[2010] HCATrans 154
IN THE HIGH COURT OF AUSTRALIA
Office of the Registry
Sydney No S82 of 2010
B e t w e e n -
AID/WATCH INCORPORATED
Appellant
and
COMMISSIONER OF TAXATION
Respondent
FRENCH CJ
GUMMOW J
HAYNE J
HEYDON J
CRENNAN J
KIEFEL J
BELL J
TRANSCRIPT OF PROCEEDINGS
AT CANBERRA ON TUESDAY, 15 JUNE 2010, AT 10.17 AM
Copyright in the High Court of Australia
MR D.L. WILLIAMS, SC: May it please the Court, I appear with my learned friends, MS S. KAUR‑BAINS and MS R.L. SEIDEN, for the appellant. (instructed by Maurice Blackburn Lawyers)
MR D.M.J. BENNETT, QC: May it please the Court, I appear with my learned friends, MS M.N. ALLARS and MR D.F.C. THOMAS, for the respondent. (instructed by Australian Government Solicitor)
FRENCH CJ: Yes, Mr Williams.
MR WILLIAMS: Aid/Watch is a small not for profit organisation incorporated in 1993. In 2006 it had total income of approximately $130,000. It has a small number of part‑time staff but much of its work is done by volunteers. In 2000 the Commissioner endorsed Aid/Watch as a charitable institution under the relevant provisions of the Income Tax Assessment Act. In 2005 Aid/Watch received similar endorsements under the Fringe Benefit Tax and Goods and Services Tax legislation. In 2006 the Commissioner revoked Aid/Watch’s status as a charitable institution on the basis that its objects previously accepted to be charitable were of a political nature.
In 1938 this Court in Royal North Shore Hospital v Attorney‑General (NSW) (1938) 60 CLR 396 described the political disqualification concept as being a somewhat vague and indefinite objection to gifts for public purposes and observed that the law was in an unsatisfactory state. Unsatisfactory as it was in 1936, in our submission, it has become more so subsequently, particularly in light of some English decisions, in particular, National Anti‑Vivisection Society v Inland Revenue Commissioners [1948] AC 31 and McGovern v Attorney‑General [1982] 1 Ch 321. That unsatisfactory nature of the law, we submit, has continued and been perpetuated in the Full Court’s decision in this matter.
In our submission, the unsatisfactory development of the law has in part arisen from the use of the label “political” in the context of charitable trusts. It has in part arisen from problems with the shaky legal foundation upon which the political objection has been erected and it has in part arisen from what might be described as an accident of legal history, or at least an historical oddity, occurring in National Anti‑Vivisection when the law lords directed themselves to a superseded edition of Tyssen published in 1888. I will be taking your Honour to some of those cases in the course of my argument but by way of overview, may I make these observations.
First, it does not appear that the label “political” was used in connection with objections to charitable trusts or charitable organisations in any of the decisions which we have been able to find before Lord Parker’s judgment in Bowman. Secondly, the case law cited in support of the proposition by Lord Parker in Bowman v Secular Society Limited was not authority for the broad proposition enunciated. The authority relied upon, De Themmines v De Bonneville [1828] 5 Russel 288 did not use the label “political”. Instead it was decided on public policy grounds.
Thirdly, Lord Parker’s remarks were not, we would submit, widely accepted at the time. I will be taking your Honours to some of the earlier text writers in that connection. Fourthly, the label received some use in the temperance cases that occurred in the late 1920s, Inland Revenue Commissioners v Temperance Council of the Christian Churches of England and Wales (1926) 136 LT 27, Justice Rowlatt made reference to that label, then the Court of Appeal in Re Hood in [1931] 1 Ch 240. The political disqualification notion became entrenched in the common law with the House of Lords’ decision in National Anti-Vivisection. Prior to that it had not figured prominently in the case law historically, and in the first instance and Court of Appeal decisions in the ‑ ‑ ‑
GUMMOW J: Perhaps we need to look specifically at what Lord Parker was saying in Bowman.
MR WILLIAMS: Yes, I intend to take your Honours to that. I just wanted, by way of overview, to indicate where the argument was going before doing so.
In National Anti-Vivisection the principle became entrenched after, it would appear, some private research done by Lord Simonds after the case had reserved. Lord Simonds, when I come to National Anti-Vivisection, makes the point that there were, in fact, two points to be determined in that case. The shorter point was whether the main purpose of the Society was of such a political character that it could not be regarded as being charitable. In referring to that matter, his Honour went to the well‑known ‑ ‑ ‑
GUMMOW J: His Lordship.
MR WILLIAMS: Yes, my apologies. His Lordship went to the well‑known passage from Lord Parker in Bowman. In doing so, his Lordship acknowledged that the case that Lord Parker had referred to –De Themmines - had turned on public policy grounds and that there was a paucity of authority for the proposition. His Honour then took the critical step of doing some private research and came upon Tyssen, The Law of Charitable Bequests, the first edition, which he said was of high authority.
His Lordship noted that it did not appear to have been cited to the court below and it certainly was not cited to the House of Lords. It appears that there may have been a good reason for that situation. The case was argued over a five‑day hearing before the House of Lords. The counsel who appeared included the Attorney‑General, three King’s Counsel and four juniors.
The version of Tyssen that was referred to by Lord Simonds and shown to the other Law Lords was a superseded version of Tyssen that had been published in 1888 before Pemsel’s Case. As it transpired, the second edition, published in 1921, which was current at the time, dealt with the matter in a rather different way. I will be handing up these in a moment, your Honour, but in the later edition of Tyssen the frequent references to the label “political” in the first edition have been replaced by sections of the text which recorded the cases that had been originally referred to under the rubric of political as now being instances of cases involving public policy considerations.
GUMMOW J: The public policy being what?
MR WILLIAMS: Gifts which were void for being contrary to public policy.
GUMMOW J: Yes, but what is the content of public policy? It is a slogan. What is its content?
MR WILLIAMS: The content was referable to the particular cases that were referred to in De Themmines. It was a gift that was contrary to public policy for reasons that the trust was deemed to be a superstitious use and against public policy. We have set out the short facts in relation to that matter and the finding of the court in paragraph 48 of our written submissions.
FRENCH CJ: You say ultimately that the political disqualification principle rests on foundations of sand historically to be substituted by some form of public policy circumscription, as I read your submission towards the end.
MR WILLIAMS: Yes.
FRENCH CJ: Are you going to formulate that in some way?
MR WILLIAMS: It is one that needs to be formulated by reference to - on a case‑by‑case basis really.
FRENCH CJ: That means not formulating?
MR WILLIAMS: It probably does but obviously in this area the - in the charitable trust area in particular, but in political disqualification area as well there has grown up a body of law and it is more useful to look at the underlying cases than the label “political” when determining what may or may not be contrary to public policy in a particular situation.
GUMMOW J: Well, would it be contrary to public policy to provide for a trust to fund one of the mainstream political parties?
MR WILLIAMS: Based upon the authorities, it would be.
GUMMOW J: Why?
MR WILLIAMS: Well, because the authorities have always ‑ ‑ ‑
GUMMOW J: Forget about the authorities. You are in the High Court. Now, tell us why.
MR WILLIAMS: As a matter of principle the objection would be that it is based upon a gift to persons, that is the political party rather than for the public benefit.
HEYDON J: It seems a strange explanation. Members of political parties are not allowed to put money into their own pockets if supporters of the party give them money for the purposes of the party.
MR WILLIAMS: Well, the historical foundation - I appreciate, your Honour, this is perhaps less an answer to your Honour’s question of principle, but the historical foundation seems to have been that it is contrary to public policy to provide for a gift to a political party that would entrench a political party in office.
GUMMOW J: We live in a different constitutional structure in this country, do we not, after Lange?
MR WILLIAMS: We do and what we would respectfully suggest is this, that ultimately the Court is looking at questions of public benefit. It is the touchstone and there may be cases in which it would be possible to adduce evidence that may be accepted by a court as to requisite public benefit in that area but it would be a matter that one would have great difficulty ‑ ‑ ‑
GUMMOW J: Theories of responsible and representative government in this country assume and depend upon, do they not, the existence of political parties?
MR WILLIAMS: They do, they do. We would respectfully submit that what today might be seen as providing that public benefit might be quite different from what had been considered to be providing a public benefit in years gone past.
FRENCH CJ: You pitch your submissions, as I see them, at paragraphs 84 and following at a certain level of generality which avoids getting into the merits or demerits of particular issues by saying that public debate itself is a public good. Once you say that then the question is how do you exclude funding to a political party which has an agenda to improve administration of government, improve laws, and so forth?
MR WILLIAMS: The answer is that there may not be an absolute prohibition. The answer may be that it depends upon the particular organisation with which one is concerned, the particular objectives which it has and a consideration of whether, in current times, those objectives can be seen to be – at least within the fourth class of Pemsel’s Case – in the public interest, or for a public benefit, I should say.
GUMMOW J: I am sorry to interrupt you again but you have to put your case positively. Your case put positively is that you are in the fourth category. Is that right?
MR WILLIAMS: No, my case positively is that I am in the first and second categories as found by the Tribunal and as the Full Federal Court would have agreed but for the political disqualification notion. To the extent that I do not fall in those categories we would of course seek the benefit of the fourth class, but our primary position is that we are an organisation that fits within the first class for the relief of poverty, and secondly for the advancement of education as found by the courts below.
FRENCH CJ: That is because you have a presumption of public benefit. Is that right?
MR WILLIAMS: That is partly it. If one is looking at the four classes the principles that appear to apply are these, that if one is in the first three classes then there is a public benefit presumed, though it is of course capable of being disproven. In the fourth class, where a lot of this law has grown up, one is required to actually establish the public benefit. It has been in that fourth class of case where the benefit needs to be proven that the courts have wrestled with this question about whether or not that may, in a situation such as we are concerned with here, involve usurping the role of the legislature or the like.
CRENNAN J: Are you contending that the political activities, such as they are, are ancillary to the objects in the first and second class?
MR WILLIAMS: Yes.
CRENNAN J: Is that the way you put the argument.
MR WILLIAMS: We put it at a number of levels. First of all, we say that we have a factual finding as to the main objects of this organisation. We say that based upon that factual finding that we fall within the recognised categories – two of the recognised categories, the first and the second class – and that consequently, it was not up to us to have to demonstrate public benefit. It was up to the Commissioner, if it sought to do so, to disprove any public benefit.
Secondly, we say even if we are wrong about the way in which we characterise the factual findings, and that we are to be categorised in a way more similar to the way my learned friend seeks to do, that the campaigning is ancillary to the primary objective which is to relieve poverty in the way in which the Court has described our objectives to be.
Often the debate in these cases, there is usually a two-stage debate and the first stage of the debate is usually about what are the objects or main objects or main group of objects of the particular charity or organisation with which one is concerned. In many of the cases that characterisation process or that fact‑finding process is critical to the resolution of the matter. The second stage of the process once the finding of facts occurs as to the primary or main objects, is to then ascertain whether it falls within any of the three established categories or, alternatively, into the fourth category.
KIEFEL J: Your argument might be reversed, but you have to deal with the first stage by reference to the notice of contention, do you not?
MR WILLIAMS: No. The notice of contention deals with the second stage, that is, the finding about whether or not on the facts found we fall within poverty or education.
KIEFEL J: Yes.
MR WILLIAMS: The first stage is the characterisation of the holistic approach that this Court referred to in Word. So on that holistic approach, what are the objects or the main objects of this organisation, first point? We say we have findings in relation to that. Secondly, the legal question based upon that factual finding, do we as a matter of law fit within poverty, education or the fourth category? That is the way we would see the two stages of the inquiry. Of course, in this case, coming as it does as an appeal from the Administrative Appeals Tribunal, there are limits on the appeal rights that an unsuccessful party has. We have dealt with those in our written submissions. I do not need to say much more about them. I do need, of course, to take your Honour to the judgment, which I will do in a moment.
GUMMOW J: One by‑product of success against you on the notice of contention might be to leave you with a fallback position of category four.
MR WILLIAMS: That is right. In fact, we had a finding in our favour of category four before the Tribunal as well. The Tribunal said, you are within poverty or education; to the extent that you are not you fit within the fourth category. It is, I think, desirable, before I take your Honours to the legal propositions with which we are concerned and which I have just summarised at the outset, to spend a little time on the findings of the Tribunal and the Full Federal Court. The Tribunal’s decision is to be found in volume 2 of the appeal books at page 805 and following.
GUMMOW J: There is one other preliminary matter too, perhaps, which is this. To what extent should the law of charitable trusts be influenced or controlled by the circumstance that various legislatures, beginning with Pemsel’s Case, I suppose, itself, of conferred revenue privileges by reference to the law of charitable trusts?
MR WILLIAMS: We would submit that in doing so the legislatures in many countries have sought to do so by keeping aligned the propositions that emerge from the charitable trust cases as well as the charitable institution cases. If there was to be a departure, it would be a major departure from the way in which most legislatures had previously examined the question. Consequently, we would contend that there should not be any relevant difference, though, of course, we are talking about different things when we are talking about trust and we are talking about a charitable organisation in some respects.
GUMMOW J: Well, I think there is a flavour in the submissions against you that goes along these lines: well, look, the legislature has enacted the particular provision adopting, if you like, the case law on charitable trusts as understood by the legislature at that date, somehow that means that there should be inhibition in further interpretation of the law of charities subsequently in a way that might produce what the revenue regards as adverse consequences for it.
MR WILLIAMS: We would submit that submission ought not be accepted for these reasons. Firstly, the notion of “charities” has always been one that has been defined at common law. What has tended to happen is that the legislatures have picked up the term “charitable trust” or “charitable organisation” or some similar description. What they have not done is picked up the – except in Canada, and I will refer to this in a moment – but except in Canada there has been no pick up, if I can put it that way, of the label “political” to enshrine that part of the law in statute. It might be different if the notion of what was political had a very clear and well‑recognised flavour to it, but here it does not, as Royal North Shore has told us.
What has happened since National Anti‑Vivisection is that the principle has been expanded quite considerably by reference to what might be described as popular notions of what is political, rather than the concept that Lord Parker in Bowman had in mind when dealing with the matter at the outset. So, in other words, whilst his Honour may have used that description as a label his Honour was not in doing so seeking to say that whatever might be popularly described as political would forever after fall foul of the principle.
FRENCH CJ: Well, you would say that the legislation which links itself to the common law concept does not take that concept as frozen in time, but subject to the development of the common law?
MR WILLIAMS: That is right, and although there was some preliminary attempt in 2003 to codify the law, the government ultimately retreated from doing so in part because the types of matters that we are concerned with in this case are not well understood or well worked through as yet. What the legislature did is decided to leave the matter to the common law to develop.
FRENCH CJ: With some extensions in 2004, I think.
MR WILLIAMS: Yes, there are I think three minor extensions that are not of particular relevance to this case, apart from the fact that it was thought desirable to clarify some aspects of the law and to ensure that some categories of gift would constitute a gift for the public benefit even though it may have been open to conjecture as to whether or not they otherwise fell within the fourth category. May I go to the Tribunal’s decision commencing at 805, and we submit that in paragraph 1, the third sentence, Aid/Watch’s:
objective is to promote aid programs that are environmentally sound and effectively delivered.
In paragraph 5, the first sentence:
The object of Aid/Watch is to promote the effectiveness of aid, both by ensuring that it is delivered where it is intended and by ensuring that its delivery is environmentally effective.
FRENCH CJ: Which of the constitutions which appear in volume 1 is the one that we are concerned with? Is that the 20 November 2006 version, AG3, page 126?
MR WILLIAMS: Yes, it is. I think that was common ground before the Tribunal and I think it is common ground here. Returning, if I could, first of all, to paragraph 5 at 806, what his Honour has done in the course of this judgment, we submit, is to engage in the holistic inquiry mandated by Word and come up with a finding as to the objects or primary objects of Aid/Watch. We submit that those findings are to be found in paragraph 5 and paragraph 1 in the sentences that are there referred to.
His Honour Justice Downes, the President of the Tribunal, identified the issues before him in paragraph 4 of the judgment – page 805 of the appeal book:
First, can an institution which researches, monitors and campaigns about aid but does not, itself, distribute aid, be charitable? Secondly, does the fact that a fundamental part of its work is campaigning, very often against government, mean that its purposes, which might otherwise be charitable, lose that status, because they are political purposes?
There is another part of paragraph 5 that I should take your Honours to –that is, the last two sentences:
Taking steps to ensure that aid provided by others is provided in such a way as to maximise the public benefit would seem to be charitable in itself. This must be so even if the purpose is the sole purpose of the charity and is not incidental to actual aid delivery.
To take an example that was used before the Tribunal and in the Full Federal Court of the soup kitchen, it is charitable, we would submit, not just to hand out the soup but also to be involved in making sure that the soup is more efficiently delivered to the needy who need it. In paragraph 6 of the judgment at page 806 his Honour summarised his findings:
The provision of overseas aid is authorised by the Parliament and is important government policy. So is the protection of the environment.
Before the Tribunal evidence was led of various treaties that the Australian Government had adopted, evidence was led – it was not necessary to lead evidence about this – there was reference made to some statutory provisions, including that in the Export Finance and Insurance Corporation Act 1991. Part of that Act mandated – as his Honour tells us later – that in exercising its functions that the particular body colloquially known as EFIC take into account treaty obligations. Before his Honour, although not reproduced in the appeal book, were the various treaty obligations that gave rise to some of the findings that his Honour ultimately made. His Honour found in paragraph 6 that:
A purpose of promoting the efficient delivery of aid, or of promoting its delivery in an environmentally effective way, is not opposing government policy, but encouraging it. Proposing to government different priorities for purposes already part of government policy neither seeks a change in the law nor even of policy . . . private institutions promoting government activities which have objects which are objectively charitable will not cease to be charitable because the activities they are promoting are activities of government.
In paragraph 7 his Honour then summarised – I do not need to read it out to your Honours – the work of Aid/Watch as provided for in its objectives and as carried out in practice and how that related to the relief of poverty and advancement of education. On page 807 is an extract from the relevant constitution. The full text of this is set out in volume 1 of the appeal book at 126 to 127. Your Honours will see that the objectives commence:
AID/WATCH monitors, researches, campaigns and undertakes activities on the environmental impact of Australian and multinational aid and investment programs, projects and policies.
The main objectives of the Association are to seek to ensure that –
Then there is a list of miscellaneous matters.
GUMMOW J: This is at one level?
MR WILLIAMS: Yes.
GUMMOW J: At another level, the question is what they actually did in the year of income, is it not?
MR WILLIAMS: Did to earn income?
GUMMOW J: No, what they actually did in the year of income.
MR WILLIAMS: Yes, that is right.
GUMMOW J: It is one thing to have objectives. Another question is what you are actually doing.
MR WILLIAMS: Yes, that is what his Honour then went on to do. His Honour’s process was that mandated by Word. He started off with the constituent documents and then analysed what was said and done by the organisation in the relevant time period.
FRENCH CJ: A lot of it was in the nature of published critiques of various programs, was it not?
MR WILLIAMS: Can I answer that more directly when we come to it. I am about to the come of the parts of the judgment. In general terms, it involved the three components of monitoring, researching and campaigning, and there is a lengthy description given in the judgment as to what was meant by those. In small print, it is a large part of the examination‑in‑chief of Dr Goodman, but we will come to that. At page 809 and following, his Honour dealt with some of the law in relation to charitable institutions. At pages 810 to 811 at paragraphs 17 through to 21, his Honour made some observations about how:
While the essential characteristics of charitable purposes do not change, what will satisfy those purposes changes with society.
Of course, that is a phenomenon that it is well known and referred to in many of the cases.
Your Honour Justice French dealt with it in Victorian Women Lawyers’ Association v Federal Commissioner of Taxation (2008) 170 FCR 318 at paragraphs 127 to 129. His Honour, in that paragraph, made reference to a number of matters which we would submit are particularly relevant in the context of the type of charity with which we are concerned here and what might be involved nowadays in the concept of public benefit. We now live in an age where governments actively seek input from the public and stakeholders into changes in the law. We now live in an age where governments from time to time seek public comment or comment from stakeholders about the way in which government policy should be headed.
FRENCH CJ: What appears at paragraphs 17 to 21, although it is addressed to characteristics of charitable purposes, is it really a class four argument about community benefit?
MR WILLIAMS: In part, but in part also, dealing with this so‑called political objection that seems to involve the proposition that the ruling on something that has been described or labelled as political might involve the usurping of the role of the legislature. Your Honours, then at page 811 under the heading “AID/WATCH”, his Honour deals with the evidence upon which he ultimately came to his finding about the objectives of Aid/Watch – the matters that perhaps Justice Gummow had in mind in his question to me a short time ago. These matters included the oral and affidavit evidence of Mr Goodman, paragraph 24.
FRENCH CJ: You can take it, Mr Williams, that we have all read the Tribunal decision and the Full Court decision and looked at all the other materials.
MR WILLIAMS: Can I just give your Honours some references to where one finds the evidence that is referred to. In paragraph 24, there is reference to two affidavits of Dr Goodman. They are to be found at appeal book 1/145 and appeal book 1/165. Unfortunately, the way in which the affidavits have been reproduced do not indicate, as they should have, that there were some paragraphs that were either not read or ruled out. May I just tell your Honours what they are? Could we hand up a list perhaps?
FRENCH CJ: I wonder if you could hand up a piece of paper. This quote was taken from his examination in‑chief, is it?
MR WILLIAMS: This is taken from his examination in‑chief.
FRENCH CJ: That was the big block of text in which he explained essentially what they do.
MR WILLIAMS: That is right. What his Honour has said is that he wanted to hear it straight from Mr Goodman.
FRENCH CJ: He wanted more detail on the generality that he initially offered.
MR WILLIAMS: Yes.
GUMMOW J: The affidavits were pretty short, were they not?
MR WILLIAMS: They were. The second one was more extensive, your Honour. That had attached to it various documents that dealt with some of the projects that they were involved with.
HEYDON J: This affidavit is scarcely an affidavit at all, is it?
MR WILLIAMS: I am sorry, your Honour.
HEYDON J: Affidavits are supposed to indicate the address of the deponent, the occupation of the deponent and whether the deponent has affirmed or sworn it. Page 146 indicates that none of these things were done.
MR WILLIAMS: I think there was an issue about that at the trial and it was remedied in the way one has to remedy problems that should not have occurred like that. In any event, he gave oral evidence, he adopted what he had said in those documents insofar as it was not ruled inadmissible and then gave oral evidence and was cross-examined extensively about it.
CRENNAN J: Mr Williams, exhibited to the first affidavit is the Australian Taxation Office decision and at 154 of the appeal book at the top of the page there are three bullet points which I understand to be the campaigns conducted by Aid/Watch which the Commissioner of Taxation regarded as political. What I wanted to ask you was, I cannot see it in the affidavit material, whether in his oral evidence Dr Goodman dealt with these matters on the basis of linking these campaigns to the general object of alleviation of poverty?
MR WILLIAMS: The answer is that he did it both in his affidavit, the affidavit that commences at page 166 ‑ ‑ ‑
GUMMOW J: On the face of it ‑ ‑ ‑
MR WILLIAMS: Pardon?
GUMMOW J: On the face of it, what has lobbying against the free trade agreement with the United States got to do with your client?
MR WILLIAMS: Is your Honour looking at the description in the letter?
GUMMOW J: Yes, page 154, line 20.
MR WILLIAMS: That is the one from Allens who were solicitors for Aid/Watch at the time.
HEYDON J: Where does it fit into the object?
MR WILLIAMS: The answer is that I will have to come back to that. What Mr Goodman did in his affidavit is he dealt with the three principal projects that Aid/Watch had been involved in in 2004 to 2006. He dealt with that at page 168 and then he gave some information about each of those under the ‑ your Honours, I am just told that the letter with which we are concerned was not part of the evidence. It is one of those paragraphs that I am going to tell your Honours was ruled out of the book and not part of the evidence.
FRENCH CJ: There is a reference to the FTA at 175, is there not?
MR WILLIAMS: Yes. What Mr Goodman did from paragraph 12 and following on page 168, set out the three principal projects that Aid/Watch had been involved with in the years 2004 to 2006. It gave some detail about each of those three principal projects and then it dealt with two minor activities of Aid/Watch and I think the one your Honour is referring to is in paragraph 26.
CRENNAN J: I think what I was asking you was whether at any stage in oral evidence was there any linkage established between these campaigns which, I understand, he mentions and the alleviation of poverty? I think from what you say the answer is probably no.
MR WILLIAMS: I think the answer is, yes, but it is not reproduced in the judgment. I will have to take a little time to find where in the transcript those matters occurred. He gave some substantial evidence in‑chief and then was cross‑examined about all of these activities for some considerable time.
CRENNAN J: I am making a distinction between explaining, as he does in the affidavit, and actually establishing the link with the other objects.
MR WILLIAMS: Yes, I understand that, your Honour. It is something that I might just have to take on board and go through a little more carefully in the transcript if it has not featured in the written submissions prominently. In any event, your Honour sees that at the outset of his explanation, and embedded within it, found in paragraph 25 of the judgment, one sees – at least we would respectfully submit one sees – some linkages that emerge.
FRENCH CJ: Anyway, we are working within the framework, of course, of the facts found by the Tribunal.
MR WILLIAMS: That is right, your Honour. We have not spent much time trying to go to underlying documentation in light of the factual findings that we have, and in light of the nature of the appeal that was open and which was exercised by the Commissioner. The appeal to the Full Federal Court ‑ ‑ ‑
GUMMOW J: Well, on this question that Justice Crennan has been raising with you though, was there any consideration of this notion that a charitable institution may have non‑charitable activities provided they are – as this Court has said – “merely concomitant and incidental to” the charitable “purpose”?
MR WILLIAMS: Does your Honour mean in the judgment?
GUMMOW J: Yes.
MR WILLIAMS: I think there is.
GUMMOW J: I am referring to Thistlethwayte’s Case 87 CLR 375 at 442.
MR WILLIAMS: Yes, your Honour. I think the same principle is to be found in a number of other of the cases that are discussed.
GUMMOW J: Is he trying to say at 174 that these were incidental? Well, I do not know.
MR WILLIAMS: At 174 to 175 he gave evidence of some very minor activities, very incidental activities that were engaged in at times about which the Commissioner had been critical.
FRENCH CJ: It was not suggested they were incidental to objectives, just the things they did but which did not really count much in the big picture of its activities. That is really the way it is being put, is it not, here?
MR WILLIAMS: That is right, your Honour, it is probably a better way of describing them than things that were truly incidental to the activities that were carried out. His Honour dealt with some of these, for instance, at paragraph 35 of the judgment.
In paragraph 27 his Honour examined the 2005 annual report of Aid/Watch. Your Honours will find that at volume 2 of the appeal books commencing at page 733 and then at 734 is where the quote is taken from. At paragraph 28, then there is a reference to some training courses, “Campaigning for Activists”, the document in relation to that is at appeal book 1, page 651. At paragraph 29 there is reference to the Australian Government’s White Paper on the Australian aid program and then a reference to Aid/Watch’s 2006 annual report. That is to be found at volume 2 of the appeal books, page 744, at 751 to 752.
I do not intend to take your Honours to any of those but merely to give your Honours the references to the material that lies behind the factual findings. There is one that I would take your Honours to, and it is over the page at paragraph 30, Aid/Watch published a major report of 30 pages in May 2007. That report, “Fighting Poverty or Fantasy Figures? The Reality of Australian aid” is to be found at appeal book 1, page 250. I will go to that briefly.
HAYNE J: What is it we will get out of this, Mr Williams? What is the point?
MR WILLIAMS: The point is that the organisation with which we are concerned in its monitoring, research and campaigning role is involved in a number of activities that involve a high degree of level of research, a high degree of analysis and professionally produced, lengthy, well‑researched reports. I do not really need to go much further than that because I have a factual finding about that as it is. I should draw your Honours’ attention to the reasoning about activities in paragraph 39 of the judgment at page 817. Paragraph 37 deals with poverty and then paragraphs 38 and 39 deal with advancement of education. In paragraph 44 his Honour deals with Lord Parker’s statement from Bowman v Secular Society Limited. It states that the reason Lord Parker gave in connection with political objects may be of doubtful validity and makes the point, which is remarked upon in some other cases, that:
This remark may be apt for fourth division charities, but charities challenged as political are often sought to be supported as trusts for the advancement of education.
and otherwise. At paragraph 47 we find the reference to the pieces of legislation that we pointed to as demonstrating government policy. Your Honours will see the reference to section 8(b)(iii). That is the provision by which EFIC ‑ ‑ ‑
FRENCH CJ: There was a concession by the Commonwealth, was there not, that there was nothing contrary to government policy in their activities?
MR WILLIAMS: I think my friend may dispute whether a concession was made in those terms. We have relied on what was in the Full Court’s decision. I think I had best leave it to my friend to deal with whether or not that is disputed. There is one error in the Full Federal Court’s description of a concession. That is at 831, paragraph 8:
The Tribunal also found, at [47], that “none of the objectives of Aid/Watch can be said to be contrary to government policy”. This point was conceded in oral submissions by senior counsel –
The concession is attributed to me. We had rather thought that the concession might have come from somewhere else. I think that is the issue that your Honour has raised with me.
I indicated to your Honour that the Tribunal had found that Aid/Watch was in the first and second divisions of Lord Macnaghten’s categories on page 818, and then his Honour goes on, in 41 and 42 to find that Aid/Watch was also within the fourth division, the fourth category. Of some significance, we would submit, to the factual findings is the last couple of sentences at paragraph 47 on page 819:
It follows that none of the objectives of Aid/Watch can be said to be contrary to government policy. The most that can be said is that Aid/Watch seeks to influence government policy as to the nature –
GUMMOW J: Where are you reading from, Mr Williams?
MR WILLIAMS: Paragraph 47 on page 819, the last two sentences. The notice of appeal to the Full Federal Court is to be found at 823 to 825 of volume 2, making it clear that the questions of law proceeded on the basis of the facts found by the Tribunal and in paragraph 5 indicating that the appellant did not seek to have the court make further findings of fact – page 825.
GUMMOW J: Was this because of changes that have been made to section 44 of the AAT Act?
MR WILLIAMS: I think it is because there is a subsection – I think it is (6) or (8); I cannot quite remember which – which enables, in certain cases, the court, if requested by a party, to make factual findings not inconsistent with the findings that are ‑ ‑ ‑
FRENCH CJ: It is actually an additional grant of jurisdiction. That is how it is characterised under 44.
MR WILLIAMS: Yes, that is probably right. But, in any event, that ground of jurisdiction was not sought to be exercised here. Then in the Full Federal Court’s decision the court observes in the first paragraph – this is at page 829 – that in oral submissions both parties accepted the findings of fact made by the Tribunal. In paragraphs 5 and 6 the Tribunal purported to set out those findings of fact but did not include the findings of fact that we rely on from paragraphs 5 and 1 of the judgment.
The Tribunal it appears, at 831 in paragraph 7, did accept that there had been a finding:
as a matter of fact that Aid/Watch did not seek to influence government by direct contact, but rather by indirect action such as the publication of reports and assessments.
In paragraph 8 there was a reference to the finding about:
“none of the objectives of Aid/Watch can be said to be contrary to government policy”.
It is a similar sort of phenomenon that your Honour the Chief Justice was considering in the Victorian Women’s Case when considering objects that included changes in the law but as part of a greater body of objects that were ultimately characterised as having ‑ ‑ ‑
FRENCH CJ: All of this, of course, falls within the scope of existing doctrine, is that not right and your ultimate position is these kinds of nice distinctions should be put to one side because public discussion on these matters is of public benefit?
MR WILLIAMS: We submit that on the factual findings that we have we are entitled to succeed, even on ‑ ‑ ‑
FRENCH CJ: On existing doctrine?
MR WILLIAMS: ‑ ‑ ‑ existing law and I put “existing” perhaps in inverted commas because it is a little unclear as to how far existing law extends, .particularly when one goes beyond the notion of changes to existing legislation, then goes to reversal of policies, then goes to attempts to influence or change government practices or attempts to influence or change particular administrative decisions of the like. There is a continuum. The further one gets down the continuum, the harder it is to go back to the supposed rationale for the principle and say, well, is this really infringing some principle that the court is not in the position to judge or is this really infringing the principle that there should be a separation between the legislature and the judiciary.
We submit that once one gets down that continuum line, and that is where one needs to get to bring Aid/Watch within this political disqualification principle, that the rationale for it is very removed from the reality of what one is dealing with. The Full Federal Court referred to the appropriate test at paragraph 14 about the political purpose only being fatal if it is a main purpose of the institution. At pages 833 to 834 it dealt with and accepted ‑ ‑ ‑
FRENCH CJ: Now, we have read all this, as I said to you before.
MR WILLIAMS: Yes, my apologies.
FRENCH CJ: Maybe you can take us to the argument.
MR WILLIAMS: Yes. Level of generality, it is in this paragraph, paragraph 20. What happened in the case is that my learned friend put the same or similar car‑door example as appears in the written submissions and said, well, you have to look at aims or objects or purposes in terms of various levels of generality and in doing so, we submit, convinced the Full Federal Court to change the factual finding as to the main purpose by reference to the means by which the objects were sought to be carried out.
My friend, in his written submissions, gives the example of the man whose purpose or object is to go to work and says that, depending upon what level of generality you look at, his purpose might be just to open the door. We submit that that example demonstrates the difficulty with the whole proposition. It is a confusion of the means with the objects. That is really the ground upon which the Full Federal Court decided that it should overturn the decision of the Tribunal because it said that, well, the actual inquiry should be – found that there was a different main object, or objects, than that found by the Tribunal. One finds that in paragraph 30.
It starts at paragraph 30 and reaches its culmination in paragraph 37. It talks about levels “of generality” and goals “being to influence, and thereby to change, the way in which aid is delivered”. At paragraph 37 on page 838 is the critical point. The Full Federal Court holds that:
Aid/Watch’s attempt to persuade the government (however indirectly) to its point of view necessarily involves criticism of, and an attempt to bring about change in, government activity and, in some cases, government policy. There can be little doubt that this is political activity and that behind this activity is a political purpose. Moreover the activity is Aid/Watch’s main activity and the political purpose is its main purpose.
Pausing there ‑ ‑ ‑
GUMMOW J: We can read along with you, Mr Williams.
MR WILLIAMS: Sorry, your Honour. This is the point at which we submit the ‑ ‑ ‑
GUMMOW J: Well, it is paragraph 38, is it not:
the main purpose is political, the question arises whether charitable and political purposes are mutually exclusive.
You criticise that, I guess?
MR WILLIAMS: Yes, we do. We have a finding of fact as to what the main purpose was. Going back to the two‑stage inquiry that I suggested was the way in which courts look at these matters at the outset, first of all, what is the word type finding after one looks at the matter in a holistic way and determines what the main object or objects of the organisation is. Then one says, well, is that within or without one of the recognised categories? So that is all I need to go to, I think, in the ‑ ‑ ‑
GUMMOW J: What do you say about paragraph 47?
MR WILLIAMS: What we say about that is that the court, if it took the view as it appeared to, that it was – this is also to be found in paragraph 41 – it seems to have thought that it was required to come to a view about whether Aid/Watch’s views were the “best way to achieve these objects”. One sees that in line 41 on page 839. Then coming to the culmination of the judgment in paragraph 47 it seems to have taken the view that promotion of one view:
The court was in no position to determine that promotion of the one view rather than the other was for the public benefit.
The first thing we would say about that is if, as we maintain, we are in categories one and two our public benefit is presumed until shown to the contrary. Secondly, that descending into that level of detail and examining the matter from the perspective of needing to decide whether Aid/Watch’s views were for the public benefit is the wrong question.
We say that because we submit that if one is looking in the established categories, for instance – religious category, for example – one does not need to accept the views of the organisation with which one is involved. For instance, one does not need to accept Joanna Southcote’s beliefs that she was with child by the Holy Ghost and had conversations with the devil in order to categorise, or in the course of categorising the trust in Thornton v Howe (1862) 31 Beav 14 as charitable.
Similarly, in other examples from the religious field, there are collected – some of them are collected, at least – in paragraph 1033 of Jacobs’ Law of Trusts. For instance, Scientologists, faith healers, the Exclusive Brethren – all of those organisations have achieved charitable status, and what the Court is not required to do is to examine whether it thinks the views of those organisations are for the public benefit. Rather, it decides that the matter is within the religious category and therefore the public benefit is presumed.
Similarly, in the education field, the Court does not need to examine whether it agrees with the views of Henry George. It decides that the promulgation of the views of Henry George is within the education category – that is Attorney-General for NSW v The NSW Henry George Foundation Ltd [2002] NSWSC 1128. It does not need to decide whether the extension of teaching of technical education in State schools is a good thing or a bad thing. It merely decides that it is within the education sphere and therefore, in Royal North Shore Hospital of Sydney v Attorney General (1938) 60 CLR 396, the requisite box was ticked. Similarly, it does not need to come to a view about who was the author of the Shakespearean manuscripts, as was the subject of the trust in Re Hopkins’ Will Trusts [1965] Ch 669.
KIEFEL J: Saying that a public benefit cannot be seen in particular activities might be another way of saying that they appear to be too removed from the relief of poverty.
MR WILLIAMS: It may be, but what this judgment seems to suggest is that it is necessary to actually examine whether its views – that is Aid/Watch’s views, in this case – were the best way to achieve its objectives. One sees that in line 41 on page 839. In other words, a rather different inquiry, we submit, seems to have been posed by the Full Federal Court than that which your Honour is posing to me. But dealing more directly with that, can I answer it in this way? If we have a finding that the object of Aid/Watch is to promote the effectiveness of aid, both by ensuring that it is delivered where it is intended and by ensuring that its delivery is environmentally effective, in light of the finding of fact that we have in that regard, it is not difficult to see the necessary connection between the objects of the organisation and the relief of poverty.
KIEFEL J: How close does the connection have to be? Do the authorities discuss this in particular?
MR WILLIAMS: They do not seem to approach it quite in that way and it is probably fair to say that there must be some capability of the object being ‑ ‑ ‑
KIEFEL J: Being carried into performance?
MR WILLIAMS: Capable of achieving charitable purposes, the relief of poverty.
KIEFEL J: Yes.
MR WILLIAMS: But there to be a lot of focus on the connecting factors in the authorities that we have seen.
FRENCH CJ: The Full Court at paragraph 20 at page 834 accepted that:
Aid/Watch’s purposes should be characterised as charitable in the legal sense unless disqualified because of their political nature.
So it was approaching it on the basis that concurrent characterisation was possible. If concurrently it could be characterised as political, then it fell outside the scope of the categories.
MR WILLIAMS: That was the legal question, not the factual question.
FRENCH CJ: Yes. The basis upon which the Tribunal approached it at page 820, paragraph 49, was to say that because Aid/Watch does not have changes to the law as a main object, it is not disqualified. Justice Downes focused on the criterion of an objective directed to change in the law, then through in, as it were – I do not say that with any lack of respect – that there might be a characterisation issue if they were really too activist and confrontational. The Full Court seems to have accepted that at page 839, paragraph 39 subject to a caveat that the charitable status of an institution cannot depend on the manner in which it implements its charitable purpose. The difference of approach in the Full Court seems to have been directed to an application of a wider test for political purposes than that acquired by the Tribunal because it goes to questions of policy and so forth. That is was it is really about, is it not, in terms of the way the legal difference emerges?
MR WILLIAMS: The legal difference, but, like in most of these cases, the factual finding or the finding as to the main purpose often governs what thereafter will follow because once one characterises the objects in a particular way, for instance, the way in which they were characterised in National Anti-Vivisection, if one characterises them in a particular way, then they are very likely to fall within the tests. To take your Honour’s decision in Victorian Women Lawyers’, there are a whole lot of objects there, some of which expressly involved seeking changes to legislation. If after your Honour’s holistic inquiry your Honour had come to the view that that was the main object, then it is likely that a different result would have followed on the authorities. But because your Honour on the holistic view came to a different view as to what was the main object or objects, then the charitable result followed without the political disqualification being an issue.
HAYNE J: There seem to be two distinct although ultimately related streams at issue in this part of your argument. Firstly you point to the need to identify and give content to the word “political”, a task which may not be without its difficulties. Second, as I understand it, you criticise the reasoning of the Full Court. Let me see if I understand precisely what you say that reasoning is. As I understand it, you characterise the reasoning as proceeding in these steps. One, political activity leads to the conclusion of political purpose – see paragraph 37. The significance to be attributed to that description “political purpose” is connected with, perhaps to be determined according to, contrariety to or conformity with identifiable government policy – see paragraphs 38 and 41.
The third step in their Honours reasoning, I think, I am far from certain of it, seems to be that because the views put forward by Aid/Watch, I attempt to characterise the process neutrally, do not conform to then identified government policy, presumably the government of the day, the court is unable to judge public benefit – see paragraph 47, page 841, at about line 20 – therefore, as I understand, the conclusion is reached, not charitable. But does that capture what you say the reasoning of the Full Court is?
MR WILLIAMS: I think essentially, yes, but I think there is one qualification that I need to introduce and that is, we would respectfully submit, that in paragraph 37 what the Full Court did was come to a different finding of fact.
HAYNE J: I understand that. I understand you want to say finding of fact, that is inviolate, end of game. I understand that point, but that is not the way the Full Court approached it, is it?
MR WILLIAMS: No, it is not, but your Honour asked me to identify ‑ ‑ ‑
HAYNE J: But the argument that the Full Court advanced is as I described it, is it not, or the chain of reasoning, rather, that the Full Court followed, is as I have described it?
MR WILLIAMS: I think that is fair, your Honour, yes.
GUMMOW J: Is not the last step that Justice Hayne was taking you to one in which the Full Court relied on Southwood v The Attorney-General when the Court of Appeal in England seemed to have talked about usurping the role of government?
MR WILLIAMS: Yes, though what appears in the line immediately before we think is significant. It is the focus on the promotion of one view over another. That links back to paragraph 41, and I have already taken your Honours to that, where ‑ ‑ ‑
GUMMOW J: What was happening in Southwood? I do not think it is on our list of authorities.
MR WILLIAMS: It is not.
GUMMOW J: I think it should be. It is a decision of the English Court of Appeal, fairly recent, is not?
MR WILLIAMS: Yes. It is Times Law Reports
GUMMOW J: What is the citation of it? Is it not electronically reported, if it is not in a proper series of reports? That is from the Times newspaper, is it not?
MR WILLIAMS: It is in the Times Law Reports.
HAYNE J: Has somebody done a search for it?
MR WILLIAMS: The neutral citation is 1998 ‑ ‑ ‑
GUMMOW J: 1998?
MR WILLIAMS: I am sorry, that is at first instance. It is in 2000 Times Law Reports ‑ ‑ ‑
FRENCH CJ: We have that.
MR WILLIAMS: ‑ ‑ ‑541. I am afraid that is all I have at the moment. I will find the additional citation. That case, of course, followed along the extensions ‑ ‑ ‑
GUMMOW J: I know, but what was the particular purpose that was being stigmatised as usurping the role of government?
MR WILLIAMS: It was a trust for the advancement of education of the public on the subject of militarism and disarmament and related fields which the court held was not charitable because the court could not determine whether or not the trust’s object of securing peace by demilitarisation promoted the public benefit.
CRENNAN J: May I check something with you. As I understood it, your answer to paragraph 47 was that provided the participation in public debate relates to an area of charitable activity there is then no need to make any qualitative assessment about public benefit.
MR WILLIAMS: If the objects of the organisation fall within class one or class two, one does not need to go to the particular views of the organisation in question, whether they be religious education or whatever, and say, do we or do we not agree with them or do we or do we not think that those views themselves are for the public benefit?
HAYNE J: The premise for that answer is that there is no political exception, I think, because the answer he has made is, but there is this political exception and because this is political and you cannot judge the outcome of the political debate, therefore, et cetera. I think it is at that level you have to engage the point, have you not?
MR WILLIAMS: That is probably right. I think that, so far as the traditional approach is concerned of dividing the matters into four classes and if you are in the first three then you do not have to demonstrate your public benefit, it means that – in many of these cases, or most of the cases, concerning political disqualification emerge in the fourth class. It is difficult to find examples where they do not.
Even in the fourth class, we come to a situation such as National Anti-Vivisection when on the one hand the court is saying, political - we are not in a position to judge and yet, on the other hand, that is exactly what they did in the other part of the decision. They judged the public benefit, but found adversely to the charity that was involved. It is the first and primary basis of the appeal – perhaps not primary, there was a twin basis for the appeal.
When we come down to looking at the particular views and the like, it is not really the content of the views that matter. It is the fact that the charity has objects engaged of the requisite category or class and therefore the charity finds itself in one of the recognised categories and then it is capable of being taken out of that category if it could be demonstrated that it is not in the public benefit, but prima facie it has that attribute.
May I now just deal with how it is that we say that the law got off track, if I could put it that way, in National Anti-Vivisection dealing with this political notion and how that label that was utilised in that case came to mean something to later courts than – it came to mean something different than it had originally meant to Lord Parker. In this area, we submit that it is important to keep the chronology firmly ‑ ‑ ‑
GUMMOW J: This Court has never applied Anti-Vivisection, has it?
MR WILLIAMS: I think that is right.
GUMMOW J: The question is whether we follow it.
MR WILLIAMS: Yes.
FRENCH CJ: We are familiar with the development and the history and the commentaries that are being made about it and the attempts to reform it in various - the difficulties that arise from this area of the law. Ultimately the question for you to address, I suppose, is if one dispenses with a political purposes exception or disqualification what are the boundaries of community benefit, or public benefit?
GUMMOW J: You will not get away just by repeating the words “public policy”.
MR WILLIAMS: We know that once a charity manages to bring itself within the first three classes the public benefit is presumed. So the issue is primarily one for the fourth class of cases. So far as the fourth class of case is concerned, there is a factual issue that is required to be addressed by an entity or trust that seeks to categorise itself as charitable and that is demonstrating to the satisfaction of the court that its object is for the public benefit.
FRENCH CJ: Well, you say public discussion of government administration and practice is, with a view to its improvement, a public benefit. Is that not right? Or law reform for that matter?
MR WILLIAMS: It usually would be, though one can imagine situations in which evidence may be capable of being adduced to lead to a different conclusion. It is an evidence based issue for the party that seeks to bring itself within category four.
GUMMOW J: But you say evidence based. Evidence is admitted if it is relevant to an issue. Now, what is the issue for which it would be relevant?
MR WILLIAMS: Whether or not the objects of the charity are for the public benefit. That is what happened in National Anti-Vivisection, there was lots of evidence taken about whether or not it was a desirable thing to experiment on animals or not. Ultimately, a decision was made but made that it was not. The objects of the Society were not in the public benefit.
FRENCH CJ: If public benefit is pitched at the level of generality which appears later in your submissions, that public discussion of law reform or improvements in government practice or administration is itself a public benefit, what boundaries are there on that proposition? For example, if one starts with the presumption that such discussion is a public benefit is there anything that would displace that? For example, a society dedicated to the decriminalisation of certain forms of drug trafficking?
MR WILLIAMS: The answer would lie in public policy.
HAYNE J: Just while you are thinking of the better answer to that, Mr Williams, your solicitors might usefully provide you with [2000] EWCA (Civ) 204 which is the media neutral citation to Southwood v Attorney General – a judgment of 28 June 2000. Back to public policy, I think, Mr Williams, you have had a moment.
MR WILLIAMS: Your Honours, the real question is whether or not the Court comes to the view, after hearing whatever evidence is given, that the particular charity’s objects are for the public benefit.
GUMMOW J: Now, look, we have written judgments about public policy and what is caught up in the phrase “the policy of the law”. There are various heads of the policy of the law that are well established. One concerns, for example, that take an unexciting subject perhaps, restraint at trade. Now, there are particular heads of public policy which disfavour certain activities in the law. There are also various activities that are proscribed by criminal law, whether it be by statute or common law offences. All of that has to be thought about, I think.
MR WILLIAMS: It does, and it is difficult to contemplate it without ‑ ‑ ‑
GUMMOW J: You also have to think about whether the Court in a particular circumstance would be moved to perceive some new policy of the law adverse to a particular activity and how it would go about that.
MR WILLIAMS: Quite, and it might be that a court in a particular instance might come to the view that it was incapable of deciding the public benefit. In other cases – for instance one can imagine situations where – well, the sort of situations that Justice Santow has referred to in his article and judgment about an ability to identify the way in which the law is hitting. It might be that there is some Commonwealth legislation about, say, anti‑discrimination, yet there is some other old legislation on the statute books ‑ ‑ ‑
GUMMOW J: Well, suppose a charitable trust to fund public debate on the repeal of anti‑discrimination laws, what happens then?
MR WILLIAMS: Well, it is a fourth category situation. The charity comes along and says, “All right, well, how am I going to demonstrate the public benefit in this activity?” One can imagine some sort of material that it might seek to adduce.
GUMMOW J: It is not an entirely fatuous question because in the United States the view that is taken as to the range of their Bill of Rights in so‑called positive discrimination cases has varied over time; it is a question of hot political debate.
MR WILLIAMS: Just as the law of charity has. What is charitable in this age may not have been charitable in another age, and vice versa.
FRENCH CJ: You are diving back into the merits of, say, a debate about repeal of anti‑discrimination laws. Your public benefit proposition, as I understand it, or community benefit proposition, lies in the virtue of public debate. Now, the question is what are the limits on that, if any?
MR WILLIAMS: Well, there might be, I hesitate to say, public policy considerations, but, for instance, if one was seeking to engage in public debate that was designed to legalise drug trafficking, as your Honour had indicated, that is one. The court may very easily say, well, looking at that do we think that is in the public benefit? No, it is not, there are clear public policy reasons as to why it would not ‑ ‑ ‑
HEYDON J: You were saying in answer to those questions that it is not in the public benefit for there to be a debate about the extent of the criminal law.
MR WILLIAMS: No, I am saying that there are some examples that one could think of in that area. What I am saying is, your Honour, there is not necessarily a right answer for that that applies to each and every aspect of debate about the law.
HEYDON J: Is a debate about a decriminalisation of the law relating to a commercial sale of heroin within your favoured class or your disfavoured class?
MR WILLIAMS: It would depend upon the evidence. My submission would be that it is unlikely that the court would ‑ ‑ ‑
HEYDON J: You do not need evidence. You say public speech is a good, it is a ‑ ‑ ‑
MR WILLIAMS: Well, public speech as a general rule is good, but there are limits.
HEYDON J: One limit is where a crime has been committed.
MR WILLIAMS: Yes, illegality.
HEYDON J: Yes, but what other limits?
MR WILLIAMS: Well, there might be some aspects of public speech that may be considered offensive to members of the community at large. An example that springs to mind from recent history is the gentleman who was denied entry to Australia because he was seeking to deny the Holocaust. One would imagine that the court might say – and it would depend – but it might say that generally free speech is a desirable thing, it is in the public benefit, but if it comes to promoting views of that nature, well, maybe we are not going to allow that to fall within the class of cases that qualify for charitable status because it is not in the public benefit.
GUMMOW J: What is the “it”, not in the public benefit?
MR WILLIAMS: To allow charitable status to an organisation that was promoting those views.
GUMMOW J: Because?
MR WILLIAMS: Because it was thought to be offensive to community standards to have a gentleman promoting ‑ ‑ ‑
GUMMOW J: But a lot of activity is about changing community standards, is it not, otherwise we would still have slavery?
MR WILLIAMS: That is right. I am not for a moment suggesting that there is one answer and one answer alone to the question.
KIEFEL J: In the example you have given, I think the laws relating to incitement might take care of the Holocaust position. The discourse there would have to be whether the law should be changed.
MR WILLIAMS: It might. One could conceive of some organisations that are masquerading as free speech type organisations in which the court detects a different purpose and does not categorise what it is doing ‑ ‑ ‑
KIEFEL J: So far it would seem, in the discussion that is being had, we would still have the court in the position where it has to seek to identify a positive benefit in its eyes, which might be a question it considers not for itself perhaps better to answer.
MR WILLIAMS: Or, to put it differently, the court may have to consider whether or not there is a disqualifying condition because, whilst free speech might as a general rule be a good thing, there might be limits to the way ‑ ‑ ‑
GUMMOW J: Incitement to violence would be criminal activity, would it not?
MR WILLIAMS: Yes, it may well be.
KIEFEL J: But then you reach a point where you say, well, there is no disbenefit, therefore public benefit is obtained. When we talk in generalities about the public benefit and discourse on any topic we usually end up on a neutral plain where discourse is the only element that is moving around.
MR WILLIAMS: Of course this debate is proceeding on the basis that this is going to be your dominant or chief objective rather than a different categorisation of the objects of the organisation.
KIEFEL J: That probably suggests that where you have these two questions, at least in relation to the first three categories, you have to identify with a little more precision just what it is that brings it within the category of charity, the public benefit involved in that, before you consider whether or not the political aspect of an activity is the larger or the lesser of the two.
MR WILLIAMS: That is correct, but, of course, if a charity falls within the first few classes, the way in which public benefit is approached is quite different from the way it is approached in the fourth class.
GUMMOW J: The Chief Justice reminds me there are cases in which copyright has been denied on the basis of the nature of the subject matter.
FRENCH CJ: In England not Australia.
GUMMOW J: In England, yes. A case called Glyn v Feature Film Company in 1916 where the novels of Elinor Glyn were so filthy and disgusting ‑ ‑ ‑
HAYNE J: What, you would not want your servants to read them, as in Lady Chatterley?
MR WILLIAMS: Well, pornography is an example of where one ‑ ‑ ‑
GUMMOW J: I do not think that Lady Elinor Glyn was really into pornography.
MR WILLIAMS: No, but pornography is an example akin to what your Honour was pointing to in which it might be thought that there was a public policy reason why the court would not think that promotion of pornography was in the public interest.
FRENCH CJ: Anyway, I understand from what you said just now and what you said earlier that whilst offering, as it were, public discussion of law reform and improvement in government administration and policy and so forth as a community benefit which can properly be the objective of a charitable institution, you do not offer any all‑encompassing formula to circumscribe it. You say it just has to be dealt with on a case-by-case basis.
MR WILLIAMS: Quite.
FRENCH CJ: That there are certain limits, but you do not know what they are.
MR WILLIAMS: It is very difficult to identify a limit without a concrete factual circumstance within which to ‑ ‑ ‑
FRENCH CJ: An obvious limit is where the speech itself would be criminal in character.
MR WILLIAMS: Yes.
FRENCH CJ: Racial vilification, for example.
MR WILLIAMS: Of course, these issues are often addressed at the first stage of the inquiry, namely, what is the main object or objects of the organisation.
HAYNE J: Can I attempt to put a framework on it. Advocacy by lawful means of a lawful end, which is one of the three specific heads in Pemsel’s Case, you would say is a charitable object, as I understand it?
MR WILLIAMS: Yes.
HAYNE J: So in this case, advocacy by lawful means of a lawful end being the relief of poverty, you say is a charitable purpose?
MR WILLIAMS: Yes.
HAYNE J: If one were to go broader, advocacy by lawful means of a lawful end constituted by matters of government and politics of the kind referred to in Lange’s Case 189 CLR 520 at 559 would be, would it, on your submission, a fourth head case?
MR WILLIAMS: Let me make sure I have got the right part of Lange before I answer that question, your Honour. I think the answer is yes, but let me just make sure about that.
FRENCH CJ: I do not think there is a contextual trick in the question.
HAYNE J: None intended, I can assure you, Mr Williams.
MR WILLIAMS: No, I appreciate that, but, of course, when a question is put to me like that by reference to a particular paragraph of a judgment, I always like to look at it before answering the question. The answer is yes.
CRENNAN J: So you would look at the reasonableness of the conduct in relation to the discussion of government and political matters. Is that what the “yes” means?
MR WILLIAMS: It was not what “yes” meant, in the context of the answer to that question, but ‑ ‑ ‑
CRENNAN J: What did you mean?
MR WILLIAMS: I meant that, as I understood the question, it is a reference to the section at 559 of Lange dealing with freedom of communication and that does not seem to import the qualification that your Honour I think was addressing to me. If your Honour wants a direct answer to the proposition that your Honour put to me, are there bounds in terms of the reasonableness of the conduct, it is the content of what is occurring rather than the manner in which it is occurring, we would submit, that is the important thing. I am not sure if that is an answer to your Honour’s question.
FRENCH CJ: Just to follow up on what Justice Hayne put to you, if you are in the area of advancing public discussion for a purpose within one of the first three of the Pemsel classes, then is it your position that you are, as it were, on safe ground?
MR WILLIAMS: Prima facie going to be charitable, unless somebody ‑ ‑ ‑
FRENCH CJ: There is no dragon territory there?
MR WILLIAMS: ‑ ‑ ‑ unless somebody can convince the court that there is an absence of public benefit in what you are doing.
FRENCH CJ: We are just talking about - looking at the category of ‑ ‑ ‑
MR WILLIAMS: Whether one gets into the ‑ ‑ ‑
FRENCH CJ: ‑ ‑ ‑ where public speech, public discussion of improvements in the law or government policy or practice directed to one or other of the purposes set out in the first three classes. If you are in that territory, there is a public benefit and one does not really have to go any further. Is that your position?
MR WILLIAMS: Yes, the public benefit is presumed because you get into the first three categories.
FRENCH CJ: It is not – you say because you are now operating at a – yes, but you are also operating at the level of generality of public benefit in public discussion. Let us come back to this point ‑ ‑ ‑
MR WILLIAMS: That ‑ ‑ ‑
FRENCH CJ: Just a minute. You say there is a public good in public discussion of law reform improvements, et cetera. We were discussing before what limits there are to that. If that public discussion is directed to the advancement of one of those purposes set out in the first three classes, then you would say that the public benefit is not circumscribed by any doubts about criminality or public policy issues. I am on safe territory there, and that is the territory you would say you are in here because you are found to have those ultimate objectives, at least as to classes one and two.
MR WILLIAMS: Yes.
FRENCH CJ: That is not a class for argument, that is just a ‑ ‑ ‑
MR WILLIAMS: It is just a class one, two and three, but in our case to ‑ ‑ ‑
FRENCH CJ: Perhaps it is a class four argument, but it is a class four argument which is informed by the public policy, if you like, that underpins the characterisation of classes one, two and three as charitable purposes.
MR WILLIAMS: Yes, coupled with the general benefits identified in Lange to which we have referred. Yes.
BELL J: Given the breadth of the Tribunal’s approach to the second head evidenced at paragraph 39 on appeal book 817 I have some difficulty seeing how the promotion of public debate of a law reform character or the like could not always be said to have a category two aspect to it. Where does one draw the distinction?
MR WILLIAMS: The distinction that is drawn by the Tribunal is an appropriate one, we would submit. If one is talking about education, then one must look at – it is not just everybody who says anything can claim to be seeking to educate. There has to be something a little more concrete than a mere public statement about a position, for instance.
BELL J: If, to pick up on Justice Gummow’s earlier illustration, a group is promoting public discussion directed to the proposition that the anti‑discrimination legislation should be repealed and in doing that they publish a pamphlet with the results of a poll of citizens in a given suburb, that is disseminating the results of research and one would think would come within the Tribunal’s view of category two. It is just that it seems to me that there is an area there of potential for sliding from category four into category two in most instances.
MR WILLIAMS: There would be, but obviously it is a matter of fact and degree as to how substantial the contribution to education might be. In this particular case the Tribunal examined the significant publications that Aid/Watch was concerned with, in particular the publication referred to in paragraph 31 of the judgment which was given by way of example. That is at appeal book 250. Your Honours did not want me to take you to it at the time, but it is an example and the example his Honour chose to give about the type of educational role that comes from the type of publications which Aid/Watch researches and promulgates. Can I hand up to your Honours ‑ ‑ ‑
KIEFEL J: Just before you move on, was there any material to show any level of effectiveness in relation to the matters that Aid/Watch had put forward?
MR WILLIAMS: Yes. For instance, it had been researching, campaigning, monitoring and the like in connection with the environmental effects of some of the EFIC policies – the Export Finance Insurance Corporation. What happened was that that organisation changed its formal policies about how it dealt with the environmental impacts of the aid with which it was concerned. If your Honour is interested in my finding the references, we can do that perhaps over lunchtime.
KIEFEL J: Yes, thank you.
MR WILLIAMS: So that is one example. I think there is another example in relation to the White Paper that the Government released. In the White Paper the Government goes out there and says, “Here is what we are thinking of doing or proposing to do; can we have comments?” and Aid/Watch comments. As the judgment shows, it applauded some parts and criticised others. That is that didactic sort of approach.
KIEFEL J: “Effectiveness” is probably not the word I was looking for. It is more some concrete outcome, something to bring it closer in connection with the actual relief of poverty and the operation of aid.
MR WILLIAMS: We will seek to find that. Can I make this submission, that so long as the object is capable of relieving poverty, whether it actually does so ‑ ‑ ‑
KIEFEL J: I am really testing the capability, because so far as present, if you do not do something like that, you are left really with objectives which are discourse. I am just trying to see if there is something that brings it closer to the actual giving of aid or how it is gone about than discourse and influence.
MR WILLIAMS: Your Honours have in the judgment an extract from Mr Goodman’s evidence‑in‑chief. In the actual transcript it goes on to deal with how Aid/Watch at least believed and gave itself a bit of a pat on the back for having achieved some of those objectives through that process. That is the sort of material I will try and gather for your Honour over lunch. Your Honours may have had this provided already, it has been given to the court officer, I think, a bundle of the old texts in relation to the development of this principle. Can I just tell your Honour what we have here and what we seek to get from them. We have arranged chronologically some of the older texts.
From 1805 we have Duke, The Law of Charitable Uses; 1862, the second edition of Tudor; 1888, the first edition of Tyssen; 1889, the third edition of Tudor. After that point, of course, we have 1891 when Pemsel’s Case was decided. Then we have 1906, the fourth edition of Tudor; 1908 Halsbury’s first edition; 1921, the second edition of Tyssen. In other words, that was the one that was not referred to by the House of Lords in National Anti‑Vivisection and when one looks at it, it is quite different in the way it approaches this political disqualification matter. I might just take your Honours to that one. Then we have 1929, Tudor and 2001, Luxton.
Can I just compare the two Tyssens with which we are concerned. The first Tyssen is the third document, your Honour. That is the one with chapter XV, “On directions to publish books, and political gifts”. At 175 and following, your Honours will find the material that the House of Lords was looking at in National Anti-Vivisection.
The actual up‑to‑date version of Tyssen is to be found a few documents down in the bundle, the 1921 version. Your Honours will see that the structure of the whole work has changed considerably. There is now no such chapter about political disqualification. The cases that had previously been referred to under that heading are now referred to on page 30 as gifts against public policy - page 30 of the second edition of Tyssen, bottom left‑hand corner - references to Thrupp v Collett and De Themmines v De Bonneval and over the page to Habershon v Vardon.
Also referred to as being against public policy is De Themmines v De Bonneval on page 114 and that which the authors have gathered from Bowman is to be found on page 116, over the page to 117. Your Honours will see that it is a rather different treatment of this concept of “political” that occurs in the up‑to‑date edition of Tyssen rather than the superseded edition of Tyssen that had preceded Pemsel’s Case.
HEYDON J: I think you are being a little unfair, perhaps, to Lord Simonds. What Lord Simonds was trying to do was to work out what Lord Parker meant and he said he was propounding familiar doctrine, nowhere better stated than in a textbook, namely that textbook. The edition current in 1917 when Lord Parker was speaking was the first edition not the second.
MR WILLIAMS: Yes.
HEYDON J: I think Lord Simonds is not backing one or other of the horses. He is just using something contemporary with Lord Parker to explain what Lord Parker was meaning. You are entitled to back whichever horse you like, of course.
MR WILLIAMS: Yes, I will, to the extent that I will put my submission this way, that what his Lordship was seeking to do in National Anti‑Vivisection is to find what was the basis for the principle and in doing so he made a reference of course to Lord Parker in Bowman’s Case, had identified that the authority in support of the proposition seemed to be “scanty” I think was the word used - that might have been a word used by one of the other Law Lords - the authority was lacking and that De Themmines had actually been determined on a public policy basis and then made reference to Tyssen as being authority for the proposition but when one examines the cases that were referred to in that edition of Tyssen, one does not find any case in which the word is used.
GUMMOW J: Well, if one looks at the 1888 edition of Tyssen, there is a discussion at page 177 of Habershon v Vardon which is a celebrated case, but the complaint was that this was a trust really to create a revolution in a friendly country which would be inconsistent with amicable relations with the government of that friendly country.
MR WILLIAMS: And, therefore, contrary to public policy.
GUMMOW J: Well, that would be so, I suppose.
MR WILLIAMS: One of the points of taking your Honours to this is to demonstrate how, at least in the cases to which reference was made in Tyssen and in the cases referred to both in National Anti-Vivisection and then in Bowman, when one goes to the underlying cases there is no use of the word “political”, instead these cases are examined from the public policy perspective.
GUMMOW J: In the United States there was quite a tradition before 1888 favouring political discussion on all sorts of subjects, was there not?
MR WILLIAMS: Yes, there was indeed. Notwithstanding that, still with the public policy check upon those matters and perhaps nowhere better ‑ ‑ ‑
GUMMOW J: Well, female franchise seemed to be beyond the pale.
MR WILLIAMS: Well, as I said, your Honour, the law moves with the times. Your Honour will be probably more pleased to know that at least in 1982 when the Bob Jones University Case came before the United States Court of Appeal, I think for the fourth circuit, the decision was that the university that had a policy of admitting negroes but only if they undertook not to be involved in a mixed relationship was found to be void on public policy grounds.
HEYDON J: Just for the sake of later clarification, the passage that I was referring to in the National Anti‑Vivisection Case was at [1948] AC 31 at 62.
GUMMOW J: The American case that I was referring to in particular is Jackson v Phillips 96 Mass 539.
MR WILLIAMS: That was the slave case, I think.
GUMMOW J: Well, also female franchise.
MR WILLIAMS: Yes.
GUMMOW J: Emancipation of slaves was one thing, but votes for women were seen as quite another.
MR WILLIAMS: Well, that has been remedied in this country, at least in Victoria, your Honour. Your Honours will have noticed I think in National Anti‑Vivisection in Lord Wright’s judgment as well the reference to having had Lord Simonds draw Lord Wright’s attention to the passage from Tyssen, that is at 50, about point 7, and I think there is some reference there to ‑ ‑ ‑
GUMMOW J: Well, your submission, as I understand it, is that you confess and avoid what is said at the bottom of page 50, there is no usurpation of the functions of the legislature.
MR WILLIAMS: Yes, we certainly say, when we come to looking at this case ‑ ‑ ‑
GUMMOW J: Because of the matters the Chief Justice and Justice Hayne were putting to you as to the nature of the relevant public benefit.
MR WILLIAMS: I do not shrink from the proposition that in today’s times the court ought not, at least in any automatic way, take the view that it would be contrary to the policy of the law for it to approve a charitable status for an organisation that had as part of its armoury the discussion as to changes of the law. Indeed, a number of the text writers have pointed out that even prior to Lord Parker’s decision in Bowman that there were quite a number of examples where the courts had approved cases of that nature.
GUMMOW J: Yes, but if you look at Lord Wright’s speech at page 52, that is the clue to what is going on. He says:
The present capacity of the appellant society . . . This conclusion does not in any way extend or affect the freedom of the society to promote their cause which is lawful . . . But it does prevent them from claiming the benefit of being immune from income tax, which would amount to receiving a subsidy from the state to that extent.
This is an example of the treatment in the tax law as driving the content to the law of charity.
MR WILLIAMS: Your Honour asked me before whether there ought be any relevant difference between the charitable concept in the revenue statutes as opposed to trust law and the answer, we would respectfully submit, is no. The two have travelled in tandem for a long period of time. There is no reason why they should be divorced, or no principle that one can identify about why they should be divorced.
HAYNE J: But nor, perhaps, should they be frozen, that is, the law of charity should not be understood in its engagement with the tax law as the law of charity frozen in time at a particular point. In that connection, ideas of the kind that were in play in the Native Title Act Case, and treatment of section 12 in the Native Title Act Case 183 CLR 373 at 484 to 488, are I think engaged, that the common law has to be understood as evolving. The legislative choice of a particular criterion as a common law criterion necessarily entails the capacity for development.
FRENCH CJ: Another good example of that, I think, is 51A of the Trade Practices Act, the unconscionable conduct according to the unwritten law of the States and Territories.
MR WILLIAMS: Yes. Indeed, many of the cases in the area of charity have made this very point that the law of charity moves with the times. If one goes back to its very genesis, which would seem to be back in about the 1200s, it was almost entirely at that stage engaged with pious causes. At a later point in legal history the concerns of charities became more secular.
In the 20th century the concerns of charities became more involved with social issues of the times. All of that process has been accommodated by the common law and can continue to be accommodated by the common law. It is certainly not the case that the legislature has spoken as to what it defines “political purposes” as for the purposes of the debate.
Can I turn to the rationale that has been proffered for the existence of the principle, the political principle? It is well known but it is set out in our written submissions at paragraph – sorry I have just lost the paragraph – perhaps it does not matter, your Honours will know it. We have given references to the various criticisms that have been made of it, but can I address them by specific reference to the factual situation with which we are concerned? It is paragraph 43 of our written submissions.
The first objection has been that the Court may not be in a position to determine the public benefit. We would submit in a case such as this where we fit into the first or second categories that the Court does not need to determine it unless there is some evidence raised to suggest that it is not in the public benefit. But leaving that aside, this is a case where we actually advanced evidence before the Tribunal as to the government laws and policies in this area and that led to the finding that what Aid/Watch did was consistent with those matters.
Secondly, the suggestion that the Court must accept the law as good or else the law will stultify itself becomes rather more difficult to apply when we get down the continuum from changes in legislation to changes in specific government policy to administrative decisions or practices or the like. One of the criticisms we have been making since this case commenced in its first instance decision was that there has never been a proper identification of what policy or practice it is said that Aid/Watch is so concerned to change. That is not to say that we do not engage in criticism of government from time to time, but unless one focuses on precisely what it is said the policy or practice or the like is, it is difficult to then go to the rationale that the law would seek to apply in terms of denying charitable status for a political purpose.
Finally, the third rationale was that the courts cannot usurp the role of the legislature or the Executive. Your Honours can read, and have read, the decision of the Tribunal. It is difficult to identify any place where it could be said that the process his Honour went through involved usurping the role of the legislature or the Executive. Where is the difficulty, one asks rhetorically. His Honour went through the Word mandated process, came to his findings about purpose, examined the material that had been advanced in oral and documentary form as to government policies and priorities and came to the view that what Aid/Watch was involved with was not contrary to those policies.
We submit that when one comes down and tries to apply these rationales to the particular case with which we are concerned none of them apply even if they were good rationales. For the reasons we have set out in our written submissions, there is a lot to be said for the suggestion that there are deficiencies in those rationales in any event. We deal with that in paragraphs 73 through to paragraph 86 of our written submissions.
Can I finally deal with the case in this Court which has examined this concept of political disqualification or political objection, that being Royal North Shore Hospital of Sydney v Attorney General (NSW). This, of course, was before National Anti-Vivisection. The actual objects of the organisation in question are referred to at page 399 at the top of the judgment and it is item (3), “The extension of the teaching of technical education in State schools” which was the one that was under consideration. The Chief Justice at 410 dealt with the concept of political disqualification at point 7 on the page:
It was contended that it was intended to promote, in the form of essays, propaganda for the extension of technical teaching in schools which are controlled by the State, and that therefore the execution of the trust would necessarily involve political propaganda for the purpose of changing.
Then there is reference to Lord Parker’s dicta in Bowman, reference to the temperance cases that I earlier referred your Honours to at page 411, they being Inland Revenue Commissioners v Temperance Council of Christian Churches of England and Wales, and then a reference to Re Hood, the decision of the Court of Appeal. Your Honours can see, just pausing, in passing how the factual finding as to the main purpose of an organisation can be all important. It was the differentiating factor between Re Hood and the other temperance case, categorisation of what the main purpose was. Over the top of the page, at page 412, his Honour said:
There are many objects, undoubtedly of a charitable character, which have or may have political aspects.
He then gives some examples. He goes on to say:
But it can hardly be suggested that, because the subject of public hospitals is a matter which is dealt with by legislation and in respect of which a State government will normally have a policy, any trust for the benefit of such a hospital or for adding to the number of such hospitals or for increasing their activities is non-charitable for the reason that it is directed towards political activity. A trust for the purpose of political agitation would be invalid as a charitable trust.
HEYDON J: Do you challenge that sentence?
MR WILLIAMS: I can only give a qualified answer to that, I am afraid, your Honour. The notion of political agitation has a pejorative notion to it. It would depend upon the main purpose or object of the organisation and the means by which it sought to carry out that main purpose or object. His Honour continues:
It is not difficult to suggest reasons of public policy which would prevent recognition by the law of the establishment in perpetuity of a trust for the promotion of a particular political object as such, or for the maintenance and advocacy during the indefinite future of the principles of a particular political party.
Then his Honour deals with Lord Sumner’s words in Bowman:
merely because the subject matter of the trust might be associated with political activity. In view of the great scope and extent of modern legislation, it is difficult, if not impossible, to suggest any subject which might not at one time or another become a subject of political propaganda.
Over the page his Honour applies these matters to relief of poverty, in particular:
The relief of poverty is one of the commonest subjects with respect to which political activity is exercised. So also is education, and it needs but little acquaintance with history to be convinced that what has been regarded from time to time as the advancement of religion is a subject with regard to which acute and active political propaganda may take place. But these considerations have never prevented trusts falling within the three classes mentioned from being regarded as charitable trusts.
Once again, this concept that things might differ between the first three categories and the fourth category. Then his Honour continues:
In this case one of the objects of the trust is to popularize and promote the principles which the testator has always advocated in his published works including – “the extension of the teaching of technical education in State schools.” This is a trust for purposes of education and of extension of education. It falls within a well‑recognized head of charitable trusts, and it cannot, in my opinion, be regarded as a trust to promote a particular object by political propaganda.
Justice Rich’s judgment commenced at 418. Could I observe in passing at point 7 on that page that his Honour differentiated between the objects of the trust:
the diminution of infant mortality in Australia, the improvement of the dietary habits in Australia and the spread of technical education . . . [from] The method by which he sought to accomplish his purpose –
Over the page at page 419 his Honour observed that the notion of a political object was a “vague and indefinite but well‑known objection”, and I do not need to read ‑ ‑ ‑
FRENCH CJ: What is the proposition that you are citing these passages to us ‑ ‑ ‑
MR WILLIAMS: What I am citing these passages for is that the courts, at least in Australia, have recognised for a long time that what might be described as political activity is not inconsistent with the way in which charities go about their business. Indeed, it is an inherent and necessary part of what they do. Now, that, of course, comes back to the question of what is meant by “political” but if we are talking about political in the popular sense of the word, as their Honours seem to have been doing, then political activity is permissible and not contrary to the notions of a charitable trust, indeed it is an inherent part of it.
When considering the vague and indefinite objection one needs to go back to what the vague and indefinite objection is really all about and it is not about stopping the sorts of matters that have been referred to in this case, that type of political activity. I will just give your Honours the other references. It is at 420 lines 5 to 8 and Justice Dixon at 426.
GUMMOW J: At page 406 in the argument for the Attorney‑General of Mr Dudley Williams, at the bottom of 406, he submits:
If there be an educational purpose or a religious purpose it is immaterial that it is also political.
Then he refers to two cases. Perhaps we should look at those.
MR WILLIAMS: I will take that on board over the luncheon adjournment.
GUMMOW J: That may provide some footing for the submission that you are putting Justice Hayne and the Chief Justice, I think.
MR WILLIAMS: Yes. Your Honours, I will just give your Honours a reference to the remaining passages. I referred to Justice Dixon at 426. I have to draw your Honours’ attention to the last paragraph. This is the well‑known passage about the law being in an unsatisfactory condition. I need to draw your Honours’ attention to the last paragraph:
Again, where funds are devoted to the use of an association of persons who have combined as a political party or otherwise for the purpose of influencing or taking part in the government of the country, it is evident that neither the good intentions nor the public purposes of such a body can suffice to support the trust as charitable.
We would submit that that reference to “influencing” there needs to be read in the context of the matter that was under consideration. That is all I wanted to deal with in that case.
Her Honour Justice Crennan asked me earlier whether there was any evidence about the impact that Aid/Watch’s activities might have had. One passage that we have been able to locate on the run, so as to speak, is at page 63 in volume 1. I am sorry, this is a more narrow question. This was the one concerning the free trade agreement that your Honour put to me earlier. I am sorry, I have been reminded it was Justice Crennan’s question to me rather than Justice Kiefel, my apologies. That was on the free trade agreement. Over the luncheon adjournment we will collect together the answers to your Honour Justice Kiefel’s question.
HAYNE J: Can I just see if I understand what you seek to take out of North Shore coupled with where we have got to so far? I would understand you to proceed in part by these propositions. One, political debate is a defining characteristic of the Australian system of government – see Lange. Two, at the most general level promotion of political debate is a public good. That is the necessary consequence of the observation made in proposition one. Proposition three, promotion of an aspect of political debate about political choices made in the relief of poverty is a public good. Proposition four, whether promotion of debate about one, all matters of political controversy generally or, two, every species of political controversy would be a public good, could be left as an open question, as could also proposition five, whether promotion of legislative change is capable of being seen as a public good. Is that where we have got to?
MR WILLIAMS: Yes, your Honour.
GUMMOW J: The Canadian courts have taken quite a different tack, have they not?
MR WILLIAMS: They have indeed. Just before we rise, I have to accept, of course, that the Canadian courts have the strictest view against me in this area. We submit the vice has arisen by reason of the label, that what has occurred is that the Canadian courts have taken the word “political” and have said to themselves, in a popular sense, what can the word “political” mean? Then once one gets drawn into looking at the word in its popular meaning, one can envisage that many, many aspects of what occurs in everyday society can be categorised as having a political flavour, a bit like the way the High Court in Royal North Shore Hospital was considering that term.
Unlike Royal North Shore Hospital, the Canadian courts have said if it is political and we look at the concept of political in a very broad way, then that is a disqualifying factor. That has then led to a development of the law in a fashion that has swept away the ability for many, many charities to ‑ ‑ ‑
GUMMOW J: How do they face up to the fact that they were reasoning in that way in the face of their Bill of Rights?
MR WILLIAMS: I am not sure that there is a ‑ ‑ ‑
GUMMOW J: Is there any intersection attempted?
MR WILLIAMS: I will have to take that question on notice, your Honour. I can make this submission to your Honour, that the situation in Canada has gone so far that there is even now a provision in the Income Tax Act that uses the word “political”. It is not in a qualifying way, but one will find that proposition developed in the case Action by Christians for the Abolition of Torture v The Queen. It is referred to our written submissions and I will give your Honours the citation from there. But your Honours will find ‑ ‑ ‑
HEYDON J: Actually there is a better one. It is 225 DLR (4th) 99.
MR WILLIAMS: Thank you, your Honour. In any event, your Honours will find a heading “Parliament of Canada” at paragraphs [54] and following and there set out is some of the income tax legislation. The way that it works is that there is a definition of a “charitable organization” and that requires the “organization devotes substantially all of its resources to charitable activities” and then there is a proviso that deals with situations where it “devotes part of its resources to political activities”. It actually uses the word “political” now in the legislation. In that case, that is Action by Christians, at paragraph [60] and thereabouts the court goes to dictionary definitions as to what is meant by the word “political”. That is how one gets this expansive sort of idea that there are all sorts of disqualifications that come with the label “political”. Is that a convenient time, your Honour?
FRENCH CJ: Thank you, Mr Williams. We will adjourn until 2.15 pm.
AT 12.47 PM LUNCHEON ADJOURNMENT
UPON RESUMING AT 2.16 PM:
FRENCH CJ: Yes, Mr Williams.
MR WILLIAMS: Before lunch, Justice Gummow made reference to the argument in Royal North Shore Hospital and the two cases that were there referred to – In re Scowcroft, and Villers‑Wilkes. We have had copies of those made and I think they are with the Court attendant. I think your Honours have them. Neither of them refers to the label “political”, though they both provide a modicum of support for our position, but they are not cases that are going to turn the decision one way or another. They do provide a modicum of support. I do not intend to take your Honours to them as a result. The second matter that I wanted to deal with – I am sorry, your Honours would have also received a copy of - we obtained through the Court library Southwood v Attorney General.
The last matter that I wanted to deal with is the question concerning the notion of effectiveness, or the question of whether or not the things that Aid/Watch is concerned with doing, whether or not they have the desired outcome. What we say about that is that a charity does not actually have to demonstrate or to prove that its activities actually work in order for it to receive charitable classification, at least within the first three classes, and probably within the fourth as well.
The activities have to be in furtherance of the objects and the objects have to be directed to the relief of poverty. We submit that a charity does not have to demonstrate that its activities actually achieve the desired effect. The examples that I gave before lunch from religious cases and educational cases would support that proposition.
To the extent that it is necessary to establish some sort of connection between the activities and that which is sought to be achieved, there are a few pieces of evidence that I point to. In the first volume of the appeal book at pages 45 to 46 – if we start from the foot of page 43 – for your Honours benefit most of what appears on page 43 is that passage that is extracted in the judgment down to about the fifth‑last line, commencing “So it’s like a circle” -so the quote taken in the judgment stops just before those words “So it’s like a circle” and Mr Goodman went on after that long description to say that:
it’s like a circle, it’s like a cycle, it begins with monitoring, moves to research, we become aware of this, use for monitoring, we move to research, we go as if we’re on the ground, we bring that research back into the Australian context through campaigning, we seek to influence the practices and the monitoring continues. So for a number of our what we call campaigns take this form and we pat ourselves on the back when for one reason or another a practice is changed and they have changed and whether or not we can prove that we actually enabled changes in practices is a bit of a moot point but we certainly pat ourselves on the back and see that [as] validating our existence in terms of improving the situation for people on the ground who are recipients of Australian aid.
To put a little bit more content to that, at the foot of page 45, between about line 38 and the bottom of the page, there are some references to what Aid/Watch was doing in the context of the tsunami relief effort in Aceh and that was involved in working with the local people about the way in which the aid had been delivered. I invite your Honours to read down to the following page at 46 to line 16.
In terms then of two examples of how this works in practice, before lunch I made mention of Aid/Watch’s concern about export credit agencies such as EFIC. That is dealt with at page 46 down to the foot of the page. Mr Goodman gave evidence as to Aid/Watch’s concern in relation to EFIC, what it did, and then the program of research:
three or four in depth research projects that investigated the environmental and social impacts of specific ethic projects and this was very well received and led over time. We can’t say that – although obviously in our publications, we like to claim that we had an influence on the process, but over time EFIC did indeed introduce a set of guidelines shaping its decision making screen, effectively, environmental and social guidelines to screen their projects.
The evidence of those policies is to be found at volume 1, pages 186 and following. It is a printout from the EFIC website and it tells us about the environmental policy amendment that was the subject of some revision in April 2006 of its earlier safeguard policies. We see that at line 45. Line 53:
EFIC has an Environment Policy which is subject to periodic review.
Then over the page at 187, 1.2, line 30 I should say:
EFIC has adopted this Environment Policy to enable it to better identify and assess any significant environmental impacts of export transactions, overseas projects and overseas investments for which EFIC facilities are sought. The Policy outlined below is an update of EFIC’s previous Environment Policy which was adopted and implemented in 2000.
FRENCH CJ: But so far as effectiveness might be relevant, it is nothing more really than speculation on the part of the witness that their input might have had some effect on these guidelines.
MR WILLIAMS: There is a fair inference to be drawn, we would submit, that given that these were the very activities that Aid/Watch was campaigning about that there is a cause and effect but proof. We would say there was a reasonable inference to be drawn. Secondly, your Honours, so far as AusAID itself is concerned, Mr Goodman dealt with that in his oral evidence at page 47 about line 32, down to the bottom of the page.
One of the concerns that Aid/Watch had was in connection with “tied aid” or what it calls “boomerang aid” and I would invite your Honours to read that. The AusAID publication from its website is to be found at volume 1, pages 202 and following, under the heading “Development Effectiveness” at page 202, lines about 15 to 20:
The Australian [Government] is committed to strengthening the performance orientation of Australia’s aid program. Aid must be monitored and evaluated against its objectives, to ensure it is effective in reducing poverty and achieving sustainable development. Australia will continue to undertake and strengthen its evidence‑based approach to aid programs.
Then over the page at page 204, lines 8 and following:
Recent years have seen international debate about evaluation of aid programs, and advances in a number of areas. With growing community interest in aid effectiveness, aid agencies are increasingly seeking credible evaluations of the long term impact of aid initiatives, using rigorous social sciences methods such as randomisation, quasi‑experiments, or rigorous qualitative techniques. Methods such as contribution analysis are being used to address the difficult questions of causality and attribution, particularly when considering the effectiveness of country programs. ODE ensures that Australia uses the latest in evaluation methodology and development thinking.
In the Tribunal’s decision it made reference to a number of scholarly‑type reports from Aid/Watch, and I have already given your Honour a reference to where one finds that significant publication called, “Fighting Poverty or Fantasy Figures?” That is at 1/250. Your Honours will see merely by reference to the executive summary on 252 that the nature of the research and scholarly approach to the problem the – your Honours will see at page 253 between lines 30 and 40 the key questions that are sought to be addressed by the paper:
·Does the aid money that Australia gives provide a genuine commitment to relieving poverty in our region?
·How is Australian aid being distributed and on what basis?
·How could it be doing better?
References throughout this document - if one just goes to the headings: at 254 “Aid Effectiveness, What Underpins High Quality Aid?”; at 256 “Quantity – Does Australia give enough? Statistics show we trail most rich countries”; at 257 the heading “What is real aid? the key international criteria.”; at 258 section I is “Where is our aid money really going?”; at 259 “Debt Cancellation, why does it inflate our aid?”; at 260 “Aid and Regional Security” and then at 263, “The Real Aid Map”.
Then at 264, section II, “Cross‑cutting issues affecting Australia’s aid” and the heading “Climate Change and Aid”. At 270 “Commercial interests in Aid . . . the boomerang continues”; then at 273 “Technical Assistance, an aid anachronism”; 275 “Transparency & Accountability” – and then the conclusion. Part of this was referred to in the Tribunal’s decision. Your Honours will recall that in the Tribunal’s decision there was some reference to this document and a call – I have lost the page reference.
FRENCH CJ: Anyway, there is a reference to it. Do you need to take us to it?
MR WILLIAMS: Yes, it is the ‑ ‑ ‑
BELL J: At 814, 31 and 32.
MR WILLIAMS: Yes, thank you, your Honour. It is the last sentence in paragraph 31:
The report concluded with “a call to action” which was summarised as follows:
“This is a call to action to government –
Your Honours will see that not only was it a call to action to government – this is at the foot of 277 – these are the words that follow that:
But significantly, there is call to action to the Australian public to have this urgent debate about aid and to dare to ask – Where is my aid money going? And how can it be done better?
Your Honours will then see the several pages worth of footnotes to the references that the authors had regard. Your Honours, we otherwise rely on the matters that are contained in our written submissions, unless your Honours wish to raise anything with me.
FRENCH CJ: Thank you, Mr Williams. Yes, Mr Bennett.
MR BENNETT: May it please the Court. Your Honours, apart from some introductory remarks and some concluding remarks, my submissions will be divided into 10 sections. May I take a moment to tell your Honours what those 10 are. The first is a discussion of levels of generality of purpose which is really what we say this case is about. The second is findings of fact and law. The third is how the political exclusion operates in relation to the four categories. Fourthly, its application or non-application, rather, to incidental activities and the limits of that exception to an exception.
Fifthly, whether it applies merely to legislation or also to executive action, as we say it does. Sixthly, whether it applies to seeking change or also to seeking….., as we say it does. Seventhly, the Lange argument that has been discussed this morning. Eighthly, the position in Canada and the United States. Ninthly, the question my learned friend poses - should the political exclusion be dropped in favour of a general public policy test? Tenthly, the matters in the notices of contention.
Returning to the introduction, it seems to be common ground that the law in relation to charity is the same whether applied in relation to wills and trusts or in relation to taxation in that the Income Tax Assessment Act picked up the common law or, more accurately, the equitable doctrine of charitable trust. There is an element of circularity, as was pointed out, which appears from the Anti-Vivisection Case.
There was a passage at page 52 of that case cited this morning where it was said that one of the factors one takes into account in developing the law of charities is that today the greater significance of the law is not in relation to the rule against perpetuities but in relation to an exemption from taxation. That is something the courts no doubt bear in mind. It is much easier to extend the idea of what is a charity when all you are talking about is an exception to the rule against perpetuities. One might take a different view when one is concerned with balancing the revenue and its interests against those of particular people or groups.
There is a circularity in that, but basically the law is the same in the two areas. That is what is said by this Court in the Central Bayside Case. I will not take your Honours to it. The reference is (2006) 228 CLR 168 at page 178, footnote (28). I will not take your Honours to that. That merely says that the Act picks up the general law relating to charities.
FRENCH CJ: It may be that the general law has developed, in part, through cases involving the application of the Act.
MR BENNETT: Precisely, your Honour. That is why I used the words “element of circularity”. Coming then to my first section, I apologise if what I am about to say to your Honours may seem a little trite. But I need to say it and underline it because it is, we submit, the major issue in this case and that is that purposes exist at different levels of generality and one cannot compare purposes at different levels of generality to ascertain a main or principal or sole purpose.
May I give this example to your Honour. Consider a claim for legal professional privilege where one is asking was the predominant purpose of the preparation of this document giving of legal advice or assistance. The old test, of course, was sole purpose. What I am about to say applies to either test.
It would be ridiculous for someone in a privilege case to cross‑examine the solicitor/author of the document to prove that he or she was a person who was desperately obsessed with money for himself or herself and say, “Your dominant purpose in preparing this document was to earn fees and therefore not to give legal advice or assistance”. That would be a nonsense because the reason it would be a nonsense is that the purpose of earning fees is at a different level of generality and does not detract from or affect the purpose of giving legal advice or assistance.
Conversely, I suppose, if the solicitor were to claim a deduction for the cost of the paper on which he or she had written the advice, it would not be open to the Commissioner to say, “But you swore in another case that your sole purpose was the giving of legal advice or assistance. How can you now say that the purpose was the earning of assessable income?” That would be a ridiculous stance for the Commissioner to take. Yet that is what my learned friends seek to do in a way. They say, “Was the purpose the high objectives, ultimate objectives, set out in the Constitution or was it to influence governments so as to achieve those purposes?” The answer is of course, that the relevant level of generality – it is the one or the other, but there is no level of generality at which it is both.
I have given the example which my learned friend criticised – and I will spend one minute on it to defend it against that criticism – the example of the worker who opens his car door in the morning while going to work. Now, if he were to have a workers compensation case, and if the relevant workers compensation statute said, as I do not think they do, but if it said, “You are to be compensated against injuries while engaged in any activity for the sole purpose of going to work”, the worker could truthfully say, “I opened that car door, causing my injury, for the sole purpose of going to work”.
He might also have a case against the manufacturer of the car. Let us assume that that manufacturer gave a warranty that it would indemnify against the consequences of injury while opening the car door, but only if the sole purpose of opening the door was to get into the car. The worker could truthfully, having just sworn that his sole purpose was to go to work, swear that his sole purpose was to get into the car. Both statements are absolutely true at their respective levels of generality. There is only a superficial linguistic inconsistency between them.
One would never say in any context, “Which was the more important purpose? Which was your dominant purpose, to go to work or to get into the car?” That would be a meaningless question, one to which there was no rational answer. My learned friend says his purpose was to go to work in that example. He says it is always the ultimate purpose, but that is simply not true as the case against the manufacturer indicates, and as the solicitor’s privilege case indicates. The ultimate purpose may be to earn some fees, but the relevant purpose, the purpose of privilege, is to give legal advice or assistance.
Now, coming down to this case, we have precisely that situation. Let it be assumed against me – and there are some arguments that deal with aspects of this later on – for the purposes of this argument that the ultimate purposes are wholly charitable, or predominantly charitable, the ultimate purposes of relieving poverty and achieving desirable objectives, ecologically and in relation to women and the various other grab bag of motherhood causes listed in the Constitution, if I can be so rude as to describe them that way.
Let me assume against myself that that is charitable. At that level of generality, the body can accurately say on that assumption we fall within the four categories of Pemsel’s Case. At that level of generality – and there is no exclusion – we are charitable. Then you come to the exclusion, and we say at a different level of generality, the level of generality of how it achieves that, how it sets out to earn how it does – it is not just how it does, it is how it sets out to achieve it, the method, if one likes – that method is, we would say, 100 per cent within the political exclusion.
Now, in that situation, what one does not do is say “Let us weigh the means and the end. Let us weigh your ultimate purpose and your intermediate purpose – your intermediate purpose of influencing government, and your ultimate purpose of thereby benefiting the poor”. That is the fallacious step you cannot take. That is saying “Did you open the door to get into the car or to go to work?” or “Did you prepare this document to give legal advice or to earn fees?” It is a meaningless inquiry, and when my friend keeps talking about findings of fact by the Tribunal, he is talking about what would ultimately be a meaningless inquiry.
It should be noted that in this case there might well be three levels of generality. There is the level of influencing public opinion, the purpose of influencing public opinion so as to effect government action, and the purpose of that action benefiting the poor. They are different levels, as I say, but we do not need to distinguish for present purposes between the first and second, because it is clear law that seeking to influence public opinion for the purpose of influencing government is within the exclusion, and I will come to that. So that is the first issue.
FRENCH CJ: When you speak of levels of generality, are you really speaking in terms of categorisation by reference to ends and means or final purposes and intermediate purposes?
MR BENNETT: Yes, your Honour. Yes, that is what I mean by that.
FRENCH CJ: So when the Full Court accepted that the purposes of the appellant were charitable in a legal sense, subject to the political disqualification, that is inconsistent with your argument?
MR BENNETT: No, your Honour.
FRENCH CJ: I am just wondering why your notice of contention raises that question.
MR BENNETT: Well, your Honour, the political disqualification operates at a different level of generality, or level of discourse, whatever phrase one wants to use, from the level of the ultimate objectives. As I say, subject to some minor matters I will be coming to, the ultimate objectives are to some extent within the relevant categories. There are some qualifications for that and I will come to it. For this argument I am assuming against me that they are entirely within it.
FRENCH CJ: The notice of contention just depends on reading through the objects and saying they are not it.
MR BENNETT: Yes, that is right, your Honour.
GUMMOW J: Now, I am not sure I understand this, Mr Bennett. A gift to my trustees to be applied for the relief of poverty is a perfectly good charitable trust?
MR BENNETT: Yes, your Honour.
GUMMOW J: They need a scheme to flesh it out.
MR BENNETT: Yes.
GUMMOW J: Not a scheme cy près but a scheme?
MR BENNETT: Yes.
GUMMOW J: How does considerations of what has to be fleshed out by a scheme match your notions of generality, levels of generality, in these submissions?
MR BENNETT: Well, your Honour, the scheme would have to be a scheme which (a) was charitable in the Pemsel sense, no doubt, but (b) was not caught by the exclusion. Now, while I am on that topic I should distinguish – because the most recent in this Court was Word Investments – the situation in relation to commercial purposes from the position in relation to political purposes. Commercial purposes are not an exclusion that takes you out once you are in. Commercial purposes are simply something that may in some cases indicate that you do not fall within the relevant category because your purpose is commercial rather than benefiting people at a charitable level.
Let me illustrate that with two examples. The first example is the exact converse of this case. Suppose John Smith, an aspiring member of Parliament, sets up the John Smith Foundation and the purpose of this foundation is to do charitable works in the constituency for the purpose of bringing John Smith’s name before the constituency and getting him elected to Parliament. Now, that is a case where the ultimate purpose is political but the intermediate purpose is wholly charitable; the method chosen, if one likes.
Now, that case again, it would be in because at the lower level of what is done and the intermediate level of the method chosen is entirely charitable, but it is then excluded by the political exclusion because the whole of the purpose of the ultimate level is political. The same might apply to a political party. My friend contends and we do not dispute that environmental activity can fall within the fourth category. On that basis the Greens might say we are a charity. Of course, they would fail because even if their entire ultimate purpose is within the fourth category, relation to the environment, they fail because their means is to get elected to Parliament and do political things to achieve it. Indeed, the same could apply to any political party.
One suspects that if one read the manifestos of any political party in Australia alone, one would see a list of things, many if not all of which would fall within the Pemsel categories, particularly as the fourth seems to involve a wide range of purposes beneficial to the community, yet, of course, political parties are excluded by the political exclusion, even if otherwise in. Now, in Word, of course, the court was not dealing with an exclusion of the political type, it was dealing simply in one of the issues in that case, with whether commercial activity for the purpose of raising money at a certain level disqualified one and the answer there, of course, is no. If a charity’s sole means of raising money is running functions or fun fairs or whatever runs to raise money and the money is entirely put to charitable purposes, it is not disqualified because at one level of generality its purpose is commercial. Commercial is not that sort of exclusion, unlike the political exclusion.
Similarly, a foundation established by a commercial enterprise which is established for the intermediate purpose of doing charitable works and the ultimate purpose of bringing that commercial body before the public’s eye as a desirable body to support, would be charitable, unlike the member of Parliament’s foundation, because again, at one level of generality all its activities are charitable and the commerciality of its purposes at another level does not exclude it if it is in from the relevant level. So, that is what I wanted to say about ultimate and intermediate purposes.
HAYNE J: Just before you part from that, you cast that argument in the form of rule and exception.
MR BENNETT: Yes.
HAYNE J: With political as an exception.
MR BENNETT: Yes.
HAYNE J: That manner of casting the argument presupposes, does it not, that the objects of Aid/Watch are charitable?
MR BENNETT: It could be either way round, your Honour. My political example is the other way round, where the objects are ‑ ‑ ‑
HAYNE J: I am not talking about the example, I am talking about this case, Mr Bennett.
MR BENNETT: I am sorry, yes.
HAYNE J: Your proposition in this case is, is it, that Aid/Watch’s objects are charitable but it falls within an exception carved out for institutions whose objects are charitable, which is described as a political exception? Is that the way the argument is put? If it is not, I need to know.
MR BENNETT: No, I put it more broadly than that, your Honour. That would be a consequence of my broader argument. My argument is that if at any level of generality one can say that the predominant purpose, or main purpose, whatever word one wants, is political, it is within the exclusion and taken out, although at another level of generality which may or may not be the ultimate level, it would qualify as charitable.
HAYNE J: For my own part, Mr Bennett, I am not yet grasping the levels of generality argument and I, at the moment, am not finding that helpful. That tells you a lot about me; it tells you nothing about the argument. But what it leads me to is the observation that stripped of this levels of generality idea, you seem to be saying you can characterise the objects of the organisation as charitable and yet somehow carve out something that is called a political exception. Whereas it would seem to me that stripped of notions of levels of generality, you have a choice at the point of characterisation of objects. What are the objects of this body? Are they charitable or are they put into another box marked “political”? That is not a question of exception. That is a question of different characterisation of objects. Do you see the difficulty I have?
MR BENNETT: I do, your Honour; and that is the approach which, we respectfully submit, is not the correct approach. We say you do not compare objects at different levels of generality to see the main object, the real object, the sole object or whatever. I respond to that with the solicitor example. One cannot say that in some way the purpose of earning fees and the purpose of giving legal advice or assistance are in any way competing purposes.
HAYNE J: I understand the example, Mr Bennett, but what I do not understand is how that fits with what the plurality said in Word 236 CLR 204 at, for example, pages 214 and following, paragraph 13 and following, and what there appears. It may be that that is a point to which you have to come at some later point in your argument. If so, come to it later at a point that is convenient.
MR BENNETT: Would your Honour pardon me a moment.
HAYNE J: The pages were 214, paragraph 13 and following.
MR BENNETT: Yes, your Honour, and that is why I was at pains to say that there is no commercial exclusion. It is simply that if you are commercial, to the extent that you are commercial you are not beneficent. But with a political exclusion we say, unlike the exclusion in Word, one carves it out, although one is otherwise in.
FRENCH CJ: How does one distinguish between a political purpose which, to use your terminology, is intermediate and affects the disqualification, notwithstanding the ultimate object which is within, say, a Pemsel category, and a political purpose which is ancillary?
MR BENNETT: Your Honour, I was going to come to that. We accept that the political exclusion does not cover incidental political activities. The example we give is the Royal Blind Society, which undoubtedly is a charitable institution, which might choose to campaign for a change in the law to have guide dogs allowed in restaurants, for example, if there was some law prohibiting that. Now, that would be an incidental part of the huge range of activities the Royal Blind Society engages in for the benefit of blind people and it would not result in its exclusion.
The Victorian Women Lawyers’ Association Case is a very good example of that. That was a case where the body had the ultimate objective of improving the status of women in the law, and perhaps a few others but they are not presently relevant, it had a range of methods by which it achieved that of encouraging women’s careers at the Bar and as solicitors and that range of methods included, as a very small part of it, changes in legislation. That was not at different levels of generality. It was at the same level of looking at all the things it did to achieve its objectives and saying that, looked at that way, the political part was a small part and therefore was incidental, like the Blind Society campaigning for guide dogs in restaurants.
We accept that fully. That is why we complained on the special leave application when your Honours may recall there was tendered by the applicant a number of letters from various charities saying, “We are really worried that this case is important because it will prevent us carrying on incidental political activities” and, of course, we say that is no part of this case. The Full Court acknowledged that in paragraph 38. Your Honours need not go to it, but it is accepted in paragraph 38. We accept it and have always accepted it.
It was put to me a moment ago that there may be a question as to whether the political exclusion is correctly described as an exclusion in the way I have sought to define it. In my submission, it clearly is. The Royal North Shore Hospital Case makes that clear in a number of places. For example, one place is a page my learned friend took your Honours to, page 426 of volume 60 CLR 396, where at point 6 of the page Justice Dixon as he then was, says:
Thus, when the main purpose of a trust is agitation for legislative or political changes, it is difficult for the law to find the necessary tendency to the public welfare, notwithstanding that the subject of the change may be religion, poor relief, or education.
It is clear that it operates as an exception to the first three Pemsel categories. Notwithstanding that you are in one of those, this takes you out of it. The cases are full of examples of religious ‑ ‑ ‑
HEYDON J: You are not really in one of them. You are not in one of them. To be in one of them, you have to be religion and public welfare, or poor relief and public welfare, or education and public welfare. Justice Dixon is saying, in effect, you are not in any of those categories because it is not for the public welfare. It is not antithetical to religion or poverty or education, but it is antithetical to public benefit. It is difficult for the law to find the necessary tendency to the public welfare.
MR BENNETT: Yes, but that perhaps is more referring to the reason for the principle of law rather than to the principle itself. My learned friend puts it as a matter of onus. He says that if you are in one of the first three categories, there is an onus to show it is not for the public welfare ‑ ‑ ‑
HEYDON J: There is a very fragile support in authority for that. It is partly an attempt by Lord Simonds to rationalise some earlier decisions and partly a very vague remark by Lord Wright. There are some rather vague statements in this very case to the same effect. I am not sure if the question were put under a microscope, it would come up as clearly as the submission would have had it.
MR BENNETT: Yes. Your Honour, even if that is so, that does not affect the level of generality argument, because one could say that if at any level of generality your predominant purpose is political, then that removes the public welfare element otherwise found in your purpose at a different level of generality. It is easier, we would submit, to look at it the way we look at it and say, well, one first asks if one is in but for the political element, if one likes, and then looks at other levels of generality to see if you are excluded. If there is a predominantly political element at the same level of generality that you got in under, then you would not have got in, because ex hypothesi your predominant purpose would have been political rather than the relief of poverty or advancement of education and so on. So it is only a disqualification where it is a predominant purpose, but it must be a predominant purpose in practice at a different level of generality, otherwise one would not be in in the first place.
GUMMOW J: I think a problem today with what Sir Own Dixon says at 426, and this may involve your argument in a way:
A coherent system of law can scarcely admit that objects that are inconsistent with its own provisions of the public welfare
This is pre‑Lange, is it not?
MR BENNETT: Yes.
GUMMOW J: A coherent system of law involves a constitution which has these values, to use that expression, which are now manifested in doctrine which are part of the law.
MR BENNETT: I will come to the Lange aspect, but we would ‑ ‑ ‑
GUMMOW J: That was not very apparent in 1938 but it is now.
FRENCH CJ: Now you have an extensive process of law reform which involves public submissions and consultations as part of the political culture in a way.
MR BENNETT: Yes. There are a number of levels of that. First of all, there is what we might call uncontroversial law reform, like putting statutes in plain English or taking Americanisms out of them or removing anomalies, matters of that sort. Then there is what we might call controversial law reform where there is some controversial public issue and the legislature decides to act one way because of a decision in relation to that issue.
I will come to the Lange exclusion. I do not need to address your Honours in any detail about the distinction between fact and law, but it is only that my learned friend does make something of it. My learned friend says there is a finding of fact by the Tribunal which the Full Court could not go behind. He does not, of course, distinguish between the factum probandum and the facta probantia, between ultimate fact and primary fact, and here of course the primary facts found by the Tribunal are unassailable, but where the Tribunal says something like the main purpose is one thing or another in the context where the facta probantia are that the ultimate purposes of those set out in the Constitution and the methods of achieving them are entirely political, in that context we would submit that the finding of fact rather ceases to be a finding of fact.
It becomes a finding of ultimate fact, if one likes, or a finding of mixed fact and law, but it is really a finding of law. I will not take your Honours to the distinctions in Collector of Customs v Agfa-Gevaert or in Hayes v Federal Commissioner of Taxation, your Honours are familiar with the distinctions. I can give your Honours those references if your Honours would be assisted by them. In our respectful submission, what my friend relies on as findings of fact just do not help him in the relevant sense, volume 2. The paragraphs he refers to are paragraphs 1 and 5 of the Tribunal’s decision which appear in volume 2 of the appeal book, the first at page 805. In paragraph 1 it says:
Aid/Watch does what its name suggests. It researches, monitors and campaigns about the delivery of overseas aid.
That is sort of controversial –
Its objective is to promote aid programs that are environmentally sound and effectively delivered.
Now, that in a sense is a composite statement of the objective. The word “promote” contains a number of sentences concealed within it. Paragraph 5:
The object of Aid/Watch is to promote the effectiveness of aid, both by ensuring that it is delivered where it is intended and by ensuring that its delivery is environmentally effective.
and so on. Now, those, we would submit, are sort of combined conclusions of ultimate fact rather than actual findings of fact in the relevant sense and to the extent that they involve weighing, whether he is doing it to earn a fee or give legal advice or whether it involves weighing the purpose of getting into the car and the purpose of going to work, if that fallacy is there, they are not findings of fact which bind the Full Court.
FRENCH CJ: You say these are characterisation issues which involve applying the concept of charitable purposes to these particular objectives.
MR BENNETT: Yes, your Honour.
FRENCH CJ: I do not know that we want to spend a lot of time on the distinction between fact and law.
MR BENNETT: No. I am not going to say any more about it, your Honour. It is a very brief matter. Well, I think I have covered the first four of my 10 submissions. I should perhaps just mention a couple of things while going through. Royal North Shore Hospital, as I have said, supports the idea of a disqualification at a different level of generality and so does McGovern.
FRENCH CJ: By the way, this term you keep using, “different levels of generality”, which speaking for myself I find has a tendency to misdirect, does that come out of any of the cases as part of the analysis, apart from the references in the Full Court?
MR BENNETT: No, your Honour. Although, I think the phrase was used by the Full Court.
FRENCH CJ: As I said before, you are really talking about intermediate and ultimate purposes and so forth in the context of characterisation.
MR BENNETT: Yes. Well, your Honour, one can talk about means and ends and intermediate purposes where one has a purpose of achieving X and the reason one wants to achieve X is that X will lead to Y. X is the intermediate purpose, Y is the ultimate purpose and, as I have said, they cannot be compared or weighed against each other. They are not in the same universe of discourse. That may be a better phrase than level of generality.
FRENCH CJ: I am not sure it is.
MR BENNETT: Universe of discourse. I will try and remember to shift to that phrase.
FRENCH CJ: I did not want to encourage you to do that.
MR BENNETT: I cannot think of a better way of illustrating it than by the solicitor in the privilege claim because that shows so clearly the fallacy in the approach that is taken against us, that it is ‑ ‑ ‑
KIEFEL J: You are talking about two parallel purposes, is that really what you are saying?
MR BENNETT: Well, the opposite to parallel, your Honour, in a sense; one purpose leading to another.
KIEFEL J: I mean, in the context of this case, if you have the overall purpose of improving aid, et cetera, are not the political discourse, et cetera, the means by which that purpose is ‑ ‑ ‑
MR BENNETT: Yes.
KIEFEL J: Well, what is wrong with that? I mean, what is the difficulty that they face if that is how it is to be put?
MR BENNETT: Well, only, your Honour, that there are perhaps three levels of generality here, or three universes of discourse here, whatever one wants to describe them as. One can call them the means and the end, if one likes, and one cannot weigh the means and the end and say, which is your purpose, the means or the end?
KIEFEL J: If you have something that is an identifiable charitable object and you have something which is not of itself a political purpose but the means by which the object is to be achieved, are you not left in the area of discussing whether or not there is absent the public benefit which Justice Dixon in the North Shore Case said was implicit in all cases of charitable objects?
MR BENNETT: Well, I do not need to, your Honour. If that were the sole way of looking at it, the Greens would be charitable, as would the Communist Party and possibly the other political party. They all have, or certainly most of them do, an ultimate purpose which could be found somewhere in the Statute of Elizabeth, or a number of purposes that could be found within it, within the spirited intendment of it.
KIEFEL J: You would test the public benefit, though, not just as an amorphous question, as a general – as you would say, a level of generality? You would say, would you not, that the charitable purpose which can be identified, put forward and achieved by the means which are also contained within the objects and the activities of the organisation either do or do not give effect to a public benefit? It has to be an identifiable public benefit, it is not the generalised public policy.
MR BENNETT: The means does not normally – although it can in some cases – detract from the public benefit. If it is for the public benefit that, for example, farmers should be prohibited from chopping down trees on their property, or the trees should be preserved, a political party which had that as its sole campaign objective would clearly not be charitable, yet a body which merely wanted to encourage graziers not to chop down trees, or pay them money not to chop down trees, or plant more trees or otherwise save the forests, would be charitable, but the moment it says, we are going to achieve this by getting into Parliament and passing legislation, that means it does not make the ultimate purpose any less for the public benefit, but it imposes a disqualification.
We would submit that the analysis which says that all the political disqualification does is take away what got you in, is not one that works in most cases of applying the political exclusion. The clearest example is McGovern’s Case itself. There one had an ultimate objective which is clearly charitable and well within the Statute of Elizabeth, expressly so, although one suspects that the drafters had in mind prisoners of bribery pirates rather than prisoners of conscience, but the ‑ ‑ ‑
KIEFEL J: Speaking of McGovern – if I may interrupt you –[1982] 1 Ch 321 at 340, Justice Slade said at about point E:
As will appear later, the mere fact that trustees may be at liberty to employ political means in furthering the non-political purposes of a trust does not necessarily render it non-charitable.
MR BENNETT: No, that is so. There was no real part of Amnesty’s aims, as I understood it, to achieve the payment of ransoms to evil dictators who were imprisoning prisoners of conscience. I do not think that was ever suggested to be part of their objective although, as I say, the payment of ransoms to bribery pirates may well have been what was in mind at the time. There is a discussion of that in the American case, in Massachusetts, about slavery, which is referred to in McGovern. It is suggested there that as long as you do it by persuading slave owners to manumit their slaves it is all right, but if you want to do it by changing the Constitution and the law it is not all right, so you limit it to the permitted purpose and not the prohibited one.
The point I am making about McGovern is that it is a case where one is initially in with the ultimate objective, which is just getting freedom for political prisoners, and one is then taken out of it because of the method employed. Whether one describes that as different universes of discourse or levels of generality or whatever, or means and ends or intermediate purposes and ultimate purposes, does not matter very much. Any of those phrases sufficiently encompass what I was submitting for.
The fifth matter, having slightly collapsed the first four into themselves, is an argument that it does not apply to executive action but only to governmental action or if it does apply to executive action, my learned friend suggests it only applies to policy, not to actual action. We submit it is not so narrow. The simplest way to demonstrate that is by some of the language in the Royal North Shore Hospital Case. In Royal North Shore Hospital 60 CLR 396 there are a number of references which make clear what I have said. One of them is in the judgment of Justice Starke at page 420 at point 7 where Justice Starke says:
The third object of the trust is not for the attainment of any political object –
and then he illustrates it –
It is not for the promotion of technical education in State schools by political means or activities.
So it seems broader than mere legislation. Justice Dixon at 426 – it is the second time I have gone to that page, but it is for a different purpose – at point 3, the end of the first full paragraph, says:
his essay competition really amounts to the institution of a propaganda to influence the administration of State education –
not legislation –
this is a political, and not a charitable object.
Then a bit further down ‑ ‑ ‑
FRENCH CJ: That was the contention, was it not?
MR BENNETT: It is a concession, perhaps, more than a contention, nor is it denied that – he repeats it in the next paragraph. He talks about:
when the main purpose of a trust is agitation for legislative or political changes –
and then the last paragraph on that page:
where funds are devoted to the use of an association of persons who have combined as a political party or otherwise for the purpose of influencing or taking part in the government of the country –
At the top of the next page:
in the present case, the main purpose is the spread of technical education. Under a system of State education those whom the testator doubtless regards as needing it are necessarily to be found in State schools. It is not his purpose to establish a means of affecting or interfering with government administration.
So, although it is true that the earlier statements of the doctrine gave as a reason for it the difficulty of a court approving a state of affairs other than that represented by the law of the land, that certainly is not the continuing basis of the doctrine and, we would submit, it quite clearly applies both to administration and to legislation or, at an intermediate level, to administrative policy.
The sixth matter I can deal with equally briefly. My learned friend repeats a number of times the point that his client does not or is not shown to advocate any particular change in legislation or policy. If one went back to the facts, which we do not need to do for the purposes of this appeal, some of the more extreme campaigns referred to in the judgment of the Tribunal may well fit into that category, but it does not matter, because it is quite clear, we would submit, that seeking to defend the status quo is in the same category as seeking to change it. That is made clear by the Molloy Case in New Zealand: Malloy v Commissioner of Inland Revenue [1981] 1 NZLR 688. At that time in New Zealand ‑ ‑ ‑
GUMMOW J: That is not on our list, Mr Bennett.
MR BENNETT: I am sorry, your Honours, I thought it was. I have copies for your Honours. Those instructing me were more alert to that than I was. This was a case involving the Society for the Protection of the Unborn Child whose object was to oppose any attempt to change the law of New Zealand which at the time prohibited abortion. One matter that was discussed was whether the fact that it was not seeking a change in the law took away the existence of the exclusion. That is discussed at page 695 at line 44:
The cases so far mentioned involve trusts having as their leading object a change in the law. So too did the passage in Tyssen specially mentioned by Lord Simonds in the Antivivisection case . . .
The relevant object of the Society in the present case however was not to change the law but to preserve it in its integrity against the claims of those who desired its alteration. Although the consideration advanced by Tyssen is not applicable to such a circumstance, reason suggests ‑
and we submit –
that on an issue of a public and very controversial character, as is the case of abortion, both those who advocate a change in the law and those who vigorously oppose it are engaged in carrying out political objects in the relevant sense. The law, statutory or otherwise, is not static. Unless it is for purposes such as the present to be regarded as immutable and having attained an unchallengeable degree of perfection the reasons given by Lord Parker of Waddington in Bowman v Secular Society Limited [1917] AC406, 442 – the inability of the Court to judge whether a change in the law will or will not be for the public benefit – must be as applicable to the maintenance of an existing provision as to its change. In neither case has the Court the means of judging the public benefit.
They then cite a passage from the judgment of Justice Dixon, as he then was, in Roman Catholic Archbishop of Melbourne v Lawlor 51 CLR 1. The passages are pages 32 to 33. I will not take your Honours to the case because the passage sufficiently contains, with italics, the part we rely on where his Honour said at the end of the quotation –
There have been many, and there are still some, provisions of the law, the maintenance or abrogation of which has been a matter of deep concern to adherents of one or other religious faith. But these have been considered, not charitable religious purposes, but political objects.
There is a statement by Lord Parker in Bowman v Secular Society, which again I am content to adopt the quotation here, to save going to it. I venture to add as a corollary to that statement that it would be equally true to apply it to the advocating or promoting of the maintenance of the present law because the court would have no means of judging, et cetera.
FRENCH CJ: It is Justice Vaisey in Hopkinson, is it not, referring to what Lord Parker said.
MR BENNETT: Yes, your Honour is correct. That is a very short point. One has the impression, looking at the materials and the judgment of the Tribunal, that there is a bit more condemning than applauding going on here, but whether or not that is so, it does not matter, we would submit. The seventh topic is the Lange argument and we say a number of things about that. The first is that the cases on the freedom of political communication in a number of places make the point that it is a freedom from interference with or restrictions on political communication, it is not a requirement to communicate. It is not something that can be used to require positively any particular form of communication. It is merely a restriction on prohibition.
Your Honours, we would say the same way here. The exclusion in relation to charitable institutions is not a prohibition or restriction on freedom of communication. It merely says we are not going to provide a particular tax benefit in relation to particular communications. That is something which we submit is simply not affected by it. Your Honours asked this morning about how it had been dealt with in Canada and the United States and in both places there are decisions which say that the maintenance of the political exclusion is not inconsistent with the American Bill of Rights or the Canadian Charter of Rights and Freedoms. I can give your Honours those references. In the United States there is Regan v Taxation with Representation of Washington – a slightly ungrammatically named society – (2003) 461 US 551 . I have copies for your Honours.
HEYDON J: You said 2003, it is actually 1983.
MR BENNETT: I am sorry, your Honour, that is because the page to which I was referring is headed 2003 for some reason. I apologise to your Honour for that mistake. It is at page 550, I think, of the United States Reports, page 2003 of the document I have handed up and paragraph [6], this is said, “These are scarcely novel principles –this is Justice Rehnquist delivering the opinion of the court:
We have held in several contexts that a legislature’s decision not to subsidize the exercise of a fundamental right does not infringe the right, and thus is not subject to strict scrutiny. Buckley v. Valeo . . . upheld a statute that provides federal funds for candidates for public office who enter primary campaigns, but does not provide funds for candidates who do not run in party primaries. We rejected First Amendment and equal protection challenges to this provision without applying strict scrutiny . . . Harris v. McRae, supra, and Maher v Roe . . . considered legislative decisions not to subsidize abortions, even though other medical procedures were subsidized.
GUMMOW J: This is construing section 501(c)(3), is it not, of the Code, the Revenue Code?
MR BENNETT: Yes, your Honour.
FRENCH CJ: The question here is the interface between the sort of underpinning propositions in Lange and the other cases about the way our Constitution is constructed with a representative democracy and so forth – the interface between that and the policy which underpinned the political exclusion at the outset, the notion of stultifying the law and comprising coherent systems of law and so forth.
MR BENNETT: Yes.
FRENCH CJ: It is not so much a freedom of speech issue as a question of whether those policy considerations can stand up in the contemporary constitutional framework.
MR BENNETT: Yes.
CRENNAN J: There is a question whether political as it is used in this area should in some way acknowledge the importance of public discussion, within a democratic society.
MR BENNETT: Yes, but, your Honour, let me come to the second aspect of it. There is a distinction between promoting public discussion and pushing one side in a debate. There might be a difference between a trust to establish a political debating society and a trust to promote principles of socialism or capitalism by public debate. In the area of education, as your Honours will see when I get to it, polemic education is excluded from the idea and we would submit that if one is to say that political debate is to be encouraged to the extent of extending the fourth category in Pemsel to cover it, it does not follow that one should go so far as to say that the expression of a particular political point of view falls within that extension.
First of all, if it did, that would totally override the political exclusion, my friend, of course, is not deterred by that, but we submit that is a – and I will come to why I submit that should not occur – but this submission would involve that consequence, because it would involve the consequence if extended beyond the debating society situation, the political debating society, it would involve the consequence that any form of political communication becomes protected by the fourth category of Pemsel’s Case.
HAYNE J: Well, assume for the purposes of argument that that large proposition may be either debatable or rejected. Assume from your point of view that the largest proposition you advance is rejected. Where does that leave the proposition put before lunch that promotion of an aspect of political debate about political choices in relief of poverty is a public good?
MR BENNETT: Well, that is reminiscent of what was described as a reducto et absurdum in Baddeley’s Case, the bridge for impecunious Methodists which by implication, it was suggested, would not be charitable.
GUMMOW J: That is because of insufficient public element not public benefit, insufficient public element, is it not? Baddeley’s Case is regarded as somewhat in its own category.
MR BENNETT: Yes, but that would be an example of picking up a category in the fourth group and combining it with the first and second ‑ ‑ ‑
GUMMOW J: The complaint in Baddeley is that it is capricious, is it not, to find these rich Methodists engaged in this activity? What is capricious about the linkage that Justice Hayne put to you?
MR BENNETT: What is capricious is this, your Honour, there is no particular benefit to poor people or to the advancement of education in talking about poverty or education.
HAYNE J: That may reflect a view of government as it stood in the 1930s. I am not sure that it reflects a view of government as it stands now, where government’s role extends into a large aspect of education, poverty relief and the like.
MR BENNETT: There are also, your Honour, many reasons why one would not extend the breadth of the freedom of political communication to the concept of what is charitable.
HAYNE J: It is not extending the concept of freedom of political communication, I think, Mr Bennett. It is simply observing that a defining characteristic of the society in which this doctrine has defined its application is that of representative and responsible government underpinned by free political exchange and an understanding of what is meant by the term “political” when used, it seems, as a term of disapprobation in contradiction to the approving term “charitable”, requires some adjustment.
MR BENNETT: Your Honour, it is not so much a matter of disapprobation as a matter of whether the court should take sides or be seen to take sides or have to decide questions which are inappropriate for a court to decide and in the case of administering a trust, having to go further and administer the specific trust by doing it. Of course, there are many communications which might fall within the implied freedom of political communication which would not themselves be things which should, to use a vocative term, be included in the concept of charitable.
One example was given in argument this morning, that was a group that wanted to repeal the Racial Discrimination Act. Let us assume it goes further and wants to introduce racial discrimination. As long as it does not actually incite, it is free to do that under the freedom of political communication, but one would hesitate to say that because political communication is permitted and cannot be restricted because of the constitutional doctrine, therefore, it should be treated as being in the fourth category of Pemsel’s Case.
One could, as I say, understand that the example of a trust to create a debating society for political debate might fall within the fourth category and might be supported in that category by reference to the implied freedom, but to extend that to the actual expression of any political view which is covered by the freedom of political communication, would, in our respectful submission, be applying it far beyond where it ought to be applied. Certainly, the court can have regard to it. It would have regard to it in my example of the political debating society, but not in relation to anything anyone wants to say about any political topic, however unmeritorious or contrary in the minds of most people to good order and morals or whatever words one wants to use. There are, as I say, many things one is entitled to say but that does not mean one should subsidise them to say it.
GUMMOW J: That is a question of subsidy. What does that have to do with the development of the law of charity?
MR BENNETT: Your Honour, that is what the point made in Anti‑Vivisection that one matter the court takes into account in deciding whether to extend concepts of what is charitable is that today the main effect of being charitable is to obtain a fiscal immunity, whereas in the past, the main purpose was simply to avoid the rule against perpetuities. That is a reason why one might well think ‑ ‑ ‑
GUMMOW J: A fiscal immunity is entirely within the purview of the legislature.
MR BENNETT: Yes, your Honour, but ‑ ‑ ‑
GUMMOW J: They have chosen to use this criterion, and have to.
MR BENNETT: They have, your Honour, and we know that the criterion is used in many federal Acts and many State Acts which impose imposts.
GUMMOW J: Through lack of some legislative imagination, one imagines.
MR BENNETT: It may be, your Honour. The Church of the New Faith Case involved the Payroll Tax Act (Vic), the phrase there being “religious institution”. In developing the law the court looks to, as my learned friends are quick to say, modern circumstances. One of the modern circumstances is that today, whether you are charitable or not, it is comparatively insignificant that the rule against perpetuities does not apply to you, but – it may have some significance, but not a great one – it is of enormous significance that one has various fiscal benefits.
HAYNE J: If the legislature chooses this particular criterion for fiscal consequences on the footing presumably that adopting the legal concept of charity reflects what Justice Dixon referred to as the real or imputed intention of contributing to the public welfare, so be it.
MR BENNETT: Yes, your Honour, but it is a reason why the court might hesitate to have a very drastic change to the common law or equitable law of what is a charity, as opposed to incremental development. It may well be that the legislature contemplated incremental development, but did not contemplate someone totally changing it. For example, to change the common law so that a charitable institution was confined to an institution supporting the views of one political party which happened to be in power, or some other purpose which seemed at the time to be desirable, would be going far beyond what the legislature had contemplated and that fact would be a reason why, we would submit, the court would hesitate to extend the meaning in a dramatic, as opposed to an incremental, way.
It may be that the other possible level at which one could answer it is to say that when the Act uses the word “charitable” it adopts the equitable meaning of the word in the cases, it adopts incremental change but does not adopt sudden and dramatic change.
GUMMOW J: Bowman’s Case may readily be seen as a dramatic change, may it not? The Anti‑Vivisection Case may be seen as a dramatic change. They were both after Pemsel’s Case is the point I am trying to make to you.
MR BENNETT: Yes. Pemsel’s Case was certainly before relevant legislative provisions.
FRENCH CJ: The legislative adoption of this criterion is in a setting in which the so‑called political exception has been the subject of more than one judicial criticism and of course much – in other words, it is an area which is potentially unstable, is it not?
MR BENNETT: Your Honour, we submit it is not as unstable as is suggested. There are, as in most areas of law, some blurry lines and there are some difficulties at the borderline as to whether a body falls on one side or the other. But in the vast majority of cases it is going to be fairly clear which side of the line one falls on. It is the old example of not knowing when day ends and night begins but knowing when midnight and midday are.
GUMMOW J: The problem for your client, Mr Bennett, in a way is that, given this background of instability, there has been no attempt to put into the Australian federal law those words of exception in 501(c)(3) of the Revenue Code of the United States.
MR BENNETT: No, there has not, your Honour. It would involve not only the Federal Government but every State and Territory Government amending quite a large number of Acts.
FRENCH CJ: I think there are about 15 Commonwealth statutes and about 160 State and Territory statutes in which the term appears.
GUMMOW J: It might require some political will.
MR BENNETT: It does, your Honour. Perhaps it requires some charitable body to promote law reform.
GUMMOW J: I was thinking about that.
HAYNE J: We will have a debate about it, shall we, Mr Bennett?
MR BENNETT: Yes. There are two Canadian cases which deal with the Charter of Rights and Freedoms. The first is called Human Rights International in Canada Incorporated - so Human Life International in Canada Incorporated. The misuse of prepositions in names seems to be a characteristic of many of these bodies.
CRENNAN J: Be charitable, Mr Bennett.
MR BENNETT: Yes. I was hoping my learned friend could explain the justification for the slash in the middle of his client’s name.
HAYNE J: It is the promotion of education, Mr Bennett.
MR BENNETT: Yes.
GUMMOW J: Do we have this decision?
MR BENNETT: Yes. It is Human Life International in Canada Inc v Minister of National Revenue [1998] 3 FC 202.
FRENCH CJ: Is this on our list? I do not think we have it.
MR BENNETT: I am sorry, your Honours. This arose out of a question this morning. We found it at lunchtime. We have not had an opportunity to print copies of it. I will have that done before tomorrow morning. It is a very short paragraph and I will read it, your Honours, but I will give your Honours the case in the morning:
With respect to the Charter argument based on alleged infringement of freedom of expression, the basic premise of the appellant is untenable. Essentially its argument is that a denial of tax exemption to those wishing to advocate certain opinions is a denial of freedom of expression on this basis. On this premise it would be equally arguable that anyone who wishes the psychic satisfaction of having his personal views pressed on his fellow citizens is constitutionally entitled to a tax credit for any money he contributes for this purpose. The appellant is in no way restricted by the Income Tax Act from disseminating any views or opinions whatever. The guarantee of freedom of expression in paragraph 2(b –
The other case, your Honours, which approved that case is Alliance for Life v Minister of National Revenue 174 DLR (4th) 442 at paragraph [73]. I have copies of this. No, I am sorry it is not paragraph [73]. Yes, it is at paragraph [87]. We refer to section 2(b) of the Charter:
This same point was fully argued and disposed of by another panel of this Court in Human Life International. I can do no better here than adopt the views of Strayer J.A. for the Court -
and then there is the passage I have just taken your Honours to.
GUMMOW J: What page is it in the report?
MR BENNETT: It is page 488, your Honour, paragraph [87].
GUMMOW J: Thank you.
HAYNE J: In the case you have just handed to us, Alliance For Life, a step, I think, in the reasoning seems to be that, as appears at page 482 paragraph [69], the communications coming from this body were not to be classified as educative, but the body’s purposes were not educational, they were more aptly described as persuasion or indoctrination and the passage at paragraph [87] is developed, is it, primarily in connection with the fourth head of Pemsel or is it treated as a stand‑alone point?
MR BENNETT: When paragraph [87] begins with the words “This same point”, that seems only to relate to the heading immediately above it. There does not seem to be any relation of the argument to the facts of the case.
HEYDON J: On page 484, paragraph [77] says:
This conclusion requires that the appellant’s four alternative arguments –
If you can have four –
now be addressed.
Then we get one, two, three and the fourth one, the one to which you refer.
MR BENNETT: Yes. The four alternative points seem to be put as flanking points in the sense that they do not relate specifically to the arguments previously dealt with. One is procedural fairness, one is estoppel, one is legitimate expectation, and then the last argument, which may smack of desperation, is the Charter. They just refer to it without relating it to the bases of the decision.
GUMMOW J: The Supreme Court decision I had in mind was the Vancouver Case, I think.
MR BENNETT: That is a neighbourhood case, I think, your Honour ‑ ‑ ‑
GUMMOW J: The Vancouver Society Case, which is ‑ ‑ ‑
HEYDON J: [1999] 1 SCR 10.
GUMMOW J: Yes, that is it – Justice Sopinka’s judgment, I think, in that case.
MR BENNETT: Yes, your Honour, the Vancouver Case is - I do not have copies of that for your Honour, but it seems ‑ ‑ ‑
GUMMOW J: Page 465?
MR BENNETT: I have that part, your Honour. I am just trying to find the beginning of the case. It is the Vancouver Society of Immigrant and Visible Minority Women v Minister of National Revenue [1999] 169 DLR (4th) 34. At the very end of that case, page 68 of the printout that I have, paragraphs 207 to 209 of the judgment said:
One final submission merits some consideration. It was argued by the interveners, the Minority Advocacy and Rights Council, the Canadian Ethnocultural Council, and the Centre for Research Action on Race Relations that the rule in Pemsel . . . violates s. 15 of the Canadian Charter of Rights and Freedoms by discriminating against immigrants and visible minority women on the basis of the analogous ground of immigrant status as well as the enumerated grounds of race, gender, and national or ethnic origin. Very briefly, the argument runs as follows. The purpose of the Pemsel rule is to support socially desirable activities of registered charities for the benefit of their beneficiaries by facilitating the raising of revenue to fund these activities. Denying the Society registration . . . may result in its being able to raise less revenue, which means that immigrants and visible minority women might not enjoy the full range of activities –
et cetera. Therefore it denies them benefits.
With respect, because I see no merit to this argument, it can be dealt with briefly. The interplay of Pemsel and the ITA results in a scheme whereby any organization, by restricting itself to charitable purposes and activities, can qualify for registration as a charitable organization. This proposition also holds in its inverse form: every organization, to qualify for registration under s. 248(1), must restrict itself to charitable purposes and activities. This requirement applies uniformly . . . The rejection of the Society’s application for registration was a consequence of the nature of its purposes and activities, not of the characteristics of its intended beneficiaries –
and the argument is rejected. That seems to be a rather different sort of argument based on the Charter, but again it is rejected.
Your Honours, the next topic is the Canadian and US cases. This is the eighth out of 10, so I will not be going for a long time in the morning. We point out that McGovern has been approved in a large number of Canadian cases. I will just list them for your Honours with the references. I will tell your Honours about them very, very briefly. There is Re Toronto Humane Society;Public Trustee v Toronto Humane Society (1987) 40 DLR (4th) 111. That was a society with an object of creating a humane public sentiment and to enact laws for the prevention of cruelty, but with an activity of supporting the Coalition Against Pound Seizure whose ultimate aim was to end the use of animals in research and…..amendment was charitable. Justice Anderson said that the objects of CAPS were political, but the Society’s role in supporting it was close to the point where a court intervention was required, but not quite there. So that is an example of a case like Victorian Women Lawyers, where there are genuine mixed purpose at the same level and it is just on one side of the line. But what is important is that McGovern was approved in it.
The next case is Positive Action Against Pornography v
Minister of National Revenue [1988] 2 FC 340 and this is the Federal Court of Appeal where an organisation which sought legislative change by activities of presenting to the public selected items of information about pornography was not charitable. Justice of Appeal Stone held that the organisation sought legislative change of its own liking. He rejected the argument that its views as to what is pornographic coincided with those of the public and he said that political activities were not incidental.
The third case where McGovern was applied was Notre‑Dame‑de‑Grace Neighbourhood Association v Minister of National Revenue [1988] 2 CTC 14, paragraph 12, where a neighbourhood association with objects including assisting persons seeking information about social issues and assisting no‑income residents was not charitable because it had activities that went beyond education and was, in effect, an activist organisation.
Human Life International I have already referred your Honours to, but at page 10 of the printout – this was an organisation with the objects of protecting the unborn, elderly, handicapped, promoting true Christian values and activities of giving lectures and publishing literature containing its point of view – was held not to be charitable. The Federal Court of Appeal referred to the approval of McGovern in Action Against Pornography, noted the characterisation of types of political activity in McGovern was not exhaustive and endorsed “the court has no means of knowing” statement as reflecting the rationale of the principle.
Justice of Appeal Strayer specifically held that activities designed essentially to sway public opinion on a controversial social issue are not charitable but are political. Then Alliance for Life v the Minister, I have taken your Honours to that - that is [1999] 99 DTC 5228 and the court again applied McGovern. Justice of Appeal Stone said this at 5248 “I am not aware that the categorisation of political purposes by Justice Slade in McGovern has been seriously questioned”.
Then the last case which I will spend a little more time on is
Actions by Christians for the Abolition of Torture v Canada [2003] 225 DLR (4th) 99 and I will hand up copies of that to your Honours. That was a case your Honour Justice Gummow referred to at the special leave application.
Your Honours will recall, as is made clear at the bottom of the front page, that section 149.1 of the Canadian Income Tax Act provides that a charitable organisation which “devotes part of its resources to political activities” which are “ancillary and incidental to its charitable activities” and “do not include the direct or indirect support or opposition to any political party or a candidate” shall not consider to be devoting that part of its resources to charitable activities and the Minister determined the administrative limit was 10 per cent. This body was held to be on the wrong side of the line.
FRENCH CJ: Is that the wrong side of a statutory line or the wrong side of a common law line?
MR BENNETT: Yes, your Honour.
CRENNAN J: It is [68].
MR BENNETT: The wrong side of a statutory line.
CRENNAN J: Paragraph [68], I think, demonstrates that.
MR BENNETT: Yes. I was going to go to [36]. I will go to [68] first. At paragraph [68]:
I have no difficulty in concluding that pressuring governments or government members through the sending of letters and postcards pertaining to current issues constitutes a political activity within the broad meaning signified by subsection 149.1(6.2). Such activity will be prohibited to a charity if it is partisan. It will be allowed if it is not partisan, provided of course that it has not become an end in itself and provided it is incidental or ancillary to the charitable purposes –
That is, of course, under the Canadian test, but it is of interest to see how it applies it. At paragraph [36] this passage appears:
The most complete analysis to date of the concept of “political purposes” is that made by Mr Justice Slade in McGovern –
and then the categorisation is referred to and, of course, that categorisation, as I should have stressed before, includes:
(iv)to procure reversal of government policy or of particular decisions of governmental authorities in this country, or
(v)to procure reversal of government policy or particular decisions of governmental authorities in a foreign country.
and then he said the list is not exhaustive. But certainly it can be referred to in relation to the distinction between legislation and executive action. It is interesting that at paragraph [41] Justice Décary, with whom Justices Létourneau and Nadon concurred, said this:
In the facts of this case, I am not certain, when I see the kind of causes espoused by the [organisation], of the precise meaning it gives to the word “torture”. If it understands this word to include such treatments as the death penalty and excision –
I am not sure what excision is –
these are definitely matters of controversy. In law, although the abolition of torture is a principle recognized in Canadian and international law . . . the Supreme Court of Canada itself accepts that there can be derogations, albeit not “easily” from this “emerging, if not established” peremptory norm of customary international law and that, “in exceptional circumstances, deportation to face torture might be justified”.
And, therefore, he doubts that it transcends the political debate.
GUMMOW J: At page 116 and following there is a discussion of Jackson v Phillips, which is said to be remarkable.
MR BENNETT: Yes, paragraph [50]:
The appellant also seeks support in the remarkable decision of Justice Gray of the Supreme Judicial Court of Massachusetts, rendered in 1867 in Jackson v Phillips (1867), 96 Mass. 539. The case of involved a testamentary trust which had as one of its objects the preparation and circulation of books, newspapers, the delivery of speeches, lectures, and such other means as . . . will create a public sentiment that will put an end to negro slavery –
Justice Gray held the emancipation of the slaves was very definitely a charitable purpose –
and he ruled the trust valid, but he did it by saying that the manner:
is not by legislation or political action, but by creating public sentiment, which rather points to moral influence and voluntary manumission.
He is not talking about public sentiment with a view to voting for something or public sentiment with a view to influencing government to legislate. He makes that clear in the next paragraph, paragraph [52]:
Justice Gray’s decision, to be sure, supports the proposition that the abolition of torture of prisoners like the emancipation of the slaves, is in itself a charitable purpose within the meaning of the Statute of Elizabeth, but it does not support – quite the contrary – the proposition that this purpose is one of charity when the means
employed consist of pressuring governments. As Slade J notes, in McGovern, at page 514 . . . the pressure (in Jackson v Phillips) was to be directed by the trustees against individual persons, rather than governments, with a view to obtaining the “voluntary manumission” –
Paragraph [53]:
I conclude that, in light of the case law, the exercise of moral pressure on governments is a political purpose or activity.
GUMMOW J: Now, Mr Bennett, there is a discussion of both the slavery case and McGovern in the latest edition of Scott on Trusts, it is the fifth edition of Scott on Trusts, section 38.7.7 through to 38.7.9 which you might look at overnight, I suspect.
MR BENNETT: Yes, I will. Your Honours, I would not expect to be very long in the morning. I thought an hour maximum, probably less. So we should finish well by lunch time, in time for the next case.
FRENCH CJ: The Court will adjourn until 9.30 tomorrow morning for pronouncement of orders and 10.15 for the resumption of this matter.
MR BENNETT: Your Honour does not mean pronouncement of orders in this case, I take it?
FRENCH CJ: No. Not yet.
AT 4.16 PM THE MATTER WAS ADJOURNED
UNTIL WEDNESDAY, 16 JUNE 2010
- AGLC
- Aid-Watch Incorporated v Commissioner of Taxation [2010] HCATrans 154
- Case
- [2010] HCATrans 154
- Decision Date
CaseChat Overview and Summary
The central legal issue before the High Court was whether Aid-Watch's purposes, as stated in its constitution, were exclusively charitable within the meaning of the *Income Tax Assessment Act 1997* (Cth). Specifically, the Court had to determine if Aid-Watch's stated purposes of promoting public debate and influencing government policy on foreign aid were charitable in law, and if so, whether they were exclusively charitable, or if they extended to non-charitable purposes.
The High Court held that Aid-Watch's purposes were not exclusively charitable. While the Court acknowledged that promoting public debate and influencing government policy could, in certain circumstances, be considered charitable if they advanced a charitable purpose, it found that Aid-Watch's stated purposes were too broad. The Court reasoned that the promotion of public debate and the influencing of government policy, without a direct link to a recognised charitable head of purpose, could extend to political advocacy that was not necessarily charitable. The Court applied the established principles of charitable law, which require that for an organisation to be registered as a charity, its purposes must be exclusively charitable and fall within one of the recognised categories of charitable purposes, such as the relief of poverty, the advancement of education, or the advancement of religion. The Court found that Aid-Watch's purposes did not fit neatly within these established categories and were too general to be considered exclusively charitable.
The High Court dismissed Aid-Watch's appeal, upholding the Commissioner's assessment.
Orders
Orders of the court
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Background
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Evidence
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