New Zealand Computer Society Inc.

• Jurisdiction: New Zealand
• Court: High Court
• Judge: MACKENZIE J
• Judgment Date: 28 February 2011
• Neutral Citation: [2011] NZHC 161
• Date: 28 February 2011
• Docket Number: CIV-2010-485-924

[2011] NZHC 161

IN THE HIGH COURT OF NEW ZEALAND WELLINGTON REGISTRY

CIV-2010-485-924

Under the Charities Act 2005

In The Matter OF an appeal against a decision of the Charities Commission concerning The New Zealand Computer Society Inc

BETWEEN

New Zealand Computer Society Inc

Appellant

Counsel:

J K Scragg and A L Robinson for Appellant

D K Baltakmens for Charities Commission

RESERVED JUDGMENT OF MACKENZIE J

Table of Contents

1. Introduction	[1]
2. Background	[4]
3. The Law	[9]
4. The Commission's Decision	[19]
5. Application for Leave to Adduce Further Evidence	[23]
(a) The Principles to be Applied	[23]
(b) The Parties’ Submissions	[27]
(c) Decision	[32]
5. The Substantive Appeal	[36]
(a) Summary of the Parties’ Submissions	[36]
(b) Professional Societies	[39]
(c) Discussion	[48]
(i) The Society's Objects	[49]
(ii) The Society's Activities	[57]
(iii) Funding	[65]
(iv) Does the Society Have Non-charitable Purposes that are more than Ancillary?	[67]
(d) Section 61B of the Charitable Trusts Act 1957	[69]
(e) Is It in the Public Interest to Remove the Appellant from the Register?	[74]
(f) Did the Commission Fail to Observe the Principles of Natural Justice?	[77]
6. Result	[81]

Introduction

1. Introduction

1 The appellant, New Zealand Computer Society Inc (the Society), appeals against a decision of the Charities Commission (Commission) to remove the appellant from the register of charitable entities (the Register). The Commission found, following a review of the Society's status, that the Society did not qualify as a charitable entity under the Charities Act 2005, because it was not established and maintained for exclusively charitable purposes.

2 The principal ground of the appeal is that any non-charitable purpose that the Society may have is merely ancillary to its main, charitable purpose.

3 Also before the Court is an application by the Society for leave to adduce further evidence in support of the appeal.

2. Background

4 The Society is a non-profit incorporated society, which works to advance computer-related education and professional development in New Zealand. It was registered as a charitable entity on 9 January 2009. The Society's objects are set out in cl 3 of its Constitution:

3. Objects

The Objects of the Society are to

3. Objects

3.1

develop the discipline of information technology in New Zealand. 3.2 foster the training, education and qualification of persons practising or intending to practise within the discipline in New Zealand. 3.3 promote proper conduct within its membership and to set ethical standards for the discipline. 3.4 grant qualifications and classes of membership to members in recognition of their proficiency within the discipline. 3.5 develop or provide lectures, meetings, conferences and publications and to promote research within the discipline of information technology. 3.6 take a public position on matters of concern to the Society and make submissions or advise government as appropriate. 3.7 promote any other related activities that are in the interests of the Society.

5 On 6 July 2009, the Society received a notice from the Commission advising that the Commission intended to remove the Society from the Register. The Commission said that it believed that the Society did not have exclusively charitable purposes. In particular, the Commission was of the view that the Society's objects provided non-ancillary benefits to its members. The Society notified the Commission that it intended to object to the removal. On 1 August 2009, it sent a response to the Commission outlining its charitable activities and addressing the Commission's concerns. It provided a non-exhaustive list of its educational activities and offered to provide further submissions in support of its charitable status should the Commission still have concerns.

6 On 31 August 2009, the Commission again notified the Society of its intention to remove it from the Register and requested that any objections to the removal be submitted by 30 September 2009. The Society responded on 20 September and provided further details concerning its charitable activities. It also requested a meeting with the Commission if the letter was not considered sufficient to address the Commission's concerns, and asked to be given a further opportunity to address any outstanding matters before a final decision was made.

7 The Commission met with the Society's Chief Executive and legal adviser on 3 November 2009. Although the Commission had previously taken the position that discussions at the meeting would have to be limited to the removal process, the Society's charitable status was in fact addressed informally. It was agreed that the Society would provide further written submissions, which it did on 27 November 2009.

8 On 14 December 2009, the Commission informed the Society that the issue of its registration would be put to the Board during its meeting in the second week of February 2010. On 19 February 2010, the Society provided further submissions. These submissions were provided to the Board prior to its meeting on 18–19 March 2010, at which it adopted the Committee's recommendations. The Commission sent the Society notice of its decision to proceed with the Society's removal from the Register by letter dated 18 March 2010. However, it appears that the Society did not receive the letter. The Society finally became aware that it had been removed from the Register on 25 April 2010. It subsequently filed an application for leave to appeal out of time, which was not opposed, in order to bring this appeal against the Commission's decision.

3. The Law

9 In order to be registered as a charity under's 13(1)(b) of the Charities Act, a society must satisfy the following three conditions: the purpose of the organisation must have a charitable character; the organisation must exist for the benefit of the public; and it must be exclusively charitable. Section 13(1)(b) provides as follows:

13 Essential requirements

• (1) An entity qualifies for registration as a charitable entity if,—

• …

  • (b) in the case of a society or an institution, the society or institution—

    • (i) is established and maintained exclusively for charitable purposes; and

    • (ii) is not carried on for the private pecuniary profit of any individual; …

10 Section 5 defines “charitable purpose” in the following terms:

5 Meaning of charitable purpose and effect of ancillary non-charitable purpose

• (1) 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 other matter beneficial to the community.

• …

• (3) To avoid doubt, if the purposes of a trust, society, or an institution include a non-charitable purpose (for example, advocacy) that is merely ancillary to a charitable purpose of the trust, society, or institution, the presence of that non-charitable purpose does not prevent the trustees of the trust, the society, or the institution from qualifying for registration as a charitable entity.

• (4) For the purposes of subsection (3), a non-charitable purpose is ancillary to a charitable purpose of the trust, society, or institution if the non-charitable purpose is—

  • (a) ancillary, secondary, subordinate, or incidental to a charitable purpose of the trust, society, or institution; and

  • (b) not an independent purpose of the trust, society, or institution.

11 The definition in subs (1) follows the established common law classification of charitable purposes 1 The four heads of charity are relief of poverty, advancement of education or religion, and any other purposes beneficial to the community.

12 In the present case, only the second and the fourth heads of charity are relevant. Advancement of education is the primary purpose relied on by the Society. Courts have generally taken a broad approach in determining what qualifies as an educational purpose, with the effect that any meaningful connection with the provision of education is likely to be sufficient 2 The “other purposes” ground must be defined in accordance with the “spirit and intendment” of the Statute of Elizabeth

and existing case law 3 The preamble to the Statute provides the following list of charitable uses:

The relief of the aged, impotent, and poor people; the maintenance of sick and maimed soldiers and mariners, schools of learning, free schools and scholars in universities; the repair of bridges, ports, havens, causeways, churches, sea banks and highways; the education and preferment of orphans; the relief, stock or maintenance of houses of correction; the marriages of poor maids; the supportation, aid and help of young tradesmen, handicraftsmen and persons decayed; the relief or redemption of prisoners or captives and the aid and ease of any poor inhabitants concerning payments of fifteens, setting out of soldiers, and other taxes.

13 As well as being required to have a charitable purpose, the entity must be carrying out its purposes for the benefit of the public. For the first three heads of charity, public benefit is assumed to arise unless the contrary is shown 4 This does not mean, however, that existence of public benefit is a foregone conclusion. Rather, “the question whether a gift is or may be operative for the public benefit is a question to be answered by the Court by forming an opinion upon the evidence before it” 5 Where the claimed purpose is “any other matter beneficial to the community”, public benefit must be expressly shown 6

14 Two questions are asked to determine whether there is a public benefit 7 First, do the purposes confer a benefit on the public or a section of the public? And second, does the...