Melbourne Trust Limited v Federal Commissioner of Taxation

The Melbourne Trust Limited appealed to the High Court against an assessment for war-time profits tax made by the Federal Commissioner of Taxation. The dispute concerned how the Commissioner had calculated the company's pre-war standard of profits and the profits for the relevant financial year. The company argued that its operations should be treated as a single business, whereas the Commissioner had treated its Strathdarr pastoral property as a separate business and excluded profits from another property, Coan Downs, from the pre-war standard. The case was stated for the opinion of the Full Court by Rich J.

The legal issues before the Full Court included whether the Commissioner's amended assessment was a valid exercise of his powers, and crucially, for the purpose of fixing the pre-war standard of profits, whether the profits from the company's whole activities, or only specific operations at Strathdarr and Coan Downs, should be taken into account. Additionally, the court was asked whether profits from the sale of Coan Downs and additional rent paid for Strathdarr should be allowed as deductions or included in the pre-war standard.

A majority of the High Court, comprising Knox C.J., Isaacs, Gavan Duffy, and Starke JJ., held that the questions raised depended on ultimate inferences of fact rather than questions of law. They reasoned that the determination of whether the company's operations constituted one business or multiple businesses, and how profits and deductions should be treated, required findings of fact that were not definitively established for the purpose of legal determination. Consequently, the Full Court declined to hear the case and remitted it to the trial judge for the determination of these factual inferences. Rich J. dissented, viewing the questions as involving mixed questions of fact and law, or pure questions of law, which the Full Court was entitled to determine.