In the case of Community Housing Limited v Clarence Valley Council [2014] NSWLEC 193, the Applicant, a provider of “social housing”, claimed that its lands were exempt from the payment of rates because it is both a “public benevolent institution” and a “public charity”. Six (6) respondent councils denied the claim to an exemption and levied rates.
Section 556(1) of the Local Government Act 1993 lists several categories of land which is exempt from all rates, other than water supply special rates and sewerage special rates, including the following:
“… (h) land that belongs to a public benevolent institution or public charity and is used or occupied by the institution or charity for the purposes of the institution or charity,…”
In considering whether the Community Housing Limited is a “public benevolent institution or public charity”, the Court examined the objectives of the company as stated in its Constitution, as follows:
“The object for which the Company is established is to be a non profit corporation that: –
(a) acquires on its own behalf, or manages or holds as trustee on behalf of any public, government, semi or local government or charitable person, association, bodies, funds, institutions or organizations, land and buildings so that:
(i) shelter is provided to persons in crisis and/or who have inadequate access to safe and secure housing;
(ii) housing may be provided to low income persons including members from ethnic groups, young people (single, dependent or otherwise), people with disabilities, people who are aged, childless couples, single parent families, families and/or other households in need;
(b) provides housing advice and referral services which may assist homeless persons into stable and long term housing.
(c) Provide training, vocational and related education, and skills development to improve employment opportunities.”
In his judgment, Harrison J of the Land and Environment Court applied the following principles:
- The proper characterisation of whether an institution is a public benevolent institution or a public charity is to be made only by reference to the objects and powers for and with which the institution is constituted, not by reference to the activities which are in fact being pursued by the institution on the lands it owns.
- An institution can be both a public benevolent institution and a public charity, the concept of the former being narrower.
- Where there are multiple components of an institution’s purpose, the conclusion must be an all or nothing exercise in the sense that there is no such thing as a partly charitable association.
- An institution’s use of a property is critical and mere ownership is insufficient to establish an exemption under s 556(1)(h).
The Court, while highly critical of the drafting of the objectives clause of the Constitution, found that clause 3(a) and (b) qualified as charitable purposes however 3(c) did not. Harrison J said as follows:
“The provision of training, vocational and related education, and skills development to improve employment opportunities is in my opinion neither an independently charitable purpose nor merely incidental to some otherwise evident or identifiable main charitable purpose of the company. It is fundamentally general in its terms and incapable as a matter of language of being accommodated within any recognised description or category of charitable purpose. “Training” does not have any charitable content standing alone and does not acquire any from the context in which it appears. The same can be said of “vocational”. The reference to “related education, and skills development” does not succeed in qualifying the clause as an independent charitable purpose for the advancement of education. Even if it were capable of meeting the description of a charitable purpose for the advancement of education, the exemption sought by the company would not be available to the extent that there is no evidence that any of its properties are used for any such purpose.”
Even though the Court found that the company was using its property for charitable purposes (satisfying the second limb of s556(1)(h)), as the Court’s interpretation of the company’s Constitution precluded it from being characterised as a ‘public benevolent institution or public charity’, the company was not entitled to a rates exemption.
Note: This information is not to be relied upon as legal advice.