Little Company of Mary (SA) Incorporated v Commonwealth [1942] HCA 26; (1942) 66 CLR 368 (20 October 1942)

The Little Company of Mary (South Australia) Incorporated Plaintiff; and The Commonwealth and Another Defendant.

The Memorial Hospital Incorporated Plaintiff; and The Commonwealth and Another Defendant.

Ligertwood K.C. (with him Culshaw), for the plaintiff The Little Company of Mary (South Australia) Incorporated.

Brebner (with him Miss Gilmore), for the plaintiff The Memorial Hospital Incorporated,

I have had the advantage of reading the reasons for judgment of my brother Starke. I adopt his concise statement of the facts in these two cases. I add, however, that in the case of the Calvary Hospital the sealholders may with the consent of the Mother Provincial of the Congregation sell or dispose of any of the property of the association—including therefore the hospital itself. Further, the control of the hospital is vested in the Mother Superior, who is appointed by the Mother Provincial. In the case of the Memorial Hospital, the rules of the association provide that the Board may mortgage or lease the property of the association and that it shall observe and carry out all proper directions of the South Australian annual conference of the Methodist Church with regard to the sale and transfer of any property of the association. The Board is appointed by the conference, and only Methodists may be members of the Board.

Thus both hospitals are entirely under denominational control. There is no obligation resting upon any person to continue to carry on the hospitals. I can see nothing to exclude complete denominational control of any funds resulting from a sale of either hospital.

The hospitals could not have been established or carried on without original public contributions. But each hospital now shows a fairly regular and substantial profit. There is no obligation to devote this profit to hospital purposes, though that in fact is the practice which has hitherto been followed. The hospitals are nursing institutions. They have no medical staffs. Substantial fees are normally charged for beds in both hospitals. The charges in the Calvary Hospital range from £3 10s. to £8 8s. per week and in the Memorial Hospital from £3 15s. to £8 8s. per week. In some cases patients are treated gratuitously or at reduced fees.

In the case of the Memorial Hospital a sum of £1,232 represents the amount given up in fees in 1941. The amount received in patients' fees in that year was £27,437. Other fees were received for use of theatre, dressings, laundry, and X-ray clinic. The only other receipt was "interest £56 11s. 9d." After allowing £1,232 for the benevolent work mentioned, there was a surplus for the year of £2,210. Thus the hospital, in the only year for which particulars are stated, paid its way completely out of fees and made a profit. The amount of benevolent work was not very substantial.

In the case of the Calvary Hospital there is no such precise information, but "out of approximately 3,000 patients treated some 500 patients either paid no fees or paid greatly reduced fees." The accounts in this case show that the hospital is supported by the fees charged to patients—other receipts being quite negligible—e.g., in 1938 fees amounted to £20,945, and other receipts to £69; in 1939 fees were £19,934, and other receipts £101; in 1940 fees were £23,329, and other receipts £143; in 1941 fees were £27,679, and other receipts £126. In each year substantial amounts of surpluses on income and expenditure account were transferred to building account.

The question is whether these useful and valuable hospitals are public hospitals. The adjective "public" is used in many collocations, and the meaning varies with the noun with which it is used. In "public park" and "public house" it is not difficult to state the meaning. The distinction between a park to which the public has access and the grounds of a private house is clear enough. So also a public house is readily distinguished from a private house. The meaning is not so clear in the case of phrases such a "public school," "public institution," "public hospital." For example, in New South Wales a "public school" is a State school, while the "great public schools" are not State schools; in Victoria the term is applied only to certain schools which are not State schools.

In Girls' Public Day School Trust v. Ereaut[1] the difficulties of defining this term become very apparent. It was held that the term was not a term of art, and that the question what was the common understanding of the term was a question of fact. In O'Connell v. Newcastle Municipal Council[2], which was relied upon by the plaintiffs, the same rule was applied by the Full Court of the Supreme Court to the consideration of the question whether a particular hospital was a "public hospital" within the meaning of the New South Wales Local Government Act 1919-1940, sec. 132. Jordan C.J. said: "Whether a particular institution is a public hospital is a question of fact to be determined upon a consideration of all the relevant facts of the particular case, no one fact being necessarily conclusive"[3]. It was held that the absence of any form of public control and the non-public ownership of the hospital property did not compel the conclusion in that case that the institution was not a public hospital. So far this decision assists the plaintiffs, though on a question of fact precedents are not of authority. It may, however, be pointed out that the hospital which was held to be a public hospital in O'Connell's Case[4] possessed characteristics which are absent in the present cases. The hospital was subject to the Public Hospitals Act 1929-1940 N.S.W.: see sec. 4. As a hospital mentioned in the Third Schedule it was bound to submit to any inquiry into administration and management which the Hospitals Commission might think proper to make; it was subject to annual inspection; it was eligible for subsidy from public moneys; and the Commission could attach to the payment of any subsidy such conditions in respect of the maintenance, equipment, management, capital expenditure, building, or repairs to existing buildings as it might think fit (sec. 11). The hospital was bound to receive destitute persons without payment (sec. 30 (6)). It would have been difficult to hold that a hospital subject in this degree to a Public Hospitals Act was not a public hospital within the meaning of another New South Wales statute. The Calvary and Memorial Hospitals possess none of the characteristics mentioned.

I therefore ask whether, in common understanding, these hospitals would be called "public hospitals." I find it difficult to believe that the patients in them would not be very astonished if they or their friends were told that they were in a public hospital. So also I conceive that the authorities of both the Roman Catholic Church and of the Methodist Church would receive with incredulity a statement that their respective institutions were public institutions and not simply and entirely church institutions. The question is not merely whether there is any charitable element in the conduct of the hospitals. There is such an element, but it is not very great. From the point of view of the community—the public in the ordinary sense—these are, I think, private institutions, controlled by churches which would naturally most strongly object to any claim that the public had any rights whatever in relation to the hospitals—whether as to management and control, or as to admission of patients, or as to utilization of funds, or as to disposition of property, or as to development or continuance of the hospital undertakings. The hospitals are not carried on for the purpose of discharging any duties owed to the public: cf. Griffiths v. Smith[5]. The only element which, in these cases, points to the opposite conclusion, is to be found in the degree to which benevolent treatment is given, and this, though admirable, is relatively small. The hospitals are open to the public only in the sense that there is no exclusion of any specific class on religious or other grounds. But that may be said of most, if not all, private hospitals. Further, these hospitals are not conducted for the private profit of the members of the associations which own and control them. But the profits can be used and rightly used for church purposes as the churches concerned think proper. It cannot be said, as it appears to me, that the churches are bound to continue to apply the profits to hospital purposes. I think that these hospitals are, to borrow the words of Starke J. in Public Trustee (N.S.W.) v. Federal Commissioner of Taxation[6] private organizations conducted by or in connection with churches.

As the principal question raised in each case is purely a question of fact, it should not have come before the Court by way of case stated under Order XXXII. of the Rules of Court. This order provides that the parties to a cause may concur in stating the questions of law arising therein in the form of a special case for the opinion of the Court. But no objection was taken upon this ground.

In my opinion the questions asked should be answered as follows:—In the case of the Calvary Hospital: (i) No. (ii) Yes. In the case of the Memorial Hospital: (a) No. (b) Yes. (c) Of all the buildings.

The questions submitted in this case stated are whether the hospital in question is a public hospital within the meaning of reg. 32 of the National Security (War Damage to Property) Regulations and is exempt from contributions payable in respect of any of its fixed property and plant. The condition of exemption mentioned in these Regulations is that the fixed property or plant should be used primarily and principally as or in a public hospital. No definition of the latter expression is given in the Regulations and in relevant judicial decisions as to the meaning of the word "public" judges have refrained from attempting an exhaustive decision. It is neither necessary nor desirable to do so. In every case which arises for determination a number of factors have to be considered, and none is an absolute criterion. "Public hospital" is not a precise or technical expression. In Hall v. Derby Sanitary Authority[7] the question for determination was whether a certain orphanage was a public institution and A. L. Smith J., as he then was, lays it down simply that if a thing is not "private" then it is "public"[8], recalling inevitably the definition of prose which we owe to Le Bourgeois Gentilhomme. The definition to which Darling J., as he then was, in Royal Masonic Institution v. Parkes[9] refers, is to be found in Acte II., Scène VI.: Le Maître de Philosophie—"Tout ce qui n'est point prose est vers et tout ce qui n'est point vers est prose." In Seal v. Trustees of the British Orphan Asylum[10] Hamilton J., as he then was, also adopts the language of A. L. Smith J. in Hall's Case[11], who distinguishes "public" from "private" by regarding the purposes which the particular institution served. The observations of Hamilton J. in Seal's Case[12] as to the publicity and purposes of the orphanage institution he was then considering are very relevant in the same connection in this case.

In the instant case the facts are stated by the parties as they exist at present, and we have not to do with any finding of a magistrate, commissioner or court, and speculations as to the future operations of the association, whether, e.g., it might cease to carry on the hospital or sell the property belonging to it, are irrelevant. The Calvary Hospital was first established partly by public subscriptions and is now partly subsidized by gifts, legacies and donations from members of the public. I am aware that these facts are not conclusive, but they are not immaterial (Shaw v. Halifax Corporation[13]). The association was incorporated pursuant to a public Act—Associations Incorporation Act 1929-1935 S.A.—an Act which excludes "associations for the purpose of trading or securing pecuniary profit to the members from the transactions thereof" (sec. 3). The objects or purposes of the association are stated in the rules filed in the office of the Registrar of Companies pursuant to sec. 11 of the Act. They are as follows:—(i) To acquire and hold property in the name of the association and for the association. (ii) To establish and carry on a nursing institution or nursing institutions. (iii) In particular to establish and maintain a hospital or hospitals for the benefit of the public generally, irrespective of class or religious belief, and particularly to maintain the same for the poor and those of limited means. (The italics are mine.) Additions and alterations to such rules must also be filed in the Registrar's office (sec. 11). The Registrar of Companies, who is charged with the administration of companies registered under the Companies Act 1934-1939 S.A., secs. 315-324, is also the public officer empowered to supervise and control associations incorporated under the Associations Incorporation Act, secs. 3, 10, 11, 12, 14, 15. Under sec. 25 the Governor may make regulations for or with respect to—(a) the inspection of documents kept by the Registrar under this Act; (d) generally, all matters or things necessary or convenient to be prescribed for carrying this Act into effect. And by sec. 20 of this Act every incorporated association may be wound up under sec. 345 of the Companies Act 1934-1939 S.A.. Thus it cannot be predicated of the plaintiff association or of the hospital it "maintains" that it is private, domestic, peculiar, or essentially apart from the current national life (The Trustees of the Cardinal Vaughan Memorial School v. Ryall[14]). Under sec. 15 of the Associations Incorporation Act cancellation of the plaintiff's incorporation would follow, if its transactions became such that it was not, or had ceased to be, an association within the meaning of sec. 3, e.g., that it was trading or securing pecuniary profits to its members from its transactions. The effect of incorporation appears to vest in the corporation personal and real property held in trust or on behalf of the association (sec. 9). This is a provision which makes for permanency, but neither permanency nor ownership is conclusive or essential, although they are factors to be considered (Girls' Public Day School Trust v. Ereaut[15]). The Calvary Hospital is also approved under another public Act (Nurses Registration Act 1920-1938 S.A.) as a training school for the whole of the prescribed courses of both general nursing and midwifery. "The hospital is open to the public at all times. Admission as a patient is conditioned on the applicant being a patient of a legally qualified medical practitioner and that a bed is vacant" (par. 9 of the case). These conditions are insisted on in every hospital, and no member of the public has an unqualified right of admission, except perhaps in the case of casualties, and even in those cases the doctor who attends the outdoor patient and the senior to whom he reports decide whether the casualty in question should be admitted to a ward. As a hospital is primarily an institution for the reception of the sick and not a boarding house these conditions are necessary for its proper administration. Patients are expected to pay for treatment or contribute to their maintenance. Charges, however, are reduced where the person is not in affluent circumstances. Patients who are in genuinely necessitous circumstances are not expected to pay and generally do not pay for anything (par. 10 of the case). Outpatients are treated to special services such as X-ray and diathermy, &c., and in proper and deserving cases at reduced charges or without charge (par. 14 of the case). The hospital is fully equipped and staffed to render in a competent and up-to-date manner all such services, medical and surgical and nursing, as are usually rendered by hospitals of the larger sort. The total value of all the land and buildings of the said hospital is over £100,000. The plant and fittings of the hospital are of the estimated additional value of £30,000.

The staff of the hospital consists of approximately thirty-five Sisters of the Congregation of the Little Company of Mary (all of whom are qualified nurses, and some of whom have special qualifications), about twenty-five registered nurses who are laywomen, and about fifty trainees or probationer nurses, as well as a number of men and women domestic and other servants. The Sisters themselves receive no salary or remuneration whatever for their services, beyond their food and clothing (pars. 5 and 6 of the case). The hospital is conducted by the plaintiff, which is a public corporation (par. 3 of the case). The fact that the Calvary Hospital was founded as a denominational institution and is carried on by a religious body does not derogate from its character and religion does not enter into the consideration of the question (Trustees of the Cardinal Vaughan Memorial School v. Ryall[16]). And I do not consider that the fact that the hospital has not been declared a public hospital pursuant to sec. 5 of the Hospitals Act 1934-1941 S.A. is in the circumstances of much or any importance. "Public control" is not, in my opinion, an essential element in the definition of "public hospital." In any event the sections of the Associations Incorporation Act to which I have referred show that the association, its rules and operations are subject to supervision by a public officer and a court. In this connection I concur in the interpretation of the expression "public hospital" occurring in a similar context in the Local Government Act 1919-1940 N.S.W. by Jordan C.J. in O'Connell v. Newcastle Municipal Council[17], where his Honour says:—"I can see nothing in the phrase public hospital nor in its immediate or general context to suggest that it is confined to hospitals which are subject to some form of public control (whatever is to be understood by this expression) and whose income and property are not at the disposal of any private authority. On the contrary, it is the purpose to which the hospital is directed, not the manner in which it is controlled, which determines whether it should be regarded as a public hospital"[18]. The terms and circumstances in which sick relief is given are material conditions. Public service is the discrimen—and publicity may be gauged by the extensiveness of an institution's operations (A.-G. v. Pearce[19]; Shaw v. Halifax Corporation[20]). The admitted facts show that the hospital, having regard to its objects and operations, is carried on for the benefit of the community or an appreciably important class of the community (Verge v. Somerville[21]) and "not for private gain but for the public good" (Seal v. Trustees of the British Orphan Asylum[22]). During the relevant period the profits from the hospital have been applied solely to the operations of the hospital. Par. 19 of the case stated emphasises the fact that "the hospital is not carried on for purposes of profit; and no person derives any profit or monetary gain therefrom." Indeed, any diversion of the profits to other purposes whether religious or otherwise would bring the association within the prohibition contained in sec. 3 of the Associations Incorporation Act and endanger its incorporation. Thus the hospital is clearly distinguishable from what is known as a private hospital established and carried on for private gain as a means of livelihood for the owners. And in my opinion the scope and operations of the hospital are sufficiently wide and large to make it a public hospital within the meaning of reg. 32.

This is a case stated which was heard with the case of The Little Company of Mary (South Australia) Incorporated v. The Commonwealth. The facts in both cases are substantially similar and I refrain from rehearsing the facts or the reasons which led me to the conclusion I formed in the former case.

Accordingly I answer the questions submitted as follows:—(a) Yes. (b) No. (c) No.

Every owner of fixed property and every owner of plant which exceeds one thousand pounds in value is required by Part VI. of the National Security (War Damage to Property) Regulations (No. 79 of 1942) to contribute to the War Damage Fund. But clause 32 provides that notwithstanding anything contained in that part of the Regulations contributions shall not be payable in respect of any fixed property or plant used primarily and principally as or in a public hospital.

The Little Company of Mary is a congregation or association of nursing Sisters of the Roman Catholic Church whose general end is the sanctification of its members by the observance of the three simple vows of poverty, chastity, and obedience, and whose special end is the care of the sick and dying. The association has been incorporated under the Associations Incorporation Act 1929-1935 S.A. (Acts No. 1912 of 1929 and No. 2246 of 1935). The objects and purposes of the association were thus stated in its rules filed in accordance with the provisions of the Act:—1. To acquire and hold property in the name of the association. 2. To establish and carry on a nursing institution. 3. In particular to establish and maintain a hospital or hospitals for the benefit of the public generally irrespective of class or religious belief and particularly to maintain the same for the poor and those of limited means.

Pursuant to the rules of the congregation or association of the Little Company of Mary and the rules of the incorporated association a hospital known as the Calvary Hospital has been erected and established in Adelaide. It is owned by the incorporated association and was conducted as a hospital during the year of contribution in question here (1942) and for many years prior thereto. The buildings, which are valued at more than £100,000, comprise a general hospital, a maternity hospital, a convent or residence for the Sisters of the Little Company of Mary, accommodation for nurses and domestics, a laundry, and a mortuary. The plant and fittings at the hospital are of a value of £30,000 or thereabouts. The hospital was established and is carried on by means of moneys provided by the Australian Province of the Little Company of Mary, by public subscriptions, gifts, legacies, borrowed moneys, and charges made to patients. And it is fully staffed with Sisters, nurses and domestics, but it has, as yet, no regular system of honorary or resident medical officers. The patients as a rule arrange for their own medical attendants, but the Sisters sometimes arrange for attention by medical practitioners, who in some cases render professional services without any fee. The hospital is open to the public of all denominations, but the public have no right of admission, and in any case admission is subject to a bed being available and to the person seeking admission being a patient of a legally qualified medical practitioner. Charges are made to patients for their maintenance and treatment at rates fixed by the management of the hospital, but it is a common occurrence that rates are reduced or not charged to poor and necessitous patients. The Sisters receive no salary or remuneration for their services, though their necessary accommodation, food, and clothing are provided. The hospital is not carried on for profit and in fact no person derives any profit or monetary gain therefrom.

In these circumstances it is claimed that property upon which the Calvary Hospital is erected, and the plant used therein, is fixed property and plant of the plaintiff used primarily and principally as or in a public hospital. Lord Macmillan observed upon the elusiveness of the adjective "public" in Girls' Public School Trust Ltd. v. Ereaut[23]. The regulation does not set forth the indicia or characteristics of a public hospital. But the authorities establish that whether a hospital is public or private is, in the main, a question of fact and a question of degree in every case. It depends, not so much upon the manner in which the Calvary Hospital was established and is financed, as upon the character of the hospital and the nature of the services rendered: See Girls' Public Day School Trust v. Ereaut[24]; O'Connell v. Newcastle Municipal Council[25].

The "dominant purpose," to adopt an expression used by Lord Atkin in Girls' Public Day School Trust v. Ereaut[26], of those who established and conduct the Calvary Hospital was charitable, that is, for the care of the sick and those requiring medical treatment irrespective of class or religious belief or, in the language of the constitution of the Little Company of Mary, the Sisters, without regard for rank, religious belief, age, or family, provide with equal faith for the care of all the sick. And the hospital is not carried on for any personal or private profit or gain, though in 1938, 1939, and 1940 the revenue from patients' fees was about twenty thousand pounds per annum, which was appropriated for building and maintaining the hospital. And it may be added that services of inestimable value are rendered to the people of South Australia in the conduct of the hospital. None of these facts, however, are decisive, though they are all matters to be considered, and there are other facts which require consideration.

The hospital was established by a private organization; it is not subject to the control or supervision of any public authority; the public have no right of admission—no trust or other right has been created in their favour and the patients are charged for their maintenance and treatment unless too poor to pay therefor. Apart from authority, I should not have thought that such a hospital would, in the ordinary and usual use of words, be described as a "public hospital," but the question is one of fact to be resolved upon a consideration of all the circumstances.

In my judgment, the Calvary Hospital, having regard to all the circumstances of the case, is not a "public hospital" within the meaning of the Regulations already mentioned. The facts which lead me to this conclusion are that the hospital was established and is conducted by a private organization, that it is not subject to the control or supervision of any public authority, that the public have no right of admission to the hospital, and, substantially, are charged for their treatment.

The question raised in this case is the same as that raised in the case of The Little Company of Mary (South Australia) Incorporated v. The Commonwealth, in relation to the Calvary Hospital. The facts of this case are set forth in the case stated herein, but the material facts are much the same as in the case of the Calvary Hospital, though they vary in detail.

The plaintiff owns fixed property and plant in Adelaide upon which is erected a hospital known as the Memorial Hospital. It was established by, and is under the control of, the Methodist Church. Its purpose is charitable, that is, for the care of the sick and those requiring medical treatment. The hospital is not conducted for the purpose of any personal or private profit or gain, though the revenue from the patients' fees in each of the years 1940 and 1941 exceeded £30,000. Any surplus from the carrying on of the hospital is used for the purposes of the hospital. Some small sums, I should add, have been applied for purposes in connection with the Methodist Church, but that does not necessarily preclude the hospital from being a public hospital: See Girls' Public Day School Trust v. Ereaut[27]. It is a fact to be considered with all the other circumstances of the case.

But for the reason that the Calvary Hospital is not a "public hospital," so I think the Memorial Hospital is not a "public hospital" within the meaning of the National Security (War Damage to Property) Regulations.

The questions stated should be answered:—(a) No. (b) Yes. (c) Yes, all the buildings.

The Little Company of Mary (South Australia) Incorporated v. The Commonwealth.—Questions answered as follows:—(i) No. (ii) Yes. Case remitted. Plaintiff to pay costs of case.

The Memorial Hospital Incorporated v. The Commonwealth.—Questions answered as follows:—(a) No. (b) Yes. (c) Of all the buildings. Case remitted. Plaintiff to pay costs of case.

Solicitors for the plaintiff, The Little Company of Mary (South Australia) Incorporated, Gunson & Culshaw.

Solicitors for the plaintiff, The Memorial Hospital Incorporated, Fisher, Jeffries, Brebner & Taylor.

Solicitor for the defendants, H. F. E. Whitlam, Crown Solicitor for the Commonwealth.

[1] (1931) A.C. 12.

[2] (1941) 41 S.R. (N.S.W.) 190; 58 W.N. 166.

[3] (1941) 41 S.R. (N.S.W.), at p. 193; 58 W.N., at p. 168.

[4] (1941) 41 S.R. (N.S.W.) 190; 58 W.N. 166.

[5] (1941) A.C. 170, at pp. 178, 186, 206.

[6] [1934] HCA 10; (1934) 51 C.L.R. 75, at p. 100.

[7] (1885) 16 Q.B.D. 163.

[8] (1885) 16 Q.B.D., at p. 173.

[9] (1912) 3 K.B. 212, at p. 216.

[10] (1911) 104 L.T. 424, at p. 428.

[11] (1885) 16 Q.B.D., at p. 173.

[12] (1911) 104 L.T., at p. 428.

[13] (1915) 2 K.B. 170, at p. 180.

[14] (1920) 7 Tax Cas. 611, at p. 620.

[15] (1931) A.C. 12, at p. 25.

[16] (1920) 7 Tax Cas., at p. 619.

[17] (1941) 41 S.R. (N.S.W.) 190; 58 W.N. 166.

[18] (1941) 41 S.R. (N.S.W.), at p. 193; 58 W.N., at p. 168.

[19] [1740] EngR 228; (1740) 2 Atk. 87 [26 E.R. 454].

[20] (1915) 2 K.B. at pp. 180-184.

[21] (1924) A.C. 496, at p. 499.

[22] (1911) 104 L.T., at p. 428.

[23] (1931) A.C. 12, at p. 34.

[24] (1931) A.C. 12.

[25] (1941) 41 S.R. (N.S.W.) 190; 58 W.N. 166.

[26] (1931) A.C., at p. 32.

[27] (1931) A.C. 12, at pp. 23, 27, 35.

High Court of Australia

Little Company of Mary (SA) Incorporated v Commonwealth [1942] HCA 26; (1942) 66 CLR 368 (20 October 1942)

HIGH COURT OF AUSTRALIA