AUSTRALIAN INSTITUTE OF LAND VALUERS AND LAND ECONOMISTS INC v COMMISSIONER OF STATE TAXATION (Vic)

Members:
G Gibson M

Tribunal:
Administrative Appeals Tribunal of Victoria

Decision date: 2 October 1992

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G Gibson

The applicant (Australian Institute of Land Valuers and Land Economists Inc) is a body representing land valuers and land economists. It acquired some land and has been assessed for $39,580 stamp duty in respect of the transfer to it of the land. The details of the transaction giving rise to the assessment, and the manner by which that assessment has reached this Tribunal, are not presently material. The only question is whether the transfer should be treated as exempt under Exemption (4) of Heading VI of the Third Schedule to the Stamps Act 1958 on the ground that the transfer was a transfer of real property to a ``corporation or body of persons associated for... educational purposes...''. It was accepted, at least in the written statement of issues submitted to the Tribunal on behalf of the Institute, that the question was then whether the Institute is associated for predominantly educational purposes.

2 The Institute in its original form was established by a group of private and public valuers in South Australia in November 1926. It currently has 7,000 members in Australia, and its Victorian division has approximately 1,400 members. Formal accreditation to practise as a valuer is provided elsewhere, and it is not essential for a practising valuer to be a member of the Institute. But membership of the Institute is itself conditional upon the applicant satisfying prescribed educational standards. The Institute as presently constituted was formed after absorbing a group of land economists, people who had a substantial experience in

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relation to property, but who may not have had the formal qualifications necessary to practise as valuers.

3 The Institute maintains a library for the benefit of members in each of its offices. It is involved in continuing professional development programmes for members, and it is proposed that participation and continuing professional development become compulsory.

4 Since 1970 the Institute has liaised closely with tertiary institutions in the provision of courses for valuers and land economists. In Victoria, it is closely involved with the Royal Melbourne Institute of Technology in relation to the course which it runs for the training of valuers in Victoria. The Institute wishes to maintain this involvement in order to ensure that standards throughout Australia are both high and uniform. It is also engaged in a policy of disseminating and selling quality text books.

5 The Institute encourages discussion groups and publishes a newsletter to its members. It also is involved in the provision of grants to RMIT and students. Regular committee meetings are held to discuss educational matters. Following receipt of a grant from the New South Wales Government in 1991, the Institute arranged for the University of Western Sydney to produce fourteen modules for a programme of continuing professional development.

6 The Institute has a legislative committee which is involved in interpreting new legislative requirements for the information of members, and may sometimes, although rarely, be involved in discussing proposed legislative changes with government. The Institute has a code of ethics which at the moment can only be enforced by expulsion on a complaint from a member of the public. The Institute is in the process of changing the way in which its code of ethics may be enforced. The Institute also sets scales of fees. These have become less relevant, because of, among other things, the increasing level of competition. But the scales of fees still have importance in cases of compulsory acquisition.

7 Evidence to the above effect was provided by written statements of the Victorian President, and by his evidence to the Tribunal. In the course of that evidence, he said that about 90 per cent of the activity of the Institute related to ``education''. But he also agreed that the raison d'etre of the Institute was to maintain and improve the professional standards of its members.

8 The constitution of the Institute contains the normal provisions that are necessary for a body like this to obtain tax exemptions. The objects clause is in a familiar form in terms of ancillary objects but its primary objects are said to be as follows:

``(a) to raise the status and advance the interests of the professions of valuation and land economy;

(b) to represent generally the views and interests of the professions and to promote a high standard of integrity and efficiency in the science and art of valuation and land economy;

(c) to provide opportunities for association among the members and students and to promote and protect their mutual interests...''.

The references in the statement of objects to ``educational'' purposes are exiguous.

9 The constitution also sets out what are described as the fundamental rules laid down by the Institute. They require that a member shall at all times carry out work entrusted to him to the best of his knowledge and ability in accordance with proper professional principles, that a member shall keep any valuation confidential, and that members should avoid conflicts of interest. The rules also deal with relations of members between themselves and with the Institute, and with the way in which a member may promote his or her services.

10 On behalf of the Institute, it was submitted that education is a fluid concept that changes according to community standards. Reference was made to
Chartered Insurance Institute v Corporation of London [1957] 2 All ER 638, 643. It was said that for the purposes of determining whether or not the Institute is engaged in educational purposes, there was no requirement of public interest as there would be if a charitable exemption was sought to be made out. It was also said that the fact that the Institute has other functions was not fatal to its position in this case. It was common ground between the parties that the issue is to be determined by reference both to the constitution of the Institute, and to the activities it carries on.

11 For the respondent Commissioner, it was submitted that the constitution provides next to

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no assistance to the applicant in this context and that the Tribunal ought to exercise some considerable care in considering the extent to which oral evidence of the activities of the Institute might in fact be said to enlarge upon the true objects of the Institute. It was said that members derive their qualification to practise elsewhere, that the evidence did not show the pursuit of ``education'' in any higher sense, and that the Institute was in truth a body representing its members and was designed to preserve their professional standards and protect their interests, with the consequence that any ``educational'' activity should only be regarded as ancillary. Reference was made to
IRC v Forrest (1890) 15 App Cas 334, 356,
British Launderers' Research Association v Central Middlesex Assessment Committee [1949] 1 All ER 21, Chartered Insurance Institute v Corporation of London, above,
War Nurses Memorial Centre v Comptroller of Stamps (1985) 1 VAR 120,
IRC v Yorkshire Agricultural Society [1928] 1 KB 611,
Institution of Civil Engineers v IRC [1932] 1 KB 149 and
London Hospital Medical College v IRC [1976] 2 All ER 113.

12 In my opinion, the case of the Institute derives hardly any assistance at all from the provisions of its constitution. It is only I think necessary to refer to those parts of it that I have set out above. They are the kind of provisions you would expect to find in the constitution of any professional representative body. They do not come close to suggesting that it would be appropriate to characterise the Institute as a body formed for educational purposes.

13 Having considered the evidence, I do not think that it warrants a finding contrary to that suggested by the constitution of the Institute. In truth it seems to me that this body carries on the sort of functions you would expect to be carried on by a professional body. Its primary task is to protect and preserve professional standards. It is also engaged in protecting the interests of its members. I do not think that the regulatory functions of the Institute could properly be regarded as insubstantial or ancillary, and I do not think that the ``educational'' functions of the Institute could properly be regarded as predominant in the work of the Institute.

14 The law relating to professional negligence nowadays has the effect that members of an institution like this have an economic interest, as well as a professional interest, in seeking to maintain proper standards. To that end, the Institute provides continuing professional development programmes. In some circles, these programmes might be described as continuing ``education''. In substance, the position is I think that the members have achieved their education, and that by participating in these programmes they are simply seeking to maintain proper professional standards. If you were to suggest to a member that unless he or she attended a sufficient number of these programmes, he or she would not be ``educated'' in the manner required for a valuer, you would I think be likely to get a sharp response.

15 The nature of the activities undertaken by the Institute as a whole, and the nature of the continuing professional development programmes, suggest to my mind that you would have to apply a most attenuated meaning of the word ``educational'' in order to be able to say that the Institute exists for ``educational'' purposes. I see no warrant for such a departure from the ordinary meaning of the language that is used in the relevant part of the statute. Indeed, in my view, to characterise the Institute as an educational body would be to demean it. It is in my view clear that the Institute discharges more substantial functions.

16 Accordingly, on considering both the constitution of the Institute, and the way in which it in fact carries on its affairs, I am satisfied that it would not be correct to describe the Institute as a corporation or body of persons associated for educational purposes, it follows in my view that the assessment was correctly raised, and should be affirmed.

17 Having considered the matter, I do not think it would be appropriate to make an order for costs against the Institute. Its position was plainly not untenable. In my view this is the sort of case where a taxpayer should be able to have a legal issue like this determined on review by this Tribunal without being penalised in costs if the review goes against the taxpayer. I have referred to what I think are the relevant considerations in this context in other cases before this Tribunal (for example,
Damon v Commissioner of Land Tax (Vic) 86 ATC 2001; (1985) 1 VAR 130).

18 For the reasons given above the decision of the Tribunal is that the assessment under reference be confirmed and that there be no order as to costs.