Baldock v Macintosh and Associates
[1999] TASSC 74
•8 July 1999
[1999] TASSC 74
CITATION: Baldock v Macintosh & Associates [1999] TASSC 74
PARTIES: BALDOCK, Gregory Lionel
BALDOCK, Tamara Annabelle
v
MACKINTOSH, Patricia
MACKINTOSH, James
Trading asMACKINTOSH & ASSOCIATES
TITLE OF COURT: SUPREME COURT OF TASMANIA
JURISDICTION: ORIGINAL
FILE NO/S: BDR 51/1993
DELIVERED ON: 8 July 1999
DELIVERED AT: Hobart
HEARING DATES: 3 - 5 May 1999
JUDGMENT OF: Underwood J
CATCHWORDS:
REPRESENTATION:
Counsel:
Plaintiffs: K E Read and D Cooper
Defendants: S P Estcourt QC
Solicitors:
Plaintiffs: Phillips Taglieri
Defendants: Page Seager
Judgment Number: [1999] TASSC 74
Number of Paragraphs: 38
Serial No 74/1999
File No BDR 51/1993
GREGORY LIONEL BALDOCK and TAMARA ANNABELLE BALDOCK v
PATRICIA MACKINTOSH and JAMES MACKINTOSH, trading as
MACINTOSH & ASSOCIATES
REASONS FOR JUDGMENT Underwood J
8 July 1999
The background and the issue
The plaintiff, Mr Baldock, was a log carter. His father was a log carter before him. Mr Baldock senior owned a 1981 Kenworth twin steer log truck and trailer ("the truck") and a cart licence to go with it. He used to cart logs for a logging contractor, Mr Peter Gillespie.
Towards the end of 1989 the plaintiffs, Mr and Mrs Baldock, formed a partnership and took over Mr Baldock senior's log carting business. As Mrs Baldock was employed as a school teacher, the truck was driven and maintained by Mr Baldock. According to a valuation tendered in evidence, the truck was worth $90,000 in September 1989. The plaintiffs bought the truck for that sum from Mr Baldock senior. The plaintiffs did not buy the cart licence, but Mr Baldock senior let them use it. The Australian Guarantee Corporation Ltd provided the whole of the purchase price by way of asset purchase agreement. The company's agent for this transaction was a Mr Peter Boulter. The plaintiffs commenced the partnership business in November 1989.
The plaintiffs decided they needed an accountant. Mr Boulter recommended the first defendant, Mrs Patricia Mackintosh, who was then practising in partnership with the second defendant under the name of Macintosh & Associates. As the second defendant had nothing to do with the subject matter of this litigation, it is convenient to simply refer to the first named defendant as "the defendant". The plaintiffs engaged the defendant as their accountant about the same time as they commenced the business of log carting. The defendant prepared the partnership accounts for the year ended 30 June 1990. After allowance for depreciation, the profit and loss account showed a before tax profit of $19,208 for that period.
However, in July or August 1990, the plaintiffs considered selling the log truck to Mr Gillespie who had expressed an interest in buying it and carting his own logs. In their evidence, the plaintiffs said that they considered the sale because the work involved long hours and this was having an adverse effect on the marriage and Mr Baldock's relationship with his young son. It was put to the plaintiffs on behalf of the defendant that their motivation for sale was not as they claimed or, at least, not solely as they claimed, but because the business was not profitable and the future for the logging industry in the area where the plaintiffs were carting was not good. This was denied by the plaintiffs.
There were discussions between Mr Baldock and Mr Gillespie about the price. I find that at some stage before the end of the 1990, Mr Gillespie told Mr Baldock that he was prepared to pay $180,000 for the truck and the licence. I accept Mr Gillespie's evidence that when he offered that sum he knew that the market value of the truck was in the order of $90,000. He said that he considered that the truck and the licence together were worth $180,000. He said that he could have bought a truck "anywhere" but the truck was no good to him without the licence. I find that Mr Gillespie was prepared to pay, in addition to the market value of the truck, something in the order of $90,000 to obtain a transfer of the cart licence from Mr Baldock senior to himself to enable him to use the truck to cart his logs to the mill. I infer that at the time Mr Baldock and Mr Gillespie were discussing the price to be paid for the truck and licence, there were discussions on the same topic between Mr Baldock and his father, as the latter was the owner of the cart licence. I also infer that there were discussions between Mr Baldock and his father with respect to the disposition of the proceeds of sale if the sale proceeded. There was no direct evidence of these discussions or their content, but it is reasonable to infer from the terms of the sale agreement that was eventually entered into, that Mr Baldock senior agreed with his son that of the total sum payable, the plaintiffs could keep $150,000, less the pay out figure on the truck to the Australian Guarantee Corporation ("AGC"), which turned out to be $85,932.
The plaintiffs went to see Mr Boulter and told him that they were considering selling to Mr Gillespie. Mr Boulter told Mr Baldock that if he was thinking about selling the truck, he had better find out if the sale would attract liability for capital gains tax.
Mr Gillespie also consulted Mr Boulter. He asked Mr Boulter if AGC would assist him to finance the proposed purchase. Mr Boulter said that AGC agreed it would finance Mr Gillespie to the same extent that it had financed the plaintiffs viz, it would lend him the amount that was owing on the truck at the time the sale was effected. I infer that Mr Gillespie also went to see his bankers, as there was evidence that Westpac agreed to lend Mr Gillespie $40,000 towards the purchase price. That left Mr Gillespie $54,068 short of the proposed purchase price of $180,000. The agreement that was later drawn up and executed provided that after payment of the amounts to be advanced by AGC and Westpac, the balance of $54,068 was left owing as an unsecured debt, $15,000 payable to Mr and Mrs Baldock senior and $39,067 payable to the plaintiffs. (There was no evidence to explain the interest of Mrs Baldock senior, although it is likely that she was a partner with her husband in the log carting business.) The agreement provided that these debts were repayable by monthly instalments of $834 to Mr and Mrs Baldock senior and $1,310 to the plaintiffs. There was no agreement to pay interest on the outstanding balance. Mr Baldock said that there were no discussions between him and Mr Gillespie about how Mr Gillespie was going to finance the shortfall. That seems unlikely, given that he and his father agreed to provide "vendor finance", but it is possible that all the arrangements with respect to this were negotiated by Mr Boulter as agent for Mr Gillespie. Nothing turns upon this.
At all events, agreement about all of those details was reached by December 1990, as by then Mr Boulter had reduced them to writing in a document he prepared for a meeting that was arranged between the plaintiffs and the defendant. The document was tendered in evidence, P3. I infer from all of the above that all the parties to this transaction knew that the truck was worth only about $90,000 and that Mr Gillespie was prepared to pay a further $90,000 for the licence. I also find that Mr Baldock senior agreed, in effect, to make a gift to the plaintiffs of approximately $50,000 - $60,000 (the precise amount depended upon the actual pay out figure on the truck) of that purchase price. The reason for the gift might simply have been family love and affection, but there was no evidence about this.
Although by December 1990 the terms of the proposed sale had been agreed, the plaintiffs had not finally made up their minds to sell to Mr Gillespie. As a result of Mr Boulter's advice, they were concerned about any liability for capital gains tax and, in addition, they were still uncertain whether the sale was in the best interests of the family unit. With respect to the liability for taxation, the plaintiffs' evidence was that they consulted the defendant and sought her advice. Paragraph 5 of the statement of claim pleads that the defendant advised the plaintiffs "that if they sold the equipment they would not incur any liability to tax on any capital gain".
The defendant denies that she gave that advice. The sale to Mr Gillespie did proceed in accordance with the terms of a written document drawn up by the plaintiffs' solicitors. In result, the plaintiffs incurred a capital gains tax liability in the sum of $28,569. By these proceedings, the plaintiffs seek to recover that sum and interest on a loan taken out to enable the tax to be paid, together with other relief.
It was common ground that the defendant would have been in breach of an implied term of the contract of retainer between her and the plaintiffs and negligent, had her advice been that the sale, as it was effected, would attract no liability for capital gains tax. The critical question on the issue of liability is what was said by the parties when there was a discussion between them about the proposed sale of the truck to Mr Gillespie. There is no note or memorandum of the discussion in evidence and all of the relevant events occurred 8½ years ago.
The plaintiffs' case was that, had they been advised that the sale was going to attract capital gains tax liability, it would not have proceeded. Mr Baldock said, "If we had to pay capital gains tax we wouldn't have sold it". With respect to his state of mind before he sought advice from the defendant, Mr Baldock said that if the advice had been that no capital gains tax was payable, "We'd think about selling it". He went on to say in his evidence, that after he had been advised by the defendant that there would be no capital gains tax liability, he and his wife had further discussions about the continuation of the business and the effect it was having on their marriage. He said that they ultimately decided that the sale should proceed. His evidence in this respect was corroborated by Mrs Baldock. The defendant agreed in her evidence that at the conclusion of the meeting the plaintiffs had yet to make up their minds whether to proceed with the sale to Mr Gillespie.
I find that immediately prior to the consultation between the plaintiffs and the defendant, the plaintiffs were undecided whether to sell to Mr Gillespie or not. I find that there were two factors in the decision making process viz, any liability to pay capital gains tax and the affect of the business on the plaintiffs' relationship with each other and their son. However, I do not accept the entirety of the plaintiffs' evidence in this respect. It seems obvious to me that liability to pay capital gains tax would not per se be the issue. The issue would have been the amount of any capital gains tax liability. A small amount may not have inhibited the sale, but a large amount might well have done so. Mr Estcourt QC, for the defendant, cross-examined Mr Baldock in an attempt to show that a reason for the sale was that the business was unprofitable and the outlook for its future was bleak. However, the attempt was unsuccessful, for not only did Mr Baldock deny this, but the evidence of Mr Gillespie made it clear that after he purchased the truck, there was sufficient work for it to be used profitably, and 12 months later his work increased to such an extent that there was enough for two log trucks.
The meeting and the advice
Mr Baldock said that there was a meeting in the defendant's office on or about 6 December 1990. He said it was held about 4.30 in the afternoon. He said it was attended by him, his wife, Mr Boulter and the plaintiffs' young child. His evidence in this respect was corroborated by evidence to the like effect from Mrs Baldock and Mr Boulter.
The defendant agreed there was a meeting attended by the plaintiffs and Mr Boulter at which there was a discussion about the sale of the truck. However, the defendant said that she believed that this meeting was held in mid-January 1991. Nothing turns upon the difference with respect to the date of the meeting, as it was common ground that there was only one such meeting and it took place about the end of 1990 or very early 1991. It was also common ground that Mr Boulter took the document P3 to the meeting and there handed it to the defendant.
I turn now to the critical issue of what advice was sought and given at the meeting between the plaintiffs and the defendant. At the outset, it is appropriate to observe that it appeared to me that each of the persons who gave evidence at the trial did their best to give an honest account of what happened and what was said at that meeting. Notwithstanding that, there were substantial conflicts between the evidence given by the defendant and that given by the plaintiffs and Mr Boulter. In order to try and unravel these conflicts after all these years requires a detailed examination of the evidence given by those witnesses, bearing in mind that the plaintiffs carry the burden of proof.
The plaintiffs and Mr Boulter said that the latter drove all three of them, together with Master Baldock, to the meeting at the defendant's office. The defendant confirmed that Master Baldock was at the meeting. I accept the evidence of the plaintiffs and Mr Boulter as to how the three of them travelled to the meeting.
The plaintiffs both said that the meeting commenced with Mr Boulter speaking first. Mr Boulter's evidence was not inconsistent with this account, and the defendant said that the meeting commenced with an explanation about the financing arrangements for the proposed sale. The preponderance of the evidence is in favour of a finding which I make, that the meeting commenced with Mr Boulter outlining the terms of the proposed sale. I accept Mr Boulter's evidence that he prepared P3 for the purpose of the meeting. The probabilities are that he handed this document to the defendant during the course of his explanation of the financing arrangements. I so find. P3 is reproduced as follows:
"G & T Baldock
Cost $180,000
GL & TA BALDOCK $150,000
LH & BJ BALDOCK $ 30,000
Source of Funds for P J Gillespie
effective to
22/1/91TRUCK PAYOUT asst purchase.
AGC $85,932.55
WBC $40000.00
GL & TA BALDOCK $25,000
LH & BJ BALDOCK $15,000Sub Total 125932.55
Vendor Finance
LH & BJ Baldock 15000.00
Vendor Finance
GL & TA Baldock 39067.45
Total 180000.00
Terms of Vendor Finance
$15000 LH & BJ Baldock 18 payments at $834 00 ($15912)
$39067.45 GL & TA Baldock 29 payments at $1310.35
1 payment at $1067.30 ($390657.45)
Solicitors costs to be paid
by P J Gillespie
Suggest 10% for early repayment."
It is all written in Mr Boulter's hand. The words in italics are written in cursive script. The balance is written in upper case letters.
From this point on there were differences between the evidence given by the defendant and that given by the plaintiffs and Mr Boulter. The defendant said that there were discussions at "quite some length" about the provision of security for the vendor finance. The defendant was then asked by her counsel "if the subject of capital gains tax was discussed" and the defendant replied:
"During the course of the discussions where I was expressing some concern about the financial difficulties of this arrangement and the unwiseness of it, it's my recollection that Mr Boulter indicated that it was capital gains tax free. Now apart from that, at that particular part of the meeting, it's my recollection that capital gains tax wasn't discussed. It was discussed at a later half of the meeting, but not at that time."
The defendant went on to explain that after the financing arrangements had been discussed, she asked Mr Boulter to leave the meeting "because there were matters of discussion that were not to do with Mr Boulter."
The plaintiffs and Mr Boulter all denied that the latter expressed any opinion about liability to pay capital gains tax and denied that Mr Boulter left the meeting before the plaintiffs.
The defendant said that after Mr Boulter had left the meeting "the subject of capital gains tax was discussed … because I needed to pursue further as to why there was some belief that this transaction could have been free of capital gains tax". The defendant added that "on the surface it wasn't [free of liability to pay capital gains tax] but the main reason it may have been is that perhaps the assets involved were acquired prior to the cut off date of 19 September 1985. Had that been the case yes, the transaction was free of capital gains tax, but I needed to establish that fact."
In her examination-in-chief, the defendant interrupted her chronological account of events at the meeting to say that before Mr Boulter left the meeting, she became aware that Mr Gillespie was prepared to pay $180,000 for the truck, which she then knew was worth only "in round figures $86,000", and a cart licence that was owned by Mr Baldock senior. The defendant said that she also understood, after an initial query, that the proceeds of the proposed sale were to be divided between the plaintiffs and Mr Baldock senior; the latter to receive $30,000 and the balance, less the pay out on the truck, to the plaintiffs. This aspect of the defendant's evidence is substantially in accord with the evidence given by Mr Boulter and the plaintiffs, and I find that at the commencement of the meeting, Mr Boulter told the defendant, after he had given her P3, that the proposal was a sale to Mr Gillespie of the truck and licence for $180,000 of which sum $30,000 was to go to Mr Baldock senior and the balance, less the amount owing to AGC, was to go to the plaintiffs.
Mr Baldock's evidence about what transpired at the meeting after Mr Boulter had spoken, was as follows:
"And then my wife asked a question to Mrs MacIntosh that if we sold the log truck would we have to pay any capital gains tax and the answer to that - we got was, no. We were exempt from capital gains tax because we'd owned it for more than twelve months."
Mr Baldock gave no other evidence about the content of the advice sought of, and given by, the defendant concerning liability to pay capital gains tax. Mrs Baldock's evidence was as follows:
"After Peter [Boulter] had spoken for possibly 5 or 10 minutes I then asked the question of Mrs MacIntosh would we be liable to pay capital gains tax if we went ahead and sold our truck and trailer.
What was the response of Mrs MacIntosh to that question? ... After briefly consulting a book that was nearby Mrs MacIntosh then responded by saying, 'As you have owned the truck and trailer for longer than 12 months you are exempt for paying capital gains tax.'
Mrs Baldock, was there any further discussion, during the course of that meeting, about the issue of capital gains tax? … There was none."
Mrs Baldock went on to say that there was conversation about the financing arrangements, in particular about the lack of security for the "vendor finance". In his evidence, Mr Boulter said:
"We sort of got our introductions out of the way and Mrs Baldock asked Mrs MacIntosh about - the whole reason for the meeting or their concern was about capital gains. So Mrs Baldock asked, straight away, were they up for capital gains ¾ after explaining to Mrs MacIntosh what was happening. They wanted to sell their truck and she asked would she be up for capital gains. Mrs MacIntosh turned to her right, where she had some books and a sort of a smallish desk, she referred to the book and she flicked through a few pages and she stopped and she read for about thirty seconds to a minute and she turned around to Tammy and said, 'No, you won't be up for capital gains. You've had the truck for more than thirteen months. You won't be up for capital gains tax'."
All three witnesses were quite firm in their recollection that it was at an early point in the meeting that Mrs Baldock asked the defendant, if they sold the truck, would capital gains tax be payable. All three witnesses were quite firm that the defendant consulted a book briefly and then said that as the truck had been owned for more than 12 months or more than 13 months, no capital gains tax would be payable if the sale proceeded.
According to the defendant, there was considerable discussion between her and the plaintiffs in the absence of Mr Boulter about the apportionment of the sale price between the truck and the licence in order to minimise the incidence of capital gains tax. She said that during that discussion she tried to establish "what value they intended to pay [Mr Baldock senior] for that licence" but she "didn't establish it clearly from them, but [she] did make a suggestion of what the value could be." The defendant said that she made it clear to the plaintiffs that there would be a liability to pay capital gains tax, but advised that it could be reduced to a small amount if the sale price was apportioned $100,000 for the truck and $80,000 for the licence. She said that the whole thrust of the discussion was the minimisation of capital gains tax. The defendant said that she told the plaintiffs that before she could advise them properly, she needed to look at their cash book, as the partnership's taxable income in the year of sale was relevant to the calculation of capital gains tax. The defendant said that she warned the plaintiffs that her suggested apportionment might have adverse taxation consequences for Mr Baldock senior and, accordingly, before proceeding further, the plaintiffs should check that with him, for he was not the defendant's client. With respect to the end of the meeting, the defendant said:
"The closing of the meeting with the Baldocks was left with three items yet to be decided. One, whether they would actually go ahead with this deal, having heard my warnings about the difficulties of taking an unsecured loan in these circumstances. Two, their cash books ¾ to look at what their current situation was including looking at any balancing charge there was, and, three, what the tax situation of their father was if eighty thousand was allocated to the cart licence. That was the way the Baldocks were going to have a very minimal tax situation, both operating tax ordinary income tax and capital gains tax. That was the question I was asked by them, that was the question I was answering and pointed out the information that was needed ¾ to arrive at some sort of answer there which could then be put in detail to them."
The plaintiffs denied that any of this occurred.
Upon careful consideration of the evidence, I have come to the conclusion that the plaintiffs have established that that it is more probable than not that their version of events is correct. That conclusion is reached for the following reasons not set out in order of significance.
(1)The defendant admitted in cross-examination that it was "somewhat difficult after this length of time" recollecting what had taken place at the meeting. She agreed that it was possible that the lapse of time between the meeting and giving evidence had made it difficult for her to recall precisely what was said at the meeting. The defendant said that she made a note for her insurer about a year after the meeting and after she became aware that a claim might be made against her. The note did not form part of the evidence and I do not know whether it still exists and, if it does, whether the defendant refreshed her memory from it before giving evidence.
(2)The plaintiffs and Mr Boulter were adamant that their recollection of events was correct and were unshaken in cross-examination.
(3)This meeting and the sale was a significant matter for the plaintiffs, but neither had any particular significance for the defendant until she became aware of the possibility of this claim being made. She said that she had hundreds of small clients like the plaintiffs.
(4)It is unlikely that Mr Boulter "indicated" to the defendant that the proposed sale would not attract liability for capital gains tax. Such evidence is inconsistent with Mr Boulter's evidence that it was his practice never to give any tax advice as he was not qualified to do so. He said that he always suggested in cases like this one that qualified expert taxation advice be obtained. The undisputed fact is that such advice was sought by the plaintiffs upon Mr Boulter's suggestion. It hardly seems likely that having suggested that taxation advice be obtained from an expert, Mr Boulter would give the expert the benefit of his opinion on the liability to pay capital gains tax at a meeting called essentially for the purpose of obtaining advice from the defendant about that very matter. Further, it seems inherently unlikely that the defendant would not immediately query Mr Boulter's opinion as soon as it was given if she thought, as she said she did, that it was wrong.
(5)The defendant's evidence that she asked Mr Boulter to leave the meeting as there were matters to discuss that did not concern him, does not stand up to scrutiny. On the defendant's evidence, the whole of the transaction had been disclosed before she asked Mr Boulter to leave and the only matter that she said was discussed after he had left was the very matter about which the defendant said Mr Boulter had expressed an erroneous opinion. Further, the history of dealings between Mr Boulter and the Baldock family were such that it is unlikely that there would be any need to keep any part of the discussion between the plaintiffs and the defendant about the proposed sale confidential from him, especially as he was their means of transport from the office on that afternoon.
(6)The actions of the plaintiffs after leaving the defendant's office are inconsistent with the defendant's account and consistent with their account and that given by Mr Boulter. They decided to sell, which, given the finding that has been made, they would not have done had they been uncertain about the incidence of capital gains tax. Mrs Baldock instructed her solicitors to draw up the agreement for sale which was tendered in evidence. It was made between the plaintiffs and Mr Gillespie. It concerned only the truck. It provided for a purchase price of $150,000. A condition of the contract was "the completion of a contract dated the same date and made between [Mr Baldock senior] … for the purchase of Cart licence 011508 and 0140-0". Upon this contractual arrangement, the capital gains tax was assessed. No agreement between Mr Baldock senior and Mr Gillespie was tendered in evidence and the only reference to what appears to be two cart licences, is in the exhibit contract to which I have just referred. Mrs Baldock said that the agreement was completed at the end of January 1990. There was no evidence to the contrary. It would have been contrary to the interests of the plaintiffs to have so instructed the solicitors if they had been given the advice that the defendant said she gave them.
(7)As I have set out, the defendant said in her evidence that she was unable to establish from the plaintiffs what value they intended to pay Mr Baldock senior for the licence. I cannot accept that evidence, as there was never any doubt in the mind of the plaintiffs that of the total proceeds of sale, Mr Baldock senior was to receive $30,000.
(8)As I have also set out, the defendant said that she needed to explore the proposal further as "perhaps the assets were acquired prior to the cut off date of 19 September 1985" and she needed to find out if that was the case. However, in another part of her evidence, the defendant admitted that she then knew, from information already in her possession, that the truck had been acquired in November, 13 months before the meeting.
With respect to the issue of damages, it was agreed:
Damages
· that the capital gains tax assessment of $28,569 was correct;
· that the plaintiffs have paid $15,521.46 to 23 April 1999, interest on a loan taken out to pay the tax;
· that interest is accruing at the rate of $5.41 per day from 24 April 1999 until the date of judgment;
· that the interest has been and is being, paid at a reasonable commercial rate.
The plaintiffs are entitled to recover those sums. The assessment of damages in contract and tort has been stated succinctly by the joint judgment in Gates v City Mutual Life Assurance Society Ltd (1986) 160 CLR 1 at 11 - 12:
"Two established measures of damages, those applicable in contract and tort respectively, compete for acceptance. In contract, damages are awarded with the object of placing the plaintiff in the position in which he would have been had the contract been performed ¾ he is entitled to damages for loss of bargain (expectation loss) and damage suffered, including expenditure incurred, in reliance on the contract (reliance loss). In tort, on the other hand, damages are awarded with the object of placing the plaintiff in the position in which he would have been had the tort not been committed (similar to reliance loss."
Insofar as the claim is based in tort, the evidence does not support a submission made on behalf of the defendant that the plaintiffs are better off financially, notwithstanding them acting on erroneous advice with respect to the payment of capital gains tax. The evidence of the earnings of the partnership during the period it operated the truck, together with the evidence of Mr Gillespie, show that the partnership was a profitable business. Working as an employed driver, an occupation that Mr Baldock pursued before he went into partnership with his wife and to which he returned after the truck was sold, produced less income than did the partnership business.
The plaintiffs made a claim for further relief. This claim was based upon the proposition that a judgment in favour of the plaintiffs may itself attract liability to pay capital gains tax.
The issue was not fully argued. Liability for capital gains tax depends upon there being a disposal of an asset after 20 September 1985. See Income Tax Assessment Act 1936 (Cth), s160L. The Act, s160M, sets out what constitutes a disposal of an asset. Unassisted by full argument, I am unable to see how the award of damages in this case can constitute a disposal of an asset within the meaning of that section. Counsel referred me to Tuit vExelby (1992) 93 ATC 4,293, but the circumstances of that case appear to me to have no application to the circumstances of this case. I agree with Shepherdson J in that case that the terms of s160M(7) are very wide (4,300), but prima facie, it does not seem to me that a judgment in this case falls within the provision of that subsection. The plaintiffs' entitlement to receipt of a judgment sum in this case arises, not by reason of the sale of truck ("the act"), but by reason of the advice given by the defendant, see s160M(7)(b). Further, the judgment sum in this case has no affect on the value of any asset of the partnership.
Similarly, it seems to me that there is no parallel between this case and Provan v H C L Real Estate Ltd (1992) 92 ATC 4,644 to which I was also referred by counsel for the plaintiff. In that case, the damages recovered directly related to the value of an asset which was disposed of and which attracted capital gains tax. The same can be said for Rabelais Pty Ltd v Cameron (1995) 95 ATC 4,552. This was a case in which damages were recovered for losses arising by reason of the failure to complete a contract for the sale of land.
However, as the matter was not fully argued by counsel, I should not proceed to final judgment without giving counsel an opportunity to make further submissions.
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