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Rates exemption – what is a public charity?

The Court of Appeal has considered the rates exemption in respect of “land that belongs to a public benevolent institution or public charity and is used or occupied by the institution or charity for the purposes of the institution or charity.” (Local Government Act 1993 (LG Act) s556(1)(h)).

Six local councils denied CHL’s claim for a rates exemption, six local councils denied the claim and levied rates notices. CHL claimed that it used the land the subject of the rates notices to provide subsidised housing.

In January 2015 we reported on judgment of the Land and Environment Court (LEC) rejecting CHL’s application which can be read here.

CHL appealed to the Court of Appeal. The decision of the Court of Appeal can be read here.

Characterisation as a charity

Before the LEC, the primary judge rejected that the CHL was exempt from paying rates because the terms of the object clause in CHL’s Constitution did not support a finding that CHL was a “public benevolent institution or public charity”. The relevant clause of the CHL’s Constitution (which contained 3 subclauses) provided as follows:

“The object for which the Company is established is to be a non profit corporation that: –

(a) acquires on its own behalf, or manages or holds as trustee on behalf of any public, government, semi or local government or charitable person, association, bodies, funds, institutions or organizations, land and buildings so that:

(i) shelter is provided to persons in crisis and/or who have inadequate access to safe and secure housing;

(ii) housing may be provided to low income persons including members from ethnic groups, young people (single, dependent or otherwise), people with disabilities, people who are aged, childless couples, single parent families, families and/or other households in need;

(b) provides housing advice and referral services which may assist homeless persons into stable and long term housing.

(c) Provide training, vocational and related education, and skills development to improve employment opportunities.”

It was common ground, both before the LEC and the CA, that in order to qualify for the rates exemption, it was necessary for CHL’s purposes to be exclusively charitable. Before the LEC, despite finding that the subject properties were in fact being used for charitable purposes, the primary Judge found that subclause (c) of CHL’s Constitution did not disclose a charitable purpose.

The Court of Appeal (CA) accepted that all of CHL’s purposes were charitable.

Specifically, in relation to subclause (c), the CA found that “the concept of charity extends to training that is vocational or practical in nature; the terms of subclause 3(c) fall squarely within this aspect of charity and that there is a public benefit in these circumstances is clear and not in dispute”.

Use for charitable purposes

In relation to whether CHL’s subject properties were used for the purposes of the charity, the CA found it was not necessary for every block of land by CHL in issue in the proceedings to be occupied at all times; it is inevitable that at any one time some of the numerous properties would be vacant.

Was the application out of time?

The Councils argued that CHL was confined to bringing an appeal against the levying of rates under s574 of the LG Act and that CHL’s claim was barred by operation of the 30 day time limit imposed by s574. However CHL’s proceedings were commenced under s674 of the LG Act (which is not subject to a time limit), seeking an order to remedy or restrain a breach of the LG Act.

The CA agreed that the applications were not “appeals” which were statute barred by the 30 day time limit because they were judicial review proceedings challenging the validity of the rates notices.


While the findings of the CA in this case are specific to the facts before it, it highlights the need for councils to carefully consider claims for a rates exemption on the basis that the land the subject of a rates notice:

  1. belongs to a public benevolent institution or public charity; and
  2. is used or occupied by the institution or charity for the purposes of the institution or charity (to be ascertained by reference to the charity’s Constitution).

Councils should note that the LG Act contains two mechanisms which permit a challenge to the rate-making functions of local councils:

  • s574 (appeal on question of whether land is rateable or subject to a charge);
  • s674 (Remedy or restraint of breaches of this Act—other persons).

A s574 appeal is subject to a 30 day time limit whereas a s674 judicial review challenge is not.

For further information, please contact Tony Pickup of Local Government Legal on (02) 4922 2307

* The above information is not to be relied upon as legal advice.


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