Mayfield v Commissioner of Taxation [No 2] [1961] HCA 58

High Court of Australia Menzies J. Mayfield v Commissioner of Taxation [No 2] [1961] HCA 58

ORDER Order in each case:Appeal dismissed with costs.

Cur. adv. vult.

Menzies J delivered the following written judgment:

Sept. 18 Menzies J

This group of six appeals was brought by the four members of the Mayfield family who were appellants in the earlier group of appeals, and by K. A. Beesley and Eynesbury Ltd. (hereinafter called "Eynesbury"). Together until 21st April 1954 they held all the shares in Mayfield Holdings Ltd. Except in the case of Eynesbury, the assessment appealed from is an amended assessment. I do not propose in this judgment to repeat such relevant facts as are stated in my earlier judgment, and to the extent necessary I incorporate herein what I there said. Again the assessments challenged depend upon the application of s. 260 of the Income Tax and Social Services Contribution Assessment Act 1936-1953 (hereinafter called "the Act") to what occurred, and in this group of appeals what the Commissioner seeks to do is to treat two distributions by Mayfield Holdings Ltd. (formerly F. R. Mayfield Ltd.)—one on 28th April 1954 of £48,000 and the other on 8th June 1954 of £1,200—as the income of the appellants who were the shareholders of the company prior to transfers of shares on 21st April 1954 to Argo Investments Ltd. (hereinafter called "Argo") and a subsidiary, Kentish Investments Ltd. (hereinafter called "Kentish"). These transfers the Commissioner claims are void against him.

On 30th June 1953 the issued capital of F. R. Mayfield Ltd. was £12,000 divided into 12,000 shares of £1 each held as follows: Eynesbury Ltd. 9,480; F. R. Mayfield 10; Jean W. Mayfield 10; Grant Mayfield 1,000; Brenton Mayfield 1,000; K. A. Beesley 500. The directors were F. R. Mayfield and Jean W. Mayfield. The company was a private company within the meaning of Div. 7 of Pt III of the Act. Eynesbury was incorporated in the circumstances stated in the first group of appeals and all of its shares were held by F. R. Mayfield and his wife, Jean W. Mayfield. Its orginal holding of 9,980 shares in F. R. Mayfield Ltd. was reduced to 9,480 by the transfer of 500 shares to K. A. Beesley, the manager of F. R. Mayfield Ltd. Eynesbury was also a private company for the purposes of the Act. F. R. Mayfield Ltd. was controlled by F. R. Mayfield through the Eynesbury holding and by virtue of his powers as governing director. Argo was as described in the earlier appeals; so was its subsidiary Dunfermline. Another subsidiary, Kentish, took part in the transactions with which this group of appeals is concerned. A. V. Adamson was a director of this company as well as of Argo and Dunfermline. He remained the financial adviser to the Mayfield family and companies.