Bray v Commissioner of Taxation (Cth) [1971] HCA 8

High Court of Australia Gibbs J. Bray v Commissioner of Taxation (Cth) [1971] HCA 8

ORDER In matter No. 91 of 1970—Appeal allowed. Amended assessment dated 24th July 1969 set aside. In matter No. 92 of 1970—Appeal allowed. Assessment made on 24th July 1969 set aside. Matter remitted to the Commissioner with liberty to re-assess in accordance with my judgment. In matter No. 93 of 1970—Appeal allowed. Amended assessment dated 24th July 1969 set aside. Order that the Commissioner pay the appellants' costs taxed on the basis that the matters were heard together. Usual order as to exhibits.

Cur. adv. vult.

Gibbs J. delivered the following written judgment:—

April 8 Gibbs J

These appeals by the executors of the will of Thomas Henry Bray, now deceased ("the deceased"), against three assessments to gift duty under the Gift Duty Assessment Act 1941-1963 Cth ("the Act") are heard together by consent.

In March 1960 the deceased was the owner of a grazing property near Forbes known as Vychan. He was aged about eighty-six years but was in good health. He was a married man and had two sons, Thomas Leslie Bray and Ralph Douglas Bray, who are the present appellants. Another son who had died had left two children, Noel Raymond Bray and Angus John Bray. The family was a united one. On 24th March 1960 T. H. Bray Pty. Ltd. ("the company") was incorporated. The deceased held one share in the company—a management share which gave him no right to participate in any dividend declared or, in the event of a winding up, to anything more than the return of capital (£1) paid up on the share, but which constituted him the governing director with wide powers to control the company. The other directors of the company were the appellants and Noel Raymond Bray and Angus John Bray. The first meeting of the directors of the company was held on 30th March 1960. Shares were allotted to the directors (other than the deceased who already held his management share) and to four grandchildren of the deceased, children of Thomas Leslie Bray and Ralph Douglas Bray respectively. At the same meeting it was resolved that the company's solicitor be instructed to prepare the necessary instruments for the purpose of purchasing the property Vychan. A further meeting of the directors was held on 31st March 1960. It was resolved that the company approve the purchase of Vychan at a valuation of £87,675 and otherwise in accordance with the terms of a contract produced by the company's solicitor, and that Thomas Leslie Bray be authorized to sign such contract on behalf of the company. It was further resolved that the company apply to the deceased for a loan of £88,000. The deceased was present at both these meetings. In accordance with the first of the resolutions passed on 31st March 1960 a contract was on the same day signed for the sale of Vychan by the deceased to the company for a price of £87,675. Payment of the purchase price was made by the company on 1st April 1960 by a cheque, the payment of which rendered the company's bank account overdrawn by about £84,673. However, the account was put into credit again on or about 2nd April 1960 when a cheque for £88,000 drawn by the deceased was paid into the company's bank account. This was the loan by the deceased to the company which had been contemplated by the resolution of 31st March 1960. There is no evidence that there was any agreement or discussion as to the repayment of the loan and it was common ground that it must be regarded as having been repayable on demand.