Aboriginal Law Bulletin
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by Michael Hanna
The NSW Court of Appeal has dismissed an appeal by Maclean Shire Council against a Land and Environment Court decision exempting Nungera Co-operative Society Limited, an Aboriginal housing .organisation, from local government rates. The ruling should now make it easy for other Aboriginal housing and welfare organisations to obtain the exemption, an entitlement wrongly denied them for many years. It also means that housing properties owned by Local Aboriginal Land Councils might attract the exemption through a change to the ownership arrangements of the properties.
In 1990, Nungera amended its rules by inserting new objects which provided that:
The objects of the Society shall be to relieve the poverty ... of needy members of the Aboriginal community in ... Maclean ... through:
(a) improving their housing, living conditions and general standards of living by the provision of land, housing and other buildings and other services for their use and benefit;
(b) improving their vocational skills and employment prospects by the provision of educational, training and employment opportunities; and
(c) arresting their social disintegration by strengthening and fostering the development of Aboriginal and Islander identity and culture and ensuring that all programs and actions are in accordance with their cultural values, customs and practices.
In December 1990, Nungera applied to Maclean Shire Council for exemption from rates for 14 properties, under section 132(1)(d) of the Local Government Act 1919. (See AboriginalLB 50/41 This section exempted "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."[1] Nungera claimed it was a "public benevolent institution" and a "public charity". Nungera also claimed that two of the 14 properties (for which Nungera was sent the assessment notices and paid the rates) were exempt from rates under section 114 of the Commonwealth Constitution, which prohibits State taxes (including local government rates) being imposed on Commonwealth property. The title to the two properties was still held in the name of the Aboriginal Land Fund Commission, a statutory predecessor of the Aboriginal Development Commission and its successor, the Aboriginal and Torres Strait Islander Commission. The titles were not amended when the repealing legislation in each case generally transferred all assets to the new Commission.
At common law, in general terms, a community-based organisation will be a public benevolent institution if its objects and activities relate solely to the provision of assistance or benefits to needy members of the public; it is "non-profit", that is, it is carried on without purpose of private gain and its funds and assets are used solely to advance its objects; and its rules contain a dissolution clause which provides that, on winding-up of the organisation, the remaining assets will not be distributed to members, but will be transferred to another organisation which also qualifies as a public benevolent institution.
At common law, in general terms, a community-based organisation will be a public charity if its objects and activities relate solely to the relief of poverty, the advancement of education, the advancement of religion or other purposes beneficial to the community (even if, incidentally, these other purposes benefit the rich as well as the poor); it is non-profit; and its assets are held subject to an enforceable charitable trust.
Following rejection of the application by Maclean Shire Council, in February 1991 the Aboriginal Legal Service on behalf of Nungera appealed to the NSW Land and Environment Court. At the hearing, the Council argued that some of Nungera's objects and activities were not benevolent or charitable. Regarding the objects, the Council referred to rules of Nungera which provided that membership and thus benefits were not to be provided to non-Aboriginal members of the public; that some of any surplus of funds could be applied to "promoting co-operation"; and that, on winding-up of the Society, any surplus was to be transferred only to an organisation established for and controlled by Aborigines and any land was to be held in perpetuity for the use and benefit of Aborigines. Regarding the activities, the Council claimed that Nungera was not adequately ensuring that only needy Aboriginal people became or remained tenants; and that three of the Aboriginal tenants, who were in part or full-time employment, were not in need of any benefits.
On 21 October 1991, Justice Bannon:
(a) decided that all of the properties "were owned by a public benevolent institution and were occupied by persons for the purposes of that institution". He ruled that the "overall purpose" of the objects were benevolent; he acknowledged that, generally, Aborigines were a disadvantaged people; and he accepted the evidence of Malcolm Hunt, Nungera administrator, that the criterion for occupation had always been the need of the Aborigines and that the employed Aborigines were unable to raise loans to obtain housing;
(b) rejected Nungera's claim to be a public charity, because, although the objects were for charitable purposes, he was not satisfied that the properties were held upon an enforceable charitable trust;
(c) did not deal with Nungera's claim that the two properties still held in the name of the Aboriginal Land Fund Commission were exempted by section 114 of the Constitution;
(d) rejected Nungera's alternative claim of exemption for the two properties under section 71 of the Aboriginal and Torres Strait Islander Act 1989 (Cth) (which exempts ATSIC from all taxes, including local government rates). He ruled that there was no evidence as to whether a Ministerial declaration had been made under section 206 of that Act and thus he was not satisfied as to whether the lands were transferred (from the former Department of Aboriginal Affairs) to ATSIC on repeal of the Aboriginal Development Commission Act 1989 (Cth); and
(e) made no order as to costs[2] [See AboriginalLB 53/15].
In November 1991, Maclean Shire Council appealed to the NSW Court of Appeal against the ruling that Nungera was a public benevolent institution and that the properties were occupied for the purposes of a public benevolent institution. The Council claimed that the "overall purpose" test used by Justice Bannon was an incorrect legal test to determine the purposes of the objects of Nungera; and that he should have held that Nungera had objects, purposes and activities which were independent and collateral to its object of providing benefits to needy members of the Aboriginal Community in Maclean. At the Appeal hearing in May 1994, the Council re-argued its earlier claims about application of surplus funds to co-operation, distribution of assets on winding-up and whether tenants were needy. In addition, notwithstanding that his point was conceded by the Council before the Land and Environment Court, the Council argued that the object regarding arresting the social disintegration of Aborigines was not a benevolent object, thus disqualifying Nungera from exemption.
In response, Nungera claimed that the appeal was incompetent, as no question of law was raised; and that the properties were held subject to a constructive chariatble trust enforceable by the Attorney-General, and thus Nungera was also a public charity. Nungera also argued that Justice Bannon should have ordered that the Council pay Nungera's costs.
On 9 September 1994, the Court of Appeal, comprised of Justices Priestly, Handley and Sheller, delivered a unanimous judgment dismissing with costs the appeal by the Council. The Court decided:
(a) that the objects of Nungera showed it to be a public benevolent institution;
(b) that the objects or rules regarding "social disintegration and Aboriginal and Islander identity" and application of surplus funds were merely ancillary or incidental to, or governed by, the object of relieving the poverty of needy members of the Aboriginal community; and
(c) that the rule regarding distribution of assets on winding-up and holding of land in perpetuity meant, in context, that the organisation to which any assets might be transferred must be for the benefit of Aborigines in need, and that the current disadvantaged position in Australia of Aborigines is such that any valid charitable trust holding land for their benefit must also be for public benevolent purposes. The Court of Appeal also allowed Nungera's cross-appeal regarding costs and ordered that the Council pay Nungera's costs in the Land and Environment Court. However, the judgment did not deal with the other contentions raised by Nungera.
Maclean Council has filed a Notice of Motion seeking to have the case re-listed in the Court of Appeal for further argument on the issue of whether the properties owned by Nungera are being used or occupied for public benevolent purposes. The Council is claiming that the Court of Appeal judgment, by stating that in the appeal the Council did not contend that the land was not being used or occupied for public benevolent purposes, overlooked the Council's Notice of Appeal, written submission and oral address on that issue. It is currently not known when the Notice of Motion will be heard by the Court.
As Aboriginal housing organisation receive minimal income from tenants and other sources, frequently housing maintenance cannot be undertaken and/or properties must be sold if the organisation is to pay local government rates, which usually are the largest liability incurred in any year. The problem is made worse by the high interest penalty imposed by the Local Government Act once rates are in arrears. The confirmation by the Court of Appeal that an object of providing benefits to needy Aborigines is, generally, for a benevolent purpose means that any organisation providing housing or other welfare assistance to needy Aborigines will be exempt from local government rates, subject to compliance with the other rules governing qualification as a public benevolent institution. It is also submitted that, as the test relating to public charities is less strict, many such Aboriginal organisations alternatively will qualify to be a public charity, notwithstanding the failure by the two court judgments to rule satisfactorily on this point.
Several rates exemption applications by other Aboriginal housing organisations, delayed in the Land and Environment Court until the Nungera case was decided in the Court of Appeal, are now expected to be dealt with in the near future.
Although the exemption only applies to the 'taxation' or land value element of a rates account, and not to any water or sewerage charges, this element still represents approximately 40-60% of the annual liability, depending on the individual council levy and other factors. In Nungera's case, it has now been exempted from about half the rates liability incurred since the application was lodged in 1990.
The Aboriginal Land Rights Act 1983 (NSW) provides for exemption from local government rates for land vested in Land Councils established under that Act, but only if the Minister administering that Act so approves. It is understood that no approvals have yet been made under the Land Rights Act, despite many representations by Local Aboriginal Land Councils and the NSW Aboriginal Land Council. The Land Councils are not eligible to apply for exemption under the Local Government Act as a public benevolent institution or public charity.
It is open to Local Aboriginal Land Councils, with the approval of the NSW Aboriginal Land Council, to establish a separate organisation with objects and rules which qualify it as a public benevolent institution or public charity, transfer their housing properties to the new organisation, and then apply for exemption under the Local Government Act. The new organisation could be, for example, an association or co-operative, with its membership and control largely in common with the Land Council. This arrangement would in effect allow the Land Councils the same exemption rights as are now to be asserted by existing Aboriginal housing co-operatives or associations and as long enjoyed by many less impecunious non-Aboriginal organisations.
[1]The exemption is now contained in s556(h) of the Local Government Act 1993.
[2] Nungera Co-operative Society Ltd. v Maclean Shire Council (1991) 73 LGRA 178.
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URL: http://www.austlii.edu.au/au/journals/AboriginalLawB/1994/49.html