Charitable Trusts Act 2022

The Act defines several foundational terms in s 4. Charitable purpose means a purpose that is charitable under the law of this State and includes a charitable purpose as defined in the Commonwealth Charities Act 2013 s 12. This dual definition ensures alignment with federal law while preserving the common law concept. Charitable trust is simply a trust for a charitable purpose. Property includes any real or personal property and money, and property held for a charitable purpose is property held on trust for or otherwise to be applied to a charitable purpose. Approved scheme means a scheme approved under Part 3 - either by the Attorney General (s 17) or the Court (s 21). Administration of a charitable trust or property includes management. A person involved in the administration includes anyone employed, engaged or otherwise concerned (including as trustee) in the administration (s 4). The Court is the Supreme Court (s 4).

Part 3 introduces scheme, scheme report (the Attorney General’s written report on a scheme, addressing the restrictions in s 25(1)), and Principal Registrar (meaning defined in the Supreme Court Act 1935 s 4(1)) (s 8). The concept of an alternative charitable purpose (s 10(2)) is central to cy‑près: property that cannot be applied to the original purpose must be applied to another charitable purpose as close as possible to the original purpose.

Part 4 creates the Western Australian Charitable Trusts Commission (s 29), which is constituted by the Commissioner under the Parliamentary Commissioner Act 1971 (or Deputy or Acting Commissioner in defined circumstances). An investigation is an investigation of a charitable trust or class of charitable trusts carried out by an investigator, who may be an authorised person (legal practitioner, accountant, departmental employee, or prescribed class person authorised by the Attorney General) acting at the Attorney General’s direction, or the Commission (s 32(1)). An investigator may issue a requirement - a written notice requiring provision of documents, information or other assistance (s 32(2)). A provider is a person who provides a document or information relating to a charitable trust to the Attorney General, an authorised person, or the Commission, either in response to a requirement or voluntarily (s 28). A complaint is a complaint made by a complainant to the Attorney General or Commission about a charitable trust or class of charitable trusts (s 31).

Part 6 centres on prescribed trust and eligible recipient. A prescribed trust is a fund referred to in item 2 of the Table to the Income Tax Assessment Act 1997 (Cth) s 30‑15 (public ancillary funds or similar), or a trust of a prescribed class, created before, on or after the former commencement day (s 48). An eligible recipient is a deductible gift recipient listed in item 1 of that Table that is not a charity due to government connection but would be if not for that connection (s 48). The prescribed power is the power of trustees of a prescribed trust to provide property or benefits to or for an eligible recipient, either expressed in the trust instrument (s 49) or implied by statute (s 50). Part 6 also contains validation provisions for periods before the Act commenced (ss 52-53).

The Act directly affects trustees of charitable trusts, other persons involved in the administration of charitable trusts (including employees and agents), the Attorney General, the Western Australian Charitable Trusts Commission, complainants, providers of information, the Supreme Court, beneficiaries or intended users of charitable property, and the public generally. Trustees bear the primary obligations under Part 3: when property cannot be applied to the original purpose, they must submit a scheme to the Attorney General as soon as reasonably practicable (s 10(4)); when an extension or variation of powers becomes necessary, they must submit a scheme (s 12(4)). Failure to do so constitutes a ground for removal under s 45(1)(b) (ss 10(5), 12(5)). Trustees must also ensure that an approval notice from the Attorney General is published in the Gazette within 28 days (s 17(2)), and that notice of Court approval or refusal is similarly published (s 18(4)); again, failure is a ground for removal (ss 17(3), 18(5)). Trustees who receive a notice from an investigator directing action in response to an investigation report must comply; failure is a ground for removal (s 41(6)). Trustees must also transfer property to a person or body designated in an approved scheme (s 26).

Persons involved in administration of charitable trusts face potential disqualification under s 46: they must not be involved if they are an insolvent under administration, a director of an insolvent corporation or a corporation under administration, were a director when a corporation became insolvent or went into administration, are disqualified under any written law from managing a body corporate registered under the Commonwealth Australian Charities and Not-for-profits Commission Act 2012, have been removed as a trustee by court order, have been convicted of an offence involving fraud or dishonesty, or are a body corporate of which such an individual is a director (s 46(1)). Breach is an offence punishable by imprisonment for 1 year and a fine of $50,000 (s 46(1)). However, such a person may apply to the Court for leave to be involved in exceptional circumstances (ss 46(3)-(5)). The Act also allows the Attorney General or an authorised person to apply to the Court for an order precluding involvement or removing a person (s 45). Complainants and providers are protected from civil or criminal liability, breach of duty, professional ethics breaches, disciplinary action, or termination of employment if they act in good faith (s 38). The public can inspect schemes and scheme reports at the Attorney General’s office free of charge (s 14(6)) and can oppose applications for Court approval (s 20). The Act also affects prescribed trusts (as defined in s 48) by giving trustees an express or implied power to give to eligible recipients, and by validating past exercises of that power.

The Act imposes several specific duties on trustees and others, and confers corresponding rights on various parties. Under s 10(4), where property held for a charitable purpose cannot be applied for that purpose because of impossibility, impracticability, inexpediency, inadequacy, the purpose having been effected, unlawfulness or uncertainty, or surplus, the persons in whom the property is vested must, as soon as reasonably practicable after becoming aware, submit a scheme to the Attorney General for approval. A similar duty arises under s 12(4) when an extension or variation of powers, or specification or variation of mode of administration, becomes necessary. Under s 13, those persons must prepare and submit the scheme. Section 14 requires that the submission include full details of facts and copies of relevant instruments. The Attorney General may charge fees for considering schemes and preparing scheme reports (s 15). If the Attorney General approves a scheme, the trustees must publish the approval notice in the Gazette within 28 days (s 17(2)); if the Court approves, they must publish notice within 28 days (s 18(4)). Under s 26, they must transfer property as designated in the approved scheme.

Investigators have the power to issue a requirement (written notice) to a person to provide documents or information relating to a charitable trust or concerning any person involved in its administration, or to provide other reasonably necessary assistance (s 32(2)). The recipient must comply within the specified period (default 14 days) (s 40). Non-compliance is an offence punishable by a fine of $50,000 (s 40(2)). However, a person may object by lodging a written notice specifying a reasonable excuse (s 40(4)). It is a defence to prove a reasonable excuse and that the person objected (s 40(3)). Notably, it is not a reasonable excuse for a trustee to assert legal professional privilege or privilege against self-incrimination (s 40(5)). An investigator may also enter premises occupied or used by a person to whom a requirement has been given at any reasonable time (s 35).

The Act confers a right on any person to make a complaint to the Attorney General or the Western Australian Charitable Trusts Commission about a charitable trust or class of charitable trusts (s 31). The complaint must be in an approved manner (s 31(2)). The investigator may refuse to investigate a complaint that is trivial, frivolous, vexatious, not made in good faith, based on insufficient information, already being investigated by another body, or where investigation is unnecessary (s 32(3)). The complainant must be informed of the decision and may receive reasons (s 32(4)). Complainants and providers acting in good faith are protected from liability (s 38). The Act also gives persons wanting to oppose a scheme application the right to give written notice to the Principal Registrar, the trustees, and the Attorney General not less than 7 days before the hearing (s 20). The Court may decide who is heard (s 21(2)). A person may apply to the Court for orders to enforce a charitable trust, for directions, for an audit, to restrict transactions, or for any other necessary order (s 44). The Attorney General or authorised person may apply for removal or preclusion of a person involved in administration (s 45). An unfit person may apply to the Court for leave to be involved (s 46(3)), with the Attorney General as a party (s 46(4)).

The Act creates several criminal offences and enforcement mechanisms. The primary criminal penalty is a fine of $50,000 for violations of confidentiality (s 37(3)), providing false or misleading information (s 39), and failing to comply with a requirement (s 40(2)). The false or misleading information offence applies to a provider who provides a document or information that the provider knows is false or misleading in a material particular (s 39). The failure to comply offence is subject to a defence of reasonable excuse and objection (ss 40(3)-(4)), but privilege cannot be relied on by a trustee (s 40(5)). More serious penalties apply under s 45(4): a person who fails to comply with a court order made under s 45 (e.g., precluding involvement or removing a trustee) is liable to imprisonment for 1 year and a fine of $50,000. Similarly, s 46(1) provides that a person who is unfit (as defined) and is involved in the administration of a charitable trust commits an offence punishable by imprisonment for 1 year and a fine of $50,000.

Beyond criminal penalties, the Act provides for civil enforcement through removal of trustees. Under s 45(1), the Attorney General or an authorised person may apply to the Court for an order removing a trustee or other person involved in administration, or precluding involvement, on grounds of misconduct or mismanagement, necessity to protect property, unfitness, or failure to comply with a provision of the Act that specifies that failure as a ground for removal (s 45(2)). Several sections expressly state that a failure constitutes a ground for removal under s 45(1)(b): failure to submit a scheme under s 10(4) or s 12(4) (ss 10(5), 12(5)); failure to publish an approval notice or Court notice within 28 days (ss 17(3), 18(5)); failure to comply with an investigator’s notice directing action (s 41(6)). The Court may also appoint a trustee or make any other necessary or convenient order (s 45(1)(c)-(d)). Under s 46(6), an unfit person who has not been granted leave is automatically removed as trustee on the later of 30 days after becoming unfit, or if leave is applied for within that period and refused, the day leave is refused. This automatic removal operates by force of the Act without a court order.

The Act also contains a cost recovery mechanism. The Attorney General may apply to the Court to recover the costs and expenses of an investigation (including audits) (s 43(2)). The Court may order payment out of the property of the charitable trust, by a trustee, or - if the investigation was the result of a frivolous or vexatious complaint or one not made in good faith - by the complainant (s 43(3)). This provides a substantial deterrent against misuse of the complaint process. The Act also protects persons performing functions under it from civil or criminal liability, disciplinary action, or termination of employment, provided they act in good faith (s 54). Similarly, complainants and providers acting in good faith are protected (s 38).

The Act expressly interacts with several other statutes. Section 6 preserves the general law principle that a purpose must be for the public benefit to be charitable, and does not restrict purposes that are charitable independently of Part 2. Section 7 provides that Part 2 does not apply to trusts existing before the commencement of the Charitable Trusts Act 1962, does not validate pre‑1962 dispositions, and does not affect pre‑1962 orders or properly done acts. Section 10(6) clarifies that nothing in the Charitable Collections Act 1946 s 16 prevents the application of s 10 (which requires property to be applied to an alternative charitable purpose). Section 12(6) provides that nothing in s 12 restricts powers conferred by any law of the State on the Court or trustees.

Part 4 incorporates provisions of the Royal Commissions Act 1968: an investigator has all the powers, rights and privileges specified in that Act as they relate to a Royal Commission, and those provisions are treated as if enacted in this Act (s 33(1)-(2)). This includes powers to summon witnesses, require production of documents, and examine on oath. Section 33(3) overrides any obligation of secrecy or restriction imposed by an enactment or rule of law. However, s 33(5) preserves the privilege against self‑incrimination and legal professional privilege to the extent that a person could not be compelled to give evidence or produce documents in court proceedings, subject to s 33(3)-(4). Section 34 allows the Commission to carry out audits and may appoint an auditor, who may be a public service officer (s 34(3)), and the Parliamentary Commissioner Act 1971 ss 9, 10, 11 and 20(1) apply to the Commission with modifications (s 29(4)).

The Act also interacts with Commonwealth legislation. The definition of charitable purpose in s 4 includes the definition in the Charities Act 2013 (Cth) s 12. Part 6 relies heavily on the Income Tax Assessment Act 1997 (Cth) s 30‑15 (deductible gift recipients). The definition of eligible recipient cross‑references the Table to that section and the Charities Act 2013 (Cth) s 4 (government entity) (s 48). The definition of prescribed trust in s 48 refers to item 2 of the Table to the Income Tax Assessment Act 1997 s 30‑15 (public ancillary funds) and trusts of a prescribed class. The automatic disqualification provisions in s 46 rely on definitions in the Corporations Act 2001 (Cth) s 9 (insolvent under administration, insolvent corporation), and the Australian Charities and Not‑for‑profits Commission Act 2012 (Cth) for disqualification from managing entities (s 46(1)(d)). Section 37(3)(g) permits disclosure to various Commonwealth bodies: Commissioner of Police, ASIC, the Advisory Committee under the Charitable Collections Act 1946, the Commissioner of the Australian Charities and Not‑for‑profits Commission, the Office of the Registrar of Aboriginal and Torres Strait Islander Corporations, the Commissioner of Taxation, and the Commissioner of State Revenue.

The Act preserves the existing law: s 27 provides that schemes approved under Part III of the 1962 Act are taken to be approved schemes under this Act. Section 57 contains transitional provisions: pending scheme applications under the 1962 Act must be determined under that Act as if not repealed (s 57(2)); examinations or inquiries under s 20 of the 1962 Act could be continued under the former Act or Part 4 at the Attorney General’s discretion (s 57(3)); declarations under s 22C of the 1962 Act continue in operation (s 57(5)). The Act also amends the Freedom of Information Act 1992 by adding the Western Australian Charitable Trusts Commission to Schedule 2 (s 58). Section 54 protects persons performing functions under the Act or any other law relating to charitable trusts.

The Charitable Trusts Act 2022 (WA) is Act No. 38 of 2022. It received Royal Assent on 1 November 2022. Pursuant to s 2, Part 1 (preliminary) commenced on that day. The remainder of the Act commenced on 21 November 2022, fixed by proclamation (see s 2(b) and Gazette SL 2022/194 cl 2). The Act is a new statute; it does not amend itself but rather repeals the Charitable Trusts Act 1962 (s 56). The Act appears to be a complete replacement, not a series of amendments to the 1962 Act. However, Part 6 contains detailed validation and transitional provisions that retrospectively validate certain actions taken before the Act commenced. Section 52 validates the provision of property or benefits by trustees of prescribed trusts to eligible recipients before former commencement day (the day the Charitable Trusts Amendment Act 2011 commenced), even if the trustees failed to comply with the 1962 Act’s requirements for declarations and limitations. Section 53 validates the inclusion and exercise of a former prescribed power on and after former commencement day but before the day Part 6 commences (the new commencement day). The regulations under s 55 may prescribe matters required or permitted by the Act. The compilation table in the Act notes that the Act is a compilation as at the date of publication, with no subsequent amendments listed. The Act does not contain a sunset clause or automatic expiry. There is no indication of any amendment bills passed since its enactment; the Act is relatively recent and appears to be the current law without amendment history in the text provided.

The text of the Act itself does not refer to any specific litigation or court decisions. It provides a new statutory framework that replaces the 1962 Act, so cases decided under that Act may provide guidance but are not cited in the legislation. The Act vests significant jurisdiction in the Supreme Court: the Court may approve schemes under Part 3 (s 18, s 21), hear proceedings to enforce or vary charitable trusts (s 44), hear applications for removal or preclusion (s 45), grant leave to an unfit person to be involved (s 46(3)-(5)), and determine cost recovery applications (s 43). The Court also has inherent jurisdiction over charitable trusts, which is preserved by s 12(6) and s 51(2)(c)-(d) (the Court’s general jurisdiction over charitable trusts extends to prescribed powers). The Act does not create a new specialist tribunal; it relies on the existing Supreme Court. The procedural provisions in Part 5 (s 47) state that in proceedings other than for an offence under the Act, the Court is not bound by the rules of evidence and may conduct proceedings in any manner it thinks fit. Any originating process by a person other than the Attorney General must be served on the Attorney General (s 47(2)). This suggests that the Attorney General is a necessary party to most charitable trust proceedings, reflecting the Crown’s parens patriae role. Without external case law provided, one can only note that the Act’s new scheme approval provisions, unfitness disqualification, and investigation powers are likely to generate litigation, particularly regarding the definition of “charitable purpose” and the interaction with the Commonwealth Charities Act 2013, the grounds for removal, and the scope of the Royal Commission‑style powers of investigators. The legal practitioner community will need to monitor Supreme Court decisions interpreting this Act. The Act does not contain a provision for appeals, but general appeal rights to the Court of Appeal would apply from Supreme Court orders.

Several provisions in the Act contain traps for the unwary. The duty to submit a scheme under s 10(4) and s 12(4) is triggered by awareness of the relevant circumstances, and must be performed “as soon as reasonably practicable”. Failure is a ground for removal - but the Act does not prescribe a specific time limit, leaving scope for disagreement about what is reasonable. However, because removal does not require a criminal conviction, a trustee could be removed for delay even if no offence is committed. Under s 17(2), the 28‑day period for publishing the Attorney General’s approval notice in the Gazette is strict; a failure is again a ground for removal (s 17(3)). Similarly for Court approval notices (s 18(4)-(5)). Trustees should calendar these dates immediately upon receipt of an approval notice.

The automatic disqualification provisions in s 46 are broad and operate by force of law. A person becomes unfit if they are an insolvent under administration, a director of an insolvent corporation, or were a director when the corporation became insolvent or went into administration (s 46(1)(a)-(c)). Note that this applies even if the person had no active role in the insolvency. A person convicted of any offence involving fraud or dishonesty is also automatically unfit (s 46(1)(f)), with no de minimis threshold or time limit. The penalty for being involved while unfit is imprisonment for 1 year and a fine of $50,000 (s 46(1)). Even more insidious: under s 46(6), if a trustee becomes unfit after appointment, they are automatically removed on the later of 30 days after becoming unfit (or if they apply for leave within 30 days and leave is refused, on the day of refusal). There is no court order needed; the removal is by force of the section itself. A trustee who continues to act beyond that date commits an offence.

The investigation powers in Part 4 are very strong. An investigator can issue a requirement for documents or information relating to a charitable trust, and s 40(5) provides that it is not a reasonable excuse for a trustee to assert privilege against self‑incrimination or legal professional privilege (but only for trustees; non‑trustees may still assert privilege subject to s 33(5) and s 36). The penalty for non‑compliance with a requirement is a fine of $50,000 (s 40(2)). The requirement does not need to be issued by a court; it is an administrative act. The investigator also has the powers of a Royal Commission (s 33), and s 33(3) overrides any secrecy obligation. However, providers are protected if they act in good faith (s 38). A further trap: s 36 abrogates legal professional privilege for trustees to the extent that the document or information relates to the administration of the trust (s 36(2)(a)), and the disclosure does not constitute a waiver of privilege as against third parties (s 36(2)(b)), but the privilege is abrogated for the purposes of the investigation. This means a trustee cannot withhold trust administration documents from an investigator on the basis of legal advice privilege. Documents disclosed can be used in civil proceedings for removal or breach of trust (s 36(4)(d)), and in criminal proceedings for false or misleading information or failure to comply (s 36(4)(c)).

Another gotcha: the confidentiality provisions in s 37 create a duty on persons engaged or employed under Part 4 not to record, use, or disclose provider information except in specific circumstances. Breach attracts a fine of $50,000 (s 37(3)). But the exceptions are broad, including disclosure to trustees, beneficiaries, legal advisors, various regulators, and the Court. A person who receives information under one of the exceptions (e.g., a trustee) could inadvertently breach confidentiality by sharing it further without authority. Section 37(5) allows recipients under s 37(3)(g) to use the information for functions under any written law, but the boundaries may be unclear.

Finally, the cost recovery provision in s 43 is a significant financial risk. The Court may order a trustee to pay the costs and expenses of an investigation (including audits). This could be substantial, especially if an investigation uncovers mismanagement. Conversely, if a complaint is frivolous or vexatious or not made in good faith, the complainant can be ordered to pay costs, which provides a safeguard but also a risk for complainants. The Act does not cap these costs.

Trustees and other persons involved in the administration of charitable trusts should take several steps to comply with the Charitable Trusts Act 2022. First, understand the definition of charitable purpose under s 4, which incorporates both the common law and the Commonwealth Charities Act 2013. For trusts with recreational facilities, confirm that the facilities meet the criteria in s 5 - they must be provided with the object of improving conditions of life for intended users, and the users must have need due to youth, age, infirmity, disability, poverty, or social and economic circumstances, or the facilities must be available to the public or a substantial section of the public. This provision applies only to trusts created after the 1962 Act commenced (s 7).

Second, regularly review the property held for the charitable purpose. If any of the circumstances in s 10(1) arise - impossibility, impracticability, inexpediency, inadequacy, the purpose having been effected, unlawfulness, uncertainty, or surplus - the trustees must, as soon as reasonably practicable, prepare and submit a scheme to the Attorney General (ss 10(4), 13). Likewise, if an extension or variation of powers or a variation of administration mode becomes necessary, a scheme must be submitted (s 12(4)). Do not delay; failure is a ground for removal. When submitting a scheme, include full details of all facts and copies of relevant instruments (s 14(1)). Be prepared to pay the Attorney General’s fees (s 15). After the Attorney General approves a scheme, publish the approval notice in the Gazette within 28 days (s 17(2)). If the Court approves, publish notice in the Gazette within 28 days (s 18(4)). Transfer property as designated in the approved scheme (s 26). Keep records of compliance.

Third, ensure that no person involved in administration falls within the automatic disqualification categories in s 46(1). Conduct background checks: review insolvency status (including directorship of insolvent corporations), criminal history (fraud or dishonesty offences), and any previous removal or disqualification orders. If a person becomes unfit, they must either obtain leave from the Court within 30 days (s 46(3)-(5)) or cease involvement. Trustees should monitor their own status and that of co‑trustees and employees. Maintain a register of disqualified persons.

Fourth, respond promptly to any requirement from an investigator. The default compliance period is 14 days (s 40(1)). If you cannot comply, lodge a written objection with a reasonable excuse within the specified period (s 40(4)). For trustees, note that privilege against self‑incrimination and legal professional privilege are not reasonable excuses (s 40(5)). However, non‑trustees may still assert privilege subject to s 33(5). Be aware that documents disclosed may be used in subsequent civil proceedings for removal or breach of trust (s 36(4)(d)). Ensure that any information provided is accurate and not false or misleading (s 39). Keep records of all documents provided and communications with the investigator.

Fifth, maintain confidentiality. Any person who receives information under Part 4 must not record, use, or disclose it except as permitted by s 37(3). If you are a trustee and receive information from an investigator (e.g., via a disclosure under s 37(3)(b)), do not share it widely. Seek legal advice before further disclosure.

Sixth, for prescribed trusts (as defined in s 48), ensure that the trust instrument either expressly includes a power to provide property or benefits to eligible recipients (s 49) or, if it does not, rely on the statutory power in s 50 (subject to any express prohibition in the trust instrument). The power is treated as exercisable for a charitable purpose (s 51). Be aware that Part 6 validates past exercises of the power even if the trustees failed to comply with the 1962 Act’s requirements (ss 52-53). Maintain documentation of decisions to give to eligible recipients.

Seventh, if you wish to make a complaint about a charitable trust, do so in good faith (s 38). The complaint must be in a manner approved by the Attorney General or Commission (s 31(2)). Be prepared for the possibility that the investigator may refuse to investigate (s 32(3)), and that costs may be awarded against you if the complaint is frivolous, vexatious, or not in good faith (s 43(3)(c)).

Eighth, trustees should consider obtaining legal advice before undertaking any significant step involving a potential scheme, investigation response, or dispute. The Act’s provisions are detailed and the consequences of non‑compliance - removal, fines, imprisonment, cost orders - are serious. Regular training on the Act’s requirements for all persons involved in administration is advisable. Finally, monitor any regulations made under s 55, as they may prescribe additional processes for requirements or classes of prescribed trusts.