Federal Commissioner of Taxation v. St. Helens Farm (A.C.T.) Pty. Limited.

Judges: Barwick CJ
Gibbs J
Stephen J
Mason J

Murphy J
Aickin J
Wilson J

Court:
Full High Court

Judgment date: Judgment handed down 11 February 1981.

---

Murphy J.
Ord Forrest Pty. Ltd. v. F.C. of T. 74 ATC 4034 ; (1973-74) 130 C.L.R. 124 was a decision by an evenly divided court dismissing an appeal from Mr. Justice Stephen . Such a decision is referred to as a statutory majority, a consequence of the directions in the Judiciary Act 1903 (as amended) sec. 23. Those directions are of questionable validity. If Parliament can direct that on an even division a certain judgment follows, for example that in certain cases, the opinion of the Chief Justice or if he is absent, the opinion of the Senior Justice present, shall prevail, presumably it can direct that in those or other cases the opinion of the junior or some other Justice shall prevail, and of course it can change the directions from time to time. If Parliament can direct that a Full Court consisting of less than all the Justices shall not give a decision on a question affecting the constitutional powers of the Commonwealth, unless at least three Justices concur in the decision, (see sec. 23(1)), presumably it can direct that the decision shall not be given unless it is unanimous. If Parliament can give such directions, why can it not direct that no decision shall be given which invalidates an Act (or on a question affecting the validity of an Act) or which challenges the validity of any governmental action, or which is adverse to the Government, unless the decision is unanimous. Section 79 of the Constitution states that: ``The federal jurisdiction of any court may be exercised by such number of judges as the Parliament prescribes.'' Assuming this is intended to apply to the High Court, it does not authorise directions on how the individual opinions or votes of justices should be transformed into judgments of the Court, which seems to be well within the sphere of the judicial branch. The validity of these provisions has not been raised, perhaps because the main provision that an appeal fails if it does not attract a majority conforms to a widespread convention (see Mr. Justice Dixon in
Tasmania v. Victoria (1935) 52 C.L.R. 157 at pp. 183-184 ). The provision about equal division in the original jurisdiction does not. It is very disturbing that an Act or State Act should be held invalid on an even division of this Court (see
Logan Downs Pty. Ltd. v. Queensland (1976-77) 137 C.L.R. 59 ).

I will state my conclusions briefly. Ord Forrest should be followed because it is correct. I agree with Mr. Justice Stephen on the meaning and application of sec. 18(1)(a) of the Gift Duty Assessment Act 1941.

In my opinion, this was an appropriate case for the use of sec. 18(2)(c). Once, it was almost an axiom that the whole was equal to the sum of its parts. In valuing company shares, it is evident that the whole of the shares may be worth more than the sum of the value of the individual shares. Some

---

ATC 4065

disparity is normal, but here the disparity between the value of the whole and the value of the sum of the individual shares as valued by the Court below is extraordinary. The respondents claim that the assets basis is inappropriate. Valuation on an earnings basis is so low that it is illusory. The companies as receptacles for the gifts resemble magicians' jugs into which great amounts of water can be poured without overflowing. The result is so bizarre that it warrants a departure from the approach of the trial judge. In these circumstances it is proper, as the Commissioner contends, to regard resort to sec. 18(2)(c) as necessary. The word is not to be construed as meaning absolutely necessary. In the context of this Act, the word is not used in a strict sense. In sec. 51 ``necessarily incurred'' is not used in a strict sense.

The appeals should be allowed. The cross appeals should be dismissed.