Bodalla Aboriginal Housing Company Ltd v Eurobodalla Shire Council

Case •

[2012] NSWCA 408

•

12 December 2012

Court of Appeal


Supreme Court


New South Wales

Medium Neutral Citation: Bodalla Aboriginal Housing Company Ltd v Eurobodalla Shire Council [2012] NSWCA 408
Hearing dates:1 November 2012
Decision date: 12 December 2012
Before: McColl JA at [1];
Hoeben JA at [2];
Tobias AJA at [3].
Decision:

Appeal dismissed with costs.

[Note: The Uniform Civil Procedure Rules 2005 provide (Rule 36.11) that unless the Court otherwise orders, a judgment or order is taken to be entered when it is recorded in the Court's computerised court record system. Setting aside and variation of judgments or orders is dealt with by Rules 36.15, 36.16, 36.17 and 36.18. Parties should in particular note the time limit of fourteen days in Rule 36.16.]

Catchwords:

RATING - whether the subject land is exempt from the payment of rates pursuant to s 556 (1) (h) Local Government Act - whether it was proper to categorise the appellant as a "public charity" within the meaning of s 556 (1) (h) Local Government Act- whether the non charitable objects of the memorandum of association were ancillary, incidental, dependant or concomitant to the four charitable objects

STATUTORY INTERPRETATION - whether s 23 Charitable Trusts Act excised the non charitable and invalid purposes of the memorandum of association and had application to the issue calling for determination under s 556 (1) (h) Local Government Act - whether regard can be had to the activities of the appellant where the memorandum sets out details of its purposes and objects
Legislation Cited: Charitable Trusts Act 1993
Church of England Trust Property Act 1917
Civil Procedure Act 2005
Conveyancing Act 1919
Companies Act 1961
Land and Environment Court Act 1979
Local Government Act 1993
Supreme Court Act 1970
Cases Cited: Akins v National Australia Bank (1994) 34 NSWLR 155
Bodalla Aboriginal Housing Company Limited v Eurobodalla Shire Council [2011] NSWLEC 146; (2011) 184 LGERA 315
College of Law (Properties) Pty Ltd v Willoughby Municipal Council (1978) 38 LGRA 81
Federal Commissioner of Taxation v Word Investments Ltd [2008] HCA 55; (2008) 236 CLR 204
Joyce v Ashfield Municipal Council (1959) 4 LGRA 195
Ku-ring-gai Municipal Council v Nalty (1949) 17 LGR (NSW) 136
Maclean Shire Council v Nungera Co-operative Society Ltd (1995) 86 LGERA 430
Phoenix Commercial Enterprises Pty Ltd v City of Canada Bay Council [2010] NSWCA 64
Re Inman [1965] VR 238
Toomelah Co-operative Ltd v Moree Plains Shire Council (1996) 90 LGERA 48
Trustees of Church Property of the Diocese of Newcastle v Lake Macquarie Shire Council [1975] 1 NSWLR 521; (1975) 33 LGRA 11
Texts Cited: G E Dal Pont, Law of Charity (2010) LexisNexis Butterworths
I J Hardingham, "Trusts including Charitable and Non Charitable purposes - special statutory provisions" (1973) 47 ALJ 68
J D Heydon, M J Leeming, Jacobs Law of Trusts in Australia, 7th ed (2006) LexisNexis Butterworths
Category:Principal judgment
Parties: Bodalla Aboriginal Housing Company Ltd (Appellant)
Eurobodalla Shire Council (Respondent)
Representation: Counsel:
P McEwen SC (Appellant)
J Robson with C Ireland (Respondent)
Solicitors:
Warren McKeon Dickson (Appellant)
Andrew Warren Associates (Respondent)
File Number(s):CA32167 of 2012 CA274517 of 2012
 Decision under appeal 
Date of Decision:
2012-08-25 00:00:00
Before:
Preston CJ
File Number(s):
40456 of 2011

Judgment

  1. McCOLL JA: I agree with Tobias AJA's reasons and the orders his Honour proposes.

  1. HOEBEN JA: I agree with Tobias AJA.

  1. TOBIAS AJA: On 26 August 2011, the Chief Judge of the Land and Environment Court dismissed a summons in which the appellant sought a declaration that certain lands that it owned were exempt from council rates pursuant to s 556(1)(h) of the Local Government Act 1993 (the LG Act) upon the ground that it was a public benevolent institution or a public charity: Bodalla Aboriginal Housing Company Limited v Eurobodalla Shire Council [2011] NSWLEC 146; (2011) 184 LGERA 315.

  1. From that decision, the appellant appeals to this Court pursuant to s 58(1) of the Land and Environment Court Act 1979 (the Court Act).

The nature of the dispute

  1. The appellant owns 28 properties in the Eurobodalla local government area (the properties), 27 of which are used or occupied as residences for persons of Aboriginal descent. Twenty four are tenanted by persons dependent on government pensions and three are tenanted by persons who earn a low income. One of the 28 properties is used by the appellant for administrative and general purposes.

  1. The 28 properties were acquired between 1979 and 1992 as a result of funding from the Aboriginal Development Commission or the Aboriginal and Torres Strait Islander Commission. It would appear that the appellant paid council rates with respect to the properties up to and including the rating year commencing 1 January 2004. It has not paid rates for any subsequent rating year commencing 1 January 2005.

  1. In 2006 the appellant applied to the Council for, relevantly, exemption of the properties from the payment of rates pursuant to s 556(1)(h) of the LG Act which exempts land from all rates, other than water supply special rates and sewerage special rates, where that land

belongs to a public benevolent institution or public charity and is used or occupied by the institution or charity for the purposes of the institution or charity.

The primary judge rejected the appellant's claim that it was a public benevolent institution and there is no challenge to that finding. His Honour also rejected its claim that it was a public charity and it is that finding with which the appeal is concerned.

  1. The appellant originally commenced proceedings in the Supreme Court by a Statement of Claim filed on 24 November 2010 seeking declaratory relief that the properties were exempt from council rates. This was in response to proceedings commenced in the District Court by the Council to recover outstanding rates and charges together with interest allegedly owing by the appellant with respect to unpaid rates. The proceedings commenced in the Supreme Court were duly transferred to the Land and Environment Court pursuant to s 149B of the Civil Procedure Act 2005.

The nature of the statutory task

  1. I have set out above the provisions of s 556(1)(h). As the primary judge noted at [6] of his reasons, that provision relevantly requires two questions to be answered in the affirmative in order for land to be exempt from rates, namely,

(a) does the land belong to a public charity?
(b) if it does, is the land used or occupied by the charity for the purposes of the charity?

The issues on which the parties were joined at trial

  1. The only issue in dispute between the parties at trial was whether the appellant was properly to be characterised, relevantly, as a "public charity" within the meaning of s 556(1)(h). The Council did not dispute that the properties on which rates and charges had been levied "belong[ed]" to the appellant. Nor did it dispute that the 28 properties were used or occupied by the appellant for its purposes as evidenced by its constituting document.

  1. The appellant was incorporated under the then Companies Act 1961 on 17 February 1978 as a company limited by guarantee. The Memorandum of Association (the Memorandum) enumerated in clause 2 the objects for which the appellant was established. There are some 32 "objects" listed in clause 2 although some of them are clearly powers rather than "objects". There are too many to enumerate but it is appropriate to set out the first four upon which the appellant placed particular reliance:

2 The objects for which the Company is established are:
(a) To provide housing for persons of aboriginal descent.
(b) To render such assistance to members as the members see fit, subject to clause 3 hereof.
(c) To carry out services for the social, intellectual and cultural advancement of members.
(d) To strengthen, build up and contribute to the identity, sense of purpose and culture of persons of Aboriginal and Island descent.

  1. The Council conceded that each of those objects constituted a charitable purpose. However, it submitted that there were four non-charitable objects in clause 2 (the impugned objects) being:

(l) To acquire the assets stock-in-trade, goodwill including the leaseholds of Bodalla Motors Pty Limited and carry on the business thereof.
(m) To manufacture, repair, service and/or deal in any let on hire and store all conveyances and means of transport including but not limited to motor vehicles, boats, aeroplanes, hydroplanes, caravans, machinery apparatus; accessories, fuel, lubricants, paints, cements, tyres and all other articles usually associated with the above business.
. . .
(s) To apply for purchase or otherwise acquire and dispose of all manner of mining or mineral or petroleum claims leases authorities licences or otherwise in any of the States and Territories of the Commonwealth of Australia or elsewhere and to prospect explore open and work all manner of claims leases mines rights to mine and to mine quarry or otherwise generally extract and treat all manner of minerals mineral substances ores or minerals or mineral substances whatsoever.
(t) To breed, rear and/or deal in sheep, cattle, horses, pigs, poultry, and all other livestock; to establish studs and develop the blood line; to carry on the business of grazier, butcher, agriculturist, farmer dairyman, poultry farmer, orchardist, horticulturist, pastoralist, and to deal in, prepare for market, cook, package and can all products of animal husbandry and agriculture; to act as consultants, advisers and manager of any of the abovementioned undertakings.

  1. The appellant conceded that taken individually at face value, each of the impugned objects was a non-charitable purpose. Accordingly, it accepted that prima facie the appellant's objects comprised both charitable and non-charitable objects or purposes with the consequence that it did not qualify as a "public charity" for the purposes of s 556(1)(h).

  1. The appellant sought to avoid that consequence essentially in two ways. First, it acknowledged that there was a distinction drawn in the cases between non-charitable objects and powers which are independent or collateral, even if subsidiary, which have a disqualifying effect, and those which are merely ancillary, incidental, dependant or concomitant to charitable objects or powers which do not: Maclean Shire Council v Nungera Co-operative Society Ltd (1995) 86 LGERA 430 at 443 per Handley JA, with whom Priestley and Sheller JJA agreed. The appellant sought to argue that, looked at as a whole, the impugned objects were in fact ancillary, incidental, dependant or concomitant to the four charitable objects and therefore did not have a disqualifying effect.

  1. Secondly, the appellant relied upon the provisions of s 23 of the Charitable Trusts Act 1993 (the successor to s 37D of the Conveyancing Act 1919) which, relevantly, provides as follows:

(1) A trust is not invalid merely because some non-charitable and invalid purpose as well as some charitable purpose is or could be taken to be included in any of the purposes to or for which an application of the trust property or of any part of it is directed or allowed by the trust.
(2) Any such trust is to be construed and given effect to in the same manner in all respects as if no application of the trust property or of any part of it to or for any such non-charitable and invalid purpose had been or could be taken to have been so directed or allowed.

  1. It was submitted first, that the appellant held the properties upon trust for the purposes or objects set forth in clause 2 of the Memorandum. Secondly, as the impugned objects were non-charitable and invalid whereas the balance were charitable purposes, the non-charitable and invalid purposes could, by virtue of s 23(2) be ignored or "blue pencilled" out of the Memorandum. Thirdly, the consequence of the foregoing was that the disqualifying effect of those non-charitable and invalid purposes were, in effect, extinguished. Fourthly, it followed that the appellant held the properties upon trust solely for charitable purposes being, essentially, the objects set forth in clause 2(a)-(d) of the Memorandum.

The decision of the primary judge

  1. Both of the foregoing contentions of the appellant were rejected by the primary judge. With respect to the second issue being the application of s 23 of the Charitable Trusts Act, his Honour held (at [61]-[63]) that the section had no application to the Memorandum for three reasons. First, he observed (at [61]), that the section was premised on the existence of a trust so that if there was no trust it had no application: Re Inman [1965] VR 238 at 245. His Honour then added:

"The plaintiff is a company limited by guarantee - it is not a trust."

  1. It is convenient at this point to note that the appellant submitted on the appeal that his Honour had erred in that statement, in that he had held that because the appellant was a company limited by guarantee, it could not hold the properties on trust for the objects or purposes set out in the Memorandum. In my opinion, this is a misreading of what his Honour was saying. He stated accurately that the appellant was a company limited by guarantee. He also found that as such, it was not a trust. His Honour was not saying that a company limited by guarantee could not be a trustee if otherwise a trust relationship existed.

  1. Secondly, the primary judge held that s 23 could not be applied to excise or "blue pencil" the impugned objects from the list of objects in the Memorandum. This was because the section saves trusts from invalidity which would otherwise fail because the trust property could be applied to both charitable as well as non-charitable purposes. It would appear that this second reason is but an extension of the first, namely, that there was no relevant trust or trust property which could be so applied. Relevantly, the issue was whether the applicant itself was a "public charity" and that was to be determined by reference to the objects set forth in the Memorandum.

  1. Thirdly, his Honour held that a similar argument for an exemption from rating based on the former s 37D of the Conveyancing Act was rejected by this Court in Trustees of Church Property of the Diocese of Newcastle v Lake Macquarie Shire Council [1975] 1 NSWLR 521; (1975) 33 LGRA 11. In that case, Hutley JA (at 553) noted that it was suggested that the objects defined in the constituting Ordinance of the appellant Trustees which were not charitable could be ignored so that the charitable objects remained valid by force of s 37D. His Honour rejected that argument in the following terms:

This section [s 37D] saves trusts from invalidity; the non-charitable trusts are not invalid in the sense that the land is not held on those trusts created by the statute and Ordinance made thereunder. Section 37D has in my opinion no work to do, and cannot be used in this situation to obtain rating advantages for the Church of England Property Trustees of the Diocese of Newcastle.

  1. With respect to the first issue, the primary judge noted at [44] that the appellant, although accepting that the impugned objects, when viewed individually, might be seen to be non-charitable, nevertheless submitted that when viewed in the context of the objects in the Memorandum as a whole, they should be seen as merely ancillary, incidental, dependent or concomitant on the charitable objects. His Honour observed that the appellant advanced three reasons in support of that submission: first, that the motive for establishment of the appellant was charitable; secondly, that there were textual indicators in the Memorandum which demonstrated that the impugned objects were incidental and ancillary; and, thirdly, the actual activities of the appellant were for charitable objects and not for non-charitable objects.

  1. As to the question of motive, the appellant relied upon certain affidavit evidence to the effect that the explanation for the inclusion of the impugned objects was attributable to what was seen at the time the appellant was incorporated in 1978 as the historical situation for Aboriginal people at that time. They had only been recently recognised as Australian citizens but there was little permanent work for people of Aboriginal descent in the Bodalla area which was primarily a farming area where Aboriginal people could obtain seasonal work when that work was available. Accordingly, the impugned objects were seen as an avenue to provide full time work to Aboriginal people if those objects were pursued. In fact, they never were.

  1. His Honour rejected the submission based on motive upon the basis that a court cannot look at the motives of the founders of an institution in order to establish its purposes. The submission at trial that the court could have regard to the intention of the founding parties upon the incorporation of the appellant was abandoned on the appeal.

  1. At [47] of his reasons, his Honour referred to the three textual indicators upon which the appellant relied. The first was the name of the appellant which was said to be descriptive of its primary and dominant purpose: a housing company. His Honour did not consider that the name of the appellant was of any relevant significance and did not assist in the characterisation of its objects.

  1. Secondly, the appellant relied upon the fact that the first listed object in clause 2(a) of the Memorandum was "To provide housing for persons of Aboriginal descent". His Honour accepted that an object listed first in an association's constituting document may or may not be indicative that it is the association's main object. That depended on the terms of the document itself. He considered that the fact that the object of providing houses was listed first in clause 2 of the Memorandum was not decisive as all of the objects, their terms and nature, must be considered.

  1. Thirdly, the appellant relied on all of the objects listed in clause 2(b) to (ff) of the Memorandum as illustrating the variety of ways in which the first listed object of providing housing for persons of Aboriginal descent could be achieved. As his Honour pointed out at [52], whereas the Council had conceded that a great many of the listed objects could be described as machinery provisions or powers relevant to the carrying out of the object of providing housing for persons of Aboriginal descent and thus were properly viewed as incidental or ancillary to that object and not as independent objects, the same could not be said for the impugned objects.

  1. The primary judge then continued:

[53] These objects, neither by express words nor by implication from the nature of the activities described in the objects, can be viewed as ancillary or incidental to the object in clause 2(a) of providing housing for persons of Aboriginal descent. Clause 2(l), (m), (s) and (t) do not expressly state that the diverse businesses, trades or industries described therein are only to be undertaken by the plaintiff for achieving any other object and, in particular, the object in clause 2(a) of providing housing for persons of Aboriginal descent.
[54] By no means can undertaking the diverse businesses, trades and industries listed in clause 2(l), (m), (s) or (t), which are of a wholly different and unrelated nature to the provision of housing for persons of Aboriginal descent, be described as a variety of ways to achieve the provision of housing for persons of Aboriginal descent or even as powers to carry out such an object.

  1. At [55], his Honour noted that the listing of objects in clause 2 of the Memorandum did not contain a chapeau that qualified the objects then listed. This was to be contrasted with the chapeau in clause 5 of the respondent's constitution in Nungera which commenced as follows:

The objects of the Society shall be to relieve the poverty, sickness, destitution, distress, suffering, misfortune or helplessness of needy members of the Aboriginal community in the Maclean and surrounding areas of NSW through:

and then followed the objects:

(a) improving their housing, living conditions and general standards of living ...;
(b) improving their vocational skill and improvement prospects ...; and
(c) arresting their social disintegration by strengthening and fostering the development of Aboriginal and Islander identity and culture ...

  1. In Nungera at 433 Handley JA considered that clause 5 made it perfectly plain that the object or power in paragraph (c), namely,

arresting their social disintegration by strengthening and fostering the development of Aboriginal and Islander identity and culture ...

was ancillary or incidental. In other words, the Society was not authorised to pursue the activities in paragraph (c) for their own sake as independent objects or purposes but solely as an ancillary or dependent means of carrying out the objective set out in the chapeau in clause 5.

  1. The position in Nungera was therefore in stark contrast with the commencement of clause 2 of the Memorandum. Thus in the primary judgment at [56] his Honour considered that each of the impugned objects did not individually have any words of qualification making them ancillary or incidental to any other object and, in particular, to the object in clause 2(a) of providing housing to persons of Aboriginal descent. Rather, each of those objects was able to be pursued for their own sake as independent objects or purposes. Accordingly, as a matter of construction the impugned objects could not properly be described as merely ancillary, incidental, dependant or concomitant to the object of providing housing for persons of Aboriginal descent.

The appellant's motion to adduce fresh evidence

  1. By notice of motion filed on 8 May 2012, the appellant sought an order that it be granted leave to file fresh evidence pursuant to s 75A(7) of the Supreme Court Act 1970 (NSW). In an affidavit of Michael Terry-Whitall sworn 7 May 2012 in support of the notice of motion, it was asserted that none of the evidence adduced or arguments made by the appellant at trial addressed the issue that the fact that the appellant was a company limited by guarantee might prohibit its operation as a trust. Further, none of the evidence adduced or arguments made by the respondent at trial sought to challenge the applicability of s 23 of the Charitable Trusts Act on the basis that the appellant was a company limited by guarantee. Accordingly, the appellant wished to adduce further evidence as to the nature of the government grants it had received to purchase the properties, which would demonstrate that notwithstanding that the appellant was a company limited by guarantee, it nonetheless held the properties on trust for the benefit of the beneficiaries identified in the terms and conditions of grant.

  1. In my view, the application to adduce such evidence is misconceived for, as I have observed at [18] above, his Honour did not hold that because the appellant was a company limited by guarantee it could not operate as a trust or otherwise be a trustee.

  1. As the appeal in the present case is from a judgment after a hearing on the merits, the effect of s 75A(8) is that the Court shall not receive further evidence except on special grounds. Those grounds must, generally speaking but not exclusively, satisfy three requirements:

(i) pre-trial unavailability;
(ii) credibility;
(iii) materiality;

(Akins v National Australia Bank (1994) 34 NSWLR 155 at 160; see generally Phoenix Commercial Enterprises Pty Ltd v City of Canada Bay Council 2010 NSWCA 64 at [13]-[22] per Spigelman CJ).

  1. There is no doubt, as the transcript of argument before the primary judge reveals, that his Honour was having difficulty in accepting the concept that the appellant was, as such, a trust. Senior Counsel for the Council in effect agreed. He further agreed that his submission that s 23 was inapplicable was not based upon anything to do with there not being a trust but for other reasons.

  1. Furthermore, during the course of the appellant's argument, the exchanges between his Honour and its Senior Counsel made it clear that the former considered there was no relevant trust and that all he had to determine was whether the appellant was "a public charity", a proposition with which counsel agreed. On the other hand, counsel on behalf of the appellant did submit, as I understand it, that there was a trust as the appellant was a trustee, there was trust property, a beneficial or charitable purpose and a personal obligation to apply the property for those purposes. He further submitted that the appellant was holding a body of fluid assets in the sense that from time to time as they acquired more housing stock or lost housing stock, existing and new stock would be held as trust property, so that it was not open to the appellant to use such stock for any purpose other than for housing needy Aboriginal people. The appellant further submitted that it was bound by the confines of its objectives both in relation to the specific objects and as to how it could apply the trust assets otherwise and, in particular, that those assets could not be distributed to its members even on a winding up.

  1. I have referred sufficiently to the argument at trial to make it clear that the question of trust or no trust became a live issue at trial so that the appellant had the opportunity, if it so desired, to tender the evidence which it now seeks to tender as fresh evidence. If necessary, given the nature of the exchanges between Senior Counsel for the appellant and his Honour to which I have referred, the appellant could have applied to the primary judge to re-open its case, so as to ensure that that evidence was before the Court. It did not do so and it is too late for it to do so now.

  1. In any event, having considered the evidence, in my view it is of no materiality. It was accepted, properly, by the appellant that the evidence in question established no more than that where a grant was made to the appellant to provide particular housing for Aboriginal people, and the money was used for that purpose, then at its highest the appellant held the properties so acquired on trust for the purpose for which the grant was made, namely, for Aboriginal housing. A new trust would come into existence every time a new grant was made and actioned. It can be accepted for present purposes that each of those trusts was a charitable trust to which s 23 would have no application, as it was not combined with a non-charitable and invalid purpose.

  1. However, in my view, the existence of those individual trusts does not bear upon the critical question, namely, whether the appellant is a "public charity". To that issue I shall return below.

  1. Accordingly, I would refuse leave to adduce the fresh evidence the subject of the notice of motion filed on 8 May 2012.

The parties submissions on the appeal

  1. The appellant's submissions with respect to the application of s 23 of the Charitable Trusts Act may be summarised as follows:

(a) Notwithstanding that the appellant was a company limited by guarantee it was able to be a trustee;

(b) As owner of the properties, it held them in trust for the charitable purpose of providing housing for persons of Aboriginal descent;

(c) As the appellant's objects were both charitable and non-charitable, s 23 applied to excise the non-charitable and invalid objects from the valid charitable objects;

(d) Trustees of Church Property of the Diocese of Newcastle v Lake Macquarie Shire Council (the Lake Macquarie case) was decided on a basis that did not require consideration of s 37D (the predecessor of s 23) so that Hutley JA's observations with respect to its application were obiter and, in any event, were not joined in by the other member of the majority, Samuels JA;

(e) The objects of the appellant included four identified non-charitable objects. It was appropriate to apply s 23 to "blue pencil" those objects thus leaving the valid charitable objects with the result that the appellant was a "public charity" in that its objects were, by virtue of s 23(2), confined to those that were charitable.

  1. With respect to the ancillary issue the appellant's submissions may be summarised thus:

(a) It is permissible to look at the nature and circumstances of the formation of the appellant for the purpose of determining its status as a public charity. The High Court took that course in Federal Commissioner of Taxation v Word Investments Ltd [2008] HCA 55; (2008) 236 CLR 204 at [25];

(b) There were a number of textual indicators which pointed to an over-arching objective of providing housing to persons of Aboriginal descent, being the name of the appellant and the order in which the objectives set out in clause 2 of the Memorandum were listed;

(c) The appellant's actual activities were relevant in characterising the impugned objectives as incidental and ancillary. Although it was accepted that it is the purposes of an association that determines its charitable status, so that an activity, taken in the abstract, can rarely be deemed charitable or non-charitable, extrinsic evidence of those activities may be relevant to determining its charitable status in three circumstances; first, where the constitution of an association expressly identifies an object as its main (or subsidiary) object in circumstances where that is not conclusive and there is, therefore, doubt as to the association's main objects; secondly, where the constitution of an association may not indicate with clarity its main object(s) in which case the expressed objects are assessed in tandem with the association's activities; and thirdly, where an association lacks a written constitution, its status may be determined by reference to its nature which will be a function of its activities: see generally, G E Dal Pont, "Law of Charity", LexisNexis Butterworths (2010) at [13.19];

(d) In the present case, the second of the above circumstances was applicable in that the Memorandum did not indicate with clarity that its main object was that set out in clause 2(a), namely, the provision of housing for persons of Aboriginal descent;

  1. The respondent's submissions may be summarised as follows:

(a) While it has been held that where trustees hold land upon a charitable trust the land belongs to a charity for the purposes of a rating statute, land may also be held by a charity within the meaning of these provisions without it being held on trust, and without their being any trust;

(b) The exemption in s 556(1)(h) is not confined to cases where there is a vesting of the land in a trustee and a valid charitable trust imposed thereon;

(c) The question of whether the appellant is a "public charity" for the purposes of the sub-section is quite separate from the matter addressed by s 23 of the Charitable Trusts Act and its predecessor s 37D of the Conveyancing Act;

(d) The essential question for determination depended upon the proper characterisation of the appellant and, in particular, whether it could be characterised as a "public charity". In this respect it is important to recognise that there are two steps in the process (identified by the primary judge at [6] of his reasons), namely, first, does the land belong to a public charity and, second, is it used or occupied by the charity for its purposes. The activities of the appellant were relevant to the second question but not to the first in circumstances where, as here, the appellant had a constitution which identified its objects in some detail in the Memorandum;

(e) The Memorandum sets out 32 separate objects of the appellant, many of which were charitable but not all. Whether or not the appellant was a trust, as such, was not the relevant question. In any event, of itself, the appellant could not be a trust; at most it could be a trustee in certain circumstances. However, the relevant issue for determination by the primary judge was whether the appellant's objects as set out in the Memorandum were exclusively charitable or whether the impugned objects were merely ancillary, incidental, dependant or concomitant to its charitable objects;

(f) Section 23 of the Charitable Trusts Act was relevant only to rendering valid testamentary or inter-vivos gifts for mixed charitable and non-charitable purposes. The section will not necessarily apply to confine a compendiously expressed trust to a trust for charitable purposes unless the compendious expression reflects a dominant charitable intention in the testator or settlor: see generally the discussion with respect to s 37D of the Conveyancing Act by Hardingham, "Trusts including Charitable and Non Charitable Purposes - Special Statutory Provisions" (1973) 47 ALJ 68;

(g) Accordingly, Hutley JA was correct in the Lake Macquarie case when he held (at 533 A-B) that s 37D has no work to do in the context of a rating case so as to give an advantage to the body to whom the relevant land belongs for rating purposes whose objects include independent non-charitable purposes to which the land can be devoted, whether or not it is in fact so devoted;

(h) As well as the clear statement of Hutley JA in the Lake Macquarie case, Moffitt P, who was in dissent, observed at 527E-F that s 37D which, if applicable, may exclude non-charitable uses and thereby validate a trust, would not appear to be an appropriate criteria to achieve exemption from a revenue statute imposing a yearly impost directed to a condition of affairs during the year or at a selected point of time. If that is what the learned President was saying, and it is not entirely clear, then it accords with the approach of Hutley JA which should be adopted;

(i) As to the impugned objects, the primary judge correctly applied a long line of authorities in approaching the first question arising under s 556(1)(h) as one requiring any non-charitable objects to be ancillary, incidental, dependant or concomitant for the rating exemption to apply. His Honour was further correct in accepting the respondent's submission that those objects were properly characterised as neither charitable nor ancillary or concomitant to the charitable objects nor to any identifiable overall or overarching charitable purpose;

(j) The impugned objects were not subject to any limitation imposed by any introductory words, chapeau or rubric. Properly construed in context, they would allow the appellant to acquire and trade as a commercial car dealership, a quarry operator or grazing enterprise. The objects were quite different to any of those considered by Stein J in Toomelah Co-operative Ltd v Moree Plains Shire Council (1996) 90 LGERA 48;

(k) Furthermore, on a winding up, clause 6 of the Memorandum required any surplus to be transferred to institutions having objects similar to the objects of the appellant and it was only if effect could not be given to that provision that the surplus was to be transferred to some charitable object;

(l) The objects of the appellant set out in the Memorandum were so diverse as to make it impossible to justify a construction to the effect that the provision of housing for persons of Aboriginal descent should constitute an overarching objective. Furthermore, there was no textual guidance to justify any such conclusion;

(m) The appellant was in error in submitting that a court could look at its activities for the purpose of determining the present issue as it was contrary to authority directly applicable to the exemption provisions in s 556(1)(h) and its predecessor in s 132(1)(d) of the Local Government Act 1919; Toomelah at 51; Nungera; Dal Pont, ibid.

The appellant's submissions should be rejected

(a) The Charitable Trusts Act issue

  1. In my view, the Charitable Trusts Act and, in particular, s 23 has no application to the issue calling for determination under s 556(1)(h) of the LG Act. The plethora of authorities on s 23 and its predecessor, s 37D, make it patently clear that it is applicable only for the purpose of preserving the validity of testamentary or inter-vivos gifts for purposes which are both charitable and non-charitable. The objective of the provision is to save the validity of the gift by confining it to the charitable purposes and "blue-pencilling", in appropriate cases, the non-charitable purposes where otherwise a general charitable intent on the part of the settlor or testator can be demonstrated: see generally, Dal Pont ibid at [13.39] - [13.45]; J D Heydon, M J Leeming, Jacobs Law of Trusts in Australia, 7th ed (2006) LexisNexis Butterworths at [1065]-[1066]. According to Professor Dal Pont (at [13.45]):

"... the saving legislation does not operate to confer charitable status upon an association that has one or more non-charitable object(s) that are neither ancillary nor incidental to its charitable objects(s)".

  1. The relevant issue required to be determined for the purpose of s 556(1)(h) is one of characterisation of the particular body to whom the land "belongs". Either it is an exclusively charitable body or it is not accepting, of course, that any non-charitable purposes will not have a disqualifying effect unless they are independent purposes and not merely ancillary, incidental, dependant or concomitant with respect to the charitable purposes.

  1. It is incontestable that if it can be established that a particular body holds land which would otherwise be rateable upon trust for charitable purposes, that that body may be categorised as a "public charity" for the purposes of s 556(1)(h). Ku-ring-gai Municipal Council v Nalty (1949) 17 LGR (NSW) 136 and College of Law (Properties)Pty Ltd v Willoughby Municipal Council (1978) 38 LGRA 81 provided good examples. But it does not follow from that proposition that s 23 of the Charitable Trusts Act has any application to any such trust in the present context or otherwise for if the trust is for both charitable and non-charitable purposes (the latter not being ancillary or incidental), then the body will not qualify for rate exemption. On the other hand, even in the absence of any trust, a body such as the appellant can be established for purely charitable purposes (as in fact occurred when amendments were made to the Memorandum of the appellant in 2011 by, amongst other things, deleting the impugned objects).

  1. I would also reject the appellant's submission that one can have regard to the activities of the appellant in circumstances where the Memorandum sets out in detail its purposes or objects. Regard to the activities of the body in question was rejected by Hutley JA in the Lake Macquarie case at 532 (E-F) (citing Walsh J in Joyce v Ashfield Municipal Council (1959) 4 LGRA 195 at 212) and by Samuels JA at 535(D-E) where his Honour said:

I do not think that it is to the point argue that the wide terms of the Ordinance must be read down, as it were, by reference to the activities which are been in fact pursued upon the land at the present. The question must be decided by reference to the range of powers and discretions which the trust instrument or its equivalent permits.

  1. The source of the ability to have regard to activities of the body in respect of whom a determination is required as to whether it is a public charity is to be found in certain comments of Walsh J in Joyce at 212. His Honour declined to hold that it was always irrelevant to consider what activities take place on the land or what are the purposes for which it is used. However, he considered that there was no room for determining the first question under the relevant exemption, namely, whether the land belongs to a public charity by reference to the use by a particular group of that land, where, as in that case, there was a formal trust instrument or its equivalent and, in the present, a formal and detailed constitution (being the Memorandum).

  1. True it is that in his judgment in the Lake Macquarie case, Samuels JA (at 535) adopted the proposition that the word "charity" in its legal sense, which for present purposes was its only relevant sense, means "an established trust for charitable purposes". Since it is only the trust for the charitable purposes which can properly be described as a public charity, unless the trustee is bound as such to carry out the public charitable purposes, there is no public charity.

  1. In that case, the relevant land was vested in the Trustees of Church Property of the Diocese of Newcastle which, pursuant to the Church of England Trust Property Act 1917, established a Department of Social Work within the Diocese the objects of which were specified in clause 2 of an Ordinance made under that Act. The relevant land was vested in the Trustees and the issue was whether the objects or purposes set out in clause 2 of the Ordinance under which the land was held were charitable purposes in the relevant sense. However, in my view the decision is not authority for the proposition that in all circumstances land can only belong to a public charity if it is held in trust by that body for charitable purposes. What is critical for consideration are the purposes for which the relevant body, in this case, the appellant, can hold land. Those purposes are set out in clause 2 of the Memorandum and unless they are relevantly charitable then the appellant is disqualified from being a "public charity" for the purposes of rating exemption.

  1. But even if it is appropriate to regard the appellant as in the position of a trustee in relation to any land it acquires, the purposes of any such trust are to be found in clause 2. For the reasons I have already indicated, any such trust is not the type of trust to which s 23 of the Charitable Trusts Act 1993 has any application. The primary judge considered that Hutley JA in the Lake Macquarie case had so determined and adopted his Honour's approach. In my view, he was correct in doing so.

(b) The ancillary issue

  1. In my view the primary judge was correct in holding that the impugned objects were independent and not ancillary or incidental to any other object including that in clause 2(a) of the Memorandum. In this respect, I cannot improve on his Honour's reasoning which I have set out at [21] - [30] above. The appellant has not demonstrated any error in that reasoning which would justify appellate intervention.

Conclusion

  1. In my opinion none of the appellant's contentions are sustainable. No error on the part of the primary judge has therefore been demonstrated. It follows that in my opinion the appeal should be dismissed with costs.

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Decision last updated: 12 December 2012

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Bodalla Aboriginal Housing Company Limited v Eurobodalla Shire Council [2011] NSWLEC 146