CENTRAL BAYSIDE DIVISION OF GENERAL PRACTICE LTD v COMMISSIONER OF STATE REVENUE (VIC)

Members: Gleeson CJ
Kirby J

Callinan J
Heydon J
Crennan J

Tribunal:
Full High Court

MEDIA NEUTRAL CITATION: [2006] HCA 43

Decision date: 31 August 2006

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Callinan J

The question

147. The question in this appeal is whether the appellant, although its objects and activities are clearly charitable, is obliged to pay pay-roll tax under the Pay-roll Tax Act 1971 (Vic) ( " the Act " ). By s 10(1)(bb) of the Act, a " charitable body " is exempted from that obligation if its employees are exclusively engaged in work of a charitable nature on behalf of their employer. Whilst it is not contended by the respondent that the appellant ' s objects and activities are not charitable, it argues, as the Victorian Civil and Administrative Tribunal ( " the Tribunal " ), a judge of the Supreme Court of Victoria (Nettle J) and the Court of Appeal of the Supreme Court of Victoria (Chernov JA and Osborn AJA, Byrne AJA dissenting) have all found, that it should be denied the exemption, because it acts so much under the control or influence of government that it must be regarded as acting in furtherance of objectives of government, rather than in the independent pursuit of its own objects.

The facts

148. The appellant is a company limited by guarantee. Its objects, legal capacity and powers are set out in pars 3 and 4 of its Constitution:

• " 3 Object

• The object of the company is to improve patient care and health, primarily in the Central Bayside area of Melbourne, by:

  • (a) improving communication between general practitioners and other areas of the health care system;
  • (b) more effectively integrating general practice with other elements of the health care system;
  • (c) enabling general practitioners to contribute to health planning;
  • (d) providing better access to available and appropriate general practitioner services for patients, and reducing inappropriate duplication of services;
  • (e) meeting the special (and localised) health needs of groups (such as Aboriginal and Torres Strait Islanders and those with non-English speaking backgrounds) and people with chronic conditions, particularly where these needs are not adequately addressed by the current health care system;
  • (f) advancing general practice, and the health and well-being of general practitioners;
  • (g) enhancing educational and professional development opportunities for general practitioners and undergraduates;
  • (h) increasing general practitioner focus on illness prevention and health promotion; and

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  • (i) improving effectiveness and efficiency of health services at the local level.
• 4 Legal Capacity and Powers
  • 4.1 The company has:
    • (a) the legal capacity and powers of an individual, and
    • (b) all the powers of an incorporated body, as provided by section 124 of the Corporations Act.
  • 4.2 The company may only exercise its powers for its object. "

149. Its status as a non-profit company is established by par 5 of the objects:

• " 5 Not For Profit
• 5.1 The company may only use its income, assets and profit for its object.
• 5.2 The company must not distribute any of its profit, income or assets directly or indirectly to its members.
• 5.3 Clause 5.2 does not prevent the company from paying its members (including its directors):
  • (a) reimbursement for expenses properly incurred by them, and
  • (b) for goods supplied and services provided by them,

  • if this is done in good faith on terms no more favourable than if the member were not a member. "

150. The liability of each member of the appellant is limited to $ 10. Any medical practitioner in the relevant area may be a member (cl 7.1). There is also provision for associate membership (cl 7.2), but not for any governmental membership, or representation on the board of directors (cl 42.1). The appellant has made a " mission statement " and has also stated its " goals " :

" Mission Statement

To establish and maintain an association of General Practitioners within the Bayside area to promote optimal, continuing patient care by General Practitioners for all residents at a local level.

Goals

• • To promote and support the role of GPs as the medical care manager of individuals in the community.
• • To provide services to GPs, including:
  • (a) Continuing Medical Education and Quality Assurance Activities;
  • (b) Enhancement of practice management support systems.
• • To improve the integration of GP services into a range of primary, secondary and tertiary and other health care services in the region.
• • To maintain and extend GP involvement in the full range of health care provision with particular emphasis on preventative strategies and health promotion.
• • To establish a significant GP role in decision making in health care planning.
• • Improve IT/IM utilisation rates by GPs and GP practices and to increase the use of IT by current users. "

151. The appellant entered into a funding agreement with the Department of Health and Ageing ( " the Department " ) on behalf of the Commonwealth. The agreement recites:

• " A. The Department operates a Program, being the Divisions of General Practice Program, which provides funding under block grant arrangements to Divisions of General Practice to enable general practitioners to conduct activities to improve integration with other elements of the health system and to address identified local health needs.
• B. The Department accepts that the Division is an eligible body for the purposes of the Program, and the Department may give financial assistance to enable the Division to undertake the approved Programs of Activity as set out in the Division ' s extended Strategic Plan for the period 1 July 1999 - 30 June 2003 and Business Plan for the period 1 July 2000 - 30 June 2003 .
• C. The Department is required by law to ensure the accountability of Program Funds and accordingly, the Division is required to be accountable for all Department Funds received.
• D. The Department wishes to pay Funds under the Program to the Division for the purposes, and subject to the terms and

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  conditions, set out in this Agreement. " (Emphasis in original)

152. The agreement requires the appellant to prepare and follow a " business plan " and to have its receipts and expenditures audited. Clause 2 of the agreement is as follows:

• " 2 Conduct of Programs of Activity
  • 2.1 The Division shall conduct the Programs of Activity to a standard acceptable to the Department and in accordance with the requirements as set out in Schedule 1.
  • 2.2 The Division shall perform its obligations under this Agreement at the times and in the manner specified.
  • 2.3 The Division will comply with the requirements regarding identified Outcomes for Outcomes-Based Funding as specified in Schedule 2.
  • 2.4 The Division will notify the Department in writing of any alteration to the Strategic Plan .
  • 2.5 If for any reason the Division is unable to commence or continue work on the Programs of Activity or forms the opinion that progress will be significantly delayed, the Division shall immediately notify the Department in writing and consult with the Department to deal with the matter.
  • 2.6 The Division, as and when required by the Department, shall cooperate with, participate in, or undertake evaluations of the Division ' s activities including the Annual Division ' s Survey, Minimum Data Set and Workforce Data. The evaluations will be in a format specified by the Department.
  • 2.7 If the Division is a corporation, the Division warrants that its Memorandum and Articles of Association are not, and shall not be, inconsistent with the Agreement. " (Emphasis in original)

153. Clause 4 is relevant:

• " 4 Funding Use and Accounts
  • 4.1 The Funding shall be expended by the Division only for the purposes of performing the Programs of Activity and in accordance with the terms and conditions set out in this Agreement.
  • 4.2 In relation to Clause 4.1, the Division shall not merely disperse Funds to General Practitioners but shall ensure that any payments made for General Practitioners are for activities performed on specified Programs of Activity being undertaken by the Division under the terms of this Agreement.
  • 4.3 The Division must immediately deposit all Funds received into an account controlled solely by the Division with a financial institution such as a bank, building society or credit union operating in Australia. The Division must notify the Department of the identifying details of that account. The Division must identify separately in its financial records the receipt and expenditure of Funds received under the Agreement for each of the agreed Programs of Activity.
  • 4.4 The Division shall cause to be kept proper accounts and records of its transactions and affairs in relation to use of the Funding, in accordance with accounting principles generally applied in commercial practice and as required by law, and shall do all things necessary to ensure that all payments out of its moneys are correctly made and properly authorised and adequate control is maintained over the incurring of liabilities.
  • 4.5 The Funding shall not be used as security for the purposes of obtaining commercial loans or entering into hire purchase arrangements nor for the purpose of meeting existing loan obligations.
  • 4.6 Interest earned by the Division on the Funding shall be used and dealt with by the Division as if the interest earned were part of the Funding. " (Emphasis in original)

154. Clause 15 should be set out:

• " 15 Compliance with Commonwealth Policies
  • 15.1 The Division shall, when using the Commonwealth ' s premises or facilities, comply with all reasonable directions

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    and Departmental procedures relating to occupational health and safety and security in effect at those premises or in regard to those facilities, as notified by the Commonwealth or as might reasonably be inferred from the use to which the premises or facilities are being put.
  • 15.2 The Division shall comply with its obligations, if any, under the Affirmative Action (Equal Employment Opportunity for Women) Act 1986 and shall not enter into a subcontract under this Agreement with a subcontractor named by the Director of Affirmative Action as an employer currently not complying with that Act. "

155. Clause 24 is also of relevance:

• " 24 Termination and Reduction
  • 24.1 The Department may, at any time by written notice, terminate this Agreement or reduce the scope of the Programs of Activity. If this Agreement is so terminated or reduced in scope, the Department shall, subject to Clauses 24.3 and 24.4, be liable only for:
    • (a) payments under the payment provisions of this Agreement that were due for the conduct of the Programs of Activity before the effective date of termination or reduction; and
    • (b) any reasonable costs incurred by the Division and directly attributable to the termination or reduction.
  • 24.2 Upon receipt of a notice of termination or reduction the Division shall:
    • (a) stop work as specified in the notice;
    • (b) take all available steps to minimise loss resulting from that termination or reduction and to protect Commonwealth Material and Agreement Material;
    • (c) in the case of reduction in the scope of the Programs of Activity, continue work on any part of the Programs of Activity not affected by the notice; and
    • (d) immediately repay to the Department so much of the Funds unexpended or not acquitted to the satisfaction of the Department as relate to any part of the Programs of Activity affected by the notice.
  • 24.3 In the event of reduction in the scope of the Programs of Activity the Department ' s liability to pay any of the Funds or provide assistance under Clause 3 shall, in the absence of agreement to the contrary, abate proportionately to the reduction in the Programs of Activity.
  • 24.4 The Commonwealth shall not be liable to pay compensation in respect of a termination or reduction under this Clause 24. "

156. The area in which the appellant operates is part of suburban Melbourne. " Divisions " of the kind of which the appellant is one were created, if not as a result of a government initiative, certainly with at least the encouragement and support of government from as early as 1992. It seems likely that they would not have been brought into existence, or would not function as they do, were it not for that encouragement and support, including, significantly, financial support for their programmes. Among the actual activities undertaken by the appellant are the expansion of access to immunisation, the provision of continuing medical education to general practitioners, the improvement of medical software systems, the enhancement of co-operation with pharmacists, the development of a " falls prevention programme " , and the improvement of access by medical practitioners to timely and objective information about therapeutics.

157. In the relevant tax year (1 July 2001 to 30 June 2002) the total receipts of the appellant were $ 1,048,979. The " sales revenues " were $ 1,087,813 (less $ 45,132 " unearned income on projects " ). The source of $ 1,006,997 of those funds (about 93 per cent of the total receipts) was by way of grant from the Commonwealth government.

158. About 43 per cent of the appellant ' s total income (less than half of the amount received from grants) was received from the Commonwealth under " outcomes based funding " ( " OBF " ). The other grants were

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described as being predominantly " project-based " .

159. A programme of funding from the Commonwealth to divisions of general practice under OBF agreements started in 1999. The first triennial OBF agreement was extended to 30 June 2003.

160. It is not disputed that the appellant is bound to conduct activities intended to achieve the identified outcomes set out in its strategic plan and business plan (as approved by the Department) and incorporated in the agreement between it and the Department. In turn, these outcomes must be in keeping with the current aims of the division of general practice. The block grant from the Commonwealth, that is, 43 per cent of the appellant ' s income did not specify actual projects or actual project outcomes. The majority of the appellant ' s grant funding related to specific projects. Some of the projects were devised by the appellant. In some cases, the appellant would actively pursue funding for a particular project which it had decided was important to the community. In other cases, expressions of interest might be invited or tenders called. The appellant would then propose a project in response to the call for expressions of interest, or accept the tender. Grants for specific projects might be augmented from a variety of sources including " health promotion agencies " of which the Pharmacy Guild is one.

Case history

161. On 24 September 2001, the appellant wrote to the Minister for Regional Development requesting that it be considered for exemption for pay-roll tax purposes. On 14 December 2001, the respondent (to whom the request had been forwarded) ruled that the appellant was not a charitable body for the purposes of s 10(1)(bb) of the Act. On 29 January 2002, the appellant objected to the decision. On 16 July 2002, the respondent disallowed the objection. The appellant requested the respondent to refer the matter to the Tribunal. On 22 November 2002, the Tribunal affirmed that the appellant was not a charitable body for the purposes of s 10(1)(bb) of the Act.

The Supreme Court of Victoria

162. The appellant sought leave to appeal against the Tribunal ' s decision. That application came on for hearing by the Supreme Court (Nettle J). On 15 August 2003, his Honour made orders that leave to appeal be granted and that the appeal be dismissed with costs.

163. Nettle J did not disturb a finding of the Tribunal that the appellant was a body that existed for purposes " beneficial to the community " . His Honour held that the appellant was not a department or other instrumentality of government; it was a matter for it whether it would seek funds from government, and accordingly subject itself to the conditions of any grant. The Commonwealth ' s control over the affairs of the appellant was no more than the power of the purse.

164. But his Honour nonetheless concluded that the appellant was not an exempt body ^[135] Central Bayside Division of General Practice Ltd v Commissioner of State Revenue (2003) 53 ATR 473 at 486 [ 33 ] ; [ 2003 ] ATC 4835 at 4845 . :

" Having regard to the constitution, activities, history and control of the Division, and in particular, to the extent to which the Division ' s activities of providing services to its members are funded and thereby controlled by the Commonwealth, I am not persuaded that the Division is sufficiently analogous to any recognised charity or is otherwise to be regarded as within the equity of the Statute. "

The Court of Appeal

165. The appellant then sought and obtained leave to appeal from the decision of Nettle J. On 1 July 2005, the Court of Appeal of the Supreme Court of Victoria, by majority (Chernov JA and Osborn AJA, Byrne AJA dissenting) dismissed the appellant ' s appeal with costs.

166. In the Court of Appeal, Chernov JA said ^[136] Central Bayside Division of General Practice Ltd v Commissioner of State Revenue (2005) 60 ATR 151 at 154 [ 6 ] ; [ 2005 ] ATC 4586 at 4589 . :

" … the analysis involved in determining whether such a body is performing the function of government must be the same (or substantially so) irrespective of whether it claims to be a public benevolent institution or a charity. In either case, the process involves the characterisation of the body ' s activities to see, not only whether they are ordinarily performed by government, but more importantly to ascertain if they are so controlled by it that the body can be properly regarded as carrying out the function or work of government. "

167. 

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The characterisation that his Honour preferred was as a body that performed the work or function of government. The reasoning of Osborn AJA was to a similar effect, that the appellant was " so much a creature or agent of government that it should be denied the status of a charity " ^[137] Central Bayside Division of General Practice Ltd v Commissioner of State Revenue (2005) 60 ATR 151 at 171 [ 60 ] ; [ 2005 ] ATC 4586 at 4602 . .

168. In dissent and, as will appear, correctly in my opinion, Byrne AJA said this ^[138] Central Bayside Division of General Practice Ltd v Commissioner of State Revenue (2005) 60 ATR 151 at 170 [ 57 ] ; [ 2005 ] ATC 4586 at 4601 . :

" I return once again to the facts of this case. It is clear that Central Bayside is not the mere creature or agent of the Commonwealth Government. No government control is exercised over its management. It plays an active role in itself selecting the particular projects which it undertakes for the benefit of its community. These features and the fact that its management is undertaken by its elected members without stipend from the Commonwealth shows that its relationship is more that of an ally than that of an agent. In this respect it is like any organisation whose principal object and activities are charitable. It is a charitable body. "

The appeal to this Court

169. Before proceeding, it is necessary to set out the relevant statutory provision, s 10(1)(bb) of the Act:

• " 10 Exemption from pay-roll tax
  • (1) The wages liable to pay-roll tax under this Act do not include wages paid or payable -

    • …

    • (bb) by a charitable body (other than a school or educational institution or an instrumentality of the State) to a person during a period in respect of which the body satisfies the Commissioner that the person is engaged exclusively in work of the body of a charitable nature … "

It is not in contention that the reference in the section to a " body of a charitable nature " is a reference to a body that is charitable in the same sense as " charitable " has been traditionally understood at law and in equity. That understanding is that the relevant purposes of the board or trustees in question must be purposes beneficial to the community within, among other classes, relevantly, the fourth class of charity referred to in Pemsel ' s Case ^[139] Commissioners for Special Purposes of the Income Tax v Pemsel [ 1891 ] AC 531 . in which Lord Macnaghten, whose words on the topic have not, so far as I am aware, been doubted, said this ^[140] [ 1891 ] AC 531 at 580-583. :

" That according to the law of England a technical meaning is attached to the word ' charity, ' and to the word ' charitable ' in such expressions as ' charitable uses, ' ' charitable trusts, ' or ' charitable purposes, ' cannot, I think, be denied. The Court of Chancery has always regarded with peculiar favour those trusts of a public nature which, according to the doctrine of the Court derived from the piety of early times, are considered to be charitable. Charitable uses or trusts form a distinct head of equity. Their distinctive position is made the more conspicuous by the circumstance that owing to their nature they are not obnoxious to the rule against perpetuities, while a gift in perpetuity not being a charity is void. Whatever may have been the foundation of the jurisdiction of the Court over this class of trusts, and whatever may have been the origin of the title by which these trusts are still known, no one I think who takes the trouble to investigate the question can doubt that the title was recognised and the jurisdiction established before the [ Statute of Elizabeth ] ^[141] Charitable Uses Act 1601 (43 Eliz I c 4) ( “ the Statute of Elizabeth ” ). and quite independently of that Act. The object of that statute was merely to provide new machinery for the reformation of abuses in regard to charities. But by a singular construction it was held to authorize certain gifts to charity which otherwise would have been void. And it contained in the preamble a list of charities so varied and comprehensive that it became the practice of the Court to refer to it as a sort of index or chart. At the same time it has never been forgotten that the ' objects there enumerated, ' as Lord Chancellor Cranworth observes ^[142] The University of London v Yarrow (1857) 1 D & J 72 at 79 [ 44 ER 649 at 652 ] . , ' are not to be taken as the only objects of charity but are given as instances. ' Courts of Law, of course, had nothing to do with the administration of trusts. Originally, therefore, they were not concerned with charities at all. But after the passing of the Act 9 Geo 2, commonly known as the Statute of Mortmain, which avoided in certain cases gifts to ' uses called charitable uses, ' alienations and dispositions to

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charitable uses sometimes came under the cognizance of Courts of Law, and those Courts, as they were bound to do, construed the words ' charitable uses ' in the sense recognised in the Court of Chancery, and in the Statute of Elizabeth, as their proper meaning. I have dwelt for a moment on this point, because it seems to me that there is a disposition to treat the technical meaning of the term ' charity ' rather as the idiom of a particular Court than as the language of the law of England. And yet of all words in the English language bearing a popular as well as a legal signification I am not sure that there is one which more unmistakeably has a technical meaning in the strictest sense of the term, that is a meaning clear and distinct, peculiar to the law as understood and administered in this country, and not depending upon or coterminous with the popular or vulgar use of the word. …

No doubt the popular meaning of the words ' charity ' and ' charitable ' does not coincide with their legal meaning; and no doubt it is easy enough to collect from the books a few decisions which seem to push the doctrine of the Court to the extreme, and to present a contrast between the two meanings in an aspect almost ludicrous. … ' Charity ' in its legal sense comprises four principal divisions: trusts for the relief of poverty; trusts for the advancement of education; trusts for the advancement of religion; and trusts for other purposes beneficial to the community, not falling under any of the preceding heads. The trusts last referred to are not the less charitable in the eye of the law, because incidentally they benefit the rich as well as the poor, as indeed, every charity that deserves the name must do either directly or indirectly. "

170. The Preamble to the Statute of Elizabeth gives as some examples, " repair of bridges, ports, havens, causeways … and highways " and it has accordingly long been held that the fourth category includes trusts for the provision of roads ^[143] See, for example, Eltham Parish v Warreyn (1734) Duke 67 . and bridges ^[144] See, for example, Forbes v Forbes (1854) 18 Beav 552 [ 52 ER 216 ] , which involved a bequest of £ 2000 to the testator ’ s executors, on trust to build a bridge in Scotland over the river Don. . I mention these for this reason. In modern times, and indeed for a long time now, a road or a bridge, certainly in Australia, could not be constructed without at least the approval, if not the active participation in the provision of it by either a State or Federal government or a local authority established by the latter. As I pointed out in Western Australian Planning Commission v Temwood Holdings Pty Ltd ^[145] (2004) 221 CLR 30 at 84 [ 147 ] . :

" … [ the creation of new roads ] cannot be done unilaterally by the [ provider ] : the Crown or the local authority must be willing for this to occur and to accept the road as a public road, and to permit it to intersect, or make a junction with an existing public road. "

It should also be noted that activities carried out in other countries by private enterprise have been more readily performed by governments and statutory authorities in this country. It might, as a practical matter, be necessary for a donor therefore, wishing to make a charitable gift within the fourth category, to place funds or property in the hands of government or a statutory authority with a charitable purpose impressed on it ^[146] See also: Luxton, The Law of Charities (2001) at 144 [ 4.89 ] where, after referring to the Preamble ’ s mention of bridges etc, it is said: “ By analogy, purposes within the spirit of the Preamble include public works and amenities, and therefore comprise many services and provisions that are today undertaken by public (or privatized) authorities. ” .

171. Exactly such an occurrence led to the litigation in Brisbane City Council v Attorney-General for Queensland ^[147] [ 1979 ] AC 411. in which the Privy Council advised that a conveyance of land for " showground, park and recreation purposes " to the Brisbane City Council, a creature owing its existence entirely to, and governed by, State legislation, upon a condition that a named show society be given exclusive use of the land for two weeks each year without charge, gave rise to a charitable trust within the fourth category of charitable purposes defined in Pemsel ' s Case .

172. In giving the advice of the Board, Lord Wilberforce relevantly said ^[148] [ 1979 ] AC 411 at 422. :

" It is common ground that the trust is only a valid charitable trust if it falls within the fourth class of charitable purposes defined in [ Pemsel ' s Case ] ^[149] [ 1891 ] AC 531 . as a trust beneficial to the community within the spirit and intendment of the preamble to 43 Eliz 1, c 4. The lack of precision of the latter ' s words has to be made good by reference to decided authorities which, as has been said, are legion and not easy to reconcile ^[150] Williams ’ Trustees v Inland Revenue Commissioners [ 1947 ] AC 447 at 455. It has been said in the Court of Appeal in England in Incorporated Council of Law Reporting for England and Wales v Attorney-General [ 1972 ] 1 Ch 73 at 88 per Russell LJ and endorsed by the other members of the Court. . It has been said in the Court of Appeal in England that, if a purpose is shown to be beneficial to the community or of general public utility, it is prima facie charitable, an approach which might help to simplify the law, but this doctrine, even assuming it to be established

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in the law of England, does not yet seem to have been received in Australia ^[151] See Incorporated Council of Law Reporting (Q) v Federal Commissioner of Taxation (1971) 125 CLR 659 at 666-667 per Barwick CJ. . Their Lordships will therefore follow the route of precedent and analogy in the present appeal. "

173. In 1948 ^[152] Monds v Stackhouse (1948) 77 CLR 232 , particularly at 240-241, 246-247 and 250-251. See also the discussion about charitable trusts for the provision of public works in Warburton, Tudor on Charities , 9th ed (2003) at 100-101 [ 2-074 ] . and on two relatively recent occasions this Court too has effectively held that a local authority, notwithstanding its political character and subjection to State governmental control may, indeed may be obliged to, accept and hold property for a purpose of a public charitable kind. This appears from Bathurst City Council v PWC Properties Pty Ltd in which the Court said this ^[153] (1998) 195 CLR 566 at 582-583 [ 35 ] - [ 37 ] per Gaudron, McHugh, Gummow, Hayne and Callinan JJ. :

" The vesting of land in a town centre in a local authority for the purpose of a publicly accessible free car park has some elements at least of a charitable trust for public purposes. The question, as formulated by Barwick CJ in Incorporated Council of Law Reporting (Q) v Federal Commissioner of Taxation ^[154] (1971) 125 CLR 659 at 667. , is whether a purpose beneficial to the community is ' within the equity of the preamble to the Statute of Elizabeth ' . The Preamble refers to ' Bridges, Ports, Havens, Causeways … and Highways ' . Freely accessible car parks on one view might be regarded as ' Havens ' from the ' Highways ' or as so necessarily incidental to the latter in modern times as to be almost indistinguishable in public purpose and utility from them: there is an analogy between a highway and a car park affording a haven from, and a secure place of resort near and accessible to, a highway ^[155] See the discussion by Lords Reid and Wilberforce of the legitimacy in finding an analogy between an object already held to be charitable and a new object in Scottish Burial Reform and Cremation Society v Glasgow Corporation [ 1968 ] AC 138 at 147 and 156 respectively, and the discussion by McTiernan, Menzies and Mason JJ in Royal National Agricultural and Industrial Association v Chester (1974) 48 ALJR 304 at 305; 3 ALR 486 at 488-489. .

An example of the recognition of a charitable trust of this nature may be provided by the judgment of Hart J in
Mareen Development Pty Ltd v Brisbane City Council ^[156] [ 1972 ] Qd R 203 ; see the judgment on refusal of special leave to appeal (1972) 46 ALJR 377. . Clause 12 of an Ordinance of the City of Brisbane provided that an applicant for approval of a subdivision was to transfer to the Council three link strips at the end or on the side of existing dedicated roadways. In the Full Court, Hart J referred to the acquisition made by the Council free of cost and, speaking of the strip in question, concluded ^[157] [ 1972 ] Qd R 203 at 216. :

' It could not have been the intention of the Ordinance that the Council was to make a profit from them from future subdividers.

In these circumstances I think it holds the strip in trust for Town Plan purposes. '

It is true that those, such as PWC in the present case, conducting commercial activities may derive a benefit somewhat greater than the general public from a proximate car park. However, the fact that some non-charitable purposes may co-incidentally be served does not of itself destroy the legal character of a charitable trust ^[158] See Monds v Stackhouse (1948) 77 CLR 232 at 240-241; Congregational Union of New South Wales v Thistlethwayte (1952) 87 CLR 375 at 441-443; In re Resch ’ s Will Trusts [ 1969 ] 1 AC 514 at 541; Brisbane City Council v Attorney-General (Q) [ 1979 ] AC 411 at 424. . "

174. What I have referred to would at least suggest that in some circumstances it may be that a gift, or a payment, if not to a government, but to some other polity or a creature of it, carrying out entirely statutorily mandated objects, will not fail to be charitable on that account, a matter not for decision in this case. But it is clear that the objects of government and its creatures are by no means necessarily antithetical to charitable objects and activities.

175. The reasoning in and outcome of the cases in this Court to which I have so far referred, and in Incorporated Council of Law Reporting (Q) v Federal Commissioner of Taxation ^[159] (1971) 125 CLR 659 . show that Australian jurisprudence with respect to the expression " charitable purpose " manifests at least as ample an approach as English jurisprudence. There Barwick CJ said ^[160] (1971) 125 CLR 659 at 667. :

" Not every purpose beneficial to the community is a charitable purpose but only those which are within the equity of the preamble to the Statute of Elizabeth. The purpose must not merely be beneficial: it must also be charitable ^[161] See Re Macduff ; Macduff v Macduff [ 1896 ] 2 Ch 451 ; Attorney-General v National Provincial and Union Bank of England [ 1924 ] AC 262 ; Williams ’ Trustees v Inland Revenue Commissioners [ 1947 ] AC 447 and Re Strakosch, dec ’ d ; Temperley v Attorney-General [ 1948 ] Ch 37 . . In this connexion however we are reminded by Lord Wrenbury in Chesterman v Federal Commissioner of Taxation ^[162] [ 1926 ] AC 128 at 132; (1925) 37 CLR 317 at 320. that ' the word " charitable " in the Elizabethan sense is larger and more comprehensive than the other words in the context ' . "

Later his Honour said this ^[163] (1971) 125 CLR 659 at 669. :

" Yet it must be considered whether that benefit is charitable in the Elizabethan sense. Out of certain of the instances given in the preamble to the Act of 1601 a broad concept emerges of the kind of object of public utility which will satisfy the quality

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of charity. Any notion that that concept is of an eleemosynary nature is seen to be untenable by some of those very instances themselves, eg the repair of bridges, havens, causeways, seabanks and highways and the setting out of soldiers. Further, these instances seem to regard the provision of some of the indispensables of a settled community as charitable. "

176. It seems to me to be beyond question that health care, a term which compendiously covers all of the purposes and activities of the appellant, can only be regarded as an " indispensable of a settled community " .

The respondent ' s case

177. The respondent nevertheless advances these propositions: a government department, (here the Commonwealth Department of Health and Ageing), is not a charitable body when it acts to implement government policy. When a body, such as the appellant here, acts so much under the control or influence of a government department that it can be seen to be acting to implement government policy, rather than in the independent performance of its own objects, then it too may not be regarded as a charitable body. The history of the divisional system and the control asserted over all divisions of general practice, including the appellant, by the Commonwealth, shows that the appellant was acting so much under the control and influence of government in discharging its obligations under its OBF agreement, and otherwise, during the tax year ending 30 June 2002, that it is an implementer of government policy rather than an independent body pursuing its own objects: accordingly it was not a charitable body entitled to exemption from pay-roll tax.

178. I would reject the respondent ' s arguments. Section 10(1)(bb) says nothing about government, government control, or the implementation of government policies. It is not difficult to conceive, as I have foreshadowed, of many charitable bodies, the activities of which further government ends. The classic example is a body which does good works for the relief of poverty. A major aim of all well-intentioned governments is the elimination or reduction of poverty. In argument, the respondent accepted that to be so but submitted that the facts have shown more, that the Commonwealth controlled the activities of the appellant. The submission went so far as to contend that the appellant was the puppet of the Commonwealth. The argument continued that the appellant was not a charitable body because, by reason of the Commonwealth ' s " control " , it did not bear the hallmark of all charities: subjection to control by the Supreme Court at the suit of the Attorney-General for the State of Victoria.

179. I disagree. There is no real possibility of a conflict between the appellant, the Commonwealth and the Attorney-General, leading to an application to any court by the Attorney-General, either personally or in a relator action. This is so because the appellant ' s objects are all truly charitable. They are also objects which either further or even implement government policy, and none of the appellant properly advised, the Commonwealth or the Attorney-General for Victoria, would have any interest in anything other than the proper pursuit of those objects. Both the Commonwealth and the Attorney-General would also have exactly the same interest in the proper application of the funds, however derived, of and by the appellant, to the charitable objects for which the appellant was established. The Attorney-General would not in any event be precluded from applying to the court if concerned about any misapplication or, if the Attorney wished, to ensure the proper application, of the appellant ' s funds however derived.

180. Three cases upon which the respondent sought to rely are readily distinguishable even if everything that was said and held in them should be accepted (something which is unnecessary to decide here but about which there may be some doubt in view of the passages from Bathurst City Council that I have cited). First, in each of Metropolitan Fire Brigades Board v Commissioner of Taxation ^[164] (1990) 27 FCR 279 . , Mines Rescue Board (NSW) v Commissioner of Taxation ^[165] (2000) 101 FCR 91 . and Ambulance Service of New South Wales v Commissioner of Taxation ^[166] (2003) 130 FCR 477 . , the appellant sought to be classified as a " public benevolent institution " within the meaning of the Fringe Benefits Tax Assessment Act 1986 (Cth), not as a charitable body within the meaning of the general law. Secondly, unlike the appellant here, the relevant body in each was established by statute and owed its whole existence to that statute. In Metropolitan Fire

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Brigades Board , it was expressly held that the Board was an emanation of government ^[167] (1990) 27 FCR 279 at 280. . In Mines Rescue Board , the Board was held to represent the State ^[168] (2000) 101 FCR 91 at 101 [ 43 ] . , and in Ambulance Service , it was held that when proper regard was had to the constitution, funding and functions of the Service, it was sufficiently governmental in character as to fall outside the meaning of the statutory phrase " public benevolent institution " ^[169] (2003) 130 FCR 477 at 493 [ 48 ] . . On no view does the appellant answer any of the descriptions applied to the appellants in those cases. Each was obliged by statute or regulation to expend money under the ultimate supervision of the Minister to whom it was answerable. Accordingly, in those cases it was not difficult to conclude that the government could be said to have effectively assumed responsibility for what the appellants there did.

181. The appellant in this case was entirely voluntarily established. It is not, and has never been, part of a government department. It does not owe its existence to a statute. It is quite separate from government. It is a matter entirely for it whether it seeks government funds or subsidisation.

182. The respondent sought to rely on a principle that clear words are required before an obligation on the part of the Crown, or a servant or agent of the Crown will be treated as a trust according to ordinary principles, even if the obligation could be described as a fiduciary obligation: absent the clearest of words, the obligation will be characterised as a government or political obligation. Kinloch v Secretary of State for India ^[170] (1882) 7 App Cas 619 . , Registrar of the Accident Compensation Tribunal v Federal Commissioner of Taxation ^[171] (1993) 178 CLR 145 . and Bathurst City Council ^[172] (1998) 195 CLR 566 at 591. were relied upon in an attempt to make good that proposition. The submission continued that, by analogy with the reasoning underlying the exclusion of trusts for political purposes from the category of charities, a court could not adjudge whether the implementation of a particular government policy or particular work of government is for the benefit of the community or a section thereof. Roman Catholic Archbishop of Melbourne v Lawlor ^[173] (1934) 51 CLR 1 at 33 per Dixon J. and Royal North Shore Hospital of Sydney v Attorney-General (NSW) ^[174] (1938) 60 CLR 396 at 426 per Dixon J. were cited in support of the argument.

183. Both the analogy and the reliance are inapt. In Roman Catholic Archbishop of Melbourne , Dixon J was referring to truly political objects, that is to say, controversial subjects although they may have had, for example, a religious connexion, such as to secularise education. Activities of that kind cannot be charitable because " the Court has no means of judging whether a proposed change in the law will or will not be for the public benefit, and therefore cannot say that a gift to secure the change is a charitable gift " ^[175] (1934) 51 CLR 1 at 33. . His Honour ' s observations there, and in Royal North Shore Hospital , have nothing to say about a case in which, as here, the objects can be seen to be undeniably charitable. No occasion arises for any assessment of any coincident governmental or political policy.

184. That the Commonwealth, by the Department, controls the appellant and its activities is a misconception. The respondent seeks to make much of cl 2.3 of the agreement between the appellant and the Commonwealth requiring the former to comply with requirements " regarding identified Outcomes for Outcomes-Based Funding as specified … " . Charitable bodies, within the course of their activities, no doubt enter into many contracts under which obligations are imposed upon them, or they assume them. The fact that those obligations are, by contract, enforceable against them, by no means has the consequence that in respect of those particular obligations, they are under the control of another contracting party or parties. It is a matter for the charitable body in question, as here, to decide whether it wishes to enter into a particular contract.

185. I would therefore reject the respondent ' s contention that the primary judge and the majority of the Court of Appeal were correct in concluding that, under the OBF agreement, or otherwise, the appellant acted to further the purposes of government " rather than to implement its own [ charitable ] purposes " . The fact that the purposes of government are coincident with the undoubtedly charitable purposes of the appellant does not mean that the appellant cannot qualify for exemption under the Act. The appellant does not lose the status to which it may be entitled because it does not have, or seek to implement, any purposes different from those of the government in

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relation to health care. If the respondent ' s contention and the holdings in the courts below were correct, the result would be that whenever the government had a purpose, which if it were pursued by any non-government body would be charitable, and it funded some other body which happened to have the same purposes, and no others, that other body could never be regarded as a charitable body. As I have already said, many of governments ' policies, particularly in modern times, are directed to what would undoubtedly be charitable purposes if they were undertaken by non-government bodies.

186. It follows that the appeal should be allowed with costs. I would join in the orders proposed in the joint judgment.