Western Australia is set to have the most rigorous and comprehensive charitable trusts laws in the nation, with the introduction of extensive new investigative powers to ensure charitable trusts are managed in accordance with the objects of their trust deed.
In WA, many charitable trusts are established for the purpose of advancing the interests of Indigenous communities.
The final report into the Njamal People's Trust (the Report) recommended a raft of reforms to the current legislation governing charitable trusts. The Charitable Trusts Bill 2022 addresses a series of gaps in the current framework identified in the Report, significant among them being the absence of any compulsive powers to require a person to attend and give evidence on oath or affirmation.
The Bill establishes the Western Australian Charitable Trusts Commission, which will be able to conduct investigations upon receiving a complaint about a charitable trust. The Commission, constituted by the Ombudsman, will undertake investigations under significantly expanded powers akin to those of a Royal Commission, which include:
- the ability to issue a notice requiring a person to provide a document or other information relating to a charitable trust or concerning any person involved in the administration of a charitable trust, or any other assistance that is reasonably necessary;
- the ability to compel the production of documents and the attendance of persons to answer questions before the investigator and be examined under oath or affirmation; and
- the ability to carry out an audit of the accounts of a charitable trust under investigation.
Non-compliance with these requirements will attract a maximum penalty of $50,000 - a ten-fold increase to the existing penalty to reflect the seriousness of the offence.
The Bill introduces a new power enabling the Attorney General, or a person authorised by the Attorney General, to apply to the Supreme Court to seek orders removing a trustee or person involved in the administration of a charitable trust, to appoint a person as a trustee or to preclude a person from being involved in the administration of a charitable trust in certain circumstances.
These circumstances are where there has been misconduct or mismanagement, where the person is not a fit and proper person to be involved in the administration of a charitable trust, or where it is necessary or desirable to protect the existing or future property held by the charitable trust.
The Bill also makes changes to simplify the law that allows certain trusts or gifts for charitable purposes that could not be given effect to (such as through insufficient funds or nominating a charity that no longer exists), to instead be put to use for a charitable purpose that is as close as possible to the donor's original intention.
As stated by Attorney General John Quigley:
"The current Charitable Trusts Act was written back in 1962 and it is not fit for purpose today.
"Tens of millions of dollars of native title settlement monies are being paid into these trusts.
"Invariably, the trustees are corporations often with their registered offices in Perth.
"As the Attorney General I receive many complaints from Indigenous groups that funds of a charitable trust are being misused by the trustees or by others involved in the administration of the trust.
"It was the concerns raised in relation to the Njamal People's Trust in 2017 that led to the appointment of then Deputy State Counsel, Alan Sefton, to conduct a formal inquiry into that Trust.
"Mr Sefton's report recommended a raft of reforms to the current legislation governing charitable trusts.
"The Bill implements the 21 legislative reforms recommended in the Report, giving Western Australia the most rigorous and comprehensive charitable trusts legislation across Australia and in New Zealand.
"It achieves a significant expansion of the powers of those investigating charitable trusts, as well as of the Attorney General and Supreme Court, in order to ensure that charitable trusts operate to further the interests of the communities they were designed to assist."
