John Fairfax & Sons Pty Ltd v Commissioner of Taxation - [1959] HCA 4 - HCA 1959 case summary — Zoe

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John Fairfax & Sons Pty Ltd v Commissioner of Taxation

[1959] HCA 4

High Court of Australia|1959-07-01|Before: Menzies JJ, Lawrence J

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Source facts

Court

High Court of Australia

Decision date

1959-07-01

Before

Menzies JJ, Lawrence J

Source

Original judgment source is linked above.

Judgment (51 paragraphs)

[1]

High Court of Australia Dixon C.J. Fullagar, Kitto, Taylor and Menzies JJ. John Fairfax & Sons Pty Ltd v Commissioner of Taxation (Cth) [1959] HCA 4

[2]

ORDER Question referred to the High Court in the case stated by the board of review answered that the legal expenses mentioned in the said question were not an allowable deduction. Order that the taxpayer pay the costs of the reference to the High Court.

[3]

In this case I would but for one consideration content myself with expressing my general concurrence in the judgments of Fullagar and Menzies JJ. which I have had the advantage of reading. That consideration lies in the significance which I think attaches to the manner in which s. 51 of the Income Tax and Social Services Contribution Assessment Act 1936 (as amended) is framed. Because of that I desire to add one or two observations as to the necessity of adhering to the principles upon which that provision is founded. The provision itself was carefully framed in the consolidation of 1936 and in such a way as to show an appreciation of the more general questions that had arisen under the previous corresponding provisions (ss. 23 (1) (a) and 25 (3) of the Act of 1922-1934) and of the manner in which they had been dealt with judicially. In s. 51 can be discerned as I think a purpose of giving effect to the general principles that had been worked out: cf. Ronpibon Tin N.L. and Tongkah Compound N.L. v. Federal Commissioner of Taxation [1] .

[9]

On the view of the Australian provision I have stated, the question in this case whether the outgoing or outgoings here in question were of a capital nature must I think inevitably be answered that they were of a capital nature. On the subject of the distinction between an outgoing of a capital nature and one of a revenue nature I adhere entirely to what I said in Sun Newspapers Ltd. and Associated Newspapers Ltd. v. Federal Commissioner of Taxation [1] . It is not in my opinion right to say that because you obtain nothing positive, nothing of an enduring nature, for an expenditure it cannot be an outgoing on account of capital. What Viscount Cave L.C. said in British Insulated and Helsby Cables Ltd. v. Atherton [2] was this, "But when an expenditure is made, not only once and for all, but with a view to bringing into existence an asset or an advantage for the enduring benefit of a trade, I think that there is very good reason (in the absence of special circumstances leading to an opposite conclusion) for treating such an expenditure as properly attributable not to revenue but to capital" [3] . That is an affirmative proposition. But it is hardly necessary to say that it is a logical fallacy to turn it round and say that an expenditure cannot be attributable to capital unless it is made once for all and is made with a view to bringing into existence an asset or an advantage for the enduring benefit of a trade. Nor did Viscount Cave L.C. mean to say that no expenditure falling outside his proposition could be of a capital nature. No doubt it is not often that an outgoing is voluntarily incurred without anything to show for it. The cynical might say that it is a phenomenon so rare that for illustrations of such an outgoing you must look to the costs of litigation. It is however a feature that is always likely to occur when the purpose of the expenditure is to limit or buy off opposition or forestall or get rid of some present or threatened disadvantage. Of course you can have expenditure of that kind which on the soundest principles of accounting is chargeable against revenue. But you might confidently expect to find that much expenditure of the kind was undeniably on capital account. It would in my opinion depend entirely upon the application to the transaction of the tests described in the case of the Sun Newspapers [4] , to which I have already referred.

[18]

The events which followed (together with the appointment of the managing director of Fairfax as chief general manager of Associated, which has already been mentioned) appear to explain what was intended by the word "merger", to which reference has been made above. The case states that, by agreement between Fairfax and Associated, Fairfax assumed responsibility for the management of Associated as from 1st September 1953 for a "fee" of fixed amount, which fee was "intended to cover, inter alia the services of senior executives of Fairfax". On 28th September 1953 an agreement in writing (which superseded an earlier agreement of 25th September) was made by which the two companies entered into partnership for the purpose of publishing a Sunday newspaper under the name of the "Sun-Herald", in lieu of the "Sunday Sun" and the "Sunday Herald", which had hitherto been published by Associated and Fairfax respectively. Publication of the "Sun-Herald" commenced on 11th October 1953. On 2nd December 1953 the governing director and the managing director of Fairfax were appointed directors, and the managing director was appointed managing director, of Associated. Since February 1956 the daily "Sun", published by Associated, the "Sun-Herald", published by a partnership of Associated and Fairfax, and the "Sydney Morning Herald" and the "Australian Financial Review", published by Fairfax, have all been produced from a new building at Broadway, Sydney, owned by Fairfax. Since 1954 the "integration of the staffs" of the two companies "steadily progressed", and, at the date of the statement of the case only a small number of the employees of Associated still remained to be transferred to Fairfax. In April 1956 the appellant acquired the whole of the outstanding ordinary shares in Associated, so that the only other shareholders in that company are the holders of the preference share capital. In September 1956 the directors of Associated, other than the governing director and managing director of Fairfax, resigned and their places were taken by executives of Fairfax.

[25]

But the present case is not, in my opinion, analogous to the Borax Case [2] . This is not, as I see it, a simple case of expenditure incurred by the taxpayer in order to prevent its being deprived of an asset owned or possessed by it. If one looks at the substance of the matter, it would accord much more with reality to describe that expenditure as incurred in the course of, and as incidental to, the acquisition of a new asset. The commencement of the suit, which occasioned the expenditure in question, must be regarded in the light of all the surrounding circumstances. The essential feature of the situation which subsisted in August 1953 was that two companies were in competition for the control of a third company. Each of these two companies sought to achieve its end by different means. The one proposed to proceed by the direct method of acquiring ninety per cent or more of the issued shares of the third company - a method which would have given it immediate control of the business of that company. The other proposed not to buy the issued shares but to subscribe and pay for the unissued shares. Ownership of those shares would not of itself give it a controlling interest in the business of the third company. But, as the case states, the holding of those shares would enable it to obtain a "substantial influence in the policy and control" of that company, and the offer to take up the unissued shares was accompanied by a proposal for a "merger" of the businesses of the two companies which doubtless comprehended the placing of the offeror in immediate de facto control. The proposal of Consolidated was ultimately a matter for the shareholders of Associated individually to accept or reject. The proposal of Fairfax was made to Associated itself, and the decision to accept or reject it was a matter for the directors of Associated. From the point of view of Associated, the proposal of Fairfax had presumably the great advantage that it would provide a large sum by way of new capital. But, be this as it may, the fact is that Fairfax and Consolidated were competing for the control of Associated - competing for a capital gain or advantage. And the competition had a twofold aspect in the sense that each desired to obtain control for itself and to exclude the other from control. It was certain that, if the one company took any particular step, the other would, as soon as it heard of it, take any legitimate means in its power - with or without resort to the courts - to counter that step.

[31]

The appellant was at all times material a newspaper publisher in New South Wales; so too was Consolidated Press Ltd. In August and September 1953 a struggle developed between these two companies which began with an attempt by Consolidated Press Ltd. to purchase from shareholders their shares in Associated Newspapers Ltd., another company which was also a newspaper publisher in New South Wales. The appellant countered this attempt with a proposal to Associated Newspapers Ltd. of which we are told no more than that it was a firm proposal "to merge the operations of the two organizations while maintaining independence in ownership and editorial policy of its publications and to take up all the unissued share capital". The unissued share capital there referred to consisted of 678,674 shares of £1 each which was the whole of the unissued ordinary capital of the company. On 27th August 1953 the appellant was informed by a committee of the directors of Associated Newspapers Ltd. that its proposal was acceptable and thereupon Associated Newspapers Ltd. by letter offered the appellant the whole of the unissued ordinary shares at par. This offer was accepted by letter from the appellant. On Sunday, 30th August 1953, the directors of Associated Newspapers Ltd. met for the purpose of allotting these shares but for some unexplained reason the meeting was adjourned until 12.5 in the morning of 31st August when the meeting was resumed and the shares were upon the subscription of the appellant allotted to it for cash which was paid and the appellant and its nominees were registered as the holders of the shares. The reaction of Consolidated Press Ltd. was prompt and on the morning of the same day one Reichenbach, a shareholder in his own right in Associated Newspapers Ltd. commenced suit against Associated Newspapers Ltd., the appellant and the board of directors of Associated Newspapers Ltd. as defendants. In commencing this suit Reichenbach agreed to act in the interests of Consolidated Press Ltd. which at that time was the beneficial owner of ordinary shares in Associated Newspapers Ltd. but was not itself registered as a shareholder of that company. The relief claimed was rectification of the register of members of Associated Newspapers Ltd. by the removal therefrom of the name of the appellant as the holder of the aforesaid 678,674 ordinary shares and injunctions restraining the appellant from dealing with the shares or voting in respect of them and restraining the other defendants from recognizing the appellant as the holder of the shares. Later on the same day the plaintiff obtained an interim injunction restraining the appellant and its nominees from selling the shares in Associated Newspapers Ltd. which represented capital unissued as at 26th August 1953 or from voting in respect of the said shares at any meeting of shareholders of Associated Newspapers Ltd. and restraining Associated Newspapers Ltd. and its directors from treating the said shares as qualifying any person to be elected as a director of Associated Newspapers Ltd. On 1st September 1953 the plaintiff filed a notice of motion to continue the interim injunction until the hearing of the suit. This application was dismissed on 22nd September 1953 but no order was made as to the appellant's costs. After further interlocutory proceedings the suit was dismissed by consent upon terms which did not include the payment to the appellant of any of its costs of the said suit. Its costs, which it paid itself, amounted to £3,142 14s. 8d. and its claim is that it is entitled to have this sum deducted as an outgoing not of a capital nature, incurred in gaining its assessable income or as necessarily incurred in carrying on a business for the purpose of gaining such income.

[34]

It has been said that the words "the assessable income" in s. 51 refer to "the assessable income from which the deduction is to be made": Charles Moore & Co. (W.A.) Pty. Ltd. v. Federal Commissioner of Taxation [1] . This assessable income in the present case seems in strictness to be the total on the credit side of the profit and loss account of the appellant for the year ended 30th June 1954 but there is a practice described by Dixon J. in Amalgamated Zinc (De Bavay's) Ltd. v. Federal Commissioner of Taxation [2] as follows: "In a continuing business, items of expenditure are commonly treated as belonging to the accounting period in which they are met. It is not the practice to institute an inquiry into the exact time at which it is hoped that expenditure made within the accounting period will have an effect upon the production of assessable income and to refuse to allow it as a deduction if that time is found to lie beyond the period" [3] . Furthermore, there is some justification for reading the words "such income" in the alternative provision in s. 51 as assessable income generally rather than as meaning the assessable income of a particular year: see Ronpibon Tin N.L. and Tongkah Compound N.L. v. Federal Commissioner of Taxation [4] and Federal Commissioner of Taxation v. Snowden and Willson Pty. Ltd. [5] , per Dixon C.J. [6] . Accordingly I do not confine my attention exclusively to inquiring whether it has been shown that the outgoing in question was incurred in gaining or in carrying on business to gain the assessable income of the appellant for the year ended 30th June 1954. This inquiry, however, it is desirable to make because of the language of s. 51 itself; because there has here been an attempt to link the outgoing and that assessable income, and because the examination of that attempt seems to me to reveal the true nature of the outgoing. In passing I should say that the way in which a taxpayer deals with a debit in its accounts cannot of course determine its character for the purposes of the Act: see Broken Hill Theatres Pty. Ltd. v. Federal Commissioner of Taxation [7] and Ward & Co. Ltd. v. Commissioner of Taxes [8] .

[36]

It appears from the case stated that the profit and loss account of the appellant for the year ended 30th June 1954 included the £3,142 14s. 8d. as a debit and included among the credit items three receipts, two of which were derived from the partnership constituted between the appellant and Associated Newspapers Ltd. already referred to and the third from an arrangement made with Associated Newspapers Ltd. that the appellant would manage that company as from 1st September 1953 for a fee. Of this arrangement little more is revealed than that at a meeting of the directors of Associated Newspapers Ltd. on 29th September 1954 it was resolved that the management fee for the financial year ended 26th September 1954 be fixed at £20,000. This fee, it is explained, "was intended to cover inter alia the services of senior executives of the appellant which were made available to the partnership; no direct payments were made by Associated Newspapers Ltd. to such executives". The first of these credits was an item described as "Licence fee - The Sun-Herald - £37,500". This, it seems, was the proportionate part of the fee of £50,000 for the period ending 30th September 1954 for the use by the partnership of the word "Herald" in the name "The Sun-Herald". The second credit was an item "Interest - The Sun-Herald - £6,837 12s. 9d." This was interest payable by Associated Newspapers Ltd. to the appellant as interest upon working capital of the partnership supplied by the appellant. The third credit was an item "Management fee - Associated Newspapers Ltd. - £16,666 13s. 4d." which was the proportionate part of the fee of £20,000 already mentioned for the year ended 26th September 1954. This information has no doubt been included in the case stated in order that the inference might be drawn that the outgoing of £3,142 14s. 8d. was incurred in gaining these items or some part of them or in carrying on business for the purpose of doing so. This I cannot accept. It is obviously true that the income represented by the first two credit items was derived from partnership operations and would not have been derived had there been no partnership and had the appellant not provided working capital at interest; similarly, the third credit item would not have been derived had there not been an arrangement that the appellant should manage Associated Newspapers Ltd. Furthermore, it is possibly a matter for inference rather than speculation that there would have been no partnership and no arrangement for management if the appellant had not taken up the 678,674 ordinary shares in Associated Newspapers Ltd. and successfully resisted the attack made at the instance of Consolidated Press Ltd. upon that transaction. But to draw this inference does not mean that either the outlay to pay for the shares or that to defend the acquisition of the shares was incurred in gaining the income in question or in carrying on business to gain such income. At best what the acquisition of the shares and successful defence did was to put the appellant in a position to enter into partnership with Associated Newspapers Ltd. and to undertake the management of that company. An analogy may be found in the case of a person acquiring shares in a company to qualify himself to be a director and so earn director's fees, or, although perhaps somewhat less pertinently, in a lawyer entitled to practise in one jurisdiction paying a fee to be admitted to practise in another jurisdiction: see Daley v. Minister of National Revenue [1] . To make a payment to acquire or to defend the acquisition of a favourable position from which to earn income or to enter into arrangements that will yield income is not in general an outlay incurred either in gaining or in carrying on business for the purpose of gaining assessable income; such a payment in the case of a trading company, occurs at a stage too remote from the receipt of income to be so regarded. To be deductible an outlay must be part of the cost of trading operations to produce income, i.e., it must have the character of a working expense. What the appellant wanted in taking up the shares in Associated Newspapers Ltd. was to keep Consolidated Press Ltd. out, and to gain the opportunity to make profits of the sort which the accounts show that it made, but that does not mean that payments in connection with the acquisition of the shares or for the defence of the acquisition of shares were incurred in carrying on the profit-making business.

[37]

The difference that has resulted from the inclusion in s. 51 of the alternative head of deduction that depends upon the words "or are necessarily incurred in carrying on a business for the purpose of gaining or producing such income" has on more than one occasion received the attention of this Court, notably in Ronpibon Tin N.L. and Tongkah Compound N.L. v. Federal Commissioner of Taxation [2] where it was said: "The alternative in s. 51 (1) therefore covers a wide description of activities. But in actual working it can add but little to the operation of the leading words, "losses or outgoings to the extent to which they are incurred in gaining or producing the assessable income". No doubt the expression "in carrying on a business for the purpose of gaining or producing" lays down a test that is different from that implied by the words "in gaining or producing". But these latter words have a very wide operation and will cover almost all the ground occupied by the alternative. The words "such income" mean "income of that description or kind" and perhaps they should be understood to refer not to the assessable income of the accounting period but to assessable income generally. If they were so interpreted, they would cover a case where the business had not yet produced or had failed to produce assessable income and the alternative would then itself suffice to authorize the deduction of a loss made in a distinct business" [3] . See also Broken Hill Theatres Pty. Ltd. v. Federal Commissioner of Taxation [1] and Federal Commissioner of Taxation v. Snowden and Willson Pty. Ltd. [2] . Disregarding the application of the section to losses and considering the alternative head solely in its application to outgoings, there must, if an outgoing is to fall within its terms, be found (i) that it was necessarily incurred in carrying on a business; and (ii) that the carrying on of the business was for the purpose of gaining assessable income. The element that I think it necessary to emphasise here is that the outlay must have been incurred in the carrying on of a business, that is, it must be part of the cost of trading operations. The only trading business of the appellant with which we are here concerned is the publication of newspapers and to my mind to pay money to acquire shares in another newspaper company is not to incur an outgoing in carrying on that business nor is to pay legal costs either in the course of that acquisition or in its defence.

[41]

It is, however, necessary to consider whether the conclusion I have stated is at variance with controlling authority and, in particular, with Morgan v. Tate & Lyle Ltd. [4] , where expenditure to resist the nationalization of the sugar industry in England was treated by the commissioners as wholly and exclusively laid out for the purposes of the company's trade and as an admissible deduction from its profits for income tax purposes, and the House of Lords decided that there was no reason in law to prevent the commissioners from so deciding. The basis of the decision of the House of Lords was that according to ordinary accountancy principles the outlay "must be charged against the profits to which it related" (these profits were treated as those of the year of the expenditure) and that there was no statutory prohibition against deducting the sum in question to arrive at the balance of profits for the purposes of taxation: see per Lord Morton [1] , and per Lord Reid [2] . The prohibition invoked by the Solicitor-General was that against allowing any deduction "not being money wholly and exclusively laid out or expended for the purposes of the trade" and in considering the applicability of that prohibition their Lordships emphasized one part of Lord Davey's famous observation in Strong & Co. of Romsey Ltd. v. Woodifield [3] , upon the meaning of the words "for the purposes of such trade" and rather discounted another part of that observation. The part emphasized was: "These words appear to me to mean for the purpose of enabling a person to carry on and earn profits in the trade" [4] ; the part discounted came later and was as follows: "It must be made for the purpose of earning the profits" [4] : see per Lord Morton [5] and per Lord Reid [6] . The earlier words were regarded as governing the later words. When attention is directed to s. 51 of the Income Tax and Social Services Contribution Assessment Act Cth. however, it is the latter part of Lord Davey's observation that seems to me to have more application than the former. This is obviously so if attention is directed to the first alternative, that is outgoings "incurred in gaining or producing the assessable income", i.e., to use Lord " Davey's words," made for the "purpose of earning the profits". But if attention is directed to the second alternative in s. 51 (1) "outgoings necessarily incurred in carrying on business for the purpose of gaining or producing such income", again, as I have already said, the essential element is that the expense has been incurred " in carrying on business " rather than again, to use Lord Davey's words, "for the purpose of enabling a person to carry on " trade and earn profits. It seems to me that the decision of the Privy Council in Ward & Co. Ltd. v. Commissioner of Taxes [7] is closer in point than Morgan v. Tate & Lyle Ltd. [8] . The earlier case concerned New Zealand legislation and the question was whether expenditure by a brewery to oppose prohibition was "exclusively incurred in the production of assessable income". It was held that it was not and their Lordships said: "The expenditure in question was not necessary for the production of profit, nor was it in fact incurred for that purpose. It was a voluntary expense incurred with a view to influencing public opinion against taking a step which would have depreciated and partly destroyed the profit-bearing thing. The expense may have been wisely undertaken, and may properly find a place, either in the balance sheet or in the profit-and-loss account of the appellants; but this is not enough to take it out of the prohibition in s. 86, sub-s. 1 (a), of the Act. For that purpose it must have been incurred for the direct purpose of producing profits" [1] . This decision was distinguished in Morgan v. Tate & Lyle Ltd. [2] on the ground that the statutory provisions relating to deductions were different. The Australian Act is different again and it seems to me that neither case is precisely applicable.

[46]

The distinction between capital and revenue expense has been the subject of a good deal of consideration in this Court over recent years. The starting point is Sun Newspapers Ltd. and Associated Newspapers Ltd. v. Federal Commissioner of Taxation [1] , where a payment of £86,500 by a newspaper publisher to persons about to publish a competing newspaper, made in order to prevent the publication of that paper but by which some tangible assets were acquired, was held to be a capital payment. Rich J. said: "It is not expenditure of a recurrent nature. It is not an incident, whether normal or unusual, of the regular conduct of the organization for earning profits. The purpose was to buy out opposition and secure so far as possible a monopoly. The fact that the benefit was not perpetual does not deprive it of its capital attributes. If physical assets of a terminating or wasting description were bought no one would say on that account that the money was a revenue expenditure" [2] . This decision was affirmed upon appeal and Dixon J. found the distinction between capital and revenue expenditure to correspond "with the distinction between the business entity, structure, or organization set up or established for the earning of profit and the process by which such an organization operates to obtain regular returns by means of regular outlay, the difference between the outlay and returns representing profit or loss" [3] i.e. the distinction between "the profit yielding subject and the process of operating it" [4] . His Honour said: "There are, I think, three matters to be considered, (a) the character of the advantage sought, and in this its lasting qualities may play a part, (b) the manner in which it is to be used, relied upon or enjoyed, and in this and under the former head recurrence may play its part, and (c) the means adopted to obtain it; that is, by providing a periodical reward or outlay to cover its use or enjoyment for periods commensurate with the payment or by making a final provision or payment so as to secure future use or enjoyment" [5] . These principles have received acceptance in this Court ever since, see per Fullagar J. in Federal Commissioner of Taxation v. Snowden and Willson Pty. Ltd. [6] . One instance of their application was in Broken Hill Theatres Pty. Ltd. v. Federal Commissioner of Taxation [7] , where it was decided that the costs of a theatre proprietor of regularly opposing applications by other persons for licences for new theatres were capital outgoings notwithstanding that the expenditure did not result in any addition to the taxpayer's assets. See too Federal Commissioner of Taxation v. Duro Travel Goods Pty. Ltd. [1] , per Taylor J. [2] .

[49]

There is however one argument pressed by Mr. Bowen that I must consider. It was that because the payment of the costs added nothing to the appellant's assets it could not properly be regarded as capital expenditure. To this there are two answers: the first is that the costs were incidental to the acquisition of the shares; the second is that the test propounded is not a decisive test. It is perhaps true that that test was treated as decisive by Lawrence J. in Southern v. Borax Consolidated Ltd. [3] , for his Lordship said: "On the other question whether this is a payment properly attributable to capital or to revenue, in my opinion the principle which is to be deduced from the cases is that where a sum of money is laid out for the acquisition or the improvement of a fixed capital asset it is attributable to capital, but that if no alteration is made in the fixed capital asset by the payment, then it is properly attributable to revenue, being in substance a matter of maintenance, the maintenance of the capital structure or the capital assets of the company" [4] and he concluded his judgment by saying: "It appears to me that the legal expenses which were incurred by the respondent company did not create any new asset at all, but were expenses which were incurred in the ordinary course of maintaining the assets of the company and the fact that it was maintaining the title and not the value of the company's business does not, in my opinion, make it any different" [5] . That decision has not been accepted by this Court (Broken Hill Theatres Pty. Ltd. v. Federal Commissioner of Taxation [6] ) notwithstanding that it had been approved by the Court of Appeal in Associated Portland Cement Manufacturers v. Kerr [1] and applied by Croom-Johnson J. in Cooke v. Quick Shoe Repair Service [2] . Now, however, Southern v. Borax Consolidated Ltd. [3] has the approval of the members of the House of Lords who decided Morgan v. Tate & Lyle Ltd. [4] . In that case, however, it was not argued that the payments in question were of a capital nature; it was conceded that they were not and in these circumstances I do not regard the approval given to Southern v. Borax Consolidated Ltd. [3] as going beyond the first branch of the decision, i.e. that the costs of maintaining the taxpayer's title to land used in its business were "wholly and exclusively laid out for the purposes of the trade" which as has been seen was the only point in issue about the payments in Morgan v. Tate & Lyle Ltd. [5] . I do not therefore regard the House of Lords in that case as adopting the proposition that because a payment made for the purposes of trade has not added to a taxpayer's assets it is therefore of a revenue and not of a capital character. Some payments of a revenue character do add to the value of capital assets, such as (1.) renewals, the subject of decision in Rhodesia Railways Ltd. v. Income Tax Collector, Bechuanaland [6] where although no new asset was created an old one, worn out by service, was improved; or (2.) the cost of advertising which in addition to boosting current sales builds goodwill; or (3.) the cost of sowing annual crops. On the other hand capital expense does not always result in the creation of a new asset or increase the value of an existing asset, e.g. a payment to get rid of an unwanted capital asset such as in Mallett v. Staveley Coal & Iron Co. Ltd. [7] , or the cost of reducing capital: Archibald Thomson, Black & Co. Ltd. v. Batty [8] . See also the cases cited by Dixon J. in Hallstroms' Case [9] . In Van den Berghs Ltd. v. Clark [10] Lord Macmillan said that from a study of the decided cases "no infallible criterion emerges" [11] and the oft-quoted observation of Viscount Cave L.C. in British Insulated and Helsby Cables Ltd. v. Atherton [12] is carefully expressed in qualified terms: "when an expenditure is made, not only once and for all, but with a view to bringing into existence an asset or an advantage for the enduring benefit of a trade, I think that there is very good reason (in the absence of special circumstances leading to an opposite conclusion) for treating such an expenditure as properly attributable not to revenue but to capital" [1] . There can be no doubt that when the question is whether a payment is of a capital nature or not it is an important circumstance that it has or has not increased the taxpayer's assets but this has not been accepted as an infallible test and I do not regard Morgan v. Tate & Lyle Ltd. [2] as elevating it to such a position. I do not therefore think that this Court should accept the proposition that a payment otherwise within s. 51 (1) is not of a capital nature unless it has resulted in the creation of a new asset or an addition to an existing asset.