Australian Conservation Foundation Inc v Commissioner of State Revenue

[2002] VCAT 1491

(Judgment by: Gibson) Court:
Victorian Civil and Administrative Tribunal

Geoffrey Gibson

Hearing date: 17 October 2002
Judgment date: 18 October 2002


Judgment by:

1. If Sir Walter Raleigh did use his cape to cover a puddle for Queen Elizabeth I he may have been showing what is nowadays called attitude (or he may have been concerned that the Queen might show attitude); he might even, I suppose, have been showing attitude to the environment. But it would seem idle to suppose that the attitude of the English people to the environment in about 1600 might bear any relationship to that of the people of Australia in about 2000. When in 1601 the English Parliament passed a law relating to charitable trusts, the nearest that its preamble got to a concern for the environment was "repair of bridges portes havens causewayes churches seabankes and highways." In Victoria in 2002 there are whole departments or agencies at every level of government exclusively concerned with conserving the environment. Times and ideas change. (The chivalry of Raleigh to his Queen did not stop his King ordering his beheading.) Nevertheless, the charitable status in Victoria of the Australian Conservation Foundation falls to be considered not so much by reference to the terms of contemporary Victorian statutes passed in the reign of Queen Elizabeth II as by reference to the meaning and effect - "the spirit and intendment"- of the preamble to the English Act of 1601 passed near the end of the reign of Queen Elizabeth I.

2. The legal issue is whether the Australian Conservation Foundation is entitled to payroll exemption under section 10(1)(bb) of the Pay-roll Tax Act 1971. The Act there provides that wages liable to pay-roll tax do not include wages paid by a charitable body to a person during a period with respect to which the body satisfies the Commissioner that the person is engaged exclusively in work of the body of a charitable nature.

3. The Constitution of the Foundation sets out in Clause 2 the objects of the Foundation as follows:

to make every effort to achieve ecological sustainability for the planet Earth by:

doing all things designed to protect the natural environment both in Australia and elsewhere;
seeking the protection and conservation of the Earth and its biosphere and ensuring that, if they are used by humans, it is with wisdom and foresight so that the competing demands upon them are resolved in ways that best protect and preserve them;
fostering the protection of the full nature range of all species, and of genetic and environmental diversity, and protecting remaining populations of natural species;
promoting the stabilization of human population numbers and resources use;
ensuring that economic, social and urban planning is founded upon the principles of environmental protection and conservation; and,
fostering management of the planet's resources in a manner that maximises options for present and future generations;

to act as a clearing house for the collection, evaluation, dissemination and interchange of information and bibliographical and other material relating to conservation;
to co-operate with, or promote co-operation by any means among persons, trusts, corporations, firms, associations, governments, instrumentalities of government, municipal authorities, and other bodies in Australia or elsewhere concerned with or interested in conservation;
generally, to take such action as it considers necessary or appropriate in the interests of promoting conservation;
to provide any kind of financial and other assistance to or in respect of specific conservation projects or undertakings, including research and the establishment and management of national and other parks, reserves and sanctuaries;
to give, grant and make available money, facilities, apparatus, equipment and other resources to any person, trust, corporation, firm, association, institution, government, instrumentality of government, municipal authority or other body for the purpose of carrying out any object of the Foundation;
to offer, provide, sponsor or contribute towards any lecture, scholarship, prize or other award for any research, study, literary contribution or other effort, in connection with any object of the Foundation;
in furtherance of the objects, to produce or to encourage by any means production or, and to make available, whether by sale of otherwise, things and material including books, monographs, periodicals, pamphlets, lectures, radio and television programmes, and films; and
to make every effort to ensure that in all its dealings there will be no discrimination on grounds of race, gender or religion."

4. The Mission Statement of the Foundation sets out its objectives and strategies in summary as follows:

Work towards a society which protects, sustains and restores the environment, and provides

Health air, land, water and biological diversity
Sustainable cities and industries
A nuclear-free Australia
Action to protect global environment

Stimulate public and political discussions of ideas and actions for the environment
Strengthen the Organisation
Broaden and Strengthen the Environment Movement "

5. In Latvian society v Commissioner of Land Tax (1989) 3 VAR 242 at 249 to 252 I endeavoured to state the relevant background to this part of Australian law as follows:

According to English and Australian law, trusts can be divided into two classes: trusts for the benefit of named individuals or groups of individuals, and trusts for purposes, not persons: Bowman v Secular Society Ltd [1917] AC 406, 441 (Lord Parker of Waddington); Attorney-General (NSW) v Perpetual Trustee Co Ltd (1940) 63 CLR 209, 222 (Dixon and Evatt JJ).
For there to be a valid trust for purposes, the purposes must be charitable, in the legal sense of that term, and, as a consequence of that requirement, public in character and beneficial to the community (except for some anomalous cases relating to relief of poverty): Re Hummeltenberg (1923) 1 Ch 237; National Anti- Vivisection Society v IRC [1948] AC 31. The critical distinction between the two kinds of trusts, the one private and the other public, is that charitable trusts have an essentially public character. If there is a beneficiary of a charitable trust, it is the public: Maitland Lectures on Equity (Brunyate Ed) 51. It follows that although charitable trusts are trusts for purposes, not people, they must be for purposes that benefit people in the community. The public element is expressed by saying that the charitable trusts must exist for the benefit of the community or an appreciably important section of it.
In the eye of the law, charitable purposes are defined by reference to the preamble of the Statute of Elizabeth I (43Eliz c4) and include the specific items referred to in the preamble, and four categories derived from it as a sort of index or chart by judicial exposition: the relief of poverty, the advancement of education, the advancement of religion, and other purposes beneficial to the community: Income Tax Special Purpose Commissioners v Pemsel [1891] AC 531, 583 (Lord Macnaghten). It is generally accepted that the legal notion of "charitable" is wider than the popular: Salvation Army case 174 - 175 (Dixon, Webb, and Williams JJ), 183 - 184 (Fullagar J); cf Anti-Vivisection Case 41 (Lord Wright). The requirement that the trust be of a public character derives not from the Statute, but the course of decisions upon the Statute.
As to the classes of charitable purposes, two things must be remembered: first, a trust for purposes beneficial to the community is not charitable unless it is within the spirit and intendment of the Statute (Roman Catholic Archbishop v Lawlor (Catholic Newspaper Case (1934) 51 CLR 131 - 36, Dixon J: Williams Trustees v IRC, Royal National Agricultural and Industrial Association v Chester (1974) 48 ALJR 304; and Incorporated Councils of Law Reporting (Q1d) v FCT (1971) 125 CLR 659); and, secondly the mere fact that a trust is for purposes beneficial to the community does not put it within the fourth category of charitable trusts: Williams v IRC at 455; Catholic Newspaper Case at 31. Sir Frederick Jordan said trusts in the first three categories of Lord Macnaghten should be in intention and in the fourth actually beneficial to the community, or some appreciably important part in the community. Another way of putting it is that public benefit may be assumed or inferred in the first three categories, but must be affirmatively proved in the fourth: Anti-Vivisection Case 52 (Lord Wright) and 65 (Lord Simonds).
The laws of charity have evolved since 1891 (Pemsel's Case) and of course since the time of the first Elizabeth, and different times may require different results: Taylor v Taylor (1910) 10 CLR 218, 238 (Isaacs J); Jordan, Chapters in Equity 37; Scottish Burial Reform and Cremation Society v Glasgow Corporation (1968) AC 138 (Lord Wilberforce); Perpetual Trustee Co Ltd v Groth, at 285 and Re Koeppler's Will Trusts (1985) 3 WLR 765 at 776.
There is no generally accepted definition of what is within the spirit and intendment of the Statute of Elizabeth. In Re Belcher (1950) VLR 11 at 13 Fullagar J referred to "purposes whose fulfilment may reasonably be thought to minister to the safety or happiness or well-being or good conscience of the community and which might reasonably be the subject of outlay at the public expense... could fairly be regarded as a possible subject of public responsibility". In Re Lowin (1965) NSWR 1624 at 1626, Jacobs J referred to "a trust which to some extent satisfies an obligation of the community recognised generally in the community"; cf Lander v Whitbread (1982) 2 NSWLR 530 at 540. In Council of Law Reporting v FCT at 669, Barwick CJ referred to "the provision of some of the indispensables of a settled community" and to instances that are "socially fundamental"."

6. It is not just the ACF that has said something about conservation and the environment The Environment Protection Act 1970 for Victoria contains the following:

The purpose of this Act is to create a legislative framework for the protection of the environment in Victoria having regard to the principles of environment protection.
Sound environmental practices and procedures should be adopted as a basis for ecologically sustainable development for the benefit of all human beings and for the environment.
The present generation should ensure that the health, diversity and productivity of the environment is maintained or enhanced for the benefit of future generations.
Protection of the environment is a responsibility shared by all levels of government and industry, business, communities and the people of Victoria.
The aspirations of the people of Victoria for environmental quality should drive environmental improvement."

7. The Commonwealth parliament in the Environment Protection (Impact of Proposals) Act 1974 says:

"5(1) The object of the Act is to ensure to the greatest extent that is practicable that matters affecting the environment to a significant extent are fully examined and taken into account in relation to the formulation of proposals" relating to government developments.

8. ACF put in substantial affidavit evidence. Both deponents were cross-examined. I will not summarise the evidence. I mention only a couple of its principal features. The ACF was established in 1965. It is registered in the ACT. It is a non-profit membership based organisation. It has about 21,000 members. Its head office is in Melbourne. Mr Connor deposed:

"6. The ACF describes each major area of its environmental work as a 'campaign'. ACF's campaigns are all environmentally focused and are designed to meet our organisational mission - namely, ACF campaigns to protect, restore and sustain the environment.

7. ACF campaigns are designed to achieve environmental actions across the three main parts of society: community, business and government. In each of these three areas the tasks are evenly divided between research, education and advocacy."

Mr Connor went on to say that the key campaign areas fall under three themes: protecting natural areas (biodiversity, land clearing, marine, forests and Asia Pacific) restoring Australia's land and waters (salinity/sustainable agriculture, healthy rivers) and sustainable living (sustainable Australia, climate change, Green building, corporate environmental responsibility and nuclear free Australia). Mr Connor described the work of the ACF with the public with business and with government. He said the position with business had improved over the last ten years. Some aspects of dealings with government are "perceived as controversial, for example the Kyoto Protocol". Mr Connor said that the ACF had been engaged in successfully lobbying government for the creation of famous national parks such as Kakadu and the Great Barrier Reef. Mr Fogarty set out a chart of the employees of the ACF and gave a breakdown of funding (only 1% from the Federal Government) and expenditure. He said that just over 60% the expenditure of ACF is listed under the item "environmental campaigns (Australia and international)". The evidence before the tribunal was apparently consistent with that before the High Court in ACF v Commonwealth of Australia (1980) 146 CLR 493. Sir Harry Gibbs said (518 - 9):

"The Foundation is a body well known for its involvement in the public discussion of issues affecting the environment in Australia... It endeavours to influence national policy affecting the environment and, for that purpose, it has made submissions to governments and public authorities in respect of environmental matters."

Sir Ninian Stephen said (at 533):

"Its main object, as appearing in its constitution, may compendiously be described as concern with conservation of the environment."

9. The ACF also tendered evidence that it had been granted exemption in a number of other Australian jurisdictions whose exemptions are sufficiently similar to the Victorian to excite some wonderment among Australian about the administration of the various tax laws of this country, most of which are incomprehensible to most Australians.

10. The submissions of Counsel were commendably lucid, to the point and thorough. I mean no discourtesy when I do not summarise them but go to the issues that the submissions give rise to. The tribunal has been assisted to realise its stated objective of giving a decision on the day of the hearing or the day after.

Does the ACF Exist for Purposes Beneficial to the Community?

11. The answer to this question has in my view been given from above by Parliaments of all colours at all levels passing laws aimed at conserving the environment. It is not just people who might be called Greens who are concerned that we are not doing enough to protect and conserve the environment and that unless we do more we will be betraying those who come after us. All major political parties are, I think I may say, committed to the conservation of the environment in one way or another. A body like the ACF must in my view be regarded as serving purposes beneficial to the community by being devoted to the conservation of the environment. I do not believe that the Crown can be heard to contend to the contrary when Parliament has spoken.

Are Those Purposes Within the "Spirit and Intendment" of the Preamble?

12. In my opinion, the conservation of the environment is a purpose "whose fulfilment may reasonably be thought to minister to the safety or happiness...of the community and which might reasonably be the subject of outlay at the public expense "or one which "to some extent satisfies an obligation of the community recognised generally in the community" or one which provides "some of the indispensables of a settled community" that are "socially fundamental" within the terms of the judicial observations I have referred to above. If you had to go to a specific part of the preamble to justify this conclusion - and I do not think you have to, since there is no reference to religion as such in the preamble - I would refer to the part of the preamble I have referred to in paragraph 1 above. To decline to hold that the conservation of the environment comes within the spirit and intendment of the preamble would in my view be to ossify the law rather than state it, and be the forensic equivalent of holding that a reference to telephonic or like services in the Australian Constitution is not apt to include a reference to radio broadcasting. As I observed earlier, the law of charity has evolved since 1891, let alone 1601, and different times may dictate different readings.

Does ACF Not Qualify as a Charity Because it is Engaged in Political Activities?

13. The decision appealed from refers to political campaigns. Those words have many meanings. A general may talk of a campaign to obtain a strategic advantage or even win a war. An estate agent may talk of a campaign to market a property before an auction. A unionist or feminist may talk of a campaign to improve the rights of workers or women in a factory. A priest may talk of a campaign to eradicate poverty, disease, or illiteracy in a parish. So might a social worker. So might a government. So might a charity. However, if you refer to someone as political you may be talking of someone who is an active member of one of the established political parties. You may be talking of someone who is tying to change the law or to get the government or some other organisation to do something by means associated with politics such as lobbying, caucusing, counting heads, getting the numbers, calling up favours, doing deals, and the rest. The board meeting of any charity - like the committee meeting of a union or the board meeting of a public company - or the conduct of its members may properly be described as political for all sorts of reasons.

14. At least since the inception of Welfare State, politics and charity have been bound to intersect. Government is closely concerned with the relief of the aged, impotent and poor, the advancement of education, and other purposes beneficial to the community. It may not be so bold in the advancement of religion - the only other head of charity - but many Parliaments do begin their proceedings each day by invoking the deity, as does the Preamble to the Australian Constitution, and governments in this country have not always been notoriously ready, willing or able to get offside with the churches.

15. On the other hand charities bent on working in the same field as government will commonly seek the assistance of government. People engaged in doing good works will customarily seek to persuade others to join or help them. A charity involved in the relief of poverty may not be worth its salt if it did not actively lobby government to conduct its affairs in a way which assisted the charity. Governments are equally keen to encourage charities, by, for example, giving them tax relief, to help relieve the burdens upon government. Indeed, increasingly both here and elsewhere, government and charity might be looked at as sharing common burdens and therefore subject to common characterisation of their activities. There will be pressure at either end for the means and ends of charity and government to merge. As I have indicated, the Victorian Parliament has spoken of the shared responsibility for the environment. It would be tart to say that we are all into caring and sharing by act of parliament.

16. It will I think be obvious that it cannot be said that a charity ceases to be a charity if its activities are predominantly said in some unspecified sense to be "political". But if the central object of an organisation is to procure a change in the law, at least in a field that is not otherwise charitable, then this object does not fall within any of the four headings of charity that the law recognises and accordingly the organisation cannot be seen as charitable.

17. Because of the concern of Parliament with conserving the environment, people engaged in that conservation may be said to be engaged in something that is in some sense political, and people actively committed to conserving that environment might in some sense be said to be involved in campaigning to protect the environment or to be involved in a political campaign but it would in my view be wrong to hold on that basis that the body cannot be regarded as charitable as a matter of law. The evidence shows, and it would be obvious that some parts of the national heritage can only be conserved with the active help of the executive and the Parliament.

18. The decision the subject of this review said:

"An organisation which is found to have political purposes cannot be considered charitable" (Bowman v Secular Society [1917] AC 406).

It will I think be apparent that I regard that statement as too wide - its value will depend on the definition of "political". The decision says:

"Political purposes are defined as purposes designed to promote change or maintenance, or influencing of the law, government policy or the decisions of government authorities..."

This is very wide but the decision goes on to say:

"Activities of the ACF which on their face are not directly targeted to changing law and government policy, by advocating and development [of] environmental consciousness towards environmental protection...are all finally directed towards environmental protection through influencing the political process, law making and state regulation of the environment."

This is I think the crux of the decision, and it is conclusion of fact, not a conclusion of law. This is plain from what follows when it is said that educational material distributed under the "pretext" of being educative is all directed to legislative and administrative change.

19. Although in my view this case turns essentially on an issue of fact, I will refer to some cases. In Bowman v Secular Society, above, the Courts dealt with a society whose object was to promote the principle that human conduct should be based upon natural knowledge and not upon supernatural belief, and that human welfare in this world is the proper end of all thought and action. The main issue was whether the propagation of anti-Christian doctrine was blasphemous and therefore illegal. Lord Parker of Waddington, alone I think of the Lords, dealt with the issue of political organization (at 444).

"The abolition of religious tests, the disestablishment of the church, the secularisation of education, the alteration of the law touching religion or marriage, or the observation of the Sabbath, are primarily political objects. Equity has as always refused to recognise such objects as charitable...a trust for the attainment of political objects has always been held invalid, not because it is illegal, but because the Court has no means of judging whether a proposed change in the law will or will not be for the public benefit."

20. In National Anti-Vivisection Society, above the Courts were concerned with a body that had as its object the total suppression of vivisection. The body was held not to be a charity on two grounds, the second being that a main object of the society was political in the promotion of legislation. Lord Simonds referred (at 61) to the remarks of Lord Parker I have referred to and the "conclusive" finding of the Commissioner "that the main object of the Society is the total abolition of the dissection...and (for that purpose) the repeal of the Cruelty to Animals Act 1876 and the substitution of a new enactment prohibiting the dissection all together." His Lordship referred (at 62) to Tyssen on charitable requests:

"It is common practice for a number of individuals among us to form an association for the purpose of promoting some change in the law...It is clear that such an association is not of a charitable nature. However desirable the change may really be, the law could not stultify itself holding that it was for the public benefit that the law itself should be changed. Each court in deciding on the validity of a gift must decide on the principle that the law is right as it stands."

His Lordship went on to deal with the difficulty that the Attorney-General may experience in enforcing a trust to change the law.

21. In Re Inman [1965] VR 238, Gowans, J considered the charitable status of a number of organisations. He ruled against the Anti Vivisection Society (at 244) on the grounds that would be compelling even if they were not compulsory.

"Moreover, without further investigation, it is clear that it is a leading object of the society to secure the abolition of vivisection by demanding its prohibition by law. To remove this means from the objective of the society would be to eviscerate it. As Lord Simonds said, how else would abolition be achieved? Whether called political or not, this does not fall within any head of charity."

22. Another body considered in this case was the RSPCA. In holding it to be charitable, His Honour said (at 242):

"The general object is therefore to prevent cruelty to animals. This dominates the statement of objects in the by-laws. None of the methods set out for the achievement of this object detracts from its character. It is true that one of those methods, viz procuring such further legislation as may be thought expedient, if taken alone, would be a political object and nothing more. But it is only a method of achieving the main or fundamental object, the prevention of cruelty of animals. If an institution for the prevention of cruelty to animals is a charitable institution, it will not be the less a charitable institution because one of the means indicated for the achievement of its dominant purpose taken alone would not be charitable..."

23. There are two fundamental distinctions between this case and the old English cases I have referred to. In each of those cases the body was specifically dedicated to the repeal of existing laws. In neither case was there a department of government set up to further the very objects of the charity. The difficulty of judges being involved with political issues does not here arise. The political issues have been decided by Parliament. In my opinion the position of the ACF is radically different to that of the Secular Society or the Anti-Vivisection Society. Those two bodies did not on their face come within the heads of charity and their primary object could only be achieved by change of the law. The ACF is plainly an organisation formed for the purposes of public benefit and on the face of its objects, and on the evidence before this tribunal, any objective or strategy that might fairly be called "political" can in my view only be regarded as ancillary or incidental - you certainly would not "eviscerate" the ACF if you removed from its constituent documents any reference to legislative change. On the material before me I am certainly not able to come to the conclusion of the original decision maker that all activities of the ACF are finally directed to political means or ends. In my view the ACF is much closer to the RSPCA then either of the bodies referred to in the English cases.

24. This position is in my view supported by two cases referred to in argument. In Royal North Shore Hospital v Attorney-General (1938) 60 CLR 396 at 412 the High Court had to consider the impact of politics on charitable trusts relating to hospitals. Latham CJ said (at 412):

"But it can hardly be suggested that, because the subject of public hospitals is a matter which is dealt with by legislation and in respect of which a State government will normally have a policy, any trust for the benefit of such a hospital or for adding to the number of such hospitals or for increasing their activities is non-charitable for the reason that it is directed towards political activity. A trust for the purpose of political agitation would be invalid as a charitable trust... In view of the great scope and extent of modern legislation, it is difficult, if not impossible, to suggest any subject which might not at one time or another become a subject of political propaganda."

In Public Trustee v Attorney-General (1997) 42 NSWLR 600 Mr Justice Santow referred at the beginning of his judgment to the observation of Sir Owen Dixon in the case I have just mentioned that the distinction between "charitable purposes and political objects is in an unsatisfactory condition". His Honour said (at 608):

"The High Court's formulation and the actual decision suggests that a trust may survive where the mode of political change falls short of political agitation, such as by general education. However, there are gradations between the two extremes which are not always capable of a priori categorisation, but depend upon their particular facts. One should be wary of either pejorative labels like "agitation" or euphemistic labels like "educational" applied to such purposes. Enquiry should rather be directed to the degree of objectivity surrounding the endeavour to influence, particularly where the trust relies on an educational end, and whether political change is merely the by-product or is instead the principal purpose."

His Honour said (at 619):

"Hence a trust whose main purposes is directed to altering the law or government policy, as distinct possibly from a trust to encourage law reform generally, cannot be saved from being political by appeal to the public interest"

His Honour further said (at 62l):

"The cases on charities also involve some confusion between means and ends when it comes to their persuasive activities. There is a range of activity from direct lobbying of the government to education of the public on particular issues in the interests of contributing to a climate conducive to political change. The line between an object directed at legitimate educative activity compared to illegitimate political agitation is a blurred one, involving at the margin matters of tone and style.
Persuasion directed to political change is part and parcel of a democratic society in which ideas and agendas compete for attention and allegiance... If persuasion towards legislative change were never permissible, this would severely undermine the efforts of those trusts available to charitable ends that ultimately depend on legislative change for their effective achievement."

25. The Commissioner did not seek to take any point about the particular wording of this charitable exemption in section 10(1)(bb) but in any event I am persuaded by the submissions on behalf of the ACF and the authority of Ngurratjuta Pmara Aboriginal Corporation v The Commissioner of Taxes (NT) (2000) ATC 4264 that on the material evidence before this tribunal the ACF does come within that provision.

26. I have carefully reviewed the evidence and submissions about what the ACF does. They do not cause me to alter the opinion I formed on reading the constituent documents. I have endeavoured to set out the reasons why I think care must be taken in using words like political or campaign in this context. It is now plain, if it was not before, that there is no law that says a charity can be proscribed merely because you can attach the epithet political to some of its activities: for a variety of reasons many charities nowadays will not be able to avoid conduct that may be said to be political. It is in my opinion clear that the ACF should prima facie be regarded as charitable and it would in my view be unacceptably unworldly if the ACF were to lose that status because of the misgivings expressed by some jurists (as it happens, Law Lords) in another context, in another hemisphere, and in another millennium.

27. It follows in my view that the ACF is entitled to the exemption and the decision should be varied accordingly. It was common ground that if the tribunal reached that conclusion, the ACF would be entitled to a refund of the taxes paid from 23 January 1998. If what I have directed is not appropriate to give effect to these reasons, the parties can mention the matter. I would expect that there would be no difficulty which could not be resolved by discussion and agreement upon the terms of appropriate directions.