1
Fair Work Act 2009
s.604 - Appeal of decisions
Dr Kwee Lim
v
Trade & Investment Queensland
(C2016/1633)
DEPUTY PRESIDENT GOSTENCNIK
DEPUTY PRESIDENT KOVACIC
COMMISSIONER SPENCER
MELBOURNE, 15 NOVEMBER 2016
Appeal against decision [2016] FWC 4174 of Hunt, C at Brisbane on 8 July 2016 in matter
number AB2016/365; whether Respondent conducting or undertaking a constitutionally-
covered business; permission to appeal granted; appeal upheld; decision quashed; matter
remitted to Commissioner to rehear.
[1] Dr Kwee Lim (Appellant) is an employee of Trade & Investment Queensland
(Respondent) and has been since 17 April 2000. The Appellant is employed as the
Respondent’s Principal Trade and Investment Officer. On 11 April 2016, the Appellant made
an application, pursuant to s.789FC of the Fair Work Act 2009 (Act) for the Fair Work
Commission (Commission) to make an order under s.789FF of the Act to prevent the
Appellant from being bullied at work by an employee of the Respondent.
[2] The Appellant’s anti-bullying application was heard and determined by Commissioner
Hunt, who issued a decision on 8 July 20161 (Decision) in which the Commissioner dismissed
the application having concluded that the Commission did not have jurisdiction to determine
the Appellant’s application because the Respondent is not a trading corporation and is
therefore not conducting a constitutionally-covered business within the meaning of the Act.2
[3] On 14 July 2016, the Appellant lodged an appeal against the Decision.
[4] The Decision, the subject of the appeal was made under Part 6-4B of the Act. There is
no right to appeal under s.604 of the Act, and an appeal may only be made with the
permission of the Commission. Subsection 604(2) requires the Commission to grant
permission to appeal if satisfied that it is “in the public interest to do so”. Permission to
appeal may otherwise be granted on discretionary grounds.
1 [2016] FWC 4174.
2 ibid at [70]-[71].
[2016] FWCFB 6615
DECISION
E AUSTRALIA FairWork Commission
[2016] FWCFB 6615
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[5] The task of assessing whether it is in the public interest to grant permission to appeal
is a discretionary one involving a broad value judgment.3 In GlaxoSmithKline Australia Pty
Ltd v Makin4 a Full Bench of the Commission identified some of the considerations that may
attract the public interest:
“... the public interest might be attracted where a matter raises issues of importance and general
application, or where there is a diversity of decisions at first instance so that guidance from an
appellate court is required, or where the decision at first instance manifests an injustice, or the
result is counter intuitive, or that the legal principles applied appear disharmonious when
compared with other recent decisions dealing with similar matters.”5
[6] Other than the special case in s.604(2), the grounds for granting permission to appeal
are not specified. Considerations which have traditionally been treated as justifying the grant
of permission to appeal include that the decision is attended with sufficient doubt to warrant
its reconsideration and that substantial injustice may result if leave is refused.6 It will rarely be
appropriate to grant permission to appeal unless an arguable case of appealable error is
demonstrated. This is so because an appeal cannot succeed in the absence of appealable
error.7 However, the fact that the Member at first instance made an error is not necessarily a
sufficient basis for the grant of permission to appeal.8
[7] The Notice of Appeal lodged by the Appellant sets out the following grounds of
appeal. The Appellant contends that the Commissioner erred:
“ by irrelevantly considering (although acknowledging it was not directly relevant) at
paragraph [60] that the Respondent could not undertake its activities without
government funding;
in finding at paragraph [61] that rental income received by the Respondent did not
constitute trading activities;
at paragraph [64] by:
(a) applying the wrong test of ‘convenience to the public’ after having
properly set out the test at paragraph [20] to the Decision, including by
reference to R v Trade Practices Commission; Ex parte St George Council
(1974) 130 CLR 533;
(b) taking into account an irrelevant consideration, and failing to give any,
or any adequate, reasons, in finding that the activities of the respondent in
paragraphs [63] were ‘peripheral activities’ and not trading activities; and
3 O’Sullivan v Farrer (1989) 168 CLR 210 per Mason CJ, Brennan, Dawson and Gaudron JJ; applied in Hogan v Hinch
(2011) 85 ALJR 398 at [69] per Gummow, Hayne, Heydon, Crennon, Kiefel and Bell JJ; Coal & Allied Mining Services Pty
Ltd v Lawler and others [2011] FCAFC 54 at [44] – [46].
4 (2010) 197 IR 266.
5 ibid at [27].
6 Also see CFMEU v AIRC (1998) 89 FCR 200 at 220; and Wan v AIRC (2001) 116 FCR 481 at [26].
7 Wan v AIRC (2001) 116 FCR 481 at [30].
8 Lawrence v Coal & Allied Mining Services Pty Ltd t/as Mt Thorley Operations/Warkworth [2010] FWAFB 10089 at [28],
202 IR 288, affirmed on judicial review in Coal & Allied Mining Services Pty Ltd v Lawler (2011) 192 FCR 78; NSW Bar
Association v Brett McAuliffe; Commonwealth of Australia represented by the Australian Taxation Office [2014] FWCFB
1663 241 IR 177 at [28].
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(c) failing to give any, or any adequate reasons for a finding that visa
application free payments in paragraph [63] did not constitute trading activities
in finding at paragraph [65] that sponsorship did not constitute trading activities
(there was, for example, no assessment undertaken like that in Hughes v The WACA
69 ALR 660);
at paragraph [67] by:
(a) applying the wrong test of whether the respondent had ‘adequately
discharged its differentiation from the circumstances found by the High Court
to determine that Queensland Rail is a trading corporation’;
(b) failing to expressly determine whether the respondent was a
constitutionally-covered business;
(c) taking into account an irrelevant consideration that the respondent was
‘not required by statute to operate on a commercial basis’; and
(d) failing to take into account the relevant consideration of the revenue
derived by the respondent through the activities in paragraphs [61] and [63] to
[65].”9
[8] The sixth ground of appeal alleges a denial of procedural fairness and that ground is
only pressed if we are against the Appellant in respect of the primary grounds of appeal
noted.10
[9] The Appellant submits that the appeal raises the important question of the
Commission’s jurisdiction to deal with applications for orders to stop bullying which is a
matter of general and public interest.11 It says further that permission to appeal should be
granted as the anti-bullying jurisdiction is of critical importance to employees, employers and
the community at large.12 The Respondent takes a contrary position and submits that the
grounds of appeal raised by the Appellant reveal no appealable errors and the Commission did
not fail to exercise its jurisdiction.13
[10] It is sufficient for present purposes to note that the gravamen of the various grounds
relied upon by the Appellant is that the Commissioner erred in concluding that the
Respondent is not relevantly a trading corporation and therefore is not conducting or
undertaking a constitutionally-covered business within the meaning of the Act.
[11] The Commissioner’s reasoning is captured in the passages of the Decision extracted
below:
9 Appellant’s Outline of Submissions dated 12 August 2016 at [2] – [7]
10 ibid at [8].
11 ibid at [44].
12 ibid.
13 Respondent’s Outline of Submissions dated 31 August 2016 at [19].
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“[60] The international exposure of businesses in Queensland is an important responsibility of
TIQ. Without funding from the State Government, the activities could not be undertaken. This
matter is not, however, a direct relevant consideration in determining whether TIQ is a trading
corporation or not.
[61] The income from activities undertaken by TIQ in the 2014/2015 financial year is
$1,742,000. Approximately one third of that income is rent reimbursement from other
agencies, where TIQ is the landlord of the rented premises. I do not consider that
arrangement to constitute trading activities. It is understandable that owners of premises
would wish to enter into a lease with one foreign entity, TIQ, and not with various
organisations some of which may not have corporate entities.
[62] It is expected that organisations, whether trading corporations or not, will hold cash
balances in bank accounts. I do not consider the sum of $133,000 in the relevant year to assist
K.L.’s argument that TIQ is a trading corporation.
[63] On TIQ’s evidence, the amount of $633,000 representing Sundries is largely payment
from individuals through a Commonwealth visa application procedure, administered by TIQ.
It is TIQ’s evidence that it administers this scheme for the benefit of the Commonwealth, and
does so at a loss when the wages of employees required to administer the scheme is taken into
consideration. Included in the amount of $633,000 are nominal payments on a cost-recovery
basis made to TIQ when individuals are included in a ministerial visit overseas.
[64] I do not consider that these activities constitute trading activities. If these activities
can be regarded as trading activities, I do not consider their contribution to TIQ’s revenue to
be of any substantial consideration. They are peripheral activities. The activities are largely
undertaken for convenience to the public; in particular, if the visa activities were no longer
undertaken by TIQ, it would not be necessary to incur the cost of approximately $800,000 per
annum to undertake the activity.
[65] I do not consider the activities represented in the accounts as ‘Industry Contribution’
($143,000) and ‘Other’ ($250,000) as trading activities. The Industry Contribution income is
largely event-cost minimisation through sponsorship. A sponsor agreeing to subsidise the cost
of an industry event does not, in my view, constitute a trading activity to equate to TIQ being
considered a trading corporation.
[66] The contribution of $250,000 was a grant of a Commonwealth department. It does not
constitute a trading activity.
[67] The activities undertaken by TIQ pursuant to its statutory responsibilities are vastly
different to the statutory responsibilities of Queensland Rail. TIQ is not required by statute to
operate on a commercial basis, and is not required to remit dividends to Queensland Treasury,
nor pay an equivalent amount of taxation. I am satisfied TIQ has adequately discharged its
differentiation from the circumstances found by the High Court to determine that Queensland
Rail is a trading corporation.
[68]In the two cases cited by K.L., the activities of the Society, and those of the Board are
easily distinguished. In the case of the Society, a significant enough portion of its revenue was
generated through public appeals, the sale of merchandise, sale of equipment, training and
other activities. In the case of the Board, commercial arrangements were entered into to sell
and service fire sprinkler systems and alarms, generating $8 million in sales. The activities of
TIQ do not in any way reflect the activities undertaken by the Society or the Board.
[69] I do not agree with the submissions of K.L. at paragraph [59]. It is argued that
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because the anti-bullying jurisdiction is in place to prevent further or future bullying, I should
find that because TIQ has the capacity to charge clients on a fee-for-service basis, it could
constitute a trading corporation. While I have regard for the capacity of TIQ to charge on a
fee-for-service basis, it presently does not do so, and could not be said to be a trading
corporation on the basis of speculative activities.”14 [Endnotes omitted]
[12] As we have already mentioned, the principal application to which this appeal relates
was for an order under s.789FF of the Act.
[13] The application raised for determination the question whether the Respondent
conducts a constitutionally covered business within the meaning of s.789FD of the Act and
necessarily required a consideration of whether the Respondent is a constitutional corporation,
that is, a corporation to which paragraph 51(xx) of the Commonwealth of Australia
Constitution Act 1900 (Constitution) applies. Subject to the constraints in s.51 and the
Constitution, that paragraph empowers the Parliament to make laws with respect to “[F]oreign
corporations, and trading or financial corporations formed within the limits of the
Commonwealth”. The determination of whether the Respondent is a constitutional
corporation relevantly required a consideration of whether the Respondent is a trading
corporation.
[14] The Respondent is a body corporate established by s.7 of the Trade and Investment
Commission Act 2013 (TIQ Act).
[15] The functions and powers of the Respondent are enumerated in ss.10 and 11 of the
TIQ Act respectively as follows:
“10 Functions
(1) TIQ has the following functions—
(a) to facilitate, encourage, promote, identify, attract and develop trade
and investment opportunities;
(b) to assist, directly or indirectly, entities in relation to trade and
investment opportunities;
(c) to promote, or participate in or coordinate projects to promote trade
and investment opportunities;
(d) to obtain, and make available to entities, information relating to
existing or future trade and investment opportunities;
(e) to conduct research into, and analysis of, trade and investment
opportunities;
(f) to work collaboratively with public sector units and other entities in
relation to increasing trade and investment opportunities;
(g) to develop and administer schemes in relation to export markets and
foreign direct investment;
(h) to facilitate access by persons to Commonwealth and State entities if
that access is likely to enhance trade and investment opportunities;
(i) to undertake trade missions for purposes in relation to TIQ's functions;
14 [2016] FWC 4174 at [60] – [69].
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(j) to establish and administer offices in foreign countries for purposes in
relation to TIQ's functions;
(k) to act outside Australia as agent for the State if requested by the
Minister;
(l) to advise the Minister about the functions mentioned in paragraphs (a)
to (k);
(m) to provide policy advice to the Minister in relation to trade and
investment opportunities;
(n) anything else likely to complement or enhance a function mentioned
under this section;
(o) to perform functions of the type to which paragraph (n) applies and
given to TIQ in writing by the Minister;
(p) any other function given to it under an Act.
(2) In this section—
trade and investment opportunities means trade, investment and other
commercial opportunities in Queensland and between Queensland and other
States or foreign countries.
11 Powers
TIQ has all the powers of an individual and may, for example—
(a) enter into contracts or agreements; and
(b) acquire, hold, deal with, and dispose of, property; and
(c) appoint agents and attorneys; and
(d) engage consultants and researchers; and
(e) charge a fee for services and other facilities it supplies; and
(f) do anything else necessary or convenient to be done in performing its
functions.”
[16] According to the Respondent’s “Statement of Comprehensive Income for the year
ended 30 June 2015”15 (Income Statement) set out in its 2014 – 2015 annual report, during
that period it received income from continuing operations in the amount of $33,546,000 of
which $32,197,000 was derived from grants and other contributions. These grants and other
contributions consisted of a recurrent grant from the Queensland government of $31,533,000,
contributions from the Commonwealth of $271,000, contributions of $143,000 from industry
and other contributions amounting to $250,000.
[17] The balance of income was made up of $583,000 received in “User Charges and fees”
and $766,000 described as other revenue.
[18] According to the evidence before the Commissioner, the contributions of $143,000
from industry was earned from sponsorship arrangements for some of the various business
and networking events organised by the Respondent and the sponsorship income was said to
help offset the cost of hosting the various events.16 Part of the “other revenue” described in
15 AB 224.
16 AB 28, PN77.
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the Income Statement included an amount of $133,000 as interest earned from a number of
bank accounts held by the Respondent in various jurisdictions The Respondent also
administers a scheme said to be on behalf of the Department of Immigration and Border
Protection enabling business and skilled migrants to reside and work in Queensland for which
it charges an application fee of between $200 and $750 for each application processed
through the scheme.17 The charging of an application fee in connection with the scheme
generated income in the amount of $633,00018 which is the balance of the $766,000 described
as “other revenue” in the Income Statement. The cost of administering the scheme to the
Respondent was said to be in the order of approximately $800,000.19
[19] The income in the amount of $583,000 received by the Respondent and described in
the Income Statement as “User Charges and fees” is wholly attributable to rental income.20
According to the evidence before the Commissioner, the Respondent maintains 13
international offices across 11 countries.21 The Respondent was described as the “landlord” of
those premises and it entered into sub-tenancy arrangements with other Queensland
government agencies, “sister” state government agencies and some universities in respect of
premises which it had leased in order to defray the cost of rental that it paid for the premises.22
[20] The sum of this income was in the order of $1,492,000 and represented approximately
4.45%23 as a portion of the Respondent’s total income of $33,546,000 for the financial year
ending 30 June 2015.
[21] A corporation may be a trading corporation within the meaning of paragraph 51(xx) of
the Constitution if it is constituted for the purposes of engaging in, or its purpose is to engage
in trading activities.24A corporation may also be a trading corporation if it engages in trade or
trading activities.25 As Gageler J observed in Communications, Electrical, Electronic, Energy,
Information, Postal, Plumbing and Allied Services Union of Australia v Queensland Rail26 the
constitutional description of trading corporation as capable of applying to a corporation – by
reference to its trading purpose or alternatively by reference to its trading activity – must each
be qualified to exclude that which is insubstantial.27 There is no bright line delineating a body
17 AB 29, PN88.
18 AB 29, PN87.
19 AB 29, PN88.
20 AB 27, PN 8.
21 AB 27, PN59.
22 AB 27, PN59 – PN65.
23 This figure is rounded to 2 decimal places. The actual percentage is 4.44762%
24 Communications, Electrical, Electronic, Energy, Information, Postal, Plumbing and Allied Services Union of Australia v
Queensland Rail (2015) 256 CLR 171 at 189 [41]; Fencott v Muller (1983) 152 CLR 573.
25 Communications, Electrical, Electronic, Energy, Information, Postal, Plumbing and Allied Services Union of Australia v
Queensland Rail (2015) 256 CLR 171 at 189 [42]; United Firefighters’ Union of Australia v Country Fire Authority
(2015) 228 FCR 497; and Bankstown Handicapped Children's Centre Association Inc and Anor v Hillman (2010) 182
FCR 483; R v Federal Court of Australia; Ex parte Western Australian National Football League Inc (1979) 143 CLR
190; The Commonwealth v Tasmania (1983) 158 CLR 1.
26 (2015) 256 CLR 171.
27 ibid at 199 [69].
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corporate that is a trading corporation and one that is not.28 The characterisation of a body
corporate as a trading corporation is a matter of fact and degree.29
[22] So far as a consideration of a corporation’s activities in assessing whether a
corporation is a trading corporation is concerned, a Full Court of the Federal Court in United
Firefighters’ Union of Australia v Country Fire Authority30 opined a framework for
addressing the activities of the CFA.31 This involved first, considering in general terms how
the question of a corporation’s activities is to be approached.32 Secondly, considering the
legislation as in force at the relevant time which governed the body corporate.33 Thirdly,
considering separately the revenue producing activities of the body corporate which were in
issue, noting that it would be necessary to also consider those activities cumulatively.34
Fourthly, considering the central issue of whether or not the body corporate was a trading
corporation within the meaning of paragraph 51(xx) of the Constitution, noting that this is a
matter of characterisation and that no single consideration requires a conclusion that a
corporation is, or is not, a trading corporation.35
[23] In considering the general approach to the charactisation of a corporation’s activities,
the Court in CFA adopted the following approach:
“ …
69. In Adamson, Barwick CJ at 211 referred to certain activities, which he had listed, as
being essentially commercial in nature and which emphasised the trading quality of the
manner in which the Club and the League in that case promoted Australian Rules Football.
Justice Mason at 235 listed certain activities of the two Leagues and said that he treated all of
those activities which he had listed and which produced revenue as trading activities. His
Honour did not limit the concept of trading to buying and selling at a profit; it extended to
business activities carried on with a view to earning revenue.
70. Further, in Bankstown at [48]-[50], a Full Court of this Court accepted the following
propositions as to the meaning of the word “trading” in the constitutional expression “trading
corporation”, adopting the summary of the principles by Steytler P in Lawrence (No 2) at [68]:
(i) In this context, “trading” is not given a narrower construction. It extends beyond
buying and selling to business activities carried on with a view to earning revenue,
and includes trade in services.
(ii) The making of a profit is not an essential prerequisite to trade, but it is a usual
concomitant. This was explained by the Full Court in Bankstown at [49].
28 Bankstown Handicapped Children's Centre Association Inc and Anor v Hillman (2010) 182 FCR 483 at 511 [52].
29 Quickenden v O'Connor and others (2001) 109 FCR 243 at 261 [52].
30 (2015) 228 FCR 49.
31 ibid at 513 [67].
32 ibid at 513 [68].
33 ibid at 513 [72].
34 ibid at 519 [91].
35 ibid at 524 [132].
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(iii) The ends which a corporation seeks to serve by trading are relevant (sic)36 to its
description. Consequently, the fact that trading activities are conducted in the
public interest or for a public purpose will not necessarily exclude the
characterisation of those activities as “trade”.
(iv) The commercial nature of an activity is an element in deciding whether the activity is
in trade or trading.37”
[24] Having regard to the above, we consider that the Commissioner erred in her
consideration and charactisation of several of the activities of the Respondent. Our reasons for
that conclusion follow.
[25] First, as to the issue of rental income, the Commissioner concluded:
“[61] The income from activities undertaken by TIQ in the 2014/2015 financial year is
$1,742,000. Approximately one third of that income is rent reimbursement from other
agencies, where TIQ is the landlord of the rented premises. I do not consider that arrangement
to constitute trading activities. It is understandable that owners of premises would wish to
enter into a lease with one foreign entity, TIQ, and not with various organisations some of
which may not have corporate entities.”38
[26] The Appellant submitted it is well established that the charging of rent to another
entity to occupy premises is a trading activity.39 He submitted the fact that the tenants may be
either directly or tangentially related to the Respondent does not alter the nature of the
transaction.40
[27] The Respondent submitted that the Commissioner, in concluding that the revenue the
Respondent received from being a landlord to other government agencies and some
universities "did not constitute trading activities", was doing no more than considering
whether such activities formed a significant proportion of its overall activities as to meet the
description of a trading corporation.41
[28] The Respondent’s submission cannot be accepted. First, the Commissioner expressly
concluded that the activity did not constitute “trading activities”. Secondly, consideration of
the significance of the activity relative to a corporation’s overall activities arises only if it is
first concluded that the activity is a trading activity. So much is clear from the authorities, for
example in CFA where the Court said:
“136 Answering that question does not simply involve the application of a formula or
equation nor the substitution of percentages or other measures of monetary value as
between the activities found to be trading activities and the activities not so found. The
purpose for which a corporation is formed is not the sole or principal criterion of its
36 This is clearly a typographical error in the reported judgement and should read "irrelevant" as is clear from the text of the
judgments in Bankstown and Lawrence to which reference is made and contextually from the sentence which follows.
37 (2015) 228 FCR 497 at 513 [69]-[70].
38 [2016] FWC 4174 at [61]
39 Relying on Quickenden v O’Connor (2001) 109 FCR 24.
40 Referring to United Firefighters’ Union of Australia v Country Fire Authority (2015) 228 FCR 497 at 523 [119]-[121]
where the Court found no error in the primary judges conclusion that renting premises to employees at a discounted rate was
a trading activity.
41 Respondent’s Outline of Submissions dated 31 August 2016 at [28].
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character as a trading corporation and the Court looks beyond the “predominant and
characteristic activity of the corporation.” We refer again to the nature and the extent
or volume of a corporation’s activities needed to justify its description as a trading
corporation. The relationship between the activities relied upon and the overall
activities of the corporation, and the extent of those activities in comparison with the
extent of the corporation’s activities overall are relevant. In our opinion, this was the
approach taken by the primary judge.42”
[29] The Respondent also submitted that the only evidence of income from rent was from
the Respondent's leasing of property and the defrayal of property costs by sub-leasing
property to other government entities and some universities.43 As a percentage, it represented
1.7% of the Respondent's total revenue.44 There was no evidence that the Respondent
conducted any investment activities with land, or that the Respondent bought and sold
properties as a business, or that Respondent received interest or dividends from any property
investments. It submitted that there is no comparison with the underlying factual situation set
out in Quickenden v O’Connor45 such that the Respondent's "rental activities" could be
regarded as a substantial part of the Respondent's activities.46
[30] With respect, none of this speaks to the character of the activity undertaken, and
whether the sub tenancy activity was commercial in nature or a business activity carried on by
the Respondent with a view to earning revenue. The ends sought to be achieved by
undertaking the activity (to defray costs) does not deny an activity of the character of trading
if, having regard to the commercial nature of the activity from which the rental income is
derived, it may properly be regarded as a trading activity. Similarly, that the Respondent did
not further engage in investment activity with respect to land, does not strip the activity at
issue of its character. The assessment of the significance of the activity vis-à-vis TIQ’s overall
activity comes next.
[31] The basis for the Commissioner’s conclusion that the activity from which the rental
income was derived was not a trading activity is not clear to us. As we earlier observed, on
the evidence before the Commissioner, the Respondent maintains 13 international offices
across 11 countries.47 It entered into sub-tenancy arrangements with other Queensland
government agencies, “sister” state government agencies and some universities in respect of
premises which it had leased in order to defray the cost of rental that it paid for the premises.48
It received rental income from those sub-tenancy arrangements.
[32] Details of the sub-tenancy arrangements were not produced but it seems to us, on the
evidence, that the sub-tenancy activity is prima facie commercial in nature and carried on by
the Respondent with a view to earning revenue. To describe the arrangement as “rent
reimbursement” is, with respect, a misnomer. Moreover, the motive of the principal overseas
landlord in entering into the principal lease with the Respondent seems to us to be irrelevant
to identifying the character of the sub-tenancy activity.
42 (2015) 228 FCR 497 at 525 [136].
43 Respondent’s Outline of Submissions dated 31 August 2016 at [29].
44 ibid.
45 (2001) 109 FCR 24.
46 ibid at [30].
47 AB 27, PN59.
48 AB 27, PN59 – PN65.
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[33] In our view, the Commissioner did not focus on the character of the activity. In this
regard the Commissioner was in error.
[34] We turn next to consider the sponsorship activity. On this issue the Commissioner’s
consideration was as follows:
“[33] The amount of $143,000 was explained by Mr Bracegirdle as payment by sponsors
when TIQ holds business events and networking opportunities for exporters and investors. An
example was provided of KPMG sponsoring an event at a time when the G20, a global
economic summit was held in Brisbane. The event sponsorship helps to defray the cost of
holding events. Mr Bracegirdle’s evidence does not detail whether there was any surplus to the
event, and if so, if it was retained by TIQ.
. . .
[65] I do not consider the activities represented in the accounts as ‘Industry Contribution’
($143,000) and ‘Other’ ($250,000) as trading activities. The Industry Contribution income is
largely event-cost minimisation through sponsorship. A sponsor agreeing to subsidise the cost
of an industry event does not, in my view, constitute a trading activity to equate to TIQ being
considered a trading corporation.49”
[35] The Appellant submitted that sponsorship in this context is synonymous with
advertising.50 It is the payment by the sponsor to have their name associated with an event. In
this case the example was KPMG sponsoring an event at or around the time of the G20.
Income from such activities has long been accepted as trading.51 The Appellant maintained
the fact that sponsorship activity was conducted to help defray costs or on a cost recovery
basis is irrelevant.52
[36] The Respondent maintained that the Commissioner, in concluding that the sponsorship
revenue received by the Respondent was not trading activity, was doing no more than
considering whether such activity formed a significant proportion of its overall activities so
that the Respondent should be characterised as a trading corporation.53 For the reasons earlier
given, this submission cannot be accepted. It is contrary to the Commissioner’s actual
conclusion that the activity is not a trading activity.
[37] The Respondent also submitted that it provided evidence to the Commission which
demonstrated that its sponsorship revenue merely involved a contribution at a cost recovery
level towards the relevant events and the promotion of the relevant Free Trade Agreements.54
With respect, this goes to the ends sought to be achieved by undertaking the activity but says
nothing about its character.
[38] The Respondent also says that there was no evidence of the Respondent performing
activities in the manner designed to compete in a market for networking services.55 This
49 [2016] FWC 4174 at [33] and [65].
50 Applicant’s Oral Submissions dated 31 August 2016 at [5a].
51 Referring to the judgements in Adamson at 220 (Stephen J) and 234 (Mason J).
52 Applicant’s Oral Submissions dated 31 August 2016 at [5a].
53 Respondent’s Outline of Submissions dated 31 August 2016 at [40].
54 ibid at [41].
55 Ibid at [42].
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seems to us to be a very one dimensional view of the activity. Take for example, the KPMG
sponsorship. It is unlikely that KPMG was acting altruistically and sought no more than to
assist the Respondent to defray its costs of hosting an event. Doubtless, KPMG saw an
opportunity to promote its brand during the event. The Respondent facilitated this in return
for a fee, which presumably KPMG paid.
[39] It seems to us that the Commissioner was distracted in her assessment of the character
of the activity by a notion that it was “largely event-cost minimisation through sponsorship”.
The evidence before the Commissioner was that the Respondent holds business events and
networking opportunities for exporters and investors and seeks sponsorship for some of these
events, to help offset the costs.56 The Respondent’s motivation, namely that it seeks out
sponsorship arrangements for which it charges a fee for the purposes of minimising the costs
incurred in hosting events, does not speak to the character of the sponsorship arrangement.
Moreover, the conclusion that “a sponsor agreeing to subsidise the cost of an industry
event”57 is an activity not involving trading, finds no support in the evidence before the
Commissioner. There was no evidence in the form of any sponsorship agreement and no
sponsor was called to give evidence about how it became aware of the sponsorship
opportunity or the terms on which it had agreed to be a sponsor. At its highest the evidence
was that the Respondent “engaged the likes of KPMG to help sponsor a couple of business
lunches” and that the sponsorship defrayed the cost of running the lunches.58 In our view, the
Commissioner did not turn her attention to the actual character of the sponsorship activity and
in failing to do so, she was in error.
[40] We next turn to consider the income derived from fees paid for the processing of
certain Visa applications and fees paid for participation in overseas delegations. The
Commissioner gave consideration to this issue as follows:
“[36] An amount of $633,000 is recorded as sundry revenue. Mr Bracegirdle explained that
TIQ administers a scheme on behalf of the Commonwealth, and primarily for the Department
of Immigration and Border Protection. When foreign individuals seek to apply for business
visas and skilled migrant visas to work and reside in Queensland, Australia, TIQ administers
the Commonwealth scheme. Applicants are charged between $200 and $750 for each of those
applications, a charge set by the Commonwealth.
[37] TIQ employs the employees to administer the Commonwealth scheme. Mr Bracegirdle’s
evidence is that this is at an annual cost of around $800,000, and the report demonstrates an
income of $633,000. Mr Bracegirdle explained that the $633,000 also includes TIQ’s
coordination of ministerial missions overseas, and business delegates are charged a very small
participation fee when attending these overseas visits. Mr Bracegirdle explained that it is cost-
recovery only.
. . .
[63] On TIQ’s evidence, the amount of $633,000 representing Sundries is largely payment
from individuals through a Commonwealth visa application procedure, administered by TIQ.
It is TIQ’s evidence that it administers this scheme for the benefit of the Commonwealth, and
does so at a loss when the wages of employees required to administer the scheme is taken into
56 AB 28, PN77.
57 [2016] FWC 4174 at [65].
58 AB 29, PN78 – PN80.
[2016] FWCFB 6615
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consideration. Included in the amount of $633,000 are nominal payments on a cost-recovery
basis made to TIQ when individuals are included in a ministerial visit overseas.
[64] I do not consider that these activities constitute trading activities. If these activities can be
regarded as trading activities, I do not consider their contribution to TIQ’s revenue to be of
any substantial consideration. They are peripheral activities. The activities are largely
undertaken for convenience to the public; in particular, if the visa activities were no longer
undertaken by TIQ, it would not be necessary to incur the cost of approximately $800,000 per
annum to undertake the activity.59 [Endnotes omitted]”
[41] The Appellant submitted that the evidence before the Commissioner did not reveal
how much of the $633,000 could be apportioned to each activity; however the evidence
established that the participation fees were the fees charged to business people by the
Respondent to permit them to attend overseas delegations.60 The Appellant submitted that the
amounts paid are in consideration for the logistical services of arranging the trips and that the
exchange of money for the provision of a service on a voluntary basis falls within a
quintessential definition of trading activities.61
[42] The Appellant submitted further that so far as the $633,000 comprised income from
the processing of visa applications, this represents the performance of a service (the
processing of the application) in exchange for the payment of money.62 The Appellant
submitted the mere fact that the processing of the application may be required by law, does
not prevent the exchange being characterised as a trading activity and this is especially so
when it was a service operated by a corporate entity on behalf of the Commonwealth.63
[43] The Respondent accepted that the reason that a corporation engages in trading
activities, to the extent that the corporation may engage in trading activities for a public
purpose, does not necessarily exclude a corporation from meeting the description of a trading
corporation.64 It also accepted that the making of a profit, while a usual concomitant, is not
the essence of trading.65
[44] However, the Respondent submitted that the Commissioner correctly concluded that if
the Respondent's visa scheme activity was a trading activity, it did not form a significant
proportion of the activity of the Respondent, so that the Respondent could be characterised as
a trading corporation.66 It submitted that having regard to the stated functions of the
Respondent in s.10(1) of the TIQ Act, and the actual functions performed by the Respondent,
the revenue derived from the visa scheme was not a significant proportion of the Respondent's
activities.67 As a percentage, it represented 1.9% (rounded up from 1.87%) of the
Respondent's total revenue.68
59 [2016] FWC 4174 at [36] – [37] and [63] – [64].
60 Applicant’s Oral Submissions dated 31 August 2016 at [5c].
61 ibid.
62 ibid.
63 ibid.
64 Respondent’s Outline of Submissions dated 31 August 2016 at [32].
65 ibid at [33].
66 ibid at [36].
67 ibid.
68 ibid.
[2016] FWCFB 6615
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[45] It seems to us that the Commissioner’s conclusion that the activities at issue were not
trading activities is not supported by any reasons. It may be inferred from [63] of the Decision
that the reasons were that the visa scheme is administered “for the benefit of the
Commonwealth” and “at a loss” and that the fees charged to business people by the
Respondent to permit these people to attend overseas delegations are “nominal payments on a
cost-recovery basis”. None of these reasons focus attention on the nature of the activity and
whether it is commercial in nature or a business activity carried on by the Respondent with a
view to earning revenue.
[46] In our view, the error is not corrected by the Commissioner’s alternative conclusion
that if the Respondent's visa scheme activity was a trading activity, it did not form a
significant proportion of the activity of the Respondent, because such an assessment should be
made having regard to the totality of the trading activities identified, and for reasons already
given, the Commissioner’s analysis of other activities was in our view, erroneous.
[47] We now turn to the interest earned by the Respondent from funds held in bank
accounts in various jurisdictions. The Commissioner deals this issue as follows:
“[35] In addition to the grants and other contributions received, an amount of $133,000 was
earned in interest on bank accounts where cash is held.
. . .
[62] It is expected that organisations, whether trading corporations or not, will hold cash
balances in bank accounts. I do not consider the sum of $133,000 in the relevant year to assist
K.L.’s argument that TIQ is a trading corporation.69”
[48] The Appellant submitted that interest is by its very nature a return on an investment.70
The Appellant submitted that interest is the amount a financial institution pays an investor for
the use of money that is deposited with the institution and that it is not to the point that the
activity may be common.71 The Appellant submitted that the question is whether the activity
can be characterised as an incident of trade or commerce and it is well accepted that income
earned from investments is to be characterised as a trading activity.72
[49] The Respondent submitted that there was no evidence before the Commissioner that
the Respondent was investing its surplus funds in a way that could be described as investment
seeking a return on an investment by, for example, depositing in term deposits or other
products provided by a financial institution.73 It submitted that earning interest from the bank
accounts was an activity that was incidental to the Respondent’s functions and was not an
activity which on its own or together with other activities leads to a characterisation of the
Respondent as a trading corporation.74
69 [2016] FWC 4174 at [35] and [62].
70 Applicant’s Oral Submissions dated 31 August 2016 at [5b]
71 ibid.
72 ibid.
73 Transcript PN141.
74 Ibid.
[2016] FWCFB 6615
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[50] Be that as it may, it does not appear clear to us how the Commissioner arrived at the
conclusion that the activity was not a trading activity. The Commissioner’s observation that
maintaining bank accounts is that which is expected organisations will do with funds says
little about the character of the activity.
[51] Given our conclusions above it is unnecessary to deal with the procedural fairness
ground of appeal.
Conclusion
[52] The appeal raises important questions about the proper approach to determining
whether a body is conducting or undertaking a constitutionally-covered business within the
meaning of s.789FD, which combined with the errors identified leads us to conclude that it is
in the public interest that permission to appeal be granted.
[53] For the reasons we have given, we are persuaded that the Commissioner erred in her
approach to assessing whether the Respondent is a constitutional corporation. As a result, the
Commissioner’s conclusion that the Respondent is not a trading corporation and is therefore
not conducting or undertaking a constitutionally-covered business within the meaning of the
Act should not in our view be permitted to stand.
[54] Finally, we would observe that in our opinion the Commissioner was not assisted by
the paucity of probative evidence concerning the nature of the activities at issue. Moreover,
given the application was made in April 2016 and that the hearing of the Respondent’s
objection was conducted in late May 2016, it is somewhat surprising that the only financial
data made available to the Commissioner about the Respondent’s activities was financial data
for the financial year ending 30 June 2015. This is a matter that might be rectified when the
matter is dealt with by the Commissioner.
[55] In the circumstances, we propose to grant permission to appeal, uphold the appeal,
quash the Decision and remit the matter to the Commissioner to deal with the Respondent’s
jurisdictional objection aided by our observations.
Orders
We order that:
1. Permission to appeal is granted;
2. The appeal is upheld;
3. The decision in [2016] FWC 4174 is quashed; and
4. The matter is remitted to Commissioner Hunt to hear and determine the Respondent’s
jurisdictional objection.
DEPUTY PRESIDENT
THE FAIR WORK COMMISSION SEAL OF
[2016] FWCFB 6615
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Appearances:
Mr C Massy, Counsel for the Appellant.
Mr J Merrell, Counsel for the Respondent.
Hearing details:
2016.
Brisbane:
7 September.
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