This may be the author’s version of a work that was submitted/accepted for publication in the following source: McGregor-Lowndes, Myles& Hannah, Frances (2020) ACPNS Quarterly Case Notes Summary – Fourth Quarter 2020. [Working Paper] This file was downloaded from: https://eprints.qut.edu.au/207934/ c The Australian Centre for Philanthropy and Nonprofit Studies (ACPNS) Disclaimer: The material included in this document is produced by QUT’s Australian Cen- tre for Philanthropy and Nonprofit Studies (ACPNS) with contribution from some authors outside QUT. It is designed and intended to provide general information in summary form for general informational purposes only. The material may not apply to all jurisdictions. The contents do not constitute legal advice, are not intended to be a substitute for legal advice and should not be relied upon as such. You should seek legal advice or other professional advice in relation to any particular matters you or your organisation may have. License: Creative Commons: Attribution 4.0 Notice: Please note that this document may not be the Version of Record (i.e. published version) of the work. Author manuscript versions (as Sub- mitted for peer review or as Accepted for publication after peer review) can be identified by an absence of publisher branding and/or typeset appear- ance. If there is any doubt, please refer to the published source. ACPNS QUARTERLY CASE NOTES – SEPTEMBER TO DECEMBER 2020 A summary of significant cases involving charitable, philanthropic, nonprofit and social enterprises organisations in Australia and overseas. The Australian Centre for Philanthropy and Nonprofit Studies (ACPNS) produces succinct case notes for lawyers, accountants and managers involved in the nonprofit sector throughout each year. The ACPNS Quarterly Case Notes Series summarises cases noted in each quarter and links them directly to its full case notes posted to QUT ePrints, an institutional Internet repository of research output of QUT staff and postgraduate students. The papers deposited in QUT ePrints are freely available, with an advanced search facility available. Further resources on grant-seeking, fundraising and philanthropy are available from the QUT Community Collection for grant-seekers, fundraisers and philanthropists. This case note summary collects and summarises cases of particular interest from the second quarter of 2020-21. The experts pick of cases to consider: Murray Baird – Advisor on Charity Law, Inaugural General Counsel ACNC, Adjunct Professor University of Western Australia Law School, Senior Fellow University of Melbourne Law School. YWCA Australia v Chief Commissioner of State Revenue has wide-ranging implications for charity law in Australia as is apparent from the case note. The judgement includes an extensive survey of Australian case law on the application of the concept of relief of poverty (at [35]-[50]) which, the court concludes, must have regard to contemporary conceptions of poverty in Australia beyond “poverty line” assessments. “Poverty is a complex state of affairs linked to various societal issues…” (at [51]). The case also applies the principles in Word Investments in the context of state revenue legislation and gives helpful guidance on the concept of “predominantly” in charity law. It is a timely case when the ACNC is currently considering revision of Commissioners Interpretation Statements in relation to charity housing and public benevolent institutions. Contrast the status of YWCA as a charity for the relief of poverty and advancement of education to that of YMCA as a religious institution: Young Men's Christian Association of Melbourne v Federal Commissioner of Taxation [1926] HCA 2; (1926) 37 CLR 351 (18 March 1926). Maria Cowen – Herbert Smith Freehills McLachlan & South Ozz Shelter (Charity Licence No. Ccp3261) an incorporated charitable institution v Hamilton (McLachlan) raises questions about the legal relationship which is created, or obligations which arise, when a donor provides funds through a ‘donate now’ button on a website. This issue will become increasingly significant due to the prevalence of crowd funding campaigns, particularly in circumstances where the charity that receives the funds has no control over the representations made as to the use of those funds. 1 Last year, we saw significant uncertainty about the permitted use of funds raised in Celeste Barber’s online bushfire appeal, a campaign which unexpectedly raised more than $51m for the NSW Rural Fire Service. In that case, despite Ms Barber’s representations as to how some of the funds would be used (and despite the donors’ intentions that the funds be used in those ways), such uses were ultimately not permitted. In McLachlan, the court confirmed the previous decision that a charitable trust was created when money was donated online with the presumed intention that it would be used for a particular charitable purpose. This reasoning may also support an emerging line of authorities that indicate that a charitable company holds its assets on charitable trust, a proposition which has a multitude of administrative and legal implications. Anne Robinson, Consultant, Prolegis Lawyers In the matter of The Ethiopian Orthodox Tewahedo Church St Mary of Debre Tsion, London [2020] EWHC 1493 (Ch) was an internal dispute case involving rival branches of the Ethiopian Tewahedo Church. The importance of this case is that it applied the test of good faith set out in both section 220 of the Charities Act UK and also in the model CIO constitution. The charity concerned had re-constituted as a CIO, and therefore came under the specific provisions of section 220. Of course, the charitable corporation in Lehtimäki and Others v Cooper was not a CIO and the decision of the Supreme Court there was not directly relevant. The circumstances of this case would also have to be distinguished from circumstances which may arise in Australia because the members in question, in voting the way they did, acted in breach of their fiduciary duties arising under clause 10.3 of the CIO constitution referred to below and section 220 of the Charities Act which provides that: “Each member of the CIO must exercise the powers that the member has in that capacity in the way that the member decides, in good faith, would be most likely to further the purposes of the CIO”. Australia does not have a CIO with its express statutory “in good faith” provision. The Court did not expressly cite or apply Lehtimäki and Others v Cooper [2020] UKSC 33. However, it did note that In the previous decision in this long running saga, Children’s Investment Foundation Fund (UK) v Attorney General [2019] Ch 139, the Court of Appeal held that members of a charitable company owed a duty corresponding to that specifically imposed on members of CIOs by section 220 of the Charities Act 2011 (at [48]). The significance of the case for me therefore is two-fold: firstly, that the Court considered the application of the good faith test: “In other words, the member must exercise the powers that he has in that capacity in the way that he decides, in good faith, would be most likely to further the purposes of [the charitable company]. It should be stressed that this duty is subjective: in other words, that what matters is the member’s state of mind (compare e.g. Regentcrest Plc v Cohen [2001] 2 BCLC 80, para 120, dealing with company directors)”. This was because the Court could not say that the members had not applied their minds to their proper duty. However, in conducting future elections the Court recommended reminding members in the meeting that in voting “they do owe a duty to the CIO/Church to exercise an independent judgment, and to vote in the way that they, in good faith, consider the interests of the CIO/Church would be best furthered”([at [59]). The second point of significance of this case for the governance of charitable corporations is that there were a significant number of members of the charity concerned, not the small number as in Lehtimäki and Others v Cooper, where the Court commented on (though it was not directly relevant) whether the principle of fiduciary duties of members would apply to charities with large numbers. It remains to be seen whether a court in Australia would find an implicit fiduciary or fiduciary-like duty notwithstanding the lack of an equivalent provision to section 220 of the UK Charities Act. 2 Charity + In Attorney General v Zedra Fiduciary Services UK Ltd [2020] EHWC 2988 (Ch) the issue before the Court was whether a trust established to discharge the National Debt was for charitable purposes, and, if those purposes having failed, whether the fund could be applied cy-près. An anonymous donor settled an amount of cash and securities in 1928 initially valued at almost £500,000. This amount was to be held by Barings as trustees to accumulate income and profits until the date fixed by the trustees as being the date when, either alone or together with other funds then available for the purpose, it was sufficient to discharge the National Debt. At the commencement of the proceedings the fund stood at £512m, approximately 0.026% of the current UK National Debt of £2,004 billion. It was agreed that while there were reasonable prospects to discharge the national debt sometime in the future at the time of the deed’s execution, the prospects were now described as “vanishingly small” (at [34]). The trust was held to be for a charitable purpose and a further hearing will be held about applying the cy-près doctrine. + Greenpeace of New Zealand Inc v Charities Registration Board [2020] NZHC 2993 was litigation following a decision confirming that Greenpeace of New Zealand Inc was entitled to be registered as a charity under the Charities Act 2005 (NZ): see Greenpeace of New Zealand Inc v Charities Registration Board [2020] NZHC 1999.