• Abstract and Figures
• Public Full-text

2007 WAIRC 00941

WESTERN AUSTRALIAN INDUSTRIAL RELATIONS COMMISSION

PARTIES JACQUELINE ANN BYSTERVELD APPLICANT -v-

SHIRE OF CUE RESPONDENT CORAM SENIOR COMMISSIONER J H SMITH HEARD TUESDAY, 17 APRIL 2007 DELIVERED FRIDAY, 20 JULY 2007 FILE NO. U 1 OF 2007 CITATION NO. 2007 WAIRC 00941

CatchWords Termination of employment - Harsh, oppressive and unfair dismissal claim - Whether Commission has jurisdiction to hear and determine the Applicant's claim - Trading activities of the Respondent considered - Commission not satisfied the Respondent is a consitutional corporation - Industrial Relations Act 1979 (WA) s 29(1)(b)(i); Local Government Act 1995 (WA) ss 2.5 to 6.50, Division 5 of Part 6, and Division 6 of Part 6; Workplace Relations Act 1996 (Cth) s 4, s 6, s 16 and s 16(1); Australian Constitution (Cth) s 51( xx) and s 109

Result Declaration made

Representation Applicant In person

Respondent Mr S White (as agent)

Reasons for Decision

1 Jacqueline Ann Bysterveld ("the Applicant") filed an application in the Western Australian Industrial Relations Commission ("the Commission") on 4 January 2007, under s 29(1)(b)(i) of the Industrial Relations Act 1979 ("the IR Act") claiming that she had been unfairly dismissed on 23 December 2006 by the Shire of Cue ("the Respondent"). The Applicant was employed by the Respondent as a caravan park manager from 6 November 2006 until 23 December 2006.

2 The Respondent says in its Notice of Answer and Counter-proposal that the Commission does not have any jurisdiction to hear and determine the Applicant's claim as the Respondent is a constitutional corporation as defined in s 4 of the Workplace Relations Act 1996 (Cth) 2007 WAIRC 00941

("WR Act"). Under s 4 of the WR Act, a constitutional corporation is defined as a corporation to which s 51(xx) of the Australian Constitution applies. Section 51(xx) of the Australian Constitution defines a constitutional corporation among others as a trading and financial corporation formed within the limits of the Commonwealth.

3 If a corporation is a "trading corporation" by virtue of ss 4, 6 and 16 of the WR Act the jurisdiction of the Commission to deal with the Applicant's claim is excluded by s 16(1) of the WR Act and s 109 of the Australian Constitution (Crown Scientific Pty Ltd v Clarke (2007) 87 WAIG 598) ("Clarke"). Whether a corporation is a trading corporation is ultimately a question of fact and degree (R v Judges of the Federal Court of Australia and Another; Ex parte The Western Australian National Football League (Inc) and Another (1979) 143 CLR 190) ("Adamson") applied by the Full Bench in Clarke and in Aboriginal Legal Services of Western Australia Incorporated v Lawrence [2007] WAIRC 00435 at [207], [235] and [322](b); (2007) 87 WAIG 856 at 878, 884 and 893 ("Lawrence"). The Evidence

4 The Applicant appeared at the hearing but gave no evidence in relation to the jurisdictional issue and made no submissions.

5 The Respondent tendered a witness statement made by Brian Seale, the Respondent's Chief Executive Officer ("CEO"), as the Respondent’s evidence in chief. Mr Seale also gave oral evidence in relation to the matters set out in his statement.

6 Mr Seale has 12 years experience working for various local government authorities in Western Australia. He has held the position of CEO since December 2006. Pursuant to s 5.41 of the Local Government Act 1995 ("the LG Act") he is responsible for the operations of the Respondent.

7 The Shire of Cue is located 649 kilometres from Perth and covers 13,716 square kilometres. Approximately 370 residents reside within the shire area and the majority of residents reside in the town of Cue. Outside the town the land within the shire is largely occupied by 10 or 12 pastoral leases and temporary mining facilities. The pastoral leases are operated by about 12 to 16 families. Mr Seale testified that the town has domestic facilities such as a hotel, a bed and breakfast, a general store and a post office.

8 Mr Seale gave evidence that tourism is a major focus for the Respondent in its strategy for long term sustainability. The Respondent owns a moderate sized caravan park which caters mainly to tourists visiting the Cue area. It is a 38 bay caravan park with some small cottages and facilities for tent accommodation. The caravan park has been in existence for at least 20 years and has always been owned by the Respondent. The Respondent plans to develop the caravan park in the near future and has engaged a consultant to carry out a staged plan which is likely to result in the expenditure of one million dollars to develop the caravan park to accommodate tourists. When asked why the Respondent established their own caravan park, Mr Seale said that it is customary for local government to provide services to a community and during the past twenty years the focus of local government had changed from mainly focusing on the fundamentals, such as roads, rates and rubbish, to a greater focus on the social welfare of the community.

9 The Respondent provides a range of sporting facilities for the community, such as basketball courts, cricket facilities and tennis courts. They also have a town hall which they hire out for functions, cabarets, weddings and parties. 2007 WAIRC 00941

10 The Respondent employs 14 people whose classifications are as follows: the CEO, deputy CEO, accounts clerk, typist, administrative officer, receptionist, grader driver, plant operator, truck driver, gardener, work supervisor and caravan park caretaker. Recently the Respondent engaged an operator to operate the power station and airport services. They also engage a health officer and a building surveyor from Perth on a contractual basis. In addition, they engage a ranger from the Meekatharra Shire on a part-time basis as they have found it less stressful for the community if someone from outside the shire arrests an abhorrent dog.

11 Fire and emergency services for the area are administered through the Respondent and staffed on a voluntary basis. Mr Seale explained that one of the Respondent's councillors is the fire and emergency services captain. The captain coordinates emergencies such as plane crashes, truck rollovers or accidents. The ambulance is also run as a voluntary service under the auspices of the Respondent and is funded by donations by the Respondent. Trading Activities

12 Mr Seale in his witness statement states that an average of 10 per cent of the total revenue received by the Respondent over the last three financial years constituted trading activities. Mr Seale testified that these “trading activities” add significantly to the organisation both in monetary value and importance, as the Respondent is a small local government organisation. Mr Seale provided a summary of what the Respondent contends are “trading activities” in Appendix A to his witness statement. Appendix A states:

"Shire of Cue Operating Accounts 2003/2004 2004/2005 2005/2006 Account Trading Income Trading Income Trading Income Cue Shire Souvenirs $1,645.26 ESL FESA Admin Fee $3,990.00 $8,951.00 $3,822.03 Fire - Operating Grants $7,817.50 $2,707.80 $3,000.00 Septic Fees $130.00 Rent - Staff Housing $3,400.00 $3,700.00 $1,920.00 Rent - Other Housing $2,475.00 $4,030.00 $1,805.00 Utilities - Pensioner Huts $496.77 $504.18 $263.99 Cont'n - Housing Utilities $10.71 Rubbish Collection Charges $19,065.00 $19,572.56 $17,820.00 Cemetery Fees $395.46 Community Bus Fees & Charges $6,397.98 $4,346.16 $2,085.92 Hall Hire $464.55 $563.64 $1,900.90 Court and Equipment Hire $178.18 $85.45 $60.00 History Book Sales $346.37 $484.09 $286.38 Cons of Aboriginal Sites $5,968.00 Heritage Grants 03/04 $128,720.00 Heritage Trail Brochure Grant $5,000.00 Anzac Park Memorial Project Grant $10,000.00 Railway Trail Reserve Grant $5,000.00 Library Charges & Fines $125.43 $6.00 2007 WAIRC 00941

2003/2004 2004/2005 2005/2006 Account Trading Income Trading Income Trading Income Sale of Brochure $4.55 Youth Officer Grant $20,000.00 $21,250.00 $1,200.00 Youth Officer Other Income $207.40 Special Events Promotion Ticket $1,145.41 $1,734.55 Community Safety Grant $6,200.00 Qfest - Stalls $577.25 $1,312.74 Qfest - Souvenirs $3,710.86 $702.97 Qfest - Other Income $48,733.52 $4,150.00 $431.82 Qfest - Grants $25,136.36 Office Charges $507.94 $706.90 $344.05 Interest - CM, Muni, Trust $13,740.76 $3,802.11 $30,210.62 Interest - Commercial Bills $16,896.46 Interest - LSL Reserve $483.40 $511.93 Interest Airport Reserve $5,549.90 $6,647.70 Interest Building Mtce Reserve $257.54 $332.51 $1,127.25 Interest Community Bus Reserve $1,416.27 Interest Mobile Phone Reserve $1,069.60 $713.39 Interest Plant Reserve $4,941.61 $4,650.46 $7,186.59 Interest Sports Complex Reserve $146.51 $225.42 Interest Streetscape Reserve $1,254.94 $1,988.96 Interest Telecenter Reserve $299.54 $163.50 Interest Brockman Pk Reserve $179.71 $217.55 Interest TV Reserve $12.08 $10.53 $64.22 Airport Grant $20,574.98 $2,425.02 Airport Fees $1,058.63 $1,261.35 $836.68 Commercial Property Rentals $3,600.00 $4,781.80 $5,090.89 Historical Photo Donations $225.55 $164.55 $180.25 Caravan Park Site Fees $14,791.17 $10,407.27 $32,885.19 Water Sales $1,130.50 $742.16 $5,604.27 Cue Information Booklet $361.35 $141.05 $582.26 Contract Private Works $12,299.70 $17,806.95 $27,992.80 Plant Hire $492.95 $7,531.96 $723.62 Sale of Sand & Gravel $6,878.64 $3,587.78 $2,032.70 Subtotal $218,557.85 $324,130.57 $165,202.29 Operating Revenue $2,245,850.00 $2,395,788.00 $2,449,718.00 Subtotal Percentage of Operating Income 9.73% 13.53% 6.74% 2007 WAIRC 00941

Potential Potential Trading Potential Account Trading Income Income Trading Income Building Licenses/Permits $2,134.33 $994.00 Legal Expenses Recovered $5,405.00 Casual - Pays CDEP $3,400.00 $10,400.00 CDEP Grant $19,520.00 Multipurpose Community Facility $20,000.00 Abolution [sic] Block Grant $15,000.00 Rate Inquiry $190.90 $318.93 $395.45 Rate Installment [sic] Fees $1,515.00 $1,515.00 $735.00 Contributions and Donations $500.00 Housing Reimbusement [sic]/Sundry $518.00 $409.09 $212.37 Airport Sundry Reimbursement $1,090.41 $5,381.38 $2,468.91 Reinbursements [sic]/Sundry $4.54 $29.56 Reinbursements [sic]/Sundry $311.71 $3,225.48 $227.27 Reinbursement [sic]/Sundries $11,015.03 Reinbursement [sic]/Sundries $464.45 $2,425.02 $240.65 Total $272,063.35 $369,464.34 $176,410.50 Operating Revenue $2,245,850.00 $2,395,788.00 $2,449,718.00 Percentage of Operating Income 12.11% 15.42% 7.20%"

(Exhibit 1 Appendix A)

13 In relation to the Respondent's income for fire and emergency services, Mr Seale testified that the Respondent receives a notional grant each year from the State government. After information is sent to the State government about the estimated cost of providing the service the State government provides the money sought by the Respondent. The ESL FESA administration fee is generated by charges rendered in statutory rate notices payable by property owners in the shire. Income from septic fees and rubbish collection charges is also received by the Respondent as part of rates and charges that are charged to land owners annually.

14 In relation to the income for rent from staff and other housing, Mr Seale testified that the Respondent owns eight or nine houses which are provided to employees to use as accommodation because the shire is in a remote location. The item "Cont'n - Housing Utilities" are amounts received as contributions to utility charges by staff who have been provided with accommodation.

15 The pensioner huts are overnight accommodation for travelling visitors. Mr Seale said that they are very small single units which are basic and contain sparse facilities for which moderate fees are charged for the use of those facilities. He said that the facilities are not used very much. Consequently, the rent received from hiring the huts has been low.

16 Mr Seale said that cemetery fees are statutory fees. Cemetery fees are charged because they offset the cost of providing cemetery services. He said that the fees are not applied with the object of being profitable but to recover the cost of providing the service. 2007 WAIRC 00941

17 Community bus fees and charges are generated from the hire of a bus which is owned by the Respondent. Income is also generated from the hire of the hall, the sports courts and equipment.

18 The Respondent also receives income from souvenirs, history books and an information booklet. They also sell tourist items such as coffee cups, teaspoons, maps and things of that nature which provide minor amounts of revenue.

19 In relation to the money received by the Respondent for the conservation of Aboriginal sites, Mr Seale is unable to say from whom the Respondent received that money but he was able to say the money was expended on a sacred Aboriginal site at Walga Rock. The money was used to construct pathways, fences and clear scrub around the site. To carry out the work the Respondent employed a group of indigenous people who are available to be contracted to carry out such work.

20 During the three years of trading, that the Respondent says are relevant to the determination of this application, the Respondent received four grants for projects. A heritage grant for 2003/04, a heritage trail brochure grant, an ANZAC Park Memorial project grant and a railway trail reserve grant. These were all grants for specific purposes. Mr Seale says that they were part of the Respondent's trading activities because they are part of the "face" of local government. The heritage grants 2003/04 were to restore heritage listed buildings in the town, which are well over a hundred years old. The funding was received from the Heritage Council of WA. To carry out the work they engaged consultants and builders approved by the Heritage Council of WA. The Respondent also engaged a heritage consultant architect to manage the project who tendered out the work to skilled persons. The second grant was received, he thought, from Lotteries WA, to prepare a brochure to use as a promotional facility for a heritage site. The money for the ANZAC Park Memorial project was provided from the Premier's Department to erect a steel fence. Mr Seale said, however, that the money was returned because the shire felt that a tall fence around a memorial looked peculiar and they wanted a lot more open space. The railway trail reserve grant funds are intended for the construction of a path around the town to connect points of interest but work is yet to be carried out. Mr Seale said that it has not been determined whether the Respondent's employees will carry out that work but it is within their capabilities and he would expect that work to be carried out in house.

21 In respect of library charges and fines, Mr Seale said that there is no fee for borrowing from the library but a fee is charged for damage to books, videos, records and penalties are imposed for late returns.

22 In relation to the funds received for the youth officer grant, Mr Seale said that the Respondent received a grant from the Office of Crime Prevention and they used the funds to engage a person for a 12 month period. The youth officer was employed by the Respondent for a specified term to provide services and coordinate sporting and recreational activities for the community. However, at the end of 12 months, interest in the position was waning, so the person was not re-engaged.

23 Mr Seale was unable to say from where the income was received for the special events promotion ticket or how that money was used. As to the community safety grant, he said that the grant was also received from the Office of Crime Prevention towards developing a plan for community safety. This project is ongoing and is intended to provide a framework for the Respondent and the community to work cooperatively towards improving safety issues in the town. Mr Seale said that no one is charged for this service. 2007 WAIRC 00941

24 The Respondent conducted a festival known a "Qfest" in 2003/04 and 2004/05. This was intended to be an annual event which attracted some interest and substantial funding. The Respondent coordinated the festival by engaging a consultant to administer it. The Respondent contributed the majority share of the funds and other organisations such as, Healthways and the Lotteries Commission contributed grants. Income was earnt from the sale of entry tickets, participation in the festival, the sale of souvenirs, tourist artefacts and other items.

25 In respect to the amounts indicated as income received for office charges, Mr Seale said that the Respondent provides ancillary services to the public for a fee, such as, the use of facsimile machines and photocopying services.

26 In relation to all of the amounts which are set out as income from interest on various funds, Mr Seale said that all amounts of interest are generated from funds held in the bank.

27 In relation to the airport grant funds, Mr Seale testified that the Respondent received a small grant to repair damaged lighting at the airport. In particular, they received funds to repair an electrical fault through the Department for Planning and Infrastructure who provide funding for airports under the Regional Airport Fund. The airport fees are fees charged to persons who use the airstrip. Users of the airport are charged a fee for landing services because the Respondent often has to inspect the airstrip to make sure there are no cattle, livestock, any windblown litter, rocks or damage from rain on the airstrip. As there is a cost attached to this service the Respondent offsets that cost by charging a fee.

28 As to the amounts received for historical photograph donations, Mr Seale explained that the Respondent has an extensive array of photographic memorabilia in its chambers and people frequently make donations when they view the gallery. If no donation made, no fee is levied to view the collection.

29 In respect of the monies received from water sales, Mr Seale testified that in times of drought the Respondent sells water to station owners who access potable water for domestic use from a stand pipe in the main street. Mr Seale said that the Water Corporation charges the Respondent a fee for the purchase of the water and the Respondent on-charges the users, not to make a profit but on a cost recovery basis.

30 In relation to the funds received for contract private works, plant hire and sale of sand and gravel, Mr Seale said that it funds work on the roads that are maintained by and owned by the Respondent from its own revenue and from contributions from Main Roads Western Australia and funds from the Canberra office of the Roads to Recovery Program. The Respondent also receives funds from private contracts. Private works are entered into with ratepayers and mining companies or whoever wishes to utilise the services of the shire's plant, equipment, personnel and resources. He said that if a mining company wishes to clear an area for a drilling pad, they contract the Respondent to carry out the work because the Respondent has the heavy earthmoving equipment and personnel and it is very convenient to utilise the Respondent's resources which are on hand. Mr Seale said that this is because the closest centre from which such equipment can be privately sourced was probably Geraldton. Mr Seale also said that the Respondent was currently negotiating with a mining company to maintain a road between a mine site 200 kilometres from the town and the value of this work is likely to be about $400,000 to $500,000 per annum.

31 Mr Seale did not give any evidence about the items that are set out in Appendix A which are stated to be potential trading income. 2007 WAIRC 00941

32 Mr Seale said that the income received from each activity set out in Appendix A is normally reasonably consistent from year to year and he does not expect these figures to change much in the future.

33 Mr Seale says that several of the services the Respondent says are trading activities are vital to the community and the shire. In particular, he says that Qfest, private works and refuse collection are significant activities of the Respondent. Statutory Scheme

34 Pursuant to s 2.5 of the LG Act, each local government body is a body corporate and has the legal capacity of a natural person. Under s 2.6, local governments are to be run by elected councils. The mayor or president of a local government authority is required to provide leadership and guidance to the community in the district among other functions. Pursuant to s 2.10, among other functions the role of the council is to represent the interests of electors, ratepayers and residents of the district; provide leadership and guidance to the community in the district. The general function of a local government under s 3.1(1) is to provide for the good government of persons in its district. Pursuant to s 3.5, local governments can make local laws prescribing all matters that are required or permitted to be prescribed by a local law, or are necessary or convenient to be so prescribed, for it to perform any of its functions under the LG Act.

35 Under s 3.18, a local government is to administer its local laws and may do all other things that are necessary or convenient to be done for, or in connection with, performing its functions under the LG Act. Under s 3.18(2) in performing its executive functions, a local government may provide services and facilities.

36 A local government's ability to receive revenue and income is prescribed by s 6.15 of the LG Act.

37 Section 6.15(1) and (2) of the LG Act provides: "(1) A local Government may receive revenue or income – (a) from – (i) rates; (ii) service charges; (iii) fees and charges; (iv) borrowings; (v) investments; or (vi) any other source, authorised by or under this Act or another written law; or (b) from – (i) dealings in property; or (ii) grants or gifts. 2007 WAIRC 00941

(2) Nothing in subsection (1)(a) authorises the making by a local government of a local law providing for the receipt of revenue or income by the local government from a source not contemplated by or under this Act."

38 Section 6.16 of the LG Act provides: "(1) A local government may impose* and recover a fee or charge for any goods or service it provides or proposes to provide, other than a service for which a service charge is imposed. * Absolute majority required. (2) A fee or charge may be imposed for the following – (a) providing the use of, or allowing admission to, any property or facility wholly or partly owned, controlled, managed or maintained by the local government; (b) supplying a service or carrying out work at the request of a person; (c) subject to section 5.94, providing information from local government records; (d) receiving an application for approval, granting an approval, making an inspection and issuing a licence, permit, authorisation or certificate; (e) supplying goods; (f) such other service as may be prescribed. (3) Fees and charges are to be imposed when adopting the annual budget but may be – (a) imposed* during a financial year; and (b) amended* from time to time during a financial year. * Absolute majority required."

39 Section 6.17 of the LG Act provides: "(1) In determining the amount of a fee or charge for a service or for goods a local government is required to take into consideration the following factors – (a) the cost to the local government of providing the service or goods; (b) the importance of the service or goods to the community; and (c) the price at which the service or goods could be provided by an alternative provider. (2) A higher fee or charge or additional fee or charge may be imposed for an expedited service or supply of goods if it is requested that the service or goods be provided urgently. (3) The basis for determining a fee or charge is not to be limited to the cost of providing the service or goods other than a service – (a) under section 5.96; (b) under section 6.16(2)(d); or 2007 WAIRC 00941

(c) prescribed under section 6.16(2)(f), where the regulation prescribing the service also specifies that such a limit is to apply to the fee or charge for the service. (4) Regulations may – (a) prohibit the imposition of a fee or charge in prescribed circumstances; or (b) limit the amount of a fee or charge in prescribed circumstances."

40 The basis of setting rates and service charges is set out in Division 6 of Part 6 of the LG Act. Rates are imposed on land pursuant to ss 6.25 to 6.30 and 6.37 of the LG Act whilst service charges are imposed on owners and occupiers of land under s 6.38 of the LG Act. Pursuant to s 6.44 of the LG Act (except in respect of a service charge imposed on an occupier of land who is not the owner of that land) the owner for the time being of land on which a rate or service charge is imposed is liable to pay the rate or service charge. Respondent's Submissions

41 At the hearing of this matter on 17 April 2007, a brief submission was made on behalf of the Respondent that the trading activities outlined in the evidence of Mr Seale are fundamental to the operation of the organisation and its solvency and that when regard is had to the percentage of trading activities in Appendix A which are said to constitute trading, compared to the Respondent's overall income, a finding should be made that the Respondent is a constitutional corporation.

42 On 11 May 2007, the Full Bench of this Commission delivered its decision in Lawrence. In Lawrence the Full Bench considered whether the Aboriginal Legal Services of Western Australia Incorporated ("ALSWA") engaged in trading and whether it is a trading corporation. In its decision the Full Bench comprehensively considered the concept of “trade” and “trading”. On 15 May 2007, both parties in this matter were invited by the Commission to consider whether they wished to adduce any further evidence or make any submissions about any relevant issue raised by the Full Bench in Lawrence. In addition, the parties were also invited to make submissions about ss 2.6 to 2.10; ss 3.1 to 3.2; ss 3.4 to 3.5; Division 5 of Part 6; and s 6.50 of the LG Act. The parties were advised that they were to inform the Commission whether they wish to make further submissions or adduce any further evidence by Wednesday, 23 May 2007. The Applicant advised the Commission that she did not seek to make any submissions or adduce any further evidence. The Respondent on 23 May 2007 informed the Commission that it wished to make submissions about the provisions of the LG Act and the decision in Lawrence but it did not wish to adduce any further evidence. The Respondent sought an extension of time to make submissions as it wished to seek legal advice. The Respondent was granted an extension of time to 15 June 2007 to file its submissions. On 15 June 2007, the Respondent's solicitors, Lavan Legal filed supplementary submissions on behalf of the Respondent. In the Respondent’s supplementary submissions, the Respondent made a submission that the Commission should regard the collection of revenue from ratepayers pursuant to rate notices as “trading”. As a result of this submission the Commission provided the parties an opportunity to make submissions in relation to the effect of Division 6 of Part 6 and s 3.59 of the LG Act. In particular, the Commission asked whether it is open to find that a statutory charge that attaches to land and thus becomes payable by the owner of the land can at law constitute “trading” when no exchange or transaction passes between the Respondent and any ratepayer to create the obligation to pay the rates. The Applicant chose 2007 WAIRC 00941

not to make a submission. On 4 July 2007, the Respondent filed a further submission which dealt with this issue.

43 The Respondent says in its supplementary submissions that based on the summary at [232] of Lawrence the following matters are particularly in point to the Commission's determination of this application: "3.1 Whether the respondent is a trading corporation involves questions of fact, to be determined upon the evidence before the Commission. 3.2 The primary focus is on what the respondent does. This determines what its activities are. 3.3 The respondent is a trading corporation if its [sic] substantially engages in trading activity. This necessitates a close analysis of what the appellant [sic] does, and whether this in whole or part constitutes trading. If all of its activities are trading, it is a trading corporation. If a portion of its activities are trading then it is necessary to consider whether that portion is a substantial or significant portion of its overall activities. If so it is a trading corporation. 3.4 It is immaterial if a corporation has a non-profit, benevolent or charitable object; if its trading activities are nevertheless substantial then it will be a trading corporation.”

44 The Respondent says that notwithstanding any perceived constraint that there might be on the operations of the Respondent as a shire under the LG Act that it is not a final determinant of whether the Respondent is a trading corporation. Furthermore, it is submitted that ss 2.6 to 6.50 of the LG Act, when read in the overall context of the LG Act, empowers the Respondent to trade in the sense of earning revenue from a number of sources, notwithstanding some constraints placed on trading activity within the general context of the LG Act.

45 In relation to ss 2.6 to 2.10 of the LG Act, the Respondent says these sections simply record that local government such as the Respondent are to be "run" by elected councils. As such none of these provisions have any material bearing on whether the Respondent actually trades or is a constitutional corporation. However, it is noted that by s 2.5 of the LG Act, a local government is a body corporate with perpetual succession and a common seal and has the legal capacity of a natural person.

46 The Respondent says that ss 3.1 to 3.5 of the LG Act assist in the determination of the issue before the Commission in this matter in that, for instance, s 3.1(1) specifies that the general function of a local government is to provide for the "good government of persons in its district" and that s 3.1(3) provides that "A liberal approach is to be taken to the construction of the scope of the general function of a local government". The Respondent points out that Division 5 of Part 6 of the LG Act says that a local government may receive revenue or income from a number of sources being: rates, service charges, fees and charges, borrowings, investments, any other source authorised by or under the LG Act, or another written law, or from dealings in property, or grants or gifts. The Respondent says that the receipt of revenue or income from these sources must be construed by "the liberal approach" as set out in s 3.1(3) of the LG Act.

47 The Respondent says that s 6.50 is not material, all it does is record a local government's ability to enforce payment of rates or service charges and such charges are inherently no 2007 WAIRC 00941

different from other revenue which may be due to a local authority because of a contract or other legislation.

48 The Respondent says that the statutory framework by which the Respondent is constituted under the LG Act is not the determinant of whether the Respondent is a trading corporation or not. This is illustrated by the large number of cases in which local governments or similar statutory authorities have been found to be trading corporations and ultimately constitutional corporations. Cases illustrating this point include: Burrows v Shire of Esperance (1998) 86 IR 75 ("Shire of Esperance"), Todd v City of Armadale (1998) Print Q2525 ("City of Armadale"), Warroo Shire Council (2000) Print S7187 ("Warroo Shire Council"), Australian Services Union v Corporation of the City of Port Augusta PR953472 ("Corporation of the City of Port Augusta") and Pellow v Umoona Community Council Inc PR973365 ("Pellow").

49 The Respondent points out that in Lawrence it is stated at [317] that the best general description of trading “is an exchange for value or the provision of goods or services for value”. With this general description in mind, the Respondent says that a significant portion of the activities of the Respondent are trading in that they constitute an exchange for value for the provision of goods or services for value. It says that the trading activities of the Respondent are set out in the witness statement of Mr Seale and each one of the activities he refers to constitute an exchange for value provided by the Respondent or the provision of goods or services for value. In the event there be any contention in that regard, the Respondent says on the authority of Shire of Esperance that activities such as domestic and commercial refuse collection are trading activities. It is submitted on behalf of the Respondent that the decision of Polites SDP in Shire of Esperance which has been followed on many occasions, is relevant and should be followed by the Commission in this instance in relation to the assessment of trading activities of the Respondent.

50 It is also submitted that in addition to what is said in the witness statement of Mr Seale that the collection of revenue by the Respondent from ratepayers, pursuant to rate notices issued on an annual basis by the Responded to various town, mining and pastoral property owners, should be considered to be trading activity. It is contended by the Respondent that the usual services provided to ratepayers within the Respondent's operations, such as the cleaning of streets, road maintenance and parks and gardens development and maintenance, are the provision of services for value to the individual ratepayers of the Respondent. The Respondent points out that these services are not provided pursuant to any contract or directive of State government but according to the policies and requirements of the Respondent and its ratepayers. It says that the circumstances in this case can be distinguished from Lawrence whereby the revenue derived by the ALSWA was without exchange for value between the ALSWA and its indigenous clients, provision of the services being provided pursuant to a contract directed and controlled in effect to enhance a particular albeit broadly stated government policy. The Respondent also says that Pellow at [28] similarly identifies Federal and State grant funding to a statutory authority as not being a trading activity. Therefore, it is submitted that it is open to the Commission to find in this matter that as rates are not federally or State sourced, ie not grant funded, but directly obtained by the Respondent from its ratepayers, they are trading activities in respect for which value is received by ratepayers. The Respondent also says as set out in Lawrence the approach that should be taken by the Commission in assessing the Respondent's trading activities is to "consider all of the activities of the Respondent" and make a qualitative assessment of what they are and what the Respondent does (Lawrence at [327]). 2007 WAIRC 00941

51 The Respondent contends that the revenue received by the Respondent for rates is more than a "public welfare service" provided by the Respondent pursuant to a contract as was the case in Lawrence. It is the rendition of a fee for value in respect of which ratepayers receive a selection of the Respondent’s services. The Respondent says that taking into account the combination of effect of the factors set out in Lawrence, it is open to the Commission to find and it should so find that a significant proportion of the activities of the Respondent are trading activities and that consequently the Respondent is a trading corporation.

52 In relation to the question whether “a statutory charge that attaches to land and thus becomes payable by the owner of the land can at law constitute ‘trading’ when no exchange or transaction passes between the Respondent and any ratepayer to create the obligation to pay the rates”, the Respondent says in its further submission that it may be inferred by this question that for the Respondent to be found “trading” there has to be a discrete exchange or transaction between the Respondent and its ratepayers to create an obligation to pay rates as opposed to the imposition of the obligation to pay the rates by statute as they are by the LG Act. As an initial answer to the question posed, the Respondent emphasises, that service charges and rates are imposed under the same Division 6 of Part 6 of the LG Act. One such service charge that is routinely charged by local governments including the Respondent is a garbage collection fee. That fee is imposed under s 6.38 of the LG Act. Although the Respondent concedes that garbage collection service charge is not in the words of the Commission’s query an “exchange or transaction between the Respondent and any ratepayer to create the obligation to pay the service charge”, it says that nevertheless even where such obligation to pay arises by statute, such activity has been found in cases such as the Shire of Esperance to be “trading”.

53 The Respondent also says that because of the way rates and service charges are provided for, imposed and collectable under the same Division 6 of Part 6 of the Act, it is submitted that if one is “trading”, the other, namely rates, should also be “trading”. In addition, the Respondent says that in the context of Division 6 of Part 6 of the LG Act, rates are in effect no more than a collection of individual service charges group together as a single rate charged by the Respondent. The Respondent says that further support for its submission can be found in s 6.37 of the LG Act, under the heading “Specified area rates”. This section authorises a local government to charge rateable land (a ratepayer) an extra specified rate for the purposes of “a specific work, service or facility” that will be of benefit or contribute to the needs of a local ratepayer or resident. It is the Respondent’s submission that if a specified area rate is under the LG Act for the provision of a particular work, service or facility, general rates are also fees for the provision of works, services and facilities in a general or collective sense being no different in kind to charges for a specific work, service or facility.

54 The Respondent contends that rates and service charges can be equated as inherently of the same ingredient and therefore “trading” which is consistent with s 3.1(3) of the LG Act which provides for a liberal approach to be taken to the construction of the scope of the general function of a local government and s 1.3(3) of the LG Act which says, “… a local government is to use its best endeavours to meet the needs of current and future generations through an integration of environmental protection, social advancement and economic prosperity”.

55 The Respondent also submits that it is open to the Commission to find that the payment of rates to a local authority such as the Respondent is a payment made by an “exchange”. The basis of this submission is that the Respondent says that ratepayers by the nature of the transaction, are entitled to the provision of services and as such, the transaction of paying rates initiates a reciprocal delivery/exchange of services by the Respondent. This is accentuated by 2007 WAIRC 00941

the capacity of the Respondent under the LG Act to specify “specified area rates” and “differential general rates” and the fact that service charges are in any event “trading”.

56 In relation to s 3.59 of the LG Act which provides for commercial enterprises by local governments, the Respondent points out that a trading undertaking for the purposes of the LG Act under s 3.59 is defined as an activity carried on by a local government with a view to producing “profit” to it. It says, however, that trading under this definition is wider than that as has been found to be “trading” for purposes of whether an organisation is a constitutional corporation because the pursuit of profit is not always a requirement for there to be “trading” in the latter context (Pellow at [28] and R v Trade Practices Tribunal and Ors; Ex parte St George County Council (1974) 130 CLR 533 (“St George County Council”) at 539 and 569). From the Respondent’s perspective, it is submitted that s 3.59 has no bearing on the question for determination by the Commission as trading under s 3.59 would constitute “trading” for purposes of the Commission’s determination in any event.

57 The Respondent finally says in its further submission that notwithstanding the fact that a portion of the revenue received by the Respondent is received by government grant and is therefore distinguishable from rates and service charges, an average of 10 per cent of the Respondent’s revenue was generated from trading activities in the years 2003 to 2004. If the rates revenue is also included, the trading revenue would be appreciably higher. The Respondent says the Commission should note the decision in United Firefighters’ Union of Australia and Ors v Metropolitan Fire and Emergency Services Board (1998) 83 FCR 346 (“Firefighters’ ”) where just five per cent of revenue allowed the Court to find the Board was “trading”. It is submitted that with the Respondent’s revenue stream being at least 10 per cent, this is another reason, based on all the facts and the Respondent’s overall operations, that the Respondent should be found to be “trading” and ultimately a “constitutional corporation”. Trading

58 The Respondent in its supplementary submission relies upon the finding of the Full Bench in Lawrence where it observed at [317]: "... in our opinion the best general description of trading is an exchange for value or the provision of goods or services for value." When the judgment in Lawrence is read carefully it can be seen that this observation by the Full Bench is part of the summary of its findings at [286] where after reviewing a number of decisions of the High Court, the Federal Court and the Australian Industrial Relations Commission, the Full Bench said: "A summary of points about 'trading' emerging from the authorities, together with our observations about them is as follows:- (a) The word is of wide import (Murphy J in Adamson at 239; Deane J in Ku- ring-gai at 648-649; The Full Federal Court in Bevanere at 330). (b) Although 'buying and selling' may be the clearest example of trading, it is not restricted to this (Stephen J in St George County Council at 569-570; Barwick CJ in Adamson at 209; Mason J in Fontana Films at 203; Toohey J in Hughes principle 7 at 20 (FCR), 672 (ALR); Carr J in Quickenden at [101]; Deane J in Ku-ring-gai at 649; Dixon J in Bank of NSW at 381). The appellant's counsel's submissions, tended to focus on clauses of the contract that referred to 'purchase' and 'sale'. We did not however take his submissions to be to the effect that it was for only this reason that the entering into and performance under the 2007 WAIRC 00941

contract was trading. Nor on the authorities, would so restrictive an approach be required. (c) Although the desire to earn profit may ordinarily be part or an element of trading, trading does not always require the attainment of profit (Barwick CJ in St George County Council at 539; Stephen J in St George County Council at 569; O'Callaghan SDP in Pellow at [28]; Deane J in Ku-ring-gai at 649). For example, a person who sells his or her shares at a loss, is nevertheless engaging in trading. (d) In our opinion, with respect, the most apt general description of trading is that succinctly stated in principle 7 at 20 (FCR), 672 (ALR) by Toohey J in Hughes: the activity of providing, for reward, goods or services. This does not mean we regard this as an all encompassing definition. To so describe what Toohey J has said would ignore point (a) above. The description of Toohey J is supported by Bowen CJ in Ku-Ring-gai at 625, as cited with approval by the Full Federal Court in Bevanere at 330. It is also consistent with the Macquarie Dictionary, 4th edition, 2005 definition of trading as 'exchange for reward'. The word 'reward' in this context means 'something given or received in return or recompense …' (Macquarie Dictionary, 4th edition, 2005). In the present context an appropriate synonym would be 'for value'. Therefore broadly speaking in our opinion trading generally involves an exchange, or the provision of goods or services, for value. Both the provider and the receiver of the goods or services will, when this occurs, be trading. Barter, referred to earlier, could therefore be trading. There is an exchange of goods where the 'value' is represented by the receipt of the goods from the other. (e) Some of the authorities refer to 'commerciality' (Barwick CJ in Adamson at 209; Bowen CJ in Ku-ring-gai at 625 and the Full Federal Court in Bevanere at 330). Carr J in Quickenden at [101] referred to the earning of 'revenue' and O'Callaghan SDP in Pellow at [28] to the earning of 'income'. We have considered whether commerciality is a separate requirement for trading to occur. In our opinion it is not. This stems from a consideration of what was precisely said in the High Court and Federal Court authorities just cited, the relevant passages of which were earlier quoted. (We have deliberately excluded Pellow from this because of our respectful opinion about the weaknesses in the analysis.) Also, in our opinion, if there is an exchange of goods or services for value this is in itself trading without the necessity of considering if there is an independent element of commerciality about the transaction. For example, a private purchase and sale of a car advertised in a newspaper is trading even though it is essentially a domestic arrangement. There is an exchange of personal property for value. The requirement of an exchange for value of itself supplies any requirement for commerciality in the arrangement for it to constitute trading. (f) Wilcox J in Australian Red Cross and O'Callaghan SDP in Pellow suggest that the gratuitous provision of a public welfare service, where the money to engage in the service is supplied by government funding, is not trading. In our opinion, and with respect, so broad a proposition is not supported by the decisions of the High Court or the other authorities cited above which discuss the meaning of 'trade' or 'trading'. In a situation where there is in effect, a tripartite arrangement involving the government it is necessary to look at the basis on which the money is 2007 WAIRC 00941

received to provide services to ascertain if any or all of this constitutes trading. This approach is not inconsistent with the authorities, which establish the relevant principles. There is no reason in principle why a tripartite arrangement may not constitute trading. The fact that government funds are used for a public welfare service, does not necessarily have the effect that the means by which the funds were received, or the arrangement overall, is not trading. The correct approach in our opinion is to carefully consider, on a fact specific basis, the means by which the government funds are provided to a corporation, to see if it is trading. Accordingly, the provision of funds by government to a corporation may or may not constitute trading. Furthermore, as we will explain more fully later, even if it is trading this does not necessarily mean the corporation is a trading corporation. In our view, to determine if it is, a holistic appraisal must be made of the activities of the corporation. This will allow a conclusion to be made about whether the trading components of its activities are sufficient to lead to characterisation as a trading corporation."

59 In my opinion, when careful regard is had to the authorities referred to by the Full Bench that inherent in the concept of "trading" or "trade" in the authorities referred to by the Full Bench is a transaction or dealing between persons whether in person or through a corporate entity. Such a transaction or dealing would include a sale, an exchange of goods or services (such as barter) or a tripartite arrangement whereby A agrees to pay B to provide a service to C.

60 In Lawrence the major source of income of the ALSWA was from the Federal government. The ALSWA had entered into a three year contract with the Federal government to provide funds for the provision of legal services to indigenous Australians in Western Australia. After examining the express terms of the contract the Full Bench concluded that the transaction by which the funds were provided (the contract) constituted "trading" but because the use made of the funds, specified by the government, was the provision of legal services without charge, the activity of the ALSWA was not trading. At [331](e) the Full Bench held that the ALSWA was not a trading corporation: "The providing of the legal service is not just the predominant activity of the appellant. It permeates through and enshrouds all that it does. The obtaining of funds from the department, although involving trading, is not an independent trading activity to enable the appellant to carry out a non trading activity. The two are inextricably linked. The funds obtained are required to be used for an activity which is not trading. This affects the extent, in a qualitative sense, of the trading with the department as against the activities of the appellant as a whole. When the activities of the appellant are considered as a whole, in the words of Mason J in Adamson trading activities do not 'form a sufficiently significant proportion of its overall activities to merit its description as a trading corporation'. Put slightly differently, to use the process of Toohey J in Hughes, from evaluating the extent of the trading activities against the totality of activities, we have reached the conclusion that the trading activities are not so significant to give the appellant 'the character of a trading corporation'."

61 The Full Bench in Lawrence also held that in determining whether an activity constitutes "trading" where funds are received by a corporation from government that there were a number of issues among others which are relevant to determine whether the corporation is a trading corporation. At [330] they observed: 2007 WAIRC 00941

"In our opinion, when funds are provided by government to a corporation there are some features of this that are relevant which may not apply when non government sources of funds are involved. This is because of the nature of government in that it, in particular, may require funds to be used for non trading activities. There are the following interrelated questions, issues and comments which in our opinion are relevant to determine whether a corporation in receipt of government funds is a trading corporation. (Although this is not intended to be an exhaustive or all encompassing check list). (a) Whether the basis on which the funds are provided constitutes trading. (b) The use that is made of the funds. (c) Related to (b) there may be a purpose specified by the government for the use of the funds. For example the funds may be required to be used for the provision of particular services. (i) If so, it is relevant to consider whether the specified use does or does not involve the provision of services to recipients which does not constitute trading. (ii) Even if a use is not specified it is still relevant to consider how the corporation uses the funds and if so whether that use in whole or in part constitutes trading with another or others. (d) The link between the provision of the funds, the use made of the funds and the activities of the corporation as a whole. There are a number of elements involved in this which are relevant and although the particular facts will need to be considered it is unlikely that a consideration of only one will be determinative of trading corporation status. The elements include:- (i) Whether the government has placed any restriction as a condition of the provision of the funds; such as that they can or must be used for particular activities and if so what. (ii) What the activities of the corporation are, in the sense described in the authorities. That is, overall, what it does. To assess what it does, it is artificial to split the receipt of government funds from what the corporation does with them. The accumulated or combined effect of the basis of receipt and the use of the funds is important in assessing what the corporation does as a whole and whether any trading activity is a sufficiently significant proportion of its overall activities to lead to a conclusion that it is a trading corporation. (iii) The proportion that the government funds received by the corporation bears to its income as a whole. (iv) The size of the amount of the funds received." At law are all the “trading activities” identified by the Respondent, trading activities?

62 I do not consider that the s 3.1(3) of the LG Act provides any assistance in determining whether the Respondent engages in trading activities. Section 3.1 simply enables local governments to construe the scope of their functions under the LG Act widely and does not assist the Commission in assessing whether the activities the Respondent engages in constitute at law “trading”. 2007 WAIRC 00941

63 In relation to the ESL FESA administration fees, septic fees and rubbish collection charges, I am not satisfied that the income received from those items can be said to be income received as a result of trading activity of the Respondent. The income received for the ESL FESA administration fees, septic fees and rubbish collection charges are statutory charges imposed on the Respondent's ratepayers through rates and charges imposed on land owners in the shire. Although, I accept that the Respondent provides fire and emergency services, and septic and rubbish collection services to its ratepayers, I am not satisfied that it does so because it has entered into any agreement, exchange, transaction or a course of dealing with its ratepayers to do so.

64 In making this finding I have not found the decision of Polites SDP in Shire of Esperance persuasive. In his judgment at 77 His Honour firstly correctly observed: "It seems clear from the authorities that trading denotes the activity of providing for reward goods or services or as Stephen J put it in the St George County case 'it is the acts of buying and selling that are at the very heart of trade' (at 570). Two other points should also be made. First, it is not necessary to be engaging in trade that the corporation's desire is to make a profit, Commonwealth v Tasmania (1984) 158 CLR 1 (the Tasmanian Dam case) per Mason J at 155. Secondly, the Tasmanian Dam case seems to make it clear that the fact that trading activity is undertaken pursuant to a statutory power does mean that a corporation which is in fact trading is a trading corporation in the constitutional sense." Polites SDP then went on to consider a finding made by Davies J in Mid Density Developments Pty Ltd v Rockdale Municipal Council (1993) 39 FCR 579 in which Davies J rejected arguments that the Rockdale Municipal Council was a trading corporation based on its garbage collection and leasing activities. Polites SDP concluded that Davies J was wrong on the basis that Davies J characterised the provision of garbage services as a function of government that the council was required by statute to provide. Whilst I agree that it may be immaterial whether an activity of a government body is performed pursuant to a statutory obligation as a function of government, with respect, in my opinion, the analysis by Polites SDP is flawed, as His Honour did not examine whether the money obtained from the garbage collection services were obtained from or by an activity that constituted trading. He simply characterised the garbage collection services as trading because the funds received were charges for a service. His Honour, however, did not examine how those charges were imposed.

65 In this matter Mr Seale gave no evidence that the Respondent enters into any transaction with the Respondent's ratepayers to pay septic and rubbish collection charges. The imposition of a charge contained in a statutory rate notice to a ratepayer without an application, or request by a ratepayer for a service or some other transaction does not constitute trading. It is clear from Division 6 of Part 6 of the LG Act that rates and service charges attach to the land within the shire pursuant to s 6.43 of the LG Act and the owner of the land only becomes liable to pay for services for which rates are charged through the operation of s 6.44 of the LG Act. The rates and service charges are payable on a date as determined by a local government authority (s 6.50 of the LG Act). To say that a transaction within the meaning of trading arises when the rates and charges notice is paid which initiates a reciprocal delivery or exchange of services is in my view misconceived as the payment is made in compliance with a statutory obligation to pay and not for an exchange of services. In addition, ss 6.43, 6.44 and 6.50 make it plain that there is no connection between the payment of rates and service charges and the invitation of delivery services. Although s 6.38 provides that the money received for service charges must be used to meet the cost of providing the specific service for which the service charge was 2007 WAIRC 00941

imposed, the payment of the service charge does not trigger the provision of the specific service.

66 In addition, I do not find the decision in City of Armadale or Warroo Shire Council or Corporation of the City of Port Augusta of assistance. O'Callaghan SDP in Corporation of the City of Port Augusta and Hodder C in Warroo Shire Council did not embark upon any analysis of "trading" other than to apply the reasoning of Polites SDP in Shire of Esperance and Laing C in City of Armadale carried out no analysis of activities said to constitute "trading". Further, I do not find the reasoning of O'Callaghan SDP in Pellow of assistance for the reasons outlined by the Full Bench in Lawrence at [265] to [272] and [276] to [277].

67 In relation to the income the Respondent received as grants, it may be that some of those grants may constitute or involve trading (see Lawrence at [286](f) and [269](d)). When considering the funds received from each grant the issues to be considered are set out in Lawrence at [330].

68 The grants the Respondent says are income received from trading activities are the fire operating grants, the heritage grants 2003/04, the heritage trail brochure grant, the ANZAC Park Memorial project grant, the railway trail reserve grant, the youth officer grant, the community safety grant, the Qfest grants and the airport grant. Whilst little information has been provided to the Commission about the conditions of each of those grants, each one appears to be a specific purpose grant. However, there is no evidence before the Commission in respect of the basis on which the funds in each case were provided could be said to constitute trading. Although, the Respondent was provided with an opportunity to adduce further evidence in light of the issues raised in Lawrence, the Respondent declined to do so. However, some evidence has been given by Mr Seale as to the use made of funds received by each grant. In relation to the fire operating grants, the evidence of Mr Seale establishes that the grant received from the State government is used to fund a voluntary service. However, no evidence has been put before the Commission as to how these funds are expended or whether the funds involve the provision of services which constitute trading. In relation to the heritage grants 2003/04, I am satisfied that the income received from the Heritage Council for these grants involved trading as the money was used to engage consultants and builders to carry out work to restore heritage buildings in the town. As to the heritage trail brochure grant, there is insufficient evidence before the Commission as to whether the income received for the purpose of the brochure was used or involved services which constitute trading. As the ANZAC Park Memorial project grant was returned by the Respondent to the Premier's Department it cannot be said that the amount received for this purpose was used for trading. In addition, I am not satisfied that the amount received for the railway trail reserve grant has been used or is intended to be used for trading as the money has yet to be expended and the work may be carried out in house. I am, however, satisfied that the grants received for Qfest can be said to have been used for or involve trading, as the Respondent engaged a consultant to co-ordinate the festival and income was received from the sale of souvenirs and other items at the Qfest..

69 The evidence does not establish that the money received for the community safety grant was used for, or involved trading.

70 As to the money received for the airport grant, the evidence establishes that the money was received to repair an electrical fault. However, no evidence was given as to whether the work was carried out by the Respondent's employees or whether the Respondent engaged contractors to carry out the work. Consequently there is insufficient evidence before the Commission to determine whether this income was used for, or involved trading. 2007 WAIRC 00941

71 I agree that the income received as airport fees can be said to be income received from trading as these fees are amounts charged to users of the airport as landing fees for services provided. I have applied the same criteria to cemetery fees, community bus fees and charges; hall, courts and equipment hire; office charges and caravan park site fees, as it appears that all of these fees and charges would be rendered to persons who have entered into an arrangement for a service. It is also clear that the income received from the sale of items from: Cue Shire souvenirs, the information booklet, history book and brochures; Qfest stalls, souvenirs and other income; and sale of sand and gravel, are income from trading or derived from trading.

72 I am satisfied that rent and income received from staff housing, other housing, utilities - pensioner huts, cont'n - housing utilities, commercial property rentals, is income from trading or derived from trading as the income in these categories has been received as the result of an exchange of money for the provision of property or a service. The same consideration applies to water sales, contract private works and plant hire. In determining whether the Respondent in this matter engaged in trading activities in selling water, contracts for private works and plant hire, the reasoning of Stephen J in St George County Council and Toohey J in Hughes v Western Australian Cricket Association (Inc) and Ors (1986) 69 ALR 660 (“Hughes”) is of assistance. In St George County Council, the council did not generate electricity. It purchased it in bulk and reticulated within the county area, charging a retail price for its supply to consumers. Stephen J at 569 said that the Council would still be a trading corporation even if the Council: “… so arranged the margin between the price it paid for electricity in bulk and the price at which it supplied it to consumers as to ensure that it derived no surplus after making the provisions referred to in s 419(1). It might be otherwise if it distributed electricity free of charge but so long as its activity is that of buying and reselling rather than distributing by way of gift it is, in my view, engaged in trading and since this is its only activity it is properly described as a ‘trading’ corporation.”

73 I am of the opinion that the amount received for conservation of Aboriginal sites was used for a trading activity, namely the entering into a contract with indigenous persons to carry out the work. I also place the money received for the youth officer grant in the same category as these funds were used to enter into a contract with a person to provide services to youth. As no evidence was given about the funds received as “youth officer other income", I will not regard those funds as being used or involved in trading. Nor will any regard be had to the income received for the special events promotion tickets, as Mr Seale was unable to say where monies were obtained from or how they were expended.

74 I am not satisfied that monies received from library charges or fines constituted trading, as these amounts were received from charges or fines imposed for damage to books, videos or records and for late returns. As such, I am not satisfied that these amounts were obtained from or were involved in trading. Nor am I satisfied that donations received from persons who have viewed the Respondent's historical photograph collection constitutes funds from trading or derived from trading when no charge is levied to view the collection and there is no evidence that any person wishing to see the collection must enter into an exchange or some other form of transaction with the Respondent.

75 As to the amounts which are stated as interest on amounts held in bank accounts, in the absence of any evidence about how the accounts, I am not satisfied that these amounts can be said to be income from trading or derived from trading. 2007 WAIRC 00941

76 I do not intend to have regard to any of the items stated as potential trading income in Appendix A to Mr Seale's statement as no evidence was given as to why these items could be considered "potential trading income".

77 In light of my findings in respect of the items set out in Appendix A, I am satisfied that the total value of trading activities of the Respondent in: (a) 2003/2004 was $129,581.25 or 5.77% of operating revenue; (b) 2004/2005 was $244,225.21 or 10.19% of operating revenue; and (c) 2005/2006 was $90,118.16 or 3.68% of operating revenue.

78 I note that the majority of the Respondent’s operating revenue comes from rates, general purpose grants and road grants. In 2004/2005, the total amount received as operating revenue was $2,395,788. Of this amount the Respondent received $922,656.06 from town, mining and pastoral rates, rate instalment fees and rate inquiries. The Respondent also received a general purpose grant of $621,368.88 and $293,720.24 in untied road grants (Exhibit 3). In 2005/2006 the Respondent received $785,786.01 from town, mining and pastoral rates, rate instalment fees and rate inquiries. The Respondent also received a general purpose grant of $663,237.00, untied road grants of $320,980.48, Main Roads airport road grant of $58,720 and Roads to Recovery Airport Grant of $182,742.00 (Exhibit 4). Whilst the percentage values of trading activities are relevant to the question whether it can be said that the trading activities of the Respondent are significant, it is not of assistance to simply analyse these activities only on the basis of comparative dollars of trading activities to the total of operating revenue received from rates and grants and other items that are not trading activities (see Lawrence at [240], [277] and [329]). The Commission must also make a qualitative assessment of the Respondent’s activities. Does the Respondent engage in substantial trading activities?

79 In Adamson the majority of the members of the court preferred the reasoning of the minority in St George County Council and overruled the majority in St George County Council. Barwick CJ, a member of the majority in Adamson (and a member of the minority in St George County Council) observed at 208 in Adamson: “ I remain of the firm conviction that for constitutional purposes a corporation formed within the limits of Australia will satisfy the description ‘trading corporation’ if trading is a substantial corporate activity. Its activities rather than the purpose of its incorporation will designate its relevant character. But so to say assumes that such trading activities are within its corporate powers, actual or imputed. It is the corporation which satisfies the description which is the subject matter of the power. Thus its corporate capacity or incapacity cannot be ignored. But once it is found that trading is a substantial and not a merely peripheral activity not forbidden by the organic rules of the corporation, the conclusion that the corporation is a trading corporation is open.”

80 Mason J at 233 (with whom Jacobs J agreed at 237) in Adamson remarked: “For my part, I prefer the minority view as expressed in the St. George County Council Case, in particular the remarks of Barwick CJ, when his Honour said that to fall within s 51(xx) it is not necessary that a corporation be formed for trading or financial purposes and 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’. 2007 WAIRC 00941

‘Trading corporation’ is not and never has been a term of art or one having a special legal meaning. Nor, as the Chief Justice pointed out, was there a generally accepted definition of the expression in the nineteenth century. Essentially it is a description or label given to a corporation when its trading activities form a sufficiently significant proportion of its overall activities as to merit its description as a trading corporation.”

81 At 234 Mason J then went on to observe: “Not every corporation which is engaged in trading activity is a trading corporation. The trading activity of a corporation may be so slight and so incidental to some other principal activity, viz religion or education in the case of a church or school, that it could not be described as a trading corporation. Whether the trading activities of a particular corporation are sufficient to warrant its being characterized as a trading corporation is very much a question of fact and degree.”

82 Murphy J at 239 said: “ 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.”

83 These passages in Adamson were cited with approval by Mason, Murphy and Deane JJ in State Superannuation Board v Trade Practices Commission (1982) 150 CLR 282 at 303 (“State Superannuation Board”) and their Honours observed at 304 that if there were any difference in the comments made by the majority in Adamson it was one of emphasis only.

84 The corporate bodies in Tasmanian Dam, and St George County Council engaged in substantial trading activities, in that they sold and supplied electricity to consumers on a very large scale. In Adamson, the Western Australian National Football League and West Perth Football Club engaged in the presentation of football matches, as commercial ventures for profit and the Victorian Superannuation Board in State Superannuation Board engaged in financial activities to provide and augment superannuation benefits for its members. In each of these matters it was clear that the corporate bodies in question engaged in substantial trading or financial activities on a large scale.

85 In ascertaining whether an incorporated body engages in trading activities which are to be regarded as a sufficiently significant proportion of its overall activities, as set out above may not simply be a matter of assessing percentages of trading income. In Hughes Toohey J considered whether the Western Australian Cricket Association (Inc) (“WACA”) and a number of associated incorporated cricket clubs were trading corporations. At 674 Toohey J adopted a “three-stage test” suggested by counsel for the respondents to determine whether an incorporated body was a trading corporation. This test: “… involved identifying the totality of the activities of the corporation, identifying those activities properly characterised as trading activities and then evaluating the extent of the trading activities against the totality of activities.” 2007 WAIRC 00941

86 When His Honour applied this test, he found that the WACA was a trading corporation as it engaged in substantial trading activities, in promoting and controlling cricket in Western Australia and providing services to its members and the public. This involved receiving and disbursing large sums of money. The WACA had expanded its activities beyond cricket to other forms of entertainment and it charged admission to its ground for cricket and other activities. In relation to the associated incorporated cricket clubs, Toohey J was not satisfied that any of those clubs were trading corporations. The associated incorporated clubs did not charge entrance fees to their games so anyone could watch their games without payment. The clubs did provide bar facilities and bar trading represented 19 per cent to 63 per cent of revenue to the clubs. The income of the clubs was otherwise derived from grants from WACA, prize money from competitions, donations, fund raising, interest on investments, sponsorship and advertisements. In determining whether the trading activities of the clubs were significant, Toohey J looked at the totality of activities of the clubs. After considering the sources of income he said at 679 to 680: “It is clear from Adamson that the fact that a corporation’s trading activities are related to its character as a club in the provision of social functions, amenities and services for its members does not prevent it from being a trading corporation. Nevertheless there are important differences between the situation in Adamson and that existing here. Underlying the decision in Adamson is the acceptance by the High Court that the playing of football by West Perth was a means of ensuring large financial returns, that its players were all paid and that the club’s principal activity was its participation as a member of the WA League in the competitions which it ran. The cricket clubs are basically amateur bodies and their activities are essentially directed to the playing of cricket. They make no charge for admission to matches. Except in the case of someone who is a player coach, the general rule is that payments are not made to players other than to those in A grade. Within A grade some clubs pay an incentive related to runs scored, wickets taken or the like. But the amounts involved are small indeed and in no way capable of providing a living for a player. The evidence revealed cases of particular players in particular clubs who were paid a fixed annual fee. … The principal activity of the clubs is the playing of cricket, a game which is played for pleasure rather than reward, though the playing of district cricket is undoubtedly the means by which players are selected for shield matches and in turn for test matches, at which point reward becomes an important consideration. Although the clubs have activities which are of a trading nature, in particular the provision of bar facilities, I do not regard these as so significant as to impose on the clubs the character of a trading corporation. To point, as the applicant did to the revenue of particular clubs and the percentage of that income derived from bar sales is relevant, but not overly persuasive. It does not sufficiently account for the time spent by the clubs in activities that are not income- producing, viz the playing of cricket which is their primary function. None of the clubs carries on the game of cricket as a trade.”

87 I do not find the decision of Marshall J in Firefighters’ of assistance to the Respondent’s argument. The facts of that matter were materially different to this matter. The Firefighters’ decision illustrates that, in determining whether trading activities of an incorporated body are substantial, it is necessary to analyse those activities and not simply compare the dollars of trading activities to the total of operating revenue. In that case the Fire Equipment Services 2007 WAIRC 00941

department (“FES”) of the Metropolitan Fire and Emergency Services Board generated $8,010,000 in the financial year ending 30 June 1997 from the sale of goods and services. Although this amount comprised only 5.11 per cent of the Board’s total revenue, revenue generated from FES constituted the largest proportion of revenue generated by the Board. In addition, FES engaged 15 staff and 37 on-road contractors and was the largest servicer of portable appliances in Melbourne. Consequently, Marshall J found that the Board through FES was involved in a major way in trading.

88 Mr Seale’s evidence establishes that the primary functions of the Respondent are to provide infrastructure and services to the shire to contribute to the social welfare and sustainability of the small remote area community of Cue. His evidence is consistent with the obligation imposed on the Respondent by s 1.3(3) of the LG Act which provides: “In carrying out its functions a local government is to use its best endeavours to meet the needs of current and future generations through an integration of environmental protection, social advancement and economic prosperity.”

89 Section 1.3 of the LG Act creates a duty on the Respondent to address the advancement of the environmental, social and economic advancement of the community within the Shire. However, in carrying out its functions to meet the duty created by s 1.3, the text of s 1.3 does not assist the Commission in determining whether the functions actually carried out by a local government authority constitutes “trading”.

90 Although the Respondent engages in activities which are of a trading nature and some of these activities are activities which could be carried out as a business, such as the provision of a caravan park, contract private works and hire of equipment, I do not regard the trading activities of the Respondent as a whole to impose on the Respondent the character of a trading corporation. The reason why I have reached this view is that none of the trading activities when considered collectively are carried out on a significant scale. (a) Income received from the caravan park, the pensioner huts and the selling of souvenirs are all activities the Respondent engages in to foster tourism to sustain the small community of Cue. These activities are engaged in to support the community but at the time of the hearing and more relevantly at the time the Respondent employed the Applicant these activities were not so significant to impose on the Respondent the character of a trading corporation. (b) The hiring of the community bus, hall, sporting courts and equipment and income from airport fees, cemetery fees and office charges are all activities which provide the Respondent with small amounts of income and are peripheral to the provision of community facilities to the community. (c) The income from employees' rent and utility charges to employees of the Respondent is peripheral to the employment of staff of the Respondent. (d) The income received from the Heritage Council in 2003/04 to restore heritage buildings in the town was not an ongoing activity. The funds were expended prior to 2005/2006. The same consideration applies to the funds received in 2003/2004 for conservation of Aboriginal sites and the youth officer grant. Nor have the Qfest trading activities been ongoing. The last Qfest was held prior to the Respondent employing the Applicant. All of these activities are one off activities peripheral to supporting a local community. 2007 WAIRC 00941

(e) Income from commercial property rentals produces only very small amounts of income to the Respondent. In addition, water sales, plant hire and sale of sand and gravel only produce a small amount of income on a small scale. (f) Mr Seale’s evidence establishes that the Respondent is approached from time to time to undertake private works because no other organisation in the area has the equipment required for such work. At the time of the hearing that work had not been carried out on a large scale. However, income received from contract private works may involve significant trading activity by the Respondent in the future if it enters into a contract with a mining company to maintain a road 200 kilometres from the town but there is no evidence that the Respondent engaged in such works to a significant degree when the Applicant was employed by the Respondent.

91 For the reasons set out above I will make a declaration that during the period the Applicant was employed by the Respondent, the Respondent was not a trading corporation and the matter will be listed for hearing on a date to be fixed.

Load more

  25

Copy Link