Registrar of the Accident Compensation Tribunal v Federal Commissioner of Taxation [1993] HCA 1; (1993) 178 CLR 145; (1993) 117 ALR 27; (1993) 67 ALJR 922 (7 December 1993)

HIGH COURT OF AUSTRALIA

THE REGISTRAR OF THE ACCIDENT COMPENSATION TRIBUNAL v. COMMISSIONER OF TAXATION (Matter No. M50 of 1992)

F.C. 93/043

Number of pages - 35

[1993] HCA 1; (1993) 93 ATC 4835

(1993) 26 ATR 353, (1993) 117 ALR 27

(1993) 67 ALJR 922

HIGH COURT OF AUSTRALIA

MASON CJ(1), BRENNAN(2), DEANE(1), DAWSON(2) TOOHEY(1) GAUDRON(1) AND McHUGH(2) JJ

HEARING

CANBERRA, 3, 4 February 1993

20:10:1993

ORDER

Matter to stand in the list.

Parties to bring in on or before 3 November 1993 agreed minutes of order in accordance with the reasons for judgment.

If parties are unable to reach an agreement on minutes of order, written submissions as to the appropriate orders to be made to be filed and served by the parties by 10 November 1993. Parties to have liberty to file and serve within seven days of such service written submissions in reply.

DECISION

MASON CJ, DEANE, TOOHEY and GAUDRON JJ This is one of three

appeals raising the question whether the Registrar of the Accident

Compensation Tribunal ("the Registrar") is liable to pay tax, as

trustee, on money credited as interest to accounts kept by him with

respect to awards of compensation made under the Workers Compensation

Act 1958 (Vic.) which, ultimately, came to be administered by him

pursuant to that same Act. Strictly, the appeals are appeals to the

Full Court of the Federal Court of Australia. They were removed into

this Court pursuant to s.40(1) of the Judiciary Act 1903 (Cth) for the

reason that they involve a question under s.114 of the Constitution.

Factual and legislative background



2. In June 1979 an award of compensation in the sum of $23,940 was made in consequence of the death of Alexander Joseph Abela. It

is common ground that the award was made for the benefit of his

dependants - his widow (Carol Abela, now Mrs Payne) and his three

daughters (Lisa, Michelle and Tanya) - who are together referred to as

"the Abela family".

3. Initially, the compensation was paid to the Workers Compensation Board ("the Board") under s.34 of the Workers Compensation Act. At

that time, 1979, that section relevantly required that, in the case of

death and unless the Board ordered otherwise, compensation should be

paid into the custody of the Board and that, subject to the rules of

the Board and the provisions of the Act, it should be "invested

applied or otherwise dealt with ... for the benefit of the persons

entitled thereto".

4. Until 1983, the Board maintained an account of payments made to or on behalf of members of the Abela family and of interest earned

on the money held on their behalf. That account was in the name

of Carol M. Abela (later, Carol M. Payne). In 1983, the Board

apportioned compensation between Lisa and the other members of the

Abela family ((1) Seemingly, this was pursuant to s.34(2) of the

Workers Compensation Act which, in 1983, provided:

"In the case of death if the worker leaves more

than one dependant the Board having regard to the

circumstances of the various dependants and variations

in such circumstances from time to time may -

(a) apply or otherwise deal with any sum so paid

into its custody in such manner as in the

opinion of the Board will for the time

being be most beneficial to the dependants;

(b) provide for any two or more dependants

collectively;

(c) exclude any dependant from participating in

any benefit.") and transferred $16,000 to a separate

account which, despite the apportionment, was treated by all concerned

as an account for the benefit of all four members of the Abela family.

5. The Accident Compensation Act 1985 (Vic.) established a new regime with respect to accidents and diseases in the work place. It

established various new bodies, including the Accident Compensation

Commission ("the Commission") and the Accident Compensation Tribunal

("the Tribunal") ((2) ss.18 and 39, respectively.). Broadly

speaking, it required the Commission to manage the compensation scheme

then established and conferred various functions on it ((3) ss.19

and 20, respectively.), including that of administering the Accident

Compensation Fund ("the Compensation Fund") ((4) s.20(a).) into

which employers, other than self-insurers, were obliged to pay an

accident compensation levy ((5) s.187, and generally Pt VII. See

s.140 as to the exemption for self-insurers.) and from which

compensation payments were to be made ((6) s.33(3)(a).).

6. Again broadly speaking, the Accident Compensation Act, as it stood in 1985, required the Tribunal to inquire into, hear and

determine compensation claims and various other matters associated

with the compensation scheme ((7) s.40(1)(a).). It also required

the Tribunal to establish and maintain a fund called the Accident

Compensation Tribunal Fund ("the Fund") ((8) s.73.). The Fund is

separate and distinct from the Compensation Fund earlier referred to.

Various amounts were required to be paid into the Fund, including, "all

... money that the Tribunal receive(d) under or for the purposes of

this Act or any other Act" ((9) s.73(2).). The Accident

Compensation Act was amended in various respects with effect from 1

December 1987 ("the 1987 amendments"), the main consequence being that

the Fund then came under the control of the Registrar.

7. The Workers Compensation Act was amended in 1985 and again in 1987 to bring it into harmony with the new compensation arrangements

effected by the Accident Compensation Act. It is sufficient, at this

stage, to note that s.37 of the Workers Compensation Act was amended

in 1985 to provide, relevantly:

"(1) On and from the appointed day, all moneys paid

into the custody of the Board pursuant to this Division as

in force before that day shall be administered by the

Tribunal in accordance with this Act.

(2) For the purposes of sub-section (1), the moneys

shall be paid to the Tribunal or, where any of the moneys

were before the appointed day invested, the investments

shall be transferred to and vest in the Tribunal." ((10) The

"appointed day" was 31 August 1985.)

Pursuant to s.37 of the Workers Compensation Act, as then amended,

the Board transferred various moneys to the Tribunal for payment into

the Fund, including the money in the accounts kept in the names of

Lisa Abela and Mrs Payne.

8. In keeping with the apportionment made by the Board in 1983, the Tribunal and, following the 1987 amendments, the Registrar kept

a separate account in the name of each of Lisa J Abela and

Carol M. Payne ("the Payne account"). Again, the Payne account seems

to have been treated as an account for the benefit of all four members

of the Abela family.

9. On 10 July 1987, an amount of $2,718.69 was credited to the Payne account as "interest" for the period 1 July 1986 to 30 June 1987. It

is common ground that that "interest" was or was calculated on the

basis of a proportionate share of income earned by the Fund in the

year ended 30 June 1987.

10. In 1990, the Commissioner of Taxation ("the Commissioner") issued a notice assessing the Registrar, as trustee for the Abela family, to

tax on the basis that the sum of $2,718 was income of a trust estate

for the year ended 30 June 1988. It seems that there was another and

alternative assessment levied on the Tribunal, on the basis that it

was income for the year ended 30 June 1987. It is not entirely clear

what has happened to that alternative assessment but it has at all

stages been treated as an assessment having effect in the event that

the sum of $2,718 is found to be income for that tax year, rather than

the year ended 30 June 1988. The Registrar lodged an objection to

the 1988 assessment but it was disallowed. He then appealed to the

Federal Court. The appeal was dismissed by Jenkinson J, the appeal

to the Full Court of the Federal Court was then instituted, and later

removed into this Court.

Legislative provisions



11. It was common ground in this Court that the case could conveniently be approached on the basis of the provisions of the

Workers Compensation Act and of the Accident Compensation Act as they

stood following the 1987 amendments. Thus, reference will be made to

earlier provisions only if significantly different.

12. The Workers Compensation Act and the Accident Compensation Act were extensively amended in 1992 when the Tribunal was abolished ((11)

By operation of s.64(1)(a)(iii) of the Accident Compensation

(WorkCover) Act 1992 (Vic.) the Tribunal ceased to exist on 1 December

1992.). The 1992 amendments have no bearing on this case. It is

convenient, therefore, to proceed as if both Acts continue in the terms

in which they stood following the 1987 amendments and as if the

Tribunal, the Registrar and the Fund continue in existence in

accordance with their then provisions.

Composition of and payments out of the Fund



13. The composition of the Fund appears from s.73(2) of the Accident Compensation Act which provides that there is to 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;

(ab) payments made under section 34 of the Workers

Compensation Act 1958;

(ac) amounts borrowed by the Registrar under section 51C;

(b) any income from the investment of any money credited to

the Fund and the proceeds of the sale of any

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".

14. It is common ground that, at all relevant times, the major part of the Fund has consisted of, or has been referable to, compensation

payments made under the Workers Compensation Act or under the Accident

Compensation Act and paid into it under s.73(2)(aa) and (ab) or,

earlier, under s.73(2)(c) of the Accident Compensation Act ((12)

Paragraphs (aa) and (ab) were inserted into s.73(2) in 1987. Prior to

that, it seems, compensations moneys were paid into the Fund under

s.73(2)(c) and, perhaps, par.(d).). Indeed, its balance sheet for the

year ended 30 June 1987 indicates that "Beneficiary Fund Investments"

then constituted more than 95% of its total assets.

15. Section 73(3) of the Accident Compensation Act authorizes the following payments out of the Fund:

"(a) payments directed by order of the Tribunal to be

paid out of the Fund under this Act or the Workers

Compensation Act 1958;

(aa) any amounts payable in respect of money borrowed under

section 51C;

(ab) any payment authorised under section 131 or 132;

(ac) any payment authorised under section 35 or 36 of the

Workers Compensation Act 1958;

(b) any payment required or authorized to be made or

which is for or towards the costs and expenses of or

incidental to the performance of the functions or the

exercise of the powers of the Tribunal or staff of the

Tribunal;

(c) any other costs and expenses incurred by the Tribunal

or Registrar under this Act or any other Act;

(d) any amounts payable in respect of remuneration,

allowances and pensions under section 45 or 50A and

any other payment required or permitted to be paid out

of the Fund by or under any other Act; and

(e) any payment required or authorized to be made out of

the Fund by sub-section (4) or (5)".

Other provisions of the Accident Compensation Act bearing on the Fund



16. Other provisions of the Accident Compensation Act bearing on the Fund are s.73(4), (5), (6) and (7) which are as follows:

"(4) The Registrar may -

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

is approved by the Treasurer; and

(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.

(5) The Registrar shall be indemnified from the Fund

against any liability or claim arising under sub-section

(4).

(6) For the purposes of this section, the Registrar may

open and maintain one or more accounts in the name of the

Registrar or the Tribunal with any bank or banks.

(7) If any money is invested under sub-section (4) in

the purchase of any land or the construction or alteration

of any buildings, the whole or part of the land or buildings

may be used by the Tribunal in connection with its powers,

duties or functions under this Act." ((13) This sub-section is

substantially repeated in s.131(3); and see fn.(16).)

Legislative provisions bearing on compensation payments paid into the Fund



17. The Workers Compensation Act continues to govern compensation moneys awarded under that Act but paid into the Fund established

and maintained under the Accident Compensation Act. The relevant

provisions of the Workers Compensation Act, ss.35 and 36, mirror

ss.131 and 132 of the Accident Compensation Act which apply to

compensation awarded under that latter Act.

18. Section 35 of the Workers Compensation Act is as follows:

"(1) Except as otherwise provided in section 34 ((14) Section

34(1) provides that certain payments of compensation are to be paid

to

and administered by the Registrar, notably compensation in the case

of

death and, also, under par.(c), in cases where the Tribunal

considers

that that is in the best interests of the worker concerned.

Section 34(2) empowers the Tribunal to impose any conditions,

restrictions or limitations on the duration and termination of

an administration with respect to compensation to be paid to the

Registrar under s.34(1)(c) if, as indicated, it considers that

that would be in the best interests of the worker.),

any amount of money administered by the Registrar under

this Act may be invested, applied or otherwise dealt with

in any manner that the Registrar thinks fit for the benefit

of the person entitled to that money.

(2) 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.

* * * * * * *

(4) If the amount of money administered by the

Registrar on behalf of any person becomes less than an

amount of money determined by the Registrar the amount

shall be paid out to that person.

(5) All expenses ((15) Section 131(5) of the Accident

Compensation Act, which otherwise mirrors this provision, is

subject to

an exception in the case of expenses paid under s.51A of that Act

to a

"funds management agent".) incurred by or on behalf of the

Registrar in the administration of any amount of money

under this Act shall be paid by the Registrar out of the

(Fund)." ((16) Section 131 of the Accident Compensation Act

contains

a provision, namely s.131(3), which repeats s.73(7) of that Act

and which is not replicated in s.35 of the Workers Compensation

Act.)

19. Section 36 of the Workers Compensation Act provides:

"(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.

(2) If a deceased worker leaves more than one

dependant the Registrar after having regard to the

circumstances of the various dependants and any variations

in the circumstances from time to time may determine to -

(a) apply or otherwise deal with any money

administered by the Registrar in a manner which

the Registrar considers will for the time being

be most beneficial to the dependants;

(b) make a payment to any dependant;

(c) provide for any two or more dependants

collectively; or

(d) exclude any dependant from participating in any

benefit.

(3) If on an application to the Registrar by an

interested party it appears to the Registrar that because

of -

(a) the neglect of any children by the spouse of the

deceased worker or of a relative standing in the

place of a parent in relation to any children of

the deceased worker under the age of 16 years;

(b) a variation in the circumstances of the various

dependants; or

(c) any other sufficient cause -

a determination as to the apportionment between several

dependants of any amount of compensation or as to the

manner in which any amount of compensation payable to

any dependant is to be invested, applied or otherwise

dealt with should be varied, the Registrar may make any

determination for the variation of the previous

determination as the Registrar in the circumstances of the

case considers appropriate.

* * * * * * *

(5) Any person who objects to any determination made

by the Registrar may appeal to the Tribunal which may make a

new determination."

Is the Registrar a trustee?



20. The Registrar has been assessed to tax under Pt III, Div.6 of the Income Tax Assessment Act 1936 (Cth). So far as Pt III, Div.6 is

concerned and subject to other questions of a more general nature

which will be considered later, it was accepted that, if the Registrar

was at relevant times a trustee of the money in the Payne account,

then Pt III, Div.6 subjects income earned on that money to tax "as if

it were the income of an individual ... and were not subject to any

deduction" ((17) See s.99(2)-(3) of the Income Tax Assessment Act.).

The primary question that arises in relation to Pt III, Div.6 is, thus,

whether the Registrar was for the purposes of the Income Tax Assessment

Act a trustee of that money. If he was, there is a subsidiary question

whether the sum of $2,718.69 credited to the Payne account in July 1987

was income earned by the Tribunal in the tax year ended 30 June 1987,

or by the Registrar in the tax year ended 30 June 1988.

21. By s.6(1) of the Income Tax Assessment Act, "trustee" is defined as follows:

"'trustee' in addition to every person appointed or

constituted trustee by act of parties, by order, or

declaration of a court, or by operation of law, includes -

(a) an executor or administrator, guardian, committee,

receiver, or liquidator; and

(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".

22. It is to be remembered that the question in this case is whether the Registrar is a trustee of the balance of the compensation awarded

in consequence of the death of Alexander Joseph Abela and standing in

the Payne account ((18) Note, the Commissioner is apparently content

to treat the moneys in the Lisa J Abela account as subject to a

separate trust. Assuming there is a trust, the question whether that

approach is correct in the light of the Registrar's wide discretion

with respect to apportionment under s.36 of the Workers Compensation

Act does not arise.), and not whether he is trustee of the Fund. It

is in that context that it was argued on behalf of the Commissioner

that the Registrar is a trustee by operation of law, alternatively a

trustee under par.(b) of the extended definition of "trustee" in

s.6(1) of the Income Tax Assessment Act. It was put that he came

within the extended definition because he had the administration or

control of income affected by an implied trust (which was identified

in the argument as a "trust for statutory purposes" ((19) See, as to a

"trust for statutory purposes", Fouche v. The Superannuation Fund Board

[1952] HCA 1; (1952) 88 CLR 609, per Dixon, McTiernan and Fullagar JJ at p.640;

Harmer v. Federal Commissioner of Taxation [1991] HCA 51; (1991) 173 CLR 264, at

p.274.) ), or because he was acting in a fiduciary capacity in relation

to the moneys in the Payne account.

23. The primary submission made on behalf of the Registrar was that the intention to be discerned from the Workers Compensation Act and

the Accident Compensation Act is not that the Registrar should be

subject to trust obligations in respect of compensation moneys, but,

rather, that they are to be dealt with on a governmental or

administrative basis.

24. In the submissions made on behalf of the Registrar, reliance was placed on the fact that the Workers Compensation Act does not

expressly constitute the Registrar a trustee of compensation moneys

but, on the contrary, s.35(2) of that Act and s.131(2) of the Accident

Compensation Act expressly provide that he is not "bound by any law

relating to the administration of trust funds by trustees".

Additionally, it was put that the obligations imposed by the Workers

Compensation Act and the Accident Compensation Act are imposed on the

Registrar in his official capacity and not on him personally; that the

Registrar has a wide discretionary power to apportion between

dependants under s.36 of the Workers Compensation Act and s.132 of the

Accident Compensation Act; that the moneys are to be paid into the

Fund, a mixed fund, incorporating not only other compensation payments

but moneys which would seem intended to defray the costs associated

with the general work of the Tribunal and the Registrar; and, that

the Registrar has power to invest moneys in the Fund in any manner

approved by the Treasurer.

25. The legislative provisions on which the Registrar relies are to be approached, according to the argument, in the light of the

principle in Kinloch v. Secretary of State for India ((20) (1882) 7

App Cas 619.). That principle requires clear words before an

obligation on the part of the Crown or a servant or agent of the Crown,

even if described as a trust obligation, will be treated as a trust

according to ordinary principles or, as it is sometimes called, a "true

trust" ((21) Tito v. Waddell (No.2) (1977) Ch 106, per Megarry V.-C.

at pp.211, 216-219. See also Kinloch v. Secretary of State for

India (1882) 7 App Cas, per Lord Selborne LC at pp.625-626;

Town Investments v. Department of Environment [1977] UKHL 2; (1978) AC 359,

per Diplock LJ at p.382.); rather,

in the absence of clear words, the obligation will be characterized as

a governmental or political obligation, sometimes referred to in the

decided cases as a trust "in the higher sense" ((22) Kinloch v.

Secretary of State for India (1882) 7 App Cas, per Lord Selborne LC

at pp.625-626; Tito v. Waddell (No.2) (1977) Ch, per Megarry V.-C. at

pp.216-217, 219.) or "a political trust" ((23) Hogg, Liability of the

Crown, 2nd ed. (1989), pp.186-188. See also New South Wales v. The

Commonwealth (No.3) [1932] HCA 12; (1932) 46 CLR 246, per Rich and Dixon JJ at

pp.260-261, per Starke J at p.268; Tito v. Waddell (No.2) (1977) Ch,

per Megarry V.-C. at p.211.).

26. It is convenient to note, at this stage, that Kinloch does no more than state a rule of construction to be applied in ascertaining

whether an intention to create a trust according to ordinary

principles is to be discerned from the language of the instrument

involved ((24) See Kinloch v. Secretary of State for India (1882) 7

App Cas, per Lord Selborne LC at p.626; Tito v. Waddell (No.2)

(1977) Ch, per Megarry V.-C. at pp.215, 216; Brisbane City Council v.

Attorney-General (1979) AC 411, at pp.421-422; Aboriginal

Development Commission v. Treka Arts (1984) 3 NSWLR 502,

per Priestley JA at p.519.). However, subject-matter and context

are also important and, in some cases, may be more revealing of

intention than the actual language used ((25) See Tito v. Waddell

(No.2) (1977) Ch, per Megarry V.-C. at p.216; Aboriginal Development

Commission v. Treka Arts (1984) 3 NSWLR, per Priestley JA at

p.519.).

27. The second matter to be noted in relation to Kinloch is that there is no rule of law or equity to prevent the imposition of

ordinary trust obligations on a person who is, in other respects, a

servant or agent of the Crown ((26) See Kinloch v. Secretary of State

for India (1882) 7 App Cas, per Lord Selborne LC at pp.625-626;

Civilian War Claimants Association v. The King (1932) AC 14, per

Atkin LJ at p.27; Town Investments v. Department of Education (1978)

AC, per Diplock LJ at p.382; Aboriginal Development Commission v.

Treka Arts (1984) 3 NSWLR, per Priestley JA at p.519.).

Moreover, it is not entirely helpful to approach cases in which it is

claimed that there is a trust in the ordinary sense on the basis that

the person who owes the obligation in question is a servant or agent of

the Crown. As will later be made clear, that is because, in some

circumstances, that person may bear that character in relation to some

functions, but not those associated with the obligation in question.

That may be illustrated by reference to the present case. If the

Registrar's duty in relation to the money in the Payne account is

merely to invest it and to hold the investments it represents and

accrued income until finally distributed to the Abela family, it is

difficult to see that that function involves any Crown or governmental

interest. And, if that is the case, the function is not easily

described as a Crown or governmental function or as a function

performed for or on behalf of the Crown, even if, for other purposes,

the Registrar is the servant or agent of the Crown ((27) See the

discussion to similar effect in Bank voor Handel en Scheepvaart N.V. v.

Administrator of Hungarian Property (1954) AC 584, per Reid LJ at

p.618. See also Wynyard Investments Pty. Ltd. v. Commissioner for

Railways (N.S.W.) [1955] HCA 72; (1955) 93 CLR 376, per Kitto J at p.393.). It

is thus preferable to approach cases such as the present on the basis

that the person concerned holds a statutory office and has a number of

functions, not all of which are necessarily governmental in nature.

And on that basis, little, if any, significance attaches to the fact

that the obligation is imposed on a statutory office holder, or, as was

put in the course of argument, on a person "in his official capacity".

28. There is a third matter to be noted in relation to Kinloch. The mere fact that the person on whom the obligation is cast is a

statutory office holder cannot, of itself, require the question

whether he or she is a trustee in the ordinary sense to be approached

on the basis of a presumption to the contrary. As with the question

whether a person is a servant or agent of the Crown, and leaving

aside any question of prerogative power, there can be no basis for

an approach of that kind unless it appears that there is some

governmental interest or function involved.

29. Of course, the matters which can be said to involve some governmental interest or function are not confined to closed

categories. The question whether a governmental interest is involved

depends very much on the law as it stands from time to time ((28) See,

generally, Committee of Direction of Fruit Marketing v. Australian

Postal Commission [1980] HCA 23; (1980) 144 CLR 577, per Gibbs J at p.580.).

Even so, and acknowledging that the administration of compensation

moneys awarded to or for the benefit of workers or, in the case of

death, their dependants ((29) See s.34 of the Workers Compensation

Act, and see fn.(14).) is a matter of considerable public importance,

it is not a function that is ordinarily perceived as governmental in

nature or as involving the interests of government. That being so, the

question in this case is simply whether or not the relevant provisions

of the Workers Compensation Act and the Accident Compensation Act,

considered in context and having regard to their subject-matter, reveal

an intention that the Registrar be subject to a trust obligation in the

ordinary sense. Accordingly, it is unnecessary to consider the extent

to which the strength of the presumption recognized in cases such as

Kinloch has been undermined by altered attitudes to the vulnerability

of the Crown to curial proceedings and remedies, including the remedies

available in cases of unjust enrichment.

30. As already indicated, ss.35 and 36 of the Workers Compensation Act govern the administration of the compensation moneys involved in

this case. However, it is clear from a comparison of those provisions

with their Accident Compensation Act counterparts, namely ss.131 and

132, that compensation moneys paid into the Fund have precisely the

same status no matter which of those Acts applies.

31. It is to be noted that the statutory provisions which govern the administration of compensation moneys are separate and distinct from

those which govern the administration of the Fund. And, although

various costs and expenses associated with the Tribunal and the

Registrar are to be paid from the Fund ((30) See s.73(3)(b)-(d) of the

Accident Compensation Act.) and certain of its investments may be used

for the purposes of the Tribunal ((31) See s.73(7) of the Accident

Compensation Act.), there is nothing in the Accident Compensation Act

or in the Workers Compensation Act to suggest that the Registrar

acquires any beneficial right or interest in compensation moneys paid

to him, even when paid into the Fund.

32. There is now no provision in either the Workers Compensation Act or the Accident Compensation Act which is as explicit as the direction

previously found in s.34 of the Workers Compensation Act, namely, that

certain compensation payments should be paid "into the custody of the

Board" and "invested applied or otherwise dealt with ... for the

benefit of the persons entitled thereto". However, there are

provisions in both Acts which point strongly in the same direction.

Thus, as already noted, s.35(1) of the Workers Compensation Act

provides:

"any amount of money administered by the Registrar under

this Act may be invested, applied or otherwise dealt with in

any manner that the Registrar thinks fit for the benefit of

the person entitled to that money". (emphasis added) ((32) See

also s.131(1) of the Accident Compensation Act.)

And s.35(4) requires that, an "amount of money administered ... on

behalf of any person (which) becomes less than an amount of money

determined" by the Registrar should "be paid out to that person" ((33)

See also s.131(4) of the Accident Compensation Act.).

33. A trust may be created without use of the word "trust" ((34) See In re Kayford Ltd. (1975) 1 WLR 279, per Megarry J at p.282; Tito v.

Waddell (No. 2) (1977) Ch, per Megarry V.-C. at p.211. See also

Brisbane City Council v. Attorney-General (1979) AC, at p.421.).

And, unless there is something in the circumstances of the case to

indicate otherwise, a person who has "the custody and administration

of property on behalf of others" ((35) Taylor v. Davies (1920) AC

636, at p.651.) or who "has received, as and for the beneficial

property of another, something which he is to hold, apply or account

for specifically for his benefit" ((36) Cohen v. Cohen [1929] HCA 15; (1929) 42

CLR 91, per Dixon J at p.100.) is a trustee in the ordinary sense.

In circumstances of that kind and in terms of s.6(1) of the Income Tax

Assessment Act, if there is no "act of parties" appointing or

constituting the Registrar trustee, he is a trustee "by operation of

law".

34. Given that no special words are necessary to create a trust in the ordinary sense, the statutory provisions which were last

discussed, namely s.35(1) and (4) of the Workers Compensation Act,

would, in the absence of some provision to the contrary, suffice

to constitute the Registrar a trustee, in the ordinary sense, of

compensation moneys paid to him pursuant to the Workers Compensation

Act. They would suffice because they indicate that he has or holds

that money for the benefit of the person or persons entitled to the

compensation involved.

35. The legislative provisions on which the Registrar relies for the argument that there is, or was, no trust in the ordinary sense fall

into two distinct categories. There are those which relate to the

Fund and those which directly relate to the administration of

compensation moneys.

36. It clearly appears from the provisions governing the Fund that it is a general fund of a kind not ordinarily identified as a trust fund.

It is sufficient to refer to the different moneys to be paid into the

Fund ((37) See s.73(2) of the Accident Compensation Act.); to the

payment out of expenses associated with the work of the Tribunal and

the Registrar ((38) See s.73(3)(b)-(d) of the Accident Compensation

Act.); and, to the power to use land and other buildings in which the

moneys of the Fund are invested for the purposes of the Tribunal ((39)

See s.73(7) of the Accident Compensation Act.). However, and as

already pointed out, this case is not directly concerned with the

status of the Fund, but with the nature of compensation moneys paid to

the Registrar for payment into that Fund.

37. Notwithstanding that the Fund is a general fund of the kind indicated, the statutory requirement that compensation moneys be paid

into the Fund is not inconsistent with those moneys being trust moneys

in the ordinary sense. Much was made in the argument on behalf of the

Registrar of his power under s.73(4)(a) of the Accident Compensation

Act to invest moneys in the Fund "in any manner which is approved by

the Treasurer". However, that is far from decisive for, in context,

the clear effect of s.73(4)(a) is that the Registrar has no power to

invest other than in a manner approved by the Treasurer. And it is

not to be supposed in relation to s.73(4)(a) that the Treasurer would

authorize investments which might be imprudent or speculative, or in

some way inconsistent with the sound management of compensation moneys

awarded for the benefit of injured workers or, in the case of death,

their dependants ((40) See fn.(14).). Accordingly, in our view, the

intention of the legislature with respect to the Registrar's holding of

compensation moneys must be discerned not from the provisions which

bear on the Fund, but from those which bear directly on the

administration of such moneys.

38. So far as the provisions which bear directly on the administration of compensation moneys are concerned, it is convenient

to deal first with s.36 of the Workers Compensation Act ((41) See also

s.132 of the Accident Compensation Act.). As earlier mentioned, s.36

confers a wide discretionary power to apportion between dependants.

That power is entirely consistent with the existence of a discretionary

trust for the benefit of the class constituted by the dependants of a

deceased worker. It does not, in our view, tell against the imposition

of an ordinary trust obligation.

39. The other provision which bears directly on the administration of compensation moneys is s.35(2) of the Workers Compensation Act which

frees the Registrar from "any law relating to the administration of

trust funds by trustees" but requires him to "act in good faith" ((42)

See also s.131(2) of the Accident Compensation Act.). It is

significant that s.35(2) does not, in terms, deny the existence of a

trust of compensation moneys in the ordinary sense. Rather, it

proceeds on the basis that there is, or would otherwise be, a trust of

that kind to be administered in accordance with the general law of

trusts. It then proceeds to exclude not the entire body of that law,

but only laws "relating to the administration of trust funds by

trustees". The limited terms of s.35(2) assume particular significance

when it is appreciated that neither the Workers Compensation Act nor

the Accident Compensation Act makes provision as to distribution of

income referable to compensation moneys paid into the Fund, nor do they

make provision, save in the case where the money involved falls below

some fixed amount ((43) See s.35(4) of the Workers Compensation Act;

s.131(4) of the Accident Compensation Act.), as to the final

distribution of compensation money to the person or persons for whose

benefit it is administered.

40. Workers compensation is a matter of legal entitlement, not charitable subvention. That being so and given the limited terms of

s.35(2) of the Workers Compensation Act, it must be concluded that

compensation moneys paid to the Registrar are trust moneys in the

ordinary sense. They are held by the Registrar in trust for the

persons entitled to the compensation involved and, subject to the

applicable legislative provisions, must be administered by the

Registrar in accordance with the general law of trusts. Accordingly,

the Registrar holds such moneys as trustee in the strict sense and

there is no need to consider the alternative arguments based on

the extended definition of "trustee" in s.6(1) of the Income Tax

Assessment Act.

Is the Registrar a public authority for the purposes of s.23(d) of the Income Tax Assessment Act?

41. It was argued by the Solicitor-General for South Australia, intervening in support of the Registrar, that the Registrar was not

liable to tax on the income earned on the money in the Payne account

by reason that s.23(d) of the Income Tax Assessment Act exempts "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 Australia" from income

tax. It was put that the Registrar is a "public authority" for the

purposes of that sub-section.

42. Whatever may be the position of the Tribunal, there is considerable difficulty in categorizing the Registrar as a statutory

office holder whose functions are mainly administrative, as "a public

authority" in the sense that that expression is used in s.23(d) of the

Income Tax Assessment Act ((44) As to the meaning of "public

authority" see Renmark Hotel Inc. v. Federal Commissioner of Taxation

[1949] HCA 7; (1949) 79 CLR 10, per Rich J at p.18; Western Australian Turf Club

v. Federal Commissioner of Taxation [1978] HCA 13; (1978) 139 CLR 288, per Stephen

J at pp.295-299; Re Anti-Cancer Council (Vict.); Ex parte State

Public Services Federation [1992] HCA 53; (1992) 175 CLR 442, at pp.450-451.).

That aside, the income on money held in trust by the Registrar, which

is to be administered in accordance with the general law of trusts,

simply is not the revenue of the Registrar. Nor for that matter was it

revenue of the Tribunal in the period prior to the 1987 amendments.

43. In the context of s.23(d) of the Income Tax Assessment Act, the expression "revenue" signifies annual or other periodic income from

which operating expenses for that period are to be paid ((45) See, for

an example of the constituents of revenue, Western Australian Turf Club

v. Federal Commissioner of Taxation (1978) 139 CLR, per Stephen J

at p.298.). The income received from the investment of compensation

moneys by the Registrar is, in equity, the income of the persons

entitled to the benefit of those compensation moneys. That income is

not income available to defray the operating costs of the Fund. Nor

has it been treated as such. According to the agreed statement of

facts, apart from financial institution duty, bank charges and

commissions paid on mortgage investments, the costs and expenses of the

Fund are not paid out of the compensation moneys.

Is the Registrar bound by the Income Tax Assessment Act?



44. It was argued that the Registrar is not bound by the Income Tax Assessment Act because, properly construed, it taxes the Crown only

where the Crown is expressly made liable to tax ((46) See, for

example, ss.218, 221C, 255 of the Income Tax Assessment Act which

expressly extend the reach of that Act so as to apply to the

Commonwealth, a State, a Territory, or, an authority thereof.). It

was put that the Income Tax Assessment Act must be construed on the

basis that general words such as "person" in s.17 ((47) Section 17

provides:

"Subject to this Act, income tax at the rates

declared by the Parliament is levied, and shall be paid

... upon the taxable income derived during the year of

income by any person, whether a resident or a

non-resident."

Note, "person" is defined in s.6(1) to include a company.) or

"trustee" in Pt III, Div.6 do not extend to the Crown, its servants or

agents and that, in consequence, the Registrar is not subject to tax,

notwithstanding that he has received income by virtue of his being a

trustee in the ordinary sense.

45. There are two answers, each involving a slightly different approach, to the submission that the Income Tax Assessment Act must be

construed so as to exclude the Registrar from its operation. The

first approach involves asking whether the Registrar, in his capacity

as trustee, is properly to be regarded as the Crown, its servant or

agent. The second is to ask whether there is any basis for reading

down the relevant provisions of the Income Tax Assessment Act, namely,

s.17 which, subject to that Act, subjects "taxable income derived ...

by any person, whether a resident or a non-resident" to tax and the

provisions of Pt III, Div.6 which apply to tax the income of trusts in

the hands of "trustees", as defined in s.6(1).

46. So far as the first approach is concerned, there can be no doubt that certain of the Registrar's functions are functions which are

performed on behalf of the government of Victoria and, to that extent

and in that sense, the Registrar can be described as the servant

or agent of the Crown. The Registrar's functions relating to the

administration of the Tribunal are clearly performed on behalf of the

Victorian government. And the same may be true of the functions

involved in administering the Fund. But the functions involved in

administering the ordinary trusts constituted by payment of

compensation money "for the benefit of the person entitled to that

money" ((48) s.35(1) of the Workers Compensation Act; s.131(1) of the

Accident Compensation Act.) are of a different kind. The trusts thus

constituted are trusts for private citizens and the duties involved are

owed to individual beneficiaries, notwithstanding that the trusts arise

under the Workers Compensation Act rather than as the result of the

acts of individuals.

47. Clearly, it is or will often be inappropriate to describe a person or a statutory office holder as the servant or agent of the

Crown in relation to some functions and not others. As a general

rule, it will be the overall nature of the functions and duties

involved which determines whether he or she is to be categorized

as a servant or agent of the Crown, no matter for what purpose that

classification is or becomes necessary ((49) See Administrator of

Austrian Property v. Russian Bank for Foreign Trade (1931) 48 TLR

37; Bank voor Handel en Scheepvaart N.V. v. Administrator of Hungarian

Property (1954) AC, per Reid LJ at p.619.). But there may be

cases where there are discrete functions which involve no interest or

purpose of the Crown and which are separate and distinct from other

functions which serve a Crown purpose.

48. It is clear that the classification of a person as a servant or agent of the Crown, whether generally or in relation to particular

functions, does not depend on there being some benefit to or some

financial or other interest on the part of the Crown or the government

involved ((50) See Bank voor Handel en Scheepvaart N.V. v.

Administrator of Hungarian Property (1954) AC, per Reid LJ at

p.618. See also Wynyard Investments Pty. Ltd. v. Commissioner for

Railways (N.S.W.) (1955) 93 CLR, per Kitto J at p.393.). However,

there may be cases where there is no Crown interest or purpose to be

served at all or, in the case of discrete functions, no Crown interest

or purpose to be served by those particular functions.

49. By reason and to the extent that the Registrar is a trustee for private individuals, no governmental interest or purpose whatsoever

attends or is served by the functions associated with those trust

obligations; in no sense are those obligations performed for or on

behalf of the Crown. Thus, there is no basis for categorizing the

Registrar, in his capacity as a trustee for private individuals, as a

servant or agent of the Crown. He is a trustee, pure and simple.

That being so and even if the relevant provisions of the Income Tax

Assessment Act do not bind the Crown, its servants or agents, they

bind the Registrar in his separate capacity as trustee for private

individuals.

50. The alternative approach is to ask whether there is any basis for reading down the general words of the Income Tax Assessment Act so as

not to include the Crown, its servants or agents. It does not matter

whether the reading down is said to be necessary because some of its

provisions expressly bind the Crown and, on ordinary principles, the

others should be construed as not binding the Crown or because of a

presumption against the Crown being bound, save by express words or by

"necessary implication", in the sense explained in Bropho v. Western

Australia ((51) [1990] HCA 24; (1990) 171 CLR 1, per Mason CJ, Deane, Dawson,

Toohey, Gaudron and McHugh JJ at pp.16-17.).

51. Whatever may have been the situation in earlier times, it is clear from Bropho that the presumption that general words do not bind

the Crown is one that must now yield to "the circumstances (involved),

including the content and purpose of the particular provision and

the identity of the entity in respect of which the question of the

applicability of the provision arises" ((52) ibid., at p.23.). It is

axiomatic that those circumstances include the way in which the

provision in question would operate and, in particular, whether it

would operate to bind "servants or agents of the ... government ... in

relation to acts which they do or property which they own or occupy

exclusively in that capacity" ((53) British Broadcasting Corporation

v. Johns (1965) Ch 32, per Diplock LJ at p.81; Bropho v. Western

Australia (1990) 171 CLR, per Mason CJ, Deane, Dawson, Toohey,

Gaudron and McHugh JJ at p.16.), or, as it is sometimes put, whether

it would "apply to servants of the Crown acting in the course of their

duties as such" ((54) Bropho v. Western Australia (1990) 171 CLR,

per Mason CJ, Deane, Dawson, Toohey, Gaudron and McHugh JJ at p.21.).

Given the purposes which, historically, were served by the

assumption that the Crown is not bound by statute ((55) See ibid., at

p.18.), there is now no basis, if there ever was any, for applying a

presumption that the Crown is not bound unless the provision or

provisions in question would operate so as to have some effect upon the

"interests or purposes of the Sovereign" ((56) Wynyard Investments

Pty. Ltd. v. Commissioner for Railways (N.S.W.) (1955) 93 CLR, per

Kitto J at p.393.) or, more accurately, the government concerned

((57) Note that that approach is implicit in the speech of Lord Reid in

Bank voor Handel en Scheepvaart N.V. v. Administrator of Hungarian

Property (1954) AC, at p.618, where his Lordship said, in the context

of a taxing statute which did not bind the Crown, that he was "prepared

to assume that if ... it was the duty of a Crown servant merely to hold

property with accruing income for a period and then pay it to some ...

private person, it would be held that tax is payable on the incoming

accruing ... because ... payment of tax could not possibly prejudice

any Crown interest or purpose".).

52. Similarly, because the provisions of the Income Tax Assessment Act which are expressed to bind the Crown operate in areas in which

Crown interests are involved, they provide no basis for reading down

general provisions in circumstances where their application has no

effect on the interests or purposes of the Crown.

53. As already indicated, there is no Crown or governmental interest in the performance by the Registrar of the trust obligations which

he owes to private individuals. Thus, there is no basis, either by

reason of a presumption that general words do not bind the Crown or by

reason that certain other provisions of the Income Tax Assessment Act

are expressed to bind the Crown, for reading down the word "person"

in s.17 or the definition of "trustee" in s.6(1) so as to exempt the

Registrar, in his capacity as a trustee, from tax under Pt III, Div.6.

Questions arising under the Constitution



54. As earlier indicated, this appeal and its two companion appeals were removed into the Court because they were seen to raise a question

under s.114 of the Constitution. So far as presently relevant, s.114

forbids the Commonwealth from "impos(ing) any tax on property of any

kind belonging to a State".

55. In substance, Pt III, Div.6, in its application to this case, taxes income which, in equity, is the income of the private citizens

who are the beneficiaries of the trust constituted by payment to the

Registrar of compensation to which they are entitled. In form, it

taxes the income of the Registrar, in his capacity as trustee.

Accordingly, neither in substance nor in form can it be said that,

in the circumstances of this case, Pt III, Div.6 taxes any property

belonging to the State of Victoria.

56. It was also argued that, in its application to the Registrar in relation to trusts of compensation moneys, Pt III, Div.6 of the Income

Tax Assessment Act infringes the implied constitutional prohibition

against Commonwealth laws which discriminate against a State or

interfere with its ability to carry out its functions ((58) See

Melbourne Corporation v. The Commonwealth [1947] HCA 26; (1947) 74 CLR 31; Victoria

v. The Commonwealth [1971] HCA 16; (1971) 122 CLR 353; Queensland Electricity

Commission v. The Commonwealth [1985] HCa 56; (1985) 159 CLR 192.). Because

Pt III, Div.6, in its application in this case, subjects the Registrar

to tax in his capacity as trustee for private citizens and does not

affect any interest or purpose of a State, it does not offend either

limb of that prohibition.

The year of income



57. As earlier indicated, the "interest" credited to the Payne account in July 1987 represented a proportionate share of the income

earned by the Fund in the tax year ended 30 June 1987. It was

suggested in argument that it might, for the purposes of the Income

Tax Assessment Act, be income of the 1987 tax year and not of the 1988

tax year which is the tax year involved in this appeal.

58. Although the registrar appealed against the determination of Jenkinson J in the Federal Court on the ground that, if the interest was assessable income, it was incorrectly included in the assessment in respect of the 1988 tax year, that ground of appeal, although mentioned in the Registrar's written outline of argument, was not developed in oral argument. No doubt, the reason was that, in a context where the Commissioner has, as already indicated, issued an alternative assessment treating the relevant interest as income of the 1987 tax year, the identity of the correct tax year was seen as being of little practical significance.

59. As has been seen, the Registrar holds the compensation moneys paid to him on trust for the benefit of the persons entitled to those

moneys. He is empowered to invest, apply or otherwise deal with the

moneys in the Fund in any manner he thinks fit for the benefit of

those persons ((59) s.35(1) of the Workers Compensation Act; s.131(1)

of the Accident Compensation Act.). Any income from the investment of

those compensation moneys is, therefore, referable to the trust at the

time of receipt. It is irrelevant that the actual allocation of the

income does not occur until some later tax year.

60. The method adopted by the Registrar, and by the Tribunal prior to the 1987 amendments, for the allocation of income accorded with that

income being received as trust income. After deducting related costs

and expenses, overall income received on investments was allocated

between the accounts of different dependants or groups of dependants.

While the actual allocation of the net investment income to the credit

of particular accounts in the books of the Fund was not effected until

after the commencement of the 1988 tax year, the respective amounts

which were so credited were ascertained, on a "pro rata" basis, by

reference to the monthly amounts held to the credit of the various

accounts during the 1987 tax year. Thus, the $2,718.69 credited to

the Payne account on 10 July 1987 was calculated by reference to the

monthly balances standing to the credit of that account during the

year in which the relevant income was received, that is, the 1987 tax

year. There was some discussion during the course of argument as

to whether the beneficiaries of the various accounts were, in fact,

entitled to a pro rata allocation of the moneys each year. It is not

necessary to decide that question because, even if there was no such

entitlement, the Registrar's and, prior to the 1987 amendments, the

Tribunal's statutory duty to invest the moneys for the benefit of the

persons entitled means that the discretion to deal with the moneys as

thought fit had to be exercised for the benefit of those persons ((60)

cf. Flannery v. Secretary, Department of Social Security (1987) 78

ALR 431; Melbourne v. Secretary, Department of Social Security

(1988) 20 FCR 496, where the relevant legislation specifically

provided that "(i)nvestments made from moneys forming part of the

Common Fund shall not be made on account of or belong to any

particular" estate, trust or person. (emphasis added)).

Thus, a proportionate share of the moneys would, at all times, be

referable to each individual account. The income received was,

therefore, derived as income at the date at which it was earned,

regardless of when it was actually allocated in the books. This was

so notwithstanding the fact that the compensation moneys had been

mixed in a common fund with other compensation moneys, borrowings,

money for the general expenses of the Tribunal and income from

investments.

61. It follows that the Registrar and, earlier, the Tribunal derived income on compensation money at the date on which that income was

earned by the mixed fund, and not on the date on which the relevant

proportion of the income was formally allocated to the particular

account. That means that the income involved in this case was earned

in the financial year ended 30 June 1987, notwithstanding the fact

that it was not actually credited to the Payne account until July

1987.

Conclusion



62. As earlier indicated, the present appeal in relation to the assessment for the 1988 tax year was listed for hearing together with

two companion appeals by the Registrar relating to two other accounts

administered by him. The Court was informed that the parties should

be able to reach agreement in relation to those other appeals once the

Court had dealt with the questions involved in this appeal.

63. In the present appeal, the Commissioner has succeeded on each of the grounds of appeal relied on by the Registrar, with the exception of the ground relating to the correct income. As has been seen, we consider that the notice of assessment involved in this appeal was erroneous because it treated the $2,718.69 as income derived by the

Registrar as trustee for the Abela family during the 1988 tax year

whereas it was income derived by the Tribunal during the 1987 tax

year. The reasoning which leads to our conclusion in that regard may,

no doubt, also lead to the conclusion that some other amount was

derived as income, of the Registrar for the 1988 tax year, but was

wrongly included in an assessment in respect of some subsequent year.

64. In all the circumstances, the appropriate course is to order that this appeal and the companion appeals stand in the list to enable the

parties to confer with a view to reaching agreement about the orders

to be made in the light of the reasons expressed in this judgment. If

the parties are unable to reach such agreement, it will be necessary

to afford to them an opportunity to make written submissions in

relation to the appropriate orders. We would indicate that, as at

present advised, we consider that the Registrar should pay the

Commissioner's costs of the appeal to this Court and of the

proceedings in the Federal Court.

BRENNAN, DAWSON AND McHUGH JJ Trust is the creature of equity. It

is of the essence of a trust that it is cognizable by a court of

equity ((61) Sturt v. Mellish [1743] EngR 82; (1743) 2 Atk 610, at p.612 [1743] EngR 82; (26 ER 765,

at p.766); Burgess v. Wheate [1757] EngR 5; (1759) 1 Eden 177, at pp.218, 223

[1757] EngR 5; (28 ER 652, at pp.668, 670); In re Williams; Williams v.

Williams (1897) 2 Ch 12, at p.19.). A relationship which obliges one

person to pay money or to transfer property to another may exhibit the

features of a trust for the benefit of the other, but there is no such

trust unless the obligation is enforceable in equity. In our opinion,

the rights of dependants of a deceased worker to receive money

following the payment of compensation under the Workers Compensation

Act 1958 (Vic.) ("the 1958 Act") are not enforceable in a court of

equity. The remedies available to dependants are designed to enforce

the performance of statutory, not equitable, duties.

2. For reasons presently to be stated, we would hold that the Registrar of the Accident Compensation Tribunal ("the Registrar")

does not hold the money paid as compensation for the dependants of a

deceased as trustee for the dependants as beneficiaries. If there be

a trust of the fund out of which the dependants of a deceased worker

receive or are entitled to receive money, the trust is not one which

confers on those dependants an equitable interest in the fund or an

equitable right to payment out of the fund. For that reason, we would

hold that Div.6 of Pt III of the Income Tax Assessment Act 1936 (Cth)

has no application to that part of the income of the fund attributed

to the dependants of a particular deceased worker. To explain this

view, it is necessary to identify the more important of the statutory

provisions from which the nature of the rights possessed by the

dependants of a deceased worker can be ascertained. These provisions

govern the making of an award of compensation, the payment of the sum

awarded, the administration of the fund into which the compensation

awarded is paid and, to some extent, the rights of the respective

dependants to seek payment out of that fund and the payment of money

to the respective dependants in whose favour the fund is applied.

3. The relevant statutory provisions in the 1958 Act were substantially amended by the Accident Compensation Act 1985 (Vic.)

("the 1985 Act") which provided, inter alia, for an Accident

Compensation Tribunal Fund ("the Tribunal Fund") to be administered by

the Accident Compensation Tribunal ("the Tribunal"). The Accident

Compensation (Amendment) Act 1987 (Vic.) ("the 1987 Act") in turn

amended both the 1958 Act and the 1985 Act and, with effect from

1 December 1987, the Registrar of the Tribunal was substituted for the

Tribunal as the administrator of the Tribunal Fund. That substitution

explains the difference in the parties who were assessed to tax on

what the Commissioner contends to have been the income of the trust

estate of the dependants of a deceased worker, Alexander Joseph Abela:

the Tribunal was assessed to tax in respect of the income year ended

30 June 1987, the Registrar in respect of the income year ended

30 June 1988. In the following discussion, reference will be made to

the statutory provisions in force at relevant times.

The operation of the statutes in the present case



4. In consequence of the death of Mr Abela on 6 November 1977, compensation was payable under s.9(1) of the 1958 Act. His dependants

were his widow (now Mrs Payne) and three infant children. Pursuant

to an award made on 12 June 1979 by the Workers Compensation Board

constituted under the 1958 Act ("the Board") and in conformity with

s.34(1) of that Act, the sum of $23,940 was "paid into the custody

of the Board and the receipt of the registrar (was) a sufficient

discharge in respect of the sum so paid". Section 34(2) provided as

follows:

" In the case of death if the worker leaves more than one

dependant the Board having regard to the circumstances of

the various dependants and variations in such circumstances

from time to time may -

(a) apply or otherwise deal with any sum so paid

into its custody in such manner as in the opinion

of the Board will for the time being be most

beneficial to the dependants;

(b) provide for any two or more dependants

collectively;

(c) exclude any dependant from participating in any

benefit."

Sub-section (2) was deleted (a new subsection being inserted) by the

1985 Act but a power corresponding to that contained in s.34(2) was

conferred on the Tribunal by an amendment inserting a new s.36(2).

Moreover, a new s.36(3), substantially re-enacting provisions that had

been contained in s.35, empowered the Tribunal (and now empowers the

Registrar) to vary a determination as to the apportionment of moneys

among the dependants of a deceased worker where there has been neglect

of children, a variation in the circumstances of the dependants or any

other sufficient cause. Thus, the extent to which any one of two or

more dependants of a deceased worker is entitled to participate in an

amount paid to the Board under s.34(1) of the 1958 Act was in the

discretion of the Tribunal until 1 December 1987 and then came to be

in the discretion of the Registrar.

5. Presumably pursuant to the power conferred on the Board by s.34(2) of the 1958 Act, the Board ordered, on or about 20 July 1983, that

$16,000 of the $23,940 paid to the Board under s.34(1) be set aside

for Lisa Joan Abela, one of the infant daughters of the deceased.

The balance was credited to a separate account in which, it seems,

Mrs Payne and the three infant children shared (hereafter "the

account"). The account was credited with interest from time to time

and debited with payments out. It is the interest credited to the

account on 10 July 1987 which the respondent Commissioner seeks to

bring to tax by the assessment for the income year ended 30 June 1988.

6. Sub-section (1A) of s.34 of the 1958 Act provided as follows:

" (1A) 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."

However, the Board's custody of the moneys in the account was affected

by a new s.37 of the 1958 Act inserted by the 1985 Act. The relevant

provisions of the new section are as follows:

" (1) On and from the appointed day ((62) 31 August 1985.), all

moneys paid into the custody of the Board pursuant to this

Division

as in force before that day shall be administered by the

Tribunal in accordance with this Act.

(2) For the purposes of sub-section (1), the moneys

shall be paid to the Tribunal or, where any of the moneys

were before the appointed day invested, the investments

shall be transferred to and vest in the Tribunal.

(3)...

(4) 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."

The "Tribunal" referred to in these provisions was defined to mean the

Accident Compensation Tribunal ((63) s.3(1) of the 1958 Act as

amended.). The Tribunal is the successor to the Board which ceased to

exist on the appointed day ((64) 1958 Act, ss.80, 81.).

7. Section 73(1) of the 1985 Act directed the Tribunal to establish and maintain a fund to be called the Accident Compensation Tribunal

Fund. Section 73(2) directed that there should be paid into the

Tribunal Fund the moneys received by the Tribunal under the 1985 Act

or under any other Act. The other moneys directed to be paid into

the Fund were of various descriptions, for example, contributions

payable by self-insurers and income from investments. The 1987 Act

specifically added "payments made under section 34 of the Workers

Compensation Act 1958" to the list of payments to be paid into

the Tribunal Fund ((65) s.73(2)(ab) of the 1985 Act.). The Registrar

was then substituted for the Tribunal as the authority charged with

responsibility for administration of the Tribunal Fund. The Tribunal

Fund is a mixed fund and payments into that fund lose their identity in

the mass. Included in that fund were the moneys standing to the credit

of the account.

8. The powers of the Registrar (previously the Tribunal) in relation to investment of the Tribunal Fund are set out in s.73(4) of the 1985

Act which authorizes the Registrar to invest money in the Tribunal

Fund in any manner which is approved by the Treasurer. Section 73(3)

of the 1985 Act prescribes the payments which may be made out of the

Tribunal Fund:

"(a) payments directed by order of the Tribunal to be

paid out of the Fund under this Act or the Workers

Compensation Act 1958;

(aa) any amounts payable in respect of money borrowed under

section 51C;

(ab) any payment authorised under section 131 or 132;

(ac) any payment authorised under section 35 or 36 of the

Workers Compensation Act 1958;

(b) any payment required or authorized to be made or

which is for or towards the costs and expenses of or

incidental to the performance of the functions or the

exercise of the powers of the Tribunal or staff of the

Tribunal;

(c) any other costs and expenses incurred by the Tribunal

or Registrar under this Act or any other Act;

(d) any amounts payable in respect of remuneration,

allowances and pensions under section 45 or 50A and

any other payment required or permitted to be paid out

of the Fund by or under any other Act; and

(e) any payment required or authorized to be made out of

the Fund by sub-section (4) or (5)."

The Tribunal Fund is thus available to meet any of the debts or

payments prescribed by s.73(3).

9. However, the 1958 Act specifically authorizes the Registrar to determine the application of money which, having been received by the

Board under the 1958 Act, became part of the Tribunal Fund. Section

35(1) of the 1958 Act provides:

" Except as otherwise provided in section 34, any amount

of money administered by the Registrar under this Act may

be invested, applied or otherwise dealt with in any manner

that the Registrar thinks fit for the benefit of the person

entitled to that money."

Pursuant to this provision, the Registrar can apply moneys for the

benefit of dependants by appropriating moneys in the Tribunal Fund for

payment to or on behalf of, or to be held on a particular trust for, a

dependant or group of dependants. But, unless and until money is so

applied, the assets representing compensation paid to the Board under

s.34(1) of the 1958 Act remain part of the Tribunal Fund.

10. Further provisions governing the Registrar's administration of moneys paid to the Board as compensation appear in s.35 of the 1958

Act which provides, inter alia -

" (2) 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.

(3) (repealed)

(4)...

(5) All expenses incurred by or on behalf of the

Registrar in the administration of any amount of money

under this Act shall be paid by the Registrar out of the

Tribunal Fund."

The terms of s.35(2) follow the provisions previously applied to the

Board by s.39 of the 1958 Act. The Registrar is governed by similar

provisions contained in s.131(2) of the 1985 Act in respect of his

administration of any amount of money being administered under the

1985 Act. The duty cast upon the Registrar is, as we shall see,

different from the duty which equity imposes on the trustees of a fund

for the benefit of beneficiaries.

11. Section 36(1) provides:

" 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."

The Tribunal nevertheless possesses a supervisory power, for s.36(5)

provides:

" Any person who objects to any determination made by the

Registrar may appeal to the Tribunal which may make a new

determination."

The scope of the disputes falling within this provision may be open to

argument but, whatever that scope may be, the sub-section provides for

the determination of disputes by a statutory authority, not by a court

of equity.

12. In this statutory context, the question is whether the statute imposes on the Registrar the character of a trustee of compensation

payments "for the benefit of the person entitled to that money" (to

adopt the language of s.35(1)), "the person" presumably comprehending,

where applicable, all the dependants of a deceased worker. Although

the language of s.35(1) might be taken to suggest that dependants are

beneficiaries of a trust, the appellant submits that the statutory

provisions imposing obligations on the Board, the Tribunal and the

Registrar create obligations of the Crown which should not be seen as

the obligations of a true trustee unless the statute clearly makes

them so ((66) Kinloch v. Secretary of State for India (1882) 7

App Cas 619; Tito v. Waddell (No.2) (1977) Ch 106, at pp.211-237; New

South Wales v. The Commonwealth (No.3) [1932] HCA 12; (1932) 46 CLR 246, at pp.262,

268; Aboriginal Development Commission v. Treka Aboriginal Arts

and Crafts Ltd. (1984) 3 NSWLR 502.). This approach is explained

by Lord Diplock in Town Investments Ltd. v. Department of the

Environment ((67) [1977] UKHL 2; (1978) AC 359, at p.382.):

"(E)ven 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, to deal with

the property for the benefit of the subject for whom it is

expressed to be held in trust, such duty being enforceable

administratively by disciplinary sanctions and not

otherwise".

This approach to the construction of a statute may be valid even where

the duty is imposed on an officer who is not an "officer of State". A

statute which imposes a duty on a public authority charged with the

performance of public functions and holding and administering property

may not give rise to a trust for the benefit of the individuals who

will profit from performance of the duty, whether or not the authority

is an emanation of the Crown ((68) Skinners' Co. v. Irish Society

(1845) 12 Cl. and F.425, at pp.488-489, 490 (8 ER 1474, at pp.1500,

1501); Swain v. The Law Society (1983) 1 AC 598, at p.618.). In the

end, however, the question is one of statutory construction: if the

statute vests property or provides for the vesting of property in one

person and requires that person to apply the property for the benefit

of another or for the benefit of a class, does the statute intend the

property to be held in trust for the other or for the class? A

statutorily created trust may not necessarily exhibit all the features

of a trust for beneficiaries created by a settlor of property ((69)

Ayerst v. C. and K. (Construction) Ltd. (1976) AC 167, at p.178.),

but the statutory intention to create a trust must nevertheless appear

in the terms of the statute. In our opinion, the relevant statutory

provisions in this case are inconsistent with the notion of a trust for

the dependants as beneficiaries. There are several indicia which lead

to this conclusion.

13. Section 34 itself reveals the policy underlying the provisions governing administration of compensation payments. In the form

introduced by the 1985 Act, compensation payments must be paid to the

Tribunal (now to the Registrar) when, inter alia, the person entitled

is under the age of 18 years or, in the case of compensation for a

worker's death, the person is over the age of 18 years (unless the

Tribunal otherwise determines) or, in any case, where the Tribunal

"considers that it would be in the best interests of the worker". The

purposes of requiring administration by the Tribunal (now by the

Registrar) seem to be the protection of the person or persons entitled

against improvidence on their part or against the incursions of

creditors and, where compensation payments are to be allocated amongst

two or more dependants, the determination of the amount and manner of

application of the money available for distribution. The scheme of

the provisions following s.34(1) is that compensation payments are not

within the disposition of a dependant or class of dependants until the

Registrar applies the Tribunal Fund by paying money to, or by creating

a trust for the benefit of, that dependant or class of dependants.

The Registrar is not required to pay money into the hands of a

dependant; the money may be applied by defraying the cost of services

to a dependant, for example, by paying school fees. In that way, the

protective purposes of s.34 may be met ((70) See In re Coleman; Henry

v. Strong (1888) 39 ChD 443, at p.451; In re Bullock; Good v.

Lickorish (1891) 60 LJ Ch 341.). Family disputes can be resolved by

determinations made by the Registrar, or by the Tribunal on appeal, as

to whom money should be paid, how much and when. At the same time,

dependants are in a position to seek judicial review of a refusal by

the Registrar to pay them their "entitlements" when payment is

appropriate in exercise of the statutory discretion which the Registrar

possesses.

14. If it were right to regard the Registrar as holding compensation payments in trust for beneficiaries being those entitled under the

1958 Act, a court of equity would control the investment of the

compensation payments, requiring the Registrar to exercise his

investment powers "in the best interests of the present and future

beneficiaries of the trust, holding the scales impartially between

different classes of beneficiaries" ((71) Cowan v. Scargill (1985)

Ch 270, at pp.286-287.). The limitations which equity would place on

the exercise of a trustee's power to invest are inconsistent with the

broad discretion conferred on the Registrar by s.35(1) of the 1958 Act

and s.73(4) of the 1985 Act. If it were right to regard the Registrar

as holding compensation payments in trust for those entitled under the

1958 Act, the jurisdiction of equity would extend to the enforcement of

their respective entitlements. If the Registrar were a true trustee of

a compensation payment, it would be the duty of the Registrar as

trustee to pay or apply on demand the amount to which a dependant was

or the dependants as a class were entitled provided the dependant was

or all the dependants in the class were sui juris and all consented

((72) In re Marshall; Marshall v. Marshall (1914) 1 Ch 192; In re Smith;

Public Trustee v. Aspinall (1928) Ch 915.). But that would nullify

the effect of s.34(1) which, as it now stands, contemplates that all

compensation payments in respect of the death of a deceased worker

will be administered by the Registrar. Presumably, if the Registrar

were a true trustee, the powers of the Registrar under s.36(2) and (3)

would be construed as trust powers, so that the dependants would be

entitled equally to the compensation payment in default of any

exercise by the Registrar of the power to apply the compensation

payment in some other way ((73) Queensland Trustees Ltd. v.

Commissioner of Stamp Duties [1952] HCA 52; (1952) 88 CLR 54, at p.63.). Or a

dependant, complaining of a failure by the Registrar to exercise his

discretion under s.36(2) or (3), could apply to a court of equity for

an order directing the Registrar to consider an exercise of the power

or an order appointing a new trustee or, perhaps, an order directing

the distribution of compensation payments among the dependants of the

particular deceased worker according to the court's selection after

inquiry ((74) See McPhail v. Doulton [1970] UKHL 1; (1971) AC 424, at p.457.). The

existence of such an equitable jurisdiction seems quite inconsistent

with the creation of a right of appeal to the Tribunal from any

determination made by the Registrar under s.35 of the 1958 Act.

15. Moreover, s.35(2) of the 1958 Act expressly releases the Registrar from "any law relating to the administration of trust funds". It is

difficult to construe the 1958 and 1985 Acts as intending to create a

trust when the foundation of any trust - the law which imposes the

duties of a trustee - is thus removed. Section 35(2) exposes the true

character of the Registrar's discretionary powers: they are statutory

powers amenable to judicial review but not amenable to control by a

court of equity. It is immaterial that the Registrar, though

compensation payments are paid to or are under the control of or are

vested in him, has no beneficial interest in those moneys. As the

Privy Council said in Commissioner of Stamp Duties (Qld) v.

Livingston ((75) [1964] UKPC 2; (1965) AC 694, at p.712.) in reference to assets in

the hands of an executor of an unadministered estate:

"When the whole right of property is in a person, as it is

in an executor, there is no need to distinguish between the

legal and equitable interest in that property, any more

than there is for the property of a full beneficial owner.

What matters is that the court will control the executor in

the use of his rights over assets that come to him in that

capacity; but it will do it by the enforcement of remedies

which do not involve the admission or recognition of

equitable rights of property in those assets. Equity in

fact calls into existence and protects equitable rights and

interests in property only where their recognition has been

found to be required in order to give effect to its

doctrines."

It is erroneous to conclude that, because property is held by one

person but the fruits are ultimately to be enjoyed by others, there

is a relationship of trustee and beneficiary between the holder of

the property and those who will ultimately receive it ((76) Ayerst v.

C. and K. (Construction) Ltd. (1976) AC, at pp.177- 178.). When

the remedies of those entitled to benefit from property are statutory,

equity does not need to call an equitable interest into existence to

control the administration of the property by the person in whom it is

vested.

16. The dependants of a deceased worker are not without remedy against the Registrar if the Registrar unjustifiably refuses to pay money

to which, under the 1958 Act or the 1985 Act, the dependants are

"entitled". The scheme of both Acts is to provide administrative

machinery for the payment of compensation, for the investing of

compensation payments until the time for payment arrives, for the

distribution among dependants of the sums available for distribution

and for the payment of the respective amounts to which dependants are

entitled. The administrative character of the scheme is manifested

by the making ((77) pursuant to s.80 of the 1985 Act.) of the

Accident Compensation Tribunal (Workers Compensation) Rules 1986 which

apply to compensation paid under the 1958 Act. Regulation 53 provides,

inter alia:

" (1) Where a payment is made into the Tribunal Fund in

the case of the death of a worker -

...

(d) if the Tribunal has apportioned the award moneys

between dependants, the respective amounts must

be separately recorded and administered by the

Tribunal; and

(e) any person entitled to share in the award moneys

or having an interest as guardian or the like in

relation to a dependant may apply to the Tribunal

giving at least five days notice in writing to all

others concerned, for an order to vary or create or

otherwise deal with an apportionment of the moneys

between the dependants; and

(f) any application for apportionment or variation of

apportionment must be made on reasonable notice to

all persons who might be affected thereby.

(2) Where money has been paid into the custody of the

Tribunal, the Registrar must pay it out to or on behalf of

the person entitled to it in such manner and circumstances

as the Tribunal may direct pursuant to section 35 of the

(1958) Act.

(3) Any person entitled to share in the award moneys may

apply informally for payment out of any part of the money,

giving such particulars as will enable the Tribunal to

exercise its discretion in the proper administration of the

moneys and, subject to compliance with such requirements,

by way of security or other safeguards, as the Tribunal may

stipulate for the protection of the interests of any other

dependants, the Tribunal may grant such an application.

(4)...

(5) Moneys in the custody of the Tribunal standing to

the credit of a person who has not made application for any

payment therefrom for a period of at least ten years, and

has not been in communication with the Tribunal during that

time, may be transferred out of the name of that person

and into a fund known as the Unclaimed Moneys Fund to be

maintained by the Tribunal and invested in like manner to

the other monies administered by the Tribunal; provided

that if at any later time the person concerned communicates

with the Tribunal with satisfactory proof of identity, the

Tribunal must transfer out of the Unclaimed Moneys Fund to

the credit of that person the appropriate sum plus accrued

interest, to be administered in the usual manner."

In addition to these provisions, a specific duty is imposed on the

Registrar to pay out a dependant where only a small amount remains to

be administered. Section 35(4) of the 1958 Act provides:

" If the amount of money administered by the Registrar on

behalf of any person becomes less than an amount of money

determined by the Tribunal the amount shall be paid out to

that person."

A dependant may apply for payment in accordance with these Rules but,

irrespective of the procedure prescribed by the Rules, the only

opening through which money may lawfully pass from the Tribunal Fund

to a dependant is the Registrar's exercise of the powers conferred on

him by s.35(1) ((78) The powers conferred by s.36(2) and (3) may

supplement or, perhaps, be the relevant powers in particular cases.).

According to the circumstances, the Registrar may be under a duty to

exercise those powers by paying money to a person entitled but that

duty is not imposed by equity. The duty flows from the purpose for

which the powers were conferred, namely, to benefit those who are

entitled to the compensation paid. And, if there be any dispute in

relation to administration of money being administered under the 1958

Act, s.36 prescribes the forum by which that dispute is to be

determined. Provided the powers conferred on the Registrar and the

Tribunal are exercised bona fide for the purposes for which they were

conferred, no jurisdiction other than that created by the 1958 Act and

the 1985 Act can be invoked to enforce a dependant's entitlement ((79)

cf. Barraclough v. Brown (1897) AC 615, at p.622; Stevens v. Jeacocke

(1848) 11 QB 731, at p.741 [1848] EngR 314; (116 ER 647, at p.652); Reg. v. County

Court Judge of Essex (1887) 18 QBD 704, at p.707.). If the powers

are not so exercised, mandamus and certiorari lie. But a dependant has

no entitlement to payment from the Tribunal Fund outside the 1958 and

1985 Acts.

The allocation of interest to the account



17. The balance sheet of the Tribunal as at 30 June 1987 shows that the total assets of the Tribunal were $118,577,200, of which

$114,878,200 consisted of "beneficiary fund investments". The income

and expenditure account for the year ended 30 June 1987 shows that the

income in respect of beneficiary fund investments was $15,848,100, all

of which was available for distribution. However, the statement of

agreed facts in this case reveals that some expenses "were paid from

the income from the Compensation Moneys prior to any distribution of

that income to the beneficiaries".

18. The statement of agreed facts shows that, on 10 July 1987, the moneys derived from investments during the year ended 30 June 1987

were allocated to the accounts of beneficiaries "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."

The amount so allocated to the account was $2718.69.

19. The respondent Commissioner assessed the Tribunal to tax in respect of the sum of $2718 as tax upon income derived during the

income year ended 30 June 1987. Subsequently a further assessment

was made, assessing the Registrar to tax for the income year ended

30 June 1988 in respect of the sum of $2718, this assessment resting

upon the allocation of a portion of the investment income of the

Tribunal Fund to the account on 10 July 1987. The assessments are

intended to be alternative, not cumulative. Objections to both

assessments were disallowed and an appeal was brought to the Federal

Court. Jenkinson J upheld the assessment of the Registrar to tax in

respect of the year ended 30 June 1988 but allowed the appeal and set

aside the assessment of the Tribunal to tax in respect of the year

ended 30 June 1987. The Registrar appealed to the Full Court of the

Federal Court against his Honour's judgment in so far as it dismissed

his appeal in relation to the 1988 assessment. That appeal was

removed into this Court.

The Income Tax Assessment Act and its application



20. Jenkinson J held that the amount allocated on 10 July 1987 was assessable income in respect of which the Registrar was liable to pay

tax pursuant to the provisions of Div.6 of Pt III of the Income Tax

Assessment Act. The "amounts of compensation" - which we take to be

a shorthand description of the amounts standing to the credit of the

account from month to month on which interest was calculated and

apportioned - were said to be a "trust estate" within the meaning of

that expression in that Division.

21. For the purposes of the Income Tax Assessment Act, s.6(1) defines the term "trustee" as follows:

"'trustee' in addition to every person appointed or

constituted trustee by act of parties, by order, or

declaration of a court, or by operation of law, includes -

(a) an executor or administrator, guardian, committee,

receiver, or liquidator; and

(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".

A "trust estate" for the purposes of Div.6 of Pt III of the Income Tax

Assessment Act must bear a corresponding meaning, that is, property

of any kind held or controlled by a trustee in one or other of the

capacities prescribed by the definition. In Manning v. Federal

Commissioner of Taxation ((80) [1928] HCA 9; (1928) 40 CLR 506, at p.509.), Knox

CJ said in reference to the definition of "trustee" in the Income Tax

Assessment Act 1922-1925 (Cth):

"Wide as this definition is, it requires at least as an

essential ingredient in the position of 'trustee' under the

Act the existence of a fiduciary obligation towards some

other person. The existence of a fiduciary obligation to

another person must, I think, always involve a liability to

account at the instance of that other person, and if I am

right in thinking that the gift of income to the appellant

involves no such liability it seems to me to follow that

she is not a trustee of the income within the meaning of

the Act."

The applicability of this observation to the Income Tax Assessment Act

1936 must be tested, of course, by reference to the entirety of that

extensive legislation. But we see no reason to treat the observation

as inapplicable to the present definition of "trustee". The opening

words of the definition speak of a trustee in the ordinary sense of a

person who holds property on trust. Paragraph (a) comprehends persons

who, whether or not they hold the relevant property, have control over

it and owe a fiduciary duty to another in exercising that control.

Paragraph (b) also comprehends persons who owe a fiduciary duty, but

the duty must relate to the administration or control of relevant

property.

22. The trust which Jenkinson J held to exist and to attract the application of Div.6 of Pt III of the Income Tax Assessment Act was

not a trust for the benefit of the dependants. His Honour held it

was a trust for statutory purposes, having the same character as the

money which was described in Harmer v. Federal Commissioner of

Taxation ((81) [1991] HCA 51; (1991) 173 CLR 264.) as being held on a trust for

statutory purposes. In Harmer, the Court referred to Fouche v. The

Superannuation Fund Board ((82) [1952] HCA 1; (1952) 88 CLR 609, at p.640.) as a

precedent for attributing that character to the fund in question.

23. In this Court, the Commissioner has placed some reliance upon Fouche and Harmer in order to characterize the compensation payments

being administered by the Registrar as trust estate of which the

Registrar was the trustee. The notion of a trust for statutory

purposes needs some analysis and it gives rise to the question whether

the trustee of such a trust is a "trustee of a trust estate" for the

purposes of Div.6.

24. The relevant claim in Fouche was a claim by the Superannuation Fund Board against individuals who had previously been members of the

Board and who, in breach of their duty, had authorized the laying out

of the Board's money on a hazardous investment. The question was

whether the Board could seek an equitable remedy against former

members on the footing that the administration of a trust fund was

involved. The Court resolved that question in favour of the Board.

But the Court said ((83) ibid.):

"We do not think it necessary to consider ... the question

whether the individual corporators were, in any sense or

for any purpose, to be regarded as trustees. Nor do we

think it relevant to inquire whether they owed any and what

duty to the contributors to the fund, whom the learned

Chief Justice regarded as beneficiaries under the trust.

We do not think, indeed, that the contributors 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."

In using the term "trust for statutory purposes", their Honours

were concerned to identify the terms on which the Board held the

Superannuation Fund. The fiduciary duties of the Board were stated

in reference to the Fund as an entirety but not in reference to the

amounts received from or in respect of individual contributors and

paid into the Fund. Although the contributors did not acquire the

beneficial interest of a cestui que trust in the Fund, their Honours

thought that the contributors' interest in its proper administration

might give them standing to invoke the jurisdiction of equity if

the Board misapplied the Fund by disbursing money from it without

authority. The Board had a fiduciary duty to perform in administering

the Fund, similar to the duty of a trustee. That duty was stated to

be "a duty of reasonable care - the care which an ordinary prudent man

of business would take" ((84) ibid., at p.641.). In the present case

the Legislature, perhaps conscious of the decision in Fouche, released

the Registrar in relation to the administration of "any amount of money

under this Act" (that is, the 1958 Act) from the duties imposed by the

law relating to the administration of trust funds and imposed on him

merely a requirement to act in good faith: s.39 of the 1958 Act,

s.35(2) of the 1958 Act as amended by the 1985 Act and s.131 of the

1985 Act as amended by the 1987 Act. Whether or not this provision

left the Registrar under a fiduciary duty in relation to the

administration of the Tribunal Fund, it is clear from this provision

and the other statutory provisions to which reference has already been

made that the Registrar was under no fiduciary duty in relation to

compensation moneys paid under s.34(1) of the 1958 Act. The duty to

invest and the duty to apply compensation moneys for the benefit of

dependants were governed exhaustively by statute.

25. In Harmer, the question in issue was the character of moneys paid into court by a debtor in an action between competing creditors and

paid out to solicitors as trustees to invest the moneys pending the

determination of the competing claims. The Court said ((85) (1991)

173 CLR, at p.274.):

"The moneys paid into court were not themselves the subject

matter of dispute but were held to satisfy any order,

including any order for costs, made by the court consequent

upon its determination of those conflicting claims and

counterclaims. Once the moneys were deposited with the

Building Society in the names of the appellants holding as

trustees, the moneys were held by them in that capacity to

be dealt with in accordance with the order of the court and

not otherwise. 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 that

the trust upon which the moneys were held was a trust for

statutory purposes ((86) See Fouche v. Superannuation Fund Board

(1952) 88 CLR, at p.640.) 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."

The fact which attracted the description of a trust for statutory

purposes was that the trustees were to deal with the moneys "in

accordance with the order of the court and not otherwise". In New

South Wales v. The Commonwealth (No.3) ((87) (1932) 46 CLR, at

p.268.) Starke J was unwilling to regard a court as a fiduciary in

respect of moneys paid into court by suitors. But in Harmer it was

accepted that the money which had been paid out to solicitors "as

trustees" to invest was held on a trust of some kind, the only question

being whether there was no beneficiary "presently entitled" for the

purposes of s.97(1) of the Income Tax Assessment Act.

26. The question in the present case is not whether the Registrar holds the Tribunal Fund on trust for statutory purposes or is under a

fiduciary duty in respect of that Fund but whether the Registrar holds

a compensation payment in trust for the dependants of a deceased

worker or is under a fiduciary duty to those dependants in respect of

that money. The assessments against the Tribunal and the Registrar

fasten on the income attributed to the amounts appearing in the books

of the Tribunal from time to time as standing to the credit of the

account. For the reasons stated, we are unable to regard that income

as "income of a trust estate" because we do not regard the amounts

standing to the credit of the account as a "trust estate" for the

purposes of Div.6, the dependants' rights being statutory. There

being no trust estate of the kind on which the Commissioner has

relied, the interest attributed to the amounts standing to the credit

of the account is not "income of a trust estate" within the meaning of

that term in Div.6.

27. We were invited to say whether, if the allocation to individual accounts of the accretion from investment of the Tribunal Fund were

not assessable income falling within Div.6, the aggregate of the

accretion might itself be assessable income in the hands of the

Tribunal (in the 1987 year) or the Registrar (in the 1988 year). That

invitation must be declined. If the Tribunal Fund were held by the

Registrar as a fiduciary or "on trust for statutory purposes", the

Registrar's equitable duty would be to apply the Tribunal Fund in

accordance with the Act and, in particular, in accordance with s.73(3)

of the 1985 Act. Even if dependants were held to have a sufficient

interest to enforce such an equitable duty, they would not be held to

have any beneficial interest in the Tribunal Fund ((88) Like the

members of a company being wound up: In re Calgary and Edmonton Land

Co. Ltd. (1975) 1 WLR 355, at p.359.). It would then be a question

of some difficulty whether the provisions of Div.6 (or at least the

provisions of ss.99 and 99A) apply to the income of purpose trusts as

distinct from the income of trusts for the benefit of beneficiaries.

That question was not argued. In practice, of course, the income of

valid purpose trusts would often be exempt income under s.23(e) or (j)

and the occasions when Div.6 might apply to the income of a purpose

trust do not appear to have arisen for consideration. We would not

answer the question whether the receipt of income from the entirety of

the Tribunal Fund is assessable in the hands of the Registrar. That is

an issue which ought to be determined only when it is necessary to

decide it.

28. We would set aside the assessment in respect of the 1988 year because it is not founded on income of a trust estate within the

meaning of that term in s.99. Accordingly we would allow the appeal,

set aside the judgment of Jenkinson J and in lieu thereof allow the

Registrar's appeal against the Commissioner's refusal to allow the

Registrar's objection to the assessment in respect of the income year

ended 30 June 1988.

29. It is unnecessary to consider the arguments based on s.23(d) of the Income Tax Assessment Act and on s.114 of the Constitution that

were advanced to challenge the assessments. Nor do we find it

necessary to determine whether, if the Registrar were a trustee of

compensation payments for the persons entitled thereto, the Registrar

might be outside the reach of the Income Tax Assessment Act on the

ground that he is an emanation of the Crown.