By Tarang Immidi, Law Graduate
On 4 December 2017, in one of the first judicial interpretations of the Australian Charities and Not-for-profits Commission Act 2013 (ACNC Act), the Administrative Appeals Tribunal (AAT) affirmed a decision of the Australian Charities and Not-for-profits Commission (ACNC) to revoke the Health Promotion Charity (HPC) status of the Waubra Foundation. This case is significant for two reasons:
- it provides the first interpretation of the definition of an HPC; and
- it outlines the procedure for an appeal against a decision of the ACNC.
1. Interpreting the Definition of an HPC
An HPC is defined as a charitable ‘institution whose principal activity is to promote the prevention or the control of diseases in human beings’. In interpreting this definition, the AAT considered each separate element.
Whether the Waubra Foundation was an institution was not disputed by the ACNC. The AAT, therefore, did not examine this issue. It did, however, refer to a decision of the High Court of Australia which adopted the definition of an institution as being a body “called into existence to translate the purpose as conceived in the mind of the founders into a living and active principle.”
1.2 Principal Activity
The AAT found that identifying an institution’s ‘principal activity’ involves assessing the activities actually carried out by the institution and assessing “holistically” the predominant activity carried on by the institution.
The AAT also noted the ACNC Commissioner’s Interpretation Statement on HPCs which states that often, the principal activity may be determined by examining which activity takes up the majority of the institution’s time or resources.
1.3 To Promote the Prevention or Control
The purpose of the principal activity of an HPC must be ‘to promote the prevention or control of diseases in human beings’. The AAT found that this should be determined by reference to the purpose of the primary activity, and not the character of the activity itself.
The AAT relied on the Macquarie Dictionary to define “to promote”, as being in this context “to further the development of.”
The word “prevention” was defined as “keeping from occurring” or “hindering”. “Control” was defined as “holding in check” or “curbing”. The AAT found that the principal activity need not promote both the prevention and the control of diseases, but that either of the purposes of ‘prevention’ or ‘control’ will be valid.
Practically, the AAT accepted the ACNC Commissioner’s Interpretation Statement on HPCs, which accepted that a broad range of activity is encompassed in the promotion of the prevention or control of disease.
The AAT adopted the definition of disease as being “a condition involving the disturbance of the normal functions of body or mind.” This definition was considered to be consistent with other legislative definitions and definitions contained in relevant case law.
This broad definition encompasses conditions that may or may not be accepted by the medical and scientific communities. The AAT found that an institution may be an HPC if it proves that its activities promote the prevention or control of factors that could have indirect health effects which may cause or contribute to disease.
2. Procedure for an Appeal against a Decision of the ACNC
As one of the first appeals against a decision of the ACNC, this case provides an important example of the process involved in appealing a decision of the ACNC. The ACNC Act provides that once the ACNC makes a decision, the entity against whom the decision was made has a right to object to the decision. This is done by a ‘letter of objection’ to the ACNC. The ACNC is then required to decide whether to allow the objection to the original decision wholly, or in part (Objection Decision) on the basis of what is submitted in the ‘letter of objection’. Importantly, it is only the Objection Decision that may be appealed to the AAT, and the parameters for review of the Objection Decision will be the grounds set out in the ‘letter of objection’. This potentially provides very narrow grounds on which an Objection Decision of the ACNC may be overturned, and even where an Objection Decision is found to be incorrect, the AAT will not be able to make the original decision of the ACNC itself. This underscores the pivotal importance of the ‘letter of objection’ in the appeal process.
The practical effect of this process is that even where an organisation wins in the AAT, there is no guarantee that this will lead to a materially different outcome compared with the original decision by the ACNC.
3. What does this mean for Health Promotion Charities?
This case provides greater certainty regarding the definition of an HPC. While existing HPCs should take comfort in the fact that the definition has been interpreted broadly, they should examine the elements of the definition set out above and ensure that their activities are compliant with the clarified definition.
Organisations that are considering applying for endorsement as an HPC should also examine this decision to ensure they are compliant with the definition to ensure their application is successful.
This case additionally provides realistic insights into the challenges charities might face in attempting to appeal a decision of the ACNC. The importance of the ‘letter of objection’ in defining the scope of review of decisions of the ACNC means that professional legal advice must be obtained early in the process of appealing a decision of the ACNC.
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