The Cairnmillar Institute and Cairnmillar Institute (Human Relations) Ltd. v. Commissioner of Pay-roll Tax (Vic.)

G Gibson M

Administrative Appeals Tribunal of Victoria

Decision date: 9 December 1988.

G. Gibson (Member)

The issue in this case is whether the body commonly known as The Cairnmillar Institute is a public benevolent institution within the terms of sec. 10(1)(ba) of the Pay-roll Tax Act 1971.

2. The Cairnmillar Institute has been assessed for pay-roll tax in the amounts of $35,631.10 (I.N. 563) and $9,238.51 (I.N. 564) and Cairnmillar Institute (Human Relations) Ltd. has been assessed for $17,250.25 (I.N. 565) and $5,426.30 (I.N. 566). The respondent Commissioner's disallowances of objections to those assessments have been referred to this Tribunal.

ATC 2002

3. Evidence was given on behalf of the applicants by Dr Francis Macnab and Mr John Message. Each of those deponents was cross-examined. Opinion evidence was given by Ms Lo Cascio on behalf of the Crown.

4. A summary of the principal evidence given on behalf of the applicants is as follows.

  • (1) In 1961 The Cairnmillar Institute was established under the auspices of the Presbyterian Church and was registered by the Hospitals and Charities Commission under the classification ``Church Relief Organisation''.
  • (2) The Cairnmillar Institute remained an unincorporated body until it was incorporated on 30 December 1974. On 22 March 1984 the Institute by special resolution changed its memorandum and articles of association consequent upon the incorporation of Cairnmillar Institute (Human Relations) Ltd. That company was incorporated to take over the operations of the human relations department of the Institute. This step was taken after discussions and negotiations with various taxation authorities. I shall from now on refer to The Cairnmillar Institute as the Institute and to Cairnmillar Institute (Human Relations) Ltd. as the Company.
  • (3) The Memorandum of Association of each company provides that no portion of the income or property of the company shall be paid to the members of the company (cl. 3) and that upon winding up or dissolution there shall be no distribution or payment among the members of the company (cl. 8).
  • (4) In about 1965 the Cairnmillar Trust was established with the object of raising money to assist the payment of fees of people attending the Institute.
  • (5) In about 1975 The Cairnmillar Marriage and Family Guidance Trust was established. The purpose of the fund was to provide assistance for people seeking marriage and family guidance through the Institute.
  • (6) The Institute and the Company are governed by a council. The Cairnmillar Trust has its own trustees. The Institute employs both professional and administrative staff.
  • (7) In 1961, when the Institute was established, it occupied church premises adjacent to the Prahran Presbyterian Church, where Dr Francis Macnab was the minister. After 1971 the Institute continued to use the premises at Prahran, but also had offices at 100 Collins Street, close to the Independent Church where Dr Macnab had become the minister. In 1980 premises at 993 Burke Road, Camberwell were purchased and renovated as the Institute's new home.
  • (8) A marriage guidance counselling service is also operated at the Doveton and Hallam Community Centre and the Berwick Community Centre, each on one day per week. The Doveton Centre has been operating for approximately 20 years. In addition, approximately 30 programs per year are conducted in country centres, and approximately 40 programs for school communities across the State. A number of programs and presentations for service groups and voluntary organisations are conducted throughout Victoria.
  • (9) Dr Macnab is the executive director of the Institute and was at its inception. Dr Macnab has the degrees of Master of Arts and Doctor of Philosophy from Aberdeen University. He is a consultant psychologist and psychotherapist. He is a member of a large number of professional bodies, and in 1982-1983 was president of the International Council of Psychologists. He has written a number of books and articles on psychological subjects and has extensive experience both in Australia and overseas in practical clinical work and the teaching of psychology. psychotherapy and human relations. As well as being executive director of the Institute, he has held the following church appointments: minister, Prahran Presbyterian Church from 1961 to 1970; senior minister, Collins Street Independent Church from 1971 to 1977; senior minister at that church, now called Uniting Church in Australia, Collins Street, Melbourne, from 1977 to the present.
  • (10) The Institute employs professional and administrative staff and the Company employs professional staff. The clinical staff of the Institute assist in the human relations program of the Company by providing professional assistance in running courses. Most clinical consultants spend approximately 87.5 hours each year

    ATC 2003

    contributing to programs run by the Company. Additionally, the Institute provides administrative, reception and clerical assistance.
  • (11) In return for these professional and administrative services the Company currently pays the Institute approximately $110,000 each year. In addition, it agrees to make its professional staff available for limited clinical work to return in the current year a budgeted further sum of $154,176 in fees to the Institute. Each of the human relations staff performs clinical functions for the Institute comprising approximately 12 sessions each week, or 40% of their time. The value of these sessions to the Institute is approximately $154,176.
  • (12) Dr Macnab said that the activities performed by each organisation could be summarised as follows. The Institute provides clinical services in the areas of personal consulting and psychotherapy, marriage and family problems, divorce and mediation counselling, adolescent and child problems and clinics for depression, pain, phobias, anxiety and stress-related disorders and sexual disorders. In 1987 approximately 10,000 consultations were conducted for over 1,000 clients. The Company provides courses in health education and preventative programs for stress-management, relaxation training, leadership training, conflict management, motivation and like skills, personal development, career development and counselling training.
  • (13) The objects of the Institute are set out in cl. 2 of its memorandum of association as follows:
  • ``(a) to provide hospital, clinical and counselling facilities for treating psychological, spiritual and social disorders;
  • (b) to establish and conduct centres for persons in need of counselling, guidance, treatment, recuperation and/ or rehabilitation from psychiatric, psychological, spiritual and social disorders;
  • (c) to provide facilities for guidance in marriage, resolution of problems in marriage and education in family care;
  • (d) to provide facilities for research, discussion and instruction in human relations in marriage guidance, community affairs and the creative arts;
  • (e) to acquire by purchase, gift or otherwise all the assets and property real and personal, including its leasehold interest (if any), moneys, book debts, stocks of books and other literature of the association known as the Institute...''

Ancillary powers follow. These objects were varied by special resolution made on 22 March 1984 after the incorporation of the Company to substitute the words ``family therapy'' in para. (c) for the words ``resolution of problems in marriage and education in family care'' and by deleting the whole of para. (d). The primary objects of the Company are:

``(a) to provide facilities for research, discussion and instruction in human relations in marriage guidance, community affairs and the creative arts;

(b) to provide teaching and experiences in various aspects of human relations in a group environment;

(c) to provide an introduction to psychotherapy in a structured and supportive environment;

(d) to provide trained lay and professional people who are working with, leading, managing or helping others;

(e) to acquire by purchase, gift or otherwise all the assets and property real and personal, including its leasehold interest (if any), moneys, book debts, stocks of books and other literature of the Human Relations Department of The Cairnmillar Company...''

(14) According to Dr Macnab, the principal activity of the Institute is the clinical treatment of psychological disorders. He said that the problems of the mind generate considerable emotional pain particularly where the sufferer is afflicted by grief, life traumas, emotionally distressing and disabling experiences, or marital disturbances. He said that there were three principal modes of determining the level of distress suffered by a client: the description

ATC 2004

given by the client; the terms of any relevant referral; and the diagnosis made by the Institute.

(15) Dr Macnab's evidence was that the service of psychotherapy provided for individuals involves evaluation: a review and assessment of the particular difficulty; an evaluation of the inadequacy and deficits in personality and functioning; and an evaluation of the inadequacies in areas of relationships, job, life-satisfaction; construction and reconstruction: a process of construction and reconstruction of capacities and resources for more effective coping with life events; an exploration of deficits in personality development with appropriate reconstruction; a reconstruction of self-esteem, self-efficacy and morale; a reconstruction of perceptual capacities, attitudes, patterns of thinking, appraisal and interpretation that affect emotional and behavioural reactions and the sense of effective coping; correction of faulty or ineffective adaptation to the circumstances of life; and development of healthier patterns of living and monitoring of life-style; and monitoring and follow-up: at the completion of the therapeutic process, it is necessary to monitor the reconstruction and provide ongoing confirmation and reinforcement for the new strategies and styles of coping which have been developed in psychotherapy.

(15) [sic] Dr Macnab said that the individual reporting to the Institute for psychotherapy may have suffered severe emotional traumas; describe severe and longstanding adjustment problems; describe severe and distressing relational impoverishment; describe longstanding uncertainty and confusion, demoralisation and low or undeveloped self-esteem; suffer from disabling tension and anxiety which may also generate secondary major physical health problems, involving lowered immunity to physical illness and disease; suffer from a wide variety of stress-related disorders and have already become involved in secondary problems of work-absenteeism, alcoholism and chronic relationship difficulties and dissatisfaction; suffer from a wide variety of depressive conditions; have adopted health risk behaviours and life-styles and may be wanting to explore more effective, enriching patterns of living; have difficulties in coping effectively with the transitions of life, particularly in retirement years, given that many now may life 20-30 years beyond the time they cease full-time employment.

(16) In the majority of instances, couples seek the Institute's help because of its recognised reputation for dealing with severely disrupted marriages and the complex relationship problems. About 30% of the work of the Institute derives from problems arising on the breakdown of marriage. The Institute tends to get the more serious problems and has developed a specific psychotherapy for the more involved cases. Frequently couples have already sought some intervention from marriage guidance agencies, psychologists and psychiatrists, prior to seeking intervention by the Institute.

(17) Dr Macnab said that at one time an individual within a family would be treated for the symptoms arising from marriage breakdown, but now there is a strongly developed field called family therapy - where the family is treated. This provides the psychotherapist with a contextual view of the way the family operates. The psychotherapist sets out to change the way a family operates; handles conflicts; manages problems; and creates positive, health-enhancing environments. A family where one individual is causing concern because of behaviour, confusion, dissatisfaction or psychological breakdown is a family at high risk. A family that is operating ineffectively or in a confused and boisterous way, places individuals at high risk.

(18) Dr Macnab said that no person is refused treatment at the Institute on financial grounds, but that the Institute's resources are limited.

(19) The fees charged for clinical consultations are approximately 75% of fees charged by therapists in private practice. The standard fee prior to 1 July 1988 was $73 per 45 minute session. This has now been increased to $80 per 45 minute session. The median fee for the Institute is in the vicinity of $73-$75. The standard recommended fee of the Australian Psychological Society for the current year is $104.

ATC 2005

(20) If the fees for a consultation or a series of consultations are beyond the means of the patient, particulars are taken and after discussion with the executive director or the assistant director and the financial manager of the Institute, the fee to be charged is determined.

(21) There is presently a balance of $63,395 in the trust fund. Approximately $20,000 is available from the trust fund to subsidise fees each year. Fees charged at the Doveton and Hallam Community Centre and the Berwick Community Centre take into account the grant of $16,000 per year from the Attorney-General's Department as an approved marriage guidance counsellor, and the fees charged range from nil to a sliding scale according to income.

(22) Of the total number of persons attending the Institute for clinical consultations, approximately 10% to 12% would pay reduced fees. The reductions range from 75% of the standard fee to no fee at all. Neither applicant sues to recover fees. Bad debts are written off.

(23) The Institute draws its support from all sections of the community. Persons travel to the Institute from most suburbs. They come from all socio-economic groups and age groups in the community.

(24) Dr Macnab says that the fees charged for the human relations programs are set with the following goals in mind: attracting the persons most in need of assistance; subsidising certain courses such as those for the aged; and charging higher fees for courses which attract persons with a greater capacity to pay.

(25) The annual accounts of the Institute show that the great bulk of its revenue comes from clinical fees and trust subsidies, and that salaries and consulting fees take up most of the expenses. The profit and loss for the Company is a little more complicated. Most of the revenue comes from both enrolment fees and clinical income. There have been substantial contributions from Collins Street Uniting Church. The expenses have to take into account the administrative fee paid to Cairnmillar Institute, as well as substantial salaries.

(26) The aims of the human relations program provided by the Company are to provide more effective coping skills; to provide skills for better relationships in the social and working environments; the development and reconstruction of self-worth, self-esteem and self-efficacy; and the development of satisfactions and sense of well-being in the retirement phase of the life-span.

(27) The Company provides by the objects set out in its memorandum of association that its primary purposes are instruction and training in human relations and the provision of an introduction to psychotherapy in a structured and supportive environment both for those in need and those who are themselves involved in helping others in need. Dr Macnab said that these functions are fundamentally therapeutic and assist in the prevention of problems of a psychiatric nature, and that the provision of resources for self-help and participation in supportive groups are recognised as valuable means of coping with the stresses of life.

(28) Dr Macnab said that the activities of the Company are designed to help individuals with psychological problems either by direct treatment or by recognition and referral or by prevention through instruction in areas of psychology and the provision of necessary and useful social skills. These activities are carried out in an environment where professional specialist skills are available to assist and guide participants.

(29) Mr Message said that there is a strong therapeutic emphasis in the human relations programs which may be focused on the individual, the group or their environment. Treatment, counselling and training are provided in a group setting by means of seminars or workshops. Mr Message said that this has proved to be a cost-effective way of making psychological services available to a large number of people who might, for financial reasons, be excluded from individual therapy.

(30) The Company averages six group programs each week for the general public with an average total enrolment of 300.

(31) In addition approximately 30 programs each year are conducted in country centres. Approximately 40 programs are run for

ATC 2006

school communities across the State, and a number of programs and presentations are conducted for service groups and voluntary organisations.

(32) Programs range from four-hour seminars to three-day workshops. They typically include teaching, assessment, skills training, discussion and individual goal schedules.

(33) These programs are open to the general public and typically address the issues of stress, effective communication, assertiveness, managing relationships, self-esteem, confidence, managing anxiety, depression, loneliness, grief, and crisis management. These general programs constitute about 60% of the work of the Company.

(34) Professional training programs are conducted at the Institute and on-site for people in front-line positions in counselling or managing people. These programs include professional psychotherapy training (12 months); basic counselling skills (5 days); advanced counselling skills (5 days); volunteers training program (18 weeks); and training and crisis counselling (2 days). This work constitutes 20% of the Company's activities. Mr Message said that while these programs are for helping the helpers in their helping roles, they are also concerned with changing the wider human environments and creating health-enhancing life-styles for the helpers and those environments.

(35) Workshops, seminars and presentations are conducted to reduce conflict, dehumanisation and exploitation in the workplace. Management are trained to become sensitive to the stressors and motivations in themselves, colleagues and staff. The aims are to make corporations receptive to reduce distress and enhance coping and the maintenance of power and dignity and support among staff. This accounts for 20% of the Company's activities.

(36) Dr Macnab said that the Cairnmillar education and human relations program has been a pioneering program in Australia: although other bodies now provide some of these services, the Cairnmillar program was the first of its kind in Australia and is the only one that provides these services in the context of a clinical back-up and a therapeutic community.

(37) There is considerable interaction between the clinical and human relations programs at the Institute. Patients may be referred from clinical treatment to participation in a particular program run by the Company. A proportion of persons commence clinical treatment after participation in human relations programs.

5. As indicated, each deponent put forward by the applicant was cross-examined. Each was an articulate and, I think, candid witness. No attack was made on the credit or expertise of either. The cross-examination did not in my view affect the substance of the evidence set out above. Accordingly, I accept the substance of the evidence that is set out above. To the extent that there is any conflict between the evidence of the witnesses for the applicant and that of the expert tendered by the Crown, I prefer the former.

6. Apart from the two primary affidavits put in on behalf of the applicants, much of the material was, in my opinion, circumstantial, hypothetical, argumentative and at times downright polemical. Additionally, large parts of that material would have been excluded as irrelevant and inadmissible in any court determining issues like those that are presently before this Tribunal.

It is almost inevitable that opinion evidence will address hypothetical issues and develop into argument. But here each side at times fell to characterising the position of the other side in a manner that to my mind produced no evidence that was relevant to the issues before the Tribunal, and certainly carried little weight, and each side has at one time or another purported to give evidence of opinion as to the ultimate issue to be decided. Even allowing that the Tribunal is not bound by the rules of evidence, I think that such a course will seldom be helpful, and usually be dangerous.

7. The Tribunal recently considered the relevant meaning of the phrase ``public benevolent institution'' in the case of
Marriage Guidance Council of Victoria v. Commr of Pay-roll Tax (9 November 1988) [reported at 88 ATC 2080 in para. 6 to 10 and 17 to 19, and I need not now repeat what was there said.

8. The contentions of the parties are set out in the reg. 8 statements and I will not rehearse

ATC 2007

them in full. The Crown contended that the range of activities of the applicants and the kinds of problems they seek to assist are too wide, that such relief as is given is not given directly, particularly by the Company, that there was no relief of poverty, and that the level of fees charged was inconsistent with the necessary ``eleemosynary'' element. The Crown also referred to
Swinburne v. F.C. of T. (1920) 27 C.L.R. 377 at pp. 382-383 (Knox C.J.) and
Y.M.C.A. v. F.C. of T. (1926) 37 C.L.R. 351 at p. 359 (Isaacs J.) to support an argument that words of exemption from a tax statute should be narrowly construed. (I doubt that the passages referred to support the argument, but like a number of theses on statutory interpretation, it is not hard to find authority for the antithesis: see the cases referred to in
Associated Broadcasting Services Ltd. v. Comptroller of Stamps 86 ATC 2018 at p. 2028; (1986) 1 V.A.R. 150 at p. 169 to support the proposition that a liberal construction should be given to words of exemption from tax.)

The applicants contended that each was engaged in providing direct relief for suffering or misfortune, that the levels of charges set were not commercial, and were merely sufficient to enable the applicants to continue on with their work, that the poor were not excluded from obtaining relief from the applicants, that the applicants structured their activities in a wide way so as to be able to provide the maximum possible range of relief, and that the applicants look after those whose needs for psychological assistance arise from significant physical and emotional pain and distress. They referred to a number of charity cases by way of analogy on the subject of fees:
Attorney-General v. McCarthy (1885) 11 V.L.R. 617;
Taylor v. Taylor (1910) 10 C.L.R. 218; Swinburne v. F.C. of T. above,
Chesterman v. F.C. of T. (1923) 32 C.L.R. 362; Y.M.C.A. v. F.C. of T. above;
Re Monk (1927) 2 Ch. 197; In
re Chown (1939) V.L.R. 443;
Scottish Burial Reform and Cremation Society v. Glasgow Corporation (1968) A.C. 138;
Re Resch's Will Trust (1969) 1 A.C. 514; and
City of Hawthorn v. Victorian Welfare Association (1970) V.R. 205.

9. It is conceded that each of the applicants is an institution, and a public institution. It is conceded that each wishes well, and therefore comes within the etymological meaning of ``benevolent''. It is not contended that the work of either applicant produces bad results, and I think on the evidence it is plain that each produces good results. The staff of each applicant are trained and dedicated to the purpose of assisting those in the community who are in need. Neither applicant was formed or carries on business for profit. There is a clear need in the community for the services offered by each applicant. Each is therefore a public institution formed and operated for the purposes of and with the effect of doing good work that is both beneficial and necessary. The question remains: is either of them a ``public benevolent institution'' as that composite term is currently interpreted in the courts?

10. The Crown accepted as basically fair the following summary of the activities of the Institute and the Company given by Dr Macnab at the beginning of the program of seminars and services of the Institute and the Company for 1988:

``Cairnmillar is a people organisation. It is concerned about people's health and well-being, their resources, their personal and professional development. Cairnmillar is a psychological organisation. It draws together various strands of psychological knowledge and skills and uses them in a practical way for people, their organisations and societies. Cairnmillar is a professional organisation. Its clinical program is staffed by people who are professionally trained and who have acquired additional specialised qualification. Cairnmillar is a training organisation. Its educational, developmental, and corporate programs, are staffed by professionally trained and experienced people.''

In my view, the evidence put forward by the applicants warrants my finding that the most substantial part of the work done by the Institute is to provide help to those who are in need of such help because of emotional and behavioural problems, and that those persons have difficulty in coping with their problems without help of the kind offered by the Institute. In my view these people may truly be said to be affected by psychological disorders such that they are experiencing misfortune, or, more simply, suffering. I do not think that it is at all likely that a significant number of people attending the Institute do so on the ground that although they are doing quite well for the

ATC 2008

moment, they think they might be able to do even better in the future. Mr Message specifically denied that this was the case.

11. There was in this case, as in the Marriage Guidance Council case, some discussion of whether or not the Institute might be regarded as ``treating'' ``sickness''. Dr Macnab said that as a matter of fact the Institute does treat conditions related to or, perhaps, arising from, physical illness. He instanced psychotherapy given in the context of serious trauma, such as road trauma, or surgical trauma, and relief given in respect of those suffering from terminal illness. Each of the experts was alive to the diffidence now felt in labelling someone as ``sick'' merely because that person may have a behavioural problem or cannot cope. In the context of this case I do not find it helpful to try to isolate the criteria that may be said to separate conditions that might be said to be pathological from those conditions that could not be so characterised. Take anxiety for example. It was, I think, conceded by the Crown that a person may fairly be said to be suffering from anxiety in circumstances where it would be absurd to say that the condition was pathological - in the sense that it required medical treatment - while at the other end of the spectrum, the anxiety might be so acute that no reasonable person would deny that the condition could only properly be treated by a duly qualified medical practitioner. I was not offered any definition of ``sickness'' or ``pathology'' for this purpose, although I think that it is fair to say that some of the discussion proceeded on the rather circular basis that you are sick if you need a doctor, and that a doctor is a person that you see if you are sick. I do not think that a consideration of the extent to which the Institute might be said to be engaged in treating sick people is of much assistance in determining this case.

12. The critical question in my view is the nature of the various human conditions for which the Institute provides relief. The Crown accepts that the Institute is concerned to improve the well-being of people. It says that for the most part the people to whom the Institute provides relief are not in sufficient need - not close enough to the bottom of the pile, emotionally, or, it was said, socially and economically. The ultimate contention of the Crown is that the Institute gives relief for such a wide spectrum of emotional conditions that taken as a whole, it should not be characterised as providing for the relief of helplessness, suffering, misfortune or illness, as those terms have been used in the authorities. I do not agree. I think that the evidence warrants a finding to the contrary.

13. Although practising lawyers regard some forms of psychology and psychiatry, particularly some forensic varieties, with some scepticism, it would I think be idle to deny the importance of proper dealing with psychological problems, and the importance of the contribution clinical psychologists can make to dealing with these problems. A lawyer called on to evaluate this contribution should always remember that he is trying to look into a discipline that has different language, concepts, customs and values. This area is, I think, one of those where to verbalise may be to trivialise. In the course of his cross-examination, Dr Macnab said that in the year before last he saw four families in which there had been a suicide related to the stress of HSC examinations. He said that such stress commonly gave rise to problems with panic, alcohol, other drugs, and vulnerability to physical disorders. Although it was, I think, a bad year for Dr Macnab with this particular problem, this one example shows the range of damage and misery that can arise from one source of stress and anxiety. It also shows the dangers of trying to draw lines to measure the scale of this damage and misery. Any lawyer who has ever practised in the matrimonial area knows the kind of pain and misery that can flow from matrimonial breakdowns; the same goes for the damage that can flow from the breakdown of any other human relationship. I find it difficult to isolate criteria to distinguish the worth of those involved in relieving this kind of distress from the worth of a doctor attending to an illness.

Emotional distress has a number of things in common with illness: in terms of severity, it can range through transient annoyance, acute pain, debilitation, to the destruction of life. Even where one looks at victims of a natural disaster, such as the Ash Wednesday fires - a case put in argument as a paradigm - there is an enormous range of the sorts of problems that the victims might face, and of the means taken to obviate those problems. I am entirely unable to dismiss the work of the Institute as involving the mere provision of cut-rate palliatives to the bourgeoisie. I think that most people that go to

ATC 2009

the Institute do so because they have a real need for what is being offered by the Institute, and that the Institute does its best to satisfy that need. In my view, the Institute is substantially engaged in relieving misfortune or suffering.

14. There is in my view no substance to the suggestion that the Institute does not provide direct relief. I do not think that it is of any significance in this case that the Institute may provide relief to people in groups. Given the nature of the problems dealt with by the Institute. I think that such relief as it does provide should be characterised as direct.

15. Nor do I think there is any substance in the suggestion that the respondent should not have been satisfied that the wages paid by the Institute were wages paid or payable to persons who were engaged exclusively in work of the Institute of a public benevolent nature. In my view the principal activity of the Institute is dealing with psychological disorders, and to the extent that it may be said to be engaged in other activities, they should be characterised as incidental to the principal activity. It would I think be fair to say that the respondent did not advance specific arguments on this issue, but maintained his position.

16. In my view, the same finding cannot be made, and the same reasoning cannot be applied, in relation to the work of the Company. I think that the range of its objects and activities is too wide for it to be characterised as relieving misfortune or distress, at least as those terms are currently applied. I have summarised the relevant evidence of the Company's activities above. The joint program for the Institute and the Company for 1989 deals with counselling services, and then describes what will be on offer under the following headings: training programs (basic counselling skills, advanced counselling skills, professional training program, marriage counselling and volunteer workers' training program), assertiveness and stress management, lifestyle seminars, the psychology of peak performance, performance appraisal, career planning, and corporate services (performance improvement, management services, and management training and executive development). Even allowing for an aversion to negative advertising, the program does I think give a fair picture of the ambit of the purposes of the Company. I think that there is a lot in the contention of the Crown that substantial parts of these services are scarcely distinguishable from those available to and part of commerce generally. It may well be, as Brereton J. remarked in
Federation of New South Wales Police Citizens Boys Club v. Council of the City of Wollongong (27 June 1957, unreported - see Marriage Guidance Council case (supra) at para. 11) that ``from the point of view of public benefit, prevention is a great deal better than cure'', but I think that the total range of activities provided by the Company is such that it cannot be said to be substantially engaged in providing relief of the kind contemplated by the existing authorities.

17. In the Marriage Guidance Council case (supra) at para. 18, I expressed the view that relief of poverty is not an essential element in the notion of a public benevolent institution. I adhere to that view. But a very substantial question remains in this case as to the other element that may be required.

I have previously indicated the difficulties that I find in identifying this ``eleemosynary'' element. A reference to the dictionaries for the meaning of the relevant words soon leads one into a circle. I have not received any substantial assistance from considering the charity cases that were referred to me. In Taylor v. Taylor, above, at p. 226, Griffith C.J. drew a distinction between philanthropy and charity (in the popular sense) that is reminiscent of the distinction drawn by Sir Owen Dixon between benevolent and benignant in
Perpetual Trustee Co. Ltd. v. F.C. of T. (1931) 45 C.L.R. 224 at p. 233 and the distinction drawn by his Honour between public benevolence and charity (in the legal sense) in
Public Trustee (N.S.W.) v. F.C. of T. (1934) 51 C.L.R. 75 at p. 104.

18. I have found this question to be most difficult, both to put it, and to answer it. It seems to me that what is required is some element of benefaction, of charity in the popular sense. Just as poverty is a relative term, so is charity. It is not the law that a ``public benefit institution'' cannot make any charge for what it provides. On the other hand, if an institution, although a public institution, and meeting a defined public need, is operating at full market prices, it must find it very difficult to come within the notion of ``public benevolent institution''. The Institute falls somewhere along the line. It has to charge some fees in order to keep going; it does not

ATC 2010

have access to some bequest, foundation or trust, or continuing source of donation, that will fund it irrespective of what it recovers for its services. But it does not charge full fees, and it does offer relief for those who cannot afford its services. I pay very little heed to the fact that this prospect of relief is not touted to consumers in the promotional material of the Institute: I can think of a number of reasons why it would be unwise for the Institute to be advertising the fact that if pressed it can provide its facilities at lesser rates, or for nothing, and that it does not sue to recover its fees.

Nor do I think that charity is any less worthy of the name because its recipients are not generally made to feel like they are receiving charity. Most people, I think, would still rather be able to give charity than have to receive it. The accounts of both the Institute and the Company indicate to me that the charges made by the Institute are set at a level sufficient to enable the Institute to maintain the services that it is established to provide. The Company pays an administration fee to the Institute, and in turn receives some sponsorship from the church. It is clear that neither the Institute nor the Company carries on its activities for profit. The Institute provides its services at a lesser rate than it could charge if it were in business. There is, in my view, an element of gift, not only in the rate charged, but in the relief provided to those who cannot afford its services, and in the refusal of the Institute to enforce debts owed by those whom it has assisted. In my view, these elements of benefaction are sufficient to bring the Institute within the meaning of ``benevolent'' for this purpose.

19. Although the cases suggest that the meaning to be given to the term ``public benevolent institution'' is to be determined by reference to prior decisions irrespective of the particular statutory context in which it occurs, I find it difficult to ignore the range of bodies to which exemption is given in sec. 10(1) of the Pay-roll Tax Act 1971. The exemption is given to bodies such as the Governor, religious institutions, public and non-profit making hospitals, private schools, local councils, consular representatives, United Nations agencies, the War Graves Commission, the Australian/American Educational Foundation and the defence forces. I do not see any common thread in those bodies, unless it is that they are thought to be concerned with public welfare in some way. I certainly find it impossible to find any link of poverty in those bodies. Given that the Institute must charge something in order to continue its work, and given that it does not charge what it might if it had not been established and were not carried on for its own purposes, there must be some difficulty in determining what element of benefaction may be sufficient. To require such a body as this to do its work on the basis of a foundation, fund or continuing donations might appear to some to put an undue premium on capital; to require such a body to provide its services by those who are prepared to donate their services for nothing would appear to others to have an aura of unreality, and not guaranteed to ensure that the best form of services continued to be available. There has been no suggestion that the employees of the Institute gain undue reward for the services that they render. So far as I can recall, no attention was paid to this question at all. But I think that it is important in trying to determine this element of benefaction that the Institute is itself benevolent, at least in the etymological sense. Since I find that in addition to wishing well, the Institute contributes to public welfare, a finding that it is not benevolent in any relevant sense might occasion some surprise. As indicated above, it is hard to see why services of the kind offered by the Institute should be regarded as intrinsically less valuable than those provided by a medical practitioner. On the other hand, there seems to me to be a world of difference between the Institute and a clinic run by doctors or clinical psychologists in the ordinary way. The difference in my view derives not just from the public nature of the Institute, but from the determination in its constitution that it shall provide its services without profit to its members, and from the fact that its activities are structured so that its services are made available as freely as possible. Although I have found this question difficult, I have concluded that the Institution is benevolent in the relevant sense.

20. I am conscious that this conclusion relating to the charges made by the Institute is different from that reached in the Marriage Guidance Council case. Although this factor cannot be considered in isolation, and each case falls to be determined on its own evidence. I

ATC 2011

may wish to reconsider that aspect of the Marriage Guidance Council case if the same point arises in the future. I think that it may have been wrong.

21. The Crown said that if the Institute succeeded, it would be the first body of its kind to have done so in the decided cases. It depends on what you regard the cases as having decided. For the reasons I have given, I think that the Institute comes within the principles to be drawn from the authorities. I have previously mentioned the difficulties I find with the subsequent treatment of the judgments of the High Court in Perpetual Trustee Co. Ltd. v. F.C. of T. above, and that in my view the connotation of the phrase ``public benevolent institution'' may vary with time. It would I think be fair to say that the Perpetual Trustee case was decided at a time when there was scarcely a shadow of the welfare state in the western world, when the practice of clinical psychology was for the most part unheard of or suspect, when the reach and effect of stress was less well understood, and when the calls on government, church, the family and industry for wider and better pastoral care were less urgent and demanding.

22. It follows in my view that the Institute is presently entitled to exemption under sec. 10(1)(ba) as a public benevolent institution, but that the Company is not. According to a communication that I have received from counsel, they have not been able to agree to the form of order that should be made on the basis of these findings. I will accordingly stand these references over to enable argument if the matter cannot be otherwise resolved.

23. Unlike the Marriage Guidance Council case, the Crown said that it would ask that costs follow the event in this case. In
Damon and Commr of Land Tax (Vic.) 86 ATC 2001; (1985) 1 V.A.R. 130. I indicated some of the matters that I think should be considered on questions of costs in tax cases in this Tribunal. As in the Marriage Guidance Council case, I take the view that this case involves a serious argument about a serious and bona fide body engaged in public and beneficial community work, and that in those circumstances it may not be appropriate to order costs against the loser. Additionally, each side has effectively won one and lost one. I should perhaps say that no criticism was made of Cairnmillar for dividing its activities between two corporations so as to maximise its prospects of exemption. If any order were to be made, the problems with some of the affidavits that I have referred to above would have required close consideration. For those reasons, I think costs should lie where they fall, and I make no order as to costs.

24. For the reasons given above, the decision is that this matter be adjourned to enable submissions to be made to the form of order appropriate for a finding that the Institute is presently entitled to exemption as a public benevolent institution but that the Company is not.

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