Registrar of the Accident Compensation Tribunal v The Commissioner of Taxation of the Commonwealth of Australia

[1993] HCATrans 4

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IN THE HIGH COURT OF AUSTRALIA

Office of the Registry

Melbourne Nos MS0, MSl and M52 of 1992

B e t w e e n -

THE REGISTRAR OF THE ACCIDENT

COMPENSATION TRIBUNAL

Appellant

and

THE COMMISSIONER OF TAXATION OF

THE COMMONWEALTH OF AUSTRALIA

Respondent

Cause Removed pursuant to

section 40 of the Judiciary

Act 1903

MASON CJ
BRENNAN J
DEANE J

Compensation(2) 102 4/2/93

DAWSON J

TOOHEY J

GAUDRON J

McHUGH J

TRANSCRIPT OF PROCEEDINGS

AT CANBERRA ON THURSDAY, 4 FEBRUARY 1993, AT 9.48 AM

(Continued from 3/2/93)

Copyright in the High Court of Australia

MASON CJ: Yes, Mr Charles?

MR CHARLES:  If the Court pleases, we had handed up to the

Court last night some short extracts from the rules

that apply to the Accident Compensation Fund. It

seemed to us overnight that the interest the Court

had been showing in these rules might make it

desirable to make the full set of the rules

available. They are now available to the Court. I

will make short reference to the rules later,

Your Honours, but not immediately.

Your Honours, we support the judgment of the

trial judge. We submit that it is correct in its

conclusions, with two riders, the first of those

being that His Honour rejected our argument that

there was a true trust. That is at pages 81 to 83

of the appeal book in MS0. It is our submission

that there was a trust, at least for statutory

purposes, and possibly a higher trust, that is to

say a true trust.

There is a second respect, Your Honours, in

which we wish to make submissions which involve a

possible departure from His Honour's reasons, and

that is in respect to the year of derivation of

income. May we start, before going to the

statutory scheme, with a very brief reference to

the definition of "trustee" in section 6 of the

Income Tax Assessment Act and make the obvious

submission that having regard to the various ways

in which "trustee" is defined, it will have the

necessary consequence that the estate in relation

to which the trustee is trustee may not be a trust estate in the sense in which that expression would ordinarily be understood in equity.

DEANE J:  Mr Charles, Could I divert you for one moment. We

have got three appeal books or three cause removed

books and three cases. When one eventually comes

to write a judgment is there anything to be served

by dealing with the three cases, or would it

suffice to deal with one of the three leaving the

parties then to work out consent orders or whatever

it is applying that to the others?

MR CHARLES:	I think, Your Honour, that it will suffice for the parties to have answers in relation to one
appeal.
DEANE J:	Dr Spry seemed to suggest that that was so.

MR CHARLES:  Yes. The way in which the matter was

originally set up was with four separate sets

because of differences between the various

dependants, and because it was thought that there

might be some differing consequences depending upon

Compensation(2) 103 4/2/93

the differing nature of the dependants. But having

said that, Your Honours, may I scramble the answer

by saying that there are some exhibits in different

appeal books to which I wish to make reference for

purposes of one of the arguments I will make this

morning, so that I will invite the Court to go

beyond one appeal book. Subject only to that, a

decision in one appeal, I think, would satisfy

certainly the respondent.

DEANE J: Because it is not only a matter of the trouble

with the members of this Court setting out the

three sets of facts, but in terms of the person
trying to read the judgment, if it is complicated

with three sets of facts when one will do, it is

undesirable also.

MR CHARLES:  Yes. I accept everything Your Honour puts to

me. One matter to which I propose to make

reference later is the Court will have noticed that

they were assessments in two separate years. One

result of a view the Court might take as to the
time of derivation of income would be that the
correct year for assessment would have been the

previous year in relation to which the assessment

presently stands set aside or quashed by

His Honour's order.

We have not appealed against that. It is not necessary for us to appeal against that in the

sense that the amount of money involved is minimal,

it is of no lasting concern, but it is for that

reason, Your Honours, that we would hope that if

the Court were to take the view that a different

year of income, the previous year, was the correct

year, the Court would indicate so.

Your Honours, in relation to the definition of

"trustee", the two parts of the definition in

section 6 of the Tax Act upon which we rely are the

first part, that is, the person having the

administration of income "affected by express or

implied trust", and we do rely on the second part,

that is, a person "acting in any fiduciary

capacity". It may be that it could be said that

the Tribunal or Registrar has possession, control

or management of the income of a person under a

legal disability, because some of the dependants,

no doubt, are infants and others might be under

other sorts of disability, but plainly that would

not cover a large number of dependants who would be

either widows or adult children, and we do not seek

to press that, Your Honours, accordingly.

Now, Your Honours, in relation to the

statutory scheme that is before the Court for

consideration, the strange, rather oblique

Compensation(2) 104 4/2/93

construction of that scheme is, as we understand

it, the result of the determination of those

originally involved to prevent workers compensation

payments from being available to meet bankrupt

creditors, to give as complete protection as

possible, in other words, to dependants who were

receiving benefits out of the moneys awarded.

Subject to that, Your Honours, our submission

is that the scheme was intended to make the

entitlement of dependants as full as possible.	May
we take the Court to Earwood v Blackham Pty Ltd,
(1965) VR 499? It is the case to which the
Solicitor-General for South Australia took the

Court yesterday before lunch and the passage which

my friend put to the Court appeared at page 501.

There is a second passage to which we would take the Court at page 502, beginning at line 15, in

these terms, that:

It is said that this provision does no more

than confer power on the Board to determine

who falls within the class of dependants, and

to determine what amount each shall be paid.

But it fortifies the inference to be drawn

from the other provisions of the Act that have

been referred to, that it is the dependants of

a worker who are entitled to the payment in

the case of death, and it is they that are to

have the benefit of it. It is pertinent to

observe that it has been clearly established

that each eligible dependant has a separate

right to claim compensation under the Act.

Now, Your Honours, we rely in our submissions

on this aspect, both on the statutory scheme and on

the way in which that scheme has been put into

operation, by both the Workers Compensation Board

and the Tribunal and the Registrar.

A question, Your Honours, was asked yesterday

as to what happened on the death of the last
dependant.	I think it was Your Honour
Justice Gaudron.	May we take the Court, briefly,

to the extract from the rules that we handed up

yesterday. In particular, Rule 53 (5). It is in

Statutory Rules 400 at page 23, where Your Honours

will see that, if moneys are standing in the

custody of the Tribunal in relation to which a

claim has not been made for ten years, then they

are to be transferred into an unclaimed moneys fund

maintained by the Tribunal, but if at any later

time the person concerned communicates with the

Tribunal, then the Tribunal must transfer the

moneys back to the credit of that person, to be

administered in the usual manner.

Compensation(2) 105 4/2/93

Now, Your Honours, on the death of the last

dependant, the moneys, it would seem, that are then

held are paid out to the legal representatives of

that dependant and that view, Your Honours, appears

supported by the - I think it is the only document

I propose to refer to in appeal book M52, that is

the Matthas appeal book, at page 42.

If Your Honours look at the letter which is set out at page 42 from the Accident Compensation

Tribunal, at the second-last paragraph at point 6 of the page, Your Honours will see the practice

that is. followed.

Our understanding is that the Tribunal takes

that approach on the basis of what it understands

to be the consequences of the decision in Earwood v

Blackham to which we have referred the Court.

TOOHEY J:  Why does it single out only the widow,

Mr Charles, in the case of sole dependants?

MR CHARLES: That is simply a letter, Your Honour. It is

our understanding that that practice is followed in

relation to the last dependant as well by the

Tribunal. We will no doubt be corrected if we are

wrong, but that is our understanding of what the

practice is. And may we add, Your Honours, in

relation to situations where the amount that is

held becomes a very small amount, that is provided

for in the Workers Compensation Act by

section 35(4), and in the Accident Compensation Act

by section 131(4).

Looking at the Workers Compensation Act, if

the amount administered by the Tribunal on behalf

of any person becomes less than an amount of money

determined in any particular case by the Tribunal,

the amount shall be paid out to that person. So that if, for example, Your Honours, the Tribunal

determines that an amount of 500 is to be the low

minimum, then once the amount held descends below that figure, the balance is paid out accordingly.

Your Honours, may I now take the Court briefly

to the appeal book in Payne and Abela, which is

M50, to invite the Court's attention to some of the

exhibits. If the Court would go first to page 30,

it will be seen that the award in that matter,

which was made in June 1979, takes the form of, in

relation to a claim for compensation, that a sum is

awarded to be paid into the custody of the board.

That sum is then held and Your Honours will see

that so far as page 33 is concerned, the Workers

Compensation Board, at least, thought that a trust

was involved, having regard to the heading at the

top of the page.

Compensation(2) 106 4/2/93

BRENNAN J: Against whom is the award made?

MR CHARLES:  The award, Your Honour - - -

BRENNAN J: Perhaps, more particularly, having regard to the

provisions of section 74 of the 1987 Act, is the

making of an award no more than the transference of

a portion of a single fund from one purpose to

another?

MR CHARLES: That would seem to be so, Your Honour, taken

with the fact that in this case there was an award

made under the Workers Compensation Act and the

amount which was then awarded and being held by the

Workers Compensation Board had to be transferred

into the Accident Compensation Fund. If our

argument is right, our submission would be that

there was a pre-existing trust at the time of the

making of an award and that pre-existing trust then
flowed into the fund held by the Workers

Compensation Board.

His Honour said in his reasons for judgment

that there seemed to be stronger arguments for

saying that there was a true trust in relation to

moneys held at that time, and we would submit that

it was continued in relation to the Accident

Compensation Fund.

BRENNAN J:  Do MSl and M52 relate to a similar situation?

MR CHARLES:  Yes, Your Honour. If I can take the Court very

quickly through the relevant exhibits, the Court

will also see that at page 34 of MSO - again it can

just be seen that there is a beneficiaries trust

ledger account. At page 36 the Workers

Compensation Board's yearly statement of accounts

includes a trust account system, and again at

page 37. While unfortunately one is not able to

read in relation to the Tribunal any wording - and

there certainly is some wording at the top of

page 39 which is simply illegible - at page 41 the

Court will see that in relation to the Accident

Compensation Tribunal, the document at the very top line on the page is said to be an application for

advance from the trust fund.

McHUGH J: What book are you reading from, Mr Charles?

MR CHARLES:  I am so sorry, Your Honour; I am reading from

MSO which is the Payne and Abela - and

unfortunately the difference is critical, because

there are slight pagination differences between the

books.

At page 41, the top line of the page shows

"Application for Advance from Trust Fund". At

Compensation(2) 107 4/2/93

page 44 one sees the receipt initially given in

relation to the Abela matter, "Money Paid into the

Custody of the Board", and the Court has already
had its attention drawn to page 55, the "Annual

Interest Advice" which shows the "amount

administered for those persons listed below".

Now, Your Honours, the relevant sections have

been looked at previously. May I invite the Court

to look at sections 130, 131 and 132 which are in

M50 set out in His Honour's reasons at pages 78 to

80, and the passages, Your Honours, which we rely on as showing what we submit is the extent of the

entitlement of the dependants with the inference

which, we submit, is that the board or the Tribunal
were not entitled to have more than custody, not

expected to have any beneficial interest in the

moneys held by it. The reference, in

section 130(1), to the fact that the Tribunal is to

administer the payments; that payments are said in

130(l)(a) and (b) to be payments to persons; in

section 131(1) to the fact that the amounts of

money are to be "administered by the Tribunal" and

to:

be invested, applied or otherwise dealt

with ..... for the benefit of the person

entitled to that money.

Again, in subsection (3):

In administering any amount of money under

this Act.

In section 131(4), that the amounts -

of money administered ..... on behalf of any

person -

and likewise in section 132(1), and then in

section 132(2)(a), that the moneys are to be

applied in the manner -

the Tribunal considers will for the time being

be most beneficial to the dependants.

Now, we submit that when section 130 provides

that moneys are to be paid to the Registrar, or the

Tribunal, in section 130(1), it is surely not in

circumstances intending that those moneys are to be

held for the Crown. To those references,

Your Honour, we add the references which can only be found in the additional materials supplied by

Dr Spry yesterday morning and, in particular,

Your Honours, the references in section 77(2)(c),

and if I may simply read it, Your Honours, that:

Compensation(2) 108 4/2/93

(2) The Registrar shall do all things

necessary to -

(c) ensure that adequate control is maintained

over assets owned by or in the custody of the
Tribunal.

Then, Your Honours, in section 92 there is the reference described as ""Division 2 -

BenefitsCompensation for death of worker", and

section 92(1) provides that:

If a worker's death results from or is

materially contributed to by an injury which

entitles the worker's dependants to

compensation, the compensation shall be a sum determined by the Tribunal in accordance with

this section.

We observe, Your Honours, without taking the

Court to it, because unfortunately section 97(5)

does not seem to be contained in the materials

supplied, that the compensation paid is inalienable

under that Act.

Then, Your Honours, may we point to the fact

that the manner in which the fund deals with these

sums, together with other sums, is covered in the

case stated, in particular pages 23 to 25, which

sets out the process by which a pro rata

distribution is made in particular at page 24 and

25. At one point, a question was asked of the

Solicitor-General for South Australia yesterday as

to whether any amount had been set aside for any

particular person.

May I simply draw the Court's attention in

this matter, which is M50, to a reference on

page 21, in paragraph 3, that in that case one

amount of $16,000 appears at line 15 to have been

set aside specifically for Lisa Joan Abela and the

remainder of the sum awarded in respect of that

worker was held for other persons. I do not know

if it is relevant to the question that was asked,
but it may be responsive to that question.

Then, Your Honours, in relation to how the Tribunal deals with moneys, I invite the Court to

look at page 46 of MSO. The Court will see that

the balance sheet of the Accident Compensation investments, at point 7 of the page, are shown as

$114,878,200. The Court will notice that, of the

assets held by the Tribunal, that would indicate

that something like nearly 99 per cent of the

assets held are beneficiary fund investments. The

Court will see that cash at bank and on hand for

Compensation(2) 109 4/2/93

the Tribunal, at point 4 of the page, are something

like $1,127,000 and furniture, equipment, library,

et cetera, another $1,000,000 or thereabouts.

The statement of income and expenditure of the

Tribunal for the relevant year is the next page, that is 47, and the Court will see that the amount

said to be available for distribution to

beneficiaries is separately dealt with at

$15,848,100 and the Tribunal's expenses leading to

a net deficit of $636,200 are in the left-hand

column.

That figure, the loss, it will be seen on the

preceding page, 46, appears under the heading

"Tribunal" second mentioned in the left-hand

column. So that there is a clear separation

between the costs and expenses of the Tribunal and

its operating expenses and the amounts held for

beneficiaries. Your Honours, I draw attention for

completeness to the statement of sources and

application of funds for the Tribunal appearing on

page 48.

Your Honours, in those circumstances, it is

our submission that there is at least a trust for

statutory purposes which is created under this

legislation, that the moneys so held are held for
the benefit of dependants of deceased workers in

pursuance of the Accident Compensation Act 1985 and

its predecessor, and in particular we would draw

attention to sections 73 and 74 set out in

His Honour's reasons for judgment at pages 83 to

86.

McHUGH J:  Mr Charles, what is the difference between a

trust for statutory purposes and holding money for

statutory purposes?

MR CHARLES: If in that situation, Your Honour, someone

holds money for statutory purposes, someone

presumably by definition of the question is not a

trustee but holds and is accountable to hold

according to those statutory purposes. In this

situation where there is a trust, we would submit

that the difference is that the person in whom

legal title is vested holds simply as trustee and
with no-other claim to any sort of beneficial

entitlement to it or to use it in that way and in a

situation, Your Honour, where those who are within

the statutory purposes for which the trust is
created are entitled to come along to court using
the remedies which beneficiaries are entitled to

rely on, for example by way of injunction, for

example possibly by way of accounts, matters of

that kind.

Compensation(2) 110 4/2/93

McHUGH J: But are these rights of the beneficiaries

equitable rights or statutory rights?

MR CHARLES:  Both, Your Honour. And it is our submission

that the existence of section 131(2) simply takes

away obligations from the trustees without

necessarily also taking away rights from the

beneficiaries.

Now, we do put it, Your Honour, that there is

sufficient in the statutory scheme the Court has now looked at, to see that there is an intention

that the dependants of deceased workers should be

the beneficiaries properly so called, and,

therefore, that there is a true trust on their

behalf. In our submission, the fact that there is
a group of beneficiaries in each case does not

prevent there being a trust fund in relation to the

amounts which are awarded in relation to each

claim, the trust is no doubt discretionary because

there is a discretion in the trustee as to how much he or she will make available on application by the

beneficiary, and it would be our submission that it

is no answer to that suggestion that there is a

mixing of funds, statutorily permitted no doubt,

with the amounts held on behalf of other claimants.

McHUGH J: Let me just ask you: take the case of funds being

held, say, by the Department of Social Security for

social security claims, are they trust moneys, is

this some sort of a trust for statutory purposes of

which the claimants have got equitable rights?

MR CHARLES:  Your Honour, I have not got that scheme in

front of me.

McHUGH J: Neither have I, but just as a general conception.

MR CHARLES: And there may be all sorts of things that would

make that different, Your Honour. What we say is

that in reliance on the clear expression of

entitlement, the clear expressions which, in our	submission, make it plain that the board and the
Tribunal, later the Registrar in this case, are not
to have any sort of beneficial right to these
moneys but are to have custody of them. It is
expressions of that kind which, in our submission, support the view that here is a true trust rather
than a trust for statutory purposes.

McHUGH J: Yes. I must say, more and more I think about it

the more I come to the conclusion the use of the

word "trust for statutory purposes" in Fouche and

repeated in Harmer was an unfortunate use of

language.

Compensation(2) 111 4/2/93

MR CHARLES:  Your Honour, in our submission one is able to

go beyond a trust for statutory purposes to a true

trust in these circumstances which would avoid the

difficulties, but if I can come back to Harmer's

case shortly.

MCHUGH J: Yes.

BRENNAN J:  Can I just add to you the difficulties which

Justice McHugh has and which I share. If there is

such a thing as a trust for statutory purposes one

imagines that there must be equitable remedies in

the beneficiaries which are different from the

remedies which might be available in public law.

How does one reconcile the two sets of remedies,

and is it sufficient to establish such a trust to

show simply that the repository of the power and

the money is not the beneficial owner, or is not

intended to benefit from the money which is reposed

in that repository?

MR CHARLES:  To answer the first part of Your Honour's

question, some of the remedies of the beneficiaries

necessarily correlate to the obligations of the
trustees. Section 131(2) has closed down that

avenue to the beneficiaries in this case, whether

it be true trust or statutory purpose trust. So

that the beneficiary will in any event be limited

in the rights it is able to bring in relation to a

claimed breach of trust.

One matter which we would submit remains open

to the beneficiary, Your Honour, would be an action

for accounts. That would not necessarily be

available to someone claiming a failure to abide by

the words of a statute. It would not necessarily,

in our submission, involve any inconsistency with a

statute, to say that the beneficiary, as

beneficiary, was entitled to bring any such action.

But plainly, the beneficiary is barred from

bringing any action relating to the specific

obligations of "trustee", which have been ruled out

by 131(2).

BRENNAN J:  Is it your proposition that once it was

established that there is a fund in the hands of a

repository, and a no class of beneficiaries of that

fund, even though the fund be established pursuant

to statute, there is a trust of that fund for the

beneficiaries modified as necessary, but only to

the extent necessary by the statute?

MR CHARLES:  Yes. Your Honour, it will not necessarily be

so in every case. There may be cases where a

statute sets up a scheme which would not involve

the creation of a trust but where moneys have to be

used for certain purposes. In our submission, what

Compensation(2) 112 4/2/93

makes this scheme different is the fact that, we

would submit, it is clear, the legislature

intended - if I may encapsulate it and say - that

the Registrar simply to have custody on behalf of

others who are entitled to the benefits. In our

submission, Your Honour, what that leads to - - -

BRENNAN J:	You say that establishes a trust.
MR CHARLES:	Yes.

BRENNAN J: That seems to me to be an important proposition.

MR CHARLES: In our submission, Your Honour, that

establishes a true trust. The Court may, for other

reasons, take the view that a true trust is not
created here because, say, the Court, for example,

took the view against me that the mixing of funds

prevented that happening, in our submission, it

would none the less follow that the setting up of a
scheme involving simple custody for the benefit of

others who are entitled would still permit the

Court to take the view that a Trust had been

created here, but for statutory purposes rather

than for specific beneficiaries.

I should add to my last answer, Your Honour,

that although the class may be ascertained, it may

presumably be capable of increase if other

dependants are brought into existence after death -
the existence of a child born later, for example.

Your Honours, notwithstanding the doubts that Your Honour Justice McHugh has expressed about the

unhappy phrasing of a statutory purpose trust, it

now seems reasonably well enshrined in cases of
high authority, we would submit, and we do rely on

Fouche. I need not do anything other than give the

Court the reference, 88 CLR, and the passage is at

page 640, and Harmer, 173 CLR 264, and particularly

at pages 270 to 274 and we submit that, for the

reasons given in Harmer, this also is a trust, at

least for statutory purposes.

Your Honours, the line of reasoning upon which

we would rely for a statutory purpose trust, as

opposed to true trust, may be seen by looking at
His Honour's reasons, the very lengthy extract

His Honour cites, beginning at page 94 of MSO and

we rely, Your Honours, on the passage which begins

at page 96, beginning at line 24, "Upon payment

into court, the" moneys "became 'trust moneys' in

the broad sense", down to line 33, and we say that

the process there referred to is identical to the

Registrar getting the money under section 130 of

the Accident Compensation Act. Then, Your Honours,

at line 43:

Compensation(2) 113 4/2/93

The moneys were received and held by the

Accountant to be applied in accordance with

the orders ultimately made by the Supreme

Court. The respective interests of the

individual claimants were, at best,

contingent. None had an entitlement -

We say that is similar to the position obtaining

under section 131. Then, Your Honours, on the next

page, 97, at line 16, the expression is:

The payment to the solicitor and the

subsequent lodging of the moneys with the

Building Society did not however, alter any

trust upon which the moneys were held when

held by the Supreme Court.

So that the view appears to be taken that the

solicitors are holding on the same trust and a

separate trust which, we submit, leads fairly to

the conclusion in the present case before the Court

that there are four separate trusts, just as there

was one separate trust in the Riverhall case.

Then, Your Honours, at line 45:

The fact that no claimant had a vested

interest in any of the moneys paid into court
until an order in his or its favour was made

by the Supreme Court does not mean that the

Supreme Court was doing other than discharging

its ordinary judicial function in determining

the competing claims of the claimants to the

moneys paid into court.

Then at page 98, Your Honours, the passages which

begin at line 2, in contrast with a case, down to

line 9 and line 20:

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.

And of course, the last passage beginning at line

33, "It suffices to say". .We would submit,

Your Honours, that it is those statements of the

joint judgment in that case which lead to the view

that there were four separate trusts here and,

therefore, to the correctness of His Honours's view

in the court below.

Your Honours, we would distinguish the

decision in Superannuation Fund Investment Trust v

Commissioner of Stamps (S.A.), 145 CLR 330. If I

Compensation(2) 114 4/2/93

can take Your Honour the Chief Justice's reasons as

my basis for distinguishing the facts in that case

in Your Honour's reasons at pages 353 to 354. At

page 353, point 9, it is seen that the trust is the

Crown, the superannuation scheme is for Crown

employees, it is a defined benefits scheme in which

the contributors would not have an interest in the

fund itself on its winding up. In other words, it

is simply a fund to provide benefits payable out of

consolidated revenue, to pay part of the total

remuneration which the Crown provides for its

employees. So that in this case, these were simply

Commonwealth public moneys in an account within the

Treasury.

We would also, Your Honours, distinguish New

South Wales v The Commonwealth (No 3), a case on

which my learned friend, Dr Spry, relied yesterday

morning, for precisely the reason that Your Honour

Justice Deane put to my friend in argument and

which appears at page 262. The report is in

46 CLR 246 and the particular passage is in the

judgment of Justices Rich and Dixon at page 262,
where in a passage which is emphasized in the

judgment the point is made that the moneys were

being deposited in the bank:  ·

named by the government of the State in that

behalf -

this is at point 6 of the page -

to the credit of the State Treasurer at the

rate of interest from time to time arranged

between the Court and the State Treasurer.

This means that the moneys lose their identity

but the State provides the interest and incurs

an obligation to repay them.

The argument, Your Honours, that there was a true

trust in this case was rejected by His Honour in

the reasons for judgment in M50 at pages 83 to 87

of His Honour's reasons. Reliance was placed in

particular on Tito v Waddell, (1977) Ch 106, and

Kinloch v Secretary of State for India, (1882)

7 App Cas 619. We would submit in relation to

Kinloch that the reasoning in Kinloch is infected by a sort of pre-Bropho view that it would be

monstrous to impose on the Crown or officers of

State the obligations imposed on persons who choose

to accept a trust.

Your Honours will see those passages set out

in the Court of Appeal in the judgment in Tito v

Waddell. The relevant passage begins at page 211

in Vice-Chancellor Megarry's reasons, and then

Your Honours will find the passages to which

Compensation(2) 115 4/2/93

reference is made appearing in the judgment of

Lord Justice James in (1880) 15 Ch D 1, at pages 8

to 9 and it is cited in Tito v Waddell at page 214G

in the Vice-Chancellor's reasons:

James LJ regarded the consequences of holding

that there was a trust enforceable in the

courts as "so monstrous that persons would be

probably startled at the idea."

Similar views were expressed by

Lord Justice Baggallay and Lord Justice Bramwell

and they are quoted at the top of page 215 of Tito

v Waddell, talking of:

the "monstrous inconvenience" and "enormous

expense of litigation" if there were a trust

enforceable by the courts -

views which might have some echo nowadays. In our

submission, that is a particular view of the

monstrous consequences of holding the Crown liable

for breach of trust which flow on into the speeches

in the House of Lords. We refer particularly,

Your Honours, to the passages which my learned

friend Dr Spry cited yesterday which I will not

repeat, but simply to refer to the Lord Chancellor,

Lord Selborne at page 625 of 7 App Cas,

Lord O'Hagan at page 630 and Lord Blackburn at

pages 631 to 632.

The consequence led the Vice-Chancellor, at

the bottom of page 216, to say that the question,

whether there was a true trust, was a matter of

construction of the whole instrument, and that

there was a presumption against the Crown being a

trustee.

We would submit that if there is any such presumption in relation to the Crown being trustee,

quite apart from the considerations which the Court

raised in Bropho and which may have particular

application only since the time of that judgment,

there is a very much less presumption in relation

to someone who, even if an officer of the Crown, is

simply a minor government functionary, if I may say

so with the greatest of respect to him, and we

would raise the question, whether the Registrar can

properly be regarded as the Crown at all, and we

will return to that, Your Honours, when we come to

Mr Finkelstein's submissions later in argument.

In any event, Your Honours, His Honour the

trial judge, at pages 86 to 87 of M50, rejected the

notion of a true trust and said that these amounts

of moneys were administered as a matter of:

Compensation(2) 116 4/2/93

distinctively governmental function, analogous

with the curial administration of funds.

Now, Your Honours, of course, the curial

administration of funds did not prevent this Court

taking the view in Harmer, and that there was a

trust in that case. It would be our submission
that, having regard to the statutory scheme, to the
repeated references to custody, entitlement and

administration for the benefit of dependants, there

is something very much less of governmental

function involved, rather than trusteeship
function, properly so-called. Accordingly,

Your Honours, that it is possible in the circumstances to find a true trust extant in this situation.

DAWSON J:  How does that marry up with the capacity of the

government - if I can put it that way - to regulate

the way in which, for instance, the funds are held

and dealt with? Is that fettered by the trust,

that legislative capacity?

MR CHARLES:	No, Your Honour, not at all.
DAWSON J:	Why not?
MR CHARLES:	It is our submission that what is being done

here is to provide an awarded amount in relation to a particular claim, that the scheme is that that is

to be held for the benefit of the dependants of the

dead worker, that the amounts are to be paid out.

The whole scheme is that they are to be

administered for the benefit of those people in the

custody, simply, of the Tribunal. In our

submission, there is nothing inconsistent with a

trust - - -

DAWSON J:  What if there was a regulation which a court

thought was inconsistent with equitable

obligations?

MR CHARLES:  Our submission, Your Honour, in answer to that

would be that there would be very limited power in

the court to depart from matters which were

strictly in the benefit, or properly speaking for

the benefit of the dependants of workers. In other

words that the courts or the tribunals or the

registrars entitlement to do things is very

strictly limited.

BRENNAN J:  How does a registrar upon retiring from office

secure discharge of his equitable obligations?

MR CHARLES:	In the first place, Your Honour, once he leaves his office then his obligations obviously cease at
that point.

Compensation(2) 117 4/2/93

BRENNAN J: What about any possible liability for breaches

of trust whilst in office?

MR CHARLES:  So far as that is concerned, Your Honour, he is

already protected by section 131(2).

BRENNAN J: Except in relation to accounts,! thought you

said?

MR CHARLES:  Indeed, Your Honour, but an obligation in relation to accounts is a limited obligation.

BRENNAN J: Let us say, for example, that he had contributed to the funds of the various beneficiaries, interest calculated not on the minimum daily balance or

minimum monthly balance but, according to the

beneficiary, he should have attributed it on a

daily balance. Now, what is the jurisdiction of

the Court of Equity then?

MR CHARLES: Simply, Your Honour, in that situation the

contention is presumably either right or wrong as a

court would find. If it were right then it would

no doubt lead to some reordering of the accounts

and possibly, if moneys had been paid out which

left the amounts held to the benefit of a

particular group of dependants at too low a figure,

an order that their sums be increased, and if

moneys had been paid over to another group that the

amount held by them decrease.

Now, it is conceivable that, let us say the

moneys in the second fund had been exhausted, that

could lead to some personal liability in the

Registrar, but that would not, necessarily, be inconsistent with the Registrar's obligations, in

any event, he being bound to act in good faith

which contemplates some liability on his or her

part in any event.

Your Honours, our submissions that the Court

received last night in writing are detailed and I

did not intend to go over all of those submissions
again, and at this point I propose to move to the

question of income derived and when it was derived,

and as to that, Your Honours, His Honour referred

to the process of allocation at page 62 in his

reasons for judgment in MSO, and the argument is

dealt with at or referred to at page 63, and the

time of derivation is found by His Honour at

page 112, that His Honour found that the income was

to be regarded as derived:

when and not before, the Registrar allocated

that sum to the Turton trust.

Compensation(2) 118 4/2/93

We submit that His Honour's view was correct.

Our argument appears on page 4 in paragraph 4 of

our written argument and in attachment 4 at

pages 14 to 15. Your Honours will see that we rely

on two decisions, Flannery v Secretary, Department

of Social Security, 78 ALR 431 at page 436 and

Melbourne v Secretary, Department of Social

Security, 20 FCR 496.

Now, Your Honours, I do not propose to repeat

that argument, but may I now put this alternative

argument on the question of when income is derived.

DEANE J: What, on this argument, if there had never been an

allocation, would you say that there was never any

liability to tax?

MR CHARLES:  No, Your Honour, I would not, for the reasons

that I am about to come to on the alternative

argument, and if I can develop that I shall produce

the answer to Your Honour's question.

Your Honours, we say that it is clear from

section 77 of the Accident Compensation Act that

the tribunal was expected to receive custody of

funds awarded to claimants and dependants, and that

the dependants, not the Tribunal, were entitled to

those funds by reason of section 92(1),

Then, Your Honours, by section 130(1), these

compensation payments, which are administered by

the Tribunal must be invested, applied, or

otherwise dealt with by section 131(1) for the

benefit of the person entitled to that money, and

the Tribunal must act in good faith, or the

Registrar, by subsection (2).

Now, accordingly, Your Honours, the Tribunal,

having invested the moneys received on behalf of
claimants and dependants, receives income from such

investments. We submit that there is a clear

obligation on the Tribunal to deduct expenses

properly incurred and then to make a pro rata	allocation of income to the accounts of each group
of claimants and dependants. Now, that would mean, Your Honours, that if one took, simply for purposes
of argument, a fund held by the Tribunal of
$25,000, made up of three amounts of $15,000, $5000
and $5000, and that in the relevant income tax year
the Tribunal incurred relevant expenses of $1000
and received income of $6000, then the proper
course for the Tribunal would be to deduct the
$1000 and from the remaining $5000 that it would be
obliged to make a pro rata allocation of $3000,
$1000 and $1000 to each of the amounts so held.

Now, Your Honours, if that submission be

correct, the consequence would seem to be that the

Compensation(2) 119 4/2/93

Tribunal or Registrar being obliged so to act, then

the income is received when it comes in and when

the expenses have been deducted from it because at

that time the Tribunal is in a position to make the

allocation and is obliged to do so.

So that it would be irrelevant, then, that the

Tribunal or Registrar had delayed making the appropriate allocation or the appropriate

accounting entry until some time early in the

following tax year. That would mean, Your Honours,

that the correct time for the derivation of income

for each of these estates would be the first of the

two tax years, rather than the second and,

therefore, if our arguments are otherwise correct,
that the result in the court below should have been

the other way around, that is to say the first

three assessments should have been upheld and the

second three should have been set aside.

DEANE J: What, the Commissioner assessed in two years?

MR CHARLES:  Indeed, Your Honour. What happened was that

the Commissioner assessed in the year 1986/1987,

then became concerned that because the allocation

had not been made until early July ·of 1987, that

purposes of setting up this test case properly,

the appropriate income year was the second year. the

made second assessments in the succeeding year in

each of the four cases.

DEANE J: But created a statutory that on the face for twice

the amount.

MR CHARLES: Indeed, Your Honour, but I do not think that

anyone has been under any misapprehension that

these are anything other than alternative

assessments for the purpose of establishing through

the Courts the answer to the difficult question of

when the income is derived within the meaning of

the Act.

DEANE J: It is great if you have got statutory powers, is

it not?

MR CHARLES:	Yes, indeed, Your Honour, but there has been, as we are instructed, a long process of
consultation between the parties for the purpose of
setting up a test case to enable these various alternative situations to be considered and in a situation when in the middle of the proposed test
scheme it seemed possible that the second year was the correct year and in circumstances where certainly the respondent, the Commissioner, did not
want the matter to be sent off the rails simply by
having assessed for the wrong year.

Compensation(2) 120 4/2/93

DEANE J:  I do not want to take time, but I simply cannot

see how, if your argument be right and the moneys

were received as trustee, there can be any argument

that they were income of the second year in the

hands of the trustee. I mean there may be argument

about whether they were received as trustee in a

set up where - this is on your argument - all the

groups had claims. But if you be right and they

were received as trustee and were not Crown funds,
what argument is there that takes them into the

next year?

MR CHARLES:  Your Honour, the only argument could be, and we

have set it out in our written submissions in I

think it is attachment 4, beginning at page 14.

The argument would run that there has to be a

coming in to satisfy income, that the time of

derivation is the time of allocation - -

DEANE J: But there is no doubt that the Tribunal has

derived the amount in one capacity or another, in

the earlier year. Well now, if you be right, and

it has derived the income in the capacity of a

trustee in the earlier year, on what basis, on your

argument, is no tax payable in that earlier year?

MR CHARLES:  Your Honour, if the argument which I have just

been putting to the Court, really in answer to

Your Honour's earlier question to me, if that is

correct, that there is an obligation immediately to

make an allocation for the reasons we have put,

then it is very difficult to see how the income
could be derived in the second year.

DEANE J: But even is there is no obligation to make an immediate allocation, there is a discretion to accumulate or allocate. If you be right, and they

are received as trustee, how do you get out of tax
liability for the year in which the income was

derived.

MR CHARLES:  Your Honour, I do not seek to answer that by

contesting Your Honour's propositions.

DEANE J: Well, Dr Spry is not going to be concerned, I

would have thought, to seek to answer it.

MR CHARLES:  Your Honour, if the rest of the Court shares

Your Honour's view, the consequence will be that

these appeals will be allowed, but in circumstances

where we would hope that having regard to the way

in which the matter is set up, if our other

submissions are correct, the Court will indicate

that the first three assessments were correctly

made, and will therefore decide the question of

principle.

Compensation(2) 121 4/2/93

As I have said, Your Honour, my understanding

is that the Commissioner is not concerned to have a

formal judgment in relation to tax in the first

three years or whichever case the Court takes as the appropriate vehicle for deciding the appeal, but wants the point decided.

BRENNAN J: Is it your submission that this income, which

was received as trustee, was derived from day to

day?

MR CHARLES:  Not so much from day to day, Your Honour, as

derived upon receipt of income from investments

when received by the Tribunal, yes. Now from that,

of course, there has to be a deduction of whatever

are proper expenses to be deducted from it, and the

Court will see from the way in which the accounts have been set out, that there is very little

deduction made from the income of the investments

held on behalf of the beneficiaries.

BRENNAN J: But the assessable income was received from day

to day?

MR CHARLES:  That would be a necessary consequence of the

submissions I have just been putting, Your Honour,

yes. It would not have any tax consequence in the

sense other than that there would be a total amount

of income received in the first of the two tax

years, but it would follow, from the submissions we

have just been making, that there would be an

obligation on the trustee, as soon as reasonably

practicable after receipt, to make an appropriate

allocation of amounts received to the various

estates held.

BRENNAN J:  To account to the beneficiaries.

MR CHARLES:  Yes. Your Honours, a further possibility might

be described as the third alternative, and this is

the one that I raised during my friend

Mr Finkelstein's argument yesterday in response to

Your Honour Justice Dawson, which was the further

possibility that the Tribunal or Registrar receives

the income on the investments representing the

awarded amounts held during the tax year in a lump

sum and not on the basis of some division into

separate trust estates.

Clearly from that figure, expenses would have

to be deducted but if for some reason the
individual claimant groups do not derive income

then, we would submit, that the trustee on the

basis of being a trustee does receive income and

that the effect of section 99(2) would then be that

all the subparagraphs of section 99(2) are

satisfied and that the trustee should then be

Compensation(2) 122 4/2/93

liable to tax on the net income received on all the

investments after deduction of expenses.

That is an alternative view which is not

raised by the present assessments, but if the Court

were to take the view for some reason that the

trustee was not obliged to make an immediate
allocation to each of the trust estates but none

the less was a trustee for statutory purposes or

for all of the dependants, then it might follow

that the Court would take the view that there was

no obligation to make an immediate allocation.

In that situation, Your Honours, we would say

that the trustee was none the less liable, and that

is the submission I was making to the Court last

night, that it would be very helpful at least if

the Court would indicate that that was the

position, although it is not precisely raised by

the present assessments.

The consequence, Your Honours, from the

viewpoint of the Tribunal and the Registrar is, it

might be thought, that it would be easier from an

accounting viewpoint for the Registrar simply to

put in one assessment in relation to the overall

amounts received rather than a large number of

separate tax returns in relation to each of the

trust estates.

However, an obvious consequence would also be

that there would be deleterious consequences for

each individual group of claimants because they would lose the tax-free threshold, in each case

there would only be one and at the relevant time

the tax-free threshold was $5100.

BRENNAN J: There will be a problem of apportionment as

between the income attributable to beneficiaries

and the income attributable to the Tribunal in its

own right.

MR CHARLES: Save, Your Honour, that the accounting system

followed by the Tribunal seems to indicate that the

beneficiary investments have all been held

separately and the Tribunal's moneys, operating

expenses and income have been dealt with entirely

separately, from the exhibits to which I took the

Court earlier in argument.

Your Honours, on the question of any

we have set out our submissions again in the

implications which flow from the Tribunal or the

written submissions we have made. It is our

submission that the Tribunal and the Registrar are

not the Crown and that the funds held by the

Compensation(2) 123 4/2/93

Registrar are not part of consolidated revenue. It

is our submission that they are held either as

trustee or at least as fiduciary and may I

respectfully remind the Court that I have not

emphasized in the oral submissions I have made that

we do make the alternative submission that the

Registrar would at least hold in "any fiduciary

capacity" in the light of the definition of trustee

if he or she does not hold as trustee and we, of

course, rely on section 131(2), the obligation
remaining of good faith, to support the argument

that at least they are held as fiduciary.

Now, Your Honours, even if the Registrar is in

some sense the Crown, we submit that there is no

basis for the operation of any presumption that the

Crown, as trustee, should not be bound by

Division 6 of the Tax Act. It is our submission

that the evident purpose of Division 6 is to tax

income when it is derived and to impose the burden

of taxation on those who stand to benefit and that

excluding the Crown would simply serve to benefit

one small group of Australians and enable them to

receive their income free of taxation.

Now, I put before what I hope was the not offensive submission to the Registrar, that he may

be regarded as a minor government official taking

custody of moneys held for workers compensation

beneficiaries. May we refer, Your Honours, to the

Bank Voor Handel v Administrator of Hungarian

Property, (1954) AC 584, to support this

submission, because we would submit that far from

assisting the respondents or interveners the case

demonstrates the difficulties of attempting to rely

on relationship with the Crown in the context of

this case.

In (1954) AC, Your Honours, the first of the

speeches is that of Lord Morton, who is, of course,

a dissentient, but at pages 609 to 610 the Court

will recall that His Lordship said:  Ordinarily, a Crown servant, whose duties

involve the holding of property and the

receipt of income in that capacity, would be

holding Crown property; but the custodian is a

Crown servant of a most unusual

kind ..... Property belonging to private

persons - some of them enemies, some of them

friends ..... is vested in him. He is told:

"You are to keep this property until you are

instructed to transfer it to someone.

And then on the next page:

Compensation(2) 124 4/2/93

"Meanwhile, you will receive the income from

the property or invest it to produce income if

it is at present unproductive, and simply hold

all income until further instructions are

given to you."

We would submit that there is marked similarity

with the position of the Registrar in this case in

his or her relationship with the dependants:

I think it would never occur -

says Lord Morton -

to such a servant to claim that such income

was Crown income and immune from tax.

Apparently it never occurred to the custodian

to do so, and I think he was quite right.

Now, Your Honours, the other dissenting speech

was that of Lord Keith's, and there are two short

passages in Lord Keith's speech at page 637, where

His Lordship, at point 2, emphasizes that it was

not:

suggested that when property wa·s vested in the custodian it became the property of the Crown, or that the income was income of the Crown.

The contention is that the property

constituted a fund held for Crown purposes and

subject to the complete control of the Board

of Trade or the Treasury. These purposes were

withholding comfort from the enemy and

distribution either during or at the end of

the war. It may be conceded that withholding

money from the enemy is a Crown purpose, but

this is something quite different from saying that it is being held for the Crown, or to be

used or expended in the functions of

Government. To pay income tax on the income

of the fund could in no way prejudice this

purpose and, indeed, would be to the benefit
of the Crown.	I agree that if this were a

special fund, held for the use and service of

the Crown, to pay tax on its income would be

to the prejudice of the Crown, notwithstanding
that the tax, if collected, would find its way

into the fiscus. But that is not the case

here. It would be a somewhat remarkable

result that an immunity could be claimed which

was of no benefit to the Crown and was indeed

to its detriment.

And likewise, Your Honours, at page 640,

His Lordship said, at point 3 of the page, agreeing with Lord Morton, that:

Compensation(2) 125 4/2/93

during the whole time the property was vested

in the custodian, it was impossible to show

that the income received was Crown income or

was received for the purposes of the

government of the country.

Now, we would submit, that both the dissentients

can be seen to support the view that a relationship

with the Crown here would be of no benefit to the

respondent.

When one goes then to Lord Reid who wrote the

main speech for the majority, the passage at

page 618, to which Your Honour Justice Deane

referred yesterday, in our submission, strongly

supports the view that a relationship with the

Crown would not be of advantage to the respondents.

His Lordship, having held that the custodian was a servant of the Crown, continues in relation to the respondent's argument that the respondent:

argues that that is not at all conclusive and

that what really matters is the character of

the income: if the income is Crown income

then tax is not due, but if it is not and it is only received by the custodian to be held

until the time comes to pay it to some private

person, then there is no immunity from tax. I

am bound to say that this appears to me to be

reasonable and not in conflict with any of the

decisions, and I am prepared to assume that if

a case arose in which it was the duty of a

Crown servant merely to hold property with accruing income for a period and then to pay

it to some as yet unascertained private

person, it would be held that tax is payable

on the income accruing. That would be because

in such a case payment of tax could not

possibly prejudice any Crown interest or

purpose.

Now, for like reasons, Your Honours, we would say

here that even if the Registrar is a Crown servant

that this is not Crown income, firstly, on the

assumption that we have made good our argument that

these are trust moneys held either for statutory

purposes or as a true trust, then the payment of

tax could not prejudice any Crown interest and

there is no possible basis for any presumption

working in the Crown's favour in relation to

Division 6 of the Tax Act.

Briefly, Your Honours, as to the other

judgments, Lord Tucker at page 628 and Lord Asquith

at page 632 both make the point that the

custodian's functions are a necessary part of the

machinery of modern government directed to the

Compensation(2) 126 4/2/93

making and prosecution of war, which plainly would

be a high government purpose. Lord Tucker at

page 628 said that the custodian is in no sense a

trustee for the alien owner whose beneficial

interest has been extinguished. Lord Asquith at

page 631 points to there being no discretion in the

custodian, that he must do what the Board of Trade

directs.

Accordingly, Your Honours, we say that this

case strongly supports the view that if we have

made good our first argument, that there is a

even if the Registrar is the Crown, for holding

trustee relationship here within the meaning of the

these trust estates immune from tax. We would say,

Your Honours, that the reasoning in Bropho also

supports the argument in this case.

We would argue that the Crown here would be bound by a like process of statutory implication as

was relied on by the Court in Pyneboard v Trade

Practices Commission, 152 CLR 328, in saying that

in section 155 of the Trade Practices Act, the

privilege against self-incrimination had been

abrogated. We would rely on what the Court said in

its reasons for judgment at pages 343 to 344 of

152 CLR for that purpose.

Section 114, Your Honours, seems to have faded

from view in the arguments of the appellants and

the interveners. Dealing very briefly with
section 23(d) of the Tax Act and the question of

the revenue of a public authority, it is our

submission that that section does not operate to

prevent this assessment. Our argument is set out

at page 6, paragraph 7, and in attachment 7,

page 19.

The Solicitor-General for South Australia

appeared to concede at the start of his argument on

this point that if the income was received on

investments by the Registrar as trustee, then it

would be difficult to characterize the income as

the revenue of a public authority. That may
possibly leave his argument standing if we were to

succeed only on the basis that the Registrar acted

in a fiduciary capacity.

We would submit, Your Honours, that when one

looks at cases such as Western Australian Turf Club

v Commissioner of Taxation, 139 CLR 288, and in

particular at what Sir Keith Aickin said in the
passage at pages 309 to 311, quoting from Ren.mark

at page 309, the connotation of public authority that one sees referred to, Your Honours, is very

much in the nature of a public utility. The

Compensation(2) 127 4/2/93

examples that are given in the extract from Renmark

set out at page 309 are matters such as a tramways

board, a water authority, a lighting authority or,

we would say, a sewerage board.

If my learned friend the Solicitor-General is

correct in characterizing the Registrar as a public

authority, then no doubt Mr Frank Jones is also a

public authority and every prothonotary around the country is also a public authority, which we would

submit is at least difficult to contemplate. But

our second and major point, Your Honours, in

relation to this argument, is that on no view can

these moneys, after deduction of expenses, if they are held on trust, be regarded as the revenue of a

public authority. We have made our submissions for

that purpose in our written submissions.

Your Honours, on the constitutional questions,

which were raised by my learned friend

Mr Finkelstein yesterday afternoon, we would

respectfully submit that there is no discriminatory

burden on a State involved that Division 6 is

general in its application to trustees and trust

estates, no State or State function is singled out.

We would submit, secondly, that there is no

interference with the ability of a State to carry

on its functions in any respect. All that will

happen is that the Registrar or Tribunal will have

to file tax returns like every other trustee in the

country and every taxpayer and the effect will be

that beneficiaries will be taxed on their

investments, leaving less moneys available to be

paid out to them. But as to either interference or
discriminatory burden, our answer to

Mr Finkelstein's submissions, with great respect, is to say that they are nonsense.

Your Honours, I think that our written

submissions say everything else that we wish to

say.	I had drawn to my attention, Your Honours,
that I said that the tax-free threshold was $5100.

That is correct for a section 97 or 98 assessment,

but where no person is presently entitled, and that

is these cases and would be indeed presumably all

cases, the correct figure is not that but is $416.

I apologize for that error.

BRENNAN J:  Mr Charles, could I ask you, how is this trust

for statutory purposes created? By legislative

intent? By operation of a statute?

MR CHARLES: 

Your Honour, we have submitted that the trust

is created in two ways: firstly, by the
construction of the relevant statutory legislation,

but we have also submitted, and it may be that this

Compensation(2) 128 4/2/93

is more directed to true trust than trust for

has been implemented by the Workers Compensation	statutory purposes, by the way in which the scheme in which the accounts have been set up, matters of
that kind.

BRENNAN J: That is tantamount to a declaration of trust.

MR CHARLES:  Not necessarily so much a declaration of trust,

Your Honour, as an acceptance of trust by those who

have been given custody of the moneys. In other

words, Your Honour, that it is a combination, both

of the way in which the statute is framed and the

way in which those who have received custody of the

moneys, have chosen to act with those moneys.

I have answered, therefore, Your Honour's

question in relation to our submissions on true

trust. So far as trust for statutory purposes is

concerned, plainly the statutory purposes can only

be found in the statute.

BRENNAN J: Yes, but does the trust also depend upon the

statute?

MR CHARLES: It, I think, must, Your Honour, yes.

BRENNAN J:  So it is a question of construction of the

statute to see whether, upon its true construction,

a trust relationship is created?

MR CHARLES:  Yes, and for that purpose we would have to rely

on the express provisions in the Act, such as

section 77 which talks about the giving of custody

only and the inference that no beneficial interest

was expected to go to anyone other than the

dependants entitled to, and that would also be

used. And that all that the Tribunal or the

Registrar is doing is administering that fund for

Your Honour, of the purposes otherwise set out in the benefit of those people and on the basis, sections such as 73 and 74.

DEANE J: But if you be correct, that there are distinct

group trusts, why would not your answer be that the

trust is created by the payment of money to the not held for their own beneficial purposes, but be

held for the statutory purposes aimed to benefit

the nominated dependants?

MR CHARLES:  I could indeed, Your Honour, should indeed

have made that answer, yes.

BRENNAN J: Well, if you make that answer, do you not have

to deal with the fact that this particular money

Compensation(2) 129 4/2/93

reached this fund by operation of statute, not by

payment of any person?

MR CHARLES:  To which my learned junior reminds me that we

have also the argument there was a pre-existing

trust in this case.

BRENNAN J:  So it was paid originally by, .for example, an

insurance company on the terms of the trust?

MR CHARLES:  Yes. I do not think I can add any further

answer to - I will have to sever myself from the

dialogue at this point, Your Honours.

MASON CJ: Yes, thank you, Mr Charles.

MR CHARLES: If the Court pleases.

MASON CJ: Dr. Spry?

MR SPRY: If the Court pleases, I understand the constraints

for time, and I think I shall be able to be very

brief.

First of all, my learned friend raised the

question in the extended definitiori-of "trustee" in
the Income Tax Assessment Act of acting in any
fiduciary capacity. We would draw the Court's

attention to the fact that the concept of acting in

a fiduciary capacity is an equitable concept and I

refer the Court to Finn on Fiduciary Obligations on

pages 1 to S.

In our submission, in the present case, the

Registrar was not in any fiduciary capacity and it really is inconceivable that in some indirect route

like that I could have equity intervening so as to

interfere with the comprehensive statutory scheme

which is set out in the Act.

The nub of our submissions is that in the present case we have a statutory scheme which sets

out all the obligations which exist, and that

scheme is able to be enforced by ordinary

administrative processes and there is no evidence

that any kind of trust is being created.

His Honour Mr Deane asked some questions about

the expression "in good faith", and other such

matters, and we would submit here that the

expression "in good faith" is critical in

understanding what the obligations are of the of the Tribunal or of a Registrar is simply to act

in good faith from time to time in accordance with

the obligations that are set out in the Act.

Compensation(2) 130 4/2/93

My learned friend has referred to use of a

term "entitlement" and has sought to gain some

benefit from that. In our submission, nothing

really follows from the use of that term.

Entitlement refers to the statutory entitlements

that are set out in Act and nothing further

follows.

Perhaps a key way of approaching the matter

would be this: that if one looks at sections 130 to

132 and asks oneself the question, "Is it possible

to go to the Court and seek equitable relief, is it

possible to go to the Court under some originating

summons and ask for the administration of a trust

in any way?" Surely the answer must be "No".
Surely the Act simply does not contemplate that

people should be able to go to the court and obtain orders from the court in its equitable jurisdiction

jurisdiction which would in some way override the

duties of the Tribunal that are set out in the Act

itself.

A final observation as I would wish to make is

in reference to New South Wales v The Commonwealth.

One does appreciate the observation made by
Your Honour Mr Justice Deane, that in a very

technical sense it may be possible to distinguish that case, because there were certain facts which

were material. None the less, the analysis of the

Court in that particular case was very broad and

very helpful and the analysis was not limited to

the particular facts of that case and we would

respectfully adopt what was said by the Court on

that particular occasion. If the Court pleases.

MASON CJ:  Thank you Dr Spry. The Court will consider its

decision in this matter and will adjourn.

AT 11.26 AM THE MATTER WAS ADJOURNED SINE DIE

Compensation(2) 131 4/2/93