81 ( v i

81 ( v i - [1932] HCA 44 - HCA 1932 case summary — Zoe

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"ance or transfer on sale (Commissioners of Inland Revenue v. Glasgow 'and South-Western Railway Co. (1) ), where it was not even argued i that the conveyance did not answer this description. In Mason v. Stokes Bay Pier and Railway Co. (2) Wood V.C. (as he then was) said ; "Tn this case the amount to be paid had been settled by the award, and a parliamentary contract had been made which could be enforced 'in this Court at the instance of either vendor or purchaser ' after notice given and the price fixed, the relation of the parties, as vendor and purchaser, was as fully constituted as in the case of a formal and regular agreement." And Swinfen Eady J. (as he then was), in In re Cary-Elwes' Contract (3), said: "It is well settled that in cases of compulsory purchase, after notice to treat and ascertainment of the price, a contract is established, enforceable in a

Court of Equity, and with regard to which both vendor and pur- chaser can enforce specific performance (Adams v. London and Blackwall Railway Co. (4) ; Regent's Canal Co. v. Ware (5) ). Follow- ing these decisions, it was held by Jessel M.R. in In re Pigott and Great Western Railway Co. (6) that as specific performance of the contract, as a contract of purchase and sale, or sale and purchase, may be enforced, all the ordinary rules apply, unless you find some statutory enactment in the way." Many references will be found _ to the relationship established by notice to treat and ascertainment of the purchase-money in which it is called a quasi-contract, e.g., per Lord Watson in Tiverton and North Devon Railway Co. v. Loose- 'more (7), and as a purchase, e.g., by Lord Bramwell (8). It is true that the Queensland statute under which the land was taken from the Company does not proceed by notice to treat but by a Gazette notice of acquisition. Perhaps in England the procedure by notice to treat produced a greater similarity in conveyancing practice to the completion of a voluntary sale, but the difference is not material in considering whether agreement is an essential element in the connotation of the word " sale," or whether it is capable of including

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possesses freedom of action; see per Lord Macnaghten in Williams y, Permanent Trustee Co. of New South Wales (1), where he says; | "Tt is a compulsory purchase just as much in the one case as in the other." The common speech of lawyers in Courts of Equity justifi the assertion that the word is capable of the more extensive meaning, and the only question remaining is whether in this statute it sho receive the more restricted construction. The subject with whi the statute is dealing points unmistakably in the direction of th more extended meaning. It is directed to the discrimination between income profits and capital profits, but the object is to leave dividends derived from income or trading profits arising from the disposal of stock-in-trade and the like subject to tax and to exclude. from taxation dividends derived from money into which property _ has been converted although not acquired for the purpose of resale, 7 Broadly the distinction is between the recovery of fixed capital and circulating capital, and the detachment therefrom of the surplus over expenditure. The fact that the fixed capital is recovered by a compulsory conversion as distinguished by a voluntary conversion - of the asset into money is quite irrelevant to the purpose of the Legislature. When trading stock was requisitioned in war time no one considered that the trader should exclude the proceeds paid to him by the Government from his profit and loss account; and I have no doubt that the ordinary accountant would put the sums - down amongst the trader's "sales." Further, it is probable that the Commissioner would consider the transaction as a resale within the meaning of the present proviso. But the difficulty remains that the Legislature has, after the date of the transaction now in - question, made an amendment of the proviso by, amongst other things, introducing the words "or compulsory resumption for public purposes." Further, the provision making the amendment is, by sec. 26 (5) of No. 50 of 1930, to apply to assessments of the financial year beginning on Ist July 1930 and subsequent years. From this it is argued that an alteration in the law has been made to take effect prospectively, thus amounting to a legislative acknowledge ment that "sale" did not cover compulsory sale. Argument

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you have then all the elements of a complete agreeme and, in truth, it becomes a bargain made under legislative enactmen between the railway company and those over whom they y authorized to exercise their power." Under the City of Bris Improvement Act, however, the Council is authorized to declare that any land required for the purposes of the Act has been taken by the Council, and, upon publication of a notice of resumption, the land becomes vested in the Council and the right of the person from whom the land is taken is converted into a claim for compensa- tion under the Act. It is an exchange of land, made under legis- lative enactment, for money. Substantially the Act has provided the price at which the land is to be taken or resumed (Davies y, Collector of Imposts (2); Commissioners of Inland Revenue y. Glasgow and South-Western Railway Co. (3)). Does the expression. "sale of assets " require a definite contract of purchase and sale, or does it mean a parting with assets in the same manner as upon contract of purchase or sale? The latter view, in our opinion, is the right one (Great Western Railway Co. v. Commissioners of Inland Revenue (4)). The Act looks to the substance of the matter, and is not concerning itself with technical definitions of the word sale. would be strange indeed if the Income Tax Assessment Act 1922- 1927, sec. 16 (b), applied to compulsory acquisitions of lands by means of a notice to treat under such Acts as the Land Compensation Act of Victoria and not to compulsory acquisitions by means of a notice of resumption under such Acts as the City of Brisbane Improvement Ad. The alteration in the provisions of the Income Tax Assessment Act 1922-1927 by the Act 1930, No. 50, sec. 6 (b), does not affect this. case, but it has been used in argument as an aid to construction of the words in the original Act. It is not, we think, a legitimate deduction, and in any case the implication that the Legislature was not expanding the meaning of the expression "sale of assets" is just as sound as that it was. Despite some argument to the con- trary, the evidence now before us, which was not before the Board Review, makes it clear in the present case that the dividends, the

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