Lloyd v Federal Commissioner of Taxation

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

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(Judgment by: Webb J)

Between: Lloyd
And: Federal Commissioner of Taxation

Court:

Judges: Dixon CJ
McTiernan J

Webb JFullagar 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:
Webb J

Case stated by Dixon C.J. pursuant to s. 28 of the Estate Duty Assessment Act 1914-1947. The late Edward Norman Belcher by his will directed, inter alia:

"Regarding my quarter share in Belcher's corner I direct my trustee to hold in trust the income therefrom for the Navy League Sea Cadets Geelong Branch ...".

The question for determination is whether this provision was for "public educational purposes in Australia" within the meaning of s. 8 (5) of the Estate Duty Assessment Act. By s. 8 (8) "public educational purposes" includes the endowment of "an educational institution for the benefit of the public or a section of the public".

It is necessary to set out at some length the origin and activities of the Navy League Sea Cadets, Geelong Branch. It is a branch of the Navy League Sea Cadets Corps, Victoria, and was formed at a public meeting at Geelong convened under the official patronage of the Executive Committee of the Navy League, Victoria Branch. The affairs and activities of the Geelong Branch are controlled by a committee elected annually at a general meeting of those entitled to vote, being any persons who have become members of the branch by signing a declaration that they recognize the authority of the Navy League Executive Committee and who pay an annual subscription of one shilling.

Since its formation the Geelong Branch has been engaged continuously in carrying out the aims and training set forth in a document entitled "Organization and Regulations of the Navy League Victorian Branch governing the Navy League Sea Cadets of Victoria". The activities of the branch include the formation of a company of cadets somewhat along the lines of naval cadets. The age of entry is between ten and seventeen years. Parades in uniform take place twice weekly and there are lectures to cadets on hygiene, conduct, citizenship and subjects of general education, instruction in knots and splices, bends and hitches, rule of the road as applying to navigation, navigation lights and signalling. There is also some study of British naval traditions. Sailing, rowing, games and sports are also part of the curriculum. Instruction has been given in sea history, general seamanship, compass and steering, squad drill, rigging, service and leadership, first aid and life saving, physical and recreational training. The money required for conducting the branch has been obtained mainly from donations and subscriptions from the public, the proceeds of functions and street appeals. The Navy League Sea Cadet Corps of Victoria is an unincorporated body established and conducted under the auspices of another unincorporated organization known as "The Navy League Victoria Branch". The latter body is associated with an organization known as "The Navy League" which has its head office in London, England. As to the constitution and activities of the English body we have no particulars. However, the aims and organization of "The Navy League Sea Cadets Corps Victoria" are set forth in the above document, which, in addition to the matters already mentioned, refers to the Navy League Sea Cadets Corps Victoria as a "Movement" and states that the aims of the movement are "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, the Queen, the Empire, and Australia' ". It provides for training under the following headings:

(1)

character building,

(2)

swimming, life saving (first aid),

(3)

squad drill, marching,

(4)

marine compass construction and uses,

(5)

helm construction and uses,

(6)

anchor, construction and uses,

(7)

boat management, oars and drill,

(8)

knots, bends, hitches and splices,

(9)

rule of the road,

(10)

lead line and marking,

(11)

semaphore signalling, and

(12)

healthy recreation.

It also provides that the "Navy League Executive Committee" shall control the "Movement" and that their decision shall be binding on all officers and ratings. I take this to mean the Navy League Victoria Branch Executive Committee. It further provides that if a donor expresses a wish that his gift shall be used for a specific purpose that wish shall be respected.

The constitution of "The Navy League Victoria Branch" states that the objects and purposes of the league are:

(1)

to secure as the primary object of national policy the complete naval protection of British subjects and British commerce all the world over;

(2)

to urge this policy on all citizens of the British Empire and upon the government of the day;

(3)

to spread information showing the vital importance to the British Empire of maintaining such naval strength as will ensure the permanent safety of our trade and Empire, and our food supply, and secure British prestige on every sea and in every part of the world;

(4)

to teach the history, spirit and traditions of the sea services in all schools and elsewhere by such means as may be deemed most expedient;

(5)

to maintain and develop the Sea Cadet Corps of Victoria;

(6)

to collect, receive and hold funds and property by voluntary collection, subscription, gifts and legacies for the objectives of the league or such of them as the donors may direct.

All Australian citizens signifying their approval of the objects of the league shall be eligible to become members. Members' subscriptions range from one shilling to one guinea.

The general direction of the policy and administration of the league is vested in the executive committee which, among other things, may refuse to accept any person as a member without giving a reason.

I think the constitution and activities of the Geelong branch as revealed by the case and its annexures sufficiently show that it is established for "public educational purposes", as it is "an educational institution for the benefit of the public or of a section of the public" and is confined to such purposes by appropriate documents: Royal Choral Society v  Commissioners of Inland Revenue, ^[F2] per Lord Greene M.R. ^[F3] A liberal construction should be given to words of exception from tax: Armytage v  Wilkinson; ^[F4] Burt v  Commissioner of Taxation, ^[F5] per Higgins J. ^[F6] Now from the documents referred to I conclude that it is an institution: see Minister of National Revenue v  Trusts & Guarantee Co, ^[F7] at pp. 149, 150; Royal Choral Society's Case. ^[F8] It is also, I think, an educational institution in as much as its main purpose is systematically to impart useful knowledge of a technical nature to youths with a view to such knowledge being employed eventually to the public advantage as well as their own. It is not necessary that the instruction imparted should be of a general educational nature: Royal Choral Society's Case. ^[F9] The recreation provided for is merely incidental to the main purpose. Lastly it is clearly for the benefit of a section of the public. However, but for the extension of the definition of "public educational purposes in Australia" by s. 8 (8) of the Act, I would have had some difficulty in holding that the Geelong branch is constituted or conducted for such purposes. No doubt there is public control of the branch, of the "Movement" and of the parent body that brought it into existence in the sense that public control was exercised in Maughan v  Federal Commissioner of Taxation; ^[F10] that is to say because their constitutions provide for those members of the public who are sufficiently interested in the work of these associations or societies to subscribe to their funds and thereby become annual members and as such eligible to vote at the elections of the controlling bodies. But the compound expression "public educational purposes in Australia", according to the common understanding of that expression as revealed more particularly in the public statutes, seems to me to imply some State control, exercised either directly or indirectly, and there is no such control of the Geelong branch, or of the "Movement" or of the parent body through which it came into existence, or of their activities.

I would answer the question in the case: Yes.