mdroth/huggingface-course_section-5_zst huggingface dataset:
Case: Mordecai v Mordecai (1988) 12 NSWLR 58
Outcome: applied
A controlling majority which diverts assets and opportunities of the company to other entities under its control, and from which it will benefit, will be acting oppressively. This is essentially the kind of conduct held to be oppressive in Scottish Cooperative Wholesale Society Ltd v Meyer [1959] AC 324 and a breach of fiduciary duty in Mordecai v Mordecai (1988) 12 NSWLR 58. Similarly, an inflexible policy of not declaring dividends can constitute oppression: Shamsallah Holdings Pty Ltd v CBD Refrigeration and Airconditioning Services Pty Ltd (2001) 19 ACLC 517 at [51]-[56]. It would be no answer to say that such conduct happened to suit the interests of the Weeden family. In Gambotto v WCP Limited [1995] HCA 12 ; (1995) 182 CLR 432 the High Court has reaffirmed the willingness of the courts to protect minority shareholders albeit in the context of a majority seeking to amend Articles of Association. 46 An important element in the present case is the special value the shares would have to the majority shareholder nominally Mrs Weeden but, it is reasonable to infer, a holder under the practical control and direction of Mr Weeden. This factor is mentioned in the passage from Abrahams cited in [43] above. Nothing in Gregory casts doubt on it. In Mordecai , 12 NSWLR at 70, Hope JA, with whom the other members of the New South Wales Court of Appeal agreed, said: It is well-established that if property has some special potentiality which only one person would buy, it is to be valued on the basis of a notional sale to that person. The property is not valueless or diminished in value because there would be no other buyers [Vyricherla and Geita Sebea cited]. On this basis the value of Morpak's goodwill is to be determined upon the basis of a hypothetical sale to the only persons to whom, on the appellants' submissions, it could be sold, and to whom the matters which they submit would render the goodwill valueless in any other purchaser's hands would be irrelevant. Young J applied the same principle in Mike Gaffikin Marine , 122 FLR at 304.
Case: Re Lowes Park Pty Ltd; Headlam v Lowes Park Pty Ltd (1994) 62 FCR 535
Outcome: distinguished
A hypothetical purchaser, properly advised, is to be credited with an awareness of the foregoing matters. The price a willing buyer would pay for the shares would reflect the availability of remedies for oppression and entitlement to a winding up order. Such a purchaser is not to be fixed with previous acquiescence in the policies of the controllers of the Weeden Companies. Rather the reasonable assumption is that the purchaser would be entitled to the rights conferred at law by the holding of the shares acquired. Cases such as Re Lowes Park Pty Ltd; Headlam v Lowes Park Pty Ltd (1994) 62 FCR 535 where the minority shareholder had accepted the conduct complained of for many years (see 62 FCR at 548, 550, 553) are distinguishable. 39 The Articles of Association of the Weeden Companies contain pre-emptive rights (Article 37-41) and also confer an "absolute discretion" on the Directors to refuse to register any transfer without being bound to assign any reason for such refusal: Article 36. 40 Mr Peters SC for the applicants pointed out that s 1072C of the Corporations Act confers rights on the trustee in bankruptcy of a shareholder who becomes bankrupt. Pre-emptive rights are effectively removed (sub-s (6)) and consent to a transfer of the bankrupt's shares must not be unreasonably withheld (sub-s (5)). It was put that the surrounding circumstances in the present case include the imminent bankruptcy of Mr Weeden. A willing seller in the position of Mr Weeden, in answer to a buyer's argument that the restrictions in the Articles warranted a lower price, would point out that the next day a trustee in bankruptcy could sell them without any such restrictions.
Case: Scottish Cooperative Wholesale Society Ltd v Meyer [1959] AC 324
Outcome: cited
A controlling majority which diverts assets and opportunities of the company to other entities under its control, and from which it will benefit, will be acting oppressively. This is essentially the kind of conduct held to be oppressive in Scottish Cooperative Wholesale Society Ltd v Meyer [1959] AC 324 and a breach of fiduciary duty in Mordecai v Mordecai (1988) 12 NSWLR 58. Similarly, an inflexible policy of not declaring dividends can constitute oppression: Shamsallah Holdings Pty Ltd v CBD Refrigeration and Airconditioning Services Pty Ltd (2001) 19 ACLC 517 at [51]-[56]. It would be no answer to say that such conduct happened to suit the interests of the Weeden family. In Gambotto v WCP Limited [1995] HCA 12 ; (1995) 182 CLR 432 the High Court has reaffirmed the willingness of the courts to protect minority shareholders albeit in the context of a majority seeking to amend Articles of Association.
Case: Shamsallah Holdings Pty Ltd v CBD Refrigeration and Airconditioning Services Pty Ltd (2001) 19 ACLC 517
Outcome: cited
A controlling majority which diverts assets and opportunities of the company to other entities under its control, and from which it will benefit, will be acting oppressively. This is essentially the kind of conduct held to be oppressive in Scottish Cooperative Wholesale Society Ltd v Meyer [1959] AC 324 and a breach of fiduciary duty in Mordecai v Mordecai (1988) 12 NSWLR 58. Similarly, an inflexible policy of not declaring dividends can constitute oppression: Shamsallah Holdings Pty Ltd v CBD Refrigeration and Airconditioning Services Pty Ltd (2001) 19 ACLC 517 at [51]-[56]. It would be no answer to say that such conduct happened to suit the interests of the Weeden family. In Gambotto v WCP Limited [1995] HCA 12 ; (1995) 182 CLR 432 the High Court has reaffirmed the willingness of the courts to protect minority shareholders albeit in the context of a majority seeking to amend Articles of Association.
Case: Vyricherla Narayana Gajapatiraju v Revenue Divisional Officer Vizagapatam [1939] AC 302
Outcome: cited
In Abrahams v Federal Commissioner of Taxation [1944] HCA 32 ; (1944) 70 CLR 23 at 44 Williams J, sitting as a single Justice of the High Court, considered that the presence of restrictive Articles was not a factor that should depreciate value because directors were obliged to exercise fiduciary duties conferred by the Article in a proper manner, bona fide and for the benefit of the company. Such obligations are enforceable in the courts. Citing the Privy Council case of Vyricherla Narayana Gajapatiraju v Revenue Divisional Officer Vizagapatam [1939] AC 302 , as applied by the High Court in Geita Sebea v Territory of Papua [1941] HCA 37 ; (1941) 67 CLR 544 , Williams J said (70 CLR at 44): ...the full value to the seller must be ascertained, however limited the market may be, even where there is only one possible hypothetical purchaser. To a prudent purchaser willing to give full value for the shares sooner than fail to obtain them, this restriction should not, to my mind, have many terrors.
Case: Australian Securities and Investments Commission v DB Management Pty Ltd [2000] HCA 7 ; (2000) 199 CLR 321
Outcome: cited
the person seeking the release of the ship were not, prima facie, liable to pay all of the costs of and in connection with her custody and release, there could be a serious inhibition on the exercise by plaintiffs of their rights to arrest. And, this construction would extend the limited form of liability of a person who caused an arrest created by the Parliament in s 34 in cases where the power to arrest had been misused. I reject APC's argument that a defendant who seeks the release of its ship, would simply be required to provide security for the costs and expenses which the plaintiff had already paid to the Marshal in connection with its arrest. A literal meaning of the Rules does not support that construction : Australian Securities and Investments Commission v DB Management Pty Ltd [2000] HCA 7 ; (2000) 199 CLR 321 at 338 [34] - [35] . I am of opinion that at the present time the costs and expenses of the actual arrest should be paid out of the amount that EMAS has paid to the Marshal and the balance of its payment of $100,000 returned to it. And, all other costs and expenses of the Marshal, including in connection with keeping the barge in custody and its release, should be paid out of the $92,100 paid by APC to secure the release. So much of the balance of those funds, equal to what was paid out of EMAS' $100,000, should be added to the amount paid into court by APC as security to abide the ultimate disposition of the proceedings. EMAS may later be able to establish its entitlement to this sum under r 75C or in the substantive proceedings. This allocation of responsibility reflects the prima facie distribution of the burden of the undertakings in rr 41 and 53 which EMAS and APC respectively assumed when each of them became bound to honour them. And it ensures that the security available to EMAS will not be diminished by the costs of the arrest in the event that it is successful in the end result.
Case: Patrick Stevedores No 2 Pty Limited v Ship MV "Turakina" (No 2) (1998) 84 FCR 506
Outcome: considered
Patrick Stevedores No 2 Pty Limited v Ship MV "Turakina" (No 2) (1998) 84 FCR 506 at 509E-F, Tamberlin J said that it was neither necessary nor appropriate to approach the undertakings, as then provided for in the Rules, on the basis that they were mutually exclusive. He also said that the undertakings did not have to be read down so as not to cover costs or expenses that may be encompassed by other undertakings that might be given by other persons. He observed that the Marshal could not claim double reimbursement in respect of the same costs or expenses. His Honour suggested that the parties should negotiate and resolve, as between themselves, the working out of the entitlements and obligations of each party who had provided an undertaking. However, this was prior to the introduction of r 75C. The undertaking that form 19 requires extends to the whole of the period of the arrest and the release, because the applicant for release must apply under r 52(1) in accordance with form 19 for the release of the ship. Once the person seeking the release of the ship from arrest provides a payment to the Marshal, or a sufficient level of confidence in the undertaking given, the ship will be released. Ordinarily, the person seeking the release of the ship will be the relevant person or someone acting for the relevant person. If the arrest has been short, the costs and expenses are not likely to be large. But, if the arrest has been for a long period of time (until the relevant person has been impelled to appear or to provide the security necessary to recover the ship from arrest) prima facie, there could be a hardship on a plaintiff if APC's construction of the operation of the Rules were correct. As Tamberlin J pointed out the Marshal cannot obtain double reimbursement. In the present case, the Marshal obtained security from EMAS, in the form of cash paid pursuant to his demands. But, the Marshal did not pay any costs and expenses prior to receiving the form 19 and payment from APC. Giving effect to APC's argument would produce the consequence that EMAS would now have to pay all of the Marshal's costs and expenses while APC would simply provide security for those payments to be available in the event that it were held liable for them at the conclusion of the proceedings. Such a construction does not lie easily with the requirements of r 52(1), r 53 and form 19. Nor, does it sit easily with the ordinary and natural meaning of s 34(1)(a)(ii) that limits the right of, among others, a relevant person in APC's position to recover damages from a plaintiff in EMAS' position for wrongful arrest.
Case: Colonial Mutual Life Assurance Society Ltd v Federal Commissioner of Taxation [1953] HCA 68 ; (1953) 89 CLR 428
Outcome: cited
Secondly, the relationship between the management fee and Riddell's income earning activities is direct. Riddell submitted that the services to which the management fee related were, as the invoice stated, for management fees. A label is never determinative: Commissioner of Taxation v Broken Hill Pty Co Ltd (2000) ATC 4659 at 4668; Colonial Mutual Life Assurance Society Ltd v Federal Commissioner of Taxation [1953] HCA 68 ; (1953) 89 CLR 428; Hallstroms Pty Ltd v Federal Commissioner of Taxation [1946] HCA 34 ; (1946) 72 CLR 634 and Sun Newspapers Ltd &amp; Associated Newspapers Ltd v Federal Commissioner of Taxation [1938] HCA 72 ; (1938) 61 CLR 337. 56 An examination of the character of the advantage sought is assisted by asking two questions: (1) what was the management fee really paid for? and (2) is what it was really paid for, in truth and in substance, a capital asset?: Colonial Mutual at 454 and Sun Newspapers Ltd at 359-360. The advantage must be identified and characterised. The answer to those questions is not assisted by an analysis of the contractual right or rights secured under the contract, as distinct from the activity itself: see Commissioner of Taxation v Raymor (NSW) Pty Ltd [1990] FCA 193 ; (1990) 24 FCR 90 at 99 (per Davies, Gummow and Hill JJ) citing Dixon J in Hallstroms at 648. As Dixon J said in Hallstroms , the answer: "...depends on what the expenditure is calculated to effect from a practical and business point of view, rather than upon the juristic classification of the legal rights, if any, secured, employed or exhausted in the process." See also Citylink at [148] (per Crennan J) (with whom Gleeson CJ, Gummow, Heydon and Callinan JJ agreed).
Case: Commissioner of Taxation v Broken Hill Pty Co Ltd (2000) ATC 4659
Outcome: cited
Secondly, the relationship between the management fee and Riddell's income earning activities is direct. Riddell submitted that the services to which the management fee related were, as the invoice stated, for management fees. A label is never determinative: Commissioner of Taxation v Broken Hill Pty Co Ltd (2000) ATC 4659 at 4668; Colonial Mutual Life Assurance Society Ltd v Federal Commissioner of Taxation [1953] HCA 68 ; (1953) 89 CLR 428; Hallstroms Pty Ltd v Federal Commissioner of Taxation [1946] HCA 34 ; (1946) 72 CLR 634 and Sun Newspapers Ltd &amp; Associated Newspapers Ltd v Federal Commissioner of Taxation [1938] HCA 72 ; (1938) 61 CLR 337.
Case: Federal Commissioner of Taxation v Citylink Melbourne Limited [2006] HCA 35 ; (2006) 80 ALJR 1282
Outcome: cited
The classic test for resolving the distinction between capital and revenue is that stated by Dixon J in Sun Newspapers Ltd at 363: "There are, I think, three matters to be considered, (a) the character of the advantage sought, and in this its lasting qualities may play a part, (b) the manner in which it is to be used, relied upon or enjoyed, and in this and under the former head recurrence may play its part, and (c) the means adopted to obtain it; that is, by providing a periodical reward or outlay to cover its use or enjoyment for periods commensurate with the payment or by making a final provision or payment so as to secure future use or enjoyment." See also Federal Commissioner of Taxation v Citylink Melbourne Limited [2006] HCA 35 ; (2006) 80 ALJR 1282 at [147] and GP International Pipecoaters Pty Ltd v Federal Commissioner of Taxation [1990] HCA 25 ; (1990) 170 CLR 124 at 137. 56 An examination of the character of the advantage sought is assisted by asking two questions: (1) what was the management fee really paid for? and (2) is what it was really paid for, in truth and in substance, a capital asset?: Colonial Mutual at 454 and Sun Newspapers Ltd at 359-360. The advantage must be identified and characterised. The answer to those questions is not assisted by an analysis of the contractual right or rights secured under the contract, as distinct from the activity itself: see Commissioner of Taxation v Raymor (NSW) Pty Ltd [1990] FCA 193 ; (1990) 24 FCR 90 at 99 (per Davies, Gummow and Hill JJ) citing Dixon J in Hallstroms at 648. As Dixon J said in Hallstroms , the answer: "...depends on what the expenditure is calculated to effect from a practical and business point of view, rather than upon the juristic classification of the legal rights, if any, secured, employed or exhausted in the process." See also Citylink at [148] (per Crennan J) (with whom Gleeson CJ, Gummow, Heydon and Callinan JJ agreed).
Case: Federal Commissioner of Taxation v Maddalena (1971) 45 ALJR 426
Outcome: distinguished
As I said in Spriggs, argument by analogy must never be allowed to obscure the particularity of the arrangements in question. The Commissioner's reliance upon Federal Commissioner of Taxation v Maddalena (1971) 45 ALJR 426 does just that. Maddalena concerned an era of professional sportsmen and women which bears little or no resemblance to professional sport in the twenty first century. One only has to point to the absence of the electronic media, let alone the internet, in the 1930's to make good that proposition. Secondly, as with Spriggs, the factual matrix in Maddalena is very different to the factual matrix of Riddell. 53 Riddell was and remains a full time professional rugby league player. Maddalena was not. Riddell seeks to claim the management fee as a deduction. That fee was incurred after the playing contract was signed, not before, and could not be charged if no playing contract was negotiated. Maddalena sought to claim travelling expenses and legal expenses, expenses which were incurred before the playing contract and which were incurred regardless of whether or not a playing contract was secured. The management fee incurred by Riddell did not "come at a point too soon to be properly regarded as incurred in gaining assessable income". 54 In relation to the "negative limb" of s 8-1 of the 1997 Act , the Commissioner submitted that even if the management fee was an outgoing incurred by Riddell in gaining or producing assessable income, it was on capital, not revenue, account and therefore not deductible under s 8-1 of the 1997 Act . This argument also fails.
Case: Federal Commissioner of Taxation v Raymor (NSW) Pty Ltd [1990] FCA 193 ; (1990) 24 FCR 90
Outcome: cited
An examination of the character of the advantage sought is assisted by asking two questions: (1) what was the management fee really paid for? and (2) is what it was really paid for, in truth and in substance, a capital asset?: Colonial Mutual at 454 and Sun Newspapers Ltd at 359-360. The advantage must be identified and characterised. The answer to those questions is not assisted by an analysis of the contractual right or rights secured under the contract, as distinct from the activity itself: see Commissioner of Taxation v Raymor (NSW) Pty Ltd [1990] FCA 193 ; (1990) 24 FCR 90 at 99 (per Davies, Gummow and Hill JJ) citing Dixon J in Hallstroms at 648. As Dixon J said in Hallstroms , the answer: "...depends on what the expenditure is calculated to effect from a practical and business point of view, rather than upon the juristic classification of the legal rights, if any, secured, employed or exhausted in the process." See also Citylink at [148] (per Crennan J) (with whom Gleeson CJ, Gummow, Heydon and Callinan JJ agreed).
Case: Federal Commissioner of Taxation (Cth) v Total Holdings (Australia) Pty Ltd [1979] FCA 30 ; (1979) 43 FLR 217
Outcome: cited
Whether an outgoing incurred by a taxpayer satisfies one or more of the positive limbs for deductibility depends upon the facts of each case: Maryborough Newspapers Co Ltd v Federal Commissioner of Taxation [1929] HCA 16 ; (1929) 43 CLR 450 and Federal Commissioner of Taxation (Cth) v Total Holdings (Australia) Pty Ltd [1979] FCA 30 ; (1979) 43 FLR 217 at 223.
Case: GP International Pipecoaters Pty Ltd v Federal Commissioner of Taxation [1990] HCA 25 ; (1990) 170 CLR 124
Outcome: cited
The classic test for resolving the distinction between capital and revenue is that stated by Dixon J in Sun Newspapers Ltd at 363: "There are, I think, three matters to be considered, (a) the character of the advantage sought, and in this its lasting qualities may play a part, (b) the manner in which it is to be used, relied upon or enjoyed, and in this and under the former head recurrence may play its part, and (c) the means adopted to obtain it; that is, by providing a periodical reward or outlay to cover its use or enjoyment for periods commensurate with the payment or by making a final provision or payment so as to secure future use or enjoyment." See also Federal Commissioner of Taxation v Citylink Melbourne Limited [2006] HCA 35 ; (2006) 80 ALJR 1282 at [147] and GP International Pipecoaters Pty Ltd v Federal Commissioner of Taxation [1990] HCA 25 ; (1990) 170 CLR 124 at 137.
Case: Hallstroms Pty Ltd v Federal Commissioner of Taxation [1946] HCA 34 ; (1946) 72 CLR 634
Outcome: cited
Secondly, the relationship between the management fee and Riddell's income earning activities is direct. Riddell submitted that the services to which the management fee related were, as the invoice stated, for management fees. A label is never determinative: Commissioner of Taxation v Broken Hill Pty Co Ltd (2000) ATC 4659 at 4668; Colonial Mutual Life Assurance Society Ltd v Federal Commissioner of Taxation [1953] HCA 68 ; (1953) 89 CLR 428; Hallstroms Pty Ltd v Federal Commissioner of Taxation [1946] HCA 34 ; (1946) 72 CLR 634 and Sun Newspapers Ltd &amp; Associated Newspapers Ltd v Federal Commissioner of Taxation [1938] HCA 72 ; (1938) 61 CLR 337. 56 An examination of the character of the advantage sought is assisted by asking two questions: (1) what was the management fee really paid for? and (2) is what it was really paid for, in truth and in substance, a capital asset?: Colonial Mutual at 454 and Sun Newspapers Ltd at 359-360. The advantage must be identified and characterised. The answer to those questions is not assisted by an analysis of the contractual right or rights secured under the contract, as distinct from the activity itself: see Commissioner of Taxation v Raymor (NSW) Pty Ltd [1990] FCA 193 ; (1990) 24 FCR 90 at 99 (per Davies, Gummow and Hill JJ) citing Dixon J in Hallstroms at 648. As Dixon J said in Hallstroms , the answer: "...depends on what the expenditure is calculated to effect from a practical and business point of view, rather than upon the juristic classification of the legal rights, if any, secured, employed or exhausted in the process." See also Citylink at [148] (per Crennan J) (with whom Gleeson CJ, Gummow, Heydon and Callinan JJ agreed).
Case: Maryborough Newspapers Co Ltd v Federal Commissioner of Taxation [1929] HCA 16 ; (1929) 43 CLR 450
Outcome: cited
Whether an outgoing incurred by a taxpayer satisfies one or more of the positive limbs for deductibility depends upon the facts of each case: Maryborough Newspapers Co Ltd v Federal Commissioner of Taxation [1929] HCA 16 ; (1929) 43 CLR 450 and Federal Commissioner of Taxation (Cth) v Total Holdings (Australia) Pty Ltd [1979] FCA 30 ; (1979) 43 FLR 217 at 223.