Sonenco (No 87) Pty Ltd v Commissioner of Taxation

This matter concerned an application for special leave to appeal to the High Court of Australia by Sonenco (No 87) Pty Ltd against the Commissioner of Taxation. The dispute centred on whether Sonenco was liable for sales tax on certain motor vehicle transactions. Sonenco contended that either the transactions were ineffective in passing title, meaning they sold nothing and thus incurred no sales tax liability, or, alternatively, if the vehicles were sold, they were sold under a quotation system that exempted them from sales tax.

The legal issues before the Court were whether the Federal Court had erred in its determination of the effectiveness of the transactions in passing title, and consequently, whether sales tax was payable. Sonenco argued that the Federal Court's reasoning on the first limb of their argument was fundamentally at odds with the established principles of the law governing the sale of goods, particularly concerning the ability to pass title. They also raised the point that the issue remained of continuing relevance due to similar provisions in subsequent legislation.

The applicant's primary submission was that the attempted transactions failed because Sonenco never possessed title to the motor vehicles in question, and therefore could not pass title to the purchasers. This was contested by the Court, with Justice Dawson noting that Sonenco's client did have title at the beginning of the transaction and that title ultimately ended up with the purchaser. The applicant's counsel clarified that the intended scheme was for Sonenco to acquire title from a financier, Citicorp, and then pass it to a purchaser, Ron Hopkins Wholesale, but argued that this scheme failed because Sonenco never actually acquired title from Citicorp.