Dickenson v Commissioner of Taxation (Cth) [1958] HCA 62

High Court of Australia Taylor J. Dixon C.J. McTiernan, Williams, Webb and Kitto JJ. Dickenson v Commissioner of Taxation (Cth) [1958] HCA 62

ORDER Appeal allowed with costs. Order appealed from discharged. In lieu thereof allow the appeal from the assessment with costs. Declare that no part of the sum of £2,000 mentioned in the notice of objection is assessable income of the taxpayer derived during the year of income ended 30th June 1952. Set aside the assessment and remit the same with this declaration to the Commissioner of Taxation for re-assessment. Appeal allowed with costs. Order appealed from discharged. In lieu thereof allow the appeal from the assessment with costs. Declare that no part of the sum of £2,000 mentioned in the notice of objection is assessable income of the taxpayer derived during the year of income ended 30th June 1953. Set aside the assessment and remit the same with this declaration to the Commissioner of Taxation for re-assessment.

Cur. adv. vult.

The following written judgment was delivered by Taylor J.

Feb. 8, 1957 Taylor J.

In each of the income years which ended respectively on 30th June 1952 and 30th June 1953 the appellant received from the Shell Company of Australia Ltd. (hereinafter referred to as "Shell") a sum of £2,000 and in assessments to income tax with respect to those years those sums were treated by the respondent as assessable income of the appellant. The appellant, however, maintains that they were received by him as capital and that to the extent to which his liability to tax was thereby increased the assessments are excessive. Accordingly these appeals are brought against the assessments pursuant to s. 197 of the Income Tax and Social Services Contribution Assessment Act.

At all material times the appellant was the proprietor of the Kingsgrove Service Station, a garage and service station conducted at Kingsgrove, a suburb of Sydney. The business premises were erected on land which belonged to the appellant and in the course of his business he sold petroleum products to the public and maintained a workshop for the repair of motor vehicles. The purchase and sale of petroleum products, however, constituted by far the greater part of his business and he dealt in the products of a number of different companies. Some of these were referred to in evidence as "Atlantic", "Shell", "Mobiloil", "Castrol" and others were not specified by name. But some time before June 1952 circumstances required him to consider whether he should undertake to deal in one brand of products exclusively and, ultimately, he decided that he would do so. Thereafter on 11th June 1952 he entered into an agreement with Shell whereby the latter agreed to sell and deliver at the appellant's service station, "at Shell's usual list prices to resellers, Shell Motor Spirit, Shell Lubricants and other Petroleum Products of Shell as the buyer shall from time to time require for the purpose of his business", and whereby the appellant agreed "to purchase exclusively from Shell or its successors in business all petroleum and its products which shall be sold used or consumed at or upon the said premises". The appellant further undertook to purchase at least six thousand gallons of motor spirit and eighty gallons of automobile lubricants in every month during the continuance of the agreement. Clause 2 of the agreement then proceeded to express what, otherwise, might have been thought to be a matter of necessary implication. By this clause the appellant agreed not to permit the sale, use or consumption upon the said premises of any motor spirit, lubricants or other petroleum products other than such as should be supplied to him directly by Shell or its successors in business. This agreement was subject to the qualification that if, for any reason whatever, Shell should not be able to supply any petroleum or its products as required by the appellant, he should be at liberty, on written notice to Shell, to obtain such supplies as should be necessary for the conduct of his business but only during such time as Shell should be unable to supply. Reference should also be made to cll. 6 and 7 of the agreement. The former of these clauses provided that, subject as thereinbefore provided, the appellant should not purchase any petroleum or its products from any other person or corporation during the continuance of the agreement so long as Shell should be able to supply him with sufficient Shell products to satisfy his weekly requirements of petroleum and its products. The suggestion was made on behalf of the respondent that the prohibition erected by this clause was quite general and not limited to purchases for the purposes of the appellant's existing business. If this were so it would be of some importance in the case but, in my opinion, this view should be rejected; to my mind the clause is ancillary to those previously contained in the agreement and the prohibition extends only in respect of purchases to meet the requirements of the existing business. Clause 7 provided that the supply agreement should commence on 9th May 1952 and that it should continue for a period of ten years and, thereafter, until the expiration of three months' written notice given by either party to the other.