Christie v Commissioner of Taxation [1956] HCA 20

High Court of Australia Fullagar J. Christie v Commissioner of Taxation [1956] HCA 20

ORDER Appeal allowed with costs. Order that assessment be reduced by excluding from appellant's assessable income of the year ended 30th June 1951 the sum of £3,000 representing the value of shares in Richardson's Meat Industries Ltd. received by appellant in that year.

Cur. adv. vult.

Fullagar J delivered the following written judgment—

May 23 Fullagar J

This is an appeal from a decision of the Taxation Board of Review. In the year ended 30th June 1951 the appellant taxpayer received from Mr. George William Richardson 12,000 fully paid shares of 5s. 0d. each in a company named Richardson's Meat Industries Ltd. The commissioner included the face value of these shares (£3,000) in the taxpayer's assessable income of that year. A majority of the board of review were of opinion that the sum in question was rightly so included, and from that decision the taxpayer appeals to this Court. I have stated in Hayes v. Federal Commissioner of Taxation [1] my reasons for thinking that that decision involves a question of law, so that the appeal is competent.

1. (1956) 96 C.L.R. 47.

The appeal was heard together with the appeal of Mr. Lewis Hayes, who received from Mr. Richardson at the same time a parcel of the same number of shares. The two appeals raise the same questions, and the general circumstances leading up to the distribution of the shares are set out in my reasons for judgment in Hayes v. Commissioner of Taxation [1] . The following special facts relating to the case of Christie are taken substantially from the reasons given by the majority of the board of review.

1. (1956) 96 C.L.R. 47.

The appellant, Christie, was at all material times one of two members of the proprietary company named Crozier & Christie Pty. Ltd., which carried on in Hobart the business of a real estate agent. For a period of some years before 1950 Christie had informally on many occasions advised Richardson in connexion with real estate dealings. In addition to the meat business Richardson himself was interested in real estate investment on a considerable scale. It appears to have become customary for Richardson to discuss with Christie any sale or purchase of real estate which was contemplated either by himself or by Richardson's Choice Provisions Pty. Ltd. As in the case of Hayes, the advice received seems to have been generally accepted, and seldom, if ever, regretted. If no business resulted, no fee was ever charged for advice given. Probably nothing was further from the mind of either party than that there should be any payment for advice or discussion as such. If, however, business did result, Crozier & Christie received the usual remuneration for their efforts and services. It should be added that, as was the case with Hayes, Richardson was on terms of close personal friendship with Christie. It may be taken as clear that the motives which led Richardson to make the "gift" to Christie were the same as those which led him to make the "gift" to Hayes. One specific factor—appreciation of Hayes' conduct in selling his shares—is absent in Christie's case, but the general nature of the reasons for making the gift was the same in both cases.