FC of T v METAL MANUFACTURES LTD

Members: Lee J

Carr J
Sundberg J

Tribunal:
Full Federal Court

MEDIA NEUTRAL CITATION: [2001] FCA 365

Decision date: 3 April 2001

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Carr J

18. I have had the advantage of reading Sundberg J's draft reasons for judgment in this appeal. I am grateful to his Honour for saving me the task of setting out the factual and procedural background to the matter.

19. I agree, respectfully, with Sundberg J's conclusion (and with the reasons given for that conclusion) that the primary judge did not err in holding that the items of plant were fixtures.

20. I agree with the learned primary judge's conclusion that the Credit Purchase Agreement was effective to vest in the Bank an interest in the nature of property which should be characterised as equitable. I also agree with his Honour's reasons for that conclusion.

21. I agree with the primary judge's characterisation of the rental payments as having been made entirely on revenue account. His Honour's views coincide with the opinion expressed by Drummond J in
Eastern Nitrogen Ltd v FC of T 99 ATC 5163 ; [ 1999] FCA 1536 , on the assumption that he (Drummond J) was wrong in his conclusion that the sale and lease- back transaction in that case were legally ineffectual to create the relationship of lessor and lessee with respect to the plant in that matter.

22. I cannot see any relevant factual distinction between the circumstances of this matter and the circumstances in Eastern Nitrogen . I am thus in agreement with both Emmett J in this matter and Drummond J in relation to characterisation of the rent payments.

23. In my reasons for judgment in the appeal in Eastern Nitrogen I identified further relevant advantages which the appellant in that case obtained by making the rental payments.

24. One of those further advantages was the continuing use of a very substantial amount of money. The same advantage can be seen as obtained by the respondent in this appeal i.e. the continuing use of some $50 million (the comparable figure in Eastern Nitrogen was $71.4 million).

25. For the reasons set out in paras 29 to 47 (both inclusive) of my reasons for judgment in Eastern Nitrogen , I do not think that any

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ATC 4156

portion of the rental payments made by the respondent in this matter should have been disallowed as being outgoings of capital or of a capital nature.

26. In this matter, as in Eastern Nitrogen , the Commissioner relied upon Part IVA of the Income Tax Assessment Act 1936 (Cth) (``the Act'').

27. Again for the reasons which I gave in the Eastern Nitrogen appeal (see paras 48 to 96 both inclusive) I do not consider that Part IVA applies to the scheme identified in this matter.

28. Accordingly I would dismiss this appeal with costs.