Hooker Rex Pty Ltd v THe Commissioner of Taxation

Re: HOOKER REX PTY LIMITED
And: THE COMMISSIONER OF TAXATION
No. G274 of 1987
Income Tax

COURT

IN THE FEDERAL COURT OF AUSTRALIA

NEW SOUTH WALES DISTRICT REGISTRY
GENERAL DIVISION
Sweeney(1), Neaves(2) and Gummow(1) JJ.

CATCHWORDS

Income Tax - Income Tax Assessment Act 1936 - whether payments by taxpayer in respect of certain guarantees or indemnities were losses or outgoings within the meaning of sub-s.51(1)- if so, whether sums were incurred in the year of income claimed by the taxpayer.

Income Tax Assessment Act 1936 ss.31, 36, 51, 185, 187, 190 (b), 204, 207, 208, 215.

F.J. Bloemen Pty. Ltd. v Federal Commissioner of Taxation (1981) 147 CLR 360 referred to.

Federal Commissioner of Taxation v Total Holdings (Australia) Pty. Ltd. (1979) 43 FLR 217 referred to.

St. Hubert's Island Pty. Ltd. v Federal Commissioner of Taxation 76 ATC 4080 referred to.

Federal Commissioner of Taxation v St. Hubert's Island Pty. Ltd. (In Liquidation) (1978) 138 CLR 210 followed.

Federal Commissioner of Taxation v James Flood Pty. Ltd. (1953) 88 CLR 492 referred to.

Deputy Commissioner of Taxation (S.A.) v Executor Trustee & Agency Co. of S.A. Ltd. (1938) 63 CLR 108 referred to.

Federal Commissioner of Taxation v Australian Guarantee Corporation Ltd. (1984) 54 ALR 209 referred to.

Clyne v Deputy Commissioner of Taxation (1981) 150 CLR 1 referred to.

Clyne v Deputy Commissioner of Taxation (1982) 56 ALJR 857 considered.

New Zealand Flax Investments Ltd. v Federal Commissioner of Taxation (1938) 61 CLR 179 followed.

Nilsen Development Laboratories Pty. Ltd. v Federal Commissioner of Taxation (1981) 144 CLR 616 referred to.

Magna Alloys & Research Pty. Ltd. v Federal Commissioner of Taxation (1980) 49 FLR 183 considered.

Hallstroms Pty. Ltd. v Federal Commissioner of Taxation (1946) 72 CLR 634 referred to.

The Commissioner of Taxation v South Australian Battery Makers Pty. Ltd. (1978) 140 CLR 645 referred to.

Federal Commissioner of Taxation v Foxwood (Tolga) Pty. Ltd. (1981) 147 CLR 278 referred to.

Walker v Federal Commissioner of Taxation (1983) 83 ATC 4,168 referred to.

Stow Bardolph Gravel Co. Ltd. v Poole (1954) 35 TC 459 considered.

Ure v Federal Commissioner of Taxation (1981) 50 FLR 219 referred to.

Curran v Federal Commissioner of Taxation (1974) 131 CLR 409 considered.

HEARING

SYDNEY

#DATE 23:5:1988

Counsel for the Appellant: Mr A.M. Gleeson QC and Mr D.H. Bloom

Solicitors for the Appellant: Clayton Utz

Counsel for the Respondent: Mr D.G. Hill QC and Mr T. Bathurst

Solicitor for the Respondent: Australian Government Solicitor

ORDER

The appeal be allowed.

The assessment of the taxpayer to income tax for the year ended 30 June 1978 be remitted to the respondent for amendment conformably with the reasons for judgment of this Court.

The respondent pay the taxpayer's costs of the proceedings in the Supreme Court of New South Wales, and three quarters of the taxpayer's costs of the appeal to this Court.

NOTE: Settlement and entry of orders is dealt with in Order 36 of the Federal Court Rules.

JUDGE1

This is an appeal by Hooker Rex Pty. Ltd. ("the taxpayer") against a decision of the Supreme Court of New South Wales given in June 1987 upon an appeal to that Court pursuant to s. 187 of the Income Tax Assessment Act 1936 ("the Act"). The taxpayer had appealed against the assessment by the respondent ("the Commissioner") of the taxpayer to income tax in respect of income derived during the year ended 30 June 1978.

There were two principal issues before the Supreme Court. The first was whether the losses or outgoings incurred by the taxpayer in respect of certain instruments described as guarantees or indemnities, which had been executed by the taxpayer in the course of the year of income ended 30 June 1973, were losses or outgoings within the meaning of sub-s. 51 (1) of the Act. The second was whether any such losses or outgoings were incurred in the year of income ended 30 June 1978, as the taxpayer contended, or in the year of income ended 30 June 1973, as the Commissioner contended at the hearing. In the Supreme Court, the first issue was resolved in favour of the Commissioner. The second issue was resolved in favour of the taxpayer. In the result, the taxpayer's appeal to the Supreme court was dismissed.
Upon the appeal to this Court by the taxpayer, the Commissioner gave a Notice of Contention in respect of the issue found adversely to him in the Supreme Court. Accordingly, on the hearing of the appeal to this Court, each party contended for a favourable answer on each of the issues that had been before the Supreme Court.
The taxpayer was at all material times a wholly owned subsidiary of Hooker Corporation Ltd. The taxpayer was itself the holding company of a number of subsidiaries. These had included, since June 1965, Capricorn Freezers Pty. Ltd., later named Hooker-Rex Marketing and Sales Pty. Ltd. ("Marketing & Sales").
The taxpayer was incorporated in 1954 and thereafter carried on a business principally of land development. It did so in conjunction with subsidiaries including Marketing & Sales. Together these companies conducted what was described in the evidence as the Land Development Division of Hooker Corporation Ltd. These activities involved the acquisition and development of land for sale primarily for residential purposes and occasionally for industrial or commercial purposes; land development services were also provided to other companies.
The preferred method of acquisition of land by the taxpayer and its subsidiaries was by purchase directly from vendors holding title to the land in question. On occasion, shares were purchased in companies holding title to land; this was done with the objective of enabling the purchaser of the shares to acquire the land held by these companies. Transactions in this form were only entered into when insisted upon by the vendors. The taxpayer and the subsidiaries preferred direct acquisition of title to land as being cheaper and less complicated than the acquisition of shares in land holding companies. Neither the taxpayer nor the subsidiaries engaged in the business of acquisition of shares for the purpose of trading in shares.
The decision as to whether the taxpayer or a subsidiary, and if so which subsidiary, would acquire a particular parcel of land was made having regard to the availability of past year losses for income tax purposes as between these companies. We were informed by Senior Counsel for the taxpayer that the business of the Land Development Division was conducted with a number of subsidiaries, with an eye, at least initially, to the operation of the payroll tax legislation.
In the Commissioner of Taxation v St. Hubert's Island Pty. Ltd. (In Liquidation) (1978) 138 CLR 210, the High Court finally settled a controversy as to whether, and if so, in what circumstances, land was capable of being "trading stock" for the purposes of s.36 of the Act. Judgment in those proceedings was delivered on 18 April 1978. The proceedings arose out of an assessment by the Commissioner the notice of which was issued on 31 October 1972. This dispute concerned certain transactions in which the present taxpayer and a subsidiary, Hooker Town Developments Pty. Ltd., had participated. The High Court decision was by a majority, the minority, Stephen J and Aickin J, dissenting as to the conclusion that the land in question was in the circumstances of the case trading stock. The appeal to the High Court was from a decision of the Supreme Court of New South Wales, delivered on 6 May 1976, which had been in favour of the taxpayer: (1976) 76 ATC 4080.
The Facts
The events which have led to the present appeal to this Court commenced on 31 August 1971 with the entry by the taxpayer into an agreement for the acquisition of shares in Bowden & Schadel (Holdings) Pty. Ltd. ("Bowden & Schadel"). This company owned the shares in four subsidiary companies ("the Bowden & Schadel subsidiaries") named Northumberland Industries Pty. Ltd., B.S. Nereida Pty. Ltd., Hunter District Industries Pty. Ltd. and Laidley Pty. Ltd. The Bowden & Schadel subsidiaries held parcels of land in the Newcastle area of New South Wales.
The minutes of a meeting of the directors of the taxpayer held on 23 July 1971 contained the following:

"OFFER FROM . . . BOWDEN & SCHADEL The Chairman advised that the HOLDINGS PTY. shareholders of Bowden & Schadel LIMITED: (Holdings) Pty. Ltd. had offered to sell to the company the whole of the issued capital for $786,000. It was noted the purchase of these shares would give control of the undermentioned companies being subsidiaries of Bowden & Schadel (Holdings) Pty. Ltd. - Hunter District Industries Pty. Limited, Laidley Pty. Limited, Northumberland Industries Pty. Limited, B.S. Nereida Pty. Limited. The Chairman recommended that the offer be accepted for the purpose of Hooker-Rex Pty. Ltd. acquiring immediate possession of the lands held by the subsidiary companies and it was RESOLVED that the offer be accepted for this purpose. It was further RESOLVED that immediately upon the acquisition of the shares in Bowden & Schadel

(Holdings) Pty. Ltd. the company be liquidated and that the assets be distributed in specie to Hooker-Rex Pty. Ltd. It was further RESOLVED that immediately the abovementioned distribution in specie had taken place that (sic) the subsidiary companies would then be liquidated immediately and a distribution in specie of the land be made to Hooker-Rex Pty. Ltd.

All lands so acquired will be developed by Hooker-Rex Pty. Ltd. subdivided and sold at a profit over and above the cost of acquisition of the shares and development costs of the subdivision."

On 22 May 1972 Bowden & Schadel and each of the Bowden & Schadel subsidiaries were placed in voluntary liquidation. A member of the firm of D.M. Dixon & Co., chartered accountants, was appointed Liquidator. A member of that firm was also Liquidator of St. Hubert's Island Pty. Ltd., the taxpayer which was to become a party to the High Court litigation. That company had been placed in voluntary liquidation on 17 March 1971. As we have said, the notice of assessment in question in that litigation was to issue on 31 October 1972.
On 31 July 1972, Messrs. D.M. Dixon & Co. wrote to the Deputy Commissioner of Taxation a letter which included the following:

"Mr A.J. Jones of this office who was appointed Liquidator of the all the Companies desires to make an in specie distribution of the asset (namely land) of the Companies to its Holding Company Bowden & Schadel (Holdings) Pty. Limited and then a further in specie distribution to Hooker-Rex Pty. Limited.

As Hooker-Rex desire to sell the land for home building as soon as possible, the Liquidator requests leave of the Commissioner in accordance with section 215 of the Income Tax Assessment Act to transfer the land and ask that the consent to transfer be treated as urgent. We understand that Hooker-Rex Pty. Limited will if required lodge an undertaking to pay any tax which may become payable . . ."

Section 215 of the Act forbade the Liquidator to part with any of the assets of the companies without the leave of the Commissioner; if he failed to comply with the section, he would commit an offence and be personally liable to unpaid tax, to the extent of the value of the assets of which he took possession and which were available at any time for the payment of tax.
The Deputy Commissioner replied on 28 August 1972 stating that his office had no objection to an in specie distribution of land of the Bowden & Schadel subsidiaries to Bowden & Schadel provided that:

"(a) Hooker Rex Pty. Ltd. and the Liquidator undertake jointly and severally to pay to the Deputy Commissioner of Taxation any amount which would then be or would thereafter become payable by the companies being wound up, under any Act administered by the Commissioner of Taxation.

(b) You notify this office immediately when the transfer of land from the subsidiaries to the holding company has been effected."

On the same day, 28 August 1972, the taxpayer executed under common seal a document addressed to the Deputy Commissioner which has been described in argument as a guarantee or an indemnity. This document was one source of the losses or outgoings in respect of which the taxpayer sought and the Commissioner denied deduction under s.51 of the Act. The other source of losses or outgoings in question was an instrument dated 16 October 1972 in respect of Shangri-la Pastoral Company (Bathurst) Pty. Ltd. ("Shangri-la"). The shares in that company had been acquired by Marketing & Sales on 29 March 1972. We will deal later with that transaction.
The instrument dated 28 August 1972 was addressed to the Deputy Commissioner by the taxpayer in the following terms:

We, the Shareholder (sic) of Bowden & Schadel (Holdings) Pty. Ltd. Laidley Pty. Limited B.S. Nereida Pty. Limited Northumberland Industries Pty. Ltd. Hunter District Industries Pty. Ltd. (in voluntary liquidation) hereby undertake to pay to you income tax to which the companies may become lawfully liable in the course of their winding-up to the extent to which the Liquidator personally and/or the companies in liquidation fails (sic) to so do. This undertaking will not prejudice any reasonable request for extension of time for payment or right of appeal. This undertaking is being furnished to enable you to approve of the Liquidator transferring the assets of the company to the shareholders.

This instrument was in similar terms to those of an instrument already accepted by the Commissioner in relation to the distribution in liquidation of the assets of St. Hubert's Island Pty. Ltd.

The taxpayer also gave to the Liquidator an indemnity against all claims and payments for which he might, in the course of the winding-up of the companies, render himself legally liable. On 1 September 1972, the Commissioner wrote to Mr. Jones formally advising him as the Liquidator of Bowden & Schadel that he had no objection to the proposed in specie distribution of land from Bowden & Schadel to the taxpayer.
Distribution of the land to Bowden & Schadel took place on 30 August 1972 and thereafter the land was transferred to the taxpayer.
On 15 March 1973, the Commissioner issued assessments in respect of the four Bowden & Schadel subsidiaries for the year ended 30 August 1972. Each assessment was made on the footing that the distributions of land in specie constituted dispositions, otherwise than in the ordinary course of business, of trading stock which was the whole or part of the assets of the businesses carried on by the taxpayers. On 30 April 1973, the Liquidator, on behalf of each of the Bowden & Schadel subsidiaries, lodged Notices of Objection under s. 185 of the Act. In particular, the Liquidator took the point that the distribution of land in specie had not amounted to a disposition of trading stock by the subsidiaries.
Final notices issued on 14 June 1973. On 20 June 1973, that is to say shortly before the end of the current year of income, the Liquidator wrote to the Deputy Commissioner referring, inter alia, to the possession of the undertaking dated 28 August 1972 from Hooker-Rex Pty. Ltd. to the Deputy Commissioner in respect of any tax assessed against the Bowden & Schadel subsidiaries in the course of their winding-up. The Liquidator requested that each of the companies be granted an extension in time for payment of the assessment pending the Commissioner's determination in respect of the relevant objections. The Commissioner replied on 24 July 1973 and after further correspondence in which the objections were disallowed, the solicitors for the Liquidator on 6 September 1973 requested the Deputy Commissioner to refer the objections to the Supreme Court of New South Wales under s. 187 of the Act. On 15 October 1973, the Deputy Commissioner sought the consent of the Liquidator to these requests being left in abeyance pending the decision of the Supreme Court of New South Wales in the matter of St. Hubert's Island Pty. Ltd.
On 18 October 1973, the Liquidator wrote to the Deputy Commissioner advising that he had no objection to this course. On 30 October 1973, the Commissioner wrote to the Liquidator stating that the appeals to the Supreme Court of New South Wales "have been deferred pending a decision by that Court on a similar matter". The Deputy Commissioner also said that the outstanding tax on assessments for the period ended 30 August 1972 for the taxpayers concerned "may remain in abeyance pending this decision, subject to additional tax for late payment at the rate of 10% per annum as provided by section 207 of the Income Tax Assessment Act on the amounts finally found to be payable".
There the matter rested until 1978. On 18 April 1978 the High Court delivered judgment in The Commissioner of Taxation v St. Hubert's Island Pty. Ltd. (In Liquidation) (1978) 138 CLR 210. On 19 May, the Deputy Commissioner wrote to the Liquidator referring to the letter of 30 October 1973, to the delivery of judgment by the High Court and stating that, in view of the present law as confirmed by the decision of the Full High Court, payment of outstanding tax could no longer be deferred. Correspondence ensued concerning payment under the undertaking in respect of the Bowden & Schadel subsidiaries, with particular reference to the amount that should be paid in respect of additional tax under s. 207 of the Act. On 25 October 1978, the Liquidator paid the outstanding amount in respect of income tax. On 20 February 1979 he paid an agreed sum of $115,259 in satisfaction of the liability in respect of additional tax. The appeals to the Supreme Court were then discontinued and the Deputy Commissioner wrote to the taxpayer releasing it from "the undertakings" given by it in 1972 in respect of the Bowden & Schadel transaction and the Shangri-la transaction.
We turn now to consider the earlier events in the Shangri-la transaction.
Shangri-la held land at Eleebana in New South Wales. On 29 March 1972, the shares in this company were acquired by Marketing & Sales which, as has been pointed out, was a wholly owned subsidiary of the taxpayer. The evidence given for the taxpayer was that Marketing & Sales was selected by the taxpayer as purchaser because of the availability for income tax purposes of its past year losses. On or about 18 July 1972, the shareholders of Shangri-la placed the company in voluntary liquidation and authorised Mr Jones, the Liquidator, to carry into effect an in specie distribution of the assets of Shangri-la to Marketing & Sales. As a condition of granting approval to that distribution, the Deputy Commissioner required an undertaking from the taxpayer. This was furnished by instrument executed under common seal of the taxpayer on 16 October 1972 and addressed to the Deputy Commissioner. It provided as follows:

"Hooker-Rex Pty. Limited hereby undertakes to pay to you income tax to which the above company may become lawfully liable in the course of its winding-up to the extent to which the Liquidator personally and/or the Company in liquidation fails to do so. This undertaking will not prejudice any reasonable request for extension of time for payment or right of appeal. This undertaking is being furnished to enable you to approve of the Liquidator transferring the assets of the Company to the shareholders."

The Deputy Commissioner then confirmed to the Liquidator that there was no objection to the proposed distribution in specie of the assets of Shangri-la. This took place on 25 October 1972. On 17 May 1973, the Commissioner issued an assessment against Shangri-la and the income tax in question was due and payable on 20 June 1973. On 29 June 1973 a Notice of Objection was given by the Liquidator. Again it was contended that the transfer of the land in question had not amounted to a disposition of Shangri-la's trading stock within the meaning of s. 36 of the Act. The objection was disallowed on 4 June 1974 and a request was then made for the objection to be forwarded to the Supreme Court of New South Wales. On 13 August 1974, the Liquidator requested an extension of time for payment of the assessment pending the determination of the Supreme Court in the matter.

Shortly before 1 October 1974, the Deputy Commissioner sought consent of the Liquidator to the appeal to the Supreme Court being deferred pending the decision in the matter of St. Hubert's Island Pty. Ltd. An arrangement was made of the same character as that reached earlier in the year concerning the Bowden & Schadel subsidiaries.
Again, the matter then rested until 1978. On 18 May, the Commissioner wrote, in respect of Shangri-la, a letter to the Liquidator in terms corresponding to those of the letters of 19 May 1978 concerning the Bowden & Schadel subsidiaries. The same course was then followed with respect to payments on the Shangri-la assessment as with the assessments of the Bowden & Schadel subsidiaries. We have already dealt with this.
The obligations of the taxpayer under the guarantees or indemnities were recorded in its financial statements for the years ended 30 June 1973 to 30 June 1977 inclusive, by way of note, as a contingent liability. In its return for the year ended 30 June 1978, the taxpayer claimed as a deduction the amount of $641,337 (being $423,637 on account of income tax and $217,700 on account of estimated additional tax). This amount was included in the Profit and Loss Account under the heading "Extraordinary Items". The "net of tax" amount of the liability, $346,322 (i.e. $641,337 less income tax attributable $295,015) was charged in the Profit and Loss Account as "Payment Under Guarantee". When the additional tax was remitted to $115,259, the sum of $102,441 was brought back to the credit of the taxpayer's Profit and Loss Account for year ended 30 June 1979. In May 1979, the taxpayer filed an amendment to its income tax return for year ended 30 June 1978. The amount claimed as a deduction was reduced to $538,896 being income tax of $423,637 and additional tax of $115,259.
The deduction so claimed by the taxpayer was disallowed by the Commissioner and it was this which led to the proceedings in the Supreme Court of New South Wales and so to this appeal.
The year of income in which the losses or outgoings were incurred
At the hearing in September 1986, the Commissioner contended for the year ended 30 June 1973; in particulars supplied in September 1984, he had specified the year of payment, that is to say the year ended 30 June 1979. The taxpayer successfully contended in the Supreme Court for the year ended 30 June 1978.
Expert evidence as to accounting practice was given by two highly qualified chartered accountants of considerable experience. The learned primary judge said the following as to the effect of that evidence:

"Uncontradicted expert evidence was given by accountants called by the appellant (the taxpayer) that it was in accord with proper accountancy practice for the liability or outoing (sic) to be included in the 1978 tax year because that was the year when the reasonable probability of its existence became apparent. . . . Mr Lynn stated that from an accountancy point of view, 1978 was the year in which the liability "accrued". In saying this, he noted the difference between "incurred" and "accrued". His and other uncontradicted expert evidence was to the effect that from an accounting point of view, the amounts in question would not have been correctly accrued, in the case of the appellant in the year in which the assessments were first raised against the "acquired" land owning companies and the guarantees given, 1973, nor in 1979, the year in which the payments were made. There would obviously be very great practical difficulties in showing the amounts as actual liabilities or debts in 1973. It would create problems with dividends and conflict with many proper and desirable company and accountancy principles."

In response, both in the Supreme Court and before this Court, the Commissioner stressed that accountancy evidence was no substitute for a correct interpretation of the expression "incurred" where it occurs in sub-s. 51 (1) of the Act. It may readily be conceded that commercial and accountancy practice cannot be substituted for the test laid down by sub-s. 51 (1): Federal Commissioner of Taxation v James Flood Pty. Ltd. (1953) 88 CLR 492 at 506-507. Nevertheless, the tendency of judicial decision has been to place increasing reliance upon the concepts of business and the principles and practices of commercial accountancy, not only in the ascertainment of income, but also in the ascertainment of expenditure: Deputy Commissioner of Taxation (S.A.) v Executor Trustee & Agency Co. of S.A. Ltd. (1938) 63 CLR 108 at 153, Federal Commissioner of Taxation v Australian Guarantee Corporation Ltd. (1984) 54 ALR 209. In the latter case (at 220) Toohey J (with the concurrence of Beaumont J) said:

"Taxpayers are required, by the terms of the Act, to make returns on an annual basis. This Court should be slow to disallow a method of calculating the amount of an outgoing if what is claimed is fairly referrable to the year in question. In my view, the amount claimed by the taxpayer as interest on deferred interest debentures for the year ended 30 September 1978 was an outgoing incurred by the taxpayer in the relevant year. It was calculated in accordance with sound accounting practice designed to give a true picture of the taxpayer's financial operations, and it was an approach not precluded by the language of the Act."

In addition to this evidence, the taxpayer emphasises a number of other matters in support of its contention that the relevant tax year was 1978 not 1973. It points out, undoubtedly correctly, that the issue is not simply whether at the end of the 1973 tax year there was, within the meaning of ss. 204 and 208 of the Act, a debt due and payable to the Commissioner by each of the four Bowden & Schadel subsidiaries and by Shangri-la, which one may call the primary taxpayers. Rather, the central issue concerns the situation of the taxpayer under the guarantees or indemnities; the undertakings to the Commissioner were to pay the income tax to which the primary taxpayers "may lawfully become liable in the course of their winding-up to the extent to which" the Liquidator personally and/or the primary taxpayers failed to do so. Further, this undertaking was stated "not to prejudice any reasonable request for extension of time for payment or right of appeal". In our view, the requests and rights of appeal so protected included requests for extension of time and rights of appeal by the the primary taxpayers.
In the case of Shangri-la, there was at 30 June 1973 outstanding before the Commissioner an objection lodged by the Liquidator to the assessment which had been issued on 17 May 1973. In the case of the four Bowden & Schadel subsidiaries, objections had been lodged on 30 April 1973 and Notice of Disallowance was given after the end of the 1973 tax year, that is to say, in August 1973. Further, at the end of the 1973 tax year, there was before the Commissioner a request, made by letter from the Liquidator dated 20 June 1973. The letter acknowledged receipt of the Final Notices dated 14 June 1973 in respect of the four subsidiaries, and directed attention to the existence of the undertaking dated 28 August 1972 from the taxpayer in respect of any tax assessed against the four subsidiaries in the course of their winding-up. The letter went on to request that the Liquidator, in respect of each company, be granted an extension of time for payment of the assessments pending determination of the relevant objections.
It is true that the income tax assessed against the primary taxpayers had become due and payable by force of ss. 204 and 208 of the Act and additional tax was accruing under s. 207: Clyne v Deputy Commissioner of Taxation (1981) 150 CLR 1 at 8-11, 16-17. Nevertheless, in evaluating the position at the end of the 1973 year of income, one also must bear in mind the observations of Mason A.C.J. in Clyne v Deputy Commissioner of Taxation (1982) 56 ALJR 857 at 858:

"I was informed that it is a somewhat unusual course for the Deputy Commissioner to commence proceedings for recovery in a court relying on a notice of assessment which is under challenge in proceedings under Pt V of the Assessment Act. It is to be hoped that this is so. The institution of proceedings for recovery on a notice of assessment which is challenged in proceedings under Pt V may operate oppressively and unfairly to a taxpayer. Fortunately, and this is conceded by Mr Priestley QC, for the Deputy Commissioner, the courts in which recovery is sought have a jurisdiction to stay or adjourn recovery proceedings when the notice of assessment is under challenge in Pt V proceedings, insisting, if it be appropriate, on the taxpayer giving suitable security or a suitable undertaking to meet the exigencies of the situation."

These observations, when read in the light of the terms of the undertakings by the taxpayer and the other circumstances we have described, give added force to the statement in the guarantees or indemnities that the undertaking therein by the taxpayer would not prejudice any reasonable request for extension of time for payment or right of appeal. The undertakings of the taxpayer contained in those instruments had to be read in the context, understood in this way, of the obligations of the primary taxpayers. The undertakings of the taxpayer were to pay income tax to which the primary taxpayers might become lawfully liable in the course of their winding-up "to the extent to which" the Liquidator of the companies failed to so do.
If the matter be looked at in that way, together with the accountancy evidence, it would not be correct, in our view, to say that the taxpayer had incurred the loss or outgoing in question in the year of income ended 1973.
It was said fifty years ago, and remains true, that it is unsafe to attempt exhaustive definitions of a term such as "incurred" in sub-s. 51 (1) of the Act: New Zealand Flax Investments Ltd. v Federal Commissioner of Taxation (1938) 61 CLR 179 at 207, per Dixon J. Certainly, a liability which is due in one year may be "incurred" in that year, although it is paid in a later year. But a loss or expenditure is not "incurred" in the necessary sense if it is no more than contingent, pending, threatened or expected, no matter how certain it is in the year of income that the loss or expenditure will occur in the future: Federal Commissioner of Taxation v James Flood Pty. Ltd. (1953) 88 CLR 492 at 507-508; Nilsen Development Laboratories Pty. Ltd. v Federal Commissioner of Taxation (1981) 144 CLR 616 at 623-624 (per Barwick C.J.), 632 (per Mason J). In the present case, it is in our view accurate to say that in 1973 the loss or expenditure of the taxpayer pursuant to the undertakings to the Commissioner was but threatened or contingent. It may even be speaking proleptically and impermissibly to say that in 1973 it was "certain" that the Commissioner would, in the future, be in a position to call on the undertakings by the taxpayer. The law as to the classification of land as trading stock was settled in 1978, but in 1973 this outcome was "certain" only in a particular sense of that term. Further, here one is concerned with the losses or outgoings of the taxpayer pursuant to the undertakings.
By the end of the 1978 tax year, the situation had changed considerably. In October 1973, pursuant to an initiative taken by him, the Commissioner had agreed with the Liquidator that, in respect of the four Bowden & Schadel subsidiaries, the outstanding tax might remain in abeyance pending the decision in the St. Hubert's Island case. When that litigation was resolved in April 1978, the Commissioner promptly wrote to the Liquidator making it plain that the payment of the tax could no longer be deferred and requiring payment without delay. On the appeal to this Court, the Commissioner submitted that the only relevance of the 1978 tax year was that it was in that period that the taxpayer "apparently formed the view that it could not win in its dispute" with the Commissioner. We do not agree that this accurately describes the situation. Rather, in April-May 1978, it became plain both that the arrangement between the Commissioner and the Liquidator for permitting the outstanding tax in respect of the four Bowden & Schadel subsidiaries to remain in abeyance, which had been in force since October 1973, was at an end, and that the Commissioner was now demanding payment forthwith. The relevant facts concerning Shangri-la in the 1978 tax year do not differ in substance.
What we have said thus far deals with the loss or outgoing of the taxpayer pursuant to the undertakings in respect of the income tax assessed against the four Bowden & Schadel companies and Shangri-la. A substantial element of the taxpayer's loss or outgoing reflected liability of the primary taxpayers for additional tax under s. 207 of the Act. The Commissioner submitted that additional tax accrues under that section per diem. In our view, the loss or outgoing of the taxpayer so far as it was in respect of the obligation of the primary taxpayers for additional tax should not, in the circumstances of this case, be treated, as to the year of income in which the loss or outgoing was incurred, differently from the component of the loss or outgoing which reflected liability of the primary taxpayers for income tax. We believe that the reasoning which leads to the conclusion that that portion of the taxpayer's loss or outgoing which reflected the liability of the primary taxpayers for income tax was not incurred in the 1973 tax year applies a fortiori to the component of the loss or outgoing representing additional tax. No doubt, the Commissioner may, pursuant to s.207 of the Act, sue to recover additional tax immediately after it has become due and payable. Nevertheless the Commissioner may, in the words of the section, "in any case, for reasons which he thinks sufficient, remit the additional tax or any part thereof". The terms of the undertakings must be read with this in mind.
On 19 May 1978, the Commissioner demanded payment of additional tax accruing in terms of s. 207 of the Act from the Bowden & Schadel subsidiaries and on the day before a demand to like effect had been made in respect of Shangri-la. As we have earlier mentioned, negotiations then took place in the 1979 year of income between the Deputy Commissioner and the taxpayer. In February 1979 an agreement was reached whereby the Commissioner accepted a lesser sum in full settlement of additional tax accruing under s. 207. In the result, as earlier indicated, the taxpayer in May 1979 filed an amendment to its income tax return for the 1978 year and reduced the amount claimed as a deduction in respect of the payment for additional tax, to reflect the reduced amount under the settlement.
In his written outline of submissions on the appeal, the Commissioner pointed to the circumstance that additional tax accrued after the end of the 1978 year and into the year of payment 1979. Nevertheless, it was still accurate, in our view, to treat the loss or outgoing of the taxpayer in respect of that portion of the primary liability made up of additional tax, as a loss or outgoing incurred in 1978.
In the result, the appeal by the Commissioner on this issue fails, and the taxpayer's submission that the loss or outgoing was incurred in the 1978 tax year is correct.
Were the losses or outgoings of a character qualifying them as allowable deductions?
We deal first with the deductibility of what the Commissioner in his written submissions described as the "Bowden & Schadel amounts". The Commissioner contended that the losses or outgoings of the taxpayer, flowing as they did from the guarantee or indemnity in respect of the tax liabilities of the Bowden & Schadel subsidiaries, were too remote from the income earning activity of the taxpayer and, in any event, were of a capital nature. The submission was that the undertaking was given by the taxpayer, not for the purchase of the land held by the four subsidiary companies, but for their liquidation and the subsequent transfer of their land in specie to their parent, Bowden & Schadel.
In truth, there was an extra step. The effect of the resolution of the directors of the taxpayer on 23 July 1971 was to provide for the liquidation of Bowden & Schadel itself and the distribution in specie to the taxpayer of the shares in the four subsidiaries; the subsidiaries would be placed in liquidation and the land of the subsidiaries would then be transferred in specie to the taxpayer for subdivision, development and sale by the taxpayer. As we have earlier explained in these reasons, approval of these steps was given to the Liquidator by the Deputy Commissioner; on or about 30 August 1972 the land held by each of the Bowden & Schadel subsidiaries was transferred to Bowden & Schadel, and thereafter from that company to the taxpayer. The provision of the undertaking by the taxpayer to the Deputy Commissioner on 28 August 1972, was sequential to the Liquidator having informed the Deputy Commissioner on 31 July of the proposals to make an in specie distribution of the land of the four subsidiaries to the holding company, Bowden & Schadel, and then a further in specie distribution to the taxpayer so that the taxpayer might sell the land for home building as soon as possible. We have previously described the significant impact of s. 215 of the Act upon these proposals. From the outset, it was plain that the implementation of the resolution of 23 July 1971 would require approval by the Commissioner under that provision.
In those circumstances, it is, in our opinion, plain that the undertaking was given to the Deputy Commissioner so that he would give his consent under s. 215 of the Act to the series of in specie distributions which would provide the taxpayer with the title to the land in question to be used by it in its trading activities. The advantage for which the losses or outgoings were incurred was the acquisition of trading stock by the taxpayer: cf. Magna Alloys & Research Pty. Ltd. v Federal Commissioner of Taxation (1980) 49 FLR 183 at 191. The legal title was acquired by the means provided by company law and the law of real property for the voluntary liquidation of companies and the transmission of legal title to land. However, s. 215 of the Act rendered illegal the in specie distributions without the leave of the Commissioner. The price paid for that leave in respect of the series of in specie distributions was the provision by the taxpayer of the guarantee or indemnity.

This, then, is not a case where the taxpayer invites the Court to ascertain the nature of the outgoing as on revenue account by having regard simply to what the outgoing was calculated to effect from a practical and business point of view, rather than also to the juristic classification of the legal rights, secured or employed in the process: Hallstroms Pty. Ltd. v Federal Commissioner of Taxation (1946) 72 CLR 634 at 648; The Commissioner of Taxation v South Australian Battery Makers Pty. Ltd. (1978) 140 CLR 645 at 658-660, 662, 668, 672-673; Federal Commissioner of Taxation v Foxwood (Tolga) Pty. Ltd. (1981) 147 CLR 278 at 285, 293. The character of the advantage sought to be obtained was not purely a practical business advantage but, more precisely, legally enforceable rights viz. title to the land. It was only on the receipt of the undertaking from the taxpayer that the Commissioner was prepared to grant, pursuant to the Act, the leave that was necessary to set in motion the series of steps under company law and real property law which produced the vesting of the title to the land in the taxpayer, for use in its trading activities.
We believe it is incorrect to characterize what happened, as the Commissioner contends, merely as the securing of a right to liquidate the Bowden & Schadel subsidiaries and procure a transfer of the land to Bowden & Schadel, so that the loss or outgoing was on capital account.
We should mention that sub-s. 51 (2) of the Act provides that expenditure incurred or deemed to have been incurred in the purchase of stock used by the taxpayer as trading stock shall be deemed not to have been an outgoing of capital or of a capital nature. Both parties in submissions treated this as declaratory of the effect of the other provisions of the Act and no more. The antecedents of the subsection are traced in Walker v Federal Commissioner of Taxation (1983) 83 ATC 4,168 at 4,199-4,200.
The Commissioner sought comfort from Stow Bardolph Gravel Co. Ltd. v Poole (1954) 35 TC 459. In that case, the taxpayer, which carried on business as dealers in sand and gravel, had purchased two unworked deposits and it was held by the English Court of Appeal that the taxpayer had acquired a capital asset, not stock in trade. Essentially this was because, in the words of Sir Raymond Evershed MR, at 471:

(T)he deposit . . . lay under the top soil, under part of a field like any other part of the surrounding country, was not the stock in trade of this business and could not become such until it had been excavated.

The taxpayer had acquired a capital asset from which it hoped, by the expenditure of further money and effort, to unearth and extract trading stock. In the present case, the advantage or benefit sought to be obtained - the object of the loss or outgoing - was the removal of a legal impediment to the acquisition by the taxpayer of an asset, viz. the land, to be acquired as stock in trade.

We turn now to consider the loss or outgoing in respect of the primary obligations of Shangri-la.
The guarantee or indemnity given by the taxpayer on 16 October 1972 in respect of income tax to which Shangri-la might become lawfully liable in the course of its winding-up was not given in respect of land distributed in specie to the taxpayer. The land was distributed in specie to Marketing & Sales, a wholly owned subsidiary of the taxpayer. In these circumstances, the taxpayer did not contend that the entry into the guarantee or indemnity was part of the cost to the taxpayer of any trading stock of the taxpayer.
The taxpayer submitted that the loss or outgoing was "necessarily incurred" in the course of the business of the taxpayer which in its submissions was described as including "operating subsidiaries". Reference was made to Federal Commissioner of Taxation v Total Holdings (Australia) Pty. Ltd. (1979) 43 FLR 217. In the circumstances of that case, the taxpayer was allowed a deduction in respect of interest paid on monies lent to it by its parent company, which monies had been applied by the taxpayer in making loans to a subsidiary of the taxpayer, free of interest. The Full Court of this Court approached the matter on the footing that the question whether interest is actually incurred in gaining or producing assessable income is one mainly of fact. It was held that the evidence did not permit the inference to be drawn that the main or dominant purpose of the taxpayer in making the interest free loans to its subsidiary was to increase the capital value of the subsidiary and enable a sale of the subsidiary for a capital profit. There is nothing in this case, in our view, which offers any immediate support for the taxpayer's submission.
The taxpayer further relied on evidence showing that the taxpayer had given a number of guarantees in the course of its business, so that liabilities incurred under guarantees given by the taxpayer should be regarded as necessarily incurred in its business and not as being of a capital nature. The evidence discloses that some of these guarantees were given in support of the development of land owned by subsidiaries of the taxpayer. Nevertheless, we believe it would be taking too great a step to conclude as a general proposition that any guarantees given by the taxpayer in respect of liabilities of any subsidiary should be regarded as necessarily incurred in its business. The question before us is one of characterizing the particular outgoing pursuant to the undertaking to the Commissioner in respect of the Shangri-la liquidation.
The evidence, given for the taxpayer, was that Marketing & Sales was "selected" as the purchaser of the shares in Shangri-la because Marketing & Sales had past year losses available "for income tax purposes". The nature of the advantage or benefit sought to be obtained from the giving of the guarantee or indemnity in respect of the liquidation of Shangri-la and the distribution in specie to Marketing & Sales was the acquisition by Marketing & Sales of trading stock, by the removal of the impediment otherwise presented by s. 215 of the Act to the distribution by the Liquidator of Shangri-la to Marketing & Sales. The giving of the guarantee thus was a step in a process which led to an increase in the asset backing of, and, other things being equal, the value of, the shares held by the taxpayer in Shangri-la. Accordingly, the outgoing was on capital account. Similarly, the loan by the taxpayer to the subsidiary in Federal Commissioner of Taxation v Total Holdings (Australia) Pty. Ltd. (1979) 43 FLR 217, was presumably of a capital nature: see Parsons, "Income Taxation in Australia" s6-245.
We also accept the submission by the Commissioner that the taxpayer's loss or outgoing in respect of the undertaking given to permit the in specie distribution from Shangri-la to Marketing & Sales was not incurred in gaining or producing the taxpayer's assessable income or necessarily incurred in carrying on a business within the second limb of sub-s. 51 (1) of the Act. We accept that the loss or outgoing was at best incurred in the course of gaining or producing the assessable income of Marketing & Sales. There was lacking, in our view, what Brennan J has called the required connection between the loss or outgoing and the gaining or producing of the assessable income of the taxpayer: Ure v Federal Commissioner of Taxation (1981) 50 FLR 219 at 223, Magna Alloys & Research Pty. Ltd. v Federal Commissioner of Taxation (1980) 49 FLR 183 at 187-195. Nor could the outgoing be brought within the second limb of sub-s. 51 (1).
Conclusions
It follows that the Commissioner was correct in disallowing so much of the claimed deduction as represented the loss or outgoing in respect of the Shangri-la undertaking and that the taxpayer correctly claimed the deduction in respect of the loss or outgoing on the undertaking concerning the Bowden & Schadel subsidiaries.
Accordingly, if the matter rested there, the appeal should be allowed and the assessment remitted to the Commissioner for amendment in accordance with the reasons of this Court.
However, there remains one further point. It concerns what we might call the Commissioner's further argument. This relates to the land received by the taxpayer in specie from Bowden & Schadel. That land comprised parcels known as Parkwood, Mount Hutton, Kuranda, North Lambton and, somewhat oddly, "Miscellaneous". The evidence in its present state is not in any detail. It shows that the first sales of allotments comprising Parkwood occurred in the 1974 tax year and that, at 30 June 1984, some 734 allotments out of the total number of 1319 had been sold. It follows that in the year of income in question, 1978, a substantial area of Parkwood was still on hand. Development and subdivision at Mount Hutton took place in the 1979 tax year and it follows that in the 1978 year of income Mount Hutton was on hand and undeveloped. First sales of Mount Hutton commenced in the 1981 tax year. As regards Kuranda and North Lambton, all allotments had been sold before the 1978 tax year. The "Miscellaneous" land included seventeen separate parcels in seven different locations. These were sold in the period between the 1973 and 1980 tax years. Again, therefore, there was land still on hand in the 1978 tax year.
On the hearing of the appeal, the Commissioner fastened upon this circumstance as showing that in 1978 parcels of land were still held by the taxpayer. It was submitted that, having regard to s. 31 of the Act, in respect of the 1978 year part of the amount of the loss or outgoing should have been brought in by the taxpayer as a cost of acquiring trading stock: Curran v Federal Commissioner of Taxation (1974) 131 CLR 409 at 421 per Gibbs J. It was then submitted that since the taxpayer had not adduced evidence in the Supreme Court as to the precise area of land left unsold at the end of the 1978 tax year, the taxpayer had failed to satisfy the burden of proof under sub-s. 190 (b) of the Act.
The issues in the Supreme Court of New South Wales, as they appear from the particulars and judgment, did not include the matters just mentioned. Nor were they specified in the Commissioner's Notice of Contention on the appeal to this Court; no point was there sought to be taken as to failure by the taxpayer to satisfy the burden of proof under s. 190 (b) of the Act. Senior Counsel for the taxpayer told us that these matters were first agitated in address by counsel for the Commissioner in the Supreme Court and that, given the course taken in the judgment, it had not been necessary for that Court to deal with them.
In this situation this Court ought not, in our view, embark upon these matters. The appeal should be allowed and the assessment remitted to the Commissioner for amendment conformably with these reasons with the result that the taxpayer correctly claimed the deduction in respect of the loss or outgoing on the undertaking as to the Bowden & Schadel subsidiaries and that the Commissioner was correct in disallowing so much of the claimed deductions as represented the loss or outgoing on the Shangri-la undertaking.
The taxpayer should have its costs of the proceedings in the Supreme Court and three quarters of its costs before this Court. This reflects our view as to relative weights to be attached to the results upon the issues in the case.

JUDGE2

Hooker Rex Pty Limited ("Hooker Rex") claims to be entitled under s.51(1) of the Income Tax Assessment Act 1936 (Cth) ("the Act") to certain deductions from its assessable income derived during the year of income ended 30 June 1978. The amount of the deductions claimed is $538,896. That sum represents amounts which Hooker Rex became liable to pay pursuant to the terms of certain undertakings given by it to the Commissioner of Taxation ("the Commissioner") in connection with the liquidation of a number of companies and of certain indemnities given to the liquidator of each of those companies.

At all material times, Hooker Rex carried on business principally as a land developer. In the course of that business it acquired and developed land for sale primarily for residential purposes, though occasionally for industrial and commercial purposes. It also provided land development services to other companies. It had a number of subsidiary companies, including a company known as Hooker Rex Marketing and Sales Pty Limited ("Marketing and Sales"). That company also carried on business as a land developer. In the case of both Hooker Rex and Marketing and Sales, land for development purposes was acquired, in the main, by direct purchase. This appeal is concerned with two transactions in which the acquisition of the land was effected otherwise than by direct purchase. In the case of those transactions, the acquisition of the land was effected by first purchasing the whole of the issued share capital of either the company which had title to the land or the company which was the holding company of a subsidiary in which the title to the land was vested. The two transactions which give rise to the issues presently before the Court may, for convenience, be referred to respectively as "the Bowden and Schadel transaction" and "the Shangri-la transaction". It should be added that neither Hooker Rex nor Marketing and Sales carried on the business of trading in shares.
The Bowden and Schadel Transaction
On 31 August 1971 Hooker Rex agreed to purchase the whole of the issued share capital of Bowden and Schadel (Holdings) Pty. Limited ("Bowden and Schadel"). That company was the beneficial owner of the whole of the issued share capital in four subsidiaries - Laidley Pty Limited, Northumberland Industries Pty Limited, B.S. Nereida Pty Limited and Hunter District Industries Pty Limited. Those four companies may conveniently be referred to collectively as "the Bowden and Schadel subsidiaries". Each of the subsidiary companies had title to parcels of land which Hooker Rex wished to acquire for development purposes.
On 22 May 1972 Bowden and Schadel and each of the four subsidiary companies were wound up voluntarily. Mr Alan John Jones, Chartered Accountant, a partner in the firm of D.M. Dixon & Co., was appointed liquidator of each of the companies. By the resolution winding up each company, Mr Jones, as liquidator, was authorised to distribute the assets of the company in specie to the members of the company.
Mr Jones wrote a series of letters dated 31 July 1972 to the Deputy Commissioner of Taxation ("the Deputy Commissioner"). By those letters, Mr Jones requested the leave of the Commissioner, in accordance with s.215 of the Act, to make an in specie distribution to Bowden and Schadel of the land to which each of the Bowden and Schadel subsidiaries had title and to make a further in specie distribution of the land from Bowden and Schadel to Hooker Rex.
By letter dated 28 August 1972 Mr Jones was informed that the Commissioner -

"has no objection to an in specie distribution of land of the companies to its holding company Bowden & Schadel (Holdings) Pty. Ltd., provided that -

(a) Hooker Rex Pty. Ltd., and the liquidator undertake jointly and severally to pay to the Deputy Commissioner of Taxation any amount which would then be or would thereafter become payable by the companies being wound up under any Act administered by the Commissioner of Taxation.

(b) You notify this office immediately when the transfer of land from the subsidiaries to the holding company has been effected."

On the same day, 28 August 1972, Hooker Rex executed under seal a document addressed to the Deputy Commissioner reading as follows:

"We, the Shareholder of Bowden & Schadel (Holdings) Pty Ltd Laidley Pty Limited B.S. Nereida Pty Limited Northumberland Industries Pty Ltd Hunter District Industries Pty Ltd (in voluntary liquidation) hereby undertake to pay to you income tax to which the companies may become lawfully liable in the course of their winding up to the extent to which the Liquidator personally and/or the companies in liquidation fails to so do. This undertaking will not prejudice any reasonable request for extension of time for payment or right of appeal. This undertaking is being furnished to enable you to approve of the Liquidator transferring the assets of the company to the shareholders."

It does not appear whether the liquidator gave a similar, or any, undertaking to the Commissioner.

By letter dated 30 August 1972, Mr Jones informed the Deputy Commissioner that it was his desire "to transfer the land to Hooker Rex Pty Limited for disposal" and sought consent for an in specie distribution being made by Bowden and Schadel to Hooker Rex. By the same letter Mr Jones informed the Deputy Commissioner that he had, as liquidator, signed the various transfers of land from the Bowden and Schadel subsidiaries to Bowden and Schadel. After such transfers were effected, none of the Bowden and Schadel subsidiaries had any assets or funds to meet any liabilities arising against them.
On 30 August 1972, Hooker Rex executed a deed of indemnity in favour of Mr Jones as liquidator of Bowden and Schadel and the Bowden and Schadel subsidiaries. By that deed, Hooker Rex undertook -

"that it will at all times hereafter in the absence of any negligence on the part of the Liquidator well and sufficiently indemnify him and keep him indemnified against all claims and payments for which he may in course of such winding up render himself legally liable and against all actions suits and proceedings claims demands costs and expenses whatsoever which may be taken or made against the Liquidator or incurred or become payable by him in the course of such winding up."

By letter dated 1 September 1972 Mr Jones was informed that the Commissioner had no objection to the proposed in specie distribution of land from Bowden and Schadel to Hooker Rex. The transfer of the land took place some short time thereafter. Upon such transfer, Bowden and Schadel had no assets or funds.
Each of the Bowden and Schadel subsidiaries was subsequently assessed to income tax in respect of the period from 1 July 1972 to 30 August 1972. Each assessment was made on the basis that, by virtue of s.36 of the Act, the assessable income of the subsidiary company included the value of the land which had been distributed in specie to Bowden and Schadel, such distribution amounting to a disposition, otherwise than in the ordinary course of business, of trading stock which constituted the whole or part of the assets of a business which had been carried on by the subsidiary company. Notices of assessment were issued on 15 March 1973, each notice specifying 17 April 1973 as the date upon which the income tax assessed was due and payable.
On 30 April 1973 each of the Bowden and Schadel subsidiaries lodged an objection to its assessment. The principal ground of objection taken by each company was that s.36 of the Act did not operate, in the circumstances, to bring into the company's assessable income the value of the land distributed in specie to the parent company.
Notices dated 14 June 1973 were addressed to Mr Jones by the Deputy Commissioner requiring payment of the outstanding tax, together with additional tax for late payment, within fourteen days.
By letter dated 20 June 1973 addressed to the Deputy Commissioner, a request was made on behalf of Mr Jones that an extension of time for payment of the tax assessed to the Bowden and Schadel subsidiaries be granted pending the determination of the objections lodged on 30 April 1973.

It follows that, in my opinion, the amounts of $148,955.72 and $39,721.52 have not been shown to be allowable as deductions under s.51(1) of the Act.
Conclusion
In the result, I would dismiss the appeal with costs.

[1988] FCA 235

23 MAY 1988