THE REGISTRAR OF THE ACCIDENT COMPENSATION TRIBUNAL (VIC) v FC of T

Judges:
Mason CJ
Brennan J
Deane J
Dawson J
Toohey J
Gaudron J
McHugh J

Court:
Full High Court

Judgment date: Judgment handed down 20 October 1993

---

Mason CJ, Deane, Toohey and Gaudron JJ

This is one of three appeals raising the question whether the Registrar of the Accident Compensation Tribunal (``the Registrar'') is liable to pay tax, as trustee, on money credited as interest to accounts kept by him with respect to awards of compensation made under the Workers Compensation Act 1958 (Vic.) which, ultimately, came to be administered by him pursuant to that same Act. Strictly, the appeals are appeals to the Full Court of the Federal Court of Australia. They were removed into this Court pursuant to s. 40(1) of the Judiciary Act

---

ATC 4837

1903 (Cth) for the reason that they involve a question under s. 114 of the Constitution.

Factual and legislative background

In June 1979 an award of compensation in the sum of $23,940 was made in consequence of the death of Alexander Joseph Abela. It is common ground that the award was made for the benefit of his dependants - his widow (Carol Abela, now Mrs Payne) and his three daughters (Lisa, Michelle and Tanya) - who are together referred to as ``the Abela family''.

Initially, the compensation was paid to the Workers Compensation Board (``the Board'') under s. 34 of the Workers Compensation Act . At that time, 1979, that section relevantly required that, in the case of death and unless the Board ordered otherwise, compensation should be paid into the custody of the Board and that, subject to the rules of the Board and the provisions of the Act, it should be ``invested applied or otherwise dealt with... for the benefit of the persons entitled thereto''.

Until 1983, the Board maintained an account of payments made to or on behalf of members of the Abela family and of interest earned on the money held on their behalf. That account was in the name of Carol M. Abela (later, Carol M. Payne). In 1983, the Board apportioned compensation between Lisa and the other members of the Abela family ^[1] Seemingly, this was pursuant to s. 34(2) of the Workers Compensation Act which, in 1983, provided: ``In the case of death if the worker leaves more than one dependant the Board having regard to the circumstances of the various dependants and variations in such circumstances from time to time may — (a) apply or otherwise deal with any sum so paid into its custody in such manner as in the opinion of the Board will for the time being be most beneficial to the dependants; (b) provide for any two or more dependants collectively; (c) exclude any dependant from participating in any benefit.'' and transferred $16,000 to a separate account in Lisa Abela's name. The balance remained in the original account which, despite the apportionment, was treated by all concerned as an account for the benefit of all four members of the Abela family.

The Accident Compensation Act 1985 (Vic.) established a new regime with respect to accidents and diseases in the work place. It established various new bodies, including the Accident Compensation Commission (``the Commission'') and the Accident Compensation Tribunal (``the Tribunal''). ^[2] ss. 18 and 39, respectively. Broadly speaking, it required the Commission to manage the compensation scheme then established and conferred various functions on it, ^[3] ss. 19 and 20, respectively. including that of administering the Accident Compensation Fund (``the Compensation Fund'') ^[4] s. 20(a). into which employers, other than self- insurers, were obliged to pay an accident compensation levy ^[5] s. 187, and generally Pt VII. See s. 140 as to the exemption for self-insurers. and from which compensation payments were to be made. ^[6] s. 33(3)(a).

Again broadly speaking, the Accident Compensation Act , as it stood in 1985, required the Tribunal to inquire into, hear and determine compensation claims and various other matters associated with the compensation scheme. ^[7] s. 40(1)(a). It also required the Tribunal to establish and maintain a fund called the Accident Compensation Tribunal Fund (``the Fund''). <sup>[8]</sup> s. 73. The Fund is separate and distinct from the Compensation Fund earlier referred to. Various amounts were required to be paid into the Fund, including, ``all... money that the Tribunal receive[d] under or for the purposes of this Act or any other Act''. ^[9] s. 73(2). The Accident Compensation Act was amended in various respects with effect from 1 December 1987 (``the 1987 amendments''), the main consequence being that the Fund then came under the control of the Registrar.

The Workers Compensation Act was amended in 1985 and again in 1987 to bring it into harmony with the new compensation arrangements effected by the Accident Compensation Act . It is sufficient, at this stage, to note that s. 37 of the Workers Compensation Act was amended in 1985 to provide, relevantly:

• ``(1) On and from the appointed day, all moneys paid into the custody of the Board pursuant to this Division as in force before that day shall be administered by the Tribunal in accordance with this Act.
• (2) For the purposes of sub-section (1), the moneys shall be paid to the Tribunal, or where any of the moneys were before the appointed day invested, the investments shall be transferred to and vest in the Tribunal.''

^[10] The ``appointed day'' was 31 August 1985.

Pursuant to s. 37 of the Workers Compensation Act , as then amended, the Board transferred various moneys to the Tribunal for payment into the Fund, including the money in the accounts kept in the names of Lisa Abela and Mrs Payne.

In keeping with the apportionment made by the Board in 1983, the Tribunal and, following the 1987 amendments, the Registrar kept a separate account in the name of each of Lisa J. Abela and Carol M. Payne (``the Payne account''). Again, the Payne account seems to have been treated as an account for the benefit of all four members of the Abela family.

On 10 July 1987, an amount of $2,718.69 was credited to the Payne account as ``interest'' for the period 1 July 1986 to 30 June 1987. It is

---

ATC 4838

common ground that that ``interest'' was or was calculated on the basis of a proportionate share of income earned by the Fund in the year ended 30 June 1987.

In 1990, the Commissioner of Taxation (``the Commissioner'') issued a notice assessing the Registrar, as trustee for the Abela family, to tax on the basis that the sum of $2,718 was income of a trust estate for the year ended 30 June 1988. It seems that there was another and alternative assessment levied on the Tribunal, on the basis that it was income for the year ended 30 June 1987. It is not entirely clear what has happened to that alternative assessment but it has at all stages been treated as an assessment having effect in the event that the sum of $2,718 is found to be income for that tax year, rather than the year ended 30 June 1988. The Registrar lodged an objection to the 1988 assessment but it was disallowed. He then appealed to the Federal Court. The appeal was dismissed by Jenkinson J., the appeal to the Full Court of the Federal Court was then instituted, and later removed into this Court.

Legislative provisions

It was common ground in this Court that the case could conveniently be approached on the basis of the provisions of the Workers Compensation Act and of the Accident Compensation Act as they stood following the 1987 amendments. Thus, reference will be made to earlier provisions only if significantly different.

The Workers Compensation Act and the Accident Compensation Act were extensively amended in 1992 when the Tribunal was abolished. ^[11] By operation of s. 64(1)(a)(iii) of the Accident Compensation (WorkCover) Act 1992 (Vic.) the Tribunal ceased to exist on 1 December 1992. The 1992 amendments have no bearing on this case. It is convenient, therefore, to proceed as if both Acts continue in the terms in which they stood following the 1987 amendments and as if the Tribunal, the Registrar and the Fund continue in existence in accordance with their then provisions.

Composition of and payments out of the Fund

The composition of the Fund appears from s. 73(2) of the Accident Compensation Act which provides that there is to be paid into the Fund:

• ``(a) the contributions payable under section 74 by the Commission and self-insurers;
• (aa) payments of compensation made to the Registrar under section 130;
• (ab) payments made under section 34 of the Workers Compensation Act 1958;
• (ac) amounts borrowed by the Registrar under section 51C;
• (b) any income from the investment of any money credited to the Fund and the proceeds of the sale of any investment;
• (c) all other money that the Tribunal receives under or for the purposes of this Act or any other Act; and
• (d) any other money required or permitted to be paid into the Fund by or under any other Act.''

It is common ground that, at all relevant times, the major part of the Fund has consisted of, or has been referable to, compensation payments made under the Workers Compensation Act or under the Accident Compensation Act and paid into it under s. 73(2)(aa) and (ab) or, earlier, under s. 73(2)(c) of the Accident Compensation Act . ^[12] Paragraphs (aa) and (ab) were inserted into s. 73(2) in 1987. Prior to that, it seems, compensation moneys were paid into the Fund under s. 73(2)(c) and, perhaps, par. (d). Indeed, its balance sheet for the year ended 30 June 1987 indicates that ``Beneficiary Fund Investments'' then constituted more than 95% of its total assets.

Section 73(3) of the Accident Compensation Act authorizes the following payments out of the Fund:

• ``(a) payments directed by order of the Tribunal to be paid out of the Fund under this Act or the Workers Compensation Act 1958;
• (aa) any amounts payable in respect of money borrowed under section 51C;
• (ab) any payment authorised under section 131 or 132;
• (ac) any payment authorised under section 35 or 36 of the Workers Compensation Act 1958;
• (b) any payment required or authorized to be made or which is for or towards the costs and expenses of or incidental to the performance of the functions or the exercise of the powers of the Tribunal or staff of the Tribunal;
• (c) any other costs and expenses incurred by the Tribunal or Registrar under this Act or any other Act;
• (d) any amounts payable in respect of remuneration, allowances and pensions under section 45 or 50A and any other

  ---

  ATC 4839

  payment required or permitted to be paid out of the Fund by or under any other Act; and
• (e) any payment required or authorized to be made out of the Fund by sub-section (4) or (5).''

Other provisions of the Accident Compensation Act bearing on the Fund

Other provisions of the Accident Compensation Act bearing on the Fund are s. 73(4), (5), (6) and (7) which are as follows:

• ``(4) The Registrar may -
  • (a) invest any money in the Fund in any manner which is approved by the Treasurer; and
  • (b) take, purchase, lease, hold, sell and dispose of real and personal property for the purpose of enabling the Tribunal to perform its functions and exercise its powers under this Act.
• (5) The Registrar shall be indemnified from the Fund against any liability or claim arising under sub-section (4).
• (6) For the purposes of this section, the Registrar may open and maintain one or more accounts in the name of the Registrar or the Tribunal with any bank or banks.
• (7) If any money is invested under sub- section (4) in the purchase of any land or the construction or alteration of any buildings, the whole or part of the land or buildings may be used by the Tribunal in connection with its powers, duties or functions under this Act.''

^[13] This sub-section is substantially repeated in s. 131(3); and see fn. 16.

Legislative provisions bearing on compensation payments paid into the Fund

The Workers Compensation Act continues to govern compensation moneys awarded under that Act but paid into the Fund established and maintained under the Accident Compensation Act . The relevant provisions of the Workers Compensation Act , ss. 35 and 36, mirror ss. 131 and 132 of the Accident Compensation Act which apply to compensation awarded under that latter Act.

Section 35 of the Workers Compensation Act is as follows:

• ``(1) Except as otherwise provided in section 34, <sup>[14]</sup> Section 34(1) provides that certain payments of compensation are to be paid to and administered by the Registrar, notably compensation in the case of death and, also, under par. (c), in cases where the Tribunal considers that that is in the best interests of the worker concerned. Section 34(2) empowers the Tribunal to impose any conditions, restrictions or limitations on the duration and termination of an administration with respect to compensation to be paid to the Registrar under s. 34(1)(c) if, as indicated, it considers that that would be in the best interests of the worker. any amount of money administered by the Registrar under this Act may be invested, applied or otherwise dealt with in any manner that the Registrar thinks fit for the benefit of the person entitled to that money.
• (2) The Registrar shall not in administering any amount of money under this Act be bound by any law relating to the administration of trust funds by trustees but shall act in good faith.
• ...
• (4) If the amount of money administered by the Registrar on behalf of any person becomes less than an amount of money determined by the Registrar the amount shall be paid out to that person.
• (5) All expenses <sup>[15]</sup> Section 131(5) of the Accident Compensation Act , which otherwise mirrors this provision, is subject to an exception in the case of expenses paid under s. 51A of that Act to a ``funds management agent''. incurred by or on behalf of the Registrar in the administration of any amount of money under this Act shall be paid by the Registrar out of the [Fund].''

^[16] Section 131 of the Accident Compensation Act contains a provision, namely s. 131(3), which repeats s. 73(7) of that Act and which is not replicated in s. 35 of the Workers Compensation Act .

Section 36 of the Workers Compensation Act provides:

• ``(1) The Registrar may on the application of any person on whose behalf any amount of money is administered under this Act determine any dispute in relation to the administration.
• (2) If a deceased worker leaves more than one dependant the Registrar after having regard to the circumstances of the various dependants and any variations in the circumstances from time to time may determine to -
  • (a) apply or otherwise deal with any money administered by the Registrar in a manner which the Registrar considers will for the time being be most beneficial to the dependants;
  • (b) make a payment to any dependant;
  • (c) provide for any two or more dependants collectively; or
  • (d) exclude any dependant from participating in any benefit.
• (3) If on an application to the Registrar by an interested party it appears to the Registrar that because of -
  • (a) the neglect of any children by the spouse of the deceased worker or of a relative standing in the place of a parent in relation to any children of the deceased worker under the age of 16 years;
  • (b) a variation in the circumstances of the various dependants; or

    ---

    ATC 4840

  • (c) any other sufficient cause -
• a determination as to the apportionment between several dependants of any amount of compensation or as to the manner in which any amount of compensation payable to any dependant is to be invested, applied or otherwise dealt with should be varied, the Registrar may make any determination for the variation of the previous determination as the Registrar in the circumstances of the case considers appropriate.
• ...
• (5) Any person who objects to any determination made by the Registrar may appeal to the Tribunal which may make a new determination.''

Is the Registrar a trustee?

The Registrar has been assessed to tax under Pt III, Div. 6 of the Income Tax Assessment Act 1936 (Cth). So far as Pt III, Div. 6 is concerned and subject to other questions of a more general nature which will be considered later, it was accepted that, if the Registrar was at relevant times a trustee of the money in the Payne account, then Pt III, Div. 6 subjects income earned on that money to tax ``as if it were the income of an individual... and were not subject to any deduction''. ^[17] See s. 99(2)-(3) of the Income Tax Assessment Act . The primary question that arises in relation to Pt III, Div. 6 is, thus, whether the Registrar was for the purposes of the Income Tax Assessment Act a trustee of that money. If he was, there is a subsidiary question whether the sum of $2,718.69 credited to the Payne account in July 1987 was income earned by the Tribunal in the tax year ended 30 June 1987, or by the Registrar in the tax year ended 30 June 1988.

By s. 6(1) of the Income Tax Assessment Act , ``trustee'' is defined as follows:

```trustee' in addition to every person appointed or constituted trustee by act of parties, by order, or declaration of a court, or by operation of law, includes -

• (a) an executor or administrator, guardian, committee, receiver, or liquidator; and
• (b) every person having or taking upon himself the administration or control of income affected by any express or implied trust, or acting in any fiduciary capacity, or having the possession, control or management of the income of a person under any legal or other disability.''

It is to be remembered that the question in this case is whether the Registrar is a trustee of the balance of the compensation awarded in consequence of the death of Alexander Joseph Abela and standing in the Payne account, <sup>[18]</sup> Note, the Commissioner is apparently content to treat the moneys in the Lisa J. Abela account as subject to a separate trust. Assuming there is a trust, the question whether that approach is correct in the light of the Registrar's wide discretion with respect to apportionment under s. 36 of the Workers Compensation Act does not arise. and not whether he is trustee of the Fund. It is in that context that it was argued on behalf of the Commissioner that the Registrar is a trustee by operation of law, alternatively a trustee under par. (b) of the extended definition of ``trustee'' in s. 6(1) of the Income Tax Assessment Act . It was put that he came within the extended definition because he had the administration or control of income affected by an implied trust (which was identified in the argument as a ``trust for statutory purposes''), <sup>[19]</sup> See, as to a ``trust for statutory purposes'', Fouche v. The Superannuation Fund Board (1951-1952) 88 C.L.R. 609 , per Dixon, McTiernan and Fullagar JJ. at p. 640 ; Harmer & Ors v. FC of T 91 ATC 5000 , at pp. 5005-5006; (1991) 173 C.L.R. 264 , at p. 274 . or because he was acting in a fiduciary capacity in relation to the moneys in the Payne account.

The primary submission made on behalf of the Registrar was that the intention to be discerned from the Workers Compensation Act and the Accident Compensation Act is not that the Registrar should be subject to trust obligations in respect of compensation moneys, but, rather, that they are to be dealt with on a governmental or administrative basis.

In the submissions made on behalf of the Registrar, reliance was placed on the fact that the Workers Compensation Act does not expressly constitute the Registrar a trustee of compensation moneys but, on the contrary, s. 35(2) of that Act and s. 131(2) of the Accident Compensation Act expressly provide that he is not ``bound by any law relating to the administration of trust funds by trustees''. Additionally, it was put that the obligations imposed by the Workers Compensation Act and the Accident Compensation Act are imposed on the Registrar in his official capacity and not on him personally; that the Registrar has a wide discretionary power to apportion between dependants under s. 36 of the Workers Compensation Act and s. 132 of the Accident Compensation Act ; that the moneys are to be paid into the Fund, a mixed fund, incorporating not only other compensation payments but moneys which would seem intended to defray the costs associated with the general work of the Tribunal and the Registrar; and, that the Registrar has power to invest moneys in the Fund in any manner approved by the Treasurer.

---

ATC 4841

The legislative provisions on which the Registrar relies are to be approached, according to the argument, in the light of the principle in Kinloch v. Secretary of State for India in Council . <sup>[20]</sup> (1882) 7 App.Cas. 619. That principle requires clear words before an obligation on the part of the Crown or a servant or agent of the Crown, even if described as a trust obligation, will be treated as a trust according to ordinary principles or, as it is sometimes called, a ``true trust''; <sup>[21]</sup> Tito v. Waddell (No. 2) [1977] Ch. 106 , per Megarry V.-C. at pp. 211, 216-219 . See also Kinloch v. Secretary of State for India in Council (1882) 7 App.Cas., per Lord Selborne L.C. at pp. 625-626 ; Town Investments v. Department of the Environment [1978] A.C. 359 , per Diplock L.J. at p. 382 . rather, in the absence of clear words, the obligation will be characterized as a governmental or political obligation, sometimes referred to in the decided cases as a trust ``in the higher sense'' <sup>[22]</sup> Kinloch v. Secretary of State for India in Council (1882) 7 App.Cas., per Lord Selborne L.C. at pp. 625-626; Tito v. Waddell (No. 2) [1977] Ch., per Megarry V.-C. at pp. 216-217, 219 . or ``a political trust''. <sup>[23]</sup> Hogg, Liability of the Crown , 2nd ed. (1989), pp. 186-188. See also New South Wales v. The Commonwealth [No. 3] (1932) 46 C.L.R. 246 , per Rich and Dixon JJ. at pp. 260-261, per Starke J. at p. 268 ; Tito v. Waddell (No. 2) [1977] Ch., per Megarry V.-C. at p. 211.

It is convenient to note, at this stage, that Kinloch does no more than state a rule of construction to be applied in ascertaining whether an intention to create a trust according to ordinary principles is to be discerned from the language of the instrument involved. <sup>[24]</sup> See Kinloch v. Secretary of State for India in Council (1882) 7 App.Cas., per Lord Selborne L.C. at p. 626; Tito v. Waddell (No. 2) [1977] Ch., per Megarry V.-C. at pp. 215, 216; Brisbane City Council and Myer Shopping Centres Pty Ltd v. Attorney-General for Queensland [1979] A.C. 411 , at pp. 421-422 ; Aboriginal Development Commission & Anor v. Treka Aboriginal Arts and Crafts Ltd & Anor [1984] 3 N.S.W.L.R. 502 , per Priestley J.A. at p. 519 . However, subject-matter and context are also important and, in some cases, may be more revealing of intention than the actual language used. <sup>[25]</sup> See Tito v. Waddell (No. 2) [1977] Ch., per Megarry V.-C. at p. 216; Aboriginal Development Commission & Anor v. Treka Aboriginal Arts and Crafts Ltd & Anor [1984] 3 N.S.W.L.R., per Priestley J.A. at p. 519.

The second matter to be noted in relation to Kinloch is that there is no rule of law or equity to prevent the imposition of ordinary trust obligations on a person who is, in other respects, a servant or agent of the Crown. <sup>[26]</sup> See Kinloch v. Secretary of State for India in Council (1882) 7 App.Cas., per Lord Selborne L.C. at pp. 625-626; Civilian War Claimants Association Ltd v. R [1932] A.C. 14 , per Atkin L.J. at p. 27 ; Town Investments v. Department of the Environment [1978] A.C., per Diplock L.J. at p. 382 ; Aboriginal Development Commission & Anor v. Treka Aboriginal Arts and Crafts Ltd & Anor [1984] 3 N.S.W.L.R., per Priestley J.A. at p. 519. Moreover, it is not entirely helpful to approach cases in which it is claimed that there is a trust in the ordinary sense on the basis that the person who owes the obligation in question is a servant or agent of the Crown. As will later be made clear, that is because, in some circumstances, that person may bear that character in relation to some functions, but not those associated with the obligation in question. That may be illustrated by reference to the present case. If the Registrar's duty in relation to the money in the Payne account is merely to invest it and to hold the investments it represents and accrued income until finally distributed to the Abela family, it is difficult to see that that function involves any Crown or governmental interest. And, if that is the case, the function is not easily described as a Crown or governmental function or as a function performed for or on behalf of the Crown, even if, for other purposes, the Registrar is the servant or agent of the Crown. <sup>[27]</sup> See the discussion to similar effect in Bank voor Handel en Scheepvaart N.V. v. Administrator of Hungarian Property [1954] A.C. 584 , per Reid L.J. at p. 618 . See also Wynyard Investments Pty. Ltd. v. Commr for Railways (N.S.W.) (1955) 93 C.L.R. 376 , per Kitto J. at p. 393 . It is thus preferable to approach cases such as the present on the basis that the person concerned holds a statutory office and has a number of functions, not all of which are necessarily governmental in nature. And on that basis, little, if any, significance attaches to the fact that the obligation is imposed on a statutory office holder, or, as was put in the course of argument, on a person ``in his official capacity''.

There is a third matter to be noted in relation to Kinloch . The mere fact that the person on whom the obligation is cast is a statutory office holder cannot, of itself, require the question whether he or she is a trustee in the ordinary sense to be approached on the basis of a presumption to the contrary. As with the question whether a person is a servant or agent of the Crown, and leaving aside any question of prerogative power, there can be no basis for an approach of that kind unless it appears that there is some governmental interest or function involved.

Of course, the matters which can be said to involve some governmental interest or function are not confined to closed categories. The question whether a governmental interest is involved depends very much on the law as it stands from time to time. <sup>[28]</sup> See, generally, The Committee of Direction of Fruit Marketing v. The Delegate of the Australian Postal Commission (1980) 144 C.L.R. 577 , per Gibbs J. at p. 580 . Even so, and acknowledging that the administration of compensation moneys awarded to or for the benefit of workers or, in the case of death, their dependants <sup>[29]</sup> See s. 34 of the Workers Compensation Act , and see fn. 14. is a matter of considerable public importance, it is not a function that is ordinarily perceived as governmental in nature or as involving the interests of government. That being so, the question in this case is simply whether or not the relevant provisions of the Workers Compensation Act and the Accident Compensation Act , considered in context and having regard to their subject-matter, reveal an intention that the Registrar be subject to a trust obligation in the ordinary sense. Accordingly, it is unnecessary to consider the extent to which the strength of the presumption recognized in cases such as Kinloch has been undermined by altered attitudes to the vulnerability of the Crown to curial proceedings and remedies, including the remedies available in cases of unjust enrichment.

As already indicated, ss. 35 and 36 of the Workers Compensation Act govern the administration of the compensation moneys involved in this case. However, it is clear from a comparison of those provisions with their Accident Compensation Act counterparts, namely ss. 131 and 132, that compensation

---

ATC 4842

moneys paid into the Fund have precisely the same status no matter which of those Acts applies.

It is to be noted that the statutory provisions which govern the administration of compensation moneys are separate and distinct from those which govern the administration of the Fund. And, although various costs and expenses associated with the Tribunal and the Registrar are to be paid from the Fund <sup>[30]</sup> See s. 73(3)(b)-(d) of the Accident Compensation Act . and certain of its investments may be used for the purposes of the Tribunal, <sup>[31]</sup> See s. 73(7) of the Accident Compensation Act . there is nothing in the Accident Compensation Act or in the Workers Compensation Act to suggest that the Registrar acquires any beneficial right or interest in compensation moneys paid to him, even when paid into the Fund.

There is now no provision in either the Workers Compensation Act or the Accident Compensation Act which is as explicit as the direction previously found in s. 34 of the Workers Compensation Act , namely, that certain compensation payments should be paid ``into the custody of the Board'' and ``invested applied or otherwise dealt with... for the benefit of the persons entitled thereto''. However, there are provisions in both Acts which point strongly in the same direction. Thus, as already noted, s. 35(1) of the Workers Compensation Act provides:

``any amount of money administered by the Registrar under this Act may be invested, applied or otherwise dealt with in any manner that the Registrar thinks fit for the benefit of the person entitled to that money .''

(emphasis added) <sup>[32]</sup> See also s. 131(1) of the Accident Compensation Act .

And s. 35(4) requires that, an ``amount of money administered... on behalf of any person [which] becomes less than an amount of money determined'' by the Registrar should ``be paid out to that person''. <sup>[33]</sup> See also s. 131(4) of the Accident Compensation Act .

A trust may be created without use of the word ``trust''. <sup>[34]</sup> See Re Kayford Ltd. [1975] 1 W.L.R. 279 , per Megarry J. at p. 282 ; Tito v. Waddell (No. 2) [1977] Ch., per Megarry V.-C. at p. 211. See also Brisbane City Council and Myer Shopping Centres Pty Ltd v. Attorney-General for Queensland [1979] A.C., at p. 421 . And, unless there is something in the circumstances of the case to indicate otherwise, a person who has ``the custody and administration of property on behalf of others'' <sup>[35]</sup> Taylor v. Davies [1920] A.C. 636 , at p. 651 . or who ``has received, as and for the beneficial property of another, something which he is to hold, apply or account for specifically for his benefit'' <sup>[36]</sup> Cohen v. Cohen (1929) 42 C.L.R. 91 , per Dixon J. at p. 100 . is a trustee in the ordinary sense. In circumstances of that kind and in terms of s. 6(1) of the Income Tax Assessment Act , if there is no ``act of parties'' appointing or constituting the Registrar trustee, he is a trustee ``by operation of law''.

Given that no special words are necessary to create a trust in the ordinary sense, the statutory provisions which were last discussed, namely s. 35(1) and (4) of the Workers Compensation Act , would, in the absence of some provision to the contrary, suffice to constitute the Registrar a trustee, in the ordinary sense, of compensation moneys paid to him pursuant to the Workers Compensation Act . They would suffice because they indicate that he has or holds that money for the benefit of the person or persons entitled to the compensation involved.

The legislative provisions on which the Registrar relies for the argument that there is, or was, no trust in the ordinary sense fall into two distinct categories. There are those which relate to the Fund and those which directly relate to the administration of compensation moneys.

It clearly appears from the provisions governing the Fund that it is a general fund of a kind not ordinarily identified as a trust fund. It is sufficient to refer to the different moneys to be paid into the Fund; <sup>[37]</sup> See s. 73(2) of the Accident Compensation Act . to the payment out of expenses associated with the work of the Tribunal and the Registrar; <sup>[38]</sup> See s. 73(3)(b)-(d) of the Accident Compensation Act . and, to the power to use land and other buildings in which the moneys of the Fund are invested for the purposes of the Tribunal. <sup>[39]</sup> See s. 73(7) of the Accident Compensation Act . However, and as already pointed out, this case is not directly concerned with the status of the Fund, but with the nature of compensation moneys paid to the Registrar for payment into that Fund.

Notwithstanding that the Fund is a general fund of the kind indicated, the statutory requirement that compensation moneys be paid into the Fund is not inconsistent with those moneys being trust moneys in the ordinary sense. Much was made in the argument on behalf of the Registrar of his power under s. 73(4)(a) of the Accident Compensation Act to invest moneys in the Fund ``in any manner which is approved by the Treasurer''. However, that is far from decisive for, in context, the clear effect of s. 73(4)(a) is that the Registrar has no power to invest other than in a manner approved by the Treasurer. And it is not to be supposed in relation to s. 73(4)(a) that the Treasurer would authorize investments which might be imprudent or speculative, or in some way inconsistent with the sound management of compensation moneys awarded for the benefit of injured workers or, in the case of death, their

---

ATC 4843

dependants. <sup>[40]</sup> See fn. 14. Accordingly, in our view, the intention of the legislature with respect to the Registrar's holding of compensation moneys must be discerned not from the provisions which bear on the Fund, but from those which bear directly on the administration of such moneys.

So far as the provisions which bear directly on the administration of compensation moneys are concerned, it is convenient to deal first with s. 36 of the Workers Compensation Act . <sup>[41]</sup> See also s. 132 of the Accident Compensation Act . As earlier mentioned, s. 36 confers a wide discretionary power to apportion between dependants. That power is entirely consistent with the existence of a discretionary trust for the benefit of the class constituted by the dependants of a deceased worker. It does not, in our view, tell against the imposition of an ordinary trust obligation.

The other provision which bears directly on the administration of compensation moneys is s. 35(2) of the Workers Compensation Act which frees the Registrar from ``any law relating to the administration of trust funds by trustees'' but requires him to ``act in good faith''. <sup>[42]</sup> See also s. 131(2) of the Accident Compensation Act . It is significant that s. 35(2) does not, in terms, deny the existence of a trust of compensation moneys in the ordinary sense. Rather, it proceeds on the basis that there is, or would otherwise be, a trust of that kind to be administered in accordance with the general law of trusts. It then proceeds to exclude not the entire body of that law, but only laws ``relating to the administration of trust funds by trustees''. The limited terms of s. 35(2) assume particular significance when it is appreciated that neither the Workers Compensation Act nor the Accident Compensation Act makes provision as to distribution of income referable to compensation moneys paid into the Fund, nor do they make provision, save in the case where the money involved falls below some fixed amount, <sup>[43]</sup> See s. 35(4) of the Workers Compensation Act ; s. 131(4) of the Accident Compensation Act . as to the final distribution of compensation money to the person or persons for whose benefit it is administered.

Workers compensation is a matter of legal entitlement, not charitable subvention. That being so and given the limited terms of s. 35(2) of the Workers Compensation Act , it must be concluded that compensation moneys paid to the Registrar are trust moneys in the ordinary sense. They are held by the Registrar in trust for the persons entitled to the compensation involved and, subject to the applicable legislative provisions, must be administered by the Registrar in accordance with the general law of trusts. Accordingly, the Registrar holds such moneys as trustee in the strict sense and there is no need to consider the alternative arguments based on the extended definition of ``trustee'' in s. 6(1) of the Income Tax Assessment Act.

Is the Registrar a public authority for the purposes of s. 23(d) of the Income Tax Assessment Act?

It was argued by the Solicitor-General for South Australia, intervening in support of the Registrar, that the Registrar was not liable to tax on the income earned on the money in the Payne account by reason that s. 23(d) of the Income Tax Assessment Act exempts ``the revenue of a municipal corporation or other local governing body or of a public authority constituted under any Act or State Act, or under any law in force in a Territory being part of Australia'' from income tax. It was put that the Registrar is a ``public authority'' for the purposes of that sub-section.

Whatever may be the position of the Tribunal, there is considerable difficulty in categorizing the Registrar as a statutory office holder whose functions are mainly administrative, as ``a public authority'' in the sense that that expression is used in s. 23(d) of the Income Tax Assessment Act . <sup>[44]</sup> As to the meaning of ``public authority'' see Renmark Hotel Inc. v. FC of T (1949) 8 ATD 424 ; (1949) 79 C.L.R. 10 , per Rich J. at ATD p. 430; C.L.R. p. 18 ; The Western Australian Turf Club v. FC of T 78 ATC 4133 ; (1977-1978) 139 C.L.R. 288 , per Stephen J. at ATC pp. 4136-4138; C.L.R. pp. 295-299; Re Anti-Cancer Council of Victoria & Ors ; Ex parte The State Public Services Federation (1992) 175 C.L.R. 442 , at pp. 450-451. That aside, the income on money held in trust by the Registrar, which is to be administered in accordance with the general law of trusts, simply is not the revenue of the Registrar. Nor for that matter was it revenue of the Tribunal in the period prior to the 1987 amendments.

In the context of s. 23(d) of the Income Tax Assessment Act , the expression ``revenue'' signifies annual or other periodic income from which operating expenses for that period are to be paid. <sup>[45]</sup> See, for an example of the constituents of revenue, The Western Australian Turf Club v. FC of T 78 ATC; (1977-1978) 139 C.L.R., per Stephen J. at ATC p. 4138; C.L.R. p. 298. The income received from the investment of compensation moneys by the Registrar is, in equity, the income of the persons entitled to the benefit of those compensation moneys. That income is not income available to defray the operating costs of the Fund. Nor has it been treated as such. According to the agreed statement of facts, apart from financial institution duty, bank charges and commissions paid on mortgage investments, the costs and expenses of the Fund are not paid out of the compensation moneys.

---

ATC 4844

Is the Registrar bound by the Income Tax Assessment Act?

It was argued that the Registrar is not bound by the Income Tax Assessment Act because, properly construed, it taxes the Crown only where the Crown is expressly made liable to tax. <sup>[46]</sup> See, for example, ss. 218, 221C, 255 of the Income Tax Assessment Act which expressly extend the reach of that Act so as to apply to the Commonwealth, a State, a Territory, or, an authority thereof. It was put that the Income Tax Assessment Act must be construed on the basis that general words such as ``person'' in s. 17 <sup>[47]</sup> Section 17 provides: ``Subject to this Act, income tax at the rates declared by the Parliament is levied, and shall be paid ... upon the taxable income derived during the year of income by any person, whether a resident or a non-resident.'' Note, ``person'' is defined in s. 6(1) to include a company. or ``trustee'' in Pt III, Div. 6 do not extend to the Crown, its servants or agents and that, in consequence, the Registrar is not subject to tax, notwithstanding that he has received income by virtue of his being a trustee in the ordinary sense.

There are two answers, each involving a slightly different approach, to the submission that the Income Tax Assessment Act must be construed so as to exclude the Registrar from its operation. The first approach involves asking whether the Registrar, in his capacity as trustee, is properly to be regarded as the Crown, its servant or agent. The second is to ask whether there is any basis for reading down the relevant provisions of the Income Tax Assessment Act , namely, s. 17 which, subject to that Act, subjects ``taxable income derived... by any person, whether a resident or a non-resident'' to tax and the provisions of Pt III, Div. 6 which apply to tax the income of trusts in the hands of ``trustees'', as defined in s. 6(1).

So far as the first approach is concerned, there can be no doubt that certain of the Registrar's functions are functions which are performed on behalf of the government of Victoria and, to that extent and in that sense, the Registrar can be described as the servant or agent of the Crown. The Registrar's functions relating to the administration of the Tribunal are clearly performed on behalf of the Victorian government. And the same may be true of the functions involved in administering the Fund. But the functions involved in administering the ordinary trusts constituted by payment of compensation money ``for the benefit of the person entitled to that money'' <sup>[48]</sup> s. 35(1) of the Workers Compensation Act ; s. 131(1) of the Accident Compensation Act . are of a different kind. The trusts thus constituted are trusts for private citizens and the duties involved are owed to individual beneficiaries, notwithstanding that the trusts arise under the Workers Compensation Act rather than as the result of the acts of individuals.

Clearly, it is or will often be inappropriate to describe a person or a statutory office holder as the servant or agent of the Crown in relation to some functions and not others. As a general rule, it will be the overall nature of the functions and duties involved which determines whether he or she is to be categorized as a servant or agent of the Crown, no matter for what purpose that classification is or becomes necessary. <sup>[49]</sup> See Administrator of Austrian Property v. Russian Bank for Foreign Trade (1931) 48 T.L.R. 37 ; Bank voor Handel en Scheepvaart N.V. v. Administrator of Hungarian Property [1954] A.C., per Reid L.J. at p. 619. But there may be cases where there are discrete functions which involve no interest or purpose of the Crown and which are separate and distinct from other functions which serve a Crown purpose.

It is clear that the classification of a person as a servant or agent of the Crown, whether generally or in relation to particular functions, does not depend on there being some benefit to or some financial or other interest on the part of the Crown or the government involved. <sup>[50]</sup> See Bank voor Handel en Scheepvaart N.V. v. Administrator of Hungarian Property [1954] A.C., per Reid L.J. at p. 618. See also Wynyard Investments Pty. Ltd. v. Commr for Railways (N.S.W.) (1955) 93 C.L.R., per Kitto J. at p. 393. However, there may be cases where there is no Crown interest or purpose to be served at all or, in the case of discrete functions, no Crown interest or purpose to be served by those particular functions.

By reason and to the extent that the Registrar is a trustee for private individuals, no governmental interest or purpose whatsoever attends or is served by the functions associated with those trust obligations; in no sense are those obligations performed for or on behalf of the Crown. Thus, there is no basis for categorizing the Registrar, in his capacity as a trustee for private individuals, as a servant or agent of the Crown. He is a trustee, pure and simple. That being so and even if the relevant provisions of the Income Tax Assessment Act do not bind the Crown, its servants or agents, they bind the Registrar in his separate capacity as trustee for private individuals.

The alternative approach is to ask whether there is any basis for reading down the general words of the Income Tax Assessment Act so as not to include the Crown, its servants or agents. It does not matter whether the reading down is said to be necessary because some of its provisions expressly bind the Crown and, on ordinary principles, the others should be construed as not binding the Crown or because of a presumption against the Crown being bound, save by express words or by ``necessary implication'', in the sense explained in Bropho v. State of Western Australia & Anor . <sup>[51]</sup> (1990) 171 C.L.R. 1, per Mason C.J., Deane, Dawson, Toohey, Gaudron and McHugh JJ. at pp. 16-17.

Whatever may have been the situation in earlier times, it is clear from Bropho that the presumption that general words do not bind the Crown is one that must now yield to ``the

---

ATC 4845

circumstances [involved], including the content and purpose of the particular provision and the identity of the entity in respect of which the question of the applicability of the provision arises''. <sup>[52]</sup> ibid., at p. 23. It is axiomatic that those circumstances include the way in which the provision in question would operate and, in particular, whether it would operate to bind ``servants or agents of the... government... in relation to acts which they do or property which they own or occupy exclusively in that capacity'', <sup>[53]</sup> British Broadcasting Corporation v. Johns [1965] Ch. 32 , per Diplock L.J. at p. 81 ; Bropho v. State of Western Australia & Anor (1990) 171 C.L.R., per Mason C.J., Deane, Dawson, Toohey, Gaudron and McHugh JJ. at p. 16. or, as it is sometimes put, whether it would ``apply to servants of the Crown acting in the course of their duties as such''. <sup>[54]</sup> Bropho v. State of Western Australia & Anor (1990) 171 C.L.R., per Mason C.J., Deane, Dawson, Toohey, Gaudron and McHugh JJ. at p. 21. Given the purposes which, historically, were served by the assumption that the Crown is not bound by statute, <sup>[55]</sup> See ibid., at p. 18. there is now no basis, if there ever was any, for applying a presumption that the Crown is not bound unless the provision or provisions in question would operate so as to have some effect upon the ``interests or purposes of the Sovereign'' <sup>[56]</sup> Wynyard Investments Pty. Ltd. v. Commr for Railways (N.S.W.) (1955) 93 C.L.R., per Kitto J. at p. 393. or, more accurately, the government concerned. <sup>[57]</sup> Note that that approach is implicit in the speech of Lord Reid in Bank voor Handel en Scheepvaart N.V. v. Administrator of Hungarian Property [1954] A.C., at p. 618, where his Lordship said, in the context of a taxing statute which did not bind the Crown, that he was ``prepared to assume that if ... it was the duty of a Crown servant merely to hold property with accruing income for a period and then pay it to some ... private person, it would be held that tax is payable on the income accruing ... because ... payment of tax could not possibly prejudice any Crown interest or purpose.''

Similarly, because the provisions of the Income Tax Assessment Act which are expressed to bind the Crown operate in areas in which Crown interests are involved, they provide no basis for reading down general provisions in circumstances where their application has no effect on the interests or purposes of the Crown.

As already indicated, there is no Crown or governmental interest in the performance by the Registrar of the trust obligations which he owes to private individuals. Thus, there is no basis, either by reason of a presumption that general words do not bind the Crown or by reason that certain other provisions of the Income Tax Assessment Act are expressed to bind the Crown, for reading down the word ``person'' in s. 17 or the definition of ``trustee'' in s. 6(1) so as to exempt the Registrar, in his capacity as a trustee, from tax under Pt III, Div. 6.

Questions arising under the Constitution

As earlier indicated, this appeal and its two companion appeals were removed into the Court because they were seen to raise a question under s. 114 of the Constitution. So far as presently relevant, s. 114 forbids the Commonwealth from ``impos[ing] any tax on property of any kind belonging to a State''.

In substance, Pt III, Div. 6, in its application to this case, taxes income which, in equity, is the income of the private citizens who are the beneficiaries of the trust constituted by payment to the Registrar of compensation to which they are entitled. In form, it taxes the income of the Registrar, in his capacity as trustee. Accordingly, neither in substance nor in form can it be said that, in the circumstances of this case, Pt III, Div. 6 taxes any property belonging to the State of Victoria.

It was also argued that, in its application to the Registrar in relation to trusts of compensation moneys, Pt III, Div. 6 of the Income Tax Assessment Act infringes the implied constitutional prohibition against Commonwealth laws which discriminate against a State or interfere with its ability to carry out its functions. <sup>[58]</sup> See Melbourne Corporation v. The Commonwealth & Anor (1947) 74 C.L.R. 31 ; The State of Victoria v. The Commonwealth of Australia (1970-1971) 122 C.L.R. 353 ; Queensland Electricity Commission & Ors v. The Commonwealth of Australia (1985) 159 C.L.R. 192 . Because Pt III, Div. 6, in its application in this case, subjects the Registrar to tax in his capacity as trustee for private citizens and does not affect any interest or purpose of a State, it does not offend either limb of that prohibition.

The year of income

As earlier indicated, the ``interest'' credited to the Payne account in July 1987 represented a proportionate share of the income earned by the Fund in the tax year ended 30 June 1987. It was suggested in argument that it might, for the purposes of the Income Tax Assessment Act , be income of the 1987 tax year and not of the 1988 tax year which is the tax year involved in this appeal.

The Registrar did not appeal against the determination of Jenkinson J., in the Federal Court, that, if the interest was assessable income, it was correctly included in the assessment in respect of the 1988 tax year. No doubt, the reason was that, in a context where the Commissioner has, as already indicated, issued an alternative assessment treating the relevant interest as income of the 1987 tax year, the identity of the correct tax year was seen as being of little practical significance.

As has been seen, the Registrar holds the compensation moneys paid to him on trust for the benefit of the persons entitled to those moneys. He is empowered to invest, apply or otherwise deal with the moneys in the Fund in any manner he thinks fit for the benefit of those persons. <sup>[59]</sup> s. 35(1) of the Workers Compensation Act ; s. 131(1) of the Accident Compensation Act . Any income from the investment of those compensation moneys is, therefore, referable to the trust at the time of receipt. It is irrelevant that the actual allocation of the income does not occur until some later tax year.

---

ATC 4846

The method adopted by the Registrar, and by the Tribunal prior to the 1987 amendments, for the allocation of income accorded with that income being received as trust income. After deducting related costs and expenses, overall income received on investments was allocated between the accounts of different dependants or groups of dependants. While the actual allocation of the net investment income to the credit of particular accounts in the books of the Fund was not effected until after the commencement of the 1988 tax year, the respective amounts which were so credited were ascertained, on a ``pro rata'' basis, by reference to the monthly amounts held to the credit of the various accounts during the 1987 tax year. Thus, the $2,718.69 credited to the Payne account on 10 July 1987 was calculated by reference to the monthly balances standing to the credit of that account during the year in which the relevant income was received, that is, the 1987 tax year. There was some discussion during the course of argument as to whether the beneficiaries of the various accounts were, in fact, entitled to a pro rata allocation of the moneys each year. It is not necessary to decide that question because, even if there was no such entitlement, the Registrar's and, prior to the 1987 amendments, the Tribunal's statutory duty to invest the moneys for the benefit of the persons entitled means that the discretion to deal with the moneys as thought fit had to be exercised for the benefit of those persons. <sup>[60]</sup> cf. Flannery v. Secretary, Department of Social Security (1987) 78 A.L.R. 431 ; Melbourne v. Secretary, Department of Social Security (1988) 20 F.C.R. 496 , where the relevant legislation specifically provided that ``[i]nvestments made from moneys forming part of the Common Fund shall not be made on account of or belong to any particular'' estate, trust or person. (emphasis added) Thus, a proportionate share of the moneys would, at all times, be referable to each individual account. The income received was, therefore, derived as income at the date at which it was earned, regardless of when it was actually allocated in the books. This was so notwithstanding the fact that the compensation moneys had been mixed in a common fund with other compensation moneys, borrowings, money for the general expenses of the Tribunal and income from investments.

It follows that the Registrar and, earlier, the Tribunal derived income on compensation money at the date on which that income was earned by the mixed fund, and not on the date on which the relevant proportion of the income was formally allocated to the particular account. That means that the income involved in this case was earned in the financial year ended 30 June 1987, notwithstanding the fact that it was not actually credited to the Payne account until July 1987.

Conclusion

As earlier indicated, the present appeal in relation to the assessment for the 1988 tax year was listed for hearing together with two companion appeals by the Registrar relating to two other accounts administered by him. The Court was informed that the parties should be able to reach agreement in relation to those other appeals once the Court had dealt with the questions involved in this appeal.

In the present appeal, the Commissioner has succeeded on each of the grounds of appeal relied on by the Registrar. As has been seen, however, we consider that the notice of assessment involved in this appeal was erroneous for a reason not relied upon by the Registrar, namely, that it treated the $2,718.69 as income derived by the Registrar as trustee for the Abela family during the 1988 tax year whereas it was income derived by the Tribunal during the 1987 tax year. The reasoning which leads to our conclusion in that regard may, no doubt, also lead to the conclusion that some other amount was derived as income, of the Registrar for the 1988 tax year, but was wrongly included in an assessment in respect of some subsequent year.

In all the circumstances, the appropriate course is to order that this appeal and the companion appeals stand in the list to enable the parties to confer with a view to reaching agreement about the orders to be made in the light of the reasons expressed in this judgment. If the parties are unable to reach such agreement, it will be necessary to afford to them an opportunity to make written submissions in relation to the appropriate orders. We would indicate that, as at present advised, we consider that the Registrar should pay the Commissioner's costs of the appeal to this Court and of the proceedings in the Federal Court.