WP Keighery Pty Ltd v Commissioner of Taxation [1957] HCA 2

High Court of Australia Williams J. Dixon C.J. McTiernan, Webb, Kitto and Taylor JJ. WP Keighery Pty Ltd v Commissioner of Taxation

ORDER Appeal allowed with costs. Order appealed from discharged. In lieu thereof order that the appeal from the assessment of the Commissioner of Taxation be allowed with costs and the assessment set aside.

Cur. adv. vult.

Jan. 10, 1957 Williams J. delivered the following written judgment:—

This is an appeal by W. P. Keighery Pty. Limited from an assessment of this company for additional tax as a private company under the provisions of Pt. III Div. 7 of the Income Tax and Social Services Contribution Assessment Act 1936-1952 (hereinafter called the Assessment Act). The company was assessed for this tax in respect of its income for the year ended 30th June 1952. The amount of the assessment is not in dispute if the company is liable to be assessed for this tax. But it contends that it is not liable to be assessed for this tax because it was not on 30th June 1952 a private company within the meaning of Pt. III Div. 7 of the Assessment Act. The commissioner's primary contention is that the company is liable because it was on 30th June 1952 a private company within the meaning of Pt. III Div. 7 of the Assessment Act. If the commissioner fails in this contention he then relies on s. 260 of the Assessment Act.

The company was incorporated as a proprietary company under the provisions of the Companies Act 1936 N.S.W. on 20th June 1952. Its nominal capital is £100,000 divided into 100,000 shares of £1 each with power to divide the shares in the capital for the time being into several classes and to attach thereto respectively any preferential deferred qualified or special rights privileges conditions or stipulations. The subscribers to the memorandum of association of the company are W. P. Keighery for three shares and his wife M. E. Keighery for one share. The articles of association of the company are the regulations contained in Table in Schedule two to the Companies Act 1936 with certain substitutions and alterations. The following substitutions should be noticed: 2. (In lieu of reg. 2 Table "A"). The shares of the company for the time being unissued (whether forming part of the original capital or of any increase in capital) shall be under the control of the directors who may allot or otherwise dispose of the same to such persons on such terms and conditions and at such times as the directors think fit and with full power to give to any person the call of any shares either at par or at a premium during such time and for such consideration as the directors think fit. 2a. (Additional Article). Subject to the provisions of s. 149 of the Companies Act the company may be special resolution issue preference shares which are or at the option of the company are to be liable to be redeemed. 54. (In lieu of reg. 54 Table "A"). Subject to any special rights or restrictions for the time being attaching to any special class of shares in the capital of the company (a) on a show of hands every member (not being a corporation) present in person shall have one vote and every member being a corporation present by a representative authorised pursuant to s. 96 of the Companies Act or by a proxy shall have one vote; (b) on a poll every member (not being a corporation) present in person or by proxy shall have one vote for every share held by him and every member being a corporation present by a representative authorised pursuant to s. 96 of the Companies Act or by a proxy shall have one vote for every share held by it. 64. (In lieu of reg. 64 Table "A"). Until otherwise determined by a general meeting the number of the directors shall not be less than two or more than five. The first directors shall be appointed by the subscribers to the company's memorandum of association. Regulation 42 of Table A is amended by substituting twenty-one days' notice of general meetings at the least for the seven days' notice at the least provided in the regulation. Regulation 67 of Table A which is unaltered provides that the business of the company shall be managed by the directors, who may exercise all such powers of the company as are not, by the Act or by these articles, required to be exercised in general meeting (subject to certain qualifications which it is unnecessary to refer to).