Federal Commissioner of Taxation v. Launceston Legacy

Judges:
Northrop J

Court:
Federal Court

Judgment date: Judgment handed down 21 July 1987.

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Northrop J.

The question raised by these appeals from five separate decisions of the Administrative Appeals Tribunal is whether the Commissioner of Taxation should issue a certificate of exemption under sec. 11 of the Bank Account Debits Tax Administration Act 1982, being Act No. 142 of 1982 ("the Administration Act"), in relation to five separate bank accounts kept in the name of Launceston Legacy. The issue of a certificate of

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exemption has the effect of relieving the person to whom the certificate is issued from a liability for tax imposed by the Bank Account Debits Tax Act 1982, being Act No. 141 of 1982 ("the Debits Act"). On various dates in May 1983, the Commissioner gave notice to Launceston Legacy that its application for a certificate in relation to each of its five accounts was unsuccessful as it was "not accepted as a public benevolent institution for the purposes of" the Administration Act. In accordance with the provisions of the Administration Act, Launceston Legacy objected to the decisions by the Commissioner. By notices dated 12 July 1984, the Commissioner notified Launceston Legacy that its objections had been disallowed:

"... as it is considered that your constitution is too wide ranging and does not clearly set out benevolent purposes in the principal object clauses to be considered as a public benevolent institution. `Legacy benefits' are payable to any person satisfying the `dependant' definition in the constitution regardless of whether he or she is in necessitous circumstances."

In accordance with the provisions of the Administration Act, Launceston Legacy requested the Commissioner to refer each of the five decisions to a Board of Review for review. Following statutory amendments, the reviews were conducted by the Administrative Appeals Tribunal constituted by Mr P.M. Roach, Senior Member. On 13 November 1986, the Tribunal set aside each of the five decisions under review and directed the Commissioner to issue a certificate of exemption to Launceston Legacy in relation to each of the five accounts. Pursuant to sec. 44 of the Administrative Appeals Tribunal Act 1975, the Tribunal held that Launceston Legacy was a public benevolent institution and in so doing it held it was a public institution and it was a public benevolent institution because it:

"... represents [sic] an important section of the community and it serves a group in need within the community. In doing so it recognises that need is not synonymous with financial poverty and that benevolence is a much broader concept than `financial assistance'."

The appeal from the Tribunal to this Court is on a question of law and comes within the original jurisdiction of this Court. Each notice of appeal specifies four questions of law but at the hearing, in which the five appeals were heard together, two questions of law only were argued, the other two being abandoned. The general question of law is whether Launceston Legacy is a public benevolent institution within the meaning of para. 3(1)(a)(vi)(A) of the Administration Act, and in particular, the question of law is whether a public benevolent institution can include a public institution extending assistance to a restricted class of recipients chosen or capable of being chosen without regard to whether the recipients are in necessitous circumstances. The Commissioner sought orders that the decisions of the Tribunal be set aside and the decisions of the Commissioner be affirmed. The ground relied upon for those orders was stated:

"The Applicant (the Commissioner) says that although the services provided by Launceston Legacy were well intentioned, they could not be described as benevolent because the class of people eligible to receive any benefit was not restricted to persons in need but was available to all persons eligible under legacy guidelines."

As will appear later in these reasons, it is possible that the formulation of the questions of law and the grounds for the orders sought may not be sufficient to dispose of the whole of the dispute between the parties.

Before turning to the facts, it is desirable to refer to certain of the provisions of the Debits Act and the Administration Act. Those Acts implement the decision of Parliament to impose a tax on debit transactions in relation to bank accounts. Amendments to those Acts do not affect these proceedings. The Debits Act is very short. It imposes the tax. Its provisions relevant to these proceedings are contained in para. 4(a) and (b), which read:

"4. Tax is imposed in respect of -

• (a) each taxable debit made on or after a date to be fixed by Proclamation to a taxable account;
• (b) each eligible debit made on or after that date to an exempt account;..."

For the purposes of these proceedings, the relevant date is 1 April 1983. The amount of tax is determined by sec. 5. Under sec. 3, the Administration Act is incorporated and is to be read as one with the Debits Act.

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In applying sec. 4 of the Debits Act, it is necessary to understand the meanings given to the phrases "taxable debit", "taxable account", "eligible debit" and "exempt account". Those meanings are contained in sec. 3 of the Administration Act. Before turning to those meanings, it should be noted that for the purposes of both Acts, Launceston Legacy has a number of accounts kept with banks and is the account holder of each of the five accounts the subject of these proceedings. For the purposes of sec. 4 of the Debits Act:

"`taxable debit' means a debit (other than an exempt debit) made to an account;"

It is noted that for the purposes of these proceedings, exempt debits are not of any relevance.

"`taxable account' means an account (other than an exempt account) kept in Australia;

`eligible debit' means a debit (other than an excluded debit or an exempt debit) made to an account;"

It is noted that for the purposes of these proceedings, the meaning of "excluded debit" is of vital importance.

"`exempt account' means an account kept in Australia in respect of which a certificate of exemption is in force;"

A certificate of exemption means a certificate under sec. 11 of the Administration Act. Section 11 is lengthy but must be set out in full:

"11(1) Where an account holder in respect of an account kept in Australia applies to the Commissioner in accordance with this section for the issue of a certificate of exemption in relation to the account -

• (a) if the Commissioner is satisfied that all debits made, or to be made, to the account are, or are likely to be, either excluded debits or exempt debits - he shall issue a certificate of exemption in relation to the account; or
• (b) if the Commissioner is not so satisfied - he shall refuse the application and shall cause notice in writing of his decision in relation to the application to be served, by post or otherwise, on the person who made the application.

(2) A certificate of exemption comes into force on a day specified in the certificate as the day of commencement of the certificate (which may be a day before the day on which the certificate is issued) and remains in force until the expiration of the day specified in the certificate as the day of expiry of the certificate or, if no day is specified as the day of expiry of the certificate, until the certificate ceases to be in force by virtue of sub-section (5).

(3) Where the Commissioner -

• (a) is notified by the account holder, or either or any of the account holders, of an exempt account that an eligible debit has been, or is to be, made to the account; or
• (b) becomes satisfied that an eligible debit has been, or is to be, made to an exempt account.

he may, in his discretion, by writing signed by him, revoke the certificate.

(4) Where -

• (a) an eligible debit has been made to an exempt account; or
• (b) an account holder of an exempt account expects that an eligible debit will be made to the account within the ensuing period of 30 days,

and the account holder, or one of the account holders, does not within 7 days notify the Commissioner in writing accordingly, the account holder, or each of the account holders, as the case may be, is guilty of an offence punishable on conviction by a penalty not exceeding $1,000.

(5) Where the Commissioner has revoked a certificate of exemption in relation to an account, he shall serve, by post or otherwise, notice of that revocation -

• (a) on the account holder or, if there are 2 or more account holders, on each of them; and
• (b) on the bank with which the account is kept,

and, notwithstanding that any day of expiry shown on the certificate has not occurred, the certificate ceases to be in force in relation to the account when the notice is served on the bank.

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(6) An application made for the issue of a certificate of exemption shall be in writing and the person making the application shall furnish such information as the Commissioner requires in connection with his consideration of that application."

It will be remembered that here the Commissioner refused the five applications by Launceston Legacy for certificates of exemption under sec. 11 while the Tribunal directed the Commissioner to issue the certificates. Where a certificate is in force, no liability for tax arises under para. 4(a) of the Debits Act but a liability for tax does arise under para. 4(b) with respect to an eligible debit. In addition, an account holder may have committed a criminal offence under sec. 11(4) of the Administration Act if an eligible debit is made to an exempt account of that account holder. The power to revoke a certificate conferred by sec. 11(3) should be noted.

Under sec. 11(1), the Commissioner is required to issue a certificate if he is satisfied "that all debits made, or to be made, to the account are, or are likely to be... excluded debits..." (emphasis added). It will be remembered that by definition an "eligible debit" cannot include an "excluded debit".

For the purposes of these proceedings, the meaning given to the phrase "excluded debit" is of crucial importance. Under sec. 3 of the Administration Act, many different meanings are given to that phrase but for the purposes of these proceedings the relevant meaning is contained in para. 3(1)(a)(vi)(A) of the meanings given to "excluded debit". The whole of para. 3(1)(a)(vi) is set out:

"`excluded debit' means a debit -

• (a) made to an account kept with a bank in the name of -
  • ...
  • (vi) any of the following:
    • (A) a public benevolent or a religious institution;
    • (B) a public hospital or a hospital that is carried on by an association or other body of persons otherwise than for purposes of profit or gain to the individual members of that association or other body;
    • (C) a school, college or university that is carried on by an association or other body of persons otherwise than for the purposes of profit or gain to the individual members of that association or other body,

  being a debit made in relation to a transaction or transactions carried out by or on behalf of the institution, hospital, association or body, as the case may be, wholly and exclusively in furtherance of its objects;"

In the present proceedings, Launceston Legacy claims that it is a public benevolent institution and that debits made by it to each of the five accounts the subject of these proceedings are debits made in relation to transactions carried out by or on its behalf "wholly and exclusively in furtherance of its objects".

At this stage, attention should be drawn to some of the special features of this legislation. The tax is imposed on debit transactions made with respect to accounts kept with banks. Under sec. 8 of the Administration Act, the liability to pay the tax is placed upon the bank with which the account is kept. A certificate of exemption under sec. 11 is issued in relation to an account. Any one person, including an institution, may have a number of different accounts with one or more banks. Launceston Legacy has at least five different accounts with different banks. A reference to the wording of para. 11(1)(a) shows that a certificate may be issued in relation to one or more accounts of a particular person while a certificate may be refused in relation to one or more accounts of the same person. The criteria to be satisfied is whether the debits made or to be made to the account are or are likely to be excluded debits. To be an excluded debit, the debit must be made to an account of, for example, a public benevolent institution, and must be a debit "made in relation to a transaction... carried out by or on behalf of the institution... wholly and exclusively in furtherance of its objects". It is difficult to understand how such an institution lawfully could authorise a debit in relation to a transaction which was not wholly and exclusively in furtherance of its objects. It might be, as was contended by counsel for the Commissioner, that a public institution cannot be benevolent in the sense of being a public benevolent institution if its objects extended to

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objects which were not benevolent. If that were the case however, the concluding words of para. 3(1)(a)(vi) would be otiose.

The material before the Tribunal included the Code of Legacy, the Charter of Legacy and the Constitution of Launceston Legacy. In addition, there was written material and oral evidence given by Mr C.N.McL. Stirling, the treasurer of Launceston Legacy, describing the activities undertaken by Launceston Legacy. There appears to have been no detailed evidence of the nature of the transactions being debits made to each of the five accounts the subject of these proceedings.

Legacy was formed in Hobart in 1923 with the object of providing assistance to widows and children of servicemen who did not return from war. The objects of Legacy were subsequently expanded to cover widows and children of servicemen who had returned from war, but died thereafter. The aims Of Legacy are reflected in its Charter, which states:

"THE CHARTER OF LEGACY

The Spirit of Legacy is Service

The care of dependants of comrades who served their country in war and who dies on service or subsequently, affords a field for service.

Safeguarding the interests of children is a service worth rendering and their interests include their mental, moral, vocational and physical welfare.

Personal effort is the main essential.

Inasmuch as these are the activities of Legacy it is your privilege to accept the `Legacy of fallen comrades'.

Therefore you men who served overseas with honourable records form you a Club to be known as the `Launceston Legacy Club' and keep fair the name of Legacy."

Under the Code of Legacy, Legacy is composed of all Legacy Clubs to whom a charter is granted. Each Legacy Club operates autonomously, although the conduct and basic principles are co-ordinated by a council comprising delegates from each State. Launceston Legacy was formed in 1933 and has its own Constitution in conformity with the Code of Legacy. It covers the northern half of Tasmania, including groups at Devonport and Burnie. Section 3 of the Constitution is set out:

"3. POLICY

The Club is an organisation of Ex-Servicemen who, possessing the necessary qualifications and elected as members have accepted as a Legacy the duty, among other obligations, of caring for the dependants of their deceased Ex-Servicemen comrades and maintaining and handing on the ideals for which they gave or risked their lives.

The Club is non-sectarian and non-political."

Section 4 of the Constitution is headed "OBJECTS" but as so often happens, many of the stated objects are in reality powers by which objects may be achieved; cf.
Williams v. Hursey (1959) 103 C.L.R. 30 per Fullagar J. at pp. 56-58. For present purposes, it is sufficient to set out three only of the 13 stated objects:

"4. OBJECTS

• (a) To honour the memory of departed Ex-Servicemen and to care for their widows and children.
• (b) To assist the dependants of deceased Ex-Servicemen.
• (c) To foster the spirit of comradeship, self-sacrifice and national and community service.
• ..."

From a consideration of the Policy and Objects sections of the Constitution of Launceston Legacy, it is true to say that the essential object of Launceston Legacy is the caring for dependants of deceased ex-servicemen. The powers by which this is done are contained in the Objects clause and by exercising those powers, including the power to do all "things as are incidental or conducive to the attainment of" that object; see sec. 4(n), Launceston Legacy seeks to achieve its essential object. The other main object of honouring departed ex-servicemen and maintaining and handing on the ideals for which they gave or risked their lives is achieved by seeking to carry out the essential object.

Membership of Launceston Legacy is not open to the general public, but is confined to ex-servicemen (called "Legatees") who have served overseas in a theatre of war. In addition, only the number of Legatees which are

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necessary to service the needs of the widows and children in the particular area serviced by Launceston Legacy are admitted as members. Launceston Legacy has approximately 90 members. Legatees provide their services free of charge, they act in an honorary capacity. In addition, three persons are employed by Launceston Legacy on a part-time basis; a social worker, a secretary and an administrator.

Assistance is provided by Legatees to widows and children in the following manner: each Legatee is allotted a number of families for which he is responsible. The aid rendered to these families includes vocational guidance and job placement, tuition, sporting activities, medical and dental advice and treatment, milk supplies, servicing and replacement of defective home appliances, the provision of furniture and, where necessary, the grant of interest-free loans. Launceston Legacy also operates widows' clubs, where widows meet amongst themselves for companionship, advice and support. The needs of families come to the attention of Launceston Legacy through that family's Legatee. That Legatee then reports to a Committee and the Committee examines the situation and makes recommendations to the Board as to the action to be taken. This takes place at luncheon meetings of the Legatees which occur twice a month.

Launceston Legacy is funded primarily through donations of various kinds, including direct public donations, the Legacy Appeal Week, bequests received from deceased estates and the "certificate of adoption", a scheme whereby individuals, companies and organizations are able to subscribe a specified amount of money each year to help maintain a particular family.

All the financial dealings of Launceston Legacy are applied towards the service ends of Legacy.

From this very brief outline of the activities of Launceston Legacy, it is apparent that a wide range of services are provided to the beneficiaries of Legacy. The class of persons eligible for the benefits of Launceston Legacy is ascertained by reference to sec. 5 of the Constitution:

"5. ELIGIBILITY FOR BENEFITS

Legacy benefits shall be available to dependants as defined in sub-section 2(j) herein."

Section 2(j) of the Constitution defines the word "dependants". Dependants are deemed to include a person who is a dependant of different classes of deceased persons defined in sec. 2(j), but it is not necessary to give details of those classes. It is sufficient to say the classes comprise persons, both male and female, who are or were servicemen. Section 2(k) then defines further the word "dependant". The parts of sec. 2(k) relevant to the present issue are set out:

"(k) Definitions

Dependant means a widow or child of a deceased person.

Child and a dependant who is a child means son or daughter, step-son, step-daughter, adopted child or any other child wholly dependent on the deceased at the time of his death.

Person includes both male and female, but except as provided, the child of a deceased woman will not be eligible until his father is also deceased."

Those definitions are rather inelegantly worded and not as clear as would be desired. The definitions must be understood in the context of the Code of Legacy, the Charter of Legacy and the Constitution of Launceston Legacy. All are directed to the provision of care "for the dependants" of deceased ex-servicemen. The use of the word "dependants" in these documents connotes a person who depends on another for support. In the Shorter Oxford Dictionary, the pertinent meaning given to the word "dependant" is: "A person who depends on another for support, position, etc.". In the same dictionary, the pertinent meaning given to the word "depend" is: "To rest entirely on, upon for support, or what is needed." A reference to the many and varied meanings given to the word "dependant" in Stroud's Judicial Dictionary illustrates the difficulty in giving the correct meaning to that word. So much depends upon the context in which it appears. In the present case, the word "dependant" connotes a person who has been deprived of the support, both financial and moral, of a deceased ex-serviceman.

In sec. 2(j) of the Constitution of Launceston Legacy, the definition of the word "dependants" is in the form of a deeming

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provision to include persons who come within the classes therein specified. Under that section, no limitation is placed upon the word "dependants" except to the extent of being dependant on a person coming within a class of persons therein specified. Section 2(k) does place limitations on the meaning of the word "dependant". A dependant must be a widow or a child of a deceased person. Of necessity, this connotes a widow or a child who has been deprived of the financial and moral support of a deceased ex-serviceman. The second paragraph of sec. 2(k) attempts to widen the meaning of the word "child" and at the same time limit that meaning to persons dependant on the deceased. In its ordinary meaning the word "child" means an infant. At the present time, in this sense, the word "child", in all probability, would be given the meaning of a person under the age of 18 years. As a correlative to parent, the word "child" means "the offspring, male or female, of human parents"; see the Shorter Oxford Dictionary. In this sense, the word "child" can be used, quite correctly, to describe the son or daughter of a parent even though the child is over 18 years of age. A son or daughter remains the child of his or her parents no matter how old the son or daughter becomes.

The purpose of the second paragraph of sec. 2(k) is to give defined meanings to the word "child" where it appears in the first paragraph of that section as well as the concept of dependant. Thus the word "child" and the phrase "dependant who is a child" are given defined meanings. Thus, in the absence of the extended meaning given to the word "child" questions might arise whether a stepson, a stepdaughter or an adopted child of a deceased ex-serviceman was a "child" within the meaning of that word appearing in the first paragraph of sec. 2(k). The extended meaning to be given to the word "child" makes it clear that in the first paragraph it is to be taken as including the meaning correlative to a parent and that a child being a son, daughter, stepson, stepdaughter or an adopted person comes within the definition of a dependant no matter how old that "child" is. In this category, the context makes it clear that the "child" must have been a dependant, in the sense described above. Thus a dependant who, correlative to the deceased ex-serviceman, is a child in the extended meaning is entitled to receive benefits from Launceston Legacy irrespective of the age of the child.

The phrase "dependant who is a child" is given a more limited meaning. The words "any other child" of necessity must refer to persons other than a son, daughter, stepson, stepdaughter or adopted child of the deceased ex-serviceman. In this context there is no need for the correlation of a parent and in this context the word "child" is to be given its normal meaning of an infant. To be entitled to receive benefits from Launceston Legacy, such a child must be under the age of 18 years and "wholly dependent on the deceased at the time of his death" (emphasis added). The concept of "wholly" has no application in the case of a son, daughter, stepson, stepdaughter or adopted child. Further, a son or daughter born after the death of their natural father, being an ex-serviceman, would be eligible for benefits even though it would be difficult to claim that that child was "wholly dependent on the deceased at the time of his death".

Counsel for the Commissioner contended that in para. 3(1)(a)(vi) of the Administration Act, the phrase "public benevolent institution" should be construed as being a public institution the objects of which were limited to the relief of poverty, sickness, destitution or helplessness and that the objects of Launceston Legacy went well beyond the relief of poverty, sickness, destitution or helplessness. They contended that under its Constitution Launceston Legacy could provide benefits to eligible persons who were not in necessitous financial circumstances and thus it was not a public benevolent institution. In substance, they contended, that in the absence of a means test provision, the recipients of benefits from Launceston Legacy need not be in a state of poverty, sickness, destitution or helplessness.

The phrase "public benevolent institution" appearing in taxing statutes in Australia has had a somewhat ambivalent but interesting history. In the 1920s, there appears to have been a difference in legal opinion on the issue of whether the word "charitable" appearing in taxing statutes should be given its ordinary or popular meaning involving the idea of relief from poverty, namely that it means eleemosynary; or be given its technical or legal meaning of trusts for the relief of poverty; trusts for the advancement of education; trusts for the advancement of religion; and trusts for

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other purposes beneficial to the community, not falling under any of the preceding heads; see
Commissioners for Special Purposes of the Income Tax v. Pensol (1891) A.C. 531 per Lord Macnaughton at p. 583. At that time, sec. 8 of the Estate Duty Assessment Act 1914 imposed an estate duty on gifts but under sec. 8(5) provided:

"(5) Estate duty shall not be assessed or payable upon so much of the estate as is devised or bequeathed or passes by gift inter vivos or settlement for religious, scientific, charitable or public educational purposes."

In
Chesterman v. F.C. of T. (1923) 32 C.L.R. 362, the High Court, by majority, Isaacs, Rich and Starke JJ., Knox C.J. and Higgins J. dissenting, held that in sec. 8(5) the expression "charitable purposes" was not used in its technical legal sense, but in its popular sense as meaning the relief of wants occasioned by lack of pecuniary means, and covering the relief of any form of necessity, destitution or helplessness, including spiritual destitution or need, which excites the compassion or sympathy of men and appeals to their benevolence for relief; and, therefore, that a gift of a fund to provide prizes for competitions in physical, mental or moral excellence, without regard to the pecuniary means of the competitors, was not for charitable purposes within the meaning of the subsection. The Privy Council allowed an appeal from that judgment; see Chesterman v. F.C. of T. (1925) 37 C.L.R. 317. The Privy Council held that in sec. 8(5) the word "charitable" was used in its technical legal sense. The effect of that judgment was to widen the purposes coming within sec. 8(5). The nature of the differences of opinion is illustrated by
The Young Men's Christian Association of Melbourne v. F.C. of T. (1926) 37 C.L.R. 351, particularly per Higgins J. at p. 360.

In 1928, sec. 8(5) of the Estate Duty Assessment Act 1914 was amended to read:

"Estate duty shall not be assessed or payable upon so much of the estate as is devised or bequeathed or passes by gift inter vivos or settlement for religious, scientific, or public educational purposes in Australia, or to a public hospital or public benevolent institution in Australia or to a fund established and maintained for the purpose of providing money for use for such institutions or for the relief of persons in necessitous circumstances in Australia."

In
Perpetual Trustee Co. Ltd. v. F.C. of T. (1931) 45 C.L.R. 224, the High Court had to consider, for the first time, the words "public benevolent institution" appearing in sec. 8(5). A testator had made a gift to the Royal Naval House in Sydney. In broad terms, the House provided accommodation, for a nominal amount, and recreation for the benefit of petty officers and lower rankings of the Royal Navy, the Royal Australian Navy, and other visiting seamen. The question before the High Court was whether the gift was exempt from estate duty as being a gift to a public benevolent institution. The High Court, by majority, Starke, Dixon and Evatt JJ., McTiernan J. dissenting, held that the House was not a public benevolent institution. In coming to this conclusion, the Court had regard to the history of sec. 8(5), the authorities already cited, the reference to the words "for the relief of persons in necessitous circumstances in Australia" contained in the same subsection and the fact that the average person would not expect the House to be described as a public benevolent institution. At pp. 231-232, Starke J., in considering the meaning to be given to the phrase "public benevolent institution" and after mentioning the statutory history and the cases cited, said:

"It cannot be said that this expression has any technical legal sense, and therefore it is to be understood in the sense in which it is commonly used in the English language. There is no definition in the Act of the composite expression, nor is it to be found in any dictionary. It is, however, found in the Act under consideration in association with such institutions as public hospitals and with funds established and maintained for the relief of persons in necessitous circumstances in Australia. In the context in which the expression is found, 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. The Royal Naval House has none of these characteristics: it is organized for the accommodation and recreation of the naval forces of His Majesty and its hospitality is also extended to the naval forces of other countries. It would surprise

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English-speaking people, I think, to learn that in the Royal Naval House naval forces are accommodated and entertained at a public benevolent institution."

At pp. 232-233, Dixon J. said:

"But, in my opinion, it is neither promoted nor conducted for the relief of poverty, distress, suffering or misfortune, and the question is whether for this reason it lacks the qualities necessary to bring it within the meaning of the compound description `public benevolent institution'. The words `benevolent institution' are commonly used in combination to denote bodies organized for the relief of poverty or of distress. Familiarity with the application of the expression to bodies of this kind inevitably tends to make the use of the phrase appear misplaced in relation to bodies which do not relieve poverty or misfortune and merit the description `benevolent' only because their objects are benignant. It is said, however, that after all `benevolent' is an ordinary English adjective, and that frequent application of a compound expression of which it forms a part to one or some of many classes of things possessing the attributes it connotes affords no sufficient reason for restricting the meaning of the expression. In such matters one must often be guided to a great degree by one's own experience in the use of terms. In the present case little help is provided by dictionaries, statutory usage, or judicial decision. For my part the application of the expression `benevolent institution' to such organizations as Royal Naval House seems odd and inappropriate."

His Honour then referred to the history of the legislation and the authorities cited and continued at pp. 233-234:

"Having regard to this history of the legislation and to the considerations I have mentioned, 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. 235-236, Evatt J. said:

"There are, however, very many bodies which readily answer the description of `benevolent institutions'. The Benevolent Society of New South Wales provides food and clothing for those in poverty and distress, the Scarba Home takes care of deserted babies, many organizations of Church and State provide for the maintenance, housing and relief of the aged poor, orphans and those suffering from bodily or mental disease. A characteristic of most of these organizations is the absence of any charge for services or the fixing of a purely nominal charge.

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. They are very numerous - `the nobler a soul is the more objects of compassion it hath' - and they have come to be known as `benevolent institutions'."

In a powerful judgment McTiernan J. dissented, but his dissent was based on the facts of the case, not the law to be applied. At p. 241, in discussing the phrase "public benevolent institution", his Honour said:

"I do not imagine that it is possible to enumerate all the services which may be rendered by human benevolence operating through the agency of a public benevolent institution. 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."

His Honour then made reference to the peculiar nature of the calling of sailors and the special treatment given to them by English statutes and concluded, at p. 244:

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"The men who resort to this Royal Naval House are placed in such a position by the circumstances of their calling, that they have a special need of the assistance, which this Royal Naval House provides for them; and while it provides that assistance, in my opinion, that part of an estate which is given to it, is entitled to be exempt from estate duty on the ground that the gift is made to an institution of the kind which the Legislature intended to denote by the expression `public benevolent institution'."

Counsel for the Commissioner relied strongly on the statements of law contained in the Perpetual Trustee case which, they submitted, have been followed in subsequent cases. He referred to
The Public Trustee of New South Wales v. F.C. of T. (1934) 51 C.L.R. 75 ("the Public Trustee case"),
Maughan v. F.C. of T. (1942) 66 C.L.R. 388 ("the Boys' Brigade case") and
Lemm v. F.C. of T. (1942) 66 C.L.R. 399 ("the Aged Women's Homes case").

The Public Trustee case involved a consideration of sec. 8(5) of the Estate Duty Assessment Act in relation to homes for children provided by the Church of England. A number of other issues arose for determination. A number of the Judges referred to the discussion of the phrase "public benevolent institution" contained in the Perpetual Trustee case. Gavan Duffy C.J. and Starke J. took the view that the relevant institutions were not public, see per Gavan Duffy C.J. at p. 96 and Starke J. at pp. 99-100. The following passage is taken from p. 100:

"Nor is it, in my opinion, a gift to a public benevolent institution. This Court held, in Perpetual Trustee Co. v. Federal Commissioner of Taxation (1931) 45 C.L.R. 224, that that expression referred to institutions organized for the relief of poverty, sickness, destitution or helplessness. The institutions named by the testator or those which may be admitted to share in the benefaction, do give relief to the needy, the sick, and the helpless. But they are private organizations conducted by or in connection with the Church of England in Australia, and are not founded, organized or maintained by or under or in connection with any public authority, or managed by its representatives."

At p. 104, Dixon J. said:

"Conceding that a gift to an institution benefiting young children in a way which makes it a charitable or benevolent object may be a valid disposition for charitable purposes, I nevertheless do not think that the institutions it covers are confined to public benevolent institutions of the required description. Institutions connected with the health, upbringing, welfare, and education of young children coming within the legal conception of `charitable' may be imagined to which no one would apply the term `public benevolent institution'."

Rich J. agreed with the judgment of Dixon J. McTiernan J., at p. 106, said that the gifts were not exempt as being for public benevolent institutions since the trustees had power to appropriate part of the trust moneys to "charitable institutions" and those would not of necessity be public benevolent institutions.

The Boys' Brigade case involved the application of sec. 78(1)(a)(ii) of the Income Tax Assessment Act 1936 which allowed as deductions for income tax purposes gifts to a "public benevolent institution". That paragraph first appeared in the Income Tax Legislation in 1927; see sec. 14 of Act No. 32 of 1927 which amended sec. 23 of the Income Tax Assessment Act 1922. Under para. 23(1)(h) of that Act, gifts made to "public charitable institutions in Australia" were allowable deductions from income for tax purposes. Following the wide meaning given to the word "charitable" when used in taxation statements, the 1927 Act inserted a definition of "public charitable institutions" with the result that in sec. 23, those words meant "a public hospital, a public benevolent institution and includes a public fund established and maintained for the purpose of providing money for such institutions or for the relief of persons in necessitous circumstances". It was not until the Income Tax Assessment Act 1936 was enacted that the wording as presently appearing in sec. 78(1)(a)(i)-(iii) appeared. Paragraph (ii) enables a deduction from income of a gift to "a public benevolent institution". In the Boys' Brigade case, the issue was whether the Boys' Brigade was a "public benevolent institution". The Boys' Brigade was incorporated and amongst its objects was the object "to carry on and conduct an institution or institutions in the City of Sydney and/or elsewhere in the State of New

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South Wales or elsewhere in the Commonwealth of Australia for the development as good citizens of the boys of the State or the Commonwealth; to cultivate Christian manliness; to promote habits of reverence, loyalty, industry, discipline and self-respect. Nothing herein contained or implied shall limit the class of persons to whom assistance or benefit of any kind may be given by the Association". The matter came on for hearing before the Full Court of the High Court pursuant to a case stated by Williams J. For the purpose of the case stated, the parties agreed to facts which showed that the activities carried on by the Boys' Brigade ("the Association") were limited to certain depressed areas of the City of Sydney despite the width of the objects of the Association. The Court held that the Association was a "public benevolent institution". At p. 395, McTiernan J. said:

"The expression `public benevolent institution' is not a term of art. Its meaning may be governed by the context in which it is found. There is nothing to indicate that the expression in sec. 78(1)(a)(ii) has any other meaning than its ordinary meaning. The Court considered the meaning of the expression `benevolent institution' in Perpetual Trustee Co. Ltd. v. Federal Commissioner of Taxation (1931) 45 C.L.R. 224, and applied the criteria laid down there in a subsequent case, Public Trustee (N.S.W.) v. Federal Commissioner of Taxation (1934) 51 C.L.R. 75. It decided in the former case that the common understanding of the words `benevolent institution', when used together, is a body organized for the relief of poverty or distress. In the present case the argument centres on the question whether the Boys' Brigade Inc. is organized for the relief of poverty. Poverty is a relative condition. It is I think hardly open on the facts of the case to draw any other inference than that the charity of those who maintain the Boys' Brigade Inc. is excited by social conditions arising from poverty and that the dominant object of the institution is to elevate boys adversely affected by those conditions. It is not probable that many of the boys for whose welfare this institution exists could overcome those conditions without its aid."

His Honour then held that the Association was a public institution. Rich J. agreed with the reasons of Williams J. who, at p. 397, applied the Perpetual Trustee case which he said "held that the collocation of words `public benevolent institution' connotes the relief of poverty, suffering, distress or misfortune". His Honour then considered whether the Association was a public institution and, in summary, at p. 398, said of the Association:

"... its activities, which accord with and fulfil the main objects in the memorandum of association, are of a public benevolent nature."

Judgment in the Aged Women's Homes case was given on the same day as the judgment in the Boys' Brigade case. The Court was constituted by the same Judges. This case involved sec. 8(5) of the Estate Duty Assessment Act and its application to homes for aged women conducted by the Presbyterian Church and the Court held that the homes were public benevolent institutions. A number of other issues were raised. Rich and McTiernan JJ. agreed with the reasons of Williams J. The money was left by will upon trust for the purpose of a home for aged women in straitened circumstances who were required to pay towards the upkeep of the home. At pp. 410-411, Williams J. considered whether the home was a public benevolent institution. He held it was a public institution and continued:

"The benefits of the institution are available to members of the class of aged women in straitened circumstances irrespective of their religion. A home for such women, even if they are able to pay one pound per week, is an institution organized for the relief of poverty. Poverty is a relative term. There are degrees of poverty less acute than abject poverty or destitution, but poverty nevertheless In
re Clarke (1923) 2 Ch. 407; In
re de Carteret; Forster v. de Carteret (1933) Ch. 103, at pp: 108-113). It is therefore a benevolent institution within the meaning of the sub-section (Perpetual Trustee Co. Ltd. v. Federal Commissioner of Taxation)."

At p. 411, his Honour considered another gift and said:

"The devise and bequest of the residuary estate, other than the amounts required to pay the annuities, will be exempt under the sub-section if this balance is devised and bequeathed to a fund established and

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maintained for the purpose of providing money for public hospitals and public benevolent institutions in Australia. For the reasons already given I am of opinion that the trusts for the establishment and maintenance of the fund comply with the sub-section, so that the important question is whether the purpose of the fund is to provide money for the use of such institutions. Under the trusts payments can be made to any home, hospital, or institution having as one or more of its objects the relief of pain and suffering, physical disability, infirmity, or financial distress. These are benevolent objects within the meaning of the sub-section (Perpetual Trustee Co. Ltd. v. Federal Commissioner of Taxation), so that the balance will be exempt if the will sufficiently indicates an intention that the homes, hospitals, or institutions must be public."

In applying the law to the facts of these appeals, I propose to have regard to the objects of Launceston Legacy; cf.
Trustees of Church Property of the Diocese of Newcastle v. Lake Macquarie Shire Council (1975) 1 N.S.W.L.R. 521. Those objects have been discussed earlier. Having regard to the authorities, it is too late to attempt to give a different meaning to the phrase "public benevolent institution" where that phrase appears without the collocation of words in sec. 8(5) of the Estate Duty Assessment Act which refer to persons "in necessitous circumstances". There is no such collocation of words in the Administration Act. However, it should be noted that the authorities cited show a softening of attitude to what comes within the concept of "benevolent" in the phrase "public benevolent institution". This is made clear by a reference to the extracts from the last two authorities set out above. Nevertheless, the warning given by Street C.J. in
Australian Council of Social Service Inc. & Anor v. Commissioner of Pay-roll Tax (N.S.W.) 85 ATC 4235 at p. 4236; (1985) 1 N.S.W.L.R. 567 at p. 568 should be kept in mind.

On the facts of the present appeals, I am satisfied that Launceston Legacy is an institution organized for the relief of poverty, suffering, distress or misfortune as discussed in the authorities. It is quite natural to describe it as a benevolent institution. I see nothing odd or inappropriate in so describing Launceston Legacy. It is providing a caring service, not limited to the provision of money, to persons who are in need. The caring service that is provided is something which cannot be bought. It is given voluntarily by the Legatees. The beneficiaries do not pay for the benefits received. These days the concept of benevolence being limited to the destitute is no longer accepted. By way of comparison, the other institutions mentioned in para. 3(1)(a)(vi)(A) of the Administration Act, namely a public hospital, a school or a university, are not institutions created to benefit the destitute only.

As Dixon J. said at p. 233 of the Perpetual Trustee case when discussing the phrase "public benevolent institution": "In such matters one must often be guided to a great degree by one's own experience in the use of terms." His Honour noted that a meaning had to be given to a composite phrase and that little help is provided by reference to dictionaries to discover the meanings to be given to separate words forming the composite phrase. That is accepted, but it is interesting to note the development of the meanings given to the word "benevolent" appearing in the Shorter Oxford Dictionary, the 1933 Edition, and the Macquarie Dictionary published in 1981. In the former, the relevant meaning given to the adverb "benevolent" is "Desirous of the good of others, of a kindly disposition, charitable, generous". In the latter, there appears the following: "1. desiring to do good for others. 2. intended for benefits rather than profit: a benevolent institution".

In my opinion, the essential object of Launceston Legacy is benevolent. The objects and powers listed in the Objects section of its Constitution are incidental and ancillary to that essential object. If it be a fact that some of those powers and objects, considered alone, might not be regarded as benevolent, that fact would not prevent Launceston Legacy being benevolent. By analogy, I apply what was said by Dixon C.J., McTiernan, Williams and Fullagar JJ. in
Congregational Union of New South Wales v. Thistlethwayte (1952) 87 C.L.R. 375 at p. 442.

I agree with the opinion of the Tribunal that Launceston Legacy "serves a group in need within the community. In doing so, it recognises that need is not synonymous with financial poverty and that benevolence is a

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much broader concept than `financial assistance'."

Accordingly, I hold that Launceston Legacy is a public benevolent institution within the Administration Act.

This conclusion, however, does not dispose of the matter. It is but a step in deciding whether a certificate of exemption should be granted under sec. 11 of the Administration Act. As has been said earlier in these reasons, it is necessary that consideration be given to the application of sec. 11(1) to the five accounts the subject of these five appeals. It may be that the Commissioner does not dispute the granting of the certificates if Launceston Legacy is a public benevolent institution. If that is so, the granting of the certificates by the Tribunal will be a formality only. In the circumstances, each matter should be remitted to the Tribunal to be determined according to law.

Launceston Legacy has succeeded on the issues raised by the appeal. Accordingly, the Commissioner should pay the costs of the appeal.

THE COURT ORDERS THAT:

1. The appeal be allowed and the decision appealed from be set aside.

2. The matter be remitted to the Administrative Appeals Tribunal for determination according to law.

3. The applicant pay the respondent's costs of the appeal.