Williams Property Developments Ltd. v. Commissioner of Inland Revenue.

Judges: Richmond P
Woodhouse J

Cooke J

Court:
Court of Appeal (New Zealand)

Judgment date: Judgment delivered 19 March 1980.

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Cooke J.

The basic facts are fully traversed in the judgment of the President, which I have had the advantage of reading, and are reasonably plain. On the evidence there can be no real doubt, I think, that Williams Property Developments acquired No. 4 Gilmer Terrace for the purpose of holding it as an investment for the time being at least but of disposing of it to some other company in the Williams group (probably but not necessarily Williams Parking Centre) if later No. 2 Gilmer Terrace was also acquired by the group. The question, simple enough to state but less easy to answer, is whether on those facts it should be said that Williams Property Developments acquired No. 4 ``for the purpose of sale or other disposal'' within the meaning of sec. 102(3).

In answering the question it is important to remember that concurrent findings, or at least something very close thereto, have been made by the Review Authority and the Judge. I do not regard that as fatal to the appellant's case. The argument has shown that it is an overstatement to say that the express purpose of the purchase of No. 4 by the objector was to sell or dispose of it to Williams Parking Centre at some time when it was convenient to do so, or that there was a kind of commercial inevitability that Williams Parking Centre would take title ultimately. But the degree of exaggeration in those statements should not divert one altogether from giving weight to the general impression which the facts made on the Judge and the Authority.

Holden v. C of I.R. 74 ATC 6021 is the leading case. The dominant purpose test was there established for cases of more than one purpose. It would be tempting to say that, because in that case in delivering the judgment of their Lordships Lord Wilberforce fastened on the only immediate purpose as distinct from a wider and more essential purpose, therefore the immediate purpose of holding No. 4 for investment should be treated as the dominant purpose in this case. But I agree with Mr. Mathieson that such a comparison would be fallacious; Holden did not call for a decision between an immediate purpose and a contingent one. Of course it by no means follows that the contingent purpose will always be the dominant one. For instance, a company may buy a property satisfied that it will be a good investment but with a definite eye to disposing of it if the market rises sharply. Such a case does not arise for decision.

Here it is the most probable inference that what interested Williams Property Developments in No. 4 was primarily the prospect of amalgamation of titles and development of a city or parking centre, if No. 2 could also be acquired. Amalgamation and development would be likely to involve disposal to another company in the group. The ability of No. 4 to stand on its own feet as an investment was a factor in the decision. I am prepared to assume that it was even an essential condition of the decision. But I am driven to think that the contingent purpose was the dominant one and that, in the ordinary and natural meaning of the subsection, No. 4 was acquired by that company for the purpose of sale or other disposal.

On that view it is unnecessary to consider the questions of onus or what the business of the appellant comprised. I agree that the appeal must be dismissed.