Industrial Relations Commission of New South Wales CITATION: Brian Charles Carter v Carenne Support Ltd [2009] NSWIRComm 173 PARTIES: Brian Charles Careter (Applicant) Carenne Support Ltd (Respondent) FILE NUMBER(S): IRC 2424 of 2008 CORAM: Haylen J CATCHWORDS: UNFAIR DISMISSAL - driver employed to transport disabled students - transport service supplied by respondent charitable organisation under contractual arrangements with Department of Education and Training - no fee charged for transport service - transport service revenue largest single item in financial returns of charitable organisation - Notice of Motion filed by respondent challenging jurisdiction of Commission - charitable organisation asserted to be a constitutional corporation and a trading corporation and therefore s 16(1) Workplace Relations Act operated to remove Commission's jurisdiction - consideration of operation of respondent - in substance transport service a funded welfare activity - respondent's operations found to lack the essential quality of trade - Notice of Motion dismissed Associations Incorporation Act 1984 Charitable Fundraising Act 1991 Industrial Relations Act 1996 Ch 2,Pt 6 LEGISLATION CITED: Local Government Financial Assistance Act 1995 Passenger Transport Act 1990 Passenger Transport Act 1990. Transport Industry - Motorbus Driver and Conductors (State) Award Workplace Relations Act 1996 (Cth), s 16, s 16(1) Aboriginal Legal Service of Western Australia Inc v Lawrence (No 2) [2008] WASCA 254 Australian Workers' Union of Employees, Queensland v Etheridge Shire Council [2008] FCA 1268 E v Australian Red Cross (1991) 27 FCR 310 Fowler v Syd-West Personnel Ltd [1998] IRComm 904 Garvey v The Institute of General Practice Education Inc (2007) 165 IR 62 CASES CITED: Hardeman v Children's Medical Research Institute (2007) 166 IR 196 Hillman v Bankstown Handicapped Children's Centre Association Inc [2008] NSWIRComm 64 Hughes v Western Australian Cricket Association Inc (1986) 19 FCR 10 R v The Judges of the Federal Court of Australia; Ex parte Western Australian National Football League (Inc) (1979) 143 CLR 190 R v Trade Practices Tribunal; Ex parte St George County Council (1974) 130 CLR 533 (at 539) The State Superannuation Board v Trade Practices Commission (1982) 150 CLR 282 at 330 HEARING DATES: 21 May 2009 Submissions 10 August, 2009, 24 August, 2009, 28 August 2009 and 1 October 2009 DATE OF JUDGMENT: 20 October 2009 No appearance for Applicant SOLICITORS: Boyd Longhurst LEGAL REPRESENTATIVES: Mr S Benson of counsel (Respondent) SOLICITORS: King Cain JUDGMENT: INDUSTRIAL RELATIONS COMMISSION OF NEW SOUTH WALES CORAM: HAYLEN J Tuesday, 20 October 2009 Matter No IRC 2424 of 2008 BRIAN CHARLES CARTER and CARENNE SUPPORT LTD Application by Brian Charles Carter re unfair dismissal pursuant to s 84 of the Industrial Relations Act 1996 JUDGMENT [2009] NSWIRComm 173 1 From July 2006 until late December 2008, Mr Brian Charles Carter was employed as a bus driver by Carenne Support Ltd ("Carenne"). On 19 December 2008 that employment was terminated and by 24 December 2008 Mr Carter had filed an application for reinstatement pursuant to the provisions of Ch 2, Pt 6 of the Industrial Relations Act 1996. 2 Carenne was established in 2004 to improve the therapy services for disabled students at Carenne School. Carenne described itself as a limited liability company having benevolent status for fund raising and taxation purposes. Carenne contracted with the Department of Education and Training ("DET") to supply special transport services to students at the school. Mr Carter had commenced with Carenne as a relief part-time driver and by mid-2007 had become the regular casual driver and in 2008 the area service was expanded. Carenne claimed that there were a number of complaints about Mr Carter's driving and he was dismissed. Mr Carter claimed that, during his employment, he was employed under the terms of the Transport Industry - Motor Bus Drivers and Conductors (State) Award. 3 In his application in which he claimed to be unfairly dismissed, Mr Carter sought reinstatement to his previous position. In Carenne's reply to Mr Carter's application it was accepted that Mr Carter was employed under the Motor Bus Drivers and Conducts (State) Award and the company advised that, in the proceedings, it would represented by the Legal Services Unit of DET. 4 Following unsuccessful conciliation proceedings held in Bathurst, Carenne filed a notice of motion seeking to have Mr Carter's application dismissed on the basis that Carenne was a constitutional corporation for the purposes of the Workplace Relations Act 1996 (Cth) and as a consequence, s 16(1) of the Workplace Relations Act operated to remove this Commission's jurisdiction in respect of any claim for alleged unfair dismissal by Mr Carter. Ultimately, the parties agreed to file and serve their affidavits in relation to this preliminary issue and also agreed that this issue could be determined on the papers and without the necessity of a formal hearing with oral evidence and submissions. In particular, this course was suitable to Mr Carter because of his personal circumstances and his inability to leave the Bathurst area. WHAT IS THE NATURE OF CARENNE AND WHAT DOES IT DO? 5 In order to address this threshold question of whether or not Carenne is a constitutional corporation for the purposes of the operation of the Workplace Relations Act, it is necessary to consider the evidence placed before the Commission concerning the operations of Carenne. 6 The evidence for Carenne was constituted by an affidavit and a number of annexures sworn by Mr Geoffrey Salmon, a director of the company since its inception. In approximately 2003, Mr Salmon and his wife became concerned about the lack of therapy services available in the Central West to people with disabilities in that region of the State. Their interest arose from the needs of their son who was assessed early in his life as being developmentally delayed, mentally and physically. Mr Salmon was of the view that the level of support from therapists, particularly speech therapists, physiotherapists and occupational therapists, was inadequate to meet the needs of young people in the region who had a range of disabilities. There did not appear to be an organisation providing advocacy on behalf of disadvantaged young people and so Mr Salmon took steps to establish an independent charitable organisation that could help provide additional therapy services as well as being an organisation that could represent the interests of this particular group. 7 In March 2004 a public charitable company limited by guarantee was registered as Carenne Support Ltd. The constitution of the company was in evidence. Clause 3.1 of the Constitution set out the objects of the company in the following terms: 1. To provide equipment and services for the relief and assistance of disabled persons, including but not limited to, provision of therapeutic, medical and other services for the relief of disabled persons and the provision of ancillary goods, services, equipment etc to assist in the relief and assistance of disabled persons: and 2. To act as a non-profit organisation in the promotion of the objects set out in (1) above. 8 Under cl 3.3 of the Constitution, the income and property of the company was only to be applied towards the promotion of the objects of the company as set out in cl 3.1. Under cl 31.1 the directors may exercise all powers of the company to (1) raise or borrow any sum or sums of money for the purposes of the company and (2) secure the payment or repayment of any amount payable by the company and any other obligation or liability in such manner and on such terms and conditions as they think fit whether upon the security of any mortgage or charge upon all or any of the property, undertaking or assets of the company present and future. Under cl 30.1, subject to the law and the Constitution, the management and control of the business and affairs of the company were vested in the directors. Under cl 48 of the Constitution if the company was wound up and a surplus remained, the surplus was not to be paid to or distributed amongst the members but was to be given or transferred to another institution or corporation having the same objects or similar objects to the company as set out in cl 3.1 and where the Constitution of that company required its income and property to be applied in promoting its objects and the Constitution prohibited it from paying or distributing its income and property amongst its members to an extent at least as great as imposed on the company under cl 3.4 (cl 3.4 provided that no income or property of the company will be paid, transferred or distributed directly or indirectly by way of dividend, bonus or otherwise to any member of the company although allowing specified good faith payments to a member). 9 Annexed to Mr Salmon's affidavit were a number of documents, including a copy of the Australian Business Register of the company showing the type of entity as being an incorporated entity with the industry code, being 96290. On October 2005 the Australian Taxation Office ("ATO") had notified Carenne that it was now registered for pay as you go ("PAYG") withholding purposes. 10 The Carenne financial statement for year ended 30 June 2008 was annexed to Mr Salmon's affidavit. The report stated that the company recorded a profit of over $64,000 in that year following a deficit of a little over $2,000 the previous year. The revenue for 2008 exceeded $185,000 with expenses exceeding $121.000. In 2007 the revenue was over $52,000 with expenses of over $54,000 incurred. The principal activities of the company during the year were described as "therapy services and support for people with a disability". The report noted that, in accordance with the company's Constitution prohibiting the declaring or paying of dividends, no dividends had been paid or recommended for the financial year. In the notes forming part of the financial statement for the 2008 financial year it was indicated that fundraising income accounted for nearly $143,000 with over $37,000 being donations. There was $4,000 in interest income and $1,5000 "other" income. This compared with the 2007 financial year when there was approximately $50,000 by way of fundraising, $3,500 in donations, $800 received for interest and $26 from other income. Under note 8 dealing with property, plant and equipment, motor vehicles were entered at cost being over $99,000 and with depreciation was reduced in value to just over $54,000. Note 11 stated that the company was limited by guarantee and if the company was wound up the Constitution stated that each member was required to contribute a maximum of $100 towards meeting any of the company's outstanding obligations. Note 12 recorded that the directors of the company performed honorary duties and in their capacity as directors did not receive any remuneration for services rendered to the company. 11 In relation to the trading activities of the company, Mr Salmon spoke of his aim for the company to establish a business enterprise that could earn profits which in turn could be applied to further the main charitable purposes of the company being the provision of equipment, relief and assistance services for disabled persons. In approximately mid-2007 the company entered negotiations to acquire a bus which was used by the then transport provider under the DET school students special transport scheme that serviced the Carenne School in Bathurst. The company paid approximately $12,000 for that vehicle which was added to pre-existing vehicles owned by the company. Carenne then entered into a contract with DET for the provision of transport services for students attending Carenne school. That contract was renewed on 5 December 2008. Mr Salmon understood that the level of remuneration set by the contract was the average rate paid by DET to other service providers for the zone covering Bathurst for the same size vehicle. While the initial contract provided for a single run (carried out by the company's three vehicles), in early 2008 a second run was allocated by DET involving, on a daily basis, the transport of a small number of children between Bathurst and Lithgow. Carenne undertook this work using its existing vehicle. During this period Carenne employed between three and four staff. Two or three staff were part-time casual drivers and the other member of staff was Carenne's part-time chief executive officer who was also a speech therapist. Under the 2009 contract for the provision of special transport services with DET, cl 10.4 provided that the service must not be sold, assigned or transferred. Under cl 11.1 there was no guarantee period for the engagement of the service and either party could terminate the agreement at any time by giving the other party two weeks' notice in writing. Under cl 1 of the contract for the provision of special transport services, Carenne agreed to provide transport for students with disabilities and special needs on the understanding that student conveyance needs could be subject to change at minimal notice. 12 Mr Salmon's evidence was that Carenne had been able to provide a range of therapy services and equipment to persons with disabilities in line with the objects of the company by applying funds from donations and the profits from the transport operations. The company had engaged a range of therapists on a fee-for-service basis whereby Carenne paid the therapists' fees while the services were provided free to persons with disabilities. 13 Following consideration of the evidence and submissions of the parties, the Commission requested Carenne to supply further information regarding its operation and revenue streams. In October 2009, Mr Salmon duly filed a supplementary affidavit dealing with the issues raised by the Commission. In that affidavit it was stated that, for the financial year ending June 2007, Carenne had received $42,815 from DET for the provision of transport services and for the financial year ending in June 2008, Carenne had received $135,188 from DET. A document supplied by Carenne showed that, for the year ending June 2007, the profit from "transport activities" amounted to approximately $25,300 while for the financial year ending June 2008, the "profit for transport activities" amounted to just over $81,300. In the financial year ending June 2007, the part-time and casual drivers engaged to provide the contractor transport service with DET were paid wages of approximately $1,900. Those drivers were paid just over $27,700 in wages for the financial year ending June 2008 for the provision of the transport service. However, it was stated that, in order to determine the actual operating profit, it was appropriate to include depreciation costs of the vehicles and other costs such as auditing that should be charged as an expense to the transport activities. On that approach, actual operating profits for the provision of transport services to DET for the year ending 2007 was nearly $6,500 and for the year ending 2008 it was just over $67,000. It was pointed out that other possible expenses, such as vehicle servicing, administration and accounting costs, were provided as donations or on a pro bono basis to Carenne and therefore were not reflected in the financial reports. These profits were applied to the provision of therapy services and equipment for children attending the Carenne Public School. The main expense for the therapy activities was wages paid to therapists. 14 In relation to the three buses used in providing the transport services, Mr Salmon said that the first two buses were purchased in 2005 from fundraising activities carried out by Carenne and from donations received from charitable organisations, notably, the Variety Club of New South Wales who provided approximately half the cost of those two vehicles. These two buses were initially used for facilitating school excursions and other special transport needs for the Carenne school and were provided free with the school supplying the drivers. In May 2006, the Board of Carenne resolved to purchase a third bus from the Trails rganisation ("Trails") who had the contract with DET for a run in the Bathurst area that included the Carenne school. The total cost of purchasing this bus was just over $14,000 which was paid out of existing Carenne funds. Carenne did not borrow any money or use any other source of financing such as leasing to purchase any of the vehicles. The principle purpose for acquiring the vehicle from Trails was to continue to undertake the run pursuant to the contractual arrangements with DET. 15 In relation to any policy adopted by DET concerning those who may apply for accreditation to be a transport provider under the School Students Special Transport Scheme ("SSSTS") for students with disabilities, Mr Salmon had been informed that DET undertook a review of expressions of interest by persons wishing to be accredited as contractors and ascertained whether they met the standard contractual requirements in the contract. In 2001, DET had conducted an open tender process for runs in the Sydney area. A DET website article referred to the scheme as aiming to assist eligible students with disabilities to access educational services in government and non-government schools in New South Wales, with a maximum of two trips per day. 16 In approximately 2006, Carenne had lodged an expression of interest with DET to become a transport service provider under the SSSTS and ultimately succeeded in becoming an approved provider. Under the scheme, Carenne was awarded a contract to provide transport services for students commuting between their home in the Bathurst area and the Carenne school. The current contract was signed by DET in February 2009 and continued until the end of December 2009. 17 Carenne clarified that it did not charge the students for the transport services provided nor did DET charge the students for the service. Carenne was paid by DET under the contractual arrangements for the provision of transport services. Mr Salmon pointed out that all New South Wales school students were entitled to subsidised travel to and from school provided they met eligibility criteria. There were two schemes in New South Wales supporting student travel. The New South Wales Department of Transport and Infrastructure managed the transport scheme for school students without disabilities For students with disabilities the transport services were available through the SSTS for students enrolled in special schools and support classes or where mobility dependent students were placed in regular classes. Carenne did not charge for any other services provided to disabled persons, including the provision of therapeutic or other services and ancillary goods services and equipment. On one occasion, Carenne had invoiced the Department of Disabilities Ageing and Home Care for physiotherapy services provided to an ex-student of the Carenne school. When Carenne commenced providing therapy services, its occupational therapist was paid by the Department of Disabilities to see a child attending the Bathurst public school. Almost all therapy services, however, provided by Carenne have catered for the needs of students at the Carenne school. To date no individual or other organisation has been invoiced for therapy services provided by Carenne. Mr Salmon accepted that Carenne worked to support the Carenne school which was a special school catering for students with an intellectual or physical disability. 18 Carenne was asked to clarify its written submissions where reference was made to cash flows for the year ended 2008 showing that receipts "from customers" was over $180,000. That amount of money was made up by approximately $136,000 by way of DET payments for the transport services, $2,400 for the Department of Disabilities payments for therapy services, just under $5,000 for a Workplace Relations refund and just over $37,000 for donations, with $1500 being received as "other income". 19 Carenne did have Deductible Gift Recipient status which allowed it to receive donations and issue receipts. This status allowed the donor to make a taxable claim for donations to Carenne and that helped its fundraising activities. The major benefit to Carenne was to make donations attractive to donors. Having that status also attracted reporting obligations to the Australian Securities and Investments Commission and the Department of Gaming and Racing - Carenne forwarded its annual independently audited financial statements to these bodies. 20 It was stated that, in the past, Carenne had two major trading activities, the first relating to the provision of transport services for DET and the second relating to the provision of therapy services to the Department of Disabilities. In February 2006, the Department of Disabilities began allocating funds to Carenne to provide therapy services to fill service gaps that had arisen due to vacant therapy positions in that Department. Since July 2006, Carenne had invoiced the Department for physiotherapy services provided to students attending the Carenne school as well as the student from Bathurst High School. The initial brief from the Department was to provide physiotherapy services on a referral basis but as it transpired, only one referral was made for a student who did not attend the Carenne school. This arrangement was terminated in December 2008 when DET employed a physiotherapist in Bathurst. Since that time all of Carenne's income from trading activities has come from the contractor provision of transport services to DET. 21 Carenne accepted that the Deductible Gift Recipient status, its GST concession, its income tax exemption and fringe benefit tax exemption were enjoyed by the company because it was classified as a public benevolent institution. Mr Salmon understood that a public benevolent institution was, by definition, a non-profit institution organised for the direct relief of poverty, distress, sickness, suffering, misfortune, disability or helplessness. 22 Mr Salmon stated that the three vehicles owned by Carenne were also used by the Carenne school staff during the school day for transporting students to activities and programmes that formed part of the school curriculum, including community activities, work experience and sporting activities. This was the extent of the use of those three vehicles for purposes other than the transport of students under the arrangement with DET. No fee was charged nor was any money received for the provision of vehicles when used in non-DET services. 23 It was accepted that neither Carenne nor any of its employees were required to hold a public passenger authority under the Passenger Transport Act 1990. Mr Salmon understood that Act required operators and drivers who carry on a public passenger service for fee or other consideration needed to be accredited by the Minister of Transport. Mr Salmon's own enquiries of DET led him to believe that, because there were eligibility criteria limiting access to the SSSTS, it was not open to the public and presumably therefore a public passenger authority was not required. Based on advice from the Minister for Transport, Mr Salmon had been informed by DET that transport providers under the SSSTS scheme were not required to be accredited under that Act. 24 Mr Carter also filed an affidavit raising a number of issues although in substance dealing with the question of whether or not Carenne was a constitutional corporation. Having regard to the terms of the Notice of Motion, the Commission will consider those parts of Mr Carter's affidavit that are capable of reference to that issue. Mr Carter did not offer a response to the further affidavit evidence of Mr Solomon. 25 Mr Carter asserted that Carenne provided a gratuitous public service to persons with a disability in the Central West of New South Wales and did not "trade". Because of the type of operation undertaken by the company it was not a trading or financial corporation and could not be classified as a constitutional corporation within the Constitution nor under the Workplace Relations Act. 26 Carenne was said to be closely associated with Carenne Public School Bathurst, a school for intellectually disabled students. The membership of Carenne consisted of teachers, parents and local community members and was similar to a Parents and Citizens Association. 27 In relation to the Australian Business Register cited by Mr Salmon, it was pointed out that, the industry code 96290 recorded on the register, under the Australian and New Zealand Standard Industry classification, by reference to that classification as published in 1996 carried the following meaning: Units of associations, clubs or organisations for the promotion of community interests n.e.c. It also includes units of political parties. 28 Mr Carter stated that the Australian Business Register did not include information as to Carenne's status as a Deductible Gift Recipient nor was reference made to the GST concession, income tax exemption and fringe benefit tax exemption achieved by the company. Mr Carter stated that Carenne enjoyed these benefits because of its classification as a public benevolent institution. A current extract from the Australian Business Register for Carenne as at April 2009 referred to its entity type as "other incorporated entity" and its tax concession status as being a "public benevolent institution" endorsed to have access to nominated tax concessions, namely, a GST concession, an income tax exemption and an FBT exemption. It was also recorded that Carenne was endorsed as a deductible gift recipient. Mr Carter pointed out that Carenne was the holder of a New South Wales authority to fund raise under the Charitable Fundraising Act 1991. 29 Mr Carter contested the relevance of Carenne being registered for PAYE withholding purposes asserting that it meant no more than, where it had employees, the employer withheld tax before remittance to the ATO. He also drew attention to the 2008 financial year statement and the fact that the bulk of the organisation's revenue came from "fundraising". This also applied to the 2007 financial year statement. He contested Mr Salmon's assertion about his desire to earn profits that could be applied for the charitable purposes of the company noting that the Constitution set out the purposes of Carenne and that Mr Salmon was only one of the directors. 30 The three buses operated by Carenne were identified as being a standard Ford Transit minibus, a wheelchair accessible Ford Transit minibus and a wheelchair accessible Toyota Hiace commuter. The two Ford transit minibuses were purchased following an appeal in 2004/2005 by the Carenne Public School, an appeal for buses to assist with transporting students to and from school-related activities. Mr Carter referred to press coverage of these fundraising events. In 2005 the Lions Club of Bathurst had donated more than $30,000 to the Carenne School bus appeal. One article carried a statement from Mr Terence Mahoney a director of Carenne and the Principal of Carenne Public School that the school would now be able to order a bus with wheelchair access. Mr Mahoney had said that the school really needed its own bus to guarantee viability of programmes for the students. Mr Mahoney had mentioned in one of the articles that the well-known charity, Variety, had come to their aid and had donated the remaining funds allowing the purchase of two buses for the school. Those statements made it clear that the purchase of the buses was for the purposes of the operation of the Carenne Public School and its students. Mr Carter asserted that there was no intention to use the vehicles for trade and that would be unusual considering that the funding for the purchase of the vehicles was supplied by donations and other charities such as Variety. 31 Mr Carter asserted that Carenne did not compete with other providers for clients. Clients were assigned to a "run" that became transport obligations of Carenne and this was all at DET's sole discretion. Under the contract with DET, the bus run fitted within Carenne's purpose under the Constitution to provide relief for persons with disabilities and to provide other services for the relief of disabled persons. Carenne did not charge clients/passengers or therapy recipients travelling on the buses for services provided. The contract between Carenne and DET was a tripartite agreement whereby DET paid a loaded rate per kilometre for the transport of students. Unlike an ordinary bus service, Carenne was not paid by the number of passengers it carried but instead was paid by the kilometres it travelled while an approved passenger was aboard. 32 Reference was made to the DET website dealing with School Students Special Transport Scheme for Students with Disabilities. The Department's site dealing with this matter stated: The School Student Special Transport Scheme ("SSSTS") aims to assist eligible students with disabilities to access education services in Government and non-Government schools in New South Wales with a maximum of two trips per day. The Scheme is administered by the New South Wales Department of Education and Training through the Students' Special Transport Unit located in the Wollongong State office. Transport services are available to students enrolled in special schools and support classes or in placements in regular classes for students who are mobility dependent. To be eligible to apply for transport assistance, students must: · have an identified disability that meets DET established criteria NSW DET Disability Criteria (July 2000); · be enrolled in the closest appropriate government or registered non-government school to their home, following consideration of educational needs and the impact of travelling distance and time on individual learning programs; · have parents and/or carers who have demonstrated in writing their inability to provide or arrange travel for the student either fully or in part; and · be a permanent resident of New South Wales. 33 It was submitted by Mr Carter that the SSSTS programme was to provide a "gratuitous public welfare service" to students with disabilities and special needs. Carenne's transport of disability students was provided on a free and discretionary basis. In order for students to be transported they had to be approved by the SSSTS and had to meet the guidelines set out by the Department. 34 Mr Carter further asserted that neither Carenne nor its employees were required to hold a Public Passenger Vehicle Authority under the Passenger Transport Act 1990. That Act was said to require operators and drivers of services carrying passengers for fee or other consideration to be accredited by the Ministry of Transport. 35 No affidavit in Reply was filed on behalf of Carenne contesting the variety of facts asserted by Mr Carter. In written submissions for Carenne, however, a number of matters were rejected or contested on the basis that they were not matters relevant to the matters raised in the Notice of Motion. DELIBERATION 36 In its written submissions Carenne accepted that the major thrust of the present inquiry involved a determination of whether the company was engaged in trading activities such as would render it a trading corporation for the purposes of s 51(xx) of the Constitution and s 16(1) of the Workplace Relations Act. Carenne therefore referred to the Constitution and the objects of the company and the reference in cl 3 of the Constitution to the business and affairs of the company and the powers of the directors in that regard. The nature of the company was indicated by the way it appeared in the Australian Business Register with an Australian business number and an Australian company number. There was also reference to the company being registered with the ATO in relation to PAYG withholding tax. How these matters informed the debate as to whether or not Carenne was a trading corporation was not spelt out in the written submissions: there was an implied assumption that these matters indicated the existence of a trading corporation. 37 In relation to the trading activities of Carenne, reliance was placed on Mr Salmon's affidavit to the effect that the company had been able, by applying funds from donations and the profits from the transport operations, to provide a range of therapy services and equipment for persons with disabilities in accordance with the company's objectives. In relation to the financial statement, Carenne relied upon the fact that, for the financial year June 2008, there was a profit in excess of $64,000 returned with overall earnings in excess of $185,000, a substantial increase on the previous year. Receipts for customers were approximately $182,000 while payouts to suppliers and employees was nearly $107,000. The three motor vehicles represented non-current assets to the level of over $54,000. 38 Reliance was placed on Carenne paying, in 2007, approximately $12,000 for its third vehicle. The company was then able to enter a contract for the provision of transport services for students attending the Carenne School. By 2008 the bus run had been expanded. The provision of the bus run was relied upon as indicative of a trading operation with emphasis being placed upon the fact that buses had been purchased, employees engaged and paid in accordance with the State Transport Award. Under the agreement with DET, Carenne had to indemnify DET against any claims, costs, liabilities or legal proceedings arising from the work performed under the agreement. The notion that there was work to be performed under the terms of the agreement was emphasised as being significant. Similarly, it was said to be significant that DET was to pay remuneration to Carenne for the provision of the transport service and the contract set out the requirement to invoice at the agreed rate. The contract also made provision for circumstances where the transport service was not provided and what payments would be made in such circumstances outside "normal commercial risks". This reference was said to be an indication of the commercial risks faced by Carenne. 39 Carenne accepted that the legal principles applicable in determining whether or not the corporation was a constitutional corporation had been laid down by the Full Bench of the Commission in Garvey v The Institute of General Practice Education Inc (2007) 165 IR 62, thus the focus of the inquiry was whether Carenne was a trading corporation at the time of the alleged dismissal: the inquiry was to address the activities of the company at the relevant time. The purpose of the corporation was no longer the appropriate test but rather the test was whether the trading activities of a corporation meant that it was a trading corporation by reference to whether the trading activities were substantial, not insubstantial or were sufficiently significant as a proportion of the overall activity. It was submitted that, on the evidence, the trading activities of Carenne represented by the provision of transport services were substantial in terms of the funding and the activities of the company. It was clear that a majority of the company's employees were engaged in the provision of those services. It was also established that a trading corporation could exist notwithstanding that its trading activities were not motivated by the hope of private gain but rather to enable other, even charitable, activities to be performed. 40 In his written submissions, Mr Carter referred to a number of well known cases dealing with the concept of a trading corporation (for example, E v Australian Red Cross (1991) 27 FCR 310; Hardeman v Children's Medical Research Institute (2007) 166 IR 196; Fowler v Syd-West Personnel Ltd [1998] IRComm 904; Aboriginal Legal Service of Western Australia Inc v Lawrence (No 2) [2008] WASCA 254; R v The Judges of the Federal Court of Australia; Ex parte Western Australian National Football League (Inc) (1979) 143 CLR 190; Hughes v Western Australian Cricket Association Inc (1986) 19 FCR 10). A number of those decisions looked at charitable organisations and their trading activities to establish whether or not the company was a trading corporation. It was submitted that the authorities cited illustrated the principle that the mere fact that a corporation traded did not mean it was a trading corporation and a close analysis was required of the current activities of the corporation. In this case, Carenne was clearly a non-profit organisation established to provided equipment and services for the relief and assistance of disabled persons in accordance with the objects contained in cl 3 of the Constitution. In Carenne's case there was no substantial corporate activity: Mr Carter adopted the approach of Wilcox J in the Red Cross case, namely, that it was not appropriate to describe the gratuitous provision of a public welfare service, substantially at government expense, as the conduct of "trade.". 41 It was submitted that, in the present case, Carenne was clearly a non-profit organisation with any income, largely achieved through fundraising, being directed to the charitable purposes laid down in the Objects of the Constitution. It was submitted to be relevant, following the decision of the Supreme Court of Western Australia in Lawrence that a decision about whether a corporation is a trading corporation being a qualitative decision involving the balancing of many factors which taken individually may point either to or against the conclusion that a particular corporation is a trading corporation. Whether the operations or activities of the corporation produced a profit or were intended to produce a profit may not be determinative but it will often be an important relevant factor. All the considerations referred to were said to lead to the conclusion that Carenne was not a constitutional corporation. 42 The evidence that is relevant to the issue of "trading" and Carenne being a "trading corporation" are the following matters: (a) at the relevant time, Carenne's revenue was over $180,000 of which $131,000 came from the DET contract to supply transport services to the disabled students at Carenne School. There was a profit of $81,000 and after making allowance for depreciation and other appropriate matters it was said the actual profit was approximately $67,000; (b) the financial statement for Carenne for 2008 describes its principal activities as "therapy service and support for people with a disability". Note 2 dealt with operating revenue and in its books the transport services appears to be part of the "fundraising income" of $143,000 with donations contributing some $37,000. The financial report refers to "receipts from customers" as being $182,000. It is of some significance that Carenne itself regarded money received for providing the transport service as fundraising income and did not describe its principal activities as being either trade or commerce or the provision of transport services; (c) Carenne did not charge for the transport services provided and they were paid for by DET in order that deserving disabled students in the area could be transported between their home and school; (d) the one-off provision of physiotherapy services paid for by the Department of Disabilities did not constitute trading and was irrelevant. As a one-off payment it was irrelevant (see Hillman v Bankstown Handicapped Childrens Centre Assocaition Inc at [82]; (e) the Deductible Gift Recipient status, the GST concession, the income tax exemptions and the fringe benefit tax exemptions were enjoyed by Carenne because it was classified as a public benevolent institution; (f) no fees were charged for the use of the buses on non-DET transport; (g) Carenne was not required to hold a public passenger authority under the Passenger Transport Act when providing this transport facility and that only applied to operators carrying public passengers for a fee; (h) as a business, Carenne was classified as an Association for the promotion of community interests and was otherwise classified as a "public benevolent institution"; (i) the principal means of transport, namely, the three types of buses, were purchased out of fundraising and donations. They were not financed by any business lease or other business borrowing. 43 As earlier mentioned, the parties were not in disagreement as to the applicable principles in dealing with a challenge of this nature but concentrated on different aspects of the activities of Carenne in order to press the acceptance of their contention. For present purposes it is sufficient, in the first instance, to refer to the judgment of the Full Industrial Court in Hardeman's case. That case involved an application under the Unfair Contracts provision of the Industrial Relations Act with the respondent arguing that, as it satisfied the description of being a constitutional corporation, s 16 (1) of the Workplace Relations Act operated to remove the Court's jurisdiction in respect of the respondent. During the hearing the parties accepted that, if the respondent was able to satisfy the Court that it was a constitutional corporation for the purposes of s 51(xx) of the Australian Constitution, then the Court would have no power to hear the applicant's summons by operation of s 16(1) of the Workplace Relations Act. The Full Court then continued as follows: [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 a 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". ... [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. 44 In Hardeman the respondent was a well-known charitable organisation having been established as a company limited by guarantee incorporated under the Corporations Act 2001. Many years ago the Board of Management of the Royal Alexandra Hospital for Children had resolved to launch a public appeal for funds to undertake children's medical research and had established a foundation to invest the money received from public appeals and that money was to be invested in securities authorised by the hospital. The income from those investments were to be used for the purposes of the Foundation. The Foundation operated as a "not for profit" organisation and was registered under the relevant legislation in each State and Territory to conduct fundraising activities. Investments were overseen by a finance and investment committee and there were restrictions on where investments could be made but all income was to be for the purposes of medical research for children. At the end of the 2006 financial year, the net surplus for the respondent was over $8m while revenue from continuing operations was nearly $24m. The respondent foundation had total assets in excess of $100m. The revenue of nearly $24m was broken down to in excess of $9m from fundraising, under $300,000 from the sale of merchandise, over $400,000 from interest received and receivable on its investments, over $5m as dividends from the respondent's investments, over $1.5m from profit received from the respondent's sale of its investments, $6.7m from research grants received by the Foundation and over $154,000 from other income such as payment for use by third parties, such as the hospital, of equipment and facilities owned by the Foundation. 45 Although the respondent Foundation did not seriously press its contention that, by reference to its trading activities, it was a trading corporation in light of evidence of limited activities relating to the provision of goods and services, nevertheless, this submission was not withdrawn and therefore was dealt with by the Court. In dealing with the relevant principles concerning a trading corporation, the Full Court stated: Relevant Principles: Trading Corporation 17 The High Court in New South Wales v Commonwealth (2006) (2006) 229 CLR 1 was not required to examine the question as to what constituted a trading or financial corporation, observing (at p 74): [55] The challenge to the validity of the legislation enacted in reliance on the corporation's 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. 46 Having concluded from the evidence that the respondent Foundation in the 2006 financial year had generated approximately 2.5 per cent of its revenue from activities described by it as trading activities, the Court then went on to consider whether the evidence was sufficient to establish the respondent foundation as a trading corporation. Accepting all the activities identified as trading activities by the defendant Foundation, nevertheless, the Full Court considered that those trading activities were insubstantial. There was a real doubt whether all of the activities relied upon by the respondent Foundation could properly be treated as trading activities for the purposes of applying s 51(xx) of the Constitution. The Full Court analysed the trading activities of the respondent Foundation as a proportion of total activities and concluded that the majority of the activities concentrated on the central activity of children's medical research, the Foundation being a medical research establishment. The trading activities identified were peripheral to these research responsibilities. It was established from the annual report that most of the respondent Foundation's organisational resources were used for and in relation to their activities of medical research and nothing in the annual report gave rise to the impression that trading activities were engaged in to a "substantial" not "insubstantial" or "sufficiently significant" degree as those terms were used in various cases. 47 After noting that all parties had addressed the objects of the respondent Foundation and although accepting that the primary focus was on the activities of the Foundation, the Full Court stated as follows: [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 . 48 A Full Court of the Industrial Court came to consider this issue again in the context of s 106 proceedings in Hillman v Bankstown Handicapped Children's Centre Association Inc [2008] NSWIRComm 64. In that case the Association was incorporated under the Associations Incorporation Act 1984 as an organisation operating in the disability services and childcare sectors by providing accommodation and support services and operating a pre-school. The Association had an authority to fundraise for charitable purposes under the Charitable Fundraising Act 1991. The numerous objects of the Association included the provision of high quality individualised service to make a real difference to the lives, independence and social integration of people with any disability as well as children and young people, to provide support for family, carers and individuals, to provide welfare assistance, aid and support to members of the public, to operate, make available and provide housing and accommodation and to acquire houses, dwellings, buildings and premises for that purpose, to provide counselling and referral services, to operate bank accounts and arrange for deposits and withdrawals of money. In the financial year 2005/2006 the total income of the Association was $9.799m and in the following year the total income was nearly $10.2m. The Department of Aging, Disability and Home Care was a provider of funds to the Association. That Department provided funds to almost 900 government and non-government organisations and service providers to deliver services on behalf of the Department. Those services included accommodation through group homes, respite care and other programmes that helped people with disabilities. Department funding was provided pursuant to a funding agreement. The funding agreement made it clear that the various types of funding provided by the Department were made in order to fulfil Government policy and to provide appropriate services to the community. 49 The Full Court stated that, in accordance with its objects, the Association provided welfare in the form of accommodation and support services for the benefit of disabled and young people. The Association was described as a "public welfare corporation" and its character and attributes bore similarities to the Red Cross blood transfusion activities and reference was made to the decision in E v Australian Red Cross Society. The Full Court noted that, in order to discharge its functions, the Association received funds from a variety of sources. The majority of monies received by the Association in connection with their activities were in fact provided in accordance with contractual arrangements with two New South Wales Government Departments. Those monies were provided on a non-acquitted and acquitted basis: that meant the acquitted funds, if not expended on an activity, were to be returned to the Government Departments while non-acquitted income was not subject to such a requirement and once received, became the property of the Association. Acquitted funds were provided by the Department for accommodation for disabled adults through the operation of group homes and non-acquitted funds were provided from another Department for out-of-home care for children and young people. In the relevant financial year acquitted funds as recurrent income in advance was made available to the Association in the sum of approximately $4.5m while over $3.5m was made available from another Department in relation to non-acquired funds. 50 It was submitted on behalf of the Association that its activities under the terms "grant", "funding" and "fee for service" should be characterised as trading activities. Those activities taken individually or together comprised a substantial part of the Association's overall activities. It was said that the essential proposition of the Association in contending its activities were trading activities was that, in offering its services it went to the market, sold to the New South Wales Government at a negotiable price and this was a commercial activity carried on consistently. Contrary to those submissions, counsel for the Attorney General and Minister for Industrial Relations as intervenor, submitted that the activities were essentially funded welfare activities provided on a charitable basis by grants provided by Governments. Those activities were properly described as the provision of welfare funded by Government rather than the provision of a service bought by Government on a commercial basis. 51 In dealing with these submissions, the Full Court was guided by the discussion of the Full Bench in Garvey and the focus to be place on the activities of the corporation. The Full Court, however, noted that the nature and purpose of the corporation may be instructive in analysing whether the activities of an organisation constituted trading, particularly in the case before the Full Court when regard was had to the source of funds or revenue for the organisation. This was said to be consistent with a statement of Barwick CJ in R v The Judges of the Federal Court of Australia. The Full Court accepted that the question of whether or not the Association made a profit or loss was not determinative but it was clear that profit or loss may be part of the "concomitant indicia" suggesting an activity was either a trading or a non-trading activity. This conclusion was said to reflect what was said by Mason J in the Western Australian National Football League case, namely: I do not limit the concept of trading to buying and selling at a profit; it extends to business activities carried on with a view to earning revenue. To similar effect was a statement of Barwick CJ in R v Trade Practices Tribunal; Ex parte St George County Council (1974) 130 CLR 533 (at 539): Though profit making is perhaps not of the essence of trading, it is a usual concomitant, and it can be said that the applicant trades at a profit. 52 In further reference to the St George County Council case, the Full Court then stated: [57] The majority in St George ( McTiernan , Menzies and Gibbs JJ) considered the purpose of a corporation to be determinative in the assessment that it was not a trading corporation. It was the reasoning, however, of Barwick CJ and Stephen J (affirmed in Adamson ) that concentrated attention upon an activities test. In this respect, we note that the activities of the first respondent could not be said to be trading activities on either of the particular standards applied by Stephen J or Barwick CJ in St George . The activities of the first respondent cannot be said to be sold in the way electricity and services were sold in St George . [58] Stephen J considered that trading activities were those that were bought or sold and that non-trading activities were those provided freely. His Honour stated (at 569): ...It might be otherwise if it distributed electricity free of charge but so long as its activity is that of buying and reselling rather than distributing by way of gift it is, in my view, engaged in trading... [59] Barwick CJ considered that the activities constituted business transactions of buying and selling of products and services in a market setting on a commercial basis, though moderately restricted, his Honour said (at 539): It is clear that the applicant does trade. It does not generate electricity. It buys it in bulk and reticulates it within the county area, charging what is, in substance, a retail price for its supply to the consumer. The applicant is none the less trading, though it has in fact a monopoly of the supply of electricity. It also buys and sells electrical appliances and performs for reward services by way of installing and repairing such appliances in competition with other persons and bodies selling and servicing such appliances. [60] It is clear that a corporation's activities must show some indicia of trade in order to be characterised as trading activities, and that trading activities are not limited to mainstream commercial activities, nor are they inconsistent with the altruistic or charitable purposes of a corporation. [61] The analysis so far has revealed that the first respondent's activities are public welfare activities, funded by acquitted grants which do not produce a profit and which cover the first respondent's costs. The activities are not bought or sold. All of these factors are relevant to the determination of the jurisdictional question in this matter. ... [64] Our view is that the degree to which a commercial element is evident in an organisation's activities will contribute to the assessment that an activity is not a trading activity. In the activities of the first respondent, the commercial element of the activities is not nearly as apparent as it was in the curtailed commercial activities in St George and the commercial activities in Adamson . [65] In St George , Barwick CJ found that the Council was engaged in trading activities because it was involved in a limited market activity, namely, the selling of electricity under restrictions imposed by the Local Government Act 1919. [66] Here, however, it is apparent that the activities for which the funds are provided by DADHC and DOCS do not occur in a commercial market setting or even a curtailed market. The departments provide the funds to serve the best interests of disabled adults and young people. The funds that are paid are prospectively negotiated and, for the most part, prospectively paid. The requirement of the departments for the provision of the service is not price or cost sensitive, because the price or costs are not a major factor for the departments in the acquisition of the services. 53 Having regard to a consideration of the activities of the Association, the Full Court determined that, in light of the funding arrangements, the activities of the Association were properly to be understood as social welfare activities provided to target groups. Government funded the costs of the activities as part of its policies and obligations with respect to the disabled and young people. The activities were not of a commercial nature and could not be appropriately described as buying or selling at a profit or loss. Those factors resulted in the conclusion that the activities of the Association were not trading activities. 54 Reference should also be made to the judgment of Spender J of the Federal Court in Australian Workers' Union of Employees, Queensland v Etheridge Shire Council [2008] FCA 1268. In this case the issue was whether the Shire Council, as a Local Government body, was a trading or financial corporation to which s 51(xx) of the Constitution applied. 55 After analysing the decision of the High Court in the St George County Council case, Spender J then turned to the judgment of Toohey J in Western Australian Cricket Association. At par [72] his Honour noted that Toohey J had summarised the position up until 1986 stating, at p 20: The last few years have seen several decisions, particularly by the High Court, in which the notion of a trading corporation has been examined. It is not my intention to refer to those decisions in great detail but rather to state the principles that appear to emerge from them and then to apply those principles to the facts of the present case. (1) The mere fact that a corporation trades does not mean that it is a trading corporation: R v Trade Practices Tribunal ; Ex parte St George County Council (1974) 2 ALR 371 ; 130 CLR 533 at 543, 562 ( St George County Council ); R v Federal Court of Australia ; Ex parte WA National Football League (1979 ) 23 ALR 439 ; 143 CLR 190 at 219, 234 ( Adamson ) . (2) The purpose of incorporation, propounded in St George County Council, is no longer a valid test. The test is one of the current activities of the corporation: Adamson and State Superannuation Board v Trade Practices Commission (1982) 44 ALR 1; 57 ALJR 89 at 96 ( State Superannuation Board ). (3) But the current activities test is not the sole criterion for determining whether a corporation is a trading corporation. Thus where a corporation has not begun to trade, its character may be found in its constitution. Even when there are current activities, the corporation's constitution is not completely irrelevant: Fencott v Muller (1983) 46 ALR 41; 152 CLR 570 at 602. (4) Views as to the necessary extent of trading activity have varied. It must be a substantial corporate activity (Barwick CJ in Adamson (143 CLR at p 208); the trading activities must form a sufficiently significant proportion of the corporation's overall activities (Mason J in Adamson at p 233, with Jacobs J concurring at p 237); the trading activities should not be insubstantial (Murphy J in Adamson at p 239); the corporation must carry on trading activities on a significant scale (Mason, Murphy and Deane JJ in State Superannuation Board (57 ALJR at p 96; Deane J in Commonwealth v Tasmania (1983) 46 ALR 625 at 833). (5) An incorporated sporting body can be a trading corporation if its activities meet the required test ( Adamson ). (6) In particular, incorporation under a statute such as the Associations Incorporation Act does not prevent a corporate body from being a trading corporation if its activities warrant that description (Adamson at p 232). (7) Trading denotes the activity of providing, for reward, goods or services: Re Ku-ring-gai Co-operative Building Society (No 12) Ltd 1978) 22 ALR 621 at 624-5; St George County Council (130 CLR at 569–70) Bevanere Pty Ltd v Lubidineuse (1985) 59 ALR 334; 7 FCR 325 at 330–1. (8) The Trade Practices Act itself draws a distinction between trading corporations and financial corporations; nevertheless the two classes are not mutually exclusive: State Superannuation Board (57 ALJR) at p 96 . 56 Spender J then satisfied himself that the proper test was to focus upon the activities of the corporation but noted that, in the St George County Council case, Barwick CJ and Gibbs J "thoroughly rejected the contention that a corporation which to any extent engages in trade is a trading corporation". His Honour proceeded to enquire whether the Shire Council was a trading corporation but considering whether, on the evidence, the predominant and characteristic activity of the Shire Council was trading whether in goods or services. In that enquiry, it was necessary to have regard not only to whether the predominant and characteristic activity of the Council was trading or finance but also, (as indicated by Barwick CJ in St George County Council), the extent of that activity and its relative significance in the affairs of the Shire Council. 57 Spender J then conducted an exhaustive analysis of the Shire Council as a Local Government entity and at par [115] noted that the activities of Local Government were funded in part by grants from a number of sources, including the fact that the State of Queensland was entitled to receive amounts from time-to-time from the Commonwealth under the Local Government Financial Assistance Act 1995 for Local Government purposes. The Local Government Financial Assistance Act provided for the establishment and operation of a Local Government Grants Commission to make recommendations to the Minister about the allocation of the amounts to and among Local Governments. The Local Government Financial Assistance Act dealt specifically with business activities to be conducted and referred to trading in goods and services to clients, including the provision of cleansing services, water and sewerage services, off-street parking and cultural, sporting and recreational facilities. Spender J noted that those services constituted a bracket of core services and facilities traditionally provided by municipal corporations in Australia and were not necessarily charged on a fee for serve basis although there could be arrangements for the provision by other entities whether governmental or non-governmental. The Local Government Financial Assistance Act required "competitive neutrality as a principle in the conduct of competitive business activities". Having regard to the evidence, his Honour, at par [130] stated that the evidence established that the Shire Council engaged in "some activities which might be described as 'trade' as broadly defined". 58 In considering the evidence, Spender J noted the joint judgment of Mason, Murphy and Deane JJ in The State Superannuation Board v Trade Practices Commission (1982) 150 CLR 282 at 330, namely, that the decision in Adamson (the W A National League case) was important for two reasons: firstly, the majority of the court rejected the argument that the purpose for which a corporation is formed is the sole or principal criterion of its character as a trading corporation. His Honour took this passage to indicate that the purpose which a corporation was formed was not the "sole" or "principal" criterion for the purposes of characterisation but suggests that the purpose of the formation of a corporation is not irrelevant to that process. In considering the functions of the Shire Council, being the legislative and administrative responsibility as a Local Government for a Local Government area, his Honour stated that it was impossible to conclude that the Shire Council was a trading corporation. All of the evidence said to reflect the trading activities of the Council, including the road works aspects of those activities, "entirely lack the essential quality of trade". His Honour noticed that most of the activities ran at a loss and were directed, in his view, to public benefit objectives within the Shire. Their scale, even in monetary terms, was so inconsequential and incidental to the primary activity and function of the Council as to deny the Shire Council the characterisation of a "trading corporation". 59 These cases direct attention to the activities test but also indicate that particular circumstances may permit, in the application of that test, consideration of other aspects including profit making and the purpose of the entity. In relation to Carenne, the trading activities identified are the transport services paid for by the Department. Those transport services are not provided as part of a general transport business or bus service operating with an eye to profit and in a commercial context but are provided as part of the philanthropic or charitable purpose for which Carenne was established. Carenne's usual income is substantially derived from fundraising and donations: indeed, the provision of at least one of the buses was due entirely to fundraising and donations made by other charitable organisations. On the evidence the only way that the transport service is made available is because of the payments made by DET in furtherance of Government's general welfare objectives. Carenne itself charges nothing for the service but receives a fee to enable it to provide the service. It is difficult to think of a business involving trade and/or commerce where somebody else pays for the provision of service but the recipients of the service pay nothing for it. On this analysis the activities of Carenne are properly described as the provision of charitable services for the disabled community and are not provided as part of "trade". 60 This categorisation of the services provided by Carenne is further supported by the following facts: the objects set out in cl 3 of the Constitution; it enjoys certain taxation status because it is a public benevolent institution; its holding of an authority to fundraise under the Charitable Fundraising Act, and, it is established under its Constitution as a non-profit organisation. The circumstances of Carenne show the existence of many similarities with the operations considered in Hillman and by the Federal Court in E v The Red Cross. In the Red Cross case, Wilcox J dealt with two aspects of the corporation: the blood transfusion operation for which no fee was charged but which was substantially subsidised by Government and a significant sum of $2m raised from the sale of goods even though they occurred through opportunity shops etc. Those selling activities were held to be sufficiently significant to qualify the corporation as a trading corporation but his Honour held it was clear that, in supplying blood to hospitals for administration to patients, the corporation acted gratuitously and that the supply of blood was not an act in "trade or commerce". In discussing the R v Trade Practices Tribunal; Ex parte St George County Council, his Honour stated: In re Duty on a State of Incorporated Council of Law Reporting of England and Wales (1888) 22 QVD at 293, Lord Coleridge CJ said of the phrase 'established for any trade or business' that 'it is not essential to the carrying on of a trade that the person engaged in it should make, or the desire to make, a profit by it. ... It is the acts of buying and selling that are at the very heart of the trade; as Lush J said in Higgins v Beauchamp [1914] 3 KB 1192 at 1195, 'a trading business is one which depends on the buying and selling of goods'. The word 'trade' was said by their Lordships in Commissioner of Taxation v Kirk [1900] AC 588 at 592, to mean primarily 'traffic by way of sale or exchange or commercial dealing'. The Shorter Oxford English Dictionary gives, as meaning of 'trade', 'the carrying on of trade; buying and selling; commerce; trade, traffic'. 61 Wilcox J then dealt with a submission that the application of the principle set out in the cases cited meant that account should be taken of the blood supply activities of the corporation. Of this submission, his Honour stated: The applicant accepts that neither the respondent makes any charge for the blood that it supplies. Neither 'trades' in blood in the usual sense of that term. But, say counsel, the reality is that the blood transfusion activities of the respondent constitutes substantial businesses by which they supply valuable commodities, blood and blood products, in return for large payments. In the year 1984-1985, the Society (including its divisions) received from Governments a total of $44,965,328 in respect of its blood transfusion services. Of this, the New South Wales division received more than $10m ... these were, of course, substantial sums. They were earned only because the respondents are prepared to carry on a blood transfusion service at a scale, in terms of labour and resources, greater than that of many organisations which are undoubtedly 'trading corporations'. But I do not think it is appropriate to describe the gratuitous provision of a public welfare service, substantially at government expense, as a the conduct of a 'trade'. It is pertinent to recall the words of Stephen J in St George County Council, ' it is the acts of buying and selling that are at the very heart of trade', and also to remember the distinction he made in respect of the distribution of electricity free of charge. In relation to the supply of blood, it seems to me that the first and second respondents do not engage in trading activities. They engage in a major public welfare activity pursuant to agreements with the Commonwealth and the various State Governments under which they will be reimbursed most of their costs. 62 The transport services supplied by Carenne are not transport services supplied in any commercial sense. Carenne does not have, separate from its charitable operations, a trading arm that engages in the supply of transport facilities either generally or for a particular category of the population, namely, disabled students in the Bathurst region. It is not in competition with other providers of such services in any real sense but in substance is the recipient of a Government grant to assist disabled children in the region to travel between their home and school. In every sense that service is a funded welfare activity and in the words of Spender J in the Etheridge Shire Council case, these activities entirely lack the essential quality of trade. The similarities between the operations of Carenne and the operations considered in Hillman, The Red Cross and the Etheridge Council cases leads to the conclusion that Carenne is not a trading corporation and that finding, in turn, results in the Commission having jurisdiction to hear Mr Carter's application for unfair dismissal. 63 If, on the other hand, the provision of the transport services through the DET contract could be regarded as trading activities, contrary to the above analysis, it is still to be borne in mind that Barwick CJ in The Western Australian National Football League case (Adamson) stated that a corporation would satisfy the description of a trading corporation if trading was a substantial corporate activity. Once it was found that trading was 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 "was open". The last two words are important. In the present case, the amounts received under the contract have become the largest source of revenue for Carenne but that factor alone would not be sufficient to lead to the conclusion that Carenne was a trading corporation. All the surrounding circumstances of that contract and the nature of the service supplied by the Carenne would still be available to be weighed in determining whether Carenne could be properly categorised as a trading corporation. The balance of those considerations, referred to earlier, would not qualify Carenne as a trading corporation. 64 It may be accepted, as a general proposition, that being a non-profit organisation will not be conclusive in determining whether the corporation is a trading corporation for the purposes of the Constitution. In the present case that objective appearing in the Constitution, together with the other evidence as to its activities, is, however, significant. It is also relevant that the founders established Carenne as a company limited by guarantee. Again, that class of company is not determinative of the issue of whether or not such a body is a training corporation but there are such limitations and inflexibilities associated with such incorporation, together with other evidence, to strongly indicate that Carenne is not a trading corporation. The distinguishing feature of a company limited by guarantee from a company limited by shares is that a company limited by guarantee does not have power to issue shares. In Ford's Principles of Corporation Law par (5.090), the authors state: Guarantee companies cannot increase or reduce the amount of the guarantee either by amendment or by agreement with the members, and this inflexibility makes them unsuitable for any venture whose capital needs are likely to change ... For a non-trading association, such as a professional association, which desires the advantages of incorporation and limited liability the guarantee company provides an option alongside the other possibility that the association might be incorporated under state associations incorporation legislation. As an example, the Australian Society of Certified Practising Accountants is a company limited by guarantee incorporated in the Australian Capital Territory. ... There is no legal bar to a company limited by guarantee earning and distributing profits. ... Section 150 presupposes that unless restricted by its constitution a company limited by guarantee may make distributions to its members. But because of its inflexible capital structure it is not usually suitable for trading activities. On occasion it has been used for trading purposes in tax minimisation schemes: see, for example, Federal Commissioner of Taxation v Slater Holdings Ltd (1984) 156 CLR 447 .. . 65 In Halsburys, Laws of Australia dealing with the classification of companies, in par [120-1215], the following comment is made in relation to companies limited by guarantee: The public company limited by guarantee was introduced by the (UK) Companies Act 1862 (Repealed). Like the company limited by shares this type of company limits the liability of a member to a fixed amount: the amount of the guarantee. The guarantee is only called in a winding-up situation. ... The company limited by guarantee is an unusual form for a business company because of the inflexibility of the guarantee. A public company limited by guarantee does not have the power to issue shares. The members cannot agree to increase or decrease the guarantee if capital needs change. Also, the guarantee is not an asset of the company and therefore cannot be charged. 66 Having considered all these matters in the context of the activities test and the principle laid down in numerous authorities, the Commission is unable to conclude that Carenne is a trading corporation such that, by operation of s 16(1) of the Workplace Relations Act, this Commission lacks jurisdiction to deal with Mr Carter's application for reinstatement. It follows that the respondent's Notice of Motion is dismissed. ORDERS 67 The Commission makes the following orders: (1) The Notice of Motion filed by Carenne Support Ltd on 31 March 2009 is dismissed. (2) The costs of the motion are reserved. (3) The parties are to confer in relation to setting a timetable for the filing of further evidence and the hearing of the substantive application. 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.