Attorney-General (NT) v Hand
[1988] FCA 272
•03 JUNE 1988
Re: COMMISSIONER OF TAXATION
And: PATRICIA FRANCES SALENGER
No. G528 of 1987
Income Tax
COURT
IN THE FEDERAL COURT OF AUSTRALIA
NEW SOUTH WALES DISTRICT REGISTRY
GENERAL DIVISION
French(1) J.
CATCHWORDS
Income Tax - income Tax Assessment Act 1936 s.26AAA(2) - company takeover - compulsory acquisition of dissenting shareholder's shares purchased less than 12 months previously - whether "sold" by taxpayer - whether deemed sale under s.26AAA(1)(f) - duty of Administrative Appeals Tribunal to follow decisions of state and federal courts.
Income Tax Assessment Act 1936 s.26AAA
Companies (Acquisition of Shares) Code
Companies Act (1961) (NSW)
Income Tax Act 1945
Income Tax Assessment Act 1922
Lands Clauses Consolidation Act 1845 (Eng)
Benjamin on Sale 8th Ed. Fleming: The Law of Torts 6th Ed.
Clerk and Lindsell on Torts 15th Ed. Pearce: Statutory Interpretation in Australia 2nd Ed.
Brettingham-Moore v Federal Commmissioner of Taxation (1981) 53 FLR 480; 38 ALR 340
Coburg Investment Co. Pty Ltd v Federal Commissioner of Taxation (1960) 104 CLR 650
Adams v Broughton (1737) Andr.18; 2 Str.1078; 93 ER 1043; 95 ER 278
Cooper v Shepherd (1846) 3 CB 267, 136 ER 107;
Brinsmead v Harrison (1871) LR 6 CP 584, 588;
Purcell v Thomas (No. 2) (1904) StRQD 189
Ridge Nominees Ltd v Inland Revenue Commissioners (1962) 1 Ch.376
Sun Alliance Insurance Ltd v Inland Revenue Commissioners (1972) 1 Ch.133
Huntington v Commissioner of Inland Revenue (1896) 1 QB 422
Finance Corporation of Australia Ltd v Commissioner of Stamp
Duties (1981) QdR493
Kirkness v John Hudson & Co. Ltd (1955) AC 696
Nalukuya v Director of Lands. Native Land Trust Board of Fiji
Intervener. (1957) AC 325
Smith v Federal Commissioner of Taxation (1932) 48 CLR 178
Hobart Bridge Co. Ltd v Federal Commissioner of Taxation (1951) 82 CLR 372
Steinberg v Federal Commissioner of Taxation (1975) 134 CLR 640
Gauci v Federal Commissioner of Taxation (1975) 135 CLR 81
Henty House Pty Ltd (In Voluntary Liquidation) v Federal
Commissioner of Taxation (1953) 88 CLR 141
Public Trustee v Commissioner of Inland Revenue (1961) NZLR 1034
Duff v Commissioner of Inland Revenue (1982) 2 NZLR 710
HEARING
PERTH
#DATE 3:6:1988
Counsel for the Applicant: S.W. Gibb with A.J.P. Reynolds
Solicitors for the Applicant: Australian Government Solicitor
Counsel for the Respondent: A. Slater
Solicitors for the Respondent: Humphreys & Corish
ORDER
The appeal is allowed.
The decision of the Tribunal is set aside.
The applicant's assessment of the respondent's taxable income for the year of income ended 30 June 1982 is confirmed.
Liberty to apply as to the form of order within 7 days.
The respondent to pay the applicant's costs of this appeal.
NOTE: Settlement and entry of orders is dealt with in Order 36 of the Federal Court Rules.
JUDGE1
In her income tax return for the year ended 30 June 1982, Patricia Frances Salenger declared a taxable income totalling $52,445. The Commissioner of Taxation said that this was not enough. She should have brought to account under s.26AAA of the Income Tax Assessment Act 1936 ("ITAA"), profits of $5,729 realised from two parcels of shares "sold" in the year of income, less than one year after she had purchased them. But, said Mrs Salenger, they were not sold within the meaning of that section. Each of the companies was subject to a takeover offer and in each case the offeror, having obtained acceptances in respect of not less than 90% of the shares, was entitled, pursuant to the relevant companies legislation, to compulsorily acquire the balance. In each case the offeror did so and in spite of her unwillingness to sell, the shares so acquired included the two parcels held by Mrs Salenger. The two parcels of shares in question were in Mauri Brothers & Thomson Limited and Containers Limited which were acquired by Burns, Philp & Company Limited and Australian Paper Manufacturers Limited respectively.
Mrs Salenger objected to the Commissioner's assessment, but her objection was disallowed. She requested a referral of the Commissioner's decision to a Board of Review. Ultimately, the matter was heard by a Senior Member of the Administrative Appeals Tribunal which took over the jurisdiction of the Boards of Review as from 1 September 1987. On 2 October 1987 the Tribunal decided to vary the decision of the Commissioner and reduced Mrs Salenger's taxable income for the year of income ended 30 June 1982 by $5,729.
In doing so the Senior Member declined to follow Brettingham-Moore v Federal Commissioner of Taxation (1981) 53 FLR 480, 38 ALR 340, a decision of the Supreme Court of Tasmania directly on point, and went so far as to say it was incorrectly decided. He distinguished Coburg Investment Company Proprietary Limited v Commissioner of Taxation (1960) 104 CLR 650, a decision of Windeyer J. to similar effect in relation to s.26(a). The distinction was made on the basis that the present respondent's case did not relate to shares acquired for the dominant purpose of profit-making by dealing or sale to which s.26(a) would have applied, but shares which were capital assets held in order to generate income. So far as that characterisation embodied a finding of fact, it is not in dispute.
Although some 13 grounds were set out in his Notice of Appeal, the Commissioner's contentions reduce to a question of construction, namely whether the word "sold" used in s.26AAA(2)(b) embraces a disposition by compulsory acquisition pursuant to the laws relating to company takeovers. It is convenient in this context to turn first to the relevant statutory provisions.
Statutory Framework
Section 26AAA of the ITAA commences with an interpretation sub-section which includes the following paragraphs:-
"(1) For the purposes of this section -
(a) a reference to property generally or to a particular kind of property includes a reference to an estate or interest in property or in that kind of property, as the case may be;
.
.
.
(d) the acquisition of a share by way of a subscription of capital, with or without the payment of any other consideration, shall be deemed to be the purchase of that share;
(e) the issue by a company to a person of shares in the company as, or as part of, the consideration for the sale of property by the person to the company shall be deemed to constitute the purchase by the person of the shares so issued;
(f) if property is transferred from a person or persons to another person or other persons in exchange for other property or without consideration, the transfer shall be deemed to constitute the sale of the property by the first-mentioned person or persons and the purchase of the property by the second-mentioned person or persons;
.
.
.
(2) Where -
(a) a taxpayer has purchased property after 21 August 1973 and before the commencement of this section or purchases property after the commencement of this section; and
(b) the taxpayer has, whether before or after the commencement of this section, sold the property or an interest in the property before the expiration of the period of 12 months from the date on which he purchased the property,
then, subject to this section, the assessable income of the taxpayer includes any profit arising from the sale of the property or interest."
Reference must also be made to the cognate provisions of s.26(a) which was repealed in 1984 and replaced by the new s.25A. The section provided:-
"26. The assessable income of a taxpayer shall include-
(a) profit arising from the sale by the taxpayer of any property acquired by him for the purpose of profit-making by sale, or from the carrying on or carrying out of any profit-making undertaking or scheme".
Section 42 of the Companies (Acquisition of Shares) Code under which the Mauri Brothers shares were acquired provides in substance that where there have been 90% acceptances under a takeover scheme, the offeror may within 1 month after the last day upon which offers remained open, give notice, as prescribed, to a dissenting offeree to the effect that the offeror desires to acquire the outstanding shares held by the dissenting offeree. Sub-section 42(6) provides:-
"Where a notice is given under sub-section (2) or (3), the offeror or on-market offeror is entitled and bound, subject to this section, to acquire the shares to which the notice relates on the terms that were applicable in relation to the acquisition of shares under the take-over scheme or pursuant to the take-over announcement immediately before the expiration of the period for which offers under the take-over scheme or offers constituted by the take-over announcement remained open."
There is provision for the dissenting offeree, upon receipt of a notice, to make application for a court order that sub-section (6) not have effect in relation to him. No such application was made in the present case. Transfer and payment are then effected pursuant to sub-ss.11 and 12 of s.42 which provide:-
"(11) Where the offeror or on-market offeror has given
notice under sub-section (2) or (3) and the Court has not, on an application made under sub-section (7), ordered to the contrary, the offeror or on-market offeror shall, within 14 days after -
(a) the expiration of one month after the notice was given;
(b) the expiration of 14 days after the last day on which a statement under sub-section (10) was given; or
(c) where an application has been made to the Court under sub-section (7) - the application has been disposed of,
whichever last happens, serve a copy of the notice on the company that issued the shares, together with an instrument of transfer of the shares executed on behalf of the holder of the shares by a person appointed by the offeror or on-market offeror and also executed by the offeror or on-market offeror, and pay, allot or transfer to the target company the consideration for the transfer, and the target company shall thereupon register the offeror or on-market offeror as the holder of those shares.
(12) The target company shall hold the consideration so received in trust for the former holder of the shares and shall forthwith notify him in writing that the consideration has been received by the target company and is being held by that company pending his instructions as to how it is to be dealt with."
The provisions of sub-ss.42(6), (7), (11) and (12) are reflected in the provisions of sub-ss. 180X(5), (6), (10) and (11) of the Companies Act 1961 (NSW) under which the Containers Limited shares were acquired.
Precise details of the timing of the offers and notices given in respect of the two acquisitions were not before the Court, but it appears to have been common ground that the Companies Act 1961 (NSW) properly applied to the acquisition of Containers Limited by Australian Paper Manufacturers Limited.
The Question of Construction
The Commissioner in substance rested his case upon two
bases:-
1. The word "sold" as used in s.26AAA(2)(b) extends to an involuntary transfer of shares under the provision of the take-over laws;
2. If the word does not so extend as a matter of construction it is deemed to apply by virtue of para.26AAA(1)(f);
and it was upon these propositions that the question of construction was fought.
(i) The Literal Approach
In ordinary parlance the word "sold" used as the past tense of the transitive verb "sell" imports, if not the concept of voluntariness, then at least the notion that it is something done by the seller. This is borne out by the relevant parts of the definition of "sell" in the Shorter Oxford English Dictionary as "to give up or hand over (something) to another person for money (or something that is reckoned as money); esp. to dispose of merchandise, possessions etc) to a buyer for a price; to vend". Consistently with that definition it may be possible to speak of a compulsory sale as one which retains the element that it is something the seller does, albeit he is forced to do it. Compulsory acquisition of the kind contemplated by s.42 of the Companies (Acquisition of Shares) Code, it may be said, involves no act or participation on the part of the dissenting shareholder. True it is that a transfer is prepared and executed by the offeror and is said to be executed "on behalf of the holder of the shares". But that is a statutory fiction which carries no connotation of authorisation, consent or even acquiescence on the part of the shareholder. Property in the shares is taken from their holder and vested in another. There is no element of giving up or handing over in the transitive sense.
A common law definition of "sale" in relation to property is found in Benjamin on Sale 8th Ed. at 2:-
"By the common law a sale of personal property was usually termed a "bargain and sale of goods". It may be defined to be a transfer of the absolute or general property in a thing for a price in money. Hence it follows that, to constitute a valid sale, there must be a concurrence of the following elements viz:-
(1) parties competent to contract;
(2) mutual assent;
(3) a thing the absolute or general property in which is transferred from the seller to the buyer; and
(4) a price in money paid or promised."
The element of mutual assent however proceeds from a context in which sale is spoken of as being or proceeding from a contract. So much is apparent from the passage that immediately follows and which explains:-
"That it requires parties competent to contract and mutual assent is manifest from the general principles which govern all contracts."
The concept of a sale without contract or assent was not unknown to the common law and was discussed generally in Benjamin (supra) at 90ff. In actions for damages for the full value of goods in trespass, trover or detinue, recovery could have the effect of passing property in the goods to the defendant by operation of law - Adams v Broughton (1737) Andr.18; 2 Str. 1078; 93 ER 1043; 95 ER 278; Cooper v Shepherd (1846) 3 CB 267, 136 ER 107; Brinsmead v (1871) LR 6 CP 584, 588; Purcell v Thomas (No. 2) (1904) St.R. Qd.189; see also Fleming: The Law of Torts 6th Ed. at 49, 66 and 69. A bailee may sell goods if his bailor fails to collect them or give directions for their delivery and the buyer will obtain a title good against the bailor - Clerk and Lindsell on Torts 15th Ed. para.21-21.
(ii) Judicial Constructions of "Sale"
The word "sale" used in statutory settings has been given a more extensive application than its ordinary meaning would permit, when context or statutory policy demands. The instrument of transfer of a dissenting shareholder's shares under the United Kingdom equivalent of s.42 of the Companies Code, was treated as a "conveyance on sale" by the Court of Appeal for the purposes of the Stamp Act 1891 in Ridge Nominees Ltd v Inland Revenue Commissioners (1962) 1 Ch. 376. No single rationale for that characterisation emerges from the judgment. According to Donovan LJ, assent, although necessary to sale, was "imposed" upon the shareholder by statute (at 405). Danckwerts LJ on the other hand accepted the concept of a "compulsory sale" and held that "the effect of the statute in such a case is to say that the absence of the transferor's consent does not matter and the sale is to proceed without it" (at 406). The difficulty with these approaches lies in their evident emphasis on fitting the acquisition provisions of the Companies Act into the general concept of sale. The more persuasive approach, with respect, is that of Lord Evershed MR who concentrated on the instrument of transfer generated by the statutory acquisition process and concluded at 402:-
"It seems to me, therefore, that what Parliament by this section envisages and has brought into being is an instrument which has upon its face all the attributes of a transfer on sale and takes effect as such."
The decision was applied in Sun Alliance Insurance Ltd v Inland Revenue Commissioners (1972) 1 Ch. 133 where, in the absence of an instrument of transfer, a court order effecting transfer of outstanding minority shares under an approved scheme of arrangement was itself held to be a "transfer on sale" for the purposes of the Stamp Act. Foreclosure orders under mortgages have also been held to be conveyances on sale for stamp duty purposes - Huntington v Commissioner of Inland Revenue (1896) 1QB 422, 427; Finance Corporation of Australia Ltd v Commissioner of Stamp Duties (1981) Qd. R.493.
Seven years before Ridge Nominees the House of Lords had accepted in Kirkness v John Hudson & Co. Ltd (1955) AC 696 that the word "sale" could extend to compulsory acquisition in the appropriate statutory context, although their Lordships did not derive much assistance in that regard from earlier stamp duty cases which Viscount Simonds and Lord Reid saw as deciding the kinds of instrument that could be characterised as a "conveyance on sale" (at 710,729). The question then before the House was whether the vesting of a company's railway waggons in the Transport Commission under s.29 of the Transport Act 1947 with compensation fixed by the Act was a "sale" for the purposes of s.17 of the Income Tax Act 1945 so as to render the company liable to a balancing charge. Their Lordships held that the waggons had not been sold. The approach to construction taken by the majority lends support to the view that the ordinary meaning of the word "sale" does not extend to compulsory acquisition and should not be so extended unless context demands. Lord Reid made the further point at 729 that:-
"In a taxing Act, and particularly in a charging section, one assumes that language is used accurately unless the contrary clearly appears".
Although the respondent in this case placed considerable reliance upon the Kirkness decision, it leaves open the question of construction in any given statutory context. And that is the way it was perceived by the Privy Council in Nalukuya v Director of Lands. Native Land Trust Board of Fiji, Intervener (1957) AC 325 which was concerned with the application of the word "disposition" in a Fijian statute to compulsory land acquisition:-
"Little assistance is to be obtained from the citation of authorities with regard to the meaning of the word "disposition" in other contexts, but it is perhaps worth noticing that several of the speeches in the case of Kirkness v John Hudson & Co. Ltd recognize that in the field of compulsory acquisition of land such words as "sale" and "purchase" are frequently used in connexion with transactions by which the transfer of ownership in land takes place in the absence of the element of mutual assent."
Turning to Australian case law, reference was made by the appellant to Smith v Federal Commissioner of Taxation (1932) 48 CLR 178 in which the High Court considered the application of a provision of the Income Tax Assessment Act 1922 which rendered non-taxable any dividends paid "wholly and exclusively out of the profits arising from the sale of assets which were not acquired for resale at a profit". The question was whether a dividend paid out of profits realised from the compulsory acquisition of land was within the exception. A majority of the Court held that the acquisition was a sale. Rich J. did so on the basis that "sale" is not a word of precise technical import. In many contexts it conveys an agreement to transfer property for a valuable consideration, but in others agreement is not of the essence of the conception. And he commented that the involuntary alienation of land under the Lands Clauses Consolidation Act 1845 (Eng) was regarded as an instance of sale. As to s.17 of the Income Tax Assessment Act 1922 he observed that it was directed to discrimination between income profits and capital profits:-
"Broadly the distinction is between the recovery of fixed capital and circulating capital, and the detachment therefrom of the surplus over expenditure. The fact that the fixed capital is recovered by a compulsory conversion as distinguished by (sic) a voluntary conversion of the asset into money is quite irrelevent to the purpose of the Legislature."
The subject with which the statute was dealing pointed "unmistakeably" in the direction of the more extended meaning of "sale". In their joint judgment, Starke, Dixon and McTiernan JJ identified the essential elements of sale as a "conveyance or transfer of property or an agreement or other obligation to convey or transfer property for a price in money". The expression "sale of assets" used in s.17 meant only "a parting with assets in the same manner as upon a contract of purchase or sale".
"The Act looks to the substance of the matter, and is not concerning itself with technical definitions of the word sale."
The cases on s.26(a) of the Income Tax Assessment Act 1936 have followed the general approach to construction adopted in Smith's case. Kitto J., in Hobart Bridge Co. Ltd v Federal Commissioner of Taxation (1951) 82 CLR 372, considered a compulsory acquisition of shares by the State of Tasmania in relation to a bridge undertaking. He found for the taxpayer on the basis that the shares had not been acquired by the taxpayer for the purpose of profit-making by sale or for the conduct of any profit-making undertaking or scheme, but observed at 382:-
"Nothing turns, I think, upon any distinction between a conversion of shares into cash by means of compulsory acquisition and a similar conversion by means of an ordinary sale: cf Smith v Federal Commissioner of Taxation. If the shares formed part of the stock-in-trade, as it were of a business of dealing in shares in which the appellant company was engaged, the profit on the realisation would be an income profit according to ordinary usages and concepts."
In Coburg Investment Co. Pty Ltd v Federal Commissioner of Taxation (1960) 104 CLR 650, Windeyer J. held that a compulsory acquisition of land which had been acquired for profit-making was a sale for the purposes of s.26(a). The process of acquisition had involved negotiation with the acquiring authority and in the end the parties had agreed a price. His Honour thought Smith's case fatal to the taxpayer's contention and distinguished Kirkness as dealing with "a general statutory expropriation of chattels with compensation to be paid at a scheduled rate irrespective of the actual value of the particular chattel" (at 662). In Coburg on the other hand, "there was a resumption of particular land by the ordinary procedure of notice to treat and a price thereafter arrived at by negotiation". In the end, however, it was to the principle embodied in s.26 that his Honour turned:-
"Section 26 reflects and should be read in the reflected light of a general principle: that is that if property be acquired for the purpose of profit-making by dealing in it by sale, as distinct from for the purpose of retaining it as an income producing capital asset, then a surplus received when it is realised is, in an economic sense, received on income account not on capital account. It matters not, for the application of the general principle, whether the actual realization occurred when it did and as it did as a result of compulsion or pressure or purely voluntarily: this is emphatically so when the actual amount obtained on realization is arrived at by mutual assent after negotiation." (663)
It is evident that the negotiated compensation was not decisive in the characterisation of the acquisition as a "sale".
There are later dicta which support the application of s.26(a) to compulsory sales. That extension seems to be implicit in the decision of the High Court in Steinberg v Federal Commissioner of Taxation (1975) 134 CLR 640 and was made explicit by Barwick CJ at 684:-
"...if the purpose to purchase for resale at a profit is otherwise made out, a sale under threat of compulsory acquisition will be a relevant sale and the gain made thereby properly brought to tax."
See also Gauci v Federal Commissioner of Taxation (1975) 135 CLR 81, 86 (Barwick CJ).
The phrase "disposed of, lost or destroyed" in s.59 of the Income Tax Assessment Act 1936 was, on the strength of Smith's case also held to extend to involuntary alienation - Henty House Pty Ltd (In Voluntary Liquidation) v Federal Commissioner of Taxation (1953) 88 CLR 141, 152 (Williams ACJ, Webb, Kitto and Taylor JJ). The importance of consistency in the application of revenue laws was mentioned in the separate judgment of Fullagar J. For, while accepting that the ordinary or popular meaning of the phrase "disposed of" would not extend to compulsory alienation, his Honour said at 157:-
"However, I would not deny that the words "disposed of" may, in an appropriate context, properly be given a wider meaning than what I regard as their normal meaning. In the present case we have a provision for adjustment which may operate either in favour of the taxpayer or in favour of the revenue. One would certainly expect to find all cases of alienation covered. No reason suggests itself for distinguishing between a voluntary alienation and a compulsory acquisition. And I think that the case of Smith v Federal Commissioner of Taxation, justifies, if it does not compel, reading the words in s.59 of the Income Tax Assessment Act 1936-1948 as including a case of compulsory acquisition on payment of compensation".
If it were not for Smith's case however, his Honour would have taken a different view. A different view has been taken of equivalent provisions in New Zealand Revenue Laws and although the statutory language is not identical to that of s.26(a) considerably greater weight seems to have been given in that country to the ordinary meaning of the word "sale" - Public Trustee v Commissioner of Inland Revenue (1961) NZLR 1034, 1042-1045 (Hutchison J.). The authority of that case seems to have been accepted by the Commissioner in the Court of Appeal in Duff v Commissioner of Inland Revenue (1982) 2 NZLR 710, 715 (Cooke J.).
The only reported judicial decision upon the application of s.26AAA to compulsory acquisition, is that of Neasey J. in Brettingham-Moore v Federal Commissioner of Taxation (1981) 53 FLR 480; 38 ALR 340. Land was compulsorily acquired from the taxpayer and his wife under the Land Resumption Act 1957 (Tas.) within 12 months of its purchase. Relying on s.26AAA, the Commissioner assessed the taxpayer on his share of the profit which arose. On appeal Neasey J. rejected the contention that the appellant had not "sold" the property for the purposes of s.26AAA. After referring to Smith and Coburg and finding no assistance in sub-s.26AAA(1), his Honour held that he was unable to see any consideration arising out of the form of s.26AAA or its relationship to the sections juxtaposed to it or from the Act as a whole, to suggest that its proper interpretation required that it be restricted to voluntary sale. This approach contrasts with Lord Reid's assumption in Kirkness that in a charging section language is used accurately unless the contrary clearly appears. It must be seen in context, however, as his Honour's response to a submission that the policy of s.26AAA showed that the concept of sale was intended to be confined to a voluntary sale. To the extent that the judgment suggests that the proponent of the ordinary meaning of the word "sale" in a statutory context must justify its "restriction" to voluntary sale, it is, in my respectful opinion, at odds with accepted principles of interpretation - see generally Pearce: Statutory Interpretation in Australia 2nd Ed. para.15.
His Honour went on to identify a policy underlying s.26AAA however which is supportive of the construction for which the Commissioner contends:-
"The only purpose which is apparent to me from the apposition of s.26AAA with s.26 and particularly para. (a) of s.26, is that the former is intended to set up an arbitrary or automatic taxing provision whereby, in its simplest expression, if property is bought and sold within a twelve month period, any profit realized on the sale is to be taxed as assessable income, whether or not it was acquired for the purpose of profit-making by sale. Profit realized on the disposition of property purchased and sold within the arbitrary twelve month period is made taxable in any event; and thus it seems to me that s.26AAA is a provision which naturally finds its place in the Act alongside s.26(a), because it is designed by its reference to a fixed time scale to avoid much of the difficult and time-consuming inquiry often made necessary by the application of s.26(a) to the taxation of profit realized on the sale of property." (FLR at 482, ALR at 342)
I respectfully agree with his Honour's description of the purpose of s.26AAA in relation to the former s.26(a) which is broadly consistent with that set out in the second reading speech preceding the enactment of the section in 1973. The section was there said to relate to the taxation of casual profits for the sale of property within the year following acquisition:-
"These short-term profits are essentially in the nature of income and ought to be subject to tax as such. The provisions give expression to this concept."
After considering Smith and Coburg in more detail, his Honour concluded:-
"In my view, no sound reason has been put forward or appears why the concept of a sale of property by the taxpayer should be treated differently as between s.26AAA and s.26; and indeed it would be anomalous if in the former it should be construed to refer to a voluntary sale only, whereas the element of voluntariness is, as has been held, immaterial in the latter." (FLR at 485, ALR at 344)
Unimpeded by authority, there would be much force in the submission that the construction for which the Commissioner contends is a misuse of language. It would have been an easy matter for the draftsman to make clear under s.26AAA that profits realised upon a compulsory acquisition of property within 12 months of purchase are to be taxed. In the event, having regard to the policy of the section as enunciated by Neasey J., I am of the view that the law is sufficiently settled by the course of decision-making in analogous cases to require me to hold that the word "sold" in s.26AAA extends to the acquisition of Mrs Salenger's shares.
The Commissioner relied in the alternative upon the proposition that para.26AAA(1)(f) covered the transaction in question and deemed it a sale for the purposes of sub-s.26AAA(2). Neasey J. referred to para.(f) in his judgment and said that its evident purpose was "to catch up transactions by which the taxing purpose of the section might be easily circumvented if they were not there" (at 482). He saw nothing in sub-s.(1) to throw any light on the relevant application of sub-s.(2). The argument with which he was faced was that the absence of any express reference to compulsory acquisition among the extended meanings given to sale in sub-s.(1) indicated that it was not intended to cover such transactions. It does not appear that any submission was made to the effect that a compulsory acquisition is caught by para.(f). In my opinion para.(f) is directed to transactions where there is no money consideration or no consideration at all. It may be accidentally wide enough to cover a compulsory acquisition, but I doubt that that was its purpose. In the event, it is unnecessary to decide the question in this case as the construction of sub-s.(2) is sufficient for the purpose. For these reasons the appeal will be allowed.
I should add, with the greatest of respect to the Tribunal, that it is difficult to see how it is open to a Senior Member to form the view that a decision of the Supreme Court of a State which is on the very point before the Tribunal is incorrect and not to be followed. In the special case of conflicting decisions of superior courts, the Tribunal may have to decide which to follow, but that occasion does not arise here. Ordinarily, Senior Members of the Tribunal should apply the law as stated by the judges of this Court or by judges of the Supreme Courts of the States.
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