CASE 23/93
Members:BJ McMahon DP
Tribunal:
Administrative Appeals Tribunal
BJ McMahon (Deputy President)
During the financial years 1985 to 1988 the applicants, a husband and wife resident in New Zealand, engaged in a business of buying and selling shares in Australia. From this enterprise they derived profits, interest and dividends. The question to be decided in this application is how the relevant amounts are to be taxed in Australia.
2. Australia and New Zealand are parties to an agreement entitled ``For the avoidance of
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double taxation and the prevention of fiscal evasion with respect to taxes on income''. It is reproduced as Schedule 4 to the Income Tax (International Agreements) Act 1953 and has the force of law by virtue of s 6B of that Act.3. The relevant parts of the Agreement for present purposes are as follows-
``ARTICLE 4
(1) For the purposes of this Agreement the term `permanent establishment', in relation to an enterprise, means a fixed place of trade or business in which the trade or business of the enterprise is wholly or partly carried on.
(2) The term `permanent establishment' includes-
- (a) a place of management;
- (b) a branch;
- (c) an office;
- ...
(5) A person acting in a Contracting State on behalf of an enterprise of the other Contracting State (other than an agent of independent status to whom paragraph (7) of this Article applies) shall be deemed to be a permanent establishment of that enterprise in the first-mentioned Contracting State if he has, and habitually exercises in that first- mentioned Contracting State, an authority to conclude contracts on behalf of the enterprise, unless his activities are limited to the purchase of goods or merchandise for the enterprise.
...
(7) An enterprise of a Contracting State shall not be deemed to have a permanent establishment in the other Contracting State merely because it carries on trade or business in that other Contracting State through a broker, a general commission agent or any other agent of independent status, where such a person is acting in the ordinary course of his business as a broker, a general commission agent or other agent of independent status.
...
ARTICLE 5
(1) Industrial or commercial profits of an enterprise of a Contracting State shall be subject to tax only in that Contracting State unless the enterprise carries on trade or business in the other Contracting State through a permanent establishment situated therein. If the enterprise carries on trade or business as aforesaid, tax may be imposed by that other Contracting State on the whole of the industrial or commercial profits of the enterprise from sources within that other Contracting State whether or not those profits are attributable to that permanent establishment.
...
ARTICLE 8
(1) The Australian tax on dividends, being dividends paid by a company which is a resident of Australia for the purposes of Australian tax, derived and beneficially owned by a New Zealand resident, shall not exceed 15 per centum of the gross amount of the dividends.
(2) The New Zealand tax on dividends, being dividends paid by a company which is resident in New Zealand for the purposes of New Zealand Tax, derived and beneficially owned by an Australian resident, shall not exceed 15 per centum of the gross amount of the dividends.
(3) Paragraphs (1) and (2) of this Article shall not apply if the person who is the beneficial owner of the dividends, being a resident of a Contracting State, has in the other Contracting State a permanent establishment and the holding giving rise to the dividends is effectively connected with that permanent establishment.
...
ARTICLE 9
(1) The tax of a Contracting State on interest derived and beneficially owned by a resident of the other Contracting State shall not exceed 10 per centum of the gross amount of the interest.
(2) Paragraph (1) of this Article shall not apply if the person who is the beneficial owner of the interest, being a resident of a Contracting State, has in the other Contracting State a permanent establishment and the indebtedness giving rise to the interest is effectively connected with that permanent establishment.''
4. The Commissioner contends that the applicants' share trading enterprise was carried
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on through a permanent establishment in Australia. As a consequence, it is contended that the whole of the income derived from the enterprise is taxable in full by Australia without the benefit of the limitations of tax on dividends and interest provided by Articles 8 and 9 of the Agreement. In particular, the Commissioner relies upon Article 4(5) and says that the representative, who acted for the applicants, habitually exercised in Australia an authority to conclude contracts on behalf of the enterprise. The applicants rely upon Article 4(7) and submit that a permanent establishment was not created through their use of a broker (whose identification will later be considered) because he acted in the ordinary course of his business as a broker.5. The short facts are that during the whole of the relevant period, the applicants carried on the enterprise of share trading in Australia through a person to whom I will refer as the dealer. The applicant husband granted a power of attorney to him in order to enable him to conduct the share trading activities in Australia on his behalf. The applicant wife did not grant such a power of attorney. The dealer arranged contracts of sale and purchase and, on occasions, signed share transfer forms in the name of the applicant husband and the applicant wife. He also opened cash management trust accounts in the name of both applicants and operated those accounts on their behalf. All interest income derived by the applicants was earned as a result of the accounts opened by the dealer in their names. The accounts were used for holding surplus funds from the share trading enterprise as well as interest and dividends, which funds were used for reinvestment in the Australian stock market.
6. The applicant husband gave evidence by affidavit that he first started using the dealer as ``his stock broker'' in 1969 when he was first employed by a member firm of the Auckland Stock Exchange Limited. Since then, whilst he has used other stock brokers, he has considered him his ``main stock broker'' and has used his services as he moved from member firm to member firm of the Auckland Stock Exchange Limited, the Melbourne Stock Exchange Limited, The Sydney Stock Exchange Limited and then the Australian Stock Exchange Limited.
7. When the dealer moved to Australia in 1979, the applicant husband saw a particular opportunity to be involved in investing in the Australian stock market. With the dealer in Australia, he would be able to provide the local knowledge and recommendations for investment.
8. The applicant husband said that it was his idea and decision to complete a power of attorney in favour of the dealer. This was executed on 30 August 1979. It was a standard full form of power of attorney, intended to provide the legal basis for the dealer to undertake investment activities for the applicant husband in Australian equities as his ``stock broker'' and at his then current firm. The power is limited to acts to be done in Australia but otherwise is a wide and general power of attorney. There were said to be significant delays in postage across the Tasman between Australia and New Zealand at the time and the power of attorney was intended to facilitate speedy dealings in securities.
9. His account with the firm which employed the dealer and to which I will refer as the Sydney firm, was a discretionary account as defined by the rules of the Australian Stock Exchange Limited. Consequently during the busy period between 1985 and 1988 it would often happen that the dealer could and would execute a purchase or a sale before the applicant husband had been advised about it. However, his evidence was that they were in ``very regular contact'' by telephone, several times a day. He often spoke to the dealer on the trading floor of the stock exchange through the switchboard of the dealer's firm.
10. When the dealer recommended a sale or purchase, the applicant husband would usually accept his advice although he would often query his reasons. When the dealer made suggestions to him as to sales or purchases, he would give his reaction and again the applicant would usually take his advice.
11. Rather more care and ``conservation'' was exercised in the investments of the funds of the applicant wife, with a general objective of capital growth but with the underlying requirement of the preservation of capital. Her portfolio saw less activity and generally contained equities which were in the lesser risk category. The applicant husband managed the portfolio on her behalf. Before any transaction was undertaken, he would discuss the proposals or recommendations and then give the dealer instructions on her behalf. As she had not given
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a power of attorney, documents were normally executed by her unless the transaction had been carried out in the name of a nominee company.12. The applicant husband also gave instructions to the dealer to open a cash management account for each of the applicants so that surplus funds could be invested to earn interest.
13. The applicant wife gave evidence by affidavit, generally corroborating her husband's evidence. She seems to have taken little part in the management of her own portfolio and left it basically to her husband. Although she did not give a power of attorney to the dealer, there are no other relevant distinguishing features between their cases. Both applications will stand or fall together.
14. The dealer gave evidence by affidavit and by telephone, as he now lives in New Zealand. During the whole of his working life, he has been in the stock broking industry as an employee of member firms of various stock exchanges. He has never been a partner in a member firm or a member in his own right.
15. The applicant husband was, through the dealer's introduction, a client of the member firm of the Auckland Stock Exchange for whom he first worked in 1969. Since that date, the dealer said that he had counted on him as a client and that the applicant had counted on him as ``his stock broker''. As he moved from firm to firm, the applicant followed him.
16. In November 1983 he took up employment with a Sydney firm of stock brokers and continued in their employ during the whole of the period under review. His principal duties throughout that time were acting as one of the Sydney firm's operators on the trading floor. For part of the time he was an institutional dealer, responsible for the Sydney firm's business with overseas brokers trading in Australia, working from the office rather than from the trading floor of the stock exchange.
17. At all relevant times, he was the holder of a dealer's representative licence under the Securities Industries Act 1980 authorising him to act as a dealer's representative on behalf of the Sydney firm.
18. The business of the Sydney firm was principally with institutional clients. The applicants, as private clients, were part of a minority of the Sydney firm's clientele. In cross-examination, he agreed that the applicants' business would have been insignificant in terms of volume compared with the turnover generated by the Sydney firm's normal institutional clients. He added that private clients were discouraged by the Sydney firm whenever possible.
19. The dealer confirmed the arrangements with the power of attorney. Most transactions were undertaken through a nominee company, but some were by choice, or needed to be, undertaken in the name of the applicant husband. An example would be in the taking up of an entitlement to rights. As the pace of transactions stepped up, a copy of the power of attorney was deposited and noted with the Sydney Stock Exchange Limited Document Noting Service, to facilitate dealings where securities were in the name of the applicant husband.
20. The dealer confirmed that he was in regular contact with the applicant husband and that they would meet every time he visited Sydney. Almost always, a telephone conversation would precede the purchase or sale of shares. In the absence of such a call, the dealer would telephone him after the event to tell him what he had bought and sold, knowing he had his authority to do so from the years of acting for him as his ``stock broker'' and from a legal point of view, through the power of attorney.
21. The applicant husband was a very active trader, as was shown in the ledger accounts with the Sydney firm. In order to save the time that would have been required to send transfers to New Zealand, have them signed and sent back and the delay caused by the subsequent issue and dispatch of share certificates, most shares were purchased in the name of a nominee company provided by the Sydney firm (Nomco). On some occasions shares were purchased in the name of the applicant husband, rather than Nomco. This occurred when there were placements or new share issues or subscriptions. When shares acquired in that way were sold, they were in the name of the applicant husband and a share transfer had to be signed by him in person or by the dealer, as his attorney. Often the activity in the account was such that securities were bought and sold before the initial settlement procedures on the purchase were undertaken. In that case transactions would be shown in the records of the Sydney
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firm as ``contra'' or matched transactions with other clients within the Sydney firm.22. Examples were shown in various ledger cards of the Sydney firm that were tendered in evidence.
23. Of the many sale transactions shown in the ledger cards, only 3 share transfer forms could be found. The dealer said that this could be explained because many of the trades were contras and furthermore there was often an aggregation of several trades into one share transfer. The first of the share transfers was signed by the dealer as attorney for the applicant husband. The second and third share transfers were of shares in the name of Nomco and were executed under the common seal of that company.
24. There was a full accounting to the applicants. The contract notes and copies of ledger cards detailing the transactions would be sent to him regularly. The dealer said (as did the applicant) that there was never any complaint as to the way in which the account was operated. As far as the dealer was concerned he operated the account to the client's total satisfaction, for the client's benefit within the requirements of his employer's Sydney firm. A large number of contract notes was tendered in evidence. These were issued by the Sydney firm. Whether or not the shares were transferred to Nomco, the contract notes showed the applicants as the buyers. Commission was paid on each trade to the Sydney firm.
25. Documents that had to be signed by the applicant were sent to him or were signed by the dealer as his attorney. He would either sign ``[applicant husband] by his attorney'', ``[dealer]'' or simply ``[applicant husband]''. When he simply signed the applicant's name, he did so in the belief that he was entitled to do this in accordance with the power of attorney and ``because it was so long winded to write the former form it was basically laziness by signing in the latter form''. A good deal of evidence and submissions were directed to this practice. However there was no dispute as to the efficacy of execution. The statutory support to be found in s 159 of the (NSW) Conveyancing Act may not have been available but a reading of the power and its effect at law leave no doubt that title was effectively passed to a transferee in any transfer executed in this manner.
26. The Sydney firm did not offer cash management account facilities as its client base was principally institutions who would manage their own surplus funds. For this reason, the applicants instructed the dealer to open cash management accounts so that surplus funds from time to time would earn interest. The applicant husband's account was opened and operated on pursuant to the power of attorney by the dealer. The applicant wife's account was also operated on by the dealer pursuant to an authority which the wife had given to the merchant bank providing the facility. The evidence was that cash management account facilities were offered by other broking firms in Sydney at the time.
27. The dealer gave evidence concerning the applicant wife's share trading account in relation to which he received instructions principally from the applicant husband. On almost every occasion, share purchases were undertaken in her own name with only a few share purchases being undertaken by Nomco. Usually share transfers would be sent to New Zealand for her to sign and return, but sometimes pressures dictated that there was insufficient time to do so and the dealer would sign on her behalf ``[applicant wife]''. This was always with the knowledge and approval of the husband, and presumably of the wife. Two share transfers were located in the records of the Sydney firm showing signatures by the dealer of the name of the applicant wife without further explanation of authority.
28. Her cash management trust account was in her name. The application form was signed on her behalf but a cheque book was not operated on the account. Deposits were made by the Sydney firm's cheque and withdrawals were made by merchant bank cheque.
29. The evidence of the dealer was confirmed in many respects by his supervisor. During the relevant period, he was responsible for the operation of all administrative compliance and dealing activities of the equity division of the Sydney firm. Throughout the period, he was responsible for the control and supervision of the dealer who reported directly to him.
30. In confirming the evidence of the dealer, he said that he knew of the existence of the power of attorney and that the dealer operated the account of the applicants within the guidelines and requirements of the Sydney firm and along what he considered to be a normal basis. Commissions were charged by the Sydney firm on all sale and purchase
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transactions. The dealer, he said, was a highly effective operator on the exchange trading floor and generated large volumes of business for the Sydney firm. His excellence was rewarded annually by bonuses and his conduct of accounts was normal.31. Evidence was also given orally and by affidavit by broker one and broker two on the normality of the arrangements.
32. Broker one was a member of the Sydney Stock Exchange Committee during the relevant years and was chairman of the trading floor sub-committee for 7 years. He had extensive experience in the securities industry. In his opinion, the form of power of attorney complied with the relevant Stock Exchange rules relating to discretionary accounts or managed funds. Those rules required written instructions, setting out terms and conditions under which the member was to operate a discretionary account or managed fund, and was to include reference to the rates of brokerage which might be incurred. In the opinion of broker one, the fact that the dealer had a dealer's representative licence effectively authorised his employer, the Sydney firm, to operate the discretionary account. The fact that there was no reference to the rate of brokerage in the power of attorney did not invalidate the transaction as the client had a history of dealings and knew the commission rate.
33. Broker one agreed that the fact that a document was signed in the name of a principal by an attorney should make reference to the fact that the person signing was acting under a power of attorney.
34. Much the same evidence was given by another experienced broker, broker two, whose views on the propriety of managing a discretionary account through the power of attorney coincided with those of broker one.
35. Evidence to the contrary was tendered by the Commissioner by a person to whom I will refer as the official. He is currently employed with the Australian Securities Commission but had been employed in the securities industry for 32 years prior to his appointment. In his view, it was not the ordinary course of business for a stock broker to deal on behalf of a client pursuant to a power of attorney. The ordinary course of business was trading for a client within a very specific authority and limitations and not handling the client's personal affairs and property generally.
36. During the time he was in charge of discretionary accounts with a firm that employed him some time ago and during his subsequent securities industry experience, he said that the ordinary course of business required, and he always insisted upon, a written authority from the client being given before trading took place or the client's funds were handled. Since 1982, the Australian Stock Exchange rules require that such an authority be given to the broking firm and not to the individual dealer. The rules set out the particulars that must be contained in such an authority.
37. In the opinion of the official, the signing of the name of the applicant husband by the dealer without showing that it was signed pursuant to a power of attorney would not be in the ordinary course of business of a stock broker. The use of a nominee company was the most common form of handling the affairs of discretionary clients. He considered the practice of signing the principal's name by the attorney without making reference to the power as ``highly improper''. However, in view of the fact that at all relevant times he was not with any stock broking firm but with Westpac, the value of his opinions as to what was in the ordinary course of business of a stock broker or what was, or was not, highly improper must be seen as limited.
38. Evidence was given on behalf of the applicant by an officer of the Australian Stock Exchange who held a supervisory position during the years in question. The value of his evidence however was similarly limited. I was not assisted by his opinion whether operation under the power of attorney was a sufficient compliance with the Stock Exchange rule dealing with the requirements for operating a discretionary account because, as he was the first to agree, his experience did not qualify him to offer an opinion.
39. The profits, dividends and interest made and earned in Australia are, pursuant to Article 5 subject to tax only in New Zealand, unless the enterprise carries on trade or business in Australia through a permanent establishment. There is no question that if this can be shown to be the case, all the profits, dividends and interest in question are attributable to that permanent establishment. Counsel for the applicant put forward a submission based upon ss 128B and 128D of the Income Tax
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40. It is necessary to look first at sub-section (7) of Article 4. If that has no application to the facts of the case, then one must consider sub- section (5). I will deal first with sub-section (7).
41. If the applicants' share trading enterprises were simply carried on in Australia through a broker, where that broker was acting in the ordinary course of his business as a broker, those enterprises would not be deemed to have a permanent establishment in Australia. The use of the word ``merely'' indicates however that if the enterprise carries on trade or business beyond the structure contemplated by the sub- section then the benefit of this exclusionary provision will not be available.
42. The applicants carried on their business in Australia through the dealer. One must then ask, was he a broker, a general commission agent or any other agent of independent status.
43. ``Broker'' has been defined in various contexts and for various purposes. In a Canadian case, to which I was referred,
Royal Securities Corp Ltd v Montreal Trust Co 59 DLR (2d) 666 at 686, a definition is offered in these terms-
``... an agent employed to make bargains and contracts between other persons, in matters of trade, commerce or navigation, for a compensation, commonly called brokerage.''
The Macquarie Dictionary offers as the ordinary grammatical meaning most appropriate to the present circumstances: ``An agent who buys or sells for a principal on a commission basis without having title to the property''. Whatever definition is adopted, it cannot be said that the dealer would fall within its terms. He was merely the employee of the broker. His function was that of an operator on the trading floor. The true construction of his conduct is that the Sydney firm was the broker which the dealer chose to transact the applicants' business at the relevant time. The Sydney firm transacted business on the dealer's instructions and on his behalf, knowing that he was acting for the applicants. It is the Sydney firm that was paid all relevant commissions, both on the share trades, and in the placement of funds with the merchant bank in cash management accounts. The dealer did not receive any commissions at all from the applicants or (so far as the evidence goes) from the Sydney firm.
44. The dealer was not a general commission agent. In
Fleming (Inspector of Taxes) v London Produce Co Ltd [1968] 2 All ER 975 at 986 Megarry J suggested this description of such a functionary-
``Third, the word `general' in the phrase `general commission agent' itself must have some import; and in the context I think that the most likely sense is that of a commission agent who holds himself out as being ready to work for clients generally, and who does not in substance confine his activities to one principal, or an insignificant number of principals. This, perhaps, is another facet of his broker-like qualities; he must be broker- like in his receipt of custom.''
45. Far from being a general commission agent, the dealer acted as agent only for the applicants. There is no evidence that he held himself out as being ready to work for clients generally. He confined his activities not to an insignificant number of principals but only to the applicants. This conduct cannot be regarded as ``broker-like''.
46. Was the dealer ``any other agent of independent status''? An agent cannot be independent if he works exclusively or substantially for one principal. As the dealer was not a stock broker, he could not hold himself out as available to work for a not insignificant number of other clients, nor did he do so. More importantly, however, the evidence is that there was close consultation between the dealer and the applicant husband concerning proposed and past trades. Although the dealer held a general power of attorney he considered it appropriate to act on almost all occasions in accordance with the applicants' instructions. An agent of independent status, as described in sub- section (7), must fall within the same genus as a broker or a general commission agent. That genus, it seems to me, is the class of agents who are ``broker-like''.
47. As the dealer was not a broker, a general commission agent or any other agent of independent status, it is not necessary to
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examine whether he acted in the ordinary course of his business. As he was none of these functionaries, he could not in fact act in the ordinary course of such a business.48. If I am wrong, however, and his acts should be viewed at all relevant times as those of the Sydney firm by whom he was employed, then I would find that his activities on behalf of that firm were not in the ordinary course of that firm's business, as a broker.
49. In
Downs Distributing Co Pty Ltd v Associated Blue Star Stores Pty Ltd (in Liquidation) (1948) 76 CLR 463 at 477 Rich J dealing with a section of the Bankruptcy Act concerning the ordinary course of business observed-
``The provision does not require that the transaction shall be in the course of any particular trade, vocation or business. It speaks of the course of business in general. But it does suppose that according to the ordinary and common flow of transactions in affairs of business there is a course, an ordinary course. It means that the transaction must fall into place as part of the undistinguished common flow of business done, that it should form part of the ordinary course of business as carried on, calling for no remark and arising out of no special or particular situation.''
50. In
Re Bradford Roofing Industries Pty Ltd (in Liq) and Companies Act [1966] 1 NSWR 674, Street J considered that in order to be considered as being in the ordinary course of business [at 681]-
``the transaction must be one of the ordinary day-to-day business activities, having no unusual or special features, and being such as a manager of a business might reasonably be expected to be permitted to carry out on his own initiative without making prior reference back or subsequent report to his superior authorities such as, for example, to his board of directors.''
51. The business carried out by the Sydney firm in relation to the requirements of the applicants, was not part of its ordinary course of business. This was servicing the requirements of institutional clients. The applicants' share trading activities were insignificant compared with the activities of these institutions. Certainly the placing of the funds in cash management accounts could not be said to be part of the ordinary course of business of the Sydney firm, as it did not offer cash management facilities to its clients. It is not relevant to enquire whether these facilities were offered by other firms. Sub-section (7) speaks only of the ordinary course of the business of the broker as identified. What was done by the Sydney firm on their behalf was outside the common flow of its transactions and arose out of a particular situation.
52. The applicant relied on a decision of the appellate division of the South African Supreme Court as persuasive authority. I welcome the experience of other minds who have had occasion to consider similar problems in this area. The decision, reported as
Secretary for Inland Revenue v Downing (1975) AD 518, dealt with facts viewed within the structure of a convention between South Africa and Switzerland, the terms of which are almost identical with the relevant terms of the New Zealand agreement. The court was under the impression that the terms of the convention were based upon a model convention contained in a 1963 report of the Fiscal Committee of the Organisation for European Economic Cooperation and Development. In
Ostime (Inspector of Taxes) v Australian Mutual Provident Society [1960] AC 459 at 480, Lord Radcliffe thought that the terms of a similar convention grew from a set of model clauses proposed by the financial commission of the League of Nations. Whatever the origin of the treaty clauses, it is clear that the language in the South African case is the same ``international tax language'' referred to by Lord Radcliffe that appears in the New Zealand agreement.
53. Having said that however, I must say that I derived little assistance from this particular report because the facts upon which the court's observations were based, are quite different from those under consideration in the present application.
54. At page 525 the court said-
``Art. 5(5), also translated into relevant terms, means, in this case, that a Swiss resident shall not be deemed to have a permanent establishment in South Africa merely because he carried on business in South Africa through a broker, general commission agent or any other agent of an independent status, where such persons are acting in the ordinary course of their business. Art. 5(5) is curiously worded in
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that it is cast in an essentially negative mould. Thus the phrase used is `... shall not be deemed to have...', instead of `... shall be deemed not to have...'. This form of wording seems to be due to the fact that this paragraph is intended to cover only the case of a person who `merely' carries on business, i.e., does no more than carry on business, through an agent of independent status, who himself acts in the ordinary course of his business. Despite its negative form, para. 5 must, in my view, be interpreted as meaning that where, for example, a Swiss resident does no more than carry on business through a South African broker and the latter, in transacting that business on behalf of his Swiss principal, acts in the ordinary course of his business, the Swiss resident must be deemed not to have a permanent establishment in South Africa. That the paragraph has this, more positive, significance is borne out by the express exception made in art. 5(4) in favour of agents of independent status to whom para. 5 applies.''
55. I do not disagree with any of the above observations. The facts, however, were that in that case a broking member of the stock exchange had received the Swiss resident's authority to manage the South African portfolio. The power of attorney in question was not granted to the broker but to another company that managed the Swiss resident's South African affairs. More importantly, the evidence was that the Swiss resident did not communicate with the broker. Once every 3 years, on visits to South Africa he would see the broker, mainly at lunch. One of the findings of fact was that the broker had never been obliged to refer decisions to the Swiss resident. It was ``one of the enjoyments'' that he could get on with the decisions when prices were suitable and without the labour of correspondence and consequential loss of opportunities.
56. If these facts occurred in Australia, the situation would fall clearly within sub-section (7) as the South African court held them to fall within an equivalent sub-section in another convention. Those are not the facts however in the present application, and the observations of the court are therefore of little assistance.
57. The facts in these applications establish that the dealer habitually exercised in Australia an authority to conclude contracts on behalf of the applicants in their share trading activities. The dealer was little more than the Australian end of the applicants' share trading enterprises. Although consulted by his principals, he habitually exercised his authority as an attorney and agent to conclude contracts on their behalf. The deeming effect of sub-section (5) means that the business structure so created, must be regarded as a permanent establishment in Australia. For this reason, the objection decisions under review are affirmed.
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