Marriage Guidance Council of Victoria v. Commissioner of Pay-roll Tax (Vic.)

Members:
G Gibson M

Tribunal:
Administrative Appeals Tribunal of Victoria

Decision date: 9 November 1988.

G. Gibson (Member)

About one in four marriages in Australia ends in divorce. Some end amicably, some with great bitterness and personal tragedy. There is a consequent social problem in this country that shows no sign of diminishing, and which has recently prompted the Commonwealth Government to act. The issue in this case is whether the Marriage

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Guidance Council of Victoria (``the Council''), a body set up to deal with this kind of problem, is ``a public benevolent institution'' within the terms of sec. 10(1)(ba) of the Pay-roll Tax Act 1971 (``the Act'').

2. The Council has been assessed for $5,434.14 for pay-roll tax for the period 1 July 1977 to 30 June 1980 (assessment G-3869) and for $45,993.10 for the period 1 July 1982 to 31 December 1986 (G-3870) (``the assessments''). The respondent's disallowances of the applicant's objections to the assessments have been referred to this Tribunal.

3. A short statement of the evidence of the executive director of the Council, whose evidence I accept unhesitatingly as to any matter of fact, is as follows.

(1) The Council was established as The Melbourne Marriage Guidance Council on 7 September 1948. Its name was changed to The Marriage Guidance Council of Victoria in 1954 and has formed part of the National Marriage Guidance Council of Australia since 1952.
(2) On 8 October 1961 the Council was incorporated under the Companies Act 1958 as a company limited by guarantee.
(3) The Council is recognised under the Family Law Act 1975 as an approved marriage counselling organisation. I refer to sec. 4 to 19 of the Family Law Act and reg. 1, 2, 7 and 9 of the Family Law Regulations. Section 4 of the Family Law Act does not define ``counselling'' but has the following definition:

```Marriage counselling' includes the counselling of a person in relation to -

(a) entering into marriage;

(b) reconciliation of the parties to a marriage;

(c) separation of the parties to a marriage;

(d) the dissolution or annulment of a marriage; or

(e) adjusting to the dissolution or annulment of a marriage.

whether that counselling is provided in relation to the proposed marriage, marriage or former marriage of that person or in relation to the proposed marriage or former marriage of another person or other persons, and whether that counselling is provided to that person individually or as a member of a group of persons...''

Under sec. 12, a voluntary organisation can apply to the Attorney-General for approval as a marriage counselling organisation and the Attorney-General may give such approval if satisfied that marriage counselling constitutes or will constitute the whole or the major part of its activities. It is clear from Pt II and III of the Family Law Act 1975 that the Commonwealth Parliament regards marriage counselling and reconciliation as very important.
(4) The Council receives an annual subsidy from the Commonwealth Attorney-General's Department. The balance of its services are funded from fees and income from other sources, such as fees for lectures and sales from its bookroom. The profit and loss statement for the year ending 30 June 1987 includes the following items of income (that for the previous year appearing in brackets): Australian Government subsidy $512,000 ($513,000); clients' fees $416,459 ($367,214); training course fees $31,532 ($22,132); and mediation income $16,187 ($11,293); the amounts received by general donations and membership subscriptions are insignificant.
(5) The fee structure is determined by the ability of clients to pay. A guide for fees suggests $10 per interview for those with a gross family income of less than $15,000 per year and $50 per interview for those with a gross family income of $40,000 to $50,000 per year. After that it is said to be negotiable, but in fact all fees are open to negotiation. The executive director said that if someone admitted to him to an income of $100,000 per year he might try to get a fee in excess of $100 per interview. The Council has only a 20% return on such accounts as it does send out, and it does not sue to collect on such accounts. It follows that it receives most of its payment of fees on the spot. The application form does indicate that the subject of fees is open to discussion and I am satisfied that very few, if any, are turned away on this account. The Annual Report for 1986-1987 shows an

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average fee per interview of $22.12 compared to $18.42 for the previous year.
(6) The Council currently employs 18 clinical staff and 12 administrative staff. It also has the services of 35 sessional counsellors. Clinical staff (staff counsellors) are trained in marriage preparation, marriage counselling and divorce mediation. Administrative staff provide secretarial, administrative and accounting support services. Sessional staff are private practitioners who perform counselling services at the Council's centres. For sessional staff the Council collects the fee from the client, deducts an administrative charge and remits the balance to the consultant.
(7) The Council's clinical staff are all marriage counsellors authorised under the Family Law Act. Many have tertiary qualifications in one of the helping professions. Some of the counsellors are not formally qualified but have received in-house training and have had considerable practical experience as counsellors. All staff participate in a structured supervisory program and attend regular professional development training.
(8) The property and affairs of the Council are under the control and management of a board of management.
(9) The Council owns properties at 46 Princess Street, Kew and Civic Square, Croydon and also provides its services from other premises at Sunshine, Coburg, Dandenong, Morwell, Ballarat, Bendigo, Shepparton and Traralgon.
(10) Admission to the services of the Council is generally available to all sections of the community. There are no stated criteria for the public to use the Council's services, but under the terms of its approval under the Family Law Act, the organisation must provide marriage counselling. Therefore, the service is only available for those members of the public who are experiencing difficulties arising from a ``marriage'' problem. As a consequence, the services are available for people preparing for marriage, whether it be their first or subsequent marriages, for people who are married and are experiencing difficulties, for people who are separated or divorced and still experiencing difficulties and for the children affected by these situations. ``Marriage'' for these purposes is defined as two people who think of themselves as a couple and act accordingly within a boundary, the boundary being their sexual relationship. No age, sex, marital status or income criteria are applied for the use of the Council's service. The major group of people using the service are men and women between the ages of 25 and 40. They come from the full range of socio-economic groups in the community, but are predominantly middle class, as, I was told, is society in Australia generally.
(11) Although the objects of the Council are formally expressed in its memorandum of association, the emphasis of its activities has primarily been influenced by the requirements of the Family Law Act and the funding authority for marriage counselling organisations and the professional ``psychotherapeutic'' methods adopted by the counsellors. The primary objective of the Council has been expressed more recently and perhaps, it is said, more accurately, as the provision of ``specialist professional services to assist people at any stage in their relationships'' (1986-1987 annual report).
(12) In recent years only a limited time has been devoted to educational and research programs. For the most part, it is said, such activities are only pursued if they have a training or public relations objective and are related to the counselling and therapy program of the organisation.
(13) The Council presently provides the following counselling and ``therapy'' services: marriage preparation; marriage counselling; and divorce mediation.
(14) Marriage preparation is said to involve a diagnostic tool to assess attitudes and personal issues in areas that may be affected by marriage. Pre-marital counselling constitutes less than 2% of the activities of the Council.
(15) Marriage counselling was said to involve a ``psychotherapeutic'' process. There was a lot of discussion about what that term might mean, or should mean. The evidence does not enable me to make any affirmative finding of what is or ought to be

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comprehended within the term ``psychotherapy'' as that term is invoked, or as any underlying discipline is practised, in Victoria. The executive director said he used the word ``psychotherapy'' in this context to refer to the intervention in personal and marital problems by psychological methods rather than physical methods, that the principal method was the talking out of problems, and that by psychology he referred to the science of human behaviour. Counsel for the Crown put an altogether different meaning to the executive director in cross-examination, one apparently involving a limitation of application to people suffering from psychoses, which the executive director did not accept, and the professional witness called by the Crown, a psychologist, propounded another version. The executive director conceded that his staff did not treat ``mental illness'' or ``pathology'' but he was not, I think, comfortable with the terminology invoked. This may have been partly because the terms were not, to my mind at least, satisfactorily defined, and the discussion rarely, if ever, got out of the circular proposition that mental illness has to be treated by a psychiatrist (or clinical psychologist) and psychiatrists (or clinical psychologists) are only concerned with mental illness. The difficulty was confounded by the disclosure that there is apparently a body called the Victorian Association of Family Therapists which exercises some sort of claim to license people to practise ``therapy'' (that is, treatment) of problems within the family. In those circumstances, it would seem to me to be a waste of time to consider how some people might label the activities of the Council. The questions seem to me to be: what does the Council do; what is its purpose; and what are the effects of its activity?
(16) What I understand the staff of the Council to be doing in marriage counselling is trying to talk out the problems associated with marriage with those suffering from the problems. There must be co-operation from the person seeking help. About 20,000 interviews are conducted each year. 40% of these are with couples, 40% with women alone, and 20% with men. About 3,500 cases are dealt with each year, about 11,000 divorces being granted in Victoria each year. The average attendance is five interviews for each case. In about 1,000 cases only one interview is conducted. The current waiting list at the Kew centre is three to four weeks. The staff involved have varying levels of theoretical training and, doubtless, practical ability, although all are said to have specialist marital therapy training. The intervention of the counsellor may result in a movement toward preserving the relationship (reconciliation) or terminating the relationship, or to dealing with the practical or emotional problems arising from the relationship. The executive director said that the staff can recognise conditions requiring the assistance of other professionals. He thought that ``psychotherapy'' might be a form of ``treatment'', that it is not necessarily a psychiatric approach or a medical treatment, but that it is an important form of relief to conditions of real distress. It is said that over the past 20 years the Council has moved away from mere ``guidance'' and more in the direction of ``treatment''. Given the constraints imposed by the Family Law Act, and the difficulty in giving any satisfactory resolution to these concepts, it is, for me at least, difficult to quantify any such evolution other than to say, as I think is likely to be the case, that the methods of the Council have improved and that its staff have got better and tend to be more ``professional'' in their approach with the passage of time.
(17) The Council undertakes these activities because marriage guidance or counselling, as the name of the Council suggests, is an objective of the Council. The importance of marriage counselling to the community is recognised by the provisions of the Family Law Act to which I have referred. It seems to me to be an obvious fact of life that does not require formal proof that matrimonial separation and divorce can lead to stress and distress and make a significant contribution to the total level of human misery, and that any conduct bona fide and properly designed to reduce that misery is likely to be a positive contribution to the community. Something like that reasoning seems to me to run behind the provisions of the Family

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Law Act dealing with marriage counselling. There is, in any event, evidence pointing to a causal connection between marital breakdown and identifiable psychiatric or physical disorders.
(18) Evidence was led that marital therapy is beneficial. This was disputed. It was conceded to be less than perfect. But I am satisfied on the evidence that the work carried out by the Council in marriage counselling is more likely than not to assist people in the problems that they face in the breakdown of personal relationships such as marriage.
(19) Divorce mediation is regarded as a separate function. Mediators have training in family law. Mediation is designed to help separating couples make their own agreement concerning the future of their children, their finances and their property. It is conceded that the formalisation of such arrangements is left to the officials of the Family Court, or to the lawyers, but the executive director thought that the Council had achieved some successes of its own in this field.
(20) The executive director said that over the whole field of marriage guidance and marriage counselling, the Council provided services in respect of a wide range of marital problems. The staff of the Council accept what individual members of the public say is a ``marital problem'' for that purpose. The executive director concedes that not all divorce is stressful, although he is disposed to think that the matters leading to divorce are, in most cases, likely to be stressful. He concedes that the Council does not by its work directly alleviate poverty, but contends that his own experience shows that effective marriage counselling may have the effect of alleviating poverty by preserving a marriage, or making its dissolution more orderly. There is also evidence that effective reconciliation may reduce poverty by diminishing the number of sole parent families.

4. According to its memorandum of association, cl. 2, the objects for which the Council was established are:

``(1) To enlist through a national system of selection and training the services of men and women qualified for work of reconciliation and education in marriage and family life.

(2) To help parents and others to give children an appreciation of family life and to make available to young men and women before marriage such guidance as may promote right relationships in friendship, courtship, marriage and parenthood.

(3) To assist those who are about to marry to understand the native responsibilities and rewards of the married state.

(4) To work towards a state of society in which the welfare of the family shall receive primary consideration, and parenthood shall nowhere involve unreasonable social and economic disabilities.

(5) To conduct research and to encourage and assist the conduct of other persons and bodies of research into marital, pre-marital, domestic and sexual relationships.

(6) To provide and encourage and assist the provision by other persons and bodies of marriage guidance and advice and assistance upon marital, pre-marital, domestic and sexual relationships.

(7) To encourage and provide facilities for co-operation between persons interested or concerned in giving marriage guidance and advice or assistance upon marital, pre-marital, domestic and sexual relationships.

(8) To provide and to encourage and assist the provision by any other person or body of education of members of the public as to the nature of a need for a scientific approach to marital, pre-marital, domestic and sexual problems generally.

(9) To investigate the causes of marital, pre-marital, domestic and sexual problems, to conduct, encourage and assist the conduct by other persons and bodies of research for the prevention and solution of such problems and to assist by advice or otherwise any person having such problems.

(10) To purchase lease or otherwise acquire all such plant furniture books papers and equipment as may from time to time be necessary for carrying out the foregoing objects and to sell or dispose of any such plant furniture books papers and equipment as shall have become unnecessary for the purposes of the Council.

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(11) To publish print and sell any publication periodical book or leaflet that the Council thinks desirable for the promotion of its objects.''

Ancillary objects follow. Clause 3 contains the usual prohibition on distribution of income to members. Clause 5 records that para. 3, 4 and 9 of cl. 2 contain conditions on which the licence by the Attorney-General was given to the Council under sec. 19 of the Companies Act 1958. Clause 8 contains the usual prohibition on distribution of assets to members on winding-up.

5. The annual reports of the Council reflect the broad range of activities contemplated by the memorandum of association. For a number of years, the principal activities of the Council have been described in its annual report as:

``Counselling:

To provide counselling to men and women who experience difficulties at any stage of their relationship.

Education and Training:

To provide undergraduate and post-graduate training in marriage counselling.

Scientific Investigation and Research:

To conduct research into pre-marital, marital, family and sexual relationships.''

6. The issue on that primary evidence is whether or not the Council is ``a public benevolent institution'' within the terms of sec. 10(1)(ba) of the Act. Section 10(1)(ba) exempts from pay-roll tax wages paid or payable:

``by a public benevolent institution to a person during a period in respect of which the institution satisfies the Commissioner that the person is engaged exclusively in work at the institution of a public benevolent nature;''

That exemption from liability to pay-roll tax occurs in conjunction with the exemption given to bodies such as the Governor, religious institutions, public and non-profit making hospitals, private schools, local councils, consular representatives, United Nations' agencies, the War Graves Commission, the Australian-American Educational Foundation and the defence forces. It is conceded by the Crown that the Council is ``an institution'' and that its activities are ``public'' for this purpose, but the Council accepts that it is not sufficient for it merely to show that it is ``benevolent''. This is because the composite phrase ``public benevolent institution'' has been the subject of exposition in the Courts.

7. In
Perpetual Trustee Company Limited v. F.C. of T. (1931) 45 C.L.R. 224 the High Court had to consider whether the Royal Naval House Sydney was a ``public benevolent institution'' within the terms of the then operative federal death duty legislation. Section 8(5) of the Estate Duty Assessment Act 1914-1928 provided:

``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.''

The house was built on land made available by the Government and used for the benefit of petty officers and lower ratings of the Navy by providing accommodation and recreation for them when ashore, and its benefits were extended to the lower ratings of visiting foreign war vessels. Relatively small charges were made for sleeping accommodation and the facilities provided. Financial deficiencies arising on the operations were made up by an annual grant from the Federal Government and by subscriptions and donations. The High Court held that the Royal Naval House was not a public benevolent institution. Starke J. referred to the context and history of the relevant statutory exemption and said (at pp. 231-232):

``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

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

His Honour thought that it would surprise English speaking people to learn that in the Royal Naval House naval forces were accommodated and entertained at a public benevolent institution. Dixon J. said (at pp. 232-234):

``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... 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... 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.''

Evatt J. referred to ``benevolent institutions'' currently in place and said (at pp. 235-236):

``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.''

His Honour went on to say that a rating would have regarded with amazement, if not indignation, the proposition that he was being put up at a ``benevolent institution'', ``for he is not a person in distress''. McTiernan J. dissented on the application of the law to the facts, but he had this to say as to the relevant law (at p. 241):

``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.''

8. The decision in Perpetual Trustee was of course decided in respect of a particular statutory context which had its own history, and, equally as importantly, in respect of a term which the members of the Court felt comfortable in being able to apply to existing institutions that appear to have had definable characteristics at that time. The various judgments make it clear that each of these matters was determinative. In
Maughan v. F.C. of T. (1942) 66 C.L.R. 388 at p. 395 McTiernan J. was able to observe (at p. 395) that the expression ``public benevolent institution'' was not a term of art. But I think that it has now become so, at least at this level of the hierarchy, particularly since this Tribunal is an administrative body and not a court (cf. Case P104,
82 ATC 551 at p. 557). In
ACOSS v. Commr of Pay-roll Tax 85 ATC 4235 at p. 4242; (1985) 1 N.S.W.L.R. 567 at p. 575, Priestley J.A. thought there was much force in the proposition that the Perpetual Trustee case should not be mechanically applied, and that the content of the words ``public benevolent

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institution'' had expanded since 1931, since popular ideas of benevolence at that time (the time of the Great Depression) revolved around the concept of direct provision of aid for the unemployed and the needy, and the High Court had not had to consider the less direct activities of a body which might be wholly or primarily directed to the ultimate reduction of distress of the relevant kinds. But the fact remains that the judgments of the High Court in Perpetual Trustee have been consistently applied now for more than 50 years in various statutory contexts, both State and federal. The judgments have been applied to statutes that have been successively re-enacted. It may well be that the courts do not give as much weight as before to the suggestion that re-enactment after judicial definition implies endorsement of the definition (
Salvation Army (Vic.) Property Trust v. Ferntree Gully Corporation (1952) 85 C.L.R. 159 at p. 174), but I find it impossible to ignore the long history of the application of the judgments in the Perpetual Trustee case before and after re-enactment.

9. The constant application of the judgments in the Perpetual Trustee case does not, I think, mean that the law is necessarily frozen in its operation. In
F.C. of T. v. Launceston Legacy 87 ATC 4635 at p. 4646; (1987) 75 A.L.R. 122 at p. 137 Northrop J. said that he thought that it was too late to attempt to give a different meaning to the phrase ``public benevolent institution'' where that phrase appears without the precise context of the federal death duty legislation before the High Court, which referred to persons ``in necessitous circumstances''. But his Honour went on to say that ``the authorities cited show a softening attitude to what comes within the concept of `benevolent' in the phrase `public benevolent institution'''. While the denotation of a term may be constant, its connotation may vary with circumstances; this is a proposition familiar to constitutional lawyers. It is, I think, clear that the law of charity has evolved since the decision of the House of Lords in Commrs for
Special Purposes v. Pemsel (1981) A.C. 531 (see e.g.
Taylor v. Taylor (1910) 10 C.L.R. 218 at p. 231; Jordan, Chapters in Equity at p. 37;
Scottish Burial Reform and Cremation Society v. Glasgow Corporation (1968) A.C. 138 at p. 154;
Perpetual Trustee Co. Ltd. v. Groth (1985) 2 N.S.W.L.R. 278 and In
re Koeppler's Will Trusts (1985) 3 W.L.R. 765) and there is in my view no reason why there cannot be a similar evolution of the connotation of the term ``public benevolent institute'' [sic] within the criteria outlined by the High Court in the Perpetual Trustee case.

10. The question is, I think, to be determined by reference to both the stated objects of the Council in its memorandum of association and to its actual functions: Case R6,
84 ATC 140;
SSAU Nominees Pty. Ltd. v. F.C. of T. 85 ATC 4632; (1986) V.R. 355.

11. The Council accepted that the issue fell to be determined in light of the Perpetual Trustee Co. case as expounded by later decisions. It argued that the principal criterion is the extensiveness of the class that the public institution aims to benefit; that the concept of benevolence is not limited to the provision of services to the destitute or to relief of poverty; that the alleviation of conditions that give rise to the misfortunes referred to in the Public Trustee Co. case are activities just as benevolent as ``therapy''; that marriage counselling directly reduces distress and pain associated with marital disharmony or separation; and that marriage counselling alleviates poverty resulting from separation and divorce. The general position of the Council amounts, I think, to this: it is conceded that the Council is a public institution; the Council aims to benefit people who need help; its aims and activities are recognised and encouraged by the Commonwealth; there is an urgent and continuing need in individuals and the community generally for such help; the help of the Council can and does benefit people by relieving them of suffering and distress; the Council carries out its activities not to make money but to benefit those unfortunate enough to need its help; common sense therefore demands that the Council be regarded as a public benevolent institution. The Council referred to some specific decisions on their facts. In Maughan, above, the High Court held that the Boys' Brigade Inc. was a public benevolent institution. The institution was financed entirely by public donations, bequests and subscriptions; its buildings were situated in slum areas and provided free of charge for the boys of these and surrounding slum areas facilities which more fortunate boys obtained in their own homes, and which thus kept them off the streets; the boys who enrolled were underprivileged and invariably in poor

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circumstances; on an average between 800 and 900 boys each year availed themselves of the facilities provided by the Brigade. McTiernan J. observed (at p. 395) that poverty is a relative condition and that the only reasonable inference was that the charity of those who maintained the Brigade was excited by social conditions arising from poverty and that the dominant object of the institution was to elevate boys adversely affected by those conditions. Williams J. observed (at p. 397) that the level of voluntary enrolment proved that the institution catered for a real want. In
Lemm & Ors v. F.C. of T. (1942) 66 C.L.R. 399 the High Court held to be a public benevolent institution a home for aged women in straitened financial circumstances. Williams J. observed (at p. 410) that a home for women in such circumstances, even if they are able to pay £1 per week, is an institution organised for the relief of poverty. His Honour then went on to observe that poverty is a relative term. In
Federation of New South Wales Police Citizens Boys Club v. Council of the City of Greater Wollongong (27 June 1957, unreported) Brereton J. held to be a public benevolent institution a police boys' club. His Honour observed (at p. 7 of the transcript) that while ``benevolent'' connotes the relief of poverty, suffering, distress or misfortune, ``poverty need not be dire, nor the distress severe''. His Honour did not think that the boys' club could be regarded as being established for the relief of poverty in itself, but that the object was to relieve conditions which are known to nurture delinquency. His Honour thought that there was no good reason for holding that any action to rescue youths from the peril of delinquency was not equally benevolent. ``Put briefly, it is difficult to see why prophylaxis should be not regarded as an activity just as benevolent as therapy. Certainly from the point of view of public benefit, prevention is a great deal better than cure'' (pp. 8-9 of the transcript). His Honour then went on to find in addition that the institution was charitable, within the legal meaning of that term. In the Launceston Legacy case, above, Northrop J. held the Launceston Legacy to be a ``public benevolent institution''. His Honour said (at ATC p. 4646; A.L.R. p. 137):

``On the facts of the present appeal, I am satisfied that Launceston Legacy is an institution organised 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.''

12. The Crown argued that the Council had to bring itself within the terms of the judgments in the Perpetual Trustee Co. case; that the relief that is given must be given freely and directly; that prevention of the underlying conditions of the misfortunes referred to is not enough; that the recipients of the benevolence must be identified by the institution; that an eleemosynary element is necessary, or alternatively, highly desirable, and that a substantial part of the activities had to be (and were not) devoted exclusively to benevolent purposes. The Crown further contended that during the relevant periods the Council was not engaged exclusively in work of a public benevolent nature within the terms of sec. 10(1)(ba) of the Act. The Crown also relied on a few decisions on their facts. In Case L21
(1960) 11 T.B.R.D. 117, the Taxation Board of Review (No. 2) held that the Marriage Guidance Council of Western Australia was not a public benevolent institution within the meaning of the then relevant part of the Income Tax Assessment Act. The work of that body may or may not have been different to that now performed by the Council in this case. The Chairman said (at p. 121):

``The work of the Council is both educational and in the nature of applied psychology or a superficial form of therapy but, in my opinion, it is not benevolent.''

Mr A.P. Webb said (at pp. 124-125), after referring to the argument of the taxpayer as having ``an enlightened common sense appeal'', and to the present state of the law in light of the judgments in the Perpetual Trustee case:

``To hold in the face of those observations that a body, which is neither promoted nor

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conducted for the relief of poverty, sickness, destitution or helplessness in the relevant sense in which those words are used, but which relieves or prevents conditions analogous to those engendered by poverty, sickness, destitution, or helplessness appears to me to be going too far. The word `benevolent' used in the expression has not, I think, its general descriptive meaning any more for Income Tax legislation than for Estate Duty, but is used in its technical, legal sense... It may well be true that marital disharmony tends to nurture juvenile delinquents in the same way as does poverty. Marital disharmony might well occur from conditions of sickness, destitution or helplessness. But it does not follow that the prevention or relief of marital disharmony is `benevolent' in the relevant sense. Conditions which produce the same consequences need have nothing else in common.

Another reason why I think the taxpayer's argument must fail can be seen by applying the very practical test used by Starke J. and Dixon J. (as he then was) where they regarded the use of the phrase `public benevolent institution' in relation to Royal Naval House in the Perpetual Trustee Co. Case as `odd', `inappropriate', and `surprising'.''

In Case R6, above, the Victorian Taxation Board of Review, the predecessor of the Taxation Division of this Tribunal, held not to be a public benevolent institution a body the activities of which were directed over a wide field toward providing information, advice and instruction on the methods of contraception, and which ran a clinic, a ``drop-in centre'' and conducted public education and professional training in the area. It was, I think, a fundamental part of that decision (at 84 ATC p. 150) that having regard to the totality of the activities of the taxpayer, it was not possible to conclude with any feeling of assurance that in respect of a substantial or non-insignificant part of those activities, the body was either ``organised for'' or ``promotes'' the relief of poverty or destitution, and that it was even more difficult to conclude that any such part of its activities was directed to the relief of misfortune, helplessness, distress, suffering or sickness. The Board concluded (at pp. 150-151):

``That an institution may incidentally provide to persons in impecunious (or other appropriate) circumstances services gratuitously which it offers to the generality for a charge does not necessarily constitute that institution one of a `benevolent' character within the statutory meaning of such a body...''

In Case S70,
85 ATC 501 the Commonwealth Board of Review held not to be a public benevolent institution the body known as Parents Without Partners. The reasoning was similar to that invoked in Case R70, above. The Board considered the judgments in the ACOSS case above, and held (at p. 513):

``Whilst the activities carried on indicate a genuine concern in an abstract sense with the relief of poverty and distress, they manifest that concern for the most part, not by the organisation of aid in a direct and immediate sense, but by the provision of what was described by the courts of social welfare generally.''

13. In my view, there are three problems confronting the Council in its attempts to bring itself within what I understand to be the currently permissible connotation of the term ``public benevolent institution''. First, even in the field of marriage counselling, the range of objects and activities of the Council is very wide. I find it impossible to say that the Council is devoted exclusively to the relief of distress, whether that distress is said to arise from physical, emotional or economic considerations. The staff of the Council accept what they are told by their client is his or her understanding of what is a marital problem, and the range of such problems, and their consequent capacity to lead to distress or helplessness, must therefore be very extensive. In fact the Council sees its objective as being capable of being compendiously described as the provision of ``specialist professional services to assist people at any stage in their relationships''. On the whole of the evidence, I do not think that statement represents a misleading description of the Council's reason for being. I find it very difficult to associate this range of services with the relief of misfortune or distress, except by extending the relevant terms to include any bona fide public welfare organisation that answers a real need across the community in respect of emotional problems,

ATC 2090

and I do not think that the law presently permits that extension.

14. The second, and related, problem, is that the Council does not seem to see itself as being wholly or even predominantly concerned with the alleviation of problems arising out of the marriage relationship. Both in its memorandum of association and its annual reports, equal stress seems to be placed on education (even though mainly by way of training of staff, actual or prospective) and research. I think that there is much force in the contention of the Crown that a substantial and not insignificant part of the activity of the organisation must be devoted exclusively, or at least predominantly or chiefly, to the relevant benevolent purposes: see Case R6. This requirement is reinforced by the reference in sec. 10(1)(ba) of the Act to the institution being ``engaged exclusively'' in the relevant work. On this point I was referred to a number of cases, including Salvation Army (Victoria) Property Trust v. Ferntree Gully Corporation, above;
Stratton v. Simpson (1970) 125 C.L.R. 388; and the Launceston Legacy case above, at ATC p. 4647; A.L.R. p. 138; for an analogy in the charity context, reference may be made to
Inland Revenue Commrs v. Yorkshire Agricultural Society (1928) 1 K.B. 611 at p. 631 per Atkin L.J. The evidence on this point was a little unsatisfactory. There was no breakdown of resources of the Council between the various activities that it says it pursues. I think that the impression given by the annual reports may be misleading. The Council may be a victim already of the system of precedent in the laying out of the annual reports. The directors' reports for the past three years have included the statement that ``the principal activities of the Company during the year were to provide counselling for men and women, at various stages of their matrimonial relationships''. I think I should attach much more weight to this statement of the directors than to the blurbs in the annual reports. In his principal affidavit the executive director swore:

``In recent years only a limited time has been devoted to educational programmes. At present lectures and activities other than counselling comprise an insignificant part of the Council's activities. Such activities are only pursued if they have a training or public relations objective which is incidental to the counselling and therapy programme of the organisation.''

Having considered the matter, I do not think that any of the other evidence requires me to find that this is not a correct statement; on the whole of the evidence, I was left with a clear impression that marriage counselling is the main business of the Council, and I find that the other activities are incidental to marriage counselling. Accordingly, I do not think that this problem is fatal to the Council. But I do not think that it is immaterial to the proper consideration of the extent to which the marriage counselling activities of the Council may be held to be benevolent in the recognised sense.

15. The third main problem is that the fee structure of the Council, and the process by which in practice the Council sets its fees, in my view go against the requirements of the judgments of the High Court in the Perpetual Trustee case. The reference to an ``eleemosynary'' aspect is, I think, a reference to a ``charitable'' element, in the popular sense of the word ``charitable'' as involving gratuitous gifts to those who are in need. The inference that I think is open, and which should be drawn, is that while the Council does not charge at the rates being charged by other professionals - I was told that some clinical psychologists are charging $102 per hour - it does in fact seek to recoup fees at a level which it thinks the ``market'' will bear, in order to be able to carry on its activities. This is, I think, particularly so in relation to ``sessional'' consultations. ``Clients' fees'' constitute about 40% of the income of the Council, and the average fee per interview ($22.12 for 1986-1987) cannot, in my view, be characterised as insubstantial.

16. These difficulties appear to me to be substantial. In order to succeed in this appeal, the Council would, I think, have to stretch to a considerable degree the following notions: the activities of a public benevolent institution should result in a direct alleviation of distress or helplessness, even if prevention may be treated in principle on the same level; the predominant function of such an institution must be so directed; and the services it provides must be freely given.

17. As will, I think, be apparent from some of the citations above, courts determining this

ATC 2091

question have frequently asked themselves whether the taxpayer comes within their own understanding of what is a ``public benevolent institution''. I have some difficulty with this. It is, I think, quite likely that what may come within the popular understanding of such a term has changed substantially since 1931. On the other hand, if, as I believe to be the case, the law is now that the permissible connotation of the term must be determined by reference to the judgments of the High Court in the Perpetual Trustee case, I think that it may be dangerous to have regard to what may be the popular understanding of the term ``public benevolent institution'' since the legal denotation is such that for legal purposes the phrase is now a term of art. In the ACOSS case, above, Street C.J. (at ATC p. 4236; N.S.W.L.R. p. 568) said that the phrase was not a term of art, but went on to hold (at ATC p. 4237; N.S.W.L.R. p. 569) that the matter is not one in which laws or approaches previously laid down require to be moulded to accommodate modern social conditions and expectations. Nevertheless, for what it is worth, I should say that it would not offend my understanding of the contemporary usage of the phrase ``public benevolent institution'' to hear the Council described as such an institution. On the other hand, if I attended at the Council for a consultation, and after some little discussion and negotiation, depending on the candour of the discussion and the vigour of the negotiation, was asked to put up $150 for an interview, my impression might vary.

18. In the end, the Crown did not abandon its contention that relief of poverty is an essential element in the notion of a public benevolent institution. I myself do not think that this is the case. I do not think that any such proposition follows from the judgments in the Perpetual Trustee case, and I think that the proposition cannot now stand with the actual decision of the Federal Court in the Launceston Legacy case. To the extent to which the Board of Review held a different opinion in 1960 in Case L21 above (see Mr Webb at p. 122), I must respectfully differ. But the Crown said that if the relief of poverty is not present, there must be some other element. Reference was made to the use of the word ``eleemosynary'' and the distinction apparently drawn by Sir Owen Dixon in the Perpetual Trustee Company case (at p. 233) between ``benevolent'' and ``benignant''; reference might also be made to the distinction made by his Honour between public benevolence and charity in the legal sense in Public Trustee v. F.C. of T. (1934) 51 C.L.R. 75 at p. 104. The difficulty is to give any satisfactory and workable meaning to either of these terms. ``Eleemosynary'' and ``benignant'' are words not much in use nowadays. I notice that the first citation given in the Shorter Oxford English Dictionary for ``benign'' is ``1. Charity is benynge WYCLIF.'' As I have remarked above, the Perpetual Trustee case was decided in a particular statutory context and by reference to the institutions then generally understood to come within the relevant class. Nevertheless, a substantial part of the argument of this case consisted of poring over the words of the judges as if they were the words of a statute. It is ironic that so much effort has to be expended in considering the judgments of some of the greatest jurists that this country has produced in an exercise that each of them would have regarded as a juristic heresy. But that exercise is, I think, very like the exercise that one is driven to perform by the authorities. On the other hand, an express or implicit refusal to follow those decisions would lead to its own problems, and may elevate impression to an undesirable level. It is one thing to make a judgment on a matter of degree: it is altogether another thing to decide a case as a matter of impression.

19. The factors that bodies that have been held to be public benevolent institutions appear to me to have in common are, first, that help is being given to people who for one reason or another are not able to help themselves, secondly, that help is given not just out of feelings of concern that ordinarily affect people when seeing other people in difficulty, but out of a commitment to do something to help such people as a matter of principle, and, thirdly, that so far as possible the help is given in return for nothing. These matters all involve questions of degree. It may be that notions change as to when people need help and when the community should help those in need - I have not forgotten that for many people a ``do-gooder'' is a proper object of abuse - but I do not think that any such change is sufficient to embrace the whole class of beneficiaries of the Council, and the whole range of the problems faced by those people. For the

ATC 2092

reasons discussed above (para. 13-15) it is my view that the range of human problems that the Council seeks to deal with is too wide, and the level of return that it seeks to and does achieve from those it helps is too substantial, for the Council to come within the accepted meaning of the term ``public benevolent institution'' as established in the Perpetual Trustee case.

20. In point of dry precedent, I am not persuaded that there is any significant distinction between the objects and conduct of the Council in this case, and those of the Council in Case L21 above. The main difference appears to me to be that this Council employs more paid counsellors. This is, after all, a pay-roll tax case. If that difference does constitute a distinction, I do not know that it necessarily assists the Council in this case. Further in point of dry precedent, I think that the actual decisions, and the reasons for the decisions, in Case R6 and Case S70 are too close for comfort for the Council in this case.

21. It follows, I think that the assessments must stand.

22. At the conclusion of the argument I indicated a provisional view that whatever might be the result there should be no order as to costs. I took the view that this was a serious argument about a serious and bona fide welfare agency and that in those circumstances it would not be appropriate to order costs against the loser, whoever that might be. Counsel then on instructions said that they agreed to that course.

23. For the reasons given above, the decision of the Tribunal is:

(1) the assessments under reference are affirmed; and
(2) there is no order as to costs.

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