Charitable Trusts and Political Purposes: Sowing the Seeds of Change? Lessons from Australia

• Author: Juliet Chevalier-Watts
• Position: Senior Lecturer in Law, Te Piringa ? Faculty of Law, University of Waikato, New Zealand
• Pages: 52-79

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CHAR ITABLE TRUSTS AND POLITICAL PURPOSES:

SOWING THE SEEDS OF CHANGE? LESSONS FROM

AUSTRALIA.

J   C  -W*

I. I

e recent case of Aid/Watch v Commissioner of Taxation1 has created

sea changes in Australia in relation to charitable trusts, and as a result our

Antipodean neighbours appear to be bla zing trails in the e volution of charitable

trusts, whils t at the same time, New Zealand resolutely remains entrenched in

the annals of charitable trust history. Can, and indeed should, New Zealand

continue this traditional approach, as pressure mounts to explore more

liberal interpretations of charitable trusts and political purposes? is article

explores the two jurisdictions and considers critically, in light of very recent

controversial judgments, the diverging paths being ta ken by the jurisdictions.

Before any analysis of the proposition, there must rst be a contextualisation

of the legal position of charitable trusts and political purposes.

II. T L C

e philosophy of charity is rooted rmly in the annals of history and

the oldest active charity on record in the United Kingdom is documented as

A D5 9 7.2 However, it would take many more centuries before an ocia l system

of regularisation would take eect; this began ocially with the Statute of

Elizabeth known otherwise as the Statute of Charitable Uses 1601. is Act

was primarily intended as “an accountability tool to ensure that charitable

assets were applied to charitable ends”3 and has long since been repealed,

although in the modern context it is its Preamble that is the cornerstone

of that which may be construed as the principle of charitable law, and the

yardstick against which charitable purposes are measured; if a purpose falls

* Juliet Chevalier-Watts, Senior Lecturer in Law, Te Piringa – Faculty of Law, University of

Waikato, New Zea land.

1 Aid/Watch Incorporated v Commissioner of Taxation [2010] HCA 42.

2 Gareth Morgan “e Spirit of Charity” (paper presented at Professorial Lecture, Sheeld

Hallam Unive rsity, England, April 2008) at 5.

3 Oongah Breen “Pemsel Plus?: Charitable Purposes – An Irish Perspective” (UCD Working

Papers in Law, Criminology & Socio Legal Studies, University College Dublin, Research

Paper No 43/2010) at 2.

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within the spirit and intendment of the Preamble,4 then prima facie, it is

charitable. e Preamble sets out the non-exhaustive list of purposes that are

deemed to be charitable and these purposes include:

• e relief of the aged, poor and impotent;

• e maintenance of sick and maimed soldiers and mariners;

• e repair of bridges and churches;

• e marriage of poor maids.

In the now seminal case of Commissioners for theSpecial Purposes of Income

Tax v Pemsel,5 Lord McNaghten set out the four heads of charity under which

all charitable trusts must fall and “these head s are still the very foundation of

charitable trusts in contemporary times.”6 e four heads of charity are most

certainly well docu mented, although no review of charity is complete without

their citation; they are as follows:

• e relief of poverty;

• e advancement of religion;

• e advancement of education;

• Any other purposes benecial to the community not fallin g under any

preceding heads.

ese four heads of charity have now been codi ed in New Zealand in the

Charities Act 2005 as follows:7

In this Act, unless the context otherwise requires, charitable purpose includes every

charitable purpose, whether it relates to the relief of poverty, the advancement of

education or religion, or any ot her matter benecial to the commu nity.

A trust may fall within one or more of the four heads, however, there

are still further tests that must be satised before a trust may be construed

as being charitable under the Act. Section 5(2) of the Act requires that the

purpose must be for the public benet:

(a) the purpose of a trust, society, or institution is a charitable purpose under this Act

if the purpose would satisfy the public benet requirement apa rt from the fact that the

beneciaries of the trust, or the members of the society or institution, are related by

blood;

4 Morice v Bishop of Du rham (1804) 9 Ves 399 at 405, 32 ER 656 at 658.

5 Commissioner forSpecial P urposes of Income Tax v Pemsel [1891] AC 531 at 583.

6 Juliet Chevalier-Watts “Charit able Trust and Politica l Activity: Time for a Chang e?” (2011)

19(2) WLR 145 at 145.

7 Charities Ac t 2005, s 5(1).