Teele v Federal Commissioner of Taxation [1940] HCA 3; (1940) 63 CLR 201 (8 March 1940)

I have had the advantage of reading the judgment of Dixon J. and agree with it.

Case stated under the Estate Duty Assessment Act 1914-1928. The question for determination is whether estate duty is assessable or payable upon so much of the residuary estate of Edmund Henry Chown deceased as was bequeathed "to such charitable or religious causes or institutions in Victoria as my trustees in their absolute discretion may determine with power to build a memorial hall or any other building to be called The Edmund Henry Chown Memorial."

It is provided by sec. 8 (5) of the Assessment Act that estate duty shall not be assessed or payable upon so much of the estates of persons dying after the commencement of the Act as is devised or bequeathed for religious, scientific or public educational purposes in Australia or to a public hospital or public benevolent institution in Australia or to a fund established and maintained for the purpose of providing money for use for such institutions or for the relief of persons in necessitous circumstances in Australia.

It was argued that the gift in favour of charitable institutions in Victoria was in effect a gift to public benevolent institutions because upon a proper interpretation of the will the testator confined his gift to institutions organized for the relief of poverty, sickness, destitution, or helplessness (Perpetual Trustee Co. Ltd. v. Federal Commissioner of Taxation[1]). But the reasoning of the Judicial Committee in Chesterman v. Federal Commissioner of Taxation[2] disposes of the argument. The word "charitable" must be given its technical meaning, as in the Statute of Elizabeth, and is not confined to public benevolent institutions.

Further, it was contended that the gift was exempt because it was, in effect, a gift for the relief of persons in necessitous circumstances in Australia. The gift is wider, I think, in its terms, and in any case it is not a gift for the relief of persons in necessitous circumstances in Australia that is exempt but a gift to a fund established and maintained for the relief of such persons (Perpetual Trustee Co. Ltd. v. Federal Commissioner of Taxation[3]; Public Trustee (N.S.W.) v. Federal Commissioner of Taxation[4]). The deceased, Chown, did not by his will establish or provide for the maintenance of any such fund.

By his will the testator bequeathed the balance of his residuary estate to such charitable or religious causes or institutions in Victoria as his trustees in their absolute discretion might determine with power to build a memorial hall or other building to be called by his name. The question for decision is whether so much of his estate as is disposed of by this bequest is liable to estate duty or falls within the exemption given by sec. 8 (5) of the Estate Duty Assessment Act 1914-1928. To fall within that exemption a bequest must be "for religious, scientific, or public educational purposes in Australia or to a public hospital or public benevolent institution in Australia or to a fund established and maintained for the purpose of providing money for use for such institutions or for the relief of persons in necessitous circumstances in Australia."

In my opinion the testator's residuary bequest goes far beyond the bodies and purposes enumerated in the sub-section. The word "charitable" in the gift should, I think, receive its prima-facie legal meaning, and the gift therefore covers any object which might be the subject of a valid charitable trust. "Charitable" is a word of known legal import, and unless some sufficient reason is found in context, subject matter or otherwise it should, in a will, be given that meaning. It was said that the mention of "religious" causes showed that the testator did not mean "charitable" to bear its prima-facie meaning, because religious causes were covered by that meaning and the express reference to them would be redundant. The statement that all religious causes are charitable is not perhaps strictly accurate, but passing that consideration by, I do not think that the logical redundancy of the reference to "religious causes" is a sufficient ground for denying its legal meaning to the word "charitable." A desire on the part of the testator to make clear or to emphasize his intention that religious causes should be considered by his trustees is enough to account for the presence of the words. In any case arguments of construction founded on tautology or redundancy are never strong.

The reason I have given is enough to answer the claim for exemption. But, even if the word "charitable" in the bequest were to receive a narrow meaning, its so-called popular meaning, I do not think that the bequest would be brought within the boundaries of the exemption. What exactly are the limits of the popular meaning of "charitable" is by no means clear: See Hobart Savings Bank and Launceston Bank for Savings v. Federal Commissioner of Taxation[5]. But I cannot see how any meaning could be placed upon the phrase "charitable causes" narrow enough to confine the bequest to the institutions and purposes mentioned in sub-sec. 5 of sec. 8. I cannot accept the view that the final words of that sub-section, viz., "for the relief of persons in necessitous circumstances in Australia" are not governed by the words "established and maintained for the purpose of providing money." It was disposed of, in my opinion, by Public Trustee (N.S.W.) v. Federal Commissioner of Taxation[6].

The question in the case stated should be answered: Yes. The costs should be costs in the appeal.

The appellant claims that the balance of the residue of the estate is exempt from estate duty under sec. 8 (5) of the Estate Duty Assessment Act 1914-1928 because it is given either to a public benevolent institution in Australia or for the relief of persons in necessitous circumstances. In my opinion, the objects upon which the testator has empowered his trustees to expend the balance of the residue of his estate are too wide to come within the exemption. Even if the word "charitable" should be read in the context of the will as synonymous with eleemosynary, as the appellant contends, it is clear that the trustees have a discretion to apply the balance of the residue to objects wider than those comprehended by the term "public benevolent institution." It will be observed that causes as well as institutions come within the scope of the trustees' discretion; and this is enough to deprive the gift of the benefit of the exemption which is limited to a public benevolent institution. Nor can the gift of the balance of the residue be held to be exempt from estate duty as one made for the relief of persons in necessitous circumstances. One reason is that the gift is not made to a fund established and maintained for that purpose. The case of Public Trustee (N.S.W.) v. Federal Commissioner of Taxation[7] decides that the concluding words of sec. 8 (5) are attached to the words "to a fund established and maintained." In the instant case the gift is not made to any fund established or maintained for that purpose.

Question in the case answered: Yes. Costs of case to be costs in the appeal. Case remitted to Latham C.J.

Solicitors for the respondent, H. F. E. Whitlam, Crown Solicitor for the Commonwealth.

[1] [1931] HCA 20; (1931) 45 C.L.R. 224.

[2] (1926) A.C. 128.

[3] [1931] HCA 20; (1931) 45 C.L.R. 224, at p. 232.

[4] [1934] HCA 10; (1934) 51 C.L.R. 75.

[5] [1930] HCA 11; (1930) 43 C.L.R. 364, at pp. 372, 373, 374.

[6] [1934] HCA 10; (1934) 51 C.L.R. 75.

[7] [1934] HCA 10; (1934) 51 C.L.R. 75.

High Court of Australia

Teele v Federal Commissioner of Taxation [1940] HCA 3; (1940) 63 CLR 201 (8 March 1940)

HIGH COURT OF AUSTRALIA