DECISION

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

Suzanne Robertson
(AB2018/445)

Application for an FWC order to stop bullying – statutory legal aid body – whether employer voluntarily submitted to jurisdiction given inclusion of policy within enterprise agreement – coverage of stop bullying laws considered – applicant must be working in a constitutionally-covered workplace – whether trading corporation – approach considered – major activities not trading – some minor activities may be trading in nature but are peripheral – not trading corporation – no jurisdiction – application dismissed.

1. Background and case outline

[1] Ms Suzanne Robertson 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. Ms Robertson is employed as an Assessment Officer at Victorian Legal Aid (VLA).

[2] VLA is a statutory authority established under section 3(1) of the Legal Aid Act 1978 (Vic) (the LA Act) which provides and funds legal services to the Victorian community. VLA employs in the order of 880 employees spread across its Melbourne head office and 14 regional locations in Victoria.

[3] The application was initially subject to mediation and whilst constructive discussions were held, the application was not resolved to the point that it could be finalised. Subsequently, the application was subject to a preliminary conference where appropriate interim arrangements and the issues arising from the matter were comprehensively considered.

[4] Although some interim arrangements are in place within the workplace to manage the interactions between relevant staff, the stop-bullying application has not been resolved and it has become necessary to deal with a jurisdictional objection raised by VLA. 1

[5] Subject to an alternative proposition advanced by the applicant, it is common ground that in order for the application to fall within this particular jurisdiction as created by the FW Act, Ms Robertson must at the relevant times have been at work in a constitutionally-covered business. This arises from s.789FD of the FW Act and I will return to the detail of that provision shortly. It is also common ground that given the definition of a constitutionally-covered business and the location of the workplace, VLA will fit within that definition only if it is found to be a constitutional corporation; 2 being in this case a trading corporation.

[6] VLA contends that it is not a constitutional corporation, the Commission does not have jurisdiction to determine the merits of the application, and that the application should be dismissed. Ms Robertson contends that VLA is a trading corporation and has, in any event, voluntarily submitted to the jurisdiction of the Commission.

[7] VLA is corporate in nature by virtue of s.5 of the LA Act. There is no contention that it is a foreign or financial corporation. As a result, this decision deals with whether VLA is a trading corporation and this requires me to consider the nature and extent of the various activities conducted by it in the context in which those activities are performed. I also need to consider the applicant’s alternative proposition.

[8] This matter was subject to a hearing on 12 October 2018. Ms Robertson was represented by her sister, Ms Angela Robertson, who is an experienced HR expert; however the representation was provided in a private capacity. VLA was represented with permission 3 by Ms Fitzgerald of Counsel.

[9] In support of its contention that it is not a trading corporation, VLA submits as follows:

•  Applying the jurisprudence from the Courts and Tribunals, VLA’s purposes and activities (under the LA Act and as a matter of fact), indicate that VLA is not a trading corporation;

•  The purpose of VLA is to give assistance by providing and funding legal advice and it is not set up for any other purpose;

•  VLA provides government services and does not undertake any significant activities that could be considered to be trading;

•  This is further confirmed by the Justice Legislation Amendment (Access to Justice) Act 2018 which, when enacted, will amend the LA Act to further reflect the current role and the extent VLA has moved or evolved since the Act was first enacted;

•  The majority of the income of the Fund administered by VLA comes from State and Commonwealth grants and the Public Purpose Fund (PP Fund);

•  There is no trading activity or “cash cow” that it uses to generate funds, but rather, it is providing a public service;

•  VLA does not pay market rates for external legal services it funds to provide assistance to people;

•  VLA does not provide its services pursuant to contracts but rather administers funds and other responsibilities in accordance with the LA Act;

•  VLA provides 40,000 grants of legal aid, with only 1.4% of those clients making any contribution towards the costs of those legal services (equating to 1,800 per year) – no profit is made from those services and even if this element of that activity were considered to be a trading activity – it is insignificant;

•  Any activities, such as room hire or paid training, that might be considered to be ‘trading activities’, are a negligible portion of its overall activities;

•  In essence, VLA’s role is to spend the Government allocated fund to achieve its stated public interest purposes and this is not ‘trade’; and

•  In consideration of the above, it is evident that VLA, whilst a corporation, does not meet either the “purposes test” or “activities test” and cannot be considered a trading corporation. This includes the fact that its objects and purpose do not contemplate commercial or trading activity.

[10] VLA relied upon a number of authorities in support of the above contentions, and in particular, referred to Aboriginal Legal Service (WA) Inc v Lawrence (No 2.)⁴ (Lawrence) to demonstrate the similarities between VLA and the Aboriginal Legal Service of Western Australia in that case. VLA submitted, however, that the circumstances of VLA are such that, if anything, there is a stronger case that it is not a trading corporation given the absence of any tendering for funds or services.

[11] VLA also contends that it has not voluntarily submitted to the anti-bullying jurisdiction and, in effect, cannot do so as a matter of law.

[12] Ms Robertson contends that VLA is a constitutionally-covered workplace within the meaning of the FW Act. In general terms, she asserts that it is a trading corporation given the nature of its activities and the extent of what she says are the legal services trading activities. Ms Robertson also contends that VLA has voluntarily submitted to the jurisdiction of the Commission by virtue of adopting a policy that included reference to the Commission’s Anti-bullying jurisdiction. The applicant further contends that this was confirmed by the inclusion of that policy in the Victoria Legal Aid Enterprise Agreement 2016-2020 (the Enterprise Agreement) as approved by the Commission under the FW Act.

[13] Ms Robertson sought to rely upon the written submissions filed on her behalf and also provided further oral submissions at hearing. In relation to the issue of whether VLA is a trading corporation Ms Robertson contends that:

•  The objectives of VLA are set out in the LA Act and none of those objectives are inconsistent with other trading organisations;

•  The primary activity of VLA is to provide legal services directly to clients or by paying private practitioners to provide legal services – and payment for products or services is a fundamental characteristics of a commercial enterprise;

•  VLA “charges” clients for services and also charges interest on money owed to it by clients, which if they remain outstanding, may be subject to debt collectors;

•  VLA is funded, in part, through the PP fund and this fund is created from interest received from funds held in solicitors’ trust funds and these funds have been obtained through trading activities and used to pay for trading activities in the form of the legal aid services; and

•  The fact that VLA does not make a profit does not alter the trading character of its primary activity (legal services) – the bulk of which is purchased from private law firms.

[14] Ms Robertson submits that, in consideration of the above, it is apparent that the activities of VLA are those of a trading corporation despite the purpose or reason it was established. That is, the provision of legal aid funding to private practitioners to undertake the legal work is the provision of legal work and this is a trading activity undertaken by VLA.

[15] In relation to the extent of the client contribution revenue, Ms Robertson contends that this sum should include client contribution income (both secured and unsecured) and provision for secured and unsecured client contributions – totalling $11.645m. Ms Robertson also referred to the Handbook in support of her contention that VLA advertises for the services of private legal providers.

[16] VLA led evidence from Mr Cameron Hume, Acting Managing Director and substantively the Executive Director Corporate Affairs and Wimmera region. Mr Hume was cross-examined by Ms Robertson. Both parties also provided comprehensive written submissions and relied upon various documents include the following:

•  Affidavit of Mr Cameron Hume (Exhibit VLA-1) with attachments:

•  VLA Annual Report 2016-2017 (Attachment CH-1);

•  Market Readiness – Submissions to the Joint Standing Committee on the National Disability Insurance Scheme (Attachment CH-2); and

•  Standing Directions of the Minister for Finance 2016 (Attachment CH-3).

•  Respectful workplace behaviour policy and complaints process (Exhibit A1);

•  Helping Victorians with their legal problems – Debt Policy (as at 28 September 2018) (Exhibit A2); and

•  Helping Victorians with their legal problems – Managing Debt Policy (as at 10 November 2018) (Exhibit A3).

[17] In addition to the above, a copy of the National Partnership Agreement (NPA) referred to in paragraph 34 of Mr Hume’s statement was also provided by VLA following the hearing. The NPA is a funding agreement between the Commonwealth and State and Territory Governments (including Victoria) for the provision of legal aid and related matters. The VLA Handbook for Lawyers found on its website was also taken into consideration by the Commission. Under leave given by the Commission, the applicant and VLA subsequently provided additional submissions on the NPA, Handbook and some related issues.

2. The coverage of the anti-bullying provisions of the FW Act

[18] Despite the common ground about the immediate issue referred to earlier, it is necessary to consider the coverage of the anti-bullying jurisdiction in order to deal with the applicant’s alternative proposition that VLA has voluntarily submitted to the jurisdiction.

[19] The coverage of this Part of the FW Act was extensively dealt with in Ms S.W. 5 and later in A.B.6 Without repeating all of that consideration and findings, the following is relevant to this matter.

[20] A significant portion of the FW Act relies upon the definition of “national system employee” and “national system employer” in ss.13 and 14 respectively. In States that have made referrals of certain powers to the Commonwealth,⁷ that definition is extended by virtue of ss.30C, 30D, 30M and 30N to include other parties in the relevant State.

[21] Victoria is a referring State and the extended definition of national system parties applies in that State. For this reason, the relevant parties were able to make and have approved the Enterprise Agreement under the FW Act without the need for any consideration of the status of VLA, beyond the fact that is a national system party. I also note in that regard that the reference to “State public sector employee” in s.30A of the FW Act, is relevant to Victoria as a State that referred industrial powers to the Commonwealth prior to 1 July 2009. However, for reasons that will become clear, these concepts are not relevant to the coverage of the anti-bullying provisions of the FW Act.

[22] Section 37 of the FW Act provides as follows:

“37 Act binds Crown

(1) This Act binds the Crown in each of its capacities.

(2) However, this Act does not make the Crown liable to be prosecuted for an offence.”

[23] This provision establishes the capacity of the FW Act to bind and apply to the Crown in its various capacities. Whether the various provisions of the FW Act apply to those various capacities depends upon how the coverage of those provisions is expressed. This follows because various parts of the FW Act are specified to apply to different parties. This includes, in most cases, reference to national system parties, whereas in other parts of the FW Act, a different basis for the coverage is stated.

[24] Importantly, the coverage of the anti-bullying provisions in Part 6-4B of the FW Act is not based upon the definition of national system parties, the coverage of the Crown or the referral of powers by most States including Victoria. This is evident from the express terms of the FW Act discussed below.

[25] In order for the anti-bullying jurisdiction to be engaged, the Commission must find that a worker has been bullied at work within the meaning of the FW Act. Section 789FD is in the following terms:

“789FD When is a worker bullied at work?

(1) A worker is bullied at work if:

(a) while the worker is at work in a constitutionally-covered business:

(i) an individual; or

(ii) a group of individuals;

repeatedly behaves unreasonably towards the worker, or a group of workers of which the worker is a member; and

(b) that behaviour creates a risk to health and safety.

(2) To avoid doubt, subsection (1) does not apply to reasonable management action carried out in a reasonable manner.

(3) If a person conducts a business or undertaking (within the meaning of the Work Health and Safety Act 2011) and either:

(a) the person is:

(i) a constitutional corporation; or

(ii) the Commonwealth; or

(iii) a Commonwealth authority; or

(iv) a body corporate incorporated in a Territory; or

(b) the business or undertaking is conducted principally in a Territory or Commonwealth place;

then the business or undertaking is a constitutionally-covered business.”

[26] The initial focus of the definition is the workplace where the applicant is at work when the alleged unreasonable conduct takes place. That is, the conduct must take place whilst the worker is at work in a constitutionally-covered business. Section 789FD(3) requires, in effect, the Commission to consider the nature, or in some cases – the location, of the legal person conducting the business or undertaking.

[27] Rather unhelpfully, and despite an opportunity to do so, VLA did not advance a position as to whether it would be considered to be a person conducting a business or undertaking (PCBU) within the meaning of the Work Health and Safety Act 2011 (Cth) (WHS Act). PCBU is defined under the WHS Act in the following terms:

“5 Meaning of person conducting a business or undertaking

(1) For the purposes of this Act, a person conducts a business or undertaking:

(a) whether the person conducts the business or undertaking alone or with others; and

(b) whether or not the business or undertaking is conducted for profit or gain.

(2) A business or undertaking conducted by a person includes a business or undertaking conducted by a partnership or an unincorporated association.

(3) If a business or undertaking is conducted by a partnership (other than an incorporated partnership), a reference in this Act to a person conducting the business or undertaking is to be read as a reference to each partner in the partnership.

(4) A person does not conduct a business or undertaking to the extent that the person is engaged solely as a worker in, or as an officer of, that business or undertaking.

(5) An elected member of a local authority does not in that capacity conduct a business or undertaking.

(6) The regulations may specify the circumstances in which a person may be taken not to be a person who conducts a business or undertaking for the purposes of this Act or any provision of this Act.

(7) A volunteer association does not conduct a business or undertaking for the purposes of this Act.

(8) In this section, volunteer association means a group of volunteers working together for 1 or more community purposes where none of the volunteers, whether alone or jointly with any other volunteers, employs any person to carry out work for the volunteer association.”

[28] I consider that VLA is a PCBU for present purposes. It is also clear that the workplace in this matter is not located in a Territory⁸ and there is no suggestion that it is conducted by the Commonwealth or a Commonwealth authority.

[29] As a result, and given the circumstances here, the application will fall within the scope of the of s.789FD of the FW Act only if, amongst other requirements, the alleged conduct occurred whilst Ms Robertson was at work in a constitutional corporation.

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

“constitutional corporation means a corporation to which paragraph 51(xx) of the Constitution applies.”

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

“Foreign corporations, and trading or financial corporations formed within the limits of the Commonwealth.”9

[32] For reasons set out earlier, of these only the concept of VLA being a trading corporation is presently relevant and in contention.

[33] I turn to consider the alternative contention advanced by Ms Robertson that, in any event, VLA has agreed to be subject to the anti-bullying jurisdiction by virtue of its policy and Enterprise Agreement.

[34] Amongst many other matters, VLA’s Respectful workplace behaviour policy and complaints process (the policy) includes reference to the following:

“Staff may also, at any time, contact one of the external agencies listed at the end of the policy.”

[35] Under the heading of External Agencies, the policy refers to the Fair Work Commission and the Fair Work Ombudsman as Federal Agencies being relevant for:

“... general protection complaints including discrimination and complaints of bullying under the Fair Work Act 2009.”

[36] The Enterprise Agreement indicates in clause 39 that VLA will address instances of alleged bullying in accordance with the relevant VLA policy.

[37] Ms Robertson contends, in effect, that the Enterprise Agreement includes the provision for the Fair Work Commission to adjudicate bullying complaints and that VLA was legally and morally obliged to permit it to do so. 10

[38] VLA contends that the policy does not commit it to the jurisdiction of the Commission for the anti-bullying provisions and that it is not open for the parties to create the necessary jurisdiction. It further contends that the policy incorrectly refers to the bullying matters as a general protections complaint and that should the Commission confirm that it is not covered by the provisions of Part 6-4 of the FW Act, the policy will be corrected to ensure that it does not potentially mislead any parties.

[39] I have set out the jurisdictional and statutory basis for the stop-bullying jurisdiction above. The Commission is a statutory tribunal and has no inherent jurisdiction. It is empowered to deal with matters, and limited not to determine matters, by the terms of the FW Act.

[40] The functions of the Commission include dealing with disputes as referred to in s.595 of the FW Act. 11

[41] Section 595 provides as follows:

“595 FWC’s power to deal with disputes

(1) The FWC may deal with a dispute only if the FWC is expressly authorised to do so under or in accordance with another provision of this Act.

(2) The FWC may deal with a dispute (other than by arbitration) as it considers appropriate, including in the following ways:

(a) by mediation or conciliation;

(b) by making a recommendation or expressing an opinion.

(3) The FWC may deal with a dispute by arbitration (including by making any orders it considers appropriate) only if the FWC is expressly authorised to do so under or in accordance with another provision of this Act.

Example: Parties may consent to the FWC arbitrating a bargaining dispute (see subsection 240(4)).

(4) In dealing with a dispute, the FWC may exercise any powers it has under this Subdivision.

Example: The FWC could direct a person to attend a conference under section 592.

(5) To avoid doubt, the FWC must not exercise any of the powers referred to in subsection (2) or (3) in relation to a matter before the FWC except as authorised by this section.”

[42] The FW Act itself does not expressly authorise the Commission to deal with anti-bullying applications other than in accordance with Part 6-4B. This requires, in this case, the VLA to be a trading corporation. Subject to what follows, the parties cannot agree to give this jurisdiction to the Commission.

[43] However, it is conceivable that the parties to an Enterprise Agreement may agree to provide the Commission with the power to arbitrate disputes about workplace conduct and related matters.

[44] Sections 738 and 739 of the Act deal with circumstances where an industrial instrument, including an enterprise agreement, contains a relevant dispute resolution term. They provide as follows:

“738 Application of this Division

This Division applies if:

(a) a modern award includes a term that provides a procedure for dealing with disputes, including a term in accordance with section 146; or

(b) an enterprise agreement includes a term that provides a procedure for dealing with disputes, including a term referred to in subsection 186(6); or

(c) a contract of employment or other written agreement includes a term that provides a procedure for dealing with disputes between the employer and the employee, to the extent that the dispute is about any matters in relation to the National Employment Standards or a safety net contractual entitlement; or

(d) a determination under the Public Service Act 1999 includes a term that provides a procedure for dealing with disputes arising under the determination or in relation to the National Employment Standards.

739 Disputes dealt with by the FWC

(1) This section applies if a term referred to in section 738 requires or allows the FWC to deal with a dispute.

(2) The FWC must not deal with a dispute to the extent that the dispute is about whether an employer had reasonable business grounds under subsection 65(5) or 76(4), unless:

(a) the parties have agreed in a contract of employment, enterprise agreement or other written agreement to the FWC dealing with the matter; or

(b) a determination under the Public Service Act 1999 authorises the FWC to deal with the matter.

Note: This does not prevent the FWC from dealing with a dispute relating to a term of an enterprise agreement that has the same (or substantially the same) effect as subsection 65(5) or 76(4) (see also subsection 55(5)).

(3) In dealing with a dispute, the FWC must not exercise any powers limited by the term.

(4) If, in accordance with the term, the parties have agreed that the FWC may arbitrate (however described) the dispute, the FWC may do so.

Note: The FWC may also deal with a dispute by mediation or conciliation, or by making a recommendation or expressing an opinion (see subsection 595(2)).

(5) Despite subsection (4), the FWC must not make a decision that is inconsistent with this Act, or a fair work instrument that applies to the parties.

(6) The FWC may deal with a dispute only on application by a party to the dispute.”

[45] The combination of these provisions means that in the absence of any direct statutory jurisdiction, the Commission’s power to deal with a dispute must be expressly authorised by the FW Act via a term of an industrial instrument giving it that function.

[46] Where the Commission is authorised to deal with a dispute through a procedure, it may, subject to the terms of the (agreement) provision, mediate, conciliate or express a view about the matter provided that it does not exercise a power that is limited by that provision. It cannot arbitrate a matter unless it is expressly empowered to do so by the terms of the provision. 12 Any decision must not be inconsistent with the FW Act or the relevant instrument.

[47] The Enterprise Agreement does contain a dispute resolution procedure at clause 7.

[48] Ms Robertson did not rely upon the dispute resolution provisions of the Enterprise Agreement to make the application or advance her alternative proposition. As a result, VLA has not had the opportunity to respond to this proposition and I have not reached any conclusions as to whether the dispute resolution procedure of this Enterprise Agreement would give the Commission any relevant jurisdiction.

[49] What is clear, is that even if such an agreed dispute resolution role for the Commission was created, this would not be the Commission exercising the anti-bullying jurisdiction, but rather, whatever dispute resolution role that the parties had expressly agreed.

[50] As a result, it is not necessary for me to determine the objective intention of the policy including whether it seeks to describe bullying complaints as being a “general protection” or a complaint in its own right. I also do not need to consider whether its terms as noted in the Enterprise Agreement represent any basis to form an express agreement to provide for dispute resolution by the Commission in that context.

[51] What is also clear is that for this application to proceed, the Commission must be satisfied that VLA is a constitutionally-covered business (a trading corporation).

3. The approach to be applied to the assessment of whether a corporate body is a trading corporation

[52] The approach of the Courts and Tribunals to the meaning of a trading corporation has been conveniently summarised by Steytler P in Lawrence. 13 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:

“68 The more relevant (for present purposes) principles that might be drawn from these and other cases are as follows:

(1) A corporation may be a trading corporation even though trading is not its predominant activity: Adamson (239); State Superannuation Board (303 - 304); Tasmanian Dam case (156, 240, 293); Quickenden [49] - [51], [101]; Hardeman [18].

(2) However, trading must be a substantial and not merely a peripheral activity: Adamson (208, 234, 239); State Superannuation Board (303 - 304); Hughes v Western Australian Cricket Association Inc [1986] FCA 357; (1986) 19 FCR 10, 20; Fencott (622); Tasmanian Dam case (156, 240, 293); Mid Density (584); Hardeman [22].

(3) In this context, 'trading' is not given a narrow construction. It extends beyond buying and selling to business activities carried on with a view to earning revenue and includes trade in services: Ku-ring-gai (139, 159 - 160); Adamson (235); Actors and Announcers Equity Association of Australia v Fontana Films Pty Ltd [1982] HCA 23; (1982) 150 CLR 169, 184 - 185, 203; Bevanere Pty Ltd v Lubidineuse [1985] FCA 134; (1985) 7 FCR 325, 330; Quickenden [101].

(4) The making of a profit is not an essential prerequisite to trade, but it is a usual concomitant: St George County Council (539, 563, 569); Ku-ring-gai (140, 167); Adamson (219); E (343, 345); Pellow [28].

(5) The ends which a corporation seeks to serve by trading are irrelevant to its description: St George County Council (543, 569); Ku-ring-gai (160); State Superannuation Board (304 - 306); E (343). Consequently, the fact that the trading activities are conducted is the public interest or for a public purpose will not necessarily exclude the categorisation of those activities as ‘trade’: St George County Council (543) (Barwick CJ); Tasmanian Dam case (156) (Mason J).

(6) Whether the trading activities of an incorporated body are sufficient to justify its categorisations as a ‘trading corporation’ is a question of fact and degree: Adamson (234) (Mason J); State Superannuation Board (304); Fencott (589); Quickenden [52], [101]; Mid Density (584).

(7) The current activities of the corporation, while an important criterion for determining its characterisation, are not the only criterion. Regard must also be had to the intended purpose of the corporation, although a corporation that carries on trading activities can be found to be a trading corporation even if it was not originally established to trade: State Superannuation Board (294 - 295, 304 - 305); Fencott (588 - 589, 602, 611, 622 - 624); Hughes (20); Quickenden [101]; E (344); Hardeman [18].

(8) The commercial nature of an activity is an element in deciding whether the activity is in trade or trading: Adamson (209, 211); Ku-ring-gai (139, 142, 160, 167); Bevanere (330); Hughes (19 - 20); E (343); Fowler; Hardeman [26].” (footnotes and full references omitted)”

[53] This summary was adopted by the Full Court of the Federal Court in Bankstown Handicapped Children’s Centre v Hillman 14 (Bankstown) and by the Full Bench of the Commission in the recently decided matter of Roads and Maritime Services v Leeman15 (RMS).

[54] In RMS, the Full Bench also made the following observations about these principles:

“[14] The first, second, fifth, sixth and seventh propositions are particularly relevant to the submissions advanced by RMS in its appeal and require some further elucidation. In respect of the first, second and sixth propositions, the judgment of Murphy J in R v Federal Court of Australia; Ex parte WA National Football League (Adamson) articulates the position in the following terms (cited by Steytler P in respect of both propositions):

“Even though trading is not the major part of its activities, the description, "trading corporation" does not mean a corporation which trades and does nothing else or in which trading is the dominant activity. A trading corporation may also be a sporting, religious, or governmental body. As long as the trading is not insubstantial, the fact that trading is incidental to other activities does not prevent it being a trading corporation. For example, a very large corporation may engage in trading which though incidental to its non-trading activities, and small in relation to those, is nevertheless substantial and perhaps exceeds or is of the same order in amount as the trading of a person who clearly is a trader. Such a corporation is a trading corporation and is the subject of the legislative power in s. 51 (xx.).”

[15] The practical application of these principles was recently discussed in the Federal Court Full Court decision in United Firefighters' Union of Australia v Country Fire Authority. This matter was an appeal against a decision of a single member of the Court (Murphy J) in which it was determined that the Country Fire Authority was a trading corporation. The Full Court said:

“[135] We do not accept that the primary judge applied the wrong test, as contended for by the CFA. An important question is whether the corporation’s trading activities form a sufficiently significant proportion of its overall activities as to merit its description as a trading corporation: see Adamson at 233 per Mason J. The same approach was taken in State Superannuation Board at 305 per Mason, Murphy and Deane JJ where their Honours referred to the nature and the extent or volume of a corporation’s activities needed to justify its description as a [trading] corporation. See also the Tasmanian Dam Case at 156 per Mason J; at 179 per Murphy J, at 240 per Brennan J and at 293 per Deane J. Substituting the word “trading” for “financial” follows what their Honours said in State Superannuation Board at 303: the Court’s approach to the ascertainment of what constitutes a “financial corporation” should be the same as its approach to what constitutes a “trading corporation”, subject to making due allowance for the difference between “trading” and “financial”.

[136] Answering that question does not simply involve the application of a formula or equation nor the substitution of percentages or other measures of monetary value as between the activities found to be trading activities and the activities not so found. The purpose for which a corporation is formed is not the sole or principal criterion of its character as a trading corporation and the Court looks beyond the “predominant and characteristic activity of the corporation.” We refer again to the nature and the extent or volume of a corporation’s activities needed to justify its description as a trading corporation. The relationship between the activities relied upon and the overall activities of the corporation, and the extent of those activities in comparison with the extent of the corporation’s activities overall are relevant. In our opinion, this was the approach taken by the primary judge.

[137] If a corporation, carrying on independent trading activities on a significant scale, is properly categorised as a trading corporation that will be so even if other more extensive non-trading activities properly warrant it being also categorised as a corporation of some other type: see State Superannuation Board at 304. In our view, this proposition answers in large part the submissions put as to the public purpose of the CFA. As we have said, the issue is one of characterisation and is a matter of fact and degree.

. . .

[139] The CFA submitted that the error by the primary judge was crystallised at the end of [102] where his Honour said:

In my opinion the CFA undertakes sufficient trading for it to be seen as “not insubstantial”, not trivial, insignificant, marginal, minor or incidental, and I find that it is a trading corporation.

In our opinion, the primary judge was considering whether or not the activities he had found to be trading activities were, proportionately, significant and whether they should be considered as peripheral so as not to affect the overall question of characterisation. We see no error. In our opinion the primary judge correctly took into account the relationship between the trading activities and the non-trading activities in order to evaluate whether the trading activities were “independent” of the non-trading and thus might affect the characterisation of the corporation.”

[16] The fifth proposition is particularly pertinent to RMS’s appeal submissions. In support of the second sentence in that proposition, Steytler P cited two judgments. The first was the dissenting judgment of Barwick CJ in R v Trade Practices Commission; Ex parte St George County Council in which his Honour relevantly said:

“Further, if the terms of an Act expressed in the language of the constitutional power properly construed embrace a government or local government instrumentality or agency, the connexion of the corporation with the government of a State will not of itself place the corporation outside the scope of the power or the statute: Victoria v. The Commonwealth [1971] HCA 16; (1971) 122 CLR 353…

. . .

The power quite obviously, in my opinion, is given to the Parliament to enable it by legislation to control amongst other things at least some of the activities of corporations which fall within its description. It seems to me that the activities of a corporation at the time a law of the Parliament is said to operate upon it will determine whether or not it satisfies the statutory and therefore the constitutional description. Thus, in my opinion, the identification of the corporation which falls within the statutory definition will be made principally upon a consideration of its current activities.

… As I have indicated, the purpose of the grant of legislative power includes the control of the corporate activities of the corporation: it is not so concerned with the motives which prompt those activities, nor the ultimate ends which those activities hope to achieve. If, upon that consideration, the corporation can fairly be described by reason of those activities, their extent and relative significance in the affairs of the corporation as a "trading corporation" it will, in my opinion, be nothing to the point that it is also a government or State or municipal corporation. The effect of the trading activities of such a corporation upon and in the community will not be lessened or necessarily affected by the fact that it is a State or municipal instrumentality.

However, it was said that for a body such as the applicant to reticulate electricity bought by it in bulk is to perform a public service and not to trade. Of course, one of the justifications put forward for the entry of government into manufacture, trade or commerce is that the public will be better served by the government corporation than it would be by a non-government body seeking only profit or gain. But whatever the merit of such a claim, the fact that government, or a "government" corporation, conducts activities which are of their nature manufacturing, trading or commercial activities does not, in my opinion, alter the nature of those activities. This must particularly be so in relation to an Act made under a constitutional power which extends to enable the control of such activities conducted by government, or "government" corporations.” 

[17] The second judgment referred to by Steytler P is that of Mason J, as he then was, in the Tasmanian Dam Case, in which the Hydro-Electric Commission of Tasmania was determined to be, by majority, a trading corporation. Mason J commenced his consideration of this issue by referring to the judgment of Barwick CJ in St George County Council, and said:

“2. As Barwick C.J. observed in his dissenting judgment in St. George County Council, at p. 541, the connexion of the corporation with the government of a State will not take it outside s. 51(xx). In making this statement, his Honour referred to certain features of the County Council in that case and stated that they did not take the Council outside the category of "trading corporations". The features were (1) that it was incorporated under the Local Government Act 1919 (N.S.W.); (2) that it had power to levy a loan rate; (3) that there was a limitation on profitmaking to ensure that the council performed a public service for the county district; and (4) that in reticulating electricity to the district it was performing a public service.

3. The Commission's connexion with the government of Tasmania is certainly closer than the connexion of St. George County Council with the government of New South Wales. And the Commission's position in the structure of government is certainly more important than that of the County Council. The Commission is the State authority responsible for generating and distributing electrical power in the State. It constructs and manages the relevant dams, generating plants and other works and makes the policy decisions and recommendations to the Minister in connexion with its functions. But in Launceston Corporation v. The Hydro-Electric Commission [1959] HCA 12; (1959), 100 C.L.R. 654, it was decided that the Commission was an independent statutory corporation and it was not a servant or agent of the Crown. Since then the Commission's Act has been amended, notably by the inclusion of ss. 15A and 15B. Section 15A enables the Minister to notify the Commission of the policy objectives of the government with respect to any matter relating to generation, distribution, etc. of electrical energy. Section 15B enables the Minister to give a direction to the Commission with respect to the performance of its functions, subject to certain limitations and qualifications. The Commission may object to the direction. If the Minister does not withdraw the direction or qualify it in a manner acceptable to the Commission, the matter is then submitted to the Governor for decision (s.15B(4) and (5)). The Commission is bound to comply with the direction, subject to any withdrawal or modification and subject to a decision of the Governor. However, it is specifically provided that the Minister's power to give a direction does not make the Commission a servant or agent of the Crown or confer on the Commission any status, privilege or immunity of the Crown (s. 15B(9)). Accordingly it is not suggested that the decision in Launceston Corporation has been eroded by legislative developments.

4. The trading activities of the Commission therefore form a much less prominent feature of its overall activities than was the case with St. George County Council. The Commission has an important policy-making role. It is the generator of electrical power for Tasmania for distribution to the public and for this purpose it engages on a large scale in the construction of dams and generating plants. In this respect its operations are largely conducted in the public interest.

5. However, W.A. National Football League demonstrates that these considerations do not exclude the Commission from the category of "trading corporations". The majority judgement in State Superannuation Board pointed out, at p.96, that the case decided that a trading corporation whose trading activities take place so that it may carry on some other primary or dominant undertaking (which is not trading) may nevertheless be a trading corporation.” 

[18] In relation to the seventh proposition, it may have been more broadly expressed than is justified by the authorities. In this connection we note the following passage in the joint judgment of Mason, Murphy and Deane JJ in State Superannuation Board v Trade Practices Commission (cited by Steytler P in support of the proposition):

“Murphy J. ((1979) 143 CLR, at p 239) said "As long as the trading is not insubstantial, the fact that trading is incidental to other activities does not prevent it being a trading corporation". Indeed, it was essential to the majority's approach and to its rejection of St. George that a corporation whose trading activities take place so that it may carry on its primary or dominant undertaking, e.g., as a sporting club, may nevertheless be a trading corporation. The point is that the corporation engages in trading activities and these activities do not cease to be trading activities because they are entered into in the course of, or for the purpose of, carrying on a primary or dominant undertaking not described by reference to trade. As the carrying on of that undertaking requires or involves engagement in trading activities, there is no difficulty in categorizing the corporation as a trading corporation when it engages in the activities.

Indeed, we would go on to say that there is nothing in Adamson which lends support for the view that the fact that a corporation carries on independent trading activities on a significant scale will not result in its being properly categorized as a trading corporation if other more extensive non-trading activities properly warrant its being also categorized as a corporation of some other type.

If there be any difference in the comments made by the majority in Adamson it is one of emphasis only. And it is important to note that they were all directed to the issue as it arose for decision, an issue relating to a sporting club and the league with which it was affiliated; they were not aimed at the corporation which has not begun, or has barely begun, to carry on business. It might well be necessary to look to the purpose for which such a corporation was formed in order to ascertain whether it is a corporation of the kind described.” (emphasis added)

[19] Nevertheless, the Full Court of the Federal Court in UFU v CFA appeared to accept that the purpose for which a corporation is formed may be relevant to its characterisation and we proceed on the basis that the seventh proposition is to be applied in the way expressed.” 16

[55] In an earlier case of E v Australian Red Cross Society¹⁷, 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 of charge 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:

“These were, of course, substantial sums. They were earned only because the respondents are prepared to carry on blood transfusion services at a scale, in terms of labour and resources, greater than that of many organisations which are undoubtedly 'trading corporations'. But I do not think that it is appropriate to describe the gratuitous provision of a public welfare service, substantially at government expense, as the conduct of a 'trade'. It is pertinent to recall the words of Stephen J in St George County Council: 'It is the acts of buying and selling that are at the very heart of trade', and also to remember the distinction he made in respect of the distribution of electricity free of charge. In relation to the supply of blood, it seems to me that the first and second respondents do not engage in trading activities. They engage in a major public welfare activity pursuant to agreements with the Commonwealth and the various State governments under which they will be reimbursed most of their costs.”18

[56] 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.

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

“51 Many activities and services which have historically been provided mainly or exclusively by government are now carried on by companies which undertake those activities or provide those services with the objective of making a profit. Examples are legion and included prison services, electricity generation and distribution, potable water collection or production and distribution and the construction and maintenance of roadways. There can be little doubt that, at least in the ordinary course, companies which undertake those activities or provide those services can be characterised as trading corporations. Does the fact that a corporation likewise provides such services but on effectively a cost recovery basis only, render it inappropriate to characterise that corporation as a trading corporation?”

[58] 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:

“54 If those substantial activities can be characterised as trading, then the Association can likewise be characterised as a trading corporation. So much is apparent from the authorities including, in this Court, the judgment of the Full Court in Quickenden (at [51]). The Association undoubtedly provided services to the State and was remunerated for doing so. It is, in our opinion, a proper characterisation of the Association's activities to describe them as selling those services to the State and, correspondingly, the State purchasing them. Indeed that was the language used in the header agreement which governed the contractual arrangements between the Association and DOCS. The provision of a given service under the header agreement resulted in an invoice from the Association to DOCS which it then paid. The prices at which the services were provided were negotiated between the parties having regard to the price at which others provide similar services. The Association employed personnel and acquired rental property to equip it for the task of providing those services. At least in its then manifestation (entailing its size, activities, property and personnel), its continued existence depended on its success in placing itself in a position in which it would continue to be remunerated by continuing to provide those services.

55 All these matters appear to us to point to a relationship between the Association and DOCS as having been a commercial one involving trade in services. It is, of course, true that it is possible to characterise, as the Industrial Court did, the Association's activities as the provision of public welfare services. However the fact that the acquisition of these services by DOCS was for this purpose does not appear to us to detract from the essentially commercial nature of the relationship. It is properly so described. There may be many incorporated charitable bodies in Australia which are nevertheless trading corporations for the purposes of paragraph 51(xx) of the Constitution. As we have noted above, the terms of the header agreements were negotiated, as were the terms of the renewal header agreement. Ultimately by that process, further negotiation as to price was not then undertaken. Thereafter, DOCS did not have to use the services of the Association at all, and the Association for its part did not have to accept any offer or request by DOCS to provide such services. On the evidence, DOCS selected those entities which it wished to provide services, once the header agreements were negotiated, on the basis of the quality of the service to be provided, but the Association (or others) did not have to agree to provide them. It is distracting to note that the services which the Association and others contracted with DOCS to provide were in the "welfare sector" of the economy, to use an expression used by the Solicitor-General.”

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

[60] In Bankstown, the Full Court observed that “there is no bright line that determines what proportion of trading activities is ‘substantial’”.²⁰ In the more recent decision of the Federal Court in United Firefighters Union of Australia v Country Fire Authority,²¹ (UFU v CFA) the Full Court adopted the approach to the characterisation of trading activities as summarised in Lawrence and considered the revenue producing activities in order to assess the cumulative impact of those activities upon that assessment. In terms of the cumulative assessment, Murphy J at first instance in that matter 22 observed:

“[92] The term “substantial” is imprecise but it at least encompasses trading amounts that are “not so small as to be trivial”: Quickenden at [51]. In that case the majority treated substantial and nontrivial as synonymous. In the present case the CFA contends that their trading activities are peripheral, insignificant or otherwise incidental. These terms are drawn from the various cases: see for “peripheral” Adamson at 208 per Barwick CJ; State Superannuation Board at 304 per Mason, Murphy and Deane JJ; for “incidental” Adamson at 234 per Mason J; for “significant” see Adamson at 233 per Mason J; E v Australian Red Cross Society and Ors [1991] FCA 20; (1991) 27 FCR 310 (“E v Red Cross”) at 345 per Wilcox J; Quickenden at [47] per Black CJ and French J.

[93] The ordinary meaning of these words is straightforward. The Shorter Oxford Dictionary defines them to include the following:

(a) “peripheral” means marginal, superficial, of minor importance, not essential or relevant to but subordinate to;

(b) “insignificant” means lacking significance, meaningless, devoid of weight or force, ineffective, ineffectual, of no importance, trivial, trifling, or contemptible; and

(c) “incidental” means occurring as something casual or of secondary importance; not directly relevant to; following up on as a subordinate circumstance.”

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

“96 The scope of these activities is broad. While they are secondary to the CFA’s primary purpose I would not describe any of them as insignificant, incidental, trivial or unimportant. For example, the road accident rescue service is a specialised emergency service that the CFA has agreed to provide in country areas, which has required special training of CFA employees beyond the usual fire training, and which the CFA recognises as an important part of the range of services it provides. The CFA has no statutory obligation to provide this service and it does so at a cost to road users and the State through the Traffic Accident Commission. I would not describe the provision of this service as incidental to the CFA’s activities nor as a fortuitous or casual occurrence of subordinate importance. Nor should its provision, viewed in the context of all of its services, be described as trifling, ineffective, superficial or marginal.

97 For essentially the same reasons the provision of fire equipment maintenance services, consultancy on matters related to fire safety, the provision of advice related to the storage of dangerous goods and the sale of goods related to fire safety should not be seen as insignificant, incidental, trivial or unimportant activities considered against the range of services the CFA provides. I infer from the evidence that these activities are seen as important by the CFA, although they are not its central or predominant focus.

98 Nor do I consider that the revenue from these trading activities is incidental in the sense of arising fortuitously or as a result of some other activity. The income is earned deliberately by the CFA from these six specific sources and on the basis that the CFA have special expertise or products of value which they provide in exchange. Taken together the income from these activities is substantial.

99 While the quantum of income from the CFA’s trading activities relative to its non trading activities is small, I am disinclined to treat almost $13 million of revenue as minimal, trivial or insignificant. It should be seen for what it is, a significant volume of trading revenue albeit dwarfed by the money received from non-trading sources. The CFA put on no cogent evidence that $12.93 million was insignificant to its operations, and no evidence was given that it could be easily foregone by the organisation. Put another way, it is likely that the CFA would be impaired in its capacity to provide services in road accident rescue, fire equipment maintenance, fire safety consultancy or sale of fire safety related goods, which it regards as important in the range of services offered, if it was not able to charge fees for doing so.

100 Although the $12.93 million of trading income is plainly a substantial amount in absolute terms, it is only a small percentage relative to the CFA’s total income. Even so, I do not consider it is trivial or minimal in relative terms.

101 In E v Red Cross the Australian Red Cross Society was one of the respondents. Wilcox J held that its supply of blood and blood products was the gratuitous provision of a public welfare service, substantially at government expense, and was not a trading activity. The Red Cross received a total of $44.9 million from the government in respect of its non-trading blood supply services, and about $2 million from trading activities. Another respondent, a major hospital, made approximately $18 million from trading activities and, in the words of Wilcox J, that sum was dwarfed by a State government subsidy of $112 million. His Honour concluded that the disparity between the money earned through trading and the money received by way of government subsidy was unimportant explaining at 345:

Trading activities yielding some $18 million per year can only be described as substantial. It seems to me that the scale of the hospital’s trading activities in 1984-1985 was such that it should be regarded as then being a trading corporation.

See also United Firefighters’ Union of Australia v Metropolitan Fire and Emergency Services Board (1998) 83 FCR 346 (“UFU v MFB”) at 354 to 356 per Marshall J.

102 The CFA contends that both E v Red Cross and UFU v MFB were wrongly decided in that they incorrectly applied an absolute test. While I consider that the CFA’s trading revenue is plainly significant if considered in absolute terms, I do not approach the issue that way. Considering its trading revenue relative to its non-trading activities, the question is not without difficulty and is one of fact and degree. In my opinion the CFA undertakes sufficient trading for it to be seen as “not insubstantial”, not trivial, insignificant, marginal, minor or incidental, and I find that it is a trading corporation.”

[62] By contrast, in the earlier approach adopted in Hughes, Toohey J observed that “A trading activity may represent a significant part of a club’s income but be relatively insignificant in an overall consideration of the club’s activities”. 23

[63] Further, the provision of services, largely or wholly, free of charge, and whether they are provided for altruistic purposes not shared by commercial enterprises, have been considered by the Court to also be relevant, but not determinative, considerations.²⁴

4. The context and nature of the activities of VLA

4.1 The statutory context of VLA

[64] VLA is established as a statutory corporation by s.3 and s.5 of the LA Act and its objectives are provided at s.4 in the following terms:

“4 Objectives

The objectives of VLA are—

(a) to provide legal aid in the most effective, economic and efficient manner;

(b) to manage its resources to make legal aid available at a reasonable cost to the community and on an equitable basis throughout the state;

(c) to provide to the community improved access to justice and legal remedies;

(d) to pursue innovative means of providing legal aid directed at minimising the need for individual legal services in the community.”

[65] The functions of VLA are established by s.6 of the LA Act in the following terms:

“6 Functions and powers

“(1) The functions of VLA are—

(a) to provide legal aid in accordance with this Act;

(b) to control and administer the Fund.

(2) VLA may—

(a) in co-operation with a government department or body concerned with social service or social welfare, arrange measures and take steps that may be conducive to meeting the need for legal aid in the community;

(b) enter into arrangements from time to time with a body or person with respect to any investigation, study or research that, in the opinion of VLA, is necessary or desirable for the purposes of this Act;

(c) make recommendations to or through the Attorney-General with respect to any reforms of the law the desirability for which has come to its attention in the course of performing its functions;

(d) initiate and carry out educational programs designed to promote an understanding by the public, and by sections of the public who have special needs in this respect, of their rights, powers, privileges and duties under the laws in force in the State;

(e) undertake research into all aspects of legal aid including new methods of financing and providing legal aid

(f) subject to and in accordance with any agreement or arrangement made between the Commonwealth and the State under section 49, provide financial assistance to voluntary legal aid bodies in the State in respect of the provision of legal aid;

(fa) subject to this Act, enter into legal aid arrangements and provide legal aid in accordance with those arrangements;

(g) do all things necessary or convenient to be done for, or in connection with, the performance of its functions.

(3) VLA may enter into arrangements to provide legal services—

(a) on behalf of the prescribed person referred to in section 151 of the Independent Broad-based Anti-corruption Commission Act 2011, to applicants for legal assistance under that section;

(b) on behalf of the Secretary to the Department of Justice, to other persons.

(4) If an arrangement is entered into under subsection (3)(a), VLA may carry out the functions of the prescribed person under section 151 of the Independent Broad-based Anti-corruption Commission Act 2011.

(5) An arrangement entered into under subsection (3)(b) requires the prior approval of the Attorney-General.

(6) Parts V, VI, VIA, VIB and VII do not apply to the provision of legal services under an arrangement entered into under subsection (3).”

[66] The duties of VLA are set out in s 7 of the LA Act in the following terms:

“7 Duties of VLA

(1) In performing its functions, VLA must—

(a) ensure that legal aid is provided in the most effective, efficient and economic manner and in a manner which dispels fear and distrust;

(b) establish any local offices that it considers appropriate and generally use its best endeavours to make legal aid available throughout the State;

(c) subject to and in accordance with any legal aid arrangement and the agreements and arrangements made between the Commonwealth and the State under section 49 from time to time—

(i) determine or vary priorities in the provision of legal aid as between classes of persons and classes of matters or both;

(ii) have regard to the recommendations of the Commonwealth Commission concerning the provision of legal aid by VLA—

(A) in or in connection with a claim, right or proceeding involving a matter arising under a law of the Commonwealth; or

(B) in a proceeding in a federal court or in a State court exercising federal jurisdiction; or

(C) in respect of persons who are agreed by the Attorney-General and the Attorney-General of the Commonwealth to be persons in respect of whom the Commonwealth has a special responsibility;

(iii) liaise and co-operate with the Commonwealth Commission in the performance by that Commission of its functions and, in particular, provide to the Commonwealth Commission such statistics and other information as that Commission may reasonably require;

(d) subject to any legal aid arrangement, determine the matters or classes of matters in respect of which legal services may be performed on behalf of assisted persons by way of legal aid;

(e) co-operate and, if VLA considers it desirable to do so, make reciprocal arrangements with other legal aid commissions, professional associations and other bodies engaged or interested in the provision of legal aid in the State or elsewhere;

(f) liaise with professional associations in order to facilitate the use, in appropriate circumstances, of services provided by private legal practitioners;

(g) make maximum use of services which private legal practitioners offer to provide on a voluntary basis;

(h) endeavour to secure the services of interpreters, marriage counsellors, welfare officers and other appropriate persons to assist in connection with matters in respect of which legal aid is provided;

(i) inform the public of the services provided by VLA and the conditions on which those services are provided;

(j) encourage and permit law students to participate, so far as VLA considers it practicable and proper to do so, on a voluntary basis and under professional supervision in the provision of legal aid;

(k) have regard to the amount of money for the time being standing to the credit of the Fund and the amount of money likely to be received by VLA for the purposes of the Fund.

(2) VLA must account separately for all money paid under an arrangement entered into under section 6(3) and that money is not payable to the Legal Aid Fund.”

[67] Section 8(1) of the LA Act allows for VLA to provide legal aid itself (i.e. employ legal practitioners to provide legal services ‘in-house’) or by arranging the services of private legal practitioners.

[68] Section 9 of the LA Act requires VLA to determine guidelines for the provision of legal aid and to determine the amount of costs or disbursements (if any) that will be required to be paid to VLA by an assisted person if they are successful in the case concerned.

[69] Section 24 of LA Act deals with the circumstances in which legal assistance can be provided by VLA. Section 24(1) provides the general circumstances in which legal assistance may be provided by VLA; namely, the person is in need of that legal assistance because they are unable to afford the full cost of obtaining legal services from a private practitioner and it is reasonable having regard to all relevant matters to provide the legal assistance. Section 24(4) provides an inclusive list of ‘relevant matters’ that must be considered by VLA when making the decision under s 24(1); namely:

(a) the nature and extent of any benefit that may accrue to the person, to the public or to any section of the public from the provision of the assistance or of any detriment that may be suffered by the person, by the public or by any section of the public if the assistance is not provided;

(b) for matters other than criminal appeals, the person’s prospects of success;

(c) for criminal appeals, whether there are reasonable grounds for appeal.

[70] Various decisions made by VLA with respect to the provision of legal aid may be reviewed by independent reviewers under s.35 of the LA Act.

[71] Various pieces of State and Commonwealth legislation also empower Courts to order VLA to provide a person with legal aid funding and other assistance. 25

[72] Under s.27 of the LA Act, VLA may grant aid unconditionally or may impose certain conditions on the grant of aid such as paying a contribution towards the cost of providing the assistance, or for other expenses incurred in providing the assistance. Section 27A requires that if a person has made a contribution to VLA and the legal assistance is not provided, VLA must refund that person out of the Fund. It is a reasonable inference that VLA is not able to use these and any other conditions to generate excess funds from the provision of legal aid for its own use.

[73] Section 30 of the LA Act confines the manner in which VLA may select a private practitioner to perform legal services on behalf of an assisted person. Section 30(3) provides that when selecting a private practitioner the paramount consideration is the interests of the assisted person but, subject to that consideration, VLA must allocate work equitably amongst the private law practices named on the referral panels established under the LA Act.

[74] Section 41(1) of the LA Act provides for the establishment of the Fund and provides that it is to be controlled and administered by VLA. Section 41(2) controls what funds can go into the Fund and s.41(3) controls what the Fund can be spent on.

[75] Earlier this year, a Bill to implement the legislative portion of the recommendations made by the Victorian Government’s 2016 Access to Justice Review passed through the Parliament. This Bill, now the Justice Legislation Amendment (Access to Justice) Act 2018, amended the LA Act but is not yet in operation. As a result, although referred to be VLA, I have not taken these amendments into account for present purpose.

4.2 The general operations and activities of the VLA

[76] The VLA is a major organisation. It employs in the order of 880 people (771.7 full-time equivalent - FTE). Of these, 667 (575.9 FTE) are engaged in direct service delivery which involves direct client interaction; 128 (114.7 FTE) are engaged in indirect service delivery which does not involve direct interaction with clients but supports direct client services; and 85 (80.5 FTE) are corporate service roles which deliver traditional corporate functions, such as finance, communications, human resources, business reporting and information and communication technology. 26

[77] In 2016-2017 VLA assisted 90,649 unique clients with 94,485 in 2017-2018. In this context, a unique client is an individual who accessed one or more of VLA's legal services but does not include people for whom a client­lawyer relationship was not formed, who received information via the telephone, website or in-person at court or at a public counter, who participated in community legal education sessions, or clients from community legal centres.

[78] VLA delivers its services through a mixed model of service delivery. The foundation of the mixed model is s.8 of the Act. This involves the provision of legal aid by making available the services of officers of VLA and/or by arranging for the services of private legal practitioners or other persons to be made available to persons being assisted.

[79] As a result, the Clients of VLA may be assisted by services provided by the following:

•  Solicitors working as sole practitioners or in law firms and incorporated legal practices (referred to in the LA Act as "private practitioners");

•  Barristers;

•  VLA's in-house staff practice (i.e. in-house lawyers);

•  Community legal centres; and

•  Aboriginal legal services.

4.3 The activities of the VLA

[80] In general terms, VLA undertakes the following activities:

•  The provision of free legal information and education to Victorians through its website, publications, library, phone or in-person consultations and targeted community legal education with a focus upon the prevention and early resolution of legal problems – legal information services;

•  The provision of free legal advice primarily through phone-based services including the legal help phone line – legal advice services;

•  The provision of minor legal services through duty lawyer services and new client appointments, largely through lawyers employed by VLA – minor legal services;

•  Conducting of strategic litigation and policy and law reform work – policy work; and

•  Grants of legal assistance to enable clients to access legal advice and representation to assist to resolve legal disputes, prepare court documents and representation throughout court proceedings, largely through the engagement/referral/funding of clients to the services of external solicitors, barristers, community legal centres and aboriginal legal services – legal assistance services.

[81] Overwhelmingly, the services of VLA involve the legal information, legal advice and minor legal services. This includes in each year about 90,000 duty lawyer services, 45,000 legal advice and minor assistance matters, and 200,000 calls seeking legal information.

[82] In general terms, with one exception, clients are not charged for any of the above services. Clients may be required to make a contribution to the legal assistance services and I will return to this aspect shortly.

[83] In addition, VLA facilitates training events for lawyers, such as the Family Law Forum, where external solicitors attend for the contribution of $50.00, and conducts Family Law Dispute Resolution Services where clients are not charged but may be required to provide a contribution. I will collectively refer to the services as family law client contribution services.

[84] One of the principal functions of VLA is to provide grants of legal assistance as part of what I have described as its legal assistance services. In general terms, this is available to people who cannot afford a lawyer, meet VLA's eligibility criteria, and are experiencing a legal problem of the nature that the VLA can assist with. Under the LA Act, VLA, through its Board, determines guidelines in relation to the provision of services. The guidelines set out the types of legal matters that VLA will fund. Different guidelines may apply to State and Commonwealth matters.

[85] A grant of legal aid is a form of legal assistance and can enable a lawyer to give legal advice, help resolve matters in dispute, prepare legal documents and represent a client throughout court proceedings. In 2016-17, and again in 2017-18, VLA issued over 40,000 grants of legal assistance.

[86] The criteria for a person to qualify for a grant of legal assistance, the process by which the grants process operates and the nature of the relationship between VLA, the clients and the private practitioners is evident from the VLA Handbook. The following aspects illustrate these matters:

•  A person applying to VLA for a grant of legal assistance must fill in one of VLA’s two application forms and provide supporting information and documents. However, if the person needs an urgent grant, VLA may make a grant of legal assistance without sighting the application form or any supporting information and documents.

•  Assistance may be sought and provided to complete the application process itself.

•  VLA may make grants of legal assistance for a wide a range matters which are being heard and determined in Victoria including criminal law, State family matters, Commonwealth and State family law and Commonwealth child support matters, Commonwealth and State civil law matters, matters involving persons with special needs; but does not generally include criminal law matters involving stays and some family law matters where no proceedings are conducted.

•  There are processes established for the assessment of grant applications by VLA, including by reference to means testing and other criteria, and for the review of any such decisions.

•  Under s.29A of the LA Act, practitioner panels comprise private law firms and community legal centres selected by VLA that are willing to act for people who require a grant of legal assistance in the relevant areas of law. There are specific panels relating to indictable crime, family, independent children’s lawyer and summary crime matters.

•  VLA may advertise in Victorian daily newspapers for expressions of interest from private law firms and private lawyers to have their names included on a section 29A practitioner panel. VLA must publish a public notice at least 21 days before VLA intends to add new members’ names to the panel’s register.

•  Under s.30 of the LA Act, the Referral Panel comprises private law firms and community legal centres willing to act in any legally assisted matters. VLA assigns legally assisted work among these firms in accordance with the “allocation of work to lawyers and law firm” guidelines.

•  Matters are allocated to private practitioners according to guidelines and arrangements determined by VLA under the relevant provisions of the LA Act.

•  VLA makes grants of legal assistance only for the matter or matters set out in VLA’s grant letter. If a person needs a grant of legal assistance for other matters, then the lawyer must get written approval from VLA.

•  In addition to any other requirements in the general terms of allocation of work for the lawyer to keep VLA informed of specific events, the lawyer must:

•  Tell VLA of any circumstances which may be relevant to VLA continuing to make a grant of legal assistance, including any change in the assisted person’s financial or living circumstances;

•  Give VLA any information which VLA reasonably requests which is relevant to:

•  the grant of legal assistance;

•  the services being provided to the assisted person;

•  the costs charged or to be charged for those services;

•  give VLA the file or files for the matter for which VLA made a grant of legal assistance, if VLA requests them;

•  inform VLA immediately if the assisted person does not accept or act on either the lawyer’s advice or counsel’s advice; and

•  inform VLA about the progress of the allocated matter, especially about any circumstances which might substantially increase costs above the usual costs for a matter of that type.

[87] Private practitioners are typically engaged through an individual grant of legal assistance. They are paid event-based, lump sum fees under various stage-of-matter funding models. These arrangements apply across all of the criminal, family, and civil law eligibility guidelines, with over 450 different fees for different components and/or stages of legal work associated with a grant of legal assistance. Stages are often linked to significant court events or exchange points in a case where negotiations are required with the other party. Payment of private practitioner fees may require the practitioner to re-certify that their client's legal argument is still meritorious.

[88] Some of the private practitioners conduct practices where the legal aid work from the VLA represents the majority of their work.

[89] Under the LA Act, VLA determines schedules of payments to be made to private practitioners who provide legal services to assisted people. VLA does not simply pay market rates for the external legal services it grants aid for. It has its own fee structure which in general terms is below the market rates for such services. 27 The lawyer must retain enough money out of any funds they receive on the assisted person’s behalf to cover the costs of the allocated matter. In addition, the lawyer must inform VLA immediately whenever they receive any money on the assisted person’s behalf and must comply with VLA’s instructions when they disburse any money they receive on that person’s behalf. Under s.46(2) of the LA Act, if a Court orders costs in favour of an assisted person, those costs effectively become the property of VLA. The lawyer must not hinder in any way VLA’s ability to recover the costs, unless VLA agrees.

[90] Within a reasonable time after the allocated matter is completed, the lawyer must give VLA:

•  A report on the result of the matter, including details of any order for costs;

•  An account in the form (if any) which VLA provides, using the appropriate scale of costs or VLA’s fee schedules and, if VLA requests, a bill of costs in taxable form for fees and disbursements; and

•  An account for all money the lawyer has received and paid on behalf of the assisted person during the time that the lawyer held a grant of legal assistance.

[91] VLA has established comprehensive practice standards that apply to practitioners who are representing clients who have been granted legal assistance. These standards inform how VLA monitors the effective, economic and efficient delivery of high quality legal aid services.

[92] The practice standards apply to any practitioner, including VLA staff practitioners undertaking work on legally aided matters. However, it is the Panel Certifier or the VLA staff practitioner certifying the matter, who is accountable for ensuring that the practice standards are met on a matter that they have certified. These practice standards represent the minimum standards expected of practitioners doing work on a legally assisted matter and supplement existing obligations for legal practitioners under relevant current legislation, regulation and rules governing the legal profession nationally and in Victoria.

[93] VLA may remove a section 29A panel practitioner or certifier. Breaches of Panel Conditions may require the VLA to suspend or remove a Provider’s panel membership and/or suspending or revoking a Panel Certifier’s certifier status, in order to preserve the quality of service delivery to an assisted person.

[94] The LA Act also provides that VLA may impose conditions on a grant of legal assistance. These conditions may include paying a contribution towards all or part of the grant. A condition that a client contribute towards all or part of a grant ("client contributions"). An initial client contribution is determined in accordance with a means test and VLA's contributions guidelines. A client contribution is never more than the cost of the grant and VLA does not make a “profit” (a surplus of income over costs) from client contributions. The amount of the client contribution may not be certain until a matter is finalised and VLA knows the total legal cost. Once a case is finalised, any client contribution is adjusted accordingly.

[95] Where a client has paid more than the cost of their legal assistance by way of a contribution, a refund is issued to the client. The means test sets eligibility thresholds for an applicant's (and if relevant, their partner's) income and assets, as well as their expenses and legal costs. Some applicants are eligible without regards to the means test, such as children, prisoners and war veterans.

[96] VLA's contribution guidelines are set out online in the VLA Handbook and are guided by two principles; namely, an assisted person should be put in a position which is equal to, but not better than, the position of a person who is not legally assisted; and an assisted person should contribute to their legal costs according to their ability to pay, without undue hardship.

[97] VLA has the power to place a lien over property to secure a client contribution, and to charge interest and collect the contribution as a debt. To date, VLA has rarely exercised these latter two rights however its capacity to do so is relevant to the characterisation of the services for present purposes.

[98] There were 40,000 grants of legal assistance in the 2016/17 year. 1,805 of these matters involved client contribution requirements and in that year the contributions treated as a recoverable debt were approximately 9% of income. Actual contributions were however approximately 1.4% of total income from transactions.

4.4 Sources of funding and expenditures

[99] The State of Victoria can, and does, enter into legal aid arrangements with the Commonwealth in relation to spending priorities for Commonwealth legal aid (which generally covers family law and Commonwealth crimes). Those agreements are binding on VLA pursuant to s.49(2) of the LA Act.

[100] Section 12M of the LA Act allows the Victorian Attorney-General to give the VLA Board written directions in relation to its policies, priorities or guidelines and the provision of legal aid by VLA in accordance with a legal aid arrangement, although this power has not recently been exercised.

[101] Each year VLA receives a funding letter from the Department of Justice and Regulation outlining the amount of funding VLA will receive for the financial year. VLA is then issued a funding schedule detailing what the money is to be spent on. VLA also receives an updated funding schedule each quarter and invoices the Victorian Department of Justice and Regulation to receive its quarterly funding in advance.

[102] As a statutory authority, VLA is required to invest any money in the Fund that is not required for current spending with the Treasury Corporation of Victoria. As required, money is then transferred back into the bank operating account out of which the Fund operates. VLA is required to comply with the Financial Management Act 1994 (Vic) (the FM Act) including the Standing Directions and Instructions issued under s.8 of the FM Act.

[103] In 2016-17, the total income of VLA from transactions was $181,352,000 and this was administered through the Fund operated by VLA. That income came predominately from Victorian and Commonwealth government grants and the PP Fund administered by the Legal Services Board (97.21%), with the remaining 2.79% predominantly from contributions made by assisted persons (clients).

[104] The full income sources for 2016-17 were as follows:

•  Government Grants $145,136,000 80.0%

•  Public Purpose Fund $31,162,000 17.2%

•  Client Contributions $2,609,000 1.4%

•  Costs recovered and Appeal Costs Fund $1,279,000 0.7%

•  Interest on investments $1,151,000 0.6%

•  Other income $15,000 0.01% 28

•  Total income from transactions $181,352,000

[105] Although described in the financial statements as being income from transactions, it is clear from the above that this includes both grant funding and income from its operations.

[106] The PP Fund comprises $31,162,000 of VLA's income. The PP Fund is administered by the Legal Services Board and comprises interest and investment earnings on clients' funds held in solicitors' trust accounts. The amount of any distribution from the PP Fund to the Legal Aid Fund can vary from year to year depending on its investment performance and any other calls that may be made on the fund, as set out in the Legal Profession Act 2004. In 2016-17, the PP Fund contained a $2,000,000 one off payment representing additional funds provided by the Victorian Legal Services board for legal related services and activities.

[107] The client contributions actually received for that year amount to approximately 1.4% of total income from transactions. To the extent that Ms Robertson contends that the income of VLA from client contributions should include revenue from client contribution income and client contribution receivable provisions, this would involve combining actual income with balance sheet provisions (assets and liabilities) that may not (and in the case of VLA’s contribution receivable provisions are often not) actually received.

[108] In 2016-17 the total expenditure from transactions was $191,297.000. That expenditure comprised the following:

•  Case-related payments to external providers 29 $80,677,000 42.2%

Staffing costs $68,781,000 36.0%

‘Other’ payments 30 $21,733,000 11.4%

Community legal center payments $16,847,000 8.8%

Depreciation and amortisation $3,219,000 1.7% 31

•  Total expenditure from transactions $191,297.000

[109] In 2016-17, the net result from “transactions” was a loss of some $9.945m and a total comprehensive result, taking into account all other economic flows, of a loss of $10.917m. 32

[110] In the same year, VLA had $68.239m in financial assets (including some provision for receivables) and $24.552m in financial liabilities. Amongst other assets, VLA had $30.931m in property, plant and equipment in 2016-17 33 and this confirms its significant scale of operation.

5. Is VLA a trading corporation?

[111] I have earlier set out the approach to the present issue that arises from the authorities. There is some difference in emphasis in the authorities about the role to be played by what is sometimes described as the “purposes test”. What is clear is that the purpose for which a corporation is established will be relevant particularly where the body is yet to operate and where the objects of the corporation directly impact upon its status by confirming its nature, one way or the other. Further, the objects always provide some context in which the actual activities are to be considered. Albeit, that it is the actual activities that are considered not the immediate purposes for which they are performed.

[112] The objects and statutory context for VLA are set out earlier in this decision. Those objects confirm the fundamental purpose of VLA is to provide the public service of legal aid and assistance to Victorians. Those objects do not of themselves point towards VLA being a trading body and provide a context in which its activities are to be assessed. Those objects also do not prevent VLA from trading, providing such activities are conducted within the parameters of the LA Act.

[113] As a result, an important step in making the relevant decision in this matter is to determine the nature of the activities of the VLA for present purposes having regard to the context and characteristics of those activities.

[114] I do not consider that the legal information services, legal advice services, minor legal services or policy work constitute any form of trading activity. That is, these services represent the gratuitous provision of public interest services, overwhelmingly funded by Government, directly through budget grants and the PP fund. These are undertaken substantially without charge or client contributions and there is no sense in which they have the nature of buying and selling or are commercial in character.

[115] The fact that the PP fund is sourced from the trust accounts of solicitors, presumably held as a result of commercial transactions, does not of itself inform the nature of the activities that VLA performs with that funding. VLA does not establish the PP fund and the degree to which it is able to access those funds is determined by the Government. VLA’s funding is provided through a combination of legislation, regulation and budget allocations. In these circumstances, the fact that some of the revenue from which the funding is allocated to VLA originally comes from trading activities (and taxes on such activity) is in my view irrelevant for present purposes.

[116] This then requires me to focus upon the nature of the legal assistance (legal aid) services. There can be little doubt that the provision of legal services is capable of being considered to be a trading activity. That is, the provision of the legal services by the private practitioners using the legal aid would be considered to be trading. However, it is the activities of VLA that are being considered here in order to ascertain the status of that body.

[117] It seems to me that this requires consideration of the activities themselves, the nature of the engagement and relationship with the clients and the nature of the engagement and relationship with the private practitioners.

[118] VLA is a creation of the LA Act and is not a legal practice under the Legal Practice Uniform Law (Victoria). I note in that regard that s.16(5) of the LA Act still makes the uniform law relevant by virtue of a deeming provision. However, the services are provided to give effect to the public service objectives and policy reasons set out in the LA Act and the VLA does not, and is not able to, generate any form of surplus from these activities.

[119] In terms of the relationship and interactions with Clients:

•  Clients can be required to make a contribution and about 9% (when assessed in the context of overall income) are nominally required to do so;

•  VLA is able to charge interest and recover outstanding contributions as debts, although in practice this does not generally occur;

•  Only a small proportion of those cases where a contribution is required actually involve contributions being made (this amounts to 1.4% of income from transactions);

•  The rules for the provision of the service and the calculation of contributions are set by policy considerations that have no commercial character;

•  In practice, the services are provided overwhelmingly without charge; and

•  The nature of the relationship and engagement is provided for in the LA Act and related instruments and is not the subject to contractual arrangements with the clients.

[120] In terms of the relationship and interactions with Private Practitioners:

•  The nature of the relationship and engagement is provided for in the LA Act and is not subject to contractual arrangements;

•  Whilst expressions of interest for panels may be sought through advertising, there is no sense in which there is any form of tender or competition for the work;

•  Funding levels, arrangements and allocations of work derive from the LA Act and related instruments and operate subject to that Act and some of these are subject to the potential for Ministerial direction and external review; and

•  These arrangements are set by policy considerations that are not commercial in character.

[121] When the entire context and nature of the legal aid services are considered, I do not consider that the provision of legal aid by the in-house lawyers at VLA or via the private practitioners is commercial in character or points towards those services being a trading activity. Those services do not have the character of buying and selling or other features of the nature considered in the authorities to be consistent with trading activities. The characterisation of the legal assistance services of VLA in this manner is consistent with the principles discussed earlier and accords with the approach evident in St George County Council, E v Australian Red Cross, Bankstown and RMS when assessing the nature of activities conducted in a context such as VLA.

[122] In 2016-17, VLA received $1.51m as interest on investments. This is approximately 0.6% of its total income from transactions.

[123] The family law client contribution services involve some commercial transactions and could be considered to be trading activities for present purposes. This is part of other income in the financial statements and that total in 2016-17 was $15,000. These services are a very small part of the activities of VLA, both in relative and absolute terms.

6. Conclusions and orders

[124] For reasons outlined above, I do not consider that the provision of legal aid by VLA and its legal assistance services more generally, in the context in which it they are provided, should be considered to be a trading activity for present purposes. Despite some client contributions and some other contrary indications, it is the overall activity that must be considered. Those contributions are small and largely optional and the overall activity is overwhelmingly provided to the community for free using funds provided by Government (directly and indirectly) for a public policy purpose. There is also no sense in which these services have the nature of buying and selling or are commercial in character.

[125] I have also found that the legal information services, legal advice services, minor legal services and policy work do not constitute any form of trading activity.

[126] The investments and other income which could be considered to be trading activity are, in the context of VLA, insubstantial and peripheral and not such as to impact upon the characterisation of VLA.

[127] As a result I do not consider that VLA is a trading corporation.

[128] For reasons outlined above, the alleged conduct would therefore not fall within the scope of the anti-bullying provisions in Part 6-4B of the FW Act. There is no jurisdiction for the Commission to deal with this present matter.

[129] This application is dismissed.

COMMISSIONER

Appearances:

A Robertson for Suzanne Robertson, the applicant.

S Fitzgerald (of counsel) with permission for Victorian Legal Aid.

Hearing details:

2018

Melbourne:

October 12.

Final written submissions:

19 and 29 October 2018.

Printed by authority of the Commonwealth Government Printer

<PR701348>

 1   The mediation was conducted and the interim arrangements put in place on a without prejudice basis in terms of all parties’ positions on the jurisdictional issue and the merit of the application and response.

 2   Relevantly to this matter, a foreign, trading or financial corporation.

 3   Permission was given for VLA to be represented under s.596 of the FW Act for reasons separately supplied to the parties.

4 (2008) 252 ALR 136 at par [68].

 5   [2014] FWC 3288.

 6   [2014] FWC 6723.

7 See the Fair Work (State Referral and Consequential and Other Amendments) Act 2009.

⁸ Victoria is not a Territory as defined in s.2B of the Acts Interpretation Act 1901, which refers to s.122 of the Australian Constitution.

9 Section 52(xx) of the Australian Constitution.

 10   Ms Robertson also referred to the Victorian Government’s commitment to honouring all collectively bargained agreements and not to use legal constructs to avoid these obligations – Public Sector Industrial Relations Policy.

 11   S.576(2)(a) of the Act.

 12   See Woolworths Ltd trading as Produce and Recycling Distribution Centre [2010] FWAFB 1464 at par [19]. See also Cape Australia Holdings Pty Ltd T/A Total Corrosion Control Pty Ltd v Construction, Forestry, Mining and Energy Union [2012] FWAFB 3994 at [15] to [24].

 13   (2008) 252 ALR 136 at par [68].

 14   (2010) 182 FCR 483 at par [48].

 15   [2018] FWCFB 5772.

 16   [2018] FWCFB 5772 at paragraphs [14] to [19].

17 (1991) 27 FCR 310.

18 Ibid at 343.

19 Ibid at 345.

20 (2010) 182 FCR 483 at paragraph [52].

21 [2015] FCAFC 1.

 22   United Firefighters Union of Australia v Country Fire Authority [2014] FCA 17. This was not disturbed on appeal by the Full Court.

 23   [1986] FCA 357 at [25].

24 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. However, these authorities must also be considered in light of the more recent decisions of the Federal Court summarised in Lawrence and Bankstown and others outlined in this decision.

 25  For example in criminal matters under ss.197 and 357 of the Criminal Procedure Act 2009 (Vic) the Court may order VLA to provide legal representation where an accused is unrepresented and VLA “must” provide legal representation.

 26   Exhibit VLA-1.

 27   Exhibit VLA-1 at [19].

 28   The percentages are rounded and do not add up to exactly 100%.

 29   Legal practitioners, barristers, medical experts, interpreters etc.

 30   Operational costs such as premises, leases, repairs and maintenance.

 31   The percentages are rounded and do not add up to exactly 100%.

 32   VLA Annual Report 2016-17.

 33   Ibid.