Melbourne Trust, Limited v Commissioner of Taxes (Vic) [1912] HCA 64

274 HIGH COURT {1912.

H.C.orA. Admitting the difficulty of the case, I come to the conclusion 1912. that the decision of the learned Chief Justice of this State is

raat correct, and that the appeal should be dismissed. v. Hie Ler. sharia Appeal dismissed with costs. Mires, C eee Solicitor, for the appellant, Guinness, Crown Solicitor for Trust Lid Ti ators (Pia is Victoria. Solicitors, for the respondent, Cohen & Herman. BL. (HIGH COURT OF AUSTRALIA. THE MELBOURNE TRUST, LIMITED. . APPELLANTS;

AND

"THE COMMISSIONER OF TAXES (VIC-

TORIA) } RESPONDENT.

ON APPEAL FROM THE SUPREME COURT OF VICTORIA.

H.C. or A. Income tax—Company—Profits—Company formed to realize assets of companies in

1912, liquidation—Surplus proceeds of realization—Business of company—Income —— Tax Act 1903 (Vict.) (No. 1819), sec. 9. Merpourne,

'Three assets companies were formed in England in December 1997 to carry out schemes of arrangement of the affairs of three Victorian banking com- panies then in course of liquidation in England and Victoria. In each case

Oct. 3, 4, 7, 14.

oar Gas provisional agreements had been made with the sanction of the Courts in Isaacs JJ. England and Victoria. The basis of each scheme was that the whole of the

assets of the banking company should be handed over to a company to be formed for the purpose of carrying it into effect. The creditors of the respective banks were to accept in full satisfaction of their claims, shares

15 C.L.R.] OF AUSTRALIA.

and debenture stock in the respective assets companies. The objects of each assets company was stated in its memorandum of association to be {inter alia) to carry out the provisional agreement ; to acquire, take over and carry on the undertaking, property and assets of the banking company, and to issue the shares and debenture stock provided for in the agreement ; and "to carry on the business of an assets company in all its branches, to nurse, use, employ, manage, develop, and liquidate for such time, and to realize at such time or times and in such manner as may be deemed expedient all property of every description including debts, claims, and demands which may at avy time come into the hands of the company." 'The form adopted in the provisional agreements embodying the schemes was that the banking com- panies and their liquidators should respectively 'sell and transfer" to the assets companies all the assets of the banking companies 'in consideration whereof " the assets companies were to issue the debenture stock and shares. 'The values of the assets taken over by the respective assets companies were entered in their books according to valuations made by the liquidators of the banking companies respectively. The conditions of the issue of the debenture stock of each assets company authorized the redemption of it by purchase from the holders at a discount, or by distribution of money amongst the stock holders pari passu. No dividends were payable until all the stock had been redeemed. The three assets companies, which under the several schemes of arrangement were managed by the same body of persons, proceeded to realize their respective assets, and by the beginning of 1903 all the debenture stock had been redeemed out of the proceeds, and a large quantity of property still remained unsold. In 1903 the appellant company was formed in England with the objects, as stated in its memorandum of association, of carrying out three several draft agreements made respectively with the three assets com- panies. Each of those agreements provided that the assets company should "sell," and the appellant company should " purchase," the undertaking of the assets company and all its assets in consideration (inter adia) of shares and debenture stock of the appellant company. 'The memorandum of association of the appellant company also included the following purposes :—'' To 'nurse, use, employ, manage, develop and liquidate for such time, and to realize at such time or times and in such manner as may be deemed expedient, all property of every description, including debts, claims and demands which may at any time come into the hands of the company"; 'to carry on the business of an estates development and assets company in all its branches."