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\qc \li0\ri0\nowidctlpar\faauto\adjustright\rin0\lin0\itap0\pararsid9000129 \fs20\lang1033\langfe1033\cgrid\langnp1033\langfenp1033 {\b\fs24\lang2057\langfe1033\langnp2057\insrsid9000129\charrsid9000129 IN THE SUPREME COURT OF FIJI
\par COURT OF REVIEW
\par }\pard \ql \li0\ri0\nowidctlpar\faauto\adjustright\rin0\lin0\itap0\pararsid9000129 {\fs24\lang2057\langfe1033\langnp2057\insrsid9000129 
\par }\pard \qc \li0\ri0\nowidctlpar\faauto\adjustright\rin0\lin0\itap0\pararsid9000129 {\fs24\lang2057\langfe1033\langnp2057\insrsid9000129 No. 10 & 16 of 1985
\par }\pard \ql \li0\ri0\nowidctlpar\faauto\adjustright\rin0\lin0\itap0\pararsid9000129 {\fs24\lang2057\langfe1033\langnp2057\insrsid9000129 
\par }\pard \qc \li0\ri0\nowidctlpar\faauto\adjustright\rin0\lin0\itap0\pararsid9000129 {\fs24\lang2057\langfe1033\langnp2057\insrsid9000129 BETWEEN:}{\fs24\lang2057\langfe1033\langnp2057\insrsid5010389 
\par }\pard \ql \li0\ri0\nowidctlpar\faauto\adjustright\rin0\lin0\itap0\pararsid9000129 {\fs24\lang2057\langfe1033\langnp2057\insrsid9000129 
\par }\pard \qc \li0\ri0\nowidctlpar\faauto\adjustright\rin0\lin0\itap0\pararsid9000129 {\b\fs24\lang2057\langfe1033\langnp2057\insrsid9000129\charrsid9000129 REDDY'S ENTERPRISES LTD
\par }{\fs24\lang2057\langfe1033\langnp2057\insrsid9000129 Appellant
\par }\pard \ql \li0\ri0\nowidctlpar\faauto\adjustright\rin0\lin0\itap0\pararsid9000129 {\fs24\lang2057\langfe1033\langnp2057\insrsid9000129\charrsid9000129 
\par }\pard \qc \li0\ri0\nowidctlpar\faauto\adjustright\rin0\lin0\itap0\pararsid9000129 {\fs24\lang2057\langfe1033\langnp2057\insrsid5010389\charrsid9000129 AND
\par }\pard \ql \li0\ri0\nowidctlpar\faauto\adjustright\rin0\lin0\itap0\pararsid9000129 {\fs24\lang2057\langfe1033\langnp2057\insrsid9000129 
\par }\pard \qc \li0\ri0\nowidctlpar\faauto\adjustright\rin0\lin0\itap0\pararsid9000129 {\fs24\lang2057\langfe1033\langnp2057\insrsid5010389\charrsid9000129 BETWEEN}{\fs24\lang2057\langfe1033\langnp2057\insrsid9000129 :
\par }\pard \ql \li0\ri0\nowidctlpar\faauto\adjustright\rin0\lin0\itap0\pararsid9000129 {\fs24\lang2057\langfe1033\langnp2057\insrsid9000129 
\par }\pard \qc \li0\ri0\nowidctlpar\faauto\adjustright\rin0\lin0\itap0\pararsid9000129 {\b\fs24\lang2057\langfe1033\langnp2057\insrsid5010389\charrsid9000129 ANTONY WILLIAM WOOD
\par }\pard \ql \li0\ri0\nowidctlpar\faauto\adjustright\rin0\lin0\itap0\pararsid9000129 {\fs24\lang2057\langfe1033\langnp2057\insrsid9000129 
\par }\pard \qc \li0\ri0\nowidctlpar\faauto\adjustright\rin0\lin0\itap0\pararsid9000129 {\fs24\lang2057\langfe1033\langnp2057\insrsid5010389\charrsid9000129 AND}{\fs24\lang2057\langfe1033\langnp2057\insrsid9000129 :
\par }\pard \ql \li0\ri0\nowidctlpar\faauto\adjustright\rin0\lin0\itap0\pararsid9000129 {\fs24\lang2057\langfe1033\langnp2057\insrsid9000129 
\par }\pard \qc \li0\ri0\nowidctlpar\faauto\adjustright\rin0\lin0\itap0\pararsid9000129 {\b\fs24\lang2057\langfe1033\langnp2057\insrsid9000129\charrsid9000129 THE COMMISSIONER OF INLAND REVENUE
\par }{\fs24\lang2057\langfe1033\langnp2057\insrsid9000129 Respondent
\par }\pard \ql \li0\ri0\nowidctlpar\faauto\adjustright\rin0\lin0\itap0\pararsid9000129 {\fs24\lang2057\langfe1033\langnp2057\insrsid9000129\charrsid9000129 
\par }\pard \qc \li0\ri0\nowidctlpar\faauto\adjustright\rin0\lin0\itap0\pararsid9000129 {\fs24\lang2057\langfe1033\langnp2057\insrsid5010389\charrsid9000129 (CONSOLIDATED APPEALS)
\par }\pard \ql \li0\ri0\nowidctlpar\faauto\adjustright\rin0\lin0\itap0\pararsid9000129 {\fs24\lang2057\langfe1033\langnp2057\insrsid9000129 
\par }{\fs24\lang2057\langfe1033\langnp2057\insrsid5010389\charrsid9000129 Mr. B.C. Patel for the first appellant.
\par Mr. F.G. Keil for the second appellant.
\par Mr. M.J. Scott for the respondent.
\par }{\fs24\lang2057\langfe1033\langnp2057\insrsid9000129 
\par }\pard \qc \li0\ri0\nowidctlpar\faauto\adjustright\rin0\lin0\itap0\pararsid9000129 {\b\fs24\ul\lang2057\langfe1033\langnp2057\insrsid5010389\charrsid13840472 JUDGMENT
\par }\pard \ql \li0\ri0\nowidctlpar\faauto\adjustright\rin0\lin0\itap0\pararsid9000129 {\fs24\lang2057\langfe1033\langnp2057\insrsid5010389\charrsid9000129 
\par These two appeals were consolidated and arise from the sale of shares in a company called Woodlands Ltd of which Reddy's Enterprises Ltd ( who I will call Reddy) and Antony W}{\fs24\lang2057\langfe1033\langnp2057\insrsid9000129 il}{
\fs24\lang2057\langfe1033\langnp2057\insrsid5010389\charrsid9000129 liam Wood (who I will refer to as Wood) were at all material}{\fs24\lang2057\langfe1033\langnp2057\insrsid9000129  }{\fs24\lang2057\langfe1033\langnp2057\insrsid5010389\charrsid9000129 
times the only shar}{\fs24\lang2057\langfe1033\langnp2057\insrsid9000129 eholders and held equal shares.}{\fs24\lang2057\langfe1033\langnp2057\insrsid5010389 
\par }{\fs24\lang2057\langfe1033\langnp2057\insrsid2758511\charrsid9000129 
\par }{\fs24\lang2057\langfe1033\langnp2057\insrsid5010389\charrsid9000129 The story begins in November 1970 when Wood who was at}{\fs24\lang2057\langfe1033\langnp2057\insrsid2758511  }{\fs24\lang2057\langfe1033\langnp2057\insrsid5010389\charrsid9000129 
all material times a civil engineer and planning}{\fs24\lang2057\langfe1033\langnp2057\insrsid2758511  }{\fs24\lang2057\langfe1033\langnp2057\insrsid5010389\charrsid9000129 consultant practising in Suva and throughout Fiji, bought}{
\fs24\lang2057\langfe1033\langnp2057\insrsid2758511  }{\fs24\lang2057\langfe1033\langnp2057\insrsid5010389\charrsid9000129 from Main Weston Ltd, a company of which a man named Wallath was the mainspri}{\fs24\lang2057\langfe1033\langnp2057\insrsid2758511 
ng, a sublease of-land known as}{\fs24\lang2057\langfe1033\langnp2057\insrsid5010389\charrsid9000129 
 Vulani Islands, situated between Nadi and Lautoka, and containing 56 acres 1 rood 12 perches. The price was $25,000. The sublease was registered as No. 114104. At the same time, because the sublease had no ri
ght of renewal, he entered into negotiations with Bhan Pratap Singh, father's name Seombar Singh for the purchase}{\fs24\lang2057\langfe1033\langnp2057\insrsid2758511  }{\fs24\lang2057\langfe1033\langnp2057\insrsid5010389\charrsid9000129 
of the head lease which was for 125 acres and for that he paid $20,000. The purpose which Wood said he had in mind was the development of the land into a tourist}{\fs24\lang2057\langfe1033\langnp2057\insrsid2758511  }{
\fs24\lang2057\langfe1033\langnp2057\insrsid5010389\charrsid9000129 hotel. It had a beach frontage and was convenient to Nadi Airport, although it was not subject to the noise of aeroplanes at Nadi Airport.}{
\fs24\lang2057\langfe1033\langnp2057\insrsid9000129  }{\fs24\lang2057\langfe1033\langnp2057\insrsid2758511 However, although Wood was }{\fs24\lang2057\langfe1033\langnp2057\insrsid5010389\charrsid9000129 
a civil engineer, he had no expertise in building hotels and he therefore sought to interest Reddy in the}{\fs24\lang2057\langfe1033\langnp2057\insrsid2758511  }{\fs24\lang2057\langfe1033\langnp2057\insrsid5010389\charrsid9000129 
project. With Mr. Y.P. Reddy, Reddy's managing director, he walked over the land and Y}{\fs24\lang2057\langfe1033\langnp2057\insrsid2758511 .}{\fs24\lang2057\langfe1033\langnp2057\insrsid5010389\charrsid9000129 P}{
\fs24\lang2057\langfe1033\langnp2057\insrsid2758511 .}{\fs24\lang2057\langfe1033\langnp2057\insrsid5010389\charrsid9000129  Reddy was so impressed with its potential that Reddy joined 
with Wood to form a company, Woodlands Ltd, to develop the project. Reddy}{\fs24\lang2057\langfe1033\langnp2057\insrsid2758511  }{\fs24\lang2057\langfe1033\langnp2057\insrsid5010389\charrsid9000129 
is a company which owns and operates several hotels in the}{\fs24\lang2057\langfe1033\langnp2057\insrsid2758511  Western area of Viti Levu, and }{\fs24\lang2057\langfe1033\langnp2057\insrsid5010389\charrsid9000129 
had not long before built the Tanoa Hotel on the Nadi side of the Airport, and was reaping a satisfactory profit therefrom. In April 1971 Wood completed the negotiations with Bhan Pratap Singh}{\fs24\lang2057\langfe1033\langnp2057\insrsid2758511  }{
\fs24\lang2057\langfe1033\langnp2057\insrsid5010389\charrsid9000129 and took a transfer of his lease and at once transferred it to Woodlands Ltd. It is true that this was a few days before the Company was registered, but nothing turns}{
\fs24\lang2057\langfe1033\langnp2057\insrsid2758511  }{\fs24\lang2057\langfe1033\langnp2057\insrsid5010389\charrsid9000129 
upon that. At the same time Wood transferred the sublease which he had bought to Woodlands Ltd. He told the Court that he made no profit on the transfers}{\fs24\lang2057\langfe1033\langnp2057\insrsid9000129  }{
\fs24\lang2057\langfe1033\langnp2057\insrsid5010389\charrsid9000129 of the land to Woodlands Ltd. The nominal capital of the company was $50,000 in $1 shares, and at all times the paid up capital was $37,000 held as to $18,500 by each of the appellants.

\par 
\par Reddy and Wood agreed that Wood was to be left to obtain the necessary consents to enable the hotel building to go ahead. No development in fact took place and}{\fs24\lang2057\langfe1033\langnp2057\insrsid2758511  in 1983 the land was sold for $225,0}{
\fs24\lang2057\langfe1033\langnp2057\insrsid5010389\charrsid9000129 00 the sale being effected by the transfer of the shares}{\fs24\lang2057\langfe1033\langnp2057\insrsid2758511  }{\fs24\lang2057\langfe1033\langnp2057\insrsid5010389\charrsid9000129 
in Woodlands Ltd to the purchasers. Of this sum after payment of expenses Reddy received $79,804 and brood $86,065. The Commissioner respondent raised income tax 
assessments against the appellants in respect of these sums. Objections were made and disallowed, and appeals followed. Reddy's appeal was scheduled to be heard in November last, but when it became apparent that the same evidence would be tendered in each
 appeal, the Court decided that both appeals should be heard together. They were, by consent, later consolidated. Wood came specially from New Zealand}{\fs24\lang2057\langfe1033\langnp2057\insrsid2758511  }{
\fs24\lang2057\langfe1033\langnp2057\insrsid5010389\charrsid9000129 to give evidence on his appeal and also on Reddy's appeal, and by arrangement between counsel his appeal was heard first. The Court was told that the only evidence}{
\fs24\lang2057\langfe1033\langnp2057\insrsid2758511  }{\fs24\lang2057\langfe1033\langnp2057\insrsid5010389\charrsid9000129 
in each appeal was that of Wood and Mr Y P Reddy, the managing director of Reddy. The Commissioner called Mr Pita Nacuva, Director of Town & Country Planning.}{\fs24\lang2057\langfe1033\langnp2057\insrsid5010389 
\par }{\fs24\lang2057\langfe1033\langnp2057\insrsid2758511\charrsid9000129 
\par }{\fs24\lang2057\langfe1033\langnp2057\insrsid5010389\charrsid9000129 In tax appeals the onus of proof is upon the appellant. The Provisions of Section 71(2) are very direct and very simple.
\par }{\fs24\lang2057\langfe1033\langnp2057\insrsid2758511 
\par }\pard \ql \li720\ri0\nowidctlpar\faauto\adjustright\rin0\lin720\itap0\pararsid2758511 {\fs24\lang2057\langfe1033\langnp2057\insrsid5010389\charrsid9000129 
"On the hearing and determination of all objections to assessments under this Act the onus of proof shall be}{\fs24\lang2057\langfe1033\langnp2057\insrsid2758511\charrsid2758511  }{\fs24\lang2057\langfe1033\langnp2057\insrsid2758511\charrsid9000129 
upon the taxpayer".}{\fs24\lang2057\langfe1033\langnp2057\insrsid5010389 
\par }\pard \ql \li0\ri0\nowidctlpar\faauto\adjustright\rin0\lin0\itap0\pararsid9000129 {\fs24\lang2057\langfe1033\langnp2057\insrsid2758511\charrsid9000129 
\par The proof necessary to}{\fs24\lang2057\langfe1033\langnp2057\insrsid2758511  }{\fs24\lang2057\langfe1033\langnp2057\insrsid2758511\charrsid9000129 discharge}{\fs24\lang2057\langfe1033\langnp2057\insrsid2758511  }{
\fs24\lang2057\langfe1033\langnp2057\insrsid2758511\charrsid9000129 the onus is upon}{\fs24\lang2057\langfe1033\langnp2057\insrsid2758511  }{\fs24\lang2057\langfe1033\langnp2057\insrsid2758511\charrsid9000129 the balance of probabilities.}{
\fs24\lang2057\langfe1033\langnp2057\insrsid2758511  }{\fs24\lang2057\langfe1033\langnp2057\insrsid2758511\charrsid9000129 Fullager}{\fs24\lang2057\langfe1033\langnp2057\insrsid2758511  }{
\fs24\lang2057\langfe1033\langnp2057\insrsid2758511\charrsid9000129 J in the High}{\fs24\lang2057\langfe1033\langnp2057\insrsid2758511  }{\fs24\lang2057\langfe1033\langnp2057\insrsid2758511\charrsid9000129 Court of Australia, in }{
\b\i\fs24\lang2057\langfe1033\langnp2057\insrsid2758511\charrsid2758511 Pascoe v Federal Commissioner of }{\b\i\fs24\lang2057\langfe1033\langnp2057\insrsid5010389\charrsid2758511 Taxation}{\fs24\lang2057\langfe1033\langnp2057\insrsid12477679  (1956) 6 AIT
}{\fs24\lang2057\langfe1033\langnp2057\insrsid5010389\charrsid9000129 R. 315, 323, in a situation somewh}{\fs24\lang2057\langfe1033\langnp2057\insrsid2758511 at similar to the present, said:}{
\fs24\lang2057\langfe1033\langnp2057\insrsid5010389\charrsid9000129 
\par 
\par }\pard \ql \li720\ri0\nowidctlpar\faauto\adjustright\rin0\lin720\itap0\pararsid2758511 {\fs24\lang2057\langfe1033\langnp2057\insrsid5010389\charrsid9000129 
"The question, therefore, which I have to ask myself is: Am I convinced - not beyond reasonable doubt but as a matter of belief - that the partners, in making the acquisition, were not actuated by a dominant purpose of profit making by sale?"
\par }\pard \ql \li0\ri0\nowidctlpar\faauto\adjustright\rin0\lin0\itap0\pararsid9000129 {\fs24\lang2057\langfe1033\langnp2057\insrsid5010389\charrsid9000129 
\par In the present case Wood and Reddy were, in effect, partners in Woodlands Ltd. The Aus}{\fs24\lang2057\langfe1033\langnp2057\insrsid2758511 tralian statute talks of profit}{\fs24\lang2057\langfe1033\langnp2057\insrsid5010389\charrsid9000129 
-making by sale. The Fiji statute says that taxpayer becomes liable to tax "if the property was acquired for the purpose of selling or otherwise disposing of the ownership of it....". I do not think that for the purpose of this case there}{
\fs24\lang2057\langfe1033\langnp2057\insrsid2758511  }{\fs24\lang2057\langfe1033\langnp2057\insrsid5010389\charrsid9000129 
is any essential difference between the Fiji statute and the Australian statute. It is clear also from judgment of the Fiji Court of Appeal in }{\b\i\fs24\lang2057\langfe1033\langnp2057\insrsid5010389\charrsid2758511 George Alexander Thompson v. C.I.R.}{
\fs24\lang2057\langfe1033\langnp2057\insrsid9000129  }{\fs24\lang2057\langfe1033\langnp2057\insrsid5010389\charrsid9000129 Civil Appeal No. 8 of 1979, that}{\fs24\lang2057\langfe1033\langnp2057\insrsid2758511  }{
\fs24\lang2057\langfe1033\langnp2057\insrsid5010389\charrsid9000129 the dominant purpose is to be looked for in Fiji as in New Zealand and Australia.}{\fs24\lang2057\langfe1033\langnp2057\insrsid5010389 
\par }{\fs24\lang2057\langfe1033\langnp2057\insrsid2758511\charrsid9000129 
\par }{\fs24\lang2057\langfe1033\langnp2057\insrsid5010389\charrsid9000129 There is, however, one further matter to be noticed when assessing the evidence of the appellants, particularly in a case like th
e present, where the evidence of the appellants is the only sworn evidence before the Court. In}{\fs24\lang2057\langfe1033\langnp2057\insrsid2758511  }{\b\i\fs24\lang2057\langfe1033\langnp2057\insrsid5010389\charrsid2758511 Pascoe's}{
\fs24\lang2057\langfe1033\langnp2057\insrsid5010389\charrsid9000129  case, to which I have earlier referred, Fullager J observed at p.320 of this report.}{\fs24\lang2057\langfe1033\langnp2057\insrsid5010389 
\par }{\fs24\lang2057\langfe1033\langnp2057\insrsid2758511\charrsid9000129 
\par }\pard \ql \li720\ri0\nowidctlpar\faauto\adjustright\rin0\lin720\itap0\pararsid2758511 {\fs24\lang2057\langfe1033\langnp2057\insrsid5010389\charrsid9000129 "where a person's purpose or object or other state of mind in rel
ation to a given transaction is in issue, the statements of that person in the witness box provide, in a sense, the "best" evidence, but for obvious reasons, they must,}{\fs24\lang2057\langfe1033\langnp2057\insrsid2758511  }{
\fs24\lang2057\langfe1033\langnp2057\insrsid5010389\charrsid9000129 as Cussen J. observed in }{\b\i\fs24\lang2057\langfe1033\langnp2057\insrsid5010389\charrsid2758511 Cox v Smail}{\fs24\lang2057\langfe1033\langnp2057\insrsid5010389\charrsid9000129  }{
\fs24\lang2057\langfe1033\langnp2057\insrsid12477679 [}{\fs24\lang2057\langfe1033\langnp2057\insrsid5010389\charrsid9000129 1912}{\fs24\lang2057\langfe1033\langnp2057\insrsid12477679 ]}{\fs24\lang2057\langfe1033\langnp2057\insrsid5010389\charrsid9000129 
 V}{\fs24\lang2057\langfe1033\langnp2057\insrsid12477679 L}{\fs24\lang2057\langfe1033\langnp2057\insrsid5010389\charrsid9000129 R 274 283 "be tested most closely, and received with the greatest caution".
\par }\pard \ql \li0\ri0\nowidctlpar\faauto\adjustright\rin0\lin0\itap0\pararsid9000129 {\fs24\lang2057\langfe1033\langnp2057\insrsid5010389\charrsid9000129 
\par }{\fs24\lang2057\langfe1033\langnp2057\insrsid2758511 It is against this back}{\fs24\lang2057\langfe1033\langnp2057\insrsid5010389\charrsid9000129 
ground that the Court has to consider the evidence of Wood and Mr Y P Reddy, for the latter, as the Managing Director of Reddy, is the person who controlled that Company and his state of mind must be accounted to be the state of mind of Reddy (see }{
\b\i\fs24\lang2057\langfe1033\langnp2057\insrsid5010389\charrsid2758511 Vesco Supermarkets v. Nattrass}{\fs24\lang2057\langfe1033\langnp2057\insrsid5010389\charrsid9000129  (1971) 2 WLR 1166, AC 153}{\fs24\lang2057\langfe1033\langnp2057\insrsid2758511 :}{
\fs24\lang2057\langfe1033\langnp2057\insrsid5010389\charrsid9000129  }{\b\i\fs24\lang2057\langfe1033\langnp2057\insrsid5010389\charrsid2758511 Federal Commissioner of Taxation v. Whitfords Beach}{
\fs24\lang2057\langfe1033\langnp2057\insrsid5010389\charrsid9000129  }{\b\i\fs24\lang2057\langfe1033\langnp2057\insrsid12477679 Pty Ltd }{\fs24\lang2057\langfe1033\langnp2057\insrsid5010389\charrsid9000129 
(1982) 12 ATR 692, 701. In considering this evidence I have to bear in mind that counse
l for the appellants told the Court that each appellant would be giving evidence in support of the other, and that therefore both members of Woodlands Ltd were giving evidence. Wood gave his evidence first and I shall accordingly treat first of his eviden
ce.}{\b\i\fs24\lang2057\langfe1033\langnp2057\insrsid5010389\charrsid12477679 
\par }{\fs24\lang2057\langfe1033\langnp2057\insrsid2758511\charrsid9000129 
\par }{\fs24\lang2057\langfe1033\langnp2057\insrsid5010389\charrsid9000129 Wood's evidence was that, because he was a civil engineer, he was left to get the necessary consents preliminary to building the hotel. He said that three things were}{
\fs24\lang2057\langfe1033\langnp2057\insrsid2758511  }{\fs24\lang2057\langfe1033\langnp2057\insrsid5010389\charrsid9000129 necessary, first, to get the approval of the Director of Lands to the reclamation nec
essary for providing access to the hotel site secondly, to get the area re-zoned for commercial purposes - it was at that time agricultural land - and thirdly, to get a new ninety nine year lease, since the existing lease, only had 42 years to run from 19
71. I must say that the}{\fs24\lang2057\langfe1033\langnp2057\insrsid2758511  }{\fs24\lang2057\langfe1033\langnp2057\insrsid5010389\charrsid9000129 
need for converting a 42 year lease into a 99 year lease immediately escapes me. So the first thing Wood did was to get Nevile Burren of Burren & Keen, who was at that time practising in Suva as a town planning consultant,
 to prepare him a plan of the proposed development. Burren prepared a plan by June 1971 but unfortunately it was not at all the type of plan the appellants wanted. It provided for about 375 acres of reclamation for two hotels and for some residential site
s. I can not understand that the reclamation of 375 acres at Vulani would be quite impracticable from an enviro}{\fs24\lang2057\langfe1033\langnp2057\insrsid2758511 n}{\fs24\lang2057\langfe1033\langnp2057\insrsid5010389\charrsid9000129 
mental point of view. Burren estimated that the cost of reclamation would be $1,300,000 and the cost of providing roads and services $2,500,000. 
In his evidence Wood said after he received Burren's plan, "then I thought I could prepare a better plan". But he did not.}{\fs24\lang2057\langfe1033\langnp2057\insrsid5010389 
\par }{\fs24\lang2057\langfe1033\langnp2057\insrsid2758511\charrsid9000129 
\par }{\fs24\lang2057\langfe1033\langnp2057\insrsid5010389\charrsid9000129 What he did do was to hold back Burren's plan, but to submit his brief or legend.}{\fs24\lang2057\langfe1033\langnp2057\insrsid9000129  }{
\fs24\lang2057\langfe1033\langnp2057\insrsid5010389\charrsid9000129 He went with Mr Y P Reddy who was the Managing Dir
ector of Woodlands Ltd to see Mr R H Regnault the Director of Lands. Neither Wood nor Y P Reddy told the Court what transpired at that meeting, but on 23rd August}{\fs24\lang2057\langfe1033\langnp2057\insrsid9000129  }{
\fs24\lang2057\langfe1033\langnp2057\insrsid7097440\charrsid9000129 1971 Wood sent in Burren's brief as his company's submission without comment. On 7th September 1971 the Director of Lands wrote stating that Wood's brief gave }{
\fs24\lang2057\langfe1033\langnp2057\insrsid7097440 "a clear picture of his}{\fs24\lang2057\langfe1033\langnp2057\insrsid5010389\charrsid9000129  }{\fs24\lang2057\langfe1033\langnp2057\insrsid7097440\charrsid9000129 client's intention",}{
\fs24\lang2057\langfe1033\langnp2057\insrsid7097440  his client being Woodlands Ltd, but he }{\fs24\lang2057\langfe1033\langnp2057\insrsid5010389\charrsid9000129 
wanted more information on the method of financing, on what market it was proposed to sell the house sites, and whether any proposals were being made for housing local people or}{\fs24\lang2057\langfe1033\langnp2057\insrsid2758511  }{
\fs24\lang2057\langfe1033\langnp2057\insrsid2758511\charrsid9000129 employees. I can only say that unless the appellants' confer}{\fs24\lang2057\langfe1033\langnp2057\insrsid2758511 ence with the Director of Lands}{
\fs24\lang2057\langfe1033\langnp2057\insrsid2758511\charrsid9000129  gave an entirely}{\fs24\lang2057\langfe1033\langnp2057\insrsid2758511  different }{\fs24\lang2057\langfe1033\langnp2057\insrsid2758511\charrsid9000129 
picture from that conveyed by their sworn evidence the proposals conveyed by Burren's brief are entirely unclear.}{\fs24\lang2057\langfe1033\langnp2057\insrsid2758511  }{\fs24\lang2057\langfe1033\langnp2057\insrsid2758511\charrsid9000129 The}{
\fs24\lang2057\langfe1033\langnp2057\insrsid6438880  }{\fs24\lang2057\langfe1033\langnp2057\insrsid6438880\charrsid9000129 Director's request for elucidation also indicates}{\fs24\lang2057\langfe1033\langnp2057\insrsid6438880  }{
\fs24\lang2057\langfe1033\langnp2057\insrsid6438880\charrsid9000129 a picture}{\fs24\lang2057\langfe1033\langnp2057\insrsid6438880  }{\fs24\lang2057\langfe1033\langnp2057\insrsid6438880\charrsid9000129 quite different from}{
\fs24\lang2057\langfe1033\langnp2057\insrsid6438880  }{\fs24\lang2057\langfe1033\langnp2057\insrsid6438880\charrsid9000129 appellant}{\fs24\lang2057\langfe1033\langnp2057\insrsid7097440 '}{
\fs24\lang2057\langfe1033\langnp2057\insrsid6438880\charrsid9000129 s sworn evidence. Wood answered}{\fs24\lang2057\langfe1033\langnp2057\insrsid6438880  }{\fs24\lang2057\langfe1033\langnp2057\insrsid6438880\charrsid9000129 the Director's query}{
\fs24\lang2057\langfe1033\langnp2057\insrsid6438880  }{\fs24\lang2057\langfe1033\langnp2057\insrsid6438880\charrsid9000129 by stating that there were to be four}{\fs24\lang2057\langfe1033\langnp2057\insrsid7097440  }{
\fs24\lang2057\langfe1033\langnp2057\insrsid5010389\charrsid9000129 stages of development. He said that Reddy could finance the first stage of the project, that house sites would be sold mainly on the local market with some overseas participation }{
\fs24\lang2057\langfe1033\langnp2057\insrsid7097440 - }{\fs24\lang2057\langfe1033\langnp2057\insrsid7097440\charrsid9000129 whatever that may mean - }{\fs24\lang2057\langfe1033\langnp2057\insrsid5010389\charrsid9000129 and t}{
\fs24\lang2057\langfe1033\langnp2057\insrsid7097440 hat housing would be provided }{\fs24\lang2057\langfe1033\langnp2057\insrsid7097440\charrsid9000129 by the Housing}{\fs24\lang2057\langfe1033\langnp2057\insrsid7097440  }{
\fs24\lang2057\langfe1033\langnp2057\insrsid7097440\charrsid9000129 Authority and at similar}{\fs24\lang2057\langfe1033\langnp2057\insrsid7097440  rents.}{\fs24\lang2057\langfe1033\langnp2057\insrsid5010389\charrsid9000129  Here again, the appellant}{
\fs24\lang2057\langfe1033\langnp2057\insrsid7097440 's }{\fs24\lang2057\langfe1033\langnp2057\insrsid7097440\charrsid9000129 sworn evidence, unless I}{\fs24\lang2057\langfe1033\langnp2057\insrsid5010389\charrsid9000129  have completely misunderstood it,}{
\fs24\lang2057\langfe1033\langnp2057\insrsid7097440  envisaged a fairly small }{\fs24\lang2057\langfe1033\langnp2057\insrsid5010389\charrsid9000129 scale developmen}{\fs24\lang2057\langfe1033\langnp2057\insrsid7097440 t to cost some where }{
\fs24\lang2057\langfe1033\langnp2057\insrsid7097440\charrsid9000129 about $500,000, of}{\fs24\lang2057\langfe1033\langnp2057\insrsid1598890  }{\fs24\lang2057\langfe1033\langnp2057\insrsid5010389\charrsid9000129 
which $300,000 would be spent on providing access and reclamation.}{\fs24\lang2057\langfe1033\langnp2057\insrsid1598890  }{\fs24\lang2057\langfe1033\langnp2057\insrsid5010389\charrsid9000129 
A further letter was addressed to the Director of Lands on 21st December 1971 stating that the cost of the first stage would be $500,000 and that sum would be raised by Woodlands Ltd with local participation and overseas participation.}{
\fs24\lang2057\langfe1033\langnp2057\insrsid1598890  }{\fs24\lang2057\langfe1033\langnp2057\insrsid5010389\charrsid9000129 This again is at var
iance with Mr Y P Reddy's evidence which, as I understand it, indicated that he could finance $500,000 through his company, just as he did in fact do when Reddy}{\fs24\lang2057\langfe1033\langnp2057\insrsid1598890  }{
\fs24\lang2057\langfe1033\langnp2057\insrsid5010389\charrsid9000129 came to buy the Sky Lodge Hotel in 1973.
\par 
\par If the Director of Lands was told that Burren's plan too}{\fs24\lang2057\langfe1033\langnp2057\insrsid9000129  }{\fs24\lang2057\langfe1033\langnp2057\insrsid5010389\charrsid9000129 grandiose for the appellants and at the same time }{
\fs24\lang2057\langfe1033\langnp2057\insrsid1598890 was }{\fs24\lang2057\langfe1033\langnp2057\insrsid5010389\charrsid9000129 given Burren's brief to work on it is perhaps}{\fs24\lang2057\langfe1033\langnp2057\insrsid1598890  of little wonder that h}{
\fs24\lang2057\langfe1033\langnp2057\insrsid5010389\charrsid9000129 e took six months to think about it, and probably to leave a decision to the Director of Town and Country Planning. That is where the project}{
\fs24\lang2057\langfe1033\langnp2057\insrsid1598890  }{\fs24\lang2057\langfe1033\langnp2057\insrsid5010389\charrsid9000129 stopped. That was a full year before Wood became aware of the }{
\b\fs24\lang2057\langfe1033\langnp2057\insrsid5010389\charrsid1598890 Belt-Collins report}{\fs24\lang2057\langfe1033\langnp2057\insrsid5010389\charrsid9000129 . He apparently had approached the Town and Country Planning Department,}{
\fs24\lang2057\langfe1033\langnp2057\insrsid1598890  }{\fs24\lang2057\langfe1033\langnp2057\insrsid5010389\charrsid9000129 for a letter in October to Roger Mirams, who was interested so Wood said,}{\fs24\lang2057\langfe1033\langnp2057\insrsid1598890  }{
\fs24\lang2057\langfe1033\langnp2057\insrsid5010389\charrsid9000129 in some film production, indicates that there were then no restrictions on development at Vulani although there might have been difficulties in access}{
\fs24\lang2057\langfe1033\langnp2057\insrsid1598890  }{\fs24\lang2057\langfe1033\langnp2057\insrsid5010389\charrsid9000129 and water supply. Notwithstanding these verbal assurances Wood made no attempt to seek from the Town Planning Developmen
t the approval in principle that the Director}{\fs24\lang2057\langfe1033\langnp2057\insrsid1598890  of Lands asked him for. The only explanation he gave was pressure of his own }{\fs24\lang2057\langfe1033\langnp2057\insrsid5010389\charrsid9000129 
professional work, and that, }{\fs24\lang2057\langfe1033\langnp2057\insrsid1598890\charrsid9000129 as Mr. Scott}{\fs24\lang2057\langfe1033\langnp2057\insrsid1598890  submitted, }{\fs24\lang2057\langfe1033\langnp2057\insrsid5010389\charrsid9000129 
seems a very lame}{\fs24\lang2057\langfe1033\langnp2057\insrsid1598890  explanation, unsupported as it is by }{\fs24\lang2057\langfe1033\langnp2057\insrsid5010389\charrsid9000129 evidence.}{\fs24\lang2057\langfe1033\langnp2057\insrsid5010389 
\par }{\fs24\lang2057\langfe1033\langnp2057\insrsid1598890 
\par }{\fs24\lang2057\langfe1033\langnp2057\insrsid1598890\charrsid9000129 The }{\b\fs24\lang2057\langfe1033\langnp2057\insrsid1598890\charrsid1598890 Belt-Collins }{\b\fs24\lang2057\langfe1033\langnp2057\insrsid5010389\charrsid1598890 report}{
\fs24\lang2057\langfe1033\langnp2057\insrsid5010389\charrsid9000129  came out in March 197}{\fs24\lang2057\langfe1033\langnp2057\insrsid1598890 3 }{\fs24\lang2057\langfe1033\langnp2057\insrsid5010389\charrsid9000129 
and Wood said that he came to know of it about}{\fs24\lang2057\langfe1033\langnp2057\insrsid1598890  }{\fs24\lang2057\langfe1033\langnp2057\insrsid1598890\charrsid9000129 July.}{\fs24\lang2057\langfe1033\langnp2057\insrsid1598890  }{
\fs24\lang2057\langfe1033\langnp2057\insrsid5010389\charrsid9000129 It contained a passage at page 102 which bears upon this appeal and I quote it in full. The word "Vulagi }{\fs24\lang2057\langfe1033\langnp2057\insrsid1598890 in }{
\fs24\lang2057\langfe1033\langnp2057\insrsid5010389\charrsid9000129 the report is accepted to be a misprint for }{\fs24\lang2057\langfe1033\langnp2057\insrsid1598890\charrsid9000129 Vulani}{\fs24\lang2057\langfe1033\langnp2057\insrsid1598890 . It}{
\fs24\lang2057\langfe1033\langnp2057\insrsid1598890\charrsid9000129  }{\fs24\lang2057\langfe1033\langnp2057\insrsid5010389\charrsid9000129 reads:}{\fs24\lang2057\langfe1033\langnp2057\insrsid5010389 
\par }{\fs24\lang2057\langfe1033\langnp2057\insrsid1598890\charrsid9000129 
\par }\pard \ql \li720\ri0\nowidctlpar\faauto\adjustright\rin0\lin720\itap0\pararsid1598890 {\fs24\lang2057\langfe1033\langnp2057\insrsid5010389\charrsid9000129 
"The Vulagi area, the large area of mangrove located immediately north of Nasoso, is not shown for any tourism development because of the very limited amount of dry land, the lack of accessibility and unknown effects of filling mangrove in the vicinity".}
{\fs24\lang2057\langfe1033\langnp2057\insrsid5010389 
\par }\pard \ql \li0\ri0\nowidctlpar\faauto\adjustright\rin0\lin0\itap0\pararsid1598890 {\fs24\lang2057\langfe1033\langnp2057\insrsid1598890\charrsid9000129 
\par }\pard \ql \li0\ri0\nowidctlpar\faauto\adjustright\rin0\lin0\itap0\pararsid9000129 {\fs24\lang2057\langfe1033\langnp2057\insrsid5010389\charrsid9000129 
Wood said that after this report he did not approach the Town Planning Department because he feared a rebuff which, if the report were translated in to action, would}{\fs24\lang2057\langfe1033\langnp2057\insrsid1048887  }{
\fs24\lang2057\langfe1033\langnp2057\insrsid5010389\charrsid9000129 have been quite final. Mr. Pita Nacuva, in his evidence,}{\fs24\lang2057\langfe1033\langnp2057\insrsid1048887  }{\fs24\lang2057\langfe1033\langnp2057\insrsid5010389\charrsid9000129 
said that although his department would have liked to see the report adopted, the government did not do so, but it was used as a guideline. However he did say that in its}{\fs24\lang2057\langfe1033\langnp2057\insrsid9000129  }{
\fs24\lang2057\langfe1033\langnp2057\insrsid5010389\charrsid9000129 '` early years the report would probably have inhibited development in the Vulani Area although he insisted that}{\fs24\lang2057\langfe1033\langnp2057\insrsid1048887  }{
\fs24\lang2057\langfe1033\langnp2057\insrsid5010389\charrsid9000129 there was no rigid prohibition of development. Wood therefore}{\fs24\lang2057\langfe1033\langnp2057\insrsid1048887  }{\fs24\lang2057\langfe1033\langnp2057\insrsid5010389\charrsid9000129 
did nothing. He said that Reddy agreed that Woodlands could do nothing further. Wood said that in 1972 he had one of his surveyors take levels throughout the site and do a soil survey. But quite apart from the }{
\b\fs24\lang2057\langfe1033\langnp2057\insrsid5010389\charrsid1048887 Belt-Collins report}{\fs24\lang2057\langfe1033\langnp2057\insrsid5010389\charrsid9000129 , the}{\fs24\lang2057\langfe1033\langnp2057\insrsid1048887  }{
\fs24\lang2057\langfe1033\langnp2057\insrsid5010389\charrsid9000129 oil crisis in 1974 produced a severe downturn in the number of visitors to Fiji, and a consequent depression in the}{\fs24\lang2057\langfe1033\langnp2057\insrsid1048887  }{
\fs24\lang2057\langfe1033\langnp2057\insrsid5010389\charrsid9000129 tourist industry.}{\fs24\lang2057\langfe1033\langnp2057\insrsid9000129  }{\fs24\lang2057\langfe1033\langnp2057\insrsid5010389\charrsid9000129 It was no}{
\fs24\lang2057\langfe1033\langnp2057\insrsid1048887 t until approximately 1978 that}{\fs24\lang2057\langfe1033\langnp2057\insrsid5010389\charrsid9000129  the position began to improve. On 25 June 197
6 Wood wrote to Gusti Heep of the Architects Pacific Design Partnership, shortly referred to as APDP, offering him part of Vulani.}{\fs24\lang2057\langfe1033\langnp2057\insrsid1048887  }{\fs24\lang2057\langfe1033\langnp2057\insrsid5010389\charrsid9000129 
This was for the Fiji Cultural Centre, in which it would seem Ratu Josua Toganivalu, a Cabinet Minister was interested. The matter apparently did not progress, for Wood wrote to}{\fs24\lang2057\langfe1033\langnp2057\insrsid1048887  Mr. W.J. Clark, MP, re}
{\fs24\lang2057\langfe1033\langnp2057\insrsid5010389\charrsid9000129 iterating the offer on 6 July 1977. Clark replied on 25 October, as Chairman of the Fiji Cultural Centre Board of Governors, asking for 30 acres of dry land" on Nadi Bay foreshore, 
and intimating that the Centre}{\fs24\lang2057\langfe1033\langnp2057\insrsid9000129  }{\fs24\lang2057\langfe1033\langnp2057\insrsid5010389\charrsid9000129 
 proposed to ask for Government assistance in roading and access. By August 1977 the appellants were prepared to give the Cultural Centre an option to buy the whole of the land. Wood did not explain why the appellants were pr
epared to relinquish the land. The price was to be $165,000 although the Court was given no indication of how and why that price was fixed. The option is dated 20th September 1978 and was to be exercised by 31st October 1978. The Cultural Centre exercised
 the option, but failed to complete. Negotiations were reopened almost immediately for on 21st November 1978 Wood wrote to Bhupendra Patel, who represented Reddy in this appeal referring to a meeting the previous day betw}{
\fs24\lang2057\langfe1033\langnp2057\insrsid1048887 een himself, Y}{\fs24\lang2057\langfe1033\langnp2057\insrsid5010389\charrsid9000129 P Reddy, Kapadia (appellant's accountant), Patel ( their solicitor) and Clark, Sharma probably Viv}{
\fs24\lang2057\langfe1033\langnp2057\insrsid1048887 ekenand Sharma Singh probably C}{\fs24\lang2057\langfe1033\langnp2057\insrsid5010389\charrsid9000129 D Singh, the Cultu}{\fs24\lang2057\langfe1033\langnp2057\insrsid1048887 r}{
\fs24\lang2057\langfe1033\langnp2057\insrsid5010389\charrsid9000129 al Centre's solicitor).
\par 
\par This provided for amendment of the agreement which had broken down, and reserved to Woodlands a 25 acre b
lock consisting of 14 acres of lease and 11 acres of reclaimed land, to be leased back after the sale-of the whole area to the Cultural Centre for $146,520 at $1,320 an acre for 111 acres.}{\fs24\lang2057\langfe1033\langnp2057\insrsid9000129  }{
\fs24\lang2057\langfe1033\langnp2057\insrsid5010389\charrsid9000129 The Cultural Centre}{\fs24\lang2057\langfe1033\langnp2057\insrsid9000129\charrsid9000129  }{\fs24\lang2057\langfe1033\langnp2057\insrsid5010389\charrsid9000129 
were to form and dedicate a legal road access f
rom the Queen's Road to the hotel site, and were also to provide a water connection and a sanitary sewerage connection and were to obtain a reclamation licence for 11 acres. Unfortunately the Cultural Centre by March 1979 had rejected this arrangement, bu
t
 made a counter offer to go back to the original agreement, but saying nothing about how or when the money would be paid. Discussions went on through 1979 and 1980, and by July 1980 it was agreed that Woodlands would retain 56 acres, 1 rood, 12 perches co
m
prised in sub-lease 114104 and the balance was to be transferred to the Cultural Centre for a nominal consideration. The Cultural Centre were to provide access and road building, and were to ask the Government for assistance on these matters. Discussion s
till went on through July and August, and on 17 September 1980 APDP submitted a plan and a brief to the Director of Town and Country Planning. His reply on 28 November was not at}{\fs24\lang2057\langfe1033\langnp2057\insrsid1048887  }{
\fs24\lang2057\langfe1033\langnp2057\insrsid5010389\charrsid9000129 all enthusiastic.}{\fs24\lang2057\langfe1033\langnp2057\insrsid9000129  }{\fs24\lang2057\langfe1033\langnp2057\insrsid5010389\charrsid9000129 
Clark Wood and Heep met Steve Wood of the Director's Office and submitted a further brief, and in response the department on 10th January 1981 indicated that}{\fs24\lang2057\langfe1033\langnp2057\insrsid1048887  }{
\fs24\lang2057\langfe1033\langnp2057\insrsid5010389\charrsid9000129 a small scale single-storey type of hotel might be acceptable. Then a planning application, on behalf of both Woodlands}{\fs24\lang2057\langfe1033\langnp2057\insrsid1048887  }{
\fs24\lang2057\langfe1033\langnp2057\insrsid5010389\charrsid9000129 and the Cultural Centre was prepared b
y APDP and submitted to the Department. The Court was not told what the result was, save that Wood, with Reddy's approval entered into negotiations with Western Real Estate Co of Nadi in November 1982, and by July 1983 had agreed to sell the shares in Woo
dlands Ltd for $225,000. That meant the land, as well, for the land was Woodlands only asset.}{\fs24\lang2057\langfe1033\langnp2057\insrsid5010389 
\par }{\fs24\lang2057\langfe1033\langnp2057\insrsid1048887\charrsid9000129 
\par }{\fs24\lang2057\langfe1033\langnp2057\insrsid5010389\charrsid9000129 Reddy's evidence supported Wood. I accept the evidence of YP Reddy that he could have built the hotel in 1971 for $300,000 for he had but recently built the Tan}{
\fs24\lang2057\langfe1033\langnp2057\insrsid1048887 o}{\fs24\lang2057\langfe1033\langnp2057\insrsid5010389\charrsid9000129 a Hotel near Nadi Airport. I prefer his evidence here, in view of his experience, to}{
\fs24\lang2057\langfe1033\langnp2057\insrsid1048887  the figure of $18,500 per room, }{\fs24\lang2057\langfe1033\langnp2057\insrsid5010389\charrsid9000129 
given by the Belt-Collins report at page 47. His financial expertise is indicated by, the fact that he was able to finance the purchase of the Sky Lodge Hotel in 1973, partly from Reddy's own resources and partly by a bank loan. Mr}{
\fs24\lang2057\langfe1033\langnp2057\insrsid1048887  }{\fs24\lang2057\langfe1033\langnp2057\insrsid5010389\charrsid9000129 YP Reddy's evidence impressed me as being truthful and I}{\fs24\lang2057\langfe1033\langnp2057\insrsid9000129  }{
\fs24\lang2057\langfe1033\langnp2057\insrsid5010389\charrsid9000129 do not accept Mr Scott's criticism of it by comparing it with}{\fs24\lang2057\langfe1033\langnp2057\insrsid1048887  }{\fs24\lang2057\langfe1033\langnp2057\insrsid5010389\charrsid9000129 
his evidence on his wife's behalf in 1972. The real difficulty is with Wood, and the question which I have to answer is}{\fs24\lang2057\langfe1033\langnp2057\insrsid1048887  }{\fs24\lang2057\langfe1033\langnp2057\insrsid5010389\charrsid9000129 
whether his backing and filling between 1971 and 1973 indicated that his real purpose when he bought the land in 1970 and 1971 was either an intention to sell as soon as reasonably
 possible at a profit or an intention to let matters ride and sell at a convenient moment. I have finally come to the conclusion that the appellants bought the land and founded the company with the dominant purpose of building a hotel. Any intention to se
ll did not come until after}{\fs24\lang2057\langfe1033\langnp2057\insrsid1048887  }{\fs24\lang2057\langfe1033\langnp2057\insrsid5010389\charrsid9000129 the }{\b\fs24\lang2057\langfe1033\langnp2057\insrsid5010389\charrsid1048887 Belt-Collins report}{
\fs24\lang2057\langfe1033\langnp2057\insrsid5010389\charrsid9000129 . The question still arises as to why he dallied with Burren's plan after he knew}{\fs24\lang2057\langfe1033\langnp2057\insrsid1048887  }{
\fs24\lang2057\langfe1033\langnp2057\insrsid5010389\charrsid9000129 it was unsuitable. In the absence of some admission from Wood himself I can reach no firm conclusion, although I think that 
the likely cost was getting beyond his resources. He said that the deposit he paid Main Weston Ltd was a significant sum to him. The building of a hotel was the purpose of his interesting Reddy, and he stuck to that purpose until 1981, even to the extent 
of transferring the greater part}{\fs24\lang2057\langfe1033\langnp2057\insrsid1048887  }{\fs24\lang2057\langfe1033\langnp2057\insrsid5010389\charrsid9000129 
of the land to the Cultural Centre for a nominal sum - perhaps not so nominal when it is borne in mind that the Cultural Centre were to make a road and provide access, but nothing}{\fs24\lang2057\langfe1033\langnp2057\insrsid1048887  }{
\fs24\lang2057\langfe1033\langnp2057\insrsid5010389\charrsid9000129 like half of $165,000. I do not regard clause one of Woodlands memorandum of association as militating against the conclusion to which I have come, for it is so comprehensive that}{
\fs24\lang2057\langfe1033\langnp2057\insrsid1048887  }{\fs24\lang2057\langfe1033\langnp2057\insrsid5010389\charrsid9000129 it might very well include the development the appellants had in mind and which began to undertake.}{
\fs24\lang2057\langfe1033\langnp2057\insrsid5010389 
\par }{\fs24\lang2057\langfe1033\langnp2057\insrsid1048887\charrsid9000129 
\par }\pard \ql \li0\ri0\nowidctlpar\faauto\adjustright\rin0\lin0\itap0\pararsid1048887 {\fs24\lang2057\langfe1033\langnp2057\insrsid1048887\charrsid9000129 The}{\fs24\lang2057\langfe1033\langnp2057\insrsid1048887  }{
\fs24\lang2057\langfe1033\langnp2057\insrsid5010389\charrsid9000129 Commissioner's case is that the appellants are }{\fs24\lang2057\langfe1033\langnp2057\insrsid1048887 caught by }{\fs24\lang2057\langfe1033\langnp2057\insrsid1048887\charrsid9000129 
both limbs of proviso (a) to Section 11 of }{\fs24\lang2057\langfe1033\langnp2057\insrsid1048887 Income }{\fs24\lang2057\langfe1033\langnp2057\insrsid1048887\charrsid9000129 
Tax Act. I have said enough to indicate that both limbs of proviso (a) to Section 11 of Tax Act. I have said enough to indicate that}{\fs24\lang2057\langfe1033\langnp2057\insrsid1048887  }{
\fs24\lang2057\langfe1033\langnp2057\insrsid5010389\charrsid9000129 in my}{\fs24\lang2057\langfe1033\langnp2057\insrsid1048887  }{\fs24\lang2057\langfe1033\langnp2057\insrsid1048887\charrsid9000129 view they have discharged}{
\fs24\lang2057\langfe1033\langnp2057\insrsid1048887  }{\fs24\lang2057\langfe1033\langnp2057\insrsid1048887\charrsid9000129 the burden of shewing that}{\fs24\lang2057\langfe1033\langnp2057\insrsid1048887  they }{
\fs24\lang2057\langfe1033\langnp2057\insrsid1048887\charrsid9000129 acquired the property - either the land or the}{\fs24\lang2057\langfe1033\langnp2057\insrsid1048887\charrsid1048887  }{\fs24\lang2057\langfe1033\langnp2057\insrsid1048887\charrsid9000129 
shares }{\fs24\lang2057\langfe1033\langnp2057\insrsid1048887 \endash  for the purpose of }{\fs24\lang2057\langfe1033\langnp2057\insrsid1048887\charrsid9000129 selling or}{\fs24\lang2057\langfe1033\langnp2057\insrsid1048887  }{
\fs24\lang2057\langfe1033\langnp2057\insrsid1048887\charrsid9000129 disposing of the ownership}{\fs24\lang2057\langfe1033\langnp2057\insrsid1048887  of them.}{\fs24\lang2057\langfe1033\langnp2057\insrsid1048887\charrsid9000129 
\par }\pard \ql \li0\ri0\nowidctlpar\faauto\adjustright\rin0\lin0\itap0\pararsid9000129 {\fs24\lang2057\langfe1033\langnp2057\insrsid1048887 
\par }{\fs24\lang2057\langfe1033\langnp2057\insrsid5010389\charrsid9000129 I have now to consider whether they were carrying on or carrying out an und}{\fs24\lang2057\langfe1033\langnp2057\insrsid1048887 ertaking or scheme entered into}{
\fs24\lang2057\langfe1033\langnp2057\insrsid5010389\charrsid9000129  or devised for the purpose of making a profit. Here again,}{\fs24\lang2057\langfe1033\langnp2057\insrsid1048887  }{\fs24\lang2057\langfe1033\langnp2057\insrsid5010389\charrsid9000129 
the burden of proof lies upon the appellants. Mr. Scott submitted that the scheme here is the incorporation of the company, the transfer of the land to the company; and the share promptly re
-sold, the value of the shares being tantamount to the value of the land, and that all was in the nature of a business deal, and he submitted that what was done was a programme or a plan of action and he referred to the judgment of Stephen J in }{
\b\i\fs24\lang2057\langfe1033\langnp2057\insrsid5010389\charrsid1048887 Steinberg v FCT}{\fs24\lang2057\langfe1033\langnp2057\insrsid5010389\charrsid9000129  (197}{\fs24\lang2057\langfe1033\langnp2057\insrsid12477679 5}{
\fs24\lang2057\langfe1033\langnp2057\insrsid5010389\charrsid9000129 ) 5 ATR 565,}{\fs24\lang2057\langfe1033\langnp2057\insrsid11206774  }{\fs24\lang2057\langfe1033\langnp2057\insrsid5010389\charrsid9000129 590. I think, perhaps I}{
\fs24\lang2057\langfe1033\langnp2057\insrsid1048887  could reject Mr. Scott's sale }{\fs24\lang2057\langfe1033\langnp2057\insrsid5010389\charrsid9000129 of Woodlands'}{\fs24\lang2057\langfe1033\langnp2057\insrsid1048887  }{
\fs24\lang2057\langfe1033\langnp2057\insrsid5010389\charrsid9000129 su
bmission in limine, because there was no shares until 1983. They were allocated to the appellants at the outset save that wood took over his wife's shares, but not, so far as I am' aware, for any substantial consideration. However, the most authoritative 
statement in}{\fs24\lang2057\langfe1033\langnp2057\insrsid9000129\charrsid9000129  }{\fs24\lang2057\langfe1033\langnp2057\insrsid5010389\charrsid9000129 
Fiji as to a scheme or undertaking entered into or devised for the purpose of making a profit must be accounted to be }{\b\i\fs24\lang2057\langfe1033\langnp2057\insrsid5010389\charrsid1048887 McClelland v FCT }{
\fs24\lang2057\langfe1033\langnp2057\insrsid3808216 (}{\fs24\lang2057\langfe1033\langnp2057\insrsid5010389\charrsid9897905 1970}{\fs24\lang2057\langfe1033\langnp2057\insrsid3808216 )}{\fs24\lang2057\langfe1033\langnp2057\insrsid5010389\charrsid9000129 
 120 CLR 487, AITR}{\fs24\lang2057\langfe1033\langnp2057\insrsid9897905 :}{\fs24\lang2057\langfe1033\langnp2057\insrsid5010389\charrsid9000129  (1971) 1 WLR 19: a Privy Council decision on appeal from the High Court of Australi
a in which their Lordships, after pointing out that all schemes to produce a profit could be caught by the}{\fs24\lang2057\langfe1033\langnp2057\insrsid9000129  }{\fs24\lang2057\langfe1033\langnp2057\insrsid5010389\charrsid9000129 
section, liberally construed, held that what was required }{\fs24\lang2057\langfe1033\langnp2057\insrsid5010389 was }{\fs24\lang2057\langfe1033\langnp2057\insrsid5010389\charrsid9000129 something in the nature of a business deal.}{
\fs24\lang2057\langfe1033\langnp2057\insrsid5010389  }{\fs24\lang2057\langfe1033\langnp2057\insrsid5010389\charrsid9000129 Mr. Scott}{\fs24\lang2057\langfe1033\langnp2057\insrsid5010389  }{
\fs24\lang2057\langfe1033\langnp2057\insrsid5010389\charrsid9000129 submits that }{\b\i\fs24\lang2057\langfe1033\langnp2057\insrsid5010389\charrsid5010389 McClelland's}{\fs24\lang2057\langfe1033\langnp2057\insrsid5010389\charrsid9000129  case is
 not in point. However,}{\fs24\lang2057\langfe1033\langnp2057\insrsid5010389  }{\fs24\lang2057\langfe1033\langnp2057\insrsid5010389\charrsid9000129 I am quite unable to see in the appellant's sale}{\fs24\lang2057\langfe1033\langnp2057\insrsid5010389 
 of their }{\fs24\lang2057\langfe1033\langnp2057\insrsid5010389\charrsid9000129 shares a business deal.}{\fs24\lang2057\langfe1033\langnp2057\insrsid9000129  }{\fs24\lang2057\langfe1033\langnp2057\insrsid5010389\charrsid9000129 
It would seem to me much more likely the simple realisation of an asset. It is true that the appellants specified that they wanted a price of $2000 an acre, but eventually agreed to less, namely $225,000 for}{
\fs24\lang2057\langfe1033\langnp2057\insrsid5010389  }{\fs24\lang2057\langfe1033\langnp2057\insrsid5010389\charrsid9000129 the whole area which works out at $1800 an acre. It is }{\fs24\lang2057\langfe1033\langnp2057\insrsid5010389 true }{
\fs24\lang2057\langfe1033\langnp2057\insrsid5010389\charrsid9000129 also that this price exceeds the price of $1320 an acre discussed with the Cultural Centre in 1978. I find some difficulty in asce
rtaining what is meant by a business deal, but I would not have thought that the appellant}{\fs24\lang2057\langfe1033\langnp2057\insrsid5010389 '}{\fs24\lang2057\langfe1033\langnp2057\insrsid5010389\charrsid9000129 
s sale came within any definition of that term.}{\fs24\lang2057\langfe1033\langnp2057\insrsid5010389  }{\fs24\lang2057\langfe1033\langnp2057\insrsid5010389\charrsid9000129 Their Lordships in}{\fs24\lang2057\langfe1033\langnp2057\insrsid5010389  }{
\b\i\fs24\lang2057\langfe1033\langnp2057\insrsid5010389\charrsid5010389 McClelland's}{\fs24\lang2057\langfe1033\langnp2057\insrsid5010389\charrsid9000129  case equated it with an 'adventure in the nature of trade', an expression well known 
to English and Scottish income tax law. In }{\b\i\fs24\lang2057\langfe1033\langnp2057\insrsid5010389\charrsid5010389 Commissioners of Inland Revenue v Reinhold, a Scottish}{\fs24\lang2057\langfe1033\langnp2057\insrsid5010389\charrsid9000129 
 case (1953) 34 T.C. 389 the taxpayer}{\fs24\lang2057\langfe1033\langnp2057\insrsid5010389  }{\fs24\lang2057\langfe1033\langnp2057\insrsid5010389\charrsid9000129 
had bought four houses, admittedly with the intention of selling them, and instructed his agent to sell them as and when 
occasion offered. They were sold at a profit. However this was held not to be an adventure in the nature of trade. But I should say that Lord Keith considered the}{\fs24\lang2057\langfe1033\langnp2057\insrsid5010389  facts }{
\fs24\lang2057\langfe1033\langnp2057\insrsid5010389\charrsid9000129 equivocal which might well have meant in Fiji that}{\fs24\lang2057\langfe1033\langnp2057\insrsid5010389  }{\fs24\lang2057\langfe1033\langnp2057\insrsid5010389\charrsid9000129 
appellants would}{\fs24\lang2057\langfe1033\langnp2057\insrsid5010389  }{\fs24\lang2057\langfe1033\langnp2057\insrsid5010389\charrsid9000129 have been unable to discharge the burden of proof resting upon them, quite apart from the taxpayer's}{
\fs24\lang2057\langfe1033\langnp2057\insrsid5010389  }{\fs24\lang2057\langfe1033\langnp2057\insrsid5010389\charrsid9000129 admission, which}{\fs24\lang2057\langfe1033\langnp2057\insrsid5010389  }{
\fs24\lang2057\langfe1033\langnp2057\insrsid5010389\charrsid9000129 would bring him within the first part of}{\fs24\lang2057\langfe1033\langnp2057\insrsid5010389  }{\fs24\lang2057\langfe1033\langnp2057\insrsid5010389\charrsid9000129 section (a)}{
\fs24\lang2057\langfe1033\langnp2057\insrsid5010389  }{\fs24\lang2057\langfe1033\langnp2057\insrsid5010389\charrsid9000129 of the proviso to section 11. Lord Keith}{\fs24\lang2057\langfe1033\langnp2057\insrsid5010389  }{
\fs24\lang2057\langfe1033\langnp2057\insrsid5010389\charrsid9000129 considered that for the transaction to be in the nature of trade it had to be a dealing in commodities, and at page}{\fs24\lang2057\langfe1033\langnp2057\insrsid5010389  }{
\fs24\lang2057\langfe1033\langnp2057\insrsid5010389\charrsid9000129 396 quoted a number of examples. I}{\fs24\lang2057\langfe1033\langnp2057\insrsid5010389  }{\fs24\lang2057\langfe1033\langnp2057\insrsid5010389\charrsid9000129 
expect dealings in land might fall into the same category. I cannot see that this is a dealing in land and I must hold against Mr. Scott also on this point. The Commiss
ioner will therefore fail in both appeals, and they will be allowed. Both appellants will be entitled to their costs, unless application is made to the Court and opposing parties within twenty one days.
\par 
\par }\pard \qc \li0\ri0\nowidctlpar\faauto\adjustright\rin0\lin0\itap0\pararsid5010389 {\b\fs24\lang2057\langfe1033\langnp2057\insrsid5010389\charrsid5010389 COURT OF REVIEW
\par }\pard \ql \li0\ri0\nowidctlpar\faauto\adjustright\rin0\lin0\itap0\pararsid9000129 {\fs24\lang2057\langfe1033\langnp2057\insrsid5010389 
\par }{\fs24\lang2057\langfe1033\langnp2057\insrsid5010389\charrsid9000129 21st July 1986
\par }{\fs24\lang2057\langfe1033\langnp2057\insrsid5010389 
\par }{\fs24\lang2057\langfe1033\langnp2057\insrsid5010389\charrsid9000129 Solicitors}{\fs24\lang2057\langfe1033\langnp2057\insrsid9000129\charrsid9000129 :}{\fs24\lang2057\langfe1033\langnp2057\insrsid13856717  }{
\fs24\lang2057\langfe1033\langnp2057\insrsid5010389\charrsid9000129 Stuart Reddy & Co., Lautoka}{\fs24\lang2057\langfe1033\langnp2057\insrsid5010389 :}{\fs24\lang2057\langfe1033\langnp2057\insrsid5010389\charrsid9000129  Mitchell Keil & Associates.
\par Suva:}{\fs24\lang2057\langfe1033\langnp2057\insrsid13856717  }{\fs24\lang2057\langfe1033\langnp2057\insrsid5010389\charrsid9000129 Solicitor to the Inland Revenue
\par }}