Western Australian Turf Club v Federal Commissioner of Taxation

[1978] HCA 13

HIGH COURT OF AUSTRALIA

Barwick C.J., Stephen, Jacobs, Murphy and Aickin JJ.

WESTERN AUSTRALIAN TURF CLUB v. FEDERAL COMMISSIONER OF TAXATION

(1978) 139 CLR 288

26 April 1978

Income Tax (Cth)

Income Tax (Cth)—Assessable income—Exempt income—Revenue of public authority constituted under State Act—Racing club with statutory power as sole licensing authority for horse racing—Whether "public authority"—Income Tax Assessment Act, 1936 (Cth), s. 23 (d)—The Western Australian Turf Club Act, 1892 (W.A.)—Racing Restriction Act, 1917-1973 (W.A.)—Western Australian Turf Club (Property) Act, 1944 (W.A.).

Decisions

1978, April 26.
BARWICK C.J. In this appeal I have had the advantage of reading the reasons for judgment prepared by my brother Stephen. I agree with his conclusion that the appellant is not "a public authority constituted under any Act or State Act" within the meaning and operation of s. 23 (d) of the Income Tax Assessment Act 1936, as amended ("the Act"). (at p290)

2. Apart from its function of licensing horse races under the Racing Restriction Act, 1917 (W.A.) ("the Racing Restriction Act"), the appellant clearly, in my opinion, had no function of a public or governmental nature. My brother Stephen's analysis of the powers and functions of the appellant, apart from the licensing of horse-races, amply demonstrates that conclusion. The case thus resolves itself into one in which an unincorporated body operating for the benefit of its members, though with some obligation to admit the public to its racecourses, has been given by statute the function of granting licences for the holding of race meetings, a function unproductive of revenue or profit to the unincorporated body. (at p290)

3. In considering whether this function may be considered to be public in its nature, I am content to assume that an unincorporated body may be constituted in a relevant sense a public authority "under" a statute, without having derived its existence from any statutory source. Of that proposition, as at present advised, I am not wholly satisfied. The proposition really rests upon expressions in the reasons for judgment in Renmark Hotel Inc. v. Federal Commissioner of Taxation (1949) 79 CLR 10 and upon the significance - to my mind, an unusual significance - given to the word "constituted" in cases such as In re East and West India Dock Co. (1888) 38 Ch D 576; (CA) 589 , and Swain v. Southern Railway Co. (1939) 2 KB 560 . But, assuming the validity of the proposition for the purposes of resolving this appeal, it must indeed be rare that an unincorporated body becomes a public authority by reason of statutory powers or functions given to it. Rich J.'s remark that such a result was "conceivable" rather suggests the rarity of the occasion. (at p291)

4. On the assumption I have made, the question is whether the possession and exercise by the appellant of the statutory power of licensing the holding of race meetings "constituted" the appellant a public authority under the Racing Restriction Act, that Act being the source of that power, so that the whole of its revenue became exempt from income tax by virtue of s. 23 (d). I am clearly of opinion that the possession and exercise of those statutory powers does not effect a change in the nature of the appellant from that of an unincorporated body earning revenue for the benefit of its members into a public authority within the scope of s. 23 (d). I agree in this respect with the reasons for judgment of my brother Stephen. In this connexion, I may say I am content to adopt my brother's review of the decided cases, though for my own part I derive little assistance from them in the decision of this appeal. (at p291)

5. In my opinion, the appellant was not at any relevant time a public authority within s. 23 (d) of the Act. I would dismiss the appeal. (at p291)

STEPHEN J. The Western Australian Turf Club is a long established racing club, having in Perth its own Ascot and Belmont Park racecourses where it conducts numerous race meetings each year. It is also the sole licensing authority for horse-racing in the State and, with the co-operation of provincial and country turf clubs, plays some part in the organization of all race meetings held in Western Australia. (at p291)

2. The Club was assessed to tax on its income for the year ended 30th April 1974, its objection was disallowed and its appeal from that disallowance was dismissed by the Supreme Court of Western Australia. The Club now appeals to this Court. It has throughout relied upon one ground of objection only, that it is "a public authority constituted under any . . . State Act", so that its revenue is exempt from tax under s. 23 (d) of the Income Tax Assessment Act. (at p291)

3. The relevant portion of s. 23 is as follows:

"23. The following income shall be exempt from income tax: . . .

(d) the revenue of a municipal corporation or other local governing body or of a public authority constituted under any Act or State Act, or under any law in force in a Territory being part of the Commonwealth." (at p291)

4. In two decisions of this Court s. 23 (d) and its predecessor in earlier legislation have been considered. In the first of these cases, Incorporated Council of Law Reporting (Q.) v. Federal Commissioner of Taxation (1924) 34 CLR 580 , the Court denied to that Council status as a "public authority". Its reason for doing so appears only from an observation of Isaacs A.C.J. made in the course of argument. He is reported as saying that for the Council's revenue to be exempt as that of a "public authority" the Council would have to have been authorized by statute "to act on behalf of the public or of the State". (at p292)

5. In Renmark Hotel Inc. v. Federal Commissioner of Taxation (1949) 79 CLR 10 Rich J., at first instance, having concluded (1949) 79 CLR, at p 16 that the British decisions on the Public Authorities Protection Act, 1893 (U.K.) were no "guide in the determination of the present case", said (1949) 79 CLR, at p 18 , that the characteristics of a public authority seemed to be that it should carry on under governmental authority some undertaking of a public nature for the benefit of the community or a part of it. Under s. 23 (d) it had to be constituted under a State Act. The possession of coercive powers were not essential but the possession of exceptional powers, not possessed by an ordinary private individual, might be. His Honour would have excluded public utilities carried on for profit by private enterprise from the scope of the phrase. His Honour concluded that the fact that the community hotel in question was not conducted for private profit, any profits being instead diverted to local public or charitable purposes, that it was under a degree of financial control by State Treasury and that its committee was elected by the local public did not make it a "public authority". It did not conform to the general understanding of that term. On appeal Latham C.J. (1949) 79 CLR, at p 23 , likewise discounted these factors; the hotel had not, he said, been given any power or authority by State law to do acts otherwise unauthorized. His Honour drew from British authority, Griffiths v. Smith (1941) AC 170 , what he regarded as the necessary attributes of a "public authority" within s. 23 (d), the performance of statutory duties and the exercise of public functions. McTiernan J. (1949) 79 CLR, at p 23 described those attributes as the possession, as a result of statute, of powers or duties to be exercised for public objects. Webb J. (1949) 79 CLR, at p 24 was content to adopt the test of Isaacs J. in the earlier Incorporated Council of Law Reporting Case. (at p292)

6. In addition to describing the attributes of public authorities for the purposes of s. 23 (d), their Honours in the Renmark Hotel Case (1949) 79 CLR 10 made it clear that to be "constituted under any . . . State Act" did not necessarily involve initial incorporation by legislation which at the same time conferred the necessary statutory duties and public functions. Rich J. (1949) 79 CLR, at p 19 understood "constituted under" to mean "constituted as a public authority" by State legislation and thought it conceivable that a body, while remaining unincorporated, might yet be constituted under a State Act so as to satisfy the exemption. Latham C.J. (1949) 79 CLR, at p 22 distinguished "constituted under" from "constituted by" and recognized that it might be by the interaction of a variety of legislation that a body came to be a public authority. This accords with the views expressed by English courts in In re East and West India Dock Co. (1888) 38 Ch D 576, at p 582 and, on appeal (1888) 38 Ch D, at pp 591, 594 , and in Swain v. Southern Railway Co. (1939) 2 KB 560, at p 572 . (at p293)

7. It is clear from these cases that an entity need not from its origin have possessed those qualities which at the relevant date make it a public authority; it may acquire the necessary attributes subsequently and if it does so as a result of legislation it will thereupon have become a public authority. In determining whether the Club now possesses those attributes its history must be examined. (at p293)

8. Until 1917 the Club remained no more than Western Australia's leading turf club. Founded in 1852, trustees for its members had, in 1877, been granted by the Crown a 999 year lease of the Ascot racecourse at a peppercorn rent. With that grant went certain obligations: to conduct a race meeting there at least once a year, to admit the public to those meetings at charges approved by the Governor, and so on. For breach of any of these the Crown might re-enter. By 1892 the Club had already much improved the course and intended further improvements. For the better management of the course it then became desirable that the Club be itself entrusted with the care of the course and be armed with all necessary powers. This was done by The Western Australian Turf Club Act, 1892, an elaborate private Act of over forty sections which vested the land in the Club's chairman and his successors in office, as if a corporation sole, for the term and upon the trusts of the original grant. The Club remained unincorporated; it was empowered to make by-laws, breach of which was an offence, and its officers might arrest and give in charge transient offenders on the racecourse. The Crown might require the committee to repair the course or its buildings and the Club's accounts were to be subject to annual audit and public inspection. Should the course cease for more than twelve months to be used it might revert to the Crown for the benefit of the public but the Club would then be entitled to be paid the value of existing buildings. (at p294)

9. The Club had operated for some twenty years under this regimen when, in 1912, the Full Court of the Supreme Court of Western Australia heard, by way of stated case, an appeal by the Club against assessment to State income tax (1912) 14 WALR 31 . The Club sought exemption as a "statutory public body" or as a society not carrying on business for the purpose of profit or gain. It failed on the first but succeeded upon the second of these grounds. (at p294)

10. Then, in 1917, a significant change took place. By the Racing Restriction Act, 1917 (W.A.) the Club became the sole licensing body for horse-racing in Western Australia. No horse-race for prize money might be held in the State without its written licence and a limit was imposed upon the number of race meetings which might be held annually in the Perth metropolitan area. The Club still retains its exclusive licensing power within Western Australia and it is no doubt by that means that it has attained its dominant role in horse-racing in the State. (at p294)

11. What occurred in 1917 is significant because it was then that the Club acquired for the first time some of the attributes of a public authority. As Burnside J. pointed out as a member of the Full Court in the Club's unsuccessful appeal in 1912 against State income tax, the Club's obligations under the Act of 1892 were imposed only as consideration for the grant of the land and not as any general public duty. Its position before 1917 bore some resemblance to that in Marshall v. Scottish Milk Marketing Board (1956) SLT 162 , one of the last British cases to be decided under the now repealed Public Authorities Protection Act, 1893, That fertile source of precedents concerning public authorities. In the House of Lords Lord Reid (1956) SLT, at p 168 described the Board's duties to the public as "placed upon them to prevent possible abuses of their statutory monopoly". So here, such obligations as were placed upon the Club by the Act of 1892 were to ensure that the Club, having had its racecourse premises granted to it, should put them to efficient use for the purpose intended by the grant. (at p294)

12. The Act of 1917 was of quite different effect. It imposed upon the Club a public function, that of licensing horse-races throughout the State. The Club has ever since been involved in this exercise of powers and functions not possessed by the ordinary citizen and which have been conferred by statute and are essentially of a public nature. Were these powers and functions vested in some State authority created for that purpose and having no other function it would, I think, clearly enough be a public authority for the purposes of s. 23 (d) of the Act. (at p295)

13. However, to confer a public function and powers exercisable in the public interest upon a body which has previously carried on, and will continue to carry on, distinct activities not in themselves characteristic of a public authority may not suffice to confer upon its revenue the immunity which s. 23 (d) affords. (at p295)

14. The two previous decisions of this Court on s. 23 (d) provide little guidance in the present case. They were concerned with entities each of which had always had but one primary function and that not of any very clearly governmental nature. The Club, on the other hand, has since 1917 had two distinct roles, that of a conventional members' turf club and that of an agency of government, controlling horse-racing within the State. The decisions of Courts in Britain on the Public Authorities Protection Act, 1893 are likewise of limited assistance but for a rather different reason. Whereas s. 23 (d) requires only that a body have the status of public authority before it may take advantage of the immunity which it offers, the Public Authorities Protection Act not only required possession of that status but also that the authority's act or default which was in question should have been one in the execution of a statute or of a public duty. It was principally, although not exclusively, with this latter requirement that the courts were concerned. More importantly, under that legislation there could be no question of the statute's benefit being conferred quite generally upon a body only one of whose functions was that of a public authority. The Act's protection was attracted only to the particular consequences of some act or default in the execution of a statute or of a public duty. By way of contrast, if s. 23 (d) applies at all it would seem to exempt the entire revenue of a "public authority" even although some or perhaps (as in the present case) all revenue-producing functions are remote from those ordinarily associated with public authorities. For these reasons the British cases have been little concerned with the present problem of an entity having mixed functions. (at p295)

15. Nevertheless some general principles of assistance do appear from the cases. I do not have in mind propositions that a purpose of earning of private profits was enough to disqualify from status as a public authority, despite the existence of statutory duties or powers (Attorney-General v. Margate Pier and Harbour Co. of Proprietors (1900) 1 Ch 749 ; Swain v. Southern Railway Co. (1939) 1 KB 77, at p 84 , per Humphreys J. at first instance) that the undoubted existence of public benefit derived from the body's activities was not in itself enough to qualify (Marshall v. Scottish Milk Marketing Board (1956) SLT, at p 167 , per Viscount Simonds) or that more was required than the performance of duties, even public duties, imposed by statute (per Lord Reid (1956) SLT, at p 168 ). It is rather the general approach of the courts to the question of status as a public authority that is useful; that approach has involved a weighing of all relevant circumstances before deciding in particular cases upon the status of the body in question. In Marshall v. SCOTTISH Milk Marketing Board (1956) SLT, at p 167 Viscount Simonds observed that the decision whether a body was a public authority for the purposes of the Act was often found to depend upon "a nice balance of considerations and the scale may, therefore, be easily turned" and in Bradford Corporation v. Myers (1916) 1 AC 242, at pp 250-251 Lord Haldane, in a passage which Viscount Simon later cited in Griffiths v. Smith (1941) AC 170, at p 176 , said that a court could
". . . only take the particular facts in the case before it, and decide as best it can whether they come within the words, or they fall altogether outside them. The essentially negative method of the second alternative often renders it, where it applies, the easiest and the safest one to use, and sometimes it admits of a principle of exclusion being laid down where no principle can be formulated affirmatively with any confidence in its legitimacy." (at p296)

16. To treat the question of the status of a body having a variety of functions as a matter of fact and degree, turning upon "a nice balance of considerations" is to apply to it a process familiar enough in determining whether some entity or situation substantially answers some statutory description. It has been employed to resolve questions as diverse as whether premises partly so used are in fact premises used for "public religious worship" (Stradling v. Higgins (1932) 1 Ch 143 ), whether land occasionally used for racing is "land used as a racecourse" (Wimborne and Cranborne Rural District Council v. East Dorset Assessment Committee (1940) 2 KB 420 ) whether a fishing boat carrying sightseers was a "passenger steamer" (Duncan v. Graham (1951) 1 KB 68 ) and whether a municipal electric supply corporation is a "trading corporation" (Reg. v. Trade Practices Tribunal; Ex parte St. George County Council (1974) 130 CLR 533, at pp 562-564, 567-570 ). (at p297)

17. In the case of s. 23 (d), the possession of some statutory duties or powers is not, I think, enough to attract the income of a body the exemption from tax which the paragraph confers unless, upon examination of all its characteristics, the body can be seen in general to conform to the common understanding of a public authority. In such an examination, in view of the indefinite nature of the term "public authority", it will perhaps be profitable, as Lord Haldane suggested in the passage quoted above, to adopt an "essentially negative method", looking for features clearly alien to the concept of what is a public authority and judging to what degree those features are pervasive and important. It will also be relevant to bear in mind the present statutory context. It is that of a provision granting exemption from income tax to the "revenue" of two kinds of entities, local government bodies and public authorities. If a taxpayer, being originally neither one of these, has engrafted onto its previous functions a new function which, while of a public nature, is not revenue-producing and if it at the same time retains its earlier functions unaffected by that new accretion, those aspects of its affairs which always were, and continue to be, positively inconsistent with the concept of a public authority will clearly be of significance in determining the applicability of s. 23 (d). (at p297)

18. This is such a case. Until 1917 the Club was in no sense a public authority. The Act of 1917 gave it a new function of a public nature which was not revenue producing, the Club making no charge for the grant of licences. After the passing of the Act of 1917 the Club continued, and still continues as before, to concern itself with all the varied activities of a major metropolitan turf club. (at p297)

19. This Club does possess features, some merely unusual in what are commonly regarded as public authorities, others positively inconsistent with the possession of that status. (at p297)

20. Features that are merely unusual are that the Club is unincorporated; that it owes its present constitution to a private Act of Parliament, the Act of 1892; that it provides special facilities for its members from which the general public are excluded; that its executive, consisting of the committee of the Club presided over by the chairman, is subject to no control whatever by government in its conduct of the affairs of the Club. There are other matters of detail which examination of the Act of 1892 and of the Club by-laws reveals, principally concerned with the election of members, including a blackball procedure, and all attributable to the essential character of the Club as a sporting or social club rather than an arm or instrument of government. They were considerations not very dissimilar from these which led Lord Moncrieff to conclude in his dissenting judgment in Armour v. Scottish Milk Marketing Board (1938) SC 465, at p 494 that that Board was not a public authority. It was his Lordship's dissenting judgment which found favour in the House of Lords in the later case of Marshall v. Scottish Milk Marketing Board (1956) SLT 162 . (at p298)

21. The Club also possesses features which must, I think, be regarded as positively inconsistent with ordinary notions of a public authority. These features are of particular significance because they relate directly or indirectly to the revenue of the Club, which is the special concern of s. 23 (d). The Club derives its revenue principally from gate receipts, commission on totalisator turnover, fees and commission from bookmakers, hire charges for use of its premises, the proceeds of the sale of race books and refreshments and, to a lesser extent, from members' subscriptions and dividends from investments. It also receives sixty per cent of the profits of the State's Totalisator Agency Board, some of which it distributes to other clubs. The Club does not distribute its profits to members, indeed it aims at a balanced budget, using surplus revenue to provide improved facilities. In consequence it now owns substantial assets apart from its Ascot racecourse. That racecourse is, by the provisions of the Act of 1892, subject to re-entry by the Crown if used for any purpose other than as a racecourse, although the Club would then be entitled to compensation for improvements. However, as I understand that Act and the later Western Australian Turf Club (Property) Act, 1944, and in particulars s. 3 (5) of the latter Act, the Club is otherwise free to deal as it sees fit with its other real estate. As Burnside J. said in the 1912 Full Court decision (1912) 14 WALR, at p 37 :

"Nor is the club precluded from owning real or personal property in like manner as any other club, and I take it that in the event of a dissolution, its assets would be divisible among its members. The controlling body of the club is elected by the members of the club, and within the limits of the authority conferred by the by-laws they are vested with a discretion in its management, unfettered by public interference."

It follows that the members of the Club have a real interest in the assets of the Club, assets which have been built up by the investment of the revenue of the Club. This is not, of course, to suggest that it is any purpose of the Club that it should earn profits for distribution to its members. It has not done so in the past and will no doubt continue in the future, as is the way with members' clubs, to devote its profits to the improvement of its facilities. However this does not dispose of the incongruity of applying the description of public authority to a club having entire control over the disposition of its profits and the members of which would, on dissolution, be entitled to share in the division of its assets. (at p299)

22. The result of a consideration of all these factors satisfies me that in its context in s. 23 (d) of the Income Tax Assessment Act the Club is not a public authority for the purposes of that paragraph. (at p299)

23. I would accordingly dismiss this appeal. (at p299)

JACOBS J. I have read the reasons for judgment prepared by Stephen J. I agree with them and cannot usefully add anything. In my opinion the appeal should be dismissed. (at p299)

MURPHY J. The question is whether the Western Australian Turf Club is a public authority constituted under a State Act within the meaning of s. 23 (d) of the Income Tax Assessment Act 1936, as amended, which states:
"23. The following income shall be exempt from income tax: . . . (d) the revenue of a municipal corporation or other local governing body or of a public authority constituted under any Act or State Act, or under any law in force in a Territory being part of the Commonwealth . . . " (at p299)

2. After its tax had been assessed for the year ending 30th April, 1974, the Club made an objection to the Commissioner that it was exempt under s. 23 (d), appealed to the Supreme Court of Western Australia against the Commissioner's disallowance of the objection, and now appeals to this Court against the Supreme Court's dismissal. (at p299)

3. The Club was formed in 1852 as an incorporated association to conduct horse-racing. In 1877, its present headquarters (Ascot racecourse) were vested in trustees for the Club for a term of 999 years at an annual peppercorn rental by a Crown grant under the Land Regulations on the express condition that the land should be used as a place of public enjoyment, especially for the training and running of race-horses in accordance with the rules and regulations of the Club, and that a race meeting should be held on the land at least once a year. The land, with an additional parcel later acquired, is now held under a certificate of title in the name of the chairman of the Club in accordance with s. 7 of The Western Australian Turf Club Act, 1892, a private Act which vested the land in the chairman and his successors in office. (at p300)

4. The long title of this Act is: "An Act to enable the Members of 'The Western Australian Turf Club' to sue and be sued in the name of the Chairman for the time being of the Committee of the said Club and for other purposes." (at p300)

5. The Act details the terms of the 1877 grant, refers to the fact that the Club expended considerable sums of money in erecting buildings and other improvements on the land, and states that it is desirable for the Club to have powers and authorities conferred on it to enable it to manage its affairs and maintain and control the racecourse and buildings. Sections 3 to 12 provide for actions by or against the Club to be taken in the chairman's name and for the vesting of present and future property, real and personal, in him, and for land vested in or leased to him to be used only as a public racecourse, with power to the Club's committee to maintain existing buildings and to erect new buildings. Section 13 authorizes the committee to make by-laws for regulating the admission and expulsion of members, managing the Club's affairs, regulating all matters concerning the land vested in the chairman and the admission to and expulsion from the land of Club members and the public (and the rates and charges to be paid for admission), for the general management of the racecourse and race meetings. (at p300)

6. The by-laws do not come into operation until one month after they have been sent to the Minister (still referred to as the "Colonial Secretary") and may be disallowed during that time by the Governor-in-Council. If not disallowed, they must be published in the Government Gazette. The Governor-in-Council may at any time thereafter by order repeal any by-law (from a time named in the order not less than six months from the date of the publication of the order in the Gazette). (at p300)

7. Section 18 provides that "a copy of all by-laws . . . (must) . . . be . . . affixed . . . in some conspicuous place at or near the principal entrance to the . . . racecourse . . ." and s. 19 provides that the by-laws ". . . shall be binding upon and be observed by all parties and shall be sufficient to justify all persons acting under the same . . .". Section 20 provides that "any person offending against any by-law made under this Act shall forfeit for every such offence any sum not exceeding twenty dollars to be imposed by such by-law as a penalty for any such offence and to be recovered by information or complaint before any justice . . .". Section 21 provides for a penalty (not exceeding $20.00) on conviction of wilfully obstructing or impeding any officer, servant or agent of the committee in the execution of his duty upon the land vested in the chairman. (at p301)

8. Section 22 provides that "any member officer or servant of the Committee and all persons called by him to his assistance may seize and detain any person who shall have committed any offence against the provisions of (the) Act or of the by-laws . . . whose name and residence shall not be given to such member officer or servant upon his requiring the same to be given and give such offender in charge to a police constable . . ." (at p301)

9. The Commissioner of Crown Lands is authorized to inspect the racecourse and buildings and require repairs to be done (see ss. 33 to 36). Accounts are to be kept and audited (see ss. 38 to 41). The Club remains unincorporated (see s. 42). If the racecourse is not maintained and used for one year, the land reverts to the Crown (see s. 43) which is then to pay to the Club the value of all buildings erected (see s. 44). (at p301)

10. The by-laws provide that the Club shall consist of (2 (a)): "(i) Ordinary Male Members; (ii) Junior Male Members; (iii) Non-effective Male Members; (iv) Non-effective Lady Members; (v) Honorary Life Members". (at p301)

11. Membership (excluding absentee members) is not to exceed 1,300 (2 (c)) and members are admitted by election by a committee of twelve after being nominated by a member and seconded by another. Two black balls shall exclude (a person from membership)" (3 (a)). (at p301)

12. By-law 19 provides that "the affairs and general business of the Club shall be managed by the Committee consisting of twelve members, to be elected by the General Meeting . . .". (at p301)

13. The income of the Club is from admission charges, sale of refreshments, etcetera. No profits are distributed to members and the Club endeavours to operate on a balanced budget. This accords with the view expressed by Parker C.J. in Western Australian Turf Club v. Commissioner of Taxation (W.A.) (1912) 14 WALR 31, at pp 34-35 :
"While the Act and rules made under its authority recognise that the club is composed of members, the members obtain no pecuniary benefit from their membership. They have the free right of entry to the racecourse, and certain privileges not at all disproportioned to their subscription, and these are the only benefits they receive beyond the privileges accorded to the public. . . . A distribution of any surplus moneys among the members of the club, by means of a dividend or otherwise would, in my opinion, be contrary to the spirit and intention of the Act and the rules made thereunder, and also opposed to the object for which the land was granted by the Crown." (at p302)

14. In 1917, the Racing Restriction Act was passed "for the restriction of horse racing and trotting". Section 2 provided that no horse race for any stake or prize should be held without written licence from the Turf Club and that race meetings in the metropolitan area should be limited to seventy-six each year. In 1944, The Western Australian Turf Club (Property) Act was passed "to resolve certain doubts concerning the power" of the Club under the 1892 Act to purchase and deal with real and personal property. This enabled the Club to take over certain small proprietary clubs operating on other courses in or near the metropolitan area. The effect of these two Acts, coupled with agreements made between the Club and a number of country race clubs, has been to give the Club an effective control over the conduct of race meetings throughout the State. This is recognized by the Totalisator Agency Board Betting Act, 1960-1966 which provides for the Board's surplus funds to be distributed between the Club (sixty per cent) and the Western Australian Trotting Association (forty per cent). (at p302)

15. There is no provision in the 1892 Act or rules of the Club for the dissolution, or consequent disposal of its assets. (at p302)

16. The Commissioner contends that the Club is a private members' club with limited statutory powers and restrictions upon the use of its land arising from the original grant but with no other fetters on its dealing with its property, and that its right to build up assets distributable to its members on dissolution shows that it is not a public authority. (at p302)

17. In Renmark Hotel Inc. v. Federal Commissioner of Taxation (1949) 79 CLR 10 , this Court (Latham C.J., McTiernan and Webb JJ.) considered the attributes which a body must have in order to be a public authority within the meaning of the relevant words in the Income Tax Assessment Acts. The Court dismissed an appeal from Rich J., who said (1949) 79 CLR, at p 18 :

"The characteristics of a public authority seem to be that it should carry on some undertaking of a public nature for the benefit of the community or of some section or geographical division of the community and that it should have some governmental authority to do so. In s. 23 (d) it is made clear that it must be constituted under a State Act. Coercive powers over the individual are given to many governmental authorities which could be called public authorities, but it is not an essential part of a conception of a public authority that it should have coercive powers, whether of an administrative or a legislative character. It may, however, be an essential characteristic of the conception that it should have exceptional powers or authority . . ."

Latham C.J. considered that a principal body was a public authority within s. 23 (d) if it performed statutory duties or exercised a public function. McTiernan J. said (1949) 79 CLR, at p 23 :

"It is necessary that an entity which claims to be a public authority for the purpose of this provision of the Income Tax Assessment Act should be constituted under statute and that it should also be given by statute powers or duties to be exercised for public objects."

and (41):

"The appellant is managed by a publicly elected committee and bound by its constitution to devote the profits to public objects, but that does not necessarily make it a public authority constituted under statute. It is the nature of the authority which is the test, and that must be considered."

Webb J. said (1949) 79 CLR, at p 24 : "Paying full regard to the legislation which has been passed to assist this particular body, I am unable to find in it any statutory power authorising this body to act on behalf of the public or the State - to apply the test laid down by Isaacs J. in the course of the argument in Incorporated Council of Law Reporting for the State of Queensland v. Federal Commissioner of Taxation (1924) 34 CLR 580 ." (at p303)

18. The English Court of Appeal in Reg. v. Manners (1976) 2 WLR 709, at p 714; (1976) 2 All ER 96, at p 101 considered that the views expressed by the House of Lords in Griffiths v. Smith (1941) AC 170 (and its approval of those of Barnes P. in The Johannesburg (1907) P 65 ) "support the definition of a public authority given in Halsbury's Laws of England", which is ((3rd ed.) vol. 30, 682, par. 1317):
"A public authority is a body, not necessarily a county council, municipal corporation or other local authority, which has public or statutory duties to perform, and which performs those duties and carries out its transactions for the benefit of the public and not for private profit." (at p303)

19. In my opinion, it is not necessary that a public authority has any duty to exercise its authority, although often a public authority has such a duty. (at p303)

20. The origin of the Club as a voluntary association must not obscure its present function. There are many voluntary associations which, by registration under an Act or by provisions similar to those in the Western Australian Acts, become public instruments for effectuating governmental purposes. In Australian Commonwealth Shipping Board v. Federated Seamen's Union of Australasia (1925) 35 CLR 462, at p 475 Isaacs J. described the voluntary associations which, when registered under the Conciliation and Arbitration Act 1904, as amended, become organizations of employers or employees as "public instruments for effectively administering an important statute of public policy for the general welfare". The fact that such associations are incorporated and similar bodies are unincorporated (for example, trade unions under State Acts) is of no significance, nor is the fact that the Club remains unincorporated. By virtue of the 1892 Act it is now a legal entity (see Bonsor v. Musicians' Union (1956) AC 104 ). (at p304)

21. Parliament has chosen the Club as a public instrument (even if not the only instrument) for the conduct of racing on a public racecourse, to carry out the other public functions mentioned in the 1892 Act, and to carry out the public administrative functions referred to in the Racing Restriction Act. It has more power over the public than the organizations referred to by Isaacs J. Thus, under the Western Australian Acts, the Club has legislative, executive, and quasi-judicial authority. Its legislative authority is of course delegated to it; its quasi-judicial authority derives from its by-laws and its exercise is crucial to the livelihood and reputation of those involved in the racing industry. In each case, the authority is in respect of matters affecting the public and exercisable not only against its members but against the public. As many members of the public wish to participate in the sport or industry of racing, the Club enjoys considerable authority over the public. (at p304)

22. Thus, the operations of the Club fall within the sphere of State action. The Club is an example of governmental functions being exercised by private persons vested with public authority (see Ira Nerken in "A New Deal for the Protection of Fourteenth Amendment Rights: Challenging the Doctrinal Bases of the Civil Rights Cases and State Action Theory", Harvard Civil Rights-Civil Liberties Law Review, vol. 12 (1977), 297, at p. 341). (at p304)

23. Does the fact that the Club is, to some extent, privately controlled destroy what would otherwise be its character as a public authority? The private aspects of a body may overshadow its public powers or authorities to the extent that it should not be regarded as a public authority within s. 23 (d). The Club's public functions, however, are so important that it is a public authority within s. 23 (d) despite the fact that its by-laws make it easy for the membership and the committee to become the preserve of a virtually self-perpetuating exclusive group. (at p305)

24. The Club has adopted by-laws in which some respects contravene the standards set out in the International Bill of Human Rights (for example, in sex discrimination). This should not detract from the characterization of the Club as a public authority; departure by governments and public authorities in Australia from the universal standards, especially in sex discrimination, is widespread. If the fact that the Government of Western Australia has not repealed the by-laws puts Australia in breach of its international obligations, that is (for the purposes of this case) a matter of legislative or executive, not judicial, concern. (at p305)

25. To come within s. 23 (d), it is not enough for the Club to be a public authority; it must be constituted as such under a (State) Act. In my opinion, the Club is constituted as a public authority under a State Act. The principal body does not have to be incorporated or created by a State Act. In the Renmark Case, Rich J. said (1949) 79 CLR, at p 19 :

"The word 'constituted' is not the same as 'incorporated'. For the purposes of s. 23 (d) it is conceivable that an unincorporated body might be constituted under a State Act so as to satisfy the exemption. On the other hand, mere incorporation under an Act does not constitute the body. The word 'constituted' immediately follows 'public authority'. It means constituted as a public authority." (at p305)

26. My conclusion is that the Club is a public authority constituted under a State Act within the meaning of s. 23 (d). (at p305)

27. The appeal should be upheld. (at p305)

AICKIN J. The origin of the Western Australian Turf Club was as a members' club, the original constitution of which is not before us, but at least by 1877 it had trustees who held certain land demised to them as trustees for the Club for the term of 999 years at a peppercorn rental to be used as a place of public enjoyment and especially for the training and running of racehorses and purposes connected therewith. One of the provisions of the demise was that pedestrians should be admitted on the land during such race meetings free of charge or on payment of such charges as might be approved by the Governor, with a provision that if at any time the land ceased to be used as a racecourse or if race meetings were not held or persons not admitted then the Crown might re-enter. The Governor was given power to nominate other persons as trustees. The original constitution may properly be said to have been superseded by a private Act, The Western Australian Turf Club Act, 1892 (W.A.) ("the Act"), which "reconstituted" the Club, but without destroying the continuity of its identity. (at p306)

2. The Act vested the property of the Club and all property held in trust for it (including the land demised by the Crown in 1877) in the chairman of its committee and his successors "in trust for the club and in the like manner as if such chairman and his respective successors in such office were in law a corporation sole". It provided by s. 3 that actions might be commenced in the name of the chairman as the nominal plaintiff for and on behalf of the Club and that actions against the Club or any of its members as such might be instituted against the chairman as nominal defendant for and on behalf of the Club or members. It was further provided in s. 6 that judgments obtained against the chairman on behalf of the Club might be executed against the property and effects of the Club, save and except the land already referred to or further land demised to the chairman pursuant to the terms of the Act. By s. 7 it was provided that the land referred to was thereby without the necessity for any conveyance or other connecting title than the Act itself vested in the chairman and his successors in office. By s. 8 it was provided that other land might be demised to the chairman for any term of years. By s. 10 it was provided that "The lands by this Act vested in or authorised to be demised to the chairman shall be held by such chairman and his successors in office only for the purpose of being maintained and used for a public racecourse under and subject to the provisions of this Act and any by-laws to be made under and by virtue hereof and save as herein expressly provided shall not be used demised or let for building purposes or unless with the permission in writing of the Commissioner of Crown Lands first had and obtained for any other purpose whatsoever." By s. 12 the committee was authorized to maintain buildings then on the land and to build or erect further buildings as they thought necessary or expedient in connexion with the use of the land as a public racecourse. Sections 13-16 are as follows:

"13. The committee or an absolute majority in number of such committee may from time to time subject to the special provisions of this Act make such bye-laws as they think fit for regulating the election or admission of members into the club and the expulsion of members therefrom for providing for the due management of the affairs of the club for regulating all matters concerning or connected with the said lands by this Act vested or which may hereafter be vested in the chairman and the admission thereto and expulsion therefrom of members of the club and the public respectively (and the rates or charges to be paid for such admission) and for the general management of the said racecourse and all races and race meetings and for the working and management of any totalisator or other betting machine and may from time to time by any other bye-laws alter or repeal any such bye-laws Provided that no such bye-laws be repugnant to the laws for the time being in force in Western Australia And every bye-law shall be reduced into writing and shall be signed by the chairman. 14. No bye-law shall be of any force or effect until the expiration of one month after the same or a copy thereof signed by the chairman shall have been sent to the Colonial Secretary of Western Australia for the time being and until publication as hereinafter mentioned and at any time within the said period of one month the Governor in Council may disallow such bye-law and after such disallowance such by-law shall not come into operation. 15. Every bye-law shall forthwith on the expiration of one month after the same shall have been sent as aforesaid if not disallowed within that time be published in the Government Gazette together with a notice stating when such bye-law was sent to the Colonial Secretary and that such bye-law has not been disallowed and such bye-law shall come into operation upon such publication.

16. The production of a copy of the Government Gazette containing any such bye-law and notice as aforesaid shall be conclusive evidence that such bye-law was duly made and was not disallowed." (at p307)

3. Section 18 dealt with publication of by-laws by their being exhibited in a conspicuous place on the racecourse and provided that when so published and affixed they were to be binding on all persons. Sections 20-21 provided as follows:

"20. Any person offending against any bye-law made under this Act shall forfeit for every such offence any sum not exceeding Ten pounds to be imposed by such bye-law as a penalty for any such offence and to be recovered by information or complaint before any justice and if the infraction or non-observance of any of such bye-laws be attended with danger or annoyance to the public or hindrance to the committee or the public in the lawful use of the said racecourse it shall be lawful for the committee or any member officer or servant thereof summarily to interfere to obviate or remove such danger annoyance or hindrance and that without prejudice to any penalty incurred by the infraction of any such bye-law. 21. Whosoever shall wilfully obstruct or impede any officer servant or agent of the committee in the execution of his duty upon any land for the time being vested in the chairman or upon or in any building or premises connected therewith or wilfully trespass upon any such land building or premises or remove or wilfully injure any building enclosure post tree or shrub upon any such land shall on conviction thereof before a justice forfeit and pay for every such offence over and above the amount of the injury done any sum not exceeding Ten pounds."

By s. 22 members of the committee and persons authorized by them might seize and detain any person who had committed an offence under the Act or by-laws and whose name and residence had not been given to them. By s. 24 the committee was authorized by by-law to fix tolls and charges for admission to the land vested in the chairman. Various powers of borrowing or leasing the land and borrowing on the security of the land or the revenues of the Club were given in ss. 25-28. (at p308)

4. By ss. 33-34 the Commissioner of Crown Lands was given powers to authorize inspection of the premises and to give notice with respect to repairs and the like. (at p308)

5. Sections 42 and 43 provided as follows:

"42. Nothing herein contained shall extend or be deemed taken or construed to extend to incorporate the club or the members thereof or to relieve or discharge them or any of them from any responsibility duties contracts or obligations whatsoever which they would be subject or liable to either between the club and others or between the individual members in the club or any of them if this Act had not been passed. 43. If at any time after the passing of this Act the lands by this Act vested in or authorised to be demised to the chairman shall save and except with the consent of the Governor in Council given before the expiration of the period of twelve months hereafter mentioned cease for the period of twelve months at any one and the same time to be maintained and used as and for a public racecourse or if without the consent of the Governor in Council the said lands or any part thereof shall be used or applied for or to any other purpose than that of a public racecourse then and in either of such cases such part of the said land so ceasing to be maintained and used or so used or applied as aforesaid as the case may be shall at the end of the said period of twelve months revert to Her Majesty her heirs and successors for the benefit of the public."

By s. 44 it was provided that Her Majesty might not take or resume possession of the lands without paying to the chairman in trust for the Club the value of all buildings erected on the land. (at p308)

6. By the Racing Restriction Act, 1917 (W.A.) it was provided that no horse race for any stake or prize should be held without written licence from the Club and that race meetings in the metropolitan area should be limited to a specified number in each year. It appears that the club is not authorized to impose any charge or fee for the granting of a written licence for the holding of horse races, or at least it does not do so. (at p309)

7. In those circumstances the contention of the Club in this appeal is that it is a "public authority constituted under any Act or State Act" within the meaning of s. 23 (d) of the Income Tax Assessment Act 1936, as amended. That provision makes exempt from income tax "the revenue of . . . a public authority constituted under any Act or State Act. . . ." The expression "public authority" is not defined in the Act but it has been discussed in two decisions of this Court. Some light is thrown by those decisions upon the meaning of the term in the Income Tax Assessment Act 1936, as amended, and its predecessor, the Income Tax Assessment Act 1915-1918. In Incorporated Council of Law Reporting (Q.) v. Federal Commissioner of Taxation (1924) 34 CLR 580 the only explanation or comment made as to the meaning of the expression is found in an observation of Isaacs A.C.J. reported as having been made in the course of argument where he said that to be exempt as a public authority a body would have to be authorized by statute "to act on behalf of the Public or of the State". In Renmark Hotel Inc. v. Federal Commissioner of Taxation (1949) 79 CLR 10 somewhat divergent views were expressed. Rich J. at first instance rejected the decisions on the Public Authorities Protection Act, 1893 (U.K.) as a guide and said (1949) 79 CLR, at pp 18-19 :

"The characteristics of a public authority seem to be that it should carry on some undertaking of a public nature for the benefit of the community or of some section or geographical division of the community and that it should have some governmental authority to do so. In s. 23 (d) it is made clear that it must be constituted under a State Act. Coercive powers over the individual are given to many governmental authorities which could be called public authorities, but it is not an essential part of a conception of a public authority that it should have coercive powers, whether of an administrative or a legislative character. It may, however, be an essential characteristic of the conception that it should have exceptional powers or authority, for instance a tramway board or trust has the exceptional authority of taking its trams down a public street. A water authority may lay its water mains, a lighting authority may do the like. Some exceptional powers of doing what an ordinary private individual may not do are generally found in any body which we would describe as a public authority. . . . In s. 23 (d) it is to be noticed that the words are not 'by any State Act,' but 'under any State Act.' The exemption therefore seems to contemplate the possibility of the public authority being established in pursuance of an Act as well as an authority constituted by a State Act. . . . The word 'constituted' is not the same as 'incorporated'. For the purposes of s. 23 (d) it is conceivable that an unincorporated body might be constituted under a State Act so as to satisfy the exemption. On the other hand, mere incorporation under an Act does not constitute the body. The word 'constituted' immediately follows 'public authority'. It means constituted as a public authority. . . . A control exercised over it by the Treasurer arises only from the necessity of excluding private profit and superintending the application of the actual profits. It appears to be a measure of police or discipline. It has no statutory powers enabling it to do what a private individual could not do. The elements upon which the appellant relies for the claim to be a public authority are restrictive, not enabling. They consist of provisions of the law and of documents adopted under the law directed to confine its activities to public purposes."

On appeal Latham C.J. said (1949) 79 CLR, at p 23 :

". . . in my opinion, the appellant company is not given any power or authority by law in the form of a State statute to do any acts in relation to the public which otherwise would be beyond its power or unauthorized. The licence to sell liquor plainly does not make the licensee a public authority. If this were the case, licensees of all premises licensed to sell liquor would be public authorities. It cannot be suggested that they are such authorities. In the case of Griffiths v. Smith (1941) AC, at pp 205-206 Lord Porter used the following words in arriving at a determination as to whether a particular body consisting of the managers of a school, was a public authority. He said: 'There are many . . . bodies which perform statutory duties and exercise public functions. In my opinion, those words indicate the nature of the attributes which a person or body must have in order to be a public authority within the meaning of the relevant words in the Income Tax Assessments Acts. In my opinion, the appellant company does not perform any statutory duties or exercise any public function."

Griffiths v. Smith (1941) AC 170 was a case concerning the Public Authorities Protection Act, 1893. McTiernan J. said (1949) 79 CLR, at p 23 that: "It is necessary that an entity which claims to be a public authority for the purpose of this provision of the Income Tax Assessment Act should be constituted under statute and that it should also be given by statute powers or duties to be exercised for public objects." Webb J. merely referred to the test formulated by Isaacs J. in the earlier case. (at p311)

8. In the Renmark Hotel Case (1949) 79 CLR 10 both Rich J. and Latham C.J. indicated that the expression "constituted under any State Act" did not necessarily require that a body be initially incorporated by legislation which conferred the necessary statutory duties and public functions. (at p311)

9. The observations in those cases provide the only guide in this Court with respect to this provision in s. 23 (d). I have given consideration to the authorities under the Public Authorities Protection Act to which my brother Stephen refers in his judgment. I am unable to derive any assistance from those authorities in the construction of the Income Tax Assessment Act. The United Kingdom Act was directed to quite a different purpose and was concerned with protection of the public authorities in relation to acts or defaults done or committed in the execution of a statute or of a public duty, the emphasis being on the nature of the acts done rather than on the nature of the authority doing them. I would not however question the general proposition that the classification of a body as falling inside or outside some statutory definition or description must turn upon a consideration of all its aspects and a balance of conflicting or possibly conflicting considerations and tendencies, and in some cases may be a question of degree. (at p311)

10. In agreement with the views expressed in the cases referred to above, I regard the basic requirement as being that the relevant Act under which the relevant body is said to be "constituted" should confer powers of an exceptional nature not possessed by private individuals or by companies formed by private individuals under the provisions of the Companies Acts. No doubt bodies corporate may be created or constituted by or under statute which are nonetheless not "public authorities". It is necessary therefore to examine the provisions of the legislation in order to see whether the powers and authorities conferred upon the Club answer that description and how they relate to the other powers, authorities and functions of the Club. The relevant time as at which the position of the Club is to be examined is in the year of income, i.e. the year ended 30th April 1974. (at p311)

11. The power or authority to conduct a racecourse on land demised by the Crown, though it may be said to be exceptional in some respects is not I think such a power as the Court had in mind in the Renmark Hotel Case, notwithstanding that it probably was not "otherwise authorized". An examination of the Act, and in particular s. 13 demonstrates that the Club was authorized to conduct a racecourse at which betting might be authorized by the by-laws of the Club - see the reference to "any totalizator or other betting machine". In that sense the Club was authorized to conduct or permit gaming which would otherwise be illegal. In addition the committee was given by ss. 20, 21 and 22 the powers and functions referred to above. (at p312)

12. It is thus apparent that the Club does have certain exceptional powers to do what an ordinary private individual, or group of individuals, may not do, some of which at least, if not all, may properly be described as statutory duties and the exercise of public functions. It does however have other powers and it exercises other functions, in that it is a members' club and is an unincorporated association such as is commonly the mode of organization of members' clubs. It is true that the Act makes a number of special provisions not often found in the case of a club. Thus the chairman of its committee is in the same position as if he were a corporation sole, providing a convenient mode for holding the Club's property and for the Club to sue and to be sued. This avoids the long standing inconveniences arising with respect to unincorporated associations, both for the association and for those who deal with it. It is however expressly provided that the Club is not an incorporated body and that the members of the Club are to remain subject to such liabilities as they might otherwise have been subjected to as members of the Club. These provisions would not of themselves warrant the conclusion that the body was a public authority or that it was constituted as such under a State Act. (at p312)

13. The situation is accordingly one in which the Club has a number of functions and activities which are properly described as being those of a public authority and it acts as such in exercising those powers performing those functions. In addition it is an ordinary members' club established as such and carrying on what may be properly described as the ordinary functions and activities of a racing club and in that capacity the Club and its individual members are not performing any function appropriate to a public authority. (at p312)

14. It appears from the material placed before the trial judge that the Club derives no income from its licensing activities nor from the powers which it exercises as a by-law making authority. Its income is primarily derived from gate receipts, totalizator turnover commissions, bookmakers' fees, and commissions, other fees the sale of refreshments and drinks and to an extent from members' subscriptions. The Club is entitled to sixty per cent of the profits of the Totalizator Agency Board. In addition it has certain investments which yeild income. There would seem to be no reason to doubt that if the Club were disbanded any surplus assets would be divisible amongst the members, though the land itself would revert to the Crown upon the basis that the Club would then no longer be using it as a racecourse, though compensation would be paid in respect of buildings on the land. (at p313)

15. If an association of persons has dual powers and functions, some of a private character and some of an exceptional character such that they are not enjoyed by ordinary individuals, neither set being plainly incidental to the other, it may be that it is possible to regard it as a public authority for some purposes and as a private association of persons for others. Even if this be so, it would not assist the Club in the present case because the income upon which it has been assessed is not derived from any operation conducted as a public authority. (at p313)

16. In so far as the Club has these public powers and functions, they are conferred upon it by statute and, if it is a public authority either in relation to all of its activities or some of them, then it seems to me that it is constituted as such under these two Acts. On the other hand it cannot be said that it is wholly or exclusively a public authority because it has substantial other activities which cannot be regarded as those of a public authority. There does not appear to be any decided case which deals with the situation where there is a body in existence with powers and functions of a purely private character, such as the Club was prior to 1892, and which has then conferred upon it powers, authorities and functions of a public character. No doubt bodies properly described as public authorities may have ancillary powers and functions which, if viewed alone, would be appropriate to and properly described as private functions or non-public functions, but the latter may properly be treated as powers or functions of the public authority because of their association with the principal or primary public functions of the authority. Income derived from such ancillary functions would properly be described as income of a public authority. (at p313)

17. In the present case however the public functions of the Club are neither the principal nor substantially the principal functions of the Club. They are incidental to the private functions rather than the reverse. For that reason the Club itself cannot be regarded as a public authority, and the fact that it derived no income from the exercise of its public powers and duties assists in that conclusion. (at p314)

18. In my opinion therefore the appeal should be dismissed. (at p314)

Orders

Appeal dismissed with costs.