FEDERAL COURT OF AUSTRALIA Carter v Carenne Support Limited [2012] FCA 1474 Citation: Carter v Carenne Support Limited [2012] FCA 1474 Appeal from: Carter v Carenne Support Ltd (unreported, Chief Industrial Magistrate's Court of New South Wales, 17 April 2012, Magistrate Hart) Parties: NATHAN JOHN CARTER v CARENNE SUPPORT LIMITED File number: NSD 641 of 2012 Judge: FLICK J Date of judgment: 21 December 2012 Catchwords: INDUSTRIAL LAW – application of state legislation – whether respondent company a constitutional corporation – whether respondent company a trading corporation – principles to be applied CONSTITUTIONAL LAW – legislative power of the Commonwealth – corporations power – s 51(xx) – what constitutes a trading corporation Legislation: Constitution s 51(xx) Judiciary Act 1903 (Cth) s 78B Workplace Relations Act 1996 (Cth) ss 4, 824, 853 Industrial Relations Act 1996 (NSW) Cases cited: Aboriginal Legal Service of Western Australia (Inc) v Lawrence (No 2) [2008] WASCA 254, 37 WAR 450, cited Australian Workers' Union of Employees, Queensland v Etheridge Shire Council [2008] FCA 1268, 171 FCR 102, cited Bankstown Handicapped Children's Centre Association Inc v Hillman [2010] FCAFC 11, 182 FCR 483, explained Brian Charles Carter v Carenne Support Ltd [2009] NSWIRComm 173, distinguished Carter v Carenne Support Ltd (unreported, Chief Industrial Magistrate's Court of New South Wales, 17 April 2012, Magistrate Hart), affirmed Commonwealth of Australia v State of Tasmania (1983) 158 CLR 1, cited Fencott v Muller (1983) 152 CLR 570, cited The Queen v The Judges of the Federal Court of Australia; Ex parte Western Australian National Football League (Incorporated) (1979) 143 CLR 190, applied The Queen v Trade Practices Tribunal; Ex parte St George County Council (1973) 130 CLR 533, applied State Superannuation Board v Trade Practices Commission (1982) 150 CLR 282, applied Date of hearing: On the papers Place: Sydney Division: FAIR WORK DIVISION Category: Catchwords Number of paragraphs: 34 Counsel for the Appellant: The Appellant appeared in person Counsel for the Respondent: Mr M J Easton Solicitor for the Respondent: Ellison Tillyard Callanan Solicitors IN THE FEDERAL COURT OF AUSTRALIA NEW SOUTH WALES DISTRICT REGISTRY FAIR WORK DIVISION NSD 641 of 2012 ON APPEAL FROM THE chief industrial magistrate's court of nsw BETWEEN: NATHAN JOHN CARTER Appellant AND: CARENNE SUPPORT LIMITED Respondent JUDGE: FLICK J DATE OF ORDER: 21 DECEMBER 2012 WHERE MADE: SYDNEY THE COURT ORDERS THAT: 1. The appeal is dismissed. 2. There is no order as to costs. 3. Liberty is reserved to the Respondent to apply to vary Order 2, such liberty to be invoked on or before 14 January 2013. Note: Entry of orders is dealt with in Rule 39.32 of the Federal Court Rules 2011. IN THE FEDERAL COURT OF AUSTRALIA NEW SOUTH WALES DISTRICT REGISTRY FAIR WORK DIVISION NSD 641 of 2012 ON APPEAL FROM THE chief industrial magistrate's court of nsw BETWEEN: NATHAN JOHN CARTER Appellant AND: CARENNE SUPPORT LIMITED Respondent JUDGE: FLICK J DATE: 21 DECEMBER 2012 PLACE: SYDNEY REASONS FOR JUDGMENT 1 On 17 April 2012 the Chief Industrial Magistrate's Court of New South Wales published its reasons in relation to its jurisdiction to hear and determine a claim brought by the Appellant, Nathan John Carter, against the Respondent, Carenne Support Limited ("Carenne Support"): Carter v Carenne Support Ltd (unreported, Chief Industrial Magistrate's Court of New South Wales, 17 April 2012, Magistrate Hart). A substantial activity of Carenne Support was the provision of bus services under a contract with the New South Wales Department of Education and Training. 2 The claim made by Mr Carter was for underpayment of wages for the period spanning December 2006 to December 2008. That claim was made pursuant to the provisions of the Industrial Relations Act 1996 (NSW). The Appellant did not rely on the Commonwealth legislation in force during the relevant period, the Workplace Relations Act 1996 (Cth). 3 The 17 April 2012 reasons resolved what the Industrial Magistrate characterised as "the threshold question of jurisdiction". It was concluded that Carenne Support was "… a trading corporation and therefore a constitutional corporation for the purposes of industrial law". The Industrial Magistrate concluded that he did not have jurisdiction under the Industrial Relations Act. The Industrial Magistrate did not, however, dismiss the Application. The reasons for decision thus state in part as follows: [22] This Court has now determined the threshold matter and the finding of the Court is that this Court lacks jurisdiction under the Industrial Relations Act 1996 (NSW) to hear the claim brought by the Applicant in circumstances where the Court has found that the Respondent company is a trading company. I do not dismiss the application before the Court in circumstances where the Applicant may wish to have the Decision judicially reviewed by way of appeal. Alternatively, the applicant may pursue his foreshadowed course of lodging an Amended Application which relies upon Federal legislation rather than the Industrial Relations Act (NSW). The Industrial Magistrate went on to adjourn the proceeding to enable the Appellant to "consider his position". The difference in any amount recoverable by Mr Carter, dependent upon whether his claim was regulated by the Commonwealth or State legislation, was said to be about $200. Mr Carter nevertheless wanted his appeal resolved – potential claims by other employees of Carenne Support, he maintained, depended upon the outcome of this appeal. 4 On 8 May 2012 the Appellant filed a Notice of Appeal in this Court. In very summary form, Mr Carter contends that the Industrial Magistrate erred in not concluding that the facts of the present case were distinguishable from those resolved by the Full Court of this Court in Bankstown Handicapped Children's Centre Association Inc v Hillman [2010] FCAFC 11, 182 FCR 483. Mr Carter further contends in his Notice of Appeal that the Industrial Magistrate failed to "correctly follow the test set down by the Federal Court of Australia in the Bankstown case …". 5 Mr Carter also filed in this Court on 8 May 2012 a Notice of a Constitutional Matter under s 78B of the Judiciary Act 1903 (Cth). Affidavits of Service were filed evidencing the service of the Notice on the Commonwealth and State Attorneys-General. No intention to intervene was communicated to the Court and, by 9 November 2012, a more than "reasonable" time had passed for the purposes of s 78B(1) of the Judiciary Act. 6 The appeal was listed for hearing on 12 November 2012. Prior to that date, however, Mr Carter filed an Interlocutory Application. An order was sought (inter alia) vacating the date for the hearing of the appeal. That Application was listed for hearing on 9 November 2012. Mr Carter appeared unrepresented by way of telephone. In the course of the hearing it became apparent that both Mr Carter and Carenne Support were content to have the hearing on 12 November 2012 vacated and for the appeal to be resolved upon the basis of the written submissions which had been filed. In large part, that course was pursued because Mr Carter suffered from a medical condition which rendered it "almost impossible" for him to leave his home town and travel to Sydney. 7 Mr Carter was unrepresented. Carenne Support was represented by Counsel. During the course of the hearing of the Interlocutory Application Mr Carter sought leave to adduce further evidence for the purposes of the appeal. Those materials, he accepted, were available to him at the time of hearing before the Chief Industrial Magistrate's Court. The Respondent objected to Mr Carter being permitted to adduce further evidence but properly accepted that the Respondent would suffer no prejudice if that evidence were admitted. If that evidence were admitted, Counsel for the Respondent indicated that there was no further evidence upon which it would seek to rely. The question of whether those materials should be admitted into evidence was thus left to be resolved at the same time as resolving the appeal itself – a course consented to by the parties. 8 The appeal is to be dismissed. It matters not whether the further materials sought to be relied upon by Mr Carter were to be admitted or rejected; their admission into evidence would lead to no different result. 9 The appeal to this Court, it should perhaps be noted at the outset, may ultimately be traced back to s 853 of the former Workplace Relations Act. Counsel for Carenne Support raised no question as to either the ability of Mr Carter to file his Notice of Appeal or the competence of this Court to hear and determine his "appeal". To the extent that leave to appeal is necessary – such leave should be taken to have been granted. THE DECISION OF THE INDUSTRIAL MAGISTRATE 10 The factual basis upon which the Chief Industrial Magistrate's Court proceeded was extremely limited. Indeed, "the threshold question of jurisdiction" was largely resolved upon the basis of written submissions. As was the experience of this Court, Mr Carter also did not appear before the Chief Industrial Magistrate's Court, even though that Court on two occasions sat in Mr Carter's own town. 11 Neither Mr Carter nor Counsel for Carenne Support, however, suggested that those written submissions failed to provide an adequate factual basis upon which the Industrial Magistrate could proceed. 12 After setting forth part of the text of Mr Carter's written submissions and an extract from the decision of the Full Court in Bankstown Handicapped Children's Centre Association Inc v Hillman, the Industrial Magistrate relevantly concluded (without alteration): [18] It is clear that there are a number of factual differences between the circumstances in Hillman's case and those applying in the case of Carenne Support Ltd. The services offered are different, the financial arrangements are different, and the manner in which the corporate vehicles are established is different. Notwithstanding those differences, I am satisfied that an application of the principles relied upon by the Federal Court of Australia in Hillman's case to the facts in the present case, result in the conclusion that the Respondent, Carenne Support Ltd was a trading corporation and therefore a constitutional corporation for the purposes of industrial law. The facts reveal that a substantial activity of the Respondent company was the provision of bus services under contract to the New South Wales Department of Education and Training. This activity is not a minor or peripheral activity of the company but a substantial and significant one. It is, by far, the major source of income revenue for the company. The company uses motor vehicles, including motor vehicles made available to it by Carenne School which provides educational services for persons with various disabilities. The availability of the motor vehicles, combined with the employment of drivers, enabled the company to contract with the New South Wales Department of Education and Training to provide transport services for persons with disabilities within a defined area of New South Wales. The Department of Education and Training was in no way obligated to enter into such a contract with the company. It was prepared to contract such work to the company at a price which was acceptable to the company. The amount payable for the services by the Department of Education and Training was derived from an averaging process utilised by the Department to set the rate it was prepared to pay. Whilst the applicant urges on the Court a conclusion that on these facts there was no negotiation between the Department and the company, the lack of negotiation does not lead to a conclusion that the arrangement was a non-commercial one. As indicated above, the Department of Education and Training was not obliged in any way to utilise the company for the provision of this service. It was in a position to offer the contract on a "take it or leave it" basis and apparently did so. The amount offered was acceptable to the company and this is hardly surprising in circumstances where the details set out in the Decision of his Honour Mr Justice Haylen reveal that the company made a quite substantial profit from this particular activity. It is also clear that the profit that was made by the company was in turn utilised to assist in the funding of Carenne School, a charitable organisation. The facts reveal that it was support for this charitable institution that led to the company being set up in the first place. The activities of the company generated revenue which could than be ploughed back into Carenne Scholl including funding for the engagement of professional speech therapists and other services provided by the School. As I understand the approach adopted by the Full Bench of the Federal Court of Australia, it is inappropriate for the ultimate social purpose of the organisation to attract the focus of attention when an examination is made as to the status of the corporation. Rather, it is the activities of the organisation which should be the focus of attention and in this case the predominant purpose of the company was the conduct of a transport service for profit arising out of the company's contract with the Department of Employment and Training. Further, as I understand the relevant test, it is not to the point that the disabled persons on the bus obtaining the benefit of the service were not charged any moneys for such services. That is because the commercial arrangement was made between the Department of Employment and Training and the company, and the service was provided in accordance with that contract and at an agreed price. [19] For the above reasons, I find that the Respondent herein was, at all material times, a trading corporation and, as a consequence, the Industrial Relations Act 1996 (NSW) does not have application in relation to the contract of employment between the Applicant and the Respondent company in the period between December 2006 and December 2008. A TRADING CORPORATION – SECTION 51(xx) 13 Section 51 of the Constitution provides, in relevant part, as follows: The Parliament shall, subject to this Constitution, have power to make laws for the peace, order, and good government of the Commonwealth with respect to: … (xx) foreign corporations, and trading or financial corporations formed within the limits of the Commonwealth; … The words "foreign", "trading" and "financial" which govern the term "corporations" in s 51(xx) indicate that the placitum refers only to corporations of particular kinds: Fencott v Muller (1983) 152 CLR 570 at 586 per Gibbs CJ. Section 4 of the Commonwealth Workplace Relations Act defined a "constitutional corporation" as "a corporation to which paragraph 51(xx) of the Constitution applies". 14 The phrase "trading corporation" as used in s 51(xx) is not a term of art: The Queen v The Judges of the Federal Court of Australia; Ex parte Western Australian National Football League (Incorporated) (1979) 143 CLR 190 at 233. Mason J there observed: "Trading corporation" is not and never has been a term of art or one having a special legal meaning … See also: (1979) 143 CLR at 219 per Stephen J. Incorporated football clubs were there held to be trading corporations. Although their central activity was the promotion of Australian Rules Football, they nevertheless also carried on essentially commercial activities. "A trading corporation may also be a sporting, religious or governmental body": (1979) 143 CLR at 239. Murphy J there went on to say that "[a]s long as the trading is not insubstantial, the fact that trading is incidental to other activities does not prevent it being a trading corporation". 15 Notwithstanding the fact that the phrase "trading corporation" is not a term of art, a number of principles of present relevance seem reasonably clear. 16 First, in determining whether a corporation is a "trading corporation", "the only sure guide … is a purview of its current activities, a judgment as to its nature being made after an overview of all those activities": Ex parte Western Australian National Football League (Incorporated) (1979) 143 CLR at 208 per Barwick CJ. Further, "[f]or constitutional purposes a corporation formed within the limits of Australia will satisfy the description 'trading corporation' if trading is a substantial corporate activity": at 208. Mason J expressed a similar view when his Honour said that the phrase a "trading corporation" is "[e]ssentially … a description or label given to a corporation when its trading activities form a sufficiently significant proportion of its overall activities as to merit its description as a trading corporation" (1979) 143 CLR at 233. "Whether the trading activities of a particular corporation are sufficient to warrant its being characterized as a trading corporation is very much a question of fact and degree": (1979) 143 CLR at 234 per Mason J. See also: State Superannuation Board v Trade Practices Commission (1982) 150 CLR 282 at 304 per Mason, Murphy and Deane JJ. 17 Second, it is necessary to look beyond its "predominant and characteristic activity". A corporation (for example) that may carry on as its primary or dominant undertaking a sporting club may nevertheless be a "trading corporation": State Superannuation Board v Trade Practices Commission (1982) 150 CLR 283 at 304. Mason, Murphy and Deane JJ there went on to observe: … 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. See also: Australian Workers' Union of Employees, Queensland v Etheridge Shire Council [2008] FCA 1268 at [78]-[86], 171 FCR 102 at 118-119 per Spender J. 18 Third, the making of a profit is not essential to the carrying on of trade: The Queen v Trade Practices Tribunal; Ex parte St George County Council (1973) 130 CLR 533 at 563. Gibbs J there observed that "although in general trade is carried on with the intention of making a profit, it is not essential to the carrying on of a trade that the persons engaged in it should make or desire to make a profit". His Honour had there previously said that "the mere fact that a corporation is trading does not mean that it is a trading corporation. It is necessary to determine the true character of the corporation, upon a consideration of all the circumstances that throw light on the purpose for which it was formed": (1973) 130 CLR at 562. 19 Fourth, the connection of a corporation with governmental activities "will not take it outside s. 51(xx)": Commonwealth of Australia v State of Tasmania (1983) 158 CLR 1 at 155 per Mason J. The fact that a corporation's "operations are largely conducted in the public interest" and that the corporation has "an important policy-making role" thus does not preclude a finding that it is a "trading corporation": 158 CLR at 156 per Mason J. 20 These are but some of the principles summarised by Steytler P in Aboriginal Legal Service of Western Australia (Inc) v Lawrence (No 2) [2008] WASCA 254 at [68], 37 WAR 450 at 509-510. It was this summary of principles which was endorsed by the Full Court of this Court in Bankstown Handicapped Children's Centre Association Inc v Hillman [2010] FCAFC 11 at [48], 182 FCR 483 at 509-510 per Moore, Mansfield and Perram JJ. It was concluded that the Association in that case was a "trading corporation" and that, accordingly, the State Industrial Court had no jurisdiction. The Association was a corporation which provided welfare and support services for people with disabilities, children and young people and provided support for their families and carers. In so concluding, their Honours observed: [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? [52] There is no bright line delineating what is or is not a trading corporation … After summarising the activities of the Association and in concluding that the relationship between the Association and the New South Wales Department of Community Services was a "commercial one involving trade in services", their Honours said: [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 s 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 … CARENNE SUPPORT – A TRADING CORPORATION? 21 These principles assume importance by reason of the emphasis placed by Mr Carter upon his submission that "the Chief Industrial Magistrate ought to have found that the predominant purpose of the respondent was for the provision of therapy services and other support to Carenne School". The "error of fact", it is said, is the finding that "the predominant purpose of the company was the conduct of a transport service for profit …". It was submitted that there was no "commercial" relationship with the New South Wales Department of Education and Training. This fact, it was further said, underlined the correct characterisation of Carenne Support as not a "trading corporation". 22 In the present appeal, a principal contention advanced on behalf of Mr Carter in his written submissions accepts that it was open to the Chief Industrial Magistrate "to consider the provision of services [under the agreement between the Respondent and the NSW Department] as an activity which amounts to trade" but contends that "such a consideration does not automatically lead to the conclusion that the respondent's performance of those services amount to trade". The written submissions go on to contend that "while the provision of transport services to disabled clients may be considered a trading activity, the circumstances in which the services are provided by an individual provider must be considered". 23 The statement of the principles set forth in Mr Carter's submissions may presently be accepted. The difficulty for Mr Carter is that the reasons for decision of the Industrial Magistrate expose a consideration of the activities of Carenne Support, including a consideration of matters such as the services provided by Carenne Support under its contract with the New South Wales Department of Education and Training; the amount payable under the contract; the fact that Carenne Support did not engage in negotiations with the New South Wales Department; and the fact that disabled persons did not pay for the services. No appellable error is discernible in the manner in which the Industrial Magistrate proceeded or the findings of fact that he made. 24 A further contention advanced by Mr Carter is that the agreement with the Department "is not commercial in nature". He maintains that "… the agreement between the respondent and the NSW DET is a relationship of convenience and not commercial in nature". The relationship between Carenne Support and the Department remained, however, but one of the matters to be taken into account when making a finding as to whether Carenne Support was a "trading corporation". The weight to be given to that relationship, and the balance of the agreement, was a matter initially for the Industrial Magistrate. As found by the Industrial Magistrate, the Department was in the position to make an offer on a "take it or leave it" basis and that the amount on offer was acceptable to the company. The amount payable for the services provided had been derived from "an averaging process". The facts upon which the Industrial Magistrate proceeded, albeit on a limited basis, provided foundation for the finding that Carenne Support was a "trading corporation". The fact that the profit generated was in turn "ploughed back into Carenne School" did not preclude that finding being made. 25 A final contention which should be expressly noted is that Mr Carter contends that the Industrial Magistrate erred in rejecting the judgment of Haylen J in an earlier decision in Brian Charles Carter v Carenne Support Ltd [2009] NSWIRComm 173. Haylen J was there "… unable to conclude that Carenne is a trading corporation such that, by operation of s 16(1) of the Workplace Relations Act, this Commission lacks jurisdiction to deal with Mr Carter's application for reinstatement": [2009] NSWIRComm 173 at [66]. Mr Brian Carter is the father of the present Appellant, Mr Nathan John Carter. 26 The decision of Haylen J pre-dated the decision of the Full Court in Bankstown Handicapped Children's Centre Association Inc v Hillman. The decision of Haylen J, according to Mr Carter, "is consistent with the principles in Bankstown, whereas the decision of the Chief Industrial Magistrate is not". The reason for Mr Carter's reliance upon the decision of Haylen J is self-evident – Haylen J reached a conclusion consistent with the result sought by Mr Carter with respect to the very company against which Mr Carter seeks relief; the decision of the Full Court tends to the opposite conclusion. 27 The reliance sought to be placed by both Mr Carter and Counsel for Carenne Support upon these seemingly inconsistent decisions is, with respect, not decisive. Each decision was, in large part, dependent upon their individual facts. 28 The present appeal is to be resolved by reference to the limited facts that were before the Court and by the application of commonly accepted principles. The principles to be applied when determining whether a corporation is a "trading corporation" – and hence a "constitutional corporation" – have been largely set forth by the High Court. It is within the framework of the principles set forth in those authorities that the facts of the present proceeding must be considered. 29 The Industrial Magistrate nevertheless relied extensively upon the approach set forth by the Full Court. No error is discernible in the Industrial Magistrate's reliance upon the decision of the Full Court and no separate error is, in any event, discernible if the facts were considered by reference to the principles as they may be separately distilled from the decisions of the High Court. For present purposes there was no difference. No error is discernible in either the principles applied by the Industrial Magistrate or in the ultimate finding of fact that Carenne Support was a "trading corporation". 30 In expressly identifying these arguments as set forth in Mr Carter's written outline of submissions, an attempt has been made to address the principal concerns of Mr Carter. His written submissions, it should be noted, have nevertheless been considered in their entirety. Those submissions, with respect, fail to expose any appellable error on the part of the Industrial Magistrate. CONCLUSIONS 31 On the limited material upon which the Chief Industrial Magistrate's Court proceeded, no appellable error is discernible. Whether any different decision may be reached upon the basis of a more extensive analysis of the facts is an issue which need not now be pursued. 32 The same conclusion would be reached irrespective of whether or not the additional materials which Mr Carter sought to adduce for the purposes of the appeal were admitted. 33 It follows that the appeal should be dismissed. 34 In the absence of any application for an order for costs being made on behalf of Carenne Support, it has been assumed that the appeal should be dismissed with no order being made in respect to costs. That, most probably, is the result dictated by s 824 of the Workplace Relations Act. Liberty should, however, be reserved to Carenne Support if this assumption be incorrect. The orders of the court are: 1. The appeal is dismissed. 2. There is no order as to costs. 3. Liberty is reserved to the Respondent to apply to vary Order 2, such liberty to be invoked on or before 14 January 2013. I certify that the preceding thirty-four (34) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Flick. Associate: Dated: 21 December 2012