Professional sporting organisation and club – Trading corporation
R v Federal Court of Australia; Ex parte WA National Football League [1979] HCA 6 (27 February 1979), [(1979) 143 CLR 190].
Facts
The respondent was a registered football player with the West Perth Club. He moved his residence to South Australia having had an offer to play with the Norwood Club (the Club). Under the rules of the National League, adopted both by the State League and the West Perth Club, the respondent needed a clearance from the National League to play with another club other than the club he was registered with. If the respondent played without clearance, the Norwood Club would lose, or run the risk of losing competition points. The respondent was refused a clearance. He claimed that both the State League and the West Perth Club were trading corporations formed within Australia, bound by the provisions of the Trade Practices Act 1974-1977 (Cth) (the TP Act) and, in relation to the requirement and refusal of a clearance, were in breach of the TP Act.
Outcome
The High Court, by majority, held that the West Perth Club and the league to which it belonged in Western Australia were trading corporations. Their central activity was the organisation and presentation of football matches in which players were paid to play and spectators charged for admission; and television, advertising and other rights were sold in connection with such matches. The Court found that this constituted trading activity.
Relevance
When determining if an organisation is a financial corporation or a trading corporation, it is necessary to examine any trading activity the organisation performs. When trading is a substantial activity of the corporation, the conclusion that the corporation is a trading corporation is open. The commercial nature of an activity is also an element in deciding whether the corporation is in trade or trading.
Building Society – Financial corporation
Re Ku-Ring-Gai Co-operative Building Society (No 12) Ltd [1978] FCA 50 (18 December 1978), [(1978) 36 FLR 134].
Facts
The income of the applicants in this matter, 2 co-operative incorporated building societies, was derived from interest paid by members upon loans made to them, management fees, fines and discharge fees paid by members, and allowances and commissions received from insurance companies. The revenue outgoings of the applicants consisted of interest on the principal of the bank loan, management fees and administrative expenses. The applicants did not conduct their activities for the purpose of making financial profits but, subject to charging a contribution to managerial and administrative expenses and a difference in the calculation of interest, lent to their members at the same rate as that at which they borrowed from the relevant bank.
Outcome
The Federal Court found that the fact that this activity was not for profit and involved the performance of an important social function was not determinative. The 2 co-operative incorporated building societies were found to be financial corporations on the basis that they lent money at interest and were therefore engaged in commercial dealing in finance.
Relevance
An organisation may be a financial corporation even if the organisation is not conducted for profit and involves an important social function.
Notwithstanding the restricted scope and limited duration of their activities, each applicant in this matter carried on a business. At the heart of that business was the commercial dealings in finance constituted by the relevant applicant’s borrowing and lending of money, and the subsequent payments and receipt of money pursuant to obligations and rights resulting from those dealings. Each applicant was formed to carry on that business and their activities were confined to carrying it on. The business which each applicant carried on and which it was formed to carry on was a financial business.
Community services organisation – Trading corporation
Re Ms Marie Pasalskyj [2015] FWC 7309 (Hampton C, 13 November 2015).
Facts
The applicant alleged that she experienced bullying conduct in her workplace, Outcare. Outcare raised a jurisdictional objection that it was not a trading corporation within the meaning of the Fair Work Act due to its activities and nature. As a result, it contended the applicant was not at work in a constitutionally-covered business.
Outcome
The Commission held that a community services organisation that provides a range of services to offenders, former prisoners and their families is a trading corporation. Activities conducted for the purposes of fundraising were found to have the character of commercial transactions. The Commission determined that the trading activities of the organisation amounted to 11% of its income. This was found to be significant, and sufficient to impact upon the overall character of the organisation. Accordingly, the Commission found that the organisation was a trading corporation and that it could deal with the merits of the application.
Relevance
In this case, the altruistic intent of the organisation’s activities did not prevent it being a trading corporation in circumstances where those activities were not insubstantial, trivial, insignificant, marginal, minor or incidental.
Public transport agency – Trading corporation
Roads and Maritime Services v Leeman [2018] FWCFB 5772 (Hatcher VP, Colman DP, Spencer C, 18 September 2018).
Facts
At first instance, the Commission found that Roads and Maritime Services (RMS) was a constitutionally-covered business because it was a trading corporation. The Commission took account of both the absolute amount of revenue RMS earned from trading activities ($232 million) and the proportion of RMS’s revenue that was derived from trading activities, in concluding that RMS’s trading activities were of significance to it rather than being peripheral.
RMS appealed on grounds including that the Commission failed to take into account RMS’s public purposes and functions and relationships to the State of New South Wales (NSW) in determining whether RMS’s trading activities were sufficient for it to be characterised as a trading corporation, and that RMS was established as a ‘public transport agency’ by the Transport Administration Act 1988 (NSW) (TA Act) and its statutory functions were overwhelmingly public functions and were not of a commercial or profit-making nature.
Outcome
The Full Bench found that the functions conferred on RMS by ss.53(1)(a) and (b) of the TA Act were clearly concerned with the conduct of trading activities. These functions were not expressed as being subordinate or incidental to any of RMS’s ‘public’ functions, and indeed the words ‘whether or not related to its activities under this or any other Act’ in s.53(1)(a) made it clear that the RMS was authorised to engage in trading activities in its own right (including outside of NSW). The Full Bench concluded that engaging in trading activity is a statutory function and purpose of RMS.
Relevance
The Full Bench held that ‘[t]he conclusion that RMS’s trading activities are substantial and of significance permits it to be characterised … as a trading corporation ... RMS is not deprived of that character by reference to the purposes for which it was established, its closeness to the State of NSW, the fact that it may be subject to Ministerial direction, or the fact that its functions are predominantly for the public good and not commercially orientated.’
Community services organisation – Trading corporation
Thurling v Glossodia Community Information and Neighborhood Centre Inc. T/A Glossodia Community Centre [2019] FWCFB 3740 (Catanzariti VP, Hamilton DP, Hampton C, 5 July 2019).
Facts
At first instance the Commission found that Glossodia was not a trading corporation and therefore not a constitutionally-covered business and dismissed the employee’s stop-bullying application. The employee appealed on grounds including that Glossodia’s trading activities included providing before and after school child care for which it charged fees and levied administration fees, and rental fees for hiring its facilities, and that these activities comprised somewhere between 27.37-35.23% of its total income.
Outcome
The Full Bench granted permission to appeal and considered that the submissions made by Glossodia at first instance, as adopted in the Commission’s decision, placed significant emphasis upon the purpose of the association and very little upon the nature of its purported trading activities.
The Full Bench found that the program services conducted by Glossodia were consistent with the purpose of the association but were made available at a cost to the individuals in the community who used those services. The services and the associated income represented the buying and selling of those services and a trading activity. The Full Bench concluded that these activities were trading in nature and were sufficient to mean that the Glossodia should have been held to be a trading corporation. The Full Bench upheld the appeal and quashed the decision at first instance. On rehearing, the Full Bench found that Glossodia was a trading corporation and as a result was conducting a constitutionally-covered business.
Relevance
While perhaps not charged at market rates, Glossodia’s program services were subject to charges that were more than nominal and did not represent the gratuitous provision of a public welfare service in the manner described in E v Red Cross. Rather, its services were provided at a cost to users of the services and the income was not peripheral, insignificant or incidental when considered in the context of Glossodia’s funding and operations. Indeed, the program services represented a significant part of the association’s operations and almost a third of its total income.
Amateur sporting organisation – NOT a trading or financial corporation
Re Kimberley John Hughes v Western Australian Cricket Association (Inc) and Ors [1986] FCA 357 (27 October 1986), [(1986) 19 FCR 10].
Facts
The applicant was a professional cricketer who contended he was disqualified from district cricket because of his participation in a South African cricket tour. The applicant’s disbarment from playing club cricket was said to result from the Cricket Council’s resolution to amend the rules of the Cricket Council by including provision for the automatic disqualification of any player found in breach of the rule. Among other things, the applicant sought relief under the Trade Practices Act 1974 (Cth), which required at least one of the parties to the relevant contract, arrangement or understanding to be a trading corporation.
Outcome
The Court found that the incorporated cricket clubs that were party to the relevant contract, arrangement or understanding were not trading corporations. (Although the Western Australian Cricket Association with which they were associated was found to be a trading corporation, it was not a party to the relevant agreement). The clubs were basically amateur bodies which did not charge for admission to matches and generally did not pay players. Although they engaged in some trading activities, this was not of sufficient significance to allow them to be characterised as trading corporations.
Relevance
None of the clubs carried on the game of cricket as a trade, though the extent of particular activities varied from club to club. Whilst the clubs had activities which were of a trading nature, in particular the provision of bar facilities, this was not found to be so significant as to impose on the clubs the character of a trading corporation. The principal activity of the clubs was the playing of cricket for pleasure rather than reward.
Charitable organisation – Medical research institute - NOT a trading or financial corporation
Hardeman v Children’s Medical Research Institute [2007] NSWIRComm 189 (24 September 2007), [(2007) 166 IR 196].
Facts
The applicant sought interlocutory relief from the NSW Industrial Relations Commission (NSWIRC) restraining the Children’s Medical Research Institute (the Institute) from terminating her contract of employment. The applicant also sought relief declaring her contract was unfair, harsh or unconscionable. The Institute contended the NSWIRC did not have jurisdiction to grant the relief as the Institute was not a constitutional corporation.
Outcome
The Institute was found not to be a trading or financial corporation. The trading activities it did engage in were insubstantial and peripheral to the central activity of medical research, generating only approximately 2.5% of its revenue. A number of factors contributed to the NSWIRC’s assessment that the Institute’s financial activities were not a sufficiently significant proportion of its overall activities. In broad terms they were: the Institute’s conscious passivity regarding its investments; the limited financial deliberation or interaction and acts related to finance; its minimal staffing arrangements and its extensive use of external financial advice and expertise.
Relevance
The Institute’s trading and financial activities were not sufficiently substantial to render it a trading or financial corporation.
Community based organisation – Disability services organisation – NOT a trading or financial corporation
Re Ms McInnes [2014] FWC 1395 (Hampton C, 24 March 2014).
Facts
Ms McInnes made an application under s.789FC of the Fair Work Act for an order to stop bullying. The workplace concerned was conducted by Peninsula Support Services Inc. T/A Peninsula Support Services (PSS). PSS was a community based organisation providing support to people with psychiatric disabilities and their carers living within the Southern metropolitan region in Victoria.
PSS objected to the application on the basis that it was not a trading corporation within the meaning of Fair Work Act due to its activities and nature and as a result, the worker was not at work in a constitutionally-covered business.
Outcome
The Commission found that the assessment of the nature of the corporation was one of fact and degree. When assessed in context, the organisation’s income from trading activities, and those that might be considered to be trading activities, was not significant in either relative or absolute terms. Rather those activities, in PSS’s overall circumstances, could be categorised as being insignificant, peripheral and incidental in the sense contemplated by the authorities.
The Commission was satisfied that PSS was not a trading corporation. Given the absence of any other circumstances that would make the workplace a constitutionally-covered business, there was no jurisdiction for the Commission to deal with the application further. The application was dismissed.
Relevance
Where trading or financial activities are insignificant, peripheral or incidental, the organisation will not be a trading or financial corporation.
