Commissioner of Taxation (Cth) v Snowden & Willson Pty Ltd [1958] HCA 23

High Court of Australia Dixon C.J. Williams, Webb, Fullagar and Taylor JJ. Commissioner of Taxation (Cth) v Snowden & Willson Pty Ltd [1958] HCA 23

ORDER Appeal dismissed with costs including the costs of the proceedings before Kitto J.

Cur. adv. vult.

The following written judgments were delivered:—

May 15 Dixon C.J.

The question for decision is whether the taxpayer is entitled to a deduction from its assessable income for the year of income ended 30th June 1953 of an amount expended by the company in an attempt to meet by advertisements certain attacks made in the Legislative Assembly of Western Australia upon the conduct of its business and in its appearance by counsel before a Royal Commission subsequently appointed to inquire into the charges and any further complaints or allegations made to the commissioner by persons who had dealt with the company.

The company carried on a business which included the speculative building of houses for customers on terms. The business covered the work of an estate agent, insurance agent and the kind of things associated with such enterprises. What, perhaps, is more material for present purposes is its business in building for its customers. The company would build for a customer owning the site or it would contract to sell him the site and to build the house. The transaction would in each case be upon terms. It is unnecessary to enter upon the details of the complaints made in the Legislative Assembly, or elsewhere, of the company's methods. It is enough to say that they reflected on the integrity of those conducting the company's business and upon the fairness of the transactions to the customers and the sufficiency of the disclosure to them of the operation of the terms.

The company's methods were attacked in the Western Australian Assembly in September 1952, the Royal Commission was appointed in December 1952 and it sat for some thirty days in January, February and March 1953, and made its report (which was by no means favourable to the taxpayer company) on 27th April 1953. The taxpayer began by expending a sum on advertising to counter the effect produced by the reports in the press concerning the charges made. The cost of this was about £637. Then the taxpayer company proceeded to defend itself and its officers before the Royal Commission. This involved fees for counsel, solicitors, valuers, surveyor and accountants. The total cost, including the advertising, was £4,252. That amount the taxpayer sought to deduct from the assessable income in the assessment for the year in question. The deduction was disallowed by the commissioner but an appeal by the taxpayer was upheld by the majority of a board of review. An appeal was instituted to the High Court and referred to the Full Court by Kitto J.