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ACPNS QUARTERLY CASE NOTES – First Quarter 2020

The Australian Centre for Philanthropy and Nonprofit Studies (ACPNS) produces succinct case notes for lawyers,

accountants and managers involved in the nonprofit sector throughout each year.

The ACPNS Quarterly Case Notes Series summarises cases noted in each quarter and links them directly to its full case

notes posted to QUT ePrints, an institutional Internet repository of research output of QUT staff and postgraduate

students. The papers deposited in QUT ePrints are freely available, with an advanced search facility available.

Further resources on grant-seeking, fundraising and philanthropy are available from the QUT Community Collection for

grant-seekers, fundraisers and philanthropists.

This case note summary collects and summarises cases of particular interest from the first quarter of 2020.

The experts pick of cases to consider: Some long-time supporters of the case notes have made their suggestions of must-read cases with their comments:

Sue Barker (NZ) - my pick would be the Scottish case in New Lanark Hotels. The decision of the Upper Tribunal looks to

be a refreshing restatement of fundamental principles and a must read for all with an interest in this area. The decision

of the High Court in Burns Family Charitable Trust is also a must read, not only for its confirmation that the Court’s role

in interpreting trust deeds is “interpretation, not creation”, but also for its interpretation of section 18 of the Trusts Act

2019 as it applies to charitable trusts: the Court found that, once the Trusts Act (NZ) comes into effect after 30 January

2021, accumulation of capital in respect of the income of a charitable trust will become lawful. The issue of

accumulations by charities generally is topical in New Zealand at the moment, as one of the 3 issues that were set to

be fast-tracked in the review of the Charities Act.

Prof Oonagh Breen (Ir) - This quarter the ‘Bread Institute’ litigation is on my watchlist, dealing as it does with the

stewardship (both by charity trustees but also by the AG) of claimed charitable assets and the concept of perpetual

charitable gifts. While the main substantive hearing of issues may still be someway off, the current interlocutory

proceedings highlight the important protective nature of the court’s jurisdiction in this area and the associated

responsibilities of all who come into contact with charitable assets (in this instance, the Receiver).

Two cases that all AGs should be reading (just to remind themselves of the scope of their sometimes little used common

law powers) are Sheppard v The Uniting Church in Australia Property Trust (Victoria) and the US Attorneys General

settlement with PayPal Charitable Giving Fund Inc. (PPGF), both dealing with the important oversight role of the AG

over charitable assets.

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Dr Bob Wyatt (Canada) - My first pick from this quarter would be the Better Public Media Trust case. Given the

challenges faced by news organizations around the world, it seems evident that charity law and/or government policy

is going to have to evolve to ensure the continuation of high-quality journalism, particularly at a local level. This case

is not a good start.

The report of the U.S. Attorneys-General’s settlement with PayPal is another “must-read”, if only to recognize how

donor-advised funds – already a contentious issue for many around the globe – may look in future. The fact situation

could well be a clarion call that we ignore at our peril.

Finally, the New Lanark Hotel and Trading cases may provide an important starting point in determining the extent to

which charities can take on business-like initiatives. As we prepare for a “new normal” post-pandemic, demand for

services and changes in government spending may well require more charities to find ways to generate revenue while

maintaining the charitable nature of the organization.

Murray Baird (Aust.) - It is sad and salutary to again see a raft of internecine (literally “to kill”) disputes in charities

being played out in the Courts. And it cannot be assumed that costs will come from the assets being fought over. The

observations of Sifris J. at the conclusion of protracted charity litigation in the Victorian Supreme Court 2018 are apt:

I consider and indeed said on many occasions that this was a most unnecessary and undignified dispute. It is in

fact shameful. The matter should never have come to Court, particularly given the identity of the litigants. I am

almost minded to call for an inquiry into costs. No doubt millions of dollars could have been deployed for

charitable purposes.

The Presbyterian Church of Victoria Trusts Corporation v Anstee, Nuske, Evans, Holman, Kerrs & Ors (No 4)

[2018] VSC 200 (27 April 2018)

Tudora v The Queen illustrates that there is no judicial sympathy for taxpayers getting involved in artificial schemes to

boost tax deductions. It can be assumed that behind such schemes are advisers who abrogate their professional

responsibilities for personal gain. If tax and charity lawyers refused to participate, such schemes would be unlikely to

gain momentum.

Charity A series of cases from overseas jurisdictions continue to struggle with of the boundaries and nature of charitable

purposes. Some would say that decisions about gun clubs, advocacy and resort ice cream parlours do not pose

intractable dilemmas in Australia because of the Australian High Court’s views of charitable purposes.

A New Zealand case Better Public Media Trust v Attorney-General [2020] NZHC 350 considered whether advancing

public media is a charitable purpose. This was an appeal from the refusal of the Charities Registration Board (the Board)

in New Zealand to register the Better Public Media Trust (the Trust) as a charity. The central issue was whether the

Trust’s main purpose of advancing public media was a charitable purpose within section 5 of the Charities Act 2005

(NZ). The Trust had been formed in 2013 as the Coalition for Better Broadcasting Trust with the object of saving two

New Zealand public broadcasting stations. The Trust first applied to be registered as a charity in 2015 and was refused.

The Board considered that the Trust’s stated purpose of advancing public media was not capable of being charitable by

analogy to previous cases dealing with public amenities. Its purpose was identified by the Board as an advocacy

purpose. This advocacy was not merely ancillary to the Trust’s purposes.

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The court found that the advocacy purpose was not ancillary because the whole thrust of the Trust’s objects was

towards a particular view of public broadcasting. The court reviewed the authorities and concluded that neither the

end nor the means of the Trust were charitable as there was insufficient nexus between the Trust’s purpose and the

public benefit. Further, a claimed education purpose was not upheld as the court concluded that the Trust was one for

advancing a cause or matters of opinion.

The Charity Commission for England and Wales (the Commission) published a compliance decision about whether a

shooting club had gone beyond its charitable objects by promoting civilian rifle competitions, and whether it required

strengthened governance in the areas of connected commercial activity and dispute resolution. Shooting clubs were

historically registered as charities on the grounds that teaching people skills of accurate shooting could be considered

as a charitable purpose for the defence of the realm. In the mid-1990s the Commission reviewed the basis of the

charitable status of such clubs and concluded that the training of civilians in shooting could no longer be said to promote

the defence of the realm for the public benefit. Many shooting clubs were removed from the register as they were not

able to establish that their purpose was the promotion of the efficiency of the armed forces through the training of the

military. The decision National Rifle Association CCEW Compliance Decision, 7 February 2020 dealt with finding the

charity acted outside its charitable objects by promoting civilian recreational shooting competitions and other activities.

Charities must advance their charitable purposes for the public benefit, and the Commission considered that there was

only the most tenuous, if any, connection between civilian recreational rifle and pistol shooting and the NRA’s

charitable purpose of promoting the efficiency of the Armed Forces for the defence of the realm.

New Lanark Hotels Ltd v Office of the Scottish Charity Regulator [2020] UT 9 and New Lanark Trading Limited v Office

of the Scottish Charity Regulator [2020] UT 10 were two appeals that we previously reported

https://eprints.qut.edu.au/131637/ (Hotel) and https://eprints.qut.edu.au/200143/ (Trading). Further, both parties

have again appealed these decisions.

The two appeals were by companies whose income is donated by gift aid (a scheme enabling registered charities to

reclaim tax on a donation made by a UK taxpayer, effectively increasing the amount of the donation) to New Lanark

Trust, the body responsible for managing the UNESCO World Heritage Site at New Lanark in Scotland. The two appeals

considered the same issue but had different facts. The Office of the Scottish Charity Regulator had refused to register

both companies as charities.

Hotels In New Lanark Hotels Ltd v Office of the Scottish Charity Regulator Ca 07/18, the appellant is a company limited by

shares incorporated in 1971 which operates a commercial enterprise within the New Lanark Village, a historical site on

the River Clyde. The appellant occupies buildings rented from the New Lanark Trust. Its principal activity is the operation

of a hotel, hostel, self-catering accommodation and associated activities including a conference centre, bar, restaurant,

wedding venue, leisure club, pool and beauty rooms. On appeal to the Upper Tribunal, the sole issue was whether the

appellant provided a public benefit. It decided that there was a public benefit. It took the view that accommodation at

the hotel was part of the experience of New Lanark as a whole. New Lanark is a ‘living’ site, presented as it was in past

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times, and staying at the hotel allowed that presentation to be complete for visitors, despite its attendant non-

charitable activities.

Trading In New Lanark Trading Ltd v Office of The Scottish Charity Regulator, New Lanark Trading is a company limited by shares

registered in 1970, operating as a large commercial enterprise. Its principal activity is the operation of a visitor

attraction with related trading activities, including hydro-electric power generation and textile production, a mill shop,

a cafe and ice cream production. Payment is required by visitors to the Visitor Centre’s exhibits, and its interpretation

of New Lanark, periodic exhibitions about New Lanark related themes, as well as external events and goods and services

sold from the cafe and shop. All parties agreed that its purposes were charitable, but did it provide a public benefit?

The ground of appeal to the Upper Tribunal was that the lower Tribunal had failed to provide proper, adequate and

intelligible reasons for its decision. The Upper Tribunal had the power to re-make the decision, rather than remit the

case back to the lower Tribunal, and further evidence was taken on the substantive issues. The additional findings of

fact were that the facility is offered to the public as ‘an inhabited, economically active settlement’ where its trading

facilities in the original mill buildings contributed to the objectives of maintaining the village as a living entity. The

provision of facilities for visitors was necessitated by the remote location of the village.

The Upper Tribunal was satisfied that the commercial business, such as the shop and ice cream production business,

contributed to the furtherance of New Lanark Trading’s charitable purpose. The ice cream shop included direct viewing

of the process of making ice cream providing a dual purpose of education and the promotion of agriculture. The Upper

Tribunal found that the statutory question is whether the organisation is providing public benefit and if it was, then it

was irrelevant that at the same time it raises funds intended to be applied either for its benefit or the benefit of another

charitable body.

Trustees In Samson Ochieng v The Charity Commission for England and Wales [2020] FTT the issue was whether a charity trustee

who had mismanaged a charity should be disqualified from being a trustee for any charities, and from holding any office

or employment with senior management functions in any or all charities for a period of eight years. The Tribunal found

that it had ample evidence of poor conduct in this case and that the appellant was unfit to hold a position as trustee of

a charity. This was underlined as a finding in that Mr Ochieng did not admit to any wrongdoing at any point of the

proceedings.

In the Burns Family Charitable Trust [2020] NZHC 615, the trustee sought clarification from the court as to the identity

of a charitable beneficiary and an accumulation of capital clause. A clerical mistake was apparently made in the trust

deed with the name of a UK charity instead of the New Zealand one. A further issue related to the fact that the trust

deed contained an accumulation of capital clause directing that, after payment of 80 per cent of the net income equally

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to the charitable beneficiaries, the trustees were to transfer the remaining 20 per cent of the net income to the capital

of the Trust Fund. The court noted that capitalisation of the income of a charitable trust is prohibited by that part of

the rule against perpetuities known as the rule against accumulations.

Winding Up The ‘Bread Institute’ proceedings involved at its heart an unsettled area of the law in Australia, New Zealand, Hong

Kong, Canada and the United Kingdom which will continue to perplex charity lawyers around the world until a case on

the issue is squarely decided by the courts. An anticipated final proceeding in the matter may be an opportunity for

some judicial comment.

Grain Technology Australia Limited & Ors v Rosewood Research Pty Ltd & Ors [2019] NSWSC 1111 is one of a series of

interlocutory proceedings in the main proceeding involving the former Bread Research Institute (now known as

‘Rosewood Research’). The main proceeding appears to involve the issues of:

- whether the terms of a corporation’s constitution can give rise to a charitable trust;

- whether a charitable corporation can convert from a public company limited by guarantee to a proprietary

company limited by shares with no objects but a for-profit shareholding; and

- whether a corporation with purportedly charitable objects is amenable to the court’s supervisory jurisdiction

exercised in respect of charities.

The grievances in the main proceeding were never fully litigated as a settlement was eventually reached between the

parties.

However, a hearing is still required at a future date to declare the claimed charitable trusts and for the approval of

schemes to fulfil their charitable purposes. The issues litigated in the several interlocutory proceedings concerned

matters relating to costs, directions to the court-appointed receiver and manager of the three defendant companies

and requests for judicial advice of the court.1 These issues are not reported in this summary note.

The aim of the plaintiffs’ application in this interlocutory proceeding was to prevent the sale of the assets, including the

Pilot Mill and research facilities, and thereby preserve the assets for the benefit of the grain foods industries to ensure

that the original educational and research purposes of the Bread Research Institute could continue to be realised. The

Court would not contemplate the destruction of an asset over which a charitable trust was claimed before its status

1 The case citations are: Rosewood Research Pty Limited [2014] NSWSC 449; Re Rosewood Research Pty Ltd (No.2)

[2014] NSWSC 1226; and Grain Technology Australia Ltd v Rosewood Research Pty Ltd (No 2) [2019] NSWSC 1744.

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was determined. The Court further considered that, given the caretaker role of the Receiver to preserve the assets

pending the resolution of the main proceeding, the sale of the property would be inappropriate.

Setting aside costs in the winding up of an incorporated association was an issue in John McInerney and Phillip

Campbell-Wilson in their capacity as liquidators of St Gregory’s Armenian School Inc v Michael Ghougassian & Anor

[2020] NSWSC 197. A school with only six pupils was ordered to be wound up, and the applicants had a series of

acrimonious dealings with the successive liquidators of the association. Costs in some instances were awarded against

the applicants. They did not pay the costs and the liquidators applied by notice of motion for the issue of a writ for the

levy of the property of each of the applicants. The Court found that there was no arguable claim to set aside the costs

order proceedings either on the ground that the order was made irregularly or against good faith.

Tax The Canadian brush with tax abusive schemes involving the charity sector stands as a warning about the how this

scourge can exponentially grow to infect giving cultures and revenue to the fisc.

Canada has been plagued by abusive tax schemes involving the gift deduction in recent years. The Canadian tax

authorities have been locked in litigation to halt the schemes. In Mariano v The Queen 2016 TCC 161, the Court ordered

costs of nearly $CA500,000 against the promoter, and some of its investors, in relation to the same charitable donation

scheme. Charitable receipts of just under $CA340m were recorded over a few years of the scheme, most of which found

its way to promoters. On 26 June 2019, the Ontario Superior Court of Justice certified a class action against the

promoters of the abusive tax program as well as their professional advisors who participated in developing, structuring

and promoting the charitable donation scheme which involved over 30,000 taxpayers claiming combined tax credits in

the hundreds of millions of dollars.

In Tudora v The Queen 2020 TCC 11, a Canadian taxpayer claimed a gift deduction concerning a tax abusive scheme.

He blamed the Canadian tax authorities for not warning him in a timely manner about the scheme. This was dismissed

by the court. The CRA asked the court to apply the principle of judicial comity, relying on its previous analysis of the

program in Mariano v The Queen 2015 TCC 244. The trial of that case took place over 25 days of legal argument

concerning primarily the same tax scheme. The judge decided that he did not need to resort to using the previous

decision in this matter and decided the matter on other issues.

Mergers It will be interesting to see how the court deals with the claimed power by a third party to an incorporated association

to force an association to merge with another, but this depends on further litigation in the matter.

Arabic Assemblies of God Inc v Land of Refuge Arabic Church in Melbourne Inc [2020] VSC 24 concerned an ex parte

freezing order in relation to a forced merger of incorporated associations. The two churches in this case had been

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previously connected with an unincorporated overseeing national body. The national body decided to exercise a

claimed oversight power in the associations’ constitutions to combine the two associations and wind up one

association. The application was refused as the purpose of a freezing order is to prevent the frustration of the court’s

process, not to provide security in respect of a prospective judgment or order.

Fundraising We can but say – ‘Only in America’!

Tang is a permanent resident of the United States who is a political activist and student leader of the Tiananmen Square

protests. He runs two pro-democracy organisations and an on-line media outlet which are funded by public donations

from workshops and fundraising events. In the case of Baiqiao Tang aka Tang Baiqiao, and Jing Geng v Wengui Guo

aka Miles Kwok aka Guo Wengui aka Ho Wan Kwok, and Golden Spring (New York) Ltd Tang requested the court to

restrain a Chinese multi-billionaire (Kwok) facing criminal charges in China, who was presently living in New York and

in the process of applying for asylum in the United States, from operating his own YouTube series providing China news

and commentary. It was alleged that Kwok targeted Tang's potential donors to drive them to his on-line offerings as

well as making defamatory statements about Tang. The court dismissed the claim as Tang failed to adequately allege

that Kwok's communications on YouTube, Twitter, and to individual donors were commercial speech because there

was no allegation that Kwok’s speech was economically motivated in that Kwok intended to profit from the actions.

A report of the Office of The Attorney General of the State of New York records a settlement with the PayPal Charitable

Giving Fund Inc. (PPGF) by multistate Attorneys General concerning inadequate disclosure (PPGF). PPGF is a charity that

receives charitable contributions from individuals using the world wide web and then makes grants to charities selected

by those individuals at no cost to the donor or the charity. Selected charities are vetted by PPGF before the distribution

occurs, and in some cases, the donor’s selected charity does not pass PPGF’s vetting requirements. When a selected

charity does not pass PPGF’s vetting requirements, PPGF redirects the charitable funds to a similar charity which has

passed PPGF’s vetting process.

The US State Attorneys General raised various concerns including timeliness of the transactions and ‘exercising its

variance power’ over the donors’ donation if the intended charities selected by the donors did not pass PPGF’s vetting

process. After investigation PPGF agreed to settle the matter by agreeing to many actions such as:

- altering their website so that it made unavoidable and prominent disclosures that the donors are making

donations to PPGF and not to the charity they select;

- making unavoidable and prominent disclosures regarding the expected time frame in which the grant to the

charity chosen by the donor will be made;

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- notify donors when PPGF exercises its variance power and redirects a donation to an organization other than

the one the donor selected; and

- paying $200,000.00 to the National Association of Attorneys General (NAAG), to be held and deposited in the

NAAG Charities Enforcement and Training Fund.

Meetings These cases provide some lessons for those conducting meetings, particularly if notice is provided by means of the

Internet.

Proceedings for a declaration that a club’s general meeting resolutions were invalid and an injunction restraining the

Club from taking any step to implement those resolutions were considered in Wykrota v Polish Club Ltd [2020] NSWSC

239. The club is a company limited by guarantee, and also a registered club under the Registered Clubs Act 1976 (NSW)

(the Act). The Act provides that a registered club must not dispose of ‘any core property’ unless the transaction has

been approved by a majority of votes cast at a general meeting of ordinary members. The members can also decide

that property is not ‘core property’. The Club held an extraordinary general meeting to consider two resolutions. One

resolution was to declare land as non-core property. The second was a special resolution to develop non-core property

of the Club, which was required by its constitution. The objection raised was that to declare a piece of the Club’s land

as non-core was ‘alienation’ contrary to the constitution. This was rejected as no interest in the property had been

parted with. Further there was an issue of whether ‘associate members’ under the Club’s constitution could vote and

the court found that they could as ordinary members.

Clarke v Australian Computer Society Incorporated [2019] FCA 2175 involved a member challenge to the validity of a

general meeting and special resolution for an incorporated association to convert into a company limited by guarantee.

The special resolution passed by only one vote and the court looked closely at a range of alleged defects such as

compliance with the constitution, inadequate notice, whether documents could be served by a hyperlink in a member’s

email, proxy validity and whether the meeting chair acted not only in good faith, but also reasonably and for the

purposes for which the powers were conferred. A breach of section 18 of the Australian Consumer Law was also

discussed, being that an explanatory memorandum provided to members conveyed a misleading impression of the

effect of the special resolution. The case contains a full discussion of the case law and is worth a close read by those

involved in arranging meetings of nonprofit associations and companies.

Unincorporated Associations While many nonprofit organisation have moved to an incorporated status, unincorporated associations still exist for

various good reasons and bump into the legal deficit of the law not recognising them as legal persons. These three cases

are illustrations of the issues that arise from their status in law.

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Whether an unincorporated association has the capacity to bring legal proceedings was considered in Aireborough

Neighbourhood Development Forum v Leeds City Council [2020] EWHC 45 (Admin). The Forum wished to challenge a

development plan made by the Council characterised as a statutory challenge, rather than a judicial review. The court

decided that the critical question in judicial review or statutory challenge is whether the claimant is a person aggrieved

or has standing to challenge, which is not a test of legal capacity but rather one of sufficient interest in the decision not

to be a mere busybody.

In Canada, a land ownership dispute between a scout branch (an unincorporated association) and its national

association about whether a campsite was held in a trust was the issue in Tillsonburg Scout Association v. Scouts

Canada 2020 ONSC 747. The issues in dispute touched upon a number of historical transactions and communications

that occurred approximately sixty years ago and which evolved over the next 23 years. Most of the individuals with

direct knowledge of the matters in issue were no longer available to give evidence. A related corporation that held the

title of all scout property in the province was found to be the owner after a consideration of a complex web of

transactions.

In Rabl v Roman Catholic Trusts Corporation for the Diocese of Sale [2020] VSC 71 the plaintiff filed a writ claiming

personal injury naming the Roman Catholic Trusts Corporation for the Diocese of Sale (the Corporation) as the

defendant pursuant to the Legal Identity of Defendants (Organisational Child Abuse) Act 2018 (Vic) (the Act). It later

became clear to the court that the plaintiff intended to claim against the Diocese, and not the Corporation, and to name

the latter as a proper defendant pursuant to the Act to incur liability arising from that claim. As the Corporation later

consented to being nominated as the proper defendant in accordance with s 7 of the Act, the court found that the

Corporation should remain named as the defendant.

Foundations This is an important decision for community foundations in Canada as to the nature of gifts to what Australians would

refer to as sub-funds. It is an issue that arises from time to time in Australia, where donors would like to retrieve the

capital from a community foundation.

The Canadian case of Doukhobor Heritage Retreat Society #1999 v Vancouver Foundation 2020 BCCA 80 is an appeal

from Doukhobor Heritage Retreat Society #1999 v Vancouver Foundation 2019 BCSC 54 where a community foundation

was ordered by the court to return funds to a charity. The capital had been donated to be ‘held permanently by the

Vancouver Foundation and invested in accordance with the provisions of the Vancouver Foundation Act’. The income

was to be disbursed each year for a youth camp but was not sufficient for the purpose. The appeal court concluded

that the foundation did need to follow the charity’s direction to return the capital of the Fund. The fund terms did not

reserve to the donor such rights, and the statutory provision did not apply to a completed gift.

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Volunteers Guilbert v Glenworth Valley Horse Riding Pty Ltd [2020] NSWWCCPD 10 was an appeal in a worker’s compensation

case, which involved the definition of a volunteer and worker. The Commissioner found that horse rides and lessons

comprised part of the usual activities of a volunteer and not a consideration to form a binding contract of employment.

The Deputy President made a useful summary of the legal principles in this area (at [64-70]), including cases such as

Teen Ranch Pty Ltd v Brown (1995) 11 NSWCCR 197, Rogers v Booth [1937] 2 All ER 761, Ermogenous v Greek Orthodox

Community of SA Inc [2002] HCA 8; 209 CLR 95 and Birkett v Tubbo Estate Co Pty Ltd (1997) 14 NSWCCR 369. Parts of

the volunteer agreement are included in the judgement.

Bequests and Cy-près A series of bequest cases this quarter illustrate the problems that can arise for charities that are named as recipients of

testamentary property. The issue of bequests left to organisations that have since merged with other organisations will

probably grow in the future given increasing merger activity.

A bequest to an incorporated association that had had its registration cancelled by the Queensland Office of Fair Trading

(OFT) was discussed in Re Graham (Deceased) [2020] QSC 27. A bequest left the residue of an estate to be equally be

divided between two charities for their general purposes. One charity existed at the time of the death, but ceased to

exist afterwards because its registration was cancelled by the OFT (it was not wound up). The court found this to be a

supervening impossibility (Re Tyrie (deceased) (No 1) [1972] VR 168) and the gift could be applied cy-près. Claims that

another organisation was the successor institution were not accepted by the court because of the OFT deregistration.

The deceased and her husband Maxwell were the owners of a successful cosmetics company (Natio) and the estate

was worth over $16m. The residue of the estate was to be paid to two charities. Markin v Animals Australia Federation

& Anor [2020] VSC 113 was an action brought by the executor as to whether dividends paid on shares were part of a

specific legacy in the will or part of the residuary of the estate. The court found that Markin, in his capacity as the

deceased’s personal legal representative, was the only person authorised to deal with her shareholding. Further, there

was an established principle that, in the absence of an express direction otherwise, income (in this case the dividend)

passed to a specific legatee or devisee from the date of death.

In The Corporation of The Trustees of The Roman Catholic Queensland Regional Seminary v Attorney-General For The

State Of Queensland & Anor [2020] QSC 67, a trust for Roman Catholic Seminaries entered into an understanding with

a Catholic university for better use of part of the land under a previous court order. A variation was required to the

best use of the site as a seminary and university.

The case of Sheppard v The Uniting Church In Australia Property Trust (Victoria) [2020] VSC 12 involved a $1.47m

charitable trust established by a will of which The Uniting Church in Australia Property Trust (Victoria) was the trustee.

Ms Sheppard alleged misuse of the trust funds claiming damages, indemnity costs, and an order for the replacement

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of the trustee, suing in a representative capacity pursuant to Part 4A of the Supreme Court Act 1986 (Vic) for the

beneficiaries of the Trust. As a charitable trust has no beneficiaries, she had no standing. The correct course was to look

to the Attorney General to address the issues, and the matter was dismissed with costs.

In Crisp v Australian Rotary Health Research Fund [2019] WASC 486 a will with a charitable bequest signed by the

deceased but witnessed by only one witness was considered. The court applied a legislative provision that a document

may constitute a will, even though it was not executed as required, if the court is satisfied that it purports to embody

a deceased person's testamentary intentions and that the person intended the document to constitute his or her will.

In Estate of Kamo [2020] NZHC 474 concerned a will which contained a clause creating a trust to last forever and so

offended the rule against perpetuities unless it was a charitable trust. The trust was for an educational scholarship to

a class of family members and this was not a sufficient section of the community to satisfy the public benefit test, and

hence was not charitable. The court applied a statutory remedy to alter the provisions.

Internal Disputes Judicial considerations of internal disputes continue to occupy the cases that find their way to court, and many now

include disputes as to how costs of the litigation should be shared.

Faamate & Ors v Congregational Christian Church in Samoa-Australia (Ipswich Congregation) & Ors [2020] QCA 87

concerned whether an incorporated association, which was also a functioning church, should be wound up on the just

and equitable ground. It was an appeal from Faamate & Ors v Congregational Christian Church in Samoa-Australia

(Ipswich Congregation) ABN 90 103 392 182 & Ors [2019] QSC 194. The appellants formed a separate group within the

congregation (the Remainder Group) because they did not approve of the actions of the pastor, Mr Reupena, in trying

to sever ties with the mother church in Samoa. Those approving of the pastor’s actions (the Reupena Group) were in

the majority. The appellants appealed this decision, challenging the finding that particular conduct of which they

complained was not oppressive to them as a minority, or was not conduct which would otherwise favour the winding

up of the Association. Their contentions were that the admission of new members was improperly validated, and the

appointment of receivers and managers was not sufficient redress. They also questioned the trial judge’s approach to

the expenditure of Association funds on the defence of the issues. The court found that the history of non-compliance,

management style of the pastor, and that the association was still functioning were not reasons for a winding-up order.

Brown v Kirkpatrick [2020] SASC 5 was a defamation dispute between two office bearers of separate gun clubs that

shared facilities. The clubs entered into an agreement about their shared facilities and responsibilities. Over time,

several disputes and persistent irritations emerged which were brought to a head by a proposal to alter the facilities.

Brown and Kirkpatrick exchanged emails, which were copied to others, about access to a security box which held a copy

of the agreement. Both claimed they had been defamed by each other in the exchanges. Most of the defamatory

content concerned the honesty, behaviour and trustworthiness of the email senders. The court was satisfied that the

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defence of qualified privilege applied. The sender was genuinely defending his own character by way of a reply to an

attack on it, and some of the recipients of the email had a proper interest in receiving the email. However, the sender

stepped outside the privileged occasion by sending his email (and others) to a much larger group of recipients. Thus,

the defence was lost.

In Vincent Jacob Middeldorp v Avondale Jockey Club Inc [2020] NZCA 13 a committee member of a financially challenged

NZ horse racing club sought review of the decision to suspend him as a committee member, declining membership

applications and declaration that the committee met without a quorum. The suspension was unlawful as there was no

power in the rules to suspend committee members, nor could it be implied. However, terms could be implied to allow

committee operation without a quorum. The membership applications were not rejected for an improper purpose. The

Incorporated Societies Act 1908 (NZ) is currently undergoing reform consultations:

https://www.mbie.govt.nz/business-and-employment/business/regulating-entities/incorporated-societies-act-

review/ .

An v Joo [2020] NSWSC 377 concerned a dispute over costs arising from An v Joo [2019] NSWSC 39 involving church

management to which there was no litigated outcome. The court decided that the costs should not be paid by the

newly incorporated church company or the church, which giving specific reasons for its decision. The sums were

substantial. On an indemnity basis Mr An was likely to recover $306,994.76, and on the ordinary basis, he was likely to

recover $247,430.64.

Another costs case following an internal dispute was Imam Ali Islamic Centre V Imam Ali Islamic Centre Inc (No

2) [2020] VSC 136. It arose from Imam Ali Islamic Centre v Imam Ali Islamic Centre Inc [2018] VSC 413. Imam Ali Islamic

Centre (IAIC Canada) claimed that IAIC Australia held property on trust for its benefit. After consideration of the method

of funding of the Centre’s property, the Court declared the existence of a constructive trust to the benefit of IAIC

Canada. Further, there was a disagreement about membership between factions within IAIC Australia. The court

determined that the first proceeding’s costs should be awarded to the Canadian body, and in the membership dispute

found some members had only an informal interest in the disputed property which were an insufficient interest for

costs.

The proceeding In The Matter of AHEPA NSW Incorporated [2020] NSWSC 138 followed on from In the Matter of Order

of AHEPA NSW Inc. [2019] NSWSC 1329 and concerned the proper assessment of costs in actions associated with a

winding up application which was not pursued. In declining to make an order for costs in this proceeding, the court

pointed to the unreasonableness of both parties in exacerbating the situation.

The case of Moala v Free Wesleyan Church Of Tonga In Australia (Victoria) Inc (No 4) [2020] VSC 50 was a continuation

of the litigation in Moala v Free Wesleyan Church Of Tonga In Australia (Victoria) Inc (No 3) [2019] VSC 831, being part

series of cases about church membership, the validity of a meeting and a dispute over church property in the Tongan

13

community. In this proceeding, the court refused to deal with the membership issues, which required a separate

hearing because of their complexity, but did make property orders. The judge made the observation that: ‘At the end

of any long dispute there needs to be a period in which the parties can attempt to reconcile, in this case, at least to the

extent necessary to enable the Church to operate for the good of all its members’. Moala v Free Wesleyan Church of

Tonga in Australia (Victoria) Inc (No 5) [2020] VSC 134 was a further continuation of this litigation and involved a claim

that the committee member had been convicted of embezzlement 20 years ago in Tonga, and thus he was not eligible

to be a committee member of the Association. The court found that the disqualification rule only applies to a committee

member as a result of their conduct or condition while holding office.

In the Canadian case of Aga v Ethiopian Orthodox Tewahedo Church of Canada, 2020 ONCA 10 church members were

expelled and sought the court’s assistance to appeal the decision. Five former members of the congregation were

expelled but given no particulars of the allegations against them, no opportunity to respond to the allegations, and no

opportunity to make representations. The judge at first instance decided that there was no underlying contract of the

association and its members and thus no justiciable issue that internal church procedures were not followed. On appeal,

it was found that the appellants applied by completing membership forms to be members of the Congregation and

offered consideration in the form of monthly payments. Because of these payments, the court found that the appellants

were not simply adherents of the faith. They entered into a mutual agreement to be part of the Congregation and abide

by the governing rules, whether or not they were specifically aware of the terms.

Another case about the jurisdiction of the Western Australian State Administrative Tribunal to hear internal disputes

in incorporated associations was Smajic v Bosnian Islamic Society Perth (WA) Inc. [2020] WASAT 36. The case follows

Green and Port Hedland Pony Club Inc. [2019] WASAT 16; Kavanagh and Pine Valley Pistol Club Incorporated

[2020] WASAT 11; Kelmscott Senior Football Club (Inc) and Western Australian Amateur Football League (Inc)

[2018] WASAT 6. As the process for dispute resolution set out in the model rules of the association was not initiated or

followed, the Tribunal found it did not have jurisdiction to hear the dispute.

Bains v. Khalsa Diwan Society of Abbotsford 2020 BCSC 181 is a Canadian case involving a religious society in dispute

with expelled and excluded members. The court found that procedural fairness and proper process had not been abided

by in the Society’s processes. The decision made use of a video of the disputed meeting and also made comments about

the levels of procedural fairness depending upon consequences, type of society and membership role.

NDIS Whether the NDIA and its local area coordinator have immunity in respect of the Discrimination Act 1991 (ACT) and the

Human Rights Commission Act 2005 (ACT) was considered by the court in National Disability Insurance Agency v

Attorney-General for the Australian Capital Territory [2020] ACTSC 52. A participant of the NDIS complained to the ACT

Human Rights Commission alleging unlawful discrimination and inequitable treatment by the NDIS and its planners.

The HRC referred the complaint to the ACT Civil and Administrative Tribunal.

14

The NDIA and its planner raised as a preliminary issue that the Tribunal lacked jurisdiction in the matter because the

Discrimination Act 1991, Human Rights Commission Act 2005 and ACT Civil and Administrative Tribunal Act 2008 do not

bind the NDIA or its planner. The matter was then referred to the ACT Supreme Court. The court found that the NDIA

was established only by Commonwealth legislation and its functions and powers were conferred by that legislation. It

was created to administer a national scheme, thereby serving a Commonwealth government purpose, and was thus

conferred an immunity from the Acts.

In XXWC by his mother and National Disability Insurance Agency [2020] AATA 923 the Tribunal considered an alternative

cheaper intervention inappropriate for a participant who was a minor with Autism Spectrum Disorder using the Early

Start Denver Model. The Tribunal had to choose between two fairly equal courses of care, but different in cost. It

preferred the more expensive one over the other as in the particular circumstances XXWC had already been receiving

the course of care for at least a year.

Read more notable cases in The Australian Nonprofit Sector Legal and Accounting Almanac series.

Author: McGregor-Lowndes, Myles; Hannah, Frances.

Email: acpns@qut.edu.au

Date of creation: June 2020

Disclaimer: The material included in this document is produced by QUT’s Australian Centre for Philanthropy and

Nonprofit Studies (ACPNS) with contribution from some authors outside QUT. It is designed and intended to provide

general information in summary form for general informational purposes only. The material may not apply to all

jurisdictions. The contents do not constitute legal advice, are not intended to be a substitute for legal advice and

should not be relied upon as such. You should seek legal advice or other professional advice in relation to any

particular matters you or your organisation may have.

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BY-NC-ND 4.0).