FEDERAL COURT OF AUSTRALIA Commissioner of Taxation v BHP Billiton Limited [2019] FCAFC 4 Appeal from: MWYS v Commissioner of Taxation (Taxation) [2017] AATA 3037 File number: QUD 27 of 2018 Judges: ALLSOP CJ, DAVIES AND THAWLEY JJ Date of judgment: 29 January 2019 Catchwords: TAXATION – appeal from Administrative Appeals Tribunal – where respondent (Ltd) is part of a dual-listed company arrangement with a non-resident company (Plc) – where third company (BMAG) is a controlled foreign company of Ltd for the purposes of Part X of the Income Tax Assessment Act 1936 (Cth) – where BMAG derived income offshore from the sale of commodities it purchased from Plc's Australian entities – whether that income of BMAG was "tainted sales income" to be included in the calculation of BMAG's attributable income and hence included in the assessable income of Ltd under Part X of the ITAA 1936 – whether Ltd is an "associate" of Plc (or vice versa) under s 318(2) – whether Ltd is "sufficiently influenced" by Plc (or vice versa) under s 318(6)(b) – whether BMAG is "sufficiently influenced" by Plc and Ltd for the purposes of s 318(2)(d)(i)(B) Legislation: Corporations Act 2001 (Cth) s 9 1 Income Tax Assessment Act 1936 (Cth) Part X, ss 316(1), 318, 318(2), 318(6), 361(1), 456, 447(1) Income Tax Assessment Act 1997 (Cth) s 995-1 Taxation Administration Act 1953 (Cth) Part IVC Taxation Laws Amendment (Foreign Income) Act 1990 (Cth) Explanatory Memorandum, Taxation Laws Amendment (Foreign Income) Bill 1990 (Cth) Cases cited: BHP Billiton Finance Ltd v Commissioner of Taxation (2009) 72 ATR 746 Buzzle Operations Pty Ltd (in liq) v Apple Computer Australia Pty Ltd (2010) 238 FLR 384 Buzzle Operations Pty Ltd (in liq) v Apple Computer Australia Pty Ltd (2011) 81 NSWLR 47 Bywater Investments Ltd v Federal Commissioner of Taxation (2016) 260 CLR 169 Charterbridge Corporation Ltd v Lloyds Bank Ltd [1970] Ch 62 Federal Commissioner of Taxation v Peabody (1994) 181 CLR 359 K-Generation Pty Ltd v Liquor Licencing Court (2009) 237 CLR 501 NEAT Domestic Trading Limited v AWB Limited (2003) 216 CLR 277 Plaintiff M174/2016 v Minister for Immigration and Border Protection (2018) 92 ALJR 481 R v Kelly (2004) 218 CLR 216 Sea Shepherd Australia Limited v Commissioner of Taxation (2013) 212 FCR 252 SZEEU v Minister for Immigration and Multicultural and Indigenous Affairs (2006) 150 FCR 214 Ultraframe (UK) Ltd v Fielding [2006] FSR 17 United Dominions Corporation Ltd v Brian Pty Ltd (1985) 157 CLR 1 Whywait Pty Ltd v Davison [1997] 1 Qd R 225 Yacoub v Federal Commissioner of Taxation (2012) 83 ATR 722 Date of hearing: 31 May 2018 Registry: Queensland Division: General Division National Practice Area: Taxation Category: Catchwords Number of paragraphs: 175 Counsel for the Applicant: Mr J Hmelnitsky SC and Mr D Hume Solicitor for the Applicant: Australian Government Solicitor Counsel for the Respondent: Mr D H Bloom QC and Mr E F Wheelahan Solicitor for the Respondent: King & Wood Mallesons ORDERS QUD 27 of 2018 BETWEEN: COMMISSIONER OF TAXATION Applicant AND: BHP BILLITON LIMITED (ACN 004 028 077) Respondent JUDGES: ALLSOP CJ, DAVIES AND THAWLEY JJ DATE OF ORDER: 29 January 2019 THE COURT ORDERS THAT: 1. The appeal be allowed. 2. The decision of the Administrative Appeals Tribunal dated 22 December 2017 be set aside and, in lieu thereof, the objection decision dated 30 June 2016 be affirmed. 3. Unless either party applies within 14 days for a different order with respect to costs, the respondent pay the applicant's costs. Note: Entry of orders is dealt with in Rule 39.32 of the Federal Court Rules 2011. REASONS FOR JUDGMENT ALLSOP CJ : 1 I have had the advantage of reading the reasons to be published of Davies J and Thawley J. These reasons assume a familiarity with their Honours' reasons. 2 I agree with the orders proposed by Thawley J. I use the abbreviations in the reasons of Thawley J. 3 The difference in view concerning, and in my respectful opinion, the answer to, the question of construction and interpretation involved lie in the contextual conceptualisation of the purpose of Part X and the place of associates and association in its operation. The point can be made by recognising, at the outset, that these two companies, Ltd and Plc, have the same persons as their directors, and the legal documents which the companies have entered into call for the two entities to operate as if the two were a single unified (economic) entity. Clauses 2(a), (b) and (c) of the Sharing Agreement reflect this. The reference in clause 2(b) to have regard to the interests of the shareholders of both companies is not a limited extension of the content of the fiduciary duty to the company. It underpins, within the framework of fiduciary responsibility to the particular company of which the person is a director, the obligation of the two companies, individually and collectively, to operate in all respects as one economic entity. 4 Thus, when each company is acting, and when the individuals who are the directors are acting, it and they are acting as, and for, one part of a unified entity in which it and they has and have a mutuality of interest with the other company and with themselves acting in their capacity as directors of it. 5 The question is whether s 318(2)(d)(i), as informed by s 318(6)(b), is satisfied or engaged between equals, acting in each other's mutual interests as one economic entity; or, whether the provisions are limited to circumstances where one entity has some degree of controlling influence over the other. 6 If the latter be the case, the provisions operate only in a unidirectional way, and one of the entities having a degree of influence over the other is sufficient for it to be able to be described as the controlling entity of the other, because the other has acted, does act or can be expected to act as set out in s 318(6)(b). 7 If the former, the provisions can operate in a multidirectional way, such that separate entities may at once be the primary entity sufficiently influenced by the other (controlling) entity, and the controlling entity sufficiently influencing the other (primary) entity. 8 There are aspects about the text, structure and purpose of Part X that point to both alternatives. 9 The associate provisions in s 318 are not for the purpose of ascribing an obligation to, or an office as, a director, as in the cognate provision of corporations legislation so heavily influential in the Tribunal's reasons. In that context, a unidirectional conception is not only understandable, but necessary: How influential was the shadow director on the members of the board such that it can be said that he or she was so influential as to be taken to be a member of the board himself or herself? 10 The associate provisions in s 318 take their place in a Part that is directed to the question of what amounts are to be included in a taxpayer's assessable income. The associate provisions take their place in this scheme by identifying relationships of sufficient proximity of association to subject an entity to tax by that association. Thus, the object of the Part (unlike the object of the shadow director provisions) is not one which, in its essence, requires limitation to a unidirectional element of influence, dominance, or control by one over the other. 11 As Thawley J points out, s 318(2) identifies a number of types of relationship that can satisfy the notion of requisite association. Paragraph 318(2)(a) fixes on partnership – a relationship of mutual interest and obligation towards a common commercial goal: the economic advancement of all, including the other(s) by the shared common venture of profit making. Paragraph (b) extends the association of the partner to the latter's spouse or child: once again to persons who one would take to be advantaged by the economic advantage of the partner. Paragraph (c) extends the association to trustees of a trust in which the primary entity has an interest. All these ((a), (b) and (c)) speak to relationships not of control or influence, but conformity or confluence, or reasonably expected conformity or confluence, of economic interest. 12 Paragraphs (d) and (e) are directed to influence and, to a degree, control. The words "controlling entity" and "controlled company" are used in the chapeaux to paragraphs (d) and (e), respectively. But that language is not used in a substantive way to say that control is required; in each case it is definitional where (d)(i)(A) or (i)(B) or (ii)(A) or (ii)(B) or (e)(i)(A) or (i)(B) or (i)(C) or (i)(D) or (ii)(A) or (ii)(B) or (ii)(C) is satisfied. For (d)(i) and (e)(i) this is informed by the interpretation of sufficient influence required by s 318(6)(b). 13 The terms of s 318(6)(b) raise a question at the outset: "sufficiently influenced" for what purpose or object? The meaning of "sufficient" is a quantity, extent or scope adequate to a certain purpose or object. The answer is in part given by the words of s 318(6)(b): "if the company, or its directors are accustomed or under an obligation (whether formal or informal), or might reasonably be expected, to act in accordance with the directions, instructions or wishes of the entity …". These are factual enquiries about the past, present or future about acting in accordance with (that is, in harmonious correspondence, agreement or conformity with) directions, instructions or wishes. Directions or instructions involve some element of the imperative: saying what is to be done; wishes involve the subjunctive: saying what is desired. If the purpose or object of the enquiry is to answer a question as to whether A controls B or B is sufficiently malleable to do what A wants or whether B is independent of A, one is looking at a binary concept in a unidirectional way. If A controls or sufficiently influences B so as to amount to control, the relationship is to be seen as unidirectional, and B is not relevantly independent. 14 If the purpose or object of the enquiry is to understand whether the two have a relationship whereby it is appropriate to attribute the income of one to the other, the answer to that binary question as to whether A controls B or whether B is independent of A may not exhaust the field of relevant useful enquiry. If one can see from s 318(6)(b) a relevantly useful factual enquiry concerning circumstances short of control, but capable of being satisfied by the mutual recognition of two parties that they will act in conformity with the wishes of each other as they have done in the past, there is no reason why such acting in conformity must be unidirectional reflecting dominance or subservience. It may be in the mutual best interests of both to act in accordance with each other's wishes, as it was undoubtedly thought to be the case here. That such acting in accordance with the wishes of the other is understood to be in one's own interests, and is conduct freely undertaken, does not diminish the reality of the fact that each acts in accordance with the wishes of the other, for the mutually beneficial operation of a single economic entity, and in accordance with the underlying agreement of the parties. 15 If the purpose or object is assessing closeness of association in order to assess the appropriateness of attribution of income, s 318(6)(b) can be seen to be wide enough to include circumstances of mutually advantageous decision-making by parties as equals acting in accordance with the direction, instructions and wishes of each other for the common economic goal of operating a single economic entity. In my respectful view, there is no reason in the text, structure or purpose of Part X to limit the operation of ss 318(2)(d)(i) and (6)(b) to a unidirectional analysis of influence or control. 16 With this approach to the sections, I agree with the reasons of Thawley J. I certify that the preceding sixteen (16) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Chief Justice Allsop. Associate: Dated: 29 January 2019 REASONS FOR JUDGMENT DAVIES J: 17 I have had the benefit of reading a draft of the reasons for judgment of Thawley J but, for the reasons that follow, I have respectfully differed on the outcome. 18 This appeal concerns the meaning and effect of the phrase "sufficiently influenced" in s 318(2) of the Income Tax Assessment Act 1936 (Cth) ("ITAA 1936"). That phrase is used, relevantly, to denote one of the relationships that will constitute a company an "associate" of another company for the purposes of the controlled foreign corporations provisions in Part X of the ITAA 1936. The term "associate" as used in that Part has the meaning given by s 318. Relevantly, s 318(2) provides that: For the purposes of this Part, the following are associates of a company (in this subsection called the primary entity): … (d) another entity (in this paragraph called the controlling entity) where: (i) the primary entity is sufficiently influenced by: (A) the controlling entity; or (B) the controlling entity and another entity or entities; or … (e) another company (in this paragraph called the controlled company) where: (i) the controlled company is sufficiently influenced by: (A) the primary entity; or (B) another entity that is an associate of the primary entity because of another paragraph of this subsection; or (C) a company that is an associate of the primary entity because of another application of this paragraph; or (D) 2 or more entities covered by the preceding sub-subparagraphs; or … 19 The phrase "sufficiently influenced" has the meaning given by s 318(6)(b), which provides that for the purposes of the section: a company is sufficiently influenced by an entity or entities if the company, or its directors, are accustomed or under an obligation (whether formal or informal), or might reasonably be expected, to act in accordance with the directions, instructions or wishes of the entity or entities (whether those directions, instructions or wishes are, or might reasonably be expected to be, communicated directly or through interposed companies, partnerships or trusts)… 20 Thus, whether a company is "sufficiently influenced" by an entity or entities within the meaning of s 318(6)(b) requires a factual enquiry into whether "the company, or its directors": are accustomed; or under an obligation (whether formal or informal); or might reasonably be expected – to act in accordance with the directions, instructions or wishes of another entity or entities. 21 For the income years ended 30 June 2006 to 30 June 2010 inclusive, the Commissioner assessed BHP Billiton Ltd ("Ltd") on income derived by BHP Billiton Marketing AG ("BMAG") from the sale of commodities that BMAG purchased from Australian subsidiaries of BHP Billiton Plc ("Plc") on the basis that Plc was an "associate" of BMAG and the profits constituted "tainted sales income" of BMAG attributable to Ltd under the provisions of Part X of the ITAA 1936. BMAG is a Swiss company and a controlled foreign corporation of Ltd by reason that Ltd indirectly holds 58% of the shares in BMAG. Plc indirectly holds the other 42%. Ltd and Plc have been parties to a dual-listed company arrangement ("DLC Arrangement") since 2001 and, under the terms of the DLC Arrangement, they each carry on a global resource business through their respective subsidiaries. During the income years in question, Ltd and Plc both made sales of commodities to BMAG through their wholly owned Australian subsidiaries. Ltd did not dispute that the income that BMAG derived from the sale of the commodities it purchased from Ltd's wholly owned Australian subsidiaries was "tainted sales income" of BMAG within the meaning of s 447(1) of the ITAA 1936 to be included in the calculation of the "attributable income" of BMAG on which Ltd is liable to tax under the provisions of Part X. Ltd also did not dispute that the income that BMAG derived from Plc's Australian subsidiaries was "tainted sales income" of BMAG attributable to Ltd under the provisions of Part X if Plc's wholly owned Australian subsidiaries were "associates" of BMAG within the meaning of s 318. Ltd, however, disputed that Plc's wholly owned Australian subsidiaries were "associates" of BMAG within the meaning of s 318. 22 Before the Tribunal, it was common ground that Plc's wholly owned Australian subsidiaries were "associates" of BMAG in the income years in question if, within the meaning of s 318(6)(b): (a) BMAG was "sufficiently influenced" by Plc and Ltd; or (b) Ltd was "sufficiently influenced" by Plc ; or (c) Plc was "sufficiently influenced" by Ltd. 23 The Commissioner relied on the features of the DLC Arrangement between Ltd and Plc to contend that Ltd and Plc were both "sufficiently influenced" by the other within the statutory meaning of that phrase in s 318(6)(b). That contention was not upheld by the Tribunal, which also did not uphold the Commissioner's contention that Ltd and Plc as shareholders in BMAG and as parties to the DLC Arrangement together "sufficiently influenced" BMAG for the purposes of s 318(2)(d)(i)(B). 24 The central point of difference between the parties on the construction of the expression "sufficiently influenced" concerns the phrase "to act in accordance with". The approach of the Tribunal was to look at the case law on the meaning of the phrase "accustomed to act in accordance with the person's instructions or wishes" in the definition of "director" in s 9 of the Corporations Act 2001 (Cth) ("Corporations Act") to provide guidance by analogy in relation to the statutory meaning of "sufficiently influenced". As the Tribunal noted, the language of the Corporations Act definition of "director" is strikingly similar to, and in substantially the same terms as, the counterpart element "are accustomed … to act in accordance with the directions, instructions or wishes of the entity or entities" in the definition of "sufficiently influenced". 25 The Commissioner accepted that the words "to act in accordance with" in s 318(6)(b) denote a requirement for some causative connection between the act of the primary entity and the directions, instructions or wishes communicated by another entity to constitute the other entity an "associate" of the primary entity, but contended that the Tribunal wrongly applied a "control" or "subservience" test in reliance on the company law cases on the meaning of "director". The Commissioner argued that s 318(6)(b) is materially broader in its terms than the definition of "director", fulfilling a different legislative purpose in a different statutory context. The Commissioner contended that Part X is a "major piece of anti-avoidance legislation" and s 318 should be given a broad and substantive construction, and "not be hedged about with unexpressed, implied limitations". The Commissioner emphasised the broad range of relationships covered by the s 318 definition of "associates". The Commissioner contended that the kind of causal relationship with which the provision is concerned is not control or subservience but influence and submitted that if the directions, instructions or wishes of another entity are an influence on the company in acting in the sense of being taken into account, there is a sufficient causal nexus. To construe the phrase "to act in accordance with" as requiring the directions, instructions or wishes of another entity to be the cause of the company acting was said to import a requirement of "control" which is not mandated by the language. It was submitted that the directions, instructions or wishes of the other entity neither has to be the cause of the company acting or involve any exercise of control. 26 Ltd, on the other hand, argued that the language of the subsection connotes "control" or "subservience" and the Tribunal was correct to attribute a meaning to the words "in accordance with" that is consistent with the company law cases on the construction of the Corporations Act definition of "director". 27 The language of s 318(6)(b) does bear some similarity with the Corporations Act definition of "director" but case law on that definition does not provide the answer to how s 318(6)(b) should be construed. Section 318(6)(b) must be construed on its own terms and a meaning attributed to the expression "sufficiently influenced" as that expression is employed to define a type of relationship which results in an entity being "an associate" for the purposes of the application of the provisions in Part X of the ITAA 1936. As McHugh J said in R v Kelly (2004) 218 CLR 216 at [103]: … the function of a definition is not to enact substantive law. It is to provide aid in construing the statute. Nothing is more likely to defeat the intention of the legislature than to give a definition a narrow, literal meaning and then use that meaning to negate the evident policy or purpose of a substantive enactment. There is, of course, always a question whether the definition is expressly or impliedly excluded. But once it is clear that the definition applies, the better - I think the only proper - course is to read the words of the definition into the substantive enactment and then construe the substantive enactment - in its extended or confined sense - in its context and bearing in mind its purpose and the mischief that it was designed to overcome. To construe the definition before its text has been inserted into the fabric of the substantive enactment invites error as to the meaning of the substantive enactment … [T]he true purpose of an interpretation or definition clause [is that it] shortens, but is part of, the text of the substantive enactment to which it applies. The definition of "associate" in s 318 is now employed in numerous provisions of the ITAA 1936 and the Income Tax Assessment Act 1997 (Cth) but the substantive enactment relevant to the construction in the present case is the use of that expression within the context of the controlled foreign corporation provisions of Part X for which purpose the definition of "associate" presently applies. Relevantly, amongst other provisions in Part X, the definition of "associate" applies to s 447 pursuant to which, in broad terms, income derived by a controlled foreign corporation from the sale of goods which it purchased from, or sold to, an Australian resident entity that is an "associate" of the controlled foreign corporation is treated as "tainted sales income" and taken into account for the purpose of calculating how much of the attributable income of the controlled foreign corporation is to be included in the assessable income of the controller company. 28 On a textual analysis, the statutory meaning of "sufficiently influenced" contains three elements: (1) there must be a direction, instruction or wish communicated or expressed by an entity to the company or its directors; (2) for the company or its directors to act "in accordance with" that direction, instruction or wish, that direction, instruction or wish must relate to how the company is to act, and the action which the company takes must be consistent with that direction, instruction or wish; and (3) the company or its directors must be "accustomed" or "under an obligation" or "might reasonably be expected" to act in accordance with the directions, instructions or wishes communicated or expressed by that entity. 29 The words "accustomed to act", as a matter of language, denote habitually to act or to act as a matter of regular practice: Buzzle Operations Pty Ltd (in liq) v Apple Computer Australia Pty Ltd (2011) 81 NSWLR 47 at [196]-[197] ("Buzzle Operations"). Being "under an obligation to act" is to be obliged or required to act in a particular way. The phrase "might reasonably be expected to act" calls for a prediction based upon evidence. In Federal Commissioner of Taxation v Peabody (1994) 181 CLR 359 ("Peabody") the High Court said at 385: A reasonable expectation requires more than a possibility. It involves a prediction as to events which would have taken place if the relevant scheme had not been entered into or carried out and the prediction must be sufficiently reliable for it to be regarded as reasonable. The standard of "reasonable expectation" thus requires a cogent or rational basis sufficient to found the expectation that the primary entity would act in a particular way: K-Generation Pty Ltd v Liquor Licencing Court (2009) 237 CLR 501 at [136]; Peabody at 384-5. The meaning of the words "in accordance with" must be considered in conjunction with each of these phrases as part of a larger composite phrase. 30 Construed in the context of the larger composite phrase, the words "in accordance with", as a matter of ordinary and grammatical meaning, import a causal connection between the action of the company and the directions, instructions or wishes of another entity that involves more than the company or its directors merely taking account of such directions, instructions or wishes in deciding how to act. Being "accustomed" or "under an obligation" or "might reasonably be expected" "to act in accordance with" the directions, instructions or wishes of another entity affects the understanding of the words "to act in accordance with" as used in this context. In the larger composite phrase, the words "to act in accordance with" carry the sense of, and should be understood to mean, "to act pursuant to" or "give effect to" the directions, instructions or wishes of another entity or "to act in the way" that another entity has directed, instructed or wishes the primary entity to act. 31 It is important to read s 318(6)(b) as a whole and the meaning of the phrase "to act in accordance with" cannot be considered without regard to the preceding words "are accustomed or under an obligation (whether formal or informal), or might reasonably be expected". Read as a whole, it is reasonably clear, in my view, that the phrase "to act in accordance with" is not just the language of causation in the sense of taking into account. In my view, the causative connection imported in the words "to act in accordance with" involves more than simply taking account of, or having regard to, the direction, instructions or wishes of another entity. In my view what makes an entity an "associate" of a company within the meaning of s 318(6)(b) for the purposes of ss 318(2)(d) and (e) is the requirement or practice of the company (or its directors) to follow, or a reasonable expectation that the company will follow, the directions, instructions or wishes of that entity. In this regard, this construction of s 318(6)(b) has parallels with the construction given to the Corporations Act definition of "director" which Hodgson JA adopted in Buzzle Operations. At [9] his Honour stated: In my opinion, the statutory formula contemplates the directors being accustomed to act in accordance with the instructions or wishes of a person, in the sense of treating those instructions or wishes as themselves being a sufficient reason so to act, rather than making their own decisions in which those instructions or wishes are merely taken into account as one factor, external to the management of the company, bearing on what is in the best interests of the company. The words "to act in accordance with" in the context of s 318(6)(b) convey a similar meaning. The causative requirement for the provision to be engaged, denoted by the phrase "to act in accordance with" the directions, instructions or wishes of another entity, may be something less than actual or de facto control which is exercised over that entity but it is not just showing that the directions, instructions or wishes of another entity have "merely" been taken into account in the decision making process. 32 The explanatory memorandum to the Taxation Laws Amendment (Foreign Income) Bill 1990 (Cth) which introduced s 318 is consistent with this analysis. It states: Paragraph 318(6)(b) clarifies the expression "sufficiently influenced" that is used in [s] 318 in relation to a company. Where any entity or entities have influence, because of obligation or custom, over a company or its directors to direct the actions of the company either directly or through interposed entities, that company will be sufficiently influenced by that entity or those entities. 33 This statement is instructive that the "influence" with which the provision is concerned is with respect to the direction of the actions of the company. In the context of the controlled foreign corporation provisions, for which purposes s 318 was enacted, it is not surprising that the definition of "associate" extends to relationships where the primary entity is directed in its actions by another company and thus apply to commercial conduct which can be seen to have the force of a controlling entity, and to bring such relationships within the taxing net. Neither the legislative context nor purpose suggests that a different construction should be preferred. Furthermore, the proposition that Part X is an anti-avoidance measure does not warrant giving the provision a broader meaning than the meaning conveyed by the textual analysis. There is no special rule of construction that applies to anti-avoidance provisions. 34 The Commissioner relied in particular on the following features of the DLC Arrangement to argue that the terms of s 318(6)(b) are enlivened in relation to Ltd and Plc: (1) the requirement for Ltd and Plc to operate as if they were a "single unified economic entity" through common boards of directors and a "unified senior executive management"; (2) the requirement for the directors of Ltd and Plc, in addition to their duties to their respective companies, to take into account the interests of the shareholders of the ordinary shares in the other company "as if the two companies were a single unified economic entity"; (3) the procedure required to be adopted for the holding of and voting at general meetings of shareholders in respect of "Joint Electorate Actions" and "Class Rights Actions"; and (4) the way in which dividends were paid. 35 As the reasons for decision of Thawley J set out these features in detail, I will only refer to them as necessary. 36 The Tribunal's conclusion that Ltd and Plc were not "sufficiently influenced" by each other within the statutory meaning of that phrase was based on the findings that: (1) neither in law nor in fact was there any abrogation by either party of an effective control either by the shareholders or the board of directors of either company under the terms of the DLC Arrangement: [28], [32], [35]; (2) neither company had the ability to dictate to the other party in the event of disagreement: [36]; (3) neither company acted in subservience to the other, formally or informally, or to anyone else, including BMAG, in entering into and implementing the DLC Arrangement: [31]; and (4) the boards of each company, by separate deliberative judgment, determined that it was in their own best interests to enter into and implement the DLC Arrangement and each company entered into the DLC Arrangement in the exercise of a judgment by its board as to what was in its own interests: [28], [31], [32], [41]. 37 None of those findings were challenged. 38 In my view, the Tribunal addressed the statutory questions posed by s 318(6)(b) on its proper construction. The provision clearly embraces the circumstance where a third party exerts effective control over a company. Plainly, where a company defers to another entity in its decision making or another entity exercises de facto control over the company, the provision will be engaged and the Tribunal correctly considered whether there was an abrogation by Ltd and/or Plc to the other of an effective control. The Tribunal also correctly analysed the facts in terms of whether either company had the ability to dictate to the other party; whether either company acted in subservience to the other, formally or informally, in entering into and implementing the DLC Arrangement; and whether, in acting, each company was pursuing its own interests in the exercise of independent judgment. All of these considerations were relevant to, and probative of, the statutory questions posed by s 318(6)(b). In my view, on the findings made, the Tribunal was correct to hold that the provision was not engaged by reason of the terms of the DLC Arrangement. Whilst there was a mutuality of interest and common aim, as part of which the directors of each company were obliged in the exercise of their powers to take into account the interests of the ordinary shareholders of the other entity "as if the two companies were a single unified economic entity", the finding was that the boards of the respective companies each met and exercised independent judgment and decision making as to their own best interests. Without more, to act in concert with a common aim and mutuality of interest is not "to act in accordance with the directions, instructions or wishes of [another] entity" within the meaning of s 318(6)(b). On the findings of the Tribunal, neither company under the terms of the DLC Arrangement was directed in its action by the instructions, directions or wishes of the other company, but each was acting independently in its own interests. 39 The special voting arrangements do not compel any different conclusion. The special voting arrangements are set out in detail in the reasons of Thawley J and I only need refer to the key features, which are as follows: (1) under the DLC Arrangement, Ltd and Plc agreed that resolutions on "Joint Electorate Actions" and "Class Rights Actions" must be put to shareholders at parallel general meetings of Ltd and Plc; (2) as part of the DLC Arrangement, each company issued two classes of shares: ordinary shares and a "special voting" share. In Ltd the special voting share is held by BHP SVC Pty Ltd, an Australian company; in Plc the special voting share is held by Billiton SVC Ltd, a UK company; (3) Ltd and Plc each undertook in relation to any resolution relating to the "Joint Electorate Actions" and "Class Rights Actions" to notify the other company and its special voting shareholder in writing as soon as possible of the number of votes cast for and against each resolution by the ordinary shareholders and the number of votes required to be cast by the special voting shareholder to mirror the for and against votes cast by the ordinary shareholders in the other company's general meeting. Voting at each general meeting could not be completed until the ordinary shareholder votes were known and communicated to the other company so that the special voting shareholder could cast its vote and the polls had to remain open for that to occur; and (4) both special voting shareholders undertook that they would only exercise the number of shares required to be cast for or against any resolution. 40 The special voting arrangements thus provided a structural mechanism for uniform resolutions by the shareholders of each company. Given that these special voting arrangements formed part of the DLC Arrangement between the companies, I am prepared to accept that the notification by each company to the other of the votes which must be cast by the special voting shareholder to achieve uniform resolutions can be characterised as instructions, directions or wishes given by that company to the other. In that respect, I disagree with the Tribunal, which held that the procedure for Joint Electorate Actions and Class Rights Actions entailed "nothing more than Ltd and Plc informing the special voting shareholders of the number of votes cast for and against a resolution by, materially, their ordinary shareholders" and did not amount to the communication of directions, instructions or wishes by one company to the other. 41 The Tribunal also reasoned that a company is a legal entity separate from its shareholders and that the shareholders of Ltd and Plc in casting their votes at a general meeting exercised a personal right and "had no power even to express a 'wish' in respect of matters consigned to the board of that company". That reasoning does not take into account that each company was not only required to notify the other company as well as the other company's special voting shareholder of the votes required to carry or defeat a resolution, but was also bound to an arrangement under which the other company's special voting shareholder was required to exercise the number of votes as notified. However, for a company to be "sufficiently influenced" within the statutory meaning of that expression, it is also a requirement that, in acting, the company is doing so on or at the direction, instruction or wishes of that entity. In this case, on the findings of the Tribunal, each company, in entering into and implementing the DLC arrangements, which included the special voting arrangements, was pursuing its own interests in the exercise of independent judgment. The fact that under the special voting arrangements each company must follow a procedure designed to achieve uniform resolutions at general meetings of the companies is not one company acting "in accordance with" the direction, instruction or wishes of the other company within the meaning of that phrase as used in s 318(6)(b). It is each company giving effect to the contractual terms governing the DLC Arrangement pursuant to which the companies act jointly with a mutuality of interest. 42 The Tribunal was also correct to hold that the dividend arrangements did not cause either company to be an "associate" of the other company by reason of the application of s 318(6)(b). The dividend arrangements are set out in detail in the reasons of Thawley J and included, relevantly, the requirement for each company to declare matching dividends "as far as practicable" (cl 3.1 of the Sharing Agreement). The Tribunal dealt with this at [37]: The Commissioner also pointed to the mechanism by which Ltd and Plc declared their dividends in support of his contention that they were "associates". To deal with this it suffices to look by way of example to the practice of Ltd's Risk and Audit Committee. That committee resolved to declare a dividend because of an instruction given to it by Ltd's board, not by virtue of any direction, instruction or wish, formal or informal, given to it by Plc's board. It was in accordance with the direction of Ltd's board that this committee noted, on behalf of Ltd, the dividend declared by Plc's board. It is evident that there was an administrative practice to record that Plc approved of or agreed with the proposed action. It had no causative effect. It was the direction of Ltd's board and that board alone which was not just influential but determinative in relation to the declaring of the dividend. 43 Having regard to the facts as found, there was no error in the Tribunal concluding that s 318(6)(b) did not apply by reason of the dividend arrangements. To the reasoning of the Tribunal I would add the agreement of the companies to act mutually in relation to the declaration of dividends is not "to act in accordance with the direction, instruction or wishes" of the other company within the statutory meaning of "sufficiently influenced". 44 Accordingly the Tribunal was correct, in my view, to hold that Ltd and Plc were not "sufficiently influenced" by each other within the statutory meaning of that expression. 45 The Tribunal was also correct to hold that BMAG was not "sufficiently influenced" by Plc and Ltd for the purposes of s 318(2)(d)(i)(B). The finding of the Tribunal was that the board of BMAG, when performing its functions, exercised independent judgment about its own best interests and acted accordingly. The Tribunal was correct to observe at [51] that whilst "it is possible, even probable, that BMAG's interests regularly coincided with those of Ltd and Plc and that BMAG's consequential actions regularly furthered not just its own but also the interests of those companies' interests", that did not mean that BMAG's board failed to make an independent judgment when making decisions for BMAG. The Commissioner's reliance on a Marketing Risk Management Standard does not advance his case any further. The Commissioner argued that this Standard, which applied group-wide to Ltd, Plc and BMAG, demonstrated that BMAG and its directors might reasonably be expected to act in accordance with this policy. First of all, the document is not an expression of "directions, instructions or wishes" by Ltd or Plc as to how BMAG is to act but, even if it be so characterised, the Tribunal found that Group guidelines regarding policies, strategies, and procedures relating to the operation of BMAG, which included the Marketing Risk Management Standard, were considered and approved by BMAG's board before being implemented and were capable of being revoked or amended at any time by BMAG's board; second, that BMAG's board actively evaluated matters and recommendations put to it from BMAG's perspective; and third, in some instances, that BMAG's board rejected recommendations made to it and requested revised recommendations or for amended resolutions to be put to it for consideration. The adoption of a policy after exercising independent judgment as to whether it should be adopted is not to act "in accordance with" the "directions, instructions or wishes" of Ltd and Plc in the relevant statutory sense. 46 In light of this conclusion, the alternative construction argument advanced by Ltd does not need to be addressed. However, I should say something about that construction argument as I do not agree with the Tribunal that s 318(2)(d)(i)(A) and s 318(2)(d)(i)(B) are, as a matter of construction, mutually exclusive provisions so that "[t]o engage one is to exclude the other from application". The Tribunal reasoned that as s 318(6) is concerned with "control", s 318(2)(d)(i)(B) cannot apply if s 318(2)(d)(i)(A) already applies "by reason of a single controller already exercising sufficient influence (via s 318(6) control)". There are two reasons for not agreeing with the Tribunal's construction. First, on the construction which I have given to the expression "sufficiently influenced", an entity may be "sufficiently influenced" by another entity within the statutory meaning of that expression without the entity being under the control of that other entity. Secondly, the fact that s 318(2)(d) uses the disjunctive "or" does not mean, as a matter of construction, that the subsections are mutually exclusive and do not overlap. The disjunctive "or" can also indicate that the provisions are to be read compendiously and, in my view, that is the meaning to be attributed in the context of 318(2)(d) which is not concerned with the legal relationship between the "controlled entity" and the "controlling entity", but upon the degree of "influence" exercised by one entity over another in respect of its decision making. The requisite degree of "influence" can arise either through the exercise of "influence" by the "controlling entity" singularly (s 318(2)(d)(i)(A)) or the controlling entity and another entity together (s 318(2)(d)(i)(B)). The Tribunal nonetheless was correct in reasoning that for s 318(2)(d)(i)(B) to apply, the directions of both the "controlling entity" and the other entity together would need to cause the "controlled company" to act in a particular way. 47 In view of my conclusions, I would dismiss the appeal. I certify that the preceding thirty-one (31) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Davies. Associate: Dated: 29 January 2019 REASONS FOR JUDGMENT THAWLEY J: 48 The central issue in this appeal from a decision of the Administrative Appeals Tribunal is the correct construction of ss 318(2) and 318(6) of the Income Tax Assessment Act 1936 (Cth) (ITAA 1936). These provisions are found in Part X of the ITAA 1936. Section 318(6) describes the meaning of "sufficiently influenced" which, relevantly for present purposes, is a phrase used in s 318(2) to identify the "associates" of a company. overview 49 BHP Billiton Ltd is part of a dual-listed company arrangement (DLC Arrangement) with BHP Billiton Plc. BHP Billiton Marketing AG (BMAG) is an entity in the Ltd and Plc corporate group. 50 BMAG is a Swiss entity which, during the relevant years, was 58% indirectly owned by Ltd and 42% indirectly owned by Plc. BMAG purchased commodities from Ltd's Australian subsidiaries and also from Plc's Australian entities. BMAG derived income from the sale of these commodities at a profit. 51 Part X of the ITAA 1936 is entitled "Attribution of income in respect of controlled foreign companies". It was introduced in 1991 by the Taxation Laws Amendment (Foreign Income) Act 1990 (Cth). BMAG is a controlled foreign company (CFC) of Ltd for the purposes of Part X of the ITAA 1936. 52 Part X is one of a number of regimes which operate to attribute income derived by foreign entities to Australian resident taxpayers. One of the principal objects of Part X is to provide for certain amounts to be included in a resident taxpayer's assessable income in respect of the attributable income of a CFC: s 316(1)(a). The underlying concern is that Australian residents could avoid current tax on foreign-source income by using entities in low tax jurisdictions and investing abroad through foreign entities. The provisions are designed to attribute the income derived by foreign residents to Australian resident taxpayers who it is assumed will ultimately benefit from the income derived offshore. 53 The central provision of Part X is s 456, which includes in the assessable income of an "attributable taxpayer" a percentage of the "attributable income" of a CFC. Relevantly: A "CFC" is defined in s 340. The relevant test revolves around the control of the foreign company by Australian entities or their associates. The identification of control interests is carried out under Subdivision A of Division 3 (ss 349 to 355). The meaning of "attributable taxpayer" in relation to a CFC is given by s 361(1). The calculation of "attributable income" is governed by Division 7 (ss 381 to 431A). The manner in which Division 7 operated in the present case was such that "tainted sales income" of BMAG would be included in Ltd's assessable income. 54 Section 447 identifies what constitutes "tainted sales income". Subsection (1) relevantly provides: Subject to this Division, for the purposes of this Part, the following amounts are tainted sales income of a company of a statutory accounting period: (a) income from the sale of goods by the company where all of the following conditions are satisfied: (i) the goods were sold to the company by another entity; (ii) either of the following sub‑subparagraphs applies at the time of the sale of the goods to the company: (A) the seller of the goods to the company was an associate of the company and a Part X Australian resident; (B) the goods were sold to the company by an associate of the company who was not a Part X Australian resident, in the course of a business carried on by the associate at or through a permanent establishment of the associate in Australia; (iii) if the goods were altered by the company—the income does not pass the substantial alteration test set out in subsection (4); … 55 There is no dispute that the income derived by BMAG from the sale of commodities it purchased from Ltd's Australian subsidiaries is "tainted sales income" and included in the calculation of the attributable income of BMAG to be included in the assessable income of Ltd. 56 The dispute is whether the income derived by BMAG from the sale of commodities it purchased from Plc's Australian entities is also "tainted sales income" to be included in the calculation of the attributable income of BMAG to be included in the assessable income of Ltd. 57 The sales income in dispute would be included in calculating the attributable income of BMAG if Plc's Australian entities, being the "sellers of goods" to BMAG within the meaning of s 447(1)(a)(ii), were "associates" of BMAG within the meaning of s 318(2). 58 The Commissioner took the position that Plc's Australian entities were "associates" of BMAG for three independently sufficient reasons: (1) Ltd was "sufficiently influenced" by Plc for the purposes of s 318(2)(d)(i)(A); (2) Plc was "sufficiently influenced" by Ltd for the purposes of s 318(2)(e)(i)(A); (3) BMAG was "sufficiently influenced" by Plc and Ltd for the purposes of s 318(2)(d)(i)(B). 59 There is no dispute that, if any one of these is satisfied, then the sales income in dispute would be included in calculating the attributable income of BMAG, and thus included in the assessable income of Ltd. 60 The Commissioner issued to Ltd amended assessments for the income years ended 30 June 2006 to 30 June 2010 to reflect his position. Ltd objected to the amended assessments and the Commissioner disallowed that objection in full. 61 Ltd sought review of the Commissioner's objection decision in the Tribunal under Part IVC of the Taxation Administration Act 1953 (Cth). The Tribunal concluded that the amended assessments were excessive and set aside the objection decision. It concluded that Plc's Australian entities were not "associates" of BMAG for any of the three reasons identified by the Commissioner. 62 For the reasons which follow, the appeal should be allowed. background Overview of DLC Arrangement 63 Ltd and Plc entered into a "DLC Structure Sharing Agreement" under which Ltd and Plc agreed that the following principles (the "DLC Structure Principles") were essential to the implementation, management and operation of the DLC Structure: (1) Ltd and Plc must operate as if they were a "single unified economic entity", through common boards of directors and a "unified senior executive management": clause 2(a); (2) the directors, in addition to their duties to the company concerned, shall have regard to the interests of the holders of the ordinary shares in each entity as if Ltd and Plc were a "single unified economic entity" and "for that purpose the directors of each company shall take into account in the exercise of their powers the interests of the shareholders of the other": clause 2(b). See also: rule 104(2) of the Constitution of Ltd (Ltd Constitution) and of the Articles of Association of Plc (Plc Articles); (3) the "DLC Equalisation Principles" must be observed: clause 2(c). These principles were set out in clause 3. In essence, they were designed to ensure that the economic and voting rights of the respective shareholders in Ltd and Plc would be in proportion to the "Equalisation Ratio" from time to time. The "Equalisation Ratio" is the ratio for the time being of (a) the dividend, capital and (in relation to Joint Electorate Actions) voting rights per Ltd ordinary share to (b) the dividend, capital and (in relation to Joint Electorate Actions) voting rights per Plc ordinary share in the Combined Group (which was initially 1:1) – see: clause 1.1 of the Sharing Agreement. 64 Ltd and Plc agreed to pursue, and to procure (to the extent appropriate to do so), that each member of its respective group pursue the "DLC Structure Principles" and "DLC Equalisation Principles": clause 2. 65 Clause 13 of the Sharing Agreement provided: Without limiting Clause 2, each party will enter into such further transactions or arrangements, and do such acts and things, as the other may reasonably require from time to time in the furtherance of the common interests of the holders of BHP Ordinary Shares and the holders of Billiton Ordinary Shares as a combined group or to give effect to this Agreement. 66 There were two particular aspects of the DLC Arrangement which the Commissioner relied upon in support of his contention that Ltd and Plc "sufficiently influenced" each other for the purposes of s 318(6)(b): (1) The first aspect was the way in which voting in the two companies, Ltd and Plc, was carried out. This process is described in more detail below. In summary: (a) in relation to "Joint Electorate Actions", the effect of the arrangements was that the number of ordinary shareholder votes cast in a Plc general meeting would also be cast in a "parallel" general meeting of Ltd (and vice versa) through a special voting mechanism. This had the consequence (ignoring the "Equalisation Ratio") that the same total number of votes for and against a particular resolution would ultimately be cast in each company. The corollary of this is that a resolution which may not have passed in one company (say Ltd) were it determined solely on the basis of the votes by the ordinary shareholders in Ltd, might pass in Ltd because the number of votes cast by the ordinary shareholders in Plc would be voted by the holder of a special voting share in Ltd in the Ltd meeting; (b) in respect of "Class Rights Actions", the effect of the arrangements was that, if a resolution was not carried by the ordinary shareholders in one company, it would necessarily not be carried in the other. (2) The second aspect was the way in which dividends were paid. This is also described in more detail below. Clause 3 of the Sharing Agreement required that matching dividends be paid. In practice, concurrent meetings of the boards of directors of Ltd and Plc resolved to recommend matching dividends be paid. The boards made the recommendations to the "Risk & Audit Committee", which was the delegate of the boards for the purposes of resolving to pay dividends. 67 As to BMAG, the Commissioner's position was that it would be reasonable to expect that BMAG, or its directors, would act in accordance with the directions, instructions or wishes of Ltd and Plc, which together were its 100% indirect owners. It was not necessary for s 318(6)(b) to apply that it be established that the directors neglected (or might reasonably be expected to neglect) their duty to BMAG or that they had control imposed upon them (or might reasonably be expected to have such control imposed upon them). The Commissioner relied in particular on a "Marketing Risk Management Standard" as an example of one of many documents recording group-wide standards which were promulgated by the group or by Ltd and Plc jointly. 68 It is also relevant to note that Ltd and Plc guaranteed certain obligations of the other entity pursuant to a Ltd Deed Poll Guarantee and a Plc Deed Poll Guarantee. Section 318 69 The resolution of the central issue hinges upon the correct meaning of the term "sufficiently influenced" as used in s 318(2), the meaning of which is supplied or described by s 318(6)(b). 70 Before turning to those particular subsections, it is relevant to make some observations about s 318 as a whole. Section 318 sets out the circumstances in which one entity is an "associate" of another. Section 318 addresses associates of natural persons (s 318(1)), associates of companies (s 318(2)), associates of trustees (s 318(3)), associates of partnerships (s 318(4)) and associates of public unit trust entities (s 318(5)). 71 The object of the provision as a whole is to identify the circumstances in which two (or more) entities have a relationship or are in some way connected such that they are to be regarded as "associates" of each other. So far as Part X (which introduced and contains s 318) is concerned, the purpose of identifying an entity as an "associate" of another is to identify when an entity is liable to be taxed in respect of attributable income derived offshore by another entity. The s 318 "definition" of associate now applies to many provisions in the ITAA 1936 and the Income Tax Assessment Act 1997 (Cth) (ITAA 1997); s 995-1(1) of the ITAA 1997 now defines "associate" by reference to s 318. 72 The relationships or connections or the circumstances in which one entity is an associate of another are identified by the terms of s 318. They revolve around a number of concepts which are not confined to "control". By way of example, a conclusion that an entity is an associate of another can turn on whether one is a "relative" (defined very broadly in s 995-1(1) of the ITAA 1997) or benefits or has the capacity to benefit, directly or indirectly, under a trust: ss 318(1)(a), 318(1)(c), 318(2)(b), 318(2)(c), 318(3)(a), 318(6)(a) and 318(7). 73 A conclusion that one entity is an associate of another may turn on the relationship or connection that one entity has with another entity which, in turn, is an associate of the "primary entity". For example, if a company (B) is a "controlling entity" of another company (A) under s 318(2)(d), an associate of B (C) may also be an associate of A: s 318(2)(f). By way of further example, if a natural person (B) is a "controlling entity" of a company (A) under s 318(2)(d), a relative of B (C) would be an associate of A: s 318(2)(f); s 318(1)(a). Subsection 318(2) 74 Subsection 318(2) deals specifically with associates of companies. The fact the provision is addressing companies is important to the construction of s 318(2). Whilst the object of s 318 generally is to identify the circumstances (or relationships or connections) in which an entity is to be regarded as an "associate" of another, the nature of the "primary entity" is relevant. Whilst a spouse or child of a person might be expected to benefit from that person merely by virtue of their familial relationship and absent any question of control (see: s 318(1)(a)), the same cannot necessarily be said of a company. 75 In the context of ss 318(2)(d) and (e), discussed below, "control" is clearly a feature. It is not clearly a feature of s 318(2)(a), (b) or (c). Section 318(2) provides: For the purposes of this Part, the following are associates of a company (in this subsection called the primary entity): (a) a partner of the primary entity or a partnership in which the primary entity is a partner; (b) if a partner of the primary entity is a natural person otherwise than in the capacity of trustee—the spouse or a child of that partner; (c) a trustee of a trust where the primary entity, or another entity that is an associate of the primary entity because of another paragraph of this subsection, benefits under the trust; (d) another entity (in this paragraph called the controlling entity) where: (i) the primary entity is sufficiently influenced by: (A) the controlling entity; or (B) the controlling entity and another entity or entities; or (ii) a majority voting interest in the primary entity is held by: (A) the controlling entity; or (B) the controlling entity and the entities that, if the controlling entity were the primary entity, would be associates of the controlling entity because of subsection (1), because of subparagraph (i) of this paragraph, because of another paragraph of this subsection or because of subsection (3); (e) another company (in this paragraph called the controlled company) where: (i) the controlled company is sufficiently influenced by: (A) the primary entity; or (B) another entity that is an associate of the primary entity because of another paragraph of this subsection; or (C) a company that is an associate of the primary entity because of another application of this paragraph; or (D) 2 or more entities covered by the preceding sub-subparagraphs; or (ii) a majority voting interest in the controlled company is held by: (A) the primary entity; or (B) the entities that are associates of the primary entity because of subparagraph (i) of this paragraph and the other paragraphs of this subsection; or (C) the primary entity and the entities that are associates of the primary entity because of subparagraph (i) of this paragraph and the other paragraphs of this subsection; (f) any other entity that, if a third entity that is an associate of the primary entity because of paragraph (d) of this subsection were the primary entity, would be an associate of that third entity because of subsection (1), because of another paragraph of this subsection or because of subsection (3). 76 In each of paragraphs (a), (b) and (c), the mere relationship establishes that the relevant entity is an "associate" and the test does not turn on any question or analysis of "control". Nor is "control" to be assumed in any of these relationships. 77 Paragraph (d) of s 318(2) provides that another entity (called the "controlling entity") is an associate of a company (called the "primary entity") in one of two situations: (1) The first, in s 318(2)(d)(i), is where the primary entity is "sufficiently influenced" by the controlling entity, alone or with another or other entities. (2) The second, in s 318(2)(d)(ii), is where a majority voting interest in the primary entity is held by the controlling entity, alone or together with entities which would be associates of the controlling entity by reason of certain specified provisions. 78 The two situations or circumstances are also found in paragraph (e) of s 318(2), which provides that an entity (called the "controlled company") is an associate of a "primary entity" where: (1) the controlled company is "sufficiently influenced" by either the primary entity (alone or with associates of the primary entity) or another entity which is an associate of the primary entity by reason of certain specified provisions; or (2) a majority voting interest is held in the controlled company by either the primary entity (alone or with associates of the primary entity) or another entity which is an associate of the primary entity by reason of certain specified provisions. 79 The meaning of "sufficiently influenced" and "majority voting interest" is supplied or described by paragraphs (b) and (c) of s 318(6): For the purposes of this section: …. (b) a company is sufficiently influenced by an entity or entities if the company, or its directors, are accustomed or under an obligation (whether formal or informal), or might reasonably be expected, to act in accordance with the directions, instructions or wishes of the entity or entities (whether those directions, instructions or wishes are, or might reasonably be expected to be, communicated directly or through interposed companies, partnerships or trusts); (c) an entity or entities hold a majority voting interest in a company if the entity or entities are in a position to cast, or control the casting of, more than 50% of the maximum number of votes that might be cast at a general meeting of the company. 80 Section 318(6) gives content to the test in ss 318(2)(d)(i) and (e)(i) to be applied to identify whether an entity is to be regarded as an "associate" of another as either a "controlling entity" or "controlled company". The terms of ss 318(2)(d) and (e) indicate that, whatever else "sufficiently influenced" means, it is more than legal control through majority voting power: (1) An entity can be a "controlling entity" under s 318(2)(d) without having legal control through a majority voting interest, where the connection between the acts of "the company, or its directors" and the "directions, instructions or wishes" of the "controlling entity" are such that there the "primary entity" is "sufficiently influenced" by the "controlling entity", within the meaning of s 318(6)(b). (2) An entity can be a "controlled entity" under s 318(2)(e) without the "primary entity" having legal control through a majority voting interest, where the connection between the acts of the "controlled entity" or its directors and the directions, instructions or wishes of the "primary entity" are such that the "controlled entity" is "sufficiently influenced" by the "primary entity", within the meaning of s 318(6)(b). 81 Whilst "sufficiently influenced" means something more than legal control through majority voting power, the concept of "control" is relevant to ss 318(2)(d) and (e). Unlike paragraphs (a) to (c), paragraphs (d) and (e) are not describing relationships in which an entity might be expected to benefit, absent any consideration of "control". This is perhaps indicated by the use of the terms "controlling entity" and "controlled entity", and is certainly indicated by the text of the provisions, which look to legal control (in the sense of a majority voting interest) or something which is not legal control but attracts the description "sufficiently influenced" in the sense of acting "in accordance with" the "directions, instructions or wishes" of another. The s 318(6)(b) description of "sufficiently influenced" may be seen to describe a species of control or influence, or expected control or influence, which falls short of legal control. The critical issue in the proceedings is how far short it falls. Section 318(6)(b) 82 A number of observations should also be made concerning the description supplied by s 318(6)(b) of when "a company is sufficiently influenced" for the purposes of s 318(2). 83 First, the paragraph directs attention to the position of the company and the position of its directors: it is sufficient if either "the company, or its directors" are caught by the terms of the paragraph. The respondent submitted that the reference to "the company" in the phrase "the company, or its directors" was not a reference to the company in general meeting but merely recognised that a company acts through natural persons. This submission is rejected for the reasons given at paragraphs [131]-[134] below. 84 Secondly, s 318(6)(b) turns on whether either the company or its directors are: (1) accustomed; (2) under an obligation (whether formal or informal); or (3) might reasonably be expected, to act in accordance with the directions, instructions of wishes of the entity or entities. 85 These three matters are not a composite phrase denoting a single test (cf: Sea Shepherd Australia Limited v Commissioner of Taxation (2013) 212 FCR 252 at [34] (Gordon J)); whilst each matter must be interpreted having regard to all of the words in s 318(6)(b) and in the context of the whole statute, the three matters comprise different considerations, each of which is independently sufficient to attract the conclusion that a company or its directors are "sufficiently influenced": (1) The first matter – whether a company or its directors are "accustomed" to act in accordance with another's instructions or wishes – depends upon past facts. (2) The second matter – whether there is an "obligation" to act in accordance with another's directions, instructions or wishes – depends upon a presently existing (or existing at the time the question is relevantly asked) formal or informal obligation. (3) The third matter – whether a company or its directors "might reasonably be expected" to act in accordance with another's directions, instructions or wishes – requires a prediction as to future events and a consideration as to the objective likelihood of those future events occurring. 86 Thirdly, the terms of s 318(6)(b) do not require that there be a legal ability to require the company (or its directors) to act in accordance with the directions, instructions or wishes conveyed. It is enough if, as a matter of past or present fact or future expectation, the company or its directors are accustomed, or under a formal or informal obligation, or might reasonably be expected, to act in accordance with the directions, instructions or wishes of the primary entity. 87 Fourthly, s 318(6)(b) is satisfied only where the act is "in accordance with" the relevant directions, instructions or wishes. This is not established by the mere coincidence that the relevant act accorded with the relevant directions, instructions or wishes. There must be something more. This is because s 318(6)(b) is concerned with when "a company is sufficiently influenced", indicating that something more is required than mere coincidence between: (a) an action by the company or its directors; and (b) the directions, instructions or wishes of another. The parties were agreed that "in accordance with" imports considerations of causation. The level of causation required by the words "in accordance with" when used in a statute is informed by the statutory context in which the words are used. 88 Fifthly, there is nothing in s 318(6)(b) which expressly specifies how many, or what types of, acts must be "in accordance with" the directions, instructions or wishes of another. The Tribunal's reasons: Ltd and Plc 89 The Tribunal's construction of s 318(6)(b) revolved around a consideration of subparagraph (b)(ii) of the definition of "director" in s 9 of the Corporations Act 2001 (Cth), which relevantly provides (Tribunal's emphasis): "director" of a company or other body means: … [(b)] unless the contrary intention appears, a person who is not validly appointed as a director if: (i) they act in the position of a director; or (ii) the directors of the company or body are accustomed to act in accordance with the person's instructions or wishes. Subparagraph (b)(ii) does not apply merely because the directors act on advice given by the person in the proper performance of functions attaching to the person's professional capacity, or the person's business relationship with the directors or the company or body. 90 After setting out that definition, the Tribunal stated at [22]: … That part of the definition found in sub-paragraph (c)(i) [sic – (b)(ii)] has a lengthy provenance in company law. Error can, of course, lie in analogy. Even identical words or phrases used in a different context can have a completely different meaning. Nonetheless, both in language and also evident purpose, the use in the Corporations Act definition of director of "accustomed to act in accordance with the person's instructions or wishes" is not only strikingly similar to language used in the ITAA 1936 definition of "sufficiently influenced" but is also used in a similar context. That context entails an extension of application of the provision concerned based on an identification of what might be described as "the power behind the boardroom throne". 91 The scope of the enquiry raised by the words "accustomed to act in accordance with the person's instructions or wishes" in the definition of "director" in subparagraph (b)(ii) of s 9 of the Corporations Act, which operates in certain circumstances to capture a person not validly appointed as a director (a so-called 'shadow director'), is noticeably narrower than the enquiry raised by the equivalent words of s 318(6)(b): (1) The subparagraph (b)(ii) definition of "director" is confined to what the directors are accustomed to doing. Section 318(6)(b) is concerned with both the company and its directors. The primary reason for this lies in the differing statutory objectives, discussed at [92] below. Subparagraph (b)(ii) is directed to attaching responsibility (and rights) to those who, whilst not in fact validly appointed, are de facto directors. (2) The subparagraph (b)(ii) definition of "director" is only engaged where the directors of the company "are accustomed to acting in accordance with the person's instructions or wishes". The subparagraph (b)(ii) enquiry as to whether a person is accustomed to act depends upon matters of past fact. Section 318(6)(b) is broader and expressly extends to a present obligation to act (irrespective of any historical custom), and to a reasonable expectation to act in accordance with the person's wishes in the future: (a) The directors could not be said to be "accustomed" to acting in accordance with the shadow director's instructions if they had never done so in the past. Being "accustomed to act" under subparagraph (b)(ii) requires habitual compliance over a period of time in respect of director matters (as opposed to management matters): Buzzle Operations Pty Ltd (in liq) v Apple Computer Australia Pty Ltd (2011) 81 NSWLR 47 (Buzzle Appeal) at [9] (Hodgson JA); [196]-[198] (Young JA); [287] (Whealy JA). That could not be satisfied by the mere existence of a present "obligation" to act in accordance with the shadow director's instructions; the shadow director might never have given any instructions and might never do so. (b) The subparagraph (b)(ii) definition of "director" contains no prospective test such as whether the directors "might reasonably be expected" to act in accordance with instructions or wishes of the shadow director. 92 Although there are certain similarities which might be observed, the "evident purpose" (Tribunal reasons at [22]) of the two provisions is not the same: (1) The subparagraph (b)(ii) definition of "director" is concerned with subjecting those who de facto control the company's activities, or an aspect of those activities (Buzzle Appeal at [230], [237], per Young JA), to the statutory duties and liabilities of a de jure director: Ultraframe (UK) Ltd v Fielding [2006] FSR 17 at [1364], per Lewison J; Buzzle Operations Pty Ltd (in liq) v Apple Computer Australia Pty Ltd (2010) 238 FLR 384 (Buzzle Trial) at [246]-[247], per White J; Buzzle Appeal at [197], per Young JA. Whether there is sufficient control is assessed by reference to the historical acts of the directors (or a governing majority of them: Buzzle Appeal at [232], [237], per Young JA) and the causal connection between those acts and the instructions or wishes of the shadow director: Buzzle Appeal at [196], [197], approving Buzzle Trial at [247]. Control by the de facto director is critical. (2) Section 318(6)(b) is directed towards an identification of when entities are "sufficiently influenced" under s 318(2) such that they can be regarded as associates of each other for the purposes (in the context at least of Part X) of subjecting an entity to tax by reason of that association. Whether one is "sufficiently influenced" by the other for the conclusion that one or other is the "controlling entity" (s 318(2)(d)) or "controlled company" (s 318(2)(e)) is assessed by reference to matters which extend beyond past events and beyond actual or legal control. Section 318(6)(b) is not concerned with the "power behind the boardroom throne" (Tribunal reasons at [22]) as such; the existence of such power might be sufficient to attract the terms of s 318(6)(b) but the provisions operate according to their terms and concerns, not those of the Corporations Act. 93 Given the different statutory context and the different statutory language, it is preferable not to be distracted by the "evident purpose" of the subparagraph (b)(ii) definition of "director" in s 9 of the Corporations Act when construing ss 318(2) and 318(6) of the ITAA 1936. In particular, subparagraph (b)(ii) is concerned with control in the sense of the directors of a company acting in accordance with a shadow director's instructions. A significant reason for that is to ensure accountability and responsibility of those truly in control of the company by ensuring that the provisions of the Corporations Act apply not only to de jure directors but also to de facto directors. The definition of "associate" in s 318 is aimed at a different target. The legislative context is not one concerned with ascribing rights and responsibilities for the conduct of the affairs of the associated company. Rather, looking at the matter in the context of Part X, of which s 318 was a part when introduced, the object is the identification of relationships or associations appropriate for the purposes of determining that there should be a Part X attribution of income. That is not to deny the clear role that "control" plays in certain provisions of Part X, as made clear by the use of that word or forms of it in various places, including in s 318 itself and in the definition of CFC in s 340. 94 The Tribunal took a different view, having relied on what it saw as the "strikingly similar language" between, and "similar context" of, s 318(6)(b) and subparagraph (b)(ii) of the definition of director in s 9 of the Corporations Act: at [22]. It addressed the facts from that perspective rather than from the perspective of what ss 318(2) and 318(6)(b) required. The Tribunal noted that, pursuant to the Ltd Constitution, the management and control of the business and affairs of Ltd was, in the relevant years, vested in the Ltd board: at [27]. The Ltd board was authorised to exercise all of the powers of Ltd, except powers required by the Ltd Constitution or the law to be exercised by Ltd in a general meeting. The Tribunal concluded that Ltd acted consistently with the Ltd Constitution. It made equivalent findings with respect to Plc and BMAG. None of these findings is disputed on appeal. 95 Having made those findings, the Tribunal went on to conclude that there was no "abrogation" of "effective control" by either the shareholders or the directors: at [28]. The boards of Ltd, Plc and BMAG did not "rubber-stamp decisions" and did not "surrender control". They acted in accordance with their duties. At [28], the Tribunal stated: Neither in law nor, I find, in fact, was there in the Relevant Years any abrogation by any party to the DLC Arrangement of an "effective control" either by the shareholders or the board of directors of the respective corporate parties of either the company concerned or its subsidiaries. The boards of Ltd, Plc and, for that matter, BMAG each met and exercised independent judgments rather than "rubber-stamping decisions actually made elsewhere by others": Bywater Investments Ltd v Federal Commissioner of Taxation (2016) 91 ALJR 59 at [80]. They observed the "central duty" of a board of directors of a company under Australian and United Kingdom company law, which is "to observe its constitution and to pursue the interests of the company as expressed in that document": NEAT Domestic Trading Pty Ltd v AWB Ltd (2003) 216 CLR 277 at [47] per McHugh, Hayne and Callinan JJ. It was not incompatible with the constitutions of Ltd and Plc for the boards of each of those companies, in the exercise of their respective, separate deliberate judgment in relation to the best interests of each respective company, to cause that company to enter into and implement the DLC Arrangement. It was no part of that arrangement that either surrendered control of its respective subsidiaries to the other or to any third party. These respective judgments having been made, it was and is unremarkable that their respective subsidiaries pursued the interests of their respective parents, including by the furtherance of the DLC Arrangement. There is nothing in the material which would suggest that, in so doing, the subsidiaries' interests were incompatible with doing this. Rather, the situation which prevailed throughout the Relevant Years was that the interests of the respective subsidiaries coincided with the interests of their respective parents, be that Ltd or, as the case may be, Plc and, in turn, the interests of Ltd and Plc coincided. 96 This reasoning focusses on whether there was an abrogation or surrendering of control by the shareholders or boards. Section 318(6)(b) is not engaged only where decisions actually made elsewhere are "rubber-stamped" in the sense discussed in Bywater Investments Ltd v Federal Commissioner of Taxation (2016) 260 CLR 169 at [80], per French CJ, Kiefel, Bell and Nettle JJ. Bywater was concerned with identifying where the central management and control of a company is properly located; it is not necessarily located in the particular location where decisions (really made elsewhere by others) are merely "rubber-stamped". Section 318(6)(b) is not concerned with central management and control. 97 Nor does s 318(6)(b) necessarily require a finding of abrogation of responsibility or surrendering of control. The provision is concerned with determining when one entity is "sufficiently influenced" by another for the purpose of determining whether, under s 318(2), an entity is the "associate" of another. The fact that a board of directors considers a direction or wish of another entity, and will not implement it unless to do so is an appropriate exercise of power in the interests of the company of which they are a director, does not necessarily immunise the company or its directors from the conclusion that they were "sufficiently influenced" within the meaning of s 318(6)(b). If the board of a company (A) only considered taking a particular course because another entity (B) expressed its wish that it do so, and the board of A implemented the wish so expressed after having first considered whether it was in the interests of A to do so, a conclusion might – depending on the circumstances – be open that the directors of A were "sufficiently influenced" within the meaning of s 318(6)(b). 98 The Tribunal's reasoning at [28] also refers to whether the implementation of a parent company's wishes was "incompatible" with the interests of the subsidiary. If the decision so implemented was "incompatible" with the interests of the subsidiary, this might tend to indicate that the subsidiary acted in accordance with the wishes of its parent. However, it is not necessary that there be such a conclusion for ss 318(2) an 318(6)(b) to apply. Whilst the subordination of interest by one party to another, or the taking of a step which is incompatible with the interests of the company taking the step, are clearly relevant as a matter of fact in applying the provisions, neither is a requirement which must be satisfied before the sections can operate. 99 The Tribunal concluded that the DLC Arrangement was in substance "a very large joint venture": at [30]. It answered the description of "an association of persons for the purposes of a particular trading, commercial, mining or other financial undertaking or endeavour with a view to mutual profit": United Dominions Corporation Ltd v Brian Pty Ltd (1985) 157 CLR 1 at 10, per Mason, Brennan and Deane JJ. Ltd emphasised, on the appeal, that s 318(2)(a) expressly refers to "a partner" as an associate of a company as well as the partnership of which the company is a partner. Ltd submitted that the legislature could have, but did not in s 318(2), make express reference to, or deal specifically with, a joint venture. 100 Ltd submitted that, if the Commissioner's construction were correct, all of Ltd's joint venturers, including those which were otherwise competitors, would be associates. Ltd submitted that there will often be requests by one joint venturer to another (Ltd) "in accordance with" which that other (Ltd) might be expected to act. However, joint ventures take many forms. A common, if not typical, form of joint venture is one which involves two or more companies, otherwise in competition with each other, combining their efforts and interests in a particular (words used in United Dominions) business endeavour, for example a particular mining operation. The agreement between the joint venturers can take any number of forms. For example, the joint venturers might remain competitors in respect of the distribution and sale of what is won from the joint mining operation. It is hardly surprising, in those circumstances, that s 318 did not expressly prescribe joint venturers to be associates. That does not deny that, in particular circumstances, they might be. 101 The DLC Arrangement is not a joint venture that can be equated with the example just mentioned. The interests of Ltd and Plc did not depart in a way which might commonly be found in other joint ventures. The "joint venture" between Ltd and Plc covered the entire field of their activity; that was the essence of the DLC Arrangement and the "single unified economic entity" principle. The "joint venture" between Ltd and Plc was, if anything, closer in nature to a partnership than a joint venture between otherwise arm's length competitors. 102 In Yacoub v Federal Commissioner of Taxation (2012) 83 ATR 722 at [24], Jagot J observed that "all partnerships involve a joint venture but not all joint ventures involve a partnership", citing Whywait Pty Ltd v Davison [1997] 1 Qd R 225 at 231, per Macrossan CJ, Pincus and McPherson JJA. In Whywait at 231, their Honours said: The references to "joint venture" in the agreement itself, and in oral evidence or correspondence, are essentially neutral. Every partnership involves a joint venture, so that to speak of a partnership in such terms does not resolve the problem. In s 5(1) of the Act "partnership" is defined as "the relation which subsists between persons carrying on a business with a view of profit". Despite the marginal heading to the section, s 5(1) savours of a description rather than a definition. What is to be gathered from that provision is that a partnership is a "relation". It is the nature of the relation that is critical. In Birtchnell v Equity Trustees Executors & Agency Co (1929) 42 CLR 348, 407- 408, Dixon J stressed the element of "mutual confidence that the partners will engage in some particular kind of activity or transaction for the joint advantage only". His Honour's statement to that effect corresponds to remarks by James LJ in Re Agriculturist Cattle Insurance Co, Baird's Case (1870) LR 5 Ch App 725, 732-733. A joint venture does not ordinarily exhibit that element of mutual confidence whether to the same extent or at all. 103 The Tribunal treated the fact that Ltd and Plc constituted "a very large joint venture" as establishing that neither had "control" of the other: at [31] and [36]. The Tribunal stated at [31]: Once it is accepted, and I do accept, that each of Ltd and Plc, by the separate, independent judgments of their respective boards, determined that it was in its best interests to enter into the DLC Arrangement, subsequent parallel implementation behaviours and related procuration of subsidiaries become unremarkable and hardly indicative of acting in accordance with the directions, instructions or wishes of another entity. To the contrary, Ltd's implementation behaviours were in accordance with its own wishes and those of Plc were in accordance with its own wishes. Each chose to act in concert. Neither chose to act in subservience, formal or informal, to the other nor to anyone else, BMAG included. 104 In coming to that conclusion, the Tribunal did not explain in detail how the voting mechanism worked. It is true, in one sense, that the "implementation behaviours were in accordance with" each company's own wishes because each company had agreed to enter into the DLC Arrangement, which contemplated a "single unified economic entity". However, as is explained below, the consequences of those arrangements, in particular the voting arrangements, included that each company's ordinary shareholders could vote in a way which might be determinative of the outcome of the vote in the other company's "Parallel General Meeting". The fact that this was pursuant to an anterior agreement to act as a "single unified economic entity" involving mutuality does not prevent the operation of ss 318(2) and 318(6)(b) according to their terms, which raise issues of past and present fact and future expectation. Indeed, the anterior relationship underscores the existence and prospect of control and influence. It informs the prediction referred to at [85(3)] above. 105 The Tribunal recorded at [32] that the actions of Ltd and Plc each followed a decision of their respective boards or a vote of their respective shareholders and it could not be said that an action taken (or not taken) by Ltd or Plc reflected or resulted from the directions, instructions or wishes of the other entity, as required by s 318(6)(b). For the reasons explained below in relation to voting, this conclusion is not consistent with the substance of the relationship. The Tribunal continued (at [32]): … In law and in fact Ltd and Plc were, throughout the Relevant Period, equals. It is just that, for the purposes of the DLC Arrangement, each had agreed to act jointly for common economic aims via a "single unified economic entity" principle. As Ltd correctly submitted, the DLC Arrangement and its implementation manifests a "collective wish", not the imposition by one of its wishes on the other. Neither in law nor in fact did one control, formally or informally, the other in the Relevant Period. 106 This reasoning focusses on the "imposition" of one entity's wishes on the other, or a relationship of "subservience". Whilst the meaning of "sufficiently influenced" is supplied for the purpose of determining whether an entity is a "controlling entity" or "controlled company", s 318(6)(b) may be satisfied where there is something less than legal control and does not necessarily require "the imposition by one of its wishes on the other" (Tribunal at [32]), or "subservience" (Tribunal at [31]). 107 The Tribunal noted at [33] and [34] that, although the boards of Ltd and Plc comprised the same individuals, it could not be said that those directors were acting at the direction of another entity. The Tribunal referred to, and applied by analogy, the following observations of Gordon J in BHP Billiton Finance Ltd v Commissioner of Taxation (2009) 72 ATR 746 at [100], concerning common board membership between a company and its subsidiary: The mere fact that corporate boards overlap is insufficient to defeat the presumption of separate existence: Walker v Wimborne (1976) 137 CLR 1 at 3-4; 50 ALJR 446 at 448 (as to the fact that the companies had common directors) and (at CLR 6-7; ALJR 499); see also Thomas Seltzer v IC Optics Ltd, IC Optics SpA 339 F Supp 2d 601 at 610-611 (DNJ 2004); United States v Bestfoods (1998) 118 S Ct 1876 at 1888 (1998) ("It is a well-established principle [of corporate law] that directors and officers holding positions with a parent and its subsidiary can and do 'change hats' to represent the two corporations separately, despite their common ownership"); Leo v Kerr-McGee, Civ A No 93-1107 (JEI), 1996 WL 254054 (D NJ, 10 May 1996) at 6 ("A significant degree of overlap between directors and officers of a parent and its subsidiary does not establish an alter ego relationship"). In fact, there is a general presumption "that the directors are wearing their 'subsidiary hats' and not their 'parent hats' when acting for the subsidiary," so dual office holding alone is not enough to establish liability: Bestfoods (at 1888) (quoting P Blumberg, Law of Corporate Groups: Procedural Problems in the Law of Parent and Subsidiary Corporations (1983) § 1.02.1, 12). 108 It may be accepted that, all other things being equal, the directors of Ltd and Plc are to be taken as acting as directors of the particular board on which they are sitting, acting in the interests of that particular company. It may also be accepted that common directorship does not deny the separate existence of the two entities. Neither of those two matters prevent the operation of ss 318(2) and 318(6)(b). Further, the fact of common directorship is plainly relevant to the application of s 318(6)(b) according to its terms. It is also important to recall that these two matters do not address the position of the company as opposed to the directors and s 318(6)(b) is directed to both the company and its directors. 109 The Tribunal referred to the obligation on the directors of Ltd and Plc to take into account the interests of the other entity and its shareholders: at [35]. It concluded that this was "distinct from any obligation to act in accordance with the other entity's directions, instructions or wishes". It concluded that "control has been preserved within each entity". It continued (at [35]): … The directors are "authorised and directed" to make their decisions in a way that will advance the "single unified economic entity" principle. The DLC Arrangement also allows the directors of Ltd and Plc respectively to cause each company (or its respective subsidiaries) to enter into transactions for the benefit of the [BHP Billiton Group], provided that such transactions are also for the benefit of Ltd or, as the case may be, [Plc] (as applicable). This ability to act in concert is consistent with Ltd's submission that the arrangement is similar to a joint venture. It does not make them "associates" as defined. 110 In respect of clause 13 of the Sharing Agreement set out at paragraph [65] above, the Tribunal stated that this did not contradict its conclusion that the arrangement was similar to a joint venture in that the parties acted in concert: at [36]. The Tribunal stated: "At the heart of this clause is a mutuality which sterilises any ability for either party to dictate one to the other in the event of disagreement". However, what clause 13 did require, in terms, was that "each party will enter into such further transactions or arrangements, and do such acts and things, as the other may reasonably require from time to time in the furtherance of the common interests of the holders of BHP Ordinary Shares and the holders of Billiton Ordinary Shares as a combined group or to give effect to [the Sharing] Agreement". This is plainly relevant to the enquiry required by s 318(6)(b), which extends beyond consideration of whether there is actual or legal control. It was not necessary for application of the provisions to the circumstances for one party to have the ability "to dictate one to the other in the event of disagreement". In any event, the voting arrangements described in detail below did give that ability. Consideration: Ltd and Plc 111 As noted above, the Commissioner argued that the arrangements with respect to voting and the way in which dividends were declared demonstrated that Ltd and Plc were "sufficiently influenced" by each other. Voting 112 Each of Ltd and Plc has issued a "Special Voting Share" (SVS). The SVS in Ltd is held by BHP SVC Pty Limited, an Australian resident company. The SVS in Plc is held by Billiton SVC Ltd, a company resident in the United Kingdom. The shares in those two entities are held by the Law Debenture Trust Corporation Plc (Law Debenture Trust), which is unrelated to Ltd or Plc. 113 Ltd and BHP SVC, Plc and Billiton SVC and the Law Debenture Trust are all parties to the SVC Special Voting Shares Deed (SVS Deed). The activities of BHP SVC and Billiton SVC are relevantly limited to performing, and enforcing the performance by Ltd and Plc, of their respective obligations under the SVS Deed, the Ltd Constitution and the Plc Articles. 114 Ltd and Plc agreed, in respect of "Joint Electorate Actions" and "Class Rights Actions", to hold general meetings on dates as close together as was practicable: clause 6.1(b) of the Sharing Agreement. Such meetings are referred to as Parallel General Meetings: rule 2(1) of the Ltd Constitution and the Plc Articles. 115 "Joint Electorate Actions" are set out in rule 60 of the Ltd Constitution and Plc Articles and clause 5.1 of the Sharing Agreement. These include such matters as: (1) the appointment, removal or re-election of any director of either Ltd or Plc; (2) the receipt or adoption of the annual accounts of Ltd or Plc, or both of them, or accounts prepared on an annual basis; (3) a change of name by Ltd (BHP) or Plc (Billiton) or both of them; (4) any proposed acquisition or disposal or other transaction of a kind referred to in certain specified United Kingdom and Australian Stock Exchange Listing Rules; (5) any matter considered by shareholders at an annual general meeting of Plc or Ltd; and (6) any other matter which the board of Ltd and the board of Plc decide should be approved under the Joint Electorate Procedure. 116 "Class Rights Actions" are set out in rule 59 of the Ltd Constitution and Plc Articles and clause 4.1 of the Sharing Agreement and include such matters as: (1) the voluntary liquidation of Ltd or Plc; (2) amendments to the Sharing Agreement or other key documents; and (3) any other action or matter which the board of Ltd and the board of Plc agree should be treated as a Class Rights Action. 117 If a particular matter is both a Joint Electorate Action and a Class Rights Action, it is treated as a Class Rights Action: rule 60(1) of the Ltd Constitution and Plc Articles. 118 Resolutions in respect of "Joint Electorate Actions" and "Class Rights Actions" must be put to shareholders at Parallel General Meetings of Ltd and Plc: rules 56(1), 59(3) and 60(2). The vote is to be decided on a poll: rule 55(3). 119 BHP SVC and Billiton SVC, as holders of the special voting shares, have specific voting rights in respect of such resolutions. Each SVS carries a "Specified Number" of votes: rule 62. The holders of the SVS must vote in the manner prescribed in the SVS Deed and the Sharing Agreement: clauses 2 and 4 of the SVS Deed; clause 4.3 of the Sharing Agreement. 120 Any poll on which the holder of a SVS is entitled to vote must be kept open long enough for the Parallel General Meeting of the other company to be held and the votes attaching to the SVS (if any) to be calculated and cast: clause 6.3 of the Sharing Agreement; see also clause 56(1) of the Ltd Constitution and Plc Articles. There are circumstances in which the holder of a SVS is not entitled to vote: rule 59(3)(c) of the Ltd Constitution; rule 59(3) of the Plc Articles. Joint Electorate Actions 121 Joint Electorate Actions must be approved by an ordinary resolution (or in particular circumstances, a special resolution) of the votes cast by both the holders of the Ltd ordinary shares and the holder of the SVS in Ltd (voting as a single class), and the holders of the Plc ordinary shares and the holder of the SVS in Plc (voting as a single class). This was referred to as the "Joint Electorate Procedure" in clause 5.2 of the Sharing Agreement. 122 On a resolution for a Joint Electorate Action, the "Specified Number" of votes carried by (and required to be cast by the holder of) each SVS is equal to the total number of votes validly cast on the poll on the equivalent resolution at the other entity's Parallel General Meeting. 123 Under clause 2 of the SVS Deed, Ltd undertook to notify Plc and Billiton SVC (and Plc undertook to notify Ltd and BHP SVC) of the number of votes cast in their respective meetings for and against each resolution in relation to a "Joint Electorate Action at the Parallel General Meeting" and its calculation of the number of votes Billiton SVC (and BHP SVC) would carry in the meeting of the other. Clause 2 of the SVS Deed provides: Notification of votes cast on Joint Electorate Actions at a Parallel General Meeting and calculation of Specified Number 2.1 Notification by BHP BHP undertakes that in relation to any resolution relating to a Joint Electorate Action, BHP shall, as soon as possible, notify Billiton SVC and Billiton in writing of: (a) the number of votes cast for and against each resolution in relation to a Joint Electorate Action at a Parallel General Meeting of BHP; and (b) its calculation of the BHP Specified Number of votes which the Billiton Special Voting Share will carry in relation to each such resolution and of the way in which Billiton SVC is required to vote the BHP Specified Number of votes attaching to the Billiton Special Voting Share in relation to each such resolution in accordance with the Billiton Memorandum and Articles and this Deed. 2.2 Notification by Billiton Billiton undertakes that in relation to any resolution relating to a Joint Electorate Action, Billiton shall, as soon as possible, notify BHP SVC and BHP in writing of: (a) the number of votes cast for and against each resolution in relation to a Joint Electorate Action at a Parallel General Meeting of Billiton; and (b) its calculation of the Billiton Specified Number of votes which the BHP Special Voting Share will carry in relation to each such resolution and of the way in which BHP SVC is required to vote the Billiton Specified Number of votes attaching to the BHP Special Voting Share in relation to each such resolution in accordance with the BHP Constitution and this Deed. 124 It is only if there is a required majority of all of the shareholders of both Ltd and Plc in respect of a resolution on Joint Electorate Actions that the resolution will be passed; and then it will necessarily be passed by both companies. The corollary is that a resolution might be passed in Ltd because of the casting by BHP SVC of votes (equivalent in number to those cast by the ordinary shareholders in Plc) even though the resolution would not have passed if the ordinary shareholders of Ltd (apart from BHP SVC) were the only ones voting. That is because the effect of the SVS arrangement is that: (1) the number of votes cast in the Plc meeting by the relevant shareholders will be cast in the Ltd meeting by BHP SVC, which holds the SVS in Ltd (the BHP SVS); (2) the number of votes cast in the Ltd meeting by the relevant shareholders will be cast in the Plc meeting by Billiton SVC, which holds the SVS in Plc (the Billiton SVS). 125 The total number of votes in both Ltd and Plc, taking into account the votes cast by BHP SVC and Billiton SVC as holders of the special voting shares, will be the same. The parties ignored for the purposes of simplicity of analysis that the number of votes is divided by the "Equalisation Fraction" under rule 62(2) of the Ltd Constitution and Plc Articles. 126 Voting cannot be completed until the votes in both Plc and Ltd are known and communicated in accordance with clause 2 of the SVS Deed so that: the votes attaching to the Billiton SVS can be calculated (and counted in the Plc meeting); and the votes attaching to the BHP SVS can be calculated (and counted in the Ltd meeting), such that the total number of votes in both Ltd and Plc are ultimately the same; the polls must be kept open to allow that to occur – see: rule 56(1) of the Ltd Constitution and Plc Articles; clause 6.3 of the Sharing Agreement. 127 Ltd gave the following worked example: Assume the following votes are cast by ordinary shareholders on a motion to appoint an auditor (a Joint Electorate Action): Company Shareholders For Against Ltd Ordinary 5,000,000 800,000 Plc Ordinary 200,000 4,000,000 Under the Sharing Agreement and the SVS Deed, the special voting shareholder must mirror the votes cast by the ordinary shareholders in the other company's general meeting. Accordingly, votes will be cast as follows: Company Shareholders For Against Ltd Ordinary 5,000,000 800,000 BHP SVC 200,000 4,000,000 TOTAL 5,200,000 4,800,000 Plc Ordinary 200,000 4,000,000 Billiton SVC 5,000,000 800,000 TOTAL 5,200,000 4,800,000 128 It can be seen from this example that, absent the SVS arrangement, Plc would have voted against the resolution, but – because the SVS arrangement required the number of the ordinary shareholders' votes in Ltd to be voted in the Plc meeting by Billiton SVC as holder of the Billiton SVS – Plc in fact passed the resolution, notwithstanding the wishes of its ordinary shareholders. 129 As noted above, the Tribunal did not explain how the voting mechanism worked. It referred to it (at [31]) as "parallel implementation behaviours … [which were] unremarkable and hardly indicative of acting in accordance with the directions, instructions or wishes of another entity". It continued: "Ltd's implementation behaviours were in accordance with its own wishes and those of Plc were in accordance with its own wishes. Each chose to act in concert. Neither chose to act in subservience, formal or informal, to the other nor to anyone else, BMAG included." 130 The Tribunal dealt with the argument more specifically at paragraphs [38] to [40]. The Tribunal's analysis at [38] focussed on whether the shareholders in Plc had the legal ability to "control, usurp or exercise" the powers of the directors in either the company of which they were shareholders (Plc) or in Ltd (and vice versa). This focus on the position of the directors of Ltd did not engage the point made by the Commissioner with respect to the voting arrangements, which was that the company was "sufficiently influenced". The Tribunal did not deal with this submission. Although subparagraph (b)(ii) of definition of "director" in s 9 of the Corporations Act focusses solely on acts of directors, s 318(6)(b) directs attention to whether "the company, or its directors" act, or might reasonably be expected to act, in the relevant way. 131 The respondent's position was that the words "the company, or its directors" in s 318(6)(b) were to be read in a specific way, informed by the structure of ss 318(2)(d) and (e). The respondent contended that: (1) sections 318(2)(d)(ii) and (e)(ii) were directed at control of a company in the sense of who is able to cast, or control the casting of, a majority of votes at a general meeting; (2) on the other hand, the "sufficiently influenced" test in ss 318(2)(d)(i) and (e)(i) was directed at control of the business or daily acts of a company, such control usually being reposed in the board; it was not directed at de facto control of the company in general meeting. 132 When read in this way, it was submitted, s 318(6)(b) in referring to "the company, or its directors" was not referring to the company in general meeting but merely recognising that a company must act through natural persons. 133 On this argument, ss 318(2) and 318(6)(b) would not apply where the company in general meeting, although not legally controlled by another entity, was in fact accustomed to acting in accordance with the directions of that entity and had done so, for example, for a number of years. If that other entity was not in a position to control the votes in the general meeting such that ss 318(2)(d)(ii) or (e)(ii) applied by virtue of the definition in s 318(6)(c), the company would not be an associate because it would not be "sufficiently influenced". 134 There is no warrant to read down the provisions in this way. The words "the company, or its directors" should be given their ordinary meaning. Sections 318(2)(d)(i) and (e)(i) are concerned with whether an entity is "sufficiently influenced" by another. The phrase "sufficiently influenced" is described by s 318(6)(b) and, read in context, identifies a species of control or influence of the company or its directors which falls short of the control contemplated by ss 318(2)(d)(ii) and (e)(ii), namely control of a "majority voting interest". Reliance on subparagraph (b)(ii) of the definition of "director" in s 9 of the Corporations Act does not assist and it is an error to equate that provision with s 318(6)(b). Subparagraph (b)(ii) is concerned only with how directors are accustomed to act. Section 318(6)(b) is not so limited. It is broader in each of the various ways described above (in particular at [91] to [93]). 135 So far as concerns "Joint Electorate Actions", the resolutions of both Plc and Ltd cannot be passed until the number of votes attaching to the Billiton SVS and BHP SVS can be calculated and cast on the poll in the relevant entity: rule 56(1) of the Ltd Constitution and Plc Articles. The situation does not arise, and cannot be expected to arise, where a final resolution of Ltd on a "Joint Electorate Action" will be communicated to Plc or vice versa. However, information is communicated before the resolution is passed pursuant to the obligation under clause 2 of the SVS Deed, that communication being made to ensure that the relevant votes attaching to the relevant SVS can be calculated and cast so that the same result (if the "Equalisation Fraction" is 1:1) is achieved in both companies. That is, the communication of that information ensures that the number of votes of the ordinary shareholders in Plc are counted in the meeting of Ltd by the casting by BHP SVC in the Ltd meeting of the "Specified Number" of votes representing the number of votes cast in the Plc meeting on the equivalent resolution. 136 As indicated at [131] above, Ltd said this notification was a notification to the company in general meeting, which was not within the ambit of s 318(6)(b). That submission was rejected. Ltd also contended that s 318(6)(b) would not apply for the following further reasons: (1) First, the notification by Plc of the number of votes (before Plc had passed any resolution and whilst its poll was still kept open) was the "provision of information", not a communication of "directions, instructions, or wishes". (2) Secondly, even if it was the communication of wishes, it was not wishes of Plc (as opposed to wishes of its shareholders, other than the holder of the Billiton SVS). (3) Thirdly, even if it was the communication of the wishes of Plc, it was acted upon by BHP SVC not by Ltd. Provision of information or communication of "directions, instructions, or wishes"? 137 As to the first issue, the fact that the notification is the provision of information does not mean it was not the communication of "directions, instructions or wishes". The communication of information is the communication of knowledge about some particular fact, subject or event: Plaintiff M174/2016 v Minister for Immigration and Border Protection (2018) 92 ALJR 481 at [24] (Gageler, Keane and Nettle JJ), referring to SZEEU v Minister for Immigration and Multicultural and Indigenous Affairs (2006) 150 FCR 214 at [205] (Allsop J). The communication of directions, instructions or wishes will always involve the provision of information, namely the content of the directions, instructions or wishes. 138 The notification by Plc under clause 2 of the SVS Deed to Ltd and BHP SVC notified both Ltd and BHP SVC of: (1) Plc's "calculation of the BHP Specified Number of votes which the Billiton Special Voting Share will carry in relation to each such resolution"; and (2) "the way in which Billiton SVC is required to vote … in accordance with the BHP Constitution and this [SVS] Deed". 139 BHP SVC was obliged to vote in accordance with the SVS Deed and the Ltd Constitution: clause 4.2(a) of the SVS Deed. Ltd was obliged to keep the poll open to allow that to occur. 140 Under the arrangements, Plc communicated to Ltd and BHP SVC the number of votes the Plc shareholders (other than Billiton SVC), exercising their personal rights as shareholders, had voted in the Plc general meeting (which was being kept open in order to allow Billiton SVC to vote). This notification by Plc was made under clause 2 of the SVS Deed and in furtherance of the DLC Arrangement, the Sharing Deed (in particular clause 6.3), the Ltd Constitution and the Plc Articles. Those documents set out a mechanism for the communication by Plc to Ltd of the pre-resolution position of Plc's ordinary shareholders on a Joint Electorate Action resolution so that the position of Plc's ordinary shareholders on the resolution would be voted by BHP SVC in the Ltd meeting. As a matter of substance and effect, this allowed the Plc ordinary shareholders to vote in the Ltd parallel general meeting. The reverse was also contemplated: the position of Ltd's ordinary shareholders on a Joint Electorate Action resolution would be communicated by Ltd to Plc and Billiton SVC before the Ltd resolution passed and Plc was obliged to keep its poll open such that the pre-resolution position of Ltd's ordinary shareholders would be counted in Plc's poll via the votes cast by Billiton SVC. 141 The notifications of the pre-resolution poll result by Plc and Ltd to each other (and to the relevant SVCs) under clause 2 of the SVS Deed were notifications of "directions, instructions or wishes" within the meaning of s 318(6)(b). Contrary to the submissions advanced by Ltd, these notifications were not merely the "provision of information". Taking a notification by Plc as an example, the notification included a "direction" or "instruction" from Plc as to how the BHP SVC was "required" (clause 2.2(b) of the SVS Deed) by Plc to vote. This direction or instruction to BHP SVC was communicated to both Ltd and BHP SVC. Both entities were bound by the underlying contractual arrangements, which required Ltd to keep the poll open to allow BHP SVC to comply with the direction. Plc's notification under clause 2 was also a communication of Plc's wish or direction that Ltd comply with its obligations to take the necessary steps to ensure that the votes of the ordinary shareholders in Plc's parallel general meeting be cast in accordance with the special voting share arrangements in Ltd's parallel general meeting before it closed. Were the "directions, instructions or wishes" those of Plc / Ltd or their shareholders? 142 As to the second issue, the "directions, instructions or wishes" were those of the companies even if they were also those of its ordinary shareholders. 143 Under DLC Arrangement, Plc and Ltd had to ensure that voting on Joint Electorate Actions occurred in accordance with the agreed mechanism. Both companies wanted the number of votes of their ordinary shareholders, cast in their respective general meetings (before they closed), to be voted under the special voting share mechanism in the general meeting of the other (before it closed). The underlying contractual arrangements contemplated that each company would give "directions, instructions or wishes" to the other in this regard and that the parties give effect to those "directions, instructions or wishes". Clause 2 of the SVS Deed provided the contractual mechanism for each company to communicate its "directions, instructions or wishes" in that respect to the other and to the relevant SVC. 144 The actual votes cast by each ordinary shareholder in Plc and Ltd in the relevant general meeting was an expression of each shareholder's wish as a shareholder in the relevant company. The wishes of those shareholders determined the content of the notifications of the "directions, instructions or wishes" of the companies under clause 2. Taking Plc as an example, the content of Plc's direction under clause 2 to BHP SVC (communicated also to Ltd) as to how BHP SVC was required by Plc to vote was determined by the wishes of Plc's ordinary shareholders. The communication of that direction was a communication from Plc of Plc's "directions, instructions or wishes" even though the content of it was determined by an anterior process. Further, although this is not a necessary conclusion, the content of the direction given by Plc was determined by that company in general meeting, albeit the meeting had not closed. 145 Plc and Ltd had agreed and implemented a mechanism for the number of ordinary shareholder votes in the meeting of one to be voted in the meeting of the other, through the special voting share arrangement. The notification by Plc to Ltd and BHP SVC of the pre-resolution result in the Plc general meeting and its calculation of the "Specified Number" of votes carried by the BHP SVS was a communication to Ltd and BHP SVC of Plc's "directions, instructions or wishes" that: (a) BHP SVC cast its votes in the Ltd meeting in accordance with the arrangements agreed, inter alia, with Ltd; and (b) Ltd, by its directors, keep the meeting open to allow that to occur. It is noted that s 318(6)(b) captures directions, instructions or wishes that are communicated directly or through interposed entities. Were the "directions, instructions or wishes" acted upon by BHP SVC and not by Ltd? 146 As to the third issue, it is true that the act of casting the "Specified Number" of votes was carried out by BHP SVC as the holder of the SVS in Ltd in accordance with the direction given under clause 2 by Plc as to what BHP SVC was "required" by Plc to do. However, Ltd had to keep the meeting open to allow that to occur: rule 56(1). It was reasonably to be expected that both Ltd and Plc would act in accordance with the DLC Arrangement, the SVS Deed and their respective Constitution and Articles, which required each to ensure the votes of the other were taken into account in the manner contemplated. The notifications, being "directions, instructions or wishes" were acted upon by Ltd and Plc and their directors, at a minimum, in keeping their meetings open until such time as the relevant SVC cast the relevant number of votes. Class Rights Actions 147 Resolutions on Class Rights Actions require approval by the required majority (50% or 75%, depending on the nature of the resolution) of the ordinary shareholders of both Ltd and Plc, voting separately, and will be rejected by both Ltd and Plc if the required majority of either does not approve the resolution. This rejection is achieved through the SVS arrangement. 148 If a resolution on a Class Rights Action is not approved by the required majority of Plc ordinary shareholders at a general meeting of Plc, the BHP SVS held by BHP SVC carries a sufficient number of votes (and BHP SVC must cast those votes) to defeat the equivalent resolution at Ltd's Parallel General Meeting. The same applies if the positions of the companies are reversed. Accordingly, if a resolution in respect of a Class Rights Action is defeated by the ordinary shareholders in one company it will necessarily be defeated in the other, irrespective of the wishes of the ordinary shareholders in the other. 149 Under clause 3.1 of the SVS Deed, Ltd undertook to notify Plc (and Billiton SVC) of whether the resolution was passed by the required majority of ordinary shareholders in Ltd. Under clause 3.2 of the SVS Deed, Plc undertook to notify Ltd (and BHP SVC) of whether the resolution was passed by the required majority of ordinary shareholders in Plc. The clause does not require the number of votes to be notified. It provides: 3. Notification of outcome of vote on Class Rights Actions 3.1 Notification by BHP BHP undertakes that, where it is required to pass a resolution in relation to a Class Rights Action, BHP shall, as soon as possible, inform Billiton SVC and Billiton in writing in accordance with Clause 16.4 as to whether or not the resolution was passed by the Required Majority of the holders of BHP Ordinary Shares. 3.2 Notification by Billiton Billiton undertakes that, where it is required to pass a resolution in relation to a Class Rights Action, Billiton shall, as soon as possible, inform BHP SVC and BHP in writing in accordance with Clause 16.4 as to whether or not the resolution was passed by the Required Majority of the holders of Billiton Ordinary Shares. 150 If the number of votes of the ordinary shareholders of Plc was such that the resolution was not passed, Billiton SVC would not be entitled to vote in the Plc meeting: rule 59(3) of the Plc Articles. The poll need not be kept open. If the number of votes of the ordinary shareholders in Ltd were such that the resolution would pass in Ltd if only those votes counted, BHP SVC would have, and be obliged to cast in the meeting of Ltd, the number of votes needed to ensure that the resolution did not pass in Ltd: rule 59(3) of the Ltd Constitution. The poll would have to be kept open to allow this to occur: rule 56(1) of the Ltd Constitution. 151 If the Plc ordinary shareholders had voted against a "Class Rights Actions" resolution, then notification of that by Plc to Ltd and BHP SVC is the communication of directions, instructions or wishes. It is a communication which would occur after the Plc poll closed, because Billiton SVC had no entitlement to vote (the ordinary shareholders in Plc having voted down the resolution). By reason of rule 59(3), rule 56(1) did not require the poll to be kept open. In the scenario that the number of votes of the ordinary shareholders in Ltd were such that the resolution would pass in Ltd, the notification has the necessary consequence that BHP SVC cast the "Specified Number" of votes to ensure the resolution in Ltd fails. Ltd has agreed, by clause 6.3 of the Sharing Agreement, to keep the Ltd poll open to allow that to occur, and rule 56(1) of the Ltd Constitution requires the directors to keep the poll open. 152 Ltd is under an obligation pursuant to the SVS Deed and the Sharing Agreement to facilitate Plc's "veto" and the directors of Ltd are bound to keep the poll open to allow that to occur. Conclusion 153 The question remains whether the taking into account of the position of the shareholders of the other entity through the SVS arrangement was such that s 318(2) applies because one was "sufficiently influenced" by the other within the meaning of s 318(6)(b). 154 The SVS arrangement did not put either Plc or Ltd in a position of subservience to the other. It involved mutuality of obligation and the taking into account of the wishes of both companies, not just by mere consideration of the position of the other, but by implementation of the "directions, instructions or wishes" of the other communicated under clause 2 of the SVS Deed (in the case of Joint Electorate Actions) through votes cast on a poll pursuant to a structure agreed to by both Ltd and Plc. The arrangement with respect to Joint Electorate Actions was one in which both had what was in substance a say (and potentially a controlling or determinative say) in the passing of resolutions on relevant matters in the other. The arrangement with respect to Class Rights Actions gave one company what was in substance a power of veto. 155 The description of "sufficiently influenced" supplied by s 318(6)(b) does not require that an entity is always the "controlling entity" (or "controlled company") or a "controlling entity" with respect to all of the affairs of the relevant company. The fact that Ltd and Plc both have influence or control under the DLC Arrangement on a day-to-day basis, and may be seen to be "joint venturers" in relation to substantially all of their commercial affairs, does not alter (and, if anything, underscores) the fact that the relationship, as disclosed by the voting arrangements, is one of which it is appropriate to say that one is "sufficiently influenced" by the other. At least in the circumstances of this case, it is no objection to the application of ss 318(2) and 318(6)(b) according to their terms that the sufficient influence or control might be seen to go both or different ways depending on the particular occasion or subject matter. Dividends 156 Clause 3 of the Sharing Agreement required Ltd and Plc to declare matching dividends. The evidence before the Tribunal indicated that the boards of Ltd and Plc, constituted by the same individuals, met at the same time. Both Ltd and Plc delegated to the "Risk & Audit Committee" the authority to approve a dividend. It was the practice of the Ltd and Plc boards to recommend to that Committee from time to time that it resolve to pay dividends in certain amounts payable on certain dates. 157 By way of example, the minutes of the Ltd board meeting of 2 and 3 February 2006 contained the following: Memorandum dated 25 January 2006 was submitted and it was resolved to delegate to the Risk & Audit Committee the authority to approve a dividend and recommend to the Committee that it resolve and note at its meeting to be held on 13 February 2006: "A. (1) That a dividend on the fully paid ordinary shares and the fully paid special voting share of BHP Billiton Limited at the rate of US$0.175 per share be payable on 22 March 2006 from retained earnings … B. (1) that a dividend on the fully paid ordinary shares of BHP Billiton Plc at the rate of US$0.175 per share be payable on 22 March 2006 from retained earnings …" 158 The Plc Minutes of 2 and 3 February 2006 contained exactly the same words as set out above. 159 The minutes of the meeting of the Risk & Audit Committee on 13 February 2006 contained: Committee members noted that a memorandum dated 26 January 2006 had been considered by the Board at its meeting on 2 & 3 February 2006 and that the Board had resolved to delegate to the Committee the authority to approve a dividend and to recommend to the Committee that an interim dividend of US$0.175 per share be paid on 22 March 2006. It was resolved on behalf of BHP Billiton Limited and noted by BHP Billiton Plc in respect of paragraph A, and resolved on behalf of BHP Billiton Plc and noted by BHP Billiton Limited in respect of paragraph B: A. (1) that a dividend on the fully paid ordinary shares and the fully paid special voting share of BHP Billiton Ltd at the rate of US$0.175 per share be payable on 22 March 2006 from retained earnings … B. (1) that a dividend on the fully paid ordinary shares of BHP Billiton Plc at the rate of US$0.175 per share be payable on 22 March 2006 from retained earnings … 160 The Commissioner submitted that the resolution of the Ltd board to recommend the payment of dividends by both Ltd and Plc could comfortably be described as an instruction or a wish as to what Plc's dividend should be. Likewise, the resolution of the Plc board to recommend the payment of dividends by both Ltd and Plc could comfortably be described as an instruction or a wish as to what Ltd's dividend should be. Those instructions or wishes were given to the Committee, which was a Committee of both the Ltd and Plc boards, as to what it should do in relation to declaring a dividend. 161 The Tribunal concluded, at [37], that it was not the resolution of the Plc board which caused the dividend in Ltd to be paid. The Tribunal stated: [Ltd's Risk and Audit Committee] resolved to declare a dividend because of an instruction given to it by Ltd's board, not by virtue of any direction, instruction or wish, formal or informal, given to it by Plc's board. It was in accordance with the direction of Ltd's board that this committee noted, on behalf of Ltd, the dividend declared by Plc's board. It is evident that there was an administrative practice to record that Plc approved of or agreed with the proposed action. It had no causative effect. It was the direction of Ltd's board and that board alone which was not just influential but determinative in relation to the declaring of the dividend. 162 The Commissioner submitted that the Tribunal ought to have concluded that the payment of the dividend by Ltd was "in accordance with" the wishes of Plc (and vice versa). The Tribunal was correct to conclude that the Committee, in exercising the power delegated to it by the Ltd board to resolve to declare a dividend to Ltd shareholders, was acting in accordance with the instructions of the Ltd board. The resolution made by Ltd through its delegate (the Committee) also accorded or coincided with what Plc wished. It was not disputed that s 318(6)(b), in using the words "in accordance with", requires something more than mere coincidence and imports notions of causation. Looking at the matter practically, the directors, meeting concurrently, considered it to be in the interests of both Plc and Ltd to recommend that a dividend be paid. The companies were obliged to pay matching dividends by virtue of the DLC Arrangement and the terms of the Sharing Agreement. It may be accepted that the recommendation by the Ltd board, in discharge of the duties owed to Ltd by its directors, caused the Ltd dividend to be paid once the recommendation was acted upon by the Committee in resolving to pay it. However, it would also reasonably be expected that the Ltd board, comprising the same individuals as those on the Plc board, and knowing that the companies had agreed to pay matching dividends, would recommend to resolve that the same dividends be paid in accordance with the wishes of both Ltd and Plc. 163 The dividend arrangements are relevant to, and probative in, the enquiry required by ss 318(2) and 318(6)(b). Together with the matters referred to above, those arrangements support a conclusion that Ltd and Plc sufficiently influenced each other. The Tribunal's reasons: BMAG 164 As has been noted above, BMAG was the offshore marketing subsidiary which, relevantly for present purposes, purchased product from Ltd's Australian subsidiaries and Plc's Australian entities for on-sale. Plc and Ltd were the 100% indirect owners of BMAG. 165 The Tribunal set out at [44] the following aspects of BMAG's formal governance structure (citations omitted): (a) Pursuant to its Articles of Incorporation and the Swiss Code of Obligations (SCO), the shareholders' meeting was the supreme corporate body of BMAG. The shareholders' meeting had the following inalienable powers: (i) the adoption and the amendment of the Articles of Incorporation; (ii) the election of the members of the BMAG Board and of its auditors; (iii) the approval of the annual report and the annual accounts; (iv) the approval of the annual financial statement as well as the resolution on the use of the balance sheet profit, in particular, the declaration of dividends and of profit sharing by directors; (v) the granting of discharge to the members of the BMAG Board; and (vi) the passing of resolutions on matters which by law or pursuant to the BMAG Articles of Incorporation were reserved to the General Meeting of the Shareholders. (b) Pursuant to BMAG's Articles of Incorporation, the SCO and the BMAG Management Regulations, the non-transferable and inalienable powers and duties of its board included the following: (i) the ultimate management of BMAG and the giving of the necessary, related directives; (ii) the appointment and removal of BMAG's officers who had managerial responsibility and who had the authority generally to represent BMAG; and (iii) the ultimate supervision of such officers, in particular, in view of compliance with the law, BMAG's Articles of Incorporation, regulations and directives. (iv) subject to that ultimate supervision, an ability to delegate the implementation of some of the board's duties to an Executive Committee, a Managing Director, and other managerial officers. 166 The Tribunal's conclusions included: (1) Control of BMAG, in the sense of an ability to appoint or remove board members so as to ensure conformity with a particular policy, reposed in the person who controlled the majority voting power at a general meeting – namely Ltd as 58% indirect shareholder: at [46]. (2) Control of BMAG in the sense of control of its business and day-to-day activities reposed in its board: at [43], [46]. (3) The members of BMAG's board were required to perform their duties with all due diligence and safeguard the interests of the company in good faith: at [45]. (4) There was no evidence to suggest that BMAG's board members neglected their duties or failed to act, first and foremost, in its interest: at [45], [49]. 167 The Tribunal's findings included the following (at [50]-[51]): (1) BHP Billiton Group guidelines regarding policies, strategies and procedures relating to the operation of BMAG, which include marketing policies or frameworks, were considered and approved by BMAG's board before being implemented. These guidelines were capable of being revoked or amended at any time by BMAG's board. (2) BMAG's board actively evaluated matters and recommendations put to it from BMAG's perspective. (3) In some instances, BMAG's board rejected recommendations made to it and requested revised recommendations, or for amended resolutions to be put to it for consideration. (4) BMAG's board was meticulous in ensuring adherence to its corporate governance structure and compliance with board obligations under the Swiss Code of Obligations, including in relation to delegated authorities. (5) Any delegation by BMAG's board (including under various approval or authority frameworks) was subject to its ultimate management and supervision. (6) It was probable that BMAG's interests regularly coincided with those of Ltd and Plc and that BMAG's consequential actions regularly furthered not just its own but also those companies' interests. 168 As to the last matter, the Tribunal noted at [51] that this did not mean that BMAG's board failed to make an independent judgment when making decisions for BMAG. It noted further that this did not derogate from the duties imposed upon BMAG's board members when performing their functions to consider whether pursuing the interests of BMAG's parents (and its parents' ultimate shareholders) was compatible with their other obligations, in particular to act in the interests of BMAG: Charterbridge Corporation Ltd v Lloyds Bank Ltd [1970] Ch 62 at 74. 169 At [52], the Tribunal's ultimate conclusion was as follows: Ltd submitted that BMAG was neither accustomed to treating, nor could it reasonably be expected to treat, the wishes or directions of either Ltd or Plc, or both (if that were possible), as a sufficient reason to act without more. I agree. The reason for this agreement is twofold. In law, the BMAG board was obliged to act in the best interests of that company and its shareholders. In fact, it so acted on the evidence. BMAG's board only followed the wishes or directions of Ltd or Plc if the board considered that to do so was in BMAG's best interests. Consideratoin: BMAG 170 The Tribunal's reasoning at [52], set out in the passage immediately above, is not sufficient for a conclusion that BMAG was not "sufficiently influenced" by Ltd and Plc as that term is described by s 318(6)(b). The conclusion in the last sentence, that BMAG did follow the wishes and directions of Ltd or Plc, implied that s 318(6)(b) applied. The reason the Tribunal concluded that s 318(6)(b) did not apply was that BMAG did not treat those directions as a reason to act "without more". That is not what ss 318(2) and 318(6)(b) require; whilst subservience or abdication of responsibility would likely be sufficient, neither is necessary; what s 318(6)(b) requires is that the "company, or its directors" act "in accordance with" the "directions, instructions or wishes" of another (or others). The fact that directors fulfil their duties to their company, and only agree to a direction if to do so is found to be in the interests of the company, does not necessarily prevent the conclusion that ss 318(2) and 318(6)(b) apply. 171 The "Marketing Risk Management Standard", which was said to be but one example of material to equivalent effect before the Tribunal, demonstrated that BMAG was likely to follow the wishes of Ltd and Plc, albeit the directors would consider whether to do so was in the interests of BMAG. Of course BMAG would reasonably be expected to follow the instructions of Ltd and Plc, its ultimate owners, as the Tribunal found at [52]. 172 Having reached the conclusion it did in [52], the Tribunal went on to consider an alternative submission advanced by Ltd that, if BMAG or its directors were accustomed, or under an obligation (whether formal or informal), or might reasonably be expected, to act in accordance with the directions, instructions or wishes of any other entity, that other entity was Ltd such that it could not be concluded that BMAG was "sufficiently influenced" by Plc and Ltd. The submission was that s 318(2)(d)(i)(B) could not be engaged where subparagraph (A) was engaged; subparagraph (A) was engaged because BMAG was controlled by Ltd (the 58% indirect shareholder). Section 318(2)(d)(i)(B) could only operate where there was no single entity which could, on its own, exercise sufficient influence over the primary entity; the section can only be engaged where two or more entities together exercised sufficient influence: at [53] to [55]. BMAG could be expected to act in accordance with Ltd's directions, instructions or wishes: NEAT Domestic Trading Limited v AWB Limited (2003) 216 CLR 277 at [47]. Therefore, on Ltd's submission, s 318(2)(d)(i)(B) could not be engaged. 173 The Tribunal accepted this argument, concluding that subparagraphs (A) and (B) were mutually exclusive: at [56]. This conclusion was reached because of the view the Tribunal took as to the meaning of "sufficiently influenced". The Tribunal equated what was required for one entity to be "sufficiently influenced" by another to control by one and subservience of the other. The Tribunal's conclusion would be correct if "sufficiently influenced" required legal control. If one entity had legal control, then it would be unlikely that the provision was intended to operate to capture that entity and another which did not have legal control. However, for the reasons identified above, the description of "sufficiently influenced" is directed to capturing relationships between entities which extend beyond relationships of legal control by one over the other. The Tribunal erred in its construction of s 318(2)(d)(i)(B). CONCLUSION 174 Plc's Australian entities were "associates" of BMAG in each of the ways identified at [58] above. Accordingly, the appeal should be allowed. 175 I agree also with the reasons of the Chief Justice. I certify that the preceding one hundred and twenty-eight (128) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Thawley. Associate: Dated: 29 January 2019