The Taxpayer and Commissioner of Taxation

[2005] AATA 1156

Administrative

Appeals

Tribunal

 

DECISION AND REASONS FOR DECISION [2005] AATA 1156

ADMINISTRATIVE APPEALS TRIBUNAL      )

)          No  QT2002/262-264

TAXATION APPEALS DIVISION		)
Re		THE TAXPAYER

Applicant

And COMMISSIONER OF TAXATION

Respondent

DECISION

Tribunal Senior Member B J McCabe

Date22 November 2005

PlaceBrisbane

Decision The decisions under review are affirmed.

..........[Sgd]........

BJ McCabe

SENIOR MEMBER

CATCHWORDS

TAXATION – Income Tax – distinction between income and capital – taxpayer carrying forward losses on sale of property – taxpayer classified property as trading stock – continuity of ownership in question – taxpayer not entitled to offset losses on property against income of company – loss on property is a capital loss in the circumstances – loss cannot be carried forward due to discontinuity of ownership.

Income Tax Assessment Act 1936 ss 80A, 80E, 226J

Taxation Administration Act 1953 s 14ZZK

Property Law Act 1974 (Qld) s 11

A Taxpayer and Commissioner of Taxation (2004) 81 ALD 473; (2004) 39 AAR 53; 2004 ATC 119; (2004) 55 ATR 1112, [2004] AATA 398

McCormack v Federal Commissioner of Taxation (1979) 143 CLR 284

Jones v Dunkel (1959) 101 CLR 298

Federal Commissioner of Taxation v NF Williams (1972) 127 CLR 226; (1972) 46 ALJR 611; (1972) 72 ATC 4188; (1972) 3 ATR 283

Whitfords Beach Pty Ltd v Federal Commissioner of Taxation (1982) 150 CLR 355; (1982) 39 ALR 521; (1982) 56 ALJR 240; (1982) 82 ATC 4031; (1982) 12 ATR 692

DKLR Holding Co (No 2) Proprietary Limited v Commissioner of Stamp Duties (NSW) (1982) 149 CLR 431

Avondale Motors (Parts) Pty Ltd v Commissioner of Taxation (1971) 124 CLR 97

REASONS FOR DECISION

22 November 2005

introduction

Senior Member B J McCabe

1.      The applicant taxpayer is a company. It wishes to carry forward losses on what it describes as the sale of trading stock in respect of the 1995-2000 years of income. The Commissioner argues the losses are actually capital losses which cannot be offset against the company’s income. The Commissioner also disputes whether the applicant company is entitled to carry forward losses given the discontinuity of ownership of the company. He imposed a penalty in light of the shortfall.

the material before the tribunal

2. The Tribunal was provided with the documents required pursuant to s 37 of the Administrative Appeals Tribunal Act 1975 (T-Documents). Three volumes of supplementary T-Documents were also tendered in evidence. Letters and affidavits of various persons involved in the transactions subject to these proceedings were also tendered and exhibited at the hearing.

3. The parties did not call any witnesses. There was a suggestion prior to the hearing that an officer of the applicant was able to give evidence which might assist the applicant’s case if he was given some assurance that his evidence would not be used against him in criminal proceedings. The respondent declined to give such an assurance. The applicant subsequently asked for an order under s 35(2) of the Administrative Appeals Tribunal Act 1975 that would have the effect of denying prosecutors access to the evidence given by the officer. The Tribunal declined to make the order (see A Taxpayer and Commissioner of Taxation [2004] AATA 398) and the officer was not called.

4.      The hearing was held in private. The names of the applicant and other figures have been suppressed or changed to protect their privacy.

the factual background

5.      A non-resident foreign businessman contracted to purchase a 10.32 hectare parcel of vacant land in a Queensland town. The contract was entered into on 13 December 1989. The purchaser agreed to pay $940,000 for the property. The purchase had to be cleared by the Foreign Investment Review Board (the FIRB) because of the businessman’s non-resident status. The purchaser’s then solicitors wrote to the FIRB to discuss the purchaser’s plans for the property. The letter dated 18 December 1989 (document T3 at pp24-25) noted the property was located adjacent to a tertiary educational institution and pointed out there was a shortage of student accommodation in the area. The letter advised the purchaser wished to develop dormitory-style cabins on the property that could be rented to overseas students. 

6.      The solicitors advised the purchaser was considering a variation to the original proposal in a subsequent letter (document T57 at p414) dated 5 April 1990. The letter foreshadowed the possibility the purchaser would on-sell part of the land to a company registered in Queensland with some Australian directors and Japanese shareholders. That company could either re-sell the land to the foreign businessman or sell the property to another company for development.

7.      The FIRB approved the purchase subject to a condition that construction be commenced within 12 months of approval. The businessman was advised of the decision in a letter dated 30 May 1990.

8.      ABC was a firm of solicitors. Mr D was a principal of that firm. ABC began acting on behalf of the businessman at some point during 1991. On 24 September 1991, ABC wrote to the FIRB on the businessman’s behalf seeking approval to transfer the property to a company named “Landowner Pty Ltd”: document T6 p 29. (“Landowner Pty Ltd” is not the company’s real name. It has been changed for the purposes of these proceedings.) The letter was authored by Ms P, a solicitor employed by ABC. The letter included the proposed purchaser’s ACN. ABC explained the transaction was necessary to allow the businessman to arrange his affairs because of tax considerations overseas. ABC had earlier corresponded with the directors of Landowner Pty Ltd: document T5 p 27. That letter was also authored by Ms P. The shareholders of the company were Australians who held their shares on trust for the non-resident businessman. ABC pointed out in that letter that Landowner Pty Ltd was specifically established to accept the transfer of the properties.

9.      The FIRB assented to the proposal to transfer the property (and another property owned by the businessman) to “Landowner Pty Ltd” in a letter dated 18 November 1991: document T8 p35. The letter noted:

·the total consideration for the transfer was $2.1 million and

·the company was wholly beneficially owned by the foreign businessman.

10.     For reasons that were alluded to (but never properly explained) in a letter dated 9 January 1992 (document T23 p 54-55), the businessman decided not to use the company that was then named Landowner Pty Ltd to accept the transfer of the properties. The shares in the company were sold to someone else and its name was changed. It was decided that the property would instead be transferred to the applicant company.

11.     The applicant was incorporated on 15 March 1982. It was registered by Mr D who became a director of the company on that date. The company’s authorised share capital was 10,000 shares with a par value of $1, although only two shares were issued. One of those shares was issued to Mr D. The company was known by a different name at that point. It changed its name in 1990. It changed its name again in 1991 – to Landowner Pty Ltd, the same name as the company referred to in the FIRB approval. (The applicant’s name change was possible because the other company that was previously known as “Landowner Pty Ltd” had left the name vacant after it changed its name.)

12.     Landowner Pty Ltd – the applicant - held an extraordinary general meeting on 28 November 1991. The company resolved to allocate Mr D a further 1,449,998 $1 shares. Mr D provided a cheque drawn in favour of the company in that amount: document T19 p47. That money was used to pay for the land that was being acquired. The transfer document appears at T15 p 43.

13.     The allocation of the shares and the purchase of the property was part of a round-robin of transactions. These included:

·The foreign businessman paid $1.45 million to Mr D.

·Upon receipt of the money from the businessman, Mr D signed an acknowledgment of debt (document T18 at p46) confirming he was indebted to the businessman. The document noted the debt was to be repaid by transferring the shares in Landowner Pty Ltd to the businessman. Mr D also undertook not to declare a dividend or undertake a distribution without the businessman’s consent. Mr D prepared a codicil to his will leaving the shares in the applicant to the businessman: see document T16 at p44.

·The foreign businessman executed a Deed of Conditional Release (document T17 at p 45). The deed provided Mr D would be released from the $1.45 million debt on condition that the shares in the company were transferred to the businessman or his nominee.

·Mr D used the money loaned to him by the businessman to pay for the shares he was allocated in Landowner Pty Ltd.

·Landowner used the money raised through the allotment to Mr D to pay for the property it was acquiring from the businessman. The company’s cheque was deposited into ABC’s trust account: documents T12 p40 and T13 p 41.

14.     In other words, the transaction was effected by passing a series of cheques. The money paid by the foreign businessman came back to him. The round-robin was recorded in a letter from ABC to the applicant’s bank dated 28 November 1991: document T11 at pp38-39.

15.     ABC wrote to the businessman’s accountant on 20 December 1991: document T22 at pp52-53. The letter acknowledges Mr D held all of his shares on trust for the businessman. The letter added:

Please note that this trust is a blind trust and therefore undisclosed in any of the records or accounts of the company.

16.     The letter also noted that the company’s only source of income was “by way of rental received under a lease of part of …the property”.

17.     The evidence as to beneficial ownership of the shares is inconsistent. The 1990 annual return of the company suggests Mr D held his single share beneficially: document T55 at 391-393. The notice filed with the Australian Securities and Investments Commission (ASIC) on 28 November 1991 records the allotment of shares but does not disclose whether they were held beneficially: document T55 at 380. The 1991 annual return refers to two shareholders holding one share each – and notes the shareholders were not the beneficial holders of the shares: document T55 at 374-377. The 1992 annual return (document T55 at p372-373) says Mr D is not the beneficial owner of the single share he held. The 1992 return was amended by a notice lodged on 1 November 1993 advising that Mr D held all of his shares (including the shares allotted in 1991) beneficially. Subsequent returns referred to Mr D as the beneficial owner of the shares.

18. There is also a record of Mr D’s remarks to a police officer executing a search warrant on Mr D’s firm in connection with a criminal investigation of Mr D’s affairs. The warrant was executed on 22 March 2000. The remarks were recorded on tape and transcribed. The transcript of the discussion is reproduced in the s 37 documents at T86. Mr D says (at line 149) that the foreign businessman was not the beneficial owner of the property that was transferred to the company. (That is correct unless the company was purporting to hold the property in trust for the businessman. I do not understand there is any suggestion that was the case here.) The investigator subsequently asserted (at line 173) that the company was beneficially owned by the foreign businessman. At line 184, Mr D claimed he was always the beneficial owner of the company. (I assume references to “ownership of the company” are in fact references to beneficial ownership of the shares in the company since one does not own a company as such.)

19. There was some discussion during the course of 1992 about the possibility of developing the company’s land. The s 37 documents include correspondence with consultants and the local government authority about sub-division proposals. A letter from the foreign businessman’s accountants to Mr D makes it clear the businessman was integrally involved in the decision-making process in relation to the development proposals: document T25 p57. As it happened, a decision was made to sell the land instead of undertaking further development. The company contracted to sell the property to Marcelcliff Pty Ltd for $1.105 m on 14 October 1992: document T26 p58. The sale realised a significant loss for the company.

20.     ABC (ie, Mr D) wrote to the directors of the company (ie, Mr D and his fellow director) on 24 November 1992: document T55 p 79. The letter confirmed the “nett settlement figure” was $1,086,460. After several amounts were paid (including an amount in respect of a previously unmentioned unregistered mortgage) the company received $720,794. A cheque in that amount was apparently drawn in favour of the businessman. It is unclear on what basis this payment was made: the board had not declared a dividend, nor was there an authorised reduction of capital or a share buy-back. There is no evidence the company was indebted to the businessman.

21.     The name of the company was changed to its present name on 1 July 1993. The other director of the company had resigned on 1 May 1993. He transferred his single share in the company to Mr D’s wife. Mrs D was appointed a director on 1 September 1993.

22.     Correspondence with the former director in relation to the transfer of the share to Mrs D dated 13 September 1993 (document T28 p65) noted the foreign businessman had instructed Mr D to “wind up, strike off of otherwise dispose of the company”. The foreign businessman signed an authority (document T29 p68) dated 17 September 1993 addressed to Mr D. The authority read as follows:

I [name of foreign businessman] hereby authorise you to wind up, strike off or otherwise dispose of the above company and for this purpose I hereby relinquish and renounce any claim that I may have as to beneficial ownership of 1,450,000 ordinary shares fully paid to one dollar ($1.00) in the company.

I consent to you taking such action as may be necessary to effect the winding up, striking off or other disposal of the company.

23.     A handwritten note of a meeting between Mr D and the businessman (document T81 p479) suggests the instructions to wind up the company were conveyed to Mr D on 23 September 1992 after the decision had been made to sell the land – nearly 12 months before the transfer of the shares to Mrs D.

24.     The applicant company’s 1993 tax return was lodged on or about 27 August 1993. The tax return disclosed a loss in the amount of $4,422. The applicant’s new accountants wrote to the respondent on 14 July 1994: document T30 p69. The accountants claimed an error had been made in the return relating “to the incorrect treatment of the sale of trading stock, which was inadvertently classified as a capital loss.” The effect of the amendment was to decrease the capital loss to nil and increase the taxable loss from $4,422 to $755,377. The taxpayer sought to carry forward the loss to later years of income.

the issues in this case

25. The first issue before the Tribunal involves the income/capital distinction. The second issue is the application of the continuity of ownership and same business tests in ss 80A and 80E of the Income Tax Assessment Act 1936 (ITAA36). The third issue – the appropriate penalty - only arises if the applicant fails to convince the Tribunal the Commissioner’s objection decisions were wrong. I will deal with each of the issues in turn.

income or capital?

26. Was the loss which the applicant seeks to carry forward more appropriately characterised as a capital loss, or should the sale of the land in 1991 be treated as a disposal of trading stock or part of a profit-making scheme that gave rise to a loss which can be offset against future income? That question requires me to consider the law in relation to the distinction between income and capital. But it also requires that I consider the operation of s 14ZZK of the Taxation Administration Act 1953 (the TAA).

27. Section 14ZZK(b) says the taxpayer has the burden of proving the objection decisions should have been made differently. The Commissioner’s decision effectively creates a presumption the applicant must rebut if he or she is to succeed in an appeal: see, for example, McCormack v Federal Commissioner of Taxation (1979) 143 CLR 284 at 314-315 per Jacobs J. That may be a difficult task where the taxpayer does not call any witnesses to explain a paper trail that does not speak for itself, or which is consistent with the Commissioner’s view or even ambiguous.

28.     The Commissioner has asked me to draw adverse inferences against the taxpayer in light of the fact the applicant has not called Mr D to give evidence. Mr D was in the best position to explain the transactions into which the applicant entered. His evidence would probably have been of assistance to the Tribunal. Mr Hack, for the Commissioner, says the rule in Jones v Dunkel (1959) 101 CLR 298 should apply. That rule permits me to draw an adverse inference from the failure to call the witness in appropriate circumstances. One of the circumstances in which I may not draw an adverse inference is where there is a reasonable excuse for the failure to call the witness. I think there is a reasonable excuse in this case. That excuse can be gleaned from the submissions made in relation to the application for a suppression order: see A Taxpayer and Commissioner of Taxation [2004] AATA 398. Mr D has apparently declined to answer questions on the basis he might expose himself to a criminal prosecution. There is little point in calling a witness in those circumstances.

29.     While I decline to draw an adverse inference from Mr D’s failure to appear, that failure inevitably makes it harder for the applicant to show the Commissioner’s decision was wrong.

30.     The starting point of the analysis is the well-established rule that the proceeds from the “mere realisation” of a capital asset will not give rise to income according to ordinary concepts – and any loss incurred on the disposal of the asset will not lead to a loss that can be offset against other income of the taxpayer: see Federal Commissioner of Taxation v NF Williams (1972) 72 ATC 4188 per Gibbs J at 4195. If the asset was more like trading stock that was bought and sold (or bought, developed, sub-divided and sold) as part of a business of developing and dealing in land, the law might treat the proceeds of the sale as income: see, for example, Whitfords Beach Pty Ltd v Federal Commissioner of Taxation (1982) 82 ATC 4031.

31.     The applicant says this was a profit-making venture. Mr Robertson asked me to infer Mr D owned the shares in the taxpayer beneficially and the foreign businessman was an investor in the company. The company acquired the land with a view to developing it or on-selling the property to another entity. The company investigated various development options before completing a sale and then distributed a portion of the proceeds to the foreign businessman.

32.     I am not persuaded by that characterisation of the company’s business activity. The taxpayer was a shelf company until it contracted to purchase a parcel of land from a foreign businessman who was a client of one of the company’s directors. The correspondence between the businessman’s solicitors and the FIRB make it clear the property was acquired by the businessman to construct student accommodation. As it happened, that was the only use to which the property was ever put. The transfer of ownership to the company was completed as part of a re-ordering of the businessman’s affairs because of taxation concerns. The company continued to derive rental income from the accommodation that had been developed on the property. The businessman foreshadowed the possibility that the property might be sub-divided as part of a development project, but I think the evidence makes it clear that was just one option under consideration. While the company was a separate legal entity with a corporate mind of its own, I am not persuaded the company had different intentions with respect to the land. (The evidence makes it clear the businessman continued to play a central role in the decision-making process of the applicant. His intentions are therefore relevant.) The taxpayer did investigate whether the property could be sub-divided or on-sold for the purposes of development, but I do not think the evidence establishes that was the purpose for which the land was acquired. The steps taken towards further development of the property were so limited that the whole undertaking could not be said to be comparable to the situation in Whitford’s Beach. 

33.     I do not think any particular significance attaches to the payment of a share of the sale proceeds to the businessman after the sale was completed. He obviously wanted as much of his money back as possible. The fact he was paid out (albeit in an irregular fashion) does not rebut the Commissioner’s argument that the sale was the realisation of a capital asset giving rise to a capital loss.

34.     The applicant’s accountants certainly regarded the sale as the realisation of a capital asset when they prepared the company’s accounts in 1993. Those accounts are exhibited at document T55 p 143ff. The accounts were subsequently amended in July 1994 to reflect a capital loss, but I note that was after the foreign businessman ceased his involvement with the company and it came under the unimpeded control of Mr D. I am satisfied the amendment to the accounts was the product of a decision to explore the possibility of deriving some value from the company once the businessman’s involvement in the company ceased.

35. I have already observed the applicant would have difficulty establishing the Commissioner’s objection decisions were wrong – the task required of the applicant by s 14ZZK of the TAA – in circumstances where the taxpayer did not call any witnesses and relied instead on inferences drawn from the evidence. I do not think the applicant has discharged that burden. The applicant has not persuaded me the land was anything other than a capital asset. The proceeds of the sale of the land should therefore be regarded as the proceeds of a mere realisation of a capital asset. The loss on that sale was a capital loss. The objection decisions under review ought to be affirmed in that respect.

carrying forward losses

36.     The second issue is the application of the continuity of ownership and same business tests used to determine whether company losses can be carried forward. Given my conclusion that the taxpayer’s losses in the relevant years were on capital instead of income account, it is strictly speaking unnecessary for me to deal with this aspect of the argument. I will do so however because the fate of this argument might be relevant to the calculation of penalties.

37. The continuity of ownership test is found in s 80A of ITAA36. Section 80A(1) provides a loss may not be carried forward unless:

(a)       the company satisfies the Commissioner; or

(b) in the case of a company that is not a private company in relation to the year of income, the Commissioner considers that it is reasonable to assume;

that, at all times during the year of income, shares in the company carrying between them:

(c)       the right to exercise more than one-half of the voting power in the company;

(d) the right to receive more than one-half of any dividends that may be paid by the company; and

(e)the right to receive more than one-half of any distribution of capital of the company;

were beneficially owned by persons who, at all times during the year in which the loss was incurred, beneficially owned shares in the company carrying between them rights of those kinds.

38.     The history of the ownership of shares in Landowner Pty Ltd has already been discussed. The important facts are these: after he was allotted the extra shares in 1991, Mr D acknowledged to the accountants in a letter that he held the shares on trust for the foreign businessman: document T22 at pp52-53. The foreign businessman subsequently surrendered his interest in the shares on 17 September 1993: document T29 p68. These documents are good evidence of the proposition advanced by the respondent, and I think they give rise to an obvious inference as to ownership that the applicant has not been able to rebut.

39. The letter to the accountants recording the beneficial interest of the businessman in the shares satisfies the requirements of s 11(1)(c) of the Property Law Act 1974 (Qld). That section regulates the transfer of equitable interests in property. It requires that transfers of equitable interests in land and other property must be evidenced in writing, and signed by the person disposing of the interest or their agent. (The opening words of s 11 refer to interests in land, but s 11(1)(c) has been interpreted to apply to the disposition of interests in personal property as well: see Adamson v Hayes (1973) 130 CLR 276 at 302-303 per Gibbs J; see also PT Ltd v Maradona Pty Ltd (No 2) (1992) 27 NSWLR 241 at 251 per Giles J.) The copy of the letter to the accountants in the s 37 documents is unsigned, but that is presumably because it is the file copy of ABC. It was not suggested to me that the original copy in the hands of the accountant was unsigned.

40.     I am satisfied the beneficial ownership of the shares in the taxpayer was transferred to the foreign businessman on or before 20 December 1991 as evidenced in the letter to the accountants. The applicant did not produce any evidence of weight that suggests I should take a different view.

41.     There is a question as to whether the authority dated 17 September 1993 (document T29 p68) effects an assignment of the businessman’s beneficial interest or a release or surrender with the effect that the beneficial interest is merged in the trustee’s legal title. The High Court’s decision in DKLR Holding Co (No 2) Proprietary Limited v Commissioner of Stamp Duties (NSW) (1982) 149 CLR 431 suggests that a release and merger is the better view: per Aickin J at 463; see also DSK Ong, Trusts Law in Australia (Sydney, 2ed) 2003 at 128ff. I think the businessman released or surrendered his interest and it merged with MR D’s legal interest in the property. The applicant was unable to produce any evidence of weight that suggested I should disregard this document and its effect. There is no evidence that the foreign businessman continued to be involved in the taxpayer’s affairs: it appears he took his money and walked away, leaving the company in the hands of Mr D.

42. The loss on the sale of the property was incurred while the foreign businessman held the beneficial ownership of all the shares. The applicant did not seek to deduct that loss against its income until after the businessman surrendered his interest in the shares. In those circumstances, the applicant cannot satisfy the test in s 80A.

43. The same business test is set out in s 80E of ITAA36. Section 80E(1) says a company may still carry forward losses even though there has been a change in beneficial ownership that would otherwise cause it to fail the test in s 80A if:

… (b)       the first-mentioned company carried on at all times during the year of income the same business as it carried on immediately before the change referred to in paragraph (a) took place; and

(c) the first-mentioned company did not, at any time during the year of income, derive income from a business of a kind that it did not carry on, or from a transaction of a kind that it had not entered into in the course of its business operations, before the change took place;

sections 80A and 80DA do not prevent the whole of the loss being so taken into account.

44.     The company derived rental income during the 1992 and 1993 years of income. Its tax returns suggest it did not trade during the 1994 year of income. It received some interest income but it no longer received rent as the land it owned had been sold. It received income from trust distributions in the 1995 and 1996 years of income; in the 1997 year of income, it received rent and interest – although the details of the source or sources of the rental income are unclear.

45.     I am satisfied there is a significant break in the business activities of the applicant between November 1992 and 1996. Thereafter there is limited evidence about the applicant’s new business. I note that in Avondale Motors (Parts) Pty Ltd v Commissioner of Taxation (1971) 124 CLR 97 Gibbs J said (at 105) the requirement that the new and old business be the same meant they must identical, rather than merely similar. The applicant in this case has not satisfied me it was engaged in the same business after a break, which means it is unable to satisfy s 80E.

46.     The objection decisions under review must therefore be affirmed to the extent they find the applicant does not satisfy the continuity of ownership and same business tests.

penalties

47. The respondent decided to impose penalty tax equal to 75% of the tax shortfall pursuant to s 226J of ITAA36. That section provides:

Subject to this Part, if:

(a)       a taxpayer has a tax shortfall for a year; and

(b) the shortfall or part of it was caused by the intentional disregard by the taxpayer or by a registered tax agent of this Act or the regulations;

the taxpayer is liable to pay, by way of penalty, additional tax equal to 75% of the amount of the shortfall or part.

48.     The applicant says a penalty of that magnitude is inappropriate because it acted with the advice of senior counsel. It seems that advice was given orally. It is unclear on the evidence before me what that advice would have been, or to what aspect of the applicant’s affairs it related. What evidence there is certainly does not suggest careful thought and evaluation of the decision to carry forward and claim the losses made by the company against its future income. To the contrary: the evidence suggests to me that Mr D (the directing mind and will of the company after the foreign businessman ceased to be involved) recognised what he took to be an opportunity to obtain a tax advantage by exploiting a corporate shell that had been abandoned by one if his clients. To do so, the company had to ignore the plain effect of many of the documents in relation to the sale of the land and the relationship between the foreign businessman, the company and Mr D. The taxpayer could not have believed it was entitled to seek the deductions, yet it persisted in its attempts to do so.

49.     Mr D was prosecuted in the criminal courts in connection with his part in this transaction. I do not see how that casts the taxpayer’s activities in a different light.

50. I am satisfied the penalty of 75% under s 226J is appropriate.

conlcusion

51.     The objection decisions under review are affirmed.

I certify that the 51 preceding paragraphs are a true copy of the reasons for the decision herein of Senior Member B J McCabe.

Signed:         .....................................................................................
  Associate:     Sam J Appleton

Date of Hearing  28 April 2005
Date of Decision  22 November 2005
The applicant was represented by Mr Robertson of counsel.

The respondent was represented by Mr Hack S.C.