Chief Commissioner of State Revenue v Northern NSW Football Ltd (Rd)

[2010] NSWADTAP 28

Appeal Panel - Internal

CITATION:	Chief Commissioner of State Revenue v Northern NSW Football Ltd (RD) [2010] NSWADTAP 28
PARTIES:	APPLICANT Chief Commissioner of State Revenue RESPONDENT Northern NSW Football Ltd
FILE NUMBER:	099033
HEARING DATES:	30 October 2009
DATE OF DECISION:	29 April 2010
BEFORE:	Needham J SC - Deputy President; Verick A - Judicial Member; Bennett C - Non-Judicial Member
CATCHWORDS:	Payroll Tax – exemptions for a non-profit organisation having wholly charitable, benevolent, philanthropic or patriotic purposes – whether a non-profit organisation having as its purpose the promotion and management of football in a particular geographic area falls within the exemption – consideration of the law of charities in the context of payroll tax.
DECISION UNDER APPEAL:	Northern NSW Football Ltd v. Chief Commissioner of State Revenue [2009] NSWADT 113
FILE NUMBER UNDER APPEAL:	086081
LEGISLATION CITED:	Duties Act 1997 (NSW) Payroll Tax 2007 (NSW) Pay-roll Tax 1971 Statute of Charitable Uses (1601) 43 Elizabeth 1
CASES CITED:	Northern NSW Football Ltd v. Chief Commissioner of State Revenue [2009] NSWADT 113 In re Nottage [1885] 2 Ch 649 Royal National Agricultural and Industrial Association v. Chester (1974) 3 ALR 486 Strathalbyn Show Jumping Club Inc v. Mayes (2001) 79 SASR 54 Re Laidlaw Foundation (1984) 13 DRL (4th) 491 Said v. Barrington [2001] NSWSC 576 Federal Commissioner of Taxation v. Word Investments Ltd (2008) 236 CLR 204 Incorporated Council of Law Reporting of the State of Queensland v. Federal Commissioner of Taxation (1971) 125 CLR 569 Commissioners for Special Purposes of Income Tax v Pemsel [1891] AC 531 Peterborough Royal Foxhound Show Society v Commissioners of Inland Revenue [1936] 2 KB 497 ; [1936] 1 All ER 813 Proctor v Jetway Aviation Pty Ltd [1984] 1 NSWLR 166 at 177 Traderight Pty Ltd v Bank of Queensland [2010] NSWSC 139 at [47] R v The Assessors of the Town of Sunny Brae [1952] SCR 76 Maclean Shire Council v Nungera Co-Operative Society Ltd (unreported, NSWCA, 7 April 1995) Perpetual Trustee Co v FCT (1931) 45 CLR 224
REPRESENTATION:	APPELLANT GC Lindsay SC, Mr Byrne instructed by Crown Solicitor for NSW RESPONDENT I Young, barrister
ORDERS:	1.The appeal is upheld 2.The orders made by the Tribunal on 20 May 2009 are set aside 3.The decision of the Chief Commissioner of 29 March 2007 that Northern NSW Football Ltd was not entitled to exemptions pursuant to s 48(1)(c) of the Payroll Tax Act 2007 is upheld 4.The proceedings are remitted back to the Tribunal pursuant to s 114(2)(b) of the Administrative Decisions Tribunal Act to determine whether the respondent satisfies the requirements of ss 259(1)(c) and 267(2) of the Duties Act 1977.

REASONS FOR DECISION

Introduction

1 The Chief Commissioner of State Revenue (“the Commissioner” or “the appellant”) appeals from a decision of the Tribunal below sub nomNorthern NSW Football Ltd v. Chief Commissioner of State Revenue [2009] NSWADT 113.

2 The question before the learned Tribunal member, Ms Hole, was whether the respondent to this appeal, Northern NSW Football Ltd (“the respondent” or “NNSWF”) was entitled to exemptions:-

a.from payroll tax, under s 48 of the Payroll Tax Act 2007; and
b.from duties under ss 259(1)(c) and 276(2) of the Duties Act 1997.

3 It was agreed that if NNSWF succeeded on the payroll tax issue, then it would also be entitled to exemptions from duty. Accordingly, the question in the appeal relates to payroll tax alone, and if the appeal is successful, the matter will need to be remitted to the Tribunal for a determination of the duties issue.

4 The appellant filed an Amended Notice of Appeal on 30 October 2009 which posed eight questions identified as the questions of law arising from the Tribunal’s decision. These will emerge from the reasons below. There was no leave sought for extension of the appeal to the merits.

The Facts

5 The respondent, generally speaking, is an organisation involved in promotion, regulation and governance of the sport of Football in the area of New South Wales in which it operates. It is a not-for-profit company.

6 In 2003 it received approval from the Commissioner for exemptions from pay-roll tax under the then Pay-roll Tax Act 1971 and from duties in respect of motor vehicle registration. Those exemptions were made on the basis that NNSWF was exempt from pay-roll tax on the wages paid to employees engaged in its charitable, benevolent, patriotic or philanthropic work (see par [3] of the decision below).

7 On 14 February 2007 the respondent notified the appellant of a change of name and requested an updating of the 2003 approvals. Between 14 February 2007 and 28 March 2007 the Commissioner notified the respondent of decisions to apply exemptions in relation to insurance, motor vehicle registrations and payroll tax. However, after an internal review by the Commissioner, the respondent was notified that all exemptions had been reviewed and withdrawn, and that the withdrawal of the exemptions would have effect from 1 July 2007. It is that withdrawal of exemptions which NNSWF sought, in the Tribunal below, to review.

8 The Commissioner’s reasoning for the withdrawal of the exemptions is set out in a Memorandum which was extracted in the decision below and which reads, in part:-

“The advice from the Technical help desk is that Northern NSW Football Federation LTD is not a charitable organisation and as such should not have been granted an exemption from pay-roll tax, Motor vehicle and Insurance Duty.
The reason for this view is that the main objects of Northern NSW Football Federation LTD are to facilitate the promotion of soccer in northern NSW.
In accordance with ATO Rulings and prior cases that have been handed down, recreational and sporting purposes such as the sport of yacht racing, associations for rowing, swimming and amateur athletics are not charitable even though there might be elements of benefit to the community.
In order for sporting purposes and activities to be considered as charitable they would have to be merely incidental to a purpose that is otherwise charitable such as sporting activities associated with universities or schools where they form an integral part of the carrying on of the charitable purpose.
Other Sporting associations, whose activities might be considered to be charitable, would be those that have training and education as their main objects. In such cases, only wages paid to those persons performing the charitable activities would be exempt from payroll tax.”

9 On 1 July 2007 the Pay-roll Tax 1971 was replaced by the Payroll Tax 2007 (“the 2007 Act”). It is common ground that the 2007 Act is the appropriate legislation to apply.

10 The learned Tribunal Member heard evidence as to the objects of the business, and noted the Objects of the respondent as set out in its Constitution, the evidence (oral and written) from the business manager of the respondent, and the evidence as to the activities of the company. At par [21] of the decision, the Business Manager of the organisation was quoted as saying that the “primary objective” of the organisation was “to promote sport and the vehicle is playing football, the objective is to promote sport.” The written statement of the business manager was extracted at length at par [24] of the decision. That included the statement that

“One of the objects for which NNSWF is established is to provide and promote football as an undertaking which benefits communities within the State through enhancement of and improvement in, the health and general well-being of participants (paragraph 1.1(c) of the Constitution).”

11 The learned Tribunal member also set out the Objects of the organisation as set out in the Constitution at paragraph 20 of her decision. Those Objects are:-

“1 Objects of Company
1.1 Objects
The objects for which the Company is established are:
(a) to be the member of FFA in respect of the State and to comply with the constitution and by-laws of FFA;
(b) to govern Football throughout the State and protect Football from abuse;
(c) to provide and promote Football as an undertaking which benefits communities within the State through enhancement of and improvement in, the health and general well-being of participants;
(d) to provide and promote education of Football players, coaches, referees and administrators;
(e) to provide and promote a healthy lifestyle in schools, and communities generally, through Football education;
(f) prevent infringement of the constitution and by-laws of FFA to the extent that it is able to do so;
(g) to foster friendly relations among the officials and players of Football by encouraging Football games in the State;
(h) to take all reasonable steps to ensure that discrimination or distinction does not occur among Football participants on any grounds regulated under any Equal Opportunity Law;
(i) to promote, provide for, regulate and manage Football tournaments and games in the State;
(j) to promote, provide for, regulate and manage Football players representing the State;
(k) to co-operate with FFA, other members of FFA and other bodies in the promotion and development of, or otherwise in relation to, Football, the Statutes and Regulations and the Laws of the Game;
(l) to facilitate the provision and maintenance of grounds, playing fields, materials, equipment and other facilities for Football in the State so that Registered Participants and communities, in general, enjoy safe environments; and
(m) to carry on any business, enterprise or undertaking in any sphere or activity which is permitted by law.”

12 It was common ground that the respondent was “a non-profit organisation by virtue of the provisions of its constitution” (par [28]).

13 After outlining the submissions from either party, the learned Tribunal member went on to determine whether the respondent fell within sub-s 48(1)(c), in that it had “wholly charitable, benevolent, philanthropic or patriotic purposes”. In doing so she traversed, as is of course appropriate, the well-trodden path emanating from the Statute of Charitable Uses (1601) 43 Elizabeth 1. After considering some texts on the issue, the learned Tribunal member then turned to the decision of In re Nottage [1885] 2 Ch 649 which held that a gift to establish a prize for “a mere game” (being a yachting race) was not charitable. Following that decision was Royal National Agricultural and Industrial Association v. Chester (1974) 3 ALR 486 where the High Court held that a trust in favour of an organisation “for improving the breeding and racing of homer pigeons” was not charitable because “it seems to us that the breeding of pigeons cannot, either by analogy or by reason of the character of the activity itself, be said to be of benefit to the community”. In Strathalbyn Show Jumping Club Inc v. Mayes (2001) 79 SASR 54 the law following Nottage was summarised as “the general rule that trusts for mere sport will not be charitable” (see par [60]).

14 The learned Tribunal member reviewed judicial and other comments to the effect that “to encourage a sport is not charitable” (including comments in Chester and Ford & Lee, Principles of the Laws of Torts). She further noted that a Canadian decision, Re Laidlaw Foundation (1984) 13 DRL (4th) 491 held that “promotion of an amateur athletic sport which involves the pursuit of physical fitness is prima facie an organization beneficial to the community within the sprit and intendment of the Statute of Elizabeth and may be classified as a charitable organization ...” (at par [61]).

15 From paragraph [62] of the decision onwards, the learned Tribunal member examined the manner in which NNSWF carries out its objects. She noted that the objects of the company “are directed to providing a benefit to communities in the geographic area that the applicant is operative”. She found that the dominant purpose was “to provide and promote football as an undertaking which benefits communities, the benefit being the improvement in the health and general wellbeing of participants, through education which encompasses education generally and specifically relating to football”. The learned Tribunal member described this as being “an amalgam of the objects and describes a clear and dominant purpose beneficial to the community”. At [74] the learned Tribunal member noted that “the Tribunal must take note of a decision of the Ontario High Court of Justice as a persuasive precedent”.

16 After the examination of the annual reports and the general activities of NNSWF, the learned Tribunal member found that the respondent was “undertaking a beneficial purpose for the community in following its objects for a principle purpose gleaned from its objects”. After doing so, she held (at [78] that “it is sufficient that a non-profit organisation not being a school, an educational institution, an educational company or an instrumentality of the State has as its sole or dominant purpose a charitable, benevolent, philanthropic or patriotic purpose for the exemptions provided in Section 48(1) of the 2007 Act to be applicable as qualified by s 48(2) of the Act.”. Accordingly, the decision of the Commissioner was set aside and “the wages paid or payable by the applicant as a non-profit organisation for work ordinarily performed in connection with the benevolent purpose of the applicant in accordance with s 48(2) of the Payroll Tax 2007 are exempt wages”.

17 The relevant legislation is set out in paragraph [8] of the decision below and as there is no dispute about that paragraph it is reproduced here:-

8 The 2007 Act defines non-profit organisations at Section 28(1) as:
“48 Non-profit organisations
(1) Subject to subsection (2), wages are exempt wages if they are paid or payable by any of the following:
(a) a religious institution,
(b) a public benevolent institution (but not including an instrumentality of the State),
(c) a non-profit organisation having wholly charitable, benevolent, philanthropic or patriotic purposes (but not including a school, an educational institution, an educational company or an instrumentality of the State).
(2) The wages must be paid or payable:
(a) for work of a kind ordinarily performed in connection with the religious, charitable, benevolent, philanthropic or patriotic purposes of the institution or body, and
(b) to a person engaged exclusively in that kind of work.”
The 1971 Act did not define non-profit organisations rather it described by whom wages were paid or payable as:

“Section 10(1)
(1) Subject to subsections (1A) and (2), the wages liable to pay-roll tax under this Act do not include wages paid or payable …
(j) by a non-profit organisation (other than a school or college, statutory body or an instrumentality of the State) having as one of its objects a charitable, benevolent, philanthropic or patriotic purpose.”

Section 10(2) refined the description of wages as:

“Section 10(2)
(2) Paragraphs (j), (j1) and (k) of subsection (1) only operate so as to exclude from wages liable to pay-roll tax under this Act wages which are paid or payable to employees in respect of time when they are engaged in charitable, benevolent, philanthropic or patriotic work of the non-profit organisation or the charitable work of the organisation, society or institution.”

The 2007 Act introduced the requirement that the non-profit organisation have as its “sole or dominant purpose” one of the charitable, benevolent, patriotic or philanthropic purposes.

Clause 12 Schedule 2 of the 2007 Act refines the description of wages as:

“Clause 12 of Schedule 2
(1) Wages are exempt for the purposes of this Act if they are paid or payable by …

(c) by (sic) a non-profit organisation (other than a school or college, statutory body or an instrumentality of the State) having as one of its objects a charitable, benevolent, philanthropic or patriotic purpose, to a person in respect of time when the person is engaged in charitable, benevolent, philanthropic or patriotic work of the non-profit organisation, being a non-profit organisation in existence immediately before the repeal of the Pay-roll Tax Act 1971 …
(2) Wages are exempt under sub-clause (1)(c) or (3) only if the organisation, society or institution concerned has not, since the repeal of the Pay-roll Tax Act 1971, altered its constitution in so far as its constitution relates to its charitable, benevolent, philanthropic or patriotic purposes.”

18 The Commissioner’s Amended Notice of Appeal raised two main issues. They were:-

a.was the finding that NNSW was a “non-profit organisation having as its dominant purpose a benevolent and or charitable purpose” within the meaning of s 48(1)(c) correct, having regard to the activities and constituting documents of the respondent? and
b.was the learned Tribunal member bound to follow the High Court decisions such as Chester rather than Re Laidlaw Foundation ?
A further issue arose out of whether the statement of objects in the Constitution of the respondent should have been accorded the status it was by the learned Tribunal Member. That is a question which falls, in our view, generally within the first of the two questions set out above.

19 The main focus of the oral submissions was on the second question, the first question being dealt with mainly by way of written submissions.

The appellant’s submissions

20 The appellant submits that the decision of the Tribunal below was made “in disregard of settled Australian law” which the Tribunal was bound to apply, and that the Tribunal was not entitled to follow Re Laidlaw Foundation in the light of the trail of Australian law adopting the principle first espoused in Re Nottage. It was submitted that Re Nottage remains the law in Australia, and had been applied by the High Court in Chester, and by State Supreme Courts (including the New South Wales Supreme Court in Said v. Barrington [2001] NSWSC 576 and the South Australian Supreme Court in Strathalbyn Show Jumping (especially at [69] and [73]-[74]). It was submitted that it “simply was not open to the Tribunal to embrace an idea (as it appears to have done in paragraphs [72]-[74] of the Decision) that it was entitled, in the name of “reform”, to depart from the law ...”.

21 The submission of the appellant on this point is that the Tribunal was bound to apply Australian law that the purposes of a sporting organisation are not, “without more”, charitable. Any departure from adopting the principle in Re Nottage and its adoption in Australia would need to be made at the level of a superior, probably the High, Court, rather than at Tribunal (or, it follows, at Appeal Panel) level.

22 The appellant moved from that primary submission as to the non-charitable nature of sporting organisations generally to consider the way in which the Tribunal dealt with identifying the “purpose” of the organisation. It was submitted that the learned Tribunal member misapplied:-

a.the requirement to assess the purpose of an organisation as against its actual activities ( Federal Commissioner of Taxation v. Word Investments Ltd (2008) 236 CLR 204 at [17]-[19], [26] and [34]; and
b.the requirement that an organisation qualify as a charitable purpose under the fourth category in Pemsel’s Case ( Commissioners for Special Purposes of Income Tax v Pemsel [1891] AC 531) with reference to the tenor of the preamble to the Statute of Elizabeth (see Incorporated Council of Law Reporting of the State of Queensland v. Federal Commissioner of Taxation (1971) 125 CLR 569).

23 It was submitted that the only evidence as to the “sole or dominant” purpose of NNSWF was “the promotion and management of the game of football throughout Northern NSW”, and thus there was no basis upon which the Tribunal could find otherwise. There was nothing in that purpose which enabled a characterisation as “charitable” or “benevolent”. The appellant pointed to the words “and or” in Order 1 of the decision (“... as its dominant purpose a charitable and or benevolent ...”. The object was one of “promotion of football”, which was not educational, nor charitable “and or” benevolent.

The respondent’s submissions

24 The respondent took issue with the characterisation of the principle in Re Nottage as “settled Australian law” which the Tribunal was “bound to apply”. It was submitted that the Tribunal was not, in fact, bound to follow Re Nottage, Strathalbyn Show Jumping or Said v. Barrington, and the observations in Chester were obiter and distinguishable. It was submitted that Chester was not good law and should not be followed, a position taken by Re Laidlaw.

25 The respondent then made submissions on the status of Chester in Australian law and more particularly in relation to this case. It was submitted that Chester was not a case about sport at all, but about the improvement and breeding of racing pigeons; in that it differed from both the present case and from the “national and broad based community sporting organisations” in Re Laidlaw.

26 Each of Chester, Re Nottage, and Said v. Barrington were closely analysed and were said to be distinguishable. in the case of Re Nottage, the respondent said that there was a significant divergence between the members of the Court in the intent and force of “mere sport” or a “mere game”, and it was difficult to say where the decision’s ratio lay. It was submitted that in Re Nottage, perhaps what could be taken from it was that the words of the testatrix (that case involving a gift by will) did not contemplate a general, public purpose.

27 The cases of Chester, Strathalbyn and other cases were likewise closely analysed. In effect the respondent submitted that the principle for which those cases are cited as authority– that a gift for a prize for sport is not charitable – has become accepted, wrongly, as a principle that a gift for sport is not charitable, and that that acceptance needs to be considered with reference to first principles.

28 In particular, the respondent noted that the decision of Re Laidlaw is the only one of the cases cited by the parties which deals with a national, broadly based organisation promoting “health and fitness through community participation”. In Re Laidlaw, the organisations in question included the Sports Fund for the Physically Disabled, Jeux Canada Summer Games, Canadian Track and Field Association, Commonwealth Games of Canada Inc and Olympic Trust of Canada. The respondent further relies upon the criticism of Nottage in Principles of the Law of Trusts (Ford and Lee, 2d ed) at [1947] and the commentary by Professor Dal Pont in Charity Law in Australia and New Zealand at paragraph [39.3].

29 The respondent submitted that Re Laidlaw had a setting wider than merely the Canadian provenance and the particular statutory background. There was a concentration (at p 506) on physical fitness as a public benefit and a distinction from “mere sport”. It was submitted that the case was on all fours with the current facts, and was an appropriate authority to guide the learned Tribunal member.

30 Orally, the respondent submitted that the Tribunal was entitled to make the finding it did as to the purpose of the organisation, and that the characterisation in paragraph [65] of the decision was a proper one. It was submitted that the Tribunal was not bound slavishly by the constitution, but in this case the activities of the organisation matched its objects (see Word Investments at par [34]).

31 Finally, the respondent submitted in oral submissions that it had not pressed the case that the purposes of the organisation were benevolent, but that case had not been abandoned, either.

The Appellant’s submissions in reply

32 In reply, the appellant essentially made two main points – firstly, that the Appeal Panel need not look beyond Australian law for purpose of determining the relevant legal framework upon which this appeal can be determined, and secondly, that Re Laidlaw was based upon a particular legislative scheme which enabled that Court to make obiter comments as to the continuing relevance of Re Nottage.

33 As for the respondent’s contention that the respondent is a “modern broad-based community or national organisation”, the appellant noted that this is a self-description of the organisation and predicated upon an assumption as to the public or community benefit of sport in general and football in particular.

34 It was submitted that the legal test of a charitable purpose requires something more than the encouragement of sport (see Re Nottage). In the first instance decision of Re Nottage [1995] 2 Ch 653-4, Kekewich J said:-

“In order to uphold this gift as charitable, I think I ought to see that it is by itself, directly and as its necessary and intended result, beneficial to the community. Almost any gift maybe some sense be said to be beneficial to the community ... But in order to find that a gift is charitable, the Court must come to the conclusion that the benefit of the community is the direct, and not the remote, object of the gift ... I cannot see that the benefit of the community is the natural and necessary result of the gift ...”.

35 The appellant submitted that the “direct object of the gift” was not a charitable purpose, regardless of any benefit to the community. Something more than mere benefit to the community was required for an organisation to be regarded as charitable within the law.

36 The appellant pointed to the definitions in the 2007 Act and submitted that for the Respondent’s activities, however laudable they may be, to be recognised as being exempted from payroll tax, the respondent must be “a non-profit organisation having as its sole or dominant purpose a charitable .. purpose”. It was submitted that whether one looked at the objects or at the activities of the respondent, the organisation plainly fell within the principles of Re Nottage.

37 As to the question of whether the gift was benevolent, the appellant submitted that the finding of benevolence was not in accordance with the law, the respondent had but faintly supported the finding, and thus there was no basis for the decision to be upheld on that ground.

Consideration

38 The first question to consider is whether the Tribunal erred in law in applying re Laidlaw over the line of cases originating with re Nottage. The general approach has been for Courts to adopt, as Windeyer J did in Said v. Barrington, that “It has been held over a long period of time that gifts for the encouragement of sport per se are not charitable. This was determined first, I think, in the case of re Nottage and has, in Australia, been followed since” (at [7]).

39 The respondent and the appellant took diametrically opposed approaches to the question. The respondent sought to examine the cases “from the ground up”, as it were; that is, to examine the facts and the reasoning in re Nottage and the cases following it to see if they did in fact, set out such a principle. The appellant’s course was to note that these cases have been applied at levels binding on the Tribunal, including the Supreme Court of NSW Said v. Barrington) and the High Court (Chester). It is useful to see how the High Court in Chester treated re Nottage:-

“In the course of reaching the conclusion under appeal, the learned judge considered the cases in which it has been held that to encourage a sport is not charitable: Re Nottage [1895] 2 Ch 649 ; [1895–9] All ER Rep 1203, and Peterborough Royal Foxhound Show Society v Commissioners of Inland Revenue [1936] 2 KB 497 ; [1936] 1 All ER 813. This his Honour did in answer to an argument “that the object of the trust could serve a purpose useful in both military and civil defence”. His Honour referred to the cases to emphasize that, although the side effects of the gift may indirectly serve such purposes, the promotion of such purposes is not the direct and necessary object of the bequest. The cases were properly regarded as instances of the application of the rule that, if a gift permits applications for uses which are not charitable, it is not charitable in the legal sense. Although we have put our decision upon a somewhat broader basis, we do agree with the learned trial judge that the provision of racing facilities and trophies would certainly be within the discretion of the trustee and that such an application of the income of the estate would not be for charitable purposes.” (at ALJR p 306; ALR at 489).

40 The respondent’s case was that this was not “seriously considered dicta”, but instead was a “passing reference”. Chester was, further, said to be distinguishable on its facts. However, it is clear that the High Court was of the view that re Nottage was authority for the proposition for which it was cited – that is, that “to encourage a sport is not charitable”. The acknowledgement that the decision in Chester was “on a somewhat broader basis” does not detract from the statement of principle accepted by the High Court.

41 The respondent submitted that Said v. Barrington was “ex tempore, and per incuriam”. The two are not synonymous, but leaving that aside, the respondent says that the per incuriam argument arises out of the fact that Windeyer J was not taken to re Laidlaw. The flaw in this argument is that Said v. Barrington and Chester are binding on this Tribunal whether they were properly decided or not; a court or Tribunal further down the hierarchy cannot ignore a case which binds it:- Proctor v Jetway Aviation Pty Ltd [1984] 1 NSWLR 166 at 177; see also Traderight Pty Ltd v Bank of Queensland [2010] NSWSC 139 at [47].

42 A more weighty objection to the application of the re Nottage line of cases is the differentiation between “promotion of sport/a mere prize” not being charitable, and the re Laidlaw approach of a charitable promotion of a goal of physical fitness on the basis of a promotion of fitness being a purpose beneficial to the community. In order to determine this aspect, it is necessary to move to the question of the finding of the Tribunal below as to the purpose of the organisation. As was said by Kekewich J in re Nottage, “Almost any gift may in some sense be said to be beneficial to the community”.

43 The most recent binding authority on the question of the determination of the purpose of an organisation in the context of its being charitable or not is Word Investments. At [17], the majority (Gummow, Hayne, Heydon and Crennan JJ) said:-

... “it is necessary to examine the objects, and the purported effectuation of those objects in the activities, of the institution in question. In examining the objects, it is necessary to see whether its main or predominant or dominant objects, as distinct from its concomitant or incidental or ancillary objects, are charitable - Royal Australasian College of Surgeons v FCT (1943) 68 CLR 436at 447, 448, 450 and 452.”

and at [34]:-

“ A caveat . To avoid doubt in future, it should be noted that it would not be enough that the purpose or main purpose of an institution were charitable if it fact it ceased to carry out that purpose”.
It should be remembered that the relevant statutory test is that the organisation be “a non-profit organisation having wholly charitable ... purposes” (see the wording of s 48(1)(c) of the 2007 Act).

44 What are the main or predominant or dominant objects of the organisation known as Northern NSW Football Ltd? The Tribunal found in par [62] of the decision that, taking into account the constitution of the company at clause 1,

“the dominant purpose being to “provide and promote football as an undertaking which benefits communities, the benefit being the improvement in the health and general wellbeing of participants, through education which encompasses education generally and specifically relating to football”. This is an amalgam of the objects and describes a clear and dominant purpose beneficial to the community”.

45 The appellant contends that the Tribunal was bound, because there was no other evidence, to accept the evidence of Mr West (the business manager of the respondent) and the Report of Directors that the sole or dominant purpose of the respondent was “the promotion and management of the game of football throughout Northern New South Wales”.

46 We do not think it necessary to decide whether we are bound by that evidence and constrained from looking beyond it, or not. It seems to us that the evidence was firmly to the effect that the purpose of the organisation, as set out in its Objects, the Report of Directors and that of Mr West, as well as demonstrated by its activities, is indeed the promotion of football. The learned Tribunal member found that that was part of the purpose of the organisation. The benefit to the community is a result of that promotion and management, and not the result of a “wholly charitable” purpose on the part of the organisation. The distinction is a little like that in R v The Assessors of the Town of Sunny Brae [1952] SCR 76 referred to by the majority in Word Investments at [27], in which a corporation had charitable and non-charitable purposes, and carried on a business which incidentally conferred benefits on charities. Here, NNSWF has a major or dominant purpose of promotion and encouragement of football, which incidentally has the attribute of being beneficial to the community. The distinction is as against a company which has purposes which are solely charitable, and which carries on a commercial business in order to give effect to those purposes.

47 We are of the view, accordingly, that the learned Tribunal member erred, in finding, as she did in paragraph [62] of the decision, that:-

“When taken as a whole the sub-clauses of Clause 1 describe a dominant purpose being to “provide and promote football as an undertaking which benefits communities, the benefit being the improvement in the health and general wellbeing of participants, through education which encompasses education generally and specifically relating to football”. This is an amalgam of the objects and describes a clear and dominant purpose beneficial to the community.”

48 The purpose of the organisation is the promotion and management of football. The result of that purpose may be a benefit to the community, but benefit to the community is not the purpose of the organisation. Much as the breeding of a better homing pigeon, or the sight of racing yachts under full sail, may have some beneficial effect on the community, so would playing football under the auspices of NNSWF. The “amalgam” purpose found by the learned Tribunal member is not one which gives proper weight to the activities of the organisation (see Word Investments), which, it was clear, was one of promoting football, managing the teams and players, and seeking to put it forward as a healthy and beneficial game to play.

49 It was not seriously contested that the purpose as found was a benevolent one. The meaning of the word “benevolent” in the context of a “benevolent institution” was considered by the Court of Appeal in Maclean Shire Council v Nungera Co-Operative Society Ltd (unreported, NSWCA, 7 April 1995) which cited Perpetual Trustee Co v FCT (1931) 45 CLR 224 as having a quality of “giv(ing) relief freely to those who are in need of it and who are unable to care for themselves. Those who receive aid or comfort in this way are the poor, the sick, the aged and the young” (see per McTiernan J, at 235-6).

50 Clearly, the NNSWF is not a “benevolent” organisation within the legal meaning of the term.

51 That finding brings the consideration of the appeal back to the question, is such a purpose a charitable one? The purpose, even as found by the learned Tribunal member, is one for the “promotion of sport”. Whether that promotion results, as this may do, in beneficial results for a particular community is not to the point. The purpose, and the activities, of the organisation are not charitable in the sense of the fourth head of Pemsel’s Case nor purposes which can be said to be within the spirit and intendment of the Statute of Elizabeth, given their focus on management and promotion of the “beautiful game”.

52 The Appeal Panel is bound by the High Court and by the Supreme Court of New South Wales, and in our view the authorities setting out the principle espoused in Chester that “to encourage a sport is not charitable” is the law in New South Wales at this time. The time for a re-examination of that rule at a higher level such as occurred in Canada in Re Laidlaw may indeed be ripe, but the authorities binding on us compel us to find that the purpose of this organisation is not one which fits within the exemption to payroll tax in s 48(1)(c) of the 2007 Act.

53 Accordingly, the questions posed in the Amended Notice of Appeal should be answered as follows (some questions have been slightly paraphrased or truncated):-

a.Question 1 : Did the Tribunal err in finding that the Respondent answered the description of a “non-profit organisation having as its dominant purpose a benevolent and or charitable purpose” within the meaning of s 48(1)(c) of the Payroll Tax Act 2007 ? Answer : Yes.
b.Question 2 : Did the Tribunal err:-
i. in refusing, or failing, to apply the reasoning in Re Nottage as part of the law of Australia? Answer: Yes.
ii. in following the reasoning of the Canadian decision of Re Laidlaw Foundation ? Answer: Yes.
c. Question 3 : Did the Tribunal err in refusing, or failing, to apply the law as found by the High Court of Australia in:-
i.Chester ? Answer: Yes.
ii Incorporated Council of Law Reporting for the State of Queensland v. Federal Commissioner of Taxation? Answer: not necessary to answer.
iii.Federal Commissioner of Taxation v. Word Investments? Answer: Yes.
d. Question 4: Was the Tribunal bound to find that the sole or dominant purpose of the Respondent was the “promotion and management of the game of football throughout Northern New South Wales? Answer: No.
e. Question 5: Did the Tribunal err in finding that a purpose to “provide and promote football as an undertaking which benefits communities, the benefit being the improvement in the health and general wellbeing of participants, through education which encompasses education generally and specifically relating to football” was:-
i. “charitable purpose” within the meaning of s 48(1)(c) of the 2007 Act? Answer: Yes.
ii. a “benevolent purpose” within the meaning of that provision? Answer: Yes.
f. Question 6 : Did the Tribunal err in making a determination as to the “dominant purpose” of the respondent by reference to the formal statement of objects in the Constitution of the Respondent without any, or any substantial, consideration of the activities in fact undertaken by the respondent? Answer: Yes.
g. Question 7: Did the Tribunal err in finding that a “dominant purpose” of the Respondent was a “benevolent” purpose in the absence of (i) any evidence and (ii) publication of any reasons in support of that finding? Answer: Yes.
h. Question 8 : Did the Tribunal address the wrong question when, although required to address the terms of s 48(1)(c) of the 2007 Act, it:-
i.identified the, or a, “dominant purpose” of the Respondent with objects of the Respondent stated in the Constitution of the Respondent? Answer: not necessary to answer
ii.asked itself the “Questions to be Answered” set out in paragraph [66] of the decision? Answer: not necessary to answer.
iii.purported to find that the Respondent had as its dominant purpose a benevolent “and/or” charitable purpose? Answer: Yes.

Determination

54 The appeal is upheld.

55 The orders made by the Tribunal on 20 May 2009 are set aside.

56 The decision of the Chief Commissioner of 29 March 2007 that Northern NSW Football Ltd was not entitled to exemptions pursuant to s 48(1)(c) of the Payroll Tax Act 2007 is upheld.

57 The proceedings are remitted back to the Tribunal pursuant to s 114(2)(b) of the Administrative Decisions Tribunal Act to determine whether the respondent satisfies the requirements of ss 259(1)(c) and 267(2) of the Duties Act 1977.