Australian Council of Social Service Inc. & Anor v. Commissioner of Pay-roll Tax (N.S.W.)

Judges: Street CJ
Mahoney JA

Priestley JA

Court:
New South Wales Court of Appeal

Judgment date: Judgment handed down 10 May 1985.

Priestley J.A.

Section 10(1)(b) of the Pay-roll Tax Act, 1971 exempts public benevolent institutions from pay-roll tax. The Commissioner of Pay-roll Tax in correspondence with the Australian Council of Social Service (``the association'') asserted that the association, in respect of a number of tax years, was not a public benevolent institution within the meaning of the sec. 10(1)(b) exemption.

Until June 1978 the association was unincorporated. On 8 June 1978, the Australian Council of Social Service Incorporated (``the incorporated council'') was incorporated in the Australian Capital Territory under the Association Incorporation Ordinance 1953. The incorporated council carried on all the activities previously carried on by the association. It also carried on the correspondence with the Commissioner, continuing to assert that the association had not been liable for pay-roll tax. In 1980 the incorporated council commenced proceedings intended to resolve the question of the association's liability. However the declaration claimed in the summons was that the council was a public benevolent institution within the meaning of sec. 10(1)(b) of the Pay-roll Tax Act. The tax years in question in the litigation were eventually confined to the six years (ending 30 June) from 1972 to 1977.

When it became apparent that there was a difficulty in the incorporated council claiming the declaration, an order was made that the Victorian Council of Social Service, which had been a member of the association, be added as a plaintiff to represent all members of the association. Thereafter the question of the association's status was litigated. Rath J. found that the association was not a public benevolent institution in the relevant sense and dismissed the summons. The incorporated council and the Victorian Council of Social Service (``the appellants'') appealed against the decision. In this Court no question was raised about the locus standi of the incorporated council. The Commissioner took the view that the addition of the Victorian Council of Social Service as a representative party made any questions which may have existed concerning the appropriateness of the incorporated council as a plaintiff not worth pursuing.

The association had a constitution in which its objects were stated as being:

``A. Carrying out programmes designed to contribute to the elimination of poverty and the promotion of the wellbeing of disadvantaged and vulnerable individuals and groups.

B. Promoting consultation and co-operation amongst non-government organisations and government authorities involved in social welfare activities.

C. Stimulating interest in, and providing information on, social welfare activities in Australia and other countries.

D. Providing a forum to discuss common problems in a spirit of mutual understanding.

E. Encouraging education and training for social welfare personnel.

F. Providing advice on social welfare matters, either on request or its own initiative.

G. Improving the organisation of social welfare services, both between and within services.

H. Carrying out services to develop social welfare organisations.

I. Promoting citizen participation in social welfare.

J. Promoting and undertaking research into social welfare problems and services, either at the request of non-government or government authorities, or on its own initiative.

K. Encouraging the development of national social policies in major social welfare areas - paying due regard to the claims and responsibilities of local, city,

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regional, state, national and international authorities, and to the changing nature of the national society.

L. Undertaking at national level or at other levels action which appears to be in the best interests of social welfare in Australia.

M. Participating in the development of social welfare in Australia's Trust Territories by co-operation with appropriate organisations within those Territories.

N. Participating in the development of international social welfare particularly through membership of the International Council on Social Welfare.

O. Doing all such other acts or things as may be conducive to the attainment of the objects set out above or any of them.''

Evidence describing the activities of the association was given by the person who had been its secretary in the years in question. Rath J. summarised the evidence in a way not now challenged by the appellants. His findings include the following. The association did not give direct relief to poverty, destitution, sickness, helplessness or distress. The association's activities were directed towards providing indirect aid for the relief of poverty or distress by performing advisory, informative, research and advocacy functions. Its activities were directed at changing the circumstances which either create or aggravate poverty or distress. The association did this by providing to its member organisations information and advice on social matters and by providing research assistance in regard to ascertaining factual material relevant to a variety of matters concerned with social welfare work. The association also conducted its own research into similar matters. Some of these were aspects of poverty, income security, unemployment, welfare provisions, and child welfare. The association also conducted policy studies and had an advocacy function aimed at improving or altering the circumstances which result in poverty and distress. In the course of its work the association produced many publications. A list was tendered in evidence. Reading the full list gives a clear impression of the scope of the association's activities which is difficult to convey by abstracting parts of it or by summarising it. Mindful of the dangers of distortion involved in such an attempt, I think it is nevertheless fair to say that the titles of the publications can be roughly divided into three categories: publications dealing exclusively with matters concerning poverty, destitution, sickness, helplessness or distress: publications dealing with one or more of those matters and more general issues and publications dealing with issues of general community concern which may or may not touch on any of the foregoing topics. As examples of the third category I list below some of the titles in Exhibit C.

The foregoing examples form only a small part of the entire list of publications and are also only a sample of the headings in the third category I described. They serve however to demonstrate the accuracy of one of Rath J.'s principal findings (not contested by the appellants) namely:

``The relief of poverty is of paramount concern in all the activities [of the association] but this relief is sought to be achieved in the promotion of social welfare in the community generally. Thus the promotion that is the essential activity of [the association] is seeking wellbeing not only for the poor but also for others...''

The words ``public benevolent institution'' in sec. 10(1)(b) of the Pay-roll Tax Act are not defined. Rath J. found assistance in approaching their meaning in a decision of the High Court concerning the same words, also undefined, in the Estate Duty Assessment Act 1914-1928. The case was Perpetual Trustee Co. Ltd. v. F.C. of T. (1931) 45 C.L.R. 224 in which the Royal Navy House in Sydney was held not to be a public benevolent institution.

Starke J. said:

``In the context... and in ordinary English usage, a `public benevolent institution' means, in my opinion, an institution organized for the relief of poverty, sickness, destitution, or helplessness.''

(at p. 232)

Dixon J. said:

``I am unable to place upon the expression `public benevolent institution' in the exemption a meaning wide enough to include organizations which do not promote the relief of poverty, suffering, distress or misfortune''

(at pp. 233-234)

Evatt J. said:

``Such bodies vary greatly in scope and character. But they have one thing in common: they give relief freely to those who are in need of it and who are unable to care for themselves.

Those who receive aid or comfort in this way are the poor, the sick, the aged, and the young. Their disability or distress arouses pity, and the institutions are designed to give them protection.''

(at pp. 235-236)

McTiernan J., who was of the view that the Royal Navy House did fall within the exemption did not think that any one element provided an irrefutable test by which an institution could be seen to be a public benevolent institution (at p. 237). He based his conclusion on what he saw as an element of relief of distress being involved in the maintenance of Royal Navy House. He said, in regard to the method of characterising an institution as being within or not within the exemption:

``While I do not think that the Legislature intended strictly to confine the exemption to gifts to an institution of a strictly eleemosynary character, yet it may be difficult to bring within the scope of the exemption which has been granted in aid of a public benevolent institution, a gift to an institution which is of a public character, but does not exist for the relief of distress or misfortune occasioned by poverty. But, I am of opinion, that the present case is one in which such a difficulty is disposed of by the facts and circumstances stated in the special case.''

(at p. 241)

Rath J. thought that the High Court's conclusion in the Perpetual Trustee Co. Ltd. case was based on the proposition that an

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institution claiming the character of a public benevolent institution must itself dispense relief to the needy. He then said, assuming in the association's favour without deciding, that it had been organised to promote the relief of the relevant misfortunes, it nevertheless did not itself directly provide such relief but rather sought to promote the provision of such relief by its activities in the community generally which included a seeking of well-being not only for the poor but also for others that would not be objects of the bounty of a public benevolent institution.

When the appeal came to be argued before us, counsel for the appellants recognised as a difficulty in their way that the association had not administered aid in a direct and immediate sense but in an indirect sense as a promoting body. This difficulty was sought to be met by the submission that what was said and decided in the Perpetual Trustee case should not be mechanically applied to exclude the association from the exemption in the present case. Stress was laid on the submission that the content of the words ``public benevolent institutions'' had expanded since 1931. It was said that at the time the Perpetual Trustee case was decided popular ideas of benevolence revolved around the concept of direct provision of aid for the unemployed and the needy and that the High Court had not had to consider the less direct activities of a body such as the association which were nevertheless either wholly or primarily directed to the ultimate reduction of distress of the relevant kinds.

It seems to me that there might well be some force in this submission as to the proper application of the Perpetual Trustee case but even if that is so, on the facts of this case, it does not assist the appellants. To me, the word ``benevolent'' in the composite phrase ``public benevolent institution'' carries with it the idea of benevolence exercised towards persons in need of benevolence, however manifested. Benevolence in this sense seems to me to be quite a different concept from benevolence exercised at large and for the benefit of the community as a whole even if such benevolence results in relief of or reduction in poverty and distress. Thus it seems to me that ``public benevolent institution'' includes an institution which in a public way conducts itself benevolently towards those who are recognisably in need of benevolence but excludes an institution, which although concerned, in an abstract sense, with the relief of poverty and distress, manifests that concern by promotion of social welfare in the community generally. On this approach, even if the appellants' submission that public benevolent institutions are not limited to those who give direct relief to poverty and distress is correct, a matter now unnecessary to be decided, the association could not, in my opinion, be brought within even the wider conception of the words.

The appellants also relied upon a decision of Connor A.C.J. in
Australian Council for Overseas Aid v. F.C. of T. 80 ATC 4575 ; (1980) 49 F.L.R. 278 . There are portions of the judgment in that case which lend support to the appellants' submission that an institution may be a public benevolent institution even though it does not make funds or services directly available to the objects of the benevolence. But as I have already sought to explain in regard to the present case, even if that proposition be correct I do not think it assists the appellants here. Among other points of distinction between the facts of the two cases there is the important one that the activities of the Australian Council for Overseas Aid could not be characterised as indirectly aimed at the relief of poverty and distress by the promotion of social welfare in the community generally. It is the fact that the association's activities were able so to be characterised that prevents the association from falling within the description of a public benevolent institution within the meaning of sec. 10(1)(b) of the Pay-roll Tax Act. It follows that the appeal should be dismissed with costs.

The Commissioner as respondent to the appeal had filed a notice of contention concerning the procedure adopted in the case. Before Rath J. it was argued that the Court should withhold exercise of its declaratory jurisdiction. This contention was based on the presence in the Pay-roll Tax Act of procedures whereby persons dissatisfied with any decision, determination or assessment made by the Commissioner could ``lodge with the Commissioner an objection in writing stating fully and in detail the grounds on which he relied''. Rath J. did not accept the submission and held that there was no ground to refuse declaratory relief if such relief was otherwise proper. Before us, the Commissioner indicated

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that he only wished to rely on this point if the association should be successful in its submission that it was a public benevolent institution. Because of this order of preference of the Commissioner and because of the view I have formed concerning the meaning of ``public benevolent institution'' it is not necessary to say anything more about the Commissioner's alternative contention.

In my opinion no other orders are necessary than that the appeal be dismissed and that the appellants pay the respondent's costs of the appeal.

ORDERS

 

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