| [2019] FWCFB 3740 |
| FAIR WORK COMMISSION |
DECISION |
Fair Work Act 2009
s.604—Appeal of decision
Gregory James Thurling
v
Glossodia Community Information and Neighborhood Centre Inc. T/A Glossodia Community Centre
(C2019/2551)
VICE PRESIDENT CATANZARITI |
BRISBANE, 5 JULY 2019 |
Appeal against Ex tempore decision of Commissioner McKenna at Sydney on 27 March 2019 in matter number AB2018/433.
[1] This decision deals with an appeal, for which permission to appeal is required, made by Mr Thurling under s 604 of the Fair Work Act 2009 (Cth) (the Act), against an Ex Tempore decision and Order 1 of Commissioner McKenna made in connection with his stop-bullying application. The stop-bullying application was made under s 789FC of the Act and the workplace in which Mr Thurling works is conducted by Glossodia Community Information and Neighborhood Centre Inc. T/A Glossodia Community Centre (Glossodia CINC).
[2] Mr Thurling is engaged as the Centre Manager/Community Development Worker.
[3] Glossodia CINC conducts a community based centre and information service based in Glossodia, New South Wales. This includes various community development activities, funded by government and, in some cases, by the charges applied for services. The services include the delivery of out of school hours care (OOSHC) and vacation care for primary aged children, a youth service for young community members, and information, referral and advocacy services for the community more generally. In addition, the organisation seeks to alleviate social isolation through a variety of services and programs targeted across the community, especially for those facing economic and social disadvantage. It is corporate in nature due to its status as an incorporated association under the Associations Incorporation Act 2009 (NSW).
[4] It is not in dispute that in order for Mr Thurling’s application to fall within the scope of the stop-bullying jurisdiction, the Commission must ultimately find that he is a worker who has been bullied at work within the meaning of the 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.”
[5] The initial focus of the definition is the workplace where the applicant worker 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.
[6] It is also not in dispute in this matter that, given its location and status, in order for Glossodia CINC to be a constitutionally-covered workplace, it must be a constitutional corporation.
[7] The term “constitutional corporation” is defined in s 12 of the Act in the following terms:
“constitutional corporation means a corporation to which paragraph 51(xx) of the Constitution applies.”
[8] The Australian Constitution refers to “constitutional corporations” as being:
“Foreign corporations, and trading or financial corporations formed within the limits of the Commonwealth.”2
[9] Of these, only the trading corporation is potentially relevant and before the Commissioner at first instance, Mr Thurling contended that Glossodia CINC was a trading corporation. Glossodia CINC contended to the contrary.
[10] After numerous attempts to resolve the stop-bullying application, the Commissioner made arrangements to conduct a hearing to determine the matter. In so doing, the Commissioner alerted the parties to a question about the jurisdiction of the Commission and referred to a recent decision 3 of the Commission regarding whether a workplace was a trading corporation. Arrangements were then made for the parties to file written submissions and evidence regarding that jurisdictional question in the lead up to a hearing by phone.
[11] We note that none of the parties were represented in the hearing conducted by the Commissioner. Written submissions, and some evidence, were provided in advance of the hearing, and in the case of Glossodia CINC, the materials were prepared by a lawyer on their behalf.
[12] At the conclusion of the hearing, which involved little more than the parties, in effect, confirming their respective written submissions, the Commissioner provided an Ex tempore decision. Having set the general context of the matter, the substance of the decision comprised the following:
“… ...
Having considered what has been advanced respectively by Mr Thurling and for the Glossodia parties, I am bound to say, even with the benefit of the additional submissions that have been made today, that I am persuaded by the submissions for Glossodia on the jurisdictional issue. Shortly stated whilst there are matters which might be seen to point in different directions, on the basis of what is before me and having considered those matters and the additional materials, the matters addressed in the Glossodia materials lead me to the view that there is a want of jurisdiction in relation to this application.
On a consideration of all that has been put before me considered in the context of the act and the authorities I accept the submissions for Glossodia that it is not a trading corporation and therefore not a constitutionally covered business for the purposes of the act in relation to an application of this nature.
It follows that the application must be dismissed for want of jurisdiction with the result that the proceedings in relation to this anti-bullying application are now concluded.” 4
[13] Accordingly, the Commissioner issued an Order dismissing Mr Thurling’s stop-bullying application lodged under s 789FC of the Act. 5
[14] Mr Thurling continued to represent himself in the appeal and provided written submission, the effect of which was as follows:
• The Commissioner erred in finding that the Glossodia CINC was not a trading corporation because it trades in goods and services;
• The trading activities include providing before and after school child care for which it changes fees and levies administration fees, and rental fees for the hiring of its facilities;
• These activities comprised somewhere between 27.37 percent and 35.23 percent of its total income, depending upon how certain government funding was treated;
• This proportion was significant and found by the Commission in other cases to be sufficient to make the organisation a trading corporation; and
• The altruistic intent of the organisation did not prevent it being a trading corporation.
[15] Mr Thurling, in his written grounds of appeal, also contended the “verbal” reasons for decision were “… at best vague. At no time was a clear or actual reason given and I left the telephone conversation still unclear as to the rationale behind it ….”.
[16] In relation to the public interest, Mr Thurling contended, in effect, that the outcome of this case, if not corrected, would have significant consequences for the community services sector and would exclude many workplaces from the coverage of the stop-bullying laws. Further, the decision was not consistent with other decisions made by the Commission in relation to that sector.
[17] Despite the directions issued in this matter, Glossodia CINC did not file written materials prior to the hearing of the appeal.
[18] On the day of the hearing, the Commission was informed that the contact person for Glossodia CINC could only appear for a brief period before having to attend to an urgent family situation. In the circumstances, and noting that one of the persons named in the stop-bullying application could participate by phone, but was not in a position to make submissions, the Bench resolved to hear the appeal in Glossodia CINC’s absence. However, a copy of the transcript was provided to the parties on 11 June 2019 and Glossodia CINC was granted 7 days following receipt of the transcript of the appeal hearing (being 18 June 2019) to provide written submissions in response.
[19] Ultimately, Glossodia CINC did not provide any submissions concerning the appeal. As a result, we have had regard to the position advanced by Glossodia CINC at first instance but we have not been further assisted by Glossodia CINC in dealing with the appeal itself.
[20] An appeal under s 604 of the Act is an appeal by way of rehearing and the Commission’s powers on appeal are only exercisable if there is error on the part of the primary decision maker. There is no right to appeal and an appeal may only be made with the permission of the Commission.
[21] As required by s 604(2) of the Act, the Full Bench must grant permission to appeal if it is satisfied it is in the public interest to do so. The task of assessing whether the public interest test is met is a discretionary one involving a broad value judgment; see: O’Sullivan v Farrer (1989) 168 CLR 210; Hogan v Hinch (2011) 85 ALJR 398 at [69]; Coal & Allied Mining Services Pty Ltd v Lawler and others (2011) 192 FCR 78 at [44] -[46]. In GlaxoSmithKline Australia Pty Ltd v Makin [2010] FWAFB 5343 at [27] a Full Bench of the Commission identified some of the considerations that may attract the public interest:
“...the public interest might be attracted where a matter raises issues of importance and general application, or where there is a diversity of decisions at first instance so that guidance from an appellate court is required, or where the decision at first instance manifests an injustice, or the result is counter intuitive, or that the legal principles applied appear disharmonious when compared with other recent decisions dealing with similar matters, it seems to us that none of those elements is present in this case.”
[22] It will rarely be appropriate to grant permission to appeal unless an arguable case of appealable error is demonstrated. This is so because an appeal cannot succeed in the absence of appealable error; see: Wan v AIRC (2001) 116 FCR 481 at [30]. However, the fact that the Member at first instance made an error is not necessarily a sufficient basis for the grant of permission to appeal; see: GlaxoSmithKline Australia Pty Ltd v Makin [2010] FWAFB 5343 at [26]-[27], 197 IR 266; Coal & Allied Mining Services Pty Ltd v Lawler (2011) 192 FCR 78; NSW Bar Association v Brett McAuliffe; Commonwealth of Australia represented by the Australian Taxation Office [2014] FWCFB 1663 at [28].
[23] For reasons that follow, we consider that leave to appeal should be granted in this matter.
[24] A useful starting point for the assessment as to whether a corporation is a trading corporation is the summary provided by Steytler P in the Western Australian Court of Appeal decision in Aboriginal Legal Service (WA) Inc v Lawrence (No 2) 6 (Lawrence). Having reviewed the developments in the approach of the High Court to arrive at what might be described as the activities test, His Honour found as follows:
“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)
[25] In the recent decision of Roads and Maritime Services v Leeman, 7 the Full Bench commented on those principles as follows:
“[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.” (References omitted)”
[26] For our part we accept that the purpose of the corporation may be relevant to its characterisation; however, this should be seen in the particular context in which the Courts have applied that consideration.
[27] We observe that the submissions made by Glossodia CINC at first instance, and as adopted in the Commissioner’s decision, place significant emphasises upon the purpose of the association and very little upon the nature of the purported trading activities themselves.
[28] The evidence before the Commissioner included a sworn affidavit and annexed documents provided by Ms Cheryl Keddie, Committee Secretary, also described in the affidavit as being the Treasurer. That material, and the documents provided by Mr Thurling, demonstrate as follows:
• Glossodia CINC is an incorporated body under the Associations Incorporation Act 2009 (NSW) and registered as a charity;
• Glossodia reports its purposes its activities as being:
“We undertake community development activities targeting the whole of our community, including 0-5 years, primary school aged children, high school aged children and older community members. We deliver out of school hours and vacation care for primary aged children. We provide a youth service for our young community members. We provide information; referral and advocacy services. We alleviate social isolation through a variety of services and programs targeted at all of our community, especially those facing economic and social disadvantage” 8.
• Glossodia CINC receives some of its revenue from funding provided by the Department of Family and Community Services NSW (DFCS) under a Program Level Agreement and this is to provide a series of activities to the community in the Hawkesbury local government area;
• The Balance Sheet as at June 2018 records total assets of $143,154.60 and total liabilities of $42.324.19, leaving net assets of $100,830.41;
• The Profit and Loss Statement for the 2017/18 year records:
• Total income of $327,344.33
• Total Expenses of $312,213.88
• Operating profit of $15,130.45 and
• Net Profit of $15,893.71
• The major elements of income comprise:
• Funding received of $118,253.06; and
• Programs income of $97,447.43, comprising:
• OOSHC and vacation care fees of $90,893.73; and
• $6,553.73 Hall hire income.
[29] Leaving aside fluctuations that might be evident from year to year, the programs income in 2017/18 represented just over 29 percent of the organisation’s total income. Although there is a dispute as to how those activities are to be assessed for present purposes, the 2018/19 year appears to be representative of the present activities of the organisation.
[30] The evidence at first instance appears to reveal that the fees charged by Glossodia CINC for child-care services are set by the organisation at rates that are less than what it describes as “market rates”, and that the hall hire income is charged at a rate to offset building expenses.
[31] We will return to how the program’s income, which forms the focus of the appeal, should be treated for present purposes.
[32] The fact that the assets of the Glossodia CINC cannot be returned to its members if wound up 9 and that the majority of the funding comes from government funded grants, does not mean that the program services are not trading or that the organisation cannot be a trading corporation.
[33] In Bankstown Handicapped Children’s Centre v Hillman 10 (Bankstown), the Full Court of the Federal 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?”
[34] 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.”
[35] Further, for reasons set out in Lawrence, 11 the fact that the trading activities are conducted in the public interest or for a public purpose will not necessarily exclude the categorisation of those activities as ‘trade’.
[36] In terms of the assessment of trading activities as substantial and not merely peripheral, the approaches do vary to a degree.
[37] In Bankstown, the Full Court observed that “there is no bright line that determines what proportion of trading activities is ‘substantial’”.12 In the more recent decision of the Federal Court in United Firefighters Union of Australia v Country Fire Authority,13 (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 matter14 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.”
[38] 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.”
[39] The focus of this appeal is the characterisation of the program services conducted by Glossodia CINC. These services are consistent with the purpose of the association but are made available at a cost to the individuals in the community who utilise those services. The services and the associated income represents the buying and selling of those services and a trading activity.
[40] Whilst perhaps not charged at market rates, the program services are subject to charges that are more than nominal and do not represent the gratuitous provision of a public welfare service in the manner described in E v Red Cross. Rather these services are provided at a cost to the users of those services and the income is not peripheral, insignificant or incidental when considered in the context of the funding and operations of the Glossodia CINC. Indeed, the program services represent a significant part of the operations of the association and almost a third of its total income.
[41] As a result, we consider that these activities are trading in nature and are sufficient to mean that the Glossodia CINC should have been held to be a trading corporation. The Commissioner’s conclusions to the contrary are, we respectfully consider, erroneous. This error goes to the jurisdiction of the Commission to deal with the stop-bullying application and means that there was no proper basis to dismiss that application.
[42] Given our findings, it is not necessary for us to deal with the appeal grounds related to the reasons provided for the decision at first instance.
[43] Given our findings, we consider that permission to appeal should be granted and the appeal upheld. On a rehearing, we find that Glossodia CINC is a trading corporation and as a result is conducting a constitutionally-covered business.
[44] There remains a dispute between the parties as to whether there has been any workplace bullying within the meaning of the Act. The stop-bullying application will be assigned to the relevant Regional Coordinator to assign to a Member to hear and determine.
[45] We order as follows:
(1) Permission to appeal is granted.
(2) The appeal is upheld.
(3) The Ex tempore decision of Commissioner McKenna at Sydney on 27 March 2019 is quashed.
(4) The Order issued by Commissioner McKenna on 27 March 2019 (PR706271) is revoked.
(5) On a rehearing, we find that Glossodia CINC is a trading corporation and as a result is conducting a constitutionally-covered business.
(6) The stop-bullying application is assigned to the relevant Regional Coordinator to assign to a Member to hear and determine in accordance with our reasons for decision.
VICE PRESIDENT
Appearances:
G Thurling, the Appellant in person.
R Blefari, for the Respondent parties.
Hearing details:
2019
Melbourne, Sydney (via Video Link)
May 30.
Printed by authority of the Commonwealth Government Printer
<PR708851>
1 PR706271.
2 Section 52(xx) of the Australian Constitution.
3 Application by Robertson [2018] FWC 6387.
4 Transcript (AB2018/433) 14 March 2019 PN 165-167.
5 PR706271.
6 (2008) 252 ALR 136 at para [68].
8 Annexure A - Affidavit of Ms Cheryl Keddie, March 2019.
9 Clause 42(1) of its rules.
10 (2010) 182 FCR 483 at par [48].
11 (2008) 252 ALR 136 at par [68](5).
12 (2010) 182 FCR 483 at paragraph [52].
13 [2015] FCAFC 1.
14 United Firefighters Union of Australia v Country Fire Authority [2014] FCA 17. This was not disturbed on appeal by the Full Court.