Federal Commissioner of Taxation v. Clendon Investments P/L

Judges:
Jenkinson J

Court:
Supreme Court of Victoria

Judgment date: Judgment handed down 14 June 1977.

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Jenkinson J.: Appeal by the Commissioner of Taxation from the decision of a Board of Review.

The Board upheld the respondent's objection against an amended assessment in respect of the year of income ended 30th June 1972. The Commissioner had claimed that the amendment was authorised by sec. 170(2) of the Income Tax Assessment Act 1936 and in the amended assessment he had increased the respondent's taxable income by $21,565. That was the amount, cents disregarded, of a cheque drawn on the respondent's bank account and paid to the Council of Trustees of the National Gallery of Victoria, in respect of which payment the respondent had claimed in its return a deduction from its assessable income of that year under sec. 78(1)(a)(xxvii) of the Act. The respondent's objection having been disallowed by the Commissioner and his decision having been referred to a Board of Review, the Board reduced the amended assessment by allowing the claimed deduction, and without including in the statement in writing contemplated by sec. 195(2) any matter relevant to sec. 170(2).

It was not disputed that the National Gallery of Victoria (hereinafter called ``the Gallery'') is an institution within sec. 78(1)(a)(xxvii) and that a payment to the Council of Trustees of the National Gallery of Victoria (hereinafter called ``the Council'') for the purposes of that institution is allowable as a deduction under subpara. (xxvii), if the payment is a gift within the meaning of para. (a) of sec. 78(1). The Council is a body corporate of nine members constituted by the National Gallery of Victoria Act 1966, and has functions prescribed by that Act which include the management and control of the institution (which is called the ``National Gallery'' in that Act), the acquisition of works of art for their preservation and their exhibition in the institution, and the acceptance of gifts of money and other property for use in carrying out the other functions I have stated. Both parties to the appeal having conducted it on the assumption that money paid to the Council for use in carrying out one of those functions may be within subpara. (xxvii), notwithstanding that other functions are conferred on the Council by sec. 13 of the National Gallery of Victoria Act 1966, I do not think that I should call the correctness of that assumption into question in this proceeding. Of particular relevance to the determination of this appeal is sec. 14 of the National Gallery of Victoria Act 1966, which provides:

``(1) Subject to sub-section (2) and with the approval of the Governor in Council the Council may exchange sell lease or dispose of any property vested in it by or under this Act.

(2) The Governor in Council shall not approve the sale exchange or disposal of any works of art in the State collection unless he is satisfied that a resolution of the Council in favour thereof has stood unrevoked for a period of not less than ten years and been confirmed by resolution of

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the Council after the expiration of that period.

(3) The Council may accept or take on loan or, out of any moneys available to it, purchase any personal property for the purpose of carrying into effect the objects of this Act.

(4) In addition to any other method of donation or gift which the Council is entitled to accept, the Council may accept a donation or gift of, or of cash for the purchase of, any picture work of art or exhibit conditional on such picture work of art or exhibit -

• (a) remaining in the custody of the donor during his lifetime or for any other period agreed upon between the donor and the Council; and
• (b) being handed over by the donor to the Council for the purposes of exhibition or study whenever and for such period as the Council may in writing so request.

(5) The Council may lend works of art vested in or under the management or control of the Council to such persons or for such purposes as the Council thinks fit.''

The respondent is an investment company of which at material times Kenneth Baillieu Myer was the governing director. In 1972 the memorandum of association of the respondent included the following object:

``2 To make gifts of property of any nature upon such terms or trust if any as the Company deems expedient.''

In that year the respondent's articles of association included conventional provisions with respect to directors and also the following articles:

``95. THERE shall be one Governing Director of the Company. The first Governing Director shall be Kenneth Baillieu Myer of 5 Woorigoleen Road Toorak Director.

96. ALL the provisions of these presents which shall in any way relate to the management and control of the business of the Company shall be read and interpreted as subject to the provisions contained in the following Articles providing for the office of and the exercise of powers of the Governing Director.

97. SUBJECT as hereinafter provided the Governing Director for the time being shall hold that office for life and the full government and control of the Company shall be vested in him and he may exercise all the powers authorities and discretions vested in the Directors generally and that notwithstanding he may be the sole Director holding office and all the other Directors (if any) for the time being of the Company shall be under the control of the Governing Director whose opinion shall prevail in the event of any difference of opinion and they shall be bound to conform to his directions in regard to the Company's business.

107. SUBJECT to the powers of the Governing Director questions arising at any meeting shall be decided by a majority of votes. The chairman shall have a second or casting vote.

113. THE management and control of the business and affairs of the Company shall be vested in the directors and the directors may exercise all such powers and do all such acts and things as the company is by its Memorandum of Association or otherwise authorised to exercise and do and are not hereby or by Statute expressly directed or required to be exercised or done by the company in general meeting but subject nevertheless to the provisions of the Companies Act 1938 and of these articles.''

Early in 1972 Mr. Myer saw two screens in Japan. He thought them to be perhaps worthy of inclusion in the Gallery's collection of Japanese art. He transmitted information about the screens to Mr. Eric Westbrook, who was at that time the Director of the Gallery, and upon his return to Melbourne he discussed with Mr. Westbrook a proposal that he should provide the money by payment of which the screens could be acquired for the Gallery. Mr. Westbrook drew to his attention the provisions of sec. 14(4) of the National Gallery of Victoria Act 1966, of which he had been unaware, and suggested that he might be enabled to have custody of the screens from time to time if he were to frame his proposal within those provisions. Mr. Westbrook followed his suggestion with a letter to Mr. Myer dated 21st April 1972, which reads:

``Dear Ken,

I enclose the suggested form of letter to the Trustees and, as you will see, I have quoted

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Section 14(4) of the National Gallery Act. For your information, this reads as follows: -

(4) In addition to any other method of donation or gift which the Council is entitled to accept, the Council may accept a donation or gift of, or of cash for the purchase of, any picture work of art or exhibition (sic) conditional on such picture work of art or exhibit -

• (a) remaining in the custody of the donor during his lifetime or for any other period agreed upon between the donor and the Council; and
• (b) being handed over by the donor to the Council for the purposes of exhibition or study whenever and for such period as the Council may in writing so request.'

This, as you will see, covers your requirements and I think that there should be no trouble in getting what you wish.

May I take this opportunity of thanking you once again for your generosity to the Gallery?

With kind regards,''

The ``suggested form of letter'' was in the following terms:

``Dear Mr. Westbrook,

I would like to make a donation of $21,000 to the Council of Trustees of the National Gallery of Victoria to enable the Council to acquire four works which I believe may be of interest to them for the Gallery's collections.

The works with their values are as follows: -

• 1. Japanese 2-part screen `Cranes'
• 2. Japanese 2-part screen `Wooded Landscape'
• 3. The White Cat's Garden - Tapestry by Charles Blackman
• 4. Table Candelabra, Silver, by Cliff Gordon.

I would like the works to be purchased by the Trustees as a conditional gift under section 14(4) of the National Gallery of Victoria Act so that they can remain in my custody during my lifetime when not required by the Trustees and staff for display or study purposes. It is understood they will revert entirely to the National Gallery on my death. In the case of Item No.4 only however, this work has personal associations in addition to what I believe is its artistic value and I would therefore like to ask that this should remain on loan to my wife, if she survives me, reverting to the Trustees on her death.

I hope that these works and this arrangement will be acceptable to the Council.''

Each of the two Australian works of art to which reference is made in the draft letter had been the subject of discussion between Mr. Myer and Mr. Westbrook. The tapestry by Charles Blackman had been seen by Mr. Myer at an exhibition at the South Yarra Gallery and he conceived the proposal that he provide the money by which a tapestry by Mr. Blackman from the exhibition might be acquired for the Gallery. Professional officers of the Gallery had concurred in the selection of the particular tapestry to which the letter refers. The candelabrum executed in Silver by Mr. Cliff Gordon had been commissioned by Mr. Myer with a view to the commemoration of a personal anniversary which fell in March 1972. Shortly after delivery of the work to Mr. Myer it was seen by Mr. Westbrook and discussed by him and Mr. Myer, who then proposed a gift by himself whereby the candelabrum might be acquired for the Gallery.

The price asked by Mr. Gordon for the candelabrum, $3,000, had not been paid by Mr. Myer, who regarded himself as morally obliged to pay, or to see that payment was made to Mr. Gordon. It was submitted on behalf of the appellant that there had been a sale and delivery of the candelabrum to Mr. Myer and that Mr. Myer was indebted to Mr. Gordon in that amount for the price. I am prepared to assume that the submission is correct.

The tapestry was for sale at $8,000. The evidence does not in my opinion justify a conclusion that Mr. Myer at any time contracted to buy it.

The exact price of the screens was not, as I infer, known by Mr. Westbrook - nor perhaps by Mr. Myer - at the time when the draft letter was prepared. The Myer Emporium Ltd. bought them in Japan at Mr. Myer's request and imported them into

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Australia with a view to their disposal, without profit, in accordance with his wishes. By 27th April 1972 that company had notified Mr. Myer of the aggregate cost incurred by it in respect of the screens: $10,566.17.

By letter dated 3rd May 1972 and typed on paper headed: -

``Kenneth Myer

314 Bourke Street

Melbourne 3000''

Mr. Myer communicated with Mr. Westbrook in the following terms:

``Dear Mr. Westbrook,

I would like to make a donation of approximately $21,565 to the Council of Trustees of the National Gallery of Victoria to enable the Council to acquire four works which I believe may be of interest to them for the Gallery's collections.

The works with their values are as follows:

      1. Japanese 2-part screen
         "Cranes"                      $6,348
      2. Japanese 2-part screen
         "Wooded Landscape"            $4,217
      3. "The White Cat's
         Garden" -  Tapestry by
         Charles Blackman (subject
         to Sales Tax)                $8,000
      4. Table Candelabra,
         silver, by Geoff Gordon      $3,000
                                    ---------
                                     $21,565
                                    ---------
          

I would like the works to be purchased by the Trustees pursuant to Section 14(4)(a) and (b) of the National Gallery of Victoria Act so that they can remain in my custody during my lifetime when not required by the Trustees and staff for display or study purposes. It is understood they will revert entirely to the National Gallery on my death.

In the case of Item No.4 only however, this work has personal associations in addition to what I believe is its artistic value and I would therefore like to ask that this should remain on loan to my wife, if she survives me, reverting to the trustees on her death.

I hope that these works and this arrangement will be acceptable to the Council.

Warm regards,

Sincerely,

Kenneth Myer.''

At a meeting of the Council's corporators held on 6th June 1972 it was resolved that Mr. Myer's proposals be accepted. The minutes of the meeting which were tendered state in respect of each work of art a price ($3,000 for the candelabrum, ``$8,000 plus sales Tax'' for the tapestry, $6,348 for one screen and $4,217 for the other) and a very brief description under the sub-heading, ``By Mr. Kenneth Myer''. All four of the articles are specified in the minutes under a heading, ``Submissions for purchase (Conditional Gift)''.

Mr. Gordon Thomson, who was acting as Director of the Gallery, notified Mr. Myer of some of the resolutions by a letter dated 9th June 1972, of which the relevant part reads:

``I am happy to say that the Trustees, at the last meeting of the Council, accepted with great pleasure the proposal to acquire as conditional gifts the two pairs of six-fold screens about which you corresponded with the Director before his illness.''

Mr. Myer replied to that letter by a letter typed on the personal stationery I have described, and dated 14th June 1972, of which the relevant part reads:

``I am pleased to know that the Trustees at their last meeting have accepted the two pairs of six-fold screens which I purchased recently in Japan. I shall be in touch with you shortly concerning my gift to the Gallery of the screens, the Blackman tapestry and the Geoffrey Gordon Silver candelabra. It is important that this gift be made and receipted by June 30.''

By another letter, typed on the same stationery, and dated 14th June 1972, Mr. Myer wrote to Mr. Thomson in the following terms:

``I am enclosing a cheque for $21,565.17 together with a copy of my letter to Mr. Westbrook of 3rd May 1972 regarding the four works which the Trustees of the National Gallery of Victoria have now agreed to purchase.

I understand the Gallery will now pay the following amounts to: -

            
      THE MYER EMPORIUM
      LTD.
      2 Japanese Screens
      (details attached)        $10,566.17 (sic)
      MR. GEOFF GORDON -
      98 Wimbledon Ave.
      Mt. Eliza
      Silver Candelabra         $ 3,000.00
      THE SOUTH YARRA
      GALLERY
      Tapestry by Charles
      Blackman                  $ 8,000.00
                               ------------
                                $21,565.17 (sic)
                               ------------
          

As Mr. Gordon has already telephoned me regarding payment of the Silver Candelabra and requested bridging finance from me, he would greatly appreciate immediate settlement of the $3,000 owing to him.

You will notice that I am paying an amount of $8,000 for the Blackman tapestry. This amount is more than the National Gallery will need to pay Mrs. Dulieu of the South Yarra Gallery, as the amount of sales tax has not yet been determined; Mrs. Dulieu is unable at this point to nominate this rebate precisely. I should therefore be grateful if the National Gallery will in due course reimburse me for the amount equivalent to the rebate of Sales Tax on the tapestry.

It would be appreciated if you could let me have a receipt before the 30th June, 1972.

Warm regards,

Sincerely,

Kenneth Myer.''

Enclosed with that letter was a cheque drawn by the respondent on its bank and payable to the National Gallery of Victoria for $21,565.17.

After Mr. Westbrook had drawn to Mr. Myer's attention the provisions of sec. 14(4) and before Mr. Myer had composed the letter dated 3rd May 1972, Mr. Myer sought legal advice from a solicitor as to whether a gift of the kind that he was contemplating, complying with sec. 14(4), would attract an income tax deduction. He was advised that it would.

The respondent had been for some years before 1972 in the habit of making each June substantial gifts for which deductions were claimed under sec. 78(1)(a) of the Income Tax Assessment Act 1936. The aggregate amount of these gifts had since 1966 been an annual sum of not less than $16,000 nor more than $31,000. Mr. Myer himself also made annual gifts which fell within sec. 78(1)(a), as did another family company with which he was closely associated. It was his practice to give consideration each June to the matter of gifts by the companies and by him. One of the considerations he took into account was the incidence of income tax.

After he had consulted his solicitor and before he caused the cheque for $21,565.17 to be made, Mr. Myer consulted Herbert Neill Barry, an accountant who has kept the respondent's books of account for more than 20 years, and upon whose advice in relation to donations it was Mr. Myer's habit to rely. Mr. Myer had, as I find, and as he admitted, an imperfect recollection of what passed between him and Mr. Barry, but the decision which Mr. Myer made at or after the discussion was that the sum of $21,565.17 would be gratuitously provided and paid to the Council by the respondent, not by himself. Mr. Myer gave effect to that decision by acquainting Mr. Barry of it, and by directing him to make the cheque, which was written and signed by him, not by Mr. Myer. The decision was implemented by Mr. Barry in the entries in the respondent's books of account which relate to the payment: no charge or claim has ever been made in those accounts or in any other way against Mr. Myer or any other person. The payment was treated in those books as a gift by the respondent to the Gallery and, although the payment was never the only subject of a resolution of a meeting of the directors of the respondent, the accounts of the respondent, prepared in accordance with the entries in those books of account, were laid by the directors before the shareholders at the annual general meeting of the respondent which was held in December 1972. Having been invited to look at the letter dated 14th June which accompanied the cheque, Mr. Myer was questioned during the course of his evidence:

``Have you thought about what might have brought about that letter? That is to say what might have brought about the contrast between the signature on the cheque and the use, as you put it, of the personal pronoun, first person? - Well I think in this context, the discussions that occurred between Mr. Westbrook and

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myself, particularly in view of my personal association with all these four works of art, I think that I would have thought in terms of the personal pronoun, because they were personal negotiations and they were personal negotiations with Mr. Westbrook, so in that sense I think that would explain the use of the personal pronoun. I wouldn't - as far as the fact that my name, I mean doesn't appear as a signatory to the cheque of Clendon Investments, I mean that's quite normal practice. I sometimes sign Clendon Investment cheques, but more often than not I don't, I'm only one of the directors of the company. And you know, your Honour, quite frankly, I was also - I was and am extremely mindful of the implications of this clause in the Act. I think that this clause is an extremely important clause and the legal interpretation of it, and the ultimate practice, is going to have a very substantial bearing on the development of the permanent collections of the Art Galleries of Australia. If I didn't think so, I wouldn't be in the box.

Well you are concerned about it now, I can understand that because of what has happened...? - No, I was concerned about it at the time, your Honour.

At the time you sent that letter? - Yes, at the time I sent the letter.

And you believe you had taken the advice of two people about it, about the legal aspects of it? - I believed, I had, yes.

Did it occur to you then to consider what relationship there should be between the donor in subsec. (4) and the person who would claim the tax deduction? - No, frankly I didn't consider that. Looking with hindsight I should have.''

I accept all the evidence of Mr. Myer, and of the other witnesses, as truthful, although I think it not unlikely, nor surprising, that Mr. Myer was sometimes mistaken in his recollection.

The Council's official receipt for the payment to it of $21,565.17 acknowledges receipt of that sum from the respondent and it was proved that the cheque was in fact honoured by the respondent's bank and that the bank debited the respondent's account accordingly. The issue of the Council's receipt to the drawer of the cheque for $21,565.17 and entries in the Council's books of account attributing the payment to the same person were explained in evidence as the consequence of adherence to the Council's normal accounting practice, and I have not found in the receipt or in those entries anything which tended against the appellant's case in this appeal.

The Council's books of account evidence payment, between 16th and 28th June 1972, of the several amounts specified in its minutes of the meeting held on 6th June 1972, to Mr. Cliff Gordon, the Myer Emporium Ltd., and the South Yarra Gallery.

The four works of art were delivered to the Council. Thereafter some of them have been sent by the Council to places outside the Gallery. When this appeal was being heard the tapestry was in Mr. Myer's home in New South Wales, and one of the Japanese screens was in the custody of a repairer after having been exhibited in the board room of the Myer Emporium Ltd. The other screen has remained in the National Gallery.

Counsel for the appellant tendered that part of a copy of a report of the Council's proceedings during the year ended 30th June 1972 which stated the four works of art to have been ``conditional gifts'' by Mr. Myer. The report had been furnished by the Council to the Chief Secretary and had been by him laid before both Houses of Parliament in compliance with sec. 17 of the National Gallery of Victoria Act 1966. The statements in the report were tendered as evidence of the truth of the statements, on the ground that they were statements in what at common law would be recognised as a public document. Counsel for the respondent objected to the tender, but waived objection to the mode of proof of the document. The admissibility of the document was not argued at length. If it is admissible, it is not to my mind persuasive. Doubtfully, and without protracted consideration, I receive the document in evidence. It will be Exhibit ``K''.

The appellant's principal submissions were that the payment to the Council was not a gift within the meaning of that word in sec. 78(1)(a) of the Income Tax Assessment Act 1936 and that, if it were, the gift was by Mr. Myer and not by the respondent.

I find that the corporators and the senior

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executive officers of the Council at all material times believed that the payment was a gift by Mr. Myer to the Council.

I find that, at and since the time when Mr. Myer directed that the cheque be prepared, the will and intention of the respondent, formed and maintained by its governing director Mr. Myer, was that the payment should be made by the respondent, that $21,565.17 of its money should be given to the Council and that it should have in respect of the payment no right or claim against Mr. Myer. And I hold that, by the cheque, $21,565.17 of the respondent's money was paid to the Council, that in respect of that payment no right or claim against Mr. Myer arose in favour of the respondent, and that the payment was authorised by cl. 2(ff) of the respondent's memorandum of association and by art. 95, 96, 97 and 113 of its articles of association as in force in 1972.

In the transaction by which the Council received $21,565.17 there was effected in my opinion a gratuitous disposition by the respondent of its property to the Council. There being no evidence that the Council has disclaimed the disposition, the disposition took effect in my opinion in consequence of the acts and intentions of the respondent, notwithstanding that the corporators and the agents of the Council believed that the acts were done in effectuation of a gift by Mr. Myer. Acceptance of a gift is presumed until disclaimer has been signified, even when the donee is unaware that a gift has been made:
Butler and Baker's case 3 Co. Rep. 25a at 26b-27a; 76 E.R. 684 at 689;
Siggers v. Evans (1855) 5 El. & Bl. 367; 119 E.R. 518;
Standing v. Bowring (1885) 31 Ch. D. 282;
London & County Banking Co. Ltd. v. London & River Plate Bank Ltd. (1888) 26 Q.B.D. 535; In the Will of Hamilton, dec'd (1913) V.L.R. 460. In my opinion the same presumption of law operated, and a gift of $21,565.17 by the respondent to the Council was in law effected, notwithstanding that the donee believed that it was receiving and accepting a gift from another person. If that be so, I need not express any concluded opinion as to whether, when the identity of the donor comes to the knowledge of the donee, the law affords an opportunity to disclaim the gift, for no disclaimer has been attempted. (See
Naas v. Westminster Bank Ltd. (1940) A.C. 366; (1940) 1 All E.R. 485; In
re Stratton's Disclaimer (1958) Ch. 42; (1957) 2 All E.R. 594;
Re Paradise Motor Co. Ltd. (1968) 1 W.L.R. 1125; (1968) 2 All E.R. 625.)

I find that the Council, by its corporators, at all material times believed that its acceptance of a gift of $21,565.17 to the Council by Mr. Myer was conditional, and intended that its acceptance should be conditional, upon the chattels for the purchase of which the gift was made remaining in Mr. Myer's custody during his lifetime and being handed over by him to the Council for the purposes of exhibition or study whenever and for such period as the Council might in writing so request. I do not find that any of the Council, Mr. Myer or the respondent believed or intended that the gift should be subject to any condition relating to access by Mr. Myer's wife to the silver candelabrum after his death: I regard the penultimate paragraph of his letter dated 3rd May 1972 as merely precatory. I think that conclusion to be strengthened by the terms of the preceding paragraph of that letter.

I find the belief of the respondent, conceived and held by its governing director Mr. Myer, to have been at the time the gift was made that its gift of $21,565.17 was subject to the conditions I have specified in relation to the belief and intention of the Council. And the respondent's intention was, as I find, that its gift should be subject to those conditions.

In my opinion, however, the legal consequences of the events under consideration were not those which I think Mr. Myer and the members of the Council supposed and intended. The gift was in my opinion the respondent's gift, and no effective imposition of any condition of the kinds contemplated by sec. 14(4) of the National Gallery of Victoria Act 1966 has been shown by the evidence to have been achieved in respect of that gift, in my opinion. No communication to the donee has ever been made, which the evidence before me discloses, of a condition of that kind which the respondent had attached to the gift it made. None of Mr. Myer's letters which I have quoted communicated any information concerning such a condition subject to which the respondent's gift was offered or was made: his letters state conditions of that kind, subject to which a gift by him was offered. The evidence does not in my opinion justify an inference that the Council or any of its

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members or officers has yet realised that the payment received by means of the cheque was a gift by the respondent. If notice of the identity of the donor and notice of the donor's will to subject the gift to such conditions have been, or were hereafter to be, contemporaneously received by the donee, yet I doubt that notice of the donor's will concerning the conditions, received after the gift had been received and the works of art had been purchased, would prevent the donee from retaining the gift free of the purposed conditions. However that may be, notice of the will of the donor has not been shown to have been communicated to the donee and the gift presently stands good, free of any such condition, in my opinion. Because Mr. Myer's letter dated 3rd May 1972 (a copy of which accompanied the respondent's cheque with the letter dated 14th June 1972) made it clear that the conditions proposed were of the kind which sec. 14(4) sanctioned, but also identified himself as the donor, it cannot in my opinion be said that the conditions proposed were conditions subject to which the gift was offered and accepted regardless of the identity of the donor, for sec. 14(4) permits only a condition concerning custody by the donor.

In my opinion the conclusion that the respondent's gift to the Council was not subject to any condition concerning custody of the works of art for the purchase of which the gift was made answers one of the appellant's arguments that the payment made did not constitute a gift within the meaning of that word in sec. 78(1)(a) of the Income Tax Assessment Act 1936. The argument to which I refer was based upon the observation of Owen J. in
F.C. of T. v. McPhail (1968) 117 C.L.R. 111 at p. 118 that ``to constitute a gift, it must appear that the property transferred was transferred voluntarily and not as the result of a contractual obligation to transfer it and that no advantage of a material character was received by the transferor by way of return.'' It was submitted that a right to custody of these works of art is an advantage of a material character. It is in my opinion a sufficient answer to the submission to say that no such a right exists in any person other than the Council; and that such custodial enjoyment of any of the four works of art as the evidence shows to have been in fact had by others, whether occasioned by the Council's misapprehension of the legal consequences of the payment it received or by the Council's exercise of the power conferred on it by sec. 14(5), was not an advantage of a kind which Owen J. contemplated in his reasons for judgment.

It was submitted by Mr. Liddell Q.C., who appeared with Mr. N.J. Webb for the appellant, that the conduct of the respondent, by its governing director, had been such as to preclude any conclusion but that the payment was a gift by Mr. Myer. Certainly the conduct of the respondent afforded evidence tending to such a conclusion. But I have found other evidence persuasive to a different conclusion. If the respondent's conduct might in proceedings between it and the Council have precluded it from establishing that the payment was not a gift by Mr. Myer, whether by reason of estoppel or other law, that is no reason why the conclusion in this appeal may not be otherwise, in my opinion.

Another argument advanced against the conclusion that the payment by means of the cheque was a gift by the respondent to the Council was premised upon the assertion that at the time when the cheque was delivered by Mr. Barry to Mr. Myer, the latter gentleman was under an obligation to pay amounts aggregating $21,565.17 in respect of the four works of art. It is convenient to consider the argument in relation to the candelabrum, for the evidence in support of such a premise is much stronger about the candelabrum than it is about the other chattels. Delivery of the cheque to Mr. Myer in the circumstances disclosed by that evidence should be characterised, according to the appellant's argument, as a gift by the respondent of $3,000 to Mr. Myer, by payment of which he would discharge his indebtedness to Mr. Gordon and then make a gift of the candelabrum to the Council.

I reject the argument upon the ground that it is contradicted by my finding that the will of the respondent at all material times was that there should be by means of the cheque a gratuitous disposition of its money, in the amount for which the cheque was drawn, to the Council. If it were a gift subject to a condition that the Council should by payment of $3,000 acquire the candelabrum, and if by that payment Mr. Myer were discharged from his indebtedness in like amount to Mr. Gordon, those circumstances in my opinion neither justify characterisation of what the respondent did as the making of a gift to Mr.

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Myer (even if the candelabrum had been of no value, rather than being, as the evidence suggested and as counsel for the appellant contended, worth $3,000), nor disclose any advantage of a material kind to the respondent.

A further argument, that there was involved in the transaction no gift at all, within the meaning of that word in sec. 78(1)(a) of the Income Tax Assessment Act 1936, or alternatively that there was a gift to be valued for the purposes of that paragraph at less than $21,565.17, was premised primarily upon the assumption that any gift to the Council which might be held to have been made was one subject to conditions relating to custody of the works of art. That assumption is falsified by the conclusions I have stated. The other condition, that the works of art should be purchased, would not in my opinion prevent characterisation of the payment as a gift within sec. 78(1)(a)(xxvii), nor reduce the value of the gift for the purpose of quantifying the deduction to be allowed. There was no evidence to suggest, nor was it contended on the appellant's behalf, that any of the works of art had a value different from the price paid for it. In any event the gift was of money, in my opinion, not of the chattels.

Like the Board of Review, I find it unnecessary to consider matters relevant to sec. 170(2), concerning which no submission was addressed to me by either party to the appeal.

The order of the Court is that the appeal be dismissed.

• MR. MERKEL: I would seek an order, your Honour, that the respondent's costs of the appeal be taxed and paid by the appellant. I understand there are no reserved costs.
• HIS HONOUR: Yes, is there anything you wanted to say?
• MR. MYER: I cannot resist that at present, your Honour.
• HIS HONOUR: There will be an order that the respondent's costs of the appeal be taxed and paid by the appellant.