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Cases, Charitable trusts, Charities

Greenpeace appeal result – one all draw

The Supreme Court decision in the Greenpeace appeal has been released.  The judgment of the court is that:

  • The appeal against the Court of Appeal’s determination that a political purpose cannot be a charitable purpose is allowed (by a 3:2 majority)
  • The appeal against the Court of Appeal’s determination that purposes or activities that are illegal or unlawful preclude charitable status is dismissed (unanimous)

The decision as to whether or not Greenpeace will be registered as a charity is  in the hands of the Charities Board.

Background

Greenpeace was denied registration as a charity under the Charities Act 2005 on the basis that two of its objects (the promotion of disarmament and peace and the promotion of “legislation, policies, rules, regulations and plans which further [Greenpeace’s other objects] and support their enforcement or implementation through judicial processes as necessary]) were not charitable. Note that Greenpeace had been incorporated in New Zealand under the Incorporated Societies Act 1908 since 1976.   Greenpeace, like other organisations that had previously held charitable status, was requited to apply to the Charities Commission (the Commission) for registration by July 2008 in order to qualify for charitable income tax exemptions.

The Commission declined Greenpeace’s application for registration on the ground that Greenpeace was not established and maintained exclusively for charitable purposes as required by the Charities Act.

Greenpeace appealed to the High Court against the Commission’s decision. The appeal concerned the extent to which purposes that are “political” (including those that advocate particular views) can be charitable and the extent to which an entity which engages in illegal activities or has illegal purposes can be charitable.

The matter was appealed to the High Court and then the Court of Appeal.   Along the way Greenpeace proposed to amend its objects by limiting the extent of its nuclear disarmament purpose and narrowing the scope of its advocacy. See When Political is not Permissible.

The Court of Appeal affirmed that political purposes cannot be charitable and remitted the matter back to the (now) Charities Board (in part to also consider the illegality matter), in the meantime, Greenpeace appealed to the Supreme Court.  Greenpeace’s position was that the law has moved and political purposes can be charitable; and further that illegal purposes are not necessarily disqualifying purposes.

The quick version

The view of the majority of the Supreme Court (comprising Elias CJ, McGrath and Glazebrook JJ) regarding  whether political purposes can be charitable can be summarised as follows:

“[74] It may be accepted that the circumstances in which advocacy of particular views is shown to be charitable will not be common, but that does not justify a rule that all non-ancillary advocacy is properly characterised as non-charitable. As Professor Sheridan observed in 1972, in relation to promotion of legislation, the true rule is that advocacy is “charitable in some circumstances and not in others”.We agree with the view expressed by Kiefel J in Aid/Watch that charitable and political purposes are not mutually exclusive. As a result, we depart from the approach taken in the Court of Appeal. If it was correct to find that the promotion of nuclear disarmament and the elimination of all weapons of mass destruction are charitable (the matter we next address), we do not think it should have found “political” activity properly connected with those purposes to exclude such charitable status unless shown to be ancillary only.”

However, on the matter if illegality the Supreme Court in its entirety sided with the Court of Appeal.

The longer version

When the High Court dismissed Greenpeace’s appeal it was noted that it felt constrained to apply the prohibition on non-ancillary purposes required by the decision of the Court of Appeal in Molloy v C of IR. The High Court found that non-charitable political purposes could not be regarded as merely ancillary to the charitable purposes. It is important to appreciate that the High Court did not determine whether Greenpeace’s activities might have involved illegal activities.

The Court of Appeal

Greenpeace then appealed to the Court of Appeal. In that Court, Greenpeace indicated that it had resolved to recommend to a general meeting that the two objects which had caused the difficulty be changed. The promotion of “disarmament” would be restricted to the promotion of “nuclear disarmament and the elimination of all weapons of mass destruction” (on the basis that these purposes accorded with New Zealand’s international obligations and domestic law and were not controversial) and the advocacy object would be changed to clarify that it was truly “ancillary” to Greenpeace’s charitable objects.

The Court of Appeal:

  • allowed Greenpeace’s appeal from the decision of the High Court
  • set aside the Charities Commission’s decision declining to register Greenpeace as a charitable entity under the Charities Act
  • affirmed the exclusion of political purposes as it found that it was codified by s 5(3) of the Charities Act

Although the Court of Appeal held that the proposed  amendments to the Greenpeace objects avoided the political purpose exclusion. The Court of Appeal considered, that the advocacy actually carried out by Greenpeace could well be beyond a level merely “ancillary” to its charitable purposes. If that proved to be the case, Greenpeace would not be maintained exclusively for charitable purposes. As the matter had not been considered by the Charities Commission because of the view it had taken that the expressed object before amendment prevented registration, the Court of Appeal referred Greenpeace’s application back to the Charities Board that had taken over the functions of the Charities Commission. The reconsideration was also to cover whether the direct action taken by Greenpeace entailed unlawful activities that were inconsistent with charitable status.

Supreme Court

In the Supreme Court, Greenpeace challenged the Court of Appeal’s acceptance that the law treated objects which were “political” as non-charitable and prevented registration of an entity with such objects unless they were merely “ancillary” to charitable objects. It argued that the exclusion of political purpose should no longer be applied in New Zealand, especially following the High Court of Australia decision in Aid/Watch Inc v Commissioner of Taxation. Greenpeace argued that there was no proper basis for a free-standing prohibition on political purpose. Rather, the only question was whether the purposes of an entity were charitable within the sense accepted by the common law.

Greenpeace also submitted that  that illegal purposes or activities, if ancillary or minor, did not disqualify an entity from registration as charitable; Greenpeace arguing that the approach of the Court of Appeal in relation to illegal activities that were minor cut across the scheme of the Charities Act in which it was only “serious wrongdoing” (as defined in s 4) which justified removal from the register.

The appeal against the Court of Appeal’s determination that a political purpose cannot be a charitable purpose allowed, the Court of Appeal noting variously as follows:

  • A “political purpose” exclusion should no longer be applied in New Zealand. Political and charitable purposes are not mutually exclusive in all cases. A blanket exclusion is unnecessary and distracts from the underlying inquiry whether a purpose is of public benefit within the sense the law recognises as charitable
  • Section 5 of the Charities Act does not enact a political purpose exclusion with an exemption if political activities are no more than “ancillary” but rather provides an exemption for non-charitable activities if ancillary
  • If the object of an entity is the promotion of a cause that cannot be assessed as charitable because attainment of the end promoted or the means of promotion in itself cannot be said to be of public benefit within the sense treated as charitable, the entity will not qualify for registration as charitable. That is because it will not be “established and maintained exclusively for charitable purposes”. Even if an end in itself may be seen as of general public benefit (such as the promotion of peace) the means of promotion may entail a particular point of view that cannot be said to be of public benefit
  • The Court of Appeal applied an incorrect approach to assessment of charitable purposes when it concluded that an object “to promote nuclear disarmament and the elimination of weapons of mass destruction” was charitable
  • The Court of Appeal applied an incorrect approach to assessment of charitable purposes when it concluded that an object “to promote nuclear disarmament and the elimination of weapons of mass destruction” was charitable
  • The conclusion of the Court of Appeal that the Greenpeace purpose of promoting nuclear disarmament and the elimination of all weapons of mass destruction was charitable was arrived at without the benefit of determinations by the Charities Board or the High Court because of the course taken in the litigation
  • In reaching its conclusion, the Court of Appeal was in error in failing to address the manner of promotion. The matter of charitable status of Greenpeace’s  objects was remitted for consideration by the chief executive and the Charities Board in the light of this decision.

The minority decision of the Supreme Court was that the view of the majority that political advocacy can be a charitable purpose was difficult to reconcile with the text of s 5(3) of the Charities Act, which presupposes that advocacy in support of a charitable purpose is non-charitable unless it is merely ancillary to that charitable purpose. The intention of the legislature was to codify this aspect of the law of charities.   And although the exclusion of political advocacy from charitable status may give rise to difficulties of application in particular cases and  it was not consistent with the approach taken by the High Court of Australia in Aid/Watch, such exclusion was consistent with the preamble to the statute of 1601, the focus of which was on tangible benefit.

It was also noted that although there was much scope for debate and controversy as to the appropriateness of the political advocacy exception, the position that political advocacy was not charitable was reasonably defensible not only on the basis of the authorities but also as a matter of policy and practicality. There was accordingly no requirement to depart from the ordinary language approach to s 5(3).

However, the appeal against the Court of Appeal’s determination that purposes or activities that are illegal or unlawful preclude charitable status  was unanimously dismissed.  Illegal activity may disqualify an entity from registration when it indicates a purpose which is not charitable even though such activity would not justify removal from the register of charities under the statute.

Moving on

The question of whether Greenpeace will be registered as a Charity is now back before the Charities Board.

References:

Also see Charities Services press release; NBR Report Hundreds affected by Supreme Court turn on Greenpeace

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