mdroth/huggingface-course_section-5_zst huggingface dataset:
Case: Holroyd v Marshall (1862) 10 HLCas 191 (11 ER 999)
Outcome: cited
With reference to the eighth proposition, I note that the idea that the legal chose in action is held on trust after the consideration is paid in full is well accepted in the case law; see for example, the Australian cases Palette Shoes Pty Ltd v Krohn [1937] HCA 37 ; (1937) 58 CLR 1 at 26 27 and McIntyre v Gye (1994) 51 FCR 472 at 480 481, and the cases referred to in Meagher RP, Heydon JD and Leeming MJ, Meagher Gummow and Lehane's Equity Doctrines and Remedies (4 th ed, Butterworths, 2002) at [6-050]. The operative principle is that equity regards as done that which ought to be done, the assignor's conscience being bound to that end: Holroyd v Marshall (1862) 10 HLCas 191 (11 ER 999); Tailby v Official Receiver (1888) 13 App Cas 523. There is, however, criticism of descriptions of the purchaser's equitable interest between contract and payment of the purchase money as that of a beneficiary under a trust; see for example Heydon JD and Loughlan PL, Cases and Materials on Equity and Trusts (6 th ed, Butterworths, 2002) at [6.7], [6.16] [6.18]. Dr Tolhurst goes further and suggests (op cit, [4.07]) an "assignment analysis" according to which, even in the former class of case (where the consideration for the assignment has been paid), a trust of the legal chose is unnecessary except as a remedial device granted by the court. In such a case, however, the case law is all one way in favour of a constructive trust arising as a matter of substantive law. In any event, his Lordship's evidence to that effect was not challenged.
Case: Industrial Equity Limited v Blackburn [1977] HCA 59 ; (1977) 137 CLR 567
Outcome: cited
Prior to the introduction of those provisions, there was a well established distinction between final and interim dividends. A declaration of a final dividend by the shareholders gave rise to an immediate debt owed by the company to the shareholders, whereas a resolution by the directors to pay an interim dividend did not do so: Potel v Inland Revenue Commissioners [1971] 2 All ER 504 at 511 512; Industrial Equity Limited v Blackburn [1977] HCA 59 ; (1977) 137 CLR 567 at 572; Marra Developments Ltd v BW Rofe Pty Ltd [1977] 2 NSWLR 616 at 625; Brookton Co-operative Society Limited v Commissioner of Taxation [1981] HCA 28 ; (1981) 147 CLR 441 at 455. Thus, a declaration of a final dividend could not be revoked and the company's indebtedness to its shareholders eliminated, if profits ceased to be available to fund the dividend between the time of the declaration and the time fixed for payment. A decision of the directors to pay an interim dividend, on the other hand, could always be revoked down to the time fixed for payment.
Case: Jolly v Federal Commissioner of Taxation [1933] HCA 63 ; (1934) 50 CLR 131
Outcome: discussed
In Jolly v Federal Commissioner of Taxation [1933] HCA 63 ; (1934) 50 CLR 131 ( Jolly ), Dixon J summarised the effect of two earlier High Court decisions on the description of income in s 14(b) of the Income Tax Assessment Act 1915-1921 (Cth), to include "dividends, interest, profits or bonus credited or paid to any member, shareholder, or debentureholder of a company which derives income from a source in Australia" (the two earlier cases were Webb v Federal Commissioner of Taxation [1922] HCA 27 ; (1922) 30 CLR 450 and James v Federal Commissioner of Taxation [1924] HCA 34 ; (1924) 34 CLR 404). His Honour stated that whatever else the provision might include, it extended to "all profits that a company allocated as such to all or some class of its members severally, and, under lawful authority appropriates in discharge of claims to which they are individually liable" (at 142). 170 I acknowledge that Jolly [1933] HCA 63 ; 50 CLR 131 and Stevenson [1937] HCA 72 ; 59 CLR 80 concerned more than simply the word "paid", and that Jolly involved the discharge of indebtedness of the shareholder to the company. I suggest, however, that the general tenor of the passages quoted is that "payment" can take such form of satisfaction of the dividend debt as the shareholder may have agreed to accept, whether that agreement is contained in the company's articles of association or is external to them.
Case: Marra Developments Ltd v BW Rofe Pty Ltd [1977] 2 NSWLR 616
Outcome: cited
Prior to the introduction of those provisions, there was a well established distinction between final and interim dividends. A declaration of a final dividend by the shareholders gave rise to an immediate debt owed by the company to the shareholders, whereas a resolution by the directors to pay an interim dividend did not do so: Potel v Inland Revenue Commissioners [1971] 2 All ER 504 at 511 512; Industrial Equity Limited v Blackburn [1977] HCA 59 ; (1977) 137 CLR 567 at 572; Marra Developments Ltd v BW Rofe Pty Ltd [1977] 2 NSWLR 616 at 625; Brookton Co-operative Society Limited v Commissioner of Taxation [1981] HCA 28 ; (1981) 147 CLR 441 at 455. Thus, a declaration of a final dividend could not be revoked and the company's indebtedness to its shareholders eliminated, if profits ceased to be available to fund the dividend between the time of the declaration and the time fixed for payment. A decision of the directors to pay an interim dividend, on the other hand, could always be revoked down to the time fixed for payment.
Case: McIntyre v Gye (1994) 51 FCR 472
Outcome: cited
With reference to the eighth proposition, I note that the idea that the legal chose in action is held on trust after the consideration is paid in full is well accepted in the case law; see for example, the Australian cases Palette Shoes Pty Ltd v Krohn [1937] HCA 37 ; (1937) 58 CLR 1 at 26 27 and McIntyre v Gye (1994) 51 FCR 472 at 480 481, and the cases referred to in Meagher RP, Heydon JD and Leeming MJ, Meagher Gummow and Lehane's Equity Doctrines and Remedies (4 th ed, Butterworths, 2002) at [6-050]. The operative principle is that equity regards as done that which ought to be done, the assignor's conscience being bound to that end: Holroyd v Marshall (1862) 10 HLCas 191 (11 ER 999); Tailby v Official Receiver (1888) 13 App Cas 523. There is, however, criticism of descriptions of the purchaser's equitable interest between contract and payment of the purchase money as that of a beneficiary under a trust; see for example Heydon JD and Loughlan PL, Cases and Materials on Equity and Trusts (6 th ed, Butterworths, 2002) at [6.7], [6.16] [6.18]. Dr Tolhurst goes further and suggests (op cit, [4.07]) an "assignment analysis" according to which, even in the former class of case (where the consideration for the assignment has been paid), a trust of the legal chose is unnecessary except as a remedial device granted by the court. In such a case, however, the case law is all one way in favour of a constructive trust arising as a matter of substantive law. In any event, his Lordship's evidence to that effect was not challenged.
Case: Palette Shoes Pty Ltd v Krohn [1937] HCA 37 ; (1937) 58 CLR 1
Outcome: cited
With reference to the eighth proposition, I note that the idea that the legal chose in action is held on trust after the consideration is paid in full is well accepted in the case law; see for example, the Australian cases Palette Shoes Pty Ltd v Krohn [1937] HCA 37 ; (1937) 58 CLR 1 at 26 27 and McIntyre v Gye (1994) 51 FCR 472 at 480 481, and the cases referred to in Meagher RP, Heydon JD and Leeming MJ, Meagher Gummow and Lehane's Equity Doctrines and Remedies (4 th ed, Butterworths, 2002) at [6-050]. The operative principle is that equity regards as done that which ought to be done, the assignor's conscience being bound to that end: Holroyd v Marshall (1862) 10 HLCas 191 (11 ER 999); Tailby v Official Receiver (1888) 13 App Cas 523. There is, however, criticism of descriptions of the purchaser's equitable interest between contract and payment of the purchase money as that of a beneficiary under a trust; see for example Heydon JD and Loughlan PL, Cases and Materials on Equity and Trusts (6 th ed, Butterworths, 2002) at [6.7], [6.16] [6.18]. Dr Tolhurst goes further and suggests (op cit, [4.07]) an "assignment analysis" according to which, even in the former class of case (where the consideration for the assignment has been paid), a trust of the legal chose is unnecessary except as a remedial device granted by the court. In such a case, however, the case law is all one way in favour of a constructive trust arising as a matter of substantive law. In any event, his Lordship's evidence to that effect was not challenged.
Case: Permanent Trustee Co v Federal Commissioner of Taxation (1940) 6 ATD 5
Outcome: discussed
The authorities cited by the applicants are St Lucia Usines and Estates Company Limited v Colonial Treasurer of St Lucia [1924] AC 508 ( St Lucia ) at 512; Commissioner of Taxes (SA) v The Executor Trustee and Agency Company of South Australia Limited [1938] HCA 69 ; (1938) 63 CLR 108 ( Carden's Case ) at 155; Permanent Trustee Co v Federal Commissioner of Taxation (1940) 6 ATD 5 ( Prior's Case ) at 13; South Australia v Commonwealth [1992] HCA 7 ; (1992) 174 CLR 235 at 253; and Bowaters Sales Co Ltd v Commissioners of Inland Revenue (1958) 38 TC 593 ( Bowaters ) at 597 599. As well, the applicants refer to the Commissioner's Public Ruling TR 98/1 at [19], in which the Commissioner has said that as a general rule, the receipts method is appropriate to determine income derived from investments, although there are exceptions, such as in the case of interest from a business of money lending carried on by the taxpayer.
Case: Potel v Inland Revenue Commissioners [1971] 2 All ER 504
Outcome: cited
Prior to the introduction of those provisions, there was a well established distinction between final and interim dividends. A declaration of a final dividend by the shareholders gave rise to an immediate debt owed by the company to the shareholders, whereas a resolution by the directors to pay an interim dividend did not do so: Potel v Inland Revenue Commissioners [1971] 2 All ER 504 at 511 512; Industrial Equity Limited v Blackburn [1977] HCA 59 ; (1977) 137 CLR 567 at 572; Marra Developments Ltd v BW Rofe Pty Ltd [1977] 2 NSWLR 616 at 625; Brookton Co-operative Society Limited v Commissioner of Taxation [1981] HCA 28 ; (1981) 147 CLR 441 at 455. Thus, a declaration of a final dividend could not be revoked and the company's indebtedness to its shareholders eliminated, if profits ceased to be available to fund the dividend between the time of the declaration and the time fixed for payment. A decision of the directors to pay an interim dividend, on the other hand, could always be revoked down to the time fixed for payment.
Case: Re Harry Simpson &amp; Company Pty Ltd and Companies Act 1936 [1964-5] NSWR 603
Outcome: discussed
The Commissioner relies on the following special characteristics of dividends: (a) that the division of a company's profits among its shareholders by the declaration of a dividend is "an effectuation or realisation of the rights obtained by the acquisition of the share" (citing Chief Commissioner of State Revenue (NSW) v Dick Smith Electronics Holdings Pty Ltd [2005] HCA 3 ; (2005) 221 CLR 496 per Gleeson CJ and Callinan J at [25] [26], quoting from the judgment of Dixon J in Archibald Howie Pty Ltd v Commissioner of Stamp Duties (NSW) [1948] HCA 28 ; (1948) 77 CLR 143 at 153); (b) that in the winding up of a company, debts owed by the company to its members in their capacity as members, including debts arising from the declaration of a dividend, are postponed until all debts owed to, or claims made by, persons other than as members of the company have been satisfied: Corporations Act 2001 (Cth) s 563A (in 1996 the comparable provision was s 563A of the Corporations Law , which was in identical terms); (c) on an assignment of a debt created by the declaration of a dividend, the debt remains subject to the "equity" of the ordinary creditors proving in priority (the Commissioner cites Re Harry Simpson &amp; Company Pty Ltd and Companies Act 1936 [1964-5] NSWR 603 ( Simpson )). 200 The Commissioner's present submission draws attention to certain special features of a dividend debt, and Simpson [1964-65] NSWR 603 exemplifies them. In that case, a company was indebted to shareholders who were trustees of twelve trusts for &#8356;34,471.18s.1d on account of dividends that had been declared. The debt was recorded in the company's books. The trustees notified the company that in accordance with the trusts, a person had elected to become the beneficiary of each trust fund. Accordingly, the company transferred the amount of its indebtedness to the trustees into an account in the name of the beneficiary. 201 Upon liquidation of the company, the beneficiary sought to prove for the debt of &#8356;34,471.18s.1d. The liquidator rejected the proof on the basis that s 200(1)(g) of the Companies Act 1936 (NSW) applied. The effect of that provision was that on a winding up a debt owed by the company to a person in the person's capacity as a member of the company, such as by way of dividend, was, relevantly, deemed not to be a debt payable to that member (cf the postponement now provided for in s 563A of the Corporations Act 2001 (Cth) referred to at [196] above). 202 The beneficiary submitted (1) that the sum owed to her was not by way of dividend, and (2) that she was not a member but an assignee from a member.
Case: Reiter v Commissioner of Taxation [2001] FCA 1068 ; (2001) 113 FCR 492
Outcome: cited
The applicants submit that the giving of the direction by ABB Zurich and the subsequent payment of the dividend to BAL occurred at a time when ABB Zurich was a bare trustee of the legal right to receive the dividend, both as a matter of Australian law (they refer to Commissioner of Taxation v Everett [1980] HCA 6 ; (1980) 143 CLR 440 at 450) and as a matter of English law (the proper law of the contracts to assign) as explained in the evidence of Lord Millett. They submit that a taxpayer derives as income only amounts to which it is beneficially entitled (citing Countess of Bective v Federal Commissioner of Taxation [1932] HCA 22 ; (1932) 47 CLR 417 at 423; Shepherd v Commissioner of Taxation [1965] HCA 70 ; (1965) 113 CLR 385 at 397; Zobory v Commissioner of Taxation (1995) 64 FCR 86 at 89; Service v Commissioner of Taxation [2000] FCA 188 ; (2000) 97 FCR 265 at [73] ; and Reiter v Commissioner of Taxation [2001] FCA 1068 ; (2001) 113 FCR 492 at [23] [24]). Finally, they submit that s 128A(3) (set out [14] above) was enacted "to maintain a corresponding principle in relation to withholding tax for dividends or interest paid to non-resident beneficiaries", citing the Explanatory Memorandum to the Income Tax Assessment Bill (No 4) 1967 , p 25.
Case: Service v Commissioner of Taxation [2000] FCA 188 ; (2000) 97 FCR 265
Outcome: cited
The applicants submit that the giving of the direction by ABB Zurich and the subsequent payment of the dividend to BAL occurred at a time when ABB Zurich was a bare trustee of the legal right to receive the dividend, both as a matter of Australian law (they refer to Commissioner of Taxation v Everett [1980] HCA 6 ; (1980) 143 CLR 440 at 450) and as a matter of English law (the proper law of the contracts to assign) as explained in the evidence of Lord Millett. They submit that a taxpayer derives as income only amounts to which it is beneficially entitled (citing Countess of Bective v Federal Commissioner of Taxation [1932] HCA 22 ; (1932) 47 CLR 417 at 423; Shepherd v Commissioner of Taxation [1965] HCA 70 ; (1965) 113 CLR 385 at 397; Zobory v Commissioner of Taxation (1995) 64 FCR 86 at 89; Service v Commissioner of Taxation [2000] FCA 188 ; (2000) 97 FCR 265 at [73] ; and Reiter v Commissioner of Taxation [2001] FCA 1068 ; (2001) 113 FCR 492 at [23] [24]). Finally, they submit that s 128A(3) (set out [14] above) was enacted "to maintain a corresponding principle in relation to withholding tax for dividends or interest paid to non-resident beneficiaries", citing the Explanatory Memorandum to the Income Tax Assessment Bill (No 4) 1967 , p 25.
Case: Shepherd v Commissioner of Taxation [1965] HCA 70 ; (1965) 113 CLR 385
Outcome: cited
The applicants submit that the giving of the direction by ABB Zurich and the subsequent payment of the dividend to BAL occurred at a time when ABB Zurich was a bare trustee of the legal right to receive the dividend, both as a matter of Australian law (they refer to Commissioner of Taxation v Everett [1980] HCA 6 ; (1980) 143 CLR 440 at 450) and as a matter of English law (the proper law of the contracts to assign) as explained in the evidence of Lord Millett. They submit that a taxpayer derives as income only amounts to which it is beneficially entitled (citing Countess of Bective v Federal Commissioner of Taxation [1932] HCA 22 ; (1932) 47 CLR 417 at 423; Shepherd v Commissioner of Taxation [1965] HCA 70 ; (1965) 113 CLR 385 at 397; Zobory v Commissioner of Taxation (1995) 64 FCR 86 at 89; Service v Commissioner of Taxation [2000] FCA 188 ; (2000) 97 FCR 265 at [73] ; and Reiter v Commissioner of Taxation [2001] FCA 1068 ; (2001) 113 FCR 492 at [23] [24]). Finally, they submit that s 128A(3) (set out [14] above) was enacted "to maintain a corresponding principle in relation to withholding tax for dividends or interest paid to non-resident beneficiaries", citing the Explanatory Memorandum to the Income Tax Assessment Bill (No 4) 1967 , p 25.
Case: South Australia v Commonwealth [1992] HCA 7 ; (1992) 174 CLR 235
Outcome: discussed
The authorities cited by the applicants are St Lucia Usines and Estates Company Limited v Colonial Treasurer of St Lucia [1924] AC 508 ( St Lucia ) at 512; Commissioner of Taxes (SA) v The Executor Trustee and Agency Company of South Australia Limited [1938] HCA 69 ; (1938) 63 CLR 108 ( Carden's Case ) at 155; Permanent Trustee Co v Federal Commissioner of Taxation (1940) 6 ATD 5 ( Prior's Case ) at 13; South Australia v Commonwealth [1992] HCA 7 ; (1992) 174 CLR 235 at 253; and Bowaters Sales Co Ltd v Commissioners of Inland Revenue (1958) 38 TC 593 ( Bowaters ) at 597 599. As well, the applicants refer to the Commissioner's Public Ruling TR 98/1 at [19], in which the Commissioner has said that as a general rule, the receipts method is appropriate to determine income derived from investments, although there are exceptions, such as in the case of interest from a business of money lending carried on by the taxpayer. 116 In South Australia v Commonwealth [1992] HCA 7 ; (1992) 174 CLR 235, Dixon J's judgment in Carden's Case was again referred to by the High Court. In a joint judgment, Mason CJ, Deane, Toohey and Gaudron JJ said (at 252) that in accordance with Dixon J's statement in Carden's Case [1938] HCA 69 ; 63 CLR 108 at 152 (see [106] (1), (2) above), "the courts have placed reliance upon the conceptions of business and the principles and practices of commercial accountancy in order to arrive at an assessment of income, the object being 'to discover what gains have during the period of account come home to the taxpayer in a realised or immediately realizable form'" (their Honours were quoting from Dixon J in Carden's Case [1938] HCA 69 ; 63 CLR 108 at 155).
Case: Tailby v Official Receiver (1888) 13 App Cas 523
Outcome: cited
With reference to the eighth proposition, I note that the idea that the legal chose in action is held on trust after the consideration is paid in full is well accepted in the case law; see for example, the Australian cases Palette Shoes Pty Ltd v Krohn [1937] HCA 37 ; (1937) 58 CLR 1 at 26 27 and McIntyre v Gye (1994) 51 FCR 472 at 480 481, and the cases referred to in Meagher RP, Heydon JD and Leeming MJ, Meagher Gummow and Lehane's Equity Doctrines and Remedies (4 th ed, Butterworths, 2002) at [6-050]. The operative principle is that equity regards as done that which ought to be done, the assignor's conscience being bound to that end: Holroyd v Marshall (1862) 10 HLCas 191 (11 ER 999); Tailby v Official Receiver (1888) 13 App Cas 523. There is, however, criticism of descriptions of the purchaser's equitable interest between contract and payment of the purchase money as that of a beneficiary under a trust; see for example Heydon JD and Loughlan PL, Cases and Materials on Equity and Trusts (6 th ed, Butterworths, 2002) at [6.7], [6.16] [6.18]. Dr Tolhurst goes further and suggests (op cit, [4.07]) an "assignment analysis" according to which, even in the former class of case (where the consideration for the assignment has been paid), a trust of the legal chose is unnecessary except as a remedial device granted by the court. In such a case, however, the case law is all one way in favour of a constructive trust arising as a matter of substantive law. In any event, his Lordship's evidence to that effect was not challenged.
Case: Zobory v Commissioner of Taxation (1995) 64 FCR 86
Outcome: cited
The applicants submit that the giving of the direction by ABB Zurich and the subsequent payment of the dividend to BAL occurred at a time when ABB Zurich was a bare trustee of the legal right to receive the dividend, both as a matter of Australian law (they refer to Commissioner of Taxation v Everett [1980] HCA 6 ; (1980) 143 CLR 440 at 450) and as a matter of English law (the proper law of the contracts to assign) as explained in the evidence of Lord Millett. They submit that a taxpayer derives as income only amounts to which it is beneficially entitled (citing Countess of Bective v Federal Commissioner of Taxation [1932] HCA 22 ; (1932) 47 CLR 417 at 423; Shepherd v Commissioner of Taxation [1965] HCA 70 ; (1965) 113 CLR 385 at 397; Zobory v Commissioner of Taxation (1995) 64 FCR 86 at 89; Service v Commissioner of Taxation [2000] FCA 188 ; (2000) 97 FCR 265 at [73] ; and Reiter v Commissioner of Taxation [2001] FCA 1068 ; (2001) 113 FCR 492 at [23] [24]). Finally, they submit that s 128A(3) (set out [14] above) was enacted "to maintain a corresponding principle in relation to withholding tax for dividends or interest paid to non-resident beneficiaries", citing the Explanatory Memorandum to the Income Tax Assessment Bill (No 4) 1967 , p 25.
Case: Comcare Australia v Mathieson (2004) 79 ALD 518
Outcome: cited
It is important when considering the extent of the Tribunal's obligations under s 43 to have regard to the words of the section. The primary obligation imposed on the Tribunal by the section is to 'give reasons ... for its decision'. They must include but are not limited to its findings on material questions of fact and reference to the evidence on which those findings are based. It must be possible '... to discern from the reasons given the actual reasoning process adopted ...' Comcare Australia v Mathieson (2004) 79 ALD 518 at [61] per Weinberg J.