Kurrajong Waratah v The Council of the City of Wagga Wagga

[2002] NSWLEC 153

Land and Environment Court

of New South Wales

CITATION:	Kurrajong Waratah v The Council of the City of Wagga Wagga [2002] NSWLEC 153
PARTIES:	APPLICANT Kurrajong Waratah (ACN 002 407 294) RESPONDENT The Council of the City of Wagga Wagga
FILE NUMBER(S):	30066 of 2001
CORAM:	Pain J
KEY ISSUES:	Rating :- exemption from rates - whether the land is used for the purposes of the charity or institution - whether there can be more than one use of land for determining whether rates are payable - whether the use of land for charitable purposes is substantial
LEGISLATION CITED:	Local Government Act 1919 s 132(1)(d) Local Government Act 1993 s 574(1), s 556(1)(h)
CASES CITED:	Aboriginal Hostels Ltd v Darwin City Council (1985) 75 FLR 197; Australian Red Cross Society v Albury City Council [1973] 2 NSWLR 309; Glasgow Corporation v Johnstone [1965] AC 609; Ryde Municipal Council v Macquarie University (1978) 139 CLR 633; Salvation Army (Victoria) Property Trust v Ferntree Gully Corporation (1952) 85 CLR 159; Trustees of the Superior Council of Australia of the Society of St Vincent de Paul v Goulburn City Council [1974] 2 NSWLR 655; Waverley Municipal Council v New South Wales Board of Jewish Education (1959) 5 LGRA 122; Young Men's Christian Association v Sydney City Council (1954) 20 LGR 35
DATES OF HEARING:	27, 28/06/2002
DATE OF JUDGMENT:	09/13/2002
LEGAL REPRESENTATIVES:	APPLICANT Mr M Condon (barrister) SOLICITORS Walsh & Blair RESPONDENT Mr J Ayling SC SOLICITORS Phillips Fox

JUDGMENT:

KURRAJONG WARATAH

(ACN 002 407 294)

Applicant

v

THE COUNCIL OF THE CITY OF WAGGA WAGGA

Respondent

JUDGMENT

1. This is an appeal by the Applicant pursuant to s 574(1) of the Local Government Act 1993 (the LG Act) against the levy of rates assessed on land owned by the Applicant at 12 - 14 Thomas Street, Wagga Wagga (the land) for the financial year ended 30 June 2002. The Applicant submits that the land is exempt from all rates, other than water supply special rates and sewerage special rates, under s 556(1)(h) of the LG Act. Section 556(1)(h) provides an exemption from all rates, other than water supply special rates and sewerage special rates, for:

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

2. It was admitted by the Council that the Applicant is either a public benevolent institution or a public charity. I accept that this is so. It was also accepted by the Council that the Applicant owns the land. The key issue in the case is therefore whether the land was used "for the purposes of the institution or charity" (the case was not put on the basis of occupation).

3. The Applicant's Memorandum of Association includes the following objects.

(a) To further the interests, train, educate and promote the welfare generally of people with an intellectual disability and to children delayed in two or more areas of their development.
(b) To conduct sheltered workshops, farms, shops…hostels and independent living facilities and such training establishments…for the training and care of those persons who because of their limited physical or intellectual capacities are unable to receive adequate training, employment or care elsewhere.
(c) To undertake such measures for the care and protection, transportation, education or recreation of such persons…

4. Stephen Jaques, the Applicant's Chief Executive Officer, essentially sums up what the Applicant does when he states in par 8 of his affidavit sworn 27 May 2002 that: "The primary aim of the Applicant is the care, support and vocational training of intellectually disabled persons".

5. The land is the site of a retirement village called "Rosebank" which includes 30 units and a community hall where numerous activities, some related to the Applicant, take place. The land is 1.074 ha in area.

The evidence

6. The Applicant relied on several affidavits of Stephen Jaques, Chief Executive Officer of the Applicant, and oral evidence given by him. The Applicant particularly relied on evidence of the activities of two sub-organisations of the Applicant known as "Kurrajong Waratah Maintenance" and "Culinary Capers". These organisations employ intellectually disabled persons (whom they term "clients") to perform the services discussed below under supervision.

7. Mr Jaques in his affidavit of 27 May 2002 stated at par 23 that:

The Applicant uses Rosebank as a business support service to employ five of its intellectually disabled clients through "Kurrajong Waratah Maintenance" for the maintenance/repairs and general upkeep of the Rosebank Village. These clients are engaged in the following activities:

(a) garden maintenance, including law

[sic] mowing, weeding, pruning, fertilising, seasonal planting, landscaping, erecting lattice/trellises; and

(b) the disposal of garbage, including removing refuse from the units and processing the recycling; and
(c) minor maintenance, including clearing gutters, window cleaning, cob webbing, drain cleaning, servicing air condition

[sic] units, minor painting and minor domestic jobs.

8. Further, Mr Jaques stated at par 24 of that affidavit:

The Applicant also uses "Rosebank" as a business support service to engage its clients from its service "Culinary Capers" at Rosebank's Community Hall for catering purposes including wedding anniversaries, meetings and birthday parties.

9. He contends that it is the Applicant's intention that its clients look after all of the standard maintenance and catering tasks around Rosebank. It is the provision of the vocational training and employment in particular which the Applicant claims is the use of the land for the purposes of the charity and which thereby gives rise to eligibility for an exemption from rates under the LG Act.

10. The Council obtained by subpoena a number of business records of Culinary Capers and Kurrajong Waratah Maintenance in relation to Rosebank. Examination of these documents suggested that the presence of Culinary Capers staff at Rosebank was intermittent or occasional. There was greater attendance by Kurrajong Waratah Maintenance employees. The written records suggested that there had been attendance approximately every six to eight days by members of Kurrajong Waratah Maintenance. Mr Jaques' oral evidence was that there was actually attendance one or two days per week as not all the work carried out by the Kurrajong Waratah Maintenance staff was reflected in the written records. There was also evidence that the community hall was used occasionally for purposes of the Applicant other than Culinary Capers' activities, such as staff meetings. It should also be noted that although two of the village units are designed so that they can be occupied by disabled persons, a requirement of SEPP 5 developments such as this, they are not currently occupied by disabled persons.

11. It is agreed by the parties that it is a matter of degree and general circumstance in each particular case as to whether the use of a property is for the purposes of the charity. Section 132(1)(d) of the Local Government Act 1919 was in almost identical terms to s 556(1)(h) of the LG Act. Accordingly, the case law decided under the earlier Act is still pertinent. In Aboriginal Hostels Ltd v Darwin City Council (1985) 75 FLR 197 at 210 Nader J stated:

The question whether the land is used or occupied for the purposes of a public charity is determined by comparing the purposes of the trust as evinced in the relevant instruments with the actual use to which the land is put. If the land were used for purposes falling outside the ambit of the trust it could not be said to be used for the purposes of a charity even though its legal title might be vested in the trustee

12. The judgment of Sugarman J in Young Men's Christian Association v Sydney City Council (1954) 20 LGR 35 is an important decision and was referred to by both parties. His Honour states at 44:

The real test following the Salvation Army (Vict.) Case [Salvation Army (Victoria) Property Trust v Fern Tree Gully Corporation (1952) 85 CLR 159 ] and the cases therein referred to, appears to be whether the purposes for which the land is used are those purposes which characterise the claimant for exemption as a "public charity", or are concomitant, or ancillary, or incidental, to those purposes. If the land is used for purposes which satisfy that test, those purposes need not, under s. 132(1)(d), be the sole or exclusive purposes of use; it is sufficient that, substantially, the land is used for those purposes. If, on the other hand, the substantial use of the land is for purposes merely additional or collateral to the purposes which characterise the claimant as a "public charity" the land is not "used for the purposes thereof" within the meaning of s. 132(1)(d).

13. The decision of Else-Mitchell J in Australian Red Cross Society v Albury City Council [1973] 2 NSWLR 309 is also an important judgment. His Honour noted the test of Sugarman J in the YMCA case namely, "whether outside uses are "such in kind, frequency or relative magnitude as to preclude the conclusion" of substantial use for the charitable purpose" (at 310). His Honour stated that the question of whether there is a substantial use is a question of fact (at 310, 311). Furthermore, whether there is substantial use or occupation is not a "strictly quantitative or proportional assessment" (at 311). In that case the Australian Red Cross Society let out a hall at its Albury branch (which was comprised of a hall, office and other facilities) to religious bodies and for social functions. Else-Mitchell J found that the circumstances of the use of the hall in question for other uses/activities did not show such a frequency or magnitude as to negate the primary use of the land for charitable purposes. He therefore held that the land was used or occupied by the Society substantially for its charitable purposes.

14. In Waverley Municipal Council v New South Wales Board of Jewish Education (1959) 5 LGRA 122 the Court of Appeal held that the use of a residence (owned by the defendant Board) by their Director of Education under a lease agreement to accommodate him and his family was not for the substantial use of the purposes of the charity (Owen, Ferguson and Herron JJ), but rather the substantial use was "for purposes merely additional or collateral to the purposes which characterise the Board as a public charity" (Herron J). It was his use of the house under a standard lease arrangement (i.e. to accommodate the director and his family) which was the substantial use and this was not charitable.

15. In Ryde Municipal Council v Macquarie University (1978) 139 CLR 633 Gibbs ACJ, at 643, stated that:

it is now well settled that when an exemption from rates or taxes is given in respect of land used for the purposes of a charity, the exemption is not confined to land used for those purposes the pursuit of which make the body a charity… If the land is used for purposes which are "merely a means to the fulfilment" of the charitable purposes and "incidental thereto" it is within the exemption: Salvation Army (Victoria) Property Trust v Ferntree Gully Corporation [(1952) 85 CLR 159, at pp 169, 171] . In other words, if the use which the charity makes of the land is "wholly ancillary to", or "directly facilitates", the carrying out of its charitable objects, that is sufficient to satisfy the requirements that the premises are used for charitable purposes: Glasgow Corporation v Johnstone [[1965] AC, at p 622]; Oxfam v Birmingham City Council [[1976] AC 126, at p 139] . If, on the other hand, the use is only "collateral" or "additional" to the purposes which give the charity its character as such, the land will not be used for the purposes of the charity : Salvation Army (Victoria) Property Trust…

Applicant's submissions

16. The Applicant argues that Rosebank is used to carry out the Applicant's main charitable purpose. It is conceded by the Applicant that the operation of the retirement village on its own is not a charitable purpose in terms of the Applicant's objects, which do not include care of the aged. The Applicant also accepts that the receipt of monies by the Applicant from the retirement village and then using that money for its charitable purposes does not satisfy the test under the Act. However, the Applicant argues that the receipt of monies does not preclude the use that is required to meet the test under s 556(1)(h). The Applicant maintains that the land should be exempt from rates because Rosebank is an important component of the Applicant's business support services for its disabled clients "because it provides another outlet for clients to find appropriate and beneficial vocational training and employment, commensurate with their needs and skills", and is a forum for the Applicant's activities (through the Community Hall).

17. There was evidence from Mr Jaques, the CEO of the Applicant, concerning the reasons for the taking over of Rosebank from its previous owner, who effectively gifted the site to the Applicant. A major motivating factor was the desire to provide working and training opportunities for the Applicant's disabled clients.

18. The Applicant argues that the test of substantial use as stated by Sugerman J in the YMCA case does not require that the charitable use is the dominant use. The issue is whether the land is used for the purposes of the charity. Provided there is a use which is ancillary or incidental, that is sufficient.

19. The Applicant argues, relying on Ryde Municipal Council, that it is not precluded from "using" the land simply because it rents out the Rosebank apartments. "Use" and "occupation" are true alternatives. "Use" should be given a wide meaning and the section should be beneficially construed. An owner of land can use land even if someone else occupies the land under a lease i.e. there can be a use without occupation.

20. The fact that the land is used for other purposes, mainly use as a retirement village, does not, by itself, prevent it from being exempted. In support of this proposition the Applicant relied on the statement of Gibbs ACJ in Ryde Municipal Council as set out above.

21. Further, it was held in the YMCA case (at 45), that the land need not be used solely or exclusively for charitable purposes and that:

a body or a purpose which is otherwise charitable does not necessarily lose that characteristic merely because payments are made by the recipients of its benefits, and in some cases may retain that characteristic even though the payments result in profits which are applied to the purposes of the charity.

22. The Applicant submits that the use of Rosebank is concomitant or ancillary to the Applicant's stated charitable objects. Relying on Ryde Municipal Council, it cannot be said that Rosebank is used merely for some additional or collateral non-charitable activity. The finding of work for persons under the care of the Applicant is ancillary to its charitable purpose in the same way as caring for workers engaged in charitable institutions is ancillary to that institution's purposes: see GlasgowCorporation v Johnstone [1965] AC 609. If the use which the charity makes of the land is wholly ancillary to or directly facilitates the carrying out of its charitable objects this is sufficient to satisfy the requirement that the premises are used for charitable purposes.

Council's submissions

23. The Council argued that the substantial use of the land was as a retirement village, which was not a use for the Applicant's charitable purposes nor ancillary to the Applicant's charitable objects. The Council accepts that the use does not need to be solely or exclusively for the relevant purpose.

24. Firstly, the Council argued on the Sugerman test in the YMCA case that there was a distinction between a use which would be characteristic of a use for the purpose of the institution or charity, and one which is conducted in order to pursue an additional or collateral activity and the profits of that activity may be applied in aid of the charitable purpose. On the present facts, the conduct of the retirement village is an activity merely additional to, and entirely collateral with, the principal aim of the Applicant. The Respondent argued and, as already noted, the Applicant accepted, that the profits which were received from the retirement village and then used for furthering the Applicant's purposes did not satisfy the test under s 556(1)(h).

25. Secondly, the Council argued that the provision of occasional catering (Culinary Capers) and regular cleaning and ground maintenance (Kurrajong Waratah Maintenance) at the land did not constitute a use of the land for the Applicant's purposes (The Respondent also questions whether it constitutes a use at all). The existence of the retirement village offers the Applicant opportunities to provide training there for its clients, but this is an incidental fact. The land is principally a retirement village. It is not an object of the Applicant to pursue, in any charitable or benevolent manner, the interests of those persons who reside in the village. Its relationship with the residents is purely commercial and the nature of that business enterprise is unrelated, such that it does not directly advance the welfare of the disabled and does not directly serve their interests. Whether the land is used for the purposes of the Applicant must be determined by comparing the purposes of the applicant with the actual use of the land.

26. Thirdly, the Council further argued that the retirement village was not used to provide accommodation/facilities that are a discharge of the Applicant's functions. The factual situation in the Trustees of the Superior Council of Australia of the Society of St Vincent de Paul v Goulburn City Council [1974] 2 NSWLR 655 was a useful comparison to this case. In that case the Court held that those parts of the Society's Goulburn premises which were let to a tenant for an electrical shop and used as a library, despite the fact that both parts returned an income for the Society, and in the case of the library at least, might have afforded a service to the subjects of the Society's charitable endeavours, were not used for the purposes of the Society. Other parts of the building which were used by the Society to run its own charity shop and other associated charitable works were held to attract the partial exemption.

27. Fourthly, the Council argued that even if the Applicant's activities i.e. catering and maintenance services, did amount to a use of the land, this was insufficiently connected to the substantial land use of a retirement village and could not therefore be regarded as other than merely incidental to it. The service is not tied to the land in the sense that it could not, or would not, be capable of being provided if the land belonged to a person or body other than the Applicant.

Can there be more than one "use" of land for the purposes of determining if rates are payable?

28. The Applicant argued that it was possible to have more than one use of land in relation to determining whether or not there was an exemption from rates. In this case, where there is clearly a use for the retirement village it was also possible that the land was used by the Applicant for its charitable purposes such that it could be exempt from rates. I note that in this respect, this case is unlike other cases referred to where uses of premises or parts of premises were more clearly defined between those of the charitable purposes and other purposes.

29. The Council argued that the Court had to choose what the use of the land was for and, unlike in planning cases, it was that use which determined whether or not there was exemption from rates. In other words there could not be multiple uses of land for the determination of exemptions from rates.

Finding

30. The facts in this case are different to those in the cases relied on by the parties where, on the whole, there has been a largely charitable use of land within which clearly defined portions/rooms in buildings have had other uses which may or may not be charitable. In this case, the Applicant is arguing that its use of land for its charitable purposes overlaps the use of the land as a retirement village.

31. The cases emphasise that the use does not need to be the sole or exclusive use. Depending on the nature of the charitable purpose, the level of use of land for that charitable purpose and the nature of the other non-charitable uses of the land there could be a factual situation where the charitable use could be found to be sufficient enough to warrant a rate exemption despite another use of the same land. In this case, where the nature of the Applicant's charitable purposes is to provide training and work opportunities for disabled people, I can envisage that the provision of such opportunities could coexist for rating exemption purposes with another use of land.

32. However, the Applicant still has to meet the test of "use" set out by the cases, such as YMCA and Australian Red Cross Society, namely that the land is used for the purposes of the charity or for purposes concomitant or ancillary or incidental to that charitable use. Furthermore, Sugerman J in the YMCA case refers to the need for "substantial" use for charitable purposes and, while other judgments such as Australian Red Cross Society emphasise the test of substantial use is not strictly a quantitative assessment, the test is a useful one in the circumstances of this case where there are arguably two overlapping and co-existing uses. It must always be a question of fact and degree in each case as to whether the use is substantial.

33. The question being one of fact and degree, I must conclude on the current levels of activity by the Applicant's sub-organisations, that is, the occasional attendance by Culinary Capers staff and the weekly attendance on approximately two days by Kurrajong Waratah Maintenance staff, that the use is not a sufficient level of use to meet the requirements of s 556(1)(h). The current level of use does not warrant a finding that there is a substantial use of the land for charitable purposes. It seems to me that for the Applicant to be successful it had to show that Rosebank is used to a far greater extent as a training/work experience facility for the Applicant's clients than the evidence demonstrated.

34. On the evidence of Mr Jaques, the Applicant considers Rosebank is an important part of its operations in providing training and work opportunities for its disabled clients. I have no doubt the Applicant's purposes in purchasing Rosebank are entirely proper and I appreciate why the Applicant is arguing the purchase assists in attaining its objectives. The Applicant sought to argue that the approach in the Ryde Municipal Council case was apposite and would result in the Applicant being successful in that its use of Rosebank is wholly ancillary to and directly facilitates its charitable purposes, as Gibbs ACJ in that case stated. The legislative provisions which that case addressed referred to land used solely for the purposes of the university. As is clear from the quote set out at par 15 Gibbs ACJ did not refer to the word "substantial" use to define the required use for charitable purposes. Given the legislative context, namely the requirement of sole use, that is not surprising. I do not therefore interpret Ryde Municipal Council as modifying the approach of substantial use applied in the YMCA and Australian Red Cross Society cases, hence my conclusion in the previous paragraph.

35. The current charitable activities of the Applicant at the land do not satisfy the provisions of s 556(1)(h) and accordingly the Applicant's application for rate exemption is unsuccessful.

Orders
The Court orders that:

1. The Class 3 application is dismissed.

2. The question of costs is reserved.

3. The exhibits may be returned.