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

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Brennan, Dawson and McHugh JJ

Trust is the creature of equity. It is of the essence of a trust that it is cognizable by a court of equity. ^[61] Sturt v. Mellish (1743) 2 Atk. 610 , at p. 612 [ 26 E.R. 765 , at p. 766 ]; Burgess v. Wheate (1759) 1 Eden 177 , at pp. 218, 223 [ 28 E.R. 652 , at pp. 668, 670 ]; Re Williams ; Williams v. Williams [1897] 2 Ch. 12 , at p. 19 . A relationship which obliges one person to pay money or to transfer property to another may exhibit the features of a trust for the benefit of the other, but there is no such trust unless the obligation is enforceable in equity. In our opinion, the rights of dependants of a deceased

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ATC 4847

worker to receive money following the payment of compensation under the Workers Compensation Act 1958 (Vic.) (``the 1958 Act'') are not enforceable in a court of equity. The remedies available to dependants are designed to enforce the performance of statutory, not equitable, duties.

For reasons presently to be stated, we would hold that the Registrar of the Accident Compensation Tribunal (``the Registrar'') does not hold the money paid as compensation for the dependants of a deceased as trustee for the dependants as beneficiaries. If there be a trust of the fund out of which the dependants of a deceased worker receive or are entitled to receive money, the trust is not one which confers on those dependants an equitable interest in the fund or an equitable right to payment out of the fund. For that reason, we would hold that Div. 6 of Pt III of the Income Tax Assessment Act 1936 (Cth) has no application to that part of the income of the fund attributed to the dependants of a particular deceased worker. To explain this view, it is necessary to identify the more important of the statutory provisions from which the nature of the rights possessed by the dependants of a deceased worker can be ascertained. These provisions govern the making of an award of compensation, the payment of the sum awarded, the administration of the fund into which the compensation awarded is paid and, to some extent, the rights of the respective dependants to seek payment out of that fund and the payment of money to the respective dependants in whose favour the fund is applied.

The relevant statutory provisions in the 1958 Act were substantially amended by the Accident Compensation Act 1985 (Vic.) (``the 1985 Act'') which provided, inter alia, for an Accident Compensation Tribunal Fund (``the Tribunal Fund'') to be administered by the Accident Compensation Tribunal (``the Tribunal''). The Accident Compensation (Amendment) Act 1987 (Vic.) (``the 1987 Act'') in turn amended both the 1958 Act and the 1985 Act and, with effect from 1 December 1987, the Registrar of the Tribunal was substituted for the Tribunal as the administrator of the Tribunal Fund. That substitution explains the difference in the parties who were assessed to tax on what the Commissioner contends to have been the income of the trust estate of the dependants of a deceased worker, Alexander Joseph Abela: the Tribunal was assessed to tax in respect of the income year ended 30 June 1987, the Registrar in respect of the income year ended 30 June 1988. In the following discussion, reference will be made to the statutory provisions in force at relevant times.

The operation of the statutes in the present case

In consequence of the death of Mr Abela on 6 November 1977, compensation was payable under s. 9(1) of the 1958 Act. His dependants were his widow (now Mrs Payne) and three infant children. Pursuant to an award made on 12 June 1979 by the Workers Compensation Board constituted under the 1958 Act (``the Board'') and in conformity with s. 34(1) of that Act, the sum of $23,940 was ``paid into the custody of the Board and the receipt of the registrar [was] a sufficient discharge in respect of the sum so paid''. Section 34(2) provided as follows:

``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.''

Sub-section (2) was deleted (a new subsection being inserted) by the 1985 Act but a power corresponding to that contained in s. 34(2) was conferred on the Tribunal by an amendment inserting a new s. 36(2). Moreover, a new s. 36(3), substantially re-enacting provisions that had been contained in s. 35, empowered the Tribunal (and now empowers the Registrar) to vary a determination as to the apportionment of moneys among the dependants of a deceased worker where there has been neglect of children, a variation in the circumstances of the dependants or any other sufficient cause. Thus, the extent to which any one of two or more dependants of a deceased worker is entitled to participate in an amount paid to the Board under s. 34(1) of the 1958 Act was in the discretion of the Tribunal until 1 December

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ATC 4848

1987 and then came to be in the discretion of the Registrar.

Presumably pursuant to the power conferred on the Board by s. 34(2) of the 1958 Act, the Board ordered, on or about 20 July 1983, that $16,000 of the $23,940 paid to the Board under s. 34(1) be set aside for Lisa Joan Abela, one of the infant daughters of the deceased. The balance was credited to a separate account in which, it seems, Mrs Payne and the three infant children shared (hereafter ``the account''). The account was credited with interest from time to time and debited with payments out. It is the interest credited to the account on 10 July 1987 which the respondent Commissioner seeks to bring to tax by the assessment for the income year ended 30 June 1988.

Sub-section (1A) of s. 34 of the 1958 Act provided as follows:

• ``(1A) All moneys paid into the custody of the Board shall subject to the rules and the provisions of this Act be invested applied or otherwise dealt with in such manner as the Board thinks fit for the benefit of the persons entitled thereto under this Act.''

However, the Board's custody of the moneys in the account was affected by a new s. 37 of the 1958 Act inserted by the 1985 Act. The relevant provisions of the new section are as follows:

• ``(1) On and from the appointed day, ^[62] 31 August 1985. 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.
• (3)...
• (4) No right interest or claim in or with respect to any money paid into the custody of the Board pursuant to this Division as in force before the appointed day shall abate or be in any way prejudicially affected by reason of this section.''

The ``Tribunal'' referred to in these provisions was defined to mean the Accident Compensation Tribunal. ^[63] s. 3(1) of the 1958 Act as amended. The Tribunal is the successor to the Board which ceased to exist on the appointed day. ^[64] 1958 Act, ss. 80, 81.

Section 73(1) of the 1985 Act directed the Tribunal to establish and maintain a fund to be called the Accident Compensation Tribunal Fund. Section 73(2) directed that there should be paid into the Tribunal Fund the moneys received by the Tribunal under the 1985 Act or under any other Act. The other moneys directed to be paid into the Fund were of various descriptions, for example, contributions payable by self-insurers and income from investments. The 1987 Act specifically added ``payments made under section 34 of the Workers Compensation Act 1958'' to the list of payments to be paid into the Tribunal Fund. ^[65] s. 73(2)(ab) of the 1985 Act. The Registrar was then substituted for the Tribunal as the authority charged with responsibility for administration of the Tribunal Fund. The Tribunal Fund is a mixed fund and payments into that fund lose their identity in the mass. Included in that fund were the moneys standing to the credit of the account.

The powers of the Registrar (previously the Tribunal) in relation to investment of the Tribunal Fund are set out in s. 73(4) of the 1985 Act which authorizes the Registrar to invest money in the Tribunal Fund in any manner which is approved by the Treasurer. Section 73(3) of the 1985 Act prescribes the payments which may be made out of the Tribunal 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

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  ATC 4849

  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).''

The Tribunal Fund is thus available to meet any of the debts or payments prescribed by s. 73(3).

However, the 1958 Act specifically authorizes the Registrar to determine the application of money which, having been received by the Board under the 1958 Act, became part of the Tribunal Fund. Section 35(1) of the 1958 Act provides:

``Except as otherwise provided in section 34, 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.''

Pursuant to this provision, the Registrar can apply moneys for the benefit of dependants by appropriating moneys in the Tribunal Fund for payment to or on behalf of, or to be held on a particular trust for, a dependant or group of dependants. But, unless and until money is so applied, the assets representing compensation paid to the Board under s. 34(1) of the 1958 Act remain part of the Tribunal Fund.

Further provisions governing the Registrar's administration of moneys paid to the Board as compensation appear in s. 35 of the 1958 Act which provides, inter alia -

• ``(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.
• (3) [repealed]
• (4)...
• (5) All expenses 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 Tribunal Fund.''

The terms of s. 35(2) follow the provisions previously applied to the Board by s. 39 of the 1958 Act. The Registrar is governed by similar provisions contained in s. 131(2) of the 1985 Act in respect of his administration of any amount of money being administered under the 1985 Act. The duty cast upon the Registrar is, as we shall see, different from the duty which equity imposes on the trustees of a fund for the benefit of beneficiaries.

Section 36(1) provides:

``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.''

The Tribunal nevertheless possesses a supervisory power, for s. 36(5) provides:

``Any person who objects to any determination made by the Registrar may appeal to the Tribunal which may make a new determination.''

The scope of the disputes falling within this provision may be open to argument but, whatever that scope may be, the sub-section provides for the determination of disputes by a statutory authority, not by a court of equity.

In this statutory context, the question is whether the statute imposes on the Registrar the character of a trustee of compensation payments ``for the benefit of the person entitled to that money'' (to adopt the language of s. 35(1)), ``the person'' presumably comprehending, where applicable, all the dependants of a deceased worker. Although the language of s. 35(1) might be taken to suggest that dependants are beneficiaries of a trust, the appellant submits that the statutory provisions imposing obligations on the Board, the Tribunal and the Registrar create obligations of the Crown which should not be seen as the obligations of a true trustee unless the statute clearly makes them so. ^[66] Kinloch v. Secretary of State for India in Council (1882) 7 App.Cas. 619; Tito v. Waddell (No. 2) [1977] Ch. 106, at pp. 211-237; New South Wales v. The Commonwealth [No. 3] (1932) 46 C.L.R. 246, at pp. 262, 268; Aboriginal Development Commission & Anor v. Treka Aboriginal Arts and Crafts Ltd & Anor [1984] 3 N.S.W.L.R. 502. This approach is explained by Lord Diplock in Town Investments Ltd. v. Department of the Environment : ^[67] [1978] A.C. 359, at p. 382.

``[E]ven where the person to be benefited is a subject, the use of the expression `in trust' to describe the capacity in which the property is granted to an officer of state is not conclusive that a trust in private law was intended; for `trust' is not a term of art in public law and when used in relation to matters which lie within the field of public law the words `in trust' may do no more than indicate the existence of a duty owed to the Crown by the officer of state, as servant of the Crown, to deal with the property for the benefit of the subject for whom it is expressed to be held in trust, such duty

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ATC 4850

being enforceable administratively by disciplinary sanctions and not otherwise.''

This approach to the construction of a statute may be valid even where the duty is imposed on an officer who is not an ``officer of State''. A statute which imposes a duty on a public authority charged with the performance of public functions and holding and administering property may not give rise to a trust for the benefit of the individuals who will profit from performance of the duty, whether or not the authority is an emanation of the Crown. ^[68] Skinners' Co. v. Irish Society (1845) 12 Cl. & F. 425 , at pp. 488-489, 490 [ 8 E.R. 1474 , at pp. 1500, 1501 ]; Swain v. The Law Society [1983] 1 A.C. 598 , at p. 618 . In the end, however, the question is one of statutory construction: if the statute vests property or provides for the vesting of property in one person and requires that person to apply the property for the benefit of another or for the benefit of a class, does the statute intend the property to be held in trust for the other or for the class? A statutorily created trust may not necessarily exhibit all the features of a trust for beneficiaries created by a settlor of property, ^[69] Ayerst v. C. & K. (Construction) Ltd. [1976] A.C. 167 , at p. 178 . but the statutory intention to create a trust must nevertheless appear in the terms of the statute. In our opinion, the relevant statutory provisions in this case are inconsistent with the notion of a trust for the dependants as beneficiaries. There are several indicia which lead to this conclusion.

Section 34 itself reveals the policy underlying the provisions governing administration of compensation payments. In the form introduced by the 1985 Act, compensation payments must be paid to the Tribunal (now to the Registrar) when, inter alia, the person entitled is under the age of 18 years or, in the case of compensation for a worker's death, the person is over the age of 18 years (unless the Tribunal otherwise determines) or, in any case, where the Tribunal ``considers that it would be in the best interests of the worker''. The purposes of requiring administration by the Tribunal (now by the Registrar) seem to be the protection of the person or persons entitled against improvidence on their part or against the incursions of creditors and, where compensation payments are to be allocated amongst two or more dependants, the determination of the amount and manner of application of the money available for distribution. The scheme of the provisions following s. 34(1) is that compensation payments are not within the disposition of a dependant or class of dependants until the Registrar applies the Tribunal Fund by paying money to, or by creating a trust for the benefit of, that dependant or class of dependants. The Registrar is not required to pay money into the hands of a dependant; the money may be applied by defraying the cost of services to a dependant, for example, by paying school fees. In that way, the protective purposes of s. 34 may be met. <sup>[70]</sup> See Re Coleman ; Henry v. Strong (1888) 39 Ch. D. 443 , at p. 451 ; Re Bullock ; Good v. Lickorish (1891) 60 L.J. Ch. 341 . Family disputes can be resolved by determinations made by the Registrar, or by the Tribunal on appeal, as to whom money should be paid, how much and when. At the same time, dependants are in a position to seek judicial review of a refusal by the Registrar to pay them their ``entitlements'' when payment is appropriate in exercise of the statutory discretion which the Registrar possesses.

If it were right to regard the Registrar as holding compensation payments in trust for beneficiaries being those entitled under the 1958 Act, a court of equity would control the investment of the compensation payments, requiring the Registrar to exercise his investment powers ``in the best interests of the present and future beneficiaries of the trust, holding the scales impartially between different classes of beneficiaries''. ^[71] Cowan v. Scargill [1985] Ch. 270 , at pp. 286-287 . The limitations which equity would place on the exercise of a trustee's power to invest are inconsistent with the broad discretion conferred on the Registrar by s. 35(1) of the 1958 Act and s. 73(4) of the 1985 Act. If it were right to regard the Registrar as holding compensation payments in trust for those entitled under the 1958 Act, the jurisdiction of equity would extend to the enforcement of their respective entitlements. If the Registrar were a true trustee of a compensation payment, it would be the duty of the Registrar as trustee to pay or apply on demand the amount to which a dependant was or the dependants as a class were entitled provided the dependant was or all the dependants in the class were sui juris and all consented. ^[72] Re Marshall ; Marshall v. Marshall [1914] 1 Ch. 192 ; Re Smith ; Public Trustee v. Aspinal [1928] Ch. 915 . But that would nullify the effect of s. 34(1) which, as it now stands, contemplates that all compensation payments in respect of the death of a deceased worker will be administered by the Registrar. Presumably, if the Registrar were a true trustee, the powers of the Registrar under s. 36(2) and (3) would be construed as trust powers, so that the dependants would be entitled equally to the compensation payment in default of any exercise by the Registrar of the power to apply the compensation payment in

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ATC 4851

some other way. ^[73] Queensland Trustees Ltd. & Ors v. Commr of Stamp Duties (1952) 88 C.L.R. 54 , at p. 63 . Or a dependant, complaining of a failure by the Registrar to exercise his discretion under s. 36(2) or (3), could apply to a court of equity for an order directing the Registrar to consider an exercise of the power or an order appointing a new trustee or, perhaps, an order directing the distribution of compensation payments among the dependants of the particular deceased worker according to the court's selection after inquiry. ^[74] See McPhail v. Doulton [1971] A.C. 424 , at p. 457 . The existence of such an equitable jurisdiction seems quite inconsistent with the creation of a right of appeal to the Tribunal from any determination made by the Registrar under s. 35 of the 1958 Act.

Moreover, s. 35(2) of the 1958 Act expressly releases the Registrar from ``any law relating to the administration of trust funds''. It is difficult to construe the 1958 and 1985 Acts as intending to create a trust when the foundation of any trust - the law which imposes the duties of a trustee - is thus removed. Section 35(2) exposes the true character of the Registrar's discretionary powers: they are statutory powers amenable to judicial review but not amenable to control by a court of equity. It is immaterial that the Registrar, though compensation payments are paid to or are under the control of or are vested in him, has no beneficial interest in those moneys. As the Privy Council said in Commr of Stamp Duties (Qld) v. Livingston ^[75] [1965] A.C. 694, at p. 712. in reference to assets in the hands of an executor of an unadministered estate:

``When the whole right of property is in a person, as it is in an executor, there is no need to distinguish between the legal and equitable interest in that property, any more than there is for the property of a full beneficial owner. What matters is that the court will control the executor in the use of his rights over assets that come to him in that capacity; but it will do it by the enforcement of remedies which do not involve the admission or recognition of equitable rights of property in those assets. Equity in fact calls into existence and protects equitable rights and interests in property only where their recognition has been found to be required in order to give effect to its doctrines.''

It is erroneous to conclude that, because property is held by one person but the fruits are ultimately to be enjoyed by others, there is a relationship of trustee and beneficiary between the holder of the property and those who will ultimately receive it. ^[76] Ayerst v. C. & K. (Construction) Ltd. [1976] A.C., at pp. 177-178 . When the remedies of those entitled to benefit from property are statutory, equity does not need to call an equitable interest into existence to control the administration of the property by the person in whom it is vested.

The dependants of a deceased worker are not without remedy against the Registrar if the Registrar unjustifiably refuses to pay money to which, under the 1958 Act or the 1985 Act, the dependants are ``entitled''. The scheme of both Acts is to provide administrative machinery for the payment of compensation, for the investing of compensation payments until the time for payment arrives, for the distribution among dependants of the sums available for distribution and for the payment of the respective amounts to which dependants are entitled. The administrative character of the scheme is manifested by the making ^[77] Pursuant to s. 80 of the 1985 Act. of the Accident Compensation Tribunal (Workers Compensation) Rules 1986 which apply to compensation paid under the 1958 Act. Regulation 53 provides, inter alia:

• ``(1) Where a payment is made into the Tribunal Fund in the case of the death of a worker -
  • ...
  • (d) if the Tribunal has apportioned the award moneys between dependants, the respective amounts must be separately recorded and administered by the Tribunal; and
  • (e) any person entitled to share in the award moneys or having an interest as guardian or the like in relation to a dependant may apply to the Tribunal giving at least five days notice in writing to all others concerned, for an order to vary or create or otherwise deal with an apportionment of the moneys between the dependants; and
  • (f) any application for apportionment or variation of apportionment must be made on reasonable notice to all persons who might be affected thereby.
• (2) Where money has been paid into the custody of the Tribunal, the Registrar must pay it out to or on behalf of the person entitled to it in such manner and circumstances as the Tribunal may direct pursuant to section 35 of the [1958] Act.

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  ATC 4852

• (3) Any person entitled to share in the award moneys may apply informally for payment out of any part of the money, giving such particulars as will enable the Tribunal to exercise its discretion in the proper administration of the moneys and, subject to compliance with such requirements, by way of security or other safeguards, as the Tribunal may stipulate for the protection of the interests of any other dependants, the Tribunal may grant such an application.
• (4)...
• (5) Moneys in the custody of the Tribunal standing to the credit of a person who has not made application for any payment therefrom for a period of at least ten years, and has not been in communication with the Tribunal during that time, may be transferred out of the name of that person and into a fund known as the Unclaimed Moneys Fund to be maintained by the Tribunal and invested in like manner to the other monies administered by the Tribunal; provided that if at any later time the person concerned communicates with the Tribunal with satisfactory proof of identity, the Tribunal must transfer out of the Unclaimed Moneys Fund to the credit of that person the appropriate sum plus accrued interest, to be administered in the usual manner.''

In addition to these provisions, a specific duty is imposed on the Registrar to pay out a dependant where only a small amount remains to be administered. Section 35(4) of the 1958 Act provides:

``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.''

A dependant may apply for payment in accordance with these Rules but, irrespective of the procedure prescribed by the Rules, the only opening through which money may lawfully pass from the Tribunal Fund to a dependant is the Registrar's exercise of the powers conferred on him by s. 35(1). ^[78] The powers conferred by s. 36(2) and (3) may supplement or, perhaps, be the relevant powers in particular cases. According to the circumstances, the Registrar may be under a duty to exercise those powers by paying money to a person entitled but that duty is not imposed by equity. The duty flows from the purpose for which the powers were conferred, namely, to benefit those who are entitled to the compensation paid. And, if there be any dispute in relation to administration of money being administered under the 1958 Act, s. 36 prescribes the forum by which that dispute is to be determined. Provided the powers conferred on the Registrar and the Tribunal are exercised bona fide for the purposes for which they were conferred, no jurisdiction other than that created by the 1958 Act and the 1985 Act can be invoked to enforce a dependant's entitlement. ^[79] cf. Barraclough v. Brown [1897] A.C. 615 , at p. 622 ; Stevens v. Jeacocke (1848) 11 Q.B. 731 , at p. 741 [ 116 E.R. 647 , at p. 652 ]; R. v. County Court Judge of Essex (1887) 18 Q.B.D. 704 , at p. 707 . If the powers are not so exercised, mandamus and certiorari lie. But a dependant has no entitlement to payment from the Tribunal Fund outside the 1958 and 1985 Acts.

The allocation of interest to the account

The balance sheet of the Tribunal as at 30 June 1987 shows that the total assets of the Tribunal were $118,577,200, of which $114,878,200 consisted of ``beneficiary fund investments''. The income and expenditure account for the year ended 30 June 1987 shows that the income in respect of beneficiary fund investments was $15,848,100, all of which was available for distribution. However, the statement of agreed facts in this case reveals that some expenses ``were paid from the income from the Compensation Moneys prior to any distribution of that income to the beneficiaries''.

The statement of agreed facts shows that, on 10 July 1987, the moneys derived from investments during the year ended 30 June 1987 were allocated to the accounts of beneficiaries " pro rata in accordance with the following practice:

• (i) The total amount so allocated was divided into 12 equal parts one for each month of the first year.
• (ii) In respect of a part attributed to a particular month that part was distributed pro rata amongst the accounts of the persons in respect of whom the Compensation Moneys had been received by the Tribunal, each account taking a share proportionate to the minimum balance standing to the credit of that account during the month. "

The amount so allocated to the account was $2718.69.

The respondent Commissioner assessed the Tribunal to tax in respect of the sum of $2718 as tax upon income derived during the income year ended 30 June 1987. Subsequently a further assessment was made, assessing the Registrar to tax for the income year ended 30

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ATC 4853

June 1988 in respect of the sum of $2718, this assessment resting upon the allocation of a portion of the investment income of the Tribunal Fund to the account on 10 July 1987. The assessments are intended to be alternative, not cumulative. Objections to both assessments were disallowed and an appeal was brought to the Federal Court. Jenkinson J. upheld the assessment of the Registrar to tax in respect of the year ended 30 June 1988 but allowed the appeal and set aside the assessment of the Tribunal to tax in respect of the year ended 30 June 1987. The Registrar appealed to the Full Court of the Federal Court against his Honour's judgment in so far as it dismissed his appeal in relation to the 1988 assessment. That appeal was removed into this Court.

The Income Tax Assessment Act and its application

Jenkinson J. held that the amount allocated on 10 July 1987 was assessable income in respect of which the Registrar was liable to pay tax pursuant to the provisions of Div. 6 of Pt III of the Income Tax Assessment Act . The ``amounts of compensation'' - which we take to be a shorthand description of the amounts standing to the credit of the account from month to month on which interest was calculated and apportioned - were said to be a ``trust estate'' within the meaning of that expression in that Division.

For the purposes of the Income Tax Assessment Act , s. 6(1) defines the term ``trustee'' 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.''

A ``trust estate'' for the purposes of Div. 6 of Pt III of the Income Tax Assessment Act must bear a corresponding meaning, that is, property of any kind held or controlled by a trustee in one or other of the capacities prescribed by the definition. In Manning v. FC of T , <sup>[80]</sup> (1928) 40 C.L.R. 506, at p. 509. Knox C.J. said in reference to the definition of ``trustee'' in the Income Tax Assessment Act 1922-1925 (Cth):

``Wide as this definition is, it requires at least as an essential ingredient in the position of `trustee' under the Act the existence of a fiduciary obligation towards some other person. The existence of a fiduciary obligation to another person must, I think, always involve a liability to account at the instance of that other person, and if I am right in thinking that the gift of income to the appellant involves no such liability it seems to me to follow that she is not a trustee of the income within the meaning of the Act.''

The applicability of this observation to the Income Tax Assessment Act 1936 must be tested, of course, by reference to the entirety of that extensive legislation. But we see no reason to treat the observation as inapplicable to the present definition of ``trustee''. The opening words of the definition speak of a trustee in the ordinary sense of a person who holds property on trust. Paragraph (a) comprehends persons who, whether or not they hold the relevant property, have control over it and owe a fiduciary duty to another in exercising that control. Paragraph (b) also comprehends persons who owe a fiduciary duty, but the duty must relate to the administration or control of relevant property.

The trust which Jenkinson J. held to exist and to attract the application of Div. 6 of Pt III of the Income Tax Assessment Act was not a trust for the benefit of the dependants. His Honour held it was a trust for statutory purposes, having the same character as the money which was described in Harmer & Ors v. FC of T <sup>[81]</sup> 91 ATC 5000; (1991) 173 C.L.R. 264. as being held on a trust for statutory purposes. In Harmer , the Court referred to Fouche v. The Superannuation Fund Board <sup>[82]</sup> (1951-1952) 88 C.L.R. 609, at p. 640. as a precedent for attributing that character to the fund in question.

In this Court, the Commissioner has placed some reliance upon Fouche and Harmer in order to characterize the compensation payments being administered by the Registrar as trust estate of which the Registrar was the trustee. The notion of a trust for statutory purposes needs some analysis and it gives rise to the question whether the trustee of such a

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ATC 4854

trust is a ``trustee of a trust estate'' for the purposes of Div. 6.

The relevant claim in Fouche was a claim by the Superannuation Fund Board against individuals who had previously been members of the Board and who, in breach of their duty, had authorized the laying out of the Board's money on a hazardous investment. The question was whether the Board could seek an equitable remedy against former members on the footing that the administration of a trust fund was involved. The Court resolved that question in favour of the Board. But the Court said: <sup>[83]</sup> ibid.

``We do not think it necessary to consider... the question whether the individual corporators were, in any sense or for any purpose, to be regarded as trustees. Nor do we think it relevant to inquire whether they owed any and what duty to the contributors to the fund, whom the learned Chief Justice regarded as beneficiaries under the trust. We do not think, indeed, that the contributors are beneficiaries in the proper sense: they have, of course, an interest in the trust fund which would probably give them standing in a court of equity, but they have not such a beneficial interest in the fund as has an ordinary cestui que trust . The trust is not a trust for persons but for statutory purposes.''

In using the term ``trust for statutory purposes'', their Honours were concerned to identify the terms on which the Board held the Superannuation Fund. The fiduciary duties of the Board were stated in reference to the Fund as an entirety but not in reference to the amounts received from or in respect of individual contributors and paid into the Fund. Although the contributors did not acquire the beneficial interest of a cestui que trust in the Fund, their Honours thought that the contributors' interest in its proper administration might give them standing to invoke the jurisdiction of equity if the Board misapplied the Fund by disbursing money from it without authority. The Board had a fiduciary duty to perform in administering the Fund, similar to the duty of a trustee. That duty was stated to be ``a duty of reasonable care - the care which an ordinary prudent man of business would take''. <sup>[84]</sup> ibid., at p. 641. In the present case the Legislature, perhaps conscious of the decision in Fouche , released the Registrar in relation to the administration of ``any amount of money under this Act'' (that is, the 1958 Act) from the duties imposed by the law relating to the administration of trust funds and imposed on him merely a requirement to act in good faith: s. 39 of the 1958 Act, s. 35(2) of the 1958 Act as amended by the 1985 Act and s. 131 of the 1985 Act as amended by the 1987 Act. Whether or not this provision left the Registrar under a fiduciary duty in relation to the administration of the Tribunal Fund, it is clear from this provision and the other statutory provisions to which reference has already been made that the Registrar was under no fiduciary duty in relation to compensation moneys paid under s. 34(1) of the 1958 Act. The duty to invest and the duty to apply compensation moneys for the benefit of dependants were governed exhaustively by statute.

In Harmer , the question in issue was the character of moneys paid into court by a debtor in an action between competing creditors and paid out to solicitors as trustees to invest the moneys pending the determination of the competing claims. The Court said: <sup>[85]</sup> 91 ATC, at p. 5005; (1991) 173 C.L.R., at p. 274.

``The moneys paid into court were not themselves the subject matter of dispute but were held to satisfy any order, including any order for costs, made by the court consequent upon its determination of those conflicting claims and counterclaims. Once the moneys were deposited with the Building Society in the names of the appellants holding as trustees, the moneys were held by them in that capacity to be dealt with in accordance with the order of the court and not otherwise. It is unnecessary to consider whether the contingent interests of the claimants in the moneys paid into court could be aggregated into a totality of beneficial ownership or whether the powers of the Supreme Court to make orders affecting the moneys, including orders as to costs, meant that one of the elements of an ordinary non-purpose trust was lacking. It suffices to say that the trust upon which the moneys were held was a trust for statutory purposes <sup>[86]</sup> See Fouche v. The Superannuation Fund Board (1951-1952) 88 C.L.R., at p. 640 . and that the legislative provisions, including Rules of Court, applicable to govern the payment of the moneys into court and their subsequent application effectively overrode any need of that element.''

The fact which attracted the description of a trust for statutory purposes was that the trustees were to deal with the moneys ``in accordance

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with the order of the court and not otherwise''. In New South Wales v. The Commonwealth [No. 3] <sup>[87]</sup> (1932) 46 C.L.R., at p. 268. Starke J. was unwilling to regard a court as a fiduciary in respect of moneys paid into court by suitors. But in Harmer it was accepted that the money which had been paid out to solicitors ``as trustees'' to invest was held on a trust of some kind, the only question being whether there was no beneficiary ``presently entitled'' for the purposes of s. 97(1) of the Income Tax Assessment Act.

The question in the present case is not whether the Registrar holds the Tribunal Fund on trust for statutory purposes or is under a fiduciary duty in respect of that Fund but whether the Registrar holds a compensation payment in trust for the dependants of a deceased worker or is under a fiduciary duty to those dependants in respect of that money. The assessments against the Tribunal and the Registrar fasten on the income attributed to the amounts appearing in the books of the Tribunal from time to time as standing to the credit of the account. For the reasons stated, we are unable to regard that income as ``income of a trust estate'' because we do not regard the amounts standing to the credit of the account as a ``trust estate'' for the purposes of Div. 6, the dependants' rights being statutory. There being no trust estate of the kind on which the Commissioner has relied, the interest attributed to the amounts standing to the credit of the account is not ``income of a trust estate'' within the meaning of that term in Div. 6.

We were invited to say whether, if the allocation to individual accounts of the accretion from investment of the Tribunal Fund were not assessable income falling within Div. 6, the aggregate of the accretion might itself be assessable income in the hands of the Tribunal (in the 1987 year) or the Registrar (in the 1988 year). That invitation must be declined. If the Tribunal Fund were held by the Registrar as a fiduciary or ``on trust for statutory purposes'', the Registrar's equitable duty would be to apply the Tribunal Fund in accordance with the Act and, in particular, in accordance with s. 73(3) of the 1985 Act. Even if dependants were held to have a sufficient interest to enforce such an equitable duty, they would not be held to have any beneficial interest in the Tribunal Fund. <sup>[88]</sup> Like the members of a company being wound up: In re Calgary and Edmonton Land Co. Ltd. [1975] 1 W.L.R. 355 , at p. 359 . It would then be a question of some difficulty whether the provisions of Div. 6 (or at least the provisions of ss. 99 and 99A) apply to the income of purpose trusts as distinct from the income of trusts for the benefit of beneficiaries. That question was not argued. In practice, of course, the income of valid purpose trusts would often be exempt income under s. 23(e) or (j) and the occasions when Div. 6 might apply to the income of a purpose trust do not appear to have arisen for consideration. We would not answer the question whether the receipt of income from the entirety of the Tribunal Fund is assessable in the hands of the Registrar. That is an issue which ought to be determined only when it is necessary to decide it.

We would set aside the assessment in respect of the 1988 year because it is not founded on income of a trust estate within the meaning of that term in s. 99. Accordingly we would allow the appeal, set aside the judgment of Jenkinson J. and in lieu thereof allow the Registrar's appeal against the Commissioner's refusal to allow the Registrar's objection to the assessment in respect of the income year ended 30 June 1988.

It is unnecessary to consider the arguments based on s. 23(d) of the Income Tax Assessment Act and on s. 114 of the Constitution that were advanced to challenge the assessments. Nor do we find it necessary to determine whether, if the Registrar were a trustee of compensation payments for the persons entitled thereto, the Registrar might be outside the reach of the Income Tax Assessment Act on the ground that he is an emanation of the Crown.

THE COURT ORDERS:

Matter to stand in the list.

Parties to bring in on or before 3 November 1993 agreed minutes of order in accordance with the reasons for judgment.

If parties are unable to reach an agreement on minutes of order, written submissions as to the appropriate orders to be made to be filed and served by the parties by 10 November 1993. Parties to have liberty to file and serve within seven days of such service written submissions in reply.

Mason CJ: (7.12.93) These matters were heard by the Full Court in Canberra. The Court delivered judgment on 20 October 1993, at which time the parties were directed to bring in agreed minutes of order. The Court now makes the following order in each matter.

Appeal allowed, set aside the assessment and remit the matter to the respondent for reassessment of the appellant's taxable income in accordance with the Court's reasons for judgment. Each party to bear its own costs of this appeal.

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