Not-For-Profit Newsletter – December 2013
Published on December 19, 2013 by Jelena Prodanovic and Patricia Monemvasitis
Welcome to the last issue of our Not-for-profit Newsletter for 2013
In this newsletter we report on:
- the recent NSW Native Title case acknowledging the native title rights of the Bandjaland people as the “traditional owners” of 2,700 square kilometres of land in northern New South Wales,
- developments in charities law and the future if the ACNC and the limited information charities can withhold from publication,
- the recent New South Wales decision concerning factors entitling eligibility for Stamp Duty exemption for charities,
- the recent NZ case concerning the consideration and review of the objects of Greenpeace New Zealand to ensure charitable status is maintained,
- the application of the Bugmy case in an ACT case involving criminal sentencing,
- some issues concerning land owner’s and builder’s rights in architectural plans
and in the Good News, we report on the appointment of Australia’s ambassador for women and children and the impact of the latest results of the Western Australia Corporate Giving Index.
We wish you all the very best over the Festive Season and hope you keep safe and enjoy the good company of your friends and relatives as well as having some well deserved rest.
We look forward to providing you with further updates on legal issues concerning the Not-for–profit sector in 2014.
The Carroll and O’Dea Not-for-profit team.
STAMP DUTY CONCESSIONS FOR CHARITIES
Is your charity eligible for stamp duty exemptions?
In New South Wales section 275 of the Duties Act 1997 contains the criteria for eligibility.
There are two major types of organisations who may be eligible:
- Organisations engaged in the relief of poverty in Australia or the promotion of education in Australia, if approved by the Chief Commissioner, will secure an exemption for a three year period.
- Organisations falling outside those categories but which, is of a charitable or benevolent nature, (or whose primary object is the promotion of interests of aborigines) require Commissioner’s approval on a transaction by transaction basis.
Eligibility is available for the organisation directly, and also for any “person” acting as “trustee” for such organisations.
The recent decision of Baptist Union of New South Wales v Chief Commissioner of State Revenue [2013] NSWADT 270 analysed the eligibility of Baptist Union to secure exemption from paying ad valorem stamp duty on the purchase of 2 villas to house lecturers of Morling College Limited.
Baptist Union would only be eligible for exemption if it could prove it held the units as trustee for Morling College Limited (s275 (3)(c)).
Facts
For both purchases, Union lodged applications for exemption under Duties Act 1997 s275(1).
Commissioner of State Revenue denied both applications.
No written declaration or any trust in writing.
Reasoning
Union failed to discharge the burden of proving that an intention to create the express trust could be discerned from the language employed by the parties to the transactions and the relevant circumstances attending the relationships between them, there was no mention made of the Union acting in capacity as trustee of Morling College, and no reliance placed on s275(3) Duties Act. Union had not made any mention of its role as “trustee” when completing the ODA 048 application form, notwithstanding there was no place on that form for Union to indicate it was applying as trustee, as the court found Union could have attached a note advising this detail.
As there was no express trust, the next argument put by Union was that there was an implied trust, based on Union’s need to quell concerns of its members, that Union was in control of Morling’s actions, (ie by buying on its behalf). The court found that as Union was the sole member of Morling, this argument was flawed.
Union pointed to a memorandum of understanding signed between itself and Morling, indicating the obligations of each of them concerning the villas, but there was no mention that Morling was actually the beneficial owner of the villas, so this document was found to be nothing greater than akin to a contract obliging rental payments between landlord and tenant.
ACNC – KEVIN ANDREWS’ UPDATE
- Minister for Social Services, Kevin Andrews, has affirmed the Coalition pre-election promise to abolish the Australian Charities Not-for-Profit Commission (ACNC) and to take further consultation from the charity sector on the provisions of the ACNC Act.
- In the last week of parliament before rising for Christmas, he had also announced the deferral of the introduction of the statutory definition of “charity” (Charities Act 2012), (which was due to commence on 1 January 2014) until 30 September 2014. The relevant amendment was not dealt with by parliament before rising, so, there is no change to the original date.
- The assistant treasurer Arthur Sinodinus has announced that the Unrelated Business Income Test (UBIT), which had been held back for several months, will now not proceed: the Coalition has indicated it would have created too much unnecessary red tape for charities, and a different method will be applied to minimise revenue consequences of unacceptable commercial activities of charities.
- In the same announcement, the “in Australia” test, which was also held over from the last government, will now be legislated, so that Australian charities must ensure that they operate solely in Australia and “pursue their purposes principally within Australia” and if they are deductible gift recipients “they will pursue their purposes solely within Australia
- The Commissioner, Susan Pascoe, has also announced a deferral of the deadline for lodgement of annual information statements beyond 31 December 2013 to 31 March 2014. Before this deferral, any charity with a financial reporting period ending 30 June had been obliged to lodge their first annual information statement by 31 December 2013 as the Commissioner had no flexibility with the penalties.
SEEKING WITHDRAWAL OF INFORMATION FROM THE REGISTER: BE AWARE.
The ACNC Act prescribes limited circumstances where a charity may avoid publication of certain material on the register: there is room for expansion of these circumstances by regulation but at this stage no regulations have been prescribed.
The permitted exemptions are that the material:
- Contains commercially sensitive information;
- Is inaccurate, will confuse or mislead;
- Is offensive to a reasonable person;
- Is a danger to public safety.
- Any submissions, for example, that the material is of no general public interest, or, that it is personal to a group, will not successfully persuade the Commissioner to refrain from registration.
GREENPEACE NZ OBJECTS: POLITICAL OR CHARITABLE? (RECENT DECISION)
The Court of Appeal of New Zealand handed down a decision on 16 November 2013, overturning the result of a lower court.
The lower court initially found that two objects endorsed by Greenpeace of New Zealand Incorporated (Greenpeace) were political rather than charitable in nature, and that these objects were independent, rather than “merely ancillary” to the organisation’s other charitable objects.
The lower Court held that Greenpeace was held not to be “established and maintained exclusively for charitable purposes” and was denied charitable status.
The two objects respectively:
- Endorsed the “promotion of… peace and disarmament”; and
- Promoted political advocacy.
Greenpeace agreed to change the wording of the two objects as follows:
- To include “promotion of… peace and nuclear disarmament and elimination of all weapons of mass destruction”; and
- To incorporate the express words “where such promotion or support is ancillary to those objects”.
With these amendments, the previously controversial objects were found to be wide enough to come within the charitable head of a “purpose beneficial to the community”, and diluted enough to be “ancillary to other charitable objects”, rather than be independent purposes – overturning the decision of the lower court.
BANDJALANG PEOPLE MAKE SUCCESSFUL NATIVE TITLE CLAIM
On 2 December 2013 the New South Wales Federal Court recognised the native title rights of the Bandjaland people. The full judgement can be found here.
The Court acknowledged that the Bandjaland people were the “traditional owners” of 2,700 square kilometres of land in northern New South Wales. The Court granted the Bandjaland people “non-exclusive rights” over the land, which includes the right to “hunt, fish and gather”, “take and use waters”, “access and camp”, perform ceremonies, “teach the physical, cultural and spiritual attributes” of the land and waters and “access…, maintain and protect” significant sites. As the recognised traditional owners of the land, the Bandjaland people are entitled to be consulted on such things as “development” and mining ventures.
In her judgment Jagot J stated that the result “will justifiably give rise to a real and well deserved sense of pride and celebration” amongst the claimants. Justice Jagot went on to say that “It is not only my hope, but also my expectation, that the work which has enabled these determinations to be made today will enable future outcomes of a similar kind to be more readily achievable.”
The decision comes 17 years after the claim was initially lodged. Many of the original claimants are no longer alive. Sadly, this extended wait time is not unique, but rather is representative of the native title determination process. On average, claims take 15 years to be processed. Australians for Native Title and Reconciliation (ANTaR) have noted that, as of 31 May 2012, 473 native title applications remained “active”.
In June this year a retiring Federal Court Judge, Peter Gray, said that “The biggest disappointment in my career has been to see the opportunity given to use by the High Court in the Mabo case squandered”, noting that native title had bee “recognised” in only 181 instances and “found not to exist in 48 cases.” To date the Bandjalang case is only the third successful native title claim made under the Native Title Act 1993 (Cth) in New South Wales.
Native title, recognised by the High Court in Mabo and given legislative effect in the 1993 Act, should not be confused with land rights, which are governed by the Aboriginal Land Rights Act 1983 (NSW) in New South Wales. While land rights are legislatively created entitlements, held by Aboriginal Land Councils, usually taking the form of freehold title, native title is the acknowledgement of the continuous, traditional ownership and use of land. Native title constitutes a property right, which to which traditional owners are entitled. A detailed examination of the differences between native title and freehold title can be found here.
CRIMINAL SENTENCING POST BUGMY
The High Court in Bugmy expounded that profound deprivation experienced by an offender is to be given regard by a sentencing judge irrespective of an offender’s racial background, aboriginality, while often part of deprivation, of itself is not a factor of mitigation. Read here our previous report on the Bugmy case.
The race-neutral application of the decision was applied recently in the ACT decision of R v Bradley Mark Flynn (unreported). Flynn, a non-indigenous male, was convicted after pleading guilty to an aggravated burglary offence in 2009. He was already serving a five year prison sentence for an armed robbery offence in 2011, and had previously been convicted for over 130 offences. Flynn’s biography is one of chronic recidivism borne in adolescence.
The court remarked that Mr Flynn’s entrenched criminality would not be easily overcome. Justice Refshauge, in citing Bugmy , acknowledged that the lasting effects of childhood disadvantage should be taken into consideration. The court acknowledged Mr Flynn’s crimogenic childhood in which Mr Flynn was forced by his parents to steal in order to support the parents’ drug habit. The court also gave regard to Mr Flynn’s time spent in juvenile detention which contributed to his lack of a proper education. In the result, Mr Flynn received a sentence of five years, with a non-parole period of three years gaol.
The Bugmy decision highlights the distinction between applying deprivation no matter its origins, and reducing a sentence to acknowledge the handicap carried by the offender, and the refusal to use an offender’s aboriginality for the same purpose. In future the judicial balancing act between equality in sentencing and having appropriate regard for aboriginality will continue.
Bugmy also illustrates the High Court’s dexterity, notwithstanding its obligation to use the common law’s approach of individualised justice: while it was not bound to use the Fernando principles, it has generated a result which in practical terms, has the same result as if they had been applied.
Foot note: The Fernando principles are derived from the 1992 sentencing decision of Justice Wood of the NSW Supreme Court in R v Fernando. They include eight overlapping principles relating to the way a court is to have regard to aboriginality and its socio-economic circumstances, including alcohol abuse, and social deprivation, when sentencing. Principle (B) states ‘[t]he relevance of the aboriginality of an offender is not necessarily to mitigate punishment but rather to explain or throw light on the particular offence and the circumstances of the offender’.
THE ARCHITECT’S PLAN AND CAN IT LEAVE A BUILDER PLANLESS?
A nice sizeable parcel of land (seaside perhaps) ripe for development. A builder seizes the opportunity. A skilled architect draws up a stunning building plan. Then, a commercial disagreement and all starts to go terribly wrong. Suddenly, in the febrile midst of the legal scramble, the question arises: can the builder use those plans to build or does the architect control their use?
Unlike some commissioned works such as portraits or photographs for private or domestic purposes, there is no statutory implication of ownership in favour of the person commissioning the work when it comes to architectural plans. The architect (or their employer as the case may be) therefore owns the copyright in the plans as their author under Section 35 of the Copyright Act 1968 (Cth).
Whilst the architect owns the copyright, the copyright can of course be assigned or licensed under contract. When the contract makes no such provision a line of cases has now firmly established that where an architect is commissioned to prepare plans and a fee is paid there will be an implied licence to use the plans for the purpose for which they were created.
As with all licences, the copyright owner retains the right to revoke the licence. However, the revocation rights do not extend indefinitely, but are linked to the purpose of the copyright. Once the purpose for which the building plan was prepared is achieved (e.g. development consent for the construction is granted) the licence becomes irrevocable.
Originally, the rationale of implied licences seems to have been that the valuable consideration paid for the plans is what gives rise to the implied licence as otherwise the business efficacy of the contract would be significantly effaced (R & A Bailey & Co Ltd v Boccaccio). The decision of the High Court in Concrete Pty Ltd v Parramatta Design & Developments Pty Ltd (2006) 70 IPR 468, has however strengthened the implication of implied licences even further. The case involved a joint venture development whereby the architect (Mr Fares) was not paid for the design of the plans, but held an interest in the eventual profit of the joint venture. After a dispute arose the land was sold on to another developer (‘Concrete’) to whom Mr Fares refused to grant a licence with respect to the plans. Concrete took legal action and sought to rely on an implied licence.
The High Court indicated that it is not essential that there be a fee, which is just one factor rather than the basis of the implied licence as earlier decisions had suggested. The Court explained that to make the implied licence conditional upon a fee being paid should not be the legal position as this would effectively allow an architect (by withholding the licence) to “sterilise the site in the hands of the liquidator.” Therefore the implied licence should not depend on the fee, non-payment of which the architect can always pursue as claim for breach of contract.
Nor does the implied licence depend on there being a contract. The Court held that the new purchaser of the land who did not have a contract with the architect still had an implied licence which flowed from the contracting party to whoever bought the land. The Court’s basis for this conclusion is not entirely clear, but the doctrines of estoppel and non-derogation of grant have been suggested.
Whilst questions still loom as to how the purpose of the plans will be assessed in various contracts and cases where planning approval is something other than development consent, it seems that courts are now likely to uphold the business efficacy of contracts and imply licences over copyright in architectural plans irrespective of fee payment and even in favour of certain third parties like purchasers or assignees.
All of this is of course subject to the express provisions in the contract and the moral rights of the author which can be used to restrict use and modification of the plans unless these rights have been expressly surrendered under contract. Therefore, whilst the implied licence is certainly an important safeguard of commercial efficacy, careful consideration and drafting is advised in respect of construction contracts and contracts with architects so as to ensure architectural plans and other copyright works can be easily relied on by land owners.
THE GOOD NEWS
Giving West
The Western Australia Corporate Giving Index has been released with results showing a surge in the number of companies signing up to the unique initiative which measures corporate generosity.
The index, which was introduced in 2012, includes 16 of WA’s leading companies as members.
According to CEO of Giving West, Kevin MacDonald, “Through the showcasing of good giving stories and statistics we hope to inform and inspire businesses that are looking to grow or set up giving programs.”
The initiative is the brainchild of Giving West who state that the index is designed to recognise companies that are champions of corporate social responsibility with a focus on outcomes and practical measures as opposed to sloganeering and self-aggrandising.
The gold standard of corporate giving is deemed to be pre-tax profit contributions of around 1% and over.
Among many interesting statistics in the WA Corporate Giving Index report (found here: http://www.givingwest.org.au/educate-share/item/98-wa-giving-index) is an increasing trend towards long term community initiatives rather than one-off donations.
