Rowston v. Commissioner of Land Tax (N.S.W.).Judges:
Supreme Court of New South Wales
Saint John Zealot Rowston as the ``Appointed Trustee'' of the Church of Saint John appeals against seven assessments issued pursuant to the provisions of the Land Tax Management Act 1956. The assessments are in respect of the tax years 1977 to 1983 inclusive. The returns in respect of these years by Mr. Rowston as the ``Appointed Trustee'' claim ownership by the Church of Saint John of two lots of land and for the last year in dispute, of three.
Particulars of these parcels of land and the circumstances of their acquisition I will have to discuss in some detail later. It is sufficient for present purposes to note that it was common ground between the parties that, at all relevant times, the land the subject of the assessments issued, was held by the registered owners thereof on trust for the Church of Saint John.
By the notice of objection to the assessments the plaintiff claimed that the land was exempt by
ATC 4088reason of certain of the provisions of the Act. Reliance was placed upon provisions of sec. 10 which so far as presently relevant provide:
``10.(1) Except where otherwise expressly provided in this Act the following lands shall be exempt from taxation under this Act: -
- (e) Land owned by or in trust for a religious society, where the land is held solely for, or the proceeds of the land are devoted solely to, religious, charitable or educational purposes, including the support of the aged or infirm clergy or ministers of the society, or their wives or widows or children;
- (g) Land owned by or in trust for any person or society and used or occupied by that person or society solely as a site for: -
- (i) a place of worship for a religious society or a place of residence for any clergy or ministers or order of a religious society;
- (iv) a charitable institution not carried on for pecuniary profit.''
At the hearing counsel for the plaintiff abandoned any reliance on the provisions of subsec. (g)(iv). The notice of objection suggested that the assessments were contrary to the provisions of sec. 116 of the Commonwealth of Australia Constitution. Except to support the argument for exemption based on the provisions of sec. 10 of the Act, I have mentioned no other reliance was based on the constitutional provision.
It was common ground between the parties that the onus of proving the land exempt rested on the plaintiff. I am afraid that what has made these appeals somewhat difficult to resolve was the paucity of the evidence adduced. The affidavits filed were only by the plaintiff himself and they practised the greatest economy in giving particulars of the Church of Saint John. The oral evidence adduced in chief shed no further light on the circumstances of the formation of the organisation or on the doctrine which it was seeking to promote. The matter was further complicated by the fact that in cross-examination the plaintiff claimed to have no knowledge on a number of topics and in relation to others, and I hope I am not thought to be offensive, he verged on the inarticulate. It is fair to the plaintiff to note at the outset that counsel for the Commissioner expressly conceded the sincerity of the plaintiff in holding the beliefs which he asserted and disclaimed any suggestion that the commercial and other arrangements which were entered into were a sham. The major contention in issue was whether the plaintiff has discharged the onus of proving that the Church of Saint John was a ``religious society'' within the meaning of the Act. Counsel for the Commissioner submitted that the occupants of two of the properties were not ministers within the meaning of sec. 10(g)(i) but he failed to support this submission with any argument. I do not propose to address myself to what can only be described as a throw away line. A Court is entitled to have proper submissions put to it and not have thrust upon it the requirement of formulating arguments and researching authority.
The organisation was established by a deed bearing date 10 November 1972 made between the plaintiff, therein referred to as ``The Appointed Trustee'', of the one part and Mr. and Mrs. Nash, Mr. and Mrs. Cropper, Saint Andrew Fidemont Rowston and his wife, Mr. and Mrs. Caruana, the plaintiff and his wife, Mr. and Mrs. I.S. Todd and Mr. and Mrs. I.G. Todd of the other part. It recites that the subscribers ``... are desirous of dedicating themselves to the work of `Jesus Christ our Lord' and so as to better perform that work, have agreed to the formation of a `Church' to be known as the `Church of Saint John', and it is hereby determined that the Church be so formed and the above listed persons are to be known as `The Founding Members' and hereby and henceforth it is declared to all and sundry that the `Church of Saint John' has been founded in New South Wales for the glorification of God and the spreading of his word as taught by Saint John throughout the land''. The Founding Members then agreed to a Constitution and Rules and the appointment of a Trustee. The Constitution and Rules set out the objects of the Church in cl. 2. That reads as follows:
The objects of the Church are as follows:
(a) The propagation of the `Holy Scriptures' of the Bible, and in particular the teachings of Saint John.
(b) To minister to all of God's children, as, to their needs, both for `Body and Soul' in a joint combination, of the spiritual needs of the soul and the future kingdom of God, and man's place in it, and the present physical needs of the body, here on earth now, and in the immediate future, treating and ministering to both needs on an equal basis, body and soul, physical and spiritual.
(c) The spiritual side to include all of the usual church facilities and Sunday school and charitable segments associated with church activities, including provision for elderly people, and children in special circumstances; and
(d) On the bodily physical side the propagation of the principles of vegetarianism in its entirety, the teaching of and propagation of the benefits of fasting as taught in the scriptures, and practised by our Lord, the teaching and propagation of the benefits to all mankind of the eating of only natural foods, the proper and regular use of physical exercise, and how the combining of all of these things both physical and spiritual can create a heaven here and now on earth in preparation for the eventual kingdom of heaven of our Lord as promised in the scriptures.
(e) To receive Gifts, contributions, tithes or bequests of all kinds, and to dispose of, accumulate or utilise all moneys or property (real or personal) coming into the hands of the church, in any way considered desirable by the executive Council of the church, provided only that the aims and objectives of the church are furthered by such disposal or gift etc.
(f) To provide suitable places of worship for members of the church together with suitable facilities for the health and physical needs of the members in each locality as required.
(g) To divide the state of New South Wales into separate parts to be called `Districts' and to appoint a minister for each District to minister to the needs of the members of the church residing in each `District'.
(h) Each such Minister properly appointed by the Executive Council of the Church shall be responsible to and under the control of the Executive Council.
(i) To provide the Appointed Ministers with suitable residential quarters and premises as required to carry out the aims of the church.
(j) To do all such things matters or acts as in the opinion of the Executive Council of the Church may be incidental or conducive to the attainment or furtherance of the aims and objectives of the church.''
Although cl. 3 deals with membership and provides for the admission of additional members other than the Founding Members the only change in membership to date has been the admission of Mr. Robinson after he married the former Mrs. Nash, a daughter of the plaintiff. Mrs. Cropper is also a daughter of the plaintiff.
Counsel for the defendant conceded that the first two objects, if carried into practice as the principal objects of the church, would fulfil the call of the statute for a ``religious society''. However, it was contended that the evidence failed to show that these objects were indeed the aims and purposes of the Church as manifested by its actual activities.
I thought the plaintiff's evidence on the reasons for the formation of an organisation called a church and the choice of name was important. As to the first he said:
``Q. Well, what made you think that it was a good idea to have a church, that it was more appropriate to have a church than a society for the promotion of vegetarianism, say? A. Well, this had been discussed between the different members before the church was formed, and it was discussed and agreed upon that it would be better for all concerned for it to be recognised as a church. That is, our beliefs to be put down on paper so that everyone knew what our beliefs and practices were.
Q. But you can have it put down on paper as a club. Why a church, is what I am trying to get from you? A. Well, that seemed the most appropriate.
Q. But why? A. So that we could have recognition of the group as a church, as our belief.
Q. Well, what advantage was it to have recognition of the group? A. Well, it was just decided between the group what would be the best way to proceed.
Q. But you see, I am not unsympathetic but I am trying to get the idea of how it came
ATC 4090about. One does not start a church every day. What were the arguments in favour of a church? A. Well, that seemed to be the only way in which we would proceed for recognition at all, otherwise we had no recognition.
Q. Recognition for what purposes? A. For the purposes that are laid down in the constitution - the spreading of God's word throughout the world, and showing people how that they can live a healthy, active, wonderful life for much longer than the period that they live now, that we should be able to double our life span if we live properly, if we follow God's word in the Bible. Jesus himself fasted for forty days and forty nights in the wilderness.
Q. Did you apply for any tax exemption of any kind in respect of the premises at Fairlight? A. Not in respect of the premises at Fairlight; they were not owned by the church, they were owned by a separate company and the church had no equity in that property other than the fact that the company had allowed the church to use a portion of it for premises for church purposes.''
The reason why the Apostle John gave his name to the organisation and why he obtained particular mention in the Constitution appears from the following evidence:
``HIS HONOUR: Q. What is the particular significance of the Apostle John in the church? A. Probably because my own name is John, to an extent.
Q. What else, if anything? A. I was quite proud of the fact that they did call the church the church of St. John.
Q. Apart from the fact that you happen to be called John, what significance has the Apostle John and his teachings got to do with the church? A. Because the disciple St. John was one of the main members of Christ's church.
Q. You picked him rather than one of the others. Could you please tell me why, apart from the fact that you happened to be called John, was there no other reason? A. None, other than the fact that I was quite proud for the name to be accepted as the Church of St. John. It could have been called the Church of any other name but I was quite proud to have it accepted that way. It was suggested...
Q. One of the objects of the church is propagation of the whole of the scriptures and in particular the teachings of St. John. Why particularly St. John? A. Because St. John was the main disciple of Jesus Christ.''
With all due respect, this does not suggest that the religious dogma to be the foundation of the church was either explored by or known to the Founding Members.
No one in the organisation has had any formal training or grounding in any aspect of theology. The plaintiff's father was a Methodist preacher. The family in the plaintiff's words ``had religion literally morning, noon and night right through our lives''. Notwithstanding this, the plaintiff is aware of one book only by the Apostle St. John instead of the more customary appreciation of there being three. The organisation has six persons designated as ministers who got what the plaintiff described as 18 months' indoctrination from five members of the Executive Council. The Executive Council consisted of the plaintiff, his two daughters and their two husbands. The six ministers are the five members of the family together with the plaintiff's brother, Saint Andrew Rowston. I find it difficult to understand how the members of the Executive Council taught each other to be ministers. At a meeting of the Executive Council that is, of the plaintiff, his brother, his daughters and his sons-in-law, then Mr. Nash and not Mr. Robertson, held on 18 December 1972, it was resolved that a fund known as ``Public Health and Research Benefit Memorial Fund'' of the Church of Saint John be created. The objects of the fund were:
The following listed objects are the purposes for which this fund are to be used and for no other purposes whatsoever:
1. To provide the facilities and opportunity and equipment needed to practice, and to research into all aspects of `Health, Sickness & Disease', and the direct relationship of these results, to the primary causes in what is eaten, and how people live, including the acquiring of suitable land for growing all kinds of organic fruits and vegetables, without any kind of sprays, fertilisers or artificial additives of any kind whatever,
ATC 4091using only organic humus and animal manures, as naturally provided by God, and instructed in his word. The research to include all fields, food, growing, preparation and eating and elimination, fasting, complete and partial, its benefits and use, sunshine, its benefits and use, fresh air, pure water, regular exercise, together with the healthy outdoor life, its benefit and use, and the direct relation of the foregoing matters, and their proper use, to the full enjoyment of health and life. To prove by experiment and practise that the regular use of the foregoing matters, if conducted in the right way, will ensure a better, more active and healthier life to all persons willing to try the methods when proved.
The research is to be directed to, and to prove by practise and research, the direct relationship between these practices and health on the one side, and sickness & disease on the other.''
It is necessary to point out that however praiseworthy the objects of the Fund may be, they bear no connection to any religious concepts. In any event, the evidence does not disclose any research activity being conducted by the Fund.
In May 1973 an organisation called Amalgamated Employee/Employer Trade Union Association was registered as a trade union under the Trade Union Act 1881. The plaintiff was appointed Trustee of the trade union as well. The members of the Executive Council of the Church were members of the trade union. In every sense the trade union so called was a creature of the church. It lent large sums of money, initially to members of the Rowston family, and subsequently to the church. Although the trade union was said by the plaintiff to have carried out considerable activity in refereeing disputes between its members, the plaintiff was quite unable to give any details or particulars. He was also quite unable to give particulars of the income of the trade union notwithstanding that, as will appear, it must have been substantial indeed. Apparently the trade union appealed to this Court against assessments against it pursuant to the provisions of the Land Tax Management Act in respect of the 1976 and 1977 tax years. Those appeals failed because Shepherd J., then a member of this Court, held that the union was not a union of employees only. The plaintiff denied that the church was established in order to avoid the payment of tax. Nonetheless, the church sought and obtained exemption from income tax, and the payment of rates. The principal asset of the organisation was acquired by it in October 1976. It is 34 acres of land at Wiseman's Ferry and is known as ``Koveda''. At all relevant times it consisted of a caravan park with approximately 100 caravan sites, a picnic shelter, toilet facilities and several boat sheds. It was formerly owned by two companies, Lance & Danny Pty. Ltd. (a company controlled by Mr. Cropper) and Mesam Pty. Ltd. (a company controlled by Mrs. Cropper). I might say in passing that both companies were also members of the Trade Union. The property was ``donated'' on the basis that the Church accepted responsibility for all outstanding debts and liabilities owed by the two companies. The property was to be used for the purposes of the Public Health & Research Benefit Memorial Fund. The principal liability taken over was a loan at call from the Trade Union of about $251,000 (see minutes 18 October 1976). Although it purported to be a gift, the liabilities taken over exceeded the value of the land. It was resolved to appoint Mr. and Mrs. Cropper as ``Joint Co-ordinators'' of the Research Programme to be carried out by the Fund and also as caretakers of the property and managers of the businesses conducted there and to provide full board and lodging for them both. Mr. Cropper was appointed as Resident Minister of the District of Wiseman's Ferry. The existing business of a caravan park and water skiing area was continued on ``Koveda''. A fee is charged to persons who come to the land either as occupants of the caravan park or intending to water ski. The picnic shelter is also used as a Chapel. The hirers of the caravans and water skiers make up the assembly at functions held at the Chapel.
The accounts for the Memorial Fund for 1982 show that the receipts from the park totalled over $100,000. Expenses totalled $197,000 resulting in an operating loss of $96,641. Expenses included $93,000 paid to the trade union as interest on the mortgage and $5,615 wages paid to caretakers, cleaners etc., which would have included the moneys paid to Mr. and Mrs. Cropper. In the accounts for 1979 to 1982 inclusive, reference is made to the fact that the research work continued on a satisfactory level but as I have already mentioned nothing
ATC 4092that could really be described as research has been accomplished. Overall, I have been left with the impression that all that distinguished the operation of Koveda from other caravan parks and water skiing establishments was that patrons could attend functions at the picnic shelter at which they were exorted to promote their physical health and practise vegetarianism and fast. The evidence as to the nature of the functions was entirely unsatisfactory. The plaintiff has not attended any function for some years. Neither Mr. nor Mrs. Cropper were called. By consent, affidavits from them and the other founding members were filed but they do not take the matter any further.
In November, 1977 the church accepted transfer of another property at Wiseman's Ferry called ``Karma''. The transferors were 18 family companies controlled by the Rowston family. Once again the church took over responsibility for the payment of all debts obligations and commitments of the companies. Again any element of a gift was purely illusory. Mrs. Cropper was designated as the Trustee to hold the property on behalf of the church. The property consists of a stone residence and is occupied by the joint Ministers for the District of Wiseman's Ferry, Mr. and Mrs. Cropper. Previously to occupying ``Karma'', Mr. and Mrs. Cropper lived in a caravan on ``Koveda'' and the residence was occupied by the plaintiff and his wife.
The third property was transferred to the church by Mr. and Mrs. Robertson in 1982. The transfer was again on the basis that the church assumed all liability in respect of debts and charges relating to the property including a mortgage to the Commonwealth Bank for $25,437. Since the date of transfer the residence has continued to be occupied by the local ``Ministers'' for the Campbelltown District, Mr. and Mrs. Robertson. The property is of 30 acres and development consent in principle has been obtained from local authority for the building there of a Seminary. It is in this setting that the question whether the Church of Saint John is a ``religious society'' is required to be determined. I am conscious of the fact that the small membership of an organisation has been said to be of no importance. As has been pointed out by Walsh J.A. in
Christian Enterprises Ltd. v. Commr. of Land Tax (N.S.W.) (1968) 2 N.S.W.R. 99, St. Francis of Assisi commenced the Order of that name with only a small number of adherents. However, the facts go much further in the present case. Not only are the members almost exclusively members of the Rowston family but the church in essence is an amalgam of the families' assets and commercial enterprises. Again it was pointed out by Walsh J.A. and more recently by members of the High Court in
The Church of the New Faith v. Commr. of Pay-roll Tax (Vic.) 83 ATC 4652; 57 A.L.J.R. 785 that the mere fact that an organisation indulges in commercial activity even on a large scale, does not necessarily demonstrate that it is not practising a religion. It has been pointed out that the established Churches have large commercial activities. Walsh J.A. in Christian Enterprises (supra) at p. 101 adopted what fell from Wallace J. in
Theosophical Foundation Pty. Ltd. v. Commr. of Land Tax (1965) 82 W.N. (Pt. 1) (N.S.W.) 545 and said:
``His Honour said that, if a society is in essence religious, it does not lose that quality merely because it has non-religious powers or purposes which are merely a means to the fulfilment of its main religious purposes and are only incidental thereto. Of course, there may be cases in which it appears that what are called ancillary powers constitute in truth the main objects for which the company was formed and in which, on looking at the reality of the situation, the whole matter cannot be regarded as concluded merely because, in the memorandum of association, certain objects and powers are stated to be subordinate to other objects.''
Here it is significant that the commercial activities rebound in a variety of ways to the financial advantage of the small number of members of the Church most of them members of the same family. As I have tried to show, the Rowston family enjoyed the benefits of the self same commercial enterprises as now belong to the Church, they occupy the same premises as they owned in their own names or through shareholdings prior to the formation of the church. They have been relieved of their debts. They get indirect benefits e.g. the family owned insurance company receives premiums, they got free accommodation and also direct payment as caretakers.
Whilst I accept that the plaintiff sincerely holds the belief that it is appropriate to conduct one's life practising both spiritual devotion and care for one's bodily health, I am not satisfied
ATC 4093that the Church of Saint John has in its day to day activities carried out its charter so far as it relates to religious devotion as its principal activity. It appears to me to be an appropriate framework within which its small number of members may obtain the advantages of tax legislation designed for religious societies but within which framework they do at the same time, albeit to a limited extent, seek to propagate their sincerely held beliefs on bodily health. In my view this is insufficient to entitle the Church of Saint John to be called a religious society within the meaning of the Act and to have Mr. and Mrs. Cropper and Mr. and Mrs. Robertson considered as Ministers of a religious society within the meaning of the Act. In my judgment the claim to exemption has not been made out and the appeals are dismissed. I order the plaintiff to pay the defendant's costs. Exhibits will be returned on the expiration of 28 days unless a notice of appeal is lodged in the meantime.