CoINVEST Ltd v Citywide Service Solutions Pty Ltd
[2020] VSC 190
•21 April 2020
| IN THE SUPREME COURT OF VICTORIA | Not Restricted |
AT MELBOURNE
COMON LAW DIVISION
JUDICIAL REVIEW AND APPEALS LIST
S ECI 2019 01909
| COINVEST LTD (JEREMY TOBIN) | Appellant |
| v | |
| CITYWIDE SERVICE SOLUTIONS PTY LTD | Respondent |
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JUDGE: | NIALL JA |
WHERE HELD: | Melbourne |
DATE OF HEARING: | 10 March 2020 |
DATE OF JUDGMENT: | 21 April 2020 |
CASE MAY BE CITED AS: | CoINVEST Ltd v Citywide Service Solutions Pty Ltd |
MEDIUM NEUTRAL CITATION: | [2020] VSC 190 |
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JUDICIAL REVIEW – Whether an entity was an ‘employer’ (i.e. not a ‘public statutory body’ constituted under the law of the Commonwealth or State of Victoria) within the meaning of the Rules of the Construction Industry Long Service Leave Fund/Construction Industry Long Service Leave Act1997 s 3 – Whether magistrate considered relevant factors – Whether magistrate provided adequate reasons for decision – Validity of notice issued under Construction Industry Long Service Leave Act1997 s 10 – Local Government Act1989 s 193.
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APPEARANCES: | Counsel | Solicitors |
| For the Appellant | Mr P J Hanks QC with Ms F I Gordon | Maddocks |
| For the Respondent | Mr C B O’Grady QC with Mr C T Carr | Baker McKenzie |
HIS HONOUR:
Introduction
Section 10 of the Construction Industry Long Service Leave Act1997 (the ‘Act’) allows the appellant to serve a notice requiring the production of information on (relevantly) an ‘employer’ or a person whom the appellant believes to be an employer within the meaning of certain trust rules governing the scheme for long service leave in the construction industry. A notice was served on the respondent, Citywide Service Solutions Pty Ltd (‘Citywide’), it failed to comply with the notice and was prosecuted for an offence under s 10(3) of the Act in the Magistrates Court.
Relevantly, an employer does not include a public statutory body constituted under a law of Victoria. Citywide is a company limited by shares and registered under the provisions of the Corporations Act 2001 (Cth) (‘Corporations Act’). As permitted by s 193 of the Local Government Act 1989 (the ‘LGA’), its shares are entirely held by the Melbourne City Council (the ‘Council’) and its operations are also controlled by its memorandum and articles and statement of corporate intent. Citywide provides municipal services to the Council. The magistrate found that Citywide was not an employer because it fell within the exception and dismissed the charge.
The questions of law in this appeal relate to whether Citywide is a public statutory body constituted under a law of Victoria. In my opinion it is not and does not fall within the exception in the definition of ‘employer’. For the reasons that follow, the order of the magistrate should be set aside and the charge remitted to the Magistrates’ Court for determination in accordance with law.
The Statutory context
Construction Industry Long Service Leave Act1997
The Act provides for portable long service leave benefits for workers in the construction industry. The scheme is operated through a trust, constituted by a trust deed, which appoints CoINVEST Ltd as trustee. It is governed by the Act, the trust deed and the Rules of the Construction Industry Long Service Leave Fund (the ‘Rules’).
The scheme confers benefits on eligible workers and, correspondingly, liabilities on employers. The principal obligation imposed on an employer is to pay a long service leave charge in respect of every worker. These payments constitute the income of the fund from which payments to employees are made.
An ‘employer’ is defined in the Rules, and adopted in the Act,[1] as ‘a person (not being the Crown in right of the Commonwealth of Australia or the State of Victoria or any public statutory body constituted under the law of the Commonwealth or of that State)’ who employs workers or as a principal contractor engages other employers or working sub-contractors.
[1]The Act s 3(2).
The LGA
As will be seen, s 193 of the LGA allows councils to organise their affairs, including by operating through or participating in other entities, for the purpose of performing any function or exercising any power conferred on a council by or under the LGA or any other Act. While the objectives, functions and powers of a council have changed to some extent over time, the essential features relevant to the present case have remained constant. The parties did not suggest that the nature of Citywide has changed by reference to amendments to the LGA since it was acquired by the Council in March 1995.
At the time the Council acquired Citywide, s 6(1) of the LGA provided, amongst other things, that the purposes of a council were to provide for the peace, order and good government of its municipal district, and to provide equitable and appropriate services and facilities for the community and ensure that those services and facilities were managed efficiently and effectively. Section 6(2) provided that it was Parliament’s intention that the provisions of the LGA be interpreted and every function, power, authority, discretion and duty conferred or imposed by or under the LGA or any other Act on a council be performed or exercised so as to give effect to the purposes and objectives of councils.
Section 7 set out the objectives of a council. These included, amongst other things, facilitating the involvement of members of the community, users of facilities and services and council staff in the development, improvement and co-ordination of local government; ensuring adequate planning for the future of its municipal district; representing and promoting the interests of the community and being responsive to its needs; and developing, implementing and monitoring its strategic plans and budgets.
The statutory functions conferred on councils by s 8 were set out in schedule 1. These included general public services such as local emergency services and the collection and disposal of refuse; health and other community services; planning and land use; property services such as gas and electricity; recreational and cultural services; roads; and any other functions relating to the peace, order and good government of the municipal district. Council powers were and remain broadly conferred.[2]
[2]Section 8(3) provided that a council had the power to do all things necessary or convenient to be done for or in connection with the performance of its functions and to enable it to achieve its purposes and objectives. Section 10 of the Local Government Act 2020 provides that subject to any limitations or restrictions imposed by legislation, a council has the power to do all things necessary or convenient to be done in connection with the performance of its role.
As might be expected of an elected tier of government, the local government legislative regime has consistently provided in detail for the election of councillors, council administration through both elected and council staff, financial management, rates and charges and specific functions, powers and restrictions, including in relation to the power of councils to enter into contracts, the requirement for a procurement policy and restrictions in relation to dealing with land.
Section 193, located within part 9, is headed ‘entrepreneurial powers’. It is central to this appeal. Section 193(1) provides:
For the purpose of performing any function or exercising any power conferred on a Council by or under this Act or any other Act a Council may—
(a)participate in the formation and operation of a corporation, trust, partnership or other body; and
(b)subscribe for or otherwise acquire and dispose of shares in or debentures or other securities of, a corporation; and
(c)become a member of a company limited by guarantee; and
(d)subscribe for or otherwise acquire and dispose of units in a trust; and
(e)acquire and dispose of an interest in a partnership or other body; and
(f)enter into partnership or into any arrangement for sharing of profits, union of interest, co-operation, joint venture, reciprocal concession or otherwise, with any person or corporation carrying on or engaged in, or about to carry on or engage in, any business or transaction capable of being conducted so as to directly or indirectly benefit the Council.
The powers in s 193(1) are circumscribed by other subsections of s 193. Notably, before a council does anything under subsection (1), the council must have regard to the risks involved and comply with subsections (5A) and (5C).[3] Those subsections require an assessment of the total investment involved and, if it exceeds a certain amount, the approval of the Minister must be obtained.
[3]Ibid s 193(5). Section 193(5B) provides that if the proposal involves an investment and a risk exposure, the sum for the purposes of s 193(5C) is the total of the sum of both. Sections 193(5) and 193(5A) were substituted by No. 109/2003. Sections 193(5B), (5C) and (5G) were inserted by No. 109/2003.
Before a council does anything under subsection (1) that would include participation in the formation or operation of, or any partnership, arrangement or venture with, an entity which would have the power to borrow money in its own right, the council must obtain the approval of the Minister.[4] Such approval may be subject to any condition that the Minister thinks fit.[5]
[4]Ibid s 193(5G). Section 193(5G) was also inserted by No. 109/2003.
[5]Ibid s 193(7).
The Local Government (Competitive Tendering) Act 1994
In 1994, the LGA was amended to insert a new division 3 of part 9 titled ‘Competitive Tendering’. It was later replaced with the ‘Best Value Principles’ but its enactment explains the provenance of Citywide.
Section 208A required councils to ‘ensure that in any financial year it is a party to competitive arrangements that have a total value of 50% or more’ of the expenses of the council.
Section 208B defined a ‘competitive arrangement’ as follows:
(a) any contract for the supply of goods or services to a Council, or for the undertaking of works for a Council, entered into by the Council in writing after a competitive process conducted by it;
(b) any in-house agreement;
(c) any contract for the supply of goods or services, or for the undertaking of works, by a Council to, or for, another person entered into by the Council in writing after it submitted a tender as part of a competitive process conducted by that person;
(d) any contract in writing or in-house agreement that has been approved by the Minister under section 208F.[6]
[6]Local Government (Competitive Tendering) Act 1994 s 208B(1).
Facts
The Council is a body corporate constituted as a ‘City Council’ and governed by the LGA.[7]
[7]And more recently also by the Local Government Act2020.
Citywide
As recorded in an enclosure to a letter dated 14 March 1995 to the CEO of the Council, the Treasurer and the Minister granted approval under s 193 of the LGA for the formation and operation of a company to be known as ’Citywide Service Solutions Pty Ltd’ and for the purchase, acquisition and disposal of shares in the company. The approval was subject to, amongst other things, the Council giving an undertaking that the memorandum and articles of association would be lodged with the office of local government and that there would be no substantial variation to those constituent documents without consideration and approval under s 193(9) of the LGA.
The undertakings included a requirement that the Council’s CEO be appointed as a director of Citywide and that the Council ensure that Citywide comply with the LGA. They included reporting obligations in relation to Citywide and compliance with a competitive tendering procedures manual.
In the covering letter enclosing the approval, the Council was told that until the competitive tendering manual had been updated, the company should not submit a tender for private sector work unless it was on the basis that the company did not have any competitive advantages arising from its status as a wholly owned subsidiary of the Council.
Following the approval, the Council instructed its solicitors to supply it with a new company. The solicitors arranged for an existing shelf company – which had been incorporated on 28 October 1994 under the name ’Murashi Pty Ltd’ – to change its name to ’Citywide Service Solutions Pty Ltd’ and for the transfer of all of the shares to the Council. Since then, all shares in Citywide have been held by the Council or the Council’s nominees.
Following the share acquisition, Citywide has performed a variety of municipal functions previously performed by the Council and, for that purpose, purchased relevant assets and infrastructure from the Council. The purchase price was satisfied by issuing shares in the capital of Citywide to the Council.
The memorandum of association of Citywide provides that the main objects of the company are to provide a quality contracting service to the Council and other customers. Citywide’s articles of association place a number of restrictions on the company, including by restricting the allotment or issuing of shares, changes to share capital and borrowing, all of which require the consent of the Minister and/or Treasurer.
The Council exercises control over Citywide in a number of ways. They include appointing a majority of directors, imposing a requirement that Citywide comply with a code of practice, reporting and continuous disclosure obligations, and approving Citywide’s annual business plans.
Citywide has also prepared a ‘statement of corporate intent’ which provides, amongst other things, for some cost sharing between it and the Council, having regard to the cost of meeting heritage, historical or other civic considerations. It also contains a profit sharing arrangement by which 40% of the annual profit is remitted to the Council as a dividend.
Citywide is exempt from income tax because it is a wholly owned subsidiary of a government entity and a ‘State/Territory Body’ for income tax purposes. Under a tax equivalence policy, it pays to the Council amounts equivalent to the income tax and payroll tax that would otherwise be payable if it were not exempt.
Citywide provides a range of services for fee under contract to the Council, other councils and other persons, including waste management, street cleaning, road and footway construction and maintenance, drainage, garden services and property services.
The Notice and Charge
On 28 September 2017, a notice under s 10 of the Act (the ‘Notice’) was served on Citywide on the basis that CoINVEST Ltd, through Jeremy Tobin, believed it was an employer. [8] The introductory paragraph of the Notice commences with ‘whereas CoINVEST Limited … believes that Citywide Service Solutions Pty Ltd … is an employer for the purposes of the Construction Industry Long Service Leave Act 1997’ and goes on to identify the information sought.
[8]An earlier notice had been served on Citywide in July 2014.
The magistrate’s reasons
The magistrate recorded the two questions that the parties agreed he had to decide:
(a) Was Citywide an ‘employer’ within the meaning of that word in the Act; and
(b) If not, did the informant believe that Citywide was an ‘employer’ for the purposes of the Act.
The prosecution alleged that Citywide was an employer and bound to answer the Notice or, alternatively, a person whom the trustee believed to be an employer and was equally bound to answer the Notice. The matter proceeded before the magistrate on the basis that if he was satisfied beyond reasonable doubt that Citywide was an employer, it was unnecessary to decide the alternative question as to the informant’s belief. In other words, Citywide did not contend that the prosecution could only succeed if it established that the relevant officer had a reasonable belief that Citywide was an employer. It did however make that contention for the first time in this Court and I will need to return to it.
After setting out the parties’ competing submissions on the first issue, the magistrate concluded that it should be answered favourably to Citywide. He said:
Having had regard to all matters, in my view, although the High Court [in Re Anti-Cancer Council of Victoria; Ex parte the State Public Services Federation[9]] was concerned with the phrase ’public authority’ rather than ’public statutory body’ I find little difference (if any) between the two phrases. Indeed it was not argued by the prosecution that there was any difference. I find that the approach of the High Court in the Anti-Cancer Council case is to be preferred. However that is not the end of the matter. In applying a multi factorial approach, it is necessary to take a holistic approach as to whether or not Citywide is or is not a public statutory body. Having regard to all of the matters before me, I am not satisfied beyond reasonable doubt that the prosecution has established that Citywide was an ’employer’ as defined by the provisions of the Act.[10]
[9](1992) 175 CLR 442; [1992] HCA 53 (‘Anti-Cancer Council’).
[10]Reasons for decision of Magistrate Gilligan given on 4 April 2019, Exhibit “SH-7” to the affidavit of Simone Holding dated 7 May 2019, [52] (‘Reasons’).
On the second issue, which the prosecution submitted only arose if the prosecution failed on the first, the magistrate noted that it was common ground that the belief had to be reasonable.[11] He rejected Citywide’s submission that the Notice had been issued for an improper purpose but said that he did not regard the informant’s evidence as ‘compelling or convincing as to his belief’.[12] Citywide had submitted, as the basis for an improper purpose, that Mr Tobin did not actually believe that it was an employer but nevertheless issued the Notice in order to clarify the status of Citywide.
[11]Ibid [64].
[12]Ibid [65]–[66].
The magistrate concluded that the prosecution had ‘not established beyond reasonable doubt that the belief by the informant in the circumstances was reasonable’.[13] It followed that the second question was answered in the negative and the ‘second limb’ of the prosecution case failed.[14] The magistrate then dismissed the charge.[15]
[13]Ibid [67].
[14]Ibid [68].
[15]Ibid [69].
Grounds of appeal
Ground 1 alleges that the magistrate approached erroneously the meaning of the exclusion from the definition of ‘employer’, in that the magistrate:
(a) failed to consider whether Citywide was a ‘public authority’ (ground 1.1);
(b) treated Anti-Cancer Council as decisive and wrongly failed to treat Melbourne City Council v State Superannuation Board of Victoria[16] as relevant and authoritative (grounds 1.2 and 1.3);
[16](1992) 77 LGRA 245 (‘MCC’).
(c) applied a multi factorial approach in circumstances where many of the factors were irrelevant to whether Citywide is a ‘public statutory body constituted under a law of the Commonwealth or [the] state’; or a ‘public statutory body’; (ground 1.4);
(d) (alternatively to ground 1.4) failed to identify the factors which the court treated as relevant to the application of the multi factorial approach and so failed to give adequate reasons for the conclusion reached (ground 1.5); and
(e) failed to address certain oral submissions of the appellant (ground 1.6).
Ground 2 puts the case in the positive and asserts that the magistrate should have held that Citywide could not, by any reasonable possibility, be regarded as a ‘public statutory body constituted under the law of the Commonwealth or that State’ so as to be excluded from the statutory definition of ‘employer’.
Appellant’s submissions
The appellant submits that the relevant exception in the definition of ‘employer’ can only be satisfied where there is a statutory body that is constituted by a law as a public statutory body.
The appellant submits that Citywide is not a statutory body because it was not created by statute; it was constituted as a proprietary company by the act of registration. Therefore, it is unnecessary to determine whether or not it might be a public body in the sense of a body performing a public function or providing public services.
Secondly, if it is necessary to take that second step, it can only be satisfied where the body is constituted under an Act as a public statutory body. The appellant submits that a public statutory body performs public functions or provides public services and must possess exceptional powers that are beyond those held by a natural person or ordinary legal entity. In making that submission, the appellant relies on Renmark Hotel Incorporated v Federal Commissioner of Taxation,[17] Western Australian Turf Club v The Commissioner of Taxation of the Commonwealth of Australia[18] and MCC. It says that Citywide does not have such powers.
[17](1949) 79 CLR 10; [1949] HCA 7 (‘Renmark Hotel’).
[18](1978) 139 CLR 288; [1978] HCA 13 (‘WA Turf Club’).
Thirdly, the appellant submits that the magistrate failed to give adequate reasons for his decision. The appellant says that the magistrate failed to identify the factors relevant to the application of the multi factorial or holistic approach, failed to weigh competing factors in the application of that approach and stated his reasoning in terms which were too general so as to obscure the basis for the conclusion he reached.
Fourthly, the appellant submits that the magistrate failed to address certain fundamental aspects of the prosecution’s case, which constituted a constructive failure to exercise jurisdiction. These included the reasons why Anti-Cancer Council could be distinguished and why MCC governed the construction of the definition in question.
In oral submissions, the appellant addressed paragraph 52 of the magistrate’s reasons, which is set out above. The appellant submitted that the magistrate was wrong to hold that there was no difference between the terms ‘public authority’ and ‘public statutory body’, that he overlooked the prosecution’s submission to the contrary, should have followed Brooking J’s judgment in MCC, and was wrong to apply a multi factorial or holistic approach.
Respondent’s submissions
Although the respondent acknowledges that the magistrate, at the urging of the parties, determined the two issues identified above, it submits that the first issue does not arise. That is because the Notice was based on the informant’s belief that Citywide was an employer, the magistrate held that the informant did not have that belief, that finding is not appealed and therefore the charge could not have been made out and was correctly dismissed. Indeed, the respondent went so far as to submit that, on the finding of the magistrate as to belief (which is not appealed) the Notice was invalid. It followed that, even if the appellant could identify error in relation to the first issue, that error was not material to the result and would not support an appeal on a question of law.
Secondly, it submits that whether Citywide is an ‘employer’ is a question of fact and any error would not amount to an error of law. It relies on Vetter v Lake Macquarie City Council[19] to submit that even if the construction of the phrase involved a question of law, once construed, the application of the facts to that phrase involved a question of fact on which it is reasonably possible to arrive at different conclusions.
[19](2001) 202 CLR 439; [2001] HCA 12 (‘Vetter’).
Thirdly, it submits that there was no error. It submits:
(a) To be a public statutory body constituted under an Act does not require that the body be constituted as a public statutory body by a specific Act;
(b) A multi factorial approach is consistent with authority and was not decisive;
(c) MCC was not determinative because it concerned a different statutory scheme, it was common ground that the body was a statutory body constituted under a law of Victoria and it pre-dated Anti-Cancer Council;
(d) the magistrate took all relevant factors (including the prosecution’s submissions) into account, did not take into account irrelevant considerations and reached a decision that was open to him; and
(e) building on legislative history, it submits that ‘only employers whose operations are truly private are intended to be caught’.
Citywide places great emphasis on the difference between the phrases ‘constituted under’ and ‘constituted by’. It submits that the former description is satisfied if the use or intended use to which the entity is put achieves the statutory purpose which the Act puts in place. It submits that the latter requires a specific Act that constitutes the entity for a public purpose.
It refers to the passage in the judgment of Rich J in Renmark Hotel where the phrase ‘under any state Act’ was said to ‘contemplate the possibility of the public authority being established in pursuance of an Act as well as an authority constituted by a State Act.’[20]
[20](1949) 79 CLR 10, 18–19; [1949] HCA 7, [14].
It also relies on what Wells J said in Scott v City of Enfield:
The two important elements in par. (b) are the expression ‘by or under’ and the word ‘as’. The word ‘by’ implies, I apprehend, that the use or intended use belonged to a class of use directly permitted by a provision or provisions of the Act or bylaw; the word ‘under’ implies that the authorization of the use or intended use was an act-in-law validly done pursuant to the Act or bylaw.’[21]
[21](1982) 49 LGRA 301, 305.
It submits that the use of Citywide to provide services was an act in law validly done pursuant to the LGA.
It submits that the approach adopted by Brooking J in MCC, to the effect that the body must be constituted as a public statutory body, impermissibly requires reading words into the provision. It says that the appellant’s submissions have the effect of reading the words ‘as such by’ into the definition and deleting the word ‘under’ so that it would read: ‘be constituted as a public statutory body as such by the law of the Commonwealth or of that State…’.
The respondent accepts that in order to fall within the definition, there must be a body that has a public dimension which ‘flows from statute’ and, if so, it will be constituted under an enactment. It accepted that there must be a nexus between a statute and the public dimension of the body.
Applying that test, s 193 of the LGA provided the necessary nexus with the result that Citywide was constituted under s 193, in the sense that its functions and limitations were imposed pursuant to s 193. It did not matter that Citywide was initially formed under corporations law and was later adopted by the Council pursuant to s 193. The use of Citywide as a vehicle for the provision of services and performance of functions was ‘an act in law validly done’ under s 193, which meant that Citywide was a public statutory body constituted under s 193.
Analysis
A question of law
In my opinion, whether the magistrate was correct to conclude that Citywide is a public statutory body constituted under a law of Victoria is, or involves, a question of law. That is so for a number of reasons.
At issue is the legal status of Citywide for the purpose of the legal obligations imposed by the Act. The facts relating to Citywide, which were for the magistrate to decide but which, as it happens, were largely agreed, are necessarily within the statutory phrase or outside it and a contrary decision is wrong in law.[22] Whether the facts found by the magistrate support the legal description given to them by the magistrate is a question of law.[23]
[22]Ibid, citing Australian Gas Light Co v Valuer–General (1940) 40 SR (NSW) 126, 138 (Jordan CJ).
[23]Vetter (2001) 202 CLR 439, 450 [24]; [2001] HCA 12 (Gleeson CJ, Gummow and Callinan JJ).
The Rules carve out of the definition of ‘employer’ (which may be a mixed question of fact and law) certain bodies by reference to their legal status. The words used, including ‘public statutory body’, are not used in their ordinary sense but reflect legal concepts, the meaning of which is to be found in the text and context. Further, whether the facts once found fit within that phrase admits only one answer. The point was encapsulated by the plurality in Vetter by reference to what Mason J said in Hope v Bathurst City Council:[24]
… Mason J pointed out that when it is necessary to engage in a process of construction of the meaning of a word (or phrase) in a statute a question of law will be involved, but that the question may be a mixed one of fact and law. His Honour's reasons make it clear that a question exclusively of law arises, as the respondent sought to argue was the position in this case, if, on the facts found only one conclusion is open.[25]
[24](1980) 144 CLR 1; [1980] HCA 16.
[25]Vetter (2001) 202 CLR 439, 451 [27]; [2001] HCA 12 (Gleeson CJ, Gummow and Callinan JJ).
I reject the submission that the conclusion of the magistrate was a conclusion of fact. The appellant correctly raises questions of law.
The authorities
The magistrate proceeded on the basis that the decision of the High Court in Anti-Cancer Council provided the preferable approach to the issue before him.[26] Equally, both parties sought to rely on decided cases, from different statutory settings, as supporting their respective arguments. It is convenient, therefore, to refer to the authorities at the outset, starting with two cases in the High Court concerning s 23 of the Income Tax Assessment Act1936 (Cth) (‘ITAA’). That section conferred an exemption from income tax on the revenue of (relevantly) ‘a public authority constituted under any Act or State Act…’.
[26]Reasons [52].
In Renmark Hotel Inc v Federal Commissioner of Taxation, Renmark Hotel Incorporated claimed to be a public authority constituted under an Act. The entity was incorporated under an associations incorporations Act. It conducted a community hotel and for that purposes was licensed under a licensing Act which regulated licenses in a specified irrigation area. A condition on the licence meant that the hotel business could only be conducted and managed by a committee of management, the first members of which were nominated by local residents, with profits used for improving the hotel and then for local purposes, but not for private profit. It followed that the body was incorporated under one Act and its operations were governed by the conditions imposed under another Act, the licensing Act.
The Commissioner of Taxation rejected the hotel’s claim to be a public authority and an appeal was brought in the High Court. Rich J, at first instance, dismissed the appeal. He identified the characteristics of a public authority as a body that carries on ‘some undertaking of a public nature for the benefit of the community or of some section or geographical division of the community and that it should have some governmental authority to do so.’[27] That formulation marries both purpose or function and powers. In relation to powers, Rich J acknowledged that it is not essential that the authority have coercive powers but exceptional powers or authority might be an essential characteristic.[28] He concluded that: ‘some exceptional powers of doing what an ordinary private individual may not do are generally found in any body which we would describe as a public authority.’[29]
[27]Renmark Hotel (1949) 79 CLR 10, 18; [1949] HCA 7, [14].
[28]Ibid.
[29]Ibid.
That conclusion was based on the requirement that the body be an ‘authority’ with Rich J drawing a distinction with a public utility such as an electricity company which might serve a public purpose but do so for profit.[30]
[30]Ibid.
Rich J then turned to the requirement that the body be constituted under an Act. In that respect, he drew a distinction between the phrases ‘constituted by’ and ‘constituted under‘, with the latter phrase accommodating an authority being constituted ‘in pursuance of an Act’.[31] He concluded that it is necessary that the body be constituted as a public authority. Neither of the two Acts had that effect, and the body lacked any powers beyond those of a private individual. Rich J dismissed the appeal.
[31]Ibid 19; [14].
An appeal from the decision of Rich J to the Full Court of the High Court was dismissed. Latham CJ was prepared to assume the hotel was constituted under one or other of the Acts but held that the hotel was not a public authority because the company was not given any power or authority by law in the form of a statute to do any acts in relation to the public which would otherwise be beyond power or unauthorised. The sale of liquor under licence did not make it a public authority. The conditions imposed limitations or restrictions rather than a grant of powers or authority.[32]
[32]Ibid 23; [13], [1] (Latham CJ and McTiernan J), 24; [1] (Webb J).
The High Court revisited s 23 of the ITAA in WA Turf Club. The Turf Club was founded in 1852 and was the leading Western Australian turf club. From 1917, it also held exclusive licensing powers for horse racing in Western Australia under the Racing Restriction Act1917 (WA). As such, in addition to conducting the business of a turf club for profit for the benefit of its members, it held ‘powers and functions not possessed by the ordinary citizen and which have been conferred by statute and are essentially of a public nature.’[33]
[33](1978) 139 CLR 288, 294; [1978] HCA 13, [12] (Stephen J).
Two issues presented. First, could an existing body be constituted under an Act as a public authority by the subsequent conferral of public powers and functions? Second, what is the correct approach to a body that has both private and public functions?
On the first question, Stephen J[34] held that in order to be constituted under an Act, an entity need not from its origin have possessed the necessary qualities that make it a public authority and may, by the intercession of later legislation, be clothed with the attributes that make it a public authority.[35] This analysis reinforces the distinction between the formulations ‘constituted by’ and ‘constituted under’. The latter does not require that the entity owe its existence to the Act but it must owe its character to the Act in the sense that the Act constitutes it as a public authority.
[34]With whom Barwick CJ and Jacobs J agreed.
[35](1978) 139 CLR 288, 293; [1978] HCA 13, [7].
On the second question, Stephen J adopted a multi factorial approach, looking at factors that pointed each way. Having noted the regulatory powers that were consistent with it being a public authority, Stephen J noted aspects that were both unusual in a public authority (including that it was unincorporated, provided special facilities for members from which the public were excluded, the election of members) and some that were positively inconsistent with ordinary notions of a public authority (including that members had an interest in revenue and assets of the club and entire control over the disposition of its profits).[36] He held that the club was not a public authority.[37]
[36]Ibid 297–299; [17]–[22].
[37]Ibid 299; [22].
Aickin J agreed that the expression ‘constituted under’ did not necessarily require that a body be initially incorporated by legislation which conferred the necessary statutory duties and public functions. On the meaning of the phrase ‘public authority’ Aickin J identified the ‘basic requirement’ as follows:
the relevant Act under which the relevant body is said to be ’constituted’ should confer powers of an exceptional nature not possessed by private individuals or by companies formed by private individuals under the provisions of the Companies Acts.[38]
[38]Ibid 311; [10].
Similar issues arose before the High Court in a very different context in Anti-Cancer Council. The issue in that case was whether employees of the Anti-Cancer Council were eligible to join the State Public Services Federation (‘SPSF’), an organisation of employees registered under the Industrial Relations Act 1988 (Cth). The rules of the SPSF permitted it to enrol as members persons employed in the public service ‘or employed in any State instrumentality or other undertaking carried on by public authorities, commissions, or corporations under any State charter, statute, enactment, or proclamation of the State of Victoria’.[39]
[39]Anti-Cancer Council (1992) 175 CLR 442, 446; [1992] HCA 53, [1] (Mason CJ, Brennan and Gaudron JJ).
The Anti-Council Council was established under s 4 of the Cancer Act 1958. Its objects included coordinating research and education programs for the prevention, detection treatment and management of cancer.
The High Court, constituted by Mason CJ, Brennan and Gaudron JJ, considered each of the limbs within the eligibility rule, concluding first, that the council was not a ‘State instrumentality’, that being a body that has power to and does serve some State government purpose[40]. It held that the word ‘public’ qualified each of the entities that followed, namely authorities, commission or corporations.[41] As the council was a corporation, it was unnecessary to determine whether it was a ‘public authority’ and possessed the ‘exceptional powers’ that are the hallmark of an authority.[42] However, their Honours treated the cases on ‘public authority’ as otherwise informing the content of the related phrase ‘public corporation’. They concluded that the term connotes some public feature of the kind that marks an authority as a public authority.[43] Their reasons do not suggest that a public corporation need possess special or extraordinary powers.
[40]Ibid 448–449; [7]–[8].
[41]Ibid 449–450; [10]–[12].
[42]Ibid 450; [13].
[43]Ibid 450–451; [13]–[15].
Their Honours then examined and balanced various attributes, as Stephen J had done in WA Turf Club, noting that the council’s activities were directed to important aspects of public health; its objects were designed to promote the interests of the public; and its existence and powers derived from statute that governed its membership and the composition of its committees in a way that ensured a large measure of public accountability and representation. These features meant that the council was a public corporation.[44] Those public dimensions were sufficient to constitute it a public corporation but not a state instrumentality or public authority.
[44]Ibid 451; [16]–[17].
In MCC, the Full Court of this Court considered whether, for rating purposes, the State Superannuation Board of Victoria was a ‘public statutory body which is constituted under the law of Victoria’ and whether land held by it was used exclusively for public purposes; such land was exempt from rates.
It was common ground that the Board was a statutory body constituted under the law of Victoria; the issue was whether it was ‘public’.
Brooking J observed that the phrase ‘public statutory body’ then appeared in around 50 Victorian Acts.[45] He concluded that the phrase ‘public statutory body which is constituted under the law of Victoria’ required that the body be constituted as a public statutory body.[46] It meant ‘a statutory body constituted under the law of Victoria to perform public functions’ and this was indistinguishable from a body formed to provide public services.[47] His Honour then considered various matters, including the Board’s statutory role as a manager of the superannuation scheme for public officers, the source of funds, the Board’s control over its investment and its borrowing powers, all of which were regulated by legislation and conceded that the Board performed public functions and was a ‘public statutory body’.[48]
[45](1992) 77 LGRA 245, 247.
[46]Ibid.
[47]Ibid.
[48]Ibid 251–252.
Consideration
As that reference to authority demonstrates, various formulations are used to define bodies that attract an immunity or privilege, including ‘public authority’, ‘state instrumentality’, and, as in this case, ‘public statutory body’. The phrases share a common link as describing bodies that exercise powers or perform functions for or on behalf of the public rather than in pursuit of private interests. However, the various formulations are not synonyms and often bear different shades of meaning. Much depends on the precise words that are used. The nature of the body itself and the source of its powers, functions and duties is often important in determining whether it is a public body of the requisite kind. Although the strands of reasoning in the cases that have considered these terms or others like them will be informative, the outcome in one case cannot govern the meaning of different words used in another.
Before addressing the text, something should be said about context, purpose and legislative history. The respondent’s reliance on legislative history, namely, the concept of ‘private employer’ in the Construction Industry Long Service Leave Act 1983 (the ‘1983 Act’) does not advance its argument for two reasons. First, the term ‘private employer’ does not appear in the Act and the starting point is the text that is used.[49] Second, in the 1983 Act, the defined term was ‘private employer’. Generally, the term to be defined (‘private employer’) does not colour the meaning to be given to the definition which follows it. It would be quite circular to construe the words of a definition by reference to the term defined.[50]
[49]Commissioner of Taxation of the Commonwealth of Australia v Consolidated Media Holdings Ltd (2012) 250 CLR 503, 519 [39]; [2012] HCA 55 (French CJ, Hayne, Crennan, Bell and Gageler JJ).
[50]The Owners of the Ship "Shin Kobe Maru" v Empire Shipping Company Inc (1994) 181 CLR 404, 419; [1994] HCA 54, [26] (Mason CJ, Brennan, Deane, Dawson, Toohey, Gaudron and McHugh JJ).
Similarly, it may be accepted that there is a legislative intention to exclude certain public sector employees from the operation of the scheme. The exclusion of employees of the Crown in right of the Commonwealth of Australia or the State of Victoria is tolerably clear. However, beyond that, identification of the overall goal or intended target does not assist in determining how far the legislation goes in the pursuit of that goal.
With those matters in mind, I return to the text of the definition of ‘employer’ in the Rules, which, as noted, the Act adopts. It is possible to distil from the definition three elements: public, statutory body and constituted under an Act, each of which must be given some work to do. However, it would be a mistake to lose sight of the fact that the words appear in a compound phrase and must be read harmoniously.
The requirement that the body be a ‘public statutory body’ means that it must perform some public function, provide a public service or exercise a public power. Those matters inform whether the body is ‘public’. As WA Turf Club and Anti- Cancer Council show, whether something is public in the relevant sense is to be assessed by reference to its various attributes and requires an overall assessment of them. Some attributes will be fatal to such a characterisation while others may tend one way or the other. As the reference to authority also establishes, there are different types of public body.
In the Rules, the second and third elements require the body to be a ‘statutory body’ and ‘constituted under’ a law of the Commonwealth or State of Victoria. These elements will often be related but they are distinct. Commonly, the Act that makes the body a statutory body will also constitute it as a public statutory body. That was the case in MCC.
It may also be possible for an Act to constitute an existing statutory body as a public statutory body for the purpose of the definition even though that Act did not create the body. On that scenario, two pieces of legislation might come together to bring the body within the definition. I note in that context that in writing the respondent did not suggest that Citywide was a statutory body because it was incorporated under the Corporations Act. Rather, it submitted that Citywide was constituted under s 193 of the LGA. In oral submissions it sought to place some reliance on the Corporations Act. That reliance is misplaced. A company is not a statutory body merely because it is regulated by statute. A company attains its legal identity on registration which is provided for and given content under the Corporations Act. It is not thereby a statutory body in any meaningful sense in the present context.
The requirement that the body be constituted under an Act directs attention to the relationship between the body and the relevant Act. That relationship is to be found in the phrase ‘constituted under’. In Renmark Hotel, Rich J remarked on the distinction between ‘constituted by’ and ‘constituted under’, observing that the latter may apply to an authority ‘established in pursuance of an Act’.[51] His Honour then went on to observe that the phrase requires that the body be ‘constituted as a public authority’.[52] It was this latter passage which was picked up by Brooking J in MCC when he noted that provision requires that the body be constituted as a public statutory body.[53]
[51]Renmark Hotel (1949) 79 CLR 10, 19; [1949] HCA 7, [14].
[52]Ibid 19; [15].
[53](1992) 77 LGRA 245, 247.
Applying the more attenuated relationship referred to by Rich J, it would be sufficient if Citywide was ‘established in pursuance of’ s 193 as a public statutory body.
Clearly enough, the shares in Citywide were acquired by the Council pursuant to s 193 for the purpose of performing various functions and powers conferred on the Council under the LGA. Its participation in the operation of Citywide and the use of Citywide to deliver services to ratepayers and to provide its services for reward to other entities was also authorised by s 193(1).
Although Citywide’s legal existence does not derive from s 193, its character, as a body performing functions and exercising powers conferred on the Council under the LGA, does, at least at one level, derive from s 193 in the sense that those functions and powers are undertaken with the authority of the Council pursuant to a statutory power that allows that to occur. It might be apt, in that context, to describe Citywide as being constituted under s 193 as a public body, although the reservations of Latham CJ in Renmark Hotel[54], and Barwick CJ in WA Turf Club[55] highlight the difficulty of treating a body as being constituted under an Act when it does not owe its existence to that Act. Further, as Brooking J noted in MCC, he was unable to distinguish between a body formed to provide public services and one constituted to perform public functions.[56] Ultimately, the fact that s 193 allows the Council to utilise a company for the purposes of discharging its powers and functions is insufficient.
[54](1949) 79 CLR 10, 22; [1949] HCA 7, [7].
[55](1978) 139 CLR 288, 290; [1978] HCA 13, [3].
[56](1992) 77 LGRA 245, 247.
Applying the approach of Brooking J, Citywide was not constituted under s 193 as a public body because its public character was constituted under the arrangements made between it and the Council. It is true that s 193 imposes obligations on the Council and the approval to form and operate through the company was subject to it giving undertakings to the Treasurer and Minister. In turn, the Council has ensured that Citywide enables the Council to meet its obligations by imposing restrictions on it through its memorandum and articles of association, to which it has subscribed. However, it is those documents, the control held by the Council as the sole shareholder and Citywide’s statement of corporate intent, and not s 193, that provide the relevant restrictions on the operations of Citywide.
More fundamentally, in order to fall within the exception, the body that is constituted under the Act must be a public statutory body. In my view, the phrase ‘statutory body’ describes the nature or type of body rather than what it does. To be constituted as a statutory body it is necessary that the body owe its existence to statute.[57] It would be an unorthodox use of language to describe a body created by the executive, or in this case a council, as a statutory body even where the Act conferred authority on the executive to use that body for public purposes. To create a statutory body more is required than a statute that contemplates, recognises or permits a body to discharge a public function, power or service.
[57]Wynyard Investments Pty Ltd v Commissioner for Railways (NSW) (1955) 93 CLR 376, 387; [1955] HCA 72, [8] (Williams, Webb and Taylor JJ).
For this purpose, a focus on the distinction between the phrase ‘constituted under’ and the more direct ‘constituted by’ misses the point because they do not bear upon the type of body, only its relationship to the Act. Citywide’s focus on the third element and its submission that ‘constituted under’ provides for a more attenuated connection than ‘constituted by’ has led it to neglect the additional, and separate, requirement that the body be a statutory body. In MCC, this discrete element was accepted to exist because the body was created by the relevant Act.
Citywide’s approach also renders the word ‘statutory’ otiose. On its argument, a body is a public statutory body if its public function flows from or is permitted to be conferred by an Act. On that analysis, every entity that is constituted under an Act in that sense would be a ‘statutory body’. The requirement that the body be a statutory body would be satisfied for every public body whose functions are permitted by statute. Such an approach ignores the orthodox approach to construction that every word is to be given meaning.[58]
[58]See, eg, Project Blue Sky Inc v Australian Broadcasting Authority (1998) 194 CLR 355; 382 [71]; [1998] HCA 28 (McHugh, Gummow, Kirby and Hayne JJ).
Section 193 of the LGA neither expressly, nor by implication, authorises a council to create a statutory body. Section 193 permits a council to organise its affairs in particular ways in order to discharge its functions and powers. It is permissive, in the sense that it provides the means by which powers and functions may be performed but a council is under no obligation to utilise them. Here, s 193(1)(a) was used to assist the Council to manage its obligation to provide services in a competitive way. The Council chose to use a wholly owned subsidiary for that purpose. The fact that the company so chosen provides services to the Council so as to enable it to fulfil its obligations to ratepayers, residents and visitors to the municipality does not mean that the company thereby became a statutory body.
Citywide does not owe its existence to s 193. Section 193 did not provide for its formation. It was the decision of the Council to acquire shares in it and to use it to provide public services that determined the character of Citywide: a private company that provides public services.
It would also follow from Citywide’s construction that any partnership or trust through which a council provides services, as contemplated by s 193(1)(d) and (e), would be a statutory body merely because s 193 allows it to occur. I reject that approach. If the body is not a statutory body, the fact that its public character was constituted under, in the sense of provided by or permitted by an Act would not change the underlying status of the body and render it a statutory body.
It follows that Citywide is not a statutory body and therefore s 193 did not constitute it as a public statutory body. On the question of whether it was a statutory body, the magistrate applied the wrong test by adopting the multi factorial approach. That approach was adopted in Anti-Cancer Council for a different stage of the analysis, in a different context.
It remains to deal with the appellant’s submission that the magistrate should have considered whether Citywide is a public authority. Contrary to that submission, whether Citywide is a public authority is an idle question because the phrase ‘public authority’ is not used in the definition and any meaning to be attributed to that phrase would need to be sourced in the particular context in which it is found. However, the cases on public authorities are relevant because they show what may supply the necessary public dimension.
I do not accept the appellant’s submission that in order to be a public statutory body, it is necessary that the body have exceptional powers, conferred by statute, which are beyond those possessed by a natural person or ordinary legal entity. As the three High Court cases discussed above make clear, that requirement is, most likely, the hallmark of a public authority. It is a reflection of the nature of an ‘authority’. I do not understand the cases to suggest that it is equally a necessary characteristic of other public entities such as corporations considered in Anti-Cancer Council or a public utility referred to in Renmark Hotel. Of course, the presence of such powers would go some way in establishing that a body was a public statutory body. It follows that, in my view, the fact that Citywide lacks any particular or unusual powers of this nature is not decisive.
On the facts as found by the magistrate, which were not in dispute, Citywide does not come within the governmental/public statutory body exception in the definition of ‘employer’.
Was the error material?
Had the appellant succeeded at trial on the first issue, Citywide did not advance an independent defence based on a challenge to the belief of the informant. However, before this Court, Citywide submits that success on the issue of belief would mean that it has a complete defence to the charge because the basis for the Notice was the informant’s belief that Citywide was an ‘employer’ and not because it was in fact one.
Citywide relies on the decision of the Court of Appeal in Aurora Construction Materials Pty Ltd v Victorian WorkCover Authority[59] as establishing a fundamental principle that a notice of this type must on its face disclose that it is an exercise of the power which is conferred on the issuing body by the statutory provision in question.[60] Where, as here, there are alternative statutory bases to enliven the power to issue a notice, the notice must identify, and be confined to, the basis set out in the notice.
[59][2018] VSCA 165 (‘Aurora Construction’).
[60]Ibid [79], [86] (Kaye JA).
Citywide submits that s 10 of the Act authorised the issue of a notice if the recipient was an ‘employer’ or if the trustee believed the recipient to be one. Having identified one of those alternatives in the Notice, it must establish that foundation in order to rely on the Notice.
Citywide submits that because the Notice was based on belief and the magistrate found that the officer did not hold the requisite belief, which involves a question of fact, any legal error did not matter and the charge was correctly dismissed.
Logically, the question of belief could have been negated on two bases, bearing in mind that it was the prosecution that bore the burden of proof to the criminal standard. First, the prosecution might have failed to prove that the informant believed that Citywide was an employer. Secondly, even if it was established that the officer held that belief, it might have failed to establish that it was reasonably held.
The magistrate rejected the allegation that Mr Tobin issued the Notice for an improper purpose. The magistrate did not make any express finding in his reasons that Mr Tobin did not believe that Citywide was an employer, although he noted that he did not find his evidence ‘compelling or convincing as to his belief’.[61] However, the second issue, which the magistrate answered in the negative, was whether Mr Tobin believed that Citywide was an employer. That formulation of the issue was not qualified by the standard of reasonableness.
[61]Reasons [66].
It is not entirely clear from the magistrate’s reasons whether he held that there was no belief, no reasonable belief or both. However, given the paucity of the reasoning on this aspect of the case, I am persuaded that had the magistrate applied the correct test, at the very least, there is a real possibility that a different decision would have been made on the question of belief.
It follows that I am satisfied that the errors I have identified in relation to the first issue also infect the second issue with the consequence that the order of the magistrate should be set aside.
The appellant asks this court to substitute a finding of guilt under s 10(3) of the Act. Citywide says that it has a defence to the charge because the appellant is confined to the Notice based on belief. In short, it seeks to run a defence that it did not run at first instance before the magistrate. The potential application of the decision of the Court of Appeal in Aurora Construction and whether Citywide should be permitted to rely on it was not considered at first instance and will depend on findings of fact as to belief.
In my view, the charge should be determined at first instance on a correct legal and factual footing.
Conclusion
I would uphold ground 2. In the circumstances, it is unnecessary to resolve the other grounds, although I would have upheld grounds 1.2 and 1.4. The order should be set aside and the charge remitted to the Magistrates’ Court for determination in accordance with law and on the basis that Citywide is not a public statutory body constituted under the law of the Commonwealth or of the State of Victoria.
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