Chesterman v Federal Commissioner of Taxation [1923] HCA 24

H ©. or A. Estate Duty - Exemption - Gifts for " religious, scientific, charitable or public 1923. tional purposes" - What are " charitable purposes ° - Whether annuity g ew) will is taxable as part of estate - Assessment - Value of annuity - Re

Mexpourn prescribing rate of interest- - Ultra vires - Hstate Duty Assessment Act 191:

Feb. 2 3 (No. 22 of 1914 - ) of 1916), secs. 8, 50 - Hslate Duty Regulatic 26 ; June 6. (Statutory Rules 1917, No. 267), reg. 33. apse ay See. 8 of the Hstate Duty Assessment Act 1914-1916 provides that " (1 Rich and

Starke JJ. to this Act, estate duty shall be levied and paid upon the value, as : under this Act, of the estates of persons dying after the commencement of

the estate as is devised or bequeathed or passes by gift inter vivos or settlement

for religious, scientific, charitable or public educational purposes."

Held, by Isaacs, Rich and Starke JJ. (Knox C. that in sub-sec. 5 the expression "charitable purpose: technical legal sense, but in its popular sense as meaning the relief of wants

occasioned by lack of pecuniary means, and covering the relief of any form of necessity, destitution or helplessness, including spiritual destitution or need, which excites the compassion or sympathy of men and appeals to their benevolence for relief ; and, therefore, that a gift of a fund to provide prizes for competitions in physical, mental or moral excellence, without regard to the pecuniary means of the competitors, was not for charitable purposes within the meaning of the sub-section.

Held, also, by Isaacs, Rich and Starke JJ., that in that sub-section the

expression "public educational purposes" connotes training or teaching

Held, further, by Knox C.J., Isaacs, Higgins, Rich and Starke JJ., that a gift of an annuity by a testator is a gift of part of his estate, and accordingly is taxable under see. 8 in respect of its value according to a valuation, taking into

account the fact, if it exists, that the annuity is defeasible.

Reg. 33 (1) of the Hstate Duty Regulations 1917 provides that " (1) Whenever it is necessary for the purpose of the " Estate Duty Assessment Act " to calculate the value of a life interest or an interest for a period certain in an estate, the value shall be calculated in accordance with the appropriate value of one pound per annum shown in any standard set of tables for calculation of values on a four and a half per centum basis."

Held, by the whole Court, that the regulation is ullra vires the power con- ferred by sec. 50 of the Hstate Duty Assessment Act to '' make regulations, not inconsistent with the Act, prescribing all matters which by the Act are required. or permitted to be prescribed, or which are necessary or convenient to be pre- scribed for carrying out or giving effect to the Act."

Held, also, by the whole Court, that the value of an annuity should, for the purposes of the Estale Duly Assessment Act, be ascertained as a matter of fact.

On an appeal to the High Court by Alfred Henry Chesterman, alter George Henderson and James Stephen, executors of the will codicils of Peter Stuckey Mitchell deceased, from an assessment le by the Federal Commissioner of Taxation under the provisions

(5) Estate duty shall not be assessed or payable uponso much of H. ©. oF 4

Cuesrerman for the opinion of the Full Court, a case which was substantia

of the Estate Duty Assessment Act 1914-1916 of estate duty pa by them in respect of the estate of the deceased, Starke J. stat

such instruments he appointed the appellants the executors there 3. The said testator died on 4th January 1921 without hay altered or revoked his said will save as and by the codicils afo and he left his widow but no children surviving him. 4. On 17th March 1921 probate of such will and codicils

in its probate jurisdiction. 4 5. The respondent caused an assessment dated 7th April 1922 te be made in respect of the estate of the said testator, and thereupot placed the net assessable value at the amount of £178,478. calculating the value of the said estate for purposes of duty, respondent included the property referred to in the said will "the Peter Mitchell Trust"; and also the annuity given by the sé will and codicils to the wife of the said testator ; and for the purpos of the assessment and payment of duty in respect of such annu he calculated the present value of the same in accordance with the appropriate value of one pound per annum shown in a standard of tables for calculation on a four and a half per centum basis, a he thereby placed such present value at the amount of £73,280. 6, The appellants, being dissatisfied with the said assessment, du and within the prescribed time lodged with the respondent an obj tion in writing against the same upon the following grounds : - (1) That the Commissioner was wrong in assessing the value the said estate for duty under the above Act at the amount of | £178,478 for the following, amongst other, reasons ; (a) that no- part of the estate of the said deceased remaining after payment of the pecuniary legacies (other than any annuity) and debts and other charges is assessable for estate duty, the whole of the said estate so remaining being devised or bequeathed to religious, scientific, charit- able or public educational purposes ; (b) that so much of the estate

of the said deceased as is (i.) included in, or (ii.) devoted to the forma- jon of, or (iii.) necessary for carrying out the provisions of, the said ill and codicils relating to the Peter Mitchell Trust is not for estate duty, the said portion of the estate being devised or

; bequeathed to religious, scientific, charitable or public educational

purposes. (2) That if and so far or set apart or used for providing for the annuity of £5,000

bequeathed to the wife of the said deceased may be liable to be _ assessed for estate duty, the Commissioner was wrong in calculating

• (for the purposes of assessment and payment of duty on the amount
• thereof) the present value of the annuity in accordance with the appropriate value of one pound per annum shown in any standard

'set of tables for calculation on a four and a half per centum basis, and thereby placing such present value at the amount of £73,280. The Commissioner should have calculated the present value of such ity upon the basis of the current rate of interest, and reg. 33 f the Estate Duty Regulations 1917 is ultra vires.

7 The respondent wholly disallowed the said objection and gave to the appellants written notice of his decision disallowing the same.

8. The appellants, being dissatisfied with the said decision, within 'the prescribed time duly appealed against such decision to the High Court of Australia and prayed the Court to make orders in accordance with the notice of objection set out in par. 6 hereof.

9, The appeal came on for hearing before me at Melbourne on Ith September 19 md the Court, thinking fit, doth state this case in writing for the opinion of the Full Court of the High Court of

Australia upon the following questions arising in such appeal which,

in the opinion of this Court, are questions of law : -

(1) Is the part of the said estate which is subject to the Peter Mitchell Trust property devised or bequeathed to religious, scientific, charitable or public educational purposes within the meaning of the Estate Duty Assessment Act 1914-1916, sec, 8 (5)?

(2) Whether any and what part of the estate of the testator passes to his widow within the meaning of sec. 8, sub-sec.

6, of the Estate Duty Assessment Act by virtue of gift of the annuity of £5,000 contained in the said will ar codicils. (3) Is any estate duty payable in respect of the gift of the ss annuity ? (4) If question 3 be answered in the affirmative, is reg. ' Statutory Rules No, 267 of 1917 valid ? (5) If question 4 be answered in the negativ

. should the of the said annuity for the purpose of taxation under th said Act be ascertained by actuarial calculation based upor the prevailing rate of interest at the time of the death o the testator or by some other and what method ?

disposed of to his trustees upon trust to sell and convert a invest the proceeds and hold them upon certain trusts, includin trust to pay to his wife, who survived him, an annuity of £5,00 with provisions that she should not have power to anticipate tl annuity or any part thereof, and that the annuity should contim

or do or suffer any act or thing whereby the income, if belongi her absolutely, would become payable to some other person, -

The will contained the following provisions with regard to tl Peter Mitchell Trust referred to in the case: - And upo

the whole or all that remains of the said net income (all of whic income payable under the trust next hereinafter mentioned hereinafter referred to as the said income) in the manner and for the ends intents and purposes hereinafter set forth con the same And I desire that the said income and the moneys pr ducing the same and the purposes hereafter set forth concerning same shall be known as " the Peter Mitchell Trust " Now I consider that though gifts for the benefit of the weak failing and sic highly praiseworthy and to be commended yet more lasting g to be effected by providing means to encourage and help the cap

thy and strong to develop and bring to fruition their natural H. ©. or A. advantages and which will act as an incentive to all sane normal and peie healthy persons of both sexes to improve so far as possible their Cuxs

ural mental moral and physical conditions and will enable the

orthiest amongst them by a process of selection and by competi- _Coms- ) , SIONER OF

tions whereby they shall earn the benefits hereby intended to still Taxazroy.

further better those conditions develop themselves broaden their outlook as citizens of the Empire and so provide a leaven of strong well balanced and self reliant individualities who mixing in daily ntercourse with their fellows will tend by their example and by the magnetism of their bright and healthful personalities to benefit and assist those with whom they may so daily mix and will also in the natural course of events reproduce in future generations those 'qualities which they themselves possess I desire though without in any way fettering or interfering with the absolute discretion of ly trustees that so far as possible the competitions of a military or ly military nature hereinafter referred to shall be shaped and carried out in such manner that while due consideration is given to intelligent combination and co-operation amongst competitors at least equal attention shall be given to cultivating the faculties of self eliance and initiative in each individual concerned and to the development of his self respect, his personal cleanliness and his know- ledge of such clean and sanitary conditions as are best calculated to eep a community of individuals or any army free from disease and that while careful attention shall be given to the development of the ody mere muscularity and over training should be discouraged I also but again without fettering or interfering with the absolute cretion of my trustees desire that in considering the merits of competitors coming within the terms of the second schedule hereto the success of the candidate in open air sports and his capacity for leadership amongst his fellows shall have due consideration by my trustees I now direct that the said income shall be divided into twenty-one parts and that the purposes to which the same shall be applied shall be as follows namely As to seven of such parts to provide prizes for the persons and purposes and subject to the due fulfilment of the qualifications and conditions set forth in the

H.C. or 4. first schedule hereto As to three of such parts to provide p 1923, wees aa

Cursrerman the other) for such military competitions or competitions not stri

ee SON military but connected with or relating to military life or traini

Comans- Em papas He stoner or MY trustees may decide upon such competitions to be

Taxation. to the military forces (including cadets) of the Commonweal

(whether in cash or in trophies or partly in the one way and pi

Australia As to two of such parts to provide prizes as afo for such naval competitions or competitions relating to training as my trustees may decide upon such competitions o confined to the naval forces of the said Commonwealth As three of such parts to provide prizes as aforesaid for such milita competitions or competitions not strictly military but co with or relating to military life or training as my trustees may upon such competitions to be open only to the military forces of tl British Empire including the troops and cadets of the said Comm wealth As to three of such parts to provide prizes as aforesaid f such naval competitions or competitions relating to naval t as my trustees may decide upon such competitions to be open onl to the naval forces of the British Empire including the naval fo of the said Commonwealth As to one of such parts to pro prizes as aforesaid for competitions amongst and to be confined to th members of the police force of the State of New South Wales At ~ as to the remaining two parts of the said income to provide priz for the persons and purposes and subject to the due fulfilment the qualifications and conditions set forth in the second sche hereto I declare that all competitions or examinations in this 1 will referred to shall be held at such times and in such place | places within the said Commonwealth and subject to such reg tions terms and conditions in all respects as my trustees either w or without expert advice shall decide upon save only that until trustees shall otherwise agree I desire that the said milita partly military competitions shall be held at Albury aforesaid I empower my trustees to fix (subject nevertheless to any ¢ direction in this behalf herein contained) the amount of value a nature of all prizes and to pay all expenses (not however inch the travelling or other expenses of candidates) connected with

jidental to all competitions herein referred to and of advertising H. ©. or A. he same by any means they may think fit out of the said income rey

And in case the bequests trusts and dispositions hereinbefore con- Carsterman ined or any of them shall for any reason wholly or partially fail ppooran be declared by any Court incapable of taking effect or in case any _COM™S-

SIONER OF portion of the corpus or income of my estate shall not by this my Taxarto.

will or any codicil thereto be effectually disposed of otherwise then I give the property or funds so undisposed of to my trustees upon trust for such non-sectarian charitable uses purposes or institu- tions as my trustees shall in their absolute and uncontrolled dis- cretion decide upon.

The first schedule referred to in the will was as follows : - The persons to whom this schedule refers shall be unmarried ales not exceeding the age of thirty years British subjects and

a fide residents of the Commonwealth of Australia of a white race

n of the fittest of such persons last aforesaid the fitness to be lecided by my trustees or by any examiner or examiners they may hoose to appoint or by my trustees assisted by such examiners. In the deciding of the fitness of any candidate and her eriority to the others the following matters (in addition to the n test hereafter mentioned and hereafter called "the main ") shall be taken into consideration ; and each candidate must mably comply with conform to or satisfy each of such matters ecording to a minimum standard required by my trustees before ng admitted to the main test : - (1) Her physical excellence and the goodness of her general health ; her freedom from any hereditary int or disease, particularly of the intellect; her brightness and ulness of disposition and the fact that she is a person who may calculated generally to bear and rear healthy normal children, Her knowledge and understanding of the main elements of the ory of the British Empire apart from the mere memorizing of and dates. (3) Her general knowledge of the climates and 'aphy of the Commonwealth of Australia and of its main natural ucts. (4) Her knowledge and understanding of standard

H.C. or A. English literature (as embraced in the booksor parts of boo

Cursrerman a sound and appreciative knowledge of such parts of the

'- of the human body ; her knowledge of first aid and her ability to id

forth in the third schedule hereunder . . . and in partie

Bible as are specially mentioned in such schedule. (5) Her kno ledge of elementary anatomy and physiology and the main

on horseback and to swim. (6) The soundness of her knowledg practical house-keeping and domestic economy and of the necessi at all times for clean and sanitary surroundings and conditions and the best practical means of attaining them under ordinary stances in the said Commonwealth. The main test to which candidate must be subjected is as follows: Her practical a theoretic knowledge of the nursing (in sickness and health) handli management training care and rearing to perfect health and si of babies and young children. The candidates (in their order merit) who best satisfy the main test shall be entitled to su provided they shall have reached the mimimum standards pre scribed by my trustees with regard to the preceding matters or but if the examiners shall be of opinion that any two or mo candidates have equalled each other in the main test then extent to which they shall have answered or satisfied the previo requirements or tests shall be taken into consideration and best in order of merit chosen. The second schedule referred to in the will was as follows + The persons to whom this schedule refers shall be males under the age of twenty-one years British subjects and bona fide residen of the Commonwealth of Australia of a white race and not the off spring of first cousins ; of good general health and free so far as my trustees may reasonably be able to ascertain from any heredit: ry taint or disease particularly of the intellect, They must have h ably fulfilled all military obligations imposed upon them by the I of the Commonwealth of Australia. They must be able to swim ride a horse and to shoot reasonably well with the rifle according standards from time to time prescribed by my trustees. The pu poses covered by this schedule shall be the providing each year or every second year of prizes or bonuses for such number as

trustees may determine not exceeding ten of the fittest of the ns last aforesaid the question of fitness to be decided by my

appoint or by my trustees assisted by any such examiner or examiners. The amount of the first prize shall be thrice that of the "second and the amount of the second twice that of each of the remaining prizes which shall all be equal. In deciding as to the merits of each candidate the following (in addition to the foregoing) 'shall be the matters to be considered namely : - (1) The excellence 'ofhis physique. (2) His knowledge and understanding of the main elements of the history of the British Empire and of the British Constitution also his knowledge and understanding of the Common- wealth of Australia and the Constitution of his own State. (3) His knowledge of the Geography of the Australian Commonwealth and ofits climates and primary products. (4) His knowledge of element- ary anatomy and physiology and the main functions of the human body and of " first aid." (5) His knowledge and understanding of standard English literature (as embraced in the books or parts of books set forth in the third schedule hereto . . . and in par- jicular a sound and appreciative knowledge of such parts of the Protestant Bible as are specially mentioned in such schedule).

In the third schedule referred to in the will were specified a number of literary works, including the Protestant Bible and, in particular, certain books of it.

Latham K.C. and D'Arcy Irvine, for the appellants, The Peter itchell Trust being a gift in perpetuity either is for charitable oses in the technical sense or is void; if it is void the gift over takes effect, and that gift is, without doubt, for charitable pur- poses in that sense.

_ [Isaacs J. referred to In re Bowen; Lloyd Phillips v. Davis (1) ; In re Lord Stratheden and Campbell; Alt v. Lord Stratheden and Campbell (2).]

The expression " charitable purposes " in sec. 8 (5) of the Estate Duty Assessment Act 1914-1916 should be interpreted in its technical _legal sense, for that is its prima facie meaning and there is nothing in (1) (1893) 2 Ch., 491, at p. 494. (2) (1894) 3 Ch., 265,

stees or by such examiner or examiners as they may choose Caxsrerwan

Cursrersan Commissioners of Inland Revenue v. Scott (2); Jackson v. Fe

the context which shows that it is not used with that meani (Commissioners of Special Purposes of the Income Tax v. Pemsel

Commissioner of Taxation (3); Trustees, Executors and Agency . Acting Federal Commissioner of Taxation (4); Dunne v. ai Kelly v. Sydney Municipal Council (6) ). In Swinburne Federal Commissioner of Taxation (7) the expression interpreted we "public charitable institution," which, it was held, had not technical meaning. The use of the other words "religio 18," " scientific" and '' public educational purposes " do not limit tl meaning of " charitable purposes," for there may be gifts for either religious, scientific or public educational purposes which are not for charitable purposes. The expression '* public educational pun poses" refers to the public educational system existing in different States, and a gift for such purposes might be so limited not to be for charitable purposes (see In re Mellody ; Brandwood
Haden (8); Laverty v. Laverty (9); Dilworth v. Commissioner Stamps (10); Clark v. Taylor (11); Thomson v. Shakespear (1 In ve Pitt Rivers; Scott v. Pitt Rivers (13); and, as to the mea of " public," In re Cranston ; Webb v. Oldfield (14) ; In re Wedgwood : Allen v. Wedgwood (15) ). Interpreting " charitable purposes " its technical sense, each of the purposes of the Peter Mitchell u falls within one or other of the purposes in sec. 8 (5). [Isaacs J. referred to R. v. Special Commissioners of Income Taa Ex parte University College of North Wales (16).| Even if the words "charitable purposes " should not be given thei technical meaning in sec. 8 (5), they should not be confined eleemosynary purposes ; they include all purposes which are al and connote unselfish generosity for the benefit of the public [Counsel also referred to Re Stephens ; Giles v. Stephens (17); Ht ¢

(1) (1891) A.C., 531, at pp. 580, 583, (9) (1907) 1 LR., 9.

589. (10) (1899) A.C., 99. (2) (1892) 2 Q.B., 152, at p. 165. (11) (1853) 1 Drew., 642. (3) (1920) 27 3. (12) (1860) 1 DeG. FP. & J., 399.

(4) (1917) 23 76, at p. 585. (13) (1902) 1 Ch., 403. (5) (1912) A. (14) (1898) 1 LR, 431. (6) (1920) 28 CLL.R., 203. (15) (1915) 1 Ch.,'113, (7) (1920) 27 ©. (16) (1909) 100 LP., 585, (8) (1918) 1 Ch. (17) (1892) 8 T.L.R., 792.

-y. Attorney-General (1); Rooke v. Dawson (2); Thomson v. Uni- H.C. oF A.

sity of London (3); Tudor on Charities and Mortmain, 4th ed., Sw

p. 95; In re Scowcroft ; Ormrod v. Wilkinson (4); Whicker v. Hume Cuxsrersax (6); Taylor v. Taylor (6); Governing Body of Westminster School jeornar.

y. Reith (7); In re Mariette; Mariette v. Governing Body of Alden-

[Isaacs J. referred to Re Ogden ; Taylor v. Sharp (12).

[Starke J. referred to In re Barker; Sherrington v. Dean cc. of St. Paul's Cathedral (13); In re Good ; Harington v. Watts (14).]

The annuity to the testator's widow is not taxable under the Act for it is not part of his estate. Sec. 8 imposes taxation only upon the

yalue of the estate which a testator leaves (see National Trustees, Executors and Agency Co. of Australasia v. Federal Commissioner of 'axation (15); Jackson v. Federal Commissioner of Taxation (16) ; Isborne v. Federal Commissioner of Taxation (17); Hanson's Death fies, 6th ed., p. 75; Earl Cowley v. Inland Revenue Commissioners ); Emmerton v. Federal Commissioner of Land Tax (19) ). Reg. 33 of the Estate Duty Regulations 1917 is ultra vires, for it is not within the power conferred by see. 50. The value which is found by apply- ing that regulation is an artificial value and not the real value, which is the value upon which sec. 8 of the Act imposes taxation (cf. Heydon v. Deputy Federal Commissioner of Land Tax (N.S.W.) (20) ).

Ham (with him Herring), for the respondent. It is not contended y the Commissioner that the Peter Mitchell Trust is not a good itable gift within the Statute of Elizabeth, but the expression "charitable purposes " in sec. 8 (5) is used not in its technical sense

(I) (1899) A.C., 309, at p. 323. (12) (1909) 25 'T. (2) (1895) 1 Ch., 480. (13) (1909) 25 T (3) (1864) 33 L.J. Ch., 625. (14) (1905) 2 ©

(6) (1910) 10 (7) (1915) Av (17) (1921) 29 C.L. (8) (1915) 2 Ch., 284. (18) (1899) A. (2) (1902) 2 Ch., 642, at p. 648. (19) (1916) (10) (1917) A. a (20) (1914) 17

; si ham School (8); In re Delany; Conoley v. Quick (9): Attorney- 7:

H.C. of A. but in its ordinary and popular sense, that is to say, as me

wets Cuesrerwan "religious," "scientific" and " public educational v. FEDERAL Commts-

• "charitable purposes" in the technical sense of those words, -

purposes of benefiting the helpless or needy. The use of the

"charitable purposes" is not used in its technical sense, for m

religious and scientific purposes and all educational purposes an

the purposes of the Peter Mitchell Trust falls within the exempti conferred by that section. None of the purposes is religious, ; purpose to be religious must be for the spreading of religion, do any of the purposes come within the term " public educatio purposes," for that term imports teaching, and is not satisfi providing prizes for those who attain a certain degree of edi None of the purposes is " scientific," which means for the promoti science (see In re Duty on Estate of Institution of Civil Engi (1); Commissioners of Inland Revenue v. Forrest (2)). 4 annuity to the testator's widow is taxable under sec. 8 as pa the estate of the testator. [Counsel was stopped on this poir The Act having provided by sec. 8 that the tax is to be paid yy the value as assessed, it is consistent with the Act and convenie within the meaning of sec. 50, that a regulation should be n prescribing how the value should be ascertained. The valu assessed is not necessarily the market value. The true value is t value assessed in the manner provided by the Act. Under se (1) (a) the assessment made is conclusive before this Court. it is not conclusive, reg. 33 is not ultra vires except so far as f is an appeal on the ground that the amount of duty asse excessive (cf. sec. 16).

Latham K.C., in reply, referred to Thompson vy. Thompson ( Farrer v. St. Catharine's College, Cambridge (4); In re Dunsta Dunstan v. Dunstan (5); In re Lowman; Devenish v. Pester ( Inve Tyler; Tyler v. Tyler (7); In re Piercy; Whitwham vy. P

(1) (1887) 19 Q.B.D., 610, at p. 620. (4) (1873) L.R. 16 Bq., 19, at pp. 20 (2) (1890) 15 App. Cas., 334. (5) (1918) 2 Ch. 304. (3) (1844) 1 Coll., 381, at pp. 392, (6) (1895) 2 Ch., 348.

1); In re Willis; Shaw v. Willis (2); Re Davidson; Perpetual H.C. oF A

ors and Trustees Association of Australia v. Davidson (3) : egae

wal Trustee Co. v. Shelley (4). CuEsTERMAN ca FEDERAL 5, Commis- Cur. adv. vult. ON or 'Taxation.

The following written judgments were delivered : - Tune 6. Knox ©.J. The first question submitted for the opinion of this ourt is as follows: Is the part of the estate which is subject to the Mitchell Trust property devised or bequeathed to religious, entific, charitable or public educational purposes within the ming of the Estate Duty Assessment Act 1914-1916, sec. 8 (5)? To er this question it is necessary to consider two separate and net questions, namely, (a) What is the true meaning of the "charitable" in sec. 8 (5) of the Estate Duty Assessment Act

he part of the testator's estate which is subject to the Peter Mitchell st within the exemption allowed? The first question depends

1 (a). The contest as to the meaning to be given to the word charitable " in the context in which it is found is, substantially, ether that word is to have its technical or legal meaning or, on e other hand, is to be construed in what has been referred to as its ypular sense - a sense which has never been exactly defined but hich is assumed to be less extensive than the technical or legal eaning. The appellants support the former view ; the respondent he latter. In Pemsel's Case (5) Lord Macnaghten said : - " In con- ing Acts of Parliament, it isa generalrule . . . that words st be taken in their legal sense unless a contrary intention appears. That according to the law of England a technical meaning is ached to the word 'charity,' and to the word 'charitable' in such

(1) (1898) 1 Ch., 565. (4) (1921) 21 S.R. (N.S.W.), 426, (2) (1921) 1 Ch., 44. at p. 444.

(3) (1917) V.L.R., 748; 39 A.L.T., (5) (1891) A.C., at p. 580.

conclusion that, in a statute where the phrase " charitable use, its equivalent " charitable trust " or " charitable purpose," is the technical meaning is now the primary and, therefore, natural meaning, requiring context to vary it. So much is elf But what kind of context is required in order to justify a depar from the technical meaning of the words used? The rule applied is the same, whether the document to be construed be a or a deed or a statute, and may, I think, be fairly stated thus: technical words or words of known legal import shall have

proper legal meaning given to them unless by the express words of t document or by necessary implication therefrom it appears el that they were meant to be used in some other sense. There i dispute as to the grammatical construction of the sub-section, is agreed on all hands that the exemption extends to property for either (a) religious purposes or (b) scientific purposes or (¢) ch

able purposes or (d) public educational purposes or (e) purpo wholly within the limits of one or more of the four purposes nam In other words, it is conceded that Parliament said, and must taken to have meant, that, if a person gave property to be app either wholly to one of the four classes of purposes named or pal to one and partly to another of such classes exclusively of any 0 purpose, that property should be exempt from payment of du But, if the contention of the respondent as to the meaning t attributed to the word " charitable " in the sub-section be the extraordinary result follows that in the case of a gift ex to be for " charitable purposes " - for instance, a gift of a trust to apply the income in perpetuity to charitable purposes 01 such charitable purposes as the trustees might select - the exempti could never operate, for the gift could only be valid if the

"charitable " in the will were given its technical meaning, ant that case it would be outside the protection of the sub-section, is said to be confined to gifts for a different and more limited el

and involves a departure from the primary meaning of the words

render such a construction necessary ? As I understand the argu- ment for the respondent in the present case, the only words relied

wposes " ave the words " religious, scientific, or public educational"

in collocation with that expression. It is said that if " charit-

his opinion ; which I have had the advantage of reading. I add vo other instances. In Commissioners of Inland Revenue v. Forrest

within an exemption allowed in respect of property applied to the tion of science, i.e., for a scientific purpose, but neither in the se of Lords nor in the Court of Appeal was it suggested that it s within the exemption allowed by the same statute in respect: of perty applied to charitable purposes. So, too, a trust for the dowment and maintenance of a private chapel is a trust for a 'ligious purpose, but not charitable in the legal sense (Moare v. Hoare (2) ). Itistrue that charitable purposes in the legal sense clude most religious, scientific and educational purposes, but this Snot enough to support the argument, for, even if charitable be given s legal meaning, the exemption given in respect of religious, ntific and educational purposes will still operate on gifts for any f those three purposes which are not charitable. On the context this sub-section it is impossible to treat " religious " or " scientific " purposes as confined to purposes of a public nature, having regard to introduction of the word " public " to qualify " educational." he circumstance that exemptions given in a taxing Act may overlap

(1) (1890) 15 App. Cas., 334. (2) (1886) 56 L.T., 147.

charitable purposes. A construction which leads to such a result H- ©. oF A.

ed can, I think, only be justified by necessity. Does the context Cursrpran

as modifying the primary meaning of the expression " charitable Taxattos.

Cursterman Observations of Lord Herschell and Lord Macnaghten in Pemsel's ( v.

if construed in a particular way is of no great importance argument against construing it in that way, as is shown by |

Counsel for the respondent placed great reliance on the decisi of the Court of Appeal in Commissioners of Inland Revenue y. 8 2), as an authority in favour of his contention. In my opinion, # decision in that case is distinguishable. The exemptions given | the Act then under discussion (Customs and Inland Revenue A 1885) were (a) property or the income thereof legally appropriate and applied for the benefit of the public at large, or of any county shire, borough, or place, or the ratepayers or inhabitants there in any manner expressly prescribed by any Act of Parlia (sub-sec. 2 of sec. 11), and (b) property or the income thereof appropriated and applied for any purpose connected with religious persuasion, or for any charitable purpose, or for the p motion of education, literature, science or the fine arts, or in fl manner expressly prescribed by any Act of Parliament (sub-see. see. 11). The Court held that " charitable " ought not to be giv its technical meaning. But in that case Lord Herschell, with who the Lords Justices concurred, said (3) that "if that extended m ea

en to the words ' charitable purpose ' the whole of sub-s¢ 2, except perhaps the exemption of property ' applied in the mani expressly preseribed by Act of Parliament,' would be wholly necessary, and the terms in which the exemption is provided

appear to indicate that property described in sub-see, was not regarded as within the description contained in sub-see. 3 It is true that he gave as an additional reason for the conclu which he arrived, that the words in sub-sec, 3 which immedi preceded and followed the words "for any charitable pi would be unnecessary if "charitable purpose" were given th extended meaning. It is, | think, by no means certain that tl Court would have come to the same conclusion in the absence t provision of sub-sec. 2, I am confirmed in this view by the fi that Lord Herschel, in discussing the decision in Pemsel's Case (

1. (1891) A.G., at pp. 574, 589. (3) (1892) 2 Q.B., at pp. 164-165. (2) (1892) 2 QB, 152. (4) (1891) A.C, 531.

mumittee in Attorney-General for New Zealand v. Brown (1). It is that the opinion was expressed in that case that the word "charitable " eleemosynary, and not in its technical, meaning, because of the location with the words " religious " and " educational," but I

in the will then under discussion must be read in its

not think the decision can be taken as laying down a rule that the location of these three words in any document is of itself sufficient show that "charitable" is used in its non-technical sense. It inust be remembered that in that case the real obstacle to be over- come by the appellants was, as Lord Buckmaster pointed out, the 'use of the word " benevolent," and the contention was in effect that the words of the will should be read as if they were " charitable and benevolent, charitable and religious, charitable and educational." The real ground of the decision seems to me to have been that the context showed that " and " must be read as " or." This conclusion s sufficient to dispose of the case, having regard to the meaning iven to " benevolent." In any event, as was said by Lord Herschell Scott's Case (2), each statute must be looked to by itself for the pose of ascertaining its meaning. In Pemsel's Case (3) Lord

The conclusion at which I have arrived is that the context does not

on that the expression " charitable purposes " in sec. 8 (5) of the shall not be given its technical or legal meaning.

1 (b). As the majority of the Court is of the opinion that the technical meaning should not be given to the expression " charitable purposes," no useful purpose can be served by discussing the ques- tion whether the Peter Mitchell Trust is a valid charitable gift in the technical sense. Any expression of opinion by me on that question is, I think, not only unnecessary but undesirable. It is unnecessary

(1) (1917) A.C, 393, (2) (1892) 2 Q.B., at p. 165. (3) (1891) A.C., at p. 587.

id that it could scarcely be supposed that the exemptions contained 4. C. oF 4.

Counsel for the respondent relied also on the opinion of the Judicial Carsrexman

H.C. oF A. because whichever way that question is decided the decision cann 1923. affect the result in this case, Whether the Peter Mitchell Trust charitable trust in the technical sense or not, I think it cannot be dis.

Froerar puted that the gift over, in the event of the failure wholly or in or Of that Trust, TAXATION. purposes or institutions as my trustees shall in their absolute a1

Knox c.g. uncontrolled discretion decide upon " is technically a good charitabl gift. The Peter Mitchell Trust is either a good charitable gift i the technical sense, or it fails. In the latter event the gift over effect. It follows that, whether the Peter Mitchell Trust is a g charitable gift or not, the property comprised in it is devised bequeathed to charitable purposes in the technical sense, and therefore, in my opinion, within the exemption given by the Act It is undesirable because the question has not been argued, coun for the respondent having declined to argue it, and because tl very question may hereafter come before this Court on appeal fi the Supreme Court, and in that event the Court will have advantage of having the matter fully argued on both sides.

In my opinion question 1 should be answered Yes. . 2. I feel no doubt that part of the testator's estate equivalent i value to the annuity given to his widow must be regarded as p to her within the meaning of sec. 8 (6) of the Act. There is a gift te the widow of £5,000 a year which can only be satisfied out of th

of the estate. The answer to question 2 should be Yes.

3. It follows from the answer given to question 2 that question 3 should be answered Yes.

4 and 5, In my opinion question 4 should be answered The regulation provides for the assessment of the value of an annuity on an arbitrary basis of four and a half per cent., without re to circumstances which may affect the amount required to chase at the relevant time an annuity corresponding to that by the will. By the Act duty is to be levied on the " value," the true value of the estate. This must be ascertained in t ordinary way having regard to the circumstances existing at relevant time and to the provisions of the will.

Isaacs J. The first question is whether the part of the estate H.C. oF A. ibject to the Peter Mitchell Trust is exempt from duty under ete the 5th sub-section of sec. 8 of the Estate Duty Assessment Act. CursTERMAN In order to be exempt it must be devised or bequeathed for (a) epnran religious or (b) scientific or (c) charitable or (d) public educational COBmS. _ purposes, within the meaning of that sub-section. I would observe Taxatron. that it is sufficient if the purposes cover one or more of those

enumerated, provided they do not extend beyond the limits of the sub-

section. It is not suggested in the present case that the purpose was teligious. Nor is the gift attempted to be supported on the basis r, for the executors that it fell within the term " charitable," and also, with less

of scientific purposes. It was strenuously urged, howev:

vigour, that it came within the expression " public educational." _ As to " charitable," the whole stress of that contention was laid on the point that the word should, on sound construction, be given the sense called Elizabethan, so clearly and authoritatively expounded in Pemsel's Case (1). For the Commissioner it was contended that e word * charitable " as used in the sub-section was to be under- stood in its popular sense, that is, in the sense which in such a collocation it would be understood to bear in ordinary life. The question, therefore, as to " charitable " is whether, in the enactment teferred to, that word is to be understood in what Farwell J. in In re Best (2) calls "'the curiously technical meaning which has been given by the English Courts to the word 'charitable,' " or whether Parliament has indicated that it means the word to have the ordinary meaning given to it in daily life. Pemsel's Case is first and foremost an authoritative pronouncement that the phrase " trust for charitable purposes " is primarily a technical legal phrase with a well-known connotation, namely, as having reference to the Statute of Elizabeth. It also determines that, in the absence of sufficient indication to the contrary, the technical meaning of any phrase should prevail. For this there are many other authorities, some of the most important of which I collected in the case of Gutheil v. Ballarat Trustees, Execu- tors and Agency Co. (3). But in the application of these rules minds easily differ. For instance, in Pemsel's Case Lord Halsbury and

(1) (1891) A.C., 531. (3) (1922) 30 C.L.R., 293, at pp. 302- (2) (1904) 2 Ch., 354, at p. 356. 304,

Cuesreraan indeed within eight months afterwards - was led to a non-technical

Lord Bramwell dissented. And one of the three eminent jurists composed the majority, Lord Herschell. in the very next yea

in another A by the collocation (Commissioners of Inland Revenue y. Scott (1)),

The words there closely approached the words in the present 4 They were: "for any purpose connected with any religious per- suasion, or for any charitable purpose, or for the promotion o education, literature, science, or the fine arts." Lindley and Kay L.JJ. agreed with Lord Herschell. The guiding principle was stated (2) that "each statute must be looked to by itself for the purpose of ascertaining its meaning and the position in which the general words are found, and the nature of the specific exemptions cannot: be lost sight of.' That decision was referred to with emphatic assent by Lord Cozens Hardy M.R. in R. y. Special Commissioners of Income Tax (3). The Master of the Rolls said as to Scott's O (1): " The generality of the term for 'charitable purposes' woul have been meaningless if placed, as it was, before and after spe charitable purposes of a particular kind." It is noteworthy that in 1887 the Supreme Court of New Zealand, on appeal, held that words " public charitable purposes " in a Property Assessment being followed by the words " public educational purposes" were to be construed in a non-technical sense, as otherwise the same thing would have been provided for twice over. The case is Sperry Y. Church Property Trustees (4): and the reasoning commends itself to me, Reference is there made to a decision of Lord Cairns in Dola v. Macdermot (5), where the Lord Chancellor in construing a will containing the words " charities and other public purposes" gave weight in construing the word " charities " to the words following i as showing that the testator did not mean private charities. that case also a salutary reminder is given (6) that "in construing @ will of this kind the Court must not lean to the side of avoiding the will in order to gain money for the family, nor, on the other hand, strain to support the will to gain money for the charity."

(1) (1892) 2 Q.B., 152. (4) (1887) 5 N.Z.L.R. (C.A.), 179.

(2) (1892) 2 Q.B., at p. 165. (5) (1868) L.R. 3 Ch., 676. (3) (1909) 100 L.T., at p. 586. (6) (1867) LR, 3 Ch., at p. 678.

Attorney-General for New Zealand vy. Brown (1). There the will benevolent religious and educational institutions societies associa- tions and objects" as his trustees should select. Some doubt was admitted as to whether the word " charitable" there covered and coloured the whole of the succeeding words. But there was an

investment clause directing the trustees to deposit the funds " with any firm bank company or corporation or public body or institution ~ commercial municipal religious charitable educational or otherwise." On this, Lord Buckmaster, speaking for Lord Parker and Lord Philli- : more as well as himself, said (2): '' In their Lordships' opinion this

shows that the meaning of the word ' charitable' in the testator's mind was something that did not embrace religious or educational

purposes, and that it ought rather to be regarded as eleemosynary, an interpretation which at once prevents tautology and gives a sensible meaning to each of the words." I cannot conceive of a more apposite precedent. When I consider how true is the expression quoted from the judgment of Farwell J. in Best's Case (3) "as to the curiously technical meaning" of "charitable," and the observation of Lord Cairns in Dolan v. Macdermot (4) that " there is, perhaps, not one per ~ son in a thousand who knows what is the technical and the legal

: meaning of the term 'charity, J am assisted, in construing this taxation Act, in arriving at the conclusion that the respondent's con- tention is correct. Ifthe word " charitable " were there to receive its "curiously technical meaning," there are decisions which show how far it would extend to relieve estates from the common contribution

to taxation, For instance, the following have been held to be

"charitable" in that sense: "Home for starving and forsaken

eats" (Swijte v. Attorney-General (5)); the promotion of vege- tarianism (In re Cranston (6) ): for "the promulgation of . . . Con- servative principles combined with mental and moral improvement, Socialism, anti-vivisection principles." (See Halsbury's Laws of England, vol. 1v., sec. 182, and the cases there cited.) That would be

(1) (1917) A.C., 393. (4) (1868) L.R. 3 Ch., at p. 678. (2) (1917) A.C, at. pp. 396-397. (5) (1912) 1 LR., 133, (3) (1904) 2 Ch., 354. (6) (1898) 1 LR,

The latest and, as I consider, the most authoritative instance is H- ©. oF A.

~~ declared that a fund should be held on trust for such " charitable Cursrerwan

H.C. or A. a strange intention to impute to the Federal Legislature. Following 1923,

the words of Lord Buckmaster in Brown's Case (1), I am very dis- w tinctly of opinion that to prevent tautology and to give to each a sensible meaning the word " charitable " in sec. 8 (5) of the Bs Bead Duty Assessment Act has not the extensive Elizabethan mea Taxartox. but has what may be shortly, though perhaps incompletely, Isaes J. its eleemosynary meaning. It must be remembered that " elee-

is not confined to mere relief of poverty. Eleemosyn

mosynary corporations, says Blackstone (vol. 1., p. 471), "are such as are con- stituted for the perpetual distribution of the free alms, or bounty i of the founder of them to such persons as he has directed. Of

kind are all hospitals for the maintenance of the poor, sick, a impotent; and all colleges, both in our universities and out of them:

of piety and learning by proper regulations and ordinances. 2. imparting assistance to the members of those bodies, in order enable them to prosecute their devotion and studies with ease and assiduity." This, of course, is not exhaustive, but illustrative.

"Charitable" must therefore, in the sub-section referred to, understood in its " popular"? sense. That does not admit of any rigid or undeviating connotation. It is flexible to an immeasurable degree, as can be seen by reference to the judgments of such eminel masters of law and language as the Judges who sat in Pemsel's Ca (2). I am disposed to think Lord Herschell (3) (with whom Lo Watson concurred) stated the central truth when he said that " the popular conception of a charitable purpose covers the relief of any form of necessity, destitution, or helplessness which excites the compassion or sympathy of men, and so appeals to their benevolence for relief." He carefully explains that he intends that in no narrow sense, because he states that within his statement come spiritual nee 4 quite as much as physical needs, and he says (4) as to charitabl purposes '* the proper course would be to prefer the broadest. sense | in which they are employed." I take " charitable " to cover all that" Lord Herschell includes, and to comprise benevolent assistance in

(1) (1917) A.C., 393. (3) (1891) A.C., at p. 572. (2) (1888) 22 Q.B.D., 296; (1891) A.C., 531. (4) (1891) A.C., at p. 573.

aid of physical, mental, and even spiritual, progress for the benefit H.C. or 4-

of those whose means are otherwise insufficient for the purpose. But

T exclude the idea that is involved in the technical meaning of Cuxs: _ "charity," that except in trusts directly for the relief of " poverty "

the distinction between rich and poor has no relevance. Judged by this standard, I cannot hold the gifts for the Peter

Mitchell Fund to be "charitable." I think the testator distinctly

meant to negative such a notion. He says: - " It is not for the purpose ofa gift for the benefit of the weak, failing and sick, but to improve the sane, normal and healthy for the benefit of the Empire and future generations." No one can deny that such a purpose is laudable, but the question is this: "Is it charitable?' Nothing in the terms of the gift indicates charity. There are to be military and quasi- military competitions for soldiers, naval and quasi-naval competi- tions for sailors, there are to be undescribed competitions for police, and there are for young unmarried females to be physical examina- tions, and examinations as to knowledge theoretic and practical, historical and geographical: and prizes are to be provided, But again I am unable to apply to these competitions in any proper sense the term "' charitable " as intended in the Act.

This brings me to the last term " public educational purposes." It is to be observed that by sub-sec. 8 of the same section it is enacted that that phrase includes "the establishment or endowment of an educational institution for the benefit of the public or a section of the public." That, in the first place, confirms my view of the meaning

_ of the word "charitable," because under the technical meaning of

"charitable " it would be no objection that a gift was for a section of the public (Attorney-General v. Lawes (1)). But if the non- technical construction be given to "charitable," and the phrase " public educational purposes " be, like " charitable." regarded from the standpoint of ordinary meaning, then the word " public " might give rise to some serious doubt if it were sought to apply it to a section of the public. Sub-sec. 8 is, therefore, doubly indicative of the ordinary meaning; and so I have to inquire as to the ordinary mean- ing of " public educational purpose " bearing in mind sub-sec. 8. I think, to begin with they must be " educational" in the sense that

Cxesrerwan mentary sense of " educational " as well as " charitable," as un

they provide for the giving or imparting of instruction. The reas ing in Whicker v. Hume (1) is important on this point. The parlia

stood in Australia in 1914, can be seen by reference to the App priation Acts of the States - as, for instance, New South Wales Ac No. 26 of 1914; New South Wales Act 43 Viet. No. 23 (Public Instruction) ; New South Wales Act No. 27 of 1901 (Public Ins tions Inspection); Victorian Education Act No, 2644 (of which s¢ especially sec. 17) ; Victorian Appropriation Act No, 3170 (Treasurer, Division No. 48, and Minister of Public Instruction); West Australian Act No, 32 of 1909 (Public Education Endowme Other Acts indicating the Australian sense of "charitable" includ New South Wales Acts No. 35 of 1902 (sec. 110) and No. 16 of 1906 (sec. 12), and South Australian Act of 1912, No. 1078. These are instances, and I have made no exhaustive search. Such publi educational" and " pul

legislative recognitions of the words education " as I have mentioned are only confirmatory of the gene understanding of these words as connoting the sense of impartin, knowledge or assisting and guiding the development of body or mind. Within that orbit the field is wide, and extends from element : instruction in primary schools to the highest technical scientific teaching in the Universities. But even this vast range will not embrace mere examination in proficiency already attained, withou t affording any means of increasing that proficiency. No doubt, incentive to exertion is created, and that incentive may again be exciting cause of obtaining educational help, but the '" purposes pointed to by the sub-section under consideration are intended to be primary and direct, not remote and accidental.

The result is that, in my opinion, none of the gifts for the Pe Mitchell Trust is within the exemptions of sub-sec. 5 of sec. 8 of th Act. I wish to say that I express no opinion as to whether these gifts or any of them are "charitable" in the Elizabethan sense. That is not before us, once the conclusion is arrived at that " charit- able" in the sub-section is not to be read in that sense, Mr. He very properly said he neither admitted nor denied they were charit- able in the technical sense, but urged that, even if it were conceded

that they were, still they were not within the statutory exemption. H.C. or A. 4 f 1923.

'Then there is a gift over, which is in these terms: " And in case the Cuesterman

bequests trusts and dispositions hereinbefore contained or any of area

"them shall for any reason wholly or partially fail or be declared by COMBS.

any Court incapable of taking effect or in case any portion of the corpus Taxation. or income of my estate shall not by this my will or any codicil thereto ime s: be effectually disposed of otherwise then I give the property or

funds so undisposed of to my trustees upon trust for such non-

I therefore abstain from expressing any opinion on that subject.

sectarian charitable uses purposes or institutions as my trustees shall in their absolute and uncontrolled discretion decide upon." As to this, some difficult questions might arise as to whether the conditions of the gift over have arisen, or what the effect of such conditions would be. But the first question to be determined as to the gift over is q whether it is to be understood in the statutory sense. If not, then again it is entirely outside our consideration, whatever its position may be in the technical sense. As to this I say nothing as to what the simple unqualified phrase "charitable institutions" might 'convey, particularly in this will where the word " charitable " occurs before. But the composite phrase is "upon trust for such non- sectarian charitable, uses purposes or institutions," &c. Reading that phrase in a will and on the whole context of this will, I am of "opinion, having regard to the principles of interpretation referred to, that the meaning to be ascribed to "charitable " in that connection must be the technical one. But as the provision is "such trusts &c. as my trustees shall in their absolute and uncontrolled discretion decide upon," it is plain to demonstration that the trustees have the whole range of technical "charity" to select from. It is conse- quently open to them to choose forms of " charity " quite outside the statutory exemptions, with the result that the appellants fail to show that the gift is confined to the four heads of exemption enumerated. _ My answer to the first question is, for the reasons given, in the _ negative.

2. A trenchant argument on the second question was advanced on behalf of the appellants, namely, that no part of a testator's estate passes to an annuitant under the will. This cannot be sustained. Tt was submitted that the gift is out of future income that could not

YL CHESTERMAN v. FEDERAL Coxnus- SIONER OF Taxation.

belong to the testator. But that is an impossible position, N testator as such can give anything except out of his estate. will speaks as at his death, and an annuitant simpliciter is entitled t the annual sum to commence from the death (Houghton v. Fra (1) ). An annuity is a legacy (Heath v. Weston (2)). Then as to the part of the estate that passes. For assessment purposes must be found by valuation (see Wroughton v. Colquhoun (3) ), an here on the basis that the estate is sufficient: to satisfy all legacies ir full. But, as there is a defeasance, that must be taken into account (see Gratrix v. Chambers (4) ). 3. The answer to this question is necessarily Yes; not becai there is a gift of an annuity but because what is given is part of estate. If it were not for the different rate provided by sub-see. 6 of sec. 8 of the Assessment Act, it would not be necessary at this stag to have any reference to the annuity. 4, In my opinion reg. 33 of Statutory Rules No. 267 of 1917; not valid. It is, in the circumstances, necessary for the purpose of the Act to calculate the value of the widow's life interest. value, in the absence of contrary statutory direction, must meal the actual value. Actual value must have reference to all cir stances, and one very material circumstance is the defeasibility the gift. I have referred to one authority, though it is ha needed. The regulation referred to provides a cast-iron rule for all annuities (inter alia), whether indefeasible or not, or, if defeasib whatever the nature of the condition, and whether the annuity is secured on corpus or income ; in fact, irrespective of the terms of the gift so long as it is an annuity, The only suggested authority for the is sec. 50 of the Act, which enables the Governor-General to " make regulations, not inconsistent with this Act, prescribing all mat which by this Act are required or permitted to be prescribed, or which are necessary or convenient to be prescribed for carrying out or giving effect to this Act." It is said that under the words " neces- sary or convenient " the regulation is permissible. The answer i the regulation is "inconsistent " with actual value, which is what is taxed by the Estate Duty Act (No. 25 of 1914) and is therefo

(1) (1823) 1 Sim. and St., 390. (3) (1847) 1 DeG. & Sm., 357. (2) (1853) 3 DeG. M. & G., 601. (4) (1860) 2 Giff., 321.

imed at in sub-sec. 6 of sec. 8, and inconsistent with "value" in H. ©. oF 4 ec, 35 of the Assessment Act, where it obviously means actual value, ie CHES TERMAN Hicers J. It must be clearly understood that the first question ppprar

in this case stated turns on the construction of the Estate Duty CO Assessment Act 1914, and on that only. Under sec, 8 the Commis- Taxarrow. sioner proposes to levy the duty on the whole of the estate of the Tips

estator Mitchell; and the executors object to pay duty on so much

for religious, scientific, charitable or public educational purposes," nd is therefore exempted from duty by sec. 8 (5). Taxing Acts frequently contain exemptions in more or less similar terms. I suppose the theory at the root is that as the tax is for the benefit of the public anything given by the testator for the benefit of the public ought not itself to be taxed. But, whatever the theory, the appel- mts have to show that the trust - or, rather, each or some of the rusts, as there are several separable trusts in the Peter Mitchell [rust - are for religious purposes or scientific purposes or charitable purposes or public educational purposes.

The testator has introduced his Trust by a long sentence which is important as showing his motive and his object : - " Now I ider that though gifts for the weak failing and sick are highly seworthy and to be commended yet more lasting good is to be fiected by providing means to encourage and help the capable ealthy and strong to develop and bring to fruition their natural dvantages and which will act" (sc) " as an incentive to all sane ormal and healthy persons of both sexes to improve so far as sible their natural mental moral and physical conditions and enable the worthiest among them by a process of selection nd by competitions whereby they shall earn the benefits hereby intended to still further better those conditions develop themselves den their outlook as citizens of the Empire and so provide a leaven of strong well balanced and self reliant individualities ho mixing in daily intercourse with their fellows will tend by their example and by the magnetism of their bright and healthful

personalities to benefit and assist those with whom they may VOL, XXXII 7

x possess." There is more to the purpose, especially as to the c

so daily mix and will also in the natural course of events rept duce in future generations those qualities which they themsely

vating the faculties of self-reliance and initiative, self-re personal cleanliness, in the military or partly military competi prescribed ; but I must leave the full terms of this part of the: for the reports. For such ends the income is divided into twenty-0 parts, of which (1) seven are to provide prizes for fifteen women per annum - in addition to other qualifications to be | sidered, the " main test " is to be that of nursing and rearing bab and young children; then (2) three parts are to provide prii men of the Commonwealth military forces in military or qu military competitions ; (3) two parts are to provide prizes f members of the Commonwealth naval forces in naval comp (4) three parts are to provide prizes for members of the milita forces of the British Empire (including the Commonwealth). military or quasi-military competitions ; (5) three parts provide prizes for members of the naval forces of the British (including the Commonwealth) ; (6) one part is to provide pri " as aforesaid " for competitions among members of the police fo of New South Wales; and (7) two parts are to provide prizes f (second schedule) males under twenty-one, if British subjects, ¢ who have fulfilled all Commonwealth military obligations, and swim, ride, shoot with a rifle, &e.

Some difficulty has been raised as to the trust for the police, on ground that the nature of the competitions has not been spe cifica stated in the trust, But the trust is to provide prizes aforesaid " for military or quasi-military competitions, &e.; and testator declares that all competitions referred to in his will shall held " subject to such regulations terms and conditions in all resp as my trustees shall decide upon." In my opinion, the trust police is on the same level as the other trusts.

For trusts 1 and 7 certain educational and other tests are scribed; and in the educational tests the testator includes

Solomon), certain plays of Shakespeare, Smiles' Self-help, U Remus, Tam O'Shanter, &c. But, notwithstanding the referer

the Bible, I am of opinion that trusts | and 7 cannot be upported as gifts for "religious purposes." The purposes are not

orpore sano, a certain knowledge of certain books of the Bible being ated as a means to the end. The direct purpose is not the pro- ion of any form of religion, but rather the promotion of all-round competency and efficiency.

For these same trusts the testator prescribes that there shall be mowledge of elementary anatomy and physiology, and the main functions of the human body. But, for similar reasons, I cannot t the trusts as for " scientific purposes " within sec. 8 (5).

T shall assume, also, that none of the trusts can be fairly described

sa trust for " public educational purpo: This point is, to my mind, more doubtful, as we may be justified in giving to education broad sense as implying culture of body and mind and character in the sense of Plato, and not as confined to the book-learning of hools and colleges. But I am not prepared to say that the ordinary ning of ** public educational purposes " in current speech covers sense so broad.

But are not the trusts for " charitable purposes" ?_ They are not, e have to read " charitable " as merely implying relief to the poor rw needy ; they are, if we have to read "charitable " in this legal ument in its legal sense. It has not been contested that if we are 0 give "charitable purposes" this legal sense - the sense of the tatute of Elizabeth - the purposes of this trust are charitable. earned counsel for the respondent expressed himself as prepared to oncede that the trust constituted a good charitable gift in the sense f that statute. The purposes here are to benefit the public - the es of competitors directly, the general public indirectly. Lord aghten, in Commissioners for Special Purposes of the Income v. Pemsel (1), says: " 'Charity' in its legal sense comprises principal divisions: trusts for the relief of poverty; trusts for the advancement of education; trusts for the advancement of religion; and trusts for other purposes beneficial to the com- nunity, not falling under any of the preceding heads." The Mitchell Trust - or rather seven trusts - seem tome to come

"religious; the purpose is rather to encourage the mens sana in Cue:

~~ ERMAN v FepERar Commis- SIONER OF TAXATION.

Cuesterman events, it seems to cover any gift intended for the benefit of |

under this fourth division. [shall not venture to make an exhaustiy definition of " charitable " in the legal sense ; but, prima facie at g

public at large, or of any indefinite and considerable part of tl public. It has been held that a gift is charitable which is for th increase and encouragement of good servants, or to distribu gratuities to female servants in Wales, selected in a certain mam (Reeve v. Attorney-General (1): Loscombe v. Wintringham (2) ); I a gift to the National Rifle Association to be expended by the coun for the teaching of shooting at moving objects so as to preve catastrophe similar to Majuba Hill (Re Stephens (3) ): also a gif of an annuity to a volunteer corps (In re Lord Stratheden and Camply (4) ); also a gift wpon trust for the officers' mess of a regiment, 1 applied in maintaining a library, and any surplus in plate (In 4 Good ; Harington v. Watts (5) ); also a gift to establish an institu for investigating and removing the causes of the potato diseases, & (University of London v. Yarrow (6) ); also a gift to a society for tl total suppression cf vivisection, whether the Court approves of th objects of the society or not (In re Foveaux ; Cross v. London Ai vivisection Society (7)). The real question is. ought we to giv

Now, the word " charitable " is a technical word, and a technic legal word used must be taken in its legal sense unless a contrary) intention appears (per Lord Macnaghten, Commissioners for Speci

Higginson (9)). Where and how is the contrary intention closed in this Act? It is urged that "charitable purposes " mean here charitable purposes in the legal sense of the word! scienti

because the words are associated with "religious, "public educational," all of which (it is said) are included unt "charitable" in the legal sense. The argument is that if t

words were used in the legal sense the other words would not have been added. But not all religious purposes are charit

(1) (1843) 3 Ha., 191. (6) (1857) 1 DeG. & J., 72. (2) (1850) 13 Beav., 87. (7) (1895) 2 Ch., 501.

(3) (1892) 8 T.L.R., 792. (8) (1891) A.C., at p. 580.

(4) (1894) 3 Ch., 265. (9) (1852) 3 H.L.C., 638, at p.

in the legal sense; for instance, a gift to an order of contem- plative nuns, seeking to sanctify their own souls by religious exer-

the upkeep thereof, would be a gift for scientific purposes, but not Taxa7™

poses charitable ; a gift to one who keeps a private observatory

charitable purposes. A gift to Edison to enable him to out- Higgins a. distance his competitors in research as to a certain subject would be ina similar position. A gift to the proprietors of a public school naid of the funds of the school would come under the words " public

ducational purposes," but not under the words " charitable pur- poses." The most that can be alleged is that most religious purposes, most scientific purposes, most public educational purposes, are charitable. There is nothing in the form of the words used to indicate hat they

re meant to be mutually exclusive in meaning. If one "moral virtuous or unselfish," there is no implication that the word " unselfish " must be limited in meaning 0 as not to include either moral or virtuous conduct. In the Income Tar Assessment Act 1915-1918, sec. 11 (1), there are numerous exemptions from the tax, and one is (j) " the income of any society r association not carried on for the purposes of the profit or gain to the individual members thereof. established for the purpose of omoting the development of the agricultural. pastoral, horticultural, iticultural, stock-raising, manufacturing. or industrial resources Australia." I cannot believe that " pastoral" is to be shorn of its full meaning because " stock-raising"" is mentioned, or that

"industrial"? has to be limited in denotation because " manu-

wing" is mentioned. The four classes of purposes mentioned i this section of the Estate Duty Assessment Act frequently overlap their denotation; but the natural meaning of the words is that if the purposes of a gift fairly come within any one of the four classes, whether they come within any of the three others or not, the gift is to be free from duty. I can find nothing in the phraseology used to 'vent us from treating the words as expanding the exemptions, as to comprehend all purposes which can come within any one mr more of the four classes. (ly (1871) L.R. 12 Eq., 574, at p. 585. (2) (1902) 2 Ch., at p. 648,

H.C.or A. Jt is not sufficient to show that another meaning than the e

Roe meaning is possible in the context - or even probable. This was ]

Cxesterman strongly by my brother Isaacs in Gutheil v. Ballarat Trustees &e.

Fepura, (1); and T should accept his position, that the technical mea

oe must be accepted unless the instrument excludes the technical s

Taxation. ** beyond all doubt." As Lord Redesdale said, in Jesson v. Wrig Figgins 3. (2), "it is dangerous, where words have a fixed legal effect, to suf

them to be controlled without some clear expression, or neces implication." This principle is applied even to wills; but surely applicable with double force to Acts of Parliament. Where a making body sets itself out to make a law for the community, it mu be taken to use legal terms in a legal sense - unless it say to tl contrary, "unless a contrary intention appears"; and the contrat intention does not "* appear " if it be suspected to exist. Prob this position would be freely accepted; but the difficulty lies, : usual, in the minor premiss, not in the major. The fallacy here may be allowed to use the expression without meaning any offen arises from the assumption that the word "charitable" in

able " in see. 8 (5) cannot be used in the Elizabethan sense. I T have shown that this assumption is wrong. Moreover, e the language of the Act were equally capable of the other interpre tion, it would be our duty, as this is a taxing Act. to accept the co struction which is in favour of the taxpayer (Armytage v. Wilkins (3) ). u

There are, however, two decisions which seem to be worthy special consideration, One is the case of Swinburne vy. Feder Commissioner of Taxation (4), in this Court. That case arose un the Commonwealth Income Tax Assessment Act. which allowe a

deduction from the assessable income of the taxpayer of "g

exceeding five pounds each to public charitable institutions in tralia." The taxpayer had given £1,000 to a technical college whe students paid for admission to the courses. It was held that

broad meaning of " charitable " - the meaning under the Statute of

(1) (1922) 30 C.L.R., at pp. 303-304. (3) (1878) 3 App. Cas., 355. (2) (1820) 2 Bli., 1, at p. 56, (4) (1920) 27 C.LR., 377.

; but the decision was based on a finding of the Court that in

current speech, and is restricted to institutions where the poor or needy are relieved. No such distinctive meaning can be attributed to "charitable purposes"; indeed, the judgment recognizes that expression " charitable purposes" has the broad Elizabethan aning, and that the Courts must apply that meaning unless the text forbid it. A similar distinction between " institution " and "purposes " seems, indeed, to be suggested by sec. 11 (1) of the same Act. For sub-sec. 1 (d) exempts "the income of a religious, scientific, charitable, or public educational institution," whereas 'sub-see. 1 (f) exempts "the income of a fund established by any 'will or instrument of trust for public charitable purposes." There m surely be no doubt that the latter exemption applies to ritable purposes in the broad sense of the Statute of Elizabeth. e other case is that of Inland Revenue Commissioners v. Scott ), which is more complex. As corporations and such bodies do not die, and are not liable to probate or succession duties, an Act of 1885 imposed a duty upon the annual value of property vested in such bodies, but made certain exemptions - sec. 11, sub-sec. 2, of property legally appropriated for the benefit of the public at large, &c., or in any manner expressly prescribed by Act of Parliament ; sub-sec. }, of property legally appropriated "for any charitable purpose, or for promotion of education, literature, science, or the fine arts." Land called the " Intack," near York, was held in trust for the freemen of a ward of the city, and was under the control of pasture- 'masters, who applied the net profit to the benefit of poor freemen ; but not under any Act. It was held by the Court of Appeal that in such a context the words " charitable purpose " could not mean a purpose charitable in the Elizabethan sense. The reason was that the whole of sub-sec, 2 as to property for the benefit of the " public at large * would be wholly unnecessary if " charitable " had the Eliza- bethan sense in sub-sec. 3; and the words " or for the promotion of education, literature, science, or the fine arts" would also be unnecessary. A trust "for the promotion of education" in that

a not apply to the words " public charitable institu- H- C. oF 4.

ais "charitable institution" has a distinctive meaning in CursveRman

general form is charitable under the Act, and the Court would sett a scheme for the public benefit. Lord Herschell, who gave the jud ment of the Court, adhered to what he had said in Commissioner. Special Purposes of the Income Tax v. Pemsel (1), that little weight be attached to the mere fact that specific exemptions were found wh would be covered by the wider general words ; but each statute be considered by itself; and here the exemptions in sub-sec. 2 as tot! " public at large," could not have been inserted ex majori ca But in the Act before us, the words " religious," " scientific," " educational," could obviously have been inserted for greater cau to prevent the boundaries of the exemption from being narrowed by the decisions under the Statute of Elizabeth. There is nothing the Act now under discussion to prevent us from treating the as having been inserted for greater caution so as to prevent a narroy construction. Jt will be seen that I have expressed my opinion on both the poi necessary to be decided in order to answer question 1 of the s case - (1) what is the meaning of "charitable" in sec. 8 (5); (2) if means charitable in the technical sense, are these specific trust charitable in that sense (the sense of the Statute of Elizabeth). 4

should like to adopt the course suggested by the Chief Justi course which has much to commend it, in some respects - and 1 refrain from deciding point 2, especially as we have been told t in February last an originating summons was taken out in the N South Wales Court to have it determined whether the trusts ar charitable in the technical sense. If not, they are void for perpe and apparently the next-of-kin would take the property ordinary wills. But in this will the testator makes a special prov for the case of the specific trusts failing - provides that if they wh or partially fail or be declared by any Court incapable of ts effect, then the trustees are to apply the property " upon trust for such non-sectarian charitable uses purposes or institutions as trustees shall in their absolute and uncontrolled discretion dee upon." The arguments for the next-of-kin would, therefore, h chiefly to attack this gift over as not being charitable in the te i sense, in order to establish an intestacy. On the whole, it see st (1) (1891) A.C, 531.

stands on both points, and to let the answer stand for what it is

he much more difficult question whether these specific trusts are 'comprehended within some non-technical, popular meaning of "charitable," msel's Case (1), "no one as yet has succeeded in defining the popular meaning of the word * charity '."

2. In my opinion, under the gift of the annuity to the widow part of the estate of the testator passes to the widow, and duty is payable it two-thirds rate. In other words, the annuity is subtracted from and diminishes the value of the estate given to the residuary legatees ; and the subtracted part is itself vendible property, part of the total state.

4. In my opinion, reg. 33 is invalid. The Act contemplates the true value for assessment of duty, and rule 33 errs in arbitrarily fixing a four and a half per cent. basis.

5. The true value of the annuity has to be ascertained by appro- ate means. It is not a matter of law to si

sually an actuarial calculation is found necessary.

Ric J. The main argument centred on the meaning of the word "charitable" in sec. 8 (5) of the Estate Duty Assessment Act. In view of what has been already said, it is unnecessary for me to resume the cases discussed. They are familiar enough and have been applied in this Court more than once. There is no rigid rule of construction, and each statute where words occur similar to those in the sub- 'section under review has to be considered by itself. In Swinburne

v. Federal Commissioner of Taaation (2) the result of the relevant

cases was stated to be that, in a statute where the phrase " charitable

'purpose " or its equivalents are used, "' a technical meaning is now the primary, and, therefore, the natural meaning, requiring context to vary it." In sec, 8 (5) of the Estate Duty Assessment Act the words which precede and follow the word " charitable" are not meaning- Tess or unnecessary, and a separate meaning is properly attributable (1) (1891) A.C., at p. 583. (2) (1920) 27 C.L.R., at p. 384. |

as used in sec. 8 (5). As Lord Maenaghten said, in '

me to be my proper course to simply answer question 1 fully as it H.C. or A.

worth, This course, also, relieves me of the necessity of considering CrsrermaN

H.C. or A. to them. It follows, then, that, as " charitable " is not an envelo

rn. containing the other words, there is context which controls t

Cursterman primary meaning and which shows that it is not to be interpret v. FEDERAL

Comtts- the illustrative construction of the word given by my brother Js SIONER OF

Taxation. None, however, of the gifts in the Peter Mitchell Trust comes

in the technical or wide sense attributed to it in the Courts. I

Rich J. that very flexible test, and they clearly do not fall within the o exemptions of the sub-section.

With regard to the terms of the gift over, assuming it falls

decided, it is sufficient to say that the area of selection or " amb

choice " given by the testator would confer upon the trustees a p

2. For the purposes of the Act the value of the part of the es which passes should be ascertained as a determinable annuity as the date of the death of the testator according to ordinary actuari principles (ef. In re Cottrell; Buckland v. Bedingfield (1) ).

4. The regulation is invalid. The value is to be ascertait having regard to all the circumstances, according to ordin ; actuarial principles, and not by a rigid rule universally applical such as the regulation in question, without regard to limitations incidents of the thing to be valued.

Srarke J." The difficulty in this case," to use the words of Buckmaster in Attorney-General for New Zealand v. Brown (2), "Ti in determining the exact values to be given to a series of words " the Estate Duty Assessment Act 1914, No, 22, sec. 8, sub-see. 5, pt viding that estate duty shall not be assessable or payable upon s much of the estates of persons dying after the commencement of th Act "as is devised or bequeathed or passes by gift infer vivos settlement for religious, scientific, charitable or public educati The Peter Mitchell Trust is clearly not for a or a scientific purpose, and the case depends therefore upon the struction placed upon the words "charitable or public educatio purposes." Charitable purposes and charitable trusts are well kno

(1) (1910) 1 Ch., 402, at p. 408. (2) (1917) A.C, at p. 895.

s in English law. In Pemsel's Case (1) Lord Macnaghten 4. ©. oF A. 1923.

ied the objects which in a legal sense fall within the terms arity." "charitable purpose" or "trust." But, as Lord Cuesvermay Herschel pointed out in Scott's Case (2), " each statute must be looked rennnan

to by itself for the purpose of ascertaining its meaning." Exemp- fas sce ions from taxation, granted by this Act, of gifts, &c., for religious, Taxatton.

cientific or public educational purposes, cover a large number of stare J. charities " in the strict legal sense. Does this suggest an intention on the part of the Legislature to again include, for greater caution, in the words " charitable purposes " objects of charity which it had ady provided for by other words ? Or does it suggest that the something that did not embrace"

ition was to provide for ose objects? It may be said that the words "religious" and 'entific'? purposes embrace a great number of objects that are not charitable in the legal sense. But if this be so, then we have the case of a taxing Act, designed to raise money, creating exemptions upon no principle of public policy, or indeed upon any rational nciple whatever. Such exemptions would include not only " any which proceeds from a philanthropic or benevolent motive, and ich is intended to benefit an appreciably important class of fellow-creatures (including, under decided cases, animals), and which will confer the supposed benefit without contravening law or morals" (In re Cranston (3), approved in In re Wedgwood (4) ), but also an indefinite range of objects covered by religious and scientific purposes that are not charitable in the legal sense, and would not ecessarily serve any public purpose. In my opinion, the true ing of the words "charitable purposes" in the statute now before the Court cannot be better put than in the words of Lord Herschel in Pemsel's Case (5). '' I certainly cannot think," says the noble and learned Lord, " that they " - the words "charities" and charitable purposes " - are limited to the relief of wants occasioned lack of pecuniary means. . . . [think . . . that the popular eption of a charitable purpose covers the relief of any form of

ecessity, destitution, or helplessness which excites the compassion or

(4) (1915) 1 Ch., at p. 117. (5) (1891) A.C., at pp. 57

(I) (1891) A.C., at p.

• (2) (1892) 2 Q.B., at p. 165.
• (3) (1898) 1 LR., at p. 446.

CHESTERMAN v. FepERaL Coxnmns- SIONER OF TAXarTIon.

sympathy of men, and so appeals to their benevolence for relief. am I prepared to say that'the relief of what is often termed spiriti destitution or need is excluded from this conception of charity Tested by this standard, the Peter Mitchell Trust is not exemp from taxation under the Estate Duty Assessment Act. Nor,

failed, is the trust for such non-sectarian charitable uses, purpo or institutions as his trustees should decide upon, in any be position, for that trust must be construed in the legal sense of charity and is beyond the sense of the statute.

I entertain some doubt whether the " Peter Mitchell Trust," s¢ far as the gifts to the persons and for the purposes mentioned in #] second schedule of the testator's will, cannot properly be des as a gift for public educational purposes within the meaning of Act. But the essential idea of education is training or teachit The Peter Mitchell Trust lacks, in my opinion, this element. provision is made for training or teaching the proposed reei of his bounty, but prizes are given for those who have already reac! the strange standard of fitness and education propounded by testator.

The other questions in this case should be answered : -

2. Part of the estate of the testator passes to the widow, but it must be ascertained by valuation, and regard must be had to the fa that the annuity is defeasible.

5, The value of the annuity is a question of fact, and should be s determined.

Questions answered thus : - (1) No, (2) Part the estate of the testator equivalent to the va of the annuity. (3) Yes. (4) No. (5) Th value of the annuity should be ascertained as a matter of fact.

Solicitors for the appellants, Fleming, Henderson & Stedman, Albury, by Snowball & Kaufmann.

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