Charities on centre court for trendsetting legal decisions

The Australian Centre for Philanthropy and Nonprofit Studies (ACPNS) keeps a keen eye on cases in the judicial pipeline and their potential impact on the sector.

ACPNS Emeritus Professor Myles McGregor-Lowndes said more than 30,000 of the centre’s court case summaries were downloaded in 2023, allowing hardworking volunteers and managers to keep abreast of legal developments that could affect their organisations.

“Case law is important to charities and not-for-profits as many of the legal principles are left to the courts to interpret and keep contemporary,” said Professor McGregor-Lowndes.

“Keeping an eye on what is trending in the courts is important, but it’s just as important to understand what principles are not being kept current with community standards when cases before the courts dry up.”

The ACPNS has just finished a review of almost 200 cases that came before courts in Australia, New Zealand, England and Wales in 2023.

From these, they have selected the top 10 cases they believe helped shape charity and not-for-profit law in those jurisdictions over the past year.

“There is something for everyone in the judicial decisions decided in 2023,” said Professor McGregor-Lowndes.

Here's a summary of the most significant Australian cases drawn from the ACPN’s top 10 legal cases for 2023

Grain Technology Australia Ltd v Rosewood Research Pty Ltd

The ACPNS believes the company structure is now the structure of choice for charitable enterprises, asks: are they to be held to charitable trust law standards or just to standards of the corporate regime?

The case Grain Technology Australia Ltd v Rosewood Research Pty Ltd provided the opportunity to clarify Australian law in relation to charitable companies by exploring whether a not-for-profit research company held its assets for charitable purposes as set out in its corporate objects.

The proceedings also considered whether the court had jurisdiction over “charitable corporations” with the power to enforce “trust-like” obligations.

The Supreme Court of NSW rejected the contention that the objects were exclusively charitable, and that the company’s property was dedicated to a trust for charitable purposes set out in the corporate objects, instead deciding that charitable trusts and charitable corporations are different types of legal institutions.

Equality Australia Ltd and Commissioner of the Australian Charities and Not-for-profits Commission

This long-running stoush between the charities regulator and the LGBTIQ+ advocacy group Equality Australia was sparked by differing views on what constitutes eligibility for public benevolent institution (PBI) status.

At its core is the argument over whether a charity is entitled to be registered under the PBI charity subtype with the ACNC when, as in the case of Equality Australia, it was organised for the relief of distress of members of the LGBTIQ+ community, and whether those members were persons in need of benevolence.

Equality Australia sought to be reclassified as a PBI in a bid to widen its donations net, but the ACNC argued it should be disqualified because it engaged in politics.

The ACNC also argued for a highly literal interpretation of the historic interpretation of PBI – first considered by the High Court in 1931 – that a public benevolent institution was limited to providing actual practical relief from (or mitigation of) harm or distress that had already become manifest.

The Administrative Appeals Tribunal delivered a split decision and the matter is now on appeal to the Federal Court. It will be closely watched in 2024.

Cuthbert v Abbot & Ors

The Queensland Court of Appeal dismissed the claim that an expelled member of an unincorporated political party was permitted to sue the party for failing to comply with party rules and natural justice.

GLJ v The Trustees of the Roman Catholic Church for the Diocese of Lismore

The APCNS described the High Court’s ruling in this case as a “significant decision.”

In a 3/2 majority verdict, the court ruled against the Catholic Church view that an alleged case of child sexual abuse brought to trial 55 years after the event was an abuse of process that justified a permanent stay of the proceedings.

A minority of justices argued that any trial would fall below the minimum standard of fairness that the law required, and that continuation of the proceeding would be so unfairly and unjustifiably oppressive as to constitute an abuse of process.

Green v Attorney General of the State of New South Wales

Professor McGregor-Lowndes and his colleagues at the ACPNS said this case in the Supreme Court of NSW served as a warning to those who voluntarily revoke their status as a charity registered with the ACNC, and the tax consequences that may follow from that action.

The Australian Taxation Office determined that the trust in question was no longer eligible for a self-assessment exemption because its registration status as a charity was revoked in July 2014.

This meant the trustees were now required to lodge income tax returns and business activity statements dating from July 2014 and would be assessed for tax and penalties.

The case was notable also for the erudite explanation of the doctrine of cy-près (old French for “as near as possible”), which allows the wishes of a donor to charity to be carried out even if the original charity no longer exists.

Trinity College Gawler Inc v Commissioner of State Taxation

The Supreme Court of South Australia considered an appeal by Trinity College which argued that 125 of its staff working at a multi-use complex housing a gymnasium, pool, café and 1,200 seat theatre should be exempt from payroll tax.

The court considered tax exemptions under a range of provisions from education, health services and charitable purposes, delving into the details of payroll tax law across the country and its application, before ruling in favour of Trinity College.

Significant charity-related court decisions overseas

There were several international cases among the ACPNS top 10, including the following.

Zedra v HM Attorney General

The UK Court of Appeal ruled on a case relating to the appropriate application of funds held on charitable trusts under the doctrine of cy-près, discussed above.

London Borough of Merton Council v Nuffield Health

The highest appeal court in the United Kingdom, the Supreme Court, considered an appeal about whether a charity was entitled to council rates relief for a gym.

Better Public Media Trust v Attorney-General

The Court of Appeal of New Zealand determined an appeal as to whether an organisation with the purpose of advocating public media was charitable.