JA Property Pty Ltd v Aherns Holdings Pty Ltd

[2002] WASC 65
49 ATR 600

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(Decision by: Master Bredmeyer)

Between: JA Property Pty Ltd
And: Aherns Holdings Pty Ltd

Court:

Judge:
Master Bredmeyer

Subject References:
Rectification of share register
Mutual mistake
Buy back of its own shares by a company 1992­93 effected by cancellation of shares
Company secretary chose pre­CGT shares for cancellation instead of post­CGT shares

Legislative References:
Corporations Law - s 175

Case References:
Grant v John Grant & Sons Pty Ltd - (1950) 82 CLR 1
Lake v Lake - [1989] STC 865
Maralinga Pty Ltd v Major Enterprises Pty Ltd - (1973) 128 CLR 336
NSW Medical Defence Union Ltd v Transport Industries Insurance Co Ltd - (1986) 6 NSWLR 740
Re Slocock's Wills Trusts - (1979) 1 All ER 358
Slee & Anor v Warke - (1952) 86 CLR 271
Baird v BCE Holdings Pty Ltd - (1996) 40 NSWLR 374
Bishopgate Insurance Australia Ltd v Commonwealth Engineering (NSW) Pty Ltd - [1981] 1 NSWLR 429
Commerce Consolidated Pty Ltd v Johnstone - [1976] VR 724
Commissioner of Stamp Duties (NSW) v Carlenka Pty Ltd - (1995) 31 ATR 281
Elders Trustees & Executor Co Ltd v E G Reeves Pty Ltd - (1987) 78 ALR 193
Grant v John Grant & Sons Pty Ltd - (1950) 82 CLR 1
Hooker Town Developments Pty Ltd v Director of War Service Homes - (1973) 47 ALJR 320
Hutchins v Collins, Deputy Commissioner of Taxation - (1996) 96 ATC 4372
Mackenzie v Coulson - (1896) LR 8 Eq 368
Monitronix Ltd v Bothranch Pty Ltd - (1988) 14 ACLR 363
Peninsula Gold v Sunbeam Victa Holdings - (1996) 20 ACSR 553
Pukallus v Cameron - (1982) 56 ALJR 907
Re Australian Slate Quarries Ltd - (1930) 31 SR (NSW) 1
Re Colebrooks Conveyances - (1973) 1 All ER 132
Re Derham and Allen Ltd - [1946] 1 Ch 31
Slee v Warke - (1949) 86 CLR 271
Wellington City Council v New Zealand Law Society - [1990] 2 NZLR 22
Westland Savings Bank v Hancock - [1987] 2 NZLR 21

Hearing date: 22 November 2001 & 11 March 2002
Judgment date: 4 April 2002

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Decision by:
Master Bredmeyer

1 This is an application by the plaintiff under s 175 of the Corporations Law and in the equitable jurisdiction of the court to correct the share register of the defendant and for consequential orders. The application is supported by an affidavit of Mr John J Ahern sworn 28 September 2001, an affidavit of Mr Roger L Day sworn 21 September 2001 and an affidavit of Mr Steven M Standing sworn 14 November 2001.

2 I initially heard this matter ex parte. I reserved my decision and then directed that the papers be served on the Deputy Commissioner of Taxation. I reconvened the hearing on 11 March 2002. On that date, against objection, I granted leave to the Deputy Commissioner of Taxation to be heard as amicus curiae . I did so because I wanted the assistance of some contrary argument to the plaintiff's submissions on rectification of the register. The Deputy Commissioner of Taxation was represented by Mr P D Quinlan of counsel.

3 The plaintiff, JA Property Pty Ltd ("Property") is the family company of Mr John J Ahern. He is a director of it and has been so since 1965. He is a major shareholder in that company as is his daughter Ms Robyn Ahern. Property held many shares in the defendant, Aherns Holdings Pty Ltd ("Holdings") which company owned the Aherns stores in Western Australia. Mr J J Ahern was a director of Holdings between May 1957 and January 2000 and was the Chairman of Directors of Holdings for much of that time. In January 2000 all shares in Holdings were sold to David Jones Limited. This is an application to correct the share register of Holdings as it appeared in 1993. In 1992 Holdings agreed to buy back 2,500,000 shares in it for $2 million, that is for 80 cents per share. The purchase was to be from:

4 Mr Roger Day, who was a certified practising accountant, but now retired, became a director and company secretary of Holdings in 1977 and held that position in 1992 and 1993 and later. He was also company secretary of Property. He prepared an explanatory memorandum for the directors of Holdings as to how this buy back was to occur. It was to be a selected buy back of shares and required shareholder approval. It also required the directors of the company to sign a declaration that the company was solvent and that it would remain solvent during a period of one year from the date of the acquisition. The effect of the declaration was that, if the company became insolvent during the one year period, the directors who signed would be personally liable to pay to the company the consideration provided by the company to buy back the shares, that is, $2 million. An independent valuation of the shares was also required. The purpose of the buy back was to enable Property and Mr J J Ahern and Ms Robyn Ahern to repay certain loans to the R & I Bank. The explanatory memorandum stated that, to overcome taxation issues for Mr J J Ahern and Ms Robyn Ahern, their shares should first be sold to Property before being bought back by Holdings.

5 The steps in the process of achieving this selective buy back were as follows. At a meeting of directors of Holdings held on 30 October 1992 the directors accepted the secretary's recommendations and recommended that a special general meeting be held whereby the articles of association would be amended to provide for a selective buy back of shares and when the following resolution would be put:

"That subject to the passing of Resolution 1 and in accordance with section 206JB of the Corporations Law approval be and is hereby given to the buy back of TWO MILLION FIVE HUNDRED THOUSAND (2,500,000) fully paid ordinary shares of FIFTY CENTS ($0.50) each in the capital of the company registered in the name of JA Property Pty Ltd for a total consideration of TWO MILLION DOLLARS ($2,000,000) or EIGHTY CENTS ($0.80) for each share (such agreement to be in the form tabled by the Chairman at the meeting)."

Mr J J Ahern transferred his 686,863 shares in Holdings to Property for 80 cents a share and Ms Robyn M Ahern transferred her 250,000 shares in Holdings to Property for 80 cents a share. In each case the share transfer is dated 30 October 1992. That paved the way for the 2,500,000 shares held by Property to be purchased by Holdings.

6 An extraordinary general meeting of Holdings was held on 16 November 1992 when the resolution previously mentioned was passed. The directors tabled their declarations of solvency. An independent valuation of the shares was obtained.

7 To implement this decision Parker & Parker, solicitors, prepared a Buy Back Offer from Holdings to Property which is dated 16 December 1992 whereby Holdings offered to purchase the 2,500,000 (50 cent) shares in its own capital from Property at 80 cents per share, that is, for $2,000,000. The Offer is executed under the seal of Holdings. The Offer document presented to me, annexed to Mr Day's affidavit at RD7, is not stamped. I mention that in passing, as I only noticed that fact late in the preparation of these reasons, and I failed to put that to counsel. The Offer provides for its acceptance by Property delivering share certificates evidencing its ownership of the buy back shares to Holdings. It does not specify any particular shares. Upon receipt of those share certificates evidencing its ownership of the buy back shares, Holdings is to deliver to Property a bank cheque for $2,000,000. I also mention in passing that, because there was no transfer of shares document, there was no transfer document to be stamped. Mr Day selected the following certificates for cancellation:

Those share certificates were cancelled on 15 March 1993.

8 I have already mentioned that Property held more than 2,500,000 shares in Holdings, so there were other share certificates in Holdings which were not selected by Mr Day for cancellation. The largest of these was certificate No 193 dated 30 June 1989 for 2,330,727 shares.

9 Capital Gains Tax ("CGT") was introduced in Australia in September 1985. Shares and other assets held prior to that date were exempt from CGT. All of the shares selected by Mr Day for cancellation under the buy back arrangement would appear to be post-September 1985 and would appear thus to be subject to CGT. For example, share certificates 161 and 162 are both dated 8 May 1987. So when the shares in these certificates were sold under the buy back arrangement, and when the shares in the other two certificates 204 and 205 were sold, they would all be subject to CGT if they were sold at a profit. However, Mr Day, at par 25 of his affidavit, states that the shares in certificates 161 and 162 were in fact exempt from CGT:

"However the shares were (despite their issue date) preserved from Capital Gains Tax because they were actually rights (by way of bonuses) attached to pre-capital gains tax shares. In other words, the shares the subject of certificates 161 and 162 amounted to pre-capital gains tax shares. It is obvious that I did not recognise that fact at that time."

10 As previously stated, in January 2000 all the shares in Holdings were sold to David Jones Limited. Property sold all its shares in Holdings to David Jones. I have not been told of the purchase price for each share paid by David Jones but it was at a much higher price than 80 cents a share, because Mr Day says that Property has been disadvantaged significantly by the cancellation of these shares. If these share have not been transferred and cancelled pursuant to the buy back arrangement, they would have been sold to David Jones Limited free of capital gains tax. As it was, all shares sold by Property to David Jones were subject to capital gains tax. The purpose of this application is to correct the register of Holdings as it appeared in March 1993 in order to enable Property to avoid capital gains tax on the sale of these shares to David Jones.

11 The first order sought in the chamber summons is:

"1.

An order that the register of the Defendant be corrected to reflect and record the following:

(a)

The reversal of all entries to the effect that Share Certificates 161 and 162 (and the 1,651,936 shares comprised therein, being shares numbered N 1,503,137 to N 3,155,072 inclusive) were cancelled on 15.3.93."

The second, third and fourth orders are really ancillary to this order. They are designed to replace the 1,651,936 shares chosen for transfer and cancellation in certificates 161 and 162, by other shares in other certificates to give effect to the buy back agreement of December 1992, but with all shares being post-CGT.

12 Mr Standing's affidavit documents that David Jones Limited has been served with a copy of this application and has advised that it does not wish to be heard and will abide by the order of the court.

13 Section 175 of the Corporations Law provides:

"S175

CORRECTIONS OF REGISTERS

(1)

[Application to Court]

A company or registered scheme or a person aggrieved may apply to the Court to have a register kept by the company or scheme under this Part corrected.

(2)

[Compensation]

If the Court orders the company or scheme to correct the register, it may also order the company or scheme to compensate a party to the application for loss or damage suffered.

(3)

[Notification of Correction to ASIC]

If

(a)

the company orders a company or scheme to correct its register of members; and

(b)

the company or scheme has lodged a list of its members with ASIC;

the company or scheme must lodge notice of the correction with ASIC."

14 I quote a few extracts from "Butterworths Australian Corporation Law" at [2.6.0515]:

"The statutory right to seek a correction of a register of members may be merely procedural, and might not create any rights of substance which are not otherwise enforceable by a court in its equitable jurisdiction.

Indeed, unlike its predecessors, s 175 does not expressly confer jurisdiction on the courts to correct a company's register; it merely assumes that the courts have the power to do so; see Peninsular Gold Pty Ltd v Sunbeam Victa Holdings Ltd (1996) 14 ACLR 1089 at 1094 per Bryson J, SC(MSW)."

15 In Grant v John Grant & Sons Pty Ltd (1950) 82 CLR 1 at 51, Fullagar J said:

"The power to order rectification of the register must clearly, I think, be in all cases discretionary. The person claiming rectification must show that he has some equity which the court will protect. If he is a shareholder, then prima facie he shows such an equity if he establishes that a name is wrongly included or omitted from the register of his company. Some definite reason must be shown, I would think, for refusing rectification before rectification will be refused. There may be circumstances which justify, or even compel refusal. There are many passages in the reports which assert that the power given by provisions corresponding to s 83 of the Companies Act is discretionary ... What Lord Cairns actually said was that the court must have 'regard to who is the applicant and all the circumstances of the case'. Otherwise, he asks 'How could the court be "satisfied with the justice of the case?" ' but the position cannot be different if it is the general equitable jurisdiction of the court that is invoked. Equitable remedies are not, generally speaking, granted unless the court is 'satisfied' of the justice of the case."

16 Mason J, who was in the majority in Maralinga Pty Ltd v Major Enterprises Pty Ltd (1973) 128 CLR 336 at 349 - 351, said:

"As Buckley LJ said in Lovell & Christmas Ltd v Wall (1911) 104 LT 85 at 93:

'For rectification it is not enough to set about to find what one or even both of the parties to the contract intended. What you have to find out is what intention was communicated by one side to the other, and with what common intention and common agreement they made their bargain.'

What is of importance is that the purpose of the remedy is to make the instrument conform to the true agreement of the parties where the writing by common mistake fails to express that agreement accurately. And there has been a firm insistence on the requirements that the mistake as to the writing must be common to the parties and not merely unilateral, except in cases of a special class to which I shall refer later.

It is now settled that the existence of an antecedent agreement is not essential to the grant of relief by way of rectification. It may be granted in cases in which the instrument sought to be rectified constitutes the only agreement between the parties but does not reflect their common intention (Shipley Urban District Council v Bradford Corporation [1936] Ch 375; Slee v Warke [1923] 2 Ch 136 at 159) but this circumstance does not affect what I have already said.

...

It may be asked why should a plaintiff be required to establish more than disconformity between the antecedent agreement and the written instrument. Why should he be called upon to show that the writing was intended to give effect to the whole of the oral contract and that by common mistake the written instrument failed to do so? The answer lies in the circumstances that the court must be satisfied that the instrument does not reflect the true agreement of the parties. It cannot be satisfied unless the writing was intended to record the earlier agreement and by the mistake of the parties it fails to do so. If the plaintiff fails to establish these elements he does not displace the hypothesis arising from execution of the written instrument, namely, that it is the true agreement of the parties."

17 I quote from the headnote of Slee & Anor v Warke (1952) 86 CLR 271:

"The power of a court to rectify a contract on the ground of mutual mistake is not confined to cases where there was an actual concluded contract antecedent to the instrument sought to be rectified; but a contract cannot be rectified on the ground that it does not represent the common intention of the parties unless it appears clearly what their common intention was."

18 I quote from parts of the headnote of NSW Medical Defence Union Ltd v Transport Industries Insurance Co Ltd (1986) 6 NSWLR 740, a decision of Clarke J:

"Held:

(1)

To found a decree for rectification of a written agreement in circumstances where the parties have used words, which when properly construed, do not express their true intention, it is sufficient that the plaintiff satisfy the court, to the requisite degree, that the parties had a common intention which continued until the execution of the agreement, which common intention was not embodied in the agreement: it is not necessary that there be some outward expression of accord.

Re Butlin's Settlement Trusts [1976] Ch 251 at 260; Crane v Hegeman-Harris Co Inc ]1939] 1 All ER 662 at 664 applied.

Joscelyne v Nissen [1970] 2 QB 86 at 98, not followed.

(2)

Evidence which may be admitted in relation to the question of the (continuing) common intention may include direct evidence that the party's intention was not as reflected in the written agreement, and facts, pre or post contractual, from which inferences can be drawn as to the particular intention at the time of entering into the contract."

19 I turn now to the evidence in support of the application to correct the register. Mr J J Ahern states, in his affidavit:

"(3)

The position in October 1992 was that a number of approaches had to my knowledge been made by various entities (including by David Jones Limited in 1981) to Holdings, either to purchase that company or its Ahern's retail business.

(4)

For the public float of Holdings had been contemplated in or about 1987. The board of directors of Holdings had discussed the possibility of sale of Holdings, or its business, on a number of occasions.

(5)

Also, as at October 1992 my daughter Robyn Ahern and I held shares in Holdings, both personally and through Property.

(6)

I was well aware, at all material times, that shares acquired prior to the introduction of Capital Gains Tax in September 1985 were exempt from Capital Gains Tax. Thus at all times I knew that any shares in Holdings which had been acquired prior to September 1985 would be exempt from capital gains tax, whereas shares acquired after that date would not be so exempt. At all times I knew and believed that it would be prudent and sensible to not dispose of pre capital gains tax shares in Holdings unless absolutely necessary, on the basis that such shares could be held indefinitely, without any tax being payable on capital gains made on those shares.

(7)

Whenever there was an discussion on a proposition regarding the sale of Holdings or movement of shares within companies in the Aherns group of companies, the question of capital gains tax was examined. I was fully conscious of the distinction between pre capital gains tax shares and post capital gains tax shares, and I and the other directors would require from the Company Secretary (and any external adviser) that the integrity of the pre capital gains tax shares be maintained to allow for the eventuality of a future external sale of the shares. There is no doubt in my mind that in November 1992 this requirement was made known.

(8)

However, neither I, nor (so far as I am aware) any other director of Holdings or Property specifically consulted with, or instructed, Roger Day as to the particular Holdings shares held by Property which were to be cancelled to effect the 2,500,000 buy back by Holdings in late 1992. To the best of my knowledge, Roger Day alone was responsible for selecting the share certificates and the shares contained in those certificates, and for cancelling those certificates and shares, in his capacity as Secretary of Holdings and Property. To the best of my knowledge, he did so without conferring either with myself or any other director of those companies.

(9)

It would have made absolutely no commercial sense to have disposed of pre capital gains tax shares in the buy back whilst continuing to hold post capital gains tax shares upon which capital gains tax would be payable in respect of any future capital gain. It was the expectation and intention of Property, at all times, that it would preserve its pre capital gains tax shares and that post capital gains tax shares would be made the subject of the buy back.

(10)

I was not aware, until 1999 (when planning was in progress for the sale of Holdings to David Jones in or about January 2000) that pre capital gains tax shares in Holdings held by Property had been made the subject of the buy back in 1992. Until then, I had always assumed that post capital gains tax shares had been sold back to Holdings (as had been reflected in the accounts of Property since the 1992/1993 financial year)."

20 Mr Roger Day, in his affidavit, explains why the particular shares were chosen for cancellation. I quote:

"22.

I was, at all material times, aware of the general import and significance of the capital gains tax provisions of the Federal Income Tax Assessment Act. I knew that assets required prior to the introduction of capital gain tax in September 1985 were exempt from capital gain tax (pre capital gain tax assets) whereas assets acquired after that date (ie post capital gain tax assets) would be subject to capital gain tax.

23.

I was also aware, at all material times, that Holdings had been the subject of a number of takeover offers since 1981. I knew that David Jones Ltd had approached Holdings in 1981 and 1989, and I knew that the Aherns group had contemplated a public float in 1987.

24.

I was thus aware, at all material times, that either Holdings or its Aherns business might be sold, and that preserving pre capital gain tax shares until such a sale would be prudent and beneficial to shareholders. Thus, when the share buy back occurred in 1992/93, I would never have deliberately used pre capital gain tax shares for cancellation, because that would have been contrary to the interests of property.

25.

Of the shares that I caused to be cancelled on or about 15 March 1993, those that were the subject of certificates numbers 204 and 205 were post capital gain tax shares having been those acquired in October 1992. Of the other 1,651,936 shares cancelled, comprising certificates 161 and 162, these shares were bonus issues from capital realisation and appreciation reserves. They were noted in the Holdings register ... (see RD8) as having been acquired by Property on 8 May 1987 (ie a post capital gain tax date). However, the shares were (despite their issue date) preserved from capital gain tax because they were actually rights (by way of bonuses) attached to pre capital gain tax shares. In other words, the shares the subject of certificates 161 and 162 amounted to pre capital gain tax shares. It is obvious I did not recognise that fact at the time (emphasis mine).

26.

The fact that I cancelled pre capital gain tax shares comprising certificates 161 and 162 was contrary to my intention and the intention of Property, which was at all times to preserve pre capital gain tax shares, and to cancel post capital gain tax shares. My cancellation of the shares in certificates 161 and 162 in such circumstances occurred (to the best of my knowledge) from a combination of two factors -

(a)

I simply selected shares from certificates that came to hand conveniently without any regard to the date when the shares the subject of the certificates had been issued;

(b)

the date of certificates 161 and 162 was 8 May 1987 - a post capital gain tax date. The fact that the shares were issued from pre capital gain tax reserves was not reflected on the certificates. Although I was cancelling the certificates, I did not specifically relate them to the issue date and the details of issue in the share register. This may well be how I came to make the error of cancelling the shares in certificates 161 and 162;

(c)

had I appreciated that the shares in certificates 161 and 162 were pre capital gain tax shares, I would instead have cancelled all of the shares in certificates 204 and 205 and 1,563,137 shares out of certificate 193, such shares being acquired in 15 April 1988 (to make up the 2,500,000 to be cancelled) and have issued a balance certificate for the balance of 767,590 shares from certificate 193.

(d)

...

27.

I was acting as the servant or agent for Property in tendering share certificates for cancellation and as a servant or agent for Holdings, in physically carrying out the cancellation of the various share certificates and in writing up the share register for Holdings. These were parts of my duties as company secretary for those companies. I was the only one with any awareness of the detail of what was being done at that time. My intention at all times, as secretary of Property, was to preserve Property's capital gain tax position, and I was obviously aware of that in my capacity as secretary of Holdings. To that extent, my cancellation of the shares comprised in certificates 161 and 162 was inadvertent, and contrary to what was intended both by Holdings and Property.

28.

I wrote a letter dated 28 May 1993 to accountants Munros, who did the tax return work for Property. Munros were not to the best of my knowledge consulted about the 1992 share buy back proposal, and in fact probably did not know about it until my letter a copy of which is annexed hereto and marked RD15. A transaction summary was attached to my letter and stated that Property had sold back to Holdings 2,500,000 on 13 October 1992 ...

29.

By reference to paragraphs 18, 19 and 20 above, it can be seen that my letter to Munros was wrong in fact in stating which shares I had actually cancelled. However, my letter to Munros reflected what I had at all times intended (and thought I had done) namely to effect the buy back using the post capital gain tax shares referred to in my letter to Munros."

21 The letter to Munros of 28 May 1993 commences:

"Re Aherns Family Share Dealings 1992-3:

Attached is a summary of Aherns family members' and entities' share dealings during the current year. It is my understanding from this that no CGT is payable."

22 Attached to that letter is a summary of share dealings headed "Sale of Aherns Holdings Pty Ltd shares by J J Ahem, R M Ahern and JA Property Pty Ltd. The entry for JA Property Pty Ltd reads:

23 The second and third entries there refer to the shares in certificates 161 and 162, both of which are dated 8 May 1987. Those entries show that Mr Day knew that they were "pre-CGT" in status, ie, CGT free, despite their issue date.

24 Mr Day states, in par 29 of his affidavit, that he was wrong in stating which shares he had actually cancelled (ie, the 1992 and 1988 shares), but that his letter to Munros reflects what he had intended (and thought he had done), namely, to effect the buy back using the post-CGT shares. Munros acted on his advice and perpetuated that mistake in Property's accounts for the year ending 30 June 1993. The sale of those shares was subject to CGT, but, in fact, no tax was due because the capital gains was small and was more than offset by an increase in CPI.

25 I quote further from Mr Day's affidavit:

"33.

I retired as company secretary of Holdings and Property on or about 1 November 1996, but remained a non-executive director of Holdings until the end of January 2000.

34.

It was not until February 1999 (following the approach from David Jones Ltd in late 1998 that ultimately led to the sale of all the shares in Holdings to David Jones) that I sought advice on the tax issues involved in the sale of shares in Holdings to David Jones. In particular, I sought advice on the capital gains tax implications of the matter. It was only when I obtained that advice that I realised that I had inadvertently allocated pre capital gain tax shares to be the subject of the 1992 buy back."

26 It was put to me in argument that Property and Holdings, the transferor and transferee of the 2,500,000 shares made a mutual mistake. Both intended in that transaction to transfer post-CGT shares to Holdings, thus leaving the especially valuable, pre capital gain tax shares available for sale at a later date. It was put to me that both companies shared a mutual assumption that the shares transferred would be post-CGT tax.

27 I consider that Mr Day, on behalf of Property, made a unilateral mistake in presenting the wrong share certificates for cancellation. I say "unilateral" because, although Mr Day was a director of Holdings at the time, and, on behalf of Holdings, he cancelled the shares, it mattered not to Holdings what shares were cancelled. It was not going to pay any tax on the sale of the shares. It did not specify the shares to be purchased in the Offer, nor in any other document. Nor were they specified in any oral agreement between Holdings and Property. Moreover, Holdings issued no oral instructions to Mr Day to select only post-CGT shares for sale to Holdings.

28 I consider that the mistake made by Mr Day was a unilateral one, made on behalf of Property, for the reasons given. If I be wrong in that, I am not satisfied that the register as it stood at the end of May 1993 does not reflect the true agreement of the parties at that time. Nothing was wrong with the Buy Back Offer document. I have not been asked to rectify the wording of that. The cancellation of the shares was done to give effect to that agreement. Mr Ahern was aware in 1992 of the value of the pre-CGT shares and the value of keeping them, but at the time of the buy back, did not form a specific intention to cancel only post-CGT shares, and did not, on behalf of Holdings, communicate that intention to Mr Day. He did not instruct Mr Day to cancel only post-CGT shares. In the whole of the circumstances of this case, I am not satisfied that the justice of the case merits a rectification of the register.

29 In saying that, I am aware of the decision in Re Slocock's Wills Trusts (1979) 1 All ER 358 at 361 - 363, followed in Lake v Lake (1989) STC 865 at 869, 870 and 872, that rectification should not be refused merely because the Deputy Commissioner would be deprived of tax if the document was legitimately designed to avoid tax. A document should be rectified if it did not carry out the common intention of the parties.

30 I propose to dismiss the application.