Healey v Commissioner of Taxation

LANDER AND GILMOUR JJ 1 This is an appeal from orders of a judge of this Court dismissing an appeal by the appellant against the respondent's income tax assessment for the year ending 30 June 2006 and dismissing her appeal against an administrative penalty assessment in respect of the same period. 2 On 17 March 2009, the respondent made an assessment of the appellant's taxable income for the year ended 30 June 2006 pursuant to s 167 of the Income Tax Assessment Act 1936 (Cth) (ITAA 1936) and issued a notice of assessment to the appellant, showing taxable income of $15,754,189, including a net capital gain of $14,190,500 as distributed to her as beneficiary of The Esteem Trust. 3 On 18 March 2009, the respondent issued a notice of assessment and liability to pay an administrative penalty on a shortfall amount, imposing a penalty on the appellant for the year ending 30 June 2006 of $5,350,134.15; and for the year ending 30 June 2007 of $8,824.15. 4 On 15 May 2009, the appellant objected to the notice of assessment dated 17 March 2009 and the notice of assessment and liability to pay an administrative penalty dated 18 March 2009. 5 On 21 May 2010, the respondent disallowed the appellant's objections in full. 6 The appellant appealed against the decision of the respondent made on 21 May 2010 in relation to the applicant's objection dated 15 May 2009. 7 On 4 October 2010, the Court made an order pursuant to s 14ZZO(a) of the Taxation Administration Act 1953 (Cth) (TAA 1953) allowing the appellant to rely upon grounds in addition to the grounds stated in the appellant's objection dated 15 May 2009. 8 On 23 March 2012, the appeal was dismissed by the primary judge. It is from those orders that this appeal is brought. 9 On 26 September 2003, Esteem Holdings Pty Ltd (Esteem) was incorporated and Ms Joanne de Hollander became the sole shareholder and was appointed the sole director of Esteem. She remained the sole shareholder and director until February 2006. 10 On the same day, The Esteem Trust, a discretionary trust, was settled for the benefit of the beneficiaries of the trust. Being a discretionary trust, the trustee was empowered to allocate the trust's income as between the beneficiaries as the trustee determined. Ms de Hollander and the appellant were both specified beneficiaries under The Esteem Trust. 11 Also on the same day, Esteem was appointed sole trustee of The Esteem Trust and remained so until February 2006. 12 Between September 2003 and February 2006, Jandakot Airport Holdings Pty Ltd (JAH) was the registered proprietor of land known as the Jandakot Airport. JAH held the land under a Crown Lease. 13 Article 28 of JAH's Constitution restricted the transfer of shares in JAH unless certain rights of pre-emption had been exhausted or waived. Any member who proposed to transfer shares was obliged to give notice to the company of the shares to be transferred and the member would specify the price that the member was willing to accept. The notice constituted JAH as that member's agent for a period of 28 days. The Directors were obliged to offer the shares, the subject of the notice, to all other members in proportion to their existing holdings at the price specified. If, within the 28 days, no existing member wished to purchase the shares, the transferor was entitled to transfer those shares to a non-member, but at a price not less than that specified in the notice. 14 Article 28 had no application where all the members, excluding the proposed transferor, waived all rights of entitlement: Article 28(8)(e). 15 Article 29 of JAH's Constitution provided that the transferor of shares remained the holder of the shares until the transfer was registered and the name of the transferee was entered into JAH's register of members. 16 Between 1 September 2003 and 31 January 2006, the sole director of JAH was Mr Douglas Green. 17 As at 1 March 2004, JAH's issued share capital consisted of 2,500,002 ordinary shares held by three shareholders: Allswan Holdings Pty Ltd (Allswan) - 858,334 shares - 34.33%; Hanscon Holdings Pty Ltd (Hanscon) - 833,334 shares - 33.33%; Jayport Holdings Pty Ltd (Jayport) - 808,334 shares - 32.33%. 18 Between September 2003 and February 2006, Ms de Hollander was a director and shareholder of Allswan and Jayport. Between September 2003 and 28 May 2004, Mr Rino Camarri was the other director of Allswan. Mr Johannes Versteeg was the other director of Jayport for the same period as Ms de Hollander. The other shareholders in Allswan (if any) are unknown. Hanscon was the other shareholder in Jayport holding 50% of the shares. 19 On 2 October 2003, Newcode Pty Ltd (Newcode) was incorporated. 20 From 17 October 2003, the sole shareholder in Newcode was Mr Roger Davis. The directors of Newcode between October 2003 and February 2006 were successively: Ms Marilyn Sanford - 2 October 2003 to 17 October 2003; Mr Roger Davis - 17 October 2003 to 18 October 2005; Ms Annette Kuhnert - 18 October 2005 to February 2006. 21 On 1 May 2004, Jayport transferred 467,014 of its shares in JAH to Hanscon and the transfer was registered in JAH's register of members. As at 1 May 2004, the shareholding in JAH was: Hanscon - 1,300,348 shares - 52.01%; Allswan - 858,334 shares - 34.33%; Jayport - 341,320 shares - 13.65%. 22 On 1 May 2004, by a document entitled "Declaration of Trust", Newcode agreed to purchase 1,199,654 shares in JAH and hold those shares in trust for Esteem as trustee for The Esteem Trust. The Declaration of Trust contained no other terms. It did not address the purchase price of the shares to be acquired or provide for any indemnity for Newcode for the cost of purchase of the shares. 23 On 1 May 2004, Allswan executed a document entitled "Standard Transfer Form" by which it transferred its legal and beneficial rights in all of its ordinary shares (858,334) in JAH to Newcode for the sum of $3,000,000. On the same day, Jayport executed a Standard Transfer Form by which it transferred its legal and beneficial rights in all of its ordinary shares (341,320) in JAH to Newcode for the sum of $1,318,750. Both Standard Transfer Forms were executed for the vendors of the shares (Allswan and Jayport) by Ms de Hollander, who had signed each form next to the words: Signed for and on behalf of …. By authority of its directors in accordance with Section 127 of the Corporations Act. 24 The directors' minutes authorising the execution of the two Standard Transfer Forms were not produced. 25 Apart from the executed Standard Transfer Forms, there was no other documentation produced relating to the sale or transfer of those shares. Thus, Newcode became entitled to 1,199,654 shares in JAH, which it held on a bare trust for Esteem as trustee of The Esteem Trust. 26 Newcode did not pay either Allswan or Jayport for the shares in cash, but by book entries became an unsecured debtor of Allswan and Jayport in the amount of the consideration for the transfer of the shares. There was no evidence of any agreement as to how Newcode would discharge its indebtedness to Allswan and Jayport. 27 The transfers were not registered in JAH's register of members at that time. There was no explanation given for the non-registration of the transfer of the shares to Newcode. 28 No evidence was produced that Allswan and Jayport complied with Article 28 of JAH's Constitution and, if they did, when they complied. Therefore, no evidence was given whether JAH or its directors responded as required by Article 28. 29 On 8 February 2005, JAH declared a franked dividend of 8 cents per share. That dividend was paid to Hanscon, Allswan and Jayport, the three shareholders who were then registered in JAH's register of members. 30 On 2 November 2005, Newcode and Hanscon entered into a Share Sale Agreement with Ascot Capital Fund No 1 Pty Ltd (Ascot) for the sale of all of their shares in JAH. Newcode was still not then registered as the shareholder of the 1,199,654 shares for which Share Transfer Forms had been executed on 1 May 2004. Hanscon still held 1,300,348 shares at that date. The Share Sale Agreement provided that the consideration for the purchase of Newcode's and Hanscon's shareholding in JAH was $43,500,000 to be paid by a deposit of $4,350,000 and the balance of $39,150,000 on completion. Clause 2.3 provided that 57.45% of the total consideration ($24,990,750 exclusive of GST) was to be paid to Hanscon and 42.55% ($18,509,250 exclusive of GST) to Newcode. That allocation meant that Ascot was paying Hanscon $19.2185 for each of its 1,300,348 shares and Newcode $15.4288 for each of its 1,199,654 shares in JAH. The discrepancy in the price paid for the shares was not explained. The Share Sale Agreement required Ascot to advance prior to the completion date $2,300,000 to JAH in order that JAH could pay a dividend of $1,196,000 to Hanscon and $1,104,000 to Newcode. 31 On 8 December 2005, JAH held its Annual General Meeting (AGM). Present at that meeting were Doug Green, Hans Versteeg, Annette Kuhnert and Jamie Pollock. Reno Camarri was an apology. The minutes recorded: Doug Green advised the meeting that Joanne De Hollander had advised, that Jamie Pollock was authorised to represent her on behalf of Allswan Holdings Pty and Jayport Holdings Pty Ltd. 32 At the AGM, Hanscon, by Mr Versteeg, waived its pre-emptive rights to restrict the transfer of the JAH shares from Allswan and Jayport to Newcode. The members of JAH resolved unanimously that the share transfers dated 1 May 2004 be approved and ratified. The minutes recorded: The chairman tabled the original share transfers of Allswan Holdings Pty Ltd and Jayport Holdings Pty Ltd to Newcode Pty Ltd, dated 1 May 2004, and requested approval to process. The chairman advised Hans Versteeg that the transfer was in conflict with the company constitution and shareholders agreement and would require his approval. Hans Versteeg advised he had no objection to transfer, and moved that the transfer of shares be processed, seconded Jamie Pollock. All voted in favour. 33 On 9 December 2005, the change in the ownership of the JAH shares from Allswan and Jayport to Newcode was formally recorded in a document lodged with the Australian Securities & Investments Commission. On the same day, the change in ownership of the JAH shares was formally recorded in JAH's register of members. 34 On 31 January 2006, the sale by Newcode to Ascot of the JAH shares completed and: (a) Newcode transferred to Ascot its 1,199,654 JAH shares; (b) Ascot paid $18,509,250 to Newcode; and (c) JAH declared and paid a franked dividend of $1,196,000 to Hanscon and $1,104,000 to Newcode. 35 On 23 June 2006, Esteem, by Ms de Hollander, resolved that the whole of the net income received by the trust, including the dividend Newcode received from JAH and the net capital gains in the sale of the shares to Ascot, be distributed to the appellant as a beneficiary of The Esteem Trust. 36 On 17 September 2008, Esteem lodged with the respondent an income tax return for The Esteem Trust for the year ending 30 June 2006. 37 Pursuant to that income tax return, the whole of the net income received by the trust including all net capital gains was distributed to the appellant. The actual profit on the purchase and sale of the shares was $14,190,500. 38 Esteem reported in the income tax return that The Esteem Trust had derived assessable income, being: (a) the $1,104,000 franked dividend paid by JAH to Newcode in relation to Newcode's 1,199,654 shares in the issued capital of JAH; (b) a net capital gain on the disposal of Newcode's 1,199,654 shares in the issued capital of JAH. 39 Esteem reported a net capital gain of $7,095,250 on the disposal of those shares, being the difference between the purchase price in total of $4,318,750 and the sale price of $18,509,250 reduced by 50% by way of discount capital gain, making a total taxable capital gain of $7,095,250. 40 It was not disputed before the primary judge or on appeal that the appellant bore the burden of proving that the assessment was excessive: s 14ZZO(b) of the TAA 1953. In Danmark Pty Ltd v Federal Commissioner of Taxation; Forestwood Pty Ltd v Federal Commissioner of Taxation (1944) 7 ATD 333, Latham CJ said at 337: … the onus rests upon the taxpayer of establishing the facts upon which he relies and if it is necessary for him to establish a particular fact in order to displace the assessment he must satisfy the Court with respect to that fact. 41 The Commissioner is entitled to rely upon any deficiency in proof by the taxpayer: The Commissioner of Taxation for the Commonwealth of Australia v Dalco (1990) 168 CLR 614 per Brennan J at 624-625. 42 The appellant relied upon her own evidence contained in an affidavit and a short cross-examination, and an affidavit of her accountant, Mr Metcalf, who exhibited a number of documents which were uncontroversial. Mr Metcalf was not cross-examined. Neither the appellant nor Mr Metcalf had first-hand knowledge of the transactions which had occurred on 1 May 2004 and 2 November 2005, or the completion of both of those transactions. Mr Metcalf's first involvement was in March 2008, after the transactions had completed. 43 The appellant did not call Ms de Hollander, although she was well known to the appellant. They have known each other for 18 years and been involved together in previous property dealings. 44 Capital gains tax (CGT) came into effect on 20 September 1985. The Income Tax Assessment Act 1997 (ITAA 1997) makes any assets acquired since that date subject to the capital gains provisions unless specifically excluded by the ITAA 1997. Capital gains legislation applies to both tangible and intangible assets and, in particular for the purpose of this case, shares: s 108-5 of the ITAA 1997. 45 A capital gain is made if the sum received on the disposal of an asset is greater than the cost of the acquisition of the asset: s 100-35 of the ITAA 1997. 46 Division 102 of the ITAA 1997 provides guidance as to whether a capital gain or capital loss has been made in any particular income year. A capital gain can only be made if a CGT event occurs and the gain or loss is measured at the time of the event: s 102-20. Section 104-5 of the ITAA 1997 provides a list of possible CGT events. 47 It is necessary for the purpose of assessing the capital gains/losses made to first decide whether a CGT event has occurred and if more than one event has occurred, regard is to be had to the one most specific to the situation: s 102-25(1). 48 An issue for decision before the primary judge was which CGT event applied to Newcode's acquisition of the JAH shares. The primary judge was faced with the choice between CGT event A1 on disposal of a CGT asset, which occurs "if you dispose of a CGT asset" pursuant to s 104-10(1) of the ITAA 1997, or CGT event E2 if you transfer a CGT asset to a trust, which occurs "if you transfer a CGT asset to an existing trust" pursuant to s 104-60(1) of the ITAA 1997. 49 His Honour concluded that the CGT event E2 was the more appropriate event for the purpose of determining the capital gains tax payable on these transactions. Both parties accept his Honour's conclusion in that regard. 50 Because an E2 event was appropriate, Newcode was taken to have acquired the JAH shares when they were "transferred", which was on 9 December 2005: s 109-5 of the ITAA 1997. Accordingly, when the sale to Ascot completed, the JAH shares had not been held by Newcode for at least 12 months to attract a discount capital gain under division 115 of the ITAA 1997. 51 Because the CGT event was E2, the capital gain was to be measured by the capital proceeds from the transfer less the asset's "cost base": s 104-60(3). That raised, as an issue, the cost base of the asset (the shares). 52 Section 112-20 of the ITAA 1997 relevantly provides: Market value substitution rule (1) The first element of your cost base and reduced cost base of a CGT asset you acquire from another entity is its market value (at the time of acquisition) if: … (c) you did not deal at arm's length with the other entity in connection with the acquisition. 53 Section 995-1 of the ITAA 1997 provides that in determining whether parties deal at arm's length, consideration must be given to any connection between those parties and any other relevant circumstance. 54 The appellant contended before the primary judge that the transaction by which Newcode acquired its shares in JAH was not a dealing at arm's length, so then s 112-20(1)(c) of the ITAA 1997 operated with effect that the market value of the shares at the time of acquisition would be substituted for the cost base of the CGT asset. 55 The second issue the appellant needed to establish, if she established the first issue that the dealing was not at arm's length, was the market value of the JAH shares as at the date that Newcode acquired them on 9 December 2005. She sought to establish that the market value was the same price as that paid by Ascot to Newcode for the JAH shares. If both of those matters were established, there would be no capital gain and the appellant's objection to the respondent's assessment would have to be allowed. 56 The primary judge found against the appellant in respect of both issues. 57 The respondent did not argue before the primary judge that s 112-20 had no application when in fact the taxpayer had made an actual capital gain. The respondent did not argue that the purpose of s 112-20 was to adjust the cost base of an asset where the cost base of the asset is said to be greater than the market value therefore minimising the capital gain. The respondent accepted that the appellant would be entitled to have substituted as the cost base of the shares the market value of the shares if the appellant succeeded on the two factual issues. 58 In relation to the first issue, the primary judge found that there was insufficient evidence on which it could be concluded one way or the other that the parties had not dealt at arm's length and that, as a result, the appellant had not proved that the dealing was not at arm's length. 59 His Honour was of the opinion that the appellant could have called witnesses, including Ms de Hollander, who could have given evidence as to the true nature of the relationship between the relevant parties. 60 As to the second issue, his Honour found that in the absence of any expert evidence he could not conclude on the balance of probabilities that the market value of the JAH shares as at 9 December 2005 was $18,509,250. 61 The same two issues arise on the appeal, both of which are factual. They have been formulated by the appellant in her written submissions: (a) whether the primary judge erred in concluding that the appellant had failed to discharge her onus in proving that the transaction of Newcode acquiring the shares in JAH was not an arm's length transaction; and (b) whether the primary judge erred in concluding that the appellant had failed to discharge her onus in proving that the market value of the shares in JAH, which were acquired by Newcode as at 9 December 2005, was $18,509,250. 62 The appellant's case on appeal is that the primary judge erred in making those two factual findings. 63 The respondent did not argue on the appeal that the construction of s 112-20, which had been assumed to be as the appellant contended before the primary judge, should be rejected. The respondent said that for the purpose of this proceeding and appeal only the respondent accepted the appellant's construction. The respondent effectively conceded that because no argument had been put to the primary judge that s 112-20 could not be construed as the appellant contended, it would not be appropriate to put the argument on appeal. 64 We think the respondent was right to concede that an argument not put at trial should not be put on appeal. 65 We shall approach this appeal upon the assumption that if the appellant can make out the two factual issues rejected by the primary judge, the appellant is entitled to have her appeal against the assessment and the penalty allowed and the assessment and penalty set aside. 66 The only issues for this Court, therefore, are whether the appellant, who has the onus, established the two facts. 67 It should not be thought, however, that this Court is thereby endorsing the construction given to s 112-20 that the parties accepted was the construction before the primary judge. 68 Because the Commissioner rightly accepted that he could not put an argument on this appeal that was not put to the primary judge, we have not heard argument on the true construction of s 112-20. 69 We simply observe that upon the appellant's construction, the party who in fact obtained a capital gain of $14,190,500 (Newcode) would not have to pay CGT on that capital gain. Rather, the liability for CGT would fall upon the parties who sold the shares (Allswan and Jayport) who did not make a capital gain. That would mean that the Commissioner would be forced to attempt to recover the CGT from parties who did not receive the actual capital gains and who would be, in all events, unlikely to be able to meet the tax liability. 70 The appellant contended on appeal that the primary judge had misconceived the relationship between Newcode and Esteem, because the relationship itself showed that the transaction was not conducted at arm's length. The appellant contended that Newcode acted in the transaction as a bare trustee for Esteem and therefore had no interest in the trust asset. The appellant contended that Newcode, in those circumstances, acted at the express instructions of the director of the beneficiary, Esteem. Ms de Hollander, it was argued, was the sole director of Esteem at the relevant time and also exercised de facto and de jure control over Newcode. It was contended that she directed the mind and will of Newcode because she was the sole shareholder and director of Esteem for which Newcode acted as bare trustee. Accordingly, it was submitted, Esteem and Newcode were not at arm's length. 71 Furthermore, although Newcode had different officers to Allswan, and Newcode had different officers to Jayport, Ms de Hollander was an officer of both Allswan and Jayport. 72 The appellant therefore contended that the parties could not be said to have operated separately and independently, nor could the parties be said to have applied separate minds and wills to the transaction. The appellant contended that the relevant transaction resulted from the direction and will of Ms de Hollander exercising control as a director of Jayport and Allswan, and also as the sole director of Esteem, which had the effect of directing the decisions of Newcode, the bare trustee of The Esteem Trust. 73 It was contended that the conclusion that the parties to the transaction did not deal with each other at arm's length could be drawn from the following facts and circumstances: there was no agreement, apart from the Standard Transfer Form, in respect of the transfer from Allswan and Jayport to Newcode of their shares; Newcode did not pay Allswan or Jayport for the JAH shares, but became a creditor of Allswan and Jayport by book entries; there was no agreement between Newport and Allswan and Jayport as to when the indebtedness of Newcode to each of those companies would be discharged; as at 13 March 2009, the respondent adopted the position that Allswan and Jayport had not dealt at arm's length with Newcode. 74 The appellant argued that the appellant's election not to call or elicit evidence from Ms de Hollander was not significant and an unfavourable inference could not be drawn solely on the basis that her evidence was not proffered. It was submitted that there was no evidence before his Honour that could provide a basis upon which Ms de Hollander's absence would suggest that an unfavourable inference should be drawn. 75 The appellant contended there was sufficient evidence in the documents themselves to show that the transacting parties were not acting at arm's length. 76 As to ground 2, the appellant argued that the primary judge had erred in finding that the appellant had not satisfied the burden of proof in establishing the market value of Newcode's JAH shares to be $18,509,250 on 9 December 2005. The sale of these shares to Ascot occurred on 2 November 2005. The appellant argued that the Newcode/Ascot transaction provided the best evidence of the market value of the JAH shares at the time of the transfer on 9 December 2005 and that his Honour should not have concluded "[i]n the absence of any expert evidence or evidence as to the parties' dealings, it would be unsafe to conclude, on the balance of probabilities, that the market value of the JAH shares as at 9 December 2005 was $18,509,250". The appellant argued that expert evidence was not required. 77 The primary judge did not find that Newcode dealt at arm's length with Allswan and Jayport. As the respondent contended, rightly, the primary judge found that the appellant had not discharged the onus of establishing that the dealing was not at arm's length. 78 The appellant did not call Ms de Hollander who would have been able to shed light upon the transaction and, in particular, could have given evidence as to why Allswan and Jayport accepted the consideration which was expressed in the Share Transfer Forms in circumstances where, if the appellant's case is to be accepted, the shares were worth significantly more. 79 As we have said, the appellant had known Ms de Hollander for 18 years. She had a continuing association with the appellant and the appellant had been involved in property dealings with Ms de Hollander. Ms de Hollander's solicitors were also the appellant's solicitors. 80 Ms de Hollander could have told the Court of the cost of the shares to Allswan and Jayport. She could have explained why the completed transactions of 1 May 2004 did not include the transfers to Newcode, but the transfer by Jayport of 467,014 shares to Hanscon. She could have explained why that transfer to Hanscon was registered in JAH's register of members contemporaneously, but the other transfers were not. She could have told the Court the price that Hanscon paid Jayport for those JAH shares, which would have been some evidence of the value of the members' shareholding in JAH. She could have shed light on why the transfer of the shares was not registered in JAH's register of members until 19 months after they were executed. She could have told the Court whether Allswan and Jayport first complied with Article 28(1) of JAH's Constitution by giving notice of the proposed share transfer to JAH, and whether the company had given notice to Hanscon of the offer of shares for sale in compliance with Article 28(3) of the Constitution, and whether Hanscon had replied as required by the Article. 81 She could have given evidence of the reasons why JAH's shares increased so markedly in value in just over 19 months. She could have explained how Newcode entered into the Share Sale Agreement for the sale of the shares of which it was not then registered in advance of Hanscon waiving its pre-emptive rights. She would have known why Ascot paid a different price for the JAH shares bought from Hanscon, compared to the JAH shares bought from Newcode. 82 She would no doubt have known why Hanscon did not exercise its pre-emptive rights to purchase the shares when Hanscon must have known that by doing so Hanscon could make an immediate profit of $14,190,500. 83 Ms de Hollander was a witness who was available and who could have shed relevant evidence upon a dealing which was shrouded in mystery. 84 It must be inferred that there was a reason for not calling Ms de Hollander. Where a party has the onus of establishing a fact and has a witness available who can give evidence of that fact and does not call that witness, it may be inferred that the witness would not have assisted to prove the fact and would not have thereby assisted the party's case: Jones v Dunkel (1959) 101 CLR 298. 85 At the very least the failure to call such a witness should have the result that that Court should be hesitant to draw an inference sought by a party who will not call evidence to prove the fact sought to be inferred: Cook's Construction Pty Ltd v Brown and Another (as liqs of DML Resources Pty Ltd (in liq)) (2004) 49 ACSR 62 per Hodgson JA at [42]. 86 Ms de Hollander could have given direct evidence of the dealing, which would have enabled the Court to know whether it was at arm's length. 87 Instead, the appellant has, by putting incomplete and selective material before the Court, asked the Court to infer that which she could have proved. 88 Ms de Hollander's absence means that the Court should be hesitant to infer that the dealing was not at arm's length. 89 As we have already said, the appellant confined her case to her evidence, which was that she was not involved in the transaction, and to the evidence of Mr Metcalf who had no knowledge of the transaction. The appellant relied upon the evidence contained in the uncontroversial documents. 90 The question whether the parties dealt with each other at arm's length in any particular transaction is a question of fact: Federal Commissioner of Taxation v AXA Asia Pacific Holdings Ltd (2010) 189 FCR 204 at 232. There was no suggestion that the primary judge erred in law in reaching his conclusion adverse to the appellant. The appellant's case was simply that there was sufficient evidence for a finding that the transactions between Allswan and Newcode, and Jayport and Newcode, were not at arm's length. 91 The appellant relied on four propositions for its ultimate contention that Allswan and Jayport did not deal at arm's length with Newcode: there was a non-arm's length relationship between the parties because Ms de Hollander was not only a director of Allswan and Jayport, but also of Esteem, for which Newcode was a bare trustee; because of that relationship it should be inferred that the particular transaction was not at arm's length; the terms of the transaction and the manner in which it was implemented support the inference that the parties were not at arm's length; because the judge had concluded that the transaction was a CGT event E2, he should also have concluded that the transaction was not at arm's length. 92 The evidence supports the finding that Esteem acted at the direction of Ms de Hollander. She was the sole shareholder and director of Esteem. However, there is no direct evidence that Newcode acted as directed by Esteem. 93 Newcode entered into the "Declaration of Trust" with Esteem to purchase the JAH shares for the ultimate benefit of Esteem. It did not receive any benefit by the transaction. It did not have the financial capacity to complete the transaction without financial support. It could only obtain that support from Esteem, or from Allswan and Jayport foregoing the debt, which had been created by the book entries. 94 The implementation of the transaction seems to support the finding that Newcode was acting for, or at the direction of, either Esteem, or Allswan and Jayport. The executed Standard Transfer Forms were not sought to be registered in JAH's register of members until after Newcode had on-sold the shares to Ascot pursuant to the Share Sale Agreement. In those circumstances, Newcode did not have to pay the consideration for the shares to Allswan and Jayport at any time prior to Newcode being entitled to receive the consideration payable by Ascot. 95 Newcode was, as the appellant contended, a trustee of a bare trust and had no interest in the trust assets except by reason of its obligations under the Declaration of Trust: CGU Insurance Limited v One.Tel Limited (In Liquidation) [2010] HCA 26 at [36]. After purchasing the JAH shares, its obligations were to transfer the shares to Esteem upon demand by Esteem. 96 Thus there is support, as the appellant contended, that the transacting parties were not at arm's length. However, that is not the end of the inquiry, but the start. The question for decision is whether the dealing was at arm's length. The appellant contended that fact must be inferred from the fact that the parties were not at arm's length. 97 The mere fact that the parties are not at arm's length does not mean that any particular dealing was not at arm's length: Commissioner of Taxation of the Commonwealth of Australia v BHP Billiton Ltd (2011) 244 CLR 325 at [95]. 98 The appellant, in our opinion, has failed to establish as a matter of fact that the transfer of the shares in JAH to Newcode was not a dealing at arm's length. The fact could easily have been proved if it were the case by the evidence of Ms de Hollander, but the appellant's failure to call the crucial witness who had the knowledge and the answers does not allow the Court to draw the inference. Her absence leads to many unanswered questions, which would be relevant for the finding sought. 99 We think there are too many features of the transactions left unexplained by the appellant to infer that the dealing was not at arm's length. Those features include: the unexplained sale of JAH shares from Jayport to Hanscon on 1 May 2004 at a price left on the evidence undisclosed; the setting of the price for the transfer of the shares to Newcode; the failure to register that transfer for over 19 months; the lack of evidence in relation to compliance with Article 28 of JAH's Constitution, and its time limits, by all parties; the failure of Hanscon to exercise its pre-emptive rights thereby foregoing a profit of $14,190,500; the sale by Newcode of the shares to Ascot before Hanscon waived its pre-emptive rights; and the different price paid by Ascot to Newcode and Hanscon for the JAH shares. 100 We agree with the primary judge that the appellant, upon whom the onus of proof lay, has failed to prove as a matter of fact that the dealing was not at arm's length. That does not mean that the Court is of the opinion that the converse has been established. 101 The paucity and the unsatisfactory nature of the evidence simply does not allow any inference to be drawn that the parties were not dealing at arm's length. 102 The appellant has failed to prove her case in that regard. That means that this Court does not necessarily need to decide the second question. 103 However, because the parties addressed the issue, the Court should also do so. 104 The transaction between Newcode and Ascot was not disputed to be at arm's length. Ascot was willing to pay $18,509,250 for the shares on 2 November 2005 and indeed paid that sum on 31 January 2006, together with the further advance of $2,300,000 to JAH, which had also to reflect Ascot's assessment of the value of the shares. However, the portion of that advance that JAH declared and paid as a franked dividend to Newcode, being $1,104,000 was declared as income by Newcode. The appellant's argument is superficially attractive. The best evidence the appellant pointed to for the market price of the shares transferred by Allswan and Jayport to Newcode, which only finally completed on 9 December 2005 after Hanscon waived its pre-emptive rights and the transfers were registered, was the price paid by Ascot for the shares pursuant to the Share Sale Agreement on 2 November 2005. 105 There was no other evidence of the value of Allswan's and Jayport's holding in JAH other than that sale on 2 November 2005, and the price that Newcode had agreed to pay on 1 May 2004. 106 The respondent, however, contended that the Share Sale Agreement did not establish the market price of the shares because there was no evidence that both parties to that agreement were knowledgeable, willing, but not anxious: Spencer v The Commonwealth of Australia (1907) 5 CLR 418. 107 There was no evidence of the surrounding facts and circumstances of the Newcode/Ascot dealing, which were easily capable of proof by evidence, again from Ms de Hollander and Ascot. 108 However, again the appellant asked the primary judge and this Court to infer that the sale price paid by Ascot to Newcode was the market price. That inference is sought to be drawn when Ascot paid a higher price per share for Hanscon's holding in JAH than Newcode's holding. There is no explanation why a higher price per share was paid for Hanscon's holding. No explanation at all has been advanced for that discrepancy. 109 The appellant could have called evidence of JAH's intrinsic value by tendering its financial statements, which would have demonstrated its value for balance sheet purposes and the profits it was generating at the date of the financial statements. Those financial statements might have supported the finding that the price paid by Ascot to Newcode was market price. The appellant did not elect to call that evidence. 110 The appellant did not call a valuer who could have opined on JAH's worth by reason of its net assets, its discounted cash flow, or its maintainable earnings, which could have been used to support a finding of market value. 111 Instead, the appellant sought to rely upon an unexplained transaction, which had an internal inconsistency, as proof of market value. 112 The evidence falls short of that required. 113 We agree with the primary judge that the appellant had not satisfied her burden of proof in establishing that the market value of Newcode's JAH shares, on the day they were acquired, was $18,509,250. 114 In those circumstances, the appellant has not succeeded on the second issue. 115 The appeal must be dismissed. The appellant must pay the respondent's costs. We certify that the preceding one hundred and fifteen (115) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justices Lander and Gilmour.