Re Livingston; Hanby v D'Wynn
[2018] VSC 100
•6 March 2018
| IN THE SUPREME COURT OF VICTORIA | Not Restricted |
AT MELBOURNE
COMMON LAW DIVISION
TRUSTS, EQUITY & PROBATE LIST
S CI 2016 02604
IN THE MATTER of Part IV of the Administration and Probate Act 1958
-and-
IN THE MATTER of the Will and Estate of PAMELA EDITH LIVINGSTON (deceased)
| NADINE CATHERINE MARGARET HANBY | Plaintiff |
| v | |
| LOUISE SARAH FRANCES HANBY D'WYNN (who is sued as Executor of the will and estate of PAMELA EDITH LIVINGSTON, deceased) | Defendant |
---
JUDGE: | McMillan J |
WHERE HELD: | Melbourne |
DATE OF HEARING: | 2 March 2018 |
DATE OF JUDGMENT: | 6 March 2018 |
CASE MAY BE CITED AS: | Re Livingston; Hanby v D’Wynn |
MEDIUM NEUTRAL CITATION: | [2018] VSC 100 (First revision 14 March 2018) |
---
FAMILY PROVISION − Where defendant seeks final orders contrary to terms of settlement − Where orders sought as a result of an assessment of stamp duty on transfer of real property consequent upon agreement between beneficiaries − Application refused.
---
APPEARANCES: | Counsel | Solicitors |
| For the Plaintiff | No appearance | A B Natoli Lawyers |
| For the Defendant | Mr N McOmish | Winn Legal |
HER HONOUR:
Introduction
Pamela Edith Livingston (‘the deceased’) died on 7 February 2015. She is survived by her three children, the plaintiff, the defendant and Warwick Hanby (‘Mr Hanby’).
The deceased’s will dated 13 December 2004 named the defendant as the executor and trustee of her estate and divided her estate equally between the defendant and Mr Hanby. Her estate principally comprised her property at Regent Street, Yarraville (‘the Yarraville property’). Probate of the deceased’s will was granted to the defendant on 23 December 2015.
Factual background
In 2016, the plaintiff sought provision from the estate pursuant to Part IV of the Administration and Probate Act 1958. On 24 March 2017, the plaintiff’s claim was mediated but did not settle until ‘the weeks shortly thereafter’. The terms of settlement are in writing, dated ‘March 2017’, and were executed by the plaintiff and the defendant, with Mr Hanby consenting to them (‘the terms of settlement’).
The terms of settlement provided, inter alia, that the defendant would pay the sum of $300,000 to the plaintiff on or before 27 September 2017, the proceeding would be adjourned until after the due date for payment of the settlement sum, and following payment, orders would be sought on the papers that the proceeding be struck out with no adjudication on the merits and no orders as to costs.
On 16 July 2017, the defendant and Mr Hanby executed an agreement headed ‘Agreement Between Beneficiaries’, whereby they agreed that:
(a) the Yarraville property was to be transferred from the defendant in her capacity as executor of the estate to the defendant in her personal capacity;
(b) the defendant would pay $300,000 to Mr Hanby at the earliest opportunity; and
(c) the defendant was personally liable to pay the agreed settlement sum of $300,000 to the plaintiff by no later than 27 September 2017.
In an affidavit sworn 28 February 2018, the solicitor for the defendant deposed that the defendant and Mr Hanby could not agree on the value of the Yarraville property for the purpose of determining the cash sum to be paid to Mr Hanby, so they agreed to obtain a valuation of the property. An appraisal of the Yarraville property by a sales consultant from a real estate agency in Yarraville as at 21 March 2017 is exhibited to the solicitor’s affidavit. The appraisal is dated before the mediation was held and the opinion provides that ‘a probable sale price approximately between $1,050,000 and $1,100,000 would be achievable for this property in the 2017 property market‘. In light of the solicitor’s statement and the date of the agreement between the defendant and Mr Hanby, it is not clear if this opinion was relied upon when they subsequently reached agreement in July 2017.
The payment of the settlement sum to the plaintiff was not made until 24 October 2017. The payment made on that date included accrued interest up to the payment date.
On an unknown date, the defendant, in her capacity as executor of the estate, transferred the Yarraville property to herself in her personal capacity. Before registration of a transfer of land can be effected, the transfer must be assessed for duty by the State Revenue Office. The documents that are usually delivered to the State Revenue Office for the assessment of dutiable property, such as the transfer of land and the supporting documents are not before the Court, and as such, the details of the transfer, such as the stated consideration for the transfer, are unknown.
On 4 December 2017, the State Revenue Office of Victoria issued a notice of assessment for $27,376 to the defendant in her personal capacity, payable by 4 January 2018 (‘the assessment’). A person who is dissatisfied with an assessment may, not later than 60 days from the date of the issue of the notice of assessment, lodge a written objection to the Commissioner stating fully and in detail the grounds of objection.
Orders sought by the defendant
On 20 February 2018, the defendant sought the following substantive orders before Judicial Registrar Englefield:
(a) The estate of the deceased be administered and distributed as if the will of the deceased provided nunc pro tunc as follows (and in lieu of the dispositive provisions in clause 2):
2. I GIVE AND DEVISE my principle (sic) residence at 19 Regent Street Yarraville in the State of Victoria, being the land more particularly described in Certificate of Title Volume 6086 Folio 055 (the Property) in specie to my daughter Louise Sarah Frances Hanby D’Wynn, provided that she pay:
(a) the sum of $600,000 to the estate; and
(b) a sum sufficient to cover all estate liabilities.
(together ‘the Payments’).
Subject to Louise Sarah Frances Hanby D’Wynn making the Payments, the estate shall be distributed as to:
(a) the sum of $300,000 to the Plaintiff; and
(b) the sum of $300,00 to Warwick Ashley John Hanby.
In the event that Louise Sarah Frances Hanby D’Wynn does not make the Payments, the Property shall be sold with the net proceeds of sale distributed as follows:
(a) the sum of $300,000 to the Plaintiff;
(b) the sum of $300,000 to Warwick Ashley John Hanby;
(c) a sum to cover all estate liabilities; and
(d) the balance remaining to Louise Sarah Frances Hanby D’Wynn.
The authority of judicial registrars as contained in Order 84 of the Supreme Court (General Civil Procedure) Rules 2015 does not allow the making of the proposed orders and the proceeding was referred to the Testators Family Maintenance List, returnable on 2 March 2018.[1]
[1]Supreme Court (General Civil Procedure) Rules 2015 O 84.
On that date, the defendant sought the same orders as were before Englefield JR. The State Revenue Office and the plaintiff were notified of the defendant’s application. The plaintiff has no interest in the application and did not wish to attend and, unsurprisingly, the State Revenue Office did not respond to notice of the application.
Defendant’s submissions
The defendant seeks the proposed orders as a means of not having to pay the assessment. She submits that, as a matter of public policy, beneficiaries should be encouraged to settle Part IV claims and the Court can assist that process by providing orders that reflect the terms of settlement. In doing all things necessary to settle a proceeding, a beneficiary should not be disadvantaged by having to pay stamp duty that would otherwise not be payable.
The defendant referred the Court to a Revenue Ruling from the State Revenue Office headed ‘Transfer of dutiable property from a deceased estate - Revenue Ruling DA.051’(‘the Ruling’). The purpose of the Ruling is expressed to be an explanation of the operation of s 42 of the Duties Act 2000 (‘the Act’) following legislative amendments made to it by the State Taxation Acts Amendments Act 2009. The Ruling also explains the different approaches applied by the State Revenue Office in determining the dutiable value of property where the exemptions in s 42 of the Act are found not to apply.[2]
[2]State Revenue Office, Transfer of dutiable property from a deceased estate, Revenue Ruling DA.051, March 2010.
The defendant submits the relevant parts of the Ruling are as follows:
Transfers made under a will for consideration
The entitlement of a beneficiary under a will may be conditional upon a payment being made. Where a beneficiary’s entitlement is conditional upon the beneficiary paying certain monies, either to the estate or a third party, the terms of the will must be strictly complied with for the exemption to apply.
…
Claims made under Part IV of the Administration and Probate Act 1958
…
In some cases a transfer of dutiable property by the legal personal representative of a deceased person may arise pursuant to an order made as a result of an application to the Supreme Court or the County Court under Part IV of the APA for the proper maintenance and support of a person for whom the deceased had responsibility to make provisions. The Court can make an order for such provisions to be made out of the estate of a deceased person, which may involve the transfer of dutiable property.
Section 97(4) of the APA provides that an order made by the Court under Part IV of the APA has effect as a variation to the deceased’s will or the intestacy rules. Accordingly, where a transfer of dutiable property by the legal personal representative of a deceased person pursuant to a court order made under Part IV of the APA is in conformity with the order, the transfer will be exempt from duty under section 42 of the Act.[3]
[3]Ibid.
Consideration
At the end of the Ruling, it is noted that rulings do not have the force of law and that each decision made by the State Revenue Office is made on the merits of each individual case, having regard to any relevant ruling and must be read subject to Revenue Ruling GEN.001, which notes that Revenue Rulings ‘cannot supplant the terms of the law’ and ‘may be overruled by legislative amendments to the law, or by decisions of appellate tribunals or courts’.[4]
[4]State Revenue Office, Explanation and status of revenue rulings, Revenue Ruling GEN.001, 1 June 1993.
The defendant’s submission that the Court can assist the process of settling Part IV claims by providing orders that reflect the terms of settlement is misplaced. The defendant is not seeking orders that were agreed in the terms of settlement, that is, after the settlement sum has been paid to the plaintiff, the orders to be sought on the papers from the Court are that the proceeding be struck out with no adjudication on the merits and no orders as to costs.
The Ruling provides guidance on such a scenario as follows:
However, if an order is made by the Court dismissing a Part IV application (for example, where the parties have settled the distribution of the estate out of Court), there is no variation to the will or intestacy rules. Where this occurs, the entitlement to the exemptions contained in section 42 of the Act will depend on the facts and circumstances of each individual case.[5]
[5]State Revenue Office, Transfer of dutiable property from a deceased estate, Revenue Ruling DA.051, March 2010.
The defendant’s application conflates two separate agreements as one agreement in an attempt to persuade the Court that the defendant should not be required to pay the assessment. The agreement for the transfer of the Yarraville property to the defendant is the agreement made between the defendant and Mr Hanby, is separate from the terms of settlement and post-dates the terms of settlement. The agreement between the defendant and Mr Hanby is the agreement acted upon when lodging the transfer of land for duty purposes and for registration of the Yarraville property in the defendant’s name in her personal capacity.
The relevant documents for the transfer must have been lodged and assessed by the State Revenue Office for the assessment to have been issued. The Court’s role does not include making orders after an assessment of duty and where the State Revenue Office has not had the opportunity to consider any objections to the assessment. Nor is it the role of the Court to make orders contrary to the terms of settlement in the plaintiff’s Part IV claim or as a means of not having to pay a duty assessment.
The appropriate procedure for seeking an exemption is prescribed by the Duties Act2000 as set out in the assessment. The defendant should have followed that procedure and lodged an objection to the assessment. In this way, the State Revenue Office is able to consider any entitlement to an exemption based on relevant facts and circumstances, including the transfer of land and any supporting documents submitted to the State Revenue Office in making the assessment.
Conclusion and orders
The Court will not make the proposed orders as sought by the defendant and will make the orders provided for in the terms of settlement.
Accordingly, I order that the defendant’s oral application made on 2 March 2018 be refused. Otherwise, orders should also be made in accordance with the terms of settlement that the proceeding be struck out with no adjudication on the merits and no orders as to costs.
---
0
0
0