Re Commissioner of Taxation v Launceston Legacy [1987] FCA 239 (21 July 1987)

FEDERAL COURT OF AUSTRALIA

Re: COMMISSIONER OF TAXATION
And: LAUNCESTON LEGACY
Nos. TG 10, 11, 12, 13 and 14 of 1986
Administrative Law

COURT

IN THE FEDERAL COURT OF AUSTRALIA
TASMANIA DISTRICT REGISTRY
GENERAL DIVISION
Northrop J.(1)

CATCHWORDS

Administrative Law - appeal from Administrative Appeals Tribunal - whether Commissioner of Taxation should issue a certificate of exemption under s.11 of the Bank Account Debits Tax Administration Act 1982 - whether Launceston Legacy is a "public benevolent institution" for the purposes of the Bank Account Debits Tax Administration Act 1982 - relevance of objects of Launceston Legacy - whether a public benevolent institution can include a public institution extending assistance to a restricted class of recipients chosen without regard to whether they are in necessitous circumstances - history and meaning of "public benevolent institution."

Administrative Appeals Tribunal Act 1975 s.44

Bank Account Debits Tax Act 1982 ss.3,4,5

Bank Account Debits Tax Administration Act 1982 ss.3,8,11

Estate Duty Assessment Act 1914 s.8(5)

Income Tax Assessment Act 1922 s.23

Income Tax Assessment Act 1927 s.14

Income Tax Assessment Act 1936 s.78

HEARING

HOBART
21:7:1987

Counsel for Applicant: Dr. R. Sundberg Q.C. and Mr J. Greenwell

Solicitor for Applicant: Australian Government Solicitor

Counsel for Respondent: Mr S. Holt

Solicitors for Respondent: Messrs. Murdoch Clarke Cosgrove and Drake

ORDER

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

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

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

(Settlement and entry of Orders is dealt with in O.36 of the
Rules of Court.)

DECISION

The question raised by these appeals from five separate decisions of the Administrative Appeals Tribunal is whether the Commissioner of Taxation should issue a certificate of exemption under s.11 of the Bank Account Debits Tax Administration Act 1982, being Act No. 142 of 1982 ("the Administration Act"), in relation to five separate bank accounts kept in the name of Launceston Legacy. The issue of a certificate of exemption has the effect of relieving the person to whom the certificate is issued from a liability for tax imposed by the Bank Account Debits Tax Act 1982, being Act No. 141 of 1982 ("the Debits Act"). On various dates in May 1983, the Commissioner gave notice to Launceston Legacy that its applications for a certificate in relation to each of its five accounts was unsuccessful as it was "not accepted as a public benevolent institution for the purposes of" the Administration Act. In accordance with the provisions of the Administration Act, Launceston Legacy objected to the decisions by the Commissioner. By notices dated 12 July 1984, the Commissioner notified Launceston Legacy that its objections had been disallowed:-

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

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

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

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

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

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

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

"4. Tax is imposed in respect of -

(a) each taxable debit made on or after a date to
be fixed by Proclamation to a taxable account;

(b) each eligible debit made on or after that date
to an exempt account; ... ."

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

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

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

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

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

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

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

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

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

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

(a) if the Commissioner is satisfied that all
debits made, or to be made, to the
account are, or are likely to be, either
excluded debits or exempt debits - he
shall issue a certificate of exemption in
relation to the account; or

(b) if the Commissioner is not so satisfied -
he shall refuse the application and shall
cause notice in writing of his decision
in relation to the application to be
served, by post or otherwise, on the
person who made the application.

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

(3) Where the Commissioner -

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

(b) becomes satisfied that an eligible debit
has been, or is to be, made to an exempt
account,

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

(4) Where -

(a) an eligible debit has been made to an
exempt account; or

(b) an account holder of an exempt account
expects that an eligible debit will be
made to the account within the ensuing
period of 30 days,

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

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

(a) on the account holder or, if there are 2
or more account holders, on each of them;
and

(b) on the bank with which the account is
kept,

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

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

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

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

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

"'excluded debit' means a debit -

(a) made to an account kept with a bank in the
name of -

...

(vi) any of the following:

(A) a public benevolent or a religious
institution;

(B) a public hospital or a hospital
that is carried on by an
association or other body of
persons otherwise than for purposes
of profit or gain to the individual
members of that association or
other body;

(C) a school, college or university
that is carried on by an
association or other body of
persons otherwise than for the
purposes of profit or gain to the
individual members of that
association or other body,

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

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

11. At this stage, attention should be drawn to some of the special features of this legislation. The tax is imposed on debit transactions made with respect to accounts kept with banks. Under s.8 of the Administration Act, the liability to pay the tax is placed upon the bank with which the account is kept. A certificate of exemption under s.11 is issued in relation to an account. Any one person, including an institution, may have a number of different accounts with one or more banks. Launceston Legacy has at least five different accounts with different banks. A reference to the wording of paragraph 11(1)(a) shows that a certificate may be issued in relation to one or more accounts of a particular person while a certificate may be refused in relation to one or more accounts of the same person. The criteria to be satisfied is whether the debits made or to be made to the account are or are likely to be excluded debits. To be an excluded debit, the debit must be made to an account of, for example, a public benevolent institution, and must be a debit "made in relation to a transaction ... carried out by or on behalf of the institution ... wholly and exclusively in furtherance of its objects." It is difficult to understand how such an institution lawfully could authorise a debit in relation to a transaction which was not wholly and exclusively in furtherance of its objects. It might be, as was contended by counsel for the Commissioner, that a public institution cannot be benevolent in the sense of being a public benevolent institution if its objects extended to objects which were not benevolent. If that were the case however, the concluding words of paragraph 3(1)(a)(vi) would be otiose.

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

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

"THE CHARTER OF LEGACY

The Spirit of Legacy is Service

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

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

Personal effort is the main essential.

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

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

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

"3. POLICY

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

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

16. Section 4 of the Constitution is headed "OBJECTS" but as so often happens, many of the stated objects are in reality powers by which objects may be achieved; cf. Williams v. Hursey [1959] HCA 51; (1959) 103 CLR 30 per Fullagar J. at pp 56-58. For present purposes, it is sufficient to set out three only of the thirteen stated objects:-

"4. OBJECTS

(a) To honour the memory of departed
Ex-Service men and to care for their
widows and children.

(b) To assist the dependants of deceased
Ex-Service men.

(c) To foster the spirit of comradeship,
self-sacrifice and national and community
service.

... ."

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

18. Membership of Launceston Legacy is not open to the general public, but is confined to ex-servicemen (called "Legatees") who have served overseas in a theatre of war. In addition, only the number of Legatees which are necessary to service the needs of the widows and children in the particular area serviced by Launceston Legacy are admitted as members. Launceston Legacy has approximately ninety members. Legatees provide their services free of charge, they act in an honorary capacity. In addition, three persons are employed by Launceston Legacy on a part-time basis; a social worker, a secretary and an administrator.

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

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

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

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

"5. ELIGIBILITY FOR BENEFITS

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

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

"(k) Definitions

Dependant means a widow or child of a deceased
person.

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

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

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

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

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

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

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

29. The phrase "public benevolent institution" appearing in taxing statutes in Australia, has had a somewhat ambivalent but interesting history. In the 1920's, there appears to have been a difference in legal opinion on the issue of whether the word "charitable" appearing in taxing statutes should be given its ordinary or popular meaning involving the idea of relief from poverty, namely that it means eleemosynary; or be given its technical or legal meaning of trusts for the relief of poverty; trusts for the advancement of education; trusts for the advancement of religion; and trusts for other purposes beneficial to the community, not falling under any of the preceding heads; see Commissioners for Special Purposes of the Income Tax v. Pensol (1891) AC 531 per Lord Macnaughton at p 583. At that time, s.8 of the Estate Duty Assessment Act 1914 imposed an estate duty on gifts but under sub-section 8(5) provided:-

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

In Chesterman v. Federal Commissioner of Taxation (1923) 32 CLR 363, the High Court, by majority, Isaacs, Rich and Starke JJ., Knox C.J. and Higgins J. dissenting, held that in sub-section 8(5) the expression "charitable purposes" was not used in its technical legal sense, but in its popular sense as meaning the relief of wants occasioned by lack of pecuniary means, and covering the relief of any form of necessity, destitution or helplessness, including spiritual destitution or need, which excites the compassion or sympathy of men and appeals to their benevolence for relief; and, therefore, that a gift of a fund to provide prizes for competitions in physical, mental or moral excellence, without regard to the pecuniary means of the competitors, was not for charitable purposes within the meaning of the sub-section. The Privy Council allowed an appeal from that judgment; see Chesterman v. Federal Commissioner of Taxation [1925] HCA 46; (1925) 37 CLR 317. The Privy Council held that in sub-section 8(5) the word "charitable" was used in its technical legal sense. The effect of that judgment was to widen the purposes coming within sub-section 8(5). The nature of the differences of opinion is illustrated by The Young Men's Christian Association of Melbourne v. Federal Commissioner of Taxation [1926] HCA 2; (1926) 37 CLR 351, particularly per Higgins J. at p 360.

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

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

31. In Perpetual Trustee Co. Ltd. v. Federal Commissioner of Taxation [1931] HCA 20; (1931) 45 CLR 224, the High Court had to consider, for the first time, the words "public benevolent institution" appearing in sub-section 8(5). A testator had made a gift to the Royal Naval House in Sydney. In broad terms, the House provided accommodation, for a nominal amount, and recreation for the benefit of petty officers and lower rankings of the Royal Navy, the Royal Australian Navy, and other visiting seamen. The question before the High Court was whether the gift was exempt from estate duty as being a gift to a public benevolent institution. The High Court, by majority, Starke, Dixon and Evatt JJ., McTiernan J. dissenting, held that the House was not a public benevolent institution. In coming to this conclusion, the Court had regard to the history of sub-section 8(5), the authorities already cited, the reference to the words "for the relief of persons in necessitous circumstances in Australia" contained in the same sub-section and the fact that the average person would not expect the House to be described as a public benevolent institution. At pp.231-2, Starke J., in considering the meaning to be given to the phrase "public benevolent institution" and after mentioning the statutory history and the cases cited, said:-

"It cannot be said that this expression has any
technical legal sense, and therefore it is to be
understood in the sense in which it is commonly
used in the English language. There is no
definition in the Act of the composite expression,
nor is it to be found in any dictionary. It is,
however, found in the Act under consideration in
association with such institutions as public
hospitals and with funds established and maintained
for the relief of persons in necessitous
circumstances in Australia. In the context in
which the expression is found, and in ordinary
English usage, a 'public benevolent institution'
means, in my opinion, an institution organized for
the relief of poverty, sickness, destitution, or
helplessness. The Royal Naval House has none of
these characteristics: it is organized for the
accommodation and recreation of the naval forces of
His Majesty and its hospitality is also extended to
the naval forces of other countries. It would
surprise English-speaking people, I think, to learn
that in the Royal Naval House naval forces are
accommodated and entertained at a public benevolent
institution."

At pp.232-3, Dixon J. said:-

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

His Honour then referred to the history of the legislation and the authorities cited and continued at pp.233-4:-

"Having regard to this history of the legislation
and to the considerations I have mentioned, I am
unable to place upon the expression 'public
benevolent institution' in the exemption a meaning
wide enough to include organizations which do not
promote the relief of poverty, suffering, distress
or misfortune."

At pp.235-6, Evatt J. said:-

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

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

Those who receive aid or comfort in this way
are the poor, the sick, the aged, and the young.
Their disability or distress arouses pity, and the
institutions are designed to give them protection.
They are very numerous - 'the nobler a soul is the
more objects of compassion it hath' - and they have
come to be known as 'benevolent institutions.'"

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

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

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

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

33. Counsel for the Commissioner relied strongly on the statements of law contained in the Perpetual Trustee Case which, they submitted, have been followed in subsequent cases. He referred to The Public Trustee of New South Wales v. The Federal Commissioner of Taxation [1934] HCA 10; (1934) 51 CLR 75 ("the Public Trustee Case"), Maughan v. The Federal Commissioner of Taxation [1942] HCA 32; (1942) 66 CLR 388 ("the Boys Brigade Case") and Lemm v. The Federal Commissioner of Taxation [1942] HCA 31; (1942) 66 CLR 399 ("the Aged Women's Homes Case").

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

"Nor is it, in my opinion, a gift to a public
benevolent institution. This Court held, in
Perpetual Trustee Co. v. Federal Commissioner of
Taxation [1931] HCA 20; (1931) 45 CLR 224, that that
expression referred to institutions organized for
the relief of poverty, sickness, destitution or
helplessness. The institutions named by the
testator or those which may be admitted to share in
the benefaction, do give relief to the needy, the
sick, and the helpless. But they are private
organizations conducted by or in connection with
the Church of England in Australia, and are not
founded, organized or maintained by or under or in
connection with any public authority, or managed by
its representatives."

At p.104, Dixon J. said:-

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

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

36. The Boys Brigade Case involved the application of s.78(1)(a)(ii) of the Income Tax Assessment Act 1936 which allowed as deductions for income tax purposes, gifts to a "public benevolent institution." That paragraph first appeared in the Income Tax Legislation in 1927; see s.14 of Act No. 32 of 1927 which amended s.23 of the Income Tax Assessment Act 1922. Under paragraph 23(1)(h) of that Act, gifts made to "public charitable institutions in Australia" were allowable deductions from income for tax purposes. Following the wide meaning given to the word "charitable" when used in taxation statements, the 1927 Act inserted a definition of "public charitable institutions" with the result that in s.23, those words meant "a public hospital, a public benevolent institution and includes a public fund established and maintained for the purpose of providing money for such institutions or for the relief of persons in necessitous circumstances." It was not until the Income Tax Assessment Act 1936 was enacted, that the wording as presently appearing in s.78(1)(a)(i), (ii) and (iii) appeared. Paragraph (ii) enables a deduction from income of a gift to "a public benevolent institution." In the Boys Brigade Case, the issue was whether the Boys Brigade was a "public benevolent institution." The Boys Brigade was incorporated and among its objects was the object "to carry on and conduct an institution or institutions in the City of Sydney and/or elsewhere in the State of New South Wales or elsewhere in the Commonwealth of Australia for the development as good citizens of the boys of the State or the Commonwealth; to cultivate Christian manliness; to promote habits of reverence, loyalty, industry, discipline and self-respect. Nothing herein contained or implied shall limit the class of persons to whom assistance or benefit of any kind may be given by the Association." The matter came on for hearing before the Full Court of the High Court pursuant to a case stated by Williams J.. For the purpose of the case stated, the parties agreed to facts which showed that the activities carried on by the Boys Brigade ("the Association") were limited to certain depressed areas of the City of Sydney despite the width of the objects of the Association. The Court held that the Association was a "public benevolent institution." At p.395, McTiernan J. said:-

"The expression 'public benevolent institution' is
not a term of art. Its meaning may be governed by
the context in which it is found. There is nothing
to indicate that the expression in sec.78(1)(a)(ii)
has any other meaning than its ordinary meaning.
The Court considered the meaning of the expression
'benevolent institution' in Perpetual Trustee Co.
Ltd. v. Federal Commissioner of Taxation [1931] HCA 20; (1931) 45
CLR 224, and applied the criteria laid down
there in a subsequent case, Public Trustee (N.S.W.)
v. Federal Commissioner of Taxation [1934] HCA 10; (1934) 51
CLR 75. It decided in the former case that the
common understanding of the words 'benevolent
institution', when used together, is a body
organized for the relief of poverty or distress.
In the present case the argument centres on the
question whether the Boys' Brigade Inc. is
organized for the relief of poverty. Poverty is a
relative condition. It is I think hardly open on
the facts of the case to draw any other inference
than that the charity of those who maintain the
Boys' Brigade Inc. is excited by social conditions
arising from poverty and that the dominant object
of the institution is to elevate boys adversely
affected by those conditions. It is not probable
that many of the boys for whose welfare this
institution exists could overcome those conditions
without its aid."

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

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

37. Judgment in the Aged Women's Homes Case was given on the same day as the judgment in the Boys Brigade Case. The Court was constituted by the same Judges. This case involved sub-section 8(5) of the Estate Duty Assessment Act and its application to homes for aged women conducted by the Presbyterian Church and the Court held that the homes were public benevolent institutions. A number of other issues were raised. Rich and McTiernan JJ. agreed with the reasons of Williams J.. The money was left by will upon trust for the purpose of a home for aged women in straitened circumstances who were required to pay towards the upkeep of the home. At pp.410-11, Williams J. considered whether the home was a public benevolent institution. He held it was a public institution and continued:-

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

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

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

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

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

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

41. In my opinion, the essential object of Launceston Legacy is benevolent. The objects and powers listed in the Objects section of its Constitution are incidental and ancillary to that essential object. If it be a fact that some of those powers and objects, considered alone, might not be regarded as benevolent, that fact would not prevent Launceston Legacy being benevolent. By analogy, I apply what was said by Dixon C.J., McTiernan, Williams and Fullagar JJ. in Congregational Union of New South Wales v. Thistlethwayte [1952] HCA 48; (1952) 87 CLR 375 at p 442.

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

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

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

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