van der Zanden v Chief Commissioner of State Revenue [2022] NSWCATAD 283
Background
The Applicant’s father appointed the Applicant’s brother (his only other child) as the sole beneficiary, Executor and Trustee of his Will (the “Will”) dated 18 August 2014. The most significant asset of the estate was a house located at 7 Fabry Street, Botany (the “Property”).
In April 2017, prior to her father’s death the Applicant and her husband lodged a caveat registering their interest in the Property that had been their family home for some years. In the same year, the father commenced proceedings in the NSW Supreme Court, seeking orders for the removal of the caveat (“2017 Supreme Court Proceedings”). In response the Applicant and her husband lodged a cross-claim seeking a declaration of their equitable interest in the Property and an order that the Property be transferred to them. Those proceedings were still pending when the Applicant’s father died on 15 September 2018.
On 29 June 2018, prior to his death, the father added a new clause to his Will, by codicil, directing his Executor and Trustee to continue to conclusion his 2017 Supreme Court proceedings against his daughter and son-in-law.
On 2 November 2018, the NSW Supreme Court granted probate on the Will, appointing the Applicant’s brother as the executor of the Will and declaring that the inventory of assets owned by the father included the Property.
The Applicant’s brother was prevented from giving effect to the probate because the 2017 Supreme Court proceeding remained pending (i.e. had not resolved).
On 29 April 2020, the 2017 Supreme Court Proceedings were resolved by agreement, and the Applicant and her husband signed a Deed of Settlement and Release (the “Deed”) with the Applicant’s brother to allow the Applicant to purchase 100% ownership in the Property which she did.
On October 28, 2020, the Chief Commissioner issued Assessment for full ad valorem duty on the transfer of the Property to the Applicant and her husband.
The Applicant objected to the Assessment claiming that the Deed was an agreement to vary the distribution under the Will to allow for the Applicant and her brother to be equal beneficiaries of the Property in exchange for the Applicant paying 50% of the expenses/liabilities of the estate in exchange for the remaining 50% of the Property. The Applicant claimed that as a result of the Deed, she was eligible for concessional stamp duty on 50% of the Property pursuant to s. 63 of Duties Act 1997 (“the Act”).
The Chief Commissioner disallowed the Applicant’s objection concluding that the Applicant did not meet the criteria under s. 63(1) or s. 63(2) for concessional duty.
The Statutory Framework
Section 63 of the Act is relevant to deceased estates:
- Duty of $50 is chargeable in respect of:
- a transfer of dutiable property by the legal personal representative of a deceased person to a beneficiary, being:
(i) a transfer made under and in conformity with the trusts contained in the will of the deceased person or arising on an intestacy, or
(ii) a transfer of property the subject of a trust for sale contained in the will of the deceased person, or
(iii) an appropriation of the property of the deceased person in or towards satisfaction of the beneficiary’s entitlement under the trusts contained in the will of the deceased person or arising on intestacy, and…
(b) (Repealed)
(c) a transmission application by a devisee who is also the sole legal personal representative, and
(d) a declaration by an executor of a will under section 11 of the Trustee Act 1925 if the Chief Commissioner is satisfied that the declaration is consistent with the entitlements of beneficiaries under the trusts contained in the will.
2. If a transfer of dutiable property is made by a legal personal representative of a deceased person to a beneficiary under an agreement (whether or not in writing) between the beneficiary and one or more other beneficiaries to vary the trusts contained in a will of the deceased person or arising on intestacy, the dutiable value of the dutiable property is to be reduced by the portion of the dutiable value that is referable to the dutiable property to which the beneficiary had an entitlement arising under the trusts contained in the will or arising on intestacy.
Submissions
The applicant's submission
The Applicant argued that the Deed was an agreement to vary the distribution of the Property under the Will, so that the Applicant and her brother would split her father’s estate 50/50. On this basis, the Applicant contended that the concessional amount in s 63 of the Act was applicable to her “50% share” of the transfer of the Property.
Alternatively, the Applicant argued that:
- she received her 50% share under intestacy; or
- the Chief Commissioner is estopped from issuing a Notice of Assessment for ad valorem duty on her 50% of the share of the Property because she was advised, by Ms B, an officer of Revenue New South Wales, that the concessional amount of $50 duty would apply on the transfer to her of her share of the Property.
The Chief Commissioner’s submissions
The Chief Commissioner argued that because probate had been granted, the Applicant’s brother was a 100% beneficiary in respect of the Property under the Will and that the Deed did not have the legal effect of altering the Will, but simply provided a mechanism for the Applicant to obtain a 100% interest in the Property.
The Chief Commissioner noted that s. 63 of the Act did not apply to the circumstances in which the Property was transferred to the Applicant and her husband, because, under the terms of the Deed, the transferor of the Property was the Applicant’s brother in his personal capacity and not in his capacity as Executor of the estate. Further, the Applicant and her husband were joint tenants under the transfer, making them liable for ad valorem duty on the value of the Property.
In relation to estoppel, the Chief Commissioner noted that the email exchanges between the Applicant and Ms B did not support the Applicant’s claims as to the advice she was given. Irrespective of the advice, neither Ms B’s nor the Chief Commissioner’s conduct can act as an estoppel preventing the Chief Commissioner from correctly assessing duty that is payable in compliance with the terms of the Act: Zhuang v Chief Commissioner of State Revenue [2013] NSWADT 103.
Decision
The Tribunal concluded that the Applicant was required to prove that the transfer of the Property to her was a transfer to her as a ‘beneficiary’ of her father’s estate because either:
- the Deed varied her father’s Will by granting her a 50% share in the Property; or
- the Deed set aside her father’s Will and she acquired a 50% share in the Property under intestacy under Chapter 4 of the Succession Act 2006.
The Tribunal concluded that the Applicant had not discharged her onus and that s 63 of the Act had no application because:
- the transfer of the Property to the Applicant and her husband was a transfer from the Applicant’s brother in his personal capacity and not in his capacity as the Executor of the father’s estate;
- the transfer of the Property was a transfer to the Applicant and her husband as joint tenants; not a transfer of 50% share to the Applicant and a 50% share to her husband;
- the dutiable value of the Property is that determined by an accredited valuer and ad valorem duty is payable on the entire amount of that value; and
- there is no evidence to support an estoppel as contended by the Applicant.
Orders
- The 28 October 2020 Duties Notice of Assessment decision of the Chief Commissioner is confirmed.
Link to decision