The Supreme Court of NSW has dismissed an application to allow the plaintiffs to rely on expert evidence by a recognised tax expert concerning the capital v income status of amounts to which beneficiaries under a will were entitled.

The plaintiffs in this case had sought to rely upon the expert report of a recognised tax expert that was directed to the taxation consequences that follow, in the expert’s opinion, from the determination of whether certain entitlements under the will were entitlements to income or capital. The principal issue that will be before the Court was the proper construction of the relevant clauses of the ‘Will’ in question.

The Court noted that the expert’s report could say nothing about the interpretation of the clauses in the Will. The tax consequences could not govern the interpretation, the Court said. In the Court’s view, to allow the tax expert’s report to be relied upon “will give it a particular status as evidence in the proceedings which will entitle the defendants, if they wish to do so, to present expert evidence of their own on those questions. This runs the very real risk of setting a hare running which will in fact not be a question that the Court necessarily needs to determine”.

However, subject to the particular issues before the Court at the time of the hearing and the way in which they are argued, the Court said that, “at this early interlocutory stage it seems to me that there is no reason why the plaintiffs would not be able to deploy the matters raised in [the expert’s] report by way of submission if necessary. The practical reality is that all other parties have been supplied with a copy of [the] report and they can take their own course in relation to the matters raised by [the tax expert] to the extent they wish to do so to be ready to meet any submission made to the effect of the matters set out in his report”.

The Court dismissed the plaintiffs’ notice of motion to rely on the expert evidence.

(Cameron v Jeffress [2013] NSWSC 1754, NSW Supreme Court, Kunc J, 15 November 2013.)

[LTN 233, 2/12/13]


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