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.

---

Woodhouse J.

I agree that the appeal should be dismissed and wish to add a short comment upon only two points.

The first matter concerns the onus of proof and the meaning of sec. 36 of the Inland Revenue Department Act 1974. We were invited by Mr. Rabone for the appellant company to adopt the opinion of Barwick C.J. concerning the equivalent provision in sec. 190(b) of the Commonwealth Income Tax Assessment Act . In effect it is that an objector should succeed if he has put forward all the facts that bear upon his grounds for objecting to the position adopted by the Commissioner and it is then not possible to draw a positive inference in favour of the Commissioner's position. In my opinion that approach to sec. 36 would quite clearly involve a reversal of its requirement that ``the burden of proof shall be on the objector''. Instead it is for the objector to demonstrate in an affirmative sense the validity of his stated grounds of objection. In the result I agree with what has been said by the President concerning the matter and with the passage to which he has referred from the judgment of Mason J. in
Gauci v. F.C. of T. 75 ATC 4257 and the cited passage from the judgment of Gibbs J. in
McCormack v. F.C. of T. 79 ATC 4111 at p. 4121 .

The second point is related to the concluding words of sec. 102 of the Land and Income Tax Act 1954 which speak of property acquired for the purpose of sale or other disposal. It may often happen that what can be recognised as the real or dominant purpose underlying the acquisition of property will be conditional or contingent for its fulfilment upon the realisation of some particular state of affairs. But by itself the contingency could not operate to prevent the purpose being regarded as dominant in the circumstances of the particular case. In the present instance the appellant company intended to hold No. 4 Gilmer Terrace on the basis of a group expectation and hope that in the end it would be possible for the property to be joined with contiguous property so as to become part of a general development. It

---

ATC 6011

may be, too, that no early decision could be made as to which of the companies in the group should take over the development and so become the owner of No. 4. But on the facts it is most improbable that the appellant would become the developer and the Commissioner approached the purchase on the basis that from the outset the appellant intended its role to be that of an intermediary. The assessment was made accordingly.

In my opinion the appellant company has failed to show that its grounds of objection are correct. In those circumstances I am satisfied that the assessment must stand.