Land and Environment Court New South Wales Medium Neutral Citation: Bodalla Aboriginal Housing Company Limited v Eurobodalla Shire Council [2011] NSWLEC 146 Hearing dates: 16 August 2011 Decision date: 26 August 2011 Jurisdiction: Class 4 Before: Preston CJ Decision: The Court orders: 1. The summons be dismissed. 2. The question of costs is reserved. Catchwords: RATING - exemption - land belonging to Aboriginal housing corporation - whether Aboriginal housing corporation is a public charity or public benevolent institution - whether charitable or benevolent status to be determined by reference only to institution's constituting document or also to actual activities carried out - objects and purpose for which corporation established include non charitable and non benevolent objects - whether ancillary or incidental to charitable and benevolent objects Legislation Cited: Charitable Trusts Act 1993 Civil Procedure Act 2005 Companies Act 1961 Conveyancing Act 1919 Statute of Charitable Uses 1601 (43 Eliz I, c 4) Local Government Act 1993 Cases Cited: Aboriginal Hostels Ltd v Darwin City Council (1985) 55 LGRA 414 Ashfield Municipal Council v Joyce [1976] 1 NSWLR 445 Chartered Insurance Institute v London Corporation [1957] 1 WLR 867 Commissioner of Taxation of The Commonwealth of Australia v Word Investments Ltd [2008] HCA 55; (2008) 236 CLR 204 Commissioners for Special Purposes of Income Tax v Pemsel [1891] AC 531 Commissioners of Inland Revenue v Yorkshire Agricultural Society [1928] 1 KB 611 Coomealla Aboriginal Housing Co Limited v Wentworth Shire Council (1986) 101 LGERA 10 Dareton Local Aboriginal Land Council v Wentworth Council (1995) 89 LGERA 120 Incorporated Council of Law Reporting for England and Wales v Attorney General (1972) 1 Ch 73 Inland Revenue Commissioners v City of Glasgow Police Athletic Association [1953] AC 380 Institution of Professional Engineers New Zealand Inc v Commissioner of Inland Revenue [1992] 1 NZLR 570 Keren Kayemeth Le Jisroel Ltd v Commissioners of Inland Revenue [1931] 2 KB 465 Keren Kayemeth Le Jisroel Ltd v Commissioners of Inland Revenue [1932] AC 650 Maclean Shire Council v Nungera Co-operative Society Ltd (1995) 86 LGERA 430 McGarvie Smith Institute v Campbelltown Municipal Council (1965) 11 LGRA 321 Morice v Bishop of Durham (1805) 10 Ves 522 NSW Nursing Service and Welfare Association for Christian Scientists v Willoughby Municipal Council (1968) 16 LGRA 65 Perpetual Trustee Co Ltd v Federal Commissioner of Taxation (1931) 45 CLR 224 Re Inman [1965] VR 238 Salvation Army (Victoria) Property Trust v Ferntree Gully Corporation (1952) 85 CLR 159 Scottish Burial Reform and Cremation Society Ltd v Glasgow Corporation [1968] AC 138 Scottish Flying Club v Inland Revenue [1935] SC 817 Stratton v Simpson (1970) 125 CLR 138 Toomelah Co-operative Ltd v Moree Plains Shire Council (1996) 90 LGERA 48 Trustees of Church Property of the Diocese of Newcastle v Lake Macquarie Shire Council [1975] 1 NSWLR 521 Victory (Ex-Services) Association Ltd v Paddington Borough Council [1960] 1 All ER 498 Texts Cited: G E Dal Pont, Law of Charity (2010) LexisNexis Butterworths Category: Principal judgment Parties: Bodalla Aboriginal Housing Company Limited (Plaintiff) Eurobodalla Shire Council (Defendant) Representation: Mr P J McEwen SC (Plaintiff) Mr J E Robson SC with Mr C R Ireland (Defendant) Warren McKeon Dickson (Plaintiff) Andrew Warren Associates (Defendant) File Number(s): 40456 of 2011 Judgment A dispute arises about exemption from rates 1The plaintiff, Bodalla Aboriginal Housing Company Limited, owns 28 properties in the Eurobodalla local government area. Twenty-seven of the properties are used or occupied as residences for persons of Aboriginal descent. Twenty-four are tenanted by persons dependent on government pensions and three are tenanted by persons who earn a low income. One of the 28 properties is used by the plaintiff for administrative and general purposes. 2In 2006, the plaintiff applied to Eurobodalla Shire Council ("the Council") for exemption under s 556(1)(h) and s 558(1)(c) of the Local Government Act 1993 from all rates for the properties on the basis that the plaintiff is a public charity or public benevolent institution. The Council did not agree to exempt the plaintiff's properties and continued to levy rates and charges in relation to the properties. The plaintiff failed to pay the rates and charges for each rating year from 1 January 2005 onwards. 3On 13 November 2008, the Council commenced proceedings in the District Court of NSW to recover the outstanding rates and charges, together with interest, owed by the plaintiff on its properties. The plaintiff did not defend the proceedings and default judgment was given for the Council. The plaintiff subsequently applied to set aside the default judgment, which the District Court did on 4 November 2010 on the condition that the plaintiff commence proceedings in the Supreme Court within 21 days seeking declaratory relief that the plaintiff's properties are exempt from all rates. The plaintiff duly commenced proceedings in the Supreme Court, by statement of claim, on 24 November 2010. The proceedings were transferred on 20 May 2011 by the Supreme Court to the Land and Environment Court under s 149B of the Civil Procedure Act 2005. 4In the statement of claim, the plaintiff seeks various declarations for the purposes of establishing that the lands that it owns are exempt from rates under s 556(1)(h) of the Local Government Act. In particular, the plaintiff seeks a declaration that it is a public benevolent institution or a public charity or both for the purposes of s 556(1)(h). At the hearing, the plaintiff sought leave to amend the statement of claim to also seek a declaration that it is a public charity for the purposes of s 558(1)(c) of the Local Government Act. The statutory provision for exemption from rates 5Section 556(1) exempts certain types of land from all rates other than water supply special rates and sewerage special rates. The relevant type of land in this case is that specified in s 556(1)(h). Section 556(1)(h) provides: "(1). The following land is exempt from all rates, other than water supply special rates and sewerage special rates: ... (h) land that belongs to a public benevolent institution or public charity and is used or occupied by the institution or charity for the purposes of the institution or charity," 6Section 556(1)(h), therefore, requires two questions to be answered in the affirmative in order for land to be exempt from rates, other than water supply special rates and sewerage special rates: (a) does the land belong to a public benevolent institution or public charity? (b) is the land used or occupied by the institution or charity for the purposes of the institution or charity? 7Exemption from payment of water supply rates and sewerage special rates is available at the discretion of the Council for certain types of institutions and certain types of land. Section 558(1)(c) provides: "(1). A council may exempt the following from payment of water supply rates and sewerage special rates: (c) a public charity," 8An institution that is a public charity for the purposes of s 556(1)(h) would also be public charity for the purposes of s 558(1)(c). The issues on which the parties are joined 9The only issue in dispute between the parties is whether the plaintiff is properly to be characterised as a "public benevolent institution" for s 556(1)(h) or a "public charity" for s 556(1)(h) and s 558(1)(c) of the Local Government Act. The Council does not dispute that the 28 properties on which rates and charges have been levied "belong" to the plaintiff. The Council also does not dispute that those 28 properties are used or occupied by the plaintiff for the purposes of the plaintiff as evidenced by its constituting document. The approach to characterisation 10The characterisation of the plaintiff as either a public benevolent institution or a public charity for the purposes of s 556(1)(h) and s 558(1)(c) of the Local Government Act is to be determined by reference to the objects and powers for and with which the plaintiff is constituted, not by reference to the activities which are in fact being pursued by the plaintiff on the lands it owns: McGarvie Smith Institute v Campbelltown Municipal Council (1965) 11 LGRA 321 at 324, 328; Trustees of Church Property of the Diocese of Newcastle v Lake Macquarie Shire Council [1975] 1 NSWLR 521 at 532 and 535; Aboriginal Hostels Ltd v Darwin City Council (1985) 55 LGRA 414 at 427; Maclean Shire Council v Nungera Co-operative Society Ltd (1995) 86 LGERA 430 at 432-433; Dareton Local Aboriginal Land Council v Wentworth Council (1995) 89 LGERA 120 at 122-123; Toomelah Co-operative Ltd v Moree Plains Shire Council (1996) 90 LGERA 48 at 51; Coomealla Aboriginal Housing Co Limited v Wentworth Shire Council (1998) 101 LGERA 10 at 15. 11The plaintiff submitted that extrinsic evidence of its activities was relevant to whether it is to be characterised as a public charity or public benevolent institution. The plaintiff relied on the discussion in the text, G E Dal Pont, Law of Charity (2010) LexisNexis Butterworths, at pp 322-323 where the author notes that, although it is clearly the purposes of an association that determine its charitable status and the activities can rarely be deemed charitable or non-charitable, extrinsic evidence of the association's activities may be relevant to charitable status in three circumstances. The plaintiff relied on the second stated circumstance: "Second, the rules or constitution of an association may not indicate with clarity its main object(s), in which case the expressed objects are assessed in tandem with the association's activities. Those activities may serve to indicate the relative weight to be accorded to each of its objects. It is possible that non-charitable objects that appear of importance on paper, when viewed in the context of the association's actual activities, are in fact directed to forwarding those objects that are clearly charitable. Alternatively, an association's activities may reveal that a power in its constitution to carry on non-charitable activities is in truth not subsidiary but rather its main purpose." 12The author cited in the footnotes to this passage various cases in support of the three propositions made in the passage. The plaintiff added to these cases the dicta of Sachs LJ in Incorporated Council of Law Reporting for England and Wales v Attorney General [1972] 1 Ch 73 at 91-93 which is to similar effect. 13These cases deal with the issue of charitable status in different contexts and under different laws. None of the cases deal with exemption from rates of and belonging to a public charity under provisions in local government legislation equivalent to s 556(1)(h) or s 558(1)(c) of the Local Government Act. This is of some importance because, as noted in Commissioner of Taxation of the Commonwealth of Australia v Word Investments Ltd [2008] HCA 55; (2008) 236 CLR 204 at [17] and [165], special care must be taken in applying general judicial observations in both local and overseas cases which come from a range of fields and on a range of issues, sometimes with a close eye to the particular statutory scheme and the particular statutory phrase or words under consideration. 14In relation to the issue of characterisation of an association as a public charity or public benevolent institution under s 556(1)(h) and s 558(1)(c) of the Local Government Act, the relevant line of authority is that which concerned these sections or their predecessors or equivalent provisions in the local government legislation of other states. This line of authority, cited in paragraph 10 above, is clear in holding that the characterisation of an association for the purpose of determining a claim for exemption from rates is to be decided by reference to the terms of the association's constituting documents and not its activities. 15This line of authority gives effect to the two step test for exemption of land from rates in statutory provisions such as s 556(1)(h) of the Local Government Act: the first step focuses on the association to which the land belongs and the second step focuses on the use or occupation of that land by the association. To have regard to the purpose to which land belonging to the association is used or occupied by the association in characterising the charitable or benevolent status of the association is to conflate the two steps required in the statutory provision. 16This explicit two step test in provisions such as s 556(1)(h) is not to be found in the other statutory provisions considered in the cases cited in the passage by Dal Pont and in the cases relied upon by the plaintiff, such as "a body of persons or trust established for charitable purposes only" ( Commissioners of Inland Revenue v Yorkshire Agricultural Society [1928] 1 KB 611, Keren Kayemeth Le Jisroel Ltd v Commissioners of Inland Revenue [1932] AC 650 and Incorporated Council of Law Reporting for England and Wales v Attorney General (1972) 1 Ch 73); "an organisation ... which is not established or conducted for profit and whose main objects ... are charitable or are otherwise concerned with the advancement of ... social welfare" ( Victory (Ex-Services) Association Ltd v Paddington Borough Council [1960] 1 All ER 498); "an institution established exclusively for charitable purposes" ( Institution of Professional Engineers New Zealand Inc v Commissioner of Inland Revenue [1992] 1 NZLR 570); or "charitable institution" ( Commissioner of Taxation of the Commonwealth of Australia v Word Investments Ltd [2008] HCA 55; (2008) 236 CLR 204). These different statutory phrases may permit reference to the association's activities in addition to the constitutional rules of the association, in order to determine whether the association meets the description of charitable status in the statutory phrases. However, this approach may not properly be applied to the different statutory phrase in s 556(1)(c) of the Local Government Act. Meaning of a public charity 17The terms "charity" or "public charity" (which have been held to be synonymous) used in the statutory context, such as in statutory provisions affording exemption of land from rates, attract their technical legal meaning, and not their popular or non technical meaning, unless there is a clear indication to the contrary: Salvation Army (Victoria) Property Trust v Ferntree Gully Corporation (1952) 85 CLR 159 at 175, 185; McGarvie Smith Institute v Campbelltown Municipal Council (1965) 11 LGRA 321 at 322; Trustees of Church Property of the Diocese of Newcastle v Lake Macquarie Shire Council [1975] 1 NSWLR 521 at 535; Ashfield Municipal Council v Joyce [1976] 1 NSWLR 455 at 459, 464, 465; Aboriginal Hostels Ltd v Darwin City Council (1985) 55 LGRA 414 at 425; Dareton Local Aboriginal Land Council v Wentworth Council (1995) 89 LGERA 120 at 124; Toomelah Co-operative Ltd v Moree Plains Shire Council (1996) 90 LGERA 48 at 52. 18The justification for this approach is that the Court can ascertain what is a public charity according to its legal definition, developed over four centuries, with greater certainty because the test is objective whereas no similar certainty applies to its popular definition because the meaning is subjective: Salvation Army (Victoria) Property Trust v Ferntree Gully Corporation (1952) 85 CLR 159 at 183-184. 19A consequence of public charity bearing its technical legal meaning is that the ambit of the exemption from rates is wider than if public charity bore its popular and non technical meaning: Incorporated Council of Law Reporting for England and Wales v Attorney General [1972] 1 Ch 73 at 90. 20In its technical legal sense, an association is a public charity if its objects are within the spirit and intendment of the preamble to the Elizabethan Statute of Charitable Uses 1601 (43 Eliz I, c 4). The Preamble lists a number of purposes and objects that were then recognised as charitable. These were: "(1) The relief of aged, impotent and poor people. (2) The maintenance of sick and maimed soldiers and mariners. (3) The maintenance of schools of learning, free schools and scholars in universities. (4) The repair of bridges, ports, havens, causeways, churches, seabanks and highways. (5) The education and preferment of orphans. (6) The relief, stock or maintenance of houses of correction. (7) Marriages of poor maids. (8) The supportation aid and help for young tradesmen, handicraftsmen and persons decayed. (9) The relief or redemption of prisoners or captives. (10) The aid and ease of any poor inhabitants concerning payment of fifteens, setting out soldiers, and other taxes." 21Over time a wide variety of other objects have come to be recognised as also being charitable. Initially, this was done by courts finding an analogy between an object mentioned in the Preamble with the object claimed to be charitable in the case at hand. Nextly, it was done by the courts finding an analogy between an object already held to be charitable in a previous case and the new object claimed to be charitable. The consequence has been an extension of the objects held to be charitable as being, or deemed to be, within the spirit and intendment of the Preamble of the Statute of Charitable Uses 1601: Scottish Burial Reform and Cremation Society Ltd v Glasgow Corporation [1968] AC 138 at 147. 22The list of charitable objects has been grouped into four categories or heads of charity: the relief of poverty, age or impotence; the advancement of education; the advancement of religion; and other purposes beneficial to the community but not falling under any of the preceding heads: Commissioners for Special Purposes of Income Tax v Pemsel [1891] AC 531 at 583 and see Sir Samuel Romilly's argument in Morice v Bishop of Durham (1805) 10 Ves 522 at 532. 23The fourth head of charity is a catch-all category for associations not falling under the other three heads. For an association seeking to establish charitable status under this fourth head, two steps must be satisfied. First, that the association does fall within the fourth head of charity but, because not every such purpose is charitable, secondly, that the association falls within the spirit and intendment of the preamble to the Statute of Charitable Uses 1601: Scottish Burial Reform and Cremation Society v Glasgow Corporation [1968] AC 138 at 149. 24An inquiry into the charitable status of an association is an "all or nothing exercise". Because charitable status of an association does not accrue in the absence of exclusively charitable objects, an association is either charitable or it is not; there is no such thing as a partly charitable association: Dal Pont at 8, [1.9]. 25The reason for this requirement that an association be exclusively charitable in order to secure charitable status is that "charity" and "public charity", used in a statutory context, have a technical legal meaning. Because an association that is a charity, as defined by law, benefits from various privileges unavailable to a non-charitable association, such as exemption from land belonging to it from rates, the law must distinguish the charitable from the non-charitable association. Were an association with both charitable and non-charitable purposes (mixed purposes) able to secure charitable status, the privileges afforded to charity could then be applied to non-charitable purposes. This would undermine the distinct concept of charity in the law and the rationale for affording privileges to charities: Dal Pont at 309, [13.2]. 26In determining whether an association is exclusively charitable, the court construes the notion of exclusivity in a "reasonable sense": Scottish Flying Club v Inland Revenue [1935] SC 817 at 822. Hence, it is not necessary that the association have exclusively, in the sense of only, charitable objects: it can also have non-charitable objects provided they are incidental, subsidiary, collateral or subordinate to the charitable objects. This approach was summarised in Inland Revenue Commissioners v City of Glasgow Police Athletic Association [1953] AC 380 at 405: "(1) If the main purpose of the body of persons is charitable and the only elements in its constitution and operations which are non-charitable are merely incidental to that main purpose, that body of persons is a charity notwithstanding the presence of those elements - Royal College of Surgeons of England v National Provincial Bank Ld [1952] AC 631. (2) If, however, a non-charitable object is itself one of the purposes of the body of persons and is not merely incidental to the charitable purpose, the body of persons is not a body of persons formed for charitable purposes only within the meaning of the Income Tax Acts - Oxford Group v Inland Revenue Commissioners [1949] 2 All ER 537": see also at 397, 397-398, 400 and 402. 27In Stratton v Simpson (1970) 125 CLR 138 at 159-160, Gibbs J stated the approach as follows: "It is established that 'an institution is a charitable institution if its main purpose is charitable although it may have other purposes which are merely concomitant and incidental to that purpose' or in other words if each of its objects is either charitable in itself or should be construed as ancillary to other objects which themselves are charitable: Congregational Union of New South Wales v Thistlethwayte (1952) 87 CLR 375 at 442, 450. If however the non-charitable purpose is not merely incidental or ancillary to the main charitable purpose, the institution will not be charitable: Oxford Group v Inland Revenue Commissioners (1949) 2 All ER 537; and In Re Harpur's Will Trusts [1962] 1 Ch 78 at 87": see also at 148-149 and Royal Australasian College of Surgeons v Federal Commissioner of Taxation (1943) 68 CLR 436 at 447, 448, 450, Congregational Union of New South Wales v Thistlethwayte (1952) 87 CLR 375 at 442; Maclean Shire Council v Nungera Co-operative Society Ltd (1995) 86 LGERA 430 at 432-433; and Commissioner of Taxation of the Commonwealth of Australia v Word Investments Ltd [2008] HCA 55; (2008) 236 CLR 204 at 217 [17]. Is the plaintiff a public charity? 28The plaintiff is a company limited by guarantee, incorporated under the then Companies Act 1961 on 17 February 1978. The Memorandum of Association enumerates the objects for which the plaintiff was established in clause 2. 29The Memorandum of Association was amended on 16 March 2011, by resolution passed at a Special General Meeting of the plaintiff to delete the original clause 2, including the objects in clause (l), (m), (s), and (t), and insert instead a new clause 2 which is different in at least four fundamental ways. First, there is a statement that "the general and overarching objectives and purposes of the company are the relief of homelessness, poverty, sickness, destitution, distress, suffering, misfortune, culture or social disintegration, or helplessness of needy persons of Aboriginal and Torres Strait Island descent". Secondly, these general and overarching objectives and purposes are stated to be achieved "through" carrying out particularised activities. Thirdly, other objectives and powers listed are expressly stated to be "ancillary and incidental" and are to be pursued and implemented "solely in furtherance" of these general and overarching objectives. Fourthly, the listed ancillary and incidental objectives do not include the objects in the original clause 2(l), (m), (s) and (t) or many of the other arguably non-charitable objects. 30As explained below, the terms of the original clause 2 and the inclusion of the objects in clause 2(l), (m), (s) and (t) are critical to the Council's argument that the plaintiff cannot be characterised as a public charity or public benevolent institution. The Council submits that, prior to 16 March 2011, the terms of the original clause 2 and the inclusion of these independent, non-charitable objects in the Memorandum of Association operated to deny characterisation of the plaintiff as a public charity or public benevolent institution. After 16 March 2011, however, the Council is prepared to accept that the plaintiff is a public charity. 31The objects for which the plaintiff was established enumerated in clause 2 of the Memorandum of Association are too numerous to quote in full. They fall into two categories: objects which are charitable and objects which are non-charitable. The critical issue is whether the non-charitable objects can be viewed as incidental or ancillary to the charitable objects. 32The plaintiff contends, and the Council accepts, that a number of the objects can properly be described as charitable. The conceded charitable objects include objects (a), (c), (d) and (k). 33Object (a) is: "(a) To provide housing for persons of Aboriginal descent." 34Such a purpose has been held to be sufficiently analogous to the first head of charity of relief of poverty or the fourth head of purposes beneficial to the community so as to be classified as charitable: Aboriginal Hostels Ltd v Darwin City Council (1985) 55 LGRA 414 at 428-429; Dareton Local Aboriginal Land Council v Wentworth Council (1995) 89 LGERA 120 at 125-126; Toomelah Co-operative Ltd v Moree Plains Shire Council (1996) 90 LGERA 48 at 53-54. 35Object (c) is: "(c) To carry out schemes for the social, intellectual and cultural advancement of members." 36This purpose may be within or sufficiently analogous to the fourth head of charity of purposes beneficial to the community: Dareton Local Aboriginal Council v Wentworth Council (1995) 89 LGERA 120 at 126. 37Object (d) is: "(d) To strengthen build up and contribute to the identity, sense of purpose and culture of persons of Aboriginal and Island descent." 38This purpose may be within or sufficiently analogous to the fourth head of charity of purposes beneficial to the community or, alternatively, may be construed not as an independent object but rather as incidental or ancillary to other charitable objects: Toomelah Co-operative Ltd v Moree Plains Shire Council (1996) 90 LGERA 48 at 57-59, see also Maclean Shire Council v Nungera Co-operative Society Ltd (1995) 86 LGERA 430 at 433. 39Object (k) is: "(k) To provide and maintain buildings and grounds for education, recreation, health, arts and craft and culture, child minding, legal offices or any other community purpose and promote and assist clubs and workshops for any such purposes." 40This purpose may fall within or be sufficiently analogous to the second head of charity of the advancement of education or the fourth head of purposes beneficial to the community, as the Council was prepared to concede. 41There are, however, a great number of objects in clause 2 that, viewed individually, could not be characterised as being charitable. Nevertheless, viewed in context as a whole, many of these can be described as being incidental or ancillary to the charitable objects. The Council fairly makes this concession. The Council concedes that clauses such as: (e) (to seek funds from community and government sources); (f) (to enter into arrangements with government and obtain rights, privileges and concessions; (g) (to purchase, lease, or hire land, buildings, easements, property, rights and privileges); (r) (to invest moneys); (y) (to sell part or the whole of undertakings of the company); (z) (to borrow, raise or secure the payment of money); (aa) (to issue or accept negotiable or transferable instruments); (bb) (to improve, manage, develop etc property and rights of the company); (cc) (to employ staff); (dd) (to take mortgages etc to secure payments to the company); (ee) (to take gifts of property); and (ff) (to raise by appeals funds and donations), should be construed as ancillary or concomitant to charitable objects and enable the plaintiff to properly manage its resources and activities. Indeed, these may be better described as powers to carry out objects rather than objects: see Commissioner of Taxation of the Commonwealth of Australia v Word Investments Ltd [2008] HCA 55; (2008) 236 CLR 204 at 218-219. 42The Council, however, submits that at least four of the objects for which the plaintiff was established are properly characterised as neither charitable nor ancillary or concomitant to charitable objects. These are (l), (m), (s) and (t): "(l) To acquire the assets stock-in-trade, goodwill including the leaseholds of Bodalla Motors Pty. Limited and carry on the business thereof. (m) To manufacture, repair, service and/or deal in any let on hire and store all conveyances and means of transport including but not limited to motor vehicles, boats, aeroplanes, hydroplanes, caravans, machinery apparatus; accessories, fuel, lubricants, paints, cements, tyres and all other articles usually associated with the above business. (s) To apply for purchase or otherwise acquire and dispose of all manner of mining or mineral or petroleum claims leases authorities licences or otherwise in any of the States and Territories of the Commonwealth of Australia or elsewhere and to prospect explore open and work all manner of claims leases mines rights to mine and to mine quarry or otherwise generally extract and treat all manner of minerals mineral substances ores or minerals or mineral substances whatsoever. (t) To breed, rear and/or deal in sheep, cattle, horses, pigs, poultry, and all other livestock; to establish studs and develop the blood line; to carry on the business of grazier, butcher, agriculturist, farmer, dairyman, poultry farmer, orchardist, horticulturist, pastoralist, and to deal in, prepare for market, cook, package and can all products of animal husbandry and agriculture; to act as consultants, advisers and manager of any of the abovementioned undertakings." 43The Council's submission as to the effect that these clearly non-charitable objects have on denying the plaintiff charitable status is encapsulated in the following paragraphs from the Council's outline of submissions: "19. These objects are not subject to any limitation imposed by any introductory words, chapeau or rubric. Properly construed in context they would allow the Plaintiff to acquire and trade as a commercial car dealership, a quarry operator or grazing enterprise. These objects are quite different to any of the objects considered by Stein J in the Toomelah decision (cf Toomelah (1996) 90 LGERA 48 at 50), which were all drafted so that the particular activity carried out was required to be for the benefit or development of the Aboriginal community, such as, for example: (c) To carry out agricultural pastoral fishing, forestry, mining and any other primary producing activities or projects for the benefit of individual members, or for the use, benefit or development of the society or the Aboriginal community in general. 21. It has long been the general law that, apart from statute, a valid charitable trust will not be created if property is directed to be held on trust for charitable and non-charitable purposes indiscriminately, so that the trustees could, if they chose, apply the whole to non-charitable objects: Re Hood [1931] 1 Ch 240; [1930] All ER Rep 215. Due to the disjunctive listing of the objects in the Plaintiff's Memorandum and due to the absence of any overarching requirement in the Memorandum that any particular object only be exercised in aid of an overarching charitable purpose, the Plaintiff's Memorandum is drafted so as to be in the position of being able to indiscriminately carry on both charitable and non charitable purposes. For example, it would be acting entirely in accordance with its objects if it were to rationalise its businesses and become purely a car dealership operating the former Bodalla Motors Pty Limited, or a commercial quarry operator or pastoral company. ... 22. Whether it has actually done so or not is beside the point." 44The plaintiff, although accepting that these objects, when viewed individually, might be seen to be non-charitable, submits that when viewed in the context of the objects and the Memorandum of Association as a whole, they should be viewed as merely ancillary, incidental, dependent or concomitant on the charitable objects. The plaintiff advances three reasons in support of this submission: the motive for establishment of the plaintiff was charitable, textual indicators in the Memorandum show the non-charitable objects are incidental and ancillary and the actual activities of the plaintiff are for charitable objects and not for non-charitable objects. 45As to motive, the plaintiff relied on the affidavit evidence of the administrator of the plaintiff, Ms Stella Bolt, as to the motive and ultimate aims in establishing the plaintiff and her opinion as to the true character of the plaintiff. The plaintiff submits in its outline of submissions: "9. The Plaintiff Company was incorporated on 17 February 1978. From its inception, the primary and dominant purpose of the Plaintiff was to provide low cost and long-term residential housing for needy persons of Aboriginal descent (per Stella Bolt, 12 May 2011, [2]). The explanation for the extraneous/claimed non-charitable objects ((l), (m), (s) and (t) above) was attributed to what was seen at the time as the historical situation for Aboriginals at that time . Aboriginals had only been recently recognised as Australian citizens; there was little permanent work for people of Aboriginal descent in the Bodalla area; Bodalla was primarily a farming area, where Aboriginals could obtain seasonal work; and when that seasonal work was available, Aboriginals who visited the Bodalla area lived in tents or shanties during the season. The extraneous/allegedly non-charitable objects were seen as an avenue to provide full-time work to Aboriginals, if those objects were pursued. In fact, they never were (per Stella Bolt, 12 May 2011, [23])." 46This submission based on the motive of the founders should be rejected: courts cannot look at the motives of the founders in order to show the purposes of an institution. In Keren Kayemeth Le Jisroel Ltd v Commissioners of Inland Revenue [1931] 2 KB 465 at 484, in rejecting a similar argument to that put by the plaintiff here, Lawrence LJ said: "... the answer to the company's contention on this part of the case is that the Court is not concerned with the motives or ultimate aims of the founders nor with the opinion expressed by Dr Feldman or by any other expounder of the Rabbinic law as to the true character of the objects of the company, but is solely concerned with the meaning and effect of the language employed in the Memorandum": see also Incorporated Council of Law Reporting for England and Wales v Attorney General [1972] 1 Ch 73 at 91. 47As to the textual indicators, the plaintiff relied on three. First, the name of the plaintiff is descriptive of its primary and dominant purpose: Bodalla Aboriginal Housing Company. With respect, the name of the institution is of no legal significance and cannot assist in characterisation of the objects of the plaintiff. 48Secondly, the plaintiff relies on the fact that the first listed object in clause 2 of the Memorandum is "(a) To provide housing for persons of Aboriginal descent." 49That an object is listed first in an association's constituting document may or may not be indicative that it is the association's main object; it depends on the terms of the constituting document. In Chartered Insurance Institute v London Corporation [1957] 1 WLR 867, the Institute sought exemption from rating on the basis that it was an organisation whose main objects are concerned with the advancement of education. The first listed object in the Institute's charter was to provide and maintain a central organisation for the promotion of efficiency, progress and general development amongst persons engaged or employed in insurance. Other objects described means by which that object might be achieved, including education. However, on a proper construction of the Institute's charter, education was not the main object of the Institute. This conclusion was not based solely on education not being the first listed object, or that the promotion of persons in insurance was the first listed object, but rather on the terms and the nature of the various objects in the charter. 50Hence, the fact that the object of providing housing for persons of Aboriginal descent is listed first in clause 2 of the plaintiff's Memorandum is not decisive; all of the objects, their terms and nature, must be considered. 51Thirdly, the plaintiff submits that all of the objects after the first listed object of providing housing for persons of Aboriginal descent, in clause 2(b) to (ff) of the Memorandum, are merely a variety of ways of achieving the first listed object: see, for example, paragraph 37 of the plaintiff's outline of submissions. 52It is true that a great many of the later listed objects could be described as machinery provisions or powers to carry out the object of providing housing for persons of Aboriginal descent. This type of object has been referred to earlier and the Council has conceded that this type of object should be viewed as incidental or ancillary and not as an independent object. However, such a description is not apt for the four impugned objects in clause 2(l), (m), (s) and (t) of the Memorandum. 53These objects, neither by express words nor by implication from the nature of the activities described in the objects, can be viewed as ancillary or incidental to the object in clause 2(a) of providing housing for persons of Aboriginal descent. Clause 2(l), (m), (s) and (t) do not expressly state that the diverse businesses, trades or industries described therein are only to be undertaken by the plaintiff for achieving any other object and, in particular, the object in clause 2(a) of providing housing for persons of Aboriginal descent. 54By no means can undertaking the diverse businesses, trades and industries listed in clause 2(l), (m), (s) or (t), which are of a wholly different and unrelated nature to the provision of housing for persons of Aboriginal descent, be described as a variety of ways to achieve the provision of housing for persons of Aboriginal descent or even as powers to carry out such an object. 55The listing of objects in clause 2 of the plaintiff's Memorandum does not contain a chapeau that qualifies the objects listed. Such a chapeau was a persuasive textual indicator in the rules of the Society considered in Maclean Shire Council v Nungera Co-operative Society Ltd (1995) 86 LGERA 430. The objects of the Society were stated to be to relieve the poverty etc of needy members of the Aboriginal community in the Maclean area "through" the three means thereafter identified. One of these, paragraph (c), if the institution had that as an independent object, would have caused the institution not to be a public benevolent institution. However, the chapeau made it perfectly plain that the object or power in paragraph (c) was ancillary or incidental, being only a means through which the object of relief of poverty etc was to be pursued: at 433. 56Each of the objects in clause 2(l), (m), (s) and (t) also do not individually have any words of qualification making each object ancillary or incidental to any other object, and in particular to the object in clause 2(a) of providing housing to persons of Aboriginal descent. There are not qualifying words equivalent to those in most of the objects of the rules of the Society in Toomelah Co-operative Ltd v Moree Plains Shire Council (1996) 90 LGERA 48 at 50 (which emphasised that the activities listed in the objects were to be undertaken for the use, benefit or development of the Society, its members or the Aboriginal community in general). These qualifying words were influential in the characterisation of the Society in that case as a public charity. 57As a matter of construction, therefore, the objects in clause 2(l), (m), (s) and (t) cannot properly be described as merely ancillary, incidental, dependent or concomitant on the object of providing housing for persons of Aboriginal descent. 58As to the actual activities carried out by the plaintiff, the plaintiff submits that in fact the plaintiff's activities have revolved almost exclusively around the object of providing housing for persons of Aboriginal descent and that the plaintiff has not pursued the objects in clause 2(l), (m), (s) and (t): see paragraphs 9, 16, and 44 of the plaintiff's outline of submissions. 59However, for the reasons and on the authorities I have given earlier, the characterisation of an institution claiming exemption from rating on the basis of being a public charity or public benevolent institution is to be determined not by reference to what actually happens at a particular institution but rather by reference to the enforceable purposes of the institution. Hence, the fact that the plaintiff has not undertaken the non-charitable activities authorised by clause 2(l), (m), (s) and (t) of its Memorandum does not assist the plaintiff in establishing that it is exclusively charitable. 60Finally, the plaintiff submits that if the objects in clause 2(l), (m), (s) and (t) of the Memorandum are independent, non-charitable objects, they could be ignored and the charitable objects would remain valid by force of s 23 of the Charitable Trusts Act 1993: paragraphs 17-22 of the plaintiff's outline of submissions. Section 23 provides: "(1) A trust is not invalid merely because some non-charitable and invalid purpose as well as some charitable purpose is or could be taken to be included in any of the purposes to or for which an application of the trust property or of any part of it is directed or allowed by the trust. (2) Any such trust is to be construed and given effect to in the same manner in all respects as if no application of the trust property or of any part of it to or for any such non-charitable and invalid purpose had been or could be taken to have been so directed or allowed." 61This section has no application to the Memorandum of the plaintiff. First, the section is premised on the existence of a trust; if there is no trust it cannot apply: Re Inman [1965] VR 238 at 245. The plaintiff is a company limited by guarantee - it is not a trust. 62Secondly, the section saves trusts from invalidity which would otherwise fail because trust property could be applied to both a charitable as well as a non-charitable purpose. The section cannot be applied to excise or "blue pencil" from the list of objects in the plaintiff's Memorandum those objects which are non-charitable. 63Thirdly, a similar argument made in an exemption from rating case based on the equivalent former s 37D of the Conveyancing Act 1919 was rejected in Trustees of Church Property of the Diocese of Newcastle v Lake Macquarie Shire Council [1975] 1 NSWLR 521. The trustees suggested that the objects defined in their constituting Ordinance which were not charitable could be ignored and the charitable objects remained valid by force of s 37D. This argument was rejected: "This section [s 37D] saves trusts from invalidity; the non-charitable trusts are not invalid in the sense that the land is not held on those trusts created by the statute and Ordinance made thereunder. Section 37D has in my opinion no work to do, and cannot be used in this situation to obtain rating advantages for the Church of England Property Trustees of the Diocese of Newcastle": at 533. 64The result is that the plaintiff, prior to 16 March 2011 when it deleted the independent, non-charitable objects, could not properly be characterised as a public charity for the purposes of s 556(1)(h) or s 558(1)(c) of the Local Government Act. Meaning of a public benevolent institution 65A public benevolent institution is an institution organised for the relief of poverty, sickness, destitution or helplessness: Perpetual Trustee Co Ltd v Federal Commissioner of Taxation (1931) 45 CLR 224 at 232, 233-234, 235-236; NSW Nursing Service and Welfare Association for Christian Scientists v Willoughby Municipal Council (1968) 16 LGRA 65 at 68; Ashfield Municipal Council v Joyce [1976] 1 NSWLR 445 at 462; Maclean Shire Council v Nungera Co-operative Ltd (1995) 86 LGERA 430 at 432; Dareton Local Aboriginal Land Council v Wentworth Council (1995) 89 LGERA 120 at 126-127. 66The concept of "public benevolent institution" is a narrower concept than that of a "public charity". The concept of a public benevolent institution more closely fits within the ordinary meaning of charitable than in the legal meaning: Dal Pont at 36, [2.28]. Is the plaintiff a public benevolent institution? 67The conclusion reached above in relation to the plaintiff's status as a public charity must also follow in relation to the plaintiff's alternative argument that it is a public benevolent institution. As with a public charity, the existence of independent and collateral objects that are not of a public benevolent nature will operate to deny an institution status as a public benevolent institution: Maclean Shire Council v Nungera Co-operative Society Ltd (1995) 86 LGERA 430 at 432-433; Dareton Local Aboriginal Land Council v Wentworth Council (1995) 89 LGERA 120 at 126-127; Coomealla Aboriginal Housing Co Limited v Wentworth Shire Council (1986) 101 LGERA 10 at 12, 15. 68The objects in clause 2(l), (m), (s) and (t) cannot be characterised as being for a public benevolent purpose. They also cannot be characterised as being ancillary or incidental to the object in clause 2(a) of providing housing for persons of Aboriginal descent, for the reasons given earlier. 69It is noticeable that the statement of the objects in the plaintiff's Memorandum of Association does not have a chapeau specifying an overarching object of relief of poverty, sickness, destitution or helplessness of needy members of the Aboriginal community and specifying that such object is to be achieved through the means of undertaking the activities in the paragraphs listed. This was the drafting approach in Maclean Shire Council v Nungera Co-operative Society Limited (1995) 86 LGERA 430 and was dispositive in the Court of Appeal's decision upholding the Co-operative's status as public benevolent institution. Such an approach was absent in Dareton Local Aboriginal Land Council v Wentworth Council (1995) 89 LGERA 120 and Bignold J held the Aboriginal Land Council was not a public benevolent institution: at 126-128. 70In response to these decisions, the Coomealla Aboriginal Housing Co Limited amended its memorandum of association to adopt a chapeau along the same lines as that in Nungera Co-operative Society Ltd's constitution. Unfortunately, this amendment was made too late for it to be able to applied to a particular rating year in which the Coomealla Aboriginal Housing Co sought exemption from rates on the basis of being a public benevolent constitution. The company's status had to be determined on the basis of the original memorandum before amendment. The original objects and powers of the company, by virtue of their width, diversity, uncertainty and the absence of a dominantly charitable or benevolent purpose, did not qualify as charitable or benevolent purposes: Coomealla Aboriginal Housing Co Limited v Wentworth Shire Council (1998) 101 LGERA 10 at 15. Although not determined, the Court indicated that the reformulated objects in the amended memorandum may be sufficient for the plaintiff in future rating years to be charactered as a public benevolent institution: at 17. 71In conclusion, prior to 16 March 2011 when the plaintiff's Memorandum was altered, the plaintiff cannot properly be characterised as a public benevolent institution for the purposes of s 556(1)(h) of the Local Government Act. Conclusion 72The plaintiff has been unsuccessful in establishing that, prior to 16 March 2011, it could properly be characterised as either a public charity for the purposes of s 556(1)(h) or s 558(1)(c) or a public benevolent institution for the purposes of s 556(1)(h) of the Local Government Act. The plaintiff needed to establish that it had either status in order to be able to defend the Council's action to recover overdue rates and charges and interest for rating years prior to 2011 when the plaintiff's Memorandum was amended. 73The Council has accepted that, after the amendment of the plaintiff's Memorandum of Association on 16 March 2011, the plaintiff could properly be characterised as a public charity for the purposes of s 556(1)(h) and s 558(1)(c). The replacement clause 2 of the Memorandum of Association is different in the fundamental ways earlier described. However, no order is sought in relation to the charitable or benevolent status of the plaintiff after 16 March 2011. 74The plaintiff's summons should therefore be dismissed. As the parties have not addressed on the question of the costs of the proceedings, I will reserve the question of costs to allow the parties an opportunity to address the Court. 75The Court orders: 1. The summons be dismissed. 2. The question of costs is reserved. ********** DISCLAIMER - Every effort has been made to comply with suppression orders or statutory provisions prohibiting publication that may apply to this judgment or decision. The onus remains on any person using material in the judgment or decision to ensure that the intended use of that material does not breach any such order or provision. Further enquiries may be directed to the Registry of the Court or Tribunal in which it was generated. Decision last updated: 26 August 2011