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Briers v. Atlas Tiles Ltd.

Judges:
McInerney J

Court:
Supreme Court of Victoria

Judgment date: Judgment handed down 21 July 1975.

McInerney J.: On 12 March, 1975, at the conclusion of evidence and addresses in this matter, I stated the findings of facts at which I had arrived on the evidence and intimated that I desired time to consider the question whether the principle of Gourley's case was applicable, and if so, to what extent, to the award of damages for the confessedly wrongful dismissal of the plaintiff by the defendant.

At common law, damages for wrongful dismissal are assessed on the basis of the amount which the plaintiff has been prevented from earning by reason of his wrongful dismissal, and are ordinarily arrived at by taking the amount which he would have earned had his employment been continued and carried on in accordance with the contract of employment and deducting therefrom the total of any monies accruing from other employment which the plaintiff, in minimising the damages suffered by the wrongful dismissal, either has obtained or should reasonably have obtained.

An award of such a kind is obviously designed to compensate the person dismissed

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for the loss of earnings or income on which he would have been liable to pay tax.

The defendant has contended that in assessing the plaintiff's loss of earnings to date and prospectively to 30 June, 1976, the Court must take into account the income tax which would have been payable by the plaintiff in respect of those earnings had he received them, and that it is only the net loss, after allowance of the taxation deduction, which can serve as a basis for arriving at the sum to be allowed as the present value of all the loss, actual and prospective, which has been suffered by the plaintiff as the result of the wrongful dismissal.

The foundation of the argument for the defendant in the present case is the decision in the House of Lords in
British Transport Commission v. Gourley (1956) A.C. 185. The action was one brought by the plaintiff to recover damages for personal injuries sustained by him owing to the negligence of the appellant's servants while he was travelling in a railway train. The trial Judge awarded the plaintiff £37,720 damages in respect of his loss of earnings actual and prospective, paying no regard to the income tax and surtax which the plaintiff would have had to pay on the amount of such earnings had he not been injured. The trial Judge, however, made an alternative assessment of damages at £6,695 on the footing that income tax and surtax should be taken into account. It was common ground that the plaintiff would incur tax liability neither on the £37,720 nor on £6,695. It was held by the House of Lords, (Lord Keith of Avonholm dissenting) that the trial Judge should have taken the tax position into account and that the award in respect of loss of earnings should be reduced to £6,695. In his opinion, Earl Jowitt referred to one case in which the claim had been for damages for wrongful dismissal namely,
Fairholme v. Firth & Brown Ltd. (1933) 149 L.T. 332; 49 T.L.R. 470 and in which liability to tax had been disregarded, and observed (p. 199) that ``There may well be a difference between actions for personal injuries and actions for wrongful dismissal in regard to the obligation of the plaintiff to pay tax on the amount of damages received, and cases on the one topic may thereafter be a dangerous guide to follow on the other''. The question for damages for wrongful dismissal was not adverted to in the opinion of Lord Tucker. It was, however, expressly adverted to in the opinion of Lord Goddard, with whose views Lords Radcliffe and Somervell of Harrow expressed concurrence. In holding that liability to tax had to be taken into account in assessing damages in the case before them, Lord Goddard said (at p. 210):

``The principles set out above would be applicable in wrongful dismissal actions in which the Court has to calculate damages for loss of earnings which would have been the subject of tax had they been earned.... In this opinion I am dealing solely with damages for personal injury and wrongful dismissal cases. In the present case all we are concerned with is whether in calculating the damage the incidence of tax should be taken into account or whether it is an element to be considered in assessing general damage. In my opinion it is....''

Lord Reid (pp. 213-214) said:

``In a case where the wrongdoer is the plaintiff's employer it has sometimes been said that he would have had to continue to pay the plaintiff's full wages or salary if there had been no accident or wrongful dismissal, so why should he take advantage of his own wrong to diminish his liability? That argument has lost some of its force since the introduction of the system of P.A.Y.E., but it would be strange if the introduction of a new method of collecting tax altered the legal position and, in any event, the argument would remain for surtax. The real answer is, I think, that before the wrong the employer was paying for the plaintiff's services, whereas now he is paying the plaintiff's loss and he will have to pay someone else to perform the services. And this argument would also go too far if valid, for it would seem to involve the proposition that, if a dismissed employee gets other work, the employer ought not to be able to take advantage of that.''

Lord Keith (dissenting) said (at p. 218)

``On all counts the safe and simple rule in my opinion, is to exclude the element of taxation from the assessment of damages. If there is a case for thinking that assessing damages on the basis of gross earnings in actions for personal injuries, or for wrongful dismissal, enables the individual to escape his fair contribution to the national revenue, the position, in my opinion, should be rectified by legislation.''

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Lord Goddard's views were accepted by Pilcher J. in
Beach v. Reed Corrugated Cases (1956) 1 W.L.R. 807 by the Court of Appeal (on a summons for particulars) in
Phipps v. Orthodox Union Trusts Ltd. (1958) 1 Q.B. 314; by Diplock J. in
Shindler v. Northern Raincoats Co. Ltd. (1960) 1 W.L.R. 1038 at p. 1050; by Wynn-Parry J. in
Houghton Main Colliery Co. Ltd. (1956) 1 W.L.R. 1219; - all decided prior to the coming into operation of sec. 37 and 38 of the Finance Act 1960 (now sec. 187-188) of the Income & Corporation Taxes Act 1970). In each of those cases it was accepted that the decision in Gourley's case requires that, in assessing the damages in respect of plaintiff's loss of earnings in wrongful dismissal case, the Court must take into account the tax which would have been payable on those earnings.

In
Parsons v. B.N.M. Laboratories Ltd. (1964) 1 Q.B. 95; (1963) 2 W.L.R. 1273 (supra), Sellers L.J. stated that the views expressed by three of the Law Lords in Gourley's case that the decision in that case applied equally to the case of wrongful dismissal were obiter dicta and although of great weight were not binding on the Court of Appeal (see at p. 110). He considered himself unfettered in that respect and was of the view that the reasoning of Gourley's case should not be applied to the case then before the Court of Appeal, and that the decision of du Parcq J. in Fairholme v. Firth & Brown Ltd., (supra) was to be preferred. This view did not commend itself to the majority of the Court in Parsons' case, namely, Harman and Pearson L.JJ. who treated the observations of Lord Goddard in Gourley's case as part of the ratio decidendi.

Even if Sellers L.J. in Parsons' case was correct in holding that Lord Goddard's views were obiter dicta and although of great weight, were not binding on the Court of Appeal ((1964) 1 Q.B. 95 at p. 110; (1963) 2 W.L.R. 1273 at p. 1220), nevertheless the question whether the principle in Gourley's case ought to be applied to claims for damages for wrongful dismissal did fall directly for decision in Parsons' case. The majority of the Court held that the principle ought to be thus applied. The reasons for so holding appear to have been the view that Gourley's case imperatively bound them so to hold - see per Harman L.J. at pp. 122-123, W.L.R. at p. 1291, and per Pearson L.J. at p. 139, W.L.R. at p. 1304.

The Court of Appeal does not appear to have acted on the view that the matter was concluded by the earlier decision of the Court of Appeal in Phipps v. Orthodox Unit Trusts Ltd., (supra). Notwithstanding the criticisms advanced by Professor Street, Principles of the Law of Damages (1962) at pp. 98-104 of the decision in Gourley's case, the decision in Parsons' case must be taken as firmly establishing that Gourley's case applies to claims for damages for wrongful dismissal, and English Courts lower in the hierarchical scale of Courts are now bound to follow and apply the decision in Parsons' case, as indeed Phillimore J. did in
Bold v. Brough (1964) 1 W.L.R. 201.

It must be conceded that the acceptance of a distinction between cases of damages for the tort of negligence and damages for wrongful dismissal would have the curious result that in a case where an employee sues his employer for damages in respect of a breach of the employer's duty to take reasonable care for his safety, tax would have to be taken into account, whereas if an employee sues the employer for damages for wrongful dismissal, tax would not have to be taken into account. Cp., for instance, the observations of Lord Reid in Gourley's case at pp. 213-214. I confess to thinking that it is anomalous that the employer escapes with less than his contractual liability, in that he is called on to pay damages quantified in respect of portion only of the full amount which he was originally liable to pay to the employee who recovers no compensation in respect of that portion of his pay which his employer was entitled to withhold from him only because the employer was, by Act of Parliament, required to act as the agent of the Commissioner of Taxation in collecting, by withholding from the employee, a prescribed weekly or other periodical amount of the employee's estimated liability to income tax, and accounting to the Commissioner of Taxation for the amounts so collected or withheld. The Commonwealth reaps no benefit in respect of that portion of the employee's pay not taken into account in assessing damages because it does not receive from the employer payment in respect of the amount thus disregarded. It is arguable that it might have been better to have made the employer liable to pay for the loss of wages at the full rate, giving the Commonwealth the benefit of tax in respect of that element of damages. As it is, the result of Gourley's case

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and Parsons' case is that the employer benefits in that he has to pay less than he was bound to pay to the employee, the Commonwealth suffers a detriment in that it does not collect the tax on the full amount of the wages to which the employee was contractually entitled and at best the employee's position remains the same as it would have been if he had suffered the deduction. My own view is that Lord Keith of Avonholm was right in suggesting that the matter was really one to be rectified or dealt with by legislation - see at p. 218 of Gourley's case.

It has always been accepted that the presence of two factors was necessary to bring into operation the Gourley's principle (see McGregor on Damages, 13th. Edition, subsec. 399, 400 to 405.):

  • (1) The amount in respect of the loss of which the damages awarded constitutes compensation must have been subject to income tax;
  • (2) The damages (as compensation) awarded to the plaintiff must not themselves have been subject to tax.

The case law in Australia has been concerned with the question whether the second of those conditions was satisfied.

In the first reported case on the matter, namely,
Robert v. Collier's Bulk Liquid Transport Pty. Ltd. (1959) V.R. 280; (1959) A.L.R. 684 the claim was for damages for negligence, the damages consisting, in substance, of loss of profits suffered during the period whilst a prime mover and trailer involved in a collision were being repaired. Gavan Duffy J. had no doubt (A.L.R. at p. 686, V.R. at p. 282) that the profits lost while the prime mover and trailer were being repaired would have been taxable if the plaintiff had received it, and he held that the damages recoverable, being compensation for loss of profits which would otherwise have been earned, would therefore be taxable under sec. 26(j) of the Income Tax and Social Services Contribution Assessment Act 1936-1950 (as the Act was then known) as an "amount received by way of indemnity for or in respect of... loss... of

  • (ii) profit or income which would have been assessable income if the loss had not occurred."

In
Melbourne Saw Manufacturing Co. Pty. Ltd. v. Melbourne & Metropolitan Board of Works (1970) V.R. 394 Barber J. held that the like result was applicable in relation to a claim (under sec. 41 of the Town & Country Planning Act 1961) for loss of profit suffered by an owner of land by virtue of the operation of The Melbourne Metropolitan Planning Scheme.


Williamson v. Commr. for Railways (N.S.W.) (1959) 76 W.N. (N.S.W.) 648; (1960) S.R. (N.S.W.) 252 was a case where a grazing property had been damaged by a fire negligently started by the servants of the Commissioner for Railways. The damages claimed included damage for loss of profits sustained by reason of loss of sheep and lambs and a diminution of the quality of the wool which was reflected in the quantity of the wool clip.

Herron and Sugerman JJ. held that damages for the actual loss proved representing loss of profits or income, including trading stock, would be taxable in the hands of the plaintiff under sec. 26(j) of the Act and that Gourley's case did not therefore apply, that no deduction should in the circumstances, be made from the damages for income. Sugerman J. expressed the view that the word ``indemnity'' in sec. 26(j) was not used as limited to mere contractual indemnity but should be construed as extending to receipts by way of compensation otherwise within its terms (including awards of damages) as well as to receipts by way of insurance.

Walsh J. also arrived at the conclusion that the rule in Gourley's case did not apply to the case, but for reasons which throw no light on the present problem.

The two last mentioned cases were cited, without disapproval, but distinguished on the facts by the High Court in
McLaurin v. F.C. of T. (1961) 104 C.L.R. 381; (1961) A.L.R. 962.

In
Winkie Meat Works Ltd. v. Ballard (1960) S.A.S.R. 312 (Full Court) Mayo and Ross JJ. held that damages for loss of profits sustained by the plaintiff by reason of defendant's breach of a covenant in restraint of trade would be assessable in the hands of the plaintiff under sec. 26(j), and that, accordingly, no deduction should be made from the damages for income tax.

On the other hand, in
Black v. Mount (1965) S.A.S.R. 167, Chamberlain J. applied Gourley's case in calculating damages for loss of earning capacity by reason of personal

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injuries. The same approach was adopted by Burbury C.J. in
Warne v. Hughes (1961) Tas. S.R. (N.C.) 15. In
Brodie v. Caswell (1961) Tas. S.R. (N.C.) 6 - another case where damages were claimed for personal injuries - Crawford J. refused to deduct income tax in calculating damages for wages actually lost down to the date of the trial, taking the view that such damages were liable to tax under sec. 26(j). The same result was reached in
O'Keefe v. Ellis (1961) Tas. S.R. 169. Finally, in
Whittaker v. Gobbey (1965) Tas. S.R. (N.C.) 15, Burbury C.J. intimated that the latter two cases were to be followed in preference to his own earlier decision in Warne v. Hughes (1961) Tas. S.R. (N.C.) 15.

In
Groves v. United Pacific Transport Pty. Ltd. and Thompson (1965) Q.R. 62, Gibbs J. held that in an action for damages for negligence, damages awarded for past or future loss or impairment of earning capacity did not come within the description of ``an indemnity for or in respect of any loss of income'' within sec. 26(j) and that such an award is not income in accordance with ordinary concepts so as to be taxable apart from the special provisions of that section. That decision, however, founded as it was on the views expressed by Dixon C.J. and Kitto and Taylor JJ. in
Graham v. Baker (1961) 106 C.L.R. 340 at pp. 346-7, on what was said in
Paff v. Speed (1961) 105 C.L.R. 549 at p. 566, and in
Bresatz v. Przibilla (1962) 36 A.L.J.R. 212 at p. 213, was obviously not directed to the case of damages for wrongful dismissal.

The only Australian case, so far as I am aware, in which sec. 26(j) has been held applicable to damages for wrongful dismissal is
Jacobsen v. B.L.B. Corporation of Australia Establishment (1968 No. 3141) (19 February 1975, Gowans J. unreported). There the plaintiff recovered (inter alia) damages for wrongful dismissal - those damages being compensation ``for the full amount of all the entitlement and allowance which he would have earned but for the breach of contract, but having regard to what he had done or could reasonably have done since the termination'' (p. 75 of the Reasons for Judgment, citing
Lavarack v. Woods of Colchester Ltd. (1963) 1 Q.B. 278). Those damages - in respect of the period of 8½ months from August 1968 to May 3, 1969 - were assessed at £62,932. It was argued for the defendant that there should be an adjustment for the incidence of income tax on the earnings in accordance with the principles of British Transport Commission v. Gourley (1956) A.C. 185. For the plaintiff it was argued that the principles of Gourley's case was not applicable because the award itself was assessable to tax under the provision of sec. 26(j) of the Income Tax Assessment Act 1936-1969.

Gowans J. accepted that argument, saying:

``It may be that the award is assessable to tax on general principles (see
F.C. of T. v. Wade 84 C.L.R. 105 at p. 112). But, in any event, the effect of Robert v. Collier's Bulk Liquid Transport Pty. Ltd. (1959) V.R. 280; Williamson v. Commr. of Railways (1959) 76 W.N: (N.S.W.) 648 (F.C.) and Melbourne Saw Manufacturing Company Pty. Ltd. v. Melbourne & Metropolitan Board of Works (1970) V.R. 394 is that the statutory provision does apply in circumstances of this kind. And see also
McLaurin v. F.C. of T. (1961) 104 C.L.R. 381. I think I should follow this line of authority. In consequence I make no deduction for income tax.''

The defendant in the present case contends that I should not follow the decision of Gowans J. in Jacobsen v. B.L.B. Corporation of Australia Establishment (supra) on the grounds that the reasoning of the majority of the Court of Appeal in Parsons v. B.N.M. Laboratories Ltd. (1964) 1 Q.B. 95; (1963) 2 W.L.R. 1273 when applied to the provisions of sec. 26(d) of the Income Tax Assessment Act 1936-1972 required that in the calculation of damages for wrongful dismissal the amount which the dismissed employee would have had to pay by way of income tax would have to be taken into account. The argument is that the sum to be awarded in the present case will be a sum to which sec. 26(d) applies, that under sec. 26(d) five per centum (5%) of that amount will be included in the assessable income of the plaintiff, that the remaining ninety-five per centum (95%) will not be subject to income tax, and that, therefore, in accordance with the decision in Parsons' case (supra) the principle of Gourley's case will be applicable in respect of that ninety-five per centum (95%).

It is an argument which proceeds on the bases that the sum to be awarded is not assessable to tax under sec. 26(j) of the Income Tax Assessment Act 1936-1972 at all, and that insofar as Jacobsen's case held that the award itself was assessable to tax under sec. 26(j), it proceeded in disregard of the provisions of sec.

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26(d) of the same Act and therefore requires reconsideration.

No such argument was presented to Gowans J. in Jacobsen's case, and it becomes necessary to examine the English legislation considered in Parsons' case and the history and the construction of the relevant sections of the Income Tax Assessment Act of the Commonwealth.

In Parsons' case (supra) the Court was concerned with the effect of sec. 37 and 38 of the Finance Act 1960 which were in the following terms:

  • 37 (1) Subject to the provisions of this and the next following sections income tax shall be charged under Schedule E in respect of any payment to which this section applies which is made to the holder or past holder of any office or employment....
  • (2) This section applies to any payment (not otherwise chargeable to income tax) which is made, whether in performance of any legal obligation or not, either directly or indirectly in consideration or in consequence of, or otherwise in connection with the termination of the holding of the office or employment.
  • 38 (3) Tax shall not be charged by virtue of the last foregoing section in respect of a payment of an amount not exceeding five thousand pounds, and in the case of a payment which exceeds that amount shall be charged only in respect of that excess: Provided that where two or more payments in respect of which tax is chargeable by virtue of that section, or would be so chargeable apart from the foregoing provisions of this subsection, are made to or in respect of the same person in respect of the same office or employment, or in respect of different offices or employments held under the same employer or associated employers, this subsection shall apply as if those payments were a single payment of an amount equal to that aggregate amount; and the amount of any one payment chargeable to tax shall be ascertained as follows, that is to say -
    • (a) where the payments are treated as income of different years of assessment the said sum of five thousand pounds shall be deducted from a payment treated as income of an earlier year before any payment treated as income of a later year; and
    • (b) subject as aforesaid, the said sum shall be deducted rateably from the payments according to their respective amounts.

Those sections have since been re-enacted as sec. 187 and 188 of the Income and Corporation Taxes Act 1970. The majority of the Court of Appeal, Harman and Pearson L.JJ. considered that the decision in the House of Lords in Gourley's case required them to apply the same principle in cases of damages for wrongful dismissal. It being clear that the first condition required by Gourley's case, was satisfied, the vital point was whether the second condition, namely, that the sum awarded as damages was not taxable, was fulfilled. The majority of the Court was of the view that the £1,200 awarded for damages, being less than £5,000, was not subject to tax and that therefore Gourley's case required that a deduction should be made for tax. The dissentient, Sellers L.J., was of the view that the effect of the English legislation was to impose taxation, even though relief in respect of the taxation was extended to amounts less than £5,000.

The judgment of Harman L.J. in Parsons' case (supra) proceeded on the view that until the passing of the Finance Act 1960 both of the conditions requisite for the application of the decision in the Gourley's case would have been satisfied in relation to any amount assessed for damages for wrongful dismissal. The matter for argument was whether sec. 37 and sec. 38 of the Finance Act 1960 (now sec. 187 and 188 of the Income & Corporation Taxes Act 1970) destroyed the second of those conditions and so removed damages for wrongful dismissal from the ambit of Gourley's case (see (1964) 1 Q.B. 95 at p. 124). Harman L.J. pointed out (at p. 127) that sec. 37 was made expressly subject to sec. 38 which proceeds to state the cases in which tax shall not be charged. He rejected as ``too metaphysical'' the argument that Parliament intended to remove all payments for loss of office from the capital to the income category so that the $1,200 awarded to the plaintiff for loss of salary was in the category of ``income'' and therefore to be regarded as subject to exactly the same rule as if it had exceeded £5,000. Proceeding from the proposition that sec. 37 was expressed to be subject to sec. 38 and that by subsec. (3) of sec.

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38 it was provided that ``tax shall not be charged by virtue of the last foregoing section in respect of a payment of an amount not exceeding £5,000......'', Harman L.J. concluded that a sum under £5,000 was therefore not a ``payment to which this section applies'' within sec. 37(1) nor was it a ``payment chargeable to tax under that Section'' within subsec. (7) of sec. 37 (now sec. 187(7) of the Income & Corporation Taxes Act 1970).

The reasoning of Pearson L.J. on the point at issue in Parson's case is to be found at pp. 140-141 of the report where he says: -

``The reasoning of the Master in his judgment, and the argument of Mr. Roskill and Mr. Monroe in this appeal, have been to the effect that the damages in this case, although by reason of their smallness and amounts they will not in fact bear tax, are nevertheless under the provisions of the Finance Act 1960, made chargeable to tax, brought within the scope or range of taxation, converted from capital payments to income payments for tax purposes and rendered taxable subject matter. In my view, however, this argument is disposed of by the wording of the Act and by its evident intention. The first part of sec. 37(1) is in these terms: -

  • Subject to the provisions of this and the next following section, income tax shall be charged under Schedule E in respect of any payment to which this section applies which is made to the holder or past holder within the office of employment....

Sub-section (2) defines the application of the section. The first part of sec. 38(3) provides: -

  • Tax shall not be charged by virtue of the last foregoing section in respect of the payment of an amount not exceeding £5,000 and in the case of a payment which exceeds that amount shall be charged only in respect of the excess......

When Parliament has expressly provided that tax shall not be charged in respect of payment such as this it is in my view impossible to contend successfully that a payment such as this is chargeable to tax. Sec. 38(3) does not create a relief from tax in the ordinary sense. It leaves a small or medium sized payment of the relevant character outside the scope of the taxation imposed by the Act: such a payment is not brought into charge, and does not become taxable subject matter. The evident intention of sec. 37 and sec. 38 is to bring within the scope of income tax and surtax large sums paid to employees on the termination of their employment, because such sums have hitherto been tax-free. It was necessary to cover payments of large damages for wrongful dismissal, because the machinery of a wrongful dismissal followed by a claim for damages could easily be used for the purpose of arranging and effecting such a payment. It was not, however, intended to impose taxes on damages for wrongful dismissal in an ordinary case, where the damages are small or medium-sized. Such damages remain tax-free.''

The reasons of Sellers L.J. for dissenting from this conclusion, appear at pp. 118-120 as follows: -

``The arguments for the appellants is simply this, that sec. 37(1) which stipulates that income tax shall be charged under Schedule E in respect of any payment to which the section applies, is made subject to the provisions of the next following section. Section 38(3) stipulates that tax shall not be charged by virtue of the last foregoing section in respect of payment of an amount not exceeding £5,000 and therefore it is said that the provisions can have no effect in the present case, where the damages cannot be more than £1,200.

The directness of that argument is apparent but it seems to me to disregard the proviso to subsec. (1) and I am persuaded by the argument of the respondent's counsel and particularly, if I may say so, by that of Mr. Monroe, that the provision should not be construed in that limited way. The effect of these provisions taken as a whole is to treat the payments to which they refer as income receipts, not, as previously, for instance in the case for damages, as a capital sum. This is of general effect and includes the first £5,000 in the class of income receipts and the scope of tax although it may be relieved in whole or in part from bearing any actual tax. The proviso throws light on the nature and effect of this small self-contained code and supports, if it does not require, the view

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that payments under £5,000 are income receipts for tax purposes. The proviso and its provision for aggregation make it appear that if a man had two separate contracts of service with the same employer or with associated employers and the appropriate damages under each in the event of breach would be £4,000, if they were both broken in the same year the two sums would be treated as a single payment of £3,000 and the excess of £3,000 over £5,000 would be chargeable to tax rateably, that is on £1,500 in respect of the damages recovered under each contract. If this occurred there would be a double taxation of the damages in effect. So long as there are circumstances in which that can arise, if that be right, the payments under each separate contract must, I think, be income receipts which are subject to tax unless relief is to be found in the provisions.

The sum, therefore, awarded in this case has to be regarded as an income receipt within the scope of tax but one which escapes actual taxation because of the relief given. I would not say, as the master said, that it necesarily follows that the principles of Gourley's case could no longer be applied, for in this particular case no tax would in fact arise on the damages but, since tax might be payable on sums awarded for breach of contract if less than £5,000 (for example in the case of aggregation) and certainly if over £5,000, it would seem to me that the only satisfactory rule would be to ignore taxation altogether in the assessment of the damages. Therefore by reason of these provisions of the Finance Act in my opinion the sum does not fall within the principle of Gourley if I am wrong in my view that Gourley does not apply to a case of a contract of service at all. This is no doubt a fortuitous result of the Finance Act provisions relied on; but it serves it purpose in the issues raised in this appeal.''

It becomes necessary now to examine the setting of what is said to be the equivalent provision in Australia namely, sec. 26(d) of the Income Tax Assessment Act 1936-1972.

Under the Income Tax Assessment Act 1936-1972 (Commonwealth) income tax at the rates declared by Parliament is levied in each financial year ``upon the taxable income derived during the year of income by any person, whether a resident or non-resident,'' - see sec. 17. This takes one back through the definition of ``taxable income'' in sec. 6(1), - there defined as ``the amount remaining after deducting from the assessable income all allowable deductions'', - to the definitions, in the same section of ``assessable income'' (meaning ``all the amounts which under the provisions of this Act are included in the assessable income'') and ``allowable deduction'' (which by the same section is defined as meaning ``a deduction allowable under this Act''). By virtue of sec. 23, 23AA, 23AC, 23A, 23D, 23E, and 23F certain income earnt in or derived from sources inside Australia or earnt or derived by residents of Australia from sources outside Australia is exempted from income tax.

Then follows a series of sections forming subdiv. A (``Assessable Income Generally'') of Division 2 (``Income'') which provide that the assessable income of the taxpayer shall include the various categories of receipts allowances and payments referred to in sec. 25, 26 and 27.

It is in this context that the two relevant provisions of sec. 26 must be considered, namely, as sections defining what constitutes or may form part of ``the assessable income'' of a taxpayer. For it is from that assessable income, after allowing all allowable deductions, that the taxable income of the taxpayer will be determined. The inquiry in each case, however, is as to ``income''.

There cannot be, in my mind, any doubt that if the assessable income of the taxpayer included an amount falling within the definition of para. (j), and there were no allowable deductions, the whole of the amount referred to in para. (j) would be taxable as ``taxable income'' so that if the amount recoverable in the present case is (as Gowans J. treated a similar amount in the case of Jacobsen's case v. B.L.B. Corporation (supra unrep.)) "an amount received by way of... indemnity for or in respect of any loss...

  • (ii) of... income which would have been assessable income if the loss had not occurred;"

then the whole of the amount payable as damages to the present plaintiff would be taxable, and Gourley's case would not have been applicable in the assessment of the damages. Mr Jordan did not, as I understood his argument, contest that proposition; his

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argument was directed to the proposition that the case fell within para. (d) of sec. 26 in that it was ``the capital amount of... compensation... paid in a lump sum in consequence of... the determination of any... employment... paid by... by compulsion of law.''

Mr. Jordan's argument was, simply, that if the Act treated the total amount as an amount in the nature of ``capital'' - on which in the absence of special provisions no income tax would be payable - nevertheless sec. 26(d) provided that ``5 per centum of... (that) capital amount'' should be included in the assessable income of the taxpayer. His argument therefore was that the remaining 95% of the amount recoverable as damages for wrongful dismissal was not subject to tax and was therefore subject to the operation of Gourley's case.

I have traced the legislative history of the provisions here in question in the hope that it might throw some light on the matter I am called on to decide.

The original Income Tax Assessment Act of the Commonwealth was the Income Tax Assessment Act 1915 (No. 34 of 1915) which was from time to time amended and finally repealed and replaced by the Income Tax Assessment Act of 1922 (Act No. 37 of 1922). The ancestors of the para. (d) and (e) of the present sec. 26 were the following provisions of the 1915 Act: -

``14. The income of any person shall include

...

(f) Five per centum of the capital amount of a retiring allowance or gratuity, which is paid in a lump sum;

(g) All allowances, gratuities (except for retiring allowances and gratuities paid in lump sum), bonuses, and premiums, whether in money or goods or sustenance or land allowed, given or granted to a taxpayer in respect of or for or in relation to any employment or service of such taxpayer to the amount of the value such allowance, gratuity, bonuses, and premiums respectively;...''

There was no provision corresponding to sec. 26(j) but sec. 20 provided as follows: -

``S. 20 A deduction shall not, in any case, be made in respect of any of the following matters: -

(a)...

(b)...

(c) Any loss or expense which is recoverable under any contract of insurance or indemnity....''

Paragraphs (f) and (g) of sec. 14, as also para. (c) of sec. 20 of the 1915 Act, were re-enacted without any significant change of wording as para. (f) and (g) of section 16 and para. (c) of sec. 29 of the 1922 Act respectively.

On March 7, 1935 the Full Court of New South Wales handed down its decision in
Scott v. F.C. of T. (1935) 35 S.R. (N.S.W.) 215, in which it dealt with the corresponding provisions of the New South Wales Income Tax legislation, namely, para. (i) and (j) of subsec. (4) of sec. 11 of the Income Tax (Management) Act 1928, which provided that the assessable income of any person should include:

``(i) Five per centum of the capital amount of the retiring allowance or gratuity (not being an amount paid to a director of a company) paid in a lump sum; and

(j) all allowances, gratuities (except retiring allowances or gratuities paid in lump sums otherwise than to a director of a company) bonuses and premiums, whether in money goods or sustenance or land allowed given or granted to a person in respect of or for or in relation directly or indirectly to any employment or service of such person to the amount of the value of such allowances, gratuities, bonuses and premiums respectively.''

Scott had been appointed Chairman of the Metropolitan Meat Industry Board for a term of five years at a salary of £2,500 per annum. During that five years the Board was dissolved by an Act which also provided that the members should cease to hold office but should receive such compensation as they would have been entitled to had their services been dispensed with otherwise than in accordance with the law. In an action for compensation, Scott recovered the sum of £7,000. The Full Court (Jordan C.J., Stephen and Street JJ.) held that no part of this sum was assessable income within the meaning of para. (j) or (Stephen J. dissenting) of para. (i) of sec. 11 of the Income Tax (Management) Act 1928 as amended. Jordan C.J. said (at p. 219) ``that the money paid to the Chairman whose Board had been dissolved could not be regarded as `income' in the ordinary meaning of the phrase....'' He said (at p. 219 "The

ATC 4027

sum in question in the present case was compensation made payable because the appellant's office had been abolished before the period for which he had been appointed to hold it had expired, and was measured by the amount of damages which he would have been entitled to recover if he had been wrongfully dismissed." Furthermore, he said (at p. 221) that the sum granted was neither an ``allowance'' or a ``gratuity'' within the meaning of paragraph (i) of sec. 11 of the Income Tax (Management) Act of N.S.W., because if the money was "paid in discharge of an obligation imposed by law, it was not a `gratuity'. Nor was it an `allowance', in any ordinary sense of either of those words. He held (at p. 221) that the sum in question was recovered in respect to the right to receive an unliquidated amount which might be anything from a nominal sum up to many thousands of pounds. It was not an allowance: ``It was in respect of something analogous to wrongful dismissal, although the element of wrongfulness was absent.'' It could not be regarded as a retiring allowance because ``it was in respect of prevention of performing further services, and had no relation to the past services.'' (p. 221).

Consequently he held that the payment was not within either para. (i) or para. (j), both of which paragraphs, he thought, were concerned ``with benefits given to persons in any way whatsoever relating to, or in respect of, or in consideration of any employment or service.'' (See at p. 222.)

Street J. concurred in the judgment of Jordan C.J. Stephen J. agreed that the item did not fall under sec. 11(j) but was of opinion that it was a retiring allowance within the meaning of sec. 11(i).

The effect of the decision in Scott's case was that as the Income Tax Assessment Act of the Commonwealth then stood, damages for wrongful dismissal would not be taxable. Consequently, when the Income Tax Assessment Act 1922 of the Commonwealth was replaced by the Income Tax Assessment Act 1936, amendments were made to the former para. (f) and (g) with a view to overcoming the effect of the decision in Scott's case (supra). As a result of these amendments, the relevant paragraphs of sec. 26 now stand as follows: -

``26. The assessable income of a taxpayer shall include...

(d) Five per centum of the capital amount of any allowance, gratuity or compensation where that amount is paid in a lump sum in consequence of retirement from, or the termination of, any office or employment, and whether so paid voluntarily, by agreement or by compensation of law....''

``(e) The value to the taxpayer of all allowances, gratuities, compensations, benefits, bonuses and premiums allowed, given or granted to him in respect of, or for or in relation to directly or indirectly to, any employment of or services rendered by him, whether so allowed, given or granted in money, goods, land, meals, sustenance, the use of premises or quarters or otherwise:

Provided that this paragraph shall not apply to any allowance, gratuity or compensation which is included in the last preceding paragraph...:''

Furthermore a new para. (j) was inserted:

``(j) Any amount received by way of insurance or indemnity for or in respect of any loss -

  • (i) of trading stock which would have been taken into account in computing taxable income; or
  • (ii) of profit or income which would have been assessable income,

if the loss had not occurred....''

The effect of this latter amendment was that moneys recovered by way of insurance or indemnity for or in respect of loss of income have been made part of the assessable income, whereas under the earlier legislation although a loss or expense recoverable under a contract of insurance or indemnity was declared to be not an allowable deduction - see 25(c) of the 1922 Act - nevertheless the insurance monies were not assessable income.

A wide construction has been placed on the word ``indemnity'' in para. (j) by the High Court in F.C. of T. v. Wade (1951) 84 C.L.R. 105 at p. 112 and pp. 115-6 per Dixon and Fullagar JJ. and at pp. 115-6 per Kitto J. ((1951) A.L.R. 962 at pp. 965-6 and p. 968 respectively) and in Mclaurin v. F.C. of T. (1961) 104 C.L.R. 381; (1961) A.L.R. 471; by Gavan Duffy J. in Robert v. Collier's Bulk Liquid Transport Pty. Ltd. (1959) V.R. 280 at pp. 283-5; (1959) A.L.R. 684 at pp. 685-9, by the majority (Herron and Sugerman JJ.) of the

ATC 4028

Full Court of New South Wales in Williamson v. Commr. for Railways (N.S.W.) (1960) S.R. (N.S.W.) 252; accepted by Barber J. in Melbourne Saw Manufacturing Coy. v. Melbourne & Metropolitan Board of Works (1970) V.R. 394 at pp. 398-9; and by Gowans J. in Jacobsen v. B.L.B. Corporation of Australia Establishment (19/2/73, unreported.)

This construction, if correct, would bring the damages recoverable by the plaintiff in this action within the ambit of para. (j) of sec. 26. The course of authority referred to above cannot be ignored by me. Equally that course of authority is capable of being invoked by the Commissioner of Taxation in support of a claim to include the whole of the damages recoverable by the plaintiff in the present case.

It would appear that the Commissioner has, in relation to the payment of $20,946.16 made in March 1974, acted on the view that the payment in question was ``compensation paid in a lump sum in consequence of the termination of... (the plaintiff's) employment'' - within the meaning of para. (d) of sec. 26. That particular sum was ``paid voluntarily'' whereas the damages for which I hereafter will give judgment, will, when paid, have been ``paid.. by compulsion of law''. Both kinds of payment are, however, within the provisions of sec. 26(d).

It is open, therefore, to the Commissioner of Taxation to treat the amount of any payment by the defendant to the plaintiff of damages hereafter awarded by me in the present case as falling within the language of sec. 26(d), in which case he would treat the assessable income of the plaintiff as including five per centum of the amount of damages awarded. Indeed that is the footing on which the defendant's counsel has presented his argument in this case, urging that I should follow and apply the decision in Parsons v. B.N.M. Laboratories Pty. Ltd., (supra).

In the field of damages for wrongful dismissal, there is no reported Australian case in which the effect of sec. 26(d) has been considered. Nevertheless the course of Australian authority to which I have referred, was, in the judgment of Gowans J. in Jacobsen's case (unreported, supra), sufficient to justify him in concluding that damages for wrongful dismissal would be taxable under sec. 26(j).

If, however, as Mr. Jordan contends, five per centum of the capital amount of such damages is assessable income liable to tax under sec. 26(d), there would be two possible bases of tax liability in relation to damages for wrongful dismissal. If both bases of liability to tax are available to the Commissioner of Taxation, there is authority for the proposition that where there is a clear alternative given to the Crown to tax under one head or another, the right of choice would belong to the Crown - see
Speyer Brothers v. I.R. Commrs. (1908) A.C. 92 at pp. 95-6 per Lord Loreburn L.C. who pointed out that if the Crown claims that the document is taxable at the higher rate in one part of the Act, it is no answer to say that there is another part under the same Act under which tax might be taxed at a lower rate.

There is, of course, another rule that where there is a charging section or charging Act, the meaning of which is in doubt, it ought to be construed in favour of the subject - see
Hennell v. I.R. Commrs. (1933) 1 K.B. 415 at pp. 420 - 1 per Lord Hanworth M.R., and at p. 428 per Romer L.J. It may be that it was this later rule on which the Commissioner of Taxation acted in relation to the payment of $20,946.16 made by the defendant to the plaintiff in March 1974: he did not seek to bring the whole of that amount into the assessable income of the plaintiff, but only five per centum thereof.

The circumstance that the Commissioner has acted on this view in relation to that payment by no means binds him to adopt the same view in relation to the amount to be awarded by this judgment. It would be open to him, consistently with the decision in Jacobsen's case, to include the whole of the amount awarded in the assessable income of the plaintiff. No corresponding option would be open to the Inland Revenue Commissioners, there being in the English legislation no counterpart to sec. 26(j) of the Commonwealth Income Tax Assessment Act. Indeed, the only reference to moneys recoverable under insurance or a contract of indemnity occurs in sec. 130(k) of the Income and Corporation Taxes Act 1970 - a provision substantially to the same effect as sec. 25(c) of the Income Tax Assessment Act 1922 and its ancestor sec. 20(c) of the 1915 Act.

For myself I am disposed to the view that the amount recovered under an award of damages for wrongful dismissal is within the

ATC 4029

provisions of sec. 26(d) rather than of sec. 26(j). The remuneration which the wrongful dismissal prevents the employee from earning is plainly within the terms of sec. 26(e). The insertion in sec. 26(e) of the word ``compensation'' coupled with the words ``in respect of... any employment'' might have sufficed to found an argument that the decision in Scott v. C. of T. (N.S.W.) (1935) 35 S.R. (N.S.W.) 215 was no longer applicable and that damages for wrongful dismissal were taxable under sec. 26(e). In relation to such an argument it would be necessary to take into account what was said by Windeyer J. in Scott v. F.C. of T. (1966) 40 A.L.J.R. 205; (1967) A.L.R. 561 at pp. 567-571.

It is unnecessary to pursue this matter however, because the insertion in para. (d) of sec. 26 of the word ``compensation'' and of the words ``in consequence of the... termination of any... employment'' and of the concluding phrase ``whether so paid voluntarily, by agreement or by compulsion of law'', coupled with the express language of the proviso inserted (in 1936) into sec. 26(e) makes it clear that damages for wrongful dismissal are within sec. 26(d) - see also
Reseck v. F.C. of T. 74 ATC 4325 at pp. 4326-27; (1974) 4 A.L.R. 621 at pp. 624-5 per Hanger C.J.

In the result, if the plaintiff recovers payment of the amount awarded as damages in his case, his assessable income for the year in which he recovers that payment will include five per centum of the damages so paid to him. It would also follow that the remaining ninety-five per centum would not be taxable, and in my view, the Commissioner would not be entitled to include that ninety-five per centum as taxable income under sec. 26(j). I do not base this view on the presence in sec. 26(d) of the words ``the capital amount'', for I am disposed to the view which, I believe, is the view which has been acted on by Income Tax Boards of Review - that those words should be construed as meaning no more than ``the capitalised amount'', and that they do not necessarily mean that the legislature took the view that the amount recovered was capital rather than income. In truth, sec. 26(d) affects both sums which are of a capital nature and sums which are in the ordinary sense of the word ``income'' - see
Henry v. Foster (1932) 16 T.C. 605 and
Dale v. De Soissons (1950) 1 All E.R. 912.

The fact that Parliament has - by the proviso to sec. 26(e) - expressly enacted that sec. 26(e) does not apply to any allowance, gratuity or compensation which is included in sec. 26(d) is, in my view, inconsistent with the view that the ninety-five per centum of the capital amount of the lump sum payment which remains after five per centum thereof has been dealt with by sec. 26(d) can be subjected to tax under sec. 26(j).

There is, I consider, a significant difference between the terms of sec. 37 and 38 of the Finance Act 1960 (now sec. 187 and 188 of the Income and Corporation Taxes Act 1970) and sec. 26(d). The English legislation provides that tax shall be chargeable in respect of any payment made in consequence of, or otherwise in connection with the termination of any employment (sec. 37(1) and (2)) but then goes on to assign the sum so paid into two distinct categories:

  • (1) Any sum not exceeding £5,000 - which is not chargeable to tax;
  • (2) Any sum in excess of £5,000 - which is not chargeable to tax in respect of £5,000 but is chargeable to tax in respect of the excess over £5,000.

The severance of the two amounts may have been dictated by the considerations adverted to by Pearson LJ. in Parsons' case (supra) at p. 141 of the report - but it is clear that Harman L.J. treated the two sums as entirely distinct, the sum under £5,000 being not a payment to which sec. 37(1) applied whereas the excess over and above £5,000 was a payment to which the section applied. In the Australian legislation, the policy considerations suggested by Pearson L.J. would not necessarily be applicable - eg. in cases where the five per centum represents a sum considerably in excess of the ``damages for wrongful dismissal in an ordinary case where the damages are small or medium-sized.'' Even if it be crystal clear that the capital amount of the payment is a large sum paid as a retirement benefit - a ``golden handshake'' in very truth - only five per centum of the amount will be brought into the assessable income. For good or ill, that is - and has, since the inception of the legislation - been the legislative policy.

Furthermore, in my view, it is not possible, in relation to sec. 26(d) to take the view that the capital amount of the lump sum payment is not ``taxable subject matter'' (to use the phrase

ATC 4030

of Pearson L.J. in Parsons' case in the passage from pp. 140-1 already quoted). In my view, the whole of the lump sum payment is ``taxable subject matter'' - for you cannot talk of, or ascertain, the amount which is ``five per centum'' otherwise than in terms of its relationship to one hundred per centum, even if only five per centum of the one hundred per centum of the lump sum payment is deemed, by sec. 26(d), to be part of the assessable income. Parliament has thereby fixed a rate of taxation of the lump sum payment and I am bound to respect and give effect to that rate.

The whole one hundred per centum of the lump sum payment is made taxable subject matter in the sense that, whether it be of a capital or an income character, it is brought into the ambit of the Income Tax Assessment Act as being the source from which part of the assessable income of the taxpayer is derived, namely, that part which consists of five per centum of the capital (or capitalised) amount of that lump sum payment, and by furnishing the basis for the calculation of the extent by which the assessable income is increased, namely, by that amount which represents five per centum of the capital (or capitalised) amount of the lump sum payment.

In this context it is of some significance - perhaps not great significance - that there is no provision that, save to the extent of five per centum thereof, the capital amount of any allowance, gratuity or compensation paid in a lump sum in consequence of retirement from or the termination of any office or employment shall be exempt from income tax - cp. sec. 23(p), 23AC(1) & (2), 23A(1), 23D(2) of the Act.

My own view is that paragraph (d) and (e) constitute a ``small self-contained code'' (cp. per Sellers L.J. in Parsons' case (1964) 1 Q.B. 95 at p. 119; (1963) 2 W.L.R. 1273 at p. 1287) - whereby the payments are brought into tax as part of the assessable income either wholly under paragraph (e) or partly - to the extent only of five per centum - by para. (d). To use a familiar phrase, the legislature has by para. (d) and (e) shown an intention of ``covering the whole field'' of payments of allowances, gratuities and compensation in respect of or for or in relation to employment or retirement from or termination of that employment. Had the legislature said expressly that damages for wrongful dismissal should be taxable to the extent of five per centum thereof, I would not have thought that the courts would have been warranted in applying Gourley's case in the computation of the damages to be awarded. In my view, what the legislature has not said expressly it has said inferentially, and I ought not, therefore, to adopt either the reasoning or the conclusions of the majority judgments in Parsons' case. The comment of Ogus, in his book on The Law of Damages (1973) at p. 108 that ``for the Gourley principle to be applicable, it is not sufficient that the award be one of the class of payments to which sec. 187 and 188 of the Income and Corporation Taxes Act applied: it must itself attract tax and therefore must exceed $5,000,'' is not, in my view, applicable to the provisions of para. (d) and (e) of sec. 26.

If sec. 26(d) had been in pari materia with the English legislation considered in Parsons' case (supra), the persuasive authority of that case would have disposed me to reduce the damages in proportion to the net amount of the plaintiff's earnings if he had not been dismissed. The practical difficulties which would be encountered in working out such an application - difficulties such as those discussed in Parsons' case, as well as in
Stewart v. Glentaggart (1963) S.L.R. 119, and in
Whiteman & Weatcroft on Income Tax and Surtax (1971) pp. 548-551, para. 15-20 - would, on this view, have had to be accepted. But for the reasons already stated, the statues are not in pari materia, and I do not therefore follow or apply the reasoning and conclusions of the majority in Parsons' case (supra).

Although my own view is that the damages here in question are taxable under para. (d) and not under para. (j) the Commissioner of Taxation is not a party to this present litigation and is not bound by the judgment I will pronounce herein. Although the Commissioner of Taxation appears to have proceeded on the view which I have adopted that the case falls within sec. 26(d), it is legally open to him hereafter to seek to assess the plaintiff to tax under sec. 26(j). The plaintiff might then find the resultant damages assessed under sec. 26(j), and his complaint that there had already been a deduction for tax in the process of assessing the damages would be irrelevant, because the Commissioner would not have received the benefit notionally deducted in the assessment of the damages, and would not be bound to give credit therefor. The topic is the subject of a valuable

ATC 4031

discussion in Street (op. cit.) pp. 98-104, where one suggestion advanced (at pp. 98-9) is that the taxation authority be joined as a party - a course recommended by Lord Greene M.R. in
Asher v. London Film Productions Ltd. (1944) 1 K.B. 133 (C.A.); 50 T.L.R. 115. Several other courses are suggested in Professor Street's discussion at pp. 103-4. In cases of damages for wrongful dismissal, logically the most satisfying course and the one most calculated to do justice as between the plaintiff, the defendant and the State is to award damages without deduction and to make separate rules about taxation of damages, including a provision for spreading the damages over the years in which the income was lost or not earned - as is done in England - see Whiteman & Wheatcroft (op. cit. pp. 546-7 para. 5-10).

In claims for damages for personal injury in cases of tort, the solution suggested would have appeal only to the taxation authorities, especially since in claims for damages for personal injuries caused by negligence compensation for loss of earnings - past, present and future - is nowadays treated as compensation for loss of a capital asset, i.e. loss of earning capacity - see Groves v. United Pacific Transport Pty. Ltd. & Thompson (1965) Q.R. 62.

These, however, are matters for the legislature, not the judiciary. In my view, the damages which I will hereafter award, are subject to taxation under sec. 26(d) to the extent of five per centum only and no more. My view further is that to apply the Gourley principle in such a way as to make deductions for tax in assessing the ``95%'' of the lump sum paid as damages - a process which can be carried only in respect of the full amount (the 100%) of the lump sum in question - would be to act at naught the legislative policy which I consider is discernible from the combined effect of para. (d) and (e) of sec. 26.

For the foregoing reasons, I consider that in the assessment of the damages in this case I should make no deduction for taxation. I should, I consider, calculate the damages on the footing of the gross amounts which would have been payable by the plaintiff had his employment not been wrongfully terminated, leaving the fiscal consequences of my award to be worked out hereafter between the plaintiff and the Federal Commissioner of Taxation.

In conclusion, I would add this: Professor Street (op. cit. p. 98) states that it has been held that the plaintiff has the burden of proving that the income is not taxable or that the damages are taxable. The authority cited for that view is the case of
Hall & Co. Ltd. v. Pearlberg (1956) 1 W.L.R. 244 a decision of the Official Referee. No doubt the plaintiff bears the general onus of proof of damages. Nevertheless, with all respect, I am unable to understand how there can be an onus of proof with respect to a question of law once the facts are established. Insofar as the plaintiff's case may involve him in proving particular facts which (he contends) show that the damages awarded will be taxable, the onus of establishing those facts will, of course, rest on the plaintiff. Conversely, if the defendant asserts the existence of particular facts on which he seeks to found the proposition that the damages would not be taxable, the onus of establishing those facts would lie on the defendant.

Once the facts are established, however, by the proof of certain asserted facts and by the rejection or non-proof of other asserted facts, the question what legal conclusions follow from the facts accepted by the Court as established on the evidence is a matter of law for the Court, on which the Court must make up its mind and which it cannot resolve in terms of an onus of proof. There are, no doubt, many cases in which such a solution would be an attractive way out. It is not, however - in my view - permissible for a Court to resolve problems of law in this way. If a problem of law arises squarely for decision, that decision must be made, and must be made as a matter of law and not in terms of any supposed onus of proof.

I have not, therefore, considered it proper for me to seek to resolve in terms of any ``onus of proof'' the issues discussed in these reasons for judgment.


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