Thompson v Federal Commissioner of Taxation [1959] HCA 66; (1959) 102 CLR 315 (4 December 1959)

HIGH COURT OF AUSTRALIA

THOMPSON v. FEDERAL COMMISSIONER OF TAXATION [1959] HCA 66; (1959) 102 CLR 315

Estate Duty (Cth)

High Court of Australia

Dixon C.J.(1), McTiernan(2), Fullagar(3), Kitto(4) and Menzies(5) JJ.

CATCHWORDS

Estate Duty (Cth) - Assessment - Exemption - Estate bequeathed for "public educational purposes" in Australia - Bequest to masonic schools - Whether "public" - Estate Duty Assessment Act 1914-1947 (Cth) (No. 22 of 1914 - No. 16 of 1947), s. 8 (5), (8).

HEARING

Sydney, 1959, August 25, 26; December 4. 4:12:1959

CASE STATED.

DECISION

December 4.

The following written judgments were delivered:-

DIXON C.J. This case stated raises a question whether a claim under s. 8(5) founded. The claim is for the exemption of a share of residue bequeathed to certain masonic schools by the will of a testatrix who died on 3rd August 1948. By the fifth clause of her will she gave devised and bequeathed the residue of her real and personal property to her trustees upon trust, after discharging (to state it briefly) all liabilities of her estate, to divide the net residue equally among certain named institutions, fourteen of them in all. According to the valuation of the estate for duty that would mean that the share of each institution would amount to about 5,000 pounds. Among the institutions named in the list contained in the residuary devise and bequest is The William Thompson Masonic Schools, Baulkham Hills. (at p318)

2. Sub-section (5) of s. 8 of the Act provides that estate duty shall not be assessed or payable upon so much of the estate as is devised or bequeathed or passes by gift inter vivos or settlement for religious, scientific, or public educational purposes in Australia or to a public hospital or public benevolent institution in Australia or as or to a fund established and maintained for the purpose of providing money for use for such institutions or for the relief of persons in necessitous circumstances in Australia. Sub-section (8) of s. 8 purports to amplify the application of the expression "public educational purposes" in the Act. At one time the expression occurred in two provisions of the Act, in s. 35 as well as in s. 8(5), but now it has lost its place in s. 35 and seems only to occur in s. 8(5). Sub-section (8) provides that in the Act "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 executors of the will claim that the share of net residue payable to The William Thompson Masonic Schools forms part of the estate devised or bequeathed for "public educational purposes" within the meaning of sub-s. (5) with or without the help of sub-s. (8) of s. 8. The question before us is whether this claim is correct. (at p319)

3. It appears that in 1922 the United Grand Lodge of New South Wales of Ancient Free and Accepted Masons founded the William Thompson Masonic Schools and Hostels, which are commonly referred to as the William Thompson Masonic Schools, Baulkham Hills. They are administered under the control of a council appointed by the United Grand Lodge. Separate accounts are kept in respect of such schools and hostels. The rules of the Grand Lodge in operation at the time of the death of the testatrix provided that the William Thompson Masonic Schools and Hostels were for the free education and maintenance of the children of deceased brethren who at the time of death were members of a lodge under the jurisdiction of the Grand Lodge, the children of brethren who whilst such members were prevented by permanent incapacity from supporting their children, and children, admitted by the council in special circumstances, of deceased brethren who had been, but at the time of death were not, members of a lodge under the jurisdiction of the Grand Lodge. The children admitted must, in the case of boys, be between the age of five and twelve years and in the case of girls five and fourteen years. Boys after doing their full primary course and girls after attaining the intermediate certificate standard attended the local public school or the nearest high school or technical school as the case might be, to continue and complete their education. But while doing so they were maintained at the William Thompson Schools and Hostels, which provided shelter, food, clothing, medical and dental attention for the children and supplied them with text books, note books and the like, as well as sporting accessories and pocket money. (at p319)

4. In 1948 when the testatrix died there were about one hundred and fifty children at the William Thompson Masonic Schools and Hostels. Much turns in this case, needless to say, upon the fact that the schools and hostels are restricted to the children of freemasons and for that reason the rules governing admission to the craft in New South Wales are annexed to the case stated. For the purpose of the question raised it is enough to say that a candidate for membership must be nominated by two master masons, and his qualifications and moral and general character are inquired into by a committee and his admission is determined by a ballot of the lodge. To be qualified he must be in reputable circumstances and he must have resided in New South Wales for twelve months and be of full age. The rule as to residence is not absolute: exceptions may be made by dispensation of the Grand Master. (at p320)

5. It will be seen from the foregoing account of the case that it may not be entirely clear that the hostels are used for educational purposes in so far as they house senior children who go outside to public schools, high schools or technical colleges. But no point was made of this on the part of the Commissioner. (at p320)

6. The fact that sub-s. (8) refers only to the establishment or endowment of an educational institution makes it a question whether the provision applies to the gift, in this case, to the "schools," a gift consisting in effect of a pecuniary legacy which might be taken to general revenue or applied in any manner the council of the schools might think fit. So far as the executors seek to rely upon sub-s. (8) as directly applicable it seems necessary for them to make out that the bequest amounts to an "endowment". But for the Commissioner it was not made a ground for resisting the claim to exemption from duty. Perhaps it does not matter. For it is difficult to suppose that the expression in sub-s. (5) "devised or bequeathed . . . for public educational purposes" would not cover all that is included in sub-s. (8) in any case. One may suppose too that the expression "section of the public" in sub-s. (8) is used in the same sense as the words are used, as they not infrequently are, in the law of charitable trusts and that the words "public educational purposes" in sub-s. (5) would receive an interpretation as wide as they properly possess in that head of equity. But it seems necessary to say that it is very difficult to regard the trust in the present case as amounting to an "endowment". "Endowment" no doubt is not an inflexible word, but prima facie it connotes some provision of an enduring character, the income or other benefit of which would contribute to the support of the institution or object endowed. In Edwards v. Hall(1855) 6 De G M & G 74 Lord Cranworth L.C. was distinguishing between acquiring land, or land and buildings, for a charity and endowing it. In doing so he said: "By the endowment of a school an hospital or a chapel, is commonly understood, not the building or purchasing a site for a school an hospital or a chapel, but the providing of a fixed revenue for the support of those institutions." (1855) 6 De GM & G, at p 87(43 ER, at p 1163) This accords with what Higgins J. said in Fielding v. Houison [1908] HCA 81; (1908) 7 CLR 393, at p 456, namely that the word "endow" connotes permanency of provision. In sub-s. (8) the context supports the view that endowment refers to a provision possessing some degree of permanence or enduring for some future time; for in the sub-section "endowment" is the alternative to the "establishment" of an educational institution. (at p321)

7. The claim to exemption from estate duty turns therefore upon the words in sub-s. (5) "so much of the estate as is devised or bequeathed for public educational purposes". In the classification of charitable trusts which the law will enforce the category of educational purposes has been a little strained by the inclusion of unexpected pursuits as subjects of instruction or encouragement. Cf. In re Dupree's Deed of Trusts; Daley v. Lloyds Bank (1945) Ch 16 and cf per Viscount Simonds in Inland Revenue Commissioners v. Baddeley [1955] UKHL 1; (1955) AC 572, at p 585 But putting aside any marginal questions about the field of education (cf. Lloyd v. Commissioner of Taxation [1955] HCA 71; (1955) 93 CLR 645 and particularly per Fullagar J (1955) 93 CLR, at pp 666, 667) there is no reason to doubt that a trust which would be upheld as charitable solely on the ground that it was for the advancement of education would obtain the exemption given by s. 8(5) to devises and bequests etc. for public educational purposes, that is of course provided that the purposes were in Australia. The tendency of the trust must be to benefit the public, a condition that is satisfied if it tends to the benefit of the public at large, or a class or section of the public. The trusts may be limited in their operations by reference to locality, to conditions of people, to their disabilities, defects or misfortunes and by reference to many other attributes of men and things, yet the trusts may retain their "public" character. Not a little difficulty has been felt in defining the conception of "public", "public charity" or "public benefit" which this involves but the contrast is, of course, to private advantage. It is not the occasion to enter upon the discussion of the difficulty; it is enough to refer to some of the leading modern cases dealing with it - In re Compton; Powell v. Compton (1945) Ch 123; Williams' Trustees v Inland Revenue Commissioners [1947] UKHL 1; (1947) AC 447, per Lord Simonds (1947) AC, at pp 457-460; In re Hobourn Aero Components Ltd's Air Raid Distress Fund; Ryan v. Forrest (1946) Ch 194; Oppenheim v. Tobacco Securities Trust Co. Ltd. [1950] UKHL 2; (1951) AC 297; per Lord Simonds (1951) AC, at p 306; In re Scarisbrick; Cockshott v. Public Trustee (1951) Ch 622; In re Koettgen's Will Trusts (1954) Ch 252; In re Cox dec'd; Baker v National Trust Co Ltd (1955) AC 627; Inland Revenue Commissioners v Baddeley (1955) AC, at pp 589-593 See further Some Recent Developments in the Law of Charity by Mr. Geoffrey Cross Q.C. (1956) 72 LQR 187 In In re Scarisbrick; Cockshott v. Public Trustee (1951) Ch 622 Jenkins LJ set out five general propositions upon this subject, in relation however to a case concerned with the relief of poverty. His Lordship in doing so said: "An aggregate of individuals ascertained by reference to some personal tie (e.g., of blood or contract, such as the relations of a particular individual, the members of a particular family, the employees of a particular firm, the members of a particular association, does not amount to the public or a section thereof for the purposes of the general rule" (1951) Ch, at p 649 (The italics are mine) (at p322)

8. The words I have italicized apply to the facts here. Of course the foregoing considerations operate directly only upon the law of charity, not upon the application of s. 8(5). But they do provide something more than an analogy. For it is obvious that the statutory exemption is in pari materia. (at p322)

9. For myself I would reject the view that a trust in favour of the William Thompson Masonic Schools and Hostels is to be considered a charitable trust because it is for the advancement of education. I would reject it because such a trust would lack the "public" element, the element of public benefit or advantage that is necessary. That of course means that the share of residue goes to the authorities of the William Thompson Masonic Schools and Hostels as a gift depending upon the ordinary law governing testamentary disposition. See Re Turkington (1937) 4 All ER 501 The same reasons as govern this view lead me to the further conclusion that the gift does not amount to a devise or bequest for public educational purposes so as to be exempt from estate duty under s. 8(5). (at p322)

10. Large as is the membership of the masonic order in New South Wales it forms but a society of persons bound together as a voluntary association into which members are admitted by the election of the existing members as provided by the rules adopted contractually for the government of the society. The size and importance of the order cannot give it any different character. (at p322)

11. It is true that the benefit of the William Thompson Masonic Schools and Hostels is enjoyed by the children of deceased or incapacitated brethren, not the brethren themselves. But as was remarked by Lord Normand in refusing to regard as material a similar distinction in Oppenheim's Case (1951) AC, at p 310 there is no public relationship between parent and child. On the same point Lord Simonds said in that case: "I can make no distinction between children of employees and the employees themselves. In both cases the common quality is found in employment by particular employers." (1951) AC, at p 306 (at p323)

12. The fact is that it is part of the advantages which a member of the masonic order obtains in virtue of his membership that his child should become eligible thus to be provided with part of his education and upkeep. (at p323)

13. In In re Income Tax Acts (No. 1) [1930] VicLawRp 33; (1930) VLR 211 the Full Court of Victoria decided that a benevolent asylum to which none other than freemasons and their wives or the widows of freemasons were eligible for admission was not a "public benevolent asylum" within a Victorian enactment giving a deduction from income tax in respect of gifts to a public benevolent asylum. This decision appears to be directly in point and is in my opinion correct. I refer in particular to the following passage in the judgment of Lowe J.: "It may not be easy or even possible to enumerate in advance the differentiae of a 'section of the public' within this rule, but I illustrate along what lines a conclusion may be arrived at. Having regard to the composition of the public, certain large groups may readily be recognized, the members of which have a common calling or adhere to a particular faith or reside in a particular geographical area. There is no bar which admits some members of the public to those groups and rejects others. Any member of the public may, if he will, follow a particular calling, adhere to a particular faith, or reside within a particular area. Of the members of such a group it may be said in a real sense that they are primarily members of the public, and such a group may well constitute a section of the public. They stand on one side of the line. Each group, it is true, may consist of many individuals, but number alone is not the criterion by which to determine whether the group constitutes a section of the public. A club, a literary society, a trade union may all have numerous members, but I think that none of these could properly be called a section of the public. They stand on the other side of the line. The distinguishing feature of each of these latter bodies is that it is an association which takes power to itself to admit or exclude members of the public according to some arbitrary test which it sets up in its rules or otherwise. Each of them does oppose a bar to admission within it. It is not one of the groups into which the community as a matter of necessary organization or by convention is divided, but it is in a sense an artificial entity which exists for the benefit of its members as members thereof and not as members of the public." (1930) VLR, at pp 222, 223 (at p324)

14. In my opinion the first question in the case stated should be answered No. (at p324)

15. As I understand, it is agreed that the second question must be answered No. (at p324)

16. In that view the third does not arise. (at p324)

McTIERNAN J. The question for decision depends upon s. 8(5) of the Estate Duty Assessment Act 1914-1947. What has to be decided is whether the schools mentioned in the case stated are devoted to "public educational purposes". The Act leaves those purposes undefined. The schools in question were founded, and have always been used, for educational purposes. But no boy or girl may attend any of the schools who is not the child of a freemason. This, of course, does not prevent the purposes of the school being educational. The word "public" in the present context does not signify State ownership or support. Its meaning is "public" as distinguished from "private" educational purposes. Schools carried on for personal gain are beyond the scope of the exemption which is made in favour of "public educational purposes". These schools, in this case, do not exist for the personal gain of anybody. The purposes meant by the expression which is being considered are not only charitable purposes. The expression has not a technical meaning. It embraces purposes pertaining to "public education". In ordinary parlance "public educational purposes" includes the instruction of youth in State or private schools in accordance with a curriculum adapted to their general educational needs. The word "public" involves no discrimen excluding from the scope of the expression a school which provides such education for a particular class of boys or girls, especially if an appreciable number of them attend the school. No implication is proper which would make the criteria of the law of charity defining a section of the public a decisive test of whether the school is devoted to "public educational purposes". Sub-section (8) of s. 5 adds a particular statutory meaning to the ordinary meaning of "public educational purposes". But these words in sub-s. (5) retain their ordinary meaning. In my opinion the bequest can rest upon the exemption which is granted in respect of benefactions for "public educational purposes". It is not necessary to consider whether the bequest is strictly an endowment of the schools within the particular statutory meaning given by sub-s. (8) of s. 8. I would answer the first question "Yes". The appellants conceded that they could not contend for a favourable answer to the second question. But, as in my opinion, the first question should be answered Yes, the second and third questions do not arise. (at p325)

FULLAGAR J. I agree with the judgment of the Chief Justice. (at p325)

KITTO J. I also agree with the Chief Justice. (at p325)

MENZIES J. By her last will dated 8th July 1948, Elsie May Almond, who died on 3rd August 1948, bequeathed the net residue of her estate for division among a number of institutions so that one-fourteenth was to be paid to the William Thompson Masonic Schools, Baulkham Hills. The value of this gift was about 5,000 pounds. The Commissioner disallowed an objection that this part of the estate of the deceased was exempt from estate duty by virtue of sub-ss. (5) and (8) of s. 8 of the Estate Duty Assessment Act 1914-1947 as a bequest for public educational purposes. Upon an appeal to this Court, the Chief Justice, pursuant to s. 28 of the Estate Duty Assessment Act, stated a case for the opinion of the Full Court upon certain questions of law of which only the first is now material: it is "Was the said bequest a bequest for public educational purposes in Australia?" (at p325)

2. From the case stated, it appears that in 1922 the United Grand Lodge of New South Wales of Ancient Free and Accepted Masons founded at Baulkham Hills the William Thompson Masonic Schools and Hostels, which are commonly called the William Thompson Masonic Schools, Baulkham Hills. They are schools and hostels for boys and girls which provide free education and maintenance for (1) children of deceased freemasons who at the time of their death were members of a lodge under the jurisdiction of the Grand Lodge; (2) the children of freemasons who whilst members of such a lodge are prevented by permanent incapacity from supporting their children; and (3) after (1) and (2) and in special circumstances, the children of deceased freemasons who had been, but were not at the time of their death, members of such a lodge. Some of the boys and girls resident in the hostels attend the William Thompson Masonic Schools, and some, having finished their education at those schools to intermediate standard, attend other schools. The schools have for many years, pursuant to Pt. III of the Public Instruction (Amendment) Act 1916 (N.S.W.), been recognized by the Department of Education as qualified to prepare pupils to the standard of the intermediate certificate. In addition to these facts, the case also states that the masonic order in New South Wales in 1948 had a membership of 99,646 and, from the extract from the regulations for the government of the masonic order annexed to the case stated, it appears that the name of every candidate for membership of the masonic order is, after exhaustive scrutiny, submitted to ballot at a lodge for acceptance or rejection and that rejection follows three, and in some cases two, black balls. Notwithstanding this, I think it is correct to say that freemasonry is open to the public in the same way as is a church or a political party or a public school, notwithstanding that only a limited number want to join and not all who may want to join are admitted to membership. (at p326)

3. There is no doubt that in 1948 the William Thompson Masonic Schools (i.e. the schools and hostels together) constituted an educational institution. In support of the contention that the gift to the schools was for "public educational purposes", some reliance was placed upon sub-s. (8) of s. 8 of the Act, which is as follows:- "In this Act 'public educational purposes' includes the establishment or endowment of an educational institution for the benefit of the public or a section of the public". I am by no means satisfied that if the gift was not otherwise for "public educational purposes", it could be brought within that description by virtue of the direct operation of this sub-section because the gift was a straight-out gift to an existing institution without any requirements that the capital should be held for any particular purpose or to provide income for the institution; accordingly it might fall outside the ordinary conception of an "endowment". In Fielding v. Houison [1908] HCA 81; (1908) 7 CLR 393 Higgins J. said that the word "endow" connotes permanency of provision and he cited the following definition of "endow" from Webster's dictionary:- "To furnish with money or its equivalent, as a permanent fund for support; to make pecuniary provision for; to settle an income on" (1908) 7 CLR, at p 457 In In re Clergy Orphan Corporation (1894) 3 Ch 145, Davey L.J., speaking for Lord Herschell L.C., Lindley L.J. and himself, refused to limit the word "endow" in s. 66 of the Charitable Trusts Act 1853 to property held upon some special purpose or trust in connexion with the charity as distinguished from the general purposes of the charity and applied it to all property belonging to or held in trust for a charity, whether held upon trusts or conditions which render it lawful to apply the capital to the maintenance of the charity or upon trusts which confine the charitable application to the income. I do not find it necessary, however, to reach a final conclusion upon whether the gift here under consideration is or is not an endowment because I accept the following passage from the judgment of Kitto J. in Lloyd v. Federal Commissioner of Taxation (1955) 93 CLR 645:- "Whatever view might have been taken if s. 8(8) were not in the Act, that sub-section really necessitates separate consideration of the public element and the educational element in a purpose for which the exemption is claimed. The conclusion would seem to be that educational purposes for the benefit of the public or a section of the public are public educational purposes in the intended sense, and that the office of s. 8(8) is to make it clear that where the devise or bequest is to an institution it is not necessary to find a public element in the control of the institution itself, so long as the institution is characterized by educational purposes which are for the benefit of the public or a section of the public. The words 'public' and 'benefit' point to two essentials: first, that the education must be provided for persons selected as members of the public or a section of the public and not selected for reasons of private concern or as members of some private class; and, secondly, that the provision of the education must not be a means of obtaining private profit for those who provide it" (1955) 93 CLR, at p 670 It follows from this that a gift to an institution which provides education for the benefit of the public or a section of the public falls within s. 8(5) of the Act as a gift "for . . . public educational purposes", even if it is not to establish or endow such an institution in a strict sense. Although it may be thought that this conclusion deprives sub-s. (8) of s. 8 of very much direct significance, it recognizes that it has some significance in the construction of sub-s. (5). In any event, however, it is difficult to envisage any case that would fall within sub-s. (8) which would not fall naturally within the description of a public educational purpose. (at p327)

4. In considering what is a public educational purpose, there is one proposition established by Lloyd's Case [1955] HCA 71; (1955) 93 CLR 645 which has consequence here. It is that recognition by the State as an educational institution does not determine whether or not an institution providing education is serving a public educational purpose. The recognition which the William Thompson Masonic Schools has, and had, from the Department of Education under Pt. III of the Public Instruction Amendment Act (N.S.W.) is not, therefore, of decisive significance, and, if a gift to the William Thompson Masonic Schools is a gift for public educational purposes, it must be because of something beyond the State recognition of these schools. (at p327)

5. It was argued in the first place that any institution which provides free education for fatherless children or children whose fathers are permanently incapacitated as regards supporting them, notwithstanding that for the children to be eligible the fathers must have belonged, or belong, to a particular group in the community, is an institution which provides education for the benefit of the public generally because it provides education at no cost to the public for those who are likely to need public assistance. I regard such a benefit as altogether too remote and think that the education provided by an institution must be for the benefit of the public or a section of the public if a gift to that institution is to fall within the description of a gift for public educational purposes. (at p328)

6. Are, then, the William Thompson Masonic Schools such an institution? The education there provided, although free (so the schools are clearly not run for profit), cannot be said to be for the benefit of the public generally because the doors are not wide open; they admit only the children of freemasons. Are, then, the children of freemasons a section of the public? Upon this question, authority was cited to us tending to support a negative answer. The case most directly in point is In re Income Tax Acts (No. 1) [1930] VicLawRp 33; (1930) VLR 211, where the Full Court of the Supreme Court of Victoria decided that a benevolent asylum to which none other than freemasons and their wives or the widows of freemasons were eligible for admission, was not a public benevolent asylum for the purposes of s. 29 of the Income Tax Act 1915 (Vict.). Macfarlan J. at the end of his discussion of the meaning of "a section of the public", said:-

"What is clear is that, generally speaking, if admission to membership of a body or inclusion in a class depends on the consent of the other members or of some of the members (e.g., a committee) of the body or class it is not 'a section of the public' in the relevant sense of the term: and I prefer to express it in that negative form." (1930) VLR, at p 217 Lowe J. considered that an association "which takes power to itself to admit or exclude members of the public according to some arbitrary test which it sets up in its rules or otherwise" (1930) VLR, at p 223 is not a section of the public. It is to be observed, however, that in the course of his judgment his Honour said:- "Having regard to the composition of the public, certain large groups may readily be recognized, the members of which have a common calling or adhere to a particular faith or reside in a particular geographical area. There is no bar which admits some members of the public to those groups and rejects others. Any member of the public may, if he will, follow a particular calling, adhere to a particular faith, or reside within a particular area. Of the members of such a group it may be said in a real sense that they are primarily members of the public, and such a group may well constitute a section of the public. They stand on one side of the line. Each group, it is true, may consist of many individuals, but number alone is not the criterion by which to determine whether the group constitutes a section of the public. A club, a literary society, a trade union may all have numerous members, but I think that none of these could properly be called a section of the public. They stand on the other side of the line" (1930) VLR, at pp 222, 223 His Honour's conclusion was that the evidence did not establish that the order of masons was an association falling within the former category. (at p329)

7. Our attention was also directed to the decision of the House of Lords in Oppenheim v. Tobacco Securities Trust Co. Ltd. [1950] UKHL 2; (1951) AC 297, where it was held that a gift to provide for the education of children of employees or former employees of the British American Tobacco Co. Ltd. or any of its subsidiary or allied companies was not a charitable gift because, although the employees numbered over 110,000, the only nexus between them was employment by particular employers. So too in Inland Revenue Commissioners v. Baddeley [1955] UKHL 1; (1955) AC 572, the House of Lords decided that a trust for the social and physical training and recreation of Methodists resident in two county boroughs was not charitable because the necessary element of public benefit was lacking. Viscount Simonds went further and said that a trust "cannot qualify as a charity within the fourth class in Income Tax Commissioners v. Pemsel [1891] UKHL 1; (1891) AC 531 if the beneficiaries are a class of persons not only confined to a particular area but selected from within it by reference to a particular creed." (1955) AC, at p 592 In a dissenting judgment, Lord Reid took the opposite view and said that the members of a particular church constitute a section of the community for the purposes of the fourth head just as much as for those of the third, viz. the advancement of religion. The latest case that has a bearing on this matter is Davies v. Perpetual Trustee Co. (Ltd.) (1959) S.R. (N.S.W.) 112 in which the Privy Council decided that a gift "to the Presbyterians the descendants of those settled in the Colony hailing from or born in the North of Ireland to be held in trust for the purpose of establishing a college for the education and tuition of their youth in the standards of the Westminster Divines as taught in the Holy Scriptures", was not a charitable gift because the qualifications for eligibility for education at the proposed college made the beneficiaries nothing more than "a fluctuating body of private individuals" (1959) SR (NSW), at p 118 It is to be deduced, however, from what Lord Morton of Henryton said (1959) SR (NSW), at p 116 that if the words "the descendants of those settled in the Colony hailing from or born in the North of Ireland" could have been disregarded, so that the gift would stand as one to establish a school for the education of Presbyterian boys, the gift would have been saved. The gift failed, therefore, not because it was for the benefit of children of Presbyterians, but because the beneficiaries had to trace descent from particular persons living at a particular date, so that the decision was but an application of Lord Simonds' observation in Oppenheim's Case (1951) AC 297:-

"A group of persons may be numerous but, if the nexus between them is their personal relationship to a single propositus or to several propositi, they are neither the community nor a section of the community for charitable purposes." (1951) AC, at p 306 (at p330)

8. The decision in Baddeley's Case [1955] UKHL 1; (1955) AC 572, however, is far from decisive in the present case, concerned as it was with whether a particular gift fell within the fourth class in Pemsel's Case [1891] UKHL 1; (1891) AC 531 (Inland Revenue Commissioners v Baddeley [1955] UKHL 1; (1955) AC 572, per Viscount Simonds (1955) AC, at pp 590, 591, per Lord Reid (1955) AC, at p 606, per Lord Somervell of Harrow (1955) AC, at p 615, while the cases of Oppenheim [1950] UKHL 2; (1951) AC 297 and Davies (1959) SR (NSW) 112 were both cases where the beneficiaries indicated could be regarded as a group by reason of their relationship to particular propositi. Further, these were all cases of "charitable purposes", whereas here we are concerned to construe a particular statutory provision. (at p330)

9. In this connexion, it is worth noticing that in Trustees of Royal Masonic Institution for Boys v. Parkes (1912) 3 KB 212 it was held that a masonic school for the sons of freemasons was a public institution for the purposes of the Factory and Workshop Act 1907, and Darling J., a propos of the fact that the school was almost entirely maintained by the subscriptions of freemasons, said:- "To be a Freemason does not appear to me to be an entirely private matter; it is a very large body from which subscriptions are collected even if nothing is taken from people who are not Freemasons. I cannot think that, so far as this is an appeal to Freemasons, it is anything but a public appeal to a limited class." (1912) 3 KB, at p 217 The Divisional Court, in reaching the conclusion that the school was a public institution, followed an earlier decision upon the same Act, viz. Seal v. Trustees of the British Orphan Asylum (1911) 104 LT 424 where Hamilton J. quoted with approval from A.L. Smith J. in Hall v. Derby Sanitary Authority (1885) 16 QBD 163, at p 173 a passage to the effect that a public charity means a charity for public purposes as distinguished from private. In the case last cited, as was pointed out by the Court of Appeal in Shaw v. Halifax Corporation (1915) 2 KB 170 great stress was laid upon extensiveness as the mark of a public, as distinct from a private, charity. When in Dilworth v. Commissioner of Stamps (1899) AC 99 the Privy Council had to decide whether a school called the Ulster Institute was a "public" institution, attention was directed not to the scholar to be educated but the terms in which and the circumstances in which education is given, but, adverting to the scholars, Lord Watson said:- "All schools, whether public or private in the strictest sense of the words, which have a reasonably large attendance of scholars have one feature in common. They give instruction to the public, or, in other words, to the children of different sections of the public" (1899) AC, at p 108 Dilworth's Case (1899) AC 99 was distinguished by Rowlatt J. in Ackworth School v. Betts (1915) 84 LJKB 2112 where it was decided that a school established by the Society of Friends for the education of children who were members of the Society and were not in affluence was not a "public school" within the Income Tax Act for exemption purposes. His Lordship, after examining the constitution of the school, said:- ". . . nor do I think it is meant to follow the lines of an ordinary public school." (1915) 84 LJKB, at p 2117 In 1920 Rowlatt J. in Trustees of the Cardinal Vaughan Memorial School v. Ryall (1920) 7 TC 611 decided upon the same Act that notwithstanding that the school there in question was denominational, it was nevertheless a public school and said:- "I think if you have got a school for the benefit of a denomination, providing it was not something absolutely, I was going to say, ridiculous, I do not speak offensively, but some very small denomination which did not really number any large number of adherents among the human race, any denomination which appealed to mankind, I should have thought that that would be a public school." (1920) 7 TC, at p 619 In explanation of the Quaker Case, his Lordship said:- ". . . I did not intend to decide that Case because it was denominational in the sense that it was for Quakers, but what I did think was present there was - and the whole point was - that these people did not want this school to be identified with even the Quakers throughout the community; they wanted to keep it, I thought - I may have been wrong in my judgment on the fact, but that is the reason I came to the conclusion - essentially private, essentially domestic - 'peculiar' I said; 'particular' the Solicitor-General says, but essentially private, essentially apart from the current national life, that is why I decided as I did in that Case" (1920) 7 TC, at p 620 (at p332)

10. The references I have made to decided cases show the different ways in which similar problems have been approached and indicate that the question here cannot be resolved by reference to cases decided upon other Acts or in relation to the legal conception of what is charitable. The authorities are of value only in a general way in considering the particular question that arises here upon the statute. (at p332)

11. That question, strictly speaking, is not whether freemasons constitute a section of the public, but whether the children of freemasons do, although it must be observed that in the Oppenheim Case [1950] UKHL 2; (1951) AC 297, Lord Simonds did say (1951) AC, at p 306 that he could see no distinction between the children of employees of the British American Tobacco Co. Ltd. and the employees themselves because the common quality distinguishing the group must be found in employment by particular employers. Furthermore, although it is not every child of a freemason who can attend the William Thompson Masonic Schools, I am satisfied that if the children of freemasons do constitute a section of the public, then the purposes of the schools can properly be said to be to provide education for that section of the public. Any child of a freemason who is of an age for the education which the schools provide could become eligible for education there. The critical question is, therefore, whether the children of freemasons constitute a section of the public so that provision for their education should be regarded as a public rather than a private purpose. (at p332)

12. It is at this point that I return to the passage already quoted in the judgment of Kitto J. in Lloyd's Case (1955) 93 CLR, at p 670 and in accordance therewith I pose the question whether children of freemasons are members of the public or are a private group. The conclusion I have reached is that they are the former, notwithstanding that their fathers' admission as freemasons did depend, inter alia, upon the consent of the other members of the order. In reaching this conclusion, I am not ready to accept the view that because admission to a group in the community depends upon the consent of existing members, the group cannot be regarded as a section of the public. I think it would be contrary to common usage to deny to members of a church or to members of a political party or to trade unionists, the description of a section of the public, although in each case membership may be said to depend upon the consent of existing members. This view is inconsistent with that taken by Macfarlan J. in In re Income Tax Acts (No. 1) [1930] VicLawRp 33; (1930) V.L.R. 211 although not necessarily, I think, with that taken by Lowe J. (at p333)

13. In Lloyd's Case [1955] HCA 71; (1955) 93 CLR 645 Kitto J. said the purposes of the Geelong Branch of the Sea Cadet Corps were purposes for the benefit of a section of the public because they had to do with the development of boys "drawn from the public generally and not selected by reference to any restrictive qualification" (1955) 93 CLR, at p 675 The lastmentioned element was, no doubt, a consideration in favour of deciding that a body to which entrance was by enlistment was a section of the public, but, in my opinion, what his Honour said cannot be extended, reversed and regarded as a denial that those who belong to a group by virtue of what might be called a restrictive qualification can form a section of the public. The very phrase "section of the public" connotes both inclusion and exclusion; some of the public are within the section, the rest are outside it because they do not possess a particular qualification. I would accord the description of a section of the public to groups such as doctors and university undergraduates, notwithstanding that entrance to the group depends upon what might be described as a restrictive qualification. (at p333)

14. Looking at the matter positively, it appears to me that the children of freemasons do constitute a section of the public because of their number, i.e. the extensiveness of the group, and because, although freemasons do belong to a restricted association, it would not be in accordance with common understanding to regard them as belonging to a private association or their children so described as belonging to a private group, and in particular it would be unreal to treat the children of freemasons as a group who are bound together by their personal relationship to particular persons, just as it would so to regard children of doctors or of Presbyterians or of trade unionists. (at p333)

15. It is for these reasons that I think that the bequest was for public educational purposes and the question should be answered Yes. (at p333)

ORDER

Question (1) in the case stated answered: No. Question (2) in the case stated answered: No. Question (3) does not arise. The appellant taxpayers to pay the Commissioner's costs of the case stated.

Authorities Cited2

Referred to (2)