case_text: On 16 February 2006 Mr McKenzie and others lodged the second Kuyani claim (the Kuyani-Wilyaru People Native Title claim). It again overlapped in part the area of the overlap proceedings. Orders were made in these proceedings that the new claim be dealt with to the extent of the overlap. The new claim suffered from the same vices that affected the first Kuyani claim a matter raised by the ALRM. A notice of discontinuance was filed by the Kuyani-Wilyaru applicants on 31 May 2006 and an order was made in the overlap proceedings that orders made in it regarding the Kuyani-Wilyaru application cease to be operative. Mr McKenzie nonetheless remains a respondent in the overlap proceedings apparently on the basis that, notwithstanding the discontinuance, he claimed to hold native title in relation to land in the area covered by the proceedings: s 84(3)(a)(ii); or else his interests might be affected by a determination in it: see s 84(3)(a)(iii). I would note in passing that it is well settled that a native title interest suffices as "an interest" for the purposes of becoming a party to a proceedings under s 84(3)(a)(iii) and (5) of the NT Act: Akiba v Queensland (No 2) [2006] FCA 1173 ; (2006) 154 FCR 513 at [34] ; Munn v State of Queensland [2002] FCA 486 at [8] ; Rubibi Community v State of Western Australia [2002] FCA 876 ; (2002) 120 FCR 512; Davis-Hurst v Minister for Land and Water Conservation (NSW) (2003) 198 ALR 315 at [27]. 41 While several first instance judges have asserted a contrary view to that in Ward though without reference to it: see for example, Emmett J in Munn v State of Queensland at [8]; it was the decision of Mansfield J in Kokatha Native Title Claim v South Australia that first gave a limiting interpretation to what was said in Ward . In the Kokatha case, his Honour was dealing with applications made under s 84(5) of the NT Act by three individuals to be joined as respondent parties to the Kokatha claim, these persons asserting native title rights and interests in part of the Kokatha claim area. Consequent upon my strike out of the Kuyani determination application, they were not independently s 61 applicants having an overlapping native title determination. In dealing with the applications of these "party-applicants" Mansfield J observed (at [22]-[23]) that: "In my view, the Court has a discretion under s 84(5) to join each of the party-applicants as a party to the Kokatha claim notwithstanding that, as individuals, they are each asserting that their interests which are or may be affected by a determination of native title in the proceedings are apparently native title rights and interests. However, I do not consider that their claimed interests, if established, could provide another avenue to a determination of an entitlement to native title rights and interests in the claim area in their favour. I share the view of Emmett J in Munn at [8] to that effect. It is a view which Branson J also appears to have shared in Davis-Hurst v New South Wales Minister for Land and Water Conservation (NSW) (2003) 198 ALR 315. In my judgment the prescriptive structure in the Act for the making of an application for the determination of native title under s 61, with the procedural requirements of s 62, and, since the Native Title Amendment Act 1998 (Cth) (the 1998 amendments), the authorisation requirements under s 251B are clear. They provide the only vehicle for the positive determination of native title rights and interests. They require the assurance that the whole of the claim group has authorised the bringing of the claim through the authorised claimants. In Yarmirr v Northern Territory (unreported, Federal Court, Olney J, 4 April 1997) his Honour stressed the importance of compliance with those provisions. See also Quall v Risk [2001] FCA 378 at [67] . I do not regard the authorities relied upon by counsel for the party-applicants as being inconsistent with that view. In Western Australia v Ward [2000] FCA 191 ; (2000) 99 FCR 316, the remarks of Beaumont and von Doussa JJ at 369, at [192]-[193] were made in the context of an existing competing native title claim group at least adjoining the claim area under consideration and including an area partly overlapping the relevant claim area: see Note C to the Consent Determination in Attorney-General of the Northern Territory v Ward [2003] FCAFC 283 ; (2003) 134 FCR 16."


case_outcome: considered

case_text: The subject and significance of authorisation has been considered in detail recently by Lindgren J in Harrington-Smith v State of Western Australia (No 9) [2007] FCA 31 at [1168] ff. As a matter of convenience, I gratefully adopt what his Honour said (at [1170]-[1172]): "1170 Under the Old NTA a native title determination application was able to be made by, inter alia, '[a] person or persons claiming to hold the native title either alone or with others': Old NTA s 61(1). An applicant did not have to be authorised. The [1998] Amending NTA introduced, in the amended s 61(1), a requirement that an application must be authorised by the native title claim group. 1171 'Proper authorisation is the foundation for the institution and maintenance of a native title claimant application under s 61 of the new Act': Perry and Lloyd, Australian Native Title Law (Thomson Lawbook Co, 2003) at [3.140] p 439. Authorisation is 'fundamental to the legitimacy of native title determination applications', and is 'not a condition to be met by formulaic statements in or in support of applications': Strickland [(1999) 168 ALR 242] at 259-260. 1172 Where the authorisation requirement of s 61(1) is not complied with, the non-compliance is fatal to the success of the application: Moran v Minister for Land and Water Conservation for the State of New South Wales [1999] FCA 1637 at [48] ; Strickland at [56]-[57] (approved in WA v Strickland [(2000) [2000] FCA 652 ; 99 FCR 33] at [77] - [78] ; Drury v Western Australia [2000] FCA 132 ; (2000) 97 FCR 169 at [10] ; Daniel v Western Australia (2002) 194 ALR 278 (FCA) at [11]; De Rose FCA/O'Loughlin J [[2002] FCA 1342] at [933]. Authorisation must be by all the persons who constitute the native title claim group in respect of the common or group rights and interests comprising the particular native title claimed: Risk v National Native Title Tribunal [2000] FCA 1589 at [30] ; Diere People v South Australia [2003] FCA 187 ; (2003) 127 FCR 364 at [55] ('Dieri People'); Tilmouth v Northern Territory [2001] FCA 820 ; (2001) 109 FCR 240 (' Tilmouth ')." 20 I need only note that authorisation has been the rock upon which Mr McKenzie's two native title determination have foundered. 21 On the filing in the Court of a s 61 application, a copy of it and prescribed accompanying documents must be given to the Native Title Registrar who in turn is required to provide copies of the application and accompanying documentation to the relevant Minister for any State or Territory in which any area covered by the application lies as well as to the representative bodies covered by the application: NT Act s 63 and s 66(1)-(2A). As well the Registrar must under s 66(3)(a) give notice containing details of the application to a prescribed list which includes "(a) ... (i) any registered native title claimant in relation to any of the area covered by the application; and ... (vii) if the Registrar considers it appropriate in relation to the person any person whose interests may be affected by a determination in relation to the application; and ... (d) notify the public in the determined way of the application." 31 This question arises because, for s 225 purposes, a determination of native title is a "determination whether or not native title exists in relation to a particular area". An order, for example, dismissing an application for a native title determination on the grounds of failure of proof is not a determination of native title. It is not a determination that native title does not exist: Harrington-Smith v State of Western Australia (No 9), at [4005]. In Western Australia v Ward (FC) at [219] Beaumont and von Doussa JJ indicated that, notwithstanding the "either or" character of the s 225 definition, it was open to a trial judge as a matter of discretion to decide that the Court should decline the jurisdiction to make a negative determination if the interests of justice so required. Their Honours instanced a situation where the evidence failed satisfactorily to disclose one way or the other whether or not native title existed. I would add that it is by no means uncommon for a trial judge to be in a position of finding that, though a claim group has failed to establish native title rights and interests in a particular area on the basis it chose to advance its case, the evidence nonetheless has suggested the possibility that, if the case had been conducted differently, at least some members of that group may have been able to establish native title rights and interests: cf Jango v Northern Territory [2006] FCA 318 ; (2006) 152 FCR 150 at [791] ; and see Jango v Northern Territory [2007] FCAFC 101 at [75] ff; see also Quall v Northern Territory [2007] FCAFC 46. 32 In describing a s 225 determination as the "end-point" of the native title claim process, the Commonwealth attributes to it the function of finally resolving the legal status of the area subject to a claim for native title purposes. Such a determination can properly be said to have that effect in the scheme of the Act given the significance attributed to "an approved determination of native title" in ss 13, 61A and 68. Nonetheless, as Beaumont and von Doussa JJ indicated in Ward , s 225 does not indicate that a negative determination must be made in all cases in which a claimant application is not made out fully or at all. The reason I emphasise this is that the discretion not to make a negative or, for that matter, an exclusive positive determination may be of no little significance in cases where native title is asserted defensively by a respondent to s 61 proceedings. 38 On appeal, Beaumont and von Doussa JJ concluded of this ( Western Australia v Ward (FC) at [192]-[193]): "192 In our opinion Lee J was plainly correct in so holding. Even if the Balangarra Peoples had not obtained leave to be joined as an applicant, and had participated in the hearing as respondents, the jurisdiction of the Court extended to making an order which determined that they held native title rights and interests within the determination area. Section 225 expressly requires the Court to determine the persons or each group of persons holding the common law rights comprising native title, and the nature and extent of those rights and interests. Section 225 does not limit the jurisdiction of the Court solely to defining the rights and interests of the named persons who initiate the claim for a determination of native title . 193 Section 213(1) of the NTA provides that if, for the purpose of any matter or proceeding before the Federal Court, it is necessary to make a determination of native title, that determination must be made in accordance with the procedures in the NTA. In our opinion that requirement was fulfilled in respect of the determination in favour of the Balangarra Peoples. The Balangarra Peoples were parties claiming an interest in the area the subject of the claim. They became parties as respondents pursuant to s 68 of the old Act. Their participation in proceedings was therefore in accordance with the procedures of the NTA and, as we have noted, the provisions of s 225 and the in rem nature of the proceedings required the Court to make a determination in respect of the rights and interests claimed by them. Upon their establishing the rights and interests claimed, they were entitled to a favourable determination declaring those rights and interests. The fact that the trial judge, as a matter of procedural convenience, gave leave to the Balangarra Peoples to become applicants, did not affect the jurisdiction of the Court to make a determination in respect of their rights and interests. Moreover, when judgment was delivered, s 67 of the new Act required that the Court make such order as it considered appropriate to ensure that the overlapping claim of the Balangarra Peoples be 'dealt with in the same proceeding'." Emphasis added.


case_text: As I have indicated in relation to s 13(1), s 61A(1) and s 68 of the NT Act, an "approved native title determination" has a primary role in the scheme of the Act a native title determination application cannot be made, and this Court cannot make such a determination, in relation to an area for which an approved determination has been made. Though declaratory of rights and in that sense absolute, an approved determination has an "indefinite character": Western Australia v Ward [2002] HCA 28 ; (2002) 213 CLR 1 at [32] ; in that it can be varied or revoked on the application of the registered native title body corporate, the Commonwealth Minister, the relevant State or Territory Minister if the area in question is within the State or Territory, or the Native Title Registrar: NT Act, s 61(1) and s 13(1)(b). Importantly such an application cannot be made by a person claiming a native title right or interest in the area. The grounds prescribed in s 13(5) for varying an approved determination are: "(a) that events have taken place since the determination was made that have caused the determination no longer to be correct; or (b) that the interests of justice require the variation or revocation of the determination." 30 There are two presently relevant matters to which it is appropriate to make reference. These are (i) in deciding a native title determination application must a court make a "determination of native title" as defined in s 225 of the NT Act? and (ii) the "in rem" character of a determination of native title.


case_outcome: cited

case_text: This question arises because, for s 225 purposes, a determination of native title is a "determination whether or not native title exists in relation to a particular area". An order, for example, dismissing an application for a native title determination on the grounds of failure of proof is not a determination of native title. It is not a determination that native title does not exist: Harrington-Smith v State of Western Australia (No 9), at [4005]. In Western Australia v Ward (FC) at [219] Beaumont and von Doussa JJ indicated that, notwithstanding the "either or" character of the s 225 definition, it was open to a trial judge as a matter of discretion to decide that the Court should decline the jurisdiction to make a negative determination if the interests of justice so required. Their Honours instanced a situation where the evidence failed satisfactorily to disclose one way or the other whether or not native title existed. I would add that it is by no means uncommon for a trial judge to be in a position of finding that, though a claim group has failed to establish native title rights and interests in a particular area on the basis it chose to advance its case, the evidence nonetheless has suggested the possibility that, if the case had been conducted differently, at least some members of that group may have been able to establish native title rights and interests: cf Jango v Northern Territory [2006] FCA 318 ; (2006) 152 FCR 150 at [791] ; and see Jango v Northern Territory [2007] FCAFC 101 at [75] ff; see also Quall v Northern Territory [2007] FCAFC 46.


case_title: Jango v Northern Territory [2007] FCAFC 101


case_title: Quall v Northern Territory [2007] FCAFC 46


case_text: It is clear from the text and structure of the Act that a s 225 determination, once made, should be a final resolution, "once and for all", of the extent of native title in relation to a particular piece of land: see Munn v State of Queensland , at [8]; subject only to the possibility of it being varied or revoked on the limited grounds specified in s 13(5). Because such a determination is declaratory of the rights and interests of all parties holding rights or interests in the area, it is commonly and properly described as a judgment in rem binding the whole world: The Wik Peoples v The State of Queensland (1994) 49 FCR 1; Western Australia v Ward (FC), at 368-369; Gumana v Northern Territory [2005] FCA 50 ; (2005) 141 FCR 457 at [127] ; on judgments in rem see also 2 Smith's Leading Cases 776 (12 th ed, 1915). Nonetheless, it should in my view be remembered that it is the terms of the Act itself (i) which now emphatically give the s 225 determination its finalising effect; see in particular ss 13(1) and (3), 61A(1) and 68; and (ii) which give persons likely to be affected by such a determination (including native title claimants) the opportunity to protect their interests by becoming a party to the proceedings: see s 84(3) and see also s 66; cf The Wik Peoples at 5-6. My reasons for emphasising this will become apparent below.


case_text: It is clear from the text and structure of the Act that a s 225 determination, once made, should be a final resolution, "once and for all", of the extent of native title in relation to a particular piece of land: see Munn v State of Queensland , at [8]; subject only to the possibility of it being varied or revoked on the limited grounds specified in s 13(5). Because such a determination is declaratory of the rights and interests of all parties holding rights or interests in the area, it is commonly and properly described as a judgment in rem binding the whole world: The Wik Peoples v The State of Queensland (1994) 49 FCR 1; Western Australia v Ward (FC), at 368-369; Gumana v Northern Territory [2005] FCA 50 ; (2005) 141 FCR 457 at [127] ; on judgments in rem see also 2 Smith's Leading Cases 776 (12 th ed, 1915). Nonetheless, it should in my view be remembered that it is the terms of the Act itself (i) which now emphatically give the s 225 determination its finalising effect; see in particular ss 13(1) and (3), 61A(1) and 68; and (ii) which give persons likely to be affected by such a determination (including native title claimants) the opportunity to protect their interests by becoming a party to the proceedings: see s 84(3) and see also s 66; cf The Wik Peoples at 5-6. My reasons for emphasising this will become apparent below. 34 Given what I have already said, I will refer to these relatively briefly. The Commonwealth's contentions focus upon the finality a s 225 determination is designed to procure and on the consequential need for the Court to determine all claims of native title rights and interests raised before it irrespective of whether all of the claimants are parties to a s 61 application. It is suggested that undesirable and inconvenient consequences would result if non-applicants (such as Mr McKenzie) cannot have the benefit of a determination of native title. And it is claimed that there is authority consistent with the interpretation they seek to place on the Act, notably Western Australia v Ward (FC) and Selway J's decision in Gumana v Northern Territory.


case_text: In the end the issue is one of statutory interpretation having regard to the text, structure and purposes of the Act. As conflicting judicial views have been expressed on this issue on a number of occasions, these provide a convenient starting point for my own consideration of the matter. It is appropriate to begin with Western Australia v Ward . The three applications dealt with in that case were made in accordance with the procedures laid down in the Act prior to the 1998 amendments. The first, and principal application if I can so describe it, had been referred under the "Old Act" to the Federal Court for curial determination. The other two applications were filed subsequent to the first but had not been so referred. The third of these (involving a claim by the Balangarra Peoples) overlapped a small part of the other two applications. The Old Act contained no provision equivalent to s 67 of the "New Act" for dealing with the overlap claims in the same proceedings. Under the Old Act parties provision (s 68), the Balangarra claimants were made respondents to the first application. The trial judge, Lee J, subsequently ordered that the Balangarra be the third applicants in the principal application. At the hearing of the application Lee J dealt as follows with a jurisdictional question raised in relation to the third applicant ( Ward v Western Australia (1998) 159 ALR 483 at 551-552): "It was faintly submitted in argument that the court could not make a determination of native title which included a determination of the interests of the third applicants unless the determination was in respect of an application made by the third applicants and referred to the court by the tribunal pursuant to s 81 of the Act as it then stood. That submission may be dealt with quite shortly. It is apparent from the provisions and objects of the Act that the court is given jurisdiction to resolve a dispute by determining whether native title exists. Once a matter attracting jurisdiction is before the court the whole of the dispute as to the existence of native title in respect of the land the subject of the application referred to the court, and arising out of the facts which underlie that matter, can be dealt with by the court if the appropriate parties are properly joined to the litigation to have that dispute resolved. Such a course was followed in this matter." 38 On appeal, Beaumont and von Doussa JJ concluded of this ( Western Australia v Ward (FC) at [192]-[193]): "192 In our opinion Lee J was plainly correct in so holding. Even if the Balangarra Peoples had not obtained leave to be joined as an applicant, and had participated in the hearing as respondents, the jurisdiction of the Court extended to making an order which determined that they held native title rights and interests within the determination area. Section 225 expressly requires the Court to determine the persons or each group of persons holding the common law rights comprising native title, and the nature and extent of those rights and interests. Section 225 does not limit the jurisdiction of the Court solely to defining the rights and interests of the named persons who initiate the claim for a determination of native title . 193 Section 213(1) of the NTA provides that if, for the purpose of any matter or proceeding before the Federal Court, it is necessary to make a determination of native title, that determination must be made in accordance with the procedures in the NTA. In our opinion that requirement was fulfilled in respect of the determination in favour of the Balangarra Peoples. The Balangarra Peoples were parties claiming an interest in the area the subject of the claim. They became parties as respondents pursuant to s 68 of the old Act. Their participation in proceedings was therefore in accordance with the procedures of the NTA and, as we have noted, the provisions of s 225 and the in rem nature of the proceedings required the Court to make a determination in respect of the rights and interests claimed by them. Upon their establishing the rights and interests claimed, they were entitled to a favourable determination declaring those rights and interests. The fact that the trial judge, as a matter of procedural convenience, gave leave to the Balangarra Peoples to become applicants, did not affect the jurisdiction of the Court to make a determination in respect of their rights and interests. Moreover, when judgment was delivered, s 67 of the new Act required that the Court make such order as it considered appropriate to ensure that the overlapping claim of the Balangarra Peoples be 'dealt with in the same proceeding'." Emphasis added.


case_outcome: referred to

case_text: The ordinary rules as to the security for costs apply in this action: see D Cremean, Admiralty Jurisdiction: Law and Practice in Australia and New Zealand (2 nd ed, 2003) at page 177-178; and see Thasos Shipping Agency Co Ltd v Owners of the Ship 'Balakleya' [1998] FCA 520 and Tisand Pty Ltd v Owners of the Ship MV 'Cape Morton' (Ex 'Freya') [2004] FCA 1191 ; (2004) 141 FCR 29, cases which considered the question at an earlier stage when the jurisdiction of the court was challenged.


case_title: Tisand Pty Ltd v Owners of the Ship MV 'Cape Morton' (Ex 'Freya') [2004] FCA 1191 ; (2004) 141 FCR 29


case_text: The plaintiff is ordinarily resident outside Australia within the provisions of O 28 r 3(1)(a) of the Federal Court Rules and, on the evidence, I am satisfied that it has no assets in Australia. The plaintiff did not contend to the contrary; nor did it argue that there has been delay in the bringing of the application, or that an order for security for costs will in any way stifle the proceedings. Furthermore, the plaintiff accepts that, in these circumstances, there must be weighty reasons why an order for security for costs should not be made. In PS Chellaram & Co Ltd v China Ocean Shipping Co [1991] HCA 36 ; (1991) 102 ALR 321, McHugh J said (at 323): 'However, for over two hundred years, the fact that a party, bringing proceedings, is resident out of the jurisdiction and has no assets within the jurisdiction has been seen as a circumstance of great weight in determining whether an order for security for costs should be made. Indeed, for many years the practice has been to order such a party to provide security for costs unless that party can point to other circumstances which overcome the weight of the circumstance that that person is resident out of and has no assets within the jurisdiction.'


case_text: This principle is well-established and has been applied on a number of occasions: see, eg, Logue v Hansen Technologies Ltd [2003] FCA 81 ; (2003) 125 FCR 590 at 600-601 [38] - [41] per Weinberg J; Silveira v Australian Institute of Management [2001] FCA 1358 at [6] per Stone J; Balderrama v Commissioner for Australian Federal Police [2001] FCA 577 at [5] per Emmett J.


case_title: Silveira v Australian Institute of Management [2001] FCA 1358


case_title: Balderrama v Commissioner for Australian Federal Police [2001] FCA 577


case_text: The plaintiff's main, and indeed only, submission is that the defendant's application for security for costs should be refused because it is very unlikely, having regard to the merits of the respective claims, that the plaintiff will be ordered to pay the defendant's costs. It is clear that I cannot determine the merits of the plaintiff's claim and the defendant's set-off and counterclaim on this application. However, the plaintiff's prospects of success are relevant on an application for security for costs: Gartner v Ernst and Young (No 3) [2003] FCA 1437. In this case, it is not the defendant who is submitting that the plaintiff's claim appears weak and that this is a factor in favour of granting security. It is a plaintiff submitting that its case is so strong that security for costs should not be ordered. 12 The plaintiff claims that it carried out repairs to the ship between 29 February 2004 and 22 March 2004. The plaintiff claims that the first instalment of the agreed price, namely, the sum of US$250,000, was paid prior to the ship leaving the shipyard. The balance of the agreed price, namely, the sum of US$233,500, was to be paid by the defendant within 60 days. It was not paid, and on the plaintiff's case the benefit of a discount was therefore lost and the sum of US$308,117 became due and payable by the defendant. Little was said about that matter in the submissions before me and I will proceed on the basis that, for the purposes of this application, the plaintiff's claim is for US$233,500. 13 It seems to be common ground that, initially at least, it was a term of the repair contract that the work would be performed within a period of 22 days.


case_text: As is repeatedly emphasised, each case turns on its own facts. However, it is helpful to consider some other factual circumstances where waiver has been considered: • An Attorney-General stated that he had received an advice, considered it and then made a recommendation to the Premier. The reference by the Attorney-General to the legal advice and to the recommendation in that advice that a petition should be denied involved no inconsistency with the maintenance of privilege and involved no unfairness to the appellant. This was because, in context, the Attorney-General was seeking to give the fullest information about the process that had been followed, while not giving reasons for the decision ( Osland v Secretary to the Department of Justice [2008] HCA 37 (' Osland ') at [44]-[48] per Gleeson CJ, Gummow, Heydon and Kiefel JJ). • A statement in response to a request for particulars that the facts, matters and circumstances taken into account by the decision-maker included certain material and was confirmed by legal advice amounted to waiver ( Rio Tinto ). • Where, in order to establish a particular right, claim or defence, a party has previously been given legal advice and needs to show that the advice did or did not have a particular character, the privilege holder puts in issue the advice received and the character or contents of the communications in which it claims confidentiality. In these circumstances, the privilege holder's conduct is inconsistent with the continued confidentiality of the communications ( Adelaide Steamship Co Ltd v Spalvins (1998) 81 FCR 360 , disapproved in Esso Australia Resources Limited v Commissioner of Taxation of the Commonwealth of Australia [1999] HCA 67 ; (1999) 201 CLR 49 but not on this point, discussed in Rio Tinto at [53]-[54]). • Privilege is waived where a party relies on a cause of action, an element of which is the party's state of mind. Privilege is taken to have been waived in respect of legal advice that is material to the formation of that state of mind. On the other hand, there is no waiver if the advice only played a part in the formation of the state of mind relevant to an issue in the proceedings. ( Telstra Corporation Ltd v BT Australasia Pty Ltd (1998) 85 FCR 152 , also discussed in Rio Tinto at [55]-[58]).


case_text: In Bennett v Chief Executive Officer of the Australian Customs Service [2004] FCAFC 237 ; (2004) 140 FCR 101 , Tamberlin J observed at [6] that ' it would be inconsistent and unfair, having disclosed and used the substance of the advice ' to emphasise and promote the strength and substance of a case to be made, to maintain privilege in respect of the relevant parts of that advice which pertain to the expressed conclusion. That contrasts with a person saying that he or she has taken advice and that his or her position after considering the advice is that certain action will be taken or not taken. There, the substance of the advice is not disclosed but merely the fact that there was some advice and that it was considered. His Honour considered at [13] that the weight of authority supports the conclusion that ' the disclosure of the conclusion reached in or course of action recommended by, an advice can amount to waiver of privilege in respect of the premises relating to the opinion which has been disclosed, notwithstanding that this reasoning is not disclosed '. Gyles J said at [65] that the ' voluntary disclosure of the gist or conclusion ' of legal advice amounts to waiver of the whole advice. 16 In Osland at [44] [49], the High Court has recently considered the issue of implied waiver. The majority (Gleeson CJ, Gummow, Heydon and Kiefel JJ) confirmed that, at common law, such waiver arises where the conduct of the party entitled to the privilege is inconsistent with the maintenance of the confidentiality that the privilege is intended to protect. Also relevant are considerations of fairness arising from the context of the circumstances of the case.


case_text: In Commissioner of Taxation v Rio Tinto Ltd [2006] FCAFC 86 ; (2006) 151 FCR 341 , the Full Court considered the authorities and concluded at [52] that they show that, where the privilege holder has put the contents of an otherwise privileged communication in issue, such an act can be regarded as inconsistent with the maintenance of confidentiality. 14 As is repeatedly emphasised, each case turns on its own facts. However, it is helpful to consider some other factual circumstances where waiver has been considered: • An Attorney-General stated that he had received an advice, considered it and then made a recommendation to the Premier. The reference by the Attorney-General to the legal advice and to the recommendation in that advice that a petition should be denied involved no inconsistency with the maintenance of privilege and involved no unfairness to the appellant. This was because, in context, the Attorney-General was seeking to give the fullest information about the process that had been followed, while not giving reasons for the decision ( Osland v Secretary to the Department of Justice [2008] HCA 37 (' Osland ') at [44]-[48] per Gleeson CJ, Gummow, Heydon and Kiefel JJ). • A statement in response to a request for particulars that the facts, matters and circumstances taken into account by the decision-maker included certain material and was confirmed by legal advice amounted to waiver ( Rio Tinto ). • Where, in order to establish a particular right, claim or defence, a party has previously been given legal advice and needs to show that the advice did or did not have a particular character, the privilege holder puts in issue the advice received and the character or contents of the communications in which it claims confidentiality. In these circumstances, the privilege holder's conduct is inconsistent with the continued confidentiality of the communications ( Adelaide Steamship Co Ltd v Spalvins (1998) 81 FCR 360 , disapproved in Esso Australia Resources Limited v Commissioner of Taxation of the Commonwealth of Australia [1999] HCA 67 ; (1999) 201 CLR 49 but not on this point, discussed in Rio Tinto at [53]-[54]). • Privilege is waived where a party relies on a cause of action, an element of which is the party's state of mind. Privilege is taken to have been waived in respect of legal advice that is material to the formation of that state of mind. On the other hand, there is no waiver if the advice only played a part in the formation of the state of mind relevant to an issue in the proceedings. ( Telstra Corporation Ltd v BT Australasia Pty Ltd (1998) 85 FCR 152 , also discussed in Rio Tinto at [55]-[58]). 17 The privilege holder is Servier. It is Servier's acts and omissions that must be considered in deciding whether it has, expressly or impliedly, waived privilege or, put another way, whether those acts or omissions are inconsistent with the maintenance of privilege ( Rio Tinto at [45]). Servier, as the applicant for amendment of the Alpha Crystalline Patent, has an obligation to put forward correct reasons for the amendment. Servier has accepted the obligation of providing evidence of its reasons for seeking to amend the Alpha Crystalline Patent. That evidence is given by Mr Hamer who explained in some detail his reasons for seeking amendment of the Patent. Those reasons concerned the validity of the Alpha Crystalline Patent and also infringement by Apotex. His evidence, in cross examination, is that so far as he is aware, Servier's reasons are his reasons. In any event, there is no other link proffered between Mr Hamer's decision to seek amendment and Servier's application to amend. Mr Hamer gave evidence that he obtained instructions from Servier to file an application to amend. Presumably, and I infer, those instructions included instructions to seek the specific proposed amendment to the Alpha Crystalline Patent. There are similar patents filed by Servier in other countries. 18 Servier says that the only reasons for the decision were those in Mr Hamer's mind and that he is in the position to provide, firsthand, the relevant matters pursuant to the obligation to give reasons for the amendment. Servier accepts that there is a legal obligation to give reasons for the amendment but says that, in complying with that obligation, there is no ' superadded peril ' of the need to disclose privileged material. Servier says that reference to communications between the solicitor and the client is a necessary part of the discharge of Servier's obligations, while seeking to maintain privilege. However, in my view, this is not a case of Servier giving evidence of the fact of legal advice, or merely referring to communications between itself and Mr Hamer as part of its reasoning process.


case_text: As is repeatedly emphasised, each case turns on its own facts. However, it is helpful to consider some other factual circumstances where waiver has been considered: • An Attorney-General stated that he had received an advice, considered it and then made a recommendation to the Premier. The reference by the Attorney-General to the legal advice and to the recommendation in that advice that a petition should be denied involved no inconsistency with the maintenance of privilege and involved no unfairness to the appellant. This was because, in context, the Attorney-General was seeking to give the fullest information about the process that had been followed, while not giving reasons for the decision ( Osland v Secretary to the Department of Justice [2008] HCA 37 (' Osland ') at [44]-[48] per Gleeson CJ, Gummow, Heydon and Kiefel JJ). • A statement in response to a request for particulars that the facts, matters and circumstances taken into account by the decision-maker included certain material and was confirmed by legal advice amounted to waiver ( Rio Tinto ). • Where, in order to establish a particular right, claim or defence, a party has previously been given legal advice and needs to show that the advice did or did not have a particular character, the privilege holder puts in issue the advice received and the character or contents of the communications in which it claims confidentiality. In these circumstances, the privilege holder's conduct is inconsistent with the continued confidentiality of the communications ( Adelaide Steamship Co Ltd v Spalvins (1998) 81 FCR 360 , disapproved in Esso Australia Resources Limited v Commissioner of Taxation of the Commonwealth of Australia [1999] HCA 67 ; (1999) 201 CLR 49 but not on this point, discussed in Rio Tinto at [53]-[54]). • Privilege is waived where a party relies on a cause of action, an element of which is the party's state of mind. Privilege is taken to have been waived in respect of legal advice that is material to the formation of that state of mind. On the other hand, there is no waiver if the advice only played a part in the formation of the state of mind relevant to an issue in the proceedings. ( Telstra Corporation Ltd v BT Australasia Pty Ltd (1998) 85 FCR 152 , also discussed in Rio Tinto at [55]-[58]). 24 The Evidence Act applies to the adducing of evidence in proceedings to which the Act is applicable. It does not apply to pre-trial processes such as discovery or to the production of documents prior to the adducing of evidence ( Mann ; Esso ).


case_outcome: applied

case_text: At common law, a person who is otherwise entitled to legal professional privilege may waive the privilege. Waiver may result from inconsistency between the conduct of the client and maintenance of the confidentiality of the relevant communications ( Mann v Carnell [1999] HCA 66 ; (1999) 201 CLR 1 at [28] ). Waiver may be express or implied and may occur irrespective of the subjective intention of the party who has lost the privilege ( Mann at [29]). 19 It must be accepted that the application to amend was made with instructions from Servier. Accordingly, Servier intentionally presented Mr Hamer's affidavits and evidence as evidence of its reasons for making that application. In effect, Servier has disclosed the legal advice of Mr Hamer by presenting that advice as the totality of its reasons for seeking amendment. It is then inconsistent with that presentation to claim legal professional privilege with respect to the communications between Servier and Mr Hamer concerning Mr Hamer's opinion, Servier's instructions, the application for amendment and Servier's reasons for making it ( Mann at [34]). 20 In answer to Apotex's complaint that it is precluded from testing Servier's knowledge, Servier relies on the pleadings and says that Apotex has not advanced such a case. However, Apotex's amended statement of grounds in support of its opposition to the amendments clearly raises an allegation of Servier's failure to provide full disclosure of all matters relevant to the proposed amendments, including its reasons for seeking them, the settlement of the Lupin opposition and its reasons for not seeking the amendments earlier in Australia. 21 Further, as Apotex is entitled to challenge Servier's reasons, there is an element of unfairness in Servier proffering only Mr Hamer's reasons as its own and maintaining the confidentiality in the link between them. Apotex is deprived of the opportunity to explore Servier's reasons, for example to ascertain whether or not they are coextensive with those of Mr Hamer. 24 The Evidence Act applies to the adducing of evidence in proceedings to which the Act is applicable. It does not apply to pre-trial processes such as discovery or to the production of documents prior to the adducing of evidence ( Mann ; Esso ).


case_title: Osland v Secretary to the Department of Justice [2008] HCA 37


case_text: Servier says that only the fact of the advice has been put in issue, not the content of that advice or the disclosure of parts of the advice. Servier says that a disclosure of the fact of and conclusions of independent advice for the purpose of explaining or justifying actions is not inconsistent with the maintenance of confidentiality of that advice ( Secretary, Department of Justice v Osland (2007) 95 ALD 380 at [67] per Maxwell P). 11 Servier submits that, in order to have waived privilege, it would have to have positively deployed the substance or effect of the advice and refused to disclose the whole of it. Servier contends that it has not done so.


case_text: In Seven Network Ltd v News Ltd [2005] FCAFC 125 ; (2005) 144 FCR 379 , the Full Court held that O 33 r 11 of the Federal Court Rules does not so operate. The Full Court concluded at [17] that the operation of O 33 r 11 of the Federal Court Rules is limited to ' circumstances in which an order is made for production of a document or thing to the Court ... at a time when the Court ... is authorised to receive evidence. That is, in circumstances in which the order to produce the document or thing is made to facilitate its being immediately adduced in evidence '. 27 The documents referred to in the notice to produce served on Servier are sought for the purpose of inspection and not for being immediately adduced in evidence. It follows that the Evidence Act has no present application to the production of documents pursuant to the notice to produce. 28 There are two outstanding issues regarding Servier's waiver of privilege: • Whether privilege has been waived by Servier in respect of all of the documents the subject of the notice to produce. Neither party addressed this question. • Whether Servier has waived privilege under s 122 of the Evidence Act . This will become relevant if, for example, any documents the subject of the notice to produce are sought to be adduced in evidence.


case_title: Telstra Corporation Ltd v BT Australasia Pty Ltd (1998) 85 FCR 152


case_text: The second ("the lack of marketability") contention involves some examination of case law relating to land and in particular the decisions of the High Court in Federal Commissioner of Taxation v St Hubert's Island Pty Ltd [1978] HCA 10 ; (1978) 138 CLR 210 and of Rogers J in Barina Corporation Ltd v Federal Commissioner of Taxation (1985) 4 NSWLR 96. 33 Later in these reasons I find that the Bulletin Place property was held for the purpose of development, strata subdivision and sale of subdivided lots. In light of this finding the question the 1997 Act requires to be answered is whether the envisioned sale of the subdivided lots would be in the ordinary course of business. For reasons I give below, I am satisfied that this "one venture": cf Federal Commissioner of Taxation v St Hubert's Island Pty Ltd (in liq) , above, at 237-238, of holding the Bulletin Place property for the purpose I have found, necessarily entailed that the envisioned sale of lots would occur in the ordinary course of a business of developing, etc the Bulletin Place property. That business was functioning in the 1998 tax year, as will later become apparent when I indicate the business activity that was engaged in in that period, for the purpose of effectuating the property's development, strata subdivision and sales of lots. 34 To anticipate what I have to say below, I reject R & D Holdings' contention that, for the Bulletin Place land to be trading stock, it must first be shown that the Hallinn Trust carried on a business of trading in land in the sense of buying and selling land with some regularity or system. That contention is not supported by the language of s 70-10 and is inconsistent with the decision in St Hubert's Island (see esp per Jacobs J at 237-238 quoted below). 35 R & D Holdings' submission is that, as the relevant business for which property is held for sale involves trading in subdivided land, an unsubdivided parcel will not be trading stock because it lacks marketability and there can be no market value. 36 To answer this submission it is necessary to refer in a little detail to case law on the definition of trading stock under the 1936 Act for such guidance as it provides in construing the 1997 Act . 37 Both sides accept that the seminal decision on whether land can be trading stock was the St Hubert's Island case, above. In that case the taxpayer company bought the whole of one small island and part of another for the purpose of developing and subdividing them and selling the allotments for residential purposes. It was incorporated with this purpose in mind. It procured an alteration in the land's zoning to permit the desired development. Substantial development works were carried out when the company was put into voluntary liquidation. The development works had not then been completed nor had places of subdivision been approved for any of the land. The liquidator was authorised to transfer and did transfer the land in specie to the sole contributory of the company who was then assessed for tax on the basis that the transfer was a disposal of trading stock to which s 36(1) of the 1936 Act applied. That issue was ultimately determined favourably to the Commissioner of Taxation in the High Court by a majority of three to two. 38 The issues of present relevance addressed by the Court were (1) whether the land in question was capable of being trading stock for the purposes of the 1936 Act and (2) whether it was trading stock in the business carried on by the taxpayer. The latter of these was raised by the express requirements of s 36(1) which dealt specifically with the question of disposal of trading stock. 39 Of the majority judges, Mason J noted that (i) it had become generally accepted that land may become trading stock according to the common understanding of this expression; and (ii) accountants and commercial men have recognised that raw materials used for the purpose of manufacture and partly manufactured goods could constitute trading stock. His Honour went on (at 228-229): "... as the definition of 'trading stock' contained in s 6(1) is not an exclusive definition, it requires us to give effect to the ordinary, and in this case that happens to be the commercial, meaning of the expression, notwithstanding that in part at least it is a meaning which may have derived from or may have been influenced by accounting principle or practice. If trading stock according to its ordinary meaning denotes land as well as goods and commodities, it must follow that land may form part of the trading stock of a business before it has been converted into the condition in which it is intended to be sold. Just as raw materials and partly manufactured goods form part of the trading stock of a manufacturer, so also virgin land which has been acquired by a land developer for the purpose of improvement, subdivision and sale in the form of allotments will form part of his trading stock. ... Once it is accepted that land acquired for the purpose of improvement and development as a preliminary to sale in allotments in its improved form constitutes part of the trading stock of the land developer's business, notwithstanding that the land as acquired differed in condition from the land as intended to be sold, the issue in the present case is whether the land in question was acquired by the respondent taxpayer for its business as a land developer, that is, for improvement and development as a preliminary to sale in subdivided allotments. That substantial work remained to be undertaken in connexion with the land before it would achieve the condition in which it was intended to be sold as an immaterial consideration. It is enough that the respondent was carrying on the business of a land developer and that it acquired the land in the course of carrying on that business. The facts as outlined by the primary judge make it plain that the land was acquired by the respondent taxpayer for this very purpose." 40 His Honour later described (at 230-231) the developmental activity undertaken by the taxpayer and then commented (at 231): "The features to which I have referred stamp the enterprise with the characteristics of a business which had as its object the making of a profit from the ultimate disposition of the land in subdivided form. The land was acquired in 1960 in a series of transactions as the first step in a substantial business undertaking which was to endure for some years. Indeed, it was a long way from completion in 1972 though it is fair to say that the respondent encountered some difficulties which may not have been foreseen. The land was not acquired as an investment and its development for subdivision and sale was not simply the realization of a capital asset. In these circumstances it is impossible to treat the proposed enterprise as one which lacked the characteristics of a business and to say that it constituted no more than an isolated transaction capable on yielding assessable income under s 26(a) rather than s 25(1)." 41 The second majority judgment, that of Jacobs J, considered (at 234) land could be trading stock but that, for the purposes of s 36(1) of the 1936 Act , the property "must be an asset of a business of trading in that stock". His Honour went on (at 235): "Once it is concluded that land may be trading stock, then I can see no reason to limit the application of the words to land which is in the condition in which it is intended that it should be sold. I am inclined to the view that land acquired or purchased for purposes of sale falls within the words of the definition whether or not the land is in the condition in which it is proposed that it shall be sold. The definition does not say otherwise. But whether this be so or not, the definition is by way of extension, not limitation, of the ordinary meaning of the words 'trading stock'; and undeveloped and unsubdivided land acquired for the purpose of development, subdivision and sale is a stock of land in which the person acquiring it may be said to trade or to propose to trade. It may therefore properly be described as trading stock not only when the processes of development and subdivision have been carried out but also when it is acquired for the purpose of carrying out those processes upon it. Whether or not it will be held to be trading stock depends on whether the person carried on or had previously carried on the business of trading in that land." 42 Whether there was such a business in that case was answered thus (at 237): "Here there was what I think should be treated as a 'one-off' purchase of an area of land with an intention thereafter, as one continuous course of activity of which the purchase was the commencing act, to improve, develop, subdivide and sell in subdivided lots the area of land so purchased. Did the taxpayer thereby carry on the business of trading in that land? I have come to the conclusion that it did, and that the land became the trading stock of that business even though at the relevant time none of the land had been sold. The fact that none of the land had then been sold did not change the character of the business carried on or the character of the stock, the land, held as an asset with which it was intended to trade. A contrary conclusion would appear to me to involve the proposition that a person can only carry on the business of trading if he does or intends to do repeated acts both of buying and of selling in the course of the business. Ordinarily to carry on the business of trading in a thing does involve repeated acts of buying and selling ... However, although this repetition of both buying and selling is a usual feature of trading I do not think that it is an essential feature." Acknowledging that a "one venture" can be a "trading operation", Jacobs J concluded (at 238): "Once it is recognized that land may be trading stock then an acquisition of land for the purpose of resale, after development improvement and subdivision, in subdivided lots, and a continued activity in fulfilment of that intention brought into existence a trading operation. The company was carrying on the business of trading so long as it was pursuing its activities with an intention to sell off the land in subdivided lots and the land was its trading stock so long as the intention continued." 43 Justice Murphy agreed with both Mason J and Jacobs J. 44 For the minority Stephen J, while accepting that land could be trading stock, concluded that the land in question was not trading stock because, at the time of its purchase it did not possess the character of being substantially in the state in which the taxpayer intended to trade in it. It was devoid of the characteristics of subdivided land. The emphasis on the time of purchase was necessary in his Honour's view because of the language of the s 6(1) definition of "trading stock". 45 Finally, Aicken J in dissent also accepted that land or interests in land could constitute trading stock but rejected that the taxpayer's land was such for the following reasons (at 246): "In my opinion items of property (including land) can only be regarded as trading stock in circumstances in which the business in which they are employed involves some continuity or repetition of both buying and selling, so that one is able to say in a real sense that the stock is being turned over by a process of buying and selling. A single purchase of land, however substantial in area, made, not as part of a continuing business of trading in land, but none the less with a view to its subdivision and development into a residential area, individual allotments in which will be sold, does not seem to me to have the qualities required for answering the description of trading stock ..." 46 The significance of this case for present purposes is that it is authority for the propositions that (i) land acquired for the purpose of development, subdivision (or strata division) and sale by allotment (or lots) can constitute trading stock of a business having that purpose irrespective of whether the land has been so developed and subdivided; and (ii) that business will be carried on for so long as the taxpayer engaged in the effectuation of the purpose of development, etc of the land. The emphasis in St Hubert's Island on the need to have the relevant intention of sale at the time of acquisition of the property in question is, though, without significance for s 70-10 purposes which as I have earlier noted links the intention or purpose of sale with the purpose (or purposes) for which the property is held . 47 Despite St Hubert's Island , R & D Holdings seeks to draw comfort from the following observations made in the five judge joint judgment in John v Federal Commissioner of Taxation [1989] HCA 5 ; (1989) 166 CLR 417 at 429: "The Act defines 'trading stock' in s 6(1) as including 'anything produced, manufactured, acquired or purchased for purposes of manufacture, sale or exchange, and also includes live stock'. The definition looks to the nature of goods that may constitute trading stock and posits that they will constitute trading stock if acquired for any of the specified purposes, including sale. It presupposes that the person by whom they are produced, manufactured, acquired or purchased is or will be engaged in trade in those goods. But it does not render an inquiry into whether or not the person is or will be engaged in that trade irrelevant. A single transaction does not render a person a trader, although, of course, a single transaction may constitute an adventure in the nature of trade. Nor, we think, is a single item acquired for the purpose of manufacture, sale or exchange an item of trading stock, unless the purchaser is or will be engaged in trading goods of that nature. Thus it is relevant to inquire whether the person who acquires an item claimed to be trading stock is a trader in the sense that he is engaged or will be engaged in trading goods of the nature of the item acquired." 48 The issue in John , insofar as presently relevant, was whether shares acquired by a partnership which carried on the business of trading in shares were trading stock within s 6(1) of the 1936 Act . They were found to be such. This context is important in considering whether their Honours were intending in any way to cast doubt upon the majority judgments in St Hubert's Island . In my respectful view, the above should not be taken as intended to address the quite particular and distinctive issues raised in cases of single venture land development and subdivision for purposes of sale by lots. The judgments of Mason J (who participated in the joint judgment in John ) and of Jacobs J in St Hubert contain a particular and detailed course of reasoning to bring what I will call single venture land subdivision cases within the scope of s 6(1). The observations in John as generalisations are, with respect, uncontroversial, but as generalisations suited to the general context exemplified in John . If they were intended to undermine St Hubert's Island in any way, I am of the view this would have been done explicitly, given the particular attention given to land in that case. In saying this I would draw particular attention to the comments of Jacobs J in St Hubert's Island quoted earlier rejecting the alleged need for repeated acts of buying and selling to establish "trading". 49 Though in this case, as in St Hubert's Island , the land together with such transformation as it underwent through development etc was stock in trade, the respective businesses carried on involved a purpose of sale of the transformed property, i.e. in the present matter the sale by lots of a strata subdivided building. 79 In the event then, I am satisfied that as at 30 June 1998 the Bulletin Place property was held for the purposes of sale in the ordinary course of business of the Hallinn Trust. That business was the development, strata subdivision and sale of subdivided lots of the Bulletin Place property: cf St Hubert's Island ; this being one of a number of business activities of the Hallinn Trust. 80 It may well have been the case that this particular business activity was abandoned not particularly long after 30 June 1998: see Mr Bobb's 13 August 1998 note referred to above. It is not necessary for me to decide whether and when this occurred for the purposes of this application. 81 The Bulletin Place property was held for the purpose of strata subdivision and sale of the subdivided lots. As such it was trading stock as defined in the 1997 Act as at 30 June 1998. The election to value it as strata subdivided at market value invoked the operations of ss 70- 45 and 70- 35 of that Act. The resultant net income of the Hallinn Trust calculated for the purposes of s 95 of the 1936 Act was included in the assessable income of R & D Holdings. As the respondent does not contest that as at 30 June 1998 the market value of the land at 30 June 1998 was in the order of $29 million, the assessment for the 1998 tax year should be adjusted accordingly.


case_outcome: distinguished

case_text: The second ("the lack of marketability") contention involves some examination of case law relating to land and in particular the decisions of the High Court in Federal Commissioner of Taxation v St Hubert's Island Pty Ltd [1978] HCA 10 ; (1978) 138 CLR 210 and of Rogers J in Barina Corporation Ltd v Federal Commissioner of Taxation (1985) 4 NSWLR 96. 51 The principal authority relied upon in support of the applicant's "marketability" contention, is the decision of Rogers J in Barina Corporation Ltd v Federal Commissioner of Taxation , above. In that case, Rogers J held that, for the purposes of s 31(1) of the 1936 Act (which related to the valuing of "each article of trading stock"), proposed lots in land acquired for the purposes of subdivision but which was not at that stage subdivided could not be described as "an article of trading stock" distinct from the land in globo. That is not the issue with which I am concerned in this matter. The relevant item of trading stock is the Bulletin Place land itself. As the Landsbury report indicates and as was relied upon by the trustees in making their election, that property was capable of being valued and was itself marketable. For this reason it is unnecessary for me to consider further the Barina case. It has no bearing on this matter.


case_outcome: discussed

case_text: Despite St Hubert's Island , R & D Holdings seeks to draw comfort from the following observations made in the five judge joint judgment in John v Federal Commissioner of Taxation [1989] HCA 5 ; (1989) 166 CLR 417 at 429: "The Act defines 'trading stock' in s 6(1) as including 'anything produced, manufactured, acquired or purchased for purposes of manufacture, sale or exchange, and also includes live stock'. The definition looks to the nature of goods that may constitute trading stock and posits that they will constitute trading stock if acquired for any of the specified purposes, including sale. It presupposes that the person by whom they are produced, manufactured, acquired or purchased is or will be engaged in trade in those goods. But it does not render an inquiry into whether or not the person is or will be engaged in that trade irrelevant. A single transaction does not render a person a trader, although, of course, a single transaction may constitute an adventure in the nature of trade. Nor, we think, is a single item acquired for the purpose of manufacture, sale or exchange an item of trading stock, unless the purchaser is or will be engaged in trading goods of that nature. Thus it is relevant to inquire whether the person who acquires an item claimed to be trading stock is a trader in the sense that he is engaged or will be engaged in trading goods of the nature of the item acquired." 48 The issue in John , insofar as presently relevant, was whether shares acquired by a partnership which carried on the business of trading in shares were trading stock within s 6(1) of the 1936 Act . They were found to be such. This context is important in considering whether their Honours were intending in any way to cast doubt upon the majority judgments in St Hubert's Island . In my respectful view, the above should not be taken as intended to address the quite particular and distinctive issues raised in cases of single venture land development and subdivision for purposes of sale by lots. The judgments of Mason J (who participated in the joint judgment in John ) and of Jacobs J in St Hubert contain a particular and detailed course of reasoning to bring what I will call single venture land subdivision cases within the scope of s 6(1). The observations in John as generalisations are, with respect, uncontroversial, but as generalisations suited to the general context exemplified in John . If they were intended to undermine St Hubert's Island in any way, I am of the view this would have been done explicitly, given the particular attention given to land in that case. In saying this I would draw particular attention to the comments of Jacobs J in St Hubert's Island quoted earlier rejecting the alleged need for repeated acts of buying and selling to establish "trading". 50 While I do not consider the quoted observations from John as being of relevance in this proceeding, there is one aspect of John which is of present assistance. It was indicated in the joint judgment (at 430) that the s 6(1) definition of "trading stock was predicated on the prescribed purpose (i.e. of manufacture, sale or exchange) attending the acquisition of the item in question". However, it was indicated that the definition did not require that the relevant purpose be the sole or dominant purpose". I can see no reason why a like view should not be taken to the like purpose requirement for which the relevant property is held in the s 70-10 definition of the 1997 Act . The significance of this for present purposes is that I have found below that R & D Holdings held the Bulletin Place property at the relevant time for the dual profit making purposes of sale or lease of subdivided lots. These two purposes clearly are not "contrary or inconsistent": John at 430.


case_text: The final authority relied upon by the applicant ARM Constructions Pty Ltd v Federal Commissioner of Taxation (1987) 19 ATR 337 - merely illustrates that whether or not property subdivided in a joint venture will be trading stock under the 1936 Act turned on the purpose or intention of the venturers when acquiring the property. If that purpose was retention, the lots etc subdivided and constructed would not be trading stock notwithstanding that the venturers acknowledged it might be necessary to sell some to discharge indebtedness as in fact happened. It does not assist R & D Holdings in this matter given my findings as to the Trust's purposes in holding Bulletin Place in the 1998 tax year. 53 Mr Richardson gave considerable evidence oral and affidavit on this matter. I should state at the outset that I have treated his evidence with considerable circumspection. I am satisfied that both his evidence and the tendered documents for which he was responsible have on occasion been contrived or framed to advance R & D Holdings' interests. Accordingly I place greater reliance on the contemporary record of events (other than several clearly self-serving R & D Holdings documents to which I will refer specifically below). 54 The Hallinn Trust was, according to Mr Richardson, his family trust and it was his intention in relation to properties purchased by it that "they would be held, so far as practicable, as investment (sic) for the ultimate benefit of my children". His own affidavit, though, does suggest that there are other trusts associated with his "family interests" "the Austcorp 208 Unit Trust": Aff [14]-[15]; and "the A J Richardson Family Trust": Aff [128] though the provenance and character of these trusts is unexplained.


case_text: Given what is said later in these reasons, the only comment I should make here is to reiterate the warning of Hill J in Kidston Goldmines Ltd v Federal Commissioner of Taxation (1991) 30 FCR 77 at 85 that: "there is a danger in substituting for the words of ... subsection [51(1)] language which does not appear in it." 103 Put at its simplest, R & D Holdings' case is that Chapel Road was entitled to claim deductions, pursuant to s 51(1) of the 1936 Act , in respect of interest due to MMLIC under the MMLIC loan on the basis that such interest was incurred in gaining or producing assessable income and, although it says it is unnecessary to show it, that it was also necessarily incurred in carrying on business for the purpose of gaining or producing assessable income. The basis of this claim is that: (a) in the years relevant to Chapel Road (1992 to 1997 income years inclusive) Chapel Road was the registered proprietor of the office building at 410 Chapel Road, Bankstown; (b) the building was a substantial multi level office building, parts of which were let to several different tenants; (c) throughout the 1992-1997 period Chapel Road was deriving rental income in respect of its ownership of the property; (d) that rental income was returned by it as assessable income for the purposes of its income tax returns; (e) Chapel Road continued to derive the rent as income notwithstanding that MMLIC had exercised its powers under the mortgage over the property to take possession in early 1991; (f) throughout the 1992-1997 period Chapel Road was incurring liabilities for interest due to MMLIC under the terms of the Loan Agreement dated 19 March 1990; (g) as legal liability for interest arose, such liabilities constituted outgoings incurred within the meaning of s 51(1) of the 1936 Act; (h) those outgoings were incurred in gaining or producing assessable income, and in carrying on business for the purpose of producing assessable income; (i) the interest liabilities of Chapel Road were (in the same way as for any other "negatively geared" property investment) deductible to Chapel Road pursuant to s 51(1) of the 1936 Act. (j) in the 1992 to 1997 income years the quantum of the deductions exceeded the rental income derived by Chapel Road as a consequence of which it incurred losses pursuant to s 79E of the 1936 Act ; and (k) in each of the 1997, 1998 and 1999 income years, Chapel Road transferred losses to the applicant in accordance with the requirements of s 80G of the 1936 Act (1997 year) or subdivision 170A of the 1997 Act (1998 and 1999 years). 104 In preparing and lodging its income tax returns in respect of the 1992 to 1997 years of income Chapel Road claimed other deductions arising in respect of its ownership of the office building. These were for: (a) repairs and maintenance pursuant to s 53 and s 51(1) of the 1936 Act ; (b) depreciation pursuant to s 54 of the 1936 Act ; (c) capital allowances pursuant to Div 10D of the 1936 Act ; (d) rates and taxes pursuant to s 72 of the 1936 Act ; and (e) other miscellaneous expenses pursuant to s 51(1) of the 1936 Act .


case_text: It has not been suggested that, when Chapel Road entered into the 1987 EMT loan or the 1990 MMLIC refinancing loan, its purpose was to generate transferable losses. On the evidence the purpose of the EMT loan and hence of the MMLIC loan: Commissioner of Taxation v Roberts (1992) 37 FCR 246 at 257 was to purchase and redevelop land by constructing an office block to be used to produce rental income. The money borrowed was used for that purpose.


case_text: There is a large body of authority to the effect that where borrowed money is laid out for the purposes of gaining assessable income this "furnishes the required connection between the interest paid upon it by the taxpayer and the income derived by [it] from its use": Ure v Federal Commissioner of Taxation (1981) 81 ATC 4100 at 4104; see generally Federal Commissioner of Taxation v Munro [1926] HCA 58 ; (1926) 38 CLR 153 at 170-171; Hart v Commissioner of Taxation [2002] FCAFC 222 ; (2002) 121 FCR 206 at [26] - [27] ; reversed by the High Court but not on this point: see [2004] HCA 26 ; (2004) 217 CLR 216. The interest paid is thus "incidental and relevant" to the gaining of that income for the purposes of s 51(1) and s 8-1: Ronpibon Tin NL and Tongkah Compound NL v Federal Commissioner of Taxation [1949] HCA 15 ; (1949) 78 CLR 47 at 56. I would note in passing that the "incidental and relevant" formula is commonly used to describe the necessary connection between the loss or outgoing incurred and the gaining or producing of assessable income, though it has been acknowledged that the formula does not constitute "an exclusive or exhaustive test" of the scope of s 51(1) requirement: Lunney v Commissioner of Taxation [1958] HCA 5 ; (1958) 100 CLR 478 at 497. Importantly, for present purposes, as was said by Gibbs CJ, Stephen, Mason and Wilson JJ in Commissioner of Taxation v Smith [1981] HCA 10 ; (1981) 147 CLR 578 at 586: "What is incidental and relevant ... falls to be determined not by reference to the certainty or likelihood of the outgoing resulting in the generation of income but to its nature and character, and generally to its connection with the operations which more directly gain or produce the assessable income."


case_title: Federal Commissioner of Taxation v Munro [1926] HCA 58 ; (1926) 38 CLR 153


case_title: Hart v Commissioner of Taxation [2002] FCAFC 222 ; (2002) 121 FCR 206


case_title: Ronpibon Tin NL and Tongkah Compound NL v Federal Commissioner of Taxation [1949] HCA 15 ; (1949) 78 CLR 47


case_title: Lunney v Commissioner of Taxation [1958] HCA 5 ; (1958) 100 CLR 478


case_title: Commissioner of Taxation v Smith [1981] HCA 10 ; (1981) 147 CLR 578


case_text: It is appropriate to add that the advantage secured by incurring an interest liability on money borrowed and laid out for the purpose of gaining income, is "the use of borrowed money [for that purpose] during the term of the loan": Steele v Deputy Commissioner of Taxation [1999] HCA 7 ; (1999) 197 CLR 459 at [29] .


case_text: When, for s 51(1) or s 8-1 purposes, an interest liability has been "incurred" on a loan the monies of which have been laid out for the purpose of gaining income, it will be characterised as a "loss" or "outgoing" not only if the liability has been discharged by payment but also if it has been capitalised, even if this results for the future in interest being payable on interest: see Hart v Commissioner of Taxation , above, at [23] ff. As was said in Federal Commissioner of Taxation v James Flood Pty Ltd [1953] HCA 65 ; (1953) 88 CLR 492 at 506: "The word 'outgoing' might suggest that there must be an actual disbursement. But partly because such an interpretation would produce very strange and anomalous results, and partly because of the use of the word 'incurred', the provision has been interpreted to cover outgoings to which the taxpayer is definitively committed in the year of income although there has been no actual disbursement." 120 Commonly, the more problematic question is when has a loss or outgoing been incurred or, to relate the question to s 51(1) and s 8-1, to what year of income is the loss or outgoing referable? 126 Alternatively, it could be said that the mortgage agreement so structured the interest liability that the taxpayer only "completely subjected itself to" the outgoings or losses in respect of interest month by month: Federal Commissioner of Taxation v James Flood Pty Ltd , above, at 506. Each monthly liability was "payable for its period": Commissioner of Taxation (Cth) v Citylink Melbourne Ltd [2006] HCA 35 at [146] .


case_text: There is a large and in some respects not easily reconcilable body of case law on these questions: for a recent statement of some of the principles that are well settled, see City Link Melbourne Ltd v Commissioner of Taxation (Cth) [2004] FCAFC 272 ; (2004) 141 FCR 69 at [27] - [29] ; and, on appeal, Commissioner of Taxation (Cth) v Citylink Melbourne [2006] HCA 35 at [122] ff. It is unnecessary for present purposes for me to enter in significant detail upon the case law much of which is directed towards losses and outgoings in "commercial" activities having characters and purposes far removed from the present.


case_text: There is a large and in some respects not easily reconcilable body of case law on these questions: for a recent statement of some of the principles that are well settled, see City Link Melbourne Ltd v Commissioner of Taxation (Cth) [2004] FCAFC 272 ; (2004) 141 FCR 69 at [27] - [29] ; and, on appeal, Commissioner of Taxation (Cth) v Citylink Melbourne [2006] HCA 35 at [122] ff. It is unnecessary for present purposes for me to enter in significant detail upon the case law much of which is directed towards losses and outgoings in "commercial" activities having characters and purposes far removed from the present. 126 Alternatively, it could be said that the mortgage agreement so structured the interest liability that the taxpayer only "completely subjected itself to" the outgoings or losses in respect of interest month by month: Federal Commissioner of Taxation v James Flood Pty Ltd , above, at 506. Each monthly liability was "payable for its period": Commissioner of Taxation (Cth) v Citylink Melbourne Ltd [2006] HCA 35 at [146] .


case_text: It is useful by way of introduction to begin with Dixon J's well worn statement on s 51(1) in New Zealand Flax Investments Ltd v Federal Commissioner of Taxation [1938] HCA 60 ; (1938) 61 CLR 179 at 207: "To come within [the] provision there must be a loss or outgoing actually incurred. 'Incurred' does not mean only defrayed, discharged, or borne, but rather it includes encountered, run into or fallen upon. It is unsafe to attempt exhaustive definitions of a conception intended to have such a various or multifarious application. But it does not include a loss or expenditure which is no more than impending, threatened, or expected." 123 Putting to one side the circumstances arising subsequent to the entry into the MMLIC loan (to which the respondent attributes decisive significance in negativing any connection between the excess interest and the gaining of assessable income), the terms of the interest liability assumed in the mortgage itself illuminate how the liability to pay interest should be characterised for s 51(1) purposes. 124 The mortgage contemplated that interest would be paid for the two year term of borrowing at either of two interest rates (depending on whether payments that were due were paid punctually or at all) unless the mortgage was terminated earlier by either the mortgagee or the mortgagor (by repaying the principal, etc in accordance with cl 7 of Annexure A to the mortgage). It could properly be said that at the time of entry into the mortgage, Chapel Road assumed a defeasible liability to pay the interest. But to say that all of the loss or outgoing attributable to the interest liability was then "incurred" for s 51(1) purposes would be to disregard how the mortgage itself contrived and structured the interest liability. It was (i) to be calculated on the daily balances of the principal sum or on such sum that remained outstanding; (ii) to be computed from the date on which the first advance was made; (iii) to be calculated and charged to the mortgagor on the last day of each month at the higher rate of interest, but be payable at the lower rate if the mortgagor made (inter alia) all payments due under the mortgage; and (iv) to be paid on the last day of each month; and (v) to be added to the principal on the last day of each month and bear interest thereafter.


case_text: The above regime contemplated that, for each month of the mortgage and at the end of each month, interest would be capitalised or paid (i.e. an actual loss or outgoing would occur), in respect of that month. Each periodic liability whether capitalised or paid represented the cost of the money borrowed for the preceding month. Given that these losses or outgoings would occur monthly across the life of the loan i.e. the interest liability would come home monthly: Nilsen Development Laboratories v Federal Commissioner of Taxation [1981] HCA 6 ; (1981) 144 CLR 616 at 623 the parties themselves created a means of allocating (or apportioning) losses or outgoings to the relevant years of income over the life of the loan. It could be said that they have in substance done for themselves what in Coles Myer Finance Ltd v Federal Commissioner of Taxation [1993] HCA 29 ; (1993) 176 CLR 640 was considered required to be done by way of apportionment over successive income years for s 51(1) purposes in the circumstances of that case: see esp 665-666.


case_title: Coles Myer Finance Ltd v Federal Commissioner of Taxation [1993] HCA 29 ; (1993) 176 CLR 640


case_text: The above is not the only evidence which throws light on the trustee's purpose in holding the property in the 1998 income year. It is this additional evidence that the respondent highlights in its submissions. In addition to the trustee's backdated "1995" minute, the Landsbury valuation and the financing correspondence of 6 and 27 November 1996, reliance is placed on the following. (a) On 16 November 1996 Mr Richardson sponsored an item in the Australian newspaper reporting the commencement of construction of the building as "the only new building specifically designed for the strata market ... in Sydney," undertaken in the course of his "turning his hand to strata subdivision of existing CBD office buildings". "[D]eveloping offices based on strata sales is a trend that has not emerged yet in Australia but is common in Hong Kong," and he "expects to begin marketing the 380 sq m floors in the new building next year." In cross-examination after attempting to minimise the import of his reference to strata designing the building, Mr Richardson accepted what this item clearly was designed to convey. (b) A press release approved by Mr Richardson on 16 December 1997 described the building as "built for its own niche market ... a specific sector where tenants want the individuality of their own floor". (c) On 10 May 1998 a Mr La Grouw of the Amstal Property Group Pty Ltd (a property marketing company) wrote to Mr Richardson setting out fee arrangements for sales or leases achieved of lots in the building. Mr Richardson struck out the portion concerning leasing, leaving the commission arrangements on sales intact, and initialled the letter. (d) On 12 May the selling agent, First Pacific Davies (NSW) Pty Ltd ("FPD") wrote to Mr La Grouw concerning an "information package for prospective purchasers" referring to the property as "strata office floors". (e) A glossy brochure advertising the property as being available "for sale or lease" was prepared and circulated in mid 1998 showing (despite Mr Richardson's denials in cross-examination) a Ms La Grouw as the agent for "sales". (f) In May 1998 the project manager convened a meeting to discuss an action plan for "implementation of coordination sales and leasing program". (g) In June 1988 a strata plan was prepared for lodgement with the Land Titles Office, although preliminary lodgement steps were not carried through to registration. (h) On 16 June 1998 Mr Richardson signed an exclusive agency agreement with FPD appointing it agent to achieve the sale of lots in the building. (i) The building was advertised in the print media in June 1998 "for sale or lease". (j) At mid-June 1998 the trustee's agent stated it was marketing the building for "sale or lease" and actively pursuing "strata sales prospects" in its "Half Yearly Update" prepared for the Trustee. (k) On 24 June FPD (with Mr Richardson's authority) wrote to a number of prospective purchasers offering inspection of the building which it described as a "Boutique Strata Office Building". (l) In the accounts of the trust estate for the year ended 30 June 1998 the property was shown as "land held for resale" at its market value, and distribution of $24,083,800 was made accordingly. (m) On 13 August 1998 Mr Bobb, the accountant, noted in a Hallinn Trust note that "Mr Richardson advised that the Bulletin Place property was not selling at a satisfactory rate. Accordingly the Hallinn Trust may need to retain the property for investment purposes. I advised the trust always has the right to convert any assets from trading stock to investment property". 73 It is unnecessary for me to make a finding as to Richardson Properties' particular purpose or purposes when acquiring the Bulletin Place Property and I decline to do so. I would only say that in the 1993 1995 period Mr Richardson intended to construct an office building on the composite Bulletin Place sites and I incline to the view that, consistent with other office developments in which Mr Richardson had been engaged (albeit through joint ventures), it was likely his then intent involved the multiple purposes (or "open" options) of sale and/or lease after construction because the options themselves were likely to be affected by the contingencies of interest rates, the economy and tenancy take up to use the trio to which Mr Richardson referred in his evidence. 74 Be that as it may, I am satisfied that from at least September 1996 when the Landsbury's valuation was sought, Mr Richardson (hence the trust) was committed to the strata subdivision of the property to be constructed with a view to strata sales. I reject Mr Richardson's explanation that the strata design in the valuation was adopted for the purposes of obtaining finance for the buildings construction insofar as he intended to convey that this was simply an expedient and reflected no change in his "investment" purpose. I consider his comments as reported in the Australian newspaper of 16 November 1996 about strata subdivision and his reasons for, experience in, and expectations of, it better reveal his contemporary purposes (being that of development, subdivision and sale). 75 Those purposes in turn were translated into the bases on which finance was sought from Westpac. Though the 6 November 1997 letter referred to the sale of only half of the building with the rest retained as a long term investment a statement of intent which could only have been made if great store was placed by Mr Richardson in the Landsbury valuation I am satisfied that sale of strata lots was Mr Richardson's dominant purpose. 76 I infer that the form of financing sought and the short repayment period for the Commercial Bills after drawdown (6 months) reflected his expectations of the marketability of the strata lots on completion of the building. As he said in concluding his 6 November 1996 application to Westpac formally seeking finance: "Given the current strong predictions of the market, it is an ideal time to commence this office building and bring it on the market early 1998. We will capitalise on the very high demand that should exist at that time." 127 It is, perhaps, unsurprising that in some number of decisions courts have assumed or have accepted that interest which accrues from day to day is so apportionable: see Federal Commissioner of Taxation v Australian Guarantee Corporation Ltd (1984) 2 FCR 483; Commissioner of Taxation v Mercantile Mutual Insurance (Workers' Compensation) Ltd [1999] FCA 351 ; (1999) 87 FCR 536 at 552; see also Texas Co (Australasia) Ltd v Federal Commissioner of Taxation [1940] HCA 9 ; (1940) 63 CLR 382 at 468 where the "recurrent expenditure" of interest to secure working capital was described as clearly deductible; see also in relation to recurrent expenditure, Commissioner of Taxation (NSW) v Ash [1938] HCA 68 ; (1938) 61 CLR 263 at 282.


case_text: It is, perhaps, unsurprising that in some number of decisions courts have assumed or have accepted that interest which accrues from day to day is so apportionable: see Federal Commissioner of Taxation v Australian Guarantee Corporation Ltd (1984) 2 FCR 483; Commissioner of Taxation v Mercantile Mutual Insurance (Workers' Compensation) Ltd [1999] FCA 351 ; (1999) 87 FCR 536 at 552; see also Texas Co (Australasia) Ltd v Federal Commissioner of Taxation [1940] HCA 9 ; (1940) 63 CLR 382 at 468 where the "recurrent expenditure" of interest to secure working capital was described as clearly deductible; see also in relation to recurrent expenditure, Commissioner of Taxation (NSW) v Ash [1938] HCA 68 ; (1938) 61 CLR 263 at 282.


case_title: Texas Co (Australasia) Ltd v Federal Commissioner of Taxation [1940] HCA 9 ; (1940) 63 CLR 382


case_title: Commissioner of Taxation (NSW) v Ash [1938] HCA 68 ; (1938) 61 CLR 263


case_title: Commissioner of Taxation (NSW) v Manufacturer's Mutual Insurance Ltd (1931) 31 SR (NSW) 575

case_text: The Deputy Commissioner's contention that there was no loss or outgoing is founded in part on the alleged "implicit assumption" in the cases that the deductibility of an outgoing in the year in which the obligation accrued is that it will in due course be met, i.e. that payment in the future is a certainty. This seeks to transform what may be a well-founded factual assumption in a given case as to what will happen in the future, into a legal prerequisite of deductibility. This, in my view, is how the respondent seeks to extract support from the comment of Ferguson J in Commissioner of Taxation (NSW) v Manufacturers' Mutual Insurance Ltd (1931) 31 SR (NSW) 575 at 585 relating to the deductibility of the calculated value of claims unmatured in the financial year in question, that "it is just as certain that some money will have to be paid". His Honour there was not concerned with, and was not addressing, whether the certainty of actual payment was a legal prerequisite to deductibility.


case_text: There is no such prerequisite. It is not an express requirement of s 51(1) or s 8- 1 . To insist upon it would introduce an unacceptable measure of uncertainty into these sections. It would require that the deductibility of losses could often turn on a fallible prophesy as to future events. And this would be so notwithstanding that deductions commonly have been allowable in respect of debts which were never later paid because of the onset of bankruptcy or liquidation: cf Oates v Federal Commissioner of Taxation (1990) 27 FCR 289 at 295. 142 The circumstances of this case, doubtless, provide an extreme example of inability to discharge a liability. But this does not assist the Deputy Commissioner. The articulation of the point at which an otherwise allowable deduction of a loss is to be transformed into a loss which is not allowable for the reasons relied upon by the Deputy Commissioner is obviously beset with no little difficulty. If it is to be the law that there is to be such a point, it is in my view the function of the legislature to identify it. It is not a matter for a court to add such a further and difficult implication and process of speculation into s 51(1) and s 8- 1 .


case_text: A distinct submission of the Deputy Commissioner is that the "excess interest" was of a capital nature and hence was expressly excluded from deductibility under s 51(1) and s 8- 1 . This submission appears to flow from the contention that the excess interest was not incidental and relevant to the derivation of any income of the company: (Respondent's Outline of Submissions pars 38-39). I have rejected the latter contention. I likewise reject the "capital nature" submission. Notwithstanding the financially disastrous position of Chapel Road given its circumstances and the terms of the loan, the interest outgoing was, and remained, "merely interest on a loan": cf Macquarie Finance Ltd v Commissioner of Taxation [2005] FCAFC 205 ; (2005) 146 FCR 77 at [111] ; see generally Steele v Federal Commissioner of Taxation above, at 466-472. 144 My conclusion is, then, that in the relevant income years Chapel Road's monthly losses in respect of interest were allowable deductions. 145 The first of the three loss transfers was recouped by R & D Holdings in the 1997 income year. That transfer was governed by the provisions of s 80G of the 1936 Act . In light of my conclusion that the rental liability was an allowable deduction, and because the other relevant requirements of the 1936 Act on loss transfers have been satisfied, it is unnecessary to set out the provisions of s 80G. R & D Holdings was entitled to recoup the losses in question.


case_text: As to the requirement that there is in fact a "business" being carried on, it is sufficient for present purposes to note the following comments on what constitutes a "business" and the "carrying on of a business". In Federal Commissioner of Taxation v Murry [1998] HCA 42 ; (1998) 193 CLR 605 at [54] , the majority observed: "A business is not a thing or things. It is a course of conduct carried on for the purpose of profit and involves notions of continuity and repetition of actions."


case_text: In Evans v Federal Commissioner of Taxation (1989) 20 ATR 922 at 939 Hill J commented: "The question of whether a particular activity constitutes a business is often a difficult one involving as it does questions of fact and degree. Although both parties referred me to comments made in decided cases, each of the cases depends upon its own facts and in the ultimate is unhelpful in the resolution of some other and different fact situation. There is no one factor that is decisive of whether a particular activity constitutes a business. As Jessel MR said in the famous dictum in Ericsen v Last (1881) 8 QBD 414 at p 416: 'There is not, I think, any principle of law which lays down what carrying on trade is. There are a multitude of things which together make up the carrying on of trade.' Profit motive (but see cf Inland Revenue Commissioners v Incorporated Council of Law Reporting (1888) 22 QBD 279), scale of activity, whether ordinary commercial principles are applied characteristic of the line of business in which the venture is carried on ( Inland Revenue Commissioners v Livingston (1927) 11 TC 538), repetition and a permanent character, continuity ( Hope v Bathurst City Council [1980] HCA 16 ; (1980) 144 CLR 1 at 9; Ferguson v Federal Commissioner of Taxation (1979) 79 ATC 4261, 4264), and system ( Newton v Pyke (1908) 25 TLR 127) are all indicia to be considered as a whole, although the absence of any one will not necessarily result in the conclusion that no business is carried on." 168 I am satisfied that, from the time of MMLIC's entry into possession, a business involving the management and rental of the Chapel Road land and building continued to be carried on until the land was sold. There was a course of conduct engaged in by MMLIC through JLW which involved continuity, repetition and system. The indicia of a business being carried on was there: cf Evans v Federal Commissioner of Taxation , at 939. But who was carrying on that business? 169 Speaking colloquially, it could well be said that at least from when MMLIC went into possession and appointed JLW as its agent to manage the Chapel Road property, MMLIC was continuing to carry on "Chapel Road's business", the moreso as it was the legal owner of the principal asset of the business. This, though, would be a mischaracterisation of what in fact was occurring. And it would treat a business as a "thing", not a "course of conduct carried on".


case_text: The powers so conferred by the mortgage and by the Real Property Act were for the benefit and protection of MMLIC. In entering into possession, appointing JLW as its agent and carrying on a rental business, MMLIC was not supplying services to Chapel Road. Rather it was exercising powers primarily for its own benefit, albeit with due regard to the interests of Chapel Road, and subject to its duty to account to Chapel Road: National Australia Bank Ltd v Sproule (1989) 17 NSWLR 505 at 510; on the duty to account see generally Fisher and Lightwood's Law of Mortgage 19.34 (2 nd Aust ed, 2006); see also on the accounting obligation Chaplin v Young (No 1) (1864) 33 Beav 330 at 336-337.


case_title: Chaplin v Young (No 1) (1864) 33 Beav 330


case_text: There are significant gaps in the material before me concerning the activities engaged in, and the relationships created by, JLW. Though no agency agreement was put in evidence, I am prepared to infer that JLW was, and acted throughout as the agent of MMLIC as mortgagee in possession. There is nothing to suggest that JLW acted as agent of Chapel Road as a receiver and manager. Having demanded and accepted rents from the existing tenants, it may well be that the relationship of landlord and tenant was thus created between it and those tenants by attornment: Tymray Pty Ltd v Mercantile Mutual Life Insurance Co Ltd (1993) NSW Conv R 55-700; but cf Sykes and Walker, The Law of Securities , 248 ff (5 th ed, 1993).


case_text: There is no direct evidence demonstrating that there were new lettings in the periods of present relevance although the case has been conducted on the assumption that there were. From at least JLW documentation from 1998, I am prepared to infer that new lettings were made on occasion. Consistent with JLW being the agent of MMLIC, I infer that MMLIC was constituted the landlord in such cases. I should add, given the express power to lease granted in the mortgage agreement, it is unnecessary to otherwise consider MMLIC's power to lease and the effect of the exercise of that power vis-à-vis Chapel Road: cf Finn v London Bank of Australia (1898) 19 NSWR(L) 364. 165 I am satisfied that at the time at which Chapel Road entered into the MMLIC refinancing loan it was then carrying on, and was intending to continue carrying on a business activity in respect of the ownership, leasing and operation of the Chapel Road property. That was, and was intended to remain, a commercially substantial operation having significant rental income and significant outgoings.


case_text: The mortgage Chapel Road entered into was of property on which an existing business was being conducted a business moreover for which that property has been developed. Even in the absence of the express mortgagee's power to carry on a business on the mortgaged property, I would in the circumstances have been prepared to imply a mortgagee's power to carry on the business being conducted at Chapel Road: cf Mercantile Credits Ltd v Atkins (No 1) (1985) 9 ACLR 757 at 762. The conduct of the rental business was, in my view, integral to the loan and its business efficacy. 167 A business of the type conducted by Chapel Road at the time of the mortgage continued to be conducted after MMLIC went into possession in 1991. I would observe in passing that it is unnecessary in this proceedings to determine by whom that business was conducted in the interregnum period after the s 63(1) notices were given and prior to JLW's appointment as MMLIC's manager.