the australian nonprofit sector legal almanac...

The Australian Nonprofit Sector

Legal Almanac 2009

MARCH 2010

EditEd by MylEs McGrEGor-lowndEs

The Australian Centre for Philanthropy and Nonprofit StudiesQueensland University of Technology

Brisbane, Australia

workinG PaPEr no. cPns 49

i i iw o r k i n G P a P E r n o 4 9

tablE of contEnts

1.0 introduction ix

2.0 casEs by catEGory 12.1 Discrimination 1

2.1.1 DeversvKindilanSociety[2009]FCA1392(FederalCourtofAustralia,27November2009,MarshallJ). 1

2.1.2 CampagnolovBenallaandDistrictFootballClubInc[2009]VSC228(11June2009) 3

2.1.3 O’KeefevSappho’sPartyInc[2009]SAEOT50(EqualOpportunityTribunalofSouthAustralia,24April2009) 5

2.1.4 GeddesvAustralianLaborParty(VictorianBranch)(Anti-Discrimination)[2009]VCAT409(12March2009) 6

2.2 EmploymentandWorkplaceRelations 7

2.2.1 BaileyvPeakhurstBowling&RecreationClubLtd[2009]NSWDC284(NSWDistrictCourt,LevySCDCJ,3November2009) 7

2.2.2 TurnervVictorianArtsCentreTrust[2009]VSCA224(2October2009) 8

2.2.3 GutnickvBondiMizrachiSynagogue[2009]NSWSC257(31March2009) 10

2.3 InsolvencyandWindingUp 11

2.3.1 Whittingham,InthematterofTheSpanishClubLtd[2009]FCA1158(FederalCourtofAustralia,19October2009) 11

2.3.2 CorreavSpanishClubLtdandOrs[2009]NSWSC1225(SupremeCourtofNewSouthWales,30September2009) 12

2.3.3 JohnsonvCommissionerofConsumerAffairs[2009]NTSC4(27February2009) 13

2.4 MembershipandOffice 15

2.4.1 DairyFarmersMilkCo-operativevCo-operativesCouncil[2009]NSWSC862(27August2009) 15

2.4.2 InthematterofDairyFarmersMilkCo-operativeLtd[2009]NSWSC627(3July2009) 16

2.4.3 CumminsvAustralianJockeyClubLimited[2009]NSWSC254(6April2009) 17

2.4.4 Plenty&AnorvSeventhDayAdventistChurchofPortPirie[2009]SASC10(19January2009) 18

2.4.5 KovacicvAustralianKartingAssociation(QLD)Inc[2008]QSC344(22December2008) 19

2.5 Negligence 21

2.5.1 MatthewChaina&OrsvThePresbyterianChurch(NSW)PropertyTrust&Ors(No3)[2009]NSWSC1243(SupremeCourtofNewSouthWales,23November2009) 21

2.5.2 TheQuadriplegicCentreBoardofManagementvMcMurtrie[2009]WASCA173(WesternAustralianCourtOfAppeal,13October2009) 22

2.5.3 RootyHillRSLClubLtdvKarimi[2009]NSWCA2(30January2009) 23

2.6 NonprofitStructureandGovernance 24

2.6.1 GouldvMosmanReturnedServicemen’sClubLtd[2009]FCA1592(FederalCourtofAustralia,LindgrenJ,15December2009) 24

2.6.2 AndrewsvQueenslandRacingLtd[2009]QSC338(23October2009) 25

2.6.3 DykyjvLoganAndDistrictServicesClubInc[2009]QSC108(SupremeCourtOfQueensland,DeJerseyCJ,11May2009) 27

2.6.4 IslamicCouncilffSouthAustraliaInc&OrsvAustralianFederationofIslamicCouncilsInc[2009]NSWSC211(SupremeCourtofNewSouthWales,16February2009) 28

2.6.5LaivTiao(No2)[2009]WASC22(12February2009) 31

2.6.6 SzencorpPtyLtdvCleanEnergyCouncilLimited[2009]FCA40(2February2009) 33

2.7 Taxation 34

2.7.1 CommissionerofTaxationvAID/WATCHIncorporated[2009]FCAFC128(FederalCourtofAustralia,FullCourt,Kenny,StoneandPerramJJ,23September2009) 34

2.7.2 CommissionerofTaxationvBargwannaandBargwannaasTrusteesoftheKalosMetronCharitableTrust[2009]FCA620(FederalCourtofAustralia,EdmondsJ,12June2009) 36

2.7.3 HeinPerschevFinanzamtLudenscheid[2009]EUECJC-318/07(CourtOfJusticeOfTheEuropeanCommunities,GrandChamber,27January2009) 38

2.8 Trusts 40

2.8.1 CunliffevAttorney-General(NSW)[2009]NSWSC1450(SupremeCourtofNewSouthWales,NicholasJ,21December2009) 40

2.8.2 NSWMasonicYouthPropertyTrustVA-G(NSW)[2009]NSWSC1301(SupremeCourtofNSW,19November2009,HallJ) 41

2.8.3 ThePublicTrusteeofQueenslandasExecutoroftheEstateofBrianEdmundMonckton,alsoknownas,BryantEdwardMonckton,DeceasedvAttorney-General(QLD)[2009]QSC353(SupremeCourtOfQueensland,ALyonsJ,7October2009) 44

2.8.4 MitreskivHisEminenceMetropolitanPetarTheDiocesanBishopofTheMacedonianOrthodoxDioceseOfAustraliaAndNewZealand[2009]NSWCA319(NewSouthWalesCourtofAppeal,10September2009) 46

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2.8.5 ThePublicTrusteeofQueenslandasExecutoroftheEstateofMaryAgnesBall,DeceasedvStateOfQueenslandAndOS[2009]QSC174SupremeCourtofQueensland–ByrneSJA–3July2009 47

2.8.6 NSWMasonicYouthPropertyTrust&ANORvHerMajesty’sAttorney-GeneralinandfortheStateOfNSW&ANOR[2009]NSWSC181(24March2009) 48

2.8.7 MetropolitanPetarvMitreski[2009]NSWSC106(SupremeCourtofNewSouthWales,4March2009) 49

2.8.8 TheEstateofDulcieEdnaRand(Deceased)[2009]NSWSC48(SupremeCourtofNewSouthWales,16February2009) 50

2.9 Miscellaneous 51

2.9.1 ACCCvAustralianKartingAssociation(NSW)Inc[2009]FCA1255(FederalCourtofAustralia,BennettJ,6November2009) 51

2.9.2 CaroonaCoalActionGroupIncvCoalMinesAustraliaPtyLtdandMinisterforMineralResources[2009]NSWLEC165(LandandEnvironmentCourtNSW,PrestonCJ,24September2009) 53

2.9.3 BurrellPlaceCommunityActionGroupIncorporatedvGriffithCityCouncil[2009]NSWLEC120(LandandEnvironmentCourtNSW,LloydJ,29July2009) 55

2.9.4 CalvovSweeney[2009]NSWSC719(29July2009) 56

2.9.5 LiberalPartyofAustraliaandAustralianElectoralCommission[2009]AATA551(AdministrativeAppealsTribunal,23July2009) 59

2.9.6 O’HaraVSims[2009]QCA186(QueenslandCourtofAppeal,Keane,MuirandFraserJJA,10July2009) 60

2.9.7 AustralianBarterCurrencyExchangePtyLtdvUnitingChurchNSWTrustAssociationLimited[2009]NSWSC607(2July2009) 62

2.9.8 WhiteCityTennisClubLtdvJohnAlexander’sClubsPtyLtdandAnor[2009]NSWCA114(3June2009) 63

2.9.9 AyanvIslamicCo-ordinatingCouncilofVictoriaPtyLtd&Ors[2009]VSC119(3April2009) 65

2.9.10TheArchitects(Aust)PtyLtdt/asArchitectsAustraliavBethanyBrisbaneInternationalChurchInc[2009]QDC56(DistrictCourtofQueensland,11March2009) 66

2.9.11Griffiths&OrsvJohnFairfaxPublications&Anor[2009]NSWSC100(3March2009) 68

3.0 statE and tErritory lEGislation 693.1 Commonwealth 69

3.2 NewSouthWales 70

3.3 Victoria 71

3.4 Queensland 74

3.5 WesternAustralia 75

3.6 SouthAustralia 76

3.7 Tasmania 77

3.8 NorthernTerritory 77

3.9 AustralianCapitalTerritory 78

4.0 ato uPdatEs 81

5.0 sPEcial issuEs for 2009 855.1 PrivateAncillaryFunds 85

5.2 NationalRentalAffordabilityScheme 86

5.3 MoneyLaundering 90

5.4 WorkplaceHealthandSafety 91

5.5 ChangestotheWorkplaceRelationsRegime 92

5.6 CompaniesLimitedbyGuarantee 94

5.7 RighttoInformationandInformationPrivacy 97

5.8 DisclosureofExpenditureonPoliticalCampaigning 101

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6.0 what doEs 2010 hold? 1076.1 CouncilofAustralianGovernments(COAG) 107

6.2 TreasuryReviewofFinancialReportingforUnlistedCompanies2007 108

6.3 DisclosureRegimesforCharitiesandNot-For-ProfitOrganisations—SenateEconomicsCommitteeJune2008 108

6.4 Co-operativesNationalLaw 109

6.5 Australia’sFutureTaxSystem(theHenryReview) 109

6.6 NationalCompact 110

6.7 Counter-TerrorismFinancing 110

6.8 TheProductivityCommission’sResearchStudyoftheContributionoftheNot-For-ProfitSector 110

6.9 DisabilityCareandSupport 120

7.0 Glossary 121

8.0 inforMation on contributinG orGanisations 125

TheAustralianCentreforPhilanthropyandNonprofitStudies 125

PilchConnect 125

TheAustralianCharityLawyersAssociation 127

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1.0 introduction 1Thisisthesecondyearthatwehavesummarisedannualdevelopmentsinthelawfornonprofitstaff,boardsandvolunteers.Wewereencouragedbytheinterestshowninlastyear’spublicationandtheusemadeofthedigitalcopyonourwebsite,sohereisthealmanacfortheJan2009–Dec2009period.ThisyearwearedelightedthatthenewlyformedAustralianCharityLawAssociationandPilchConnect(Victoria)agreedtocontributeandpromotethepublicationaswell.ThesetwoorganisationsarebeginningtofillthevoidofprofessionallegaldevelopmentandassistancetosmallnonprofitorganisationsthathascharacterisedAustraliafortoomanyyears.

Foranumberofyears,ProfessorMylesMcGregor-Lowndes,RhondaRichards,FrancesHannah,LindaLavarchandAnneOverellhavecompiledonetotwopagesummariesofcasesinvolvingnonprofitorganisationsandpublishedthemonTheAustralianCentreforPhilanthropyandNonprofitStudiesDevelopingYourOrganisation(DYO)wiki.1YoucanbealertedofnewcasesummariesastheyarepostedtotheDYOwikibysubscribingtotheRSSfeedwhichisfoundonthefrontpageofthewikispaceortheACPNStwitterservice.2

Anumberofothercasessummarisedinthisworkingpaperareworkingtheirwaythroughtheappealsprocessandcareshouldbetakenwiththeirapplication.

Legislation

Theyear2009sawfederallegislativereformwithamendmentstoPrescribedPrivateFunds–nowPrivateAncillaryFunds.Theregulationoftrusteecompanieswhoareresponsibleforasignificantproportionofchartiabletrustswasalsoreformedandbroughtunderasinglefederallicensingandreportingregime.Therearealsoproposalsforamendmentstotheregimeapplyingtocompanieslimitedbyguaranteeandcooperatives.SignificantincorporatedassociationandfundraisingreformsworkedtheirwayfurtheralonginVictoria,NewSouthWalesandWesternAustralia.Acommonthemeinincorporatedassociationreformistieredorproportionalreportingreforms.

SpecialthanksmustgotoClaireJones(Prolegis)andSueWoodward(PilchConnect)forprovidinglegislativeupdatesforNewSouthWalesandVictoria,respectively.

Special Issues for 2009

Anumberofspecialistlegalpractitionershavecontributedsuccinctsummariesofsignificantlegalissuesfacingnonpofitorganisationsthisyear.Thiscollectionofsummariesservesasareadyfirstreferencetosomeofthemoresignificantlegaltransactionsandissuesthatcontemporarynonprofitorganisationsarefacing.ThankstoJohnEmerson(Freehills),BrendanLeighton,TimLongwillandHeatherWatson(McCulloughRoberston–Lawyers),MarkFowler,MatthewTurnourandNathanReich(NeumanTurnourLawyers)andNathanMacDonald(PilchConnect)forcheerfulcontributionsofoutstandingqualitywithinthetightdeadlines.

1 https://wiki.qut.edu.au/display/CPNS/Legal+Case+Notes

2 http://twitter.com/CPNSinsides

Australian Taxation Office (ATO)

In2009,theATOreleaseditsviewsontheWordInvestmentandtheVictorianWomen’sLawyersAssociationcasesandpreparedmaterialfollowingthelegislationestablishingPrivateAncillaryFunds(formerlyPrivatePrescribedFunds).TheATOalsosucceededintheBargwannacase(seecase2.7.2,below)andtheAidwatchCase(seecase2.7.1,below).Appealsmaybepending.

ThehighlyregardedATOnonprofitupdatesservenonprofitorganisationswellinprovidingtimelyalertstotheATO’scomplianceactivities,changesintaxationlawandprocedure,aswellasnewandrevisedATOpublications.ThemoresignificantupdatesarenotedinthispublicationandcanbereadilyaccessedthroughtheATOwebsite.

TheATOwebsite3forthenonprofitsectorcontinuestoimprovedramaticallyinitsclarity,usefulnessanddepthofcontent.TheAustralianCentreforPhilanthropyandNonprofitStudies(ACPNS)nowprovidesastreamed24/7onlinevideotutorialonfindingyourwayaroundtheATOwebmaterials.Thistutorialisavailableathttps://wiki.qut.edu.au/display/CPNS/ATO+Nonprofit+Website+Tour.

What does 2010 hold?

Thefinalsectionmovesfromlookingintherearviewmirrortopeeringoutthefrontwindscreentodiscernthereformagenda.Anunprecedentednumberoffederalinquiriesarebeingconsideredduring2010whichhavethepotentialtoshapethelegislativeandregulatoryagendaforthenextdecadeandbeyond.

Download

ThispublicationisalsoavailablefordownloadinPDFformatatwww.bus.qut.edu.au/research/cpns/publications

3 www.ato.gov.au/nonprofit/

1w o r k i n G P a P E r n o 4 9

2.0 casEs by catEGory 2Casesinthissectionarepresentedaccordingtoalphabeticalcategoryandinreversechronologicalorder.

Anycaseswhichdonotfitthewithinacategoryarepresentedinthe‘Miscellaneous’categorywhichappearsattheendofthissection.

2.1 discriMination2.1.1 DEVERS V KINDILAN SOCIETY [2009] FCA 1392 (FEDERAL

COURT OF AUSTRALIA, 27 NOVEMBER 2009, MARSHALL J )

Theplaintiff,JaneDevers,wasahearing-impairedemployeeoftheKindilanSociety,whichtradesasFocus.FocusisanonprofitorganisationandaregisteredcharityinVictoria,andprovidesresidentialcarefordisabledpeopleintheMorningtonPeninsularegion.MsDeversworkedasadisabilitysupportworkeratoneoftheresidentialpremises(referredtoasaCommunityResidentialUnitorCRU)whichwasoperatedbyFocusinMornington.ThisCRUisnolongerinoperation.

SheallegedthatFocusdiscriminatedagainstherinheremploymentbyreasonofherdisabilityfromSeptember2003toOctober2008,incontraventionofsections5,6and15oftheDisability Discrimination Act 1992(Cth)(theAct).

DeversalsoreliedontheCharter of Human Rights and Responsibilities Act2006(Vic)andtheConvention on the Rights of Persons with Disabilities,aninternationalconventiontowhichAustraliaisaparty.Neitherofthesedocumentswasrelevanttothiscase.TheActisaCommonwealthActanditsinterpretationisnotaffectedbytheVictorianCharter of Human Rights and ResponsibilitiesAct 2006,astateAct.NorwastheinternationalcharterrelevantsincealthoughAustraliaisaparty,ratificationofaninternationaltreatydoesnotautomaticallyimportanyrightsorobligationsintodomesticlaw(seeMinister for Immigration and Ethnic Affairs v Teoh(1994)183CLR273at286–7andNulyarimma v Thompson(1999)96FCR153at[20]).Thisprincipleappliedinthiscase.

Devers,whosedeafnessisprofound,hadcommencedworkonavolunteerbasisinAugust2003,afterrepresentationsbyanotherorganisation,SensWide,anemploymentserviceforpeoplewithhearingandsightdisabilities.Thisvolunteerworklaterprogressedtocasualwork,startingwithfortnightlyshiftsfromSeptember2003.

DeversallegedthatherworkwasimpededbyalackofservicesandequipmentprovidedbyFocus,inparticularatelephonetypewriter(TTY),qualifiedAustraliansignlanguage(Auslan)interpretersforstaffmeetingsandtrainingsessions,andwarninglightstoassistwithansweringthedoor.

Section15oftheActmakesitunlawfultoengageinconductwhichconstitutesdiscriminationonthegroundofdisabilityinthecontextofemployment.Theunlawfulnessisencapsulatedinthewords‘ontheground’ofthedisabilityinquestion.Suchdiscriminationmaybeeitherdirectorindirect.

TheActdoesnotprovidethatanemployerisobligedtosupplyaidstodisabledemployees,butanemployermustprovide‘reasonableaccommodations’.Inhiringordismissinganemployee,anemployermustalsoassesswhetherthedisabledemployeecancarryoutthe‘inherentrequirements’ofthejob,andwhetheradditional‘servicesorfacilities’wouldassistthedisabledemployeetomeettheparticular‘inherentrequirements’oftheemployment(section15(4)(a)).Discriminationisnotunlawfulifprovidingadditionalservicesorfacilitieswouldbe‘anunjustifiablehardshipontheemployer’(section15(4)(b)).

JusticeMarshalldeterminedtheissuestobeasfollows:

1. WhetherFocusengagedindirectdiscriminationagainstDevers;

2.WhetherFocusengagedinindirectdiscriminationagainstDevers;and

3. IfdiscriminationagainstDeversoccurredwithinthemeaningofsections5or6oftheAct,whetherthisdiscriminationwascontrarytosection15(1)or(2)oftheAct,andthusunlawful.

Astodirectdiscrimination,Deversallegedvariousinstanceswhichamountedtodenyingheraccesstoopportunitiesforpromotion,trainingandotherbenefitsundersection15(2)(a),(b),(c)and(d)oftheAct.Thesewere:

1. Notallowinghertoattenddoctors’appointmentswithresidentsonherown;

2.NotgivingheraccesstothesparekeyandaccesscodetotheCRU;

3.Notallocatingherso-called‘sleep-over’shifts;

4.Notallocatinghersufficienthoursontherosterofshifts;and

5.Denyinghertraininganddevelopmentopportunities,particularlybynotprovidinganAuslaninterpreter.

Directdiscriminationisdefinedinsection15(1)oftheActasoccurringwherethe‘discriminatortreatsorproposestotreattheaggrievedpersonlessfavourablythan…apersonwithoutadisability.’Thishasbeenheldtoinvolveanobjectiveassessmentandcomparison‘incircumstancesthatarethesameorarenotmateriallydifferent’:Purvis v New South Wales(2003)217CLR92.

JusticeMarshallobservedthatthecorrectcomparatorinthiscasewasanemployeeofFocus,inasimilarrole,withoutDevers’sdisability,butwhoalsohasherattributes.Incarefullyconsideringeachallegeddirectdiscrimination,JusticeMarshallfoundnosuchdiscriminationusingthecomparatortest.Inparticular:

1. Nootherstaffmemberswerepermittedtoattenddoctors’appointmentsontheirownwithaclient.

2.AllstaffhadknowledgeoftheaccesscodetotheCRUasitwasnotasecret–ratheritwasthefirstfourdigitsoftheCRUphonenumber.Inaddition,whenDeversaskedspecificallyforthecodein2008,itwasgiventoheratthattime.

3.Devershadalwaysindicatedthatshedidnotwantsleep-overshifts,andJusticeMarshallcouldfindnoevidencethatthishadchangedin2008asallegedbyDevers.

4.TheevidencedidnotpointtoanyreductioninDevers’sworkinghoursbetween2003and2008–rathertherostersproducedinevidencepointedtosimilarhoursallocatedineachyear.

5.Allstaffhadaccesstothetrainingrosterforeachyear,andknewthattrainingsessionshadtobeappliedforontheappropriateforms.Theissueofinterpreterswasanimportantone,andwasfurtherconsideredbyJusticeMarshallinthecontextofindirectdiscrimination.Inthecaseofdirectdiscrimination,Devershadnotindicatedthatshewasnotapplyingfororattendingtrainingbecauseofthelackofinterpreters.

JusticeMarshallthereforefoundthattherewasnodirectdiscriminationagainstDeversinheremploymentwithFocus.

Astoindirectdiscriminationundersection6oftheAct,theissuesinthiscaserevolvedaroundthenon-provisionofTTYequipment,AuslaninterpreterswhereneededandflashinglightstoenableDeverstoanswerthedoortotheCRU.Toestablishindirectdiscrimination,Devershadtoshowthat:

1. Focusimposedarequirementorconditiononher

i. Withwhichasubstantiallyhigherproportionofpersonswithoutherdisability(abasegroup)areabletocomply,and

ii. WithwhichDeversisnotabletocomply,sothat

iii.Therequirementorconditionisthereforenotreasonablehavingregardtoallthecircumstances.

Whetherarequirementorconditionhasbeenimposedisaquestionoffact.Itcanbeimplicitintheactionstaken.JusticeMarshallconsideredeachallegationofindirectdiscriminationinturn.

DeverswasnotprovidedwithaTTYuntilJuly2008,somefiveyearsafterheremploymentcommenced.DeversallegedthatshehadrepeatedlyaskedforaTTY,andhadultimatelyprovidedoneormoreofherownmachines.However,JusticeMarshallfoundthatontheevidenceDevershadnotaskedforaTTYatvarioustimeswhenshecouldhavedoneso,suchaswhenshewasaskedwhatFocuscoulddotoassisther.

Ontheissueofflashinglights,JusticeMarshallfoundthatontheevidencetherewasnorequestforsuchlights,thoughtheywereultimatelyinstalledattherequestofthefatheroftworesidentswhowerealsoprofoundlydeaf.

OntheissueoftrainingsessionsandthelackofAuslaninterpreters,theevidencewasthatinformalinterpreterswereprovidedfortrainingsessionsandstaffmeetings,butnotonalloccasions.Insomecases,staffmeetingshadnointerpreterpresent,andDeverscouldonlyaccessthematerialcoveredbyconsultingtheminutesofthemeeting.However,thesewerefreelyavailabletoallstaff.Inaddition,forsometrainingsessions,writtenmaterialwasallthatDevershadavailabletoherastherewasnointerpreter.However,thisappliedtoallstaffmembersequally.

ItwasnotunreasonableforFocustoavoidtheprovisionofinterpretersbecausethiswasacostlyexercise(amountingtosome$20,000peryearforthebenefitofonecasualemployee),andinthecontextofDevers’shoursofworkandearnings,itwasnotreasonabletoexpectsuchacosttobebornebyanonprofitorganisationwithalimitedbudget.

JusticeMarshallfoundthattherewasnoindirectdiscriminationagainstDevers,sinceinthelightofallthecircumstances,theallegationsdidnotsupportthecontentionthatDevershadbeendiscriminatedagainst,orhadsufferedanyparticulardetriment.

Therefore,therewasneitherdirectnorindirectdiscriminationagainstDeversinthecontextofheremployment.Therebeingnodiscriminationfound,therewasnoneedtoconsideranyillegality.Theapplicationwasdismissedwithcosts.

Thecasemaybefoundat:www.austlii.edu.au/au/cases/cth/FCA/2009/1392.html

2.1.2 CAMPAGNOLO V BENALLA AND DISTRICT FOOTBALL CLUB INC [2009] VSC 228 (11 JUNE 2009) FILE NO: 5329 OF 2009

ThisappealhaditsorigininthedecisionofaseniormemberoftheVictorianCivilandAdministrativeTribunalon9February2009,tostrikeoutacomplaintbyMrCampagnoloagainsttheBenallaandDistrictFootballLeagueInc.(theLeague).An

attempttoseekleavetoappealthisdecisionwasdeniedbyAssociateJudgeDalyoftheVictorianSupremeCourt.Eventually,thisrefusaltoallowleavetoappealcamebeforeJusticeHanseninthesamecourt.

Essentially,MrCampagnoloclaimedhehadexperienceddiscriminationonaccountofhisbisexualityinthathehadbeendismissedfromhispositionassportstrainerattheBonnieDoonFootballClubInc.(BonnieDoon),oneoffiveclubsintheLeague.Althoughemployedtheresince1997andopenabouthissexuality,publicitysurroundinghisinvolvementinasexualdiscriminationmatterwithagovernmentdepartmentinFebruary2007,broughthissexualstatusintothepublicarena.Subsequently,on10April2007,thePresidentofBonnieDoonexpressedreservationsaboutcontinuingtoemployhimandgavehimnotice.AccordingtoMrCampagnolo,thisallegeddirectdiscriminationasdetailedinsections7and8oftheEqual Opportunity Act 1995 (Victoria)(theAct) wouldimpactadverselyontheprovisionofservicestohimundersection42(1)(c),particularlyhisfreeadmissionto,aswellastravelexpensesforclubgames.ThematterwascompoundedbyphysicalthreatsfromBonnieDoon’sSeniorCoach.InMrCampagnolo’sopinion,thisvictimisationwasmotivatedbyhisremarkstotheHerald Sunconcerningthediscriminatorytreatment.

MrCampagnoloincludedtheLeagueinhissightsasa‘governingbody’undersection60oftheActwhichstatedthat,‘Agoverningbodyofaclubmustnotdiscriminateagainstamemberoftheclub’.Hemaintainedthat,althoughthePresident/SecretaryoftheLeaguewasawareofhispredicament,theLeaguewasremissinaddressingthesituation outlinedin sections11(b)and65(b)oftheAct.Therefore,heassumedcomplicitywithBonnieDoon,arguingthattheLeaguewasvicariouslyliablebyreasonofsection102oftheActfortheclub’sdecision,throughitsfailuretoputinplacemechanismstoensurethesesectionswerenotcontravened.

Beforelookingattheissuesraised,JusticeHansendeterminedwhethertheLeague’sendeavourtostrikeoutthecomplaintshouldhavebeenbroughtundersection109oftheEqual Opportunity Act 1995,ratherthansection75oftheVictorian Civil and Administrative Tribunal Act 1998.HedecidedthatthelatteroptionwasappropriatebecausethecomplaintwasalreadybeforetheVictorianCivilandAdministrativeTribunalatthetimeinquestion.

WhilstJusticeHansenagreedthatsection4(1)oftheActregardedbisexualityasasubsetofsexualorientation,anattributethatshouldnotattractdiscrimination,therewasnoindicationofanydiscriminationinvolvingtheservicesmentioned.WithrespecttoMrCampagnolo’snotionthathewasamemberofaclubofwhichtheLeaguewasagoverningbody,BonnieDoonisaclubforthepurposesofsection4(1).However,therewasnoevidencetosupportMrCampagnolo’smembershipofBonnieDoon,letaloneitsumbrellabody.HisHonouralsorejectedthenotionthattheterm,‘governingbody’,referredtotheprovisionofoverarchingdirection,viewingtheconceptasdenotingamorepedestriancommitteeofmanagementforBonnieDoon.Consequently,MrCampagnolo’sattempttorelyonsection60provedunsuccessful.EstablishingvicariousliabilityontheLeague’spartwasnotpossible.

HiseffortstoarguethattheLeaguediscriminatedagainsthimbyfailingtouseitsavailablepowersinrelationto‘unbecomingconduct’weresimilarlyfruitless.Underclause22ofitsRulesandRegulations,theLeaguehadtherighttoinvestigateanysuchbehaviourwhichbroughtthegame’sreputationintodisrepute.Fromtheinvestigativestage,aseriousmatterwouldmovetotheLeagueTribunalfordetermination.Clause22(a)alsoallowsdetailsofanyallegationstobeprovidedtotheBoard.Sincenoaction

wasinstigatedagainstBonnieDoon,MrCampagnoloassertedthathehadbeentreatedlessfavourablythanapersonwithouthissexualorientationinthesamecircumstances,thussatisfyingsection11(b)oftheActaswellassection65(b)specificallypertainingtoexclusionfromsport.JusticeHansenconcludedthisargumentwasuntenablebecausetheLeaguedidnotdiscriminateagainstMrCampagnolointermsofhissexualitytoterminatehispositionassportstraineratBonnieDoon.Further,theLeague’sinactionunderclause22(a)didnotconstitutelessfavourabletreatmentasanypreliminarystepstakenbytheLeaguewouldhavebeenadvancedthroughtheotherjudicialmechanismsinplacewithanunpredictableoutcome.

Theappealwasdismissed.

Thiscasemaybeviewedat:www.austlii.edu.au/au/cases/vic/VSC/2009/228.html

2.1.3 O’KEEFE V SAPPHO’S PARTY INC [2009] SAEOT 50 (EQUAL OPPORTUNITY TRIBUNAL OF SOUTH AUSTRALIA, 24 APRIL 2009)

Sappho’sPartyInc(theAssociation)wasanincorporatedassociationestablishedtoholdapartyintheAdelaideHillsinJanuary2006,forlesbianfeministsraisedasfemale.Althoughthepartywasdesignedtobeaprivatefunction,theorganizerswereconcernedtoprovideinsurancecoverfortheattendees.Incorporationwasthevehiclechosentoeffectpublicliabilityinsuranceforwhatwasreferredto,inparagraph28ofthejudgment,asa‘notforprofitcommunityevent’.

Thecomplainant,MsO’Keefe,receivedaflyeradvertisingthepartyfromherpartner,KatrinaFox.MsO’Keefehadbeenbornmalein1955buthadoptedforgenderreassignmentsurgeryasanadult.Afterbeinginvolvedinalesbianrelationshipsince1993,shehadlegallymarriedMsFoxinEnglandin1998withtheaidofhermalebirthcertificate.ThecouplesettledinAustraliain2001.Sheexplainedherbackgroundwhenshesentawayforticketsforthembothtotheparty.However,thepartyorganizerswereunsympatheticandrefusedtoallowMsO’Keefetoattend.Asaresult,on11December2005,shecontactedtheSouthAustralianCommissionerofEqualOpportunitytolodgeacomplaintonthebasisshehadbeendiscriminatedagainstbecauseofhertranssexuality.Onceconciliationeffortsfailed,themattercamebeforetheEqualOpportunityTribunal.

Threeissuesarose.ThefirstentaileddeterminingwhethertherewasunlawfuldiscriminationagainstMsO’KeefeintheofferofentertainmentservicesbytheAssociationanditsfailuretosupplythemassetoutundersections39(1)(a),(b)and(c)respectivelyoftheEqual Opportunity Act 1984 (SA)(theAct).ShouldsuchunlawfuldiscriminationundertheActbeevidentwithrespecttotheAdelaideHillsparty,itwasthennecessarytoexamineifitwaspermissibleundersection47becauseitwasameasuredesignedtoensurethatpersonsofonesexhadequalopportunitieswithpersonsoftheothersex.Finally,theunlawfuldiscrimination,ifestablished,hadtobeclearlyrelatedtoMsO’Keefe’stranssexuality.

Attheoutset,HisHonourJudgeBarrettandtheothertwomembersoftheEqualOpportunityTribunalwerefacedwithtryingtodecidewhetherthepartywasaprivateorapublicaffair.DespitetheincorporationoftheAssociation,thechoiceofacommercialvenueforthepartyandtheimpositionofentryfees,HisHonourandoneothertribunalmemberMsJasinskioptedfortheformer.Therefore,regardlessofthesexualdiscriminationMsO’Keefesuffered,themajoritydecisiondeterminedthattherequirementoftheofferofgoodsandservicesundersection39(1)oftheActwasnotmet.ThegatheringwasprivateandtherewasnobreachoftheActsinceitdidnotcoverprivateevents.

Strictlyspeaking,therewasnoneedtocanvasstheotherissues.Nevertheless,theywereaddressed.Section47oftheActwasfoundtobeinapplicableinthisparticularsituationastherewerenoopportunitiesavailabletomen,anddeniedtowomen,whichweremademoreequalbythisevent.However,MsO’Keefewasnotdisentitledfromclaimingunlawfuldiscriminationrelatedtohertranssexuality,despitetherespondent’sargumentthatherlegalstatusinAustraliawasasamalesinceshecouldproducenogenderreassignmentcertificate.Tobetranssexual,accordingtosection5oftheAct,‘Apersonofonesexassumescharacteristicsoftheothersex.’Nevertheless,sincetheActwasfoundnottoapply,thecomplaintwasdismissed.

MrShetliffe,thedissentingmemberoftheTribunal,agreedwiththemajorityaboutthelackofrelevanceofsection47aswellasMsO’Keefe’sexperiencingunlawfuldiscriminationbecauseofhertranssexuality.However,hedecideddifferentlyasregardstheapplicabilityofsection39(1).Essentially,hemaintainedthataprivatefunctioncanstillbecaughtbytheActwheretheprocessofselectingprospectiveattendeesfromthewiderpublicisdiscriminatory.Here,hebelievedthiswasthecaseastheflyersweredistributedAustralia-wideaswellasinternationally.Inhisview,thiscoupledwiththetargetingofalllesbiansraisedasfemale,meantthatthedistributionprocesswassufficientlypublictosatisfysection39(1)oftheAct.Thereforeinhis(dissenting)opinion,MsO’KeefehadindeedbeenunlawfullydiscriminatedagainstbySappho’sParty.

Thiscasemaybeviewedat:www.austlii.edu.au/au/cases/sa/SAEOT/2009/50.html

2.1.4 GEDDES V AUSTRALIAN LABOR PARTY (VICTORIAN BRANCH) (ANTI-DISCRIMINATION) [2009] VCAT 409 (12 MARCH 2009) VCAT REFERENCE NO: A239/2008

MervGeddes,alongstandingmemberoftheAustralianLaborParty,complainedundertheEqual Opportunity Act 1995 (Victoria)abouthistreatmentbytheVictorianbranchoftheparty.Inparticular,heallegedhehadexperienceddiscriminationonthebasisofpoliticalbelieforactivity.ThecomplaintwaslodgedagainsttheunincorporatedassociationfollowingdisciplinarymeasurestakenagainstMrGeddesin2006whenhehandedout‘HowtoVote’cardsforarivalcandidateintheVictorianseatofMorwellinastateelection.AsaresultofhisactionswhichclearlycontravenedtheVictorianbranch’srules,MrGeddeswasexpelled fromthepartyforfiveyears.Forhispart,MrGeddesmaintainedhewasnotaccordednaturaljusticebecausehewasnotalignedwiththedominantfactioninhisbranch.

Inreturn,theVictorianbranchoftheAustralianLaborPartyproceededagainsthimundersection75oftheVictorian Civil and Administrative Tribunal Act 1998 inanattempttostrikeouttheaction.Sections42and60oftheEqual Opportunity Act 1995 (Victoria)(theAct)wereidentifiedaspotentiallegitimatesourcesofgrievanceandsubsequentlyeliminated.

HerHonour,JudgeHarbison,dealtfirstwithMrGeddes’sassertionsundersection60oftheActthathisexpulsionfromtheVictorianbranchhaddeniedhimmembershipofaclubor,alternatively,causedhimtosuffer‘anyotherdetriment’.Insection4,thedefinitionalsectionoftheAct,a‘club’isregardedas,‘Asocial,recreational,sportingorcommunityserviceclub,oracommunityserviceorganisationoccupyinganyCrownlandorreceivingdirectorindirectfinancialhelpfromstateorlocalgovernment’.Eventakingaccountofelectoralassistancemeasures,JudgeHarbisonwashard-pressedtoviewapoliticalpartyasacommunityserviceorganisationwithaltruismatitscore.Shesawtheomissionoftheword,‘political’,asintentional.Inreality,heranalysiswasunnecessaryasMrGeddeshadfailedtotaketherequisitestepsformembershipofthepartyintheyearinquestion.

Next,sheexaminedhisallegationsofdiscriminationrelatingtotheprovisionofgoodsandservicesasdiscussedinsection42.Here,MrGeddeswasunabletotiehiscriticismsintotherelevantsection,merelyre-iteratinghewasrefusednaturaljustice.Despiteprecedentsuggestingtheexpression,‘services’,shouldbedefinedbroadly,HerHonourwasunwillingtointerpreteithermembershipofapoliticalorganisationortheinvokingofadisciplinaryprocedureasaserviceoutlinedintheAct.Neithercouldbecategorizedasbeingavailabletoornecessarilyconferringabenefitonthegeneralpublic.Fromherperspective,nofurtherenquirywouldenhancehisargument.

AlthoughJudgeHarbisonwasreluctanttoaccedetotheVictorianbranchoftheALP’srequestsinceevidenceremainedunheard,shestruckouttheapplicationasfruitless.BecauseMrGeddes’smotivationcentredonrevisitingissues,suchasthefailuretoaccordhimnaturaljustice,whichwerenotstrictlyanti-discriminatory,itwasanabuseofthelegislativeregimetoproceedundertheequalopportunitylegislation.

Thiscasemaybeviewedat:www.austlii.edu.au/au/cases/vic/VCAT/2009/409.html

Implications of Discrimination Cases

Theprecedingcasesdemonstratethatnotalldiscriminatorybehaviourisunlawful.Unlawfuldiscriminatorybehaviouristhatbehaviourwhichisprescribedundertheanti-discriminationlegislationofeithertheCommonwealthortheStatesandTerritories.Anti-discriminationlawinAustraliaisbasedontheinternationalhumanrightsconventionsandtreatieswhichhavebeenratifiedbyAustralia.Federallytherearefivemainanti-discriminationpiecesoflegislation,namely,Age Discrimination Act 2004; Disability Discrimination Act 1992; Sex Discrimination Act 1984 and the Racial Discrimination Act 1975. EachoftheseActssetoutprohibitedareasofdiscrimination,identifyingtypesofdiscriminationandthegroundsuponwhichanindividualcanbringanactionandareasthatareexemptedfromtheoperationofthelegislation.Also,eachStateandTerritoryhasenactedanti-discriminationlegislationsettingoutareasofunlawfuldiscriminationandgroundsuponwhichacomplaintcanbemade,aswellasaprocessbywhichacomplaintcanbemade.Anti-discriminationlegislationisnowwidelyusedtoseekredresswhenanindividualconsiderstheyhavenotbeentreatedwithdignityandrespectorthattheirself-worthhasbeenviolated.Manyorganisationshaveinplaceanti-discriminationpoliciesandcodesofconductaddressingsituationsthatmightgiverisetodirectorindirectunlawfuldiscrimination.

2.2 EMPloyMEnt and workPlacE rElations

2.2.1 BAILEY V PEAKHURST BOWLING & RECREATION CLUB LTD [2009] NSWDC 284 (NSW DISTRICT COURT, LEVY SC DCJ, 3 NOVEMBER 2009)

TheplaintiffCarolAnneBaileywasemployedasacasualbarstewardbythedefendant,thePeakhurstBowling&RecreationClubLtd,acompanylimitedbyguarantee.MsBaileyworkedfortheClubduring1998and1999;thenfromMay2000workedanaverageof30hoursperweek,untilmid-2006,whenshehadtoceaseworkduetohealthreasons.Atthetimeofthehearingshewas52yearsold.

Inmid-2004,MrTonyRiley,apatronandadirectoroftheClub,whoalsocontractedservicestotheClub,wasappointedclubchairman.InthispositionheimmediatelybecameMsBailey’ssupervisor.

MsBaileygaveevidencethatfromthetimeMrRileywasappointedchairmanhesubjectedhertoaconcertedcampaignofworkplaceharassment,intimidationandbullying.Thiscampaignconsistedof:constantthreatsthatshewouldloseherjob;useofextremelyvulgarlanguagetoMsBaileyandinfrontofher;pressureonhertobendorbreaktheliquorlicensingrulesregardingserviceofalcohol,gamingandaccountingforsales;pressuringhertoresignherunionmembership;changingherworkclassificationsothatshelostpayandseniority;falselyallegingtherewasa$2000shortfallinthecashfloatandimplyingshewasresponsible.Therewerealsoinstancesofunderpaymentofwages.Thiscampaignoccurredoveratwoyearperiod(diarieskeptbyMsBaileycorroboratedherevidence).AsaresultofthistreatmentMsBailey’spsychologicalhealthsufferedandshewasreferredtoapsychologistforcounsellingandtreatment.

MedicalevidenceacceptedbythecourtdescribedMsBaileyashavingaseriousandchronicgeneralisedanxietydisorderwithpanicandagoraphobiatogetherwithapost-traumaticstressdisorderanddepression.TheprognosisisthatMsBaileyisunlikelytorecoverfullyandgivenherageitisunlikelyshewilleverreturntopaidemployment.

DuringthecourseofthehearingthedefendantClubadmittedliability.MrRileydidnotgiveevidence.TheClubconcededitowedMsBaileyadutyofcarethatrequiredittoprovideasafeplaceandsafesystemofwork,andthatithadbreachedthisdutyofcare.Further,theClubconcededthatasaconsequenceofitsbreachofdutyofcaretoMsBaileyshesufferedapsychologicalinjurythatresultedinapsychiatricdisorder.

ThecourtawardedMsBailey$507,550intotaldamageswhichincluded$334,305forfuturelossofearningcapacityand$36,773forfuturelossofsuperannuation.

Thiscasecanbeviewedat:www.austlii.edu.au/au/cases/nsw/NSWDC/2009/284.html

Implications of this case

Thiscasereinforcesthepointthatthecourtswillnotcountenancebullyingandharassmentofemployees.Thechairman’spersistentabusivebehaviourtowardstheplaintiffcombinedwiththeClub’slackofsupportforitsemployeecombinedtoenablethecourttofindaseriouscaseofbullying.Asanemployer,theClubhasadutyofcaretoprovideasafeplaceofemploymentandasafesystemofwork.Itbreachedthatdutybyallowingthebullyingtohappenandtocontinue.ThecaseonceagainhighlightstheneedfororganisationstounderstandtheirdutyofcaretowardsemployeesandensuretheyhavecomprehensiveHRpoliciesandpracticesinplace.Italsohighlightstheneedtohaveanearlyandeffectivecomplaintandinterventionprocessinplace,especiallywhereanemployeefeelstheyarebeingbullied,intimidatedorharassed.

2.2.2 TURNER V VICTORIAN ARTS CENTRE TRUST [2009] VSCA 224 (2 OCTOBER 2009) NO 3848 OF 2008

FromAugust1985until25January2001,MsAdrienneTurnerwasemployedbytheVictorianArtsCentreTrust(theArtsCentre).Shemaintainedthatfrom20October1999,onwards,shewasbulliedinherroleasSeniorAccountManager/TicketManagerbytheArtsCentre’sTicketingServicesManager,MrDominicHolden,aswellasbeingsubjectedtopsychosocialstressors.Withrespecttotheformerallegation,shereferredtoinstanceswhereMrHoldenuntruthfullyaccusedherofmisconduct,ofbehavingviolentlytowards

himandofenjoyingunnecessarybreaksfromherworkroutine.MsTurnercontendedhisemailstoherwereaggressiveinnature.Inaddition,shepointedoutthatbeingsurroundedbyfellowworkerswhowerealsoadverselyaffectedbyMrHolden’sactionswasalsostressful.Theimpositionofanimpractical,mandatorychangeinamealbreaktimewasmentionedasanexampleoftheunilateralnatureofhisdecision-making.

MsTurnerallegedthatasaresultofMrHolden’sbehaviour,herhealthseriouslydeteriorated.NegligenceonthepartoftheArtsCentrewascitedasacausalfactorinherpsychiatricconditionwhichincludedmajordepressive,anxietyandpanicdisorders.Inparticular,shecriticisedtheArtsCentreforfailingtoprovideherandhercolleagueswithasafeenvironmentinwhichtoworkaswellasanawarenessoftheappropriateproceduresshouldbullyingoccur.ShealsoclaimedtheArtsCentrewasderelictinitsdutytodirectandmonitortheactivitiesofMrHoldenandhisoffsider,JennyLacey,astoappropriatecounsellingtocorrectherperceivedworkdeficiencies.Thecomplaintextendedtoalllevelsofmanagementfortheirinadequateresponsetoherconcerns,andtheirfailuretorecognisethatstrategiestodealwithbullyingandvictimisationneededtobeinstigated.Eventually,MsTurnertookactioninnegligenceandbreachofcontractintheVictorianCountyCourtseekingdamagesforthepsychiatricdistressshehadsuffered.However,thatapplicationfailed.

MsTurnerapproachedtheCourtofAppealtohavetheCountyCourtjudgmentsetasideandthematterretried.Thefirstgroundofappealrelatedtoabreachofthecollateralevidencerulebythetrialjudge.ThisinvolvedevidencegivenconcerningtheresignationofanArtsCentrestaffmember,MsAnnO’Hanlon,whowas,accordingtoMsTurner,anothercasualtyofMrHolden’sbullying.TheArtsCentreledotherevidenceimplyingthatMsO’Hanlon’sdeparturewaslinkedtoafraudulentclaimforovertimeexposedbyMrHolden.TheCourtofAppealdecidedthatthisevidencewasnotcollateralandwasadmissible,sothetrialjudgehadmadethecorrectdecisiontoallowit,althoughbasedincorrectlyonthebiasexceptiontothecollateralevidencerule.SpecificcommentwasmadethatMsTurner’slegalcounselfailedtodirectthejurynottoallowtheevidencetoreflectadverselyonMsO’Hanlon.

Next,thematterofwhetherthetrialjudgeshouldhavedischargedthejurywasconsidered.DuringMsTurner’scross-examination,astatementwasmadethathercomplaintofbullyingtotheArtsCentrewasinvestigatedandfoundtobe‘notsubstantiated’.Whilethiscommentwasheldtobeprejudicial,HisHonour‘sdecisiontodirectthejurytoignoreitratherthandischargingthejurywasregardedbytheCourtofAppealasasatisfactoryresolution,particularlysincesixdaysofthetrialhadalreadyelapsed.

MsTurner’sfinalobjectioncentredaroundwhetherthetrialjudgeshouldhavepermittedtheevidenceofMrJimBailey,ahumanresourcesexpert,tobeheard.ThejudgesoftheCourtofAppealbackedthetrialjudge’sdecisiontoexcludehisevidenceasMrBaileylackedanyspecialistqualificationsthatwouldenablehimtobeconsideredanexpertinhisfield.Well-reasonedconclusionscouldbearrivedatbylaypeople,suchasthejury,withouthisinputasthematterwasonewithinthegraspoftheireverydayexperience.

Theappealwasdismissedasnoneofthegroundsraisedonappealweremadeout.

Thiscasemaybeviewedat:www.austlii.edu.au/au/cases/vic/VSCA/2009/224.html

Theplaintiffwasnotsuccessfulinherclaimfordamagesforbreachofdutyofcarebyheremployerfornotprovidingasafeplaceofemployment.However,itisatimelyreminderthatorganisationsareinthesamepositionasallotheremployersandneedtoensurethatemployeesarenotexposedtoanunnecessaryriskofinjury.Employershaveawellestablisheddutyofcaretoemployeestoprovideasafeworkplace.Complaintsaboutbeingbulliedresultinginpsychologicaldistressarebecomingmorecommon.Employersshouldbeawareoftheirpotentialliabilityforpsychologicalrelatedillnessesthataredirectlyrelatedtotheconditionsoftheworklaceandputinplaceeffectivegrievanceprocedureswhichcanbeaccessedataveryearlystage.

2.2.3 GUTNICK V BONDI MIZRACHI SYNAGOGUE [2009] NSWSC 257 (31 MARCH 2009) FILE NUMBER: 2047/09

Since1987,RabbiMosheGutnickhasbeentheRabbiattheBondiMizrachiSynagogue(theSynagogue),apart-timepositionwhichhemaintainsis‘hazaka’ortenuredforlife.TheSynagogueisacompanylimitedbyguaranteewhosecongregationalmembersconstituteitscompanymembership.

At8p.m.onthedayoftheCourthearing,anextraordinarygeneralmeetingofthesegeneralmembershadbeenconvenedtoconsiderpassingresolutionsconcerningtheSynagogue’sfinancialsituationaswellasterminatingtheRabbi’semploymentonthegroundsofredundancy.RabbiGutnick’sresponsewastoseekaninterlocutoryinjunctiontopreventthelatterresolutionbeingvotedonorgiveneffectto.Further,hesoughttoensuretheofficersoftheSynagoguewouldnotbeabletotakealternativeactiontoendhisemployment.If,however,theSynagoguewaswillingtoplacethematterfordeterminationbeforeaDinTorah,anOrthodoxJewishcourtwhosejudgesdispenserabbiniclaw,RabbiGutnickwouldacceptitsdecisionregardingwhetherterminationofhisemploymentwasjustified.Moreparticularly,hewasadamanthiscontractwiththeSynagoguestipulatedanarbitrationprocesscalledzablawherebytheSynagogueandtwoarbitratorshadtherighttoselectasuitablyqualifiedthirdarbitrator.AlthoughtheSynagoguewaspreparedtoagreetoaDinTorah,therewasconcernthatafindinginRabbiGutnick’sfavourwouldhaveseriousconsequencesfinancially.

JusticeWhitedeterminedthatwhether‘hazaka’wasanexpressorimpliedtermoftheRabbi’scontractwasaseriousquestiontobetried.Contingentonthis,anotherseriousquestiontoresolvewasthetypeofremedytobeawarded–specificperformanceoraninjunctiontopreservethestatus quo untilJewishlawwasapplied.Withrespectto‘hazaka’,RabbiGutnick’soriginal1987contractspecificallyexcluded‘hazaka’.Oncethiscontractexpiredin1990,nofreshcontractwasenteredinto.RabbiGutnickclaimedtobegranted‘hazaka’atthe1990generalmeetingasaprerequisitetohisagreeingtoremaininhisrole.Later,inthemid-nineties,anunsignedmemorandumtothateffectwasdrawnup.Thismemorandumwasdistributedin2004byaBoardmemberasacopyoftheRabbi’scontract.FromtheRabbi’sperspective,itformedthebasisforthecontinuedperformanceofhisdutiesfrom11April2004.HisHonourdoubtedthat‘hazaka’wasanexpresstermofthecontractsincenoapprovalfromthegeneralmemberswasevidenced,asrequiredbyarticle87oftheArticlesofAssociation.However,RabbiGutnickarguedthatunderJewishlaw,intheabsenceofexpressexclusionof‘hazaka’,itwasimpliedintoacontract.GiventheadoptionofnewArticlesofAssociationon

28April1997,itwasmootwhen‘hazaka’becameanimpliedterm.Nevertheless,JusticeWhitesuggesteditwasfrom2004becauseoftheBoard’stacitacceptanceofRabbiGutnick’spointofview.Hefoundthiswasthecasedespitethenewarticle12.3.4whichdealtwitheventsresultingintermination.

If‘hazaka’wasshowntobepartoftheemploymentcontract,thejudgebelievedspecificperformanceoftheRabbi’sdutieswouldbeorderedbytheCourt,asenforcingtheobligationsofecclesiasticalofficesisanexceptiontothegeneralprinciplethatcontractsforpersonalservicesarenotspecificallyenforceable.HisHonourwasnotconvincedthatdamageswouldproveasuitableremedyforthistypeof religiousdispute.Onthebalanceofconvenience,hebelievedthemattershouldbedealtwithbyaJewishtribunalwithanintrinsicunderstandingofJewishlaw.HisHonouralsopointedoutthenoticeconveningthemeetingwasdefectiveaccordingtoarticle6.3.5oftheConstitutionsincememberswerenotadequatelyinformedoftheargumentsunderlyingtherabbi’sproposedredundancy,anothermatterrelevanttothebalanceofconvenience.Bygrantinganinjunctiontomaintainthestatus quo,eventhoughthiswasnotthereliefsought,HisHonourwasconfidentthatbothparties’attitudeswouldensurethematterwasconcludedspeedilyviaaDinTorah.

Thiscasemaybeviewedat:www.austlii.edu.au/au/cases/nsw/supreme_ct/2009/257.html

Althoughthiscasehasparticularcharacteristicsbecauseitarisesfromemploymentofsomeonetoperformareligiousoffice,thedisputecameaboutinitiallybecausetheboardwastryingtoaddressthedesperatefinancialsituationofthesynagogue.

WhileitispossiblethatdwindlingattendancesatsynagogueledtotheargumentthattheRabbiwasredundant,particularlywhenthesynagoguewasthreatenedwithinsolvency,thelackofcleardocumentationofhisemploymentcontractcouldmakeitmoredifficultfortheboardtosupportthecaseforredundancy.(Thiswaspossiblycompoundedbyminuteswhichwereunclearandthememorandumwhichwasnotsignedorapproved.)Thecaseunderlinestheimportanceofmaintaininguptodateemploymentcontractsforemployees,includingdisputeresolutionprocedures.( Insomecasesitwillbeappropriateforthesetorefertoorincorporateanindustrialinstrumentlikeanawardoracollectiveagreement.)Itisimportantforallpartiestoknowtheirrightsandobligations–somethingwhichwillbecomeevenmoreimportantinacrisis.

2.3 insolVEncy and windinG uP

2.3.1 WHITTINGHAM, IN THE MATTER OF THE SPANISH CLUB LTD [2009] FCA 1158 (FEDERAL COURT OF AUSTRALIA, 19 OCTOBER 2009) FILE NUMBER: NSD 1080/2009

On9November1972,theSpanishClubLtd(thecompany)wasincorporatedasanonprofitcompanylimitedbyguarantee.Manyyearslater,on17November2008,MrWhittinghamofPKFCharteredAccountantswasappointedtoadministerthecompanyundersection436AoftheCorporations Act 2001 (Cth)(theAct’)).Subsequently,on27February2009,thecompany’screditorsdecidedthatadeedofcompanyarrangement(DOCA)shouldbeenteredinto.Thishappenedon16March2009andMrWhittinghamwasdulyappointedadministratorofthescheme.

Inthisrole,hewascompelledbyClause12.1oftheDOCAtoconveneacompanyannualgeneralmeeting,whichhearrangedtotakeplaceatSydney’sStarCityCasinoon13November2009.Astipulationofsection249(1)oftheActisthatatleasttwentyonedays’noticemustbegivenofsuchameeting.Toachievethis,underClause17ofthecompany’sArticlesofAssociation,servicewasdeemedtobeeffectedthedayafterthenoticewasposted.Thereforethiscouldoccurnolaterthan21October2009.Asimilarresultwasarrivedatbyapplyingsection29oftheActs Interpretation Act 1901(Cth).

However,clause34(a)ofthecompany’sArticlesofAssociationstatedthatthenominationsforelectiontocommitteepositionsmustbereceivedbytheSecretarytwentyonedaysbeforetheannualgeneralmeeting.AccordingtotheAustralianElectoralCommission,whichwasdesignatedinClause12.2oftheDOCAtoconducttheelection,thefinaldatefornominatingwasthe23October2009.Obviously,allowingtheprescribedtimefornominationswouldcontravenethenoticerequirements.ThesituationwasfurthercomplicatedbyMrWhittingham’sneedtocomplywithClause12.1oftheDOCAbecause,asadministrator,hewasboundtodosoundersection444GoftheAct.

WhenthemattercamebeforeJusticeLindgrenintheFederalCourt,hepointedoutthatsection447DoftheActpermittedanadministratortoapproachtheCourtforadvice.Therewasscopeundersection447AoftheActfortheCourttomakeanappropriateorder.Inthiscase,HisHonourdecidedtoshortenthenominationperiod.Notificationofthecommitteeelectionwastobeprovidedonorbefore2Octoberwith12noonon19October2009,setastheclosingdateforthenominations.

Thiscasemaybeviewedat:www.austlii.edu.au/au/cases/cth/FCA/2009/1158.html

VoluntaryadministrationisgovernedbyPart5.3AoftheCorporations Act 2001(Cth).Theobjectiveofvoluntaryadministrationistoallowacompanythemaximumchanceofcontinuinginexistence,orifthatprovestobeimpossible,toprovideabetterreturntocreditorsandmembersthananimmediatewindingup.Voluntaryadministrationismeanttoencouragecompaniestouseacheaper,moreflexibleprocessinordertodealwiththeirinsolvencywithoutanycourtinvolvement.Theappointmentoftheadministratorgivesrisetoamoratoriumondebtsofthecompany,andallowstheadministratortoreviewoptionstoputbeforeameetingofthecompany’screditors.Thecreditorshavetheultimatesanctioninthismethodofexternaladministration.

Inthiscase,thecreditorsofthecompanyvotedtobeboundbyadeedofcompanyarrangement,buttechnicaldifficultiesarose.Thisisanexampleoftheoperationofsection447A(1)whichallowsthecourttomakeanyorderitseesfittopromotetheoperationofPart5.3AoftheAct.AlthoughPart5.3AoftheActishighlytechnicalinnature,andseemsprescriptive,section447A(1)hasbeenliberallyinterpretedbythecourtstogiveflexibilitytoadministratorstoachievethepolicypurposesofvoluntaryadministration.Thiscaseshowsthatsuchflexibilitycanassisttheadministratortomovetheadministrationforwardtotheultimatebenefitofthecompanyandthecreditors.

2.3.2 CORREA V SPANISH CLUB LTD AND ORS [2009] NSWSC 1225 (SUPREME COURT OF NEW SOUTH WALES, 30 SEPTEMBER 2009) FILE NO: 4777/09

AftertheSpanishClubLtd,aclubregisteredunderthe Registered Clubs Act1976(NSW)(thestateAct),becameinsolvent,KennethWhittinghamwasappointedadministratorofthedeedofcompanyarrangementthatwassubsequentlydrawnup.Althoughthechiefcreditor,AustralianUnity,wasowedapproximately$3.67millionofthe$4milliondebt

outstanding,theClub’sassetsexceeded$10million.On1July2009,G&JDrivasPtyLtdenteredintoacontractwiththeadministratortopurchase86and88LiverpoolStreet,Sydney,for$9.25million.Accordingtothedeedofcompanyarrangement,theformerpropertywasdescribedinClause1.1(14)asnon-corewhilstthelatterwasdefinedinClause1.1(7)ascoreproperty.

Undersection41J(3)ofthestateAct,thesaleofcorepropertyrequiredtheapprovalofamajorityofordinarymembersoftheClubobtainedatageneralmeeting.Themeetingwasheldon31July2009,butthemembersrejectedtheproposedsaletoDrivas.Regulation19(1)(h)oftheRegistered Clubs Regulation 2009 (NSW)alloweddisposalofcorepropertywithapprovaloftheNewSouthWalesDirector-GeneralofCommunities,sotheadministratoraskedfortheDirector-General’sassistance.SincetheCorporations Act 2001 (Cth)prevailedoverstatelegislation,theadvicewasthattheadministratorwasnotboundbytherequirementsofsection41J(3)ofthestateAct.

However,section444A(5)oftheCorporations Act 2001 (Cth)qualifiestheadministrator’sbroadpowerofsaleunderadeedofarrangement‘exceptsofarasitprovidesotherwise’.Here,thedeedspecificallyreferredtotheneedtocomplywiththestateAct.DeloresCorrea,amemberoftheClub,soughtapermanentinjunctiontohalttheintendedsale.JusticeBreretonintheSupremeCourtofNewSouthWalesagreedthattherewerestronggroundsforherstance.HepointedoutthattherequirementsofthestateActwereincorporatedintoclauses5.1and5.2ofthedeedofarrangement–indicatinganintentiontoprotecttheinterestsofclubmembersaswellasthoseofcreditors.Otherwise,whyincludetheclausesatall?Further,hedidnotviewtheDirector-General’sremarksunderregulation19(1)(h)assignifyingapprovaltosellthepropertyinquestion.Toproceedcouldharmtheinterestsofmemberswhowereeagertoseetheclubreturntoprofitability.

Onthesubjectofwhomthebalanceofconveniencefavoured,HisHonourcouldseenoprejudicetoeitherparty,particularlyastheClub’sassetsweremorethansufficienttocoveritsdebts.Therefore,becauseDeloresCorrea’scaseonbehalfofthememberswassostrong,apermanentinjunctionwasgranted,leavingopenthepossibilityofthecontract’sbeingavoidedinthefuture.

Thiscasemaybeviewedat:www.austlii.edu.au/au/cases/nsw/NSWSC/2009/1225.html

Thiscaseisanillustrationofthepossibleconflictswhichcanarisebetweenstateandfederallegislation.Constitutionally,federallegislationwillprevailoverstatelegislationinmanycircumstances.However,inthiscase,provisionsofastateActwereincorporatedintothedeedofcompanyarrangementmadeunderafederalAct.Adeedofcompanyarrangementisbindingontheadministratoraswellasthecreditorsandmembers,andHisHonourdecidedthatintheparticularcircumstancesofthecase,thismeantthattheadministratorhadtocomplywiththestateAct’sprovisions.

2.3.3 JOHNSON V COMMISSIONER OF CONSUMER AFFAIRS [2009] NTSC 4 (27 FEBRUARY 2009) FILE NO: 90 OF 2006 (20619538)

Usingthepowerprovidedbysection65oftheAssociations Act (2003) (NT)(theAct),theCommissionerofConsumerAffairs(theCommissioner)dissolved theBlonksMotorcycleClubIncorporated(theAssociation)on12July2006.ThedissolutionwasgazettedaftertheAssociation’soperationsbecamedormantanditwasunclearwhetheritsobjects

werebeingpursued.MrJohnson,thepublicofficeroftheAssociationattherelevanttime,deniedthelattercriticisms.Asaninterestedpersonundersection71(1)oftheAct,hesoughttoprovethat,whentheAssociationwasdissolved,itwasinfactcarryingoutitsobjectsoroperation.Bysodoing,hecouldbegrantedanorderdeclaringtheCommissioner’sactionvoid.

Originallyincorporatedon7April1986,theAssociation’sobjectivesrevolvedaroundtherestorationofBritishandAmericanmotorcyclesandtheirsafeuseintouringandsportingpursuits.BoththeAssociation’sConstitutionanditsRuleswerefiledwiththeappropriatebody.AftertheAssociationwasincorporated,on12May1989,itpurchasedahouseatHowardSpringstouseasaclubhouse.TheCommissioner’sevidencerevealeditfunctionedastheAssociation’sclubhouseuntil1993whentheHell’sAngelsMotorcycleClub(Hell’sAngels)setupaDarwinchapterandeffectivelytookcontrol.Infact,thissignificantAssociationassetwasgiftedtoAngelInvestments(NT)PtyLtd,abusinessentitycontrolledbyHell’sAngels,on27July2001.

ExaminationoftheAssociation’sfinancialaffairsinsubsequentyearsrevealedproblems.Unqualified,auditedfinancialstatementsweresubmittedbytheAssociationforthe2001/2002financialyear.Nonewerelodgedforthefollowingfinancialyear.Theequivalent2003/2004statementswerequalified.TherewasnoindicationthatthesereportshadbeenplacedbeforetheAssociation’sAnnualGeneralMeetingorthatanymembersoftheManagementCommitteehadsignedoffonthem.Nolodgementwasmadefortheyearended30June2005.On1March2006,althoughtheCommissionerrequestedthattheAssociationproduceitsbooks,noresponsewasforthcoming.

Bythistime,MrJohnsonwastheAssociation’snotifiedpublicofficer,despitethefacthismembershipoftheAssociationclearlyendedin1993.AnewConstitutionforthemotorcycleclubwasadoptedon13June2006,buttheCommissionerlaterruleditwasnon-compliantwiththecurrentlegislation.TheargumentthatAssociationrecordshadbeendestroyedinafirewasrejectedasacredibleexplanationfortheunderlyinglackofdocumentationofmeetingsandotherrelevantdata.

Therefore,JudgeSouthwooddeterminedthatmostoftheoriginalAssociationmemberswerenowmembersofHell’sAngels.AnyconnectionwiththeearlierBlonksMotorcycleClubIncorporatedwaslimitedtouseofitsformerpropertyandaccesstoitsbankaccountsasrequiredbyHell’sAngels’members.TheAssociation’sformerassetswerebeingappliedtoHell’sAngels’pursuits.MerepossessionofpersonalpropertysuchasalawnmowerandwatertankswasnotsufficienttoprovetheAssociationoperational.Becauseofthesefactorsandtheabsenceofstrictadherencetotheacceptedproceduralguidelinesforassociations,HisHonourdeclaredtheAssociationdefunctatthetimeofitsdissolution.Inhisview,itwasinactiveby12July2006.

Thiscasemaybeviewedat:www.austlii.edu.au/au/cases/nt/NTSC/2009/4.html

2.4 MEMbErshiP and officE

2.4.1 DAIRY FARMERS MILK CO-OPERATIVE V CO-OPERATIVES COUNCIL [2009] NSWSC 862 (27 AUGUST 2009) FILE NUMBER: 11129/09

TheDairyFarmersMilkCo-operative(DFMC)operatedasaco-operativeofdairyfarmerswithinacontractualframework.Until2008,whenitwastakenoverbyNationalFoodsLtd,milksuppliedwasdespatchedtoAustralianCo-operativeFoodsLtd(ACFL)forprocessing.Asaresultofthetakeover,theco-operativebecameacorporationundertheCorporations Act 2001 (Cth).WhenACFL’sschemeofarrangementwithitsmemberswasapprovedon18November2008,DFMC’sshareholdingwas20%whichwasexpectedtoberealisedanddistributedamongstitsmembers.Outoftheresulting$91,589,000,aspecialdividendof$1.6897persharewasdeclaredon10December2008,andannouncedattheDFMCannualgeneralmeeting.ThisspecialdividendwasonlyavailabletocurrentDFMCmembers.

Thirty-oneformerDFMCmemberswhohadcancelledtheirmembershipbetween31March2008,and31October2008,werewaitingonpaymentfortheirsharecapitalwhentheschemeofarrangementwaseffected.On28Novembertheircapitalwasrepaidwithoutinterest,butmorepromptlythanwasusual.Althoughtheyhadnoentitlementtopartakeinthespecialdividendbecausetheywerenolongermemberswhenthespecialdividendwasannounced,on9December2008thesepastmembersrequestedtheCo-operativesCounciltorestoretheirmembershipsothattheycouldaccessthespecialdividend.Theirapplicationreliedonsection129oftheCo-operatives Act 1992 (NSW)(theAct)whichpermittedanordertoreinstatemembershiptogetherwithitsentitlementsifitscancellationhadoccurredunreasonably.On5FebruarytheCo-operativesCouncilorderedthattheseshareholdershavetheirmembershipreinstatedfromtherelevantterminationdatestomakethemeligibleforthespecialdividend.Twentyfourhoursafterthepaymenthadtakenplace,theirmembershipwastobecancelledagain.Unhappywiththedecision,theDFMCappealedaswasitsrightundersection419oftheAct.

ActingJusticeBrysonfoundthat,asthethirty-onemembershadbecomeinactivethroughfailingtosupplytherequisiteamountofmilkwithintherequiredtimeframesetoutinsection64(1)oftheAct,theirmembershipwaslegitimatelycancelledundersection127.Further,hedeterminedthatthepowergrantedbysection129(1)shouldbeinterpretedwidelytopermitthealterationofmembers’rightswithrespecttothecancellationoftheirmembership.Ananalysisofsection 129clearlyindicatedtheCo-operativesCouncilwaschargedwiththisresponsibilitywhilsttheCo-operativesBoardhadnopowerinthisregard.Thatsaid,HisHonourcouldnotfaulttheCo-operativesBoard’shandlingoftheoriginalmembershipcancellationsnoritsprematurereturnofshareholders’capital.

Next,ActingJusticeBrysonconsideredingreaterdetailwhethertheCo-operativesCouncil’sorderwaswithinitspower.HepointedouttheDFMC’scorrespondencewiththeformermemberswasnotmisleadingalthoughtherewasnoattempttobeproactiveandoutlinethecircumstancesinwhichtheirmembershipcouldberevived.DespitethelawfulnessoftheDFMC’sbehaviour,theCo-operativesCouncil’sdecisionastotheunreasonablenessofthecancellationofthethirty-onemembershipswasvalid.Tosupport

hiscontention,HisHonourcitedthereferenceintwooftheDFMC’sletterstotheaffectedmembersbeing‘entitled’,anexpressionwhichsuggestednofurtheractiononthepartofthememberswasnecessary.HealsocriticizedtheDFMC’sfailuretoacquaintthesememberswiththeirrightsandresponsibilitiesundertheactivemembershiprule.Inhisopinion,oncetheCo-operativesCouncilresolvedthatthecancellationofthethirty-onemembershipswasunreasonable,itwaswithinitsmandatetoreinstatetheirmembershipsassetoutinsection129(3)oftheAct.Therefore,theappealbytheDFMCwasdismissed.

2.4.2 IN THE MATTER OF DAIRY FARMERS MILK CO-OPERATIVE LTD [2009] NSWSC 627 (3 JULY 2009) FILE NUMBER: 2929/09

AfterDairyFarmersMilkCo-operativeLtd(DFMC)solditstwentypercentshareholdinginAustralianCo-operativeFoodsLtd(ACF),itneededtoapportionthenetproceedsofthesaleamongstitsmembers.Theinitialstepwastoannounceaspecialdividendof$1.6879pershareatthe2008AnnualGeneralMeeting,tobepaidtoDFMCmembersbyDecemberofthatyear.Some$56.9millionwasinvolved.Next,paymenthadtobeeffectedforthecompulsorysharecancellationasthesalewasbroughtaboutviaatransferofDFMC’ssharestoNationalFoodsLtdinexchangeforcash.Itwasdeterminedtopay$1.00pershareforeachofmember’ssevenoutoftensharestobecancelled.AfurthercomplicationconcernedwhetherformermembersoftheDFMCwhoappliedsuccessfullytotheCo-operativesCouncilforreinstatementundersection129oftheActtotakeadvantageofthedividend,wereeligibleforthispaymentaswell.Acourt-approvedschemeofarrangementwasrequired.

DFMCsoughtapprovalintheNewSouthWalesSupremeCourtforaschemearrangedwithitsmembersundersection344(1)oftheCo-operatives Act 1992 (NSW)(theAct).Accordingtosection344(1)(b),suchapprovalmayonlybegrantedifmembershavepassedaspecialresolutionbymeansofaspecialpostalballot.AftertheCourtnominated3July2009,asthedateforhearingDFMC’sapplication,therequiredballotofactivememberswascarriedoutinJune.Noanomalieswerereportedinthewaytheballotwasconducted.Aspecialresolutionforthepurposesofaspecialpostalballotofco-operativemembersneedsathreequartersmajorityassetoutinsection189(1)(c)oftheAct.Topasssucharesolution,thespecifiedmajoritymustcastaformalvoteinlinewithsection190(2).Here,97.6%oftheformalvotes supportedtheschemeunderdiscussion.JusticeAustinwassatisfiedthatalltheproceduralrequirementsrelatingtotheballothadbeenmet.

HisHonouralsoexploredtheissueofhowtheadditionalpaymentimpactedonDFMC’scapitalposition.HeagreedwiththeDFMCBoardthat,althoughtheschemeofarrangementresultedinareductioninDFMC’scapital,itwasnotdesignedtofloutsection299(1)inPart11Division2oftheActwhichdealswithpurchasingsharesinaco-operative.RetainedearningsshouldbesufficienttocontinuetheoperationofitsMilkSupplyAgreementwithACFwhilstDFMC’sbalancesheetshouldbenefitfromtheremovalofthepossibilityofnegativenetassets.

Therefore,heagreedthattheCourtshouldapprovetheschemeofarrangement.Althoughinactivememberswouldbenefitunderthescheme,providedtheirshareshadnotalreadybeenpaidout,reinstatedmemberswouldnotsincetheyhadbeenpaidpreviously.Nevertheless,allmemberswouldbesubjecttothescheme’sstipulations.

2.4.3 CUMMINS V AUSTRALIAN JOCKEY CLUB LIMITED [2009] NSWSC 254 (6 APRIL 2009) FILE NUMBER: 2144/09

Establishedin2008asacompanylimitedbyguarantee,theAustralianJockeyClubLimited(theAJC)leasestheRandwickRacecourseinSydney.InMarch2009,SarahCummins,alongwithothermembersoftheAJC,attemptedtorequisitionageneralmeetingtodiscussthereplacementoftheAJC’sincumbentdirectorsduetodissatisfactionwiththeirperformance.Aspartoftheprocess,hergroupproducedaproxyformtobeusedintheeventaconcernedmembercouldnotattendandwishedtoappointaproxy.Themeetingwasdulyscheduledfor9April2009.However,theproxyformswerepreparedaheadoftimeandblankswereleftinwhich‘thebearer’wasauthorisedtoinsertthetimeandplaceofthemeeting.

WhentheAJCsentoutitsnoticecallingthemeetingwithaccompanyingvotinginformationaround11MarchitstatedthatonlytheformofproxyprovidedbytheAJCwasvalid.Bythisstage,manymembershadalreadyhandedtheiralternativeproxyformstooneofMsCummins’sgroup.Subsequently,justpriorto18MarchafterinterventionbyComputershareInvestorServicesPtyLtd,acompanyemployedbytheAJCtoassistwiththelogisticsofthemeeting,theseproxieswerereturnedwithinstructionstodepositthemsignedwitheithertheAJCorComputershare.

Despitethisaction,legaldiscourseviatheirrespectivesolicitorscontinuedbetweentheAJCandMrOsburg,arepresentativefromMsCummins’sfaction.CorrespondencefromtheAJC’slegalrepresentativeson27Marchand31Marchcitingaseniorcounsel’sopinion,wasambiguousastowhatconstitutedavalidproxyvote.ThisculminatedinMsCumminscommencinglegalproceedingson31Marchtohavethetwoformsofproxydeclaredtobevalid.Meanwhile,by2Aprilthedaybeforethereturnofheroriginatingprocess,theAJCadmittedthatanyissuesrelatingtotheproxieswerepurelyacademic.Nonehadbeenforwardedinvalidlyandnodisputeovertheactualproxieshadarisen.

Therefore,whenthematterreachedtheSupremeCourton3AprilMsCumminssoughtleavetodiscontinuetheaction.Inaddition,sheappliedforanorderthattheAJCpayhercosts.ThisapplicationwasstrenuouslyobjectedtobytheAJCwhomaintainedthatthecustomarypositionastocostsshouldhold.Accordingtoregulations42.19(1)and(2)oftheNewSouthWalesUniform Civil Procedure Rules 2005whichdealrespectivelywithdiscontinuanceofproceedingsandtheassociatedcosts,anycostsincurredbytheAJCwithrespecttothediscontinuedmatterwouldusuallybebornebyMsCummins.

However,JusticeBarrettupheldbothofMsCummins’srequestsonthebasisthat,sincetheAJChadfailedtoprovidetimelyguidanceastothevalidityofthealternativeproxies,forcingMsCumminstoseekadvicefromthecourt,theAJCshouldbeliableforhercosts.

2.4.4 PLENTY & ANOR V SEVENTH DAY ADVENTIST CHURCH OF PORT PIRIE [2009] SASC 10 (19 JANUARY 2009)

GrahamandDeeannePlentyoriginallyattendedtheSeventhDayAdventistChurchinPortPirie(theChurch)duringthelate1950sbeforetheymovedtoWesternAustralia.OntheirreturntoSouthAustraliainthe1970s,theybecameactivemembersofthecongregationaftertheirnameswereplacedonthePortPirieChurch’sroll.Duringthistime,therewasanongoingdisputebetweenthePlentysandfellowchurchmembersinvolvingwhattheformerperceivedastheirregularelectionofpeopletoChurchpositions.ThisdisagreementculminatedinMrandMrsPlenty’sbeingdisfellowshipped,thatis,expelledfrommembershipoftheChurch,on1December1979.AlthoughtheyreactedinJune1982,byinstigatingproceedingsclaimingadenialofnaturaljustice,thematterdidn’treachcourtuntil2002.On10March2003,judgmenttothiseffectwasgivenintheSouthAustralianSupremeCourtalongwithadeclarationbyJusticeDugganthattheChurch’sactionswerenullandvoid.TheChurchrefutedthisdeclarationviaacross-appeal.

Subsequently,thePlentysamendedtheirstatementofclaimtoseekdamagesinbothcontractandtort.InNovember2006,JusticeDuggandeniedboththeseremedies:thefirst,onthebasisthatnocontractexistedbetweentheChurchandthePlentys;thesecond,onthegroundsofafailuretodemonstratetheexistenceofadutyofcare.Onappeal,MrandMrsPlentyre-addressedthesecontractualandtortiousissuesaswellastheconsequencesofthedenialofnaturaljustice.Themattersofthelossofproprietaryrightsandthedamagetotheirreputationswerealsoraised.

IntheSouthAustralianFullCourt,theleadingjudgmentbyJusticeGraydealtfirstwiththePlentys’claimthattheyweredeniednaturaljustice.Moreparticularly,theirexposuretobiaswasexamined,astheChurchmembersnotonlysetintrainthedisfellowshippingprocess,butalsodeterminedwhetheritsimplementationwasnecessary.HisHonourcommentedthat,asmembershipofsuchaChurchwouldberelativelysmall,itwouldbeunavoidablethatmemberswouldbeforcedintopotentiallyconflictingroles,asituationpermittedbytheChurchrules.Noevidenceofmalicewasfoundtobeapparent.

Next,JusticeGray’sattentionfocusedonwhethertheChurchmanual,producedintheUnitedStatesofAmerica,gaverisetocontractualrightsandobligationsamongstitsmembers.Hedidn’tbelievesoasitwasastandardAmericanpublicationwithastrongreligiousflavour.Legalproceedingswereonlyincorporatedasadefaultoption.Commentingonthetrialjudge’sexaminationofwhetherdamageswereavailableforthedistressthedisfellowshippingcausedMrandMrsPlenty,JusticeGrayalsodeclinedtofindanyresultantinconvenience,citingthethreedecadestakentohavethematterconcluded.

Turningtothequestionofwhetherdamageswerepayableundertortlaw,HisHonouragreedwiththetrialjudge’sview,basedlargelyontheevidenceofDrBlakemore,apsychiatristcalledbytheChurch,thatitwasnotreasonablyforeseeablethatarecognizablepsychiatricconditionmightdevelopasaresultofbeingdisfellowshipped.Similarly,JusticeGrayrejectedthenotionthatheartconditionssufferedbybothMrandMrsPlentywereattributabletotheirtreatmentbythePortPiriecongregation.Therefore,nodamageswereawardedintortasnodutyofcarehadbeenbreachedwithrespecttothem.

Withrespecttotheirpurportedlossofproprietaryrights,thePlentyswerestillabletoutiliseChurchfacilitiesdespitetheirnamesbeingremovedfromtheroll.However,astherelationshipbetweentheChurchanditsmembershadneverbeencontractualinnature,noproprietaryrightshadeverbeenpossessedbythePlentys.SinceMrandMrsPlentywerenothighlyregardedbythecongregationpriortothedisfellowshipping,JusticeGrayfailedtofinditcauseddamagetotheirreputations.

Finally,HisHonourconsideredthedeclarationforeshadowedbyJusticeDugganin2003.Itwasnotuntilthe23October2007,thatthisdeclarationcametofruition.Bythen,neitherMrnorMrsPlentyhadhadanyinvolvementwiththeChurchforover25years.TheChurcharguedthattheprotractedwayinwhichthePlentyshadpursuedthemattersuggestedtheirlackofinterestinthedeclarationwhichwouldnot,inthefinalanalysis,restoretheirChurchmembership.Fromapurelylegalperspective,thesituationwasfurthercomplicatedbyconfusionastowhetherthedecision,relatingasitdidtonaturaljustice,wasvoidorvoidable.Therefore,JusticeGrayallowedthecross-appeal,settingasidethedeclaration.Hisfellowjudgesconcurredwithhissentiments.

Thiscasemaybeviewedat:www.austlii.edu.au/au/cases/sa/SASC/2009/10.html

Theprincipalpointinthiscaseisthatthechurchisanunincorporatedassociation,asopposedtooneincorporatedunderstateassociationsincorporationlegislationorthecorporationslegislation.Theunincorporatedassociationisnottraditionallyregardedasalegalentitywithrightsandobligations.Ineffect,unincorporatedassociationsdonotexistinlaw.Therefore,damagesforbreachofanunincorporatedassociation’srulescannotgiverisetodamagesintheabsenceofacontract.Ofcourse,thishasmeantthatthereisnobasisforamembertobringanactionagainstanassociationunlesssomeproprietaryrightcanbeshown.Inshowingatrueproprietaryright,theexistentialproblemofwhetheranunincorporatedassociationis‘real’inanylegalsenseisanobstacle.Anunincorporatedassociation,whichisnotalegalentityundercommonlaw,cannotholdpropertyinitsownname.Therefore,amembercouldnotparticipateintherightsattachedtothatproperty,andsotherecouldneverbeaproprietaryrightdemonstrated.Therebeingnoproprietaryrightsinvolved,thenthereisnocauseofactionincontract.However,thetestforshowingaproprietaryrightisratherflexibleinAustralia.Itiswhetheramemberderivesatangibleorintangiblebenefitfrombeingamemberoftheassociationinquestion.Tangiblebenefitscanincludetherighttouseandenjoyanassociation’ssocialfacilities,playingfieldsorequipment.Intangiblebenefitsmightapplytoanassociationwhichhasnoactualfacilitiesorequipment,suchasabookclubconductedinmembers’homes,oranenvironmentalgroupwhichconductsallitsactivities‘on-site’atcontestedareas.Benefitswhicharemerelycollateral,however,maynotbesufficient.

2.4.5 KOVACIC V AUSTRALIAN KARTING ASSOCIATION (QLD) INC [2008] QSC 344 (22 DECEMBER 2008) FILE NO: BS 8505 OF 2008

FifteenyearoldJamesKovacic,aproficientgo-kartcompetitorfromNewSouthWales,wasbarredfromenteringkartingcompetitionsinQueenslandafterthelocalarmoftheAustralianKartingAssociationIncorporated(theAKA)passedaresolutiontothateffecton27October2007.

AlthoughhehadheldalicencetocompetesinceJanuary2002,hisexclusionstemmedfromhisfather’sinvolvementinanumberofunpleasant,sport-relatedincidentswhichincludedintimidatorybehaviour.Forhispart,amongstotheraccusations,ValentinoKovacic allegedtheQueenslandofficialswereopentobriberyandexhibitedbias.ThevolumeoflitigiousmaterialfromMrKovaciccausedtheAKA(Qld)’sprosecutor,MrLane,torefusetodealwithmattersconcerningMrKovacicinthefuture.Assupportfortheprosecutor,theAKA(Qld)decidedtodenyJamesentrytotheQueenslandkartingraces.ThiswaspassedbyresolutionatameetingoftheAKA(Qld),interms‘Thattheclubsof

QldsupporttheAKA(Qld)ProsecutorinthattheywillrefusetoaccepttheraceentryofJamesKovacic’.OnlywhenJamesnominatedtoenteraraceinRockhamptonthefollowingJuneandwasrefused,didherealisethathehadbeenexcludedonanongoingbasis.

IntheQueenslandSupremeCourt,MrKovacicmaintainedonJames’sbehalfthattheAKA(Qld)didnotpossesstheauthoritytoimplementsuchanactionindefinitelystatewide.Further,proceduralfairnesshadnotbeenobservedinthatnoticerequirementswereignored.Finally,hedeclaredthedecisiontobesounreasonablethatitcouldnotbeallowedtocontinue.AKA(Qld)arguedthatthedecisionwasnottakenatadisciplinarytribunal;itwasaquasi-executivedecisionandnaturaljusticedidnotapply;andthatorganisersofcompetitionshadtherighttoexcludeanyone.

WhilstJusticeWilsonrecognisedMrKovacic’srighttoraisetheseissues,shefailedtofindanymeritinhisarguments.AttheheartofherdecisionwasthefactthatthematterwasnotjusticiablemerelybecausetheAKA(Qld)wasincorporated.HerHonourstatedthatcourtsdonotliketointerfereintheinternalmattersofvoluntaryassociationswithoutgoodreason(forexamplebreachofaproprietaryorcontractualrightofamember).Incorporationunderanactdidnotmatchtheperceivedpublicimportanceoflegislationgoverningtradeunionsorpoliticalparties,forexample.Byexploringtheavenuesopenunderprecedent,shefoundtherewasnoevidenceofbreachofcontractnorofinfringementofaproprietaryright.Finally,HerHonourconsideredwhetherJames’slivelihoodorreputationwasaffectedbytheAKA(Qld)’sdecision.SincehewasstilllicensedatanationallevelandracedmainlyinNewSouthWales,thechiefeffectwasthelossoftheabilitytocompeteinasingleQueenslandevent.Internationally,hisgo-kartingwasunaffected.AsforMrKovacic’sclaimthatJameshadlostsponsorshipdealsworthcollectivelyabout$200,000becauseoftheAKA(Qld)’sresolution,HerHonourdeclaredittobeunfounded.Therefore,shedismissedMrKovacic’scase.

Thiscasemaybeviewedat:www.austlii.edu.au/au/cases/qld/QSC/2008/344.html

Thiscaseisimportantforitsdiscussionaboutthepolicyofthelawandcourtsinrespectofinterferenceintheaffairsofavoluntaryorganisation.Thedecisionreaffirmsthelongheldpositionthatinorderforacourttobeabletoprovidereliefatlaworinequitytheapplicanthastoestablishthattherehaseitherbeenabreachofcontractoraninterferencewithaproprietaryrightorinterestorsomeone’slivelihoodorreputationisatstake.Theplaintiffwasnotamemberoftheorganizationwhichplacedthebanonhimanditwasheldthatthisfactdidnotprecludehimfromseekingdeclaratoryrelieffromthecourt.Thecourthasaverywidejurisdictiontograntdeclaratoryrelief.Thecaseturnedonthefactsnotonalackofstandingtobringanactionoronthattheactioncouldn’tbebrought.

2.5 nEGliGEncE

2.5.1 MATTHEW CHAINA & ORS V THE PRESBYTERIAN CHURCH (NSW) PROPERTY TRUST & ORS (NO 3 ) [2009] NSWSC 1243 (SUPREME COURT OF NEW SOUTH WALES, 23 NOVEMBER 2009) FILE NO: 20472/2002

FollowingthedrowningoftheirsonataschoolcampinOctober1999,MrandMrsChainalaunchednegligenceactionsbothasparentsandasthedirectorsandonlyshareholdersoffamilycompanies.Asdiscussedinanearlierlegalcasenote(Chaina & Ors v the Presbyterian Church (NSW) Property Trust & Ors[2008]NSWSC290),theyinsistedthenervousshocksufferedasaresultoftheirson’sdeathadverselyaffectedtheirabilitytooperatetheirbusinessandtriggeredalossofprofits.Since,byOctober1999,theywereintheprocessofdevelopingacollectionofdomesticcleaningproductstobemarketedaswellasplanningtore-launchanindustrialproductrange,claimsforpastandfutureeconomiclossweremade.

Ofparticularimportanceforassessingthequalitiesattributedtothecleaningproductsweretherelevantformulae.However,whileMrandMrsChainamaintainedtheformulaeexisted,theywereloathtodivulgethem,despiteacourtorderrequiringthemto.FollowingtherevelationinAugust2009,thatMrChainadidnotpossesstheacademicqualificationsheprofessedtohave,thecouplesoughttohaveexperttestimonyadmittedastothesuperiorqualitiesoftheirproducts.SolicitorsfortheChainasassertedthatfailuretopresentsuchtestimonywouldseriouslyharmtheircase,particularlyasMrChaina’spreviousevidencewouldnowbediscredited.

Foritspart,thePresbyterianChurch(NSW)challengedthisassumptionasitscasehadbeenresearchedandresourcedaroundMrChaina’searlierstatementsofhispersonalknowledgeofandinvolvementinthedevelopmentoftheproducts.ReferringtoMrandMrsChaina’sdelayingtacticsoverthecourseofthelitigation,theChurchcontendeditwastoolateforthemtobeallowedtoaltertheirevidentiaryfoundations,pointingoutthatsection56(1)oftheCivil Procedure Act 2005 (NSW)advocated‘Ajust,quickandcheapresolutionoftherealissuesinproceedings’.TheChurchalsoarguedthatthespecialistadviceofthepreferredexpertswouldbeoflimitedassistancesincesomeoftheoriginalingredientsinthe1999formulaewerenolongeravailable,makingexactreplicationofthecleaningproductsimpossible.

AlthoughJusticeHoebenintheNewSouthWalesSupremeCourtwassympathetictotheChurch’sarguments,particularlywithrespecttotheprotracteddelays,unnecessarycostsanduncertaincasemanagement,andrecognisedthatawardingcostswasnotadequaterecompensefortheinconveniencecaused,HisHonourfeltinthisinstancethattheclaimneededtobearguedproperly.Iftheapplicationtoadmitthenewtestimonywasrejected,MrandMrsChaina’scasemightwellcollapse.Sincecasepreparationwasongoingandnohearingdatehadbeenset,mindfulofacting,‘Inaccordancewiththedictatesofjustice’,assetoutinsection58(1)oftheCivil Procedure Act 2005 (NSW),JusticeHoebengrantedtheChainas’application.

2.5.2 THE QUADRIPLEGIC CENTRE BOARD OF MANAGEMENT V MCMURTRIE [2009] WASCA 173 (WESTERN AUSTRALIAN COURT OF APPEAL, 13 OCTOBER 2009) FILE NO: CACV 120 OF 2008

IntheWesternAustralianDistrictCourt,$510,840wasawardedindamagesfornegligencetoMsMcMurtrie,anurse’sassistant,forabackinjurysustainedwhileturningapatient,MrR.J.,inhisbedattheQuadriplegicCentreon24May2001.Sheallegedthatafterswearingather,MrR.J.struckouttowardsherfacewhileshewasbendingoverhim.Toavoidhisblow,shelurchedbackwardsquickly,causingdamagetoherbackasshedidso.IttranspiredthatMrR.J.hadpreviouslybeenphysicallyaggressivetowardsanotherstaffmember,MrSiharath,amatterofwhichMsMcMurtriewasunaware.Sheclaimedthat,hadsheknownpriortoherinjury,shewouldhaveapproachedMrR.J.differently.FollowingMsMcMurtrie’sexperience,aregisterednurse,MsWynne,alsocomplainedthatMrR.J.hadhitoutather.Therefore,thetrialjudgedecidedthattheQuadriplegicCentrewasnegligentbyreasonofitsfailuretonotifyMsMcMurtrieofMrR.J.’spriorviolentbehaviour,aforeseeableconsequenceofwhichwasthatshecouldbeharmed.TheQuadriplegicAssociationappealedthedecision.

ItwasarguedthatthetrialjudgehadlargelyignoredtheevidenceofMsMarshall,anothernurse’sassistant,whomaintainedthatMsMcMurtriewasstanding,notbendingover,atthetimeinquestion,anddidnotlurchbackwards.ThisargumentwasupheldbytheCourtofAppealasanerrorinlawbythetrialjudge.

Thesecondgroundofcontentioninvolvedwhether,infact,therehadbeenabreachoftheQuadriplegicAssociation’sdutyofcare.Astherespondent’semployer,theQuadriplegicAssociationowedheradutytotakereasonablecaretoavoidexposinghertounnecessaryriskofinjury.Theissueherewasthescopeofthatdutyofcare,specifically,whetheritincludedadutytowarnofthepriorincidentwithMrSiharath,andwhetherthedutyhadbeenbreached.Onceagain,theCourtofAppealfoundfortheQuadriplegicAssociation.JusticePullin,withwhomJusticeNewnesagreed,pointedoutnosuchdutyofcaretowarnwasowedtoMsMcMurtrieasshehadbeenspecificallyrequestednottolookafterMrR.J.and,therefore,wasnotamemberofthegroupassignedtolookafterhim.Intheeventthisreasoningwasflawed,thejudgespointedoutthattwominorinstancesofaggressionfromMrR.J.werenotsufficienttowarrantageneralwarningtoallnursingassistants.JusticeBussinaseparatejudgmenthighlightedthistoo,mentioningMrR.J’slimitedphysicalabilitytoinflictaninjury.Further,asheregardedbreachofdutyandcausationasinterlinked,hefounditimpossibletoacceptthetrialjudge’sconclusionthatthemereprovisionofawarningwouldhavealteredMsMcMurtrie’splight.

AllthejudgesfoundnomeritinthesuggestionthatthetrialjudgefailedtosupplyadequateunderlyingreasonsastowhyawarningshouldhavebeengivenandhislinkageofthisstateofaffairstotheQuadriplegicAssociation’sbreachofitsdutyofcare.

However,onthefourthgroundofobjection,namely,thetrialjudge’sfindingthatMsMcMurtrie’sinjurywasdirectlyattributabletothelackofawarning,themajorityoftheCourtofAppealdecidedthattherewasnoconnectionbetweenthebackinjuryandthesuggestedwarningasthedamagewasnotinflictedbyMrR.J.,butbyMsMcMurtrie’ssuddenmovementinresponsetomisreadinghisactions.Evenifadutyofcarecouldbeshowntoexist,failuretowarnofapossibleassaultwasnotcausaloftheinjury,giventhatitwasnotdirectlyassault-related.JusticeBussalsofoundthetrialjudgetohaveerredwithrespecttothematterofcausation.Hebelievedthatawarningwouldnothave

changedMsMcMurtrie’sactionswithrespecttoMrR.J.,astoturnhimnecessitatedherbending.Anyrelevantwarninggivenwouldhavehadtofocusontheforeseeableriskofassaultwhereastheinjurywasnotcausedinthismanner.ConsiderationofMsWynne’sevidencedidn’tmakeadifferencetothefinaldecision.

Therefore,theappealwasallowedandtheearlierjudgmentsetaside.

Thiscasemaybeviewedat:www.austlii.edu.au/au/cases/wa/WASCA/2009/173.html

2.5.3 ROOTY HILL RSL CLUB LTD V KARIMI [2009] NSWCA 2 (30 JANUARY 2009) FILE NUMBERS: 40623/07; 40626/07

Asaresultofbeingassaultedatapproximately11.30p.m.onSaturday,19April2003,byadrunkenMichaelSmithinthecarparkoftheRootyHillRSLClub(theClub),TariqueKarimi,amemberoftheClub,sustainedseriousinjuries.Aftertheassault,hewascomatosefortwomonths,beingleftwithsignificantbraindamageandnorecollectionofthenight’sevents.ThisassaultwasrelatedtoanearlierincidentintheClubthateveningatabout11.10p.m.,where,withnoprovocationonhispart,TariqueKarimi,wassetuponbythesameintoxicatedattacker.SecurityguardsemployedbytheAlliedSecurityGroup(Allied)dealtwiththepreviousattackbyevictingbothmen,regardlessoffault,inlinewiththeClub’spolicy.Despitestaggereddepartures,MichaelSmithdupedAlliedbyreturningtooneoftheClub’scarparkstofurtherassaultTariqueKarimiafterMrSmith’scarhadbeenobservedleavingtheotherone.

IntheNewSouthWalesSupremeCourt,acaseinnegligencewasmadeoutagainstboththeClubandAllied,andacaseoftrespasstothepersonwasmadeoutagainstMichaelSmith.TheClubandAlliedwereconsiderednegligentfornotimplementingmeasurestoensurethetroublemakershadactuallyleftthepremises.Further,theClubwasheldtobenegligentforfailingtooverseeAllied’sstrategiesforhandlingsuchasituation.NotprovidingTariqueKarimiwithanescortoralertinghimtothedangerofwalkingunaccompaniedtohisvehiclewasregardedasnegligentonAllied’spart.

BoththeClubandAllieddisputedthefindingsintheCourtofAppeal.Theyarguedthattheirdutyofcareprimarilyinvolvedgoings-onintheclubhouseanddidnotincludeliabilityfortheassaultinthecarpark.If,inthealternative,itdid,theyhadfulfilledtheirobligationsandtheirbehaviourwasnotcausativeofMrKarimi’sinjuries.TherewasnoactualorconstructiveknowledgeofMrSmith’slateractions.Further,theClubmaintainedthatsoleresponsibilityforpatronsecurityhadbeendelegatedtoAllied,astancethecourtofAppealrejected.

Nevertheless,JusticeBellinajudgmentsupportedbyhercolleagues,upheldtheClub’sandAllied’sgroundsofappeal.Shedeterminedthattheoriginaljudgmentwasarrivedatbyareconstructionofeventsonlypossibleinhindsight.Atthetimehewasaskedtoleave,MrSmithseemedcalm.Theoriginalincidentitselfdidnotrequirebackupsecurityassistance.MrKarimiwasonlypermittedtowalktohisvehicleafterMrSmithhaddrivenoff.Also,JusticeBelldoubtedwhetherthetrialjudge’ssuggestedmeasureofasecurityguard’saccompanyingMrKarimiwouldhavewardedoffthemindless,pre-meditatedattack.Therefore,shedeclinedtofindfailuretoemploysuchaprocedureasbeingcausalofMrKarimi’sinjuries.

Thiscasemaybeviewedat:www.austlii.edu.au/au/cases/nsw/NSWCA/2009/2.html

2.6 nonProfit structurE and GoVErnancE

2.6.1 GOULD V MOSMAN RETURNED SERVICEMEN’S CLUB LTD [2009] FCA 1592 (FEDERAL COURT OF AUSTRALIA, LINDGREN J, 15 DECEMBER 2009)

Thislitigationbeganon3June2009,andencompassedseveralhearings.Gouldsoughtreliefagainstthedefendant,MossmanReturnedServicemen’sClubLimited(theclub)fornumerousfailuresbytheexistingboardoftheclub.BothGouldandtheclubwereunrepresented.Theclubhadoriginallybeenrepresentedbyafirmofsolicitors,buthadletthisrepresentationlapsebecauseoflegalcosts.Theclubstatedthatitwouldsubmittoanyorderofthecourt,exceptastocosts.

Gouldallegedthattheboardhadengagedinvariousformsofimproperconductincluding:

• intimidationofclubmemberswhoagreedwithGould;

• entrenchingthemselvesasboardmembersthroughanalteredconstitution;

• thedeliberaterunningdownofthebusinessoftheclubsothatthelandcouldbedevelopedasshops;

• aconflictofinterestattachedtothisplanbyoneboardmemberwhoisalsoalocalcouncillor;

• failuretoallowmemberstovoteonresolutionsproposedbymembers,and

• alsomadeallegationsaboutfinancialirregularities.

Gouldoriginallysoughtanordertooverturnhissuspensionasamemberoftheclub,andinthecourseoftheproceedingstheclubagreedtoreinstatehimtomembership.ThisallowedGouldtoattendtheclub’sannualgeneralmeetingon31May2009.GouldthenamendedhisoriginatingprocesstoquestionthevalidityoftheAnnualGeneralMeeting.Atthismeeting,therehadbeenanattempttoremovethedirectors,whichfailedbecauseofaproceduralshortfallinthedaysnecessaryforsuchamotiontobepresented.Gouldthenattackedthevalidityoftheconstitutionwhichprovidedfortheprocedurewhichhadcausedthemotiontofail.Heallegedthattheconstitutionhadbeenadoptedbytheboardtoserveitsownpurposes.

Althoughtheclubisacompanylimitedbyguarantee,JusticeLindgrenpointedoutthatthesewereinternalmattersforresolutionbytheclub,ratherthanmattersforthecourtorforresolutionbyreferencetotheCorporations Act 2001(Cth).ThelatterreferencewastoGould’sattempttogather100signaturesundersection249DoftheCorporations Act,whichallowsforarequisitionofageneralmeetinguponpresentationtotheboardofthesignaturesof100memberswhoareentitledtovoteatageneralmeeting.Goulddidobtainmorethan100signaturesforhisrequisition,butagainfailedinhavingtheresolutionsacceptedbytheboardfortechnicalreasons.

Gould’sfinalapplicationwasforanorderremovingcertainnameddirectorsfromoffice,andfornewelectionstobeheld.JusticeLindgrenpointedoutthatthecourtdoesnothavethegeneralpowertoremovedirectorsortoappointdirectors.Gouldthenappliedforafurtheradjournmentuntil2010inordertoinvestigateanallegedconflictofinterestinvolvingtheboardandthelocalMosmanCouncil.

JusticeLindgrenpointedoutthathehadgivenseveraladjournmentstoallowGouldtoconsiderandactuponguidancegiventohimbythecourt,butstatedattheprevioushearingon13November2009thatthemattercouldnotbeallowedtocontinueindefinitely,andthatthishearingon15December2009mustbetheconclusionofthematter.HisHonoursaid:

‘IhavenodoubtthatMrGouldgenuinelyholdstheviewsthattheClubismismanaged,anditmaybethatthereissubstancetohissenseofgrievance.Itmaybethat,ifhehadbeenlegallyrepresentedandcouldarticulateandsupporthiscomplaintsinproperform,thecourseofeventswouldhavebeendifferent…MrGouldhashadampleopportunity,inthelightofthenumerousadjournmentsthathavebeengrantedathisrequest,todemonstrateajusticiablecase,but,hehasnotdoneso...WhileIhavehadsympathywithMrGouldinviewofhisundoubtedsincerity,Iwillnotallowtheproceedingtobeadjournedagainincircumstancesinwhichthepastrecordclearlysuggeststhateventswillnotimprovewithtime.’

Theproceedingwasdismissed.Therewasnoorderastocosts.

Thecasemaybefoundat:www.austlii.edu.au/au/cases/cth/FCA/2009/1592.html

ThiscaseinvolvedaselfrepresentedlitigantwhowasaggrievedbytheallegedactionsoftheboardoftheRSLClubbutlackedsufficientunderstandingofthelegalprocesstobeabletoarticulatehiscase.Thecourthadnoalternativebuttodismisshisproceedings.Whilstmanyfearseekinglegaladviceandengaginglegalrepresentationduetothecost,thiscasedemonstratesthatthecourtcanonlyassisttoacertainextent.Thecasealsoillustratesthatthecourtswillnotreadilyinterveneininternalmattersofanorganisation.

2.6.2 ANDREWS V QUEENSLAND RACING LTD [2009] QSC 338 (23 OCTOBER 2009) FILE NO: 9471/09

QueenslandRacingLtd,acompanylimitedbyguarantee,overseesthethoroughbredracingindustryinQueenslandasdirectedbytheRacing Act 2002 (Qld)(theAct).UnderitsConstitutiondatingfrom26April2006,therearetwoclassesofmembers:ClassAmadeupofracingclubs;andClassB,theDirectorsofthecompanyfromtimetotime.Accordingtoclause15oftheConstitution,theDirectorsaretoretireonarotationalbasis.Oneofthese,WilliamAndrews,alongwithanotherDirector,MrLambert,wasduetostepdownon17November2009atthefirstAnnualGeneralMeeting(theAGM)aftertheirinitialthreeyeartermsconclude.However,MrAndrewscomplainedtotheSupremeCourtofQueenslandofirregularitiesintheselectionprocessforhisandMrLambert’ssuccessorsanddemandedcompliancewiththeselectionrequirementsundertheConstitution.

Clause17oftheConstitutionprovidesastep-by-stepapproachtochoosingDirectors,culminatingintheirappointment,inthiscasetakingeffectattheendoftheAGMinNovember2009.Inaddition,AppendixAoftheConstitutionsetsoutfivepossibleselectioncriteriaforsuchpositions,satisfactionofatleasttwoofwhichismandatory.AnyprospectivecandidatemustalsocomplywithSection9oftheActwhichprescribesqualitiesforaneligibleindividual,includingnotbeingbankruptorinvolvedinracingmanagement.

Tofacilitatetheprocess,anindependentrecruitmentspecialist,MrMarkWilsonofNorthernRecruitment,waschosenbytheBoardon6March2009.Whenapplicationsforthepositionsclosedon29May2009,twentysixparties,includingMrAndrews,hadregisteredtheirinterest.MrAndrewsfailedtomaketheshortlistforselection.

MrAndrews’sobjectionsrelatedmainlytothewayMrWilsoncompiledtheshortlistofonlyfourpeople.Whenapplicationsclosed,thetwoultimatelysuccessfulDirectorschosenfromtheshortlist,MrMilnerandMrStewart,wereChairmenoftheBrisbaneandToowoombaTurfClubs,respectively.Bothsubsequentlyresignedfromtheirpositions,theformeron17June2009,andthelatteron25July2009.MrAndrewscontendedthatholdingthesepositionswhenapplicationsclosedforDirectors’positionsmeanttheywerenoteligiblepersonsundertheAct.Onthispoint,JusticeWilsondecidedthat,providedtheresignationswereeffectedbeforethedaytheSelectionCommitteeconvened14September2009),theywereeligiblepersons.

Uponconsiderationoftheshortlist,HerHonouragreedwithMrAndrewsthatMrWilsonhadbeeninstructedtoputforwardonlyfournamesratherthanregardingfourastheminimumnumber.Nevertheless,therewasnoevidenceofhisbeinginfluencedbyMrBentley,theChairmanofQueenslandRacingLtd,indeterminingthefinalfouralthoughconversationsbetweenthetwonaturallycanvassedtheBoard’srequirements,suchasmemberswithfinancialacumenandracingexpertise.Notonlywashisindependencenotindoubt,butJusticeWilsonalsomaintainedtherewasnoevidencetosupportMrAndrews’sclaimofpartialityinMrWilson’sbehaviour.Inherview,questionsputtoanapplicant,MrMcGruther,concerninghisschoolingandreligiouspersuasiondidnotreflectpartialityinMrWilson’sapproach.Further,HerHonourfoundthattherewasnothingimproperintheshortlistingofMrMilnerandMrStewart,asboththecriteriaforselectioninAppendixAoftheConstitutionandforeligibilityinsection9oftheActhadbeenmet.

Despitethesefindings,shewasnotwillingtosanctionQueenslandRacingLtd’sattempttotrivializetheirregularityintheselectionprocessasamereproceduraldeviationfromtheConstitutionbymakinganorderundersection1322(4)oftheCorporations Act 2001 (Cth).InJusticeWilson’sopinion,MrAndrewswasentitledtohavetheDirectorsselectedinthemannersetdownbytheConstitution.Whathadoccurredreflectedseriouslyonthecompany’sgovernance.MrAndrews,aswellasotherpotentialshortlistedapplicants,hadsufferedconsiderableinjusticeinbeingdeniedtherighttohavetheshortlistpreparedinlinewithclause17oftheConstitution.

Therefore,JusticeWilsongrantedaninjunctionpreventingtheChairmanofQueenslandRacingLtdfromdeclaringMrMilnerandMrStewartthedulyelectedDirectorsfromtheshortlistatthescheduledAGMon17November2009.Anotherinjunctionwasissuedstipulatingthattheoriginaltwentysixapplicantsbereconsideredforthepositionsinstrictcompliancewiththeproceduresoutlinedinclause17oftheConstitution.

Thiscasemaybeviewedat:www.austlii.edu.au/au/cases/qld/QSC/2009/338.html

Thecaseclearlyillustratesthatinallareasofboardmanagementattentiontodetailisrequired.InthisinstancetheConstitutionhaddetailedprovisionsinrespectoftheselectionprocessandcriteriafortheshortlistofprospectiveboardmemberswhichreinforcedStatelegislativerequirementsbuttheboardfailedtofollowtherequirementsofitsownconstitution.Theboarddelegatedtheprocesstoaprivateconsultantwithoutcriticallyassessingthatconsultant’srecommendations.

2.6.3 DYKYJ V LOGAN AND DISTRICT SERVICES CLUB INC [2009] QSC 108 (SUPREME COURT OF QUEENSLAND, DE JERSEY CJ – 11 MAY 2009)

TheLoganandDistrictServicesClubisanincorporatedassociationpursuanttotheAssociations Incorporation Act 1981(Qld).AtitsAGMon5November2008theClubsoughttorepealandreplacetheexistingconstitution.Pursuanttoclause27oftheexistingconstitutionaspecialresolutionwasrequiredfortheconstitutiontobeamended.Pursuanttosection3(4)oftheAssociations Incorporation Actaspecialresolutionmustbepassedbyathree-quartersmajority.

Theapplicant,MrDykyj,opposedthemovetorepealandreplacetheexistingconstitution.Hegathered56proxiesfrommembers,whichheintendedtoexercisebyvotingagainstthemotion.PriortotheAGM,the56memberswhowereseekingaproxyvotecollectedtheirproxyformsinpersonfromtheClub.MrDykyjwasgiventhedulycompletedproxiesbythosemembersandsoughttolodgethem.TheywererejectedbyanemployeeoftheClubonthebasisthattheywouldonlybevalidiflodgedpersonallybythememberseekingtoallocateaproxyvote.

Themotiontorepealandreplacetheconstitutionwaspassed123to32.HadMrDykyjbeenabletoexercisethe56proxyvotesthemotionwouldhavebeendefeatedastherewouldnothavebeenathree-quartersmajority.

Thereweretwoissuesplacedbeforethecourt,firstlythevalidityoftherejectionoftheproxyvotesandsecondlythesufficiencyofthenoticeofthemeeting.

Proxy votes

InrespectofthevalidityoftheproxyvotestheChiefJusticeconsideredthetermsofclause25.2oftheconstitutionexistingpriortotheAGMwhichprovided:

‘Aproxywillbevalidif:

(a)TheMembercompletesandlodgestheproxyintheformapprovedbytheBoardwiththeSecretarynotlaterthan24hoursbeforethetimefortheholdingofthegeneralmeeting...’.

HisHonourdeterminedthatamember’srighttocastavotebyproxyisestablishedatthetimeoftheissueoftheproxyformtothememberinpersonanditwouldseemunreasonabletothenrequirethemembertovisittheclubagaininpersontolodgetheform.HisHonourheld

‘...intheabsenceofanexpressrequirementforlodgementbythememberinpersonthepossibilityoflodgementbyanagenthasnotbeenexcluded.’

Furtherclause25.3oftheconstitutionprovided‘anyissueofvalidityofaproxywillbedeterminedbytheChairpersonofthemeetingactingontheadviceoftheReturningOfficer’.TherewasnorulingbytheChairpersononthevalidityoftheproxiesandtherewasnoevidencethatthestaffmemberwhorejectedtheproxieswasactingwiththeauthorityoftheboardorthattheboardmadeanyrulingastothevalidityoftheproxieshavingbeendeliveredbythemembersthroughtheiragent.HisHonourconcludedthattheproxieswerewronglyrejected.

Notice of the meeting

WithrespecttothequestionofthesufficiencyofnoticeofthemeetingHisHonourconsideredsection3(2)oftheAssociations Incorporation Actandexaminedthenoticerequirementsforaspecialresolution:thatis,theneedtogivepriorwrittennoticeofthedate,timeandplaceofthegeneralmeetingatwhichthespecialresolutionistobeproposed,togetherwiththetermsoftheproposedspecialresolution,toeachmemberoftheassociation.Thenoticegiveninthiscasestatedthattheexistingconstitutionwastobereplacedinthetermsproposed,withoutgivinganydetailofthetermsproposed.

ThereforeHisHonourdeterminedthatthenoticedidnotcomplywiththeAct.

TherespondentClubthenaskedforaremedialorderundersection133(3)oftheActonthebasisinter aliaoftherebeingnoevidenceofanydetrimentorinjusticehavingoccurredtoanymemberthroughtheadoptionofthenewconstitution.

HisHonourdisagreedwiththisassertionandfoundthattherewasa‘substantialinjustice’sufferedbythosedeniedtheirvotebytherejectionoftheproxiesandthosedeniedadequateinformationabouttheproposalbecauseoftheuninformativenoticeofthemeeting.Accordinglytheprovisionsofsection133oftheActcouldnotremedytheinvalidactions.Itwasheldthatthespecialresolutionwasinvalid.CostswereorderedagainsttheClub.

Thiscasemaybeviewedat:www.sclqld.org.au/qjudgment/2009/QSC/108

Sections71to73oftheAssociations Incorporations Act 1981(Qld)providefortheinterventionoftheSupremeCourt.Thegeneralpolicyofthelawisnottointerfereintheinternaldecisionsofanincorporatedassociation.However,section133oftheActgivesthecourtremedialpowerifitissatisfiednosubstantialinjusticehasormaybecausedbythecourtvalidatingtheactionsoftheassociationoramemberoftheassociation.Thiscaseshowsthatthecourtispreparedtointerfereininternaldecisionsincircumstanceswheremembersaredeniedtherighttovoteandtherighttoknowwhattheyarevotingon.

2.6.4 ISLAMIC COUNCIL OF SOUTH AUSTRALIA INC & ORS V AUSTRALIAN FEDERATION OF ISLAMIC COUNCILS INC [2009] NSWSC 211 (SUPREME COURT OF NEW SOUTH WALES, 16 FEBRUARY 2009)

TheplaintiffsinthiscaseareIslamiccouncilsinthestatesofSouthAustralia(ICSA),Queensland(ICQ)andNewSouthWales(MCNSW).Thedefendant,TheAustralianFederationofIslamicCouncilsInc(AFIC)isanumbrellabodyofIslamicassociationsinAustralia,constitutedasafederationofnineIslamicsocieties.AFICoperatesanumberofIslamiceducationalinstitutionsandhasassetsof$25million.

ThedisputeinthiscasecentredonthestatusoftheICQandMCNSW,andtheirabilitytoparticipateintheaffairsofAFIC.AFICcontendedthattheICQhadbeensuspendedfrommembershipofAFIC,andtherehadbeenpreviousproceedingsbetweenAFICandMCNSWastoitsmembershipofAFIC,whichwasineffectsuspended.Inaddition,AFIChadrefusedtocallaFederalCouncilMeetingfollowingrequestsfromtheplaintiffsandotherstodoso,sothatthemembershipissuescouldberesolved.

AFIC’saffairsaregovernedbythreebodies:

• theFederalCongresswhichiscomprisedofmembersoftheExecutiveCommitteeandtwodelegatesfromeachstatecouncil.ThepowersoftheCongressincludeto‘adjudicateinallmattersofcontroversy’betweentheFederalCouncil,theExecutiveCommitteeandstatecouncils;

• theFederalCouncilwhichcomprisesfourmembersoftheExecutiveCommitteeandthePresidentorChairmanofeachstatecouncil.ThepowersoftheCouncilinclude‘todeterminethetime,placeandagendaofthemeetingsoftheFederalCongress’andtoactfortheCongressbetweenitsmeetings;

• theExecutiveCommitteewhichisresponsibleforthedaytodayrunningofAFICandissubjecttothe‘controlandscrutinyofboththeFederalCongressandFederalCouncil’.

TheconveningofmeetingsoftheFederalCouncilisgovernedbyclauses40to42ofitsconstitution.Inparticular,theseclausesstatethat:

• 41.SubjecttothisConstitution,aCouncilmeetingshallbecalledbytheSecretaryoftheFederationasdirectedbytheFederalExecutiveCommitteeoruponwrittenrequestsfromfour(4)ormoreStateCouncils.

• 42.NoticeofFederalCounciltogetherwithitsAgendashallbegivenbytheSecretaryoftheFederationtothemembersoftheCouncilatleast(4)weekspriortothedateofsuchmeeting.

Requestsforameetingwerereceivedfromsixstatecouncils(WesternAustralia,MCNSW,Victoria,ICSA,theNorthernTerritory,andICQ)between3November2008and18December2008.However,nomeetingwasconvenedandnoreasonwasgivenforrefusal.

Theissuesbeforethecourtwere:

• Whetherupontheproperconstructionoftheconstitutionandintheeventswhichhadhappened,therehadbeenvalidlywrittenrequestsfromfourormoreStateCouncilsforthecallingofameetingoftheFederalCouncil.This,inturn,involvedanumberofsubsidiaryissuesrelatingtotheallegedrequestsmadebysomeoftheStateCouncils;

• Ifso,whetherAFIC’sfailuretoconvenesuchameetingwasjusticiable;and

• Ifso,whetherreliefshouldnonethelessbedeclinedasamatterofdiscretion.

TherequestsforameetingfromSouthAustraliaandtheNorthernTerritorywereuncontroversial.Theotherrequestswereindispute.JusticeBreretonconsideredthattherequestfromNSWwasvalid,despitetherebeingsomedisputeastothestandingoftheMCNSWtomakesucharequestbecauseofexistingmembershipissues.Alltheserequestswerebyletter.

TherequestfromVictoriawasinanemail.Wasthisawrittenrequestwithinclause41oftheconstitution?BreretonJfoundthatitwas:

‘Thepurposeofrequiringthatnoticesandthelikebeinwritingisusuallyatleasttwofold.Oneistoensurethatthereisaformalact,sothatdoubtdoesnotattendtheintentofthepartygivingthenotice.Asecondisoftentoavoidlaterdisputationbyensuringthatthereisapermanentrecordofthenotice.Thatsaid,theconceptof‘writing’isconcernedwiththeforminwhichwordsareused,andnotthesurfaceonwhichtheyarewritten.Thefundamentaldistinctionisbetween

thewrittenwordandthespokenword.While‘writing’oftencontemplateswritingonpaper,itisnonethelesswritingandnotspeech,ifwrittenininvisibleink.Itisnonethelesswriting,ifwrittenintheskybyanaircraftengaginginskywriting.Tomymind,itisnonethelesswriting,ifitappearsonacomputerscreen,asaresultoftheentryofdataintoacomputer.’

Therefore,theVictorianrequestwasinwriting.Thenextissuewasastowhetherthisrequestwas‘signed’.Clause41didnotexplicitlyrequireasignature,thoughotherclausesintheconstitutiondid.HisHonoursaidthat‘inanyevent,atypedname(asdistinctfromaholograph)canbeasignature,andhasbeenheldtobesoinmanycasesrelatingtotheStatuteofFrauds’.

ThefinalissuerelatingtotheVictorianemailwaswhetherinfactitwasa‘request’forameeting.HisHonourheldthatitwasnot,butrather,byitswording,anexpressionofawishorhopeforsuchameeting.Therefore,theVictorianemailwasnotavalidrequestforameetingunderclause41.

TherequestfromWesternAustraliahadpurportedlybeenwithdrawnon15December2008.Wasthisavalidrequest?HisHonourfoundthatitwas,andthismeantthatasat25November2008,AFICwasinreceiptoffourvalidrequestsforameetingfromWesternAustralia,SouthAustralia,NewSouthWalesandtheNorthernTerritory.Thepurportedwithdrawalon15DecemberdidnotaffectthebindingobligationofAFICtoholdthemeetingthatcrystallisedon25November2008.

AstotherequestfromICQ,JusticeBreretonheldthatiswasalsovalid,sothatevenifoneoftheotherrequestswasnotvalid,therewerestillfourrequestsinoperation.ThiswasdespitethepurportedsuspensionoftheQueenslandcouncilfrommembershipofAFIC.HisHonourfoundthattherewasnopowertosuspendmembershipinthisway.Therefore,therewereatleastfourvalidrequestsforameetingwithintheconstitution.

Was the failure to convene the meeting justiciable?

Courtsdonotgenerallyinterveneintheinternalaffairsofvoluntaryassociations,whetherunincorporatedorincorporated(seeCameron v Hogan[1934]HCA24).Foracourttointervenetheremustbesomeinterferencewithpropertyrightsorinterests,somebreachofcontract,orsomethreattolivelihoodorreputationinvolved.Thiscasewasnotoneofinterferencewithmembers’propertyrightsorinterests,norwasitoneofthreattolivelihoodorreputation.Thequestionwaswhethertherewasanyrightincontract.

AFICisincorporatedasanassociationinTasmania.Inthatstate,theAssociations Incorporation Act 1964doesnotimportcontractualrelationsintotherelationshipbetweenmembersandanassociation,ashappensinmostotherstates.Thequestionthenbecomesoneofconstructionoftheconstitution.Wasitintendedtocreatecontractualrelationsbetweenmembersandtheassociation?InCameron v Hogan, theHighCourtdidnotfindanysuchcontract,butallowedthattherecouldbeenforceablelegalrelationscreatedinanassociation’sconstitutioniftherewasaclearenoughintent.ThecaselawsinceCameron v Hoganhasbeenmoreinclinedtofindevidenceofcontractualintentinassociationconstitutions,butthisisbynomeansacertainty(seePlenty v Seventh Day Adventist Church of Port Pirie [2009]SASC10.

HisHonourcouldnotfindanyrealcontractualintentintheconstitutionofAFIC,particularlybecauseofitsmainlyreligiouscharacterandtheprovisionofinternaldisputeresolutionmechanisms.However,AFIChadpreviouslybeeninvolvedinanamountoflitigationinwhichithadneverclaimedtobeimmunefromthecourts’rulings.BreretonJheldthat

itwas‘justtoolateforittodosonow’.Therefore,byconduct,therewasanintentthattheConstitutioncreatedalegallybindingandenforceablecontractbetweenAFICanditsmemberinstitutions.Thatbeingso,thematterbeforethecourtwasjusticiable.

Was relief available to the plaintiffs?

Thiswasamatterofdiscretionforthecourt.AFICarguedthatthereshouldbenoreliefbecauseoftheinternalnatureofthedispute.HisHonourwasunpersuadedandreliefwasnottobedeclinedondiscretionarygrounds.Therefore,thecourtorderedthattheFederalCouncilshouldconveneameeetingby17February2009.

2.6.5 LAI V TIAO (NO 2) [2009] WASC 22 (12 FEBRUARY 2009) FILE NO: CIV 1442 OF 2005

ThiscaseinvolvesadisputeconcerningmainlyTaiwanesemigrantswhoinitiallyworshippedatatempleatthehomeofHoMingWang,areputedmasterofI-KuanTao.Arecentreligiousdevelopment,I-KuanTaodrawsonConfucianism,TaoismandChineseBuddhism.

IncreasinginterestinthereligionnecessitatedalargertempleandamenitiesandtheprovisionofthesewasoneofthereasonswhysixoftheoriginalgroupestablishedtheAustralianChineseConfucius-MenciusTaoCentreIncorporated(theAssociation)on22December1992,toraisefunds.Afterincorporation,thesesixassumedamanagerialrole,ineffect,formingaboardofdirectors.MasterWangbecamethechairman,whilstShengChinLai(Lai)tookonthevice-chairman’sposition.AsathirdsignatorywasrequiredtooperatetheCentre’saccounts,ChengChihTiao(Tiao)waschosenforthispurpose.TiaosubsequentlyactedastheAssociation’srepresentativeforbothtempleconstructioncontractswhichhesignedundersealin1995.AfterthetemplewascompletedinMarch1996,MasterWangvirtuallyresidedthereuntilhediedinDecember2001.

DiscordlaterdevelopedbetweenLaiandTiao,particularlywithrespecttowhoweretheactualmembersoftheAssociation.TherewasalsodissensionaboutwhetherMrConalO’Toole,theAssociation’ssolicitor,hadbeenvalidlyappointedandwhetherTiaohadauthoritytoenterintoacontractwithLevelHoldingson11May2004,forthesubdivisionandsaleoflandheldbytheAssociationat42WartonRoad,CanningVale,inWesternAustralia.Unlikethepreviousconstructioncontracts,noAssociationsealwasinevidenceandtheaddressgivenwasTiao’sprivateone.Underthecontract,thedesignatedlandwastobesubdividedintotenlotsbyLevelHoldingswhowouldretainfiveaspaymentforthesubdivision.TheremainderweretheAssociation’stobesoldasnecessarytofunditsactivitiesbecauseofthedirestateoftheAssociation’sfinances.NoresolutiontothiseffectwaseverplacedbeforetheAssociation’smembersalthoughtwooftheoriginalsix,SongTyanKuoandHuiPingWang,allegedlyauthorisedTiaotoactfortheAssociationinthismatterataboardmeeting.

AsLaiandtheremainingmemberoftheoriginalsix,YungSenChou,wereunawareoftheAssociation’sneedforfundsandtheproposedlandsale,LailodgedacaveatovertheAssociation’slandon6January2005.Inaddition,hesoughtdetailsofthecontractandtherelevantAssociationminutes.Bywayofresponse,on26February2005,TiaoandHuiPingWangheldameetingoftheAssociation’smemberswhoretrospectivelygaveablanketratificationtomyriaddealingscarriedoutbyanyoneactingorpurportingtobeactingonbehalfoftheAssociationsinceitsinceptionin1992.Lai,on13April2005,requestedthatTiaocallanothermeetingofAssociationmembers.Uponhisrefusal,Laigavenoticeofamembers’meetingon25May2005.However,aninjunctiontopreserve

thestatus quo wassubsequentlygranted.On19April2005,Laisoughtandfinallyobtainedaninjunctiontopreventthesaleandfurthersubdivisionofthelandunderthecontractuntil5p.m.on13June2005.Bythen,thesubdivisionwas90%completed.AnextensionoftheinjunctionwasgrantedinJune.

ThetaskofunravellingthetruthcamebeforeJusticeJohnsonoftheWesternAustralianSupremeCourt.First,HerHonourdeterminedthattheactualfoundationmembersoftheAssociationwerethesixoriginalmemberswhowereinvolvedinitsincorporation.SheagreedwithLaithattheAssociation’sordinarymemberswerethosewhosenamesappearedontheListofContributorstakenfromthemarbleplaquecommemoratingthebuildingofthetemple.

HerfocusshiftednexttowhetherTiao’sentryintothecontractwithLevelHoldingswasauthorisedattheoutsetatboardlevelorratifiedretrospectivelybytheAssociation’smembers.ShecommentedthattheAssociationwasmanagedinanad hoc fashion.Therewerenomeetingsofanykindheldbetween1992and2005andnoregisterofmembersexistedduringthatperiod.TheAssociationblameditslackofcompliancewithitsstatutoryobligationsonthefactthatitsmemberswereunabletocomprehendtheincorporationdocumentationwhichwasinEnglish.AsHerHonourpointedout,aChinesetranslationoftherelevantmaterialwouldhavesolvedtheproblem.

Ontheevidence,itseemedapparentthatLaihadcontributedthemoneytopurchasethelandinquestion.AlthoughhehadtakenlittleactivepartinthemanagementoftheAssociationsinceadisagreementrelatingtofinanceson8April1996,JusticeJohnsonstatedthatcommoncourtesyrequiredthatLaibeinformedaboutthesubdivision.Lai’sconcernabouttheAssociation’sfinancialmismanagementwassharedbytheDepartmentofConsumerandEmploymentProtectionwhichstressedtheneedforthecleardelineationofTiao’sandtheAssociation’sfundsaswellasthenecessityforanauditofitsfinances.Tiao’sfailuretoaffixtheAssociationseal,theirregularuseofhisprivateaddressandtheautocratic,haphazardwayinwhichtheAssociation’saffairsweregenerallyconducted,convincedJusticeJohnsonthatnomemberoftheboardhadauthorisedthesigningoftheLevelHoldingscontract.ShewouldnotgivecredencetoTiao’sbeliefthattheagreementofamajorityoftheboardconstitutedvalidauthorization.Similarly,HerHonourfailedtofindanysuggestionofconsultationwiththeAssociation’smembers.

Concerningthemembers’meetingon26February2005,itwasfoundtobeinvalidlyconvenedastherehadbeennopriorboarddecisionnorarequestfromtwentymembers,therequirementslaiddownunderclause11.2.1oftheAssociation’sConstitution.Accordingtoclause11.2.3ofthisConstitution,noticeofageneralmeetingmustbeprovidedtoordinarymembersatleastfourteendaysbeforeitoccurs,animpossibletaskintheabsenceofanyrecordsofmembership,exacerbatedbywhatJusticeJohnsonfoundwasabroadermembershipthanthatrecognisedbyTiao.Aswell,insufficientinformationwaspresentedabouttheLevelHoldingscontractformemberstomakeaninformeddecision.Therefore,retrospectiveratificationofTiao’sactionswasnotpossible.Because oftheirregularitiesintheAssociation’soperation,HerHonouralsofoundthatitssolicitor,ConalO’Toole,wasnotvalidlyappointed.WithrespecttothemeetingcalledbyLaion25May2005,HerHonourdecidedthat,aslongasthetwentyfoursignatoriestothedraftnoticeofmeetingwereeitherfoundationororiginalmembers,itwasavalidrequestwithwhichTiaohadfailedtocomply.

Thewayforwardfromthejudge’sperspectivewastoholdsuchageneralmeetingatwhichanewboardofdirectorscouldbeappointed.Technically,thisshouldhavehappenedatthefirstannualgeneralmeeting,hadoneeverbeenconvened.Once

theboardofdirectorswasinplace,memberswhosatisfiedthecriterialaiddowninclause6.2oftheConstitutionshouldbeadmitted.AfteranyappropriatechangeshadbeenmadetotheConstitution,theboardshouldthoroughlyexaminetheAssociation’sfinancialaffairsbeforetheissueoftheAssociation’ssolvencywasraisedfordiscussionwiththemembers.

Thiscasemaybeviewedat:www.austlii.edu.au/au/cases/wa/WASC/2009/22.html

Thiscaseisimportantnotonlyasanobjectlessoninwhatcanhappenwhenboardsdon’tinformthemselvesabouttheirobligationsandabidebythem.Thejudgefoundthat,fromtheoutset,thechairmanoftheboardhadadominantrole,notwithstandingthataboardissupposedtomanagebyconsensusorbymajoritydecision–andallboardmembersareresponsiblefordecisions.Boardmembershavestatutoryobligationsaswellasobligationsundertheirorganisation’srulestoholdmeetings,keeprecordsandmakedocumentsavailable.Inaddition,therelevantActinthiscasemakesitanoffenceforboardmembersnottoensuretheassociationcomplieswithitsstatutoryobligations.

Nodoubtthelackofpropermeetings,lackofadministrativeandfinancialrecords,dominatingroleofthechair,andtheothermembers’ignoranceoftheirobligationscontributedtotheinternaldisputesandthepossiblecollapseoftheorganisation.

2.6.6 SZENCORP PTY LTD V CLEAN ENERGY COUNCIL LIMITED [2009] FCA 40 (2 FEBRUARY 2009) VID 534 OF 2008

TheCleanEnergyCouncilLimited(theCouncil)isanonprofit,publiccompanylimitedbyguarantee.FormedinAugust2007,bythemergeroftwokeysustainableenergyorganisations,theAustralianWindEnergyAssociation(AusWind)andtheAustralianBusinessCouncilforSustainableEnergyInc(BCSE),theCouncilisdesignedtobeaunifiedpeakbodyforthesustainableenergyindustry.Membershipreflectsbothsupplyanddemandenergytechnologies.Whilsttheformerfocusesontheproductionofsustainableenergy,thelatterconcentratesonecologicallysoundenergyreductionforcommercialanddomesticpurposes.AMemorandumofUnderstandingoutlinedtheresponsibilitiesofthenewlyestablishedcompanywhilstitsConstitutionaddressedmatterssuchasmembershipcriteria.

SzencorpPtyLtdisamemberoftheCouncil.FromhisstandpointasDeputyChairoftheCouncil,MrPeterSzental,adirectorofSzencorpPtyLtd,approachedtheFederalCourtforassistancewithrespecttoanumberofperceivedgrievancesinvolvingtheCouncil’simplementationoftheMemorandumofUnderstanding.HearguedthattheconductoftheCouncil’saffairscontravenedsection232oftheCorporations Act 2001 (Cth)(theAct)sinceitwas,‘Contrarytotheinterestsofthemembersasawholeoroppressiveto,unfairlyprejudicialto,orunfairlydiscriminatoryagainstmembersoftheCouncil.’Inparticular,hecontendedthatthesupplymembersoftheindustryhadbeenadvantagedattheexpenseofthoseinvolvedinthedemandside.Aremedyfromtheordersavailableundersection233oftheActwassought.

AlthoughJusticeGoldbergdidnotdirectlyaddressallthecomplaintsraisedbyMrSzental,hethoroughlyinvestigatedtheallegationssurroundingthefinancialmanagementoftheCouncilintheperiodfollowingthemerger.ItemergedthatMrRichardMcIndoe,theCouncil’sChair,hadrequestedanindependentaccountingreportbyStonesManagementServicesintotheCouncil’sfinancialaffairsinJanuary2008.

However,noinformationwasreleasedtoanyboardmemberotherthantheChairmanoftheFinanceandCompliancesub-committeeuntilasupplementaryreportwasproducedinMay2008.ConcernedabouttheCouncil’ssolvencyandtheapparentlackoftransparencyinitsdealings,MrSzentalwrotetohisfellowdirectorson17JunerequestingdiscussionofthesemattersattheJune2008,meetingaswellastheappointmentofaninsolvencyexperttoinvestigatetheCouncil’struefinancialposition.

WhentheCouncil’sBoardofDirectors’meetingtookplaceon20June2008,notonlyweretheissuesnotdiscussed,but10ofthe13directorsdemandedMrSzental’sresignationastheynolongerhadfaithinhisjudgment.MrSzentalpennedanotherletterseekingaspecialmeetingoftheBoardtoconsiderhisconcerns.ThedirectorsoftheCouncildulymeton27JunebutMrSzentalwasexcludedfromthemeeting.Asaresult,thematterwasfiledintheFederalCourton11July2008.AnauditoftheCouncilbyErnst&Youngwascommissionedthesameday.LaterinJulyMrSzentalwassuppliedwiththerequestedfinancialdetails.

TheCouncilmaintainedthatSzencorpPtyLtd’sFederalCourtactionwasanabuseofprocess,anopinionnotsharedbyJusticeGoldberg,whovieweditasanattempttoensuregoodgovernance.However,hefoundnoevidencethatthesupplymembersoftheCouncilweregivenpreferentialtreatmentovertheirdemandcolleaguestothedetrimentoftheinterestsofthemembersasawhole.Withrespecttotheclaimofoppression,HisHonourstatedthatanessentialelementtobeprovenwasthatofcommercialunfairness.HeacceptedtherewassubstancetoMrSzental’sclaims,but,bythetimethesecamebeforetheCourt,manyofthematterscomplainedofhadbeenaddressed.Ofitself,theabsenceattrialofdemonstrablecommercialunfairnessdidn’tautomaticallymeanthatreliefundersection233couldnotbegranted,providedsuchcommercialunfairnessexistedatthetimetheoriginallegalactionwastaken.However,inthiscase,JusticeGoldbergsuggestedthat,notonlywasMrSzental’sdemandforanindependentaccountingassessmentimpracticable,butalsothatsucharequestdidnotfitwithinthemeaningofthesectionreliedon.Section233(j)statedthattheCourtcanmakeanorder,‘Requiringapersontodoaspecifiedact.’Forthesereasons,SzencorpPtyLtdfailedinitslitigation.

2.7 taxation

2.7.1 COMMISSIONER OF TAxATION V AID/WATCH INCORPORATED [2009] FCAFC 128 (FEDERAL COURT OF AUSTRALIA, FULL COURT, KENNY, STONE AND PERRAM JJ, 23 SEPTEMBER 2009)

AID/WATCHisanincorporatedassociationwhichresearches,monitorsandcampaignsaboutthedeliveryofoverseasaid.ItisanorganisationconcernedwithpromotingtheeffectivenessofAustralianandmultinationalaidincludinginvestmentprograms,projectsandpolicies.Itdoesnotdeliveranyaiddirectlytoanyperson,butproducesresearchreportsaboutAustralianaideffectivenessaswellasotherperformingpublicityevents(suchassendingderisory60birthdaygiftstotheWorldBanksuggestingitwastimeforthebanktoretire).Thecourtfoundsomeofitsactivities,forexample,callstoaction,somewhataggressive.

AID/WATCHsoughtexemptionfromincometaxasacharitableinstitutionpursuantto

s50–5IncomeTaxAssessmentAct1997.TheobjectionoftheCommissionerwasthatfirstitwasaninstitutionwhichdidnotitselfdistributeaidandthuswasnotcharitableandsecond,itachieveditsobjectsthroughcampaigningwhichamountedtoapoliticalpurpose.

TheorganisationsoughtreviewoftheCommissioner’sdecisionintheAdministrativeAppealsTribunal(AAT)inthefirstinstance.ThiscaseisanappealfromtheAAT’sdecision.

The AAT decision

TheAATreviewedtheCommissioner’sdecision4andfoundthattheorganisationwasentitledtostatusasacharitableinstitution.ItdecidedthatthemajorobjectiveofAID/WATCHwasthereliefofpoverty,eventhoughthesewordswerenotmentionedspecificallyintheconstitutionaldocuments,asaidwasclearlyforthereliefofpovertyandtheorganisation’spurposewascentrallyconcernedwithaid.TheAATalsoconsideredthattherewasanelementoftheadvancementofeducationintheorganisation’sactivitywhichwasalsocharitable.ThefinalpartoftheAATdecisionwastoconsiderwhethertheactivitieswerepoliticalandthusunabletobecharitable.AsAID/WATCHdidnothavechangestothelawasamainobject,theAATdeterminedthatitwasnotdisqualifiedfromcharitablestatus.TheAATalsoremarked(para49)that:

‘Itmaybedisqualifiedifitsobjectsandactivities,althoughnotovertlypolitical,stillplaceundueemphasisonattemptstoinfluencegovernment,particularlywithrespecttoprioritiesandmethods.Theargumentagainstcharitablestatusmaybeenhancedbecauseofitsactivistapproachesandconfrontationalmethods.’

TheCommissionerappealedtotheFederalCourt

The Federal Court decision

Onappeal,theFederalCourtfoundthatAID/WATCH’spurposeswerenotcharitableasreliefofpovertyandeducationwerenotitsprimarypurpose.However,theCourtdidnotaccepttheCommissioner’sviewthateducationinvolved‘trainingorteachingthroughasystemorsyllabusinastructuredmanner,ratherthansimplyaprocessofinformingthepublic’.ItdidfindthatresearchandpublicationsproducedbyAID/WATCHdidhavethenecessaryeducationalelementandsetitapartfromthosesuchasjournalistswhomerelydisseminatedgeneralinformation.InadditiontheCourtfoundthatAID/WATCH’sactivitiesweredirectedtowardspurposeswhichwouldfallwithinrelieffrompoverty,sothatthepurposesshouldbecharacterisedascharitableinthelegalsenseunlessdisqualifiedbecauseoftheirpoliticalnature.

WheretheAppealCourtdisagreedwiththeAATwasinrespectofwhetherpoliticalpurposesdisqualifiedAID/WATCHfrombeingacharity.ItagreedbetweentheCommissionerandAID/WATCHthatAID/WATCHwasnotengagedin‘lobbying’orattemptstoinfluencethegovernmentdirectly,butratherwas‘campaignfocused’.However,theCourtofAppealstated(para37)that:

4 Seecasenoteathttps://wiki.qut.edu.au/display/CPNS/AID-WATCH+Incorporated+v

+Commissioner+of+Taxation

‘Aid/Watch’sattempttopersuadethegovernment(howeverindirectly)toitspointofviewnecessarilyinvolvescriticismof,andanattempttobringaboutchangein,governmentactivityand,insomecases,governmentpolicy.Therecanbelittledoubtthatthisispoliticalactivityandthatbehindthisactivityisapoliticalpurpose.MoreovertheactivityisAid/Watch’smainactivityandthepoliticalpurposeisitsmainpurpose.RecognisingAid/Watch’sultimateconcerntorelievepovertydoesdiminishitspoliticalpurpose.’

Thereforepoliticalpurposeswereitsmainpurpose,ratherthanancillarytoacharitablepurposewhichwouldnothaveaffecteditsstatusintheordinarycourse.

TheargumentthatAID/WATCH’sobjectiveswerenotcontrarytogovernmentpolicybut‘toinfluencegovernmentpolicyastothenatureandextentandmeansofdeliveryofoverseasaid’(para39)werenotaccepted.Thiswasbecause‘the‘naturalandprobableconsequence’ofAid/Watch’sactivitiesisaneffectonpublicopinionandthenongovernmentopinion.’(para47)Itwasthusconsideredpolitical.

TheAppealCourtalsoaddressedanotherreferencebytheAATtosomeofAID/WATCH’sactivitiesbeingthoughttobeattheedgesofappropriateconduct,butnot‘soextremethatitlosesitscharitablequality’.TheAppealCourtthoughttheTribunalhadbeenunclearastoitsmeaningbutstated:‘IfitwasmerelyintendedtosuggestthatAid/Watchmightjeopardiseitscharitablestatusifitoperatedoutsideitsstatedobjects,thecommentisunobjectionable.Shortofthat,wedonotacceptthatthecharitablestatusofaninstitutioncandependonthemannerinwhichitimplementsitscharitablepurpose’(para40).

TheCourtofAppealunanimouslyfoundthatAID/WATCHwasnotentitledtoexemptionfromincometaxasacharitableinstitutionpursuanttos50–5IncomeTaxAssessmentAct1997.

Thiscasemaybeviewedatwww.austlii.edu.au/au/cases/cth/FCAFC/2009/128.html

ThisisanimportantcasewhichiscurrentlybeingappealedtotheHighCourt.Sothecurrentreportshouldbeusedwithcaution.TheboundariesofwhereadvocacyandpoliticalactivityaretobedrawnhavebeenafieldofdisputebetweentheATOandpartsofthesectorforsometime.TheATOhasattemptedtomakeitspositionclearinaseriesofexamplesgivenonitswebsitepagesCharities–political,lobbyingandadvocacyactivitiesavailableatwww.ato.gov.au/nonprofit/content.asp?doc=/content/62779.htm.Mostcharitieswhoinvestigatetheissuearesurprisedatwhatactivitiesareallowedprovidedthatitdoesnotbecometheir‘main’purpose.

2.7.2 COMMISSIONER OF TAxATION V BARGWANNA AND BARGWANNA AS TRUSTEES OF THE KALOS METRON CHARITABLE TRUST [2009] FCA 620 (FEDERAL COURT OF AUSTRALIA, EDMONDS J, 12 JUNE 2009)

ThiswasanappealfromadecisionoftheAdministrativeAppealsTribunal(AAT),whichhadsetasidetheCommissioner’sdecisiontorefuseincometaxexemptionforMrandMrsBargwannaastrusteesfortheKalosMetronCharitableTrust(thetrustfund).

TheCommissioner’sargumentonappealwasthattheAAThaderredinconcludingthatthetrustfundwasappliedforthepurposesforwhichitwasestablishedasrequiredundersection50–60oftheIncome Tax Assessment Act 1997(Cth)( ITAA),whichstatesthat‘Afund...isnotexemptfromincometaxunlessthefundisappliedforthepurposes

forwhichitwasestablished...’.Amainissueofthegroundsofappealwasthetesttobeappliedindeterminingwhethertheprimaryfactssatisfiedtherequirementthatthefund‘is applied’forthepurposesforwhichitwasestablished.

Themainfactsrelatingtotheappealcentredaround:

• moneyfromthetrustfundbeingplacedintheBargwannas’personaloffsetaccount,whichreducedtheirinterestontheirhomemortgagebutpaidnointeresttothefund;

• someofthefundbeingheldintheaccountant’s,MrCraik’s,trustaccount(hewasalsoMrsBargwanna’sfather):interestonthattrustaccountwasretainedbyMrCraik;andfundmoneyappearedtohavebeenusedtooffsetdebitsinhisotherclients’trustaccounts;

• anunsecuredloanbeingmadefromthetrustfundtoaprivatecompany(theloanwasstatedtobeat7%interestbutnonewaseverpaidandtheloanwasnotre-paid).

TheCommissionersubmittedthattheAATerredinlawinfindingthatthesewerenotapplicationsofthetrustfundotherwisethanforapurposeforwhichitwasestablished;itshouldhavefoundthatbecauseoftheseusesofthefundtheBargwannasfailedtosatisfytherequirementsofsection50–60.

TheCommissioneralsosubmittedthattheAATerredinlawwhenitconcludedthatapplyingthetrustfund‘substantiallyinaccordancewithitsconstituentterms’satisfiedtherequirementsofsection50–60.

TheCourtconsideredthetermsofsection50–60todeterminehowitshouldbeinterpretedandwhethertheseapplicationsofthetrustfundcomplied.TheCourtsaidthatwherelegislationconfersanexemptionuponabodyorfundifitmeetscertainrequirements,itdoesnotpromoteParliament’spurposetoconstruetheprovisioninamannerfavourabletothebodyorfundreferredto.‘[T]heprivilegedstatusofexemptionfromincometaxontheincomeofafundwhichaspirestothatstatusdemandsstrictadherencetotherequirementsthatmustbemetbeforethatstatusisconferred’(para28).TheCourtconsideredthatthetermsofsection50–60wereclear–i.e.itreferstofundsestablishedforcertainpurposes,‘andthelegislationrequiresnotmerelythattheybeestablishedattheoutsetforthesepurposes,butalsothattheirassetsbeappliedforthosepurposesfromtimetotimethereafter’(para29).Moreover,thesectionrequiresthatthefundbeappliedforthosepurposes,notthatitbesubstantially,orprincipally,appliedforthepurposes.‘Ifthelegislaturehadintendedthatsubstantiallyapplied...wassufficient,itwouldhavebeeneasyenoughtosayso.’(TheCourtcomparedittosection50–50(a)whichreferredtoobjectivesbeingpursued‘principallyinAustralia’.)(para30)

TheCourtconcludedthattheapplicationsofthetrustfundwereintentional,weresometimesforsignificantportionsofthefund,andbroughtsignificantbenefitstopersonswhowerenotobjects(beneficiaries)forwhichthetrustfundwasestablished.TheCourtfoundthattheAAThaderredinthetestitusedtodeterminewhetherthetrustfundwasappliedinaccordancewithsection50–60andthereforeallowedtheCommissioner’sappealandsetasidetheAAT’sdecision.

Thiscasemaybefoundatwww.austlii.edu.au/au/cases/cth/FCA/2009/620.html

Inordertoclaimincometaxexemptionforacharitabletrust,thecharitablepurposesmustcomplywiththeActattheoutset.Inaddition,thetrusteesmustbecarefultocomplywiththeActinthewaythefundisapplied(aswellasadministeringthefundinwaysthatadheretothetrustinstrument).TheCourtinthiscaseindicatedthatitwillreadprovisionsoflegislationstrictlywheretheyconferprivilegedstatusoncertainbodiesinreturnforadherencetocertainrequirements.

Theactionsofthetrusteesinthiscasemayhavebeeninbreachoftrustaswellasbreachingtherequirementsofsection50–60.Trusteeshaveanobligationtoapplytrustmoneysforthepurposesofthetrust,andmustnotconfusetheirownpurposeswithtrustpurposes,orusetrustfundsfornon-trustpurposes.

2.7.3 HEIN PERSCHE V FINANZAMT LUDENSCHEID [2009] EUECJ C-318/07 (COURT OF JUSTICE OF THE EUROPEAN COMMUNITIES, GRAND CHAMBER, 27 JANUARY 2009) 5

Basically,thecaserevolvedaroundadisputebetweenMrPerscheandtheFinanzamtLudenscheid,theDistrictTaxOfficeinLudenscheid,Germany.Inhis2003taxreturn,MrPerscheclaimedasanincometaxdeductionapproximately$34,285.00,forthevalueofbedlinenandbathtowelsplussomeambulatoryassistancedeviceshehadgiventotheCentroPopulardeLagoa,aPortuguesenursinghome.Sometoysforachildren’shome,incorporatedlater,wereincludedaswell.TheCentre’sreceiptoftheitemswasacknowledgedinthetaxreturn.AlsoattachedtothereturnwasadeclarationfromthedirectorofthelocalsocialsecurityofficeinFaro,Portugal,dated21March2001,assertingthattheorganisationinquestionwastax-exemptunderPortugueselawbecauseitsaimswerecharitable.

ThedeductionwasdisallowedbytheLudenscheidDistrictTaxOfficebothinitiallyandwhenMrPerschelodgedanobjection.HisattempttoappealtotheDistrictTaxCourtinMunsteralsoprovedunsuccessful.Undeterred,hetookhiscasetotheBundesfinanzhof(theFederalFinanceCourt)inMunichwhichupheldtheDistrictTaxOffice’sdecisionsincethegiftinvolvedarecipientwithnopresenceinGermanyandadonationcertificateregardedasunacceptable.Otherconcerns,however,sawthematterreferredtotheGrandChamberoftheEuropeanCourtofJustice.

Inparticular,theFederalFinanceCourtsoughtadviceonwhetherdonationsofconsumergoods,suchasthoseinquestion,byadonortoarecipientinanotherMemberStatewherethegoodsarelegallyconsideredascharitable,arecaughtbyArticle56oftheEuropeanConvention(EC)dealingwiththefreemovementofcapital.Ifso,doesthisnecessitatethatMemberStatesbetreatedequallyandthatataxbenefitdoesnotrequireacharitablerecipienttobesituatedinthedonor’sMemberState,inthisinstance,Germany.Finally,shouldequaltreatmentberequired,wheredoestheburdenofprovingtheunderlyingfactsrest.DoesDirective77/799insistonthetaxationauthoritiesintheaffectedMemberStatesliaisingwitheachothertocorroboratetheinformationorisitprocedurallyacceptableforthetaxpayerconcernedtoberesponsibleforsubstantiatingclaimsinvolvinganotherMemberState?

5 On14October2008,MrAdvocateGeneralMengozzideliveredhisopiniononthisnovelmatter(seeHeinPerschevFinanzamtLudenscheid[2008]ECJC-318/07https://wiki.qut.edu.au/display/CPNS/Hein+Persche+v+Finanzamt+Ludenscheid).Asthatwasanon-binding,advisoryassessment,thedefinitiveversionwasnotdeliveredbytheEuropeanCourtofJusticeuntil27January2009.

Does Article 56 EC apply?

UnderArticle56(1)EC,restrictionsonthemovementofcapitalamongmemberStatesarestrictlyprohibited.Noprecisedefinitionofwhatconstitutes‘movementofcapital’isprovided.TherewasdissensionamongtheMemberStatesastowhatwascoveredbytheexpression,withGermany,Spain,FranceandIrelandinsistingthatinvestmentorfinancialassignmentwasessential,aviewsharedbytheGermanTaxOffice.Greecemaintainedthattransfersofordinaryconsumergoodsnotlinkedtopaymentfellwithintheambitoffreemovementofgoods,ratherthancapital,anargumenttheCourtrejectedinthelightoftherelevantlegislation.TheCommissionoftheEuropeanCommunitiesandtheEuropeanFreeTradeAssociationSurveillanceAuthorityarguedthatArticles56EC–58ECdidencompassgiftsinkindtocharitablebodiesoutsidethetaxpayer’sMemberState.

Toresolvetheissue,recoursewashadtootherEuropeanUnionlaw.HeadingXIinAnnex1toDirective88/361dealswithhowinheritancesandlegaciesshouldbetaxedunderthefreemovementofcapital.Nodistinctionisdrawnbetweenfinancialtransactionsandthoseinkind.Therefore,theCourtdeterminedthatmonetarygifts,aswellasgiftsinkindlikeMrPersche’stoorganisationsregardedascharitiesinotherMemberStates,weremovementsofcapitalregulatedbyArticle56EC.

Is equal treatment necessary?

Next,theCourthadtodecidewhetherlimitingtaxdeductibilityfordonationstocharitableorganisationssituatedonlyinthedonor’sMemberStatewasaviolationofArticle56EC.NotonlytheGermanTaxOffice,butalsotheGermanGovernmentalongwiththeGovernmentsofFrance,Spain,theUnitedKingdomandIrelandarguedthatunequaltreatmentwasnecessaryforefficientfiscalmonitoring.TheyalsopointedoutthatwhatisperceivedascharitablemayvaryamongthevariousMemberStates.TheCourtwassingularlyunimpressedwiththefiscalargumentonthegroundsthatcomplaintsaboutdonationstootherMemberStatesmakinginroadsintoaparticularMemberState’slevelofpublicrevenueanditsresultantcapacitytobudgetwerenottheresponsibilityoftheCourt.

WhilsttheCourtrecognisedthatwhatconstitutedcharitablestatusvariedamongstthememberStates,whereitcouldbedemonstratedthatthelegislativerequirementsinoneMemberStatewerereflectedinthoseofanotherMemberState,Article56ECprohibitedanytaxationbenefitbeingappliedsolelytoalocallysituatedorganisation.MrPersche’sPortuguesein-kinddonationwasclearlyeligibleforconsiderationasataxdeduction.

Where does the burden of proof lie?

VerifyingthedeductibilityofadonationsuchasMrPersche’swasviewedpotentiallyasajointundertaking. Atthesimplestlevel,itwasobviouslypossibleforthedonortorequestareceiptfromthecharitablerecipientinanotherMemberStateaswellasinformationaboutitscharitableactivitiesandstatus.AlthoughnotnormallycognisantofthefitbetweenthisMemberState’slegislativerequirementswithrespecttocharitiesandthoseofthedonor’sMemberState,Directive77/799allowstheappropriatetaxationofficialsfromthedonor’sMemberStatetoelicitthedataessentialtoassesstheextentofthetaxbenefitorotherwisefromanotherMemberState.OnceitisproventhattheelementsfortaxdeductibilityinoneMemberStatemirrorthecriteriasetdowninthelegislationofanotherMemberState,thedonor’staxationpositionshouldbesimilar.

Thiscasemaybeviewedat:www.bailii.org/eu/cases/EUECJ/2009/C31807.html

2.8 trusts

2.8.1 CUNLIFFE V ATTORNEY-GENERAL (NSW) [2009] NSWSC 1450 (SUPREME COURT OF NEW SOUTH WALES, NICHOLAS J, 21 DECEMBER 2009)

TheplaintiffsarethetrusteesoftheStVincent’sHospitalatDarlinghurstinSydney(thetrustees).TheyholdlandsupontrustforthepurposesoftheStVincent’sHospital,pursuanttoastatute,theSt Vincent’s Hospital Act 1912 (NSW)(theSVHAct).Thelandsheldontrustarethoseoccupiedbythehospitalitself(whichisapublichospital),theStVincent’sPrivateHospital,theSacredHeartHospice,theStVincent’sClinic,theVictorChangCardiacResearchunit,theGarvanInstituteofMedicalResearch(theGarvan),andtheSistersofCharityOutreachService.

Theoverallgoverningentityofthisgroupingisacompanylimitedbyguarantee,theStVincent’sHospitalSydneyLimited(SVHS).ThesolememberofthatcompanyisStVincent’sHealthAustraliaLimited(SVHA),alsoacompanylimitedbyguarantee.Anothercompanylimitedbyguarantee,StVincent’sandMaterHealthSydneyLimited(SVMHS)providesmanagementservices,includingfinanceandadministration,tothegroup.ItssolememberisalsoSVHA.

On17August2009,thetrustees,SVHSandtheGarvanhadexecutedaprojectagreementforthedesignandconstructionofanewcancercentre,theGarvanStVincent’sCancerCentre(GSVCC).ThelandonwhichtheGSVCCwastobebuiltisheldontrustforthebenefitofthehospitalundersection2oftheSVHAct.Theprojectagreementincludedprovisionforaleaseof82yearstoobtainjointtenancyoccupationoftheGSVCCbuildingbyboththeSHVSandtheGarvan.

AfundingagreementhadalsobeenenteredintowiththeCommonwealthgovernmentforprovisionof$70milliontowardsthetotalcostoftheproject($90.6million),withtheremaindertocomefromprivatedonations.Somedonationshadalreadybeenreceived.Thefundingagreementrequiredthattenureofthelandbesettledwithin20businessdaysofthedateofthefundingagreementon17August2009.

TheAttorney-GeneralofNewSouthWales,asdefendant,wasactinginhisroleasprotectoroftrustassets.TheprincipleraisedherewaswhetherthenewGSVCCservedthepurposesofthetrustunderwhichthehospitalwasestablished.Themainissueforconsiderationwasthepowerofthetrusteestoenterintothe82yearleaseundersection6oftheSVHAct.Thissectiongivesspecificpowertothetrusteestoleaseland,butsection6(1)providesforamaximumtermof21yearstoapublicauthority,oramaximumof10yearstoanyotherperson.

Thejudgeacceptedthetrustees’contentionthattheonlypossibledetrimentarisingfromsuchalongleasetermwasthatthelandwouldnotbeavailableforanyotherpurposeduringthisterm.HisHonouragreedthatthisdetrimentwasoutweighedbytheadvantagesoftheGSVCCforboththehospitalanditspatients.TheAttorney-Generalwasconcernedthattheterminationrightsunderclause15.5oftheprojectagreementweresignificantlylessthanthoseavailabletootherparties,inthattheeventsofdefaultwereverylimited.

HisHonourfeltthatthisneededtobelookedatinthelightoftheprojectasawholeandtheevidenceoftheprobableconsequencesofthetrustees’participationinit.Theprojecthadconsiderablebenefitsforthetreatmentofcancer,offeringsynergiesbetween

theleadingresearchoftheGarvan,andthealreadyadvancedtreatmentoptionsofferedattheSVH.Theofferingofmultidisciplinarycaretopatientswasapotentconsiderationwithinsection81oftheTrustee Act 1925(NSW)whichallowsfor‘advantageousdealings’tobeenteredintodespitelackofpowervestedintrustees.Ifthetrustees’dealingswereadvantageoustothepurposesofthetrustwithinsection81,thenthecourtcouldordermattersasitthoughtfit.

Sincetheprojectandtheleaseoffered‘advantageousdealings’,thepowersoughtbythetrusteestoenterintotheprojectagreementandtheleasewasgrantedpursuanttosection81oftheTrustee Act.Theplaintiffswereorderedtopaythedefendant’scosts.

Thecasemaybefoundat:www.austlii.edu.au/au/cases/nsw/NSWSC/2009/1450.html

Thiscaseshowedthattrustarrangementsenteredintointhepastcanbeasignificantobstacletotrusteesinchangingtimes.Inthiscase,therewasaspecificstatutedatingfrom1912underlyingthetrust.However,thecourtwaspreparedtointerprettheprovisionsoftheunderlyingacttoaccommodatepurposeswhichwereinlinewith,butnotexactlythesameas,thetrust’sstatedpurposes.TheactionoftheAttorney-GeneralinthiscasewerepartoftheAttorney’sdutytoprotecttrustassetsinthepublicinterest.

2.8.2 NSW MASONIC YOUTH PROPERTY TRUST V A-G (NSW) [2009] NSWSC 1301 (SUPREME COURT OF NSW, 19 NOVEMBER 2009, HALL J )

TheplaintiffsinthiscaseweretwocorporatetrusteesoftheMasonicWelfareFundofNewSouthWalesandtheAustralianCapitalTerritory(theFund’),theNewSouthWalesMasonicYouthPropertyTrustandtheNewSouthWalesMasonicWelfarePropertyTrust.ThesecorporatetrusteeswerealsothetrusteesoftheEdithBoydMemorialTrustFund(theEdithBoydFund).

TheAttorney-GeneralofNewSouthWaleswasthefirstdefendantrepresentingallcharitableinterestsinNewSouthWales,whiletheseconddefendantwasarepresentativeofallthosewhomighttakepartofthecorpusorincomeoftheFundifthecourtweretodeterminethatnotrustexisted.

ThequestionsbeforethecourtstemmedfromalonganddetailedhistoryrelatingtotheFund.Thesewere:

1. WhetherthepropertyoftheFundwasheldontrustforcharitablepurposes;

2. Ifso,whatwerethecharitablepurposesinvolved?

3.WhetherthetrusteeswerevalidlyappointedasthetrusteesoftheEdithBoydFund;

4. Ifthecharitablepurposescouldnotbeexecuted,whetherthetrustsshouldbeexecutedcy-près.

Inapreviousjudgementon24March2009(seecase2.8.6,below),anotherquestionhadbeendeterminedrelatingtothetrusts.Inthiscontext,itisimportanttonotethatthetrustwasestablishedon28March1923asavalidtrust.Theearlierquestionwaswhetherthetrusteesofthetrustestablishedon28March1923werethemembersfromtimetotimeoftheFundorthemembersfromtimetotimeoftheExecutiveoftheFund.JusticeHalldeterminedthatthetrusteesoftheFundwerethemembersfromtimetotimeoftheExecutiveoftheFund.FiveindividualpersonaltrusteeswerelaterpurportedlyestablishedasthetrusteesbyaDeedexecutedon14January1927.Subsequently,fromabout27November1972,allthepropertyoftheFundhasbeensupposedlyheldandcontrolledbythetwocorporatetrustees.AsatJune2008,theFundheldnetassetsof$10,844,000.

ThehistoryoftheFundwasinextricablylinkedtotheestablishmentoftheWilliamThompsonMasonicSchoolandHostelsinNSW.WilliamThompsonwastheGrandMasteroflodgesinNSWin1921whenheproposedtheestablishmentofaMasonicschoolforchildrenofdeceasedbrethren.ThiswasdulyestablishedandtheMasonicSchoolsWelfareFundwasthencreatedtofundvariousactivitiesoftheschoolwhichwereoutsidethedaytodayoperationsoftheschool.TheFundwasoriginallycreatedasacommitteeofMasonsfromeachlodgeinNSW.Theschoolandhostelsweremuchusedbetween1923andthe1960sbutweregraduallyfoundtobeunnecessaryandceasedtoexistin2001.SincethattimenochildhasfallenwithintheoriginaldescriptionofthepurposeoftheFundasstatedinits1923constitution.

Theconstitutionfirstdraftedin1923statedthattheFund’sobjectsweretoassisttheschoolandthechildrenintheschoolbyprovidingbenefitsoutsidetheusualschoolfunctions,suchassportsequipment,librarybooks,prizes,entertainments,anannualpicnic,vacationaccommodation,railwayfares,theprovisionofsuitablepositionsinworkafterschoolwascompleted,financialassistancebothduringandafterschool,andwhereapplicable,evenuniversityeducation.JusticeHallheldthisconstitutionwasvalidandthatitestablishedatrustwiththeobjectsstatedintheminutesofthemeetingheldon23March1923.

Themostimportantaspectofthisconstitutionwasthatitdidnotincludeaprovisiontoamendthetrust.Thismeantthatthetrust’scharitableobjectscouldnotbeamended,norcouldaprovisiontoamendthetrustbeinsertedatalaterdate.Nevertheless,severalsetsofamendmentstothetrusthadpurportedlybeenmadeovertheensuingyears.Particularlyimportantamendmentsweremadein1926,1927,1936,1956,1965,1972and1997.Thesewere:

1. 1926:furtherclauseswereaddedtotheconstitutiontomakethepropertyofthetrustvestinfivetrusteestobeelectedbymembers.Adeedtothiseffectwassignedon14January1927.

2. 1927:amendmentsweremadetotheconstitutiontochangetheobjectsoftheFundtoincludethepowertoestablishaccommodationhostelsforbothchildrenattheschoolandforthosewhowereinworkafterfinishingschooling,andtoinsertapowerofamendment.

3.1936:furtheramendmentsweremadetotheconstitutionandobjects,thoughthesereflectedtheoriginalminutesofthe1923meeting,andthe1927decisionabouthostels.

4.1956:amendmentsweremadetoestablish‘auxiliaries’throughoutNSWwhichweretocollectorraisefundsforthegeneralpurposesandobjectsoftheFund.Inaddition,theobjectswerefurtherrefinedtoreflecttheincreasinginterestoftheFundinex-studentsoftheschoolwhowereinnecessitouscircumstances–provisionwasmadetoassistsuchex-studentsbyfinancialaid,provisionofaccommodation,purchasingtextbooks,necessaryclothes,toolsoftrade,professionalinstrumentsandequipment,andotheritemstofurthertheirchosencareers.

5.1965:substantialamendmentsweremadetotheobjectsoftheFundtoextendandbroadenthecoverageoftheFundbeyondex-studentsoftheschool(whichwasfallingintodeclineinuse)tochildrenofdeceasedandincapacitatedmembersoftheNSWLodgeofMasonsgenerally,andprovidereliefandassistancetoMasonicyouthinnecessitouscircumstancesgenerally.Inaddition,thenumberoftrusteeswasreducedfromfivetothree.

6.1972:afterbothlegalandjudicialadvicewasobtainedin1970and1971totheeffectthattheFundwasnotcharitableinthelegalsense,andcouldnotqualifyforexemptionfromincometax,thecorporatetrusteeswereappointedon6April1972.TheassetsoftheFundhadpurportedlybeencontrolledbythecorporatetrusteessinceabout21November1972.The1972amendmentstotheconstitutionoftheFundeffectedthischange.

7. 1997:on8December1997,aspecialgeneralmeetingoftheFundresolvedtoadoptanewconstitution.Theobjectswereto‘relieveandassistYouthinnecessitouscircumstancesinanyoneormoreofthefollowingways,namely,byensuringtheprovisionofadequateprimary,secondary,tertiaryorothereducation,byencouragingscholasticattainments,vocational,professionalambitionsoraptitudes,byassistingthoseshowingpromiseortalenttoproceedtoUniversityorengageinanyothercourseofstudyorspecialcourseoftrainingwithoutregardtosex,race,colourorreligionoravocationorprofession,byprovidingfinancialaid,medical,hospitalanddentaltreatment,byobtainingsuitablehomeaccommodationorboardandresidencebyprovidingnecessaryclothes,textbooks,tools-of-trade,professionalequipmentoranyotheressentialrequisiteinthefurtheranceofthecareerchosen’.

TheevidencepresentedwasthatthepurposeofthetrustnolongerexistsastheMasonicschoolandhostelsnolongerexist.

IndiscussingthepurportedamendmentstotheFund,JusticeHallobservedthatitissettledlawthatonceacharityhasbeenfoundedanditstrustshavebeendeclared,thesetrustscannotberevoked,variedoraddedtobythefounderorfoundersunlessavalidpowerofamendmentorrevocationwasincludedatthetimethetrustsweredeclared.Thisrulebindsthetrusteesaswellasthefounderorfounders.Atgenerallaw,acourt’sjurisdictionismerelydirectedtoenforcementofpurposesofthetrustasitwasoriginallycreated,andtoavoidunnecessarydeparturesfromthetermsofthetrust.

JusticeHallfoundthattherehadbeenonecontinuousFundoperatingovertheyearssince1923,andtherewasnobasisforfindingthatthetermsoftheoriginaltrusthadbeenalteredbyanyofthepurportedamendments.Inparticular:

1. Avalidexpresstrustwascreatedon28March1923withtheconstitutionalsocreatedonthatdate.

2.Thepurportedamendmentstothe1923trustwerelegallyineffective,andsodidnotvarythetermsofthe1923trust.

3.Thepurportedappointmentofcorporatetrusteesin1972wasnoteffectiveasitproceededonanincorrectlegalpremise,namelythatthedeedexecutedin1927validlyappointedfiveindividualtrustees.

4.Therefore,thetrusteesoftheFundsince1923hadbeenthemembersfromtimetotimeoftheExecutiveoftheFund.

5.Theplaintiffs,thecorporatetrustees,weretrusteesde son tort (operatingincorrectly),andhavebeensosincetheirpurportedappointmentin1972.

6.ThemoneyandpropertysettledontheFundinandafter1923wasimpressedwiththetrustcreatedin1923.

Therefore,theonlyvalidtrustoperatingwasthatwhichestablishedtheFundon28March1923.

Was this a valid charitable trust?

Tobeacharitabletrust,itmusthavebeenestablishedforcharitablepurposes.Legally,acharitabletrustmustfallwithinoneofthefourclassesrecognisedinthePemselcasein1891:atrustfortheadvancementofeducation,forthereliefofpoverty,fortheadvancementofreligion,orforotherpurposesbeneficialtothecommunity.Inaddition,thetrustmustbeofapublicnatureandforthepublicbenefit.Afterconsideringthepossibilities,JusticeHallagreedwiththesubmissionoftheAttorney-GeneralofNSWthatthe1923trustwasoneforthereliefofpoverty,andthereforeforcharitablepurposes.Itspurposewastoassistimpoverishedchildren,andalthoughnotexpresslystatedassuchinthe1923constitution,thereliefofpovertycouldbeinferredfromorwasimpliedintheobjectsofthetrust.Thus,itwasavalidcharitabletrust.

InrespectoftheEdithBoydFund,theplaintiffscoulddemonstrateaclearchainoftitleastrustees,andcouldbedeclaredasthepropertrusteesofthatFund,whichhadadifferenthistoryfromtheWelfareFund.

AsthecharitablepurposesoftheWelfareFundcouldnolongerbeexecuted,itwasproperthatacy-prèsschemebedevelopedfortheFund.Thehearingastothenatureofthecy-prèsschemewasheldovertoalaterdate.

Thiscasemaybefoundat:www.austlii.edu.au/au/cases/nsw/NSWSC/2009/1301.html

Thiscaseillustratesthedifficultieswhichcanarisewhenatrustisestablishedatatimeinthepast,andthenisdealtwithbytrusteesorotherpersonswhohaveimperfectunderstandingofthetrustoroftrustlaw.Inthiscase,overmorethan70years,trusteeshadpurportedlybeenappointed,andamendmentsmadetothepurposesofthetrust,withoutanyproperreferencetotheoriginaltrustterms.Moreover,adviceontrustmattershadbeensoughtfromvariousprofessionalpersonswhodidnotdiscerntheactualtermsofthetrust,orthemodeofproperoperationofthetrust.Meanwhile,thetrusthadoperatedquitesuccessfully.Itwasonlyatitsdissolutionthatthelegalproblemsemerged,whichresultedinthislitigation.Trusteesshouldnotmakeanychangestoatrustwithoutproperlegaladviceastothelegitimacyoftheproposedchanges.Theoutcomehereofacy-prèsapplicationofthesubstantialtrustfundsistheproperoneinthecircumstances.

2.8.3 THE PUBLIC TRUSTEE OF QUEENSLAND AS ExECUTOR OF THE ESTATE OF BRIAN EDMUND MONCKTON, ALSO KNOWN AS, BRYANT EDWARD MONCKTON, DECEASED V ATTORNEY-GENERAL (QLD) [2009] QSC 353 (SUPREME COURT OF QUEENSLAND, A LYONS J, 7 OCTOBER 2009)

BrianMoncktondiedin2006.Hislastwill,madein1997,appointedthePublicTrusteeasadministratorandlefthisentireestatetohiswifeifshesurvivedhimby30daysand,ifnot,totheQueenslandChildren’sResearchFoundation(QCRF)‘forthecharitablepurposesofthefoundation’.

TheQCRFwasformedinMay1973withobjectivesprincipallytopromoteresearchintothetreatmentofillnessanddiseasesaffectingchildren.TheQCRFwasnotparticularlyactiveandduring1993allofitsfundsweredonatedtotheRoyalChildren’sHospitalFoundation.Itwasderegisteredin1994,threeyearsbeforethedeceasedhadmadehiswill.

ThePublicTrusteeappliedtothecourtundersection134ofthePublic Trustee Act 1978fordirectionsastohowtoapplythegift(theestatewasworthabout$424,000).ThequestionforthecourtwaswhetherthegifttotheQCRFwasstillvalidandifso,howwasittobedealtwith.

Thetraditionalapproachofthecourtsisthatatestamentarygiftlapsesincaseswhereanentityceasedtoexistduringthetestator’slifetime.HerHonourcanvassedthethreestandardexceptionstothisruleandnoted(para13)thatcourtshavedevelopedafourthexceptiontothelapserule.ThiswastheapproachusedbytheSupremeCourtintherecentcaseofMary Agnes Ball(seecase2.8.5,below).Thislooksatthecircumstancessurroundingagifttoaninstitutionthathasceasedtoexist,todetermineifitisagiftforacharitablepurposeofthatinstitution,ratherthananoutrightgift.Ifthatcharitablepurposecanbefound,thefundcanbeappliedtoaninstitutionwhichcancarryoutthatpurposeandfulfillthetestator’sintention.

HerHonourfoundthatthegifthadnotlapsedastherewasnofailureofthegeneralcharitablepurposedeclaredinthewill.Whilethebequestdidnotstateaparticularpurpose,bythefactthatitwasagifttoaFoundationwhichwasformedtoraisefundsformedicalresearchforchildren’sillnessesitwasinterpretedashavingacharitablepurpose.HerHonouralsonotedthatinAustraliaagifttoacharitableinstitutionisprimafacieagiftforacharitablepurpose.(seeMontefiore Home v Howell & Co(19842NSWLR406)).

ThereforethecourtdirectedthepropertythesubjectofthegiftbepaidtotheRoyalChildren’sHospitalFoundationasithadthecapacitytofulfilthepurposeofthegift.

Thecasemaybefoundathttp://sclqld.org.au/qjudgment/2009/QSC/353

Thiscaseonceagaindemonstratestheimportanceofkeepinganuptodatewillandcheckingthecorrecttitleofacharitywhennamingitinawill.Ifanorganisationnolongerexists,thecourtwillhavetodeterminewhetherthereisasuccessororganisationtoacceptthegift,orestablishwhetherthetestatorhadageneralcharitableintention.Inthatcasethecourtneedstodeviseacy-prèsschemetogiveeffecttothecharitablepurposeofthewill.Suchaschemedirectsabequestinawilltosuitablecharitablepurposewhentheonenamedinthewillcannotbecarriedout.Whileareviewofthecaselawshowsthecourtswill,insofaraspossible,inferageneralcharitableintentiontopreventthelapseofacharitablegift,theprocessforacy-prèsapplicationcanbelongandinvolvedwithmanycompetingorganisationsapplyingforthebequest.Also,asthecostsassociatedwithanycourtactionarenormallyorderedagainsttheestate,thisdecreasestheamountoffundsthatwillultimatelybegiftedtothecharity.Accordingly,bestpracticewhendraftingawillwouldinvolvecontactingorcheckingthewebsiteofanycharitytowhichagiftistobegiven,toconfirmitscorrectlegalname.Mostcharitieshaveasuitablebequestclausealreadydraftedtobeusedinwills.Regularcheckstoensurethecharitystilloperatesorhasnotchangeditsnameandifsoupdatingthewillcanpreventuncertaintyandthepossibilitythatanintendedgiftwilllapseandreverttotheestate.

2.8.4 MITRESKI V HIS EMINENCE METROPOLITAN PETAR THE DIOCESAN BISHOP OF THE MACEDONIAN ORTHODOx DIOCESE OF AUSTRALIA AND NEW ZEALAND [2009] NSWCA 319 (NEW SOUTH WALES COURT OF APPEAL, 10 SEPTEMBER 2009 FILE NO: 40202/09

Thisisacourtcaseinvolvingthelong-runningdisputeamongmembersoftheMacedonianOrthodoxChurchconcerninghowitspremisesinRockdaleinSydneyshouldbeutilized6.Complaintsaboutthegeneralconductofthechurch’sbusinesshadalsobeenairedovertheprecedingtwelveyearsoflitigation.DuringanearlierattempttobringthematterbeforetheNewSouthWalesCourtofAppeal,Metropolitan Petar v Macedonian Orthodox Community ChurchSt Petka Inc [2007]NSWCA263, thejudgesdecidedthatonlyasingleappealwouldbepermittedtodealwiththeissuesraisedpreviouslyintheEquityDivisionoftheSupremeCourt.Suchanappealwasenvisagedtooccursometimelater,afterthetrial’sconclusion.

TheseproceedingswereanattempttodojustthatonthelegalbasisthatafurtherrulingbyChiefJusticeYoungintheEquityDivision,Metropolitan Petar v Mitreski [2009]NSWSC106,hadfailednotonlytoensureproceduralfairnessforthemembersoftheMacedonianOrthodoxChurch,butalsotodetermineallthequestionsatissue.ParticularmentionwasmadeofthefactthatHisHonourhadalludedtoabreachwhichhewasnotrequiredtoaddress.IntheFullCourtoftheCourtofAppeal,JusticeTobiasstatedthereferencewasclearlytoanallegedbreach.Decisionsastoanyunresolvedmatterswereregardedasstillinthepipeline.Afterreferringtothethrustofthe2007judgment,allthreeAppealCourtjudgesconcludedtherewasnosubstancetotheclaimsadvancedbythecounselforthemembersoftheMacedonianOrthodoxparishofSt.PetkaatRockdale.Therefore,noleavewasgrantedtoappealChiefJusticeYoung’sdecision.

Theopportunitywasalsotakeninthisactiontorevisitthe2003case,Metropolitan Petar v Mitreski [2003]NSWSC262,withaviewtoagainapplyingforleavetoappealJusticeHamilton’sorders.Intheinterestsofjusticeandultimatelyoftheparties,theCourtofAppealre-iterateditsstancethattherewasstillscopeintheEquityDivisionoftheSupremeCourt,forhandlingsuchmatters.Onlywhenthisavenuewasexhausted,shouldtheybebroughtbeforetheCourtofAppeal.Leavewasonceagainrefused.

Thiscasemaybeviewedat:www.austlii.edu.au/au/cases/nsw/NSWCA/2009/319.html

ThiscasewaspartofaverylongrunningseriesofcourtapplicationsconcerningabranchoftheMacedonianOrthodoxChurchinAustralia.Itillustratesthatinternecinedisputeswithinassociationscanresultinbitterlitigationwhichiswastefulofbothanassociation’sresourcesandofthecourt’stime.Asthepresidingjudgesaidinoneofthemanyapplicationsinthislitigation‘ithadbeeninthelistsfartoolong’(see2.8.7below).

6 EarlierhearingsinthemattercanbeseenincasenotesonTrustsandWillsathttps://wiki.qut.edu.au/display/CPNS/Trusts

2.8.5 THE PUBLIC TRUSTEE OF QUEENSLAND AS ExECUTOR OF THE ESTATE OF MARY AGNES BALL, DECEASED V STATE OF QUEENSLAND AND ORS [2009] QSC 174 SUPREME COURT OF QUEENSLAND – BYRNE SJA – 3 JULY 2009

MaryAgnesBallmadeawillin1987whichleftherentireestatetoherhusbandifhesurvivedherby30days,andifnot,inequalsharestotheGuideDogsfortheBlindAssociationofQueensland,theQueenslandDeafSocietyIncorporated,andtheNorthBrisbaneHospitalsBoardforthepurposesoftheRoyalBrisbaneChildren’sHospital.Inallcases,thebequestwasforthepurchaseofequipmentforthecharitiesinquestion.

MrsBall’shusbandpredeceasedher,andthequestionforthecourtwaswhetherthegifttotheNorthBrisbaneHospitalsBoard(theBoard)wasstillvalidandifso,howwasittobedealtwith.

ThisquestionarosebecausetheBoardhadceasedtoexistatthedateofMrsBall’sdeathin2007.TheNorthBrisbaneHospitalsBoardwasincorporatedin1959tooperatepublichospitalsonthenorthernsideoftheBrisbaneRiver,includingthethenBrisbaneChildren’sHospital.In1968,thishospital’snamehadchangedtotheRoyalChildren’sHospital,sothatitwasmisdescribedinthewillwhenthewillwasmadein1987.In1982,anewboardwascreatedtooperatethehospital,calledtheRoyalChildren’sHospitalsBoard.TheBoardcontinuedtorunotherpublichospitalsuntiltheHealth Services Act 1991 (Qld) abolishedallQueenslandhospitalboardsin1991.Therewerealsolaterreorganisationsinmanagementofthehospitals,andatthetimeofMrsBall’sdeath,thehospitalwasmanageddirectlybytheQueenslandgovernment.

Was the charitable gif t to the Board still valid?

Howwasittobedirectedandused?Abequesttoapublichospitalisarecognisedgiftforacharitablepurpose(Re Sutherland, deceased; Queensland Trustees Limited v Attorney-General [1954]StRQd99;Le Cras v Perpetual Trustee Co Ltd; sub nom In Re Resch’s Will Trusts [1969]1AC514).HisHonoursaidatparagraph6:

‘TheHospitalwas,itseems,functioningin2007muchasithad20yearsearlierwhenthewillwasmade.Itstillis.Sothereisnopracticalimpedimenttoapplyingthegifttothespecificpurpose.NoristherealegalobstacletogivingeffecttoMrsBall’sconcerntobenefittheHospital.’

TherewasnoquestionofthegifthavinglapsedbecauseasHisHonoursaidatparagraph12:

‘Theidentityofthedesignateddoneewasnotoftheessenceofthegift.ThedeclaredcharitablepurposeiswhatmatteredtoMrsBall.Therehasbeenafailureoftheparticularmeansbywhichthecharitablepurposewastobeeffected.Butthereisnofailureofthatpurposeassuch.Thegifthasnotlapsed.’

Sincethegifthadnotlapsedtherewasnoneedforacy-prèsscheme.AllthatwasrequiredwasforthegifttobepaidtoasuitablepersonorentitywiththeresponsibilityforbuyingequipmentfortheRoyalChildren’sHospital.Allinterestedparties,includingthePublicTrusteeandtheAttorney-General,agreedthatthesuitablerecipientinthecircumstanceswastheRoyalChildren’sHospitalFoundation(theFoundation),asopposedtotheQueenslandgovernment.

Therefore,HisHonourdirectedthatthebequestbepaidtotheTreasurerorotherappropriateofficeroftheFoundation,andthatallcostsbepaidfromtheestate.

Thecasemaybefoundat:http://archive.sclqld.org.au/qjudgment/2009/QSC09–174.pdf

Thiscasedemonstratestheimportanceofkeepinganuptodatewill,andofcheckingthecorrectnameforacharitywhennamingacharityinawill.Insomecases,theCourtmayneedtodeviseacy-prèsschemetogiveeffecttoacharitablepurposeinawill.Suchaschemedirectsabequestinawilltoasimilarorganisationwithsimilarpurposestotheonenamedinthewillwhichhasnowceasedtoexist.However,theprocessforacy-prèsapplicationcanbelongandinvolved,withmanycompetingorganisationsapplyingforthebequest.Therefore,itisbesttoupdateawillregularlyandtocheckthatcharitiesnamedstillexist,andthatthecorrectnamehasbeenusedinthewill.Correctnamescanbecheckedfromacharity’swebsite,whichmayalsocontainsuitablebequestclausestouseinawill;orbycontactingthecharitydirectlyforabequestkitorotherappropriatedetails.

2.8.6 NSW MASONIC YOUTH PROPERTY TRUST & ANOR V HER MAJESTY’S ATTORNEY-GENERAL IN AND FOR THE STATE OF NSW & ANOR [2009] NSWSC 181 (24 MARCH 2009) FILE NUMBER: NO 5534 OF 2007

AqueryarisingoutofasubmissionbytheAttorney-Generalinamatterauthorisedundersection6oftheCharitable Trust Act 1993 (NSW),sawtheSupremeCourtofNewSouthWalesdirectedtoaddresstheissueofwhotheactualtrusteesofthe NSW Masonic School Welfare Fund (theFund) were.Moreparticularly,acceptingthatthetrustwasvalidlyconstituted,thequestionforconsiderationwas,werethemembersoftheFundfromtimetotimethetrusteesordidthetrusteesonlyincludethemembersoftheFund’sExecutiveforthecorrespondingtimeframe?

ThisFundwasestablishedatageneralmeetingofrepresentativesofvariousLodgesofMasonson28March1923.FollowingsomejudicialadvicefromHisHonourMrJusticeStreetin1971,corporatetrustees,theNewSouthWalesMasonicYouthPropertyTrustandtheNewSouthWalesMasonicWelfarePropertyTrust,wereappointedon21November1972,tooverseetheFund.ThesetrusteesholdalltheFund’spropertyaswellasadministeringbankaccountsinthenameoftheMasonic Youth Welfare Fund of NSW & ACT.

ItwasrecognisedinthesubmissionofcounselfortheAttorneyGeneralthattheestablishmentoftheFundin1923,plusthemonetarypaymentsintoitsatisfiedtherequirementsofanexpresstrust.Thetrustpropertyconsistedofthefinancialdonationswhichweretobeheldontrusttoaddresstherelatedneeds,notnecessarilyeducationalinnature,ofthenominatedbeneficiaries,childrenoftheMasonicSchoolsofNewSouthWales.Suchneedsincludedmattersinvolvingmedicalanddentalcareaswellastheprovisionoffood,clothingandaccommodation.WhiletheFund’sConstitutionwasclearinthisregard,itwasnotclearexactlywhoweretocompriseitstrustees.

JusticeHallsoughtguidancefromtheMinutesoftheGeneralMeetingof28March1923,astotherepresentatives’intentionconcerningtheappointmentoftrusteestomanagetheFund.NotonlydidtheMinutesevidenceanintentforanExecutivetodirecttheFund’sbusinessoperation,butalsotheysanctioneditsinvolvementinfundraisingwheneverrequired.Scantmentionwasmadeoftherightsandresponsibilitiesof

individualmembers.Fromapracticalperspective,HisHonourdiscountedthepossibilityoftheFund’sefficientadministrationbytheentiremembershipofanunincorporatedassociation.NordidheaccepttheargumentthataresolutionpassedataspecialgeneralmeetingoftheFundon20December1926,totheeffectthattheFund’sassetsshouldvestinfiveelectedtrustees,illustratedthatpreviouslyallmembersoftheFundhadbeentrustees.ThesubsequentadoptionofaTrustDeedtoimplementthis,didnotalterhisstance.Infact,heinterpretedthedevelopmentsasindicatingadesirefortheExecutivetofacilitateitsownrenewal.

Therefore,HisHonourdecidedthatthetrusteeswerethemembersoftheFund’sexecutivefromtimetotime.

Forarelatedcasesee2.8.2,above.

2.8.7 METROPOLITAN PETAR V MITRESKI [2009] NSWSC 106 SUPREME COURT OF NEW SOUTH WALES – 4 MARCH 2009

ThishearingwastofinaliseoneissueofmanyinacasewhichHisHonourstated‘hasbeeninthelistsfartoolong’.Theproceedingscommencedon28July1997whenadisputearosebetweentheBishop(MetropolitanPetar)andthegoverningbodyoftheincorporatedassociationwhichcontrolledtheparishofStPetkainNewSouthWales.Thedisputeconcernedtheappointmentoftheparishpriestandcontrolovermoneyandpropertywithintheparish7.

AChurchtrusthaspreviouslybeenheldtoexistinthiscase(seeMetropolitan Petar v Mitreski[2003]NSWSC262(4April2003)).TheissueshereweretoascertainthetermsoftheChurchtrustwhichwasallegedtohavebeenbreachedbythedefendants,andtodeterminewhetheranyofthosetermswerefundamentalterms.

TheallegedbreachesoftrustwerethattheauthorityoftheBishophadbeendeniedby:

a.preventingtheDiocesanBishopfromconductingservicesintheChurchBuilding;

b.preventingapriestappointedbytheDiocesanBishopasparishpriestoftheStPetkaParishfromconductingreligiousservicesintheChurchBuilding;

c. preventingapriestlicensedbytheDiocesanBishoptoconductreligiousservicesintheChurchBuildingfromdoingso;

d.(excludingthepriestappointedbytheDiocesanBishopasparishpriestoftheStPetkaParishfromtheexecutivecommitteeofthebodyresponsiblefortheadministrationoftheStPetkaParish;

e. employingapriestnotappointedbytheDiocesanBishoptoactastheparishpriestoftheStPetkaParish;

f. employingapriestundervalidecclesiasticaldisciplineinaccordancewithChurchLawtoactastheparishpriestofStPetkaParish;

g.requiringorpermittingapriesttoconductreligiousservicesupontheChurchLandwhen:

i. thatpriesthasnotbeenauthorisedbytheDiocesanBishoptodoso;or

ii. thatpriestisundervalidecclesiasticaldisciplineinaccordancewithChurchLaw.

7 EarlierhearingsinthemattercanbeseenincasenotesonTrustsathttps://wiki.qut.

edu.au/display/CPNS/Trusts

h.anyorallof:

i. closingtheChurchBuilding;

ii. removingtheHolyObjectsfromtheChurchBuilding;

iii.installingHolyObjects;

iv.reinstallingHolyObjects;

v. carryingoutofbuildingworksinandupontheChurchBuildingwithouttheauthorityandblessingoftheDiocesanBishop.

i. refusingorfailingtoacceptapplicationsformembershipfrombelieversinthedoctrinesoftheMacedonianOrthodoxChurchwhohavesatisfiedthecriteriaforeligibilityspecifiedintheConstitution,theDiocesanStatuteandtheBy-Laws;

j. failingtoremittotheDiocesanBishopthecontributionfromtheincomeoftheparishasspecifiedintheDiocesanStatute.

Inacomprehensivejudgment,whichincludedanin-depthconsiderationofthehistoryoftheMacedonianOrthodoxChurch(MOC)andrelevantCanonLaw,HisHonourfoundthattheMOCwasfoundedbothhistoricallyandinthepresentonabsoluteauthorityofitsBishopric.HisHonoursaidthat:

‘ThedoctrineofApostolicSuccessionasacceptedbytheMOCheavilyreliesonthetraditionfromonesetofbishopstothenextofthefaithoftheApostles.Thedirectionofthechurchbyapersonwhoseorthodoxyispureandacceptedisvitaltotheframeworkofthewholechurch.’

Thus,thequestionofthetermsofthetrustinthiscaseshouldbeanswered‘bysayingthatthetermsoftherelevanttrustdonotjustifytheexclusionofthebishopfromtheparishChurchofStPetkanortheemploymentofanypriestnotauthorisedbythebishopnortheclosing,alteration,additiontotheChurchbuildingoritsornamentswithouttheBishop’sapproval’.Therefore,HisHonourheldthatallegedbreaches(a),(b)and(h)andtheirassociatedbreacheswerefundamentalbreachesoftrust.Hehaddoubtsastowhetherallegedbreaches(d),(i)and( j)werefundamental,butstatedthatthiswas‘oflittlemomentasthesematterswillbesubsumedinthemoreseriousmatters’.

ThismeantthatthegoverningbodyoftheincorporatedassociationoftheparishofStPetkawasinbreachoftheChurchtrust.

Thecasemaybefoundat:www.austlii.edu.au/au/cases/nsw/NSWSC/2009/106.html

Seeinplicationsforcase2.8.4above

2.8.8 THE ESTATE OF DULCIE EDNA RAND (DEC’D) [2009] NSWSC 48 (SUPREME COURT OF NEW SOUTH WALES, 16 FEBRUARY 2009) FILE NUMBER: 4649 OF 2008

DulcieRanddiedon21February2006.Inher1997will,RonaldCarterwasnamedexecutorofherestate,estimatedtobeworth$1,898,243.08.Probatewasgrantedon22April2006.AfterRonaldCarter’sdeathinDecember2007,hiswidow,FayeCarterwasgrantedprobateofhiswill.MrsCartersoughtdirectionastohowtodistributeoneofthesixequalsharesinDulcieRand’swill.Underclause4(f),theshareinquestionwasleftto,‘ThePhilippinesandAustraliaEpiscopalChurchofGlendinning,NewSouthWales,’anon-existentbody.

InvestigationrevealedthattheSt.Paul’sMulticulturalFilipino-AnglicanMinistry,acongregationoftheAllSaintsAnglicanChurchinNorthParramatta,professedtobethecurrentpersonaoftheearlierunincorporatedassociation.Thepreviousdesignationreflectedthechurch’sstatusasanAreaMissionoftheEpiscopalChurchinthePhilippinescateringforthespiritualneedsofFilipinosinSydney.WhenthechurchbecamepartoftheAnglicanDioceseofSydneyinOctober2002,anewnamewasadoptedtoreflect thisaffiliation aswellastobroadenitsethnicmigrantbase.LettersconfirmingthischangeofidentitywerereceivedfromrepresentativesofboththeWesternSydneyRegionoftheAnglicanChurchDioceseofSydneyandtheEpiscopalChurchinthePhilippines.RepresentationswerealsomadebytheLegalOfficeroftheAnglicanChurchDioceseofSydneywhorecommendedthemoneysbepaidtotheAnglicanChurchPropertyTrustDiocese(theTrust)ofSydneyastrustee,tobeusedasDulcieRandwished.

Viasubmissions,theTrustcontendedthatthename,thePhilippinesandAustraliaEpiscopalChurchofGlendinning,wasamisnomerfortheFil-AussieChristianFellowshipwhichoperatedatRootyHillin1997.RonaldCarterhadbeenmistakenastothenamewhenMaxRandenquiredaboutitonDulcie’sbehalf.Glendinningwas,infact,wherethepriest,theReverendGayagay,lived.JusticeHarrisonagreedthattheFil-AussieChristianFellowshipwastheintendedbeneficiary,butdeclaredthatthediscrepancyinthenamewasnotmaterialsinceclearlytheSt.Paul’sMulticulturalFilipino-AnglicanMinistrywasitssuccessor.ThisconclusionwasreinforcedbythecontinuinginvolvementoftheReverendGayagaywiththeethnicministryandhishistoricalaccountofitsdevelopment.

Therefore,HisHonouradvisedthattheresiduaryonesixthoftheestateshouldbedistributedtotheSt.Paul’sMulticulturalFilipino-AnglicanMinistry.AstothequestionofwhethertheTrustshouldadministerthebequestonitsbehalf,JusticeHarrisonsuggestedthepartiesthemselvesworkoutanexpeditioussettlement.

Thiscaseshowsyetagain,theimportanceofkeepingacurrentwill.Thenamedbeneficiaryinthiscasewasanunincorporatedassociationwhichhadceasedtoexistunderthatnameatthetimeofthetestator’sdeath.Thistypeofproblemcanbeverydifficultforexecutorstoresolve,sothesemattersfrequentlyendupintheSupremeCourt.

Leavingagiftinawilltoanunincorporatedassociationcanalsocauseproblemsbecauseitisnotalegalentity.Thereforeitisalwayswisetofindoutthecorrectnameofyourintendedbeneficiaryanditslegalstatus.Manynonprofitorganisationsareabletosuggestcorrectdraftingofclausesifyouwishtoleavethemagiftinyourwill.

2.9 MiscEllanEous

2.9.1 ACCC V AUSTRALIAN KARTING ASSOCIATION (NSW) INC [2009] FCA 1255 (FEDERAL COURT OF AUSTRALIA, BENNETT J, 6 NOVEMBER 2009)

TheAustralianKartingAssociation(AKA)isanincorporatedassociationwhichwasformedbyvariousindividualkartracingclubsinNSWandtheACT.AtthetimeoftheproceedingstheAKAhad19memberclubs.Kartracingisaspecialisedmotorsportandhasitsownlicensingregime.TheAKAactstopromote,co-ordinateandadministerall

aspectsofkartinginNSWandtheACT.TheAKAraisesitsrevenuebyissuinglicencestoindividualdriversbutdoesnotownanykartcircuitsorsupplyanykartcircuithireservices.Thereare15kartcircuitswhicharemanagedbyAKAmemberclubsinNSWandtheACTand7kartcircuitsownedormanagedbynon-AKAmembers.EachoftheAKAmemberclubsisformedaroundakartcircuitinaparticularlocationandmanagesthatcircuit.EachoftheAKAmemberclubsisasportingclubrunbyvolunteersandtheclub’sactivitiesincludeconductingkartracingevents,organisingsprintkartracingseriesandhiringoutthekartcircuit.

InNSW,inadditiontotheAKA,thereareotherbodies,suchas,ProkartandAustralianBracketRacingAssociation(ABRA),whomanagekartcircuitsororganisekartracingevents.PriortoJuly2008,ProkarthadhiredkartcircuitsfromdifferentAKAclubsbydealingdirectlywiththeclubsandhadheldracesateachofthosehiredkartcircuits.

On19July2008theAGMofAKAwasheld.All19clubswererepresentedatthemeeting.DuringthecourseofthismeetingtwomemberclubrepresentativesledadiscussionaboutsettingascheduleoffeesforcircuitsoperatedbyAKAmembersandhavingtheAKAofficehandlenegotiationsforcircuithire.Theminutesofthatmeetingrecordthatthefollowingmotionwascarriedunanimously:

‘Allapplications/negotiationsaretobehandledbytheStateOfficeforanyAKANSWlicensedcircuitthatistobeusedforkartracing.Theminimumfeeis$4,000plusGSTperdayforcountryclubsand$6000plusGSTperdayformetropolitanclubsandCanberraKartRacingClub.’

Between31July2008and8August2008,ProkartrangtheAKAonthreedifferentoccasionstoobtainquotesforhirefeesforparticularAKAclubcircuitsandasaconsequenceoftherequest,writtenconfirmationofthehirefeewasprovidedtoProkart.OneachofthesethreeoccasionstheprocedureundertakenandthehirefeesquotedwereinaccordancewiththeresolutioncarriedattheAGMthusgivingeffecttotheprovisionsoftheminimumhirefeesunderstanding.Thecourtreferredtothisunderstandingasthe‘KartCircuitHireUnderstanding’forthepurposesofapplyingtheCompetitionCodeofNSW.ThecourtwassatisfiedthattherewasamarketforkartcircuithireandthattheAKAcouldexercisesignificantmarketpowerasitsclubsmanageandhire15ofthepossible22kartcircuitsinNSW.

WhileProkartdidnotproceedwithhiringanyoftheAKAclubcircuits,theactionsoftheAKAweresufficientfortheACCCtoconductaninvestigationandsubsequentlycommencecivilproceedingsagainsttheAKAandthreeofitsmembersforengaginginconductincontraventionofsections45(2)(a)(i)and45(2)(a)(ii)oftheCompetitionCodeofNSW.ThesesectionsoftheCodeconcernpricefixing,controllingpricesormaintainingorprovidingforpricefixingtosubstantiallylessencompetition.Immediatelyuponlearningthattheiractionswereagainstthelaw,AKAceasedgivingeffecttothekartcircuithireunderstanding.

TheAKAanditsmembersco-operatedfullywiththeACCCincludingprovidingalldocumentsandinformationrequiredbytheACCC.TherespondentsmadefulladmissionsandreachedagreementwiththeACCConthepenaltiesthatshouldbeimposed.Thequestionforthecourtcentredontheappropriatenessoftheconsentorderagreedbetweenthepartieswhichproposedthenatureofthepenaltiestobeimposed.Theproposedconsentorderprovidedfordeclarationsidentifyingthecontraveningconduct,a$10,000fine,injunctionsandatrainingandeducationprogram(complianceprogram)fortheAKAanditsmembers.

JusticeBennettnotedthatitisnotsufficientforthecourtmerelytogiveeffecttoaprivateagreementbetweenthepartiesbyconsentingtotheproposedorder:‘TheCourtisnotmerelygivingeffecttothewishesoftheparties.Itisexercisingapublicfunctionandmusthaveregardtothepublicinterestindoingso’(para68).HerHonourconsideredatlengththelegalprinciplesandrelevantfactorssurroundingthecontravention.ShefounditnoteworthythattherespondentsweretotallyignorantthattheiractionsconstitutedcontraventionsoftheCodeconcludingthatthisshowedtheyhadnointentiontocontravenetheCode.HerHonouralsotookintoaccounttherespondents’fullco-operationwiththeACCCandthenonprofitpurposeofAKAanditsmemberclubs.Thefactthattheparticipantsoftheclubsarevolunteerswastakenintoconsiderationwhenassessingwhethertheproposedpenaltieswereappropriate.

DespitethefactthattherespondentsunknowinglybreachedtheCodeandwereunlikelytore-offend,JusticeBennetttooktheviewthatitwasinthepublicinteresttosendamessagetosimilarorganisationsthattheyneedtobeawareoftheCompetitionCode.ShewassatisfiedthatinjunctionsagainsttheAKAandtherespondentclubspermanentlyrestrainingthemfrompricefixingarrangementstogetherwiththeproposed$10,000fineandtheestablishmentofaneducationandtradepracticescomplianceprogramforitsofficersandemployeeswouldhaveasignificantdeterrenteffectupontheAKAandaccordinglytheproposedconsentorderswereappropriateinthecircumstances.

JusticeBennettalsoplacedastrongemphasisongeneraldeterrencebeingaprincipalobjectofapenalty.HerHonourwasmindfulthatitwasinthepublicinteresttomakeaclearstatementtoothersportingorganisationsinsimilarpositionstotheAKA.

ThiscaseillustratesthatallorganisationsneedtobeawareoftheoperationoftheTradePracticesActandStateorTerritoryCompetitionCodeswhenengagingincommercialactivities.Organisationsengagedinprice-fixingandotheranti-competitivebehaviourwillbesubjecttoseverepenalties,eveniftheorganisationsinvolvedarenonprofitandeveniftheyarenotawareofthelaw.

2.9.2 CAROONA COAL ACTION GROUP INC V COAL MINES AUSTRALIA PTY LTD AND MINISTER FOR MINERAL RESOURCES [2009] NSWLEC 165 (LAND AND ENVIRONMENT COURT NSW, PRESTON CJ, 24 SEPTEMBER 2009)

Theapplicant,CaroonaCoalActionGroup,isanincorporatedassociationwhichwasformedtoopposeanyexplorationactivitiesand/orminingintheCaroonaDistrictontheLiverpoolPlainsinNSW.MembersoftheGroupcomprise80%ofthelandownersintheCaroonaDistrictwhosepropertiesarewithintheareaofanexplorationlicencegrantedbytheMinisterforMineralResourcestoCoalMinesAustraliaPtyLtd.TheGrouphadbroughtproceedingstochallengethegrantingoftheexplorationlicenceandcoalauthorisationtoundertakeexplorationactivitiesintheCaroonaDistrict.ThismatterwasanapplicationbytheGroupforanorderspecifyingthatthemaximumcoststhatanypartycouldrecoverfromanyotherpartyinthemainproceedingwouldbe$34,000.

TheCourthasanumberofsourcesofpowertomakeamaximumcostsorderinadvanceoflitigation.HisHonourdiscussedthesourcesandtheexerciseofthepowertomakeamaximumcostsorderindetail(paras9to15)buttheoverridingpurposeofmaximum

costsordersistofacilitateaccesstojustice.Itiswellunderstoodaccesstojusticeisimpededwherethecostoflitigationishigh.Amaximumcostsorderisawayofachievingproportionalitybetweenthecostoflitigationandtheimportanceandcomplexityofthesubjectmatterofthedispute.Thiscanbeparticularlyimportantinpublicinterestlitigation,butpublicinterestisjustoneconsiderationindeterminingtheaccesstojusticequestion.

TheActionGrouparguedthatamaximumcostsordershouldalwaysbeavailable‘wheneverproceedingsarebroughtinthepublicinterest’buttheCourtrejectedthis(para59).TheCourtlookedatcaseswhereanorderwasmadeonthebasisthatthepublicinterestplaintiffwouldbedeterredfromcontinuingproceedingsifamaximumcostsorderwasnotmade,andasaconsequenceissuesofsomepublicsignificancewouldnotbeabletobeheardanddeterminedbyacourt(para60).

However,theCourtheldthatamaximumcostsordershouldnotbemadeinthiscasebecauseaccesstojusticewouldnotbeimpededbynotmakingtheorder.TheActionGroupdidnotclaimthatitwouldnotcontinuewiththeproceedingsifamaximumcostsorderwasnotmade.TheCourtfound(para61)thatalthoughtheActionGoup’sassetswerenotsignificant,itsmembershipwasmostofthelandownersaffectedbythemininglicence.Theirpropertieswereofhighagriculturalproductivity,sotheirconcernwasthepotentialadverseeffectsontheirproductivity.HoweverthisalsomeantthattherewasafinancialincentiveforthelandownerstoprovidefinancialresourcestotheActionGrouptocontinuewiththelitigationregardlessofwhetheramaximumcostsorderwasmade.

TheCourtalsofoundthattheestimatedamountofcostswouldnotbedisproportionatetotheimportanceandcomplexityofthesubjectmatteroftheproceedings.

Inaddition,thetrialjudgewouldhaveadiscretiontorefusetomakeacostsorderagainsttheapplicanteveniftheywereunsuccessfulattrial,onthebasisofthepublicinterestnatureofthelitigation.

Thiscasemaybeviewedat:http://austlii.edu.au/au/cases/nsw/NSWLEC/2009/165.html

Thecriticalquestionindetermininganyapplicationforamaximumcostsorderiswhetheraccesstojusticewillbepromotedorimpededbymakingornotmakingtheorder.Theparticularcircumstancesofthelitigation,includingitsnatureas‘publicinterest’litigation,andoftheplaintiffarerelevantinansweringthiscriticalquestion,butthesemattersarenotendsinthemselves(para58).

Whilemaximumcostsordersareaneffectivewayforcommunitygroupspursuingpublicinterestlitigationtocontainthelegalcoststhatcanbeawardedagainstanyparty,thecourtwilllooktosurroundingcircumstancesofthecasewhendeterminingiftheoverridingpurposetoensureaccesstojustrequiredsuchanorder.Inthiscase,thefinancialincentivefortheActionGroup’smemberstocontinuethelitigationregardless,combinedwiththefactthatcostswouldnotbedisproportionatetotheimportanceandcomplexityofthematter,weredecidingfactors.

2.9.3 BURRELL PLACE COMMUNITY ACTION GROUP INCORPORATED V GRIFFITH CITY COUNCIL [2009] NSWLEC 120 (LAND AND ENVIRONMENT COURT NSW, LLOYD J, 29 JULY 2009)

BurrellPlaceCommunityActionGroupInc(theActionGroup)wasincorporatedundertheAssociations Incorporation Act 1984(NSW)on4March2009.TheprincipalactivityoftheActionGroupisdescribedas‘takingreasonableactionwithrespecttoplanningissuesatBurrellPlace’.InSeptember2008DunebaInvestmentGroupPtyLtd(Duneba)lodgedadevelopmentapplication(DA)withtheCounciltobuildasupermarketatBurrellPlace.InFebruary2009theCouncilconsentedtotheDA.InMarch2009theActionGroupwasformedtoopposetheconstructionofasupermarketatthatlocation.On4May2009theActionGroupcommencedproceedingsintheLandandEnvironmentCourtseekingadeclarationthattheCouncil’sconsenttotheDAwasinvalidandofnoeffect.

TheActionGrouphad22membersandatthetimeoftheproceedingshad$5795.00initsbankaccountanditssolicitorswereholding$2560.40ontrust–clearlyinsufficientfundstopayacostsordershouldtheActionGroup’sclaimfail.

TheCouncilandDunebaappliedforsecurityforcostspursuanttorule42.21oftheUniform Civil Procedure Rules 2005(NSW)(UCPR)whichgivesthecourtjurisdictiontomakeanorderforcostsandtostayproceedingsuntilthesecurityisgiveninanyofthecircumstancessetoutintherule.Inthisparticularinstancerule42.21(d)wasreliedupon,namely,‘that there is reason to believe that a plaintiff, being a corporation, will be unable to pay the costs of the defendant if ordered to do so...’

TheActionGroupargueditwasnotacorporationwithinthemeaningoftheCorporations Act 2001(Cth)andthereforethedefendantscouldnotbringanapplicationforsecurityforcostsunderthisrule.HisHonourrejectedthisargumentonthebasisthattheGroupwasabodycorporatewhichiscapableofsuingandbeingsuedandthereforemustbetreatedlikeanyotherbodycorporatewithintheordinarymeaningoftheword‘corporation’inrule42.21oftheUCPR.TheUCPRdoesnotreferto‘acorporation’withinthemeaningoftheCorporations Actandthereforethebroadermeaningisadopted.Inanyevent,ifthisruledidnotapplythenrule42.21(e)couldbeapplied.

Thepurposeoftheruleallowingsecurityforcostsistoprotectdefendantsfromunjustconsequencesofanunsuccessfulclaimagainstthem.Althoughitisentirelywithinthecourt’sdiscretionwhethertoordercostsinanactionthelongestablishedruleisthatcostsfollowtheevent.ThereareanumberoffactorstheCourttakesintoconsiderationindecidingwhethertoordersecurityforcostsincludingthestrengthandbonafidesofthecase.

HisHonouralsotookintoconsiderationthatinproceedingssuchasthepresentanorderforsecurityforcostsdoesnotdeprivetheapplicantplaintiffofanyfundamentalrightwherethereareotherswhomightprosecutethecaseundertheprovision.

Anotherissueinthecasewasthatrule4.2(2)oftheLand and Environment Court Rules 2007(NSW)providesthatacourtmaydecidenottomakeanordertogivesecurityforcostsifitissatisfiedthattheproceedingshavebeenbroughtinthepublicinterest.RelyingonpreviousdecisionsoftheNewSouthWalesLawandEnvironmentCourt(NSWLEC),HisHonourdeterminedthatadeparturefromtheusualorderforcostsrequiressomeotherfactorinadditiontothepublicinterestnatureofthelitigation,suchasanimportantquestionofstatutoryinterpretationorthebreakingofnewgroundoflegalprinciple.

ThereforeHisHonourorderedsecurityforcostsagainsttheActionGrouponthebasisthatitscasewasinherentlyweak;andthatitdidnotraiseanyquestionofconstructionornewprincipleandthereforewasnotinthepublicinterest.Securityforcostsforanamountof$85,000wasordered,inadditiontoanorderforcostsagainsttheGroupforthisapplication.Theproceedingswerestayeduntilthesecurityforcostswaspaid.

Thiscasemaybeviewedat:www.austlii.edu.au/au/cases/nsw/NSWLEC/2009/120.html

Incorporatedassociationsarenotimmunefromanorderforsecurityforcosts.Howeverthelikelihoodofhavingsuchanordermadeisdirectlylinkedtothestrengthofthecaseiftheassociationispursuingaclaim.Evenifthelitigationhasapublicinterestnaturethiswillnotofitselfbesufficienttoresistanorderforcosts.Therealsoneedstobeanimportantorgroundbreakinglegalaspecttothecase.

2.9.4 CALVO V SWEENEY [2009] NSWSC 719 (29 JULY 2009)

TheAustralianInstituteofMusicLtd(AIM)isanonprofitcompanywithpurelyeducationalandculturalaims,underpinnedbyacharitableintent.DrandMrsCalvoweretheownersandwerealsodirectors.Theirsonwasthethirddirector.From1989,AIMofferedprivate,tertiarymusiceducationaswellasnon-tertiarymusicstudiesandperformanceclasses.Itexpandedin2002withtheassistanceofa$2.4millionNewSouthWalesGovernmentgrant,provideditretaineditsnonprofitstatus.Withexpansion,rentaloverheadsincreasedsignificantly.

AIM’smonetarypositiondeteriorated,andin2002/2003theauditorqualifiedhisopinion.InMay2003,theCommonwealthGovernmentforeshadowedaFee-HelpschemeunderanewHigherEducationLoanProgram,but,foritsstudentstobeeligible,AIMhadtosatisfytherequirementstobeclassifiedasaHigherEducationInstituteontheAustralianQualificationsFrameworkRegister.ThiswouldhavebeenasourceofincreasedprofitabilitybutAIM’sfinancialsituationmeantitcouldnotgetrecognitiononthisregister.Atthesametime,DrCalvodecidedhewantedtoretireanddecidedtoputAIMonthemarket.HewasintroducedtoMrSweeney,anaccountant,todeterminearealisticexitstrategy.

DrCalvosaidhewaswillingtosella20%stakeinAIMfor$2million,whichMrSweeneythoughtwasanoverlyinflatedfigure.Followingameetingofstakeholderson29October2003,itwasdecidedtocompileadetailedinformationmemorandumforprospectiveinvestors.Thatwascompletedby20May2004butintheprocessitwasdiscoveredthattheCalvoshadhadtoselltheirhomeinlateNovember2003,todischargetheiroverdraftwithWestpac,theirformerfinancialcontroller,andfreeupsomefundsforAIM.

ToreinforcethepositiveoutlookforAIM,MrSweeneysaidithadtogenerateprofitstoattractinvestorsandherecommendedthatitrepositionitselfasa‘for-profit’company.DiscussionscontinuedbetweentheCalvosandMrSweeneyabouttheamountandtermsofpaymenttoDrCalvoandtheholdingthatanyinvestorwouldreceiveinreturn.InlateJuneAIMsoughtaccreditationasaHigherEducationInstituteundertheHigher Education Support Act 2003(Cth)sothatitcouldattractFee-Helpforitsstudents.

On2July2004DrCalvowasadmittedtohospitalaftersufferingastroke.Thedaybefore,AIM’slandlord(Ellimark)hadtakenafixedandfloatingchargeoverallofAIM’sassetstosecureitsobligationsunderitslease.MrSweeneywasnotawareofthisuntilAugust.On6JulyMrSweeneyexpressedhisinterestinpersonallyinvesting$500,000inAIMandassistingDrCalvotopurchaseahome,providedDrCalvo’sshareholding

waseventuallyreducedto5%.Nootherprospectiveinvestorscouldbefound.AfterdiscoveringthefixedandfloatingchargeandAIM’sdirefinancialposition,MrSweeneyinsistedonabsolutecontrolofitsmanagementaswellasaconcertedefforttoqualifyasahighereducationprovider.Thiswouldhaveimprovedthefinancialoutlookbecauseofthefeeassistance,buttheCommonwealthDepartmentofEducation,ScienceandTraining(DEST)hadseriousconcernsaboutAIM’slongtermfinancialviability.

On2September2004,MrSweeneyconvincedDrandMrsCalvothatademonstrablechangeinmanagementstyleandgovernancewererequiredtoimprovebothEllimark’sandDEST’sperceptionsofAIM.Soon6September2004,theCalvosallotted51%oftheAIMsharestoMrSweeney,leavingthemselveswith24.5%each–whichtheybelievedwasapurelytemporarymeasure.

The court actions – Trade Practices Act claims

On19July2007,theCalvosbroughtactionintheNewSouthWalesSupremeCourt.Partoftheirclaimwasbasedonmisleadinganddeceptiveconductundersection51oftheTrade Practices Act 1974 (Cth)(TPA).FirstlytheysaidtheywereinducedtoissuethenewsharesbecauseofsupposedmisrepresentationsbyMrSweeneyon2September2004.

Theclaimedmisrepresentationswere:

• thatEllimarkwouldnotalteritsstanceonrentalconcessionsinexchangeforshareswhiletheCalvosweremanagingAIM;

• theinferencethatDESTwouldprefertoconductbusinessdealingswithMrSweeney.

Thefirststatementwaspatentlyfalse,buttheCalvossubsequentlydenieditwasuttered–meaningthat,bytheirownadmission,theycouldnothavereliedonit.Withrespecttothesecondcomment,HisHonourpointedoutitwasnotmisleadingasMrSweeneywasmerelystatinghisopinionbasedonDEST’slengthystatementofconcernsaboutAIM’sfinancialandcommercialmanagement.

Afurtherclaimwasmadethaton6September2004,MrSweeneyallegedlyofferedtheCalvospaymentof$1millionupfrontwiththepromiseofafurther$1millioninayear’stimetoinducetheCalvostogivehima51%stakeinthecompany.SuchfundswouldhavecomeviaAIMasrepaymentofDrandMrsCalvo’s2003loantothecompany.However,JusticeWhitefoundthisnotiontobeimplausiblesinceMrSweeneyneededtogainamajorityshareholdingaswellastoinjectfundsintoAIMtoimprovetheefficiencyofitsoperation.TherewasalsonoevidencethattheCalvoswereinfluencedtopartwiththeirsharesbyanyremarkmadebyMrSweeneyonthatday.HisHonournotedthatMrSweeneyhadinsistedthatDrandMrsCalvoobtainlegaladvice.

Therefore,noclaimofmisleadinganddeceptiveconductundersection51oftheTPAcouldbesubstantiated.

The court actions – breach of fiduciary duty claim and undue influence

ThroughoutSeptember2004,negotiationscontinuedregardingtheamountandtermsofMrSweeney’sinvestment;theleasedebtwithEllimark;aninjectionoffundstosecureanunqualifiedaudit;theholdingtoberetainedbytheCalvos;andaccreditationasahighereducationprovider.ItwasagreedthatMrSweeneywouldtake37.5%ofAIM;Ellimarkwouldwriteofftheexisting$1.6milliondebtinreturnfor37.5%ofthebusinessandreduceAIM’srenttoJune2005;theCalvoswouldkeeptheremaining25%of

AIM,butMrSweeneyinsistedonanoptionovertheirholdingaswellasanirrevocableproxy–effectivelygivinghimcontrolofthecompany.On22Septemberheagreedtopurchase15%ofAIM’ssharesfromtheCalvosprovidedthebusinessmade$1.5millionforthe2005/2006financialyear.DrCalvoaskedfor$1.56millionwhenthesharesweretransferred.

TheCalvosresignedasdirectorsofAIMon24SeptembertobereplacedbyMrSweeneyandoneother.Theshareallotmentwaseffectedthatday.Therewasdisputeastowhethertheshareholders’agreementwasconcludedthatdayoron27September2004.Aso-calledco-operationdeedlegitimisedMrSweeney’sproxyvotingrightsovertheCalvos’shareholding.Theyweretocontinueasconsultantsonasalaryuntil30June2007.

WhenAIMfinallyachievedhighereducationproviderstatuson9November2004,MrSweeneyandarelatedcompanymadetax-deductiblegiftsof$150,000and$250,000respectively.

DrandMrsCalvofirstsoughtlegaladviceregardingpaymentfortheirsharesinDecember2004.JusticeWhiteconcludedthat,sincetheyhadnotsoughtlegaladviceatthetime,theydidnotfullyunderstandthedocumentstheyhadsigned.TheproblemwascompoundedbytheeffectsofDrCalvo’sstrokewhichlefthimmoreamenabletoMrSweeney’ssuggestions.

InJune2005,ademandfor$1.56millionwasmadeforthetransferofthe37.5%shareholdingtoMrSweeney.MrSweeneysuggestedconvertingthecompanytoa‘for-profit’venture.Hemadeothersuggestionsforbusinessschemesoversubsequentmonthsbutnopaymenteventuated.On2April2007,DrCalvowasinformedhewouldbefinishingupattheendofthefinancialyear.

InthiscourtactiontheCalvosaccusedMrSweeneyofcompromisinghisfiduciarydutyofloyaltytothemthroughhisAIMshareholdingandactiveinvolvementasitsChiefExecutiveOfficersince27September2004.

MrSweeneyarguedhisrolewasthatoffinancialadvisortoAIM,andhehadnofiduciaryobligationtoDrandMrsCalvo.However,JusticeWhitedisputedthisargumentbecausetheCalvoswerenotonlyreliantonMrSweeney’snegotiationskills,butalsoconvincedonlyhecouldrescueAIMfromitsprecariousfinancialstate.Inaddition,hehadunlimitedaccesstoconfidentialmaterialconcerningAIM.HisHonourdeterminedthatafiduciaryrelationshipentailingloyaltydidexistbetweentheCalvosandMrSweeney.SinceMrSweeneyhadbeenemployedtooverseetheCalvos’exitstrategy,itwasinappropriateforhimtoattempttobrokerasizeablepersonalshareholdinginAIM,unlesshehadtheirfullyinformedconsent.

MrSweeneyarguedhisdirectinvolvementwasneededtosafeguardtheCalvos’businessinterestsandthiscounteredhisapparentconflict.Thiswasrejected.AsJusticeWhitepointedout,acquiringa37.5%stakeinandeffectivecontrolofAIMwhilefailingtoremuneratetheCalvoswasinherentlyunfair.Therewasnoevidencethathiswasthebestdeal;andMrSweeneyusedtimepressuresrelatingtoAIM’saccreditationtohisadvantage.TheirrevocableproxyovertheCalvos’shareswasusedtoreinforcehisdominantrole.

AccordingtoJusticeWhite,thisactionalsodemonstratedthattheCalvosweresubjecttoundueinfluencefromMrSweeney.AlthoughDrCalvoandhiswifehadalwaystrustedMrSweeney’sjudgment,followingDrCalvo’sstroke,theybecameincreasinglyvulnerabletotheabuseofthatinfluence.MrSweeneycouldnotrebutafindingofundueinfluenceinthewayhe’dseizedcontrol.

The remedy

JusticeWhitedeclaredthatMrSweeneyheldhissharesinAIMontrustfortheCalvos.ThesesharesandanyaccompanyingcertificatesweretobetransferredtoDrandMrsCalvowithintwentyonedays.

Regardlessofanyagreementsmadethecourtcanlookatthenatureoftherelationshipbetweenthepartiesanddeterminewhetherthereissufficientindependenceofactiontoplaceallpartiesonthesamefooting.HeretheCalvoswereatadistinctdisadvantageandhadplacedtheirtrustinMrSweeneywhowasinasuperiorposition.Consequentlythecourtdeterminedtheyhadbeenundulyinfluencedandfoundintheirfavour.

2.9.5 LIBERAL PARTY OF AUSTRALIA AND AUSTRALIAN ELECTORAL COMMISSION [2009] AATA 551 (ADMINISTRATIVE APPEALS TRIBUNAL, 23 JULY 2009) FILE NO: 2009/1311

TheLiberalPartyofAustralia(theLiberalParty)approachedtheAustralianElectoralCommission(theCommission)undertheFreedom of Information Act 1982 (Cth)(theAct)aboutaccessingtwolegaladvicesonthesubjectofregisteringpoliticalparties.OneofthesecamefromtheLegalServicesSectionoftheCommissionon17May2007,andtheotherwasgiventotheCommissionbytheAustralianGovernmentSolicitoron3Augustofthesameyear.BothsetsofadvicefollowedanattemptinFebruary2007,toregisterapoliticalpartycalledtheLiberalDemocraticParty,thenameofwhichhadobvioussimilaritiestoanexistingAustralianpoliticalparty.Inresponse,theCommissionrefusedtherequest,maintainingthat,becausethedocumentswouldbesubjecttolegalprofessionalprivilegeinanylegalproceedings,theywereexemptundersection42oftheAct.

Althoughanunincorporatedassociation,theLiberalPartyhadstandingtoapplyforareviewofthisdeterminationtotheAdministrativeAppealsTribunal(theAAT)assection27(2)oftheAdministrative Appeals Tribunal Act 1975 (Cth)statesthat,‘Anassociationofpersons,whetherincorporatedornot,’qualifiesaspersonsaffectedbythisdecision.Itsgroundsforthereviewwerethatthedocumentsinquestionwerenotprotectedbylegalprofessionalprivilegeandthat,withrespecttotheAustralianGovernmentSolicitor’sadvice,theCommissionhadwaiveditsprivilege.

SeniorAATMember,J.W.Constance,addressedthislattermatterfirst.HefoundfortheLiberalPartybecausetheCommission’suseoftheAustralianGovernmentSolicitor’smaterialunderpinneditsdecisiontodenytheLiberalPartyaccesstothematerialsought.ItwasagreedthatsuchopenreliancesupportedthewaivingoftheCommission’slegalprofessionalprivilege.Thereforeintheinterestsoffairness,theLiberalPartyshouldbepermittedtoviewtheadvicefromtheAustralianGovernmentSolicitor.Noreductioninthechargeforaccessingthelegaldocumentwasmeritedas,intheSeniorMember’sopinion,itfailedthepublicinteresttestoutlinedinsection29(5)(b)oftheAct.

ConsiderationoftheadvicefromtheCommission’sownlegalteamwarrantedadifferentoutcome.Inthisinstance,theadvicewasregardedasaconfidential,legalopinionsuppliedtoaclient,regardlessofwhetherthesolicitorwasemployedbythatclient,theCommission.Therewasnoevidenceofprivilegebeingwaived.DespitetheLiberalParty’seffortstoarguethatthedocumentwasanexceptiontosection42(1)oftheActsinceitmet

thecriteriaundersection9(1)suggestingithadbeenproducedbytheCommissionforitsofficers’decision-makingpurposes,theAAT’srulingwasthattheLegalServicesSectionhadcompileditforaparticularcaseratherthanforgeneralapplication.

Thiscasemaybeviewedat:www.austlii.edu.au/au/cases/cth/AATA/2009/551.html

2.9.6 O’HARA V SIMS [2009] QCA 186 (QUEENSLAND COURT OF APPEAL, KEANE, MUIR AND FRASER JJA, 10 JULY 2009)

ThiswasanappealfromaSupremeCourtciviljurytrial(O’Hara v Sims[2008]QSC301).Thejuryfoundtherewerenodefamatoryimputationsabouttheplaintiff(O’Hara)inaletterthedefendant(Sims)hadsenttoothermembersoftheGoldCoastTurfClub.MrO’Haraappealedthedecisiononthegroundsthat:eachofthejury’sfindingswasonethatnoreasonablejurycouldhavereached;andthetrialjudgeerredindeterminingthatifthejuryhadfoundtheimputationsdefamatorythedefenceofqualifiedprivilegewouldhaveapplied(section30,Defamation Act 2005(Qld)).

MrO’Hara,amemberoftheGoldCoastTurfClubCommittee,wasseekingre-electiontothecommitteeinthe2007biennialelection.Inthelead-uptotheelectiontherewascontroversyoverasuggestedproposalthattheracetrackbemovedtoanewlocation.MrO’HaragaveaninterviewtotheGold Coast Bulletinnewspaperinwhichhewasreportedassayinghewasinfavourofthemove,althoughhelaterassertedthearticlemisquotedhiminrespectofhissupportbeingunconditional.MrSims,alifememberoftheclub,wasopposedtoanysuggestionthatthetrackshouldberelocatedandwrotetoclubmembersurgingthemtoexaminethecredentialsofeachcandidateforelectionclosely,beforevoting.InhisletterhestatedhehadpreviouslysupportedO’Harabuthadchangedhisopinionandgavereasons;thenconcluded:‘Inmyviewthismanisnowunworthyofapositiononourcommittee.IwillnotbevotingforBrianO’Hara’.MrO’Haraconsideredtheletterconveyeddefamatoryimputationsandbroughtanactionfordamagesfordefamation.

The trial

Attrial,thequestionforthejurywaswhethertheletterconveyedimputationsthatweredefamatoryofMrO’Hara,inthat:

1. HehadengagedinconductmakinghimunworthytobeacommitteememberoftheTurfClub(imputation1);

2.HehadsubordinatedthedueperformanceofhisdutyasacommitteememberoftheTurfClubtohisinterestinself-promotion(imputation2);and

3.HehadactedrashlyasacommitteememberoftheTurfClub(imputation3).

MrSimsdefendedtheactiononthebasisthattheletterhadnotconveyedtheimputationsasalleged,andinanyeventifsuchimputationswereconveyedtheywerenotdefamatoryofMrO’Hara.Alternativelyifthepurportedimputationswerefoundtobedefamatoryhereliedonthedefencesoftruth,honestexpressionofopinionandqualifiedprivilegepursuanttosections25,30and31oftheDefamation Act 2005 (Qld).Thetrialjudgewithdrewthedefencesoftruthandhonestexpressionofopinionfromthejury’sconsiderationandreservedhisrulingontheavailabilityofthequalifiedprivilegedefenceuntilafterthejuryreturneditsverdict.Thejuryconcludedthatimputation1wasnotconveyedbytheletterbutimputations2and3were;however,theywerenotdefamatoryofMrO’Hara.JudgmentwasenteredforMrSims.

Thetrialjudgeaddressedthequestionofthequalifiedprivilegedefence,whichisavailableifthedefendantprovesthat:

a.Therecipienthasaninterestorapparentinterestinhavinginformationonsomesubject;and

b.Thematterispublishedtotherecipientinthecourseofgivingtotherecipientinformationonthatsubject;and

c.Theconductofthedefendantinpublishingthatmatterisreasonableinthecircumstances.

Thetrialjudgeconcludedtherewas‘nodoubtthatMrSims’sletterwasacommunicationofsuchanaturethathehadaninterestinmakingitandthememberstowhomhewrotehadacorrespondinginterestinhavingitmadetothem.Thecommunicationwasthereforeprivilegedunlessmademaliciouslyorunreasonably’([2008]QSC301atparas44to45).MalicewasnotassertedandonthequestionofreasonablenessHisHonourfoundthatthecircumstancesoftheelectionandthemembers’commoninterestintheelectionofcommitteememberswereenoughtoestablishitsreasonableness.ThereforethedefenceofqualifiedprivilegeappliedandjudgmentwasenteredforMrSims.

This Appeal

Onanappealfromaciviljurytrial,theroleoftheCourtofAppealisnottore-opentheevidenceandconsiderwhetherthejury’sconclusionisthemostreasonableconclusionthatcouldhavebeenreached,butonlytoensurethejuryverdictisrealisticinthecircumstances.Inordertodeterminewhetherthejury’sverdictcouldreasonablyhavebeenreachedtheCourtconsideredthethreeimputations.Applyingthetestthatanimputationisdefamatoryifthepublicationofitislikelytoleadordinarydecentpersonstothinklessoftheplaintiff,JudgeofAppealKeaneheldthatMrO’Haramustshowthattheviewstakenbythejurywerenotrationallyopentoit(para34).

Imputation 1

Inrelationtoimputation1whichconcernedtheappellant’s(MrO’Hara’s)worthinesstobeacommitteemember,JudgeofAppealKeanehelditwasopentothejuryreasonablytoconcludetheletterdidnotconveytheimputationthathewasunworthyasacommitteememberbutinsteaditwenttotheissuewhetherhewasunworthytobeelected.HisHonournotedthedifferencebetweenO’Hara’sprospectofelectionbeingdamagedbytheletterandhisreputationbeingdamagedbytheletter(para39).JudgeofAppealFraserhadasimilarview(para81)

Imputation 2

Inrespectofimputation2,JudgeofAppealFraserthoughttheimputationwasnotasseriousastheappellantcontendedbutconsidereditwouldcauseordinarypeopletothinklessoftheappellantandthereforewasunabletoseehowthejurycouldnothavefounditdefamatory(paras89to90).JudgeofAppealMuiragreed.JudgeofAppealKeanewasnotpersuadedthejury’sconclusion(theimputationwasconveyedbytheletter,butwasnotdefamatory)wasnotreasonablyopentoit.HoweverheconsideredthatiftheimputationdidmakepeoplethinklessofMrO’Haraitwouldonlybetoaminimalextentwhichisrelevanttotheissueofqualifiedprivilege.

Imputation 3

TheCourtconsideredthattheimputationofrashnessagainstMrO’Harawasnotsuchastocauseordinaryandreasonableorright-mindedpeopletothinkthelessofhim(paras53,91).

Defence of Qualified Privilege

TheCourtofAppealhadtodeterminewhetherthetrialjudgewasrighttoreachtheconclusionthatthequalifiedprivilegedefencehadbeenestablished.KeaneJAconsideredthatthecriticismsofthetrialjudge’sdecisionwerewithoutsubstanceandFraserJAwasnotpersuadedthetrialjudgehaderredinanyrespectinfindingtheimputationslackedseriousnessandwerereasonableinthecircumstances.MuirJAconcurred.

Theappealwasdismissedunanimously,withcostsagainstMrO’Hara.

Thiscasecanbeviewedat:www.sclqld.org.au/qjudgment/2009/QCA/186

Implications of this case.

ThelawofdefamationinQueenslandisgovernedbytheDefamation Act 2005,partofnationaluniformlegislationgoverningthelawofdefamation.Thiscasedemonstratesthatthewell-settledtestonwhetherapublicationisdefamatoryisthatitisactionableasdefamationifitcausesordinaryanddecentpeopletothinklessofaperson.Justbecauseacriticismofapersonispublisheddoesnotnecessarilymeanitisdefamatory.Butiffoundtobedefamatory,statutorydefencesmayapply,e.g.qualifiedprivilegemayapplyifthepublicationistoapersonwithaninterestinreceivingtheinformationandpublicationisreasonableinthecircumstances.

2.9.7 AUSTRALIAN BARTER CURRENCY ExCHANGE PTY LTD V UNITING CHURCH NSW TRUST ASSOCIATION LIMITED [2009] NSWSC 607 (2 JULY 2009) FILE NUMBER: 11739/2009

MrDavidCassanitiwhowasinvolvedwithseveralcompanies,includingAustralianBarterCurrencyExchangePtyLtd,borrowedabout$14millionthroughtheUnitingChurchNSWTrustAssociationLimited(theUnitingChurchNSW)in2004.Inexchangefortheloans,mortgagestothevalueof$27millionweretakenover29properties.Whenpaymentbecameduein2006,MrCassanitiwasinjailwherehewasdetaineduntilJuly2008.Atthattime,thecompanieswereplacedinprovisionalliquidation.Duringthistime,theloansremainedunpaidandinterestdemandswerenotmet.

ThisstateofaffairspromptedtheUnitingChurchNSWtoservenoticesonMrCassanitiundersection57(2)(b)oftheReal Property Act 1900 (NSW).Saleofthepropertiesaspermittedbysection58wasanoptionifhefailedtocomplywiththelender’slegitimatedemands.Forhispart,MrCassanitiwashamperedinhisquesttorefinancetheloansbythefacthiscompanieswereinthehandsofaprovisionalliquidator,MrRobertMoodie.Alternativelenderswereunderstandablyreluctanttoadvancefunds.ThesituationwasfurthercomplicatedbythefactthatMrMoodiehadlodgedcaveatsovertheprovisionallyliquidatedcompaniestoensurepaymentofhisprofessionalfees.Thesecaveatswerenotremoveduntil27May2009.Inaddition,theAustralianSecuritiesandInvestmentsCommission(ASIC)sawfitnottonoteMrCassanitiasadirectorinthecompanies’recordsagainbefore2June2009.

AfterMrCassanitisuggestedanumberofunworkableschemestotheUnitingChurchNSW,itwasdecidedinlateJanuary2009,toauctionfiveofthe29propertieson2and8April2009.AttheendofMarchMrCassanitiunsuccessfullysoughttoprevent

thisactionbeingtaken.However,thepropertiesweredulysold,reducingthedebtto$7.061millionandleavingtheUnitingChurchNSWinpossessionofsurplusfunds.

Whenthepublicauctionofafurtherfourpropertieson11June2009,wasproposedbytheUnitingChurchNSW,MrCassanitisoughtaninjunctiontohaltthesaleofthethreeinBathurstStreet,Liverpool,althoughhewasagreeabletotheauctioningofaBaulkhamHillsproperty.Hemaintainedthatnotonlywasrefinancingunderway,butalsothesecurityofferedbythepropertieswaswellinexcessofthedebtowedtotheUnitingChurchNSW.Fromitsperspective,theUnitingChurchNSWobjectedtotheinterferencewiththemortgagee’spowerofsaleaswellasthefinancialcostsincurredinfindingoutaboutMrCassaniti’sactionstwentyfourhoursbeforetheproposedsale,especiallywhenhehadknownabouttheauctionsince24May.

DespitesympathisingwiththeUnitingChurchNSW’sposition,JusticeHoebengrantedtheinjunctionbecausetherewasnoprospectofitsfacingfinanciallossandtherefinancingofMrCassaniti’sloansseemedassured.Costs,however,wereawardedintheUnitingChurchNSW’sfavourbecauseoftheshortnoticegivenofMrCassaniti’sintentions.

2.9.8 WHITE CITY TENNIS CLUB LTD V JOHN ALExANDER’S CLUBS PTY LTD AND ANOR [2009] NSWCA 114 (3 JUNE 2009) FILE NUMBER: 40038/09

WhiteCity,situatedatPaddingtoninSydney,wasTennisNSWheadquarterspriortoitsrelocationtoHomebushinabout2000.Fromitsestablishmentin1948,theWhiteCityTennisClubLtd(theClub)operatedatennisclubthere.Later,itleasedpartofabuildingerectedundertheCentreCourtin1970.Themostrecentleaseforaperiodoftwentyfiveyearswasenteredintoon1October1995.Whenitwasdecidedtoredevelopthestadium,TennisNSWandtheClubendorsedaHeadsofAgreementon19January2004,indicatingtheClubwouldhaveanoptiontobuythepieceoflandonwhichitsoperationswerecentred.Subsequently,onthe23April2004,JohnAlexander,therenownedinternationaltennisplayer,approachedtheClubthroughhiscommercialarm,JohnAlexander’sClubsPtyLtd(JACS),withapropositionforaJointVentureAgreement(arevisedversionofanearliersubmission).TennisNSWthenrescindedtheHeadsofAgreementregardingtheland,andon26August2004,itwasannouncedthatthelandinquestionwouldbesoldbypublictender.

Despitethisdevelopment,aMemorandumofUnderstanding(theMOU)wassignedbetweentheClubandJACSon28February2005,withtheclubpromisingtocontinuetorunatennisclubandJACSagreeingtodevelopafirst-classsportingamenityatWhiteCity.Clause3.7oftheMOUrelatedspecificallytopursuinganoptiontoacquirethenecessaryland.Aftertwopreviousattempts,anotherWhiteCityAgreement(theAgreement)wasnegotiatedon29June2005.Thesignatoriesincluded:thesuccessfultenderer,SydneyGrammarSchool;SydneyMaccabiTennisClubLtd(Maccabi);theClub;andJACS.Amongstothermatters,theAgreementprovidedanoptionforJACStoacquirelandotherthanMaccabi’ssouthofthestormwaterchannelbeforetheendofthe2007financialyear.IfJACSpasseduptheoption,theClubwouldhavethechancetodoso.

JACSservedaNoticeofTerminationoftheMOUon12April2006,citingtheClub’sfailuretomeetitsobligations.SuchgroundswerestrenuouslydeniedbytheClubwhichre-iterateditscommitmenttotheMOUinwritingon16August2006.

On27June2007,PoplarHoldingsPtyLtd(Poplar),acompanyofwhichJohnAlexanderwasthesoleshareholder,boughtthelandavailableunderoption.Accordingtotheevidence,thecompanywassetuppurelytoimplementtheoption.However,theClubarguedthatanyinterestinthislandwasheldonconstructivetrustforit.OninitialtrialintheSupremeCourt,thejudgedidnotacceptthisargument,andviewedtheparties’negotiatingabilitiesasbeingequallybalancedandvoluntarilyemployed.Nopre-existingfiduciarydutyhadbeenviolated.

TheClubtooktheissueonappealtotheNewSouthWalesCourtofAppealalongwithademandthat,forthepaymentof$6.73million(theamountpaidbyPoplarinexercisingtheoption),thetitleandinterestinthedisputedlandbetransferredtotheClub.

JusticeMacfarlan,withwhomJusticesGilesandBastenagreed,pointedoutthattheWhiteCityAgreementhadnomaterialeffectonthescopeoftheMOU.Inaddition,heconcludedthattheexistenceofaconstructivetrustwasnotdependentonwhethertheMOUwasstillinforce,nordiditrequireapre-existingfiduciaryrelationshipbetweentheparties.Whatwascrucial,inHisHonour’sopinion,wasthattheClubhadrelinquisheditsownrightswithrespecttotheland,trustingJACStotakeuptheoptionfortheirjointventure,oralternativelypermittingtheClubtoutilisetheoption.ToallowJACStobypasstheClubforitsownaggrandisementwasclearlyunconscionable.

Clause3.7.1oftheMOUdealtwithusingtheoptiontoprocurethelandonbehalfofWhiteCityHoldingsLimited(WCH),acompanysetupforthatexpresspurpose.Underthatclause,theClubreliedonJACStohonouritspromiseorrisknotbeingabletomaintainitslinkwithWhiteCitythroughbeingineligibletopurchasetheproperty.Thewords,‘onbehalfofWCH’,expresslyindicatedtheexistenceofafiduciaryrelationshipwherebyJACSmustactintheClub’sinterestinWCHinanylandtransactionwithTennisNSW.InJusticeMacfarlan’sview,itmadenodifferencewhetherJACSoritsnominee,Poplar,securedthelandasbothcompanieswereMrAlexander’spuppets.SincetherewasnomandateforJACStopromoteitsowninterests,exercisingtheoptioninthismannerwassimilarlyimproperforPoplar.Therefore,PoplarmustholdthepropertyonconstructivetrustfortheClub.

AlthoughJusticeMacfarlanexaminedsection42(1)oftheReal Property Act 1900 (NSW)inregardtothepositionoftheClub’sunregisteredinterest,hebelievedthatthetransactiondidnotinvolve‘fraud’inthecriminalsense.Nevertheless,hefoundthattheClubhadgroundsofpersonalequityforobjectingtoPoplar’sactionssinceMrAlexander,throughhiscompanies,wastryingtoevadehisresponsibilitiestotheClub.Assuch,registrationofPoplar’sinterestundersection42(1)didnotpreventaconstructivetrustbeingimposed.

AftercommentingbrieflyontheinconclusivenessofthematerialrelatingtotherepudiationoftheMOUintheearliertrial,HisHonourdeclaredtheexistenceofaconstructivetrustandorderedthat,inexchangefor$6.73million,PoplartransferthelandinquestiontotheClub.HerefusedtoentertainpaymentofanylegitimateallowancetoJACSandPoplarwheretheiractionscouldbeshowntobehonest,astheirrequestsweretardyandtheClubhadtherighttopromptsettlement.

Thiscasemaybeviewedat:www.austlii.edu.au/au/cases/nsw/NSWCA/2009/114.htm

Thecaseinvolvedanintricatesetofarrangementsandunderstandingsbetweenthepartiesandassociatedbodiesthathadevolvedoversomeperiodoftime.These

arrangementsandunderstandingsweresetoutinaMOUwhichwasthenarguedtohavebeenrepudiated.Thecasedemonstratestheimportanceofhavingallpaperworkinordertobeabletoassertthetermsoftheagreement.Withinconclusivematerialrelatingtothetermsoftheagreementequitableremedieswereabletobereliedupon.Thismeansthecourtcanlooktotheconductofbothpartiesanddeterminewhatwouldbeconscionableinthecircumstances.

2.9.9 AYAN V ISLAMIC CO-ORDINATING COUNCIL OF VICTORIA PTY LTD & ORS [2009] VSC 119 (3 APRIL 2009)

ThiscaseinvolvedtheallegeddefamationofMrAbdulAyanthroughhisassociationwithabusinessnamed‘Aus-Halal’,whichpurportedtocertifyHalalmeat.ViaalettersenttoanumberofcustomersinMarch2001,writtenonofficialletterhead,thethenIslamicCo-ordinatingCouncilofVictoriaInc(theICCV)(nowtheIslamicCo-ordinatingCouncilofVictoriaPtyLtd)claimedthatneitherAus-Halalnor,moreparticularly,MrAyanwasauthorisedbytheAustralianQuarantineandInspectionService(AQIS)toissuesuchcertification.TheICCVwasalsocriticaloftheestablishmentofanotherorganisationcalledtheIslamicCo-ordinatingCouncilofAustralia(theICCA)whichprofessedAQISapproval,sincetheICCV,anamalgamofelevenMuslimgroups,wastheAQIS-endorsedorganisationtooverseetheslaughterofanimalsinaccordancewithIslamicreligioustraditions.Inaddition,theICCVassuredtheircustomersthatitwouldmakecertainthatbusinesswouldreturntonormalandtheywouldnotbedisadvantagedbyMrAyan’sactions.MrAyantookexceptiontotheclaimsandsoughtdamagesfordefamationfromtheICCVaswellasfromitschairman,MrIbrahimMohammed,itsvice-chairman,DrMirMohammedHabib,anditssecretary,MrIbrahimYalcin.

BecauseMrHabibandMrYalcindeniedanyknowledgeoftheletter’spublicationandwerenotattherelevanttimeholdingpositionsofresponsibilitywithintheICCV,JusticeBeachoftheVictorianSupremeCourtclearedthemofpublishinganydefamatorymatter.However,theuseoftheICCVletterheadwiththechairman’ssignatureclearlyinvolvedtheotherdefendantsintheletter’spublication.WithrespecttotheimplicationthatMrAyanlackedAQIS’sauthoritytoperformhisbusinessactivities,HisHonourdeterminedthatthethrustoftheletterwasdefamatoryinthatitcauseddamagetoMrAyan’sreputationinthebroadercommunityaswellasencouragingavoidanceofhisservicesbyfair-mindedpeople.HefoundthistobesoalthoughtheICCVwasprimarilyconcernedwithensuringcompliancewithIslamicslaughterritesratherthantarnishingMrAyan’sstandinginthecommunity.

Asadefence,MrMohammedandtheICCVattemptedtoarguejustificationundersection25oftheDefamation Act 2005 (Victoria)(theAct)onthebasisthattheletter’scontentsweresubstantiallytrue.Thisdefencefoundnofavourwiththejudge,whocriticizedthepoorarticulationofthesupposedlyjustifiableimputations.Heespeciallyhighlightedthedefendants’failureintheirwrittencriticismstodistinguishamonginterim,transferandfinalcertificates.WhilstauthorizationfromAQISwasneededforthefinalcertificateforexportpurposes,itwasperfectlyvalidforAus-Halaltoissuetheothercertificates,afacttheICCV’sletterconvenientlyskimmedover.

Inlikemannertohisdismissalofthedefenceofjustification,JusticeBeach rejectedthedefendants’attemptstoapplythedefenceofqualifiedprivilegefromsection30oftheAct.TheyreliedonanICCVreportproducedinFebruary2001,inresponsetoconcernsaboutwhethertheprocessingproceduresemployedbyAus-HalalweregenuinelyHalalcompliant.AccordingtoHisHonour,sincethisreportneglectedtoaddressthetopic

ofwhetherMrAyanheldAQISaccreditation,therewasnonexusbetweenanyoftheprivilegedmattersinthereportwhichcouldhavebeenmadeavailabletotheappropriateabattoirsandtheletter’sdefamatoryallegations.Further,claimsbytheICCVthatAus-Halalsuppliedexportcertificatescouldnotbesubstantiated.

JusticeBeachthenreflectedonthequestionofmalice.Expressmaliceoverridesqualifiedprivilege,butitsestablishmentisunnecessarywherethedefenceofqualifiedprivilegehasnotsucceeded.Suchmaliceariseswherethereisactuallyanunderlyingmotivetotheclaimofqualifiedprivilegewhichpromptsthedefamatoryremarks.HisHonourmaintainedthatexpressmalicewasevidentinthedefendants’publicationofthelettercriticalofAus-HalalandMrAyan.ThedefamatoryimputationswereclearlydirectedatdissuadingMrAyan’scustomers,bothexistingandpotential,fromemployingAus-Halal’sMuslimslaughtermenandsupervisors.Inaddition,thesestatementsweredesignedtothwartMrAyan’slegitimaterighttoprovideinterimandtransfercertificatessimplybecausetheICCVsawhisparticipationintheseprocessesascompromisingtheintegrityofthefinalcertificates.

Therefore,JusticeBeachfoundthatMrAyanhadbeendefamedintheletterpublishedbytheICCVwiththeconsentofitschairman,MrIbrahimMohammed.Becauseoftheletter’sdisastrouseffectsonhisreputationandtheprofitabilityofhiscompany,MrAyanwasawarded$125,000indamagesplusinterest.

Thiscasemaybeviewedat:www.austlii.edu.au/au/cases/vic/VSC/2009/119.html

2.9.10 THE ARCHITECTS (AUST) PTY LTD T/AS ARCHITECTS AUSTRALIA V BETHANY BRISBANE INTERNATIONAL CHURCH INC [2009] QDC 56 (DISTRICT COURT OF QUEENSLAND, 11 MARCH 2009) FILE NO: 2217/07

TheArchitects(Aus)PtyLtdArchitects(ArchitectsAustralia)claimedthattheBethanyBrisbaneInternationalChurchInc(theChurch)owedthem$71,500infeesforarchitecturaldesignworkundertakenin2006–2007.ThisclaimwasrefutedbytheChurch.InOctober2006,accordingtoArchitectsAustralia,anunsigned,standardRoyalAustralianInstituteClientandArchitectAgreementoutlining aproposedbuildingprogramwassenttotheChurch’sboard.Schedule6ofthatagreementsetouttheprofessionalfeesinvolved.ThedesignsweretoincludeaworshipcumrecreationalfacilityaswellasstudentaccommodationandtherequiredparkingattheChurch’sEightMilePlainssite.AChurchrepresentative,MrHannyYasaputra,acceptedthecontractoverthetelephoneinNovember2006,andauthorisedMrKildey,thearchitectinchargeofthejob,tocommencework.

AnumberofmeetingswereheldbetweenSeptember2006,andMarch2007.Fromtheoutset,atthe25Septembermeeting,MrKildeymadeitclearthathisfeeswouldrangebetween10%and13%ofthecostofthedevelopment.Healsopointedoutthat,inhisestimation,theprojectwouldprovetobeexpensive.MrYasaputraindicatedthattheChurch’sbudgetwasapproximately$900,000,afigureMrKildeydismissedasinadequate.Unawarethatthe$900,000representedthelimitoftheChurch’sfunds,MrKildeyagreedtoundertakesomepreliminaryplanningonagoodfaithbasispriortoformalentryintoacontract,toallowtheChurchtoeffectsettlementoftheEightMilesPlainsland.

Withnumerousrevisionstotheoriginalproposals,ArchitectsAustraliasubmittedanestimatedcostingof$1,628,650inaletterdated6February2007.Onequarterof10%ofthisamount,$40,716.25,wasowedtothefirmforthesuccessfulcompletionofStage1,asoutlinedinSchedule6.Atameetingon20March2007,attendedbybothboardandnon-boardmembers,thesubjectofthearchitecturalfirm’sfeeswasspecificallyraised.MrYasaputrabaulkedatthesuggestedfigure,maintainingthedevelopmentcouldbeachievedlessexpensively.Subsequently,inAprilMrKildeyofferedareductionintheexistingprofessionalfeeswhichtheChurchfailedtoaccept.Afterfurtherconsultationconcerningthefeenon-paymentwithMrHenryLouw,oneoftheChurch’snon-boardmembers,inlateJuneMrKildeywasinformedthattheChurchwishedtoterminatethecontractasthepropertydevelopmentnolongerseemedfeasible.AlastminuteofferfromtheChurchof$15,000forhisprofessionalservicestodatefailedtoswayMrKildeyandhegavenoticeofplacingthematterinhissolicitor’shandson27June2007.

ThemattercamebeforeJudgeSearlesintheQueenslandDistrictCourt.AftercommentingfavourablyonMrKildey’sveracity,HisHonourrejectedtheChurch’sattempttoarguethat,accordingtoparagraph14oftheBoardofArchitectsofQueenslandCodeofPractice,acontractforprofessionalfeesexceeding$1,500mustbeinwriting.Astherewasnolegalbasisforthiscontention,theChurch’srelianceonsection28(b)oftheAssociations Incorporation Act 1981(Qld)wasimpossible.IthadbeenitsintentiontoclaimthatMrYasaputrahadnoauthority,expressorimplied,toenterintosuchawrittencontract.AnynotionthatMrKildey’sserviceswereprovidedgratuitouslywasalsorejectedasfar-fetchedbythejudge.Noviable,architecturalbusinesscouldaffordtoembarkonacommercialventurewherepaymentwassubjecttotheclient’swhim.

IntheeventanagreementbetweentheChurchandArchitectsAustraliadidexist,theChurch’sendeavourtoinvoketheclausesrelatingtomisleadinganddeceptivepracticesundertheTrade Practices Act 1974 (Cth)ortheFair Trading Act 1989 (Qld)provedunsuccessfultoo.HisHonourdeclaredthatfeedeterminationonapercentagebasiswasclearlydelineated.ThementionofhourlyratesinItem4ofSchedule6wasnotmisleadingas,fromtheoutset,theChurchwasawareofthemethodtobeused.Finally,heassertedthatMrYasaputrapossessedtheauthoritytoactontheChurch’sbehalfandengageArchitectsAustralia’sservices.

Todeterminemorepreciselywhatthearchitecturalfirmwasowed,thejudgereliedontheevidenceofMrSimpson,anarchitectwith40yearsexperience.HestatedthatnotonlywasStage1complete,butalsothatStage2was65%finished,atotalinfeesof$76,181.80.JudgmentwasenteredforArchitectsAustraliafor$83,312,inclusiveof$11,812interest.

Thiscasemaybeviewedat:www.austlii.edu.au/au/cases/qld/QDC/2009/56.html

Thiscaseillustratesthatallbusinessarrangementsneedtobeclearlyunderstoodandputinwritingtoavoidexpensivelitigation.TheinformalwayinwhichtheboardoftheChurchengagedprofessionalservicesforsuchamajorprojectalsobringsintoquestionthegovernanceprocedures.

2.9.11 GRIFFITHS & ORS V JOHN FAIRFAx PUBLICATIONS & ANOR [2009] NSWSC 100 (3 MARCH 2009) FILE NUMBER: 20301/01

Theseproceedingsaroseoutofas.7AtrialinSeptember2005.AccordingtothedefinitionalsectionoftheNewSouthWalesSupremeCourtCommonLawPracticeNote4,suchatrialinvolves,‘Atrialofissuesprovidedbysection7A(1)(3)oftheDefamation Act 1974 (NSW).Althoughtheotherpartieswereunsuccessful,theFoundationforHumanity’sAdulthood(theFHA)wasfoundtohavebeendefamedinaSydney Morning Herald articletitled‘ProphetofthePosh’whichwaspublishedon22April1995.Thedefamatoryallegationinvolvedastatementclaimingthat,‘TheFHA’sdemandsonitsmemberstoretheirfamiliesapart.’

On14February2008,JohnFairfaxPublicationsPtyLtd,thepublishersoftheSydney Morning Herald,indicatedtheirintentiontodisputethisfindingwhichtheFHAclearlyhadaninterestinupholding.Later,on9December2008,thepublishers’solicitorssoughtfromtheFHAsecurityforthecostsofthetrialandexpendituresincurredasaresult,tothevalueof$500,000.BecausetheFHAclaimedpaymentofsuchasumwouldmakeitimpossiblefinanciallytomountitsowncase,therequestwasdeclined.Asaresult,thematterofwhethertheFHAshouldprovidesecurityforcostsfelltotheSupremeCourtfordeterminationinMarch2009.

TheFHAarguedthat,in1990,itwasincorporatedasacompanylimitedbyguaranteewhoseinterestlayinhumanevolutionandbiologicaldevelopment,withaspecificfocusonthepresentproblemsaffectinghomo sapiens andhowtheycouldbeaddressed.Sincethebeginningofthe2001financialyear,theFHAhasbeenregardedasincometaxexemptbecausetheAustralianTaxOfficedeemsitacharitableinstitution.TheFHAisreliantforitsfundsondonationsandholdsnointerestinland.

Donationsasasourceofincomearenotoriouslyunreliable,afactofwhichJusticeNicholaswasacutelyaware.Underthe Uniform Civil Procedure Rules 2005 Pt42,r.42.21(1)(d)or,inthealternative,undersection1335(1)oftheCorporations Act 2001 (Cth),securityforcostsisawardedwherethereisreasontobelieveacorporationwillbeunabletopaythecostsofadefendantwhoissuccessful.Atthetimeinquestion,theFHA’snetassetswere$777,115withanestimated$329,641.22incashinhand.Giventhisbasefigure,HisHonourwasnotsatisfiedthattherewouldbesufficientfundsinthefuturetocoverJohnFairfaxPublicationsPtyLtd’scostsiftheCourtsoordered.

TotheFHA’sclaimthatorderingsecurityforcostswouldfrustrateitslitigation,thejudgerepliedthattheevidencesuggestedtherewaseverylikelihoodthatthevoluntarydonationswhichhadfinanceditslegalproceedingssofar,wouldcontinuetodoso.Therefore,JusticeNicholasorderedthattheFHApaythe$500,000in$100,000instalmentsassecurityforcostspriortothehearingalreadysetdownfor10August2009.

Thiscasemaybeviewedat:www.austlii.edu.au/au/cases/nsw/supreme_ct/2009/100.html

3.0 statE and tErritory lEGislation rEViEw 2008 3

3.1 coMMonwEalth TherelevantActsandRegulationsintheCommonwealth(orfederal)jurisdictioninclude:

• Corporations Act 2001

• Corporations (Aboriginal and Torres Strait Islander) Act 2006

• Extension of Charitable Purpose Act 2004

• Income Tax Assessment Act 1997

Inaddition,manyotherfederallawsapplytononprofitorganisationssuchasthosegoverningemploymentofstaff,anti-discrimination,usingdigitalcommunication,sendingfundsoverseasandbeinginreceiptofgovernmentagencyfunding.

Taxationissuesspecifictononprofitorganisationsarecoveredindetailbelow;see‘4.0 ATO Updates’.

Changes to Prescribed Private Funds

Since2001,ithasbeenpossibletoestablishprivatelycontrolledtrustsknownasPrescribedPrivateFunds(PPFs).Theywereentitledtoanumberoftaxationconcessionsincludingdeductiblegiftrecipient(DGR)statusandincometaxexemption.Theirsolepurposewastoprovidemoney,propertyorbenefitstoarangeofotherDGRssuchaspublicbenevolentinstitutions,healthpromotioncharities,overseasaidfunds,andorganisationsontheregisterofculturalorganisationsandtheregisterofenvironmentalorganisations.AfterareviewbyTreasury,legislationwasintroducedtoalterthePPFregulatoryregimeand on1October2009anewregimebegan,withPPFsnowknownasPrescribedAncillaryFunds(PAFs).Moredetailedcoverageofthechangescanbefoundbelow:see‘5.1PrivateAncillaryFunds’.

Regulation of trustee companies

InJuly2008,theCouncilofAustralianGovernments(COAG)agreedthattheCommonwealthwouldassumeresponsibilityfortheregulationoftrusteecompanies.TrusteecompanieshavepreviouslybeenregulatedatanentitylevelunderStateandTerritorylaws.Theselawsalsoallowprivatetrusteecompaniestoenterthemarketforpersonaltrusteeandestateadministrationworkandfacilitatetheestablishmentoflongtermandperpetualtrusts,suchascharitabletrusts.Thismakesregulationoftrusteecompaniesofinteresttothenonprofitsector.

Schedule2oftheCorporations Legislation Amendment (Financial Services Modernisation) Act 2009insertedChapter5D(Licensedtrusteecompanies)intotheCorporations Act 2001.Chapter5DimplementsthetransferoftrusteecompanyregulationfromtheStatesandTerritoriestotheCommonwealth.Theamendmentsarescheduledtocommenceon6May2010.

ThepolicyintentionisthattheCommonwealthwillhaveexclusiveresponsibilityfor‘entitylevel’regulationoftrusteecompanies’traditionalservices,includinglicensingthosecompaniesandregulatingthefeestheycanchargeforthosetraditionalservices.Atthesametime,StateandTerritorylegislation,andtherulesofcommonlawandequity,willcontinuetogovernthefunctionsandpowersoftrusteecompanies.Also,itisintendedtopreserveruleswhichapplygenerallytopersonssuchastrustees,executors,administratorsandguardians(includingtrusteecompanieswhentheyperformthoseroles).

Manyjurisdictionspreviouslyimposedcapsonthefeesthattrusteecompaniescouldcharge.Inrelationtocharitabletrusts,underDivision4ofChapter5Dthereis‘grandfathering’offeeschargedtoexistingclients,and‘capping’offeeschargedto

newclients.Inrelationtonewtrustsandestatesotherthancharitabletrusts,thereisderegulation,subjecttorequirementsthatthecompany’sfeeschedulebedisclosedontheinternet,andthattrusteecompanieschargenomorethanthefeesspecifiedintheirpublishedfeescheduleimmediatelybeforethetrusteecompanystartedtoprovidetheservice.Thegovernmenthasindicatedthatitwillreviewthefeesarrangementsforbothexistingandnewcharitabletrustsaftertheprovisionshavebeeninoperationfortwoyears.

3.2 nEw south walEsTherelevantActsandRegulationsinNewSouthWalesare:

• Associations Incorporation Act 1984

• Associations Incorporation Regulation 1999

• Association Incorporation Regulation 2009

• Charitable Fundraising Act 1991

• Charitable Fundraising Regulation 2008

• Charitable Trusts Act 1993

• Lotteries and Art Unions Act 1901

• Lotteries and Art Unions Regulation 2007

LegislationinNewSouthWaleshadanotablechangein2009,withtheenactmentoftheAssociations Incorporation Act 2009andAssociations Incorporation Regulation 2009,whichwillreplacetheAssociations Incorporation Act 1984andtheAssociations Incorporation Regulation 1999.ThenewAct2009waspassedbyStateParliamenton31March2009andgivenroyalassenton7April2009tocommencefromadatetobeproclaimed.ThenewRegulationsarecurrentlystillinthepublicconsultationphase.ItisexpectedthatthisActandRegulationwillcommenceinearly2010,atwhichtimethe1984Actand1999Regulationswillberepealed.

Oncecommenced,theActwillstreamlineandsimplifyregulationsandrequirementssurroundingtheincorporationofnonprofitassociations.Onekeydevelopmentistheintroductionofatwo-tieredsystembasedonafinancialthresholdtobespecifiedintheforthcomingregulations,relievingsmallerorganisationsofadministrativeburdenssuchasyearlyauditsthatarerequiredoflargerorganisations(sections42to49).Thelegislationalsointroducesmakesitanoffenceforcommitteeorboardmemberstomisusetheirpositionsorinformationgainedthroughtheirpositions,whichshouldprovidebetterprotectionfororganisationsfromdishonestboardorcommitteemembers(sections32and33).

Otherreformsaimedatsimplifyingtherequirementsofassociationsincludechangestoallowpostalvotingandtoenablegeneralmeetingstobeheldinmultiplelocations,throughtheuseoftechnologysuchasteleconferencing(sections30(2)and38(1)(b)).TheActalsoenablesappealsfromcertaindecisionsoftheDirector-GeneraltotheAdministrativeDecisionsTribunal(section104).Technicalchangesincludethesubstitutionof‘constitution’for‘rules’whichappearedinthe1984legislation,andaclearerdefinitionof‘pecuniarygain’,reducingtheambiguityassociatedwithdeterminingnonprofitstatusforsomeassociations.

FordetailsofActsandregulationsinNSWsee:

www.legislation.nsw.gov.au/maintop/scanact/inforce/NONE/0

3.3 VictoriaTherelevantActsandRegulationsinVictoriaare:

• Associations Incorporation Regulations 2009 (includingJan2010amendments)

• Charities Act 1978

• Charities Regulations 2005

• Fundraising Act 1998

• Fundraising Regulations 2009

• Lotteries Gaming and Betting Act 1966

• Gambling Regulation Act 2003

• Gambling Regulation Regulations 2005

InlinewithitsStrengthening Community Organisations Action Plan,theVictoriangovernmentmademanychangestothelawsregulatingtheoperationofnonprofitgroupsoperatinginitsstate,withamendmentstotheincorporatedassociationslegislation,aswellasbingoandfundraisinglaws.Furthersignificantchangestotheincorporatedassociations’regimeareexpectedin2010.

Incorporated associations

AstheAssociations Incorporation Regulations 1998 hadreachedtheirsunsetdate,theywerereplacedbytheAssociations Incorporation Regulations 2009 (enactedon28Julyinsubstantiallythesameformasthe1998regulations).Somesubsequentchangesweremadein29Septemberand19January2010.Aprescribedassociation(i.e.havinggrossreceiptsover$200,000orassetsover$500,000)nowhastopreparefinancialstatementsinaccordancewiththeaccountingstandardsapplicableundertheCorporations Act 2001(Cth),i.e.theAASBAccountingStandard(seereg.13A).Therearealsonewprovisionsaboutsecuritytobegivenbyliquidators(reg.14A);andallowingthecommitteetofinemembersforbreachoftherules(seereg.18Aandclause7ofmodelrules).

TheAssociations Incorporation Amendment Bill 2008 waspassedon7April2009.Someofthemainreformsarelistedinthefollowingtable.

TABLE 1 REFORMS IN AIA BILL 2008

Topic and commencement

Comments

‘Publicofficer’to‘secretary’

11 Dec 2011 unless earlier date

Thischange(andseveraloftheotherchangesbelow)willrequireamendmentstothemodelrulessocommencementhasbeendelayedpendingare-writeoftherulesin2010.

Meetingminutes

11 Dec 2011 unless earlier date

Therulesofanincorporatedassociationwillberequiredtocoveranumberofnewmattersinrelationtothekeepingof,andaccessto,minutesofmeetings.

Returnofdocumentsheld

7 April 2009

Alloffice-holders,formeroffice-holdersormembersofanincorporatedassociationarerequiredtoreturnanydocumentsbelongingtoanincorporatedassociationwithin28daysiftheyceasetoholdofficeorbemembersoftheorganisation.TheassociationcanapplytotheMagistrates’Courttoensureperformance.

Specialresolutions

7 April 2009

Anoticeofaproposedspecialresolutionmustsetoutthefulldetailsoftheproposedspecialresolutionandmustbeprovidedtomembersatleast21daysinadvance.Thenoticemustalsomakeitclearthattheresolutionisbeingproposedasaspecialresolution.

DocumentsprovidedtoRegistrarandchangestorulestobeapprovedbyRegistrar

7 April 2009

TheRegistrar(ConsumerAffairsVictoria)hasanewpowertorefusetoreceiveanydocumentsubmittedbyanincorporatedassociationiftheRegistrarbelievesthedocumentisnotavaliddocumentoftheincorporatedassociation.

IfanincorporatedassociationsubmitsaspecialresolutionforalterationofitsrulestotheRegistrar(unders22),theRegistrarcanacceptsome,only,oftheproposedalterations.

Statutorymanagement

7 April 2009

Thisisacompletelynewremedy,likelytobeofassistancetofinanciallyviableassociationsexperiencingsomeformofseriousdysfunction.

TheRegistrarcaninvestigatetheaffairsofanassociation,includingitsfunctioningandfinancialcondition.Followinganinvestigation,iftheRegistrarconsidersitisintheinterestsofmembers,creditorsorthepublic,theRegistrarcanapplytotheMagistratesCourtfortheappointmentofa‘statutorymanager’toconducttheaffairsoftheassociation.

Ifastatutorymanagerisappointed,allmembersofthecommitteeofmanagement(orgoverningbody)immediatelyceasetoholdoffice.Astatutorymanagerhasarangeofpowerstodealwiththeassociation’saffairs.

ActionsinMagistratesCourt

7 April 2009

ThereareanumberofnewactionsthatcanbetakentotheMagistratesCourt:

theRegistrarcanapplyforanorderrestrainingtheassociationfromdoinganactthatisoutsideitsstatementofpurposes,iftheRegistrarissatisfieditisinthe‘publicinterest’todoso;

amember(or,inmorelimitedcases,aformermember)canapplyforanorderpreventinganassociationfromengaginginoppressiveconduct.

Voluntarycancellationofregistrationandvoluntaryadministration

7 April 2009

Smallincorporatedassociationswithlessthan$10,000inassets(andwhichmeetotherrequirements)canapplytotheRegistrarforvoluntarycancellationoftheirregistration.

ThevoluntaryadministrationprovisionsoftheCorporations Act 2001(Cth)willnowapplytoVictorianincorporatedassociations.

Removalofauditor

7 April 2009

Anauditorcanberemovedbyaresolutionofmembersatageneralmeeting.Noticeoftheproposedresolutionmustbegiventomembersatleast2monthsinadvanceofthemeetingandcopiesmustbeprovidedtoboththeauditorandtheRegistrarassoonaspossible.

Surplusassetsonwindingup

Ruleforexistingassociationmadebefore7April2009valid

Anewprovisionnowpreventsthesurplusassetsofanincorporatedassociationfrombeingdistributedtomembersonvoluntarywindingup,unlessthe‘member’isabodycorporate(likeanassociationoratrust)whichitselfcannotdistributeassetstoitsmembers.

Fundraising

Asforeshadowedinthe2008LegalAlmanac,theFundraising Appeals and Consumer Acts Amendment Act 2008cameintoforceon11February2009(withafewprovisionscommencinglaterin2009).ThenameoftheprincipalActhasbeenchangedtotheFundraising Act 1998.ObjectshavebeenintroducedtotheAct,statedtobeforthefacilitationof‘transparencyandpublicconfidenceinthefundraisingindustryandinnot-for-profitorganisationsthatconductfundraising;andtheprotectionofmembersofthepublicfromwhommoneyorabenefitissolicitedforbeneficialorbenevolentpurposesinthecourseoffundraising;andtheprotectionofthepublicinterestinrelationtofundraising’.

Thedefinitionofafundraisingappealhasbeenchangedtorecognisethatanappealcanbeanon-goingactivity,ratherthanjustaone-offevent(section5(2)(ca)).

Newsection12Aand12BoftheActincreasethedisclosurerequirementsforbusinessesandfundraisers.Undersection12Aabusinesswhichrepresentsthataportionofmoneyreceivedinreturnforgoodsorservicesistobeappliedforbenevolentorbeneficialpurposesmustdisclosethedollarorpercentageamounttobeusedforthosepurposes.Thedisclosuremustbemadeinwritingtothepersontowhomthegoodsorservicesaretobesuppliedbeforethecontractofsupplyisenteredinto.Thesectionimposesamaximumpenaltyof240penaltyunitsforacorporationand120penaltyunitsinanyothercase.Undersection12B,otherdisclosurerequirementscanbeimposedonregisteredfundraisers.Otherchangesarealsoaimedatbettertransparencyforthebenefitofdonors,suchasensuringdirectdebitformsallowdonorstoworkoutthenatureofthearrangementtheyaresigningupfor.

Community and charitable gaming (bingo)

Witheffectfrom25November2009therulesforVictoriancommunityandcharityorganisationsthatwishtoconductbingosessionswerechanged.Nowifacommunitygroupisa‘declared’organisation,itisnotrequiredtoobtainaminorgamingpermittoconductabingosession.Instead,adeclaredcommunityorganisationneedonlycompleteaformandlodgeitwiththeVictorianCommissionforGamblingRegulation(VCGR)atleastsevendaysbeforethecommencementofthebingogame(s).OncethecommunityorganisationnotifiesVCGRoftheintendedbingosession,itwillreceivea‘NoticeofAuthorisedBingoSessions’thatmustbeprominentlydisplayedattheentrancetothebingovenue.Ifnotalready‘declared’,anorganisationmayapplytobe‘declared’atthesametimeasitappliestoactuallyconductbingo,howevertheapplicationforbecomingadeclaredorganisationshouldbelodgedatleast28daysbeforethecommencementofthebingogame(s).VCGRhaspowertomakerulesforthegameandconductofbingo.RuleshavebeenpublishedandareavailableontheVCGRwebsite(www.vcgr.vic.gov.au).AnorganisationcanalsoapplytotheVCGRtovarytherules.SeeGaming Regulation Amendment (Bingo) Regulations2009 and,forVGRrules,theVictorianGovernment Gazette No.S419,20November2009.

TheGaming Regulation Further Amendment Bill 2009 (21October,2009)providesthatanyprizeofmorethan$1,000mustbepaidbycheque(notpayableto‘cash’)(Part7)andmadesomeamendmentstothepubliclotteriesprovisions(seePart4).

DetailsofallVictorianActsandRegulations(includingamendingActsandregulations)canbefoundat:www.legislation.vic.gov.au

PilchConnect’sfreemonthlye-bulletinprovidesupdatesofVictorianlegislativechangesandproposedlawreforms.(Seewww.pilch.org.au/PCLawReform).

3.4 QuEEnslandTherelevantActsandRegulationsinQueenslandare:

• Collections Act 1966

• Collections Regulation 2008

• Charitable Funds Act 1958

• Charitable and Non-Profit Gaming Act 1999

During2009theQueenslandgovernmentintroducedmajorreformsinrespectofthestructureofitscivilandadministrativereviewtribunalsandtheFreedomofInformationregime.ThereformsinrespectofthetribunalssawtheintroductionofonecomprehensiveTribunaltocoverallcivilandadministrativemattersinQueensland.TheQueenslandCivilandAdministrativeTribunal(QCAT)hasamalgamatedjurisdictionof23previousbodies(18ofwhichhavebeenabolished)andprovidesasinglegatewayforcivilandadministrativereviews.QCATcommencedoperationon1December2009.TheQueensland Civil and Administrative Tribunal (Jurisdiction Provisions) Amendment Act 2009amended216piecesofQueenslandlegislationtogiveQCATjurisdictionforawiderangeofmatters.TheconferredjurisdictionincludeschangesofjurisdictionforadministrativereviewproceduresandamendmentshavebeenmadetothefollowingrelevantActs:

Associations Incorporation Act 1981

• AmendmentstotheheadingsinPart12.PreviouslythisPartwasheaded‘Reviewsandappeals’;itisnowtitledsimply‘Reviews’.Omittingthewords‘andappeals’reflectsthefactthat,underQCAT,appealsfromadministrativedecisionsareknownas‘reviews’.TheheadingofDivision1wasalsoamended:previouslytitled‘Reviewofdecisions’,itisnowtitled‘Internalreview’,makingclearthatreviewsundertheDivisionareinternalreviewsbythechiefexecutive.ReviewstoQCATareexternalreviews.

• Sections111and112wereamendedtoconferonQCATthejurisdictionpreviouslyheldbytheDistrictCourtinrespectofreviewofdecisionsabouttheincorporationofassociations.

Charitable and Non-Profit Gaming Act 1999

• UnderPart8oftheAct,reviewsofdecisionsofthechiefexecutiveincluding:mattersinrespectoflicences;appointinganadministrator;approvalsinrelationtogamingequipment;orforfeituretotheState,arenowtobemadetoQCAT(seesection174).

• AppealsfromQCATunderthisActcanonlybemadetotheCourtofAppeal(nottotheAppealTribunal)onaquestionoflaw

ForfulldetailsoftheoperationofQCATgotowww.qcat.qld.gov.au.

ReformsinrelationtotherightofaccesstogovernmentinformationhaveresultedintwonewActswhichwereintroducedduring2009.TheseActs,namelytheRight to Information ActandtheInformation Privacy Acthaverelevancetononprofitorganisations,especiallythosewhoarefundedbyorcontracttoprovideservicesforthegovernmentanddealwithpersonalinformation.AmorecomprehensivediscussionontheimpactsofthesereformsonthenonprofitsectorisincludedbelowunderPractitionerPerspectives:see‘5.7RighttoInformationandInformationPrivacy’.

DetailsofallActsandRegulationsinQueenslandcanbefoundat:www.legislation.qld.gov.au/Acts_SLs/Acts_SL.htm

3.5 wEstErn australiaTherelevantActsandRegulationsinWesternAustraliaare;

• Associations Incorporation Regulations 1988

• Charitable Collections Act 1946

• Gaming and Wagering Commission Act 1987

During2009therewerenomaterialchangestotherelevantlawinWesternAustralia.ABillcurrentlybeforetheWesternAustralianParliamentwillamendtheformattingoftheAssociations Incorporation ActandtheCharitable Collections ActalongwithnumerousotherStateActs.TheStandardisation of Formatting Bill 2009,wasintroducedintotheLegislativeCouncilon18August2009,tobringuniformityoflayout,styleandformattingacrossthelegislationdatabase,inordertoimprovereadabilityandsearchfunctions.Havingastandardformatwillhelptomakelegislationmoreuser-friendly,improvingaccesstojustice.

WesternAustralia(alongwithSouthAustraliaandtheNorthernTerritory)alsoenacteditsupdatedpayrolltaxlawsinaccordancewiththenationaltaxharmonisationproject.Ofrelevancetothecharityandnonprofitsectoristheexpansionofwageexemptionsincludedintheassessmentofpayrolltax.Theexemptionnowincludesanonprofitorganisationhavingacharitablepurposeasitssoleordominantpurpose(butexcludeseducationalinstitutions)andtakesintoaccountwagespaidforworkundertakentocarryoutthatcharitableorbenevolentpurpose.Anexemptionisalsoincludedforthewagesofworkerswhovolunteerasfire-fightersorforemergencyrelief.

ThereviewoftheAssociations Incorporation Actisstillcontinuing.InNovember2009itwasannouncedthatthefeedbackfromtheconsultationperiodindicatedthereweresomecontentiousmattersrelatingtotheproposaltointroduceathree-tieredstructureoffinancialaccountabilityandtheobligationtoappointapublicofficer.Itisnowproposedthatatwo-tierstructurebeintroduced,whereTier1associationshaverevenueoflessthan$500,000perannum,withTier2havingrevenueof$500,000orgreaterperannum.Tier1associationswillnotberequiredtohavetheirfinancialstatementsauditedbutwillstillhavetopresentthosestatementsinamannerwhichcaneasilyidentifythefinancialsolvencyoftheassociation.AuditingoffinancialaccountsforTier2associationswillbemandatory.Itisalsoproposedthatassociationswillnolongerberequiredtoappointapublicofficerasthisisconsideredtobetoogreataburdenonsmallerassociations.ItisexpectedthatanewBillwillbedraftedandpresentedtoParliamentsometimelaterin2010.Detailsmaybefoundat:www.commerce.wa.gov.au/associations

DetailsofallActsandRegulationsforWesternAustraliacanbefoundatwww.slp.wa.gov.au/legislation/statutes.nsf/default.html

3.6 south australiaTherelevantActsandRegulationsinSouthAustraliaare:

• Collections for Charitable Purposes Act 1939

• Public Charities Funds Act 1936

• Lottery and Gaming Act 1936

During2009theAssociations Incorporation ActwasamendedbytheStatute Amendment (Public Sector Consequential Amendments) Act 2009.Thisamendmentremovedsection49BwhichhadprovidedimmunityfromliabilityfordepartmentalofficersengagedintheadministrationorenforcementoftheAssociationAct.TheimmunitystillexistsbutisnowincludedinthePublic Sector Act 2009whichcommencedoperationon1February2010andprovidesacomprehensivecivilimmunityforpublicsectoremployeeswhichactingunderofficialpowersorexercisingoficialfunctions.

OtherrelatedlegislationwhichisofinterestistheMount Gambier Hospital Hydrotherapy Pool Fund Act 2009.ThisActcameintooperationon16April2009toovercomeadifficultsituationinrelationtofundscollectedforaprojectthathasbeenabandoned.TheMountGambierandDistrictsHealthServiceIncorporatedestablishedtheMountGambierHospitalHydrotherapyPoolFundin2000toraise$1milliontobuildahydrotherapypool.ByJune2003atotalof$270,769.00hadbeenraisedbutasitwaswellshortoftherequiredconstructioncosts,theproposalwasabandoned.TheMountGambierand

DistrictsHealthServiceisaninstitutionlistedunderSchedule2ofthePublic Charities Funds Act 1935.Section11ofthisActprovidesinthesecircumstancesallfundsdonatedvestimmediatelyintheCommissionersforCharitableFundsandassuchthesemonieswouldbeheldunderacharitabletrustadministeredbytheCommissioners.PursuanttothePublic Charities Funds Act,thecharitabletrustestablishedwouldonlybeabletodisbursetheincomeofthetrustnotthecapitalandwouldbeunabletorefunddonations.Thelocalcommunitybelievedthemoniesdonatedshouldbereturnedtothedonorsorusedforanalternativeepurposeastherewasnolikelihoodofthepooleverbeingbuilt.TheMount Gambier Hospital Hydrotherapy Pool Fund Actaccedestothecommunitieswishesandallowsforthereturnofdonationswereapplicable,andtheutilisationofthefundsforanalternativepurpose.TheActtransfersthefundsheldtoCountyHealthSAHospitalIncorporatedtoadministerthefundsassetoutintheActincludingfindinganalternativecommunitypurpose.

ThisActhighlightstheshortcomingsofthePublic Charities Funds Actincircumstanceswherethereisastrongcommunitywishtoredirectfundsofanabandonedprojectforthebenefitofthecommunity.

SouthAustralia(alongwithWesternAustraliaandtheNorthernTerritory)enactednewpayrolltaxlegislationin2009inaccordancewiththenationalschemetaxharmonisationproject.Ofrelevancetothecharityandnon-profitsectoristheexpansionofwageexemptionsincludedintheassessmentofpayrolltax.Theexemptionnowincludeanonprofitorganisationhavingacharitablepurposeasitssoleordominantpurpose(butexcludeseducationalinstitutions)andtakesintoaccountwagespaidforworkundertakentocarryoutthatcharitableorbenevolentpurpose.Anexemptionisalsoincludedforthewagesofworkerswhovolunteerasfire-fightersoremergencyrelief.

DetailsofallActsandRegulationsforSouthAustraliacanbefoundat:www.legislation.sa.gov.au/index.aspx

3.7 tasManiaTherelevantActsandRegulationsinTasmaniaare:

• Associations Incorporation (Model Rules) Regulations 2007

• Collections for Charity Act 2001

• Gaming Control Act 1993

TherewerenorelevantBillsorothermaterialchangestothelawinTasmaniaduring2009.

DetailsofallActsandRegulationsforTasmaniacanbefoundat:www.thelaw.tas.gov.au/index.w3p

3.8 northErn tErritoryTherelevantActsandRegulationsintheNorthernTerritoryare:

• Associations Act

• Associations Regulation

• Associations (Model Constitution)Regulation

• Gaming Control Act

TherewerenorelevantBillsorothermaterialchangestotheabovelistedlegislationduring2009.

Howeveraspartofthenationaltaxharmonisationprogramtoreducepayrolltaxcompliancecostsforbusinesses,theNorthernTerritorygovernmentintroduceditsnewPayroll Tax Act 2009.PursuanttotheagreementofallStatesandTerritories,thenewprovisionsweretotakeeffectfrom1July2009.NewSouthWales,VictoriaandTasmaniahadenactedprovisionsinaccordancewiththeharmonisationprogramin2008.Queenslandalreadyhadconsistentprovisionsinplace.AtthetimetheNorthernTerritorylegislationwasintroduced,SouthAustraliawasmovingtowardsfullyharmonisingitspayrolltaxlegislationaswasWesternAustralia(seeabove).TheNTActwasassentedtoon25June2009andcommencedon1July2009.ThenewPayroll Tax Actextendsexistingpayrolltaxexemptionforwagespaidbyreligiousinstitutionsandpublicbenevolentinstitutionstoincludenonprofitorganisationsthathaveasoleordominantpurposethatischaritable,benevolent,philanthropicorpatriotic.Theexemptionisconditionalonthewagesbeingpaidtoapersonwhoisexclusivelyengagedinworkofareligious,charitable,benevolent,philanthropicorpatrioticnature.Payrolltaxexemptionsarealsoextendedtoemployeesparticipatinginvoluntaryworkforbushfiresoremergencyrelief.

DetailsofallActsandRegulationsfortheNTcanbefoundat:www.nt.gov.au/dcm/legislation/current.html.

3.9 australian caPital tErritoryTherelevantActsandRegulationsintheACTare:

• Charitable Collections Act 2003

• Charitable Collections Regulation 2003

• Lotteries Act 1964

TherewereanumberofamendmentstotherelevantlegislationintheACTduring2009.

TheAssociations Incorporations Act 1991wasamended(witheffectfrom11September2009)toallowtheRegistrar-Generaltokeepconfidentialtheresidentialaddressofacommitteememberofanassociation.ApplicationcanbemadetotheRegistrar-Generalwhohasthediscretionwhethertoaffordtheapplicantconfidentialityasrequested.

FurtheramendmentsweremadetotheAssociations Incorporation ActtoincorporatetherecommendationsoftheStandingCommitteeonPublicAccounts(ReportNo17of2008)withregardtoincorporatedassociations.TheamendmentsextendedthecircumstancesunderwhichtheRegistrar-Generalcanbegintheprocessforcancellinganassociation’sincorporationundersection93,toinclude:

• Wheretheassociationhasfailedtosubmitanannualreturnforeachoftheprevioustwoyears(previouslythiswasthreeyears);

• where,forthepreviousthreeyears,theassociationhasfiledanannualreturnwithqualifiedauditswheretheauditorisunabletoaffirmwhetherornottheassociationhascompliedwiththeaccountingrequirementsandotherprovisionsoftheAct.

OthersituationswheretheRegistrar-Generalmayinstigatecancellationremain,forexamplewhereanassociationhasnotconvenedanAGMforthepreviousthreeyears.

TheamendmentswerecontainedintheJustice and Community Safety Legislation Amendment Bill 2009 (No 2),andtookeffectfrom29September2009.

TheCharitable Collections Act 2003section7,wasamendedtoclarifytheactivitiesthatareexemptfromtheoperationsoftheAct.UptothispointtheCharitable Collections Regulation 2003setoutthecoverageoftheAct,inparticular,thatentitiesthatdonotsolicitdonationsorthatdonotconductcollectionsarenotboundbytheCharitable Collections Actsimplybecausetheyreceiveadonation.TheexemptionisnowincludedinthetextoftheAct(section7)itselftoensurethattherewillbenodisputewhenreadingtheprovisionsoftheActthatthesesortsofactivitiesareexemptfromtherequirementsoftheAct.(TheamendmentswerecontainedintheJustice and Community Safety Legislation Amendment Bill 2009 (No 2).

ThenewUnlawful Gambling Act 2009isawaitingcommencement.ItreplacestheUnlawful Games Act 1984andtwootheroutdatedActs,namely,theGaming, Wagers and Betting Houses Act 1901andtheGaming and Betting Act 1906.OnceproclaimeditwillbetheprincipallegislationregulatinggamblingintheACT,includingcharitablegambling.TheprovisionsofthisActweredevelopedfollowingapublicreviewoftheUnlawful Games Act 1984bytheGamblingandRacingCommission.TheUnlawful Gambling ActprovidesthatallgamblingintheACTisunlawfulexcepttotheextentitispermittedbylegislation.Approvedcharitablefundraisingthroughgameswillbepermittedundercertaincircumstancesandundercertaincontrols.TheActrecognisesthatfund-raisingactivitiesareanimportantpartofthecommunitybuttheprovisionsseektoensurethereisintegrityinanyfund-raisinggamblingactivities.Thedraftregulationdealingwiththeissueofcharitablegamblingsetsoutthenatureofrecordkeepingandreportingthatwillberequired.

DetailsofallActsandRegulationsfortheACTcanbefoundat:www.legislation.act.gov.au

TheAustraliaTaxOffice(ATO)maintainsasignificantamountofmaterialfornonprofitorganisationwhichisavailableatwww.ato.gov.au/nonprofit.YoucanviewastreamedvideoofhowtofindyourwayaroundthesitefromtheACPNSDevelopingYourOrganisationsitehttps://wiki.qut.edu.au/display/CPNS/DYO+Home.

In2009theATO:

• releaseditsviewsontheWordInvestmentcase(HighCourt)andtheVictorianWomen’sLawyersAssociationcase(FederalCourt).DecisionImpactStatementswerereleasedforbothcases,andTaxationRulingsTR2005/21andTR2005/22areunderreviewasaresultoftheCourts’decisions;

• preparedguidelinesandmaterialsforthenewdeductiblegiftrecipientcategoryofPrivateAncillaryFunds(formerlyPrivatePrescribedFunds),whichcommencedon1October2009;

• wontheBargwannacaseandtheAid/WatchCase(casenotesforbothofthesecasescanbefoundintheCasenotespartofthisLegalAlmanac,undertheTaxationheading);

• alloweddeductionsfortheVictorianbushfires,Italianearthquake,Taiwantyphoon,Samoanearthquakeandtsunami,earthquakedamageinSumatra,andthetropicalstorminthePhilippines.

TheATOalsohasanonprofitnewsservicereaderscansubscribeto.Belowarearticlesfrom2009,whichcanbeviewedatwww.ato.gov.au/nonprofit/pathway.asp?pc=001/004/020.

Non-Profit News Service No. 0261 – Proposed amendments relating to higher education providers and deductible gift recipient (DGR) status

Dec2009.Treasuryisinvitingcommentsonproposedamendmentstothetaxlaw.TheamendmentsincludevaryingtherequirementsforDGRendorsementunderthecategories‘Highereducationinstitution’and‘Affiliatedresidentialeducationalinstitution’.

Non-Profit News Service No. 0260 – Rewrite of Part 3 of the Charities consultative committee – resolved issues document

Dec2009.Part3oftheCharitiesconsultativecommitteeresolvedissuesdocumenthasbeenupdated.

Non-Profit News Service No. 0259 – Productivity Commission releases draft report on the contribution of the not-for-profit sector

Nov2009.On14October2009,theProductivityCommissionreleaseditsdraftreportonthecontributionoftheAustraliannot-for-profitsector.

Non-Profit News Service No. 0258 – New products released for private ancillary funds

Oct2009.TheTaxOfficehasreleasednewproductstoassistorganisationsseekingdeductiblegiftrecipientstatusunderthenewcategoryforprivateancillaryfundseffectivefrom1October2009.

Non-Profit News Service No. 0257 – Donations to help disaster victims in Samoa, the Philippines and Sumatra

Oct2009.WeprovideinformationforindividualsandorganisationswantingtocollectfundsormakedonationstohelpvictimsoftherecentdisastersinSamoa,thePhilippinesandSumatra.

4.0 ato uPdatEs 4

Non-Profit News Service No. 0256 – Court decision confirms Tax Office’s view on what is a charitable institution

Oct2009.On23September2009,theFullFederalCourtofNSWruledinfavouroftheTaxOfficeinitsdecisioninthecaseofAid/WatchIncorporated.

Non-Profit News Service No. 0255 – Government consultation on GST reforms – non-profit sub-entities

Sep2009.TheAssistantTreasurerrecentlyreleasedasecondconsultationpaperonGSTreformsthatincludenon-profitsub-entitiesaccessingthesameGSTconcessionsasparententities.Consultationcloses9October2009.

Non-Profit News Service No. 0254 – Prescribed private fund information return for the period 1 July 2008 to 30 June 2009

Sep2009.Theprescribedprivatefundinformationreturnfortheperiod1July2008to30June2009isnowavailableonourwebsite.Thereturnformsandtheirinstructionswillnotbemailedoutthisyear.

Non-Profit News Service No. 0253 – Private ancillary funds: legislation passed

Sep2009.TaxLawsAmendment(2009MeasuresNo4)Bill2009hasbeenpassedandawaitsroyalassent.Thebillamendsthetaxlawtoimprovetheintegrityofprescribedprivatefunds(PPFs),renamedprivateancillaryfunds(PAFs)underthenewframework.

Non-Profit News Service No. 0252 – Revocation of endorsement as a tax concession charity

Sep2009.Whenacharitablefundisnotappliedtothepurposeforwhichitwasestablished,itscharityendorsementmayberevoked.ThisarticlediscussesrecentcomplianceactivitiesundertakenbytheTaxOfficeinthisarea.

Non-Profit News Service No. 0251 – Support for victims of Typhoon Morakot in Taiwan

Aug2009.TheAssistantTreasurerhasannouncedhisdecisiontorecogniseTyphoonMorakotinTaiwanasadisasterforthepurposesoftaxdeductibilityofdonations.

Non-Profit News Service No. 0250 – Compliance Program 2009–10 released

Aug2009.On6August,TaxCommissionerMichaelD’AscenzoreleasedtheComplianceProgram2009–10.Thecomplianceprogramcontainsanon-profitorganisationschapterthatoutlinesthekeyprioritiesandactivitiesforthenon-profitmarketsegment.

Non-Profit News Service No. 0249 – Addendum to GSTR 2006/9 Goods and services tax: supplies

Jul2009.WerecentlyreleasedGoodsandServicesTaxRulingGSTR2006/9A2–Addendum.ItfurtherclarifiesandgivesexamplesoftheTaxOfficeviewonmultipartyarrangements,especiallythethirdpartyproposition.

Non-Profit News Service No. 0248 – Deductibility of management fees – High Court decisions (Spriggs & Riddell)

Jul2009.On18June2009,theHighCourthandeddownitsdecisionsinSpriggsv.FCofTandRiddellv.FCofT.Thecourtallowedthetaxpayers’appealstodeductmanagementfeesfornegotiatingcontractswithnewclubs.

Non-Profit News Service No. 0247 – Recent case: fund denied charitable status

Jul2009.On12June2009,theFederalCourthandeddownitsdecisioninthecaseCommissionerofTaxationvBargwanna.

Non-Profit News Service No. 0246 – Private ancillary funds: legislation introduced and draft guidelines released

Jul2009.On25June,legislationwasintroducedintoparliamenttoestablishacomprehensivelegalframeworkforprivateancillaryfunds(PAFs).DraftguidelinesonhowthenewPAFframeworkwillapplywerealsoreleasedforpublicconsultation.

Non-Profit News Service No. 0245 – GST: Change in use of goods and services

Jul2009.Ifthecreditablepurposeofgoodsandserviceschanges,youarerequiredtomakeanadjustmenttotheamountofGSTcreditspreviouslyclaimed.

Non-Profit News Service No. 0244 – Refund of franking credits mailout

Jun2009.On19June2009theTaxOfficemailedthe2008–09refundoffrankingcreditsapplicationpackagetonon-profitorganisationsthatreceivedarefundoffrankingcreditsintheprioryear.

Non-Profit News Service No. 0243 – New ruling SGR 2009/2 on the meaning of ‘ordinary time earnings’ and ‘salary or wages’

Jun2009.AnewsuperannuationguaranteerulingSGR2009/2hasbeenreleasedonthemeaningoftheterms‘ordinarytimeearnings’and‘salaryorwages’.Therulingincludeseasy-to-followexamplesandreplacesSGR94/4andSGR94/5.

Non-Profit News Service No. 0242 – Decision impact statements released: Word Investments Ltd and Victorian Women Lawyers’ Association Inc

May2009.TheCommissionerhasreleaseddecisionimpactstatementsoutlininghispositioninrelationtothecasedecisionsinWordInvestmentsLtdandVictorianWomenLawyers’AssociationInc.

Non-Profit News Service No. 0241 – Updated fringe benefits tax (FBT) web products

May2009.Providesalinktofourfringebenefitstax(FBT)webproductsthathavebeenrecentlyupdatedtohelpyoumeetyourFBTobligations.

Non-Profit News Service No. 0240 – 2009–10 0240 – 2009–10 Budget: measures relevant to non-profit organisations

May2009.TheGovernmenthasannouncedseveralmeasuresthatarerelevantorofinteresttonon-profitorganisationsinthe2009–10Budget.

Non-Profit News Service No. 0239 – Education tax refund for approved care organisations

Apr2009.Theeducationtaxrefundisanewtaxoffsetapprovedcareorganisations(ACO)canclaimfortheeligibleeducationexpensestheyincurforeachchildintheirresidentialcarewhoisinprimaryorsecondaryschool.

Non-Profit News Service No. 0238 – Support for victims of recent Italian earthquake

April2009.TheAssistantTreasurerhasannouncedhisdecisiontorecognisethe2009Italianearthquakeasadisasterforthepurposesoftaxdeductibilityofdonations.

Non-Profit News Service No. 0237 – Productivity Commission to review the contribution of the not-for-profit sector

April2009.ThegovernmenthasannouncedtheProductivityCommissionwillexaminethenot-for-profitsector’scontributiontoAustraliansociety,howtheircontributionsarecurrentlymeasuredandobstaclestomaximisingtheircontributionstosociety.

Non-Profit News Service No. 0236 – Support for victims of recent Victorian bushfires

April2009.TheTreasurerandAssistantTreasurerhavedeclaredtherecentVictorianbushfiresasadisasterforthepurposesoftaxdeductibilityofdonations.

Non-Profit News Service No. 0235 – GST and gambling activities

Mar2009.Inmostcases,gamblingsalesyourorganisationmakes(suchaslotteriesorgamingmachineactivity)aretaxable.YouonlyapplyGSTtoyourmarginonthesetaxablegamblingsales–nottoeachindividualsale.

Non-Profit News Service No.0234 – Guidance for non-profit organisations on counter-terrorism financing

Mar2009.TheAttorney-General’sDepartmenthasreleasedadraftguidancedocumenttoassistNPOstoprotectthemselvesfromtheriskofterrorismfinancing.TheAttorney-General’sDepartmentencouragesinterestedpartiestoprovidetheircomments.

Non-Profit News Service No.0233 – Legislation tabled: proposed changes to Australian disaster relief funds

Feb2009.ProposedamendmentstabledinParliamenton25February2009containmeasuresaffectingthedeductiblegiftrecipientcategory–Australiandisasterrelieffund.

Non-Profit News Service No. 0232 – Recent bushfires and floods and GST concessions for charitable fund-raising events

Feb2009.Certainorganisationscanchoosetohaveallsuppliestheymakeinconnectionwithafund-raisingeventtreatedasinputtaxedforgoodsandservicestaxpurposes.

Non-Profit News Service No. 0231 – GST-free non-commercial activities

Feb2009.Non-commercialactivitiesareGST-freeforsomenon-profitorganisations.

Non-Profit News Service No. 0230 – Henry Review releases consultation paper

Jan2009.TheAustralia’sFutureTaxSystemReviewPanelhasreleaseditsconsultationpaper,providingthebasisforfurthercommunityinputin2009.Section7ofthepaperconsidersthemaintaxconcessionsavailabletonot-for-profitorganisations.

Forthefirsttime,wehaveinvitedanumberoflegalpractitionerstoprovidesuccinctsummariesofsignificantlegalissuesnonprofitorganisationscanencounter.Thesesummariesaremeantasareadyreferencepointratherthanadefinitiveguideandyoushouldconsidertakingformalandconsideredlegalassistancewhereappropriate.

5.1 PriVatE ancillary fundsJohn Emerson, Freehills

Since2001,ithasbeenpossibletoestablishprivatelycontrolledtrustsknownasprescribedprivatefunds(PPFs).PPFswereentitledtoanumberoftaxationconcessionsincludingdeductiblegiftrecipientstatusandincometaxexemption.Theirsolepurposewastoprovidemoney,propertyorbenefitstoarangeofotherdeductiblegiftrecipientssuchaspublicbenevolentinstitutions,healthpromotioncharities,overseasaidfunds,andorganisationsontheregistersofculturalorganisationsandenvironmentalorganisations.By30June2009,over800PPFshadbeenestablished,theyhadreceivedmorethan$1.3billioningifts,anddistributedmorethan$300milliontodeductiblegiftrecipients.On1October2009anewregimebeganforPPFs.

Main changes

ExistingPPFsbecamePrivateAncillaryFunds(PAFs)andtheyweretakentobeendorsedasdeductiblegiftrecipients.TheMinisterwasgivenpowertomakeguidelinesabouttheestablishmentandmaintenanceofPAFs.EachtrusteeofanexistingPPFwastakentohaveagreedtocomplywithPAFGuidelines.OnlyaconstitutionalcorporationcanbeatrusteeofaPAF.

TheadministrationofPAFswasvestedfullyintheCommissionerofTaxation,subjecttosometransitionalprovisions.TheCommissionerhaspowerto:

• endorsePAFsasdeductiblegiftrecipientsandtaxconcessioncharitiesorincometaxexemptfunds;

• revokeendorsement;

• imposeadministrativepenaltiesontrustees,andtheirdirectors;and

• suspend,removeandreplacetrustees.

ThelegislativechangesarecontainedinTax Laws Amendment (2009 Measures No. 4) Act 2009(Cth)whichreceivedRoyalAssenton18September2009.ThePAFGuidelinesweresignedon28September2009andamodeltrustdeedwasreleasedsoonafterbytheAustralianTaxationOffice.

ThePAFGuidelinesarealegislativeinstrumentandsohavelegaleffect,incontrasttotheguidelinesthatappliedtoPPFs.PAFsmustagreetocomplywiththeGuidelines.

Main requirements in Guidelines

Ineachfinancialyear,aPAFmustdistributetodeductiblegiftrecipientsanamountequaltoatleast5%ofthemarketvalueofitsnetassetsasattheendofthepreviousfinancialyear.ThemarketvalueoftheassetsmustbeestimatedasspecifiedintheGuidelines.

APAFmustnotacquireacollectable,maynotcarryonabusiness,andmaynotsolicitdonationsfromthepublic.APAFisalsolimitedinthedonationsitcanacceptfrom‘outsiders’.

5.0 sPEcial issuEs 5

APAFmusthaveandmaintainacurrentinvestmentstrategyandsubjecttosomeexceptions,maynotborrowormaintainanexistingborrowing.ThetrusteemustprepareandmaintainacurrentinvestmentstrategymeetingtherequirementsofthePAFGuidelines.Specialobligationsarealsoimposedontheindependentresponsiblepersonontheboardofdirectorsofthetrustee.

TheGuidelinescontainsomeexceptions/qualificationsinrespectoftheaboverules,andtheGuidelinesandActcontaintransitionalprovisionsinrespectofcertainPPFsthatexistedbefore1October2009.

ThenewregimedoesnotaffectthebasictaxconcessionsthatappliedtoPPFs.Itis,however,essentialthatthetrusteeofeachexistingPPFanditsdirectorsexaminethenewlegislationandthePAFGuidelinescarefullytoensuretheirPAFcomplieswiththem.

Further information

ThematerialsoutlinedbelowcanbelocatedontheATOwebsite(www.ato.gov.auandbysearchingfor‘PAF’).

• TheTax Laws Amendment (2009 Measures No 4) Act 2009,Schedule2PrivateAncillaryFunds;

• Explanatory Statement to PAF Guidelines(28September2009);

• ATO Non-Profit News Services,No.0246,1July2009;No.0253,14September2009;andNo.0258,15October2009;

• Private Ancillary Fund Model Trust Deed;

• Endorsement as a Deductible Gift Recipient,NAT2949;

• AgreementtocomplywiththerulesinthePAFGuidelines;

• Revocation of the agreement to comply with the rules in the PAF Guidelines;

• Private Ancillary Fund – Schedule for deductible gift recipient applicants;

• TransitionalarrangementsforPPFs;

• Private Ancillary Fund Guidelines 2009(undertheTaxation Administration Act 1953 )areavailableontheFederalRegisterofLegislativeInstrumentsatwww.frli.gov.au–seewww.ato.gov.au/nonprofit/content.asp?doc=/content/00216088.htm.

TheATOisalsointendingtoissueadetailedlistofFAQs.

5.2 national rEntal affordability schEMEMark Fowler, Neumann and Turnour Lawyers

TheNationalRentalAffordabilitySchemecommencedwiththeenactmentoftheNational Rental Affordability Scheme Act 2008(Cth),theNational Rental Affordability Regulations 2008 (Cth)andnewlyinsertedDivision380oftheIncome Tax Assessment Act 1997(Cth)( ITAA97).TheScheme’sprincipalaimistostimulatetheconstructionof50,000newdwellingsacrossAustralia.Thesedwellingsaretobelettotenantswhomeetmeans-testedeligibilitycriteriaforamaximumof80%ofthethencurrentmarketrent.

ApplicantsareinvitedtosubmittenderstotheDepartmentofFamilies,Housing,CommunityServicesandIndigenousAffairs,theCommonwealthdepartmentresponsibleforoverseeingtheScheme,forashareof50,000individual‘allocations’,eachofwhichislinkedtoan‘approvedrentaldwelling’.Theseallocationsaretobereleasedacrossthreerounds.Atthetimeofpublication,roundsoneandtwowereclosedwiththefinal

roundremainingopento31August2010.Theholderofanallocation(‘theapprovedparticipant’)willbeentitledtoanannual‘incentive’intheamountsdisplayedatTable2(toincreaseinlinewithConsumerPriceIndex).

TABLE 2 : INCENTIVES

Contributed by Amount

Australiangovernment $6504.00

State/Territorygovernment $2168.00

Total $8672.00

UnderDivision380oftheITAA97theapprovedparticipantmaybeoneofthefollowing:

• anindividual;

• apartnership;

• atrust;or

• aparticipantina‘non-entityjointventure’.

Subjecttotheindividualtaxcircumstancesoftherecipient,theincentivemaytaketheformofeitherataxoffsetcertificate,orapayment.Entitlementtoanincentivewillbedeterminedbytheproportionofactualrentreceivedbytheinvestor,whichinturnisconsequentuponthestructuringoftheapprovedparticipant.Ongoingentitlementtotheincentiveisconditionaluponsatisfactionofongoingreportingandcompliancerequirements.IndividualStategovernmentrequirementsvaryacrossAustralia.

Nonprofit involvement

Giventhestronghistoricalinvolvementofthenonprofitsectorinaffordablehousing,fromitsinceptiontheSchemeanticipatedtheparticipationofthesector.EnactmentstotheExtension of Charitable Purpose Act 2004(Cth)wereintroducedtoensurethecharitableendorsementsofNFPswouldnotbeaffectedbyparticipationinrounds1and2oftheScheme.SubsequentlytheTreasurerhasexpressedhisviewthat,subjecttothecircumstancesoutlinedintheCommissioner of Taxation v Word Investments Ltd,8NFPsparticipatingintheSchemewillretaintheircharitableendorsementsunderthetaxlawswheretheydirectsurplusfundsgeneratedfromtheirparticipationintheSchemetowardstheircharitablepurpose.

ThereareseveralformsthatNFPparticipationintheSchememaytake,includingpropertyandtenancymanagement,jointequityinvolvement,syndicationoroutrightownership.ThenovelaspectformanyNFPprovidersenteringtheSchememaybethelevelofdirectengagementwithprivateandinstitutionalinvestorsandconsequently,thetensionbetweenmarketimperativesandtenantinterests.

ThedifferentpotentialmanifestationsofnonprofitinvolvementareperhapsbestillustratedbyasampleofthepropertystructuresthatarecurrentlybeingutilizedwithintheScheme.

8 CommissionerofTaxationvWordInvestmentsLtd(2008)236CLR204.

Property Structuring

1. HeadLeaseModel,comprisingnon-entityjointventure

GOVERNMENT OWNER

TENANT

Residential Tenancy

Agreement

Rent 80% Market Value

Incentive

Rent Lease (NEJV)

AtthetimeofprintingtheTreasurerandMinisterforHousinghaveflaggedtheirintentiontointroducelegislativechangetoclarifyfurtherthetaxationconsequencesofentrancetothismodel.9

2.RentalUnitTrust

NFPas trustee For

reNtal uNit trust

GOVERNMENT

OWNERTENANT

Residential Tenancy

Agreement

Incentive

Distribution Rent

Incentive

Owner purchases Units

in the Trust equivalent to rental value

9 ATOInterpretiveDecisionNo.2009/146providesfurthercommentaryonthenon-entityjointventuremodelwhereittakestheformofaHeadLease,andinparticularthepartiesentitledtoreceiptoftheincentivewithinsuchamodel.TheillustrationgivenshouldbereadinconjunctionwiththatInterpretiveDecision.

3.DirectOwnership

GOVERNMENT

TENANT

Residential Tenancy

Agreement

Incentive

IneachoftheabovemodelstheNFPmayconductthefollowing:

• ApplicationtoFederalGovernmentforIncentive(approvedparticipant);

• Tenancyandpropertymanagement(theNFPmayelecttosubcontractthisactivity);and

• CompliancereportingtoFederal(andState)Government.

Issuesrequiringtheconsiderationofthenonprofitinassessingthemeritsofindividualpropertystructuresmayinclude:

• Protectionoflongertermsecurityoftenureforresidentialtenants;

• Potentialliabilitytoinvestorsintheeventofnon-receiptoftheincentive;

• Occupier’sliabilityassublessorofproperty(iftheNFPistohaveexclusivepossessionoftheapprovedrentaldwelling);

• ConsequencesofsaleofapprovedrentaldwellingbyOwner;and

• GSTconcessionalbenefitsflowingfromcharitablestatus.

FurtherinformationontheSchemeisavailableatwww.fahcsia.gov.auandtheAustralianTaxOfficehavereleasedseveralexamplesofpropertystructuringarrangementsforparticipationinNRAS,availableontheirwebsitewww.ato.gov.au.ItisrecommendedthatnonprofitentitiesconsideringparticipationinNRASshouldseektheirownlegalandtaxationadvice.

5.3 MonEy laundErinGHeather Watson, McCullough Robertson – Lawyers

Moneylaunderingisanimportantandnecessaryelementofanyorganisedcrimenetworkengagedincrimeswithafinancialreward.Moneylaunderingtechniquesarealsoemployedbyterroristorganisationstoaccessfundsrequiredtocarryoutterroristactivities.

Moneylaunderingistheprocessbywhichcriminalorganisationsattempttoconcealthetrueoriginandownershipoftheproceedsoftheircriminalactivities.Ifmoneylaunderingissuccessful,thoseproceedscanlosetheirapparentcriminalidentityandappearlegitimate.

In2006,theCommonwealthgovernmentenactedtheAnti-Money Laundering and Counter Terrorism Financing Act 2006 (Cth)(AML/CTFAct).TheAustralianTransactionsReportsandAnalysisCentre(AUSTRAC)istheregulatorybodyresponsibleforenforcingcompliancewiththeAML/CTFAct.TheActimposesvariouscomplianceobligationsonpersonswhoprovidecertain‘designatedservices’.Theseobligationsinclude:

a. identificationandverificationproceduresforcustomers;

b.suspiciousmatterreporting;

c. thresholdtransactionreporting;

d.AML/CTFActcompliancereporting;

e. cross-bordertransferreporting;

f. implementationofAML/CTFprograms;and

g.recordkeepingrequirements.

Section6oftheAML/CTFliststhedesignatedserviceswhicharecaughtbytheregime.Themajorityoflisteddesignatedservicescouldbedescribedasrelatingtotheprovisionoffinancialservices,suchasbankingactivities,loansbusinesses,certaindealingswithsecuritiesandactingasanagentforapersoninrelationtotheprovisionofafinancialservice.Gamblingservices,dealingsinpreciousmetalsandcashremittanceservicesarealsolisteddesignatedservices.

Potentially,theprovisionofa‘oneoff’designatedservicemaybecaughtbytheAML/CTFAct.Section5providesthatabusinessconcerningtheprovisionsofadesignatedserviceincludes:‘Aventureorconcernintradeorcommerce,whetherornotconductedonaregularrepetitiveorcontinuousbasis’.

AUSTRAChaspublisheditsinterpretationof‘carryingonabusiness’initsPublic Legal Interpretation,No.4of2008,whichprovidesthat:‘Itisnotessentialthattheactivitiesbeundertakenforgainorprofit,butthattheactivitiesmustoccuraspartofaventureorconcernintradeorcommerce’.BasedonAUSTRAC’sassessment,itwouldappearthatnonprofitactivitieswhichinvolvetheprovisionofadesignatedservicewillfallwithinthescopeoftheAML/CTFAct.

NonprofitentitieswhoareincidentallyinvolvedintheprovisionofadesignatedservicesmayalsoberequiredtocomplywiththeAML/CTFAct,dependinguponthescopeoftheiractivities.Forexample,anonprofitentityprovidingfinancialaccommodationtoindividualsintheformofaloanmayberequiredtocomplywiththeAML/CTFAct.

NonprofitentitiesshouldseeklegaladviceiftheyareunsurewhethertheiractivitiesmaybecaughtbytheAML/CTFAct.MoreinformationinrelationtotheActcanbefoundatwww.austrac.gov.au.

5.4 workPlacE hEalth and safEtyNathan MacDonald, PilchConnect

On1February2008,theWorkplaceRelationsMinisters’CouncilagreedthatthebestwaytoachieveuniformityofAustralia’soccupationalhealthandsafety(OHS)lawsisthroughthedevelopmentofmodellegislation.10ThisprocessincludestheimplementationofamodelOHSAct,modelOHSregulationsandmodelOHScodesofpractice.

On11December2009,SafeWorkAustraliareleasedthemodelWork Health and Safety Act (ModelAct).DependingonwhatstateorterritoryOHSlawsyouarefamiliarwith,theModelActrepresentsvaryingdegreesofchangefromexistingOHSframeworks.

Primary duty of care

Asastartingpoint,theModelActimposesaprimarydutyofcareonany‘personconductingabusinessorundertaking’toensure,asfarasisreasonablypracticable,thehealthandsafetyofworkers.Volunteersareincludedinthedefinitionof‘worker’andarethereforeowedthesamedutiesundertheModelActaspaidemployees.11

TheModelAct’sprimarydutyofcaredoesnotdistinguishbetweenoperationsthatareconducted‘for-profit’,andthosethatare‘nonprofit’.However,theModelActexcludes‘volunteerassociations’fromthedefinitionof‘conductingabusinessorundertaking’,whicheffectivelymeansthattheseorganisationsdonotowethisprimarydutytotheirworkers.Section5(5)definesa‘volunteerassociation’as:

agroupofvolunteersworkingtogetherforoneormorecommunitypurposeswherenoneofthevolunteers,whetheraloneorjointlywithanyothervolunteers,employsanypersontocarryoutworkforthevolunteerassociation.

Itcanbeinferredfromthisdefinitionthatonceanorganisationtakesonjustonepaidemployee,itwillnolongerbedeemeda‘voluntaryassociation’andthereforewillbeunabletorelyontheModelAct’sexclusion.Howthisappliestoorganisationsthatengagepart-timecontractorsorperiodicpaidstaff(e.g.,abookkeeper)remainstobeseen.

Other duties of care

TheModelActimposesfurtherdutiesofcareinrelationtocertainactivities,particularlywherethereis‘managementandcontrol’ofaworkplace.TheModelActdefinesa‘workplace’asaplacewhereworkiscarriedoutforabusinessorundertakingandincludesanyplacewhereaworkergoes,orislikelytobe,whileatwork.Itishopedthatthisdefinitionisclarifiedfurthertoprovidecertaintytothenonprofitsector,whichoperatesinmanynon-traditionalworkplacessuchasprivateresidencesandpublicspaces.

WhereanorganisationowesadutyundertheModelAct,anofficer12ofthatorganisationmustexerciseduediligencetoensurethatdutyiscompliedwith.

10 WorkplaceRelationsMinisters’Council,Communiqué,1February2008,www.workplace.gov.au/NR/rdonlyres/31BED76B-2655–4CDF-952F-

E84FE0CD3469/0/WRMC75AgreedCommunique.pdf(accessed18February2010).11 Section7oftheModelAct.12 Asdefinedatsection9oftheCorporationsAct2001(Cth).

Offences

TheModelActintroducesthreecategoriesofoffenceswhereapersonisfoundtohavebreachedasafetyduty.

Category 1offencesarethemostseriousandconsequentlyprovideforthemostseverepenalties.Thiscategoryisreservedforpersonswhobreachasafetydutywhichcausesseriousinjuryordeath(orahighriskofthisoccurring),andwherethatpersonisfoundtoberecklessastotheseconsequences.

Category 2offencesapplytopersonswhohavebreachedasafetydutyinthesamecircumstancesasCategory1,butarenotfoundtohavebeenreckless.

Category 3providestheleastseverepenalties,andincludesallotherbreachesofthesafetydutiesnotfoundtofallwithinthefirsttwocategories.

Treatment of volunteers

WhilevolunteersareoweddutiesundertheModelActasworkers,theyareexemptfromincurringliabilityunderthemajorityoftheoffenceprovisions.However,volunteersmaystillbeliablewheretheyfailtocomplywiththedutytotakereasonablecarefortheirownhealthandsafety,orwheretheyfailtotakereasonablecaretoensurethattheiractionsdonotadverselyaffectthehealthandsafetyofothers.13

Theterm‘volunteer’isdefinedintheModelActasapersonwhoisactingonavoluntarybasis,irrespectiveofwhetherthepersonreceivesout-of-pocketexpenses.14Thevolunteerexclusionfromtheoffenceprovisionsisthereforerelevantforvolunteercommitteeorboardmembers,orvolunteermanagerswhomightotherwisebeconsideredtobeconductingabusinessorundertakingandwouldthereforeincurliability.

From here

TheModelActisthefirststageofreforms,withregulationsandacodeofpracticestilltobedevelopedin2010.SafeWorkAustraliahasindicatedthattherewillbefurtherpublicconsultationthroughoutthisprocess.Itintendstohavealljurisdictionsenactthemodellawsbytheendof2011.

Resources

PilchConnect’sfreemonthlye-bulletin(seee-bulletinlinkon:www.pilch.org.au/PCLawReform)providesupdatesofVictorianandrelevantnationallegislativechangesandproposedlawreforms.Tosubscribepleaseemailconnect@pilch.org.au.

5.5 chanGEs to thE workPlacE rElations rEGiME

Tim Longwill, McCullough Robertson

Anumberofemployersacrossthecountry,includingnonprofitorganisations,havebeenaffectedbythecommencementoftheFair Work Act 2009 (Cth)(theAct).From1January2010,allstatesexceptWesternAustraliareferredtheirindustrialrelationspowertotheFederalgovernment.ThismeansthatthemajorityofAustralianemployers,

13 Section33oftheModelAct.14 Section4oftheModelAct.

includingthosethatarenot‘constitutionalcorporations’,arenowcoveredbythefederalregime.Thisarticlebrieflyoutlinessomeofthemajorchangesaffectingemployersinthenonprofitsector.

Introduction of the National Employment Standards

TheNationalEmploymentStandards(NES)setouttheminimumstandardsapplicabletoallnational-systememployeesfrom1January2010.TheNESeffectivelyintroducethefollowingfivenewstandards:

1. therightofanyemployee,whoistheparentorcarerofachildunderschoolage,oradisabledchild,torequestflexibleworkingarrangements;

2. therighttobeabsentfromworkinordertoconductrecognisedcommunityserviceactivities.Theseactivitiesarecurrentlylimitedtojuryserviceandvoluntaryemergencymanagementduties;

3.anentitlementtoredundancypay(althoughthereisanexceptionforsmallenterprises);

4.aneligibleemployee’sentitlementto12monthsofunpaidparentalleaveonthebirthoradoptionofachildandtheirrighttorequestanextensionofparentalleaveforafurtherperiodofupto12months;and

5.anemployer’sobligationtogiveeachnewemployeeaFairWorkInformationStatement(whichmaybedownloadedfromwww.fairwork.gov.au)assoonaspracticableaftertheycommenceemployment.

TheNESalsoconfirmsthat:

• employees’hoursofworkmustnotexceed38hoursperweek;and

• eligibleemployeesareentitledto:

• annualleave;

• personalleave,carer’sleaveandcompassionateleave;

• longserviceleave;and

• publicholidays.

ItisimportantforemployerstonotethattheNESwillapplytoallemployeesregardlessofanyagreementsbetweentheemployerandtheemployee.AnycontractualprovisionwhichisinconsistentwiththeNESwillnolongerbevalid.Althoughthiswillnotinvalidatetheremainingtermsofanyemploymentcontract,employersmaywishtoconsiderupdatingtheircontractstoreflectthesechanges.

Introduction of modern awards

Generallyspeaking,modernawardsalsocommencedapplicationon1January2010.However,specialtransitionalarrangementsareinplacefororganisationswhichonlybecamesubjecttothefederalregimeduetothe‘referralofpowers’legislation.Thesearrangementswillaffectalargenumberofnonprofitorganisationswhicharenotconstitutionalcorporations.Inmostcasesmodernawardswillnotapplytotheseorganisationsuntil1January2011.However,itisimportanttonotethatthereisanexceptiontothisruleiftherewasnoStateawardapplyingtotheorganisationinquestionon1January2010.

Foremployerswhoareconstitutionalcorporations,transitionalarrangementshavebeenintroducedintoeachmodernaward,permittingthe‘phasingin’ofnewfinancialprovisions.Thismeasureisintendedtoeasetheburdenoftheintroductionofnewpayscalesonbothemployersandemployees.

Allemployersshouldfamiliarisethemselveswithanyrelevantmodernawardswhichmayapplytotheirorganisations.Modernawardsmaybedownloadedfromwww.airc.gov.au/awardmod/fullbench/awards.htm.

Other relevant changes

AnumberofotherchangeshavebeenintroducedbytheAct.Theseinclude:

• changestounfairdismissallaws,includingtheintroductionoftheSmallBusinessFairDismissalCodeforemployerswithfewerthan15employees;

• theintroductionof‘workplacerights’laws,whichprohibitanyadverseactiononthebasisoftheexerciseofanemployee’sworkplaceright;

• amended‘rightofentry’lawssettingoutthecircumstancesinwhichaunionofficialcanenteraworkplace;and

• theformationofFairWorkAustraliaandtheFairWorkOmbudsman.

Further advice

Althoughthisarticleaimstoprovideabriefoutlineofthemajorchangesaffectingnonprofitorganisations,pleasebearinmindthattheAct introducesacomplexnewindustrialrelationsregime.Inanumberofrespects,theapplicationoftheActtoeachorganisationwillbeaffectedbytheirindividualcircumstances.Independentadviceshouldthereforebesoughttoensurecompliancewiththenewlaws.

Inparticular,assistancemayberequiredtodeterminewhetheranorganisationisaconstitutionalcorporation,whichwillaffectmodernawardcoverage(althoughformanyorganisationsthisexercisewillalreadyhavebeenundertakenundertheWorkChoicesregime).Advicemayalsoberequiredtonavigatethetransitionalprovisionsforawards,particularlyforemployersthatarenotconstitutionalcorporations.

5.6 coMPaniEs liMitEd by GuarantEEMatthew Turnour and Nathan Rieck, Neumann and Turnour Lawyers

InDecember2009theCommonwealthgovernmentannouncedproposedchangestothelawsregulatingthereportingrequirementsforcompanieslimitedbyguarantee.Theproposedchangesaretosimplifythereportingrequirementsforcompanieslimitedbyguaranteedependingupontheirannualrevenueandtheirtaxdeductibilitystatus.Thesechangesappeartobebasedonadesiretosimplifythereportingrequirementsofsmallentitiesandreducethecostsofcomplyingwiththerequirementswhilstensuringthatallrelevantinformationismadeavailabletothosewhowouldbemostadverselyaffectedshouldacompanybecomeinsolvent.Thesechangesformpartofawideragendaacrossthecommonlawworldtoreformcorporationsthroughwhichcitizensparticipateincivilsociety.Inthisoverviewtheproposedchangesaresummarisedandlocatedintheinternationaldiscourse.

Current Legislation and Proposed Changes

Underthelegislation,asitcurrentlystands,companieslimitedbyguaranteeareregulatedasotherpubliccompaniesandassucharerequiredtocomplywiththesubstantialreportingrequirementsimposeduponthem.

AsthemajorityofcompanieslimitedbyguaranteeinAustraliaaresmall,community-basedorcharityorganisations,thesereportingrequirementscanbecomequiteonerous.Theproposedchangesseektocategorisecompanieslimitedbyguaranteeintooneofthreetiersaccordingto(a)theannualrevenueofthecompanyand(b)thetaxdeductibilitystatusofthecompany.Thereportingrequirementsvaryforeachtier.ThefollowingtablesetsouttheproposedreportingrequirementsforeachofthetiersassetoutintheCorporate Amendment (Corporate Reporting Reform) Bill 2010(Cth).

TABLE 3 REPORTING REQUIREMENTS FOR THREE TIERS UN

Tier Qualifications Companies with: Reporting Requirements

FirstTier • Annualrevenuelessthan$250,000whichdonothavedeductiblegiftrecipientstatus.

• Companieswouldbeexemptfrompreparingthefinancialreportanddirectors’report.

SecondTier • Annualrevenuelessthan$250,000thataredeductiblegiftrecipients;or

• Annualrevenueof$250,000ormorebutlessthan$1million,irrespectiveofwhetherthecompanyisadeductiblegiftrecipient.

• Prepareafinancialreportwhichtheycouldelecttohavereviewedratherthanaudited;

• Prepareastreamlineddirectors’report,ratherthanafulldirectors’report;and

• Besubjecttoastreamlinedprocessfordistributingtheannualreporttomembers.

ThirdTier • Annualrevenueof$1millionormore,irrespectiveofwhetherthecompanyisadeductiblegiftrecipient.

• Continuetoprepareanauditedfinancialreport;

• Prepareastreamlineddirectors’report,ratherthanafulldirectors’report;and

• Besubjecttoastreamlinedprocessfordistributingtheannualreporttomembers.

Streamlined Directors’ Report

Insteadofthereportingobligationsrequiredofapubliccompanywhichcompanieslimitedbyguaranteearecurrentlyrequiredtocomplywith,undertheproposedamendments,theannualDirectors’Reportforsecondandthirdtiercompaniesneedonlyaddressthefollowing:

• StrategicIssues:

• Shortandlongtermobjectivesofthecompany;

• Strategyforachievingtheobjectives;

• Activitiesundertakenbythecompany;

• Howtheactivitiesassistinachievingobjectives;

• Performancemeasures;

• Governanceissues

• Detailsofdirectors;

• Qualificationsofdirectors;

• Numberofmeetings;

• Amountthatmembersareliabletocontributeifthecompanyiswoundup(byclassandintotal).

FirsttiercompaniesarenotrequiredtoprepareaDirectors’Report.

Review of Financial Reports

Underthecurrentlegislation,companieslimitedbyguaranteearerequiredtohavetheirreportsauditedbyaregisteredcompanyauditor.Theproposedstreamlinedprocessaimstoreducecosts.Ratherthansubjectallcompanieslimitedbyguaranteetoacompleteaudit,companiesthatfallintothesecondtiermayelecttoundertakeareviewprocessbyaregisteredcompanyauditororamemberofaprofessionalaccountingbodywhoholdsapractisingcertificate.Thisallowsmorepeopletoundertakethereviewprocessandshouldreducecompliancecosts.

Thereviewprocess,asopposedtoanaudit,isnotdesignedtoprovideanyassurancethatthefinancialreportsarefreefromerror.Thereviewprocessconsistsofapreliminaryinvestigationandreviewoffinancialandaccountingprocessesandthepeopleinvolvedintheseprocesses.Thiswillbringsomemattersofconcerntotheattentionofthedirectorsbutdoesnotcoverthedetailrequiredtoprovidecompleteassurances.

Undertheproposedamendmentsthereviewprocesswillonlybeanoptionavailabletosecondtiercompanieslimitedbyguarantee.Firsttiercompanieslimitedbyguaranteewillnotberequiredtopreparefinancialreportswhilethirdtiercompanieslimitedbyguaranteewillstillberequiredtopreparefullyauditedfinancialreports.

Streamlined Distribution Process

Companieswhichfallwithinthesecondandthirdtiersandwhichdonothavethetechnologyfacilitiesavailabletomaketheirannualreportsavailabletomemberselectronicallywouldberequiredtowritetotheirmembersandinformthemthatthereportshavebeenpreparedandhowtheycanobtainprintedcopies.

International Context

Thesechangesarelikelytosimplifyandreducethecostoftheregulatoryandreportingrequirementssignificantlyformostclubsandcharitableorganisations.However,theyfallalongwayshortoftheinternationaldevelopmentsinlegislationtofacilitateandencourageparticipationinthevoluntarysector.

ThemostrecentdevelopmentofthisbodyoflawisinCanadawhereanon-profitcorporationstatute,theCanada Not-for-Profit Corporations Act 2009,hasbeenpassedbutisnotyetlaw.IntheUnitedKingdom,EnglandandWalesnowhavespecialistcivilsocietyfacilitatingentitiesintheformoftheCharitableIncorporatedOrganisationandCommunityInterestCompany.In2008,theStateofVermontintheUnitedStatesofAmericapassedspecialistlegislationfacilitatingnonprofittradingentitiescalledL3Cs.

Conclusion

Withthesechanges,theAustraliangovernmenthasnottakentheopportunitytobuildfrominternationaldevelopments.Insteadtheproposedchangeshavebeenrelativelyminor.Theyare,however,likelytobewellreceivedinthesectorandshouldsimplifyproceduresformanycompanieslimitedbyguarantee.

5.7 riGht to inforMation and inforMation PriVacyLinda Lavarch, The Australian Centre for Philanthropy and Nonprofit Studies

Untilrecently,informationheldbytheQueenslandgovernmentwasregulatedbytheFreedom of Information Act 1992(Qld)(FOIAct).ThisActanditslegislativeframeworkoperatedtoprovideanavenueforthepublictoaccessinformationheldbygovernment,includingpersonalinformation.Itwasnotintendedtoapplytotheprivatesectorandthereforeonlyhadaminorimpactontheoperationsofnonprofitorganisations.Theprincipallegislationregulatingpersonalinformationheldbytheprivatesector,includingnonprofitorganisations,isaCommonwealthAct,thePrivacy Act 1988(Cth).

However,in2008thegovernmentreleasedareport,The Right to Information: Reviewing Queensland’s Information Act,whichhasledtosignificantreformtotherighttoinformationandtheprivacyininformation,chieflytheenactmentoftheRight to Information Act 2009(Qld)andtheInformation Privacy Act 2009(Qld).ThesetwoActshavethepotentialtohaveagreaterimpactontheprivatesectorincludingnonprofitorganisations.

ThisarticleaimstooutlinebroadlythemostsignificantimpactthechangesmighthaveonanonprofitorganisationandbrieflyoutlinestheproposedchangestoCommonwealthprivacylawsthatmayaffectnonprofitorganisations.

Changes in the new Queensland Acts

TheRight to Information Act 2009(RTIAct)andtheInformation Privacy Act 2009( IPAct)operatetocomplementeachotherandtogethertheyreplacetheFreedom of Information Act 1992(Qld)(FOIAct).TheRTIActgivesalegalrighttoaccessinformationinthegovernment’spossessionandunderitscontrolunlessitiscontrarytothepublicinteresttogivetheaccess.Itdealswithnon-personalinformation.TheIPActgivesaccessto,ortherighttoamend,anapplicant’spersonalinformation.

WhiletheprovisionsofbothActsareaimedpredominantlyatthepublicsector,thereversalofthetestforthereleaseofdocumentsandthebroadeningofthecoveragemayseetheirapplicationtothenonprofitsectorchange.UndertheoldFOIActrégime,theprinciplewasthatinformationshouldonlybereleasedwhenitwasinthepublicinteresttodoso.UnderthenewRight to Information Acttheapproachnowisthatinformationshouldbereleasedunless,onbalance,itisnotinthepublicinteresttodoso.Thenewapproachtoaccesstoinformationadoptsa‘push’modelratherthantheprevious‘pull’model–i.e.thestartingpointispro-disclosure,ratherthanpro-protection,ofinformation.

Privacy

Priortotheenactmentofthe2009Acts,QueenslanddidnothaveanyprivacylegislationwiththeexceptionoftheInvasion of Privacy Act 1971whichdoesnotgiveageneralprotectionforprivacyorpersonalinformation.TheIPActintroducesanewframeworktosafeguardthehandlingofpersonalinformationheldinthepublicsectorenvironment,thatispersonalinformationheldbyagencies.InordertounderstandthechangesmadetoprivacylawsinQueenslandandthepossibleimpactonnonprofitorganisationstherearetwocriticaltermsthatmustfirstbedefined:

‘PersonalInformation’:theIPActhasthesamedefinitionastheCommonwealthPrivacy Act 1988.Thistermcoversanyinformationoropinionthatidentifiesapersonorcouldbeusedtoidentifyaperson.

‘Agency’isdefinedinsection18oftheIPAct(formostpurposesoftheAct)as:

a.aMinister;or

b.adepartment;or

c. alocalgovernment;or

d.apublicauthority,whichisanybodycreatedbyanActofparliamentforapublicpurpose.

(Anyboard,council,committeeetc,establishedtohelportoperformfunctionsconnectedwithanagencyistakentobepartoftheagency.)

TheActsetsoutinformationprivacyprinciples(IPPs)inSchedule3.Most‘agencies’mustcomplywiththeseprinciples(apartfromtheHealthDepartmentwhichmustcomplywiththenationalprivacyprinciples(NPPs)inSchedule4).

Application to the nonprofit sector

Thereareanumberofnonprofitorganisationsthatforvariouslegalreasonswerecreatedbyenactment,typicallyschoolsandchurches.Howeveritisunlikelytheywouldbeconsideredtobepublicauthorities(andthereforeagencies)becausetheyhavenotgenerallybeencreatedforapublicpurpose.(Schedule2oftheActspecificallyexemptsgrammarschoolstowhichtheGrammar Schools Act 1974(Qld)applies.)

ForothernonprofitorganisationsestablishedbylegislationtheywouldonlybecaughtbytheprovisionsofthisActiftheymetthepublicpurposetest.Theexceptiontothiswouldbethoseorganisationswhicharesupporteddirectlyorindirectlybygovernmentfundsorotherassistance,oroverwhichthegovernmentisinapositiontoexercisecontrol.AnexampleofthistypeoforganisationwouldbeahospitalfoundationcreatedundertheHospital Foundations Act 1982(Qld).

However,organisationsthatprovideservicesonbehalfofthegovernmentwillprobablybeconsideredtobepublicauthorities.ThisisbecauseofChapter2.

Chapter2oftheIPActregulatescompliancewiththeprivacyprinciples.Part4ofChapter2binds‘contractedserviceproviders’tocomplywiththeprivacyprinciples.ThisislikelytohavethegreatestimpactuponQueenslandnonprofitorganisations,asanorganisationthatmakesacontractorarrangementtoperformoneormorefunctionsofanagencymustcomplywithPart1or2andPart3ofChapter2,iftheydealwithortransferpersonalinformationunderthearrangementwiththegovernmentagency.

ThereislittleguidanceintheActastowhatismeantby‘functionofanagency’,andgiventhewidevarietyandconstantlychangingrolesperformedbygovernmentitis

impossibletocreateanexactlistofagencyfunctions.Anynonprofitorganisationthatcontractstoprovideaserviceforanagencyshoulderronthesideofcautionandassumethatitisperformingafunctionoftheagency.

Anonprofitorganisationthatentersintoanarrangementtoprovideservicesfortheperformanceofoneormoreofagovernmentagency’sfunctionsmustcomplywiththeIPPsinSchedule3;orifitcontractstoprovideservicesfortheHealthDepartment,itmustcomplywiththeNPPsinSchedule4.Generallyspeakingtheseprinciplesdealwiththewayanorganisationcancollect,store,useandaccesspersonalinformation.ThesenonprofitorganisationsmustalsocomplywiththerequirementsabouttransferringpersonalinformationoutsideofAustralia(Part3ofChapter2).

Undersection35,theobligationisplacedonthegovernmentagencytoensurethatitscontractedserviceprovider‘isrequiredtocomplywithpart1or2andpart3[ofChapter2],asifitweretheagency,inrelationtothedischargeofitsobligationsunderthearrangement’.Thisappliesonlyifthecontractedserviceproviderwilldealwithpersonalinformationonbehalfofthecontractinggovernmentagency;ortheprovisionofservicesunderthearrangementwillinvolvetransferofpersonalinformationtotheagencyorwillinvolveprovidingservicestoathirdpartyfortheagency(seesection35(2)).

Undersection36,thecontractedserviceproviderhastocomplywiththeprivacyprincipleswhendischargingitsobligationsunderthearrangementwiththegovernmentagencyasifitwerethegovernmentagency.It’simportanttonotealsothatthenonprofitorganisationcontinuestobeboundbytheprivacyprinciples‘inrelationtopersonalinformationitcontinuestohold’,evenaftertheservicearrangementisfinished(section36(2)).

Anynonprofitorganisationthatcontracts(whetherformallyorbyarrangement)toprovideaserviceforanagency,shouldalwayscheckwhetheritwillbecaughtbytheprovisionsoftheIPAct.TheOfficeoftheInformationCommissioner(Qld)hasproducedanumberofresources,including‘Contractedserviceproviders–achecklistforagencies’,availableonlinefromwww.oic.qld.gov.au/toolkit

The test

Chapter3oftheIPActgovernsaccesstopersonalinformation.Anindividualcanapplytotheagencytoaccessherorhisownpersonalinformationandtoamendinaccurate,outdatedormisleadingpersonalinformationindocumentsheldbytheagency.Section40oftheActlimitsaccessonlytodocumentsthatcontaintheapplicant’spersonalinformation(althoughthedocumentsmaycontainotherinformationaswell;irrelevantmaterialmaybedeletedbeforeaccessisgiven:section88).Section54oftheActsetsoutthestepstobeundertakenbytheagencytoassesswhethertheapplicationcanbemadeunderthisAct.

Thepro-disclosureapproachisinsection64,i.e.theagency(orcontractedserviceprovider)shoulddecidetogiveaccesstothedocumentunlessgivingaccesswould,onbalance,becontrarytothepublicinterest.Thereisarighttorefuseaccesstodocumentsundersection67.Thisrequiresconsiderationofwhetherthereleasewouldbecontrarytothepublicinterest,andthegroundsonwhichaccessmayberefusedaretobeinterpretednarrowly.Refusalofaccessrequiresaninformeddecisionbythedecision-makerintheorganisation.

Right to Information

TheRight to Information Act 2009(RTIAct)appliestoapplicationsforinformation,otherthanpersonalinformation,whichisheldbyan‘agency’.ApplicationsrelatingtopersonalinformationmustbemadeundertheIPActasoutlinedabove.

Section14oftheRTIActdefinesan‘agency’as:

a.adepartment;or

b.alocalgovernment;or

c. apublicauthority(asdefinedinsection16);or

d.agovernmentownedcorporation;or

e. asubsidiaryofagovernmentownedcorporation.

TheRTIActismostlyconcernedwiththemechanicsofmakinganapplication,andwiththeoperationoftheOfficeoftheInformationCommissioner.TheActgivestherighttoaccessdocuments,definedinsection12tomeandocumentsinthepossessionorunderthecontroloftheagency,includingdocumentstheagencyisentitledtoaccess.

Application to nonprofit organisations

Importantlyfornonprofitorganisationswhicharefundedbygovernmentagenciesorwhichcontracttoprovideservicesforgovernmentagencies,documentsinthepossessionorcontrolofthegovernmentagency,whichrelatetotheirfundingorserviceproviderarrangement,maybesubjecttoarighttoinformationrequest.However,theinformationrequestwouldbetothegovernmentagency,nottothenonprofitorganisation.ThiswouldalsohavebeenthecaseunderthepreviousFOIAct,buttheapproachtoreleaseofinformationhaschangedasoutlinedabove,i.e.theapproachisnowpro-disclosureofinformationratherthanpro-protectionofinformation.Itisalsoimportanttonotethat,undersection37anagencymustnotdiscloseinformationwheredisclosurewouldbeofconcerntoarelevantthirdparty,withoutfirstinformingthethirdpartyandgettingtheirresponse.Thiswouldberelevanttoanonprofitorganisationifanapplicationweremadeforaccesstodocumentsrelating,forexample,totheirfundingagreementorserviceprovidercontract.Thenonprofitmustbeaskedforitsviewaboutwhethertheinformationisexemptoritwouldnotbeinthepublicinteresttodiscloseit.

FormoredetailedinformationgotothewebsiteoftheOfficeoftheInformationCommissioner(Queensland):www.oic.qld.gov.au

Proposed Changes to the Privacy Act 1998 (Cth)

TheAustralianLawReformCommission(ALRC)publishedtheFor Your Information: Australian Privacy Law and PracticereportinAugust2008.Thisreportmade295recommendationsdesignedtosimplifyandimproveAustralia’sprivacylaws.Therecommendationsofthereportaretobeintroducedintwostagesoveraperiodofthreeyears.On14October2009SenatorLudwigpubliclyreleasedtheCommonwealthgovernment’sfirststageresponsetotheALRCreport,outliningthegovernment’spositionon197recommendationsrelatingto:

• developingasinglesetofPrivacyPrinciples;

• redraftingandupdatingthestructureofthePrivacy Act;

• addressingtheimpactofnewtechnologiesonprivacy;

• strengtheningandclarifyingthePrivacyCommissioner’spowersandfunctions;

• introductionofcomprehensivecreditreportingandenhancedprotectionsforcreditreportinginformation;and

• enhancingandclarifyingtheprotectionsaroundthesharingofhealthinformationandtheabilitytousepersonalinformationtofacilitateresearchinthepublicinterest.

TheCommonwealthgovernmentintendstoreleasedraftlegislationimplementingthefirststageresponseinearly2010.

Implications for nonprofit organisations

AsaresultoftheexpansivechangesmadetotheQueenslandlawsregardingtherighttoinformationandinformationprivacyitisnowpossiblethatnonprofitorganisationswillberequiredtointroduceproperprotectionsforpersonalinformationincludingestablishingsystemstoreceiveanddecideapplicationsforaccesstopersonalinformationundertheIPAct.AnynonprofitorganisationplanningtocontractwiththeQueenslandgovernmenttoperformtheirservices,wherethearrangementwillinvolvereceivingortransferringanypersonalinformation,shouldfirstseekexpertadviceonestablishingpoliciesandsystemsforinformationprivacy.

FurtheritishighlylikelythattherewillbemajorchangestobothQueenslandandCommonwealthinformationprivacylawsinthenext12to18months.Itiscriticalthatallnonprofitorganisationskeeptheirinformationprivacysystemsuptodatewiththelaw.

5.8 disclosurE of ExPEnditurE on Political caMPaiGninGLinda Lavarch, The Australian Centre for Philanthropy and Nonprofit Studies

SincetheenactmentofthefirstCommonwealth Electoral Actin1902,politicaldonorshavebeenrequiredtofurnishreturnsiftheyhadspentanymoneyorincurredanyexpenseforapoliticalparticipant.OverthepastcenturytheCommonwealth Electoral Acthasbeensubjecttoanumberofamendmentssurroundingmeasuresthatsoughttoimproveintegrity,accountabilityandtransparency.

Overthistime,thirdpartyindividualsandorganisationsthatareindependentofpoliticalpartiesandcandidateshaveincreasinglyhadelectoralexpendituredisclosurerequirementsplaceduponthem.Inthepoliticalarenathereisafearthatthirdpartyindividualsorgroupswillbeusedasaloophole,tocircumventfinancialdisclosurerulesforcandidatesandpoliticalpartiesandasaconsequenceunderminethemeasuresputinplacetoensureaccountability,integrityandtransparencyintheelectoralsystem.

Nonprofitthirdpartiesplayacriticalroleinthedemocraticprocessincontributingtopublicdebatebyexpressingviewsonspecificissuesandadvocatingforchange.Theyplayacriticalroleactingasthelinkbetweenthecommunityandgovernmentconveyingimportantinformationtogovernmentsthatwouldotherwiseremainoutofthepublicarena.

In2006,thethenfederalgovernmentintroducedanumberofamendmentstotheCommonwealth Electoral Act 1918.OneoftheseamendmentsthathashadamajorimpactonthirdpartiesistherequirementforathirdpartytomakeanannualreporttotheAustralianElectoralCommission(AEC)documentingpoliticalexpenditure.Politicalexpenditureisbroadlydefinedbutrelatestoexpressinganopinionorviewonacandidate,partyorissueinanelection,forexample,the‘YourRightsatWork’campaignbytheAustralianCouncilofTradeUnions(ACTU).

Thereasongivenforthesereformshavingawiderreachthanpreviousdisclosurerequirementswasthatthemeasurewasnecessarytoensureaccountabilityandtransparencyandtogivevotersallrelevantinformationonthefinancingofcampaigns.Currentproposalstoamendtheexistingreportingregimealsohavethepotentialtodrawagreaternumberofnonprofitorganisationsand/ornonprofitactivitieswithintheCommonwealthElectoralAct’sdisclosureobligations.Soitisimportantthatnonprofitsbeawareofthereportingrequirementsundertheelectorallaws;andif,forexample,they

areinvolvedinacampaignorstrategyexpressingaviewonanissuethatmayformpartofanelectioncampaign,theyshouldhaveasysteminplacetoidentifyandifnecessaryreportonwhathasbeenspentinthisregard.

Current Reporting Requirements under the Commonwealth Electoral Act 1918

Currently,individualsandorganisationsthatincur‘politicalexpenditure’abovethedisclosurethresholdarerequiredtolodgeanannualreturnwiththeAECby17Novemberineachyear.15(ThedisclosurethresholdisadjustedforCPIon1Julyeachyear;atpresentitis$11,200.)Thisreportmustdocumenttotalpoliticalexpenditureandidentifythevalueandsourceofdonationsusedtofundthepoliticalexpenditure.AnnualReturnFormsfor‘Thirdpartiesincurringpoliticalexpenditure’canbeaccessedviawww.aec.gov.au/Parties_and_Representatives/forms_handbooks/.

Politicalexpenditureisdefinedasexpenditureincurredbyapersonororganisation,orwiththeirauthority,on:

• publicexpressionofviewsonapoliticalparty,candidateinanelectionormemberoftheFederalParliamentbyanymeans;

• publicexpressionofviewsonanissueinanelectionbyanymeans;

• printing,production,publication,ordistributionofanymaterialthatisrequiredtoincludeaname,addressorplaceofbusiness16(allelectoraladvertisementsarerequiredtobeauthorisedatalltimes,includingadvertisementsontheInternet);

• broadcastofpoliticalmatterinrelationtowhichparticularsarerequiredtobeannounced;17

opinionpollingandotherresearchrelatingtoanelectionorthevotingintentionofvoters.

Theexpenditureonlyneedstobedirectlyrelatedtoanyofthecategoriesaboveanddoesnotinclude,forexample,amountsspentonadministrationortravel.Expenditureincurredtotallingmorethanthethresholdamountinthereportingyear(i.e.1Julyto30June)mustbereportedunderoneormoreofthefivespecifiedcategorieslistedabove.

‘Election’referstoageneralelectionoraSenateelection.TheelectionperiodisdefinedastheperiodcommencingonthedayofissueofthewritfortheelectionandendsatthelatesttimeonpollingdayatwhichanelectorinAustraliacouldenterapollingboothforthepurposeofcastingavote.18Anelectoraladvertisementisdefinedasanadvertisementintendedorlikelytoaffectvotinginanelection,includingcampaignadvertisementsbypartiesandorganisations.Inadditiontoreportingexpenditureabovethethreshold,giftsthataremorethanthethresholdamountwhichwereused,evenpartly,toincurthepoliticalexpenditureorreimbursetheamountspentaretobeincludedinthedisclosurereturn.

TheAECrecommendsthirdpartiesshouldconsiderthefinancialrecordingsystemsandproceduresnecessarytoenablethereturnformstobecompletedproperly.Thisentailsdocumentingandrecordingalltransactionsincludingadonationsregisterandretainingallrelevantreceiptsandinvoices.Recordsmustbekeptforthreeyears.Failuretolodgea

15 CommonwealthElectoralAct1918(Cth)s.314EB.16 CommonwealthElectoralAct1918(Cth)ss328and328A.17 BroadcastingServicesAct1992(Cth)Schedule2;seethebroadcastingguidelinesat

www.acma.gov.au.

18 CommonwealthElectoralAct1918(Cth)s.287.

returnorretainrecordscanattractsignificantpenalties.19

Understandingwhatisandwhatisnotpoliticalexpenditurecanbedifficultforthirdparties.ThelackofguidancefromeitherfederalParliamentorthecourtsonwheretodrawthelinebetweenthenormaleverydayexpressionofviewsonanissueandtheexpressionofviewsinanelectionisespeciallyproblematic.Inresponsetothis,somethirdpartyorganisationsaresimplychoosingnottobeinvolvedinthepoliticalprocessasawayoferringonthesideofcaution.Althoughthisisachoicethatisunderstandableinthecircumstances,notbecominginvolvedinpublicdebateispotentiallyharmfultodemocracyinAustralia.

TheAEC’sFundingandDisclosureGuidecanbeviewedat:www.aec.gov.au/pdf/political_disclosures/handbooks/2009/ThirdParty-Guide.pdf.

Proposed Changes to the Commonwealth Electoral Act

InMarch2009,inresponsetoareportoftheJointStandingCommitteeonElectoralMatters,thefederalgovernmentintroducedintoParliamentaBillcontaininganumberofamendmentstotheCommonwealth Electoral Act.Threeoftheproposedamendmentswillaffectthirdparties’involvementinelectioncampaigns:

• Firstly,itisproposedthatthirdpartiesberequiredtolodgetheirreportswiththeAECdocumentingpoliticalexpenditureonceeverysixmonths(thenew‘reportingperiod’)insteadofannually.Aswell,thetimeperiodinwhichtolodgethereportwouldbereducedfromwithin20weeksaftertheendofthefinancialyearto8weeksaftertheendofthereportingperiod.

• Secondly,thefinesforprovidingmisleadingorfalseinformationinareporttotheAECwouldbesubstantiallyincreased.

• Themostsignificantproposalisthatthedisclosurethresholdbereducedtoaflatrateof$1,000.

Atthetimeofwriting,theBillhasfailedtopasstheSenate.Itislikelytobere-introducedtotheParliamentinthenearfuture.

States’ and Territories’ election expenditure disclosure requirements for third parties

Queensland

InQueensland,thirdpartieswhoincurexpenditureinanelectionperiodmustreportamountsof$200ormoreaftereachelection.Allbroadcasterswhobroadcastanadvertisementrelatingtotheelectionduringtheelectionperiodarerequiredtogiveareturnshowingdetailsoftheadvertisementsbroadcast.Publisherswhopublishadvertisementsrelatingtotheelectionduringtheelectionperiodarealsorequiredtogivereturnsifthetotalamountchargedfortheadvertisementsis$1000ormore.Reportsaretobefurnishedwithin8weeksaftertheelection.

FormoredetailsseeElectoralCommissionQueensland:www.ecq.qld.gov.au/asp

New South Wales

Thirdpartypoliticaldonorsarerequiredtoreportevery6monthswheretheyhaveincurred$1000ormoreofspecifiedelectoralexpenditure.Publishersandbroadcastersarenotrequiredtoreport.AnInquiryintopublicfundingofelectioncampaignsisbeingundertakencurrentlybytheElectoralMattersCommitteeoftheNSWParliament.

FormoredetailsseeNSWElectionFundingAuthority:www.efa.nsw.gov.au

19 SeeCommonwealthElectoralAct1918(Cth)s315.

Western Australia

Thirdpartiesarerequiredtoreportaftereveryelectiononsumsofspecifiedelectoralexpenditurewherethetotalis$500ormore.Publishersandbroadcastersarenotrequiredtoreport.

FormoredetailsseeWAElectoralCommission:www.waec.wa.gov.au/pp_candidate/financial_disclosure

Victoria

Victoriadoesnothaveanyrequirementsforthirdpartiestodisclosecampaignexpenditure.

FormoredetailsseeVictorianElectoralCommission:www.vec.vic.gov.au

South Australia

SouthAustraliadoesnothaveanyrequirementsforthirdpartiestodisclosecampaignexpenditureorfunding.

FormoredetailsseeElectoralCommissionSouthAustralia:www.ecsa.sa.gov.au

Tasmania

TasmaniadoesnothaveanyrequirementsforthirdpartydisclosurehoweverunderPart6oftheElectoral Act 2004(Tas)therearestrictprovisionsforcandidateexpenditureinrespectofLegislativeCouncilelections.Theseprovisionsplaceacaponcampaignexpenditureforeachcandidate(atpresentthisis$12,000)andprohibitexpenditurebythirdpartieswithaviewtopromotingorprocuringthecandidate’selection.

FormoredetailsgotoTasmanianElectoralCommission:www.tec.tas.gov.au

Thirdpartiesarerequiredtoreportaftereveryelectionwheretheyhaveincurred$1000ormoreofspecifiedelectoralexpenditure.Publishersandbroadcastersarerequiredtoreportonelectoraladvertisementsaftereveryelection.

Formoredetailsgoto:www.elections.act.gov.au/parties/fad.html

Northern Territory

Thirdpartiesarerequiredtoreportaftereveryelectiononsumsofspecifiedelectoralexpenditurewherethetotalis$200ormore.Publishersandbroadcastersarerequiredtoreportonelectoraladvertisementsaftereveryelection.

FormoredetailsgotoNorthernTerritoryElectoralCommission:www.nt.gov.au/nteo

Implications

Manynonprofitorganisations,especiallypeakbodies,lobbygovernmenttoseekpolicyandlegislativechanges.Manyrundirectedcampaignsonspecificissues.Lastyeardisclosuresweremadeby37organisations,amountingtoexpenditureofnearly$6.5milliononpoliticalcommentary,advertising,pollingorotherresearch.Inthepreviousyear(whichincludedthe2007federalelection)75third-partyreturnswerelodged,disclosingatotalexpenditureof$51million.ItcanbeunclearwhetherparticularexpenditurebyathirdpartycomesundertherequirementsoftheAct,buttheAECcanhelpclarifytheissue.Therequirementtodiscloseexpenditureshouldnotbeadeterrenttoengageindebateonpoliticalissues.Howeverthereisacostofcomplianceandorganisationswhichengageinpoliticalexpenditureshouldhaveinplaceasystemofrecordingandreporting.

Polit ical Donations and Tax Deductibility

Politicalpartiesarenotdeductiblegiftrecipients(DGRs)but,todate,individualsandbusinesseshavebeenabletoclaimincometaxdeductionsforcontributionsandgiftstopoliticalparties,independentcandidatesandMembersofParliament.Thevalueofthegiftordonationthatcanbeclaimediscappedat$1500.

Howeverthisisabouttochange,withenactmentoftheTax Laws Amendment (Political Contributions and Gifts)Bill2008whichcompleteditspassagethroughfederalparliamentinFebruary2010(atthetimeofwriting,theBillisawaitingroyalassent).Whentheamendmentscomeintoeffect,businesseswillnolongerbeabletoclaimtaxdeductionsforsuchpoliticaldonationsandgifts(neitherasapoliticaldonationnorasageneralbusinessdeduction).Individualswillstillbeabletoclaimthetaxdeductionforpoliticaldonationsandgiftsupto$1500.

Theamendmentswillapplyretrospectivelyfrom1July2008.

Thereareanumberofcasesunderappealasindicatedearlier,andstatelegislationproposed.TheFederalGovernment,byitselforthroughtheCouncilofAustralianGovernments(COAG)process,hasasignificantreformagendaforthesector.TheProductivityCommissionResearchReportontheContributionoftheNot-for-ProfitSectorreleaseditsfinalreportinFebruary2010withfortyrecommendations,andatthetimeofwritingtheReportfromtheAustralia’sFutureTaxSystemReview(theHenryReview)hadbeenhandedtogovernment,butnotreleased.Wehavesummarisedsomeofthemoreimportantinquiries,reportsorinvestigationsinprogressinearly2010.FurtherbackgroundanddetailonmanyofthesecanbefoundintheLegalAlmanac2008.

6.1 council of australian GoVErnMEnts (coaG)Standard Chart of Accounts

Thelackofconsistencyinaccountingcategoriesandtermsforgrantreportingrequiredbystateandfederalgovernmentdepartmentscauses:

• Aninabilitytoaggregateandcomparefinancialdataforanypurposes,suchaspublicpolicydevelopment,benchmarkingofperformanceandindicationsoffinancialeffectivenessorefficiencytofunders;

• Significantcompliancecoststononprofits,and

• Significantadministrationcostsforgovernmentagencies.

AnationaltaxonomywouldresolvetheseissuesandtheQUTStandardChartofAccounts(SCOA)Project,aninitiativeofanAustralianCentreforPhilanthropyandNonprofitStudiesandSchoolofAccountancy20soughttodevelopsuchastandardtaxonomy.TheprojecthasimplementedstandardtaxonomiesforchartsofaccountsinQueensland,NewSouthWales,VictoriaandWesternAustralia.COAGagreedatitsDecember2009meetingtoimplementanationalstandardchartofaccounts.21Implementationistobeginby1July2010.

Fundraising Legislation Review

COAGalsoreferredtoitsBusinessRegulationandCompetitionWorkinggrouptheissueofwhetherstateandterritoryfundraisingregulationshouldbereformedtoprovideamoreconsistent.Therehavebeensubmissionsmadeforanationalfundraisingregime.

20 MoreinformationontheQUTStandardChartofAccountsisavailableattheACPNSwebsitehttps://wiki.qut.edu.au/display/CPNS/Standard+Chart+of+Accounts(accessed19February2010).

21 CouncilofAustralianGovernments,‘RegulatoryReform’,COAGCommunique,7December2009,www.coag.gov.au/coag_meeting_outcomes/2009–12–07/index.cfm?

CFID=518001&CFTOKEN=38641218#business_reg(accessed19February2010).

6.0 what doEs 2010 hold? 6

6.2 trEasury rEViEw of financial rEPortinG for unlistEd coMPaniEs 200722

InDecember2009theCommonwealthgovernmentannouncedproposedchangestothelawsregulatingthereportingrequirementsforcompanieslimitedbyguarantee.23Thisfollowsonfroma2007Treasurydiscussionpaperonfinancialreportingbyunlistedpubliccompanies.Theexposuredraftbill,entitledtheCorporate Amendment (Corporate Reporting Reform) Bill 2010(Cth),seekstocategorisecompanieslimitedbyguaranteeintooneofthreetiersaccordingto:(a)theannualrevenueofthecompany,and(b)thetaxdeductibilitystatusofthecompany,withproportionatereportingrequirementsforeachtier.ThesemattersarediscussedinmoredetailunderSection5.5CompaniesLimitedbyGuaranteeabove.

6.3 disclosurE rEGiMEs for charitiEs and not-for-Profit orGanisations — sEnatE EconoMics coMMittEE JunE 200824

TheSenateEconomicsCommitteeissueditsfinalreportinmid-December2008.TheGovernmenthasdelayedrespondingtotherecommendationsuntilafterithasgivendueconsiderationtotheProductivityCommissionReportandteoutcomeoftheHenryReviewofAustralia’sFutureTaxSystem.InformationabouttheSenateCommittee’sinquiryandafulllistoftherecommendationscanbefoundintheLegalAlmanac2008.

22 AustralianTreasury,FinancialReportingbyUnlistedPublicCompanies–DiscussionPaper,www.treasury.gov.au/documents/1269/PDF/Discussion_paper_Financial_

Reporting_by_Unlisted_Public_Companies.pdf(accessed19February2010).23 TheHonChrisBowenMP,Pressrelease,No.42,4December2009,http://ministers.

treasury.gov.au/DisplayDocs.aspx?doc=pressreleases/2009/042.htm&pageID=00

3&min=ceba&Year=&DocType(accessed19February2010);theExposureDraftBillisavailableatwww.treasury.gov.au/contentitem.asp?NavId=037&ContentID=1677(accessed19February2010).

24 FurtherinformationontheSenateInquiryintoDisclosureRegimesforCharitiesandNot-For-ProfitOrganisations,includingthefullreport,isavailableviatheACPNSDevelopingYourOrganisationwiki:https://wiki.qut.edu.au/display/CPNS/DYO+Home(accessed19February2010).

6.4 co-oPEratiVEs national lawIn1990,thereportoftheBradyCommitteeofInquiryintoNon-BankFinancialInstitutionsandRelatedFinancialProcesses25notedthatcooperativeshadbeenarguingthatexistinglegislationwasantiquatedanddidnotprovideasuitableframeworkinthecurrentcommercialandsocialenvironment.Thecooperativessubmittedthattheiractivitieswerehamstrungbytheinadequaciesofthelegislation.

Currently,allStatesandTerritoriesinAustraliahavelegislationwhichenablesacooperativetoregisterandtobecomeincorporatedasalegalentity.Thelegislationisverysimilaracrossjurisdictionsandisbasedonasetofstandardprovisionsdevelopedin1996bytheStandingCommitteeofAttorneys-General,whichsignedtheConsistentCooperativesLawsAgreement.Undertheagreementeachjurisdictionagreestoenactcooperativeslegislationcontainingtheagreedcoreconsistentprovisions.

ACo-operativesNationalLaw26isnowproposedforallStatesandTerritories.FairTradingNSWiscollectingcommentsonbehalfoftheMinisterialCouncilonConsumerAffairsontheproposedCo-operativesNationalLawBillandonaConsultationRegulatoryImpactStatementfortheproposedlegislation.

TheproposedCo-operativesNationalLawwillreplaceseparatecooperativeslegislationineachStateandTerritory.TheplanisthatNewSouthWaleswillenactthenationallawin2010.OtherStatesandTerritorieswillthenhave12monthstoenactthenationallaworenactconsistentlegislation.

6.5 australia’s futurE tax systEM (thE hEnry rEViEw) SinceMay2008theAustralia’sFutureTaxSystemReviewPanel(theHenryReview)hasbeenexaminingthecurrenttaxsystem,27holdingpublicmeetingsandfocusgroups,andtakingsubmissions.Thedeadlineforpublicsubmissionswas1May2009andapolicyconferenceonthetaxandtransferpolicywasheldinmid-June2009.Furtherconsultationwithindustry,professionalandcommunitygroupsonthebroadertaxandtransfersystemcontinuedduringthesecondhalfof2009.

InDecember2009,theReviewPaneldelivereditsfinalreporttotheTreasurer.However,thegovernmentisstillconsideringthereportandhasnotmadeitpublic.

25 Queensland,IndependentCommitteeofInquiryintoNon-BankFinancialInstitutionsandRelatedFinancialInstitutionsandRelatedFinancialProcessesintheStateofQueensland,ReportoftheIndependentCommitteeofInquiry(theBradyCommitteeReport),GovernmentPrinter,Brisbane,1990.

26 Seewww.fairtrading.nsw.gov.au/Cooperatives_and_associations/Cooperatives/

Cooperatives_legislation/Cooperatives_national_law.html(accessed18February2010).

27 BackgroundontheReviewanditsmandatecanbefoundintheLegalAlmanac2008.Timelineforthereview,isavailableathttp://taxreview.treasury.gov.au/content/

Content.aspx?doc=html/timeline.htm(accessed19November2008).

6.6 national coMPactThesecondphaseofconsultationforthenationalcompact28washeldfromMaytoOctober2009(includinganonlineforumduringAugustandSeptember).Twobodieswereestablished:anAcrossGovernmentWorkingGroupacrosstheAustralianpublicservice;andtheNationalCompactJointTaskforce.TheJointTaskforceincludessectorrepresentatives,alongwithcommonwealthandlocalgovernmentandunionrepresentatives.

ADraftNationalCompactwasreleasedinFebruary2010March201028.TheNationalCompactisexpectedtobelaunchedon17March2010.

6.7 countEr-tErrorisM financinG TheCommonwealthAttorney-General’sDepartmentreleasedadraftpaperentitledGuidance for non-profit organisations on counter-terrorism financing inFebruary2009aspartofitsAnti-MoneyLaunderingandCounter-TerrorismFinancinginitiative.29(The Anti-Money Laundering and Counter-Terrorism Financing ActwaspassedinDecember2006andcommencedinstagesthroughout2007and2008.Seeabove,5.2MoneyLaundering,formoreinformationabouttheActandnonprofitorganisationsandmoneylaundering.)

6.8 thE ProductiVity coMMission’s rEsEarch study of thE contribution of thE not-for-Profit sEctorTheProductivityCommissioncommenceditsresearchprojectonthecontributionofthenonprofitsectortoAustraliansocietyinMarch2009.30TheCommissionpublishedadraftreportinOctober2009andreleaseditsfinalreportinFebruary2010.31Thereportincludedthefollowingrecommendationswhichthegovernmentwillrespondtoduring2010.

28 Availablefromhttp://fahcsia.gov.au/sa/communities/progserv/nationalcompact/

Pages/draft_national_compact.aspx

29 Australia,Attorney-General’sDepartment,GuidanceforNonprofitOrganisationsonCounter-TerrorismFinancing(draft),February2009.

30 InformationaboutthebackgroundandscopeoftheProductivityCommission’sstudycanbefoundintheLegalAlmanac2008.

31 ProductivityCommission,ContributionoftheNot-for-ProfitSector:Researchreport,2010;theReportandsubmissionscanbefoundatwww.pc.gov.au/projects/study/not-

for-profit(accessed19February2010).

RECOMMENDATIONS

Building knowledge systems

Promoting national data systems on the NFP sector

Recommendation 5.1

TheAustralianGovernmentshouldinitiateanInformationDevelopmentPlanforthenot-for-profitsector.Givenitscentralroleinprovidingdataonthesector,anditslegislatedresponsibilityforstatisticalcoordination,theAustralianBureauofStatisticsshouldbegivenresponsibilityforformulatingtheInformationDevelopmentPlan.

AmongtheissuestheInformationDevelopmentPlanshouldaddressare:

• theappropriatefrequencyforpublicationofthesatelliteaccountonthesector

• thescopetodevelopadministrativeandotherlongitudinaldatasetstosupporttheanalysisofnetimpactsofsectoractivities

• thecollationoftheinformationfromtheseandotherdatasourcestoprovideamoredetailedassessmentofthecontributionofthenot-for-profitsectorovertime

• thefeasibilityofobtainingaccurateestimatesofthenumberofunincorporatednot-for-profitorganisationsinacost-effectivemanner.

Building a better evidence base for social policy

Recommendation 5.2

Australiangovernmentsshouldadoptacommonframeworkformeasuringthecontributionofthenot-for-profitsector.Havingregardtothediversityofthesector’sactivitiesandstructures,measurementusingthisframeworkshouldembodytheprinciplesofproportionality,transparency,robustness,flexibility,andrelevance.

Recommendation 5.3

Tominimisecompliancecostsandmaximisethevalueofdatacollected,Australiangovernmentsshouldagreetoimplementareformagendaforreportingandevaluationrequirementsfororganisationsinvolvedinthedeliveryofgovernmentfundedservices.Thisshould:

• committobasingreportingandevaluationrequirementsinservicedeliverycontractsonacommonmeasurementframework(appropriatelyadaptedtothespecificcircumstancesofservicedelivery)

• requireexpenditure(input)measurestobebasedontheStandardChartofAccounts

• developdatastandardsfortherelevantnon-expenditureitems

• ensurethatinformationgeneratedthroughperformanceevaluationsarereturnedtoserviceproviderstoenableappropriatelearningtotakeplaceandalloworganisationstobenchmarktheirperformance

• employ,wherepracticable,theprincipleof‘reportonce,useoften’.

Recommendation 5.4

TheAustralianGovernmentshouldprovidefundingfortheestablishmentofaCentreforCommunityServiceEffectivenesstopromote‘bestpractice’approachestoevaluation,withaninitialfocusontheevaluationofgovernmentfundedcommunityservices.Overtime,fundingshouldalsobesoughtfromstate/territorygovernments,businessandfromwithinthesector.Amongitsroles,theCentreshouldprovide:

• apubliclyavailableportalforlodgingandaccessingevaluationsandrelatedinformationprovidedbynot-for-profitorganisationsandgovernmentagencies

• guidanceforundertakingimpactevaluations

• supportfor‘meta’analysesofevaluationresultstobeundertakenandmadepubliclyavailable.

Smarter regulation of the not-for-profit sector

Enhancing the legal options for NFPs

Recommendation 6.1

TheAustralianGovernmentshouldamendtheCorporationsActtoestablishaseparatechapterrelatingtonot-for-profitcompanieslimitedbyguarantee.Thisshould:

• embodytheprinciplesofproportionalityinrelationtoreporting,feesandcharges

• provideclearrulesonthedisposalofassetsintheeventofthecompanybeingdissolvedorrestructured,inadditiontotheproposedprohibitiononthepaymentofdividends

• includeaplainEnglishguide(ascurrentlyexistsforsmallandmediumscaleenterprises)

Aspartofthisprocess,theAustralianGovernmentshould,inconsultationwithstakeholders,examinewhetherthereareadditionalrequirementsthatareinappropriateorundulyrestrictivefornot-for-profitorganisationsthatshouldalsobeaddressed.

A national one-stop-shop for regulation and tax endorsement of NFPs

Recommendation 6.5

TheAustralianGovernmentshouldestablishaone-stop-shopforCommonwealthregulationbyconsolidatingvariousregulatoryfunctionsintoanewnationalRegistrarforCommunityandCharitablePurposeOrganisations.WhileultimatelytheRegistrarcouldbeanindependentstatutorybody,initiallyitshouldbeestablishedasastatutorybodycorporateororganintheAustralianSecuritiesandInvestmentCommission.

TheRegistrarwillundertakethefollowingkeyfunctions:

• registerandregulatenot-for-profitcompanieslimitedbyguaranteeandIndigenouscorporations,withastakeholderteamdedicatedtoIndigenouscorporations

• assesstheeligibilityofnot-for-profitorganisationsforCommonwealthtaxconcessionstatusendorsementandmaintainaregisterofendorsedorganisations

• registercross-jurisdictionalfundraisingorganisationsand/oractivitiesbynot-for-profitorganisations

• provideasinglereportingportalforpublicrecordcorporateandfinancialinformation.

• provideappropriateguidanceinrelationtogovernancematters

• investigatecompliancewithregulatoryrequirements

• providecomplaintshandlinginrespectoftheabovefunctions.

Recommendation 6.4

ResponsibilityforendorsementforCommonwealthtaxconcessionalstatusfornot-for-profitorganisationsandmaintainingaregisterofendorsedorganisationsshouldsitwiththeRegistrarforCommunityandCharitablePurposeOrganisations.ToretainendorsementforCommonwealthtaxconcessions,endorsedorganisationsshouldberequiredtosubmitanannualcommunity-purposestatementtotheRegistrarwhichwouldbeaccessibletothepublic.

TheAustralianCommissionerforTaxationshouldhavetherighttoseekareviewofdecisionsoftheRegistrarinrelationtotheendorsementofnot-for-profitorganisationsfortaxconcessionalstatus.TheCommissionershouldalsohavethepowertoissueadirectivetotheRegistrarforthedis-endorsmentofanorganisationwheretherehasbeenabreachoftaxationcompliancerequirements.

Reduce compliance costs and improve ef fectiveness

Recommendation 6.2

Australiangovernmentsshould,throughtheCouncilofAustralianGovernmentsBusinessRegulationandCompetitionWorkingGroup,pursueharmonisationofstateandterritorybasedincorporatedassociationslegislation,withaninitialfocuson:

• aligningnot-for-profitorganisations’publiccorporateandfinancialreportingrequirements

• rulesonthedistributionofassetsonthedissolutionorrestructuringofanot-for-profitorganisation

• allowingnot-for-profitorganisationstomigratefromonelegalformtoanotherandtomovetotheCommonwealthjurisdictionwithoutoneroustransactioncosts.

Recommendation 6.3

Topromoteconfidenceinandreducethecompliancecostsassociatedwithfundraisingregulation,Australiangovernments,throughtheCouncilofAustralianGovernmentsBusinessRegulationandCompetitionWorkingGroup,should:

• agreetoandimplementmutualrecognitionandharmonisedfundraisingregulationacrossAustralia,throughtheestablishmentofmodelfundraisinglegislation

• supportthedevelopmentofafundraisingregisterforcross-jurisdictionalfundraisingorganisationsand/oractivities,tobeadministeredbytheproposednationalRegistrarforCommunityandCharitablePurposeOrganisations

• clarifytheresponsibilityforregulationoffundraisingundertakenthroughelectronicmediasuchastheinternet,andmovetoensureappropriateregulationofsuchmediumsincludingthroughCommonwealthlegislation.

Recommendation 6.6

TheRegistrarshouldimplementtheprincipleof‘reportonce,useoften’byprovidingasinglereportingportalandformforannualreportingoncommunity-purpose,governancearrangements,financialaccountsandfundraisingactivity.Australiangovernments,throughtheCouncilofAustralianGovernments,cansupportthisprincipleandsubstantiallyreducecompliancecostsfornot-for-profitorganisationsby:

• adoptinganddevelopinganimplementationstrategyfortheStandardChartofAccountsforreportingbynot-for-profitsinreceiptofgovernmentgrantsorservicecontracts

• expandingtheStandardBusinessReportinginitiativetoincludereportingrequirementsbynot-for-profits

• encouragingtheiragenciestoutilisethegovernanceandfinancialaccountinformation(thatwillbelodgedwiththeRegistrar)tomeettheirorganisationlevel‘healthcheck’requirementsforcontractingpurposes.

Improving arrangements for ef fective sector development

Improving equity and ef fectiveness of tax concessions for philanthropy

Recommendation 7.1

TheAustralianGovernmentshouldadoptastatutorydefinitionofcharitablepurposesinaccordancewiththerecommendationsofthe2001InquiryintotheDefinitionofCharitiesandRelatedOrganisations.

Recommendation 7.2

Stateandterritorygovernmentsshouldrecognisethetaxconcessionstatusendorsementofnot-for-profitorganisationsattheCommonwealthlevel.Giventhedisparitiesbetweeneligibilityfortaxconcessionsacrossjurisdictions,stateandterritorygovernmentsshouldutilisesuchCommonwealthendorsementsindeterminingeligibilityfortheirjurisdictionalconcessions,andseektoharmonisetaxconcessionalstatusdefinitionsorclassificationswiththeCommonwealthovertime.

Recommendation 7.3

TheAustralianGovernmentshouldprogressivelywidenthescopeforgiftdeductibilitytoincludeallendorsedcharitableinstitutionsandcharitablefunds.ConsistentwiththeAustralianTaxationOfficerulingsonwhatconstitutesagift,paymentsforservicesshouldnotqualifyasagift.

Recommendation 7.4

Toencouragecost-effectivegiving,theAustralianGovernmentshouldexploreoptionstopromoteandsupportplannedgiving,especiallypayrollgiving.Specifically,theAustralianGovernmentshouldprovidefundingforanationalcampaigntopromotepayrollgivingandtheassociatedtaxbenefits.Aspartofthecampaign,governmentsshouldencouragetheestablishmentofpayrollgivingwithinalltheiragencies.

Developing a sustainable market for NFP debt

Recommendation 7.5

Australiangovernmentsshouldassistinthedevelopmentofasustainablemarketfornot-for-profitorganisationstoaccessdebtfinancingthrough:

• buildingbusinessplanningskillsfornot-for-profitorganisations,notablysocialenterprises(recommendations9.2and9.6)

• improvingfundingcertaintyforthosenot-for-profitorganisationsinvolvedinthedeliveryofgovernmentservicestoimproveloanviabilitybyimprovingclarityaboutfunding(recommendation11.1)andtheappropriatelengthofcontract(recommendation12.5)

• exploringoptionstoencourage(foralimitedperiod)communitydevelopmentfinancialinstitutionstodevelopappropriatefinancialproductsandservicesforthesector

• exploringoptionstomakebetteruseofthecorpusofphilanthropicfoundationsandtruststomakeloanstodeductiblegiftrecipientsandendorsedcharitableinstitutions.

TheAustralianGovernmentshouldestablishanadvisorypanel,chairedbyTreasury,toconsideroptionsandassessprogressindevelopingasustainablemarketfornot-for-profitorganisationdebtproductswiththeaimofestablishingmainstreamfinancialproductsforinvestorswhoarewillingtoacceptalowerriskadjustedfinancialreturnforanaccompanyingsocialreturn.

Building sector capabilities to improve governance and enhance productivity

Recommendation 9.1

Informationandcommunicationtechnologyhasthepotentialtoenablemorecost-effectiveandhigherqualityhumanservices.Withdueconsiderationstoprotocolsforprotectingprivacy,inspecificserviceareas,Australiangovernmentsshouldexplorethepotentialforselectivesharingofclientinformationbetweenagenciesandnot-for-profitorganisationsandotherproviders,throughtheutilisationofenhancedinformationandcommunicationtechnology.

Recommendation 9.2

Stateandterritorygovernmentsshouldreviewtheirfullrangeofsupportforsectordevelopmenttoreduceduplication,improvetheeffectivenessofsuchmeasures,andstrengthenstrategicfocus,includingon:

• developingthesustainableuseofintermediariesprovidingsupportservicestothesector,includingininformationtechnology

• improvingknowledgeof,andthecapacitytomeet,thegovernancerequirementsfornot-for-profitorganisations’boardsandmanagement

• buildingskillsinevaluationandriskmanagement,withapriorityforthosenot-for-profitorganisationsengagedindeliveryofgovernmentfundedservices.

Recommendation 9.3

Australiangovernmentagenciesprovidingextensivegrantsto,orusingexternalagenciesfor,servicedeliveryshouldestablishevaluationprogramstoassesstheeffectivenessandactualcostoftheirprograms.Whererelatedtocommunityservices,theseevaluationsshouldbepostedwiththeCentreforCommunityServiceEffectiveness.

Addressing workforce issues

Recommendation 10.1

Australiangovernmentsshouldintroduceasystemof‘WorkingwithVulnerablePeopleChecks’thatprovidesforcheckstobeportablebetweenorganisationsforadesignatedtimeperiod.

Further,Australiangovernmentsshouldexplorethefeasibilityofdevelopingaconsistentnationalsystemallowingportabilityacrossstatesandterritoriesofpolicechecksandtheexchangeofinformationonpeopledeemedunsuitableforworkingwithvulnerablepeople,especiallychildren.

Recommendation 10.2

Inordertoensurethatnot-for-profitscansustaintheirworkforces,andaswagesareamajorfactorinthesuccessfulrecruitmentandretentionofstaff,Australiangovernmentspurchasingcommunityservicesneedtobasefundingonrelevantmarketwagesforequivalentpositions.Costingsneedtotakeintoaccounttheskillsetsrequiredtoperformthepurchasedservicesandbeindexedappropriatelytomarketwagegrowthwithinthatindustrysector.

Recommendation 10.3

TheAustralianGovernment,inconsultationwithSkillsAustralia,shouldcommissiontheCommunityServicesandHealthIndustrySkillsCounciltoundertakeworkforceplanningforthecommunityservicessectorhavingregardtothecurrentandfutureworkforcechallengesarisingfromgrowingdemandandincreasingsupplyconstraints.

Stimulating social innovation

Recommendation 9.5

Australiangovernmentsshouldrequireallprograms(ofover$10million)deliveringcommunityservicesthroughnot-for-profitorganisationstosetasideasmallproportionoftheprogrambudget(forexample,onepercent)toaprogramrelatedsocialinnovationfund.Thefundshouldsupporttrialsofnewapproachestoservicedelivery,includingevaluationoftheircost-effectiveness.

Building sector capabilities to support innovation

Recommendation 9.4

TheCooperativeResearchCentreprogramshouldfacilitateapplicationsbycollaborationsofnot-for-profitorganisations(includinguniversities),governmentagenciesandbusinessesintheareasofsocialinnovationby:

• activelypromotingtheopportunitiesthatarenowavailable

• providingspecialisedadviceandfacilitationsupporttoorganisationsexpressinginterestbutlackingtheknowledgeandresourcestodevelopthepartnershipsrequired.

Recommendation 9.6

TheAustralianGovernmentshouldfundtheEnterpriseConnectprogramtoexpanditsspecialistservicestoanewCentrethatprovidesbusinessadvisoryservicestoorganisationsinvolvedinsocialenterpriseactivity.

Improving the effectiveness of direct government funding

Providing clarity over funding obligations

Recommendation 11.1

Australiangovernmentsshould,inthecontractingofservicesorotherfundingofexternalorganisations,determineandtransparentlyarticulatewhethertheyarefullyfundingparticularservicesoractivitiesundertakenbynot-for-profitorganisations,oronlymakingacontributiontowardstheassociatedcostsandtheextentofthatcontribution.

Australiangovernmentsshouldfullyfundthoseservicesthattheywouldotherwiseprovidedirectly(allowingforco-contributionsfromclientsandanyagreedcontributionsbyserviceproviders).Inapplyingthiscriterion,governmentsshouldhaveregardtowhetherthefundedactivityisconsideredessential,aspartofthesocialsafetynetoranentitlementforeligibleAustralians.

Recommendation 11.1

Australiangovernmentsshouldensurethatserviceagreementsandcontractsincludeprovisionforreasonablecompensationforprovidersforthecostsimposedbychangesingovernmentpolicythataffectthedeliveryofthecontractedservice,forexample,changestoeligibilityrules,thescopeoftheservicebeingprovided,orreportingrequirements.

Recommendation 8.1

TheDepartmentsoftheTreasuryandFinanceandDeregulationshouldjointlyconductareviewintothefeasibility,thecostsandthebenefitsofrequiringvalueformoneyassessmentsforgovernmentprocurementtoconsidersignificantinputtaxconcessions.Suchareviewshouldbewide-ranging,includingthenot-for-profit andfor-profitsectors.

Ensuring appropriate independence

Recommendation 11.3

Australiangovernmentsfundingserviceprovisionormakinggrantsshouldrespecttheindependenceoffundedorganisationsandnotimposeconditionsassociatedwiththegeneraloperationsofthefundedorganisation,beyondthoseessentialtoensurethedeliveryofagreedfundingoutcomes.

Removing impediments to better value government funded services

Getting the model right

Recommendation 12.1

Australiangovernmentsshouldensurethattheychoosethemodelofengagementwithnot-for-profitsthatbestsuitsthecharacteristicsandcircumstancesoftheservicebeingdelivered.Inchoosingbetweenalternativemodelsofengagement,governmentsshouldconsiderthenatureoftheoutcomessought,thecharacteristicsofclients,andthenatureofthemarket.Inparticular:

• thereshouldbenopresumptionthatpurchaseofservicecontractingwillalwaysbethemostappropriatemodel

• wheregovernmentsareseekingthedeliveryofaclearlydefinedoutcomeandmarketsaregenuinelycontestablepurchaseofservicecontractingshouldremainthepreferredapproach

• wheretrulycompetitivemarketsdevelopandclientsfacerealchoiceintheservicesavailabletothem,governmentsshouldconsidermovingtoclientdirectedservicedeliverymodels.Thistransitionshouldbeconditionalupontherebeingappropriatesafeguardsinplacetoprotectandempowervulnerableclients(ortheircarers)inexercisingchoiceandensureanacceptableminimumlevelofservicequalityandprovision.

Recommendation 12.2

Whereamarketbasedapproachisnotfeasibleorappropriate,governmentsshoulduseothermodelsofengagement.Thismayinvolvegovernmentsenteringintoeitherextendedlifeorshorttermjointventures.

Extendedlifejointventuresshouldadoptaniterativeprocessthatwill:

• involveallpartiesinthedesignoftheprogram

• embedandfundanagreedevaluationprocess,informingprogramdesignandmodification

• regularlyreviewandrevisetheservicedeliveryapproachesinlightoffindingsfromevaluation,changingdemandsorenvironmentalconditions

• providelong-termorrollingfundingwithcapacitytoadjustfundinginlightofthemodifications.

Recommendation 12.3

Australiangovernmentsshouldensurethatwhatevermodelofengagementisusedtounderpinthedeliveryofservicesitisconsistentwiththeoverarchingprincipleofobtainingthebestvalueformoneyforthecommunity.Indeterminingvalueformoney,governmentsshouldexplicitlyrecogniseanyindirectorwiderbenefitsthatprovidersmaybeabletogenerate.Anevidencebasedapproachshouldbeusedtoassessthenature,extentandrelevanceofthesetypesofbenefitsonacase-by-casebasis.

Recommendation 12.4

Australiangovernmentsshouldassesstherelativemeritsoftheleadagencymodelonacasebycasebasis.Thisshouldincludeanassessmentofthecoststonot-for-profitsofadoptingthisapproachincludinganyduplicationofreportingandaccountabilityrequirements,theadditionaltransactioncostsassociatedwithsubcontracting,andthepotentialforlossofdiversityamongproviders.

Improving procurement and management processes

Recommendation 12.5

Thelengthofserviceagreementsandcontractsshouldreflectthelengthoftheperiodrequiredtoachieveagreedoutcomesratherthanhavingarbitraryorstandardcontractperiods.

Extendedlifeserviceagreementsorcontractsshouldsetoutclearlyestablished:

• processesforperiodicallyreviewingprogresstowardsachievingaprogram’sobjectives

• conditionsunderwhichaservicemaybeopeneduptonewserviceprovidersoraprovider’sinvolvementisscaledbackorterminated.

Recommendation 12.6

Whenenteringintoserviceagreementsandcontractsforthedeliveryofservices,governmentagenciesshoulddevelopanexplicitriskmanagementframeworkinconsultationwithprovidersandthroughtheuseofappropriatelytrainedstaff.Thisshouldinclude:

• allocatingrisktothepartybestabletobeartherisk

• establishingagreedprotocolsformanagingriskoverthelifeofthecontract.

Recommendation 12.7

Australiangovernmentsshouldurgentlyreviewandstreamlinetheirtendering,contracting,reportingandacquittalrequirementsintheprovisionofservicestoreducecompliancecosts.Thisshouldseektoensurethatthecomplianceburdenassociatedwiththeserequirementsisproportionatetothefundingprovidedandriskinvolved.

Further,toreducethecurrentneedtoverifytheprovider’scorporateorfinancialhealthonmultipleoccasions,evenwithinthesameagency,reviewsshouldincludeconsiderationof:

• developmentofMasterAgreementsthatarefit-for-purpose,atleastatawhole-of-agencylevel

• useofpre-qualifyingpanelsofserviceproviders.

Recommendation 12.8

TheDepartmentofFinanceandDeregulationshoulddevelopacommonsetofcoreprinciplestounderpinallgovernmentserviceagreementsandcontractsinthehumanservicesarea.Thisshouldbedoneinconsultationwithrelevantgovernmentdepartmentsandagenciesandserviceproviders.

Implementation of the proposed package of reforms

Recommendation 14.1

TheAustralianGovernmentshouldestablishanOfficeforNot-For-ProfitSectorEngagement,foraninitialtermoffiveyears.TheOfficewouldsupporttheAustralianGovernmentinitseffortsto:

• implementsectorregulatoryandotherreformsandtheimplementationoftheGovernment’sproposedcompactwiththenot-for-profitsector

• promotethedevelopmentandimplementationoftheproposedInformationDevelopmentPlan

• overseetheestablishmentoftheproposedCentreforCommunityServiceEffectiveness

• implementtheproposedcontractingreformsingovernmentfundedservices

• actasacatalystforthepromotionandfundingbygovernmentagenciesofsocialinnovationprograms

• facilitatetheestablishmentoftheadvisorypanelondevelopmentofanot-for-profitcapitalmarket

• facilitatestrongercommunityandbusinesscollaboration.

TheOfficeshould,throughtherelevantMinister,reportpubliclyonanannualbasisonitsachievements.

Recommendation 14.2

CompactsbetweenAustraliangovernmentsandthesectormustbesupportedbywelldocumentedplansofaction,includingatagencylevel,ifappropriate,andsupportedbypracticalmeasuresincludingmonitoringandevaluativeprocessesthatgiveconcreteexpressiontotheproposedrelationship.

Recommendation 14.3

Stateandterritorygovernmentsshoulddevelopapublicstrategyforimplementinggovernment-sectorreformsarisingfromthisreport.Priorityareasshouldincludemeanstoimprovegovernment-sectorengagement,enhancedriskassessmentandriskmanagementstrategies,contractdesign,effectivereporting,andevaluationmethods.

6.9 disability carE and suPPortTheProductivityCommissionhasbeengivenaresearchbrieftoexaminethefeasibility,costsandbenefitsofreplacingthecurrentsystemofdisabilityserviceswithanewapproachwhichprovideslong-termessentialcareandsupportforpeoplewithsevereorprofounddisabilitieshoweveracquired.32TheReportwillbetitledDisability Care and Support,tobegininApril2010andreportbyJuly2011.33Thereportislikelytobeverysignificantforthosewithamissiontoassistsuchpersonsandtheircarers.

32 JointMediaReleasewithTheHonKevinRuddMPPrimeMinisterandTheHonJennyMacklinMPMinisterforFamilies,Housing,CommunityServicesandIndigenousAffairsandTheHonBillShortenMPParliamentarySecretaryforDisabilitiesandChildren’sServicesAustralianGovernmenttoConsiderNewApproachestoDisability,No.093,23/11/09http://assistant.treasurer.gov.au/DisplayDocs.

aspx?doc=pressreleases/2009/093.htm&pageID=003&min=njsa&Year=&DocType=

33 www.pc.gov.au/projects/inquiry/disability-support

Administrator

Someoneappointedtoadministerordirecttheaffairsofanother,forexampleabusinessorcompanyinvoluntaryadministration,todeterminewhetheritshouldgointoadminstration,bewounduporcanresumetradingasnormal.

Appellant

Thepartywhohaslodgedtheappealinanappealcase

Charitable institution

Anorganisationwhichcarriesoutcharitablepurposesorholdspropertyintrustforcharitablepurposes

Charitable trust

Atrustwhichissetupforapurpose–beingarecognisedcharitablepurpose–ratherthanforthebenefitofaperson

Cy près scheme

Aschemedevisedbyacourttogiveeffecttoacharitablepurposewhentheintendedpurposecannotbefulfilled,becauseitisimpossible,impracticableorillegal.Forexamplepropertyleftinawilltobeusedforageneralcharitableintentionmaybeinadequateforthepurpose,oraninstitutiontoreceivethebenefitofacharitabletrustmaynolongerexist.Thecourtcandirectthefundsasnearaspossible(cyprès)totheoriginalintention.

Ex parte

Denotesanapplicationbroughtandheardbyacourtintheabsenceoftheopposingparty,e.g.whereamatterisurgent.

Fiduciary duties

Dutieswhichrequireapartytoactwiththeutmostloyaltytoanotherparty’s(theprincipal’s)interests(ortotheirjointinterestsinapartnership).The‘fiduciary’mustnot,withoutfullyinformedconsent:actinherorhisowninterestsiftheyconflictwithdutiestothe‘principal’;actaccordingtoadutytoanotherpersonifthatdutyconflictswithdutytothe‘principal’;orderiveabenefit(profit)frombeinginthefiduciaryposition.

Incorporated association

AnassociationincorporatedunderStateorTerritoryincorporatedassociationslegislation,e.g.theIncorporated Associations Act 1981(Qld).Anincorporatedassociationisrecognisedasalegalperson,likeacompany,andthereforecanholdproperty,cansueandbesued.

Injunctive relief

Aremedyintheformofaninjunction.Aninjunctionisanorderbyacourttoprohibitsomeonefromdoinganact(prohibitoryinjunction)ortorequiresomeonetodoanact(mandatoryinjunction).Theordercanbelimitedastotime(interimorinterlocutory)oritcanbepermanent(perpetual).

Interlocutory injunction

Aninjunctionorderedtomaintainthestatusquountilthemaintrial.

7.0 Glossary 7

Insolvent

Unabletopaydebtsasandwhentheyfalldue.Anindividualinthissituationisbankrupt;acompanyorbusiness,isininsolvency

Liquidator

Thepersonwhoassumescontrolofacompany’saffairsinawindingup,inordertoascertainliabilities(debts),terminatecontractsliquidateassets,distributeavailablefundstopaycreditors,anddisposeofthebusinessleadingtodissolution.

Non-retained profits

Profitthatisdistributedinthefinancialyear,forexampleasadividendtoinvestors.Retainedprofitsareaccumulatedoveranumberofaccountingperiods,i.e.carriedforwardtothefollowingfinancialyear.

Pemsel

Pemsel’scase(Commissioners for Special Purposes of Income Tax v Pemsel )wasan1891Englishcasewhichbroughttogetherthelawonwhatwasacharitablepurpose,classifyingcharitableobjectsintofourcategories(thefourheadsofcharity):thereliefofpoverty,ageandimpotence;theadvancementofeducation;theadvancementofreligion;otherpurposesbeneficialtothecommunity.

Prima facie

Atfirstglance;onthefaceofit

Probate

Thegrantingoftherighttoadministerawill

Qualif ied Privilege

Inanactionfordefamation,qualifiedprivilegegivesprotectiontothepersonwhocommunicatedtheallegedlydefamatorystatement,ifheorshehadaninterestordutytomakethecommunication,andthepersonwhoreceivedthecommunicationhadaninterestordutytoreceiveit.Theprivilegeisnotavailableifthepersonmakingthestatementisdoingitmaliciouslyorforanimproperpurpose.

Respondent

Thepartywhohastoanswertoacase,e.g.inanappeal,thepartywhohastorespondtotheappellant’scase.Incivilcasesthepersonbringingthecase(i.e.suing)maybecalledtheplaintiffortheapplicantwhiletheotherpartymaybecalledthedefendantortherespondent.

Trusts

Atrustisadeviceforensuringpropertyisheldforthebenefitofaparticularpersonorpersons,orforacharitablepurpose.Thetrusteeholdslegaltitletothetrustproperty.Thebeneficiaryhasabeneficial(orequitable)interestintheproperty,andthetrusteemustadministerthetrustpropertyforthebenefitofthebeneficiariesorthecharitablepurpose.

Ultra vires

Outsideofpowerorauthority–i.e.anactwhichisbeyondthepowerorauthorityofapersonorinstitutiontoperform,andthereforeinvalid.Somethinginlegislationcanalsobeultravires,forexamplesomethinginanActwhichisnotauthorisedbytheConstitutionorsomethinginaRegulationwhichisnotauthorisedbythegoverningAct.

Voluntary administration

Ifacompanyisinfinancialdifficultiesbutcouldbesaved,anadministratormaybeappointedtoinvestigateitsaffairsandrecommendtoitscreditorswhetheritshouldenteradeedofcompanyarrangement,bewounduporcanresumenormaltrading.

Wound up

Aformofadministrationwherealiquidatorassumescontrolandwindsupacompany’saffairstodissolvethecompanyasalegalentity.Theliquidatorinvestigatesthefinancestodeterminethedebts,convertsassetsintocashforpaymentofcreditors,terminatescontractsanddisposesofthebusiness.Awindingupcanbevoluntary(bymembersorcreditors)orcompulsory(bycourtorder).

thE australian cEntrE for PhilanthroPy and nonProfit studiEsTheAustralianCentreforPhilanthropyandNonprofitStudies(ACPNS),locatedintheSchoolofAccountancyispartofQUT’sFacultyofBusinesswhichisinternationallyrecognisedforitshighqualityteachingandresearch.ACPNSbringstogetheracademicsandresearchstudentswithexpertiseinphilanthropy,nonprofitorganisations,andthesocialeconomy.This,combinedwithourstrongindustrylinksanduniqueandpracticalteaching,ensuresthatwestayattheleadingedgeofknowledge,providingourstudentswithateachingandresearchenvironmentthatisuptodateandrelevanttotheneedsofstudentsinterestedinpursuingcareersinthephilanthropicandnonprofitsectors.

Throughourresearchandteaching,ACPNSbringstothecommunitythebenefitsofteaching,research,technology,andservicerelevanttophilanthropicandnonprofitcommunities.

Goals of ACPNS

1. TeachingandLearning:ToensurethatQUTstudentsinphilanthropyandnonprofitstudiespossessaneducationthatenhancesthecapacityofthephilanthropicandnonprofitsector.

2.Research:Toadvanceandapplyknowledgegermanetothephilanthropicandnonprofitcommunityinordertoassistinthecreationofsocialcapitalandtoenhancecivilsociety.

3.Technology:Tobringthebenefitsofappropriatetechnologytothephilanthropicandnonprofitsector.

4.CommunityService:Tocontributetotheprofessionalism,effectivenessandinternationalreputationoftheAustralianphilanthropicandnonprofitsectorbyprovidingprofessionalserviceandcommentaryonissuesrelevanttophilanthropyandthenonprofitsector.

PilchconnEctWho or what is PILCH?

ThePublicInterestLawClearingHouse(Vic)Inc.(PILCH )wasestablishedin1994,andisanindependent,nonprofitcommunitylegalservicebasedinMelbourne.

PILCHseekstomeetthelegalneedsofindividualsfromdisadvantagedormarginalisedbackgrounds,andnonprofitorganisations.PILCHworkscreativelytomatchclientswithlawyerswillingtogivetheirserviceswithoutcharge.PILCHhasalsodevelopedareputationforwell-targetedlawreformandadvocacy,drawingonexperiencefromitscaseandreferralwork.

Sinceitsinception,PILCHhassuccessfullyestablishedarangeofinnovativeservicesincludingtheHomelessPersons’LegalClinic–anoutreachservicethathasnowbeenreplicatedinseveralstates.PILCH’scollaborateswithitscounterpartsinotherstates:PILCHNSW,Q-PILCH,JusticeNetSAandACTProBonoClearingHouse.

PILCH’scorefundingcomesfromitsmembers(privatelawfirmsofvaryingsize,theVictorianBar,theLawInstituteofVictoria,corporatelegaldepartments,communitylegalcentres,allVictorianuniversitylawfacultiesandothersinancillaryfields),plusagrowingnumberofindividualsupporters.

PILCHhasdevelopedintoaunique‘one-stopshop’forprobonoandaccesstojustice.

8.0 inforMation on contributinG orGanisations 8

PilchConnect

PilchConnectisPILCH’sspecialistservicefornonprofitcommunityorganisations–formallylaunchedinNovember2008.PilchConnectprovidesfreeandlowcostlegalinformation,training,andlegaladvice(viaphone)toVictorianbasednonprofits.Italsomatcheseligible,publicinterestnonprofits,thathavemorecomplexlegalissueswithPILCHmemberlawfirms.PilchConnecthasalreadyundertakensignificantlawreformandpolicyworkatbothastateandfederallevel.

Bydevelopingasasector-basedhubofNFPlegalexpertise,PilchConnectsupportsexcellentstandardsofgovernanceandregulatorycompliancebynonprofitcommunityorganisationssotheireconomicandsocialcontributiontoAustraliaismaximised.Ineffect,PilchConnectis‘helpingthehelpers’bysupportingtheestablishmentandtheeffectiverunningofwell-governedcommunityorganisations.Inturn,theseNFPsprovidecrucialsupportandassistancetothelocalcommunitiesinwhichtheyoperate,includingservicestoclientsandmembers,promotingvolunteeringandcommunitywellbeing.

ThePilchConnectservicecurrentlyreceivesnogovernmentfundingandreliesonpilotfundingfromTheWilliamBucklandFoundationandtheLegalServicesBoardofVictoria.

PilchConnectworkswithpeakbodiessuchasVolunteeringVictoria,VolunteeringAustraliaandVCOSS.Inparticular,weenjoyaformalpartnershipwithAustralianCentreforPhilanthropyandNonProfitStudiesandaregratefultotheCPNSteam(inparticular,ProfessorMylesMcGregor-Lowndes)fortremendoussupportandencouragement!

thE australian charity law associationThereisanemergingneedforaccountable,charity-relatedlegalservicesinAustralia.Inrecognitionofandresponsetothis,theAustralianCharityLawAssociation(ACLA)wasestablishedin2009.ACLAisanonprofitpubliccompanyassociation,basedinNewSouthWales.

ACLAaimstoprovidelegaleducationthatislegitimate,targetedandrelevanttoallthosewhoworkwiththesectorincludingexternaladvisorsforcharities,in-houselawyersemployedbycharities,charityworkers,administratorsandeveninterestedmembersofthepublic.Intheprovisionofthiseducation,ACLAseekstoraisethestandardoflegalassistanceprovidedtocharities,andconsequently,bolsterthestrengthofthecharitablesectorasawhole.

ACLA’smeansofeducationincludecourses,seminarsandpublications.TheseeducationalprogramsareinformedbyACLA’smembersandaretargetedtoaddressthespecificneedsofcharitiesinAustralia.TheyalsoincorporateusefulinformationonthecurrentlegalissuesaffectingtheAustraliancharitablesector.

ThecurrentDirectorsoftheorganisationareClaireJones(SeniorAssociate,Prolegis),DrMylesMcGregor-Lowndes(Director,TheAustralianCentreforPhilanthropyandNonprofitStudies,QueenslandUniversityofTechnology)andAnneRobinson(SolicitorDirector,Prolegis).

TheHonourableSirAnthonyMasonACKBE(FormerChiefJusticeoftheHighCourtofAustraliaandnon-permanentJudgeoftheHongKongCourtofFinalAppeal)hasacceptedourinvitationtobetheAustralianPatronofACLA.

Inaddition,ourInternationalPatronisUniversityProfessorHarveyDale(Director,National

CenteronPhilanthropyandtheLaw,NewYorkUniversitySchoolofLaw).

How you can get involved

InSeptember2010,ACLAwillbehostingaseriesofmasterclassesoncurrentcharitylawissues.TheseclasseswillbetargetedatthosewhoalreadypossessageneralknowledgeoftheAustraliancharitablesector.

FurtherinformationonthemasterclassescanbeobtainedbycallingACLACompanySecretaryJulieMcConnell:phone0294665222email jmcconnell@prolegis.com.au

Becomeamember.MembershipformsareavailableonrequestfromACLACompanySecretary,JulieMcConnell:phone0294665222emailjmcconnell@prolegis.com.au

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