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Editors --- "Gumbangerrii Aboriginal Corporation v.- Nambucca Council - Case Summary" [1996] AUIndigLawRpr 64; (1996) 1(3) Australian Indigenous Law Reporter 416

Gumbangerrii Aboriginal Corporation v. Nambucca Council

29 March 1996, Sydney

Rating - Exemption - Land owned by Aboriginal Housing Corporation - Whether a public benevolent institution - Construction of objects - Whether used or occupied for benevolent or charitable purposes

The Gumbangerrii Aboriginal Housing Corporation sought an exemption from rates levied by Nambucca Council, on land owned by the Corporation. The Corporation made the application under subs. 132(1) of the Local Government Act 1919, or subs. 556(h) of the Local Government Act 1993, on the basis that it was a public charity or a public benevolent institution. The Council refused the exemption. This was an appeal by the Corporation against the levying of rates by the Council on land owned by the Corporation.

The appeal was upheld, and Gumbangerrii was entitled to a rating exemption under the Act, on the grounds that:

(1) the applicant was a public charity and a public benevolent institution; and

(2) the land was being used for public charitable and benevolent purposes.

Introduction

These are appeals by the Gumbangerrii Aboriginal Corporation under s. l33 of the Local Government Act 1919 (the Act) against the levying of rates by Nambucca Council on land owned by the applicant. Each application relates to a separate rate assessment notice but they have been dealt with by consent as a single application and heard together.

By letter dated I December 1993 Cheryl Donovan, director of the applicant, sought an exemption from rates under subs. l32(l)(d) of the Act on the basis that the applicant is a public charity or public benevolent institution. (The points of claim also seek to rely on subs. 556(h) of the Local Government Act 1993 which is the equivalent of subs. l32(l)(d) in the earlier Act.) With the letter were enclosed a copy of the applicant's rules, its latest annual accounts, a submission supporting the application for exemption, a summary of relevant cases and a copy of Bannon J's judgment in Nungera Co-operative Society Ltd v Maclean Shire Council (1991) 73 LGERA 178. On or about 24 January 1994, the respondent served a rate determination notice on the applicant in respect of the subject lands and rate notices were subsequently issued on 27 January 1994.

Gumbangerrii Aboriginal Corporation

The applicant was incorporated pursuant to the Aboriginal Councils and Associations Act 1976 (Cth) (the ACA Act) on 25 June 1980. The Corporation's objects are set out in cl 6 of its rules as follows:

The objects for which the Association is established are:

(a) to foster, advance, improve and maintain the general wellbeing and welfare of Aboriginal persons;

(b) to provide facilities and amenities for Aboriginal persons;

(c) to promote, encourage and develop sporting activities for Aboriginal persons;

(d) to maintain and promote Aboriginal culture and society; and

(e) to undertake all or any aspects of the foregoing activities within the Shire of Nambucca and all such other locations as the Committee shall from time to time determine.

The powers of the Corporation are set out in cl 7 of the rules which states that:

(1) The Association shall, subject to the provisions of the Act, have power to do all such lawful things as may seem to the Committee necessary to carry out the objects of the Association.

(2) The Association does not have power to dispose of or give mortgages, charges or other securities upon or over an estate or interest in land that is not a disposable estate or interest under the Act.

Clause 8(l) stipulates that membership of the Corporation is open to adult Aboriginal persons normally and permanently resident in the Shire of Nambucca and all such other locations as the Committee from time to time shall determine. Paragraph 8 of the Points of Claim states that 'the members of the Applicant are Aboriginal residents of the Nambucca and Macksville areas of NSW and needy members of the community'.

Clause 9 deals with the election and functions of the Corporation's Governing Committee and sub clause (10) states that 'the Committee shall manage and control the affairs of the Association in accordance with these rules and with the Act ...'. Under cl 10, the Corporation is required to appoint a 'public officer' in accordance with s. 56 of the ACA Act (see s. 56).

Clause 15 states that:

All funds and property of the Association not subject to any special trust shall be available at the discretion of the Committee for the purpose of carrying out the objects of the Association, provided that no portion thereof shall be paid or applied directly or indirectly by way of dividend bonus or otherwise howsoever by way of profit to any member, but nothing herein contained shall prevent the payment in good faith of reasonable and proper remuneration to any member of the Association, officer, servant, agent or employee of the Association for or in return for services actually rendered to the Association.

In answer to the respondent's request for particulars, the Corporation (through its solicitor Mr Friend) notified the Council that 'no special trusts have been created in accordance with the rules of the Corporation'. In the same letter (dated 16 August 1995), Mr Friend informed the Council that:

The funds of the Corporation are applied to repair and maintenance of the houses owned by the Corporation, payment of rates, accountancy fees, audit fees, bank charges, insurances, hire fees, legal fees, lights and power, provision of doubtful debts, management fees, postage, printing and stationery, travelling and accommodation, telephone, and wages.

Clause 16 requires that proper accounts and records be kept while cl 17 requires an annual audit by qualified auditors. The audit is to include a report drawing attention to any irregularities in the Corporation's financial affairs and this report is to be made available to the members at the annual general meeting. Section 59 of the ACA Act imposes detailed account keeping requirements on the members of the Governing Committee and sets a penalty for failure to comply. Copies of the 'Committee's report' and 'examiner's report' as required by s. 59 must be filed with the Registrar of Aboriginal Corporations (appointed by the Minister under s. 4 of the Act).

Under cl 18, any alteration of the Corporation's objects and rules must be passed by a three-fourths majority at a general meeting and the alteration does not take effect unless it is approved by the Registrar under the ACA Act (see ss. 52 and 54).

Importantly, cl 19 states that a winding up of the Corporation is to be in accordance with the Act. Clause 19(2) provides:

In the event of the Association being wound up, any moneys received by the Association from the Commonwealth that have not been applied or that have been improperly applied shall, on request by the Minister for Aboriginal Affairs of the Commonwealth or any other Minister of State of the Commonwealth who may for the time being be responsible for Aboriginal Affairs, be repaid by the Association to the Commonwealth.

Section 62A of the ACA Act gives the Registrar power to petition the Court (that is, the Federal Court) that an Aboriginal Corporation be wound up if, inter alia, she or he is of the opinion that the winding up would be in the public interest or in the interests of the members of the Association. Under s. 63, the Court can wind up an Aboriginal Corporation on the petition of the Association, any creditor, member, the judicial manager or Registrar. Subsection (2) states that a petition under subs. 63(l) shall specify one or more of the following grounds:

....

(e) the members of the Committee of the Association have acted in the affairs of the Association in their own interests rather than in the interests of the members as a whole or in any other manner whatsoever that appears to be unfair or unjust to other members;

Section 65 governs the distribution of surplus assets on a winding up. It states that any surplus assets shall be distributed by the Court or the liquidator in accordance with the rules of the Corporation or a resolution of the Corporation passed by at least two-thirds of its members. In the present case, the only rule dealing with winding up is cl 19(2). Thus, distribution of any surplus assets by the Gumbangerrii Aboriginal Corporation must be in accordance with a resolution of its members or an order of the Court under subs. 65(2). The latter provides (inter alia) that, where a Judge of the Court considers that a distribution of assets in accordance with the members' resolution would not be just, or if no such resolution has been passed, the Judge 'shall make such orders for the distribution of those assets as, having regard to the objects of the Association, he considers just' (emphasis added). See also subs. 65(3).

These provisions are important in considering whether or not the applicant constitutes a public benevolent institution or public charity such as to qualify for the rating exemption under the Local Government Act. I return to this issue later.

Regard must also be had to certain other provisions of the ACA Act dealing with Aboriginal Corporations. Section 49C of the Act states that 'a member of the Governing Committee of an Incorporated Aboriginal Association must act honestly and diligently in exercising powers and performing functions and duties under this Act, the regulations and the Rules'.

Section 60 gives the Registrar power to authorise the inspection of an Aboriginal Corporation's documents and the person undertaking that inspection is then required to report to the Registrar any irregularities in the operations or financial affairs of the Association. Similarly, s. 68 gives the Registrar power to investigate an Aboriginal Corporation's affairs if she or he suspects on reasonable grounds that there has been a failure to comply with the Act, regulations or rules or that there has been an irregularity in the corporation's financial affairs. Subsection 69(l) creates an offence (attracting a $200 penalty) where a person fails to comply with the provisions of subs. 68(2) and subs. 69(2) imposes a penalty of $1,500 for making a false or misleading statement before the Registrar.

Section 60A gives the Registrar power to require compliance with the Act, regulations or rules where she or he suspects that there has been a failure to so comply, or that there has been an irregularity in the Association's financial affairs. Under s. 6l the Registrar may, subject to the provisions of subsection (1), apply to the Court for an injunction requiring the Association not to contravene, or to cease contravening, the Act, regulations or rules.

Under s. 7l, the Registrar may appoint an Administrator if she or he is satisfied that (inter alia) the Governing Committee has failed to comply with a provision of the Act etc and has failed to provide a satisfactory explanation, or that the members of the Governing Committee have acted 'in their own interests rather than in the interests of the members of the Association or otherwise in a way that appears to be unfair or unjust to members of the Association'. Upon the appointment of an Administrator, the offices of the members of the Governing Committee and the public officer automatically become vacant (s. 73).

These provisions are set out to demonstrate the degree of public accountability of the applicant resulting from the ACA Act. This is relevant to the question of whether the applicant constitutes a public benevolent institution and is a matter to which I will return.

As I noted in Toomelah Co-operative Ltd v Moree Plains Shire Council (unreported 4 March 1996), the question of whether the applicant constitutes a public benevolent institution or public charity is principally answered by reference to the terms of its constituting documents (at p. 5). Nevertheless, due to subs. l32(l)(d) of the 1919 Act (and subs. 556(h) of the 1993 Act) it is necessary to examine the applicant's activities in order to determine whether the lands in question are used or occupied for benevolent or charitable purposes.

The activities of the applicant

Gumbangerrii Aboriginal Corporation owns 16 houses which it rents to Aboriginal people in Nambucca Shire on the basis of need. The majority of the Aboriginal community in Nambucca Shire are unemployed or on some kind of Social Security benefits (par 17 of the affidavit of Cheryl Donovan, sworn 18 July 1995).

The criteria used by the Governing Committee when selecting tenants are set out in Ex 2 which states that the main criteria used:

Is the objectives within the constitution of Gumbangerrii, where it states that the governing committee must, foster, advance and maintain the general well-being and welfare of Aboriginal persons' and to improve facilities and amenities for Aboriginal people.

This obviously mirrors cll 6(a) and (b) of the Corporation's rules.

Other criteria used include Aboriginality, registered membership of the Corporation and the need of housing, including the following considerations which I quote:

1) Financial Difficulties. (Renting privately, Rent cost to [sic] high)

2) Accommodation. (Boarding, Overcrowded Situation)

3) Number of people to be housed. (Adults and Children)

This information is given to the Governing Committee which, exercising its discretion within the framework of the Corporation's objects, approves or disapproves the application for housing by secret ballot.

According to the Auditor's Report for the year ended 30 June 1995, there are currently 111 members on the Membership Register. Rents charged on the premises range between $55 to $70 per week. The rent is used to pay for a variety of things including insurance, repairs and service charges. All but two houses are presently occupied. The condition of the housing stock varies (one was described as being in a 'disgraceful condition'). The applicant attempts to maintain the houses to the best of its ability but often does not have sufficient funds for the purpose. Mrs Donovan gave evidence of the repairs needed in several of the houses and noted that there was no money available to undertake repairs on the vacant house at 2 Angus Lane or on Fiona Kay's house at 14 Bent Street. Many of the houses are overcrowded with large or extended families living in the houses (oral evidence and Annexure E to Mrs Donovan's affidavit).

Paragraph 9 of Mrs Donovan's affidavit lists the names of four tenants in employment (who were not employed at the time housing was allocated to them) although, by the time of the hearing, the number of tenants in some form of employment had risen to six or seven. Annexure 'E' to the affidavit sets out the names, addresses and, where applicable, occupations of the Corporation's tenants. The majority of those in employment work as labourers, teachers or assistants of one kind or another. Their combined household income range from between $17,000 to $36,000 per annum net. Many of those employed support a number of children and dependents on these incomes and cannot, in my opinion, be regarded as other than low income earners with tenuous employment. Evidence was led that a number of tenants fail to pay their rent on time. The Auditor's Report for the year ended 30 June 1993 (annexed to Mrs Donovan's affidavit) and that in Ex 4 set out the names of rental debtors and the amounts owing: as can be seen, some of the sums are substantial. Mrs Donovan gave evidence that those who are behind on rent are 'given a couple of warnings' before the Corporation goes to the 'Tribunal'. This process was described as 'continuous'. However, only a few tenants have actually been evicted.

Is the applicant a public benevolent institution?

Subsection 133(2) of the 1919 Act gives a right of appeal against the levying of rates by any person holding an estate or interest in land on the ground that the land (or part thereof) is not rateable or not rateable to any particular rate. Subsection 132(l)(d) of the Act exempts from rating:

land which belongs to any public hospital, public benevolent institution, or public charity, and is used or occupied by the hospital institution or charity as the case may be for the purposes thereof;

Similarly s. 574 of the 1993 Act (Local Government Act 1993) gives a right of appeal 'against the levying of the rate on the ground that the land or part of it is not rateable or is not rateable to a particular ordinary rate or a particular special rate'. Subsection 556(h) provides that:

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

is exempt from all rates (except water supply special rates and sewerage special rates).

The first question for the court to decide is whether Gumbangerrii Aboriginal Corporation is a public benevolent institution. The meaning of the expression 'public benevolent institution' has been considered in many reported cases. The leading authority is Perpetual Trustee Co Ltd v Commissioner of Taxation(Cth) [1931] HCA 20; (1931) 45 CLR 224. Starke J in considering the meaning to be given to the phrase said at 232, it is 'in my opinion, an institution organised for the relief of poverty, sickness, destitution, or helplessness'. Dixon J at 233 said a public benevolent institution must be promoted or conducted for the relief of 'poverty, distress, suffering or misfortune'. Evatt J at 235-236 said 'such bodies vary greatly in scope and character. But they have one thing in common: they give relief freely to those who are in need of it and who are unable to care for themselves. ... Their disability or distress arouses pity, and the institutions are designed to give them protection'.

Is the applicant an institution which is organised for the relief of poverty as it is to be understood nowadays?
It may be noted that 'poverty' need not be destitution (Lemm v FCT (1942) 66 CLR 39. 9; Commissioner of Taxation (Cth) v Launceston Legacy (1987) 75 ALR 122); and that benevolence is not confined to practical or material assistance, in fact it may extend to the promotion of culture, Tangentyere Council Inc v The Commissioner of Taxes [1990] NTSC 14; 99 FLR 363 at 372.

Aborigines as a class of people have been judicially and statutorily recognised as being severely disadvantaged and impoverished in Australian society and are a 'class which, generally speaking, is in need of protection and assistance' Aboriginal Hostels v Darwin City Council (1985) 75 FLR 197 at 211; Maclean Shire Council v Nungera Co-operative Society (1995) LGERA 436 at 434 (and see Re Mathew [1951] VicLawRp 29; [1951] VLR 226 at 232; Re Byrning [1976] VicRp 8; [1976] VR 100).

Whether an institution is held to be a public benevolent institution is principally applied by 'reference to the terms of its constituting documents' and not by reference to the applicant activities (Toomelah, p5).

Mr O'Rourke, on behalf of the Council, submitted that the Corporation was not a public benevolent institution because it had independent or collateral objects, not all of which were devoted to benevolent purposes. He submits that not all the objects are designed to relieve poverty through the provision of housing and thus fall outside the ambit of the test stated in Perpetual Trustee.

It is well established that non-benevolent objects and purposes that are not incidental or ancillary to the main benevolent purpose can result in the Organisation losing its benevolent status, whereas objects and purposes which are incidental or ancillary to the main benevolent purpose do not have a disqualify effect (see Stratton v Simpson (1970) 126 CLR 138 at 159-160; Royal Australasian College of Surgeons v Commissioner of Taxation (Cth) [1943] HCA 34; (1943) 68 CLR 436 at 447 and Nungera at 432.

Are the objects and purpose of the Organisation independent or ancillary? On behalf of Gumbangerrii Aboriginal Corporation, Mr Friend submits that Object 6(a) namely 'to foster, advance, improve and maintain the general wellbeing and welfare of Aboriginal persons' is the primary objective of the Corporation and objects (b) to (e) are ancillary or incidental to 6(a). In other words, objects (b) to (e) must be read subject to object 6(a).

I agree with the Corporation's submission. Handley JA in Nungera held that the applicant in that case satisfied the criteria for a public benevolent institution as set out in Perpetual Trustee. In that case the objects of the Society contained a Preamble which read 'The objects of the Society shall be to relieve the poverty, sickness, destitution, distress, suffering, misfortune or helplessness of needy members of the Aboriginal community in the Maclean and surrounding areas of New South Wales through. ...' (at 433). The court held the Preamble was the primary objective and the succeeding objectives ancillary to the main objective.

In this case there is no such Preamble. Mr O'Rourke submits that in the absence of such a Preamble all the objects, with the exception of (e), should be construed independently of each other.

I reject this submission. In Toomelah, a case not dissimilar to this, where there was an absence of such a Preamble, I held 'while the wording of the Toomelah Co-operative Society's rules is different to that employed in the Nungera rules, the underlying objects of the two societies is the same' (at 12). The first object was held to be the primary object and the subsequent objects ancillary.

In my opinion the applicant's primary object is to relieve poverty through fostering, advancing, improving and maintaining the general wellbeing and welfare of Aboriginal persons.

In Tangentyere Council v The Commissioner of Taxes 99 FLR 364 at 365 Angel J held that in order to decide whether an Organisation is a public benevolent institution the whole of the circumstances of the case must be examined. Exhibit 2 sets out the criteria to be used when selecting tenants (set out earlier).

These criteria demonstrate that the main objective of the institution is organised to foster, advance, improve and maintain the well-being of and welfare of Aborigines by providing low-cost housing (and thus relieve poverty).

Whilst the other objects do not explicitly spell out that their purpose is to increase Aboriginal welfare and
well-being, it is clearly their intent. Thus, they are ancillary to the predominant purpose set out in 6(a)
(Aboriginal Hostels at 211). I conclude that the applicant is a public benevolent institution. In so concluding, I also take account of the public accountability provisions inherent in the Aboriginal Councils and Association Act and the applicant's Rules.

Does the applicant use or occupy the land for the purposes of a public benevolent institution?

The second question to decide is whether the land is used or occupied by the institution ... for the purposes of the institution. According to Nader J. in Aboriginal Hostels in order to determine this question one must compare the purposes of the institution 'as evinced in the relevant instruments with the actual use to which the land is put' (at 210).

What are the uses of the relevant land? The land is used to provide low-cost accommodation for needy Aborigines in the Nambucca Heads and Macksville area. Mr O'Rourke submits that the land is not being used for benevolent purposes. Evidence was led by the Council that 6 or 7 of the 68 housed Aborigines had family income of between $17,000 and $36,000 net. The respondent suggests that these persons are not in need and therefore the land is not used for benevolent purposes.

I reject this submission. The fact that 6 or 7 members of the Corporation are employed (mostly in low income jobs) whist the majority are welfare recipients, does not mean that the land is not used in the manner required by
subs. l32(l)(d) (1919 Act) or subs. 556(h) (1993 Act). Bannon J so found in Nungera (at 183) and this was confirmed by Handley JA on appeal (at 435), see also Toomelah at 13. Handley JA held that merely because three of the Aborigines in that case were employed, one should not conclude that they 'were well off by ordinary Australian standards'. He also said 'whether particular persons are in need is a question of fact' (at 435).

On the evidence, the income of the 6 or 7 employed Aboriginal persons is not such as to disentitle the applicant to the exemption.

Is the applicant a public charity?

In Toomelah I held that in order to enjoy the privileges which the status of 'charity' confers it must be shown that there is a charitable trust which is within the spirit and intendment of the Preamble to the Statute of Elizabeth (43 Eliz c. 4) (at 7). However, in this case the conclusion that the applicant is a public benevolent institution means that it is unnecessary to address the alternative basis of the application that the Corporation is also a public charity.

Accordingly, I do not intend to examine the issue of whether the applicant is a public charity under the Act. Suffice to say that it is not altogether clear from looking at the Corporation's objectives and the Aboriginal Councils Association Act that the necessary constructive trust arises.

Conclusion

I conclude that the applicant is a public benevolent institution, and that the land the subject of these appeals is used or occupied for benevolent purposes. The applicant is therefore entitled to the exemption provided for in
subs. 132(l)(d) of the Local Government Act 1919 and subs. 556(h) Local Government Act 1993. Each appeal is upheld. Costs are reserved and exhibits may be returned save for 2, 3 and 5. l