Fairway Estates Pty Ltd v Commissioner of Taxation

(c) To lend or advance money to builders and other persons on securities of all description whether real or personal and to grant loans upon mortgage of any lands buildings and hereditaments of whatsoever tenure for the improvements thereof or otherwise.

(i) To carry on business as pawnbrokers and money-lenders and as dealers in jewellery and precious stones gold silver and plated articles articles of vertu coins and metals and as the commission agents and general merchants.

(j) To invest the capital of the company in and to deal with the shares stocks bonds debentures obligations and other securities of any company or association formed for the establishment or working in any part of the world of railways canals gasworks waterworks stocks telegraph or other undertaking and to sell dispose of or repurchase any such securities.

(k) To make advances upon or hold in trust issue on commission sell or dispose of any of the securities before numerated or to act as agents for any of the above for the like purposes.

The appellant held the first meeting of its shareholders on 3rd October 1958 when it appointed its first directors and, of them, J. T. Wolfe, a signatory of the Memorandum, to be the chairman. After a number of resolutions had been passed appointing auditors, solicitor, bankers, secretary and public officer and determining the location of the registered office of the company, the minutes of the meeting record under the caption "Objects" the following:

The chairman reported that the company had been formed as a money lending company and it was the intention to raise funds for this purpose from either United Finance Pty. Ltd. and/or United Investments (Tas.) Ltd., and if so required a mortgage debenture to be issued to either of these companies.

United Finance Pty. Ltd. has successfully carried out money lending transactions by means of subdivision, that is to say, that money had been advanced for either the purchase and development with the subsequent term sales being held by the finance company and in order to commence operations in Fairway Estates Pty. Ltd., United Finance Pty. Ltd. was prepared to advance monies to that company in order for it to build up sufficient funds to operate independently.

The United Finance Pty. Ltd. (United) referred to in this minute is a company also incorporated in Queensland whose directors included two of the persons elected as directors of the appellant and of whose shareholders fifty per cent were also shareholders of the appellant. It was one of a group of associated companies which included the appellant.

On 15th October 1958 the appellant entered into an agreement with Albert Carrigg for the purchase of a block of land in Ward County, Brisbane. To complete this transaction, and to provide operating capital, the appellant borrowed from United some £40,000. This land was subdivided, the necessary roads made and home building allotments were offered for sale by the appellant. These were sold to various purchasers on time payment as part of the "Fairway Estate" over the next few years, all blocks having been sold by the end of the financial year 1963/1964. The appellant's income in respect of these transactions derived both from the profit on the resale of the land and from interest on money advanced to, or allowed to remain unpaid by, the buyers of the blocks of land. These transactions constituted a large part of the business transactions carried out by the appellant between its incorporation and 30th June 1964. There were, however, a number of other transactions in that period and it is in respect of one of these that the question before me arose.

The appellant in 1959 advanced a total sum of $56,491.61 to Jubilee Tin Pty. Ltd. (Jubilee) to enable that company to develop a tin-mining venture near Cooktown on the eastern coast of Queensland. Repayments amounting to $5,944.25 were made on various dates up to 31st March 1963. The amount owing to the appellant by Jubilee, including interest, at the 30th June 1963 was $53,879.22. The appellant wrote this sum out of its books as a bad debt in the financial year 1963/64 and claimed a deduction therefor under s. 63 of the Income Tax Assessment Act 1936-1964 Cth (the Act) in its return of income for the tax year ending 30th June 1964.

The Deputy Commissioner of Taxation in Brisbane disallowed the deduction claimed by the appellant and assessed the appellant's tax for the year under review in an assessment dated 27th August 1965 as $823.30, amending this after objection to $267.30. An objection to the assessment having been disallowed, the appellant has appealed to this Court against this assessment on the ground that its taxable income for the tax year 1963/64 was £26,565 ($53,130) less than that on which the respondent has calculated the assessed tax: this sum included the amount written off as a bad debt. The appellant claims and the respondent denies that the amount of £26,565 ($53,130) written off by the appellant in that year as a bad debt constituted an allowable deduction under s. 63 (1) (b) of the Act. That section provides:

63 (1) Debts which are bad debts and are written off as such during the year of income, and -

(b) are in respect of money lent in the ordinary course of the business of the lending of money by a taxpayer who carries on that business,

The dispute between the parties extends to all the elements of the deduction allowable under the section except the facts that the money written off was money advanced, that the sum in question was written off as a bad debt in the tax year and that the amount so written off was a bad debt.

The questions which the appeal therefore raises for decision are:

(i) Was the transaction one of money-lending within the meaning of the Act?

(ii) If so, did the appellant at the time the money was lent carry on the business of the lending of money? and

(iii) If so, was the money lent in the ordinary course of the appellant's business of the lending of money?

In order to understand the respondent's reason for disallowing the appellant's objection to the assessment and to decide upon its validity it is necessary to examine the facts surrounding the initial advance of money to Jubilee. United undoubtedly carried on the business of lending money both before and after the incorporation of the appellant. Mr. Wolfe, its chairman of directors and later chairman of directors of the appellant as well, had been actively engaged before the incorporation of United in the business of beach mining. Having sold out his mining interests he had settled in Southport and became instrumental in the formation of United, the appellant and other companies having a number of common directors and shareholders.

At some time prior to 27th August 1959, Mr. Wolfe had been approached personally by Mr. Cooley seeking "money to operate an area in Cooktown where he (Mr. Cooley) felt that he had discovered tin." The approach does not appear to have been made to Mr. Wolfe in any of his particular capacities, i.e. as director of United or of the appellant, but was made merely because, as Mr. Wolfe said in evidence, he, Mr. Wolfe "was in finance". Also, no doubt Mr. Wolfe's interest in mining was a factor both in the approach by Mr. Cooley and the response to it by Mr. Wolfe. After discussion with Mr. Cooley over a period of time, Mr. Wolfe brought the matter before the board of the appellant. Mr. Wolfe's account of his discussions with Mr. Cooley as to the terms on which money could be lent for the tin-mining venture was that "we would lend the money at ten per cent provided we received a twenty-five per cent equity in the company "; that "the company would be administered from my office at Southport. I would be on the board and also Mr. Witheriff would be on the board and the secretary of the company".

At this time United and the appellant were carrying on business at the same address in Southport. United was then a registered money-lender under The Money Lenders Acts, 1916 to 1946 Q. and the appellant became a registered money-lender on 13th July 1959 pursuant to a resolution of its directors passed on 27th May 1959. Neither company advertised for business as money-lenders. Indeed, the appellant had no sign externally displayed at the business address announcing itself as having an office in the building. However, the fact that money could be borrowed at that address seemed to have become known because during 1958 and 1959 unsolicited applications for loans were made there by "people who came in off the street". Apparently there were no other registered moneylenders in Southport during relevant times. An inquiry form, not bearing the name of any company, was in use in the office commonly used by United and the appellant upon which particulars of the applicant and of the application for loan were entered. In cases where an application for loan was acceptable, a decision was made by either Mr. Wolfe or by Mr. Witheriff, another director both of United and the appellant, or by both in consultation as to whether United or the appellant would make the loan, the endeavour being "to divide as equally as possible between the two companies the income for distribution". But in fact no such application for loan was allocated to the appellant before 28th August 1960.

At the time of the inquiry by Mr. Cooley with respect to an advance of money for the tin-mining venture, United by reason of a then recent sale of some of its assets, was in a position to make available to the appellant the necessary money to make the required advance to Jubilee, which had been formed on 27th May 1959 to carry out the tin-mining venture. In the event, United lent the necessary money to the appellant at an interest rate of fifteen per cent and the appellant made the advance to Jubilee at the interest rate of ten per cent subscribing £62 10s. 0d. for 250 of the initial issue of 1,000 shares in the capital of Jubilee.

According to the minutes of a meeting of directors of the appellant held on 27th May 1959:

The chairman reported that he had received an application from Mr. N. J. Cooley to finance a tin mining company being formed to take over tin mining leases held by him at Cooktown. The chairman described in detail the negotiations he had had with Mr. Cooley, the manner in which he had satisfied himself on the profitability of the mine, and tabled the following proposition which Mr. Cooley had assured him would be acceptable to the members of his syndicate for confirmation by the board.

That this company agreed to lend Jubilee Tin Pty. Ltd. the sum of £20,000 at call bearing interest at the rate of ten per cent per annum on the following terms and conditions: -

1. That in view of the low rate of interest this company be given the right to subscribe for a twenty-five per cent interest in the capital of the company.

2. That as additional security for the unsecured loan, while any monies remain owing to this company under this arrangement, Mr. John Theodore Wolfe be appointed chairman and managing director and Mr. William Denis Witheriff be appointed secretary of the mining company.

That in general principle the scheme outlined by the chairman be approved.

At a meeting of directors held on 28th May 1959: The Chairman reported that Mr. N. J. Cooley, who was present at the meeting, had confirmed that the basis of borrowing from Fairway Estates was acceptable to the remaining members of the syndicate and as there was to be an inaugural meeting of Jubilee Tin Pty. Ltd. at 9 a.m. this day, before making any advances to the company he was desirous of this company receiving its share interest.

He thereupon tabled an application for 250 ordinary shares of 5/- each in the capital of Jubilee Tin Pty. Ltd.

That the application be signed under the common seal of the company by John Theodore Wolfe, Director, in the presence of William Denis Witheriff, Secretary.

That Mr. John Theodore Wolfe be and is hereby authorised to act as representative of the Company at any meeting of Jubilee Tin Pty. Ltd. and to exercise all voting and other rights vested in this company by virtue of its shareholding in that company.

It was resolved that the company proceed forthwith to obtain a money lender's licence.

As the quoted minutes indicate, the appellant subscribed initially for 250 shares in Jubilee which at the time of that subscription amounted to one-quarter of the issued capital of that company. Over a period of time Jubilee increased its issued capital, the appellant's holding becoming progressively larger so that by December 1959 the appellant held 530 of the 2,000 issued shares. Two of the directors of the appellant also served on the board of directors of Jubilee.

On 7th August 1959 at a meeting of directors held that day:

The Chairman advised that he had been approached by Jubilee Tin Pty. Ltd. for advances in excess of £20,000.

He reported to the meeting that an arrangement had originally been entered into by that company with Thiess Bros. for the rental of plant, but as these negotiations had now broken down it was obvious that the company would now require to buy plant and it would require considerably more than the £20,000 agreed to.

He further informed the Meeting that although he had no doubt as to the ultimate success and profitability of the Mine, he had refused the application because he considered that £20,000 was the maximum which Fairway Estates could advance to any one venture. He had advised Jubilee Tin Pty. Limited that they would have to borrow money from outside sources but he would use what influence he could to assist the Company in procuring such monies.

He reported that the Directors of Jubilee Tin had agreed to allot an interest in the Capital of the Company to the new lenders on a similar basis to the advances made by Fairway Estates Pty. Limited. In accordance with the earlier agreement between Fairway Estates Pty. Limited and Jubilee Tin Pty. Limited, it was now necessary for this Company to take additional shares to retain its same equity in the Capital of that Company.

The Chairman then tabled an application for 230 Ordinary Shares of 5/- each in Jubilee Tin Pty. Limited and it was resolved:

That the application be signed under the Common Seal of the Company by John Theodore Wolfe, Director, in the presence of William Denis Witheriff, Secretary.

In the minutes of a meeting of directors held on 11th November 1959: The Secretary indicated that the Commercial Bank of Australia Ltd. Queen St. Brisbane would be prepared to make available an overdraft to £2,500 to Jubilee Tin Pty. Ltd. on the Guarantee of the Company and,

That Fairway Estates Pty. Ltd. guarantee the repayment of such advances as Jubilee Tin Pty. Ltd. may require from time to time and the Commercial Bank of Australia Ltd. may see fit to grant on the security of the company's guarantee for £2,500 such guarantee to be executed on the bank's usual form by the company and that the said document be given to secure also all monies (if any) already owing by Jubilee Tin Pty. Ltd. to the Commercial Bank of Australia Ltd. and the document be signed under the seal of the company and by the hands of W. D. Witheriff.

Some time in January 1960 there were indications that matters were not satisfactory with the tin-mining operations and between January and June that year Mr. Wolfe attempted to reorganize the whole operation. He formed the opinion, however, that there was not much tin at the site of these operations. In July 1960 Jubilee was put into receivership by a debenture holder at the instance of Mr. Wolfe.

At the date of the advance to Jubilee and apart from making it, the appellant's only activities consisted of the selling of land in subdivision. However, from a period from August 1960 onwards, the company in the period up to 1964 made approximately 21 miscellaneous secured and unsecured advances to individuals. During the same period it also made considerable advances to some of the associated companies. The appellant also, by the end of the financial year 1963/64, had developed plans to subdivide a further block of land to be purchased from Parklands Pty. Ltd., an associated company, under a scheme similar to that under which the "Fairway Estates" land had been sold.

During the financial years 1958/59 and 1959/60 the appellant received interest only in respect of the loan to Jubilee but in subsequent years in addition to interest on the sundry loans to which I have referred, it received interest from each of two companies, respectively named Sun Lands and Ray Sun, upon money lent by the appellant to them. These companies were both engaged in discounting builders' mortgages and in lending money to subdividers in Brisbane. At the time the appellant made advances to these companies they had shareholders and directors who were also shareholders and directors of the appellant. The rates of interest paid by these companies on the advances made to them varied between ten per cent and twenty per cent. The first advance to either company however was subsequent to August 1960. I ought here to mention that the appellant besides the money advanced to Jubilee obtained various sums from United upon loan at interest, the rate after the 30th August 1960 being eight per cent.

Although the onus of showing the assessment to be excessive rests on the appellant, the issues for consideration can be best seen by stating the submissions of the respondent. He says firstly that the advance of the money to Jubilee was part of an investment of capital in the mining venture of that company and not the lending of money in a relevant sense. Secondly, that if the advance constituted relevantly the lending of money, it was not made in or as part of a business of the lending of money because the appellant at the time of the advance did not have or conduct a business of lending money. Thirdly, that if the advance was made in the business of lending money it was not in the ordinary course of such a business, either as then conducted by the appellant or as generally conducted in the community, either because the appellant at that time had not established an ordinary course of its business of lending money or because of the association of the shares transaction with the advance.

It will be apparent that these submissions raise important questions as to the construction and application of s. 63 of the Act. The section no longer contains the words "and no other " which were removed by the Income Tax and Social Services Contribution Assessment Act (No. 2) 1963 Cth. Thus, in an appropriate case a deduction of an irrecoverable debt may be had under s. 51 (1). However, in this case, having regard to the facts, the only basis of deduction must be found in s. 63.

The first question is whether the taxpayer, to satisfy the terms of s. 63, must be carrying on the business of lending money at the time of making the advance in respect of which the deduction is claimed. It seems to me that this must be so, that the advance must be made as part of a business of money-lending then carried on by the taxpayer.

There then arises the question whether upon the true construction of the section, the advance must be made in the ordinary course of the business of lending money as then carried on by the taxpayer, and whether it is sufficient that the advance is not made in circumstances which are out of the ordinary course of the business of the lending of money. In my opinion, the proper construction of the section is that the advance of the money in question should have been made by the claimant taxpayer in the ordinary course of the business of lending money then carried on by him.

In requiring the lending to be in the ordinary course of the business, however, the section, in my opinion, does not require that the advance must conform to the usual or ordinary transaction currently carried out by the taxpayer in carrying on the business of lending money. It is the ordinary course of such a business of which the section speaks. The advance may be of a new type or kind so far as the taxpayer's business is concerned and yet be in the ordinary course of that business.

I have come to the conclusion that the decisions involving the expression "in the ordinary course of business" found in bankruptcy legislation have no direct bearing on the construction or application of s. 63. Accordingly, I find no need to discuss them. However, the remarks of Rich J. in Downs Distributing Co. Pty. Ltd. v. Associated Blue Star Stores Pty. Ltd. [1] are of use in that they emphasize the notion of a common course in the conduct of a business. The requirement that the transaction be in the ordinary course of the business excludes transactions which are made for purposes other than the carrying on of the business or to achieve ends disparate from those of the business activity.

In applying this construction of the section to the facts of this case the critical question is whether or not the appellant was carrying on the business of lending money at all at the time of the advance to Jubilee. If it was not then doing so, no further question arises.

The appellant was incorporated to carry on the business of the lending of money along with other activities. This, I am satisfied was an actual intention of its subscribers and not merely a precautionary inclusion of an object in its memorandum along with a large number of other possible courses of action. The appellant's association with United, having regard to the activities and financial resources of that company, confirms the view that the appellant intended throughout to carry on the business of the lending of money as opportunity offered.

However, up to the date of the advance to Jubilee it had not commenced to carry on any such business. As I have said, its sole activity up to that time was the purchase of land and its sale in subdivision. But, because of its association with United I believe it would have lent money to sundry members of the public who had applied prior to that time at the address in common use by the appellant and United had Mr. Wolfe or Mr. Witheriff decided that it should do so. Yet in fact it did not do so.

When the proposal for financial assistance was received from Mr. Cooley, it would seem that a policy decision was taken by Mr. Wolfe that the opportunity to make the advance should be given to the appellant. United was in any case the ultimate source of the funds wherefrom the advance was to be made, as well it might have been the source of the money advanced to members of the public, if it had been decided that any of the applications received in the common office before the advance to Jubilee should be accepted by the appellant. It would seem that as a matter of policy it was decided at that time that the appellant should make the larger advances, rather than the smaller advances then available to be made by either United or the appellant to members of the public. It seems to me that it was in reference to this policy that Mr. Wolfe said in evidence that there was a change in the policy of the appellant after the failure of Jubilee. Thereafter the appellant did accept some of the applications for loans made by members of the public at the common address. In August 1960 the appellant decided to borrow £100,000 at eight per cent from United to place itself in a position to expand its money-lending activities.

In cases upon the application of legislation to control money-lenders it has been usually said that to carry on the activity as a business, repetition and continuity is necessary, and on occasions the requisites have been described as involving a plan or scheme of activity. See for example Kirkwood v. Gadd [1] ; Rabone v. Deane [2] ; Schnelle v. Dent [3] ; Lapin v. Heavener [4] ; Lapin v. Abigail [5] ; Blockey v. Federal Commissioner of Taxation [6] ; Newton v. Pyke [7] and Gabb v. Loan & Deposit Co. Ltd. [8] . On the other hand in the application of a taxing statute a somewhat different approach was made by the Privy Council in South Behar Railway Co. Ltd. v. Commissioners of Inland Revenue [9] .

1. [1910] A.C. 422. 2. (1915) 20 C.L.R. 636. 3. (1925) 35 C.L.R. 494. 4. (1929) 29 S.R. (N.S.W.) 514. 5. (1930) 44 C.L.R. 166. 6. (1923) 31 C.L.R. 503. 7. (1908) 25 T.L.R. 127. 8. [1934] N.Z.L.R. s. 198. 9. [1925] A.C. 476.

Here, if the transaction is a loan of money, it was made as a matter of business. It was not made in connexion with the land-selling business of the appellant. In my opinion, it was not intended to be a single and isolated transaction; that there were to be no further advances of money. I accept the expressions in the minutes of the appellant as to the intention of the appellant as genuine. For example, it is minuted under date 1st July 1959:

An interim dividend declared on 28th May 1959 be payable as at 1st July 1959. In view of the objects of the company to operate basically as a money lending company it has requested that all shareholders' dividends be placed with the company in the form of an advance bearing interest at the rate of ten per cent.

The chairman reported that an approach had been made verbally to the respective shareholders who were in full agreement, except that Mrs. J. Witheriff would re-invest only £200 of the £300 dividend.

Again, when in August 1959 Jubilee sought an additional loan, it is recorded that Mr. Wolfe " informed the meeting that although he had no doubt as to the ultimate success and profitability of the mine, he had refused the application because he considered that £20,000 was the maximum which Fairway Estates could advance to any one venture. He had advised Jubilee Tin Pty. Ltd. that they would have to borrow money from outside sources but he would use what influence he could to assist the company in procuring such monies." It is of course true as the respondent's counsel has emphasized that there were no loans made between the date of the advance to Jubilee and August 1960, or as he preferred to state the fact, only one loan in the first twenty-one months of the appellant's existence. The force of this fact would be greater in my mind if the question was whether the appellant intended to carry on the business of money-lending. But given that intention, which as I have said, I regard as fully established by other evidence, I do not regard the fact that there was no immediate repetition of the lending of money or that there was a considerable break before there was any continuity in the making of loans as definitive of the question whether the business of lending money was being carried on at the time of the advance to Jubilee.

In Re Griffin; Ex parte The Board of Trade [1] an isolated transaction intended to be repeated was regarded as enough to constitute the carrying on of a business for the purposes of the book-keeping provisions of the Bankruptcy Act, 1883 U.K.. Lord Esher with the concurrence of Lopes and Kay L.JJ. said this [2] :

The difficulty is as to whether he had entered into business as a builder. It was stated, as I understand, by the learned Registrar in his judgment that because there was only evidence of one building transaction, or, if he treated the cottage speculation as a building transaction, only evidence of two transactions, it was not proved that there was a business. In my opinion, to say that if only one or two transactions can be proved, then, as a matter of law, it cannot be said that they are transactions in a business, is too drastic a statement. I think that whether one or two transactions make a business depends upon the circumstances of each case. I take the test to be this: if an isolated transaction, which if repeated would be a transaction in a business, is proved to have been undertaken with the intent that it should be the first of several transactions, that is, with the intent of carrying on a business, then it is a first transaction in an existing business. The business exists from the time of the commencement of that transaction with the intent that it should be one of a series, and if the business is one in which it is proper to keep books, then books ought to be kept from the commencement of the first transaction. In fact in that case, for lack of satisfactory proof of the existence of an intention to have further transactions, the conclusion was that there was no existing business. 1. (1890) 60 L.J. Q.B. 235. 2. (1890) 60 L.J. Q.B., at p. 237.

I am of opinion that the proper conclusion in this case is that the appellant was carrying on the business of lending money at the time it made the advance to Jubilee and that that loan was the first transaction in a business of the lending of money then commenced and intended to be carried on.

The next question is whether the transaction with Jubilee was in any respect a lending of money or merely a capital investment by the appellant in a tin-mining venture. In my view, the advance of money to Jubilee was a transaction of lending money. The proper conclusion from the evidence which I accept is that the stipulation by the appellant for participation in the equity was part of the return it required for advancing the money at the agreed rate. It tended to offset the apparent loss due to the difference between the rate of interest paid to United and the rate charged to Jubilee. I say "apparent" because of the relationship of the two companies and of their shareholders. The difference in these rates does not, in my opinion, indicate or tend to establish that the true nature of the transaction as a whole was the investment of capital not the lending of money. The insistence upon representation of the appellant on the board of Jubilee was, in my opinion, to effect a measure of security for the money lent. Evidence was given before me by Mr. N. M. Barnett as to the practice of companies carrying on the business of lending money when advancing money to a company whose venture involved a degree of risk. I regard that evidence as admissible in the circumstances of the case, and having regard to the issues raised. Mr. Barnett seemed well qualified to speak as to this matter and I accept what he said. From that it appears that on a significant number of occasions involving considerable sums of money the company, engaged in the lending of money with which he was principally associated, became a shareholder in the borrowing company and insisted on having representation on its directorate. These steps were taken as a means of increasing the effective interest yield and of participating in the control of the borrowing company's affairs by way of security for the money advanced. In my opinion, the arrangements made by the appellant with Jubilee were of this kind. The transaction was a lending of money.

The last question is whether the loan of money to Jubilee was in the ordinary course of the taxpayer's business of lending money. In this connexion it was submitted that there had not as yet developed at the date of the loan any ordinary course in that business. Only one loan had been made: thus it is said no course of business which in the respondent's submission entails repetition and continuity. But this submission misconceives the significance of the expression "course of business" in the section. I have already indicated what in my opinion the ordinary course of business for present purposes involves. Further, in my opinion, there can be a course of business although as yet there is nothing more than an intention to carry on the business and a single transaction carried out in pursuance of that intention. The lending in this case was not for any purpose other than the carrying on of the appellant's business of lending money.

But the respondent's counsel submitted that the presence of the stipulation for a share in the equity capital of Jubilee and of representation on the board of that company took the lending of the money outside the ordinary course of the taxpayer's business. But again, it seems to me, this submission misconceives the significance of the expression "in the ordinary course of business". It may well be that the transaction was unusual even for the taxpayer. It may also be that it may be a transaction of a kind which it might not thereafter have repeated or repeated in the precise form of the transaction with Jubilee. But the unusual quality of a transaction does not mean that it is of necessity a transaction entered into outside the ordinary course of business. Here, everything points in the opposite direction. The transaction is made by the appellant with another company in which it has no interest prior to the carrying out of the transaction itself, the money was actually advanced, the consideration was real and there were no circumstances by reason of which, in my mind, it could be said that the transaction was outside the ordinary course of business of the taxpayer. All that can be said the respondent does say, when he calls attention to what he calls the unusual features of the loan. However, it may be remarked that the evidence placed before me through Mr. Barnett would indicate that the transaction was not even unusual in the field of money-lending in which it took place.

I have therefore come to the conclusion that the amount written off by the appellant in the year under review constituted a bad debt in respect of the loan of money to Jubilee made by the taxpayer at a time when it was carrying on the business of the lending of money and that the advance was made in the ordinary course of that business. Accordingly, in my opinion, the appeal should succeed.

The order I make is "Appeal allowed with costs. Assessment set aside and remitted to the Commissioner to assess the taxpayer in accordance with these reasons for judgment".