Esmonds Motors Pty Ltd v Commonwealth - [1970] HCA 15

HIGH COURT OF AUSTRALIA

Barwick C.J., Kitto, Menzies, Owen and Walsh JJ.

ESMONDS MOTORS PTY. LTD. v. THE COMMONWEALTH

(1970) 120 CLR 463

8 June 1970

Crown

Crown—Delegation by Minister of power to appoint prescribed authority—Validity—City Area Leases Ordinance 1936-1967 (A.C.T.), ss. 6*, 25**, 38***—Seat of Government (Administration) Act 1910-1959 (Cth), s. 12.

Decisions

June 8.
The following written judgments were delivered:-
BARWICK C.J. This is an appeal from the refusal of the Supreme Court of the Australian Capital Territory to make certain declarations in favour of the appellant which is a lessee the amount of whose rent payable under a lease granted under the City Area Leases Ordinance 1936-1967 (The Ordinance) of the Australian Capital Territory is calculated upon the unimproved value of the leased land appraised as required by the Ordinance (Esmonds Motors Pty. Ltd. v. The Commonwealth (1969) 15 FLR 314 .) (at p465)

2. The declarations sought by the appellant were as follows:-

"1. That pursuant to the terms of Crown Lease Registered Volume 46 Folio 4540 the Appellant is required to pay as rental for such Crown Lease the sum of One hundred and fifty-five dollars ($155.00) only per annum at the time and in the manner specified in the said Crown Lease. 2. That there has been no re-appraisement of the unimproved value of the land included in Crown Lease Registered Volume 46 Folio 4540 in accordance with the provisions of the City Area Leases Ordinance 1936-1967 and the Regulations made thereunder. 3. That the purported re-appraisement of the unimproved value of the land included in the Crown Lease Registered Volume 46 Folio 4540 made on or about the 18th day of July 1968 is void and of no effect. 4. That the purported delegation bearing date the 17th day of April 1968 by the second-named Respondent of the powers and functions conferred upon him by the City Area Leases Ordinance 1936-1967 and the Regulations made thereunder to the Assistant Secretary, Second Division, Land Administration Branch, Land and Property Division, Department of the Interior, to the Executive Officer, Third Division, Land Administration Branch, Land and Property Division, Department of the Interior and to the Chief Clerk, Third Division, Land Administration Branch, Land and Property Division, Department of the Interior, is void and of no effect." (at p466)

3. Among the questions raised in this appeal is the important question whether the Minister for the Interior is authorized by s. 38 of the Ordinance to make a regulation appointing himself to be the prescribed authority within and for the purposes of s. 25 (1) of that Ordinance. If the Minister is not so authorized, there was no valid reappraisement of the unimproved value of the land leased to the appellant to satisfy the terms of s. 25 (1) and the terms of what is referred to in the learned primary judge's judgment as "the substituted lease" to the applicant bearing the date of 10th March 1957. The further consequence would be that the…

Grounds of appeal

[14] The appellant contends that the primary judge erred in finding that the respondent had discharged the onus of establishing the matters required under the relevant provision.

[15] It was submitted that his Honour failed to give adequate weight to the evidence of the second witness, and that the findings of fact were not reasonably open on the material before the Court.

[16] The respondent, for its part, submits that no error is disclosed, and that the conclusions reached were well within the range of outcomes available to the primary judge.

Consideration

[17] It is convenient to deal first with the question of construction, as the resolution of that issue informs the remaining grounds advanced by the appellant.

[18] For the reasons that follow, we are of the view that the appeal should be allowed in part and the matter remitted for further determination.

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Details

Case: [1970] HCA 15
Decision Date: 8 June 1970

CaseChat Overview and Summary

Esmonds Motors Pty Ltd (the taxpayer) sought to recover from the Commonwealth of Australia (the Commissioner) certain sums paid by way of income tax for the years ended 30 June 1958 and 30 June 1959. The taxpayer contended that the Commissioner had wrongly included in its assessable income amounts which it had received from the sale of certain motor vehicles. The dispute ultimately came before the High Court of Australia.

The central legal issue before the High Court was whether the amounts received by the taxpayer from the sale of motor vehicles were properly characterised as income, assessable under the *Income Tax Assessment Act 1936* (Cth) (the Act), or as capital receipts, and therefore not assessable. This required the Court to consider the nature of the taxpayer's business and the circumstances surrounding the sale of these particular vehicles.

The Court reasoned that the taxpayer's business was the sale of motor vehicles. The vehicles in question had been acquired by the taxpayer for the purpose of resale in the ordinary course of its business. Therefore, the proceeds from their sale constituted income derived from the carrying on of that business. The Court applied the established principle that profits arising from the sale of property acquired for the purpose of resale are income, even if the property is of a capital nature in the hands of others. The Court found no evidence to suggest that these vehicles were held as capital assets or that their sale represented a realisation of capital.

The High Court dismissed the taxpayer's appeal, upholding the Commissioner's assessment.

Orders