Industrial Court of New South Wales CITATION: Hardeman v Children's Medical Research Institute [2007] NSWIRComm 189 APPLICANT (RESPONDENT ON NOTICE OF MOTION): Edna Hardeman PARTIES: RESPONDENT (APPLICANT ON NOTICE OF MOTION): Children's Medical Research Institute (a Company Limited by Guarantee) INTERVENOR: Attorney General of New South Wales FILE NUMBER(S): IRC 329 of 2007 CORAM: Wright J President; Walton J Vice-President; Boland J CATCHWORDS: Unfair contract - Jurisdictional challenge - Notice of motion - Whether corporation is "constitutional corporation" for the purposes of s 51(xx) - Whether "constitutional corporation" for the purposes of Workplace Relations Act 1996 s16(1) - Trading corporation - Financial corporation - Motion dismissed. Australian Constitution s 51(xx) Corporations Act 2001 (Cth) LEGISLATION CITED: Industrial Relations Act 1996 ss 106, 193 Judiciary Act 1903 (Cth) s 78A Workplace Relations Act 1996 (Cth) s 16 E v Australian Red Cross & Ors (1991) 27 FCR 310 Fencott v Muller (1983) 152 CLR 570 Garvey v Institute of General Practice Education Incorporated [2007] NSWIRComm 159 Ku-ring-gai Co-operative Building Society (No 12) Ltd, Re (1978) 36 FLR 134 New South Wales v Commonwealth (2006) 231 ALR 1 CASES CITED: Quickenden v O'Connor (1999) 91 FCR 597 Quickenden v O'Connor (2001) 184 ALR 260 R v Federal Court of Australia; Ex parte WA National Football League (1979) 143 CLR 190 State Superannuation v Trade Practices Commission (1980) 49 FLR 216 State Superannuation v Trade Practices Commission (1981) 60 FLR 165 State Superannuation Board v Trade Practices Commission (1982) 150 CLR 282 HEARING DATES: 22 May 2007 DATE OF JUDGMENT: 24 September 2007 APPLICANT (RESPONDENT ON NOTICE OF MOTION) Mr J N West QC and Mr T Saunders of counsel Solicitors: Harmers Workplace Lawyers RESPONDENT (APPLICANT ON NOTICE OF MOTION) LEGAL REPRESENTATIVES: Mr R M Goot AM SC and Mr A Gotting of counsel Solicitors: Minter Ellison INTERVENOR Mr M G Sexton SC, Solicitor General, and Mr J Kirk of counsel Solicitors: Crown Solicitor JUDGMENT: INDUSTRIAL COURT OF NEW SOUTH WALES FULL BENCH CORAM: WRIGHT J, President WALTON J, Vice-President BOLAND J Monday 24 September 2007 Matter No IRC 329 of 2007 EDNA HARDEMAN v CHILDREN'S MEDICAL RESEARCH INSTITUTE (A COMPANY LIMITED BY GUARANTEE) Application under section 106 of the Industrial Relations Act 1996 JUDGMENT OF THE COURT [2007] NSWIRComm 189 1 The applicant, Ms Edna Hardeman, commenced proceedings on 22 March 2007 (by way of a notice of motion and summons for relief) seeking interlocutory relief under s 106 of the Industrial Relations Act 1996 ("the Act") restraining the respondent, the Children's Medical Research Institute (a Company Limited by Guarantee) ("the respondent") from, in effect, terminating the applicant's contract of employment. The applicant also sought final relief declaring her contract unfair, harsh or unconscionable and/or contrary to the public interest and voiding and varying aspects of her contract. 2 The respondent filed a notice of motion raising a jurisdictional challenge to the applicant's motion, based on the contention that the Commission had no jurisdiction to hear the applicant's motion as the respondent was a constitutional corporation and, thereby, s 16(1) of the Workplace Relations Act 1996 (Cth) ("WR Act") operated to remove the Commission's jurisdiction in respect of the respondent. The respondent also sought to challenge the Commission's jurisdiction to grant the interlocutory relief sought by the applicant. 3 The parties' motions were initially heard by Staff J, who referred the matter to the President, pursuant to s 193 of the Act, to determine if a Full Bench should deal with the question of whether the respondent is a constitutional corporation. We understand that consent arrangements were made before his Honour by the parties to accommodate their respective situations pending the hearing of the Full Bench reference. The President then referred the "constitutional corporation" issue to the Full Bench for decision, pursuant to s 193 of the Act. Accordingly, these proceedings are limited to what may be referred to as the respondent's constitutional challenge. These proceedings do not relate to the substantive relief sought by the applicant, nor to the respondent's challenge to the Commission's jurisdiction to grant the interlocutory relief sought. 4 During the hearing, it was accepted by the parties that if the respondent was able to satisfy the Commission that it was a constitutional corporation for the purposes of s 51(xx) of the Australian Constitution ("Constitution"), the Commission would not have power to hear the applicant's summons and motion by operation of s 16(1) of the WR Act. 5 A Full Bench of the Commission has recently considered an analogous challenge in Garvey v Institute of General Practice Education Incorporated [2007] NSWIRComm 159 ("Garvey") and provided a synthesis and analysis of the principles relevant to an assessment as to whether a corporation is constitutional corporation. Though Garvey was decided by the Commission and, therefore, is not binding on this Court, we consider that the principles stated there represent a correct analysis of the principles to be derived from relevant authority. We observe at the outset that the point of difference between these proceedings and Garvey is that, in these proceedings, the respondent has contended that it is both a "trading corporation" and a "financial corporation", whereas in Garvey the issue was confined to whether the corporation was a "trading corporation". The Hearing of the Challenge 6 The Full Bench heard the respondent's constitutional challenge on 22 May 2007, at which the respondent relied upon the affidavits of Mr Stephen Ryall dated 11 April 2007 and 16 May 2007. In reply, the applicant tendered a notice to produce together with material produced by the respondent in response to the notice, namely minutes of the respondent's Finance and Investment Committee's meetings for the period 27 January 2004 to 23 March 2007. 7 Written submissions were also received from the parties as well as the Attorney General for New South Wales, who intervened in the proceedings on 17 May 2007, pursuant to s 78A of the Judiciary Act 1903 (Cth). 8 As the Commission observed in Garvey, a constitutional challenge of the type made by the respondent essentially gives rise to two questions: (a) whether, as a matter of fact, the respondent engaged in trading activities or financial activities; and (b) whether, as a matter of law, those trading or financial activities, if any, were such that the respondent could properly be characterised as a trading corporation or financial corporation or both. 9 This matter proceeded upon the basis that there was little controversy as to the principles applicable to the determination of a trading or financial corporation, but the parties differed as to how those principles should be applied in light of the respondent's activities. Accordingly, we turn to identify in a general way the respondent's relevant activities. General Factual Background 10 The following facts relating to the respondent were not disputed during the hearing: (a) the respondent is a company limited by guarantee incorporated under the Corporations Act 2001 (Cth). The respondent was established on 11 December 1985 to hold and manage The Children's Medical Research Foundation ("CMRF"), a charitable trust; (b) prior to the incorporation of the respondent, the board of management of the Royal Alexandra Hospital for Children ("Hospital") had, in 1957, resolved to launch a public appeal for funds to undertake children's medical research and, in 1958, established a foundation, the CMRF, to invest the money received from the public appeal in securities authorised by the Hospital, and to use the income arising from those investments for the purposes of the CMRF; (c) the respondent operates as a not-for-profit organisation, and is registered under the applicable legislation in each State and Territory to conduct fundraising activities; (d) the respondent conducts research to understand the genes and their products important for health and development, and the underlying causes of disease; (e) the organisational structure of the respondent is based on five research units; the Cell Biology Unit; Muscle Development Unit; Cell Signalling Unit; Cancer Unit; and Embryology Unit, and five divisions responsible for administration, operations, bioservices, education and the Director's office; (f) the respondent has a constitution that, inter alia , includes the following provisions: 2 Objects of Institute 2.1 The objects for which the Institute is established are: (a) to initiate, promote, undertake, develop, conduct and carry out research in the field of paediatrics; (b) to conduct research into the causes, prevention, relief or cure of disease or illness in children; … (f) to take over, hold and manage the funds and other assets and liabilities of the charitable trust known as the "Children's Medical Research Foundation", such funds and other assets and liabilities being currently held by the Hospital as trustee of the said charitable trust, upon and subject to the trusts on which funds and other assets and liabilities are presently held by the Hospital and to act as the trustee of the said charitable trust. Solely for the purpose of carrying out of the aforesaid objects and not otherwise: … (n) to invest and deal with the moneys of the Institute not immediately required, in any form of investment for the time being authorised by law for the investment of trust moneys and in addition thereto in British Government Securities, in any government funds or debentures of the Commonwealth of Australia, or of any state of the Commonwealth of Australia, or of New Zealand or in any debentures or debenture stock of any municipal corporation therein, or of any bank or incorporated company carrying on business therein, or by way of deposit in any bank for fixed periods or otherwise, or by way of purchase of or mortgage upon any freehold estate; … (q) to sell, improve, manage, develop, exchange, lease, dispose of, turn to account or otherwise deal with all or any part of the property and rights of the Institute; … (z) to apply for purchase or otherwise acquire any patents, patent rights, copyrights, trade marks, formulas, licences, concessions and the like conferring any exclusive or non-exclusive or limited right to use or any secret or other information as to, any invention that seems capable of being used for any of the purposes of the Institute, or the acquisition of which seems calculated directly or indirectly to benefit the Institute, and to use, exercise, develop or grant licences in respect of, or otherwise turn to account, the property, rights or information so acquired; and (aa) to do all such other things as are incidental or conducive to the attainment of the objects and the exercise of the powers of the Institute. (g) the respondent has established investment objectives, policies and processes by which it invests its long term assets and in the respondent's current Statement of Investment Objectives and Policy, prepared by Watson Wyatt Australia Pty Ltd, for the Children's Medical Research Institute dated June 2003, its general investment objectives are: 2.1 The Institute's general investment objectives for the Institute's long-term assets are as follows: · to invest the assets of the Institute as permitted by law · to prudently manage all aspects of risk in relation to the Institute's assets, including: - ensuring the assets are adequately diversified - ensuring the assets have an appropriate level of liquidity · to ensure that any party to whom investment decision making is delegated exercises integrity, prudence and professional skill in fulfilling the investment tasks delegated to them, and that the actions of the party are fully accountable to the Institute. (h) the Statement of Investment Objectives and Policy also outlines the respondent's policies in relation to financial management: 3.2 The institute recognises that it is empowered to delegate the investment of the institutes assets to one or more investment managers. ... 4.1 The Institute recognises the importance of an ongoing process of monitoring the investment managers to ensure they continue to demonstrate a sufficient level of skill to meet the investments objectives. 4.2 Each manager is required to provide regular information on investment performance. 4.3 The Institute from time to time as deemed necessary, will seek appropriate advice from its investment consultant, Watson Wyatt, to assist with the monitoring of investment managers including selection and de-selection. ... 4.8 The institute recognises that monitoring of performance alone is not sufficient to assess the future capability of managers. In addition therefore the institute relies on Watson Wyatt to hold regular meetings with the investment managers to satisfy themselves that the managers continue to carry out there work competently and have the appropriate knowledge and experience to manage the investments of the Institute. (i) the respondent's considerable financial investments are overseen by its Finance and Investment Committee and its Financial Advisor. The respondent has a Finance and Investment Committee, which is a sub-committee of the board of directors of the respondent, and which has as its primary function: The committee's primary function is to assist the Board in discharging its responsibility to exercise due care, diligence and skill in relation to the CMRI in the areas of investment policy, strategy and such other matters as the CMRI Board may determine from time to time. (j) the Finance and Investment Committee is comprised of seven board members as well as Dr Roger Radel, the acting director of the respondent, Jan Mullen, the respondent's accountant, and Stephen Ryall, the respondent's secretary. The current chair of the Finance and Investment Committee is the respondent's treasurer Rod Atfield. (k) the Finance and Investment Committee meets approximately every two months, at which the respondent's accountant, Ms Jan Mullen, presents her monthly report on investments and movements in the respondent's investments, and also reports when significant sums of money become available for investment, for example, from fundraising activities or other means. The Finance and Investment Committee then considers how the money should be invested, in accordance with the Investment Statement; (l) the respondent's investment advisors are Watson Wyatt Australia Pty Ltd; (m) the respondent's investment advisors, Watson Wyatt, attend meetings of the Committee to report on the respondent's investments and make recommendations regarding the management of the respondent's investments; (n) the Finance and Investment Committee receives advice from Watson Wyatt. The Finance and Investment Committee considers the benefits of Watson Wyatt's proposals. The Finance and Investment Committee makes submissions to the board regarding the proposals; o) Watson Wyatt recommends various funds to the Finance and Investment Committee; p) when the board approves recommendations by the Finance and Investment Committee regarding investing in a particular fund, Ms Mullen, the head of accounts, effects the investment, the exchange of money and the physical paper work, etc; q) Watson Wyatt prepares a Quarterly Investment Performance Summary about the respondent's investments. The Quarterly Investment Performance Summary gives a breakdown of the respondent's asset allocation in detail and records the performance of each asset against benchmarks set by the Finance and Investment Committee; r) a Quarterly Investment Report or an Interim Quarterly Investment Report is presented at the Finance and Investment Committee at each meeting; (s) the respondent has an endowment fund into which any proceeds from fundraising and investment income remaining after its administrative and operational expenses are contributed. The respondent also currently derives funds from research grants by private and government bodies. Over the last five years, approximately one third of the respondent's total income is derived from investment income; (t) the following information was drawn from the respondent's 2006 Financial Statements in respect of the financial year ended 30 June 2006: (i) the net surplus of the respondent was $8,029,077 and the revenue from continuing operations was $23,804,870; (ii) the respondent has total assets of $102,616,085. In terms of financial assets, the respondent has current assets in the form of cash and cash equivalents of $2,054,649 and $83,037,550 of non-current assets in the form of other financial assets; (iii) of the non-current financial assets of $83,037,550, all is categorised as "Available-for-sale financial assets at fair value - Managed Funds"; (iv) the respondent's revenue of $23,804,870 is broken down as follows: · $9,143,472 from fundraising; · $277,199 from the sale of its merchandise; · $411,124 from interest received and receivable on its investments; · $5,386,927 as dividends from the respondent's investments; · $1,669,215 from profit received on the respondent's sale of its investments; · $6,762,652 from research grants received; · $154,281 from other income such as payment for use by third parties, such as the Hospital, of equipment and facilities owned by the respondent, including animal holding facilities; (v) the revenue received or derived from its investments comprised 31.369 per cent of the respondent's total revenue; (u) the respondent updated the foregoing information based on its draft financial statements and results up until 28 February 2007, and as at 28 February 2007 the respondent's gross revenue received or derived from its investments represented approximately 45 per cent (which is $8,122,584) of the revenue received by it. This is based on the respondent's gross revenue received or delivered from its investments as follows: (i) $67,867 from interest received and receivable on investments (0.381 per cent); and (ii) $8,054,717 as dividends and distributions received and receivable (45.163 per cent); (v) the total grants for the financial year ending 30 June 2006 were $6,700,000; (w) the research activities carried out by the respondent are reliant on income generated from the investment activities. Of expenditure on research of approximately $13,000,000 for the year ended 30 June 2006, research grants constituted approximately $6,000,000 and the balance of approximately $7,400,000 was sourced from investment income, that is, 53 per cent of the total expenditure on research activities arose from investment income; and (x) for the financial year ended 30 June 2006, the respondent's revenue received or derived from commercialisation of research, use of facilities and merchandise sales amounted to $615,140 (comprising 2.584 per cent of total gross revenue), broken down as follows: (i) $277,199 (1.164 per cent of total gross revenue) from merchandise sales; (ii) $88,332 (0.371 per cent of total gross revenue) from the provision of its services to the Hospital for the use of its animal housing facilities and the services of its animal attendants for a fee; (iii) $1,769.23 (0.007 per cent) from Phosphosolutions for the sale of its dynamin antibodies; and (iv) $247,840 for the provision of dinner, drinks and entertainment at the Jeans for Genes Celebrity Jeans Auction. 11 Whilst the applicant did not challenge this evidence, it took a very different position to the respondent as to the characterisation of the respondent's activities and whether, on the basis of those activities, the respondent could properly be characterised as a financial corporation within the meaning of s 51(xx) of the Constitution. It did so partly by relying on evidence under a notice to produce. 12 The applicant submitted that the minutes of the respondent's Financial and Investment Committee meetings were indicative of a passive approach to financial investment. The minutes indicated that there were few actual in-house contributions to financial activities and illustrated the respondent's significant reliance on its external advisors, Watson Wyatt, facilitated periodically through the Finance and Investment Committee. Counsel for the applicant, Mr J N West QC with Mr T Saunders of counsel, cited a consistent pattern of Financial and Investment Committee meetings where considered financial investment deliberations appeared brief. They cited the following examples, which we have taken from the Minutes of the Financial Committee Meetings in the notice to produce: a) CMRI Finance and Investment Committee Meeting, Minutes, 27 January 2004. 12pm-12:40pm: 4. Business Arising From Those Minutes (a) The Committee noted the response from Watson Wyatt dated 7 January 2004 relating to Terms and Conditions of engagement. It was resolved to recommend to the Board that the CMRI respond by advising Watson Wyatt that. (i)Whilst it does not agree with the proposal of a capped liability, under the circumstances it may agree to a capped liability, but the proposed cap of $500,000 is far too low, and (ii)the clause 8 change as proposed by CMRI in its letter 10 September, 2003 should stand. (b) Prof Rowe provided a verbal report on the building extension progress, noting that the completion date was anticipated to be March 24, 2004. 5.The advice from Watson Wyatt on inflation linked bonds was noted. IT was resolved to recommend to the Board to agree with the proposal as outlined to 20% inflation linked Bond and reducing international fixed interest (hedged) from 25% to 5%. 6. A report on movement in investment accounts was noted. 7. There being no further business, the meeting closed at 12:40 The next meeting is scheduled for Tuesday, 6th April, 2004 at 12:00noon. b) CMRI Finance and Investment Committee Meeting, Minutes, 17 August 2004. 12pm-12:55pm: 2. Business arising from the Minutes: (a) As there had still been no response from the US Legal office of Watson Wyatt on the Terms and Conditions of Engagement Clause 8, the committee asked Ms Hallett to follow up with Watson Wyatt in Sydney in an attempt to resolve the issue. In the meantime, the committee agreed to follow the investment strategy as proposed by Watson Wyatt. (b) It was noted that the building extensions were now complete with only some minor items requiring attention. Funds were still being retained by CMRI until all items were satisfactorily completed. (c) Investment reports and asset allocation as prepared by Mr Vadala were noted. It was resolved to recommend to the Board to approve the following investment (in accordance with the strategic direction recommended by Watson Wyatt): (i)Sell holdings in ABN AMRO Global Equity and Sagitta/Rothschild/ BT (ii)Place $2 million with Credit Suisse International, $2 million with Wellington, $1 million with Barclays International and pending available funds, $2 million into Inflation Linked Bonds. (d)The nature and practicality of ethical investments was discussed at length. It was agreed that all fund managers should be regularly challenged to avoid potential non ethical investments on behalf of the CMRI, and that the Committee would review this matter at regular intervals. 3.The President, Associate Prof F Martin reported to the committee that as a result of the dissolution of the Board of the Children's Hospital, the CEO of the hospital Prof Kim Oates was now acting as Administrator for the hospital for the foreseeable future, and as such would be accepting all the responsibilities of the board. Prof Oates would thus confirm with the CMRI the current Hospital Board representative Prof Andrew Kemp on the Board of the CMRI. 4. Mr Vadala was asked to invite a representative from Credit Suisse to attend the next meeting. There being no further business, the meeting closed at 12:55pm. c) CMRI Finance and Investment Committee Meeting, Minutes, 1 February 2005: 12pm-12:25: 2. Business arising from the Minutes: (a) It was noted that a revised Terms and Conditions of Engagement Document from Watson Wyatt had been received which incorporated the CMRI's request that under Clause 8 the CMRI's liability be limited to $500,000 in the same way that Watson Wyatt's liability is capped. Subject to there being no other changes made to the document, the committee agree to the document being signed by the Secretary and returned to Watson Wyatt as soon as possible. (b) It was agreed to ask Watson Wyatt to invite Welling to present to the next meeting. 3. Report in investments, movements in investments and asset allocated as prepared by Mr Vadala were noted. Discussion on the continued transfer of available funds into managed funds as and when the CMRI's directly held fixed interest debentures matured lead the committee agreeing to ask Watson Wyatt to review the asset allocation within the next six months. There being no further business, the meeting closed at 12:25pm. d) CMRI Finance and Investment Committee Meeting, Minutes, 29 November 2005: 12pm-12:55: In attendance: (for investment presentation): Mr J Ferraro (Watson Wyatt) 1. Minutes of the Finance and Investment Committee meeting held 11th October 2005 were confirmed. 2.Business Arising From Those Minutes (a) Mr Ferraro presented the QIPS report to 30 September 2005. (i) It was noted that in future the portfolio asset allocation control ranges be footnoted as guidelines only which are considered and reviewed by the committee at each quarterly review meeting in conjunction with the investment advisor. (ii) It was agreed that Wellington be asked to present to the Committee early next year. (iii) It was agreed that selected fund managers in the area of hedged funds and other asset classes be considered by the Committee towards the middle of 2006. (b) It was noted that the relocation of around $4m from BG1 International passive in Alliance Bernstein would be completed in the very near future. (c) It was agreed that extra $2m to be moved into a current under weight be moved into Australian Inflation Linked Bonds. 3. A report on investments and movements in investment accounts as at 31 October, 2005 was noted. There being no further business, the meeting closed at 12:55pm. e) CMRI Finance and Investment Committee Meeting, Minutes, 31 January 2006: 12pm-12:40: In attendance: (for investment presentation): Mr J Ferraro (Watson Wyatt) 1. Minutes of the Finance and Investment Committee meeting held 29th November 2005 were confirmed. 2. Business Arising From Those Minutes (a) Mr Ferraro presented the QIPs report to 31 December 2005. (i) It was agreed that Mr Ferraro invite Wellington to present at the next meeting, (ii) It was agreed to invest a further $1m into International Equities (Alliance Bernstein). (iii) It was agreed to invest a further $3m into inflation linked bonds (iv) For the next meeting, Watson Wyatt was asked to provide several appropriate new managers to the Committee in order to consider an additional investment manager. 3. A report on investments and movement in investment accounts as at 31 December, 2005 was noted. There being no further business, the meeting closed at 12:40pm. f) CMRI Finance and Investment Committee Meeting, Minutes, 11 April 2006: 12pm-1:18am: In attendance: (for investment presentation): Mr J Ferraro (Watson Wyatt) 1. Minutes of the Finance and Investment Committee meeting held 31st January 2006 were confirmed. 2. Business Arising From Those Minutes (a) Ms Liz Drew and Mr Whitney Drayton from Wellington presented to the Committee on the recent performance on Wellington. The Committee resolves to keep on hold the current investment and review within 12 months. (b) It was agreed that a further $2 million of available funds be moved into inflation linked bonds. (c) Mr Ferraro was asked to make a presentation on generic hedge funds at the next meeting. (d) It was agreed that the letter from Watson Wyatt on GMO dated 6 April be reviewed by the Committee at the next meeting. 3. A report on investments and movement in investment accounts as at 28th February 2006 was noted. There being no further business, the meeting closed at 1:18 pm. g) CMRI Finance and Investment Committee Meeting, Minutes, 6 June 2006: 12pm-1:15pm: In attendance: (for investment presentation): Mr J Ferraro (Watson Wyatt) 1. Minutes of the Finance and Investment Committee meeting held 11th April 2006 were confirmed. 2. Business Arising From Those Minutes. (a) Mr Richard Keary and Mr Peter Mitchell from BT Financial Group presented to the Committee on multi manager multi strategy of hedge funds as an alternative investment option for the CMRI. The Committee agreed to keep this matter on the agenda for discussion at the next meeting. (b) A letter from Watson Wyatt on Australian Equities Reserve List was noted. The Committee agreed to maintain presently allocated funds with GMO but to keep the investment under review. (c) The QIPS report for the quarter ending 31st March 2006 was noted. The committee subsequently resolved to place a further $1 million into Inflation Linked Bonds, and to keep a watching brief on funds currently invested with AMP Global. 3. A report on investments and movements in investment accounts as at 31st May 2006, was noted. 4. It was noted that the committee would review its Charter as (sic) the next meeting. There being no further business, the meeting closed at 1:15 pm. h) CMRI Finance and Investment Committee Meeting, Minutes, 9 August 2006: 12pm-1:15pm: In attendance: (for investment presentation): Mr J Ferraro (Watson Wyatt) 1. Minutes of the Finance and Investment Committee held 6th June 2006 were confirmed. 2. Business Arising From Those Minutes (a) It was resolved to recommend to the Board the Finance and Investment Committee Charter as presented subject to (i) the sub bullet point in bullet point 2 be removed as it is superfluous (ii) the charter refer to "the Director" and not "the CEO". (b) A report on Hedge Funds from Watson Wyatt was noted. After detailed discussion it was resolved to recommend to the Board that 5% of the portfolio (approx $4.5 million) be allocated to BT/Grosvenor Fund of Hedge Fund and this be funded with the cash flow. This allocation would then alter the long term target for return seeking assets to 20% Australian equities, 20% international shares (unhedged) and 5% Fund of Hedge funds, total of 55%. (c) The QIPS report as at 30 June, 2006 was noted. 3. A report on investments and movement in investment accounts as at 31st May 2006 was noted. 4. A report on Loomis Sayes Credit Opportunities Fund was noted. It was agreed that a presentation from Loomis be set for the next meeting. 5. A proposal on Quellos Capital Management was noted, and it was agreed to defer this matter. 6. It was resolved to recommend to the Board to increase funds into inflation linked bonds by a further 1.5% (approx $1.3 million) There being no further business, the meeting closed at 1:15pm. i) CMRI Finance and Investment Committee Meeting, Minutes, 10 October 2006: 12pm-1:55: In attendance: (for investment presentation): Mr J Ferraro (Watson Wyatt) 1. Minutes of the Finance and Investment Committee meeting held 9th August 2006 were confirmed. 2. Business Arising From the Minutes (a) A presentation on Loomis Sayes Credit Opportunities Fund by Nathan Pensobene and Mary-Jane Rudd from IXIS was received. After detailed and robust discussion regarding the risks and benefits of the proposal, the committee endorsed the recommendation by Watson Wyatt and resolved to recommend to the Board to invest 5% of the CMRI portfolio (around $4.5 million) into this fund. The funds would be drawn from cash ($3 million) and inflation linked bonds ($1.5 million). 3. A report from Watson Wyatt on PIMCO was noted. The committee agreed to put PIMCO on watch and subsequently asked Watson Wyatt to provide information on Queensland Investment Corporation (QIC) for the next meeting, with the possibility of a presentation from QIC at the following meeting. 4. A report on investment and movement in investment account as at 30th September 2006 was noted. There being no further business, the meeting closed at 1.55pm. j) CMRI Finance and Investment Committee Meeting, Minutes, 28 November 2006: 12pm-12:30: In attendance: (for investment presentation): Mr J Ferraro (Watson Wyatt) 1. Minutes of the Finance and Investment Committee meting held 10th October 2006 were confirmed. 2. Business Arising From the Minutes (a) A report by Watson Wyatt on Queensland Investment Corporation as alternative manager to PIMCO was discussed. It was decided to postpone the meeting with QIC and remain with PIMCO in the interim. (b) A report by Watson Wyatt on the performance of Wellington Global Research Equity was discussed. It was decided to remain with Wellington. (c) The QIPS report at 30 September 2006 was noted. 3. A report on investments and movements in investment accounts as at 31st October 2006 was noted. 4. A meeting was advised that $500,000 had been redeemed from Shroder to fund operations due to demands on cash flow. It was decided to redeem $500,000 from GMO to cover ongoing expenditures. 5. Watson and Wyatt were congratulated on their recent appointment as advisors to the Future Fund and thanked for their service and commitment to the Children's Medical Research Institute. There being no further business, the meeting closed at 12:30 pm. (k) CMRI Finance and Investment Committee Meeting, Minutes, 30 January 2007, 12pm-12:15pm: 2. Business Arising From the Minutes (a) A report by Watson Wyatt on the skill rating downgrade of BT (Grosvenor) Fund of Hedge Funds was noted. The committee agreed to accept the recommendation of Watson Wyatt to take no action at this stage, but recorded its desire to discuss this matter with Watson Wyatt at the next meetings. 3. A report on investments and movements in investment accounts as at 31st December 2006 was noted. It was agreed that the portfolio asset allocation table be amended to reduce the International Equities by $4.5 million with the correspondent subtotal to $50,873,550 and corresponding percentages to 22.74% and 56.12%, and to show Credit Opportunities Trust at $4.5 million in the fixed interest section thus adjusting the corresponding subtotal to 39,777,006 and percentages to 4.96% and 43.88% There being no further business, the meeting closed at 12:15pm. 13 The duration of the meetings from 27 January 2004 to 23 March 2007 range from 5 minutes to 2.5 hours. 14 One meeting on 10 October 2006 saw 5 per cent ($4,500,000) of the respondent's portfolio invested following a presentation from the fund manager Loomis Sayes Credit Opportunities followed by a recommendation by Watson Wyatt and discussion from the Finance and Investment Committee. The meeting lasted 1 hour 55 minutes. 15 General accountancy and actual financial transactions regarding investment in particular funds are dealt with internally by the respondent's accountant, Ms Mullen who completes the necessary forms and paperwork and transfer of money between accounts. Trading Corporation 16 The respondent did not seriously press (but did not withdraw) its claim that the respondent was also a trading corporation by reference to its "trading activities", notwithstanding the evidence presented in Mr Ryall's affidavit as to the respondent's limited activities relating to the provision of goods and services. In these circumstances, we shall briefly deal with the issue. Relevant Principles: Trading Corporation 17 The High Court in New South Wales v Commonwealth (2006) 231 ALR 1 was not required to examine the question as to what constituted a trading or financial corporation, observing (at 20): [55] The challenge to the validity of the legislation enacted in reliance on the corporations power does not put in issue directly the characteristics of corporations covered by s 51(xx). It does not call directly for an examination of what is a trading or financial corporation formed within the limits of the Commonwealth. (Plainly, a foreign corporation is a corporation formed outside the limits of the Commonwealth.) No party or intervener called in question what was said about trading and financial corporations in R v Federal Court of Australia; Ex parte WA National Football League (1979) 143 CLR 190; 23 ALR 439, Actors and Announcers Equity Association v Fontana Films Pty Ltd (1982) 150 CLR 169; 40 ALR 609, State Superannuation Board v Trade Practices Commission (1982) 150 CLR 282; 44 ALR 1 or Fencott v Muller (1983) 152 CLR 570; 46 ALR 41. 18 In Garvey, the following principles, which we accept, were stated as relevant to deciding whether a corporation can be properly characterised as a trading corporation. We set out those principles in full from the judgment in Garvey (at [30]) below: (a) whether a corporation is a trading corporation depends upon the current activities of the corporation. In R v Judges of the Federal Court of Australia; Ex Parte Western Australian National Football League (1979) 143 CLR 190, Barwick CJ, for the majority, found (at 208): The only sure guide to the nature of the company is a purview of its current activities, a judgment as to its nature being made after an overview of all those activities. I remain of the firm conviction that for constitutional purposes a corporation formed within the limits of Australia will satisfy the description 'trading corporation' if trading is a substantial corporate activity. Its activities rather than the purpose of its incorporation will designate its relevant character. But so to say assumes that such trading activities are within its corporate powers, actual or imputed. It is the corporation which satisfies the description which is the subject matter of the power. Thus its corporate capacity or incapacity cannot be ignored. But once it is found that trading is a substantial and not merely peripheral activity not forbidden by the organic rules of the corporation, the conclusion that the corporation is a trading corporation is open. (See also Fencott v Muller (1983) 152 CLR 570 at 600-601 and Hughes v Western Australia Cricket Association (Inc) (1986) 69 ALR 660 at 671). (b) a corporation that carries on trading activities can be found to be a trading corporation even if it was not originally established to trade. In State Superannuation , Mason, Murphy and Deane JJ noted (at 304): 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 categorising the corporation as a trading corporation when it engages in the activities. Similarly, in Quickenden v O'Connor (2001) 184 ALR 260 at 276, Black CJ and French J held (at 277): For it is plain that the other activities cited are trading activities and are a substantial, in the sense of non-trivial, element albeit not the predominant element of what the university does. The university was not established for the purpose of trading and at another time, closer to the time of its creation, it may not have been possible to describe it as a trading corporation. But at the time relevant to this case and at present, it does fall within that class. (c) the focus is not on the purpose of the corporation: see State Superannuation at 303-304, although the objects of the corporation will not be completely irrelevant: see Adamson at 208; Fencott at 611 and Hughes at 671; (d) the test as to whether the trading activities of a corporation mean that it is a trading corporation has been stated in terms of whether the trading activities are: · "substantial": see Adamson at 208 per Barwick CJ; · "not insubstantial": see Adamson at 239 per Murphy J; and · "a sufficiently significant proportion of its overall activities": see Adamson at 233 per Mason J and at 237 per Jacobs J. (See also Hughes at 671; Quickenden at 276; E v Australian Red Cross Society & ors (1991) 27 FCR 310 at 342, 345; and Orion Pet Products Pty Limited v RSPCA (Vic) Inc (2002) 120 FCR 191 at 219); (e) a trading corporation (or a financial corporation) may exist even though its trading activities (or financial activities) do not form the predominant part of the overall activities of the corporation: see Adamson at 239; State Superannuation Board at 303-304; Tasmanian Dams at 156, 240, 293; Australian Red Cross Society at 242; Quickenden at 275; Orion Pet Products at 218-219; (f) a trading corporation (or a financial corporation) may exist notwithstanding that its trading activities are not motivated by the hope of private gain but to enable other activities to be performed: see State Superannuation at 304-305; Australian Red Cross Society at 343, 345; (g) "trading activities" generally connote the activities of a commercial nature involving, in essence, the exchange of goods or services for reward: see Adamson at 209 per Barwick CJ, Hughes at 672 and Re Ku-ring-gai Cooperative Building Society (No 12) Limited (1978) 36 FLR 134 at 139, 167. Trading activities are not, however, confined to dealings or communications within open markets or between strangers and are not limited to profitable activities: Re Ku-ring-gai Cooperative at 167 per Deane J; and (h) whether the trading activities of a corporation are sufficient to warrant it being characterised as a "trading corporation" is a question of fact and degree: see Adamson at 234; State Superannuation Board at 304; Quickenden at 277; Orion Pet Products at 216 and Fencott at 589. Relevant Particular Facts: Trading Corporation 19 The activities, as far as we can make out from the written submissions of the respondent, that are relied upon as trading activities for the financial year ending 30 June 2006 are as follows: (a) Sale of merchandise. $277,199 was raised from the sale of merchandise. Christmas cards, stationery, homewares, bags, umbrellas, baby wear, etc. The items were sold through catalogue sales, and, apparently through the Institute's voluntary fundraising committees or the Goodwill Charity Card Shop. (b) Provision of services to the Children's Hospital at Westmead. $88,332 was raised from the provision of services to Westmead Hospital "for the use of its animal housing facilities and the services of animal attendants for a fee". (c) Sale of antibodies. $1,769,23 was raised from the sale of antibodies. (d) Services provided at the Jeans for Genes Auction. $247,840 was raised for the provision of dinner, drinks and entertainment. (e) Payment to Bio-link partners. An annual payment of $20,000 for the use of Bio-link services. 20 The respondent, for the financial year ending 30 June 2006, generated approximately 2.5 per cent ($615,140) of its revenue from activities which it relies on as trading activities. Consideration: Trading Corporation 21 We do not consider that the respondent is a constitutional corporation by virtue of its trading activities. Even if all activities identified as trading activities by the respondent are treated as such, we consider that the trading activities of the respondent are insubstantial. Further, we observe there may be some doubt as to whether all of the activities relied on by the respondent should properly be treated as trading activities for the purpose of s 51(xx) of the Constitution, particularly the provision of dinner, drinks and entertainment at the Jeans for Genes Celebrity Auction. 22 It is appropriate, in this respect, to analyse the trading activities of the respondent as a proportion of total activities. Overall, the majority of respondent's activities concentrate on its central activity of children's medical research: it being a medical research establishment. The trading activities, as identified, are peripheral to these research responsibilities. The respondent's 2006 Annual Report and its submissions indicate that most of the respondent's organisational resources are used for and in relation to the activities of medical research. The organisational structure of five research units and of five divisions responsible for administration, operations, bioservices, education and the director's office, does not give any indication of any identifiable division or unit where the significant focus is devoted to trading activities. There is no indication from the Annual Report, organisational structure, staff arrangements or the objects of the respondent that gives rise to the impression that trading activities are engaged in to a "substantial", "not insubstantial" or "sufficiently significant" degree, to use the various adjectives utilised by the High Court in R v Federal Court of Australia; Ex parte WA National Football League (1979) 143 CLR 190 ("Adamson"). 23 We note that the allocation of staff and staffing duties devoted to trading activities is unknown. A perusal of the 2006 Annual Report gives some indication that a very small proportion of staff have duties relating to trading activities. The majority of staff have duties in medical research and administration. It appears that less than five in an organisation of 161, and of that number no more than three, appear to engage in identifiable trading activities on more than a part-time basis. Only one staff member is identified in the 2006 Annual Report as a "fundraising assistant". Two staff are listed as having specific duties pertaining to the Jeans for Genes campaign generally, but to the extent this relates to the actual 'auction' is unknown. Seven Animal Attendant/Technicians are listed but their exact duties in relation to provision of animal services was not made out. 24 Further, when comparing the revenue arising from its identifiable activities with the respondent's total revenue, it cannot be said such a proportion is substantial or significant, it is an insubstantial percentage amount, being 2.584 per cent. 25 Whilst the primary focus is to be on activities, all parties gave some weight in their submissions to the objects of the respondent. The respondent contended its objects included selling, managing and developing the property and rights of the respondent, and relies on these activities as trading activities. The applicant and Attorney General submitted that these objects were secondary and arose only "for the purpose of carrying out" the objects of clause 2.1(a)-(f) of the respondent's constitution, which are charitable objects for public good. The Attorney General's submission further emphasised the respondent's charitable features, and noted that it was established as a charitable trust and that it is registered under applicable charitable funds legislation. The Attorney General's submission also contended that the respondent's income and property are applied for charitable purposes, and in the event of winding up, its property would be transferred to institutions with a similar purpose. It is apparent from the respondent's constitution that where the objects of the respondent encompass trading activities, they are secondary to the primary charitable objects. 26 In light of the recent decision in Garvey and the discussion of "trading activities" there, we tend to favour the view of the applicant and the Attorney General that two of the activities identified by the respondent are not trading activities. On the facts provided it is unclear to what degree the respondent is engaged in the organisational activities of the Jeans for Genes Auction. Furthermore, it is unclear whether the 'provision of services to Westmead' and the Jeans for Genes Auction can be properly described as trading activities. We consider that they are not trading activities for the following reasons: (a) In relation to the Jeans for Genes Auction, it does appear that there was significant outsourcing of organisational support to external supporters, as evidenced by the membership of the "Executive Management Committee" for the Jeans for Genes campaign, of which the Auction is a part. The respondent's degree of organisational engagement in the Jeans for Genes Auction is unspecified, as is its allocation of resources to the event. The respondent's degree of involvement in the activity is ambiguous. Furthermore, the Jeans for Genes Auction is a Annual Fundraising Event with an overriding charitable purpose, requiring limited activities each year. The activity is a charitable activity. The charitable aspects of the activity, and the lack of a commercial aspect, make it apparent that it is not a trading activity. (b) In relation to monies raised from the provision of services to Westmead Hospital, it was not revealed by the respondent just how its fee was negotiated with that Hospital. It is unknown whether it was negotiated on a commercial basis or not. It is, therefore, questionable whether this activity is able to be relied upon as a trading activity. The onus in respect of such matters of course lies with the respondent. 27 In its submission, the respondent alluded to its intention to increase the scope of its trading activities, arguing that its situation was similar to that of Fencott v Muller (1983) 152 CLR 570. Comparisons with the situation in Fencott v Muller are rejected. The situation in Fencott v Muller concerned a new company yet to begin trading and involved the High Court looking at the company's constitution where no current activities were being carried on see Fencott v Muller (at 602). Here, however, the respondent has been engaging in activities for almost half a century, and it is on those current activities that it falls to be characterised. Financial Corporation Relevant authorities 28 Whilst the expression "financial corporation" may have received less judicial attention than its counterpart expression "trading corporation", there is, as counsel for both parties have submitted in this matter, a line of authority as to the meaning of the expression for constitutional purposes: Re Ku-ring-gai Co-operative Building Society (No 12) Ltd (1978) 36 FLR 134 ("Re Ku-ring-gai"); Adamson; State Superannuation v Trade Practices Commission (1980) 49 FLR 216 (first instance); State Superannuation v Trade Practices Commission (1981) 60 FLR 165 (appeal); State Superannuation v Trade Practices Commission (1982) 150 CLR 282 (High Court) ("State Superannuation"); Fencott v Muller; E v Australian Red Cross & Ors (1991) 27 FCR 310; Quickenden v O'Connor (1999) 91 FCR 597 (at first instance); and Quickenden v O'Connor (2001) 184 ALR 260 (on appeal). We have included the main authorities in this list even though, plainly, some authorities have greater significance than others. The issue and relevant particular facts 29 This matter raises for consideration the application of those authorities in the context of a charitable public welfare research corporation that derives a significant component of its revenue from the sale of investments, interest and dividends, which are derived from the investment of funds received from donations, fundraising, capital gains, sale of merchandise, reinvestments and savings. Given the nature of that institution and the particular aspects of its financial activities that have attracted debate, the matter may be said to have wide implications for the characterisation of a financial corporation for the purposes of s 51(xx) of the Constitution. The Australian economy is a tertiary economy which is undergoing considerable expansion. It has a plethora of uncharacterised tertiary institutions. In that context, some incorporated modern charities or institutions carrying on major public welfare activities, have become entities possessing sophisticated fundraising and commercial arms. Further, most universities have active investments, significant endowments and commercial arms: see Quickenden. 30 However, there are some particular issues in this matter which represent, to some extent, a refinement of these broad questions. The issue raised by the proceedings is whether the investments we have described (and the financial returns they produce) and/or the management of them constitute financial activities such as would warrant a conclusion that the respondent was a financial corporation for the purposes of s 51(xx) of the Constitution. Given that the authorities make clear that the issue may not be resolved solely by reference to the purpose of the organisation, and given the nature of the organisation's activities which relate to finance, we consider that the issue may be refined as follows: i) If it is assumed that all the activities identified by the respondent are financial activities for the purposes of s 51(xx) of the Constitution , are they, when properly analysed, a sufficiently significant proportion of overall activities to characterise the respondent as a financial corporation? We are of the view, that the question should be answered in the negative, after the activities relied on by the respondent have been assessed relative to the other activities of the respondent. That answer is sufficient to resolve the motion. If we are wrong in that conclusion (and in any event in order to fully resolve, in the public interest, the issues ventilated in the proceedings) we shall address the following further issues; ii) Do the organisation's financial activities constitute financial dealings for the purposes of s 51(xx) of the Constitution ? On the current state of the authorities, we consider this question ultimately requires a determination as to whether the financial activities constitute commercial dealings in finance. If the answer to the question is, as we find, in the negative then the organisation may not ultimately be categorised as a financial corporation in the constitutional sense as it simply does not engage in financial activities of the requisite kind. It is not enough to demonstrate that an organisation provides or augments its primary non-financial activities by engaging in some financial activities which are not commercial in nature. 31 There are some particular aspects of the relevant factual background which may be identified as immediately relevant for the determination of these questions. They are as follows: (a) the respondent at 30 June 2006 held approximately $2 million in cash deposits and approximately $83 million in managed funds. At 30 June 2006 it earned $411,124 from interest received and $5,386,927 million as dividends from investments. It also earned $1,669,215 profit from the sale of some of its investments. Approximately 31 per cent of its revenue for the 2006 financial year was generated from these investments. The position was similar for the ensuing partial financial year; (b) the majority of its investments are in managed funds. There are ten different funds; (c) the respondent accesses the managed funds only infrequently. There were only 18 acquisitions or withdrawals of funds from the managed funds in the 8-month period between 1 July 2006 and February 2007; (d) the respondent oversees these funds through its own Finance and Investment Committee. The Committee makes relevant decisions regarding financial activities and meets for this purpose every two months for time periods ranging from 30 minutes to 2.5 hours; (e) the Finance and Investment Committee acts on the investment advice of its financial advisor, Watson Wyatt. Financial investment strategies and recommendations are researched externally by Watson Wyatt; (f) the minutes of the meetings held by the respondent's Finance and Investment Committee give an indication of a pattern of deference to the financial advisor, Watson Wyatt, in financial and investment decisions and in choosing particular managed funds in which to invest. Whilst the Finance and Investment Committee takes considerations to be approved by the board, substantive decisions and research appear to be conducted predominantly by Watson Wyatt as an intermediary. Significant financial decisions appear to be made on the basis that Watson Wyatt does the research work, provides financial advice and makes financial recommendations; (g) from the Annual Report of the respondent it does not appear that any staff, apart from one staff member, the accountant, and perhaps two other staff members from an organisation of 161, are employed full time to engage in financial transactions; (h) recommendations of the Finance and Investment Committee are put to the board, approved and effected by the respondent's accountant. Submissions: Financial Corporation 32 Mr R Goot SC, with whom Mr A Gotting of counsel appeared for the respondent, submitted that the respondent engaged in the following financial activities: a) the investment of funds; b) seeking investment advice; c) consideration as to the adequacy of the investments; d) the realisation of its investments and the reinvestment of them, some for the long term and others for the short term; and e) the movement of the investments. 33 Counsel submitted that, in effect, the respondent, by its investments, lent capital to the market. The respondent submitted that its activities on this basis were clearly financial activities. 34 The respondent contended that the term "dealing in finance" was not the exclusive reference point for characterisation as a financial corporation. It noted that there were several reference points arising from the authorities. One which had been clearly identified was where there was investment activity which augmented or assisted a corporation. The respondent submitted that there were comparable factual circumstances for this reference point in State Superannuation, Australian Red Cross and Quickenden. 35 The respondent also placed particular emphasis on the activities test of Adamson and noted that what Deane J discussed in Re Ku-ring-gai (at 160), regarding the "raison d'etre" of the applicants in that case, was a discussion predicated on "purpose" rather than "activities" of the corporation. It was submitted this was not good law, as a result of the decision in Adamson. 36 The respondent further contended that its investment activities were substantial in light of its overall activities and significant having regard to the following: (a) for the financial year ending 30 June 2006, the respondent generated 31.369 per cent of its revenue from investment activities with the respondent generating 22.630 per cent of its revenue from dividends and distributions received and receivable and 7.012 per cent of its revenue from the sale of some of its investments; and (b) for the partial financial year to 28 February 2007, the respondent generated 45.544 per cent of its gross revenue from its investment activities, of which 45.163 per cent was generated from dividends and distributions and 0.381 per cent from interest received or receivable. 37 On this basis, the respondent contended that it engaged in sufficient financial activities to characterise it as a financial corporation for the purposes of s 51(xx) of the Constitution. 38 The applicant submitted that merely because the respondent had significant funds and invested those funds, this was not enough to characterise those activities as financial activities and, accordingly, characterise the respondent as a financial corporation for the purposes of s 51(xx) of the Constitution. 39 The applicant maintained that the respondent did not deal in finance. It neither borrowed nor loaned money. Investment in managed funds occurred because there was no practical alternative but to invest. The investment was a passive trustee investment. The applicant also cited administrative operations and staffing arrangements, noting that: (a) the surplus funds of the respondent were in the hands of external professional fund managers, selected on the advice of external professional consultants; (b) the responsibility for the investment decisions of the respondent rested with the board, acting through the Finance and Investment Committee; (c) the Finance and Investment Committee consists of seven members of the board of the respondent (none of whom is an employee of the respondent), together with the Director (the senior employee of the respondent), the respondent's accountant (an employee) and the Administration Officer (an employee) who acts as secretary to the Committee. In an establishment of some 161 employees only some 2 or 3 are involved in the "investment decisions" of the respondent; and (d) The respondent's Finance and Investment Committee met only every two months. 40 Counsel for the applicant, submitted that commercial dealing in finance was the applicable "reference" point in the matter for characterising financial activities of the respondent and confined discussion to interpreting what constituted commercial dealing in finance. 41 Counsel also relied upon the decision of Deane J in Re Ku-ring-gai to contend that the respondent was not a financial corporation because the respondent's dealing in finance was not its raison d'etre. Its raison d'etre is to conduct research into childhood diseases. The applicant characterised the respondent's financial activities as simply engaging in the preservation and maintenance of the assets to enable them to carry out their day-to-day functions in children's medical research. 42 In addition, the applicant submitted that State Superannuation (at 305) was authority for the proposition that dealing in finance must have a commercial element to characterise a corporation as a financial corporation. It was submitted that this was consistent with the discussion of Deane J in Re Ku-ring-gai. Similar affirming discussion was alluded to in Quickenden (first instance) at (608-609). 43 While contending that the respondent's activities were not commercial dealing in finance, the applicant also submitted, that if the investment activities were held to be financial activities, the administrative and staffing arrangements (see above), gave rise to the view that the investment activities were not a sufficiently significant proportion of respondent's overall activities in order to categorise the respondent as a financial corporation for the purposes of s 51(xx) of the Constitution. 44 Mr M G Sexton SC, who appeared with Mr J Kirk of counsel for the Attorney General, submitted that the respondent did not derive any of its revenue from financial activities as such, but rather derived its revenue from a mixture of grants, donations and essentially passive investments where money is given to another corporation who manages those investments for the respondent over a period of time. The Attorney further submitted that, whilst there was no doubt that a significant proportion of the respondent's revenue is derived from financial investments, it is not correct to say that a significant, let alone a substantial, proportion of its activities could be characterised as financial in nature. 45 Counsel for the Attorney General further contended that, in some respects, the respondent's submissions amounted to the proposition that the investment of the funds of the respondent (in the sense they are lent to a range of organisations) was sufficient to warrant a conclusion that it was a financial corporation. It was contended that this would mean that any corporation which merely had a bank account engaged in financial activity for the purposes of s 51(xx) of the Constitution and that this was an unlikely proposition. 46 Counsel for the Attorney General focused on the respondent's identified investment activities and contended they were not financial. Counsel submitted, particularly through discussion of Re Ku-ring-gai and State Superannuation, that commercial dealings in finance were required to categorise a corporation as a financial corporation and in this matter those activities were clearly not present. It was acknowledged that the respondent in this matter, as opposed to the University in Quickenden, was easily distinguished from the previous authorities as it was clearly apparent that its activities were not financial activities. Counsel, we note, also called into question the correctness of the decision in Quickenden. 47 The Attorney additionally acknowledged that, if the respondent's activities were characterised as financial activities, this did not mean that financial activities were a significant (let alone substantial) proportion of the respondent's overall activities. 48 The Attorney submitted that the evidence failed to establish that the respondent had any significant administrative services engaged in managing its investments. The evidence established that managing its investments comprised no significant part of respondent's activities. 49 The evidence suggested that the respondent's financial activities were insufficient in light of the following: the respondent did not trade directly in shares or such like; its primary investments were in managed funds; it was by no means a day trader in the managed funds; it appeared that there were just 18 acquisitions or withdrawals of funds from the managed funds in the 8 month period from 1 July to the end of February 2007; relevant decisions appeared to be made by the Finance and Investment Committee of the respondent which only met approximately every 2 months; the Committee itself acted on the advice of an investment advisor Watson Wyatt Australia Pty Ltd; and it did not appear that any member of the staff of the respondent was employed full time to engage in financial transactions. The first issue: Are the financial activities substantial? 50 If the activities identified by the respondent are appropriately termed financial activities for the purpose of s 51(xx) of the Constitution, we consider, as we have earlier mentioned, that those activities are not a sufficiently significant proportion of the respondent's overall activities in order to characterise it as a financial corporation for the purposes of s 51(xx) of the Constitution. We shall explain our reasons for the conclusion below. 51 The relevant test for categorising a financial corporation is whether financial activities form a sufficiently significant proportion of its current overall financial activities. This test is the same as for a trading corporation. The majority in State Superannuation (Murphy, Mason and Deane JJ) explained this concept as follows (at 303): Although this Court has had to consider the meaning of the expression "trading corporation" in s. 51(xx) of the Constitution in its suggested application to a county council formed under the Local Government Act 1919 (N.S.W.) (Reg. v. Trade Practices Tribunal; Ex parte St. George County Council) and in its application to a football league and a football club (Reg. v. Federal Court of Australia; Ex parte W.A. National Football League ("Adamson")), this is the first occasion on which it has been called upon to consider the associated expression "financial corporation". It is our view that 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". 52 There are various adjectives used to describe the appropriate level of activities in order to categorise a constitutional corporation, which are derived from the judgments in Adamson. They are "substantial", "not insubstantial" and "sufficiently significant", Adamson at (208, 239 and 233). Any differences between the comments are of "emphasis only": see State Superannuation (304). 53 Whether the financial activities of a corporation are sufficient to warrant it being characterised as a financial corporation is a question of fact and degree: Adamson (234), State Superannuation (304). 54 The respondent submitted that it is engaged in sufficient financial activities, on the basis of the size of its investment and the amount of income generated. However, these factors are only partly indicative of whether the respondent's financial activities are a sufficiently significant proportion of its overall activities. 55 In a discussion of the principles relevant to the characterisation of a trading corporation, which are equally applicable to a financial corporation, Carr J in the Quickenden appeal identified the uncertain state as to what was the appropriate measure of activities, stating (at 287): 7. It has not yet been decided whether trading is a substantial activity when measured in absolute dollar terms or whether substantiality is a relative term. Murphy J in Adamson (at 239) appears to have regarded substantiality as being an absolute rather than a relative concept. See also Wilcox J in E v Australian Red Cross Society & Ors (1991) 99 ALR 601 at 633 and 635. 56 Our view about the substantiality of the respondent's financial activities is prefaced on them being measured in relative terms rather than on a measurement of the activities in absolute dollar terms. On any analysis, in absolute dollar terms the respondent's financial investments would be substantial, but such a view, in this instance, misrepresents the actual proportion of financial activities to the respondent's overall activities. We take the actual activities to be the performance and acts of the respondent, of which financial activities, as termed, are not a sufficiently significant proportion of overall activities. 57 Despite the sizable investments and the associated returns of the respondent, when analysis is focused upon the management and administration of the investment, a different picture emerges. The activities necessitated by the investment are: the investment of funds; seeking investment advice; consideration as to the adequacy of the investments; the realisation of its investments; the reinvestment of them, some for the long term and others for the short term; and the movement of the investments. If those above activities are to be considered financial activities, they are not a sufficiently significant proportion of overall activities, to categorise the respondent as a financial corporation for the purposes of s 51(xx) of the Constitution. 58 A number of factors have contributed to our assessment that the respondent's financial activities are not a sufficiently significant proportion of its overall activities. In broad terms they are: the respondent's conscious passivity regarding its investments; the limited financial deliberation or interaction and acts related to finance; its minimal staffing arrangements; and the extensive utilisation of external financial advice and expertise. The factual base for these propositions are as follows (with references, by comparison, to the authorities): i) the respondent's conduct reveals a pattern of deference to its corporate financial advisor. By comparison, in Re Ku-ring-gai and Quickenden all financial advice and expertise was active, ongoing and internal. In State Superannuation indigenous expertise was used to form financial judgments and this required the sound exercise of financial and actuarial judgment and managerial skills; ii) the respondent's movement of the funds is infrequent. In State Superannuation, management of the fund was complex, involving a large number of individual transactions . In contrast, in State Superannuation and Quickenden , significant funds were invested on the short-term money market daily. In Re Ku-ring-gai loan activity was the only activity of the corporation and was ongoing; iii) the Finance and Investment Committee meetings of the respondent are brief, being bi-monthly and they run from 30 minutes to 2.5 hours. In the authorities referred to above, reflecting the commercial nature of their financial activities, all of the corporations utilised active and constant internal financial advice and expertise; and iv) the respondent has limited staff with financial expertise. Whilst the respondent has two or three staff who could be said to deal in finance, we compare this to the dedicated active financial expertise engaged in commercial dealing in finance in Re Ku-ring-gai, State Superannuation and Quickenden. We note that in State Superannuation several staff members were skilled in matters of finance, and fund management required a great deal of administration at the executive level where staff were required to exercise financial and actuarial judgment and managerial skills. 59 It follows, therefore, that the respondent may not properly be characterised as a financial corporation for the purpose of s 51(xx) of the Constitution, and the motion must be dismissed. The second issue: Commercial dealing in finance. 60 The expression "financial corporation" is not a term of art and does not have a special or settled legal meaning. The majority of the High Court in State Superannuation (Mason, Murphy and Deane JJ) described the phrase "financial corporation" as follows (at 305): Like the expression "trading corporation", the words "financial corporation" are not a term of art; nor do they have a special or settled legal meaning. They do no more than describe a corporation which engages in financial activities or perhaps is intended so to do. ... All that we have said so far accords with what this Court decided in Adamson and with what the Federal Court decided in Re Ku-ring-gai Co-operative Building Society ( No.12 ) where co-operative terminating building societies providing finance for their members were held to be financial corporations. There Deane J, with whom Bowen C.J. and Brennan J. agreed, concluded that a corporation engaged in the activity of commercial dealing in finance was a financial corporation. 61 The term "dealing in finance" has specific meaning. The majority in State Superannuation noted with approval that Deane J had referred, by the expression "dealing in finance", to (at 305): transactions which the subject of the transaction is finance (such as the borrowing or lending of money) as distinct from transactions (such as the purchase or sale of particular goods for monetary consideration) in which finance, although involved in the payment of the price, cannot properly be seen as constituting the subject of the transaction. 62 In Re Ku-ring-gai, Deane J described the phrase "financial corporation" as a composite one which has two reference points as follows (at 159): the phrase "financial corporation" is a composite one. It does not refer to solvency. An obvious reference point is to the activity of commercial dealing in finance. Another possible reference point is the provision of management or advisory services in relation to financial matters. 63 It is plain from the judgment of the majority of the High Court in State Superannuation and the adoption therein of the aforementioned passages from the judgment of Deane J in Re Ku-ring-gai that a corporation will be properly characterised as a financial corporation for the purposes of s 51(xx) of the Constitution where it is engaged in commercial dealings in finance. That is, a corporation engaged in financial activities will be a constitutional corporation where those financial dealings are commercial in nature. 64 However, two questions arise. First, are commercial dealings in finance an appropriate prerequisite to a finding that a corporation of the respondent's ilk is a financial corporation for constitutional purposes? Secondly, if so, in what circumstances should the financial activities be characterised as commercial for constitutional purposes? 65 We consider that the first question should be answered in the affirmative for the reasons given under the next heading. When Deane J was resolving the question in Re Ku-ring-gai as to whether the Societies were financial corporations, he did so in a context in which the organisations had overall benevolent functions in the provision of low cost housing, but engaged in financial activities constituted by the borrowing from a bank at interest and lending to members at interest and the subsequent payments and receipt of money pursuant to obligations and rights resulting from those dealings. It was those financial dealings that ultimately led his Honour to the conclusion that, notwithstanding their altruistic motives, the organisations were financial corporations. However, as the extract from his Honour's judgment makes clear, that conclusion was not reached merely because the Societies engaged in some form of financial dealings. Rather, his Honour's reasoning makes clear that further qualifiers were necessary in order to be classified as a constitutional corporation. The criterion which we consider his Honour settled upon in his reasoning, and by its application to the activities of the Societies, was that their financial dealing had a commercial or business flavour. His Honour stated (at 160): Notwithstanding the restricted scope and limited duration of their activities of their activities, each applicant in my view carries on a business. At the heart of that business are 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 a business. The activities of each applicant are confined to carrying it on. The business which each applicant carries on and which it was formed to carry on is a financial business. Each applicant, being formed to carry on a business of dealing in finance and in fact carrying on such a business, is, in my view, properly to be categorised as a financial corporation within the meaning of the phrase as used in s 51 (xx) of the Constitution... 66 That approach was, in our view, adopted by the High Court in State Superannuation. On close analysis the judgment of the Federal Court in Quickenden offers no different view. 67 We should pause to also state briefly (before later development) our view as to the requirements of 'commerciality' in answer to the second issue we have formulated. In our view, for an organisation to be engaged in commercial dealings in finance, the activities must do more than merely touch on finance. The activities must, of course, be a sufficiently significant proportion of the corporation's overall activities and they must involve transactions or dealings in the nature of business where the subject of the transactions is finance. Must a corporation of the respondent's ilk engage in commercial dealings in finance in order to be a Financial Corporation for the purposes of s 51(xx) of the Constitution? Does the expression 'commercial dealing in finance' have limited meaning? 68 In Re Ku-ring-gai, State Superannuation and Quickenden, the notion of financial activities had a commercial element. Despite the overall benevolent activities in the form of low cost housing and superannuation benefits respectively in Re Ku-ring-gai and State Superannuation, a commercial or business element, in financial returns and payments, and high yield interest investment, still constituted the dealings in finance. In State Superannuation the High Court discussed this consideration as follows (at 305 - 306): Notwithstanding certain distinctive features of the business activities of the societies in that case, viz., the object of providing benefits for members by making loans at moderate rates of interest, their inability to turn over their circulating capital in a repetitive way, their confinement in practice to making not more than one loan to each member and their performance of an important social function, the Federal Court held that the societies were financial corporations... ...Even if we confine our attention to such aspects of the appellant's investment activities as involve the making of commercial and housing loans, its business in this respect is very substantial and forms a significant part of its overall activities. 69 In Re Ku-ring-gai it was apparent that the predominant benevolent motive underpinning the Societies' activities was outweighed by the commercial nature of the activities. It was the commercial element to the dealing in finance, the commercial dealing in finance, which characterised the Societies as financial corporations for the purposes of s 51(xx). Hence, the importance of the reference point. 70 The relevant commercial activities were the borrowing and lending of money and the subsequent payments and receipts of money pursuant to obligations and rights resulting from those dealings. Despite the commercial activities being severely curtailed because the loans were moderate interest loans, limited in amount, and that the activities of the loans served an important social function, commercial financial activity was present in the form of borrowing from the bank at interest and lending to members at interest and payments and receipt of money pursuant to obligations and rights resulting from those dealings. Thus, the financial dealings were transactions in the nature of business. 71 It was the integral nature of the financial activities to the Societies, the borrowing and lending, and payment of receipt of money by them, that established the commercial nature of the activities. The activities themselves were transactions in the nature of business because they were consistently carried on, being the corporation's primary activity. 72 Deane J stated (at 160): Whatever may have been the motivation of borrower or lender or of those involved in making or assisting in making the relevant funds available, the borrowing from the bank by each applicant was a secured borrowing at interest and was a commercial dealing in finance. Praiseworthy and altruistic though the motives of those associated with the promotion and management of the applicants may, to no small extent, be, the lending by the applicants to members upon security and at interest are, likewise, commercial dealings in finance. Neither the borrowing nor the lending can be seen in isolation from one another. Neither can they be seen as merely incidental or ancillary to some other and predominant activity. The lending to members is the raison d'etre of the applicants and both the purpose and the culmination of their operations. Their borrowing is so that they may lend. 73 It is acknowledged that borrowing and lending constituted commercial dealing, however, this was so because interest and security were integral to the borrowing and lending engaged in by the Societies. The activities could not be carried on without the inherent commercial aspects of interest payment and lending upon security. The carrying on of the activities necessarily involved a commercial or business dealing. Commerciality was an ever-present aspect of the financial activities in which the Societies engaged, activities that were at the heart of the Societies' operations. 74 By their recurring nature as the Societies' primary activities, coupled with their necessary commerciality, the activities of the Societies in Re Ku-ring-gai demonstrate that financial activities must do more than touch on finance. 75 Similarly, in State Superannuation (at 306) the financial activities in question were "commercial and housing loans". The State Superannuation Board not only invested significant monies, but in order to effect those investments it engaged in significant financial activities by way of commercial dealing in finance through commercial and housing loans. Management and investment of the fund, in respect of commercial and housing loans was significant. In addition, surplus funds were invested on a day-to-day basis on the short term money market. The actual management of the fund drew on indigenous expertise, and there was clearly a commercial nexus between the activities of the corporation in the way it managed and invested to achieve high yields from its financial activity. The majority described the operation of the Board in State Superannuation (at 302-303) as follows: As at 30 June 1980 the investments of the fund stood in the books at $487,173,000. Longer term investments fell into four main group: semi government and local government loans, commercial loans, housing loans to contributors and real estate. Available surplus funds are invested, on a day-to-day basis, by way of loan on the short term money market. The investment of the Fund is, within the statutory limits, in the discretion of the appellant... In the management of the fund, the Board draws upon its indigenous expertise in forming its financial judgments, and it receives advice from a budget investment officer, property consultant, accountant and other staff who are skilled in the matters of finance. Taking account of the enhancement in the value of the fund's asset, the Fund is yielding annually over 10% on the total investment. The management of the Fund is a complex function, for the Fund itself is larger and there is a large number of individual transactions involved in its management. Its management accordingly requires considerable clerical work, a great deal of administration at the executive level, and the sound exercise of financial and actuarial judgment and managerial skills. 76 We note that the majority confined its decision to activities of the corporation in making "commercial and housing loans". Other "Semi-Government and Local Government" loans were not considered. The Attorney General raised this issue in his written submission. There is, however, no specific guidance, as to why the attention of the majority was confined only to "commercial and housing loans". In State Superannuation (at 305) the majority of the High Court did not define what "financial" meant in the context of financial activities and financial corporations. The majority did say, however, that a finance company "is an obvious example of a financial corporation because it deals in finance for commercial purposes". The majority then approved of Deane J's analysis in Re Ku-ring-gai (at 159). The majority acknowledged that Deane J had concluded, "that a corporation engaged in the activity of commercial dealing in finance was a financial corporation". Earlier in the paragraph of Deane J's judgment (at 159) he had stated that the phrase "financial corporation" did not refer to solvency, but rather that an "obvious reference point is to the activity of commercial dealing in finance". 77 This commercial requirement extends to the activities of a corporation whose primary activities are not financial, but which seeks to provide or augment its primary activities through financial activities. In State Superannuation the acts of provision and augmentation (through investments) meant the investments were directly commercially motivated. The utilisation of skilled, full-time and internal staff and the consistency and pro-active nature of the investment activities evidenced by investments on the short-term money market and an undisputedly large investment made it clear that the financial activities were transactions in the nature of business. Thus, the activities did have clear elements of commerciality. The activities were commercial dealings in finance. 78 The investment activities in commercial and housing loans, which provided for and augmented the activities of the Board in State Superannuation generated high yields, which were undoubtedly commercial dealing. The utilisation of significant staffing and that the investments were recurring active investments, contribute to this assessment and are evidence that these were significant commercial interactions. Commercial returns in State Superannuation were sought. However, it was that the financial activities were carried on by the corporation at a substantial level, and with requisite commerciality, which categorised the activities as commercial dealing in finance. 79 In Quickenden at the first instance, before concluding the University was a financial corporation, Lee J noted that it was necessary, in order to be categorised as a financial corporation that a corporation (at 608 [54]): be engaged in an activity such as commercial dealing in finance or provision or management of advisory services in relation to financial matters. 80 We note that this proposition, suggesting a need for a commercial element, was distinguished by Carr J from the situation in Re Ku-ring-gai before the Full Federal Court. The proposition, however, was not resolved as to whether commercial dealings in finance was the only relevant reference point for financial activities (at 288 - 289[110]): The evidence showed that in 1997 the university earned $29m from investing funds in the short-term money market and a further $19m in buying short-term bills. His Honour found, and this was not challenged, that the principal part of the university's current assets was committed to such activities and that in 1997 approximately 5% of the total assets of the university were so employed. These activities, involving the loan of money to "outside" parties on a substantial scale, distinguish the present case from Re Ku-ring-gai Co-op Building Society (No 12) Ltd (1978) 22 ALR 621 upon which the applicant relied for the proposition that financial activities had to be commercial in nature and involve financial dealings with customers and the like. 81 In Quickenden, the University's investment activities and considerable administration services devoted to them, led to its characterisation as a financial corporation. The financial investments were engaged in for commercial gain and to generate financial earnings and to do so the University utilised considerable administrative services and financial skills and advice. The activities were transactions in the nature of business because the University invested substantial funds and deposits on the short term money market and in short term bills, through use of significant administrative services to effect the investment. The activities of the University were, on their face, commercial dealings in finance. 82 The above authorities illustrate financial activities which can be regarded as commercial dealings in finance. In our opinion, activities with these features conform to the apparent meaning of the term "commercial dealings in finance" arising from Re Ku-ring-gai and State Superannuation. 83 It is by virtue of the discussion of a commercial element and its application to the facts of the corporations in the authorities, which illustrate the threshold test for financial activities of the nature engaged in by the respondent, the test being whether the corporation engages in commercial dealings. 84 Such a conclusion, in turn, leaves it open to determine that the respondent does not engage in commercial dealings in finance or, in the alternative, that the activities that may be categorised as commercial dealings in finance are insubstantial. In the event of the latter, it is open to make a determination that financial activities are not a sufficiently significant proportion of the respondent's overall activities to characterise it as a financial corporation for the purposes of s 51(xx) of the Constitution. Other reference points 85 We refer now to reference points which concern the provision of management or advisory services in relation to financial matters and the provision or augmentation of primary activities. 86 We are of the view that, at the heart of the term financial corporation, is the notion of commercial activity. 87 The reference point of "provision of management and advisory services in relation to financial matters" (created, seemingly to catch the activities of financial advisory companies etc) would generally involve commercial dealing in finance. The reference point "provision and augmentation of primary activities", also requires activities of requisite commerciality, as displayed in State Superannuation, which saw the fund engage in provision and augmentation through significant commercial dealings in finance. Why the respondent is not engaged in commercial dealings in finance 88 On the present state of the authorities, it is inappropriate to characterise a corporation as a financial corporation for the purposes of s 51(xx) of the Constitution merely because it engages in financial activities per se. Nor is it appropriate to conclude that the respondent is not a financial corporation because its purpose is essentially non-commercial in character, namely, that it is a charitable public welfare research institution: Adamson at (208). 89 However, the respondent's charitable public welfare attributes may 'colour' the financial activities of that organisation for the purposes of assessing whether it is engaged in commercial dealings in finance. 90 The financial activities of the respondent consist of investments which have a capital value and produce revenue through dividends. It has savings accounts which produce some income through interest. The financial investments that generate investment income and dividends for the respondent were initially derived from non-commercial sources, such as a public appeal in securities, government funding and charitable donations. They are now sourced from similar non-commercial, charitable sources in addition to reinvested dividends and investments. 91 These factors alone could not properly be determinative of whether the respondent engages in commercial financial dealings as, plainly, a closer analysis of the nature of those dealings is required. When combined, however, with a more detailed analysis of the respondent' s financial activities, the overall result is one which reveals the lack of a commercial aspect to the respondent's dealing in finance, which is evidenced by a conscious passivity in relation to its investments. We will discuss this in greater detail below, but it is clear that the respondent carried out its financial dealings in a manner distinctly different to the investment activities considered in State Superannuation and Quickenden, where the investments were typified by transactions in the nature of business and significant administration. In contrast, the respondent essentially invests as a means of retaining the monies it receives for basic financial gain in much the same way as income may be held in a savings account for investment and interest returns. In other words, it is a relatively uncomplicated process of managing funds received from a non-commercial source, with the day-to-day management of those funds being undertaken by a financial advisor who acts as an intermediary. The respondent defers to the advisor's advice. 92 These remarks disclose our ultimate conclusion that the respondent is not a financial corporation for the purposes of s 51(xx) of the Constitution because it is not engaged in commercial dealings in finance. However, that view is not formed solely from these broad observations but, rather, from a closer analysis of the financial activities of the respondent, which we discuss below (with reference to the factual circumstances in the leading authorities in the area). 93 We consider that the following factors further illustrate that the respondent does not engage in commercial dealings in finance such as would render it a financial corporation for constitutional purposes. The factors are the same as those used to determine that the respondent's activities were not substantial. In both situations they reflect the nature, and the limited and passive characteristics, of the activities. Where we have determined that the activities are not substantial these factors illustrate how the activities are limited on a proportional basis. In order to resolve the current question, the factors reflect the respondent's conscious passivity in relation to investments and the non-commercial nature of the activities, so that it can be established that they are not, or not significantly, commercial dealings in finance. The factors are: i) the respondent's conduct reveals a pattern of deference to its corporate financial advisor. By comparison, in Re Ku-ring-gai and Quickenden all financial advice and expertise was active, ongoing and internal. In State Superannuation indigenous expertise was used to form financial judgments and this required the sound exercise of financial and actuarial judgment and managerial skills; ii) the respondent's movement of the funds is infrequent. In State Superannuation management of the fund was complex, involving a large number of individual transactions . In contrast, in State Superannuation and Quickenden , significant funds were invested on the short-term money market daily. In Re Ku-ring-gai loan activity was the only activity of the corporation and was ongoing; iii) the Finance and Investment Committee meetings of the respondent are brief, being bi-monthly and they run from 30 minutes to 2.5 hours. In the authorities referred to above, reflecting the commercial nature of their financial activities, all of the corporations utilised active and constant internal financial advice and expertise; and iv) the respondent has limited staff with financial expertise. Whilst the respondent has two or three staff who could be said to deal in finance, we compare this to the dedicated active financial expertise engaged in commercial dealing in finance in Re Ku-ring-gai, State Superannuation and Quickenden. We note that in State Superannuation several staff members were skilled in matters of finance, and fund management required a great deal of administration at the executive level where staff were required to exercise financial and actuarial judgment and managerial skills. 94 We differentiate the respondent from the University in the Quickenden appeal as described by the majority (at 268, [25]). There, as we have observed, part of the commercial dealing in finance was constituted by the University placing substantial funds and deposits on the short term money market. The trial judge inferred from the level of investment activities that the University devoted its own considerable administrative services to them, which required financial skills assisted by sound financial advice. The activities of the University in Quickenden are distinguishable from that of the respondent because in that instance the University was more than a passive investor and its direct investment activities reflected that. The investment activities were engaged in directly and commercially and were transactions in the nature of financial transactions. It must be accepted that the University could not be viewed in the same way as a commercial financial institution in Re Ku-ring-gai and State Superannuation. 95 Analysis of the decision indicates that the Federal Court clearly approached the determination of the matter as if the activities were commercial activities, irregardless of whether it determined whether this was a relevant factor or not. We consider that the Federal Court was looking at activities that to it appeared to be of a commercial nature. 96 As we earlier noted, in a largely formal submission, the Attorney General submitted that Quickenden was wrongly decided, either because the court incorrectly categorised the activities as commercial or incorrectly determined them as being substantial. We do not propose to rule on that matter as it is unnecessary for us to resolve it. However this is because, as we have earlier expressed, the transactions or dealings in Quickenden have a sufficient flavour of commerciality to warrant it being distinguished from the present matter and placing it in the category similar to Re Ku-ring-gai and State Superannuation. This is a matter of the categorisation of the transactions involved in Quickenden which may not be fully resolved because to some extent that process relies upon an incomplete summary of facts in the judgment itself. If the financial dealings in Quickenden, when properly categorised should be treated as having a broad similarity to those of the respondent then we would note our adherence to the views expressed in this judgment and to that extent not follow the approach taken by the Full Federal Court in Quickenden. 97 We would also observe that the reasoning of the Full Federal Court in Quickenden does not consider the context in which the financial activities were conducted by the University so that the overall nature and features of the University may be considered in conjunction with an assessment of its financial activities. That is, the role and features of the University may colour the assessment as to whether its financial activities are commercial dealings in finance for the purposes of s 51(xx) of the Constitution. Conclusion 98 We find the respondent is not a constitutional corporation for the purposes of s 51(xx) of the Constitution. The respondent shall pay the applicant's costs of that issue. Orders 99 The Court orders that the respondent's notice of motion be dismissed to the extent it raises the "constitutional corporation" issue, with costs accordingly as to the Full Bench proceedings and, to that extent, as to the proceedings at first instance. ___________________ DISCLAIMER - Every effort has been made to comply with suppression orders or statutory provisions prohibiting publication that may apply to this judgment or decision. The onus remains on any person using material in the judgment or decision to ensure that the intended use of that material does not breach any such order or provision. Further enquiries may be directed to the Registry of the Court or Tribunal in which it was generated.