Re Family First New Zealand

• Jurisdiction: New Zealand
• Judge: Collins J
• Judgment Date: 30 June 2015
• Neutral Citation: [2015] NZHC 1493
• Docket Number: CIV-2013-485-000955
• Court: High Court
• Date: 30 June 2015

In the Matter of an appeal under s 59 of the Charities Act 2005 from a decision of the Charities Board dated 15 April 2013

Re Family First New Zealand

Appellant

[2015] NZHC 1493

CIV-2013-485-000955

IN THE HIGH COURT OF NEW ZEALAND

WELLINGTON REGISTRY

Appeal under s59 Charities Act 2005 (right of appeal) against the Charities Board's decision to deregister the appellant because its purposes were political and it was no longer eligible to be registered — appellant's aims were to promote and advance research and policy supporting marriage and family and to educate the public — effect of Re Greenpeace of New Zealand Inc (political purposes and charitable purposes were not mutually exclusive) — doctrine of substantive legitimate expectation and factors needed to establish it — whether the appellant met the definition of “charitable purpose” under s5 Charities Act (meaning of charitable purpose and effect of ancillary non-charitable purpose) — whether the Charities Board breached the appellant's legitimate expectation that it would remain registered as a charitable entity absent material changes to its activities.

Counsel:

P D McKenzie QC for Appellant

P J Gunn and M J McKillop for Charities Board

JUDGMENT OF Collins J

Summary of judgment

1 I am allowing an appeal brought by Family First New Zealand (Family First) against a decision of the Charities Board in which it determined Family First was no longer eligible to be registered as a charitable entity.

2 In allowing the appeal I am directing the Charities Board reconsider Family First's case, in light of the judgment of the Supreme Court in Re Greenpeace of New Zealand Inc (Greenpeace) 1 and this judgment.

Context

3 The Family First trust deed was created on 26 March 2006. The trust deed sets out six purposes and aims of Family First, namely: 2

• A. To promote and advance research and policy supporting marriage and family as foundational to a strong and enduring society

• B. To educate the public in their understanding of the institutional, legal and moral framework that makes a just and democratic society possible

• C. To participate in social analysis

• D. To produce and publish relevant and stimulating material in newspapers, magazines, and other media

• E. To be a voice for the family in the media

• F. To carry out such other charitable purposes within New Zealand as the Trust shall determine.

4 On 6 April 2006, Family First was incorporated under the Charitable Trusts Act 1957. Family First was approved as a charitable entity by the Charities Commission and registered under the Charities Act 2005 (the Charities Act) on 18 May 2007.

5 On 21 February 2008, the Charities Commission made an inquiry of Family First about the extent to which its activities involved advocacy. Family First responded on 25 February 2008, saying: 3

… [I]t has never been and is not our intention to directly lobby MP's in our ongoing work. Our focus is on education, research and encouraging public debate.

6 On 25 June 2009, the Charities Commission advised Family First that it was conducting a review of its operations to ensure it still qualified for registration as a charitable entity.

7 On 16 March 2010, the Charities Commission advised Family First its review had been completed and that the Charities Commission had concluded: 4

… [Family First] continues to be qualified for registration as a charitable entity.

8 On 24 February 2012, the Charities Amendment Act 2012 came into force. That amendment created the Charities Board, disestablished the Charities Commission and transferred the functions of the Charities Commission to the Department of Internal Affairs (the Department) and the Charities Board.

9 On 11 September 2012, the Department advised Family First it intended recommending to the Charities Board that Family First be removed from the charities register under s 32(1)(a) of the Charities Act. I set out that provision in paragraph [27] of this judgment.

10 The Department advised Family First that its recommendation was based on its view that Family First's purposes involved advocating and promoting a political viewpoint. The Department said this was not a charitable purpose.

11 On 14 November 2012, Family First sent the Department a detailed response to the proposal that Family First be deregistered as a charitable entity.

12 On 15 April 2013, the Charities Board resolved to deregister Family First from the register of charities. The reasons for the Charities Board decision were sent to Family First on 26 April 2013 (the Charities Board decision). 5

13 Family First filed its notice of appeal in the High Court on 27 May 2013. On 17 June 2013, the High Court made an interim order under s 60 of the Charities Act that Family First remain on the register of charitable entities pending the outcome of the appeal.

14 The parties agreed that Family First's appeal be deferred until after the Supreme Court delivered its judgment in Greenpeace, which was delivered on 6 August 2014. 6

Legal framework

General principles

15 Section 13 of the Charities Act sets out the essential requirements for registration as a charitable entity. Under s 13(1)(a) of the Charities Act, a trust qualifies for registration if it “is of a kind in relation to which an amount of income is derived … for charitable purposes.”

16 In the case of Family First, almost all of its income is derived from donations. The level of donations received by Family First has steadily increased from

$213,200 in the 2008 financial year to $371,138 in the 2013 financial year.

17 The term “charitable purpose” owes its genesis to the list of purposes found in the preamble to the Statute of Charitable Uses Act 1601 (the Statute of Elizabeth I). 7

18 The speech of Lord Macnaghten in the Commissioners for Special Purposes of Income Tax v Pemsel is generally considered to be the source of the modern classification of charitable trusts into four principal categories, namely, trusts for the relief of poverty, for the advancement of education, for the advancement of religion and for other purposes beneficial to the community. 8

19 In New Zealand, statutory definitions of “charitable purpose” could be found in s 2 of the Charitable Trusts Extension Act 1886, s 14 of the Religious, Charitable, and Educational Trusts Act 1908 and ss 2 and 38 of the Charitable Trusts Act 1957.

20 The definition of “charitable purpose” found in s 5(1) of the Charities Act reflects the classification of trusts attributable to Lord Macnaghten. Section 5(1) provides:

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.

…

21 To be charitable, the entity's purpose must be for the public benefit. 9 Where any one of the first three categories of charity are established it is assumed, unless there is evidence to the contrary, that the charity is for that public benefit. 10 Where the fourth category of charitable purpose is relied upon, public benefit must be expressly established. Any private benefit derived from an entity's activities must be a means of achieving an ultimate public benefit. 11

22 A non-charitable purpose will not preclude registration if that non-charitable purpose is merely ancillary to a charitable purpose. Section 5(3) and (4) of the Charities Act provide:

• (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.

23 Section 18(3)(a)(i) and (ii) of the Charities Act provide that an entity's activities must be taken into consideration when deciding whether the entity qualifies for registration under the Charities Act.

24 An entity's activities are not to be conflated with the entity's purposes. 12 However, examining an entity's activities may assist in assessing:

• (1) the meaning of a stated purpose where the stated purpose is capable of bearing more than one meaning; 13

• (2) whether the entity is undertaking an unstated non-charitable purpose; 14

• (3) whether the entity's purposes provide a benefit to the public; 15 and

• (4) whether a non-charitable purpose falls within the saving provisions of s 5(3) of the Charities Act. 16

25 The charitable status of an entity is determined by construing its objects and powers in context and as a whole, rather than individually. 17

Deregistration

26 Section 50 of the Charities Act permits the Charities Board to examine and inquire into a charitable entity:

… if it considers it reasonably necessary for the purposes of carrying out its functions and exercising its powers under the [Charities] Act.

27 Section 32(1)(a) of the Charities Act provides:

32 Grounds for removal from register

(1) The [Charities] Board may direct that an entity be removed from the register if—

(a) the entity is not, or is no longer, qualified for registration as a charitable entity;

…

28 If an objection to deregistration is received, the Charities Board must not deregister the entity unless the Charities Board is...