Communications, Electrical, Electronic, Energy, Information, Postal, Plumbing and Allied Services Union of Australia & Ors v Queensland Rail

[2015] HCATrans 7

[2015] HCATrans 007

IN THE HIGH COURT OF AUSTRALIA

Office of the Registry
  Brisbane  No B63 of 2013

B e t w e e n -

COMMUNICATIONS, ELECTRICAL, ELECTRONIC, ENERGY, INFORMATION, POSTAL, PLUMBING AND ALLIED SERVICES UNION OF AUSTRALIA

First Plaintiff

THE ELECTRICAL TRADES UNION OF EMPLOYEES QUEENSLAND

Second Plaintiff

AUSTRALIAN MUNICIPAL, ADMINISTRATIVE, CLERICAL AND SERVICES UNION

Third Plaintiff

QUEENSLAND SERVICES, INDUSTRIAL UNION OF EMPLOYEES

Fourth Plaintiff

AUTOMOTIVE, FOOD, METALS, ENGINEERING, PRINTING AND KINDRED INDUSTRIES UNION KNOWN AS THE AUSTRALIAN MANUFACTURING WORKERS’ UNION

Fifth Plaintiff

AUTOMOTIVE, METALS, ENGINEERING, PRINTING AND KINDRED INDUSTRIES INDUSTRIAL UNION OF EMPLOYEES, QUEENSLAND

Sixth Plaintiff

AUSTRALIAN FEDERATED UNION OF LOCOMOTIVE EMPLOYEES, QUEENSLAND UNION OF EMPLOYEES (FEDERAL)

Seventh Plaintiff

AUSTRALIAN FEDERATED UNION OF LOCOMOTIVE EMPLOYEES, QUEENSLAND UNION OF EMPLOYEES (STATE)

Eighth Plaintiff

AUSTRALIAN RAIL, TRAM AND BUS INDUSTRY UNION, QUEENSLAND BRANCH

Ninth Plaintiff

AUSTRALIAN RAIL, TRAM AND BUS INDUSTRY UNION OF EMPLOYEES, QUEENSLAND BRANCH

Tenth Plaintiff

and

QUEENSLAND RAIL

First Defendant

QUEENSLAND INDUSTRIAL RELATIONS COMMISSION

Second Defendant

FRENCH CJ
HAYNE J
KIEFEL J
BELL J
GAGELER J
KEANE J
NETTLE J

TRANSCRIPT OF PROCEEDINGS

AT CANBERRA ON WEDNESDAY, 4 FEBRUARY 2015, AT 10.17 AM

(Continued from 3/02/15)

Copyright in the High Court of Australia

____________________

FRENCH CJ:   Yes, Mr Kirk.

MR KIRK:   Thank you, your Honour.  Your Honours, before I turn to the issue of trading corporation, can I just pick up four points which arose from yesterday?  First, your Honour Justice Kiefel asked me a question about the significance of by‑laws and I referred, with a half memory, to a case Conservators of the River Tone v Ash. My memory was not quite right. Can I take your Honours briefly to that case? It is reported in (1829) 109 ER 479. If I could take your Honours within the English report to page 491, which is within Justice Bayley’s judgment, at point 3, the paragraph beginning “Then as to the power”, and if I could invite your Honours to read about the first 10 lines dealing with by‑laws.

Your Honours, that was a rather unusual corporation, as explained there, because it could make by‑laws not only for its own members, but for others as well.  That illustrates the point, as it happens, that simply because a corporation has governmental aspects or regulatory aspects, even in 1829 it was not seen as removing it from being a corporation.

But to come back to the substance of the point your Honour Justice Kiefel raised with me – and I think your Honour gave the example of municipal corporations – one can well understand with municipal corporations or university colleges or the dean and members of a cathedral or such like that one might need to have, or speak of having, by‑laws for regulating the members of the group.  But even in English law, of course, corporations’ sole were recognised as corporations, and so it would not be seen even under English law, in our respectful submission, as an essential aspect of the constitutional conception.

Secondly, your Honour Justice Hayne raised two issues with me; the first ‑ two I wish to come back to.  The first related to section 37 of the impugned Act which is found at page 30 of the legislative materials which provides:

The Authority is a unit of public administration under the Crime and Corruption Act 2001.

If I can deal with that briefly. In section 20 of the Crime and Corruption Act 2001, it defines units of public administration and this adds to that definition. That definition within section 20 picks up some incorporated bodies and some unincorporated entities. The notion of the unit of public administration is a foundational notion within the Crime and Corruption Act as things to which corrupt activity can be directed or which it can involve.  In our respectful submission, it does not greatly add to the debate here.  I do note that although the definition of “units of public administration” in the Crime and Corruption Act does not pick up in terms government owned corporations, pursuant to section 156 of the Government Owned Corporations Act, to some extent for some purposes government owned corporations are also dealt with as units of public administration.

But that, in a sense, points to the deeper issue your Honour raised with me, which was also raised ‑ and this is the third point I wanted to deal with – also raised by your Honour the Chief Justice when your Honour mentioned section 46 of the Acts Interpretation Act.  With your Honours’ leave, we have prepared a one and a half page note which your Honours should have, behind which are some extracts from relevant legislation.  I might ask your Honours briefly to cast your eyes over just the note.

HAYNE J:   One that is missing is the Government Owned Corporations Act, Mr Kirk.

MR KIRK:   That has its own significant complexities, your Honour, yes.

FRENCH CJ:   Well, you would have to be a body corporate to be a government‑owned corporation, do you not?

MR KIRK:   Yes, I think that is right, your Honour.

FRENCH CJ:   So this cannot be a government‑owned corporation.

MR KIRK:   Well, that may be right.  It may be right, your Honour.

FRENCH CJ:   That would then mesh in with the fact that Queensland Rail Limited is taken out of the scope of the government Corporations Act by, effectively, statutory revocations of declaration.

MR KIRK:   Yes, that may well be right.  I should also note, incidentally, that your Honour Justice Hayne also asked me a question about how bodies corporate are dealt with under the Corporations Act.  That is a matter of some complexity and the Commonwealth, I am told ‑ ‑ ‑

HAYNE J:   It sure is.

MR KIRK:   ‑ ‑ ‑ the Commonwealth, with what are traditionally called its “unlimited resources” is, I understand, preparing a note on that and I am grateful to them for that.  So we seek to rely on the note we have handed up and the final submission we make about it is captured within paragraph 7 of the note.

The fourth and final point I wish to make on the topic of yesterday is that for the avoidance of doubt, even if we do not persuade your Honours that the essence of a notion of a constitutional corporation is quite as we put it, we respectfully submit that on any view Queensland Rail is a corporation within that notion and, in that regard, in our primary written submissions at paragraph 10, we have sought to bring together a range of the attributes which I took your Honours through yesterday which are indicia on any view of it – looking, acting, smelling and quacking like a corporation.  That is all I wanted to say in relation to ‑ ‑ ‑

FRENCH CJ:   Can I just ask you, what do you say is the purpose of section 6(2)?

MR KIRK:   It may well be that it has a purpose of the kind outlined in the note to differentiate it for the purposes of other statutory law of the kind we have articulated – perhaps also the Government Owned Corporations Act – from regulation under that Act.  It is not necessary to go so far as to say it has a purpose of seeking to withdraw Queensland Rail from the scope of the Fair Work Act, although given that the plain purpose of the Act is to remove Queensland Rail from regulation by the Fair Work Act, that may well be one part of why it was there.  What we do say about it, regardless of its purpose, that self‑characterisation cannot determine the constitutional issue as to what is a corporation and whether Queensland Rail is a corporation.

FRENCH CJ:   There is no direct relevant statement of purpose, is there, in either the second reading speech or the explanatory notes or the report of the parliamentary committee that was before the Parliament when this ‑ ‑ ‑

MR KIRK:   Nothing useful that I could find.  My recollection of those materials is that, again, there was no doubt; there is no secret that one part of the purpose was to withdraw this from the Fair Work Act.  I am not saying that was the only purpose incidentally but, no, I do not recollect there being anything useful in any of the extrinsic materials in relation to section 6(2).

HAYNE J:   Well, before you part from this point, Mr Kirk, the point that may have to be grappled with can, I think, be put in this form.  The words “body corporate” can be – perhaps, commonly are – used in legal discourse as precisely congruent with an expression “any artificial legal entity”.  The second proposition that it would be necessary to observe or make would be, I think, that the QRTA Act creates an authority – on the face of it, at least, subject to what the Solicitor for Queensland tells us – it seems that the authority is an artificial legal entity; it is a right and duty bearing entity.  If step two is right, does it follow that the expression, “body corporate”, when used in section 2 is being used in a sense in which it is not congruent with – wholly congruent with – any artificial legal entity?

Now, if those steps are right ‑ they may not be, and the Solicitor for Queensland will no doubt tell me why they are not – it would perhaps lead to the fourth proposition:  that “body corporate” in 6(2) is used as an expression intended to engage other provisions of the Queensland statute book.  Presently, we have at least two evident candidates for that kind of engagement, the Acts Interpretation Act provision and the GOC Act provision, but it seems to me that is where the argument presently sits.  Now, if it is not, I need to know, but if it is where it sits, then at least the Solicitor for Queensland and the interveners have a target at which to shoot.

MR KIRK:   Or, the only thing I would respectively add to that, your Honour, is otherwise five, what does it do, apart from speaking to this Court, or other courts, in an attempt to avoid the consequences of the definitions in the Fair Work Act.

HAYNE J:   Well, that is a circuitous device argument which I notice that no party or intervener seems ‑ I was about to say brave enough to put ‑ no party or intervener puts.

MR KIRK:   Can I turn then, your Honours, to the trading corporation issue and I will seek to be a little briefer on this point; that is significantly because my learned friends for Queensland Rail, have dedicated all of two paragraphs to the topic in their written submissions.  Furthermore, neither Queensland Rail, nor any State attorney has sought leave to reargue any of the decisions of this Court dealing with the issue.  However, I do need to deal, fairly briefly I hope, with submissions made by the Victorian attorney, if I could take your Honours to the written submissions of the Victorian attorney.  The tests that they propose is found at page 10, paragraph 21, where in the second sentence of the paragraph, it is said:

The underlying question is: what is the corporation’s true character ‑

and in subparagraph (a) they talk about “generally speaking”, looking to the “present activities” and then go on to speak of whether trading is its “characteristic activity”.  In subparagraph (b) they suggest that one should look at the:

proportion of the corporation’s activities generally, rather than the value . . . in an absolute sense.

Then in paragraph 22, in the last sentence before they quote, they approvingly invoke what Chief Justice Gibbs and Justice Wilson stated in the State Superannuation Board Case and your Honours will note particularly the last sentence of the quote:

It is not a question solely of substantiality in either a quantitative or a relative sense but whether the activity is the predominant or characteristic activity.

Now, in our respectful submission, insofar as Victoria is seeking to reinvigorate what those two members of the Court said in State Superannuation Board, the submission is inconsistent with Adamson’s Case, the State Superannuation Case and Tasmanian Dam.

It is sufficient for me to start with the State Superannuation Case and take your Honours briefly to that. That is in (1982) 150 CLR 282. The judgment of the Chief Justice and Justice Wilson was a dissenting one. If I can take your Honours to the majority judgment of Justices Mason, Murphy and Deane at page 303, the Court, of course, was dealing with whether the appellant was a financial corporation rather than a trading corporation but there was no dispute that the same type of principle should apply for financial as for trading corporations. At the bottom of page 303, their Honours indicate that:

the decision in Adamson is of importance for two reasons.  First, the majority of the Court –

rejected the argument that one looks to –

the purpose for which a corporation is formed is the sole or principal criterion –

and secondly at the top of page 304 their Honours say ‑

the judgments of the majority in Adamson make it clear that, in having regard to the activities of a corporation for the purpose of ascertaining its trading character, the Court looks beyond its “predominant and characteristic activity” –

and then in the next paragraph, beginning with the reference to his Honour Justice Murphy, the next sentence goes on ‑

Indeed, it was essential to the majority’s approach and to its rejection of St. George that a corporation whose trading activities take place so that it may carry on its primary or dominant undertaking, e.g., as a sporting club, may nevertheless be a trading corporation ‑

and so on, including the next paragraph beginning “Indeed”.

FRENCH CJ:   May the test be satisfied by reference to statutory objectives which fall within the scope of trading?

MR KIRK:   Yes.  Although the focus since this line of cases has very much been on trading activities, reference to “purpose” has never been ruled out as possible and, of course, in Fencott v Muller that was the basis of the corporation there being found to be a trading corporation.  So, yes, either would be sufficient.  One might also take account of both as part of the characterisation exercise.

Underlying this part of their Honours’ analysis, of course, is a rejection, again, of any notion that one is looking for the sole, dominant or singular characterisation.  It is a manifestation of the acceptance of dual characterisation within Australian constitutional law.  The point is also developed over the page at page 305, at about point 3, towards the end of the line beginning “However, just as a corporation may be a trading corporation” and so on to the end of the paragraph, and again on page 306, the paragraph above the heading beginning “The facts as we have recited them”.

KIEFEL J:   Do you say this constitutes a rejection of the approach which looks to the characterisation of a corporation?

MR KIRK:   It is a rejection, in our respectful submission, of an approach which looks to a predominant characterisation or, perhaps put another way, a characteristic characterisation if that notion of characteristic is meant to imply the dominant, the overall, the singular characterisation.

KIEFEL J:   But once you start talking about activities being substantially or significant, you are talking about something about a corporation.  Are you not necessarily saying that by reference to this degree of activity, the corporation will have the character of a trading corporation?

MR KIRK:   Yes.

KIEFEL J:   That is what is said in Fencott v Muller, is it not, 152 CLR at page 602?  There, the company Oakland, when regard was had to the memorandum and articles of association because it had not traded, the majority said:

In the circumstances of the present case, there is no better guide to its character than its constitution ‑ ‑ ‑

MR KIRK:   Yes.  I accept all that, your Honour.  One is looking for, in a sense perhaps our objections to the Victorian submission may come down to the definite versus the indefinite article.  It needs to be a character, a sufficient character for constitutional purposes.  It does not need to be the singular, defining, predominant or characteristic character.  It needs to be a meaningful character of the corporation.

KIEFEL J:   It sounds like a split personality rather than a character.

MR KIRK:   It is just a manifestation of the fact as brought out clearly in the State Superannuation Board Case, that one could characterise that entity as a governmental entity directed to public servants’ superannuation.  The minority in that case said that is the predominant characteristic.  The majority in the case indicated one may well say that it is such an entity, but it is also a financial corporation when one looks to its activities.  It has to be, to pick up a phrase of Sir Anthony Mason in Adamson, I think, sufficiently significant to warrant it being so characterised; it could not be de minimis.  The word “peripheral” is used, for example.  If the trading or the financial activity was peripheral, then it would not have that character.

So, for example, if one had a very large municipal body – millions and millions of dollars of revenue and was selling only tourist trinkets and that was 0.1 per cent of its revenue that would not warrant it being characterised as a trading corporation, not just because of the absolute amount – say $10,000 worth of trade – but because of the relative amount.  In other contexts $10,000 of trade may well be enough if it is a part‑time business run from home doing drafting or designing.  All its revenue is trading.  That may well be enough to make it a trading corporation.  In all instances, one has to look at the circumstances. 

HAYNE J:   Is it a character that comes and goes?  How do you deal with the time issue?  A court is always looking backwards – I understand that.  But do corporations come within and go without power?  Can they?

MR KIRK:   I think that is a necessary corollary of the current state of jurisprudence that they may, save that.  Your Honour the Chief asked me about purpose and I said, yes, that if the purpose is trading activities, that may be enough.

FRENCH CJ:   What do you say about section 10(1)?

MR KIRK:   Of the Act here?

FRENCH CJ:   Yes.

MR KIRK:   That that is enough.  Indeed, in our written submissions – if I can just take your Honours to that.  As a checklist in our primary written submissions at paragraph 62 on page 14, we list other indicia of purpose from the statute which indicates that it has a purpose of being a trading body – we say corporation, obviously – and that that is enough.  To that I would add to the list incidentally section 62 which I took your Honours to yesterday about the QR being liable to pay Commonwealth tax equivalents.  So, yes, we do rely on purpose.  We also rely on activities. 

To come back to your Honour Justice Hayne’s difficult question, if one takes the view of purpose for bodies such as this which I have articulated, that means the body is not going to wax and wane in and out of power.  But in circumstances where the ultra vires doctrine has been abolished and corporations do not need to – they often sometimes still do – but they do not need to have statements of objects in the same way as they used - one then is forced to resort to an activity‑type of test.

HAYNE J:   But it comes at its most acute, does it not, in either the university or the local government authority?  Leave aside local government authority and arguments about whether they are bodies politic or quasi bodies politic - leave those arguments to one side.  What do you do with an entity like a local authority or a university which engages in a marketplace with a view to deriving more revenue than it outlays in the activities that are the subject of that marketplace?  I am simply observing that there is a market for goods and services.  I think some of the submissions seem to approach the point of saying that is enough.  Now, is it?

MR KIRK:   Well, the corporations power must be taken to be possible to operate in the real world in a practical way.  One can assume - to the extent one is concerned about framers’ intentions, one would assume they intended it to be practically operative, and to the extent that might involve significant waxing and waning in and out of power, that would significantly undermine the efficacy, indeed even the rule of law in a sense, of the federal law because one would be uncertain from time to time if the federal law applied.  One would not actually know at the time one was considering it with a certainty.

What that points to, in our respectful submission, is that the threshold should not be set too high, and that is part of our response to the Queensland submissions, to look for example for a predominant characteristic or a dominant characteristic as opposed to a meaningful characteristic.  It is much more likely to encourage that waxing and waning in and out of power for different times, different periods, different activities, which renders the corporations power significantly less useful. 

That is part of the reason the Victorian approach should be adopted.  Another part is that this Court last visited this issue 32 years ago in Tasmanian Dam and it has actually worked – no one has pointed to any great difficulty in its application since.  There are borderline cases – universities – Quickenden, sometimes government bodies, sometimes charitable bodies.  We refer to Bankstown Handicapped Children’s Centre Association Case in our written submissions.  There are always going to be borderline cases, but by and large the test has worked well and no one has said to the contrary. 

KIEFEL J:   With the growth of not for profit companies and corporations, I would have thought that it has become – there is a degree of difficulty about the question now.

MR KIRK:   That may be right.  There is always going to be borderline issues whatever test is adopted, and that may be where the borderline ‑ ‑ ‑

KIEFEL J:   That is partly because the intention of the framers is, as I think was said in Work Choices, a mirage.  You cannot really discern what was intended because the whole development of corporations was in a state of flux.  What you can discern is that not all corporations were intended to be the subject of 51(xx).

MR KIRK:   That is true, your Honour, and they have identified three types of course and without taking your Honours to it, we will all recall what Sir Isaac Isaacs said in Huddart, Parker where he listed a range of corporations – trading, financial, religious, municipal, charitable and so on; he had a long list.  But as some of your Honours pointed out in Work Choices in relation to that list – I think it might have been paragraph 86 or so – it was not clear, for example, even in 1908 why mining or manufacturing corporations, which were two of the ones in his Honour’s list, would be seen as distinct from trading corporations, even in 1908, let alone today.

GAGELER J:   Well, there was a view that manufacture was not trade.

MR KIRK:   Was not trade?

GAGELER J:   Manufacture or primary production was seen on one view as being separate and preliminary to trade.

MR KIRK:   That view is one that has not found favour in the Court constitutionally – 51(i) – or in a range of other areas in which the issue has arisen since and is, with respect, in a sense an anachronistic view.  It is one of those more denotation‑type views as opposed to the broader view.

To take other examples ‑ sporting bodies.  Adamson was decided in 1979.  In the years since, sport has become even more commercialised.  Charitable bodies ‑ this Court considered a case ‑ I will just give your Honours the reference, Commissioner of Taxation v Word Investments (2008) 236 CLR 204 – about a religious charity involved in translating bibles and proselytization overseas, which engaged in significant trade for the purposes of profit, and was held by the majority of this Court to be a charity. But it could not be disputed, in our respectful submission, it was also a trading corporation, which points to the deeper issue about the scope of the constitutional power in a sense.

As I put yesterday, drawing in part on paragraphs 177 and 178 of Work Choices, the corporations power – to put it simply – is directed to regulating activity, business activities, to summarise it in that way.  If an entity is engaged in those activities, in a not insignificant way, regardless if whether it is doing it for profit or not, for a charitable end or not, for a sporting end or not, for a governmental end or not, if it is engaging with consumers or members of the Australian community in relation to trade, it should be capable of regulation within the corporations power, in our respectful submission.

As to this notion of looking to the proportion of trade, as is consistent with the submissions I have put this morning, it is one factor – I gave the example of the municipal corporation.  It cannot be, however, or it should not be, in our respectful submission, a factor of great significance if that is meant to point back to looking to the predominant characteristic for the reasons I have already given, but it has a further problem ‑ how is proportion to be judged?  If it is the University of Western Australia, it is not so hard.  One can say 17 or 18 per cent of the income is from trading and the rest is from government grants and so forth, but if it is Word Investment, the charity considered in the case I mentioned, it may be that nearly all of the revenue is from trading activities, and it is then spent on the other side of the accounts for non‑trading activities.

How then is proportion to be judged where all, say 100 per cent of the revenue, is from trade?  Does one look to employee time spent?  Compare revenue spent versus revenue earned?  These would be very fact intensive exercises and would create uncertainty of the kind we have discussed this morning.  So, in our respectful submission, purpose, if it can be seen as a not insignificant purpose, sufficient to warrant the character, is enough.  Trading activities, if they are not insignificant, sufficient to warrant this body bearing that character, without being a predominant character, that is enough.  If Victoria is submitting to the contrary, we respectfully submit those submissions should be rejected.

To turn then to Queensland Rail.  First, we rely on purpose in the way I have already identified.  Secondly, in relation to activities, if I can take your Honours briefly to the special case in volume 1 of the special case book.  The parts I am about to take your Honours to in some way are a summary of documents and so forth, but given the time, I will simply take your Honours to these paragraphs.  First, at page 58 of the special case book, paragraph 40, as I alluded to yesterday, QR accepts that since 3 May 2013 its wholly owned subsidiary QR Limited has –

Remained a trading corporation within s. 51(xx) of the Commonwealth Constitution ‑

for whatever that is worth.  If one turns to paragraph 50 on page 61, it is there identified that QR and QRL have entered a rail transport service contract with the State of Queensland by which both agree to provide the rail services as defined – the contract is in the materials.  One turns over the page to paragraph 54:

As at 30 June 2013 –

at the time the special case was prepared, the 2014 accounts and annual report was not available.  As at that date, there were about 6,500 full‑time employees in Queensland Rail, and QRL had no employees.  Then the next paragraph:

The majority of work performed by [QRL] since –

the transfer date –

is effected through the provision of employees provided by [QR] under a managed services agreement –

That agreement, as it currently stands, is then explained on page 64 from paragraph 62 onwards, and turning to paragraph 63:

Under the Managed Services Agreement, it is stipulated that:

A.       [QR] has personnel that are skilled . . . 

B.       [QRL] wishes to engage [QR] to provide personnel –

Then 64:

A.[QR] will make available its personnel . . . for . . . the following purposes:

i. . . . providing rail passenger transport services –

et cetera, including A.v. towards the bottom of the page –

v.all such other acts as are necessary to fulfil the role of accredited rail infrastructure and rolling stock operator as required by any law –

Over the page, page 66, paragraph 65, QR pays all the salary and benefits of the employees and:

B.Is responsible for [their] management, career development and training –

so all the HR aspect.  Paragraph 66, the services that QRL provides back to its parent relate only to facilitating QR providing the employee services, so it has to allow access to QRL’s premises and to its payroll system.

Paragraph 67, under the agreement, QR can and does debit QRL for direct and indirect costs.  I note that does not include a profit component; I will come back to that.  Paragraph 68, QRL can do the same back to QR.  In fact, there is no evidence it does, but even if it did, it would be to no end.  If I can give your Honours a reference; in Schedule 2 of the agreement, clause 1.2(e) at page 1301 of volume 4, any amounts QRL charges QR can be included in QR’s bill back to QRL as part of the cost of providing the services.  The cost of the charging is all one way.  Paragraph 69, the personnel have been made available, invoices have been issued.  Paragraph 70, since the transfer date:

the provision of employees to [QRL] has been and is [QR]’s principal revenue‑generating activity.

In fact, it is its only – at least in the 2013 financial year ‑ it was its only revenue‑generating activity apart from gaining a dividend from QRL.

KIEFEL J:   Invoices and revenue by themselves do not take you very far.  It is common amongst governmental agencies that they adopt commercial practices.  This Court no doubt invoices for ‑ ‑ ‑

MR KIRK:   What is happening here is that ‑ ‑ ‑

KIEFEL J:    ‑ ‑ ‑and it is not an agency.

HAYNE J:   Sorry I did not hear that, Justice Kiefel.

KIEFEL J:   Would you like me to say it a little louder?

MR KIRK:   Insofar as all of this is meaningful – and I am not suggesting it is not – QR is a labour hire firm.  It is providing its employees, it is managing its employees, it is developing and it is training them, and so forth and it is saying, here they are and they can run your business for you and we are going to charge you for it.  As paragraph 76 indicates, in the 2013 financial year they charged $120.5 million for those services.  The provision of labour services in that way must be a trading activity, in our respectful submission.

HAYNE J:   Leaving aside the different subject matter of the transactions, what is different between QR and the form of corporation that was common, at least in the late eighties, early nineties, of the treasury or finance corporation in the corporate group?  At one stage there was – I do not know whether there still is – a company called BHP Finance Limited.  It used to have all the treasury function for the whole of the BHP Group.  I do not whether it worked at a profit or not, but what is the difference in kind?

MR KIRK:   Can I say it in two ways?  In one sense there is the usual Salomon type of difference – that we have different legal entities, and so forth.  That is the formal legal answer.  At a deeper level, in substance QR and QRL are together performing the activities.  Indeed, QR in its brief submissions on this point raises only two issues against us.  One is that on the labour hire aspects there is not profit component, which is accepted.  Profit is not necessary, however, and in our written submissions and in the Commonwealth’s written submissions the authorities for that are explained.  If it was an ordinary labour hire firm, the fact that it was not making a profit ‑ the fact that it was not seeking to make a profit – would not change the fact it is engaged in transactions in the Australian economy.

But, at the deeper level, QR says secondly against us, well, these are not really arms‑length transactions.  Well, if that is right that only strengthens our case, in our respectful submission.  It comes back, actually, to the Act.  Under section 9, I think it is, of the Act:

The Authority –

this is on page 18 of the legislative materials ‑

has the following functions to the extent they are consistent with its operational and strategic plans –

and subsection (2) ‑

The Authority may carry out its functions directly, or indirectly through its subsidiaries.

I also referred your Honours yesterday to section 100, I think, indicating that the Act does not deprive QRL of its effective management and control.  But, in substance here section 9(2) is being implemented.

FRENCH CJ:   I think there is a reference, is there not, in the explanatory notes to the concept of a Queensland rail group.

MR KIRK:   Yes, that is right.  Queensland Rail – the board is the same, the CEO is the same, there is no practical distinction.  In substance, QR is engaged in trading activities.  Leave aside the labour, it is engaged in trading activities with the public in the way that is brought out in the provision of rail services and is described in the special case.

The final topic, very briefly, is our answers to the questions stated.  The questions stated are found at page 74 of volume 1 of the special case book.  Is QR a corporation?  We submit yes.  Is it a trading corporation?  We submit yes.  Question (3):

If so, does the Fair Work Act 2009 (Cth) apply to Queensland Rail and its employees by the operation of s. 109 of the Constitution, to the exclusion of the Act or the Industrial Relations Act 1999 (Qld) or both?

Our simple answer is yes, both.  We give a more precise formal answer in our written submissions ‑

(4)      What relief, if any, are the plaintiffs entitled to?

The relief we seek ‑ and I note that QR has not suggested that there is any particular problem with any of the relief that we seek if we are right on the first two questions.

HAYNE J:   Just one minor matter, Mr Kirk.  If, at the end of argument, it proved unnecessary to determine whether “corporation” is better understood separately from its place in the various collocations in 51(xx), but one were to form a view about whether QR is a trading corporation, would you press for an answer to question (1)?

MR KIRK:   What we press for, ultimately, is relief.  The questions are a means to the end.  So, no, ultimately, your Honour.  Unless I can assist your Honours any further, they are the submissions for the plaintiff.

FRENCH CJ:   Yes, thank you, Mr Kirk.  Mr Solicitor.

MR DUNNING:   Thank you, your Honours.  Your Honours, would you like a couple of minutes just to read our ‑ ‑ ‑

FRENCH CJ:   Yes, just a moment.

MR DUNNING:   Thank you.

FRENCH CJ:   Yes, thank you, Mr Solicitor.

MR DUNNING: Thank you, your Honours. Your Honours, as we state at the outset of the outline, it is naturally no part of Queensland Rail’s case that the Constitution and the particular provision should be read anything other than as a living document. We do not contend for some constrained reading of the expression “corporation” in 51(xx) or that the only conception of corporation that might be relevant to determine this issue is for corporations as they were understood at 1900. Rather, in our respectful submission, the circumstances in which one comes to look at this provision and on this point it seems for the first time is really in the context that corporations as they were understood in the second half of the 19th century in Australia is the surest guide to the expression that is used in 51(xx).

There is an interesting history that both sides have recited prior to that time and prior to the extent of statutory regulation, but the reality is that when 51(xx) was both agitated as a prospect and ultimately settled upon, within Australia there had been then, for at least some decades, extensive legislation in the individual States dealing with the topic of corporations and, whatever else, that was plainly something that was the topic of 51(xx). 

We do not intend to rehearse the Convention Debates at length.  Our learned friends took your Honours to the passages in Work Choices yesterday. We do not need to meaningfully add to them. There are limits to the extent to which they might assist, but the careful analysis the Court gives there of the development of law in relation to corporations demonstrates the point, in our respectful submission, we have just made, that is, that by the time of the enactment of the Constitution corporations within the limits of Australia were, and really always had been for practical purposes, the creature of statute. It is that to which the case is directed.

Ultimately, the controversy that falls to be determined between the plaintiffs and the defendants is how one characterises a corporation.  Our learned friends’ definition, in effect, is that it is for the purpose of 51(xx), an artificial entity with distinct legal personality, or, put another way, a juristic person established pursuant to law.  It is said that it has no further defining features beyond that. 

Now, that leads to the inevitable acceptance that any right‑bearing entity – so it is said by the plaintiffs – would be a corporation with, it seems, two exceptions.  One is the States and the other is an unidentified small list of possible exceptions.  We do not know what those exceptions are or what informs what they might be, other than presumably they are not Queensland Rail or something constituted like that.

Now, there is some tension between that and the cases originally framed were agitated in paragraph 32 of our learned friend’s primary outline in writing.  We make the point only to draw attention to the difficulty, in our respectful submission, with the approach taken by the plaintiffs in this case and the Commonwealth as to the meaning of a corporation and in the end, whether a corporation is as wide a concept as the plaintiffs and the Commonwealth would say, that is, any artificial legal entity save for States and these unknown, but small number of alternatives or, whether it is, as we contend, an artificial creation of the law and created in the terms that the law might choose to create it.  I come to deal with the authority ‑ ‑ ‑

HAYNE J:   Sorry, can you put that again?  What was the last proposition you put? 

MR DUNNING:   Whether it is an artificial – sorry, can I start again?

HAYNE J:   I have interrupted you, forgive me.  Go on, Mr Dunning, go on.

MR DUNNING:   No, no, I should have had it clear in my mind.  My apologies, your Honour.  I am going to come to deal with the late 19th century and 20th century authority on the topic because in our respectful submission, it is a large body of authority that is relatively consistent and in support of the plaintiff’s case but can I deal with, on a slightly more conceptual level, this whole issue of artificial legal entities.

In that regard, can I take your Honours, please, to two texts?  The first I would wish to take your Honours to is Salmond and may I ask your Honours, please, to go to page 326 of Salmond.  I think our learned friends of the Commonwealth may have handed up another earlier edition of Salmond.  Sorry, the edition I am referring to is the 10th edition and may we invite your Honours, please, to notice on page 226 at about point 2 those first two sentences.

Then the learned authors go on to discuss what are corporations and trade unions and then from about the middle of the page they discuss further this topic of personification and it is the item numbered 2 at about point 7 on the page – 326 - may we invite your Honours, please, to read from number 2 at about point 6 or 7 on the page through to the first five or six lines and then institution itself, and then at the foot of that page, the last three lines, the sentence “It is well to remember”.

In similar terms, your Honour Justice Hayne made reference yesterday to Paton on Jurisprudence and a copy of that should be with your Honours.  May we ask your Honours, please, to go to page 351.  At about point 3 or 4 on the page, your Honours will see a sentence that says:

An idol may be regarded as a legal persona in itself, or a particular fund may be incorporated.

The authors are there considering the fact that there are certain legal systems that recognise religious idols as separate legal entities and as compared to say the way universities may have been established in the United Kingdom with trustees and the like to in fact make the institution itself a separate legal entity.  They go on to discuss that.  Then at about point 5 on the page, the last full sentence in that paragraph - your Honours will see a sentence that starts:

This is no mere academic distinction –

I would invite your Honours to read that, please.

BELL J:   I am sorry, what page was that?

MR DUNNING:   It is page 351, Justice Bell.  Then in the next paragraph, about five lines down, there is a sentence that starts “Similarly it says”, can we invite your Honours, please, to read just that sentence.  Then, your Honours, may I ask you, please, to go to page 365, and at about point 6, point 7, under this heading, “Theories of the Nature of Corporate Personality”, your Honours will see about four or five lines into it:

The grant of legal personality is clearly within the gift of the State, for it may be refused to natural persons.

We will develop the matter a little more fully, but the purpose of taking your Honours to that is to demonstrate that the artificial legal person is a conception of the law and ultimately what falls to be determined here is whether, for practical purposes, and for the purpose of 51(xx), there is in reality no other legal person, save for the States and these couple of unnamed entities other than a corporation, that is, that the reference to “corporation” in section 51(xx), at least in terms of trading or financial, is really synonymous with artificial legal entities save for the States and some unnamed but small in number entities.

HAYNE J:   Your proposition has to be, does it not, that “corporation” in 51(xx) and the collocation “trading or financial corporation” means and means only a corporation of a kind that could be identified in English law or colonial law at the turn of the 20th century, that is, a body, corporation aggregate incorporated pursuant to statute, perhaps a corporation sole, but there cannot be a new form of artificial legal entity created that falls within the definition of “corporation”.

MR DUNNING:   Respectfully, Justice Hayne, I would not accede to that as our case.  It brings starkly into relief the distinction between the plaintiffs’ case and the defendants’ case.  The question is:  what is it that constitutes a corporation.  If in fact the notion of corporation can be ever expanded so, as it were, it consumes the unfilled space of the greater concept of artificial legal entity then, yes, that would be the outcome.  But, in our respectful submission, one can identify what is a corporation, albeit its complexion may change over time.

HAYNE J:   The proposition I put to you arose out of what you say in paragraph 6 of your outline of oral argument which, at least at first blush, might be an important part, perhaps the lynchpin, of your argument.  It seems there to say that there is a genus, artificial legal entities, of which corporations are a subset.  Is that right?

MR DUNNING:   Correct.

HAYNE J:   What is the subset which you identify as “corporation”?  Is it a subset that is sufficiently identified by those kinds of corporation, both aggregate and sole, that an English or colonial lawyer would have recognised at the time the framers were writing?

MR DUNNING:   Justice Hayne, not sufficiently.  Certain of them might be identified that way, but that would not be all of those matters within the subset of “corporation”.  Might I give an illustration ‑ ‑ ‑

HAYNE J:   Of course.

MR DUNNING:   ‑ ‑ ‑ that I hope will be helpful?  My learned friend, Mr Kirk, yesterday said that perpetual succession was perhaps the less desirable expression than continuous succession, and we would respectfully agree.  So that, for instance, even though the cases are legion that speak in terms of perpetual succession, legislation that created an Act – sorry, that created a corporation for a finite period of time would still be a corporation.  That would, on the defendants’ case, be because Parliament had created a piece of legislation where it had determined that it would create a corporation that had certain characteristics. 

Our learned friends say that what we try to do is label.  Now, if that is right we lose the case.  If in fact what we have done is simply tried to label our way into a constitutional outcome, well, then undoubtedly we will lose.  Our case is to say that the parliamentary intention as to whether to create this particular species of artificial legal entity known as corporation is in fact decisive.  Once one accepts that, if we have persuaded your Honours to do that, a lot of these other difficulties pass away.  You do not have to rationalise why a corporate sole and a corporate aggregate are both corporations.

FRENCH CJ:   So the genus or the subset is the core of – at the core is the set of corporations that existed around about the time of the Constitution’s enactment plus anything that the Parliament can be taken to have intended to be a corporation?

MR DUNNING:   Respectfully, Chief Justice, no.  All of those would ‑ ‑ ‑

FRENCH CJ:   What are the characteristics that bring artificial legal entities into the subset where they do not belong to the core?

MR DUNNING:   A legislative intent that they ‑ ‑ ‑

FRENCH CJ:   Well ‑ ‑ ‑

MR DUNNING:   Well, the ‑ ‑ ‑

HAYNE J:   We are moving from metaphor to metaphor, Mr Solicitor.  We are going to have to come to earth at some point.

MR DUNNING:   Well, I do intend to come to earth and with the benefit of the reasoning of some of your Honours’ predecessors where that is the language that was relevant to the cases before them to decide the question of what was a corporation.  But, Chief Justice, in answer to your question what was it that brought it within the subset, it is that it was a corporation and our submission is that the defining feature of a corporation is the intention to create this artificial legal entity of a certain character, and that is of a corporation.

KIEFEL J:   You say of a certain character.  Do we take it then that legislative intention determines whether it is a trading corporation as well?

MR DUNNING:   No, no, that is ‑ ‑ ‑

KIEFEL J:   You draw the line, legislative intention finishes somewhere?

MR DUNNING:   You could put it that way.  I would be more inclined, Justice Kiefel, to put it this way.  There is one inquiry as to what is the concept of a corporation.  There is a further inquiry as to is that legal entity…..a trading corporation.  There are two plainly closely related inquiries here, but ultimately there is a different point of inquiry in respect of each of them.

FRENCH CJ:   The trouble is the invocation of legislative intention tends to a conclusionary criterion, whereas underlying that must be some set of characteristics that bring an artificial legal entity into the subset and after that you no doubt say that is the legislative intent, but it has to be underpinned by some sort of characteristics, does it not, on your argument?

MR DUNNING:   It gets back to what it is that is essential to being a corporation and if its essential defining feature is that the sovereign power like Queensland that might have enacted a corporation might have kept it within the polity, but has a range of options as to how it creates artificial legal entities, but it does so, that is, we say, reflective of the fact that that is what defines a corporation.  I do not mean to be non‑responsive to your Honour, but that is the essence of our case.

GAGELER J:   Mr Solicitor, I see you are going to take us to a lot of English cases and I do not see any reference to the decision of the United States Supreme Court before our Federation in Liverpool Insurance Company v Massachusetts.  Would you deal with that at some point in your submissions?

MR DUNNING:   Yes.

KEANE J:   Mr Solicitor, looking at the passages from Paton’s Jurisprudence that you have given us, particularly the passages at 365 and following, do they not suggest that artificial legal personality equals corporate personality as a matter of usage?

MR DUNNING:   Not quite, in our respectful submission, Justice Keane.  What they reflect, in the same way Palmer reflected simply at the time that in England corporations were the only artificial legal persons that were in active use, and then later trade unions.  They seem careful to make the point, when one reads both of the passages we take you to, that it remained something that was open to the sovereign power to ‑ ‑ ‑

KEANE J:   Why is not the process of corporation an accurate description of the creation of an artificial legal personality?

MR DUNNING:   Because, in our respectful submission, the law has ascribed a particular identity to certain, but not all, artificial legal entities.  The Chaff and Hay Committee is an illustration.

KEANE J:   Is that your strongest case?

MR DUNNING:   Yes.  Your Honours, moving now to roughly about paragraph 8 of our oral outline, we seek to make good this our first proposition by reference to certain of the authorities.  I want to take your Honours only to one of the authorities that we set out in paragraph 8 and what we say is, effectively, when you look at the history of the matter you see either cases where Parliament simply said this is a corporation and that was it.  So, Tasmanian Dam is a good illustration.  The Hydro Commission, without inquiring into whether it was a corporation or not, the Court said is a corporation because here is a section of the Act that said it is so.  I do not need to take your Honours to that but might I take your Honours please to the Queen against – what is loosely called Adamson’s Case.

May I first of all ask your Honours please to go to page 198 in the reasons of Chief Justice Barwick?  Your Honours might recollect in that case the sporting clubs were disputing they were trading corporations.  In fact, they were even disputing they were corporations because at least one of them was incorporated under an associations‑type piece of legislation.  At about point 3 on the page, you will see his Honour says:

Each of the prosecutors has been issued with a certificate of incorporation which evidences that the association is incorporated.

Then, down a few lines:

That Act places no limitation upon the activities of the incorporated body. 

I invite your Honour please to read the next sentence.  In the next paragraph it starts:

It may be –

Then on page 199, at about point 4 on the page, the paragraph that starts:

Further, as I have said –

Then, may I ask your Honours, please, to go to page 231.  Your Honours will see the paragraph that starts “Having come to a firm conclusion”.  Can I ask your Honours, please, to read that paragraph up until Justice Mason starts setting out the definition of “association”. 

Now, their Honours conclude that those entities were corporations, in effect because there was a piece of legislation that created machinery provisions by which they could become incorporated.  For so long as they enjoyed the benefits of compliance with those machinery provisions, they were a corporation.  In our respectful submission, that is consistent with the notion that we would contend for. 

Can I then move to the proposition that is set out in paragraph 9, and some of the cases I will take your Honours to will really make good the second of the propositions in paragraph 8.  Can I start please with the decision in Taff Vale Railway [1901] AC 426?

HAYNE J:   To demonstrate what?

MR DUNNING:   To demonstrate, your Honour, that the law recognises artificial legal entities other than corporations and that a Parliament is competent to create such entities.  Can I first of all take your Honours, please, to page 429 at about point 3 in the first instance decision of Justice Farwell and your Honours will see a sentence that starts “Now, although a corporation and an individual” and can I invite your Honours, please, to read to about point 6 on the page, the sentence that starts “The Legislature has legalised”.  We would say that the opening sentence of that is consistent with the proposition we advance here.  Justice Farwell’s decision was overturned in the Court of Appeal, which itself was overturned in the House of Lords.

Can I then take your Honours, please, to page 436 and the decision of Lord Macnaghten with whom - and we have given your Honours the reference there - all but one of their other Lordships agreed.  Can I take your Honours, please, to Lord Shand’s reasons.

FRENCH CJ:   Sorry, what page?

MR DUNNING:   Page 440, your Honour, at about point 5, the first paragraph on that page and my apologies, your Honours, I ought to have taken you to Lord Macnaghten.  Can I take your Honours, please, to 436, at about point 8 on the page, the first sentence there and then on 437, the second full paragraph, that first sentence “Parliament has legalised”.  Then on 439 at the foot of that page “The further question remains” over to the first line of 440. 

Your Honours, with the exception of Lord Lindley, all of the other Lordships accept that and accept the reasoning of Farwell J below, the passage to which I have already taken your Honours.  The next in the sequence of these cases is National Union of General and Municipal Workers v Gillian which I might just compendiously call Gillian [1946] KB 81.

HAYNE J:   All this is uttered against the background of the Trade Unions Act of, I think 04 or 01, whatever it was, and a long and complex history of British trade union law.  What do we get out of Gillian’s Case?

MR DUNNING:   Your Honour, what we get out of Gillian’s Case is again a recognition that Parliament is competent to create an artificial legal person that is not an corporation.

FRENCH CJ:   We come back to whether that translates as - that is not called a corporation.  What does it mean to say that something is not a corporation?  It seems to beg the fundamental question.

MR DUNNING:   Well, your Honour, if in fact legislative intent is the essential feature, that is, Parliament is competent to choose whether an artificial legal entity is a corporation or not ‑ ‑ ‑

FRENCH CJ:   Whether to call it one or not, or is it something more fundamental than that?

MR DUNNING:   It is something more fundamental than that.

FRENCH CJ:   What is the something more fundamental?

MR DUNNING:   Well, the prerogative of Parliament to choose to create – to constitute it as this as opposed to some other form of artificial legal entity.

FRENCH CJ:   Which all throws us back to what is in the subset and what is not.

MR DUNNING:   Yes, it does, your Honour.  Yes, we accept that, and we either make good our proposition from the authorities we are taking you to, or in that sense we fail.

KIEFEL J:   Does a trade union have different qualities from a corporation – characteristics?

MR DUNNING:   That depends on the manner in which it is created by statute.  So if we go back to the history Justice Hayne was referring to prior to legislation creating registered unions, it would be a collection of persons.  Then there was the intervention of statute to create an artificial legal entity and cases such as Gillian are illustrative of the fact that what was created was an artificial legal entity, but not a corporation.

GAGELER J:   Is the ultimate proposition for which you are contending that which we find in paragraph 5 of your submissions that the distinctive feature is that the entity is formed as a corporation rather than as some other artificial legal entity?

MR DUNNING:   Yes.

GAGELER J:   Do you apply that to foreign corporations in the same way as you apply it to trading corporations?

MR DUNNING:   No, we do not, Justice Gageler.  In our respectful submission, the submission we make in respect of foreign corporations is that, when one looks at that history of the development of 51(xx), it remains a question as to whether foreign corporations – the reference to “corporation” there should be viewed as synonymous with the reference to “corporation” in the context of trading and financial.  We in our summary document make the submission, as we made elsewhere, that the proper approach would seem to be to determine whether something is a foreign corporation by reference to whether it is a corporation within its place of creation.

HAYNE J:   Is that to ask anything other than whether according to the place of incorporation it is an artificial right and duty bearing entity?

MR DUNNING:   Yes, it is, in our submission.  It is to – well, it really gets back to the issue that I have canvassed with both yourself and the Chief Justice about whether there is in truth a subset, as my side would contend with.  But if I can just return to that question, Justice Gageler, in our respectful submission, it is not necessary and respectfully probably not desirable in this case to determine the ambit of what “foreign corporation” means.

The discussion of it in the course of the Convention Debates might shed some light on what we mean by trading and financial, but this case does not raise for determination that question and, in our respectful submission, it is ultimately a question that would be better resolved in a case that squarely raised the issues.  Now, it is not irrelevant to the determination today because it does feature in the creation of 51(xx), but the ultimate extent of what is meant by “foreign corporation” remains, in our submission, a question that is not settled.

GAGELER J:   So we proceed, in your submission, on the basis that the word “corporations” used twice in section 51(xx) may have a different meaning?

MR DUNNING:   May, yes.

KIEFEL J: But if you are going to look, as you seem to do, to the historical approach to what is a corporation, at the time the Constitution was framed, something must have been known about the concept of a corporation in other jurisdictions?

MR DUNNING:   Yes, there is no doubt about that.

KIEFEL J:   There may be a common element that enabled the word “corporation”, even then, or perhaps even more so then, to be identified consistently.

MR DUNNING:   There may have been, yes.

KIEFEL J:   In particular with continental conceptions of what were partnerships or combined partnerships in corporations.  The one thing that they had in common was a very wide version of – notion of a legally recognised entity.

MR DUNNING:   Yes, and as we have said in writing, we accept that the largest in number of the artificial legal entities will be corporations.

KIEFEL J:   But is it not the case that if you look at the developing notions of a corporation, and you look at other entities that were created and that were recognised in the late 19^th century/early 20^th century, you could say there were trade unions and then there was the requirement of registration where a corporation of so many people had a particular purpose, one of which was the acquisition of gain.

So purposes might have then distinguished between what was a corporation and what was something other than a corporation. That might have been one way of doing it; we could identify that. The difficulty is that the conception might now be somewhat different, and the conception is noticeably different, is it not, in section 51(xx), because the qualification of what is or is not the subject of 51(xx) is stated as a trading or financial corporation, and a foreign corporation. So the purposes/activities, that is taken care of by the adjective. We are looking at some underlying elementary notion of a corporation, are we not?

MR DUNNING:   We are, your Honour, yes.  Your Honours, I am just mindful of the time – I might – Gillian is effectively picked up in some of the later cases so I might just move to Chaff and Hay.  Can I briefly take your Honours, please, to the decision in the Full Court of the Supreme Court of New South Wales, that is J.A. Hemphill & Sons v Chaff and Hay Acquisition Committee (1946) 47 SR 218 and I am taking your Honours to the decision below for two reasons:  one, to demonstrate something of the history of the litigation and what were the issues that had to be considered both in that court and ultimately in this Court, and also the reasoning of the majority in that court is adopted in certain passages in the High Court.

Can I take your Honours, please, to page 220 of the report, the reasons of Chief Justice Jordan start there, and you will see that his Honour records that:

FRENCH CJ:   Yes, thank you, Mr Kirk.  The Court will reserve its decision.  The Court adjourns until 10.15 tomorrow morning.

AT 4.10 PM THE MATTER WAS ADJOURNED