The Church of the New Faith v. Commissioner of Pay-roll Tax (Victoria).
Members: Young CJKaye J
Brooking J
Tribunal:
Supreme Court of Victoria (Full Court)
Brooking J.
Consequent upon the report of a Board of Enquiry into scientology appointed by the Government of Victoria, the Parliament of this State enacted the Psychological Practices Act 1965. By sec. 31 of this Act:
``(1) Any person who demands or receives, directly or indirectly, any fee or reward, of whatever kind and by whomsoever paid or payable, for or on account of or in relation to the teaching practice or application of scientology or who advertises or holds himself out as being willing to teach scientology shall be guilty of an offence and shall be liable for a first offence to a penalty of not more than $200 and for a second or any subsequent offence to a penalty of not more than $500 or to imprisonment for a term of not more than two years.
(2) In this section `scientology' means the system or purported system of the study of knowledge and human behaviour advocated in the writings of Lafayette Ronald Hubbard and disseminated by the Hubbard Association of Scientologists International, a company incorporated in the State of Arizona in the United States of America, and includes any system or purported system associated with or derived from the same and the system or purported system known as dianetics.''
The E-meter also received the attention of the legislature, its use by any person (other than a registered psychologist) without the consent of the Victorian Psychological Council being prohibited by sec. 30 under penalty of a fine of $500. In addition the Act, by sec. 32, required, under a criminal sanction, the immediate delivery up to the Attorney-General, for destruction or other disposal, of ``scientological records'' as defined in that section and authorised the issue of search warrants.
Notwithstanding this legislation, by November 1978 there were, according to the affidavit of Elaine Isobel Allen, twelve ordained ministers of the appellant in Victoria, who were said to assist in the conducting of services, the counselling of
ATC 4219
members of the appellant and the teaching of the doctrines of the Church. By the time of the hearing ``the number of people of the Church'' in Victoria was said to be between five and six thousand. Moreover, the E-meter was still in frequent use in this State. The reconciliation of the statutory prohibitions with what went on, and evidently still goes on, in practice was said by the appellant to be found in the operation of an early section of the Psychological Practices Act upon certain events which took place in relation to the right under Federal law to celebrate marriages. Section 2 of the Act excepts certain persons, acts or things from the operation of the Act, the exception contained in subsec. (3) being in the following terms:``(3) This Act does not apply to anything done by any person who is a priest or minister of a recognized religion in accordance with the usual practice of that religion.''
By subsec. (4), ``recognized religion'' means a religion any of whose priests ministers or members are as such authorized to celebrate marriages under the law of the Commonwealth relating to the celebration of marriages or any religion which is proclaimed by the Governor-in-Council by proclamation published in the Government Gazette to be a recognized religion for the purposes of sec. 2.
Section 26 of the Commonwealth Marriage Act 1961 empowers the Governor-General to declare, by Proclamation, a religious body or a religious organisation to be a recognised denomination for the purposes of the Marriage Act, and the result of sec. 29 and 32 is that a minister of religion of a recognised denomination who is registered under the Act may solemnize marriages in Australia. By Proclamation dated 18th January 1973, ``The Church of the New Faith Incorporated'' was declared to be a recognised denomination for the purposes of the Marriage Act. By 1977, a number of persons, said to be ministers of religion of the appellant (including at least one person in Victoria), had been registered under the Marriage Act as ministers of religion of a recognised denomination.
Neither before Crockett J. nor in this Court did the Commissioner rely upon the Psychological Practices Act. The course taken by the Commissioner cannot, however, relieve the Court of the responsibility of considering whether illegality affords an answer to the taxpayer's claim to exemption provided it is clear that the question could not be affected by further evidence.
I have already referred to Mrs. Allen's affidavit evidence to the effect that by November 1978 the taxpayer had twelve ordained ministers in Victoria, assisting in the teaching of the doctrines of the Church. Earlier in her affidavit she had said this:
``As appears from art. 2 of the constitution and general rules of the appellant the objects of the Church includes [ sic ] the object of presenting and upholding the religion of Scientology. The religion of Scientology was founded by Lafayette Ronald Hubbard, who is the spiritual leader of the adherents of the religion, including its adherents in Australia who are members of the appellant. Now produced and shown to me and marked with the letters `EIA 4' is the work entitled `The Scientology Religion' by the said Lafayette Ronald Hubbard. The said work is regarded by the trustees, ministers and members of the appellant as authoritative and is adhered to by them in their conduct of the affairs of the appellant and in their conduct of the religion of Scientology in Victoria, insofar as they are able to do so. Insofar as the said book contains statement of fact, I believe the same to be true. Insofar as the same contains statements of belief, the said statements of belief are the beliefs upon which the appellant's activities are founded, and are beliefs which are adhered to by the trustees, the ministers and members of the appellant, in Victoria.''
In her viva voce evidence, Mrs. Allen described the taxpayer's headquarters in Russell Street, Melbourne, as including a chapel and two course rooms for people who first came into the Church; in those course rooms ``Basic Courses in Scientology'' were given. According to the viva voce evidence of that witness and the witness Cockerill, the income of the taxpayer came from membership dues, donations, fees paid by those training for the ministry, fees paid by
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others for various ``services'' and the price of books sold, these being almost without exception the works of Lafayette Ronald Hubbard.The taxpayer describes itself as a Church. In art. 2 of its Constitution and General Rules the first of its objects is said to be ``to present and uphold the religion of Scientology as founded by the Church and as further developed by the Church as prescribed herein to the end that any person wishing to participate in its communion and fellowship may derive the greatest possible good of the spiritual awareness of his Beingness, Doingness and Knowingness''. Paragraph (h) of sec. 2 of art. 9 of the same document defines ``scientology'' without reference to Hubbard, but sec. 5 of art. 2 gives as one of the taxpayer's objects to affiliate with the Mother Church and retain a unity of doctrine, teaching and practice with that of the Mother Church. The Mother Church is identified by para. (g) of sec. 2 of art. 9 as a certain Church in the United States of America as founded by Hubbard. Another object of the taxpayer, as set forth in sec. 6 of art. 2, is to recognise and fraternally co-operate with the Church of Scientology of California incorporated in the State of California and the Church of Scientology of California in England registered at East Grinstead in the County of Sussex, England and any other bodies which seek to achieve objects similar to those set out in the Constitution and General Rules. The evidence makes it clear that the Church of Scientology of California is engaged in propagating scientology in the sense of a system associated with or derived from the system developed by Hubbard. On the whole of the evidence, it is clear beyond argument that ``the religion of Scientology'', to present and uphold which is said to be the first object of the taxpayer, is scientology within the meaning of that term as defined in sec. 31 of the Psychological Practices Act 1965. It is inconceivable that evidence could be led to cast doubt on that conclusion. In addition to the presentation and upholding of scientology called for by sec. 1 of art. 2, sec. 7 of the same Article looks to the establishment and chartering of libraries, schools, institutes, seminaries, chapels, subordinate churches, book shops and other places to encourage the learning, study and practice of scientology.
The taxpayer is registered as a foreign company in Victoria under sec. 346 of the Companies Act 1961. Pursuant to para. (b) of sec. 346(1) it must have lodged with the Commissioner for Corporate Affairs a certified copy of its Constitution and General Rules, and that document is available for inspection by any member of the public (sec. 12(2)). Quite apart from what the evidence discloses as to the actual activities of the taxpayer, it is impossible to avoid the conclusion that the taxpayer is, having regard to the terms of its Constitution and General Rules and the lodging of a copy of that document under sec. 346(1), holding itself out as being willing to teach scientology and so committing an offence against sec. 31 of the Psychological Practices Act 1965, unless sec. 2(3) provides the answer. It is to be noted that sec. 31 prohibits holding out whether or not a fee or reward is in contemplation.
The Act of 1965 prohibits under penalty any person from advertising or holding himself out as being willing to teach scientology or from demanding or receiving any fee or reward in connection with the teaching practice or application of scientology. ``Scientological records'' must, on pain of a penalty, be delivered up for destruction. The use of the E-meter is in general prohibited. In the face of these proscriptions of activities which were evidently regarded as pernicious I confess that I find surprising the suggestion that Parliament contemplated that the evil to be checked would, as it were, disappear if a scientological body or organisation succeeded in having itself declared to be a recognised denomination for the purposes of the Marriage Act. It seems to me probable that when Parliament used the expressions ``a religion'' and ``any religion'' in sec. 2(4) it was not comprehending scientology as defined by sec. 31(2). The adoption of this view avoids the surprising consequence I have mentioned. It is a view which gains support from the words chosen in sec. 31(2) to define scientology, ``system or purported system of the study of knowledge and human behaviour'': the definition treats scientology (an expression defined so as to include associates and derivatives) as something other than a religion.
Moreover, if scientology as defined in sec.
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31(2) is a ``religion'' within the meaning of sec. 2(4), then once a scientological body or organisation is declared to be a recognised denomination for the purposes of the Marriage Act and (on one view of sec. 2(4)) at least one scientologist has been registered under the Marriage Act, the Victorian statute will have an incongruous operation in relation to the practice of scientology. This results from the inappropriate terms in which sec. 2(3) is cast if it is intended to introduce religious toleration for scientologists. For the exception is very far from co-extensive with the general rule represented by the penal provisions. Section 2(3) prevents the Act from applying to anything done by any person who is a priest or minister of a recognised religion in accordance with the usual practice of that religion. Even if the widest possible view is taken of the effect of this provision, it is none the less clear that the teaching and practice of scientology to any substantial extent will result in the commission of many offences and may well result in the commission of many others. Any person who is not a minister of scientology who holds himself out as being willing to teach scientology commits an offence. The taxpayer itself does so, as does any layman who holds himself out. The taxpayer commits an offence every time it receives a fee for one of the ``services'' referred to in the evidence, and probably commits an offence every time it receives from a member his dues or tithes, having regard to the prohibition on receiving any fee or reward, of whatever kind, in relation to the teaching, practice or application of scientology. The person who pays the fee, dues or tithes himself incurs criminal liability by aiding and abetting. The taxpayer commits an offence if it pays its ministers remuneration for their work as such, unless sec. 2(3) can be said to protect the transaction on the basis that sec. 2(3) prevents the Act from making criminal anything done by a third person in relation to anything done by a minister of a recognised religion, a proposition difficult to support. The taxpayer commits an offence, by aiding and abetting, when it pays the commission of 15 per cent on the value of ``services'' taken. It is arguable that receiving the purchase price of a book on scientology is caught by sec. 31, as the receipt of a fee or reward, of whatever kind, for or on account of or in relation to the teaching practice of application of scientology. The layman who uses an E-meter offends against sec. 30. If the taxpayer has any ``scientological records'' in its possession, they must be delivered up for destruction under sec. 32. The definition of ``scientological records'' may well be wide enough to include a register of members. There would appear to be no reason for excluding from the duty to deliver up documents kept by a layman scientologist and relating to the practice of scientology on, by or with respect to him. A wedding invitation, or a certificate of baptism, or a death notice in the daily press, might even be comprehended. Such of the published works of scientology as touch on the practice of scientology on, by or with respect to a particular person might also qualify for destruction under the section. A ``Release'' is defined as a person whose graph has been raised and whose I.Q. has been improved by scientology processing. Lists of the names of those who have become Releases have evidently been published from time to time in the magazine ``Communication''. Copies of the magazine containing these lists would appear to be liable to destruction. According to the magazine, a Release Certificate was issued to every person whose test clearly demonstrated that he had attained that state. These certificates would also seem to be liable to destruction.The circumstance that even on the most liberal view possible of the effect of sec. 2(3) the provisions of sec. 30-32 would still bear heavily on the Church and the laity while leaving the clergy free to propagate the faith is a reason for concluding that Parliament, not wishing its legislation to bring about any such strange results, did not intend that on a prosecution a scientologist should be able to claim the Benefit of Clergy.
I am of opinion, as a matter of construction, that scientology as defined in sec. 31(2) (and this of course includes not only Hubbard's original system but also its companions and descendants) is not a ``religion'' within the meaning of sec. 2(4). If I am wrong in this view, however, my conclusion on the question whether the taxpayer is entitled to the exemption claimed by it as a ``religious institution'' will not be affected. For even if the Act, properly construed, does not apply to anything done
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by ministers of scientology in accordance with usual practice, the Church itself is committing a criminal offence by holding itself out as being willing to teach scientology. If it is a ``religious institution'' within the meaning of para. (b) of sec. 10 of the Pay-roll Tax Act 1971, it enjoys that character only because it is a body devoted to the maintenance and propagation of scientology. So far as the State of Victoria is concerned, the taxpayer is a body formed for an object illegal under the criminal law. It is the existence and effectuation of that illegal object which give the taxpayer its character as a religious institution (assuming for the moment that on the proper construction of that expression the taxpayer is a religious institution). But for the crime, the taxpayer would not be entitled to the exemption (St. John Shipping Corporation v. Joseph Rank Ltd. (1957) 1 Q.B. 267 at pp. 292-294 ).
``It appears to me'', said
Fry
L.J. in a celebrated passage, ``that no system of jurisprudence can with reason include amongst the rights which it enforces rights directly resulting to the person asserting them from the crime of that person'' (
Cleaver
v.
Mutual Reserve Fund Life Association
(1892) 1 Q.B. 147
at p. 156
). ``It is clear that the law is, that no person can obtain, or enforce, any rights resulting to him from his own crime'' (
In the
Estate of Crippen
(1911) P. 108
at p. 112
per Sir Samuei
Evans
P.). It is a principle of public policy that no Court ought to assist a criminal to derive benefit from his crime (
Beresford
v.
Royal Insurance Co. Ltd.
(1938) A.C. 586
at pp. 603 and 605
per Lord
Macmillan
). The absolute rule is that the Courts will not recognize a benefit accruing to a criminal from his crime (
ibid.
at p. 599 per Lord
Atkin
).
The decisions in which the principle in
Cleaver's case
has been applied have been said to be illustrations of the maxim
ex turpi causa non oritur actio
(
Bereford's case
(1937) 2 K.B. 197 at p. 219; compare
Burns
v.
Edman
(1970) 2 Q.B. 541
at pp. 544 and 546
). The correctness of this view may be doubted (
Smith
v.
Jenkins
(1970) 119 C.L.R. 397
at p. 414
per
Windeyer
J.), but the question need not be pursued, since it is clear that the principle is not confined to claims relating to contracts or dispositions of property. It has been applied to gifts by will (
In the
Estate of Hall
(1914) P. 1
); to property passing on intestacy (
Re Cash
(1911) 30 N.Z.L.R. 577
;
Re Tucker
(1920) 21 S.R. (N.S.W.) 175
;
Re Sangal
(1921) V.L.R. 355
;
Re Callaway
(1956) 2 All E.R. 451
;
Re Pechar
(1969) N.Z.L.R. 574
) and to entitlement to a grant of administration (
In the Estate of Crippen, supra
); to the proceeds of an insurance policy (
Bereford's case, supra
); to the right of survivorship as between joint tenants (
Re Thorp
(1961) 80 W.N. (N.S.W.) 61
;
Re Pechar, supra;
Rasmanis
v.
Jurewitsch
(1970) 70 S.R. (N.S.W.) 407
; contrast the approach in
Re Barrowcliff
(1927) S.A.S.R. 147
and
Kemp
v.
Public Curator
(1969) Qd. R. 145
); to a trust created by statute (
Cleaver's case, supra
); and to a claim under the
Fatal Accidents Act
by a professional criminal's widow (
Burns v. Edman, supra
).
Devlin
J. would have applied the principle to defeat a claim for freight had his Lordship been of opinion that the right to claim freight had been brought into existence by a ``crime'' in the relevant sense (
St. John Shipping Corporation v. Joseph Rank Ltd., supra,
at pp. 292-294). The principle must be applied to all cases to which it can be applied without reference to the particular character of the right asserted or the form of its assertion (
Cleaver's case, supra,
at p. 156 per
Fry
L.J.;
Re Cash, supra,
at p. 579;
Re Sangal, supra,
at p. 359).
Since death affects the destination of property, it is not surprising that the cases in which the principle has been considered are almost without exception cases of felonious homicide. Expressions like ``his own felonious act'' ( Re Sangal, supra, at p. 359) must be read with reference to the facts of the case. The principle has often been stated in terms which would not confine it to felonious slayings or even to felonies; for example, the formulations of Fry L.J. in Cleaver's case, supra, at p. 156, of Sir Samuel Evans P. in Crippen's case, supra, at p. 112 and of Lord Atkin and Lord Macmillan in Beresford's case, supra, at pp. 599, 603 and 605 all speak of ``crime''. Fry L.J. indeed refers both to ``crime'' and to ``felony or misdemeanour'', and, subject to what I shall say in a moment about offences which do not as a matter of public policy call for the application of the principle, I would view his Lordship's reference to misdemeanours as meaning all crimes below
ATC 4223
felony: comparePickup v. Dental Board of the United Kingdom (1928) 2 K.B. 459 . The offences created by sec. 31(1) of the Psychological Practices Act are summary offences ( Justices Act 1958, sec. 73(1)). It has been said that many criminal offences would afford no moral justification for a Court to apply the principle of public policy that rights directly arising to the person asserting them from his crime are not to be enforced ( Beresford's case (1937) 2 K.B. 197 at pp. 219-220;
Marles v. Philip Trant & Sons Ltd. (1954) 1 Q.B. 29 at pp. 37-40 ;
Hardy v. Motor Insurers Bureau (1964) 2 Q.B. 745 at p. 760 ; compare St. John Shipping Corporation v. Joseph Rank Ltd., supra, at p. 292); but in my opinion the offences created by sec. 31(1) of the Psychological Practices Act fall outside this apparent exception to the general rule.
The right or benefit in question in the present case is the exemption created by para. (b) of sec. 10 of the
Pay-roll Tax Act
1971. There is no reason why public policy should not in an appropriate case deprive a taxpayer of the benefit of some exemption or deduction; compare the observation of
Dixon
J. in
F.C. of T.
v.
Snowden
&
Willson Pty. Ltd.
(1958) 99 C.L.R. 431
at p. 437
. General words in a statute which might include cases obnoxious to the principle of public policy must be read down (
Cleaver's case, supra,
at p. 157 per
Fry
L.J.) and the provisions of the statute must bend before it (
Re Sangal, supra,
at p. 359), even though the result may appear to be an extraordinary instance of judge-made law (
Re Tucker, supra,
at p. 181).
I should add that in my opinion no assistance is to be derived from decisions dealing with the assessability to income tax of profits derived from illegal transactions (see, for example, the cases noted in Mannix and Harris, Australian Income Tax Law and Practice para. 25/135), including decisions which bear on the question whether systematic crime can itself constitute a trade (see Pinson, Revenue Law, 6th ed., p. 26, note 31). Nor have I found it necessary to consider authorities dealing with the construction of the objects clause of the memorandum of association of a company with a view to discovering something that may be regarded as its main object.
In my opinion, if the taxpayer would but for the provisions of the Psychological Practices Act 1965 be a religious institution within the meaning of sec. 10 of the Pay-roll Tax Assessment Act 1971 (a question concerning which I find it unnecessary to express any view), it has that character only by reason of objects and activities which result in or constitute both continuous and continual offences against the Act of 1965, and sec. 10 of the later Act must be so construed as to exclude from its operation a body which, were it to be accorded exemption, would be receiving a benefit as a direct result of its own criminal activity.
I agree that the appeal must be dismissed.
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