Commissioner of Pay-roll Tax (Vic.) v. Cairnmillar InstituteJudges:
Supreme Court of Victoria
In 1961 the Cairnmillar Institute was established as an unincorporated organisation within the Presbyterian Church. Dr Francis Macnab was the main instigator for its foundation and has primarily been responsible for its development and operation since. He was the founding executive director of the institute and has continued in that position.
Dr Macnab is highly qualified in psychology and has had a great deal of experience in the areas of psychology, psychotherapy and human relations.
He was minister of the Prahran Presbyterian Church from 1961 to 1970 and then senior minister of the Collins Street Independent (Presbyterian) Church to 1977. He has remained senior minister of that church which in 1977 joined in the formation of the Uniting Church.
The Cairnmillar Institute was registered in 1961 with the Hospitals and Charities Commission as a church relief organisation.
In 1971 the power to levy pay-roll tax moved from the Commonwealth to the States. In 1973 the institute sought exemption from pay-roll tax. The first response by the Commissioner of Pay-roll Tax for the State of Victoria was that
ATC 4754no exemption was available to charitable institutions as such and a body had to establish that it was a public benevolent institution. In February 1974, however, the Commissioner notified his determination that it was exempt as a religious institution.
On 30 December 1974 the Cairnmillar Institute was incorporated in Victoria as a company limited by guarantee. The objects stated in its memorandum of association were these:
``(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;''
There was another clause which, although called an object, is in my view a power.
In 1976 the institute sought a ruling from the Commissioner whether it was exempt from pay-roll tax. The Commissioner replied that it was not, and that it should have been registered as an employer from its incorporation. The institute registered as from incorporation and made arrangements to pay its arrears of tax.
In late 1982 and 1983 the institute again raised with the Commissioner the question of its entitlement to an exemption. His decision was notified to the institute by letter of 19 September 1983 which included this passage:
``In reference to the application for exemption, I must determine whether the provisions of sec. 10(1)(ba) apply, that is, in particular, whether the institute is a public benevolent institution.
Clearly the organisation qualifies as an institution. However I have had to determine the existence of public benevolence.
It has been established that public benevolent institutions are those which exist for the relief of poverty, distress, suffering or misfortune:
Perpetual Trustee Company Ltd. v. F.C. of T. (1931) 45 C.L.R. 224. In summary, I am not satisfied that the organisation exists only for public benevolent purposes. The courses offered through the preventative or community program are not confined to those which are benevolent. While they provide a useful social purpose they do not necessarily provide relief to persons in distress. By their very nature, a number of them are designed to be preventative, that is, to stop the conditions of distress ever arising. This cannot be described as benevolence. Furthermore, these activities do not have a secondary role: the organisation has indicated that these activities are of equal importance to its clinical activities.''
The institute then, of its own initiative, decided that another company should be formed to perform what are described as the ``human relations functions'' previously performed by the institute, leaving the institute with its ``clinical services'' functions. Cairnmillar Institute (Human Relations) Ltd. was incorporated for that purpose on 1 March 1984. I will for convenience refer to the new company as ``the company'' and to the original company as ``the institute''.
Soon after the incorporation of the company the object of the institute, set out above, were amended so that objects (a) and (b) remained, object (c) took the form:
``(c) to provide for facilities for guidance in marriage family therapy;''
and object (d) was deleted.
Since then many things have occurred which it is not necessary to recount. Neither the institute nor the company was granted exemption from pay-roll tax.
Eventually the Commissioner's disallowance of objections by the institute and the company were referred to the Administrative Appeals Tribunal and heard by Mr Geoffrey Gibson [reported at 89 ATC 2001]. After careful analysis, on 22 December 1988, he wholly allowed the objections by the institute and from that decision the Commissioner now appeals to this Court. Mr Gibson disallowed the
ATC 4755objections by the company and it has not appealed against that decision.
Section 6 of the Pay-roll Tax Act 1971 imposes a liability to pay-roll tax on certain wages paid or payable by an employer. The following provision is relevant to the appeal before me:
``10(1) The wages liable to pay-roll tax under this Act do not include wages paid or payable -
- (ba) by a public benevolent institution to a person during a period in respect of which the institution satisfies the Commissioner that the person is engaged exclusively in work of the institution of a public benevolent nature;''
The Commissioner appeals to this Court under sec. 33B(4) of the Pay-roll Tax Act 1971 which gives an appeal from any decision of the Tribunal which, in the opinion of the Court, involves a question of law. In my opinion the decision of the Tribunal involves a question of law: whether the institute is a public benevolent institution. If I dismiss the appeal, it is agreed by the parties that I should refer back to the Tribunal the question of which employees during the relevant period were engaged exclusively in work of the institute of a public benevolent nature.
The appeal to this Court is to be determined on the evidence before the Court. The burden of establishing that it is a public benevolent institution and that its employees were engaged exclusively in work of the institute of a public benevolent nature lies upon the institute (sec. 33A(1)(b)). While this Court proceeds on the basis of the evidence before it, it gives due weight to the decision of the Tribunal on questions of fact: cf.
Comptroller of Stamps v. Hutchins & Ors (1985) V.R. 599.
Public benevolent institution
It is common ground before me that the Cairnmillar Institute is, within the meaning of sec. 10(1)(ba), a public institution. There is a contest on the facts and the law as to whether it is benevolent.
Mr G.R. Anderson Q.C., who appeared for the institute, submitted that the evidence of its objects and activities showed it to comply with the description of what is, in the community of today, a public benevolent institution. Mr R.A. Finkelstein Q.C., who appeared with Dr J. Scutt for the Commissioner, contended that the institute does not fall within that description primarily because (1) it does not provide its services only to those in financial need, (2) the needs satisfied by the provision of its services are not such that their satisfaction amounts to benevolence, and (3) the services are not provided without charge or for a small charge.
The parties differ basically as to the appropriate way to apply the principles inherent in the decision of the High Court in Perpetual Trustee Co. Ltd. v. F.C. of T. (1931) 45 C.L.R. 224, and the cases which have followed it.
I mention briefly the background to that decision. A subsection [sec. 8(5)] in the Estate Duty Assessment Act 1914 had provided:
``Estate duty shall not be assessed or payable upon so much of the estate as is devised or bequeathed or passes by gift inter vivos or settlement for religious, scientific, charitable or public educational purposes.''
Chesterman v. F.C. of T. (1923) 32 C.L.R. 362 the High Court by a majority of three held that the expression ``charitable... purposes'' was not used in its technical legal sense but in its popular sense as meaning the relief of poverty or of any form of necessity, destitution or helplessness which excites the compassion or sympathy of men and so appeals to their benevolence for relief. Two of the majority, Isaacs and Rich JJ., expressed the view that in order to be charitable the relief had to be confined to relieving necessity or helplessness in those lacking sufficient pecuniary means to do so themselves. See pp. 384-385 and 398. Starke J. appears to have taken the opposite view. See pp. 399-400.
An appeal to the Privy Council was allowed, the Judicial Committee holding that the word ``charitable'' was used in its technical legal sense. Chesterman & Ors v. F.C. of T. (1926) A.C. 128; (1925) 37 C.L.R. 317.
Following that decision the earlier subsection was replaced by the following provision:
``Estate duty shall not be assessed or payable upon so much of the estate as is devised or bequeathed or passes by gift inter vivos or settlement for religious, scientific,
ATC 4756or public educational purposes in Australia or to a public hospital or public benevolent institution in Australia or to a fund established and maintained for the purpose of providing money for use for such institutions or for the relief of persons in necessitous circumstances in Australia.''
In the Perpetual Trustee Co. case, the question was whether Royal Naval House in Sydney was a public benevolent institution so that a gift to it in a will was exempt from estate duty. Royal Naval House was a hostel organised for the inexpensive accommodation and recreation of naval petty officers and ratings on leave in Sydney.
The majority of the High Court, Starke, Dixon and Evatt JJ., held that Royal Naval House was not a public benevolent institution within the meaning of the subsection of the Estate Duty Assessment Act. McTiernan J. dissented.
The Judges of the majority relied on their knowledge of the ordinary use of the English language in the community. Starke J. said (at pp. 231-232):
``... we have to consider the expression `public benevolent institution'. It cannot be said that this expression has any technical legal sense, and therefore it is to be understood in the sense in which it is commonly used in the English language. There is no definition in the Act of the composite expression, nor is it to be found in any dictionary.''
Later he said:
``In the context in which the expression is found, and in ordinary English usage, a `public benevolent institution' means, in my opinion, an institution organized for the relief of poverty, sickness, destitution, or helplessness.''
``It would surprise English-speaking people, I think, to learn that in the Royal Naval House naval forces are accommodated and entertained at a public benevolent institution.''
Dixon J. said (at p. 233):
``The words `benevolent institution' are commonly used in combination to denote bodies organized for the relief of poverty or of distress. Familiarity with the application of the expression to bodies of this kind inevitably tends to make the use of the phrase appear misplaced in relation to bodies which do not relieve poverty or misfortune and merit the description `benevolent' only because their objects are benignant. It is said, however, that after all `benevolent' is an ordinary English adjective, and that frequent application of a compound expression of which it forms a part to one or some of many classes of things possessing the attributes it connotes affords no sufficient reason for restricting the meaning of the expression. In such matters one must often be guided to a great degree by one's own experience in the use of terms. In the present case little help is provided by dictionaries, statutory usage, or judicial decision. For my part the application of the expression `benevolent institution' to such organizations as Royal Naval House seems odd and inappropriate.''
He concluded that he was:
``... unable to place upon the expression `public benevolent institution' in the exemption a meaning wide enough to include organizations which do not promote the relief of poverty, suffering, distress or misfortune.''
Evatt J. said:
``There are... very many bodies which readily answer the description of `benevolent institutions'. The Benevolent Society of New South Wales provides food and clothing for those in poverty and distress, the Scarba Home takes care of deserted babies, many organizations of Church and State provide for the maintenance, housing and relief of the aged poor, orphans and those suffering from bodily or mental disease. A characteristic of most of these organizations is the absence of any charge for services or the fixing of a purely nominal charge.
Such bodies vary greatly in scope and character. But they have one thing in common: they give relief freely to those who are in need of it and who are unable to care for themselves.
Those who receive aid or comfort in this way are the poor, the sick, the aged, and the young. Their disability or distress arouses pity, and the institutions are designed to give them protection. They are very numerous - `the nobler a soul is the more objects of compassion it hath' - and they have come to be known as `benevolent institutions'.
Such a phrase seems to me to be impossible to apply to the Royal Naval House at Sydney. It is in truth a cheap and convenient club-house for those in regular naval services and pay and for no one else. The public encouragement evidenced in its formation and running is in part a gesture of hospitality, in part a recognition of the debt owed by the community to those who are serving it. The rating, paying for his bed and board, using the services provided at the rates fixed, would, I think, greet the statement that he had been staying at a `benevolent institution' with amazement, perhaps with indignation. For he is not a person in distress. On the contrary he is a chosen and active protector of the nation, the object not of compassion but of admiration. Neither the public spirit of those who started and those who control the institution nor the convenience or benefit it is to the ratings, is sufficient to make it a `benevolent institution'. It is probably because of the fact that it is a social institution rather than a benevolent institution that it is so attractive to naval men and so useful to the Navy itself.''
The textual and historical context in which the phrase appeared was treated as relevant. Starke J. referred to the background to and the decision of the Privy Council in Chesterman's case upon the meaning of the word ``charitable'' in the earlier subsection. He also referred to and relied on the fact that the expression ``public benevolent institution'' was:
``found in the Act under consideration in association with such institutions as public hospitals and with funds established and maintained for the relief of persons in necessitous circumstances in Australia.''
In my opinion it follows from the Perpetual Trustee Co. case that the approach in the present case is to ask whether in the ordinary use of the English language in this community today the Cairnmillar Institute is a public benevolent institution. There was no suggestion by either party before me that in ordinary usage today the essence of a public benevolent institution is different from what it was when the Perpetual Trustee Co. case was decided. On the other hand, clearly enough, the ways in which many public benevolent institutions go about achieving their objectives today are different from the ways in which the typical public benevolent institutions operated in 1931. It is also relevant to consider the context of the Pay-roll Tax Act in which the expression is used.
I do not consider it essential that a public benevolent institution provide relief only for those in poverty or destitution. In the Perpetual Trustee Co. case, Starke J. at p. 231 mentioned that the Privy Council had held that the word ``charitable'' in the earlier subsection was not used in the sense of ``the relief of poverty or destitution'' which was the meaning the High Court had given it. Neither he nor any other judge suggested in the Perpetual Trustee Co. case that the meaning the High Court had earlier given the word ``charitable'' was to be applied to the expression ``public benevolent institution''. They all looked afresh at that expression and decided its meaning in the way mentioned above. Their carefully chosen words went beyond the relief of poverty or destitution. Starke J. regarded the phrase as meaning:
``an institution organized for the relief of poverty, sickness, destitution or helplessness.''
Dixon J. indicated that it included organisations which promote the relief of poverty, suffering, distress or misfortune (pp. 233-234). Evatt J. treated the expression as covering bodies that, by aiding the poor, the sick, the aged and the young, relieved from their disability or distress those in need of the relief and unable to care for themselves (pp. 234-235).
The judgments of the Judges in the majority support the view that it is not only an institution which provides relief for those in poverty or destitution which may be a public benevolent institution, but also one which provides relief for those who are sick, suffering, helpless or in
ATC 4758distress or subject to misfortune or to the disabilities of the aged or the young. If they had taken the narrower view that the objects of the benevolence of a benevolent society did not extend beyond those in poverty or destitution they would have said so. Their Honours were not defining a legal concept. They were giving a broad indication of the types of things done by institutions which in ordinary language are called ``benevolent institutions''. They held that it was not enough, as had been argued, that an institution conferred benefits on a section of the community. It was necessary that the institution relieve persons suffering from some unfortunate disability or condition. These are persons whose plight, in terms used by Evatt J., arouses pity or compassion.
Those who are the objects of the benevolence of a benevolent institution are, because of some disability or condition, disadvantaged as compared with the population generally. A benevolent institution operates to provide relief designed to overcome or reduce the disadvantage. The decision emphasised that an institution which operates to confer benefits on persons suffering no disadvantage is not in ordinary speech referred to as ``a benevolent institution''.
There was some discussion in the High Court of the meaning of ``public benevolent institution'' in the Estate Duty Assessment Act in
The Public Trustee of N.S.W. & Ors v. F.C. of T. (1934) 51 C.L.R. 75. Starke J. said that the institutions which might share in the benefaction of the testator:
``... do give relief to the needy, the sick and the helpless.''
but were private and not public organisations.
Dixon J., with whom Rich J. agreed, said that the description ``public benevolent institution'' had received an interpretation in the Perpetual Trustee Co. case and he quoted from what had been said by Starke J., Evatt J. and himself. He said of institutions which could be objects of the benefaction in that case:
``Institutions connected with the health, upbringing, welfare, and education of young children coming within the legal conception of `charitable' may be imagined to which no one would apply the term `public benevolent institution'.''
Such institutions would, no doubt, include those providing benefits to children who had advanced beyond the helplessness of the very young and who suffered no disadvantage of health, upbringing, welfare or education.
Maughan v. F.C. of T. (1942) 66 C.L.R. 388 the High Court considered whether an incorporated association, The Boys' Brigade Inc., was a public benevolent institution within sec. 78(1)(a)(ii) of the Income Tax Assessment Act 1936 so that a gift to it was an allowable deduction. That institution enrolled boys who were underprivileged and invariably in poor circumstances. It operated from two buildings in slum areas of Sydney, Williams J. said of it:
``There it provides free of charge facilities for the boys of these poor districts which their more fortunate brothers obtain in their own homes.''
The issue in the case was stated by McTiernan J.:
``The expression `public benevolent institution' is not a term of art. Its meaning may be governed by the context in which it is found. There is nothing to indicate that the expression in sec. 78(1)(a)(ii) has any other meaning than its ordinary meaning. The Court considered the meaning of the expression `benevolent institution' in Perpetual Trustee Co. Ltd. v. Federal Commissioner of Taxation (1931) 45 C.L.R. 224, and applied the criteria laid down there in a subsequent case, Public Trustee (N.S.W.) v. Federal Commissioner of Taxation (1934) 51 C.L.R. 75. It decided in the former case that the common understanding of the words `benevolent institution', when used together, is a body organized for the relief of poverty or distress. In the present case the argument centres on the question whether the Boys' Brigade Inc. is organized for the relief of poverty.''
(my emphasis) (p. 395)
The Court was unanimous that the activities of the Brigade were of a public benevolent nature and the only conclusion reasonably open to the Board of Review was that it was a public benevolent institution.
Lemm & Ors v. F.C. of T. (1942) 66 C.L.R. 399 in which judgment was delivered by the same Judges on the same day as that in Maughan, the question was whether gifts under
ATC 4759a will were made to public benevolent institutions within the meaning of the Estate Duty Assessment Act. The other members of the Court agreed with the judgment of Williams J.
There were devises and a bequest to establish and maintain a memorial home for aged women in straitened financial circumstances who should be required to pay towards the upkeep of the home the sum of one pound per week. It was held by Williams J. that:
``A home for such women, even if they are able to pay one pound per week, is an institution organized for the relief of poverty. Poverty is a relative term. There are degrees of poverty less acute than abject poverty or destitution, but poverty nevertheless. (In
re Clarke (1923) 2 Ch. 407; In
re Cartaret; Forster v. de Cartaret (1933) Ch. 103, at pp. 108-113.) It is therefore a benevolent institution within the meaning of the sub-section (Perpetual Trustee Co. Ltd. v. Federal Commissioner of Taxation (1931) 45 C.L.R. 224).''
The devise and bequest of the residuary estate authorised the trustees of the will to apply income and capital to any home, hospital or institution including the memorial home, having as its object the relief of pain and suffering and/or physical disability and/or infirmity and/or financial distress. Williams J. said:
``Under the trusts payments can be made to any home, hospital, or institution having as one or more of its objects the relief of pain and suffering, physical disability, infirmity or financial distress. These are benevolent objects within the meaning of the sub-section (Perpetual Trustee Co. Ltd. v. Federal Commissioner of Taxation (1931) 45 C.L.R. 224)...''
There was an issue in the case whether the objects of the gifts were public institutions. In deciding that they were, Williams J. said of the memorial home:
``The purpose of the home is to confer benevolence upon an appreciable needy class in the community, so that it complies with the most important test of what is a public institution...''
Regarding the homes, hospitals and institutions he said:
``It is plain that the testator was not contemplating private institutions whose object it is to make a profit out of providing such relief. Looking at the gift as a whole it appears to me that the testator must have had in mind homes, hospitals and institutions similar to the Memorial Home, which is specifically included in the class (In
re Dudgeon; Truman v. Pope (1896) 74 L.T. 613), or, in other words, homes, hospitals and institutions organized to render services of a permanent eleemosynary character to appreciable deserving but needy sections of the community. Such institutions are public and not private in character.''
The gifts were held to be exempt from the estate duty as gifts to public benevolent institutions.
Australian Council of Social Service Inc. & Anor v. Commr of Pay-roll Tax (N.S.W.) 85 ATC 4235; (1985) 1 N.S.W.L.R. 567, the Court of Appeal of New South Wales considered whether the appellant was exempt from pay-roll tax as a public benevolent institution under the legislation of that State. The findings of the primary Judge were accepted on appeal. He had found that the appellant did not give direct relief to poverty, destitution, sickness, helplessness or distress. Its activities were directed towards providing indirect aid for the relief of poverty or distress by performing advisory, informative, research and advocacy functions. It directed its activities at changing the circumstances which either create or aggravate poverty or distress.
In holding that the appeal should be dismissed, Priestley J.A., with whom Mahoney J.A. agreed, said:
``To me, the word `benevolent' in the composite phrase `public benevolent institution' carries with it the idea of benevolence exercised towards persons in need of benevolence, however manifested. Benevolence in this sense seems to me to be quite a different concept from benevolence exercised at large and for the benefit of the community as a whole even if such benevolence results in relief of or reduction in poverty and distress. Thus it seems to me that `public benevolent institution' includes an institution which in a public way conducts itself benevolently towards those
ATC 4760who are recognisably in need of benevolence but excludes an institution, which although concerned, in an abstract sense, with the relief of poverty and distress, manifests that concern by promotion of social welfare in the community generally.''
(ATC p. 4242; N.S.W.L.R. p. 575)
The other member of the Court, Street C.J., expressed the view that the appellant was not a public benevolent institution because it did not directly distribute or dispense aid.
F.C. of T. v. Launceston Legacy 87 ATC 4635; (1987) 75 A.L.R. 122 Northrop J., in an appeal to the Federal Court of Australia from the Administrative Appeals Tribunal (Commonwealth), considered the meaning of the words ``public benevolent institution'' appearing in the Bank Account Debits Tax Administration Act 1982 of the Commonwealth. If the Launceston Legacy Club was a public benevolent institution within the meaning of that Act it could be relieved from liability for a tax imposed by another Act on debit transactions in relation to bank accounts. The particular question of law argued on the appeal was stated by Northrop J. to be:
``... whether a public benevolent institution can include a public institution extending assistance to a restricted class of recipients chosen or capable of being chosen without regard to whether the recipients are in necessitous circumstances.''
(ATC p. 4636; A.L.R. p. 124)
Northrop J. held that the essential object of Launceston Legacy was the caring for dependents of deceased ex-servicemen. He construed ``dependants'' as those who had been deprived of the support, both financial and moral, of a deceased ex-serviceman. Members of the club were ex-servicemen who acted in an honorary capacity providing their services free of charge. The club employed on a part-time basis a social worker, a secretary and an administrator. Members provided aid to widows and children of deceased ex-servicemen. A child of a deceased ex-serviceman could be given aid regardless of the age of the child. Each member was responsible for an allotted number of families. The aid rendered to these families included vocational guidance and job placement, tuition, sporting activities, medical and dental advice and treatment, milk supplies, servicing and replacement of defective home appliances, the provision of furniture and, where necessary, the grant of interest-free loans.
The club was funded primarily through donations, including direct public donations, bequests and a subscription scheme. All the financial dealings of the club were applied towards its service ends.
The Commissioner of Taxation contended that because Launceston Legacy could provide benefits to eligible persons who were not in necessitous financial circumstances it was not a public benevolent institution. It was argued that Launceston Legacy could not be a public benevolent institution in the absence of a means test provision for the recipients of benefits from it.
After consideration of the authorities, Northrop J. concluded:
``On the facts of the present appeals, I am satisfied that Launceston Legacy is an institution organized for the relief of poverty, suffering, distress or misfortune as discussed in the authorities. It is quite natural to describe it as a benevolent institution. I see nothing odd or inappropriate in so describing Launceston Legacy. It is providing a caring service, not limited to the provision of money, to persons who are in need. The caring service that is provided is something which cannot be bought. It is given voluntarily by the Legatees. The beneficiaries do not pay for the benefits received. These days the concept of benevolence being limited to the destitute is no longer accepted.''
(ATC p. 4646; A.L.R. p. 137)
His Honour added:
``I agree with the opinion of the Tribunal that Launceston Legacy `serves a group in need within the community. In doing so, it recognises that need is not synonymous with financial poverty and that benevolence is a much broader concept than `financial assistance'.'''
(ATC pp. 4646-4647; A.L.R. p. 138)
He held Launceston Legacy to be a public benevolent institution within the meaning of the Act.
My examination of the decisions of the courts on the meaning of ``public benevolent
ATC 4761institution'' since the Perpetual Trustee Co. Case in 1931 indicates that it has never been regarded as a necessary criterion that relief be provided only to those in financial need. The poor have been regarded as one category of persons to whom benevolent institutions provide relief: but other categories include those who are sick, suffering, helpless or in distress, or subject to misfortune or the disabilities of the aged or the young.
The context in which the expression ``public benevolent institution'' is found in sec. 10(1) of the Pay-roll Tax Act 1971 supports the conclusion that an institution may comply with that description although it does not provide its services only to those in financial need.
In my opinion the authorities establish that a public institution which provides relief in a direct way to persons suffering from some unfortunate disability or condition is a public benevolent institution. The plight of such persons is sufficiently serious to arouse pity or compassion within the community and they are regarded as in need of benevolent relief. While in that sense they may be described as ``needy'' it is not necessary that their need be financial need. Their need for benevolence might arise from poverty but it might arise from sickness, suffering, helplessness or other distress or misfortune. Relief given to those suffering distress or misfortune through causes other than poverty falls within the concept of benevolence. Of course it often occurs that people suffering distress or misfortune from a cause other than poverty also suffer from poverty.
The descriptions of persons as poor, sick, suffering, helpless, in distress, or subject to misfortune or disability are relative descriptions: a person may be moderately or severely so. I consider that the test for whether relief to such persons amounts to benevolence is whether their disability or condition is of such seriousness as will arouse community compassion and thus engender the provision of relief.
It is at the heart of the institute's case on this appeal that while the satisfaction by the company of the human relation needs it satisfies may not amount to benevolence, the satisfaction by the institute of the needs it satisfies does amount to benevolence.
It is important, I think, constantly to bear in mind that this appeal is not concerned with either a statutory or a judicial definition of public benevolent institution. One looks at the decisions and takes account of expressions commonly and currently used in the community. From that comes an indication that public benevolent institutions are those which direct their work to the relief of those whose unfortunate disability or condition arouses compassion within the community. The tenor of the word ``benevolent'' in this context owes more to an understanding of humanity than to legal analysis.
In a case such as this, where the institute and the company between them provide a whole spectrum of psychological relief, that meaning of the word ``benevolent'' does enable one to discern whether the provision of particular relief is benevolence. A person who would benefit in some way, or build immunity against some undesirable disability, from some training, education or improvement is not ordinarily one who, for that reason alone would arouse community compassion. Of course human needs do not segregate themselves in neat and discrete compartments. Questions of degree are involved but that is a common feature of that which falls for judicial decision:
Sutherland Shire Council v. Finch & Anor (1970) 123 C.L.R. 657 at p. 666.
In applying the broad community understanding of what is a benevolent institution no difficulties arise from the absence of authority which has considered psychological services. It is not necessary to expand the word ``sickness'' used in earlier cases. The test is whether the institute provides relief from unfortunate disabilities or conditions which arouse compassion within the community today. The answer provided by the test will turn to a substantial degree on the nature and extent of the psychological disability or condition the person is suffering, its present and potential consequences and the need for treatment. In applying the test it is appropriate to have regard to both the objects and the activities of the institute:
SSAU Nominees Pty. Ltd. v. F.C. of T. 85 ATC 4632; (1986) V.R. 355.
Services provided by institute
Essentially the institute provides clinical services in the area of psychotherapy. In this
ATC 4762judgment I use the word ``clinical'' in the sense of being concerned with the identification and treatment of a disorder or defect. I use ``therapy'' in the sense of treatment of a disorder or defect. Those terms are not universally used in those senses in the evidence and writings before the Court.
I am satisfied that the work done by the institute is predominantly that of providing clinical services to people by way of psychotherapy in respect of psychological disorders and abnormalities. Those conditions are treated by use of psychological techniques. Personal consultation and counselling is commonly the central part of those techniques.
The affidavits which were before the Administrative Appeals Tribunal are also before me. I am glad to adopt as accurate a statement by Mr Gibson of the effect of some evidence of Dr Macnab in his first affidavit (at p. 2004):
``(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 effect 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 live 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
ATC 4763psychological 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.''
I accept that evidence of Dr Macnab which was not affected by cross-examination before me.
The work of the institute is that of counselling. The brochure ``Cairnmillar 1989'', which is ex. B before me, sets out in broad terms the programs, seminars and services of the institute and the company. It describes at pp. 3 and 4 counselling services available. These are personal counselling, marriage counselling, family counselling and group counselling.
Individual counselling is described as ``personal counselling and psychotherapy''. It is said that consultations are designed to fit the person and the problem and the following problems are set out: depression; burnout; relaxation; dissatisfaction and destructiveness; sexual difficulties; coping with stress of high demands, low self-concept, change and loss; social inadequacy, shyness, low self-assertion; blocked growth, inappropriate behaviour; confusion of feelings; and inability to express feelings adequately.
Marriage counselling is said to be available for an engaged couple preparing for marriage; a recently married couple adjusting to each other; a couple who sense a gap in communication or a lessening of consideration for each other; a couple contemplating separation; a separated or divorced person; a couple experiencing difficulties in their sexual relationship; a couple in conflict with anger and violence.
Difficulties for which family counselling may be appropriate are identified in the brochure as: children's and adolescents' problems; family conflicts and tensions; parental uncertainty; separation and divorce; step-families; difficulties at school; career changes and vocational uncertainty.
The fourth type of counselling, group counselling, is presented in the brochure in this way:
``Many heads are better than one
Groups are people working together with a shared vision and shared commitment. They are people wanting to relate more effectively with others. At home, at work, in relationships.
A worthwhile team activity
Groups focus on specific individual problems. The leader assists participants to tap their potential, realise they are not alone, and learn from the experience of others.
Groups bring different perspectives, experiences and friendships. There is a sharing of information, rehearsal of skills, and strategies for coping with stressful life-events, plus strong and effective team building.''
A central issue in this case is whether the counselling work done by the institute is, in substance, psychological treatment or the provision of advice.
The descriptions in the brochure of the types of counselling are equivocal and tend to indicate advice rather than psychotherapy. It is necessary to have regard to other evidence. There is the evidence of Dr Macnab to which I have already referred.
There is also some evidence before me which was not before Mr Gibson. In February 1989 Dr Macnab conducted a survey in which he and the other nine professional employees then engaged in the institute's clinical program, from their records, completed a form giving information about each consultation they conducted during a two-week period late in 1988. The results are before the Court in ex. FAM 1, 2 and 3 to the affidavit sworn by Dr Macnab on 23 March 1989. The work done during those two weeks is a fair sample of the work done in the program at the institute for the four years 1986 to 1989. The material in that exhibit gives a good indication of the type of work done in the clinical services of the institute.
The information in the exhibit does not identify any persons but it does refer to particular cases with their individual details. The parties have taken great care to ensure that there is no possibility of any identification or embarrassment flowing from the information in the exhibit. It is sufficient that I record that the information in the exhibit satisfies me that the counselling given by the institute is to be categorised as typically and substantially psychological treatment or psychotherapy
ATC 4764rather than the provision of advice. That is not to say that everyone who is counselled needs and receives treatment, nor to deny that a great deal of advice is given which could not be categorised as treatment. In a similar situation, the fact that a general practitioner sees a number of patients who have no illness and need no treatment, and frequently advises patients on their lives, as a guide, philosopher and friend, does not indicate that the practice being conducted is other than that of a medical practitioner.
I have accepted the evidence of Dr Macnab that because of its reputation, the institute tends to get the more serious problems arising from the disruption of marriages and complex relationships. The fact that, as mentioned later, the counselling fee charged to persons who can afford to pay is at about the level charged by clinical psychologists in private practice, confirms that people go to the institute for, and are prepared to pay for, psychotherapy rather than ordinary marriage or family counselling.
I am satisfied that the individual, marriage and family counselling provided by the institute is essentially psychotherapy.
The other type of counselling, group counselling, was said by Dr Macnab to be done on behalf of the institute and on behalf of the company. There is some lack of clarity in the evidence specifically relating to this counselling. It does not clearly distinguish the type of counselling done by the institute from that done by the company. The description of the activity in the brochure seems to fit into the company not the institute, in light of the division of function which has been made.
I consider that the effect of Dr Macnab's evidence in cross-examination is that the group counselling done by the institute involves the provision of clinical services by way of psychotherapy in respect of psychological disorders and abnormalities when the services are provided to a group. I regard family counselling and the clinical counselling of groups in respect of schoolchildren with particular problems as two examples. I mention the counselling of schoolchildren later.
Although in its published material, no doubt for good reason, the institute does not emphasise that it offers psychological treatment, in the main those who go to it for counselling, go for treatment and receive it. That is the position although most of them also receive a good deal of what, of itself, would be regarded as traditional marriage or family guidance counselling.
The Commissioner relied on an affidavit of Ms Lo Cascio, a psychologist, family therapist and counsellor. Her evidence was to the effect that it is important that counsellors and therapists work in conjunction with medical practitioners; that marriage guidance counselling is not necessarily effective; that when difficulties have arisen in a marriage it may be a disadvantage rather than an advantage for a married woman to have the marriage preserved; and that marriage guidance counsellors may give advice which is not in the interests of the married woman. She expressed the opinion that difficulties which relate to human interaction, including grief, life traumas, emotionally distressing and disabling experiences, or marital disturbances should not be labelled as illnesses but should be regarded as normal developmental stages although upsetting and depressing to those to whom they occur. She said that persons who become sick, as medically defined, require medical treatment, and remedial psychotherapy is not medical treatment. She added that a psychiatric condition needs a psychiatrist.
There may be much in what Ms Lo Cascio says in her affidavit. However, neither she in her affidavit nor counsel for the Commissioner in cross-examining Dr Macnab, suggested that the institute made any of the errors or misjudgments referred to in the affidavit.
One must agree that most people who undergo the upsetting experiences of ordinary life do not become ill, disordered or abnormal and do not need, seek or receive treatment. On the other hand it is common experience that some psychologically vulnerable people are precipitated into psychological disorder or abnormality by such occurrences. I have no reason to think that the institute with its responsibilities and with the educative and developmental facilities of the company available for people better suited to that, treats people who do not need it. That was not suggested in cross-examination by counsel for the Commissioner.
Division of work
I examine whether the institute effectively limits its function in substance to psychotherapy.
It is necessary to form a view on the evidence of what work is done by the institute and what by the company. They work together as two co-ordinating parts which make up an organisation which has a wide-ranging overall objective. It is reflected in the introduction by Dr Macnab of Cairnmillar at the commencement of the brochure, ex. B.
``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 society. Cairnmillar is a professional organisation. Its clinical program is staffed by people who are professionally trained and who have acquired additional specialised qualifications. Cairnmillar is a training organisations. Its educational, developmental, and corporate programs, are staffed by professionally trained and experienced people.
Cairnmillar began in Melbourne in 1961. Today it is an organisation known across Australia and overseas.''
The institute and company set out between them to make available to people all the advantages that go with psychological health and well-being. Although the functions of clinical services and improvement of human relations have been separately allocated, it is part of the Cairnmillar philosophy that the practitioner in one area is greatly improved by contemporary experience in the other. The question is whether the two bodies have separated their functions so that the institute is a provider of clinical services and does so in a way that amounts to benevolence.
The way in which it has been sought to allocate functions appears from a statement in the ``Cairnmillar Clinical Services Directory'' published in 1986. It states:
``CAIRNMILLAR... is a non-profit community organization providing psychotherapy, counselling and human relations education. It emphasizes treatment and prevention of problems in living, and has offered a warm, supportive and expert service in these areas since 1961.
Our Clinical Department focuses on intervention and treatment. Our Education Department emphasizes prevention and growth. These services are complementary, allowing people greater opportunities for personal development.
The Clinical Department provides individual and group psychotherapy and counselling at reasonable cost on a fee for service basis. Some assistance is available for people who cannot afford the fee.''
I consider that the division of functions given in 1985 to an inspector investigating the eligibility of the institute and company for taxation exemptions and set out in her report fairly states the present position:
``... the Institute deals with the following areas:
(a) Personal Consulting and Psychotherapy
(b) Marriage and Family Problems
(c) Divorce and Mediation Counselling
(d) Adolescent and Child Problems
(e) Clinics for pain, phobias, stress-related disorders and sexual disorders.
The human relations area is involved with educating people in order to prevent problems of the above nature occurring. Courses are held regularly in:
(a) Human Relations
(b) Stress Management
(c) Relaxation Training
(d) Leadership Training
(e) Conflict Management
(f) Motivation and Life
(g) Personal Development
(h) Career Development
(i) Counselling Training.''
Exhibit FAM 1 to the affidavit of Dr Macnab of 12 August 1988 at p. 6.
Staff and organisation
Since 1980 the institute has occupied a building on land it owns at 993 Burke Road, Camberwell. This has consulting rooms, conference rooms and administrative facilities and is the headquarters of the institute and the company.
Although there have been some changes in staff since the commencement of this litigation, the professional staff employed by the institute and the company respectively have typically numbered in all about 11, including Dr Macnab, the executive director of the institute. About three of them have been employed by the company and the others by the institute. The practice is for employees to be full-time.
All professional staff whether employed by the institute or the company have similar training and qualifications. They have their professional qualifications as a medical practitioner, clinical psychologist, social worker or the like, and either have qualifications, or train and obtain qualifications through four years of training in psychotherapy. All members of the professional staff are registered under the Psychological Practices Act 1965 or are receiving post-graduate supervision to obtain the necessary experience to become registered. Particular people have different qualifications and areas in which they have particular experience and interest. The 11 members of staff introduced in the ``Cairnmillar Newsletter July 1988'', ex. A, included a consulting psychologist and psychotherapist, Dr Macnab, a clinical psychologist of 15 years' standing, a consulting psychologist, and two medical practitioners. People are often referred from one consultant to another with special expertise in the area. A person in a seminar conducted by the company, identified as needing clinical services, will be referred to the institute for that purpose. Someone seen in counselling by a consultant for the institute, who is better suited to enter a seminar of the company, will be referred there.
All professional employees of the one body are required to do work by arrangement for the other body.
Most clinical consultants employed by the institute spend about 87.5 hours each year taking part in programs run by the company. All four of the clerical, administrative and reception staff are employed by the institute. These staff spend on the work of the company, 25, 50, 50 and 85% of their time respectively.
In return for these professional and administrative services the company currently pays the institute about $110,000 each year. In addition the company agrees each year to make its professional staff available to the institute for its clinical work. In 1988 this was budgeted to return in fees to the institute a further sum of $154,176. This involves the professional staff of the company performing for the institute about 12 clinical sessions a week which take some 40% of their time.
Work of company
The work of the company is mainly dealing with groups who seek education, training and other improvement from counselling sessions, seminars and the like. The general nature of this work is shown by the brochure, ex. B. There are seminars and sessions which people are invited to attend to improve themselves, their capacities and personalities (pp. 10-15, 19-20). The programs include seminars and sessions on Understanding and Overcoming Loneliness, Getting Your Message Across, Increasing Confidence, Positive Thinking, Relaxation, Putting It All Together, and seminars on Strategic Stress Management and Career Planning.
The company runs a corporate services program in which it provides in-house training in Corporate Management, Team Building, Staff Morale, Managing People, and Executive Development, among other subjects (pp. 16-18).
The company conducts a series of training programs. One teaches advanced counselling skills and another provides a training program for marriage counsellors. Forty seminars are conducted in a series for people in the health professions who wish to increase their understanding and skill in the practical application of major psychotherapies. It includes such subjects as Psychodynamic Theory and Stress Management Counselling (pp. 5-9).
Line of demarcation
Broadly the line of demarcation of function is drawn between the psychological component of a person's life described as health and that described as well-being: or in other words
ATC 4767between restoring health by clinical services and that of improving human relations. In ordinary life a distinction is drawn between being in a state where disorders or abnormalities need clinical services and being in a state where one would have advantage from education, training or other improvement.
The evidence satisfies me that in a broad way the line is drawn alongside the persons who carry psychological imperfections to no greater extent than what may be regarded as the ordinary load of a human. Such a person arouses no compassion and needs no treatment. On the other hand the well-being of such a person can usually be advanced by improvement. This is the area in which the company may provide services to improve the person's relations with others.
On the other side of the line are persons carrying significantly more than humanity's ordinary load of psychological imperfections who would generally be regarded as having a disorder or abnormality, deserving of pity and needing treatment. These are the persons to whom the institute provides relief.
The allocation of work between the institute and company is such that essentially the work of the institute is limited to clinical services. Staff are employed by one body or the other and confine themselves to the work of that body except when, by arrangement, a staff member of one body on behalf of his or her employer does work for the other body. Staff members do not work on any loose arrangement without knowing whose work it is they are doing.
Dr Macnab, who is employed by the institute as its executive director, appears also in fact to have the management of the company. He was asked about the programs for some 40 school communities across the State in which both the institute and the company do work and how it was decided who would do particular work. He indicated that the focus of the work would be important so that if the program was one of general stress management for the staff that would be allocated to the educational human relations program of the company, but if the program was for specific problems and stresses within the school that would be done by a clinical person for the institute.
There is no suggestion before me that the corporate and operating arrangement by which the work has been divided and allocated between the institute and the company was not a genuine one or was not genuinely complied with and followed in practice.
Institute predominantly clinical
Applying the more stringent of the tests described in
R. v. The Judges of the Federal Court of Australia; Ex parte The Western Australian National Football League (Inc.) & Anor (Adamson's Case) (1979) 143 C.L.R. 190, the predominant and characteristic purpose and activity of the institute is the treatment by psychotherapy of psychological disorders and abnormalities. This is the provision of relief from unfortunate disabilities or conditions which arouse compassion within the community. Put in other terms, it is relief from sickness, suffering, distress or misfortune.
It is not inconsistent with this conclusion that counselling by way of psychotherapy includes aspects of what must be regarded as traditional individual, marriage or family counselling; or that a minority of clients receive only such traditional counselling; or that there is to some extent an overlap in functions between the institute and the company.
I refer later to marriage counselling which is given by the institute at two community centres, which involves little psychotherapeutic content. This marriage counselling is the whole activity of the institute at the two centres. The institute is approved by the Attorney-General under sec. 12 of the Family Law Act 1975 as a marriage counselling organisation on the basis that marriage counselling constitutes a major part of its activities. It does not appear whether this approval was given on the basis of having regard only to the operation at the two centres, or whether the counselling related to marriage, of the type that I have treated as psychotherapy, is treated as marriage counselling. In any event, on the whole scale of the institute's activities, the operation of the two centres is a relatively minor activity.
The charge for services
For the year ended 31 December 1987 the revenue of the institute was $582,054. The most significant items were:
- Clinical fees and trust subsidies - $507,014;
- Donations - $19,900;
- Marriage counselling grant - $16,700; and
- Special projects - $11,546.
The item, special projects, refers to moneys donated, particularly from the Collins Street Uniting Church, for special ventures.
There is a dispute whether the standard fee fixed by the institute or the median fee actually charged by it is less than that charged by psychotherapists in private practice. For the institute it was claimed that the median fee was about 75% of the fee typically charged by private practitioners. For the Commissioner it was put that the standard and median fees are about the same level as that of private practitioners.
After 1 July 1988 the standard fee charged by the institute for a clinical consultation was fixed at $80 for a session of 45 minutes. At the time the standard fee recommended by the Australian Psychological Society was $104. The median fee in fact charged by the institute was about $73 to $75. Dr Macnab was cross-examined on this part of his affidavit, and four affidavits on the point were filed on behalf of the Commissioner. The deponents of the four affidavits were not cross-examined. The burden of proof is on the institute. On the evidence before me I am unable to be satisfied that the standard and median fees of the institute are other than somewhere in the general region of charges made by private practitioners.
I turn to the way in which the activities of the institute are funded.
In about 1965 the Cairnmillar Trust was established with the object of raising and providing money for the fees in whole or in part payable by persons treated at the Cairnmillar Institute for psychiatric and psychological disorders or because of social maladjustment and who may be unable by reason of financial circumstances to pay the cost of the treatment. Gifts to it are allowable deductions under the Income Tax Assessment Act 1936. When Dr Macnab swore his affidavit in August 1988 there was a balance of $63,395 in the trust fund. Approximately $20,000 to $30,000 are available from the trust fund each year to subsidise fees.
In about 1975 the Cairnmillar Marriage and Family Guidance Fund was established to raise and provide money to the Cairnmillar Institute to be used in furnishing people with marriage and family guidance through the Cairnmillar Marriage and Family Guidance Centre of the institute. Gifts to it are allowable deductions for income tax purposes.
The institute conducts the marriage guidance counselling service, which has been mentioned, on one day a week at each of the Doveton and Hallam Community Centre and the Burwood Community Centre. The service has operated at the Doveton and Hallam Community Centre for over 20 years.
As a marriage counselling organisation approved by the Attorney-General the institute receives a grant from the Attorney-General's Department which was $16,700 in 1987. The grant is made specifically for the work done by the institute at the two community centres. The work done there is exclusively marriage counselling and mediation. The whole of the grant is used to subsidise that work. It does not appear whether funds become available these days from the Cairnmillar Marriage and Family Guidance Fund. For these services special fees appropriate to marriage counselling are charged which vary on a sliding scale according to the income of the client. No charge is made to a client who cannot afford to pay. This work is done by one part-time member of staff who is engaged solely on this work.
The fee of $80 for a session of clinical counselling is not always charged and, as has been mentioned, the median fee in fact charged is about $73 to $75.
Although the resources of the institute are limited no one seeking treatment is refused because of inability to pay. Those unable to pay the full fee fill out a form applying for assistance in payment of fees in respect of treatment at the institute: see ex. FAM 2 of Dr Macnab's affidavit of 12 August 1988, p. 24. On the basis of that information the fee to be charged is determined after discussion by the consultant with the executive director or assistant director and the financial manager of the institute and the client informed. The balance is usually paid from the $20,000 to $30,000 annually available for that purpose from the Cairnmillar Trust. About 10% to 12% of those attending the institute for clinical counselling pay fees reduced in this way. The reductions range down from the standard fee to no fee at all. If there are no trust funds
ATC 4769available, counselling is given and the institute accepts a reduced fee or no fee at all.
Mr Finkelstein argued for the Commissioner that for the institute to be a public benevolent institution it not only must confer benevolence but it must do so benevolently. He argued that the fact that most clients who receive counselling pay a fee not shown to be less than private practitioners charge, disqualified the institute.
It is, I think, important not to approach a consideration of the ways open to a benevolent institution to go about achieving its objectives, with preconceptions arising from the fact that the leading case was decided in the context of the very different society which existed some 60 years ago. The position was well put by Mr Gibson in his reasons (at p. 2011):
``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.''
The institution with a benevolent purpose has to adapt itself to the realities of obtaining funds and dispensing its benevolence in the conditions of today.
It is of importance that the institute is a unique organisation. There is no other organisation, public or private, similar to it in Australia. It is geared towards encouraging people who need psychotherapeutic treatment to seek it and providing high quality treatment at the lowest possible charge. Its members receive no profit and would not share in any distribution of assets if the institution were wound up.
There is no suggestion that its employees or anyone else derive financial benefits other than proper salaries from the institute's operation.
Because of changes in the operation of taxation, and changed social and religious attitudes, people nowadays do not commonly leave large sums to found or fund public benevolent institutions as they were apt to do 60 years ago. These days public benevolent institutions must devote their initiatives to the supply side as well as the relief and service side.
The institute has drawn freely on the generosity of the church with which it is associated and on supporters prepared to make donations to it. That would not be enough. It has financed its operations by charging those who can afford it fees which enable it to operate so that receipts broadly equal expenditure, with those who cannot afford to pay being subsidised by the trust or, if there are no trust funds available, being treated without the institute receiving a full, or sometimes any, fee.
It is a practical approach for organisations motivated to act benevolently to respond to the incentive and encouragement given by Parliament and organise themselves to carry on the activities of a public benevolent institution with the assistance which comes from exemptions from taxation.
The institute advertises widely and clearly brings to treatment many people who would not have taken the initiative of seeking treatment from a private practitioner. Some 10% of clients are referred to the institute by medical practitioners.
It needs to be borne in mind that a public benevolent institution is not restricted to providing services or other relief to those in financial need. The fact that the institute provides relief to some who are and some who are not in financial need does not disentitle it from being treated as a public benevolent institution.
As Mr Anderson pointed out, the Pay-roll Tax Act itself contemplates that the modern public benevolent institution may take a form very different from the form taken by such institutions two generations ago. An exhibit before me shows that for 1989 an exemption from pay-roll tax only operated in respect of a public benevolent institution whose pay-roll for its employees exceeded $310,000, because employers with lesser pay-rolls paid no tax.
It was argued for the Commissioner that the institute did not operate benevolently because its services were provided to the middle class. The institute offers its services to the whole community and clients come from all classes and all localities. The fact that the middle class,
ATC 4770which is a large class anyway, has a propensity to utilise such services does not deprive the services of the quality of benevolence.
I do not regard the fact that the institute does not widely advertise its readiness to give treatment for reduced or no fees as excluding it from the description of a public benevolent institution. It does not conceal that readiness and it does become known. The institute has to operate within the limited trust funds available to subsidise fees.
In my opinion the institute is a public benevolent institution within the meaning of the Act. The appeal will be dismissed.
The order I will make is -
- (1) appeal dismissed;
- (2) refer back to the Administrative Appeals Tribunal the question of which employees during the relevant period were engaged exclusively in work of the Cairnmillar Institute of a public benevolent nature; and
- (3) the appellant is ordered to pay the respondent's costs of the appeal.