Case W31

Members:
IR Thompson DP

Tribunal:
Administrative Appeals Tribunal

Decision date: 14 April 1989.

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I.R. Thompson (Deputy President)

The taxpayer is a minister of ``The A church in Australia'' (``the church''). The church has a beneficiary fund. In the tax year which ended on 30 June 1985 he was paid from the beneficiary fund $42,483. The payment was made under r. 17(4) of the rules for the beneficiary fund; that rule provides for the payment of an annuity and a capital sum to a minister upon his retirement permanently on medical grounds. The respondent regarded that amount as having been paid to the taxpayer as an ``eligible termination payment'', as defined in sec. 27A(1) of the Income Tax Assessment Act 1936 (``the Act''). He, therefore, treated 5% of the amount paid in respect of the period before 1 July 1983 and the whole of the amount paid in respect of the period from that date also as assessable income. Consequently, the total amount of the payment treated as assessable income was $3,122. The taxpayer objected to the assessment. He considered that the amount of $3,122 was not assessable income. His objection was disallowed; he then requested that the objection decision be referred to the Administrative Appeals Tribunal for review.

2. At the hearing the taxpayer was represented by Mr A.J. Myers, of Her Majesty's counsel, and Mr J.W. de Wijn, of counsel; the respondent was represented by Mr P.J. Cosgrave, of counsel. Oral evidence was given by the taxpayer and by another minister of the church who is the managing treasurer of the beneficiary fund. The constitution and regulations of the church and the regulations and rules for the beneficiary fund were tendered in evidence. So were a copy of the taxpayer's income tax return for the 1985 tax year and a letter addressed to the second witness by the general secretary of the synod of Victoria of the church advising him that on 10 September 1984 the standing committee of the synod had approved the taxpayer retiring permanently ``from active ministry under the provisions of Regulation 2.5.2(a) on health grounds''. Further, reference was made to an Act of the Parliament of Victoria relating to the church; it provided inter alia for the establishment of the A Church in Australia Property Trust (Victoria) and for property to be vested in or acquired by the trust.

3. Before 1984 sec. 26(d) of the Act provided that the assessable income of a taxpayer was to include 5% of the capital amount of any allowance, gratuity or compensation where that amount was paid in a lump sum in consequence of retirement from, or the termination of, any office or employment (with certain exceptions). In 1984 para. (d) was repealed and provision made in a new Subdiv. AA of Div. 2 of Pt III of the Act in respect of payments within the definition of ``eligible termination payment''.

4. That provision was effective for the 1985 tax year. The expression ``eligible termination payment'' was defined in sec. 27A(1). The part

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of the definition which is relevant in these proceedings is as follows:

``27A(1) `eligible termination payment', in relation to a taxpayer, means -

• (a) any payment made in respect of the taxpayer in consequence of the termination of any employment of the taxpayer, other than a payment -
  • ...''

5. Section 27B of the Act provided, in effect, that moneys received by way of an eligible termination payment in respect of the eligible service period that occurred on or after 1 July 1983 were to be included in the taxpayer's assessable income. Section 27C provided, in effect, that 5% of moneys received by way of an eligible termination payment in respect of an eligible service period that occurred before 1 July 1983 was to be included in his assessable income.

6. Mr Myers, in opening the taxpayer's case, relied entirely upon an argument that none of the moneys received was an eligible termination payment. As one ground stated in the notice of objection against the assessment was that the whole of the amount received was a capital receipt and not income assessable pursuant to sec. 25(1) or any other section of the Act, I asked the parties to state their positions in respect of that ground. They agreed that in these proceedings the only issue was whether or not the moneys were received as an eligible termination payment and that, if the Tribunal were to decide that they were not, it would be open to the respondent to consider whether or not the whole of those moneys were assessable income pursuant to sec. 25(1) or any other section of the Act and, if so, to issue an amended assessment in accordance with sec. 170 of the Act. In that regard it is to be noted that the date upon which the tax assessed became due was 26 June 1986.

7. The issue in these proceedings is, therefore, whether the payment was made in respect of the taxpayer in consequence of the termination of any employment of him. In sec. 27A(1) ``employment'' is defined as including the holding of an office; ``office'' is not defined. As noted above, sec. 26(d) before its repeal related to amounts paid ``in consequence of retirement from, or the termination, of any office or employment''. In a number of cases the courts and the Taxation Boards of Review considered the meaning of that expression in sec. 26(d); what was said in those cases remains relevant to its use in sec. 27A.

8. The constitution of the church was in force in the 1985 tax year. It provided for there to be members of the church and for three classes of persons engaged in the church's ministry, ministers of the word, deaconesses and lay pastors. The taxpayer was a minister of the word. For convenience I shall refer to him simply as a minister. For the purposes of the government and administration of the church the constitution provided for there to be congregations, parishes, presbyteries, synods and an assembly. A parish might consist of one or more congregations. A presbytery was a council of the church, the members of which were ministers, deaconesses, persons in other ministries and confirmed lay members of the church elected to represent parishes within the bounds of the presbytery. Clause 13 of the constitution provided that ministers were to be ``responsible to a Presbytery in matters of faith and discipline and to the Parish or other appointing body for the exercise of their Ministry''. Clause 17 empowered the assembly to make provision whereby parishes and other bodies through the relevant presbytery might call or seek the appointment of a minister. A minister so called or appointed was then said to be ``settled'' in the parish. Clause 17 of the constitution also provided that appointments might be made to a college, institution, office or other agency of the church and that settlements to other forms of ministry might be made as prescribed. It provided also that settlements might be terminated.

9. The assembly had made regulations as authorised by the constitution. In a number of the regulations there were references to the minister's office, that is to say the office of being a minister of the church. The duties of a minister were stated in reg. 2.3.10. They were related to the church as a whole and were not specific to any duties of a minister settled in a parish. However, duty (f) was ``careful attention to all administrative responsibilities pertaining to the Minister's office''; such administrative responsibilities necessarily arose out of the settlement in which he was placed for the time being. Consequently, a minister settled in a parish exercised his office as minister by reference to his settlement in that parish.

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10. Regulation 2.3.12 provided for the classification of ministers. One classification was in a settlement. Another classification was serving in a form of ministry outside the jurisdiction of the church. Other classifications were without settlement due to temporary ill health, absence for approved study, absence for secular employment, secondment or transfer to another church, and being permanently retired due to age, health or other reasons.

11. Regulations 2.5.2 and 2.5.3 were headed ``Termination of Active Service''. Active service was not defined anywhere in the regulations. However, reg. 2.5.2 provided that it was to continue until terminated by the synod on the recommendation of the presbytery on any of a number of stated grounds. Those were, broadly stated, the grounds for a minister being classified as without settlement in accordance with the provisions of reg. 2.3.12. It is apparent, therefore, that the reference in the regulations to active service was to the performance by a minister of the duties of a minister in a settlement or in the course of serving in a ministry outside the jurisdiction of the church or being classified as without settlement and awaiting settlement.

12. Regulation 2.4.5 provided in para. (a) as follows:

``2.4.5(a) The Synod shall, through the Settlements Committee and by assistance to the Presbyteries, ensure that as far as possible

• (i) every Parish within the bounds shall have a settled ministry, and
• (ii) every Minister available for active service shall have a settlement.''

13. The nature of settlement was stated in reg. 2.4.1. Paragraph (a) of that regulation was as follows:

``2.4.1(a) Settlement is the placement of a Minister in a position of responsibility for the regular discharge of the duties of the ministerial office under the jurisdiction of the Church.''

Regulation 2.4.2 provided that settlements which were considered necessary to be made and maintained within the bounds of the synod were to be designated as approved placements; the settlement of a minister in the parish in which the taxpayer was settled was not an approved placement.

14. Regulation 2.6.2 required that a minister in settlement should be paid a stipend. Regulation 3.2.4 which stated the responsibilities of a parish, was, in so far as is relevant in these proceedings, in the following terms:

``3.2.4(a) A Parish shall do all things possible to assist the Congregations toward the better fulfilment of their responsibilities and, without limiting the foregoing, attention shall be given to the following:

• ...
• (ii) the provision of facilities and resources in support of the work of the Congregations, including stipends and allowances and other provisions for the support of the ministry, provided that stipends shall be the first charge on the funds of the Parish;''

15. The regulations provided for there to be a parish council for each parish and for the parish council to be responsible for a number of matters; they may be broadly described as the management of the affairs of the parish. A minister settled in a parish was, by virtue of reg. 3.3.3, a member of its parish council. The other members included members elected by the congregation or congregations constituting the parish.

16. Mr Myers asserted that the effect of the constitution and regulations of the church was that a minister settled in a parish was not an employee of the church, the parish or any of the other bodies established by the constitution for the government and administration of the church's affairs. Although his stipend was provided by the parish in which he was settled, the parish could not direct him as to the work which he was to perform or how he was to perform his work in the parish. The church as such did not pay him; nor did any other body established by the constitution other than the parish. His duties derived from the regulations made by the assembly under the authority of the constitution. Mr Cosgrave did not present any argument that the taxpayer as a minister settled in a parish was in the employment of the parish or of any other person or body. I find that he was not.

17. All Mr Cosgrave's arguments were directed to establishing that the taxpayer retired from an office. That is the issue which remains

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to be decided. The taxpayer was a minister of the church. He was settled in a parish of that church. He was one of two ministers settled in the parish; provision for such collegiate ministries were made in reg. 2.3.11. Partly because of injuries sustained in a motor car accident and partly because of a heart condition he sought to have his active service terminated permanently by the synod in pursuance of reg. 2.5.2(a), that is to say for health reasons. It was as a result of that request that the synod decided, as stated in the general secretary's letter, to give approval for him to retire permanently from the active ministry on 31 December 1984. Under the provisions of r. 17(4) of the beneficiary fund the taxpayer became entitled to payment of an annuity and to payment of a lump sum. He also became entitled, under r. 27(b), to have not more than one-half of the annuity commuted and paid as an additional lump sum at his request. He requested such commutation. Thereupon the total of the two lump sums was paid to him from the beneficiary fund. That is the payment which is the subject of the assessment to which objection was taken by the taxpayer. It is to be noted that in subpara. (a) and (b) of r. 17(4) the circumstances of such a payment are referred to as ``the Retirement permanently of a Minister... on medical grounds''.

18. The taxpayer gave evidence, which was not disputed, that since the termination of his active service he had become a member of another parish and had performed in that parish from time to time duties of a minister, including conducting worship, administering the sacraments, conducting funerals, teaching and organising groups of members for church activities. He said that he was still an authorised marriage celebrant and celebrated marriages. He received no stipend or other payment from the parish; however, he was permitted to retain all or part of payments made by persons for whom he celebrated marriages. He was also paid travelling expenses for any journeys which he had to make in the course of the performance of his duties.

19. Asked about his administrative tasks in the parish in which he was settled, the taxpayer said that he had been the chairman of a number of committees of the parish council and of the elders (members appointed by the congregation as provided for by the constitution to share with the minister, in effect, in the performance of his pastoral duties in the parish). He said that as chairman he had guided and controlled meetings. He had organised the agenda for the meetings. However, the secretary of each committee had sent out the notices advising members of the committees of the time, place and agenda for each meeting. The secretary had prepared the minutes of meetings. The taxpayer said that he had probably given the secretary directions about some things. Most letters had been written by lay persons but he had himself written some. He pointed out that a minister in his administrative role in the parish did not have either the final say or prime responsibility. On occasions he had done things at the request of the parish council with which he had not agreed, because it had had the responsibility for making decisions in those matters.

20. He accepted that as minister settled in a parish he had been in a position of trust and had owed duties to the congregation or congregations of that parish. He said that in his present parish he always responded positively to requests if his health and other commitments permitted it. In deciding whether or not to respond positively to a request he acted in accordance with his perception of his duty to God. He was committed to his faith in God and had an interest in trying to further God's work in the parish. He considered that, if a day's work were regarded as eight hours, he spent two to three days a week on God's work in his present parish. His commitment to God was the overriding consideration; he did what he believed God wanted him to do. The difference between his present situation and that of a minister settled in the parish was that that minister was in a full-time appointment but he was not. He said that when he was settled in his parish, the parish had provided a house for him to live in. He had paid the rates and electricity accounts. In his present parish he lived in his own house. While settled in his parish the benefits which he had received had been the house, long service leave, annual leave and payment of his stipend during periods of absence through illness. He said that he did not receive any of those benefits in his present situation.

21. In the taxpayer's income tax return for the 1985 tax year he disclosed the receipt of a lump sum payment of $41,315, stating that he had received the lump sum payment ``upon

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retiring as a Parish Minister''. The statement continued with an assertion that he was a ``self-employed person'' and that the amount received was not an eligible termination payment within the meaning of sec. 27A. Giving evidence, he said that he believed that that statement had been drafted by the accountants who had prepared his return, and not by himself. However, he acknowledged that he had signed the statement as being correct.

22. The second witness gave evidence that, before he had become the managing treasurer of the beneficiary fund, he had been a minister in settlement in a parish. He said that a house had been provided for him by the parish because he was settled in it and that, when a minister ceased to be settled in a parish, he was required to vacate the house made available to him by the parish. Then, if another minister was settled in the parish, the house was provided for him as his residence. Asked about ministers without settlements but awaiting them, he said that the synod of Victoria had decided to pay them a stipend at the usual rate and, so that they could meet their commitments in respect of motor vehicles that they were buying, an amount to take account of the travel allowance which they would normally have received in a parish. However, if they had not been settled by the end of a year, the stipend might no longer be payable to them. It was a situation which caused him concern.

23. The meaning of the phrase ``in consequence of'' in sec. 26(d) was considered by the High Court of Australia in
Reseck v. F.C. of T. 75 ATC 4213; (1975) 133 C.L.R. 45. At ATC pp. 4216-4217; C.L.R. p. 51 Gibbs J. (as he was then) stated:

``Within the ordinary meaning of the words a sum is paid in consequence of the termination of employment when the payment follows as an effect or result of the termination. In the present case the payment did follow as a result of the termination of the taxpayer's services.''

It was argued that, where a payment was made in consequence of an employee's past service as well as in consequence of his retirement, that prevented the payment being treated as having been made in consequence of his retirement. At ATC pp. 4217 and 4219-4220; C.L.R. pp. 51 and 56 Gibbs J. and Jacobs J. respectively rejected that argument and held that the termination of the employment need not be the dominant cause of payment.

24. In
McIntosh v. F.C. of T. 79 ATC 4325; (1979) 25 A.L.R. 557 the Federal Court was concerned with a situation where an employee was entitled to a pension but could opt to commute the whole or a part of it into a lump sum payment. At ATC p. 4328; A.L.R. p. 561 Brennan J. said:

``On and by reason of retirement, a contributor who has earlier elected to require commutation is entitled to payment of a lump sum; on and by reason of retirement, a contributor who has not elected to require commutation, acquires the right to become entitled to payment of a lump sum. In either case retirement is the occasion of and a necessary condition of becoming so entitled, and a payment made to satisfy the entitlement is made in consequence of retirement.''

Toohey J., after referring to Reseck's case, said at ATC pp. 4330-4331; A.L.R. p. 564:

``In the present case it may be true to say that the immediate cause of the payment to the taxpayer of the sum of $27,006.84 was the exercise by him of the right to commute a percentage of the pension to which he was entitled. To say that is not to exclude the notion that the payment was in consequence of the taxpayer's retirement or that it followed on his retirement. In my view, the payment followed on the taxpayer's retirement, the only intervening event being the exercise of the option to commute. The connection was not simply temporal; retirement was a prerequisite to payment and in that sense there was a `following on' as I understand the language of Jacobs J.''

25. Similarly, at ATC pp. 4336-4337; A.L.R. p. 571 Lockhart J., after expressing his opinion that in Reseck, Gibbs and Jacobs JJ. were not construing the phrase ``in consequence of'' differently from one another, said:

``In my opinion, although the phrase is sufficiently wide to include a payment caused by the retirement of the taxpayer, it is not confined to such a payment. The phrase requires that there be a connection between the payment and the retirement of

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the taxpayer, the act of retirement being either a cause or an antecedent of the payment. The phrase used in sec. 26(d) is not `caused by' but `in consequence of'. It has a wider connotation than causation and assumes a connection between the circumstance of retirement and the act of payment such that the payment can be said to be a `following on' of the retirement.

Sometimes the relevant connection may be that the retirement is a condition precedent to the right to payment of the sum in question.

If the phrase `in consequence of' were to necessarily import causation, in my opinion the payment made to the taxpayer in the present case would not be a consequence of his retirement. The cause would be the exercise by him of his right to commute 50% of his pension entitlement to a lump sum which, upon its being exercised, required the administrators to pay the lump sum to him. That would be not merely a cause, but the cause of the payment. It is true that the payment would not have been made unless the taxpayer had completed 15 years of service with the bank and had retired from his employment at the age of 62; but these are conditions precedent to his right to receive a pension and, therefore to his right to commute his pension entitlement in part to a lump sum payment, provided the right was exercised within one month after his retirement.

In the present case in my opinion there is a relevant connection between the retirement of the taxpayer and the payment of the sum of $27,006.84. He served the bank for 15 years and retired at the age of 62. He became entitled to a pension under the rules of the fund. Within the period of one month he exercised his right to commute 50% of his pension entitlement to a lump sum. The administrators of the fund became bound to pay it to him and payment was made. In my opinion the payment was made `in consequence of' the retirement of the taxpayer from his employment.''

26. In the present case the effect of r. 27(b) was that, once the taxpayer had requested the committee administering the fund to commute a part of his annuity which did not exceed half of it and to pay it as a lump sum, the taxpayer was entitled to have the lump sum paid to him. I have no doubt that the payment of both that lump sum and the lump sum payable directly under the provisions of r. 17(4) was made in consequence of the retirement permanently of the taxpayer. I have no doubt also that that retirement was itself the direct result of the termination of the taxpayer's active as a minister of the church. The question which remains to be decided is whether the termination of his active service as a minister was the termination of his holding an office.

27. In
Great Western Railway Company v. Bater (1922) 8 T.C. 231 the question to be decided was whether a person held an office or employment of profit in or under the appellant company so as to render the appellant company liable to assessment in respect of him under the Income Tax Acts of 1842 and 1853. The phrase used in the 1842 Act was ``any office or employment of profit held under any public corporation or under any company or society whether corporate or not corporate''. In a number of cases since then reliance has been placed on a passage from the judgment at first instance of Rowlatt J. at p. 235. It reads:

``Now it is argued, and to my mind argued most forcibly that that shows that what those who use the language of the Act of 1842 meant, when they spoke of an office or an employment, was an office or employment which was a subsisting, permanent, substantive position, which had an existence independent from the person who filled it, which went on and was filled in succession by successive holders; and if you merely had a man who was engaged on whatever terms, to do duties which were assigned to him, his employment to do those duties did not create an office to which those duties were attached. He merely was employed to do certain things and that is an end of it; and if there was no office or employment existing in the case as a thing, the so-called office or employment was merely an aggregate of the activities of the particular man for the time being. And I think myself that that is sound. I am not going to decide that, because I think I ought not to in the state of the authorities, but my own view is that the people in 1842 who used this language meant by an office a substantive thing that existed apart from the holder.''

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28. Appeals were taken to the Court of Appeal and the House of Lords. In the House of Lords, Lord Atkinson at p. 246 stated that he fully concurred in the opinion of Rowlatt J. in the passage set out above; he described it as ``happily expressed''. The other Lords of Appeal generally did not discuss the nature of an office but were more concerned with whether the person was in employment of profit and whether such employment was required to be ``public''. They did not expressly accept the test propounded by Rowlatt J. In the Court of Appeal Lord Sterndale M.R. had observed at p. 238:

``The test which was put and which is most relied upon is this: it is said you must have an office or an employment apart from the officer or the employee in this sense, that although if the officer or employee dies or goes away or leaves, the office remains, and it must be something that has to be filled up, and therefore there must be a continuity in that sense. It certainly is an attractive argument, but when one comes to apply it, it seems almost impossible to apply as an absolute definition, and it is difficult to say when you have an establishment of clerks, although the establishment may be subject to alteration from time to time, that when anybody dies or leaves there is not a vacant clerkship; it may be that the number may be altered from time to time, but until it is altered there is the vacancy which is always spoken of as a vacancy in a clerkship. Of course, that applies more to cases where the establishment is limited by either a Treasury Minute or a Minute of a Government Department or the resolution of a company in general meeting or something of that description, but that does not seem to be a test which you can possibly apply to every sort of office or employment.''

(emphasis added)

29. In McMillan v. Guest (1942) A.C. 561 the appellant was a director of a company resident and controlled in the United Kingdom; but he was an American citizen, resident in Chicago and managing a company there which was allied to the predecessors of the United Kingdom company. As a director of the United Kingdom company he received remuneration from that company. The question was whether he derived his salary from a public office or employment within the United Kingdom. Lord Atkin at p. 564 noted that there was no statutory definition of ``office'' and said:

``Without adopting the sentence as a complete definition one may treat the following expression of Rowlatt J. in Great Western Ry. Co. v. Bater... adopted by Lord Atkinson..., as a generally sufficient statement of the meaning of the word: `an office or employment which was a subsisting, permanent, substantive position which had an existence independent of the person who filled it, which went on and was filled in succession by successive holders.' There can be no doubt that the director of a company holds such an office as is described.''

(emphasis added)

30. At pp. 566 and 567 Lord Wright said:

``I do not attempt what their Lordships did not attempt in Bater's case, that is, an exact definition of these words. They are deliberately, I imagine, left vague. Though their true construction is a matter of law, they are to be applied in the facts of the particular case according to the ordinary use of language and the dictates of common sense with due regard to the requirement that there must be some degree of permanence and publicity in the office.''

31. In
Edwards (Inspector of Taxes) v. Clinch (1982) A.C. 845 the question was whether an inspector appointed by a minister to hold specified inquiries for which he was remunerated by daily fees was holding an office. By a majority of three to two the House of Lords decided that he was not. However, only two of their Lordships adopted as the test of what is an office the statement of Rowlatt J. that it was a ``subsisting, permanent, substantive position which had an existence independent of the person who filled it, which went on and was filled in succession by successive holders''. The two Lords of Appeal who were in the minority were unwilling to accept that test. At p. 868 Lord Edmund-Davies said:

``I am fully alive to the veneration which over the years has attached to the decision of Rowlatt J. in Great Western Railway Co. v. Bater [1920] 3 K.B. 266, and particularly to his adoption, at p. 274, of the submission that:

• `... what those who used the language of the Act of 1842 meant when they spoke

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  of an office or an employment of profit was an office or employment which was a subsisting, permanent, substantive position, which had an existence independent of the person who filled it, and which went on and was filled in succession by successive holders,...'

The indicia enumerated by the learned judge are doubtless useful pointers to the existence of an `office'. It would probably prove difficult to conclude that the occupant of a position having all those characteristics was nevertheless not the holder of an `office', and it may well be that it is in that sense that Rowlatt J.'s words have received over the years exalted judicial acceptance in cases considered in the lower courts during the progress of this appeal and again in your Lordships' House. But I respectfully find it well-nigh startling to have those words invoked as providing the definitive test of the existence of an `office', so that no post lacking all or any of Rowlatt J.'s indicia can possibly deserve the term. The word is not a term of art, but a wide-ranging noun of ordinary usage, as the dictionary definitions demonstrate. And during the expansive submissions of counsel a substantial number of posts were considered which in my judgment completely fitted within the everyday understanding of the term, notwithstanding that they were transient in their very nature and not simply in the duration of tenure of office of a particular person, and furthermore that they were `tailor-made' for people possessing particular talents to discharge tasks of a non-recurring type. My noble and learned friend, Lord Bridge of Harwich, has dealt with some such posts, but he has by no means exhausted the list. Walton J. rightly said [1979] 1 W.L.R. 338, 345:

• `... whilst the permanency of the duties to be discharged may well, in a suitable case, form an apt guide as to whether the person discharging them is or is not holding an office, this test is wholly inapplicable to a case where the office is confined to the discharge of one (or a few) specific duties which, in the very nature of such duties, will be discharged within a finite space of time.'

My Lords, learned counsel for the respondent submitted that the provisions of section 204 of the Act of 1970 themselves indicate that `office' must be given a meaning severely restricted on the lines indicated by Rowlatt J. He said that subsection (3) thereof demonstrates such a necessity, and he indicated certain practical difficulties which would arise in relation to P.A.Y.E. coding were the holder of an `office' in receipt of emoluments episodic and irregular in their payment and unpredictable in their amounts. But for my part I reprehend giving an everyday word a special meaning simply because it would be more convenient to do so owing to the nature of the currently adopted machinery for the assessment and recovery of taxes. If it was desired to give `office' a meaning tailored to the P.A.Y.E. system why did the relevant legislation not provide its own dictionary by defining in a special sense a word of such everyday use?''

32. At pp. 881 and 882 Lord Bridge of Harwich said:

``The relevant definition of the word `office' in the Oxford English Dictionary is:

• `A position or place to which certain duties are attached, especially one of a more or less public character; a position of trust, authority, or service under constituted authority; a place in the administration of government, the public service, the direction of a corporation, company, society, etc.'

At first blush, it seems to me that the appointed person holding a public local inquiry under the provisions to which I have referred occupies an `office' which falls fairly and squarely within each of the three limbs of this definition. He occupies a position to which duties of a public character are attached. He is in a position of authority. He holds a place in the administration of government. To this I would add, as reinforcing my view that he holds an `office' in the ordinary sense of the word, three of the four factors which weighed with Walton J. First, the `appointed person' has no employer in any ordinary sense; he exercises his functions quite independently. Secondly, he is not acting in any personal capacity, but in a capacity which derives its existence wholly from, and is clothed with powers and duties by,

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his statutory appointment; this embraces under a single head the factors listed as (2) and (3) in Walton J.'s enumeration at [1979] 1 W.L.R. 338, 344.

I confess that, with all respect, I do not share Buckley L.J.'s expressed inclination, `unguided by authority', to understand the word `office' in the context of Schedule E as connoting

• `... a post which can be recognised as existing, whether it be occupied for the time being or vacant, and which, if occupied, does not owe its existence in any way to the identity of the incumbent or his appointment to the post' [1981] Ch. 1, 6.

If `office' is given its ordinary meaning, then, in my opinion, the taxpayer held an office whenever he was appointed to hold a public local inquiry and the fees paid to him were the emoluments of that office. Conversely, when holding such inquiries, he was certainly not practising his profession as a civil engineer and the fees could only be brought within the ambit of Schedule D, Case II on the footing that the holding of statutory inquiries is itself a separate `vocation', which involves, to my mind, an unacceptable straining of language.''

33. Of the test postulated by Rowlatt J. in Bater and endorsed by Lord Atkinson, Lord Bridge observed that in order to appreciate its true significance it was necessary to have regard to all the facts and the relevant provisions of law with which the courts had been concerned in that case. He concluded that it was especially to be noted that the opinion expressed in Bater that what was required under the Act of 1842 was ``a subsisting, permanent, substantive position which had an existence independent of the person who filled it...'' applied alike to an office or an employment. He considered that it was clear that their Lordships had been constrained to express that opinion solely by the language of the first rule under Sch. E of the Act of 1842 with which they were expressly concerned. After considering more recent decisions in which courts had adopted the test in Bater's case he observed at pp. 885 and 886:

``It will thus be seen that all the relevant authorities hark back to Great Western Railway Co. v. Bater [1920] 3 K.B. 266; [1922] 2 A.C. 1. Your Lordships have no need to quarrel with any decision that the holder of an office which does exhibit the Bater criteria of a Schedule E office is properly assessable under Schedule E. But there is certainly no case which establishes the converse of that proposition. I hope I can say without any disrespect that the endorsement of the opinion of Rowlatt J. and Lord Atkinson in all the cases following Bater's case has been quite uncritical, since there has been, so far as I can discover from any report we have looked at, no occasion before the instant case when any court or your Lordships' House has been invited to criticise the opinion, still less to re-examine the foundation on which it rests to see if it is still valid as applied to the phrase `office or employment' in Schedule E in the form it assumed in 1956, which reappears in the consolidating Act of 1970.

It is precisely such a re-examination that your Lordships now have to undertake. It leads, in my opinion, inevitably to the conclusion that the opinion is no longer good law. The rule on which both Rowlatt J. and Lord Atkinson based their interpretation has gone. Moreover, now that Schedule E embraces all employments, it surely would be absurd to suggest that `employment' under the Schedule can be limited to `a subsisting, permanent, substantive position which has an existence independent of the person who fills it.' If that construction no longer applies to `employment' in Schedule E, I can see no logic whatever in continuing to apply it to `office'. So far as authority is concerned, therefore, your Lordships are, in my opinion, wholly unconstrained and free to give to the word `office' its ordinary dictionary meaning.''

(emphasis added)

34. The fifth Lord of Appeal, Lord Lowry, although one of the majority of the Court, did not reach his conclusion on the same basis as the other two Lords of Appeal who made up the majority. At p. 871 he said:

``... One can fairly say that the true ratio decidendi of this House in Great Western Railway Co. v. Bater [1922] 2 A.C. 1 was that Mr Hall held no office and that his employment was not public and that, in so far as other reasons were advanced, their

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Lordships were strongly influenced by rule 1 of the 1842 Schedule (E.).

The decisions in all the cases reviewed are easily justified by reference to what I have called the ordinary meaning of `office'. They also satisfy the full Bater test and we have no examples so far of a court's refusal to apply Schedule E on the ground that Bater was not satisfied. Therefore the test has not been relevantly considered. Lord Bridge also rightly points out that the discussion embraces employment as well as office, and now the private as well as the public domain. It is therefore impossible to accept that employment (or, by the same token, office) must be `permanent': if so, Schedule E could not apply to temporary employment or to an office created by name for the performance and completion of a specific task.''

(emphasis added)

35. Lord Lowry agreed with the judge at first instance that the temporary nature of the ``office'' was not by itself fatal to the appellant's argument. He pointed out that Bater had been followed by a series of cases which satisfied Rowlatt J.'s test and that consequently further refinement of the test had been unlikely. He noted, however, that in
Mitchell and Edon v. Ross (1960) Ch. 498 at p. 530 Harman L.J. had stated that ``an office is a position or post which goes on without regard to the identity of the holder of it from time to time''. Lord Lowry said that some refining of the test had already been done so that the emphasis on permanence and continuity had lessened and the possibility of a once only appointment had been recognised; but the concept of an office which existed independently of its holder still held sway. He noted that the contrast was between trade, profession or vocation on the one hand and office or employment on the other. That was because the treatment of the one was different from the other under the various Schedules of the Income and Corporation Taxes Act 1970.

36. The passage cited above from Rowlatt J.'s judgment in Bater was the basis of the decision of No. 3 Board of Review in Case B6,
70 ATC 29 and more recently a decision of the Administrative Appeals Tribunal in Case U75,
87 ATC 453. However, it is one of the rules of construction of a statute that, if a word or expression used in the statute is not defined, its meaning is to be ascertained inter alia by reference to the context in which it is used. The context of sec. 27A of the Act and the previous context of sec. 26(d) is not identical with the context in which the word was used in the income tax Acts of the United Kingdom with which the courts were concerned in the cases which I have cited above. It is, therefore, doubtful whether the meaning ascribed by the courts to ``office'' in those cases should be regarded as applicable to the word in sec. 27A, particularly in view of the disagreement on the meaning within the House of Lords in Edwards v. Clinch.

37. In
F.C. of T. v. Sealy 87 ATC 5076 at p. 5080 Pincus J. expressed doubt whether it was sound to assume that the Australian Parliament necessarily intended that meaning of ``office'' which had been established in the construction of the United Kingdom's tax legislation to be applied in construing sec. 26AD. He continued:

``The word `office' has a range of meanings: see Collins English Dictionary (meaning no.7), Shorter Oxford English Dictionary (meaning 4), Great Western Railway v. Bater (1921) 2 K.B. 128 at pp. 136-137. In some contexts, it refers to a position of authority in a governmental or other public organisation. I see no reason so to restrict its meaning here. The intention apparently was to cover the case in which, there being no cessation of an employment, a payment of the character mentioned is made in respect of retirement from or termination of an office. It is difficult to think of any reason why the legislature should have intended to confine the concession given by the section to instances in which the terminated position is one of a public character or of any high degree of permanency. Presumably, no one would dispute that the position of managing director of a public company could be regarded as an `office'. I cannot see why that of managing partner of a grazing partnership should not be so regarded.''

38. I would respectfully adopt the observation of Lord Edmund-Davies in Edwards v. Clinch that ``the word (office) is not a term of art, but a wide-ranging noun of ordinary usage, as the dictionary definitions demonstrate''. In the Shorter Oxford English Dictionary one meaning of the word ``office'' is given as ``a position to which certain duties are attached, especially a place of trust, authority, or service under constituted

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authority''. That is, I consider, the meaning which is appropriate to the context in which the word is used in the definition of ``eligible termination payment'' in sec. 27A(1) of the Act. It is appropriate because persons in such positions are frequently paid for the performance of their duties and may further be paid an amount on ceasing to hold the position in recognition of the services which they have rendered.

39. In my view, the position of a minister of the church while engaged in active service, as that expression is used in the regulations of the church, is generally a position to which certain duties are attached. They are either the duties of a minister settled in a parish or those of a minister settled in a ``position of responsibility for the regular discharge of the duties of the ministerial office under the jurisdiction of the Church'' (reg. 2.4.1(a)). It is position of trust and service under the constituted authority of the church. It differs from the situation of a minister without a settlement; although by virtue of Reg. 2.3.10 he has duties imposed on him, he is not placed in a position of responsibility for the regular discharge of those duties.

40. A minister retired from active service is referred to in r. 17(4) of the rules of the beneficiary fund as having retired permanently. In the applicant's case, before his retirement upon termination of his active service, his position as a minister settled in a parish, to which the duties to which I have referred above were attached, was a continuing position. It was not a position peculiar to him. It was similar to positions held generally by ministers settled in parishes. I have, therefore, come to the conclusion that he was holding an office, that the office was the office of ministry in active service, specifically settled in a parish, and that there was termination of his holding that office when his active service was terminated or, in the words of the general secretary, when he retired permanently from active ministry. The payment in issue in these proceedings was made in respect of him in consequence of the termination of the holding of an office. It was, therefore, an eligible termination payment, as defined in sec. 27A(1).

41. Accordingly, the objection decision under review is affirmed.