McGuiness v. Federal Commissioner of Taxation.
Judges:Walsh J
Court:
High Court
Walsh J.: For many years the appellant Vincent Francis McGuiness owned and worked farming and grazing properties in the Mullewa district, some sixty miles east of Geraldton in the State of Western Australia. He sold those properties in 1952 and 1953. A little earlier than that he had been advised that he should go for health reasons to a cooler climate and he had bought a property of 867 acres situated close to the sea and a little to the south of Geraldton. Its western boundary was the highway which runs from Perth to and beyond Geraldton. The land was unimproved. It is not in dispute that the appellant intended to improve and to use that property for farming or that he did so use it for a considerable time, although about the year 1963, after having sold some small portions of it, he sold over 460 acres and leased the rest of it to the purchaser and gave up farming altogether.
In 1952, the appellant received a notice that 139 acres of the property were to be resumed by the Commonwealth for use as a rifle range. He has said in evidence that
ATC 4025
because of this he looked for some more land in the same area for use in conjunction with what would remain of the property which he had recently bought. He inspected a property known as Location 5843. This was, at its northern end, divided only by the highway from his main holding. But he decided against buying that land. He inspected another property lying just north of it, known as Location 2125. It is with a subsequent sale by the appellant of a large part of that property that these appeals are concerned. Location 2125 is a long narrow strip of land with an area of a little over 98 acres. On the east it adjoins the highway and on the west it is very close to the sea. Its southern boundary lies immediately across the highway from the northern boundary of what was the main holding of the appellant. It is a little over a mile in length and its width is about eleven or twelve chains.The appellant ascertained that a trust company had title, as trustee for several different beneficiaries, to seven one-twelfth undivided shares in the land. That interest was bought by him. He paid only a little over £35 for it, including certain fees and charges, but it seems that in addition he paid some ``back rates'' on the property. In fact a subdivision of this land, into 340 lots, had been made more than fifty years earlier. But no lots had ever been sold off separately. In 1954 when he bought an interest in the land, the appellant had no knowledge that there had been a subdivision of it. In 1958 he caused an application to be made for a subdivision into 5-acre lots and this was approved by the Town Planning Board. But as the appellant did not have title to the entirety of the land, the matter proceeded no further. Later, solicitors acting for the appellant discovered the existence of the earlier subdivision.
It was not known in 1954 where the persons entitled to the other undivided shares could be found. They were found afterwards and the appellant bought their interests. But this was much later. The three contracts of sale by which he bought were dated respectively 16 August 1966, 30 November 1966 and 15 February 1967. These related respectively to the sale of an undivided one-eighth share for $2,400, the sale of an undivided one-sixth share for $3,200 and the sale of an undivided one-eighth share for $4,300. In each contract the appellant alone was named as the purchaser. But he had made an agreement in writing with a company called Silversands Beach Homes Limited (Silversands) for the sale to it of one-half of the interest in the land which he was acquiring by these purchases. For this the company was to pay $4,550. This was intended to be one-half of the total of the price payable by the appellant, but one of the vendors held out for a higher price than that which the appellant had expected he would have to pay. Later, the company and the appellant made a new agreement under which the company took as sole owner part of the land in satisfaction of its rights under the earlier agreement and the appellant became the sole owner of the balance of the land. He had already agreed in 1959 to sell a portion of the land to an Order of Nuns and he had agreed to dispose of another portion of it to a man named O'Brien. No issue arises now concerning the disposition by the appellant of those two portions. What is in question is the profit which is said to have arisen from the sale in January 1968 of 224 lots in Location 2125 which were sold for $246,000, payable by instalments. Under the terms of the sale the appellant received $50,000 in the tax year which ended on 30 June 1968 and another $50,000 in the following tax year. After making certain calculations to which I need not refer at present, the respondent treated the appellant as having received as profit in each of those years the sum of $47,828 and he added that sum to the taxable income of the appellant and made assessments accordingly. The appellant's objections were disallowed and appeals have been brought by him to this Court.
The respondent seeks to rely on both branches of sec. 26(a) of the Income Tax Assessment Act (the Act). Before examining the submissions made as to the operation of that provision, it is necessary to discuss further the facts of the case. At the outset I must consider what was the purpose of the appellant when he bought an interest in the land in 1954. He said in evidence that his purpose was to use it for grazing stock and for growing crops. It has been argued that
ATC 4026
for various reasons I should not accept that evidence or at least I should not be satisfied that his purpose was not that which would make the first part of sec. 26(a) applicable. In a letter written before the purchase, the appellant said that he had a farm opposite the land and would like a road on to the beach. His explanations for writing that are not very convincing. But I do not think that this letter is really significant, either as proof of his real purpose or as affecting his credit. It would be of no assistance to the respondent to claim that access to the beach was in fact the appellant's purpose and this is not claimed.There is a good deal of independent evidence that the land was not suitable for farming purposes and there are letters written by people who were acting on behalf of the appellant asserting that the land was of ``no value for agricultural use'' (letter of 3 February 1959, part of Exhibit E) and that it was ``not suitable for agricultural purposes'' (letter of 17 April 1961, part of Exhibit D). But the usefulness of land for farming is a relative and not an absolute thing. I do not treat those letters as showing that the land was of no use at all for farming. I think it is plain that much of the land was not very suitable either for grazing or for cropping, unless perhaps after the expenditure of a lot of money on it. But that does not mean that it was of no use to a farmer who had other land close by. That other land was itself not very good farming land and at the relevant time it had not been improved. I do not think it is unreasonable to suppose that the appellant bought an interest in Location 2125 thinking that it could be of some assistance to him in his farming, if he could find water on it. It is in my view of much importance that he was able to get that interest and with it the possession of the land for a very small sum of money. No doubt if he had to pay a price which would have been reasonable for high quality farming land, he would not have bought this land for the purpose of farming on it. But in the circumstances its poor quality is not a convincing reason for rejecting his evidence on this matter.
I accept the evidence that the appellant tried without success to find fresh water under this land, that in a small way he made some efforts towards fencing it and making roads through it and he grew crops of peas on some fairly small portions of it. It is true that the total use actually made of the land, during the period that elapsed until the time when clearly the appellant was anxious to sell it or at least some of it and also during the period thereafter until he did dispose of it, was so small that it might be described as insignificant. In ordinary circumstances that would make one doubt that there had ever been any purpose of using it for farming. But the circumstances are unusual. The appellant was not in good health and his eyesight was failing. He made improvements to the main holding and this work proved to be slow and expensive. Although the appellant had believed at first that he would be able to get in time a title to the entirety of Location 2125 by paying rates, it appears that later he became unwilling to spend money on improvements without having such a title. Although he had sold his Mullewa properties for much more (about £17,500) than he paid for the 867 acres that he bought (about £3,500), he was by 1957 short of money and was borrowing from a bank to carry on his farming. In that interval he had been overseas. He had spent a large sum of money on improvements of the property.
In the circumstances I think it is not surprising that from about 1958 the appellant was making efforts in various ways to improve his position in relation to Location 2125. As already mentioned, there was an attempt to subdivide it into 5-acre lots, which came to nothing. Enquiries were made as to the prospects of obtaining recognition of a title by adverse possession. Some consideration was given to the possibility of a partition. The existence of the old subdivision was discovered. Eventually it became possible to enter into negotiations to buy the outstanding interests. It is not clear just when that happened but negotiations were proceeding in 1964, as appears from a letter of 5 January 1965 from the appellant's accountants in Geraldton to his Perth solicitors. In that letter the solicitors were urged to try to expedite the matter and to point out to the prospective vendors that the appellant might be compelled to start ``selling
ATC 4027
the blocks off on his 7/12ths title''. It appears from another letter in evidence that by July 1965 the appellant had made a bargain with Silversands, although formal agreements were not made until 1966. The dates of the contracts which the appellant made with the vendors have been given above. For the purpose of the question which I am considering now, it is not important to fix with precision the dates when the appellant began any of his various endeavours to subdivide or to get in the title or to sell.There was criticism of the evidence of the appellant that the resumption of part of his land caused him to seek other land to replace it. It was shown that he obtained a lease of the resumed land. The lease in evidence was not executed until the end of 1956 but the term of the lease was deemed to have commenced on 1 March 1956. But approval was given much earlier than that to a lease for three years to commence on 1 January 1955, which was however to be terminable by the Commonwealth by one month's notice. It is likely on the evidence that the appellant had the actual use of the land, subject to some restrictions, not long after November 1953. But on the whole I think that the resumption could have been a cause, although perhaps not the only cause, for the seeking by the appellant of additional land.
The onus lies upon the appellant to show that the assessments were wrong and if I could not come to any conclusion as to what his purpose was in acquiring the seven-twelfths share in the land, he would fail on the issue which I am now discussing. But I am satisfied that when he purchased that interest in the land, he did not acquire it for the purpose of profit-making by sale. As purchasers often do when buying property, he may have believed that an increase in value would take place later and that in the future he might obtain the benefit of such an increase. But there is little to suggest that at that time residential development would have been considered likely to extend in the near future to that area. A hope that the appellant may have entertained that at some future time he would make a profit by sale would not be inconsistent with a finding that his main purpose was what he has said it was, that is, to use the land for crops or for grazing. The result of that finding is that the respondent's primary submission cannot be accepted. The submission was that at all material times, that is to say, when the appellant first acquired an interest in the land and when he acquired the remaining undivided shares in it, his purpose in acquiring the land which he sold in January 1968 was to sell it at a profit and that, therefore, so much of the profit as was obtained as a result of that sale in each relevant year of income was taxable under the first part of sec. 26(a).
There was an alternative submission that the first part of sec. 26(a) brought into income a profit derived from the acquisition of the five-twelfth interest in the land and the subsequent sale of the land. But it will be convenient to defer that question until after I have considered submissions made in reliance on the second part of sec. 26(a).
In the first place it was argued that if I should find that the original purchase was not made for the purpose of reselling at a profit, I should find that it was made in order that in some way or other the land might be turned later to profitable account, the appellant not being concerned to come immediately to any decision as to the manner in which that would be done. It was submitted that if that were the basis of the original acquisition, then the facts of the case would bring the whole of the transactions relating to the land within the operation of the second part of sec. 26(a). In this connection reference was made to the judgment of Windeyer J. in
Buckland v. F.C. of T. (1960) 34 A.L.J.R. 60 at p. 62. But, in my opinion, any profit which the appellant made ultimately out of the sale of the land cannot be brought to tax, in the circumstances of this case, upon the basis thus submitted. Having regard to the finding that I have already made on the evidence it cannot be said that the appellant, when he bought the seven-twelfths interest in the land, was entering upon an ``undertaking'' with a view to the making of profit in whatever way might later seem best. At that point of time there was, in my opinion, no ``undertaking'' and no ``scheme'', within the
ATC 4028
meaning of sec. 26(a). I think that this conclusion follows in the circumstances of the case from the finding already made as to the purpose for which the interest in the land was acquired. On this point I refer to what I said inEisner v. F.C. of T. (1971) 71 ATC 4022. A decision that there was then an undertaking or a scheme within the meaning of the provision would be inconsistent, in my opinion, with the exposition of its meaning which was given in
McClelland v. F.C. of T. (1970) 70 ATC 4115, to which I shall have occasion to refer again later.
An alternative contention on behalf of the respondent was that at a later time a profit-making undertaking or scheme came into being, when the appellant set about to acquire the full ownership of the land with the purpose of making a profit. The appellant endeavoured to establish a title by adverse possession to the entirety of the land and he made an attempt to subdivide it into 5-acre blocks and it was argued that in taking these steps his purpose was to sell the land. In my view it does not matter what was the purpose with which the appellant took those earlier steps. It is clear on the evidence that when he negotiated for the purchase of the outstanding interests and when in aid of that transaction and in order to finance it he made his arrangements with Silversands, it was the appellant's purpose to sell the land or a major part of it. He was no longer interested in farming on Location 2125. As early as 1958, he wanted to dispose of it or at least of part of it, in order to raise money. I think that the abortive proposals or attempts to establish a possessory title or to subdivide or to effect a partition may be disregarded. The substance of the relevant transaction was that the appellant was to obtain for himself the title to the entirety of the land, except for the interest which as part of his plan was to go to the Silversands company, intending to dispose of his interest by sale in the best way possible (subject to obligations which he had undertaken to the Order of Nuns and to O'Brien). The plan was varied by the further agreement by which Silversands took the full title to some lots in place of a share in a larger number of lots.
In considering whether that transaction came within the operation of the second part of sec. 26(a), it is important to notice that the appellant already owned an interest in the land and his purpose was to dispose of the interest which he would have when that existing interest had been combined with an additional interest which he was setting out to acquire. It has to be determined whether there was a profit-making undertaking or scheme, which had in contemplation the sale of the combined interest, to which the second part of sec. 26(a) applies. I regard this as a difficult question. But a consideration of the judgments in
F.C. of T. v. McClelland 69 ATC 4001; (1969) 118 C.L.R. 353 and the judgment of the Privy Council on appeal, 70 ATC 4115; (1970) 120 C.L.R. 487, has brought me to the conclusion that the respondent's submissions, which seek to apply that part of the provision to the profit from the sale of the whole interest, should not be accepted.
Although an expert witness, Mr. Pollard, whose evidence was prepared and given very carefully, expressed the opinion that the value of the seven-twelfths share which the appellant had could be taken to be seven-twelfths of the value of the freehold, I have no doubt that the appellant expected and believed that the acquisition of the outstanding shares would enable him to realise to greater advantage the share which he owned already. That would have been an entirely reasonable belief. I think therefore that the plan to obtain control of the outstanding interests may be regarded as being, at least in one aspect of it, a plan for the expenditure of money, by an owner of a capital asset, in order to increase its market value. In so far as the result was to give to that asset an enhanced value, that would not represent a taxable profit: see McClelland's case (1969) 118 C.L.R. at p. 360, per Windeyer J. and 69 ATC 4001 at p. 4003 per Barwick C.J.
It is true that there are differences between the facts of this case and those of McClelland's case. One is that the original share was in this case acquired by purchase and not by gift. But on the question I am now considering that does not seem important. At the time at which a scheme is said to have come into being the appellant (like Mrs. McClelland) had an asset which he could have
ATC 4029
sold in its existing form, without incurring a liability for tax if he made a gain from that sale. Another difference between the two cases is that here it is clear that the appellant's intention was to dispose of the land, if he could do so to advantage, whereas the view of the facts which prevailed in McClelland's case was that the main purpose was to retain a substantial and valuable part of the land and that the sale of some of it was but a step taken to prevent the sale of the rest of it. On the question now under consideration, I do not think that that difference makes inapplicable the reasoning in the judgments in this Court, to which I have already referred, or in the judgment of the Privy Council. Their Lordships said, at p. 4119, that in this Court the Chief Justice had pointed out that Mrs. McClelland had made a profit, in the sense that the fee simple was much more valuable than the sum of the former interests in common. They added that ``this profit, being unrealised appreciation, was not a taxable profit in her hands''. Their Lordships went on to say, at p. 4120, that the criterion for determining that a single transaction produces assessable income rather than a capital accretion is (when the transaction is one of acquisition and resale) that it must ``exhibit features which give it the character of a business deal''. Their conclusion was that in the case under consideration there was not that kind of undertaking or scheme which is caught by sec. 26(a). They went on to say that the prior purchase of the brother's interest and its inclusion in the sale was simply a means to an end, that is, the retention of the more valuable land. Therefore it may be suggested that their ultimate conclusion in favour of the appellant upon the second part of sec. 26(a) depended upon a fact which is not present in this case. Nevertheless it seems to me, reading their judgment having regard to what had been said in this Court in the judgments of Windeyer J. and of the Chief Justice, that I ought to hold that the sale in this case of the entire interest of the appellant in the 224 lots did not produce a profit which is taxable as being a profit arising from the carrying on or carrying out of a profit-making undertaking or scheme.There remains for consideration another submission made on behalf of the respondent. It was said that the appellant bought a five-twelfths interest in the land for the purpose of profit-making by sale and that, within the first part of sec. 26(a), a profit which is taxable was derived from the sale of that interest.
On the evidence it is clear that the purpose of the appellant in acquiring the five-twelfths interest was to make a sale. In this respect the case is different from McClelland's case. But there are observations in that case which suggest that the attempt of the respondent to apply the first part of sec. 26(a) to the acquisition by the appellant of the five-twelfths interest and to the subsequent sale must fail at the threshold, simply for the reason that what he sold was not a five-twelfths share in the land but was a different thing, namely the entire fee simple. Windeyer J. (118 C.L.R. at p. 359) expressed the opinion that the first part of sec. 26(a) ``does not apply when what is sold is essentially different in kind from the thing acquired''. It seems clear that his Honour thought that the sale by Mrs. McClelland of the entirety of portion of the land was the sale of something different in kind from what she had bought. In the Full Court, the Chief Justice, in giving reasons for agreeing that no part of the money received on the sale was taxable under the first part of sec. 26(a), said (69 ATC at p. 4002) that Mrs. Mc Clelland did not purchase her brother's interest with a view to its resale and in his opinion ``she did not in any significant sense resell it''. In the judgment of Kitto J., all that was said on this point (at p. 4006) was that it had been rightly held that her purpose was not one of profit-making by sale of her brother's half interest, either in lot 5 or in the whole of the Rockingham land. In the Privy Council, the observations concerning the first part of sec. 26(a) (70 ATC 4115 at pp. 4118 - 4119) do not assist me to resolve the question now being considered.
In my opinion, I am not bound to hold that the first part of sec. 26(a) can never apply when what is bought is an undivided share in land and what is sold is the entirety of that land or part of it. What Windeyer J. said in McClelland's case (1969) 118 C.L.R. at p. 360) dealing with the second part of
ATC 4030
sec. 26(a), namely that the resolution of particular cases may depend upon matters of fact and degree, is applicable in my opinion to the operation of the first part of the paragraph, in some cases where there is not identity between what is bought and what is afterwards sold. For example, if a man bought land which was subject to a lease and sold it after the lease had expired, I should think that the provision could not be excluded merely because the purchase was of an estate in reversion and the sale was of an estate in possession. If a man buys an outstanding interest to supplement an interest to which he is already entitled and his purpose is a profitable sale of the resulting enlarged interest, it may be true to describe his aim as being to enhance the value of the interest which he has. But in my opinion the transaction may also be described as one in which his purpose is to make a profit from the subsequent disposal of the interest which he is then acquiring, although he knows that it will not remain in his hands a separate interest. In my opinion it should be held that the first part of sec. 26(a) is not necessarily inapplicable to the acquisition of an undivided share followed by a sale of the entirety. The provision is not in my opinion incapable as a matter of construction of applying to the acquisition made by the appellant in 1966 and 1967 and the sale made by him in January 1968.It is necessary therefore to consider whether or not the facts are such that the provision can and should be applied, and, if so, in what way the profit to be brought to tax should be calculated. The first problem is that of ascertaining an amount which can be regarded as representing a return obtained by the appellant from the disposal of a five-twelfths share in the 224 lots which he sold in January 1968.
It cannot be accepted as a general proposition that the value of a specified undivided share in land can be found simply by calculating the amount of the corresponding fraction of the value of the fee simple: see Mc Clelland's case (1969) 118 C.L.R. at pp. 363-364. But at this point the question with which I am concerned is not really a question of fixing the price which a five-twelfths share of the land would be expected to bring upon a sale of that share alone to a purchaser who had no other interest in the land. The question is whether it is proper for the purposes of sec. 26(a) to regard five-twelfths of the net price payable to the appellant upon his sale of the 224 lots as being a return accruing to him in consequence of his acquisition of a five-twelfths share in the land. In my opinion, in the circumstances of this case it is proper so to regard it.
The expert witness, Mr. Pollard, in forming an opinion as to the value in July 1965 of the land, took in one of his methods of approach the price of $4,300 paid by the appellant to the vendor of a one-eighth undivided share as demonstrating the value of that share and then he simply multiplied that price by eight. His opinion was that it was legitimate to do that and he gave reasons for that opinion. Although I was not and am not convinced that those reasons are entirely valid, it is to be noticed that the appellant did not adduce any evidence to the contrary. However, as I have indicated, I do not think that it is necessary to give full acceptance to that opinion in order to decide that the sale price realised may be treated as attributable proportionately to the interest, the acquisition of which enabled the appellant to sell the entire fee simple.
According to figures set out in Exhibit V, which have not been disputed, the net sale price was $240,000. In my opinion five-twelfths of that sum, that is to say $100,000, may be taken as a starting point in calculating a relevant profit arising from the sale.
But there are difficulties in considering what sums should be deducted as representing the cost to the appellant of the property. In relation to the questions which I am now about to discuss I have decided that I should give an opportunity to the parties to place further material before me, if they wish to do so, in the manner later explained.
In this judgment I have referred more than once to the appellant's acquisition by purchase of the outstanding five-twelfths interest in the land in Location 2125. The
ATC 4031
same mode of expression was used repeatedly in the arguments addressed to me at the hearing. For the purpose of considering some of the questions raised by these appeals, that is a sufficiently accurate description of what occurred. But in examining the question now under discussion it is necessary to look more closely at the facts. The additional beneficial interest which the appellant acquired by his contracts in 1966 and 1967 with the vendors of outstanding interests was not really five-twelfths. It was five-twenty-fourths. Silversands became beneficially entitled at the same time to five-twenty-fourths. I say that it became entitled at that time to that share because although in form there was an agreement (21 July 1966) for the sale by the appellant to Silversands of a five-twenty-fourths share in the land for the sum of $4,550, I think that the evidence shows that so far as the beneficial entitlement was concerned there was no interval between the passing to the appellant of the outstanding interests in the land and the acquisition by Silversands of an interest. They were really joint purchasers of the outstanding interest. If the appellant had then sold to a stranger he could not have made a sale of the fee simple. He would have been entitled to sell only a nineteen-twenty-fourths share in the land. But he could, if he wished, have sold also that same share in the 70 lots, which came afterwards into the ownership of Silversands. Before there was a resale by the appellant a new transaction took place. It was embodied in a written agreement of 29 November 1966. Silversands accepted ``as part satisfaction of its five-twenty-fourths interest in the land'' the lots specified in the agreement. (Nothing seems to me to turn upon the inclusion of the word ``part'',) Thus there was an exchange of interests without any additional cash consideration. The appellant parted with his nineteen-twenty-fourths interest in the 70 lots which went to Silversands. He received an enlargement of his existing interest in the other 270 lots. That enlargement was the addition of a five-twenty-fourths share and the result was that he then had an entire interest. When he resold he did not sell all the 270 lots. But the question for consideration is what was the cost to him of acquiring the five-twelfths share (in the 224 lots that he sold), which he did not have until it was purchased from the former owners (together with a like share in the other lots) in 1966 and 1967. It was acquired partly by that purchase and partly by the subsequent transaction with Silversands. The cost to the appellant of the purchase, that is of an interest in the 340 lots, was $5,350 together with any expenses that ought to be taken into account. The sum of $5,350 is the difference between the total of the purchase prices ($2,400, $3,200 and $4,300 and the $4,550 which Silversands agreed to pay. There may be a question whether all that sum or a proportionate part of it (224 to 340) should be taken into account. But it is the question of the cost to the appellant in the second transaction that causes me greater difficulty. Should this be taken as being the value, at whatever date is decided to be for this purpose the relevant one, of a nineteen-twenty-fourths undivided share in the 70 lots taken by Silversands? Should any adjustment be made of the figure so obtained in order to take account of the fact that in exchange for the surrender of that interest the appellant obtained an enlarged interest in the 46 lots that he did not sell in January 1968? If the value of the interest which he surrendered is to be taken into account should it be valued as at the date of the agreement (29 November 1966) or at some other date?I have stated what was surrendered and what was acquired by the appellant by the agreement of 29 November 1966. It may be suggested that the agreement shows, or at least provides evidence, that these were of equal value. Silversands obtained ownership of 70 lots in exchange for its five-twenty-fourths interest in 340 lots. There is not a great difference between the ratio 5 to 24 and ratio 7 to 34. Possibly it may be suggested that the appellant and Silversands acted in such a way and that these appeals have been conducted in such a way that a simple way could properly be adopted to determine the cost to the appellant, namely to treat the interest which he acquired from Silversands by the second agreement as costing him the same amount as that company had agreed earlier to pay to obtain a five-twenty-fourths
ATC 4032
share in the land. On that basis the total cost to him would be similar to what it would have been if he had simply acquired solely on his own account the outstanding five-twelfths share, that is to say it would be about $10,000. But it may be argued that such an approach is unwarranted.It is possible that the parties, after their advisers have perused these reasons, may be able to make an agreement (expressed, if so desired, to be without any admission as to the appropriateness or relevance in the determination of these appeals of the figure or figures agreed upon) as to the figure which should be taken to represent the profit realised by the appellant, if the first part of sec. 26(a) is held to be applicable upon the basis here under discussion. Alternatively the parties may be able to agree upon some of the figures to be used as components in calculating such a profit, without agreeing entirely upon the manner in which it should be calculated. Any such agreement, if made, should be filed for use as part of the material before the Court. It may, of course, be argued on behalf of the appellant that the circumstances are such that it is just not possible to ascertain by any means an amount of profit accruing from the sale upon which, upon the basis here being considered, sec. 26(a) would operate. If, however, such a profit could be ascertained I think it would be much less than the total profit upon which the assessments were based, those assessments having been made of course upon a different footing. It would be necessary to calculate how much of that total profit should be taken to have been received in each of the relevant years of income.
The questions to which I have referred in the latter part of these reasons are questions to which not much attention was given at the hearing, in the evidence or in the addresses of counsel. That is understandable. The contest between the parties was waged mainly upon other questions and it was not seen as necessary, by learned counsel or by myself, to give detailed consideration to some matters which have since appeared to me to be important. I do not think that I should decide them without affording an opportunity to the parties to make further submissions and perhaps to put forward some further evidence bearing upon them. In mentioning further evidence I have mainly in mind the possibility that the parties may wish to put forward some further opinions of experts as to values related to the question of determining the total cost to the appellant of what he acquired in 1966 and 1967.
As a further hearing in court is not practicable without undue delay or expense, I propose to make these reasons available to the parties and not to make at present any final order in the appeals.
In these reasons I have made some references to the evidence of Mr. Pollard but I have not examined or made findings upon the conflicting evidence of value given by him and by Mr. Gauntlett. Having regard to my views upon the submissions made to me I do not think it is necessary to do so. It may be, however, that if further submissions are made in writing a party may wish to rely upon some of the evidence already given by those witnesses and if so that evidence will of course be considered in relation to any such submission.
I publish for the information of the parties the reasons which I have prepared. I publish also some directions as to the manner in which the parties may, if they wish, supplement the material before the Court in these appeals. The appeals will be placed in the list again upon a date to be fixed.
DIRECTIONS: 1. Each party is to be at liberty to file an affidavit or affidavits to be used as evidence in these appeals provided that -
(a) Any such affidavit or affidavits is filed and a copy is served upon the solicitor for the other party on or before 25 February 1972.
(b) A party upon whom any affidavit is served if he objects to the use of that affidavit without cross-examination shall give notice by letter of that objection, within seven days after such affidavit has been served, to the other party and to the Deputy Registrar of this Court at the New South Wales Registry. If such notice be
ATC 4033
given the affidavit or affidavits to which it relates shall not be used unless further order or direction in that behalf be subsequently made.2. Each party is to be at liberty to forward written submissions addressed to the Deputy Registrar of this Court at the New South Wales Registry provided that these are posted not later than 10 March 1972.
3. A copy of any such submissions is to be served upon the solicitor for the other party.
4. Any affidavits or submissions filed or made in accordance with the foregoing directions are to be directed only to the questions indicated in these reasons as those upon which there should be an opportunity to supplement the evidence or the arguments already before the Court.
5. Subject to any further order or direction the appeals will be listed for judgment as soon as practicable after any further evidence or submissions have been received or after the times mentioned in these directions have elapsed.
This information is provided by CCH Australia Limited Link opens in new window. View the disclaimer and notice of copyright.