Australian Family Court orders, that were made by consent between Mr and Ms Ellison, required a corporation (“Sandini” - that was controlled by Mr Ellison) in its capacity of the Ellison family trust to forthwith transfer 2.1M shares of a public company to Ms Ellison. However, Ms Ellison instead got Sandini to transfer those shares to a company controlled by her (“Wavefront”). This precluded rollover relief to Mr Ellison (under s. 126-15 of the Income Tax Assessment Act 1997 (Australia)) unless, among other mooted requirements, it could be considered that the beneficial ownership of those shares had already been transferred to her by Sandini “because of” the consent orders.
In fact, the trustee of the Ellison family trust was another company and, conversely, Sandini held its shares of the public company in its capacity of the sole trustee of a unit trust (“KRUT”) of which that other company, in its capacity of sole trustee of the Ellison family trust, was the sole beneficiary. In finding that the “because of” requirement in s. 126-15 was not satisfied, Jagot J stated (at paras. 192, 194):
Trigger events which occur not because the orders require it, but for some other reason (and even if the reason is a shared incorrect belief that the orders are being satisfied or that the parties agree the action means that they will treat the orders as satisfied), do not occur “because of” the orders within the meaning of the section; they occur “because of” some state of mind of the parties which may or may not be influenced by the orders. …
[T]he 21 September 2010 orders are inefficacious in all relevant respects. They purport to join Sandini in a capacity which it did not have (order 1). They purport to require Sandini in that non-existent capacity to do things (order 3). … The fact that Sandini did things in another capacity (as trustee of the KRUT Sandini transferred shares to Wavefront) does not mean that the orders were efficacious. It may mean that Mr Ellison and Ms Ellison agreed that Sandini should do these things and that they would treat this as satisfaction of the orders, but that agreement does not give the orders efficacy. The relevant point for present purposes is not the existence of an agreement between Mr Ellison and Ms Ellison subsequent to the making of the orders. It is whether it can be said that anything occurred “because of” the orders within the meaning of s 126-15.