LIV v Commissioner of State Revenue [2015] VSC 604

2 The LIV seeks a declaration that at all material times it was a non-profit organisation having as its dominant purpose a charitable purpose and also seeks a refund of previously paid payroll tax to the Commissioner of State Revenue (Commissioner), to the extent it can do so.

3 The LIV has two proceedings against the Commissioner as outlined below.

4 The LIV wrote to the Commissioner and claimed that wages paid and payable in both 1 July 2008 to 30 June 2012 (the First Period) and 1 July 2012 to 30 June 2013 (the Second Period) were exempt wages pursuant to both the former s 48 of the PT Act in operation from 1 July 2008 and to 30 June 2012 and the current s 48, in operation from 1 July 2012. On 25 November 2013 the Commissioner refused the LIV's exemption claim. An objection was lodged by the LIV on 24 January 2014 under Part 10 of the Tax Administration Act 1997 (Vic) (TA Act) against the Commissioner's decision of 25 November 2013 (the Objection Proceeding). On 28 March 2014 the Commissioner disallowed the plaintiff's objection, and on 2 April 2014 the LIV requested the Commissioner to treat the objection as an appeal, and have that proceeding set down in this Court as an appeal under s 106 of the TA Act. The Commissioner did so on 8 April 2014 under Part 10 of the TA Act.

Refund and Declaratory Proceeding (S CI 2013 6641)

5 In addition to the Objection Proceeding, on 12 July 2013 the LIV initiated a proceeding under Part 4 of the TA Act for the refund of payroll tax paid by the LIV under the PT Act for the whole of the period 1 July 2008 to 30 June 2013 (Refund Proceeding).

6 The LIV claims that pursuant to s 19 of the TA Act, it is entitled to a refund of overpaid payroll tax (Overpaid Tax), in the sum of $2,514,414.48. The LIV asserts that the Overpaid Tax was paid on wages which were exempt from payroll tax under the current s 48(1)(a)(iii) of the PT Act. The LIV brings this proceeding pursuant to the provisions of s 21(1) of the TA Act for recovery of the Overpaid Tax.

7 The Commissioner raises certain procedural issues directed to persuading the Court that for the First Period, the Objection Proceeding was not properly before the Court, and further that for the Second Period only the Objection Proceeding, and not the Refund Proceeding was properly before the Court.

Statutory framework - Payroll Tax Act 2007

Payroll Tax Act 2007 (former section 48)

8 From 1 July 2008 until 1 July 2012 s 48 of the PT Act ('former s 48') provided that:

(1) Subject to subsection (2), wages are exempt wages if they are paid or payable by any of the following -

...

(c) a non-profit organisation having as its sole or dominant purpose a charitable, benevolent, philanthropic or patriotic purpose (but not including a school, an educational institution, an educational company or an instrumentality of the State).

(a) for work of a kind ordinarily performed in connection with the religious, charitable, benevolent, philanthropic or patriotic purposes of the institution or body; and

(b) to a person engaged exclusively in that kind of work.

Payroll Tax Act 2007 (current section 48)

9 From 1 July 2012 s 48 of the PT Act ('current s 48') has provided that:

(1) Wages are exempt wages if the Commissioner is satisfied that the wages are paid or payable -

(a) by any of the following-

...

(iii) a non-profit organisation having as its whole or dominant purpose a charitable, benevolent, philanthropic or patriotic purpose (but not including a school, an educational institution, an educational company or an instrumentality of the State); and

(b) to a person engaged exclusively in work of a religious, charitable, benevolent, philanthropic or patriotic nature for the institution or non-profit organisation.

10 The LIV Objection Proceeding and the LIV Refund Proceeding are to be determined in this proceeding.

11 The LIV claims that the former s 48(1) and (2) applies to wages paid by the LIV during the First Period.

12 The LIV claims that the current s 48(1) and (2) applies to wages paid by the LIV during the Second Period.

13 The Commissioner accepts that during the period 1 July 2008 to 30 June 2013 (the Relevant Period), the LIV was a non-profit organisation.[1]

14 The Commissioner accepts that the maintenance and sustenance of the law is a charitable purpose.[2]

15 Further, the parties jointly submitted that: [3]

(a) the response to the objection of the LIV was contained in a decision of the Commissioner dated 28 March 2014 (the Determination). That decision is contained at Exhibit MBY-46 to the affidavit of Michael Brett Young sworn 11 April 2014;

(b) in Annexure A to the Determination styled 'Employees who satisfy the second limb of s 48 (1) of the Act', there are included 31 staff in the LlV Professional Services Department, whose role is specified to be 'provides regulatory services and reflects the functions and powers delegated by the LSC and LSB under the LPA'; and

(c) further, for the year 2012/13, the LIV contends, and the Commissioner does not dispute, that if the Court were to conclude that s 48(1)(a) of the PT Act is satisfied, the Court should then find, at a minimum, that each of the employees set out in Annexure A satisfies the terms of s 48(1)(b) of the PT Act.

16 The 2012 Constitution of the LIV[4] is accepted by the parties as representative of the LIV's Constitution, notwithstanding that the LIV's Constitution has been altered from time to time in the relevant tax years.

17 The financial evidence adduced by the LIV in relation to the Financial Year 2012/13 is accepted by the parties as representative of the LIV's position in respect of the same matters in each other relevant year.[5]

18 On 12 July 2013, the LIV wrote to the Commissioner and claimed that the wages paid or payable by it throughout the First Period and the Second Period were exempt wages pursuant to the former s 48 and, also pursuant to the current s 48, respectively (the Exemption Claim). Thereafter:

(a) on 25 November 2013, the Commissioner refused the Exemption Claim deciding that the LIV was not a charitable organisation for the purposes of s 48(1)(a)(iii) of the PT Act;

(b) on 24 January 2014, the LIV objected to the Commissioner's refusal. The LIV's objection was advanced on a number of bases, including that the Commissioner should allow the LIV's Exemption Claim because the LIV was and continues to be a non-profit organisation having as its whole or dominant purpose, a charitable purpose. The LIV also argued that from 1 July 2012 wages to employees were paid, or payable, to persons engaged exclusively in work of a charitable nature (current s 48(2) of the PT Act) and that prior to 1 July 2012 wages to employees were paid or payable to persons engaged exclusively in work of a kind ordinarily performed in connection with the charitable purpose of the LIV (former s 48(2) of the PT Act);

(c) on 28 March 2014, the Commissioner made a Determination disallowing the LIV's objection. By that Determination the Commissioner communicated his decision that the LIV was not an organisation the dominant purpose of which is a charitable purpose. The Commissioner also concluded that the LIV's objection was not a valid objection in relation to that part of its claim which related to the period prior to 1 July 2012, because s 48 of the PT Act did not empower the Commissioner to make a decision prior to that date. Additionally, the Commissioner determined that if the LIV was able to satisfy the first limb in s 48(1) of the PT Act, the Commissioner accepted that certain employees of the LIV, set out in Annexure A to the Commissioner's Determination, would satisfy the requirements of s 48(1)(b) of the PT Act after 1 July 2012;

(d) on 2 April 2014, the LIV requested that the Commissioner treat the objection as an appeal and cause it to be set down for hearing at the next sitting of the Supreme Court pursuant to s 106 under Part 10 of the TA Act, and the Commissioner did so on 8 April 2014;[6]

(e) the Commissioner by letter dated 8 April 2014 filed in this Court and thereby referred the LIV's Objection to the Commissioner's Determination of 28 March 2014, to be heard and determined by this Court, pursuant to Rule 7.05 and Rule 7.06 of the Supreme Court (Miscellaneous Civil Proceedings) Rules 2008; and

(f) no application has been made by the LIV in these proceedings for an order granting leave, or otherwise enabling the LIV's grounds of appeal in the Objection Proceeding, to be enlarged pursuant to s 109 of the TA Act.

19 On 12 July 2013, in addition to the Exemption Claim, the LIV lodged an application for a refund in the form approved by the Commissioner pursuant to s 19 of the TA Act (the Refund Application) under Part 4 of the TA Act.

20 The LIV submits that the Commissioner did not take any of the actions referred to in s 21(1)(b) of the TA Act within the period of three months after the Refund Application was lodged.

21 On 23 December 2013, within three months after the end of the period referred to in the preceding paragraph, the LIV commenced proceedings for a declaration including that it was a non-profit organisation and it had a dominant purpose that is a charitable purpose and also seeking the recovery of the amount of a refund of $2,514,414.48 pursuant to s 21(1) of the TA Act.[7]

22 The Commissioner contends that, for the First Period, only the Refund Proceeding, and not the Objection Proceeding, is properly before the Court.

23 The Commissioner argues that the Objection Proceeding is not properly before the Court because, in the First Period, the Commissioner made no "decision" under the PT Act in respect of which the LIV was entitled to pursue an objection.

(1) A taxpayer may lodge a written objection with the Commissioner if the taxpayer is dissatisfied with -

...

(d) a decision of the Commissioner under the Payroll Tax Act 2007.

(1A) A reference in subsection (1)(d) to a decision does not include a refusal by the Commissioner to refund tax paid or purportedly paid by the taxpayer.

(2) No court or administrative review body, including the Tribunal, has jurisdiction or power to consider any question concerning an assessment or decision referred to in subsection (1), except as provided by this Part.

25 The Commissioner points out that the payroll tax up until 12 July 2013 had been paid by the LIV without the Commissioner being required to make a decision upon the applicability of s 48 of the PT Act to the LIV.

(a) the LIV's contention that the Commissioner's refusal of a refund constitutes a "decision" is wrong. Section 96(1A) of the TA Act provides that "a decision does not include a refusal by the Commissioner to refund tax paid or purportedly paid by the taxpayer";

(b) during the First Period there was no "assessment" issued to the LIV; and

(c) the Commissioner had no power to make a decision under s 48 of PT Act as in force during that First Period as to the status of the LIV. It follows that, during the First Period, the Commissioner's view as to the status of the LIV was not a "decision".

27 The Commissioner contends that for the Second Period, only the Objection Proceeding, and not the Refund Proceeding, is properly before the Court.

28 In the Second Period, s 48 of the PT Act empowered the Commissioner to make a decision about the status of the LIV and he did so by his decision of 25 November 2013.

29 Further, by reason of s 96(2) of the TA Act, the Court only has jurisdiction pursuant to Part 10 of the TA Act.

No court or administrative review body, including the Tribunal, has jurisdiction or power to consider any question concerning an assessment or decision referred to in subsection (1), except as provided by this part.

31 The Commissioner submits that although the difference between the two proceedings makes no difference in relation to the first key issue identified above, namely, whether the LIV was a non-profit organisation having as its dominant purpose a charitable purpose, it is relevant, on the Commissioner's submission, to the second key issue identified above, namely, whether each of the LIV's employees are engaged in work of an exclusively charitable nature.

32 The Commissioner argues that the difference between the proceedings is relevant because, firstly, in the Objection Proceeding the LIV must identify reviewable legal error in the Commissioner's Determination,[8] but the LIV has not purported to do so nor has it done so. Secondly, the Commissioner argues that if in the Objection Proceeding the LIV fails to show that all of its employees are engaged in work of an exclusively charitable nature then it fails on the objection it has made.

33 However, by its oral submissions the Commissioner clarified that it was not the Commissioner's submission that the LIV should be taken as falling between stools, as between the Refund Proceeding and the Objection Proceeding.[9] The Commissioner submits that the Court should however determine the first four of the five years on the Refund Proceeding, because for the purposes of the TA Act, in those four years there was no relevant "decision" by the Commissioner.[10] The Commissioner conceded that such declaratory relief may be granted under s 21 of the TA Act.

34 The Commissioner also clarified in submissions that it does not take any point as to process or timing in relation to the LIV's declaration and refund claim in respect of the first relevant four years.[11]

35 The Commissioner submits that in the last relevant tax year, after commencement of the current PT Act providing for the need for the Commissioner's satisfaction, there has been a relevant decision under that Act, and therefore the process of objection, determination and referral to the Court, is the appropriate process.[12]

36 Ultimately, neither the Commissioner nor the LIV sought in their cases to specifically address the Commissioner's Determination of 28 March 2014[13] and the LIV's Objection of 24 January 2014[14] so as to identify error in respect of the application of s 48(2) of the PT Act, or the incorrect application of that section requiring the relevant persons to be exclusively engaged in charitable work.

37 The LIV submits that by its letter dated 12 July 2013, and the attached refund form, it applied for a refund of payroll tax, pursuant to the exemption provided for by s 48 of the PT Act. That application was applicable to the five years from 1 July 2008 to 30 June 2013.

38 In respect of the First Period, the LIV submits that the Commissioner's "refusal"[15] to make a refund, or failure to act in relation to s 21(1)(b) of the TA Act, constitutes a "decision" of the Commissioner under the PT Act for the purposes of s 96(1)(d) of the TA Act.

39 The LIV submits that the relevant "decision" for the purposes of the Objection Proceeding is the decision of the Commissioner not to do any of the matters referred to in s 21(1)(b) of the TA Act:

(a) a taxpayer has lodged an application for the refund of an amount in accordance with section 19; and

(b) within the period of 3 months after the application was lodged -

(A) refunded the amount; or

(B) applied the amount in accordance with section 20(d)(i); or

(C) refunded part of the amount and applied the remainder in accordance with section 20(d)(i); or

(ii) the Commissioner has, in writing given to the taxpayer within that period, refused to make a refund -

the taxpayer, within 3 months after the end of that period or after that refusal, whichever first occurs, may bring proceedings for the recovery of the amount or, if the Commissioner has refunded or applied part, the remainder of the amount.

40 In this regard, the LIV notes that in Drake Personnel Ltd v Commissioner of State Revenue[16] Phillips JA, with whom Ormiston and Buchanan JJA agreed, said:

... As the judge herself observed [at first instance], in the Taxation Administration Act 1997 (which came into force on 1 July 1997) s 96 permits an objection to "a decision of the Commissioner under the Pay-roll Tax Act 1971" and such a description would appear to fit a decision of the commissioner, even under the original s 19, not to grant a refund.[17]

41 The LIV also seeks to rely on Central Bayside General Practice Association Ltd v Commissioner of State Revenue,[18] where the litigation proceeded from VCAT to the High Court on the basis that the question of whether the appellant was a "charitable body" for the purposes of s 10(1)(bb) of the Pay-roll Tax Act 1971 (Vic) was an appealable decision. At first instance, Nettle J held that the question of whether the appellant was a charitable body involved a question of law.[19]

42 Further, the LIV contends that the Commissioner's reliance on Conte[20] is misplaced. The LIV submits that Conte was impliedly overruled by the High Court in Tasty Chicks Pty Ltd v Chief Commissioner of State Revenue (NSW).[21] The LIV's submission is that, under the current state of the law, the dichotomy between the powers of the Supreme Court and the Tribunal has been abrogated,[22] and it is not necessary for the LIV to show that the Commissioner has erred on the material before the Commissioner or to show that the exercise of the discretion by the Commissioner was vitiated by error of law of the kind referred to in Avon Downs Pty Ltd v Federal Commissioner of Taxation.[23]

43 The LIV submits therefore that it is entitled to invoke the objection and review/appeal process provided for in Part 10 of the TA Act.

44 The LIV submits in relation to the Commissioner's position that the objection process is not open to the LIV under the former s 48,[24] that if the position asserted by the Commissioner is correct then it is particularly appropriate for the LIV to bring proceedings in relation to the First Period (which it has done) seeking:

(a) a declaration that wages paid by it during that period were exempt from payroll tax; and

(b) recovery of the Overpaid Tax pursuant to s 21(1) of the TA Act.

The LIV submits that this is one reason why it has instituted the Refund Proceeding.

45 The second reason the LIV mentions in relation to why it has instituted the Refund Proceeding is because it seeks a refund under Part 4 of the TA Act of payroll tax paid throughout the Second Period, and beyond.

46 In relation to the Second Period, the LIV submits that the current s 48 requires the Commissioner to make a decision[25] about whether the wages paid by the LIV are exempt wages pursuant to that section.

47 The LIV has applied to the Commissioner for a decision that the wages paid by it throughout the Second Period, and also in effect from 1 July 2013 onwards, are exempt wages. That application was rejected by the Commissioner and the LIV has in turn also objected to the Commissioner's decision in that regard, and the Commissioner has disallowed that objection.

48 The LIV has appealed in relation to the last mentioned decision in accordance with s 106 of the TA Act.[26]

49 The LIV submits that if successful in relation to its appeal, it would be entitled to a refund under s 115(2) of the TA Act.

50 I am not satisfied that the Commissioner's "decision" of 25 November 2013 rejecting the LIV's claim for an exemption from payroll tax pursuant to the former s 48, is in the nature of a decision or an assessment, in respect of the Exemption Claim in respect of the First Period.

51 In the Commissioner's letter of 25 November 2013 communicating that decision he clearly states that, in his view, any future objection to that decision will only be a valid objection in relation to the LIV's payroll tax obligations from 1 July 2012 because the PT Act did not establish a right to object to a "private ruling" prior to 1 July 2012. The Commissioner thereby rejected the notion that his communication of 25 November 2013 is in the nature of a decision for the purposes of the Former Period.

52 The current s 48(1), in operation after 1 July 2012, provides for wages to be exempt from payroll tax, "...if the Commissioner is satisfied..." as to certain matters. The former s 48 did not provide that the relevant exemption would be effective upon the Commissioner's satisfaction or decision.

53 Part of the Commissioner's contention appears to be that after 1 July 2012 a decision of the Commissioner pursuant to s 48(1), is able to be the subject of an objection by the taxpayer pursuant to s 96 of the TA Act, however, any question there arising can only be considered pursuant to Part 10 of the TA Act. Part 4 of the TA Act is not relevant. Prior to 1 July 2012, there was no relevant decision or assessment which the Commissioner was empowered to make under s 48, and therefore there could be no effective objection by the LIV which could in turn trigger an entitlement on the part of the LIV to have any question concerning its entitlement to an exemption from payroll tax, reviewed under Part 10 of the TA Act.

54 I am for the above reasons in agreement with the Commissioner's submission in relation to the First Period. There is, in my view, no relevant decision or assessment made by the Commissioner which would entitle the LIV to pursue a Part 10 review, and ultimately to have any Commissioner's determination dealt with by the Court.

55 It follows that because in relation to the First Period the Commissioner has made no decision or assessment, and because the PT Act makes no provision for such a decision under the former s 48 of that Act, the LIV's purported "objection" dated 24 January 2014 is not a valid objection under s 96(1) of the TA Act insofar as it relates to the First Period.

56 For the same reasons I reject the LIV's submission that the Commissioner's "decision" of 25 November 2013, is relevant to the LIV's Exemption Claim concerning the First Period.

57 I also reject that part of the LIV's submission which argues that the Commissioner's conduct in relation to the LIV's payroll tax Exemption Claim, as it related to the First Period, amounted to a "refusal" to make a refund which constituted a "decision" under the PT Act for the purposes of s 96 of the TA Act. In my view s 96(1A) of the TA Act defeats this argument in the clearest terms.

58 I consider that in the First Period to which the former s 48 applied the Commissioner was not empowered to make a decision under s 48, and therefore it cannot be said that his view of the status of the LIV was in any respect a relevant decision.

59 At all events, as the LIV points out in its submissions, it has issued the Refund Proceeding seeking a declaration, including in respect of the First Period (as well as in relation to the Second Period), that wages paid by it are exempt from payroll tax, and made a claim for the refund of any overpaid taxes in that period.

60 In relation to the First Period the Commissioner, as already noted, by memorandum dated 2 September 2014 agrees that each of the 31 staff of the LIV Professional Services Department are employees who satisfy the requirements of s 48(1)(b) of the PT Act. The Commissioner also submits that the procedural issues he raises have no impact on the question of whether the LIV is a non-profit organisation having as its dominant purpose, a charitable purpose.[27]

61 In this context the Commissioner submits that because of the prescribed process for the consideration and determination of questions concerning the Commissioner's decisions, provided for in Part 10 of the TA Act, the questions in relation to a claimed s 48(1)(a) and (b) exemption to payroll tax payable by the LIV after 1 July 2012 must be decided in the Objection Proceeding, and furthermore the Commissioner submits that in those proceedings the LIV must identify reviewable error in the Commissioner's Determination. The Commissioner cites Conte for the proposition that in this context reviewable error is required.

62 In Tasty Chicks the Chief Commissioner had grouped taxpayers for the purposes of assessing payroll tax. Under Part 10 of the Taxation Administration Act 1996 (NSW) the taxpayers objected to the assessment on the basis that they should not have been grouped. The Commissioner disallowed the objections. Taxpayers dissatisfied with the decision on their objection could apply for a 'review' of that decision by the Supreme Court of New South Wales (s 97(1)) or by the Administrative Decisions Tribunal (s 96(1)). In Tasty Chicks the taxpayers had sought 'review' by the Supreme Court. The High Court held that the effect of the Taxation Administration Act 1996 (NSW) was that the Supreme Court had the same powers on review as the Administrative Decisions Tribunal, and that the Supreme Court Act 1970 (NSW) also conferred additional powers on the Supreme Court when conducting a review under s 97(1). The effect on a 'review' was that the Supreme Court was empowered, just as the Administrative Decisions Tribunal was, to set aside the Commissioner's decision disallowing the taxpayers' objection, allow the objection, revoke the initial assessments and require reassessments by the Commissioner. Further, it was not necessary on review by the Supreme Court for the taxpayers to show that the Commissioner had erred on the materials before him/her or that his/her exercise of discretion was vitiated by error of the kind referred to in Avon Downs.[28]

63 In Mould v Commissioner of State Revenue[29], Ginnane J considered an appeal reaching the court pursuant to s 106 (and the following provisions of the TA Act), in relation to a determination by the Commissioner under s 67 of the Land Tax Act 2005 (Vic). His Honour said the following on the issues concerning the nature of the appeal brought by the taxpayer under s 106 of the TA Act, in respect of a determination under s 67 of the Land Tax Act 2005 (Vic):

1. In my opinion, the nature of the appeal provided will often be determined, and is to be determined in this instance, by consideration of the character of the decision or judgment against which the appeal is brought. The opinion that I express as to the nature of this appeal is directed only to a decision of the character made by the Commissioner in this determination. Section 106 of the Taxation Administration Act 1997 (Vic) may give a taxpayer a different appeal right in respect of a different determination by the Commissioner. In the same way, an appeal to the Court of Appeal will be more limited if made against a discretionary judgment than against a non-discretionary judgment, although both appeals are brought under the same statutory provision.
2. A number of authorities to which the Commissioner referred were appeals against a decision maker's formation of an opinion or a conclusion that the decision maker was satisfied of prescribed matters. Such decisions can only be the subject of judicial review in limited circumstances. Avon Downs was such a case. The statute there provided that no loss incurred by a company in any year prior to the year of income should be an allowable deduction unless the company satisfied the Commissioner of matters relating to its shareholding in the year of income and also in the year in which the loss was incurred. The legislation provided for a right of appeal to the Court as well as a right to an appeal before a Taxation Board of Review. As is the case with the Taxation Administration Act 1997 (Vic), the taxpayer could add further objections and the taxpayer bore the onus of proof.

1. In my opinion, neither the decision in Tasty Chicks nor that in Avon Downs is determinative of the nature of the right of appeal given by s 106 against the Commissioner's determination in this case.
2. I consider that s 106, in this instance, gives the appellant an appeal to the Supreme Court with a right to a rehearing de novo including a right to lead further evidence, although limited to the grounds of the objection, unless leave is granted to add to them.
3. This is not a case like Avon Downs where the Commissioner has to be satisfied of particular matters. Rather, the Commissioner, in the first instance, had to issue an assessment of land tax by applying the statute to the facts relating to the land and the owner. In determining the appellant's objection he was performing that same function.

1. In this case, there is no state of mind or discretion involved in the Commissioner's determination. The question is whether the taxpayer had established the matters entitling him to claim the exemption. Whether land tax is payable depends upon the applicability of statutory criteria, which do not involve any individual satisfaction or exercise of discretion on the part of the Commissioner.
2. The other matter that has influenced my conclusion that s 106 provides an appeal that is a rehearing de novo is that the appeal is from an administrative decision maker to the Court sitting in its original jurisdiction. Such appeals are often construed as appeals de novo. This is in part because the appellant has not previously had a hearing. That is the position in this case. The Commissioner made a determination after a consideration of written material rather than any dialogue or exchange of views with the taxpayer about all the matters that might have influenced the Commissioner. The appellant had no right to a hearing or to call witnesses before the Commissioner. In such circumstances, an administrative decision maker may well take into account matters upon which the taxpayer has not made submissions. In the present case, there was little, if any, discussion between the Commissioner and the taxpayer about whether the taxpayer carried on a business of renting properties.
3. I will therefore proceed to determine this appeal on the basis that is requires a de novo determination based on the evidence and material that is before me, which includes the documents that were before the Commissioner together with the affidavits and oral evidence of Mr Mould. The appeal is limited to the grounds of objection but they include ground 7 that primary production was the sole business of the Trust.

64 In Mould, Ginnane J concluded that reviewable error was not required. However, in Mould, his Honour did not consider that he was dealing with a case where the Commissioner's decision hinged upon his satisfaction as to particular matters. Ginnane J suggested the result could be different where there is a state of mind or discretion involved in the Commissioner's determination.[30]

65 In my view the determination to be made by the Commissioner, pursuant to s 48(1) is not in the nature of the exercise of a discretion, but by contrast involves the Commissioner making a decision likely, as in this case, to involve questions of law and questions of fact.

Conclusion on relevance and form of review in the circumstances

66 As a result, however, of my ultimate decision in this matter that the LIV has not established that it comes within s 48(1) of the PT Act, it is unnecessary for me to decide issues concerning the nature of the LIV's appeal to this Court under Pt 10 of the TA Act.

67 However, because these matters were argued, and in case I am wrong in relation to my ultimate decision in this proceeding, I find, on the particular facts and circumstances of this Objection Proceeding, that Pt 10 of the TA Act, in particular ss 106, 109, 100 and 112, do not require identification of reviewable error in the present circumstances for the following reasons:

(a) the word 'appeal' is not defined in s 3 of the TA Act and the appeal under the relevant provisions comes to the court in relation to a determination by the Commissioner in respect of which the taxpayer has not had the opportunity of a hearing before now;

(b) section 106 of the TA Act provides that "the taxpayer, in writing, may request the Commissioner... to treat the objection as an appeal" if the taxpayer is dissatisfied with the Commissioner's determination of the taxpayer's objection. There appears to be no obvious basis upon which to construe s 106 of the TA Act as being intended to limit an appeal thereunder to other than the whole of the objection that was before the Commissioner. Every aspect of that objection is now the subject of an appeal and not just limited parts of the decision exhibiting reviewable error;

(c) the only express delimitation in relation to the appeal under Pt 10 is by s 109 of the TA Act which confines the review/appeal to the grounds of the objection, and limits the Commissioner's case to the grounds on which the objection was disallowed, unless the Court/Tribunal otherwise orders;

(d) although in Tasty Chicks the court was concerned with the NSW legislation and a 'review' to the Supreme Court, the majority appears to indicate that in these circumstances 'review' and 'appeal' are interchangeable;[31]

(e) further, the Court noted that "an 'appeal' from an administrative decision to a Court is a creature of statute and it confers original, not appellate jurisdiction";[32]

(f) the Commissioner also submits that the Objection Proceeding (in relation to the Second Period) is one in which the LIV must show that all of its employees are engaged in work of an exclusively charitable nature, and that otherwise the LIV has failed on the objection it has made. The Commissioner submits that the LIV has called no evidence to establish that all its employees were so engaged;[33]

(g) the LIV in substance concedes that it has not sought to prove, in relation to the Second Period, that all its employees were exclusively engaged in work of a charitable nature.[34] The LIV's response is to assert that it is a matter of characterisation not proof, and that it argues that it is for the principal overall purpose that all employees pursue their general activities;

(h) I also observe that at trial both parties approached the hearing in a manner wholly consistent with it being a normal trial of the Refund Proceeding claims by way of a rehearing de novo of the issues raised by the Objection Proceedings. At trial this included the filing of extensive evidence, the LIV adducing additional evidence in chief, and extensive cross-examination;

(i) the above matters suggest that the review/appeal is effectively a rehearing de novo, restricted to the grounds of the objection and the grounds for disallowance, unless otherwise ordered; and

(j) In this regard, as Ginnane J considered of significance in Mould, I also regard the fact that the LIV did not have the opportunity to receive any form of hearing in respect of its objection, before the Commissioner, makes it more likely that the appeal before this Court pursuant to s 109 of the TA Act, as was the position in the particular case before his Honour, is a rehearing de novo on the merits.

68 At all events the Commissioner concedes that the Refund Proceedings is properly before the Court in relation to the First Period.[35]

69 Further, as already mentioned the Commissioner has acknowledged by its submissions that in respect of the procedural issues it raises, the Commissioner does not argue that the LIV "falls between stools".[36] I have taken the above submission by the Commissioner to convey that it does not argue that were the LIV to succeed in satisfying the requirements of s 48(1)(a) of the PT Act, and the exemption in either the former s 48 or the current s 48, it would have a process before the court which:

(a) by reason of the Refund Proceeding would enable it to obtain a declaration as to its charitable status under s 48(1)(a) of the PT Act for the First Period;

(b) the declaration referred to in (i) above in respect of s 48(1)(a) (in the terms sought by the LIV namely that it had a dominant purpose, that is a charitable purpose), would render that declaration effective to ensure that the LIV's charitable status was established also pursuant to s 48(1)(a) of the current PT Act;

(c) were the LIV to be successful on its primary argument under s 48(1)(a), then, in the First Period, because the Commissioner has made a concession in relation to the wages which came within s 48(1)(b), the LIV would satisfy both limbs of s 48(1) in the First Period;

(d) were the LIV to be successful on its primary argument under s 48(1)(a) in relation to the Second Period, either as a result of declarations as to its charitable status in the First Period pursuant to the Refund Proceeding, or pursuant to the Objection Proceeding, the LIV would still need to establish that in the Second Period, it has satisfied s 48(1)(b), in relation to wages. In that regard the Commissioner argues that the LIV has not adduced any evidence to demonstrate that the Commissioner's determination in relation to wages paid to the LIV employees in the Second Period is in error.

70 Further, in my view the procedural argument ultimately falls away because:

(a) of my ultimate findings herein that the LIV has not established that it comes within s 48(1)(a) of the PT Act, for the reasons stated below;

(b) in the Second Period the LIV's case is that all its employees should be found to be engaged in charitable work because all its employees were either engaged in its charitable work or were working on activities which were ancillary to its charitable work, and directed to ensuring its charitable work could be undertaken;

(c) the LIV does not, however, seek to prove that in the Second Period, any specific wages were paid, or payable, to persons engaged exclusively in work of a charitable nature;

(d) for the reasons stated below, I find that the LIV's employees were not all engaged directly or indirectly in the LIV'S charitable work; and

(e) for the reasons stated below, I find that not all LIV employees were engaged exclusively in work of a charitable nature.

71 Although as I have already noted, it is ultimately not necessary for me to decide the procedural question raised by the Commissioner in connection with the Objection Proceeding and the Refund Proceeding, I have however taken the view that I should address the procedural issues, as I have done above, in case I am wrong about the primary substantive issues dealt with below.

72 Section 6 of the PT Act imposes payroll tax on all "taxable wages". The employer is liable to pay payroll tax under s 7, in an amount ascertained by reference to schedules to the PT Act per s 8. "Taxable wages" are defined in s 10 and s 11 of the PT Act, in part, as "wages, other than exempt wages, that are paid or payable by an employer for services performed" in certain circumstances.

73 Part 4 of the PT Act contains provisions that define the scope of "exempt wages". Section 48 enacts an exemption for non-profit organisations.

74 In the periods covered by these proceedings, s 48 of the PT Act took two forms.

75 In the First Period, the former s 48 provided the basis of an exemption from payroll tax. That section has been set out above.

76 The former s 48 was amended by s 3 of the State Taxation Acts Further Amendment Act 2011 (Vic), with effect from 1 July 2012. Of that amendment, the explanatory memorandum stated:[37]

The High Court decision in Commissioner v Word Investments Limited[38] has expanded the common law definition of charitable organisation to include organisations that conduct predominantly commercial activities to fund their charitable objects or donate their profits to another charity. This, in turn, expanded the scope of the exemption available for wages paid or payable by charitable organisations.

The new provision restores the long-standing policy position that wages paid or payable to employees engaged in the commercial activities of a charity that are unrelated to its charitable purposes are not exempt from payroll tax. The amendment ensures that only wages paid or payable to employees engaged in exclusively charitable activities are exempt. While the High Court decision relates to a charitable purpose, it is intended that the "exclusive" criterion also applies to religious, benevolent, philanthropic or patriotic purposes referred to in section 48 of the Payroll Tax Act 2007.

This will place non-profit organisations that undertake commercial activities on the same level playing field as commercial enterprises, which is consistent with the principle of competitive neutrality.

77 Secondly, in the period on and from 1 July 2012, current s 48 provided for an exemption to payroll tax, but did so in terms which altered the former s 48 as highlighted below:

(1) Wages are exempt wages if the Commissioner is satisfied that the wages are paid or payable-

(iii) a non-profit organisation having as its sole whole or dominant purpose a charitable, benevolent, philanthropic or patriotic purpose (but not including a school, an educational institution, an educational company or an instrumentality of the State); and

(b) to a person engaged exclusively in work of a religious, charitable, benevolent, philanthropic or patriotic nature for the institution or non-profit organisation.

78 The LIV submits that during the Relevant Period its dominant purpose was a charitable purpose under s 48 of the PT Act.

79 The LIV submits that its dominant purpose was to promote the development of the law and the legal profession for the benefit of the public.[39]

80 The LIV contends that during the Relevant Period the LIV undertook a range of activities to achieve its objects including:

(a) advocacy-related activities - including the development of legal policy and the provision of legal practice support to members, as well as advocating for access to justice including reforming civil justice, funding legal aid, promoting appropriate dispute resolution, reforming tort law and accessing interpreters in civil matters;

(b) referral services - including operation of a pro bono referral service, the LIV Legal Assistance Service administered by the Public Interest Law Clearing House, and the Legal Referral Service;

(c) education and professional development - including making Continuing Professional Development rules, practical legal training in conjunction with the College of Law, and managing and coordinating a Court Education Program at the Supreme and County Courts;

(d) publications - including publishing the Law Institute Journal;

(e) delegated functions - including functions delegated to the LIV by the Legal Services Board (LSB) and the Legal Services Commissioner (LSC);

(f) information and practice resources - including operating a specialist law bookshop, a costing service, the Mental Health and the Legal Profession project and the LIV library. The LIV ethics department also provides confidential advice, summaries of recent case law, presentations on ethical principles and solutions to practical problems faced by the legal profession; and

(g) marketing - including providing strategic direction to the LIV's business, and developing, presenting and delivering the LIV's websites and electronic communications.

81 The LIV asserts that during the Relevant Period its dominant purpose was to promote the development of the law and the legal profession for the benefit of the public. It submits that this purpose is a charitable purpose under s 48 of the PT Act, and that any benefits to LIV members were an incidental, though an important and necessary consequence of the LIV's pursuit of the development of the law and the legal profession.

82 The LIV argues that during the Relevant Period all its staff members were involved in work of a charitable nature, on the basis that all of the activities of the LIV were related to its charitable purpose of promoting the development of the law and the legal profession.

83 Further, the LIV argues that to the extent its staff were involved in commercial activities, those employees were involved in activities of a commercial nature which were undertaken in furtherance of the charitable purpose of the LIV.

84 The LIV also argues that further or alternatively to the above arguments, to the extent that the LIV staff were involved in any activities which were not in the nature of the pursuit of the said charitable purpose, such activities were purely incidental to the LIV's dominant charitable purpose.

85 The Commissioner pleads that the LIV's objects and stated activities included:

(c) undertaking the duties of a Recognised Professional Association ("RPA") as defined by the Legal Practice Act 1996/Legal Profession Act 2004;

(d) focusing on member retention, growth and representation;

(e) focusing on revenue generation from key income producing areas, including membership subscriptions and activities and bookshop sales and commissions; and

(f) focusing on expenditure attributable to the provision of membership services.[40]

86 The Commissioner also pleads as significant that the LIV's purposes include its role as leader and innovator of the legal profession; to support, inform and educate its members and to raise the profile and standing of the legal profession and to advocate justice for all.

87 Before assessing the strength of the LIV's submissions, it is necessary to determine the meaning of the expressions "dominant purpose" and "charitable purpose" as employed by s 48.

88 The LIV submits that the meaning of "dominant purpose" has been held by the High Court to be the "purpose which was the ruling, prevailing, or most influential purpose".[41] In the context of legal professional privilege, a "'dominant purpose' is one that predominates over other purposes; it is the prevailing or paramount purpose".[42]

89 The Commissioner argues for an interpretation of "dominant purpose" that conforms with the definition as it is applied to charitable institutions.

90 For an institution to be a "charitable institution" it must only have charitable objects.[43] An organisation with both charitable and non-charitable purposes is treated in law as non-charitable.[44] However, where the non-charitable purposes are merely incidental or ancillary to the main charitable purpose, the organisation is a "charitable institution".[45]

91 Those propositions were stated by Windeyer J in Stratton v Simpson:[46]

A gift to an institution that has several objects or purposes, some charitable some not, one or more of which it can lawfully pursue independently of others, is not a gift to charity. It does not become charitable simply because one of the objects, being charitable, is called the main object of the institution.

...

when the question is whether any institution is a charitable institution, the test lies in ascertaining what is its main object.

In Keren Kayemath Le Jisroel Ltd v Inland Revenue Commissioners, Lord Tomlin said:

"I well appreciate the argument which says that if you once find that the main object is charitable you cannot destroy the charitable character of the main object, because the ancillary powers, which are incidental to it, are, some of them, in themselves, not charitable."

And in this Court, Dixon CJ, McTiernan, Williams and Fullagar JJ said in Thistlethwayte's Case:

"An institution is a charitable institution if its main purpose is charitable although it may have other purposes which are merely concomitant and incidental to that purpose."

92 In the same case, Windeyer J expanded on what is meant by the "main object" test:[47]

The phrase "main object" has long been part of the vocabulary of lawyers concerned with charitable trusts; and it has been taken to express a criterion of their validity. ...

In itself the phrase "main object", as used in legal writing, is ambiguous: but in any particular case the context or the topic ordinarily shows in which of two senses it is used. Sometimes it means the principal object of an institution having also secondary objects or activities which, although of less importance, are capable of being lawfully pursued independently of and without their having any essential bearing upon the pursuit of the main object. On the other hand the words can postulate a dominant object, other objects being all incidental, subservient and ancillary, only lawfully to be pursued as conducive to promoting the main object.

93 The Commissioner submits that these general law propositions inform the proper construction of s 48 of the PT Act. It is because the non-charitable objects cannot be independent, and must be incidental, subservient and ancillary to the charitable objects, in order for an organisation to be charitable, that "dominant" in the PT Act must be construed according to the second sense identified by Windeyer J.

94 The Commissioner makes the further additional points:

(a) in Word Investments[48] the High Court referred to Stratton, saying:

"in examining the object, it is necessary to see whether its main or predominant or dominant objects, as distinct from its concomitant or incidental or ancillary objects, are charitable";

(b) if it was the case that the PT Act permitted the classification of an organisation as charitable despite it having independent, non-charitable objects, such an approach would represent a significant change in the law of charity by reference to Stratton;

(c) the above "change", as asserted by the LIV, would be inconsistent with s 7M of the Charities Act 1978 which proceeds upon the assumption that a charity cannot have independent, non-charitable purposes;

(d) the proper construction of the word "dominant" is in conflict with the LIV's assertions about its meaning which is drawn, in a large measure from the meaning of the word "dominant" in cases concerning schemes under Part IVA of the Income Tax Assessment Act 1936 (Cth);[49]

(e) if the LIV has non-charitable objects the LIV must not only establish that its charitable objects are paramount, the LIV must also establish that its non-charitable purposes are not independent purposes, but are merely incidental, subservient and ancillary to its charitable purposes, and only pursued to promote its charitable purposes.

95 The LIV contends that the Commissioner has applied the wrong test. It submits that the relevant test is whether the LIV has as its dominant purpose a "charitable purpose", not whether the LIV is a "charitable institution". The LIV submits that the cases cited by the Commissioner, including Navy Health Ltd v FCT, Congregational Union (NSW) v Thistlethwayte and Stratton were cases concerned with the meaning of "charitable institution", rather than the question whether the "dominant purpose" is a "charitable purpose" for the purposes of s 48 of the PT Act.

96 The LIV further submits that the Commissioner's position on the interpretation of "dominant purpose" in s 48 is wrong for the following reasons:

(a) the term "charitable purpose" is different to "charitable institution". In Commissioner of Land Tax (NSW) v Joyce,[50] the High Court considered the exemption from land tax in respect of "land owned by or in trust for a charitable or educational institution if the institution... is carried on solely for charitable or educational purposes". Menzies J held:

[The trustees] are individuals holding as trustees for charitable purposes. The land is not owned by a charitable institution... The trust, however, is plainly one for charitable purposes...[51]

(b) accordingly, the LIV submits that an organisation can have a charitable purpose, but not be a charitable institution;

(c) under the Pay-roll Tax Act 1971 (Vic), the predecessor to the PT Act, a public benevolent institution was entitled to exemption from payroll tax.[52] In 1992, the exemption was broadened to include a "charitable body".[53] In 2007, the term "charitable body" was replaced with "non-profit organisation" as part of the modernisation and harmonisation of the payroll tax legislation;[54]

(d) the term "public benevolent institution" is a narrower term than "charitable".[55] By extending the exemption to "charitable body" (and later "non-profit organisation"), the Court should infer that the Parliamentary intention was to broaden the scope of the exemption; and

(e) in addition, the LIV refers to the above evaluation of the PT Act and submits that if Parliament wanted the exemption to apply to a "charitable institution" rather than a "non-profit organisation having as its sole [or whole] or dominant purpose a charitable...purpose", it would have drafted the relevant provisions accordingly.[56]

(a) that the Commissioner's case and arguments in relation to dominant purpose are inconsistent with s 48 of the PT Act;

(b) under both the former s 48 and the current s 48 the question is whether the LIV is "a non-profit organisation having as its ... dominant purpose a charitable ... purpose". The LIV submits that it is clear from the words of s 48 that a non-profit organisation can satisfy the requirements so long as its dominant purpose is a charitable purpose, even if it has other purposes;

(c) that here it would not be permissible for the Court to read down the provision such that the relevant organisation must only have charitable objects or that any non-charitable purposes must be merely incidental or ancillary to the main charitable purpose as submitted by the Commissioner;[57] and

(d) points out that the High Court held in Project Blue Sky Inc v Australian Broadcasting Authority[58] that "a court construing a statutory provision must strive to give meaning to every word of the provision".[59] Accordingly, the construction put forward by the Commissioner does not give meaning to the words of the provision "a non-profit organisation having as its ... dominant purpose a charitable ... purpose".

Conclusion on the question of statutory construction of s 48

98 In my view the starting point should be a focus on the language used by s 48(1) of the PT Act. In the respect presently under consideration the PT Act provides that to be entitled to an exemption from payroll tax, relevant wages must be paid or payable by an organisation having as its dominant purpose a charitable purpose. The word dominant in its ordinary and natural meaning conveys a prevailing or ruling characteristic. However, I reject the LIV's argument that in s 48(1)(a) the words "dominant purpose" are so broad, in their context, to mean a purpose which is no more than most influential or prevailing. In contradiction to a case like Stratton which in my view informs the concept of purposes or objects in this area, the acceptance of such a proposition would mean that an organisation would enjoy the special status of an exempt organisation on a charitable basis even though it pursued objects independent of its most influential or prevailing object, and even though those independent less dominant objects did not have an essential bearing, nor were incidental or ancillary to the main charitable object, but rather were being pursued as conducive to promoting the main object.

99 I consider that there is no assistance to be derived in the cases from possible distinctions which may in certain instances exist between an entity described as a charitable institution and as here an organisation required to have as its dominant purpose a charitable purpose.[60] In Victorian Women Lawyers' Association Inc v Commissioner of Taxation, French J, as he then was, accepted that the law informing the meaning of the words "charitable purpose", was appropriately drawn from jurisprudence concerned with "charitable institutions".[61]

100 What is significant in ascertaining the meaning of the relevant part of the subject provision is that the meaning of the key words used is informed by the applicable common law, absent such clear language that renders no such reference as helpful.

101 I accept the Commissioner's submission that the interpretation of the words "dominant purpose" in s 48(1) of the PT Act should be informed by and conform with the approach which has been applied to charitable institutions in many authoritative cases. As established in Stratton, for a purpose to be dominant, it must be established as the main objective of the organisation under consideration, and in that way the prevailing or ruling objective. That will no longer be the case if it is shown that the subject organisation has other independent objects or activities which are lawfully pursued without having any essential bearing upon the pursuit of the main object.

102 The LIV and the Commissioner are not in dispute about the definition of the word "charitable" in s 48 of the PT Act.

103 The meaning of "charitable" is to be understood by reference to its source in the general law as it has developed.[62] In the absence of a contrary intention in the statute, the word "charitable" should be given its technical legal meaning, which is set out by Lord Macnaghten in Commissioner for Special Purposes of Income Tax v Pemsel[63] by reference to the four heads of charity and the spirit and intendment of the preamble of the Statute of Charitable Uses Act 1601 (UK). The LIV submits that for present purposes the relevant head is the fourth head of charity; "purposes beneficial to the community".[64]

104 In Incorporated Council of Law Reporting (QLD) v Federal Commissioner of Taxation Barwick CJ stated that "the sustenance of the law is a benefit of a material kind which enures for the benefit of the whole community".[65] Windeyer J, in a concurring judgment, also relevantly stated that "the promotion of the learning of the law and adding to the number of men learned in the law and augmenting their learning are in themselves charitable objects and beneficial to the community".[66]

105 The LIV's alternative contention is that that the dominant purpose is charitable because its principal object and activities are directed towards the promotion of the legal profession and to the extent that any of its objects or activities are not so directed, they are ancillary and undertaken to enable the main principal object to be pursued.[67]

106 The Commissioner accepts that the maintenance and sustenance of the law is a charitable purpose.[68]

107 Although both parties are generally in agreement as to the process the Court should undertake to identify the dominant purpose of the LIV, the processes they advance differ slightly as a result of their competing interpretations of the meaning of "dominant" within s 48 of the PT Act.

108 The LIV submits that in order to determine its dominant purpose, the assessment should be made holistically, having regard to its objects, the history of its formation and the activities it has undertaken since its formation.[69]

109 The Commissioner relies in part on the test identified in Word Investments:

It is necessary to examine the objects, and the purported effectuation of those objects in the activities of the institution in question. In examining the objects, it is necessary to see whether its main or predominant or dominant objects, as distinct from its concomitant or incidental or ancillary objects, are charitable.[70]

110 The Commissioner submits that Word Investments was a case where the company had only charitable objects.[71] Where an organisation has both charitable and non-charitable objects, it is necessary to evaluate the relationship between them to determine the main or dominant purpose of the organisation.

111 There is no single and universally applicable test for determining the main or dominant purpose of an organisation. It is a question of characterisation and of degree whether a body with mixed objects is or is not charitable.

112 The Commissioner submits that the most appropriate approach was identified by the Privy Council in Latimer v Commissioner of Inland Revenue:[72]

The distinction is between ends, means and consequences. The ends must be exclusively charitable. But if the non-charitable benefits are merely the means or the incidental consequences of carrying out the charitable purposes and are not ends in themselves, charitable status is not lost.

113 In Victorian Women Lawyers' Association[73] French J (as he then was), provided the following guidance in relation to the characterisation of an organisation in question:

The characterisation of VWL is to be assessed holistically. In making that assessment the primary focus must fall on its formal objects as stated in its constitution. But they are to be read in light of the history of its formation, together with the activities it has undertaken since its formation.

114 Before dealing with the objects and activities of the LIV it is of assistance to first consider the question of how the determination of dominant purpose and charitable purpose has been applied to professional associations in the past.

115 The test, as it is applied to professional associations, was put in this way by Atkin LJ in Inland Revenue Commissioners v Yorkshire Agricultural Society:

There can be no doubt that a society formed for the purpose merely of benefiting its own members, though it may be to the public advantage that its members should be benefited by being educated or having their aesthetic tastes improved or whatever the object may be, would not be for a charitable purpose, and if it were a substantial part of the object that it should benefit its members I should think that it would not be established for a charitable purpose only. But, on the other hand, if the benefit given to its members is only given to them with a view of giving encouragement and carrying out the main purpose which is a charitable purpose, then I think the mere fact that the members are benefited in the course of promoting the charitable purpose would not prevent the Society being established for charitable purposes only.[74]

116 The principal cases relied on by the LIV, where a professional association was found to exist for a purpose other than the benefit of its members, include the following.

(a) In The Commissioners of Inland Revenue v Forrest[75] the House of Lords recognised that advantages conferred by a professional association (in this case an association of civil engineers) upon its members may be "an incidental, though an important and perhaps a necessary consequence" of the way in which the association pursues its charitable purposes. It was held that 'the action of [a] society may incidentally benefit the profession to which its members belong... [but] "that which [the] society does is something higher and larger than the mere education of students and others for the profession"'.[76] In Forrest the relevant exemption sought was "for the promotion of science".

(b) In 1943, the High Court considered whether the Royal Australasian College of Surgeons was a scientific institution in Royal Australasian College of Surgeons v Federal Commissioner of Taxation.[77] Starke J noted that the substantive question was whether the College was a body for the advancement of professional objects and interests or for "something higher and larger", namely, the promotion of science in the advancement of surgical knowledge and practice. The Court held that the College was a scientific institution and Starke J concluded that:

The activities of the College may benefit its fellows, but the facts related speak for themselves and establish that the College is doing "something higher and larger" than the mere promotion of professional interests. It is actively engaged in the promotion and advancement of science in the advancement of surgical knowledge and practice. And that, I think, is the main and prevailing and the characteristic nature of the activities of the College. As Lord Watson observed in Inland Revenue Commissioners v. Forrest "I do not doubt that membership" of the College "is accompanied with a certain amount of prestige which may prove to be of service to the member in his professional career; but I believe that the same result would attend membership of any society which effectively promoted a branch of science intimately connected with the profession or business in which the member was engaged."[78]

(c) In 1952 the House of Lords decided Royal College of Surgeons of England v National Provincial Bank Ltd.[79] In the leading judgment, Lord Morton held that:

... I think that the promotion of the interests of practising surgeons is "an incidental, though an important and perhaps a necessary consequence" of the work of the college in carrying out its main object, the promotion and encouragement of the study and practice of the art and science of surgery.[80] (Emphasis added)

I think that promoting the practice of surgery is a different thing from promoting the interests of those who practise surgery.[81]

(d) More recent decisions of the Federal Court indicate that it is often inevitable that individual members of a charitable organisation obtain private benefits.[82]

(e) In 2008, French J stated in Victorian Women Lawyers' Association:[83]

The activities of the association, including the social and networking functions, may have benefited its members. They were, however, plainly directed to the larger object and in many cases to a larger audience, the legal profession in Victoria. They were in aid of the principal objective. There was certainly a relentless push by the association for changes to attitudes and practices affecting women within the profession. There were representations and public positions taken from time to time on matters affecting the position of women generally.[84] (Emphasis added)

117 In my view the above cases all turn on their own facts and on this aspect assist only to the extent that they highlight the way the courts have, in appropriate cases, accepted that the activities of an organisation which are not directly pursuing that organisation's charitable object or objects may, when they are sufficiently consonant with the higher and larger charitable objectives, be viewed as having a dominant purpose which is charitable. In my view the above cases do not materially depart from the principles referred to above in Stratton.

Characterisation of the dominant purpose of the LIV

118 The Objects of the LIV are contained in Clause 2 of Part A of the LIV's Constitution. The LIV has had four Constitutions over the Relevant Period, however Clause 2 has remained relatively unchanged. In these proceedings it has been agreed by the parties that the 2012 Constitution can be treated as representative for the whole of the Relevant Period. Earlier Constitutions are however also in evidence.[85]

119 The Objects of the LIV, set out in the 2012 Constitution are:[86]

The objects for which the Company is established are:

(1) to take over the funds and other assets and liabilities of the former statutory body known as the Law Institute of Victoria;

(2) to foster the rule of law and to promote improvements and developments in the law;

(3) to safeguard the independent of the legal profession;

(4) to strengthen the community's understanding and confidence both in the legal profession and in the processes by which the law is made and administered;

(5) to act as a public voice for the expression of members' opinions;

(6) to represent the professional interests of members both generally and individually in their relations with the community including governments, courts and other institutions;

(7) to promote and ensure compliance with high standards of professional and ethical conduct, professional practice and client service among Australian legal practitioners and to provide advice in relation to such matters;

(8) to accept delegated functions from the Legal Services Board and the Legal Services Commissioner and to enter into the necessary arrangements with those bodies for the completion of that work in accordance with the Legal Profession Act 2004;

(9) to accept referrals from the Legal Services Commissioner to investigate and provide recommendations in respect of disciplinary complaints in accordance with the Legal Profession Act 2004;

(10) to provide and co-ordinate programs relating to continuing legal education and specialist accreditation for Australian legal practitioners;

(11) to provide a useful and cost effective range of services, facilities and benefits to members;

(12) to apply for and hold a Club Licence and any applicable permits under the Liquor Control Act;

(13) to exercise any powers that the company has by having the legal capacity of a natural person, including performing any act or function which it is authorised or required to do by any law.

120 The LIV contends that historically, the objects of the society from which the LIV was incorporated were focused on legal education, maintenance of the integrity of the legal profession and law reform. A focus on these objects also continued throughout the Relevant Period and can be seen in the professional activities outlined in Mr Brett Young's affidavit of 11 April 2014, summarised below. Mr Brett Young's evidence was that the LIV's professional activities directly relate to objects 2-7, 10 and 11 of Clause 2 of the LIV Constitution.

121 The LIV submits that it has in the Relevant Period focused on legal education, maintenance of the integrity of the legal profession and law reform throughout the Relevant Period. The LIV's submission of 1 September 2014 summarises its activities under the headings:

122 The LIV submits that during the Relevant Period, the LIV has, in addition to these professional activities, offered various professional benefits to its members (as well as non-member legal practitioners and, at times, the public) such as: education and professional development, including a CPD program; and information and practice resources, including the LIV library.

123 The LIV submits that these professional benefits are a means by which it promotes and develops the law and the legal profession. The LIV asserts that the professional benefits the LIV provided to its members during the Relevant Period were "an incidental, though an important and perhaps a necessary consequence" of the way in which the LIV pursued the promotion of the development of the law and the legal profession for the benefit of the public.

124 The LIV submits that its actions were directed towards "something higher and larger" than the mere promotion of the professional interests of its members; the LIV was actively engaged in promoting access to justice, the promotion of the learning of the law and the advancement of legal knowledge and practice.

125 The LIV submits that, taking into account all matters which it submits are relevant, its dominant purpose is to promote the development of the law and the legal profession, and not to promote the professional interest or advantage of its members.

126 The LIV submits in relation to the various inducement benefits it offers to its members and potential members, that it is a common thing for a charitable institution to offer all kinds of privileges and benefits which are in no sense charitable in order to obtain funds for the purpose of carrying out its objects.

127 The LIV submits that its purpose benefits not only lawyers but also the community as a whole. Evidence was given by Mr Brett Young as to the LIV's operations which is summarised below.

128 The LIV submits that the pursuit of its regulatory objects is a pursuit which benefits the public and it submits that it is recognised by authority.

129 The LIV also calls in aid of its case that the Australian Charities and Not-for-profits Commission (ACNC) has registered the LIV as a charity, effective from 1 July 2013. It was registered under the "advancement of education" and "another purpose beneficial to the community" subtypes for the period 1 July 2013 to 31 December 2013. The LIV notes that since 1 January 2014 the LIV has been registered under the subtypes "advancing education", "advancing social or public welfare", "promote or oppose a change to law, government policy or practice" and "purposes beneficial to the general public and other [sic] analogous to the other charitable purposes".[87]

130 In my view the recognition and registration referred to in the last preceding paragraph provides no assistance to me in relation to the task of interpreting the provision of s 48 of the PT Act because that recognition and registration was achieved pursuant to a separate and distinct framework and criteria.

131 The Commissioner submits that the objects contained in Clause 2 of Part A of the LIV's Constitution can be divided into 3 groups:

(a) Objects that evince a charitable purpose (the Charitable Objects);

(b) Objects that are concerned with the protection and promotion of members' interests (the Professional Objects); and

132 The Commissioner accepts that it is well settled that the maintenance and sustenance of the law is a charitable purpose.[88] This is not in controversy between the parties. Accordingly, the Commissioner accepts that three of the thirteen expressed objects in the LIV's constitution evince a charitable purpose. The Commissioner accepts that Objects 2, 3 and 4 (in part) of the LIV's constitution are charitable in nature.

133 The Commissioner submits that it is well established that purposes of raising the status and dignity of a profession and of providing protection and advantage to those in the profession are not charitable purposes.[89] The Commissioner contends that Objects 4 (in part), 5, 6, 10 and 11 are of this character. The Commissioner argues that those objects are directed at securing professional benefits for, and the professional interests of, the LIV's members, and Object 4 is primarily concerned with the reputation of lawyers and Objects 5 and 6 concerns the representation of members and their interests. Object 10 concerns the education of members of the LIV. Object 11 concerns the provision of services, facilities and benefits to LIV members. These objects the Commissioner submits are concerned primarily with the position of members of the LIV; and only consequentially, if at all, with a public benefit.

134 The Commissioner contends that the pursuit of objects concerning the regulation and disciplining of the profession are not charitable purposes. There is however a division in the authorities on this point.

135 The Commissioner summarises the following authorities as follows:

(a) In General Nursing Council,[90] a majority of the House of Lords held that the regulatory objects of the statutory General Nursing Council were not charitable.

(b) In Dulles v Johnson,[91] the United States Court of Appeals for the Second Circuit held that regulatory and disciplinary objects served charitable purposes.

(c) In Commissioner of Inland Revenue v Medical Council of New Zealand,[92] the New Zealand Court of Appeal held that regulatory functions of the statutory Medical Council were charitable purposes.

136 In General Nursing Council, the House of Lords decided that the Council's statutory regulatory functions were not charitable. Lord Morton quoted approvingly from an earlier decision of the Court of Appeal:[93]

I think myself that the whole scheme of this legislation is to regulate the profession of medical men, who in consequence have certain privileges conferred upon them by the legislation, and that it is in the first instance as a professional measure that the legislation is to be regarded. No doubt, as I have said, the result of that strict qualification and supervision will be to the public advantage. Exactly the same thing might be said of the regulations which govern the admission of qualified persons to the ranks of solicitors and barristers...

I agree with these observations, and, in my view, they can properly be applied to the appellant council in the present case. I think that the council, formed as it is to exercise statutory powers and discharge statutory duties**,** has only one main object, namely to regulate the profession of nursing...the object which I have just stated is not a charitable object...

137 Lord Keith considered that the regulatory functions were "just another instance of an organisation performing administrative functions under Parliamentary authority which, though for the public benefit, can in no sense be regarded as of a charitable nature".[94]

138 In Dulles v Johnson, the Court of Appeals considered that the regulation of the unauthorised practice of law and the disciplining of the profession by state bar associations was charitable.[95]

139 In Medical Council of New Zealand, Richardson P and Gault J, in the minority, followed the House of Lords in General Nursing Council and the Court of Appeal in General Medical Council in holding that there was nothing of a charitable nature, in the subject regulation and supervision: "it carries out a regulatory and administrative role no different from the High Court in maintaining the register of legal practitioners. That has no charitable character".[96]

140 The Commissioner submits that the approach by the majority in Medical Council of New Zealand to the identification of the purpose and functions of the Council has been strongly criticised.[97] The majority approach, which does not ultimately rely on the express functions and powers of the Medical Council, but rather by focusing on the public benefit of high standards being achieved in the practice of medicine and surgery, would if adopted more generally, result in many bodies which exercise statutory functions and powers being prima facie charitable, because there would usually be an identifiable public benefit and purpose to be seen in the legislative scheme.

141 The LIV makes the following responses to the Commissioner's contention that the Regulatory Objects concerning the regulation and disciplining of the profession are not charitable purposes.

142 The LIV submits that although in General Nursing Council a majority of the House of Lords held that the regulatory objects of the statutory General Nursing Council were not charitable, in 2001 the Charity Commission reconsidered the Court of Appeal's decision in General Medical Council, as affirmed in General Nursing Council, and determined that the General Nursing Council is established for exclusively charitable purposes.[98]

143 Accordingly, the LIV submits that the decision in General Nursing Council is outdated, and that the term "charitable" in s 48 should be given its modern legal meaning,[99] and the LIV reiterates its reliance on the decision in Dulles v Johnson, and the decision in Medical Council of New Zealand.

144 I do not accept the LIV's submission that the principle case on which the Commissioner relies being General Nursing Council[100] is "outdated" or that the cases it relies on, namely Dulles v Johnson and Medical Council of New Zealand, displace or materially qualify the House of Lords decision in General Nursing Council.[101] Neither in my view is it of assistance that the ACNC considered and took a particular view of the majority judgment in the Medical Council of New Zealand case.

145 In my view the LIV's regulatory activities, and the LIV's Constitutional Objects under which those activities are pursued, are in the nature of independent non-charitable objects and activities. This is because, as has been held by the House of Lords in the General Nursing Council case, the exercise of statutory power to regulate members of a profession is not by its nature a charitable pursuit. Such an object and the activity undertaken in respect of it is the performance of a function, here undertaken pursuant to parliamentary authority. In this particular instant the LIV is in substance simply undertaking delegated work for the LSC and the LSB, as an agent, for which it is being paid substantial sums. If the LSC and the LSB and their objects and activities are not of a charitable nature, and it has not been suggested by the LIV that there is a charitable aspect to the LSB and the LSC's work, in my view, its delegate and agent the LIV, is not fulfilling a charitable objective or undertaking charitable work by undertaking such regulatory tasks. The performance of these tasks is of public benefit or advantage. However that is not in itself sufficient.[102]

146 The Commissioner further submits that on the above analysis only three of the LIV's objects might be characterised as charitable. In addition, the Commissioner contends that the LIV has Professional Objects (directed to furthering the professional interests of its members) and Regulatory Objects (directed to performing a regulatory task), which are not charitable.

147 The Commissioner submits that an assessment of the LIV's activities is useful in the present case because the LIV has a mixture of charitable and non-charitable purposes and an assessment of its activities may determine both the relative weight to be accorded to each and, also, whether the non-charitable purposes are incidental to the charitable purposes.[103] In Attorney-General v Ross, Scott J said:

...if the constitution, while expressing some charitable objects, also permits non-charitable activities to be carried on, then, in my opinion, it is necessary to ask whether the main purpose of the organisation is charitable and whether the non-charitable powers can be regarded as merely ancillary or supplemental. This, as Brightman J said, is a matter of degree. And extrinsic evidence as to the real or main purpose for which the organisation was formed would, in my view, be admissible. The extent to which the organisation has carried on intra vires but non-charitable activities is capable, in my opinion, of being admissible extrinsic evidence.[104]

148 That proposition makes it necessary to identify not only the activities carried on in (and around) the period from 2008 to 2013, but also matters such as the resources devoted to the LIV's various activities.

149 In his affidavit, Mr Brett Young identifies and prioritises the LIV's activities in an, as the Commissioner puts it, idiosyncratic fashion and by reference to his own categorisation of those activities as: (a) professional activities; (b) professional benefit activities; and (c) inducement benefit activities. He does so in a way that does not directly reflect: (a) the director's statement of the principal activities of the LIV in its financial report; (b) the description of activities in the annual report; or (c) the allocation of employees to "departments" in the LIV.

150 Mr Brett Young opines that "professional activities" form the "core business" of the LIV and that these activities relate to the LIV's constitutional objects and do not primarily service members' needs.[105] The Commissioner submits that there are five points to make about that claim. First, the basis on which he asserts that these activities are the "core business" of the LIV is not clear. Secondly, in any event, that is a conclusion to be reached from assessing the evidence of the activities. Thirdly, Mr Brett Young's category of "professional activities" is incredibly broad and includes almost everything the LIV does. Being so broad, that category is almost meaningless. Fourthly, the category of "professional activities" includes activities carried out in pursuance of a range of the LIV's objects, both charitable (such as "advocacy related activities") and non-charitable (such as "delegated functions" and "legal referral services"). Fifthly, the evidence is deficient as to the distinction between (a) the LIV's employees' involvement in those activities; and (b) the LIV's members' involvement in those activities. The Commissioner submits that this distinction is important because where a member is involved in the activities, such as accepting a referral or participating in advocacy, the member is, at least in part, doing so for his or her own professional interests. The distinction is also important because insofar as this case is about liability to payroll tax based on the activities of employees, the claim that these activities form the "core business" of the LIV does not accord with: (a) the revenue derived from, or expenditure on, those activities; or (b) the number of employees who carry out those activities.

151 Mr Brett Young opines that "professional benefit activities" are activities that deliver information, support and practice resources to legal practitioners in the ongoing development and education of the legal profession.[106] In the Commissioner's submission, these are professional activities that support the qualities, status and professional interests of members.

152 Finally, Mr Brett Young opines that "inducement benefit activities" are activities that "add value to membership of the LIV" by providing monetary benefits and discounts to members. He also contends that those activities "support the LIV's professional activities and professional benefit activities by helping to cover the cost of those services and activities".[107] The Commissioner submits that there is no evidence of that conclusion.

153 The Commissioner contends that the nature and relative weightings of the LIV's activities are best ascertained by reference to: (a) the LIV's annual reports; and (b) the tasks performed by its employees.

154 In the Directors' Report contained in the Financial Report for the year ended 30 June 2013, the principal activities of the LIV were described as follows:[108]

Principal activities

The principal activities of the company during the financial year were:

(i) to operate as a professional association of lawyers providing high standards, continuing education, informed debate on issues within areas of its professional competence, setting and maintaining the highest professional and technical standards and promoting the role of members for the benefit of the community; and

(ii) to carry on the duties of a Registered Professional Association as defined by the Legal Practice Act 1996/Legal Profession Act 2004.

155 In the Commissioner's submissions, none of those principal activities are charitable. It is notable that, other than very indirectly, none of those activities are concerned with the maintenance and sustenance of the law. Rather, they are concerned with maintaining and promoting the professional interests of the LIV's members.

156 Further, the Commissioner observes that the Directors of the LIV in the 2013 Financial Report gave the following description of how the LIV achieves its objectives and measures its performance:

Company objectives

The objectives of the Law Institute of Victoria Ltd are achieved by:

(i) Establishing a framework to continuously evaluate and improve member services and benefits;

(ii) Developing and implementing a member service charter, and developing a communications strategy to ensure effective, relevant and targeted member communications; and

(iii) Developing and maintaining an optimal financial model and actively investigating development of new products and services that provide options for growth.

Company performance

The Law Institute of Victoria Ltd measures its performance using the following key performance indicators:

(i) Member retention;

(ii) Member growth;

(iii) Revenue growth targets for key income producing areas;

(i) Ensuring members are represented in all law reform and policy.

157 The Commissioner submits that none of those matters are obviously and intrinsically charitable, further the Commissioner submits that all are focused on the position of members.

158 The Commissioner also argues that the LIV's activities are at least partly reflected in its revenues and expenditures.

159 The Commissioner also makes the point that in the 2013 Annual Report, revenue was primarily derived from three sources: (a) "Legal Service Board/Legal Service Commissioner contributions and reimbursements" in the amount of $8,043,035; (b) "membership activities" in the amount of $5,068,765; and (c) "membership subscriptions" in the amount of $4,227,013. The Commissioner observes that the first source is derived from regulatory functions, and that the second and third sources, relate to members activities.

160 Similarly the Commissioner submits, the top three items of expenditure were for: (a) "membership services" in the amount of $8,949,786; (b) "regulation" in the amount of $3,787,434; and (c) "governance and representation" in the amount of $3,051,829. The Commissioner asserts that these expenditures confirm that the LIV's activities prioritised services to members and regulation.

161 The Commissioner summarises his position on this issue as follows:[109]

Significant resources of the LIV are devoted to assisting members with practice management, referring legal work to members and improving the knowledge and quality of members. Except by a (faulty) chain of reasoning that links the pursuit of members' interests with the public interest, that cannot be said to be charitable. Nor can it be said to be a means of furthering the Charitable Objects. Nothing about maintaining and sustaining the law itself requires that members of the LIV have successful practices, access to a costing service, or a bookshop, or have work referred to them. And, as noted above, regulatory objects are necessarily separate and distinct from charitable objects. Finally, it cannot be said that ensuring members have successful practices is a necessary result of, or an "unsought consequence"[110] of fostering the rule of law, the independence of the profession or the administration of the law. Those are purely professional interests in which benefit to the profession is the primary aim and benefit to the community is at best secondary.[111]

162 The LIV responds to the Commissioner's contention that certain of the LIV's objectives and performance measures are focused on the position of its members and are not obviously and intrinsically charitable by submitting that a member-focus does not preclude the LIV from having a charitable purpose as its dominant purpose. In Chamber of Commerce and Industry of Western Australia v Commissioner of State Revenue (CCIWA),[112] President Chaney J held:

There can be no doubt that service provision to members has played a major part in the planning and activities of CCI from at least November 2000 when the Corporate Planning Background Paper was produced. In my view, however, the focus on building the membership base and achieving a strong financial position, which necessarily required the development of the service activities of the organisation, must be seen in the context of a view that strength through membership numbers and resources better enables the achievement of the primary object of the organisation, namely the promotion of trade commerce and industry and the development generally.

...

In my view, provision of services to members is ancillary to, and possibly a necessary part of, fostering trade and commerce generally for the benefit of the wider community.[113]

163 The LIV submits that the source of funds is not determinative.[114] The relevant query is whether the LIV's dominant purpose is a charitable purpose.

164 The LIV submits that the Commissioner's analysis of the top three items of the LIV's expenditure fails to take into account the significant amount of pro bono work undertaken by its members for charitable purposes, including its advocacy related activities and access to justice initiatives. On this point the LIV notes that Mr Brett Young's evidence was that the annual value of the work of the LIV's committees alone is approximately $11 million. The LIV also submits that the label "Membership Services" under expenses does not accurately reflect the components that make up the $8,949,786, as the figure includes expenses for legal policy and practice, CPD, publications, bookshop and the legal referral service, which relate to activities carried out for a charitable purpose.

165 The Commissioner submits that, even on its own case, the LIV cannot establish that its dominant purpose is charitable. The LIV describes its dominant purpose in these terms:[115]

The Plaintiff's dominant purpose was the promotion of the development of the law and the legal profession for the benefit of the community.

166 The Commissioner submits that the first part of that statement, the promotion of the development of the law, evinces a charitable purpose.

167 Further, the second part, the promotion of the development of the legal profession, does not. As noted above, the object of advancement of persons pursuing a profession is not charitable. The Commissioner submits that is an object directed to the personal and professional interests of members.

Conclusion in relation to the LIV's Constitutional Objects

(a) the authorities will not provide the answer to whether Object 2(2) is primary and the other objects are incidental or ancillary;

(b) of most assistance will be looking at the LIV's activities (ie this will allow the dominance of the objects to be (inferred) from the activities and this will avoid the LIV's incorrect approach of interpreting Object 2(2) as primary and then seeing all other objects as ancillary (including membership and Regulatory Objects)[116]; and

(i) there are many worthwhile activities undertaken by the LIV which support and promote the law;

(ii) there are many member services provided to the membership base and the Members pay about $4.25m for those services;

(iii) there is a very substantial amount of regulatory work done by the LIV, as delegated to it by the LSB;

(iv) therefore the real question is not answered by starting with the conclusion that the primary object of the LIV is the promotion of the law, from which it is then easier to construe the other objects as subservient or ancillary;

(v) rather, the Court should look at the critical question of whether, on the evidence, Object 2(2) is primary and every other object incidental; and

(vi) on the evidence the court cannot be persuaded that Object 2(2) is primary and all other objects are incidental.

169 In my view the court should not start from the premise/conclusion that Object 2(2) is the primary object and then consider whether the other objects are ancillary to that object.

170 An association's charitable status is usually to be determined by construing its objects in context as a whole, not in isolation.

171 It is therefore not appropriate to interpret Object 2(2) independently of the other objects. The objects as a whole must be interpreted, and if the constitution does not identify one of the objects as the primary/main object, the court should look at the association's activities in order to determine the primary object.

172 I should, after primary focus on the LIV's Constitutional Objects, consider the objects and activities together to determine which object(s) is/are the primary object(s).

173 The enquiry to be undertaken in ascertaining whether an entity is an organisation having as its dominant purpose a charitable purpose is an assessment which has regard to the objects, purposes and activities of the subject entity. The cases have recognised that this task is one undertaken in a holistic way.

174 In this matter I consider that the starting point and primary focus is the Objects in the LIV's Constitution.

175 The Constitution itself does not, in my view, assist in relation to which of the LIV's 13 Objects is intended to be the LIV's main or dominant object or objects although as I address below a review of the Objects allows conclusions to be drawn as to which objects or group of objects are particularly significant.

176 Nor does the Constitution itself assist by in any way indicating the relative importance of the 13 separate objects to the LIV. There is nothing express nor which can probably be implied from the terms of the Constitution in that regard.

177 The character of the Objects in the Constitution, however, can with some assuredness, be ascertained from the nature and terms of those individual Objects.

178 The Commissioner has submitted that the Objects of the LIV can be divided into three categories:

The objects the Commissioner puts in this category are Objects 2, 3 and 4 (in part). The part of Object 4 which is excepted is the reference in that object to the legal profession. The words in Object 4 which the Commissioner would not agree conveyed a charitable object are "... both in the legal profession and in ...".

(b) Objects which are concerned with the protection and promotion of members interests.

The Commissioner submits that Object 4 in the part extracted above if read with the remainder of Object 4 and Objects 5, 6, 10 and 11.

The objects which the Commissioner considers to be concerned with regulatory activities and related to the LIV exercising powers delegated by the statutory regulators, the LSC and the LSB. These objects are 8 and 9.

179 The LIV submits that all its Objects are either purely charitable in nature, or in instances where Objects are not intrinsically charitable, are nevertheless to be regarded as charitable because those objects are pursued by the LIV in order to effectuate the main charitable purpose of the LIV, and the objects which are not charitable are carried out in furtherance of a charitable purpose.[117]

180 The LIV submits that none of the LIV's activities, and by necessary implication the Objects, pursuant to which that activity is undertaken, are unrelated to the LIV's charitable purpose because they are all related to the promotion of the development of the law and of the legal profession.[118]

181 In my view, the objects described in Objects 2, 3 and 4 (excluding the words in this Object I have defined above) are charitable because they are by their terms in substance directed to the maintenance and sustenance of the law.

182 I also consider that Objects 8 and 9 are regulatory in nature because they expressly deal with the LIV undertaking certain delegated statutory functions for the LSB and the LSC. For the reasons I deal with elsewhere, I do not consider these Objects to be charitable.

183 Objects 5, 6, 7, 10, 11 and 12 are in my view, because of the goals which their terms express, intended to enable the LIV to undertake activities to promote and protect its members' interests.

184 The exercise of ascertaining which of the LIV's Objects is the main object, or which object or objects reflect its main or dominant purpose is, in this case, one of degree.

185 I consider that, taking into account each of the stated objects, the LIV's Objects reflect that the LIV is very significantly focused on the promotion and protection of its members interests, via the goals reflected in Objects 5, 6, 7, 10, 11 and 12. The Objects also in my view reflect a significant overall focus on the undertaking of regulatory delegation, and thereafter as a lesser focus its objects said to reflect its charitable goals in Objects 2, 3 and 4 (in part), to foster the rule of law and to promote improvements in the development of the law, the safeguarding of the independence of the legal profession, and strengthening the communities understanding and confidence in the process by which the law is made and administered.

186 Beyond the above, I am unable by reference to the LIV's Objects to determine which object or series of objects reflects with any clarity, or on the balance of probabilities, the LIV's main or dominant purpose. I am however not satisfied by reference to the LIV Constitution that the LIV Objects 2, 3 and 4 in whole or in the narrowed terms referred to above, or any one of those objects represents the LIV's main or dominant object, or purpose.

187 Accordingly, it is appropriate to move to the more holistic task of considering relevant matters and circumstances extrinsic to the LIV Constitution to attempt to ascertain whether, as the LIV must establish on its case, its dominant purpose is a charitable purpose.

188 As part of the task of evaluating the LIV's dominant purpose, a focus framed by the way the LIV has put its case, the objects in its Constitution are also to be considered in the context of its background and its activities and any other relevant circumstance.

189 In submissions, the Commissioner encapsulated the part of its case relevant to the issues addressed below as follows -

Your Honour, it's not in issue that the maintenance and sustenance of the law is a charitable purpose, it's not in issue that fostering the rule of law is a charitable purpose, it's not in issue that fostering the rule of law to safeguard the independence of the legal profession and strengthen the community's understanding and confidence in the legal profession is other than a charitable purpose. It's not in issue that object 2(2) and other objects speak to a charitable purpose.

So none of that is the controversy between the parties. It's not in controversy between the parties that if the taxpayer persuades Your Honour that object 2(2) is the principal object and everything else is incidental to that, that that connotes anything other than a charitable purpose.[119]

We say it's an unsustainable construction of the objects and it doesn't give relevant weight to activities in the way that it should, ... look at object 2(11) the object that: "the Law Institute provides a useful and cost effective range of services, facilities and benefits to members" is not of itself charitable. ...

My learned friend this morning said that benefits to members were an ancillary activity but in fact they are a direct object ... The taxpayer must be submitting that this object and a series of other objects are incidental to what it says is the main object, which is object 2(2).

190 I now deal with the LIV's evidence of relevance to its objects and activities. This evidence was given primarily by the affidavit of Michael Brett Young dated 11 April 2014, his supplemental affidavits listed below, and supplementary evidence in chief and in cross-examination by the Commissioner.

191 Mr Brett Young was the Chief Executive Officer of the LIV during the Relevant Period and commenced that role on 8 August 2006.

(a) Steven Stevens sworn 11.4.14 together with exhibits SS-1 to SS-3;

(b) Michael Brett Young sworn 11.4.14 together with exhibits MBY-1 to MBY-48;

(c) Michael Brett Young sworn 6.8.14 together with exhibits MBY-49 to MBY52;

(d) Michael Brett Young sworn 22.8.14 together with exhibit MBY-53; and

(e) Michael Brett Young sworn 25.8.14 together with exhibits MBY-54 and MBY-55.

LIV and Commissioner agree to the addition of certain further evidence

193 By email dated 29 August 2014 the Solicitors for the LIV provide a copy of a 'Notice of Endorsement for charity tax concessions' dated 15 August 2014 issued by the Australian Tax Office, which identified 'Law Institute of Victoria Limited' as a registered charity. The Commissioner in this proceeding has agreed to that document being included in the Court Book on the basis that it was filed without submission.

194 At about the time of the conclusion of Mr Brett Young's cross-examination, the parties filed a summary in the following terms:

1. The parties agree that the following sections/pages of the LIV's website (www.liv.asn.au) are accessible only by persons with a "login":

(a) Managing a Practice: Funding a Practice

(b) Managing a Practice: Client Development & Marketing (including Selling & Tendering; Practice Promotion; Client Retention & Development; Market Research; LIV Member Logo)

(c) Managing a Practice: Information Technology

(d) Managing a Practice: Human Resources (including Awards, Salaries, Terms & Conditions; Recruitment; Staff Development).

(c) following the hearing, the LIV provided an amended Outline of Submissions dated 1 September 2014, and Amended Reply Submissions dated 1 September 2014.

Written submissions relied on by the Commissioner

196 At the hearing the Commissioner relied upon its Outline of Submissions dated 7 May 2014.

197 The Commissioner also provides undated written submissions in relation to objections to evidence. The LIV also provided submissions in relation to objections to evidence dated 21 August 2014.

198 The Commissioner filed the above objections to the evidence filed by the LIV, by written Outline of Objections to Evidence. The LIV responded to those objections by written Outline Submissions on Evidence dated 21 August 2014. At the commencement of the trial of these proceedings the parties agreed to the Court deciding objections in a summary manner by upholding or rejecting objections without elaborating the reasons for such rulings.[120]

199 Further, at trial the parties agreed that the affidavit evidence under objection would be received by the Court, subject to any notified objection, and that such notified objections would be determined at a later time. I rule on each objection as follows.[121]

200 The LIV was established in 1859 with 26 members after at least five attempts to set up a professional society. The LIV's first members wanted rules for conduct and education, with other objectives including law reform and a relief fund for LIV members and their families. The LIV was later incorporated by the Law Institute Act 1917 (Vic). The passing of the Legal Profession Practice (Amendment) Act in 1946 gave the LIV the power to police the conduct of all solicitors and made membership of the association compulsory. The LIV made the transition to a voluntary membership association in 1997 as a result of the enactment of the Legal Practice Act 1996.[122]

201 As at 30 June 2013, the LIV had a total of 18,120 members, comprised of Practicing Full Members, Associate Members, Student Members and Honorary Members. At this time the LIV had approximately 133 staff.

202 Mr Brett Young's evidence in chief concerning the LIV's activities can be summarised as follows.

203 The activities of the LIV during the Relevant Period are summarised in the five LIV Annual Reports from 2009 to 2013.

204 The LIV's operational activities during the Relevant Period can be classified into three groups:[123]

205 These activities Mr Brett Young stated form part of the core business of the LIV, directly relate to the LIV's constitutional objects and do not primarily service member's needs.

206 Those professional activities were summarised by Mr Brett Young under the following headings and in the following manner:

(a) Bushfire and disaster assistance. This involved the creation of a "Bushfire Legal Help Service" in response to the 2009 Black Saturday bushfires. The service provided pro bono legal advice and assistance to those affected by the disaster. The service has since been renamed "Disaster Legal Help" and now exists to provide ongoing legal information and support to Victorians in times of disasters.

(b) LIV Legal Assistance Scheme. This scheme is a referral service that acts as a facilitator of pro bono legal assistance between the community and the legal profession.

(c) Victorian Legal Aid funding campaign. The purpose of the campaign was to respond to the cuts made to Victorian Legal Aid funding.

(d) Victorian Legal Assistance Forum. The LIV has participated in the VLAF, which promotes collaboration and co-ordination in the delivery of legal services for socially and economically disadvantaged people in Victoria.

(e) Advocating Justice For All. The LIV's involvement in issues concerning access to justice includes its work on reforming civil justice, pushing for greater funding of legal aid, promoting appropriate dispute resolution, reforming tort law and the provision of interpreters in civil matters.

(a) Legal policy and practice. The LIV's Legal Policy and Practice department is dedicated to the development of legal policy advocacy and the provision of legal practice support to members. The submissions made by the LPP aim to lobby government, statutory entities, the courts and other organisations on law reform initiatives. The practice support information on the LIV's website has some content that is accessible to the general public, but also some information that is only accessible to members.

(b) Corporate social responsibility ('CSR'). The LIV's CSR initiatives focus on environmental, economic, social and human rights considerations. Key initiatives have included the implementation of the LIV disability action plan and the LIV reconciliation action plan.

(c) Federal election 2013. The LIV published a "Call to the Parties Brochure" which aimed to inform election debate on what the LIV considers to be key issues. It consolidated a range of LIV advocacy work in the federal arena and provided an advocacy platform from which the LIV could increase the profile of its policy and reform work and practice sessions.

(d) Public affairs. The LIV operates a public affairs team, which advocates for improvements to the law and communicates to the public across a range of legal issues and developments within the profession.

(a) Legal referral service. The LIV operated a legal referral service which provided members of the public with referrals to LIV member firms throughout Victoria practicing in the relevant area of law and geographical location.

(b) Other referral services. The LIV conducted legal archive searches for the public and practitioners to assist them in locating a file that had been held by a firm that has since ceased operation or relocated.

(a) Law Institute Journal (LIJ). The LIV published the LIJ, a legal journal which addresses important issues for legal practitioners such as diversity, mental illness, reputation and the changing environment that is reshaping the future of the profession.

(b) Legal fact sheets. The LIV made available legal fact sheets to the public on factors to consider when performing transactional matters including buying/selling a house, wills and estates and family related matters such as property and spousal maintenance.

207 During the Relevant Period the LSB delegated some of its functions to the LIV under the Legal Profession Act 2004 (Vic). These functions included trust investigations, unqualified practice investigations, Fidelity Fund investigations, practising certificate determinations and processing, continuing professional development (CPD) compliance and Rules of Practice.

208 Mr Brett Young submits that these functions performed by the LIV help to develop and maintain the integrity and reputation of legal practitioners by promoting high standards of ethical conduct, so that the community gains trust and confidence in the legal profession.

(a) participating in and providing financial support for Law Week;

(b) providing a referral service for legal practices seeking a qualified person to mediate or arbitrate as an option for dispute resolution if a dispute cannot be resolved between the parties;

(c) provided financial and administrative support to the Victorian Women Lawyers' Association;

(d) provided support to Tarwirri (the Indigenous Law Students and Lawyers association of Victoria);

(e) offered an Indigenous Bursary for one indigenous law graduate to undertake the College of Law Victoria's professional program;

(f) launched the Wellbeing and the Law Foundation on 12 September 2013, which aims to raise money to build awareness, fund research and develop strategies to improve mental health in the legal profession; and

(g) operated an education and professional development mentoring program which links experienced legal practitioners with those seeking professional development, support or guidance.

209 Mr Brett Young's evidence was that these are activities that deliver information, support and practice resources to legal practitioners in the ongoing development and education of the legal profession, and to ensure that legal practitioners maintain and comply with appropriate practices. This category of activities may be broken down further, as follows.

(a) CPD. During the Relevant Period, the LIV could make rules under the Legal Profession Act 2004 with the approval of the LSB. The Professional Development department supports members and non-members to comply with the Continuing Professional Development Rules 2008 (Vic) and to meet professional and ethical obligations. Mr Brett Young stated in his evidence that by providing education programs to legal practitioners (both members and non-members), the LIV develops the skills of the legal profession so as to enhance the provision of client services.

(b) Young lawyers and students. The LIV has assisted the education and professional development of young lawyers and law students by: being involved in a joint venture with the College of Law to offer practical legal training to law graduates; operating the Education Liaison Service which managed and coordinated the Court Education Program at the Victorian Supreme and County Courts; and operated the LIV's Young Lawyers Section which worked to enhance the legal skills, knowledge and professional networks of law students, graduates and young lawyers in the early stages of career development.

(c) Accredited specialisation. The LIV has operated an accredited specialisation program to provide a platform for lawyers to be recognised as having enhanced expertise in certain areas of the law.

(a) The LIV has operated a retail outlet and online bookshop, which is also accessible to non-members and the general public. The LIV has also run a legal support line, an array of mental health support services and the LIV library.

(b) Ethics department. This department provides confidential advice, summaries of recent case law, presentations on ethical principles and solutions to practical ethical problems faced by the legal profession. Mr Brett Young stated in his evidence that this advice to practitioners maintains professional standards and protects the public in the performance of legal work.

(c) Personal support services. During the Relevant Period, the LIV offered a range of personal support services to help members and non-members through difficult times including LawCare (confidential counselling service for legal professionals), senior and junior counsellors, a members' advocate service and the VicLawyers Health Line. Mr Brett Young also stated that by providing these services, the LIV assists legal practitioners to provide legal services to the community.

210 These are activities that add value to membership of the LIV by providing monetary benefits and discounts to members.[124] These activities support the LIV's professional activities and professional benefit activities by helping to cover the cost of those services and activities.

(a) Marketing. The LIV's marketing department provides strategic direction to the LIV's business through areas such as branding and reputation, industry and member communications, engagement through product and services promotion, corporate partnerships and the LIV privileges program.

(b) Events. The LIV's events department co-ordinated, advised on and produced events and programs for LIV members, non-members, the general public and associated organisations.

(c) LIV member privileges. These include discounts for products and services of companies such as Qantas and American Express, the LIV Bookshop and discounts for LIV events and educational programs.

211 Steven Stevens, Australian lawyer and past President of the LIV gave evidence that he has been involved with the LIV since 1988 when he became a member upon admission to practice. Mr Stevens' involvement has included being on multiple LIV Committees, a member of the LIV Council, and being President of the LIV in 2010.

212 Mr Stevens opines that the role of the President of the LIV, as a leader of the Victorian legal profession, is to:

(a) promote the rule of law in the community and the due administration of justice;

(b) promote the availability of access to justice for all members of the community;

(c) pursue improvements in legislation reflecting the preceding principles;

(d) promote the highest standards of professional conduct and ethical behaviour within the legal profession in providing legal services to the community; and

(e) contribute, on behalf of the legal profession and for the benefit of the community, the profession's counsel and advice on proposals for change in laws or the adoption of new laws.

213 Based on Mr Stevens' experience and involvement with the LIV, he believes that the majority of the activities undertaken by the LIV are directed toward:

(a) promoting the rule of law and the due administration of justice in the community;

(b) promoting access to justice for all members of the community; and

(c) acting as the representative association of legal practitioners in Victoria, to promote, and participate in, the development of legislation to advance the rule of law and the accessibility of legal representation to the community.

214 Mr Stevens' evidence was that examples of these activities undertaken by the LIV, include:

(a) committees that prepare submissions and make representations to improve proposed changes to legislation;

(b) organising continuing professional development seminars;

(c) ethics department which provides guidance and advice to practitioners on a confidential basis on ethical dilemmas that arise during the practice of law;

(d) LIV Legal Assistance Scheme which is a referral service for pro bono work; and

(e) LIV Legal Referral Service which refers members of the public to a legal practitioner in their local community with expertise relevant to their problem.

215 Mr Stevens stated in the President's Message in the 2010 Annual Report that:

I had the privilege of leading the Council of Australia's oldest law society in its 151st year. And I am pleased to report that the Council has focused in recent months on the LIV's primary objective as a member services organisation.

Supplementary Affidavit of Michael Brett Young 6 August 2014

216 In his supplementary evidence Mr Brett Young states that on 7 February 2014 the LIV applied to the ACNC for registration under s 25-5 of the Australian Charities and Not-for-profits Commission Act 2012 (Cth) as a charity from 1 July 2013.

217 On 14 February 2014 the LIV completed an online application to the ACNC to accompany and provide further detail in support of the earlier application. On 3 June 2014 further submissions in support of the application were sent to the ACNC.

218 On 31 July 2014 the LIV received notification that the application had been successful and the LIV was registered as a charity with the ACNC from 1 July 2013.

Further Supplementary Affidavit of Michael Brett Young 22 August 2014

219 In a further supplementary affidavit Mr Brett Young states as a result of the LIV being registered as a charity with the ACNC, information about the LIV is contained on the online ACNC register.

220 For the period 1 July 2013 to 31 December 2013, the LIV was registered under the 'Entity Subtypes':

221 From 1 January 2014 the LIV was registered under the 'Sub-entity' types:

(c) To promote or oppose a change to law, government policy or practice; and

(d) Purposes beneficial to the general public and other [sic] analogous to the other charitable purposes.

Second Further Supplementary Affidavit of Michael Brett Young 25 August 2014

222 In his Second Further Supplementary Affidavit, Mr Brett Young gave evidence that:

(a) On 31 July 2014, the ACNC also notified the LIV by email that:

"The tax concessions part of your application will be automatically forwarded to the Australian Taxation Office (ATO) overnight. An ATO staff member will contact you directly regarding the tax concessions. Generally, ATO staff will contact charities regarding their tax concessions within 14 working days of receiving the application".

(b) The LIV has been informed orally by the Australian Taxation Office that the information on the Australian Business Register (ABR) 'ABN Lookup' website summary for the LIV would be confirmed in a letter to be sent to the LIV.

(c) On the ABR 'ABN Lookup' website, the LIV is listed as being a charitable institution endorsed to access the following tax concessions from 1 July 2013:

Further evidence in chief and cross-examination - Mr Brett Young

223 At trial the LIV was granted leave to adduce additional evidence from Mr Brett Young. In his supplementary evidence in chief Mr Brett Young gave the following evidence.

224 Mr Brett Young confirmed that he had been the Chief Executive Officer of the LIV for the previous eight years and in that position he had been in charge of Operations for the LIV.

225 Mr Brett Young stated in brief evidence in chief that:

(i) In relation to services which the LIV provided for non-members he estimated that the percentage of activities that the LIV undertakes and which are made available to non-members was as follows:

(a) on the LIV's website there are 16,000 pages of which 70% are open to the public;

(b) most of the activities which the Law Institute undertakes have a public component and the majority of the LIV's activities are open to the public;

(c) the majority of the Law Institute's activities are accessible to non-members of the Law Institute of Victoria;[125]

(d) the majority of the LIV's operations are aimed at educating either solicitors or the public.[126]

226 The LIV convenes 79 committees. Those committees typically comprise about 12 persons with about 10 meetings annually of a duration of approximately one to one and a half hours. The value of the professional hours devoted to the LIV's committee work is in excess of $5 million.[127]

227 The LIV's committees make submissions via the LIV's Legal Policy and Practice section. More than 100 submissions are made every year and in 2013 approximately 120 submissions emanated from the LIV's Legal Policy and Practice section. The committee members and related sections are involved in producing the LIV's submissions and the value of professional time devoted to the production of such submissions is in the order of $6 million.[128]

228 All of the committee work undertaken by the LIV is on a voluntary basis and none of the LIV committee members are remunerated.

229 In relation to Objects 7 and 10 of the Constitution which refer to Australian legal practitioners and other objects which refer to Members, Mr Brett Young gave evidence that the LIV's Constitution originated from a time when it was compulsory for solicitors to be Members of the LIV and accordingly at that time the Constitution talked about Members. Subsequently when the relevant legislation changed in 2004 the Constitution made reference where appropriate to Australian Legal Practitioners. Mr Brett Young also stated that he considered that the present reference to Members in the Constitution is effectively a reference in the present context to Australian Legal Practitioners.

230 During cross-examination by Senior Counsel for the Commissioner, Mr Brett Young gave the following further evidence.

231 Mr Brett Young was referred to the LIV's Annual Report for 2013. Mr Brett Young confirmed that he worked with the LIV's Chief Financial Officer in the preparation of the LIV's Annual Report.

232 The LIV's Annual Report for 2013 states that its revenue from "Legal Service Board/Legal Service Commissioner contributions and reimbursements" was $8,043,035.

233 On notice before trial, the Commissioner by letter dated 22 August 2014 to the solicitors for the LIV, delivered written questions to the LIV concerning the makeup of the above sum of $8,043,035. In response the LIV provided answers to the Commissioner's questions about that sum.[129]

234 Mr Brett Young explained that $5.8M of that $8,043,035 came from "Regulation"; that is the delegated regulatory work done by the LIV, for the LSB. Of that sum the item relating to "investigations" accounted for $2.478 million.[130]

235 The payment to the LIV in relation to "investigations" related to inspections by the LIV's inspectors, namely accountants, undertaking audits on behalf of the LIV in respect of the practices of certain Australian legal practitioners. Those inspections were undertaken in relation to trust accounts of legal firms in Victoria. Such inspections were undertaken to detect mistakes and deficiencies in relation to the work undertaken by Victorian legal practitioners. Part of the role of the inspectors is to assist practitioners including by providing better accounting methods and addressing minor mistakes. In relation to major mistakes the inspectors report to the LSB identifying such mistakes.

236 In the year ending 30 June 2013 there were approximately ten inspectors who substantially undertook the sort of investigations referred to above and in addition provided trust accounting education to practitioners who were applying for practising certificates, and education by way of professional development.[131] Some inspectors may have been involved solely in investigations although Mr Brett Young was not able to say how many of the inspectors may have worked in this specific area alone.[132]

237 The 2013 LIV Annual Report recorded an item "Fidelity Fund Claims" of $166,000. This activity, Mr Brett Young stated, was related to investigating reports usually from members of the public in relation to alleged deficiencies in trust accounts. The work of investigating such reports was in the nature of a "delegated function".[133] Two LIV employees were engaged in undertaking this fidelity fund claims function. Those employees were also involved in "investigations" work and providing assistance to practitioners in relation to their trust account management. That assistance included helping practitioners to prepare better trust account records and on occasions educating them through the professional development process.[134] Mr Brett Young stated that the two persons he referred to who were employed to undertake the "investigations" were also the people who undertook the work in relation to the "Fidelity Fund Claims".[135]

238 The 2013 Annual Report also refers to a "litigation" item in the sum of $303,000. This payment to LIV by LSB related to litigation arising out of regulatory work undertaken by the LIV for the LSB.[136]

239 The said sum of $303,000 for litigation relates to litigation conducted on behalf of the LSB or the LSC.[137] The LIV is paid a fixed fee for each financial year on a monthly basis by the LSB or the LSC for such litigation, irrespective of the result. Such a system was in operation in 2013 and the five preceding years, although Mr Brett Young gave evidence that there may have been some change in the basis for payment over that six year period.

240 Mr Brett Young also explained that in some recent years there has been disagreement between the LSB and the LSC as to what should be paid to the LIV in relation to such litigation. Accordingly, in some instances the LIV has undertaken what it regarded as necessary work in that area at its own expense.[138]

241 The LIV has several solicitors who undertake its "litigation" work. There is one permanent person in the LIV working in relation to the "litigation" work and other solicitors come from other areas in the LIV and are not solely devoted to that work.[139] The one permanent person employed in the litigation area also worked on other LIV duties.

242 The LIV's Response to the State Revenue Office letter records that the LIV received payment from the LSB/LSC in the sum of $782,000 in relation to "complaints". Mr Brett Young explained that the sum related to a payment in respect of costs associated with addressing complaints referred to the LIV pursuant to its delegation to investigate such complaints.

243 Five LIV employees were involved in work relating to "complaints" in 2013. Such complaints were initially received by the LSC and then investigated and addressed by the LIV personnel.

244 The LIV also received revenue in relation to work associated with external intervention in legal practices in the nature of receiverships, and also revenue in relation to practising certificates. The revenue in relation to receiverships generally related to the management of practices which required the LIV's external intervention by way of the appointment of a receiver. Six LIV employees undertook work of this nature and five of those six worked predominantly on that work during the relevant year.[140]

245 The remuneration paid by the LSB to the LIV in relation to receivership work was arrived at by means of the LIV making a submission in that regard to the LSB or the LSC. The level of funding in relation to that activity was then agreed as a lump sum for necessary work in relation to receiverships. The LIV takes the risk that the amount of work in this area may exceed what the LIV anticipated and therefore the agreed lump sum may prove to be inadequate.[141]

246 Mr Brett Young stated that over the six years ending 30 June 2013, other than the LIV's work in relation to practising certificates and complaints, the work delegated to it by the LSB and the LSC has remained constant.[142]

247 In relation to barristers' fees being incurred in respect of work concerning complaints, practising certificates, external intervention and receiverships, Mr Brett Young gave evidence that such fees are paid directly by the LIV and that those payments were funded via an amount agreed between the LSB and/or the LSC and the LIV at the commencement of each given year.[143]

248 Mr Brett Young clarified in his evidence that the two persons he referred to who were employed to undertake the "investigations" were also the people who undertook the work in relation to the "Fidelity Fund Claims".[144]

249 Save for income received in respect of work which was ultimately undertaken by external solicitors and barristers, all the work referred to in the "Summary" or typed responses to the State Revenue Office's letter dated 22 August 2014 was work undertaken by LIV employees.[145]

250 In relation to the LIV's bookshop sales a discount is provided to members.[146]

251 The LIV also has "catering revenue" which relates to the hiring of LIV rooms and facilities.[147] Rooms are made available in the LIV to members and non-members. The charge for such facilities is the same for members and non-members.

252 Mr Brett Young was referred to the 2013 Annual Report and the "regulation" items. These items generated revenue for the LIV in the order of $8 million. Specifically, in relation to "investigations" the cost comprises the total wage package of a number of LIV employees.[148] These wages costs included the total wages for some LIV employees and an allocation of a percentage of the wage in respect of others.[149]

253 Mr Brett Young's gave evidence that the document at "MBY-39" was prepared under his supervision.

254 Mr Brett Young stated that the wage costs for six employees under the item "investigations" relates to individuals and those persons are part of the 33 LIV Professional Standards Department staff.[150] He also noted in cross-examination that there are also some full-time employees allocated to the expense reflected in the item "complaints".[151]

255 Mr Brett Young confirmed in his evidence that all of the full-time employees taken into account in the sums referred to in the items in the Table which is part of the summary response to the Commissioner's letter of 22 August 2014, are part of the LIV's staff of 33, and there are in addition other staff referred to in the items in Exhibit MBY-39 to which there is also an allocation of cost.[152] He also explained that the LIV Executive and Finance Department and the IT Department are staff additional to the 33 staff in the Professional Standards Department, are employees referred to in MBY-39 and a percentage of the cost of those employees is included in that summary of staff in "MBY-39".

256 Mr Brett Young stated that those LIV employees whose wages were 100% allocated to the item "investigations" were exclusively involved in that area of work.[153] Similarly the six persons involved in the item "complaints" were also wholly engaged in that area of work.[154] However, considering the revenue received in respect of those persons and also the expenses included, these activities were not profit making for the LIV because funding from the LSB was insufficient to cover all the work undertaken in those two areas.[155]

257 Mr Brett Young was referred to the 2013 Annual Report at page 56, "Financial Report - Notes to Financial Statements", which refers to contributions and reimbursements from the LSB and the LSC in a sum over $8 million.[156]

258 Mr Brett Young confirmed that the LIV's direct costs are reported in the financial year 2012/13 as $3.787 million.[157]

259 The LIV Annual Report of 2013 reflects that the funding received by the LIV for regulation was revenue in a sum of $5.786 million and the direct cost of regulation to the LIV was $3.787 million not taking into account other costs such as occupancy.[158] Mr Brett Young explained that other costs not included in the $3.787 million related to expenses such as light, power, and such like.[159] Mr Brett Young was not able to detail those additional operating costs without having time to work through them with the LIV's accountant.

260 Mr Brett Young was however adamant that the regulation activities were not profit making because in general terms the LIV spends more money than the LSB and the LSC pay to it.[160]

261 In any event in my view nothing turns here on the difference between the revenue received by the LIV from the LSB in relation to the regulatory activities undertaken by the LIV, and the lesser sum which in 2012/13 that the LIV's accounts reflect was expended to the LIV on those regulatory activities.

262 Mr Brett Young was referred to paragraph 17(a), (b) and (c) of his affidavit of 11 April 2014. Mr Brett Young's evidence was that in making his three part classification of the LIV Constitutional "Objects" in paragraph 17(a), (b) and (c), he was there referring to cl 2 of the LIV Constitution, in particular Object 2, and Objects 3, 4, 7, 10 and 11.[161]

263 Mr Brett Young explained that in the opening two sentences of paragraph 17 of his affidavit he was making reference to the LIV's Constitution and Objects 3, 4, 5, 6, 7, 10 and 11. Mr Brett Young was cross-examined for some time about how he reconciled what he said in paragraph 17 of his affidavit with the LIV's Constitutional Objects. Mr Brett Young explained that the LIV does not classify its activities strictly by reference to the Objects in the Constitution. He also stated that in his view the Objects in the LIV Constitution are out of date in that they deal with both members and non-members in most areas of activity to which they refer.[162]

264 Mr Brett Young explained that the current Constitution is in some respects out of date because until 1996 lawyers who held practising certificates as solicitors were required to be Members of the LIV. After that date it was no longer compulsory, however the Constitution reflects the prior period before 1997 because the activities in the Constitution which are undertaken by the LIV as it currently operates relate to activities that involve the whole of the profession most of the time.[163]

265 Mr Brett Young stated that in his affidavit at paragraphs 17 and 23 he referred to "the core business of the Law Institute", and that he considered the term "Members" in the Objects of the Constitution as synonymous with "Australian Legal Practitioners".[164]

266 Mr Brett Young was questioned about his statement at paragraph 32 of his affidavit and page 19 of the 2013 Annual Report and in particular to the description of how the LIV's Legal Assistance Service connects marginalised and disadvantaged Victorians. Mr Brett Young confirmed that the program which provided that connection was one that is operated by an outside body, namely Justice Connect.[165]

267 Mr Brett Young confirmed that the Legal Referral Service operated by the LIV is a service only available to members.[166] However the Legal Referral Service has approximately 30,000 calls each year from members of the public and not all of those calls are referred to lawyers; some are referred to other bodies which may be able to assist them, for instance the Telecommunications Ombudsman or banks.[167] However when a referral is deemed to be appropriate to a private legal practitioner, preference is given to members of the LIV over non-members.[168]

268 Mr Brett Young referred to paragraph 94 of his affidavit and was cross-examined about what Objects of the LIV's Constitution informed the opinion set out in paragraph 94, the opinion being that "the delegated functions performed by the LIV assist to develop and maintain the integrity and reputation of legal practitioners by promoting high standards of ethical conduct, so that the community gains confidence and trust in the legal profession". In response Mr Brett Young stated that it was Objects 3, 4, 7 and 10. Further, in his view, the delegation to the LIV of those activities, responding to and investigating complaints made against legal practitioners, enhanced the achievement of the Objects of the LIV referred to in paragraphs 3, 4, 7 and 10 of its Constitution.[169]

269 Mr Brett Young confirmed that the LIV undertakes delegated functions for both the LSB and the LSC.[170] Mr Brett Young confirmed that in relation to the LIV's delegated functions those functions were always initiated by either the LSB or the LSC.[171]

270 Mr Brett Young clarified that in all but one instance delegations were accepted by the LIV from the LSB or the LSC.[172]

271 Mr Brett Young stated that for specialist accreditation with the LIV applicants who had more than five years' standing as a lawyer and certain experience must also sit an accreditation exam. Such accreditation was available to Members of the LIV and non-members.[173]

272 The LIV provides services to its members which include membership discounts for Qantas Club, American Express and certain other financial services. The Member Services employees are approximately seven in number.[174]

273 Mr Brett Young was referred to Exhibit "MBY-39" of his Affidavit for the year ending 30 June 2013 and in particular to the LIV Membership Team which comprised ten staff. Mr Brett Young explained in cross-examination that those ten staff would have at least one person supervising them outside the group.[175] Mr Brett Young also gave evidence about how the Membership Team functions. He similarly addressed the work of the LIV Accreditation Specialisation staff of two.[176] The Membership Team provided certain services to non-members. The LIV Accreditation Specialisation staff of two appeared to provide membership related services. Mr Brett Young described the role of the LIV Marketing Department, which has a staff of four, and explained a number of their functions which were not in the nature of member services.[177]

274 Mr Brett Young was also referred to the LIV's Legal Policy and Practice Department comprising 18 staff. He explained that the $5 million of costs he had allocated to the work of the 79 LIV committees were quantified on the basis of an approximate hourly fee of $400 per hour in respect of members of the committee meeting ten times a year in committees of about 12 members and doing so for about an hour and a half in respect of each meeting. Mr Brett Young explained that the $6 million he had ascribed to the value of the work done in respect of submissions by the Legal Policy and Practice Department was calculated on a similar basis.[178]

276 The LIV relied upon its written submissions of 1 September 2014, which in summary are directed to establishing, via Mr Brett Young's evidence particularly, that the majority of the LIV's operations were aimed at educating either solicitors or the public.

277 Relying on the evidence of Mr Brett Young, the LIV submits that the LIV focused in its activities on legal education, maintenance of the integrity of the legal profession, and law reform via a number of activities. The nature of those activities is explained by Mr Brett Young in relation to advocacy-related activities, the work of LIV pro bono committees, which Mr Brett Young notes are not a cost captured in the LIV's annual reports, facilitations, the performance of regulatory functions, access to justice activities including referral services, natural disaster assistance work, and Victoria Legal Aid campaigns for more adequate funding.

278 The LIV's evidence asserted that the work done by the LIV Committees would equate to about $11 million of legal time devoted to the overall work undertaken by the LIV's many committees. I note however that the LIV did not attempt to ascribe any particular monetary value to any particular committee's activities or to any particular committee's output.

279 The LIV also makes submissions in relation to the nature and extent of the professional benefits it offers its members. It refers to Mr Brett Young's evidence as to these activities and submits that these activities, including in relation to education and professional development and information, and the facilities which the LIV provides to its members, give rise to no dichotomy with the LIV's charitable purpose. The LIV submits that such professional benefits are part of the means by which the plaintiff promotes and develops the law and the legal profession.

280 The LIV also submits that the professional benefits it provides to its members are incidental, although an important and perhaps necessary way in which the LIV pursues the promotion of the development of the law and the legal profession for the benefit of the public. The LIV submits that its endeavours are directed towards something higher and larger than the mere promotion of the professional interests of its members.

281 The LIV submits that the professional benefits it offers are plainly directed to a larger object and are undertaken in aid of its principal objective, namely, the promotion of the development of the law and the legal profession.[179]

282 The plaintiff's submissions also dealt with Mr Brett Young's evidence about the nature and extent of the "inducement benefits the LIV arranges and provides to its members". These benefits are those in the nature of discounts and special privileges negotiated by the LIV with various suppliers of goods and services. In respect of the LIV's activities directed to providing such inducement benefits, the LIV submits that these should not be regarded as detracting from the LIV's main charitable objectives.

283 The LIV also submits that it is commonplace for a charitable institution to offer all kinds of privileges and benefits which are in no sense charitable, in order to obtain funds for the purpose of carrying out its object. Mr Brett Young's evidence was that the provision of inducement benefits attracts and retains members, and thereby generates membership subscriptions.

284 The LIV's overarching submission is that its membership focus should not preclude it from being found to have a dominant purpose which is a charitable purpose.[180]

285 The Commissioner's evidentiary submissions, amongst other topics, focused on the work actually being undertaken by LIV employees.

286 The Commissioner submitted that the evidence disclosed the following in relation to specific LIV activities:

There are ten personnel involved in LIV investigative work. The LIV concedes that the whole of the salary paid to each of those ten persons is paid in respect of the regulatory functions which they perform.

There are two LIV personnel involved, and those two persons appear to be part of the ten LIV personnel working in respect also of the Investigation work referred to above.

There are five LIV employees working in this area. All of the salary of those five persons is related to the regulatory work concerned with complaints.

There are six LIV employees involved in regulatory work concerning receiverships of legal practices.

287 The Commissioner submitted that the LIV's evidence showed that except in relation to the regulatory area concerned with complaints, the evidence was that the other above areas of regulatory work by the LIV involved a constant work flow throughout the relevant period.

288 The Commissioner highlighted that in the financial year 2013/13, the revenue received by the LIV in respect of the above regulatory activities was $5,786,035, paid by the LSB.

289 The Commissioner submitted that although not determinative in evaluating the LIV's various activities, it is helpful to consider the sources of the LIV's revenue and the associated expenses.[181]

290 The Commissioner submits that, from a macroscopic perspective the LIV in 2012-2013 received revenue of about $20 million and that the LIV expended well over half of that revenue on membership services and regulatory costs.[182] The Commissioner pointed out that the LIV has not in this proceeding explained with any specificity on what it has expended those revenues.

291 The 2013 Annual Report establishes that the LIV received $8 million in relation to the regulatory activities it carried out for the LSB. The LIV also received in the same period over $4 million from members' subscriptions.

292 The Commissioner argues that in relation to the LIV website (in respect of which the parties have agreed as to the login requirements specified above) although some parts of the LIV website are available for public view, a number are not available to the general public.[183]

293 The Commissioner points out that the LIV's evidence is that its "Legal Referral Service" is only available to LIV members.

294 The Commissioner also points out that LIV members receive a discount at the LIV Book Shop.

295 There is a delineation of treatment in the accredited specialisation program run by the LIV, in that non-members cannot apply to be accredited unless they are barristers or members of other legal societies.[184]

296 The Commissioner points out that the evidence establishes that the LIV negotiates a number of discounts and other benefits with third party suppliers, and does so for the benefit of its members. These include life and health insurance discounts, home and investment loan discounts, and office supply discounts. The LIV also negotiates certain benefits on purchases of motor vehicles, on car rental agreements, at the retailer Harvey Norman and vouchers at petrol outlets. The LIV negotiates discounts at hotels, the theatre, the opera, the ballet and at concerts. The Commissioner notes that the LIV describes the above as "inducement benefits" meaning that such benefits are believed to induce lawyers to join the LIV.

297 The Commissioner however, submits that there is no evidence, or other basis, upon which to conclude that the provision of the above mentioned "member benefits" in the nature of discounts with third party suppliers, does in fact induce lawyers to become members of the LIV.[185]

298 Further, the Commissioner submits that it is not clear what the LIV relies upon in asserting that members of the LIV consider that it is the LIV's promotion of the law generally that is more valuable to them than the "member benefits" that the LIV offers.[186]

299 The Commissioner submits that although Mr Brett Young in good faith expressed his opinion or belief that the core business of the LIV was its professional activities, his evidence was misguided because it addressed the wrong question.

300 As to the key question the Commissioner submitted:

In fact, we propose for Your Honour that the critical question instead is how on the evidence adduced in truth it's proposed in the facts, both that object 2(2) is primary and that everything else is incidental? We submit to Your Honour on the evidence that Your Honour won't be satisfied as to dominant purpose.[187]

301 The Commissioner refers to Mr Brett Young's evidence at paragraph 23 of his affidavit sworn 11 April 2014, which says that the LIV's professional activities directly relate to the constitutional objects and do not primarily service members' needs. The Commissioner argues that even if Mr Brett Young's evidence at paragraph 23 was ruled admissible, it should be disregarded because Mr Brett Young confirmed during his cross-examination that he did not give his evidence in paragraph 23 by reference to the LIV's Constitutional Objects.[188]

302 The Commissioner submits that in the financial year 2012/13 the claim pursued by the LIV is via the Objection Proceeding. This is because the PT Act speaks of the Commissioner's satisfaction and there is a "decision" for the purposes of the TA Act that can be appealed to this Court.[189]

303 Under that process there is an onus on the LIV under s 110 of the TA Act to persuade the Court that its objection should be upheld in whole or in part.

304 On its objection case the LIV contends that all wages were paid in respect of the pursuit of the relevant charitable purpose; that is because the LIV contends that all wages are paid for work which is at least incidental to the main charitable purposes.

305 If the LIV succeeds under former s 48 of the PT Act, on the issue of only purpose, sole purpose, or whole purpose, it is likely the Court would conclude that all wages are within s 48(2).

306 If the LIV succeeds in its case under the current s 48, in relation to the dominant purpose, it is not clear how the LIV says all wages fall exclusively within the language of the current s 48(2).

307 The LIV has not sought to prove what any particular wage has been paid for and is seeking to have the court accept that it need not prove that all relevant wages were paid to an employee who was engaged exclusively in work of a charitable nature. Indeed the LIV made it clear in its submissions that it is running an all or nothing case when it comes to wages. That is, it is relying upon establishing that all staff are working exclusively in order to further the LIV's charitable purpose.[190]

308 If the LIV succeeds in establishing its case on a dominant purpose argument - the Commissioner submits it will fail to prove all wages are caught because there will be no proof of the non-dominant purpose work undertaken.

309 Further, if the LIV were to establish the relevant dominant purpose, the LIV would not establish error in the decision which is under objection. That is because the alternative case of all wages being exempt was not pursued by the LIV through the objection process.

310 The Commissioner submits therefore that for all relevant years the Refund Proceeding should be dismissed as follows:

(b) the fifth year because it is not open to the LIV to pursue a claim by writ when there has been a decision by the Commissioner.[191]

311 In relation to the Objection Proceeding, for the first four relevant years the Commissioner submits that there has been no "decision" by the Commissioner. In relation to the fifth relevant year the Court should uphold the Commissioner's decision.

312 The LIV's evidence was that most of its activities have a "public component" and the majority of its activities are accessible to non-members of the LIV, and that the majority of its operations are aimed at educating either solicitors or the public.

313 I consider, however, the LIV's general evidence of the type summarised to be of little persuasive weight because it is so general in its nature.

314 Similarly, the LIV's general evidence about the existence of a multitude of committees, the number of persons involved, the value of professional hours of devoted to committee work and its extrapolated value, and that committee work is often directed to the production of a large number of submissions emanating from the LIV's Legal Policy and Practice section, reflects significant efforts by the LIV in that regard. However in the overall balance I find it to be far less significant than the LIV's overall focus on membership services, and secondly the LIV's regulatory work.

315 Although the LIV's evidence was that 70% of some 16,000 pages on its Webpage were open to the public, no evidence was called to establish the extent to which the public in fact accessed the LIV's Webpage or in respect of what content such access occurred.

316 Of the approximately $8 million recorded as revenue in the LIV's 2013 Annual Report, $5.8 million was received by the LIV for the activities it undertook for the LSB.

317 Although an unquantified component of the LIV's regulatory activities relates to its inspectors assisting legal practitioners, for example by providing better accounting methods addressing minor mistakes and providing trust accounting education and related professional development instruction, the overwhelming majority of the LIV's regulatory activities are purely regulatory and accord for a very significant part of the LIV's overall revenue.

318 The LIV also undertakes work in relation to Fidelity Fund Claims. The activities in relation to such tasks are also in the nature of regulatory work. The LIV also receives payment from the LSB in relation to litigation it conducts on behalf of the LSB and the LSC and this activity is part of the LIV's regulatory activities. Because of disputation between LSC or LSB and the LIV about what was properly payable to the LIV for the provision of legal services in undertaking this work, the LIV have on occasion borne unspecified costs in relation to these activities.

319 It is to be noted that the various regulatory activities referred to above, for which the LIV was paid by the LSB, are the many such activities for which in 2012/13 the LIV was paid the total sum of approximately $5.8 million.

320 The LIV's Book Shop activities are recorded as producing $1,205,371 of revenue in the financial year 2013.

321 Although the LIV Bookshop is an activity which may assist in attracting members of the LIV by reason of the discount the bookshop allows to LIV members, there was no evidence which sought to establish or quantify the importance of the bookshop to members.

322 The LIV received "catering revenue" of $91,602 in the financial year 2013. This revenue was produced by the LIV hiring out rooms in its building. Both members of the LIV and non-members contributed to this income.

323 No evidence was adduced as to what impact members of the LIV ascribed to the LIV having such facilities available to members, and the evidence did not seek to establish the degree to which the rooms hired by the LIV were hired by members or non-members of the LIV.[192]

324 This service is a pro bono referral service administered by PILCH (now known as Justice Connect) that is asserted by the LIV to connect marginalised and disadvantaged Victorians with the legal profession. However, Justice Connect is a third party and accordingly the referral service cannot properly be said to be administered by the LIV.

325 This service operated by the LIV is only available to LIV members. The service receives a very large number of calls per annum from members of the public, and not all of those calls are referred to lawyers, but to other organisations by which the caller may be assisted, for example, the Telecommunications Ombudsman. When the LIV assesses that referral to a lawyer is appropriate, that referral is usually to an LIV member.

326 In my view the LIV's Legal Referral Service is predominantly for the benefit of its members and provides very little service or benefit to the public other than putting a member of the public in touch with a lawyer recommended by the LIV.

327 The LIV conducts specialist accreditation services for its members and for non-members. There was no evidence adduced about the ratio of member and non-member utilisation of the LIV Specialist Accreditation Program.

328 The LIV undertakes the process of negotiating with many organisations, such as Qantas, American Express, the RACV, golf clubs, theatres, petrol providers and many more service providers, so as to arrange a discount to LIV members for utilising their services and products.

Conclusions regarding revenue - (on the evidence)

329 Broadly, the LIV in the financial year ending 2013 received:

Membership Activities (income from activities referred to above including Continuing Professional Development activities and the LIV Bookshop)

330 In the same period the LIV's principal expenses were:

331 Mr Brett Young's evidence sought to emphasise that the regulation activities undertaken by the LIV did not reap a profit for the LIV, because in general terms the LIV spends more on undertaking those activities than it is reimbursed by the LSB and the LSC.

332 On the evidence referred to above and in particular the explanations given by Mr Brett Young I am not satisfied that the LIV profits from undertaking regulatory activities.

333 The regulatory component of the activities undertaken by the LIV, with the exception of activities in the area related to practising certificates ($490,000 in financial year 2013) and complaints ($782,000 in financial year 2013) has remained at a constant level over the six years to 30 June 2013. No evidence was directed to the degree to which there was a variation in the level of the LIV activations concerning practising certificates and complaints, in the six year period referred to above.

334 Although it is clearly a matter of degree, the resources which the LIV applies to its activities also suggests the conclusion that its main focus is on activities apart from and independent of its charitable purposes.

335 In his affidavit, Mr Brett Young identifies and prioritises the LIV's activities by reference to (a) professional activities; (b) professional benefit activities; and (c) inducement benefit activities. However, Mr Brett Young's evidence does not reflect either (a) the Director's Statement to which I refer which sets out the principal activities of the LIV in its 2013 Financial Report; or (b) the description of activities in the 2013 Annual Report; or (c) the allocation of employees to "departments" in the LIV.

336 Mr Brett Young states that "professional activities" form the "core business" of the LIV and that these activities relate to the LIV's constitutional objects and do not primarily service members' needs.

337 However, in my view, he did not satisfactorily explain just how professional activities were the LIV's "core business". Further, Mr Brett Young's category of "professional activities" is self-evidently very broad and includes, it appears, most of the activities of the LIV. For this reason I have found this evidence which sought to establish that the LIV's "professional activities" are its "core business", of little assistance.

338 I also consider that the term "professional activities" here includes activities in relation to a range of the LIV's objects, both charitable and non-charitable, and the evidence does not segregate the LIV's employees' involvement in those activities and the LIV's members' involvement.

339 On the evidence I am unable to be at all sure whether when a member is involved in the activities of the LIV, such as accepting a referral or participating in advocacy, the member is, at least in part, doing so for his or her own professional interests. The distinction appears to be of some importance because insofar as this case is about liability to payroll tax based on the activities of employees, the claim that these activities form the "core business" of the LIV is at odds with the revenue derived from, and the expenditure on, those activities and also at odds with the small number of employees who carry out those activities.

340 Mr Brett Young states that "professional benefit activities" are activities which deliver information, support and practice resources to legal practitioners in the ongoing development and education of the legal profession. In relation to his evidence I accept the Commissioner's submission that these activities support the qualities, status and professional interests of members of the LIV.

341 In relation to "inducement benefit activities" Mr Brett Young stated that these activities "add value to membership of the LIV" by providing monetary benefits and discounts to members. He also states that those activities "supported the LIV's professional activities and professional benefit activities by helping to cover the cost of those services and activities". On this aspect I also accept the Commissioner's submissions that this assertion has not been established by any evidence directly demonstrating that this was the position. The evidence given in this regard was, in my view, too general to be probative.

342 Finally, I accept the Commissioner's submission that the nature and relative weightings of the LIV's activities is materially informed by reference to the LIV's Annual Reports and by the tasks performed by its employees. In my view both of these elements of the evidence are persuasive as to the LIV's objective and focus.

343 The 2013 Annual Report includes an extensive section concerning "LIV member Communications" which notes "As the peak legal body in Victoria, the LIV's reach and influence is broad, and as a member you connect with more than 18,000 of your peers". The LIV also describes its activities in that Report with terms including "LIV Member Communications", "Your Voice", "Your Career", "Your Solution" and "Your Reputation".

344 The Commissioner attached a chart to his submissions dated 7 May 2014. That chart identifies the number of LIV employees allocated to each area of the LIV's activities and provides a description of that area of activity which is described in the LIV Annual Report. Those descriptions focus primarily on benefits to members' practices which are said to be provided by the activities. The Commissioner's chart also shows that significant resources are devoted by the LIV to regulatory and member-focused activities.

345 I consider that this matching of LIV staff to the LIV activities which are in my view primarily directed to benefiting members, demonstrates that the LIV's non-charitable objectives and activities, being its professional and Regulatory Objects, are a significant and a key area of focus and endeavour by the LIV.

346 Referring to the summary of Income and Expenditure 2012/13 attached to Mr Brett Young's typed response to the Commissioner's letter of 22 August 2014, LIV's Revenue was approximately $20 million in the 2012/13 financial year. Of this sum the LIV expended well over half, namely approximately $9 million on membership services and approximately a further $4 million on activities which are in my view independent of its purely charitable activities.

347 The sum of approximately $9 million spent on membership services and the revenue in relation to membership activities of approximately $6.2 million, against the comparator of the LIV's overall income of about $20 million and overall expenditure of about the same amount, establish in my view that the LIV's membership activities, and operations in that regard are a very major and in my view independent component of the LIV's overall activity.

348 I consider that the nature and scale of the LIV's membership activities and the above highlighted degree of focus on membership activities, services and incentives strongly militates against the conclusion that those aspects are incidental or subservient or ancillary to the LIV's main charitable purposes.

349 I consider that both the LIV's very numerous activities to service, promote and attract members, and its very substantial area of operation in relation to regulatory delegations, constitute independent activities, lawfully pursued pursuant to the LIV's objects, but do not constitute activities pursued for the purpose of promoting the LIV's charitable objects, or only to enable those charitable objects to be pursued.

350 For the above reasons I am not satisfied that the LIV has established that the LIV pursues its membership activities, to the major extent that it does, in order to enable it directly or indirectly to promote its charitable purposes.

351 I consider that the LIV's membership activities constitute a substantial independent objective of the LIV and one of the main drivers and focuses of the LIV. Further, I consider that those membership activities are lawfully pursued by the LIV under its Constitution, however, substantially these membership activities do not have any essential bearing upon the LIV's pursuit of its purely charitable objects, in clause 2(2), (3) and (4) of the Constitution.

352 Additionally, the substantial amount of activity undertaken by the LIV in relation to regulatory work for the LSC and LSB, also constitutes a major and independent activity, lawfully undertaken by the LIV pursuant to Objects 8 and 9.

353 Similarly, I consider that the LIV's regulatory activities do not have an essential bearing on the pursuit of the LIV's charitable objectives, and constitute a substantial area of activity which is not incidental or ancillary to, or pursued by the LIV only to promote its charitable objects.

354 I consider that assessing the LIV's overall position holistically, it would be artificial to find that the pursuit of the LIV's membership activities naturally goes with, and is undertaken to assist, the achievement of the LIV's purely charitable objectives, namely to foster the rule of law and promote improvements and developments in the law, and to safeguard the independence of the legal profession and to strengthen the community's understanding and confidence in the processes by which the law is made and administered.

355 In coming to the view I have on this issue, I have not undertaken a simply quantitative comparison of what the LIV does, and what it receives by way of revenue and what it expends, but rather I have considered those facts which speak to the raison d'etre of the LIV and its main objectives and focus, assessing the position of the LIV holistically taking into account primarily its formal Constitutional Objectives, and considering those stated objectives, taking into account relevant background matters and its activities.

356 Furthermore, in my view the very substantial regulatory activity of the LIV which accounts for approximately $5.786 million of its revenue, is not in the nature of LIV activity which is either directly or indirectly undertaken in the pursuit of the LIV's purely charitable objectives. This is because the regulatory work undertaken by the LIV is work delegated from the LSB, which the LIV undertakes for the LSB as its paid agent and, as earlier addressed, the view the law has long considered as non-charitable in nature such regulatory functions, including those authorised under a statutory regime like the Legal Profession Act 2004.

357 Combined, the LIV's membership and regulatory activities can be seen as even more strongly demonstrating that the LIV is pursuing very major independent objectives which generate most of its revenue and account for most of its operating costs, and which are not minor or ancillary or incidental, supplemental or subservient to the LIV's charitable purposes, indeed in my view the converse is the case.

358 For the above reasons I am not satisfied that the LIV was at any material time an organisation having as its dominant purpose a charitable purpose.

359 Given my findings and decision in this matter the question of interest, which might otherwise have been payable to the LIV, does not arise.

(1) In relation to both the Objection Proceeding and the Refund Proceeding:

(i) I am not satisfied that the LIV, in addition to being a non-profit organisation, has as its dominant purpose a charitable purpose;

(ii) I am not satisfied that all the wages paid, or payable, by the LIV in the Second Period were paid to persons engaged exclusively in work of a charitable nature.

361 The LIV's Objection Proceeding and the LIV's Refund Proceeding are dismissed.

362 I reserve the question of costs and any other necessary consequential order.

[1] Amended Statement of Claim 5 February 2014, [10]; Defence 11 February 2014, [10].

[2] Commissioner's Submissions 7 May 2015, [39]. It was further conceded by the Commissioner that LIV Objects 2, 3 and 4 (in part) are charitable objects.

[3] The Parties Joint Memorandum to the Court dated 2 September 2014.

[4] Exhibit MBY-4 to the Affidavit of Michael Brett Young sworn on 11 April 2014 ('Michael Brett Young Affidavit').

[5] Michael Brett Young Affidavit, [18]; Defendant's Outline of Submissions dated 7 May 2014, [18].

[6] See Exhibits "MBY-42", "MBY-43", "MBY-45", "MBY-46", "MBY-47" and "MBY-48" to the Michael Brett Young Affidavit.

[7] See Exhibits "MBY-41", "MBY-42" and "MBY-44" to the Michael Brett Young Affidavit.

[8] Conte Mechanical and Electrical Services v Commissioner of State Revenu_e (2011) 85 ATR 120 ('Conte'_).

[13] Exhibit MBY-46 to the Michael Brett Young Affidavit.

[15] Within the ambit of s 21 of the TA Act (Tab 18 of Court Book, Volume 1 tabs 10 and 11).

[16] [2000] VSCA 122; (2000) 2 VR 635.

[17] Ibid, [77]. The "original s 19" provided that where the Commissioner "finds in any case that tax has been overpaid he may refund [it] to the employer who paid the tax" (at [76]).

[18] [2006] HCA 43; (2006) 228 CLR 168 ('Central Bayside').

[19] Central Bayside Division of General Practice Ltd v Commissioner of State Revenue [2003] VSC 285; (2003) 53 ATR 473, [5].

[20] (2011) 85 ATR 120.

[21] [2011] HCA 41; (2011) 245 CLR 446 ('Tasty Chicks').

[22] Ibid [20]; and compare s 111(1) and s 112(1) of the Taxation Administration Act 1996 (NSW).

[23] [1949] HCA 26; (1949) 78 CLR 353 ('Avon Downs'). This principle was stated in Tasty Chicks [2011] HCA 41; (2011) 245 CLR 446, [22].

[24] See pp 7-8 of Exhibit "MBY-43" to the Michael Brett Young Affidavit.

[25] That is, to be "satisfied", see subsection (1) of the current s 48.

[26] See Exhibits "MBY-42", "MBY-43", "MBY-45", "MBY-46" and "MBY-47" to the Michael Brett Young Affidavit (Tab 10 of Court Book).

[27] Neither the LIV nor the Commissioner made a submission directed to the detail of either the LIV Objection dated 24 January 2014 or the Commissioner's Determination.

[28] Tasty Chicks [2011] HCA 41; (2011) 245 CLR 446, [22].

[29] [2014] VSC 268 ('Mould').

[30] Mould [2014] VSC 268, [35]-[42], [47].

[31] Tasty Chicks [2011] HCA 41; (2011) 245 CLR 446, [5].

[35] Commissioner's Submissions 7 May 2014, [4].

[37] Explanatory Memorandum, State Taxation Acts Further Amendment Bill 2011 (Vic), 3.

[38] [2008] HCA 55; (2008) 236 CLR 204.

[39] Amended Statement of Claim 5 February 2014, [13].

[41] Federal Commissioner of Taxation v Spotless Services Ltd [1996] HCA 34; (1996) 186 CLR 404, 416.

[42] AWB Ltd v Cole (No 5) [2006] FCA 1234; (2006) 155 FCR 30, 45 [44], citing AWB v Cole (2006) 152 FCR 382, [105]-[106] and Commissioner of Taxation (Cth) v Pratt Holdings [2005] FCA 1247; (2005) 60 ATR 466, [30].

[43] Commissioner's Outline of Submissions, [22].

[44] See Navy Health Ltd v Federal Commissioner of Taxation [2007] FCA 931; (2007) 163 FCR 1, [58], citing Attorney-General (NSW) v Adams [1908] HCA 51; (1908) 7 CLR 100, and Smith v West Australian Trustee Executor & Agency Company Ltd [1950] HCA 32; (1950) 81 CLR 320. See also G E Dal Pont, Law of Charity (LexisNexis Butterworths, 2010) [13.15].

[45] Congregational Union of New South Wales v Thistlethwayte [1952] HCA 48; (1952) 87 CLR 375, 442.

[46] Stratton v Simpson [1970] HCA 45; (1970) 125 CLR 138, 149-151 ('Stratton'). See also Inland Revenue Commissioners v City of Glasgow Police Athletic Association [1953] UKHL 1; [1953] AC 380, 405.

[47] Stratton [1970] HCA 45; (1970) 125 CLR 138, 148. See also Royal Australasian College of Surgeons v Federal Commissioner of Taxation [1943] HCA 34; (1943) 68 CLR 436, 448, 452; Federal Commissioner of Taxation v Word Investments Ltd [2008] HCA 55; (2008) 236 CLR 204, [17]-[18] ('Word Investments'); and G E Dal Pont, Law of Charity (LexisNexis Butterworths, 2010) [13.15].

[48] [2008] HCA 55; (2008) 236 CLR 204, [17].

[50] [1974] HCA 39; (1974) 132 CLR 22.

[53] The new s 10(1)(bb), as inserted by the State Taxation (Amendment) Act 1992.

[54] See the Explanatory Memorandum, Payroll Tax Bill 2007 (Vic), 1, 16, 17.

[55] See Perpetual Trustee Co Ltd v Commissioner of Taxation (Cth) [1931] HCA 20; (1931) 45 CLR 224, 232 (Starke J) and 233-234 (Dixon J); Aid/Watch Inc v Commissioner of Taxation [2010] HCA 42; (2010) 241 CLR 539 (Aid/Watch), [16]; Central Bayside v Commissioner of State Revenue [2005] VSCA 168; (2005) 60 ATR 151, [39] (Byrne AJA in dissent).

[56] See for example item 1.1 of s 50-5 of the Income Tax Assessment Act 1997 (Cth).

[57] See Defendant's Outline of Submissions, [22].

[59] Ibid, [71] (McHugh, Gummow, Kirby and Hayne JJ).

[60] Northern NSW Football Ltd v Chief Commissioner of State Revenue [2011] NSWCA 51; (2011) 281 ALR 147 concerned s 48 of the Payroll Tax Act 2007 (NSW), there the Court declined to distinguish Word Investments on the basis that it concerned a charitable institution, as opposed to a non-profit organisation whose dominant purpose is a charitable purpose. Refer also ([7]-[9]) and G E Dal Pont, Law of Charity (LexisNexis Butterworths, 2010) [13.15].

[61] [2008] FCA 983; (2008) 170 FCR 318, [24]-[26] ('Victorian Women Lawyers' Association').

[62] Aid/Watch [2010] HCA 42; (2010) 241 CLR 539, [23]-[24] (French CJ, Gummow, Hayne, Crennan and Bell JJ).

[63] [1891] UKHL 1; [1891] AC 531 ('Pemsel').

[65] [1971] HCA 44; (1971) 125 CLR 659, 669 ('Incorporated Council of Law Reporting').

[66] Ibid 671-672, see also Victorian Women Lawyers' Association [2008] FCA 983; (2008) 170 FCR 318, 347 [125]-[126].

[67] See Incorporated Council of Law Reporting [1971] HCA 44; (1971) 125 CLR 659; and Pemsel [1891] UKHL 1; [1891] AC 531 and the Preamble to the Statute of Charitable Uses.

[68] Commissioner's Outline of Submissions, [20]; T155.1-3.

[69] Victorian Women Lawyers' Association [2008] FCA 983; (2008) 170 FCR 318, 352 [146]; Word Investments [2008] HCA 55; (2008) 236 CLR 204, [17].

[70] [2008] HCA 55; (2008) 236 CLR 204, [17].

[72] Re Crown Forestry Rental Trust; Latimer v Commissioner of Inland Revenue [2004] 1 WLR 1466, [36]. See also Hubert Picarda, The Law and Practice Relating to Charities (Bloomsbury Professional, 4th ed, 2010) 333.

[73] [2008] FCA 983; (2008) 170 FCR 318, 352 [146].

[74] Inland Revenue Commissioners v Yorkshire Agricultural Society [1928] 1 KB 611, 631.

[75] [1890] UKHL TC_3_117; (1890) 15 App Cas 334 ('Forrest').

[77] [1943] HCA 34; (1943) 68 CLR 436.

[79] [1952] AC 631.

[82] Tasmanian Electronic Commerce Centre Pty Ltd v Commissioner of Taxation [2005] FCA 439; (2005) 142 FCR 371; Commissioner of Taxation v Triton Foundation [2005] FCA 1319; (2005) 147 FCR 362; Commissioner of Taxation v Co-operative Bulk Handling Limited [2010] FCAFC 155; (2010) 189 FCR 322.

[83] [2008] FCA 983; (2008) 170 FCR 318.

[85] LIV Submission, 1 September 2015 at [2.4.2].

[86] Exhibit MBY-4 to the Michael Brett Young Affidavit.

[87] Further Supplementary Affidavit Michael Brett Young dated 22 August 2014, [3].

[88] Incorporated Council of Law Reporting [1971] HCA 44; (1971) 125 CLR 659, 668-669 (Barwick CJ).

[89] Inland Revenue Commissioners v Yorkshire Agricultural Society [1928] 1 KB 611, 631 (Atkin LJ); General Nursing Council for England and Wales v St Marylebone Borough Council [1959] AC 540, 557-558 (Lord Cohen) ('General Nursing Council'); Chartered Insurance Institute v London Corporation [1957] 1 WLR 867, 874 (Lord Goddard CJ, with whom Byrne J agreed), 876 (Devlin J).

[90] [1959] AC 540, 555 (Lord Morton), 556 (Lord Tucker), 557-558 (Lord Cohen, dissenting in the overall decision) and 561 (Lord Keith).

[92] [1997] 2 NZLR 297 ('Medical Council of New Zealand').

[93] Ibid 554-555, quoting General Medical Council v Inland Revenue Commissioners (1928) 97 LJKB 578, 587-588 (Sargant LJ) ('General Medical Council').

[96] [1997] 2 NZLR 297, 307 (Richardson P and Gault J).

[97] G E Dal Pont, Law of Charity (LexisNexis Butterworths, 2010) [13.29]-[13.31].

[98] Decision of the Charity Commissioners for England and Wales made on 2 April 2001.

[99] Aid/Watch [2010] HCA 42; (2010) 241 CLR 539, [18], [23] (French CJ, Gummow, Hayne, Crennan and Bell JJ).

[100] [1959] AC 540.

[102] Central Bayside Division of General Practice Limited v Commissioner of State Revenue [2003] VSC 285, [35].

[103] Attorney-General v Ross [1986] 1 WLR 252, 264.

[105] Michael Brett Young Affidavit, [17(a)].

[109] Commissioner's Submissions, [70].

[110] Inland Revenue Commissioners v City of Glasgow Police Athletic Association [1953] UKHL 1; [1953] AC 380.

[111] Northern NSW Football Ltd v Chief Commissioner of State Revenue [2011] NSWCA 51; (2011) 281 ALR 147, [25] (Gzell J, with whom Allsop P and Handley AJA agreed).

[112] [2012] WASAT 146; (2012) 89 ATR 797.

[114] Central Bayside [2006] HCA 43; (2006) 228 CLR 168, [39]-[41] (Gleeson CJ, Heydon and Crennan JJ).

[117] LIV's Reply Submissions dated 1 September 2014, [76(c)].

Opinion; comment; interpretation of Act is for the Court

Opinion; conclusory; comment; underlying facts not disclosed

Opinion; conclusory; comment; underlying facts not disclosed

Opinion; conclusory; comment; underlying facts not disclosed

Opinion; conclusory; comment; underlying facts not disclosed

[122] Information in this paragraph extracted from Michael Brett Young Affidavit and Law Institute Journal, LIV Celebrating 150 years, (March 2009).

[123] Michael Brett Young Affidavit, [17].

[124] Michael Brett Young Affidavit, [17](c).

[129] See Tab 15 - Michael Brett Young's response to State Revenue Office letter.

[136] Mr Brett Young's response to the Commissioner's letter of 22 August 2014.

[179] LIV Submissions, 1 September 2015, [2.4.12].

[180] LIV Reply Submissions, 1 September 2015, [60].

[190] Plaintiff's Amended Outline of Submissions 1 September 2014, 3.2-3.5.