Adelaide Stevedoring Co Ltd v Commissioner of Taxation (Cth) [1963] HCA 20

High Court of Australia Dixon C.J. McTiernan, Menzies, Windeyer and Owen JJ. Adelaide Stevedoring Co Ltd v Commissioner of Taxation (Cth) [1963] HCA 20

ORDER Appeal dismissed with costs.

Cur. adv. vult.

The following written judgments were delivered:—

1963, July 25 Dixon C.J.

I have found the question involved in this appeal a difficult one although it depends on a short phrase in ordinary language. After considering all the arguments I have come to the conclusion that the interpretation adopted by Taylor J. is correct and that his reasons are adequate to sustain it. I think therefore that the appeal should be dismissed and I will not add to the learned judge's reasons for that conclusion.

McTiernan J.

In my opinion this appeal should be dismissed. I agree with the reasons of Taylor J. and in my view it is not necessary to add anything.

Menzies J.

This appeal from a judgment of Taylor J., who decided that the appellant (whom I shall call "the company") was not a private company for the purposes of the assessment of income tax for its tax year ended 31st July 1958, turns upon the interpretation to be put upon s. 105 (4) (b) of the Income Tax and Social Services Contribution Assessment Act 1936-1958 Cth. It was not disputed that the judgment appealed from was correct if the company was "a subsidiary of a public company" on 31st July 1958 (that is, the last day of the company's year of income) and it was common ground that whether it was or not depended upon whether it fell within s. 105 (4) (b) of the Act which provides that "a company is a subsidiary of a public company if, by reason of the beneficial ownership of the shares, the control of the company is in the hands of one or more companies none of which is a private company". This provision, it should be noted, relates to control exercised through beneficial ownership of shares and, whether this is altogether in accord with the realities of company administration or not, it is a well-recognized legal conception. Thus in W. P. Keighery Pty. Ltd. v. Federal Commissioner of Taxation [1] , Dixon C.J., Kitto and Taylor JJ. said: "The controlling authority of a company is its general meeting, and accordingly it has always been recognized in the cases in this Court to which reference will be made and in the line of English decisions which the Court of Appeal has recently reviewed in S. Berendsen Ltd. v. Inland Revenue Commissioners [2] that the only way in which a company can be controlled, in the relevant sense of the word, is by the carrying of a resolution at a general meeting" [3] . Both parties accepted the position that control of a company is in the hands of the shareholders with major voting strength at general meetings. For the Commissioner it was contended that susceptibility to control by non-private companies in this way was enough: the company's contention was that something more than this was required to bring a company within s. 105 (4) (b) and put forward as alternatives either capacity to control to the exclusion of any other grouping of shareholders or actual control effectively exercised in general meetings.