Court throws out charitable status test case

Canterbury Development Corporation has lost its case in the High Court to be considered a charity and enjoy the tax-exempt status of that.

The regional economic development agency, an arm of the Christchurch City Council and part-funded by a council grant, challenged the Charities Commission's decision in September last year to decline its application to register as a charity.

The CDC and two related bodies, the Canterbury Development Corporation Trust and the Canterbury Economic Development Fund, also applied for charitable status registration and were declined.

Justice Ronald Young's decision in the High Court released yesterday upheld the commission's decision.

The CDC's challenge was regarded as a test case, because several other economic development agencies who, like CDC, had previously had charitable status, had been declined that under the new charities law.

CDC chief executive Bill Luff could not be contacted yesterday for comment on the decision. CDC argued that its charitable purpose was the relief of poverty, advancement of eduction and the beneficial effect to the community through the development of industry and commerce.

It said the generation of jobs was within the bounds of the relief of poverty, one of the purposes of a charity defined in the Charities Act 2005.

But Justice Young disagreed. "I do not accept the purpose of CDC is to assist the unemployed. I accept the unemployed could be one of the ultimate beneficiaries of its work.

"The aim of CDC is to assist businesses to prosper [within the criteria of those whom it will help]."

None of the activities of CDC was directly focused on the creation of employment for the unemployed. CDC's purpose was to improve the general economic wellbeing of the area, he said.

"The possibility of helping someone who is unemployed is too remote for it to qualify as the charitable purpose of relief of poverty."

Another purpose of a charity was the advancement of education. Justice Young said he did not consider the business training courses provided by CDC in areas such as finance, marketing and counselling came within the provision of the advancement of education under the Charities Act.

To be a charitable purpose it must provide the opportunity to a broad section of the public.

"This could hardly be said to be the case here given the narrow way in which CDC has defined eligibility.

Nor in my view is supporting business by providing assistance to their proprietors, in such aspects of financial management or marketing, the support or advancement of education and learning."

Justice Young said the CDC intention was to help fledging businesses in the hope that they will grow.

Not all businesses who asked for help were provided it, only those within a narrow band, and the help might make the businesses more profitable

"This promotion and profitability is not incidental to the work of CDC. It is at its core. This illustrates how the spirit and intendment of charitable purpose is not cental to CDC's function and thereby cannot be charitable."

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