"public benefit institution"
3 In 1923, in Chesterman v Federal Commissioner of Taxation (1923) 32 CLR 362, the High Court (by majority) decided that the word "charitable", in the exemption from estate duty in subs 8(5) of the Estate Duty Act 1914 (Cth) expressed in terms "for religious, scientific, charitable or public educational purposes", was not used in its technical legal sense as understood in the law of charity by reference, in particular, to what Lord Macnaghten said in Commissioners for Special Purposes of the Income Tax v Pemsel [1891] AC 531, 583. Rather, the Court said that the word was used in its popular sense, in its ordinary meaning. This sense or meaning involved the relief of any form of necessity, destitution or helplessness (physical or spiritual) which excited compassion or sympathy and so appealed to people's benevolence for relief; this included benevolent assistance in aid of the physical, mental and even spiritual progress for the benefit of those whose means were otherwise insufficient: see especially Isaacs J (at 384-85), Rich J (at 398) and Starke J (at 399-400). On appeal, the Privy Council disagreed. Their Lordships were of the view that the general rule that words must be taken in their legal sense applied, there being no contrary intention: (1925) 37 CLR 317, 319. Thus the words "charitable purposes" were to be understood in accordance with the categories identified by Lord Macnaghten in Pemsel's case derived from the Statute of Elizabeth.
4 After the Privy Council's rejection of the approach of the High Court to the word "charitable" in Chesterman, supra, concerning in the Estate Duty Act, Isaacs J in Young Men's Christian Association v Federal Commissioner of Taxation (1926) 37 CLR 351 at 359 said the following about the phrase "charitable institution" in par 11(1)(d) of Income Tax Assessment Act 1915-1918 (Cth) which exempted from income tax the income of a religious, scientific, charitable or public education institution:
It is obvious to me that in the interests of all concerned the meaning of Parliament should be legislatively declared beyond doubt. …Litigation, perhaps protracted and expensive, is inevitable unless Parliament by a few words declares whether by "charitable" it means to use that word in its ordinary modern sense, or in the technical Elizabethan sense that some quaint Chancery decisions in connection with trusts have affixed to it as its primary legal meaning, extending to objects which include, as I have said, purposes quite outside what any ordinary person would understand by charitable.
5 On 11 September 1928, the Commonwealth Treasurer (Dr Earle Page) said the following in the House of Representatives in introducing the amendment to the Estate Duty Act:
The High Court held [in Chesterman's case] that this bequest is not a charitable bequest within the meaning of the act, because its character is not eleemosynary, and because the word "charitable" was, in the opinion of the court, used in the actin its popular meaning which involves the idea of assisting poverty or destitution. The Privy Council [on appeal in Chesterman's case] held that the four words "religious," "scientific," "charitable" and "public educational," as used in the section, are not mutually exclusive, and that the word "charitable" as used in the act must be given its technical legal meaning as used in the Elizabethan sense…
When the Estate Duty Act was passed it was intended that the four terms referred to should be mutually exclusive. It is proposed to bring this about by means of the proposed amendment. The bill will also make clear the charitable purposes intended to be provided for. For this purpose it uses the language which was inserted by Parliament for the same purpose in the Income Tax Assessment Act 1927, in connexion with deductions for donations to public charitable institutions.
6 Subsection 8(5) of the Estate Duty Act was amended by the removal of the word "charitable" and its replacement by the following:
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.
7 The phrase "public benevolent institution" had already been employed in par 132(1)(d) of the Local Government Act 1919 (NSW) which provision had exempted from rating land, which, amongst other things, belonged to any public hospital, public benevolent institution or public charity.
8 Shortly thereafter, the High Court dealt with the new, amended, subs 8(5) and the phrase "public benevolent institution" in Perpetual Trustee Company Limited v Federal Commissioner of Taxation (1931) 45 CLR 224. The case concerned a bequest to the Royal Naval House near the Rocks adjacent to Sydney Harbour. The establishment provided dormitories, recreation facilities and a place for lectures, concerts and the like for men in the Royal Australian Navy and Royal Navy. Petty officers and seamen of warships of other nations were also eligible to avail themselves of the accommodation there when ashore in Sydney. A small charge was made for accommodation, meals, baths, billiards and lockers. Other services were provided without charge. The land had been made available by the Government of the Colony of New South Wales. The cost of the building and additions to it had been paid for from subscriptions from men of the Royal Navy, from grants by the Colonial Government and State Government (of New South Wales) and from a grant by the Lords Commissioners of the Admiralty. The affairs of the House were governed by trustees and a House Committee. There were twelve trustees comprising two senior Australian Naval Officers, the New South Wales Chief Secretary and nine others. The original trustees were appointed by the Governor of the Colony of New South Wales. Vacancies were filled by the remaining trustees, with the approval of the Governor of New South Wales, which approval was notified in the Government Gazette. The trustees, who received no remuneration, were appointed for life. The House Committee consisted of the trustees and various Australian Naval Officers. The House was inspected, from time to time, by members of the Naval Board and Naval officers. There was no written constitution or trust deed governing the affairs of the House.
9 A number of propositions were put forward about the phrase "public benevolent institution" which are of relevance to the resolution of the present proceedings. First, it was said that the expression did not have a technical legal meaning, but was to be understood in the sense in which it is commonly used in the English language: Starke J at 231-32 and Dixon J at 233. Secondly, it was said that the phrase was a composite or compound expression: Starke J at 132 and Dixon J at 233. Thirdly, it was said that in the context in which it appeared (in association with public hospitals and funds for the relief of persons in necessitous circumstances) and in ordinary English usage it meant an institution organised for the relief of poverty, sickness, destitution or helplessness: Starke J at 232; or for the relief of poverty, distress, suffering or misfortune: Dixon J at 233; or an institution which gave relief to those who were in need of it and who were unable to care for themselves: the poor, the sick, the aged and the young, in circumstances in which their disability or distress aroused pity: Evatt J at 235-36. Fourthly, it was said that the words "benevolent institution", used in combination, denoted bodies organised for the relief of distress or poverty and not merely those displaying kindness or goodness, that is benignancy: Dixon J at 233. Fifthly, it was said that since the task of construction involved a question of the ordinary meaning of the phrase, the Court could have regard to its own experience in the use of terms: Dixon J at 233.
10 The decision of the majority that the House was not a public benevolent institution was not based on an express absence of a "public" element. Starke J approached the matter implicitly by denying any element of the relief of poverty, sickness, destitution or helplessness; his Honour concluded that it would "surprise English-speaking people… to learn that in the Royal Naval House naval forces are accommodated and entertained at a public benevolent institution": at 232. Dixon J said that "[b]ecause of its association with the various Governments, and because it is concerned with the naval forces of the country, it would be difficult, if it be a benevolent institution, to deny it the description 'public'": at 232. His Honour said expressly that the House did not relieve poverty, distress, suffering or misfortune: at 233. Likewise, Evatt J said that the naval seaman using the House was not "in distress"; "[O]n the contrary," his Honour said "he is a chosen and active protector of the nation, the object not of compassion but of admiration": at 236. It is to be noted that Dixon J saw as relevant to the "public" element of the composite phrase, the "association with the various Governments". This association did not amount to control by a government in the fullest sense. But the point is it was not seen as a disqualifying element, but as a discussion of "public".
11 Starke J and Dixon J referred to the phrase as a compound or composite one. That does not mean that the words making up the whole phrase have no individual role to play: see the approach of Dixon J at 232-33 in his comments on the sufficient existence of governmental association so as to satisfy the "public" element of the phrase. However, that said, it is important to recall that it is the ordinary meaning of the whole phrase, "public benevolent institution", which the Court said had to be met: see the recognition by Dixon J at 233 that the objects of the House were "benevolent" (in one sense), but that the House was not a "benevolent institution". In this context of a whole phrase, the comments of McHugh J, though in a different context, in Applicant A v Minister for Immigration and Ethnic Affairs (1997) 190 CLR 225, 256, as to the error in analysing and adding up the linguistic elements of a whole phrase, rather than attending to the meaning of the phrase a whole, are apposite. See also Swinburne v Federal Commissioner of Taxation (1920) 27 CLR 377, 384 (implicitly overturned by the Privy Council in Chesterman, supra, but not in a way to affect this issue) and the Full Court in Metropolitan Fire Brigades Board v Commissioner of Taxation (1990) 27 FCR 279, 281 (see below).
12 The High Court returned to subs 8(5) of the Estate Duty Act and the phrase "public benevolent institution" in The Public Trustee of New South Wales v Federal Commissioner of Taxation (1934) 51 CLR 75. In that case, the testator had left half his residuary estate to four named Church of England homes for children and, at the discretion of the trustees after consultation with his widow, to any other homes for children founded by the Church of England having for their objects the care and control of children.
13 Starke J (at 100) accepted that the institutions named and provided for did give relief to the needy, the sick and the helpless. However, his Honour found them to be private, not public, institutions. He said (at 100):
But they are private organizations conducted by or in connection with the Church of England in Australia, and are not founded, organized or maintained by or under or in connection with any public authority, or managed by its representatives…
14 It should be noted that Starke J said this immediately before reiterating (at 100) that the expression was not a term of art, and that his Honour was of the view that the denominational homes were not, in his view, within the ordinary meaning of the expression. This is important, because Starke J's comments at [13] above should be seen as his Honour's explanation for why, in his opinion, these denominational homes did not fall within the ordinary meaning of the phrase, not as the laying down of a legal rule, to be applied a priori, that it was a necessary legal element for any conclusion that an organisation was a "public benevolent institution" that it be "founded, organized or maintained by or under or in connection with any public authority".
15 Dixon J (with whom Rich J agreed) said (at 104) that institutions could be imagined which were connected with the health, upbringing, welfare and education of young children and coming within the technical legal conception of "charity", but to which no-one would apply the term "public benevolent institution". His Honour had referred to the phrase almost immediately prior to this at (103-104) where he said:
The description "public benevolent institution" has received an interpretation by this Court (Perpetual Trustee Co v Federal Commissioner of Taxation (1931) 45 CLR 224). It is to be treated as a compound expression referring to institutions "organised for the relief of poverty, sickness, destitution, or helplessness" (per Starke J, at p 232). The phrase I used was "the relief of poverty, distress, suffering or misfortune" (p 233). Evatt J said (at pp 235-36): - "Such bodies vary greatly in scope and character. But they have one thing in common: they give relief freely to those who are in need of it and who are unable to care for themselves. Those who receive aid or comfort in this way are the poor, the sick, the aged, and the young. Their disability or distress arouses pity, and the institutions are designed to give them protection. They are very numerous - the nobler a soul is the more objects of compassion it hath - and they have come to be known as 'benevolent institutions.'" McTiernan J dissented on the ground that this was too narrow a meaning. Conceding that a gift to an institution benefiting young children in a way which makes it a charitable or benevolent object may be a valid disposition for charitable purposes, I nevertheless do not think that the institutions it covers are confined to public benevolent institutions of the required description…
16 Thus, for Dixon J (and Rich J) it was not the absence of a public element which prevented the homes being "public benevolent institutions", but the width of objects of the possible institutions. They provided for circumstances which could simply be described as benevolent or benignant in the sense his Honour had mentioned in Perpetual Trustee, supra at 233, that is merely exhibiting kindness, and so beyond the scope of relieving distress and suffering.
17 The High Court returned to the phrase "public benevolent institution" in Maughan v Federal Commissioner of Taxation (1942) 66 CLR 388, in dealing with par 78(1)(a)(ii) of the ITA Act in its then form, which allowed, as a deduction, gifts to a "public benevolent institution". At the same time the same bench (Rich, McTiernan and Williams JJ) heard and decided the case of Lemm v Federal Commission of Taxation (1942) 66 CLR 399, which dealt with the phrase in subs 8(5) of the (by then named) Estate Duty Assessment Act 1914-1940 (Cth). These two cases, importantly for the present proceedings, dealt with the element of "public" in the phrase. I will come to them shortly. A little over a month before Maughan and Lemm were handed down, a differently constituted bench, though including Rich J (together with Latham CJ and Starke J), heard two cases - The Little Company of Mary (SA) Incorporated v The Commonwealth and The Memorial Hospital Incorporated v The Commonwealth (1942) 66 CLR 368. These two cases concerned the phrase "public hospital" in reg 32 of the National Security (War Damage to Property) Regulations (SR 1942 No 79), which exempted from the assessment of any obligation to pay contributions to the War Damage Fund, inter alia, fixed property or plant used primarily and principally as or in (a) a public hospital or (b) a public benevolent institution.
18 The members of the plaintiff association in the first case (the Little Company of Mary) comprised a congregation of nursing sisters of the Roman Catholic Church. The Little Company of Mary owned and conducted the Calvary Hospital in North Adelaide. The plaintiff in the second case (the Memorial Hospital Inc) carried on the Memorial Hospital, also in North Adelaide.
19 The Calvary Hospital was established using money and property provided by the South Australian public and by the Little Company of Mary. The objects or purposes of the Little Company of Mary included the following:
(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.
20 The Memorial Hospital was established in 1919 by the Methodist Church with gifts from members of the public of all religious denominations. It was under the control of the Methodist Church. Its objects were:
(a) To provide and maintain hospitals and rest homes for the medical and surgical treatment of patients and persons requiring hospital treatment.
(b) To perpetuate the memory and sacrifice of those who gave their lives in the Great War 1914-1919.
21 Both hospital charged fees at varying rates. The staff of the Calvary Hospital included thirty-five sisters of the Little Company of Mary, but no discrimination ("of either class or religion": at 371) was made in the hiring of lay nurses or paid staff. Both hospitals were open to the public, irrespective of the faith of the patient. Neither hospital was carried on for profit and no person derived any monetary gain from the running of either hospital. Neither hospital had been declared a "public hospital" under s 5 of the Hospitals Act 1934 (SA).
22 Latham CJ placed emphasis on public control as a constituent of "public" in the phrase "public hospital". His Honour distinguished both hospitals the subject of the proceedings from the Mater Misericordiae Hospital in Waratah, New South Wales, which had been the subject of consideration by Jordan CJ in O'Connell v The Council of the City of Greater Newcastle (1941) 41 SR (NSW) 190 in connection with the rating exception in par 132(1)(d) of the Local Government Act 1919 (NSW), and which been held to be a "public hospital" by the Full Court in that case. Latham CJ noted (at 378-79) that whether any particular hospital was a public hospital was a question to be determined on the facts of each case and was a question on which prior cases were of little value as precedents. However, he pointed out (at 379) that in respect of the Mater:
The hospital was subject to the Public Hospitals Act 1929-1940 (NSW): 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.
23 Latham CJ then proceeded to answer the question before the Court by reference to the common understanding of the phrase in question. He said (at 379-80):
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 (1941) AC 170, at pp 178, 186, 206. 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 (NSW) v Federal Commissioner of Taxation (1934) 51 CLR 75 at p 100 private organizations conducted by or in connection with churches.
24 Starke J referred (at 385-86) to the elusiveness of the adjective "public". He said (at 386):
[T]he 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...
25 Whilst recognising, as relevant considerations, that the purpose of those who established and conducted the hospitals was for the care of the sick irrespective of background and religion, that the hospitals were not conducted for private profit and that the hospitals provided services of inestimable value to the people of South Australia, Starke J concluded that they were not "public hospitals". Speaking of Calvary (but equally applicable to Memorial) his Honour said (at 386):
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.
26 In the reasons of each of Latham CJ and Starke J the lack of public control or some element of public control or supervision was a consideration in coming to a view, overall, as to whether the ordinary meaning of the phrase "public hospital" was satisfied. It was a discussion ending in the characterisation as a public hospital.
27 Rich J dissented. He said the following in connection with the phrase "public hospital" (at 380-81):
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 (1885) 16 QBD 163 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" [(1885) 16 QBD at p 173], 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 (1912) 3 KB 212 at p 216 refers, is to be found in Acte II, Scčne VI: Le Maitre 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 (1911) 104 LT 424 at p 428 Hamilton J, as he then was, also adopts the language of A L Smith J in Hall's Case (1885) 16 QBD at p 173, who distinguishes "public" from "private" by regarding the purposes which the particular institution served. The observations of Hamilton J in Seal's Case (1911) 104 LT at p 428, as to the publicity and purposes of the orphanage institution he was then considering are very relevant in the same connection in this case.
28 For Rich J, the purposes served (rather than public control) were central. At 383-84 his Honour made this clear, significantly, in the light of the approach of Latham CJ referred to at [22] and [23] above. At 383-84 his Honour said:
"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 (NSW) by Jordan CJ in O'Connell v Newcastle Municipal Council (1941) 41 SR (NSW) 190; 58 WN 166, 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" (1941) 41 SR (NSW) at p 193; 58 WN, at p 168. 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 (1740) 2 Atk. 87 [26 ER 454]; Shaw v Halifax Corporation (1915) 2 KB at pp 180-184). 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 (1924) AC 496 at p 499) and "not for private gain but for the public good" (Seal v Trustees of the British Orphan Asylum (1911) 104 LT, at p 428). 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.
29 In Maughan v Federal Commissioner of Taxation, supra, the Court (Rich, McTiernan and Williams JJ) considered whether an organisation called the Boys' Brigade Inc, which provided to underprivileged boys up to about fourteen or fifteen years of age from the inner suburbs of Sydney what was described in the evidence as "a wholesome environment, and intelligent occupation for their leisure hours, in substitution for the demoralising influences of the streets and, even, in some cases, the boys' homes", was a "public benevolent institution". The association was financed entirely by public donations, bequests and subscriptions. The objects of the association included the following:
To carry on and conduct an institution or institutions in the City of Sydney and/or elsewhere in the State of New South Wales or elsewhere in the Commonwealth of Australia for the development as good citizens of the boys of the State or the Commonwealth; to cultivate Christian manliness; to promote habits of reverence, loyalty, industry, discipline and self-respect. Nothing herein contained or implied shall limit the class of persons to whom assistance or benefit of any kind may be given by the Association.
There was a Council of fourteen that controlled the affairs of the organisation.
30 Williams J wrote the leading judgement. Rich J and McTiernan J concurred. McTiernan J also added some comments of his own. The reasons of Williams J and the comments of McTiernan J should be read in the light of the argument in which it was submitted by counsel for the organisation that despite contrary opinions expressed by Starke J in Public Trustee, supra at 100 (see [13] and [14] above) and by Latham CJ and Starke J in The Little Company of Mary, supra at 379-80 and 386 respectively (see [22] to [26] above), it is not necessary that a hospital in order to be a "public" hospital should be controlled by the government or some other public authority. In that context, McTiernan J said the following (at 395-96):
The institution is not incapable of being properly described as a public benevolent institution because it is not owned or controlled by the Government. It would be contrary to a considerable volume of judicial authority to say that such is the only test whether an institution is public. An individual may render public service although he is not a public official or controlled by the Government. The premises and the facilities of this institution and its services are provided for an extensive class, and by reason of the measure of its public service and the conditions under which it is given, I agree it is not open, on the facts of the case, to say it is not a public benevolent institution.
31 Williams J discussed the question of public control (at 397):
The question whether an institution is subject to some form of public control is a factor to be taken into account in determining whether it is a public institution (The Little Company of Mary (SA) Incorporated v The Commonwealth). But public control is not essential (the main criterion is the extensiveness of the class it is the object of the institution to benefit) and, in order to be of a public nature, the control need not be, in my opinion, that of some government body. A constitution which provides for those members of the public who are sufficiently interested in the work of the institution to subscribe to its funds and thereby become annual members and as such eligible to vote at the election of the controlling body creates a control which is public in its nature. It is the sort of control that one could expect to find for an institution which carries on activities calculated to arouse the interest of a considerable number of well-disposed citizens with a liberal and progressive outlook, to cause them to subscribe to its funds and to take an interest in its management and work. Similar provisions are contained in Part V of the Public Hospitals Act 1929-1940 (NSW).
[Emphasis added]
32 Two matters are worthy of comment at this point. First, the benevolent or charitable element of the phrase is for the relief of suffering or misery. This characteristic of a "benevolent institution" is likely to evoke sympathy, and, concomitantly, generosity from well-disposed people. In those circumstances, the revenue exemptions, such as s 78 of the ITA Act, can be seen as intended to encourage such well-disposed people to give to such objects. The existence of public control is not inimical to the creation of a desire in well-disposed people to support an institution which relieves distress; nor is it inimical to the encouragement, by statutory revenue exemption, of such relieving activity and support thereof. Secondly, Part V of the Public Hospitals Act 1929 (NSW), referred to by Williams J (at [31] above), contained provisions for public hospitals incorporated under the Public Hospitals Act as follows: to have just under half their directors appointed by the Governor (s 22) (though the Governor had the power to appoint all directors (s 25)); to enable the Governor to remove all directors and to direct that the management and administration of a hospital be carried out by the Hospitals Commission (created and provided for under Part II of the same Act) (s 26); to empower the board of a hospital, with the approval of the said Commission, to make by-laws and fix penalties in respect of various matters.
33 Further, in Maughan Williams J referred to another provision of s 78, added in 1939, providing for the deductibility of gifts to a public institution or fund established and maintained for the comfort, recreation or welfare of the members of the Naval, Military or Air Forces of the Commonwealth. Williams J said (at 397-98):
This amendment is significant as showing that the Parliament evidently intended the word "public" to include institutions which, like the Royal Naval House, provide for the needs of some special but substantial class of the community. But this is merely a recognition of the view established by many decisions (see the cases collected in the judgement of Rich J in The Little Company of Mary Case) that an institution which aims at benefiting an appreciable and particularly but not necessarily an appreciable needy section of the community is a public institution.
To sum up, the sources of the Association's finances are public benevolence, it is controlled by an executive elected upon a quasi-public basis, and its activities, which accord with and fulfil the main objects in the memorandum of association, are of a benevolent nature.
34 Also, relevantly, in Maughan, Williams J also gave guidance as to the notion of an institution. At 398 his Honour said:
It complies with the following definition of an institution contained in the speech of Lord Macnaghten in Mayor & c. of Manchester v McAdam (1896) AC 500 at pp 511, 512: "It is the body (so to speak) called into existence to translate the purpose as conceived in the mind of the founders into a living and active principle Sometimes the word is used to denote merely the local habitation or the head-quarters of the institution. Sometimes it comprehends everything that goes to make up the institution - everything belonging to the undertaking in connection with the purpose which informs and animates the whole": See also Minister for National Revenue v Trusts and Guarantee Co Ltd (1940) AC 138 at pp 149,150.
35 In Lemm v Federal Commissioner of Taxation, supra, the Court considered whether a devise for the purpose of a home for aged women in straightened circumstances who would be required to pay one pound per week towards the upkeep of the home was to a "public benevolent institution" for the purposes of subs 8(5) of the Estate Duty Assessment Act.
36 Williams J once again delivered reasons with which both Rich J and McTiernan J agreed. Williams J dealt with the elements of the phrase "public benevolent institution". Counsel for the Federal Commissioner relied on what Starke J said in Public Trustee, supra at 100 (see [13] above) and also submitted that the class of women catered for was a relatively small section of the community. Williams J said that the institution was public and that the class benefited was sufficiently wide. His Honour laid stress on the conferring of the relevant (that is necessitous) benevolence upon an appreciably real class in the community as the most important "test" of what is a public benevolent institution. At 410-411 his Honour said:
The control of the institution is vested in the Church Property Trust. This body, which is incorporated by Act of Parliament, is a public body in the sense that it represents an important section of the community (Royal Masonic Institution for Boys (Trustees of) v Parkes (1912) 3 KB 212 at p 217.) The benefits of the institution are available to members of the class of aged women in straitened circumstances irrespective of their religion. A home for such women, even if they are able to pay one pound per week, is an institution organized for the relief of poverty. Poverty is a relative term. There are degrees of poverty less acute than abject poverty or destitution, but poverty nevertheless (In re Clarke (1923) 2 Ch 407; In re de Carteret; Forster v de Carteret (1933) Ch 103 at pp 108-113.) It is therefore a benevolent institution within the meaning of the sub-section (Perpetual Trustee Co Ltd v Federal Commissioner of Taxation (1931) 45 CLR 224). The purpose of the home is to confer benevolence upon an appreciable needy class in the community, so that it complies with the most important test of what is a public institution (Shaw v Halifax Corporation (1915) 2 KB 170). The conclusion is that the devise of 23 Charlotte Street is to a public benevolent institution in Australia and that the legacy of Ł500 is bequeathed and the four shops devised to a fund established and maintained for the purposes of providing money for its use within the meaning of the sub-section.
37 Thus, at this time, the courts treated the question whether any given body fell within the phrase "public benevolent institution" as a matter of popular or ordinary meaning at that particular time. Nevertheless, decided cases identified legal issues affecting or influencing the answering of that question. They illuminated its meaning. One theme seen in the judgments of Latham CJ and Starke J was the requirement, for the satisfaction of the "public" element of the phrase, for there to be at least a degree of public control, meaning government control. Whilst not rejecting such a consideration as irrelevant (as a factor assisting a conclusion that the "public" element was satisfied), other judges, in particular Rich J, Williams J and Jordan CJ (the latter in the context of the expression "public hospital") said that the nature and extent of the benevolence conferred was the principal consideration in the "public" nature of the institution. No case had been decided on the basis that the governmental control was so extensive and complete as to render ineligible the institution (if it be one) from being seen as a "public benevolent institution".
38 Also, it is important to appreciate that no court had decided that the central enquiry was other than that which was identified by Starke J and Dixon J in Perpetual, supra at 231-32 and 233: that is an enquiry as to the satisfaction of the ordinary English meaning of the phrase as a composite whole ([9]-[11] above).
39 In Australian Council of Social Service Inc v Commissioner for Pay-Roll Tax (NSW) (1985) 1 NSWLR 567 (the ACOSS case) the New South Wales Court of Appeal (Street CJ, Mahoney and Priestley JJA) dealt with the phrase "public benevolent institution" in par 10(1)(b) (an exempting provision) of the Pay-roll Tax Act 1971 (NSW). Street CJ agreed with the conclusion of Priestley JA that, on the facts of the case, ACOSS' activities did not fall within the description of the phrase. However, Street CJ did (at 568) say something about the role of authorities in the task at hand:
The phrase "public benevolent institution" is not circumscribed by any statutory definition; nor is it a term of art: Public Trustee of New South Wales v Federal Commissioner of Taxation (1934) 51 CLR 75 at 100. Its import has been illuminated by authoritative decisions. Whilst its meaning is thus not absolutely incapable of extension or modification, the pursuit of certainty in the operation of statutes and dispositive instruments such as wills and settlements is a powerful factor to be taken into account when it is sought, as it is in the present appeal, to widen the established scope of those words. The fact is that those words do have an established scope, one of the elements of which involves the ascertainment of the identity of the persons to benefit from the benevolence of the institution in question.
…
This, of course, does not necessarily and of itself predicate that direct dispensation of benefits is a prerequisite. It does, however, provide a strongly persuasive basis for holding that, over the passage of years, this element has now become built into the concept of a public benevolent institution. The judges of the past have taken this for granted and it is a long step to hold that a comparatively modern statute (the Pay-roll Tax Act was passed in 1971) can properly be construed as being freed from that basic factual element.
40 Priestley JA (with whom Mahoney JA agreed) said (at 575) that "there might well be some force in [the] submission" that Perpetual, supra, should not be mechanically applied to exclude ACOSS from the exemption, that ACOSS fell within the meaning of the phrase on present popular or ordinary notions of benevolence and that the content of the phrase "public benevolent institution" had expanded since 1931 when Perpetual, supra, was decided.
41 In Federal Commissioner of Taxation v Royal Society for the Prevention of Cruelty to Animals, Queensland Inc [1993] 1 Qd R 571; (1992) 92 ATC 4441, Fitzgerald P and Thomas J both approached the question as a legal one to be answered by application of earlier authority: see 574-5, 577-8, 581-83; 4,443, 4,445 and 4,448-49. Thomas J said (at 582; 4,449):
If the matter were now one of first instance, the Courts might well adopt what they consider to be the contemporary common understanding of the words in the community. It is certainly arguable that the respondent Society is a "public benevolent institution" and a "public charity" in the popular sense of those words, and that in the popular sense there is little or no distinction between them. This in the end, seems to be the basis upon which the learned chamber Judge decided the matter in favour of the Society. However in my view the matter is no longer at large. I agree with Street CJ in Australian Council of Social Service Inc v Commissioner of Pay-roll Tax (NSW) 85 ATC 4235, 4236; (1985) 1 NSWLR 567, 569, that the pursuit of certainty in the operation of Statutes makes it difficult to take a new approach at this stage. I also agree with Fitzgerald P that it is not to the point to consider the present popular meaning of "public charity", or the legal meaning of "public charity" or the present popular meaning of "public benevolent institution". Given the history of the legal decisions and legislation, we are concerned with a well established albeit limited legal meaning of "public benevolent institution".
[Emphasis added]
42 With respect, the view that the question is an entirely legal one, to be dealt with by the application of past authority, irrespective of the present common understanding of the composite phrase in the currently spoken English language, is difficult to reconcile with what those High Court authorities say: for example see Starke J and Dixon J in Perpetual, supra at 231-32 and 233 ([9] above); Starke J in Public Trustee, supra at 100 ([14] above); Latham CJ, Starke J and Rich J in The Little Company of Mary, supra at 279-80, 386 and 380-81 ([23], [24] and [27] above); McTiernan J in Maughan, supra at 395-96 ([30] above). Nor, with respect, did Street CJ put the matter thus in the ACOSS case.
43 In 1992 the Full Court of the Victorian Supreme Court in Commissioner of Pay-Roll Tax (Vic) v The Cairnmillar Institute [1992] 2 VR 706; 92 ATC 4,307 (the Cairnmillar Institute case) dealt with the phrase "public benevolent institution" in par 10(1)(ba) of the Pay-roll Tax Act 1971 (Vict). Of relevance to the present proceedings is the clear statement by Gobbo J (with whom Brooking and Tadgell JJ agreed), after an examination of the authorities, that the making of a charge for the relief provided does not disqualify the institution from the characterisation of "public benefit institution" and does not prevent the activities being seen as benevolent.
44 With this background, I now turn to two decisions of the Full Court of this Court both of which deal with the importance of the characterisation of the body in question as governmental to any conclusion as to whether it is a "public benevolent institution".
45 In Metropolitan Fire Brigades Board v Commissioner of Taxation, supra (the Fire Brigades case) the Full Court of this Court decided that the Metropolitan Fire Brigades Boards (the Boards), constituted under the Fire Brigades Act 1964 (Qld) and then provided for under the Fire Service Act 1990 (Qld) were not "public benevolent institutions" under subs 57A(1) of the FBT Act. The Court first examined the Fire Brigades Act and its provisions dealing with the appointment by the Governor of some of the members of the Boards, the power of the relevant Minister to control Boards, the budgetary control of the Minister, the power of the Minister to recommend dissolution of Boards, and the power to make by-laws and impose penalties for breach thereof. The funding of the Boards was substantially by the State Government out of its own funds and from a trust fund established under the Fire Brigades Act from compulsory "contributions" under the Act, which were characterised by the Court as taxes on property owners. The Court concluded (at 280) that each Board was "made a governmental body" and was "an emanation of government".
46 The Court described the Boards' functions, being the control and extinguishing of fires, the protection of life and property in case of fire and other related matters as provided for in the Fire Brigades Act, as being, and having been for many years, regarded as a "responsibility of government". This was so notwithstanding the existence of volunteer fire brigades. This conclusion was one which involved a degree of judicial notice and reflected the Court having regard to what Dixon J said in Perpetual, supra at 233, about the Court having regard to its own experience in the use of terms ([9] above).
47 The Court said (at 281) that each Board was:
…a body constituted, funded and controlled by government andperforming functions on behalf of government.
[Emphasis added]
48 The Court referred to a passage of Williams J in Maughan, supra at 397 (part of the extract in [31] above emphasised) and to the following passage from the judgment of Jordan CJ in O'Connell, supra, quoted by Street CJ in the ACOSS case, supra:
…the question as to whether a benevolent institution is public in the sense in which that word is to be read in the exempting provisions referred to is less dependent upon the particular circumstances of its constitution and domestic government than upon the character and objects of its benevolence. What are the benefits which the institution dispenses, and to whom are the benefits extended, are inquiries the answer to which must be decisive on the question of whether or not the institution is public in the statutory sense.
49 The Court also referred to what Priestley JA said in the ACOSS case, supra at 275.
50 I respectfully note, however, that these comments were made by Williams J and by Jordan CJ in the context of rejecting the proposition that public control was a necessary element within the phrase (whether "public benevolent institution" or "public hospital") not in support of the proposition that public control was somehow antithetical to the meaning of either phrase. The Court recognised this, as it went on to say (at 282):
The connection of a body with government may, in some circumstances, assist towards a conclusion that it is a public benevolent institution. But we think a purely governmental body is hardly ever likely to satisfy the tests which the authorities contain.
51 Thus, the Boards were characterised as "purely governmental", being "constituted, funded and controlled by government and performing functions on behalf of government".
52 The Court, dealing as it was with s 57A of the FBT Act, expressed the view that the terms of subs 57A(2) supported its view. The Court said (at 282):
Section 57A(2) of the Fringe Benefits Tax Assessment Act itself suggests this. That subsection exempts benefits provided to employees whose duties of employment are exclusively performed in, or in connection with, a "public hospital that is a public benevolent institution", where the employer is a government body. The language chosen by the legislature clearly contemplates that some of these institutions (whose purpose is, of course, to alleviate people's suffering) may not be public benevolent institutions. Further, the terms of the subsection are consistent with the view that government bodies are ordinarily not thought of as public benevolent institutions.
53 The Court then referred to the meaning attached to the phrase "public benevolent institution" in the authorities and the relationship between the phrase and the ordinary meaning of "charity". It drew a distinction between, on the one hand, the ordinary meaning of the phrases "public charity" and the relief afforded by a "public benevolent institution" in the relief of poverty, suffering, distress and misfortune (as enunciated and illuminated in authorities such as Perpetual, supra, Public Trustee, supra, Lemm, supra and Maughan, supra) and, on the other hand, an entity or emanation of government using government funds to exercise a function of government with the same purposes or ends for the relief of such conditions in mind. At 283 the Court said:
This is not to say that "public charity" is synonymous with "public benevolent institution", but the ordinary meanings of the two expressions are rather similar, in our view. It was put for the appellant that people whose buildings are being or have been destroyed by fire may be in need of urgent help and may be in personal danger, so being objects of benevolence. No doubt the bulk of the recipients of the moneys disbursed by way of pension payments and other assistance to Commonwealth pensioners are in need, also, but that is not to say that the Commonwealth in making those payments is acting as a "public benevolent institution". It is simply, like the appellant, using government funds to exercise a function of government. We are of the view that, whatever the precise limits of "public benevolent institution", the appellant falls well beyond them.
54 The Court dealt with the matter as one of ordinary meaning, but identified or illuminated the meaning of the phrase as not encompassing purely governmental bodies, using government funds to carry out functions of, or on behalf of, government even though those functions might fall within what judges have said, in respect of other institutions, are relevantly benevolent activities.
55 The Full Court returned to the phrase "public benevolent institution" (once again in the context of subs 57A(1) of the FBT Act), in Mines Rescue Board (NSW) v Commissioner of Taxation (2000) 101 FCR 91 (the Mines Rescue case). There the Mines Rescue Board (the Board) was a corporation established under the Mines Rescue Act 1994 (NSW)(MRA). It was expressly stated to be a statutory body representing the Crown in right of New South Wales (MRA s 2). The constitution and control of the Board was described by the Court as follows (at 92):
There are seven directors of the appellant appointed by the Governor on the recommendation of the Minister. Three of the directors are persons nominated to represent the interests of mine owners; a further three are persons nominated to represent the interests of mine employees; one is required to be a person nominated by the Minister: MRA, s 10. The Minister may remove a director from office at any time: MRA s 10(5); Sch 1, cl 5(2). The Chief Executive Officer of the appellant is appointed by the Governor who may, at any time, remove a person from the office of Chief Executive but only after consultation with the Board: s12(1), (3) and Sch 2, cl 1(5).
56 The functions of the Board were described by the Court as follows (at 92):
The appellant's functions are of two types. First, there are principal functions, summarised as the provision of rescue services for underground coal mines in New South Wales: MRA, s 6. Secondly, it has discretionary functions summarised as the provision of rescue services for other mines and the provision of non-rescue services for mines and industry both in New South Wales and elsewhere: ss 7 and 8.
57 Control of the Board by the government was described by the Court as follows (at 92-3):
On the issue of ministerial control of the appellant, the Minister may give written directions to the directors concerning the exercise of the appellant's functions with which the directors must comply subject to following a review procedure: MRA, s 14. The appellant is under an obligation to provide the Minister with information concerning its activities and to keep the Minister informed of the general conduct of its activities: MRA, s 15.