FEDERAL COURT OF AUSTRALIA Ellison v Sandini Pty Ltd [2018] FCAFC 44 Appeal from: Sandini Pty Ltd v Commissioner of Taxation [2017] FCA 287 Sandini Pty Ltd v Commissioner of Taxation (No 2) [2017] FCA 905 File number(s): WAD 172 of 2017 WAD 173 of 2017 Judge(s): SIOPIS, LOGAN AND JAGOT JJ Date of judgment: 27 March 2018 Catchwords: INCOME TAX – capital gains tax – roll over relief – whether Family Court order resulted in a change of ownership within the meaning of s 104-10 of the Income Tax Assessment Act 1997 (Cth) (the ITAA) – whether Family Court order constituted CGT event A1 as defined in 104-5 of the ITAA – whether the effect of Family Court order was such that the roll over relief provisions contained in Subdivision 126-A of the ITAA were engaged – whether primary judge erred in holding that a change of ownership had occurred as a result of the deeming provision contained in s 103-10 of the ITAA EQUITY – unnumbered and uncertificated shares in public company – creation of trust over part of shareholding by Family Court order - beneficial ownership – requirement for certainty of subject of trust – shares as a fungible asset Legislation: Constitution s 75 Bankruptcy Act 1966 (Cth) s 121 Bankruptcy and Family Law Legislation Amendment Act 2005 (Cth) Company Law Review Act 1988 (Cth) Corporations Act 2001 (Cth) ss 768A, 1070A, 1070B Family Law Act 1975 (Cth) ss 35, 78, 79, 79A, 106A Income Tax Assessment Act 1936 (Cth) s 160ZZMA Income Tax Assessment Act 1997 (Cth) ss 103-10, 104-1, 104-5, 104-10, 116-20, 121-20, 124-85, 124-90, 124-95, 126-1, 126-5, 126-15, 995-1 Judiciary Act 1903 (Cth) ss 38, 39, 39B Taxation Administration Act 1953 (Cth) Taxation Laws Amendment Act 1989 (Cth) Tax Law Improvement Act (No 1) 1998 (Cth) Family Law Rules 2004 (Cth) r 20.07 Explanatory Memorandum, Tax Law Improvement Act (No 1) 1998 (Cth) Cases cited: Archibald Howie Pty Ltd v Commissioner of Stamp Duties [1948] HCA 28; (1948) 77 CLR 143 Baker v Paul [2013] NSWCA 426 Beck v Henley [2014] NSWCA; (2014) 11 ASTLR 457 Bellinz Pty Ltd v Commissioner of Taxation (Cth) (1998) 84 FCR 154 Burt v Commissioner of Taxation [1912] HCA 74; (1912) 15 CLR 469 Colonial Bank v Whinney (1885) 30 Ch D 261 Commissioner of Taxation v Consolidated Media Holdings [2012] HCA 55; (2012) 250 CLR 503 Commissioner of Taxation v Futuris Corporation Ltd [2008] HCA 32; (2008) 237 CLR 146 Commissioner of Taxation v McNeil [2007] HCA 5; (2007) 229 CLR 656 Commissioner of Taxation v Totalisator Administration Board (Q) (1990) 170 CLR 508 Corin v Patton [1990] HCA 12; (1990) 169 CLR 540 Coshott v Woollahra Municipal Council [2008] NSWCA 176 Edwards v Santos Limited [2011] HCA 8; (2011) 242 CLR 421 Eisner v Macomber, 252 U.S. 189 (1920) Executor Trustee and Agency Co of South Australia Ltd v Deputy Federal Commissioner of Taxes (South Australia) [1939] HCA 35; (1939) 62 CLR 545 Herdegen v Federal Commissioner of Taxation [1988] FCA 419; (1988) 84 ALR 271 Human Rights and Equal Opportunity Commission v Mount Isa Mines Pty Ltd [1993] FCA 535; (1993) 46 FCR 301 Hunter v Moss [1993] EWCA Civ 11; [1994] 1 WLR 452 Inland Revenue Commissioners v Blott [1921] 2 AC 171 Jones v Daniel [2004] FCAFC 278; (2004) 141 FCR 148 Kartinyeri v The Commonwealth [1998] HCA 22; (1998) 195 CLR 337 Kennon v Spry [2008] HCA 56; (2008) 238 CLR 366 Kent v Vessel 'Maria Luisa' (No 2) [2003] FCAFC 93; (2003) 130 FCR 12 KLDE Pty Ltd v Commissioner of Stamp Duties (Qld) [1984] HCA 63; (1984) 155 CLR 288 Langford and Coleman [1992] FamCA 68; (1992) 16 Fam LR 228 Lavin v Toppi [2015] HCA 4; (2015) 254 CLR 459 Lionsgate Australia Pty Ltd v Macquarie Private Portfolio Management Ltd [2007] NSWSC 371; (2007) 62 ACSR 522 Mac-Jordan Construction Ltd v Brookmount Erostin Ltd (in receivership) (1991) 56 BLR 1; [1992] BCLC 350 Mullane v Mullane [1983] HCA 4; (1983) 158 CLR 436 National Mutual Life Association of Australia Ltd v Commissioner of Taxation [2009] FCAFC 96; (2009) 177 FCR 539 National Provincial Bank Ltd v Ainsworth [1965] UKHL 1; (1965) AC 1175 Newcastle Airport Ltd v Chief Commissioner of State Revenue [2014] NSWSC 1501; (2014) 99 ATR 748 Official Trustee in Bankruptcy v Mateo [2003] FCAFC 26; (2003) 127 FCR 217 Oil Basins Ltd v Commonwealth [1993] HCA 60; (1993) 178 CLR 643 Pearson & Ors v Lehman Brothers Finance SA & Ors [2010] EWHC 2914 (Ch) Pearson & Ors v Lehman Brothers Finance SA [2011] EWCA Civ 1544 Petroleum (Timor Sea) Pty Ltd v Minister for Resources [1994] FCA 1002; (1994) 49 FCR 155 Pilmer v The Duke Group Ltd (in liq) [2001] HCA 31; (2001) 207 CLR 165 Platypus Leasing Inc v Commissioner of Taxation [2005] NSWCA 399; (2005) 61 ATR 239 Priest v Ross Asset Management Limited (In liq) [2016] NZHC 1803 Re London Wine Co (Shippers) Ltd [1986] PCC 121 Re Rose [1952] Ch 499 Re Totalisator Administration Board of Queensland [1989] 1 Qd R 215 R v Australian Broadcasting Tribunal; Ex parte Hardiman [1980] HCA 13; (1980) 144 CLR 13 R v Toohey; Ex parte Meneling Station Pty Ltd [1982] HCA 69; (1982) 158 CLR 327 Shortall v White [2007] NSWCA 372 Simic v New South Wales Land and Housing Corp [2016] HCA 47; (2016) 339 ALR 200 State of Queensland v Congoo [2015] HCA 17; (2015) 256 CLR 239 Tanwar Enterprises Pty Ltd v Cauchi [2003] HCA 57; (2003) 217 CLR 315 Telstra Corporation Ltd v The Commonwealth [2008] HCA 7; (2008) 234 CLR 210 Wellington Capital Ltd v Australian Securities and Investments Commission [2014] HCA 43; (2014) 254 CLR 288 Wende v Horwath (NSW) Pty Limited [2014] NSWCA 170; (2014) 86 NSWLR 674 Western Australian Trustee Executor & Agency Co v Commissioner of Taxation (Western Australia) [1980] HCA 50; (1980) 147 CLR 119 White v Shortall [2006] NSWSC 1379; (2006) 68 NSWLR 650 Wingadee Shire Council v Willis [1910] HCA 35; (1910) 11 CLR 123 Yanner v Eaton 1999] HCA 53; (1999) 201 CLR 351 Heydon JD, Meagher, Gummow and Lehane's Equity: doctrines and remedies, (5th Ed, LexisNexis Butterworths, 2015) Goode, Sir Roy, Are Intangible Assets Fungible? (Lloyd's Maritime and Commercial Law Quarterly 379, 2003) Date of hearing: 21-22 August 2017 Registry: Western Australia Division: General Division National Practice Area: Taxation Category: Catchwords Number of paragraphs: 214 Counsel for Ms Ellison: S Owen-Conway QC Solicitor for Ms Ellison: Park Legal Solutions Counsel for the Commissioner of Taxation: J Hmelnitsky SC with D Hume Solicitor for the Commissioner of Taxation: Australian Government Solicitor Counsel for Sandini Pty Ltd: S H P Steward QC with F D O'Loughlin Solicitor for Sandini Pty Ltd: Jackson McDonald ORDERS WAD 172 of 2017 BETWEEN: DEBBIE MAREE ELLISON First Appellant WAVEFRONT ASSET PTY LTD (ACN 139 479 968) ATF THE FELSTEAD FAMILY TRUST Second Appellant AND: SANDINI PTY LTD (ACN 008 921 417) ATF THE KARRATHA RIGGING UNIT TRUST First Respondent WABELO PTY LTD (ACN 008 921 426) ATF THE ELLISON FAMILY TRUST Second Respondent CHRISTOPHER JAMES ELLISON (and others named in the Schedule) Third Respondent WAD 173 of 2017 BETWEEN: COMMISSIONER OF TAXATION First Appellant AND: SANDINI PTY LTD (ACN 008 921 417) ATF THE KARRATHA RIGGING UNIT TRUST First Respondent WABELO PTY LTD (ACN 008 921 426) ATF THE ELLISON FAMILY TRUST Second Respondent CHRISTOPHER JAMES ELLISON (and others named in the Schedule) Third Respondent JUDGES: SIOPIS, LOGAN AND JAGOT JJ DATE OF ORDER: 27 MARCH 2018 THE COURT ORDERS THAT: 1. The appeals be allowed. 2. The declaration made on 22 March 2017 be set aside. 3. The orders of 7 August 2017 as to costs be set aside. 4. The further amended originating application filed 7 September 2016 be dismissed. 5. The appellants file and serve proposed orders and short written submissions as to costs within 14 days. 6. The respondents file and serve proposed orders and short written submissions as to costs within a further 14 days thereafter. 7. Costs be determined on the papers unless any party objects at the time they comply with orders 5 and 6 above as required. Note: Entry of orders is dealt with in Rule 39.32 of the Federal Court Rules 2011. REASONS FOR JUDGMENT SIOPIS J: 1 I have had the very considerable benefit of reading the reasons for judgment of Jagot J. For the reasons given by Jagot J, I agree that the appeal be allowed and that the orders proposed by Jagot J be made. I certify that the preceding one (1) numbered paragraph is a true copy of the Reasons for Judgment herein of the Honourable Justice Siopis. Associate: Dated: 27 March 2018 REASONS FOR JUDGMENT LOGAN J: 2 I have had the privilege of reading in draft the reasons for judgment of Jagot J. 3 I gratefully adopt her Honour's summary of the facts, issues and submissions of the respective parties to the appeal and of the reasons of the primary judge. Her Honour has also extracted relevant legislative provisions. None of these do I repeat. For consistency, I shall also use the abbreviations adopted by her Honour. 4 For the reasons which follow, I would dismiss the appeals. 5 The evidence in this case in relation to the application by Ms Ellison for the making and amendment of an order (I refer to the orders collectively as, "the order") under s 79 of the Family Law Act (Cth) (Family Law Act), the subsequent lodgement of a consent by her and Mr Ellison and supporting materials and their approval by the Family Court, all, seemingly, without any attention to the possible federal revenue law consequences of the order proposed, made and later amended, gives pause for thought about the risks of over-specialisation in both the practising profession and the judiciary. However this may be, the task in these appeals is just to determine what those consequences were. 6 The method chosen for the determination in the original jurisdiction for the determination of those consequences, via the seeking of declaratory relief, was permissible but unusual. 7 The original jurisdiction of this Court includes, subject to a presently immaterial exception in relation to criminal jurisdiction, jurisdiction in any matter, "arising under any laws made by the Parliament": s 39B(1A)(c) of the Judiciary Act 1903 (Cth) (Judiciary Act). The determination of a CGT liability under the Income Tax Assessment Act 1997 (Cth) (ITAA97) is, unquestionably, one arising under the laws made by the Commonwealth parliament. Further, it is patent from the antecedent correspondence that a justiciable controversy in relation to that liability had arisen. So there could be no doubt that this Court had jurisdiction to entertain the proceeding and to grant declaratory relief so as to quell the controversy: Edwards v Santos Limited (2011) 242 CLR 421. 8 Because the Commissioner is the Commonwealth's chief revenue officer and was sued as a representative of the Commonwealth, this Court was not the only court which had jurisdiction to grant the declaratory relief sought. The original jurisdiction of the High Court includes jurisdiction in all matters in which the Commonwealth or a person being sued on behalf of the Commonwealth is a party: s 75(iii), Constitution. Oil Basins Ltd v Commonwealth (1993) 178 CLR 643 (Dawson J) offers an example of the recognition by the High Court of this jurisdiction in relation to a federal revenue law controversy. 9 Because this aspect of the High Court's jurisdiction is not, by virtue of s 38 of the Judiciary Act, made exclusive of the jurisdiction of the several courts of the States, those courts, within the limits of their several jurisdictions, could also have entertained this proceeding, on the basis that it was a matter "in which the High Court has original jurisdiction or in which original jurisdiction can be conferred upon it": s 39(2), Judiciary Act. Both the amount of the asserted tax liability and limits on the ability of the inferior courts of the States to grant declaratory relief would have meant that the proceeding was one apt only for institution in the Supreme Court of a State. 10 In earlier times, the lack of a comprehensive assessing regime in sales tax legislation sometimes saw the parties to a justiciable controversy avail themselves of this jurisdiction possessed by a State Supreme Court. Re Totalisator Administration Board of Queensland [1989] 1 Qd R 215 (McPherson J) offers an example of the recognition of this Supreme Court declaratory jurisdiction in a case ultimately disposed of in the High Court in relation to a sales tax controversy (sub nom Commissioner of Taxation v Totalisator Administration Board (Q) (1990) 170 CLR 508). 11 These days, the combination of a more comprehensive assessment regime in federal revenue statutes, the existence under Pt IVC of the Taxation Administration Act (Cth) (Taxation Administration Act) of a right of appeal to this Court in its original jurisdiction if dissatisfied with an objection decision in respect of such an assessment and the related consequence that this Court is the usual forum for the determination of federal revenue law controversies would usually see the Commissioner, if he had not already done so, make and then tender in a State Supreme Court a certified copy of that assessment. The effect of that tender would not deprive the State Supreme Court of jurisdiction to grant declaratory relief but rather the conclusive evidentiary quality of that assessment in that court as to the taxation liability (s 350-10, Table, item 2, Sch 1, Taxation Administration Act) would render futile the prosecution of that declaratory proceeding in that court by a person who disputed that assessed liability: Platypus Leasing Inc v Commissioner of Taxation (2005) 61 ATR 239. 12 In the present proceeding, the Commissioner could have made an assessment and then tendered it. The adoption of this course would also not have deprived this Court of the jurisdiction to entertain the proceeding but, as in a State Supreme Court, would have rendered the proceeding futile in so far as a party sought to dispute that assessed taxation liability. The Commissioner chose not to adopt that course in this proceeding. Such choices fall to be made in the Commissioner's general administration of taxation laws. He is hardly to be criticised for making the choice which he did. The proceeding was brought in the usual forum for the resolution of federal revenue law liability disputes. Further, the controversy was not just one between one party and the Commissioner but also between the parties to a marriage, only one of whom was in agreement with the Commissioner as to the taxation consequences of the order made in the matrimonial causes jurisdiction. The declaratory proceeding offered a convenient way in which each of those interested in the determination of the controversy could be made parties. Comparatively, in a taxation appeal under Pt IVC of the Taxation Administration Act, only a recipient of an assessment could have objected against that assessment and, in turn only a person dissatisfied with an objection decision could have instituted a taxation appeal. None of that means that the Commissioner was bound not to issue an assessment but it is possible to see, in the circumstances of this case, why, reasonably, he chose not to. 13 The existence of a jurisdiction to grant declaratory relief is one thing, whether, as a matter of discretion, to exercise that jurisdiction so as to grant relief is quite another. Ms Ellison initially made the decision by the primary judge to exercise the discretion a ground of appeal but chose not to press this ground. I respectfully agree with Jagot J that this this retreat was a sound step. That, notwithstanding the existence of a power to assess and the related objection and appeal regime described, the Commissioner chose not to assess and then tender an assessment but instead actively to participate in the proceeding as a party was a powerful factor, in conjunction with the continuance of the controversy, favouring the exercise of a discretion to grant relief. The position may have been different if a Pt IVC taxation appeal proceeding had been pending in this Court and, for some reason, the Commissioner had chosen not to tender the assessment concerned: Commissioner of Taxation v Futuris Corporation Ltd (2008) 237 CLR 146. No error of principle was entailed in the decision by the primary judge that the case was one in which it was apt to grant declaratory relief. 14 The question on the appeal is whether the declarations made by the primary judge as to the taxation liability controversy were correct? 15 It is tempting to answer that question just by concurring with the reasons of the primary judge but that would neither afford respectful recognition of a considered view to the contrary which Jagot J proposes to express (with which Siopis J proposes to concur) nor do justice to the submissions carefully made on behalf of each of the parties. 16 As always with a liability which is reliant for its existence on a statute, it is necessary, in determining whether such a liability has arisen, to commence with the text of that statute, construed having regard to context, subject matter and purpose: Commissioner of Taxation v Consolidated Media Holdings (2012) 250 CLR 503 at [39]. That means that the starting point must be the ITAA97, the relevant provisions in which are set out in the judgment of Jagot J. 17 From these it emerges that the relevant CGT event is CGT event A1, which arises on the disposal of a CGT asset: s 104-5, ITAA97. The shares in question (2,115,000 MIN shares owned by Sandini) constitute a CGT asset. The time when that CGT event occurs is also specified in s 104-5. Perhaps surprisingly, given that the making of orders in the matrimonial causes jurisdiction was consensually promoted by Mr Ellison and Ms Ellison, it was not suggested by any party that there was any antecedent disposal contract. On the basis that there was no such contract, the time of CGT event A1 was when the entity which hitherto owned the shares stopped being their owner. For this purpose, what is relevant is a change in the beneficial ownership of the shares: s 104-10(2), ITAA97. A suggestion made on behalf of Mr Ellison in submissions that the change in ownership had to be both legal and beneficial is contrary to that provision and must be rejected. 18 At first blush, one might have thought that the answer as to when and by what the requisite change in beneficial ownership occurred was straightforward. It occurred by virtue of the court order when that order was made on 21 September 2010. After all, the order made under s 79 of the Family Law Act spoke from the date of its making: Kennon v Spry (2008) 238 CLR 366 at [129] per Gummow and Hayne JJ. Of this order, the primary judge observed (at [142]): As noted in Lysaght v Edwards (1876) 2 Ch D 499, a right to specific performance to compel the transfer of an asset can be equated with beneficial ownership. In this instance, Ms Ellison had a more substantive right than a right to obtain an order for specific performance. She already had an order of the Family Court for the transfer of the shares within seven days. 19 I respectfully agree with this observation. The order made under s 79 of the Family Law Act in respect of the shares at least worked an alteration in the equitable ownership of those shares: Mullane v Mullane (1983) 158 CLR 436 at 445 (Mullane v Mullane). The order is not materially distinguishable from those which this Court in Official Trustee in Bankruptcy v Mateo (2003) 127 FCR 217 and in Jones v Daniel (2004) 141 FCR 148, in the application of Mullane v Mullane, regarded as effecting a change in beneficial ownership. For reasons which follow, the subject of the order was identifiable. 20 On and from the making of the order, it was Ms Ellison who enjoyed all of the attributes of the MIN Shares which gave them value. All that Sandini retained was the bare legal ownership in those shares. It held them as constructive trustee for Ms Ellison. It was Ms Ellison who enjoyed the dispositive power in respect of the shares. The evidence discloses that she exercised this in favour of her family trust. As the primary judge correctly found (at [22]), the trustee of the trust became the bare legal owner of the share on its registration as owner on 4 October 2010. 21 The Commissioner contended that there was insufficiency of identity in the shares referred to in the order for there to be a change in beneficial ownership. There was, with respect, a Dickensian quality to this submission, perhaps grounded in the nostalgic recollection of individually numbered, paper share certificates, physical scrip, duly produced at a company's share registry for cancellation and issuing of a fresh certificate or indorsement following a share transfer transaction. One might, with respect, have thought that ordinary experience of share transfer transactions in the digital age would have given pause for thought about the advancing of this submission. As it happens, it is without merit. 22 The subject of the rights given by the order was identifiable: 2,115,000 MIN shares owned by Sandini. The evidence before the primary judge (paragraph [5] of the affidavit of Mr Gould sworn on 14 June 2016) was that the shares in MIN were of the same class, were unnumbered and were not evidenced by the issue of physical scrip. To adopt an applicable description offered by Dixon J in Archibald Howie Pty Ltd v Commissioner of Stamp Duties (1948) 77 CLR 143 at [154], the interest transferred was that part of Sandini's "congeries of rights in personam" measured by the number of shares referred to in the order. Such rights would include rights to dividends, to capital and to vote in meetings of the company. 23 The number of shares beneficial ownership in which was transferred to Ms Ellison by the order was nothing more than the means of quantifying her proportionate interest constituted by this "congeries of rights in personam". That same proportion may be re-expressed from time to time by different numbers of shares: Commissioner of Taxation v McNeil (2007) 229 CLR 656 at [38] per Gummow A-CJ, Hayne, Heydon and Crennan JJ, citing with approval an explanation offered by Viscount Finlay in Inland Revenue Commissioners v Blott [1921] 2 AC 171, at 195. 24 An observation made in Eisner v Macomber 252 U.S. 189 (1920), at 208, though made in the era of physical scrip, remains relevant in the digital age for the description which is offered of the nature of the proportionate interest conferred by the holding of a particular number of shares: Certainly the interest of the stockholder is a capital interest, and his certificates of stock are but the evidence of it. They state the number of shares to which he is entitled and indicate their par value and how the stock may be transferred. They show that he or his assignors, immediate or remote, have contributed capital to the enterprise, that he is entitled to a corresponding interest proportionate to the whole, entitled to have the property and business of the company devoted during the corporate existence to attainment of the common objects, entitled to vote at stockholders' meetings, to receive dividends out of the corporation's profits if and when declared, and, in the event of liquidation, to receive a proportionate share of the net assets, if any, remaining after paying creditors. 25 As, with respect, the primary judge recognised, it is nothing to the point that there was a greater number of shares in MIN than 2,115,000. That did not prevent a change in the beneficial ownership of some of those shares via the court order. As Leeming JA remarked in Beck v Henley (2014) 11 ASTLR 457 at [40], "Shares are plainly specifically severable. Hence their name" (emphasis in original). The identification of individually numbered shares in MIN is unnecessary in the same way as such identification was unnecessary for the valid creation of a trust in respect of part of a parcel of shares: White v Shortall (2006) 68 NSWLR 650 at [210] to [247] per Campbell J. 26 The Commissioner was not a party to the Family Court proceeding. He must take the order as he finds it in the same way as he is bound to assess in accordance with other orders made in proceedings to which he is a stranger: Executor Trustee and Agency Co of South Australia Ltd v Deputy Federal Commissioner of Taxes (South Australia) (1939) 62 CLR 545 at 561-562 per Latham CJ; at 569-570 Dixon J and at 572 per McTiernan J. Such orders form part of the taxable substratum, already determined by a court of competent jurisdiction. The Commissioner's submissions as to the form of the order should, for this reason alone, be rejected. In any event, contrary to the Commissioner's submissions, the order does not purport to be made under s 79(1)(d) of the Family Law Act, only s 79. The amendments made to s 79 of that Act were not material when compared with the original wording with the observation being made in the explanatory memorandum that, that s 79(1)(d), "largely replicate[d] the existing law" (Bankruptcy and Family Law Legislation Amendment Bill 2005, Revised Explanatory Memorandum, par [55]). Even if there were some defect in the form of the order, that did not affect its legal efficacy. The analysis of the order made by the primary judge at [161] through [171] was correct. 27 This is sufficient to dispose of the appeals but the same result follows from an alternative proposition put to and accepted by the primary judge. 28 Even if either Ms Ellison were but a constructive recipient of the MIN shares and if the relevant CGT event Al were the transfer of the MIN shares by Sandini to Wavefront, Ms Ellison was sufficiently "involved" in that transfer to enliven under the ITAA97 ss 126-5 and 126-15 roll-over. 29 In these provisions, a CGT event is termed a "trigger event": s 126-5(1). The text of s 126-15 does not require that the person who is in fact the transferee of the CGT asset that is subject to the trigger event be a spouse or former spouse before roll-over relief is available. Instead, what is required is a trigger event, and for a spouse or former spouse to be involved in it. The Commissioner's submission that a transfer must be to a spouse or former spouse has no textual support in s 126-15. Instead, that submission is nothing more than a muffled echo of different language used in the former s 160ZZMA of the Income Tax Assessment Act 1936 (Cth) (ITAA 1936). 30 On any view of the facts, a CGT event Al occurred. Likewise, on any view, Ms Ellison was involved in that event. She was the beneficiary of the order. It was by her direction that her desired registration of the shares occurred. That is involvement in a CGT event. Without Ms Ellison's direction, the transfer would have been to her personally and her involvement would have been different, and passive, by way of being a recipient. Further, the transfer would not have happened but for the order. These circumstances constitute sufficient "involvement" in the CGT event for the purposes of s 126-15 of ITAA97. Thus, roll­over is available. 31 Section 126-15 is directed to beneficial ends. It relieves taxpayers from taxation burdens which would otherwise arise. The evident policy of s 126-15 is to defer crystallisation of a CGT liability. The text and those beneficial ends are conducive to a liberal construction of the provision: Burt v Commissioner of Taxation (1912) 15 CLR 469 and Western Australian Trustee Executor & Agency Co v Commissioner of Taxation (Western Australia) (1980) 147 CLR 119. The construction advanced on behalf of the first to fourth respondents to each appeal and accepted by the primary judge is in accordance with such a construction of s 126-15 and should be accepted as correct. 32 It follows that each appeal should be dismissed, with costs. I certify that the preceding thirty-one (31) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Logan. Associate: Dated: 27 March 2018 REASONS FOR JUDGMENT JAGOT J: SUMMARY 33 The issue in these appeals is whether the first respondent, Sandini Pty Ltd as trustee for the Karratha Rigging Unit Trust (or KRUT), was entitled to rollover relief by the operation of ss 104-10, Subdivision 126-A or 103-10 of the Income Tax Assessment Act 1997 (Cth) (ITAA 1997). 34 The claim for rollover relief is based on property settlement orders of the Family Court of Australia between husband (Mr Ellison) and wife (Ms Ellison) under s 79 of the Family Law Act 1975 (Cth). The orders joined Sandini Pty Ltd as trustee for the Ellison Family Trust to the Family Court proceedings and required it in that capacity to do all acts and things and sign all documents necessary to transfer to Ms Ellison 2,115,000 shares in a publicly listed company known as Mineral Resources Limited or MIN. Sandini was not the trustee of the Ellison Family Trust at any time but did own more shares in MIN than 2,115,000 in its capacity as the trustee of the KRUT. In response to a request by Ms Ellison, Sandini transferred 2,115,000 shares not to Ms Ellison as referred to in the orders, but to a company she controlled known as Wavefront Asset Pty Ltd. Sandini, Mr Ellison, and associated entities then sought a declaration that Sandini was entitled to rollover relief, which the primary judge granted. The Commissioner of Taxation and Ms Ellison dispute that entitlement. 35 Resolving the issue involves answering the following questions: (1) did the Family Court orders mean that a "change in ownership" as referred to in s 104-10(2) of the ITAA 1997 had occurred so that Ms Ellison beneficially owned 2,115,000 of the larger parcel of MIN shares to which Sandini held title at the time the order was made? The primary judge found that the orders had this effect, but the Commissioner contends that whatever rights were vested in Ms Ellison as a result of the orders those rights did not amount to equitable or beneficial ownership of any shares in MIN which Sandini owned in its capacity as trustee of the KRUT. Ms Ellison also contends that a "change of ownership" requires a transfer of legal title which the orders did not effect; (2) did the Family Court orders, either by reason of the change in beneficial ownership which the primary judge found had occurred and held to constitute CGT event A1 as defined in s 104-5 of the ITAA 1997 or the transfer of shares by Sandini to Wavefront, engage the rollover relief provision in s 126-15(1)(a) of the ITAA 1997? This provision refers to a trigger event which involves a company (the transferor) or a trustee (also the transferor) and a spouse or former spouse (the transferee) of another individual because of a court order under the Family Law Act. The primary judge held the provision was engaged on both bases. The Commissioner and Ms Ellison contend the provision was not engaged as the orders did not effect a change in ownership of the shares (as the first basis) and no shares were transferred to the spouse or former spouse as transferee and thus Ms Ellison was not "involved" as s 126-15(1) requires (as to the second basis). Ms Ellison also contends that no shares were transferred "because of" the Family Court orders; and (3) does s 103-10(1) of the ITAA 1997, which provides that Pt 3-1 and Pt 3-3 of the ITAA 1997 (the latter of which contains s 126-15) apply as if a person has received money or other property if "it has been applied for your benefit…or as you direct", mean that ss 104-10(2) and/or 126-15(1)(a) are deemed to apply to Ms Ellison because she directed the transfer of shares to Wavefront? The primary judge held that s 103-10(1) operated in this way. The Commissioner and Ms Ellison contend that s 103-10(1) only operated to engage provisions in Pts 3-1 and 3-3 of Ch 3 to the ITAA 1997 involving the receipt of money or other property. 36 For the reasons given below, I consider that the Commissioner's contentions should be accepted, as should Ms Ellison's contention that the shares in MIN which Sandini transferred to Wavefront were not transferred "because of" the Family Court orders. Accordingly, the appeals should be allowed and the declaration in Sandini's favour as to rollover relief which the primary judge made should be set aside. STATUTORY PROVISIONs Family Law Act 37 Section 78 of the Family Law Act is in these terms: (1) In proceedings between the parties to a marriage with respect to existing title or rights in respect of property, the court may declare the title or rights, if any, that a party has in respect of the property. (2) Where a court makes a declaration under subsection (1), it may make consequential orders to give effect to the declaration, including orders as to sale or partition and interim or permanent orders as to possession. 38 Section 79 of the Family Law Act provides that: (1) In property settlement proceedings, the court may make such order as it considers appropriate: (a) in the case of proceedings with respect to the property of the parties to the marriage or either of them - altering the interests of the parties to the marriage in the property; or (b) in the case of proceedings with respect to the vested bankruptcy property in relation to a bankrupt party to the marriage - altering the interests of the bankruptcy trustee in the vested bankruptcy property; including: (c) an order for a settlement of property in substitution for any interest in the property; and (d) an order requiring: (i) either or both of the parties to the marriage; or (ii) the relevant bankruptcy trustee (if any); to make, for the benefit of either or both of the parties to the marriage or a child of the marriage, such settlement or transfer of property as the court determines. … (2) The court shall not make an order under this section unless it is satisfied that, in all the circumstances, it is just and equitable to make the order. (4) In considering what order (if any) should be made under this section in property settlement proceedings, the court shall take into account: (a) the financial contribution made directly or indirectly by or on behalf of a party to the marriage or a child of the marriage to the acquisition, conservation or improvement of any of the property of the parties to the marriage or either of them, or otherwise in relation to any of that last-mentioned property, whether or not that last-mentioned property has, since the making of the contribution, ceased to be the property of the parties to the marriage or either of them; and (b) the contribution (other than a financial contribution) made directly or indirectly by or on behalf of a party to the marriage or a child of the marriage to the acquisition, conservation or improvement of any of the property of the parties to the marriage or either of them, or otherwise in relation to any of that last-mentioned property, whether or not that last-mentioned property has, since the making of the contribution, ceased to be the property of the parties to the marriage or either of them; and (c) the contribution made by a party to the marriage to the welfare of the family constituted by the parties to the marriage and any children of the marriage, including any contribution made in the capacity of homemaker or parent; and (d) the effect of any proposed order upon the earning capacity of either party to the marriage; and (e) the matters referred to in subsection 75(2) so far as they are relevant; and (f) any other order made under this Act affecting a party to the marriage or a child of the marriage; and (g) any child support under the Child Support (Assessment) Act 1989 that a party to the marriage has provided, is to provide, or might be liable to provide in the future, for a child of the marriage. 39 By s 79A of the Family Law Act: (1) Where, on application by a person affected by an order made by a court under section 79 in property settlement proceedings, the court is satisfied that: (a) there has been a miscarriage of justice by reason of fraud, duress, suppression of evidence (including failure to disclose relevant information), the giving of false evidence or any other circumstance; or (b) in the circumstances that have arisen since the order was made it is impracticable for the order to be carried out or impracticable for a part of the order to be carried out; or (c) a person has defaulted in carrying out an obligation imposed on the person by the order and, in the circumstances that have arisen as a result of that default, it is just and equitable to vary the order or to set the order aside and make another order in substitution for the order; or (d) in the circumstances that have arisen since the making of the order, being circumstances of an exceptional nature relating to the care, welfare and development of a child of the marriage, the child or, where the applicant has caring responsibility for the child (as defined in subsection (1AA)), the applicant, will suffer hardship if the court does not vary the order or set the order aside and make another order in substitution for the order; or (e) a proceeds of crime order has been made covering property of the parties to the marriage or either of them, or a proceeds of crime order has been made against a party to the marriage; the court may, in its discretion, vary the order or set the order aside and, if it considers appropriate, make another order under section 79 in substitution for the order so set aside. (1A) A court may, on application by a person affected by an order made by a court under section 79 in property settlement proceedings, and with the consent of all the parties to the proceedings in which the order was made, vary the order or set the order aside and, if it considers appropriate, make another order under section 79 in substitution for the order so set aside. Income Tax Assessment Act 1997 40 Part 3-1 of Ch 3 of the ITAA 1997 contains s 103-10 which is in these terms: (1) This Part and Part 3-3 apply to you as if you had received money or other property if it has been applied for your benefit (including by discharging all or part of a debt you owe) or as you direct. (2) Those Parts apply to you as if you are entitled to receive money or other property: (a) if you are entitled to have it so applied; or (b) if: (i) you will not receive it until a later time; or (ii) the money is payable by instalments. 41 Part 3-1 also contains Div 104 which includes the following provisions: 104-1 This Division sets out all the CGT events for which you can make a capital gain or loss. It tells you how to work out if you have made a gain or loss from each event and the time of each event. It also contains exceptions for gains and losses for many events (such as the exception for CGT assets acquired before 20 September 1985) and some cost base adjustment rules. 104-5 CGT events Event number and description Time of event is: Capital gain is: Capital loss is: A1 Disposal of a CGT asset [See section 104-10] when disposal contract is entered into or, if none, when entity stops being asset's owner capital proceeds from disposal less asset's cost base asset's reduced cost base less capital proceeds 104-10 (1) CGT event A1 happens if you * dispose of a * CGT asset. (2) You dispose of a * CGT asset if a change of ownership occurs from you to another entity, whether because of some act or event or by operation of law. However, a change of ownership does not occur if you stop being the legal owner of the asset but continue to be its beneficial owner. (3) The time of the event is: (a) when you enter into the contract for the * disposal; or (b) if there is no contract - when the change of ownership occurs. … 42 Section 995-1 contains defined terms including, except so far as the contrary intention appears: "CGT event" means any of the CGT events described in Division 104. A CGT event described by number (for example: CGT event A1 ) refers to the relevant event in that Division. "dispose of" a * CGT asset: you dispose of a CGT asset (in its capacity as a CGT asset) in the circumstances specified in section 104-10. "spouse" of an individual includes: (a) another individual (whether of the same sex or a different sex) with whom the individual is in a relationship that is registered under a * State law or * Territory law prescribed for the purposes of section 2E of the Acts Interpretation Act 1901 as a kind of relationship prescribed for the purposes of that section; and (b) another individual who, although not legally married to the individual, lives with the individual on a genuine domestic basis in a relationship as a couple. 43 Part 3-3 of Ch 3 of the ITAA 1997 contains these provisions: 126-1 A same-asset roll-over allows a capital gain or loss an entity makes from disposing of a CGT asset to, or creating a CGT asset in, another entity to be disregarded. For a disposal, certain attributes of the asset are transferred to the receiving entity. 126-5 (1) There is a roll-over if a * CGT event (the trigger event) happens involving an individual (the transferor) and his or her * spouse (the transferee), or a former * spouse (also the transferee), because of: (a) a court order under the Family Law Act 1975 or under a * State law, * Territory law or * foreign law relating to breakdowns of relationships between spouses; or … (2) Only these * CGT events are relevant: (a) CGT events A1 and B1 (a disposal case); and (b) CGT events D1, D2, D3 and F1 (a creation case). … (4) A * capital gain or a * capital loss the transferor makes from the * CGT event is disregarded. 126-15 (1) There are the roll-over consequences in section 126-5 if the trigger event involves a company (the transferor) or a trustee (also the transferor) and a * spouse or former spouse (the transferee) of another individual because of: (a) a court order under the Family Law Act 1975 or under a * State law, * Territory law or * foreign law relating to breakdowns of relationships between spouses; or … 44 As the primary judge explained at [123] of his reasons: With the making of a court order such as the Family Court Order, there are two roll-over consequences. The first is that if the roll-over has taken place, no tax is paid by the transferor and the transferee inherits or acquires the cost base of the assets as they were historically when held by the transferor. In this way, tax is deferred until the next disposition of the family asset. The underlying policy is apparently that the transfers of assets arising on a marital breakdown, as on a transfer of assets in other circumstances such as death, are not the occasion for exigibility. In both those instances, there is not the sale for purpose of making a gain, but rather in this instance, necessary compliance with a court order... BASIC FACTS 45 Mr Ellison and Ms Ellison were married. As noted, Sandini was the trustee of the KRUT. Sandini as the trustee for the KRUT owned over 35 million shares in an Australian public company, MIN. KRUT is a unit trust in which Wabelo Pty Ltd as trustee for the Ellison Family Trust is the sole unit holder. The Ellison Family Trust is a discretionary trust the beneficiaries of which include Mr Ellison and another company Ellison (WA) Pty Ltd, which has one issued share beneficially owned by Mr Ellison. Ms Ellison was the sole director and shareholder of Wavefront, the trustee of the Felstead Family Trust. 46 After the breakdown of their marriage, Ms Ellison applied to the Family Court for orders under s 79 of the Family Law Act. 47 On 21 September 2010 the Family Court made orders by consent between Mr Ellison and Ms Ellison. The order was in these terms: ORDERS BY CONSENT are hereby pronounced in terms of the Minute of Consent Orders dated 15 September 2010, a sealed copy of which is attached. 48 The attached sealed Minute of Consent Orders record the following: On the: • Form 1 Application for Final Orders of the husband filed this day it is agreed that the following orders be made by consent: 1 Sandini Pty Ltd as trustee for the Ellison Family Trust ("Sandini") be joined to these proceedings as second respondent. 2 Pursuant to s 79A of the Family Law Act 1975 as amended Orders 2.3-5 inclusive of the orders made by consent on 23 September 2009 be set aside. 3 Within 7 days of orders being made Sandini do all acts and things and sign all documents necessary to transfer to the wife 2,115,000 Mineral Resources Limited shares. 49 These orders are signed by Mr Ellison and Ms Ellison. Mr Ellison has also signed in his capacity as: Sole Director and Sole Company Secretary of Sandini Pty Ltd in its own right and as trustee for the Ellison Family Trust Pty Ltd in accordance with Section 127 of the Corporations Act 2001. 50 The parties agree that the orders were made under s 79 of the Family Law Act. 51 Orders 2.3-5 of the orders made on 23 September 2009, as referred to in order 2 of the orders of 21 September 2010, would have given Ms Ellison an entitlement to a transfer of assets of a further $18.8 million. Failing payment by 1 December 2011, the orders also required Mr Ellison to transfer to Ms Ellison shares in MIN to the value of $2,500,000. The apparently more favourable terms of the 23 September 2009 orders compared to those of 21 September 2010 may explain why Ms Ellison is seeking to have the orders of 21 September 2010 set aside, but that is not an issue for this proceeding. 52 The divorce of Mr Ellison and Ms Ellison was effected by an order of the Family Court on 8 April 2010, the divorce order taking effect from 9 May 2010. 53 By September 2010 Mr Ellison became aware that the orders of 23 September 2009 required him personally to transfer MIN shares to Ms Ellison to the value of $2,500,000 when, in fact, Sandini owned the shares as trustee for the KRUT. This is said by him to be the genesis of the orders of 21 September 2010. 54 The 21 September 2010 orders refer to and join as a second respondent "Sandini Pty Ltd as trustee for the Ellison Family Trust ("Sandini")". Sandini was not the trustee for the Ellison Family Trust. As noted, Sandini was and is the trustee of the KRUT. 55 The trustee of the Ellison Family Trust, as noted, was and is another company of which Mr Ellison is the sole director and company secretary, Wabelo. 56 Ms Ellison sent an email to Mr Ellison on 29 September 2010 asking that the MIN shares be transferred to Wavefront as trustee for the Felstead Family Trust. 57 On 30 September 2010 Mr Ellison for Sandini and Ms Ellison for Wavefront signed a share transfer form for the transfer of 2,115,000 shares in MIN from Sandini to Wavefront. This transfer was registered on 4 October 2010. 58 Sandini, Mr Ellison, Wabelo and Ellison (WA) commenced a proceeding seeking declaratory relief. They sought a declaration that on or before 30 September 2010 beneficial ownership of 2,115,000 shares in MIN owned by Sandini passed to Ms Ellison upon the making of the 21 September 2010 orders or steps taken as a consequence of these orders (defined as the Disposal). They also sought a declaration that in calculating the liability to income tax of the applicants for the year ended 30 June 2011 Sandini, in its capacity as trustee of the KRUT, is entitled to rollover relief in relation to the Disposal. 59 The primary judge held that the 21 September 2010 orders caused a change in ownership of 2,115,000 MIN shares owned by Sandini so that CGT Event A1 happened on the making of those orders within the meaning of s 104-10 of the ITAA 1997. 60 The primary judge also held that the facts engaged s 126-15 of the ITAA 1997 which provide for rollover consequences if the trigger event involves "a company (the transferor) or a trustee (also the transferor) and a spouse or former spouse (the transferee) of another individual because of: (a) a court order under the Family Law Act 1975…". 61 The primary judge further considered that s 103-10 of the ITAA 1997 had the effect of deeming Wavefront's receipt of MIN shares to be receipt by Ms Ellison so that ss 104-10(2) and 126-15(1) of the ITAA 1997 were taken to apply to her. 62 As a result, the primary judge made the following declaration: For the income year 30 June 2011, the first applicant is entitled to the roll-over consequences in s 126-5 of the Income Tax Assessment Act 1997 (Cth), due to the operation of s 126-15(1)(a) of the Income Tax Assessment Act 1997 (Cth) in relation to its disposal of the 2,115,000 Shares in Mineral Resources Limited as processed in 4 October 2010. 63 The Commissioner and Ms Ellison contend that the primary judge was in error in each of the respects identified above. THE PRIMARY JUDGE'S REASONS 64 The primary judge rejected Ms Ellison's contention that the Court did not have jurisdiction to declare that Sandini was entitled to rollover relief. As his Honour said at [44] there is a genuine dispute about Sandini's entitlement to rollover relief which a declaration would quell. Ms Ellison does not challenge this conclusion in her appeal. 65 The primary judge also rejected Ms Ellison's argument that relief should be refused on a discretionary basis in that Sandini's seeking of the declarations effectively by-passed the statutory scheme in Pt IVC of the Taxation Administration Act 1953 (Cth) for the resolution of objections. While his Honour accepted that the availability of an alternative remedy is relevant to the discretionary power to grant a declaration, he was satisfied that the case presented a suitable vehicle for declaratory relief. As the primary judge said, the case involved novel questions of construction and the Commissioner, who had elected not to issue a notice of assessment pending resolution of the proceedings, accepted the suitability of the issues for resolution by declaratory relief (at [51]-[54]). Ms Ellison withdrew her ground of appeal alleging an error in the exercise of discretion during the course of the hearing of her appeal. Given the Commissioner's position, the decision not to pursue this ground of appeal was sound. 66 Before the primary judge there was one factual dispute, whether Ms Ellison sent an email on 29 September 2010 to Mr Ellison requesting the transfer of the MIN shares to Wavefront. The primary judge found that Ms Ellison sent the email (at [20]). There is no challenge to this finding in Ms Ellison's appeal. 67 The primary judge accepted that the orders of the Family Court involved the occurrence of CGT event A1. He held that the orders meant that there had been an immediate change of ownership in 2,115,000 of the MIN shares of Sandini as referred to in s 104-10(2) of the ITAA 1997. He considered this to be the effect of the reasoning in two Full Court decisions about orders under s 79 of the Family Law Act, Jones v Daniel [2004] FCAFC 278; (2004) 141 FCR 148 and Official Trustee in Bankruptcy v Mateo [2003] FCAFC 26; (2003) 127 FCR 217 by which he was bound (at [139], [153], [154] and [160]). 68 As to the availability of rollover relief in s 126-15(1)(a) of the ITAA 1997 Honour reasoned that: (1) the reference in s 126-15(1)(a) to a "court order" does not mean that the court order must be "valid or efficacious" (at [124]); and (2) s 126-15(1)(a) was satisfied as Ms Ellison became the beneficial owner of the shares as transferee because of the Court orders or was involved in the transfer of the MIN shares to Wavefront which would not have occurred were it not for the Family Court order or Ms Ellison's direction or instruction. Either way, Ms Ellison was relevantly involved in the event. Further, the causal requirement involves nothing more than "commonsense cause and effect", so that further inquiry about "exact compliance with the precise terms of the court order is not stipulated or implied in the section" (at [125], [185]-[188]). 69 The primary judge also would have accepted the alternative argument that Sandini was entitled to CGT rollover relief by operation of s 103-10 of the ITAA 1997 because the transfer to Wavefront was at her direction (at [183]-[187]). 70 As noted, the Commissioner and Ms Ellison challenge these conclusions, the only material difference between them being the Commissioner has retreated from the contention before the primary judge that only the disposal of legal title will satisfy the requirements of CGT event A1 whereas Ms Ellison maintains that contention in her appeal. 71 In neither the hearing before the primary judge nor this appeal did the parties suggest that the minute of consent orders signed by Mr Ellison, Ms Ellison and Mr Ellison as "[s]ole Director and Sole Company Secretary of Sandini Pty Ltd in its own right and as trustee for the Ellison Family Trust Pty Ltd in accordance with Section 127 of the Corporations Act 2001" amounted to anything more than an agreement to the making of orders. The case was never put on the basis of any suggestion of a contract for the transfer of shares in MIN between Mr Ellison and Ms Ellison. THE CHANGE OF OWNERSHIP ISSUE 72 Section 104-10(2) of the ITAA 1997 provides that CGT event A1 happens if a person disposes of a CGT asset. A person disposes of a CGT asset "if a change of ownership occurs from you to another entity". Section 104-10(2) also provides that a change of ownership does not occur "if you stop being the legal owner of the asset but continue to be its beneficial owner". The Commissioner's submissions 73 The Commissioner submitted that the primary judge was correct in principle when he concluded that a change of ownership can occur if there is a change in equitable but not legal ownership. According to the Commissioner, however, the primary judge erred in concluding that the 21 September 2010 orders effected a change in equitable ownership. In support the Commissioner made the following points. 74 Section 104-10(2) concerns a change of ownership, not a mere change of proprietary interests. Ownership involves a "right to have and to dispose of possession and enjoyment of the subject matter" of the proprietary right (Yanner v Eaton [1999] HCA 53; (1999) 201 CLR 351 at [25]). Thus, in Yanner at [22] the High Court refused to find that the Crown had "full beneficial, or absolute, ownership" of fauna because of difficulty identifying the fauna to which the rights attached. 75 Further, for there to be a change of ownership the transferee must obtain a proprietary interest in the asset. A proprietary interest is ordinarily one that "must be definable, identifiable by third parties, capable in its nature of assumption by third parties, and have some degree of permanence or stability" (R v Toohey; Ex parte Meneling Station Pty Ltd [1982] HCA 69; (1982) 158 CLR 327 at 342 citing National Provincial Bank Ltd v Ainsworth [1965] UKHL 1; (1965) AC 1175 at 1247-1248). This is because property is often best understood as a "legally endorsed concentration of power" (Yanner at [18] citing Gray, "Property in Thin Air", (1991) 50 Cambridge Law Journal 252 at 299; see also Telstra Corporation Ltd v The Commonwealth [2008] HCA 7; (2008) 234 CLR 210 at [44]). 76 The 21 September 2010 orders did not effect a change in the legal ownership of any MIN shares. A change in legal ownership required the execution and registration of share transfer forms (which occurred, but in favour of Wavefront, not Ms Ellison). The first issue is thus whether the orders effected a change in equitable ownership. As a result, the principle in Lavin v Toppi [2015] HCA 4; (2015) 254 CLR 459 at [52] is engaged: The extent of any equitable right or entitlement has been said to be commensurate with the orders which a court of equity may make to protect or enforce the right or entitlement. 77 Accordingly, if a court of equity would not grant relief giving a person, in effect, rights of ownership over a subject matter, it cannot be said that the person is the equitable owner of that subject matter. 78 According to the Commissioner, there are five important features of order 3 of the 21 September 2010 orders: (1) although an order declaring a change in the parties' rights to shares could have been made under s 79(1)(a) of the Family Law Act, the order does not itself declare a change in ownership; (2) rather, the order requires that "Sandini do all acts and things and sign all documents necessary to transfer to the wife 2,115,000 Mineral Resources Limited shares". The order thus was made under s 79(1)(d) of the Family Law Act, not s 79(1)(a); (3) the duty imposed by the order was time conditional. It was not to be complied with immediately but was to be complied with within seven days; (4) the duty did not attach to particular shares in MIN but to a quantum of MIN shares; and (5) the order did not restrain Sandini from dealing in the MIN shares it owned or in any particular quantum of MIN shares. Such an order could have been made under r 20.07(e) of the Family Law Rules 2004 (Cth) but was not. 79 The Commissioner submitted that order 3 derived its practical efficacy from two sources, the power of the Family Court to punish for contempt under s 35 of the Family Law Act and s 106A(1) of that Act which states: (1) If: (a) an order under this Act has directed a person to execute a deed or instrument; and (b) that person has refused or neglected to comply with the direction or, for any other reason, the court considers it necessary to exercise the powers of the court under this subsection; the court may appoint an officer of the court or other person to execute the deed or instrument in the name of the person to whom the direction was given and to do all acts and things necessary to give validity and operation to the deed or instrument. 80 Section 106A(1) is conditional and discretionary. 81 Accordingly, upon the making of the 21 September 2010 orders, the Commissioner said: (1) the subject of any rights was not identifiable as the orders did not attach to any particular shares and Sandini owned more shares than the orders required to be transferred; (2) such rights as Ms Ellison obtained in respect of shares in MIN were not transferable. The orders required the transfer of shares to "the wife" and a court, including a court of equity, would not grant relief involving a transfer to any person other than Ms Ellison; (3) Ms Ellison's remedy would not be in equity. Her rights arose from s 106A of the Family Law Act and equity would not provide any additional remedy to that under s 106A (whereby an officer of the court could do all things necessary to execute an instrument effecting the required transfer of shares); (4) Sandini did not lose control of any of its MIN shares. The orders did not prohibit Sandini from dealing in those shares. Sandini retained all rights to assign and encumber its shares. Sandini could have sold all of its MIN shares and then acquired at least 2,115,000 shares in MIN within the seven days without contravening the order; (5) it necessarily follows from (4) that Ms Ellison did not gain control of any shares in MIN; and (6) as a result, it cannot be said that Ms Ellison owned any shares in MIN. 82 The position is the same after the expiry of the period of seven days referred to in order 3. The only difference is that if Sandini failed to transfer 2,115,000 MIN shares to Ms Ellison it would be in contempt of order 3 and Ms Ellison could obtain relief under s 106A of the Family Law Act. Section 106A is a statutory right which is not proprietary (see, by analogy, Kartinyeri v The Commonwealth [1998] HCA 22; (1998) 195 CLR 337 at [2]-[3]). Liability to contempt for failure to comply with an order says nothing about the character of the right as a proprietary right or not. There would be no occasion for equity to grant any additional remedy. 83 In any event, submitted the Commissioner, there can be no contempt of an order the meaning of which is unclear (Baker v Paul [2013] NSWCA 426 at [21]). On its face order 3 purported to bind Sandini in its capacity as trustee of the Ellison Family Trust, but Sandini was not the trustee of the Ellison Family Trust and did not own any MIN shares in that capacity. This means the order is subject to real doubt and would not be enforced under s 106A, a fact unaffected by the "practical reality" that Sandini was likely to comply with the order (as the primary judge noted at [165]). 84 It is also apparent that Ms Ellison did not wish any MIN shares to be transferred to her. She wished for MIN shares to be transferred to Wavefront. 85 For these reasons, the Commissioner submitted, the 21 September 2010 orders did not effect any change in ownership of any MIN shares. 86 Mateo and Jones did not require the contrary conclusion. This is because: Both Mateo and Jones concerned orders for the transfer of specified real estate (see Jones at [4]; Mateo at [83]); the subject matter of the orders was therefore identifiable. Further, both Mateo and Jones concerned orders to "transfer" property, not an order to execute documents for that purpose. The orders in Mateo contained a negative injunction preventing encumbrance of the real estate prior to transfer: see at [83] (order 2). The orders in Mateo also contained a self-executing order appointing the Registrar to execute all necessary deeds and documents if there were a default: see at [83] (order 14). Neither Mateo nor Jones involved orders which were defective in form. Both Mateo and Jones concerned an old (and now repealed) version of s 79(1) of the Family Law Act. The text of that version is set out at [8] of Jones. The power given by that provision was to make an order altering interests in property, which was said to "includ[e]" a power to require the making of a transfer. That provision was repealed by the Bankruptcy and Family Law Legislation Amendment Act 2005 (Cth). The current form of s 79(1) expressly distinguishes between orders altering interests in property (s 79(1)(a)) and orders requiring the making of a transfer (s 79(1 )( d)). In Jones, Allsop J gave weight to the fact that the orders were made "against the background of s 79": at [20]. Neither Mateo nor Jones concerned whether the relevant orders effected a change in "ownership" - whether in general or as that term is used in s 104-10 of the ITAA 1997. Nothing in those cases stands for the proposition that equitable ownership, as distinct from some equitable estate or interest, was transferred by the making of the orders. Ms Ellison's submissions 87 Ms Ellison submitted that a "change in ownership" within the meaning of s 104-10(2) of the ITAA 1997 requires a change in legal ownership. The sense in which "ownership" is used in s 104-10(2) is the "entire dominion of the thing said to be owned" (Bellinz Pty Ltd v Commissioner of Taxation (Cth) (1998) 84 FCR 154 at 161). Thus, a transfer of beneficial ownership is insufficient. If a transfer of beneficial ownership is sufficient, Ms Ellison submitted that the 21 September 2010 orders did not have that effect for the reasons identified by the Commissioner. Respondents' submissions 88 The respondents adopted the reasoning of the primary judge. 89 The 21 September 2010 orders spoke from the date on which they were made (Kennon v Spry [2008] HCA 56; (2008) 238 CLR 366 at [129]). As the primary judge noted at [142], from the making of the orders, Ms Ellison's rights were greater than those of a purchaser under a contract of sale who had paid the purchase price, which makes the vendor a "constructive trustee, absolutely and indefeasibly for the purchaser" (Heydon JD, Meagher, Gummow and Lehane's Equity: doctrines and remedies, (5th Ed., LexisNexis Butterworths, 2015) at [7-145]). Thus, as his Honour said at [142]: As noted in Lysaght v Edwards (1876) 2 Ch D 499, a right to specific performance to compel the transfer of an asset can be equated with beneficial ownership. In this instance, Ms Ellison had a more substantive right than a right to obtain an order for specific performance. She already had an order of the Family Court for the transfer of the shares within seven days. 90 By reason of the orders Ms Ellison immediately enjoyed full beneficial ownership of 2,115,000 MIN shares. She exercised her dispositive power by requiring the MIN shares to be transferred to her family trust. On registration of the share transfer on 4 October 2010, that trust gained bare legal title to the shares, as Ms Ellison was the equitable owner of the shares from the making of the orders on 21 September 2010. 91 As the respondents put it: (1) "[t]he shares were of the same class, were unnumbered and were not evidenced by the issue of physical scrip. The asset which was transferred was nonetheless clearly identified: it was that part of Sandini Pty Ltd's congeries of rights in personam [Archibald Howie Pty Ltd v Commissioner of Stamp Duties (NSW) [1948] HCA 28; (1948) 77 CLR 143 per Dixon J at 154] as measured by the particular number of shares set out in the Orders"; (2) "[t]he Commissioner's approach misconceives the nature of a share in a company and confuses the means of measuring proportionally the congeries of rights held by a shareholder, as against the rights themselves" (Pilmer v The Duke Group Ltd (in liq) [2001] HCA 31; (2001) 207 CLR 165 at [19]; see also White v Shortall [2006] NSWSC 1379; (2006) 68 NSWLR 650 at [199] which confirms that the right to sue for an unpaid dividend in relation to shares is a single chose in action, the measure of which is the number of shares held); (3) the rights which Ms Ellison obtained in equity were "transferable or assignable" and Ms Ellison exercised those rights to direct that the MIN shares go to her family trust; (4) Ms Ellison's remedy to enforce her interest was not limited to the Family Law Act. A constructive trust arose upon the making of the orders and equity would regard as done that which ought to be done; (5) Sandini lost control of that part of its congeries of rights affected by the orders. "Consistently with the observation of Campbell J in White v Shortall at [210], Sandini …was free to sell the shares in MIN provided that it did not sell to fewer than 2,115,000 and provided that Ms Ellison was free to call for the transfer of those shares. These limitations reflect the change in equitable ownership"; (6) Mateo and Jones are applicable. The terms of the orders in Mateo and Jones are materially the same as those here. In each case, as here, the orders obliged a transfer to a named spouse. Whilst the orders in Mateo contained a negative injunction preventing any encumbrance of the land in issue, there is nothing to suggest that a similar order was present in Jones. In both cases, the orders were held to have immediate dispositive effect. The changes to the Family Law Act are not material when they are compared with the original wording. The Bankruptcy and Family Law Legislation Amendment Bill 2005, Revised Explanatory Memorandum, states that s 79(1)(d) largely replicates the existing law (at [55]); and (7) Mateo and Jones are authority for the proposition that the effect of the orders was to create more than a mere equitable interest in favour of Ms Ellison. By reason of the orders Ms Ellison enjoyed all of the value in the MIN Shares and there was a change in ownership. 92 Otherwise, the respondents submitted, the primary judge was right to reject the contentions that the 21 September 2010 orders were deficient and that a transfer of legal title in the MIN shares was required to effect a change in ownership. Discussion Change in legal ownership required? 93 The first argument for Ms Ellison that a change in legal ownership is required to satisfy s 104-10(2) of the ITAA 1997 may be dismissed immediately. The argument is inconsistent with the second sentence of the section which provides that "a change of ownership does not occur if you stop being the legal owner of the asset but continue to be its beneficial owner". As the primary judge said at [143], the express reference in the section to a change in legal but not beneficial ownership not being sufficient to amount to a "change in ownership" indicates that a change in beneficial but not legal ownership will be sufficient. Meaning of "ownership" 94 Section 104-10(2) requires a "change in ownership", not the mere creation of a proprietary interest in another entity. "Ownership" has been said to involve: (1) "…dominance, ultimate control and of ultimate title against the whole world" (Kent v Vessel 'Maria Luisa' (No 2) [2003] FCAFC 93; (2003) 130 FCR 12 at [62]); (2) "…something greater than beneficial interest. Equitable ownership of property is commensurate with the right to relief in a Court of Equity… If a person has contractual rights in relation to a ship which, if performed will result in the person becoming the owner of the ship, then the person will be regarded as the equitable owner of the ship provided that specific performance of the contract would be decreed: KLDE Pty Ltd v Commissioner of Stamp Duties (Qld) (1984) 155 CLR 288, 296-297. Thus entitlement to a vesting order or equivalent relief would be necessary before AFE could be regarded as the equitable owner of the ship as at the relevant date: Stern v McArthur (1988) 165 CLR 489, 523-524; Chan v Cresdon Pty Ltd (1989) 168 CLR 242, 252-253. But that does not mean that AFE does not have an interest in the trust property, including the ship, which equity would protect regardless of whether AFE could be called the equitable owner" (Maria Luisa at [66]); and (3) a legal relationship with a subject-matter involving a concentration of power to control or deal with the subject-matter fully (Yanner at [17]-[25]). 95 In KLDE Pty Ltd v Commissioner of Stamp Duties (Qld) [1984] HCA 63; (1984) 155 CLR 288 at 296 the High Court noted that: Where the contract is capable of being specifically performed the vendor, pending payment of the balance of purchase price, is not a bare trustee (he has been described as a trustee sub modo: see Chang v Registrar of Titles (1976) 8 ALR 285 at 291; 137 CLR 177 at 184–5). However, so far as the interest of the purchaser is concerned, this court was clearly of the view in R v Australian Broadcasting Tribunal; Ex parte Hardiman (1980) 29 ALR 289; 144 CLR 13 that: "a purchaser who can by way of specific performance compel a transfer of shares under a contract is a beneficial owner of the shares": (ALR) at p 302; (CLR) at p 31, per Gibbs, Stephen, Mason, Aickin and Wilson JJ. 96 The company which the High Court had in mind in R v Australian Broadcasting Tribunal; Ex parte Hardiman [1980] HCA 13; (1980) 144 CLR 13 at 31 was a proprietary company in which the sale of the whole of the issued share capital was proposed, although their Honours also said (at 32) that "there are situations in which the purchaser of shares in a listed public company may be able to compel specific performance of his contract as, for example, when shares are unobtainable or they have special market value". This reflects the orthodox approach that a court of equity will not generally order specific performance of the sale of shares in a publicly listed company. As explained in Lionsgate Australia Pty Ltd v Macquarie Private Portfolio Management Ltd [2007] NSWSC 371; (2007) 62 ACSR 522 at [64]: Generally speaking, the court will not decree specific performance against the seller under a contract for the sale of shares quoted on and freely traded through a stock market maintained by a stock exchange. This is because, as Shadwell VC observed in Duncuft v Albrecht (1841) 12 Sim 189 at p 199; 59 ER 1104 at p 1108, such a commodity "is always to be had by any person who chooses to apply for it in the market". The buyer can satisfy himself by resort to the market and may then look to the seller for monetary compensation if he has had to pay more than the contracted price. Damages are accordingly an adequate remedy. As Shadwell VC further observed, a commodity of the kind thus readily obtainable is to be distinguished from, for example, "a certain number of railway shares of a particular description, which railway shares are limited in number, and which, as has been observed, are not always to be had in the market". 97 To return to the concept of "ownership", in KLDE Brennan J, in dissent, said this at 300-301: It seems to me to be inaccurate to describe as ownership the interest which a purchaser acquires on entering into a contract for the sale of land before he is entitled to call for a conveyance of what he has contracted to purchase. Until the vendor is under an obligation to convey the title which the purchaser has contracted to purchase the purchaser cannot himself show title to the property. He owns an interest in the property, but he does not own the property. When a purchaser, on payment of the price becomes entitled to insist upon conveyance of title to the property he has contracted to purchase, he may rightly be described as the owner of it: see R v Australian Broadcasting Tribunal; Ex parte Hardiman (1980) 29 ALR 289 at 302 ; 144 CLR 13 at 31. If the vendor then refuses or declines to convey or is disabled from doing so, the purchaser is entitled to a vesting order (Chang v Registrar of Titles (1976) 8 ALR 285 at 291; 137 CLR 177 at 185). Until the purchaser is entitled to insist upon conveyance of title to the property which he has contracted to purchase, it may be right to describe the vendor as a trustee sub modo of the property and the purchaser as a beneficial owner of it sub modo. Though the purchaser has sometimes been described as a beneficial owner once the contract is unconditional, the effect of an unconditional contract for the sale of land is more accurately stated by Kitto J as transferring "to an extent" the beneficial ownership of the land (Haque v Haque (No 2) (1965) 114 CLR 98 at 124). For the purpose of sub-para (iii), the extent of the interest transferred on entering into the contract is important. For that purpose, I would hold the interest of the purchaser to fall short of ownership unless and until a purchaser is entitled to insist upon a conveyance of title to the property. KLDE did not become entitled under the contract to insist upon delivery of a registrable memorandum of transfer and the relevant certificate of title until 27 February 1981 when it paid the balance of the purchase price on completion. 98 The view of Brennan J has subsequently been endorsed. In Tanwar Enterprises Pty Ltd v Cauchi [2003] HCA 57; (2003) 217 CLR 315 Gleeson CJ, McHugh, Gummow, Hayne and Heydon JJ at [47] said: One commences by identifying the "interest" of a purchaser in the land the subject of an uncompleted contract. In Lysaght v Edwards [(1876) 2 Ch D 499 at 506], Sir George Jessel MR described the position of the vendor at the moment of entry into a contract of sale as "something between" a bare trustee for the purchaser and a mortgagee who in equity is entitled to possession of the land and a charge upon it for the purchase money; in particular, the vendor had the right in equity to say to the purchaser "[e]ither pay me the purchase-money, or lose the estate". This way of looking at the relationship in equity between vendor and purchaser before completion appeared also in the works of eminent writers of the period in which the Master of the Rolls spoke. Later, Kitto J [Haque v Haque [No 2] (1965) 114 CLR 98 at 124] and Brennan J [KLDE Pty Ltd v Commissioner of Stamp Duties (Q) (1984) 155 CLR 288 at 301] preferred to treat what was said in Lysaght as indicating that "to an extent" the purchaser acquired the beneficial ownership upon entry into the contract. 99 Having regard to the reasoning discussed above, I consider that: (1) there is no change of ownership if a person continues to be a "beneficial owner" of an asset – so much is made express by the second sentence of s 104-10(2); (2) a "beneficial owner" of an asset has more than a mere proprietary interest in the asset. To be a beneficial owner the person must have rights which a court of equity would enforce involving full dominion over the asset; and (3) if the original owner continues to enjoy rights to deal with the asset, including rights of disposal, then it could not be said that another entity is the beneficial owner of the asset, even if the other entity may have a beneficial interest in the asset. Are Mateo and Jones decisive in present case? 100 Do Mateo and Jones, as the primary judge held, dictate the result in the present case? 101 Some arguments for the Commissioner may be dismissed immediately. 102 There is no material difference between the terms of s 79 of the Family Law Act before its repeal by the Bankruptcy and Family Law Legislation Amendment Act 2005 (Cth) and in its present form. Nor can it be said that the 21 September 2010 orders were made under s 79(1)(d) of that Act as opposed to s 79(1)(a). It is apparent that the power under s 79(1) is to make an order "altering the interests of the parties to the marriage in the property" (s 79(1)(a)) or "in relation to a bankrupt party to the marriage - altering the interests of the bankruptcy trustee in the vested bankruptcy property" (s 79(1)(b)). This power "includes" the power to order a "settlement of property in substitution for any interest in the property" (s 79(1)(c)) and to order "such settlement or transfer of property as the court determines" (s 79(1)(d)). In other words, an order under ss 79(1)(c) or (d) is a kind of order included within the scope of an order which alters interests in property under s 79(1)(a) or (b). 103 The position in respect of s 79(1) of the Family Law Act thus remains as described in Mullane v Mullane [1983] HCA 4; (1983) 158 CLR 436 at 445 in which the High Court said: In our opinion, therefore, s. 79 on its proper construction refers only to orders which work an alteration of the legal or equitable interests in the property of the parties or either of them. An interest in property is a right of a proprietary nature, not a mere –personal right… It does not exclude every interest which is not assignable or transferable… Thus an order under s. 79 may give rise to an interest in property which is defeasible on assignment or transfer to a third party, or on the occurrence of some other event, or which the holder is enjoined from assigning or transferring. 104 The Commissioner's submissions to the contrary should not be accepted. This does not mean that the orders effected a "change in ownership" of MIN shares, however. As the Commissioner submitted, proprietary rights may be created or transferred which do not amount to a "change of ownership" within the meaning of s 104-10(2) of the ITAA 1997. "Ownership", as the Commissioner submitted, involves full, absolute rights of possession and control over the subject-matter of the rights. If such rights are not created or transferred by the orders, it cannot be said that there has been a "change of ownership". Moreover, such rights cannot be created or transferred if the transferor retains equivalent or similar rights. 105 In Mateo, the husband and wife jointly owned a home which was subject to a mortgage. The Family Court made orders, by consent, by which the husband was to transfer to the wife, within 28 days, all his "rights, titles and interests" in the home. The orders also provided that the husband "shall not do any act matter or deed whereby a caveat charge or other encumbrance is or may be registered on the [home] from the date hereof". The orders provided further that in the event that either party refused or neglected to execute any document or do anything required then the Registrar of the Family Court was appointed to "execute all deeds and documents in the name of the party in default and do all things necessary to give validity and operation to the said order". 106 The wife, as sole owner following the transfer to her of the husband's interest, sold the home. While the sale was on foot the husband became a bankrupt. The Official Receiver served a notice on the wife which created a charge on the amount of the husband's interest in the home on the basis that the transfer of the husband's interest to the wife was void as against the husband's trustee in bankruptcy under s 121 of the Bankruptcy Act 1966 (Cth) (which makes certain transfers of property of a person who later becomes a bankrupt void as against the person's trustee in bankruptcy). The wife applied to set aside the notice. The primary judge set aside the notice. The Official Receiver appealed against the primary judge's orders. The Full Court dismissed the appeal, albeit for reasons different from those of the primary judge. To the extent relevant to the nature of orders under s 79 of the Family Law Act, Wilcox J held that the orders of the Family Court "transferred the value of Mr Mateo's interest in the home to his wife" (at [64]). Branson J at [102] said: [s 79] is concerned to empower the Family Court directly to alter the interests of the parties to a marriage in property, not merely to make an order requiring the parties or one of them to take steps which will result in their property interests being altered…Turning to the actual order made by the Family Court in this case …it seems to me that it is probably implicit in the terms of the order that the interests of the parties to the marriage in their matrimonial home were altered by operation of the order. That is, that the order itself vested in the wife all of the husband's beneficial interest in the matrimonial home…On this view of the order, the transfer which paragraph 1 of the order required the husband to effect was necessary only to perfect the wife's interest by the transfer to her of the husband's legal interest in the matrimonial home. 107 Her Honour continued at [103]: Even if the Family Court order is not so construed, in my view, the order necessarily destroyed the value of the husband's interest in the property. The order gave the wife an entitlement to have the whole of the husband's interest in the property transferred to her within twenty-eight days and, if necessary, the right to call on the Registrar of the Family Court to execute all necessary documents. For this reason the husband's remaining interest in the property was merely formal. The order restrained the husband in the meantime from charging or encumbering the title to the property (par 2 of the order)… 108 Justice Merkel noted that: [127] At the outset it is appropriate to identify certain features of an order under s79 of the Family Law Act. First, the order is a final order, subject to the limited jurisdiction to set aside or vary such an order by appeal or under s79A of the Family Law Act: see Mullane v Mullane (1983) 158 CLR 436 ("Mullane") at 442-443. The order may also be set aside on the ground of jurisdictional error in an application for prerogative relief under s75(v) of the Constitution. [128] Second, a court order settling property between husband and wife, including a requirement that there be a transfer of one party's interest to the other, has generally been regarded as vesting in the transferee an equitable estate or interest in the property pending the transfer of the legal estate or interest: see Harris v Walker (1968) 14 FLR 167 at 176. [129] In Mullane the Court stated at 445: "s79 on its proper construction refers only to orders which work an alteration of the legal or equitable interests in the property of the parties or either of them. An interest in property is a right of a proprietary nature, not a mere personal right". [130] In Craven v Official Trustee in Bankruptcy (unreported, Supreme Court of New South Wales, Needham AJ, No 2712 of 1991, 26 July 1991) Needham AJ, in reliance on Mullane, concluded that an order altering property interests under s79 "creates an equitable interest in the land which could be enforced just as a contract of sale could be enforced". [131] Third, the fact that a consent order might be made under s79 does not have the consequence that the transfer of the equitable estate or interest is pursuant to the agreement between the parties giving rise to the consent, rather than pursuant to the Court order… 109 At [134] Merkel J held that: The consent orders made by the Family Court on 22 June 2000 altered the interests in the matrimonial home of the bankrupt and his wife by transferring the equitable estate and interest of the bankrupt in the matrimonial home to his wife. The transfer of that estate and interest was brought about by the order of the Family Court, rather than by a transfer of the estate or interest by the bankrupt. 110 His Honour continued at [137]: Of course, the subsequent execution of a transfer in accordance with the court order by the bankrupt to his wife of the bare legal estate held by him in the matrimonial home is a transfer, made pursuant to the consent orders, by the bankrupt of the legal estate and interest in the matrimonial home to another person for the purposes of ss120 and 121. However, that transfer has little, if any, relevance for a number of reasons. First, as the consent orders resulted in the legal estate and interest being held by the bankrupt and the equitable estate and interest being held by his wife, that was all that was necessary "to establish the relation of trustee and cestui que trust" between the bankrupt and his wife (see Hardoon v Belilios [1901] AC 118 at 123). Because trust property does not form part of the property of the bankrupt which is divisible among creditors (see s116(2)(a) of the Bankruptcy Act), the legal estate and interest, as trust property, fall outside the scheme of the Bankruptcy Act and there is no occasion for the Official Receiver to make the trust property the subject of a notice under s139Z(Q). Second, as the value of the legal estate and interest is nil there would be no point in the Official Receiver making that estate or interest the subject of a notice under s139Z(Q). Third, as the value of the legal estate and interest is nil and some consideration was in fact paid by the bankrupt's wife the requirement of no, or inadequate, consideration being paid has the result that the consideration requirements in s 120(1)(b) were not satisfied. Also, the equal value of the consideration given and received (ie, nil) results in the precondition for exclusion from s 121(4)(a) being satisfied. 111 In Jones the husband and wife were the registered proprietors of their home. The husband was the subject of a creditor's petition. In subsequent proceedings the Family Court ordered the husband to transfer to the wife his interest in the home by a nominated future date. The following day, before the transfer was effected, the husband became bankrupt. At [14] Moore J said: The members of the Full Court in Mateo did conclude that when an order (of the type presently under consideration) is made under s 79 ordering that a person presently holding a legal interest in the property transfer that interest to another person, a beneficial interest is thereby vested in the other person. Wilcox J described the order as vesting an equitable interest (at [62]) and Merkel J as transferring an equitable estate or interest (at [136]). Branson J expressed her conclusion in qualified terms (at [102]) when she spoke of it being "probably implicit in the terms of the order that the interest of the parties to the marriage in the [property] were altered by operation of the order" …vesting in the wife all the husband's beneficial interest in the property. It appears Branson J viewed that as the preferable construction of the order and its affect. In any event the views of a majority were clear and an equitable interest was, by the order, transferred. A trust was created for the benefit of the other person. 112 His Honour continued at [15]: Moreover, the conclusions of Wilcox J and Merkel J were an essential step in the reasoning leading to the ultimate conclusion in that matter. Accordingly, the conclusion concerning the transfer of an equitable interest and the creation of a trust forms part of the ratio of the Full Court in Mateo. There is a comparatively settled approach in this Court that on questions of statutory construction, a full court should follow a construction adopted by an earlier full court unless it considers the earlier construction is clearly wrong… 113 At [17] Moore J said: It is true that the members of the Full Court approached the matter by considering whether an equitable interest vested when an order was made under s 79 altering the interests, of the parties to a marriage, in property. It is not necessary to determine whether the transfer of an equitable interest creates a trust enforceable in equity or an interest of some other character deriving from statute…It is sufficient that the Full Court concluded in Mateo that it was an interest which defeated the rights of a trustee in bankruptcy to the property for distribution amongst creditors. 114 Allsop J (as he then was) agreed with Moore J (at [19]). His Honour continued at [20]: Section 79 of the Family Law Act 1975 (Cth) deals, as the High Court said in Mullane v Mullane (1983) 158 CLR 436 at 445, with orders which work an alteration of the legal or equitable interests in parties or either of them. Thus, an express and immediate vesting order could be made. There was nothing to suggest in the reasons for judgment of Coleman J in the Family Court (or of the Family Court in Mateo, as far as can be gleaned from the judgment of the Full Court in Mateo) that any suspension of effect of the orders made was intended. It would perhaps have been clearer if the immediately dispositive effect of the orders here had been identified expressly. Nevertheless, the orders here, though not expressly dispositive, made as they were against the background of s 79 and in light of the reasoning in Mateo, should be taken to have the effect found by the primary judge. 115 Mateo and Jones both concerned real property. In both cases, despite the terms of the order requiring transfers at later dates, the orders were held to have an immediate dispositive effect. In Mateo, it is apparent that both Wilcox and Merkel JJ reasoned that the orders vested in the wife full beneficial interest in the property, leaving the husband with a bare legal title. While the reasoning of Branson J may appear more circumspect about the effect of the orders, it is reasonably clear from her Honour's statement at [103] that the orders destroyed the value of the husband's interest in the property, leaving the husband with a remaining interest that was "merely formal", that her Honour's reasons should be understood in the same way. Jones, however, is more circumspect than Mateo about the effect of such orders given the repeated references by Moore J, with whom Hill and Allsop JJ agreed, to the orders vesting in the wife "a" beneficial or "an" equitable interest in the property sufficient to defeat the claims of a trustee in bankruptcy under s 121 of the Bankruptcy Act. 116 The present case concerns shares in a publicly listed company. This raises issues different from those considered in Mateo and Jones. It also concerns an order which incorrectly identified the capacity in which the entity referred to in the order owned the shares. This too raises issues not considered in Mateo and Jones. For these reasons alone the issues in the present case are not determined by the reasoning in Mateo or Jones. Nor is the Commissioner's case, as Sandini would have it, that unnumbered and uncertificated shares in a publicly listed company are incapable of equitable transfer in Australian law. The Commissioner's case, rather, is that to satisfy s 104-10(2) of the ITAA 1997 full beneficial interest in the MIN shares must have vested in Ms Ellison because of the 21 September 2010 orders but this did not occur as, leaving aside the misidentification of Sandini as the trustee for the Ellison Family Trust (which Sandini was not): (i) the shares were not identifiable from the larger pool of shares which Sandini owned, (ii) the orders left Sandini free to deal in all of its shares before transfer, and (iii) as a result, whatever proprietary or other interest in the MIN shares owned by Sandini may have vested in Ms Ellison on the making of the orders, that interest was not a full beneficial interest sufficient to constitute a change in ownership for the purposes of s 104-10(2) of the ITAA 1997. This is not the same as the "remarkable proposition" which Sandini identified during the hearing of the appeal, that while the law is capable of transferring unnumbered uncertificated shares in a company, equity is not. 117 Given the nature of the dispute, it is necessary to return to fundamentals. Section 79 of the Family Law Act 118 An order under s 79 of the Family Law Act does not necessarily have the effect, by force only of the making of an order under the section, of vesting either full legal or beneficial ownership of property in one or other party. The power under s 79 is more flexible than this. The power is to alter "interests" in property of parties to a marriage or either of them including by a settlement of property in substitution or transfer of property "as the court determines". As the Commissioner submitted, it is important that the power is not merely to alter "ownership" of property but "interests in" property. It is also important that the power is to "alter" property interests, not merely to "transfer" such interests. There are a wide range of potential interests in property and the power of the court would extend to the full conceivable range of alterations of these interests. It follows that the effect of an order under s 79 will depend on the terms of the order and the nature of the property. In the present case, the property the subject of the orders was shares in a publicly listed company. The nature of this property is therefore critical. Shares in a publicly listed company 119 A share, it has been said, is "the interest of a shareholder in the company measured by a sum of money for the purpose of liability in the first place and of interest in the second, but also consisting of a series of mutual covenants entered into by all the shareholders" (Archibald at 156). The subsequent abolition of the concept of par value and of authorised capital effected by the Company Law Review Act 1998 (Cth) renders the reference to the measurement by a sum of money in this description inapt (National Mutual Life Association of Australia Ltd v Commissioner of Taxation [2009] FCAFC 96; (2009) 177 FCR 539 at [48] referring to Pilmer v The Duke Group Pty Ltd [2001] HCA 31; (2001) 207 CLR 165 at [19]). In Pilmer at [19] McHugh, Gummow, Hayne and Callinan JJ said: Once issued, a share comprises "a collection of rights and obligations relating to an interest in a company of an economic and proprietary character, but not constituting a debt" [citing Pennington, "Can shares in companies be defined?", (1989) 10 The Company Lawyer 140 at 144]. 120 For a share to be held on trust there must be "certainty …as to the property bound by the trust" (Herdegen v Federal Commissioner of Taxation [1988] FCA 419; (1988) 84 ALR 271 at [19] citing Federal Commissioner of Taxation v Clarke [1927] HCA 49; (1927) 40 CLR 246 at 283–5; Scott on Trusts, 4th ed, 1987, § 76, 77). In the context of shares which do not need to be numbered and certificated (as permitted by s 1070B(2) of the Corporations Act 2001 (Cth)), as is the case with shares in MIN, the question that arises is the certainty of the subject matter of any trust. This is because shares are considered to be fungible or interchangeable (a concept which, as noted below, itself has attracted criticism). 121 The analysis of Campbell J in White v Shortall [2006] NSWSC 1379; (2006) 68 NSWLR 650 warrants detailed consideration. The defendant held shares in a company which were unnumbered. The defendant declared in writing that a specified number of these shares were held on trust for the plaintiff and would be transferred to the plaintiff after a specified date or on the plaintiff's death. The plaintiff requested transfer, but the defendant refused. Campbell J held that the defendant was liable for damages for breach of contract. He also considered the trust claim and concluded that the declared trust was valid and enforceable, the remedy for which would be equitable compensation. In so doing, his Honour provided a detailed analysis of issues relevant to the present case. 122 His Honour started from these basic premises: [149] There is no doubt that a share can be held on trust. Lord Shaw said in Lord Strathcona Steamship Co Ltd v Dominion Coal Co Ltd [1926] AC 108 at 124: The scope of the trusts recognised in equity is unlimited. There can be a trust of a chattel or of a chose in action, or of a right or obligation under an ordinary legal contract, just as much as a trust of land. … [151] In Kauter v Hilton (1953) 90 CLR 86 at 97 Dixon CJ, Williams and Fullagar JJ reiterated: … the established rule that in order to constitute a trust the intention to do so must be clear and that it must also be clear what property is subject to the trust and reasonably certain who are the beneficiaries. 123 His Honour then considered the decision of the English Court of Appeal in Hunter v Moss [1993] EWCA Civ 11; [1994] 1 WLR 452 in which it was held that a valid trust over a specified number of shares in a larger pool had been created. His Honour noted the extensive criticism which the decision had attracted at [155] to [162] on the basis that the outcome offended the fundamental requirement that the subject-matter of the trust be certain, so that an undifferentiated number of shares forming part of a larger parcel could not be the subject of a trust. His Honour observed at [164] that an application for leave to appeal from the orders was dismissed. At [165] Campbell J said that, there being no Australian authority, he had to consider the question "on the basis of general principle". 124 His Honour referred to the criticism of the analogy drawn in Hunter v Moss between a testamentary gift of shares from a larger parcel and an inter vivos declaration of trust (at [168]-[169]) and preferred not to adopt the same process of reasoning by analogy to a testamentary disposition which involves the unique position of an executor (at [176]). His Honour next noted the reliance in Hunter v Moss on the capacity to transfer inter vivos some shares from a larger parcel by execution of a transfer and conduct to give effect to it without any identification of the individual shares (at [177]). He explained that the case relied upon, Re Rose [1952] Ch 499, in fact involved specific numbered and certificated shares and thus did not support the proposition for which it was cited in Hunter v Moss (at [179]). 125 His Honour referred at [180] to obiter dicta in Corin v Patton [1990] HCA 12; (1990) 169 CLR 540 that "there can be an effective voluntary equitable assignment of property transferable at law when the donor has done everything that only the donor has the power to do to transfer the legal estate, even if actions remain undone that lie within the power of the donor to do to advance the transfer but that can equally well be done by someone else". He observed that this is "consistent with the decision of the English Court of Appeal in Re Rose, because in Re Rose it was only necessary to decide whether the transfer of shares was effective at a time when the only step remaining undone was for the company to register the transfer". Suffice to say Campbell J did not find Re Rose supported the conclusion in Hunter v Moss (at [182]). 126 The next case to be considered was Re London Wine Co (Shippers) Ltd [1986] PCC 121 which, as the name suggests, involved wine which was sold but not segregated from larger quantities stored by the vendor. Oliver J held that legal title to the wine had not passed to the purchasers. Dillon LJ in Hunter v Moss distinguished the case on the basis it involved the passing of title to chattels, and not a declaration of trust. This, Campbell J accepted at [185], but his Honour continued, stating that the difference may be accepted but Hunter v Moss gave no principled basis for the factual difference affecting legal principle. 127 Mac-Jordan Construction Ltd v Brookmount Erostin Ltd (in receivership) (1991) 56 BLR 1; [1992] BCLC 350 was then addressed. A builder was required to set aside on trust parts of progress payments for construction on behalf of a contractor. The builder did not do so. It was held that there was no trust. At [187], Campbell J agreed saying he could "readily accept that there was no trust property at all, because the fund had not been constituted. It was not as though there was even a specific fund of money, part of which was said to be held on trust". In Hunter v Moss, the case was distinguished on the basis that it did not involve any equitable charge over a blended fund. Campbell J said this reasoning "begs the question" (at [190]). 128 Campbell J concluded this part of his reasons at [191] in these terms: That is the totality of the reasoning in Hunter v Moss. I do not, with the greatest respect, find it sufficiently persuasive, for the reasons I have given, to simply adopt it as the solution to the present problem. 129 I agree. 130 As a result, Campbell J returned to first principles. At [193], by reference to various cases, his Honour identified the defining characteristics of a share as the shareholder's interest in the company constituting personal property which is a chose in action incapable of transfer by delivery and "closely akin to a debt", (Colonial Bank v Whinney (1885) 30 Ch D 261 at 287). At [195] Campbell J referred to s 1070A of the Corporations Act in which a share is described as "personal property", "transferable or transmissible as provided by" the constitution of the company or "the operating rules of a prescribed CS facility [clearing and settlement facility, see s 768A of the Corporations Act] if they are applicable", "capable of devolution by will or by operation of law". 131 At [198] Campbell J noted the orthodox position that some rights associated with shares, such as the right to receive a dividend, are themselves assignable as those rights are also property, also being choses in action. At [199] his Honour gave this example: …when the holder of 1000 shares in a company sues to recover a dividend that has been declared but is unpaid, there is just one action that the shareholder brings, to recover the dividend — there are not 1000 separate rights to be paid a dividend… In that way, the chose in action — the thing that the law regards as a piece of property because it can be sued for — is the single right to be paid the dividend, the measure of which is the number of shares held. 132 At [201] Campbell J noted that many shares are held in unnumbered and uncertificated form as contemplated by s 1070B(2) of the Corporations Act which permits fully paid up shares in a company or of the same class, which rank equally, not to be numbered. His Honour noted that share identification by number is not critical for all purposes. Thus, if all of the shares of a shareholder are transferred, it has been held that a transfer is valid even if the shares are not identified by number in the transfer (at [204]). Incorrect share identification is also not necessarily fatal to an effective transfer (at [205]-[209]). The Commissioner disputes no part of this reasoning. 133 The key part of Campbell J's reasoning, on which all the parties rely for their competing purposes, commences at [210]. At [210] Campbell J said: The declaration of trust that the defendant made is, in substance, that, of those shares in Unitract that he held, 222,000 of them were held in trust for the plaintiff. In my view, that is, in substance, that 220,000 of the shares he held were on trust for the plaintiff, and the rest were on trust for himself… The declaration of trust left him free to deal with the parcel of 1.5 million shares as he pleased, provided that it was not reduced below 220,000, provided that any encumbrances on the shareholding were such that at least 222,000 were left unencumbered, and provided that the plaintiff was entitled to call for the transfer of 222,000 shares at any time after 1 August 2003. If there were to be any declaration of dividend or return of capital prior to the time that the plaintiff had the 220,000 shares transferred to her, the plaintiff would be entitled to receive an appropriate proportionate part of the dividend or return of capital. 134 In other words, the declaration of trust applied to the whole of the shareholding. This, his Honour explained at [211], was because: Once a finding has been made that there was an intention to hold 220,000 shares on trust, that intention needs to be given effect to in the way that is appropriate to the kind of property that is being talked about. Given the types of rights that are involved in holding shares in a company, the way that rights of a shareholder need not be identified only in terms of owning particular identified shares, how identification of individual shares can be unimportant for a transfer of some of the shares in a shareholding, and how these particular shares in Unitract were in any event not numbered and were held as an undifferentiated balance in a share register, there is nothing in the nature of the trust property that is inconsistent with recognising the validity of the trust. To recognise the trust is not to perfect an imperfect gift — because there is no transfer of any property involved in a declaration of trust, but rather the declarer of the trust states the terms on which, henceforth, he will hold certain property that he already holds. 135 It is apparent from what follows that the validity of the trust depended on the fact that all shares were subject to the declaration of trust; this must have been the declarer's intention in order to give effect to the trust. Thus his Honour said: [212] A trust of this kind is not analogous to a simple trust, where a single and discrete item of property is held on a bare trust for a single beneficiary. Rather, it is a trust of a fund (the entire shareholding of 1.5 million shares) for two different beneficiaries (the plaintiff and the defendant himself), where powers of management are necessarily involved in the trust (to sell or encumber, within limits that such dealings do not impinge on the plaintiff's rights), and where duties on the trustee would arise as a matter of law (eg to deal with any dividends and capital distributions by distributing them in the appropriate proportions). It is because the trust is construed as being of the entire shareholding that it is not necessary for the plaintiff to be able to point to some particular share and be able to say "That share is mine". It is because of this feature of the trust that the defendant declared that an attempt to draw an analogy with cases concerning whether property passes in items of goods when the goods are not appropriated to the contract (like London Wine Co or Re Goldcorp Exchange [[1995] 11 AC 74]) fails — because in those cases, identification of the individual items in which property has passed is essential if the property in them is to pass. The construction that is needed to be able to make a trust of part of a shareholding operate — and which I infer is what the defendant actually intended — is the one that I have set out in para [210] above. It does not require there to be identification of particular shares in which the beneficiary has the beneficial interest. Given the nature of shares in a company, it is perfectly sensible to talk about an individual having a beneficial interest in 222,000 shares out of a parcel of 1.5 million, even if it is not possible to identify individual shares that are held on trust. [213]… the test for validity of a trust is not dependent on a beneficiary being able to identify particular property that is held on trust for him or her. In many discretionary trusts, the only interest that a particular beneficiary can claim to have at a particular time is the vested interest subject to defeasance (and sometimes contingent as well) that a taker in default of appointment has (cf Stein v Sybmore Holdings [2006] NSWSC 1004 at [25]–[26]). Because of the powers of management that the trustee of such a trust often has, it is often not possible for the taker in default of appointment to be able to point to any of the assets of the trust and say simply "that asset is mine". All that such a person can do is point to an asset and say "that asset is mine, provided the trustee does not sell it before the vesting date, provided the trustee does not make an appointment of it to someone else, and provided any other contingencies that there are before I take an interest vested in possession happen." In the present case, one can identify the property that is subject to the trust (the entire shareholding) one can identify the trustee (the defendant), and one can identify the beneficiaries (the plaintiff as to 220,000 shares, the defendant as to the rest). That is all that is needed for a valid trust. 136 His Honour noted that this conclusion was consistent with equity's capacity to "recognise a trust of a particular number of shares out of a larger parcel, by way of remedy" (at [217]), and authorities in the United States which recognised trusts of unnumbered shares in a larger parcel (at [219]-[229]). 137 At [236] Campbell J turned to Herdegen. His Honour noted that: The proposition that Gummow J is denying is (in part) that Mr Herdegen held 38 of his 59 shares on a bare trust. Among the authorities to which his Honour referred at 277 is Scott on Trusts, 4th ed, 1987, § 76, 77. At 444–445, in §77 Scott refers to both Rollestone and Busch v Tuitt. Scott cites Rollestone as an example of the proposition that: A person who holds the entire legal interest may be trustee for another to the extent of a share of the property and subject thereto for his own benefit. It is exactly that type of trust that the defendant in the present case has declared. 138 Campbell J continued: [237] If the correct way of regarding what Mr Herdegen had done was that he had declared himself a trustee of 38 of his 59 shares, that is a trust of his 59 shares that would be partly for the benefit of the beneficiary, and partly for the benefit of Mr Herdegen himself. Such a trust of the 59 shares is not a bare trust. [238] Further, the proposition that Gummow J is denying is that Mr Herdegen held 38 of his 59 shares on a bare trust, in a particular factual situation namely that he is not able to establish (i) which of the 59 shares were so held, and (ii) for whom, out of the potential beneficiaries, they were so held. Gummow J is not denying that it was possible for Mr Herdegen to hold 38 of his 59 shares on trust for some specified person. … [241] The passage from the judgment of Gummow J at 277 is also followed by the paragraph in brackets, that I have quoted above from p 279, that expressly leaves open the question of whether it is possible to have a valid trust of a particular number of shares from a larger parcel. Thus, reading his Honour's reasons as a whole, they leave open the question of whether under Australian law it is possible to have a valid trust of a particular number of shares from a larger parcel. 139 At [243] his Honour concluded: It follows from this discussion that I do not, with respect, agree with the view expressed in Jacobs [Jacobs', Law of Trusts in Australia, 7th edition, 2006, at [523]] that Herdegen is authority for the proposition that an undifferentiated portion of a parcel of shares is a subject matter too vague for the court to enforce any trust in respect of, unless one uses "undifferentiated" with a very particular shade of meaning. 140 It is apparent from [245] to [247] of his reasons that by "undifferentiated" Campbell J meant the subject-matter of the trust was itself uncertain, in contrast to the trust being over a specified proportion of a fund of some kind (be it shares or another kind of chose in action such as the debt represented by a bank account). 141 At [249] Campbell J considered the question of liability to capital gains tax if the person who has declared the trust over part of a larger body of shares disposes of some of the shares. In short, does the disposal relate to those shares of the person who declared the trust and thus, on Campbell J's analysis, holds some shares on trust for himself or herself, or those of the other beneficiary? His Honour noted the terms of s 104-10 of the ITAA 1997 and s 121-20 of that Act which requires that records be kept of every act, transaction, event or circumstance that can reasonably be expected to be relevant to working out whether there has been a capital gain or loss from a CGT event. This led his Honour to say at [252] that the person would need to have records "to indicate whether any shares in that parcel which had been disposed of belonged beneficially to the shareholder". 142 His Honour delved further into the issue from [259], considering the consequences for calculating liability to capital gains tax if the shares were acquired at different times and thus had different costs bases. While the difficulty was not present on the facts in the case before him, Campbell J considered it necessary to address the issue to identify whether there was a problem in principle with recognising the trust he had identified. At [261] Campbell J said that the declaration of trust is itself a disposal, engaging the record keeping requirements of s 121-20, which would include the cost base of the shares the subject of the trust. The person declaring the trust is thus free to choose the shares the subject of the declaration. At [263] his Honour said: The exercising of that choice does not have any effect on the amount of capital gains tax that might eventually be payable by the beneficiary. If the beneficiary has received the shares without consideration, the beneficiary's cost base for the shares that are held on trust will be zero. If the beneficiary has provided consideration for the declaration of trust, the beneficiary's cost base for the shares will be whatever is the value of the consideration that the beneficiary provided. 143 As the Commissioner pointed out, however, this conclusion does not take account of the roll-over provisions in Pt 3-3 of Ch 3 of the ITAA 1997 which attributes to the receiving entity (that is, the beneficiary) the cost base of the shares. Once this is taken into account, the assumption that the shares are identical for all purposes, including for the purposes of CGT event A1 as provided for in s 104-10, remains unanswered by Campbell J's meticulous analysis. Nor does his Honour specifically analyse the question whether a declaration of trust of unidentified shares in a larger parcel effects a "change of ownership" so as to constitute a disposal within the meaning of s 104-10(2); rather, his Honour appears to have assumed that to be the case. 144 An appeal from his Honour's decision was dismissed (Shortall v White [2007] NSWCA 372). 145 In Pearson & Ors v Lehman Brothers Finance SA & Ors [2010] EWHC 2914 (Ch) Mr Justice Briggs identified the principles which apply "where A acquires title to property for the account of B, to the question whether B thereby obtains a proprietary interest in that property" (at [225]) in these terms: i) The recognition of a proprietary interest of B in property where A has the legal or superior title necessarily assumes the existence of a trust as between A and B. ii) There can be no such proprietary interest if the necessary trust would fail for uncertainty. iii) A trust of part of a fungible mass without the appropriation of any specific part of it for the beneficiary does not fail for uncertainty of subject matter, provided that the mass itself is sufficiently identified and provided also that the beneficiary's proportionate share of it is not itself uncertain. iv) A trust does not fail for want of certainty merely because its subject matter is at present uncertain, if the terms of the trust are sufficient to identify its subject matter in the future. v) Subject to the issue of certainty, the question whether B has a proprietary interest in the property acquired by A for B's account depends upon their mutual intention, to be ascertained by an objective assessment of the terms of the agreement or relationship between A and B with reference to that property. vi) The words used by the parties such as "trust", "custody", "belonging", "ownership", "title", may be persuasive, but they are not conclusive in favour of the recognition of B's proprietary interest in the property, if the terms of the agreement or relationship, viewed objectively, compel a different conclusion. vii) The identification of a relationship in which A is B's agent or broker is not conclusive of a conclusion that A is, in relation to the property, B's trustee, although it may be a pointer towards that conclusion. viii) A relationship which absolves A from one or more of the basic duties of trusteeship towards B is not thereby rendered incapable of being a trustee beneficiary relationship, but may be a pointer towards a conclusion that it is not. ix) Special care is needed in a business or commercial context. Thus: (a) The law should not confine the recognition and operation of a trust to circumstances which resemble a traditional family trust, where the fulfilment of the parties' commercial objective calls for the recognition of a proprietary interest in B. (b) The law should not unthinkingly impose a trust where purely personal rights between A and B sufficiently achieve their commercial objective. x) There is, at least at the margin, an element of policy. For example, what appears to be A's property should not lightly be made unavailable for distribution to its unsecured creditors in its insolvency, by the recognition of a proprietary interest in favour of B. Conversely, the clients of intermediaries which acquire property for them should be appropriately protected from the intermediary's insolvency. 146 On appeal (which was dismissed) in Pearson & Ors v Lehman Brothers Finance SA [2011] EWCA Civ 1544 Lord Justice Lloyd observed that Mr Justice Briggs had relied on Hunter v Moss for proposition iii) above but, in so doing, "favoured the analysis that the trust worked by creating a beneficial co-ownership in the identified fund, an approach formulated in White v Shortall [2006] NSWSC 1379 and by Professor Sir Roy Goode Q.C. in an article "Are Intangible Assets Fungible?", [2003] LMCLQ 379" (at [71]). There was no challenge to this reasoning in the appeal. 147 In Priest v Ross Asset Management Limited (In liq) [2016] NZHC 1803 Clifford J in the High Court of New Zealand dealt with the same issue specifically in the context of unnumbered uncertificated shares. His Honour said this: [178] Shares in one company are, amongst themselves, fungible. This means that there is no way to distinguish one share in a particular company from other shares in that company… [179] Assume that, at the date of the acquisition by RAM/Dagger of shares comprising the Priest Holdings - say shares in Company X - RAM or Dagger already owned (for Other Investors) shares in Company X. In that circumstance, a question of the certainty of the subject matter of the trust would arise. That is, for a trust to come into existence the property which is the subject matter of the trust must be able to be identified with certainty. If RAM or Dagger already held shares in Company X for Other Investors, given that shares in a particular company are amongst themselves fungible, it could be argued it would not be possible to identify which of the pool of fungible shares was subject to the trust in favour of the Priests, and which were subject to the trust in favour of the Other Investors. I am not attracted to that argument. Given the ubiquity of decertificated shares, in my view it should be enough for a given number of those shares to be identified as having been earmarked for an investor for the trusts, bare or otherwise, recognised in managed funds to come into existence. 148 Where does this leave the matter? In terms of principle, the weight of authority is that there can be a valid trust over a fungible pool of assets provided the assets and relevant proportions for the different beneficiaries are identified with sufficient certainty. The better view is that for the requirement of certainty to be satisfied the trust must be over all of the fungible assets in the pool, the beneficial co-ownership proportions reflecting the respective interests of the beneficiaries. In the context of a declaration of trust, there may be a sound basis in principle to uphold the validity of such a trust on the basis that the trustee's intention must have been to create a valid trust which requires certainty of subject matter. By this means, it may be accepted that the beneficiary obtains a proprietary right in a proportion of the asset pool. If, given the terms of the declaration and the nature of the property, the trustee is constituted as nothing more than a bare trustee on behalf of the beneficiary in respect of the beneficiary's proportional interest, it may well be that there has been a change of ownership within the meaning of s 104-10(2) of the ITAA 1997. For this to be the case, however, the rights vested in the beneficiary must be capable of supporting the grant of equitable remedies the equivalent of ownership, including preventing the trustee from dealing in the relevant proportion of the asset pool other than in accordance with the beneficiary's directions. In Mateo and Jones, which concerned real property in the form of the familial home, construing the effect of the orders of the Family Court as constituting the husband as a bare trustee of his interest for the wife makes sense; real property is not fungible and, whether expressly provided for or not in the orders, no dealing by the husband in his interest pending compliance with the orders could be compatible with the rights vested in the wife. 149 What then of the facts of the present case in which the shares formed part of a larger pool of shares which Sandini owned, and in which there was no declaration of trust by Sandini, but orders of the Family Court? Can it be said that the Family Court orders of 21 September 2010 created a trust over the whole of Sandini's shares in MIN, Ms Ellison being the beneficiary of the trust as to 2,115,000 of those shares and Sandini as trustee of the KRUT being the beneficiary of the balance? Leaving aside the misidentification of Sandini's capacity, one conceptual difficulty with this analysis applying to the 21 September 2010 orders is that Campbell J identified in White v Shortall; shares may have a different cost base for the purposes of capital gains tax and thus, in this sense, may not be interchangeable. If and when the time for transfer of the beneficiary's proportion of the shares to the beneficiary arises, the owner of the shares could identify shares with a higher cost base to be the subject of the transfer, thus transferring a larger liability for capital gains tax than would otherwise be the case. In the present case, that is not the fact because, on the evidence, all of Sandini's shares in MIN had the same cost base, but the issue is one of principle. 150 This concern is not mere quibbling about details. The value of the asset to be transferred could be far less than that contemplated on the face of the orders, given the potential associated capital gains tax liability (and, indeed, that is the fact in the present case). Nor can it be dismissed in circumstances where the underlying basis of the analysis in the authorities is the inferred intention of the party declaring the trust or of the parties to other legal relationships. As the Commissioner put it, the resolution Campbell J reached in White v Shortall works only if it can be said that the trust created is over the whole of the fund and only if the trustee is not a bare trustee for the beneficiaries. Otherwise the inferred intention of the declarer of the trust or the parties, as relevant, may be bedevilled by capital gains tax issues as a result of rollover relief provisions. Further, in the case of orders of the Family Court under s 79 of the Family Law Act, which can be made only if the Court is satisfied that the orders are just and equitable, the issue is not one of the inferred intention or actual intention of the parties, but of the proper construction of an order made within that particular statutory context. In respect of this latter issue, consent orders for substantive relief under s 79 of the Family Law Act present a problem with which many courts grapple, albeit in different contexts. If substantive relief is conditioned on the existence of facts or the court holding a particular state of mind or the consideration of certain factors (as in the case of s 79), what is the court to do when confronted by the bare terms of a consent order? In many jurisdictions the problem has been addressed by requiring the parties seeking the making of a consent order in which substantive relief is granted to file a statement of agreed facts and joint submission with the proposed consent order which deals with the position of the parties about the pre-conditions to any exercise of power by the making of the orders. A practice of this kind has many advantages including the potential to disclose issues of concern which may not have occurred to one or other party (and would not necessarily occur to the court either), such as the capital gains tax implications which have arisen in the present case. 151 I do not consider it necessary or appropriate to attempt to unravel the question of the potential impacts of the competing arguments on Sandini's position as trustee for the KRUT (itself a unit trust with various beneficiaries), including the potential for Sandini to have acted in breach of trust if the respondents are correct and the orders immediately vested in Ms Ellison beneficial ownership of 2,115,000 shares in MIN. This is because the orders are the orders as made. The orders must be dealt with as a taxable fact, irrespective of the potential consequences for Sandini as the trustee for the KRUT. The fact, however, that Sandini owned MIN shares only as trustee for the KRUT may well be relevant to the proper construction of the orders. As the party seeking the declarations, it was for Sandini to answer any questions about its capacity and obligations to the KRUT in respect of the MIN shares. Sandini's inability to do so satisfactorily, weighs against its contention that the orders should be construed as it proposes, that is, as in White v Shortall, by creating a trust over the whole of Sandini's shareholding as to some shares on trust for the KRUT and as to 2,115,000 on trust for Ms Ellison, Sandini thereafter being nothing more than bare trustee for Ms Ellision as the beneficial owner of that proportion of the pool. 152 These considerations tend to support the doubt that has been expressed as to the fungible character of shares (see, again, Professor Sir Roy Goode Q.C. in an article "Are Intangible Assets Fungible?" [2003] Lloyd's Maritime and Commercial Law Quarterly 379). As pointed out at 381 of this article, the essence of fungibility is "a choice between legally interchangeable units". If all shares in the company are of the same class, there is but a single asset, being the issued share capital. On this basis, as Professor Goode proposes, a single asset cannot give rise to the capacity for selection which defines a fungible asset. 153 In any event, I do not accept that, as the respondents would have it, the orders operate on the MIN shares Sandini owned in its capacity as the trustee for the KRUT. While s 79(1)(a) of the Family Law Act refers to the "property of the parties to the marriage or either of them", s 79(1)(c) refers to "an order for a settlement of property in substitution for any interest in the property". The "property" referred to at the end of s 79(1)(a) is the "property of the parties to the marriage or either of them" whereas "property in substitution" for that property in s 79(1)(c) is any property. Order 2 of the 21 September 2010 orders sets aside earlier orders under which Ms Ellison gained interests in property of the parties to the marriage. It is not apparent that order 3 relates to property of the parties to the marriage or either of them (being the MIN shares owned by Sandini). Order 3 may be "an order for a settlement of property in substitution for any interest in the property" which is included within the concept of an order "altering the interests of the parties to the marriage in the property." Order 3 thus may merely require Sandini to do what is necessary to transfer the required number of any MIN shares to Ms Ellison within seven days irrespective of Sandini owning any such shares. The same could not be said of the orders in Mateo or Jones, which is another distinguishing feature from the present case. 154 As discussed, the nature of the property is one issue. The terms of the orders are another. 155 In the present case, although the orders were made by consent, they are orders of a court and fall to be construed as such. In Wende v Horwath (NSW) Pty Limited [2014] NSWCA 170; (2014) 86 NSWLR 674 at [60] Basten JA summarised the general principle with respect to construing court orders in these terms: Although there has been a debate as to whether it is permissible to go to extrinsic material to assist an understanding of a court order, it is not in doubt that such material may be relied on in a case of ambiguity: P Herzfeld, "Interpretation of Orders", in P Herzfeld, T Prince and S Tully, Interpretation and Use of Legal Sources — The Laws of Australia (Thomson Reuters, 2013) at [25.4.730]. In Athens v Randwick City Council [2005] NSWCA 317; 64 NSWLR 58 at [29], Hodgson JA accepted a statement that "in the case of real ambiguity extrinsic material such as the reasons for judgment may be considered", referring to Justice P W Young, "Construing Court Orders" (1998) 72 ALJ 117. Hodgson JA also cited the proposition from Repatriation Commission v Nation (1995) 57 FCR 25 at 34, where Beaumont J said (Black CJ and Jenkinson J agreeing) that "evidence of surrounding circumstances is admissible to assist in [construction] of an instrument if the language is ambiguous or susceptible of more than one meaning, but not admissible to contradict the language of the instrument when it has a 'plain meaning' (see Codelfa Construction Pty Ltd v State Rail Authority (NSW) (1982) 149 CLR 337 per Mason J at 352)". This proposition was recently affirmed in Ross v Lane Cove Council [2014] NSWCA 50 at [30]–[31] (Leeming JA). 156 Orders in matrimonial causes, however, appear to be a special case. In Langford and Coleman [1992] FamCA 68; (1992) 16 Fam LR 228 at 233 Nygh J (with whom Barblett DCJ and Ellis J agreed) said: …there is clear authority for the proposition that at least in matrimonial causes once any financial agreement reached between the parties is embodied in consent orders, it is to these orders alone that the court must look. The court cannot take into account whatever agreement might or might not have been reached between the parties which led to the making of the consent orders, and the authority for that proposition is found in the opinion of the Privy Council on appeal from Hong Kong in de Lasala v de Lasa1a [1980] AC 546 at 560, where Lord Diplock said: "Financial arrangements that are agreed upon between the parties for the purpose of receiving the approval and being made the subject of a consent order by the court, once they have been made the subject of the court order no longer depend upon the agreement of the parties as the source from which their legal effect is derived. Their legal effect is derived from the court order." That principle was applied by the English Court of Appeal in the case of Thwaite v Thwaite [1901] 3 WLR 96 and I refer particular to the judgment of Lord Justice Ormrod, as he then was, at 101, where his Lordship said: "The effect of eliminating the contractual basis of these consent orders should simplify the problems. If their legal effect is derived from the court order it must follow, we think, that they must be treated as orders of the court and dealt with, so far as possible, in the same way as non-consensual orders." These details, although they relate respectively to the law of Hong Kong and to the law of England, have been treated as authoritative in this country and were followed and applied most notably by the Full Court of this court in In the Marriage of Robinson and Willis (1981) 8 Fam LR 131 at 141–2 by Asche J and at 144 by Fogarty J. Although in those cases, admittedly, the courts were concerned with the rights of appeal arising from consent orders and stressed the fact that a consent order can be appealed from, like any other order, in my view the principle is wider than that. It follows that if an order made by consent must be treated like any other non-consensual court order it must be read and interpreted quite independently of what the parties subjectively might have intended thereby. It must be read as standing on its own feet, as it were. 157 There is no ambiguity on the face of the 21 September 2010 orders. The fact that Sandini was not the trustee of the Ellison Family Trust is not apparent from the face of the orders. Accordingly, recourse to extrinsic material is impermissible. It also must follow that Sandini as trustee for the KRUT owning more than 2,115,000 shares in MIN when the orders were made cannot be taken into consideration in construing the orders. Rather, the orders are to be construed on their own terms. As discussed, it may not be the case that order 3 concerns "property of the parties to the marriage" (s 79(1)(a)) because given order 2, order 3 may be "an order for a settlement of property in substitution for any interest in the property" of the parties to the marriage (s 79(1)(c)). Thus, unlike the case in Mateo and Jones, where the real property was "property of the parties to the marriage", the terms of order 3 do not necessarily refer to property owned by any party at the time the orders were made. This also follows from the nature of MIN shares which are available to be acquired or sold as shares in a publicly listed company. 158 Apart from these considerations, the Family Court could not make the orders under s 79 of the Family Law Act unless satisfied that it was "just and equitable to make the order" (s 79(2)) and having taken into account the matters in s 79(4). This statutory context is also relevant to the construction of the order. This statutory context supports my conclusion that the effect of the order was not, as Sandini contends, to create a trust over all of Sandini's shares in MIN, Ms Ellison being the beneficiary in respect of a proportion of the total shares represented by 2,115,000 shares and Sandini as trustee for the KRUT being the beneficiary of the balance, the effect of the trust being to constitute Sandini as a bare trustee and nothing more. 159 I consider that, having regard to these considerations, the preferred construction of the orders is against the respondents. The following matters also support this conclusion. 160 First, the orders do not purport to make any declaration "with respect to existing title or rights in respect of property" as permitted by s 78 of the Family Act. Nor are they orders which, in terms, alter interests in property of the parties to a marriage or either of them under s 79 of the Family Law Act. They are orders under s 79 which, as discussed, permits orders to be made in respect of property in substitution for any property of the parties to a marriage. 161 Second, the order relates to shares in a publicly listed company. The respondents would have it that the only reason Sandini was joined as party to the Family Court proceedings was because it owned shares in MIN and thus was capable of transferring such shares to Ms Ellison. This may be so as a matter of the subjective intention of the parties, but insofar as the orders are concerned, Sandini's ownership is irrelevant. In any event, it is equally plausible that Sandini was a mere convenient vehicle to ensure steps are taken to effect transfer of the required number of MIN shares. 162 Third, and even if the orders should be construed as relating to the MIN shares Sandini owned, a necessary question is what a court of equity would do. Would it prevent Sandini from dealing in 2,115,000 MIN shares on and from the date of the order? Would it declare Sandini to be a bare trustee of 2,115,000 MIN shares for Ms Ellison on and from the date of the order? I consider these questions must be answered against the respondents having regard to the following matters: (1) the nature of the shares as an asset freely traded in a publicly accessible market by reason of being shares in a publicly listed company. As a result, Sandini could acquire shares and do all acts necessary to transfer shares to Ms Ellison as required irrespective of owning shares in MIN at the time or not; (2) the fact that order 3 refers simply to "2,115,000 [MIN] shares" and not to "2,115,000 of the MIN shares owned by Sandini" or words to similar effect; (3) the fact that the orders do not require Sandini "to transfer" any shares to Ms Ellison. Rather, they require Sandini to "do all acts and things and sign all documents necessary to transfer to the wife 2,115,000 [MIN] shares"; (4) the period of seven days in order 3 for Sandini to do all acts "necessary to transfer" 2,115,000 MIN shares; (5) the orders do not suggest that their effect is that Sandini holds all shares it owns in MIN on trust, the beneficiaries being Ms Ellison as to 2,115,000 and Sandini as to the balance; (6) the orders do not prevent Sandini dealing in any MIN shares it might own; and (7) the orders refer to Sandini doing all things necessary to transfer "to the wife" 2,115,000 MIN shares. They do not identify the wife as having a power to direct the transfer of the shares to another entity. The rights created are thus personal to the wife. It is not apparent that those rights are themselves assignable. 163 Fourth, the same matters weigh against construing the orders as the respondents propose. In the case of: (1) assets which involve possibly complex questions of the cost base of the assets for capital gains tax purposes; (2) a lack of anything on the face of the orders dealing with the capital gains tax implications if rollover relief is available; (3) the fact that the party joined to the orders is identified as a trustee for another entity (the Ellison Family Trust); and (4) a statutory context in which the orders could be made only if the Family Court was satisfied they were just and equitable, it seems to me that there is not a sound foundation to construe the orders as the respondents propose. 164 As will be apparent my conclusions do not depend on the question whether the orders concern the shares in MIN which Sandini in fact owned or not. I consider the preferable construction is that the orders do not concern shares that Sandini in fact owned for the reasons already given. But if they do concern such shares, I do not accept that the effect of the orders was to make Ms Ellison the beneficial owner as to her relevant proportion of the share pool. No doubt, on that construction, the orders vested statutory rights and a beneficial interest of some kind in Ms Ellison but, as discussed, I do not consider that interest can be characterised as beneficial ownership or ownership of any kind sufficient to engage s 104-10(2) of the ITAA 1997. 165 Apart from these matters, the fact that Sandini did not own any shares in its capacity as the trustee of the Ellison Family Trust, as referred to in the orders, is itself relevant to the relief a court of equity might have granted. The respondents characterised the error as one of Sandini's capacity. This may be accepted. The relevant facts, to my mind, however, are that the orders are as made and capacity may be critical. The orders have never been amended. In any proceeding before a court of equity, it would be common ground that order 1 purported to join Sandini as trustee for the Ellison Family Trust when Sandini was not the trustee of this trust. As a result, when order 3 refers to Sandini doing things, it is "Sandini as trustee for the Ellison Family Trust" which is being referred to, given the defined term "Sandini" in order 1. While a court of equity could accept evidence that when the order was made Sandini was the trustee of the KRUT and the KRUT owned shares in MIN, but query what it could do with that evidence. A court of equity would not have power to amend the orders of the Family Court. It would be bound to construe the orders of the Family Court consistently with the principles noted above (that is, on their own terms and without regard to extrinsic material). As a result, it would be confronted with an order which purported to join a party which did not exist (Sandini as trustee for the Ellison Family Trust) and purported to require that non-existent party to do things necessary to transfer shares to Ms Ellison. 166 It may be accepted that the erroneous description of a person does not vitiate an instrument (Wingadee Shire Council v Willis [1910] HCA 35; (1910) 11 CLR 123; see also BHP Petroleum (Timor Sea) Pty Ltd v Minister for Resources [1994] FCA 1002; (1994) 49 FCR 155 at 172). While an order of the Family Court is not a performance bond subject to a principle of strict compliance as was the case for the instrument in Simic v New South Wales Land and Housing Corporation [2016] HCA 47; (2016) 339 ALR 200, the principles of construction which apply to orders in a matrimonial cause support the conclusion that the misidentification of the capacity of Sandini renders the orders incapable of operation. In Simic at [10] French CJ, albeit in the context of a performance bond, said: In the ordinary case, saving minor slips and misdescriptions, the designation of a person or entity as a beneficiary cannot simply, as a matter of construction, be transmuted into the designation of a different person or entity. Nor can a reference to a non-existent entity be construed as a reference to an existing entity with quite a different name. 167 At [85] in Simic Gageler, Nettle and Gordon JJ noted that the instrument in issue was "independent of any underlying transaction and any other contract". So too is an order in a matrimonial cause. 168 I am unable to agree with the primary judge that the description of Sandini's capacity was otiose and thus did not affect the application of the orders to Sandini itself. As noted, the orders are to be construed on their own terms without reference to extrinsic material. The fact that Sandini is the trustee of the KRUT, which owned shares in MIN, is all extrinsic material. So too is the fact that Sandini was and is not the trustee of the Ellison Family Trust. None of those matters arise on construction of the orders. As a result, it cannot simply be assumed that the orders meant that Sandini in its capacity as trustee of the KRUT be joined and subjected to order 3. Nor can it be assumed that the orders meant that Sandini Pty Ltd in its own capacity be joined and subjected to order 3. If this is so, then other potential consequences arise relating to the enforcement of the orders. In short, on their own terns, the orders have no operation and cannot be enforced. 169 It must also be the case that the capacity in which Sandini was joined as party and subjected to order 3 would be relevant to the relief a court of equity would grant. To my mind, this indicates that the identification of Sandini's capacity in the order for joinder (order 1) is not mere inutile verbiage which can be disregarded. 170 It follows from this that I accept the Commissioner's example of the problem with which a court of equity would be confronted by these orders. The Commissioner said, assume Sandini approached a court of equity seeking a declaration that it was the bare trustee of 2,115,000 shares on behalf of Ms Ellison based on the orders. What would a court of equity do? It could not ignore the terms of the orders. It could not construe those orders other than consistently with principle. It could not read out the words "…as trustee for the Ellison Family Trust" in order 1 and read in the words "…as trustee for the KRUT". I do not see how the court could have granted the declaration to Sandini. The same must apply to the position of Ms Ellison. She could not obtain a declaration or relief on the basis that she was the beneficial owner of 2,115,000 MIN shares owned by Sandini as trustee for the KRUT based on the orders. 171 It is not that the orders are invalid; they are simply ineffective. Sandini in its capacity as the trustee of the Ellison Family Trust did not exist, could not be joined as party and could not be ordered to do anything. 172 What of the fact that Ms Ellison requested the transfer of MIN shares to Wavefront? The respondents characterised this as Ms Ellison exercising a power of direction, consistent with equitable ownership of 2,115,000 shares. I am unable to agree. There is no basis to conclude that in so doing Ms Ellison was actually exercising any right that she held by reason of the orders. Nor does the subsequent fact of execution of a share transfer by Sandini support the conclusion that Ms Ellison was vested with any such right. It is a fact that Ms Ellison made the request, as it is a fact that Sandini and Wavefront executed a share transfer. These facts do not mean that Ms Ellison was exercising a right when she made the request, nor that Sandini was complying with a duty when it executed the share transfer form. As the Commissioner said, this aspect of the respondents' argument is circular (Ms Ellison could direct the transfer of the shares to Wavefront because she was the equitable owner of them and Ms Ellison was the equitable owner of the shares because she could so direct the transfer). 173 For these reasons I am not satisfied that the orders of 21 September 2010 effected a change in the ownership of 2,115,000 owned by Sandini in its capacity as the trustee of the KRUT within the meaning of s 104-10(2) of the ITAA 1997. As a result, CGT event A1 did not occur on the making of the orders of 21 September 2010. 174 CGT Event A1 occurred, however, on either the execution of the share transfer form by Sandini or, at the latest, the subsequent registration of the share transfer. As noted, however, the share transfer form was executed in favour of Wavefront as transferee, not Ms Ellison and Wavefront became the registered owner of 2,115,000 MIN shares. This leads to the next issue involving the operation of s 126-15(a) of the ITAA 1997. THE INVOLVEMENT ISSUE 175 As noted, s 126-15(1) provides for the roll-over consequences in s 126-5 if "the trigger event involves a company (the transferor) or a trustee (also the transferor) and a * spouse or former spouse (the transferee) of another individual because of…" one of the nominated matters (which includes in (a) an order of the Family Court). The primary judge concluded that Ms Ellison was involved in the CGT event (being the change of ownership of the shares from Sandini to Wavefront) as she had directed or instructed Sandini to transfer the MIN shares to Wavefront (at [186]-[188]). 176 I am unable to agree with this conclusion. In my view, s 126-15 means that a spouse or former spouse is involved in the trigger event in one capacity only, as transferee from a company or a trustee. 177 First, this conclusion accords with the ordinary meaning of the text of s 126-15. The trigger event is the event referred to in s 126-5, being the CGT event as identified in s 126-5(2). Section 126-15 operates to extend s 126-5. Section 126-5 applies if the trigger event happens involving an individual (the transferor) and his or her spouse (the transferee) or former spouse (also the transferee). Section 126-15 extends to trigger events involving a company (the transferor) or a trustee (the transferor) and a spouse or former spouse (the transferee). In both sections the character of the required involvement is internally defined. For a spouse or former spouse, the involvement is as transferee. If it were otherwise, neither section could be worded as it is, by referring to spouse or former spouse (the transferee). 178 Second, this is consistent with the way in which s 126-5 applies to a transfer from an individual defined as the transferor and s 126-15 applies to a transfer from a company or trust also defined as the transferor. If the individual automatically was "involved" in the trigger event by directing or instructing a transfer by a company or trustee to a spouse or former spouse, s 126-15 would be redundant. It is not redundant because the only way in which an individual can be involved is as transferor under s 126-5. If a company or trustee is acting under the direction or instruction of an individual, s 126-15 operates. The same logic must apply to spouses and former spouses who are identified as transferees. They are involved only because they are transferees. 179 Third, and as the Commissioner explained, s 126-15 is a successor provision to the former s 160ZZMA of the Income Tax Assessment Act 1936 (Cth) (ITAA 1936). Section 160ZZMA, introduced by the Taxation Laws Amendment Act 1989 (Cth), applied where "a taxpayer ... being a company or a trustee of a trust estate, disposes of an asset ... to a person (in this section called the 'spouse') who is or was the spouse of another person". Section 160ZZMA was repealed by the Tax Law Improvement Act (No 1) 1998 (Cth) and replaced by s 126-15. The Explanatory Memorandum, Tax Law Improvement Act (No 1) 1998 (Cth) states at chapter 2.17 that the ITAA 1936 provisions are "excessively complicated…The result under the simplified approach is the same". As the Commissioner put it: Given this statutory history, it is inherently unlikely that the introduction of s 126-15 was intended to substantially expand the class of cases in which there were roll-over consequences. Indeed, the only available inference from the Explanatory Memorandum is that Parliament intended no change at all: the result was to be "the same", albeit with simpler wording. 180 For these reasons I accept the Commissioner's submission that: The work done by the words "involves" ins 126-15(1) is to identify that the transferor (ie the company or entity) and the transferee (ie the spouse or former spouse) must be connected to the trigger event "because of" one of the matters listed in sub-paragraphs (a) through (f). One or more of those matters must be the explanation for their involvement. The word is not intended to expand the class of trigger events which attract roll-over relief to any event procured by a company, trustee, spouse or former spouse. His Honour erred in holding to the contrary. 181 The primary judge said: [79] The applicants maintain, and I accept, that an important consideration not to be lost in the proper construction to be given to s 126-15 is that it is an ameliorating provision that relieves taxpayers from taxation burdens that would otherwise arise. Accordingly, and consistently with the text, context and policy of the statute (per Project Blue Sky Inc v Australian Broadcasting Authority (1998) 194 CLR 355 (at [69]–[70])), to the extent that there are construction options within these parameters, those that allow a liberal and not restrictive construction ought to be preferred to those that do not: see Burt v Commissioner of Taxation (1912) 15 CLR 469, WA Trustee Executor & Agency Co Ltd v Commissioner of State Taxation (WA) (1980) 147 CLR 119, being sales tax exemption cases; and see also Shell's Self Service Pty Ltd v Deputy Commissioner of Taxation (Cth) (1989) 98 ALR 165 per Ryan J and Bons (t/as Scale Aviation Australia) v Commissioner of Taxation (Cth) (1994) 28 ATR 239 per Beazley J. The policy of s 126-15, the applicants stress, is to defer crystallisation of tax liability that would otherwise arise upon CGT events that follow from division of property between spouses and former spouses on breakdown of their relationship. The construction advanced above is wholly consistent, the applicants say, with this policy and, further, does not undermine the scheme of the CGT Rules. [80] It will produce a tax liability when the relevant assets pass beyond the family unit in more normal circumstances, most of which will be accompanied by a realisation generating proceeds with which the tax burden will be able to be met. 182 As the Commissioner submitted, however, it must be understood that these provisions effect a transfer of capital gains tax liability from one spouse (or company or trustee) to the other spouse, not mere deferral. Given this, recourse to notions of preferring a liberal construction may be inapt. In any event, a liberal construction cannot operate to extend the provision beyond that permitted by its terms. 183 I do not accept the respondents' submissions to the contrary. It is true that CGT event A1 occurred. It may be accepted that it occurred because Ms Ellison requested the transfer from Sandini to Wavefront and Sandini executed a transfer, which was then registered. This does not mean that s 126-15 is satisfied. I find the words of s 126-15 clear. Ms Ellison was not the transferee. Section 126-15 is not engaged. THE "BECAUSE OF" ISSUE 184 Section 126-15 of the ITAA is only engaged if the trigger event involves a company or trustee (transferor) and a spouse or former spouse (transferee) "because of…(a) a court order under the Family Law Act 1975…". 185 The primary judge considered that there "was a transfer of shares in purported compliance of a court order" (at [123]). Further, his Honour said nothing in "the provision requires that the court order be valid or efficacious" and "there is no occasion to inquire into the legal or factual correctness of the orders: see Coshott v Woollahra Municipal Council [2008] NSWCA 176 per Handley J" (at [124]). His Honour continued at [125]: It is a requirement of the section that the CGT event must happen 'because of' the relevant order and I find that was expressly so here. It is clear on the facts that the transfer would not have occurred were it not for the Family Court Order and did occur 'because of' the Family Court Order. As noted by Lockhart J (at 321–322) in Human Rights and Equal Opportunity Commission v Mount Isa Mines Pty Ltd (1993) 46 FCR 301, this expression simply implies a relationship of cause and effect. The section does not use a more confining expression such as 'pursuant to the specific terms of the order'. Rather, it seeks to rely upon broader and less technical concepts inherent in a mere cause and effect relationship. Inquiry is not invited beyond the conclusion that a transfer occurs as a result of a court order in a commonsense cause and effect sense. Further inquiry as to whether there is exact compliance with the precise terms of the court order is not stipulated or implied in the section. 186 Ms Ellison contended that the contrary conclusion was necessary. 187 I accept Ms Ellison's submissions about this issue. 188 First, for the provision to be satisfied the relevant causal relationship must exist in respect of a transfer involving a company or trustee as transferor and a spouse or former spouse as transferee. As discussed above, the transfer of the shares was to Wavefront, not to Ms Ellison, the spouse. 189 Second, the fact (if it be the fact) that, as between Ms Ellison and Mr Ellison (as the controlling mind of Sandini), both believed they were giving effect to the 21 September 2010 orders is immaterial to the question whether the there was a trigger event as required because of an order of the Family Court. Section 126-15 is not concerned with the subjective states of minds of the transferor or transferee. It is concerned with an objective state of affairs which requires the existence of an order of the Family Court and the occurrence of the trigger event involving a company or trustee as transferor and spouse or former spouse as transferee "because of" the order. The requirements are all objective, including the causal requirement. 190 I consider that the provision requires the causal relationship described by the words "because of" to be understood as involving a trigger event required by an order of the Family Court. I prefer to avoid the language of a trigger event occurring "in compliance with" an order of the Family Court, as the concept of "compliance" may call for consideration of the state of mind of the person required to comply which, in my view, is immaterial. Thus, I consider that a trigger event involving the transferor and transferee as identified in s 126-15 occurs because of an order of the Family Court if the order requires that event to occur and the event occurs. 191 Third, I do not consider the reasoning in Human Rights and Equal Opportunity Commission v Mount Isa Mines Pty Ltd [1993] FCA 535; (1993) 46 FCR 301 to support the contrary conclusion. The reasoning involved the meaning of "by reason of" in the context of human rights legislation (that is, the discriminatory conduct occurring "by reason of" the relevant factor such as gender). Language and context are all. Section 126-15(1)(a) of the ITAA 1997 concerns rollover relief in circumstances where, as the primary judge said at [123], the property consequences of the dissolution of a marriage are not seen to be an appropriate occasion for the imposition of a tax liability. This is reinforced by the Explanatory Memorandum, Tax Law Improvement Bill (No 1) 1998 (Cth) which states that he object of s 126-15(1) is to provide for rollover relief where an asset is transferred to the spouse "as a result of a marriage breakdown" (at chapter 2.17). 192 The section operates against the background of the Family Law Act which empowers the Family Court to make orders adjusting the property rights of parties to a marriage on breakdown of the marriage. Construed in context, I consider that it is trigger events which occur as required by those orders which are given the benefit of the provision; these are trigger events which occur "because of" such orders. Trigger events which occur not because the orders require it, but for some other reason (and even if the reason is a shared incorrect belief that the orders are being satisfied or that the parties agree the action means that they will treat the orders as satisfied), do not occur "because of" the orders within the meaning of the section; they occur "because of" some state of mind of the parties which may or may not be influenced by the orders. I do not see why the provision would be construed as applying to such events. A focus on the objective operation of the provision avoids this result. 193 Fourth, the principle to which Handley AJA referred in Coshott v Woollahra Municipal Council [2008] NSWCA 176 at [16]-[17] was that of res judicata. In Coshott a costs order had been made in favour of one party in a proceeding. It followed that the other party was not entitled to inquire into the legal or factual correctness of that order in another proceeding. The present case is different. The issue in this proceeding is whether the trigger event involving the transferor and transferee occurred because of the 21 September 2010 orders. If, as in the present case, the orders required Sandini to do all acts necessary to transfer shares to Ms Ellison and, instead, Sandini transferred shares to Wavefront, the principle of res judicata is not material. It is proper, indeed necessary, to ask whether these facts satisfy the requirement in s 126-15. In my view they do not, irrespective of the states of mind which Mr Ellison (which, for the purpose of the discussion, may be attributed to Sandini) and Ms Ellison held. In short, I do not see how it can be said that the transfer to Sandini was "because of" the 21 September 2010 orders, even if Mr Ellison and Ms Ellison believed the transfer was in purported compliance with those orders. It may be different if Sandini had done all things necessary to effect a transfer of the shares to Ms Ellison but did so later than the period of seven days or transferred a number of shares different from that nominated in the orders. In such a case, it may still be possible to find that the transfer occurred "because of" the orders. Given the terms of s 126-15 which refer to the spouse or former spouse (transferee), however, I do not see how any transfer to an entity other than the spouse or former spouse as transferee can engage the provision. 194 Fifth, and as discussed above, in my view the 21 September 2010 orders are inefficacious in all relevant respects. They purport to join Sandini in a capacity which it did not have (order 1). They purport to require Sandini in that non-existent capacity to do things (order 3). No doubt order 2 (vacating earlier orders) is an operative order which binds Mr Ellison and Ms Ellison, but that order has nothing to do with s 126-15 of the ITAA 1997. The fact that Sandini did things in another capacity (as trustee of the KRUT Sandini transferred shares to Wavefront) does not mean that the orders were efficacious. It may mean that Mr Ellison and Ms Ellison agreed that Sandini should do these things and that they would treat this as satisfaction of the orders, but that agreement does not give the orders efficacy. The relevant point for present purposes is not the existence of an agreement between Mr Ellison and Ms Ellison subsequent to the making of the orders. It is whether it can be said that anything occurred "because of" the orders within the meaning of s 126-15. 195 In my view, the fact that orders 1 and 3 are wholly inefficacious means that this question must be answered in the negative for this further reason. This is not a case of an otherwise efficacious order containing some minor error which may properly be disregarded for the purposes of s 126-15. It is that orders 1 and 3 of the 21 September 2010 orders had no effect whatsoever. They could not be enforced by Ms Ellison. While s 106A(1) of the Family Law Act refers to execution of documents "in the name of the person to whom the direction was given", given the terms of orders 1 and 3, the name of that person was "Sandini Pty Ltd as trustee for the Ellison Family Trust". Thus, failing compliance by Sandini in its non-existent capacity as trustee for the Ellison Family Trust, Ms Ellison also could not have availed herself of s 106A of the Family Law Act because Sandini did not have that capacity. 196 Sixth, the fact that it may well have been open to the parties to seek to vary the 21 September 2010 orders by consent so that they referred to Sandini being joined and required to do things in its capacity as trustee of the KRUT is immaterial for the simple reason that this never occurred. 197 Consistent with the reasoning above, however, I would not accept the argument for Ms Ellison that the mere fact that Sandini executed the share transfer a short period after expiry of the period of seven days referred to in order 3 would itself exclude the application of s 126-15. 198 For these reasons also, accordingly, I consider that s 126-15 was not engaged. THE DEEMING PROVISION ISSUE 199 As noted, by s 103-10 of the ITAA 1997, Pt 3-1 and Pt 3-3 of Ch 3 of that Act (which contain s 104-10 and s 126-15, amongst other relating to CGT event A1 and roll-over relief) applies "to you as if you had received money or other property if it has been applied for your benefit … or as you direct". The primary judge treated this provision as if it operated to deem Ms Ellison to have acquired ownership of the MIN shares transferred to Wavefront because those shares had been applied as she directed or to her benefit (at [187] and [198]). 200 I again find persuasive the Commissioner's submissions about the construction of s 103-10 of the ITAA 1997, with the consequence that I take a different view from that of the primary judge. 201 Section 103-10 is a deeming provision. It provides that Pt 3-1 and Pt 3-3 of Ch 3 apply to a person "as if [the person] had received money or other property" (or the person is entitled to do so) in the identified circumstance (the money or property has been applied for your benefit or as you direct). 202 The receipt of or entitlement to receive money or property engages various provisions in Pt 3-1 and Pt 3-3. 203 For example, s 116-20(1) in Pt 3-1 provides that: (1) The capital proceeds from a * CGT event are the total of: (a) the money you have received, or are entitled to receive, in respect of the event happening; and (b) the * market value of any other property you have received, or are entitled to receive, in respect of the event happening (worked out as at the time of the event). 204 Section 124-85 in Pt 3-3 deals with the consequences if you "receive money". 205 Section 124-90 concerns the consequences if you "receive * another CGT asset". 206 Section 124-95 deals with the consequences if you "receive both money and another * CGT asset". 207 I accept the Commissioner's submission that s 103-10 operates so that these provisions (and others which are engaged by the receipt of money or property) apply if "money or other property …has been applied for your benefit … or as you direct". 208 But s 103-10 does not operate at large to apply the whole of Pt 3-1 or Pt 3-3 to a person if money or other property has been applied for that person's benefit or as that person directs. This seems to me to follow from the clear words of s 103-10, but I also agree with the Commissioner's submission that to give the section a wider operation than that for which its terms provide is contrary to principles of construction. 209 In Wellington Capital Ltd v Australian Securities and Investments Commission [2014] HCA 43; (2014) 254 CLR 288 Gageler J explained at [51] that provisions which create a legal fiction are "not construed to have a legal operation beyond that required to achieve the object of its incorporation", a principle which applies to both statutes and private instruments. His Honour applied the same principle in State of Queensland v Congoo [2015] HCA 17; (2015) 256 CLR 239 at [165]. 210 Newcastle Airport Ltd v Chief Commissioner of State Revenue [2014] NSWSC 1501; (2014) 99 ATR 748 does not assist the respondents. In that case White J said: [54] The Chief Commissioner submitted that such a deeming provision is to be construed strictly and only for the purpose for which resort is to be had to it (Federal Commissioner of Taxation v Comber (1986) 10 FCR 88 at 96). The Chief Commissioner's argument did not explain how s 49(6) would operate if given a narrow or strict construction as distinct from giving the words used their ordinary and natural meaning. Counsel for the Chief Commissioner submitted that s 49(6) existed "for the purposes of determining whether or not a statutory function has been exercised by the delegator". Undoubtedly, that is true in the sense that the provision provides that where a delegated function has been duly exercised by the delegate, it is taken to have been exercised by the delegator. But that is only to repeat the words of the section. Counsel submitted that the purpose of the provision was "to determine whether or not a statutory function has been exercised". I do not understand that submission because s 49(6) applies only where a delegated function has been duly exercised. [55] In my view the approach to be taken to construing the deeming provision in s 49(6) is the same as in construing any statute. In DCC Holdings (UK) Limited v Revenue and Customs Commissioners [2010] UKSC 58; [2011] 1 WLR 44 at 58 Lord Walker approved the following passage from the judgment of Peter Gibson J in Marshall v Kerr (1993) 67 TC 56 (at [38]) as follows: [38] Peter Gibson J (with whom Balcombe and Simon Brown LJJ agreed) then stated this principle 67 TC 56, 79 (the same passage also appears at p 92 but with five words accidentally omitted): For my part, I take the correct approach in construing a deeming provision to be to give the words used their ordinary and natural meaning, consistent so far as possible with the policy of the Act and the purposes of the provisions so far as such policy and purposes can be ascertained; but if such construction would lead to injustice or absurdity, the application of the statutory fiction should be limited to the extent needed to avoid such injustice or absurdity, unless such application would clearly be within the purposes of the fiction. I further bear in mind that, because one must treat as real that which is only deemed to be so, one must treat as real the consequences and incidents inevitably flowing from or accompanying that deemed state of affairs, unless prohibited from doing so. In the House of Lords (which reversed the Court of Appeal on a point not taken below) Lord Browne-Wilkinson approved this passage as the correct approach: [1995] 1 AC 148, 164. [56] Lord Walker added (at [39]): [39] Neuberger J developed this reasoning in a passage in Jenks v Dickinson [1997] STC 853, 878,69 TC 458 that I find helpful: It appears to me that the observations of Peter Gibson J, approved by Lord Browne-Wilkinson, in Marshall indicate that, when considering the extent to which one can "do some violence to the words" and whether one can "discard the ordinary meaning", one can, indeed one should, take into account the fact that one is construing a deeming provision. This is not to say that normal principles of construction somehow cease to apply when one is concerned with interpreting a deeming provision; there is no basis in principle or authority for such a proposition. It is more that, by its very nature, a deeming provision involves artificial assumptions. It will frequently be difficult or unrealistic to expect the legislature to be able satisfactorily to [prescribe] the precise limit to the circumstances in which, or the extent to which, the artificial assumptions are to be made. … [58] In my view, s 49(6) is to be given its literal interpretation… 211 The natural and ordinary meaning of s 103-10 is that which the Commissioner propounds. 212 The legal fiction which s 103-10 of the ITAA 1997 creates involves the following elements: (1) various provisions of Pts 3-1 and 3-3 of Ch 3 of the ITAA 1997 apply to a person who has received money or other property; (2) a person who has had money or property applied for their benefit or as they have directed has not, in fact, received money or property; (3) accordingly, but for s 103-10 those provisions of Pts 3-1 and 3-3 of Ch 3 of the ITAA 1997 which apply to a person who has received money or other property do not apply to such persons; and (4) s 103-10 ensures that such provisions do apply "as if" the person had received the money or other property. 213 So understood, nothing in s 103-10 operates to deem every provision of Pts 3-1 and 3-3 of Ch 3 of the ITAA 1997 to apply to such a person. The argument which the primary judge accepted and for which the respondents contend on appeal, that s 103-10 operates to apply every such provision to a person in that position, cannot be reconciled with the terms of s 103-10. It is not that the Commissioner is proposing an unduly narrow construction of the language of that section. It is that the section, on its natural and ordinary meaning, cannot support any operation broader than that for which the Commissioner contends. As such, and contrary to the respondents' submission, recourse to the proposed policy of ensuring that the rollover relief in s 126-15 is available cannot assist in the construction of s 103-10 of the ITAA 1997. CONCLUSIONs 214 For the reasons given, I consider that the appeals must be allowed and consequential orders made. Sandini was not entitled to the rollover relief provided for in s 126-5 of the ITAA 1997, by operation of s 126-15 of that Act, because the 21 September 2010 orders of the Family Court did not constitute CGT Event A1, and the subsequent transfer of shares by Sandini to Wavefront which did constitute CGT Event A1 did not engage s 126-15(1)(a) of the ITAA 1997 as Ms Ellison was not involved in the transfer as transferee and the transfer did not occur because of the Family Court orders. I certify that the preceding one hundred and eighty-two (182) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Jagot. Associate: Dated: 27 March 2018 SCHEDULE OF PARTIES WAD 172 of 2017 Respondents Fourth Respondent: ELLISON (WA) PTY LTD (ACN 135 966 773) Fifth Respondent: COMMISSIONER OF TAXATION WAD 173 of 2017 Respondents Fourth Respondent: ELLISON (WA) PTY LTD (ACN 135 966 773) Fifth Respondent: DEBBIE MAREE ELLISON Sixth Respondent: WAVEFRONT ASSET PTY LTD (ACN 139 479 968) ATF THE FELSTEAD FAMILY TRUST