``The Waratahs'' Rugby Union Football Club v. Federal Commissioner of Taxation.

Judges:
Waddell J

Court:
Supreme Court of New South Wales

Judgment date: Judgment handed down 13 July 1979.

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Waddell J.: The appellant, ``The Waratahs'' Rugby Union Football Club Ltd., was incorporated under the Companies Act 1961 (N.S.W.) on 26 June 1963 as a company limited by guarantee. At all material times the principal activities of the appellant had been twofold. Firstly, it has fielded a number of Rugby Union football teams and in various other ways has taken an active part in the organisation and promotion of Rugby Union football and has organised and promoted other sporting activities. Secondly, it has provided for its members and their visitors a social club with all the usual amenities: a dining room, bar and lounge, poker machines, films, and Saturday night entertainments. By its income tax returns for the years 1969-74 the appellant claimed that its income was exempt from income tax under sec. 23(g)(iii) of the Income Tax Assessment Act 1936 which reads:

``The following income shall be exempt from income tax: -

• (g) subject to Division 9A, the income of a society, association or club which is not carried on for the purposes of profit or gain to its individual members and is -
• ...
  • (iii) a society, association or club established for the encouragement or promotion of an athletic game or athletic sport in which human beings are the sole participants;''

This claim was rejected by the respondent Commissioner. The decision of the Commissioner was upheld by majority on an objection heard by Taxation Board of Review No. 1. The appellant appeals from the decision of the Board pursuant to sec. 196(1) of the Act which provides that:

``The Commissioner or the taxpayer may appeal to a Supreme Court from any decision of the Board that involves a question of law.''

The respondent accepts that the appellant is a ``club which is not carried on for the purposes of profit or gain to its individual members''.

It is submitted for the respondent that the decision of the Board did not involve a question of law and that hence the appeal is incompetent. This submission is put on two bases. First, it is said that the question whether the appellant satisfied the statutory description in the years in question is purely a question of fact. Secondly, it is said that in the conduct of the hearing before the Board of Review it was common ground between the parties that the principles upon which the provision in question was to be interpreted were those set out in the decision of the Full High Court in
Royal Australasian College of Surgeons v. F.C. of T. (1943) 68 C.L.R. 436. There is no contest that this was so.

In that case the Court had to determine, upon a case stated, whether the income of the College was exempt under sec. 23(e) of the Act, that is, whether it was a ``scientific institution''. Starke J. expressed the view that this question was one of fact but went on to say that it might ``perhaps be regarded as raising a mixed question of law and fact proper to be stated for the opinion of this Court pursuant to sec. 198 of the Act'' which permitted the Court to state a case upon ``any question of law arising on the appeal''.

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In
I.R. Commrs. v. Yorkshire Agricultural College Society (1928) 1 K.B. 611 the Court of Appeal was concerned with the question whether the Society was a body of persons established for charitable purposes only within the meaning of sec. 37(1)(b) of the Income Tax Act 1918. Lord Hanworth M.R. said:

``It is obvious that the facts in each case must be the basis on which one finds whether or not there is a body of persons established, and whether or not they are established for a charitable purpose; and that if it be a question of degree, then it is a question of fact, and if it is a question of fact, it is a matter within the sphere of the Commissioner.''

The appellant relies upon both these references. However, it is clear from the whole of Lord Hanworth's judgment that there was a preliminary question upon which he and the other members of the Court of Appeal expressed a view as to the true construction of the statutory provision. Neither of the passages relied upon establishes that the question of whether the appellant in this case comes within the statutory description is not a question of mixed law and fact. Decisions on sec. 26(a) of the Act, upon which the respondent relies, show that it does:
Buckland v. F.C. of T. (1960) 34 A.L.J.R. 60;
Krew v. F.C. of T. 71 ATC 4213 at p. 4215;
XCO Pty. Ltd. v. F.C. of T. 71 ATC 4152 at p. 4154. In my opinion the decision of the Board in the present case did involve a question of law, namely what is the true interpretation of sec. 23(g)(iii).

Turning to the second point, while the parties may not have been in dispute as to the true meaning of the provision in question, the reasons of each member of the Board make it clear that he considered for himself what was the true construction of the provision and that that question was involved in his decision. Indeed, Mr. O'Neill, who dissented, formulated a different construction from that accepted by the majority. The Chairman, Mr. H.P. Stephens, was of the view that the appellant failed because the evidence did not establish that the club's primary or dominant objective was the promotion of sport: para. 42 and 43 of his reasons. He did not find it necessary to refer to the authorities other than to Case Nos. T52, T53 and T55 in
(1968) 18 T.B.R.D 52. Each of these cases was concerned with a claim for exemption under sec. 23(g)(iii). It is clear from the unanimous reasons from the Board in Case No. T55, that Royal Australasian College of Surgeons was regarded as indicating that the test was whether the objects and activities of the taxpayer club ``were principally and predominantly but not necessarily exclusively directed towards'' the promotion or encouragement of an athletic game or athletic sport (18 T.B.R.D. at p. 295).

Mr. Fairleigh Q.C. referred to a number of the authorities at para. 24-28 of his reasons and concluded:

``Upon the application of the Yorkshire Agricultural Society case I am in agreement with... the Chairman's reasons that promotion of sport (particularly Rugby) was to be merely one of the purposes for the Club's existence and it has not been the Club's predominant objective; so also would the conclusion... that the Club has failed to show that, during the years under review, it was a body established for a purpose within the meaning of sec. 23(g)(iii).''

Mr. R.E. O'Neill, after drawing a distinction between the decision of the Court of Appeal in
I.R. Commrs. v. Forrest (1890) 15 App. Cas. 334 and in
R. v. Institution of Civil Engineers (1879) 5 Q.B.D. 48, concluded:

``In light of the distinction emphasised in Forrest it seems to me that a club may still be `established for the encouragement or promotion' of an athletic game if that is in fact its main, or primary, or chief object even if the club has a collateral object, provided that the pursuit of such collateral object is subsidiary to or no more than jointly with and as an aid to the pursuit of its main and prevailing object. In other words it is not necessary that any such additional activity should be merely concomitant and incidental to the pursuit of a sole object.''

(para. 66)

This is, I think a different interpretation of sec. 23(g)(iii) to that adopted by the majority and one upon which the conclusion of Mr. O'Neill, as the dissenting member, depends.

The respondent relies upon some remarks of Rich J. in
F.C. of T. v. Miller (1946) 73 C.L.R. 93 at p. 100. His Honour there

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expressed the view that it would be desirable that a practice should be adopted in appeals under sec. 196 ``to insist that the question of law suggested to be involved should be distinctly taken before the Board and the ruling of the Board obtained upon it''. However, such a practice has not been adopted and, in any event, it is doubtful that a court to which an appeal lies under sec. 196 could validly adopt a practice which in any way restricted the right of appeal given by that section.

For the foregoing reasons it is my opinion that the appeal is competent. The consequence is ``that the whole decision of the Board, and not merely the question of law, is open to review''. Krew at p. 4215;
Ruhamah Property Co. Ltd. v. F.C. of T. (1928) 41 C.L.R. 148 at p. 151. I turn first to what is the true construction of sec. 23(g)(iii) and then to the question whether the evidence establishes that the appellant comes within this statutory description.

It is, of course, clear that the income of the appellant was not exempt from income tax unless it came within the statutory description contained in the section. It is established by authority, and it is not in question in the appeal, that in determining whether the Club was established for the purposes mentioned regard should be had to the objects for which it was incorporated and the activities in which it has engaged, particularly in the years of income in question. The question of law which arises is whether, on the true interpretation of the provision, the activities of the taxpayer relating to the conduct of its social club should be regarded as making the statutory description inappropriate. In this Court it seems to me that this question is to be answered in accordance with what was said by the Full High Court in Royal Australasian College of Surgeons. The question there was whether such of the College's objects and activities as were concerned with the promotion of the professional interests of its members prevented it coming within the statutory description of a ``scientific institution''. After an examination of the authorities each of the members of the Court expressed his conclusions in slightly different terms. Latham C.J. said:

``Unless the promotion of surgical science is the main substantial or primary object of the College, it cannot be described as a scientific institution.''

(68 C.L.R. at p. 444).

Rich J. said:

``... as I understand the cases, the test is whether it can be predicated that the College is in the main scientific. The inclusion of an institution in the exemption clause depends upon the intrinsic character of the object which it promotes and not upon the scope of the benefits which may result from its transactions. After considering all the relevant matter in the case stated (including the annexures) I have come to the conclusion that the main or real object of the College is the promotion and advancement of surgery. By this I mean that its essential purpose is to enlarge and extend the boundaries or area of the science of surgery. Its other objects are not collateral or independent but merely concomitant and incidental to the main object. And the fact that some of these subsidiary or ancillary functions and purposes may indirectly and incidentally be of benefit to the members of the profession does not destroy the exemption claimed.''

(at p. 447)

Starke J. said:

``The substantial question is whether the College is a body for the advancement of professional objects and interests or for `something higher and larger', namely, the promotion of science in the advancement of surgical knowledge and practice... (at p. 447)

...

It is actively engaged in the promotion and advancement of science in the advancement of surgical knowledge and practice. And that, I think, is the main and prevailing and the characteristic nature of the activities of the College.''

(at p. 449)

McTiernan J. said:

``It is not necessary, to satisfy the section, that the object of the association should be exclusively scientific. But it is necessary that the promotion of the science of

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surgery should be its main object.''

(at p. 450)

Williams J. said:

``This depends upon whether the main and dominant object for which the College was incorporated is to promote the science of surgery.''

(at p. 451)

The facts in the Royal Australasian College of Surgeons were, of course, quite different to those in the present case. There the activities which were said to be outside those of a scientific institution were such matters as the admission to fellowship of the College with its resulting professional advantages and activities of an educational character designed to improve the professional qualifications of its members. But different though the facts were from those in the present case it seems to me that in point of principle the questions which arose were of the same kind as those which arise here. No case, except the Board of Review decisions, has been cited in which the facts were comparable to those in the present case.

The conclusion which I draw from the Royal Australasian College of Surgeons that, in order for the appellant to come within the statutory description in question in this case it must appear from the evidence that the main or real purpose for which it was established during the tax years in question was for the encouragement or promotion of an athletic game or athletic sport of the kind mentioned and that the purpose of a social club was not collateral to or independent of this purpose but merely concomitant and incidental to it. I turn now to the facts.

The principal objects of the appellant as set out in its Memorandum of Association are as follows:

``(a) To acquire and take over all of the assets and liabilities of the present unincorporated body known as `The Waratahs Rugby Union Football Club' and to carry on the objects of the said body.

(b) To encourage, foster and promote Rugby Union Football in the Waratah and surrounding districts.

(c) To promote social intercourse and good fellowship amongst players of and persons interested in Rugby Union Football.

(d) To provide for members and members' guests a social and sporting club with all the usual facilities of a club including residential and other accommodation liquid and other refreshment libraries and provision for sporting musical and educational activities and other social amenities.

(e) To assist generally in the promotion conduct and propagation of Rugby Union Football by any means whatsoever for the purpose of the Club in Waratah and surrounding district or elsewhere and to provide or assist in the provision of training and conditioning and teaching facilities for football played in accordance with the rules of the New South Wales Rugby Union.

(f) To promote by any means whatsoever for the purpose of the Club all or any of the games of Rugby Union Football, Bowls, Tennis, Squash, Golf, Billiards and other amateur athletic sports recreations and pastimes and to acquire prepare and maintain football grounds tennis and squash courts bowling greens and any other grounds necessary or desirable for any amateur athletic sports or pastimes.''

The remaining objects may be described as incidental. These include:

``(1) In furtherance of the objects of the club to apply for and obtain and hold a Club license or any other license or licenses or certificate of registration under the Liquor Act or Laws or any other Act or Laws for the time being operative and for such purpose or purposes to appoint if necessary or desirable a manager or managers or secretary or other officer or officers to act as Licensees on behalf of the Club.

(m) In furtherance of the objects of the Club to obtain and hold any license or permission necessary for and to carry on the business of restaurant keepers sellers of tobacco, cigars, cigarettes and of all kinds of goods provision wares and merchandise.''

The Memorandum provides no indication that any of the principal objects mentioned is to be the main or dominant object of the appellant. The order in which the objects are stated reflects the historical circumstance

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that the activities of the appellant have grown out of those of the previous football club. In the 1940's this was a very loosely-knit organisation with no formal membership requirements. Before the incorporation of the appellant very little was provided for members by way of social amenities. Indeed, up to and including the end of the appellant's financial year on 30 November 1968 the respondent accepted that its income was exempt from income tax under sec. 23(g)(iii).

In order to determine the purposes for which the club was established during the years of income in question it is necessary to have regard, among other considerations, to the nature of its membership and to its activities during those years. The Articles of Association provide for several classes of members of which only ordinary and associate members need be mentioned. Eligibility for ordinary membership is confined to those who were subscribers to the Memorandum of Association or at the date of their nomination have been players in or officials for teams fielded by or on behalf of or under the sponsorship of either the unincorporated club or the appellant and who have not offended against the rules as to professionalism for the time being.

It is provided that associate members ``shall be such persons either male or female who are considered from time to time by the committee to be desirable persons to be elected as associate members of the Club and who are so elected as associate members''. Associate members are not entitled to vote at any meeting but are otherwise entitled to all privileges of the Club. The control of the Club is in the hands of the ordinary members and thus of persons who have had a close personal association with the sport of Rugby Union football.

During the years in question the number of members of the Club increased from 248 in 1969 to 861 in 1975. The proportion of associate members has ranged between 46% and 50% of total membership, except in 1969 when it was 31%. According to the affidavit of Mr. Quirk who has been secretary of the appellant since March 1967, he has been responsible for considering applications for membership and for recommending to the general committee those applicants he considered suitable for membership. His instructions have been only to recommend applicants who evinced a genuine interest in Rugby Union and he has followed out those instructions. By way of illustration he says that he rejected approximately 170 applications during the years 1969 to 1971. His evidence indicates that to his personal knowledge a substantial proportion of associate members are closely connected with Rugby Union football in some way or another. Some reliance is placed by the appellant upon the circumstance that no females have ever been admitted as members.

The appellant's case in relation to its activities during the relevant period is that if these are looked at globally it will be seen that the appellant answers the statutory description; that in fact a great deal of time and energy is devoted to sporting matters by its office-bearers, members and employees, the significance of which is not to be assessed solely in monetary terms; that the sporting activities provide the real reason for its establishment and existence; that its social activities and the amenities which it provides for its members should be seen as part and parcel of the conduct of a strong and active sporting club; and that the provision of social amenities for its members, including poker machines, should be seen as a means of earning income for immediate or ultimate application for the promotion or encouragement of sporting activities. The respondent's case is that, having regard to the nature and extent of the social amenities provided and to the amount of the appellant's income and other funds which have been applied for these purposes, it cannot be said that the provision of the amenities and facilities of a social club has been ancillary to the appellant's sporting objectives but rather that such provision has served an important, independent and collateral purpose.

I turn first to the activities of the appellant directed to the promotion and encouragement of Rugby Union football and other sports. At the time of the appellant's incorporation in 1963 there were 76 senior football players registered with it and it was fielding three teams in the junior competitions of the Newcastle district. In addition there were members actively associated with these teams as officials in

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various capacities. By the season of 1975 the appellant was fielding five teams in five grades in the senior competitions and eight teams in eight grades in the junior competitions. This was a total of 121 senior and 160 junior players who were registered. Again there were members engaged as officials. The increase in players is one of the matters relied upon as indicating the real purpose of the Club and as an instance of the application of its income for the promotion and encouragement of Rugby football. Quite apart from the increase in its own players the Club has for many years past strenuously encouraged the development of Rugby Union football among schoolchildren. In 1975 Rugby Union was not played as a sport in schools in the Newcastle and Hunter Valley district but, largely as a result of the activities of officials and members of the Club, by 1975 a significant number of schools were engaged in state-wide competitions and district competitions. The appellant has supported financially the interests of Rugby Union football in various ways such as contributing to the expense of international tours or visits and of interstate visits. Members of the Club have held a substantial number of official positions with the Newcastle Rugby Union as office-bearers and officials of the various associations and as referees, coaches, selectors and managers.

The premises of the appellant included a squash court and a gymnasium and these facilities were used by its members for keeping fit. It had a squash club which had nine teams engaged in a local competition. It also had two cricket teams.

The appellant's home ground is at Waratah Park, a short distance away from its clubhouse. It had been for some time anxious to develop an area of the park for playing fields at its own expense. It made an application to the City Council in this respect in October 1971 in which it presented a comprehensive proposal for the development of the eastern end of the park for sporting purposes seeking a lease of the area. It undertook to spend some $70,000 over a five year period for this purpose, stating that the basis upon which this offer was made was the net profit of $48,000 shown in its report and balance sheet for the year 1970. The offer was not, however, accepted and by letter of 20 November 1972 the Minister for Lands stated that any lease would be objectionable upon grounds, in effect, of public interest. This matter is put forward as an instance of the Club's dedication to the promotion of sporting activities and of its readiness to apply its available funds for such purposes and as indicating that it may confidently be anticipated that the Club will in the future apply its funds to a similar project because it does not as yet have its own ground either as owner or lessee.

There are other ways in which the Club promotes and encourages sporting activity, mainly Rugby Union football, which need not be mentioned in detail. The extent of the financial assistance provided to sport is shown by the figures which will be mentioned below.

When the appellant was incorporated its only asset was a squash court built by its members upon land which had been acquired. Meetings of players or of the Club had to be held in private homes or at the squash court. Since then from time to time the appellant has been successful in buying adjoining land. Its first club house was completed and opened in October 1969. A provisional certificate of registration under the Liquor Act had previously been granted. The premises comprised a kitchen, storerooms, a dining room and a bar which would accommodate between 35 and 40 people. In July/August 1971 extensions were completed. These provided additional toilets, a food servery, a lounge bar and an auditorium with a sliding partition between the two. The auditorium had a seating capacity of 150 persons and also served the purpose, when required, of a lounge and cabaret area. Some of the land acquired over the years has been used for parking purposes and was acquired in order to conform with the requirements of the licensing authorities. Poker machines were installed in the first club-house. In 1969 there were twelve and by 1975 there were twenty-four or twenty-five. In his report for 1970 Mr. Chambers, as president, was able to say that the extensions when completed would make the Club equal to any in Newcastle, by which he meant equally desirable in terms of social amenities for members.

The club-house facilities have uses which are directly connected with sporting

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activities. The lounge and cabaret area is used for various meetings including monthly footballers' meetings and fortnightly sub-committee meetings. It is also used by selectors and officials. On Saturday evenings after the main football match it is thrown open to the players in both sides until about 7.45 p.m. and a certain amount of free beer is provided. The offices in the club-house are used for administrative purposes in respect of sporting activities. The lounge-cabaret area is also used for general meetings of the Club. Sporting films are shown there on Wednesday nights.

The usual kinds of social uses are made of the Club premises. Meals are provided in the dining room and liquor and poker machines are available. There is a social evening every Saturday night with entertainment provided by a musical group. This occasion is advertised every week in the Newcastle Rugby News, a publication for which the appellant takes responsibility and which is mainly financed by advertisements. The advertisement for the appellant also publicises its dining room as providing lunch on week days and dinner Fridays to Sundays. A phone number is given for enquiries. Visitors are permitted. There is no evidence before the Court as to what proportion of attendance should be attributed to visitors but there was some evidence before the Board. It is apparent from the assessments, which are based on the non-mutual income of the appellant, that their attendance is of some substance.

According to Mr. Quirk, the secretary, the aim of the dances is not to make money but to interest the younger footballers and give them somewhere to go and give them somewhere to do and encourage them to stay with the Club. In general it is said that the provision of the Club facilities attracts members and encourages them to stay together and thus promotes or encourages sporting activities.

I turn now to the financial statements which are in evidence. These include the annual accounts for the appellants, copies of which were sent in with its income tax returns and an analysis of these by a member of the appellant's firm of accountants. This analysis concludes with a statement of the percentage in each year of net funds available after repayments of loans incurred for the acquisition of land and the construction and equipment of the club-house and other purposes applied to sporting activities. It is submitted for the respondent that to obtain a correct perspective of the percentage of funds of the appellant applied for sporting purposes the calculation should be made before loan repayments and an analysis which reflects this has been tendered in evidence.

As might be expected the trading results for the appellant and the way in which its funds have been applied, has varied over the years in question not only in absolute amounts but in the relationship between the amounts of various items. However, neither party seeks to make any distinction between any of the years in question. It is not suggested that the income of the appellant might be exempt in one or more of the years and not in others.

The statement of profit and loss for the years in question shows that income increased from $24,445 in 1969 to $208,710 in 1975. In each of the years the most important item of income was net revenue from poker machines which increased from $17,748 in 1969 to $153,959 in 1975. Other items of income were relatively insignificant. These included donations, game fees, members' subscriptions and joining fees ($3,318 in 1975) and squash receipts ($3,527 in 1975). The first charge shown against income is that of operating expenses. These are shown as including all the general expenses of operating the Club's premises and the social club activities. The total of these shown for 1969 is $9,235, increasing to $128,198 in 1975. The second charge against income is that of sporting activities and facilities. These expenses are shown as including among others, accommodation, entertainment and promotional expenses, equipment for football and other sports, hire of training facilities, salaries, superannuation, travelling expenses (promotion), travelling expenses (tours), and trophies and photographs. The items relating to salaries were obtained by apportioning the salaries of the secretary and other Club employees between sporting activities and activities relating to the conduct of the social club and other general matters. Thus in respect of 1970 two-fifths of the salary of Mr. Quirk, the secretary, was attributed to

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sporting activities and in the other year one-fifth of his salary. The total expenses for sporting activities and facilities shown in 1969 is $2,484 rising to $32,797 in 1974 and $27,352 in 1975.

The analysis shows that the appellant had other sources of funds apart from income. In each of the years it borrowed moneys from its bank, the amounts being: 1969, $29,000; 1970, $8,000; 1971, $59,000; 1972, $19,000; 1973, $12,704; 1974, $18,143; and 1975, $18,000. The principal and interest due on these advances was repayable by monthly instalments in 1969 and 1970 of $650, in 1971 of $2,250 and in the remaining years of $2,700. Some equipment, including the poker machines, was purchased by instalments secured by promissory notes. The funds provided in this way are shown as being in 1969, $32,475; in 1970, $2,878; 1971, $810; 1972, $1,935; and in 1974, $12,850. Funds obtained on debentures issued to members and by loans from members are shown as totalling $25,600 in 1969; $700 in 1970; and $4,000 in 1975. The total of funds derived from non-income sources may be calculated as being $100,962 in 1969; $21,637 in 1970; $66,360 in 1971; $30,625 in 1972; $12,704 in 1973; $31,608 in 1974; and $23,250 in 1975.

The funds available to the appellant for application comprised the funds just mentioned and its net profit for each year after charging against income the trading and sporting expenses already mentioned. For completeness there should also be added in items deducted to ascertain net profit which did not involve any outlay of funds, for example, provision for depreciation. The total of the funds available to the appellant for application over the years in question was $667,351. Over this period $412,941 was applied in the purchase of land, including an old building converted to a gymnasium, and in the construction, extension, furnishing and equipping of the club premises. $95,082 was applied in the repayment of the principal of bank loans and $47,974 in meeting promissory notes mainly in respect of the purchase of poker machines. The other items of application are relatively minor and need not be mentioned.

I turn now to the proportion of revenue applied to expenditure on sporting activities and facilities. The view put forward for the respondent is that the net income of each year should be regarded as applied to three purposes: sporting purposes, income tax paid, and accumulations. The third purpose includes expenditure on capital items and repayments of loans. Measured in this way the percentage of net income of the appellant applied for sporting purposes during the years in question commencing with 1969 was 11.3, 10.3, 17.6, 42.6, 25.8, 46.6 and 34.4. The percentage accumulated was 88.7, 89.7, 82.4, 38.8, 62.6, 51.8 and 54.5. If, however, as the appellant submits it is correct to do so, expenditure on sporting activities is expressed as a percentage of net revenue funds after loan repayments, the figures obtained will be substantially higher.

The two analyses mentioned are each designed to support different views of the relative significance of the two principal objects for which the appellant was established during the years in question, the promotion and encouragement of sporting activities and the provision of social club amenities for its members. If, as the appellant submits, the social club is an activity which is subsidiary to the appellant's sporting objects, then no doubt it is appropriate to regard moneys applied to sporting activities and facilities as a percentage of the net funds generated principally by the social club, that is, after loan repayments. But this analysis assumes the correctness of the appellant's contention rather than establishes it. The analysis put forward for the respondent is, I think, more helpful but cannot, however, be regarded as decisive.

The relevance of the information contained in the financial statements is, in my opinion, that it provides a measure of the extent of the two principal activities of the appellant. But no conclusion can be based on this information alone. It is also necessary to take into account the other evidence dealing with the nature and extent of the sporting activities and the social club activities. Having regard to the whole of the evidence it is my view that it does not justify a conclusion that the promotion and encouragement of the requisite sporting activities was the main or real object of the appellant during the years in question. There can be little doubt that in a practical sense the provision of social club amenities and the

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activities conducted there were of importance in achieving the appellant's sporting objectives in that the Club was virtually the sole source of income for the sporting activities and was an important factor in promoting the comradeship and loyalty necessary for successful sporting activities. However, it would be unreal to regard the provision of the social club and its activities as having been undertaken purely for these purposes. Rather, they should be regarded as having been pursued for a second and independent purpose of importance, namely the provision for members of a social and sporting club with all the usual facilities pursuant to the objects set out in para. 3(d) of the appellant's Memorandum of Association. In my view the activities of the appellant in the years in question relating to its social club facilities cannot be regarded as merely concomitant and incidental to its sporting activities but were in pursuit of a collateral or independent purpose. Accordingly it cannot be said that the evidence establishes that the appellant comes within the statutory description.

For the foregoing reasons the appellant's claim to come within the provisions of sec. 23(g)(iii) fails and the appeal should be dismissed with costs.