Carter v Carenne Support Limited

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FEDERAL COURT OF AUSTRALIA

Carter v Carenne Support Limited [2012] FCA 1474

Citation: Carter v Carenne Support Limited [2012] FCA 1474
Appeal from: Carter v Carenne Support Ltd (unreported, Chief Industrial Magistrate’s Court of New South Wales, 17 April 2012, Magistrate Hart)
Parties: NATHAN JOHN CARTER v CARENNE SUPPORT LIMITED
File number: NSD 641 of 2012
Judge: FLICK J
Date of judgment: 21 December 2012
Catchwords:

INDUSTRIAL LAW – application of state legislation – whether respondent company a constitutional corporation – whether respondent company a trading corporation – principles to be applied

CONSTITUTIONAL LAW – legislative power of the Commonwealth – corporations power – s 51(xx) – what constitutes a trading corporation

Legislation: Constitution s 51(xx)
Judiciary Act 1903 (Cth) s 78B
Workplace Relations Act 1996 (Cth) ss 4, 824, 853
Industrial Relations Act 1996 (NSW)
Cases cited: Aboriginal Legal Service of Western Australia (Inc) v Lawrence (No 2) [2008] WASCA 254, 37 WAR 450, cited
Australian Workers’ Union of Employees, Queensland v Etheridge Shire Council [2008] FCA 1268, 171 FCR 102, cited
Bankstown Handicapped Children’s Centre Association Inc v Hillman [2010] FCAFC 11, 182 FCR 483, explained
Brian Charles Carter v Carenne Support Ltd [2009] NSWIRComm 173, distinguished
Carter v Carenne Support Ltd (unreported, Chief Industrial Magistrate’s Court of New South Wales, 17 April 2012, Magistrate Hart), affirmed
Commonwealth of Australia v State of Tasmania (1983) 158 CLR 1, cited
Fencott v Muller (1983) 152 CLR 570, cited
The Queen v The Judges of the Federal Court of Australia; Ex parte Western Australian National Football League (Incorporated) (1979) 143 CLR 190, applied
The Queen v Trade Practices Tribunal; Ex parte St George County Council (1973) 130 CLR 533, applied
State Superannuation Board v Trade Practices Commission (1982) 150 CLR 282, applied
Date of hearing: On the papers
Place: Sydney
Division: FAIR WORK DIVISION
Category: Catchwords
Number of paragraphs: 34
Counsel for the Appellant: The Appellant appeared in person
Counsel for the Respondent: Mr M J Easton
Solicitor for the Respondent: Ellison Tillyard Callanan Solicitors

IN THE FEDERAL COURT OF AUSTRALIA

NEW SOUTH WALES DISTRICT REGISTRY

FAIR WORK DIVISION

NSD 641 of 2012
ON APPEAL FROM THE CHIEF INDUSTRIAL MAGISTRATE’S COURT OF NSW
BETWEEN:

NATHAN JOHN CARTER
Appellant
AND:

CARENNE SUPPORT LIMITED
Respondent

JUDGE:

FLICK J

DATE OF ORDER:

21 DECEMBER 2012

WHERE MADE:

SYDNEY

THE COURT ORDERS THAT:

1.The appeal is dismissed.

2.There is no order as to costs.

3.Liberty is reserved to the Respondent to apply to vary Order 2, such liberty to be invoked on or before 14 January 2013.

Note:Entry of orders is dealt with in Rule 39.32 of the Federal Court Rules 2011.


IN THE FEDERAL COURT OF AUSTRALIA

NEW SOUTH WALES DISTRICT REGISTRY

FAIR WORK DIVISION

NSD 641 of 2012
ON APPEAL FROM THE CHIEF INDUSTRIAL MAGISTRATE’S COURT OF NSW
BETWEEN:

NATHAN JOHN CARTER
Appellant
AND:

CARENNE SUPPORT LIMITED
Respondent

JUDGE:

FLICK J

DATE:

21 DECEMBER 2012

PLACE:

SYDNEY

REASONS FOR…

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Details
Case
[2012] FCA 1474
Decision Date

CaseChat Overview and Summary

The appeal in Carter v Carenne Support Limited was brought before the court to determine whether Carenne Support Limited, a company that provides transport services for individuals with disabilities, is a trading corporation for the purposes of the Industrial Relations Act 1996 (NSW). The case originated from an earlier decision by the Chief Industrial Magistrate, who ruled that Carenne Support Limited was indeed a trading corporation and, therefore, not subject to the provisions of the Industrial Relations Act 1996 (NSW). The appeal centred on whether the Industrial Magistrate's decision was legally sound and whether Carenne Support Limited qualifies as a trading corporation under section 51(xx) of the Constitution.

The primary legal issue for the court was to ascertain whether Carenne Support Limited's primary activities constitute a trading corporation. This required the court to consider the nature and extent of the company's business operations and whether these operations were commercial in nature. The court needed to determine whether the company's activities were substantial and significant enough to classify it as a trading corporation. Additionally, the court had to examine whether the ultimate social purpose of the company, which was to support a charitable institution, should influence the classification of the company as a trading corporation.

In its decision, the court meticulously analysed the evidence presented and the reasoning of the Industrial Magistrate. The court found that Carenne Support Limited's primary activity was providing bus services under contract to the New South Wales Department of Education and Training, which was a substantial and significant business operation. The company made a substantial profit from this activity, which was then used to fund Carenne School, a charitable organisation. The court emphasised that the primary focus should be on the company's activities rather than its ultimate social purpose. The commercial arrangement between the company and the Department of Education and Training, along with the agreed pricing for the services provided, further supported the classification of Carenne Support Limited as a trading corporation. Consequently, the court upheld the Industrial Magistrate's decision that Carenne Support Limited was a trading corporation and, therefore, not subject to the Industrial Relations Act 1996 (NSW).

Orders

Orders of the court

Full text does not contain this section.

Background

Background to the litigation

Full text does not contain this section.

Evidence

Evidence Before The Court

Full text does not contain this section.

Decision

Reasons for decision

The appeal to this Court, it should perhaps be noted at the outset, may ultimately be traced back to s 853 of the former Workplace Relations Act. Counsel for Carenne Support raised no question as to either the ability of Mr Carter to file his Notice of Appeal or the competence of this Court to hear and determine his “appeal”. To the extent that leave to appeal is necessary – such leave should be taken to have been granted.THE DECISION OF THE INDUSTRIAL MAGISTRATE The factual basis upon which the Chief Industrial Magistrate’s Court proceeded was extremely limited. Indeed, “the threshold question of jurisdiction” was largely resolved upon the basis of written submissions. As was the experience of this Court, Mr Carter also did not appear before the Chief Industrial Magistrate’s Court, even though that Court on two occasions sat in Mr Carter’s own town. Neither Mr Carter nor Counsel for Carenne Support, however, suggested that those written submissions failed to provide an adequate factual basis upon which the Industrial Magistrate could proceed. After setting forth part of the text of Mr Carter’s written submissions and an extract from the decision of the Full Court in Bankstown Handicapped Children’s Centre Association Inc v Hillman, the Industrial Magistrate relevantly concluded (without alteration):[18] It is clear that there are a number of factual differences between the circumstances in Hillman’s case and those applying in the case of Carenne Support Ltd. The services offered are different, the financial arrangements are different, and the manner in which the corporate vehicles are established is different. Notwithstanding those differences, I am satisfied that an application of the principles relied upon by the Federal Court of Australia in Hillman’s case to the facts in the present case, result in the conclusion that the Respondent, Carenne Support Ltd was a trading corporation and therefore a constitutional corporation for the purposes of industrial law. The facts reveal that a substantial activity of the Respondent company was the provision of bus services under contract to the New South Wales Department of Education and Training. This activity is not a minor or peripheral activity of the company but a substantial and significant one. It is, by far, the major source of income revenue for the company. The company uses motor vehicles, including motor vehicles made available to it by Carenne School which provides educational services for persons with various disabilities. The availability of the motor vehicles, combined with the employment of drivers, enabled the company to contract with the New South Wales Department of Education and Training to provide transport services for persons with disabilities within a defined area of New South Wales. The Department of Education and Training was in no way obligated to enter into such a contract with the company. It was prepared to contract such work to the company at a price which was acceptable to the company. The amount payable for the services by the Department of Education and Training was derived from an averaging process utilised by the Department to set the rate it was prepared to pay. Whilst the applicant urges on the Court a conclusion that on these facts there was no negotiation between the Department and the company, the lack of negotiation does not lead to a conclusion that the arrangement was a non-commercial one. As indicated above, the Department of Education and Training was not obliged in any way to utilise the company for the provision of this service. It was in a position to offer the contract on a “take it or leave it” basis and apparently did so. The amount offered was acceptable to the company and this is hardly surprising in circumstances where the details set out in the Decision of his Honour Mr Justice Haylen reveal that the company made a quite substantial profit from this particular activity. It is also clear that the profit that was made by the company was in turn utilised to assist in the funding of Carenne School, a charitable organisation. The facts reveal that it was support for this charitable institution that led to the company being set up in the first place. The activities of the company generated revenue which could than be ploughed back into Carenne Scholl including funding for the engagement of professional speech therapists and other services provided by the School. As I understand the approach adopted by the Full Bench of the Federal Court of Australia, it is inappropriate for the ultimate social purpose of the organisation to attract the focus of attention when an examination is made as to the status of the corporation. Rather, it is the activities of the organisation which should be the focus of attention and in this case the predominant purpose of the company was the conduct of a transport service for profit arising out of the company’s contract with the Department of Employment and Training. Further, as I understand the relevant test, it is not to the point that the disabled persons on the bus obtaining the benefit of the service were not charged any moneys for such services. That is because the commercial arrangement was made between the Department of Employment and Training and the company, and the service was provided in accordance with that contract and at an agreed price. [19] For the above reasons, I find that the Respondent herein was, at all material times, a trading corporation and, as a consequence, the Industrial Relations Act 1996 (NSW) does not have application in relation to the contract of employment between the Applicant and the Respondent company in the period between December 2006 and December 2008.A TRADING CORPORATION – SECTION 51(XX)

Ratio Decidendi

Legal Principle Established

After setting forth part of the text of Mr Carter’s written submissions and an extract from the decision of the Full Court in Bankstown Handicapped Children’s Centre Association Inc v Hillman, the Industrial Magistrate relevantly concluded (without alteration):[18] It is clear that there are a number of factual differences between the circumstances in Hillman’s case and those applying in the case of Carenne Support Ltd. The services offered are different, the financial arrangements are different, and the manner in which the corporate vehicles are established is different. Notwithstanding those differences, I am satisfied that an application of the principles relied upon by the Federal Court of Australia in Hillman’s case to the facts in the present case, result in the conclusion that the Respondent, Carenne Support Ltd was a trading corporation and therefore a constitutional corporation for the purposes of industrial law. The facts reveal that a substantial activity of the Respondent company was the provision of bus services under contract to the New South Wales Department of Education and Training. This activity is not a minor or peripheral activity of the company but a substantial and significant one. It is, by far, the major source of income revenue for the company. The company uses motor vehicles, including motor vehicles made available to it by Carenne School which provides educational services for persons with various disabilities. The availability of the motor vehicles, combined with the employment of drivers, enabled the company to contract with the New South Wales Department of Education and Training to provide transport services for persons with disabilities within a defined area of New South Wales. The Department of Education and Training was in no way obligated to enter into such a contract with the company. It was prepared to contract such work to the company at a price which was acceptable to the company. The amount payable for the services by the Department of Education and Training was derived from an averaging process utilised by the Department to set the rate it was prepared to pay. Whilst the applicant urges on the Court a conclusion that on these facts there was no negotiation between the Department and the company, the lack of negotiation does not lead to a conclusion that the arrangement was a non-commercial one. As indicated above, the Department of Education and Training was not obliged in any way to utilise the company for the provision of this service. It was in a position to offer the contract on a “take it or leave it” basis and apparently did so. The amount offered was acceptable to the company and this is hardly surprising in circumstances where the details set out in the Decision of his Honour Mr Justice Haylen reveal that the company made a quite substantial profit from this particular activity. It is also clear that the profit that was made by the company was in turn utilised to assist in the funding of Carenne School, a charitable organisation. The facts reveal that it was support for this charitable institution that led to the company being set up in the first place. The activities of the company generated revenue which could than be ploughed back into Carenne Scholl including funding for the engagement of professional speech therapists and other services provided by the School. As I understand the approach adopted by the Full Bench of the Federal Court of Australia, it is inappropriate for the ultimate social purpose of the organisation to attract the focus of attention when an examination is made as to the status of the corporation. Rather, it is the activities of the organisation which should be the focus of attention and in this case the predominant purpose of the company was the conduct of a transport service for profit arising out of the company’s contract with the Department of Employment and Training. Further, as I understand the relevant test, it is not to the point that the disabled persons on the bus obtaining the benefit of the service were not charged any moneys for such services. That is because the commercial arrangement was made between the Department of Employment and Training and the company, and the service was provided in accordance with that contract and at an agreed price. [19] For the above reasons, I find that the Respondent herein was, at all material times, a trading corporation and, as a consequence, the Industrial Relations Act 1996 (NSW) does not have application in relation to the contract of employment between the Applicant and the Respondent company in the period between December 2006 and December 2008.A TRADING CORPORATION – SECTION 51(XX)