Land and Environment Court New South Wales Medium Neutral Citation: Community Housing Limited v Clarence Valley Council [2014] NSWLEC 193 Hearing dates: 26 June 2014 Decision date: 23 December 2014 Before: Harrison J Decision: (1) Proceedings dismissed. (2) Order the applicant to pay the respondents' costs of the proceedings. Catchwords: RATING - exemption - whether company is a public benevolent institution or public charity - whether land owned by the company exempt from the payment of rates in accordance with Local Government Act s 556(1) (h). Legislation Cited: Housing Act 2001 Land and Environment Court Act 1979 Local Government Act 1993 Cases Cited: Aboriginal Hostels Ltd v Darwin City Council (1985) 33 NTR 1; (1985) 55 LGRA 414 Bodalla Aboriginal Housing Company Limited v Eurobodalla Shire Council (2011) 184 LGERA 315; [2011] NSWLEC 146 Commissioner of Taxation v Launceston Legacy (1987) 15 FCR 527 Dareton Local Aboriginal Land Council v Wentworth Council (1995) 89 LGERA 120 Greater Wollongong City Council v Police Citizens Boys' Clubs (1957) 2 LGRA 54 Joyce v Ashfield Municipal Council (1959) 4 LGERA 195 Lemm v Commissioner of Taxation [1942] HCA 31; (1942) 66 CLR 399 Peabody Pastoral Holdings v Mid-Western Regional Council [2013] NSWLEC 86 Perpetual Trustee Company Ltd v Federal Commissioner of Taxation [1931] HCA 20; (1931) 45 CLR 224 Toomelah v Moree Plains Shire Council (1996) 90 LGERA 48 Warringah Shire Council v Salvation Army (NSW) Property Trust (1943) 15 LGR (NSW) 91 Williams' Trustees v Inland Revenue Commissioners [1947] AC 447; [1947] 1 All ER 513 Category: Principal judgment Parties: Community Housing Limited (Applicant) Clarence Valley Council (First Respondent) Parramatta City Council (Second Respondent) Port Macquarie Hastings Council (Third Respondent) Nambucca Shire Council (Fourth Respondent) Gosford City Council (Fifth Respondent) Coffs Harbour City Council (Sixth Respondent) Representation: Counsel: M Fraser & A Isaacs (Applicant) A Galasso SC (Respondents) Solicitors: Warren McKeon Dickson (Applicant) Marsden Law Group (Respondents) File Number(s): 2013/40922, 2013/40923, 2013/40924, 2013/40925, 2013/40926, 2013/40927 Publication restriction: Nil Judgment 1HIS HONOUR: Clause 3 of the Constitution of Community Housing Limited is in the following terms: "The object for which the Company is established is to be a non profit corporation that: - (a) acquires on its own behalf, or manages or holds as trustee on behalf of any public, government, semi or local government or charitable person, association, bodies, funds, institutions or organizations, land and buildings so that: (i) shelter is provided to persons in crisis and/or who have inadequate access to safe and secure housing; (ii) housing may be provided to low income persons including members from ethnic groups, young people (single, dependent or otherwise), people with disabilities, people who are aged, childless couples, single parent families, families and/or other households in need; (b) provides housing advice and referral services which may assist homeless persons into stable and long term housing. (c) Provide training, vocational and related education, and skills development to improve employment opportunities." 2Section 556(1)(h) of the Local Government Act 1993 provides as follows: "556 What land is exempt from all rates, other than water supply special rates and sewerage special rates? (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,..." 3The company claims to be both a public benevolent institution and a public charity, and contends that the land it owns is used for its purposes as such. It therefore claims that its lands are exempt from the payment of rates. The councils deny the claim to an exemption and have levied rates. The councils have disputed first, that the company is either a public benevolent institution or a public charity and secondly, that the lands that belong to it, upon which the rates have been levied, are used or occupied by the company for its purposes as either a public benevolent institution or a public charity. Preliminary issue 4The councils have raised a preliminary issue in response to the company's claims. That issue arises in the following way. 5The company commenced these proceedings as Class 4 proceedings under s 20 of the Land and Environment Court Act 1979. That section provides relevantly as follows: "20 Class 4-environmental planning and protection and development contract civil enforcement (1) The Court has jurisdiction (referred to in this Act as 'Class 4' of its jurisdiction) to hear and dispose of the following: ... (d) proceedings under sections 673 and 674 of the Local Government Act 1993, (2) The Court has the same civil jurisdiction as the Supreme Court would, but for section 71, have to hear and dispose of the following proceedings: (a) to enforce any right, obligation or duty conferred or imposed by a planning or environmental law or a development contract, (b) to review, or command, the exercise of a function conferred or imposed by a planning or environmental law or a development contract, (c) to make declarations of right in relation to any such right, obligation or duty or the exercise of any such function,..." 6Chapter 15 of the Local Government Act deals with the financing of councils and the levying of rates as part of that financing. Section 20(3) relevantly includes the financing of councils and the levying of rates as a "planning or environmental law". 7The councils have defended these proceedings in part upon the basis that they ought properly to be characterised as a rates appeal, and as such barred by operation of s 574 of the Local Government Act. It is not disputed that the proceedings were not brought within 30 days after service of the rates notices that are the subject of these proceedings. 8The company asserts in effect that s 574 and s 674 provide different and separate statutory rights, and that the provisions operate in addition to one another, not alternatively. The company contends, and has pleaded in reply, that there is no express or implied requirement in the Local Government Act that prohibits the exercise of the right to seek declarations or consequential orders under s 674. That is said to be because by issuing rate notices, the councils have committed breaches of the statutory exemption from the payment of rates for which s 556(1)(h) provides. 9Section 574 of the Local Government Act is relevantly as follows: "574 Appeal on question of whether land is rateable or subject to a charge (1) A person who has an estate in land, or who is the holder of a licence or permit for land under the Crown Lands Act 1989, in respect of which a rates and charges notice is served may appeal to the Land and Environment Court: (a) in the case of a rate-against the levying of the rate on the ground that the land or part of it is not rateable or is not rateable to a particular ordinary rate or a particular special rate, or (b) in the case of a charge-against the levying of the charge on the ground that the land is not subject to any charge (excluding a charge limited under section 503 (2)) or is not subject to the particular charge. (2) An appeal may not be made under this section on the ground that land has been wrongly categorised under Part 3. (3) An appeal must be made within 30 days after service of the rates and charges notice." 10Section 674 of the Local Government Act is relevantly as follows: "674 Remedy or restraint of breaches of this Act-other persons (1) Any person may bring proceedings in the Land and Environment Court for an order to remedy or restrain a breach of this Act. (2) The proceedings may be brought by a person on the person's own behalf or on behalf of the person and on behalf of other persons (with their consent), or a body corporate or unincorporated (with the consent of its committee or other controlling or governing body), having like or common interests in those proceedings. (3) Any person on whose behalf proceedings are brought is entitled to contribute to or provide for the payment of the legal costs and expenses incurred by the person bringing the proceedings." 11"Breach" is defined in s 672 as follows: "672 What constitutes a breach of this Act for the purposes of this Part? In this Part: (a) 'a breach of this Act' means: (i) a contravention of or failure to comply with this Act, (ii) a threatened or an apprehended contravention of or a threatened or apprehended failure to comply with this Act, and..." 12The councils contended that it is on the contrary apparent from the way in which the company has framed its case that its only issue with the rates notices concerns whether the lands were rateable by virtue of the exemption under s 556(1)(h). No other criticism is directed to the councils' conduct. 13Similarly, the evidence relied upon by the company, contained in the respective affidavits of Matthew Sweeney, the company's chief financial officer, directs attention to the factual elements required in order to establish an exemption under s 556(1)(h): charitable status, ownership and use of the land. Mr Sweeney also emphasises the correspondence passing between the company and the councils concerned touching the claims for an exemption. No other issue has been identified. 14The question of whether or not a levy of rates by a council "on the ground that the land...is not rateable" is the very issue addressed on an appeal pursuant to s 574. The company's case is therefore properly to be characterised as an appeal under that section. Put another way, nothing that the company now raises could not have been raised in an appeal under s 574. 15The councils also supported their opposition to the company's claims by reference to a comparison between s 574 and s 674 of the Local Government Act as a matter of statutory construction. Broadly, the councils contended that a specific right of appeal against the levying of a rate upon the ground that the land is not rateable precludes the same matter being raised as an alleged breach of the Act. No authority has been cited for that proposition. The councils' argument was in effect that the general breach provisions ought not as a matter of construction to derogate from the particular time bar concerned with rate appeals. Disposition of the preliminary issue 16It seems to me that it is inaccurate to characterise the company's claims for relief as an appeal. The company claims an exemption from the payment of rates levied by the respective respondents. The company does not appeal against the rate that has been levied but rather challenges the entitlement of the councils to levy the rates in the particular circumstances in the first place. If, as the company contends, the lands are exempt from the payment of rates, the councils have levied them incorrectly. 17Quite apart from whether or not the company could also have appealed in accordance with s 574, Chapter 15 of the Local Government Act deals with "How are councils financed?" That includes the levying of rates. Chapter 15 is expressly defined as a "planning or environmental law" in respect of which the Court has jurisdiction. The reference to Chapter 15 among the limited parts of the Local Government Act that are subject to the open standing provision so as specifically to include these proceedings within the Court's Class 4 regime is instructive. Presumably there would have been no reference to Chapter 15 in s 20 of the Land and Environment Court Act if it had been intended to restrict the company's claims for relief in the manner contended for by the councils. Moreover, it might in such circumstances have been anticipated that a review of the decision of a council in the Class 4 jurisdiction conferred by s 674 would have expressly prohibited or otherwise expressly limited the appeal process anticipated by s 574. 18In any event, the relief sought by the company is clearly wider, and goes further, than the relief contemplated by s 574. The company's summons includes claims for the following declarations and orders: "1. A declaration that the applicant is a public benevolent institution and/or a public charity for the purposes of s 556(1)(h) of the Local Government Act 1993. 2. A declaration that the Land belongs to the applicant and is used or occupied by the applicant for the purposes of the applicant within the meaning of section 556(1)(h) of the Local Government Act 1993. 3. A declaration that the Land is exempt from all rates which have been or are levied on the Land by the respondent after the applicant became the registered proprietor of the Land. 4. An order that the respondent pay the applicant an amount equal to the amount paid previously by the applicant for rates on the Land declared to be exempt pursuant to claim 3 above. 5. A declaration that the rates notices issued by the respondent in respect of the Land on 19 July 2013 were issued in breach of s 554 and s 556(1) of the Local Government Act 1993. 6. A declaration that the rates notices issued by the respondent in respect of the Land on 19 July 2013 are a nullity and/or invalid. 7. Order that the respondent Council be restrained from taking any steps to enforce the rates notices issued by the respondent in respect of the Land." 19If the company's land is exempt from the payment of rates, then the service of rates notices is in contravention of ss 554 and 556 of the Local Government Act as there would be no pre-existing entitlement to levy them. The company would clearly be entitled to seek a declaration concerning the validity of such a rate notice, as well as consequential orders. Even a casual appreciation of the scope and content of the company's claims in this case reinforces my conclusion that these proceedings are properly constituted. The proceedings are not an appeal contemplated by s 574 of the Local Government Act. They cannot, and should not, be characterised in the limited way for which the councils contend. 20Nor am I satisfied that the councils' preferred statutory interpretation of the arguably competing sections is sound. Accepting that the general ought not ordinarily to exclude the particular, the principle can only apply if the subject matter of the provisions is the same. In the present case there is a clear distinction between a challenge to a rate properly levied by a council authorised and entitled to do so on the one hand, and a challenge to the right or power of the council legally to levy the subject rate at all on the other hand. An appeal by the company in the present circumstances would imply or necessitate an acceptance by the company of the councils' right to levy the rates in question. That right is far from accepted or conceded and is on the contrary controversial. It may be that if the company's challenge to the councils' right to levy the rates is unsuccessful that it will have lost its right to appeal by effluxion of time in the absence of a stay. That is, however, not an issue that presently arises. 21It follows, in my opinion, that these proceedings are not barred by operation of the time limit that constrains appeals under s 574 of the Local Government Act. Principal issues for determination 22The parties have identified a series of issues that arise for determination. These are dealt with in turn. Characterisation: public benevolent institution or public charity 23Is the company, and was it at the time that the rates were levied, a public benevolent institution or a public charity for the purposes of s 556(1)(h) of the Local Government Act? 24It is possible to be both: Warringah Shire Council v Salvation Army (NSW) Property Trust (1943) 15 LGR (NSW) 91; Greater Wollongong City Council v Police Citizens Boys' Clubs (1957) 2 LGRA 54; Dareton Local Aboriginal Land Council v Wentworth Council (1995) 89 LGERA 120. 25Preston CJ dealt with the issues in helpful detail in Bodalla Aboriginal Housing Company Limited v Eurobodalla Shire Council (2011) 184 LGERA 315; [2011] NSWLEC 146. The proper characterisation is to be made only "by reference to the objects and powers for and with which the [institution] is constituted, not by reference to the activities which are in fact being pursued by the [institution] on the lands it owns": Bodalla at [10]. Proper characterisation is therefore to be determined by reference to the terms of the company's constituting documents and not its activities: Bodalla at [14]. 26The institution must be "public" in the sense that it must be of a public character and not merely for the benefit of particular private individuals. An institution will be public if it is for the benefit of the community or of an appreciably important class of the community: Williams Trustees v Inland Revenue Commissioners [1947] AC 447; [1947] 1 All ER 513, cited by Stein J in Toomelah v Moree Plains Shire Council (1996) 90 LGERA 48 at 53. 27Preston CJ explained the meaning of "public benevolent institution" in Bodalla at [65] and [66] as follows: "[65] A 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. [66] The 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]." 28The term "public charity" was also discussed by his Honour in Bodalla at [20], [22] and [23] as follows: "[20] In 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.' ... [22] The 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. [23] The 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." 29The inquiry into the charitable status of an association is an "all or nothing exercise": Bodalla at [24]. His Honour proceeded to explain the reasonable approach to be taken when construing the objects of an association at [26] - [27]: "[26] In 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.' [27] In 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]'." 30In the present case the determination or ascertainment of the objects and powers of the company involves the not uncomplicated dissection of the tortured wording of clause 3 of its Constitution. The company's submissions 31The company proffered the following submissions upon how to approach the task. 32The single object of the company is comprised by the words from the commencement of clause 3 to the end of clause 3(b). Clause 3(b) ends with a full stop. Clause 3(c) then follows as a separate sentence and must be given some work to do. It can be construed in one of the following ways. Either, clause 3(c) forms part of a single object of the company, but is merely ancillary, incidental, dependent or concomitant to that object, which is fully expressed in clause 3(a) and 3(b). The single sentence in clause 3(c) does not make sense on its own as an object. If clause 3(c) were a separate independent object of the company, it would remain unclear who were the persons with whom it was intended to deal. Alternatively, clause 3(c) is a separate object. The company acknowledged that such a construction runs counter to the terminology of the Constitution that, with the exception of clause 5, refers to a single object, but submitted that, even if a separate object "to provide training, vocational and related education, and skills development to improve employment opportunities" it arguably amounts to one for the advancement of education: see Bodalla at [22]. 33The non-profit status of the company is irrelevant. 34The company argued that the object identified in clauses 3(a), 3(b) and 3(c) falls comfortably within one of the first three of the four identified categories referred to by Preston CJ in Bodalla at [22]. Identification of a group of persons with a special character will render an otherwise neutral purpose charitable: Aboriginal Hostels Ltd v Darwin City Council (1985) 33 NTR 1; (1985) 55 LGRA 414 at 428. Three such groups can be identified here: (1)Clause 3(a)(i): "persons in crisis and/or who have inadequate access to safe and secure housing"; (2)Clause 3(a)(ii): "households in need"; (3)Clause 3(b): "homeless persons". Clause 3(c) is said to apply to all three of these categories listed above. 35The company submitted that it was therefore a public charity within the meaning of s 556(1)(h). 36Moreover, the company contended that, on these bases, it is also a public benevolent institution for the purposes of s 556(1)(h) as the objects are clearly for the relief of poverty, suffering or misfortune: Perpetual Trustee Company Ltd v Federal Commissioner of Taxation [1931] HCA 20; (1931) 45 CLR 224 at 233. In addition, the object of the company to acquire land and buildings to provide "shelter to persons in crisis and/or who have inadequate access to safe and secure housing" and "housing to other households in need" is one for the relief of poverty: Toomelah Co-operative Ltd v Moree Plains Shire Council at 56. 37The company accepted that the concept of a public benevolent institution was narrower than the concept of public charity, but submitted that it met the criteria for both. The councils' submissions 38Although expressed as a single object in clause 3 of the company's Constitution, its object is clearly enough split into three components. The councils contended that this was irrelevant. Each of the subparagraphs of clause 3 is contained in a single objects clause. It is clear from Bodalla at [24] that where there are multiple components of purpose, the conclusion must be an all or nothing exercise in the sense that there is no such thing as a partly charitable association. The justification for this is that to the extent that non-charitable objects exist, they must be found to be incidental, subsidiary, collateral or subordinate to the charitable objects: Bodalla at [25]-[26]. 39The reference to a single object in clause 3 of the company's Constitution is necessarily a reference to an object containing three parts. The councils contended that an analysis of the three subparagraphs of clause 3 demonstrated that an exclusively charitable purpose could not be identified or isolated. That is for the reason that clause 3(a) is concerned with the holding of land for two purposes, only one of which is said to be charitable, that clause 3(b) is concerned with the provision of advice, which might be charitable to the extent that it is concerned with "homeless persons" and that clause 3(c) could not on any construction be regarded as charitable in the strict sense. 40According to the councils, no single charitable object has been or can be identified other than by reference to all three subparagraphs. That leads to the inevitable result that the charitable purposes become infected with non-charitable purposes. 41The councils submitted that the company did not qualify as a public charity. They contended that a reference to "low income persons" was insufficient to engage the concept of poverty in any relevant sense. This was said to be for a number of reasons. 42First, the provision of housing to "low income persons" is separate from the provision of shelter to persons in crisis: clause 3(a)(i). If the latter is a charitable purpose, the provision of housing to the low income persons arguably contaminates that purpose. 43Secondly, the category of "low income persons" does not engage the charitable purpose of the relief of poverty. The concept of low income persons is not defined. Nor is it a recognised expression or term of art. Even if the expression finds some mention in delegated legislation, the company's Constitution does not expressly or otherwise incorporate or adopt such references. Who are or maybe low income persons is an ambulatory concept that is entirely dependent upon the subjective decisions of the company from time to time. 44Thirdly, poverty is a relative concept: see Lemm v Commissioner of Taxation [1942] HCA 31; (1942) 66 CLR 399 and Commissioner of Taxation v Launceston Legacy (1987) 15 FCR 527 at 540. "Low Income" must therefore also be a relative, not to say nebulous, concept. According to the councils' submissions, the company's Constitution is effectively meaningless because "low income" can only ever be determined or assessed by reference to an unstated and correspondingly uncertain dollar amount. The need to make a subjective assessment in order to give content to the concept therefore disconnects it from any identifiable charitable purpose. 45Fourthly, the relative nature of the concept of poverty is also highlighted relevantly for present purposes by the text and context of the Local Government Act. For example, s 556(1) exempts some, but not all, Crown land from rates. The objects of the Housing Act 2001 include the provision of affordable housing or, in other words, housing that is affordable by persons on low incomes. The councils submitted that in reconciling any ambiguity in the concept of "low income housing" referred to in clause 3 of the company's Constitution, which the company says constitutes poverty, it is necessary to take into account the fact that the statutory scheme of the Local Government Act does not exempt the Crown from rates in its provision of not dissimilar housing: s 560(4). 46Fifthly, the councils contended that it is wrong to regard members of "ethnic groups" or "young people" or "childless couples" as necessarily "low income persons". Moreover, "other households in need" is not a characterisation of that to which clause 3(a)(ii) is directed but is instead an example of its primary object. Clause 3(a)(ii) is therefore not incidental or ancillary to any other object or objects but in fact contaminates the other object or objects. 47Sixthly, whereas the councils accept that "homeless persons" referred to in clause 3(b) is a charitable object, the provision of training and so forth in clause 3(c) is not. Clause 3(c) cannot be treated as applying to all previously identified categories. Even if that approach were permissible, it fails to identify any relevant exclusively charitable purpose. 48Seventhly, the fourth or catch-all head of charitable purpose identified in Bodalla at [22] is not engaged simply because the suggested purposes are beneficial to the community, not falling specifically under any of the preceding three heads. The fourth head does not operate as a catch-all except to the limited extent that some nominated charitable object is contemplated by any one of the three preceding categories. 49The councils also submitted that the company did not qualify as a public benevolent institution. Although narrower than the concept of public charity, it is still necessary that it be an institution organised for the relief of poverty, sickness, destitution or helplessness. The councils reaffirmed in this context the arguments concerning poverty that it pressed concerning public charity. Accordingly, if the object concerning low income persons is relevantly disconnected from the concept of poverty, or that clause 3(c) is alone aligned with it, or disconnected from the other objects, then the "all or nothing" requirement applies so as to disentitle the company from being characterised as either a public charity or a public benevolent institution. 50In all of these circumstances the councils contended that, even before or without reference to the "use" requirement, s 556(1)(h) did not apply to the company. Consideration - benevolent or charitable 51Despite the accepted fact that clause 3 of the company's Constitution is infelicitously drafted, its apparent structural and semantic difficulties do not disguise at least one fundamental problem for the company. That problem is, in my opinion, that clause 3(c) identifies as one of the company's purposes a non-charitable object that is not merely incidental to the company's charitable purpose identified or expressed in the preceding words of the clause. 52I hasten to observe that such a conclusion is based upon an acceptance, or in my view an assumption, that clauses 3(a) and 3(b) qualify as charitable purposes or as a charitable purpose. That is important because an assessment of the question of whether or not clause 3(c) is or may be relevantly non-charitable but nevertheless incidental to the company's charitable purpose necessitates the anterior identification of a charitable purpose. 53The provision of training, vocational and related education, and skills development to improve employment opportunities is in my opinion neither an independently charitable purpose nor merely incidental to some otherwise evident or identifiable main charitable purpose of the company. It is fundamentally general in its terms and incapable as a matter of language of being accommodated within any recognised description or category of charitable purpose. "Training" does not have any charitable content standing alone and does not acquire any from the context in which it appears. The same can be said of "vocational". The reference to "related education, and skills development" does not succeed in qualifying the clause as an independent charitable purpose for the advancement of education. Even if it were capable of meeting the description of a charitable purpose for the advancement of education, the exemption sought by the company would not be available to the extent that there is no evidence that any of its properties are used for any such purpose. 54However, I am satisfied that the balance of clause 3 of the company's Constitution qualifies as charitable. I consider that clause 3(a)(ii) is incidental to clause 3(a)(i), which standing alone is reasonably and fairly to be read as a provision for the relief of poverty, and that clause 3(b) is either incidental to that charitable purpose or capable of standing alone as a charitable purpose for the relief of poverty. 55Much attention has been directed in the parties' submissions to the meaning of low income persons. It is obviously enough a relative term, not an absolute concept. However, that alone cannot destroy its ability to mark out the relief of poverty as its purpose. This is for the obvious reason that poverty is itself a relative concept, requiring a subjective assessment of who is or may be a person in poverty. Distribution of charitable funds to needy recipients for the relief of poverty necessarily calls for a decision about the qualifications of the prospective recipients. That does not mean that bequests for the relief of poverty fail in the absence of a definition of the concept. 56The provision of shelter to persons in crisis who have inadequate access to safe and secure housing is in my opinion definitively charitable. Shelter is not relevantly to be distinguished from housing. Shelter in clause 3(a)(i) must mean the same as housing in clause 3(a)(ii). A later reference to a non-exclusive list of people or groups in clause 3(a)(ii) who may be considered to qualify does not indicate a non-charitable purpose that is not incidental to a purpose that is charitable. Clause 3(a)(ii) neither confines and restricts the operation of clause 3(a)(i), nor purports to identify a non-charitable purpose that is not incidental to it. The proposition that "low income persons" is not necessarily always coextensive with the existence of poverty does not mean that no low income persons may never be poor. 57In summary, clause 3(c) does not amount to or describe a charitable purpose. It cannot be saved as incidental or ancillary to a charitable purpose. The all or nothing rule means that the company does not qualify as a public benevolent institution or a public charity. To the extent that clause 3(c) is neither charitable nor incidental to a charitable purpose, the first limb of s 556(1)(h) has therefore not been satisfied. As will appear below, however, I consider that the company has satisfied the second limb of that section. The company's use of the lands The company's submissions 58The question of whether the company's lands are used or occupied for the purposes of a public charity or public benevolent institution is determined by comparing the purpose of the landowner as disclosed in its instruments with the actual use to which the land is put: Joyce v Ashfield Municipal Council (1959) 4 LGERA 195; Aboriginal Hostels Ltd v Darwin City Council at 427. The company contended that in the present case its lands were used for purposes falling within the ambit of its objects. 59Mr Sweeney's uncontradicted evidence was that each of the company's properties was either occupied by a tenant or was available to be tenanted. All of the properties are rented to low income tenants in the manner described by him under the heading "tenancy selection". The properties are leased at a reduced rate, compared to market, "particularly providing housing to those persons identified in clause 3(a)(i) and (ii) of its Constitution." 60The company submitted that the mere fact that some payment was made for accommodation did not detract from the general proposition that the land in question was still used or occupied by the owner for the purpose identified in its constitution: Aboriginal Hostels at 428. As Stein J explained in Toomelah Co-operative at 54: "It is not a bar to benevolent or charitable status that the Society charges rent for the houses, nor that it conducts activities of a commercial nature..." The councils' submissions 61The councils submitted that based upon the evidence in these proceedings, the only possible candidate for use of any of the company's lands is clause 3(a)(ii) of the Constitution. That is said to be because there is no evidence, and the company does not suggest, that any of the properties are utilised to provide shelter (as opposed to housing), housing advice or referral services, or training or vocational and related education, to which clause 3 otherwise refers. 62The s 556(1)(h) exemption process is a property specific process. Ownership alone is insufficient. In assessing and determining the claimed exemption, each property being considered must be used for the requisite purpose. The councils contended that, even notwithstanding the evidence of Mr Sweeney, there is insufficient material upon which I could make the required determination. The later affidavits or Mr Birkefeld do not assist. 63The company has attempted to demonstrate that it qualifies for the exemption by indicating that all of its properties are rented to persons "categoried [sic, categorised] as very low income, low income or moderate income": Birkefeld at [12]. Clearly even on the company's own approach there is a distinction between low and moderate income earners. A person on a moderate income is not someone contemplated by the objects in the Constitution. The notion of "very low income" is presumably an advance upon the concept of merely "low income". 64Arguably more problematic is the assertion that one third of the company's properties are intended to be occupied by very low income tenants, one third by low income tenants and the remaining third by moderately low income tenants: Birkefeld at [20]. Mr Birkefeld originally conceded at [22] of his 17 June 2014 affidavit that those earning "moderate incomes" are not persons for whom it is the company's object to provide housing, but that paragraph was later disavowed in his 24 June 2014 affidavit: see below. According to the councils, the evidence does not make clear which properties are tenanted in any particular category. Mr Birkefeld's assertion that the income from properties let to other than low income tenants was in any event for the overall purposes of the company is necessarily beside the point: it is neither authorised by s 556(1)(h) nor within the terms of clause 3. 65The councils also emphasise that the evidence does not make clear which properties, if any, are tenanted in fact, and therefore "used" in the requisite sense contemplated by s 556(1)(h). Mr Sweeney makes a number of references in his affidavit to the properties being "occupied by a tenant or...available to be tenanted." The councils maintained that availability did not satisfy the requirement of use. That position is effectively compounded by Mr Birkefeld's evidence conceding that at least one third of the properties are retained for occupation by other than low income persons. 66A number of the properties are also vacant land: Sweeney at [16]. An intention to develop the land is insufficient for the purposes of s 556(1)(h) unless the use is made manifest by the commencement of some activity on it: Peabody Pastoral Holdings v Mid-Western Regional Council [2013] NSWLEC 86 at [72]. Vacant land unaccompanied by either a relevant approval for use or actual use cannot trigger the claimed exemption, quite apart from the question of whether or not the purpose qualified as a clause 3 purpose. 67In summary, use is critical and mere ownership is insufficient to establish an exemption under s 556(1)(h). Even if the company has established ownership, it has not established that each property is used for one of its charitable purposes. Consideration - use of the lands 68One immediately obvious fact is that the evidence does not appear to disclose that any of the properties are used to provide training, vocational and related education and skills development to improve employment opportunities. Even assuming that I were in error in finding that clause 3(c) was not charitable, or was not incidental to an otherwise identified charitable purpose, with the consequent disentitling result for the company's status as a public benevolent institution or public charity, no rates exemption under s 556(1)(h) would be triggered by that purpose in any event. Both relevant ownership and use are required. However, a failure to use properties for a legitimate charitable purpose contained in the company's objects clause would not matter if the properties were otherwise used for some other charitable purpose. 69In order to establish the ways in which its properties were used, the company relied upon the affidavits of Matthew Sweeney dated 13 February 2014 and filed in each proceeding. Some reference to paragraphs of those affidavits has already been made. The presently relevant portions of Mr Sweeney's affidavits are as follows: "Use and occupation of properties by CHL [16] Each of the properties is occupied by a tenant of CHL or is available to be tenanted. [17] CHL leases its properties to tenants at a reduced rate, particularly providing housing to those persons identified in cl 3(a)(i) and (ii) of its Constitution. The reduced rate of rent is significantly less than what the market value for rent is for an equivalent property. That reduced rate is set applying CHL's 'Housing Allocation and Rent Setting Policy'. The application of the 'Housing Allocation and Rent Setting Policy' facilitates fulfilment of the Objects in clause 3 of the Constitution. A copy of CHL's 'Housing Allocation and Rent Setting Policy' is at pages 32 to 36 of Exhibit MS1. [18] All of the properties are rented to low income tenants. Low income tenants are persons chosen through the selection criteria referred to under the heading 'Tenancy Selection' in this affidavit. The adoption and application of the tenancy selection procedures provides an objective and transparent method of CHL fulfilling its objects, but in particular object 3(a)(ii) of the Constitution. [19] Rent limits are set in accordance with the 'Housing Allocation and Rent Setting Policy'. The application of that policy CHL ensures that low income persons can afford to live in its housing, and that housing goes to those in need of the help that CHL offers. Tenancy Selection [20] CHL only selects tenants who are eligible for 'social housing' or 'affordable housing' to rent the properties. [21] For 'Social Housing' prospective tenants, CHL voluntarily participates in the common access system known as Housing Pathways as a method of tenant selection. CHL is under no obligation to use Housing Pathways to choose tenants for the Properties but do so for convenience, including as a method of selecting occupants for the properties owned by CHL. [22] CHL is registered with Housing NSW as a social housing provider. There are numerous other social housing providers registered with NSW Housing. NSW Housing manages and controls the Housing Pathways system. [23] For 'affordable housing' prospective tenants, CHL participates in 'NRAS'; the National Rental Affordability Scheme ('NRAS') eligibility requirements. This is an income test based on a household income limit indexed each year. [24] NRAS is a federal government incentive scheme for housing providers. For each property that CHL rents to a NRAS tenant the requirements for participation in the scheme include that the rental rate must not be more [than] 75% of market rent. [25] The utilisation of either the Housing Pathways or NRAS tenancy selection procedures provides an accountable and transparent method for CHL to ensure as fully as possible that tenants occupying CHL properties are those in need of the help or support of CHL, in fulfilment of its objects. [26] When one of CHL's properties becomes available CHL selects an appropriate tenant based on its selection criteria referred to above and offers the property to them. Once the offer is made it is up to the client to inspect the property and choose to accept or reject the offer. [27] Following selection of a tenant and appointments to a particular property, through either system, each of the tenants of CHL is managed in accordance with CHL's 'Tenancy Management Procedure-NSW' dated 1 October 2011. [28] Where a low income tenant experiences exceptional circumstances such as health problems, changing family circumstances or regional isolation CHL has in place the following policies to ensure that the tenant can continue to afford to live in CHL's housing: (i) Exceptional circumstances - Tenancies at Risk Policy; (ii) Linking Tenants to Support Policy; and (iii) Hardship Policy. [29] The Exceptional Circumstances procedure allows CHL's usual tenancy management procedures to be varied to cater for those who are experiencing increased hardship. The adoption and application of the Exceptional Circumstances procedure provides a further objective and transparent method of CHL fulfilling its objects." 70The company also relied upon the affidavits of Frank Birkefeld dated 17 June 2014 and 23 June 2014. Paragraphs [20] and [21] of the earlier affidavit are as follows: "Additional matters [20] As manager for NSW I implement the management practice of CHL that so far as possible the properties owned in NSW by CHL are occupied, (a)One third by very low income tenants, (b)One third by low income tenants, (c)One third by moderate income tenants. [21] All tenants must fall within the income eligibility criteria for affordable housing set in the manner explained by Mr Sweeney 'Tenancy Selection'." 71Paragraphs [1] to [9] of Mr Birkefeld's second affidavit are as follows: "[1] I made an affidavit sworn in these proceedings dated 17 June 2014. I have had the chance to carefully consider that affidavit over the weekend. I wish to make one correction and provide some additional information. Correction [2] The correction that I wish to make is that I no longer regard paragraphs [22]-[25] of my affidavit sworn in these proceedings on 17 June 2014 to be correct. [3] To make that correction, I will describe how CHL identifies the 'low income persons ... And/or other households in need ...' of access to safe and secure housing as referred to in object 3(a) of the CHL Constitution. [4] The Community Housing Eligibility Policy issued by Housing NSW establishes the categories of very low, low and moderate income. A copy of that Policy is annexed hereto and marked 'FB1'. CHL applies the terms of that Policy, which then sets the eligibility for social housing, affordable housing, co-operative housing, transitional housing and crisis accommodation managed by community housing providers in NSW as referred at paragraph 2 of that Policy. The limits that apply to each category of income referred to are then set annually by the Centre for Affordable Housing Guidelines. Housing NSW sets the income limits that apply to Social Housing accommodation. [5] The 'low income persons' referred to in clause 3 of the Constitution of CHL: · include all of the categories set by the Community Housing Eligibility Policy, but · is not a term which is derived from the Community Housing Eligibility Policy. [6] Those households with the highest income under the by the Community Housing Eligibility Policy are those categorised as being of 'moderate income'. My personal knowledge, having worked with CHL and Community Housing Mid-North Coast Ltd, is that persons and households identified as 'moderate income' under that Policy do not have sufficient household income to obtain adequate access to safe and secure housing as well as being able to meet the normally expected expenses of each such household. Those persons are therefore either individual households or multi person households in need of safe and secure housing. [7] Persons who earn even less individually or by household in the very low income or low income categories as set by the Policy have the same need but more acutely. [8] As I previously adopted from Mr Sweeney's affidavit selection of clients by CHL applying this method meets the objective of providing housing to 'households in need' of 'access to safe and secure housing'. [9] By this day to day practice the utilisation of the categories 'Very Low, Low and Moderate Income' as determined by the Community Housing Eligibility Policy produce the low income persons or other households in need which it is the object of CHL to find homes for, as referred to in clause 3(a) CHL's Constitution." 72The company either owns or will soon own hundreds of properties. Having regard to the evidence, and in the nature of things, some of them will be tenanted and some of them will be vacant from time to time. Provided they are owned for purposes that otherwise qualify for an exemption under s 556(1)(h), I do not consider the fact that some of the properties are or may be temporarily untenanted means that they are not relevantly being "used" by the company for its purposes. Part of that use includes the holding of properties in anticipation of letting them to appropriate tenants. It is unrealistic to suggest otherwise in my view. The position would be different if the properties or some of them were clearly used for some purpose not contemplated by clause 3. The situation is not analogous to the permissible use status of a property that is, for example, dependent upon the receipt of development consent or approval, without which the land could not legally be used for the purpose in question. 73Although the issue is academic, having regard to the conclusions I have reached regarding the charitable or benevolent status of the company, I am satisfied that the properties held by the company are used for its nominated clause 3 purposes. There is no evidence to the contrary. The admittedly general and omnibus nature of the evidence of Mr Sweeney and Mr Birkefeld, to the effect that the company's properties are all leased to qualified tenants, and are never used for any other purpose, is sufficient to establish that the use requirement of s 556(1)(h) has been satisfied. 74Nor am I troubled that any of the properties may be leased to people with "moderate incomes". Different adjectival gradations of "income", such as "very low", "low", or "moderate" do not foreclose the company's ability to decide who is or may be properly the beneficiary of its assistance for the relief of poverty. The current issue is the use limb of the s 556(1)(h), not the purpose limb. The non-exclusive terms of clause 3(a)(ii) mean that housing may be provided to households in need. That description is apt in present day circumstances in particular to contemplate people who are in need of relief from poverty, in the form of the provision of shelter or housing, notwithstanding that their income may in the opinion of the company be moderate, whatever "moderate" may mean at any particular time. 75I am satisfied that the company's properties are used by it for the purposes identified in clause 3(a) and 3(b) of its Constitution. Conclusions and orders 76In a document filed by the company on 11 June 2014 it identified a series of seven issues for trial. Having regard to those issues, the form of the relief claimed by the company and the conclusions to which I have come, it is only necessary to make a single order dismissing the proceedings and making a consequential order for costs. For example, even though I have come to the conclusion that the company is using its properties for the purposes identified in clause 3 of its Constitution, that is of no general or wider significance than is indicated by the terms of s 556(1)(h) of the Local Government Act. That provision was the single and central focus of this litigation, and there is no warrant for making declarations about some limited state of affairs upon which the company may have succeeded if it has no utility beyond the context of the company's claim for an exemption under that section. If the parties have a different view I would be prepared to entertain submissions about it. 77Unless otherwise persuaded to the contrary, however, I consider that it is sufficient simply to make the following orders: (1)Proceedings dismissed. (2)Order the applicant to pay the respondents' costs of the proceedings. ********** 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: 23 December 2014