Perpetual Trustee Co Ltd v Federal Commissioner of Taxation

45 CLR 224

---

(Judgment by: Evatt J)

Perpetual Trustee Co Ltd v Federal Commissioner of Taxation

Court:

Judges: Starke J
Dixon J

Evatt JMcTiernan J

Subject References:
Taxation and revenue
Estate duty
Exemption
Institute for benefit of naval ratings

Legislative References:
Estate Duty Assessment Act 1914 (Cth) - Subsection 8(5)

Judgment date: 23 April 1931

SYDNEY

---

Judgment by:
Evatt J

The Royal Naval House stands on land situate in the City of Sydney. The Lords Commissioners of the Admiralty, the Government of the State of New South Wales, the officers and men of the Royal Navy and the general public of the State assisted in providing the funds necessary for the erection of the building and certain later alterations to it. The land was made available by the Government of New South Wales and the title is vested in a public authority representing that Government. The building on it is used for the benefit of the petty officers and lower ratings of His Majesty's Navy by providing accommodation and recreation for them when ashore. No written constitution or trust deed is in existence but the House is controlled by honorary trustees and committees, and representatives of His Majesty's Australian Navy assist in its control.

The services of the House are largely availed of by the petty officers and men of His Majesty's and His Majesty's Australian Navy, and when warships from foreign countries visit Sydney Harbour, the lower ratings are also allowed to use the House.

Charges are made by the governing authority of the House for sleeping accommodation, for meals, for baths, for billiards and for lockers but money and valuables of the sailors are taken care of free. The charges are described as small (everything is relative-a bath costs sixpence) but it is noteworthy that in the year 1929-1930 the amount received in respect of such charges was PD3,202, while the total expenditure for that year was only PD3,589, including a salary and wages bill of PD2,251. No rent is paid to the Government of New South Wales and the loss on each year is apparently made up by a small grant of PD250 from the Commonwealth Government and by subscriptions and donations. One special concession has been stressed in argument: when men ask for a bed for the night, they may obtain it on a promise to pay on the next pay day. These promises are usually honoured.

Is the Royal Naval House a "public benevolent institution" within the meaning of s. 8 (5) of the Estate Duty Assessment Act 1914-1928? No doubt, the body both in origin and function has had a sufficiently "public" character impressed upon it. But is it a "benevolent institution"?

The House of course serves very useful purposes. It is convenient that the lower ratings in actual naval service should have an inexpensive hostel available to them when on leave from their ships in Sydney. If they take leave overnight they might otherwise have to seek for places of accommodation at hotels or other places in city or suburbs. The Naval House, no doubt, has become to a large extent the club of those who are accorded its privileges. It probably enables the officers in control of His Majesty's ships of war to get quickly in touch with men required to return at short notice from leave.

There is no element of profit-making in the concern, but the receipts from service charges make the House nearly self-supporting. It resembles in this respect, bodies founded at Australian Universities by State or governing authorities in order to benefit the undergraduates. They are sometimes self-supporting; often they are not, because charges made for services are as small as possible. Halls and rooms are there used for lectures and debates but no one (except perhaps a student in sarcastic vein at a debate) would describe them as "benevolent institutions." Yet students are as a class notoriously impecunious, much more so than the naval ratings in regular employment at a pay fixed by Government.

There are, however, 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.

I would answer the question "No."