28 Aug 2015
Under section 6.26(1) of the Local Government Act 1995 (WA) (“the Act”), rates must be paid on all land unless specifically exempted under the Act. 
Generally, exempted land falls into the following categories:
1) Crown land;
2) land used for public facilities or purposes, and land vested in public authorities and bodies; 
3) land used by a religious body;
4) land used by private schools;
5) land vested in trustees for agricultural or horticultural show purposes; and
6) land used exclusively for charitable purposes.
At first glance, many of these exemptions appear fairly self-explanatory; however, as is frequently the case with statutory interpretation, Courts and Tribunals will scrutinise commonplace words and phrases so that their meaning is often quite different to what might be ordinarily understood.
For example, in the recent case of Australian Flying Corps & Royal Australian Air Force Association (WA Division) Inc (“RAAFA”) and City of Mandurah (“the City”) ([2015] WASAT 47), RAAFA successfully argued that land being used to operate a retirement village was capable of falling within the ‘charitable purposes’ exemption pursuant to section 6.26(2) of the Act.
Facts of the Case
Under the Act, where a local government provides notice to a landowner that rates are payable, the landowner (i.e. RAAFA) may object to paying the rates. In this case, the City dismissed RAAFA’s objections and RAAFA then applied to the State Administrative Tribunal (“SAT”) to review the City‘s decision.
While RAAFA is a not-for-profit organisation and is approved as such with various bodies such as the Australian Taxation Office, its costs of providing the facilities and services at the retirement village were funded by the residents. Specifically, an incoming resident had to pay an interest-free entry loan to RAAFA for the grant of a lease. RAAFA then repaid this loan, less a retention sum, to the resident or their estate on termination of the lease. The residents were also required to pay a monthly operating costs charge as a contribution to the operating costs. 
Furthermore, the City argued that the retirement village’s common facilities, such as a hair salon, and medical and consulting rooms, were not charitable. Therefore, the City submitted that even if the accommodation could constitute ‘charitable purposes’, the land could not constitute being used ‘exclusively’ for charitable purposes.
What is a ‘Charitable Purpose’?
The issue before the SAT was, in essence, whether land could be used ‘exclusively for charitable purposes’ if it is used to provide accommodation and other services to residents in return for the cost of doing so.
While ‘charitable purposes’ is not defined in the Act, it is accepted that “the relief of aged, impotent and poor people” will be classified as charitable according to Uniting Church Homes (Inc) and City of Stirling ([2005] WASAT 191). Secondly, for a purpose to be ‘charitable’, there must be a public benefit – that is, a benefit that is directed to the general community or to a sufficient section of the community to amount to the public (Lloyd v Federal Commissioner of Taxation (1955) 93 CLR 645). 
Overall, the SAT held that when viewed objectively, the land was being used exclusively for charitable purposes and that RAAFA should be exempt from paying rates. 
In making its decision, the SAT made the following observations:
1) The fact that the residents of the retirement village were required to purchase the right to occupy their units, and pay fees, did not alter the charitable characterisation of the land use.
2) The retirement village held a public benefit because residency was available to anyone and was not restricted to members of RAAFA (although all residents were required to subsequently become members of RAAFA).
3) The village facilities other than for accommodation were held to be incidental to the needs associated with providing ‘relief of the aged’, and although residents were required to pay any fees payable for these other facilities, most of the facilities were available to residents without paying an additional fee.
4) Despite RAAFA generating a small surplus during the relevant years, the Tribunal found that this did not necessarily mean that the village operated for commercial gain.
Conclusion
Legislation is intended to be drafted as precise and clear as possible in anticipation of all the possible scenarios that may arise in the course of applying that statute. However, no matter how precise and clear, it is inevitable that the task of interpreting statutes may create some unintended situations, such is the richness and indeterminacy of our language. While not all land used for retirement villages will be exempt from paying rates, local governments should note that it is possible (or rather, likely) for relatively unambiguous words such as ‘charitable’ to produce unexpected legal outcomes.
This is general information only, and does not constitute specific legal advice. If you would like further information in relation to this matter or other legal matters please contact our office on Freecall 1800 609 945 or email us now.

*This is general information only, and does not constitute specific legal advice. Please consult one of our experienced Legal Team for specific advice relevant to your situation.

100 years of Supporting West Australians

"Always fast and thorough service. Thank you"

Sitka Pil

My circumstances at the time I made contact with HHG were dire following my argument being rejected by two no win no fee firms. Following my initial meeting with HHG's employment law team I was left feeling extremely positive by the response and concern shown by HHG in regards to their support of my argument along with their preparedness to pursue an outcome on my behalf.

I accept the fact that nobody really wins in these cases (mental health/ workplace) however the end result was what would be considered most favourable and far in excess of what would have been achieved had I not sought the advice from HHG.

I have no hesitation in recommending HHG to anyone caught up in the messy circumstances I found myself in at the time.

Great advice and five-star commitment to their client!!"

Nathan Lynch

"Thank you for such great assistance with the transaction of Flying Domestics on behalf of Lorna Good. It has been such a pleasure to work with the HHG Legal Group and I look forward to working with you in the future."

Jim Goodwin

"Simon Creek and his team were at all times empathic, professional and confident.  My matter needed to be addressed within a pressing time frame, and their availability at short notice and contact after hours was much appreciated.  It caused me considerable stress, but having such a thoroughly reliable and competent team to call on helped me to feel in control. Although I hope not to need their services again in future, I would be confident in doing so!"

Dr Lana Bell

"A good outcome is what we can expect.  A great outcome is a sign of a company which does the very best for their clients. A very big thank you to Daniel Morris for showing empathy towards my small and much needed legal action.

To HHG Legal Group, thank you for a great outcome.  I would recommend your company to anyone seeking legal services."

Jan Atkinson

"Your support this morning was amazingly kind, not to mention your totally reassuring competence, knowledge and wisdom that you used on my behalf.  It was extremely reassuring to have your knowledgeable support, and I particularly appreciated your real and obvious kindness to me. It means so much at a very difficult time. I'm so grateful to you."

Family Law Client

"Janene was very professional and we established a good rapport quickly. The subject of death and wills can be quite confronting to deal with, however, Janene's approach was soft and accommodating."

Lynette Livesey

"A big thank you to HHG for their professional service, continued support, and wide range of legal knowledge. Our clients have given us nothing but kind words regarding HHG Legal Group and so we have no hesitation in referring and recommending Simon Creek and HHG Legal Group for their outstanding services and legal expertise."

Nigel Plowman, Director at McKinley Plowman & Associates

"Simon is a friendly and practical legal advisor. I have received great feedback from the clients I have referred to him and his team at HHG Legal Group."

Richard Beal, Director at BDO

"Over the last few years, I have been impressed by Simon’s legal ability, management skills, entrepreneurial spirit, personal integrity and people skills. He appears to be that rare breed of lawyer – both knowledgeable and commercial."

Michael Malone, Founder of iiNet

"Our family has been a client of HHG Legal Group over many years.  Business has included drawing up of wills for three generations and preparing of probate for my father in law. I would have no hesitation in recommending HHG Legal Group to anyone requiring such services."

Bernice Climie

"You should be congratulated for the manner in which your staff address clients and we found our dealings with your company, once again a very pleasant experience and we would like to truly thank you for your efforts."

Steve Harvey and Jane Powell

"HHG Legal were absolutely fantastic. Extremely responsive and brought calm to our chaotic family situation through their knowledge and caring attitude. Extremely professional from our very first contact with them and they expertly guided our family though the required legal process over almost a 12 month period."

Amanda Williamson

"Fantastic team! They really care about their client. Tim Colcutt is a 'go that extra mile' guy who gives his client his all. I can't recommend HHG and Tim enough."

Kerry Samson

"I had a fantastic lawyer in Anne Hurley. She helped me out a great deal with good, sound advice in a friendly, professional manner. First class, thanks Anne"

Graeme Hammond

"Marine Plant Systems has been working with HHG Legal Group for a few years now and they continually provide first-class service. Their professional advice has been invaluable to our company."

Carolin Grimm - Marine Plant Systems

"We were kept up to date at all times. Pricing was always updated over the time period so we remained "in budget". Personal access to someone whenever I had questions. All in all a great experience without too much fuss."

Rosslyn Tasker - COO AltusQ Pty Ltd

"Good service you can count on."

Miles Lee

"HHG Legal Group has provided outstanding support as I have taken the journey of buying a business, their professionalism is beyond reproach. Their assistance throughout the Due Diligence process has been invaluable, I would fully recommend them."

Mark Armitage

"Very friendly and efficient service - what a pleasure working with Anne."

Jacques Taylor

"I highly recommend Daniel from HHG Legal Mandurah. When dealing with a complicated legal property matter recently I was extremely impressed by Daniel's honesty and integrity and the legal advice I received. I am very happy with the service from HHG Legal."

Tony Walker