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

[1993] HCATrans 2

..

'I

'

J6

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IN THE HIGH COURT OF AUSTRALIA

Office of the Registry

Melbourne Nos MS0, MS! 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
DAWSON J
TOOHEY J
GAUDRON J

McHUGH J

TRANSCRIPT OF PROCEEDINGS

AT CANBERRA ON WEDNESDAY, 3 FEBRUARY 1993, AT 10.17 AM

Copyright in the High Court of Australia

Compensation(2) 1 3/2/93

MR I.C.F. SPRY, QC: If the Court pleases, I appear with my

learned friend, MR P.J. KENNON, for the Registrar.

(instructed by the Victorian Government Solicitor)

MR S.P. CHARLES, QC: If the Court pleases, I appear with

MR G.A.A. NETTLE for the respondent, the

Commissioner of Taxation. (instructed by the

Australian Government Solicitor)

MR R.A. FINKELSTEIN, QC:  May it please the Court, I appear

with my learned friend, MR P.G. SEST, for the

Attorney-General for the State of Victoria.

(instructed by the Victorian Government Solicitor)

MR J.J. DOYLE, QC, Solicitor-General for South Australia:

If the Court pleases, I appear with MS B.C. WELLS for the Attorney-General of South Australia to intervene on behalf of that State in support of the

appellant. (instructed by the Crown Solicitor for

South Australia)

I will be confining the submissions I put to

the question of whether the Registrar of the

Tribunal was or were a trustee, and I propose to

adopt the submissions to be put by Mr Finkelstein

on the question of whether the Act purports to bind

the State or its officials and the question of

whether it can, having regard to the provisions of

the Constitution.

MR SPRY:  If the Court pleases. The Commissioner has

assessed the Registrar as purported trustee for the

trust of Carol M Payne, Tanya, Michelle and Lisa

Abela in one of the three cases before the Court

and since the relevant considerations are the same

in all three cases, we are proposing to take that

particular case as the one to which we would
primarily direct the Court's attention.

submit that there is nothing different in the other We would

cases and the result in the Abela case is also the
result in the other two cases.

The primary submission, of course, of the Registrar is that we have here a statutory

administrative machinery and that there is no trust

or other equitable basis for any assessment.

The basic facts are very simple and I do not

wish to take the Court to all of them, but there

are a few salient matters in the cause removable to

which I would like to refer the Court.

From page 20 of the Abela appeal book, it

appears that the worker died in 1977, leaving a

widow, Mrs Payne as she became and three children,

Lisa, Michelle and Tanya Abela. At page 21 it

Compensation(2) 2 3/2/93

appears that in 1979 the sum of $23,940 was awarded

by the Workers' Compensation Board and was to be

paid into the custody of the board under the old

section 34 which I will bring the Court's attention

to in a moment.

In 1983 it appears from the same page that

$16,000 of that sum as accumulated - it was more

than $23,940 then - was set aside for the benefit

of Lisa Joan Abela and the balance was retained for

Mrs Payne and the other three.

Now, that order was made under section 34 of a

Workers Compensation Act 1958. That provision,

which I will bring the Court's attention to later,

permits an apportionment as between dependents, and

the apportionment is also subsequently variable at

any future time.

So that, by section 35, it would have been

possible at any time after that order was made in

1983 to vary that apportionment and to exclude any

particular dependent and so on.

However, I would wish to stress to the Court

that, henceforth, we are concerned only with one of

the two funds which arise. We are not concerned

with the $16,000 fund which was set aside - we are

concerned with the balance.

Now, the actual account of the fund is set out

at pages 32 and the following pages of the book.

If I may bring Your Honours to that page 32, you

will see that the opening entry involves a payment

in of $23,940 and there are then monthly balances,

and then the accumulative monthly balances which

are to be seen on the right-hand side.

And Your Honours will see that every year, in

June, there was an entry of something which was

described as "interest". In the first year it was

$1876. Although in these early years, this was

done in June, in subsequent years, including the

year of income with which we are concerned, it was

done in July of the next year. So, instead of

being done at the end of the one year, it was

actually done at the beginning of the next year.

At page 35, Your Honours will see that it is

shown that $16,000 is taken out of this particular

account and paid into a separate account, and we

are not concerned any longer with that $16,000.

And at page 39, Your Honours will see that the top entry of that page, at page 39, is the critical

amount. On 10 June 1987, an amount $2,713.69 was

paid in as interest, as it were - "paid in" is not

Compensation(2) 3 3/2/93

the correct term, Your Honours, it was really a

paper entry. That entry was made as on that date,

relating to the earnings, if you like, of the fund,

the Accident Compensation Tribunal fund, of the
preceding year. It was done, we stress, not at the
end of one year during that year, but subsequently

at the beginning of the next year.

Now, Mrs Payne applied from time to time for

small amounts to be paid to her, for example, for

school books and so on, and an example of this is

seen at page 41 of the appeal book. An application

was made for school books, for school uniforms, and

also an application for payment of $120 per month

to her so that she did not have to keep making

small applications. Those applications were

acceded to, as Your Honours will see from page 42.

So one did have the position that small amounts were paid out from time to time, and indeed,

periodic payments were made after that particular

time of the order of $120 per month.

If I may bring Your Honours back to the agreed

statement of facts, at page 22 in paragraph 5, it

is set out that when the Workers Compensation Act

was amended by the Accident Compensation Tribunal

Act in 1985 the moneys which had previously been held in the custody of the board under the Workers

Compensation Act were paid across and transferred

to the Accident Compensation Tribunal so as to form

part of the Accident Compensation Tribunal fund.

And therefore, as from 1985, all relevant moneys

have been part of the Accident Compensation
Tribunal fund, and we now turn to page 23.

Your Honours will see that follows from the top of

page 23.

Then, Your Honours, we come to the method by which the income of the fund was calculated.	The
fund was, of course, a mixed fund which included

not only these compensation moneys but all sorts of

other moneys which we will see when we go to the

provisions. At page 23 the method of calculation

is set out, that is to say that the fund derived

income from investments and also various costs and

expenses were paid.

Most of these costs and expenses were

paid out of part of the Fund that did not

include the Compensation Moneys but a

small proportion of the costs and
expenses, including Financial

Institutions Duty (FID), bank charges and commissions paid on mortgage investments were paid from the income from the Compensation Moneys.

Compensation(2) 3/2/93

Although there was a totally mixed fund, none the

less for its own internal purposes, of course, the
tribunal kept the record of what parts were to be

attributed to the dependants and what parts were to

be attributable to other purposes, and it was on

that basis that these things could be done.

At page 24 Your Honours will see that the

method of allocation is set out in paragraph (d) on

page 24:

The income so allocated was distributed

pro rata in accordance with the following
practice;

(i) The total amount so allocated was divided into 12 equal parts one for each month of the

first year.

(ii) In respect of a part attributed to a

particular month that part was distributed
pro rata amongst the accounts of the persons

in respect of whom the Compensation Moneys had

been received by the Tribunal, each account

taking a share proportionate to the minimum
balance standing to the credit of that account

during the month.

(e) The allocation and distribution in respect

of the first year -

that is to say the 1987 year

took place in the month of July 1987.

And we would stress that point, that the actual

allocation took place a few days after the end of
the relevant year, and indeed it appears from

paragraph (f) that that occurred on 10 July, and at

page 7 of the book, Your Honours, you will see that	the actual interest advice is set out - the annual
interest advice at page 7. It is actually dated
1 July 1987 although the parties proceeded on the basis that the events took place on 10 July. The interest too was $2718.69 and new balance is the
capital, as it were, remaining in the fund. The
rate for the year was 15 per cent. Towards the
middle of the page there is set out Carol Payne and the three children as being the beneficiaries, and
it is really that amount which is currently in
question.

The assessment by which that amount was

brought in is set out at page 9 of the book, if

Your Honours would look at page 9. It is a very

straightforward assessment. It simply states,

"Your taxable income" - it is addressed to:·

Compensation(2) 3/2/93

The Registrar

Accident Compensation Tribunal

as Trustee for the Trust of -

Mrs Payne and the three children "Your taxable

income is $2718", that is the amount which

Your Honours have seen, (a) the amount is assessed

at $652.00. There are various adjustments.

Your Honours, in the present case nothing turns

upon all of this. The basic question so far as the

appellant is concerned is that there is simply no

trust in the circumstances and there is no

quibbling, as it were, about figures in any way,

and we would not expect it is necessary to turn to

the provisions of Division 6 for these purposes of

income tax.

BRENNAN J:  If you succeed at the end of the day, what do we

do with respect to the assessment that we see at

page 9?

MR SPRY: Well, Your Honour, in our submission, the

assessment was not properly made. It could be

ordered by Your Honours to be set aside. That

would be one possibility.

BRENNAN J: But is it excessive only as to the amount

of - - -

MR SPRY: Well, that is the only amount assessed,

Your Honour. There was no income - there was no

trust estate and this is the only relevant amount.

It is not a personal assessment of any individual

who might have some other source of income.

BRENNAN J: There are other items on page 9; that was why I

asked.

MR SPRY: Yes, Your Honour, there are, but they are not

items of income. The only income item is $2718.

Such things as provisional tax and so on do not

matter for these purposes.

BRENNAN J: That is what I was trying to find out. What

happens - I understand the argument about the

taxable income. What do we do, for example, with

regard to "other amounts payable"?

MR SPRY:  Your Honour would not need to do anything in

regard to those amounts.

BRENNAN J: Set aside the assessment.

MR SPRY: Yes; set aside the assessment, Your Honour.

Matters such as provision tax, Your Honour, are simply consequential. They are set out on the

Compensation(2) 6 3/2/93

assessment form, but in actual fact the provisional

tax is not an assessed amount; it is simply an

amount which is applied by the provisions of the

Act. It is not part of the actual assessment although for convenience it is set out there and

any credits for past provisional tax are on the

same basis.

Now, Your Honours, before I come to the

statutory provisions to which I wish to take

Your Honours, I would note our central position and

the central proposition which we would make is that

when in circumstances such as those of the present

case moneys are held by a governmental body, prima

facie they are held pursuant to administrative non-trust obligations. Unless an intention to

impose a trust appears positively, and in the

present case the relevant indicia are against the

existence of a trust.

If I may take Your Honours now to the relevant statutory provisions, which are few in number.	The
moneys have been administered now under the

Accident Compensation Act 1985 since that time. If

I may refer Your Honours to section-130 first. We

have handed up a little bundle of photostats of the

relevant provisions which may be useful to

Your Honours. I do not know whether Your Honours

have complete copies of all the Acts, but in the

bundle which we handed up to Your Honours, there is

a summary of the provisions at the front, and then

the old Act, the Workers Compensation Act, is

reproduced in yellow and the new Act, the Accident

Compensation Act, is reproduced in blue. So that

we hope that it will be easy for Your Honours to

follow that quickly.

If I may take Your Honours to section 130,

that provides:

(1) The following payments of

compensation shall be paid to the Tribunal to

be administered by the Tribunal in accordance

with this Act:

We would note there that there is a reference to

sections 92 and 98. Section 92 deals with payments

on death; section 98 deals with lump sum

compensation payments. We would note that the

requirement is that that there be an administration

by the Tribunal "in accordance with this Act".

There is not a requirement that there be an

administration in accordance with trust rules; it

is a requirement that there be an administration

"in accordance with this Act". Then we come to

section 131. This section gives a very wide

Compensation(2) 7 3/2/93

non-trust power as to investment and dealing. In

subsection (1) it is provided:

Except as otherwise provided in section 130,

any amount of money administered by the

Tribunalunder this Act may be invested,

applied or otherwise dealt with in any manner

that the Tribunal thinks fit for the benefit

of the person entitled to that money.

It is a very general power. Subsection (2):

The Tribunal shall not in administering any

amount of money under this Act be bound by any

law relating to the administration of trust

funds by trustees but shall act in good faith.

In other words, if it is an administrative

situation where there is an obligation to act in

good faith, there is an express negativing of any

obligations of trustees in regard to the

administration of trust funds.

We would submit that the word ·"administration"

is very broad in this context and really covers the

field, but although one commonly refers to the

execution of a trust and the administration on an

estate, the two terms really refer broadly to all

the things which are done by the relevant person in

carrying out his duties.

So far as subsection (2) is concerned, we rely

upon that in two ways. One way would be to say

that it simply negatives in itself any trust

obligation. Another way would be to say that

whether or not it extends fully to that extent, it

is part of the Act, and a very important part, the construction of which is determinative for present

purposes and viewed together with the other

provisions, it reinforces a view that there is no

trust in the present circumstances.

Then we come to subsection (3):

In administering any amount of money

under this Act the Tribunal shall have regard

to any advice received from the advisory

committee under section 133 -

And that is an administrative committee set up

under section 133. Section 133 was repealed in

1987.      The advisory committee therefore has not

been in existence since 1987. None the less it is

an indicium that administrative questions are here

in point and not trust questions.

Section 131(5) provides:

Compensation(2) 3/2/93

All expenses incurred by or on behalf of the Tribunal in the administration of any

amount of money under this Act shall be paid

by the Tribunal out of the Accident

compensation Tribunal Fund.

Of course, normally with trust estates the amounts are paid out of the trust estate itself, but here

as follows from the administrative scheme they are

payable out of the totality of the fund. And then

subsection (6) provides:

Subject to the direction of the

President, the Registrar may exercise the

powers of the Tribunal under this section.

BRENNAN J: Subsection (6) of?

MR SPRY: Yes. Subsection (6), Your Honour.

BRENNAN J:  Of section?

MR SPRY: Subsection (6). Your Honour, I am now referring

to the original Act as an Act of 1985. I think

Your Honour actually has the amended Act, as amended in 1987 which deleted that particular

version, I think. Now we come to section 132:

The Tribunal may on the application of

any person on whose behalf any amount of money

is administered under this Act determine any

dispute in relation to the administration.

And again, Your Honours, that is a matter which is

left therefore on an administrative basis of the

Tribunal. It would not be appropriate, in our

submission, to approach the Equity Court on the

basis of the administration of the estate and seek

an originating summons, or questions which are

determined on that sort of basis.

MASON CJ:  Dr Spry, you are proceeding too quickly for me.

I have not yet been able to locate 131(6).

MR SPRY: Yes, Your Honour. Well I think, Your Honour, that

was a point raised by Justice Brennan.

MASON CJ Yes.

MR SPRY:  I now have, Your Honour, the original 1985 Act.

In 1987 the Act was amended and Your Honour	has the
amended Act which took out subsection (6).	Nothing
really turns upon that, Your Honour, in the	present
circumstances.

What happened in 1987, Your Honour, is that a

number of amendments were made and the most

Compensation(2) 9 3/2/93

fund.

important amendment was that instead of the administered the

BRENNAN J:  In the income year was it governed by the 1985

Act as unamended or by the 1987 Act?

MR SPRY:  The amending Act came in on 1 December of that

year.

BRENNAN J:	1987?
MR SPRY:	1987, Your Honour, yes.

BRENNAN J: Well, the first income year is ended

30 June 1987.

MR SPRY: That is right, Your Honour, yes.

BRENNAN J:  So that is under the old Act.

MR SPRY: That is under the old Act, but the second year,

the year with which Your Honours are concerned was

governed by the amended Act as amended from

December, and therefore the Registrar has been

assessed in respect of that year.

BRENNAN J:  So we can work on the amended Act then?

MR SPRY: Yes, Your Honour.

BRENNAN J:  We do not need to look at the 1985 Act?

MR SPRY:  No, Your Honour. I think there is probably no

need to look at the 1985 Act specifically. It is

of some historical interest because it shows that

the Registrar, as it were, is simply standing in
the shoes of the Tribunal which is perhaps evident

in any event. Originally we started off with the

Tribunal, and now we have the Registrar. It may

be, on the basis that Your Honours have the amended Act, useful for me to refer to the amended Act from

now on which I will do for convenience.

Under the amended Act, section 132:

(1) The Registrar may on the application of

any person on whose behalf any amount of money

is administered under this Act determine any

dispute in relation to the administration.

That is a provision I have just read to

Your Honours.

(2) If a deceased worker leaves more than one

dependant the Registrar after having regard to

the circumstances of the various dependants

Compensation(2) 10 3/2/93

and any variations in the circumstances from

time to time may -

do all sorts of things:	make payments, as it were,
for particular dependants;	may make
apportionments;	may exclude particular dependants,

and so on. Again, we would say that that is an

administrative function and one could not question

what was done there by an originating summons in

the equity jurisdiction.

Subsection (3) permits a variation to be made

at any particular time not only in the case of:

(a) the neglect of any children by the

spouse -

but also is there is:

(c) any other sufficient cause -

a determination as to the apportionment -

et cetera, made earlier can be varied at some later

time. Subsection (5) provides a mechanism for appeal. The mechanism for appeal is simply an

appeal from the Registrar to the Tribunal under

subsection (5) of that particular provision.

Your Honours, that is the 1985 Act as amended

in 1987. However, that really dealt only with

payments which were made, as it were, under the

Accident Compensation Tribunal Act itself. It did not deal with payments which had previously been made under the Workers Compensation Act, the 1958 Act. Those are dealt with subsequently by the 1985
Act which substituted new sections 34, 35, 36 and

37 into the Workers Compensation Act.

Your Honours, the substituted sections are not

in the material which has been provided to

Your Honours.	Do Your Honours have copies of the
1985 Act?

MASON CJ: Yes, we have it in the form of a reprint.

MR SPRY:	Does the reprint contain section 262?
MASON CJ:	No.

MR SPRY: Perhaps if I could read out the relevant parts,

Your Honour.

BRENNAN J: Is this contained in a Workers Compensation Act

1958 reprinted from 30 August 1985?

Compensation(2) 11 3/2/93

MR SPRY:  Yes, I think it would be, Your Honour.

Your Honours will see there new substituted

sections 34 to 37. Your Honours will see that

those substituted sections really follow pretty

exactly sections 130 to 132 of the main 1985 Act.

In other words, there is an assimilation of the obligations in regard to old payments under the

1958 Act to the obligations in regard to the 1985

Act.

I will not go through those provisions once

again, because I have gone through them once in

relation to section 130 et cetera. But

technically, Your Honours, the current moneys are

governed by amended sections 34, 35, 36 and 37 of

the 1958 Act in so far as those sections have been
from the old Act, if I could put it that way, to the new Act.

necessary to bring the moneys into the Accident

The only section I need draw Your Honours'

attention to in great detail here is section 37,

because this has no equivalent in the other
provisions to which I have drawn Your Honours'
attention. Section 37 simply is the machinery

provision which says:

On and from the appointed day, all moneys paid

administered by the Tribunal in accordance with this Act.

into the custody of the Board pursuant to this

Subsection (2) says:

the moneys shall be paid to the Tribunal or -

where they are in the form of investments:

the investments shall be transferred to and

vest in the Tribunal.

And subsection (4) says:

No right interest or claim in or with respect

to any money paid into the custody of the

Board pursuant to this Division as in force

before the appointed day shall abate or be in

any way prejudicially affected by reason of

this section.

We would submit, Your Honours, that that saving

provision in subsection (4) does not prevent, in

any way, moneys which were previously under the old

regime of custody under the Board, from going

Compensation(2) 12 3/2/93

across under the new regime into the administration

by the Accident Compensation Tribunal.

Now, for historical purposes, Your Honour, as

we are in the present case concerned with moneys
which were originally paid under the Workers

Compensation Act, it is desirable to look at the original sections 34 and 35. This is of the

Workers Compensation Act 1958, before the 1985 amendments, and Your Honours will find this in the

materials which have been handed to you. Your

Honours will see that a somewhat different form is

used here. Under the old section 34 it was

provided that:

The payment in the case of death (unless the

Board otherwise orders), any payment (other

than a weekly payment) payable to a person

under 18 years -

et cetera -

shall be paid into the custody of the Board

and the receipt of the registrar shall be a

sufficient discharge in respect of the sum so

paid.

(lA) All moneys paid into the custody of the

Board shall subject to the rules and the

provisions of this Act be invested applied or
otherwise dealt with in such manner as the

Board thinks fit for the benefit of the

persons entitled thereto under this Act.

And then we have subsection (2) which gives a power

of application or apportionment and section 35

which gives a power of variation, and the other

provisions are not really material, Your Honours.

We would submit that under the old system, under the Workers Compensation Act, pre-1985, was	likewise an administrative machinery, but whether
there was an administrative machinery then or not
and whether a trust then or not, as soon as the
1985 Act came into operation it became clear that
one was no longer concerned by any trust mechanism and that one was concerned instead with a statutory
machinery.
Now, Your Honours, the next matter to look at is the actual fund itself under which the various
moneys have been held, and if Your Honours would
look at section 73 of the amended Act.

DAWSON J: Which Act?

Compensation(2) 13 3/2/93

MR SPRY:  This is of the amended Act, Your Honour. The

amended 1985 Act as amended in 1987.

DAWSON J: That is the top page?

MR SPRY:  Yes, Your Honour. I am sorry, Your Honours, this

is very confusing going from Act to Act.

Section 73 provides:

The Registrar shall establish and maintain a

Fund to be called the Accident Compensation

Tribunal Fund.

(2) There shall be paid into the Fund -

(a) the contributions payable - - -

BRENNAN J: Excuse me, my copy has not got a section 73 in

it. It goes from section 68 to 81.

MR SPRY:  Your Honour, I am looking at the 1985 Accident

Compensation Act as amended in 1987.

There shall be paid into the Fund -

(a) the contributions payable under section 74

by the Commission and self-insurers;

(aa)payments of compensation made to the

Registrar under section 130.

I have drawn Your Honours' attention to section to

section 130.

(ab) payments made under section 34 -

of the old Act, which have been brought across -

(ac) amounts borrowed by the Registrar under

section 51C;

(b) any income from the investment .....

(c) all other money that the Tribunal receives

under or for the purposes of this Act or any

other Act; and

(d) any other money required or permitted to

be paid into the Fund by or under any other

Act.

And then, so far as payments out are concerned, we look at subsection (3):

There may be paid out of the Fund -

Compensation(2) 14 3/2/93

(a) payments directed by order of the Tribunal

to be paid out of the Fund under this Act or

the Workers Compensation Act 1958 -

any repayments of borrowings -

(ab) any payment authorized under section 131

or 132 -

and that would be payments to dependents who become

entitled under this Act.

(ac) any payment authorised under section 35

or 36 of the -

old Act. That is, again, payments to dependants,

but under the old Act. Then costs and expenses and

incidental payments, other costs and expenses,

remuneration, and so on, any other payments.

Subsection (4) provides that:

The Registrar may -

(a) invest any money in the Fund in any manner

which is approved by the Treasurer.

It is clear from that, Your Honours, that this is a

mixed fund, and that there is certainly no keeping

distinct of any of the compensation moneys, if I

can use that term.

The only provision which we have been able to

discover which goes against the rather simple

position, as we see it, is section 77(2)(c). If

Your Honours would be kind enough to look at

section 77(2)(c) of the amended 1985 Act:

The Register shall do all things necessary

to -

(c) ensure that adequate control is maintained

over assets owned by or in the custody of the

Tribunal.

"Owned by or in the custody of the Tribunal". The

words "in the custody of" or "the custody of" are
curious there, because they really look back, in a

sense, to moneys prior to the 1985 Act being

brought into force. In other words, the

terminology "in the custody of" was appropriate to

the 1958 Act, but was inappropriate to the 1985 Act

and, perhaps, that expression has just slipped in,

in some way, by a draftsman who had in mind the

preceding provisions which were no longer

applicable.

Compensation(2) 15 3/2/93

Now, Your Honours, if I may go to the cases

which, in our submission, are material. We would

submit, of course, that this a simple matter of

construction; that it is a matter of construction

whether there is the intention to have a statutory

scheme or trust scheme. Really, therefore,

everything depends upon this particular case. In

one sense, other cases do not help. But, at the

same time, there have been some discussions in the

authorities in regard to this sort of problem, and

we think it is appropriate to draw the Court's

attention to some of these, and I shall do so

briefly.

The first of the relevant cases, if the Court

pleases, is Kinloch v The Secretary of State for

India, (1882) 7 App Cas, 619. And, if I may, look

at first of all the headnote:

The Queen by Royal Warrant "granted" booty of

war to the Secretary of State for India in

Council "in trust" for the officers and men of

certain forces, to be distributed, by the

Secretary of State or by any other person he

might appoint.

So the words "in trust" were actually used. It

was:

Held, affirming the decision of the Court of

Appeal, that the warrant did not transfer the

property, or create a trust enforceable by the

High Court of Justice; and that the Secretary

of State being merely the agent of the Crown
to distribute the fund the action could not be

maintained.

At pages 625-626, it was said by the Lord

Chancellor, not even the words "in trust"

themselves being sufficient to create the trust:

Now the words "in trust for" are quite consistent with, and indeed are the proper

manner of expressing, very species of trust -

a trust not only as regards those matters

which are the proper subjects for an equitable

jurisdiction to administer, but as respects

higher matters, such as might take place

between the Crown and public officers

discharging, under the direction of the Crown,

duties or functions belonging to the

prerogative and to the authority of the Crown. In the lower sense they are matters within the

jurisdiction of, and to be administered by,

the ordinary Courts of Equity; in the higher

sense they are not.

Compensation(2) 16 3/2/93

A curious terminology, which is really saying that, in a higher sense, the word "trust" refers to the

governmental discharge of governmental obligations.

Whereas, in a lower sense, it refers to what is

done by a Court of Equity.

At page 630 there is a brief passage in

Lord O'Hagan's opinion:

There is no magic in the word "trust".

In various circumstances, it may represent many things, and the Secretary of State to

whom a delegation was made for special and

specified purposes, might well be described as

a "trustee" for the Crown, as, for the Crown,

he was required to take on himself the

distribution of the property in question.	But
he was not constituted a "trustee" for a

cestui que trust entitled, according to the

rules of Equity, to ask for the administration

of a fund.

And Lord Blackburn at page 632 said something

very similar:

On the construction of this warrant, as I read it, the Secretary of State for India in

Council was made an agent of the Queen,

subject to Her Majesty's control and power, to

pay away the moneys when quite satisfied that

the claims were right, but he was by no means

made a trustee subject to the power and

control of the Court of Chancery.

The most recent follow up to that in England

has been in the rather lengthy judgment of Vice-

Chancellor Megarry in Tito v Wadell (No. 2) (1977)

Ch 106. If I may read from the headnote at pages

110 to 111, the first holding.	I do not want to
take Your Honours to the facts, which are a bit

complicated, but:

in Ocean Island No. 2 the use of the term

"trust" in relation to the Crown did not

necessarily create a true trust, enforceable

by the courts (a "trust in the lower sense"),
but might create a "trust in the higher
sense", or governmental obligation, not
enforceable in the courts; that it was a
question of construction -

We would, with respect, emphasize those words. whether in all the circumstances a true trust

had been created, one material factor being

whether the person required to hold on trust

was described in his personal or in his

Compensation(2) 17 3/2/93

official capacity; and that as there was

nothing in the Ordinances or in the various

instruments or other documents which sufficed

to show that the Crown had undertaken any

enforceable trust or fiduciary obligation such

as was alleged, none had been created -

Then, fortunately, the relevant parts of

His Honour's judgments are not long. At page 211

His Honour said in the last paragraph of the page:

When it is alleged that the Crown is a

trustee, an element which is of especial

importance consists of the governmental powers

and obligations of the Crown; for these

readily provide an explanation which is an

alternative to a trust. If money or other

property is vested in the Crown and is used

for the benefit of others, one explanation can

be that the Crown holds on a true trust for

those others. Another explanation can be

thai, without holding the property on a true

trust, the Crown is nevertheless administering

that property in the exercise-of the Crown's

governmental functions. This latter possible

explanation, which does not exist in the case of an ordinary individual, makes it necessary

to scrutinize with greater care the words and

circumstances which are alleged to impose a

trust.

And then finally, at page 216, he referred to

what had been said by Lord O'Hagan and

Lord Selborne in Kinloch's case and said half-way

down the page:

I pause at that point. This

classification of trusts seems to have made

little impact upon the books:

And he refers to various books.

There is, indeed, a certain awkwardness in

describing as a trust a relationship which is

not enforceable by the courts, though the so-

called trusts of imperfect obligation perhaps

provide some sort of parallel.

Not a very close one, I would think.

Certainly in common speech in legal circles

"trust" is normally used to mean an equitable

relationship enforceable in the courts and not

a governmental relationship which is not thus

enforceable. I propose to use the word

"trust" simpliciter (or for emphasis the

phrase "true trust") to describe what in the

Compensation(2) 18 3/2/93

conventional sense is a trust enforceable in

the courts, and to use Lord Selborne's

compound phrase "trust in the higher sense" to

express the governmental obligation that he

describes.

I return to the principles or

considerations which the Kinloch case appears

to support. The third is that it seems clear
that the determination whether an instrument

has created a true trust or a trust in the

higher sense is a matter of construction, looking at the whole of the instrument in question, its nature and effect, and, I think,

its context. Fourth, a material factor may be
the form of the description given by the

instrument to the person alleged to be the

trustee. An impersonal description of him, in

the form of a reference not to an individual

but to the holder of a particular office -

which of course is the present case -

for the time being, may give some indication

that what is intended is not a true trust, but

a trust in the higher sense.

Your Honours, we now come to an important

Australian case, a decision of this Court in New

South Wales v The Commonwealth (No 3), (1932)

46 CLR 246. If I could draw Your Honours'

attention to that. The relevant part of the

headnote at page 247 is:

In addition to ordinary revenue the State

of New South Wales deposited with its bankers

moneys received by it under certain statutes

and orders of Court for specific purposes and

to meet particular claims, such as, for

example, estates administered by the

Master-in-Lunacy, the Public Trustee and the

Registrar of Probates respectively, and claims

by suitors and litigants. The accounts were

kept by the banks under various descriptive

headings, moneys deposited being allocated to

the relevant accounts upon the receipt,

subsequent to payment in, from the State of a

"distribution sheet," and by an agreement

between the State and the banks the accounts

were treated as one account, withdrawals being

permitted from any account, whether in debit

or otherwise, provided the combined account

was in credit, interest being allowed by each

of the banks on any amount held by it in

excess of 100,000 pounds. The banks stated

that they had not been informed, and were

Compensation (2) 19 3/2/93

unaware, that any of the moneys deposited by

the State were "trust" moneys.

It was held by four of the learned judges:

that such moneys were not received by the

Crown in right of the State in a fiduciary

capacity so as to remain specifically the
property in equity of the suitors or others
concerned, but went into the general resources
of the State; and that, accordingly, the sums

at credit of the bank account were attachable

under sec 15 of the Financial Agreements

Enforcement Act 1932.

The other two members of the Court, Your Honours,

did not differ from that but dissented on the basis

that the relevant Commonwealth provision was

invalid. There is a valuable analysis by the Court

of the nature of moneys held by government

entities, and if I may refer Your Honours to

pages 259 and following pages. At the bottom of

page 259:

Among the accounts in credit are certain

special deposit accounts and other accounts

connected with the administration of "funds"

for answering particular claims, and the State

contends that these contain trust moneys in

which the State has not the beneficial

property. A conspicuous instance is given in

the Supreme Court Accounts. These accounts

include the Colonial Treasurer's

Master-in-Equity Account, the Colonial

Treasurer's Master-in-Lunacy Account, the

Colonial Treasurer's Public Trustee Account,

the Colonial Treasurer's Prothonotary's

Account, and the Colonial Treasurer's

Registrar of Probate Account.	The total
Accounts on 11th April 1932 was
amount to the credit of the Supreme Court

482,586 pounds, and it is said that the

various litigants and others in respect of

whom moneys were paid in so as to create this

amount are entitled amongst them to this

credit as specific property. This contention

does not appear to us to be consistent with

the arrangement made by the State with the
banks by which the amounts at the credit of

these accounts is included in the aggregate

amount at the State's credit for the purpose

of drawing on other accounts, nor with the

condition of the accounts which shows an

aggregate balance of 85,589 pounds only, an

amount less by 396,997 pounds than the total

amount at credit of the Supreme Court

Accounts.

Compensation (2) 20 3/2/93

Now we come to the critical passage:

But, in our opinion, the contention is ill

founded. The Crown in administering justice

and otherwise -

and in the present case, Your Honours, the Tribunal

is in fact the court under section 40 -

The Crown in administering justice and

otherwise in performing its sovereign

functions receives moneys from the subject,

not as trustee of those specific moneys, but

in the exercise of its powers of governments.

The subject is entitled to repayment of an

equivalent amount of money, and he relies upon

the whole credit of the State as his security.

The specific money paid is not segregated but

loses its identity in the general funds of the

Treasury. This truth is obscured by the fact

that for the convenient and orderly

administration of the finances of the State,
as well as for the security of the subject, it

is necessary to maintain in the Treasury

distinct accounts of the receipts and

disbursements in relation to every separate

purpose and to keep corresponding bank

accounts, and that this is provided for by

law. But it does not follow that the

doctrines of equity which enable a cestui que
trust to fasten upon moneys received by the

trustee in his fiduciary capacity and to treat

any bank account into which they go, or any

sort of property into which they are

transformed, as trust property specifically,

or as subject to a charge in favour of the

trust, apply to the moneys received by the

Crown. The Crown is not liable for the moneys

in specie, but is liable only to repay money

of the same amount; and this is so

notwithstanding the fact that statutory

obligations may exist requiring a separation

in account and an appropriation in account of

moneys so that they may ever be ready against

the doctrines of equity relating to the

the fulfilment of the Crown's obligations.

tracing of trust moneys arises rather from the

nature of the position which the Crown

occupies as a sovereign exercising the

functions of government than from statutory

enactment, yet the Audit Act appears clearly

to recognize that the existence of ttfundstt at

the Treasury and accounts for special purposes

impresses no specific moneys with any

equitable charge or other right of property in

favour of the subject but leaves the actual

Compensation(2) 21 3/2/93

moneys at the credit of the Crown its property

to be dealt with according to law.

His Honour Mr Justice Starke, at page 268, said

briefly something to similar effect. Half-way down

page 268 His Honour said:

(1) The Supreme Court Accounts are the moneys

of suitors or trustees paid into Court, but a
Court assumes no fiduciary character and is

not a trustee for the suitors or persons who

pay the moneys into Court, though such moneys

are under its control and order. The receipt
or collection of such moneys by the Court is

an exercise of the judicial function of the

State and not an assumption of any fiduciary

character. The payment of the moneys under

Rules of Court, or otherwise, to the credit of
the State or the State Treasurer at interest
arranged with the State Treasurer, is but
using the credit of the State for the
furtherance of the judicial function. Neither

the Government nor the Court thereby assumes

any fiduciary character, but the suitors and

others have thus at their back the credit of

the State for the purpose of meeting any claim

or rights established as to the moneys under

the control or order of the Courts.

And at page 277 His Honour Mr Justice McTiernan

said very similar things, and perhaps it is not

necessary for me to take Your Honours to that.

Now, as we have submitted, none of these cases

is directly applicable in the present case in so

far as this must be a question of construction of

the instrument in the present case, in particular the Accident Compensation Act in the present case.

But they are cases which are helpful in showing

that what is being submitted as a case presently is	not a position which is in any way in conflict with
basic authorities which have been accepted by the
courts.

The next case, if the Court pleases, is the

fairly recent House of Lords decision in Town

Investments Ltd v Department of the Environment,

(1978) AC 359. From page 360 it appears:

In an underlease of office premises

granted in 1952 by a limited company the

tenant was described as " ... the Minister of

Works (hereinafter called 'the lessee' which

expression where the content so admits

includes his successors and assigns) for and

on behalf of Her Majesty ... "

Compensation(2) 22 3/2/93

Then a little further down it appears that -

a fresh lease was granted by the present
landlords in substantially the same terms save

that the rent was increased. The description

"Secretary of State for the Environment" was

substituted for that of "Minister of Works".

One of the contentions before the House of Lords in

this case was that it was really a trust, that you

had a public officer who held it on trust for the

Crown, but that analysis was rejected by the court.

The court held that there was not, in fact, a trust

in these circumstances. The Crown simply held

itself directly, and the first holding at page 360

states at the end of the little paragraph (1): the tenant of the premises was the government

acting through its appropriate member, or,

expressed in the term of art in public law,

the Crown.

If I may bring Your Honours to page 382 where

Lord Diplock said:

My Lords, I would not exclude the

possibility that an officer of state even

though acting in his official capacity, may in

some circumstances hold property subject to a

trust in private law for the benefit of a

subject; but clear words would be required to

do this -

the presumption is against this. There had to be

clear words.

and even where the person to be benefited is a

subject, the use of the expression "in trust"

to describe the capacity in which the property

is granted to an officer of state is not

conclusive that a trust in private law was

intended; for "trust" is not a term of art in

public law and when used in relation to

matters which lie within the field of public

law the words "in trust" may do no more than

indicate the existence of a duty owed to the Crown by the officer of state, as servant of the Crown -

Incidentally, Your Honours, my learned friend from

South Australia will be bringing Your Honours to

some of the statutory provisions and authorities
which show how this public duty can be enforced in

the courts and otherwise -

to deal with the property for the benefit of

the subject for whom it is expressed to be

Compensation(2) 23 .3/2/93

held in trust, such duty being enforceable

administratively by disciplinary sanctions and

not otherwise. But even if the legal

relationship of trustee and cestui qui trust

under a trust in private law is capable of

existing between an officer of state in his

official capacity and a subject, the concept

of such relationship being capable of existing

between him as trustee and the Crown as cestui

qui trust is in my view wholly irreconcilable

with the legal nature in public law of the

relationship between the Crown and its

servants or, in more modern parlance, the

government and the ministers who form part of

it.

And something similar was said at page 397 by

Lord Simon. Half-way down between Band C

His Lordship said:

In private law a phrase like "for and on

behalf of" would be apt to signify agency at

least, and possibly trust. Not so in public

law. Then a little further down between D and E:

In public law even a phrase like "in trust

for" may not betoken at all the relationship

of trustee and cestui que trust, but rather

the imposition of a constitutional duty the
sanction for which is political or

administrative not legal.

TOOHEY J:  Dr Spry, you described the question before as one

of construction but those passages suggest

something rather more fundamental, do they not,

that the Crown is in a particular position?

MR SPRY:  Your Honour, anything can be done by statute. If

an intention appeared sufficiently clearly by

statute that any Crown officer held property in

trust then that would be an effective mechanism.

The presumption is, it appears from the cases

clearly in our submission, that the presumption is

against any finding of such a trust. A statute can

do anything and therefore, in that sense, we are
not faced with any insuperable barrier.

Now, the most recent of the cases which touch upon these matters is the decision of the Court of

Appeal in New South Wales, the decision in
Aboriginal Development Commission v Treka

Aboriginal Arts and Crafts Ltd, (1984) 3 NSWLR 502,

and the headnote reads:

Compensation(2) 3/2/93

The Aboriginal Arts Council, a delegate of the Australia Council, a statutory

corporation created under the Australia

Council Act 1975 (Cth), in pursuance of proper

powers resolved "that an amount of $190,000 be

approved to the Aboriginal Development

Commission" (another statutory corporation

created under the Aboriginal Development Act

1980 (Cth)) "being for the funding towards

operating costs of Treka Aboriginal Arts and

Crafts Ltd" (a private company involved in the

promotion and marketing of Aboriginal art),

"for the six months to 30th June 1984".

Following correspondence between the two

statutory corporations relating to "the

transfer of funding arrangements for Treka
Aboriginal Arts and Crafts Pty Ltd" the amount
of $190,000 was paid to the Aboriginal

Development Commission which paid it out to a

newly incorporated company Inada Holdings

Pty Ltd which had no relationship to Treka

Aboriginal Arts and Crafts Pty Ltd.

And then the second holding was that:

The Crown may constitute itself a trustee but

clear words are required to show that there

was the necessary intention.

And then, thirdly:

Where statutory corporations or governmental

bodies are carrying out the functions of the

Crown there is no place between them for one

being the settler and the other the trustee of

a private trust; the relationship as between

themselves is governed by administrative

arrangements enforceable by the executive and

not by the courts.

The first of the two passages in the judgments is

at pages 517 to 518 by His Honour Hutley JA who

quoted first of all from Kinloch's case and then

said at letter C:

In my opinion, if the Australia Council,

the Aboriginal Arts Board and the Aboriginal

Development Commission are carrying out the

functions of the Crown, there is no place

between them for one being the settler and the

other the trustee of a private trust in favour

of the respondent. Their relationship, as

between themselves, would be governed by

administrative arrangements enforceable by the

executive and not by the ordinary courts.	If
there is to be a trust arrangement, the settler must be equally able to enforce the

Compensation(2) 25 3/2/93

trust because if the money is not applied in

accordance with the settlement, the settlor

is, equally with the beneficiary, entitled to

have it restored and, to me, it is

inconceivable that as between the Australia

Council and the Aboriginal Development

Commission there is a relationship which is

enforceable as an ordinary trust. I can

discern in what may be called the settlement

documents no intention on the part of the

settlor to constitute a trust or of the

alleged trustee to accept the responsibilities

of a trustee, if they are emanations of the

Crown.

His Honour Priestley JA at page 519 said in his

fifth numbered conclusion:

The Crown may constitute itself a trustee,

clear words being necessary to show that was

the intention.

Finally in these regards, although it is not a case

directly on those points, is Walker v Corboywhich

is authority for the proposition that where you

have a mixing of funds, that in itself is a strong

indicium that a trust is not involved but merely

some statutory or other obligation to pay a

particular amount. That is in (1990) 19 NSWLR 382.

I need not take Your Honours to that, save to note

the observation of His Honour Meagher JA at

page 397B who said:

The first, and to my mind the most

powerful, indicium that no trust can be imputed is the absence of any statutory requirement that agents should keep the

proceeds of sale of produce separate from

their own general funds.

He quoted further down Mr Justice Channell who

said: 

" ... We must apply that principle to a case

where the property is a sum of money. It is

clear that if the terms upon which the person
receives the money are that he is bound to

keep it separate, either in a bank or

elsewhere, and to hand that money so kept as a
separate fund to the person entitled to it,
then he is a trustee of that money and must

hand it over to the person who is his cestui

que trust.  If on the other hand he is not

bound to keep the money separate, but is
entitled to mix it with his own money and deal
with it as he pleases, and when called upon to

hand over an equivalent sum of money, then, in

Compensation(2) 26 3/2/93

my opinion, he is not a trustee ... but merely

a debtor. All the authorities seem to me to

be consistent with that statement of law."

In our respectful submission, that is correct.

Now, Your Honour, we then come to the decision

of Mr Justice Jenkinson in the present case and we
would submit with the greatest respect that

His Honour Mr Justice Jenkinson erred. Having been

originally, in our submission, on the right track

and proceeding, in our submission, as appears from

his judgment, on the way to holding that there was no trust in the present case, he then felt himself

compelled by a decision of Your Honours in Harmer's

case to hold that that decision required him to

hold that there was a trust in the present case,

and for reasons which we will indicate we would

submit that he should have maintained his original

approach and that Harmer's case was really

concerned with a different matter.

The judgment of His Honour is quite lengthy

and I only need to take Your Honours to three

passages I think. The first of those passages

and I am still on the Abela cause removal book - is

at page 82 to 83 and, at line 22 at page 86,

His Honour said:

Whether or not the Tribunal and the Registrar are within the shield of the Crown, the function of administration of these four

amounts of compensation, and similar amounts,

is in my opinion a distinctively governmental

function, analogous with the curial
administration of funds in court for the
benefit of a person under disability. In such
a case forms of expression and legal

conceptions suggestive of a trust obligation

which are found in the document -

I pause to say there are no such indications here

in any event -

whether a legislative enactment or some other

instrument, proposed as the source of such an

obligation may be explicable as appropriate

to - and as having reference to - the
prescription of governmental obligations and

powers rather than to the obligations and

powers with which a court of equity is

concerned in respect of a trust.

Then he went on at pages 86 to 87 - I am sorry
Your Honour, I was reading then - I apologize to

Your Honours - - -

Compensation(2) 27 3/2/93

MASON CJ:	From page 86, were you not?
MR SPRY:	I am afraid I was reading then from the second

extract instead of the first.	May I take
Your Honours back to page 82?	I was reading the
second extract then.	The first extract is at
page 82, line 17:

The language of the Accident Compensation Act

1985, like the not dissimilar language of the

Workers Compensation Act 1958, suggests

conceptions similar to several of the

conceptions of trust obligation: the control

of property, by him who has no right to
enjoyment of the property, for the benefit of

another or others in whom the right of

enjoyment resides. But the provisions of the

Accident Compensation Act 1985 concerning the payment of amounts of compensation into the

Accident Compensation Tribunal Fund, and

concerning the sources of, and the management

of, and the payment of moneys from, the

Accident Compensation Tribunal Fund are in my

opinion inconsistent with the existence, in
the case of any of the four amounts of

compensation, of an identifiable fund of

compensation money as the subject of trust

obligations and equitable interests.

And then he went on to set out those particular provisions and then he went on to the passage at

page 86 or 87 which I have already read to

Your Honours, where he said that:

In such a case forms of expression and legal conceptions suggestive of a trust obligation

which are found in the document, whether a

legislative enactment or some other

instrument, proposed as a source of such an

obligation may be explicable as appropriate	to - and as having reference to - the
prescription of government obligations and powers rather than to the obligations and
powers with which a court of equity is
concerned in respect of a trust.

However, at page 99 His Honour went on to hold that
he regarded himself constrained by Harmer's case.

After discussing Harmer's case he said, at page 99,

at line 3:

I believe myself constrained by the reasoning in Harmer's case to conclude that

each of these four amounts of compensation was

at relevant times a "trust estate" within the

meaning of that expression in Division 6,

notwithstanding that in respect of none of

Compensation(2) 28 3/2/93

them was the trustee "liable for the moneys in

specie, but (was) liable only to repay money
of the same amount", and notwithstanding that,

in the cases of at least two of those amounts,

there was no person who had a right to any

benefit in respect of that trust estate. I

base that conclusion, not upon what is said in

Harmer's case about a sum of money subject to

a pre-existing trust at the time it is paid

into court, but upon what the court said about

the sum of money paid into court by Riverhall

while that sum remained in court. Upon

payment into court those moneys are said by

the High Court to have become "trust moneys"

in the broad sense that neither the Accountant

of the Crown Law Department nor the court

itself was beneficially entitled to them. Then over the page at page 100:

It suffices to say that the trust upon which

the moneys were held as a trust for statutory

purposes ..... and that the. legislative
provisions, including Rules of Court,

applicable to govern the payment of the moneys

into court and their subsequent application

effectively overrode any need of that element.

That was quoting, Your Honour, from what was

said in the judgment. At page 103, he said, at
line 11:

an expression of opinion that the money paid

In those circumstances I understand the

into court by Riverhall was, while in court,

subject to a trust for statutory purposes and

that it constituted a "trust estate" within

the meaning of that expression in Division 6.

There is in my opinion no sufficient basis for	reaching a different conclusion concerning any
of the four amounts of compensation in question here -
Well, in our respectful submission, the matter

really goes the other way, that we must construe

the 1985 Act in the present case which sets out a

statutory scheme and what basis is there for

carrying across an analogy in regard to some
different statutory scheme. So, in our respectful

submission, His Honour went wrong there.

His Honour reserved his judgment in that case

and after the parties had argued the matter, the

decision in Harmer's case was handed down and

His Honour did not call the parties for further

argument based upon the decision in Harmer's case

Compensation(2) 29 3/2/93

but chose not to do that and instead regarded

Harmer's case as in some way determinative of the

issues before him without hearing any further

argument.

Your Honours, I have not proposed to say anything about Harmer's case, save to say that that

was a matter which arose by reason of a payment in

under the rules of the Supreme Court of Western

Australia. Of course, as a matter of theory, it is

quite possible that in Western Australia there were

statutory provisions or rules of court which

created a trust where the trust might not otherwise

have been created. That would be entirely a matter

of construction of what I might loosely refer to as

the "Western Australian provisions", but that has

nothing to do at all with the position which arises

under the Accident Compensation Act. I have gone

through the relevant provisions of that Act,

Your Honours, in order to show that in so far as there are indicia, those indicia point towards a statutory scheme and quite clearly say there is an

attempt even to exclude trust liabilities and that,

in our submission, this is really a pretty clear

case of a statutory scheme which is enforced on

that basis rather than upon a trust estate.

I should refer Your Honours to the extended

definition of "trustee" in section 6 of the Income

Tax Assessment Act. Your Honours will observe that

in section 6 there is a special definition of

"trustee", this in the Income Tax Assessment Act,

which provides that:

in addition to very person appointed or

constituted trustee by act of parties, by

order, or declaration of a court -

the term includes:

(b) every person having or taking upon himself

the administration or control of income

affected by any express or implied trust, or

acting in any fiduciary capacity, or having

the possession, control or management of the

income of a person under any legal or other

disability.

My learned friend, Mr Charles, before

His Honour Mr Justice Jenkinson, did argue that

this is a case where if it was not a trust in the

ordinary sense, there was none the less a fiduciary

capacity. If, of course, there were a fiduciary

capacity, then there would a constructive trust.

But in our submission, Your Honours, the exclusion of "trust" and "equitable obligations" is

Compensation(2) 30 3/2/93

general, but we have here a statutory scheme

involving administration by the tribunal in

accordance with the Act, and that statutory scheme
covers the field, as it were, not in some partial

sense and simply excluding "express trusts" and

permitting implied or constructive trusts, based
upon a fiduciary capacity or anything else, but it

simply excludes, entirely, any basis of equitable

intervention in regard to the fund in question.	In
our submission it is not necessary to say anything
more about that.
If Your Honours please, there are other issues, of course, in the present case, which will
be dealt with by my learned friends who are intervening on behalf of the Attorneys-General for the State of South Australia and Victoria but, in
our submission, what we have said this morning is
sufficient to dispose of this case. That is to
say, that in the present case, there simply is no

trust, there is a statutory scheme, the assessments

must fall, and that is the end of the matter. If

Your Honours please.

BRENNAN J: Whose income is it then if it is not - - -

MR SPRY:  Your Honour, the analysis in the High Court in the

decision in New South Wales v the Commonwealth

would tend to suggest that these are governmental

moneys.

BRENNAN J: So, even if they are

MR SPRY: But with a statutory obligation to pay the precise

sums to the particular dependant when the Act

requires it. And, we would submit that that

analysis of the High Court in that case is, with

respect, correct.

McHUGH J:  Your point is that fund and its income are vested

in the Crown?

MR SPRY: Yes, that is right. If the Court please.

MASON CJ:  Thank you, Dr Spry. Mr Finkelstein.

MR FINKELSTEIN: With the Court's leave, I have had some

discussions with my learned friend, Mr Doyle, and

we rather thought that, because he was going to

address his submissions principally on the question

whether there was a trust or not, it would be

convenient if he went next, and then I would deal

with discrete questions and come last. Thank you.

MASON CJ: Mr Solicitor.

MR DOYLE:  Does the Court have our outline of submissions?

Compensation(2) 31 3/2/93

MASON CJ: Yes.

MR DOYLE:  If the Court pleases. The Court will have seen

from the definition of trustee to which - I am

sorry, I should start by saying, first of all, we

respectfully adopt the submissions put by Dr Spry and, secondly, as I mentioned when I announced my appearance, in relation to paragraph 20 of our

outline, what I might call the Bropho point, I will

simply adopt the submissions to be put by

Mr Finkelstein, and we also adopt his submissions on the issue of whether there is a constitutional

inhibition which would mean that the Commonwealth

is unable to tax the Crown or the State, even if

the Act purports to do so. And so, as I said, my

submissions are confined to Division 6.

The court will have seen from the definition

of "trustee" to which Dr Spry referred that in

subparagraph (b) there are three limbs:

any express or implied trust -

That is one limb. The next one is:

acting in any fiduciary capacity - And in the third one is:

having the possession, control or management

of the income of a person under any legal or

other disability;

I propose to address submissions briefly to each of them, because as I understand it from a quick

glance at Mr Charles' submissions, he does, if

necessary, rely on those other possibilities. But,

much the same issues tend to arise under each head.

In other words, in our submission, one tends to

come back to similar issues under each three heads,

and so my submissions were mainly directed to the

issue of express or implied trust.

The other point I would make, Your Honours, is that I will be particularly addressing submissions

to the judges' concept of a trust for statutory

purposes. That in the end was how he analysed the

matter. I will not re-read the pages, but I will

just give Your Honours a couple of page references.

But I am sorry, the book I worked off was M52 of

1992 and I am not actually sure which person's

matter that is. But anyway, it is M52, so I am

sorry to inconvenience you but my page references

are just going to be slightly different. Matthes

is the matter.

Compensation(2) 32 3/2/93

The way His Honour reasoned was, as I

understand him, that he said, first of all the four

amounts of compensation were not an identifiable

fund held on trust. And that is the first stage of

the judgment to which Dr Spry referred, and that

appears at pages 84 to 85, and then again to the

same effect at page 88 line 22 through to page 89.

Then the next step in his reasoning, having

said that, which when one reads it, one thinks for

a moment, well it looks like they have won, then he
went on to say, well never the less, those four

amounts of compensation were subject to a trust for

statutory purposes.	And that is 102 line 7 and 103
line 14.

Then the next step, as I understand him to

say, well therefore the amounts of compensation are

a trust estate for the purposes of Division 6.

That is 103 line 15, and 101 line 3, and he called

this trust an "implied trust" in the context of the

definition of trustee. That is at 104 line 8.

Then he said, well when the Registrar or the

Tribunal allocates income to an amount of

compensation, he said that is what Division 6

imposes tax on, that act of allocation. That is

108 line 23 and 109 line 18.

Your Honours, I think, will have picked up

that there were two assessments in respect of each

amount, one in respect of the year in which the

income was earned by the fund and another one in

respect of the year in which the allocation was

made, and following his reasoning through he set

aside the former assessment and said the correct

assessment is the assessment based on the year in

which the Registrar or Tribunal actually did the

allocation. And he said that is the thing that

attracts the liability to tax, and he said if there

had been no allocation there would have been no

liability to tax.

So, as I said, Your Honours, he focused on

this concept of a trust for statutory purposes

which he saw as existing consistently with his

conclusion that the four amounts of compensation

were not an identifiable fund held on trust. It

may be the thrust of what he was saying there was

really that because it was a mixed fund that might

have explained the first step in his reasoning but,

in our submission, those two parts of his judgment

do seem a little bit contradictory and it is a

contradiction which, in our submission, is not

really explained.

Compensation(2) 33 3/2/93

So, could I go then to the primary submission,

namely, that there is here in terms of the

definition of "trustee" no income affected by any

express or implied trust because I take it, and the

judge himself seemed to proceed on this basis, that

no one would suggest that the Tribunal or the

Registrar were a trustee -

by act of parties, by order, or declaration of

a court -

and I do not think His Honour was saying "by

operation of law". He seemed to be focusing on

subparagraph (b) of the definition.

Now, Your Honours, our submission on this

point that there is no express or implied trust is,

I suppose, encapsulated in paragraph 2 of our

outline. Dr Spry has taken the Court to the

sections and I will not go to them again but, in

our submission, when one looks at the Act and, in

particular, that group of sections, 73 to 79 and

then 130 to 132, first of all we have there what is

simply a complete statutory scheme for the

existence of the fund: what goes into to it; what

goes out of it, and how the fund is administered

and handled, and it is a scheme which suggests

there is no need for and no scope for notions of

trust. So our first point is that as a matter of

common sense, when you look simply at what is

there, it is all explicable in terms purely of the

statute and it is confusing and misleading to

introduce trust terms.

Then we draw further support from the

provisions to which Dr Spry referred,
section 131(2) which says the Registrar -

shall not in administering any amount of money

under this Act be bound by any law relating to

the administration of trust funds by trustees

but shall act in good faith.

So again, we submit that seems to make it even

clearer that all notions of trust are, as it were,

out the door. His Honour dealt with that

particular provision at page 104 in a manner which,

in our submission, is not particularly convincing.

I suppose it is best at the very bottom of

page 103, the last two words. He is referring to

the subsection there and he says:

But in my opinion that sub-section does not deny the existence of a trust of the money to

which it refers. It frees the Tribunal and

the Registrar from the operation of part of

the law of trusts.

Compensation(2) 34 3/2/93

I take it His Honour was really reading the section

as if it was saying, "Well, even though these

people are or may be trustees, in this particular

respect they are not to be fixed with the
responsibilities of a trustee." But, in our

submission, first of all that is just not the

natural reading of the section, namely, the

premise, even though these people may be trustees;

but secondly, those words "administering" seem to
be quite sweeping and if they do, as it were,

free -

the Tribunal and the Registrar from the

operation of part of the law of trusts -

it is a pretty big part because it is not just

talking about investment, it is obviously talking

about making decisions as to who gets money, when

they get money. In other words, it is really all

aspects of his dealings with the money. And so as

I said, even if one says it is not - and it clearly

is not, as it were, a definitive statement about

the status of these moneys - but it is freeing the Registrar from what I would call a big part of the

law of trusts, if that is what it does.

So that is the next point we would fasten on,

the fairly powerful force of that subsection.

There is also, I suppose, the fact when one looks

at the sections to which I refer, that the

treasurer plays a part in the administration of

this fund and in the control of these moneys.

There is the fact to which Dr Spry adverted, that

the moneys are mixed with other moneys, which is

not conclusive but certainly points that way.

Then one has the position of what the Act

calls "the person entitled" and in these

submissions I will henceforth just use the term

"person entitled", but I want to make the point

that under the workers' compensation legislation of

Victoria, as I think is the case in probably all

States, the person entitled is not really entitled.

In other words, in a dependants type claim the

person entitled may receive no money; it may turn

out that the money goes to other dependants. In

other words, the award is made in respect of the

deceased worker and then the person entitled comes

in as a dependant, and more dependants may emerge

after the claim is heard. So the person entitled

has an entitlement which is, if I can put it this

way, entirely dependent upon a further decision of

the Tribunal first of all recognizing the person as

a dependent, and then deciding whether the person

is to get money or not.

Compensation(2) 35 3/2/93

BRENNAN J:  How does that accord with His Honour's approach

that that which is the relevant income is the

allocation of the money to a specific account in

the name of a specific person?

MR DOYLE:  It is the very last bit, Your Honour, "in the

name of a specific person". It was the allocation

of money to a specific account, but the most one

can say, in my submission, is that is an account

being held for the dependants of an identified

worker, and we will know who the worker is if we

look at the order providing for the payment.

BRENNAN J: Is that right? Looking at M50, page 7, I

thought we were given an illustration of how the

specific amount was allocated to a specific person,

namely one of four in that case, that pursuant to

sections 34 and 35, I thought it was, of the Act?

MR DOYLE:  Your Honour, this part of the submission, which

is in a sense a makeweight, because obviously my

point of principle goes beyond just amounts held in

respect of deceased persons, but I had relied for

what I am saying, Your Honour - if we could go to

M52, page 110 of the book, starting at about

line 10:

At and since the time of Mrs Cousins's

husband's death that word -

"dependant" -

has, in both ..... meant those persons who at

the time of the worker's death were wholly or

mainly or in part dependent on the earnings of

the worker ..... Although a right to claim an
award of compensation in respect of the death

of a worker was conferred on each of his

dependants, in the defined sense ..... and	although the sum awarded as compensation for	the death was described in both the ..... as a
sum to which the dependants have an
entitlement, ss 34 and 35 of the former Act ands 132 of the latter Act conferred on the
Workers Compensation Board and the Accident Compensation Tribunal ..... respectively powers,
while there were several dependants, of such a kind that the only entitlement of a dependant
was to the exercise from time to time of a
discretionary judgment by the repository of
the powers as to whether any benefit - and, if
so, as to what benefit - should be conferred
on that dependant by the application of
compensation money.

BRENNAN J:  We are past that stage now, are we not?

Compensation(2) 36 3/2/93

MR DOYLE:  I must say, Your Honour, I am sorry that I am not

clear on this. I am not clear whether the

particular document to which Dr Spry refers

indicates what I might call an irrevocable decision

that "This dependant is to get this amount of

money, and we are simply now holding it until this

dependant - - -

DAWSON J: Forgive my ignorance, but what happens to the

money in the end?

MR DOYLE:  I do not know, Your Honour, what happens in the

odd case where dependants do not actually come for
it, but in my own experience - and I suspect it

would be similar in all places - these moneys are

held and then the dependants come forward. If

first of all it is disputed they are dependants,

they will have to establish it, and then they say,

"We want money for school books." If it is the

widow, she might say, "I want money to take the

children on a holiday somewhere", and the relevant

official considers that request and if he sees fit,

then draws on the fund.

So it is really only then and there that a

particular amount - that one would say there is a

true entitlement to a particular amount. Let us

assume illegitimate children could be dependants,

and if 10 years later suddenly someone emerged and

said, "Look, I'm actually a previously unknown

illegitimate child of the deceased", that person

could - it would probably on those facts be very

hard to prove you were a dependant at the time of

death, so perhaps I will not introduce that

particular fact situation.

But a dependant perhaps who had been lost

track of could come forward some time later and

say, "Really I'm to be included in the group of

claimants."	I do not claim to have fully mastered
all the facts of each case, but I did not

understand from the materials - and I am sure I

will be corrected if I am wrong - that any

particular amounts of money had been allocated, as

it were, irretrievably and irrevocably - - -

DAWSON J: 

So that at the end when there ceased to be any
dependants there may be a sum left there in that

account and that just reverts, does it, to - - -

MR DOYLE: 

Yes, well that is my understanding. I could not

find anything in the Act that covers that and
obviously - - -

DAWSON J: Just to complete that; if there is only one

dependant she - if it is a she - cannot say, "Well

I just want the whole lot now"?

Compensation(2) 37 3/2/93

MR DOYLE: Well, not as I understand what His Honour says

here, and - - -

DAWSON J: In other words, there is no entitlement to a

capital sum?

MR DOYLE:  No, it is an entitlement to go to the Tribunal

and say, "I am a dependant", and they will either
say, "Yes we know you are", or "Prove it", and
secondly, "I have a need for some money now; would
you please give it to me?". Now, of course, in a

particular case it may be, "I want to buy a house

for myself and the children", and the dependant may

get the whole lot of money, but the point is it is

a matter of going and making a particular request

and if that request is granted because you are a,

eligible, and b, it seems an appropriate use of the moneys, then, and only then, do you get some money.

TOOHEY J: Is it right, Mr Solicitor, to suggest that at the

end of the day there may be moneys which will not

go either to the widow or the children?

MR DOYLE: Well, that is how I see it, Your Honour. Again,

obviously one knows it is unlikely that will happen

but - - -

DEANE J: But one thing must be quite clear, must it not,

and that is, in the absence of unclaimed money
provisions nothing ever goes to the Crown, and if

it does not go to the dependants it surely goes

back to the person who is ordered to pay it in.

MR DOYLE: Except here, Your Honour, on our analysis it has

gone into the fund and it is now simply, if one

wants to start saying, "Whose property is it?",

then we would submit, if anyone's, it is the

property of the Crown.

DEANE J:  So you do say that if orders are not made on this

support basis for dependants the money paid in by a

particular worker for the benefit of particular

dependants goes to the Crown. That strikes me as

absolutely extraordinary.

MR DOYLE: Well, Your Honour, I am not sure that that could

quite happen, because for the claim to - - -

DEANE J:	On your argument it must -
MR DOYLE:	- - - be made a dependant has to come forward and

make a claim.

DEANE J: But on what you have said it must happen, in that

you have said the Crown has the legal and

beneficial interest that the moneys only go to

Compensation(2) 38 3/2/93

dependants to the extent that there are particular

orders and the dependants will not get the surplus.

MR DOYLE:  Yes.

DEANE J: Well now, on your argument all this money then

goes to the Crown beneficially.

MR DOYLE:	Yes, I was only, Your Honour, cavilling at the notion of where there being no dependants.	I agree
at the end of the day if the requests by the

dependants have not exhausted the fund or the part

of the fund allocated to them in the ledger then,
yes, that would be the result of my conclusion
because the money is simply held by the Crown, or
by the official of the State in his governmental
capacity. A certain group of people are eligible

to make claims under the Act against that and the

State, through this official, will meet those

claims if made. But if, in the end, there is money

left over it would simply stay in the fund.

TOOHEY J: If you took it back one step, Mr Solicitor, to

the original hearing that gave rise to the award,

assuming that there was a dispute, there would be

parties to the hearing before the relevant

Compensation Tribunal and an award would be made in

favour of, one would think, the applicant or

plaintiff, however it is so described, and then the

Act operates so as to provide that the award,

instead of being immediately available to the applicant, is invested in accordance with the statutory provisions. But the very fact that an

award is made suggests that it is made for the

benefit of those persons.

MR DOYLE: True, Your Honour, but the award is made though for the dependants of the deceased. If I can use

this terminology: the plaintiff will, I think,

have to be a dependant but really makes the claim

on behalf of a group of people, and so that is

another reason why the award is not paid to the

plaintiff, because it is an award for the benefit

of all those who are now known to be or might later

turn out to be dependants of the deceased, and so

sorting out who are the dependants and how much

they are to get comes at a later stage.

TOOHEY J: Yes, I understand that, but all that statement

implies is that no one dependant is necessarily

entitled as of right to a particular proportion of

the award - - -

MR DOYLE: True, yes.

TOOHEY J:  - - - but, collectively, the dependants own

title to the benefit of the award, are they not?

Compensation(2) 39 3/2/93

MR DOYLE:  Yes, Your Honour, but in a sense that if they

come forward and make requests for payment which

seem appropriate they will be met but,

nevertheless, in my respectful submission, if, at

the end of the day through some curious mischance,
the dependants have not drawn on all the money and

there are no dependants around, then it is simply

money in a fund held under the Act, administered

under the Act, which is money of the Crown and

claim sufficient to exhaust that portion of the

money just have not been made and the money stays

exactly where it is, in the fund.

TOOHEY J: Would you say that if there had been a fatal

accidents claim and an award had been made by the

court and moneys directed to be paid to the public

trustee for investment?

MR DOYLE:  No, I would not, Your Honour, because in my

submission when we bring public trustee into the

position, and again it is difficult to generalize
because there are Acts in every State, but as a

general proposition my submission is that public

trustee is a public official constituted to be a

trustee and therefore there are not the same

objections to the trust analysis when you have got

money held by a public trustee. So if there has

been court process, money is now paid to public

trustee, it may be relatively easy, in fact may be

the natural analysis to say, "Right, that money is

held on trust and that is its status". Our

submissions are directed to moneys which are held,

I suppose to be precise I really should say, by the

State or one of its functionaries not being public

trustee as to whom different considerations apply.

BRENNAN J:	Mr Solicitor, does your argument sit well with provisions of section 34(1A) of the 1958 Act? This
is the yellow pages.
MR DOYLE:	I did not get a set of the materials,

Your Honour, could I just take a moment?

BRENNAN J: Well, it provides, apart from anything else,

that the:

moneys paid into the custody of the Board

shall ..... be invested applied or otherwise

dealt with in such manner as the Board thinks

fit for the benefit of the persons entitled

thereto under this Act.

MR DOYLE:  Yes. Your Honour, can I say without seeming

cheeky, not comfortably, but irreconcilably in the

sense that they are natural words to use, and we

have to bear in mind just as some of the cases

show, the word "trust" may be used in relation to

Compensation(2) 3/2/93

the Crown or Government, and we know straight away

it is not a true "trust". They are just the

natural and simple words to use to indicate that

you will handle the moneys in a way which is in the interests of these people. In other words, do not, for instance, invest it in a government building at

low rent, which one may say, well that is safe.

But, apart from being safe, there is virtually

saying no income for the people who are the people

referred to in the section.

So I would say, an awkwardness in terms of my

argument, but when one thinks about it and bears in
mind constantly the importance of the governmental

flavour of the situation, there is no

irreconcilable conflict.

BRENNAN J:  I take you to the next subsection, (2)(a), and

ask you whether the relevant question for our

determination here is not the terms on which the

board first holds the money, but the question as to

the terms on which the board holds the money which

it has applied pursuant to 34(2)(a)?

MR DOYLE: Well, Your Honour, I read that particular

subparagraph as referring to what are called

"payments out". In other words, it is saying that

the board is to, as it were, spend the money in the

manner which will be most beneficial to the

dependants, and not as speaking about the board in

what I will call its investing or custodial or

holding capacity.

On that basis, my answer then would be, we are

dealing here with moneys at the first stage simply being held, or moneys that were previously held by the board under that Act. We are not dealing with moneys which have been applied in the

subparagraph (a) sense because we are not dealing

with any moneys that have been either handed over

to a dependant or, which I suppose is another

possibility, used perhaps in this way: the official
buys a house and for some reason registers it in

the official's name but lets the dependants live in

it. That seems a bit unlikely, but I suppose that

sort of thing could happen.

So as I understand it here, we are not dealing with moneys that have been applied. We are dealing

with the capital fund being the whole fund, and

then in relation to these particular assessments,

we are dealing with part of the income of the total

fund for a given year which has been allocated in a

ledger on the basis of a previous allocation to a

group of dependants. In other words, because if

the fund is, say, 100 units and the dependants of

Matthes have contributed one unit of that fund,

Compensation(2) 41 3/2/93

then on the basis that in the ledgers, when one
looks at the balance of the fund at the end of the
preceding year, they hold, in effect, one unit out
of 100, therefore there is allocated to them after,

it seems, the deduction of certain costs of the

Tribunal and so forth, there will be attributed to

them one unit of the income that remains. That is

what we are dealing with, as I understand it.

BRENNAN J: Then your argument is that His Honour was wrong

because he selected as an occasion for the

imposition of tax an appropriation which had no

legal effect?

MR DOYLE:  No, Your Honour. My argument - and maybe I am

putting it too fuzzily - is that that amount also

is not subject to any trust, that it is simply

recording in the accounts of the Tribunal or the Registrar the amount which is the maximum amount

which could be paid to that group of dependants.

BRENNAN J: It had no legal significance?

MR DOYLE:  Yes, Your Honour is right, I suppose it does come

to that. Yes, it is of no legal significance, but
the only reason I hesitate is that in this sense it

is of legal significance because if we said, "Well,

what is the amount in respect of which the Matthes

dependants are entitled?", one could only answer

that by going to the accounts of the Tribunal or of

the Registrar. And so while, I suppose, one can

say as an act, it is not a legally significant act,

the state of the accounts is legally significant

because it is only by reference to them that one

can, as I said, identify the maximum amount on

which this group of dependants could call, and to
which the Registrar could resort in answer to a

call.

DAWSON J: What does happen to any amount that is left after

there has ceased to be any dependants?

MR DOYLE:  Ms Wells refers me to a Victorian decision which

is on Mr Charles' list of authorities of Earwood v

Blackham Pty Ltd, (1965) VR 499, and I must say,

starting to look at it, it suggests that some of

the submissions I have made may be erroneous. The

particular point is at page 501, referring to the

Victorian Workers Compensation Act 1958, and at

line 34:

This indicates, without explicit

statement, that the class of persons entitled

to the payment in the case of death is the

dependants of the worker and that it is they

who are to have the benefit of it.

Compensation(2) 42 3/2/93

This was the view taken by the House of

Lords in United Collieries v Simpson, where it

was held that a right correlative to the

liability imposed on the employer on the death

of a worker was acquired by a dependant, and

that such right was transmissible to her

personal representative on her death before

making a claim.

I am not sure whether that is referring to the right to make the claim or whether that is
referring to what would happen to the moneys after

death of the last dependant. As I read it, it

would seem to be referring to the right to make the

claim because it says it is:

transmissible to her personal representative

on her death before making a claim.

So perhaps my initial alarm can diminish a little. Dr Spry assures me this does not matter because we

are dealing in any event with statutory rights. I

am not sure if I share his confidence that it does

not matter, but - - -

GAUDRON J: Could I ask a related question, Mr Solicitor?

How does an account get closed, as it were, to use

a neutral term?

MR DOYLE:  I am afraid I do not know, Your Honour. I could

not see anything in the Act that covers that. When

I worked through the agreed facts, I could not see

anything that really explained that either.

Obviously - at least one assumes obviously - if all

the money was paid out, that is it. But in fact

what happens, I am afraid I simply do not know. I

do not think there is any material before the Court

and I do not know whether either of my friends is

sufficiently conversant with the position to answer

it.

Your Honours, I think I sank into those rather

deep waters at the point when I was submitting that

the nature of the entitlement of the person

entitled is significant here. I do hope I have

swum through the deep waters and I will continue to

put that submission, that the nature of the

entitlements is also significant.

So we would argue then on that basis, that

when you have looked at the Act and the provisions

it makes and those points we adverted to, there is

no reason really to introduce the notion of a

trust, and the notion of a trust just does not sit

comfortably with it. It is a complete statutory

scheme and explicable, really, just in its own

terms and to overlay it with the notion of a trust

Compensation(2) 43 3/2/93

just starts to cause confusion, if nothing else,

because the notion of a trust carries with it

certain connotations that do not then easily sit

with the statutory scheme. In particular I point

again to the exclusion in section 131(2) of any

trust-type liabilities in respect of the

administration of the fund.

Then we, as it were, say that that conclusion,

that preliminary conclusion, is supported by what

we have got in paragraph 3 of our outline, that in

addition to the statutory scheme you have in the

background, as it were, the duties which the

Registrar and possibly the Tribunal members owed to the Crown on the basis that they are public

officers.

Your Honours, I do not think it is necessary for these submissions to take Your Honours to the

authorities which we refer to in paragraph 3 of our

outline, but what they do show is that public

officers owe duties to the public, duties which are
enforceable by the Crown, by both the criminal
process and, secondly, civil process, and many of

the remedies obtainable by civil process are very

similar to remedies available in equity.

So in Reading's case, which I am sure

Your Honours will be familiar with - the army

sergeant who rode in uniform in the truck carrying

contraband, thereby gaining bribes because his

presence meant the truck could pass through

checkpoints - he was said to either be, or be the

same as, the fiduciary in that respect, and so the

Crown could recover from him the bribes he had

received.

We submit that that just strengthens the

submission because there is that further category

of duties and obligations which flow from the	governmental nature of the situation and once again	there is no need again to intrude into this concept
of trust.

I will come back to this point about the

fiduciary in relation to the second part of the
definition of trustee. In our submission, it is

not necessary for the Court to get into what might be the difficult issue of whether a public officer

is in fact a fiduciary. I acknowledge the duties

he owes to the Crown, which are enforceable by the

Crown, are very similar to duties owed by

fiduciaries but it is not necessary to decide the

question because our argument is that he is not

acting in a fiduciary capacity. That is not a

proper description of what he is doing, he is

acting in a statutory capacity and he simply

Cornpensation(2) 44 3/2/93

happens to owe duties which are either very similar

to fiduciary duties or may, if you like, be called

fiduciary duties to the Crown.

So that is our second reason, Your Honours,

for saying the trust analysis should be excluded, the fact that this officer, the Registrar and the Tribunal are public officers and there is another,

as it were, tier of duties which flow from that.

And then our third reason, Your Honours, is

that in paragraph 6 of our outline, and again I do

not need to read again from the case, Dr Spry has read from it, but the very firm statements by the court there that when you get the Crown or the

State holding funds that at least there is a strong

presumption one simply does not talk of notions of

trust, the moneys are simply held by the Crown,

there is a claim by the person entitled against the

State which is regarded as the highest form of

security, still it seems, and there is no room for

trust notions, and Your Honours probably will have noted, when Dr Spry was reading this, that some of

the moneys referred to there, one would think, must
inevitably have been moneys as to which a

particular person could say, "That is in every

sense my money", and yet the court was saying,

because it came from suits and equity accounts and

such accounts, that the court was saying, "This

money in the hands of the Crown is not subject to any trust, there is a claim against the Crown for the money but there is no room for trust here".	So
there is that third factor that here what we have
is the State providing for the performance of a governmental function, probably the best way of
putting it, when the Tribunal or the Registrar
receives the money and that is another reason for excluding the trust analysis.

So, first of all, we say on that basis it

seems clear really that there is no room for the

trust analysis here in any ordinary sense.

Moreover, one would not say, in our submission,

that there is a trust but it is a trust for the

Crown, and I simply rely upon the decision in Town

Investments referred to by Dr Spry.

Then, I suppose one has to say, "Now, is it

right, nevertheless, to say that there is a trust

for statutory purposes" and that seems to have been

the reasoning of the judge, and that notion,

Your Honours, seems to have originated in terms of

Australian cases in the decision of this Court in

Fouche v The Superannuation Fund Board, (1952)

88 CLR 609 at 640. Perhaps I should, first of all,

take Your Honours to the passage where that

statement is made about a trust for purposes, I

Compensation(2) 3/2/93

think it is page 640. I will come back to the

facts in a minute; I will just show Your Honours

the particular passage, just above the mid-point of

the page, Their Honours said:

We do not think, indeed, that the

contributors -

that is to the Superannuation Fund -

are beneficiaries in the proper sense: they

have, of course, an interest in the trust fund

which would probably give them standing in a

court of equity, but they have not such a

beneficial interest in the fund as has an

ordinary cestui que trust. The trust is not a

trust for persons but for statutory purposes.

And His Honour seems to have drawn on that and, of course, Your Honours referred to that judgment also

in Harmer to which I will come in a moment. And so

there is the notion of trust for statutory purposes

and it might be said, "Well, then what is the

problem". There was a statute, a statutory scheme,
but the court said, "Nevertheless it is a trust for

statutory purposes".

In our submission, first of all, Dr Spry was,

we respectfully say, was correct in saying, well,

so be it for that situation, and we have got to

look at our particular situation and the particular

provisions here.

But, secondly, could I say this as to Fouche's

case. And I just mention, by the by, that we have

provided to the Court some extracts from the

Tasmanian statute, some sections that are not

referred to in the judgment.

When one looks at the Act, what one finds

first of all is that moneys were paid into this

fund by contributors and payments of pension

benefits were made from the fund, so it was a fund sourced by contributors and it was one of those, I

think now, old fashioned superannuation funds where

you contributed in units, and for each unit of

contributions, you got a defined and, specified in

the Act, entitlement to a pension. So, for one

unit, you would get, say, two pounds eight

shillings, or whatever the amount was, and there is

a table in the Act which shows the value of each

unit.

So, for a start, the structure, although it is

under a statute, it is starting to look very much

like what I might call a private law structure.

Compensation(2) 46 3/2/93

At sections 20 and 28, which deal with

benefits from the fund and contributions in, and

also section 4(3). It also seems, as best I can

tell, under the Act, that there would be no

circumstances under which the Crown would have any

interest in the fund.

The fund seems entirely devoted to payment of the pensions and, apart from the fact that it is

set up under an Act, there seems to be no

conceivable basis on which the Crown could ever

say, well some of the money in that fund now comes

to the Crown. And, indeed, under section 6(4), the

Crown had to top the fund up, if the earnings of

the fund in a given year were insufficient for

benefits.

It is also doubtful, in our submission, whether the board could be said to have been the

Crown, even though this was a fund for public

servants. It was a board of five members, but

three of the five were elected by contributors,

that is section 7, and other provisions, round

about section 7, gave members of the board, in

effect, security of tenure, in the sense that they

could only be removed for cause, they could not be

removed at the discretion of the government.

So, in our respectful submission, although

this is a statutory fund, on the other hand, it is

readily distinguishable from the present case. And

in our submission, one would not say here, for any

reason, that this is a case, that is Fouche, of the

Crown or the State holding moneys, first of all,

and, secondly, in our submission, the interests of

the claimants, or potential claimants, against the

fund was very different from the interest here.

And so, for all those reasons, we would

respectfully say that even if it was right to say,

in Fouche's case, that that was a trust for

statutory purposes, it does not get one anywhere in

terms of our case. And we would acknowledge, with

respect, that it was probably a fairly natural way

to approach that case.

Another matter I have forgotten to mention is that the investment powers of the board in that

case were talked of in terms of being the same

powers as a trustee would have, and so there was

that illusion in the Act itself to trust notions

which one could well understand leading the Court

towards a trust analysis.

So, we would respectfully submit that

Fouche's case can be clearly distinguished and does

not provide any support for the notion of a trust

Compensation(2) 47 3/2/93

for statutory purposes at all, actually, in our

context, where the money is being held by the

State.

The only other point I would make which

perhaps does not really get me far because it is

clear that this was no mere dictum, but the trust
analysis does not seem to have been necessary to
the decision, because the decision was that, first
of all, a particular person could not, by action,
enforce a claim for moneys from the fund, because a

payment to him would have been an unauthorized investment, and so one could have simply said, "Well, that is an investment which would be

unauthorized, having regard to the terms of this

Act, and therefore how can your claim for moneys

from the fund succeed?"

The other claims in this action were claims by

the board against ex members who had entered into

the transactions which gave rise to the claim by Mr

Fouche against the board. In other words, first of

all, the expenditure of money, or the payment of

money to Fouche was unauthorized, and then those
members having gone, the board, apart from

resisting Mr Fouche's claim, was also saying, the

ex members should refund the board for the

unauthorized payments. And again, in our

respectful submission, assuming they did

participate, it would seem that they would have

owed a duty to the fund which would be enforceable

by making them repay the unauthorized investment.So

once again, strictly, the trust analysis was not

necessary to the decision.

DEANE J: Mr Solicitor, who or what were the funds or by

whom or what were the funds legally held in this

case?

MR DOYLE: In Fouche?
DEANE J:	No, in our present case.

MR DOYLE: Well, my understanding -

DEANE J: Are there any sort of corporate entities involved?

MR DOYLE: My understanding of the Act is that the - I would

have expected the fund, if it was invested

anywhere, to be invested in the name of the

Registrar of the Tribunal. In other words, not

"Mr Smith", but "Registrar of the Accident

Compensation Tribunal".

DEANE J: Well, if you were an employer, to whom were you

required to make out the cheque or make the

payment? Certainly not to consolidated revenue?

Compensation(2) 48 3/2/93

MR DOYLE:  No, I do not think, Your Honour - perhaps my

friend can tell me. I do not think employers pay

to the fund, I think employers pay to the fund

handled by the Commission and then the Commission

makes payments - - -

DEANE J: Well, if you were the Commission making a payment,

to whom do you make it?

MR DOYLE: Well, either to the Registrar, or, in the context

of this Act, a cheque payable - it probably would

not be strictly right, but a cheque payable to the

fund would certainly get to the right destination.

But, prima facie, in my submission, the right payee

on the cheque would be the Registrar of the

Tribunal.

DEANE J: Well then, in whom is the legal title to the fund?

MR DOYLE:  In the Registrar, and that is all one needs to

say, but one can then say, "Well, when we look at

this statute the Registrar is an official of the

State or of the Crown, and if you want to introduce

trust notions you can say in a sense, well, he is

holding it for the Crown." Btit what the cases say,

in effect, is really "Don't start talking trusts."

Simply acknowledge the fact he is the Registrar, and under these statutory provisions he is, if you want to say, "Who is he holding it for?", he is

holding it for the Crown because he is holding it

to discharge his statutory functions. And from

that fund the statute provides that he may from

time to time make payments to people who can

establish their dependants of a deceased worker.

I suppose, Your Honour, in part, the problem

is we naturally do ask questions such as

Your Honour did, "Who is this money held for?" But the general answers may be a bit misleading in a

sense that the safest way to proceed may always be

to say, "Well, in this particular situation what

would happen to the money?", and that general

answer may convey a reasonably accurate flavour

when you say, "It is held for the Crown", but it

may then be unreliable or unsafe to reason from

that and say, "That must mean that it is held on

trust for the Crown."

DEANE J: What if the Crown told the Registrar to pay the

money into consolidated revenue?"

MR DOYLE: Well, as I read the Act it could not,

Your Honour, because that would not be an

authorized use of the fund.

DEANE J:  So the Registrar would refuse?

Compensation(2)	49	3/2/93
MR DOYLE: Hopefully, yes.

DEANE J:	Why would he be entitled to refuse?
MR DOYLE:	Because of the terms of the Act, because he holds

the fund - - -

DEANE J:  So he would be entitled to say to the Crown, "I

don't simply hold these funds on the higher sort of

trust that the House of Lords has been talking

about .. I hold them on statutory duties which are

enforceable against you."

MR DOYLE:  Yes. And he could say, in effect, "Look, I know

in a sense I am holding this money for the Crown,

but", and then the very things Your Honour has put

to me. So you can say again in a way it is a sort

of trust for the Crown, and I think, in fact,

Your Honour - - -

DEANE J:  Why would not his sensible answer be, "I hold

these funds for statutory purposes"? They are not

your money.

MR DOYLE: 

Yes, well that is a sufficient answer just to say

for statutory purposes, and one needs to go no
further.

DAWSON J: But the question really is not, "Who is the money

held for?," but "What is it held for?", in these

circumstances.

MR DOYLE:	Yes, that is right, and I would argue that - - -
DEANE J:	Which means once you say, "I hold it for statutory

purposes", unless one accepts your answer that

notwithstanding, or apart from application of

unclaimed money funds, there is a residuary trust

to lead to the dependants. in favour of the Crown, one is going to start identifying what the purposes are which are going

MR DOYLE:  Yes. I think Your Honour's questions have caused

me to realize that when I think I said earlier, if

there was a surplus the money would go to the

Crown, that answer really has to be wrong, because

the money can only be handled in accordance with

section 73(3), and so the short answer probably is

that in truth, if there was a surplus and no call

on it, there would simply have to be legislation

providing for what was to be done with it. I think

now, on reflection, that it could not just be paid

to the Crown.

DEANE J: Well, one would normally expect - I know nothing

about the Victorian scheme, but one would normally

expect that if the stage was reached where

Compensation(2) 50 3/2/93

dependants did not need the money for maintenance

it would be applied - the whole of what was there

would be applied to them and paid to them.

MR DOYLE:  Yes. I agree, Your Honour. That is what one

would expect, and so it seems almost impossible

that the situation we are talking about would

arise, and in any event, my answer now is if it

does arise that unless a basis for using the money

could be found under subsection 73(3), it would

simply have to continue to sit in the fund, which

just highlights, I suppose, the point I was making,

that while we can meaningfully say, if we want to,

the money is, sort of, held for the Crown, in the

end, as Your Honour Justice Dawson says, the real

question is, ttFor what purpose is it held?tt and

subsection (3) actually answers that

comprehensively and there can be no other answer.

That is the purposes for which the money is held.

DEANE J: Which means the money is not held for the Crown.

MR DOYLE:  No, and I am acknowledging that language is

inaccurate but it conveys, I suppose, at least a

notion that the Crown has a major interest in the

way in which the fund is handled, but I acknowledge

and intended to from the outset, it is not an
accurate use of language.

So, Your Honours, we would argue that Fouche's case does not get one anywhere and because this is

relevant to what I want to say about Harmer's case

in a minute or two we would argue in particular

that Fouche's case is not really of much assistance

when one is looking at moneys held by the Crown and

that there one has to bear in mind, always, what

was said by this Court in New South Wales v The

Commonwealth about the normal explanation or the

normal analysis when the Crown is found to be

holding moneys in its sovereign or governmental	function, as distinct from holding in a private	function or capacity. So, that is Fouche's case,
Your Honour, where the concept was raised.

The concept of trusts in a statutory context

is also raised in Superannuation Fund Investment

Trust v Commissioner of Stamps, (1978-79)

145 CLR 330. There, Your Honours, the actual

question at issue was the duty - or the liability to stamp duty of certain conveyances or transfers by or

to the Superannuation Fund Investment Trust, and the

question was whether the fund was exempt from duty

and Your Honours will see at page 331, at the top of

the page, a reference to the provision of the South

Australian Stamp Duties Act which contained an

exemption from duty.

Compensation(2) 51 3/2/93

The actual decision was that duty was payable because the Commonwealth Act controlling the fund

showed an intent not to exempt the trust from stamp

duty. Now, relevant to our purposes, Your Honours,

is the fact that there was some discussion about

the basis upon which the money was held, and here

it was mixed up with the Crown. As I read the

judgments, Your Honours, Justices Stephen and

Aickin said that the trust was not the Crown. The

Chief Justice, Sir Garfield Barwick and Your Honour

Justice Mason said it was the Crown and

Justice Murphy expressed no view.

So, if you just bear that in mind. The

Chief Justice says this body, the trust, which

holds the moneys, is the Crown, and then what he

said about the basis on which it held the fund is

at 335 where he said:

Further, property acquired by the Trust for the purposes of the fund becomes on its

acquisition the property of the Crown in right

of the Commonwealth.

And he says:

I am content to rest these conclusions upon
the analysis of the provisions of the Act
which my brother Mason has made in his reasons

for judgment.

So he simply seemed to be saying to the extent one

had to say who owned the property, it was just

property of the Crown in right of the Commonwealth

and that, in my submission, does not cause any

difficulties for our submissions.

Your Honour Justice Mason dealt with this

point at page 354, and if Your Honours could just

keep a finger on the passage I read from the Chief

Justice, I want to come to it in a moment, and at

page 354 - the very bottom of page 353, Your Honour

said:

The argument for the respondent rested

chiefly on the submission that the moneys
standing to the credit of the Fund belong in

equity to the contributors. I do not agree

with this submission. The Act prescribes the

amounts of the benefits to which contributors

become entitled but it does not, as I read its

provisions, give them any property or

equitable interest in the Fund. To a very

substantial extent benefits payable under the

Act are payable out of the Consolidated

Revenue Fund -

Compensation(2) 52 3/2/93

et cetera, and then, a couple of sentences on:

To the extent to which the Trust is a trustee

of the moneys it is a trustee for the

Commonwealth, not for the contributors.

So it could be said as against me, "There is a

judgment dealing with moneys held by the Crown, a

body deemed to be the Crown, and the trust analysis

is used". But with respect, I am not sure whether

Your Honour the present Chief Justice was really saying, it is a trust, or whether Your Honour was

really saying, to the extent that it is relevant to

use trust notions, and if you do use them, then it

is the Commonwealth that you would say is the

beneficiary.

The reason I wanted to just keep a finger in

what Sir Garfield Barwick said is that it is not

clear to me whether he was actually agreeing with

that trust analysis by Your Honour or whether, when

he refers to the analysis "which my brother Mason
has made", he is simply saying, "On the basis of
the sections he refers to, I conclude that it

simply property of the Crown", and not intending to

pick up Your Honour's allusion to trust principles.

Mr Justice Aickin said the body - that is the

fund - was not the Crown. As to the basis upon

which the moneys were held, that was at page 362 of

his judgment, point 6, where he said:

The Fund is thus to be held by the Trust

upon trusts to be ascertained from the terms

of the Act itself.

He then goes on, drawing on the provisions of the

Act, to describe the terms of the trust. Then

Justice Stephen, who said the trust was not the

Crown, said that trust principles were just of no

relevance in this setting, and that is an approach

which we would respectfully agree with. That is at

page 342. About two-thirds of the way down the

page, he says:

little importance to be attached to the fact

that the word "Trust" is used to describe the

entity which s 29 incorporates. I do not

regard it as significantly assisting the case

for the respondent. No true analogy can, I

confined statutory power of management of the	think, be drawn between the Trust's closely as are available for investment and the
position of a trustee in a privately
constituted trust:  I have thus found the

Compensation(2) 53 3/2/93

attempted identification of some cestuis que

trust of the Fund to be of little profit.

He then goes to say that as a matter of practical

concern, the most you can say about the use of the

fund is - et cetera.

So, in our respectful submission, the most

that can be said against our submissions is that

there, at least one member of the Court who took
the view the money was being held by the Crown, and

so we have a statute and we have the Crown - took

the view that maybe and perhaps in fact trust

principles were relevant. But I would submit that that is the most that can be drawn from that case,

and that again it really provides no particularly

persuasive approach for saying that in our case the

trust analysis should be introduced.

Could I then finally go to what this Court

said in Harmer v Federal Commissioner of Taxation,

(1991) 173 CLR 264, and this, of course, is the

passage which seems to have turned the scales and

led to what seemed like an imminent victory at

about page 20 of the judgment being snatched from

Dr Spry's hands, and it is the reference to the

status of the moneys while in court, at the bottom

of page 272:

Upon payment into court, the $198,195

owed by Riverhall became "trust moneys" in the

broad sense that neither the Accountant of the

Crown Law Department nor the court itself was

beneficially entitled to them. They were

received by the court (through the Accountant

as the appropriate officer) pursuant to the

statutory provisions or Rules of Court under

which they were paid in. After payment in,

the claimants acquired an interest in the

moneys in the sense that they were entitled to

insist that they be properly administered -

which I would not challenge -

and applied for the purposes for which they

were paid in. However, no claimant was

beneficially entitled to either the whole or

any part of the moneys paid into court or of

the interest earned thereon. The moneys were

received and held by the Accountant to be

applied in accordance with the orders

ultimately made.

I thought, Your Honours, that somewhere in

the - - -

Compensation(2) 54 3/2/93

MASON CJ: Page 270 at the bottom, is it not, three lines

from the bottom and then over into the continuation

of that paragraph on 271?

MR DOYLE:  Yes, I am sorry, it is the new practice of

putting the cases in footnotes that threw me, I was

looking at the text of the judgment, footnote 23 it

is on page 274.

It suffices to say that the trust upon which

the moneys were held was a trust for statutory

purposes.

And that appears to be a reference to the status of

the moneys in court because if one goes up about an

inch there is a reference to the building society

and then Your Honours say:

It is unnecessary to consider whether the

contingent interests of the claimants in the

moneys paid into court could be aggregated

into a totality of beneficial ownership or

whether the powers of the Supreme Court to

make orders affecting the moneys, including

orders as to costs, meant that one of the

elements of an ordinary non-purpose trust was

lacking. It suffices to say -

purpose trust relying on Fouche. Now, could we put

these submissions as to this, and it was of central

importance to His Honour. First of all this part

of the judgment was unnecessary to the outcome
because the case was concerned with the status of
the moneys held by the persons to whom they were

paid after they had been paid out of court, and

they expressly held the money as trustees and the

only issue was whether there was a beneficiary

presently entitled to the moneys, and so, in our

submission, first of all it was in no sense

necessary to determine the status of the money

while it was in court, and so we would argue that

it is obiter and not part of the decision.

Secondly, with great respect, we would argue

that it is wrong that it overlooks the significance

of what was said in New South Wales v The

Commonwealth about the basis upon which moneys are

held by the Crown when they are received by it or
its functionaries in a sovereign or governmental
capacity. That these moneys were received by the

Court simply to be held by the Court as the

Court -

DEANE J: But in New South Wales v The Commonwealth at least

Justices Rich and Dixon stressed the nature of the

way the moneys were held. They were held by the

Compensation(2) 55 3/2/93

Treasurer, they were not in a separate fund like this, they were held by the Treasurer and they

constituted part of the overall Treasury funds

which, for interest purposes and borrowing

purposes, were treated as one conglomerate whole.

It is as far removed from this case or Harmer's

case, one would think, as one could possibly find.

MR DOYLE:  Your Honour, first of all, my understanding based

on what is said in the Full Federal Court is that

the moneys paid into court then went to the in fact, invested by the Treasurer and held by the

Treasurer. Secondly, my submission is that in New

South Wales v The Commonwealth there are two

distinct strands to the reasoning. First of all,

and the primary strand is, when the Crown receives

money ordinarily there is no trust and then,

secondly, they were saying "And look at how these

moneys were handled. That confirms what we say

because the various separate accounts were treated

in terms of the aggregate balance."

DEANE J: But in terms of the answer you gave me a little

while ago, if the Registrar in relation to this

fund sought to treat it the way the funds were

treated in New South Wales v The Commonwealth, he

would be acting quite improperly and no doubt - but

would an injunction go to restrain him. If the

Crown said "Make these funds available to us."

MR DOYLE:	Yes.
DEANE J:	At the suit of the dependants?
MR DOYLE:	Yes, Your Honour, it would seem to me, with

respect, they would have a sufficient interest in

the use made of the fund to have standing before

the court to challenge an unauthorized use of the

money. But what I am putting, Your Honour, is that

the Registrar has likewise - the moneys are

received and held by him as a representative of the

Crown in its governmental or sovereign capacity.

So my argument is that what is said in New

South Wales v The Commonwealth is relevant, that is

the first strand of the reasoning, that when

someone receives and holds money on that basis you

really take a power of persuading to accept that

there is room for trust analysis there, it is

simply the Crown through one of its officials

holding the moneys. I agree that the second

strand, namely the mixing up of moneys is not

there, although this is nevertheless a mixed fund

and there are moneys in it which, according to the

judge under appeal, are trust moneys and then

moneys in the fund which are not trust moneys.

Compensation(2) 56 3/2/93

So there is that element of mixing and no

doubt, if I can take it one step further, one would expect that when the Registrar invests it he simply

invests it as the fund and so he deals with it as

an aggregate regardless of individual balances as

between individual accounts. But there is not that

particular feature that there was in New South

Wales v The Commonwealth that the Government was

able to draw on the aggregate credit balance

regardless of the state of individual accounts.

But, Your Honours, it is significant that

New South Wales v The Commonwealth was not cited

here, and there was no reason to cite it really because the case came to the Court on the basis, this is a trust, these people are trustees and the

only issue was, is there a beneficiary presently

entitled? And in our submission, if one considers

what was said in New South Wales v The Commonwealth

and bears in mind the fact that the moneys were in

fact, once paid into court, paid over to the

treasurer of the State and invested by him, that in

truth it was not correct to say that the moneys

when they were paid into court were held on a trust

and nor is it correct to say, as the Court said in

particular, that they were held on a trust for

statutory purposes, and Fouche is really a very

different case dealing with a very different

situation. So, without wishing to seem

impertinent, we would respectfully submit that that

particular passage led His Honour into error in the

judgment under appeal.

DEANE J:  Mr Solicitor, I am just trying to remember, but in

Harmer, in terms of that statement, where were the

moneys at the time? Were they not - - -

MR DOYLE:  They were being held by these people who were

called trustees.

MASON CJ:  By the solicitors for the parties who were called trustees.

DEANE J: In a building society.

MR DOYLE:  Yes, it had gone into court and then out to

people who were called trustees and who had

invested it and the only question was, while it is

in their hands, is there a beneficiary presently

entitled?

DEANE J: Well now, your argument is that it is wrong to say

they were held for statutory purposes?

MR DOYLE:  While in court.

DEANE J: While with the building society

Compensation(2)	57	3/2/93
MR DOYLE:	No, sorry, Your Honour.	I do not challenge in

any sense the decision of the Court that the money

held by the solicitors was held on trust. My

argument is that that extra bit of Your Honour's

reasoning, namely, before it got to them and while

it was in court it was on a trust for statutory
purposes, I am arguing that that step was

unnecessary, irrelevant really and, with respect, wrong. That is the very bit that the judge under

appeal has focused on and seems to be saying,

"Well, I was heading one way, but this passage

constrains me to go the other way."

DEANE J:  I had not followed the way you were putting it.

MR DOYLE: Probably because I - we always assume all

Your Honours remember every aspect of all your

judgments, and tend to just plunge into the middle.

I am sorry, I had not made it clear, yes, that the

case was about the moneys, after they had gone out

of court. The passage the judge has drawn on is

about the moneys while they were still in court.

As I said, our submission is that, when one looks

at that particular dictum in the light of what was

said in New South Wales and the Commonwealth, it

cannot stand.

So, Your Honours, we therefore would argue,

having looked at the cases which have picked up the
notion of a trust for statutory purposes, that it

just does not fit here, and that is really our

second stage, drawing on the provisions of the Act,

the relevance of the public office and material,

that the trust notion does not seem to fit

generally and that the trust, for statutory

purposes notion, drawn from Fouche, does not fit

either, and that Fouche is clearly distinguishable,

and that one should be very careful about that

notion.

In other words, it is not to say there cannot

be a trust for statutory purposes, but rather to
say that it is likely to be a rather confusing
notion to introduce, and the more natural and
simple analysis of this situation is as, I think

Your Honour Justice Dawson put to me some time ago,

the money is just held for the purposes of the Act,

and you do not need to say any more.	And it is
misleading to say any more.

So, Your Honours, I will not read from this,

but the portion in the Full Federal Court which

shows that the moneys went to the Treasurer, when

they were in court, and would be mingled with the

funds of the State - that is, 94 ALR 541, at

page 549 where that point was made by the Full

Federal Court.

Compensation(2) 58 3/2/93

On my point, despite what Your Honour Justice

Deane says to me, what I call the first strand of

New South Wales v The Commonwealth is directly

relevant, could I just then give two page

references, page 260 and 268, where Their
respective Honours are stressing the significance
of the money being received by the Crown in its
sovereign capacity, or by the Crown or officials of

the Crown.

So, turning back then, Your Honours, to the

definition of "trustee", that completes the first

part of our argument and on that basis we say these

moneys were not income affected by any express or

implied trust. There is simply no trust there.

The next part of the definition is, "or acting in any fiduciary capacity", and as to that, my

submission in brief, is this: it is probably not

accurate to talk of the Registrar as a fiduciary.

The articles by Dr Finn that I have referred to

make the point that from his point of view the

courts have been wrong and too loose in calling, on

occasions, public officers fiduciaries, and that

the more accurate proposition is that they are

simply public officers. There are duties

enforceable by the Crown which are very similar to

fiduciary duties.

But, be that as it may - and this would seem

to be the case where the Court would want to

analyse in detail the nature of public officers -

the reference in the Act is to a person "acting in

any fiduciary capacity" and, in our submission, it

is straining language to say that because the Crown

has, or can enforce - has remedies against this

person similar to remedies available against a

fiduciary, that he is acting in any fiduciary

capacity. definition is to say, "No, he is acting in his The natural answer to that part of the	statutory capacity as Registrar of the Tribunal",
and I say that notwithstanding the fact that the
Crown has available to it certain remedies, because it has available to it criminal remedies as well,
and in other words, those remedies, in my
submission, do not, as it were, tell you in what
capacity he is acting.

BRENNAN J: What is the relevance of the Crown's remedies?

The question is, are there any remedies available

to the "beneficiaries", is it not?

MR DOYLE:  Yes, well, the reason I - - -

BRENNAN J: Say the Registrar here did take the money and

was investing it in some unauthorized investment,

what remedy, if any, would the beneficiaries have?

Compensation(2) 59 3/2/93

MR DOYLE:  The remedy they would have, Your Honour, is

assuming, as I would expect, that it was

acknowledged that they had standing to complain

before a court, simply an injunction or whatever

was appropriate to enforce the terms of the

statute, and not in any sense a fiduciary or

equitable remedy. And the reason I deal with this

point, perhaps unnecessary, is that because the Act

says, "in any fiduciary capacity", it seemed to me

it may be said, "Well, yes, he is in a fiduciary

capacity, albeit fiduciary to the Crown". And so

it was that word "any" which caused me to put this

particular submission.

BRENNAN J:  Is your argument this then that the duty which

is enforceable at the seat of the beneficiaries,

being a statutory duty, cannot answer the

description of a fiduciary duty for the purposes of

the definition.

MR DOYLE:  Yes, Your Honour.

BRENNAN J: What is the reason for that submission?

MR DOYLE: 

That it is simply a remedy to enforce the

provisions of the Act and I suppose in part, I have
to acknowledge, I do draw on my general argument,
namely, that it is unnecessary and misleading to

start introducing fiduciary concepts here, but it

is simply, I would argue, a remedy to enforce the

Act, and there is just no reason at all to call it

a fiduciary duty except by, I suppose, what would

seem to me a rather weak analogy, namely, "Well, if
he was holding the money on trust for them, they

could do a similar sort of thing", or restrain a

similar sort of thing.

So, I would say, yes, granted, if he was a

simply a statutory officer and their complaint is	fiduciary then people may be able to restrain him in the same way, but the fact is, here, he is
that he is acting in a manner not permitted by the
Act.

BRENNAN J:  Does that mean that the Act gives him powers of

acting or authority to act in a manner, in the

management of this fund, which a person in a

fiduciary capacity would not have the power to act

in?

MR DOYLE:  Yes, Your Honour. My submission is in this sense

that particularly section 131(2) - I do not think

it uses the word "fiduciary" - no, it does not use

the word "fiduciary". It says:

not ..... be bound by -

Compensation(2) 60 3/2/93

that is pretty wide -

any law relating to the administration of

trust funds by trustees but shall act in good

faith.

My argument is that - - -

BRENNAN J:  Why is not the obligation to act in good faith

equivalent to the obligation to act in a fiduciary

capacity?

MR DOYLE:	Your _Honour, it may in a sense in terms of content be found on a very close analysis to be
similar in content but, in my submission, it is
simply the statutory duty to act in good faith. In
our submission, the thrust of 131(2) is that he
does not probably owe as between particular
claimants, for instance, any duties of the type that a fiduciary may owe and in considering a claim for a payment out he does not have to consider it
as if he were a fiduciary.  He considers it simply
as an officer given a statutory discretion
exercisable on broader grounds.  And so the area
where - - -

BRENNAN J: Challengeable only for Wednesbury

unreasonableness.

MR DOYLE:  Yes, for that sort of thing, Your Honour. Not

challengeable by, as it were, drawing on cases
dealing with the handling of moneys by fiduciaries.

Could I add, Your Honour, just to complete that answer, the one area where persons entitled would

be as well off as fiduciaries is if he is
purporting to invest the moneys in an unauthorized
fashion. There, I would acknowledge, they can go

to court and stop him doing it and so could a

fiduciary, but once we move away from there,

investment or a payment out, but in other respects

relating to the administration of the money,

principles which would apply to a fiduciary would
not apply to him.	And if they were called in aid

it would again only be by way of an analogy to

assist the court in deciding how to exercise its

discretion fettered only, as Your Honour said, by

the notion of unreasonableness.

BRENNAN J:  You have put two arguments really. The first is

that as a matter of classification, the duties are

not fiduciary duties. The second argument is that

as a matter of content, the duties are not

analogous to fiduciary duties.

MR DOYLE:  Yes, as it were, talking of them globally. In

some particular situations, yes, some may be.

Compensation(2) 61 3/2/93

BRENNAN J: Yes. It seems to me that the first argument is

presently a matter of assertion. In other words,

it would be curious if the classification was the

real test of the nature or the capacity in which a

person is acting.

MR DOYLE: Yes, I take Your Honour's point. There is, I

acknowledge, an element of assertion in it, but I

suppose it draws to some extent on my general

argument that when you have a statutory scheme and

people performing governmental functions, there has

to be very good reason to start using terms such as
"trust" and "fiduciary" and that that, as it were,

supports my assertion somewhat that it makes sense

to say, "He is not acting in a fiduciary capacity;

he is simply acting as registrar. That is a

sufficient and complete description of the

situation."

So as I said, Your Honours, without really

addressing argument to the question of whether

analytically he can be called a fiduciary, although

I would argue he cannot, my argument is that he is

not acting in any fiduciary capacity, and that is

why that part of the definition does not apply.	Do
Your Honours wish me to proceed?	I have still to

deal with income of a person under any legal or

other disability.

MASON CJ:  We will adjourn now, Mr Solicitor, and resume at

2.15.

AT 12.48 PM LUNCHEON ADJOURNMENT

UPON RESUMING AT 2.18 PM:

MASON CJ: Yes, Mr Solicitor?
MR DOYLE:	If the Court pleases, it is with reference to

paragraph 16 of our outline, I have dealt with

subparagraphs (a) and (b). Just one final point on

acting in a fiduciary capacity. If because of the

fiduciary duties owed to the Crown the view were

taken that that meant the Registrar or the Tribunal

was acting in a fiduciary capacity, just one last

point, it would produce a slightly odd result in

that we would be talking then of a trust estate

existing, being the moneys allocated in respect of

groups of dependants, and it being a trust estate

as a result of the fiduciary duty owed to some

Compensation(2) 62 3/2/93

other person, that is to the Crown, which, in our

respectful submission, sits rather awkwardly.

Then a third limb of subparagraph (b) is

income of a person under any legal or other

disability, that is does the Registrar or the

Tribunal have the possession, control or management of the income of a person under any legal or other

disability, and our answer to that point is that

the moneys, neither the capital sum nor the annual

allocations of income answer that description, and

for that we rely on the passage, which I think I

started to read this morning and may not have

completed reading, at page 110 in appeal book M52.

Page 110, I think I began this morning at line 16

and I just cannot remember how far I read through

it:

Although a right to claim an award of compensation -

and His Honour refers to the right.	He says, at
the bottom of the page:

while there were several dependants, of such a

kind that the only entitlement of a dependant

was to the exercise from time to time of a

discretionary judgment by the repository of

the powers as to whether any benefit - and, if

so, as to what benefit - should be conferred

on that dependant by that application of

compensation money.

Then he makes the point that Mrs Cousins is not the

only dependant:

There is no limitation period applicable to a

claim to recognition as a dependant.

And then at line 19:

But my understanding of the Workers

Compensation Act 1958 is that the awarded sum is not awarded to her. The award is of the

sum awarded for the benefit of the claimant

and of such other persons as may thereafter be

recognised by the Board or the Tribunal as

dependants. Whether or not that be so,

Mrs. Cousins had no right at any relevant time

to demand or to receive payment of the

credited interest -

I have taken it there to mean the annual amount -

or of any part of the amount being

administered for her benefit.

Compensation(2) 63 3/2/93

So our argument is that notwithstanding that the

dependants can be called persons entitled, their

relationship or their rights in respect of that

money are such that one would not call it income of
those persons, and that for that reason the

situation is not caught by the third aspect of the

definition.

BRENNAN J:  Even if the Registrar is not caught by the

definition of "trustee", why is it that the

Registrar is not assessable for tax in respect of the income derived by him from the investment of

this fund?

MR DOYLE: That, Your Honour, is a question which I suppose

first of all raises the broader question: does the

Act purport to bind officials of the Crown acting

in their official capacity? Secondly, it would

raise the question which may get a reasonably ready

answer of whether to tax that would be to tax

property of the State under section 114. Thirdly,

the matter on which we are adopting the submissions

to be put by Mr Finkelstein: the question of

whether to tax that money would be to either impair

the capacity of the State to function or would be

an interference of an impermissible type with what

I will just loosely call the functioning of

essential organs of the State, namely this Court,

which is one of the courts of the State -

admittedly not, as it were, the court, the supreme

court of the State, but nevertheless a court of the

State. So those issues, we would submit, would all

arise.

BRENNAN J:	No doubt they do, and the first of those questions, I would have thought, was one which bore some consideration. If the Registrar here, once
the money is dealt with, to use a neutral term,
under sections 34 and 35 of the old Act or the more modern equivalents, has possession of this fund,
certain it is that his disposition of it is governed by the statutory provisions. But even if they are governed by the statutory provisions, why
is it that in performing that statutory duty, he is
an emanation of the Crown in right of the State?

MR DOYLE: Well, we would argue, Your Honour, that flows

from, I suppose really, the nature of the function
he performs and the source of his powers. His

powers come from the State, and the functions he

performs, we would argue, when one looks at the

fund as a whole, are closely allied both to, I

suppose I would say, judicial and administrative

functions performed for or on behalf of the State.

And so we would argue that it flows, as I

said, from the source of the powers, in the nature

Compensation (2) 64 3/2/93

of his functions, and that he would be identified

with the Crown or with the State.

BRENNAN J:  If it be held that the only persons who can take

a benefit from this fund are the beneficiaries,

then does it follow that the relevant character in which he acts is otherwise than as the person with

duties to those beneficiaries?

MR DOYLE: It does, Your Honour. First of all, as to

Your Honour's premise, it is clear that the fund,

that is the whole fund, serves a number of purposes

other than as an investment vehicle in the

interests of persons entitled in terms of the Act.

So, it is not just for them.

We would argue, again, that just as when a Master of the Court holds moneys on behalf of a

litigant who may be mentally incapable, or is

holding those moneys for some other reason,

similarly he is still, we would argue, performing

governmental functions. He is holding those moneys

as an officer of the Court in the discharge of a

function long associated with our courts. And we

would argue that, even though the Registrar here,

one of his functions is to look after, loosely,

invest moneys in respect of which there are

individuals entitled, still, when you look at the

whole picture, you say he is an officer of or

equivalent to the State or Crown.

And then you come to the intention argument,

on which we simply adopt Mr Finkelstein's

submissions. But I certainly identify him with the

State or the Crown and the executive government.

And, I suppose, if you ask me to single out two

particular things, it is the source of powers,

which is, perhaps, almost a truism, but his close

link to what is a court of the State, and his close

involvement in the functioning of what is a court

of a State.

DEANE J:  Mr Solicitor, I should really have asked Dr Spry

this, but since you are on your feet can I ask you?

At the time when the Registrar received the moneys

or was credited with the moneys, including the

$2718 that were credited to the Abelas, using

language loosely, was the position that he was

bound to credit that particular amount to the

Abelas? In other words, assume that he received
credits of a total of $5 million for that tax year,
are there provisions which lead inevitably to the

Abela's entitlement being $2718?

MR DOYLE:  Yes, as we are starting at that amount, the

amount first received in respect of them.

Compensation(2) 65 3/2/93

DEANE J: If you start with the $5 million?

MR DOYLE:	Yes.
DEANE J:	I mean, does he just sit down and do a

mathematical calculation of entitlements? What is

the position?

MR DOYLE:  Your Honour, my answer really is that he is

driven to that position of necessity and it is a

practical necessity in the sense that section 130

tells him that amounts are to be paid to him and to

be administered by him, being a payment under

section 92 or 98. When the payment comes to him it

will come, presumably, with a court order attached

which will tell him, "This is the amount of money

awarded by the Tribunal in respect of, and for the

benefit of the dependants of, X," So, as we would

see it, simply to keep track of things thereafter,
and that is why I say that practical necessity

caused him to start with that amount.

DEANE J:  I mean, we have passed well beyond that. Say he

has a total of $50 million invested of which

$20,000 is appropriated to the Abela fund or

represents the Abela fund. From there is it just a

matter of working out as a trustee would, or is

there some other procedure by which you work out

the $2728 that was credited to the Abela interests?

MR DOYLE:  Your Honour, there is probably a good deal of

flexibility available to him. If I understand

Your Honour right, then my answer is that he always

in a way goes back to the initial receipt, an order

of the Tribunal which will tell him how much was

awarded to a particular group or in respect of a

particular group of dependants. And starting from

there, at any given time I suppose - - -

DEANE J: Well, he has the money for that award, has he not?

MR DOYLE:  Yes. Now, he could simply invest it as part of

the fund. On the other hand, as I read the Act,

there would appear to be nothing to stop him if he

wanted to having a subdivision of the fund, and I
suppose he could actually probably have a separate

bank account for each group of dependants if he

wished. So he has a lot of flexibility.

DEANE J:  I put my question badly apparently. What I am

merely asking you is assume that the total interest

earned on the $50 million was $5 million. When

that $5 million was earned, would it be possible for an auditor looking at things to say $2718 of

that had to be credited to the Abelas?

Compensation(2) 66 3/2/93

MR DOYLE:  Not, in my respect submission. All the auditor

could say was, "Well, your records show that", let
us say, "one per cent of the funds which were

invested this year by you, has been credited to the

Abela family." And I suppose the auditor would

say, "If you intend to divide the income earned
proportionately, then the amount would be
so-and-so, but Mr Registrar, would you please tell

me what you do intend?", and the Registrar would have to make a decision. And while one tends to

think he would divide it proportionately, I suppose
it would be going too far to say that is the only

thing he could possibly do.

DEANE J: That is so, is it? I mean, could he have said, "I

am not giving any part of this interest to the

Abelas this year"?

MR DOYLE:  Your Honour, I think I would probably have to say

in theory he could. It is not easy to think of

situations in which it would happen, but he is

simply - - -

DEANE J: If that is so, do we not need to understand that,

because I would have thought that would be of

critical importance to an argument that this $2718

was not received by the Registrar as trustee for

the Abela interest, if they were not entitled to it

until he decided, in the goodness of his heart, to

apportion it in their favour?

MR DOYLE:  Your Honour, it is not, I suppose, just in the

goodness of his heart. He has - - -

DEANE J: Well then, in the proper exercise of a statutory

discretion.

MR DOYLE:  Yes. Certainly, that is our argument,

Your Honour, that it is a matter of him exercising

the discretion year by year and a pro rata

allocation seems both fair and sensible, assuming

the whole fund is invested as one and that the

income of it is received as an indistinguishable

mass. But I suppose the weight of our argument

against what Your Honour is putting, namely that he

receives it as trustee of a trust estate, really

starts from the fact that no particular dependant,

for a start, is entitled at any time to any

particular amount of money - the passage I was

reading - and that he holds this money as the

maximum amount available to be applied for the
benefit of this group and on the basis that any

will be applied only if there is a yet-to-come

exercise of a discretion in respect of a defined

amount and we would put, I suppose, most weight on

that aspect.

Compensation(2) 67 3/2/93

DEANE J: But I just want to make sure I understand it. I

was accepting, for the purpose of my question, the
whole of your argument that all that one has is a

group entitlement and what I was asking you was,

does that group entitlement have some entitlement

to be credited with the $2718 or have they no

entitlement to be so credited prior to the credit

being made?

MR DOYLE:  Your Honour, I think I can only answer it by

saying, they have no entitlement but because of his
statutory duty to invest and deal with the money
for the benefit of the person entitled, in his
dealings with the whole fund he must acknowledge

that there are persons entitled in the terms of the

statute to certain monetary amounts and he must

properly exercise that discretion, namely, the
discretion to deal with it as he thinks fit but for

the benefit of the person entitled.

So I would say that is the limit of the right,

and while that will probably usually lead to that
pro rata allocation, that is the complete statement

of the position, so it is not, as it were, strictly

right to say they have a right to the money, that

is, to the crediting of the interest. What they

have a right is that he properly consider, year by

year, what is for the benefit of them, the benefit

of those persons.

DEANE J:  I follow the way you put that.

TOOHEY J: Are any of these questions foreclosed by the

statement of agreed facts, Mr Solicitor? If you

are not able to take us to them immediately, it

does not matter.

MR DOYLE:  Yes, I think if I could I would like to leave it

to Dr Spry.	He is probably more closely familiar
with them.	My impression would be not so much
discussed, the agreed facts, are a bit thin in foreclose, but some of the things we have	terms of giving you the sort of background you
would want to have to give a confident answer.

TOOHEY J: For instance, the statement of agreed facts

appears to set out the practice which was adopted.

That does not answer Justice Deane's question as to

what was the rights and obligations of the party.

MR DOYLE:  No, that is right. Yes, I mean one assumes from

the form of the agreed facts that what is described
there is his routine practice, but there is an

element of assumption even in that.

BRENNAN J: There are no regulations which govern it?

Compensation(2) 68 3/2/93

MR DOYLE:  I understand from Mr Charles there are some

regulations which are relevant, Your Honour, to

which he will refer. Your Honours, the final part

of our argument is paragraph 17, that the Tribunal and the Registrar, it should read, they are both a public authority for the purposes of section 23 of the Income Tax Assessment Act which provides:

The following income shall be exempt from income tax.

In ( d) :

the revenue of a municipal corporation or

being part of Australia;

other local governing body or of a public

authority constituted under any Act or State

It may be, if the Court was against us on the first

part of the argument, that the basis of that

conclusion would be such as to make this submission

untenable, so in other words it may be losing the

first part makes the second irrelevant. On the

other hand, it is conceivable the Court might say,

"It's because a fiduciary obligation attaches in

respect of the administration of the moneys that

one could still say that the Tribunal is a public

authority", and the question would arise: are the

moneys revenue of the public authority?

I will deal with the point relatively briefly,

Your Honours. First of all, as to whether the

Registrar and the Tribunal are public authorities, could I just go to one short passage in Re

Anti-Cancer Council of Victoria, (1992)

66 ALJR 817. The Court was there dealing merely

with a rule of the State Public Services Federation which used the expression "public authorities", but the case is useful because it collects what, as far

as I am aware, are all the cases of significance on

the point. They are dealt with at page 819,

column 2, where just above letter F the Court said:

The question whether a body is a public

authority is one of fact and degree which

often requires a balancing of the various

features of the body concerned.

various cases are then referred to. Over the page,

a passage from Renmark Hotel Inc v Federal

Commissioner of Taxation, which is one of the most

frequently cited passages on the point and appears

to be cited with approval, where Justice Rich said:

"it should carry on some undertaking of a

public nature for the benefit of the community

Compensation(2) 69 3/2/93

or of some section or geographical division of

the community and that it should have some

governmental authority to do so".

As Your Honours point out:

on appeal, emphasis being given to the need

for "public functions, duties to be exercised
for public objects" or "power ... to act on

behalf of the public or the State".

And so if I could, as it were, take that as

the text without going to the other cases, but just
bearing in mind that in the end it is a matter of

balancing the various features of the body

concerned, we would argue both the Registrar and

the Tribunal are, in that sense, a public

authority. Their powers come from a statute, that

they are powers of an exceptional nature, the

Tribunal's powers to decide issues, and even the Registrar's power in respect of investments, and

the power to decide whether payments will be made

to persons entitled. In a sense it is an

undertaking of a public nature for the benefit of the community. Certainly what the Registrar does

and, in our respectful submission, in the broad

sense, what the Tribunal does, and it is backed by

governmental authority and, we would respectfully

submit that it is reasonably clear that these

bodies are public authorities. And so then one has

to ask whether income of the fund as we do in

paragraph 18 is, in the words of the Tax Act, the

revenue of a public authority.

Now, we would argue that clearly enough the

income of the whole fund answers that description and, indeed, His Honour acknowledged that and his

point was that once there was an allocation to the

ledger kept in respect of a particular group of

dependants then it ceased to be revenue of a public

authority.	Our submission, which to some degree
draws on submissions I have already made, is that

His Honour was not right in that and that the

passage I read a few moments ago at pages 110 to

111 is describing the entitlement of a person

entitled, that is merely to seek the exercise of a

discretionary judgment, means that unless and until

an order is made by the Registrar for a particular

payment to a particular person that even the

interest, which is allocated to a particular

amount, retains its status as revenue of the public
authority, and all that has happened is that there

is a ledger entry which is purely a matter of internal recording within the workings of the Tribunal or the Registrar's office for his own

convenience.

Compensation(2) 70 3/2/93

In our submission, it would in theory be

possible for him to do no such thing, but whenever

a dependant came to him to sit down and work out,

"Well, in respect of this group of dependants three

years ago I got X dollars". And at the time of an

application he could work out, "What today is the

maximum that could be given to this group?" It is

obviously administratively convenient, year by

year, to work it out and to allocate it to a

ledger.

In our submission, if he found there had been

an error, there would be no difficulty in him

correcting it. It is purely an internal working

document, that ledger, and the making of the entry

in it has no effect on the status of the moneys, it

just makes it easier for him when they come to him

to work out a starting point.

So we would argue that His Honour was, with

respect, wrong in saying that once there was an

allocation in the ledger the moneys ceased to be

revenue of the public authorities and that that

does not, in truth, occur until there is an order
for payment out. Then, of course, the money is

immediately received by the successful applicant.

So we do argue that in this case that one can say

negatively that there is not a trustee here, as

defined by section 6, and that one can say

affirmatively that these moneys are the revenue of
a public authority for the purposes of

section 23(d). They are our submissions, if the

Court pleases.

MASON CJ:	Thank you, Mr Solicitor.	Mr Finkelstein.
MR FINKELSTEIN:	May it please the Court.	Does the Court

have a copy of our summary of submissions?

MASON CJ: Yes.

MR FINKELSTEIN:  And it would be also useful to have a copy

of the Income Tax Assessment Act.

MASON CJ:  We have both.

MR FINKELSTEIN:  Thank you, Your Honours. On the first

question, whether there is a trust or not created

by the statute, we adopt the submissions that have

already been put on that issue and do not seek to make separate argument. We desire to address the

Court on two separate questions. First, whether

the Registrar can ever be bound by the Income Tax

Assessment Act to pay tax on the income that has

been received or generated from investment of the

fund maintained under the Act. And secondly,

whether or not the Tax Act, if it does seek to

Compensation(2) 71 3/2/93

impose, or does otherwise operate to impose tax on
that income, is an invalid Act of the Commonwealth.

On the first question, that is, the question of construction, our primary submission is this:

that on the proper construction of the Tax Act,

unless the Crown is expressly named it is not

liable as a taxpayer, nor is it liable to pay tax

on behalf of another person. In this context, when

we use the word "Crown", what we mean and what we

say is encompassed by the notion is the Crown in

right of the State of Victoria, relevantly for this

purpose, servants or agents of the Crown who act in

that capacity, and bodies independent of the Crown

who carry out Crown functions.

So far as the Registrar is concerned, he is a

servant of the Crown. His office was created by

section 51 of the Accident Compensation Act, as

were other offices. Subsection (1) provides that:

Subject to the Public Service Act 1974, there

shall be appointed -

(a) a Registrar -

and other office holders. The consequence of that

is that the office of Registrar - -

BRENNAN J:  Mr Finkelstein, could you assist at all? This green volume - - -

MR FINKELSTEIN: That is the Act as passed in 1985, and the

grey one is a reprint which incorporates the 1987

amendments. If the Court has a copy of the grey

one - - -

DAWSON J: Grey what?

MR FINKELSTEIN: Accident Compensation Act. There should be

both a green and a grey Accident Compensation Act,

green being the original Act in the form that it

was when passed in 1985, but it was amended in

1987.

MASON CJ: Well, we have a green one, but it incorporates

amendments up to and including Act No 83 of 1992,

Reprint No 3.

MR FINKELSTEIN:  I am not sure whether the most recent

reprint -

MASON CJ:  I have one that has written on it Reprint No 1 to

1 December 1987.

MR FINKELSTEIN: Yes, and that was the Act as it was in

force in the years of income with which we are

Compensation(2) 72 3/2/93

dealing.	The Act has changed since then.	In fact
•	•	I

it is fundamentally changed in 1992 with the

Tribunal itself going out of existence and having

been replaced by a new body. But the reprint as at

1 December 1987 is, for all relevant purposes - - -

MASON CJ: Sufficient.

MR FINKELSTEIN:  Yes, as it was at the time of the relevant

year, and it is in that Act that section 51 creates

the office of Registrar.

TOOHEY J:  Well., the other way to come at it is simply to

take the Amendment Act itself which for present

purposes gives us the sections that you are

referring to.

MR FINKELSTEIN:	I think that is right, yes, Your Honour.
TOOHEY J:	The 1987 Amendment Act.

MR FINKELSTEIN:  Yes, Your Honour. So that you see that the

statute creates the office, provides that it is

subject to the Public Service Act 1974 and the
Victorian Public Service Act, as it was in force
again up until either the beginning of this year or
late last year, mirrored substantially the
Commonwealth Public Service Act and the Public
Service Acts of other States, and was the means by

which servants of the Crown were appointed. They had to be appointed under an Act of Parliament or

by the Governor in Council, in pursuance of

section 88 of the Constitution Act of Victoria.	So
that the office that is created, is filled, or was

filled, at the relevant time by the Public Service

Board, acting under the Public Service Act.

Generally speaking, when one refers to the

Crown, in our submission, it is proper to include

within the notion of Crown what is more commonly

called the government, that is, the means by which

the State functions, and that is certainly how it

has been regarded in recent cases, and not so

recent cases.

The Court has already been referred to Town

Investments v Department of Environment, (1978) AC

359. I want to refer the Court to a passage in the

speech of Lord Diplock at page 381 where, in the

first paragraph, not full paragraph, but from about

point B of the page down, Lord Diplock explains

what is now meant by "the Crown" and suggests that
one would be better to use the word "government".

But more importantly for relevant purposes, in the paragraph beginning at point D, decides for the purposes of that case, as do the other members of

Compensation(2) 73 3/2/93

the Court, that when an act is undertaken by a

government official acting in that capacity, it is

the act of the government.

So that, for our purposes, when the Registrar receives funds for investment, maintains the

statutory fund, invests the money that he receives

for payment into that fund, exercising his

statutory powers of investment, our principal

submission to characterize that conduct is that it

is the conduct of the State or the government, so that, for example, when the Registrar, exercising his power of investment - I think it is in 73(4) of

the Accident Compensation Act, which permits the

Registrar, among other things, to:

(b) take, purchase, lease, hold, sell and

dispose of real and personal property for the

purpose of enabling the Tribunal to perform

its functions and exercise its powers under

this Act.

When he does those things, when he buys land,

leases land, sells land, he is doing that, not as

trustee on behalf of the Crown, but his conduct

constitutes the Crown's conduct.

DEANE J: But, are we concerned with this argument unless we

are against the arguments you adopt? In other

words, do we not only reach this argument if the

Registrar has received these moneys as trustee for

the particular group of beneficiaries?

MR FINKELSTEIN: Yes. I hope the answer is - - -

DEANE J: Because otherwise the assessment has gone.

MR FINKELSTEIN: Yes. I hope the answer is yes, but,

His Honour Mr Justice Brennan did tantalizingly

suggest, "Well, why is not the Registrar taxable in

any event, trust or no?

DEANE J:	I follow that but -
MR FINKELSTEIN:	And it would bear on that question.

DEANE J: But what my question was directed to is this: do

we not really, in a practical sense, approach this

argument on the basis that if we reach it, the

Registrar has received the moneys as trustee for

the group of beneficiaries - - -

MR FINKELSTEIN: Correct.

DEANE J:  - - - and we then have to look at the sections and

see are they intended to catch the Crown acting as

trustee?

Compensation(2)	74 MR FINKELSTEIN, QC	3/2/93
MR FINKELSTEIN:	That is so.	The only reason why I went a

bit further on the point that I would have, because

I am concerned to avoid anybody saying that the

Crown or the Registrar could be taxable in either

case. But otherwise I would confine my submissions

to the - based on a premise that there is a trust

and the beneficiaries of the trust are the
dependants or constitute a class comprising

dependants known or unknown.

BRENNAN J:  Of course, if it is a question of the Registrar

being liable, apart from character of the trustee in respect of income received from the fund - - -

MR FINKELSTEIN:  It would then be the whole of the income.

BRENNAN J: Yes, and in the cases with which we are

concerned, it would be income that was not received

during the income year.

MR FINKELSTEIN:  No. He would have received it in - - -

BRENNAN J: In the previous year.

MR FINKELSTEIN:  - - - the previous year, that is so, and if

it was sought to say that the Registrar is

assessable as a person under the Act liable to pay

tax, then he would have been assessed in the

previous year and for the full earnings of the fund

because - well, it could not work in any other way,

we would imagine.

BRENNAN J: Well, in one sense I suppose we can put that

consideration which I tantalizingly raised aside

because there is no assessment in respect of -

MR FINKELSTEIN:  No, and the assessment is based on the

Registrar being a trustee. So if that is set

aside - I do not want to invite the Commissioner to

do anything else, of course - - -

BRENNAN J:  Yes. So it is acquiring the character of a

trustee as at the date on which the allocation was

made?

MR FINKELSTEIN: That is right. Then I will proceed on the

basis that we are only dealing with the position

that we find ourselves in if there is a trust.

MR CHARLES:  I am so sorry to interrupt Your Honours, but in

the light of the question that has just been asked

of my friend I should say that in the event that

the Court were against the assessments that stand

in their present form, we will be asking the Court
to indicate a view because the question will

certainly arise as to whether the proper course is

for the Commissioner to assess the Registrar in

Compensation(2) 75 3/2/93

relation to the whole income in the fund. The

submission will be that it will be the net income

that should be regarded, that is the income after

expenses, and I do not want to take any more time

but - - -

DAWSON J: What, assess the Registrar personally?

MR CHARLES:	No, Your Honour, the Registrar as Registrar.
DAWSON J:	What does that mean?
MR CHARLES:	Not personally, but on the basis that he has

received the income of the - - -

DAWSON J:	He or the Crown has received?
MR CHARLES:	The whole fund yes.
DAWSON J:	The Crown?
MR CHARLES:	The Registrar, as the holder of the moneys.

DAWSON J: Yes, well that is personal.

MASON CJ: Yes, Mr Finkelstein.

MR FINKELSTEIN:  Thank you, Your Honour. Can I say that our

submissions fall into two levels. First, on the

question of construction, it follows just from a
proper construction of the Tax Act, applying

ordinary principles of construction, that the

Registrar would not be liable to pay tax in this

case as assessed. Secondly, on the basis of the

presumption that the Crown is not bound by general

words in a statute, perhaps one might add

especially a revenue statute.

As to the second basis which I will deal with

second, I just want to make two further points. We

would submit that it is permissible to construe the

Tax Act by reference to the rule of construction

that a general Act will not bind the Crown unless
intention to do so is manifest from the terms of
the statute. We say we can take advantage of the
reservation in Bropho that the Tax Act which, not

in exactly the same form as it is now, but dates

back to 1936, principal parts of the Act,

fundamental parts of the Act, remain relatively

speaking, unchanged, but even if we cannot, we

would say that there is no intention disclosed by

the Act to bind the Crown. But, can I come back to
the principal question of construction.

An examination of the Tax Act in our submission shows that if it is intended that the

Crown pay any tax at all, that intention is made

Compensation(2) 76 3/2/93

clear by express words. If it is intended that the

Crown pay tax on behalf of another person, with

money that may belong to that other person, or with
money that may be owing to that other person, that

intention is also made clear by express words.

Dealing with the first proposition that the

Crown itself is not a person liable to pay tax, I

want to draw the Court's attention to two

provisions of the Act and one of the parts of the

definition. Sections 17 and 25 might be
characterized as principal parts of the Act

imposing tax and describing on what tax is payable.

Section 17, "income tax ..... is levied",

leaving out irrelevant words:

upon the taxable income derived during the

year of income by any person whether a

resident or a non-resident.

DAWSON J:	Who raises the taxes?
MR FINKELSTEIN:	The Commissioner, but it is a debt due to

the Crown.

DAWSON J: Is it not the Crown?

MR FINKELSTEIN:	Yes.
DAWSON J:	The statutory authority is to be found in the

income tax assessment - - -

MR FINKELSTEIN: That is so.

DAWSON J:  Then it is an odd conception of the Crown raising

taxes on itself.

MR FINKELSTEIN: That is exactly right, and the Act itself

says that the tax is a debt due to the Crown, and

we would say, more than odd. There may be an argument, however, that the Crown in right of the	Commonwealth to whom - well, one may get into a
question whether or not the Crown is severable or not severable and whether, because the debt that is due by the Tax Act and levied is levied by the
Crown in right of the Commonwealth, whether it is
unusual that it can be imposed on the Crown in
right of the State. But, the fact is that the
Tax Act does, in certain instances, impose
obligations to pay money, in some cases tax and in
some cases an amount to be applied towards a third
person's tax, and imposes penalties on State
governments if those amounts are not paid.

So that what necessarily follows, I think, is

the Commonwealth cannot tax itself. But if it is

Compensation(2) 77 3/2/93

correct to say that in a functioning Federation the

Crown should be seen, at least to some extent, as

separate, then it may be that there would be

nothing absolutely extraordinary in having the

Commonwealth impose a debt which is due to the
Crown rather than the Commonwealth on a State,

because by parts of the Act it does so, and by

statute it may well be entitled to do so.

When one looks at section 17, one sees that

the subject of the tax is a person. There is a

definition in the Tax Act of a "person" in

section 6. It says it includes corporations, so

that does not take it very far. But what you do

see from section 17 is the person who is liable to

pay tax is either "a resident or a non-resident",

and you see the same thing in section 25,

especially section 25(1). It is terminology that

finds its way throughout the Act, but 25(1) is a

good example:

The assessable income of a taxpayer shall include -

(a) where the taxpayer is a resident -

the gross income ..... from all sources whether

in or out of Australia; and

(b) whether the taxpayer is a non-resident -

the gross income derived ..... from all sources

in Australia.

Then there is a definition of "resident" in

section 6. The definition of "resident", which

deals with the residence of a natural person or a

corporation makes it, in our submission, clear that

the Crown cannot be a taxpayer for the reason that
the Crown is not either resident or non-resident

within the meaning of the Act, and it is only a

who pays tax. That is to say, because the notion	person who is either a resident or a non-resident
of residence cannot and does not apply to the Crown - this is without any recourse to presumptions or anything like that - the Crown is not within the notion of "person" for the purposes of the Act when
it is the person on whom tax is sought to be
levied.

GAUDRON J: All of this assumes, does it not, that the

Crown, for relevant senses, is a person whereas, of
course, it is not; it is just a metaphor in terms
of a country like Australia when you are talking

about the Crown in right of Victoria. It is a

metaphor. It is a metaphor for the State itself.

When you talk about people being the Crown, you are

Compensation(2) 78 3/2/93

not talking abou	.1e Regi;;; _ ·- - ... 0eing the Crown at
all, the Registr	is a person who holds an office
and the officer	1t attract certain consequences.
It is all fictic	,lized and artificial, is it not,
to deal with it	~nis way?

MR FINKELSTEIN:  Yes, it is, but there are still - I would

like to take up the point - but there are many

cases, including revenue cases, which say that the

Crown is a pers,:Jn within the notion of person

because, I assume, of the old fashioned notion of

Her Majesty having two persona, the natural and the body politic, the body politic constituting a legal

person. Many cases have said that when a statute

uses the word "person" it would include the Crown

unless there is some reason for excluding it, like

the presumption, and so on.

GAUDRON J:  The real question here is does it include, I

suppose, an office, a statutory office.

MR FINKELSTEIN:	It cannot in that sense and the case has proceeded on the basis that an assessment raised
against an office holder in the name of his office
is a proper assessment.  The Tax Act, at least in
so far as trustees are concerned, provides, I think
in section 254, that the trustee is personally
liable to pay tax assessed under Division 6.

The office cannot be personally liable to pay

the revenue.	A person, a natural body corporate
can be personally liable to pay the revenue.	It

may be that the answer is that the assessment, when

raised by the Commissioner, should have been raised
against the office holder rather than describe him

by his office. I think it is probably fair to say

that everybody has proceeded on the basis that it

an assessment against the person and it is his

Ligation, because the statute imposes the

ligation, to discharge the tax - that is, if it

j properly raised.

If there is a trust, the office cannot be the

trustee. If there is a trust some person has to be

~ustee because you need a trustee for there to

l	.. ~st, at least one of the elements of the
t

3t make passing reference to section 6C of

the Tax Act, where reference is made to - - -

DAWSC\' J: Just before you do that, if you did want to tax,

say, the Government of Victoria on its revenue,

apart from other constitutional difficulties, how

would you go about it? Who would you asses?

'ompensation( 2) 79 3/2/93

MR FINKELSTEIN:  I think the assessment should be raised

against the State of Victoria.

DAWSON J:	As an entity?
MR FINKELSTEIN:	As an entity on the basis that it has legal

personality.

DAWSON J:  Where does it get its legal - I know the

Constitution treats	it in some respects as having a
legal personality.	This Court recognizes it as a
litigant, but where	does it get that legal
personality from?

MR FINKELSTEIN: There is an article by Maitland in

volume 17 of the Law Quarterly Review at about

page 130 or 131, where he deals with that question,

and from memory quotes from an author called

Plowden who wrote in 1550. The article is by

Maitland, 17 LQR 131, and he quotes from Plowden,

and I have not tracked down who Mr Plowden was, but

sets out a passage from something that was written

in 1550:

So that he (the king) has .a body natural

adorned and invested with the estate and

dignity royal, and he has not a body natural

distinct and divided by itself from the office
and dignity royal, but a body natural and a

body politic together indivisible, and these

two bodies are incorporated in one person and

make one body and not divers, that is, the

body corporate in the body natural and the

body natural in the body corporate. So that

the body natural by the conjunction of the

body politic to it (which body politic

contains the office, government and majesty
royal) is magnified and by the said

consolidation hath in it the body politic.

DAWSON J: It is not terribly illuminating, is it?
MR FINKELSTEIN:	No, but I think what was being got at is

that the Crown exists so that her or his majesty

exists not only as a natural person, but as, in

effect, the government or the State, and that has

separate independent existence. And forward the theory that there is a separate lgeal

entity which we know and call the Crown in right of

the State of Victoria, but it is a person, not a natural person, but a body politic; whereas the

Americans no doubt would say something different.

They would say that the body politic is constituted

by the government and the people, the nation.	But
they may not see it in terms of it having legal

personalty; whereas at least our historians treat

Compensation(2) 80 3/2/93

the Crown as having independent existence, that is, being a separate entity, and if that is right, then

you could levy an assessment against the Crown in

right of the State of Victoria, or just the State
of Victoria on the basis that it exists
independently. It has legal status which is all I

assume you need for the purposes of raising the

assessment, but I cannot be sure that that is right

or wrong, but then I suspect that nobody can be

quite sure whether that is right or wrong.

I just want to make passing reference to 6C of

the Tax Act as an example of a section which
assumes that the Crown, to the extent that the
Crown has separate existence, does not have

residence. I also want to draw attention to

Part IX of the Tax Act, which is at section 267 and

following, especially sections 270 and 271, as an

example of the Parliament, when intending to impose

tax obligations on a State, doing so expressly by

expressly nominating the State as a tax-paying

party.

Slightly different questions arise when one

deals with Division 6, the trust division.

Section 96 provides that:

Except as provided in this Act, a trustee

shall not be liable as trustee to pay income

tax upon the income of the trust estate.

Section 97 is one circumstance where a beneficiary

does become liable to pay tax:

(1) Where a beneficiary of a trust estate who

is not under any legal disability is presently entitled to a share of the income of the trust estate -

(a) the assessable income of the beneficiary

shall include -

(i) so much of that share of the net income of

the trust estate as is attributable to a

period when the beneficiary was a resident;

and -

local sources if he is a non-resident. So that

what Division 6 does is at least to some extent,

and it is impinged upon by other parts of the Act,

but generally speaking what it seeks to do is to

create a code by which one looks at by whom and

when income tax is payable on trust funds or, as

they are called in this division, trust estates.

Section 97 describes when the beneficiary is obliged to pay tax from income derived by trust

estate. Again, the beneficiary is liable to pay

Compensation(2) 81 3/2/93

tax on certain income if he is a resident and other
income if he is not a resident.

If I am right in saying that the notion of

residency does not apply to the Crown, it would
follow, as it would from sections 17 and 25, that
if the Crown was the beneficiary of a trust estate,

it would not be liable to tax and section 97 would

not attach to it. That is looking at it from the

wrong end, but it is another example of how the

Crown is not intended to be liable to pay tax.

S_ection 98 is an example of when a trustee

becomes liable to pay tax. It is when beneficiary is under a legal disability, is presently entitled,

and the trustee shall be assessed on so much of the

net income as is attributable to a period when the

beneficiary was a resident, and again what is

attributed to Australian sources if the beneficiary

is not a resident.

The term "trustee" is defined, the Court has been taken to the definition in section 6(1).	What
seems to be clear from the definition, in our
submission, just by the words used, is that the
trustee is intended to be a person. It assumes
that the trustee will be a person. Definition:

"trustee" in addition to every person

appointed or constituted trustee by act of

parties -

et cetera. It includes:

an executor or administrator, guardian,

committee, receiver, or liquidator -

and (b):

every person having or taking upon himself the

administration or control -

of other's property. So that a guide is that who

is intended to be a trustee is encompassed by

trustee is a person, either natural person or body

corporate. It is also important in this connection

- I said earlier that the trustee is personally

liable to pay tax. That is to be found in section

254(l)(e). So that the tax which a trustee is

liable to pay is levied against the trustee

personally and the statute gives to the trustee a

right of indemnity out of the trust estate.

Section 254(l)(e) says that the trustee is:

personally liable for the tax payable in

respect of the income, profits or gains to the

Compensation(2) 82 3/2/93

extent of any amount that he has retained, or

should have retained -

So he has got the right to go to the trust fund to

be indemnified, but whether he takes the money out

of the trust fund or not, it is a personal

obligation on the trustee to pay the tax.

Section 99 is another example of where a

trustee can be liable to pay tax, as is

section 99A. It helps to emphasize that the Crown

is not liable for tax in this way. If I am right

in saying that the Crown cannot be regarded as a

beneficiary for the purposes of Division 6, so as

to be obliged to pay tax earned from a corpus held

on its behalf, 99(2) could, at least in theory,

make a person like the Registrar, if he holds

property on trust for the Crown, liable to pay the

tax, because 99(2) provides that:

Where there is no part of the net income of a

resident trust estate ..... is included in the

assessable income of a beneficiary -

under section 97, or -

in respect of which the trustee -

is taxed under section 98, the trustee shall be -

assessed and is liable to pay tax -

if the income -

were the income of an individual who was a

resident not subject to any deduction.

It would produce the very odd consequence, if a

trustee was, say, a Crown agent, like the

Registrar, and assuming that when he holds property

make the assumption it is just a trust on behalf of	it is not the Crown holding property, therefore you
the Crown. The beneficiary, the Crown, would not
be liable to the tax, but the trustee would be liable to pay the tax.
That would follow unless, for some reason or other, the Crown is exempt which means you would be
able to get indirectly, or the Commissioner would be able to get indirectly what he could not get
directly.

There is another feature which tends to

suggest that a trustee cannot be the Crown. That

is to be found in section 252A.	It imposes certain
obligations in relation to trust estates.	One

obligation is that there must be "a trustee of a

Compensation(2) 83 3/2/93

trust estate who is a resident", that comes from

subparagraph (b), it is 252A(l)(b), and if there is

not a resident trustee an offence is committed.

Now, if the Crown cannot be resident, in the

sense in which that word is defined in

section 6(1), and we would say it plainly cannot

be, then the Crown would always commit an offence

under 252A(l)(b) if it remained trustee of a trust

estate because it would not be resident and it is

an offence not to have a resident trustee within a

requisite period of time, 90 days after the section

commenced. It is just another indication why it is

that a trustee does not and should not be regarded

as including the Crown.	What the Tax Act has
done -

GAUDRON J:  Why does not one approach it the other way and

say, "Well, if he is a trustee he is to that extent

not" - I presume it is a he it may well be a she,

is it - "she is to that extent not the Crown"?

MR FINKELSTEIN: If the Registrar is a trustee the Registrar

is only a trustee because, on the Commissioner's
argument, the trust was created by the Parliament,

that is the Accident Compensation Act which

establishes the fund has established a fund which

is a trust fund, so that the Registrar who holds

the fund, so it is said, would become the trustee

of the fund but, because he acts in pursuance of

statutory duties and not privately, his acts are

the acts of the Crown.

GAUDRON J: But that involves an assumption, does it not,

that as trustee he is none the less servant or

agent of the Crown. There is nothing to say that.

He may be quite independent. He may be - in fact

the indications would seem to be that he or she is

independent, in the sense that is not subject to

directions with any respect in relation to the

MR FINKELSTEIN: There are two things to be said about it: management of the fund. first, he is a Crown servant - - -

GAUDRON J: He is appointed under the Public Service Act.

MR FINKELSTEIN: Because he is appointed under the Public

Service Act, therefore he is a servant or agent of the Crown.

GAUDRON J:  He may be that in relation to ordinary functions

as a Registrar. It does not necessarily follow

that it carries on to his functions of

administering the fund.

Compensation(2) 84 3/2/93

MR FINKELSTEIN: That is true in the sense that, if what

Your Honour is putting to me is that he may be not

subject to the same duties and obligations as a

Crown servant ordinarily is, subject to the

direction of the Crown, that might be so but that

does not stop him and his Acts being equated with

the Crown.

GAUDRON J: Being done as servant or agent for the Crown.

MR FINKELSTEIN: Whether it is a servant or agent for the

Crown is not the only test in determining whether

the Act should be characterized as an Act of the

Crown. It is sufficient if the person carrying out

a statutory duty is performing functions of

government. Whether he is a servant or agent is

not necessarily relevant or determinative.	So that
provided he is performing the functions of

government, especially the functions of government

created by statute, then that is sufficient to

constitute that person, the Crown.

That appears from a decision of the House of

Lords, which was not on our list of authorities,

but we did provide photocopies of the judgment to

the Court:	Bank Voor Handel v Administrator of
Hungarian Property, (1954) AC 584.	The case

concerned a person established by statute who was

the custodian of enemy property who received some

gold bullion that belonged to a Dutch bank. This

was war-time legislation. The gold was sold, the

proceeds invested, income was earned and the

custodian was assessed tax and paid it, and then

wrongly handed over the proceeds of sale after

deduction of tax of some years to, I think a person

called the Administrator of Hungarian Property, or

the headnote says that.

The true owner, the Dutch Bank, then sued the

custodian for the value of the gold bullion, plus
the income which the proceeds of sale had produced
on the basis that the custodian, being part of the Crown, was not obliged to pay tax. He had been

assessed, or the office holder, he or she, had been assessed, had paid the tax, but the Dutch bank said

that the tax had been wrongly paid. The question

for decision, in this case, was whether that

argument was correct, whether or not tax had or had

not been correctly paid by the custodian of enemy

property.

The House of Lords held by a majority that it

had been wrongly paid, which therefore entitled the

bank to receive from the custodian an amount equal

to the tax which had been paid, although it had

been dissipated by the custodian. One of the

questions that arose from the case was whether or

Compensation(2) 85 3/2/93

not the custodian, having regard to the act that he

was performing, should have been regarded as the

Crown for the purposes of claiming the Crown

immunity against tax. In 1954 and earlier and

perhaps even since then, what we are talking about

here is a question of construction was put as an
exercise of prerogative right. That is, the Crown

is not to be bound as a matter of prerogative to a

tax in statute or to other statutes which might

effect Crown property.

So, all the language is in terms of the Crown

exercising prerogative, but the central question

was, "Was the Crown liable to tax?", and that was

determined in part by an examination of what the

custodian did in order to determine whether the
custodian and the custodians Acts constituted Crown

Acts, so that the sale, the investment of the

proceeds and the receipt of income - it had to be

determined whether those events were, or those

Acts, constituted Crown conduct, and the Court said

by majority that it was and that the immunity

applied.

Lord Morton, who was in dissent, put a pretty

bald proposition which seems to be correct enough,

at page 609, last full paragraph, where

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 -

He dissented on the principal question about whether the Crown servant was immune.

Lord Reid dealt with the issue at the foot of

page 614, the last two lines. His Lordship says:

In my opinion, there is nothing in these cases which requires us to limit the class of

servants of the Crown to Ministers and the

like or to exclude subordinate servants of the
Crown. Those in consimili casu are typically

bodies like the justices independent of the

Crown asserting Crown privilege not for the

benefit of the revenues of the Crown but for
the benefit of their own revenues in order
that the functions which they are carrying out

shall not be prejudiced, and it is easy to see

why such independent bodies can only be

permitted to claim Crown privilege in respect
of a very limited class of functions, and only
if the property or money in respect of which

immunity is claimed is wholly devoted to those

functions.

Compensation(2) 86 MR FINKELSTEIN, QC 3/2/93

And the functions are the functions of the

government, the functions of the State. The same

point is made at page 618, the first full paragraph

about a third of the way down:

I therefore hold that the custodian is a

servant of the Crown, and it is clear that he

received this income in the course of his

official duties.

I will skip the rest of that paragraph and go to

the beginning of the next:

Whilst it may be that a Crown servant

could not claim Crown immunity in respect of

his performance of statutory duties which

served no Crown purpose at all, I can find

nothing to justify the argument that Crown

immunity can only be claimed by the Crown (or

its servants on its behalf) if it is required

to protect some direct or financial interest

of the Crown; and still less can I find any

support for the argument that immunity cannot

be claimed by the Crown unless the Crown alone

is interested in the benefit which it will

bring.

GAUDRON J: What is the immunity that was there under

discussion?

MR FINKELSTEIN: Against having the Tax Act apply to the

Crown.

GAUDRON J:  So it really was a question of construction, was

it?

MR FINKELSTEIN: Yes, it was, but lots of the English cases

put this question of construction on an - - -

GAUDRON J:	I am familiar with the expression.
MR FINKELSTEIN: It was a construction question, and I think

one of the Law Lords actually said it was a

question of construction; the others dealt with it

as an assertion by the Crown of immunity or Crown

prerogative against tax. Lord Tucker dealt with

the same point in point form at page 627. Point 1

carries our argument, we would say.

1. The immunity extends at least to

include all those officers of State and their

subordinates who now perform, pursuant to

statutory authority, functions of public

government which were formerly the peculiar

prerogatives of the Crown.

Compensation(2) 87 3/2/93

2.      Such functions include the making and

carrying on of war and the making of treaties

of peace and other consequential international

arrangements and the performance thereof.

3. It is immaterial whether the person

in respect of whom the immunity is claimed is

himself an officer of State with ministerial

status or is a subordinate official of such lower status than that of a Minister.

4.      The immunity extends to such persons

only so long as they are acting in the

capacity described above.

5. This immunity also extends to persons

who do not come within the class above

described but are the owners or occupiers of

property exclusively used for the purposes of

government.

That has been a separate argument.

GAUDRON J:  Mr Finkelstein, to the extent that those

passages are directed to a question of
construction, do they still stand good following

the decision in Bropho?

MR FINKELSTEIN:  There are two questions that arise. The

first is whether or not the person that we are

looking at is performing functions which can be

said to be Crown functions. On that question, the

case is good authority. That is, what it says is

that the Crown acts through a whole range of real

people, including ministers, public servants and

independent authorities like courts.

Some of them may be servants in the true sense

that can be given orders by the master, the Crown,

through a departmental head or minister.	Some of
them may be independent of the Crown in the sense

that they cannot act and will not act at the

direction of the executive but are nevertheless

part of the Crown. If they are part of the Crown, that is if they perform government functions, then they are to be treated, because they are the Crown,

for the purpose of construction.

Bropho deals with a different question. It

just asks whether or not in a particular statute

the Crown is intended to be bound, but that is the

second step. First of all you have to ask or

ascertain who is the Crown for the purposes of the

construction argument and then see whether the

statute is intended to apply to it.

Compensation(2) 88 3/2/93

GAUDRON J:  I have never understood it that way, I must say.

I had always thought that you had this rather amorphous concept of immunity which meant that you

approached the statute on the basis that it did not

apply to anyone who could be said to engage in some

activity which was said to be attracting the shield

of the Crown, which was also a fairly amorphous

concept.

MR FINKELSTEIN: Yes. That is true.

GAUDRON J:	And that ultimately one was only ever concerned about construction and that that had been made
clear in Bropho.

MR FINKELSTEIN: Yes, and I do not suggest otherwise, but

all I am trying to do at the moment - there are two

things about that as well. In the first instance,

Bropho, or the relaxation of the judge-made rule,

may not be applicable to this case because we are

dealing with a pre-Bropho statute, that is, an Act

made by the Parliament when the Parliament would

have assumed that the stricter rule of

construction, or the greater protection of the construction.

Be that as it may, in the first instance, it

is still necessary to identify whether or not the

particular person or office that we are dealing

with is carrying out functions of the Crown. We

would say that, provided you can characterize what

the office holder is doing as government functions,

then it is a Crown function. It is the Crown

acting.

Just like in Town Investments, a lease made by

a minister, executed by a minister, was held by the

House of Lords to be a lease with the Crown. It

was not a lease by a minister who held the legal

estate created by the lease on trust for the Crown.

It was a lease to the Crown. And all I am saying

here is that the Registrar, when he does things,
receives money, creates a fund and puts money into

the fund, and invests the fund, his acts are the

acts of the Crown. They are not the acts of an

individual, that is plain enough. They are acts of

the Crown because it is an office holder, created

by statute - - -

GAUDRON J: But that again, you see, only makes sense if you

ask the further question:  for what purpose? I

mean, they plainly are not the acts of the Crown; they are plainly the act of a person who holds an

office. So you have to ask something else. What

is it that gives them their character such that

they are to be treated as acts of the Crown, and

Compensation(2) 89 3/2/93

for what purpose are they to be treated as acts of

the Crown?

MR FINKELSTEIN: Because it is one of the functions of the

Crown, as we know it. One of the things that the

Crown does is, it has a judiciary. It is one of

the essential elements of a constitutional

government as we know it - the Parliament, the

executive and the judiciary.

The tribunal itself is part of the judicial

arm of the State government. It is not a superior

court of record, but it is a court. It is like the

justices that were referred to in Bank Voor.

The Registrar, one of his principal

functions - I think his functions are set out in

either section 51 or 52 - section 51B. He is

responsible for the efficient, effective

administration of the Tribunal - that is one of his

key functions.	He provides administrative support
to the Tribunal.	I assume he performs similar

functions as the Registrar does of superior courts

of record or the prothonotary of State supreme

courts.

He is an administrative official who makes the

court, in this case a statutory court, function

properly. Part of what this statutory court does

is invest money, and dispense with that money in

the way that the statute provides.

So the government function is identified

because the Tribunal is part of the judicial

structure. It is part of the social welfare
structure as well, but it is the social welfare of

the State being implemented through an inferior

court. That is a government function. It is a

State function. And that is why we say that you

treat what the Tribunal does and its staff

indirectly, including the Registrar, as State
activities.	You do not treat them just as

completely independent of government.

GAUDRON J: Well, what you say is you do not treat them as a

person, that to that extent they are not a person.

MR FINKELSTEIN: That is right. There are about half a

dozen examples in the Tax Act of circumstances when

the Parliament thought that a State should pay

money to the Commonwealth on account of tax owing

by a taxpayer, and it did so in each case in

express terms, that is, identifying the State as a

person liable to pay that tax.	I will take the
Court quickly to the examples.

Compensation(2) 90 3/2/93

Section 218 of the Tax Act is the first. That

is the section where the Commissioner can serve a notice on any person who owes money to a taxpayer

requiring that person to pay the money that he owes to the taxpayer to the Commonwealth in discharge of

the taxpayer's obligation to pay tax. The section

itself, the empowering section, subsection (1),

says that the notice can be served and require "any

person" who holds money, and so on, to pay that

money to the Commonwealth.

In section 218(6B) "person" is expressly defined so as to include -

the Commonwealth, a State, a Territory and any

public authority.

So it is a clear example of when the Parliament

intended "person" to include the body politic. It

says so clearly and expressly.

Division 2 of Part VI, sections 221A and

following is another example of the same thing. By

section 221C certain deductions - I am sorry, that

is the Division that deals with deductions from

salary by an employer of tax with the employer

being obliged to pass that deduction on to the

Commonwealth. Section 221C imposes the obligation.

The obligation is to make deductions at certain

prescribed rates. The obligation is on an

employer, so by the Act an employer must make the

deduction. "Employer" is defined in 221A as a

person who pays salaries and wages and includes a

government body. "Government body" is defined also

in the same section as

the Commonwealth, a State, a Territory or an

authority of the Commonwealth or a State or

Territory.

Section 221YHZA and following deals with the

collection of tax for certain - this is deduction

from royalties. This is another example of much

the same thing as in the previous set of sections

that I referred the Court to where "government

body" is included as one of the obliging parties

and "government body" is defined in section 221YHZA

as -

the Commonwealth, a State, a Territory or an

authority -

of each of them.

Another example is in the group of sections dealing with the collection of mining withholding

Compensation(2) 91 3/2/93

tax, which is section 221Z and following.	The
principal obligation is in 221ZB(l):

A person shall not make a mining payment to a

person or persons or apply a mining payment

for the benefit of a person or persons unless

the person has made a deduction ..... of an

amount equal to 5.8% of the amount of the

mining payment.

"Person" is defined in 221ZA(2) as including

government. "Government" is again defined as

Commonwealth, State or territory or an authority of them.· The Court will note, not surprisingly, that

in 221ZD, where penalties are provided for failing

to comply with the part, everybody is liable to a

penalty other than the Commonwealth, but that would

have to follow because it would be the Commonwealth

imposing a penalty on itself. The States and the

territory would be liable to a penalty but the

Commonwealth would not. Section 255 is another

example. That is not very dissimilar to the

position with trustees under Division 6. It

provides that where some person has:

control or disposal of money belonging to a

non-resident -

"Control or disposal of money belonging to a

non-resident" is more limited to Division 6 because

that is "any trust estate", but if a person has a

control or disposal of money belonging to another

person, then it is likely, at least at law, to be

trust money.	The obligation that is imposed is in
(l)(a):

he -

that person who has the control of the money -

shall when required by the Commissioner pay

By subsection (c), the person is made personally the tax due and payable by the non-resident;

liable to pay the tax out of the money that he had

or should have retained. By subsection (3), the

Commonwealth or a State or an authority of the

Commonwealth or a State is liable - - -

MASON CJ:  Mr Finkelstein, this seems to be taking up a good

deal of time. Would it be possible for you to give

us a document in which these various categories are

set out where specific attempts are made to - - -

MR FINKELSTEIN: That is the last of them, Your Honour. All

they show is that when the Parliament intended to

bind the Crown either to pay tax or to collect tax

Compensation(2) 92 3/2/93

on behalf of another person, it did so expressly;

actually nominated the State as the obliging party.

So that just on the simple and ordinary

construction of the Tax Act, it is our submission
that no tax can be imposed or is intended to be

imposed on the Crown in the wider sense of that

word, that is any person performing government

activity so as to be equated with the Crown.

If that is not correct, then we do rely on the

rules of construction that exclude the Crown. We

say that Bropho permits us to adopt the pre-Bropho

test, that is that the statute has to manifest

clearly an intention to bind the Crown, and the

absence of that manifestation, then the Crown is

not bound. We have referred in our list of

authorities to an example of a case where the Crown

has been held as a matter of construction not to be

bound by taxing Acts. That is Madras Electric

Supply Corporation v Boarland, (1955) AC 667.

The Bank Voor Handel case is also an example

of that and in Bank Voor Handel - I will not take

the Court to the passages but we rely on what is

said at pages 584 and 618 to 619.

DEANE J:  Is not what is said by Lord Reid at 618 against

you? In the middle of the page - what follows the

colon, towards the end of the line - on the

assumption that these are trust moneys, is not what

His Lordship says - - -

MR FINKELSTEIN:  No, I think, Your Honour, what is being set

out there is the competing arguments and what the

argument was that was being put was if the money,

or if the income, did not belong to the Crown, if
the income belonged to a third party then the Crown
could not get the benefit of the presumption or the

prerogative and two of the Law Lords, those in

dissent, agreed with that proposition, but

Lord Reid did not and neither did -

DEANE J: Well, is that so. If you read it, what he says

is:

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.

And he then goes on to say that that accords, so

far as he is concerned, with authority and he is

prepared to assume that it is correct.

MR FINKELSTEIN: That is true, but if Your Honour looks at

the next paragraph, what His Lordship says and

Compensation(2) 93 MR FINKELSTEIN, QC 3/2/93

where the majority differed from the minority was

that for the immunity to go it was not necessary to

show a direct financial interest of the Crown and

that is in the paragraph which is the last

paragraph on 618. That is, provided that it is a

function of government which produces the income,

even if the Crown does not benefit by the income,

then that is sufficient. That is the reason why
there was a difference of views; the minority
holding that because the Crown did not have any

interest in the money, at the end of the day it was

going to be given to somebody else, there was no

need for an immunity to go, the majority holding

otherwise saying that what was being performed as a

government function and although the Crown did not

have any interest - any financial interest - in the

activity because the property was not going to go

to it, nor was the income going to go to it, it was

still protected. And from that point of view the
case is not dissimilar to the facts that we have

got.

I will try and deal as quickly as I can with

our last submission: the constitutional

prohibition. Our starting-off point is that the

administration of justice through the courts,
superior or inferior courts, is one of the most

important functions of government, so also is the

provision of social welfare. The Tribunal that was

established, the Accident Compensation Tribunal

that was established by the 1985 legislation, as I

said earlier, is part of that system of justice in

Victoria and is the vehicle by which, between 1985 and 1993, or the end of 1992, a form of social

justice was provided by the State. The prohibition

is set out in point 10 of our outline. It has two

limbs and I think the way that it is there set out

is reasonably non-contentious. Can I just give the

Court page references to Queensland Electricity v

The Commonwealth, without taking the Court to them,

where the two limbs of the rule, the prohibition,

are set out: in the judgment of the former

Chief Justice Sir Harry Gibbs, at pages 206

and 207; Mr Justice Mason at 217 and

Mr Justice Wilson at 222.

The first bar, as it is there set out, is if

the legislation is discriminatory and it will be

discriminatory and therefore invalid if it imposes

some disability, restriction or control over a

function of State and we refer to what

Mr Justice Wilson said in Queensland Electric

Supply at page 226. And it may also be

discriminatory, even if it is a general law if it

operates in a discriminatory fashion in respect of

a State and, again, going back to Queensland

Compensation(2) 94 MR FINKELSTEIN, QC 3/2/93

Electricity, Mr Justice Deane, at pages 248 through to 249, and Mr Justice Dawson at page 260.

Now, we say two things about the Tax Act, if

it seeks to impose tax on the Registrar. We say,

first, that it is discriminatory in the relevant

sense. It is true that the Tax Act is a general
law and Division 6 is of general application but it

discriminates against the State in an impermissible

way because of the way in which the legislation

operates. Here it operates in respect of a court

and a fund created for the purposes of being

distributed by that court to workers and their

dependants, and because it is pursuant to that sort

of statutory function that it is said that income

is earned and tax is imposed, it is discriminatory

because you do not have any parallel conduct by

private citizens. You cannot have because private

citizens do not conduct courts or establish funds

where tax is levied by the State to produce the

fund that generates the income which is what

happens under the 1985 Act. So to that extent it

is and properly characterized as, in our

submission, discriminatory legislation, simply

because it cannot operate in the same way in

respect of a private citizen.

BRENNAN J:  I do not quite follow that, Mr Finkelstein.

What is the difference between this and a trustee

of a superannuation fund?

MR FINKELSTEIN:  Because a private citizen can establish a

superannuation fund and that superannuation fund is

liable to tax and if the State establishes a

superannuation fund, or the Commonwealth

establishes a superannuation fund, if there is an

intention to tax a superannuation fund there is no

discrimination between what a private citizen does

and what the State might do so as to show that

there is a discriminatory effect but, in this case,

activity that is the subject of the tax is an

activity which can only be carried on by a State.

BRENNAN J: But their activity is the investment of the

fund, derivation of income, distribution.

MR FINKELSTEIN:  If you characterize the activity in that

way, limited to that, then the point is not a good

point. What I am saying is, our submission is that

you do not characterize the activity that way, what

you do is you look at the activity in the context

in which it is being performed which is in relation

to the activities of the Tribunal and the provision

of compensation to workers and their dependants,

and it is a fund specifically generated for that

purpose. So that what is being taxed is the income

Compensation(2) 95 3/2/93

of a fund established for the purposes of providing

benefits to workers and their dependants.

BRENNAN J:  But that is not so. I mean the only money that

we are concerned with here is money which comes

into this fund after an assessment by the board or

by the Tribunal of a liability to pay it for the

benefit of named dependants. It is not a fund for

the benefit of workers and their dependants as a

total social class.

MR FINKELSTEIN: No. Well, the fund is established for that

purpose, and the - - -

BRENNAN J:  The fund was established as a mechanism to

achieve that purpose, but the fund itself consists

solely of those moneys which have been adjudged to

be appropriate moneys for the compensation of

dependants of deceased workers.

MR FINKELSTEIN:  No, Your Honour, that is not correct. The

fund consists of other moneys as well. It is not a

fund which consists just of money applied for the

benefit of particular workers and the dependants of

particular workers.	The fund is much broader than
that.

BRENNAN J: Is it?

MR FINKELSTEIN: Well, the statute says so. Section 73

contributions payable under section 74 by the

shows the source of money to the fund and only part

of the source of the money are from awards made.

Commission and self-insurers. Now, section 74 says

that the Registrar has got a power to tell the

Commission and self-insurers how much money they

have to pay into the fund. That is, it is not just

an earmarked fund for workers and their

dependants - I am sorry, for particular workers who

have got the benefit of an award.	It is a much
larger fund, into which that money gets paid as

well but others and includes borrowings.

So, the fund is not an earmarked fund at all.

It is much broader and if you look to see how

payments out are dealt with in subsection (3), it

is not only payments out to workers and their

dependants - although lots of the others are

costs - but this is a much larger fund and, in a

sense - well, I suppose to the extent that money

comes under section 74 from the Commission, it is

not like a tax, but the Registrar has those who are

classified as self-insurers, those who carry their

own insurance and do not pay the usual levy under

the Act, they are obliged to make a contribution to

the fund which is like a tax.

Compensation(2) 96 3/2/93

The argument would not work if it was just an

earmarked fund for specific workers and their

dependants. But it is not that. It is a much

larger fund, including taxable revenue, not income,

and it is that which a private individual can never

do because he cannot levy anybody for any payment.

So that we say to that extent if you properly

characterize the fund and see how it operates, the

effect of the Tax Act as it is sought to be used is

discriminatory and really for similar reasons we

say it interferes with the carrying on of the

functions of the Registrar and the Tribunal but it

interferes in a way that, because it denies to the

Registrar and the Tribunal the ability to make the decisions that the Registrar, and before him the Tribunal, could have made in relation to the appropriation of moneys in that fund.

GAUDRON J:	Is it true to say that it is taxing in any event the maintenance of investment of a fund?
MR FINKELSTEIN:	I am sorry, Your Honour?
GAUDRON J:	You are addressing it as though the tax had

effect or operated in relation to the entire fund.

MR FINKELSTEIN:	No, it does not do that.
GAUDRON J: No.	It taxes the allocation of, or the

crediting of moneys, does it not?

MR FINKELSTEIN:  What it, I think in truth, does is tax a

portion of the income of the fund, because you

cannot tax a paper entry. So what the Tax

Department did is picked up a bit of income and

said, "We will levy tax on that bit."

GAUDRON J: That bit which is credited to specific people?

MR FINKELSTEIN: Correct. That is right. That is how they

did their arithmetic, but the reality is that it is

taxing part of the income of the fund. By doing

that it deprives the Tribunal or the Registrar from

dealing with the fund in the way that the Registrar

might have done without that imposition. They are

the only submissions that we desire to make, if the

Court pleases.

MASON CJ: Thank you, Mr Finkelstein. Mr Charles?

MR DOYLE:  Could I raise a matter with the Court that might

just affect the manner in which Mr Charles puts his

submissions? That is, to ask the Court to indicate

whether in fact it is likely to entertain his

request that the Court express a view on the, as I

understood it, assessability of the whole fund,

were the present appeal to succeed. That, in our

Compensation(2) 97 3/2/93

submission, is a wider and different issue than the

one directly raised. I must confess I did not come

here prepared to argue it and have not put any

submissions to it except in so far as I touched on

it in answer to Your Honour Mr Justice Brennan and

I believe my friend, Dr Spry, is in the same

position. We would, first of all, have to prepare

something on it and I suppose I would have to seek

a right of reply and presumably Dr Spry would have

to spend time on it as well.

MASON CJ:  Mr Solicitor, I do not know that we can actually

determine at this stage whether we will give

consideration to the question at all. Prima facie,

one would not want to do so, but we would have to
give Mr Charles the opportunity of presenting

perhaps an argument that we should. After all, he

has only given an indication to us that he wants us

to do this.

MR DOYLE:  Yes. I appreciate that you would need to hear

from him on that. It is just that if that could be

dealt with, at least we will know where we all

stand overnight, whether we have to be ready

tomorrow to deal with that point, and also it would

affect the length of his argument because if the

Court said it is not going to go into it, then he will not have to develop it in any detail.

DEANE J: But in one sense it is a bit hard to ignore it

though, is it not, in that it is a little bit hard

to see why the notice of allocation should take

taxability or assessability out of the year in

which the income was received and into the

following year. In that sense it is somewhat

difficult not to look at the income of the year in

which it was received and address the question: is

this assessable income?

MR DOYLE: Yes, it may be, Your Honour. Could I just make

one other point, Your Honour, and it really touches
on the very last thing my friend Mr Finkelstein was

developing. The fund is a larger fund, and

obviously if the whole fund is assessable, then

what I will call loosely government moneys are

being taxed. It may well be that some of those who

chose not to intervene thought, "It's one thing to

tax moneys that" - again loosely - "are clearly

identified with particular individuals", but their

response may have been very different to the

section 78B notice had they known that an issue

might be the taxation of funds that are, again

loosely, government moneys. I know Your Honour

Justice Deane could say they should have thought

the issue through and seen sort of at the back of

it, but - - -

Compensation(2) 98 3/2/93

DEANE J: If I could take you back to the questions I was

asking you. If the answer to them had been

different to that which you gave and had been, "At

the time these moneys were received, it could be

seen that as a matter simply of procedure they had

to be allocated to the particular groups", I would

have had difficulty in seeing why the amount was

income of the subsequent year and not the year in

which the income was derived. It is rather

difficult to come in, as it were, at the other end

and say, assume against Dr Spry, that somehow this

did become income in the subsequent year. That

must b~ on an assumption that it was not income in

the previous year.

MR DOYLE: Well, I appreciate, Your Honour, the timing point

clearly arises, but my friend's wider argument

would involve the proposition that although the fund contains moneys other than those linked to dependants, that the income of the whole fund could

be taxed and so a necessary premise is, income

which has nothing to do with any recipients of

compensations, and that is the wider - - -

DEANE J:  I do not want to delay you, but what has been

operating in my mind was that there may be a very

simple answer to this question, and that is that this whole case, and that is that on no approach

was the income assessed income of the relevant tax year. Well now, are you suggesting if that is the correct result we simply say, that is the end of it

and do not consider any of the questions?

MR DOYLE:  No, Your Honour, and I do not want to labour it,

but that seems to me, with respect, to go to the

pin pointing when the income was derived. The

wider argument I understood him to foreshadow was

putting aside any matters of timing, could we have issued an assessment in respect of the grand total of income of the fund, acknowledging that we are

now assessing income which has nothing to do with

any dependants. And so he is saying, putting aside

issues of timing, can we just, as it were, go for

the whole lot.

Well, that is my request that the Court give

us some indication, if it can, of where we stand on

that wider issue.

MASON CJ:  Mr Charles, the reaction of the Court to your

request in light of what the Solicitor has said is

that it will naturally give consideration to any

arguments that are relevant to the validity of the

assessments under attack, but the Court would not

go beyond that.

Compensation(2)	99
MR CHARLES:	Your Honours, I have not yet developed in any

way at all the wider way in which we would seek to

put the argument tomorrow. I did not intend to

put, as I think Justice Dawson put very briefly,

that we might seek to assess the Registrar

personally, but though there is a question which

might arise if the Court were to take the view that

it had, let us say, gone slightly too far in

Harmer, in using words which have led the

Commissioner and Mr Justice Jenkinson to take the

view that there were four separate trust estates,

and that there was income therefore derived in the

second tax year, but to look back to the previous

year at the time when the income was first received

in the fund, and then not looking at the fund at

large, but looking at so much of the fund as was

paid in respect of amounts held for dependants in

relation to various awards.

The question would then be, whether the Registrar received those moneys as trustee, but in

a lump sum as trustee, and whether he would be

assessable in that context. It is a narrower

context, if I may say so, than the one that I think

Your Honour Justice Dawson had in mind, and does

involve still an acceptance that the Registrar
receives as trustee, but not on the basis of income

being derived for four separate estates in the

second tax year.

I hope that is of assistance to my friend,

that it is that possibility that we would wish to

raise on behalf of the Commissioner tomorrow and

presupposes that the Court might contemplate a

different view of Harmer.

MASON CJ:	Mr Charles, it seems that it will be necessary for us to hear what you want to put to us and we will make a decision in the light of that.
MR CHARLES:	Yes.
MASON CJ: If other parties are disadvantaged because they

do not have enough time to deal with the arguments

that you raise and they have not dealt with them

thus far, we will have to consider what ought to be

done about it.	How long is your argument going to
take?

MR CHARLES: First, Your Honour, it may be of assistance if

I hand the outlines - - -

MASON CJ:  I was going to ask you to do that, in any event.

MR CHARLES:  Yes. We have made our argument somewhat full;

there are 19 pages including annexures. I would

Compensation(2) 100 3/2/93

hope, Your Honours, to be through in not more than

an hour and a half.

MASON CJ: Well, one of our problems is, of course, there

are a number of other cases listed for tomorrow.

It may not be possible for us to finish this case

tomorrow. We will adjourn at this stage until 9.45

tomorrow, but I do think it will be necessary for

us to hear the other cases that are listed

tomorrow. There is one appeal that is listed and I

think three special leave applications.

MR CHARLES: I am sorry, I am not understanding. Is the

Court proposing to take those other matters first,

or - - -?

MASON CJ: Yes, I think that would be our present intention.

We will start this case first and then we will have

to make an assessment as the argument proceeds,

Mr Charles, but as I say, if we cannot finish in

time to enable the Court to deal with the other

cases, this case will have to stand adjourned.

MR CHARLES: Yes, I understand, Your Honours.

MASON CJ:  We will adjourn until 9.45 am tomorrow.

AT 4.20 PM THE MATTER WAS ADJOURNED

UNTIL THURSDAY, 4 FEBRUARY 1993

Finkelstein 101 3/2/93