[2015] FWC 7309
FAIR WORK COMMISSION

DECISION


Fair Work Act 2009
s.789FC - Application for an order to stop bullying

Ms Marie Pasalskyj
(AB2015/407)

COMMISSIONER HAMPTON

ADELAIDE, 13 NOVEMBER 2015

Application for an order to stop bullying – whether workplace conducted by a constitutionally covered business – incorporated association providing services to prisoners - whether trading corporation – extensive government funding – whether funded activities and income should be treated as trading – many activities not in the nature of the government purchasing commercial services – whether other income producing activities trading in nature and significant – some trading activities found – trading activities significant and sufficient to impact upon the character of the association – trading corporation – jurisdiction to deal with alleged conduct found – application to be listed for hearing.

1. Background and case outline

[1] Ms Marie Pasalskyj has made an application under s.789FC of the Fair Work Act 2009 (the FW Act) for an order to stop bullying conduct she alleges has taken, and may in the future take place, within her workplace. The workplace concerned is conducted by Outcare Inc T/A Outcare (Outcare or the employer).

[2] Outcare is a community services organisation that provides a range of services to offenders and former prisoners and their families in Western Australia. Ms Pasalskyi is the Manager of the employer’s Family Care Centres that are operated in the prisons for the Department of Corrective Services (WA) (DoCS).

[3] Having conducted preliminary proceedings, arrangements were made for the determination of the application. In the course of that preparation, Outcare raised a jurisdictional objection concerning its status as an organisation.

[4] It is common ground that for Ms Pasalskyj’s application to proceed, the behaviour must have taken place in a workplace that is conducted by a constitutionally-covered business. This arises from s.789FD of the FW Act, which is in the following terms:

[5] Outcare is located in Western Australia and does not fall within the scope of s.789FD(3)(a)(ii), (iii), (iv) or (b). Accordingly, in order to fall within the scope of s.789FD(3) of the FW Act, Outcare must be a constitutional corporation.

[6] The term “constitutional corporation” is defined in s.12 of the FW Act in the following terms:

[7] The Constitution, in effect, defines “constitutional corporations” as follows:

[8] It is also common ground that of these, only the concept of a trading corporation is potentially relevant to Outcare. It is apparent that Outcare is incorporated within the limits of the Commonwealth.

[9] Outcare contends that it is not a trading corporation within the meaning of the FW Act due to its activities and nature, and as a result, the workplace is not conducted by a constitutionally-covered business. In support of that proposition, it relies upon the evidence of Mr Justin Clarke, its Finance Manager.

[10] Ms Pasalskyj contends that the activities of the employer include significant government funded programs and that these, and other activities, are trading in nature and mean that it should be considered to be a trading corporation. Ms Pasalskyi provided a sworn statement and also relies upon other publicly available information.

[11] In addition to the provision of comprehensive written submissions, a hearing was conducted given certain factual disputes.

2. The broad operations of Outcare

[12] Before dealing with the detailed positions of the parties it is appropriate to initially consider the nature and operations of the employer in broad terms. I leave aside for the moment the characterisation of the various activities and the limited factual disputes that exist.

[13] Outcare has been operating since the mid-1960s as a provider of rehabilitation services in Western Australia. Originally, Outcare was established as the Civil Rehabilitation Committee of WA, which was formed at the same time as the then Probation and Parole Service.

[14] Outcare is engaged in the community services sector and is funded primarily by the State and Federal Governments to provide services to offenders in the prison setting and when they are released from prison to help the offenders reintegrate back into the community. It is generally regarded as being a “not-for-profit” organisation.

[15] Outcare is an incorporated association pursuant to the Associations Incorporation Act (1987) (WA) and is registered with an Australian Business Number (ABN). The incorporation provides its corporate status for present purposes.

[16] Outcare is classed as a public benevolent institution and is eligible to accept tax deductible gifts. It is governed by a board comprising a President, two Vice Presidents, a Treasurer and a combination of elected and co-opted board members.

[17] Outcare’s current Constitution 2 establishes its basic purpose in the following terms at clause 3:3

[18] Clause 3.8 of the Constitution provides that the property and income of Outcare is to be applied solely towards the promotion of the objects or purposes of Outcare and no part of that property or income may be paid or otherwise distributed, directly or indirectly, to its members except as bona fide compensation for services rendered or expenses incurred on behalf of Outcare. I note that this constraint is consistent with associations that may be incorporated under the Associations Incorporation Act (1987) (WA). 4

[19] Outcare is a major non-government provider of crime prevention in Western Australia and it works closely with offenders, ex-offenders and their families, as well as the broader community, government and non-government organisations.

[20] Outcare provides services to clients during the six months prior to their release from prison and also during the twelve months subsequent to their release. The main services that Outcare provides are designed to deal with the issues that contributed to the original offending behaviour in an effort to reduce the likelihood that the client will re-offend. These services include offering support in finding accommodation, providing training and education, assistance in finding employment and referrals to other service providers.

[21] Outcare also offers a broad range of education, intervention and reform programs aimed at reducing the re-offending rate of people in conflict with the justice system and supporting their successful reintegration into the community.

[22] During the 2014/2015 financial year, Outcare delivered sixteen programs or services focusing on specific groups including adult males, youth males, and individuals with complex needs, Aboriginal clients, adult females and family members of clients.

[23] In order for Outcare to operate, it is dependent on funding received through the DoCS, the Mental Health Commission (MHC), the Disability Services Commission (DSC), the Commonwealth Department of Social Services (DSS) and the Department of Prime Minister and Cabinet (PMC).

[24] The property and income of Outcare for the Financial Year 2014/2015 includes the following:

[25] The net assets of Outcare for the Financial Year 2014/2015 are set out in the provisional (unaudited) Balance Sheet for Financial Year 2014/2015:

[26] The total current assets identified in the above table have accumulated since Outcare’s inception in the mid-1960s and the evidence does not reveal where all of these assets have derived from. It is however clear that the funding has included donations from LotteryWest and individuals, and the accumulated product of its activities over time.

[27] In the Financial Year 2014/2015, Outcare retained a provisional surplus which was comprised of the following:

[28] Five operational programs ran at a loss of $89,888 bringing the overall surplus to $174,507. The total of the Operational Programs for the Financial Year 2014/2015 created a net loss of $37,727. That is, the funded programs required additional financial support from Outcare's reserves in order to maintain the services.

[29] The total income of Outcare was derived from the following sources to deliver a range of services to the various target groups:

[30] The Administration surplus achieved in the 2014/15 year was comprised of $331,000.00 of internal company cost recovery charges matched with $348,000 of expenses, $189,000 in interest from term deposits, and approximately $40,000 other income.

[31] In 2015, Outcare directly employed in the order of 125 staff.

[32] Outcare does not engage in specific fundraising activities.

3. The contentions of the parties

3.1 Outcare

[33] Outcare contends that it is not a trading corporation on the following grounds: 5

[34] Furthermore, Outcare contends that:

The provision of government funding through DoCS to the employer is completely regulated in terms of the purpose the funding must serve. For the majority of programs, no fee is charged and little if no surplus is generated;

Consequently, the objectives of Outcare show that the very purpose for which the organisation exists is to provide assistance and guidance to individuals with disabilities. It is not to engage in commercial activities predominantly;

3.2 Ms Pasalskyj

[35] Ms Pasalskyj contends that Outcare is a constitutionally-covered business on the basis that it is a trading corporation. The basis of that contention is as follows: 7

The activities of Outcare are in reality a commercial enterprise with a solid capital foundation with 126 staff selling its services to the Government, which the Government is prepared to purchase on certain terms and conditions. Additionally, Outcare runs a significant accommodation service for its clients which operates on the basis of normal tenancy provisions and the receipt of commercial rent for the properties. The accommodation activity is not trivial; and

[36] Ms Pasalskyj further submits that based on Outcare’s activities, the following arises:

[37] Furthermore, Ms Pasalskyj submits that Outcare has grown significantly since it began and enacted the charitable aims and objects that are set out in the Outcare Constitution. Outcare is well positioned to provide services to Government to achieve its objects both with its capital depth and staff resources, which underpin its activities that are commercial in nature. If the term trading corporation is given a wide and liberal interpretation, the employer should be found to be a trading corporation for the purposes of the FW Act.

4. What is a trading corporation?

[38] The following discussion is taken from my decision in McInnes, 10 which was comprehensively referred to by both parties. I have also extended the discussion based upon the submissions of the parties in this matter.

[39] The approach of the Courts and Tribunals to the meaning of a trading corporation has been conveniently summarised by Steytler P in Aboriginal Legal Service (WA) Inc v Lawrence (No 2.)11 (Lawrence). Having reviewed the developments in the approach of the High Court to arrive at what might be described as the activities test, His Honour found as follows (footnotes and references omitted):

[40] This summary was adopted by the Full Court of the Federal Court in Bankstown.

[41] Given the facts of this matter, it is also appropriate to further consider how government funding and related activities have been treated by Courts and Tribunals in terms of the characterisation of those activities for present purposes.

[42] In Lawrence, the Western Australian Court of Appeal held by majority that the legal service involved was not a trading corporation. It found that the funding it received from the Commonwealth Government under contract for the provision of (mostly) free of charge legal services to indigenous Australians was removed from the ordinary concepts of trade or trading. 12 The minority held that the legal service had entered into a trading arrangement because its services were provided after a competitive tendering process.13

[43] In Fowler v Syd West Personnel Ltd 14 the Australian Industrial Relations Commission was dealing with a corporation established to create and operate a long term employment program for people with intellectual disabilities and to place other workers in employment. Much of its income came from Commonwealth Government grants under contract. The Commission concluded that the respondent was not a trading corporation on the basis that it was engaged in the gratuitous provision of a public welfare service substantially at government expense which was not the conduct of a ‘trade’.

[44] In an earlier case of Pellow v Umoona Community Council Inc 15 the Australian Industrial Relations Commission distinguished between grant funded social service activities and agency arrangements involving a charge on a government department for the provision of a designated service.16

[45] These decisions must also be considered in the context of the later decisions of the Federal Court.

[46] In Bankstown, the Full Court was also dealing with an incorporated association that received most of its funding from government. The Court posed the question in the following manner:

[47] The Full Court focused in particular on the funding and services provided in relation to the ‘Out-of-Home Care’ (OOHC) programs under which the Centre was paid for services provided to the relevant government agency (DOCS) on a fee for service basis. It concluded:

[48] In an earlier case of E v Australian Red Cross Society, 17 Wilcox J considered whether the Australian Red Cross Society and the Royal Prince Alfred Hospital were trading corporations. The Society supplied blood and blood products, generally free to the community, but received substantial government funding. The Court, in considering the more than $44m received in respect of its blood transfusion services, said:

[49] I note that when considering the position of the Royal Prince Alfred Hospital, Wilcox J found that the scale of the hospital's trading activities were “substantial enough” to require that the hospital should be regarded as a trading corporation. 19 The details of this aspect are explained in more detail in a decision outlined below.

[50] In terms of the assessment of trading activities as substantial and not merely peripheral, the approaches do vary to a degree.

[51] In Bankstown, the Full Court observed that “there is no bright line that determines what proportion of trading activities is “substantial”. 20 In the recent decision of the Federal Court in United Firefighters Union of Australia v Country Fire Authority,21 (UFU v CFA) Murphy J observed:

[52] Having found that six of the County Fire Authority’s (CFA’s) non-fire fighting activities were trading activities, Murphy J found:

[53] In Edmonds v Telethon Speech and Hearing Centre for Children [2014] FWC 1037, Cloghan C helpfully observed that:

[54] The fact that an ABN is used by the employer cannot by itself mean that it is a corporation. Amongst other reasons, non-corporations can apply and be granted an ABN. 22

[55] The provision of services, largely or wholly, free of charge, and whether they are provided for altruistic purposes not shared by commercial enterprises, are also relevant, but not determinative, considerations. 23

5. Is PSS a trading corporation?

[56] This matter primarily rests upon the characterisation of the activities associated with the government payments received by Outcare. These activities are in the nature of community welfare and services, however this is not of itself relevant. The services are also significant in both relative and absolute terms and if the whole, or a reasonable part, of those activities were considered to be trading activities, this would inevitably lead to the conclusion that Outcare was a trading corporation.

[57] The decisions discussed earlier in this decision suggest that there is a dichotomy between activities that are undertaken by organisations similar to Outcare where the government pays for a service to be provided. Typically, these involve the delivery of services to government (often in the form of services available to the community) that result from competitive tendering processes where the Government is seeking specific services at competitive rates, and where payment is made for the actual services provided. That is, the “State” effectively purchases the services. In most cases, these activities are either undertaken for profit, or at least to generate revenue to support other activities or the organisation as a whole. The OOHC service in Bankstown is an example of this form of trading activity. Activities of this nature are considered to be trading activities for present purposes.

[58] Alternatively, there are activities that are undertaken by organisations similar to Outcare that are the subject of government payments whereby governments subsidise the services provided by the organisation. Typically, these involve the provision of bulk grants that might be linked to performance requirements and benchmarks, but do not involve fee for service in the conventional sense. These services lack the character of buying and selling between the organisation and the funding agency, and are often provided gratuitously to the public and are considered to be an end in themselves. That is, the purpose of the service is not to generate income but rather, to provide the service itself. The provision of blood products by the Red Cross in E v Red Cross is an example of this form of non-trading activity. Activities of this nature are not considered to be trading activities for present purposes.

[59] These two characterisations represent points on a spectrum, and the real world, as in this case, often involves a mix of such indicia. It is also important to consider the entire context in which the activities are undertaken.

[60] Against that background I turn to consider the various forms of government payments provided to Outcare and the associated activities conducted by the employer.

5.1 Block Funding Contracts

[61] The essential immediate issue is how the so called block funding activities should be treated. If all or some of these are considered to be trading in nature, they are significant enough in their own right to effect the characterisation of the organisation for present purposes.

[62] The combined block funding activities amounted to over 80% of the programs provided by Outcare in the 2013/14 financial year. These activities include the following:

[63] I will deal separately with the accommodation and related services which are facilitated to a significant degree by block funding contracts.

[64] Each of the block funding contracts operate under a service agreement, or contract, which specifies the services and standards required, the funding arrangements, and the audit and acquittal conditions. In general terms, these contracts provide a “block” of funding to provide a particular service and the payment is not linked to a particular number of clients or individuals services. This includes, for example, a target for the provision of services without any link between the actual number and the amount of the payment made by the relevant Department. 24 The funding agreements do, however, normally have KPI’s that often include the required achievement of some or all of the nominated targets. This includes, for example, the number of clients and referrals.25

[65] Payments are made quarterly in advance, or on some other regular basis, and involve a Recipient Created Tax Invoices (RCTI) being issued by the funding body in accordance with the agreed funding amount. A RCTI is, as the name suggests, an invoice issued by the recipient of the supply rather than by the supplier as would normally be the case. In some limited cases, additional fees may be payable for additional services, such as the brokerage funds that are made available to “purchase” services under one of the mental health programs. 26

[66] In most cases, the block funding contracts have been in place for many years and have been continued without any form of competitive tendering processes.

[67] In each case, the block funding contracts require that the funding be spent exclusively on the services outlined in the contract with any surplus or unspent money being returned to the funding agency, allocated to another project with the specific approval of the funding agency, or in some cases, rolled over into the next year for use on the original funded program. The services are also generally provided free of charge to the clients.

[68] As a result, in general terms the block funding contracts are not intended, or able to be used, by Outcare to fund other activities of the organisation. In each case, the funding must be used for the particular programs concerned and these are undertaken to meet the fundamental objectives of the organisation.

[69] I consider that in general terms these block funding contracts are more consistent with the concept of non-trading activities. That is, they do not generally have the character of commercial trade in services or elements of exchange or other commercial indicia in the payment so as to be considered as trading activities for present purposes. The activities resulting from these arrangements are also generally provided to the community without charge. They are more akin to the non-trading services described by Wilcox J in E v Red Cross.

5.2 Accommodation and related support services

[70] Outcare runs an accommodation program which utilises around 40 properties to provide short term and emergency accommodation and support services to a number of clients (ex-offenders newly released from prison who are assessed as having a high risk of returning to custody due to a lack of suitable accommodation) and in some instances, their families.

[71] The 40 properties are provided to Outcare by the Department of Housing under a funding/lease agreement. The Department leases the premises to Outcare at a peppercorn rent. Outcare is obliged under the arrangements to charge its clients a market value fee or rental cost. The Guidelines attaching to one of the lease agreements encourages the agency to maximise their rental charges and returns in a manner that reduces the financial disadvantage to the “tenants”. 27

[72] Outcare provides a transitional accommodation program and does so by treating the clients as boarders rather than tenants due to the nature of the arrangements and the need for flexibility. 28 In that context, it enters into a licence to occupy with its clients rather than a tenancy agreement.

[73] Outcare generally charges $100 per week to its clients. This is variously described as being a “maintenance contribution”, and in most contexts, as a “rental payment”. Outcare does not charge or receive additional payments from clients in relation to utilities such as phone, electricity, gas and water.

[74] The licence to occupy is a formal contract and requires that the first fortnight rent payment will be $200 combined with a key deposit and a welcome pack. The rent is to be paid two weeks in advance and arrangements are made to deduct payments via income provided from Centrelink.

[75] The description of the client contribution as “rent” and the associated arrangements are also designed to acquaint the clients with some of the normal terms and obligations that would apply in the private rental market. This is part of the client transition process, and although it may fall short of being a full market rate, it is the case that the rental payments are commercial transactions and operate in the context of formal contractual arrangements. These have a trading character.

[76] Some of the housing is suitable for multiple clients to occupy, and if that occurs, each client is charged the “rental” fee. The housing stock is in high demand and Outcare applies considerable staff and other resources to provide this service.

[77] In the last financial year, Outcare received, in addition to the government funding, approximately 2.4% or $271,000 of its total funding for the provision of this service, in the form of “rental” fees. These rental fees are a significant source of funds for the accommodation program and this outcome is intended as part of the government funding arrangements.

[78] Any surplus from the accommodation services may be retained by Outcare for use in the program; however, the program as a whole is normally loss making, with a loss of approximately $6,000 in the financial year 2014/15.

[79] The Crisis Accommodation Program (CAP) is a further service run by staff of Outcare and funded under an agreement with the DCS. There is also a variation to this agreement which provided funding for the Dangerous Sex Offender program. The Accommodation Service Agreement is supplemented by an agreement; namely, the General Provisions for the Purchase of Community Services by Government Agencies.

[80] Funding under the Accommodation Service Agreement comprising a fixed annual fee. In the last financial year, this funding comprised approximately 4.5% of Outcare's total funding.

[81] Invoices for services are to be submitted quarterly in advance to the Department of Justice and payment is made to Outcare subject to the provision and/or receipt of reports in accordance with the terms of the Accommodation Service Agreement.

[82] The service payment is to be used for the sole purpose of providing the services and is not to be used for “prohibited purposes” such as costs relating to any industrial or legal action, payment of existing debts or those debts not related to the service and purchase of capital items.

[83] Any surplus from the Accommodation Service Agreement may be retained by Outcare to use in the program the following year.

[84] Although much of the accommodation and related services may not be considered to be a trading activity, the direct provision of the housing to clients and the associated licence to occupy and rental arrangements have the character of commercial trade in services or elements of exchange or other commercial indicia in the payment so as to be considered as trading activities for present purposes.

[85] As a result, I find that some of the accommodation and related services represent trading activities. I will return to the measurement of that extent later in this decision.

5.3 Funding contracts

[86] The terms “Funding contracts” is used by the employer in this context to refer to the fact that Outcare derives income from contacts that arise from a tender process and it offers services at a nominated price. Income is received in advance based upon the contract price provided the necessary Key Performance Indicators are met.

[87] Unlike the block funding contracts, any surplus funds may be retained by Outcare. The only present funding contract is subject to a service agreement with the WA Department of Training and Workforce Development and involves the provision of support services including employment placement and vocational training.

[88] Approximately 1.8% of its total funding was derived from funding contracts in the last financial year.

[89] I consider that these activities are more consistent with the nature of the OOHC service in Bankstown and should be considered to be trading activities for present purposes.

5.4 Individual contrasts

[90] In September 2013, Outcare entered into a service agreement with the Disability Services Commission (DSC) for the provision of individually funded services to ex�offenders with intellectual disabilities living in Western Australia for a period extending until 30 June 2016 (Special Needs Service Agreement).

[91] The Special Needs Service Agreement consists of a request for individually funded services (including the basis of referrals), an advice of acceptance from the DSC, and general provisions for the purchase of community services by public authorities.

[92] Prior to accepting a client referral, the Outcare Special Needs support worker is required to undertake a risk assessment that analyses, among other things, the client's primary offence, additional offences, sentence, expected date of release, and age at first conviction.

[93] The support services provided include mentoring, assistance with finding accommodation, development of employment skills, domestic assistance, emergency relief and assistance with personal care.

[94] Once funding has been acquired for the client, DSC complete the details required in the contract regarding the individual funding and services and an estimate of the requirement for staff support. These are based on interactions with the client and other relevant stakeholders. This establishes the funding and deliverable hours for each client.

[95] Pursuant to the Services Agreement, Outcare must undertake and comply with certain reporting requirements regarding details of the activities and agreed outcomes that are to be funded and delivered, provision of an annual report stating whether they have delivered the contracted services and, where required, provision of an annual financial report.

[96] The Special Needs Service Agreement arose from a tendering exercise which involved a panel of providers. This was, in part, preparation for the roll-out of the NDIS in Western Australia.

[97] In the last financial year, Outcare received approximately 7.7% of its total funding from the State Department for the provision of this service, being $877,412.

[98] Approximately $17,396 (equivalent to 0.02% of the total Income) is classed by Outcare as ‘Fee for Service’. This is where the Public Trustee holds the client funds and is invoiced for service hours, rather than funding coming from the Commission.

[99] I consider that the activities subject to the funding contracts are more consistent with the concept of trading activities. That is, they do have the character of commercial trade in services or elements of exchange or other commercial indicia in the payment so as to be considered as trading activities for present purposes.

5.5 Other funding and income

[100] Approximately 4% of Outcare's income is derived from other funding or income accrued across the financial year. This included just less than 2% ($189,000) of interest derived from term deposits in the last financial year.

[101] Approximately 1.3% of Outcare's income is derived from the Youth Housing Renovation program in which clients on the Live Works program renovate Department of Housing properties as the practical learning component of their Certificate II in Construction. In the last financial year, Outcare invoiced approximately $154,000 to the government for this service.

[102] Approximately 0.5% of Outcare's income is derived from various one-off grants received from a number of sources. These grants are generally tied to specific deliverables such as art programs for youth in the criminal justice system. In the last financial year, Outcare received approximately $60,000 in income from these sources.

[103] Outcare receives approximately $15,000 or 0.2% of its income for the charity Nighthoops which runs a basketball program for high risk youth in the metropolitan area. Outcare derives no profit from this “auspicing” arrangement and donates $5,000.00 in kind.

[104] There are a series of intercompany charges allocated in the accounts of Outcare. These include a cost recovery charge of $4,500 per annum per employee to each program using facilities in the building owned and occupied by Outcare in East Perth. This is to enable employees to each program to be co-located with other programs. This is charged on an estimated cost-recovery basis.

[105] In the last financial year, Outcare leased 52 vehicles and owned 6 vehicles. These vehicles are leased to employees of Outcare's programs operating from East Perth for the purposes of various trades and transporting clients. The six vehicles owned by Outcare are charged to the programs at the same cost as the leasing company from which Outcare leases its vehicles.

[106] In terms of interests on deposits, these would appear to be a natural consequence of any incorporated association having cash investments. Activities in that regard may be considered to be indicative of a financial corporation, 29 however this has not been suggested in this case and the level is such as to be insignificant for present purposes. I do not consider this to be a trading activity in the context of Outcare’s operations.

[107] I consider that the Youth Housing Renovation program is a trading activity. Despite its altruistic purpose, this activity involves the provision of a service to the Western Australian government which is invoiced based upon the performance of specific services.

[108] However, I am inclined to the view that the process of generating “profit” from the charging out of the motor vehicles and other overheads on a cost-recovery basis to each of the activities is not, by itself, a trading activity in the context of Outcare.

5.6 The process for gaining funding

[109] I have set out above the basis under which the major activities have been funded. In general terms, most of the activities have been gained by direct discussions with the funding bodies rather than an open tendering process. There are exceptions to this rule and these are also set out above.

[110] Various departments and agencies of the Western Australian government are amongst the major funders of the employer. The WA government is moving to a more competitive model for the provision of community services. This is known as the Delivering Community Services and Partnership Procurement Model and this is being progressively implemented. The Special Needs Service Agreement was organised and gained in a manner consistent with this model and it is anticipated that many of the major activities of Outcare will be subject to the full application of this model in 2016. This will involve a competitive tendering process and a more commercial basis of assessment and operation of the contracts.

[111] To that end, Outcare had established a Tender Process Management Team, made up of existing management staff, but focused on positioning the organisation to contest upcoming tender exercises.

[112] There would be little doubt that the full application of this new model to the major activities of Outcare would impact upon the characterisation of those activities for present purposes. However, the approach adopted by the Federal Court in Bankstown 30 was that the time to evaluate whether a corporation is a constitutional (trading) corporation is when the application is made. On that basis, other than where an activity has been obtained under the revised funding model, I have not had regard to that development. This means that although most of the services are being provided in what will be an increasingly competitive and commercial context, that is not the contractual environment in which they presently operate.

5.7 Is there sufficient trading activity to impact upon the characterisation of Outcare?

[113] As outlined earlier in this decision, the assessment of trading activities as substantial and not merely peripheral, insignificant or otherwise incidental is a matter of fact and degree.

[114] I consider that activities conducted under the following funding arrangements bear the necessary hallmarks of trading so as to be treated as being trading activities for present purposes include:

[115] This amounts to, in the order of, 11% of Outcare’s income and approximately $1.20m per annum. 31

[116] In addition, I consider that activities associated with the direct provision of accommodation services are also trading activities. If only the rental payments were taken into account to measure the extent of this activity, that would amount to an additional 2.4% of income and approximately $271,000 per annum. However, this is approach is too narrow in that significantly more resources and funding is applied to this service than is measured in the rental payments. Regrettably, it is not possible to derive that amount with any precision based upon the information presently before the Commission.

[117] Despite this, it is reasonable to deal with this matter on the basis that the total of the trading activities would be something well beyond $2.5m per annum and what would have to be in excess of 15% of the income of Outcare. This is based upon a conservative estimate of the additional value of the accommodation trading activities. This combined level of trading activities is in my view substantial in the sense contemplated by the authorities. Further, Outcare’s trading activities are not insubstantial, not trivial, insignificant, marginal, minor or incidental.

6. Conclusions and order

[118] In all of the circumstances I am satisfied that Outcare is a trading corporation.

[119] The workplace in which the alleged conduct took place is conducted by a constitutionally-covered business and this means that there is a basis for the Commission to deal with the application under the relevant provisions of the FW Act.

[120] Accordingly, this application will be assigned so that it can be listed for a hearing to deal with the substance of the matter.

COMMISSIONER

Appearances:

P Mullally, of Workclaims Australia, with permission for Ms Pasalskyj.

M Airey with M Lalli, of HWL Ebsworth, with permission for Outcare Inc.

Hearing details:

2015

Adelaide and Perth (video hearing):

October 6.

 1   Australian Constitution s.52(i).

 2   Dated 9 October 2013.

 3   Summary taken from the evidence of Mr Clarke.

 4   Associations Incorporation Act 1987 (WA) – s.33. See also Bankstown at [43] and [44].

 5   Taken from written and oral submission made on behalf of Outcare.

 6   Aboriginal Legal Service (WA) Inc v Lawrence (No 2.) (2008) 252 ALR 136 at par [68].

 7   Taken largely from written submissions made on behalf of Ms Pasalskyj.

 8   Bankstown Handicapped Children’s Centre at [54].

 9   (2010) 182 FCR 483 at par [48].

 10   [2014] FWC 1395.

11 (2008) 252 ALR 136 at par [68].

 12   Per Steytler P at pars [72] to [74].

 13   Per Le Miere J at pars [133] to [139].

 14   [1998] AIRComm 904 per McIntyre VP.

 15   [2006] AIRComm 426 per O’Callaghan SDP.

 16   Ibid at par [29].

 17   (1991) 27 FCR 310.

 18   Ibid at 343.

 19   Ibid at 345.

 20   (2010) 182 FCR 483 at par [52].

 21   [2014] FCA 17.

 22   See Ms S.W. [2014] FWC 3288.

 23   See R v Trade Practices Tribunal Ex parte St George County Council (1974) 130 CLR 533 at 569 and Re: Ku-ring-gai Co-operative Building Society (No. 12 ) Ltd (1978) 36 FLR 134 at 160. These authorities must also be considered in light of the more recent decisions of the Federal Court outlined in this decision.

 24   Service Agreement Amendment operating with respect to Accommodation Transition Program – part of attachment G to exhibit R1.

 25   Community Support Services Pilot for Youth Mental Health Court Diversion Program - part of attachment I to exhibit R1.

 26   Ibid.

 27   Guidelines for the Community Disability Housing Program – attachment D to the statement of Mr Clark – exhibit R1.

 28   Boarders are excluded from the relevant tenancy laws in Western Australia.

 29   See: Re Mid Density Development Pty Limited v Rockdale Municipal Council [1992] FCA 634 at 25.

 30   Bankstown at [45] to [47].

 31   Using the income from funders and interest on term deposits from the 2014/15 year as the basis of the income estimates.

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