Lloyd v Federal Commissioner of Taxation

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

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(Judgment by: Fullagar J)

Between: Lloyd
And: Federal Commissioner of Taxation

Court:

Judges: Dixon CJ
McTiernan J
Webb J

Fullagar JKitto 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:
Fullagar J

Edward Norman Belcher died on 21st January 1947. Clause 25 of his will, referring to a valuable property in the city of Geelong, read:"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". The question for decision is whether this disposition falls within s. 8 (5) of the Estate Duty Assessment Act 1914-1947, which exempts from estate duty "so much of the estate as is devised or bequeathed for religious scientific or public educational purposes in Australia". The contention of the executors is that the gift is a gift for "public educational purposes". Section 8 (8) provides that "public educational purposes" includes "the establishment or endowment of an educational institution for the benefit of the public or a section of the public". The constitution and the objects and activities of the Navy League Sea Cadets are expounded fully in the judgment of the Chief Justice and need not be repeated.

I had to consider the validity and effect of the gift in question in In re Belcher dec'd. ^[F11] in which I held that a gift to the Navy League Sea Cadets was a gift for charitable purposes, but that a gift to "other youth welfare organizations" was a gift for purposes which included non-charitable purposes. I then had to consider the effect on the actual gift made by the will of s. 131 of the Property Law Act 1928 (Vict.). I concluded that the gift took effect as a gift of the income of the whole of the testator's interest in Belcher's Corner to the Navy League Sea Cadets.

The correctness of this decision on the effect of the statute was, of course, in no way in question on this appeal. I think I should mention, however, that my attention was not called either to an article by Mr. E. H. Coghill "Mixed Charitable and Non-Charitable Gifts", ^[F12] or to the decision of Nicholas C.J. in Eq. in Union Trustee Co  of Australia Ltd  v  Church of England Property Trust, Diocese of Sydney. ^[F13] I have not considered whether, if I had had these before me, I should have taken a different view, but I have thought that I ought to mention them, and to mention also two later articles by Mr. Coghill, ^[F14] in the latter of which he cites the recent case in New Zealand of In re Ashton (dec'd); Siddall v  Gordon. ^[F15]

In considering in In re Belcher dec'd. ^[F16] the question whether the trust for the Navy League Sea Cadets was a charitable trust I do not think that I was greatly concerned to determine whether that trust would be more correctly placed in the second or in the fourth of the "categories" in Commissioners for Special Purposes of Income Tax v  Pemsel, ^[F17] at p. 583, or partly in the one and partly in the other. It seemed to me clear enough that it was a charitable trust. But the second category has always been regarded as casting a very wide net, and I thought that the purposes of the Navy League Sea Cadets were educational in the relevant sense. I have not seen any reason to doubt the correctness of this view, nor did I understand it to be in any way challenged. It does not, however, follow from this view that the purposes of the Navy League Sea Cadets are "public educational purposes" within the meaning of s. 8 (5) of the Estate Duty Assessment Act. In considering whether the trust is charitable, we are concerned with the meaning of the word "education" as used in a judgment, and as intended merely to describe in a very broad and general way one particular kind of purpose which should be held to be within the "spirit and intendment" of the statute of Elizabeth I. In considering whether the subject matter of the trust is dutiable, we are concerned with a compound expression-"public educational purposes"-used in a statute, and intended to define the nature of certain gifts which are to be exempt from duty. The elements which make up that compound expression cannot be separated and considered in isolation from one another. There is one single question, and that question is whether the trust for the Navy League Sea Cadets, Geelong Branch is a trust for "public educational purposes". That question is not answered by saying that there is an educational element in the trust, or that the work which the trust is designed to forward has a high educational value-as indeed I think it has.

I am quite unable to agree with one view suggested by Mr. Menzies. The exemption given by the words in question is not, in my opinion, confined to educational institutions or activities which are conducted or controlled by the State. I would think it clear that the word "public" had reference primarily not to the instruments by which education is to be imparted, but to the persons to whom education is to be imparted. The primary intention is to exclude private trusts such as a trust for the education of AB or of the children of AB. The benefit of the trust must be open to "the public" or a section of "the public".

I have, however, come to the conclusion that we have not here a trust for public educational purposes within the meaning of s. 8 (5). The question, as so often happens, is very largely a matter of one's conception of the natural meaning of a word or phrase. Here the words of the statute convey immediately to my mind a definite impression of something more formal, more continuous, and more systematic, than what is provided by the Navy League Sea Cadets. Then, pursuing the matter a little further, one reflects that purposes which would certainly come primarily within those words are the purposes of a university, or an ordinary school or college for girls or boys. Such institutions are, I think, characterized by the fact that they exist for the purpose of imparting knowledge as such, whether the ultimate aim of the pupil be vocational or generally cultural or what you will. I am not able to regard the Navy League Sea Cadets as another species of the same genus. The activities of that body have an educational aspect and an educational value, and this aspect and this value are more than mere accidentals. But the imparting of knowledge as such is not its raison d'etre. A soldier has to be taught many things in the Army, but no one would say that the Army was a public educational institution in any relevant sense. A "nautical school" (of the kind familiar in England) for the training of officers for the Navy or the Merchant Navy would probably be a public educational institution, but I cannot think of the Navy League Sea Cadets as a nautical school, and the reason is, I think, that the one does, and the other does not, exist for the essential purpose of the communication of knowledge by teachers to pupils.

The question in the case stated should, in my opinion, be answered: No.