ry PROD Me JUDGMENT No. 22..J 1TH by Eo. CATCHWORDS tog ok n Be Taxation - Allowabie deductions - Losses - Transfer of shares to share~trading partnership — Trading stock - s.36A election - Whether shares trading stock - Whether shares an asset of a business after transfer - Whether necessary that transfer be not in the ordinary course of business - Income Tax Assessment Act 1936-1975, s.6 (Definition of trading stock), s.36, s.36A, s.5l. The Commissioner of Taxation of the Commonwealth of Australia v. Westracers Pty. Limited No. G92 of 1977 Coram: Brennan, Deane and Toohey JJ. Date: 23 March 1979. Sydney. > IN THE FEDURAL COURT OF AUSTRALIA) ) NEW SOUTH WALES DISTRICT REGISTRY) No. G92 of 1977 ) GENERAL DIVISION ) ON_APPEAL from the Supreme Court of New South Wales Administrative Law Division iN THE MATTER of the Income Tax Assessment Act 1936 BETWEEN: THE COMMISSIONER OF TAXATION OF THE COMMONWEALTH OF AUSTRALIA Appellant AND: WESTRADERS PTY. LIMITED Respondent ORDER JUDGES MAKING ORDER: Brennan, Deane and Toohey JJ. DATE OF ORDER: 23 March 1979. WHERE MADE: Sydney. THE COURT ORDERS THAT: 1. The appeal be dismissed. 2. The appellant pay the costs of the respondent to be taxed. IN Ti TRPERAL CouPT OF AUS'LRALTA BW SOUL WALES DIGPRICT RNCISPRY Zz No G92 of 1977 ww GENERAT DIVISION ON APPEAL FROM THE SUPREME COURT OF NEW SOUTT: WALES ADMINISTPATI LAW DIVISION IN THE MATTER of the Income Tax Assessment Act 1936 BETWEEN THE COMMISSIONER Cr TAXATION OF THE COMMONWEALTH OF AUSTRALIA Appellant AND: WESTRADERS PTY. LIMNTTED Respondent CORAM Brennan, Deane and Toohey JJ. Friday, 23 Marcn, 1979. REASONS FOR JUDGMENT DEANE J I have had the benefit o* reading the judgment of Toohey J. I agree with tne conclusions which he reaches and with the reasons which he advances for those conclusions. I would add some comsents for myself on the question whether tne shares owned by Jensen Mining & Investment Limited ("Jensen") which became the property of Jenspart Trading Company ('Jenspart") were, at the tame of that chonge of ownership, propertj benz trading stock of a business. These shares were in the capital of nineteen different companies. I shall refer to them as "the relevant shares". With the possible exception of a small] holding of shares 1n Beneficial Finance Corporation Limited, none of the relevant shares had been acquired by Jensen in the course of the ordinary buying and selling operations of an unscphisticaled trader in shares. They were acquired as part of what have, for convenience, been referred to as "dividend stripping" operations. The profit which was the object of their acquisition was to be derived more from the dividends which were ripe for the picking (either in the form of cash or, in two cases, in the form of land) than from the proceeds of the ultimate sale of the shares themselves. This circumstance d.d not, however, preclude the shares so acquired from constituting part of the trading stock of the business of dealing in shares which Jensen, at the time of the acquisition, carried on (see Investment & Merchant Finance Corporation Limited v. Federal] Commissioner of Taxation (1971) 125 C.L.R. 249; Curran v. Federal Commissioner of Taxation (1974) 131 C.L.R. 405 and Commissioner of Taxation v Patcorp Investments Limited (1976) 51 A.L.J.R. 40). The finding of the learned Judge at first instance that the shares, when acquired, were trading stock of that business was, in the light of those authorities and for the reasons which he gave, plainly correct. Between the time of Jensen's acquisition of the relevant shares and the time their ownership changed from Jensen to Jenspart, Jensen's business activities underwent a change In that it commenced the activity of promoting partnerships to which shares purchased as part of dividend stripping operations could be transferred after the dividend had been declared and received. The learned trial Judge found that Jenzen made plans for this business activity early in May, 1975. The activity commenced in the same month. It anvolved Jensen receiving both consideration for the sheres transferred to a partnership in the form of a credit in the partnership accounts and a fce or commission from the other partners in the relevant partnership in consideration of Jensen signing an election pur-~ suant to s.36A of the Income Tax Assessment Act 1936 ("the Act'') After 1t commenced this activity, Jensen did not dispose of shares other than by way of transfers to such partnerships of which 1t was a member. Transfer to such 2 partnership was followed by sale of the shares jr the course of a share trading business carried on by the relevant partnership. Jenspart was such a partnership. It consisted of Jensen and seventeen other partners (including the taxpayer). It was constituted by an agreement of 28 May, 1975. That agreement provided that the relevant shares would be held by Jensen upon trust for the partnership until the same were transferred to the parinership and registered in the names of the partners or were disposed of by the partnership in the course of its bus- iness. The capital account of Jensen in the books of the partnership was to be credited with the sum of $115,000 which the partners agreed was the market value of the relevant shares at the commencement of the partnership. Jensen executed trans- fers of the shares to Jenspart on 27 June, 1975. On that day, Jenspart disposed of all the relevant shares, other than the small holding of shares in Beneficial Finance Corporation Limited, at a profit. One of the conditions of operation of s 3GA of the Act 1s that a change has occurred in the ownership of "property constituting the whole or part of the assets of a business and being trading stock ...". The question arises whether, at the time their ownership changed from Jensen to Jenspart, the relevant shares constituted "assets of a business ... being trading stock". The relevant time 1s immediately prior to that change 1n ownership At that time, the Shares were owned by Jensen. The condition of the operation of the section will have been satisfied if the shares either remained trading stock of Jensen's business as a share irader or had become trading stock of some new business carried on by Jensen. The learned Judge at first i1nstance referred to Jensen's activity of promoting partnerships, of which it was a member and to which it transferred shares as a "new business". He did not however, as I read his judgrent, mean, by the use of that phrase to andicate a view that this "new business" represented a complete break with or cessation of, Jensen's old business as a share trader. It may not, in one sense, be correct to refer to the conversion of single ownership into collective ownership which results from the transfer of shares to a partnership of which the transferor 1S a member as a disposal of the shares as dis-— tinct from a disposal of an interest in the shares (see Rose v. Federal Commissioner of Taxation (1951) 64 C.L.R 118). Such a narrow approach to the effect of a transfer of shares to a -5- partnership of which the transferor 18 a member accords 111, however, with accountancy practice or commercial reality in a case where the transfer is the result of arm's length business dealings and when it 1s proposed that the shares transferred will be sold by the partnership in the course of a business of share trading carried on by 1t. In the absence of agreement to the contrary, a member of a partnership has no definite or separate share or interest in any particular item of partnership property. He has an undivided beneficial interest in the totality of partnership assets and 1s entitled to insist that they be applied for legitimate purposes of the partnership (see, generally, Livingstone v. Commissioner of Stamp Duties (Qld) (1960} 107 C.L.R. 411 at p. 453 and Canny Gabriel Castle Jackson Advertisin; Pty. Limited v. Volume Sales (Finance) Pty Limited (1974) 131 C.L.R. 321 at pp. 327-328). The transfer of the relevant shares by Jensen to Jenspart was itself effective to extinguish any separate interest which Jensen had in them as distinct fron the undivided beneficial interest which 1t had in the totality of partnership assets The combined effect of the transfer of the relevant shares by Jensen to Jenspart and the subsequent sale of them by Jcnspart was that, on any approach, Jensen had disposed of al] interest in the shares. That disposition was plainly the result of a new course of business activity which involved the formation of five such partnerships with the consequent transfer of shares to them. That new business activity provided a more favourable environment for Jensen to dispose of the trading stock of its share trading business in that it involved the formation of partnerships wh3¢h would pay or credit the equivalent of market value for shares acquired and whose members other than Jensen would pay to Jensen an additional amount for the benefit of a s.36A election. The adoption of that new business activity did net however mean that Jensen's business as a share trader no longer existed. It continued while Jensen actively sought io dispose of the shares which it held as trading stock of that business. Nor does the fact that the new activiliy involved the seeking of advantages which were diiferent - and indeed additional to those which would ordinarily be enjoyed by a share trader produce the consequence that the shares which were io be dis- posed of by the share trader in the course of that new activity ceased, before the change 1n their ownership, to be trading stock of the share trading business (see, Investment & Merchant Pinanceo Corporation Limited v Federal Commissioner of Taxation, supra, at p. 270-271, Commissioner of Taxation v Patcorp Investments Limited, supra at pp. 44-45, and p. 53). The learned Judge at farst instance found that, at the time the change in ownership of the relevant shares occurred, they constituted trading stock of Jensen's share trading business. I can see no warrant for unterfering with his finding in that regard. On the contrary, I agree with 1t. In the result, I am of the view that the sophisticated tax avoidance procedures which were adopted by the taxpayer have been successful in converting what was, by ordinary commer- cial standards, a profit for the tax year of more than $238,000 unto a loss, for income tax purposes, of $3,593. That result may seem both contrary to the general policy of the Act (1f 1t be possible to discern any general polacy other than that people pay income tax) and unfair to the ordinary taxpayer who willingly or reluetantly contribntes, without resort to tax avoidance, the share of his net income which tne Pariiament has determined 1S required by the nation for the common good. 1f there be, in truth, such contraricty or unfairness, the faull lies with the form of the legislation at the relevant timc and not with the courts whose duty it is to apply the words which the Parllament has enacced. For a court to arregate to itsclf, without legisletive warrant, the function of overriding the plain words of the Act 1n any case where it considers thxt over- all considerations of fairness or some gencral policy of the Act would be best served by a decision against the taxpayer would be to substitute arbitrary taxation for taxation under the rule of law and, indeed, to subvert the rule of law itself (sce Ransom v. Higgs [1974] 1 W.L.R. 1594 at p. 1617; I.R.C. v. Duke of Westminster [1936] A.C. 1 at p. 19). The appeal should be dismissed with costs. wrens 6 re eects wee "5% IN THE TEDERAL COURT OF AUSTRALIA) ) NEW SOUTH WALES DISTRICT REGISTRY) No. G92 of 1977 ) GENERAi. DIVISION ) ON APPEAL From the Supreme Court of New South Wales adranisvcrative La Division IN TFS MATTOR of the Incore Tax Assessrent Act 1936 BETWEEN: THE COMMISSIONER OF TAXATION OF THE CCNMONWEALTH OF AUSTR#E: TA Appellant AND: WESTRADERS PUL. LIMITID ORDER JUDGES MAKING ORDER: Brennan, Deane and Toohey JJ. DATE OF ORDER: 23 March 1979. WHERE MADE: Sydney. THE COURT ORDERS THAT: 1. The appeal be dismissed. 2. The appellant pay the costs of the respondent to be taxed. IN THE FEDERAL COURT OF AUSTRALIA ) ) NLW SOUTH WALES DISTRICT REGISTRY } No. ) GENCPAL DIVISION ON APPEAL FROM 1) SUPRE 2 SOUTH WALLS ADMILJOrRATIVE of 1977, COURT OT NEW 24W DIVISLON IN THE MATTER of the Imcon- Tax Assessment Act 1930 ~~ BETWEEN THE COM 'ISSIC OF TAXATION OF TI Ss - 77TH OF AUSTRAL Az yellant AND WESTRADES Pls. TMITED Respondent CORAM : BRENSAN, DUANE & TOCibY Jd, 231d day of March, 1979 REASONS FOR JUDOMENT BRENNAN J: This 1s an appeal from a 'udgment <5 the Supreme Court of New South Wales. Rath J., sitting 1" Law Division of that Court, allceed the appeal against its assessment te tax for 30 June 1975, The appellant he: $248,844 claimed by the respones iz as Trading Partnership Jenspart Trictang Co,' the Jenspart Trading Co.("Jenspirti") wes partnership, the membership of +n2ch cor-> cisaile-s 2 anistrative yu taxpayer's .-r ended -fcaction of in Share As Las Honour fcund, ' mn nar: trading ,e respondent, cen ee en ee ala a0 'a Jensen Mining and l:i.estucnuts Ltd. ("Jensen") and othe: persons, so™> corporate and some natural, 'The respondent had a 3.22% interest an the partnership. The partnership Wes "ormed in May 1975. The mann:: and circumstances of Jenspart's formation owe much 72% the provisions of ss.36 and 36A of the Income Tax .~-essvent Act 1936, and to che perception of their wperation which the chairnan of Jensen, Mr. P.R. Fos, then entertained, Jensen was. at the material time, .. public listed company. It had Leen a share trader, It iad bought shares in companies which had then been proc.-cd to distribute lerge dividends, leaving the shares serth much less than theca: cost. As these shares were 2. © stock of Jenscn's trade, 1t had the option, for th »urposes of the Income Tay Assessment Act 1936, to bring "hen to account at the end of its tax year at market val-. or at cost (s.31(1)). In early Hay 1975 (at a time whi.h was not long besSore the formation of the Jenspart per-nership) Mr. Fox conceived the notion of forming partners:!ips to which Jensen might transfer the shares it had co. hand and, by attracting the operation of ss.31(1), 36 an. 561, confer upon the partnerships the ability to obtain tne beiefit of tax losses on resale of the shares, Jenspastt wes one of the partnerships so formed, and some o= ."ensen's shares were transferred to Jenspart in circwisi.nces presently to be mentioned, 2/3 - ren re ere erm es oe Sm ere rare ee ee ee (para (b)), the transferred shares becauw2 an asset in Jenspart's business of share trading (para (a)) and a notice signed by Jensen and the members of the Jencspart partnership was given to the Comnissiuner notifying hin that they had agreed that s.36A(2) should apply to the transferred shares (para (c)). Jensen so exercised its s.31(%) option that 1f s.36A(2) were applied, the value to be attributed to the transferred shares for the purposcs of s.36 would be the cost of those shares to Jensen, not the market value of those sharcs nor the actual amount which Jenspart paid for them. lt was then thought, and the respondent now submits, that the transfcr of the shares from Jensen to Jenspart fell within s.36A(1), that the application of s.36 was thus attracted, and that Jenspart is to be deemed to have purchased the shares ai a price equal to their cost to Jensen. If that submission be right the subsequent sale cf the shares (or most of them) by Jenspert for their market value - an amount much less than their cost to Jensen - was expected to give fFise to a tax loss in the partnership. That tax loss was expectcd to benefit the partners by diminishing their respective assessable incomes. By contract with those who entered into partnership with Jensen, Jensen obtained fees and commissions in consideration of its signing the elections required for the purposes of s.36A(2). {ts .-./4 ent1rilcment to retazn those fees and commissicas was not to be affected Ly the success or failure of the scheme in conferring the intended tux benefits upon the partic:pants. The Supreme Court upheld the respondent's claim to be allowed a deduction being its proportionete share of the clazmed "Tax loss in Share Trading Partnership", fanding the scheme to be effective to confer a tax benefit upon the Jenspart partners. The appellant, though challenging that conclusion, does not seek to upset it by challenging the learned trial judge's findings of facts, and a brief reference to the relevant facis 1s required, Jenspart acquired the relevant shares from Jensen when the partnership commenced, pursuant to cl.4 of the Partnership Deed, which provided: "4, CAPITAL The anit1ral capital of the partnership shall consist of:- (1) The shares specified in the Second Sclcdule herete which 1mmediately prior to the commencement of this partnership were beneficiaJly owned by Jensen, Jensen wiil from the commencement of this partnership hold the said shares upon trust for the partnership until such time as the same are transferred to and registered in the names of the Partners, or are disposed of by the partnership 1n the course of its business. Jensen warrants that at the commencement of this partnership the said shares are unencumbered and that it 1s subject to the trust hereby constituted the beneficial owner of each of them. The capital account of Jenren im the books of the partnersiip sh. li be eredited with the sum of One hundred and fifteen thousand dollars ($115,000.10) which the Partners agree to te the market value of the said parcel of shares at the commencencnt of this Partnership. (2) The sum of Three hundred and forty-five thousand dollars ($345,000.00) an cash which shall be contributed by the Partners other than Jenscn in the amounts sct out in the Third Schedule hereto. " The partners contributed capital in accordance with this clause and Jensen exccutcd transfers to Jenspurt of the shares specified in the second schedule on 27 June 1975, Jenspart sold the majority of those shares on the sane day, Shares which the partuership had acquired for $111,284.20 were sold for $125,199.60. Jenspart's share trading and profit and loss account for the period ending on 30 June 1975 showed purchases $152,547, sales $138,590 and closing stock $27,072. Jenspart's tax return for the year ended 30 June 1975 revealed a "book profit" of $9,072, an amount which was the difference between the sum of the proceeds of sale of shares and the value of shares on hand at 30 June 1975, and the amounts actually outiaid in purchasing those shares and paying audit fees. The respondent's share of the book profit was $349, Although Jenspart's trading activities resulted in a book profit, those activities were said to result in a "partnership loss" within the meaning of that term in s.9G of the Income Tax Assessment Act 1936 in the .+./6 amount of $6,463,484. Accordingly the respondens cleimed a dedvction of $245,844 representing its undividual inteccst in thet loss (s.92f1)). Jenspart arrived at the paruncrship loss of $6,463,484 by treating the shares acquired from Jensen (which his Honour found to be pari of the ay treding stocl of the parinership}) as heaving been ce] acquired at a "deemed cost in accordance with s.36A(2) election" of $6,584,513. This was the cost of the shares then Jensen purchased thea. The question in 1ssue is whether the "deemed cost" of $6,584,515 1s an allowable deduction, for it 1s only if an affirmative answer be given that the partnership loss could be said to arise (s.90)). The deduction claimed is not, of course, a claim in respect of expenditure actually incurred, The incurred cost of trading stock 1s deductible under s.51(1) but thet provision standing alone does not create an allowable deduction of a cost which has not in fact been incurred, However, that provision may confer deductibility upon a cost which s.36(1) deems to be the purchase price of property where that property 1s trading stock, The terms of s.51(2) make it clear that s.51(1) may so apply, Section 51(2) applies both to cxpendiature actually uncurred and to expenditure deemed to have been incurred in the purchuse of the taxpayer's trading stock: »./7 " "(2) Eypencgiture ancurred o1 dev aod to have heen ancurred 1n the purchesc of stock us-d bo the taxpaver as treding stock shall l« deemed nct to be au outgoings of capital or of a capita! nature, " Section 51(2) qualifies the exclusion from deduct1btlicy expressed in the latter pert of svb-s.(1) of s.51 (per Dixon C.J. in John Fairfax § Sons Pty.Lid, v. Federet Commissioner of Tuxation (1959) 102 C.L.R.30 at p. 35), and that qualification 1s required in respect of expenditure deemed to have been ancurred as wol] as in respect of expenditure actually incurred, The provision which deoms expenditure to have been ancurized un the purchase of an assct 18 $.5@f1), the concluding words of which require an amount to be deencd to be the purchase price of an asset whether or not the asset 1n question is purchased and whether or not thie deemed amount 15 the same as the consideration (if any) which passes from the disponee to the disponor on the disposition of the asset to which s.36(1) relates. Section 36(1) reads: "30, (1) Subject to this section, where - (a) a taxpayer disposes by sale, giit, or otherwise of property being trading stock, standing or growing crops, crop-stools, or trecs which have been planted and tended for the purpose of sale; (b) that property constitutes or constituted the whole or part of the assets of a business which 1s or was carried on by the taxpayer; and (c) the disposal was not in the ordinary course of carrying on that business, ../f8 ue - ee ee ee me coer} the vatue of thar property shall be included in the asscssable income of the taxpa,.v, and the person acquiring that property shall he deewed to have purchesed 1t at a vrice equci to that valuc, " Tho value which s,36(1) takes as th. doened purchase price of the relevant property is its market veluc (s.36(8)), but the amount ef the deemed purchase price in cases falling unde: s,.36A(2) 1s the value which would have -cen taken anto account at the end of the year of income if no disposal had teken place and if the year of income had ended ou tne date when the change 1a tle ownership of or interests in the property occurred, The value which could thus be deemed to be the purchese price of the shares transferred by Jensen to Jenspart was the cost of the pronerty to Jenseu. But berore a outgoing deemed to have been ancuried in the purchase of trading stock can he deducted, the statutory conditions for deeming Jenspart to have paid more than it actually outi«id must be fulfilled. As s.35A(1) operates by crplying s.36 1n a modifiec manner, 1t 1s convenient first to consider the operation or s.36, The the propert) of whic ~ 'a taxpayer dispeses", The .+/9 n subject ratrer of the disposition is net the s. crel and severable pvroprietsry zirhts of the dispontr in the articles of his tiading steck, but the articies themselves, The complex of provisions relating te trading stock of which s.56(1) forms a purc are concerned with "articles" of trading stock (Farnsworth v. Federal Commissioner of Taxation (1919) 738 C.L.R.504 at p.513), which may properly be described as being "on hand" at relevant dates (Modern Permanent Building awd Investment Society (In Liquidation) v. Federal Comissione: of Taxatson (1858) 98 C.L.R.187 at p.190; Investment and Merchant Finance Corporation Ltd. v. Federei Coumissioner of Taxation (1971) 125 C.L.R.249 at p.270). Section 36(3) rejJates to the disposition of the ownership of the articles of trading stock, not to the disposition of fractional interests in those articles, as the judgment of the High Court in Rose v. Federal Commissioner of Taxation (1951) 84 €C,L.R.118 explained. In their joint judgment, Dixon, Fullagar and Kitto JJ said (at pp.125, 124): "Section 36 18 concerned with the disposal of the whole or part of the assets of a business when truding stock is included in the disposition, Now 1t seems quite clear that, unless the partnership can for the purposes of s.36 be consideied as a distinct entity to which the assets were transferred, the disposition by the taxpayer consisted in tmparting to his two sons equal undivided shares in the assets .../10 as co-ovrners with himseif, Further, the admission of the sons tnto partnershtyp with ham may be regarded as an entire transaction of which the aticratson to each of them of an equal uns.vided third share in the assets of tno busincss was only a legal consequence or ancident When s.30 spesls of disposing of the assets oc a business it 18 Speuking of a transfcr of the preprictor's ownership of the assets, including the immediate right to their possession, subject of course to any encumbrance, whethor existing or newly created, But it 1s not speeking of the transfer of an undivided fiacticnal unterest in the assets. It as not speaking of the vesting in another or others of an undivided share or shares in che business auncluding the asseis. Plainly it 15 directed at the disposal of the onttrety cof ownership in the assets and not the conversion of single ownershi, into collective ownersh:p, " It follows that s.35641) does not appiy to the acquisition of shares by Jenspart from Jensen, for clause 4 of the partnership deed did not work a disposal of the cntircty of Jensen's ownership in the shares, Re From the commencement of the partnersh:p Jensen hel uw a par an interest an the shares as 4 co-owner with the other partners. Section 36 does not apply te the change which the partnership deed effected in the oxnership of the shares, and it does not, 1n combination with s.51, create an entitlement to an allowable deducticn of the kind claimed by Jenspart. oei/ll seemingly conse, 11, Section 36A, enacted subseaucnt to and 2sont upon the judsreat ain Rose's case (Supra) gives an cxtenidcd application to 5.36, Section 36A(1) provides: The of, the are the ' 36A. (1) Where, for any reason, ancluding - (a) the formation or dissoluiion of a partnership; or (b) a variation in the constitution of a partnership, cr in the interests of the partners, a change has occurred in the ownership of, or in the interests of persons in, proper:y constituting the whole cr parr of the assets of a business and beinz trading stock, standing or groving crops, crop- stouls, or trees which have been planted and tended for the purpose of saie, and the person, or one or more ox the persons, who owned the property before the change has or have an interest 1n tne property after the change, section 36 applics as if the person or persons rho owned the property before the change had, on the day on whicn the change occurred, disposed of the shole of the property to the person, or all the persons, by whom the property is owned after the change. " partnership deed effected a change in the ownership or in the interests of Jensen in, the shares, and if other conditions of operation expressed in s.3o0A(1) satisfied, s.36 would apply as uf Jensen had, at commencement of the partnership, disposed of the whole of the sharcs to Jenspart. Section 36A(1) applies s.36 1an a fictional way: "as if"! there had been a disposition of the entirety of the ownership of the relevant assets by the person or persons who held the 2/12 Me 12, entj)e interest to the Perlon of perso > no ars to hold « like interest. Lt 1s impliert se 7.56407) thet the nolional dzsponer and dispourc +2 the relievanr property should be resarded for the purpescs of s.36(1) as including no common entity who retuine a contunring interest in thst property, Sectren WACT) would tlhore fore regard Jensen, for s.36(1) purposes. as the "tarypayor" and Jenspart as "the person acquitirg" the relevant property. The appellant submitted thet s.36A(1) applied paras (a) (b) and (c) of s.36(1) te a notucna dispos.tion created hy s.36A(1), 2nd that the notaorw disposition of shares by Jeoneen te Ieaspart did not satisfy the condition exvressed in $.36(1)(c) which requires that "the dasposal fis] net in the ordinary covrse of carrying on that business", If this constiuction of the two provasteas . ore adopted, s.3¢(1) would not produce anv effect with tespect to a notional disposition created by s.55A(1) umicss each cf the aa? conditions expressec in and (c) of s.36(1} are satisfied. In my viow that .~ "et a true construci:on of ss.56(1) and Z6AC1). The similarity but lach Of .¢ontity between paras (a) and (b) of s.oo.l o > terms of s.36A(1) make it unlikely thet taese previs ots i™pose separate cumulative sets of condicions; . < t.. cendition expressed 2/13 In pata (c) i. not susceptible of appl eut.on to the fictional d:sposition created by s,56...1). One can at predicate of a disposition of propert: that line not occurred c1ither that it was, or that it was not, in the ordinary course of Cariyin, on tie business of the owner of the property, Sectiton $64 1s concerned with crses where the trading stock of a business - the articles on hand - are not disposed o:, but are retained in the pariial ownership of the former propri>tor of thet stock. Section 35A(1) wor\s a nution:. disposition of the tradins stock so thet = purch x va Q C1 Pa a price may be decmed to have occurred sersusnt to s,3eti), and that operation is not dependent mon satis ling a set of conditions additional to these contain:¢ in s.36A(1). It is not, therefore, re er.ant to eng. re for the purposes of para (c) of s.io{i) whetnrs: Jensen's disposition of fractions. interests .- the shares to the members of the partrerslip was not in the ordinery course of 1is business, icr the dispcs tion of a oO fractional interest fails Zrr ronsidz:-.1on only vide: s.36A, The operation of s.,izA on a ct uge in propiietary interests may not be diss:inilar fron 7:2 operation of s.56(1) on a disposition of tre..72 stock, frr ut is difficult to envisage a caseé where ¢.. on clinary coc.ise of carrying on a business of trading in st7:.. vould etccece a change in the propractary interests 17 tit stech. 14, The property to which $,304 relatcs is descr:vod un terms sumilar to but not identical wath the teris used in s.36, Tach section relates to property descriue 2 as an assct of a hustness and (rolevantly For picsent purposcs) as trading stoch. Befvore an asset can be described as treding stock, the asset must be founl iv have that quaJity wn a particular business. In Feder. 1 Commissioner of Taxation v. St. Hubert's Tslind Pty. Limited 78 ATC 4,104, Jacobs J. at p.4116 notes, in reference to the land which was the assct there uncer "4 consideration, that he did "not find 1¢ yossibie to ansve1 the question vwhether the land as trading stock except through an examination of the nature of the business of which the land may be the trading stock. " Later in his judgment, his Honour said (at pp.4116-4117): "For instance, a nan may be a shop \eceper and out of the accumulated prot:ts retained in the business he may purchase an areca of land with the purpose of selling ic at a profit at some time in the future, In one sense the land is an asset of the business, but not, I think, in the sense of sec. 356(1), There must be a relationship betreen the property and the business hereby Ji can be said that the property bears the description of one or another of the kinds enumerated, not in a general sense, but in specific relation to the business which was or 1s carried on. Thus property, being trading stock, must he an asset of a business of trading in that stock. " 2/15 Although both ss.35(1}) und S6A(1) relate to trading stock answeriny the deseription of an asset of a business of treding in that stack, there js a differcnce between the provisions which distanguashes the timcs when the tradine stock must be To.nd to ansver that description. Sectizn 2641(i) relates to property ""constitutiig the whole or part cf the assoty, of a business and being truding stocit'. The relevent quelities must be founc to exist at the tine when th & change 1n preprietary iuntcrest occurs, The property must be trading stock of a business at the tance when $.56A cperates. In this respect, the terms of s.56A(1) are materially different fron s.35(1) which relates to the disposition of property vhich "censtitutes or constituted the whole or part of the assets uf a business". The daficrence in terms 18 accounted for by the difference between the subjcct mattcr of the respective provasions. When an asset 15 acquired as trading stock in a taxpayer's business, and its cost becomes an e2lla.able deduction, provision 15 necessaialy made for Lringing to account the proceeds of its disposition cven if the business is discontinued, and there 1s nothing to coufer upon the asset a continuing character as trading stock, And so $.36(1) looks backward to the character whic! the asset has borne et any time in the taxpayer's hands, » 2/16 16. But 5.35A 18 concerned tin Chunges in pruprictary interests in assets which ere, et the tum: of disposition, assets in a business of treding 1n those assets. Jet is the concenporancous chaoracier of the assets which pives point to s.36A(7i} and attracts 1ts eperation, An asset May acquire the character of trading stock at the morint of its acquisition (s.6(1), and see per Jacobs J. in tho St. Hubert's Island case, supra,at p.4110), but 11 15 not an assct of a business of trading in thcl stock after the relevant business 1s d:iscontinuec To determine whether the shercs wore assets in Jensen's business of share trading at the tame when it entered into the partnership aeel, 1t 18 necessary to ascertain the nature of Jensen's activitues at that tine. The fandings cf the learnec trial judge, hose careful analysis of the evidence was not challenged, furnish the facts upon which this enquiry procceds. Reth J, found that Jensen carried on the bus3ness of share trading in the years ended 30 June 1971 to 39 June 1975 anclusive, He found that als the shares transferred to Jenspart were acquired as assets in Jensen's business of share trading. ga His Honour made further findings with respect to Jensen's part in the formation of partnerships of which 1t should be a member and to which 1t should transfer shares which had been the trading stock in its business as a share trader, Jenspari was one of those partnerships 2ee/1? ~- 17, There were Cour others. Wis Mouour Found: " Jenson was instrumental in formins four other paitnersh ps, shortl; after the formation of Jenspa:., li aopears that (nese Other partuerships had shere: transferred to them by Jensen, and that these shares were wlso sold 1. the yeer ended Scch June, 1975 with similer tax deduction advertages for the partuers, 1} Mention this in this context because these other partnerships, as wel] as Jenspart, participeted in the financi. transactions co.nected with the purchese of the shares transferred by Jenscn to Jenspart." The beau. fit to Jensen an the formation of the partnerships and the sale to then of chures which Jenser i a4s holicsny was the payment of a fee or commission to Jensen in consiugeration of its signing an election under s.36A with a view to conferring a tax benefit upun 1ts respective co-pariners, His Honour found: Jensen was paid a fee or comission by euch of 1ts co-partners in Jensen ( sic } mn consideration of its stgning this s.36A 'clection', The amount of the fee was between 15 and 20 per cent of the tax deduction required: the larger the deduction requried, the lower the rate. The fee vas non-refundable in the serse that, 1f 1t proved the decu_tion was not an fact allowed in lew, the fce could not be recovered, Similar feces o1 CoOmisssione were paid to Jensen by its co-partners other four partnerships formed by 1t an the same 4uncowe tax year foi the same tax deduction purpose, In all it collected in such fees 'well over' one million dullars. " (2) 18. IIus Horour ferther fevnd: " Tarly an May, 1975 Jensen made plans for another business activity, nanelv tac prometjon of partnerships, This new Lusjuess was ratenced to take advantege of the deemnedc plice provisions of seclious 36 and 36A, In order that tire desired result might be achicved, 1t was necossery for Jensen to be a moarber of the parincrshizp, and to bring into the parinership shares which by vome precess had suffered a considerable diminuticsn in value since the1rr ucquiszt.ion by Jensen, These sharcs hac to be trading stocx in a business carricd on by Jensen. The shares transfeired to Jenspart arsyvered this description, having Leen acquired for the purpose cf sate in Jensen's business as a share trader. " These findings, construod as findings of fact, were neither challenged nor reascnably open to challenge, But the finding by hzs Nonour that the promotion of partneiships was "another busiress activity" raises the question whethei the share tracing business of Jensen was discontinued, or more relevancly, whether the shures which had "been acquired for the purpose of sate in Jensen's business as a share trader" remained assets un a business of trad.ng in those shares 1ummediately to prior to Jensen's entering into che deed of paitnershis. The conmercial activity of Jensen ar the time of its cntry into the partnership deed no longer involved the sale of shares. The busaness of trading in those shares, a business which involves the selling no less than the buying of shares, had ceased. Cnce Jensen resolved to engage jn the promotion of the partnership to take advantage of the conccived tax advantages, 1t would .../19 ba sXe] be unaccyrute to describe its business as share t1. c1iug, To sell the shares at thet tame would have becn ipcolpatrbie rath the prowotion of the partserstiayps Fron whick Junce. antenced to dcrive some profic. The business of Jenscn which hac becn found to be, und vo be accuva.ely described as, "che business of sh-re tracing" could not endure past the point where Jon.en resolved not to sell the shares which hitherte were its stock in trade. From that point onwards the only relevant cenmrerciai actirity in which Jensen engaged was an activity ian which the fractional interests in the shares, not the shares themselves, were to be disposed of to Jenspert or to the other partnerships which 1t was instruee.tal an forming. When the shcie trading business ceased, the character of the shares as assets yn a business of share trading fell awey, His Honour's Finding that the relevant shares were trading stcck in Jensen's business of share trading does not conclude the question of the character of the shares inmcediatcly prior to the change 1n proprictary inteiests to which s.350:(1) relates. The transfer of the shares to the members of Jenspart 18 not properly to be seen as a transfer on sale of the tr. ling stock of Jensen's share trading business, It was of the essence of the scheme, and it was che fact, that the shares were not sold to the cther »../20 20, newoers of the partnership, The sheres ver. breught sn as Jensen's contribution co the cepttel of the periner bry and the consequent chaips ar propriccirs rig'a3 4s referable not to a bustness of share tradieg buy to the new ccmrerczal actuvity, to whach his Honcsur re terres The shares were withdrawn from sale sn tie share tradira business, in order that Jensen's proprictasy 1uf¢rest in then could be devoted to the new cormsercicl ectivity. The change in ownership of the srares cffzcied by clause 4 of the partuerslip decd d.d not uttract ile opeiaticn of s.362, for the shares were not assets in a U a a business of trading in those shares at that tine. The provisions of s,36(1) which may create en allo.able deduction for a dcemed purchase price vere thu- net nude to apply to the acquisition of the shares by Jenspart, Jenspait 1s not to be deemed to have incurred en: cost different from the cost 1t incurred in fact in purchasing the shares. I would allow the appeal with costs, set aside the judgment of the Supreme Court, and order that the respondent's appeal to that Court be dismissed with costs, TN THE Pepee ar, Coun OF AL RASTA MALES DIGiQLUY RUG IETS GENERAL YIVISTUN Rem we hy c a ed t > IMO ADL LAL LPC LE, SULr ie, an SObiul WAL AMMANTSLASTI& . LA IN ThE M- TPR oF the Ine Act 143u BTU RL : a COMTLL STON OF TAKA AND: WPOTRADERS PTY, TPITT Db CORK AY : BREKAAN, DOANE & 23 arch 1979. TOCHEY J. In its income tax return fur the year 30 June 1975 the respondent taxpayer claimed a deduction of $248,844, described as 'vax Loss in Sharc Partnership Jenspart Tradi.3 Co." That deduct disallowed by the Conmissicaer but wus Later Rath J. It is against his Honour's decisicu appeal is brought. "PL + LON one Tap C10 OF iu Appellant respondent Peony IJ. ended Trading -26N Vas upheld by Chel this Ce tasel for the Commiss toner formated os the basic que tiens anvelved ti the apeeat lehether «4.06 and 3vA, or either of then arty, anc af so vde bor bnes govt oan the mourn that rs er tereed foo uy tne respondent". Thos. seelions of the Ince wiley Asocue ee Te arise for cemoiecraliow an this wey. dhe ports. anus Jenspart Tratsng Co. (emse vl") was fesved an die $075 and during the remuineter of that Fipancieb wear Ll oetigait and sold many shares. In its farsl veer of onersieuus, tbs year under consideration, deusparl claimed va tax des of oD $6,403,454 of whacn 3.457%, $245,944, vac Che tepals propection, 'Tnat Toss urasc from the Lrealacu. tyr Jere poet and in turn by the taxpayer of a large vurber of share bought by the pertnersnip at what wae called "ucema cost in accordence wilh s.dt..€2) election". In osscesin Lhe taxpaycr the Conwissitiner disallowed tls share of loss; this had the effeel ef converting whet heel been retorned as an overall ivss of 93,993 Inte a tasabie incoue of $234,965. The precise mechanics exple cu by the ComuissLoner Lo arrt.c at tals Sire were eaplained by counsel. Jet is wniceessary to detail] Lhe, except to note that an amount of $349, berm, the taxpayer's share of Jenspart's book profil for the your, Was NOL, Ot adjuctuene, brews as pale aecounl by lhe Coctutsstoner, he teason Tor this secs bo have loer thet the Goumok: sioner treaher the pertias thar Gear iets genecaling Jousprrtts claimod boss oF G24 564 wate ue fer the puryperes of the Act, Chat Le us pvr rice neither to asscserble inesue nor allovebic ecduction. Cn go tay (375 the taspeyer cubercd tute partnevshin with Jenser Minti and gore. uments Peet (VJenseu") end 1/7 ulflers, som undayad aly aud cite ve companies. 'he partnership business .,oo lescra bed as that of "traders ard dealere bie shares, share ope one, stocks aud olher securities including the purchase and 7 u an ViG pelts eee hye sale of Lhe sate ual wuborest<« tn initial capital of the parlhesconip consisted of sla cue beneficially owned by) Jensen ai a Miho of Comper ber whith, from th held upon trust for the parencers, and the sur of $345,000 in cash coitrrbated by the varlinwrs othe than Jensen, On 27 June 1975 Jensen excevled Lremptecte te Jenspurt of the shares lrsced in tue pectles eshay agreement and which were he ld in 19 cermpuntes. 'Ie day Jenspart transferied Che.e shares, olher then iets © coleenceument of the purtuerspay, st van wn beucticaal Far ow Cc ?° a _ ' . o ' sceparete pervtels, cau te cock of tbe follors po - att Secu ates Pey. Linitcd, S.f.1 0 ce Tamyrpecc hy. Laraiecdl, Poors Mw. Tarcted wad Poon Pousti ors. Peay. Cima tou Ihe sale pelee of tue chires Seon Toran bo Jey wrk vars SLA, 224.20 apd from Jeuspeorn be iho Pou cums fbe.,!? What was a icsultant profit te jJeas cat of SP2.499.40 Lee a substontial Lan Joss by Lorsen of an clection fe le dist Alek. s.36A(2) of the Act by Jensen ana Lho otbor perlinr: The effect of that eleclion wos tu etlri bite Lo tn: mares "che value ... that wer ta pee been toler < an eT PTL welt at che ond of the year of ipeco o if no ditpasad Yad tone. place and the year of ancome Pet or led on the date oo th chance". This wes oboe "deemes coet™ of Sb, 4,505 creas , Lhe ordiyireal cost to gerele . Vher tenes tier Jls shares Lo Jenspart wost os. toc cle Leen tia fs oa" a dividcudc strippia, operatier, var Jersen's incet tive to join ir tie ¢ sle by its co-parlucie eu ce the deduction required by cont rhe netice of appeal cone' ane Gumbo of pros ta. Onc, seclins to invoke s.2o0 FU. fet, an argument ve lock by Rath J., was Cormally aba. - co coelag the hoarsn.. ue cenaiving, grounds muy be sums 2. U7 Cis Vey 1, Sd ooo rn bern oF weet) tb re ves a Gea IN Lhe oymershrp of © re Lhe rahe mw ot. OP persons lh pra chy. bith property, a hon eaisvea Lhe seoestplian au foe 6 tbeseekse ot "the volo cr part of the gesels or tle besboss and beau bretiag stark. 2 ube shaies trapeterre oe Prom Tonmeen be J reat dra pol become "an as cf ot a busiest! Gorse ou by Tengpark, hee peau Gay Of genes Cop 07 Sot A Wade NO complied tals ane no elo wtion cedlda o.oo made pire. al bo bel sth chair a. 3. Suction Bua Gees net ostond on ats oon. fh 8 tlie. Loo dove comhcobled ty. atl} of were. 2 7 ad owbons2en. dio branster or lie here ys f. hoe Lo Jub pari Vele im the ol iru course ol 2 ns on dunsen's Listiess. Meo bbe reat ced _s .' Lin petra (eo) Of oe abQhy thae "Lbe disp set . Che ofdamary cenutse of cCaliyaay, Ou that b> a nok wet and s.Jort could bave no applied: Phe juddsjteetl ood nat Por. Shey OME Gos Lasbe.y @f Lars wablor apd toe feet wpa sd epplication of $6. 5G ara Sed do opera, np t pes tafvers, described as "limabketael', Coe Cone . not challenge any of Lhe feeus fost tare do th Udi what were sald to Le rurereices ober. In comrectotn with sach vital poenbess a& Shoe or tt shares treading ebook of dean ny awd Che tole re of tle care' d ot vy Jeuspark, Toca a the ¢prnted loath aata gd. wes for the most past vakung Landings oF Poou aud rol drawing inlerences In breed Leting hes Boats s recs remoin uoenutlenged cacent ats Lo Lhe ster rprckausen untiecessary to set out vn dott) all tre sen ovat complicated fuets of this case. Lo varhd v2 cumtere N procved .zror, his Honmeusts Piusic gy bo tes der lp operation of 65.36 an! 364 evecpt chit some relescrce wus', I thins, be made co Lh. reason, ano eranr Lo pale clear whal ere G c tu Lp =~ -z. et _ fae a ral ana what, 1f any, are inferences. Jensen began in 199% as @ iInewe wil barker bel in 1871 chengel Ls course Lo Usat of a whiny cud was tre company. The managing divcetor, Br. PY. ron, stent Honour called "a truthful end accurate witness", described Lhe cormany's operations berseen September 1070 and 30 June 1975. They shoved o significant aclivity dn 1. pairchege ae Sule OF thiatee ord PR dF lel Congeaat a. ag, O%ealiteed fab vider ce, Batt F. coneluce di "Th Tovany aber rr et of Feb are thoy vow prope os be drew or thas ola ce.' at shamdary Lhey es Tis activity could faurrly be classified ac a& Lysinubs ef shave Leadin,,. Paring the Ferarral year cuded oO June 175 ut Shure trad oa, in lealed sbares tas etal! g.onlflce snare Cealens. the first, vbich related te bu cumporres C.oumir fiasestiupts Ply. Lavaited) an ie7, end Renita: Diy. Lintied on T9274), vas Ccstemed by acquire the reel estate helutugs of those eu pees althou the sherls vere Peter trans fe raua to Jenspart and then cold Ue Jonspave, al Cech muss Yor @& weminal stu pte Geore tas bo pel obedp be 1 1 di Divisston 7 sehen... dnese schemes we re entered into with the objeek of malar, a profil frase d oa lends on aod from (lio sale ef tie slates. dealiugs were beld by his Ueuen of Lhe shure ttadin, a Livetier oa! 4. dn 1974 cher. wae wo Alfie's on by Jengser Pel rh ose bene ago als Divisecas ¢ Wheoch atoumi)ed to cate tus on a bustiess of gh Lradi ng. ali t ose tg Le "por ee WME tlla oe 5. In the year emt doo Jue 19750 Tousen arte ed uple a number of diveres slace Lrevaucl teas, of wiich related Lo Divisior 7 sulowes aud ate olved dividend stripp reg aad cule. G. obixviy in Bay 2075 feuser cuibarted en auother activity, Lhe pinot ies of parten acvaubane of the provie.uns Of as Act. 7. ALL Che shetres Craneloiged by Jepsen other than those un Pb. oauer Hold and Endsler.h lnvestiments c "t . before the business 6f prvuwsling 6.30, povirershioe Was contemplated Ly Jen ven. Tinted, In wy view the conucleus1ons reache Lo way ' ne 1 a ror? rs tae Jensen's specific activities were truly linding. of fuct which were not challenged and in enulirely warranted by the eviderce. ony hs event Hone! Vor aay oats chars wa cr pete Ve pita bade ie) t 1+ descr. beam a7 Jenene asia eae Lado ane vs catecud i) wo ga bbe: Dosarctse of rate tradi may be cate ertced os , " fnferesce ban To thi moe acne dys deppeen t6 an Valultion, besed on Gitipeacicu mds or. of Tack come on, Lhe cere ta Gerda el one a myst owe tha ad roe: 1 J - . . are 3 eld Pen bi bev eae woth Chab uvaloabtur andes. cubborred Liab phot uw) Taoras \. C1879) 145 Cont. BOG ab pm. deft , my paet Poa. s bisracd thas ah was rught Jerein hed by gls aclavitaucs tea 39%], 1972 and 1! established atself el « share Licder o, We dsater ity o3 erthedox se ae OF those Ciptese lan Aoy st yiacbion bo buy shasca cur-aiv ide wt ocd to sell Chen exe daycare aboe rediced price was pel oa Qasaclrour of share toads 1s course of a bus.reses as a shore trader vas gejyectee in Tivestie ent aad Merchant banence Corperel icon Tha. we Pek Comnt s 8 ore © ot (247)) 145 CLL. 244, "oy. but auite clearly neither the alttegr vat - , : . of prvfit cor tbe expectation of 1) is essent-ol fer a partrediar cauercras Lrantachien £9 fori pact of tre burarcss of dealings, La the caoneodery -chased" Gsar 2c! GJ. at p.255). "She tatpavec Fought the sheses ditemdar, to take t ml co the divide: d are Lo sel) Gao sare 3 ab there, thes parkob prace. Tt vas carder tbed dy brace tuet the attrection of Lhe transact) on lay in the conc. rrou s of thiee features, namely, that the purchess price would be dade Liide from asestoneble dmecies thet the diviaend tu be recetved would bu rububelle aed that che sale of ine sheres vould resnib ania lose Veach could, 2b wis expected, vs deductible fier other ancome of Lhe vedn ui which Lhe Joss val fete. It seems to ne, however, Lab Lhaic Ureangsasllen bas aotemsaction of a@ teadiigy cheracter" AL p.ge?), CiuneLus J. won we come Tn eee Jensep'3 oative cs. a D2.0 tere ete etre Gs cull. frame undone and pace O.tt das Oiare de. tires pub Year Lhe ce pery Soe ht Gases Pene ceta m at COot OF SUP, LTS, 470 and Fd see coe a Lolal po. of Sa (sto. Jo Geserels ae. as ts Roa wr did, as share tiasver and 3 Chaage ale bate ou lla 6 Of sh cat tradane vate AOL Cily vurrdae -G Leb tes ah se) eval However tbat dovs vol dispul: of the Co mage ctu cs first greurd or » Ge argrves thatoewun sf Jeno eupagea Ln the Busiucse of stoke Lae iia, Ue sueee . trancferroa to Jousp. ve cere uot tryed os etochovdttar ua meaniey of thal Lem in 6. 07). Since Invests ib acd berchert Pimaner © ora. devbio thetosageer tay be tial grt oes shane lieder. ine CsFinibies a4 se otL of uu Ace that ovwedeg elect "rneh dey auyeha yc. mareflactered, ecqivced of paurthased for che puro. rn . ad - esc hawne roo welt mass agcadive, Shae GL each ... Operates cleuli ' upou the ordinary meetudug of tae berm. of Tanctlion ve St. Tiubert 7.0. 4,104, E5octronr 260A regarrss dhe' the pre, orb which the change eceurs corstatule "Lhe whole er par the assets of a business and boiny Lradiiy, stuck..." St. fubort sland Ply, Limited facubsy TJ. conmuneced Sete ee ~ + - lated - stom 7 "Jodo oe find ab ps Guest? ata 8 the ORMCEpPL Les ta ete, il. 1 . a DD Et dal tice thibisib. | OL Lee tsa sn ot vce Th tare tred rr ebLock, weed guaetbiaga etl ite of the Cou pels cn 1 waS lM cate Cool adit. boapes 27, ef Lo shail Tt a5 trae Loeb hres vowou aporoaou ro that the broad fd ayy, for purvoses cF sale vill unless, an tic words of Jecous St. Habre be Telaad Poy. mw cant at Levit yn Pp tte Satieoe © 4 a eee OT not core nd ee eee en ~ ee Coe & Lbew Youf tae U lar oy Hp » boule ws eller Wa «7eds fray wes Lb out see 5 bo es. sf An aca ory wo + " GL ts ar ia] . \ Cah owe bye Pdtaree Wa. nek beni coer' High Court whew reth J. aulsvered adopted much t's: gauu ua, proach v5 hese shares had vo bustvess currica oa be obra wy Die transferred to Jonsp.rt aiss duseriplicu, basin pucposs of sale in Seusen's share treder." lt woy vell Le, as the Gotu ooie , shares were acecired pris. rily backing and sere shares fur the ¢ stripping oid therr sale None: Lound Lhet share: * Jo that 'ere a0. Jobe wea elo tae Saath - et May shel MW acvalued phreu OL ry te Tory an te al y) widen Sale 453 Sey coh da be fobs 2b on mite or hot Cap sale etther wie, beer ind tue a Pab be. prc at Go tuY | Sat? Poel we op te tbat Te Jia, tl J such ase. In vethl dite etre at oss Three bo baie Gull or rn hide, ¢1 1 Woset rou Lid . coretdcutea teadiiy o wr even Pio ah eid ath, davider ] stiapo ing worn ibe. Voce Pwith a vores sson oe behet hor une Gut ihosbom 2 thel be thapes deo. pen ees ae dd fo peiprs. Of Teeson'c tucae se at pro bday, 6. tn, perbuesshigs, was home ate fied ea ahs Nall the snr Lramlfo waa te jen art (other chai those aa Pee. a. Ply. Jiwited aul ated. Vaya Tiwiteap vero ueanirad beteve of peorr boa. sedan nerhustonus os vot tt contermictlos, ee BY re a@egudted by Jeusea on £2 01 13 ths 7-75 foste the shoves tuo Ter. dauer Volar oo. uy. ~ a ote NEgol Leos GvEr Ferleurad PanVas. The. F ott Joousen acute red Lhose shere. fo. fyo roan - BOLE Waid A Cesk corel alent gether ct the purchase pric. oa Line ft corte 4 leet profit; if al cudd ae seld bo oe peat sh then that wes another tui 4 bul Chere were ob prospecbare Liose shares af tre tre." tho hora! pest chases & Ihe ? a ls ' € ' is ty Lave fo Luc Guests: "lo. vas gl ap your mere Ube ef the j. vo tvs of Lh ce i the treneli: bo ger oe pat bes shy comrsel" r r , Wty. " he ensvered: i Jensea eenrecred tu tate Pty. Lavated on P/ thay We? o. du Ur. beat vee ir, } to: fle a H 1 buccho see) an GL S notenih stage cb activitacs ... Yes - Lo sre ow thet ster We Laoeehh we tor id ty sell 1b to Jenspart, yes. cing of beth comoanses tos Yaneuy genes 2 the preaer es ledere eo booty uagettoas, oS } pase cada, chal Loser Wa tes else Verte Acgtibrest ap eh ete er den ar fs tT rare Leach Paclrer hie Mev deed desevabead Ube te youd - . it - for these thotes as La "Lhe aidan yf Gur ys oF lens acbivaty as a Jivideral gfianae. (the wh a pert rs boa x a t . . Nott Wits COMLE waded os &@ Titedy puvcie Se 3. The anfercice aravn ies Coms.chord wothook evideice. rurbleruere nested ou the gece af nor truly di argueerk cae thes, carl puvaled bo stee the shares ju Pel. Thteer Podciiaa. Ply. Liralbed ona Endsleigh Lavesenents Ply. Linrbea aifferentiy fees other sheer: > bre Forred by Jensen to enol, ted In saumaary thon, (he shares trenefecred to Jen pare vere part of Lhe tssetbs of the ber res oO trader crea ed aa by Sonsen apd vere trading os! ' Mey, ote S pov Ube ehey con vetated «stele GO baal coms la the oisine g of trevding da shoves. The securd KIO. rae ye Lk Tete bleak tli et, a Laduoderred a Foo s.t to Joa pee eb dae tet eh at the Caso plies oF en as. bef a bis cin su Gea cred a bs ue perbaovoba,, bean, "ene pers or pesse.s by ova boxe pro erly is oned ater Che chuwel™ (aedeaty mera ce), Tn Captervate wath bbe Gpety, vords ou! othe) Lote require: ont is Chat Lhe properties Lee ues au essee Gh w basimess carriud on wr & person er plrsouse byw ae ee properc as owed @eter Che cheipes the aedetie 2) cle cas olf bring traciagz tock Tees nol cxeal. 'luece as ulttie. |. the Llenguuge of the ectimr boat repos the promert to be received a3 srcding stock. Wael as vetcesary os th. LL boca mes Mmpss Che change ba coi rahap wr asec et oo basipess carzied on. nile s.sbAci) looks prataril ee a change thet has vecirred by season of the foun ery fa dissolulion of a partiership ol a Vardeiie au ite censtatulion, cha seetson read as a@ wbolo ures nob rec soe Lhab the busiress carved cable be chee uo bl ben buseress us Chal carried vo reluse. Coluisel fur tie taapayer conceded "Laat ow itel shu? for the jy uderere below ealectusely to be uple dd that the partresshan poe Lhe shares that wore auebares Liat: deasen Lo brad uta. | That comerssren may have beer warecessaraly wade 2 vod. ? exprercsly oporepard to s SOA but dd. che CM ba. tho oh port o ot Lhe wore specTal carcun (onees relations te the aces cat aud di were 1 those eveadiutes SUppos .round questicre of act emd ot law. Fo shore ibe tr L rae) at 'onthe in the share Lredsith buss. 25 of Fei cpnare. " be e c Coote GAL ge Dopatt vas uu bvesrese ay ¢ eden drop the aay afler .tbs rere ou. that veo bbet fois tosh deo deve not ge tube oa nbs shoge bea te, eobisabres onl were eH aatgek LSilhas CdS ley oSel of thous sha.es, Lhoee specrol techies eluvent to the question whether the share. vere Lisieus wore Pandas, of fact, gntbocutns Nor a Met. there wos appke axnicderee bs ' : avd Shed nethows ' iS or untleiferiev, wie. ther. am ooaten: zon of §.39 cud that bercre on, election way le mace under the foimer zl ous pecestor, that the rewiireserts of the latter beret. day. trend, 60 [he §.39(.) that "the disposal was .oto um th. ordinoc course s.36A Pal i] Tha reper ran, the regiirens ut sam yer. (ay of F cariyae, en that dustaecs py ceeerbial ta Y ¢Cpclate, lu. Sectaen Sust dy comberan fot taetse th bt ba vets Leovrhs perss. Oi) eed (i) of s. ugh' ber oovets hea vorda oop. Cod, af Lh Gai ctared reat hho Corse onde 25 Lueb @ Laemsestear webu, ohh the — . yay . bhoy 1 requileiente vt &.duafl) bat aa Loot Meee tra our sLou othe Orda tary tee to OF Oude dae ont G Lusaness camel svoud en electra ume g.00 C25 Secl on BOA was introduces by ateavkie nk No.tG oo. 7 3., ore Purpose of which wos to mec! the erbratoo ci leb i Gel. . 278. bot ducderea conf oe the one tb a 6 7 s.3f toon tramfor of bho peeprrctusts ero hee or asseis, exchliding aq teams Ter ef om udev cacti pen: ante.cslh am Lhe. te dombl ested wae debe ts, gt Lhe operelion of 3.36 watono dovbt al ued peach atleon AL the same tame 2! tatiredmeed vio cetuneer ber tae Geimissioner deserilcad os "an anetioratuuy poo.isae iy Wherety on volice dy tae rolrone! traps teres ana Liansferee Lhe ve lue of the proscety Fo. til perp ose $.36 will be - "the value (1f ayy} that vould hase been Lahen inle agveoume ath thes cad oi che weg of aneowe af no dis and the yoar er une date of Lhe change'. yosedl dhod Gale plac a dae ned ended an bbe C g. 0% Lor oa st vq ; Pay og ta mayor ot dy OQ. lf Lee. . eneerrs mre flere ae han co a mo, taty € sae an Ty ys . ete ay tle ce te thage bs Lhe Lita ws so ak LG sorte iv ro web Fre. ct my ewiot Sern ea Te Poult Ol Fpvear oo ee ee or Ol it - . SD a 2 OO au. . Oe OD OC prope ete theo erty toads cia ha fat Gn vt eee ape Ecee teed Chee ee oF thy ~ 2 Sn ee ster Les ha Lee bel bay wr : Sor or oy rn ae prope. ts 1s 4 ee ee AOE ry . re. hath Jets sok : u . . det. >. Ad) Pa sae Pho onl curl eS ee al Cres «Pp 4s ~ oe - alps cet atal pian Pee aren ' . " lo Ce - 5 vo oe. Sue ' . . The Guatose— a, Soe 2 One thet wlu re ou (4: "yt ~ : Let 2. de ees et 21", lowest s th bt tie becte. . . - . A Sechuor whee - ~. lop ves GL Ok Levis Hae Lie - ' neo. Tr be, e. te Ee ater FG aeplhh, di, aos SLLaetlioh 28 - ere se ort ob electis Waeat pobtomabl : Doe te the ordinary cauree of 1 - ePe Te eta SON PAL Fears vy . . > s ' 1 7 a Couecuts 2 ef 1S e faghi. To beta vik. du corms : cee os TLS oss co dillars ot aeelaclch, oy refo. cL property cous ttating Of a Pat ame 4 wo loa, PL Ges Ms is? 2 MTL by the percou Or peso before bP Lo aay COs bieh ta pesas. fa) ere becouse theese mathers ers by s.a6/, Ll sec refer beck tu paca (0) ce) nmovhy c) Pare) ) Qa ease para. ( it a. ool ap peopracts opererton of chav sect the sort. cf chanyse in held net to be a disre Peracreph Co} of that Utkin, net mentioned £ te, mote og cera ia uemersh oa of fhe vhel cl uert ef the . ae Pattee Teh, te tiet ou. uecty Pagrvevey caper tr berg rT ae pes asc ome oftor thee pan mere eo keg wt dot. ve sta f hited Peo bo her pO pkoperee rer ones milee. Tr 1h be urnecess ry Lov (by of si Sei), cud tO 25 eet are covered althovan in dio ferent "™S CuLiens Lhal ot. showld have to of the eaurl.er seetiut. Ms re as fay nol repeated at os. 394 2u0t ry ty tefer te thal pera jre sh fo ch. ten, Ib is tpat au kone 's eunergshom onvisosea by s.2eA was sal within the Lan owage of 5.3001) gecLion spans cf "Lhe despoy ib". uopora.(a), Bel the dicpos 2 reforzed to ca thet patagragh is met the enluge in owners ap contemplated ur s.3e4. Heneeg it sould nave be inappropria o for s.364 to draw iu, cnpicesiv or Uy reference, the Jangyiuge of pare. (ec) of s.S6ctd. fund if s.26 vas untredvecd toa meet the gap ce.cehid by bese's Ca 6, enere was in thie case no consalirarion Or Ciscoe) | brass le ss. in Loe sie do be rit my uit LOoTls OPerabhLor cet ¢ mer awaed 417 Vhen there wei bias cd Rath J. sty ercsteu, the pis, uses ard that wean Mo val ros ee That verult 2 mone Lewd aA ner towed an Drona by vay of election, In ty @p2 - Ye ag CONG yw NCus the Lvwo secti Snoiler Oxford Laslish Dict menadinrgs of of ual Ve EF tae ee. ve 2. : \ eoher yah. tare be me lee eon baetd Goh ub o£. "EA Te robo igus tTag tes nfo) af 4g. OFS, v4 ' 1 a - ' - SONA previ ses bet nw tian tas . te 1 7 aa Naeere) eyes da Ll wee eat thee a da lmosih tor ve ae ' e . . 6.5009) ts hecre La nave ee ecdaaed So thet = ve Lr pavgs be stadt ta oy souls cua Go tha fos oy Geeta Sti Cheb acy eyvhy core mC pcchas boat oh @ pote Wr uel. & broaghh ovenk rior Lhe chro oa se duet) ortsc. Ste: the or One eee ehoula al into combacc edit, enn be ore 2 rout of "apply! - neem Llrs BONY ua ao hey the . a . Verda Gr ft . -yot lav oe Ha ae . i) 2a a plow | if i ne Hi . topcied. hia, . pr ers, Via 4, 4 ' calts, &, 4 Lat ra nil ,or hee 1 ' iv c a 1 , erie Jone - ot roar t ' 1 u cara > ura edrn aes "do toy a dow, bork ele.) tthe Combes! sabi fascou, bo pub trl oproecbr oi orere " OF S.SO0 CT) Bere teem aay the 74 Lo pet ©. S6 "oubo yo aekaee! open hae! Mev eie ue Moemineg be varvcah wb by the cease Lion re tio ec! eed Peer art ad Bb, tle, Curt lt ta be furs ele. ot WI bi, Pouce wt SUED oom OY "dar ~ 4 1 a onqd ia ' (1) HloOrtCokigM (a Apyet wt daa rede fa. oa Lo Lee bade Of an opoenert, by oo tee aye (s.26 Aww), Language of Liat sork ane ce paraide prusisions ert, found for ameter ori gs. ob2y ard Cop aut do oe aG Gl ere Cty, Chale all gabe ary Lo ettaalisa tints bon reoerye ltes OF tee olbes preciosa Bw lec ast, 22 Cn the vecew Tine telon of the vet bigo. 4 . botvew ss.ce and JON LE LS UlureceSoary be vote - 5 ' - Purcber Grestiov vee chor a beck breste Ven a ty te, un th: ordinary, ceurse of cartyat s on Jeet Ss boating Sintec there ts no disonte that a one aye eect ce yu the wmershap of or ta las anbernests of peetere st propercy Curebreueing the who te oo, path of awe i ee of Jensen's business cud sence Loam of Lae oydader Lh Lhuse Gssclo were Lradinugy stole aie Chit uron the ¢ in owiership ob tacereste Chat property Geoabie ai eel af a bustmss Carrie! on by lepsport, tb folle s chew' right to elect a vale rn the bea of g.lbt Ges earstea, BMC vate Prose by Cte attest Vigtwe ot Peovtetop eet he or gt thie nr Elna ye ad be noted. Uda lie. mr i Vestate dy Joc pue pore Woy at Tel bau Ceniss sists i relhora. rae re bt Le. thew hb tae: . PG basic vena, yw SRP ety ta de patid a Je ape ph fet te treo sfor ef the sucees 0% Gh cette boom else ad dotutio, Trdoeet omer Lhe nae Ty at, pl Poel, = tl 1 > - . . arr ' i Oo. ~Tnak the Stra Carat shovdd he. utd that Che cool te Feaspere of the ahe wel © ope se of by Jensen wes uet var orbits be tome section 3S! uf tue Wb wee cyyptaca te, PA wee ok dete te tre cpa er aL ' 5 : ben. Cuntam e tee soe ei SU. on otha re shor veo COs Gere aw Nabl g Varo ceid. uw . 7 . . , . die ueder LO awecthoe tO Unablias ot ep dos" wWiohie Lig ukesar. ef ss. Uo gt th cee PeCvssury Lo dibor a ee wot res taor deo oc $.at suild ve ot a boy ap dio. te cedsciien., Th yas sata thot toe sete omice ' : of the shaves was pol oe esodi fe Lier lu wo Mw Farsl Jacth, po. was Lhevo aay mer... bob on apy Fansites t the dee ned cus carried oo ly ab ounder Lhe coven boob. Ju t Fteer the ory Was Ghat the pooered ¢f i the eale of the co shenen fy Cog park © ty . capriel, nol areas. Sh heseckium (2) oF 2 Ob vary pet applicahio, beeen C2l ve eral s the shares were not Lradir ge stock of densoath Tohha.e alreedy beta bhat the ohares vor acquired, hedd and deeposed ot by Jur spearct as teedang stest a rts tueancs ceo baie Jno shures und gi ty ey thee the } ( argu 2b Laldooet the thre sale." 7 Pn , ra . ' cok Yon oe ro o4oy "pr ete 4 TH Say ws Loe hlceans er the Yack tal Wich Lie 1 1 wYoe Ty ° * bar - pay cs rs = I- tae Supa Ot ry rere con mha. cust ~ . Ges POS Lo eerrlot up ty Com tet = vas th 7 and - Yas a paneer = ene t ~ c£oe. care y LO Gaitn Clo ary tis. rel wcetug s AN rane -- te eed pre ep TO , tte ~ AL Gn 2 70, 24 FUE Gait S £UT rk. GF mat ew fT Vee - aw oe Sy eel 7. Jorepaet var du besine ls os a glove treda. Tran Wi.. there can be no Joube 2. thet exper ite 2 lneactved fn the purcatee of Plo dustible udder ey wre be work aot pe of . } elt rtil > eae ily. Sunec vritanes whic, Topas rec'd the rraaqons ,' Cc . ~ - 1 ore rod 4+ Es 7 ~ 7 - of Dieare o., wWelth pretvestir reformele to his cOlamuce regarding the cheiecter cf the shivic inmedueted, before thair transf{e_ to Jensnert part ef the terdaiug stack of Jenuca's snure t busin » Tegree with hie Honeu:'s cozents concluci: . in that recard. u& Tau append should be disiresed with «