Re Australian Elizabethan Theatre Trust30 FCR 491
102 ALR 681
Re Australian Elizabethan Theatre TrustCourt:
Gifts to Australian Elizabethan Theatre Trust
Attracting deduction under s 78(1)(a)(viii) of the Income Tax Assessment Act 1936
Gifts stated to be 'unconditional' but with 'preference' for 'allocation' to particular arts organisation
Moneys banked in overdrawn operating account
No 'allocation'yet made
Provisional liquidator appointed
Whether express or constructive trust
Nature of Quistclose trust
Income Tax Assessment Act 1936 - section 78(1)(a)(viii); section 78(1)(a)(xiii)
Corporations Law - section 475(7); section 479; section 266
Trade practices Act 1974 - section 52
Companies Act 1947 (UK) - section 95
Bankruptcy Act 1966 (Cth) - section 122
Trident General Insurance Co Ltd v McNiece Bros Pty Ltd - 165 CLR 107; 80 ALR 574
Walker v Corboy - 19 NSWLR 382
Barclays Bank Ltd v Quistclose Investments Ltd -  1 AC 567
Re Associated Securities Ltd and the Companies Act -  1 NSWLR 742
Re Multi Guarantee Co Ltd -  BCLC 257
Stephens Travel Service International Pty Ltd v Qantas Airways Ltd - 13 NSWLR 331
Muschinski v Dodds - 160 CLR 583; 62 ALR 429
Baumgartner v Baumgartner - 164 CLR 137; 76 ALR 75
FCT v McPhail - 117 CLR 111
Bray v FCT - 19 ALR 309; 140 CLR 560; (1978) 78 ATC 4179; (1978) 8 ATR 569
Australasian Conference Association Ltd v Mainline Constructions Pty Ltd (in liq) - 141 CLR 335; 22 ALR 1
Rose v Rose - 7 NSWLR 679
Re Veli; Ex parte AE Developments Pty Ltd v Scott - 18 FCR 204
Re Miles; Ex parte National Australia Bank Ltd v Official Reciever in Bankruptcy - 20 FCR 194; 85 ALR 216
Ausintel Investments Austrlia Pty Ltd v Lam - 19 NSWLR 637
General Communications Ltd v Development finance Corp of New Zealand Ltd -  3 NZLR 406
Re Rolls Razor Ltd (No 2) -  1 AC 576;  1 Ch 910;  1 Ch 912;  1 Ch 540;  1 Ch 930
Commissioner for Stamp Duties (NSW) v Perpetual Trustee Co Ltd -  1 AC 425; 64 CLR 492
Vandervell's Trusts (No 2) -  1 Ch 269
Carreras Rothmans Ltd v Freeman Matthews Treasure Ltd -  1 Ch 207
Australasian Conference Association Ltd v Mainline Constructions Pty Ltd (in liq) - 1 CLR 353
Tidex v Trustees Executors and Agency Co Ltd -  2 NSWLR 453
Re Wall; Ex Parte Official Reciever v Kemmis - 25 ALR 615
Trident General Insurance Co Ltd v Mc Niece Bros Pty Ltd - 80 ALR 574; 165 CLR 107
Bahr v Nicolay (No 2) - 164 CLR 604; 78 ALR 1
Countess of Bective v FCT - 47 CLR 417
Perpetual Trustee Co Ltd v Godsall -  2 NSWLR 785
Re EVTR -  BCLC 646
Dean v Cole - 30 CLR 1
Barnes v Addy -  9 Ch App 244
British America Elevator Co Ltd v Bank of British North America -  1 AC 658
Australia and New Zealand Banking Group Ltd v Westpac Banking Corp - 164 CLR 662; 78 ALR 157
Lipkin Gorman v Karpnale Ltd -  3 WLR 10
Le Compte v Public Trustee -  2 NSWLR 109
Re Crest Realty Pty Ltd (in liq) and the Companies Act -  1 NSWLR 664
Re Sharpe (a bankrupt); Ex parte Trustee of the Bankrupt v Sharpe -  1 All ER 198
Halbury's laws of England, 4th ed Vol 20
"The Romalpa Clause and the Quistclose Trust", ed "Equity and Commercial Relationships"
"The Quistclose Trust: Who Can Enforce it?"
"Different Views on the Scope of the Quistclose Analysis: English and Antipodean Insights"
The Law of Trusts, 4th ed 1987 Hearing date: 10, 11 July 1991
Judgment date: 2 August 1991
The court declares:
That the moneys received by the Australian Elizabethan Theatre Trust (the AETT), in respect of which the donor expressed a preference for allocation in favour of the Australian Opera (the Opera), the Australian Ballet Foundation (the Ballet) and Victorian Tapestry Workshop (the Workshop) being the moneys identified in Annexure B to the affidavit of the provisional liquidator, sworn 5 June 1991 and filed herein, do not constitute moneys held by the AETT or the Commonwealth Bank of Australia upon trust for the Opera, the Ballet, the Workshop or any of them.
The court orders:
That the proceeding stand over further directions and orders.
One of the objects of the Australian Elizabethan Theatre Trust (AETT) is the promotion of the Australian arts by the provision of financial support to various arts organisations. Section 78(1)(a)(viii) of the Income Tax Assessment Act 1936 (Cth) (the Tax Act) provides that certain gifts to the AETT be allowable deductions. The Commissioner of Taxation ruled that donations to the AETT would be deductible only where the donations were received by the AETT "unconditionally". However, the Commissioner accepted that where the donor indicated a "preference" that the donation be passed on to a nominated arts organisation, these "wishes" of the donor might be taken into account by the AETT when making grants in accordance with its objects. The Commissioner further ruled that "preference" donations would be deductible only where the AETT received the donation in its own right and had an unfettered discretion whether or not to apply the donation in accordance with the preference.
A practice therefore developed whereby donations would be made to the AETT on a standard form stating that the donation was unconditional but expressing a preference that the AETT pass on the gift to a nominated arts organisation. The AETT passed on the donation to the arts organisation, thereby enabling the donor to receive a deduction in relation to gifts ultimately received by the various arts organisations (the tax deductibility program).
Certain donations had been made indicating preferences in favour of the Australian Opera (the Opera), the Australian Ballet Foundation (the Ballet) and the Victorian Tapestry Workshop (the Workshop). The donations were deposited by the AETT with the Commonwealth Bank of Australia (the bank) into a general operating account, and not an earmarked account. Prior to any allocation by the AETT, a provisional liquidator was appointed to the AETT.
The court considered whether the moneys were held on either express trust or constructive trust.
Held: , declaring that the moneys were not held on express trust or constructive trust:
- The moneys were not held upon express trust.
- The question as to the existence of any express trust is answered by reference to intention. Ordinarily, the relevant intention is that of the alleged settlor, but in some circumstances it may be appropriate to look at the mutual intention of the settlor and trustee.
- Trident General Insurance Co Ltd v McNiece Bros Pty Ltd (1988) 165 CLR 107 ; 80 ALR 574, applied.
- The relevant intention is to be inferred from the language employed by the parties, and the court may look at the nature and circumstances of the transaction.
- Walker v Corboy (1990) 19 NSWLR 382, applied.
- The word "unconditionally" in the AETT standard form suggests an absence of qualification or obligation. The tax deductibility program was premised upon donors obtaining the deduction and that required gifts to be made outright. A stated "preference" was to indicate a motive or expectation, but not to impose a legal or equitable obligation.
- Barclays Bank Ltd v Quistclose Investments Ltd  AC 567, distinguished.
- A significant factor in leading to the conclusion that no express trust arose was that the AETT, upon receipt of gifts, placed the moneys into a general operating account rather than an account earmarked for grants.
- Re Associated Securities Ltd and the Companies Act  1 NSWLR 742; Re Multi Guarantee Co Ltd  BCLC 257; Walker v Corboy (1990) 19 NSWLR 382, applied.
- Stephens Travel Service International Pty Ltd v Qantas Airways Ltd (1988) 13 NSWLR 331, distinguished.
- Accordingly, no express trust arose in favour of the three organisations. Nor was the AETT subjected to a trust power exercisable by the AETT in favour of one or other of the organisations, given that the funds were given to the AETT "unconditionally". Likewise, the moneys were not held by the AETT on trust for the donors pending allocation by the AETT.
- Observations on Barclays Bank Ltd v Quistclose Investments Ltd  AC 567, including: it is an error to treat the references by Lord Wilberforce in the Quistclose case to "purpose" as characterising an express trust which did not have to satisfy the ordinary requirements for any private (as distinct from public) trust. The use of the expression "purpose" should not be read as heralding a new era for the non-charitable purpose trust.
- The circumstances are not such that the bank was engaged in a joint enterprise with other donors, the AETT and the preferred arts organisation in the sense which brings into play equitable principles regulating the proprietary rights of parties inter se upon the premature collapse of a joint enterprise. Accordingly, no constructive trust should be imposed upon the AETT or the bank in favour of the three organisations.
- Muschinski v Dodds (1985) 160 CLR 583 ; 62 ALR 429; Baumgartner v Baumgartner (1987) 164 CLR 137 ; 76 ALR 75, distinguished.
This application was brought by the provisional liquidator of the AETT who sought a declaration that certain moneys received by the Australian Elizabethan Theatre Trust (AETT) as donations stating a preference that such donation be allocated by way of grant to one of the Australian Opera (the Opera), the Australian Ballet Foundation (the Ballet) or the Victorian Tapestry Workshop (the Workshop) did not constitute moneys held by the AETT upon trust for those parties. The Commonwealth Bank of Australia (the bank) supported the making of that declaration. The Opera, the Ballet and the Workshop sought declarations that the moneys were held on express trust for the arts organisations, or alternatively the donors. The Opera, the Ballet and the Workshop sought in the alternative declarations that the AETT or the bank holds the money on constructive trust in their favour.
Cur adv vult
D E J Ryan for the provisional liquidator and the Australian Elizabethan Theatre Trust (in provisional liquidation).
S D Rares for the Australian Opera, the Australian Ballet Foundation and the Victorian Tapestry Workshop.
R A Conti QC and G O'L Reynolds for the Commonwealth Bank of Australia.