1
Fair Work Act 2009
s.604—Appeal of decision
Gregory James Thurling
v
Glossodia Community Information and Neighborhood Centre Inc. T/A
Glossodia Community Centre
(C2019/2551)
VICE PRESIDENT CATANZARITI
DEPUTY PRESIDENT HAMILTON
COMMISSIONER HAMPTON
BRISBANE, 5 JULY 2019
Appeal against Ex tempore decision of Commissioner McKenna at Sydney on 27 March 2019
in matter number AB2018/433.
Background to the appeal
[1] This decision deals with an appeal, for which permission to appeal is required, made
by Mr Thurling under s 604 of the Fair Work Act 2009 (Cth) (the Act), against an Ex
Tempore decision and Order1 of Commissioner McKenna made in connection with his stop-
bullying application. The stop-bullying application was made under s 789FC of the Act and
the workplace in which Mr Thurling works is conducted by Glossodia Community
Information and Neighborhood Centre Inc. T/A Glossodia Community Centre (Glossodia
CINC).
[2] Mr Thurling is engaged as the Centre Manager/Community Development Worker.
[3] Glossodia CINC conducts a community based centre and information service based in
Glossodia, New South Wales. This includes various community development activities,
funded by government and, in some cases, by the charges applied for services. The services
include the delivery of out of school hours care (OOSHC) and vacation care for primary aged
children, a youth service for young community members, and information, referral and
advocacy services for the community more generally. In addition, the organisation seeks to
alleviate social isolation through a variety of services and programs targeted across the
community, especially for those facing economic and social disadvantage. It is corporate in
nature due to its status as an incorporated association under the Associations Incorporation
Act 2009 (NSW).
1 PR706271.
[2019] FWCFB 3740
DECISION
E AUSTRALIA FairWork Commission
[2019] FWCFB 3740
2
[4] It is not in dispute that in order for Mr Thurling’s application to fall within the scope
of the stop-bullying jurisdiction, the Commission must ultimately find that he is a worker who
has been bullied at work within the meaning of the Act. Section 789FD is in the following
terms:
“789FD When is a worker bullied at work?
(1) A worker is bullied at work if:
(a) while the worker is at work in a constitutionally-covered business:
(i) an individual; or
(ii) a group of individuals;
repeatedly behaves unreasonably towards the worker, or a group of
workers of which the worker is a member; and
(b) that behaviour creates a risk to health and safety.
(2) To avoid doubt, subsection (1) does not apply to reasonable management
action carried out in a reasonable manner.
(3) If a person conducts a business or undertaking (within the meaning of the
Work Health and Safety Act 2011) and either:
(a) the person is:
(i) a constitutional corporation; or
(ii) the Commonwealth; or
(iii) a Commonwealth authority; or
(iv) a body corporate incorporated in a Territory; or
(b) the business or undertaking is conducted principally in a Territory or
Commonwealth place;
then the business or undertaking is a constitutionally-covered business.”
[5] The initial focus of the definition is the workplace where the applicant worker is at
work when the alleged unreasonable conduct takes place. That is, the conduct must take place
whilst the worker is at work in a constitutionally-covered business. Section 789FD(3)
requires, in effect, the Commission to consider the nature, or in some cases – the location, of
the legal person conducting the business or undertaking.
[6] It is also not in dispute in this matter that, given its location and status, in order for
Glossodia CINC to be a constitutionally-covered workplace, it must be a constitutional
corporation.
[7] The term “constitutional corporation” is defined in s 12 of the Act in the following
terms:
“constitutional corporation means a corporation to which paragraph 51(xx) of the
Constitution applies.”
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[8] The Australian Constitution refers to “constitutional corporations” as being:
“Foreign corporations, and trading or financial corporations formed within the limits of
the Commonwealth.”2
[9] Of these, only the trading corporation is potentially relevant and before the
Commissioner at first instance, Mr Thurling contended that Glossodia CINC was a trading
corporation. Glossodia CINC contended to the contrary.
The decision at first instance
[10] After numerous attempts to resolve the stop-bullying application, the Commissioner
made arrangements to conduct a hearing to determine the matter. In so doing, the
Commissioner alerted the parties to a question about the jurisdiction of the Commission and
referred to a recent decision3 of the Commission regarding whether a workplace was a trading
corporation. Arrangements were then made for the parties to file written submissions and
evidence regarding that jurisdictional question in the lead up to a hearing by phone.
[11] We note that none of the parties were represented in the hearing conducted by the
Commissioner. Written submissions, and some evidence, were provided in advance of the
hearing, and in the case of Glossodia CINC, the materials were prepared by a lawyer on their
behalf.
[12] At the conclusion of the hearing, which involved little more than the parties, in effect,
confirming their respective written submissions, the Commissioner provided an Ex tempore
decision. Having set the general context of the matter, the substance of the decision comprised
the following:
“… ...
Having considered what has been advanced respectively by Mr Thurling and for the
Glossodia parties, I am bound to say, even with the benefit of the additional
submissions that have been made today, that I am persuaded by the submissions for
Glossodia on the jurisdictional issue. Shortly stated whilst there are matters which
might be seen to point in different directions, on the basis of what is before me and
having considered those matters and the additional materials, the matters addressed in
the Glossodia materials lead me to the view that there is a want of jurisdiction in
relation to this application.
On a consideration of all that has been put before me considered in the context of the
act and the authorities I accept the submissions for Glossodia that it is not a trading
corporation and therefore not a constitutionally covered business for the purposes of
the act in relation to an application of this nature.
2 Section 52(xx) of the Australian Constitution.
3 Application by Robertson [2018] FWC 6387.
[2019] FWCFB 3740
4
It follows that the application must be dismissed for want of jurisdiction with the result
that the proceedings in relation to this anti-bullying application are now concluded.”4
[13] Accordingly, the Commissioner issued an Order dismissing Mr Thurling’s stop-
bullying application lodged under s 789FC of the Act.5
The appeal
[14] Mr Thurling continued to represent himself in the appeal and provided written
submission, the effect of which was as follows:
The Commissioner erred in finding that the Glossodia CINC was not a trading
corporation because it trades in goods and services;
The trading activities include providing before and after school child care for
which it changes fees and levies administration fees, and rental fees for the hiring
of its facilities;
These activities comprised somewhere between 27.37 percent and 35.23 percent of
its total income, depending upon how certain government funding was treated;
This proportion was significant and found by the Commission in other cases to be
sufficient to make the organisation a trading corporation; and
The altruistic intent of the organisation did not prevent it being a trading
corporation.
[15] Mr Thurling, in his written grounds of appeal, also contended the “verbal” reasons for
decision were “… at best vague. At no time was a clear or actual reason given and I left the
telephone conversation still unclear as to the rationale behind it ….”.
[16] In relation to the public interest, Mr Thurling contended, in effect, that the outcome of
this case, if not corrected, would have significant consequences for the community services
sector and would exclude many workplaces from the coverage of the stop-bullying laws.
Further, the decision was not consistent with other decisions made by the Commission in
relation to that sector.
The positon advanced by Glossodia CINC
[17] Despite the directions issued in this matter, Glossodia CINC did not file written
materials prior to the hearing of the appeal.
[18] On the day of the hearing, the Commission was informed that the contact person for
Glossodia CINC could only appear for a brief period before having to attend to an urgent
family situation. In the circumstances, and noting that one of the persons named in the stop-
bullying application could participate by phone, but was not in a position to make
submissions, the Bench resolved to hear the appeal in Glossodia CINC’s absence. However, a
copy of the transcript was provided to the parties on 11 June 2019 and Glossodia CINC was
4 Transcript (AB2018/433) 14 March 2019 PN 165-167.
5 PR706271.
[2019] FWCFB 3740
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granted 7 days following receipt of the transcript of the appeal hearing (being 18 June 2019)
to provide written submissions in response.
[19] Ultimately, Glossodia CINC did not provide any submissions concerning the appeal.
As a result, we have had regard to the position advanced by Glossodia CINC at first instance
but we have not been further assisted by Glossodia CINC in dealing with the appeal itself.
Consideration
[20] An appeal under s 604 of the Act is an appeal by way of rehearing and the
Commission’s powers on appeal are only exercisable if there is error on the part of the
primary decision maker. There is no right to appeal and an appeal may only be made with the
permission of the Commission.
[21] As required by s 604(2) of the Act, the Full Bench must grant permission to appeal if it
is satisfied it is in the public interest to do so. The task of assessing whether the public interest
test is met is a discretionary one involving a broad value judgment; see: O’Sullivan v Farrer
(1989) 168 CLR 210; Hogan v Hinch (2011) 85 ALJR 398 at [69]; Coal & Allied Mining
Services Pty Ltd v Lawler and others (2011) 192 FCR 78 at [44] -[46]. In GlaxoSmithKline
Australia Pty Ltd v Makin [2010] FWAFB 5343 at [27] 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, it seems to us that none of those elements is present in this case.”
[22] 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; see: Wan v AIRC (2001) 116 FCR 481 at [30]. 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; see: GlaxoSmithKline Australia Pty Ltd v Makin [2010] FWAFB 5343
at [26]-[27], 197 IR 266; 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 at [28].
[23] For reasons that follow, we consider that leave to appeal should be granted in this
matter.
[24] A useful starting point for the assessment as to whether a corporation is a trading
corporation is the summary provided by Steytler P in the Western Australian Court of Appeal
decision in Aboriginal Legal Service (WA) Inc v Lawrence (No 2) 6 (Lawrence). Having
reviewed the developments in the approach of the High Court to arrive at what might be
described as the activities test, His Honour found as follows:
6 (2008) 252 ALR 136 at para [68].
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“68 The more relevant (for present purposes) principles that might be drawn from
these and other cases are as follows:
(1) A corporation may be a trading corporation even though trading is not
its predominant activity: Adamson (239); State Superannuation Board
(303 - 304); Tasmanian Dam case (156, 240, 293); Quickenden [49] -
[51], [101]; Hardeman [18].
(2) However, trading must be a substantial and not merely a peripheral
activity: Adamson (208, 234, 239); State Superannuation Board (303 -
304); Hughes v Western Australian Cricket Association Inc [1986]
FCA 357; (1986) 19 FCR 10, 20; Fencott (622); Tasmanian Dam case
(156, 240, 293); Mid Density (584); Hardeman [22].
(3) In this context, 'trading' is not given a narrow construction. It extends
beyond buying and selling to business activities carried on with a view
to earning revenue and includes trade in services: Ku-ring-gai (139,
159 - 160); Adamson (235); Actors and Announcers Equity Association
of Australia v Fontana Films Pty Ltd [1982] HCA 23; (1982) 150 CLR
169, 184 - 185, 203; Bevanere Pty Ltd v Lubidineuse [1985] FCA 134;
(1985) 7 FCR 325, 330; Quickenden [101].
(4) The making of a profit is not an essential prerequisite to trade, but it is
a usual concomitant: St George County Council (539, 563, 569); Ku-
ring-gai (140, 167); Adamson (219); E (343, 345); Pellow [28].
(5) The ends which a corporation seeks to serve by trading are irrelevant to
its description: St George County Council (543, 569); Ku-ring-gai
(160); State Superannuation Board (304 - 306); E (343). Consequently,
the fact that the trading activities are conducted is the public interest or
for a public purpose will not necessarily exclude the categorisation of
those activities as ‘trade’: St George County Council (543) (Barwick
CJ); Tasmanian Dam case (156) (Mason J).
(6) Whether the trading activities of an incorporated body are sufficient to
justify its categorisations as a ‘trading corporation’ is a question of fact
and degree: Adamson (234) (Mason J); State Superannuation Board
(304); Fencott (589); Quickenden [52], [101]; Mid Density (584).
(7) The current activities of the corporation, while an important criterion
for determining its characterisation, are not the only criterion. Regard
must also be had to the intended purpose of the corporation, although a
corporation that carries on trading activities can be found to be a
trading corporation even if it was not originally established to trade:
State Superannuation Board (294 - 295, 304 - 305); Fencott (588 - 589,
602, 611, 622 - 624); Hughes (20); Quickenden [101]; E (344);
Hardeman [18].
(8) The commercial nature of an activity is an element in deciding whether
the activity is in trade or trading: Adamson (209, 211); Ku-ring-gai
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(139, 142, 160, 167); Bevanere (330); Hughes (19 - 20); E (343);
Fowler; Hardeman [26].” (footnotes and full references omitted)
[25] In the recent decision of Roads and Maritime Services v Leeman,7 the Full Bench
commented on those principles as follows:
“[14] The first, second, fifth, sixth and seventh propositions are particularly relevant to
the submissions advanced by RMS in its appeal and require some further elucidation.
In respect of the first, second and sixth propositions, the judgment of Murphy J in R v
Federal Court of Australia; Ex parte WA National Football League (Adamson)
articulates the position in the following terms (cited by Steytler P in respect of both
propositions):
“Even though trading is not the major part of its activities, the description,
"trading corporation" does not mean a corporation which trades and does
nothing else or in which trading is the dominant activity. A trading corporation
may also be a sporting, religious, or governmental body. As long as the trading
is not insubstantial, the fact that trading is incidental to other activities does not
prevent it being a trading corporation. For example, a very large corporation
may engage in trading which though incidental to its non-trading activities, and
small in relation to those, is nevertheless substantial and perhaps exceeds or is
of the same order in amount as the trading of a person who clearly is a trader.
Such a corporation is a trading corporation and is the subject of the legislative
power in s. 51 (xx.).”
[15] The practical application of these principles was recently discussed in the Federal
Court Full Court decision in United Firefighters' Union of Australia v Country Fire
Authority. This matter was an appeal against a decision of a single member of the
Court (Murphy J) in which it was determined that the Country Fire Authority was a
trading corporation. The Full Court said:
“[135] We do not accept that the primary judge applied the wrong test, as
contended for by the CFA. An important question is whether the corporation’s
trading activities form a sufficiently significant proportion of its overall
activities as to merit its description as a trading corporation: see Adamson at
233 per Mason J. The same approach was taken in State Superannuation Board
at 305 per Mason, Murphy and Deane JJ where their Honours referred to the
nature and the extent or volume of a corporation’s activities needed to justify
its description as a [trading] corporation. See also the Tasmanian Dam Case at
156 per Mason J; at 179 per Murphy J, at 240 per Brennan J and at 293 per
Deane J. Substituting the word “trading” for “financial” follows what their
Honours said in State Superannuation Board at 303: the Court’s approach to
the ascertainment of what constitutes a “financial corporation” should be the
same as its approach to what constitutes a “trading corporation”, subject to
making due allowance for the difference between “trading” and “financial”.
[136] Answering that question does not simply involve the application of a
formula or equation nor the substitution of percentages or other measures of
7 [2018] FWCFB 5772.
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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 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.
[137] If a corporation, carrying on independent trading activities on a
significant scale, is properly categorised as a trading corporation that will be so
even if other more extensive non-trading activities properly warrant it being
also categorised as a corporation of some other type: see State Superannuation
Board at 304. In our view, this proposition answers in large part the
submissions put as to the public purpose of the CFA. As we have said, the
issue is one of characterisation and is a matter of fact and degree.
…
[139] The CFA submitted that the error by the primary judge was crystallised
at the end of [102] where his Honour said:
In my opinion the CFA undertakes sufficient trading for it to be seen as
“not insubstantial”, not trivial, insignificant, marginal, minor or
incidental, and I find that it is a trading corporation.
In our opinion, the primary judge was considering whether or not the activities
he had found to be trading activities were, proportionately, significant and
whether they should be considered as peripheral so as not to affect the overall
question of characterisation. We see no error. In our opinion the primary judge
correctly took into account the relationship between the trading activities and
the non-trading activities in order to evaluate whether the trading activities
were “independent” of the non-trading and thus might affect the
characterisation of the corporation.”
[16] The fifth proposition is particularly pertinent to RMS’s appeal submissions. In
support of the second sentence in that proposition, Steytler P cited two judgments. The
first was the dissenting judgment of Barwick CJ in R v Trade Practices Commission;
Ex parte St George County Council in which his Honour relevantly said:
“Further, if the terms of an Act expressed in the language of the constitutional
power properly construed embrace a government or local government
instrumentality or agency, the connexion of the corporation with the
government of a State will not of itself place the corporation outside the scope
of the power or the statute: Victoria v. The Commonwealth [1971] HCA 16;
(1971) 122 CLR 353.
…
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The power quite obviously, in my opinion, is given to the Parliament to enable
it by legislation to control amongst other things at least some of the activities of
corporations which fall within its description. It seems to me that the activities
of a corporation at the time a law of the Parliament is said to operate upon it
will determine whether or not it satisfies the statutory and therefore the
constitutional description. Thus, in my opinion, the identification of the
corporation which falls within the statutory definition will be made principally
upon a consideration of its current activities.
… As I have indicated, the purpose of the grant of legislative power includes
the control of the corporate activities of the corporation: it is not so concerned
with the motives which prompt those activities, nor the ultimate ends which
those activities hope to achieve. If, upon that consideration, the corporation can
fairly be described by reason of those activities, their extent and relative
significance in the affairs of the corporation as a "trading corporation" it will,
in my opinion, be nothing to the point that it is also a government or State or
municipal corporation. The effect of the trading activities of such a corporation
upon and in the community will not be lessened or necessarily affected by the
fact that it is a State or municipal instrumentality.
However, it was said that for a body such as the applicant to reticulate
electricity bought by it in bulk is to perform a public service and not to trade.
Of course, one of the justifications put forward for the entry of government into
manufacture, trade or commerce is that the public will be better served by the
government corporation than it would be by a non-government body seeking
only profit or gain. But whatever the merit of such a claim, the fact that
government, or a "government" corporation, conducts activities which are of
their nature manufacturing, trading or commercial activities does not, in my
opinion, alter the nature of those activities. This must particularly be so in
relation to an Act made under a constitutional power which extends to enable
the control of such activities conducted by government, or "government"
corporations.”
[17] The second judgment referred to by Steytler P is that of Mason J, as he then was,
in the Tasmanian Dam Case, in which the Hydro-Electric Commission of Tasmania
was determined to be, by majority, a trading corporation. Mason J commenced his
consideration of this issue by referring to the judgment of Barwick CJ in St George
County Council, and said:
“2. As Barwick C.J. observed in his dissenting judgment in St. George County
Council, at p. 541, the connexion of the corporation with the government of a
State will not take it outside s. 51(xx). In making this statement, his Honour
referred to certain features of the County Council in that case and stated that
they did not take the Council outside the category of "trading corporations".
The features were (1) that it was incorporated under the Local Government Act
1919 (N.S.W.); (2) that it had power to levy a loan rate; (3) that there was a
limitation on profitmaking to ensure that the council performed a public service
for the county district; and (4) that in reticulating electricity to the district it
was performing a public service.
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3. The Commission's connexion with the government of Tasmania is certainly
closer than the connexion of St. George County Council with the government
of New South Wales. And the Commission's position in the structure of
government is certainly more important than that of the County Council. The
Commission is the State authority responsible for generating and distributing
electrical power in the State. It constructs and manages the relevant dams,
generating plants and other works and makes the policy decisions and
recommendations to the Minister in connexion with its functions. But in
Launceston Corporation v. The Hydro-Electric Commission [1959] HCA 12;
(1959), 100 C.L.R. 654, it was decided that the Commission was an
independent statutory corporation and it was not a servant or agent of the
Crown. Since then the Commission's Act has been amended, notably by the
inclusion of ss. 15A and 15B. Section 15A enables the Minister to notify the
Commission of the policy objectives of the government with respect to any
matter relating to generation, distribution, etc. of electrical energy. Section 15B
enables the Minister to give a direction to the Commission with respect to the
performance of its functions, subject to certain limitations and qualifications.
The Commission may object to the direction. If the Minister does not withdraw
the direction or qualify it in a manner acceptable to the Commission, the matter
is then submitted to the Governor for decision (s.15B(4) and (5)). The
Commission is bound to comply with the direction, subject to any withdrawal
or modification and subject to a decision of the Governor. However, it is
specifically provided that the Minister's power to give a direction does not
make the Commission a servant or agent of the Crown or confer on the
Commission any status, privilege or immunity of the Crown (s. 15B(9)).
Accordingly it is not suggested that the decision in Launceston Corporation
has been eroded by legislative developments.
4. The trading activities of the Commission therefore form a much less
prominent feature of its overall activities than was the case with St. George
County Council. The Commission has an important policy-making role. It is
the generator of electrical power for Tasmania for distribution to the public and
for this purpose it engages on a large scale in the construction of dams and
generating plants. In this respect its operations are largely conducted in the
public interest.
5. However, W.A. National Football League demonstrates that these
considerations do not exclude the Commission from the category of "trading
corporations". The majority judgement in State Superannuation Board pointed
out, at p.96, that the case decided that a trading corporation whose trading
activities take place so that it may carry on some other primary or dominant
undertaking (which is not trading) may nevertheless be a trading corporation.”
[18] In relation to the seventh proposition, it may have been more broadly expressed
than is justified by the authorities. In this connection we note the following passage in
the joint judgment of Mason, Murphy and Deane JJ in State Superannuation Board v
Trade Practices Commission (cited by Steytler P in support of the proposition):
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“Murphy J. ((1979) 143 CLR, at p 239) said "As long as the trading is not
insubstantial, the fact that trading is incidental to other activities does not
prevent it being a trading corporation". Indeed, it was essential to the majority's
approach and to its rejection of St. George that a corporation whose trading
activities take place so that it may carry on its primary or dominant
undertaking, e.g., as a sporting club, may nevertheless be a trading corporation.
The point is that the corporation engages in trading activities and these
activities do not cease to be trading activities because they are entered into in
the course of, or for the purpose of, carrying on a primary or dominant
undertaking not described by reference to trade. As the carrying on of that
undertaking requires or involves engagement in trading activities, there is no
difficulty in categorizing the corporation as a trading corporation when it
engages in the activities.
Indeed, we would go on to say that there is nothing in Adamson which lends
support for the view that the fact that a corporation carries on independent
trading activities on a significant scale will not result in its being properly
categorized as a trading corporation if other more extensive non-trading
activities properly warrant its being also categorized as a corporation of some
other type.
If there be any difference in the comments made by the majority in Adamson it
is one of emphasis only. And it is important to note that they were all directed
to the issue as it arose for decision, an issue relating to a sporting club and the
league with which it was affiliated; they were not aimed at the corporation
which has not begun, or has barely begun, to carry on business. It might
well be necessary to look to the purpose for which such a corporation was
formed in order to ascertain whether it is a corporation of the kind
described.” (emphasis added)
[19] Nevertheless, the Full Court of the Federal Court in UFU v CFA appeared to
accept that the purpose for which a corporation is formed may be relevant to its
characterisation and we proceed on the basis that the seventh proposition is to be
applied in the way expressed.” (References omitted)”
[26] For our part we accept that the purpose of the corporation may be relevant to its
characterisation; however, this should be seen in the particular context in which the Courts
have applied that consideration.
[27] We observe that the submissions made by Glossodia CINC at first instance, and as
adopted in the Commissioner’s decision, place significant emphasises upon the purpose of the
association and very little upon the nature of the purported trading activities themselves.
[28] The evidence before the Commissioner included a sworn affidavit and annexed
documents provided by Ms Cheryl Keddie, Committee Secretary, also described in the
affidavit as being the Treasurer. That material, and the documents provided by Mr Thurling,
demonstrate as follows:
Glossodia CINC is an incorporated body under the Associations Incorporation Act
2009 (NSW) and registered as a charity;
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Glossodia reports its purposes its activities as being:
“We undertake community development activities targeting the whole of our
community, including 0-5 years, primary school aged children, high school
aged children and older community members. We deliver out of school hours
and vacation care for primary aged children. We provide a youth service for
our young community members. We provide information; referral and
advocacy services. We alleviate social isolation through a variety of services
and programs targeted at all of our community, especially those facing
economic and social disadvantage”8.
Glossodia CINC receives some of its revenue from funding provided by the
Department of Family and Community Services NSW (DFCS) under a Program
Level Agreement and this is to provide a series of activities to the community in
the Hawkesbury local government area;
The Balance Sheet as at June 2018 records total assets of $143,154.60 and total
liabilities of $42.324.19, leaving net assets of $100,830.41;
The Profit and Loss Statement for the 2017/18 year records:
Total income of $327,344.33
Total Expenses of $312,213.88
Operating profit of $15,130.45 and
Net Profit of $15,893.71
The major elements of income comprise:
Funding received of $118,253.06; and
Programs income of $97,447.43, comprising:
OOSHC and vacation care fees of $90,893.73; and
$6,553.73 Hall hire income.
[29] Leaving aside fluctuations that might be evident from year to year, the programs
income in 2017/18 represented just over 29 percent of the organisation’s total income.
Although there is a dispute as to how those activities are to be assessed for present purposes,
the 2018/19 year appears to be representative of the present activities of the organisation.
[30] The evidence at first instance appears to reveal that the fees charged by
Glossodia CINC for child-care services are set by the organisation at rates that are less than
what it describes as “market rates”, and that the hall hire income is charged at a rate to offset
building expenses.
[31] We will return to how the program’s income, which forms the focus of the appeal,
should be treated for present purposes.
8 Annexure A - Affidavit of Ms Cheryl Keddie, March 2019.
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[32] The fact that the assets of the Glossodia CINC cannot be returned to its members if
wound up9 and that the majority of the funding comes from government funded grants, does
not mean that the program services are not trading or that the organisation cannot be a trading
corporation.
[33] In Bankstown Handicapped Children’s Centre v Hillman10 (Bankstown), the Full
Court of the Federal Court was dealing with an incorporated association that received most of
its funding from government. The Court posed the question in the following manner:
“51 Many activities and services which have historically been provided mainly or
exclusively by government are now carried on by companies which undertake those
activities or provide those services with the objective of making a profit. Examples are
legion and included prison services, electricity generation and distribution, potable
water collection or production and distribution and the construction and maintenance
of roadways. There can be little doubt that, at least in the ordinary course, companies
which undertake those activities or provide those services can be characterised as
trading corporations. Does the fact that a corporation likewise provides such services
but on effectively a cost recovery basis only, render it inappropriate to characterise that
corporation as a trading corporation?”
[34] The Full Court focused in particular on the funding and services provided in relation to
the ‘Out-of-Home Care’ (OOHC) programs under which the Centre was paid for services
provided to the relevant government agency (DOCS) on a fee for service basis. It concluded:
“54 If those substantial activities can be characterised as trading, then the Association
can likewise be characterised as a trading corporation. So much is apparent from the
authorities including, in this Court, the judgment of the Full Court in Quickenden (at
[51]). The Association undoubtedly provided services to the State and was
remunerated for doing so. It is, in our opinion, a proper characterisation of the
Association's activities to describe them as selling those services to the State and,
correspondingly, the State purchasing them. Indeed that was the language used in the
header agreement which governed the contractual arrangements between the
Association and DOCS. The provision of a given service under the header agreement
resulted in an invoice from the Association to DOCS which it then paid. The prices at
which the services were provided were negotiated between the parties having regard to
the price at which others provide similar services. The Association employed
personnel and acquired rental property to equip it for the task of providing those
services. At least in its then manifestation (entailing its size, activities, property and
personnel), its continued existence depended on its success in placing itself in a
position in which it would continue to be remunerated by continuing to provide those
services.
55 All these matters appear to us to point to a relationship between the Association
and DOCS as having been a commercial one involving trade in services. It is, of
course, true that it is possible to characterise, as the Industrial Court did, the
Association's activities as the provision of public welfare services. However the fact
that the acquisition of these services by DOCS was for this purpose does not appear to
9 Clause 42(1) of its rules.
10 (2010) 182 FCR 483 at par [48].
[2019] FWCFB 3740
14
us to detract from the essentially commercial nature of the relationship. It is properly
so described. There may be many incorporated charitable bodies in Australia which
are nevertheless trading corporations for the purposes of paragraph 51(xx) of the
Constitution. As we have noted above, the terms of the header agreements were
negotiated, as were the terms of the renewal header agreement. Ultimately by that
process, further negotiation as to price was not then undertaken. Thereafter, DOCS did
not have to use the services of the Association at all, and the Association for its part
did not have to accept any offer or request by DOCS to provide such services. On the
evidence, DOCS selected those entities which it wished to provide services, once the
header agreements were negotiated, on the basis of the quality of the service to be
provided, but the Association (or others) did not have to agree to provide them. It is
distracting to note that the services which the Association and others contracted with
DOCS to provide were in the "welfare sector" of the economy, to use an expression
used by the Solicitor-General.”
[35] Further, for reasons set out in Lawrence,11 the fact that the trading activities are
conducted in the public interest or for a public purpose will not necessarily exclude the
categorisation of those activities as ‘trade’.
[36] In terms of the assessment of trading activities as substantial and not merely
peripheral, the approaches do vary to a degree.
[37] In Bankstown, the Full Court observed that “there is no bright line that determines
what proportion of trading activities is ‘substantial’”.12 In the more recent decision of the
Federal Court in United Firefighters Union of Australia v Country Fire Authority,13
(UFU v CFA) the Full Court adopted the approach to the characterisation of trading activities
as summarised in Lawrence and considered the revenue producing activities in order to assess
the cumulative impact of those activities upon that assessment. In terms of the cumulative
assessment, Murphy J at first instance in that matter14 observed:
“[92] The term “substantial” is imprecise but it at least encompasses trading amounts
that are “not so small as to be trivial”: Quickenden at [51]. In that case the majority
treated substantial and nontrivial as synonymous. In the present case the CFA contends
that their trading activities are peripheral, insignificant or otherwise incidental. These
terms are drawn from the various cases: see for “peripheral” Adamson at 208 per
Barwick CJ; State Superannuation Board at 304 per Mason, Murphy and Deane JJ; for
“incidental” Adamson at 234 per Mason J; for “significant” see Adamson at 233 per
Mason J; E v Australian Red Cross Society and Ors [1991] FCA 20; (1991) 27 FCR
310 (“E v Red Cross”) at 345 per Wilcox J; Quickenden at [47] per Black CJ and
French J.
[93] The ordinary meaning of these words is straightforward. The Shorter Oxford
Dictionary defines them to include the following:
11 (2008) 252 ALR 136 at par [68](5).
12 (2010) 182 FCR 483 at paragraph [52].
13 [2015] FCAFC 1.
14 United Firefighters Union of Australia v Country Fire Authority [2014] FCA 17. This was not disturbed on appeal by the
Full Court.
[2019] FWCFB 3740
15
(a) “peripheral” means marginal, superficial, of minor importance, not
essential or relevant to but subordinate to;
(b) “insignificant” means lacking significance, meaningless, devoid of weight
or force, ineffective, ineffectual, of no importance, trivial, trifling, or
contemptible; and
(c) “incidental” means occurring as something casual or of secondary
importance; not directly relevant to; following up on as a subordinate
circumstance.”
[38] Having found that six of the County Fire Authority’s (CFA’s) non-fire fighting
activities were trading activities, Murphy J found:
“96 The scope of these activities is broad. While they are secondary to the CFA’s
primary purpose I would not describe any of them as insignificant, incidental, trivial or
unimportant. For example, the road accident rescue service is a specialised emergency
service that the CFA has agreed to provide in country areas, which has required special
training of CFA employees beyond the usual fire training, and which the CFA
recognises as an important part of the range of services it provides. The CFA has no
statutory obligation to provide this service and it does so at a cost to road users and the
State through the Traffic Accident Commission. I would not describe the provision of
this service as incidental to the CFA’s activities nor as a fortuitous or casual
occurrence of subordinate importance. Nor should its provision, viewed in the context
of all of its services, be described as trifling, ineffective, superficial or marginal.
97 For essentially the same reasons the provision of fire equipment maintenance
services, consultancy on matters related to fire safety, the provision of advice related
to the storage of dangerous goods and the sale of goods related to fire safety should
not be seen as insignificant, incidental, trivial or unimportant activities considered
against the range of services the CFA provides. I infer from the evidence that these
activities are seen as important by the CFA, although they are not its central or
predominant focus.
98 Nor do I consider that the revenue from these trading activities is incidental in
the sense of arising fortuitously or as a result of some other activity. The income is
earned deliberately by the CFA from these six specific sources and on the basis that
the CFA have special expertise or products of value which they provide in exchange.
Taken together the income from these activities is substantial.
99 While the quantum of income from the CFA’s trading activities relative to its
non trading activities is small, I am disinclined to treat almost $13 million of revenue
as minimal, trivial or insignificant. It should be seen for what it is, a significant
volume of trading revenue albeit dwarfed by the money received from non-trading
sources. The CFA put on no cogent evidence that $12.93 million was insignificant to
its operations, and no evidence was given that it could be easily foregone by the
organisation. Put another way, it is likely that the CFA would be impaired in its
capacity to provide services in road accident rescue, fire equipment maintenance, fire
safety consultancy or sale of fire safety related goods, which it regards as important in
the range of services offered, if it was not able to charge fees for doing so.
[2019] FWCFB 3740
16
100 Although the $12.93 million of trading income is plainly a substantial amount
in absolute terms, it is only a small percentage relative to the CFA’s total income.
Even so, I do not consider it is trivial or minimal in relative terms.
101 In E v Red Cross the Australian Red Cross Society was one of the respondents.
Wilcox J held that its supply of blood and blood products was the gratuitous provision
of a public welfare service, substantially at government expense, and was not a trading
activity. The Red Cross received a total of $44.9 million from the government in
respect of its non-trading blood supply services, and about $2 million from trading
activities. Another respondent, a major hospital, made approximately $18 million from
trading activities and, in the words of Wilcox J, that sum was dwarfed by a State
government subsidy of $112 million. His Honour concluded that the disparity between
the money earned through trading and the money received by way of government
subsidy was unimportant explaining at 345:
Trading activities yielding some $18 million per year can only be described as
substantial. It seems to me that the scale of the hospital’s trading activities in
1984-1985 was such that it should be regarded as then being a trading
corporation.
See also United Firefighters’ Union of Australia v Metropolitan Fire and Emergency
Services Board (1998) 83 FCR 346 (“UFU v MFB”) at 354 to 356 per Marshall J.
102 The CFA contends that both E v Red Cross and UFU v MFB were wrongly
decided in that they incorrectly applied an absolute test. While I consider that the
CFA’s trading revenue is plainly significant if considered in absolute terms, I do not
approach the issue that way. Considering its trading revenue relative to its non-trading
activities, the question is not without difficulty and is one of fact and degree. In my
opinion the CFA undertakes sufficient trading for it to be seen as “not insubstantial”,
not trivial, insignificant, marginal, minor or incidental, and I find that it is a trading
corporation.”
[39] The focus of this appeal is the characterisation of the program services conducted by
Glossodia CINC. These services are consistent with the purpose of the association but are
made available at a cost to the individuals in the community who utilise those services. The
services and the associated income represents the buying and selling of those services and a
trading activity.
[40] Whilst perhaps not charged at market rates, the program services are subject to charges
that are more than nominal and do not represent the gratuitous provision of a public welfare
service in the manner described in E v Red Cross. Rather these services are provided at a cost
to the users of those services and the income is not peripheral, insignificant or incidental when
considered in the context of the funding and operations of the Glossodia CINC. Indeed, the
program services represent a significant part of the operations of the association and almost a
third of its total income.
[41] As a result, we consider that these activities are trading in nature and are sufficient to
mean that the Glossodia CINC should have been held to be a trading corporation. The
Commissioner’s conclusions to the contrary are, we respectfully consider, erroneous. This
[2019] FWCFB 3740
17
error goes to the jurisdiction of the Commission to deal with the stop-bullying application and
means that there was no proper basis to dismiss that application.
[42] Given our findings, it is not necessary for us to deal with the appeal grounds related to
the reasons provided for the decision at first instance.
Conclusions and disposition of the appeal
[43] Given our findings, we consider that permission to appeal should be granted and the
appeal upheld. On a rehearing, we find that Glossodia CINC is a trading corporation and as a
result is conducting a constitutionally-covered business.
[44] There remains a dispute between the parties as to whether there has been any
workplace bullying within the meaning of the Act. The stop-bullying application will be
assigned to the relevant Regional Coordinator to assign to a Member to hear and determine.
Orders:
[45] We order as follows:
(1) Permission to appeal is granted.
(2) The appeal is upheld.
(3) The Ex tempore decision of Commissioner McKenna at Sydney on 27 March 2019
is quashed.
(4) The Order issued by Commissioner McKenna on 27 March 2019 (PR706271) is
revoked.
(5) On a rehearing, we find that Glossodia CINC is a trading corporation and as a
result is conducting a constitutionally-covered business.
(6) The stop-bullying application is assigned to the relevant Regional Coordinator to
assign to a Member to hear and determine in accordance with our reasons for
decision.
VICE PRESIDENT
Appearances:
G Thurling, the Appellant in person.
R Blefari, for the Respondent parties.
THE FAIR WORK C AR AMISSION THE SEAA
[2019] FWCFB 3740
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Hearing details:
2019
Melbourne, Sydney (via Video Link)
May 30.
Printed by authority of the Commonwealth Government Printer
PR708851
