SANDINI PTY LTD & ORS v FC of T & ORS

Judges:
McKerracher J

Court:
Federal Court, Western Australia

MEDIA NEUTRAL CITATION: [2017] FCA 287

Judgment date: 22 March 2017

McKerracher J

CAN A FAMILY COURT ORDER TRANSFERRING TO A FAMILY TRUST ATTRACT ROLL-OVER RELIEF?

1. Mr Christopher James Ellison , Sandini Pty Ltd, as trustee for the Karratha Rigging Unit Trust ( KRUT ), Wabelo Pty Ltd, as trustee for the Ellison Family Trust ( EFT ), and Ellison (WA) Pty Ltd ( EWA ) seek declaratory relief. That relief is opposed by the Commissioner of Taxation, Mr Ellison's former wife, Ms Debbie Maree Ellison , and Wavefront Asset Pty Ltd. Since 17 September 2009, Ms Ellison has been the sole director, secretary and shareholder of Wavefront.

2. Essentially, the applicants seek a declaration that a transfer of shares made at the instance of Mr Ellison, in accordance with directions apparently given by Ms Ellison and pursuant to orders of the Family Court of Western Australia, attracts 'roll-over relief' pursuant to subdiv 126-A of the Income Tax Assessment Act 1997 (Cth) ( 1997 Act ). The Commissioner's position turns on analysis of the transaction. Ms Ellison's position is that the Court has no jurisdiction as no 'matter' has arisen in the constitutional sense; secondly, in its discretion, the Court should not exercise its jurisdiction in the circumstances; and thirdly, roll-over relief should not apply for reasons similar to those advanced by the Commissioner.

3. The primary and apparently simple issue in this case is whether Sandini should be entitled to CGT roll-over relief in circumstances where:

(1) such relief would normally be available when an asset was transferred by and to a former spouse under a family court order.

But in this instance:

(2) was transferred to a corporate entity solely controlled by the former spouse;
(3) in accordance with the former spouse's direction as to the manner of compliance with the court order.

4. As the Commissioner argues, there is genuine doubt as to this point.

5. For reasons which follow, on the facts of this case, my conclusion is that the Court has and should exercise jurisdiction and that the applicants are entitled to the declaratory relief sought.

RELEVANT STATUTORY FRAMEWORK

6. This proceeding involves construction of subdiv 126-A of the 1997 Act. From the provisions extracted below it may be seen that CGT roll-over relief (effectively a deferral) is relevantly provided for in respect of certain CGT events referred to as 'trigger events' that happen in the context of a marriage or relationship breakdown.

7. Section 126-5 (a CGT event involving spouses) relevantly provides that there is a roll-over if a CGT event (the 'trigger event') happens involving an individual (the 'transferor') and his or her spouse or former spouse (the 'transferee') because of a court order under the Family Law Act 1975 (Cth): s 126-5(1)(a). In a disposal case, only CGT events A1 and B1 are relevant: s 126-5(2)(a). Section 126-15 (a CGT event involving a company or trustee) relevantly provides that there are the roll-over consequences in s 126-5 if the trigger event involves a company or a trustee (the 'transferor') and a spouse or former spouse (the 'transferee') of another individual because of a court order under the Family Law

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Act: s 126-15(1)(a). For a roll-over under s 126-A to be applicable the following elements are essential:

(a) there must be a relevant CGT event (in this case, the relevant trigger event must be CGT event A1);
(b) the CGT trigger event must involve a spouse or former spouse (as defined in s 995-1(1)) as a transferee; and
(c) the CGT trigger event must occur 'because of' a court order under the Family Law Act.

8. The provisions must be seen in context, even if they are not all immediately relevant to the factual situation described in the next part of these reasons. They provide as follows:

Subdivision 126-A - Marriage or relationship breakdowns

Table of sections

126-5 CGT event involving spouses

126-15 CGT event involving company or trustee

126-20 Subsequent CGT event happening to roll-over asset where transferor was a CFC or a non-resident trust

126-25 Conditions for the purposes of subsections 126-5(3A) and 126-15(5)

126-5 CGT event involving spouses

(1) There is a roll-over if a *CGT event (the trigger event ) happens involving an individual (the transferor ) and his or her *spouse (the transferee ), or a former *spouse (also the transferee ), because of:

(a) a court order under the Family Law Act 1975 or under a *State law, *Territory law or *foreign law relating to breakdowns of relationships between spouses; or

(b) a maintenance agreement approved by a court under section 87 of the Family Law Act 1975 or a corresponding agreement approved by a court under a corresponding *foreign law; or

(c) [repealed]

(d) something done under:

(i) a financial agreement made under Part VIIIA of the Family Law Act 1975 that is binding because of section 90G of that Act; or

(ii) a corresponding written agreement that is binding because of a corresponding foreign law; or

(da) something done under:

(i) a Part VIIIAB financial agreement (within the meaning of the Family Law Act 1975) that is binding because of section 90UJ of that Act; or

(ii) a corresponding written agreement that is binding because of a corresponding foreign law; or

(e) something done under:

(i) an award made in an arbitration referred to in section 13H of the Family Law Act 1975; or

(ii) a corresponding award made in an arbitration under a corresponding State law, Territory law or foreign law; or

(f) something done under a written agreement:

(i) that is binding because of a State law, Territory law or foreign law relating to breakdowns of relationships between spouses; and

(ii) that, because of such a law, prevents a court making an order about matters to which the agreement applies, or that is inconsistent with the terms of the agreement in relation to those matters, unless the agreement is varied or set aside.

(2) Only these *CGT events are relevant:

(a) CGT events A1 and B1 (a disposal case ); and

(b) CGT events D1, D2, D3 and F1 (a creation case ).

Note: The full list of CGT events is in section 104-5.

(3) However, there is no roll-over if:

(a) the *CGT asset involved is *trading stock of the transferor; or

(b) for *CGT event B1-title in the CGT asset does not pass to the transferee at or before the end of the agreement.

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(3A) There is no roll-over because of paragraph (1)(d), (da) or (f) unless the conditions set out in section 126-25 are met.

(4) A *capital gain or a *capital loss the transferor makes from the *CGT event is disregarded.

Consequences for the transferee (disposal case)

(5) For a disposal case where the transferor *acquired the asset on or after 20 September 1985:

(a) the first element of the asset's *cost base (in the hands of the transferee) is the asset's cost base (in the hands of the transferor) at the time the transferee acquired it; and

(b) the first element of the asset's *reduced cost base (in the hands of the transferee) is worked out similarly.

Example: Your spouse transfers land to you because of a court order under the Family Law Act 1975. Any capital gain or loss your spouse makes is disregarded.

If the land's cost base at the time you acquired it is $10,000, the first element of the land's cost base in your hands becomes $10,000.

Note 1: There are special indexation rules for roll-overs: see Division 114.

Note 2: A roll-over under this Subdivision may have an effect on the transferee's main residence exemption: see sections 118-178 and 118-180.

(6) For a disposal case where the transferor *acquired the asset before 20 September 1985, the transferee is taken to have acquired it before that day.

Note: A capital gain or loss you make from a CGT asset you acquired before 20 September 1985 is generally disregarded: see Division 104. This exemption is removed in some situations: see Division 149.

(7) For a disposal case where the transferor *disposed of a *collectable or *personal use asset, the transferee is taken to have *acquired one.

Note 1: Capital losses from collectables can be subtracted only from capital gains from collectables: see section 108-10.

Note 2: Capital losses from personal use assets are disregarded: see section 108-20.

Consequences for the transferee (creation case)

(8) For a creation case, the first element of the asset's *cost base (in the hands of the transferee) is the amount applicable under this table. The first element of its *reduced cost base is worked out similarly.

Creation

Event No. Applicable amount

D1 the *incidental costs the transferor incurred that relate to the trigger event

D2 the expenditure the transferor incurred to grant the option

D3 the expenditure the transferor incurred to grant the right

F1 the expenditure the transferor incurred on the grant, renewal or extension of the lease

The expenditure can include giving property: see section 103-5.

126-15 CGT event involving company or trustee

(1) There are the roll-over consequences in section 126-5 if the trigger event involves a company (the transferor ) or a trustee (also the transferor ) and a *spouse or former spouse (the transferee ) of another individual because of:

(a) a court order under the Family Law Act 1975 or under a *State law, *Territory law or *foreign law relating to breakdowns of relationships between spouses; or

(b) a maintenance agreement approved by a court under section 87 of the Family Law Act 1975 or a corresponding agreement approved by a court under a corresponding *foreign law; or

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(d) something done under:

(i) a financial agreement made under Part VIIIA of the Family Law Act 1975 that is binding because of section 90G of that Act; or

(ii) a corresponding written agreement that is binding because of a corresponding foreign law; or

(da) something done under:

(i) a Part VIIIAB financial agreement (within the meaning of the Family Law Act 1975) that is binding because of section 90UJ of that Act; or

(ii) a corresponding written agreement that is binding because of a corresponding foreign law; or

(e) something done under:

(i) an award made in an arbitration referred to in section 13H of the Family Law Act 1975; or

(ii) a corresponding award made in an arbitration under a corresponding State law, Territory law or foreign law; or

(f) something done under a written agreement:

(i) that is binding because of a State law, Territory law or foreign law relating to breakdowns of relationships between spouses; and

(ii) that, because of such a law, prevents a court making an order about matters to which the agreement applies, or that is inconsistent with the terms of the agreement in relation to those matters, unless the agreement is varied or set aside.

…

126-20 …

126-25 …

9. CGT event A1 is the subject of s 104-10 of the 1997 Act which provides as follows:

104-10 Disposal of a CGT asset: CGT event A1

(1) CGT event A1 happens if you *dispose of a *CGT asset.
(2) You dispose of a *CGT asset if a change of ownership occurs from you to another entity, whether because of some act or event or by operation of law. However, a change of ownership does not occur if you stop being the legal owner of the asset but continue to be its beneficial owner.

Note: A change in the trustee of a trust does not constitute a change in the entity that is the trustee of the trust (see subsection 960-100(2)). This means that CGT event A1 will not happen merely because of a change in the trustee.
(3) The time of the event is:
- (a) when you enter into the contract for the *disposal; or
- (b) if there is no contract-when the change of ownership occurs.
  
  Example: In June 1999 you enter into a contract to sell land. The contract is settled in October 1999. You make a capital gain of $50,000.
  
  The gain is made in the 1998-99 income year (the year you entered into the contract) and not the 1999-2000 income year (the year that settlement takes place).
  
  Note 1: If the contract falls through before completion, this event does not happen because no change in ownership occurs.
  
  Note 2: If the asset was compulsorily acquired from you: see subsection (6).

10. It can be seen that subs (1) provides that CGT event A1 happens if a taxpayer disposes of a CGT asset. The concept of a 'CGT asset' is provided for in s 108-5 of the 1997 Act and includes any kind of property or a legal or equitable right that is not property. It can include an equitable interest. Section 104-10(2) provides that a taxpayer disposes of a CGT asset if a 'change of ownership' occurs from the taxpayer to another entity, whether because of some act or event or by operation of law.

11. It further provides that a change of ownership does not occur if the taxpayer stops being the legal owner of the asset, but continues to be its beneficial owner.

FACTUAL CIRCUMSTANCES

The entities and their resolutions

12. The transfer of shares in issue was a transfer of 2,115,000 shares by Sandini in

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Mineral Resources Limited ( MIN ) ( MIN Shares ) made following an order of the Family Court made on 21 September 2010 by consent ( Family Court Order ). MIN was and is a public company. Its shares were listed for trading on the Australian Securities Exchange.

13. Prior to 21 September 2010, Sandini owned 35,804,065 shares in MIN, including the MIN Shares. As noted (in [1]), Sandini is and was, at all material times the trustee of the KRUT. Wabelo, in its capacity as trustee for the EFT was the sole holder of units in the KRUT during the whole of the 2011 income year. Wabelo was the trustee of the EFT, a discretionary trust. The EWA was a proprietary company with one issued share. That share was beneficially owned by Mr Ellison. EWA and Mr Ellison were members of the class of beneficiaries able to participate in discretionary distributions from the EFT.

14. Ms Ellison was married to Mr Ellison on 15 February 1992. They remained married until 9 May 2010. Wavefront was a proprietary company. As discussed above, since 17 September 2010, Ms Ellison has been the sole director, secretary and shareholder of Wavefront. In September 2010, Wavefront was the trustee of the Felstead Family Trust ( FFT ). Wavefront and the FFT, as an entity, are not connected with Mr Ellison.

15. On 30 June 2011, Sandini, as trustee of the KRUT, made a resolution in the following terms:

RESOLUTION OF TRUSTEE

SANDINI PTY LTD ATF KARRATHA RIGGING UNIT TRUST

HELD ON 30 June 2011

PRESENT: [Mr Ellison] (Chairman)

APPLICATION OF INCOME: RESOLVED that the net income of the trust for the accounting period ended 30 June 2011 be applied for the benefit of the undermentioned ordinary unit holders in the proportion to their ordinary unit holdings that the unit holder entitlements to be credited to them in the trust books of account.

Unit Holder Percentage

Wabelo Pty Ltd ATF Ellison Family Trust 100%

SIGNED AS A CORRECT RECORD: [SIGNATURE OF MR ELLISON]

16. On 30 June 2011, Wabelo, as trustee of the EFT, made a resolution in the following terms:

RESOLUTION OF TRUSTEE

WABELO PTY LTD ATF ELLISON FAMILY TRUST

HELD 30 JUNE 2011

PRESENT: [Mr Ellison] (Chairman)

APPLICATION OF INCOME: RESOLVED that the net income of the trust, exclusive of the amount of any capital gain included in such income, for the accounting period ending 30 June 2011 be applied for the benefit of the undermentioned beneficiaries in the proportions or amounts stated and that the beneficiaries' entitlements be credited to them in the trust books of account.

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Beneficiary Proportion or Amount

Ellison (WA) Pty Ltd 100%

APPLICATION OF CAPITAL GAINS: RESOLVED that pursuant to the provisions of the Trust Deed relating to partial vesting of the trust capital, the amount of -

1) The taxable capital gain of the trust; or

2) The whole of the capital gain included in the trust accounts

for the accounting period ending 30 June 2011 be applied for the benefit of the undermentioned beneficiaries in the proportions or amounts stated and that the beneficiaries' entitlements be credited to them in the trust books of account.

Beneficiary Proportion or Amount

[Mr Ellison] 100%

SIGNED AS A CORRECT RECORD: [SIGNATURE OF MR ELLISON]

Family Court Order and transfer of MIN Shares

17. On 27 March 2008, Ms Ellison commenced proceedings in the Family Court with Mr Ellison as respondent, seeking, amongst other things, alteration of property interests pursuant to s 79 of the Family Law Act. On 20 June 2008, the Family Court made initial orders relating to the division of the matrimonial property of Mr and Ms Ellison. On 23 September 2009, the Family Court made further orders relating to the division of the matrimonial property of Mr and Ms Ellison ( 23 September 2009 Orders ). The 23 September 2009 Orders required Mr Ellison to transfer the shares in MIN to the value of $2,500,000 if Mr Ellison did not pay a cash settlement amount in full by 1 December 2011. On 8 April 2010, the Family Court ordered in relation to the marriage of Mr and Ms Ellison that 'a divorce order be made, such divorce order to take effect and thereby terminate the marriage on the ninth day of May 2010'.

18. On 21 September 2010, the Family Court Order was made as follows:

1. [Sandini] as Trustee for the [EFT] ('Sandini') be joined to these proceedings as second respondent.
2. Pursuant to s 79A of the Family Law Act 1975 as amended Orders 2.3-5 inclusive of the orders made by consent on 23 September 2008 be set aside.
3. Within 7 days of orders being made Sandini do all acts and things and sign all documents necessary to transfer to [Ms Ellison] 2,115,000 [MIN Shares].

19. Contrary to the description in Order 1, Sandini has never been the trustee of the EFT.

20. Whilst it is not common ground, I accept on the evidence, which I will discuss further below, that the applicants have established that:

(a) on 28 September 2010, a transfer form was partly prepared for the transfer of the MIN Shares;
(b) on 29 September 2010, Mr Ellison received an email sent that day from Ms Ellison ( 29 September Email ). The 29 September Email was sent from the email address used by Ms Ellison for email communications;
(c) the 29 September Email was in response to an email sent to Ms Ellison by Mr Ellison on 28 September 2010;
(d) Ms Ellison sent the 29 September Email;
(e) Ms Ellison was responsible for the instruction given to Mr Ellison in the 29 September Email; and
(f) the MIN Shares referred to in the 29 September Email were the shares required to be transferred pursuant to the Family Court Order.

21.

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On 29 September 2010, the transfer form referred to above was completed with the details provided in the 29 September Email. On 30 September 2010, Sandini as trustee for the KRUT, executed a Standard Transfer Form for the transfer of 2,115,000 shares, being the MIN Shares, to Wavefront as trustee of the FFT.

22. It is not common ground, but I accept on the evidence, which I will discuss further below, that the applicants have established that on 30 September 2010:

(a) Ms Ellison also executed the same Standard Transfer Form for the transfer of the MIN Shares to Wavefront as trustee of the FFT;
(b) the executed Standard Transfer Form referred to above was in accordance with Ms Ellison's directions; and
(c) on 4 October 2010, the transfer of the MIN Shares was registered.

23. By an affidavit relied upon by Ms Ellison in this proceeding and sworn on 14 September 2016, she deposed that she had no recollection of writing or sending the 29 September Email and she believed that it did not appear to have been written by her because it included language she did not normally use. She acknowledged that it is possible that she wrote and sent the email, but submits that it is improbable that she did so because she did not recall doing so. It includes reference to 'SRN' and 'ATF', when her evidence was that she did not know what SRN and ATF meant at that time. Although she knew that at 29 September 2010 the FFT had been set up with Wavefront as trustee of that Trust, she did not then understand the purpose of a family trust or how she should 'use it'. The trust had been set up by her former accountant in September 2009.

24. Ms Ellison also says she has no recollection of prior discussions with Mr Ellison or any other person about the 29 September Email. The first time she recollects seeing the email was when the ATO brought it to her attention in November 2014. She does not deny signing the Standard Transfer Form. The signature on it appears to be her signature. Mr Ellison also swore an affidavit of 12 July 2016 that annexed an email of 28 September 2010 which he sent to Ms Ellison requesting from her the details of where she wanted the MIN Shares transferred to.

25. I have no reason to doubt that Ms Ellison has no recollection of these particular events as she says. Nonetheless, there is also absolutely no reason to doubt, having regard to common experience in all the circumstances and the nature of the exchanges, the logic and the absence of any other explanation, that Ms Ellison did authorise the transaction, which was made in accordance with her request and direction. I accept the applicants' submission that in circumstances where:

(a) on 21 September 2010, the Family Court ordered the 2,115,000 MIN Shares be transferred by Sandini to Ms Ellison;
(b) on 28 September 2010, Mr Ellison sent to Ms Ellison an email enquiring as to her particulars for the transfer of those Shares;
(c) the 29 September Email was by way of response to the 28 September 2010 email to Ms Ellison;
(d) the 29 September Email was received by Mr Ellison from Ms Ellison's email address;
(e) the entities referred to in the 29 September Email were entities that were closely connected with and controlled by Ms Ellison;
(f) on 30 September 2010, Ms Ellison signed a share transfer form conforming to the particulars supplied in the 29 September Email; and
(g) there was no evidence to contradict the assertion that Ms Ellison sent the 29 September Email,

I have no hesitation in finding that Ms Ellison did in fact send that email.

The dispute with the Commissioner

26. On 20 August 2015, the Commissioner sent a letter to Mr Ellison notifying him that the Commissioner intended to conduct an audit in relation to the 2011 income year regarding the risk of 'unreported capital gains' arising from the transfer of the MIN Shares from Sandini. On 4 September 2015, the Commissioner sent a letter to Mr Ellison setting out his position paper regarding the audit. On 13 October 2015, Mr Ellison's tax advisers, RSM Bird Cameron, sent a letter to the Commissioner responding to the position paper. This letter stated, amongst

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other things, that upon the Family Court making its order of 21 September 2010, or on 28 September 2010, being the date by which the orders needed to be performed, beneficial ownership in the MIN Shares passed to Ms Ellison. One of the central disputes, which follows in the discussion below, is whether the effect of the Family Court Order was to pass beneficial ownership in the MIN Shares to Ms Ellison.

27. On 1 December 2015, the Commissioner sent a letter to Mr Ellison replying to the RSM letter of 13 October 2015. The Commissioner did not accept the contentions advanced in the RSM letter. Instead the Commissioner asserted that the transfer of the MIN Shares to Wavefront was such as to constitute a CGT disposal of the MIN Shares from Sandini, as trustee of the KRUT to Wavefront, which disposal did not attract subdiv 126-A (roll-over relief) under the 1997 Act. The disposal, of course, was not made directly to Ms Ellison.

DOES THE COURT HAVE JURISDICTION?

28. The applicants pursue declaratory relief pursuant to s 39B(1A) of the Judiciary Act 1903 (Cth) and s 21 of the Federal Court of Australia Act 1976 (Cth). Relevantly, s 39B(1A) of the Judiciary Act provides that the original jurisdiction of this Court includes jurisdiction under any matter arising under any laws made by the Parliament, other than a matter in respect of which a criminal prosecution is instituted or any other criminal matter. Section 21 of the Federal Court Act provides that the Court may, in civil proceedings in relation to a matter in which it has original jurisdiction, make binding declarations of right, whether or not any consequential relief is, or could be, claimed. Moreover, s 21(2) of the Federal Court Act provides that a suit is not open to objection on the ground that a declaratory order only is sought.

29. The key word for this part of the debate between Mr Ellison and Ms Ellison in s 21 is 'matter' in s 39B. Broadly speaking, a 'matter' is a controversy for determination by the Court. Without an immediate right, duty or liability to be established by a determination of the Court, there cannot be a matter:
Re Judiciary Act 1903-1920 and Navigation Act 1912-1920 (1921) 29 CLR 257 per Knox CJ, Gavan Duffy, Powers, Rich and Starke JJ (at 265);
Re McBain; Ex parte Australian Catholic Bishops Conference (2002) 209 CLR 372 per Gleeson CJ (at 389), per Gaudron and Gummow JJ (at 405) and per Haynes J (at 459).

30. A matter exists when it is necessary to determine a disputed right or defence or a disputed title, privilege or immunity. A dispute concerning an issue which does not involve any justiciable controversy is not capable of being a matter:
Scott v Bowden (2002) 194 ALR 593 per McHugh J (at [7]).

31. In
Bass v Permanent Trustee Co Ltd (1999) 198 CLR 334, Gleeson CJ, Gaudron, McHugh, Gummow, Hayne and Callinan JJ observed (at [45]) that a declaration ordinarily involves 'a conclusive or final decision based on a concrete and established or agreed situation which aims to quell a controversy'.

32. There is nothing novel about the usage of declarations in the context of revenue law to determine rights and obligations arising under laws that impose commonwealth taxes. In
Oil Basins Ltd v Commonwealth (1993) 178 CLR 643, Dawson J (at 651) affirmed the Court's power to make declaratory judgments in circumstances where an assessment had not only not been made, but there was not any immediate prospect of one being made. Nonetheless, there were real questions as to the operation of the Petroleum Resource Rent Tax Assessment Act 1987 (Cth) ( PRRT Act ) and real obligations and liabilities not wholly contingent on assessments.

33. In arguing there is no 'matter', Ms Ellison relies upon
Bob Jane T-Marts Pty Ltd v Commissioner of Taxation (1999) 94 FCR 457 per Hill, Sundberg and Mansfield JJ. In that case, the Court concluded that declaratory relief was not an appropriate process given the factual matters that still required resolution and that the evidence before the Court did not allow that resolution. There was no conclusion, (nor in my respectful opinion, could there be), that declaratory relief would not be available in revenue cases.

34. In this case, as explained, there is a clear controversy between the applicants and the Commissioner. A critical element of the

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controversy is who or which, if anyone, should be taxed. The nature of the controversy is whether or not Sandini is entitled to roll-over relief and, if so, who should be taxed as a consequence. If Sandini is entitled to roll-over relief, it is not required to include any taxable capital gain in its net income as understood by s 95 of the Income Tax Assessment Act 1936 (Cth) ( 1936 Act ). If it is not entitled to roll-over relief, it will be required to include taxable capital gains in its s 95 net income which, in turn, affects the income tax liabilities of the other applicants.

35. There is nothing hypothetical about the facts which have all occurred in the past. It is only the appropriate tax response which requires consideration on the established facts. Moreover, in this situation, unlike Bob Jane T-Marts, the facts are all substantially agreed. Those that are not agreed are in short compass (eg, the 29 September Email on which a finding has been made).

36. Ms Ellison points to the fact that the Commissioner served a notice pursuant to s 78B of the Judiciary Act ( s 78B notice ), due to the contention that there is no matter arising under the Constitution for determination by the Court. I note that no Attorney seeks to intervene. It is also, in my experience, the position that from time to time without s 78B notices being served, submissions are raised to the effect that a proceeding does not involve a 'matter'. Whether that is the correct course or not does not matter in this instance as the s 78B notice has been served.

37. A justiciable controversy is identifiable independently of the proceedings brought for its determination. It is the whole controversy in respect of which it is the function of the court or courts exercising the judicial power of the Commonwealth to quell. It is the 'subject matter for determination in a legal proceeding'. The context and width of the concept of 'matter' lies at the heart of the notions of federal jurisdiction and the judicial power of the Commonwealth. The word 'matter' is central to the operations of s 75, 76 and 77 of the Commonwealth Constitution. The 'matter' is the justiciable controversy between the actors to it comprised, as the superior courts have long held, of the substratum of facts and claims representing or amounting to the dispute or controversy between or amongst them. The meaning of 'matter', as the High Court recently noted in
CGU Insurance Limited (ACN 004 478 371) v Blakeley (2016) 327 ALR 564, is comprised of two elements (in turn citing Burmester H, "Limitations on Federal Adjudication", in Opeskin B and Wheeler F (eds), The Australian Federal Judicial System (Melbourne University Press, 2000) p 232):

[…] the subject matter itself as defined by reference to the heads of jurisdiction set out in Chapter III, and the concrete or adequate adversarial nature of the dispute sufficient to give rise to a justiciable controversy.

38. Ms Ellison contends that the declaratory relief sought would merely be an advisory opinion or an abstract declaration in the manner discussed in
Re Judiciary Act 1903-1920; Ainsworth v Criminal Justice Commission (1992) 175 CLR 564 and CGU Insurance, but see also the discussion in Oil Basins (at 651).

39. Ms Ellison also submits that when Sandini did transfer the MIN Shares to Wavefront on 30 September 2010, it did so as trustee for the KRUT and not the EFT. The apparent error made by the applicants in 'joining the wrong trust entity' is said to be crucial because the Family Court Order was incapable of being carried out on its precise terms and, as such, Sandini is not entitled to roll-over relief. Ms Ellison says it is not possible to ignore the terms of the Family Court Order and read it as if the KRUT was substitutable for the EFT. Ms Ellison's point is that it has always been open and a matter for the applicants to make an application to the Family Court to amend the Family Court Order, if they have grounds to do so. Indeed, that has been recognised because Wabelo as trustee for EFT filed an application in the Family Court on 21 June 2016 to amend the Family Court Order nunc pro tunc to be:

[Sandini] as trustee for the Karratha Rigging Trust ('Sandini') be joined to these proceedings as second respondent.

40. Unless and until the Family Court Order is amended in the terms sought by the applicants, which amendment is opposed by Ms Ellison on various grounds, Ms Ellison says there is no justiciable controversy that supports

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the declarations sought by the applicants because the terms of the Family Court Order as they stand cannot be carried out and were never carried out. As such, Ms Ellison contends, the proposed declarations are, at best, both 'abstract' and 'hypothetical'.

41. Ms Ellison also deposes to the fact (in an affidavit sworn on 14 September 2016) that, in any event, if Mr Ellison's application currently before the Family Court to amend the Family Court Order nunc pro tunc is successful insofar as the Family Court pronounces orders on that application, she will appeal that decision.

Consideration

42. Unlike Ms Ellison, the Commissioner does accept, and I agree, that the Court has jurisdiction to make a declaration as to whether Sandini is entitled to roll-over relief under subdiv 126-A of the 1997 Act in relation to the disposal of the MIN Shares. The Commissioner agrees substantially with the contentions advanced on behalf of the applicants. However, the Commissioner does not share the characterisation of the question as being not knowing who to tax, but rather the Commissioner's position, as set out by letter of 1 December 2015 from the Australian Taxation Office ( ATO ), is that there is 'genuine doubt' about the proper application of the law in the circumstances. For that reason, unless the relevant uncertainty can be practicably resolved, the Commissioner foreshadowed the issue of alternative assessments. The case relied on by the applicants concerned the meaning of the term 'present legal obligation' in a particular context:
Federal Commissioner of Taxation v H (2010) 188 FCR 440. But it was accepted in H, that unless and until an assessment was made, income tax was not due and payable. The applicants make it clear that they are not suggesting to the contrary.

43. In relation to the error the parties made in drafting the Family Court Order, for reasons below, this error does not preclude the granting of declaratory relief.

44. There is a genuine question in dispute as to whether Sandini is entitled to roll-over relief. A declaration in relation to that question will resolve that dispute.

45. Although the Commissioner is yet to issue an assessment, that does not affect the fact that there is a genuine controversy between the parties that is susceptible to judicial determination. The lack of any assessment does not render, hypothetical, the declaratory relief sought. Whether Sandini is entitled to roll-over relief turns on the operation of the 1997 Act upon past events and is not contingent on an assessment being made. It is clear from Oil Basins (especially at 651) that declaratory relief is available in circumstances when no assessment has been issued. In that particular case, the Court otherwise considered the circumstance to be inappropriate.

46. It is necessary to make a ruling on the facts as they occurred and when they occurred. If some future changes arise then the consequence of those changes can be revisited. Were it otherwise, it would never be possible to make a ruling and there would never be a justiciable controversy in circumstances such as these merely because there was a possibility of events changing sometime in the future.

47. Indeed, put another way, it may be that the outcome of this proceeding would assist the parties in their arguments and possibly the Family Court in determining how such existing or future applications should be addressed.

48. I do not accept the submission made for Ms Ellison that the declaratory relief sought in the originating summons cannot be made until at least such time as the existing Family Court proceedings have been dealt with, 'including any prospective appeals being heard and determined'.

49. The Commissioner also suggests, and I agree, that if a declaration is to be made, the appropriate declaration should be:

In calculating the net income of the trust estate of The Karratha Rigging Unit Trust for the income year 30 June 2011, the first applicant is entitled to the roll-over consequences in s 126-5 [of the 1997 Act], due to the operation of s 126-15(1)(a) [of the 1997 Act] in relation to its disposal of the 2,115,000 Shares in Mineral Resources Limited as processed in 4 October 2010.

SHOULD THE COURT EXERCISE ITS DISCRETION?

50. Ms Ellison also advances the argument, which is opposed by both the applicants and the

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Commissioner, that there is an appropriate legislative scheme under Pt IVC of the Taxation Administration Act 1953 (Cth) ( TAA ) which provides a mechanism for the conduct of taxation objections, reviews and appeals. The present situation involves the Commissioner having undertaken an audit of the taxation affairs of Sandini and, having concluded in its position paper that Sandini is not entitled to claim roll-over relief in relation to the MIN Shares, has made clear its intention to issue Sandini with a notice of amended assessment in respect of the MIN Shares. Ms Ellison points to Oil Basins where a prospective taxpayer sued the Commissioner in advance of an assessment. As noted above, Dawson J rejected the contention that the declaration sought would be hypothetical because his Honour found it would produce a consequence for the parties. In that case, the Commissioner had not only not issued any assessments pursuant to the PRRT Act, but he conceded he had given no indication that he had formed a view that the plaintiff was or was not liable to pay the relevant tax. Ms Ellison stresses that this case is quite different because the Commissioner has reached a view as to Sandini's entitlement.

51. Ms Ellison also contends that if declaratory relief were granted in this case it would set an undesirable precedent whereby taxpayers, having been informed by the Commissioner that they are about to receive a notice of assessment, may choose to seek a declaration before the Court in an endeavour to have their objections to their assessment heard and determined shortly prior to service of the notice of assessment. This, it is argued, would have the effect that no obligation on the taxpayer to pay tax would arise prior to the determination of the issues by the Court and would render substantially ineffective the scheme providing for objections to be dealt with under Pt IVC of the TAA. Hence, the Court should exercise its discretion, it is contended, to decline the declaratory relief sought on the grounds that there is an established and more appropriate procedure available to challenge the validity of the notice of assessment after it is issued.

Consideration

52. It may be accepted that one matter to take into account in exercising discretion to grant or to refuse a declaration is the availability of an alternative remedy:
Forster v Jododex Australia Pty Ltd (1972) 127 CLR 421 per Gibbs and Walsh JJ (at 438) and Bob Jane T-Marts (at [4]).

53. Beyond this, I am unable to accept the submissions advanced by Ms Ellison. This particular case raises entirely novel questions of construction on which respectable opposing views are advanced. There are no outstanding factual matters to be resolved. It is, as the applicants and the Commissioner accept, an entirely suitable vehicle for declaratory relief. The fact that the formerly married parties may wish to revisit or recast orders made in the Family Court or to seek new or different orders does not bear upon the facts as they exist now. Those hypothetical possibilities will remain. In the meantime, it is desirable that this matter be resolved. As indicated above, resolution of this matter may aid in determining appropriate courses to be pursued, if any, in relation to any existing or proposed matters in the Family Court.

54. Relevant to both topics is the factual dispute about whether or not Ms Ellison sent the 29 September Email and whether, if sent, it was sent as a director of Wavefront rather than in her personal capacity. As I have indicated, I have found that she did send the 29 September Email and that it was also sent on behalf of Wavefront, as she was the sole directing mind and will of Wavefront. Nonetheless, the Commissioner submits that the case can be determined without the necessity for any findings on those issues. That depends upon the main debate on whether or not roll-over relief can arise. I turn to that issue.

APPLICANTS' ARGUMENT ON ROLL-OVER

55. The applicants argue that there are two bases on which Sandini is entitled to a roll-over. The first being because there was a CGT event A1 within the meaning of s 104-10 of the 1997 Act with Ms Ellison becoming the owner of the MIN Shares enlivening s 126-5 and s 126-15 ( Ms Ellison CGT event A1 ). The second alternative is on the basis that Ms Ellison was

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sufficiently involved in Sandini transferring the MIN Shares to Wavefront in respect of which there was at least one CGT event A1 to as to enliven s 126-5 and s 126-15 ( Ms Ellison's involvement ).

Ms Ellison CGT event A1

56. Dealing with the first of these, the Ms Ellison CGT event A1, the applicants argue that either by reason of the Family Court Order alone or by reason of the steps taken to give effect to it, by 30 September 2010, Ms Ellison became the owner of the MIN Shares. Her becoming the beneficial owner constituted a change in ownership of those shares attracting the terms of s 104-10. Further, that change of ownership occurred because of the Family Court Order and thus the terms of s 126-5 and s 126-15 are satisfied.

57. This construction turns on a notion of beneficial ownership, which is perhaps the key issue in dispute in the proceedings. The applicants argue that CGT event A1 is concerned with changes in beneficial ownership of CGT assets, referring to s 104-10, which spells out that CGT event A1 happens if you dispose of a CGT asset, and that such a disposal occurs if a change of ownership occurs:

from you to another entity, whether because of some act or event or by operation of law. However, a change of ownership does not occur if you stop being the legal owner of the asset but continue to be the beneficial owner.

Note: a change in the trustee of a trust does not constitute a change in the entity that is the trustee of the trust (see subsection 960-100(2)). This means that CGT event A1 will not happen merely because of a change in the trustee.

58. If a person who owns an asset in one capacity becomes an owner of it in another capacity, he or she is recognised differently by the 1997 Act: see s 960-100(3), which provides as follows:

960-100 Entities

…
(3) A legal person can have a number of different capacities in which the person does things. In each of those capacities, the person is taken to be a different entity .
Example: In addition to his or her personal capacity, an individual may be:
- • sole trustee of one or more trusts; and
- • one of a number of trustees of a further trust.
In his or her personal capacity, he or she is one entity. As trustee of each trust, he or she is a different entity. The trustees of the further trust are a different entity again, of which the individual is a member.

59. A change in beneficial ownership without a change in legal ownership can arise in a number of ways. However, only one is specifically provided for under the CGT Rules in Pt 3-1 and Pt 3-3 of the 1997 Act and that is by CGT event E1, set out in s 104-55, declaring oneself to be trustee for another. If a trust relationship is imposed, and it is not the result of the asset owner's declaration, then the terms of s 104-55 are not met.

60. The applicants contend that CGT event A1 is not limited to situations where there is a change in both legal and beneficial ownership of CGT assets. The applicants argue that the text used in s 104-10, the context in which those words are used and the evident purpose of the CGT Rules do not suggest such a limitation. To the contrary, they argue, the context and purpose of the CGT Rules suggest that a mere change in beneficial ownership, without a change of legal ownership, is sufficient.

61. The applicants argue that if it were not so, events that cause a change in beneficial ownership of an asset without legal ownership changing would not fall within subdiv 104-E of the 1997 Act. For example, a purchaser paying or providing all of the consideration required under a purchase contract for an asset or a court order vesting an asset in a person might never be treated as CGT events.

62. It follows, on the applicants' argument, that the CGT Rules focus on ownership. They can be contrasted with other statutory schemes that, in the context of shares, focus on shareholdings and shareholders with an apparent legislative preference to be guided by the certainty that the share register provides.

63. The basis and focus of the applicants' primary submission is that on making the Family Court Order, or on 28 September

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2010, being the date at which the order was to be performed, beneficial ownership in the MIN Shares passed to Ms Ellison. The applicants rely on
In the Marriage of Michiels (1991) 103 FLR 1 (at 6-7);
In the Marriage of Bourke (1993) 114 FLR 89 (at 94-95);
Official Trustee in Bankruptcy v Mateo (2003) 127 FCR 217 and
Jones v Daniel (2004) 141 FCR 148 per Hill, Moore and Allsop JJ (as the Chief Justice then was). The applicants contend that the order altered the interests of Sandini in the subject matter of the Family Court Order, namely, the MIN Shares. It does not matter, they say, that the form of the Family Court Order was not expressed to have an immediate dispositive effect: see Jones per Moore J (at [8]), with whom Hill and Allsop JJ agreed and per Allsop J (at [20]) with whom Hill J agreed. Whatever interest Sandini had in the MIN Shares vested in Ms Ellison, the applicants contend. This is not a case where Ms Ellison needed to do anything or to pay anything to perfect or complete her interest. The applicants argue that in terms of s 104-10, as the shares pre-existed the Family Court Order, and Ms Ellison came to be their owner, she must have acquired them and Sandini must have disposed of them, such that the test for the section to become operative was satisfied: see
Allina Pty Ltd v Commissioner of Taxation (1991) 28 FCR 203 per Lockhart, Burchett and Gummow JJ (at 209-210).

64. The applicants argue that what was done after this time to give effect to the Family Court Order was a matter for Ms Ellison. By the time the transfer documentation was registered in accordance with Ms Ellison's directions, the MIN Shares were already hers.

65. The applicants contend that the mis-description of Sandini in the Family Court Order is irrelevant. Any interest in the MIN Shares before the Family Court Order was made, or when it became effective, on whatever basis those interests were held or enjoyed, were extinguished by reason of the Family Court Order. Further, the applicants argue, this is not a case in which there have always been a co-existent legal and beneficial ownership of property: see, for example,
Commissioner of Stamp Duties v Livingston (1964) 112 CLR 12. As such, there was not an order impossible of observance by reason of mis-description of any ownership interests to be divested.

66. Essentially, it is argued that all that was necessary for the roll-over was that the change of ownership in the MIN Shares be because of the Family Court Order; but for the order, there would have not been a CGT event of any description involving the MIN Shares and the parties to the dealings in them presently under review.

67. It is not to the point, the applicants argue, that Sandini owned a larger parcel of shares in MIN that included the MIN Shares. There is nothing to prevent a vesting of ownership of part of a larger parcel of shares in favour of the new owner. This is what occurred in
White v Shortall (2006) 68 NSWLR 650 per Campbell J, which I consider at length below. If, to the contrary, the MIN Shares coming from a larger parcel precluded Ms Ellison's beneficial ownership of the MIN Shares arising upon the making of the Family Court Order, or the time within which it needed to be met, then, the applicants argue, there were steps taken in furtherance of the Family Court Order which constituted an appropriation of the MIN Shares to the Family Court Order and the beneficial ownership fixed upon that appropriation. The applicants invite a comparison with a goods context, where the focus of attention is usually the passing of property at law, and where an act consistent with the terms of a bargain or obligation can be enough to be an appropriation to the contract. Thus, in
James v Commonwealth (1939) 62 CLR 339 per Dixon J (at 377) shipping goods in some circumstances was sufficient and in
Akron Tyre Co Pty Ltd v Kittson (1951) 82 CLR 477 per Latham CJ (at 484-485) attaching tyres to vehicles was sufficient.

68. As with chattels or goods, shares can also be appropriated to an agreement, instrument or arrangement under which beneficial ownership is intended to pass and thereby pass beneficial ownership before the passage of title:
Beconwood Securities Pty Ltd v Australia and New Zealand Banking Group Ltd (2008) 246 ALR 361 per Finkelstein J (at [57]), where his Honour said:

Put another way, OPS has the freedom to decide how and from whom it will obtain

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securities that answer the description of "Equivalent Securities". Crucially, there is no provision in the SLA restricting OPS from disposing of the lent shares or requiring OPS to keep on hand at any time specific securities for delivery to Beconwood as Equivalent Securities. In these circumstances, Beconwood cannot obtain a legal or equitable interest in any shares, even if they meet the description of Equivalent Securities, before shares that satisfy the description are appropriated to the agreement:
Re Goldcorp Exchange Ltd [1995] 1 AC 74. This is no more than an application of the rule that until property which is previously unidentified is appropriated to an agreement, neither a legal nor an equitable interest in that property can be created by that agreement:
Hoare v Dresser (1859) 7 HLC 290 [11 ER 116];
Citizens' Bank of Louisiana v First National Bank of New Orleans (1873) LR 6 HL 352.

69. In the current situation, the applicants argue, Mr Ellison, as director of Sandini, initiated steps to have a share transfer document prepared to transfer the MIN Shares as contemplated by the Family Court Order. He sought details of Ms Ellison's required particulars for the transfer, instructed that the transfer document be prepared, delivered the transfer document to her, executed the transfer and delivered it for registration. Each of those steps was a step consistent with the terms of the Family Court Order. Each was an appropriation, if the preceding step was not already an appropriation, of the shares represented by the transfer document to the Family Court Order and the beneficial ownership consistent with the order fixed in favour of Ms Ellison.

70. The applicants also argue that, as an alternative, there was a change of ownership of the MIN Shares to Ms Ellison either by reason of her constructive receipt of those shares or by reason of s 103-10 of the 1997 Act, which relevantly provides that Pt 3-3 will apply if you receive money or other property if it has been applied for your benefit, including by discharging all or part of a debt you owe, or as you direct. Section 103-10(2) provides as follows:

…
(2) Those Parts apply to you as if you are entitled to receive money or other property:
- (a) if you are entitled to have it so applied; or
- (b) if:
  - (i) you will not receive it until a later time; or
  - (ii) the money is payable by instalments.

71. The intent of the 1997 Act is that one does not escape the reach and operation of the Act by directing vested entitlements to others. The applicants note that historically that philosophy has found its expression in an income tax context where an amount is derived by receipt or constructive receipt by being dealt with as directed by the person entitled to receipt. For income to be derived, the taxpayer must beneficially own it, free of restriction. Ownership of the income, a receipt, a receivable or property entitlement is a threshold feature of derivation and assessability. That ownership can be recognised one of three ways. First, by actual receipt (or accrual of an entitlement to receipt) by a taxpayer, second, by constructive receipt of a vested entitlement of a taxpayer, or third, by force of statute, namely, s 19 of the 1936 Act and s 6-5(4) of the 1997 Act. The applicants point to the fact that the income tax constructive receipt principles have been replicated in the CGT context both at its inception by s 160D of the 1936 Act and in the current CGT Rules by s 103-10 of the 1997 Act. The same principles and concepts apply.

72. Reverting then to the words of s 103-10, the applicants argue that there is no limit in its operation to determining capital proceeds for a CGT event. Accordingly, the applicants submit, if Ms Ellison did not otherwise become the owner of the MIN Shares, she did so by reason of her vested entitlement to them under the Family Court Order and her subsequent constructive receipt of them.

73. The Explanatory Memorandum to the Income Tax Assessment Amendment (Capital Gains) Bill 1986, Income Tax (Rates) Amendment (Capital Gains) Bill 1986 (Cth) provided, in relation to s 160D:

Section 160D: Money or other property applied for benefit of taxpayer

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New sub-section 160D specifies the circumstances in which a taxpayer is to be deemed to have received or to be entitled to receive money or other property for the purposes of the new Part. This sub-section is relevant, for example, to the operation of section I60ZD which stipulates what is to be taken into account in determining what consideration has been given or received in respect of a disposal of an asset. By paragraph 160D(1)(a), a taxpayer will be taken to have received money or other property if the money or other property has been applied for the benefit, or in accordance with the directions of the taxpayer . By paragraph 160D(1)(b) a taxpayer will be treated as entitled to receive money or other property if the taxpayer is entitled to have the money or other property applied for his or her benefit, or in accordance with his or her directions. Sub-section 160D(2) stipulates that, without limiting the generality of the expression, the reference in sub-section (1) to the application of money or other property for the benefit of a taxpayer is to include a reference to the application of money or other property in the discharge in whole or in part, of a debt due by the taxpayer. Proposed sub-section 160D(3) ensures that nothing in sub-sections 160D(1) and (2) is to imply any writing down of the scope of section 19 of the Principal Act. Section 19 is a general rule to the effect that income or money is deemed to have been derived by a person where it is dealt with as directed by that person although not actually received by the person.

(emphasis added)

74. The applicants argue that Ms Ellison became the owner of the MIN Shares on or before 30 September 2010. That change of ownership was sufficient to constitute a CGT event A1 and the first threshold condition for s 126-5 and s 126-15 roll-over was thus satisfied. It is these provisions that create the roll-over entitlement.

75. The applicants' position is that assuming Ms Ellison became the owner of the MIN Shares, that ownership arose because of the Family Court Order. But for the Family Court Order, no interest in the MIN Shares for Ms Ellison would have arisen and Sandini would not have transferred the MIN Shares.

76. It follows, the applicants argue, that Mr Ellison is entitled to the roll-over relief asserted.

Ms Ellison's involvement

77. The alternative approach to the applicants' case is to rely upon Ms Ellison's actual involvement. This approach assumes, contrary to the primary position advanced for the applicants, that there was no change of ownership to Ms Ellison. If that is the case, then the applicants argue there was sufficient involvement of Ms Ellison in the change of ownership that did occur to enliven s 126-5 and s 126-15 roll-over. The argument rests on the fact that the words used in s 126-15 do not prescribe or require that the person who is in fact the transferee of the CGT asset that is the subject of the trigger event be a spouse or former spouse before roll-over relief is available. Rather, what is required is a trigger event and for a spouse or former spouse to be 'involved' in it. The fundamental argument advanced for the Commissioner that the transfer must be to a spouse or former spouse is not reflected in the natural language used in s 126-15 on this limb of the applicants' argument.

78. The applicants say that in the present matter, on any view, there was a CGT event A1. Also on any view, Ms Ellison was involved in it. First, her involvement was as the beneficiary of the Family Court Order and, second, in emailing a direction to secure the registration of the MIN Shares in accordance with her preference. That activity was involvement in a CGT event. Without her direction, the transfer would have been to her personally and her involvement would have been different, and passive, by way of being a recipient. Each type of activity is involvement in the CGT event. Once again, on either approach, the transfer would not have happened but for the Family Court Order and, accordingly, roll-over relief is available.

79. The applicants maintain, and I accept, that an important consideration not to be lost in the proper construction to be given to s 126-15 is that it is an ameliorating provision that relieves taxpayers from taxation burdens that would otherwise arise. Accordingly, and

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consistently with the text, context and policy of the statute (per
Project Blue Sky Inc v Australian Broadcasting Authority (1998) 194 CLR 355 (at [69]-[70])), to the extent that there are construction options within these parameters, those that allow a liberal and not restrictive construction ought to be preferred to those that do not: see
Burt v Commissioner of Taxation (1912) 15 CLR 469,
WA Trustee Executor & Agency Co Ltd v Commissioner of State Taxation (WA) (1980) 147 CLR 119, being sales tax exemption cases; and see also
Shell's Self Service Pty Ltd v Deputy Commissioner of Taxation (Cth) (1989) 98 ALR 165 per Ryan J and
Bons (t/a Scale Aviation Australia) v Commissioner of Taxation (Cth) (1994) 28 ATR 239 per Beazley J. The policy of s 126-15, the applicants stress, is to defer crystallisation of tax liability that would otherwise arise upon CGT events that follow from division of property between spouses and former spouses on breakdown of their relationship. The construction advanced above is wholly consistent, the applicants say, with this policy and, further, does not undermine the scheme of the CGT Rules.

80. It will produce a tax liability when the relevant assets pass beyond the family unit in more normal circumstances, most of which will be accompanied by a realisation generating proceeds with which the tax burden will be able to be met.

THE COMMISSIONER'S POSITION ON ROLL-OVER RELIEF

81. The Commissioner's argument on this point (essentially adopted by Ms Ellison), turns on one fundamental proposition and that is whether there was, at any time, a relevant change of ownership, even beneficial ownership. The Commissioner says there was not as the Family Court Order did not have that result.

82. The Commissioner identifies three questions in the issue of whether Sandini is entitled to roll-over relief in relation to the disposal of the MIN Shares:

(1) Did para 3 of the Family Court Order bring about a 'change of ownership' that qualified for roll-over relief under subdiv 126-A?;
(2) In the alternative to (1), did the transfer of the MIN Shares from Sandini to Wavefront on 30 September 2010 qualify for roll-over relief under subdiv 126-A?; and
(3) In the alternative to (1) and (2), by reason of s 103-10 of the 1997 Act, or an alleged constructive receipt of the MIN Shares, did Ms Ellison's direction in relation to the MIN Shares and the giving of effect to that direction result in a change of ownership within the meaning of s 104-10 so as to qualify for roll-over relief under subdiv 126-A?

83. As to (1) above (in [82]), para 3 of the Family Court Order provided that 'within 7 days of orders being made Sandini do all acts and things and sign all documents necessary to transfer to the wife 2,115,000 [MIN Shares]'. The Commissioner says that order did not result in a change of ownership of the MIN Shares that qualify for roll-over relief under subdiv 126-A for two reasons.

84. First, a change of ownership for the purpose of s 104-10(2) of the 1997 Act required a transfer of the legal ownership of the MIN Shares to the transferee. The Family Court Order did not effect a transfer of the MIN Shares. It follows there was no change of ownership for CGT purposes.

85. Second, even if the transfer of beneficial ownership on its own were sufficient for the purpose of s 104-10(2), on its terms, the Family Court Order did not effect such a transfer.

86. The Commissioner argues that there was no change of ownership for the purpose of s 104-10(2) of the 1997 Act because the subsection, by its terms, makes clear that a change of legal ownership, but not of beneficial ownership, does not result in a change of ownership for CGT purposes. This, the Commissioner argues, is further illustrated by the Note to s 104-10(2), cited above at [57], which explains that CGT event A1 will not happen merely because of a change in trustee, as there is no change in the relevant entity. Looking at the reverse position, the Commissioner noted that while the question is not covered by any authority so far, the CCH Australian Federal Income Tax Reporter in relation to the 1997 Act states that:

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the above exceptions in relation to a change of ownership make it clear that a mere change in the legal ownership of CGT asset will not cause CGT event A1 to happen if the beneficial ownership remains unchanged. Further, a change in the beneficial ownership of a CGT asset does not cause CGT event A1 to happen if there is no change in the legal ownership. This means that CGT event A1 can only happen if there is a change in the legal ownership and the beneficial ownership of a CGT asset

(emphasis supplied).

87. Under CGT event A1, a taxpayer disposes of a CGT asset if a change of ownership occurs. The initial task is to identify the relevant asset. What is required for 'ownership' and a 'change in ownership' will depend on the nature of the CGT asset being considered. 'Ownership' has neither an historical nor a contemporary universal meaning. Its prima facie meaning is the entire dominion of the thing said to be owned: see
Bellinz Pty Ltd v Commissioner of Taxation (Cth) (1998) 84 FCR 154 per Hill, Sundberg and Goldberg JJ (at 161). The Commissioner says that is the sense in which ownership was used in s 104-10(2) of the 1997 Act.

88. The Commissioner stresses that the case for the applicants depends on the asseveration, for which no authority is cited, that CGT event A1 is concerned with changes in beneficial ownership of CGT assets. The applicants posit that the Family Court Order resulted in beneficial ownership of the MIN Shares passing to Ms Ellison. So it would be enough for s 104-10(2), according to the applicants, if a vendor and purchaser entered into an executory contract for the sale of land. A purchaser under such a contract of sale, which is specifically enforceable, obtains a beneficial interest in the land, albeit one conditional on the payment of the price. The vendor retains the legal interest in the land, however, until that interest is disposed of on completion of the transaction. But Note 1 to the example in s 104-10(3) of the 1997 Act demonstrates, the Commissioner says, unequivocally that this is not the case. No change in ownership occurs if the contract falls through before completion.

89. The Commissioner argues that two other observations flow from the content of the Note. First, it is not the case, as the applicants argue, that there is an immediate change in ownership, for the purpose of s 104-10 of the 1997 Act, on execution of the contract because the purchaser obtains a beneficial interest according to the general law, but then disposes of that interest when the contract falls through. Rather, in terms of the Note 'this event does not happen because no change in ownership occurs'. There is no change of ownership at all and no CGT event. Second, the change in ownership for the purpose of s 104-10 occurs on completion and not before. The Commissioner says that the vendor retains the legal interest in the land until that legal interest is disposed of on completion. There is not a relevant disposal until completion of the contract. The 'disposal' occurs on completion; the execution of the contract does not amount to a disposal of the CGT asset.

90. The Commissioner also suggests that the error in the applicants' approach is to transpose the relevant CGT asset that is being disposed of, namely, the MIN Shares with the beneficial interest in those shares. In reality, the Commissioner says, Sandini retained dominion over the MIN Shares until execution of the transfer on 30 September 2010. There was no change in ownership for the purpose of s 104-10 until Sandini ceased to enjoy all rights as owner.

91. The Commissioner submits that in considering the proper construction in the context of s 104-10, the question is not answered by pointing to various cases in which there is an acknowledgement that under the general law there is a concept of beneficial ownership, which is self-evident. The question, rather, is whether that concept of beneficial ownership and effecting an alteration in beneficial ownership by entering into a contract, or as a result of a Court order, is sufficient for a change of ownership (my emphasis) within the meaning of s 104-10. This is because what is required for ownership must be different and will be different in terms of the various statutory contexts. Accordingly, the change in ownership would be quite different in the context of examining a transaction under CGT event B1, such as a hire purchase contract, compared with the question of whether

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beneficial ownership was transferred by reason of the Family Court Order. The Commissioner also relies on
Re Transphere Pty Ltd (1986) 5 NSWLR 309, in which there was an analysis by McLelland J in the context of a company receivership of legal and equitable interests, his Honour saying (at 311):

Accordingly unless the contrary intention appears, property in the Companies (New South Wales) Code, s 573(1)(h), will include the estate or interest of the relevant person in property which he holds on trust for other persons. It is important to recognise the true nature and incidents of legal and equitable estates in property subject to a trust. They are clearly and succinctly described in the judgment of Hope JA in
DKLR Holding Co (No 2) Pty Ltd v Commissioner of Stamp Duties [1980] 1 NSWLR 510 at 518-520. (His Honour's analysis is not affected by the decision of the High Court in that case - see
149 CLR 431.) I would not wish to detract from the value of Hope JA's exposition by trying to summarise it. But what is significant for present purposes is the imprecision of the notion that absolute ownership of property can properly be divided up into a legal estate and an equitable estate. An absolute owner holds only the legal estate, with all the rights and incidents that attach to that estate. Where a legal owner holds property on trust for another, he has at law all the rights of an absolute owner but the beneficiary has the right to compel him to hold and use those rights which the law gives him in accordance with the obligations which equity has imposed on him by virtue of the existence of the trust. Although this right of the beneficiary constitutes an equitable estate in the property, it is engrafted onto, not carved out of, the legal estate. Hope JA (at 519) illustrates the point by the following quotation from Maitland - Lectures on Equity 2nd ed (1949) at 17: Lectures on Equity (1949) at 17:

"… Equity did not say that the cestui que trust was the owner of the land, it said that the trustee was the owner of the land, but added that he was bound to hold the land for the benefit of the cestui que trust. There was no conflict here."

92. The Commissioner says two points are to be noted from this passage, the first being that, as an absolute owner, Sandini held only a legal estate. It is wrong in principle, the Commissioner asserts, to divide up the absolute ownership of property into a legal estate and an equitable estate. An absolute owner holds only the legal estate. Where an owner holds on trust for another, he or she continues to have the rights of an absolute owner at law; but the beneficiary has the right to compel the owner to hold and use the rights in accordance with the obligations imposed by equity. Second, when an equitable interest does arise, the beneficiary's equitable interest is engrafted onto, not carved out of, the legal estate:
DKLR Holding Co (No 2) Pty Ltd v Commissioner of Stamp Duties (NSW) [1980] 1 NSWLR 510 per Hope JA (at [16]). In those circumstances, when the equitable interest arises, the person who is the legal owner has exactly the same ownership interest as before, except that he, she or it now holds that interest subject to the equitable entitlement of another. In this passage, McLelland J was following what was said by Hope JA in the New South Wales Court of Appeal in DKLR. Both this passage and the passage from DKLR were referred to with approval by the plurality of the High Court in
Federal Commissioner of Taxation v Linter Textiles Australia Ltd (in liq) (2005) 220 CLR 592, where the Court (Gleeson CJ, Gummow, Hayne, Callinan and Haydon JJ said (at [30]) (footnotes omitted):

In so far as their Lordships were proceeding in Oriental Steam upon an assumption that the law of property requires the location at all times and in all circumstances of distinct legal and beneficial ownership, that assumption since has been exploded by Commissioner of Stamp Duties (Q) v Livingston. In Franklin's, Menzies J made this point respecting the significance of Livingston. McLelland J later rightly emphasised "the imprecision of the notion that absolute ownership of property can properly be divided up into a legal estate and an equitable estate". Hope JA said:

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"[A]n absolute owner in fee simple does not hold two estates, a legal estate and an equitable estate. He holds only the legal estate, with all the rights and incidents that attach to that estate."

93. At the most, according to the Commissioner's argument, the Family Court Order had the effect of creating a new equitable estate in favour of the recipient, Ms Ellison, in relation to the MIN Shares as held by Sandini. But from 21 September 2010 until 30 September 2010, Sandini continued to hold the very same interest it always had held in relation to the MIN Shares. There was no change in ownership for the purpose of s 104-10, and could be no CGT event A1 disposal, unless and until Sandini no longer held dominion over the shares. That did not occur until the transfer was executed. The Family Court Order therefore did not have the effect of transferring the MIN Shares. Accordingly, there was no change of ownership for the purpose of the relevant CGT trigger event, CGT event A1.

94. In short, the Commissioner's primary contention is that an alteration in beneficial ownership does not constitute a change of ownership for the purpose of s 104-10(2).

95. However, even if this is wrong, the Commissioner says the Family Court Order did not effect such an alteration in the beneficial ownership of the MIN Shares. The Commissioner accepts that a transfer order made under s 79 of the Family Law Act may create or transfer an equitable interest in property that is the subject of the order, but whether or not it has such effect depends on the terms of the order. In this case, the Family Court Order required Sandini, within 7 days, to 'do all acts and things and sign all documents necessary to transfer' the MIN Shares to Ms Ellison.

96. The Commissioner argues that the following factors support the conclusion that the effect of the Family Court Order was not to transfer an equitable interest of the MIN Shares to Ms Ellison:

(1) Rather than ordering the 'transfer' of the MIN Shares, the Family Court Order required Sandini to 'do all acts and things and sign all documents necessary to transfer' the MIN Shares. In other words, the Family Court Order was directed at the doing of the acts and things and the signing of the documents as opposed to transferring the MIN Shares. The Family Court Order was not immediately dispositive. In this sense, the Commissioner argues, it is distinguishable from those authorities relied upon by the applicants, such as In the Marriage of Michiels.
(2) The property the subject of the Family Court Order was a number of MIN Shares, as opposed to readily identifiable real or personal property, thus preventing identification of the property in respect of which the equitable interest was created. At best, Ms Ellison could have a beneficial interest in 2,115,000 MIN Shares from within the much larger parcel of MIN Shares held by Sandini, or possibly an interest in respect of the entire mass of those shares.

97. The authorities relied upon by the applicants, the Commissioner points out, were concerned with the rights of the intended transferee as against the trustee in bankruptcy of the transferor's estate. The question here, however, is raised in a different context and for a different purpose, namely, whether from a taxation perspective, ownership of the MIN Shares has changed.

98. The Commissioner says it is not clear from the authorities whether such transfer of beneficial ownership for the purpose of s 79 of the Family Law Act amounts to absolute entitlement (including, for example, an entitlement to any income received in respect of the asset between the date of the order and the date of the transfer of legal ownership). However, from a taxation perspective, any beneficial ownership transferred to Ms Ellison as a result of the Family Court Order was insufficient to constitute a 'change of ownership' for the purpose of s 104-10(2) of the 1997 Act. As para 3 of the Family Court Order did not result in a change of ownership for the purpose of s 104-10(2) of the 1997 Act, it follows, the Commissioner argues, that nothing happened that could qualify for roll-over relief under subdiv 126-A.

99. As to (2) above (in [82]), the Commissioner also contends that the transfer of the MIN Shares from Sandini to Wavefront on

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30 September 2010 did not qualify for roll-over relief under subdiv 126-A. In order for the transfer of the MIN Shares from Sandini to Wavefront on 30 September 2010 to qualify for roll-over relief under subdiv 126-A, the trigger event must involve a company or a trustee as transferor and a spouse or former spouse as transferee. A spouse is defined in s 995-1 as an 'individual' regardless of whether the same or different sex, and whether married or living together as a couple on a genuine domestic basis.

100. The transfer of the MIN Shares from Sandini to Wavefront on 30 September 2010, the Commissioner says, did not qualify for roll-over relief under subdiv 126-A as the transferee was Wavefront and not a 'spouse or former spouse'. Section 126-15 should not be given the broad construction contended for by the applicants, the Commissioner argues. The process of statutory construction must always begin with the examination of the text of the relevant provisions. So it must end. The enquiry is directed to the text, context and purpose of the provision, identification of the relevant constructional choices, and the determination of the construction that best achieves the statutory purpose. It is important that s 126-15 expressly provides for the transferor of the asset to be either an associated company or trust, yet expressly stipulates that the transferee must be the 'spouse or former spouse'. The Commissioner argues that provision could have been made in the legislation for the transferee to be an associated company or trust of a spouse or former spouse. It was not. To construe s 126-15 as extending to transfers to companies or trusts associated with a spouse or former spouse is to give the provision a meaning that is not supported by the text.

101. Although the Commissioner accepts that meaning needs to be given to the term 'involves', in this instance, the Commissioner argues, the relevant involvement of the spouse or former spouse is specifically prescribed as being the recipient of the relevant CGT asset. The Commissioner submits that it is relevant that s 126-15(1) of the 1997 Act is a rewrite of s 160ZZMA(1) of the 1936 Act pursuant to which roll-over relief was available, if an asset was transferred from a company or a trustee to a spouse or former spouse. Although s 160ZZMA(1) did not include the word 'involves', the Explanatory Memorandum set out above explains the changes that were made in Div 126, but does not refer to any change made as a result of the inclusion of the word 'involves', indicating, the Commissioner contends, that the scope of the roll-over did not change. Consistently with this, s 1-3 of the 1997 Act provides that if the former statutory provision expressed an idea in a particular form of words and the 1997 Act appears to have expressed the same idea in a different form of words in order to use a clearer or simpler style, then the ideas themselves are not taken to be different just because different words are used.

102. As to (3) above (in [82]), in relation to s 103-10 of the 1997 Act, the Commissioner rejects the alternative argument advanced by the applicants to the effect that, by reason of s 103-10 of the 1997 Act or the alleged constructive receipt of the MIN Shares, Ms Ellison's direction in relation to the MIN Shares and the giving of effect to that direction resulted in a change of ownership within the meaning of s 104-10. Section 103-10 does not operate to broaden the scope of subdiv 126-A, not only would such an outcome be inconsistent with the text of the relevant roll-over provisions (which are expressly limited to transfers to a spouse or former spouse and include no reference to the application of property for a spouse's benefit or at a spouse's direction), it would have the effect of setting the costs base for Ms Ellison in respect of an asset that she did not hold. Further, the Commissioner argues, were s 103-10 to operate in the manner contended for the applicants, the tax position of the actual recipient of the asset would be manifestly uncertain.

MS ELLISON'S POSITION ON ROLL-OVER RELIEF

103. Ms Ellison has largely adopted the position as advanced for the Commissioner and, in particular, accepts the Commissioner's contention that the case can be determined without the necessity for findings in relation to whether Ms Ellison sent the 29 September Email and, if so, in what capacity. I have found that Ms Ellison sent the relevant email and she sent it in the capacity in which she was invited to send it, namely, as the respondent

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to the Family Court Order and as the person invited to indicate the method of compliance with those orders. As she directed the transfer to be to Wavefront, she did so also on its behalf as the sole director and guiding mind of Wavefront. I can accept that she has no recollection of sending the brief email, but no other plausible explanation is advanced or apparent.

104. The CGT event occurs at the time when the transferor disposes of the asset in accordance with the order, being a time when change of ownership occurs, Ms Ellison says. Transfers made pursuant to a court order are not made under a contract. In this case, the change of ownership occurred only after Sandini, as trustee for the KRUT as transferor, executed the Standard Transfer Form on 30 September 2010 to transfer ownership of the MIN Shares from it to Wavefront as transferee.

105. Ms Ellison rejects the applicants' primary contention that she acquired beneficial ownership of the MIN Shares by operation of law based on the Family Court Order made on 21 September 2010 or on 28 September 2010, being the date by which the orders needed to be performed. Ms Ellison also rejects the applicants' argument that Sandini held the MIN Shares by virtue of the Family Court Order in trust for Ms Ellison and, subject to her direction, Ms Ellison could have restrained any transfer of shares by Sandini to a third party. She equally rejects the submissions for the applicants that she held beneficial ownership of the MIN Shares at the time of the Family Court Order, dated 21 September 2010, by virtue of constructive receipt under s 103-10 of the 1997 Act.

106. Regardless of whether or not she obtained some form of equitable interest in the MIN Shares due to the Family Court Order (which she denies), Ms Ellison argues that Sandini is not entitled to relief because an essential condition is that the trigger event CGT event A1 occurs. Ms Ellison rejects the argument that the Family Court Order constituted CGT event A1 because of the absence of transfer of legal ownership. It is only a change of legal ownership which can constitute CGT event A1. Further, she argues that it is clear that the transfer of the MIN Shares to Wavefront was as a consequence of email communication initiated by Mr Ellison and between Mr Ellison and Ms Ellison in a capacity as a director or Wavefront, not because of the 21 September 2010 Family Court Order. In my view, this contention is not realistic. There was no prospect of such a transfer occurring were it not for the Family Court Order.

107. Ms Ellison suggests that under CGT event A1, a disposal of a CGT asset takes place if a change of ownership occurs. However, Ms Ellison submits, a change in beneficial ownership is not enough to give rise to CGT event A1, even if there is a beneficial interest arising by virtue of orders under s 79 of the Family Law Act, as this is not sufficient to amount to an absolute entitlement. In any event, Ms Ellison contends that, in fact, no part of the beneficial interest in the MIN Shares passed to her prior to 30 September 2010, or indeed at all. That is explained on the basis that, properly construed, s 104-10 of the 1997 Act lends support to the view that CGT event A1 is limited to situations where both the legal and equitable interests must be disposed of before a change in ownership occurs for the purpose of CGT event A1.

108. It is further argued that as the Family Court Order was incapable of being performed according to their terms, roll-over relief cannot be obtained. The transfer that did occur was not a transfer pursuant to the Family Court Order.

109. An additional problem to which Ms Ellison points is that she had no entitlement to any particular identifiable MIN Shares before 30 September 2010. It is submitted, therefore, that the Family Court Order did not satisfy the test of certainty of 'subject' because it did not specify that a particular and identifiable parcel, comprising a particular 2,115,000 MIN Shares then owned by Sandini, had to be set aside and specifically applied for the purpose of compliance with the Family Court Order. Rather, the Family Court was not informed and had no knowledge of whether Sandini held what became the MIN Shares at 31 September 2010 or, if so, whether Sandini intended to trade them or acquire other shares in MIN to transfer to Ms Ellison within the following 7 days. Sandini was obliged only to transfer a parcel of shares in MIN by 28 September

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2010 amounting in total to 2,115,000 in number. The terms of the Family Court Order did not require Sandini to hold, identify, separate or appropriate any particular and identifiable parcels of shares in MIN. Nor did Sandini ever seek to do so. Immediately before the 2,115,000 MIN Shares were transferred, Sandini held 35,804,065 shares in MIN.

110. Accordingly and, with respect, plausibly, Ms Ellison argues that no equitable interest was created in the specific MIN Shares which were transferred. Ms Ellison says the only equity that she had by virtue of the Family Court Order was the right to call upon Sandini, if the orders were capable of being enforced, to do all things necessary to deliver up the MIN Shares. Sandini could deal without restriction in the MIN Shares and dispose of all of its shares if it wished prior to the transfer as long as it did acquire and transfer 2,115,000 shares in MIN pursuant to the Family Court Order on the day the transfer was required. Ms Ellison says no proprietary interest in the 2,115,000 MIN Shares was capable of passing at law or in equity until such time as the particular parcel had been identified, put into a deliverable state and unconditionally appropriated to the transfer. This did not occur before the time at which the Standard Transfer Form was executed by both parties and probably took place at the time when the transaction was processed.

111. Ms Ellison also argues that, as a matter of law (apart from questions of discretion), the MIN Shares were not transferred 'because of' the Family Court Order, but rather, because of the directions given by virtue of the emails. I do not accept this submission for reasons given above. It is also submitted that the beneficial ownership in the MIN Shares did not pass to Ms Ellison 'consequent upon' the Family Court Order. No beneficial interest passed as a result of the steps taken after 28 September 2010. The legal and any beneficial interest in the MIN Shares passed at the same time on 30 September 2010 when the Share Transfer Form was fully executed.

112. Further, Ms Ellison says there was a failure to comply with the Family Court Order saying that the shares were not transferred to her as ordered, but to a 'third party', namely, Wavefront as the trustee for the FFT. This submission starkly ignores the reality that it was at Ms Ellison's direction that the transfer was to Wavefront and was in response to the email to her from Mr Ellison of 28 September 2010 in which he said 'can you please send me the details of where you want the [MIN Shares] transferred to'. There is no doubt that request was made because of the Family Court Order and would not have been made other than because of the Family Court Order. It was intended to be in complete compliance with the Family Court Order, albeit that strictly the shares could simply have been transferred directly to Ms Ellison, as the Order required. It is unrealistic, in my view, for Ms Ellison now to complain about failure to comply with the Family Court Order.

113. Ms Ellison also complains about non-compliance with the transferee spouse requirement. By this she means that Sandini as trustee for the KRUT failed to comply with the requirement set out in s 126-15(1) of the 1997 Act, which makes it clear that in relation to any assets transferred under the provision, the transferee has to be to the spouse or former spouse as defined in subs 995-1(1) as an 'individual'. Sandini did not transfer the MIN Shares to an individual, but rather to Wavefront.

114. The applicants response to this is that it is sufficient that the spouse 'is involved' in the transaction, saying that Ms Ellison was involved 'as the beneficiary of the Court order' and 'in directing the traffic to secure the registration of the shares in accordance with her preference'. Ms Ellison complains that 'no authority is cited for this proposition'.

115. Ms Ellison contends that s 103-10 of the 1997 Act has no relevance at all as it only applies to CGT assets being disposed of by a transferor in order to assist them in working out any capital gain or capital loss in respect of that disposal. It is only relevant, it is submitted, when considering how the CGT provisions in Pt 3-1 and Pt 3-3 apply to a transferor, for example, in determining a taxpayer's capital proceeds from a CGT event. Section 103-10, Ms Ellison says, does not apply to deem a disposal of a change of ownership to have occurred to Ms Ellison to allow Sandini to claim roll-over relief under subdiv

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126-A. Rather, s 103-10 is simply a guidance provision, setting out 'general rules that apply to the provisions dealing with capital gains and capital losses'. Ms Ellison says it is a provision which modifies the general rules about capital proceeds set out in s 116-20. It is not referred to in Div 109 which outlines specific rules, rather than general rules, relating to when CGT assets are acquired by an entity. The provision is intended to capture certain entitlement as receipts, but is not intended to otherwise modify the operative effects of the other CGT provisions. This position is supported on the basis that it would be inconsistent with the scheme of the 1997 Act and would lead to ambiguous and uncertain outcomes outside the legislative intent if s 103-10 were to be interpreted in the manner proposed by the applicants. Section 103-10 is framed as applying to 'you', it sets out when 'you' are treated as having received, or if 'you' are entitled to receive, money or other property for the purpose of Pt 3-1 and Pt 3-3. Section 103-10 deals with how the provisions in Pt 3-1 and Pt 3-3 will be applied to the relevant taxpayer in receipt of an entitlement. Ms Ellison says it does not, however, address the consequences for other entities, such as the actual recipient. Ms Ellison adopts the Commissioner's submissions that if s 103-10 were to operate such that the roll-over provisions applied to her 'as if' Ms Ellison had received property, the provisions would apply to set the cost base of her in respect of an asset she does not hold and Ms Ellison says this would be a 'manifestly absurd' outcome. Section 103-10 could not be applied so as to treat another taxpayer who actually received the property as if it were Ms Ellison.

116. Finally, Ms Ellison challenges the question of whether she gave a 'direction' for the purpose of s 103-10 of the 1997 Act. Ms Ellison says there was an intention on Mr Ellison's part to not be bound by the Family Court Order which required the MIN Shares to be transferred 'to the wife'. In effect, Mr Ellison and Ms Ellison made their own arrangements outside the terms of the Family Court Order. The 29 September Email, it is argued, would appear to be in response to Mr Ellison's email of 28 September 2010 (I find it is undoubtedly so). The language used in the 29 September Email, it is said, is in the nature of a polite request by way of response to Mr Ellison to transfer the MIN Shares and, Ms Ellison submits, not in the nature of an explicit instruction or order. It is not the language of a direction. At best, the result was that the Family Court Order was ignored and Mr Ellison initiated and Ms Ellison cooperated with the new regime. Ms Ellison submits that it is unclear who the author of the 29 September Email was, but it is unlikely to have been her. I do not accept this submission. It may well have been that she received some input into the terminology or adopted it from other documentation, but there is no evidence whatsoever to suggest that the email was sent by anybody else from her email address and it is plainly in response to a specific query.

117. I do not accept that the content of the response did not constitute a direction for the purposes of where that word is used in s 103-10 of the 1997 Act.

CONSIDERATION

118. The Commissioner was unable to identify a compelling policy or objective reason why a family trust would be excluded from the same benefit that the former spouse would get, other than to indicate that there would be more possibility for mischief if the disposal was to a family trust rather than directly to a spouse because the family trust may have further objects or beneficiaries in the case of a discretionary trust. If one looks at the objective of a roll-over, it is to defer the time at which there will be imposition of CGT. While this is understandable in the context of marital breakup and property rearrangements to spouses, there is no reason why that should have been extended further to a family trust, it is said. Nothing in the explanatory memorandum suggests there was any change in terms of legislative choice.

119. In fairness to the Commissioner, it was not part of his case that a policy objective would be defeated and not achieved. Rather it was at my inquiry that the response was proffered. At least in the context of this case when the spouse alone directs the proceeds and the spouse is the primary beneficiary, it is difficult to detect any objective being defeated. This perhaps underscores the sense in starting

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and finishing with the words or text of the statute.

120. The applicants put their argument in different ways. The primary argument is that the making of the Family Court Order itself constituted CGT event A1 because there was a disposition by operation of law of the MIN Shares to Ms Ellison. The applicants say (and in this situation I agree), that the mis-description of the transferor's capacity does not preclude that conclusion, nor does the failure to complete the transfer within the specified seven days. The applicants argue that the trust property, that is, the trust created by reason of the Family Court Order, was not simply the number of shares actually transferred, but all of the shares held by Sandini in MIN so that there was sufficient certainty of the subject matter of the trust.

121. The alternative argument is that there was constructive receipt of the MIN Shares by Ms Ellison for the purposes of s 103-10. Ms Ellison obtained, by reason of the terms of the Family Court Order, a dispositive power over the MIN Shares. The fact that the shares were not transferred to Ms Ellison personally does not affect the operation of the section because she held the dispositive power over the MIN Shares.

122. The further alternative argument is that it was not a necessary ingredient of the roll-over relief that Ms Ellison, as the former wife be the actual transferee of the shares so long as she was sufficiently involved in the transfer.

The effect of the Family Court Order

123. With the making of a court order such as the Family Court Order, there are two roll-over consequences. The first is that if the roll-over has taken place, no tax is paid by the transferor and the transferee inherits or acquires the cost base of the assets as they were historically when held by the transferor. In this way, tax is deferred until the next disposition of the family asset. The underlying policy is apparently that the transfers of assets arising on a marital breakdown, as on a transfer of assets in other circumstances such as death, are not the occasion for exigibility. In both those instances, there is not the sale for purpose of making a gain, but rather in this instance, necessary compliance with a court order. There is no doubt in this instance that there was a transfer of shares in purported compliance of a court order.

124. Nothing in the provision requires that the court order be valid or efficacious, but rather, requires the making of an order in such a manner that an order with a minor defect, but the substance and effect of which is nonetheless clear, would still be an order which satisfies the requirements of s 126-15. The fact that the Family Court Order is a consent order has no bearing on whether the Family Court Order is such an order for the purpose of s 126-15: see
Kinch v Walcott [1929] AC 482 (at 493), where the Privy Council noted that a consent order was as effective as any other order of the court and binding on the parties unless it is set aside in proceedings duly constituted for that purpose. Moreover, for present purposes, there is no occasion to inquire into the legal or factual correctness of the orders: see
Coshott v Woollahra Municipal Council [2008] NSWCA 176 per Handley J.

125. It is a requirement of the section that the CGT event must happen 'because of' the relevant order and I find that was expressly so here. It is clear on the facts that the transfer would not have occurred were it not for the Family Court Order and did occur 'because of' the Family Court Order. As noted by Lockhart J (at 321-322) in
Human Rights and Equal Opportunity Commission v Mount Isa Mines Pty Ltd (1993) 46 FCR 301, this expression simply implies a relationship of cause and effect. The section does not use a more confining expression such as 'pursuant to the specific terms of the order'. Rather, it seeks to rely upon broader and less technical concepts inherent in a mere cause and effect relationship. Inquiry is not invited beyond the conclusion that a transfer occurs as a result of a court order in a commonsense cause and effect sense. Further inquiry as to whether there is exact compliance with the precise terms of the court order is not stipulated or implied in the section.

126. There is also a fourth requirement under s 126-15 that the event must 'involve' a transferor, which for s 126-15 includes a trustee, and a transferee who is a spouse or a former spouse of another individual. The case for the applicants is that, if the transferee must be the spouse or a former spouse, it

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was the former wife, Ms Ellison, who was the transferee of the shares. So s 126-15 extends the roll-over consequences of s 126-5 where the trigger event involves a company or trustee as transferor and a spouse or former spouse because of an order. What those consequences are is determined by the operative provision s 102-5 which spells out that assessable income includes net capital gain, if any, for the income year. The effect of the provision is that a taxpayer aggregates capital gains and capital losses. Division 103, which in turn is part of Ch 3, Specialist Liability Rules, and Pt 3-1, Capital Gains and Losses-General Topics, sets out some general rules that apply to the provisions dealing with capital gains and capital losses. At s 103-10, it is provided that Pt 3-1, in which s 103 is contained, applies to the taxpayer as if the taxpayer had received money or other property if it had been applied for the taxpayer's benefit, including by discharging all or part of a debt owed by the taxpayer, or as the taxpayer directs. So the Part applies where moneys are received for the benefit of a taxpayer in accordance with directions given.

127. Division 104 spells out CGT events. Specifically, the relevant CGT event is contained under Div 104-A, Disposals, and s 104-10, disposal of a CGT asset: CGT Event A1. By subs (1), it is provided that CGT event A1 happens if you dispose of a CGT asset. By subs (2) it is made clear that you dispose of a CGT asset if a change of ownership occurs from 'you' to another entity, whether because of some act or event or by operation of law. However, a change of ownership does not occur if 'you' stop being the legal owner of the asset, but continue to be its beneficial owner. There is no doubt in the present circumstances the disposal was by operation of law and the debate arises around the words 'however, a change of ownership does not occur if you stop being the legal owner of the asset but continue to be its beneficial owner'. The respondents' position is that this event cannot take place unless there is a change in both the legal and beneficial ownership of the asset.

128. In my view, this is not necessarily so. It is certainly not what is expressly provided for in the section. Rather, the section turns on the expression 'a change of ownership'. It is true that in the second sentence there is express reference to the concept of a legal owner and beneficial owner.

129. However, what the statute did expressly prescribe is that the event is not triggered if you continue to be the beneficial owner. It is certainly clear that the statute expressly recognises that for its purposes, there will be no change of ownership if the taxpayer ceases being the legal owner, but continues to be its beneficial owner. This tends to emphasise the importance of beneficial ownership. If the effect of the Family Court Order was to give beneficial ownership to Ms Ellison, the question is whether the transfer of the beneficial ownership was also sufficient, a concept not apparently expressly catered for, one way or another, in specific terms in the statutory provisions.

130. The applicants' position is that this is important because the CGT Rules are all directed to dealings in beneficial ownership. While they may also concern dealings in legal ownership, where beneficial ownership also moves, unless the legal ownership also moves the beneficial ownership, there will not be a CGT event.

131. An example reflecting this is s 106-50, dealing with absolutely entitled beneficiaries, which provides that if the taxpayer is absolutely entitled to a CGT asset as against the trustee of a trust (disregarding any legal disability), Pt 3-1 and Pt 3-3 apply to an act done by the trustee in relation to the asset as if the taxpayer had done the act.

132. The 1997 Act pays close regard to CGT events involving trusts, which would tend to demonstrate that Pt 3-1 is focussed on dispositions of beneficial ownership, rather than legal ownership. This, it is said, is expressly reflected again in the second sentence to s 104-10(2).

133. The focus on the beneficial interest is arguably consistent with recognition that the person who enjoys the fruits of the property should be the person liable as the taxpayer if tax is payable.

134. The various CGT events involving trusts attract liability only in circumstances of beneficial ownership. So for example, s 104-55, creating a trust over a CGT asset by a

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declaration or settlement, does not apply by virtue of the exceptions specified in subs (5).

135. The focus in this and other trust CGT events, including CGT event E5 and E9, make it clear that the CGT event does not 'happen' if the taxpayer remains the beneficial owner. In the circumstances of CGT events concerning trusts, the focus again is on beneficial ownership.

136. There is support for the position advanced for the applicants, namely, that in the present circumstances equitable ownership of the shares appears on the authorities to have been acquired by Ms Ellison as a result of the terms of the Family Court Order. In Jones, orders had been made pursuant to s 79 of the Family Law Act in December 2003 and on the following day the husband became bankrupt. During the next month, the wife and the trustee in bankruptcy became registered owners of the land which had been transferred pursuant to the court orders. In February, the husband executed a deed transferring the whole of his interest in the land to the former wife. The terms of the order were similar to those in the current proceedings. Moore J, in the Full Court, noted that central to the reasoning of the primary judge had been the judgment of the Full Court in Mateo.

137. In Jones, Moore J (with whom Hill J and Allsop J (as his Honour then was) agreed) said (at [14]):

The members of the Full Court in Mateo did conclude that when an order (of the type presently under consideration) is made under s 79 ordering that a person presently holding a legal interest in the property transfer that interest to another person, a beneficial interest is thereby vested in the other person. Wilcox J described the order as vesting an equitable interest (at [62]) and Merkel J as transferring an equitable estate or interest (at [136]). Branson J expressed her conclusion in qualified terms (at [102]) when she spoke of it being "probably implicit in the terms of the order that the interest of the parties to the marriage in the [property] were altered by operation of the order" (emphasis added) vesting in the wife all the husband's beneficial interest in the property . It appears Branson J viewed that as the preferable construction of the order and its affect. In any event the views of a majority were clear and an equitable interest was, by the order, transferred. A trust was created for the benefit of the other person .

(emphasis added)

138. Allsop J (as the Chief Justice then was) also noted the following (at [20]):

Section 79 of the Family Law Act 1975 (Cth) deals, as the High Court said in
Mullane v Mullane (1983) 158 CLR 436 at 445, with orders which work an alteration of the legal or equitable interests in parties or either of them. Thus, an express and immediate vesting order could be made. There was nothing to suggest in the reasons for judgment of Coleman J in the Family Court (or of the Family Court in Mateo, as far as can be gleaned from the judgment of the Full Court in Mateo) that any suspension of effect of the orders made was intended. It would perhaps have been clearer if the immediately dispositive effect of the orders here had been identified expressly. Nevertheless, the orders here, though not expressly dispositive, made as they were against the background of s 79 and in light of the reasoning in Mateo , should be taken to have the effect found by the primary judge .

(emphasis added)

139. Applying Jones and Mateo, in my view, as a result of the Family Court Order Ms Ellison became the equitable or 'beneficial owner', to use the expression appearing in CGT event A1, of the MIN Shares.

140. Of course the position for the respondents is that the CGT event must involve disposal of both legal and beneficial ownership. As is made clear from the Full Court decision of
Kent v Vessel "Maria Luisa" (No 2) (2003) 130 FCR 12, there are forms of ownership of assets in equity such that the concept of a beneficial owner can be contrasted with a person who has a lesser equitable interest such as a mere equity. In Kent v Vessel "Maria Luisa" (No 2), the issue was whether someone who individually owned all of the units in a unit

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trust, which in turn owned the ship, was the owner for the purposes of the Acts Interpretation Act 1991 (Cth). In the joint judgment of Tamberlin and Hely JJ (at [61]) their Honours said:

The word "owner" cannot be given any general description. But ordinarily the incidents of ownership of a chattel include the right to make physical use of the chattel, the right to the income from it, the power of management, and the right of alienation: Lawson & Rudden, at p 8. In the Iron Shortland (at 544) Sheppard J quoted from the decision of the Singapore Court of Appeal in
The Ohm Mariana; Ex Peony [1993] 2 SLR 698 that the term "owner" means any person who is vested with such ownership as to have the right to sell, dispose of or alienate the ship, and that a beneficial owner of the ship comes within that term . See also to similar effect
The Permina 3001 [1979] 1 Lloyd's Rep 327 at 329.

141. Their Honours made clear that ownership, whether legal or equitable, involves something greater than beneficial interest. At [66] their Honours said:

Ownership, whether legal or equitable, therefore involves something greater than beneficial interest. Equitable ownership of property is commensurate with the right to relief in a Court of Equity : In
Will of MacGregor; Trustees, Executors and Agency Co Ltd v Acting Commissioner of Taxation (Cth) (1917) 23 CLR 576 at 583; Meagher, Heydon and Leeming, Meagher, Gummow & Lehane's Equity Doctrines & Remedies (4th ed, 2002) at [4-120]. If a person has contractual rights in relation to a ship which, if performed will result in the person becoming the owner of the ship, then the person will be regarded as the equitable owner of the ship provided that specific performance of the contract would be decreed :
KLDE Pty Ltd v Commissioner of Stamp Duties (Qld) (1984) 155 CLR 288. Thus entitlement to a vesting order or equivalent relief would be necessary before AFE could be regarded as the equitable owner of the ship as at the relevant date:
Stern v McArthur (1988) 165 CLR 489;
Chan v Cresdon Pty Ltd (1989) 168 CLR 242. But that does not mean that AFE does not have an interest in the trust property, including the ship, which equity would protect regardless of whether AFE could be called the equitable owner.

(emphasis added)

142. As noted in
Lysaght v Edwards (1876) 2 Ch D 499, a right to specific performance to compel the transfer of an asset can be equated with beneficial ownership. In this instance, Ms Ellison had a more substantive right than a right to obtain an order for specific performance. She already had an order of the Family Court for the transfer of the shares within seven days.

143. In my view, the Family Court Order vested beneficial ownership in Ms Ellison, which in turn satisfied the change of ownership concept in CGT event A1. It might be anticipated that s 104-10(2) would be drafted differently in circumstances where express reference is made to the expressions 'beneficial owner' and 'legal owner' in the second sentence which emphasises that a change of legal ownership alone would not trigger CGT event A1 without a change in beneficial ownership. The fact that the provision did not specify that a change of beneficial ownership without a change in legal ownership would not trigger CGT event A1, taken in context, is consistent with the notion that CGT event A1 would be triggered where there was a change of beneficial ownership. I am not persuaded that there is anything in the description of CGT event A1 which would limit it to cases only of both legal and beneficial ownership change. That the key is the change in beneficial ownership is supported by the text and substance of the provisions which have been examined.

144. In my view, this would also appear to be consistent with the legislative purpose because, were it otherwise, whenever there was disposition of equitable ownership without legal ownership, not expressly directed by one of the CGT events, such as E1, there would be no liability for CGT. So, for example, in the case of a constructive trust (eg,
Baumgartner v Baumgartner (1987) 164 CLR 137) CGT would be wholly avoided. So also in other cases of constructive trust (see, for example,
Chang v Registrar of Titles (1976) 137 CLR 177 (at 185)). That this would be intended seems unlikely.

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145. The applicants draw on two decisions to support the contention that beneficial ownership will suffice. The first of those cases is a Full Court decision and, with respect, not particularly supportive to the applicants' position. In
Taras Nominees Pty Ltd v Federal Commissioner of Taxation (2015) 228 FCR 418, the Full Court (Perram, Robertson and Pagone JJ) (at [10]) said:

10 The reasons for concluding that CGT event E1 happened also require the conclusion that CGT event A1 happened. Event A1 occurred because there was a change of ownership by transfer of the Taras land from Taras to the trustee. The event would not have occurred if Taras continued to be the beneficial owner of the land but the analysis above also requires the conclusion that Taras was no longer the sole beneficial owner of the Taras land upon its transfer to the trustee for it to be held upon the terms of the trust deed and the joint venture agreement. Her Honour correctly concluded at [138]:

"Prior to 20 August 1998, Taras had ownership of the Taras land and it disposed of that land, for the purposes of s 104-10, when it transferred the land to the Land Trustee. There was a disposal of the Taras land for these purposes because the combined effect of the JVA, the Trust Deed and the transfer was that Taras ceased to be the owner of the Taras land and became an equitable tenant in common with the other beneficiaries under the trust, namely, SDA and the Marpine Trustee. In so concluding, I adopt the reasoning of Batt JA in Victoria Gardens (Court of Appeal), which is discussed at [103]-[115] above. For the reasons stated above, Booth v Ellard does not support Taras' submission that it retained beneficial ownership in the Taras land: see [124]-[128] above."

The combined effect of the trust deed and the joint venture agreement was that upon transfer of the land by Taras to the trustee, Taras ceased to be the only beneficial owner of the land. Its interest was thereafter made "subject to" the rights of the other beneficiaries to the land. Taras became, as her Honour held at [138], an equitable tenant in common of the Taras land with the other beneficiaries under the trust.

146. The applicants rely upon these passages because of the emphasis on the significance of beneficial ownership, but it must be noted that in that case there was a transfer of beneficial ownership as well as legal ownership to the trustee. When the various owners of contiguous parcels of land decided to sell their land to a trustee, he would then develop the enlarged land. That transaction was held by the Full Court to be taxable either as CGT event E1, a settlement of a trust, or CGT event A1.

147. Another case contains a much more direct indication of the significance of beneficial ownership, when considering this part of the tax legislation. In
Brooks v Commissioner of Taxation (Cth) (2000) 100 FCR 117, the Full Court (Hill, RD Nicholson and Sundberg JJ) were considering a circumstance in which the taxpayers were the vendors in an investment property under a contract for sale of land. The purchasers did not complete the purchase and the taxpayers terminated the contract for breach. A deposit paid by the purchasers to the taxpayers was forfeited. The taxpayers then applied to the Administrative Appeals Tribunal to review an objection decision made by the Commissioner against them in respect of the forfeited deposit. The Tribunal stated a special case for determination of questions of law by the Court on the basis that a contention was made that the decision of the Full Court in
Commissioner of Taxation v Guy (1996) 67 FCR 68 was plainly wrong. The Full Court declined to follow Guy in its application of s 160ZZC(12) of the 1936 Act, in the course of which the Court said (at [13]):

The key concepts of acquisition and disposal are defined, or expanded upon in s 160M of the Act. It is not necessary here to consider whether s 160M contains a conclusive code of what constitutes acquisition and disposal. That it does was conceded by counsel for the Commissioner. What s 160M(1) makes clear

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is that both words are not to be given a narrow interpretation. Anything which involves a change in the beneficial ownership of an asset is treated as a disposal and as giving rise to an acquisition . Further, it is irrelevant how that change in ownership is brought about: s 160M(2), whether it be by a transaction, by an instrument, by operation of law, by the doing of some act or thing, or the occurrence of an event . Section 160M(3) expands upon the circumstances that are to be taken to give rise to a change in ownership. Relevant to the facts of the present case is par (b) which provides that a change shall be taken to have occurred in ownership of an asset by:

"(b) in the case of an asset being a debt, a chose in action or any other right, or an interest or right in or over property - the cancellation, release, discharge, satisfaction, surrender, forfeiture, expiry or abandonment, at law or in equity, of the asset."

(emphasis added)

148. The key words in that paragraph are that '[a]nything which involves a change in the beneficial ownership of an asset is treated as a disposal and as giving rise to an acquisition'. The relevant words in s 160M(1) of the 1936 Act, 'subject to this Part, where a change has occurred in the ownership of an asset, the change shall be deemed to have effected the disposal of the asset by the person who owned it immediately before the change and an acquisition by the person who owned it immediately after', reflect the terminology used in CGT event A1.

149. The Commissioner accepts that the Full Court authority in Brooks is against the Commissioner's submission, but says that it is a Full Court authority in the context of the predecessor to s 104-10(2), namely, s 160M(1) of the 1936 Act. There is no textual change in the words which would require any difference in the meaning. The Commissioner makes the point that in Brooks the Full Court provided no reasoning for the introduction of the word 'beneficial'. The Commissioner also makes the point that it was not an issue in Brooks whether or not the simple change of beneficial ownership was enough for a disposition in terms of s 160M(1).

150. It may be that the Full Court did not explain why the word 'beneficial' was used. But certainly there is an explanation in this proceeding and that explanation together with the Full Court's observations in Brooks is, at the very least, persuasive, if not binding. The Commissioner also points to [17], which is in the following terms:

Prima facie, therefore, where a taxpayer owning land enters into a contract to sell that land, at the time the contract is entered into, that taxpayer creates a right in the purchaser to have the contract performed upon payment of the consideration under that contract. The vendor under the contract is thus treated as having disposed of this right, being a right which the taxpayer is deemed to have owned immediately prior to the creation of it. Conversely, the purchaser is deemed to have acquired the right pursuant to the disposition.

151. The Commissioner proposed that the Full Court was implying that there was a CGT event by virtue of the creation of an interest immediately upon entry into the contract, rather than being a disposal at the point of completion. Similarly, the Commissioner suggests that the following passage at [61] indicates that the Full Court was looking more at the question of forfeiture of the deposit, rather than looking discretely at the question of when a disposal might occur. The Full Court acknowledged that a purchase of land is not completed until the purchase money is paid and an executed transfer handed over:

The dictionary meaning of "prospective" quoted (the quotation is from the Macquarie Dictionary (2nd ed, 1991)) is "potential, likely expected". The first meaning given in that dictionary is not inconsistent with that quoted by the Full Court, which was "in the future". But the meaning of the phrase "prospective purchase" falls to be determined, not merely by reference to the word "prospective", but by reference to the complete phrase and in particular the word "purchase". No doubt it is correct to refer to a precontract contract as a contract prior in time to a purchase in the future and thus

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as a prospective purchase. However, the real question is whether it is correct or incorrect to refer to a contract which calls for completion in the future as a prospective purchase. We do not find the same difficulty as the Full Court in Guy did. A purchase of land is not completed until the purchase money is paid and an executed transfer handed over. That is when the sale actually takes place. Until completion, it is not inaccurate to treat the purchase as being in the future. Once the purchase money is paid the payer becomes a bona fide purchaser for value, but not before.

152. In the present arguments, the respondents have also relied upon the wording which appears in an example and Note 1 under s 104-10(3) to support an argument that they say demonstrates that CGT event A1 is concerned only with dispositions of both legal and equitable ownership. In my view, this may make too much of the Note. What is unknown from the description in the Note is whether, at the time the contract failed, only the deposit had been paid. If it is only a deposit that has been paid, the suggestion from Lysaght v Edwards is that the purchaser does not have full equitable ownership for the land, but rather, sufficient equity in order to support an action for specific performance: see
Tanwar Enterprises Pty Ltd v Cauchi (2003) 217 CLR 315 (at [53]). So if Note 1 is intended to illustrate a circumstance in which merely a deposit has been paid, then it would be accurate because beneficial ownership did not change. But if it should be read in some other way, then it would not be particularly helpful and perhaps not correct. The fact that an example given in legislation may be unhelpful or inaccurate is of no moment to construing the legislation as is evident from the discussion in the decision of Brooks (at [65]-[66]).

153. The way in which the Family Court Order is crafted is that Sandini is required to do all acts and things necessary to transfer the shares within seven days to Ms Ellison. In my view, this gave Ms Ellison an absolute right vested in possession to be owner of the shares within seven days. This flows from the discussion in Jones referred to above. In those circumstances there is no equitable interest retained in that number of shares by Sandini. All that Sandini can own in that number of shares is the bare legal title.

154. From a practical perspective, this is demonstrated by the fact that the only activity remaining at the time of the making of the Family Court Order was execution of the Share Transfer Form and presentation of it to MIN so that MIN could amend the Register in favour of the transferee. These steps involved changes to the legal, rather than the equitable title. None of those remaining steps enlarged in any sense the already absolute beneficial ownership of the shares held by Ms Ellison upon the making of the Family Court Order.

155. The analysis in Mateo by Wilcox J, after discussing a decision of
Craven v Official Trustee in Bankruptcy (unreported, Supreme Court of New South Wales, per Needham AJ, 26 July 1991), is pertinent (at [57]):

Craven provides support for the view, advanced by counsel for the respondents, that the effect of a transfer order under s 79 of the Family Law Act is to vest in the beneficiary of the order an equitable estate in the property interest that is the subject of the order. If that is so, what remains, after the order, in the hands of the person who is bound to effect the transfer is a bare legal interest, the market value of which must be nil. It would follow that a transfer giving effect to such an order could never be void against the trustee of the transferor's bankrupt estate; the market value of the property (nil) would never be greater than the consideration given for the transfer (also nil).

156. Wilcox J continued (at [62]):

On this analysis, in the present case there were two vesting events; but only the second of them was a "transfer of property by a person who later becomes a bankrupt". The first event took place on 22 June 2000, when the Family Court made orders requiring, amongst other things, Mr Mateo to transfer to his wife all his right, title and interest in the home. The effect of that order was to vest in Mrs Mateo an equitable interest in the one-half legal estate that continued to be held by Mr Mateo, but which, thereafter, had only a nominal market value. The second event was the transfer

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of the legal estate that was effected by the registration of a transfer document on or about 10 August 2000 .

(emphasis added)

157. As indicated above, similarly in this instance, there were two vesting events. The first was the vesting beneficial ownership by reason of the Family Court Order and then the second event by which the transfer of the legal estate and the beneficial estate was made to the family trust. The first event is sufficient for CGT purposes.

158. In the judgment of Branson J in Mateo, her Honour's approach on that aspect of the matter gave rise to a similar conclusion when her Honour said (at [102]):

Secondly, s 79 of the Family Law Act authorises the making of an order "altering the interests of the parties in … property". That is, the section is concerned to empower the Family Court directly to alter the interests of the parties to a marriage in property, not merely to make an order requiring the parties or one of them to take steps which will result in their property interests being altered. An alteration of the interests of the parties to a marriage in property by court order does not, in my view, constitute "[a] transfer of property by a person … to another person" within the meaning of s 121(1) of the Act (
Kizon v Palmer (1997) 72 FCR 409 at 430-431;
142 ALR 488 at 505-506 per Lindgren J with whom Jenkinson and Kiefel JJ agreed). Turning to the actual order made by the Family Court in this case (see [83] above), it seems to me that it is probably implicit in the terms of the order that the interests of the parties to the marriage in their matrimonial home were altered by operation of the order. That is, that the order itself vested in the wife all of the husband's beneficial interest in the matrimonial home (see
Harris v Walker (1969) 14 FLR 167 ). On this view of the order, the transfer which par 1 of the order required the husband to effect was necessary only to perfect the wife's interest by the transfer to her of the husband's legal interest in the matrimonial home. The transfer of the husband's beneficial interest in the matrimonial home to the wife was not on this view "[a] transfer of property by a person who later becomes a bankrupt" within the meaning of s 121(1) of the Act; it was a transfer of property by court order.

(emphasis added)

159. Merkel J reached a similar conclusion when his Honour said (at [127]-[130]):

127 At the outset it is appropriate to identify certain features of an order under s 79 of the Family Law Act. First, the order is a final order, subject to the limited jurisdiction to set aside or vary such an order by appeal or under s 79A of the Family Law Act: see
Mullane v Mullane (1983) 158 CLR 436 at 442-443. The order may also be set aside on the ground of jurisdictional error in an application for prerogative relief under s 75(v) of the Constitution.

128 Secondly, a court order settling property between husband and wife, including a requirement that there be a transfer of one party's interest to the other, has generally been regarded as vesting in the transferee an equitable estate or interest in the property pending the transfer of the legal estate or interest: see
Harris v Walker (1968) 14 FLR 167 at 176.

129 In Mullane at 445 the Court stated:

" … s 79 on its proper construction refers only to orders which work an alteration of the legal or equitable interests in the property of the parties or either of them. An interest in property is a right of a proprietary nature, not a mere personal right"

130 In
Craven v Official Trustee in Bankruptcy (unreported, Supreme Court, NSW, Needham AJ, No 2712 of 1991, 26 July 1991) Needham AJ, in reliance on Mullane , concluded that an order altering property interests under s 79 "creates an equitable interest in the land which could be enforced just as a contract of sale could be enforced" .

(emphasis added)

160. Those consistent observations by members of the Full Court lead to a conclusion

ATC 19520

which binds me to the effect that Family Court orders under s 79 of the Family Court Act transfer full beneficial ownership on the making of the order. It is clear that, as at 21 September, Ms Ellison could have compelled the transfer of the shares because she was armed with the Family Court Order.

Defects

161. Although there are said to be two defects in the Family Court Order, in my view, this does not affect the position.

162. The first of the alleged defects is the fact that Sandini is described in the first of the orders as acting in its capacity as trustee of the EFT. In fact it was not the trustee, it was the owner of the shares, but as trustee for the KRUT.

163. The second of the alleged defects is that the transfer did not occur within seven days.

164. In relation to the description of the capacity on which Sandini was the subject of the Family Court Order, Ms Ellison (specifically not the Commissioner) has said, as I have noted, that it was impossible to comply with the orders because of these defects and, secondly, there was no compliance with the orders.

165. It is true that the capacity in which the transfer was to be effected is mis-described, but Sandini, nonetheless, was the correct legal entity. All that was required in fact for the purpose of making fully effective orders was that Sandini effect the transfer. The capacity in which it was making the transfer was irrelevant to the legal and beneficial effect of the orders. The practical reality was that the parties knew that Sandini owned the MIN Shares and was, therefore, the correct legal entity to be the vendor of the shares. If nothing had been said about the trust capacity, it would have made no difference. It is also apparent that this is a defect which has been identified well after the event. The practical reality again is that the parties had no difficulty whatsoever in performing the orders and the error in the capacity in which Sandini acted had no effect on the binding nature of the orders on Sandini. As I have previously noted, I apprehend that Mr Ellison would have faced considerable difficulty if, on behalf of Sandini, he advanced an argument that the Family Court Order was not binding because the shares were held on behalf of a different trust than the trust identified in the Family Court Order. Of course, he did not seek to do that.

166. Finally, and only in addition to these points, it is well established that a mis-description of a person in an instrument does not invalidate the instrument so long as it is otherwise expressed with sufficient certainty to enable it to be performed:
BHP Petroleum (Timor Sea) Pty Ltd v Minister for Resources (1994) 49 FCR 155 per Beaumont J (at 172). In
Wingadee Shire Council v Willis (1910) 11 CLR 123 a rates notice served on 26 September provided that the relevant rates would be payable within 30 days of service, but then went on to mistakenly calculate that date as being 28 October. It was argued that the rates notice was therefore invalid. That was rejected. Barton J said (at 139-140):

Finally, there is the point raised under the 4th plea, that the shire did not cause the prescribed notices to be served on the respondent. The notice of valuation and rate states correctly enough that the specified amount of the rates will be due and payable "at the expiration of thirty days from service" of the notice. The notice was served on 28th of September as it sets forth. But it goes on to say, "the day on which rates will be due will therefore be 28th October 1907." It is argued that this amounts to a notice to pay on 28th October, a date at which thirty days from the date of service had not expired. The material sections are 144 (3) and 146 (1)(c). I am clearly of opinion that the evident error in inserting 28th October does not make the notice void. Utile per inutile non vitiatur. The mention of the 28th is a mere videlicet, heralded by the word "therefore." It is a mere statement of a computation made by the officer, palpably in error, as is demonstrated by the prior part of the notice. It is obvious that a failure to pay on the actual expiration of the thirty days from service cannot be justified on such a ground. The express mention of the time available to the ratepayer governs the notice and counteracts what is plain to any observer as a mere slip in counting the days. It might

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and would have been another matter if the thirty days had not been specified and the "therefore" had been omitted. The principle is in effect that stated by Bacon in his maxim, "præsentia corporis tollit errorem nonimis."

167. In the same decision, Isaacs J, in dealing with the argument, said (at 144):

I think the notice given was substantially accurate. The reference to 28th October was self-explanatory as a mere calculation which, though perhaps one day short of accuracy, did not vitiate the main and mandatory portion of the notice. The mistake was evident, and could safely be ignored and corrected by the recipient. As in the analogous rating cases of Ormerod v Chadwick and R. v. Stretfield, in which very similar questions were raised, it is a case of falsa demonstratio quae non nocet.

168. Higgins J said (at 147-148):

As for the point that the amount of the rates is not due because the notice did not fix a day for payment more than 30 days after service, I am of opinion that the notice did err in saying "The day on which such rates will be due will therefore be the 28th October 1907." For the notice was served on the 28th September; and the rate did not become due under the Act until the 29th October, after 30 days from the day of service (sec. 144 (3)). But the notice said truly that "on the expiration of 30 days from service of this notice" the amount will be due; and the statement as to the 28th October was a mere videlicet; and even if the videlicet is wrong, the statement is right. The prescribed notice has been duly given to pay-the notice in the form and with the particulars prescribed (see sec. 146 (1)). Errors such as this are not fatal to the rights of the Council. The maxims utile per inutile non vitiatur, falsa demonstratio non nocet, quicquid demonstratae rei additur satis demonstratae frustra est (see Broom's Legal Maxims, 7th ed., pp. 468, 470, 471), all seem to apply. The error is such as the ratepayer could detect by an examination of the Act, or of the notice itself. Probably, if an action had been brought on 28th October, the plaintiff could not have shown that any rate was due on that date; but in this case the writ was issued on 30th July 1908.

169. The last citation from Broom's Legal Maxims, 7th ed effectively translated means that that which is useful is not rendered useless by that which is useless. Put another way, otiose words added to the description of a thing which is sufficiently clearly described have no effect. Descriptions so added under this Rule may be rejected and not allowed to vitiate or render useless the clarity, certainty and enforceability of the instrument in which they are so introduced. The addition of the trustee capacity in which Sandini acted was otiose.

170. As to the delay of a day, such a delay was never acted upon or relied upon in any way at the time. Ms Ellison was content with the transfer, which was made in accordance with her direction. In
Oliver v Malanos (2011) 199 FCR 136, Cowdroy J, after discussing Jones and Mateo, said (at [60]-[62]):

60 The Court considers that the principle recognised in Craven, Mateo and Jones v Daniel is directly applicable to the present circumstances. Orders 5 and 6 of the consent orders were effective to create a beneficial interest of Ms Fung's $200,000 equity for the benefit of the children. As stated by Needham AJ in Craven such orders created an equitable interest in the fund which could be enforced by the beneficiaries of the fund.

61 The respondent asserts that orders 5 and 6 could not "carve out" the $400,000 from the fund, as the joint account did not exist at the time of the making of the orders. However, while neither the joint account nor the new account existed at that time, neither did the fund of money that was ordered to be provided in both Mateo and Jones v Daniel . It is clear from the authorities that orders under s 79(1) of the FLA have an immediate dispositive effect and one cannot evade the consequences of such orders by failing to comply strictly with the formalities of the orders or by simply not carrying them into effect .

62 As considered above, s 59A of the Bankruptcy Act gives paramountcy to Family Court orders made under s 79(1) over the vesting provisions of s 58 of the

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Bankruptcy Act. The Court notes the appellant's submission that s 59A (which was introduced by the amending act in 2005) may have been enacted to give statutory effect to the reasoning in Craven and Mateo.

(emphasis added)

171. While some authorities on this point pertain to the Bankruptcy Act 1966 (Cth) context, there is no evident distinction in the application of principles between the effect of such orders for bankruptcy purposes or tax purposes. The objective is always to identify the relevant ownership against which the machinery provisions of the legislation are to take effect.

Certainty

172. A further point advanced for the respondents was insufficient certainty in the subject matter of the trust. The argument is that as at 21 September it was not possible to identify which particular 2,115,000 shares were to be the subject of the trust. The evidence from an affidavit of Mr Goulds is that none of the shares in MIN were actually numbered and they were non-certificated. The shares transferred were ordinary shares. Registration for the company is electronic so shareholders are simply sent statements of balances from time to time. As explained by Mr Goulds, shares may be either issuer-sponsored or broker-sponsored. All shares held by Sandini, including the MIN Shares, were issuer-sponsored. Prior to the key date, being 21 September, Sandini owned 35,804,065 MIN Shares.

173. The instinctive response to the assertion as to lack of certainty of the specific shares may be that the trust created by the Family Court Order extended at least to (that is to no fewer than) the specified number within the Family Court Order of MIN Shares existing as at the time of the Family Court Order. However, another approach is apparent on the authorities. At least in Australia as distinct from England, there is persuasive single judge authority that the subject matter of the trust will be not, in this case, just the 2,115,000 shares referred to in the Family Court Order, but all of the MIN shares held, in this case, by Sandini.

174. In White, the question was closely examined by Campbell J. The relevant circumstances were that, after a de facto couple had fallen out, as a means of settling property arrangements, the defendant wrote the plaintiff a letter saying:

'THIS LETTER IS TO CONFIRM THAT I AM HOLDING IN TRUST FOR YOU 222,000 UNITRACT SHARES. THESE SHARES WILL BE TRANSFERRED TO YOUR NAME AND CONTROL, AT ANY TIME THAT YOU REQUEST, AFTER 1/AUGUST/2003. …

175. As in the present situation, the defendant owned more than the number of shares nominated. Campbell J addressed an argument by which it was submitted for the defendant that the trust property had not been adequately identified by saying that it was 222,000 of the 1.5 million shares that the defendant held. Campbell J considered the English Court of Appeal decision in
Hunter v Moss [1994] 1 WLR 452 (in White (at [153]-[209]) and concluded that a trust of the kind under examination in White is not analogous to a simple trust where a single and discrete item of property is held on a bare trust for a single beneficiary. Rather, his Honour held (at [212]):

it is trust of a fund (the entire shareholding of 1.5 million shares) for two different beneficiaries (the plaintiff and the defendant himself), where powers of management are necessarily involved in the trust (to sell or encumber, within limits that such dealings to not impinge of the plaintiff's [in this instance Ms Ellison] rights), and where duties on the trust would arise as a matter of law (for example, to deal with any dividends and capital distributions by distributing them in the appropriate proportions). It is because the trust is construed as being of the entire shareholding, that it is not necessary for the plaintiff to be able to point to some particular share and be able to say 'That share is mine'.

176. His Honour continued (at [212]):

given the nature of shares in a company, it is perfectly sensible to talk about an individual having a beneficial interest in 222,000 shares out of a parcel of 1.5 million, even if it is not possible to identify individual shares that are held on trust.

177.

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His Honour discussed numerous academic views about Hunter (at [155]-[164]) and noted the absence of Australian authority on the point. His Honour also cited and considered
George Attenborough & Son v Solomon [1913] AC 76 (at 82-83) per Viscount Haldane LC;
Wise v Whitburn [1924] 1 Ch 460 (at 468-469);
Easterbrook v Young (1977) 136 CLR 308 (at 320);
Re Rose [1952] Ch 499 (referred to in Hunter);
Corin v Patton (1990) 169 CLR 540;
Anning v Anning (1907) 4 CLR 1049;
Re London Wine Co (Shippers) Ltd [1986] PCC 121 (also considered in Hunter); and other cases considered in Hunter before saying (at [191]) that he did not find the reasoning in Hunter to be sufficiently persuasive to simply adopt it as the solution to the present problem. His Honour went on to consider the rights of a shareholder (at [193]-[200]) before considering the failure to identify shares by individual numbers. His Honour (at [204]-[209]) said:

204 But even when shares were held in numbered, certificated form, there were some purposes for which the identification of the shares by number was unimportant. If a shareholder executed a transfer of the same number of shares that he owned in a company, the transfer was valid even if the identifying numbers of the shares were inserted only after the transfer was executed (
Re Barned's Banking Co; Ex parte The Contract Corporation (1867) LR 3 Ch App 105 at 115-116;
Re Financial Insurance Co; Bishops case (1869) LR 7 Ch App 296n) or never inserted at all (
Re Letheby & Christopher Ltd [1904] 1 Ch 815).

205 It can also be unimportant that the wrong identifying numbers are inserted in the transfer. In
Re International Contract Co; Ind's case (1872) 7 Ch App 485, A had transferred to B 50 shares, numbered 11,105 to 11,154, in a particular company. In fact someone other than A owned the shares with those numbers, but at the time of the transfer A owned more than 50 shares in the company, and some of his shares were numbered 11,005 to 11,054. When the company was wound up, B alleged that he was not a contributory. He failed. Sir WM James LJ said (at 486-487):

"If the creditors find a man on the list for fifty shares they do not look at the particular numbers; all that concerns them is that he is on the list of shareholders for fifty shares … I cannot think that he should be allowed to say that there was some mistake about the figures in the transfer - a mistake which was very easily made, for it appears that the numbers ought to be from 11,005 to 11,054 instead of from 11,105 to 11,154. The substance of the transaction was that he meant to be on the list for fifty shares; he was on the list for fifty shares, and the creditors and other persons interested have a right to hold him to that."

206 Sir G Mellish LJ said (at 487):

"I think the numbers of the shares are simply directory for the purposes of enabling the title of particular persons to be traced; but that one share, an incorporal right to a certain portion of the profits of the company, is the same as another, and that share No 1 is not distinguishable from share No 2 in the same way as a grey horse is distinguishable from a black horse. If, therefore, a holder of shares has the same number of shares which he professes to transfer, or a larger number, and by mistake the wrong distinguishing numbers are put in the transfer, that will not prevent the fifty shares which belonged to him passing to the transferee. The figures might afterwards be rectified. I think the substance of the matter is that Mr Ind has agreed to take fifty shares as between him and the creditors of the company; he has been registered with his own consent as to these shares, and therefore he is properly on the list. (Emphasis added)"

207 It is part of the reasoning of Sir G Mellish LJ that statement of the identifying numbers of the shares being transferred is unimportant for the validity of the transfer.

208 The law of the United States similarly regards the numbers allotted to individual shares as unimportant for some purposes.
Richardson, Trustee in Bankruptcy v Shaw 209 US 365 (1908), a decision of the United

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States Supreme Court, considered a situation where a sharebroker had received share certificates as security for a client's margin trading, and, at a time when the broker was approaching bankruptcy, had returned to the client, upon the client's demand, certificates relating to an equal number of shares to those lodged. The question at issue was whether the client had thereby received a preference. It was argued that there was a preference because, by a custom of the market: "… the broker was not obliged to return the very stocks pledged, but might substitute other certificates for those received by him, and that this is inconsistent with ownership on the part of the customer, and shows a proprietary interest of the broker in the shares."

209 The Court rejected that argument, saying (at 378-379):

"… this contention loses sight of the fact that the certificate of shares of stock is not the property itself, it is but the evidence of property in the shares. The certificate, as the name implies, but certifies the ownership of the property and rights in the corporation represented by the number of shares named.

A certificate of the same number of shares, although printed upon different paper and bearing a different number, represents precisely the same kind and value of property as does another certificate for a like number of shares of stock in the same corporation. It is a misconception of the nature of the certificate to say that a return of a different certificate or the right to substitute one certificate for another is a material change in the property right held by the broker for the customer [citations omitted]. As was said by the Court of Appeals of New York in
Caswell v Putnam 120 NY 153 at 157, 'one share of stock is not different in kind or value from every other share of the same issue and company. They are unlike different articles of personal property which differ in kind and value, such as a horse, wagon or harness. The stock has no earmark which distinguishes one share from another, so as to give it any additional value or importance; like grain of a uniform quality, one bushel is of the same kind and value as another'."

178. As his Honour noted, the test of validity of a trust is not dependant on a beneficiary being able to identify a particular piece of property that is held on trust for him or her. In many discretionary trusts, the only interest that a particular beneficiary can claim to have at a particular time is the vested interest.

179. It is not apparent that the process of reasoning applied in Hunter v Moss by the Court of Appeal has been applied outside of the United Kingdom. White was unsuccessfully appealed to the New South Wales Court of Appeal (
Shortall v White [2007] NSWCA 372). The particular point under consideration at present does not appear to have been the subject of any challenge. The decision has been followed on a number of occasions and cited on a number of occasions, but not on this point other than in a Full Court decision of this Court in
Federal Commissioner of Taxation v ElecNet (Aust) Pty Ltd (2015) 239 FCR 359 per Jessup, Pagone and Edelman JJ, in the joint judgment of Pagone and Edelman JJ, with whom Jessup J essentially agreed. In that decision (at [73]-[93], and particularly at [80]-[87]) their Honours said:

80 The same submission was made by Senior Counsel for the Commissioner on this appeal. He submitted that the difference between a fixed trust and a unit trust was that a fixed trust gives the beneficiary an interest in a "particular part … as compared with an interest in the trust property as a whole". He submitted that a unit trust was a species of fixed trust where there was no discretion involved and where the "unit" was measured as a percentage or proportion of the whole of the trust assets: ts 17-18, 20-21.

81 The Commissioner's approach to fixed trusts is not wholly without authority. A decision which supports the Commissioner's approach is the ex tempore decision of the English Court of Appeal in
Hunter v Moss [1994] 1 WLR 452. In that case, the Court of Appeal considered whether there was certainty of subject matter of a trust which,

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the trial judge had found to be created by a defendant's declaration that he held 50 of his 950 issued shares in a company on trust for the plaintiff. The Court of Appeal considered that the subject matter was sufficiently certain although the Court accepted that the subject matter would not have been certain if the declaration had been of a trust over 50 out of 950 bottles of wine: see
Re London Wine Company (Shippers) Ltd [1986] PCC 121.

82 The reasoning in the ex tempore decision in Hunter v Moss was very controversial. It was described by Heydon and Leeming as a "strongly criticised decision": Jacobs' Law of Trusts (7th ed, 2006) p 68 [523]. It was the subject of withering criticism by Professor (now Justice) Hayton who described the decision as having been given "perilously close to the vacation". As Hayton argued, the trust could easily have been created by Moss declaring himself the trustee of one nineteenth (ie 50/950) of all his shares in favour of Hunter. But the obvious problem of creating a trust of 50 of the 950 shares was that there was "no certainty as to which 50 of the 950 shares the trust relates": D Hayton , "Uncertainty of subject matter of trusts"
(1994) 110 Law Quarterly Review 335 at 336 .

83 The reasoning in Hunter v Moss was rejected by Campbell J in
White v Shortall (2006) 68 NSWLR 650 at [190] where his Honour said that the reasoning "simply assumes, or asserts, that it is possible for a person to declare himself trustee of a particular number of the shares he holds in a particular company". An appeal from this decision was dismissed:
Shortall v White [2008] DFC 95-411 . And even before Hunter v Moss had been rejected in White , it was considered in England at first instance by Neuberger J who, although bound to apply it, recognised the force of the criticisms of the decision and acknowledged that English law had departed from Australian law:
Re Harvard Securities Ltd (in liq) [1997] 2 BCLC 369 at 381, 385 .

…

85 A description of a fixed trust of intangible rights as involving a percentage interest of the beneficiaries in the trust rights also involves some imprecision. A beneficiary of a trust has an interest in the rights which are the subject of the trust but only in a derivative sense. The interest of the beneficiary derives through the interest of the trustee because it involves duties engrafted upon the trustee's rights . As Dr Whitley Stokes put it in 1882 on the Indian Trusts Act 1882 s 3, a trust "is an obligation annexed to the ownership of property, and arising out of a confidence reposed in and accepted by the owner". Maitland made the same point in his Cambridge lectures when he said that equity "did not say that the cestui que trust was the owner of the land, it said that the trustee was the owner of the land, but added that he was bound to hold the land for the benefit of the cestui que trust": FW Maitland, Equity also the Forms of Action at Common Law (Cambridge University Press, 1910) pp 17-18.

86 The same point has been iterated and reiterated in Australia. In
DKLR Holding Company (No 2) Pty Ltd v Commissioner of Stamp Duties (NSW) [1980] 1 NSWLR 510 at 518-520, in a passage quoted in part by the High Court in
Federal Commissioner of Taxation v Linter Textiles Australia Ltd (in liq) (2005) 220 CLR 592 at [30], Hope JA explained that

"although the equitable estate is an interest in property, its essential character still bears the stamp which its origin placed upon it. Where the trustee is the owner of the legal fee simple, the right of the beneficiary, although annexed to the land, is a right to compel the legal owner to hold and use the rights which the law gives him in accordance with the obligations which equity has imposed upon him ."

87 Similarly, in
Re Transphere Pty Ltd (1986) 5 NSWLR 309 at 311, McLelland J emphasised that a trustee who had legal ownership has all of the rights at law of the absolute owner but the beneficiary "has the

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right to compel him to hold and use those rights which the law gives him in accordance with the obligations which equity has imposed on him by virtue of the existence of the trust". His Honour continued, adding that the right of the beneficiary "is engrafted onto, not carved out of, the legal estate".

(emphasis added)

180. I prefer the analysis by Campbell J for the reasons his Honour gives and for its apparent approval by the Full Court of this Court. That said, for the purpose of this case, it does not seem to me that the distinction in the two approaches particularly matters. In either event, the interest in the beneficial interest was created by reason of the Family Court Order either in any shares of that number to adopt the Hunter approach, or in respect of all of Sandini's shares (sharing along with other rights), to adopt the White approach. In either event, the argument seems somewhat academic because Sandini transferred shares as directed by Ms Ellison in accordance with the terms of the Family Court Order, but for the fact that they were transferred to the trust as directed by her, rather than directly to her. In my view, it would have been a clear breach of the Family Court Order and a breach of the trust created by the Family Court Order were Sandini to put itself in a position (by share disposal) when it could not comply with the terms of the Federal Court Order. Of course, it did no such thing.

181. One other argument which was not developed but was advanced on written submissions for Ms Ellison was that the beneficial interest principle could be invoked only with respect to interest in land and not to intangible objects such as shares. No authority was cited in support of that proposition, nor reasoning advanced. In my respectful view, it is not shown to correct.

182. If I am correct on the first point, the alternative case advanced for the applicants does not need to be considered. For completeness I will consider it, lest a different view be taken on the primary argument.

183. The alternative case advanced for the applicants refers to s 103-10 which specifies that Pt 3-1 and Pt 3-3 apply to the taxpayer as if the taxpayer had received money or other property when it has been applied for the taxpayer's benefit or as the taxpayer directs. The respondents suggest that despite the width of the wording in s 103-10, it has a more limited operation, namely, it is limited to a determination of what capital proceeds are obtained upon the happening of a CGT event. That is because Div 110 deals with capital proceeds. It does not, according to the respondents, operate in relation to any of the CGT events. I doubt, with respect, that this submission is supported by the plain words of the provision under analysis. There are no such words of limitation. For example, s 103-10 is not preceded by words that say 'for the purposes of Div 116' (which relates to capital proceeds). Section 103-1 is contained in Div 103, described as 'General rules'. It is said that the Division sets out some general rules that apply to the provisions dealing with capital gains and capital losses. Again, there are no words of limitation apparent.

184. It seems difficult to argue against the assertion that the shares were applied for Ms Ellison's benefit as they were transferred to the family trust she controlled at her request, the FFT. The relevant trust deed was in evidence. As mentioned, Ms Ellison is the sole director and secretary of the trustee, Wavefront. She is named as the specific beneficiary in the schedule of beneficiaries. In the trust deed, the definition of 'General Beneficiary' includes the specified beneficiary and the children and grandchildren thereof. Ms Ellison was both the guardian and appointor of the trust. As the sole shareholder, sole director, as appointor and guardian and as beneficiary, she was the effective controller of the trust. She could make all necessary decisions, subject of course to fiduciary duties as to the distribution of income and capital. The transfer then of the MIN Shares to the discretionary family trust at her request can be described as being for the benefit of Ms Ellison. If authority is necessary for this proposition, reference may be made to
Vasudevan v Becon Constructions (Australia) Pty Ltd (2014) 41 VR 445 per Nettle JA, with whom Beech and McMillan JA agreed (at [23] and [26]).

185. Equally, there is no doubt that there was the requisite direction for the purposes of s 103-10. As already indicated, the evidence in

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substance is that Mr Ellison emailed Ms Ellison at 10.27 am on 28 September with an email saying 'can you please send me the full details of where you want the [MIN Shares] transferred to'. The following day, at 10.39 am there was a reply to that email from the same email address (which I find to be the address of Ms Ellison, the 29 September Email). There was no dispute that an email from that address (the 29 September Email) was received by Mr Ellison in response. Mr Ellison swore to receiving it. The 29 September Email states:

Can you please transfer the [MIN Shares] I don't have the SRN as Wavefront has never brought shares only property, the name of the company is Wavefront Asset Pty Ltd ATF Felstead family trust, the ABN is 61 535 574 469.

186. Entirely consistent with this exchange, the response from Ms Ellison was forwarded to Mr Goulds, the MIN company secretary, who then completed a standard transfer form naming Wavefront as the transferee and gave it to Mr Ellison. Mr Ellison gave him the transfer back duly signed by each of Mr Ellison and Ms Ellison. Ms Ellison signed on behalf of Wavefront, together with the words 'as the sole director I am authorised by the company to complete this form'. There is absolutely no doubt that the transfer was to the trustee as a result of direction or instruction from Ms Ellison.

187. The Commissioner also says that putting aside the direction question, the transfer to the trust is not for the benefit of the spouse transferee. I unable to see why this would be so, particularly in this case where the transferee is a sole controller of the discretionary trust of which she is a beneficiary. 'Benefit' is intended legislatively to capture a broad concept, not some limited legal concept. In my opinion, under the s 103-10 point, there are no words of limitation. If it is necessary for Ms Ellison to have had the asset, she has had the benefit of the Family Court Order. Ms Ellison has had the beneficial ownership in the MIN Shares. Secondly, the effect of the deeming or benefits section is that it was unnecessary for her to have been a transferee personally. Her deemed receipt of the shares by reason of s 103-10, either by deriving the benefit or making the direction, satisfies the requirement. Any further transfer of beneficial ownership to another entity (which she happened to totally control) was a matter for her. If s 103-10 is intended to be limited to receipts, as the respondents contend, in the present context Ms Ellison is deemed to have received something. This is so, albeit that the actual transfer was to the FFT at her direction.

The effect of Ms Ellison's involvement

188. The second alternative argument, which was not addressed orally for Mr Ellison was whether the transfer to Wavefront as trustee was a transfer in which Ms Ellison as a former spouse was involved for the purpose of s 126-15 . As to the second alternative argument that, in terms of s 126-15, Ms Ellison is still involved in the trigger event, the Commissioner argues that the spouse or former spouse must be involved in the trigger event as transferee. It can only apply where a natural person's spouse or former spouse is the transferee. According to the Commissioner, that does not mean simply participating in, but actually being involved as a transferee. Reading s 126-15 in the context of, and combination with, s 126-5, it is clear that the transferee is to be the acquirer and the only nominated transferee in terms of s 126-15 is the spouse or former spouse. Further, the Commissioner says that the construction that the natural person only is involved is consistent with the previous s 160ZZMA. For the reasons discussed at [185]-[186], by directing the disposition of the MIN Shares, I consider that she was sufficiently involved for the purposes of s 126-15.

A final point

189. The respondents also make the point that the other natural corollary of the applicants' argument is that it would have the effect of providing that the so-called directing spouse, in this case Ms Ellison, would have a cost base in respect of an asset that she does not 'own'. That is because s 126-15 says that where there is a roll-over event, then the consequences are as in s 126-5. In s 126-5, one of the consequences is to provide for the cost base in the hands of the transferee. That makes sense where the transferee is the spouse or former spouse who receives the CGT asset, but it 'makes no sense', the

ATC 19528

Commissioner argues, where the person who, in this case is Ms Ellison, is said to have, in the terms of s 103-10, property applied to her benefit or as she directs. In that case, she does not have the assets. The Commissioner says it does not make sense to suggest that there should be a cost base in respect of her for an asset she does not 'hold'. As a policy consequence, I am not certain that this is necessarily correct. The objective of the provisions discussed is to defer CGT liability in special circumstances of what is, in effect, a non-voluntary transfer. If the analysis of the text and context of the statute is correct, this objective is still achieved. The only factor which distinguishes this case from every other roll-over case under these provisions is that the transfer was made pursuant to a Family Court order at the direction of the receiving spouse to a family trust controlled by the spouse. If there is difficulty in making sense of the purpose of the provisions in this instance, (which is not readily apparent to me), then it is a general difficulty. There is nothing particular about this case beyond the distinction to which I have just mentioned. More importantly, if inequities or unexpected adverse outcomes are experienced as a result of application of the provisions, they may be something to take into account in the determination of the terms of Family Court orders dealing with property adjustments. The fact that a transfer is to a family trust rather than a particular spouse does not appear to create the unexpected outcome to which the respondents point.

CONCLUSION

190. In my view, the Family Court Order did cause a CGT event A1 to happen. All that is required pursuant to s 104-10 of the 1997 Act is a change of beneficial ownership of CGT assets and a Family Court order. This is consistent with the decisions in Jones and Mateo. The result of the Family Court Order was that Ms Ellison became the equitable owner of the MIN Shares specified in the Family Court Order.

191. As to the question of whether changes in equitable ownership alone are sufficient for a CGT event A1 to occur, by way of summary, I prefer the applicants' argument on the following basis.

192. First, one can be an owner of property which is a CGT asset with equitable title only. This is evident, for example, in Kent v Vessel "Maria Luisa" (No 2) per Tamberlin and Hely JJ (at [61] and [66]) cited above.

193. Secondly, a consequence of the position advanced for the respondents (that it is necessary for legal as well as beneficial ownership to pass for a CGT event A1 to happen) would be that whenever there is a disposition of equitable ownership without legal ownership (that is, not by way of a declaration or settlement, which is a CGT event E1), there are no taxable gains arising and, as a consequence, no CGT would ever be assessable.

194. Thirdly, the statutory context of s 104-10 of the 1997 Act and its incorporation of s 106-50, dictates a construction focussed on beneficial ownership: see the discussion in Taras (at [10]) cited above.

195. Fourthly, the content of Note 1 under s 104-10(3), or the example given, should not be treated as being decisive in this regard: see the observations concerning this in Brooks (at [65]-[66]). Notes and examples may be incorrect. In relation to the predecessor of CGT event A1, s 160M(1) and (2) of the 1936 Act, in the discussion in Brooks, the Court said that anything which involved a change in the beneficial ownership of an asset was treated as being a disposal and as giving rise to an acquisition. Further, it is irrelevant, the Court said, how that change in ownership is brought about by virtue of s 160M(2) of the 1936 Act, whether it be by way of a transaction and instrument or by operation of law or the doing of some act or thing or the occurrence of an event: see the discussion in Brooks (at [13]) cited above. (Brooks is binding on me.)

196. Fifthly, Ms Ellison's further argument that in any event the Family Court Order, because of its error, did not confer full beneficial ownership, in my view, should not be accepted. Albeit that there was an error in one aspect of the Family Court Order, it is clear that:

(a) the Orders were absolute and unqualified in their terms. All that was required to execute the document to transfer registration was stipulated: see the discussion in Mateo (at 234, 248 and 254);

ATC 19529
(b) the defects in the Orders do not change their effect: see the discussion in BHP Petroleum (at 172). It would be a challenging argument for Mr Ellison to seek to advance that he was not required to comply with the terms of the Family Court Order because of the technical defect that both parties had made in consenting to the Order. There is no doubt as to what the substance of the Family Court Order required and there is no doubt that (but for the transfer to Wavefront, which is another issue), the Family Court Order was performed;
(c) the timing of the transfer of the registration document is irrelevant; and
(d) finally, there was sufficient certainty of subject matter for beneficial ownership to pass within the parameters discussed in cases such as White (at [230]-[234]), where the decision of
Herdegen v Commissioner of Taxation (Cth) (1988) 84 ALR 271 is discussed and explained.

197. If this analysis is not correct, then there is, in my view, substance in the alternative cases advanced by the applicants. There is nothing in the words of s 103-10 of the 1997 Act which limit its operation to deeming receipt of capital proceeds. Constructive receipt arises under that provision where the money or property is applied for the benefit of the taxpayer. A transfer of shares to a trust controlled by a person with dispositive power over those shares is clearly an application of property for that person's benefit: see the discussion in Vasudevan per Nettle JA, Beach JA and McMillan AJA (at [23] and [26]) where their Honours said (footnotes omitted):

23 Secondly, the natural and ordinary meaning of a requirement that something be for "for the benefit of" a person is that it be "for the advantage, profit or good" of the person. So, in this context, just as moneys paid by A to B to discharge C's indebtedness to B would ordinarily be conceived of as paid to B for the benefit of C, so too the incurrence by A of obligations to B in order pro tanto to relieve C of his obligations to B would naturally and ordinarily be conceived of as being for the benefit of C.

…

26 With respect, however, I disagree. As I see it, the close associate provisions are designed to catch a benefit flowing to a close associate whether or not the benefit has the effect of legally or financially advantaging the director in question. In contrast, the natural and ordinary meaning of "for the benefit of" in s 588FDA is calculated to catch a benefit which legally or financially advantages the director in question regardless of whether it is paid or directed to a close associate of the director . Since the two regimes are aimed at different albeit potentially intersecting sets of possibilities, it would run counter to the evident intention of the legislation to read down either to the point of mutual exclusion.

(emphasis added)

198. Because the transfer of the shares to the FFT was for Ms Ellison's benefit, in my view, the provision is satisfied. I am also satisfied that there is no doubt that Ms Ellison gave the requisite direction for the purpose of s 103-10 of the 1997 Act. As previously noted, there is no doubt that this transfer would not have occurred had she not done so. Ms Ellison directing the disposition was sufficient involvement in whatever CGT event A1 happened. The words of the section did not require her to be the transferee and the use of that term in s 126-15 of the 1997 Act is to identify a person, not to prescribe a necessary capacity of that person.

199. For all these reasons, I consider that the applicants are entitled to the declaration in the alternative form posited by the Commissioner which I accept is the preferable form. I will make no order on costs as requested by the Commissioner. Unless the parties wish to be heard, (in which case I will do so), costs will be dealt with on the papers.

THE COURT DECLARES THAT:

1. For the income year 30 June 2011, the first applicant is entitled to the roll-over consequences in s 126-5 of the Income Tax Assessment Act 1997 (Cth), due to the operation of s 126-15(1)(a) of the Income Tax Assessment Act 1997 (Cth) in relation to its disposal of the

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2,115,000 Shares in Mineral Resources Limited as processed in 4 October 2010.

THE COURT ORDERS THAT:

2. The parties are to file submissions on costs to be dealt with on the papers, unless any party wishes to be heard on costs.

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Creation
Event No.	Applicable amount
D1	the *incidental costs the transferor incurred that relate to the trigger event
D2	the expenditure the transferor incurred to grant the option
D3	the expenditure the transferor incurred to grant the right
F1	the expenditure the transferor incurred on the grant, renewal or extension of the lease

PRESENT:	[Mr Ellison] (Chairman)

APPLICATION OF INCOME:	RESOLVED that the net income of the trust for the accounting period ended 30 June 2011 be applied for the benefit of the undermentioned ordinary unit holders in the proportion to their ordinary unit holdings that the unit holder entitlements to be credited to them in the trust books of account.

	Unit Holder	Percentage

	Wabelo Pty Ltd ATF Ellison Family Trust	100%

SIGNED AS A CORRECT RECORD:	[SIGNATURE OF MR ELLISON]