case_title: Federal Commissioner of Taxation v Orica Ltd [1998] HCA 33 ; (1998) 194 CLR 500

case_text: Lend Lease submitted moreover that the construction of s 160ZD(1) of the Tax Act, by reference to the juridical basis upon which it framed its case, accorded also with 'business commonsense', and further that 'the consideration in respect of the disposal' of the Westpac shares, pursuant to the operation of subss 160ZD(1) and (2), constituted no more than the purchase price expressed to be payable by County Natwest as purchaser of those shares pursuant to the FPA. The Court was referred in that context generally to the following passage in the speech of Lord Wilberforce in Aberdeen Construction Group Ltd v Inland Revenue Commissioners [1978] AC 885 at 892-3: 'The capital gains tax is of comparatively recent origin. The legislation imposing it, mainly the Finance Act 1965, is necessarily complicated, and the detailed provisions, as they affect this or any other case, must of course be looked at with care. But a guiding principle must underlie any interpretation of the Act, namely that its purpose is to tax capital gains and to make allowance for capital losses, each of which ought to be arrived at upon normal business principles. No doubt anomalies may occur, but in straight-forward situations, such as this, the courts should hesitate before accepting results which are paradoxical and contrary to business sense. To paraphrase a famous cliché, the capital gains tax is a tax upon gains: It is not a tax upon arithmetical differences.' I would have difficulty nevertheless in describing the present situation as 'straight forward'. The essence of that aspect of his Lordship's speech in Aberdeen Construction , incidentally, was cited with approval in Commissioner of Taxation v Orica Ltd [1998] HCA 33 ; (1998) 194 CLR 500 at 545 [118] (Gummow J). 66 Pointing out moreover that s 160ZD contains no definition of 'property' (which is strictly correct, though s 160A defines ' asset ' as ' any form of property ' and lists a number of examples specifically), the Commissioner drew attention to what appeared in the joint judgment of Gaudron, McHugh, Kirby and Hayne JJ in Orica at 536-537: 'We have no doubt that the rights acquired by the taxpayer against MMBW under the Principal Assumption Agreement are an asset for the purposes of Pt IIIA. The contention, accepted by the majority of the Full Court, that the right acquired by the taxpayer "was merely a personal right... which was incapable of being assumed by a third party" must be rejected. The conclusion that the taxpayer's right against MMBW was only a right to compel MMBW to specifically perform its obligations appears to have been founded in the proposition, adopted by the primary judge, that "no conceivable assignee would have any interest in enforcing MMBW's obligation which was to discharge [the taxpayer's] obligation to the debenture holders". It may be doubted that enquiring whether there is any person who would have a commercial interest in taking an assignment will determine whether something is an item of property capable of assignment. The question is whether the rights are capable of assignment, not whether anyone is interested in taking an assignment.' I am unable to see how that passage is operable relevantly in relation to the present context. 67 In relation to the Commissioner's invocation of Orica in any event, it is perhaps material for present purposes to record the background circumstances there involved. A publicly listed company undertook to repay loan funds the subject of issued debentures when the same fell due after certain terms of years, and subsequently liability for that repayment was assumed by a third party. It was held by a majority of the High Court that the assumption party's promise to perform was not income, and it was further held by a reduced majority, more relevantly for present purposes, that the company's rights against the assumption party constituted an asset for capital gains tax purposes, and that accordingly the company's rights were partly discharged or satisfied, and hence were partly disposed of, on each occasion that the assumption party effected a reduction of the principal sum the subject of the debentures. Moreover to the extent that the amount of each payment exceeded that part of the cost of the rights attributable to the repayment, it was further held that a capital gain should be accordingly imputed to the company.


case_outcome: referred to

case_text: It was pointed out by Lend Lease moreover that the notion of ' receive ' appearing in s 160ZD(1) should be accorded its ordinary meaning, for instance as contained in the Macquarie Dictionary (Revised Third Edition), that meaning being 'to take into one's hand or one's possession (something offered or delivered)' . A similar meaning was said to have been accorded in a social security context in Jazazievska v Secretary, Department of Family and Community Services (2002) 65 ALD 424 at 435 [39] (Cooper J), in the context of an attempted recovery of an overpayment of social security payments, where the statutory notion under scrutiny included the words 'received in good faith'. Lend Lease contended that '[f]or a taxpayer to have "received" money or property for the purposes of s 160ZD(1), [the taxpayer] must have acquired possession of that money from... someone else', and Lend Lease cited the following passage from the speech of Lord Lindley in Gresham Life Assurance Society Ltd v Bishop [1902] AC 287 at 296: 'But to constitute a receipt of anything there must be a person to receive and a person from whom he receives, and something received by the former from the latter, and in this case that something must be a sum of money.' In the present context, that 'someone else' from whom the asserted '[a]dditional non-cash consideration' was received would need to have been County Natwest or Westpac; in either case there is inherent difficulty which the Commissioner was required to address.


case_outcome: cited

case_title: Gresham Life Assurance Society Ltd v Bishop [1902] AC 287


case_text: In the foregoing context, Lend Lease cited dicta of a Full Federal Court in Burrill v Commissioner of Taxation (1996) 67 FCR 519 at 523 (Jenkinson, Olney and Sundberg JJ) that '[i] t is a fundamental principle of Australian income tax law that rights to receive money and obligations to pay money are taken into account in calculating income and outgoings, gains and losses, at their nominal value' . Reliance was placed by the Full Federal Court in Burrill incidentally upon the following dicta of the High Court in Federal Commissioner of Taxation v Myer Emporium Ltd [1987] HCA 18 ; (1987) 163 CLR 199 at 216-217 (Mason ACJ, Wilson, Brennan, Deane and Dawson JJ): 'The accounting basis which has been employed in calculating profits and losses for the purposes of the Act is historical cost... not economic equivalence... And so a taxpayer who lends money for a stipulated period at interest is treated as exchanging the money lent for a debt of the same amount, unless the loan is made at a discount or premium, in which case there may be a gain or loss on capital account... . In the ordinary case, the debt is brought to account in the same amount as the money lent. The amount of the debt is not reduced because the lender is kept out of the use and enjoyment of the money lent for the period of the loan.' It was contended by the Commissioner that the foregoing dicta 'does not address the statutory requirements in s 160ZD(1)(c)'. The difficulty for the Commissioner remains however in seeking to establish that the par (c) expression 'an amount or amounts of money or property' accommodated the controversial notion of '[a] dditional non-cash consideration on disposal' appearing in [16] above. 52 The further response of Lend Lease to what was propounded by the Commissioner concerning the value of the 'right to share in Westpac dividends' was that the Commissioner thereby unjustifiably and impermissibly elevated 'a supposed economic equivalence to the status of a contractual right capable of comprising consideration'. Lend Lease cited in that regard Commissioner of Taxation v Citylink Melbourne Ltd [2006] HCA 35 ; (2006) 228 ALR 301, where at [95], Crennan J (with whose reasons Gleeson CJ and Gummow J agreed), observed as follows: '... it was contended that the net present value of the liability to pay the concession fees should be used to calculate allowable deductions. The Commissioner applied for leave to amend the grounds of appeal to raise this point... Leave to amend was refused. Present value discounting of outgoings, payable in the future, is currently under consideration, together with other methods for assessment and deduction, spread over the life of certain financial arrangements (her Honour thereby referring to the Tax Laws Amendment (Taxation of Financial Arrangements) Bill 2006, exposure draft, December 2005) . However, the accounting basis used to date in Australian tax law for the purposes of assessment and deductions has been historical cost accounting, rather than economic equivalents.' Citation was made by her Honour from both Burrill and Myer Emporium.


case_title: Federal Commissioner of Taxation v Myer Emporium Ltd [1987] HCA 18 ; (1987) 163 CLR 199


case_text: The further response of Lend Lease to what was propounded by the Commissioner concerning the value of the 'right to share in Westpac dividends' was that the Commissioner thereby unjustifiably and impermissibly elevated 'a supposed economic equivalence to the status of a contractual right capable of comprising consideration'. Lend Lease cited in that regard Commissioner of Taxation v Citylink Melbourne Ltd [2006] HCA 35 ; (2006) 228 ALR 301, where at [95], Crennan J (with whose reasons Gleeson CJ and Gummow J agreed), observed as follows: '... it was contended that the net present value of the liability to pay the concession fees should be used to calculate allowable deductions. The Commissioner applied for leave to amend the grounds of appeal to raise this point... Leave to amend was refused. Present value discounting of outgoings, payable in the future, is currently under consideration, together with other methods for assessment and deduction, spread over the life of certain financial arrangements (her Honour thereby referring to the Tax Laws Amendment (Taxation of Financial Arrangements) Bill 2006, exposure draft, December 2005) . However, the accounting basis used to date in Australian tax law for the purposes of assessment and deductions has been historical cost accounting, rather than economic equivalents.' Citation was made by her Honour from both Burrill and Myer Emporium. 68 It is appropriate to add for completeness that the following dictum of R D Nicholson J in Integrated Insurance Planning Pty Ltd v Commissioner of Taxation (2004) ATC 4054 at [128] was said by the Commissioner to be to 'like effect': 'An "asset" for the purposes of capital gains is defined in the relevant Act to mean "any form of property and includes... a chose in action... (and) any other right" (s 160A(a)). The rights which the applicants acquired as a consequence of the deeds were a chose in action and/or a right and hence an asset. The position referred to in TR 2001/9 and CGT Determination CGT 3 related only to a simple debt in which the taxpayer had no contractual right to a waiver upon achievement of the relevant contingent (sic) . The present position is therefore different because the taxpayer's rights gave them a CGT asset (s 105-5(1)). They arose as the consequence of a CGT event D1.' I have difficulty in perceiving a viable basis for the Commissioner's invocation of Integrated Insurance in relation to circumstances such as here involved. The Commissioner's postulation of a so-called 'right to share in Westpac dividends' would impermissibly elevate a situation of 'a supposed economic equivalence to the status of a contractual right capable of comprising consideration', as I have already pointed out in my citation of dicta in Citylink Melbourne .


case_text: Lend Lease referred also in the present context to the implications relevantly of Prime Wheat Association Ltd v Chief Commissioner of Stamp Duties (1997) 42 NSWLR 505 where at 511, Gleeson CJ rejected the characterisation of what is commonly described as a 'mortgage back' transaction, put in place pursuant to a share sale agreement whereby ownership of the shares was to pass to the purchasers on completion of that agreement, but payment for the shares was to be made by an initial deposit, and thereafter by instalments over 20 years, and to be secured partly by the grant of a mortgage over those shares in favour of the vendor. Though in the minority in the outcome in the New South Wales Court of Appeal, his Honour observed ( obiter ) at 511 as follows: 'There is no doubt, in the present case, that the transaction in question was one under which the vendor of the shares provided financial accommodation to the purchasers, or that the instrument in question made provision for such financial accommodation. It does not follow, however, the form of financial accommodation agreed between the parties was by way of loan. To describe the transaction as being substantially one which involved a mortgage back to the vendor does not provide an answer to the critical questions in the case, and, as was submitted on behalf of the appellants, carries a risk of resolving the issue by reference to considerations of economic equivalence rather than by reference to an accurate characterisation of the instrument under consideration.' 54 Given that contrary to Lend Lease's foregoing submissions, Lend Lease did derive for Part IIIA purposes the controversial 'additional non-cash consideration' of $144,263,243 propounded by the Commissioner, and did so ' in respect of the disposal of an asset ' within the scope of operation of s 160ZA(4), as to which see paragraphs (a) (c) and (d) thereof, so much was asserted by the Commissioner to have comprised an entitlement in the nature of 'a chose in action' , and therefore an ' asset ' within the Part IIIA definition contained in s 160A, being a chose to retain beneficial ownership of the shares until the completion of the transaction of sale, and therefore to receive any dividend paid by Westpac prior to completion. Lend Lease contended nevertheless that the dividends, being a part or a so-called 'manifestation' of the 'non-cash consideration', were included in the assessable income of Lend Lease 'as a result of the disposal' of the Sale Shares under the FPA having occurred within the purview of par (b) of s 160ZA(4). Lend Lease emphasised in that context that by virtue of par (d) of s 160ZA(4), 'if the notional capital gain does not exceed the included amount or the sum of the included amounts no capital gain is deemed for the purposes of this Part to have accrued to the taxpayer during the year of income in respect of the disposal of the asset' , and further that since the dividends included in the assessable income of Lend Lease totalled $162 million, that figure exceeding the amount of the capital gain assessed by the Commissioner, it followed that by virtue of par (d) of s 160ZA(4), no capital gain could or should be taken to have accrued to Lend Lease by operation of law.


case_text: It was further pointed out by Lend Lease that the operation of s 160ZA(4) was consistent with the principle as well as the policy of the general fiscal law that a taxpayer should not be taxed twice in respect of the same profit or gain. That traditional precept was acknowledged in the Income Tax Assessment Amendment (Capital Gains) Bill 1986 at page 55, in relation to the then foreshadowed enactment of s 160ZA(4), in the following terms: 'Broadly stated, where an amount of a capital gain that has accrued to a taxpayer in respect of the disposal of an asset and an amount included in respect of the disposal by virtue of the operation of another provision of the Principal Act (e.g. section 25) relate to the same profit or gain, sub-section 160ZA(4) operates to provide for the reduction of the capital gain. The capital gain is to be reduced by so much of the difference between the "notional" and "actual" amounts (referred to in paragraphs (4)(b) and (c)) as does not exceed the amount of the capital gain. The "actual amount" is the amount that has been or will be included in the assessable income of the taxpayer otherwise than under Part IIIA in respect of any year of income as a result of the disposal of the asset. The "notional amount" is the amount that would have been so included in the assessable income if the consideration received in respect of the disposal had been reduced by an amount equal to the capital gain. Sub-section 160ZA(4) will apply, for example, to a taxpayer who disposes of land and building where the profit on disposal is included under section 25 of the Principal Act. If the consideration in respect of the disposal were reduced by the amount of the capital gain (as required by paragraph (4)(c)), generally the amount that would be included in assessable income of the taxpayer under section 25 would also be reduced by the amount of the capital gain. Accordingly, the "notional amount" would be less than the "actual amount" by the amount of the capital gain, resulting in the capital gain being reduced to nil. Therefore, the same amount of profit is not taxed more than once.' That policy of the general fiscal law was said by Lend Lease to reflect the principle of interpretation adverse to any implication of double taxation, as enunciated by Dixon J (as he then was) in Executor Trustee & Agency Co of South Australia Ltd v Federal Commissioner of Taxation [1932] HCA 25 ; (1932) 48 CLR 26 at 44, as follows: 'No interpretation of a taxing Act should be adopted which results in the imposition of double taxation unless the intention to do so is clear beyond any doubt.'


case_text: Lend Lease submitted accordingly that the imposition of what it portrayed as the attempted 'double taxation... of an asset' on the part of the Commissioner, implicitly by reference to Lend Lease's derivation of dividend income irrespective of its rebateable character, would be an 'incongruous result', and 'capricious' or 'irrational', and further that where an interpretation of legislation is reasonably open which does not lead to any such result, and accords moreover with the evident purpose of the legislation, that interpretation should be preferred by the Court. Lend Lease cited in that regard Cooper Brookes (Wollongong) Pty Ltd v Commissioner of Taxation [1981] HCA 26 ; (1981) 147 CLR 297 at 320, where in the joint judgment of Mason and Wilson JJ, the following appears: 'Generally speaking, mere inconvenience of result in itself is not a ground for departing from the natural and ordinary sense of the language read in its context. But there are cases in which inconvenience of result or improbability of result assists the court in concluding that an alternative construction which is reasonably open is to be preferred to the literal meaning because the alternative interpretation more closely conforms to the legislative intent discernible from other provisions in the statute.'


case_text: I have earlier referred to the Commissioner's submissions under the heading 'Issues arising on the appeal', but as I have sought to emphasise, only in outline, given the extent that the Commissioner's case in the course of presentation of submissions was reframed purportedly in reply. An emphasis of the Commissioner's case was that the s 160ZD(1) notion of 'the consideration in respect of a disposal of an asset' , by reason of the inclusion of those words 'in respect of' , draws 'the widest possible connection between the terms of the disposal and the receipt of money or property'. Attention was drawn by the Commissioner in that regard to State Government Insurance Office (Qld) v Crittenden [1966] HCA 56 ; (1966) 117 CLR 412 at 416, where Taylor J referred to the expression 'in respect of' appearing in legislation, though being 'difficult of definition' , as having nevertheless and by virtue of longstanding judicial precedent 'the widest possible meaning of any expression intended to convey some connexion or relation between the two subject matters to which the words refer' . The legislative context there addressed in Crittenden was that of personal injury insurance. More recently in Moneywood Pty Limited v Salamon Nominees Pty Limited [2001] HCA 2 ; (2001) 202 CLR 351 at 380, Gummow J adopted that earlier dictum in Crittenden , the context in Moneywood also being other than that of revenue law. Moreover at 398 in Moneywood , Kirby J observed that '[t] he width of the words "in respect of" has been the subject of many juridical observations. There is no reason in the present context to cut down that width.' The Commissioner's submissions thereafter focused with emphasis upon dicta of the majority judgment of Gummow, Kirby and Hayne JJ in Chief Commissioner of State Revenue v Dick Smith Electronics Holdings Pty Ltd [2005] HCA 3 ; (2005) 221 CLR 496, which involved a consideration of the meaning of 'dutiable value' in relation to ' dutiable property that is subject to a dutiable transaction' appearing in the stamp duty legislation of the State of New South Wales. Though the context in Dick Smith Electronics was that of revenue law, the issue there arose in a stamp duty and not an income tax context, involving the extent of stamp duty exigible upon agreements for the sale or transfer of shares the subject of issued capital in a company. The present circumstances relate of course to income tax assessable upon the monetary value of shares the subject of an agreement for sale or transfer of property, being of course shares in Westpac.


case_title: Moneywood Pty Limited v Salamon Nominees Pty Limited [2001] HCA 2 ; (2001) 202 CLR 351


case_text: I have earlier referred to the Commissioner's submissions under the heading 'Issues arising on the appeal', but as I have sought to emphasise, only in outline, given the extent that the Commissioner's case in the course of presentation of submissions was reframed purportedly in reply. An emphasis of the Commissioner's case was that the s 160ZD(1) notion of 'the consideration in respect of a disposal of an asset' , by reason of the inclusion of those words 'in respect of' , draws 'the widest possible connection between the terms of the disposal and the receipt of money or property'. Attention was drawn by the Commissioner in that regard to State Government Insurance Office (Qld) v Crittenden [1966] HCA 56 ; (1966) 117 CLR 412 at 416, where Taylor J referred to the expression 'in respect of' appearing in legislation, though being 'difficult of definition' , as having nevertheless and by virtue of longstanding judicial precedent 'the widest possible meaning of any expression intended to convey some connexion or relation between the two subject matters to which the words refer' . The legislative context there addressed in Crittenden was that of personal injury insurance. More recently in Moneywood Pty Limited v Salamon Nominees Pty Limited [2001] HCA 2 ; (2001) 202 CLR 351 at 380, Gummow J adopted that earlier dictum in Crittenden , the context in Moneywood also being other than that of revenue law. Moreover at 398 in Moneywood , Kirby J observed that '[t] he width of the words "in respect of" has been the subject of many juridical observations. There is no reason in the present context to cut down that width.' The Commissioner's submissions thereafter focused with emphasis upon dicta of the majority judgment of Gummow, Kirby and Hayne JJ in Chief Commissioner of State Revenue v Dick Smith Electronics Holdings Pty Ltd [2005] HCA 3 ; (2005) 221 CLR 496, which involved a consideration of the meaning of 'dutiable value' in relation to ' dutiable property that is subject to a dutiable transaction' appearing in the stamp duty legislation of the State of New South Wales. Though the context in Dick Smith Electronics was that of revenue law, the issue there arose in a stamp duty and not an income tax context, involving the extent of stamp duty exigible upon agreements for the sale or transfer of shares the subject of issued capital in a company. The present circumstances relate of course to income tax assessable upon the monetary value of shares the subject of an agreement for sale or transfer of property, being of course shares in Westpac. 58 The circumstances in Dick Smith Electronics were that an agreement for the acquisition of the entire issued capital of a private company stipulated for a substantial purchase price for the shares less a so-called 'dividend amount' equal to the target company's retained earnings up to a certain maximum sum, and for the vendors (being the existing shareholders) to cause the target company to declare dividends equal to those retained earnings in favour of those existing shareholders. The takeover agreement further stipulated that on completion thereof, the purchaser would both pay the purchase price to the vendor shareholders and provide the finance, by way of additional consideration on the takeover, to enable the target company to discharge the debts owing to the existing vendor shareholders arising out of the dividends thus declared but remaining unpaid. Thus immediately prior to completion of the takeover agreement, the target company declared but did not distribute in cash those substantial dividends, and thereby created a debt equal to the amount thereof due by the target company to the existing shareholders, that is of course, the vendors of the shares in the target company. At the time of completion of the takeover agreement, the purchaser paid to the vendors accordingly the purchase price for their shares, less the amount of the dividend declared and distributed in their favour, but nevertheless simultaneously lent to the target company the residue of the purchase price, which equalled the dividend required to be so declared. Thereafter the company, being thus funded for the intended purpose, satisfied in cash the dividend declared in favour of the vendor shareholders. The takeover agreement was assessed to stamp duty what was identified as the consideration for the shares. 59 It may be seen that the present circumstances differ from those in Dick Smith Electronics . Whereas as indicated above, the purchaser there was obliged to in effect fund the target company so that it could pay the dividend to the vendors, the amount whereof would reduce the stipulated purchase price, and the vendor was not required to complete other than upon the footing of performance of that obligation, and so that the vendor would receive the dividend as well as the sale price for the shares stipulated in the agreement for sale which became the subject of transfer. The majority concluded that the vendor was entitled to receive, and the purchaser obliged to procure, that the vendors did receive on completion, as part of the total sale consideration required to be furnished by the purchaser, payment by the target company of the outstanding dividends already due to the vendors though in their capacity as shareholders of the target company. The majority held that the dutiable consideration comprised the several promises on the part of the purchaser recorded in the takeover agreement, in consequence whereof the vendors received an agreed monetary amount, whereof part was by way of dividend from the target company pursuant to the takeover agreement. 60 After referring to the well known dictum of Dixon J (as he then was) in Archibald Howie Pty Ltd v Commissioner of Stamp Duties (NSW) [1948] HCA 28 ; (1948) 77 CLR 143 at 152 as to the notion of the term consideration, being: '... the word "consideration" should receive the wider meaning or operation that belongs to it in conveyancing rather than the more precise meaning of the law of simple contracts... the consideration is rather the money or value passing which moves the conveyance or transfer. ' and also to what was said by Lord Wilberforce in another stamp duty context in Shop and Store Developments Ltd v Commissioner of Inland Revenue [1967] 1 AC 472 at 503 as to the term 'consideration', being: 'In the first place, the phrase "consideration for the transfer or conveyance" seems to me to refer clearly and naturally to that which passed to the transferor company "for" the transferred properties....' the reasons of the majority judgment in Dick Smith Electronics , under the heading 'The error of the Supreme Court' , continued at 519-520 as follows: 'The result of this analysis is that the primary judge and the majority of the Court of Appeal erred in the approach that they respectively took to the application of the Act to the uncontested facts. Approached correctly, the case may be summed up as follows. The promises which the parties made and recorded in the Agreement can be sufficiently described as being: (1) the Vendors' promise to transfer the Shares to the Purchaser; (2) the Vendors' promise to procure the Company to declare as large a dividend as it could (up to a maximum of $27 million); (3) the Purchaser's promise to pay the Vendors $114,139,649 minus the Dividend Amount; and (4) the Purchaser's promise to "fund" the Company's payment of the dividend. The consideration for each of those promises is to be found in the promises made by the opposite party. However, what for the purposes of s 21(1) of the [Duties] Act moved the transfers by the Vendors was performance of all of the various stipulations in the Agreement, not merely the promises which the Purchaser made. To put the same point in other words: why identify the consideration "for" the transfers as only what the Purchaser gives up? The Vendors transferred the Shares in return for receiving some $114 million, of which part was received from the Company because the parties had agreed that this should be so.' 61 The Commissioner contended that 'the same analysis applies here', though of course Dick Smith Electronics involved the issue as to the stamp duty exigible on the 'dutiable value' of the totality of the shares in a private company incorporated in New South Wales the subject of sale by two equal offshore incorporated shareholders, whereas the present context involves the different revenue issue as to whether capital gains tax is exigible in relation to the capital gain controversially postulated by the Commissioner in respect of the disposal of a significant but apparently far from being a controlling parcel of shares in a public company (of course Westpac). The valuable consideration which was said by the Commissioner to have 'moved' the disposal here of the subject parcel of Westpac shares from Lend Lease to County Natwest, as I have already foreshadowed, was 'the money' (ie the two monetary instalments of purchase price payable at different times and totalling $353,297,356), and additionally the value of the so-called 'contractual rights' to share in future dividends to be paid by Westpac in respect of that subject parcel, which the Commissioner characterised as '[a]dditional non-cash consideration' and asserted to have a value of $144,236,243 ( ante ). Those future dividends equalled what might be declared by Westpac during the period of time between entry into the FPA on 7 June 1996 and its completion. Thus it was the Commissioner's explanation that '[i]t is sufficient for the Commissioner's point that [Lend Lease's] contractual rights as a whole are assignable, subject to consent', in order for its Part IIIA case to qualify within the s 160ZD(1)(c) expression 'property other than money as a result or in respect of the disposal' . It was further said by the Commissioner that Lend Lease's contractual rights were capable in their nature of assumption by third parties and also of assignability, albeit that consent was required, and that prior to the FPA, Lease Lease 'did not have the contractual rights under it', but by entering into the FPA, it 'obtained or received those rights'. Lend Lease rejoined to the effect that the Commissioner's characterisation of Lend Lease's contractual rights as a whole was different to that characterisation elsewhere given by the Commissioner as rights 'to retain beneficial ownership', in either case '... until the Completion Date'. 62 In support of the Commissioner's case in any event, the Commissioner submitted that the majority of the High Court found in Dick Smith Electronics that what was received by the vendors by virtue of the takeover agreement there involved included the substantial dividend to be paid to the vendors prior to completion, and that the vendors had bargained with the purchaser to achieve that result (pursuant of course to the takeover agreement), the 'dividends' in that context having been declared and satisfied out of the fund comprising historically retained earnings of the target company. However as I have sought to point out, the circumstances relevantly involved in Dick Smith Electronics do not provide the extent of the analogy the commissioner sought to invoke. It was further emphasised by the Commissioner in any event that '[t]he amount of consideration which moved the sale was the receipt of the sum including the dividends and it did not matter that part was paid from the target company rather than the purchaser', and further therefore that '[t]he consideration for the transfers was not only what the purchaser gave up, but also what was agreed would be received by the vendors from the target' company. I have of course already made observations concerning what seem to me to have been features in Dick Smith Electronics distinguishable from the present case. 63 It was pointed out further by the Commissioner that '... even the minority judges in Dick Smith Electronics (Gleeson CJ and Callinan J) were prepared to accept that the promise to fund the dividend, as opposed to the performance of that promise, was a 'non-monetary consideration for the agreement to transfer on sale'. In that regard however Gleeson CJ and Callinan J observed (at 510) that while they were '... prepared to accept that the obligation accepted by [Dick Smith Electronics]', being the obligation of the purchaser to lend to that target company 'an amount sufficient to put it in funds to pay the dividend ', they decided nevertheless that '[w]e cannot accept that it is monetary consideration for the transfer on sale'. Be that as it may, the findings made by the High Court majority in Dick Smith Electronics were described by the Commissioner to be consistent with the approach taken in Colonial Mutual Life Assurance Society Ltd v Federal Commissioner of Taxation [1953] HCA 68 ; (1953) 89 CLR 428, where it was held that the payment of amounts equal to 90 per cent of all rents, as and when received by lessees of a city mixed development, constituted in reality outgoings of a capital nature, being part of the capital costs for the acquisition of an asset comprising that development, and were therefore not deductible. In other words the terminology adopted by contracting parties in their contract does not necessarily determine the character of a transaction the subject of that contract at least for revenue purposes, irrespective of the nature and extent of the divergence of views between the majority and minority of the High Court in Dick Smith Electronics . So much may be readily accepted but the issue remains as to whether the Commissioner thereby gains the assistance it seeks from Dick Smith Electronics . 64 It was said by the majority in Dick Smith Electronics in any event at 519 that '[i] t was only in return for that total sum (paid by the various steps and in the various forms required by the Agreement) that the Vendors were willing to transfer to the Purchaser the bundle of rights which their shareholding in the Company represented', and further that '... the amount of monetary consideration for the transactions of sale and transfer of the Shares... was to come as a dividend from the Company...'. It was further said by the majority at 519 '[t] hat which passed to the Vendors "for" the transfers of the Shares was "consideration" which was "monetary" rather than "non-monetary" within the meaning of s 21(1) of the [Stamp Duties] Act' , since '[t] he transaction was to be assessed to duty on the footing that it was performed... both sides addressed their arguments by reference to the implementation of the transaction [and] [t] he Commissioner correctly took the stance that the intended result of the transaction, seen as a whole, was the receipt by the Vendors of [that total sum]'. 65 It was contended by the Commissioner that in the present case, '[t]he relevant connection between the right to receive a portion of future dividends and the disposal of the Westpac shares was demonstrated by the FPA itself', the Commissioner thereby drawing attention to clauses 3.1, 3.2, 3.3, 5.1 and 5.2 of the FPA, which have been already reproduced in these reasons, and also to clause 7.1(b), which the Commissioner described as having 'provided for an automatic reduction in the Purchase Price of the shares in the circumstances specified in clause 7.9,' whereby Westpac might declare a so-called 'excessive dividend', as quantified by the Commissioner, '... in excess of 70c per share for any fiscal year'. Purportedly upon the basis of the entitlements thus postulated by the Commissioner to be conferred by the FPA, the Commissioner submitted that Lend Lease 'was entitled to dividend rights as a shareholder in Westpac until the Completion Date, subject to the limits imposed by the transaction documents', being limits described by the Commissioner as 'significant' and referable to what the Commissioner described as 'limited dividends', 'no rights to capital in the shares', 'sterilised voting', and 'restriction on dealing in the shares without consent'. There are I think at least conceptual difficulties with that analysis on the Commissioner's part, aside from the express terms of the FPA in any event. Be that as it may, the Commissioner categorised those rights to ongoing entitlement to dividends as 'property' within ss 160ZD(1) and 160K(3) of the Tax Act. 71 It was next submitted by the Commissioner that '[i]t is not necessary that the value in the consideration for the shares should flow directly from County Natwest as purchaser for reasons discussed... in Dick Smith [Electronics]', and I was referred to what the majority in Dick Smith Electronics was said by the Commissioner to have held, being that '... the dividends received by the vendor from the target company moved the transaction and constituted part of the consideration for the transaction'. However a similar observation is not sufficiently apposite to the present circumstances. The subject dividends on the Westpac shares were to be and were in fact declared and paid by Westpac in the ordinary periodic course in relation to the entirety of its share capital listed for quotation on the Australian Stock Exchange, whereof only a relatively minor proportion were the subject of sale (ie from Lend Lease to County Natwest), and not for comparison as occurred in Dick Smith Electronics , by way of a single or isolated dividend distribution of accumulated retained earnings of the controlled subsidiary made in the context of and in order to facilitate the takeover, albeit also at arm's length, of the entirety of the issued capital of the offshore target company InterTAN Australia Ltd by way of takeover by Dick Smith Electronics Holdings Pty Ltd. The Commissioner contended nevertheless that s 160ZD(1) did not support 'a restrictive interpretation' which 'only picks up consideration which is received in a tangible or physical way', asserting in that regard that '[t]he words that govern the relationship between the consideration and the disposal are of the widest import', and were 'not to be read down by a reference to any notion of tangibility', whatever might be effectively conveyed, if at all, by that non-statutory notion of 'tangibility' so used by the Commissioner. 72 The Commissioner drew attention in any event to the way in which Lend Lease characterised the rights conferred in its favour by the FPA, and submitted that '[t]he dividends were commercially regarded as part of the consideration for the disposal of the shares', since '[t]he value of the dividend flow was clearly something which was in the mind of the Lend Lease Corporation Board in making its decision to authorise the transaction to proceed'. The Commissioner next referred, inter alia , to reports of 28 March 1996 made to the Lend Lease Board meeting held on 29 March 1996 (see [2]-[3] above), which summarised 'the effects of the proposal' submitted to the Lend Lease board by County Natwest in the context of the current market value of the Westpac shares, together with the realisable market value of the Lend Lease holding of Westpac shares if sold 'today' after allowing for 'market discount' (given the size of the subject parcel proposed to be acquired), and the implications of capital gains tax, and the value generally of the so-called 'County Deal'. That report suggested the provision of the following 'explanation to our shareholders and the market' to include the facts that 'Lend Lease has secured the major part of the gain from the restructuring of Westpac and now believes it is appropriate to lock in that value', pointing out thereby that '[t]he arrangements with County have allowed Lend Lease to take back its original capital of $625 million plus an abnormal gain of $75 million', and further that '[t]he shareholders will participate in the major part of the increase in value of the Westpac shares through fully franked dividends over the following 5 years prior to the emergence of profits on investments currently being undertaken.' The inference is open to be drawn that the internal Lend Lease evaluations of the realisation proposal were commercially and not taxation driven, though understandably the Lend Lease decision-makers were concerned to receive expert advice as to any unfavourable taxation implications which might be involved. As I have elsewhere indicated, the Commissioner did not ultimately pursue any case based upon or referrable to the tax avoidance provisions of Part IVA of the Tax Act. 83 The Commissioner next drew attention to the circumstance that before entering into the FPA with County Natwest (as so-called 'Purchaser'), Lend Lease 'did not have the contractual rights under it', but '[b]y entering [into] the FPA it obtained or received those rights'. Lend Lease's 'central submission', so described by the Commissioner, and said to have been advanced by Lend Lease for the first time orally in reply, was as follows (transcript p.140): 'When the applicant disposed of the shares the rights that [counsel for the Commissioner] claims, as [additional] consideration, evaporated. They merged in the transfer. They were spent. The applicant didn't have those rights following the transfer. They were consideration for the transfer, they were terms of the contract for the transfer. It's very easy when talking about consideration, to slide between consideration in the contractual sense, being the mutual exchange of promises, and consideration in the conveyancing sense. The High Court pointed that out on a number of occasions, in Archibald Howie, more recently in Dick Smith. We are concerned with consideration which moves the contract and which one is left with, after the transfer. Not with the mutual promises which comprise contractual consideration. The consideration which the applicant was left with, after the transfer, what it got in exchange for what it gave, was the $3.53. It wasn't the additional promises that my friend relies upon.' The Commissioner sought to emphasise in the above context that contractual rights have value, and in their nature are capable of assignment, and repeated its reliance on Dick Smith Electronics essentially to the extent I have earlier summarised; the Commissioner asserted moreover that what County Natwest did was 'agree to compensate [Lend Lease] for the loss of dividends in circumstances such as any delisting of Westpac [from the Australian Stock Exchange]', being a circumstance falling within the scope of the FPA definition of 'Early Exercise Event' ( ante ), and hence within the scope of operation of clause 5.1 of the FPA ( ante ). 84 The Commissioner therefore submitted that Lend Lease 'got something more than cash here', and that '[t]his was not a mere case of future delivery, it was a carefully constructed transaction, designed to secure to [Lend Lease], through its contractual rights, both immediate cash and a flow of income neither of which, if [Lend Lease] be correct, would lead to the payment of tax'. The Commissioner further submitted that the Westpac dividends were not 'really the additional consideration', but '[t]he contractual rights of [Lend Lease] were', and further that '[t]he dividends were an important by-product over which the parties bargained, and agreed a sharing formula and compensation mechanism'. 85 The complexity of the structure of the FPA, and of its operation in the events which subsequently happened, have rendered it necessary or appropriate for me to record in detail the respective submissions of the parties, both of which were assembled thoughtfully as well as comprehensively. As will have been appreciated from what I have discussed and recorded, I am of the opinion that the case of Lend Lease in denial of the viability of the assessment of the Commissioner to capital gains tax pursuant to Part IIIA of the Tax Act, and to s 160ZD(1)(c) in particular, and hence adversely to the Commissioner, should succeed and therefore be upheld in Lend Lease's favour.


case_text: After referring to the well known dictum of Dixon J (as he then was) in Archibald Howie Pty Ltd v Commissioner of Stamp Duties (NSW) [1948] HCA 28 ; (1948) 77 CLR 143 at 152 as to the notion of the term consideration, being: '... the word "consideration" should receive the wider meaning or operation that belongs to it in conveyancing rather than the more precise meaning of the law of simple contracts... the consideration is rather the money or value passing which moves the conveyance or transfer. ' and also to what was said by Lord Wilberforce in another stamp duty context in Shop and Store Developments Ltd v Commissioner of Inland Revenue [1967] 1 AC 472 at 503 as to the term 'consideration', being: 'In the first place, the phrase "consideration for the transfer or conveyance" seems to me to refer clearly and naturally to that which passed to the transferor company "for" the transferred properties....' the reasons of the majority judgment in Dick Smith Electronics , under the heading 'The error of the Supreme Court' , continued at 519-520 as follows: 'The result of this analysis is that the primary judge and the majority of the Court of Appeal erred in the approach that they respectively took to the application of the Act to the uncontested facts. Approached correctly, the case may be summed up as follows. The promises which the parties made and recorded in the Agreement can be sufficiently described as being: (1) the Vendors' promise to transfer the Shares to the Purchaser; (2) the Vendors' promise to procure the Company to declare as large a dividend as it could (up to a maximum of $27 million); (3) the Purchaser's promise to pay the Vendors $114,139,649 minus the Dividend Amount; and (4) the Purchaser's promise to "fund" the Company's payment of the dividend. The consideration for each of those promises is to be found in the promises made by the opposite party. However, what for the purposes of s 21(1) of the [Duties] Act moved the transfers by the Vendors was performance of all of the various stipulations in the Agreement, not merely the promises which the Purchaser made. To put the same point in other words: why identify the consideration "for" the transfers as only what the Purchaser gives up? The Vendors transferred the Shares in return for receiving some $114 million, of which part was received from the Company because the parties had agreed that this should be so.'


case_title: Shop and Store Developments Ltd v Commissioner of Inland Revenue [1967] 1 AC 472


case_text: It was pointed out further by the Commissioner that '... even the minority judges in Dick Smith Electronics (Gleeson CJ and Callinan J) were prepared to accept that the promise to fund the dividend, as opposed to the performance of that promise, was a 'non-monetary consideration for the agreement to transfer on sale'. In that regard however Gleeson CJ and Callinan J observed (at 510) that while they were '... prepared to accept that the obligation accepted by [Dick Smith Electronics]', being the obligation of the purchaser to lend to that target company 'an amount sufficient to put it in funds to pay the dividend ', they decided nevertheless that '[w]e cannot accept that it is monetary consideration for the transfer on sale'. Be that as it may, the findings made by the High Court majority in Dick Smith Electronics were described by the Commissioner to be consistent with the approach taken in Colonial Mutual Life Assurance Society Ltd v Federal Commissioner of Taxation [1953] HCA 68 ; (1953) 89 CLR 428, where it was held that the payment of amounts equal to 90 per cent of all rents, as and when received by lessees of a city mixed development, constituted in reality outgoings of a capital nature, being part of the capital costs for the acquisition of an asset comprising that development, and were therefore not deductible. In other words the terminology adopted by contracting parties in their contract does not necessarily determine the character of a transaction the subject of that contract at least for revenue purposes, irrespective of the nature and extent of the divergence of views between the majority and minority of the High Court in Dick Smith Electronics . So much may be readily accepted but the issue remains as to whether the Commissioner thereby gains the assistance it seeks from Dick Smith Electronics .


case_title: Integrated Insurance Planning Pty Ltd v Commissioner of Taxation (2004) 205 ATC 4054

case_text: It is appropriate to add for completeness that the following dictum of R D Nicholson J in Integrated Insurance Planning Pty Ltd v Commissioner of Taxation (2004) ATC 4054 at [128] was said by the Commissioner to be to 'like effect': 'An "asset" for the purposes of capital gains is defined in the relevant Act to mean "any form of property and includes... a chose in action... (and) any other right" (s 160A(a)). The rights which the applicants acquired as a consequence of the deeds were a chose in action and/or a right and hence an asset. The position referred to in TR 2001/9 and CGT Determination CGT 3 related only to a simple debt in which the taxpayer had no contractual right to a waiver upon achievement of the relevant contingent (sic) . The present position is therefore different because the taxpayer's rights gave them a CGT asset (s 105-5(1)). They arose as the consequence of a CGT event D1.' I have difficulty in perceiving a viable basis for the Commissioner's invocation of Integrated Insurance in relation to circumstances such as here involved. The Commissioner's postulation of a so-called 'right to share in Westpac dividends' would impermissibly elevate a situation of 'a supposed economic equivalence to the status of a contractual right capable of comprising consideration', as I have already pointed out in my citation of dicta in Citylink Melbourne .


case_text: By way of elaboration of the Commissioner's submissions relating to the theme framed by the Commissioner as to 'how did [Lend Lease] regard the rights', conferred in its favour by the FPA, it was pointed out that the Lend Lease internal documentation disclosed that Lend Lease '... was desirous of disposing of a significant proportion of its holding in Westpac', though '[o]bviously, it would not dispose of assets to an arms length party at less than market value, especially not for $3.52 in 1996 plus 1 [cent] in 2000 when the market price on the contract date was $5.39.' However as I have earlier emphasised, Lend Lease remained entitled to receive the dividend income to be derived in the meantime on its ongoing holding of its Westpac portfolio. The Commissioner emphasised in that context that '[w]hen valuing a share, its value is the value in exchange and is ascertained by the reference to the sum obtainable upon sale', and that such '... sum represents the influence of two factors, namely, the amount of the accumulated funds or assets of the company and the expectation of future dividends annually or periodically distributed'. I was referred by the Commissioner in that latter context to dicta of the High Court in Commissioner of Taxation (NSW) v Stevenson [1937] HCA 72 ; (1937) 59 CLR 80, where the following appears in the joint judgment of Rich, Dixon and McTiernan JJ at 97: '... A share in a company is a piece of property the alienation of which is subject to few or no restrictions. Its value is a value in exchange and is ascertained by reference to the sum obtainable upon sale. That sum represents the influence of two factors, namely, the amount of the accumulated funds or assets of the company and the expectation of future dividends annually or periodically distributed. ...' 74 Purportedly upon that footing, the Commissioner acknowledged that '[a]s a commercial matter, the contractual right to retain ownership and dividends made up the shortfall between the money consideration and the market value', and that such contractual right hence purportedly '... reflected the value of expected future dividends over the following 4 years'. The Commissioner observed that the financial accounts of Lend Lease showed that dividends were treated as being 'proceeds of sale of Westpac shares when they were declared', the Commissioner referring in that regard to the consolidated statements for the year ended 31 December 1996. However a right to receive future income to be derived over an ensuing period of time does not necessarily translate to crystallisation of the derivation for capital gains tax purposes of the present day value of that future income. Normally contracts entered into for the sale of realty envisage a period of time to elapse between entry by the vendor and purchaser into a contract of sale and completion of that contract of sale, although the structure of the subject transaction may probably not be described as normal, given the size and potentially strategic proportion of the Westpac capital the subject thereof. 75 As at 7 June 1996, Lend Lease would have no likely basis for predicting with any precision the quantification of the dividend income it would or might well derive from its Westpac shareholding from that time until 31 July 2000, or earlier on 30 April 2000 (see again clause 5.2 of the FPA, and the terms of the so-called subsequent Amending Deed to the Forward Purchase Agreement bearing date 17 January 2000). Each of Lend Lease and County Natwest having been involved in decision-making with the evident benefit of experienced and qualified professional assistance, would not have obtained any significantly larger lump sum consideration, up front as it were in the context which occurred, than was furnished by County Natwest at arm's length, once account be taken as to Lend Lease's entitlement to continue to receive and retain Westpac dividends until the fiscal year 2000.


case_text: Upon the topic of the right of a taxpayer as to the benefit of offsetting of capital losses, the Commissioner submitted that it was incorrect of Lend Lease to characterise that right as one which Lend Lease agreed to relinquish on completion of the FPA, and further that what was constituted by the FPA in favour of Lend Lease was rather a right which was partly discharged each time a dividend was received, the Commissioner purportedly invoking in that regard the operation of s 160M(3)(b) of the Tax Act, which reads as follows: '160M(3) ... a change shall be taken to have occurred in the ownership of an asset by: ... (b) in the case of an asset being a debt, a chose in action or any other right, or an interest or right in or over property the cancellation, release, discharge, satisfaction, surrender, forfeiture, expiry or abandonment, at law or in equity, of the asset.' It was therefore submitted by the Commissioner that no capital loss arose from the partial discharge of the relevant rights, since the cost base of the part of each of the rights disposed of on each occasion was offset by the amount of the dividend received. All that was said to be consistent with the decision in Commissioner of Taxation v Dulux Holdings Pty Ltd [2001] FCA 1344 ; (2001) 113 FCR 436, where a Full Federal Court (Beaumont, Lindgren and Kenny JJ) unanimously held that rights under an assumption agreement were discharged as each payment was made, leaving thereby no scope for s 160U(3) to operate. Contrary therefore to Lend Lease's submissions earlier recorded, so the Commissioner contended, 'the right was not disposed of for no consideration', since each dividend was received in respect of the disposal of part of the right and was therefore disposed of for consideration. As I have foreshadowed, there is evident difficulty with the Commissioner's notion as to payment by a company of a dividend involving the disposition of a right, within the scope of operation of Part IIIA of the Tax Act, attributable to the declaration and payment of that dividend to the company's shareholders. 77 Upon the basis in any event that the disposal did not occur when the FPA was entered into, but as and when dividends were paid in subsequent fiscal years, the Commissioner drew attention to s 160U(4), the text of which I have earlier reproduced. I am unable to accept, conceptually or otherwise, that payment of dividends by a company, in circumstances for instance as here prevailing in the case of County Natwest, constituted a situation whereby an '... asset [which] was... disposed of otherwise than under a contract' within that subsection, that being a provision designed to address the subject of 'Time Of Disposal And Acquisition' , as the heading to s 160U duly indicates.


case_text: Specifically as to the s 160ZA(4) issue, the Commissioner submitted to be flawed an alternative proposition that the Lend Lease case, to the effect that the capital gain on disposal of the Westpac shares (postulated of course by the Commissioner) was to be disregarded, under what it described controversially as the 'anti-overlap' provisions of that subsection, for the following reasons: (i) it could not be said rightly that dividends would be included in assessable income 'as a result of the disposal of the asset' , here being of course the Westpac shares, because 'inclusion in the taxable income resulted from the later circumstance that payments were in fact received from Westpac'; once received, so the submission continued, those payments were said by the Commissioner 'properly to be characterised under the income tax provisions as assessable income'; however the dividends declared and paid by Westpac to Lend Lease at the material times were said by the Commissioner not to be included in Lend Lease's income 'as a result of the disposal of the asset' within the meaning of s 160ZA(4); (ii) 'as at the date of disposal of the Westpac shares it could not have been said that any amount "will" be included in assessable income' of Lend Lease, since '[t]here is no certainty that dividends will be paid in the future depending, as dividends do, on availability of distributable profits and discretion of the Board of Directors', and moreover until a dividend is declared, any such declaration can only be 'in the eye of the law a possibility only' : Norman v Federal Commissioner of Taxation [1963] HCA 21 ; (1963) 109 CLR 9 at 40 (Windeyer J). 79 The Commissioner criticised what was described by Lend Lease as 'the transaction having constituted one of mere deferred delivery for a discounted purchase price', for the reason that the description was merely a 'beguiling oversimplification', and as not in any event reflective of the case propounded by Lend Lease. As I have earlier outlined, the Lend Lease case was to the effect that the FPA, though entered into on 7 June 1996, constituted a contract for the sale of the Westpac shares whereby until completion thereof on 30 April 2000, ownership of the Westpac shares would remain with Lend Lease, and would therefore not pass to County Natwest, such that Natwest would not acquire any beneficial interest in the Westpac shares prior to completion of the FPA. Consequently the Commissioner's submissions in derogation of the case propounded by Lend Lease as one based simply on the notion of a 'mere deferred delivery agreement' did not appear to advance the Commissioner's case relevantly or materially for present purposes. 80 The Commissioner emphasised in any event that it is the market value of the 'property other than money' received as 'the consideration in respect of a disposal of an asset' which falls to be addressed in order to calculate a capital gain, being a market value to be determined 'at the time of disposal' (see again ss 160ZD(1)), that time being that of entry into the FPA. The Commissioner referred in that context also to s 160U(3) of the Tax Act.


case_text: The Commissioner further submitted that '[t]he parties have clearly intended [Lend Lease's contractual rights] to be assignable, in the light of clause 20 of the FPA ( ante ). Moreover I was referred by the Commissioner to clause 22 of the FPA, headed 'No Merger', which stipulates as follows: 'The rights and obligations of the parties will not merge on completion of any transaction under the [FPA]. They will survive the execution and delivery of any assignment or other document entered into for the purpose of implementing any transaction.' In that context it was said by the Commissioner that labelling the contractual rights and obligations of each party as 'personal' did not conclude the issue, and that whether contractual rights 'are truly to be seen as "personal" is a question of construction in all the circumstances', citing in that regard well-known authority. I was also referred to the observations of Gummow J (as a member of a Full Federal Court) in Hepples v Federal Commissioner of Taxation (1990) 22 FCR 1. In relation to the operation of the statutory definition of asset , his Honour observed (at 27): 'In my view, rights which are not proprietary in character... whether because they are personal rights or because they are "rights" merely in some popular sense, are not "assets" within the meaning of s 160A of the Act.' It was submitted that the foregoing position so adopted by the Commissioner was '... not at odds with the observations' of his Honour.


case_text: general principle is that once a trial date is set, the trial should proceed. It was pointed out by the Full Court of the Supreme Court of South Australia in Dawson v Deputy Commissioner of Taxation (1984) 56 ALR 367 at 370: It is essential to the orderly conduct of the business of the court that trial dates be adhered to. When a case comes before the trial judge on the date fixed for trial, the parties are entitled to come to court with an assurance that the trial will commence and will proceed, so far as possible, without interruption, to its conclusion. The court, which is in this respect the protector of the public interest, is also entitled to that assurance. (I also refer to another decision of that court Sarunic Brothers Pty Ltd v AFG Insurances Ltd , unreported Full Court Supreme Court of South Australia, 12 March 1984.)


case_title: Sarunic Brothers Pty Ltd v AFG Insurances Ltd , unreported Full Court Supreme Court of South Australia, 12 March 1984


case_text: as pointed out by Dawson, Gaudron and McHugh JJ in The State of Queensland v JL Holdings Pty Ltd [1997] HCA 1 ; (1996) 189 CLR 146 at 154: Case management is not an end in itself. It is an important and useful aid for ensuring the prompt and efficient disposal of litigation. But it ought always to be borne in mind, even in changing times, that the ultimate aim for a court is the attainment of justice and no principle of case management can be allowed to supplant that aim. In the submissions put to me yesterday it seems that, at least from the view point of the applicants, a considerable volume of material has been put to them days before trial. I note the claim of the respondents that most of the documents to which reference is made in the Schedule provided by the applicants to me in court yesterday were disclosed. The statements delivered during that time were made in response to the allegations of fraud made by the applicants. However, in view of the timing of delivery of this documentation and its considerable length (in particular the lengthy signed affidavit of the second applicant filed and served 12 July 2006 which in itself, including the annexures, totals 1685 pages) it appears at least from their submissions very difficult for the applicants to ascertain whether the documentation has been previously disclosed. I am not persuaded on the facts before me that the documents which have been delivered ought not to cause the applicants difficulty as urged by the respondents. The position before me as of yesterday is that there appears to be a large volume of evidence which the applicant has either not had a proper opportunity to read and if necessary, respond to, or, possibly, evidence which is still not before the applicant.


case_text: The Minister submitted that the matters alleged by the applicant concerning prison conditions could not amount to torture, relying on de Bruyn v Minister for Justice and Customs [2004] FCAFC 334 ; (2004) 143 FCR 162 at 163 per Kiefel J, with whom Spender J (expressly) and Emmett J (by necessary implication) agreed. 64 In relation to the applicant's complaints concerning the Departmental submission's use of HIV statistics, the Minister submitted that the Departmental submissions had relied on a clearly appropriate and probative source, which was the Centre for Disease Control. 65 One of the grounds identified in the applicant's first affidavit was that the Minister's power under s 22 was unconstitutional. However, this ground was not touched upon at all in oral submissions. Further, the applicant stated on a number of occasions at the hearing that he relied upon pages 1 to 71 of his supplementary book, whereas his written submissions under the heading 'Constitutional challenge' commence at page 71. From this I infer that his constitutional challenge was not pressed. 71 There is no general entitlement to an oral inquiry and none arose in this case. Nor was the Minister obliged to pursue lines of inquiry proposed by the applicant by contacting and speaking to people. There is no substance, in my opinion, in the contention that the extradition request was made in bad faith. In addition, there is no substance, in my opinion, to the contention that the Minister was biased in any sense. As to the ongoing litigation of the applicant, it is not apparent to me that this was a matter the Minister had to take into account. Indeed it appears to me to be irrelevant. It is not for this Court to determine whether the applicant might be tortured (an issue not raised by a mere allegation of mistreatment or abuse in prison: see de Bruyn at [55]) or whether the applicant could mount a successful extradition objection based on his race or religion. They were matters to be considered by the Minister. They were. No reviewable error on the part of the Minister has been demonstrated. 72 The application should be dismissed with costs. I certify that the preceding seventy-two (72) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Moore. Associate: Dated: 21 December 2006 The Applicant appeared in person Counsel for the Respondent: Mr N J Beaumont Solicitor for the Respondent: Australian Government Solicitor Date of Hearing: 2 and 6 November 2006 Last date for Submissions: 5 December 2006 Date of Judgment: 21 December 2006 AustLII: Copyright Policy | Disclaimers | Privacy Policy | Feedback URL: http://www.austlii.edu.au/au/cases/cth/FCA/2006/1784.html


case_text: In the result, there was material before the Minister which indicated that by reference to the applicable laws of the United States, the undertaking given by the United States , had the character of an undertaking by virtue of which the penalty of death would not be carried out, if indeed an undertaking was required. In the absence of evidence to the contrary, it can be assumed that the Minister read this material and considered the issues raised by it: see Chan v Minister for Justice and Customs [2001] FCA 718 at [29] .


case_outcome: applied

case_text: The applicant submitted that a death penalty undertaking had not been given which conformed with s 22(3)(c) of the Act. He further submitted that such an undertaking was required in his case because the extradition offence could attract the death penalty. For those reasons, he contended that the Minister should not have determined to surrender him and should have exercised his discretion under s 22(3)(f) not to surrender him. The applicant submitted that he was not asking the Court to inquire whether the United States would in fact honour its undertaking not to seek or apply the death penalty: see McCrea v Minister for Justice and Customs [2005] FCAFC 180 ; (2005) 145 FCR 269. Rather his complaint was that the undertaking given did not comply with the requirements of s 22(3)(c) of the Act as established in McCrea . 34 The initial undertaking was provided by Mr Fermin, in his earlier affidavit. In his supplementary affidavit, Mr Fermin said that none of the special circumstances listed in s 190.2 of the Code applied to the extradition offence for which the applicant's extradition was sought and that no special circumstances had been alleged in the charging document. In the result, the death penalty was not an available punishment for the charge against the applicant. The Embassy of the United States of America in Canberra provided a diplomatic assurance, dated 28 February 2005, in the following terms: 'Based on the information provided by the Deputy District Attorney for San Bernardino County, California, and in accordance with Article VIII of the 1974 U.S. Australia Extradition Treaty, as amended by Article 5 of the 1990 Protocol Amending the Extradition Treaty, the United States Government assures the Government of Australia that the death penalty will not be sought or imposed against Lawrence Rivera.' 35 A further assurance was given by Mr Michael Ramos, the then recently elected District Attorney, on 28 September 2005, stating that '[T]he San Bernardino County District Attorney's Office will not seek to impose the death penalty on Lawrence Rivera on the instant matter'. 66 The only issue potentially of substance, in my opinion, raised by the applicant concerned whether the Minister could have been satisfied about the matter addressed by s 22(3)(c) , namely that an appropriate undertaking concerning the death penalty had been given. The Minister had an undertaking from the United States and information derived from affidavits concerning Californian law and the charge that had been laid. In McCrea , the Full Court said (at [25]): 'It does not follow from the conclusion that a legally enforceable undertaking is not needed that the requirements of s 22(3)(c) will be satisfied merely by the giving of an undertaking that follows the language of the provision and which has been made by a person with appropriate authority. An evident object of s 22(3)(c) is to provide a safeguard against the carrying out of the death penalty upon a person extradited from Australia under the Act. Whilst the object of the provision can be variously stated, the seriousness of the subject matter suggests that it is very unlikely that nothing more than compliance with a verbal formula was intended. Consistently with the object of the provision, there is much to be said for the view that the expression "by virtue of an undertaking" requires that the decision-maker consider whether the undertaking is one that, in the context of the system of law and government of the country seeking surrender, has the character of an undertaking by virtue of which the penalty of death would not be carried out. It would seem unlikely that the object of the provision was intended to be achieved only by the favourable (to the person accused) exercise of the discretion conferred by s 22(3)(f).' (emphasis added) 67 While the observations in the latter part of this passage are only tentative, I think it is appropriate that, as a single judge, I proceed on the basis that those tentative views correctly state the law. Perhaps my approach might be different if I held a strong view to the contrary, but I do not. Accordingly, in view of the submissions made by the applicant, it is necessary to ascertain whether the Minister, in the face of an undertaking that the death penalty would not be sought or imposed, considered whether it was an undertaking which, in the context of the system of law and government of the United States, had the character of an undertaking by virtue of which the penalty of death would not be carried out. 68 The essence of the case of the applicant was that the question of whether facts existed which fell within the concept of 'special circumstances' for the purposes of ss 190.1 and 190.2 of the Code was a matter to be determined by the jury and, at least impliedly, were not matters the determination of which was within the control of the prosecuting authorities or the trial judge. The authorities referred to by the applicant, namely the judgments of the Supreme Court of the United States in Ring and the earlier case of Apprendi , represent a line of authority that facts which establish legislative special circumstances, and which enable or require the imposition of the death penalty, must be found by the jury and not by a trial judge in the course of a sentencing hearing. However, having regard to the affidavits of Mr Fermin (the relevant parts of which were before the Minister in a summary way) who was the Deputy District Attorney responsible for prosecuting the applicant, a statutory condition precedent to 'special circumstances' being considered was that 'special circumstances' are charged. Mr Fermin deposed that they had not been charged.


case_text: Counsel for the Minister submitted that the Minister was not obliged to provide the applicant with a copy of the Departmental submissions as a matter of natural justice. Where the Department evaluated material, and that material had been made available to someone in the applicant's position as it had here to the applicant, it was not correct to say that natural justice also required the comments or submissions themselves to be provided: see Re Minister for Immigration and Multicultural and Indigenous Affairs; Ex parte Palme [2003] HCA 56 ; (2003) 216 CLR 212 at 219 to 220. 70 I turn to consider other issues. It appears from the joint judgment of Gleeson CJ and Gummow and Heydon JJ in Ex parte Palme (at [16] to [26]) that, in a case such as the present, the applicant is not entitled to see and comment on the Departmental submissions and that the mere failure to make them available does not constitute a denial of procedural fairness without more. In certain circumstances a person affected by a decision may be entitled to see submissions made to a decision maker. But that could well depend on the contents of the submissions and the extent to which the person was otherwise aware of material that would be provided to the decision maker. However there is no requirement, as a matter of general principle that submissions be made available irrespective of their contents and the circumstances in which they come to be considered by the decision maker. None arose in this case.


case_outcome: distinguished

case_text: is a clear line of authority that Mr Hicks is at present entitled to the benefit of this conclusion: see, as discussed above, Abbasi v Secretary of State [2002] EWCA Civ. 1598. Deprivation of liberty is prima facie unlawful, and until this is rebutted by evidence of lawful authority, the unlawfulness can be accepted. There is at present no such rebuttal evidence before me. Authorities support the proposition that in habeas corpus applications, the detaining party bears the onus of showing the lawfulness of that detention: Abbasi v Secretary of State [2002] EWCA Civ. 1598 at [66] (and cases cited therein); The King v Carter; Ex parte Kisch [1934] HCA 50 ; (1934) 52 CLR 221 at 227 per Evatt J; Regina v Governor of Brixton Prison; Ex parte Ashan (1969) 2 QB 222 at 233, 237, and 248; R v Governor of Metropolitan Gaol; Ex parte Di Nardo [1963] VR 61 at 62; and, regarding the need for evidence, Greene v Home Secretary [1942] AC 824. See also Aronson, Dyer and Groves, Judicial Review of Administrative Action (3 rd ed., 2004) at 777-779. In answer to this, Mr Hicks submits that under the Australian Constitution , and in particular s 61 , the federal executive government owes a duty of protection to a citizen in the predicament of Mr Hicks. Although this protective duty cannot be enforced by Mr Hicks, it is a duty of imperfect obligation which must be taken into account in the respondents' consideration as to whether to make a request. It would be inconsistent with this duty of protection to take into account that Mr Hicks would not be prosecuted if returned. Due to this inconsistency, an inability to prosecute Mr Hicks in Australia or the likelihood that he may go free if returned cannot be relevant in the respondents' consideration as to whether the applicant should be protected by a request to the United States authorities to repatriate him from Guantanamo Bay back to Australia. Likewise, it is said, the respondents' purpose of further co-operating with the United States authorities in relation to the continued detention and prosecution of Mr Hicks in Guantanamo Bay is not consistent with the Executive's duty to protect a citizen. Therefore, the applicant submits, both of these considerations are extraneous to the protective duty. The function of the Executive under s 61 is to protect against and not enable the punitive detention and prosecution of an Australian citizen in a 'legal black hole', to use the terminology of the English Court of Appeal in Abbasi . Special attention should be given to a case which is similar in some respects to the current matter, and to which counsel for both Mr Hicks and the respondents gave attention. It considers many of the relevant principles and issues considered in this case. In Abbasi v Secretary of State [2002] EWCA Civ 1598 , the English Court of Appeal considered an application for relief by an English citizen detained at Guantanamo Bay naval base. Mr Abbasi was transported to that detention centre in January 2002 and by the time of the appeal hearing he had been in detention for eight months. He sought judicial review and an order to require the Foreign Office to make representations his behalf to the United States. Their Lordships at [66] and [107] twice expressed deep concern that in apparent contravention of fundamental principles of law, Mr Abbasi may be subject to indefinite detention by the United States authorities with no opportunity to challenge the legitimacy of his detention before any recognised court or tribunal. Their Lordships referred to what appeared to be 'a clear breach of a fundamental human right'. This latter expression echoes the language in Kuwait Airways . The Abbasi circumstances can be distinguished from the present case in the following respects. In the present case it is apparent that the position of Mr Hicks has not been advanced by these considerations of appellate review or intervention by the Commission which were outstanding at the time of the Court of Appeal decision. In this case, Mr Hicks has been in detention for over five years at the present time, and the original charges against him were invalid, as was the Military Commission. In Abbasi , the Court had the benefit of evidence from the Deputy Under Secretary of State for Foreign and Commonwealth Affairs as to the relationship between the British and United States governments. There is no evidence from the respondents on the present application to this effect. In this case, the application is to set aside the decision of the respondents not to make any request to intervene whereas in Abbasi the application sought an order that a specific representation should be made. In the present case, there is also an application for habeas corpus. In Abbasi , there was not; although their Lordships did acknowledge at [59]-[63] the great importance of the writ of habeas corpus as affording a swift remedy to all cases of illegal restraint or confinement. The grounds of the application for judicial review in this case are based on the irrelevant considerations ground. In Abbasi , this was not the basis of the review application. In this case, a submission is based on the meaning and reach of s 61 of the Australian Constitution . In Abbasi , of course, the principle of separation of powers in the concept of a written federal Constitution was not relevant. The Court at [57] observed that it did not need a statutory context in order to express a view in relation to what it conceived to be a clear breach of international law, particularly in the area of human rights. At [60] their Lordships affirmed the fundamental principle that in English law every imprisonment is prima facie unlawful and that the executive cannot interfere with the liberty of a British citizen except on the condition that it is possible to support the legality of the detention before a court of justice. This statement is important in the present case because it lends some support to the habeas corpus application by Mr Hicks. The Court said at [64]: 'For these reasons we do not find it possible to approach this claim for judicial review other than on the basis that, in apparent contravention of fundamental principles recognised by both jurisdictions and by international law, Mr Abbasi is at present arbitrarily detained in a "legal black hole.".' At [106], their Lordships note that while the discretion of the Foreign Office is a wide one there is no reason why its decision or inaction should not be reviewable where it can be shown to be 'irrational' or 'contrary to legitimate expectations'. However, they said that the expectations of a citizen to protection are limited and the discretion is a very wide one. Their Lordships referred to the existence of a 'forbidden area' which included the decisions affecting foreign policy. Nevertheless, they expressed the view that there was an obligation to consider the position of a particular British citizen, and that it seemed unlikely that such consideration of the extent to which some form of action might be taken on his or her behalf would impinge on any 'forbidden area'. The general way in which a decision could impact on foreign relations in this case could be the subject of evidence, as it was in Abbasi . The concept of a 'forbidden area' arguably states the position far too generally to be applied at face value, and such a broad proposition will not readily apply in Australia where executive power is vested by and subject to the limitations spelt out in s 61 of the Australian Constitution . These observations lend support to the case of Mr Hicks insofar as they refer to the consideration by the Secretary of State as involving all relevant factors being thrown into the balance. In Abbasi, the extent of the injustice was considered by their Lordships to be substantial, even where the internment had been a period of eight months and there appeared some prospect of alleviation of Mr Abbasi's predicament as a consequence of possible appellate review in United States courts and because of representations of the Inter-American Commission. In contrast, the injustice in this case could be seen to be substantially greater than that in Abbasi , given the internment of the applicant for over five years and the fact that there has been no alleviation of his predicament as a result of appellate review or representations by the Commission. It is common ground that if the respondents' summary judgment application is refused on the present pleading, it will be necessary to amend the current pleading to take account of significant new developments that have occurred since the Statement of Claim was filed on 6 December 2006. I agree that some wording in the Statement of Claim is imprecise and in other instances unclear. The defects as outlined in the submissions of the respondents are, however, capable of clarification and more precision. In particular, the introductory phrase in a number of crucial paragraphs, "there is no reason to suppose", is unclear. I would read those words, in the context of the paragraphs in which they appear, as indicating "it is likely that" or "there is a reasonable expectation that" Mr Hicks will be returned if a request is made.