RE AUSTRALIAN INSTITUTE OF MANAGEMENT (VIC) AND COMMISSIONER OF STATE REVENUE (VIC)

Members:
GAA Nettle M

Tribunal:
Victorian Administrative Appeals Tribunal

Decision date: 3 November 1995

GAA Nettle

Application to review the Commissioner's decision to disallow an objection against the Commissioner's assessment to duty of a transfer of land. The Applicant contends that the transfer is exempt from duty by reason of Exemption (4) under Heading VI in the Third Schedule to the Stamps Act 1958, as a transfer to or in trust for a body of persons associated for educational purposes.

2. Some of the facts are agreed and a number of documents were tendered by consent. Two witnesses were also called by the Applicant: Mr Peter Shelldrake, the executive director of the Applicant; and Ms Johan Wigley, the General Manager of the Australian Institute of Management - Victoria Training College, and both witnesses were cross examined by counsel or the Commissioner.

The Applicant

3. The Applicant is a non-profit company limited by guarantee which was formed in 1944 to advance the interests of persons engaged in management. According to Mr Shelldrake it does that in three ways: first, by recognising managers in terms of their experience and thus, depending upon their experience, admitting such persons to membership of the Applicant as a fellow, associate fellow or member (with the award of the appropriate post nominals); secondly, by providing its members with appropriate learning opportunities in the discipline of management; and thirdly, by providing its members with what are described as networking opportunities, which means opportunities to meet and form associations with other persons engaged in management.

4. As set out in its Memorandum of Association of the Applicant (Exhibit A, doc 1), the objects of the Applicant include:

5. The Applicant has some 6,000 members in the fellow, associate fellow or member category. There are also some 800 non professional members, called affiliates, who are persons who have had no professional experience in management but have management aspirations. In the large part non professional members are students undertaking studies which they envisage are likely to lead to a career in management. There is also a further category of members, called corporate members, who are employers of persons engaged in management and who pay membership fees on a sliding scale according to the number of their employees engaged in management roles. All professional members, which is to say all members other than affiliate and corporate members, have the right to attend and vote at meetings of the Applicant and receive a number of benefits including use of the Applicant's library, a monthly magazine, membership of the Applicant's book club and access to a number of workshops, seminars and luncheons conducted by the Applicant. Affiliate members have no right to vote at meetings, but receive all of the other benefits referred to. All members are also offered discounts on the fees payable for courses conducted by the Australian Institute of Management - Victoria Training College, of which more will be said below.

6. The Applicant's functions are confined to the State of Victoria but there are comparable organisations in each of the other States and in the Australian Capital Territory, and the Northern Territory is serviced by the Queensland organisation. The seven State and Territory organisations in turn combine to form a peak national organisation - the Australian Institute of Management - the membership of which is comprised of a number of persons appointed by each of the State and Territory organisations.

The Australian Institute of Management - Victoria Training College

7. In 1961 or 1962 (the evidence given was no more precise than that, but the Commissioner did not dispute it) the Applicant resolved to divest itself of all of its educational activities in favour of a new organisation, called the Australian Institute of Management - Victoria Training College, and in accordance with that decision a trust was constituted in terms of the Australian Institute of Management - Victoria Training College Constitution (Exhibit A, doc 2). The Constitution provided, and still provides, that the affairs of the College shall be managed by a Committee of Trustees (clause 6) and that the Committee of Trustees shall be appointed annually by the Council of the Applicant and shall comprise the President, three Vice Presidents and the Treasurer of the Council (clause 7).

8. The objects of the College as set out in clause 3 of the Constitution are as follows:

9. Clause 4 of the College Constitution provides for the income and property of the College to be applied solely towards the promotion of the objects and purposes of the College, with no portion to be paid or transferred to the Applicant or any member of the Applicant and clause 10 of the Constitution provides that upon the winding up of the College any surplus remaining is in effect to be distributed cy-pres to a similar organisation or otherwise to charity. Mr Shelldrake also said in evidence that donations made to the College are treated by the Commissioner of Taxation as deductible pursuant to s 78 of the Income Tax Assessment Act 1936.

10. Mr Shelldrake gave evidence that the finances of the College have always been kept separate from those of the Applicant - the College has a separate budget and separate accounts and its accounts are separately audited - but that there has always been very close association and a high degree of co-operation between the Applicant and the College. Indeed the College is described in the Applicant's literature as the training services arm of the Applicant and in evidence Mr Shelldrake referred to the College as the subsidiary of the Applicant. Until 1994 the College also leased space in the Applicant's former premises at St Leonards Avenue, St Kilda and at all relevant times the College has made use of the administrative facilities of the Applicant, for which it is charged by the Applicant on an apportionment basis. Because of the relative demands placed on those services, 75% of the costs are borne by the College and only 25% are borne by the Applicant.

11. Since the College was established it has offered an increasing range of courses in various aspects of management. The range of those courses (set out in the College's Training Services and Course Directory (Exhibit 1)) is now extremely broad. It extends from subjects as practically based as salesmanship and computer training through to full programs leading to a Masters Degree in Business Administration which are conducted in conjunction with the Royal Melbourne Institute of Technology and Monash University, and accordingly the courses range in duration from a few hours to a number of years. Each year the College also holds a number of special event seminars conducted by celebrities such as Edward de Bono, an internationally recognised

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authority on creative and conceptual thinking, and Professor Richard Pascale of the Stanford Graduate School of Business. All of these courses and seminars are open to the public and to members of the Applicant alike. Mr Shelldrake gave evidence that the only limitation upon admission is, in some cases, an appropriate standard of education or qualification and, in all cases, payment of the appropriate fees (which range according to the length and complexity of the course subject and, in the case of special event seminars, according to the identity of the seminar leader). The only advantage of members of the Applicant over the public is that members are offered the specified discounts to which I earlier referred.

12. Mr Shelldrake gave evidence that virtually all of the income of the College is derived from the fees which it charges for its courses and that almost all of that income is spent on College expenses. He said that in the year of income ended December 1994 the College generated $5 million gross income (compared to $2 million generated by the Applicant) and that out of its income the College had to pay sums totalling close to $5 million to its academic staff and guest speakers, and for administration and the use of premises. He added that any surpluses, currently about $150,000 per annum, have always been invested as reserves. This evidence was not contradicted.

13. Ms Wigley gave evidence in effect similar to that of Mr Shelldrake but Ms Wigley was cross examined at greater length about the nature of the courses conducted by the College. It was put to her that the main object and activities of the College were the improvement of the management performance of client organisations, which is to say of corporate members. She was shown passages from the College's Training Services and Course Directory (Exhibit 1 and Exhibit 3) which it was suggested demonstrated that the principal objective of the College was to provide in- house training of management for corporate members (see page 2 of Exhibit 1) and to custom design training programs for corporate members (see page 65). Ms Wigley agreed that the College does enter into bidding contests to win that sort of work. But she said that only 10% of the work of the College is directed to custom-made courses, of which but a small part are in-house, and that the rest of the work of the College consists of running the courses listed in the directory which are of a general nature and available to all according to qualifications.

14. It was also put to Ms Wigley that the College existed largely to service the educational needs of the members of the Applicant. But Ms Wigley also rejected that suggestion. She said that most of the persons who attend the courses conducted by the College are not members of the Applicant; only 1% of personal members attend the short courses; only 7% of members attend special events; and whilst a large number of participants were employees of corporate members they still accounted for something less than half of the total number of participants.

15. It was put to Ms Wigley that many of the courses conducted by the College were of a very short or otherwise basic nature, the implication (as I understood it) being that what was taught could not properly be described as education. Ms Wigley rejected that suggestion too. She said that the average short course was of between 2 and 3 days duration, frequently spread over a number or weeks, that other courses ranged up to some years duration, and that the content of all courses was calculated to enhance commercial and management skills however basic or lofty.

16. Finally, it was put to Ms Wigley that the College existed principally to provide networking opportunities as opposed to purely educational activities. Ms Wigley responded that whilst one result of the College's activities was networking opportunities, these opportunities were educational in the sense that a forum to share ideas about management was an educational opportunity which built up management skills. I accept Ms Wigley's evidence.

The decision to buy a new building

17. Mr Shelldrake said that by 1991 it was becoming clear to the management of the Applicant that the Applicant's premises were too small to accommodate the increasing range of activities of the College. He said that some thought was then given to the idea of extending the Applicant's premises but, because those premises were situated in a residential area, the planning difficulties which would be encountered were thought to be insurmountable. A decision was therefore made to look for a new building and in 1993 a new building was

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found at 173-191 Fitzroy Street, St Kilda. The purchase price was some $5 million and it seems to have been recognised that a further $2 million would need to be spent on fitout, making for an all up projected cost of approximately $7 million.

18. Somewhat later a decision was made that the College should buy the new building, and lease part of it to the Applicant, rather than vice versa as had originally been proposed. Mr Shelldrake said that this decision was largely based upon considerations that the College had greater accumulated reserves than the Applicant and that the College was likely to take up a far greater part of the new building than would the Applicant. But Mr Shelldrake also frankly conceded that stamp duty implications were an additional consideration.

19. The objective evidence, constituted of the following exchange of correspondence, also shows that stamp duty played a significant part in the decision to make the College the purchaser:

(1) On 12 August 1993 Deloitte Touche Tohmatsu wrote to the Commissioner of State Revenue as follows:

``We act on behalf of the Australian Institute of Management - Victoria (``AIM'') which is currently contemplating the purchase of a new building. One of the issues that is being considered in deciding whether to proceed with any purchase is the quantum of stamp duty that would be payable.

In this regard we believe that AIM would qualify for exemption from stamp duty by the application of Exemption (4) in the third schedule of the Stamps Act and we seek confirmation that exemption would, in fact, apply...

In our opinion, any instrument for the conveyance of real property to AIM would be exempt by virtue of this item as AIM is a corporation associated for educational purposes...

We look forward to your prompt response in this matter...''

(2) On 15 September 1993 the Commissioner for State Revenue replied to Deloittes as follows:

``I wish to remind you that to date I do not appear to have received a reply to my previous telephone conversation (10 June 1993).

Unless a reply is received within fourteen (14) days of the date hereof, I shall be compelled to shelve your file, and forward all documents to the Opinion Assessing Branch for issue of an assessment of stamp duty payable...''

(3) On 28 October 1993 Deloittes wrote to the Commissioner as follows:

``We refer to our letter dated 12 August 1993 concerning stamp duty exemption for our above named client.

In this regard, we note that a response has not been received and ask if the matter could be given urgent attention...''[1] The letter of 12 August 1993 which was not referred to was tendered in evidence during the course of the hearing.

(4) On 6 January 1994 Deloittes wrote to the Commissioner again, as follows:

``We refer to our letter of 1 August 1993 seeking stamp duty exemption for the Australian Institute of Management - Victoria (``AIM'') by the operation of Exemption (4) in the third schedule of the Stamps Act and your subsequent reply of 8 December 1993 denying the request.[2] The letter of 8 December 1993 referred to was not tendered in evidence during the course of the hearing.

In this regard we seek further clarification as to the basis upon which exemption has been denied. In our opinion, the statement that ``exemption has been denied on the basis that this organisation is more of a professional body than a charitable one'' does not address the issues presented in our letter of 12 August 1993...''

(5) The Commissioner responded on 17 January 1994 as follows:

``I refer to your letter of 6 January 1994.

It is re-iterated that this office is of the view that the Australian Institute of Management is not eligible for exemption from stamp duty. In this regard it is our view that the Australian Institute of Management whilst having some peripheral educational activities is primarily existent to preserve and maintain professional standards and protect the interests of its members.

You are referred to the case of Australian Institute of Land Valuers and Land Economists v CSR (1992) ATC 2116.

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Should you wish to discuss this matter please do not hesitate to contact me.''

20. On 1 July 1994 Purves Clarkes Richards, solicitors wrote to the Commissioner as follows:

``We act on behalf of the Australian Institute of Management - Victoria (`AIM') and the Australian Institute of Management - Victoria Training College (`the training college').

AIM, which is a company limited by guarantee, was incorporated in or about 1942, whilst the training college was established in 1961.

By contract of sale dated 23 February 1994 AIM purchased as trustee for the training college the property situated at and known as 173-191 Fitzroy Street, St Kilda. Settlement occurred on 30 June and we now enclose for assessment of duty under control of the Commonwealth Bank, which has taken a mortgage over the property, the following:-

1. The transfer of land

2. Declaration of trust (in triplicate)...

We advise that all moneys for the purchase of the property have been provided by the training college.

We submit that the transfer of land is exempt from duty on the grounds that the training college is `... a body of persons associated for... educational purposes...' pursuant to Exemption (4) of the third schedule of the Stamps Act 1958. A copy of the training college's constitution is enclosed for your information.

The training college is a non profit organisation conducted by a committee of trustees with the object, as is evidenced by its constitution, of promoting `... by educational means the art and practice of management in all its branches and the usefulness and efficiency of persons engaged therein'...

The training college has no members and its programs and courses are marketed widely to the general public. Although the training college has an affiliation with AIM in that it was set up to take over the educational activities of AIM and, its trustees are appointed by AIM, you will note that the constitution prohibits the trustees from paying or appropriating for the benefit of AIM any income from or property belonging to the training college and, in addition prohibits the transferring of assets on the winding up of the training college to AIM.

We advise that title to property has been taken in the name of AIM for no other reason than to avoid the inconvenience and cost of rectifying title each time there is a change in the composition of the trustees.''

The purchase of the new building

21. By contract of sale dated 25 February 1994, the Applicant purchased from Citibank Ltd the land at 173-191 Fitzroy Street, St Kilda at a purchase price of $5.15 million. In accordance with that contract the land was later transferred to the Applicant. According to the Applicant, the building was purchased by the Applicant as trustee for the College and the College funded the purchase and subsequent fitout of the building with $1.8 million of its own moneys, a loan of $3.4 million from the Commonwealth Bank and a further loan of $2 million from the Applicant. The Commissioner accepts that that was so. Yet some of the evidence about the circumstances surrounding the purchase is not particularly clear. There is no doubt that the Applicant entered into the contract of sale (Exhibit A, doc 8) and there is no doubt that the Applicant executed a mortgage in favour of the Commonwealth Bank (Exhibit 7, doc 3) to secure repayment of the loan of $3.4 million. But the Commonwealth Bank loan was made to the Applicant, not the trustees of the College, and the only written evidence that the loan was for the College is an unexecuted copy of a deed of direction (Exhibit 7, doc 4) in which it is asseverated that the Applicant entered into the Commonwealth Bank Facility as trustee for the College. The only written evidence of the loan of $2 million from the Applicant to the College is a partially executed deed dated 24 June 1994 (Exhibit 7, doc 5) and a partially executed Loan Agreement of the same date (Exhibit 6, doc 6). And although there is also a document entitled ``Declaration of Trust'', said to have been executed and dated 25 June 1994[3] So much was asserted by counsel for the Applicant and agreed to by counsel for the Commissioner. (which I received into evidence as Exhibit A, doc 10(c)), of which Clause 8 provides as follows:

``The beneficiaries are the trustees of the Australian Institute of Management - Victoria Training College (`the training

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college') and hereby declare and acknowledge that the purchase price of the property has been or will be provided by the training college and the beneficial interest in the property is or will be held by them in trust for the training college.''

the document as tendered was unexecuted and undated.

The dispute about stamp duty

22. I have already referred to Purves Clarke Richards' letter of 1 July 1994. On 16 November 1994 the Commissioner responded to it as follows:

``Further to your letter dated 1 July 1994 and your application for opinion I advise I am unable to grant an exemption from stamp duty in accordance with your request...''

23. On 17 December 1994 the Commissioner issued the assessment the subject of this reference, in an amount of $283,260. On 29 December 1994 the Applicant lodged its notice of objection against assessment. On 30 January 1995 the Commissioner disallowed the objection and it is that decision of the Commissioner to disallow the objection which comes before the Tribunal for review.

The Applicant's Contentions

24. The Applicant contended that the transfer of land is exempt from duty on the grounds that the College is a body of persons associated for educational purposes within the meaning of Exemption (4) under Heading VI in the Third Schedule to the Stamps Act 1958.[4] Exemption (4): ``Any instrument for the conveyance of real property to or in trust for any registered friendly society or any corporation or body of persons associated for religious, charitable or educational purposes, and any instrument for declaring or defining the trust or for appointing new trustees in respect of the real property so conveyed''. It was submitted by the Applicant that the College is a non-profit organisation conducted by a committee of trustees with the object, as is evidenced by its constitution, of promoting ``... by educational means the act and practice of management in all its branches and the usefulness and efficiency of persons engaged therein''; that the education provided by the College takes a number of forms, the principal ones of which are the provision of management programs and courses; and that there is a significant range of programs and courses provided and that the same is illustrated by the index to the services and course directory of the College. It was said that, although the College has no members, its programs and courses are marketed widely to the general public. It was also said that, although the College has an affiliation with the Applicant, in that the College was set up to take over the educational activities of the Applicant and its trustees are appointed by the Applicant, the College Constitution prohibits the trustees from paying or appropriating for the benefit of the Applicant any income from or property belonging to the College and, in addition, prohibits that transferring of assets to the Applicant on the winding up of the College.

The Commissioner's Contentions

25. The Commissioner conceded that the Applicant did enter into the contract for the purchase of the building as trustee for the College, and holds the building as trustee for the College, but the Commissioner contended that the transfer is not exempt under Exemption (4) because, although the College engages in some educational activities, the College is to be regarded as a professional support organisation with ancillary educational aspects which relate to the maintenance of the professional standards of its members. It was said that such an organisation is not a body engaged primarily in educational purposes. Reliance was placed upon the decision of Mr G. Gibson of this Tribunal in
Australian Institute of Land Valuers and Land Economists Inc v Commissioner of State Taxation (Vic) 92 ATC 2116. It was also contended on behalf of the Commissioner that, as against the Commissioner, the trust in favour of the College is defeated by the operation of s. 69 of the Stamps Act 1958 or as a result of the operation of the doctrine of fiscal nullity.

The issues

26. The contentions set out above give rise to a number of issues. They are:

I shall deal with these issues in turn.

Transfer to AIM to or in trust for the college

27. Were it not for the fact that the Commissioner accepts that the Applicant did buy the building as trustee for the College, with

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College funds, there might be room for doubt about the terms of the deeds and declarations of 24 and 25 June 1994 and whether any trust was created until sometime after the building was purchased by the Applicant. I say that because the Applicant appears to have started out in 1993 with the intention of acquiring the building beneficially and there is no clear evidence that it gave any thought to the idea of acquiring or holding the building as trustee for the College until after the Commissioner expressed the opinion that a transfer to the Applicant would not be exempt from duty. Furthermore, although it is said that $1.8 million of the moneys payable under the purchase contract was paid out of College funds, there was no satisfactory evidence of that fact tendered, and it is clear enough that a deposit of $515,000 was paid in accordance with special condition 8 of the contract by the Applicant considerably before the declaration of trust was executed in June 1994. To say the least, I find it surprising that the Applicant should enter into the contract of sale as trustee for the College and use College funds with which to pay a deposit under the contract, and yet not execute the declaration of trust or indeed any written evidence of trust until some four months later.[5] No written evidence dated earlier than June 1944 was tendered in the course of the hearing.

28. In view of the Commissioner's concession I proceed on the basis that the Applicant did enter into the contract of sale as trustee of the College; did use College funds to meet all obligations under the contract of sale; and did take the transfer as trustee for the College. But I record that, were it not for the Commissioner's concession, the evidence would not have satisfied me of some of those facts. I have no doubt that the Applicant does hold the building on trust or the College, and I accept the evidence of Mr Shelldrake that the Applicant pays rent to the College, albeit under an informal lease, for the space in the building occupied by the Applicant. However, but for the Commissioner's concession. I would have doubted that the trust was constituted before or at the time of purchase.

Corporation or body of persons

29. The Constitution of the College provides, in clause 7, for the appointment of a committee of trustees and, in clause 6, for the trustees to manage the business and affairs of the College. The objects of the College include the acquisition of property for any purpose of the College and the intention of the Constitution thus appears to be that the trustees acquire and hold property and manage it for College purposes. For convenience I set out again that the purposes or objects of the College proclaimed in clause 3 of the Constitution as follows:

``The objects for which the training college is established are as follows:

  • (a) To acquire and takeover by purchase, donation or otherwise all or part of the assets of the Australian Institute of Management - Victoria at present used as aids to educational activities.
  • (b) To promote by educational means the art and practice of Management in all its branches and the usefulness and efficiency of persons engaged therein.
  • (c) To provide for the delivery and holding of lectures, exhibitions, public meetings, classes and conferences calculated to advance directly or indirectly the cause of education in Management, whether general, professional or technical and to employ lecturers, teachers and other persons for these purposes, and to pay all expenses professional or otherwise, in common therewith.
  • (d) To encourage the study of Management and to improve and elevate the general and technical knowledge of persons engaged or about to be engaged in Management and for that purpose to test by examination or otherwise the competence of such persons.
  • (e) In furtherance of the objects of the Training College to provide offices, conference rooms, libraries, reading rooms, clubs, workshops, laboratories and other buildings and conveniences in connection therewith, and to furnish, equip and maintain and conduct the same, and to permit the same and other property of the Training College to be used by members of the Australian Institute of Management - Victoria, gratuitously or for payment...''

30. Clause 4 of the Constitution of the College provides that:

``(1) The income and property of the Training College, however derived, shall be applied solely towards the promotion of the

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objects and purposes of the Training College and no portion thereof shall be paid or transferred, directly or indirectly, by dividend, bonus or otherwise to the Australian Institute of Management - Victoria or any member thereof.

(2) The Training College shall not:-

  • (a) Appoint a person who is a member of the Committee of Trustees to any office of the Training College to which there is payable to the holder any remuneration by way of salary, fees or allowances; or
  • (b) Pay to any such person any remuneration or other benefit in money or moneys worth (other than the repayment of out of pocket expenses)...''

Clause 10 of the Constitution provides that:

``If upon the winding up of the Training College there remains after the satisfaction of all its debts and liabilities, any property whatsoever the same shall not be paid to the Training College or to Australian Institute of Management - Victoria or to any of its members, but shall be given or transferred to some other institute or association having objects similar to the objects of the Training College and which shall prohibit the distribution of its or their income and property among its or their members to an extent at least as great as is imposed on the Training College under or by virtue of Clause 4(1) hereof, such institute or association to be determined by the Committee of Trustees at or before the time of dissolution, and if and so far as effect cannot be given to the aforesaid provisions. then to some charitable object.''

31. In my view the Constitution, taken together with the evidence or Mr Shelldrake and Ms Wigley to which I have earlier referred, establishes that the College is a trust for the purposes enumerated in clause 3 of the Constitution. Clause 3(e) may suggest that the facilities of the College are more likely to benefit members of the Applicant than other members of the public. But I do not think that clause 3(e) is such as to characterise the trust as one for the benefit of members of the Applicant: cf. Re
Denley's Trust Deed [1969] 1 Ch. 373. Unlike the trust instrument in Re Denley's Trust Deed, the Constitution of the College does not confer any express entitlement on a particular group of persons to make use of the facilities the subject of the trust. The overriding impression is one of trust for all the purposes specified, with power to the trustees to permit members of the Applicant, not necessarily to the exclusion of others, to make use of those facilities: cf.
Re Manser [1905] 1 Ch. 68;
Re Eighme [1935] Ch. 524.

Educational purposes

32. The next question is whether the purposes identified in clause 3 of the Constitution are educational purposes within the meaning of Exemption (4). Mr Hines made a number of submissions on behalf of the Commissioner in support of his contention that the College was not established for educational purposes. His first submission was that ``education'' means training up the young in general learning, not teaching for a business or profession, and that the College was established for the purpose of teaching for the profession of management or of providing courses of instruction directed to the profession of management, and not training up the young in general learning.

33. In support of the submission that ``education'' is to be confined to what may be described as ``training up the young in general learning'', Mr Hines relied upon the decision of the Queens Bench Division in
Re Duty on Estate of Civil Engineers (1887) 19 QBD 610 and, in particular, upon the observation of Lord Coleridge CJ that the promotion of education means more than teaching a particular thing. But I do not consider that that case supports Mr Hines' submissions. The question for decision there was not the meaning of ``educational purposes''. It was whether the property of the Institution of Civil Engineers was appropriated ``for the promotion of education, literature, science, or the fine arts'', within the meaning of sub-section 11(3) of the Customs and Inland Revenue Act 1885, and it was because of the particular collocation of words in that sub- section, rather than because of the meaning of ``educational purposes'', that it was held that the section excluded the possibility that ``education'' extended to a particular thing connected with education: ibid at p. 620. In any event the decision was reversed on appeal to the Court of Appeal:
Re Duty on Estate of Civil Engineers (1888) 20 QBD 621 and the decision of the Court of Appeal was affirmed on appeal to the House of Lords: sub nom
Commrs of

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Inland Revenue v Forrest (1890) 15 App Cas 334.

34. Mr Hines next relied on the decision of the House of Lords in Commrs of Inland Revenue v Forrest and in particular on observations made by Lord MacNaghten at (1890) 15 App Cas at pp. 353 to 354. But I do not consider that those observations support the Commissioner's contention either. If anything, they run counter to it. The case was ultimately decided on the basis that the property of the Institution of Civil Engineers was appropriated for the promotion of science within the meaning of sub-section 11(3) of the Customs and Inland Revenue Act 1885, and in the passage of Lord MacNaghten's speech to which Mr Hines made particular reference His Lordship said that he saw no reason why ``science'' should be confined to pure or speculative science and that it was intended to denote a particular branch of science as well as universal science or science generally.

35. Finally, Mr Hines referred me to the definition of ``education'' in Stroud's Judicial Dictionary 5 Ed Vol 2 at p. 810. That does say that ``education'' means training up the young in general learning. But the authorities cited do not support that proposition. In my view it takes the matter no further.

36. Mr Boaden for the applicant submitted that the ``purposes of education'' in Exemption (4) coincide with the purposes or the advancement of education within the meaning of the Statute of Elizabeth, and thus include all forms of structured learning, including all disciplined practical instruction. In my view that is correct. It is established by high authority[6] See the authorities cited in Ford and Lee, supra at para. 2078. that the word ``charitable'' were used in exceptions to fiscal statutes has its legal meaning, and the expression ``religious, charitable, or educational purposes'' in Exemption (4) is consistent with an intention that the words ``religious'' and ``educational purposes'' also have the meanings attributed to them at law. I therefore approach the question on that basis.

37. Mr Hines next submitted that even if education in a particular subject qualifies as education within the meaning of Exemption (4), the word ``education'' must still be confined to education for its own sake ``in order that the mind be trained'' and does not extend to tuition and examination activities designed for the benefit of the members of a particular profession. On that basis he contended that the College was not established for the purposes of education because all its courses were calculated to enhance the professional competence of the members of the management profession. In support of that submission he relied upon the decision of the Queens Bench Division in
Chartered Insurance Institute v London Corporation [1957] 1 WLR 867; [1957] 2 All ER 638.

38. I do not consider that Chartered Insurance supports Mr Hines's submission. In that case the Court had to decide whether the Chartered Insurance Institution was an organisation ``whose main objects are charitable or are otherwise concerned with the advancement of religion, education or social welfare'' within the meaning of s. 8(1)(a) of the Rating and Valuation (Miscellaneous Provisions) Act 1955. It was held that it was not, but not because the education provided by the Institution was of a professional nature. On the contrary, Lord Goddard CJ, with whom Byrne J agreed, said that it might be held that what was offered by the Institution was education ([1957] 1 WLR at pp. 872 and 873; [ 1957] 2 All ER at p. 641). The basis of their Lordships' decisions was instead that the principal object of the Institution was to advance the standing of its members and not to provide education - the education provided was simply the means by which the object of advancement was achieved - and the Institution was thus an organisation for the advancement of its members, as opposed to one for the advancement of education. It is true that the third member of the Court, Devlin J, said that the words ``for the advancement of education'' meant that the education provided had to be education ``for its own sake''. His Lordship also said that because the tuition and examination activities of the Institution were designed for the benefit of the members of a particular profession (scil. the insurance profession), in order to enable them to practice their profession to greater advantage, the Institution was not concerned with the advancement of education. But I do not read His Lordship's observations as meaning that tuition designed to enhance the professional competence of members of a profession can never be ``education''. I read them, like the judgments of the other members of the Court, as meaning no more than that where the

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principal object of an institution is the advancement of members of a profession, its principal object is not the advancement of education; even if the means of advancement is the provision of education.

39. Mr Boaden submitted that although it may be a task of some nicety to define the line which separates institutions for the advancement of a profession by means of education, from institutions for the advancement of education of a profession, if an institution exists to provide professional education it may be an institution established for the purposes of education, even if the only probable consequence of the education is the enhancement of professional skills. I agree with that submission. The legal conception of education has been so expanded by a succession or judicial decisions as now to cover almost any form of worthwhile instructional cultural advancement.[7] See Ford & Lee, supra at para. 1915 and the cases there cited. It is also to be observed that for the purposes of section 78 of the Income Tax Assessment Act 1936 the word ``education'' has been held to be a word of broad meaning importing a general understanding which connotes the sense of imparting knowledge or assisting and guiding the development of body or mind: see
Chesterman v FC of T (1923) 32 CLR 362 at p. 386. The conception of education is therefore much wider than mere book learning and wider than any category of subjects which might be thought to comprise general education: see
Lloyd v FC of T (1955) 93 CLR 645 at pp. 661 and 665. And although instruction in matters of management might not conform to once accepted notions of mainstream education, I consider that it is within the broader ambit of education as it is conceived of for charitable purposes.

40. Although it is said in some of the texts, as was submitted of behalf of the Commissioner, that ``education'' does not extend to purely professional or career courses, close attention to the authorities relied upon as support for that proposition shows that they do not support it: see, for example, the decisions in Chartered Insurance Institution v London Corporation, supra;
Institution of Civil Engineers v Commrs of Inland Revenue [1932] 1 KB 149;
London Hospital Medical College v Inland Revenue Commrs [1976] 2 All ER 113; and
War Nurses Memorial Centre v Comptroller of Stamps (1985) 1 VAR 120. The correct interpretation of them, in my view, is that professional training may qualify as education but that an organisation which provides professional training will not be seen to be established for the purposes of education if its principal object is the advancement of its members.

41. Mr Hines next submitted that even if tuition of the kind provided by the College were ``education'', the main purpose of the College was the advancement of members of the management profession and that the education which was provided was merely the means by which that objective was achieved. Again he relied on what was said in Chartered Insurance and he also made reference to
Commrs of Inland Revenue v Yorkshire Agricultural Society [1928] 1 KB 611 and
Minahan v Commr of Stamp Duties (1926) 26 SR (NSW) 480. He contended that the College was a mere ``training services arm'' of the Applicant (see p. 1 of the Annual Report); that its main purposes are the same as those of the Applicant: the advancement of the business of profession of its members, clients and marketing; that ``education'' in the loose sense is merely the means by which the College serves those ``grander'' purposes; and that symptomatic of those facts are the following:

42. I regard the first of those facts as insignificant. All of the educational objectives or the Applicant were adopted by the College. To that extent the two organisations necessarily have common objects.

43. The second fact is more significant, because clause 3(b) of the Constitution contains

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a hint of the advancement of members of a profession by education. But of itself I think that that is not enough to make the College an institution of the kind dealt with in Chartered Insurance. As clause 3(b) is drafted, the promotion by educational means of the usefulness and efficiency of persons engaged in ``management'' appears as secondary to the promotion by educational means of the art and practice of Management. Furthermore, the form and manifestations of ``management'' are so disparate as to make it very difficult to conceive of a profession of management. In my view the true effect of the clause is the advancement by educational means of anyone and everyone engaged in a management role, and in one sense or another that must include a very large section of the public. Consequently, for the College to say that it has as one of its objects the promotion by educational means of the efficiency of persons engaged in management is somewhat like a university post graduate mathematics school saying that it has as one of its objects the promotion by educational means of the efficiency of mathematicians. In as much as I cannot conceive of such a post graduate mathematics school being held to be other than established for the purposes of education, I do not think that clause 3(b) is enough to dictate that the College should not be seen as established for the purposes of education.

44. The third ``fact'' combines a repetition of the second with the submissions earlier made by Mr Hines that ``education excludes professional training''. For the reasons already given, I reject it. I do not understand what significance is thought to reside in the fourth fact unless it is that, because the Constitution might be changed, the College might cease to be what it is. It might. But it has not since 1962 and the matter must be judged on the basis of what it is; not what it might become. The fifth fact also does not impress me greatly. For whatever might be the status of the mission statement, it cannot override the Constitution. In any event I do not see the ``advancement of management'' as being in any way inconsistent with the objects in the Constitution.

45. Mr Hines also submitted that:

46. I reject the first of those submissions as not supported by the facts. The Commissioner did not challenge the existence of the College. It was not suggested that it was a sham. And I do not know in what other sense the term ``device'' might be intended. The fact is that the College is a legal entity which is separate from, albeit closely allied with, the Applicant; it does have objects; and it does perform functions different to those performed by the Applicant.

47. The second submission is more significant. If a substantial part of the activities of the College were directed to providing custom designed management programs to commercial organisations it might well be that the College did not exist for the purposes of education: cf.
British Launderers Research Association v Central Middlesex Assessment Committee and Hendon Rating Authority [1949] 1 All ER 21 (CA) at pp. 24 to 25. But according to the evidence only 10% of the College's training is bespoke and only a very small percentage of that is to do with in-house management programs for commercial organisations. It seems to me therefore that even assuming those activities do not amount to education, they are truly incidental to the main educational activities of the College.

48. I find the third submission unconvincing. I cannot see what significance there is in the emphasis which advertising material places on the benefits of a course in management. I do not think it can change what is education into something which is not education, any more than an undergraduate guide as to the professional opportunities available to graduates can change undergraduate education into something other than education.

49. The fourth submission is also rejected. As I see it, it combines two misconceptions. The first is the misconception that that which is not academic cannot be education. The observations of Dixon CJ in
Lloyd v FC of T (1955) 93 CLR 645 at pp. 660-661 (in dissent but not on this point) put paid to that notion. The second is the misconception that what was once not regarded as education cannot now be regarded as education. Lord Hailsham LC demonstrated the error of that in
Inland Revenue Commrs v McMullen [1981] AC 1 at p. 15. In my view the training of a secretary, or a welder or a carpenter, is just as much education as the tutoring of a law student.

50. The fifth submission appears as just another version of the contention that the College is established to advance its members. If so, I have dealt with the subject already.

51. The sixth submission is also not supported by the facts. In evidence it was said that those cases in which membership subscriptions exceed course fees are very much in the minority and that the bookshop is available to everyone. It was also said that whilst members do get a bookshop newsletter and the offer of some special prices on items sold by the bookshop, those are the only advantages they enjoy over non members; that of the 7,500 persons who participated in courses last year only 3,299 were employees of corporate members and only 315 were paid members; and the majority of participants were non members.

52. The seventh submission repeats the second. My response remains the same.

53. The eighth submission adds nothing new.

54. Finally, Counsel for the Commissioner placed reliance on the decision of this Tribunal in Australian Institute of Land Valuers and Land Economists v Commr of State Taxation (Vic), supra. In that case it was held that the Institute of Land Valuers was not a corporation or body of persons associated for educational purposes within the meaning of Exemption (4). But in that case the evidence was that 90% of the activities of the institute related to ``education designed to maintain and improve the professional standards of its members''. In this case the facts are different. The College was set up expressly and solely for the purpose of taking over from the Applicant those of the assets of the Applicant previously used as aids to educational activities and to promote by educational means the art and practice of management in all its branches and the usefulness and efficiency of persons engaged therein. In those circumstances it does not seem to me possible to say, as it was possible to say of Australian Institute of Land Valuers and Land Economists, that the primary task of the taxpayer is to protect and preserve professional standards providing educational services only by way of ancillary function. On the contrary, the breaking out from the Applicant of such of its functions as might have been regarded as educational and the concentration of them in the College has meant, in my view, that the College is a body of persons associated predominantly if

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not solely for educational purposes within the meaning of Exemption (4).

55. It may be that the purpose identified in clause 3(e) of the College Constitution is not an educational purpose, in as much as it is directed to the provision of benefits to members of the Applicant and thus individuals ascertained by reference to personal ties of contract rather than to the public or a section of the public: cf.
Thompson v FC of T (1959) 102 CLR 315 at p. 322. It may also be that some of the custom designed courses and training provided by the College are not education. But even if that be so the evidence is that those things account for no more than 10% of the work of the College, and as Street CJ said in Minahan v Commr of Stamp Duties, supra at p. 481, it is the main purpose which is determinative.[8] See also Commr of Inland Revenue v Forest (1890) 15 App. Cas. 324 at p. 338, in which Lord Hailsham LC said: ``I do not stop here to discuss the question of whether the exemption would be lost by some additional objective or purpose, since I agree with almost all who have considered this question, that the statute would be satisfied if the main purpose and object of the institution were that which the statute considers the subject of exemption.'' Applying that test, it seems to me that the College can be characterised as an educational institution. Looking either at the objects of the College or the manner in which the evidence shows the College is conducted, it appears that the ``main purpose and object'' of the College is educational. In my opinion the College is a trust for the purposes of the advancement of education within the meaning of the test.

Corporation or body of persons

56. The next question is whether a trust for charitable purposes comes within the description in Exemption (4) of a corporation or body of persons associated for educational purposes. Although the expression ``body of persons associated'' might be thought more aptly to describe an unincorporated association than a group of trustees holding property on trust I consider that the expression ``body of persons associated'' is literally descriptive of the trustees of a charitable trust and that when the exemption is read as a whole it is clear enough that it was intended to extend to trustees of that kind. The words ``associated for charitable purposes'' appear as much to govern the word ``corporation'' as they do the expression ``body of persons'' and the most important aspect of the definition seems to be that an entity, be it a corporation or group of persons, exists for charitable purposes. It is hard to think that a different result was intended to obtain as between an unincorporated association associated for charitable purposes and a group of trustees assembled for the same purposes. In my opinion a different result was not intended.

Section 69

57. Section 69 of the Stamps Act 1958 provides that:

``Every instrument executed in order either directly or indirectly to avoid or evade the payment of any stamp duty chargeable on the conveyance of real property or part of any such duty is void except after conveyance of the real property to third parties, and then only when the instrument has been duly stamped as a conveyance of real property under this Act.''

58. The Commissioner contended that this provision, which was introduced into the Act by s. 7 of Act No. 9662, was to be seen as a sort or anti-avoidance provision designed to apply to cases such as this one. The Commissioner's contention was that the declaration of trust was executed in order directly or indirectly to avoid or evade the duty which otherwise would have become payable on the conveyance on sale to the Applicant and thus is void or at least will be void until and unless stamped as a conveyance of real property. The question is whether the declaration of trust can or does directly or indirectly avoid or evade duty. In my opinion it does not.

59. The declaration of trust was not capable of altering the incidence of duty unless there were no trust in existence until execution of the declaration of trust. But since the Commissioner concedes that the applicant acquired the building as trustee, it must be taken that the building was an asset of the trust from the outset. The sale and the transfer were therefore always to or in trust for the College. It is true that the declaration of trust might have operated to make the trust enforceable whereas, in the absence of evidence in writing of the trust, the trust might have been unenforceable: see s. 53(1)(b) of the Property Law Act 1958. But even if the trust were created orally before or at the time of purchase, so that until evidenced in writing the trust remained unenforceable, the subsequent declaration of trust and thereby the creation of evidence in writing of the trust would not have created a new trust. There would only ever have been one trust existing since the time of the oral declaration, and the only change which would have been brought about by the declaration would have been to make enforceable that which had previously existed but been unenforceable: see Ford & Lee, The Principles

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of the Law of Trusts, 2nd Edition at paras. 607 and 610 and the cases there cited.

60. Moreover, even if it could be said that the declaration somehow altered the incidence of duty I think it would be difficult to conclude that the declaration of trust was executed in order either directly or indirectly to avoid or evade duty. The purpose of the declaration of trust was to vest or perfect the vesting of the beneficial interest in the property in the trustees of the College for the benefit of the College. That may have served to alter the incidence of duty. But I do not consider that that is the sort of alteration which amounts to avoidance or evasion. Unguided by any authority on the meaning of s. 69 I am inclined to think that, as with s. 260 of The Income Tax Assessment Act 1936, in order to bring a document within s. 69 it is necessary to be able to predicate, by looking at the document or at least the overall acts by which it was implemented, that the document was brought into existence or used in a particular way so as to avoid tax, and that if one cannot so predicate but has to acknowledge that the document is capable of explanation by reference to ordinary business or family dealings without necessarily being labelled as a means to avoid tax the document does not come within the ambit of the section: cf.
Newton & Ors v FC of T (1958) 11 ATD 442 at p 445; (1958) 98 CLR 1 at p. 8;
FC of T v Gulland; Watson v FC of T 85 ATC 4765 at pp 4771, 4779 and 4795; (1985) 160 CLR 55 at p. 66, 80 and 108; and see also
Boulevard Developments Pty Ltd v Toorumba Pty Ltd 84 ATC 4715 at p. 4718; (1984) 2 Qd R 371. In my view a declaration of trust executed by the Applicant to vest the beneficial interest in the building in the College is an ordinary business or family dealing beyond the reach of s. 69.

Fiscal Nullity

61. That brings me finally to the question of fiscal nullity and the authorities in support of the doctrine to which Counsel for the Commissioner referred. As formulated by Lord Brightman in
Furniss v Dawson [1984] AC 474 at p. 527, the doctrine is applicable in England where two circumstances exist:

``First, there must be a pre-ordained series of transactions; or, if one likes, one single composite transaction. This composite transaction may or may not include the achievement of a legitimate commercial (ie. business) end... Secondly, there must be steps inserted which have no commercial business) purpose apart from the avoidance of a liability to tax - not `no business effect'. If those two ingredients exist, the inserted steps are to be disregarded for fiscal purposes. The court must then look at the end result. Precisely how the end result will be taxed will depend on the terms of the taxing statute sought to be applied.''

See also
W.T. Ramsay Ltd v Inland Revenue Commrs [1982] AC 300;
Inland Revenue Commrs v Burmah Oil Co. Ltd (1981) 54 TC 200; cf.
Oakey Abattoir Pty Ltd v FC of T 84 ATC 4718 at p. 4725; (1984) 55 ALR 291 at pp. 298-299;
W & J Investments Ltd v FC of T (1986) 16 FCR 314 at p. 320.

62. In Australia the position is different. Successive full courts of the Federal Court of Australia and the High Court of Australia have spoken of the principle in terms which suggest doubt about its validity and, in any event, in a way which suggests that this Tribunal should be slow to invoke the principle in the construction of s. 69 of the Stamps Act 1958. In
John v FC of T 89 ATC 4101 at p 4110; (1989) 166 CLR 417 at p. 434, the High Court said that:

``If any such or similar principle is to be applied in relation to the Act, it is one that must be capable of implication consonant with the general rules of statutory construction. One such general rule, expressed in the maxim expressum facit cessare tacitum, is that where there is specific statutory provision on a topic there is no room for implication of any further matter on that same topic. The Act, in sec. 260 and now Part IVA, makes specific provision on the topic of what may be called tax minimisation arrangements and thereby excludes any implication of a further limitation upon that which a taxpayer may or may not do for the purpose of obtaining a taxation advantage.''

The Court also observed, ibid at p. 435, that even if the principle were approached as a matter excluded by the plain meaning of s. 51 of the Income Tax Assessment Act, there would be no reason to resort to any new principle of construction.

63. By parity of reasoning, I consider that the existence of s. 69, which may be taken as a sort of general anti-avoidance provision, coupled with other provisions of the Act such as ss. 64A, 67, and 68, excludes the implication of a

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fiscal nullity limitation upon that which a taxpayer may or may not do for the purpose of obtaining a taxation advantage by the minimisation of stamp duty. However, even if there is room for the application of the doctrine of fiscal nullity to documents the subject of the Stamps Act 1958, I do not consider that the declaration of trust executed in this case would fall within the doctrine. On the basis of the concessions made by the Commissioner I cannot conceive of the execution of the declaration of trust as being or as including steps ``inserted which have no commercial (business) purpose apart from the avoidance of a liability to tax''. The execution of the declaration of trust did have a purpose apart from the avoidance of liability to tax and that purpose, as has been conceded, was to evidence that the land acquired by the Applicant is held and is to be held on trust for the College.

Conclusion

64. For the reasons given I consider that the transfer the subject of this reference is exempt from duty by virtue of Exemption (4) and, accordingly, that the assessment should be varied by being reduced to nil. Given the complexity of the matter, and the attendance of counsel, I also think that the Respondent should pay some part of the Applicant's costs and I assess that part in the amount of $2,500.

Footnotes

[1] The letter of 12 August 1993 which was not referred to was tendered in evidence during the course of the hearing.
[2] The letter of 8 December 1993 referred to was not tendered in evidence during the course of the hearing.
[3] So much was asserted by counsel for the Applicant and agreed to by counsel for the Commissioner.
[4] Exemption (4): ``Any instrument for the conveyance of real property to or in trust for any registered friendly society or any corporation or body of persons associated for religious, charitable or educational purposes, and any instrument for declaring or defining the trust or for appointing new trustees in respect of the real property so conveyed''.
[5] No written evidence dated earlier than June 1944 was tendered in the course of the hearing.
[6] See the authorities cited in Ford and Lee, supra at para. 2078.
[7] See Ford & Lee, supra at para. 1915 and the cases there cited.
[8] See also Commr of Inland Revenue v Forest (1890) 15 App. Cas. 324 at p. 338, in which Lord Hailsham LC said: ``I do not stop here to discuss the question of whether the exemption would be lost by some additional objective or purpose, since I agree with almost all who have considered this question, that the statute would be satisfied if the main purpose and object of the institution were that which the statute considers the subject of exemption.''

 

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