Case L50

Judges: HP Stevens Ch

CF Fairleigh QC
JR Harrowell M

Court:
No. 1 Board of Review

Judgment date: 31 August 1979.

C.F. Fairleigh Q.C. (Member): The taxpayer's return of income for the year ended 30 June 1974 was adjusted inter alia by the Commissioner disallowing in toto a claim to deduct an amount of $19,000 in respect of a gift of shares in company N purportedly to a public benevolent institution (sec. 78(1)(a)(ii) of the Income Tax Assessment Act). The Commissioner's decision disallowing the taxpayer's objection in that respect to the consequent assessment is the only issue presently before the Board.

2. In or about December 1973 company T which was registered as the holder of 9,500 ordinary fully paid $2 shares in company N sold those shares to the taxpayer at par and the transfer was registered in N's register of members on 21 December 1973.

3. The taxpayer in pursuance of an intention to make a gift which would be encompassed by sec. 78(1)(a)(ii) of the Act executed a transfer of that parcel of shares; and N's register records that on 28 December 1973 the holder of the shares is what is called a ``benevolent society'' by its trustees (two of the four persons mentioned in the next paragraph hereof).

4. That gift of shares augmented a fund which was set up by four residents of Norfolk Island executing on 6 November 1973 a deed which has the one recital:

``Whereas the parties are desirous of establishing and maintaining adding to and accumulating a public fund for the

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purpose of providing money property or benefits to or for funds authorities or institutions for charitable purposes or for the establishment of such funds authorities or institutions on Norfolk Island such public fund to be conducted as a public benevolent institution to be known as... or other name as may be decided upon from time to time.''

5. Those four persons were two men, father and son, both solicitors, their secretary and one of their employees (or a former employee). In November 1976 those four persons admitted another man into the group; he was a solicitor employed by those two other solicitors. This group of four persons (later the group of five) made constant efforts to obtain special incorporation or some other statutory recognition. Evidently the governmental authorities have seen no impelling need to alter the status of this body from that of an unincorporated group of four (later five) persons.

6. Those four persons have agreed and declared as in the 16 clauses of the Deed:

7. The taxpayer described the said Sunshine Club of Norfolk Island thus: A band of women that looks after whatever help is needed, friendly advice or help, and their children are looked after, or money made available, if they need it.

8. The other witness (the senior member of the group of four and chairman of the board of directors of company N) said that the Sunshine Club was founded by the daughters of one who the medical officer on the island about the turn of the century; and only one of those ladies is still alive. The club ``is an aggregation of the older ladies of the island who are in touch with most of what goes on on the island and the needs of individuals on the island. In a very nice way and without any fuss or filling in forms or anything else they see that anybody needing money is provided with it''.

9. The instance of an outlay of money by the Sunshine Club which is of particular significance was referred to as the ``Granny... appeal''. This is a reference to a Norfolk Island resident about 90 years of age with her home on a residual area of three acres (after gifts of portions of the land to her children) who is said to have asserted that she is adequately provided for and does not know what social welfare is and does not want it.

10. That witness said that when that elderly lady became ill and had to be taken by aeroplane to the Australian mainland ``the Sunshine Club spread the word around that it was a bit short at the time on the necessary amount and hence the donation to the Sunshine Club'' (scil. from the cash under the control of the group of four - vide para. 23 hereof).

11. Another association of some residents of Norfolk Island which arises for mention (see para. 23 hereof) is the Wives and Mothers' Club. The witness last mentioned said that it is a ``voluntary association unsubsidised except by public support''. He said that ``the particular thing it has done has been (to) build a pre-school kindergarten and staff it and also (it has) provided a lecturer on mothercraft at the hospital during... one night a week or something of the kind. That is a sample of its work''. The witness further said: ``In the Polynesian way children are very popular among the island people; for example, one never sees a neglected child or a child who is not well dressed and well nourished and that sort of thing, and should a child be left without parents there is almost a scramble for who shall adopt the child. At the pre-school kindergarten... the number at the present time... is something like 35.''

12. It is as well to dispose now of the subsidiary question as to the value of the subject property at the material time.

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13. Some of the defects in the evidence as to value are that the exhibit (which values tenant rights at $102,050 at 21 April 1975) ignores the restriction in the lease as to payment for tenant improvements; the exhibit does not relate any value to the date which is presently material; the taxpayer has put a value on the shares which he bought and sold without any proper attention to the restrictions which are contained in the lease; and without any allowance for factors which are associated with shares in a (quasi) proprietary company, and are absent when shares in a public listed company are being considered (
Executors of the Estate of Bruce-Smith (dec'd.) v. F.C. of T. 73 ATC 4137 ; (1973) 47 A.L.J.R. 569 ;
Gregory & Anor. v. F.C. of T. 71 ATC 4034 ; (1970-1971) 123 C.L.R. 547 ).

14. There is an observation in many cases that some evidence of value, even the best evidence of value is the sum of money for which the property has been purchased on the open market (near to the relevant date) after being advertised so as to attract the attention of those who would be likely to be interested in purchasing it (
Green v. Einasleigh Shire Council (1904) S.R.Q. 10 at p. 15 ;
Beaudesert Shire Council v. James Campbell & Sons Ltd. (1925) S.R.Q. 18 at p. 30 ;
Jowett v. F.C. of T. (1926) 38 C.L.R. 325 at p. 328 ;
McDonald v. D.F. Commr. of Land Tax (N.S.W.) (1915) 20 C.L.R. 231 at p. 239 ;
Australian Apple and Pear Marketing Board v. Tonking (1942) 66 C.L.R. 77 at pp. 102-103 ). The chairman of directors of company N said in evidence that a sale of these shares to an outsider would probably be at a considerable discount. That line of cases gives little support to the taxpayer's own evidence as to value in the present circumstances; for example the taxpayer bought this parcel of shares from a family company in which ``he was involved'' and for the express purpose of making this gift of the shares as soon as possible.

15. The exhibit which expresses one opinion as to value is strictly speaking not evidence of value at all (
Becker v. F.C. of T. (1951-1952) 87 C.L.R. 456 at p. 458 ). The document was not accepted in evidence as proof of value, but the taxpayer's counsel contends that the exhibit is evidence of value as a fact pursuant to sec. 14B of the Evidence Act (N.S.W.). However all preliminary matters essential to support the application of sec. 14B of the Evidence Act were not proved; so also
Dass (an infant) v. Masih (1968) 2 All E.R. 226 does not assist the taxpayer in the present circumstances; nor does
Morley v. National Insurance Co. (1967) V.R. 566 .

16. No reference was made during the progress of evidence to any qualification or restriction placed by the taxpayer upon the donees' right to sell or otherwise dispose of the parcel of shares (para. 46 hereof). This is relevant to the issue of value as well as to the question whether what was given was essentially only a right to receive dividends and bonus shares and to participate in distribution on winding up, perhaps an unlimited gift of income (
Re Weaver ; Trumble v. Animal Welfare League of Victoria (1963) V.R. 257 ) without being a gift of corpus, apparently not an absolute gift (cf.
Trustees Executors & Agency Co. Ltd. v. Zelman Memorial Symphony Orchestra Ltd ; Re Lloyd (1958) V.R. 523 ).

17. The evidence, poor as it is, enables a finding to be made that the value of the parcel of shares at the material time was $19,000 even though there may be some rights in respect of those shares, retained by the taxpayer. The major issue can now be considered.

18. At the initial meeting of the group of four on the same day as the deed was executed those persons disclaimed any intention of making the public aware of their purposes, viz.: ``It was further agreed that at this stage no public announcements be made as to the formation of the Society but that the present members should inform any friends expressing interest in such an idea.'' The minutes of 23 June 1977 record: ``It was noted that the Society was not organised as a public fund and did not invite or receive subscriptions from the public.'' So also a minute of a meeting on 17 September 1977: ``When the protracted uncertainty as to the status of Norfolk Island is finally resolved then the activities of the Society will be published to a greater extent and opportunity given to all interested persons to become members if they so desire.'' Again in a letter sent on behalf of this Society on 11 November 1974 to the Honourable the Administrator of Norfolk Island by one of

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those four persons the statement is made: ``It is not envisaged that the... Society... would invite or receive subscriptions... for raising money for any public or patriotic fund. It is envisaged, however, that members of the Norfolk Island community, wishing and able so to do, will be invited to participate actively by becoming members of the Society, and if they are so disposed, to make contributions to its fund to be applied in accordance with its rules.''

19. In a broad sense (i.e., in vernacular usage) the group of four express in the Deed benevolent and charitable intentions (cf.
Re Parker ; Ballarat Trustees Executors & Agency Co. Ltd. v. Parker (1949) V.L.R. 133 ). However, at a meeting of the four persons on 1 November 1976 the minutes record that the treasurer confirmed ``that after full inquiry he was of opinion that there did not exist at the present time on the Island any case of hardship in which application of the Society's funds is called for''. The possible projects then discussed were (i) a garbage disposal plant; (ii)pathological or other research on the Island regarding gastric and other illnesses and water contamination; (iii) supplementing of the Queen Victoria Scholarship scheme and promotion of the recorded history and language of Norfolk. The resolution was: ``to keep all these and other similar matters under review but not to be precipitate in expenditure particularly where other provision for the situation exists.'' Once again on 31 May 1977 the minutes record that ``since the last report'' (semble 2 December 1976) ``neither (the treasurer) nor any other member of the Society had been aware of any case of need not otherwise provided for. The policy of leaving available funds to accumulate for the time being was approved''; so also on 23 June 1977. The evidence of one of the group was that those who sought to join as members of this so-called institution were told in effect to wait until the group achieved incorporation (or recognition under subordinate legislation) before seeking membership; so also with those members of the general public who might otherwise have contributed to the fund set up by the four persons. The same witness said that they (as a group of four or five persons) had never solicited anything from anybody.

20. The taxpayer has not produced the constating documents of (i) company N; (ii) the Sunshine Club; or (iii) the Wives and Mothers' Club. No good reason has been given for the failure to do so; quite likely there is no constating document for (ii) or (iii). The taxpayer has not produced the books of account or any records of (ii) or (iii) and so it is not known whether the conduct of those clubs is exclusively benevolent in the sec. 78(1)(a)(ii) or say sec. 78(1)(a)(iii) sense.

21. Company N acts as a trustee in an unknown number of instances. Company N has tried unsuccessfully to obtain statutory status as a trustee. Company N is the Crown lessee of a parcel of land on Norfolk Island for a term of 28 years (semble from 1 March 1968) subject to resumption on six months' notice. The lessee has tenant rights for the value of improvements effected by it, less $1,000. The rental is $100 per annum. As at 30 June 1974 company X had spent $67,703 on leasehold improvements; $68,452 at 30 June 1975; $68,621 at 30 June 1976; $78,324 at 30 June 1977.

22. Statements of income and expenditure and balance sheets of this Society of four people were put in evidence. For the period 6 November 1973 to 31 December 1974 the particulars are: 

                                                             $            $

      Income                                              38,337

      Donations                                                        36,702

      Interest                                                             10

      Dividends                                                         1,625



      Less expenses

      Donation Norfolk Island public hospital

(Charity Queen Appeal)                                     5,950

                                                         -------

      Surplus of income over expenditure transferred

      to accumulated funds                               $34,387







        

      -------



      Balance sheet at 31 December 1974



      Investments                                         32,502

      Shares at cost (sic)

      Company N

      16,251 ordinary $2 shares                                        32,502

      Current assets

      bank                                                 1,885

                                                          ------

                                                         $34,387

                                                          ------

      Represented by accumulated funds                   $34,387

                                                          ------

23. For the year ended 31 December 1975 the donations by this Society are shown as nil; for the year ended 31 December 1976 the donations by this Society are shown as $250 to the Sunshine Club and $100 to the Norfolk Island Central School library appeal; for the year ended 31 December 1977 the donations by this Society are shown as $826 to Wives and Mothers' Club and $1,000 to Norfolk Island hospital. In those same years the gifts made to this Society are shown as $50, nil and $576 respectively. The balance sheet at 31 December 1977 shows accumulated funds $39,586 being two parcels of N shares $32,502, interest bearing deposits $6,593 and bank account credit $491. Almost all donations to this Society in the last six years have come from persons or companies associated with the witness who is the chairman of directors of company N.

24. On 3 December 1976 a gift of $250 was made to the said elderly Norfolk Island resident who was travelling to Australia for medical attention; $250 was given on 21 September 1978 to each of Royal Far West Children's Health Scheme and Girl Guides Association; $300 was given on 10 January 1979 to Norfolk Island Underwater Club (a diving club) as a contribution towards the purchase of an oxygen resuscitation unit. A minute of a meeting of 28 June 1979 states that the oxygen resuscitator unit is to be available as a service to the Norfolk Island community in association with the hospital; the underwater club is to maintain the unit in good order and train its members in the use thereof in the ordinary course of their participation in the club's activities; the minutes record that that club has changed its constitution to ensure that in the event of the club ceasing to function, the resuscitator unit will be handed over to the Norfolk Island Hospital.

25. The minutes record a motion on 10 June 1978 that this group of people (the Society) make $400 available for the purpose of employing a designer to produce finished design work for the flag for Norfolk Island as proposed by the Norfolk Island Council a few days earlier. The minutes do not record the fate of that motion, although the probability is that the motion as recorded is in essence a resolution.

26. It would be fanciful to regard this group of four or five persons, or the Sunshine Club, or the Wives and Mothers' Club in the same way as one would look on an unincorporated order of nuns committed to charitable purposes (cf.
Stratton v. Simpson (1970) 125 C.L.R. 138 at p. 163 per Gibbs J.); or as one would regard the Y.M.C.A. which has a known constitution (
The Young Men's Christian Association of Melbourne v. F.C. of T. (1925) 37 C.L.R. 351 ; R. & McG. 71 ; see also
Maughan v. F.C. of T. (1942) 66 C.L.R. 388 ).

27. I have set out my views on the composite descriptive phrase ``public benevolent institution'' in Case H24,
76 ATC 174 at pp. 182-184. As at present advised I adhere to what I there said and no useful purpose would be served by restating it.

28. In
Attorney General (New Zealand) v. The New Zealand Insurance Co. Ltd. and Others (1936) 3 All E.R. 888 there was an unsuccessful attempt to distinguish a gift to institutions for benevolent purposes from a gift for benevolent purposes on the ground that the gift was in favour of institutions, societies or objects in or about a particular town for benevolent purposes (see also In
re Macduff , Macduff v. Macduff (1896) 2 Ch. 451 ).

29. The majority decision in
Perpetual Trustee Co. Ltd. v. F.C. of T. (1931) 45 C.L.R. 224

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; 7 A.T.D. 385 that the phrase ``public benevolent institution'' (as in sec. 8(5) of the superseded Act) means an institution organized for the relief of poverty, sickness, destitution or helplessness, and that such a body need not have a written constitution or exist under a trust deed and may be controlled by persons who are not acting as an arm of government is applicable for the corresponding sec. 78(1)(a)(ii). The taxpayer fails to get the full benefit of that decision as he has failed, for example, to prove that this group of four or five persons is so organized; and to prove that the Sunshine Club is so organized (see also
I.R. Commrs. v. Falkirk Temperance Cafe Trust (1926) 11 T.C. 353 ).

30. In Stratton's case the will expressly excluded public hospitals (in the Western Australian statutory concept) from benefiting. The group of four or five persons in the instant reference is not (in my understanding of the purposes set out in the deed or of the purposes carried out) an institution within the meaning of that phrase as discussed in the case quoted by Windeyer J., viz.,
M.N.R. v. Trusts & Guarantee Co. Ltd. (1940) A.C. 138 ; the fact that ``institutions'' include boards of trade, chambers of commerce, charity organization societies and societies for the prevention of cruelty ( ibid. p. 149) does not lead to the conclusion that those four persons are an institution consequent upon signing the Deed with or without their subsequent acts of benevolence, using the word in its broad sense.

31. An express trust for an individual or other specified beneficiary (singly or in the plural) was not created by the Deed (cf.
Rowlandson v. National Westminster Bank Ltd. (1978) 1 W.L.R. 798 ). If the provisions of the Deed are to succeed as a valid trust then it must be as a purpose trust and then only as charitable in the sense given to that word in the authorities.

32. In
Incorporated Council of Law Reporting (Old.) v. F.C. of T. 71 ATC 4206 at p. 4210; (1971) 125 C.L.R. 659 at p. 666 in respect of an incorporated body which was held to be an ``institution'' within the meaning of sec. 23(e) (``religious, scientific, charitable or public educational institution'') Barwick C.J. said:

``But is the Council nonetheless, a `charitable institution' within the meaning of sec. 23(e)? If its purposes are charitable, it will be such an institution for the nature of the institution inheres in the purposes it is created to and does pursue. There is no need in this connection to consider what is the main purpose of the Council as, in my opinion, it has in substance but one purpose...

The Act attempts no definition of charity or of what for its purposes will be charitable. But having regard to the decision of the Privy Council in
Chesterman & Ors. v. F.C. of T. (1925) 37 C.L.R. 317 . It must be taken that whether or not the institution is relevantly charitable will be determined according to the principles upon which the Court of Chancery would act in connection with an alleged charity. That means that the indications contained in the preamble to the Statute of Elizabeth 1601 and the classifications in Lord Macnaghten's speech in
Commr. for Special Purposes of Income Tax v. Pemsel (Pemsel's case) (1891) A.C. 531 at p. 583 are to be observed in deciding whether or not the institution is charitable for the purposes of the Act.

The reported cases may in some instances afford a guide by analogy to the decision whether a particular trust, or a particular purpose is charitable. In addition, the many dicta found in the reasons for judgment in such cases, though by no means of one accord, provide valuable assistance in resolving such a question. But in the long run, it seems to me, it is a matter of judgment whether the trust or purpose fairly falls within the equity, or as it is sometimes said, `within the spirit and intendment' of the preamble to the Charitable Uses Act 1601 (Imp.). This is clearly so in Australia.''

33. In
Brisbane City Council and Anor. v. Attorney-General for Queensland (1978) 3 All E.R. 30 at p. 33 Lord Wilberforce for the Privy Council said:

``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 Income Tax Special Purposes Commrs. v. Pemsel as a trust

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beneficial to the community within the spirit and intendment of the preamble to 43 Eliz. I 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 (
Trustees of Williams' Trusts v. I.R. Commrs. (1947) 1 All E.R. 513 at p. 519. It has been said in the Court of Appeal in England (
Incorporated Council of Law Reporting for England and Wales v. Attorney-General (1971) 3 All E.R. 1029 at p. 1036 ) per Russell L.J. and endorsed by the other members of the court) 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 in the law of England, does not yet seem to have been received in Australia: see Incorporated Council of Law Reporting of the State of Queensland v. Taxation Commr. of the Commonwealth of Australia, per Barwick C.J.''

(See further
Johnson and Another v. Moreton (1978) 3 All E.R. 37 at p. 55 per Lord Simon of Glaisdale.)

34. In
Ashfield Municipal Council v. Joyce (1978) A.C. 122 at p. 132 Lord Wilberforce for the Privy Council said:

``In Australia, after a period in which the courts showed some willingness to accept an alternative and narrower meaning for `charity' or `charitable purposes', the strength of the presumption in favour of this legal meaning was reaffirmed both by this Board in Chesterman v. F.C. of T. (1926) A.C. 128 (a case from New South Wales) and in
Adamson v. Melbourne and Metropolitan Board of Works (1929) A.C. 142 (a case from Victoria), and by the High Court in
Salvation Army (Victoria) Property Trust v. Fern Tree Gully Corporation (1952) 85 C.L.R. 159 (a case from Victoria). In that case the joint judgment of Dixon, Williams and Webb JJ. contains the passage, at p. 175:

  • `There has been, perhaps, too great a tendency in the Australian courts, as the Privy Council rather hinted in Adamson v. Melbourne and Metropolitan Board of Works, to depart from the legal meaning of `charitable' on rather slight grounds. Our courts in the future should be slow to do this unless there is a clear indication of a contrary intention.'

Second, and as a counterpart of the first, if it is desired to argue that the well-settled legal meaning of `charity' or `charitable purposes' is to be departed from, it is necessary to be clear as to the alternative which is offered. This is said to be the `popular' meaning. This does not mean merely the meaning in vernacular usage: something more is involved than an appeal to such words as might be used by a beggar appealing for alms, or in an adjuration from the pulpit as to one's attitude to one's neighbours. We are in search for something capable of legal precision in a statutory setting. But, as has been said many times, there is neither clarity or unanimity as to what this `popular' meaning is.''

35. A gift for charitable benevolent or philanthropic institutions (indiscriminately) fails to be charitable in the strict sense (
Attorney-General for N.S.W. v. Adams (1908) 7 C.L.R. 100 ; see further the cases collected in Australian Digest 2nd ed., vol. 3, Charities col. 1184 et seq.; see also In
re Diplock. Wintle v. Diplock (1941) 1 Ch. 253 ; (1948) 1 Ch. 465 ). The general rule as expressed in Halsbury (4th ed., vol. 5, Charities p. 352 para. 556) is that although purposes beneficial to the public or of public utility are prima facie charitable, certain public purposes are not charitable because they do not come within the spirit and intendment of the preamble to the Elizabethan statute.

36. A gift of money to be used and expended wholly or in part as someone in authority may judge most conducive to what is in the abstract charitable will fail to be a valid charitable bequest (
Dunne v. Byrne (1912) A.C. 407 affirming 11 C.L.R. 637 ; see also
Attorney-General for N.S.W. v. Metcalfe (1904) 1 C.L.R. 421 ).

37. It is only if there is certainty as to the property subject to the trust and certainty that the donor intended to devote that property to a charitable purpose that the gift will survive the test as to certainty (
Armenian General Benevolent Union v. Union Trustee Co. of Australia Ltd. (1952) 87 C.L.R. 597 ).

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38. Provided that all the objects are exclusively charitable, there is a good charitable gift even though the donor leaves it to others to determine which institutions shall benefit (
Smith v. W.A. Trustee Executor & Agency Co. Ltd. (1950) 81 C.L.R. 320 ).

39. Where there is a gift for the purposes of an organization which has no constitution or rules and there is a possibility of use for non-charitable purposes in the future whereby the gift consistently with the directions may be applied to other than strictly charitable purposes the gift does not pass the test of being for charitable purposes (
Re Carson ; Carson v. Presbyterian Church of Queensland (1956) S.R.Q. 4661 ).

40. I would not construe sec. 78(1)(a) so as to make inapplicable the maxim qui facit per alium facit per se. Thus it seems to me that a donor will be entitled to the statutory deduction if, for example, he hands over two dollars or more to a friend with a direction that the money be paid to a certain ``public hospital'' (properly so called) and the friend complies with that request; so also if the donor hands over a sum of money to a group of persons as agents to pay over the money in sums of not less than two dollars to various ones of the funds, authorities and institutions named or described in sec. 78(1)(a) and the agents do so.

41. In
Schellenberger v. Trustees Executors & Agency Co. Ltd. (1952) 86 C.L.R. 454 it was held that a bequest of residuary estate in trust ``for the beautification and advancement'' of a small country town is a valid charitable trust. In a joint judgment the Court (Dixon C.J., McTiernan and Fullagar JJ.) at p. 459 said: ``We would regard it as plain that what the testator had in mind is the provision of physical things within a particular locality, which, because they have an element of beauty, or for some other reason, will tend to the general benefit or advantage of the small community dwelling in that locality and so `advance' it as a community. Such trusts have been uniformly held to be charitable... They afford an outstanding example because in them we find a private person choosing to devote a part of his resources to what could fairly be regarded as a possible subject of public responsibility.'' At p. 460 the joint judgment draws attention to the observation of the Master of the Rolls in
Re Strakosch (1949) Ch. 529 at p. 541 : ``If we are right in holding that the principle laid down is that general words that money is to be applied for the benefit of a district or country are construed as meaning for such purposes as are recognized by the law as charitable purposes, the principle has no application here where the purpose is expressed.'' (See also
Ryland v. F.C. of T. 73 ATC 4107 ; (1973) 128 C.L.R. 404 as to a fund set up for the relief of persons in necessitous circumstances.)

42. Where general phrases are used in a trust instrument the trustee is entitled to submit to the Court a question whether some proposed application of the fund will be within the terms of the trust (Schellenberger (supra) at p. 461); and the settling of a scheme by or under the authority of the Court will be appropriate where a charitable trust has failed or where for some other reason there is to be a cy-pres application of the fund (ibid.).

43. In the present situation the taxpayer carries the onus of proof that the deed prohibits property received pursuant to it being applied for any purpose not specified in sec. 78(1)(a). Thus in
Macmine Pty. Ltd. v. F.C. of T. 79 ATC 4133 at p. 4156 et seq. Murphy J. cited the authorities which show that the effect of the onus provision is that the Commissioner is entitled to succeed if the evidence is consistent with the hypothesis (to relate it to the instant circumstances) that pursuant to the deed the group of persons (then four, later five) may apply the property for the benefit of a body or for individuals not encompassed by sec. 78(1)(a). The same sort of test was indicated by Barwick C.J. in
Gauci v. F.C. of T. 75 ATC 4257 at p. 4259; (1975) 135 C.L.R. 81 at p. 86 , viz.: ``The actual facts - apart from... - were fully exposed.'' Of course evidence as to intention or motive or of other avenues for the generosity of the taxpayer is irrelevant.

44. It is a fatal defect in the taxpayer's case that he has not produced the constitution or other constating document of, for example, the Sunshine Club; even if the assumption is made that ``public hospital'' in the deed means precisely the same thing as ``public hospital'' in sec.

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78(1)(a)(i) (cf.
O'Connell v. City of Greater Newcastle (1941) 41 S.R. 190 ;
Public Trustee v. Hospitals Commissioner of N.S.W. (1939) 56 W.N. 198 ;
Re Sutherland ; Queensland Trustees Ltd. v. Attorney-General (1954) S.R.Q. 99 ; In the Will and Codicil of Padbury ;
Home of Peace for Dying and Incurable v. Solicitor-General (W.A.) (1908) 7 C.L.R. 680 ;
Kytherian Association of Queensland v. Sklavos (1959) 101 C.L.R. 56 ;
Lemm v. F.C. of T. (1942) 66 C.L.R. 399 ; 7 A.T.D. 138 ) ).

45. The label of ``public benevolent institution'' which the deed attaches to the group of four persons is question-begging and is of little moment. As Murphy J. said (Macmine (supra)) ``if all the relevant circumstances are not proved it is obviously insufficient to show that there is nothing in what has been proved'' (scil. to support an inference adverse to the taxpayer)... ``It is necessary only for the taxpayer to establish that circumstances... did not exist'' (scil. which would be adverse to the taxpayer).

46. Another defect of the same character is the failure of the taxpayer to adduce at the hearing the correspondence or discussions between himself and the group of four concerning qualifications on any absolute transfer of the shares to two of the four persons said to be ``trustees for the Society''. The minutes of a meeting of three of the four persons (the other being absent because of illness) on 28 December 1973 record a discussion concerning a then recent (proposed) amendment to the Income Tax Assessment Act and the minute states that the taxpayer (and another with a similar proposal for a gift of shares in N) ``did not wish to prejudice the company (viz. N) and had considered giving their shares in it to the Norfolk Island public hospital, the Sunshine Club of Norfolk Island, and perhaps other charities. They were under the impression however that neither of the bodies mentioned would be able to retain the shares and that any forced sale would probably be harmful. Learning that the Society had come into existence they had respectively decided to make the transfers...'' The consequent resolution is that: ``in deference to the wishes of the donors and having regard to the close association with and interest in (N) of all present members of the Society, the investment in these shares of (N) be retained in full until and unless otherwise decided by the Society.''

47. It is not unusual for this group of four persons to receive donations subject to conditions; for example the minute book records on 15 January 1976 a memorandum of the chairman thus: ``On the terms of my receipt of this money from... originally and from subsequent conversations with him I have a discretion as to the application of the money. My intention is that it be applied... If it should appear that this nominated purpose fails my recommendation at this stage is... failing which that it be treated as a donation from... to the Society for its purposes generally.''

48. Neither
Bray v. F.C. of T. 78 ATC 4179 nor
Western Australian Turf Club v. F.C. of T. 78 ATC 4133 is directly applicable on any of the facets of the instant reference.

49. The summary of the matter is:

50. I would uphold the decision of the Commissioner on the objection and I would confirm the assessment.

 

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