Brown v Commissioner of Taxation

INTRODUCTION OF THE PURCHASER TO MONACORP 17 The Kings Forest land comprises approximately 2,000 acres. The effect of the Tweed Shire Council Local Environmental Plan was generally that the Kings Forest land could be developed for residential tourist purposes. Monacorp acquired the Kings Forest land in about 1988 with the intention of developing it as a golf course and tourist resort. However, by the end of 1989 Monacorp had decided to attempt to sell the Kings Forest land in globo. 18 At the relevant time, the participants in the venture relating to the Kings Forest land were Mr Ray and Messrs Robert Ell and Christopher Buist. Mr Ray, or entities associated with him, owned 50 per cent of the share capital of Monacorp and each of Messrs Ell and Buist, or entities associated with them, owned 25 per cent. Messrs Ray, Ell and Buist were the directors of Monacorp. 19 Mr Buist is an old colleague of Mr Ray's and had been involved in property development for some time. He first discovered the opportunity that the Kings Forest land offered. Mr Ell and Mr Ray had also engaged in a number of transactions together and Mr Ell was invited to participate in the venture. 20 Mr Ray first met the Taxpayer in approximately 1988 when the Taxpayer was a Cabinet Minister. The Taxpayer came to Queensland with a business associate of Mr Ray to look at a property that Mr Ray and his associate were developing at Kirra. After that first encounter, the Taxpayer and Mr Ray became friends and saw each other on a number of occasions, but infrequently. On more than one of those occasions, the Taxpayer assisted Mr Ray with various charity matters in which Mr Ray was involved. 21 In late 1989 and early 1990 Mr Michael Hambley was the Regional Director of the Australian Tourism Commission in Tokyo. Mr Hambley and the Taxpayer had been friends for some time. At that time, the Taxpayer's wife was a public relations consultant with JMA Public Relations Pty Limited ("JMA"). Christopher Brown was also employed by JMA. 22 Christopher Brown had met Mr Hambley in Japan during 1989, and had given him some information about a property called Goodnight Island situated in the Shoalhaven district on the South Coast of New South Wales. The owner of Goodnight Island was a client of JMA. In late 1989 Christopher Brown was contacted by Mr Hambley by telephone. Mr Hambley told him that representatives of Narui Norin Co. Ltd ("Narui Norin"), who were friends of Mr Hambley's father-in-law, were coming to Australia. Mr Hambley asked Christopher Brown to look after the Japanese visitors and said that it "might also be in your interests to run one of the brochures for that island by them". 23 When the representatives of Narui Norin visited Australia in January or February 1990, the Taxpayer's wife and Christopher Brown, together with the Taxpayer, the owner of Goodnight Island and the representatives of Narui Norin, went by helicopter to Goodnight Island. There Christopher Brown handed each of the Japanese visitors a brochure prepared by JMA in relation to Goodnight Island. 24 While the representatives of Narui Norin were still in New South Wales, the Taxpayer telephoned Mr Ray at the latter's office on the Gold Coast in Queensland. The Taxpayer told Mr Ray that he had been contacted by an associate of his in Tokyo who had some Japanese friends wishing to invest in Australian property. The Taxpayer asked Mr Ray if he could be of assistance to the Japanese visitors. He told Mr Ray that the Japanese visitors were loggers who owned forest land and that they knocked down the trees, used the timber to construct log cabins and then built golf courses on the land. He told Mr Ray that the Japanese visitors were looking for similar opportunities in Australia. 25 The Taxpayer said that in a subsequent telephone conversation he informed Mr Ray of the dates when the representatives of Narui Norin would be visiting the Gold Coast. Mr Ray, on the other hand, said that the Taxpayer informed him during the initial telephone call that the Japanese visitors would be arriving on the Gold Coast during the course of that same week and that if Mr Ray was interested, he should make himself available to them. 26 The Taxpayer said that, after he had informed Mr Ray of the dates when the representatives of Narui Norin would be visiting the Gold Coast, he had no further involvement in introducing them to Mr Ray. Mr Ray, on the other hand, said that the Taxpayer rang him again on the morning that he was supposed to make contact with the Japanese visitors. He said that during that telephone call, the Taxpayer informed him that the Japanese visitors were staying at the Mirage Resort Hotel on the Gold Coast, and that they had been shown around the Gold Coast and were not favourably disposed to it. According to Mr Ray, the Taxpayer told Mr Ray that the Japanese visitors had indicated to him that they would soon be leaving for Cairns. 27 Christopher Brown said that a few days after the representatives of Narui Norin had left New South Wales, he received a telephone call from Michael Hambley who asked him to go to visit the Japanese on the Gold Coast, since they were interested to know more about Goodnight Island. He said that he subsequently travelled to the Gold Coast with the intention of giving a presentation to the Japanese visitors concerning Goodnight Island. 28 Christopher Brown said that on his way to the Mirage Resort Hotel, he received a telephone call on his mobile telephone from Mr Ray, whom he knew as a friend of the Taxpayer. He said that, during the course of that conversation, Mr Ray told him that he had been speaking to the Taxpayer earlier in the week and that the Taxpayer had said "some Japanese are in town". Mr Ray told Christopher Brown that he had a property that he wanted to show the Japanese and asked if Christopher Brown would mind if Mr Ray came to the meeting. 29 Christopher Brown said that he met Mr Ray in the foyer of the Mirage Resort Hotel. He said that, when they entered the hotel room, he introduced Mr Ray to the representatives of Narui Norin and then made a brief presentation in respect of Goodnight Island. He said that Mr Ray then addressed the meeting and discussed two properties, one of which he referred to as "Kings Forest". He said that Mr Ray's presentation took approximately 30 minutes and that at the end he handed each of the Japanese visitors one of his business cards. 30 Mr Ray said that, after he had spoken to the Taxpayer, he decided to call on the Japanese visitors at their hotel. He said that, in the course of the conversation that he then had, he found that they were not interested in land on the Gold Coast and were looking particularly for property which was heavily treed and which would be reminiscent of the northern part of Japan, where Narui Norin had established a number of golf courses. Mr Ray said that it occurred to him that they may therefore be interested in the Kings Forest land and that, accordingly, he proposed that, on their way to Cairns, he would take them to the Kings Forest land to see if it was of interest. Mr Ray denied that Christopher Brown was present at his discussions with the Japanese at the Mirage Resort Hotel. 31 The conflict between Mr Ray on the one hand and the Taxpayer and Christopher Brown, on the other, is curious. As I have said, I do not consider that any of the witnesses was intending to be untruthful in the evidence given. While the versions are quite inconsistent in many respects, they are consistent to the extent that Mr Ray took the initiative. I do not consider that Christopher Brown's evidence concerning his attendance at the Mirage Resort Hotel is a fabrication. I consider that it is more likely that Mr Ray's recollection is faulty by reason of the time that has elapsed since the events in question. There is no reason for him to have remembered Christopher Brown's presence. I accept the Taxpayer's and Christopher Brown's version of the events, but only because they seem to me to be more probable.