Hotchpot operates to bring a benefit received by a beneficiary during the testator’s lifetime into account when determining that beneficiary’s entitlement under the Will. The principal difficulty arises in valuing non-monetary benefits. Where the earlier benefit is property, questions include the appropriate value to attribute, the relevant valuation date, and whether tax or other liabilities should be considered.
Dixon J identified the problem in Re Tennant; Mortlock v Hawker [1942] HCA 3. On the issue of construction, His Honour observed at 491-492 that:
The hotchpot provision may say that the advances are to be “deducted” from the advanced child’s share, to be “taken in satisfaction” or “in part satisfaction” or “in or towards satisfaction of the share” or to be “taken” or ” brought into account.” Sometimes the words “by way of hotchpot” are added or there is some other express reference to “hotchpot.” With all such expressions it is natural to understand the direction as referring to a “deduction” from, “satisfaction” of, or “accounting” against a money fund …
Property values may change substantially between the date of transfer, the testator’s death, and the estate’s distribution. The inclusion or exclusion of capital gains tax or other liabilities may also alter the value attributed. As a result, a clause intended to equalise beneficiaries’ entitlements may produce different economic outcomes depending on the valuation method applied.
Craven v Bradley [2021] VSC 344 illustrated these difficulties. Phyllis Craven left her residuary estate equally between her three sons, with different parcels of real estate passing to two of them and an adjustment mechanism intended to account for their differing values. Derham AsJ was required to resolve both the treatment of capital gains tax and the appropriate valuation date. By contrast, in Todd v Todd & Ors [2021] SASC 36, Brampton J concluded that CGT should not be taken into account when valuing the relevant gifts.
The authorities highlight a key drafting consideration. Under a hotchpotch clause, specifying the valuation method for earlier gifts or advancements, the relevant valuation date, and whether to include or deduct tax or other liabilities is important.
Timing is also relevant. As noted in Re Tennant; Mortlock v Hawker [1942] HCA 3, an advancement made years before death may be brought into account at its original value or adjusted for the passage of time. Indexing a monetary advancement to CPI, rather than charging interest, may provide a mechanism to reflect changes in real value.
The matter
In Tanner v Tanner [2026] NSWCA 100, the Court of Appeal considered a hotchpot provision concerning land transferred about 20 years before the deceased made their Will. The case shows that identifying an advancement is only the first step; the Will must also provide a practical mechanism to account for the earlier transaction in the testamentary distribution.
Hilda Tanner (the deceased) made a Will in 2021. After making several pecuniary gifts, the deceased left the residue of her estate to their three children, John (the plaintiff), James (the first defendant), and Susan (the second defendant), in equal shares.
The Will included a material qualification affecting the distribution.
Clause 5 of the Will directed that the value of a parcel of land that the deceased and her late husband transferred to the plaintiff be treated as an advancement to the plaintiff and
” brought into account and taken in satisfaction”
of the gift under the residuary clause.
The land was transferred to the plaintiff and his wife in 2001 about 20 years before the testator’s Will was executed. Following the deceased’s death in 2024, a dispute arose concerning the construction of clause 5 and its effect on the plaintiff’s entitlement to the residuary estate.
The Supreme Court decision
In Estate of Tanner [2025] NSWSC 1078, Bennett J considered the origins and development of the doctrine of hotchpot and its application to Will construction.
Hotchpot allows a beneficiary’s prior benefit to be brought into account when determining that beneficiary’s entitlement under an estate. The mechanism does not require the beneficiary to repay the earlier benefit, but it considers its value when calculating the beneficiary’s subsequent entitlement.
The plaintiff submitted that the residuary clause gave him an unqualified one-third share of the estate and that clause 5 did not alter that entitlement. Additionally, as the deceased no longer owned the property, the Will was unable to meet the direction in clause 5. Considering the Will and the surrounding circumstances Her Honour held that the plaintiff’s entitlement to one-third share of the residue was expressly subject to clause 5. Applying the earlier transfer into account when determining the plaintiff’s entitlement to the residuary estate.
Bennett J applied the usual costs rule, ordering the plaintiff to pay the executor’s costs of defending the application for a declaration concerning the Will’s construction. The plaintiff appealed the decision.
Tanner v Tanner [2026] NSWCA 100
The New South Wales Court of Appeal dismissed the appeal.
In Tanner v Tanner [2026] NSWCA 100, Bell CJ, Stern JA and McHugh JA upheld Bennett J’s construction of the Will.
The dispute concerned two provisions: clause 3(c), which divided the residuary estate equally between the deceased’s three children, and clause 5, directing that the land previously transferred to the appellant and his wife be treated as an advancement and brought into account in satisfying his entitlement under clause 3(c ).
The appellant’s principal submission was that clause 5 did not qualify his entitlement to one-third of the residue.
The Court of Appeal disagreed.
The Court also had to decide whether the 2001 property transfer was a gift. A further issue concerned the circumstances of the original transfer. The 2001 memorandum of transfer recorded that the deceased and her husband acknowledged receipt of $100,000 as consideration. The appellant relied upon that document and an affidavit stating that the consideration recorded on the transfer was $100,000.
However, no evidence established that the $100,000 had been paid. In the hearing, plaintiff’s counsel repeatedly characterised the transfer as a gift. Only in supplementary submissions following the hearing did the appellant advance the argument that the transfer was not a gift.
The Court of Appeal held that Bennett J did not need to determine whether the transfer was actually a gift or an advancement. That factual question did not determine clause 5’s operation. Consistent with Re Tennant; Mortlock v Hawker (1942) 65 CLR 473; [1942] HCA 3, the critical question was one of construction of the Will: what did the deceased intend clause 5 to do to the appellant’s entitlement under the residuary clause?
The terms of the Will resolved the issue.
The Court of Appeal held that Bennett J had construed the Will correctly. The deceased’s ability to direct that the earlier transfer be taken into account did not depend on continued ownership of the property at death. Similarly, the effectiveness of clause 5 did not depend on establishing that the 2001 transfer had legally been a gift. The Will itself directed how the appellant’s entitlement to the estate was to be calculated.
The executor could not read the apparently equal division of the residue in clause 3(c) in isolation; it had to be read alongside clause 5. The appellant remained a one-third residuary beneficiary, subject to the requirement that the value of the earlier property transfer be taken into account.
The $100,000 consideration
The Court of Appeal also rejected the appellant’s complaints concerning Bennett J’s treatment of the evidence. The memorandum of transfer’s acknowledgment of $100,000 consideration did not necessarily establish that the money had been paid.
The surrounding circumstances were significant. The appellant produced no evidence of actual payment, despite being in a position to know whether consideration had been paid. The appellant’s counsel repeated characterisation of the transfer as a gift did not affect the outcome. The operations of clause 5 following its proper construction did not depend on whether the original transfer had been gratuitous.
The significance of Tanner
Tanner v Tanner demonstrates that an apparently straightforward gift of an equal share of residue cannot be considered in isolation from the remainder of the Will.
A testator may direct that an earlier benefit received by a beneficiary be brought into account when determining that beneficiary’s entitlement under the Will. Where the Will contains such a direction, the question is primarily one of testamentary construction.
The case also illustrates an important distinction between determining the historical legal character of an earlier transaction and determining the testamentary consequences the testator has subsequently attached to it.
Whether the 2001 transfer was technically a gift was ultimately irrelevant. The deceased’s Will expressly directed that the transfer be treated as an advancement and brought into account against the appellant’s residuary entitlement.
The Court’s task was therefore to give effect to the Will read as a whole.
Tanner’s result confirms that the doctrine of hotchpot remains relevant to modern succession law. Still, its operation ultimately depends upon the language the will-maker uses. An equal division of residue does not necessarily result in each beneficiary receiving an equal amount from the estate at distribution where the Will expressly requires an earlier benefit to be brought into account.