Federal Commissioner of Taxation v. Hall.

Rath J

Supreme Court of New South Wales

Judgment date: Judgment handed down 20 August 1975.

Rath J.: This is an appeal from the decision of a Board of Review upholding an objection of the respondent against an assessment to income tax for the year ended 30th June, 1970. The Board allowed the objection of the respondent against the inclusion in his assessable income of the amount of $2,715.00 received by him from the University of New South Wales out of funds provided by the Asthma Foundation of Tasmania. The questions of law involved in the decision of the Board relate to the construction of sec. 23(z) of the Income Tax Assessment Act 1936 as amended. This provision reads -

``23(z) income derived by way of a scholarship (other than a scholarship referred to in the next succeeding paragraph), bursary, or other educational allowance by a student receiving full-time education at a school, college or university, but not including an amount received by the student from a person or authority upon condition that the student will (or will, if required) render, or continue to render, services to that person or authority.''

The respondent obtained his degrees in medicine at the University of Cambridge in 1963 and 1964 and specialist qualifications as a physician in Australia in 1968. In the last mentioned year the respondent approached Associate Professor Gandevia, of the University of New South Wales, and indicated to him that he wished to undergo training in epidemiology with a view to proceeding to a doctorate in medicine or philosophy. The respondent was aware that Professor Gandevia had experience in the field of epidemiology, and wanted his advice as to what projects and potential supervisors there were in Sydney. Professor Gandevia had in fact a project under way which he had undertaken for the Asthma Foundation of Tasmania. He expected to have available early in 1969 data from a survey conducted pursuant to this project in Tasmania and was of the view that this data would form a suitable basis for research by the respondent under his supervision. The respondent reacted enthusiastically to this suggestion, but there was for him a financial problem. He was a married man, who had recently undertaken the commitment of buying a home. He was then employed in a hospital, and as the research project would be full-time he would have to resign from this employment and would require financial assistance.

In these circumstances Dr. Gandevia decided to seek funds from the Asthma Foundation of Tasmania to finance a research fellowship for the purpose of providing assistance in the analysis of the data from the

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survey. In order properly to appreciate the significance of this request, it is desirable to consider the nature and purposes of the survey.

The Asthma Foundation of Tasmania is a charitable organisation. Its objects do not provide for itself undertaking research, but they do provide for its encouraging of research. The significant objects for the present case are to be found in para. (a), (b) and (m) of cl. 3 of its memorandum of association. These paragraphs read as follows -

``(a) To arrange for, promote, foster, develop and assist the study and the acquisition, dissemination and application of knowledge and information concerning the causes, diagnosis, prevention and treatment of asthma and allied conditions.

(b) In furtherance of the objects of the Foundation to encourage stimulate and aid research in all branches of medical science and (without prejudice to the generality of the foregoing) asthma research and investigation into the causes and treatment of asthma.

(m) To arrange or provide monetary assistance for and establish scholarships and make outright donations to graduate students, medical practitioners, scientists and other persons for the purposes of research and study or for the purpose of teaching and demonstrating their professional skill in the knowledge of methods of diagnosis prevention and treatment of asthma.''

In about 1967 the Foundation requested Professor Gandevia to aid publicity and give support to an appeal which the Foundation proposed conducting in Tasmania. The Foundation sought his advice as to projects to which it could apply the funds raised by the appeal. One of his suggestions was that the Foundation support an epidemiological study within Tasmania in conjunction with the School Medical Service in that State. This suggestion was adopted, and the Foundation sought his co-operation in the setting up of the study. Professor Gandevia then designed the basis of a respiratory survey, which involved the School Medical Service in circulating some 8,000 questionnaires to all children born in Tasmania in 1960 and in preparing the replies for analysis. The study was conducted in 1968, and Professor Gandevia was a member of a committee appointed by the Foundation to implement the study programme and to arrange for the storage and collation of data with the assistance of staff and computer facilities provided by the University of Queensland. The survey produced an outstanding response, and when the collection of information was completed the Foundation sought Professor Gandevia's advice as to its collation, critical analysis and preparation for publication in the most effective and expeditious manner. It was at this stage of the project that the respondent approached Professor Gandevia for his advice. Thereafter, on 12th July, 1968, Professor Gandevia wrote a report for the Foundation, setting out the progress of the survey, and the difficulties that would be involved if he did not have assistance in the detailed analysis of the results. ``I therefore wish to recommend to the Foundation'', he said in this report, ``that it undertake the support of a research fellow whose tasks it would be to undertake the detailed analysis of the results, in collaboration with Professor Silverstone and myself, to prepare the results for publication and to follow up the more important findings of the survey, either by re-analysis of the available data in different terms or by further study in Tasmania of random samples. On the basis of his findings, he would also undertake, in collaboration with the current workers, the design of the subsidiary and follow up surveys to be undertaken in Tasmania over the next few years... The fellowship would need to be supported for two years, as I estimate that this would be the minimum period of time in which this work could be completed''. He then went on to say that he had ``a very suitable candidate'', whom he identified (though not in this report) to the Foundation as the respondent.

This report was considered by the Medical Advisory Committee of the Foundation on 3rd August, 1968, which resolved that it be recommended that a research fellowship be granted for the analysis of survey findings. This Committee considered that the establishment of a writing committee was desirable, comprising Dr. Gibson (who had conducted the survey), Dr. Silverstone (of Queensland), Professor Gandevia, the Fellow, and a representative of the Medical Advisory Committee. On 17th September, 1968 the Foundation agreed ``to underwrite the stipend and expenses of a research fellow, to be known as the Tasmanian Asthma Foundation Fellow,

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for one year, to a total amount not exceeding $6,500, including annual stipend, superannuation provision and travelling expenses''. Terms and conditions of the fellowship were set out in the resolution, including a provision for its renewal for a further year.

The chairman of the executive committee of the Foundation wrote letters to the respondent and Professor Gandevia dated 23rd October, 1968 setting out the terms and conditions of the fellowship. The letter to the respondent reads as follows -

``Dear Dr. Hall,

On behalf of the Asthma Foundation of Tasmania, and on the recommendation of Associate Professor B.R. Gandevia, I have pleasure in offering you an appointment to a research fellowship on the following terms -

  • (1) The duties of the research fellow will be to analyse, collate, and to prepare for publication the findings of the Tasmanian Asthma Survey.
  • (2) The fellow will be attached to the Department of Thoracic Medicine at the University of New South Wales and will work under the supervision of Associate Professor Gandevia.
  • (3) Papers communicated verbally to medical and scientific societies and published papers on the finding of the Survey should include suitable acknowledgement to the Foundation.
  • (4) The Foundation has no objection to the research fellow making use of the information obtained from the survey as the basis for his preparation of a thesis for the degree of doctor of medicine.
  • (5) All communications based on the finding of the survey, other than the research fellow's thesis, will be subject to the approval of and revision by a Writing Committee. The Writing Committee will consist of the research fellow, Associate Professor Gandevia, Dr. Heather Gibson, Dr. Silverstone, and a representative of the Medical Advisory Committee of the Asthma Foundation of Tasmania.
  • (6) The tenure of the research fellowship will date from 1st January, 1969, and be for a period of one year in the first instance. The Foundation is prepared to consider re-appointing the fellow for a second year if the directors are satisfied with the work of the fellow and that the analysis of the results of the Survey justifies a second year of work.
  • (7) The fellow will submit an interim report of the progress of his work to the directors of the Foundation, not earlier than 1st July, 1969 and not later than 31st August, 1969.
  • (8) The stipend of the research fellowship will be $5,500 per annum with superannuation provision not exceeding $550 per annum, or alternatively $6,000 per annum without superannuation provision. The directors are prepared to consider applications for travelling expenses to be incurred by the research fellow, these expenses not to exceed $400 per year.
  • (9) The directors of the Foundation accept that the research fellow will be allowed four weeks annual leave.

I shall be glad to hear that you accept this appointment on these terms.''

The respondent did not reply to this letter, and there is no evidence of any communication between him and the Foundation in regard to it. Professor Gandevia was abroad at the time, and it appears that it was he who, on his return, completed the arrangements under which the University accepted the grant. He wrote a letter to the Assistant Registrar, dated 3rd December, 1968, which in part reads: ``The Asthma Foundation of Tasmania... has offered a research fellowship to Dr. G.J.L. Hall. This fellowship will be tenable for two years and is for work to be carried out in my unit. Dr. Hall will proceed to the degree of doctor of medicine or perhaps doctor of philosophy, and is to be regarded as a postgraduate scholar in the University. The Asthma Foundation has offered Hall a salary of $6,000 per annum.... Dr. Hall will commence duty on 13th January, 1969''.

A letter dated 2nd January, 1969 from the Registrar to the respondent made the formal offer of what it termed ``a postgraduate research scholarship supported by the Asthma Foundation of Tasmania''. This letter is as follows -

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``Dear Dr. Hall,

Postgraduate Research Scholarship 1969

On behalf of the University I am pleased to offer you a Postgraduate Research Scholarship supported by the Asthma Foundation of Tasmania for 1969 with an annual stipend of $6,000. This offer is subject to the conditions set out below. The offer may be accepted in anticipation of satisfying these conditions.

Will you please inform Mr. J.F. Foley, Assistant Registrar, within fourteen days of the date of this letter, but preferably by return mail, whether or not you wish to accept the award.

If you accept the award, having notified Mr. Foley, you should contact the Head of the School in which you will be working in order to finalise any matters associated with the scholarship which may be outstanding; such as the date on which you will commence your studies under the scholarship; the lodging of an application for registration as a higher degree candidate.

General Conditions Governing the Award

  • 1. You are required to register as a candidate for a Doctor of Medicine by 30th April 1969; otherwise the scholarship may be terminated.
  • 2. The purpose of the award is to provide you with an opportunity for full-time training in research under the direction of a supervisor appointed by the University.
  • 3. During the tenure of the scholarship you may not engage in any paid activity without the prior approval of the University. Subject to securing the prior approval of the University, you may undertake up to a maximum of six (6) hours weekly in demonstrating and tutoring; or fewer hours where extensive preparation and or marking is required.
  • 4. If you are unable, at any time during the tenure of the scholarship, to engage in your research work for a period of three successive working days or more, the circumstances shall be reported in writing, through the Head of your School, to the Registrar; where illness is the cause a medical certificate shall be submitted with this report. The University will consider what effect, if any, the circumstances will have on the scholarship stipend.
  • 5. By arrangement with the Head of your School up to four weeks' recreation leave may be taken in each year of tenure of the award.
  • 6. The tenure of the Award will initially be for one year and subject to satisfactory progress being made with your research the scholarship may be renewed.
  • 7. You are required to submit a written report on your research work to the Head of your School by 30th October each year during the tenure of the scholarship, and to indicate whether or not you desire an extension of your scholarship for the following year.''

The University by-laws provided at the relevant times that subsequent to registration of a candidate for the degree of doctor of medicine, he should pursue a course of advanced study and research for at least six academic terms, and that the candidate should carry out his course of study under a supervisor appointed by the Faculty, or under conditions or with facilities that had been approved. The respondent applied for registration late in November or early December, 1968. The short title of his proposed field of research was: ``Bronchial Asthma. A Homogeneous Entity, or One of a Spectrum of Related Disorders?'' The brief outline of his proposed field had the approval of Professor Gandevia, and was stated in his application as follows: ``Taking as a basis the respiratory survey organised by Professor Gandevia for the Asthma Foundation of Tasmania of all children born in Tasmania in 1960, it is proposed, using defined criteria, to study groups comprising (i) unequivocal asthma, (ii) unequivocal bronchitis, (iii) indeterminate or `mixed' lower respiratory disorders and (iv) a control group without lower respiratory disorder. These groups will be examined for factors permitting clearer definition of sub-groups, and for factors involved in aetiology and prognosis. Factors to be studied include: family history of asthma, bronchitis and upper respiratory disorders; social factors such as size of family and interpersonal relationships; genetic, climatic and geographical features. Whilst I took no part in designing or carrying out the initial survey, there is considerable scope for

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originality of approach to the analysis of the vast amount of complex and comprehensive data which has been acquired. Two, or perhaps three, field surveys will be designed and conducted personally, one of eight year old children in an industrial area of Sydney (a type of area not represented in the Tasmanian survey) and one or two studies of specific problems, defined by initial analysis, in defined population groups drawn from the main survey population in Tasmania''.

The respondent was notified by a letter dated 19th March, 1969 from the Registrar of the University that his application to register as a higher degree candidate had been successful. The conditions for his registration included enrolment for the full time doctorate of medicine course, as from first term, 1969 on the topic proffered, with Associate Professor Gandevia as supervisor.

Professor Gandevia said, in an affidavit filed in the appeal, that when he is requested to assist in the training for the degree of doctorate of medicine or philosophy, then the subject of work which the student wishes to undertake must come within the field in which he is competent to supervise and must be related to material of which he can ensure a supply. It is essential that he is able to provide the necessary techniques or apparatus. The candidate must invariably work within the resources of his department. These requirements are also matters upon which the University insists in regard to its acceptance of candidature in a given department or under a given supervisor. Professor Gandevia said that it was necessary for the respondent in order to attain his degree to show originality of approach to the data and to do some work in the field himself on a project of his own. He had to show familiarity with techniques, and ability to design and carry out an original project himself. The basic requirements for his higher degree were that he should: (a) obtain training in research methods; and (b) provide an original contribution to knowledge. Dr. Gandevia said that the respondent's acceptance by the Higher Degree Committee of the University indicated that it was satisfied that the necessary conditions were satisfied within the scope in which the respondent was moving.

Following acceptance of the respondent by the Foundation, the respondent was paid directly by the University and the Foundation reimbursed the University the moneys paid. The chairman of the executive committee of the Foundation wrote the following letter dated 26th March, 1969 to the assistant registrar of the University: ``You are aware, through Professor Gandevia, that a research fellowship has been offered to Dr. Graham Hall, by the Asthma Foundation of Tasmania. Since this is the first grant of its kind from this Foundation, I shall be glad if you will let me know on what basis you would prefer the payments to be made.'' The University bursar replied on 1st May, 1969 as follows: ``Thank you for your letter of 26th March, 1969 regarding the research fellowship offered to Dr. G. Hall. The University would be pleased to receive the fellowship payment in equal instalments at six monthly intervals payable in advance. It would be appreciated if the first payment could be made immediately and the second payment prior to the 31st (sic.) September, 1969''.

Throughout the course of his studies the respondent remained under the control and direction of Professor Gandevia alone. He was required by the University to submit reports at six monthly intervals and these reports were submitted to Professor Gandevia as his supervisor. The respondent also prepared reports for forwarding to the Foundation, but these reports, in Professor Gandevia's opinion, were more in the nature of public relations advice than academic material. Professor Gandevia was primarily responsible for the reports to the Foundation, and he often revised or added to the reports prepared by the respondent. The Foundation gave no directions as to the manner in which the survey was to be conducted or the manner in which the reports submitted to them were to be prepared.

Much stress was placed in the course of evidence and argument on behalf of the appellant upon the conditions relating to the writing committee. There is little room for doubt on the evidence that this committee never functioned as such, though consultation among its members as to proposed published material did in some instances occur. I think that the intention of the Foundation, in nominating this committee, was to ensure that there should be no publication, purporting to be made with the approval of the Foundation, unless the material had the approval of this committee. The Foundation desired that published material should make some courteous reference to the Foundation, and it

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appears also to have made some vague property claim to the materials of the survey. But little or no light is thrown on the relations between the respondent and the Foundation by these circumstances.

This review of the evidence to my mind establishes the following propositions. First, the University, primarily through Professor Gandevia, approved a course of study and research for the purposes of the respondent's candidature for a higher degree. This course was to be a full time one. In the event the respondent did earn some income from other activities, but these were minor. His day extended over at least the period from 9 a.m. to 5 p.m. on the course the University had approved. He was therefore pursuing a full time course for the higher degree. Secondly, all of his activities related to the analysis of the survey made for the Foundation were integrated into his higher degree course. The work in relation to that survey was made, by the University, the work primarily required for his degree. It was, with some supplementary effort, to be the material not only for his original contribution to knowledge but also for his own training in the techniques of research, including the formulation of a research project. In short, the broadness of the original concept of the survey, as it appeared from the initial results, was sufficient to provide for a student a field of training in research techniques and for original contributions to knowledge. Thirdly, whatever may have been the purpose or motive of the Foundation in providing the funds for the fellowship, the University took steps to ensure that the fellow was under its own exclusive control, and his activities, whilst being kept by the University to the terms of the grant from the Foundation, followed the course that the University had determined as the proper one for his higher degree. Two distinct relationships are involved. The first was that between the Foundation and the University, and the essence of that relationship was that the University should require the research fellow to carry out activities that would ensure the proper implementation of the survey that had been conducted under the auspices of the Foundation. The second was that between the University and its student, and this was so designed that the work he was assigned to do was work acceptable for his higher degree. It was the mark of this second relationship that the University received the funds from the Foundation, that it laid down to the student the conditions under which his scholarship would be paid, and that it itself paid the scholarship moneys from its own accounts.

Counsel for the appellant Commissioner submitted that the income in question was not derived by the respondent by way of a scholarship, bursary or other educational allowance; that the respondent was not receiving full-time education at the University; and that, even if these submissions were wrong, the income was received by the respondent from a person or authority upon condition that the respondent would render, or continue to render, services to that person or authority.

It will be convenient to consider first whether Dr. Hall was receiving full-time education at the University of New South Wales. His normal hours of work at the University, namely from 9 a.m. to 5 p.m., for five days a week, obviously have the character of full time activity, though he did have some other independent income. The whole of the work formed part of the course of research and academic activity planned by him and the University as the course to be pursued for the attainment of his higher degree in medicine. To deny this activity the character of education is to assert that work regarded by a university as part of the qualifying course for a higher degree is not education. The University required Dr. Hall to work under the supervision of Professor Gandevia, and its intention was, as I understand the planning of the work, that Dr. Hall, under the instruction and guidance of Professor Gandevia, would develop his powers of research, and be afforded an opportunity to make an original contribution to knowledge.

Chesterman v. F.C. of T. Starke J. said ((1923) 32 C.L.R. 362 at 400) that the essential idea of education is training or teaching. Isaacs J. said (pp. 385-6) that for purposes to be educational they must provide for the giving or imparting of instruction. In his view education connotes the sense of imparting knowledge or assisting and guiding the development of body and mind. ``Within that orbit'', he said, ``the field is wide, and extends from elementary instruction in primary schools to the highest technical scientific teaching in Universities''. In
Lloyd v. F.C. of T. ((1955) 93 C.L.R. 645), Kitto J., after referring to these views, said (at p. 676): ``The conception is unquestionably much wider than mere book learning, and wider than any category of subjects which

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might be thought to comprise general education as distinguished from education in specialized subjects concerned primarily with particular occupations''. In the same case Dixon C.J. referred (at p. 661) to ``systematic methods or procedures for the inculcation of knowledge''.

On these authorities education involves the dual concepts of imparting of knowledge and system. In educational institutions the imparting of knowledge is performed by various methods and combination of methods. The simplest, and this is the one that features prominently in primary education, is the direct inculcation of knowledge by the teacher in the pupil. A more sophisticated form of instruction is discussion, the exchange of ideas between teacher and student, a form which finds classical expression in the dialogues of Plato. In advanced education the element of direct inculcation may have little prominence. The professor's lectures may be better understood by reading his notes than by hearing him speak. It is not unknown for the lecturer to deliver his lecture at a speed which permits of every word being taken down in long hand. There can be little or no understanding of the subject matter in such a procedure, and understanding comes later from a study of the notes. In higher education much of the instruction comes, not from the teacher, but from the books the student reads. Indeed the element in education that has been referred to as imparting of knowledge (thus suggesting a necessary teacher-student relationship) might be better described as learning; and the process of learning may be fostered in many ways, without stress on the teacher-student relationship.

More significant perhaps is the element of system. In all educational establishments there is a planned course of learning. It is primarily for the educator to plan the course of study, and the procedures of learning. Typically these procedures will involve reading, discussion and teaching, with the first two having the predominant role as the level of education advances.

It may be that a fully qualified expert, engaged in research, is outside the field of education. He may, it is true, learn from his research; but he plans his own research, and although it may have a system, it is not a system laid down by an educational authority. Thus research performed by the professor himself, or as leader of a team, may not be a process of education for him. But that sort of research is different in kind from the research performed under supervision and direction by a student for a higher degree. In the present case, Dr. Hall's activities were settled for him by an educator, and were selected by the educator as being capable of qualifying Dr. Hall himself to become a competent planner and co-ordinator of research projects. Thus in my view it would be wrong to deny to Dr. Hall's activities the character of education. There is no ground in the evidence for dividing his activities into two kinds, educative and non-educative, the non-educative being some more routine aspects of his work in the analysis of the survey. All of the activities, on the evidence, were regarded by the University as having a necessary instructional character. They do not lose this character for him because the results of his work may have values for others of a non-educational kind.

I do not intend by the foregoing remarks to lay down the proposition that there can be no education without an educator. The notion of self-education is in my view a real one. A person might plan his own course of study. But in sec. 23(z) the requisite education must be at a school, college, or university, and it is unnecessary to consider the concept of self-education.

Dr. Hall, then, was receiving full time education at the University by way of his work upon the survey conducted under the sponsorship of the Asthma Foundation. The income he received enabled him to receive this education. However, the money was not provided by the Foundation for the purpose of educating Dr. Hall, but for purposes of its own. From his point of view it was an allowance for his education; but this was not the reason the Foundation provided the money, and Dr. Hall was aware of this fact.

The words ``scholarship, bursary or other educational allowance'' appear to me to connote an educational purpose in the person who provides the allowance. It is not sufficient that the provider of the money does not object to some ancillary educational result being derived from the use of his grant. The founder of a scholarship may be motivated by purely educational aims, or he may have in mind some collateral advantage; but a grant does not in my view fall within these words in sec. 23(z) unless at least one of the purposes for which it

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is made is the education of the recipient. Such a view is not inconsistent with the construction of the words after ``but'' as a true exception, because a condition requiring services from the recipient, even present services, is not incompatible with a purpose of educating the recipient; indeed it is not incompatible with a purpose of providing him with full-time education, because the services required may be part of the education programme, or may be required to be performed outside the programmed hours of the full-time course. It is true that the exemption in sec. 23(z) relates to income in the hands of the scholar, and not to deductibility from income of the benefactor, and that this may be thought to provide a reason for looking at the character of the receipt from the point of view of the purposes of the scholar. Though there may be logic in this approach, I think it is inconsistent with the ordinary understanding of the phrase ``scholarship, bursary, or other educational allowance''. In its ordinary meaning that collocation of words connotes a character in the income that attaches to it apart from and irrespective of the use the student makes of the money. A scholarship is a scholarship even if the student spends it on marihuana; income of the student derived from his own rent producing properties is not exempted from his assessable income by sec. 23(z) even if he devotes it to his education. For these reasons I am of the opinion that if the income is treated as derived from the Asthma Foundation it has not the requisite character of being ``derived by way of a scholarship, bursary, or other educational allowance''.

But this does not conclude the matter. There is no reason why money obtained by a University for certain purposes should not be used by it to provide a scholarship, if the conditions of the scholarship satisfy the purposes for which the money is provided. Thus money given to a university by a chemical company for research into pesticides might, if the terms of the donation were wide enough, be used by the university to provide scholarships tenable by students. In such a case the donor's purpose is to have research conducted that may advance his commercial interests; but his purpose may be achieved if the university has the research carried out as part of an education programme. The question is whether it is realistic to regard the Asthma Foundation's money as being applied in this way. On the one side is the circumstance that the University paid Dr. Hall from one of its own accounts. As I understand the position, Dr. Hall was paid from University funds as if he was a research fellow of the University; it was not simply a case of the University receiving money from an outside source for a specific purpose, and paying that money into an appropriate account for payment out to Dr. Hall. The University treated the payments from the Asthma Foundation as a source from which it could properly reimburse itself the moneys paid to Dr. Hall. True the University sought to ensure that the moneys from the Foundation would be in hand before it paid Dr. Hall, but it does not appear to have acted as the agent of the Foundation for paying Dr. Hall, and it was not a mere ``conduit pipe'' (cp.
Clarke v. F.C. of T. (1932) 48 C.L.R. 56 at 79). On the other side it may be said that there is some unreality in regarding the moneys as a scholarship in any sense provided by the University. The money was obtained by Professor Gandevia for a special purpose, and for a named person, Dr. Hall; and the donor of the money was allowed to remain with the belief that it was paying Dr. Hall for a specific task being undertaken in pursuance of its charitable objects. Fundamentally the payment was for the provision of assistance to Professor Gandevia in a project he had undertaken for the Foundation.

Thus on the one side it may be said that the money was paid by the University and accepted by Dr. Hall for educational purposes, with reimbursement from funds provided by the Foundation. On the other side it may be said that the moneys never had the character of a scholarship, because, whether they were regarded as coming directly from the Foundation, or only indirectly, their real character was moneys for the performance of specified work, and Dr. Hall accepted the moneys on the understanding he would do this work.

It will be noted that there was no arrangement between the Foundation and the University to the effect that the University would in its discretion apply money received by the Foundation in ways conformable both to the Foundation's purposes and the educational role of the University. The money paid to Dr. Hall by the University was money that it held for application to a specific purpose, namely the purpose of paying Dr. Hall to do certain work required by the Foundation to be done;

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and whatever procedures were adopted in the payment to Dr. Hall, both he and the University knew where the money was coming from, and what it was for. In these circumstances I do not think that the income in question here can be treated as income derived by way of a scholarship, bursary, or other educational allowance within the meaning of sec. 23(z).

If, contrary to this view, the income is income derived by way of a scholarship, bursary, or other educational allowance, the question is left as to whether it is an amount received by Dr. Hall from a person or authority upon condition that he would (or would, if required) render, or continue to render, services to that person or authority. The only relevant ``person or authority'' is the Asthma Foundation, because I do not think it could reasonably be said that it was a condition of the receipt that Dr. Hall should render services to the University. Thus, if the exception is to apply, it must first be the case that the income is an amount received by Dr. Hall from the Foundation. For reasons I have already given, I do not think that the money received by the University from the Foundation was paid to Dr. Hall by the University acting as the agent of the Foundation. That would not correctly express the relationship between Dr. Hall and the University. For both Dr. Hall and the University, it was the University that was the paymaster. But the University received the money from the Foundation under an obligation to pay it to a specific person for specific purposes. It was answerable as a trustee for the money to the Foundation. This interposition of the University as a trustee in my opinion would not prevent the exception from applying. Assuming, then, that the income is to be treated as received by Dr. Hall from the Foundation, the question is, was it an amount Dr. Hall received upon condition that he would (or would, if required) render, or continue to render, services to the Foundation? On the evidence I think Dr. Hall should be regarded as receiving the money on the conditions laid down by the Foundation in their letter to him. It is a sufficient acceptance of those conditions that he accepted the Foundation's money, because the Foundation had communicated its conditions to him, and could reasonably regard his conduct as acceptance. Although the Foundation was not itself carrying out the collation and analysis of data from the survey, and may not have been authorized by its memorandum of association to do so, it was concerned to ensure that the work of collation and analysis was done, and had the power to make a grant for that purpose. In those circumstances it seems to me that the person receiving the grant for those purposes is receiving it upon the condition of rendering services to the Foundation. There is work being done, and that work is being done in furtherance of a survey conducted for the Foundation at its expense. This seems to me in the circumstances of this case to be work done for the Foundation of such a kind as to constitute the rendering of services to it (cp.
Employers' Mutual Indemnity Association Limited v. F.C. of T. (1943) 68 C.L.R. 165 per Latham C.J., at 174;
Revesby Credit Union Co-operative Ltd. v. F.C. of T. (1965) 112 C.L.R. 564 at 577-8).

For these reasons I am of the opinion that the appeal should be allowed.

I was informed by counsel that an arrangement as to costs had been made between the parties and that they were not concerned as to what order for costs (if any) I made. However, I think the proper order for costs is that the respondent pay the appellant's costs of the appeal.

I therefore order that the appeal be allowed, and that the respondent pay the appellant's costs of the appeal.

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