Case: Federal Commissioner of Taxation v Orica Ltd [1998] HCA 33 ; (1998) 194 CLR 500 
Outcome: referred to
Lend Lease submitted moreover that the construction of s 160ZD(1) of the Tax Act, by reference to the juridical basis upon which it framed its case, accorded also with 'business commonsense', and further that 'the consideration in respect of the disposal' of the Westpac shares, pursuant to the operation of subss 160ZD(1) and (2), constituted no more than the purchase price expressed to be payable by County Natwest as purchaser of those shares pursuant to the FPA. The Court was referred in that context generally to the following passage in the speech of Lord Wilberforce in Aberdeen Construction Group Ltd v Inland Revenue Commissioners [1978] AC 885 at 892-3: 'The capital gains tax is of comparatively recent origin. The legislation imposing it, mainly the Finance Act 1965, is necessarily complicated, and the detailed provisions, as they affect this or any other case, must of course be looked at with care. But a guiding principle must underlie any interpretation of the Act, namely that its purpose is to tax capital gains and to make allowance for capital losses, each of which ought to be arrived at upon normal business principles. No doubt anomalies may occur, but in straight-forward situations, such as this, the courts should hesitate before accepting results which are paradoxical and contrary to business sense. To paraphrase a famous clich&eacute;, the capital gains tax is a tax upon gains: It is not a tax upon arithmetical differences.' I would have difficulty nevertheless in describing the present situation as 'straight forward'. The essence of that aspect of his Lordship's speech in Aberdeen Construction , incidentally, was cited with approval in Commissioner of Taxation v Orica Ltd [1998] HCA 33 ; (1998) 194 CLR 500 at 545 [118] (Gummow J). 66 Pointing out moreover that s 160ZD contains no definition of 'property' (which is strictly correct, though s 160A defines ' asset ' as ' any form of property ' and lists a number of examples specifically), the Commissioner drew attention to what appeared in the joint judgment of Gaudron, McHugh, Kirby and Hayne JJ in Orica at 536-537: 'We have no doubt that the rights acquired by the taxpayer against MMBW under the Principal Assumption Agreement are an asset for the purposes of Pt IIIA. The contention, accepted by the majority of the Full Court, that the right acquired by the taxpayer "was merely a personal right... which was incapable of being assumed by a third party" must be rejected. The conclusion that the taxpayer's right against MMBW was only a right to compel MMBW to specifically perform its obligations appears to have been founded in the proposition, adopted by the primary judge, that "no conceivable assignee would have any interest in enforcing MMBW's obligation which was to discharge [the taxpayer's] obligation to the debenture holders". It may be doubted that enquiring whether there is any person who would have a commercial interest in taking an assignment will determine whether something is an item of property capable of assignment. The question is whether the rights are capable of assignment, not whether anyone is interested in taking an assignment.' I am unable to see how that passage is operable relevantly in relation to the present context. 67 In relation to the Commissioner's invocation of Orica in any event, it is perhaps material for present purposes to record the background circumstances there involved. A publicly listed company undertook to repay loan funds the subject of issued debentures when the same fell due after certain terms of years, and subsequently liability for that repayment was assumed by a third party. It was held by a majority of the High Court that the assumption party's promise to perform was not income, and it was further held by a reduced majority, more relevantly for present purposes, that the company's rights against the assumption party constituted an asset for capital gains tax purposes, and that accordingly the company's rights were partly discharged or satisfied, and hence were partly disposed of, on each occasion that the assumption party effected a reduction of the principal sum the subject of the debentures. Moreover to the extent that the amount of each payment exceeded that part of the cost of the rights attributable to the repayment, it was further held that a capital gain should be accordingly imputed to the company.