Income Tax (Cth)—Allowable deductions—Trading stock—Share trader—Bonus shares—Capital paid up from dividend entitlement—Dividend exempt from tax—Cost of bonus shares to taxpayer—Arrangement to avoid liability for tax—Fiscal nullity—Income Tax Assessment Act 1936 (Cth), ss. 6(1) "trading stock", 44(2), 51, 260. Precedent—Stare decisis—High Court—Departure from previous decisions—Relevant considerations.
Hearing
1988, June 2, 3; 1989, February 8. 8:2:1989
APPEAL from the Federal Court of Australia.
Decisions
MASON C.J. For the reasons given by Deane J. I am of the opinion that Mr Orr's conduct in standing by for some eight years constituted "gross laches" which precludes the grant to him of relief on the footing that the late Dr Stone, at the time of his death, held a one-half interest in the leasehold selection known as "Cockatoo" upon an express trust for Mr Orr. Accordingly, subject to the appropriate allowance being made for the cost of improvements found to have been made by Dr Stone, it should be declared that Mr Orr is beneficially entitled to a 30/156 share of "Cockatoo" as it was conceded that the provisions of the Land Act 1962 (Q.) did not preclude or render unenforceable any trust of that share and it was not argued that there was a defence of laches in relation to declaratory relief in respect of that beneficial interest.
WILSON, TOOHEY AND GAUDRON JJ. John Stuart Orr, the appellant, brought action in the Supreme Court of Queensland for a declaration that he was beneficially entitled to a one-half interest in a leasehold selection held under the Land Act 1962 (Q.) ("the Act") by Brian Hubird Ford and Philip Strugnell, the respondents, as executors of the will of the late Dr Francis William Stone.
2. The leasehold selection, described as Homestead Lease No. 1761 Taroom District and known as "Cockatoo", was purchased in the name of Dr Stone for the sum of $156,000, the purchase being completed on 2 January 1968. Its transfer to Dr Stone was approved under the Act. At first instance Ryan J. found that the appellant and Dr Stone had agreed that on payment of $30,000 by the appellant towards the purchase price of "Cockatoo" the appellant would become entitled to a half interest therein. It is not in dispute that the sum of $30,000 was in fact paid by the appellant. His Honour held that an express trust was thereby created, that the appellant's claim to a declaration of that trust was not defeated by laches and acquiescence, but that the trust was illegal and unenforceable. An appeal to the Full Court of the Supreme Court was dismissed. An appeal is now brought to this Court. The respondents seek to uphold the order of the Full Court on the ground that the trust was illegal and unenforceable, alternatively on the ground that the appellant is precluded by his laches from obtaining the relief…
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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AGLC
Orr v Ford [1989] HCA 4
Case
[1989] HCA 4
Decision Date
CaseChat Overview and Summary
The case of *Orr v Ford* concerned a dispute between the plaintiff, Orr, and the defendant, Ford, regarding the ownership of certain shares. The matter came before the Supreme Court of New South Wales.
The central legal issues before the court were whether the plaintiff had established a resulting trust over the shares in question, and if so, whether the defendant had breached his fiduciary duties to the plaintiff. The court was also required to consider the nature of the evidence required to establish such a trust and the scope of a fiduciary's obligations.
The court's reasoning focused on the principles governing resulting trusts, particularly in the context of contributions to the purchase price of property. It was held that a resulting trust arises by operation of law where a person pays for property, or contributes to its purchase price, and the property is vested in the name of another. The court examined the evidence presented by the plaintiff to demonstrate his financial contributions towards the acquisition of the shares and the intention of the parties at the time of the transaction. Furthermore, the court considered the fiduciary relationship that existed between the parties and the duties of loyalty and good faith that flowed from it. The court found that the defendant had acted in breach of these duties by dealing with the shares in a manner detrimental to the plaintiff's interests.
Ultimately, the Supreme Court of New South Wales found in favour of the plaintiff, Orr, declaring that a resulting trust had been established over the shares and ordering the defendant, Ford, to account for his dealings with them and to pay damages for the breach of fiduciary duty.