F.C. R. v. THE CENTRAL CANE REFINING Lukin J. that the Chairman did definitely decide that the Board could exclude from consideration the cost of production to the canegrower, and in that respect the Chairman of the Board seems to have erred, and not to have been acting in accord with the imperative provision of s. 12. This attitude, it seems to us, amounted to a refusal to exercise jurisdiction over a branch of the enquiry. After the experience the Board had had of the unsatisfactory nature of the evidence on this question, one can understand the reasons for the Board in so acting, but still the statute enjoins the consideration of that question, and unsatisfactory, or perhaps even valueless, as it may seem, the Board must, if pressed so to do, give it the best consideration they can. Remedy is to be sought, if necessary, by an amendment of the Act. No benefit, we think, is likely to accrue from the issue of a mandamus compelling the Board to enter an adjournment and to hear and to consider the matter in accordance with law, but if the applicants press for it, the order may go. GOONDI MILL. In this case the Central Board made an award on an appeal, and not on a delegation, as in the Victoria Mill. Some of the questions raised in the latter are again raised in this case-as to the non-recreation of the Local Board for 1916-as to the award being contrary to s. 12, subsec. 4, and as to the award amounting to a denial of justice. of the opinion already expressed. On the first two grounds, we are As to the last grounds, this being the hearing of an appeal, it was optional with the Board whether they should receive any further evidence-Clause 12, subsec. 3 of the Regulations. But it seems that the Chairman and the Board came to the conclusion that the cost of production was not a factor which the Board would be compelled to take into consideration. That being so, it seems to us a similar order to that in the Victoria Mill case should be made. MACKNADE MILL. This case is identical with the Victoria Mill, and should result similarly. HAMBLEDON MILL. In this case the Central Board acted under a delegated authority. All the objections, (except that as to impossibility of performance, THE QUEENSLAND LAW REPORTER. JANUARY, 1917. and retrospectivity) were taken in this case, as in the Victoria Mill case, and in those objections, except as to the last, we decide similarly. The circumstances in connection with the last pointthat is, the refusal of the right to call evidence or consider the issue of the cost of production to the cangrower are different from those in the Victoria Mill case. The Board's judgment speaks of this question in these words: "All the evidence on the cost of production of cane, as in the previous hearing by the Board was unsatisfactory, and of no assistance to the Board. Whether the cost of production, if it had been established to the satisfaction of the Board, would have been taken into consideration in making this award, is a matter which has not yet been considered by the Board." From this it appears that the Board did not refuse to receive, but did receive, evidence, and since the evidence was, in their opinion, absolutely valueless on the relevant issue, the question never arose whether they should take it into consideration. The Board therefore did not decline to exercise jurisdiction on a branch of the enquiry. They considered that the evidence was valueless, not irrelevant or inadmissible, and the Board did not exclude the consideration of a relevant issue, or hold it to be irrelevant. The application in this case must therefore entirely fail. An additional judgment of Real J. and Shand J. was read by SHAND J. We agree with the judgment which has just been read, excepting with regard to two matters. Having regard to s. 8 of the Act, we do not wish to be taken as deciding that if an existing award made by a Local Board, or by a Central Board in any year, were not determined by order of the Central Board made under s. 8, it would not ordinarily remain in force until a new award was made; or that in that case a new award could ordinarily be given any retroactive operation. But in the present case the difficulty does not arise, because the awards for 1915 were, by s. 14 of the schedule, only valid for the sugar season of 1915, and because the awards of the Central Board made for 1916 were either made at the same time as those for 1915, and therefore operated as orders determining the awards for 1915, or were made by way of appeal from awards which had no retroactive operation. The other point on which the view we take differs from that which seems to us to be expressed in the judgment delivered by Lukin J. is, that in our opinion the Central Board, although bound to hear the parties, as they were heard in this case, were under no obligation to hear evidence on any matter on which they did not desire to be informed by that means, and we are strengthened in that belief by reg. 11 relating to the proceedings before the Central Board, by which the chairman is empowered to settle the issues to be determined in such proceedings. We do not, : F.C. R. v. THE CENTRAL CANE PRICES BOARD AND OTHERS, Ex parte THE COLONIAL SUGAR REFINING COMPANY LIMITED. Lukin J. Shand J. F.C. R. v. THE CENTRAL CANE COLONIAL SUGAR COMPANY Shand J. however, think that the chairman could exclude from the issues questions upon which the majority of the Board required information. Prosecutors asking for a mandamus-mandamus was ordered to issue in three of the cases; prosecutors to pay costs of all parties, except so far as costs were increased by application for mandamus. Solicitors for prosecutors: Flower & Hart. Solicitor for Central Cane Prices Board: The Crown Solicitor. Solicitors for certain canegrowers: Foxton, Hobbs & Macnish, for MacDonnell & Hannam, Cairns, and for Havard & Montgomery, Herberton. 1916. September 20. October 6. JOHN HICKS LIMITED v. JOHN HICKS & COMPANY Income tax-Agreement to indemnify against Income Tax- . In 1914, on the sale by the plaintiff company to the defendant company of its business, assets, goodwill, and all its property, it was agreed (inter alia) that the defendant company should have the benefit of and undertake the obligation of all contracts; that "the defendant company shall pay and discharge all liabilities of the plaintiff company existing as at 1st July, 1914, or which may have been subsequently incurred in carrying on the business and shall indemnify the defendant company against all proceedings, claims, and demands in respect thereof to the intent that the purchase shall be completed both as to the assets and liabilities on a walk-in, walk-out basis;" and that the plaintiff company should be indemnified by the defendant company against all land tax, income tax, rates, taxes, assessments, and other outgoings, and all stamp duty upon the sale Assessment was made for the purposes of income tax for the year 1914, and the plaintiff company paid, inter alia, £250 income tax on the goodwill valued at £5000, and £468 on an amount of profits earned in former years, but not distributed until 1914. Income tax was apparently charged on the goodwill, because in balance sheets of former years it appeared as an asset, but was not shown in the balance sheet for 1914. In the agreement for sale was the item of £1000 for goodwill. The plaintiff company claimed that these two amounts were recoverable from the defendant company under the clauses of the agreement of sale. Quare, whether the plaintiff company was liable to pay income tax on the £5000. Held, that the undistributed profits of former years had been distributed as a dividend within the meaning of The Income Tax Acts, 1902-1912, s. 7; that the income tax payable on this dividend was not a "liability" under the above clause of the agreement; that the above clause indemnifying the plaintiff company against all income tax was contrary to s. 73 of the Income Tax Acts, and was void TRIAL OF ACTION. . The plaintiff company, in 1900, purchased the business of John Hicks for £26,310. Between 1900 and 1914 profits were earned. Some of these profits were paid as dividends and some remained in the business as undistributed profits, and were utilised in the business. Income tax was not paid on the undistributed profits. The Income Tax Acts, 1902-1912, s. 7. By agreement between the Commissioner of Income Tax and the plaintiff company, the company's balance sheet was accepted In the balance sheet for the purpose of estimating income tax. for the year ending June, 1914, the undistributed profits were shown as £18,741. In that balance sheet no entry appeared of the goodwill, although from 1908 to 1913 it had appeared as being of the value of £5000. Towards the end of 1914 the plaintiff company sold its business to the defendant company for £48,000. In the sale was included the item "£1000 for goodwill.” The agreement for the sale contained the following clauses : 8. The new company shall have the benefit of and undertake the obligations of all contracts which have been entered into by. the old company and as the residue of the consideration for the said sale the new company shall pay and discharge all the liabilities of the old company subsisting as at the said 1st day of July 1914 or which may have been subsequently incurred in the course of carrying on the said business as herein before provided and shall indemnify the old company against all proceedings claims and demands in respect thereof to the intent that the purchase shall be completed both as to assets and liabilities on a walk-in walk-out basis. Pending completion of the purchase the old company may from time to time out of its assets pay and discharge its liabilities as they respectively become due." "13. If this agreement shall not be adopted by the new company within six calendar months from the date of these presents any party hereto may by notice in writing to the other rescind the same and upon such rescission none of the parties shall claim against the other or others in respect of anything contained herein or connected herewith and in no case shall the said John Hicks or the old company be called upon to pay any costs or expenses in connection with the flotation incorporation and registration of the new company or the preparation completion and carrying into effect of this agreement all of which costs and expenses shall be borne and paid by the new company provided that the said John Hicks or the old company shall be at liberty but shall not be under any obligation to remunerate any person or persons promoting the new company. The old company shall be indemnified by the new company against all land tax income tax rates taxes assessments and other outgoings and all stamp duty fees costs and expenses arising upon the sale hereby contemplated." JOHN HICKS JOHN HICKS LIMITED V. JOHN HICKS & COMPANY LIMITED. Income tax was levied for the year 1914 on the plaintiff company by the Commissioner for Income Tax (inter alia) on £5000, the goodwill, which had disappeared from the 1914 balance sheet, and on £18,741, the distribution made of previously undistributed profits, amounting respectively to £250 and £468 10s. 6d. The plaintiff company paid the amounts, and by this action claimed that under the above clauses of the agreement for sale, the defendant company were liable to make repayments of those two sums. The facts and the contentions appear in the judgment. Stumm K.C. and Woolcock for the plaintiffs: The action involves the interpretation and effect of a written document. They referred to the recitals and claims 2, 8, 12 and 13, Memorandum of Association, clause 6. The Income Tax Acts, 1902-1912, s. 73. The provisions of s. 73 are not defeated by the argreement, and the liability to pay income tax is not taken away; but the defendants under the contract of indemnity must indemnify the plaintiffs. Colbron v. Travers (1); Davies v. Fitton (2); Denby v. Moore (3); Beadel v. Pitt (4); Halsbury, Laws of England, Vol. XVI, p. 633; Lamb v. Brewster (5); Patterson v. Farrell (6); Elder v. Dennis (7); Hutchenson v. Scott (8). Real and McGill (for Henchman, now serving with His Majesty's Forces), for the defendants: The defendants, if liable, are only liable to pay the tax legally payable; no tax is payable on the goodwill; income tax is not a liability under clause 8; clause 13 is illegal. Income Tax Acts, 1902-1912, s. 73; Gidge v. Royal Exchange Assurance Corporation (9); Cooper v. Barron (10); North Western Salt Co. Ltd v. Electra-lytic Alkali Coy. Ltd. (11); Harris v. Sydney Glass & Tile Coy. (12); The Companies Act of 1863, s. 19; Lord Ludlow v. Pike (13); Arding v. The Economic Printing & Publishing Coy. (14); The Australian Widows Fund Life Assurance Society Ltd. v. The National Mutual Life Association of Australasia Ltd (15); In re Barry's Trusts (16); C.A.V. (1) 1862, 12 C. B.N.S. 181. (9) [1900] 2 Q.B. 214. |