KP Brady Ch
LC Voumard M
JE Stewart M
No. 2 Board of Review
K.P. Brady (Chairman); L.C. Voumard and J.E. Stewart (Members)
The matter for determination in this reference is whether a bequest of $50,000 made to an organisation described in the testator's will as the ``Australian Jewish Welfare Society'' is exempt from estate duty under the provisions of sec. 8(5)(b)(iii) or sec. 8(5)(c)(ii) of the Estate Duty Assessment Act 1914 as amended, which we shall hereafter call ``the Act''.
2. The testator's will was dated 10th July, 1977. He died some 18 months later on 6th January, 1979. The administrator of the estate lodged an estate duty return under date of 18th July, 1980, which reflected a net value for the estate of $534,484. Under the terms of the testator's will, his property was to be distributed as follows:
- (i) $1,500 to his nephew;
- (ii) $201,000 comprising general bequests;
- (iii) the residue to the Heart Foundation of Australia.
By cl. 2(b) of his will, the testator directed his trustees to pay over the undermentioned bequests within two years of his death. Those bequests were in the following terms: "
- (i) To pay to the Melbourne Hebrew Congregation the sum of one thousand dollars to be applied solely for the purpose of maintenance of the exterior of the Synagogue building, or any addition thereto, and not otherwise.
- (ii) To pay to the Melbourne Jewish Philanthropic Society for the purpose of the Montefiore Homes the sum of fifty thousand dollars subject to a plaque of a size and inscription thereon to be approved by my trustees being placed in the main dining hall of the Homes.
- (iii) To pay to the Australian Jewish Welfare Society the sum of fifty thousand dollars subject to a suitable inscription to be approved by my trustees being placed on a unit of a Welfare Home in my memory.
- (iv) To pay to Beer-Sheva Yeshivat Israel Rechor Negba 49 the sum of one hundred thousand dollars, Kadish to be recited for me for eleven months after my death and a Yizkor recited on all appropriate occasions.
3. In raising an assessment on the estate, the Commissioner treated the bequest to the Australian Jewish Welfare Society as dutiable and issued a notice of assessment under date of 11th March, 1981, reflecting duty payable of $25,967.10. The administrator company objected under sec. 24(1) of the Act on the grounds:
``that the legacy obviously relates, and was intended to relate to the Australian Jewish Welfare and Relief Society, whose objects are to maintain a fund for the purposes of providing money for the relief of persons in necessitous circumstances in Australia, and as such the legacy is non-dutiable.''
The Commissioner disallowed the objection, and the administrator requested the Commissioner to refer that decision to a Board of Review for review as provided for by sec. 24(4) of the Act.
4. At the hearing, Mr. H. Reicher of Counsel appeared for the objector and Mr. G. Davies of Counsel appeared for the Commissioner.
5. In putting forward his submissions, Mr. Reicher elaborated on the grounds of objection stated in the notice of objection, namely, that the will contained a misdescription. That misdescription was constituted by one of the beneficiaries named in the will being described by the testator as the ``Australian Jewish Welfare Society'', and it would seem that no such society existed by that precise name. Mr. Reicher submitted that the testator intended to make the bequest to the ``Welfare-Relief Appeal (under the auspices of the Australian Jewish Welfare and Relief Society)'', and tendered in evidence a Deed of Trust by which a trust fund of that name was established on 6th September, 1961.
6. In making that submission, we are of the view that Mr. Reicher was adding a new ground to the grounds of objection stated in the notice of objection. We therefore consider that there was not a proper compliance with sec. 26(2) of the Act. That subsection states:
``The objector shall be limited on the review to the grounds which he has stated in his objection.''
However, we are mindful of the general legal principle that a gift for charitable purposes will never fail because the precise object to be benefited is uncertain (see
Morice v. Bishop of Durham (1805) 32 E.R. 947 at p. 949), and in case our view on the adequacy of the grounds is incorrect, we will proceed on the basis that the submission that the testator intended to benefit the Welfare-Relief Appeal, is not constrained by the operation of sec. 26(2).
7. Mr. Reicher also tendered the Memorandum and Articles of Association of the Australian Jewish Welfare and Relief Society, and its certificate of incorporation which reflected that it was a company limited by guarantee and incorporated on 1st December, 1948. Mr. Reicher called as a witness the present vice-president of the Society, whom we shall call A. That witness informed us that he had enjoyed a long association with the Society dating back some 18 years, and was familiar with all aspects of its work. He advised that the Welfare-Relief Appeal fund was the fund-raising arm of the Society and each year conducted an appeal for funds over a three-month period, usually in the latter part of each calendar year. He contended that the Jewish community used various names when referring to the appeal fund, and the following exchange took place during his examination-in-chief:
``Q. Could I direct your attention to cl. 2 of that deed of trust? And could I ask you to read out the full title of the trust fund? - A. The trust fund shall be known as the Welfare Relief Appeal under the auspices of the Australian Jewish Welfare and Relief Society.
Q. That is, in fact, the full official title of that fund. Is that correct? - A. Yes, it is.
Q. Could I turn your attention now to cl. 3 of that trust deed, and ask you to read that? - A. The trustee shall hold the trust fund upon trust to apply it exclusively for the relief of persons in Australia who are in necessitous circumstances by reason of accident, physical or mental ailment, disorder or incapacity, unemployment or other misfortune.
Q. Can I ask you whether that is the only clause in that trust deed which contains objects, which specifies objects? - A. Yes, it is.
Q. By what name is that fund generally known in the Jewish community? - A. In the nature of these things, the community often becomes confused about names. Our appeal literature describes it as the Welfare Relief Appeal of a particular year. It was also commonly known as the Welfare Appeal, the Jewish Welfare Society, Jewish Welfare, or in fact the full title of the Society itself which is the Australian Jewish Welfare Relief Society, and I believe that there is not a great deal of discernment amongst the community at large as to the significance of differential between these various titles.
Q. Is it also true to say that one of the names by which the trust fund is known is the Australian Jewish Welfare Society? - A. Yes, I believe that is so.
Q. But Australian Jewish Welfare Society is not an official name of that fund? - A. No, it is not.
Q. And does the fund also receive bequests from time to time? - A. Yes, it does.
Q. Would it be correct to say that it is likely and certainly possible for someone making a donation or bequest to the fund to describe it as the Australian Jewish Welfare Society? - A. Yes, I believe it is quite likely.''
8. Mr. Reicher also adduced evidence to show that the testator had made donations to the Welfare-Relief Appeal on a regular basis over the years 1961 to 1969. From that fact we were invited to reach a finding that the testator had intended to benefit that fund when he drafted his will.
9. On the other hand, the Commissioner's representative, Mr. Davies, contended that the testator intended that the devisee should be the Australian Jewish Welfare and Relief Society. In support of his argument, he referred us to the Society's annual accounts which showed that the Society no less than the Appeal Fund was a recipient of bequests, and in fact a form of bequest to the Society was included in its annual report.
10. It was conceded by both parties that (a) there was a misdescription in the will, and (b) that the legal position is that the issue should be determined by the intention of the testator. The authorities are clear on the latter point; the difficulty in a situation such as the one before us is to establish what the testator's intention in fact was.
11. The ascertainment of the intention of the testator is to be ascertained from a consideration of the whole will taken in connection with evidence properly admissible, and the meaning of the will, and of every part of it, is determined according to that intention (see
Crumpe v. Crumpe (1900) A.C. 127 at p. 130, also Halsbury's Laws of England, 3rd ed., vol. 39 pp. 973-974). Where the words directing payment of a specific bequest are obscure, the general purpose of the testator is a factor to take into account as well as the general scope of the will (see In
re Whiteley, Bishop of London v. Whiteley (1910) 1 Ch. 600 at p. 607, also Halsbury, supra, at p. 977).
12. Complying with these strictures, we consider that the intention of the testator was to benefit the Australian Jewish Welfare and Relief Society as opposed to benefiting the Welfare-Relief Appeal. It was the Society which had as its charter the caring for the Jewish people in Victoria, and in carrying out that general function it looked after the resettlement of Jews from U.S.S.R. and Eastern Europe, caring for children from disrupted backgrounds and for those physically handicapped, providing accommodation and care for the aged, and counselling Jewish families where there occurred illness, death and financial emergencies. That list is in no way exhaustive. On the other hand, the functions of the Welfare-Relief Appeal Fund were far more specific, with its main object being to apply its funds exclusively for the relief of persons in Australia who were in necessitous circumstances by reason of prescribed causes.
13. An examination of the functions of the Society is germane in ascertaining the intention of the testator for it seems to us that his wish, as expressed in his will, was to provide moneys to organisations which looked after the interests of the Jewish people in Victoria. Thus, we note that the specific bequest first detailed in his will was to assist the Melbourne Hebrew congregation, the second was to assist the Melbourne Jewish Philanthropic Society, and
ATC 555the third was to assist the ``Australian Jewish Welfare Society''. In making those bequests we see the manifestation of a desire to assist organisations involved in providing assistance of one kind or another to Jews, particularly those living in Melbourne. Some support for that finding, we consider, also lies in the testator's wish, as expressed in the bequest to the ``Australian Jewish Welfare Society'' to have a suitable inscription ``placed on a Unit of a Welfare Home in my memory''. It was only the Society which operated such Homes and not the Welfare-Relief Appeal Fund. Those aspects, we consider, favour the Australian Jewish Welfare and Relief Society as the intended beneficiary and far outweigh the argument that, because he made donations totalling some $200 during his lifetime to the Appeal Fund, it was that fund which he sought to benefit in his will.
14. We now turn to the appropriate legislation to ascertain whether the specific bequest to the Australian Jewish Welfare and Relief Society is non-dutiable.
15. Section 8(5) of the Act, to the extent that it is relevant, states that:
``Duty shall not be assessed or payable upon so much of the estate as is devised or bequeathed...
- (b) to or for the benefit of any of the following institutions in Australia: -
- (iii) a public benevolent institution;
- ... or
- (c) for the establishment and maintenance of a fund, or to a fund established and maintained -
- (ii) for the purpose of providing money for the relief of persons in necessitous circumstances in Australia.''
16. Mr. Reicher considered there were three possibilities:
- (i) that the Australian Jewish Welfare and Relief Society was a public benevolent institution, and so the exemption under sec. 8(5)(b)(iii) applied;
- (ii) that the bequest was either for the establishment and maintenance of a fund, or to a fund established and maintained for the purpose of providing money for the relief of persons in necessitous circumstances in Australia, and so the exemption under sec. 8(5)(c)(ii) applied; and
- (iii) both bases of exemption applied.
On the other hand, predictably perhaps, Mr. Davies contended that the grounds did not exist for either exemption to apply.
17. As with Mr. Reicher's submission that the testator intended to benefit the Welfare-Relief Appeal, we consider that it is not open to him to argue that the Australian Jewish Welfare and Relief Society is a public benevolent institution because that ground was not stated in the notice of objection. However, it may be another case where ``charity being involved, generosity rather than pedantry is called for in the construction of the section'' (see judgment of Barwick C.J. in
Ryland v. F.C. of T., 73 ATC 4107 at p. 4111) and so, in case we are wrong in the view we take, we will proceed on the basis that Mr. Reicher is not constrained from advancing his further argument.
18. In order to ascertain whether the Australian Jewish Welfare and Relief Society was a public benevolent institution, it is necessary to examine its character and the nature of the services which it rendered (see
The Little Company of Mary (S.A.) Incorporated v. The Commonwealth & Anor. (1942) 66 C.L.R. 368 at p. 386). Its memorandum of association detailed its objects as follows under cl. 3:
``(A) To carry on rescue and relief activities for and on behalf of distressed Jewish persons in the State of Victoria and to render them relief, financial and other aid.
(B) To promote, assist, encourage and strengthen the rehabilitation and the economic social and cultural absorption in Victoria of Jewish arrivals from overseas as well as other Jews resident in Victoria by rendering them assistance, social counselling, financial and other aid.
(C) To receive, take over, expend and generally administer funds already
ATC 556collected or which may at any time hereafter be collected from persons, societies or organisations in Australia or abroad for any of the Society's objects.
(D) To assist Jews in the State of Victoria with donations, gifts, and/or loans of money without interest and with or without security, and to assist in obtaining instruction in trade and professions for them.
(E) To establish, conduct and maintain homes for the aged in the State of Victoria. In homes to which grants under the Commonwealth Aged Persons Homes Act are received, only `aged persons' as defined in the Act will be admitted.
(F) To establish, conduct and maintain hospitals, infirmaries, clinics, hostels and children's homes, sheltered and/or therapeutic workshops in the State of Victoria.
(G) To cater for the welfare of physically and mentally disabled Jewish persons in the State of Victoria.''
19. The relevant date for determining whether a particular bequest is exempt from estate duty is the date of death of the testator (see Ryland's case, supra, at p. 4110). We have noted that the testator died on 6th January, 1979. Therefore, it is permissible and proper to examine the Society's 1979 Report and the evidence of the objector's witnesses to ascertain the various works being carried on by the Society about the time the testator died (see
Royal Australasian College of Surgeons v. F.C. of T. (1943) 68 C.L.R. 436 at p. 452).
20. It would seem that one of the main works carried on in that year was the reception and resettlement of a large number of Jewish persons from the Soviet Union. Additionally, children from unstable family backgrounds were continued to be given residential care. Work was continued to be provided for handicapped people in the sheltered workshop. The work of structuring the leisure time of young people with special handicaps was further developed. Provision of residential care for the aged also continued on during 1979. Additionally, calls were made on lonely and housebound elderly persons living in their own homes. Also the Society joined with Montefiore Homes in underwriting an intensive research project into the needs of the Jewish aged in Melbourne. Counselling services too were developed further by the Society in 1979. Help and advice was given to parents of problem children, to marriage partners in conflict, and to elderly Jews unable to look after themselves. Also counselling was continued of newly-arrived Russian migrant families. To these same people, too, finance was provided to assist in their resettlement. Also money was provided to families and single people whose needs were caused by illness, death, divorce and unemployment. Loans to assist in the resettlement of migrants and to assist people in temporary financial difficulties were made by two financially interdependent bodies, The Melbourne Jewish Aid Society and The Jewish Mutual Loan Society. More generally, a service to locate friends and relatives continued in operation, as did visitations to members of the Jewish community who were temporarily or permanently in psychiatric institutions. Classes in Jewish culture and history were organised at an inner-suburban State school because of the large number of Russian children attending there, and holidays and cultural programmes were planned and implemented for handicapped young people.
21. The above list of works performed, whilst comprehensive is not exhaustive. Nor is it selective. But it provides support to the statement made by the witness, A, in his examination-in-chief that:
``The Society is a comprehensive family care agency, concerned with the care of people in need in the Jewish community in Melbourne.''
Mr. Reicher also called the senior social worker of the Society to give evidence. She saw the Society as a ``multi-casework'' agency spanning the whole spectrum of the Jewish community from the cradle to the grave. She provided us with details of the Society's caring and counselling activities, but conceded that assistance was also provided with interpersonal problems, health care, and integrating migrants into the wider community. Also marriage guidance was provided, and not necessarily to people in straitened financial circumstances.
22. It now seems appropriate to ascertain what the courts have stated a public benevolent institution to mean. It may first be noted that because the objects of the Society are to look after the interests of Jewish persons (and perhaps one can add, Jewish persons only), that restriction does not of itself debar the Society from being a ``public benevolent institution''. In our view the extent of the number of beneficiaries permits the Society to be called a ``public'' institution (see
Verge v. Somerville (1924) A.C. 496 at p. 499, also
Keren Kayemeth le Jisroel Limited v. I.R. Commrs. (1931) 2 K.B. 465 at p. 493, and
Maughan v. F.C. of T. (1942) 66 C.L.R. 388 at p. 398).
23. The expression ``public benevolent institution'' was considered by the High Court in
Perpetual Trustee Co. Ltd. v. F.C. of T. (1931) 45 C.L.R. 224, a case which also arose under sec. 8(5) of the Estate Duty Assessment Act. Starke J., in considering the expression, stated at pp. 231-232:
``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. It is, however, 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 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.''
24. In our view the Society is not a public benevolent institution, for we see its primary object as being not for the relief of poverty, distress, suffering or misfortune, but for looking after the interests of the Jewish community in Melbourne. It was organized not to relieve poverty and kindred malaises, but to provide benignant services over an extremely wide area to the local Jewish people. In so doing it doubtless relieved poverty on occasions, and sickness and helplessness far more often, but its primary object was to promote the economic, social and cultural interests of the local Jewish community, as opposed to being an institution designed to give protection to the poor, the sick, the aged and the young (see judgment of Evatt J. in the Perpetual Trustee case, supra, at p. 236).
25. Mr. Reicher, in his closing address, submitted that we should not take a narrow view as to what activity should be regarded as a benevolent work. Further, we should appreciate that an activity such as marriage guidance which might not properly be termed ``benevolent'' in one age, could well be so at a later point in time due to an increased and more widespread need for the activity. We can only reply that we do not consider that it is appropriate for a Board, being an administrative body, to make new law by giving words a wider meaning than the courts have been prepared to give. Also, we are mindful of the stricture of Dixon J., as he then was, and Williams and Webb JJ. in
Salvation Army (Victoria) Property Trust v. Ferntree Gully Corporation (1951-1952) 85 C.L.R. 159 at p. 175, that courts should be slow to depart from the legal meaning of the word ``charitable'', and, by implication, we would see his dictum as applying to a like word such as ``benevolent''.
26. But our decision rests not so much on a classification of the activities of the Society as benevolent or non-benevolent, but on the wider view that the main object of the Society, viz. ensuring that the local Jewish community was experiencing a satisfactory standard of living, was not benevolent in the sense that the courts have interpreted that word.
27. We now turn to Mr. Reicher's alternative submission, viz. that the bequest was either ``for the establishment and maintenance of a fund or to a fund established and maintained... for the purpose of providing money for the relief of persons in necessitous circumstances in Australia''. The short answer is that that submission is not tenable because of our finding that the bequest was made to the Australian Jewish Welfare and Relief Society which is not a fund, but a company limited by guarantee and incorporated under the Victorian Companies Act 1938. Certainly its Board of Directors have the power under cl.
ATC 55812 of the trust deed establishing the ``Welfare-Relief Appeal (under the auspices of the Australian Jewish Welfare and Relief Society)'' to remove the existing trustees and appoint new trustees, and it could well be said that the Society controls the Appeal Fund. But the language of sec. 8(5)(c) is explicit in stating that the bequest must not only be ``for the purpose of providing money for the relief of persons in necessitous circumstances in Australia'', but that it first be for the establishment of a fund, or to a fund established and maintained for that particular purpose. For completeness, however, we would state that in our view the object of the Society is not to provide money for the relief of persons in necessitous circumstances in Australia. In
Ballarat Trustees Executors and Agency Company Limited v. F.C. of T. (1950) 80 C.L.R. 350, Kitto J. was not prepared to find that bequests were exempt under sec. 8(5) of the Estate Duty Assessment Act 1914-1942 where relief was provided by the beneficiary fund indifferently to persons who were, and to persons who were not, in necessitous circumstances. He was of the opinion that the subsection was required to be read as if the word ``exclusively'', or perhaps ``chiefly'', appeared after the words ``established and maintained''. He stated at p. 355:
``that a person is in necessitous circumstances if his financial resources are insufficient to enable him to obtain all that is necessary, not only for a bare existence, but for a modest standard of living in the Australian community.''
28. In Ryland's case (supra), Barwick C.J. was of the view that neither the word ``exclusively'' nor the word ``chiefly'' was required to be inserted in every situation. In the case before him, he considered that so long as the predominant purpose of the fund was to afford relief to persons in Australia and there was no specific intention to include persons out of Australia within the scope of the gift, then the exemption operated.
29. However, in our view, the present situation is not one where the dictum enunciated in Ryland's case is applicable. Whilst doubtless money was provided by the Society for the relief of persons in necessitous circumstances, the purpose of the Society was, as has clearly been stated, other than that. The fact that some Jewish persons in necessitous circumstances were helped by the Society does not elevate examples of benevolent activity to the status of predominant purpose. Mr. Reicher's alternative submission must therefore also fail.
30. For reasons stated above, we consider that the Commissioner's action in disallowing the objection was correct, and we confirm the assessment.
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