Swinburne v Federal Commissioner of Taxation [1920] HCA 8; (1920) 27 CLR 377 (1 March 1920)

After reading the judgment about to be delivered I still feel some doubt whether the word "charitable" in the phrase "public charitable institutions" used in sec. 18 (1) (h) (iii.) of the Income Tax Assessment Act 1915-1918 should not be construed as having the meaning which has been attributed to the same word when used in the Statute of Elizabeth. The rule as to construction of a statutory provision conferring the privilege of exemption from taxation is stated by Lord Young in Hogg v. Parochial Board of Auchtermuchty[1] thus: "I think it proper to say that, in dubio, I should deem it the duty of the Court to reject any construction of a modern Statute which implied the extension of a class privilege of exemption from taxation, provided the language reasonably admitted of another interpretation." Applying this rule, I concur in the answer proposed to be given to the question submitted in the special case.

This is a case stated by the learned Chief Justice on an appeal by a taxpayer, under the Commonwealth Income Tax Assessment Act 1915-1918, from the decision of the Commissioner. The matter in contest is very short. The taxpayer contributed during the taxing year the sum of £1,000 to the Swinburne Technical College; and the question is whether, in calculating his taxable income for the year, he is entitled to a deduction of the sum so contributed from his total assessable income. The claim for deduction is rested on the provisions of sec. 18 of the Act, which by sub-sec. 1, par. (h) (iii.), includes among statutory deductions "gifts exceeding five pounds each to public charitable institutions in Australia if the gifts are verified to the satisfaction of the Commissioner." The most important question we have to determine is as to the proper legal interpretation of the words "public charitable institutions" as they occur in that paragraph. As to this the taxpayer contends that in that expression the word "charitable" should be construed in the wide signification of the Elizabethan Act; while the Commissioner contends that that word in its statutory setting has the narrower meaning of ordinary parlance, which, in effect, we take to be beneficent assistance to the needy or helpless. The argument before us extended also to consideration as to whether, assuming the taxpayer's construction was correct, the Constitution of the College is such as to make its property subject to an inalienable trust to the public, and whether in the circumstances, having regard to its memorandum of association, the College would come within the terms of the enactment so construed.

It is only necessary to deal with the broad question of construction. No rigid rule can be applied for the determination of that question. As said by Lord Herschell in Commissioners of Inland Revenue v. Scott[2] in relation to a very similar question, "each Statute must be looked to by itself for the purpose of ascertaining its meaning." But it is always the duty of a Court to give to words in a Statute their natural signification unless, on a consideration of the Statute as a whole, some other meaning is seen to be intended (Watney, Combe, Reid & Co. v. Berners[3]). The word "charitable" taken alone is open to various significations. In the phrases "a charitable donation" and "a charitable view of conduct" quite different meanings are conveyed by the same word. In a Statute where the phrase "charitable use" or its equivalents "charitable trust" and "charitable purpose" are used, a technical meaning is now the primary and, therefore, the natural meaning, requiring context to vary it. Lord Macnaghten has stated the fact, and the reason for it, in Commissioners for Special Purposes of Income Tax v. Pemsel[4]. But no technical signification has attached itself, at all events in Australia, to the expression "public charitable institution." We are not to pull the phrase to pieces and consider the various meanings of its component parts, but we have to read the composite expression as written, and if, when so read, it has a known signification, that should primâ facie be taken to be its meaning in the Statute. Now, in Australia (and the Act we are considering is directed to Australians) the expression "public charitable institution," so far from having the technical meaning coextensive with the Elizabethan Statute, is used both popularly and officially as denoting an institution which—assuming its "public" character, a matter unnecessary for us here to delimit—is "charitable" in the sense of affording relief to persons in necessitous or helpless circumstances, and in most instances, at all events if required, gratuitously. That that is the popular understanding of the phrase is a matter of common knowledge, and so within our judicial cognizance.

That conclusion is confirmed by various Acts of Parliament in various States, which constitute strong evidence of the general sense in which the term is understood.

The Commonwealth enactment we are construing was passed in 1918 by Act No. 18, sec. 14 (f). Prior to that date the following State Statutes had been passed. (We mention in order of date only those material Acts that we have been able to find.) In 1875, in South Australia, Act No. 7: by sec. 1 of which the phrase "public charitable institutions" was defined to mean "public hospitals, destitute and lunatic asylums, orphanages, reformatories, and other institutions of the like nature, whether local or general: Provided that such institutions are established by or pursuant to Act of Parliament, and supported wholly or in part out of the general revenue." In 1885, in Queensland, Act No. 8, passed for the management of public charitable institutions: by sec. 2 of which it was provided that the Governor might by Order in Council declare any public institution which was maintained wholly or in part at the public expense for the reception, maintenance and care of indigent persons, or other persons requiring medical or other aid or comfort, not being a hospital for the insane or a hospital established under the Statutes relating to hospitals, and not being an orphanage within the meaning of the Orphanages Act of 1879, to be a public charitable institution for the purposes of the Act. In 1888, in Tasmania, Act No. 8, by which "charitable institution" was defined as "any hospital established for the treatment of the sick; any home or refuge for destitute or unfortunate persons; any institution for the gratuitous education or gratuitous maintenance and education of children; any society or association of persons established or associated for the purpose of raising and disbursing moneys for the relief or maintenance of indigent persons; and any other institution which the Attorney-General may certify as a fit and proper institution to be registered under this Act, but shall not include any institution incorporated under the provisions of any law now in force, or any institution subject to the provisions of any special Act of Parliament regulating the maintenance and management thereof, unless the context expresses the contrary." In 1901, in New South Wales, by Act No. 29, a consolidated Act was passed called the Public Institutions Inspection Act: it defined "public charity" as "any hospital, infirmary, orphan school, or charitable institution, which is wholly or in part supported by grants from the public revenue"; for those a Government inspector of public charities was to be appointed; then alongside these were enumerated institutions not included under the head "public charities," but regarded as other "public institutions"; they are mentioned in sec. 10 as "a mechanics' institution, school of arts, public library, literary society, or other similar institution," and for these inspection by a magistrate or other person resident is provided. In Victoria there is no similar general Act, but charitable institutions are dealt with in various language in different Acts: for instance, even the phrase "charitable purposes" now in the Local Government Act 1915, sec. 249 (2) (i), was held in 1905 to be used not in a technical but in a colloquial sense (Trustees of Queen's College v. Melbourne Corporation[5]); in 1907 by the Income Tax Act (No. 2090), and repeated in the Act of 1915, sec. 29, the phrase "charitable institution" is not used, but specific classes of public institutions are enumerated as entitling donors to deductions. In 1912, in South Australia, by Act No. 1078, replacing former Acts, the term "public charitable institution" is defined as in the Act of 1875. It should further be added, with reference to the statement in the special case that the College receives Government grants, that, having looked at the Victorian Appropriation Acts under which those grants are made, we find that the grant made by Parliament is under the heading of "Technical Schools."

The Federal Act, in adopting the same term "public charitable institutions in Australia," cannot, therefore, be taken as intending any meaning other than the generally accepted meaning in Australia unless its own structure indicates another meaning. There is not context to indicate a secondary meaning, and, therefore, we are of opinion that the meaning of the phrase contended for by the Commissioner is its true one. This renders any further consideration of the arguments unnecessary.

The questions stated in the special case should, therefore, be answered in the negative.

Solicitor for the respondent, Gordon H. Castle, Crown Solicitor for the Commonwealth.

[1] 7 Rettie, 986.

[2] (1892) 2 Q.B., at p. 165.

[3] (1915) A.C., 885, at p. 893.

[4] (1891) A.C., at pp. 580-581.

[5] (1905) V.L.R., 247; 26 A.L.T., 191.

High Court of Australia

Swinburne v Federal Commissioner of Taxation [1920] HCA 8; (1920) 27 CLR 377 (1 March 1920)

HIGH COURT OF AUSTRALIA