The first question: whether Word was a "charitable institution"
4 The primary judge approached the question as to whether Word was a "charitable institution" within the meaning of item 1.1 of the table in s 50-5 by examining the motive or purpose of Word in the use of the funds at its disposal from the carrying on of its activities. At [37] of his reasons, the primary judge said that "the true question to be asked is the purpose of the making of the profit. If the purpose is commercial then the exclusive purpose of the organisation is not charitable: if the purpose is selfless then it may be". See also [52] of his Honour's reasons, where he said, "whether an organisation is charitable depends in large part on the motivation of the organisation - it is a question about the mental state of the organisation…"
5 So, in determining Word's purposes (and whether they were charitable) the question was what Word understood and intended was being done with the funds it made by the profitable activities that it undertook. The primary judge was in no doubt as to the answer to that question: Word understood and intended that the funds it raised would be given to other entities for religious (and charitable) purposes.
6 The primary judge found legal error in the approach of the Tribunal in analysing the funeral business activities of Word as inherently commercial. This he said was an incorrect focus on the manner of raising money, when the correct question was the purposes of raising money. If the purpose was charitable, the manner (that is the activity) was irrelevant.
7 The first significant question is whether this approach of the primary judge is correct.
8 There was no dispute that the word "charitable" in the 1997 Act bore its technical legal meaning: Income Tax Special Purpose Commissioners v Pemsel [1891] AC 531 and Central Bayside General Practice Association Ltd v Commissioner of State Revenue (2006) 228 CLR 168 at 178-179 [18]. Nor was there any dispute that the advancement of religion is a charitable purpose. Nor was there any dispute that Word was an institution.
9 The debate concerned whether Word was a charitable institution.
10 The not unimportant point raised in debate on appeal is whether or not a company, having an avowedly charitable purpose in the disposition of all its profits, is to be denied the character of a charitable institution because of the activities by which it gains its profit do not, of themselves, bear the character of charity.
11 There are a number of authorities to guide one to the answer to these questions. Principal among these is the Royal Australasian College of Surgeons v The Federal Commissioner of Taxation (1943) 68 CLR 436 (The "Surgeons' Case"). As the careful analysis of the various judgments in the Surgeons' Case by Lockhart J in Cronulla Sutherland Leagues Club Limited v Commissioner of Taxation (1990) 23 FCR 82 at 90-93 shows, the question as to the true character or nature of the entity is to be assessed having regard to its objects, purposes and activities. See also Beaumont J and Foster J in Cronulla Sutherland Leagues Club at 117 and 123, respectively; and to the same effect by the Full Court in Commissioner for the Australian Capital Territory Revenue Collections v Council of the Dominican Sisters of Australia (1991) 101 ALR 417 at 422-24.
12 To thus state the principle does not, however, lead to the conclusion that an entity, whose activities were all non-charitable in the sense that the activities in their nature did not bespeak activities recognised by the Statute of Elizabeth, is not a charitable entity. That conclusion would only be reached by applying another proposition, to the effect that an institution can only be charitable if its activities were of a kind that were to be found in the terms and spirit of the Statute of Elizabeth and Pemsel's Case [1981] AC 553. That is, if the notion of charitable purposes is confined to activities which of themselves contain the relevant legal public benefit within the legal concept of charity.
13 This latter proposition does not emerge from the Surgeon's Case. Nor does it emerge from any binding High Court authority or any persuasive authority.
14 The relevant task, as stated in the Surgeons' Case, is to assess the true character or nature of the entity by reference to its objects, purposes and activities. It is an integrated, holistic enquiry directed to whether a body of facts and circumstances satisfies a legal category or conception.
15 In examining the authorities, one must pay precise attention to the terms of the statute concerned and the precise nature of the enquiry being engaged in. Sometimes, the words "purposes" and "activities" are used almost interchangeably. This is due, sometimes, to the form and limits of the relevant question. For example, some of the cases concern rating statutes that employ the word "use", such as in rating cases which turn on the user of land. Such an inquiry inevitably focuses on an analysis of activity.
16 The submission of the Commissioner was that a charitable institution could conduct so-called commercial activities, but only as incidental or ancillary to the entity's charitable activities. Thus, it was said, the passive holding of investments to produce income for putting a charitable purpose into effect might be permissible. So, also, it was said that the making of a profit from charitable activity might be permissible. What was impermissible, however, was the conduct of so-called commercial activities which in their nature and of their character could not be said to be activities legally charitable.
17 This submission was said to flow from Scottish Burial Reform and Cremation Society, Ltd v Glasgow City Corporation [1968] AC 138; The Incorporated Council of Law Reporting of the State of Queensland v Commissioner of Taxation (1971) 125 CLR 659; Salvation Army (Victoria) Property Trust v Shire of Fern Tree Gully (1952) 85 CLR 159; Roman Catholic Archbishop of Melbourne v Lawlor (1934) 51 CLR 1; In re Smith (Deceased) [1954] 1 SASR 151; and Glebe Administration Board v Commissioner of Pay-Roll Tax (1987) 10 NSWLR 352.
18 These cases do not support the submission sought to be derived from them by the Commissioner. The Scottish Burial Case and the ICLR of Queensland Case both stand as authority for the proposition that the making of a profit from the conduct of the charitable activity does not necessarily destroy the charitable nature of the purpose exhibited by the activity. As Lord Wilberforce said in the Scottish Burial Case [1968] AC at 156:
In my opinion, the fact that cremation is provided for a fee rather than gratuitously does not affect the charitable character of the company's activity, for that does not consist in the fact of providing financial relief but in the provision of services.
The terms of the Glasgow rating exemption were that the land be occupied by a charity and wholly used for charitable purposes.
19 In the ICLR of Queensland Case, the memorandum and articles of association made the production of law reports the Council's sole purpose. Thus the memorandum made the characterisation of the activity the essential question.
20 Neither case addressed the present problem.
21 In Salvation Army v Shire of Fern Tree Gully 85 CLR 159, the Court was concerned with a rating exemption as to "land used exclusively for - charitable purposes". Thus, the inquiry was not as to the character of an entity, but as to the character of the purposes for which land was used. The focus by the Court on the purposes, in the sense of activities, can be seen in that context. The land in question was used for the conduct of a training farm for delinquent boys and for homes for difficult, wayward or underprivileged boys. Pigs and cattle were raised, fruit and flowers were grown and a herd of cows kept and milked. The produce thus won was used in the maintenance of the institution and feeding of the boys, with the surplus sold. The sums thereby produced went to defraying the costs of conducting the farm and the homes, which were, overall, conducted at a loss. The magistrate found that the sole object of the institution in carrying on the various activities was to achieve the charitable purpose of educating the boys in these activities. Dixon, Williams and Webb JJ said (at 172) that the use of the land did not cease to be exclusively for charitable purposes merely because the charitable purpose (in the activity) produces a profitable by-product as a mere incident of that use. At 173 their Honours also indicated that the making of a charge for a charitable activity (such as the provision of beds for the needy) did not necessarily destroy the charitable character of the activity. McTiernan J (at 178-79) dealt with the matter similarly; as did Fullagar J (at 186-87).
22 Though not relied on by the Commissioner, Nunawading Shire v Adult Deaf and Dumb Society of Victoria (1921) 29 CLR 98 needs to be explained. It was referred to, and distinguished by, the Court in Salavation Army v Shire of Fern Tree Gully. Nunawading was also a rating case in which the relevant provision concerned itself with the use of the land being exclusively for charitable purposes. Land held by the Society was used to grow flowers as a method of training and instructing the deaf and dumb. The flowers were sold at a profit. The public was also permitted to use the grounds for a fee as a recreational area. The proceeds of the flower selling and the recreational use were put towards the upkeep of the institution. The Court focused (see in particular at 108) on the activities undertaken. That can be seen as a consequence of the terms of the provision in question. The case also was decided before Chesterman v Federal Commissioner of Taxation (1923) 32 CLR 362 and [1926] AC 128. In Salvation Army v Shire of Fern Tree Gully this was the basis for distinguishing the case.
23 In Roman Catholic Archbishop of Melbourne v Lawlor (1934) 51 CLR 1 the testamentary gift was of certain shares and one half the residuary estate to the Archbishop of Melbourne and various Bishops "to establish a Catholic daily newspaper". The issue was not how Catholic daily newspapers hitherto could be characterised by their activity, but what the gift permitted to be done. Since not all religious purposes were charitable, a newspaper conducted as a vehicle for aiding in the advancement of the Roman Catholic faith could not be contained within the legal concept of charity (Rich J at 23). Likewise, Starke J at 25-6 said that the objects of a Catholic newspaper could not be confined to charitable purposes - given the wide latitude of advancing the views of the Roman Catholic Church. Dixon J at 30 ff discussed the notion of purpose. His discussion makes clear that to be a purpose that can be said to be charitable the purpose in the sense of "activity or pursuit" (32) must have the requisite character (here religion):
In order to be charitable the purposes themselves must be religious; it is not enough that an activity or pursuit in itself secular is actuated or inspired by a religious motive or injunction: the purpose must involve the spread or strengthening of spiritual teaching within a wide sense, the maintenance of the doctrines upon which it rests, the observances that promote and manifest it….
The conduct of a Catholic newspaper was only conducive to religion and not confined to charitable purposes in the legal sense. An example that would clearly fall within the activity was the dissemination of political views conducive to the religion: see esp 33-36.
24 Because the gift was for the conduct of an activity (the establishment of a Catholic newspaper), the question before the Court was whether a gift for the purpose of carrying on that activity was necessarily a charitable purpose. To answer this the Court examined the limits of the permission and whether all that could fall within that permission were activities that could be characterised as charitable. The question before the Court was thus one which directed attention to the need to the permission for the relevant activity (the conduct of a Catholic daily newspaper) to be confined by the legal notion of charity. It was not. The gift failed. The case is not authority for the proposition that an entity carrying on so-called commercial activities and constrained by the requirement to employ the profits for charitable purposes or ends is not a charitable institution.
25 In re Smith [1954] SASR 151 concerned a 1914 will with a residuary gift to the Sydney Sanitarium and Benevolent Association Limited (the "Company") to be used for the purposes, works and objects of the branch thereof at Adelaide. The Company had been established by the Seventh Day Adventist Church. The memorandum of association of the Company included objects which of their character were charitable - such as the establishment of hospitals and sanitariums, and objects which of their character were not charitable - such as the manufacture and sale of health foods and health appliances. The memorandum of association stated that no dividends were to be paid to members and all profits were to be applied to the extension of the objects of the Company. The Company was dissolved in NSW in 1938, having been removed from the South Australian Register as a foreign company in 1934. A second company, the Australian Conference Association Limited ("ACA"), was formed in 1909 with similar objects. In 1918, the Company transferred its sanitarium and a business for the manufacture and sale of vegetarian foods in New South Wales, and its sanitarium in South Australia to ACA. ACA sold the South Australian sanitarium in 1920 and from then on its principal activity in South Australia was to conduct a shop and factory for the manufacture and sale of vegetarian goods.
26 The ratio of the decision was that the gift failed, the Company having ceased to exist. There was, therefore, an intestacy as to the residuary. Obiter, Ligertwood J said that even if the gift of residuary could be construed as one for defined purposes, being those contained in the memorandum, it could not be treated as a good charitable gift because some of the purposes there identified were commercial and non-charitable.
27 There was no doubt that the motive behind the establishment of the health food company was religious (vegetarianism being a tenet of Seventh Day Adventism). There was no doubt that the profits were, in fact, used exclusively in aid of the teachings, activities and purposes of a religious kind. But the purposes (if it be seen to be a gift for purposes) included all the purposes - the charitable purposes (building hospitals and sanatoriums) and the non-charitable purposes (manufacturing and selling health foods). The memorandum did not restrict the use of the profits to the charitable purposes. Ligertwood J saw the governing instrument as permitting activities (that is, purposes) wider than those which were capable of being characterised as charitable. He saw a direct application of Lawlor's Case.
28 In re Smith and Lawlor's Case do not answer the question as to whether an entity can be characterised as charitable if it is permitted to carry on (and does carry on) activities that do not bear a charitable character from their nature, but which permission is limited by an exclusive purpose, in the sense of aim or object, of making a profit solely for an avowed charitable purpose, in the sense of an activity that does bear a charitable character from its nature. The alternative construction of the gift in In re Smith was for purposes, in the sense of activities, that were both charitable and non-charitable, with the proceeds being required only to go to fund the same mixed group of activities.
29 The Glebe Administration Board Case 10 NSWLR 352 concerned the question whether the Board which managed and controlled certain commercial properties owned by the Church of England was a "religious institution". By majority, the New South Wales Court of Appeal said that it was not. Priestley JA (with whom McHugh JA agreed), after a detailed examination of the instruments creating the Board and the activities of the Board, said the following at 365:
One matter which this argument does not sufficiently take into account, in my opinion, is that the Board in holding church property was endowed with non-religious managerial powers so that it cannot be said that the property was appropriated to entirely religious purposes. The property was to a substantial extent appropriated to commercial purposes, the net profit from which was to be available for religious purposes. I do not think that McAdam's case helps the Board's argument on the first question.
The situation also seems to me to be different in kind from the sort of case dealt with by Else-Mitchell J in McGarvie Smith Institute v Campbelltown Municipal Council (1965) 83 WN (Pt 1) (NSW) 191; 11 LGRA 321, where he held that the conduct of trade by a charitable trust does not derogate from its charitable character because any gain from the trading operations had to be used to further the purposes of the trust. The kind of case he was then dealing with was one where it was the charitable activity itself which involved an incidental aspect of money-making. In the case now before the Court the religious and trading activities were fully separated in point of legal operation.
Conclusion on first question:
In my opinion the Board was not at any relevant time a religious institution. It was a statutory corporation doing commercial work within limitations fixed by reference to religious principles. It was staffed by persons who wished to observe the religious principles giving rise to the limitations on the Board's commercial activities. The property in its ownership both increased in value and gave rise to revenue. Capital was held for the benefit of a religious institution and large amounts of revenue were handed over to that institution. To my mind all these matters result in it being accurate to describe the Board as a legal entity working in a commercial area, guiding its commercial conduct by the principles of a religious institution and, in ordinary language, working for that religious institution. I do not think that this legal entity can either by an ordinary or a technical use of language be accurately called a religious institution.
30 It is possible to see this as a conclusion, using the approach in the Surgeons' Case, that the independent commercial operation of the Board was such that it could not be characterised as religious. It may also be possible to extract from his Honour's approach a proposition that an institution cannot be religious if its activities bear a non-religious character irrespective of the destination of the funds produced. On balance, I think the former is what the Court decided. First that is what Priestley JA said. Secondly, the Board's purpose can be seen as entirely commercial - not to make profits for religious purposes, but to manage, commercially, the Church's property. The distinction is fine, but real. The following passage at 370-71, dealing with the payment of wages, perhaps exemplifies the distinction:
… The result is that among the purposes to which the Board had to devote its receipts was the purpose of paying the wages of employees working in an ordinary area of commerce. The fact that in working in that area the Board guided its commercial conduct by the principles of the Church and that the whole of the net revenue from its activities was available for the charitable purposes of the Church does not seem to me to make the purpose of the payment of those employees a charitable purpose. To put it slightly differently, the Board in carrying out the duties it was obliged to carry out pursuant to cl 13 of the ordinance was not carrying out solely public charitable purposes but was lawfully using trust property in commerce for revenue earning purposes, some of the net proceeds of which were used and all of which were available to be used (if the Standing Committee so decided) by the Church for public charitable purposes.
31 I also agree with the comments of Jessup J as to the lack of dispositive effect of the Glebe Administration Board Case to the arguments here.
32 To the contrary of the Commissioner's proposition that the predominance of non-charitable activities by an entity deny the possibility of its characterisation as a charitable institution, there is authority to the effect that a company that is incorporated for the object of charitable purposes that conducts activities of a so-called commercial (or relevantly non-inherently charitable kind) for the clear and exclusive purpose (as here) of raising funds to deploy in ways that are charitable is or can be characterised as a charitable institution.
33 In Christian Enterprises Ltd v Commissioner of Land Tax (1968) 72 SR (NSW) 90 the New South Wales Court of Appeal was concerned with whether the company in question was a "religious society" or a "charitable institution" for land tax purposes. For reasons that it is unnecessary to discuss here the company was held by the majority (Walsh JA and Asprey JA, Wallace P dissenting on this issue) not to be an institution, and so the company could not be a charitable institution.
34 The Court did, however, examine the purpose and activities of the company in order to assess whether it could be characterised as a religious society. The company's primary objects were (variously expressed) to raise funds to spread the Gospel and to spread the Gospel. Another clause (cl 3), expressed to be for the purposes only of carrying these out, gave additional powers and objects to carry on a wide variety of trades and business. Another clause (cl 7) directed that the income and property be applied solely towards promotion of the objects. Subject to paying wages and the like, no portion could be transferred to members. The company received moneys interest free and invested them at a profit. Later, six blocks of land were bought, developed and sold for the purpose of making a profit to be used for the primary objective. Also, the company received rent for the premises it occupied. The members were in the building industry, contractors and tradesmen. On the evidence, it was clear that the members were not using the company as a device for their own benefit. Walsh JA at 103 expressed the view that having regard to the provisions of the objects clause and the evidence, all that was done was for the purposes of carrying out the religious objects in the memorandum. He said "[f]or that purpose, [that is the religious objects in the memorandum], but not otherwise, it may undertake commercial ventures of many kinds. But… this does not provide a reason for refusing to describe it as a religious society."
35 The activity of the company was simple: it held land worth Ł10,195; sums totalling Ł26,000 had been lent to a finance company to earn interest; sums totalling Ł39,000 were owed by the company (having been lent by sympathetic persons and on which no interest was paid); in the 1962 year of income Ł3,270 and Ł6,100 was received as interest and rent, respectively; and in the same year the company paid out Ł4,598 in ten separate donations to persons or bodies in evangelical work. The following year's accounts revealed that the land had been sold at a profit, loans to and by the company had increased and Ł3,660 in donations to evangelical bodies were made. The activities of the company (apart from the donations) were all commercial in character. They were, however, undertaken for the purpose of making a profit to give to bodies to spread the Gospel, as the company's objects provided for. Walsh JA characterised the company as a religious society. Asprey JA agreed with Walsh JA. Leaving to one side their Honour's views that the company was not an institution, this approach to the characterisation of the company as a "religious society" would have been equally applicable to the question whether the company could be characterised as a charitable institution (if it were an institution).
36 Wallace P disagreed with Walsh JA and Asprey JA about "institution". He came to the conclusion that the company could be characterised as a charitable institution saying the following at 72 SR at 94:
Under modern conditions it is sometimes not practicable for a substantial charitable institution to conduct its activities on a permanent basis without incorporation and without having the wide powers which almost of necessity go with incorporation and the acquisition and distribution of money for the purpose of carrying out the charitable object. This is the way I would view the constitution of the appellant institution, and I do not think in a relevant sense it is carried on for "pecuniary profit", which is a phrase primarily intended to apply to the shareholders or proprietors of the institution. All its net income of necessity goes to charity, and there is nothing in the evidence to establish or suggest that the outgoings are excessive or that there was any sham or deception about the company or its activities.
37 It was necessary for the Court to distinguish Theosophical Foundation Pty Limited v Commissioner of Land Tax (1966) 67 SR (NSW) 70. The Court of Appeal there had overturned Wallace J (as his Honour then was). Importantly, the company there had only two members, both corporate. This was held not to be a "religious society". It was said that one could not lift the corporate veil to characterise it by reference to those involved in the two corporations. The difficulty was, however, that passages in the judgments, especially of Herron CJ, placed weight on the commercial activities of company: see in particular the discussion by Walsh JA in Christian Enterprises at 100-102. The conclusion of the Court of Appeal in Theosophical Foundation was principally a factual one and heavily influenced by the corporate state of its two members. The company, as an individual corporate entity, was incorporated to buy and manage a city property and its association with existing religious bodies, including having as its first object the pursuit of the national society's objects and including the probability that proceeds from the company's activities would be channelled into other religious group members, was inadequate upon which to conclude that the company was a religious society.
38 The later Court of Appeal decision of Christian Enterprises is authority for the proposition that a body which conducts only commercial activity and directs the profits from same by donation solely in accordance with the charitable objects of the body is capable thereby of being characterised as a "religious society". That reasoning is equally applicable to addressing the issue whether a body (if an institution) is a "charitable institution". The earlier decision, Theosophical Foundation 67 SR (NSW) 70, is authority for the proposition that mere association with religious bodies is an inadequate basis upon which to characterise the entity as a religious or charitable institution: see 67 SR (NSW) at 78 and 84. That proposition can be accepted.
39 To similar effect as Christian Enterprises is the decision of the New Zealand Court of Appeal (Gresson P, and North and Turner JJ) in Commissioner of Inland Revenue v Carey's (Petone and Miramar) Limited [1963] NZLR 450. The company's memorandum of association contained objects to carry on the business of drapers and furnishing and general warehousemen and to act as trustee. Under its articles of association the company was required to distribute all its profits to a Board which was required to distributed the profits for charitable purposes. On a winding up, any surplus funds were to be used for charitable purposes. The revenue had argued (as the Commissioner argued here) that the commercial character of the activities was fatal to the existence of a charitable trust. The Court rejected this approach saying at 455:
The contention was advanced by counsel for the Commissioner that inasmuch as the respondent was authorised to use the trust property in conducting a commercial business, the property could not be said to be held upon a charitable trust; that moreover the charities could take no benefit unless and until income was paid over by the respondent to the Board and that it could, if it chose, apply any part of the income in extending the business, and that therefore this could not be regarded as the execution of a charitable trust. In our opinion the fact that such wide powers - unusual in a trustee - were given, does not negative the charitable nature of the trust. The conduct of the business is subjected to the dominating consideration that the income, when ascertained, shall be paid to the Board to be apportioned exclusively amongst charities. All the wide powers given to the respondent are for the purposes of developing the business and increasing the income yield. It is indeed not uncommon for trustees to be given such powers as to carry on farming or other business for the benefit of the widow or children of a testator; in such a case the whole net income from the investment is held in trust for the nominated beneficiaries. It cannot be doubted that a trust is thus constituted, and if the objects of such a trust are indubitably charitable, can it be contended that it is not a charitable trust? Such trustees, in carrying on the business of the farm would have to buy and sell stock and engage in sundry other commercial operations; but these incidental and intermediate operations, involving no diversion of ultimate income into non-charitable channels cannot, in our opinion, change the essential charitable nature of the original trust if that nature be found to be originally charitable.
40 Christian Enterprises and Carey's Case accord with the views of Iacobucci J (with whom Cory, Major and Bastarache JJ agreed) in Vancouver Society of Immigrant & Visible Minority Women v Minister of National Revenue [1999] 1 SCR 10 at [152]-[153] as follows:
While the definition of "charitable" is one major problem with the standard in s 149.1(1), it is not the only one. Another is its focus on "charitable activities" rather than purposes. The difficulty is that the character of an activity is at best ambiguous; for example, writing a letter to solicit donations for a dance school might well be considered charitable, but the very same activity might lose its charitable character if the donations were to go to a group disseminating hate literature. In other words, it is really the purpose in furtherance of which an activity is carried out, and not the character of the activity itself, that determines whether or not it is of a charitable nature. Accordingly, this Court held in Towle Estate, supra, that the inquiry must focus not only on the activities of an organization but also on its purposes.
Unfortunately, this distinction has often been blurred by judicial opinions which have used the terms "purposes" and "activities" almost interchangeably. Such inadvertent confusion inevitably trickles down to the taxpayer organization, which is left to wonder how best to represent its intentions to Revenue Canada in order to qualify for registration. In fact, as may become clear shortly, the Society may have suffered exactly this difficulty in drafting its purposes clause.
See also (though in dissent in the result) the comments by Gonthier J (with whom L'Heureux-Dubé and McLachlin JJ agreed) at [52]-[54]. Also, the discussion in Guaranty Trust Company of Canada in re the will of Dorothy Elgin Towle v Minister of National Revenue [1967] SCR 133 by Ritchie J for the whole Court is worthy of repetition as it assists in the appreciation of the importance of purpose and the affecting of the character of activities by the purposive context in which they occur. The Court was dealing with a gift to the Medical Alumni Association of the University of Toronto. The Letters Patent which set up the Association contained objects and purposes some of which were of their own nature charitable and some of which were not. In that context Ritchie J said the following for the whole Court at 147:
In my view the activitiesof the Association which are calculated to ensure its continued existence are to be distinguished from the purposes for which it exists. If, as I think to be the case, the objects of promoting the usefulness and influence of the University and generally promotingthe science and art of medicine are exclusively charitable purposes, then it seems to me to be clear that the means by which these purposes are to be promotedconstitute an essential ingredient of the purposes themselves.
It having been established "that by far the greatest part of the Association's effort" was devoted to charitable purposes "at the time of the making of the gift and the time of the death of the deceased" it remains to be determined whether the other purposes of the Association can be said to be "an end in themselves" to use the language employed by Lord Denning in the British Launderers' Research Association case. In this regard I only find it necessary to refer to the objects and purposes described in paras. (a) and (b) of the objects clause of the Letters Patent of the Association.
[emphasis in original]
41 The same emphasis on purpose as explaining commercial activity can be seen in McGarvie Smith Institute v Campbelltown Municipal Council [1965] NSWR 1641 at 1647; Re Tennant [1996] 2 NZLR 633 at 640; and Hester v Commissioner of Inland Revenue [2005] 2 NZLR 172 at 191.
42 The decision of the New South Wales Court of Appeal in Christian Enterprises, whichwas not affected by the majority in the Glebe Administration Board Case, most closely conveys the relevant governing principle to be applied. To that extent, as an expression of principle, it reflects the Australian common law on the subject and should for that reason be followed unless plainly wrong: Farah Constructions Pty Limited v Say-Dee Pty Limited (2007) 236 ALR 209 at [135]. It is not plainly wrong. It is reflective of the almost contemporaneous, as well as the more recent, views of the Court of Appeal of New Zealand and of the Supreme Court of Canada. It should be followed.
43 Thus, I would reject the central proposition underpinning the Commissioner's argument. It was not an error by the primary judge to fail to conclude from the activities undertaken by Word, including the conduct of the funeral business, that Word could not be a charitable institution.
44 The primary judge accurately set out the task before him at [27] of his reasons:
In determining whether an institution is charitable, it is necessary to consider the institution's essential object, which is itself to be determined by a consideration of the purpose of its formation, its constitution and its activities.
45 He then directed himself to the memorandum and activities of association, saying the following at [28]:
The starting point in determining the essential object of an institution is its constitution or articles of association. However, this will not always be determinative since "[t]he skill of Chancery draftsmen is well able to produce a constitution of charitable flavour intended to allow the pursuit of aims of a non-charitable or dubiously charitable flavour": Attorney-General v Ross [1986] 1 WLR 252 at 263 per Scott J. Similarly, the constitution of a legitimate charity may be drafted in such a way as to obscure that legitimacy, whether through the inexperience of the drafter, the mistaken belief that the organisation's charitable nature will never be questioned, or otherwise. Where it is unclear from the listed objects of an organisation what its main purpose is, or where the evidence shows that the listed objects do not reflect the actual purpose of the organisation, it is appropriate to look to the activities of the organisation together with the expressed objects. In my view, this is not a case where the listed objects leave it unclear what is the main purpose of the organisation. Nor is there evidence that the stated objects do not reflect the actual purpose of Word. The first six objects in paragraph (a) of the objects (set out above at [9]) are clearly related to Word's evangelising activities. As for the remaining objects, I am satisfied, as was the Tribunal, that their comprehensive nature is more likely to reflect a degree of caution on the part of the drafter to ensure that no necessary or desirable act would be prohibited because of an unintended omission from the list.
46 This approach was entirely conformable with authority. When one construes the memorandum and objects of a company drafted under the Uniform Companies Acts up to the early 1960s, one must bear in mind the accepted and well known approach taken in the drafting of memoranda and articles of association of distinguishing in the objects section main objects and ancillary powers, even where the drafting made no express distinction. The practice had grown up of inflated objects, some of which were no more than powers: see Cotman v Brougham [1918] AC 514 at 521; Re Tivoli Freeholds Ltd [1972] VR 445; Re Introductions Ltd [1970] Ch 199; and Ford HAJ Principles of Company Law (2nd Ed 1978) at 93-94. This approach was capable of application to the ascertainment of whether the main objects of a company were charitable: Theosophical Foundation v Commissioner of Land Tax (1965) 82 WN (Pt 1) (NSW) 545 at 551 (per Wallace J) adopted in Christian Enterprises 72 SR (NSW) at 103 (per Walsh JA).
47 The primary judge then examined the activities and subjective purposes of the directors of Word. The purposes in practice conformed with the purposes of Word from its memorandum of association: the charitable religious evangelising purposes.
48 The activities were investment and the funeral business. For the reasons I have given, I do not consider that the primary judge erred in concluding as he did that Word was a charitable institution. In saying that, I should not be taken as agreeing with all the expressions by the primary judge as to the "motivation" of the directors of Word. The proper question is one of characterisation of the institution. To that enquiry, the objects activities, the purposes of those concerned and the legal constraint under which the directors were working are all relevant: see the Surgeons' Case 68 CLR 436. Here, on the proper understanding of the memorandum of association, the purpose of all activities was, and could only be, the religious (and charitable) purposes of Word. The evidence of the subjective motives of the directors conformed with and bolstered those constitutive purposes. On the basis of the authorities to which I have referred, the commercial nature of the activities did not necessarily destroy the capacity of Word to be characterised as a charitable institution.
49 It was argued before the primary judge that the Tribunal had erred in law in concluding that the donation of the money was charitable. The primary judge said the following at [32] of his reasons:
In Collins v Minister for Immigration and Ethnic Affairs (1981) 36 ALR 598, Fox, Deane and Morling JJ said, at 601:
"An appellant who attacks a conclusion of the Tribunal because of deficiency of proof said to amount to an error of law must show, if he is to succeed, that there was no material before the Tribunal upon which the conclusion could properly be based."
Clearly, in this case there was evidence that Wycliffe and the other organisations used the money received from Word for charitable purposes. More importantly, there was also evidence that Word intended and believed that Wycliffe and the other organisations would use the money for charitable purposes. It follows that no error of law has been made out.
50 No real argument was put that this reflected error. I am satisfied that it did not: see in this respect Inland Revenue Commissioners v Helen Slater Charitable Trust Ltd [1982] 1 Ch 49.
51 These views make it unnecessary to deal with the further point argued on appeal (though not dealt with by the primary judge) that the activities of Word in the conduct of the funeral business were in their nature charitable as an aspect of the burial of the dead contemplated by the Statute of Elizabeth and within Lord Macnaghten's fourth class in Pemsel's Case [1891] AC 531: see the Scottish Burial Case [1968] AC 138.
52 There being no demonstrated error in the conclusion of the primary judge as to this first question, it is necessary to consider whether s 50-50(a) was satisfied.