Aid-Watch Incorporated v Commissioner of Taxation

[2010] HCATrans 58

[2010] HCATrans 058

IN THE HIGH COURT OF AUSTRALIA

Office of the Registry
  Sydney  No S280 of 2009

B e t w e e n -

AID/WATCH INCORPORATED

Applicant

and

COMMISSIONER OF TAXATION

Respondent

Application for special leave to appeal

GUMMOW J
HEYDON J

TRANSCRIPT OF PROCEEDINGS

AT SYDNEY ON FRIDAY, 12 MARCH 2010, AT 10.41 AM

Copyright in the High Court of Australia

MR D.L. WILLIAMS, SC:   May it please the Court, I appear for the applicant with my learned friends, MS S. KAUR‑BAINS and MS R.L. SEIDEN.  (instructed by Maurice Blackburn Lawyers)

MR D.M.J. BENNETT, QC:   If the Court pleases, I appear for the respondent, with my learned friends, MS M.N. ALLARS and MR D.F.C. THOMAS.  (instructed by Australian Government Solicitor)

MR WILLIAMS:   If your Honours please, the ‑ ‑ ‑

GUMMOW J:   Just a minute, Mr Williams.  We would be assisted to hear first from you, Mr Bennett.

MR WILLIAMS:   If your Honours please.

MR BENNETT:   Your Honours, a large part of this application appears to be based on a misapprehension that in some ways the decision below has the effect that a body which is otherwise charitable and engages in incidental political activities disqualifies itself.  It is very clear from the judgment of the Full Court that that is not the case.  That appears, for example, from paragraph 14 of the judgment at page 30 of the application book where it is `made clear that:

a political purpose will only be fatal to charitable classification if it is a “main purpose” –

There is no doubt that if the Royal Blind Society wants to engage in an incidental campaign to have guide dogs allowed in restaurants or on buses that that does not disqualify it, and we have never suggested to the contrary.  The letters which are affixed to the affidavit and the submissions seem to suggest that that is a point of some significance.  It is no point at all.  It just does not arise. 

GUMMOW J:   Would the Commissioner take the view that the activities of Amnesty International, for example, would be disqualified?

MR BENNETT:   Amnesty International was, of course, the subject of McGovern’s Case in England.

GUMMOW J:   Yes, a question is whether we would follow it?

MR BENNETT:   Yes, your Honour, but that involves some different questions in that it involves questions of overseas activities and the extent to which the political exception applies to them.

GUMMOW J:   The Statute of Elizabeth talked about relief of prisoners and captives.  The captives were people who had been kidnapped by Barbary pirates, were they not?

MR BENNETT:   Yes.  Well, your Honour, it may be ‑ ‑ ‑

GUMMOW J:   They were undoubtedly overseas and they undoubtedly were not going to be relieved unless something happened at a political level. 

MR BENNETT:   Well, your Honour, the logic of that would lead to the conclusion that there may be an exception in relation to political purposes where the political purpose is the purpose that Amnesty has.  But here one is dealing with something quite different.  Here one is dealing with a body whose ultimate purpose may fall within the definitions, but whose sole purpose at a lower level of generality is to influence government.  Sole purpose at the lower level of generality - that is all it does.  It does not seek to ‑ ‑ ‑

GUMMOW J:   Hence, what is offensive in influencing government?

MR BENNETT:   Nothing is offensive about it, your Honour.  It is just a disqualification from being charitable.

GUMMOW J:   I know, but why?

MR BENNETT:   Well, your Honour, partly because it is part of the common law which was adopted by the use of the word “charitable” in the legislation and by the continued use of that word since the first of the Income Tax Assessment Acts to date.  It is clear that the legislature ‑ ‑ ‑

GUMMOW J:   The Act takes charity as the law from time to time in trust or finds it, does it not?

MR BENNETT:   Yes, your Honour, it does.

GUMMOW J:   In a sense.

MR BENNETT:   Yes it does, your Honour, but the law in relation to the political ‑ ‑ ‑

GUMMOW J:   The 1936 Act was where these provisions had their root. 

MR BENNETT:   I think it is earlier, your Honour.

GUMMOW J:   Earlier?

MR BENNETT:   We have traced it back, I think, to the ‑ ‑ ‑

GUMMOW J:   But at the present…..the 1936 Act was enacted at a time when Sir Owen Dixon said in one of the cases that the political exception was difficult ‑ ‑ ‑

MR BENNETT:   Really it goes back to the 1915 Act.  It was in the first ‑ ‑ ‑

GUMMOW J:   Yes, Sir Owen Dixon was saying in the 30s that this was all very difficult, this political exception.

MR BENNETT:   Well, I do not know that being difficult is a ground of special leave, your Honour.  Indeed, one of the problems with granting special leave on that approach is that the case would ultimately involve a large list of questions of law.  It would involve, the way my learned friend has put it, is there a political exclusion at all?  It would involve the question of whether if a body has an ultimately charitable purpose but the sole method it uses to achieve it so its sole purpose at the lower level of generality is political activity, is that excluded? 

It involves, thirdly, the question of whether the political exclusion includes influencing policy as opposed to legislation.  It involves, fourthly, the question whether, if one’s activities are primarily directed to confirming rather than changing government policy that affects it and that involves issues of fact as well.  It involves, fifthly, the issue which is said to flow from Word about the absence of direct spending on the charitable objects, although here, of course, it is much more indirect to Word.  There are more steps here between the activities and the relief of poverty than there were in Word between the steps and the promotion of religion. 

Sixthly, it involves a debate that – perhaps a semantic debate – discussed at some length below as to whether what it does is lobbying or not lobbying.  The phrase, we conceded, was “indirect lobbying”  In other words it does not go to members of Parliament and say “Vote this way”.  It seeks to influence public opinion so that that in turn will have an effect on what government does. 

Finally, it involves what would be a notice of contention question about the meaning of education and the extent and the distinction between propaganda and education which is discussed in some of the cases.  So it is an inconvenient vehicle for a look at the broad question.

GUMMOW J:   Why?

MR BENNETT:   Because it involves so many diverse questions of law, each involving issues of fact.  Your Honour, we submit that what was decided here by the Full Court was totally in accordance with established authority on each of the various principles.  It is for that reason a very clear case on the application of the political exception, in many ways particularly a clear one because, as I say, the whole of its activities at one level of generality are devoted to the influencing of government.  There is a discussion ‑ ‑ ‑

GUMMOW J:   One of the problems is that governments now have such an enlarged role in poverty, education, religion that pursuit of those charitable objectives at one stage or another is going to have an intersection with government activity.

MR BENNETT:   Yes, your Honour, and that is why ‑ ‑ ‑

GUMMOW J:   Which was not true 150 years ago.

MR BENNETT:   No, and that is why I started with the very clear concession that ancillary activities are not disqualified.

GUMMOW J:   Not necessarily ancillary, that is the area of debate anyway.

MR BENNETT:   Let me put the distinction.  If the Royal Blind Society – clearly a charitable body – chooses, as part of its activities, to campaign to have the law changed to permit blind dogs on buses that would not disqualify it.  But if one had a body whose sole objective was, in order to benefit blind people, to change the law about blind dogs on buses that would fall on the wrong side of the line.  That is the distinction.  Your Honours, the distinction has a respectable history.  It has been applied many times and it has an obvious purpose.  The fact that the government engages in more activities today ‑ ‑ ‑

GUMMOW J:   You say it has been applied many times, but if one looks at Mr Picarda’s work on charities in the 3rd edition it has an appendix by the Chief Charity Commissioner of England on political activities which goes for pages trying to sort all this out at a practical level on the basis that the principles are so vague.

MR BENNETT:   Your Honour, some of them are controversial, but the general principle is very clear.  If my learned friends were right a political party like the Greens, indeed on one view of it any political party, would be charitable.  I am sure if one looked at the constitutions of any of the political parties and looked at their objectives many, if not all of them, would fit in under the concept of what we regard as charitable.  Certainly,

that would apply to the Greens or the Communist Party, in relation to the environment and poverty respectively.  Your Honour, there are good reasons for maintaining that distinction and not making political activity something which is charitable.

GUMMOW J:   What was the particular defect that the Full Court found in the activities of Aid/Watch?

MR BENNETT:   The fact, your Honour, that its sole activity and its sole purpose of the lower level of generality was to influence government policy.

GUMMOW J:   Is there a particular provision in its constituent documents that indicated that?

MR BENNETT:   Not so much a particular provision as the fact that every one of its objectives used the word – I think it was “secure” – I just have to check the word.  But I think it was the words “to ensure” - yes, to ensure that government aid is delivered in accordance with the rights of women, in accordance with respect for the environment, in accordance with not benefiting Australian companies which might carry out the works, and so on.  There is a whole collection of objectives, some of which are blatantly political and some of which are simply motherhood objectives.  But in each case the aim is to ensure that, not to provide any direct benefit for the relief of poverty, but to ensure that government does it and only government.

The body is not concerned with private aid.  It is not concerned with whether foundations which deliver aid for the relief of poverty overseas observe its objectives.  It is concerned with government and the whole of its activity is directed to that objective.  As I say, there would be a notice of contention in relation to education, educating the public about things the government is doing of what one disapproves is, we would submit, very clearly a propaganda, rather than education.  There are cases which discuss that dividing line and that is another issue which would arise. 

But, your Honour, for those reasons we submit that the decision below is clearly correct.  There is no point requiring specific elucidation by this Court and if leave were to be granted it would be a case involving a lot of legal issues, most of which would involve quite a bit of factual analysis.  If the Court pleases.

GUMMOW J:   We do not need to hear from you, Mr Williams.  There will be a grant of leave in this matter.  Two days will be set aside for the hearing.  We will need to be assisted with reference on this subject, with such assistances to be derived from decisions in Canada, the United Kingdom and the United States and the leading charitable trust writers and decisions in those.  There has been quite a bit written about this, I think, quite a bit decided. 

There is, for example, a decision of the Federal Court of Appeal in Canada which would assist Mr Bennett, I think, called Action by Christians for the Abolition of Torture v The Queen in Right of Canada (2002) 225 DLR (4th) 99, where the Christians lost their registration as a charity under the Canadian taxation system.

AT 10.57 AM THE MATTER WAS CONCLUDED