Lloyd v Federal Commissioner of Taxation

93 CLR 645
[1955] HCA 71
[1956] ALR 95
29ALJR 693

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(Judgment by: Dixon CJ)

Between: Lloyd
And: Federal Commissioner of Taxation

Court:

Judges:
Dixon CJMcTiernan J
Webb J
Fullagar J
Kitto J

Subject References:
Succession
Estate duty
Exemption
Public educational purposes
Navy League Sea Cadet Corps

Legislative References:
Estate Duty Assessment Act 1914 (No 22) - the Act

Hearing date: MELBOURNE 13 October 1955; 14 October 1955
Judgment date: 15 December 1955

SYDNEY

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Judgment by:
Dixon CJ

Sub-section (5) of s. 8 of the Estate Duty Assessment Act 1914-1947 excludes from an assessment of estate duty, inter alia, so much of the estate as is devised or bequeathed for religious scientific or public educational purposes in Australia. Sub-section (8) defines "public educational purposes" to include the establishment or endowment of an educational institution for the benefit of the public or a section of the public.

By his last will Edward Norman Belcher of Geelong, who died on 31st January 1947, made a disposition for which exemption from estate duty is claimed as one for public educational purposes. The subject of the disposition is the deceased's one-fourth interest, valued at PD24,355, in a piece of land called Belcher's Corner. The terms of the disposition are as follows:"Regarding my quarter share in Belcher's Corner I direct my trustees to hold in trust the income therefrom for the Navy League Sea Cadets Geelong Branch or any other youth welfare organization male or female as in their wisdom they deem fit." This is followed by a direction not to sell the interest unless under compulsion and then to invest the proceeds for such organizations as those before mentioned in the clause. With the help of s. 131 of the Property Law Act 1928 (Vict.) the validity of this disposition was upheld as a charitable gift so far as it concerns the Navy League Sea Cadets, Geelong Branch, and, because the other purposes mentioned in the clause went beyond what is charitable, the application of the entire interest of the deceased in Belcher's Corner was confined to that corps or body: In re Belcher dec'd. ^[F1]

The question for our decision is whether it forms a devise or bequest for public educational purposes so as to be excluded from estate duty.

The Geelong branch forms part of the Navy League Sea Cadet Corps, Victoria. The Navy League, Victorian Branch, is a voluntary association the objects of which are directed to the maintenance of British naval strength and kindred policies. Among the purposes enumerated in the constitution of the Victorian branch of the league are the teaching of the history, spirit and traditions of the sea services in all schools and elsewhere by such means as may be deemed most expedient and the maintenance and developing of the Sea Cadet Corps in Victoria. Pursuant to this last object the league established the body called the Navy League Sea Cadet Corps, Victoria, with a branch organization at Geelong. The league entrusts the general direction of its own policy and administration to an executive committee which it elects annually. The Navy League Sea Cadet Corps of Victoria is governed by a constitution which may be amended by the Navy League Executive Committee and doubtless owes its origin to that body. The control of the corps is placed in the executive committee of the league, and it appoints the more senior officers. There is a State Commandant or Captain, a State Commander and an Assistant State Commander and district lieutenant commanders so appointed and these form a senior officers committee, with which the State Captain consults. Company officers, who rank as "Lieutenants Navy League", are responsible for the training and discipline of the cadets of the company as well as the care of the depot, equipment, boats and the like. A company is or may be part of a branch organization, as it is in Geelong. The Executive Committee of the Navy League may convene a public meeting where a company is to be formed and invite persons interested to become associate members of the Sea Cadet Corps branch in that place. The associate members may then elect a local committee. The company officer must be one of its members. The work of a local committee includes the raising of funds for the Sea Cadet Company, the assisting of the officers in carrying out their duties "in order to ensure the spirit of comradeship and complete co-ordination of effort essential to the well being of the sub-branch and company and the corps as a whole" and the endeavouring "to secure progressive and harmonious working with religious civic and educational authorities parent and citizens' associations and all recognized organizations devoted to the welfare of boy life".

Boys are enlisted in the Sea Cadet Corps when they are between the ages of ten and seventeen years. There is a prescribed uniform which petty officers and cadets must wear when required by the officer in charge. Colour patches distinguish the companies. The effective strength of a company must not be less than twenty or more than seventy-five petty officers and cadets. Camps may be held, both general and company camps. The constitution of the Navy League Sea Cadet Corps, Victoria, states the aims of the Sea Cadet Movement to be

"to keep alive the sea spirit of our race, also to assist cadets to become good citizens of Australia and the Empire by voluntarily accepting discipline and by doing their duty in the spirit of the motto, For God, Queen, the Empire and Australia".

The same document gives a catalogue of the training in twelve brief descriptions, viz.

(1)

character building;

(2)

swimming, life saving (first aid);

(3)

squad drill, marching;

(4)

mariners' compass construction and uses;

(5)

helm construction and uses;

(6)

anchors, construction and uses;

(7)

boat management, oars and sail;

(8)

knots, bends, hitches and splices;

(9)

rule of the road;

(10)

lead line and markings;

(11)

semaphore signalling;

(12)

healthy recreation.

The forming of classes is left to the company officer, with the direction that he is to form one as circumstances and the exigency of the occasion demand and that variety is necessary to hold the interest of the boys.

The Geelong branch holds midweek evening parades and Saturday afternoon parades in uniform. The cadets are inspected. Some time is given to lectures and instruction. There are sports and indoor games and sailing and rowing. The lectures and instruction cover hygiene, conduct, citizenship, something under the head "subject of general education", knots, splices, bends and hitches, navigation lights and rule of the road and hearing and visual signalling. Instruction has also been given, it is stated, in sea history, general seamanship, compass and steering, rigging, squad drill, service and leadership, first aid and life saving and physical and recreational training. There are regular sporting competitions.

The question we have to decide does not concern the value or merit of the organization, the importance of its contribution to youth welfare, sea training and loyal citizenship, or the advantage to the community of its work. It is concerned only with the claim to apply to the Sea Cadet Corps the description "public educational purposes" as that expression is used in s. 8 (5) and (8) of the Estate Duty Assessment Act. For myself I find it too difficult to give the expression a sufficiently wide meaning to comprehend the objects and operations of the Navy League Sea Cadets Corps, Victoria. It is a compound phrase and like most compound phrases its application cannot safely be ascertained by taking each separate word of which it is composed and then exploring the uses of which by itself the word is capable. No doubt the word "educational" may be used with reference to any process of instruction direction or control to which the young are submitted, however intermittently, if it has a purpose or tendency, or supposed tendency, of developing some of the faculties or of forming character. Again the word "public" is not incapable of a use which implies nothing more than that the thing to which it refers must not be "private" either in the sense of being conducted for private profit or of being established for the private advantage of a class of individuals and not for the benefit of the public at large or a section of the public. It seems to me that only by first attaching large constructions like these to the respective terms and then combining them is it possible to fit the Navy League Sea Cadet Corps, Victoria, within their meaning. But the application to the corps of the expression "public educational purposes" as a compound expression strikes one as most unnatural. The central or basal characteristics to which the exemption is directed may be seen in the schools, colleges, universities, technical schools and schools of art which are so familiar to us. It may be conceded that the application of the exemption is not restricted to such institutions. Instruction and training of the young may take many different forms and no doubt the expression "public educational purposes" will find applications to systematic methods or procedures for the inculcation of knowledge, whether scholastic or vocational, for the cultivation of the mental and physical powers and for the development of character although they may vary widely from those practised or illustrated in the examples of formal education that are more familiar to the community. But even so the Sea Cadet Corps seems remote indeed in objects organization and procedure from anything which may be supposed to fall within the denotation of the expression. Its organization and discipline are reflected from the Navy. The cadets assemble for comparatively brief periods twice a week. There is no organized course of study, no systematic preparation for a defined end. What is done is for the promotion of the welfare of youth by providing associations, interests and discipline arising from the sea and the naval and maritime services. Highly as this may be commended, it does not seem to me to be what the legislature meant by "public educational purposes".

My answer to the question in the case stated is therefore in the negative.