A discussion of the law of ‘sham’ as applied in Millar v FCT – ‘back to back’ loans assessed as premature benefit from superannuation fund

SHAM TRANSACTIONS AND THE MILLAR CASE [2016] FCAFC 94

CPD OF THE TAX BAR ASSOCIATION

HELD AT THE FEDERAL COURT OF AUSTRALIA
10 October 2016
Presented by Jennifer Batrouney QC, Annette Charak, Hadi Mazloum

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Jennifer Batrouney QC:

Sham has been described as a “popular and pejorative word” and, as Tony Slater QC has said, it is “bad company to be found in”.(1)

It is important to distinguish what IS a sham from what is NOT necessarily a sham.

What is a sham?

In Snook v London & West Riding Investments Ltd,(2) Lord Diplock said:

“… for acts or documents to be a ‘sham’, all the parties thereto must have a common intention that the acts or documents are not to create the legal rights and obligations which they give the appearance of creating. No unexpressed intentions of a ‘shammer’ affect the rights of a party whom he deceived”.

More vivid descriptions of sham are to found in tax cases where it has been said that a sham is “an unreal or colourable transaction intended to throw dust in the eyes of the Commissioner of Taxation”.(3)

In Mahony’s case, Windeyer J noted that:

“To say that a document is a sham means that it was never intended to take effect and to operate according to its tenor: that the parties intended it to disguise, not to regulate or embody, their relationship and transactions.” (4)

In Sharrment’s case, Lockhart J described a sham as “a spurious imitation, a counterfeit, a disguise or a false front”.(5)

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(1) “Sham and Substance” (1999) 28 AT Rev 197 at 204.
(2) [1967] 1 All ER 518 at 529.
(3) Deputy FCT v Purcell (1921) 29 CLR 464 at 474, per Rich J.
(4) Mahony v FCT (1967) 41 ALJR 232 at 237.
(5) Sharrment v Official Trustee (1988) 82 ALR 530 at 537.

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What is NOT a sham?

The relationship between parties is determined by the law and not by the label that they put on it. The true legal character of a transaction must be ascertained as a matter of law. Similarly, an unusual form for a transaction does not necessarily mean that the transaction is a sham. In Sharrment, Lockhart J summarised the law as it stood with illustrations of cases where a transaction was not a sham, regardless of the form:

• Circularity: eg a round robin of cheques does not necessarily indicate a sham, even where no party has funds to meet the cheques.(6)

• Artificiality: so long as each document had the effect that it purported to have and so long as none of the documents purported to do something different from what the parties had agreed to do.(7)

• Complexity: the fact that a transaction is complex and elaborate rather than simple and straightforward does not affect its true nature if the parties intended it to be operative according to its tenor.(8)

• Suspicion:

“mere circumstances of suspicion do not by themselves establish that a transaction is a sham: it must be shown that the outward and visible form does not coincide with the inward and substantial truth”.(9)

• Ulterior purpose:

“A transaction is no sham merely because it is carried out with a particular purpose or object. If what is done is genuinely done, it does not remain undone merely because there was an ulterior purpose in doing it.”(10)

Finally, while on the one hand it is impossible to equate legal ineffectiveness with sham – on the other hand, the circumstance that the transaction is carefully documented and recorded by instruments meticulously drafted and executed will not prevent that transaction, or the instruments, from being a sham if they are not supported by and do not reflect the true intention of the parties.

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(6)   Re Barnett; Perpetual Trustee Co Limited v Barnett [1969] 2 NSWR 721.
(7)   Inland Revenue Commissioners v Littlewoods Mail Order Stores Limited [1962] 2 All ER 279 at 285 per Lord Reid.
(8)   Coppleson v Federal Commissioner of Taxation (1981) 34 ALR 377 at 381 per Hunt J.
(9)   Miles v Bull [1969] 1 QB 258 at 264 per Megarry J.
(10) Ibid.

Proving sham

An allegation of sham is a serious allegation to make. As Lee J said in Fraunschiel v FCT:

“An allegation of a sham cannot be made out by light proof when the essential matter to be proved is the existence of a mere façade or an intent that something spurious or counterfeit be mistaken for something that it is not. The structure must be shown to be false or deceptive.”(11)

The onus of proof will be on the party who alleges a sham and a high standard of proof is required to establish that the relevant party intended a situation to exist that was different to that which the documents on the face were appropriate to bring about.(12)

Where the Commissioner of Taxation alleges sham, he must raise some basis for that allegation but then, due to the onus provisions in the Taxation Administration Act, it is up to the taxpayer to lead evidence to rebut it.(13)

Parole evidence rule

It has been said that sham is an exception to the parole evidence rule – so that oral evidence can be given to the effect that a document was never intended by the parties to be operative according to its tenor at all, but was meant to cloak another, different transaction. So … while the mere fact that a transaction is circular, artificial or complex will not mean that it is necessarily a sham, evidence of such matters can be received by a court and inferences drawn from it.

Recent developments in the law of sham

The traditional statement of what is a sham is found in Snook(14) and the reference in that case to all the parties having a common intention. Sham revolved around intention.

More recently, in Australia, in Raftland,(15) the High Court has seemed to move away from the strict requirement that it must be shown that there was a common intention that a shammer’s acts or documents did not create the rights and obligations which they gave the appearance of creating—towards a more ethereal formulation whereby it is sufficient if the “substantive effect” of documents was other than what they appeared to be, even though those documents were intended to have their apparent legal effect.

I will now hand over to Annette to see how things panned out in Millar’s case

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(11) (1989) 20 ATR 955 at 980.
(12)  Official Trustee in Bankruptcy v Baker Unrep Fed Crt Drummond J 5 August 1994, noted in (1995) 3 Insolv LJ 6n.
(13) A H Slater, “Sham and Substance” (1999) 28 AT Rev 197 at 211.
(14) [1967] 1 All ER 518 at 528.
(15) Raftland Pty Ltd as trustee of the Raftland Trust v Commissioner of Taxation [2008] HCA 21; (2008) 238 CLR 516.

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Annette Charak:

Good afternoon. I will walk you through the facts of Millar and then describe the decision of the AAT, the decision of the primary judge of this Court, Griffiths J, and the judgments of the majority of the Full Federal Court.

FACTS

Mr and Mrs Millar’s troubles in this matter began in about June 2000. They had seen an apartment on the Sunshine Coast that they wanted to buy. They made an offer, which was accepted, but they didn’t have the $1.1 million needed to buy it. They were able to borrow $600,000 from the St George Bank, but they needed a similar amount to cover the rest of the purchase price and the associated costs of buying. They did have money in their super fund but they were not permitted to access that money. So they sought help from their long-time and trusted accountant and financial advisor, Mr Vanda Gould. He had been their advisor for over 40 years.

Mr Vanda Gould, you may recall, has been connected with over 100 audits with over $300 million in tax liabilities, and about 40 court challenges. In all but one of those, the Commissioner has been successful.

Mr Gould told the Millars that they could borrow $600,000 from the Hua Wang Bank Berhad, a bank incorporated in Samoa in 1994. A curious condition of Hua Wang’s banking licences is that the licences authorised Hua Wang to deal only with clients of Mr Gould.

To get their loan with Hua Wang, the Millars had to place an equivalent amount on deposit with Hua Wang and give a personal guarantee. No other security was needed. Mr Gould told them that they could use the money in their Australian superannuation fund for the deposit with Hua Wang and that the deposit would earn 5% simple interest.

Mr Gould explained that the arrangement provided two advantages: their retirement nest egg would grow and they did not have to give security over any specific asset. The annual interest that they had to pay under the loan facility with Hua Wang could be capitalised if not paid on the due date, that is, it would be added to the principal loan amount to be repaid when the loan was due.

On 11 October 2000, the Millars transferred $600,000 from their super fund to Hua Wang. Just three days later, on 14 October 2000, Hua Wang transferred the same amount to the Millars’ solicitors. That transfer was consistent with a document purporting to be a five- year loan facility agreement between the Millars and Hua Wang, but which was expressed to be with effect from 1 July 2000, just over three months earlier.

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On 1 June 2005, one month before the repayment date of the initial advance, the existing loan was rolled over with the capitalised interest for a further five years. At the time of the trial, the amount outstanding was about $2m.

The Commissioner took the view that the whole transaction was a sham, and the documents disguised the truth of the matter: that the taxpayers had accessed their super funds to purchase the Sunshine Coast apartment. The Commissioner therefore included $600,000 in the Millars’ assessable income as a benefit they had received from their super fund—$300,000 assessed to each of them. The Millars objected, arguing that they truly borrowed the money from Hua Wang and the agreement was a simple loan agreement. They said that to the extent that they had not repaid the loan or paid any interest, the obligation to do so remained. The Commissioner disallowed their objections. And they sought review of the objection decision in the AAT.

AAT

The case was heard in April 2014.16 The Millars gave evidence, but they had not dealt directly with Hua Wang at all—only with Mr Gould—so their evidence was sketchy. Mr Gould didn’t give evidence, even though it became clear through the trial that he was best positioned to explain many details of the transactions. At the time, he was facing criminal charges of conspiracy to cause a loss, or a risk of loss, to the Commonwealth, and conspiracy to deal with property intended to become an instrument of crime. Those offences were unrelated to Hua Wang. Counsel gave those pending criminal charges as the reason for Mr Gould’s not giving evidence. But the tribunal didn’t accept this as a valid explanation.

The tribunal referred to Raftland,(17) and to the accepted formulations of sham. The tribunal relied on the formulation from Raftland that sham involves an intention to deceive third parties by creating a disparity between the apparent and the real.

The tribunal considered whether the parties ever really intended to be bound by the terms of the loan documents. The tribunal held that in that enquiry it is relevant to look at how subsequent behaviour aligns with the terms of the documents.

And that was where the tribunal found the real disparity between the parties’ ostensible and real intention: the material available viewed in its entirety was full of gaps and inconsistencies. The tribunal found that some of the attempted explanations were implausible. Sometimes the taxpayers could not provide any explanation at all. And the main reason (according to the tribunal) was that the taxpayers were more or less passive, compliant participants in an arrangement presented to them by Mr Gould.

(16) [2015] AATA 114.
(17) Raftland Pty Ltd as trustee of the Raftland Trust v Commissioner of Taxation [2008] HCA 21; (2008) 238 CLR 516.

The tribunal considered cases relied on by the Millars. They had argued that those cases suggested that all they had to do was present evidence of their subjective intention and if the tribunal was satisfied that their intention was to be bound by the documents, they would have disproved sham. The tribunal did not accept the Millars’ position. It went perhaps further than it needed to in holding that “in the circumstances, not only is the intention of the taxpayers not determinative, it is probably not even relevant. The relevant intention is that of the puppet master, not the puppets.”(19) The reference to the puppet master was to Mr Gould and the tribunal went on to say that it had no idea what Mr Gould’s intention was.

The tribunal pointed to serious discrepancies between what was said in the loan documents and what actually happened and where that left the tribunal:

• It was not persuaded that the terms of the loan documents had been substantiallycomplied with.
• Based on the available evidence, it could not accurately determine the interest rate.

The limited bank records provided were inconsistent with the apparent agreement.The tribunal concluded that in 2000, the taxpayers improperly accessed their superannuation funds to buy the apartment on the Sunshine Coast. The documents created at that time were created to provide a smokescreen to disguise the true position. The Millars did not truly place the $600,000 on deposit with Hua Wang and Hua Wang did not truly lend the $600,000 to the Millars. The money was transferred to Samoa to make it look as though it was being put on deposit, in the name of the superannuation fund, for the purpose of earning interest. The subsequent transfer of the identical amount to Australia was not an advance of a loan but a return of the money sent over three days earlier. The purported placing of funds on deposit with Hua Wang and the loan documentation were mere window dressing, a sham.(20)

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(18)  [2015] AATA 114 at [49].

(19)  Ibid at [59].

(20) Ibid at [68].

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Interestingly, the tribunal did accept that the Millers themselves were unaware, at the time, that what was being created around them was a fiction. The tribunal accepted that they believed what Mr Gould had told them, even though, had they taken a step back, they would have seen that what was being offered was too good to be true.(21) As you would expect, this finding immediately rang appeal bells for the Millars.

FEDERAL COURT: GRIFFITHS J

The appeal to the Federal Court (under s 44 of the AAT Act)(22) focused on two findings of fact:

1. that the Millars believed what Mr Gould had told them, ie, that they were putting funds on deposit with Hua Wang, and that they were borrowing money from Hua Wang and therefore their subjective intention was not one of sham; and
2. that their subjective intention was probably not relevant.

They raised three questions of law relating to sham, as well as four other questions of law. Griffiths J dismissed the appeal. On the issue of sham, he said it was open to the tribunal to find that the Millars’ intention was not determinative and was “probably not even relevant” in the circumstances of this case and having regard to the tribunals’s fndings, ie, that the Millars knew very little about many aspects of the transaction and that they were passive and compliant participants in an arrangement presented to them by Mr Gould.

His Honour said that the Millars bore the burden of showing that the loan was not a sham. In this particular case, it was not enough to persuade the tribunal—as they did—that they genuinely believed the transaction was a loan and that they genuinely intended it to be so. Their difficulty was that they had placed their total trust and faith in Mr Gould and as a result Mr Gould’s actions were “properly imputed to them”.(23)

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(21) Ibid at [69].
(22) [2015] FCA 1104.

(23) Ibid at [133].

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FULL FEDERAL COURT MAJORITY

On appeal to the Full Court,(24) the majority, Pagone and Davies JJ, in separate judgments, dismissed the appeal. Logan J dissented.

Davies J

Davies J considered Raftland.(25) She identified that case as clear authority that where sham is in issue, the Court—in determining the parties’ intentions—is not confined to the documentation. The Court can examine and draw inferences from other evidence, including the parties’ explanations as to their dealings and their subsequent conduct. Their subsequent conduct is relevant as evidence of their intentions, either because that conduct is consistent with the transactional documents or because the conduct is not consistent, as in this case.(26)

Where the transactional documents cannot be taken on face value because of “apparent discrepancies” between the legal rights created and the actual dealings or because of any other evidence, the taxpayer—in this case the Millars—has to establish that the parties did intend the documents to have the purported legal effect. Without that, the taxpayer will not have discharged the onus of proof. In this case, the Millars had the onus of proving that they intended the loan documents to have their purported legal effect, ie, they had to prove that they had a genuine loan from Hua Wang.

The tribunal had looked at the subsequent behaviour of the parties to see how it aligned with the documents and had identified several apparent discrepancies, including that the super fund had not earned any interest on the deposit with Hua Wang. The taxpayers could not themselves explain the disparities because they were “passive, compliant participants in an arrangement presented to them by their trusted advisor” and did what Mr Gould told them to do. They “did not understand the entirety of the agreement they thought they were making with [Hua Wang]”.(27) Davies J held that the tribunal could find that the Millars had a shamming intention even though they believed what Mr Gould had told them about the loan transaction. The onus was on them to prove that they intended the legal relations created by the loan arrangement with Hua Wang to take effect on their terms. In light of the evidence that showed “serious discrepancies between what [was] said in the loan documents and what actually happened”,(28) the Millars needed more than the transaction documents alone to prove that they did not have a shamming intention. Given the discrepancies between the documents and what the parties actually did, it made sense to inquire into whether the documents were a pretence. The tribunal was acting properly when it substituted Mr Gould’s intention for that of the Millars in determining that the Millars had not discharged their burden of proof.

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24 [2016] FCAFC 94.
25 (2008) 238 CLR 516.
26 [2016] FCAFC 94 at [82]. 27 Ibid at [61].
28 Ibid at [84].

Mr Gould’s intention had become relevant because he was the person who knew something about the transaction. He might have been able to explain the discrepancies. But on the evidence available, the tribunal had not been satisfied that the transaction documents taken at face value did represent the real agreement between the parties. And there was no legal error in the tribunal’s approach.

Pagone J

Pagone J agreed with Davies J’s conclusions. In his judgment, Pagone J referred to an often quoted House of Lords passage in which Lord Diplock said that if sham is to have any meaning at law, it means acts done or documents executed by which the parties intend to give the appearance of creating legal rights and obligations different from the actual legal rights and obligations (if any) which the parties intend to create.(29)

Pagone J made the interesting point that sham in law may be distinguished from other mismatches between actual intentions and legal outcomes. For example, parties may be found to have contracted on terms that they didn’t intend; parties may be found to have caused a constructive trust to come into existence without having had any such intention. But for there to be a sham, the parties must have intended to create a sham. They had to have intended to create a disguise for the true position.

At this point, you may think that Pagone J is accepting the taxpayers’ position. After all, the tribunal found that the taxpayers themselves genuinely believed that the transaction was a loan and genuinely intended it to be so.

BUT … his Honour continued by explaining that there are two linked factual inquiries:

(1) whether the parties intended a sham; and
(2) whether the parties had the necessary intention to create the legal consequences that the questionable transaction purported to have—in this case, the loan arrangement.

In each case the underlying question is: Does the document or transaction in question have its purported legal effect? In answering that question, one must consider the intention of the parties.

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(29) Snook v London and West Riding Investments Ltd [1967] 2 QB 786 at 802.

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This complexity may have been Pagone J’s way of grappling with the authority of the High Court that frames the test by reference to the parties’ subjective intention in the context of a case that, viewed objectively, appeared to be a sham.

Like Davies J, Pagone J said that the Millars’ evidence in itself fell short of disproving sham. Without further evidence, the tribunal had not been persuaded that the transactions were what they purported to be and the tribunal was entitled to so find.

While Davies J and Pagone J delivered separate judgments, largely overlapped, the decision was not unaminous. Hadi Mazloum will now speak to the minority judgment of Logan J.

Hadi Mazloum:

Introduction

Good afternoon. Today I’ll be speaking to Logan J’s minority judgment. In doing so, I will address the two issues that his Honour considered and ultimately determined in favour of the taxpayers:

First, whether the transaction entered into by the Millars was a sham—the sham issue; and

Second, whether the Millars were under an obligation to withhold tax from the payment of interest to a non-resident—the withholding tax issue.

Sham issue

Incidental to his Honour’s dissent was the finding, in respect of the sham issue, that the Millars had discharged their burden of proving that the Commissioner’s assessments were excessive by proving that the transaction they entered into was not a sham.

His Honour cites and applies the dicta in Raftland and Snook, amongst others, and determines that what is relevant is the intention of the parties that had entered into the transaction—in this case the Millars because they were the ones that signed the loan agreement.

Central to his Honour’s reasoning was a finding of fact at paragraph 69 of the tribunal’s reasons. There the tribunal said “I accept that the taxpayers themselves were unaware, at the time, that what was being created around them was a fiction. They believed what Mr Gould told them: that they were putting funds on deposit with Hua Wang, and that they were borrowing money from Hua Wang. That is despite the fact that, if they had taken a step back from what was taking place, they may well have realised that what Mr Gould was offering them was too good to be true”.

The tribunal says these words after having concluded that the taxpayers had not discharged their burden of proving that the impugned transaction was not a sham. Logan J took those words that I just quoted to be the subjective intention of Mr and Mrs Millar upon entering into the loan agreement, that is, that they were entering into a transaction that was what it purported to be.

And here we can see a tension in the reasoning of the Court – on the one hand, the majority says that it isn’t enough for the taxpayer to give uncontradicted evidence that they believed at the time of entering into the transaction that it was what it purported to be. On the other – as is evident by Logan J’s reasons – that subjective intention is enough and is all that is relevant for the purposes of discharging the burden imposed by s14ZZK of the Taxation Administration Act.

But let’s revisit this: the tribunal’s reasons make clear that the tribunal thought that the transaction was a sham while at the same time finding that the Millars believed it not to be sham. The tribunal was obviously troubled by the fact that Mr Gould, who unilaterally handled the whole transaction, did not give evidence. Or put more accurately, the Millars chose not to call Mr Gould to give evidence.

In my view, Griffiths J was right to pause at this juncture and ask – isn’t this a situation that calls into play the rule in Jones v Dunkel?(30) We know from that case that the failure of a party to call a witness does not give rise to a prima facie adverse inference being drawn. There must be other evidence to provide a basis for drawing that unfavourable inference. And here we had other evidence that suggested that the decision not to call Mr Gould was motivated by the fact that calling him would not have assisted the Millars’ case:

•   There was the evidence that Mr Gould ceased working at the accounting firm Gould Ralph in 1998 – 2 years before the letter of offer from Hua Wang to the Millars in respect of the loan in question which stated that the accountant was Gould Ralph;
•   There were also unanswered questions as to the interest rate and how that was calculated;
•   And there was a confusing profit and loss statement of Hua Wang that did not reference the loan and deposit made by the Millars’ superannuation fund.

There were other questions that remained unanswered. As to the gaps in the evidence, the tribunal said: “These are precisely the types of record-keeping shortcomings and inconsistencies that one is likely to see when people are trying to record transactions and financial outcomes that are not real”.(31)

Given this, we might ask, wasn’t it open to the tribunal to find – as it indeed did – that the transaction was a sham despite having believed the Millars when they said that when they signed the agreement, they genuinely thought it was a loan. It may not be falling into an objective analysis of the intention, as Logan J put it, but rather a tempering of the subjective intention in light of the fact that the Millars did not call Mr Gould to give evidence, did not provide an adequate reason for so doing and therefore in light of the rule in Jones v Dunkel.

Where the taxpayer bears the onus of proving that the Commissioner’s assessments were excessive, and therefore in this case of proving that the transaction entered into was not a sham, the dearth of evidence in respect of the transaction presented to the tribunal cannot be ignored. Isn’t the evidence at its highest, the Millars’ viva voce confirmation that they genuinely thought what they were entering into was a loan?

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(30) (1959) 101 CLR 298.

(31) [2015] AATA 114 at [45].

In those circumstances, perhaps it was open to the tribunal to make a finding of fact as to the Millars’ subjective intention but to then attribute less weight to that intention. If there was truth to the Millars’ subjective intention that the impugned transaction was a loan, then they would have had a lot to gain by calling Mr Gould to give evidence to that effect so as to bolster the credibility of their own. But that’s just my opinion.

The discussion of the issue of principal and agent is also interesting. Logan J says that this is not a case where Mr Gould was acting as agent for the Millars and therefore his intention cannot be relevant. This was because, as mentioned before, the Millars signed the loan agreement themselves.

But I think this raises another question: when the accountant does everything to effect the transaction and merely presents the taxpayers with a document and a pen to sign it, is that enough to ignore the principal/agent analysis and what the Courts have told us as to the intention of the parties in those circumstances? Perhaps there is room to create an exception to the general rule in a situation that mirrors that of the Millars.

Withholding tax issue

And now briefly to the withholding tax issue. As most of you would be aware, in essence, section 12-245 of the 1997 Act imposes an obligation on a taxpayer to withhold tax from the payment of interest to a non-resident. Otherwise, the taxpayer won’t be allowed to deduct that interest expense from their assessable income. Logan J interpreted section 12-245 by strictly looking at the text of the provision while expressly stating that the wording of its predecessor in the 1936 Act is not relevant in the exercise of statutory construction that his Honour was presented with. His Honour ultimately concluded that the word “paid” in section 12-245 does not catch a situation where interest is capitalised as was the case here. This was so even though the previous provision in the 1936 Act listed capitalisation as a specific example of when interest was said to be paid.

Logan J’s observation that one must begin with the wording of the current provision and not with the wording of its predecessor accords with the first principles of statutory interpretation. Those principles also tell us that the exercise requires the interpretation of that text in the context of the legislation as a whole and to achieve the purpose that was intended by Parliament in drafting it.(32)

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But here, there was unequivocal evidence that Parliament did not intend for the effect of the provision to change in the rewording. Reference was made to the explanatory memorandum in support of this. We also have to look at other provisions within the 1997 Act that may be relevant to the exercise of interpreting section 12-245. Section 11-5 is one of those provisions and specifically the words, and I’m paraphrasing “an amount is taken to have been paid to another entity if it is applied or dealt with in any way on the other’s behalf or as the other directs”. The majority relied on the wording of that provision to conclude that interest is “paid” when it is capitalised. And they relied on the loan documentation in this respect as evidence of the taxpayers’ having directed that the amount of interest be applied in that way. But we also have section 1-3 of the 1997 Act. And I am indebted to Daniel Diaz and Keith Kendall of our Bar for making this observation in their article in the Blue Journal. Section 1-3 of the 1997 Act states:

(1) This Act contains provisions of the Income Tax Assessment Act 1936 in a rewritten form.
(2) If:

(a) that Act expressed an idea in a particular form of words; and
(b) this Act appears to have expressed the same idea in a different form of

words in order to use a clearer or simpler style;
the ideas are not to be taken to be different just because different forms of words were used.

So is the omission of ‘capitalisation’ as a specific example in the 1997 rewrite to be taken as Parliament’s intention to change the effect of the provision? Section 1-3 tells us that the answer to that is probably no.

As can be seen from the case and the issues raised in today’s presentation, the pending special leave application will be watched closely by all. If special leave is granted, the High Court will have a few questions to grapple with, including:

1. Whose shamming intention is relevant and to what extent can we look at the evidence (or lack thereof) of another, in circumstances where they unilaterally orchestrated the impugned transaction?
2. How do we reconcile the tension between the relevant intention in sham cases and the burden of proving that the assessments are excessive?

3. To what extent are appellate courts hindered by the question of fact/question of law dichotomy in circumstances where the Tribunal makes a finding of fact as to the taxpayers’ intention?
4. And finally, what do the principles of statutory construction tell us about the rewriting of legislation in simpler language?