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Case J59

Judges: JL Burke Ch
RE O'Neill M

CF Fairleigh QC

Court:
No. 1 Board of Review

Judgment date: 11 October 1977.

C.F. Fairleigh Q.C. (Member): The fulcrum of each of these two references is the Commissioner's submission based by analogy on
Thomas v. F.C. of T. 72 ATC 4094 ; (1972) 46 A.L.J.R. 397 and on
F.C. of T. v. Faichney 72 ATC 4245 ; (1972) 47 A.L.J.R. 35 that -

``no matter how great the extent of the dedication in point of use to the pursuit of those activities from which a barrister earns his income, the rent applicable to a study in a barrister's residence which he occupies under two agreements (one as to the study and an ancillary area, say, the space taken

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up by a table near the main entrance, and the other agreement as to the remainder of the residence) is not an allowable deduction under sec. 51(1) of the Income Tax Assessment Act 1936 as amended.''

2. In so confining his main contention the Commissioner's counsel has not abandoned or conceded any other point which arises on the references. I propose to set out in para. 10 to 25 hereof some authorities re trusts and tenancies; and at para. 26 hereof return to the chief submission; and then at para. 43 hereof to refer to subsidiary matters which arise on the second reference.

3. The taxpayer, a barrister-at-law in private practice and with his chambers in the city, claimed a deduction in his return of income for the year ended 30 June 1974 as follows: - 

      Rent of study and ancillary

      area (at residence) .............   $840

      One-sixth of outgoings

      attributable to study ...........   $180

                                        ------

                                        $1,020

                                        ------

The Commissioner adjusted the income as returned by disallowing the claim to deduct $840 as aforesaid. The taxpayer objected thereto and the Commissioner decided to disallow the objection and a notice of assessment issued accordingly. That decision was referred to a Board for review.

4. The taxpayer in his return of income for the year ended 30 June 1975 claimed a deduction of $1,040 for rent as aforesaid and of $215 for outgoings (i.e., one-sixth as before). The Commissioner adjusted the income as returned by disallowing the claim for rent and by disallowing $185 of the claim for outgoings, thus allowing $30; and a notice of assessment issued accordingly. The taxpayer objected thereto and the Commissioner decided to disallow the objection. That decision was referred to a Board for review. Doubtless there should be a separate formal decision on each reference even though they have been heard together.

5. As the taxpayer who conducted his own case and so had the dual function of witness and advocate (cf. 16 A.L.J. 262) raised the question whether credibility is in issue, it can be said categorically that the answer is in the negative (
Browne v. Dunn (1894) 7 C. & P. 408 ).

6. The taxpayer and his wife entered into a contract to buy the subject property (a terraced house of two storeys) and on settlement the property was transferred to them as joint tenants subject to a mortgage to an insurance corporation. Neither the contract nor the transfer pursuant thereto makes any reference to a trust. It is clear that the vendor did not settle the property on the taxpayer and his wife as trustees (cf. the form of nomination of trustees under the Real Property Acts as this land is Torrens system); nor did the taxpayer and his wife settle the property on themselves (or on others) as trustees; and the evidence does not show a declaration of trust (in the strict sense) in respect of the property. A deed of settlement was in existence prior to the purchase of the property and there are two recorded resolutions of the trustees (the taxpayer and his wife) referable to the contract for the purchase of the property. There is also a deed of appointment of a new trustee under the deed of settlement. The deed of appointment (which bears the date 17 August 1975) states that the assets and liabilities as at 30 June 1975 are as set out in a schedule thereto and this includes the subject property. The taxpayer and his wife moved into the subject property in September 1973. Their first child was born on 26 March 1974 and the second child on 27 May 1975.

7. The first minute of the trustees' resolutions bears the date 6 April 1973 and contains provisions to the following effect: -

``Resolved that the Trust purchase (the subject property) for $90,500. Resolved that the trust accept a loan of $9,050 from (the taxpayer) to pay the deposit; and that it seek to raise a large loan secured by mortgage on the property, to finance as much of the balance as possible; (the taxpayer) intimated that he would advance to the Trust any further funds necessary on the terms that the moneys advanced should be repayable on demand. Resolved that the whole of the income of the Trust for the year ended 30 June 1973 should be accumulated.''

(N.B. There are no convenants resulting from this or the next resolution. Also if there is a breach by the taxpayer, it is impracticable for the two trustees to act jointly.)

8. The second minute of the trustees' resolution bears the date 20 August 1973 and contains provisions to the following effect: -

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``Resolved to borrow $50,000 at 9% per annum from (an insurance corporation) repayable by instalments over a period of 31 years, to finance the purchase of (the subject property) and to execute all necessary documents accordingly. It was agreed between the trustees and (the taxpayer, one of the two trustees) that the balance of moneys required to complete the purchase was to be lent to the trustees by (the taxpayer) to be repayable 7 days after demand in writing. It was agreed that the trustees would permit (the taxpayer) to occupy one room in (the subject property) as a study, together with such ancillary space and facilities as he might reasonably require from time to time for the purposes of his professional practice as a barrister; and that he would pay therefore the sum of $20 per week or such other sum as might be mutually agreed from time to time.

It was agreed that the trustees would permit (the taxpayer) to occupy the remainder of the premises as a residence upon the terms that so long as he was the occupier of the property: -

  • (a) he paid all outgoings and kept the premises in proper repair;
  • (b) he paid the interest under the said mortgage; and
  • (c) he made no demand for the moneys advanced by him to the trustees.''

9. In the notice of objection as referred to in para. 3 hereof the taxpayer informed the Commissioner that the residence (which he and his wife have occupied at all material times) is ``owned by a trust'' and he furnished a copy of the minute as referred to in para. 8 hereof as ``recording the arrangement pursuant to which the rent is paid'' (for the study).

10. A trustee is not permitted to effect a transaction between himself and the trust (e.g., purchase or lease of the trust property); and he cannot retire for the purpose of effecting such a transaction for that means that his decision was made whilst he was a trustee; and furthermore, by reason of his activities in managing the trust he has information and knowledge which he should use for the benefit of the beneficiaries and not of himself (
Gould v. O'Carroll (1964) N.S.W.R. 803 per Jacobs J.). A trustee's application for the approval of the Court for the sale of trust property to him was refused in
Re Overland (1960) Q.W.N. 25 and an order was made by Stable J. that the property be retained in the estate. Gibbs J. held in
Union Trustee Co. of Australia Ltd. v. Gorrie (1962) Qd. R. 605 that a trustee for the sale of property cannot, without the sanction of the Court, himself be the purchaser of the property, and this disqualification extends to a case where the sale is made by two co-trustees to one of themselves and other purchasers; see further
Re Lovett (1966) V.R. 65 per Hudson J. A trustee who is also a beneficiary may, in some circumstances, be liable for breach of trust (e.g.,
Re Dawson ; Union Trustee Co. Ltd. v. Perpetual Trustee Co. Ltd. (1966) 84 W.N. (Pt. 1) N.S.W. 399 ). Even where there is such an equitable centaur (to use Hanbury's description) other beneficiaries may have a right of election in respect of the impugned dealing.

11. In
Rowley, Holmes & Co. v. Barber and Anor. (1977) 1 W.L.R. 371 Kilner Brown J. held that where a person was the personal representative of a deceased man (the employer) and where that person was himself the employee, then the office of personal representative could give to that person sufficient separate legal personality to enable him to make an arrangement, an agreement, a contract, with himself in a different capacity. In short ( vide p. 376) an administrator or personal representative may in that capacity be entitled to make an arrangement with himself in a different and personal capacity. Apart from that type of exception (and the one-man company transactions) all three counsel in the matter before Kilner Brown J. were unable to find authority for the statement in Halsbury's Laws of England 4th Ed. Vol. 9 (1974) p. 81 - ``Where a person has different capacities, he may have power to contract in his representative capacity with himself as an individual'', and in the footnote ``e.g., a trustee, executor, administrator or agent''. As Kilner Brown J. said (at p. 374) there are several authorities, if authorities are needed, for the general proposition that a man cannot contract with himself, and reference was made to
Ellis v. Kerr (1910) 1 Ch. 159 ,
Napier v. Williams (1911) 1 Ch. 361 and
Ellis v. Joseph Ellis & Co. (1905) 1 K.B. 324 and the judgment continues: -

``Those three cases are authority for saying that in some circumstances, notwithstanding the title or status which a person gives to himself or acquires, the

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reality of the situation is that he is still the same person, namely the individual. Thus it is clear - as indeed Lord Denning said in his speech in
Rye v. Rye (1962) A.C. 496, 513 that, even going back to Blackstone's Commentaries, the law was beyond argument, namely that a person cannot grant a tenancy to himself, and a person cannot be both landlord and tenant. In Ellis v. Kerr it was the same person trying to be both convenantor and covenantee. In Ellis v. Joseph Ellis & Co. it was a slightly different point: there the two men were partners and one of the partners tried to employ himself. For the purpose of the Workmen's Compensation Act 1922 it was held that that was not a matter of possibility.''

Kilner Brown J. (at p. 375) in respect of the issue before him agreed with counsel that the office of administrator carries with it various attributes such as a capacity to sue, an assumption of obligation, a right to exercise, whereby the area over which these attributes of the office of administrator exists is so wide that the statement in Halsbury supra can be well supported even though it may be by way of analogous observation.

12. In
Henderson v. Astwood , Astwood v. Cobbold , Cobbold v. Astwood (1894) A.C. 150 the issue concerned a purported sale at public auction by the mortgagee, after default by the mortgagor, the ostensible buyer being a third party but in reality the mortgagee was the buyer. Lord Macnaghten at p. 158 said: ``The so-called sale was of course inoperative. A man cannot contract with himself. A man cannot sell to himself, either in his own person or in the person of another... It may be a cloak for a fraud, it may be a mere blunder.''

13. Where a person entered into an agreement with himself and another or others such a covenant or agreement was formerly absolutely void Ellis v. Kerr (supra); Napier v. Williams (supra). Under most modern legislation the covenant is construed as if it had been made with the other person or persons (cf. United Kingdom Law of Property Act 1952 sec. 72, 82 - Rye v. Rye supra;
Harding, Bryant and Page v. Commr. of I.R. (N.Z.) (1974) 1 NZTC 61,209 - the Australian State in which the residence is situate appears to me on my brief research to have adopted most relevant modern United Kingdom legislation).

14. In Rye v. Rye supra Viscount Simonds at pp. 505-506 said that his mind recoiled against an interpretation of the Law of Property Act which lead to so ``fanciful and whimsical a result'' (
Grey v. Ellison (1895) 1 Giff. 436 at p. 444 per Stuart V.-C.) that a man could grant a lease to himself; and his Lordship would not give currency to the suggestion that the statute had given birth to such a monstrous child even though counsel had assured him that, for purposes connected with tax law, companies had found it convenient to grant leases to themselves. Lord MacDermott said (at p. 507) that before the Law of Property Act 1925 came into operation, A could not convey or lease to A and A + B could not convey or lease to A + B. Lord Radcliffe (at p. 510 see also p. 512) referred to a transaction which is absurd in itself such as a single individual purporting to make himself his own tenant; and (at p. 511) that he could, of course, put land in trust for himself by conveying it to a nominee and (his Lordship supposed) he could similarly demise land to a nominee if there were any conceivable point in the operation; and he could vest land in himself through the machinery of the Statute of Uses as when a freehold owner desiring to make a strict settlement of land granted it to a feoffee to the use of himself in fee simple until an expected event and thereafter to the use of himself for life with remainders over. After saying that nothing in the United Kingdom 1925 Act made it possible for a man to enforce contractual obligations against himself, Lord Radcliffe continued ``I do not feel sure that the same result would necessarily be reached in the case of two persons seeking to demise to themselves by deed, for sec. 72(3) (of the 1925 Act) would, I think, be able to pass a legal interest by demise and it might be possible to express the required contractual obligations in the form of joint and several covenants, so that each person convenanted separately with himself and the other. It seems that sec. 82(1) (of the 1925 Act) would then convert such a covenant into an effective obligation.''

15. Lord Denning (at p. 513) said that at common law it was impossible for a person to grant a tenancy to himself, or for two persons to grant a tenancy to themselves, for as soon as the tenancy and the reversion are in the same hands the tenancy is merged, that is sunk or drowned in the reversion. Thereupon Denning L.J. said " Neither could a person at common law covenant with himself, nor could two

ATC 516

persons with themselves. Neither could one person covenant with himself and others jointly (emphasis added). Such a covenant said Pollock C.B. is `senseless', see
Faulkner v. Lowe (1848) 2 Ex. 595 at p. 597 . " Then (p. 513) Denning L.J. posed the question whether the Law of Property Act 1925 changed all this and gave the answer: -

``It has certainly changed it where two persons grant a tenancy by writing to one of themselves, as where A and B grant a yearly tenancy to B; and B enters into covenants with A and B to repair, and so forth. Such a tenancy is valid under sec. 72(4) because it is a `conveyance' and the covenants are enforceable under sec. 82(1) just as if B had covenanted with A alone. Notice to quit can be given by A to B or B to A. So no difficulty arises.... both those subsections ( scil. sec. 72(4) and 82(1)), as I read them, only apply where one of the persons, at any rate, is not on both sides.... even under the 1925 Act a person cannot grant a tenancy to himself... The truth is that they ( scil. A and B) cannot grant a tenancy to themselves.... (Section 72(3)) applies to such cases as these: where a man who is sole executor conveys to himself as devisee: or a case where a man who is a beneficial owner conveys land to himself as trustee for charitable purposes. Such a conveyance is not founded on an agreement nor does it contain covenants that may require to be enforced. There is no reason, therefore, why it should not be held valid.''

16. In
Purcell v. D.F.C. of T. (1920) 28 C.L.R. 77 the owner of certain Crown leasehold and chattels declared himself a trustee thereof for his wife, his daughter and himself. Isaacs J. at p. 88 said that the declarant thereby held all the property in trust for the three equitable owners and continued at pp. 89-91 to say: -

``The three would have equal right to possession of the business and all the property belonging to the firm. Their possession would be one of the `unities' of their joint ownership. The right to possession is `the essential part of ownership' ( Williams on Real Property 20th Ed. p. 2)) and, resting, at the primary gift, there is no reason either in law or in justice why the wife should not - whatever might be the case with the daughter - enter at will into possession. No injury could possibly arise thereby to any other cestui que trust. The principle is exactly the same as is laid down in In,
re Marshall ; Marshall v. Marshall (1914) 1 Ch. 192 at pp. 199-203 .... but a `declaration of trust without transfer' means without transfer of the legal ownership to the cestui que trust, who is the grantee, and the right of possession is the cestui que trust's right of personally having possession as against (and not by means of) the trustee. In
Milroy v. Lord (4 De G.F. & J., 264 at p. 274) Turner L.J. specifies three modes of effectual, though voluntary, transfer of property by a settlor, viz., (1) actual transfer to the beneficiary, (2) transfer to another person as trustee for the beneficiary and (3) declaration that he himself holds it in trust for the beneficiary. The last is the declaration without transfer, and the right of the equitable grantee to have possession cannot be satisfied by the settlor's retention of the property. That would give no meaning to the statutory requirement....''

17. In
Glynn. v. F.C. of T. (1964) 111 C.L.R. 169 at p. 174 Kitto J. said: ``It is true that proof of a formal statement by the owner of property to the effect that he holds it upon trust for another is not conclusive proof of the trust, for special circumstances may explain the statement as having been due to some other intention than that of creating a trust.'' See also
Glynn v. Commr. of Stamp Duties N.S.W. (1977) 7 A.T.R. 417 as to intention to create a trust;
Truesdale v. F.C. of T. 70 ATC 4056 ; (1970) 44 A.L.J.R. 296 ;
Tucker v. Commr. of I.R. (N.Z.) (1965) N.Z.L.R. 1027 .

18. As between the freeholder and the lessee, the freeholder is seised and the lessee possessed of the land. Possession, in a wide sense, denotes occupation under any title, whether of freehold or leasehold or even without title ( Halsbury Laws of England 3rd Ed. Vol. 32 p. 311). Possession of land ordinarily involves two elements, viz., a physical relation to the land adopted to give control over it, and to exclude others and a mental intention to exclude others from physical occupation ( Restatement of Law of Property Vol. 1 pp. 19-20). In
Bank View Mill v. Nelson Corporation (1942) 2 All E.R. 477 at p. 486 Stable J. said: ```Possession' is a word that, perhaps like a great many words, is incapable of an entirely precise and satisfactory definition. Possession of a house

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is essentially different from possession of a gold watch.'' As to the nature of a joint tenancy in land see
Eastgate v. Equity Trustees Executors and Agency Co. Ltd. (1963-1964) 110 C.L.R. 275 at pp. 282-283 per Kitto J.

19. In
Jones (A.E.) v. Jones (F.W.) (1977) 2 All E.R. 231 the step-mother held a ¾ th the share in a house property as tenant-in-common with the step-son who held a ¼ th share. He was in sole occupation of the house and she wanted some payment in the nature of rent. Lord Denning M.R. at p. 235 said: -

``Now the common law said clearly that one tenant in common is not entitled to rent from another tenant in common, even though that other occupies the whole. That appears from
McMahon v. Burchell (1846) 2 Ph. 127 at p. 134 by Lord Cottenham L.C. and
Henderson v. Eason (1851) 17 Q.B. 701 at p. 720 . Of course if one of the tenants let the premises at rent to a stranger and received the rent, there would have to be an account but the mere fact that one tenant was in possession and the other was out of possession did not give the one that was out any claim for rent. It did not do so in the old days of legal tenants in common. Nor does it in modern times of equitable tenants in common. In
Bull v. Bull (1955) 1 Q.B. 234 at p. 239; (1955) 1 All E.R. 253 at p. 256 I said `... the son, although he is the legal owner of the house, has no right to turn his mother out. She has an equitable interest which entitles her to remain in the house as tenant in common with him until the house is sold.' As between tenants in common, they are both equally entitled to occupation and one cannot claim rent from the other. Of course, if there was an ouster, that would be another matter;... but there can be no claim for rent by one tenant in common against the other whether at law or in equity.''

Roskill and Lawton L.JJ. agreed and the former referred to
Kennedy v. De Trafford (1897) A.C. 180 and said that that showed that the claim for rent was foredoomed to fail.

20. Whilst the evidence is scant, it seems that at the time when the taxpayer and his wife completed the purchase of the property from the vendor there was no interest in others (whether beneficially or at common law) adverse to that of the taxpayer and his wife. Thus they were entitled to possession of the entire residence and land appurtenant thereto and neither was able to exclude the other from possession of the whole or of any part thereof. From the outset and at all subsequent material times there was not (so far as the evidence goes) any beneficial interest disturbed by their possession of the whole of the subject property.

21. The observation of
Lord Greene M.R. in Booker v. Palmer (1942) 2 All E.R. 674 at p. 677 is apposite for a licence to occupy as well as for a lease: -

``To suggest there is an intention to create a relationship of landlord and tenant appears to me to be quite impossible. There is one golden rule which is of very general application, namely, that the law does not impute intention to enter into legal relationships where the circumstances and the conduct of the parties negative any intention of the kind.''

22. To adopt phrases from the judgment of Winn L.J. in
E.R. Ives Investments Ltd. v. High (1967) 1 All E.R. 504 at p. 513 it is necessary to envisage in terms of legal concepts what effect was produced by the arrangement which is referred to in the resolution set out in para. 8 hereof. The expression ``occupy'' suggests a licence to occupy, and yet it would seem that none was needed by the taxpayer. One might perhaps think of an exclusive licence in the sense of excluding the taxpayer's wife from occupying the study for her own purposes, perhaps as a sewing room, or bridge party room. There are two objections to that hypothesis: one is that exclusion of the taxpayer's wife is not compatible with the sense in which it is said in the same document that the taxpayer is permitted to occupy the remainder of the premises as a residence; the other is that any such arrangement is not one to which the common law or equity would pay any heed. Certainly there is a principle of law that if a party enters into an arrangement which can only take effect by the continuance of a certain existing set of circumstances, there is an implied engagement on his part that he shall do nothing of his own motion to put an end to that state of circumstances under which alone the arrangement can be operative (
Stirling v. Maitland (1865) 5 B. & S. 840 ; 122 E.R. 1043 per Cockburn L.J.; approved by the House of Lords in
Southern Foundries (1926) Ltd. v. Shirlaw (1940) A.C. 701 , and applied in
Shindler v. Northern Raincoat Co. Ltd. (1960) 1 W.L.R. 1038 ).

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There are cases in which a promise is made with the intention that it will create legal relations and the courts have said that the promise must be honoured (
Central London Property Trust Ltd. v. High Trees House Ltd. (1947) 1 K.B. 130 ;
Barns v. Queensland National Bank Ltd. (1906) 3 C.L.R. 925 ;
Butler v. Fairclough (1917) 23 C.L.R. 78 at p. 95 ;
Petrie v. Dwyer (1954) 91 C.L.R. 99 at p. 104 ). This is not to say that the courts have gone so far as to give a cause of action in damages for the breach of such a promise ( High Trees supra at p. 134) and the question is whether such a promise gives rise to an estoppel ( ibid; and see the limitation of estoppel to representations of existing fact, and not to promises of future conduct in
Jordon v. Money (1854) 10 E.R. 868 ; cf.
Craine v. The Colonial Mutual Fire Insurance Co. Ltd. and Anor. (1920) 28 C.L.R. 305 ;
Yorkshire Insurance Co. Ltd. and Ors. v. Craine (1922) 2 A.C. 541 ). Yet domestic arrangements stand on a special footing. In the course of family life many agreements are made which could never be supposed to be the subject of litigation ( Cheshire & Fifoot's Law of Contract Aus. Ed. at p. 189 and cases there cited). In Chitty on Contracts, General Principles, 21st Ed. at p. 17 it is said that in some cases there is a presumption from the relationship of the parties that the promises exchanged are not to be legally binding, e.g., in the case of domestic arrangements between husband and wife; and (at p. 658) until the Law Reform (Married Women and Tortfeasors) Act 1935 (U.K.) the common law did not allow husband and wife to contract with one another as they were one person in law.

23. The licence to occupy in favour of the taxpayer (or his wife's abandonment or relinquishment of the right to occupy) is not wholly and solely a domestic arrangement. However at the time when the taxpayer and his wife obtained title under the Torrens system to the residential property they were thenceforth together entitled to possession and occupation thereof and the question is whether there is an agreement of which Equity (or the common law) takes cognisance whereby the taxpayer's wife is excluded from her pre-existing rights, or to put it another way, whereby the taxpayer's pre-existing rights are enlarged.

24. As to a document which purported to be a conveyance or settlement of land and yet produced no legal effect whatever see
The Commr. of Stamp Duties (Queensland) v. Hopkins (1945) 71 C.L.R. 351 at p. 360 per Latham C.J.; and in respect of ``licence'', though in a sense different from the one here relevant, some assistance may be gained from
Bishops Auckland Industrial Co-op. Society Ltd. v. Butterknowle Colliery Co. Ltd. (1904) 2 Ch. 419 at p. 447 affirmed (1906) A.C. 305 . I do not think that it would help the taxpayer to refer to many of the long series of cases dealing with the way in which one interprets commercial documents, e.g., ``take a practical commercial view rather than a technical or legalistic view'' per Lord Pearson for the Privy Council in
Australian and New Zealand Bank Ltd. v. Ateliers de Constructions Electriques de Charleroi (1967) A.C. 86 at p. 113 ; see also
Reardon Smith Line v. Hansen-Tangen (1976) 3 All E.R. 570 ); or that a document of constraint is to be construed in a sense favourable to the promisor ( Peters
American Delicacy Co. Ltd. and Anor. v. Patricia's Chocolates and Candies Pty. Ltd. (1947) 77 C.L.R. 574 at p. 586 per Dixon J. as he then was); nor that a document entered into by a taxpayer with a third party will generally be accepted by a Board of Review at its face value where the document has not been the subject of litigation: one does not speculate as to the possible result should the parties to the document litigate it - but this is something different from the construction of the document per se. I do not see the present case as one of a ``Voluntary assumption of a legally enforceable duty'' (
Australian Woollen Mills Pty. Ltd. v. The Commonwealth (1954) 92 C.L.R. 424 at p. 457 ;
Placer Development Ltd. v. The Commonwealth (1969) 121 C.L.R. 353 at p. 367 ). I see less prospect of an equity arising from the present recorded arrangement than that in Pearce v. Pearce 17 March 1977 N.S.W. Supreme Court, per Helsham C.J. in Equity. I would not accept the arrangement in the present case as being an executory licence or lease (cf.
Butts and Anor. v. O'Dwyer and Anor. (1952) 87 C.L.R. 267 ), i.e., subject to ultimate approval of the Supreme Court.

25. Whilst the Commissioner is not presently basing any argument on the technicalities of the property becoming trust property under the deed of settlement or on the validity of the arrangements made between the taxpayer and his wife as trustees (if such they be of the property) on the one hand and the taxpayer on the other hand, the question which remains open for a Court if an appeal ensues is whether the arrangement as recorded

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in para. 8 hereof creates any such obligations as a Court would acknowledge. (See and compare as Isaacs J. says in Purcell supra the language of the Privy Council in
Mussoorie Bank v. Raynor (1882) 7 App. Cas. 321 at p. 331 .) It may be that the payments of rent are simply ex gratia without consideration and without giving rise to any enforceable right, despite the fact that those payments have been returned as income of the trust. Perhaps the present arrangement (whether as to a tenancy of the study or as to a licence to occupy the study) should be regarded as Isaacs J. in Purcell at p. 94 thought that the declaration of trust might possibly be regarded - i.e., as a nullity, a mere simulacrum. Yet even if the present arrangement can aptly be dubbed factitious, or spurious, it is not fictitious in the sense in which the hire purchase agreement was fictitious in
Bennett v. Griffin Finance (1967) 1 All E.R. 515 ; see also
Snook v. London and West Riding Investments Ltd. (1967) 1 All E.R. 518 . At the present juncture it is unnecessary to pursue those questions.

26. I now return to the ``home office'' line of cases on which the Commissioner supports the assessment, and in relation thereto other aspects of the evidence are set out.

27. The notices of objection indicate that the study is a large room (approximately 13ft x 16ft) with a very large quantity of convenient cupboards and bookshelves; that the room is furnished and used exclusively as a study -

``except that (the taxpayer) also keeps (his) clothes there.''

It is said that the house has six principal rooms (i.e., excluding kitchen, bathroom and several smaller rooms used for incidental purposes); on a square footage basis the proportion for the study is said to be about one-tenth. The residence is old and so repairs and maintenance are more costly than with a modern house.

28. The evidence is that the taxpayer uses this study as a changing or dressing room adjacent to the master bedroom. His wife also has a dressing room adjacent to that bedroom. All those rooms are on the upper floor of the residence. The taxpayer also kept a card index of cases in the study and many books and precedents, filing cabinets and furniture suitable for a continuation of his daily work upon returning home in the evening.

29. The line of reasoning in Thomas and Faichney supra does not give a peremptory denial to the proposition that a barrister who has chambers in his residence (whether by conversion or by addition of rooms) is entitled to the appropriate taxation advantages which are available to a medical practitioner who has a surgery or consulting room in his residence ( cf. para. 34 hereof).

30. In Faichney, Mason J. was not adverting to and had no occasion to consider, for example, the impoverished self-employed, say a boot repairer, who carries out the work which produces his income in a room, or on the verandah of the dwelling house which he rents, and seeks a deduction for an appropriate proportion of the rent pursuant to the words in sec. 51(1), viz., ``... to the extent to which...'' As Templeman J. said in
Caillebotte (H.M. Inspector of Taxes) v. Quinn (1952) 2 All E.R. 416 ; 50 T.C. 222 (and leaving aside as inappropriate to the Australian Act, ``exclusive use''): -

``... it is possible to apportion the use and cost of a room on a time basis and to allow the expense of the room during the hours in which it is used exclusively for business purposes in the same way as it is possible to calculate the business expense of a car which is sometimes used for business purposes exclusively and sometimes used for pleasure.''

31. In Thomas one of the three rooms added to the barrister's house was used by him as a study in the course of carrying on his profession. So also in Faichney the dictum of Mason J. is given in respect of the same typical situation. Neither of these cases adverts to the position where a barrister is using a room in his home as barrister's chambers - and no doubt, questions of degree will arise. The present case is one where the barrister has a large principally non-litigious practice and he prepares in his study documents which are necessary in the course of his practice as well as doing general and specific legal research there. It may be that the present taxpayer is engaged in doing such work in his study for more lengthy periods than was the appellant in Thomas. It is clear that the present taxpayer works until late at night in his study. But whether the present taxpayer uses his study in excess of the time as in Thomas is not a matter material to the issue. There is nothing untypical (apart from the use of the room as a

ATC 520

dressing room) in the use made by the taxpayer of the study. The study was not the place of customary resort (though exceptions did arise) for those who sought the professional services of the taxpayer. His home was his private demesne. The difference in character of such a study and the medical practitioner's surgery or consulting room is readily recognizable. The study is an integral part of the home and partakes of the characteristics of the home. On the other hand the character of the surgery or consulting room is more akin to that of a shop front to a residence wherein the shopkeeper lives. The shop front with the house at the rear, the shop with the residence above it, the home with the surgery in it or attached to it are structures serving a dual purpose (to adopt an expression from another context -
Gollan v. Randwick Municipal Council (1961) A.C. 82 ; Broken
Hill Pty. Co. v. Valuer-General (1970) A.C. 627 at p. 639 ) and this may, or may not, be apparent from observation of the structure.

32. If a barrister adds to his home rooms designed for use as professional chambers, or alters existing rooms so that they serve that purpose, the physical appearance (not necessarily the external appearance) of the home will be changed to some extent and so will the character of the structure - in particular, as with the surgery or consulting room, or shop as an adjunct to a dwelling, there may be a separate entrance, or if not, an internal division between the parts of the structure which serve different purposes. On the other hand when a barrister simply uses a room in his residence as a study even though it is furnished as a barrister's working room is furnished and is used for professional purposes, there is generally no significant change in the physical characteristics of the residence. The character of the residence (so also the character of the money invested in the residence) does not change by reason of one room in it, or added to it, being exclusively used by the barrister as a study in the conduct of his profession.

33. It is known to many members of the legal profession that some practising barristers do not retain chambers in the city and accordingly they hold all or most professional conferences and consultations and do most ``chamber'' work in a section of their home set side for that purpose. The impact of town planning restrictive legislation for permissive and prohibited uses is immediately apparent, though not so blatant as where a solicitor or accountant has a shingle on the outer wall of his residence indicative that he practises his vocation there. Furthermore some barristers with city chambers have in their home other chambers on a bona fide basis ( cf.
Nevill & Co. Ltd. v. F.C. of T. (1936-1937) 56 C.L.R. 290 at p. 300; 4 A.T.D. 187 at p. 193 per Latham C.J.) and customarily proceed directly (and it may be in the company of the instructing solicitor and client) from one or other set of chambers to the court, depending again on bona fide considerations in the interests of efficiency. In such circumstances the ``home chambers'' will be a base (or one base) for the professional work in the sense in which ``base'' is used in
Lunney and Hayley v. F.C. of T. (1957-1958) 100 C.L.R. 478 at p. 500; 11 A.T.D. 404 at p. 414 ;
Horton v. Young (Inspector of Taxes) (1972) 1 Ch. 157 at p. 167 ;
Weston v. Young (Inspector of Taxes) noted at (1972) 1 Ch. 170 ;
Newsom v. Robertson (1953) Ch. 7 at p. 16 and in
F.C. of T. v. Ballesty 77 ATC 4181 . The facts as last postulated for the barrister differ from what was referred to by Rath J. in
F.C. of T. v. Collings 76 ATC 4254 at p. 4268 , viz., ``... she must have more than one place of work. Hers is not the freedom of choice of a barrister who does some of his work at his home.''

34. The High Court ( Barwick C.J., Gibbs and Jacobs JJ.) on 22 August 1975 dismissed instanter an application for special leave to appeal from the decision of Helsham J. in
F.C. of T. v. McCloy 75 ATC 4079 (where Helsham J. upheld the Commissioner's appeal against this Board's decision in Case F55,
74 ATC 308 ). It is recorded in the transcript of proceedings in the High Court (as initially transcribed and uncorrected) that during the submissions of counsel for the applicant the following discussion occurred: -

``BARWICK C.J.:... You are saying that is one of the outgoings on his house. He has got it mortgaged. But you see people mortgage a house for a variety of reasons, not always of necessity. But even if of necessity you would be making quite a distinctly different law for one group than for another. One man who has got enough money to own his house and a man who has not will be treated differently.

COUNSEL: To take your Honour's example and apply it to a medical practitioner who borrows on an unencumbered house for some collateral business activity may or

ATC 521

may not get a deduction, but that depends upon a business activity.

BARWICK C.J.: He ought not to get a deduction. It is not money expended for the purpose of gaining his assessable income. It is interest paid on money borrowed, and the purpose for which he uses the money is not for the gaining of assessable income... (discussion continued on a different aspect).

COUNSEL: Can I come back to them, if I may for a few moments longer. This question your Honour put to me about the doctor, I am sorry, I think it is important. If a man has to borrow to buy a factory or to buy some business equipment, or to buy law books, he normally gets a deduction for the interest on that borrowed money. If he is wealthy enough, he does not. It is no different in my submission - and so with the manufacturer, from the Broken Hill Pty. Co., down to the smallest citizen.

BARWICK C.J.: But the Commissioner if he is doing his task will always look at interest to see whether in fact the principal is being used to earn assessable income and he will disallow interest that is not so used even though it happens to be borrowed on the factory. It is the use to which the money is put in earning assessable income. That is what makes me think there is a very big logical non sequitur in saying well, this man borrowed some money on his house and he is paying interest and therefore it is used partly to pay for his study.

COUNSEL: That is not the proposition that was found by the Board of Review, your Honour. This man did not borrow money on his house and then use the money for something else, he borrowed money so that he could buy a house and on the evidence the Board has found that he had to buy a house that was different from the house that he otherwise would have bought.

BARWICK C.J.: This is what my brother Jacobs puts to you, but you did not seem to appreciate it. This Court would not be able easily to lay down in respect of borrowed money any universal rule that would be useful because the question must be, even if you are partly right, is whether the money itself is used to gain assessable income so as to make the interest on it a proper deduction. You could not lay down a rule.''

35. In
Korner and Others v. I.R. Commrs. (1969) 45 T.C. 287 at p. 297 Lord Upjohn, speaking generally, said that a barrister who works in his house where he keeps or brings his law books and works on his briefs in the evenings and at week-ends is allowed by the Crown a reasonable sum in respect of the necessary upkeep of his dwelling as being properly attributable to his professional activities. In Korner some part of the expenditure on rates, repairs and insurance was allowed. See also
Newlin v. Woods (1966) 42 T.C. 649 at p. 657 , and
Horton v. Young (1971) 47 T.C. 60 at p. 63E . Some relief of this nature is given by sec. 53(1) and sec. 54 of the Income Tax Assessment Act 1936 as amended and Korner is not an authority for extending the established scope of sec. 51(1). If the matter were to be considered free from the impact of Thomas and Faichney I would regard myself as virtually bound to follow where in pari materia a decision of the Court of Appeal, a fortiori one of the House of Lords, notwithstanding the change from colonial status which was fundamental to the advice given in
Trimble v. Hill (1879) 5 A.C. 342 at pp. 344-345 ; and compare the leading editorial in 45 A.L.J. 225. The observation of Windeyer J. -

``... all judgments of the House of Lords are not equally persuasive and all statements in all speeches of their Lordships are not equally acceptable (
Skelton v. Collins (1965-1966) 115 C.L.R. 94 at p. 135 )''

is not intended as a direction to inferior courts or to administrative tribunals. See further
Webb v. F.C. of T. (1922) 30 C.L.R. 450 ;
Sexton v. Horton (1926) 38 C.L.R. 240 and
Stuckoid Pty. Ltd. v. Stadiums Pty. Ltd. (1960) 107 C.L.R. 521 at p. 525 on binding precedents. Note also the principle in
Adelaide Racing Club Incorporated v. F.C. of T. (1965) 114 C.L.R. 517 as to regarding a property as an indivisible whole and not as a series of separate parcels some of which are used for the purpose of producing assessable income and some of which are not so used, and thereupon looking to the chief purpose for which the property is used. The industry of the Commissioner's counsel and of those instructing him has resulted in the Board having before it photostat copies of a series of decisions from Canada upon taxation problems similar to the present one. However I do not think that I should take up time and

ATC 522

space in analysing or commenting upon those decisions ( cf. 51 A.L.J. 288).

36. The Board has been referred to passages in a New Zealand text book `` Molloy on Income Tax '' which are critical of the reasoning in Faichney and Thomas and the author concludes that the High Court should have applied the test whether the expenditure on the outgoings was ``incidental and relevant'' to the operations carried on by the taxpayer in the production of his income. The criticism is ill-founded. As Mason J. said in
Lodge v. F.C. of T. 72 ATC 4174 at p. 4175; (1972) 128 C.L.R. 171 at p. 174 ; it was pointed out by Williams, Kitto and Taylor JJ. in Lunney and Hayley supra that these statements did not constitute ``an exclusive and exhaustive test for ascertaining the extent of the operation of the section''. See further
Commr. of I.R. (N.Z.) v. Castle (1971) 2 A.T.R. 481 at pp. 486-487 .

37. A phrase such as ``incidental and relevant'' as used in
Ronpibon Tin N.L. and Tongkah Compound N.L. v. F.C. of T. (1949) 78 C.L.R. 47 ; 8 A.T.D. 431 is only a comment ( cf. Finn's case supra per Dixon C.J. 106 C.L.R. 60 at p. 67) unless used to mean the character or nature of a loss or outlay (
Charles Moore & Co. (W.A.) Pty. Ltd. v. F.C. of T. (1956) 95 C.L.R. 344 at p. 351; 11 A.T.D. 147 at p. 149 ). Where the leading words in a statute are, e.g., ``in the course of his employment'' the introduction of a phrase such as ``incidental to the employment'' is a judicial gloss, and such judicial language is never to be construed as though it were the language of the statute (per Roskill L.J.,
R. v. National Insurance Commissioner (1977) 2 All E.R. 420 at p. 427 ); and words such as ``reasonably incidental to his employment'' are only words of explanation ( ibid at p. 430). At best felicitous phrases crystallize some factors which may incline the scale in a particular case after a balance of all other considerations has been taken (cf.
B.P. Australia Ltd. v. Commr. of Taxation of the Commonwealth of Australia (1966) A.C. 224 at p. 265; 112 C.L.R. 386 at p. 397 ).

38. Notwithstanding the wide application to be given to the phrases in the positive provisions of sec. 51(1) ( cf. on the superseded Act
Amalgamated Zinc (De Bavay's) Ltd. v. F.C. of T. (1935) 54 C.L.R. 295 at p. 309 per Dixon J., as he then was) the essential character of the expenditure is the criterion ( Lunney and Hayley supra 100 C.L.R. at pp. 498-499; 11 A.T.D. at pp. 412-413;
Pye v. F.C. of T. (1959) 33 A.L.J.R. 337 at p. 339 ). The character of the expenditure fetters the otherwise free choice of the self-employed ( Nevill supra, see also
Owen v. Pook (1970) A.C. 244 at p. 263 per Lord Wilberforce; Caillebotte supra at p. 416; 227). Even length of time though theoretically not a deciding factor, may, in practice, shed a light on the nature of the advantage sought ( B.P.'s case supra at p. 267; pp. 399-400); so also with the way in which a benefit is to be used, relied on and enjoyed (
Sun Newspapers Ltd. v. F.C. of T. (1938) 61 C.L.R. 337 at p. 362 cited by the Privy Council in B.P.'s case supra at pp. 261 and 273; 394 and 405).

39. I leave aside as irrelevant to a claim by the self-employed or by a person practising a profession all cases which are dependent on the test of ``condition of employment'' (in the sense of a term express or implied -
E.M.I. (Australia) Ltd. v. F.C. of T. 71 ATC 4112 at p. 4118; (1971) 45 A.L.J.R. 349 at p. 353 ; e.g.,
F.C. of T. v. Finn (1961) 106 C.L.R. 60 ;
F.C. of T. v. Hatchett 71 ATC 4184 ; (1971) 125 C.L.R. 494 ;
F.C. of T. v. White 75 ATC 4018 (where the phrase ``part and parcel'' seemingly means ``condition of employment''); F.C. of T. v. Ballesty supra 75 ATC 486. ``Perceived connexion'' as used in Hatchett supra was not put forward by Menzies J. as a test and his Honour expressly refers to the taxpayer ``in reliance upon the conditions of his employment spending more to earn more''. Absurdities arise from a literal application of phrases of wide import such as ``connected with'' (
Commr. of Customs v. Top Ten (1969) 3 All E.R. 39 at p. 93 per Lord Donovan ); and qualifications thereon such as remote (or tenuous) or reasonable (or sufficient) connexion demonstrate that ``connexion'' per se cannot be a test and may lead the user into the pitfalls of petitio principii (cf. The
National Insurance Co. of New Zealand v. Espagne (1961) 105 C.L.R. 569 at p. 570 ) and to the use of a chain ``composed of missing links'' (cf.
Overseas Tankship (U.K.) Ltd. v. Morts Dock and Engineering Co. Ltd. (The Wagon Mound No. 1) (1961) A.C. 388 at p. 422 ;
Woods v. Duncan (1920) A.C. 956 at p. 984 ). Where such phrases are used (e.g., ``real connexion'' by Latham C.J. in
Robert G. Nall Ltd. v. F.C. of T. (1936-1937) 57 C.L.R. 695 at p. 706 and ``further connexion'' and ``sufficient relation'' by Dixon J., as he then was, ibid p.

ATC 523

712) they are only put forward as a step in the reasoning.

40. 
F.C. of T. v. Kropp 76 ATC 4406 uses the expression ``perceived connexion'' in circumstances where an outlay upon an overseas journey was ``inherently likely to result'' in the taxpayer receiving on his return to Australia re-employment on more advantageous monetary terms: and this was held to be a ``sufficient association''. Waddell J. (at p. 4410) said that the question whether there is such a ``perceived connexion'' in any particular case so as to enable a taxpayer to succeed under the positive limbs of sec. 51(1) of the Act is a matter of judgment informed by the criteria established by the cases. Thus one cannot use ``perceived connexion'' per se as a test but must return to the criteria in case law. The word ``perceived'' in the phrase ``perceived connexion'' is merely a grace note. There are dangers in selecting a phrase from a judgment on a factual situation and regarding it as the solution of questions whether something is or is not within the provisions of a statute (
Ransom v. Higgs 50 T.C. 1 at p. 91A; (1974) 3 All E.R. 949 at p. 966(g) ;
G. & C. Kreglinger v. New Patagonia Meat and Cold Storage Co. Ltd. (1914) A.C. 25 at p. 40 ;
Ogden Industries Ltd. v. Lucas (1969) 1 All E.R. 121 at p. 124F ). There are circumstances where the phrase ``remote connexion'' serves a useful purpose (
Bowden (H.M. Inspector of Taxes) v. Russell & Russell (1965) 42 T.C. 301 at pp. 305 and 307 ); and, of course, ``sufficiently proximate'' is used with a temporal aspect (
A.G.C. Advances Ltd. v. F.C. of T. 75 ATC 4057 at p. 4065; (1975) 49 A.L.J.R. 105 at p. 111 ); so also the phrase ``requisite degree of proximity'' has its place in an appropriate context, e.g., in a common law action as in
Caltex Oil (Aust.) Pty. Ltd. v. The Willemstad (1977) 51 A.L.J.R. 270 .

41. The test of direct or immediate effect on income is exemplified by Hatchett supra, viz., the Teacher's Higher Certificate resulted ipso facto in an automatic increase in salary (possession of the certificate carried with it a higher salary range immediately) but the university degree did not have that result. White supra is an instance of the failure of the taxpayer on this test; and in White this test is set out as an alternative for the taxpayer/employee who fails on the test of ``part and parcel'' of the employment. Expenditure by a barrister in setting up or maintaining a study in his home does not have (no matter how great the use of the study) any direct or immediate effect on his income. Such expenditure may not result in the barrister receiving or completing more briefs, or marking higher fees on briefs, or reducing his outlays. Nor could it be said that falling into arrears in payment or rent on a study in his home or of interest on a mortgage secured on his home has a direct or immediate effect on his income (this is apparent to all who have endeavoured to obtain possession of land from a defaulting lessee or mortgagor). These considerations are not pertinent where a different test, e.g., the character of the outlay, is applied.

42. The summary of all that is set out in paras. 27 to 41 hereof is that the claim to deduct rent is to be regarded in the light of the character of that expenditure. There is a prohibition against looking behind the legal character of a payment made pursuant to a contract so as to take into account economic benefits which would in fact accrue to the taxpayer otherwise than as a matter of contractual right. (
Europa Oil (N.Z.) Ltd. (No. 2) v. Commr. of I.R. (N.Z.) 76 ATC 6001 at pp. 6006-6007 ). The legal character of the outlay here in issue does not change because of the extent of the dedication in point of use of the study to those activities from which the taxpayer as a barrister earns his income. The study in this taxpayer's residence has no different character from the study which was considered in Thomas supra and in Faichney supra. The payments of rent (so-called) were in respect of one room in the family residence; and that room was primarily used as a study and it did not thereby lose its character as a room in the family residence. The outlays here in issue were of a private and domestic nature.

43. Additional issues arise in respect of the year ended 30 June 1975. The Commissioner has allowed $30 in respect of outgoings attributable to the use of the study in the course of carrying on a profession for the purpose of gaining or producing assessable income, perhaps principally though not exclusively to cost of electricity. The taxpayer endeavoured but failed to obtain from the Commissioner the arithmetical process by which he arrived at $30. Presumably the Commissioner, quite properly, did what the High Court in Ronpibon supra has recognized has to be done by the Commissioner in some instances, i.e., applied a more or less arbitrary expedient ( aliter for a Court, or a Board of

ATC 524

Review, which is deciding an issue inter partes - cf.
St. John's School v. Ward (1973-1974) 49 T.C. 524 at pp. 535-537 ). The taxpayer has conceded that if the question for decision under sec. 51(1) is to be decided by a strict application of Thomas and Faichney then he cannot say he is entitled to have an allowance in excess of $30. The concession is hedged by the submission that the Commissioner has made the allowance on an incremental basis, and the taxpayer believes that he would achieve a large deduction if the allowance were made by apportionment of total expenditure. Yet even in respect of charges for electricity the taxpayer has not provided any firm foundation to support his contention; as regards wood for a fuel fireplace he rests his case on the law of physics that warm air rises and cool air flows in to take its place whereby he says that room heating provided in one of the normal residential rooms on the ground floor will give less benefit to that room than to the study which is on the upper floor. I see nothing of substance in the taxpayer's contentions with regard to oil heating, wood, gas, electricity, insurance on house contents (not satisfactorily shown to be additional to the said $30), insurance on the house, electrician's account, heating repairs, or window cleaning (not satisfactorily designated in any way). So far as the evidence goes the sum of $30 suffices to cover all such claims to the extent, if any, that they are sustainable. That leaves outstanding a claim of $613 to ``painter/handyman''.

44. Section 53(1) of the Act so far as presently relevant is as follows: -

``(1) Expenditure incurred... for repairs, not being of a capital nature, to any premises or part of premises... held occupied or used by him for the purpose of producing assessable income, or in carrying on a business for that purpose, shall be an allowable deduction.

(2) Expenditure incurred upon repairs to any premises or part of premises not so held occupied or used shall not be an allowable deduction.''

45. As ``premises'' is not defined some problems arise as to its scope in sec. 53(1) but in popular language it frequently means buildings (
Beacon Assurance v. Gibb 1 Moore P.C. N.S. 97 - where, by context, ``on the premises'' was construed to mean ``in the ship''). The word is frequently used in relation to structures of one kind or another (
Maunsell v. Olins (1975) 1 All E.R. 16 per Viscount Dilhorne at p. 19). Where there was a composite unit of a caravan and the land on which it stood, the land and caravan together were held to be ``premises'' (
Norton v. Knowles (1967) 3 All E.R. 1061 at p. 1063 per Salmon L.J.). Scrutton L.J. has said that there is no reason why a room separately occupied should cease to be ``premises'' because it is contained within the structure of a larger building which is also premises (
Frost v. Caslon , Frost v. Wilkins (1929) 2 K.B. 138 at p. 147 ). The word has come to mean generally real property of one sort or another (
Gardiner v. Sevenoaks R.D.C. (1950) 2 All E.R. 84 at p. 84 per Lord Goddard C.J.).

46. In the context of sec. 53(1) I take the word ``held'' to relate to title or ownership, and the word ``occupied'' to relate to a tenancy or to a licence to occupy. Thereupon it follows that the particular room with which we are presently concerned was not (in the relevant sense) held by the taxpayer for the purpose referred to in sec. 53(1). It seems to me that the room was used (perhaps ``occupied'') by the taxpayer on many occasions for the purpose of producing assessable income. So it is now necessary to consider quantum bearing in mind the dictum of Templeman J. in Caillebotte supra ( vide para. 30 hereof) and that the Board cannot resort to more or less arbitrary expedients and the onus is on the taxpayer to lead evidence upon which an apportionment may be given ( cf. para. 43 hereof).

47. If, for example, it is necessary to replace several lengths of guttering which take the flow of rainwater from the roof of the residence, it may be that it can be shown that a certain proportion thereof is adjacent to the room which is used for the purpose referred to in sec. 53(1). However, I would not see that as an appropriate case for the application of sec. 53(1) because the repair is to the structure of the house as an entirety and not to ``the part of the premises... used... for the purpose'' aforesaid. Handbasins and other plumbing fixtures and fittings would appear to be outside the purview of sec. 53(1), and they are specially dealt with in sec. 54(2)(c). Floor coverings, carpets, etc., appear to me to be more conformably within sec. 54 rather than sec. 53(1). I see the replacement of a window pane in the particular room as coming within

ATC 525

sec. 53(1), and so also with the painting of the internal walls of that room; and, in some instances, it may be, the external walls also, though not in the present case.

48. The taxpayer said that the item of repairs does not materially increase the sum of $30. He attributed $400 of $613 to the general structure of the house (modifications to the roof, attention to loose iron, painting, work on the stairway). Thereupon he asserts that $400 is apportionable (either on a floor area basis or main rooms basis) in respect of the study. I have rejected this proposition in principal in the preceding paragraphs. In answer to the question whether any part of the remaining $213 was attributable to the study specifically he said that he thought some work was done on the window frames - ``the woodwork outside the windows was done and a wire screen was fitted''. He said that he doubted that it would have been $20/30 worth. Notwithstanding the informal way in which evidence is given before a Board of Review I do not regard the taxpayer as having shown any acceptable basis for an allowance in excess of $30 whether that sum be looked at as restricted to sec. 51(1) as the statement under reg. 35(1) does restrict it, or looked at as inclusive of claims under sec. 53 also.

49. I would confirm the decision on the objection in respect of the year ended 30 June 1974.

50. I would confirm the decision on the objection in respect of the year ended 30 June 1975.

Claims allowed


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