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Federal Court of Australia |
COURT
IN THE FEDERAL COURT OF AUSTRALIACATCHWORDS
Constitutional Law - Non-judicial organs of government - The Crown - When bound by statute - Whether Income Tax Assessment Act 1936, applies to Victorian Crown as "trustee" within Division 6 of Part III.Income Tax - Ascertainment of assessable income - Trustees - Whether money administered for deceased workers' dependants under Accident Compensation Act 1985 (Vic.) a "trust estate" within Division 6 of Part III of the Income Tax Assessment Act 1936.
Income Tax Assessment Act 1936 - Part III Division 6; s.23(d)
HEARING
MELBOURNE Counsel for the Applicants: Dr. I.C.F. Spry QC, Mr P.J. Kennon,
Mr H.C. Berkeley QC, S.-G. and
Mr P.J. Kennon for Attorney-General
for State of VictoriaSolicitors for the Applicants: Victorian Government Solicitor
Counsel for the Respondents: Mr S.P. Charles QC and Mr P.J. Cosgrave
Solicitors for the Respondents: Australian Government Solicitor
ORDER
Further consideration of the appeal be adjourned to a date in February or March 1992 to be fixed.Each party's costs of this day's hearing be reserved.Note: Settlement and entry of orders is dealt with in Order 36 of the Federal Court Rules.
DECISION
Eight appeals against decisions by the respondent Commissioner on objections against income tax assessments, four in respect of the year of income ended 30 June 1987 and four in respect of the year ended 30 June 1988.2. Each assessment in respect of the first of those years treated as assessable income an amount credited in augmentation of a sum of money held by the Victorian Accident Compensation Tribunal, for the benefit of dependants of a deceased worker, in pursuance of provisions of the Accident Compensation Act 1985 (Vic.) The sum held by the Tribunal, in respect of each of four deceased workers, had been paid "into the custody of" the Workers Compensation Board as the amount of compensation awarded by the Board, in respect of that worker's death, in pursuance of the Workers Compensation Act 1958 (Vic.) Section 37 of the latter Act (as amended by s.262 of the Accident Compensation Act 1985) provided that at and after 4 p.m. on 31 August 1985 all such amounts should be administered by the Accident Compensation Tribunal in accordance with the Workers Compensation Act 1958, and should be paid to that Tribunal, or, where any of the moneys were before that time on 31 August 1985 invested, the investments should be transferred to and vest in the Tribunal (s.37(2)). The Tribunal was required by s.73(1) of the Accident Compensation Act 1985 "to establish and maintain a Fund to be called the Accident Compensation Tribunal Fund", into which all money required or permitted to be paid into the Fund by any other Act was required by the Accident Compensation Act 1985 to be paid (s.73(2)(d)). Each of the four amounts of compensation with which these appeals are concerned (augmented by any interest credited and diminished by any payment for the benefit of a dependant of the deceased worker which the Workers Compensation Board had authorised) was accordingly paid into that Fund on 31 August 1985, and thus mixed with moneys from other sources. The Registrar of the Tribunal exercised the power conferred on him by s.73(4) to invest, subject to the general direction of the Tribunal, money in the Fund in such manner as was approved by the Treasurer. The income derived from the investments was paid into the Fund, as s.73(2)(b) required. In respect of income so derived during the year ended 30 June 1987 an allocation was made by the Tribunal of a proportionate part of that income to the credit of each of the four amounts of compensation held for the benefit of dependants of the four deceased workers. The allocation was made in July 1987, augmenting in each case the amount so held by the amount so allocated. In respect of each of three of the four allocations the respondent assessed the Tribunal as trustee of a trust estate (an estate consisting of the share in the Fund held for the benefit of that deceased worker's dependants immediately before the allocation) liable to pay tax on that net income as if it were the income of an individual who was a resident and were not subject to any deduction, in each case in reliance on provisions in Division 6 of Part III of the Income Tax Assessment Act 1936, and in each case in respect of the year of income ended 30 June 1987. But, the allocation having been made in July 1987, the respondent included the same allocated amount in each of the three corresponding assessments he made in respect of the year of income ended 30 June 1988, so that upon the hearing together of the appeals the court might give effect to its conclusion upon the question as to when the income was derived by the taxpayer. Those latter three assessments were directed, not to the Tribunal but to the Registrar of the Tribunal, for a reason which will appear later. In the fourth case, that with which the appeals numbered VG387 of 1989 and VG286 of 1990 are concerned, an allocation of the same kind having been made in July 1986, and the amount allocated having been included by the applicant in her income tax return, the respondent included that amount in the assessable income of the applicant in respect of the year of income ended 30 June 1987 as her share of the net income of a trust estate. The amount allocated in July 1987 in respect of that fourth case was included in the applicant's assessable income in respect of the year ended 30 June 1988.
3. The question as to the time when income was derived was but one of several raised by the parties on the hearing of the appeals. Dr. Spry QC, who appeared with Mr Kennon for each applicant, submitted that Division 6 of Part III of the Income Tax Assessment Act 1936 had no application to the income included in the assessments because no trust subsisted in relation to any money or other property held, or treated as held, for the benefit of the dependants of a deceased worker under the Accident Compensation Act 1985, nor was any person or persons a "trustee" within the meaning of that word in that Division.
4. It was the Accident Compensation Tribunal to which, eo nomine, the respondent addressed notices of the three assessments in respect of the year of income ended 30 June 1987 which imposed liability as a trustee. In respect of the following year of income the three notices were addressed to the Registrar of that Tribunal. By the Accident Compensation (Amendment) Act 1987, the relevant provisions of which came into operation on 1 December 1987, the Registrar had been substituted for the Tribunal as the person upon whom the duty of maintaining the Accident Compensation Tribunal Fund was imposed by s.73(1) of the Accident Compensation Act 1985. By the same amending Act there was deleted, from the grant by s.73(4) to the Registrar of power to invest money in that Fund, the limitation that the power was subject to the general direction of the Tribunal. The Tribunal is not a juristic person, but was constituted by a President and such number of Deputy Presidents, conciliators and other members as should be necessary from time to time for the proper functioning of the Tribunal. Those persons are designated in the titles of the three appeals to which they are parties as the Accident Compensation Tribunal.
5. The meaning of the word "trustee" in Division 6 is, by definition of the
word in s.6(1), wider than that which equity attributes
to it. A necessary
consequence of that amplification is that the expression "trust estate" has in
that Division a wider meaning
than equity would allow. Section 6(1) provides
that in the Income Tax Assessment Act 1936, unless the contrary intention
appears,
"trustee in addition to every person appointed or constituted trustee by6. Mr Charles QC, who appeared with Mr Cosgrave for the respondent, submitted that the Accident Compensation Act 1985 constituted the Accident Compensation Tribunal, and from 1 December 1987 the Registrar, trustee by operation of law of each of the four amounts of compensation here in question. He submitted further that, if the Act did not impose, proprio vigore, such a trust, it contemplated such a trust as conformable with its provisions, and that the evidence of what the Tribunal and, later, the Registrar had done required the conclusion that a trust had been in each of the four cases constituted by that conduct.
act of parties, by order, or declaration of a court, or by operation of
law, includes -
(a) an executor or administrator, guardian, committee, receiver, or
liquidator; and
(b) every person having or taking upon himself the administration or
control of income affected by any express or implied trust, or
acting in any fiduciary capacity, or having the possession,
control or management of the income of a person under any legal
or other disability."
7. Mr Charles and Dr. Spry were in difference as to the identity of the person in whom legal ownership of the four amounts resided. Dr. Spry submitted that the four amounts were part of the public funds of the Crown in right of the State of Victoria held for governmental purposes, and that the Accident Compensation Tribunal and its Registrar were agents of that Crown to exercise governmental functions. Although Dr. Spry acknowledged that the Crown may by assent to legislation, as also by other means, subject itself to a trust enforceable in equity in respect of money or other property, he relied on considerations propounded by Megarry V.-C. in Tito v Waddell (1977) Ch. 106 at 211-219 as strengthening the conviction, to which an examination of the relevant legislation in this case in his submission led, that no equitable relationship enforceable in the courts had been created in respect of these amounts of compensation. The considerations propounded by Megarry V.-C., and prayed by Dr. Spry in aid of his submissions concerning the construction of the legislation under which the amounts of compensation were paid to, and administered by, the Accident Compensation Tribunal and its Registrar, related specifically to the Crown as the executive government of a state, in that case of the United Kingdom. A conclusion, in accordance with Dr. Spry's submissions, that the amounts of compensation were part of the public funds of the State of Victoria, and the Accident Compensation Tribunal and its Registrar agents of the Crown in right of that State and within its shield, would attract, as relevant to the determination of the question whether those amounts had been subjected to a trust, the observations of Megarry V.-C. A conclusion, in accordance with Mr Charles' contrary submissions, that the amounts of compensation were vested in the Registrar, and formed no part of the moneys of the Crown in right of the State of Victoria, may be thought to render inapplicable to the construction of the Accident Compensation Act 1985 those observations of the learned Vice-Chancellor.
8. I set out some of those observations (1977) Ch at 211):
"I propose to turn at once to the position of the Crown as trustee,After discussing several English authorities his Lordship observed of Kinloch v Secretary of State for India in Council (1882) 7 App Cas 619 that -
leaving on one side any question of what is meant by the Crown for
this purpose; and I must also consider what is meant by `trust.' The
word is in common use in English language, and whatever may be the
position in this court, it must be recognised that the word in often
used in a sense different from that of an equitable obligation
enforceable as such by the courts. Many a man may be in a position
of trust without being a trustee in the equitable sense; and terms
such as `Brains Trust.' `Anti-trust,' and `Trust Territories,'
though commonly used, are not understood as relating to a trust as
enforced in a court of equity. At the same time, it can hardly be
disputed that a trust may be created without using the word `trust.'
In every case one has to look to see whether in the circumstances of
the case, and on the true construction of what was said and written,
a sufficient intention to create a true trust has been manifested.
When it is alleged that the Crown is a trustee, an element which is of
especial importance consists of the governmental powers and obligations
of the Crown; for these readily provide an explanation which is an
alternative to a trust. If money or other property is vested in the
Crown and is used for the benefit of others, one explanation can be that
the Crown holds on a true trust for those others. Another explanation
can be that, without holding the property on a true trust, the Crown is
nevertheless administering that property in the exercise of the Crown's
governmental functions. This latter possible explanation, which does
not exist in the case of an ordinary individual, makes it necessary to
scrutinise with greater care the words and circumstances which are
alleged to impose a trust."
"it supports certain principles or considerations which are ofI set out two further observations:
relevance and importance. First, the use of a phrase such as `in
trust for,' even in a formal document such as a Royal Warrant, does
not necessarily create a trust enforceable by the courts. As Lord
O'Hagan said 7 App Cas 619, 630: `There is no magic in the word
"trust."' Second, the term `trust' is one which may properly be used
to describe not only relationships which are enforceable by the
courts in their equitable jurisdiction, but also other relationships
such as the discharge, under the direction of the Crown, of the
duties or functions belonging to the prerogative and the authority
of the Crown. Trusts of the former kind, so familiar in this
Division, are described by Lord Selborne L.C. as being `trusts in
the lower sense'; trusts of the latter kind, so unfamiliar in this
Division, he called `trusts in the higher sense.'
I pause at that point. This classification of trusts seems to have made
little impact upon the books: see, e.g., Lewin, Trusts, 16th ed. (1964),
pp 10, 13; Underhill's Law of Trusts and Trustees, 12th ed. (1970),
p 51; Halsbury's Laws of England, 3rd ed., vol. 38 (1962), p 810. There
is, indeed, a certain awkwardness in describing as a trust a
relationship which is not enforceable by the courts, though the
so-called trusts of imperfect obligation perhaps provide some sort of
parallel. Certainly in common speech in legal circles `trust' is
normally used to mean an equitable relationship enforceable in the
courts and not a governmental relationship which is not thus
enforceable. I propose to use the word `trust' simpliciter (or for
emphasis the phrase `true trust') to describe what in the conventional
sense is a trust enforceable in the courts, and to use Lord Selborne's
compound phrase `trust in the higher sense' to express the governmental
obligation that he describes.
I return to the principles or considerations which the Kinloch case, 7
App Cas 619, appears to support. The third is that it seems clear
that the determination whether an instrument has created a true trust or
a trust in the higher sense is a matter of construction, looking at the
whole of the instrument in question, its nature and effect, and, I
think, its context. Fourth, a material factor may be the form of the
description given by the instrument to the person alleged to be the
trustee. An impersonal description of him, in the form of a reference
not to an individual but to the holder of a particular office for the
time being, may give some indication that what is intended is not a true
trust, but a trust in the higher sense." ((1977) Ch at 216)
"In the case of an individual, there will often be only two feasible9. The objects of the Accident Compensation Act 1985 were stated in s.3 to be:
explanations, either that he holds on a true trust, or else that he
holds on no trust at all, but at most subject to a mere moral
obligation. In the case of the Crown, there is a third possible
explanation, namely, that there is a trust in the higher sense, or
governmental obligation. Though this latter type of obligation is not
enforceable in the courts, many other means are available of persuading
the Crown to honour its governmental obligations, should it fail to do
so ex mero motu. This is accordingly no mere moral obligation; and it
can provide a satisfactory and probable explanation of a transaction
which has been conducted with formalities which suggest that more than a
mere moral obligation was intended. Without putting matters on the
basis of any `burden of proof,' the existence of this alternative
explanation when the alleged trustee is the Crown means that the courts
will be ready to adopt it unless there is a sufficient indication that
instead a true trust was intended." ((1977) Ch at 217-219)
"I can well see that in deciding whether a particular obligation is that
of a debtor to a creditor or that of a trustee to a beneficiary, it may
be a matter of great importance to see whether some funds or assets have
been segregated in some way to meet the obligation. Where, however, the
question is whether there is on the one hand a true trust, or on the
other hand a `trust in the higher sense,' or governmental obligation, it
does not seem to me that segregation plays the same part. Governments
have to keep accounts; and if there is a fund of money applicable for a
particular purpose, then as a matter of practice the government will
normally keep a separate account of that fund. In Chippewa Indians of
Minnesota v United States (No. 2)[1939] USSC 72; , 307 US 1, I may say, there was a
fund established by statute, and yet there was no true trust. In short,
I cannot see how the maintenance of a separate fund, or a separate
account, can normally play any significant part in distinguishing
between a true trust on the one hand and a governmental obligation on
the other: the separateness of the fund or account seems to me to be
indifferently a badge of each." ((1977) Ch at 219)
"(a) to reduce the incidence of accidents and disease in the work place;No objects are stated in the Workers Compensation Act 1958, in pursuance of which the four amounts of compensation were paid into the custody of the Workers Compensation Board, but the objects stated in paragraphs (c) and (d) of s.3 may confidently be identified as objects of the older legislation. In Part IV of the Accident Compensation Act 1985 entitlements to compensation are conferred on workers and their dependants in respect of the consequences of injuries arising out of or in the course of employment. Both the entitling events and the consequences are generally similar to those which the Workers Compensation Act 1958 ordained. But the persons on whom liability is imposed by the Accident Compensation Act 1985 to pay that compensation are not those on whom the liability had been imposed by the Workers Compensation Act 1958. The latter Act had contemplated the employer as the person primarily liable to pay compensation and had imposed on every employer, save one comprehended by a scheme of compensation, an obligation to insure against that liability. Part V of the Accident Compensation Act 1985 enabled the Governor in Council to approve an employer which was a body corporate and which employed many workers as "a self-insurer", in which case that employer was liable to pay compensation and was exempt from the provisions of Part VII. But the liability of other employers to pay compensation was limited by s.125 to the first five working days of the period of incapacity resulting from an injury and to the first $250 of the costs of treatment in relation to an injury. That limited liability was imposed only on employers paying more than $10,000 per annum in remuneration. The general liability to pay compensation was imposed on a body corporate named the Accident Compensation Commission. The money to satisfy that liability and to defray the cost of pursuing others of the stated objects of the Act was to be raised by the imposition on employers of a levy. Part VII of the Act made provision for the imposition of a levy at a prescribed rate upon remuneration paid or payable during the financial year by each employer. That Part included provisions for registration of employers, for returns by them of relevant information, and for assessment, collection and recovery of the levy by the Accident Compensation Tribunal. Section 208(1) provided:
(b) to provide suitable systems for the effective rehabilitation of
injured workers;
(c) to provide suitable and just compensation to injured workers;
(d) to speedily and efficiently determine claims for compensation
and deliver compensation to injured workers; and
(e) in this context, to reduce the cost to the Victorian community
of accident compensation."
"A levy shall be deemed when it becomes due and payable to be a debt dueA person aggrieved by any decision of the Commission in relation to assessment of a levy might have the decision referred to the Administrative Appeals Tribunal for review, or might have the objection to the decision treated as an appeal and heard by the Supreme Court.
to Her Majesty and payable to the Commission."
10. The Commission was required by s.33(1) to establish and maintain a fund
to be called the Accident Compensation Fund. The levy
imposed under Part VII
was required to be paid into the Accident Compensation Fund, as were other
moneys specified in s.33(2). Payments
of compensation under that Act were to
be paid out of the Accident Compensation Fund. The objectives of the
Commission were stated
in s.19 to be to -
"(a) manage the accident compensation scheme as effectively,develop such internal management structures and procedures as
efficiently and economically as is possible;
(b) ensure that appropriate compensation to workers who are so
entitled is delivered in the most socially and economically
appropriate manner and as expeditiously as possible;
(c) ensure a co-ordinated approach in the implementation of the
accident compensation scheme in liaison with the Council and
the Occupational Health and Safety Commission that emphasizes
accident prevention, rehabilitation and operational efficiency;
(d) promote the goal of effective rehabilitation; and (e)
will enable the Commission to perform its functions andThe word "Council" in the Act means the Victorian Accident Rehabilitation Council. The functions of the Commission were stated in s.20 to be to
exercise its powers effectively, efficiently and economically."
"(a) administer the Accident Compensation Fund;VII;
(b) receive, assess and accept or dispute claims for compensation;
(c) pay compensation to persons whose entitlement to compensation
is accepted by the Commission or determined by the Tribunal;
(d) defend applications for review before the Tribunal;
(e) provide insurance for the purposes of this Act;
(f) defend actions against employers at common law;
(g) determine the levy payable under this Act;
(h) collect and recover levy payable under this Act;
(i) consider objections and defend appeals under Division 5 of Part
(j) undertake and provide funds for the undertaking of researchfunctions;
and educational programmes for the purpose of assisting the
Commission in achieving its objectives or performing its
(k) establish and maintain statistical records relating to theemployer;
accident compensation scheme established by or under this Act
and inform an employer about the incidence or cost of claims
in respect of injuries occurring in establishments of the
(l) provide advice to the Minister in relation to mattersThe management of the Commission and the exercise of its powers were committed to a Board of Management consisting of not more than eleven Directors appointed, and liable at any time to removal, by the Governor in Council (ss. 23, 24). Section 22 provided that the Commission should exercise its powers and perform its functions under the Act subject to the general direction and control of the Minister, and to any specific written directions given by the Minister. The exercise of the Commission's borrowing powers was subject to the control of the Treasurer (s.34), as was the manner of investing money standing to the credit of the Accident Compensation Fund (s.33(7)). The Commission's annual financial statements, which were required to contain information, and to be prepared in a manner and form, to be determined by the Treasurer (s.37(3)), were subject to audit by the Auditor-General, who was clothed in respect of the audit with all the powers conferred on him by any law relating to the audit of the public accounts (s.38).
specifically referred to the Commission by the Minister and
generally in relation to the administration of this Act and
the accident compensation scheme established by or under this
Act; and
(m) carry out such other functions as are specified in this Act or
any other Act."
11. The Accident Compensation Tribunal was declared by s.40(1) of the Act to
have the following functions:
"(a) to act as a Tribunal with exclusive jurisdiction to inquire
into, hear and determine any question or matter -Tribunal;
(i) in relation to the administration of the Workers
Compensation Act 1958;
(ii) relating to liability to pay compensation under the
Workers Compensation Act 1958;
(iii) with respect to claims for compensation under the
Workers Compensation Act 1958;
(iv) arising out of any decision of the Commission under
Part IV. or VII. or a self-insurer under Part IV. in
respect of which this Act does not provide for a right
of appeal or review by any other body or tribunal;
(v) in respect of which jurisdiction is conferred by any
other Act; and
(vi) in relation to whether an insurer is, or two or more
insurers are, liable to indemnify an employer under a
policy of insurance or indemnity issued under the
Workers Compensation Act 1958;
(b) to provide assistance to workers and their dependants in any
matter which may be the subject of any proceedings;
(c) to administer the provisions of this Act which relate to the
(d) to collect and supply statistics on prescribed matters to thefunctions as are specified in this Act."
Minister and the Commission;
(e) to make an annual report to Parliament; and (f) such other
"39A.(1) The Tribunal shall exercise the powers conferred on it inact as a court with exclusive jurisdiction to inquire into, hear and determine any question or matter -
divisions of the Tribunal in accordance with this Act.
(2) The divisions of the Tribunal are -
(a) the Accident Compensation Division; and
(b) the Workers Compensation Division; and
(c) the Contribution Assessment Division.
40.(1) The functions of the Accident Compensation Division are to
(a) with respect to whether claims for compensation should beact as a court with exclusive jurisdiction, except as provided in sub-section (1), to inquire into, hear and determine any question or matter relating to claims for compensation under the Workers Compensation Act 1958.
made under the Workers Compensation Act 1958 or this Act; or
(b) arising out of any decision of the Commission or a
self-insurer under this Act in respect of which this Act does
not provide for a right of appeal or review to any other
division of the Tribunal or to any other body or tribunal;
or
(c) in respect of which jurisdiction is conferred on the
Tribunal by this or any other Act other than the Workers
Compensation Act 1958; or
(d) in relation to whether liability to pay compensation arises
under this Act or the Workers Compensation Act 1958.
(1A) The functions of the Workers Compensation Division are to
(1B) The functions of the Contribution Assessment Division are toact as a court -
(a) with exclusive jurisdiction to inquire into, hear andThe same amending Act substituted the Registrar for the Tribunal as the person who should establish and maintain the Accident Compensation Tribunal Fund and who should determine the amount of contributions payable into the Fund in respect of each quarter of each financial year by the Commission and by self-insurers. Section 75 provided that the Tribunal, for which the Accident Compensation (Amendment) Act 1987 substituted the Registrar, should each year submit to the Minister administering the Act an estimate "of the amount necessary to be paid out of the Fund in the next financial year". The Minister was empowered to approve the estimate "subject to any amendment that the Minister requires". (s.75(3))
determine any question or matter -
(i) arising out of section 116A; or
(ii) arising out of Division 6 of Part IV; or
(iii) arising out of section 218(2); and
(b) with jurisdiction to inquire into, hear and determine any
question or matter relating to -
(i) whether an insurer is, or two or more insurers are,
liable to identify an employer under a policy of
insurance or indemnity issued under the Workers
Compensation Act 1958; or
(ii) the amount of any such liability."
12. Part IV of the Accident Compensation Act 1985 had for a heading "Payment
Of Compensation". Within that Part were provisions defining the circumstances
in which an entitlement
to what was formerly called workers' compensation
arises, provisions defining the measure of compensation, and provisions for
claims
and their determination. Division 7 of Part IV had for a heading
"Administration by Tribunal". The first three sections of Division 7 read as
follows:
"130.(1) The following payments of compensation shall be paid to the
Tribunal to be administered by the Tribunal in accordance
with this Act:
(a) Any sum payable under section 92 or 98 to a person under the
age of 18 years;(b) Unless the Tribunal otherwise determines, any payment under
section 92 to a person of or over the age of 18 years; and(c) Any other payment of compensation under this Act where on an
application to the Tribunal the Tribunal considers it would(2) The Tribunal in making a determination on an application under sub-section (1)(c) may impose any conditions, restrictions or limitations it considers appropriate on the duration and termination of the administration or arrangement. 131. (1) Except as otherwise provided in section 130, any amount of money administered by the Tribunal under this Act may be invested, applied or otherwise dealt with in any manner that the Tribunal thinks fit for the benefit of the person entitled to that money.
be in the best interests of the worker.
(2) The Tribunal shall not in administering any amount of moneyunder this Act be bound by any law relating to the administration of trust funds by trustees but shall act in good faith.
(3) In administering any amount of money under this Act theTribunal shall have regard to any advice received from the advisory committee under section 133.
(4) If the amount of money administered by the Tribunal onbehalf of any person becomes less than an amount of money determined in any particular case by the Tribunal the amount shall be paid out to that person.
(5) All expenses incurred by or on behalf of the Tribunal in theadministration of any amount of money under this Act shall be paid by the Tribunal out of the Accident compensation Tribunal Fund.
(6) Subject to the direction of the President, the Registrar mayexercise the powers of the Tribunal under this section.
(2) If a deceased worker leaves more than one dependant theTribunal after having regard to the circumstances of the various dependants and any variations in the circumstances from time to time may determine to -
(a) apply or otherwise deal with any money administered by theTribunal that because of -
Tribunal in a manner which the Tribunal considers will for
the time being be most beneficial to the dependants;
(b) make a payment to any dependant;
(c) provide for any two or more dependants collectively; or
(d) exclude any dependant from participating in any benefit.
(3) If on an application to the Tribunal it appears to the
(a) the neglect of any children by the spouse of the deceaseda determination as to the apportionment between several dependants of any amount of compensation or as to the manner in which any amount of compensation payable to any dependant is to be invested, applied or otherwise dealt with should be varied, the Tribunal may make any determination for the variation of the previous determination as the Tribunal in the circumstances of the case considers appropriate.
worker or of a relative standing in the place of a parent in
relation to any children of the deceased worker under the
age of 16 years;
(b) a variation in the circumstances of the various dependants;
or
(c) any other sufficient cause -
(4) Subject to the direction of the President, the Registrar mayexercise the powers of the Tribunal under this section.
(5) Any person who objects to any determination made by theRegistrar may appeal to the Tribunal which may make a new determination." It is s.92 which defines the measure of the entitlement of a worker's dependants to compensation when the worker has died in circumstances giving rise to that entitlement. Section 98 both confers and prescribes the measure of a worker's entitlement to a single payment of compensation in respect of certain specified injuries. The Accident Compensation (Amendment) Act 1987 substituted "Registrar" for "Tribunal" where the latter word first and secondly occurred in sub-sec. 130(1), wherever it occurred in sub-secs. (1), (2) and (4) of s.131, and wherever it occurred in sub-secs. (1), (2) and (3) of s.132, sub-sec. (4) being repealed. Sub-section 132(5) not having been repealed or amended by the Accident Compensation (Amendment) Act 1987, the displacement of the Tribunal by the Registrar in sub-secs. (1), (2) and (3) of s.132 is not of importance for present purposes.
13. The argument of Mr Charles that each of the four amounts of compensation was the subject of a trust in Lord Selborne's lower sense (a "true trust", as Megarry V.-C. would say) was supported by reference to the indications in the Accident Compensation Act 1985 that such an amount, after it has been paid to the Tribunal (whether pursuant to s.37 of the Workers Compensation Act 1958 or pursuant to s.130 of the Accident Compensation Act 1985) or to the Registrar, is conceived as belonging beneficially to the person or persons on whom entitlement was expressed (in whichever of those Acts) to be conferred. The verb "entitle" and its noun are used throughout Part IV to express the conferral of each right to compensation, as in s.131(1). And in s.77(2)(c) the language of the command addressed to the President of the Tribunal (after 1 December 1987 to the Registrar) to "do all things necessary to ... ensure that adequate control is maintained over assets owned by or in the custody of the Tribunal" was said by Mr Charles to contemplate that very distinction, between beneficial ownership in the Tribunal and beneficial ownership in persons entitled to compensation moneys in the Tribunal's custody, for which he contended. The references to administration (ss. 130(1), 131(1), 131(2), 131(4), 132(1), 132(2)(a) of money on behalf of (ss. 131(4), 132(1)) persons entitled to (s.131(1)) that money for their benefit (s.131(1), 132(2)(a)) strongly suggested a true trust of that money, in Mr Charles' submission.
14. A trust may be imposed, even on the Crown, by implication from the
provisions of a statute. (See Hogg : Liability of the Crown
(2nd ed.) pp
186-188.) The language of the Accident Compensation Act 1985, like the not
dissimilar language of the Workers Compensation Act 1958, suggests conceptions
similar to several of the conceptions of trust obligation : the control of
property, by him who has no right
to enjoyment of the property, for the
benefit of another or others in whom the right of enjoyment resides. But the
provisions of
the Accident Compensation Act 1985 concerning the payment of
amounts of compensation into the Accident Compensation Tribunal Fund, and
concerning the sources of, and
the management of, and the payment of moneys
from, the Accident Compensation Tribunal Fund are in my opinion inconsistent
with the
existence, in the case of any of the four amounts of compensation, of
an identifiable fund of compensation money as the subject of
trust obligations
and equitable interests. It is convenient to state those provisions as
amended by the Accident Compensation (Amendment)
Act 1987, not because of any
significant alteration by amendment, but because the amendments make explicit
several matters not so
plainly expressed in the 1985 Act. Those provisions
are:
"73.(1) The Registrar shall establish and maintain a Fund to be calledTribunal;
the Accident Compensation Tribunal Fund.
(2) There shall be paid into the Fund -
(a) the contributions payable under section 74 by the
Commission and self-insurers;
(aa) payments of compensation made to the Registrar under section
130;
(ab) payments made under section 34 of the Workers
Compensation Act 1958;
(ac) amounts borrowed by the Registrar under section 51C; and
(b) any income from the investment of any money credited to
the Fund and the proceeds of the sale of any investment;
(c) all other money that the Tribunal receives under or for
the purposes of this Act or any other Act; and
(d) any other money required or permitted to be paid into
the Fund by or under any other Act.
(3) There may be paid out of the Fund -
(a) payments directed by order of the Tribunal to be paid
out of the Fund under this Act or the Workers
Compensation Act 1958;
(aa) any amounts payable in respect of money borrowed under
section 51C;
(ab) any payment authorised under section 131 or 132;
(ac) any payment authorised under section 35 or 36 of the
Workers Compensation Act 1958,
(b) any payment required or authorized to be made or which
is for or towards the costs and expenses of or
incidental to the performance of the functions or the
exercise of the powers of the Tribunal or staff of the
(c) any other costs and expenses incurred by the Tribunalliability or claim arising under sub-section (4).
or Registrar under this Act or any other Act;
(d) any amounts payable in respect of remuneration,
allowances and pensions under section 45 or 50A and any
other payment required or permitted to be paid out of
the Fund by or under any other Act; and
(e) any payment required or authorised to be made out of
the Fund by sub-section (4) or ((5).
(4) The Registrar may -
(a) invest any money in the Fund in any manner which is
approved by the Treasurer; and
(b) take, purchase, lease, hold, sell and dispose of real
and personal property for the purpose of enabling the
Tribunal to perform its functions and exercise its
powers under this Act.
(5) The Registrar shall be indemnified from the Fund against any
(6) For the purposes of this section, the Registrar may open andmaintain one or more accounts in the name of the Registrar or the Tribunal with any bank or banks.
(7) If any money is invested under sub-section (4) in the purchaseof any land or the construction or alteration of any buildings, the whole or part of the land or buildings may be used by the Tribunal in connection with its powers, duties or functions under this Act. 74. (1) The Registrar shall determine the amount of contributions payable into the Fund having regard to the amount of leviable remuneration paid or payable during the financial year and preceding financial year in respect of that year and preceding year or any quarter of that year or preceding year -
(a) in the case of the contribution by the Commission - byshall be payable on 1 July, 1 October, 1 January and 1 April each year.
employers paying the levy; and
(b) in the case of self-insurers - by each self-insurer
calculated as if the self-insurer were an employer
liable to pay the levy and, if the self-insurer is a
holding company, as if the self-insurer and each of its
subsidiaries were an employer liable to pay the levy.
(2) The contribution by the Commission and each self-insurer
(3) The contribution by the Commission or a self-insurer shall bepaid within 14 days of the due date.
(4) If the contribution is not paid by the due date, the amountof the contribution together with interest at the prescribed penalty rate and the prescribed surcharge may be recovered by the Registrar as a civil debt recoverable summarily.
(5) The Commission and each self-insurer shall submit a return inthe prescribed form and at the prescribed intervals to enable the Registrar to determine the amount of contributions payable.
(6) Any person who fails to submit a return as required undersub-section (5) within the prescribed period shall be guilty of an offence against this Act and liable to a penalty of not more than 1 penalty unit for each day during which the default continues.
(7) Any person who submits a return which contains any falsematerial particulars shall be guilty of an offence against this Act and liable to a penalty of not more than 10 penalty units."
15. Each of the four amounts of compensation was paid into the custody of the
Workers Compensation Board pursuant to s.34 of the Workers Compensation Act
1958 before the commencement of the Accident Compensation Act 1985. Payment
into the Accident Compensation Tribunal Fund was made in compliance with the
requirements of sub-sections (1) and (2) of
s.37 of the Workers Compensation
Act 1985 (as amended by the Accident Compensation Act 1985) and of s.73(2)(d)
of the Accident Compensation Act 1985. Sub-sections (1) and (2) of s.37
provided:
"(1) On and from the appointed day, all moneys paid into theSub-section 37(4) provided:
custody of the Board pursuant to this Division as in force before
that day shall be administered by the Tribunal in accordance with
this Act.
(2) For the purposes of sub-section (1), the moneys shall be paid
to the Tribunal or, where any of the moneys were before the
appointed day invested, the investments shall be transferred to and
vest in the Tribunal."
"No right interest or claim in or with respect to any money paidProvisions similar to ss. 130(1), 131(1), 131(2) and 131(3) of the Accident Compensation Act 1985 had been contained in, respectively, ss. 34(1), 34(1A), 39, 34(2) and 35 of the Workers Compensation Act 1958 before the enactment of the former Act. Those provisions of the 1958 Act were reformed into language identical with the language of the corresponding provisions of the 1985 Act, by amendments effected by s.262 of the latter Act. No fund corresponding with the Accident Compensation Tribunal Fund had been available as a repository of amounts of compensation paid "into the custody of the Board" pursuant to s.34(1) of the Workers Compensation Act 1958. Sections 36, 37 and 38 of the latter Act provided, before the amendments effected by the Accident Compensation Act 1985, as follows:
into the custody of the Board pursuant to this Division as in force
before the appointed day shall abate or be in any way prejudicially
affected by reason of this section."
16. Dr. Spry relied on observations by Rich and Dixon JJ. in New South Wales
v The Commonwealth (No. 3) [1932] HCA 12; (1932) 46 CLR 246 at 259-261,262 as supporting both
his submission that the Accident Compensation Tribunal Fund is the property of
the Crown in right
of the State of Victoria and his submission that the Crown
is not a trustee in relation to the four amounts of compensation. In
that
case the State of New South Wales submitted that a notice requiring a bank to
pay the money standing to the credit of the State
in the bank's books of
account extended to moneys which were not the property of the State. Rich and
Dixon JJ. said:
"Notices have been served under sec. 15 upon the Bank of New SouthThose observations may be thought to be directed only to the question whether "the doctrines of equity" relating to the "specific moneys" the subject of a trust applied to the court funds under consideration, not to the question whether the Crown was subject to any trust in relation to those funds. In the same case Starke J. gave an answer to each question (46 CLR at 268):
Wales and the Commercial Banking Co. of Sydney, the banks at which
the public accounts of the State are kept, requiring them to pay to
the Treasurer of the Commonwealth the amount of the balance standing
to the credit of the State. The public account is kept in many
sub-accounts or divisions, but for a very long time they have been
treated as one account for the purpose of utilizing the aggregate
balance and thus enabling money to be withdrawn from any of the
accounts for any lawful expenditure to which the account is
applicable although that particular account may be in debit. So on
11th April 1032, the day on which the notices were served, the
aggregate balance of both banks in favour of the State was 85,589,
obtained by setting off debit balances in various accounts amounting
to 40,333,156 against credit balances in others amounting to
40,418,745. Among the accounts in credit are certain special
deposit accounts and other accounts connected with the
administration of `funds' for answering particular claims, and the
State contends that these contain trust moneys in which the State
has not the beneficial property. A conspicuous instance is given in
the Supreme Court Accounts. These accounts include the Colonial
Treasurer's Master-in-Equity Account, the Colonial Treasurer's
Master-in-Lunacy Account, the Colonial Treasurer's Public Trustee
Account, the Colonial Treasurer's Prothonotary's Account, and the
Colonial Treasurer's Registrar in Probate Account. The total amount
to the credit of the Supreme Court Accounts on 11th April 1932 was
492, 586, and it is said that the various litigants and others in
respect of whom moneys were paid in so as to create this amount are
entitled amongst them to this credit as specific property. This
contention does not appear to us to be consistent with the
arrangement made by the State with the banks by which the amounts at
the credit of these accounts is included in the aggregate amount at
the State's credit for the purpose of drawing on other accounts, nor
with the condition of the accounts which shows an aggregate balance
of 85,589 only an amount less by 396,997 than th e total amount at
credit of the Supreme Court Accounts. But, in our opinion, the
contention is ill founded. The Crown in administering justice and
otherwise in performing its sovereign functions receives moneys from
the subject, not as trustee of those specific moneys, but in the
exercise of its powers of government. The subject is entitled to
repayment of an equivalent amount of money, and he relies upon the
whole credit of the State as his security. The specific money paid
is not segregated but loses its identity in the general funds of the
Treasury. This truth is obscured by the fact that for the
convenient and orderly administration of the finances of the State,
as well as for the security of the subject, it is necessary to
maintain in the Treasury distinct accounts of the receipts and
disbursements in relation to every separate purpose and to keep
corresponding bank accounts, and that this is provided for by law.
But it does not follow that the doctrines of equity which enable a
cestui que trust to fasten upon moneys received by the trustee in
his fiduciary capacity and to treat any bank account into which they
go, or any sort of property into which they are transformed, as
trust property specifically, or as subject to a charge in favour of
the trust, apply to the moneys received by the Crown. The Crown is
not liable for the moneys in specie, but is liable only to repay
money of the same amount; and this is so notwithstanding the fact
that statutory obligations may exist requiring a separation in
account and an appropriation in account of moneys so that they may
ever be ready against the fulfilment of the Crown's obligations.
Although the inapplicability to the Crown of the doctrines of equity
relating to the tracing of trust moneys arises rather from the
nature of the position which the Crown occupies as a sovereign
exercising the functions of government than from statutory
enactment, yet the Audit Act appears clearly to recognize that the
existence of `funds' at the Treasury and accounts for special
purposes impresses no specific moneys with any equitable charge or
other right of property in favour of the subject but leaves the
actual moneys at the credit of the Crown its property to be dealt
with according to law.
In the case of relations between subject and subject the fiduciary
character of one person or the proprietary right of the other leads
Courts of equity to require that the exact moneys paid over or
obtained shall be dealt with, shall be identified, and shall be
appropriated so as to remain the identifiable property of the
beneficial owner. But it has always been considered by Courts of
equity that the highest form of security for trust funds was an
investment upon the public credit of the country, and conformably
with this view moneys received by the Crown might properly be
conceived as represented no longer by specific property retaining
its identity and charged with an equity in favour of the subject,
but as transformed into an obligation of the State to repay an
equivalent sum."
"The Supreme Court Accounts are the moneys of suitors or trusteesIn Harmer v Commissioner of Taxation (unreported; judgment 12 December 1991) the High Court of Australia was dealing with a case in which the appellants accepted that they were trustees of a trust estate within the meaning of those words in Division 6 of Part III, and the question for decision was whether the interest derived from an investment of the trust estate was income to which there was no beneficiary "presently entitled" for the purposes of s.97(1). The trust estate consisted of $198,195 paid into the Supreme Court of Western Australia in an interpleader proceeding in 1981 and subsequently ordered by that Court to be paid out to the appellants, who were the solicitors for one of the parties claiming in the proceeding, to be held by the appellants "on trust by them pending the determination" of the proceeding. The money having been deposited with a building society on "a redeemable interest bearing deposit" in the names of the appellants, interest was derived by them from the investment in the 1983 and 1984 years of income, to which reference is made in the reasons for judgment as "the tax years". The interpleader proceeding was not determined by the Supreme Court until 1985. In their joint reasons for judgment Mason C.J., Deane, Dawson, Toohey and McHugh JJ. observed:
paid into Court, but a Court assumes no fiduciary character and is
not a trustee for the suitors or persons who pay the moneys into
Court, though such moneys are under its control and order. The
receipt or collection of such moneys by the Court is an exercise of
the judicial function of the State and not an assumption of any
fiduciary character. The payment of moneys under Rules of Court, or
otherwise, to the credit of the State or the State Treasurer at
interest arranged with the State Treasurer, is but using the credit
of the State for the furtherance of the judicial function. Neither
the Government nor the Court thereby assumes any fiduciary
character, but the suitors and others have thus at their back the
credit of the State for the purpose of meeting any claim or rights
established as to the moneys under the control or order of the Courts."
"It is plain that any interest which accrued on an amount which hadIn Fouche v The Superannuation Fund Board [1952] HCA 1; (1952) 88 CLR 609 Dixon C.J., McTiernan and Fullagar JJ. described (at 640) a trust, constituted by statute, of a superannuation fund into which contributions by members of the Tasmanian public service and the State of Tasmania were paid as "not a trust for persons but for statutory purposes". The contributors were said not to have "such a beneficial interest in the fund as has an ordinary cestui que trust".
been ordered to be paid to a particular claimant after the making of
the relevant order constituted assessable income of that claimant.
The interest derived during the tax years was, however, all derived
before the making of any order and at a time when the conflicting
claims of particular claimants had not been resolved by either
agreement or decision.
The parties are agreed that the cases (See, in particular, Federal
Commissioner of Taxation v Whiting [1943] HCA 45; (1943) 68 CLR 199, at pp 215-216,
219-220; Taylor v Federal Commissioner of Taxation [1970] HCA 10; (1970) 119 CLR
444, at pp 450-452; Totledge Pty Ltd v Federal Commissioner of
Taxation (1980) 31 ALR 657, at pp 661, 664; Federal Commissioner of
Taxation v Totledge Pty Ltd [1982] FCA 64; (1982) 60 FLR 149, at pp 159-161; 40
ALR 385, at pp 394-396) establish that a beneficiary is `presently
entitled' to a share of the income of a trust estate if, but only if:
(a) the beneficiary has an interest in the income which is both
vested in interest and vested in possession; and
(b) the beneficiary has a present legal right to demand and receive
payment of the income, whether or not the precise entitlement can
be ascertained before the end of the relevant year of income and
whether or not the trustee has the funds available for immediate
payment.
That being so, the question on the appeal is whether any one or more of
the claimants either were `presently entitled' in that sense to the
interest earned on the funds deposited with the Building Society or had
a `vested and indefeasible interest' in that interest. That question
must be answered as at the time when the interest was derived, that is
to say, during the tax years. The fact that orders were subsequently
made for payment of the interest earned in the tax years to one or other
of the claimants does not assist the appellants unless those orders
represented a judicial recognition of a present or relevantly vested
beneficial entitlement to the interest which existed at the time when
the interest was derived, that is to say, which existed independently of
the actual order.
There are many circumstances in which trust money can be paid into court
by a trustee either pursuant to an order made on the application of a
beneficiary or pursuant to an application made by the trustee himself or
herself (see, e.g. Trustees Act 1962 (W.A.), s.99; Meagher and Gummow,
Jacobs' Law of Trusts in Australia, 5th ed. (1986), par 2303. In such a
case, the funds paid into court remain subject to any pre-existing trust
notwithstanding the payment in. If some person or persons were
presently entitled to the corpus or income before payment in, the fact
of payment in to await the orders of the court will not, of itself,
displace that present entitlement. If entitlement is disputed, the
function of the court will be to identify existing interests in the
money paid into court rather than to create new ones. If the interest
of a beneficiary in the moneys is vested and the beneficiary has a right
to demand and receive payment of income, the fact that the interest and
the right are disputed and await vindication by the order of the court
will not make the interest contingent or negate the existence of the
right. That being so, if a beneficiary is found by the court to have
had a pre-existing interest in the income, the fact that the interest
was not admitted or its extent was not ascertained at the time of
payment in or until the making of the relevant order does not mean that
the beneficiary was not presently entitled to it both at that time and
during the period pending the court's determination.
The moneys paid into court by Riverhall were not, however, moneys which
it held as trustee. The primary relationship between Riverhall and In
Residence was that of debtor and creditor. Notwithstanding that the
effect of what had occurred was that In Residence held some (but not
all) of its contractual rights against Riverhall in trust for one or
other of the other claimants, it has not been suggested on behalf of the
appellants that Riverhall itself at any time held property as trustee
for any of the claimants. In these circumstances, it is necessary to
determine the effect of the payment of the moneys into court and the
subsequent deposit of the moneys with the Building Society in the name
of the three appellants.
Upon payment into court, the $198,195 owed by Riverhall became `trust
moneys' in the broad sense that neither the Accountant of the Crown Law
Department (See Rules of the Supreme Court (W.A.), Third Schedule, cl.1)
nor the court itself was beneficially entitled to them. They were
received by the court (through the Accountant as the appropriate
officer) pursuant to the statutory provisions or Rules of Court under
which they were paid in. After payment in, the claimants acquired an
interest in the moneys in the sense that they were entitled to insist
that they be properly administered and applied for the purposes for
which they were paid in. However, no claimant was beneficially entitled
to either the whole or any part of the moneys paid into court or of the
interest earned thereon (See, e.g., Official Receiver in Bankruptcy v
Schultz [1990] HCA 45; (1990) 170 CLR 306, at pp 312-314). The moneys were received
and held by the Accountant to be applied in accordance with the orders
ultimately made by the Supreme Court. The respective interests of the
individual claimants were, at best, contingent. None had an entitlement
to the capital or the income of the fund which was vested either in
interest or in possession. A fortiori, none had a present legal right
to demand or receive payment of either capital or income. It follows
that none of the claimants was `presently entitled' to the income of the
fund for the purposes of s.99A of the Act during the period between the
time of the payment in of the moneys and the time when they were
received by In Residence's solicitors to be deposited with the Building
Society.
The payment of the moneys to In Residence's solicitor involved a payment
out of court. The perceived basis of the power of the Supreme Court to
order that payment out of investment was not investigated in argument.
It may have been the power impliedly reserved to the Supreme Court by
the liberty to apply for investment of the moneys which had been
reserved by the order for payment in Official Receiver in Bankruptcy v
Schultz [1990] HCA 45; (1990) 170 CLR 306, at pp 312-314. The payment to the
solicitor and the subsequent lodging of the moneys with the Building
Society did not however, alter any trust upon which the moneys were held
when held by the Supreme Court. It is true that the claimants had an
interest in the debt then owing by the Building Society to the
appellants in the sense that they were entitled to insist that the
rights of the appellants as the legal creditors of the Building Society
(and in any moneys received from the Building Society) be held,
exercised or applied in accordance with the orders of the Supreme Court.
As had been the case when the moneys were held by the court, however,
any beneficial interest of an individual claimant was contingent upon an
order being made in his or its favour. Unless and until such an order
was made, no claimant had any vested interest in the moneys lodged with
the Building Society, in the interest earned thereon or in the rights of
the appellants as legal creditors of the Building Society. If, for
example, the whole of the moneys had been exhausted by orders of the
Supreme Court in relation to costs, none of the claimants would ever
have obtained a vested beneficial interest in any of the moneys
otherwise than to the extent of his or its entitlement under those
orders as to costs.
The fact that no claimant had a vested interest in any of the moneys
paid into court until an order in his or its favour was made by the
Supreme Court does not mean that the Supreme Court was doing other than
discharging its ordinary judicial function in determining the competing
claims of the claimants to the moneys paid into court. No claimant
asserted that the moneys paid into court by Riverhall had been held by
Riverhall as trustee. Riverhall had paid the moneys into court to
resolve its liability as a debtor. In contrast with a case where the
moneys paid into court are subject to a pre-existing trust and the
dispute is between claimants to a direct and vested interest in the
actual moneys, the function of the court in the present case was not to
resolve a dispute between the claimants about beneficial ownership of
the moneys themselves. As the orders actually made demonstrate, the
function of the court in the present case was to determine the
conflicting claims and counterclaims of the claimants as against
Riverhall as a debtor. The moneys paid into court were not themselves
the subject matter of dispute but were held to satisfy any order,
including any order for costs, made by the court consequent upon its
determination of those conflicting claims and counterclaims. Once the
moneys were deposited with the Building Society in the names of the
appellants holding as trustees, the moneys were held by them in that
capacity to be dealt with in accordance with the order of the court
and not otherwise. It is unnecessary to consider whether the
contingent interests of the claimants in the moneys paid into court
could be aggregated into a totality of beneficial ownership or
whether the powers of the Supreme Court to make orders affecting the
moneys, including orders as to costs, meant that one of the elements
of an ordinary non-purpose trust was lacking. It suffices to say
that the trust upon which the moneys were held as a trust for
statutory purposes (see Fouche v The Superannuation Fund Board
[1952] HCA 1; (1952) 88 CLR 609, at p 640), and that the legislative provisions,
including Rules of Court, applicable to govern the payment of the
moneys into court and their subsequent application effectively
overrode any need of that element."
17. I believe myself constrained by the reasoning in Harmer's Case to conclude that each of these four amounts of compensation was at relevant times a "trust estate" within the meaning of that expression in Division 6, notwithstanding that in respect of none of them was the trustee "liable for the moneys in specie, but (was) liable only to repay money of the same amount", and notwithstanding that, in the cases of at least two of those amounts, there was no person who had a right to any benefit in respect of that trust estate. I base that conclusion, not upon what is said in Harmer's Case about a sum of money subject to a pre-existing trust at the time it is paid into court, but upon what the court said about the sum of money paid into court by Riverhall while that sum remained in court. Upon payment into court those moneys are said by the High Court to have become "`trust moneys' in the broad sense that neither the Accountant of the Crown Law Department nor the court itself was beneficially entitled to them ...... The moneys paid into court were not themselves the subject matter of dispute but were held to satisfy any order, including any order for costs, made by the court consequent upon its determination of those conflicting claims and counterclaims. Once the moneys were deposited with the Building Society in the names of the appellants holding as trustees, the moneys were held by them in that capacity to be dealt with in accordance with the order of the court and not otherwise. It is unnecessary to consider whether the contingent interests of the claimants in the moneys paid into court could be aggregated into a totality of beneficial ownership or whether the powers of the Supreme Court to make orders affecting the moneys, including orders as to costs, meant that one of the elements of an ordinary non-purpose trust was lacking. It suffices to say that the trust upon which the moneys were held was a trust for statutory purposes (See Fouche v The Superannuation Fund Board [1952] HCA 1; (1952) 88 CLR 609, at p 640) and that the legislative provisions, including Rules of Court, applicable to govern the payment of the moneys into court and their subsequent application effectively overrode any need of that element".
18. The judges of the Federal Court of Australia who had made the orders under appeal to the High Court in Harmer's Case had held that upon payment into court "no relationship in the nature of trust arose in respect of that sum in the hands of the court accountant or the Treasurer of the State. Pursuant to Item 3 of the Third Schedule of the rules of the Supreme Court of Western Australia, money paid into court is required to be paid by the accountant to the Treasurer unless ordered to be invested pursuant to Item 14 of the Third Schedule whereupon it is required to be transferred to the Public Trustee. A bare order requiring moneys paid into court to be invested may not carry sufficient indicia to constitute a trust estate of the moneys so paid in and transferred to the Public Trustee. In receiving and dealing with such moneys, it seems to us, the Public Trustee does no more than comply with the requirements of its statute and the requirements of the rules of Court. It is probably correct to treat him as a mere mandatory: see DCT v Trustees of Wheat Pool of Western Australia [1932] HCA 15; (1932) 48 CLR 5 at 14; but cf Fremanis v Cheshire Holdings Pty. Ltd. 90 ATC 4201" : Federal Commissioner of Taxation v Harmer (1990) 94 ALR 541 at 549. Tito v Waddell (No. 2) supra was cited in the reasons of one of those judges. The High Court's reasons for judgment go beyond what the parties had left unresolved by concession and agreement, no doubt in order to give guidance for the administration of Division 6. In those circumstances I understand the High Court's reasons for judgment to include an expression of opinion that the money paid into court by Riverhall was, while in court, subject to a trust for statutory purposes and that it constituted a "trust estate" within the meaning of that expression in Division 6.
19. There is in my opinion no sufficient basis for reaching a different conclusion concerning any of the four amounts of compensation in question here from the conclusions stated by the High Court about the money paid into court by Riverhall. (As I have observed, it might be argued that each of those four amounts was subject to a "pre-existing trust" when it was paid to the Tribunal. If that were so, the conclusion that each amount of compensation constituted a "trust estate" would be strengthened, according to the reasoning in Harmer's Case). I assume that in the Western Australian statutory provisions and Rules of Court relating to the payment into court by Riverhall there was no provision similar to s.131(2). But in my opinion that sub-section does not deny the existence of a trust of the money to which it refers. It frees the Tribunal and the Registrar from the operation of part of the law of trusts.
20. The question remains whether the trustee, in relation to the four trust estates, was the Crown in right of the State of Victoria or the members of the Tribunal and, later, the Registrar. In my opinion each of those latter persons was, at relevant times a "person having ... the administration of income affected by (an) implied trust", within the meaning of those words in the definition of "trustee". It may be - it is certainly arguable - that they are also agents of the Crown in right of the State of Victoria, in which the property in the Accident Compensation Tribunal Fund is vested. On the basis that they are, it was submitted on behalf of the applicants, and by Mr Berkeley, QC, the Solicitor-General for Victoria, that the Income Tax Acts and the Income Tax Assessment Act 1936 did not, on their proper construction, purport to apply to the Crown. In my opinion so much of that legislation as subjects a trustee, in the defined sense, to income tax on the net income of a trust estate, does purport to apply to the Crown in right of a State. In compliance with the suggestion of Mason C.J., Deane, Dawson, Toohey, Gaudron and McHugh JJ. in Bropho v Western Australia [1990] HCA 24; (1990) 93 ALR 207 at 218, I take account of the fact that the tests applicable, at the time when the Income Tax Assessment Act 1936 was enacted, in determining whether the presumption that statutes do not bind the Crown had been rebutted were then seen as of general application. I bear in mind also the observation of those learned judges (93 ALR 219) "that, notwithstanding the absence of express words, an Act may, when construed in context, disclose a legislative intent that one of its provisions will bind the Crown while others do not and that a disclosed legislative intent to bind the Crown may be qualified in that it may, for example, not apply directly to the Sovereign herself or to a Crown instrumentality itself as distinct from employees or agents. Always, the ultimate questions may be whether the presumption against the Crown being bound has, in all the circumstances, been rebutted, and, if it has, the extent to which it was the legislative intent that the particular Act should bind the Crown and/or those covered by the prima facie immunity of the Crown". It is only with the applicability of Division 6 to the Crown and to its agents as trustees that I am concerned. Two of the cardinal purposes of Division 6, when read in the light of s.254, are to bring about the taxation of income when it is derived, whether or not it has been then derived by the person who is to have the enjoyment of it, and to shield from liability to pay income tax with his own money the person who has derived income to the personal enjoyment of which he has no right. If the Crown in its role of trustee is obliged to pay income tax on the net income of the trust estate those purposes are, pro tanto, achieved. If the Crown in its role of trustee is free of that obligation the first of those purposes may not inappropriately be described as wholly frustrated, when regard is had to the substantial aggregate sum which the evidence showed to be subject to trusts under the Accident Compensation Act 1985. Payment of the tax imposed in accordance with the requirements of Division 6 by a trustee in that capacity who observes the requirement stated in s.254(1)(d) costs the trustee nothing but the exertion of preparing and furnishing his return and remitting to the Commissioner the money required to satisfy the assessment, to the enjoyment of which he has no right. In those circumstances a legislative intention to subject the Crown and its agents to the provisions of Division 6 and the Tax Acts in their application to trustees can in my opinion be discerned, in rebuttal of the presumption to the contrary.
21. It was only by reference to s.114 of the Constitution that argument was advanced that the Commonwealth Parliament lacked constitutional power to subject the Crown in right of the State of Victoria to the provisions in Division 6 relating to trustees. Dr. Spry formally submitted that the Constitution, other than s.114, invalidated a law imposing taxation on the income of a State.
22. The "property .... belonging to (the) State" which Mr Berkely identified
as that on which the Commonwealth had in contravention
of s.114 imposed a tax
was the moneys from the Accident Compensation Tribunal Fund which had been
invested. The tax in question in these
appeals was in his submission a tax on
the use which the State had made of those moneys in investing them to yield
income. The tax
was calculated by reference to the amount which the use of
the moneys yielded, namely the interest on the investment. He relied
on
reasoning by Mason C.J. Brennan and Deane JJ. in Queensland v The Commonwealth
[1987] HCA 2; (1987) 162 CLR 74 at 97-98. Their Honours quoted this statement by Higgins J.
in the Steel Rails Case (1908) 5 CRR 818 at 854:
"There is a fundamental difference between taxing men for havingTheir Honours then continued:
property, and taxing men for moving property - and, in particular, for
moving property into the country from overseas."
"This statement expresses what in our opinion is the essence of the23. The tax here in question was imposed, not on the use of moneys in the Fund to yield income, but on the accretion of income to each of the four trust estates effected by the allocation of part of what the investments had yielded to the credit of the account recording what the balance of that account was. If the income yielded by the investments during a year had not been allocated to a trust estate, but had been retained in the Fund, no tax would have been imposed by the operation of Division 6. Further, "(s)ales taxes and income taxes are taxes imposed upon transactions or activities and there is no direct relationship between them and any property held or owned by the taxpayer in the sense that he is liable to tax because he is the holder or owner of property" : per Dawson J. in Queensland v The Commonwealth 162 CLR at 104-105. In my opinion no contravention of the constitutional provision flows from the operation of Division 6 in relation to the amounts here in question.
immunity conferred by s.114 and what was one of the basic grounds of
decision in the Steel Rails Case. The section protects the property
of a State from a tax on the ownership or holding of property but it
does not protect the State from a tax on transactions which affect
its property, unless the tax can be truly characterized as a tax on
the ownership or holding of property. This interpretation gives
effect to the popular or common understanding of what is involved in
the prohibition of a tax of any kind on property of a State, namely
a tax on the ownership or holding of property. And it gives a
powerful measure of protection to the financial integrity of a State
without preventing the Commonwealth from taxing every form of
transaction to which a State is a party. No compelling reason has
been advanced for giving the constitutional immunity any wider
operation.
It may be said that a tax on the exercise of any of the rights giving
content to the concept of ownership is itself a tax on ownership. This
notion is rather more extensive than the common understanding of what is
involved in the prohibition of a tax on the property of a State, as we
have explained it, though we would accept that some taxes on rights
exercised by an owner with respect to his property would amount to a tax
on property in the prohibited sense. Thus, in the context of an
exemption from taxation on ownership of property, a tax on the
possession or use of property would constitute a tax on the ownership of
that property: see Attorney-General (Saskatchewan) v Canadian Pacific
Railway Co. (1953) AC 594, at p 616. This is because an exemption
from taxation on ownership of property naturally extends to an exemption
from taxation on the use of it. And a tax on the proceeds of sale of
property is likewise a tax on the ownership of property or on property
because it is an indirect means of taxing the ownership of property.
Such a tax would necessarily fall within the constitutional immunity; if
it did not, the constitutional immunity would amount to nothing but a
formal prohibition."
24. Section 23(d) of the Income Tax Assessment Act 1936 provides:
"The following income shall be exempt from income tax:-body
(d) the revenue of a municipal corporation or other local governing
under any law in force in a Territory being part of Australia;"An alternative submission by Dr Spry was that the amounts assessed were "revenue" of the Tribunal and, later, of the Registrar. Even if those amounts could be said to fall within the meaning of that word when they, as part of the income from investments of the Accident Compensation Tribunal Fund, were received by the Tribunal or the Registrar, none of them answered that description upon allocation to the four amounts of compensation, in my opinion. Division 6 and the relevant Income Tax Acts imposed tax in respect of that allocation. In that character none of the four amounts was revenue of the Tribunal or of the Registrar, in my opinion.
25. In the appeals numbered VG387 of 1989 and VG286 of 1990, the applicant
Joyce Agnes Cousins was at relevant times of full age
and it was not suggested
that she was at any relevant time under any legal or other disability. In
respect of each year of income
s.97 was said to justify inclusion of the
interest credited to her account by the Tribunal in her assessable income.
The evidence
in those two appeals, which - like the evidence in the other six
appeals - consisted merely of stated facts agreed between the parties
and
documents which they tendered, did not disclose the existence of any other
person who might have answered the statutorily defined
description of
"dependants" of the applicant's husband at the time of his death. It is only
dependants of the deceased worker, within
that definition, who may have any
interest in the compensation in respect of his death. At and since the time
of Mrs Cousins's husband's
death that word has, in both the Workers
Compensation Act 1958 and the Accident Compensation Act 1985, meant those
persons who at the time of the worker's death were wholly or mainly or in part
dependent on the earnings of the worker
or would but for the incapacity due to
the worker's injury have been so dependent. Although a right to claim an award
of compensation
in respect of the death of a worker was conferred on each of
his dependants, in the defined sense of that word (Barwood v W.H. Blackham
Pty
Ltd (1965) VR 499; The United Collieries Ltd v Simpson (1909) AC 393), and
although the sum awarded as compensation for the death was described in
both
the Workers Compensation Act 1958 and the Accident Compensation Act 1985 as a
sum to which the dependants have an entitlement, ss. 34 and 35 of the former
Act and s.132 of the latter Act conferred on the Workers Compensation Board
and the Accident Compensation Tribunal
(later the Registrar) respectively
powers, while there were several dependants, of such a kind that the only
entitlement of a dependant
was to the exercise from time to time of a
discretionary judgment by the repository of the powers as to whether any
benefit - and,
if so, as to what benefit - should be conferred on that
dependant by the application of compensation money. The statement of agreed
facts does not assert that Mrs Cousins was the only dependant of her husband.
There is no limitation period applicable to a claim
to recognition as a
dependant, so far as I am aware. The statement of agreed facts includes the
following:
"By a consent award dated 29 November 1982 (`the award') the WorkersThe quantum of compensation payable varies in accordance with the number and age of the dependants. Mrs Cousins was the claimant upon whose claim the award was made. But my understanding of the Workers Compensation Act 1958 is that the awarded sum is not awarded to her. The award is of the sum awarded for the benefit of the claimant and of such other persons as may thereafter be recognised by the Board or the Tribunal as dependants. Whether or not that be so, Mrs Cousins had no right at any relevant time to demand or to receive payment of the credited interest or of any part of the amount being administered for her benefit. The Workers Compensation Act 1958 (in terms identical with those of the Accident Compensation Act 1985) had committed to the Tribunal, later the Registrar, the discretionary power to pay or to refrain from paying to her the whole or part of the amount being administered for her benefit : she was not in my opinion "presently entitled" to the income within the scope of s.97. In each of the appeals to which she is a party the appeal will be allowed, the decision of the respondent on the objection set aside and the matter remitted to the respondent for amendment of the assessment.
Compensation Board (`the Board') awarded the widow compensation in
respect of the death of the deceased worker in the sum of $15,000 to be
paid into the custody of the Board and to be administered for the
benefit of the widow."
26. I turn to the appeals numbered VG389 of 1989 and VG288 of 1990. The statement of facts upon which the parties were agreed in those two appeals asserts that the worker in respect of whose death compensation was paid died on 18 August 1983 and that Sarah Kate Turton was born on 16 November 1983, the child of the worker and his widow Susan Jennifer Turton. That statement further asserts that "(b)y an amended award dated 8 May 1984 ... the Workers Compensation Board ... awarded the widow and the infant daughter compensation in respect of the death of the deceased worker in the sum of $65,919 to be paid into the custody of the Board to be administered for the benefit of the widow and the infant daughter". But what the statement of agreed facts asserts to be a copy of the award, annexed to the statement, makes no reference to the daughter and declares that the compensation is to be administered for the benefit of the widow. There is reference to the daughter, as a person for whose benefit the compensation is to be administered, in other, less formal annexed documents. No one adverted to those circumstances during the hearing of the appeal. Although the definition of "dependants" in the Workers Compensation Act confines the class to those persons whose dependence on the worker existed, or would but for his incapacity have existed, at the time of his death, a time at which Sarah Kate Turton was not in contemplation of law a person, it may be that other provisions of that Act, such as clause (4)(a) of the clauses appended to s.9 or a provision which I have not noticed, have the effect of bringing Sarah Kate Turton within the class. If Sarah Kate Turton neither was, nor has been formally recognised by the Workers Compensation Board or the Tribunal as, a dependant of her father, Mrs Turton is in like case with Mrs Cousins, and the members of the Tribunal (in the appeal numbered VG389 of 1989) and the Registrar (in VG288 of 1990) were the trustees liable to pay tax on the net income of the Turton trust estate. If Sarah Kate Turton is, or has been formally recognised as, a dependant, again - and a fortiori - those persons were the trustees liable to pay tax on that net income.
27. On 10 July 1987 $4,846 was credited by way of addition to the amount standing to the credit of the Turton trust. That was a proportionate part of the income derived during the year ended 30 June 1987 from investment of moneys in the Accident Compensation Tribunal Fund, after deduction from that income of some expenses. The Registrar was assessed to tax on the basis that that sum was assessable income of the Turton trust estate under s.99 in relation to the year of income ended 30 June 1988. In my opinion that assessment was correct, as was the respondent's disallowance of the objection against it. The income was in my opinion to be regarded as derived as "assessable income of the trust estate calculated .... as if the trustee were a taxpayer in respect of that income", within the meaning of those words in Division 6, when, and not before, the Registrar allocated that sum to the Turton trust. Accordingly the appeal in the proceeding numbered VG288 of 1990 will be dismissed. The same amount was assessed to tax on the basis that that sum was assessable income of the Turton trust estate under s.99 in relation to the year of income ended 30 June 1987. According to the agreed statement of facts an amount of $5,896, being the proportionate part of the income derived during the year ended 30 June 1986 from investment of moneys in that Fund, was on 4 July 1986 credited by way of addition to the amount standing to the credit of the Turton trust. I will hear counsel as to the appropriate orders in the appeal numbered VG389 of 1989, which relates to the year of income ended 30 June 1987.
28. In the appeals numbered VG388 of 1989 and VG289 of 1990 it was asserted
in the agreed statement of facts that the sum awarded
was awarded to a named
dependant. I refer to what is written in paragraph 27 hereof on that subject.
In this case the formal award
of the Workers Compensation Board, which recited
its finding that Toni Lee-Ann Matthes was a dependant of the deceased worker,
included
this sentence:
"The Board reserves to Alma Ann Matthes liberty to prove her entitlementThe statement of agreed facts asserts that six days after the date of the award the Board ordered that $2,000 of the awarded sum be paid "by way of apportionment" to Alma Ann Matthes, the mother of the claimant at whose suit the award had been made, Toni Lee-Ann Matthes. Toni Lee-Ann Matthes was born in 1972. The balance of the awarded sum, $12,091, was at relevant times held by the Board, and later by the Tribunal and the Registrar, for the benefit of Toni Lee-Ann Matthes to the credit of an account in the name of Beverley Isabel Darlow, a relative of Alma Ann Matthes, who had brought the original claim for compensation on behalf of Toni Lee-Ann Matthes. The allocation of a proportionate part of the income derived during the year of income ended 30 June 1987 to the credit of that account was effected on 10 July 1987. The amount was $5,798. The Registrar was assessed to pay tax on that sum as the net income of a trust estate in respect of both the income year 1987 and the income year 1988. Section 98 was indicated as the provision authorising the 1987 year assessment on the basis that Toni Lee-Ann Matthes was the beneficiary presently entitled to the income and was under the legal disability of infancy. In my opinion she was not presently entitled. She had no vested interest in any part of the trust estate. Section 36(3) of the Workers Compensation Act 1958 (as amended by the Accident Compensation Act 1985), like s.132(3) of the latter Act, empowered the Tribunal, later the Registrar, to vary the previous apportionment between mother and daughter, and s.36(2)(d) of the 1958 Act, like s.132(2)(d) of the 1985 Act, enabled those authorities at any time, for good reason, to exclude the daughter from participating in any benefit from the trust estate. However, s.99 justified the 1988 year assessment, in my opinion. The appeal in respect of that year (No. VG288 of 1990) will be dismissed. A proportionate part of the income derived during the year ended 30 June 1986 was credited to the Matthes trust on 4 July 1986. I will hear counsel concerning the appeal No. VG388 of 1989 in respect of the assessment for the 1987 year.
to be admitted as a claimant and dependant to this Award, pursuant to
claim No. 7404/74."
29. The remaining appeals (numbered VG385 of 1989 and VG287 of 1990) do not raise any question not discussed in relation to the other six. The appeal numbered VG287 of 1990 in respect of the 1988 year will be dismissed. I will hear counsel concerning the other appeal.
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