Ms Kathleen McInnes

[2014] FWC 1395

[2014] FWC 1395

FAIR WORK COMMISSION

DECISION

Fair Work Act 2009
s.789FC - Application for an order to stop bullying

Ms Kathleen McInnes
(AB2014/1009)

COMMISSIONER HAMPTON ADELAIDE, 24 MARCH 2014

Application for an FWC order to stop bullying - related Full Bench matter - further jurisdictional objection - whether constitutionally-covered workplace - whether constitutional corporation - whether trading corporation - community services organisation - nature of funding and activities considered - distinction between government funding for contract services and grant funding to support programs - funded activities lack trading character - trading activities insignificant, peripheral and incidental - not a trading corporation - no jurisdiction - application dismissed.

1. Background and case outline

[1] Ms Kathleen McInnes has made an application under s.789FC of the Fair Work Act 2009 for an order to stop bullying conduct she alleges has taken, and may in the future take place, within her workplace. The workplace concerned is conducted by Peninsula Support Services Inc. T/A Peninsula Support Services (PSS).

[2] PSS has raised a number of jurisdictional objections to the application.

[3] One of these objections was very recently considered by the Full Bench in McInnes v Peninsula Support Services Inc. T/A Peninsula Support Services[2014] FWCFB 1440. That decision dealt with a jurisdictional issue which arose concerning the timing of events relied upon by Ms McInnes. Given the findings 1 of the Full Bench, it is appropriate for me to now determine the other jurisdictional issue that was heard in parallel with the Full Bench matter.

[4] It is common ground that for Ms McInnes’ application to proceed, the behaviour must have taken place in a workplace that is conducted by a constitutionally-covered business. This arises from s.789FD of the Act, which is in the following terms:

“789FD When is a worker bullied at work?

(1) A worker is bullied at work if:

(a) while the worker is at work in a constitutionally-covered business:

(i) an individual; or

(ii) a group of individuals;

repeatedly behaves unreasonably towards the worker, or a group of workers of which the worker is a member; and

(b) that behaviour creates a risk to health and safety.

(2) To avoid doubt, subsection (1) does not apply to reasonable management action carried out in a reasonable manner.

(3) If a person conducts a business or undertaking (within the meaning of the Work Health and Safety Act 2011) and either:

(a) the person is:

(i) a constitutional corporation; or

(ii) the Commonwealth; or

(iii) a Commonwealth authority; or

(iv) a body corporate incorporated in a Territory; or

(b) the business or undertaking is conducted principally in a Territory or Commonwealth place;

then the business or undertaking is a constitutionally-covered business.

[5] PSS is located in Victoria and does not fall within the scope of s.789FD(3)(a)(ii), (iii), (iv) or (b). Accordingly, in order to fall within the scope of s.789FD, PSS must be a constitutional corporation.

[6] The term “constitutional corporation” is defined in s.12 of the Act in the following terms:

“constitutional corporation means a corporation to which paragraph 51(xx) of the Constitution applies.”

[7] The Constitution, in effect, defines “constitutional corporations” as follows:

“Foreign corporations, and trading or financial corporations formed within the limits of the Commonwealth.” 2

[8] It is also common ground that of these, only the concept of a trading corporation is potentially relevant to PSS. PSS is incorporated within the limits of the Commonwealth.

[9] PSS contends that it is not a trading corporation within the meaning of Act due to its activities and nature, and as a result, the workplace is not conducted by a constitutionally-covered business. Ms McInnes contends otherwise. Much of the focus of that dispute is about the treatment of Government funding provided to PSS.

2. The facts of the matter

[10] These facts are drawn from the witness statement 3 of Mr Terry Paliportas, the Chief Executive Officer of PSS, and the accompanying Annual Report, financial statements and the Rules of Incorporation. This evidence was provided by consent and not disputed by Ms McInnes.

[11] PSS is a community based organisation, which provides support to people with psychiatric disabilities and their carers living within the Southern metropolitan region (Mornington Peninsula, Frankston and parts of Kingston) in Victoria.

[12] In 1988, PSS, under a former name, became incorporated under the Associations Incorporation Act 1981 (Vic) and registered as a Community Support Service under the Mental Health Act 1986 (Vic). PSS was subsequently issued with an ABN in June 2000 and is registered as a Charity with the Australian Charity and Not-for-Profits Commission, is endorsed by the ATO as an income tax exempt charitable entity, and is registered for GST purposes.

[13] PSS currently delivers various types of programs that are directed to support people with severe and enduring mental illness. The types of programs and projects include rehabilitation for individuals and groups, home based outreach support, mental health and homelessness, carer support and intake functions.

[14] The services provided by PSS are almost exclusively funded by the Victorian and Commonwealth Governments. The major source of these funds is via the Victorian Department of Health (DoH) and this involves a service agreement for a period of three years commencing in 2012 (the DoH service agreement). The other major source of government funds comes via the Commonwealth Department of Families, Housing, Community Services and Indigenous Affairs (as it was known at the time) and this arrangement has been confirmed through formal correspondence and a funding agreement (the DaHCSIA agreement).

[15] The DoH service agreement is a formal contract that provides nominated funding for the various service plans (projects) and in most cases sets out various performance measures and targets (clients, reports, hours of service provision, client contact hours etc). The agreement commits PSS to accept and use the funding for the delivery of the services in accordance with the terms of the agreement. 4 Most of that funding is an annual lump sum broadly linked to performance measures although there is some baseline funding that is not so linked.

[16] The DaHCSIA agreement is in the form of a standard Commonwealth Government funding agreement and provides the nature of the activities funded, various performance indicators and targets, and the extent of funding for each activity.

[17] Both the DoH service agreement and the DaHCSIA agreement establish funding, reporting and acquittal requirements upon PSS.

[18] The process to achieve the funding varies and includes competitive tendering, albeit in a minority of cases. Much of the funding is obtained by PSS making application to governments for funding and this is the case for most of the programs and projects funded under the DoH service agreement and for the DaHCSIA agreement.

[19] A limited number of the programs delivered by PSS are the result of competitive tendering processes, where the relevant government department invites organisations to bid for funding to undertake services in nominated areas. This includes some of the projects where PSS works in conjunction with other service providers to obtain government funding in that context. Examples of this arrangement include a tender provided by PSS (and another organisation) to another mental health service, which then acts as the lead organisation in the provision of services in a Youth (Prevention and Recovery Care) project (Y-PRARC). In this arrangement, PSS provides services under contract to the lead organisation. The work is all funded by the DoH.

[20] In the 2012-13 financial year, PSS obtained income and paid expenses as follows: 5

“STATEMENT OF PROFIT OR LOSS AND OTHER COMPREHENSIVE INCOME FOR THE YEAR ENDED 30 JUNE 2013

CONTINUING OPERATIONS	2013 $
INCOME
DoH-Grants	2,365,586
FaHCSIA - Grants	261,350
Other-Grants	85,031
Client Program	2,602
Donations	902
Interest Received	60,044
Reimbursements	808
ProfitI(Loss) on Disposal of Fixed Assets	10,831
Sundry Income	16,076
TOTAL INCOME	2,803,230

LESS EXPENSES
Administration	195,015
Depreciation	91,779
Motor Vehicle Expenses	91,520
Occupancy Expenses	247,120
Program Costs	148,686
Staff Expenses	55,583
Travel and Meetings	15,579
Payroll Expenses	1,925,453
TOTAL EXPENSES	2,770,735
OPERATING PROFIT I (LOSS) FROM CONTINUING OPERATIONS	32,495
OTHER COMPREHENSIVE INCOME	–
TOTAL COMPREHENSIVE INCOME	32, 495

[21] The financial statement reveals an operating profit/surplus of $32,495. The level of income and expenses was in the same order of magnitude in the 2011-12 financial year.

[22] I note that the “Other grants” income figure includes $80,042 from the Y-PRARC project and a grant of $2,000 from WorkSafe Victoria to support the health and safety of that agency’s employees.

[23] The $10,831 of profit from the sale of fixed assets arose from the sale of motor vehicles and represents the difference between the sale price and the book value of vehicles obtained through grant funding when disposed of with the agreement of the funding provider.

3. The contentions of the parties

[24] PSS contends that it is not a trading corporation on the following grounds: 6

● PSS is a not for profit service provider to vulnerable and unwell members of the community;
● PSS did not engage in a competitive tendering process to obtain the majority of its funds from government;
● PSS was not, and is not, paid a fee by government to implement government programs or policies; rather it obtains funding under an agreement to operate certain programs;
● PSS received grant monies pursuant to an agreement (with government), and a proportion of that funding is lump sum in nature and tied only to the relevant program;
● PSS is funded by government to deliver services to vulnerable groups of persons in the community and does so, free of charge;
● Funds from the sale of assets is a “minuscule” element of its operations and involves purchases made with government funds and requires the permission of the Department; even if considered to be trading, which was not conceded, this is not a substantial activity;
● Income from interest on funds in a “bank account” is very minor; and even if considered to be trading, which was not conceded, this is not a substantial activity.

[25] Ms McInnes contends that PSS is a constitutionally-covered business on the basis that it is a trading corporation. The basis of that contention is as follows: 7

● The focus should be upon the relationship between PSS and its funding bodies (the governments);
● PSS competes with other service providers for project funding identified by the government and when selected, delivers services in exchange for a grant of money, and this is the essence of trading;
● The services of PSS take place in a competitive market;
● PSS operates in recent times on a surplus and this should be considered in the same way as profits are taken into account in relation to commercial businesses; and
● The sale of services for the grant money is a commercial transaction and represents a significant trading activity for PSS.

4. What is a trading corporation?

[26] The approach of the Courts and Tribunals to the meaning of a trading corporation has been conveniently summarised by Steytler P in Aboriginal Legal Service (WA) Inc v Lawrence (No 2.) 8 (Lawrence). Having reviewed the developments in the approach of the High Court to arrive at what might be described as the activities test, His Honour found as follows (footnotes and references omitted):

“68 The more relevant (for present purposes) principles that might be drawn from these and other cases are as follows:

(1) A corporation may be a trading corporation even though trading is not its predominant activity: Adamson (239); State Superannuation Board (303 - 304); Tasmanian Dam case (156, 240, 293); Quickenden [49] - [51], [101]; Hardeman [18].

(2) However, trading must be a substantial and not merely a peripheral activity: Adamson (208, 234, 239); State Superannuation Board (303 - 304); Hughes v Western Australian Cricket Association Inc [1986] FCA 357; (1986) 19 FCR 10, 20; Fencott (622); Tasmanian Dam case (156, 240, 293); Mid Density (584); Hardeman [22].

(3) In this context, 'trading' is not given a narrow construction. It extends beyond buying and selling to business activities carried on with a view to earning revenue and includes trade in services: Ku-ring-gai (139, 159 - 160); Adamson (235); Actors and Announcers Equity Association of Australia v Fontana Films Pty Ltd [1982] HCA 23; (1982) 150 CLR 169, 184 - 185, 203; Bevanere Pty Ltd v Lubidineuse [1985] FCA 134; (1985) 7 FCR 325, 330; Quickenden [101].

(4) The making of a profit is not an essential prerequisite to trade, but it is a usual concomitant: St George County Council (539, 563, 569); Ku-ring-gai (140, 167); Adamson (219); E (343, 345); Pellow [28].

(5) The ends which a corporation seeks to serve by trading are irrelevant to its description: St George County Council (543, 569); Ku-ring-gai (160); State Superannuation Board (304 - 306); E (343). Consequently, the fact that the trading activities are conducted is the public interest or for a public purpose will not necessarily exclude the categorisation of those activities as 'trade': St George County Council (543) (Barwick CJ); Tasmanian Dam case (156) (Mason J).

(6) Whether the trading activities of an incorporated body are sufficient to justify its categorisations as a 'trading corporation' is a question of fact and degree: Adamson (234) (Mason J); State Superannuation Board (304); Fencott (589); Quickenden [52], [101]; Mid Density (584).

(7) The current activities of the corporation, while an important criterion for determining its characterisation, are not the only criterion. Regard must also be had to the intended purpose of the corporation, although a corporation that carries on trading activities can be found to be a trading corporation even if it was not originally established to trade: State Superannuation Board (294 - 295, 304 - 305); Fencott (588 - 589, 602, 611, 622 - 624); Hughes (20); Quickenden [101]; E (344); Hardeman [18].

(8) The commercial nature of an activity is an element in deciding whether the activity is in trade or trading: Adamson (209, 211); Ku-ring-gai (139, 142, 160, 167); Bevanere (330); Hughes (19 - 20); E (343); Fowler; Hardeman [26].”

[27] This summary was adopted by the Full Court of the Federal Court in Bankstown Handicapped Children’s Centre v Hillman 9(Bankstown).

[28] Given the facts of this matter, it is also appropriate to further consider how government funding and related activities have been treated by Courts and Tribunals in terms of the characterisation of those activities for present purposes.

[29] In Lawrence, the Western Australian Court of Appeal held by majority that the legal service involved was not a trading corporation. It found that the funding it received from the Commonwealth Government under contract for the provision of (mostly) free of charge legal services to indigenous Australians was removed from the ordinary concepts of trade or trading. 10 The minority held that the legal service had entered into a trading arrangement because its services were provided after a competitive tendering process.11

[30] In Fowler v Syd West Personnel Ltd 12 the Australian Industrial Relations Commission was dealing with a corporation established to create and operate a long term employment programme for people with intellectual disabilities and to place other workers in employment. Much of its income came from Commonwealth Government grants under contract. The Commission concluded that the respondent was not a trading corporation on the basis that it was engaged in the gratuitous provision of a public welfare service substantially at government expense which was not the conduct of a 'trade'.

[31] In an earlier case of Pellow v Umoona Community Council Inc 13 the Australian Industrial Relations Commission distinguished between grant funded social service activities and agency arrangements involving a charge on a government department for the provision of a designated service.14

[32] These decisions must also be considered in the context of the later decisions of the Federal Court.

[33] In Bankstown, the Full Court was also dealing with an incorporated association that received most of its funding from government. The Court posed the question in the following manner:

“51 Many activities and services which have historically been provided mainly or exclusively by government are now carried on by companies which undertake those activities or provide those services with the objective of making a profit. Examples are legion and included prison services, electricity generation and distribution, potable water collection or production and distribution and the construction and maintenance of roadways. There can be little doubt that, at least in the ordinary course, companies which undertake those activities or provide those services can be characterised as trading corporations. Does the fact that a corporation likewise provides such services but on effectively a cost recovery basis only, render it inappropriate to characterise that corporation as a trading corporation?”

[34] The Full Court focused in particular on the funding and services provided in relation to the 'Out-of-Home Care' (OOHC) programs under which the Centre was paid for services provided to the relevant government agency (DOCS) on a fee for service basis. It concluded:

“54 If those substantial activities can be characterised as trading, then the Association can likewise be characterised as a trading corporation. So much is apparent from the authorities including, in this Court, the judgment of the Full Court in Quickenden (at [51]). The Association undoubtedly provided services to the State and was remunerated for doing so. It is, in our opinion, a proper characterisation of the Association's activities to describe them as selling those services to the State and, correspondingly, the State purchasing them. Indeed that was the language used in the header agreement which governed the contractual arrangements between the Association and DOCS. The provision of a given service under the header agreement resulted in an invoice from the Association to DOCS which it then paid. The prices at which the services were provided were negotiated between the parties having regard to the price at which others provide similar services. The Association employed personnel and acquired rental property to equip it for the task of providing those services. At least in its then manifestation (entailing its size, activities, property and personnel), its continued existence depended on its success in placing itself in a position in which it would continue to be remunerated by continuing to provide those services.

55 All these matters appear to us to point to a relationship between the Association and DOCS as having been a commercial one involving trade in services. It is, of course, true that it is possible to characterise, as the Industrial Court did, the Association's activities as the provision of public welfare services. However the fact that the acquisition of these services by DOCS was for this purpose does not appear to us to detract from the essentially commercial nature of the relationship. It is properly so described. There may be many incorporated charitable bodies in Australia which are nevertheless trading corporations for the purposes of paragraph 51(xx) of the Constitution. As we have noted above, the terms of the header agreements were negotiated, as were the terms of the renewal header agreement. Ultimately by that process, further negotiation as to price was not then undertaken. Thereafter, DOCS did not have to use the services of the Association at all, and the Association for its part did not have to accept any offer or request by DOCS to provide such services. On the evidence, DOCS selected those entities which it wished to provide services, once the header agreements were negotiated, on the basis of the quality of the service to be provided, but the Association (or others) did not have to agree to provide them. It is distracting to note that the services which the Association and others contracted with DOCS to provide were in the "welfare sector" of the economy, to use an expression used by the Solicitor-General.”

[35] In an earlier case of E v Australian Red Cross Society, 15 Wilcox J considered whether the Australian Red Cross Society and the Royal Prince Alfred Hospital were trading corporations. The Society supplied blood and blood products, generally free to the community, but received substantial government funding. The Court, in considering the more than $44m received in respect of its blood transfusion services, said:

“These were, of course, substantial sums. They were earned only because the respondents are prepared to carry on blood transfusion services at a scale, in terms of labour and resources, greater than that of many organisations which are undoubtedly 'trading corporations'. But I do not think that it is appropriate to describe the gratuitous provision of a public welfare service, substantially at government expense, as the conduct of a 'trade'. It is pertinent to recall the words of Stephen J in St George County Council: 'It is the acts of buying and selling that are at the very heart of trade', and also to remember the distinction he made in respect of the distribution of electricity free of charge. In relation to the supply of blood, it seems to me that the first and second respondents do not engage in trading activities. They engage in a major public welfare activity pursuant to agreements with the Commonwealth and the various State governments under which they will be reimbursed most of their costs.” 16

[36] I note that when considering the position of the Royal Prince Alfred Hospital, Wilcox J found that the scale of the hospital's trading activities were “substantial enough” to require that the hospital should be regarded as a trading corporation. 17 The details of this aspect are explained in more detail in a decision outlined below.

[37] In terms of the assessment of trading activities as substantial and not merely peripheral, the approaches do vary to a degree.

[38] In Bankstown, the Full Court observed that “there is no bright line that determines what proportion of trading activities is “substantial”. 18 In the recent decision of the Federal Court in United Firefighters Union of Australia v Country Fire Authority,19 (UFU v CFA) Murphy J observed:

“[92] The term “substantial” is imprecise but it at least encompasses trading amounts that are “not so small as to be trivial”: Quickenden at [51]. In that case the majority treated substantial and nontrivial as synonymous. In the present case the CFA contends that their trading activities are peripheral, insignificant or otherwise incidental. These terms are drawn from the various cases: see for “peripheral” Adamson at 208 per Barwick CJ; State Superannuation Board at 304 per Mason, Murphy and Deane JJ; for “incidental” Adamson at 234 per Mason J; for “significant” see Adamson at 233 per Mason J; E v Australian Red Cross Society and Ors [1991] FCA 20; (1991) 27 FCR 310 (“E v Red Cross”) at 345 per Wilcox J; Quickenden at [47] per Black CJ and French J.

[93] The ordinary meaning of these words is straightforward. The Shorter Oxford Dictionary defines them to include the following:

(a) “peripheral” means marginal, superficial, of minor importance, not essential or relevant to but subordinate to;

(b) “insignificant” means lacking significance, meaningless, devoid of weight or force, ineffective, ineffectual, of no importance, trivial, trifling, or contemptible; and

(c) “incidental” means occurring as something casual or of secondary importance; not directly relevant to; following up on as a subordinate circumstance.”

[39] Having found that six of the County Fire Authority’s (CFA’s) non-fire fighting activities were trading activities, Murphy J found:

“96 The scope of these activities is broad. While they are secondary to the CFA’s primary purpose I would not describe any of them as insignificant, incidental, trivial or unimportant. For example, the road accident rescue service is a specialised emergency service that the CFA has agreed to provide in country areas, which has required special training of CFA employees beyond the usual fire training, and which the CFA recognises as an important part of the range of services it provides. The CFA has no statutory obligation to provide this service and it does so at a cost to road users and the State through the Traffic Accident Commission. I would not describe the provision of this service as incidental to the CFA’s activities nor as a fortuitous or casual occurrence of subordinate importance. Nor should its provision, viewed in the context of all of its services, be described as trifling, ineffective, superficial or marginal.

97 For essentially the same reasons the provision of fire equipment maintenance services, consultancy on matters related to fire safety, the provision of advice related to the storage of dangerous goods and the sale of goods related to fire safety should not be seen as insignificant, incidental, trivial or unimportant activities considered against the range of services the CFA provides. I infer from the evidence that these activities are seen as important by the CFA, although they are not its central or predominant focus.

98 Nor do I consider that the revenue from these trading activities is incidental in the sense of arising fortuitously or as a result of some other activity. The income is earned deliberately by the CFA from these six specific sources and on the basis that the CFA have special expertise or products of value which they provide in exchange. Taken together the income from these activities is substantial.

99 While the quantum of income from the CFA’s trading activities relative to its non trading activities is small, I am disinclined to treat almost $13 million of revenue as minimal, trivial or insignificant. It should be seen for what it is, a significant volume of trading revenue albeit dwarfed by the money received from non-trading sources. The CFA put on no cogent evidence that $12.93 million was insignificant to its operations, and no evidence was given that it could be easily foregone by the organisation. Put another way, it is likely that the CFA would be impaired in its capacity to provide services in road accident rescue, fire equipment maintenance, fire safety consultancy or sale of fire safety related goods, which it regards as important in the range of services offered, if it was not able to charge fees for doing so.

100 Although the $12.93 million of trading income is plainly a substantial amount in absolute terms, it is only a small percentage relative to the CFA’s total income. Even so, I do not consider it is trivial or minimal in relative terms.

101 In E v Red Cross the Australian Red Cross Society was one of the respondents. Wilcox J held that its supply of blood and blood products was the gratuitous provision of a public welfare service, substantially at government expense, and was not a trading activity. The Red Cross received a total of $44.9 million from the government in respect of its non-trading blood supply services, and about $2 million from trading activities. Another respondent, a major hospital, made approximately $18 million from trading activities and, in the words of Wilcox J, that sum was dwarfed by a State government subsidy of $112 million. His Honour concluded that the disparity between the money earned through trading and the money received by way of government subsidy was unimportant explaining at 345:

Trading activities yielding some $18 million per year can only be described as substantial. It seems to me that the scale of the hospital’s trading activities in 1984-1985 was such that it should be regarded as then being a trading corporation.

See also United Firefighters’ Union of Australia v Metropolitan Fire and Emergency Services Board (1998) 83 FCR 346 (“UFU v MFB”) at 354 to 356 per Marshall J.

102 The CFA contends that both E v Red Cross and UFU v MFB were wrongly decided in that they incorrectly applied an absolute test. While I consider that the CFA’s trading revenue is plainly significant if considered in absolute terms, I do not approach the issue that way. Considering its trading revenue relative to its non-trading activities, the question is not without difficulty and is one of fact and degree. In my opinion the CFA undertakes sufficient trading for it to be seen as “not insubstantial”, not trivial, insignificant, marginal, minor or incidental, and I find that it is a trading corporation.”

5. Is PSS a trading corporation?

[40] It is common ground that PSS is not established to undertake trading activities or to make profits. However, this is not relevant to the characterisation of its activities and only indirectly relevant to its overall characterisation.

[41] In relation to the activities leading to the income described as being Client Program and Donations, even if these were considered to be trading activities, which I do not consider is appropriate, they are individually and collectively insubstantial and incidental.

[42] I am inclined to the view that the “profit” from the sale of the fixed assets (motor vehicles) is also not a trading activity in the context of PSS. In any event, the activity and the income is certainly incidental in the scheme of things.

[43] This matter in essence rests upon the characterisation of the activities associated with the government grants received by PSS. These services are in the nature of community welfare, however this is not of itself relevant. The services are also significant in both relative and absolute terms and if the whole, or a reasonable part, of those grants were considered to be trading activities, this would inevitably lead to the conclusion that PSS was a trading corporation.

[44] The decisions discussed above suggest that there is a dichotomy between activities that are undertaken by organisations similar to PSS where the government pays for a service to be provided. Typically, these involve the delivery of services to government (often in the form of services available to the community) that result from competitive tendering processes where the Government is seeking specific services at competitive rates, and where payment is made for the actual services provided. That is, the “State” effectively purchases the services. In most cases, these activities are either undertaken for profit, or at least to generate revenue to support other activities or the organisation as a whole. The OOHC service in Bankstown is an example of this form of trading activity. Activities of this nature are considered to be trading activities for present purposes.

[45] Alternatively, there are activities that are undertaken by organisations similar to PSS that are the subject of government grants whereby governments subsidise the services provided by the organisation. Typically, these involve the provision of bulk grants that might be linked to performance requirements and benchmarks, but do not involve fee for service in the conventional sense. These services lack the character of buying and selling between the organisation and the funding agency, and are often provided gratuitously to the public and are considered to be an end in themselves. That is, the purpose of the service is not to generate income but rather, to provide the service itself. The provision of blood products by the Red Cross in E v Red Cross is an example of this form of non-trading activity. Activities of this nature are not considered to be trading activities for present purposes.

[46] These two characterisations represent points on a spectrum, and the real world, as in this case, often involves a mix of such indicia. It is also important to consider the entire context in which the activities are undertaken.

[47] Against that background I turn to consider the various government grants provided to PSS and the activities associated with them.

[48] With one potential exception, none of the government grants fall into the category of being fee for service. The one potential exception, is the grant from WorkSafe Victoria. There is an amount of $2,000 which has been paid to provide services to the staff of that agency. There is little evidence as to how this arose or operates in practice. If provided on the basis that charges were made for each service provided, this would fit into that category. It is shown in the evidence 20 as being a flat figure and this would be more consistent with it being a genuine grant provided to have PSS available to provide services. It is also unclear on the evidence whether that activity followed a tender process and/or is provided in competition or association with any other body. I will assume, without finding, that this grant should be considered to be a trading activity for present purposes.

[49] The services and activities that arise from all the government funding, including that arising from WorkSafe Victoria, are provided to the community without charge.

[50] The DaHCSIA agreement and the associated activities fit squarely into the category of non-trading activities. There is no fee for services rendered to the funding body and the application for grant funds was not the equivalent of a competitive tender process. This also applies to the great majority of the DoH service agreement. All of these services and the associated arrangements lack the character of buying and selling, even when considered in the broadest sense.

[51] There are some activities undertaken by PSS where a tendering process was entered into in order to secure the funding. In particular, the Y-PRARC project falls into that category and it would appear that PSS in that case is selling its services to the other agency. It does not matter for present purposes that the actual service is similar to the rest of the services that are provided by PSS. The context is such that the relationship between PSS and the funder is different whereby PSS is in fact providing/selling its services to another entity and this potentially makes that project a trading activity for PSS.

[52] I have also considered those elements of the direct DoH funding where some form of tendering exercise was undertaken. This principally applies to the Intensive Home Based Outreach Program, the Homelessness Program and the Centralised Intake Program. A competitive tendering process in the present context may involve organisations making proposals to receive grant funding under various program headings. Alternatively, organisations may make proposals to undertake certain defined work and provide a price and service tender in a bid to be awarded a contract for the provision of those services. The evidence about the nature of the tender process is limited but confirms that it involved a competitive process and the outcome is reflected into the DoH service agreement. 21

[53] The DoH service agreement treats the funding for those programs that were the subject of a tender process in the same way as the other projects. As in Bankstown, the nature of the relationship between the funder and the service provider is a significant consideration. Although the precise nature of the tender process is not clear, it has led to the provision of a general grant to undertake programs rather than a contract to provide specific services and payment directly linked to the provision of the nominated services.

[54] As a result, I am satisfied that the activities provided by PSS through the DoH service agreement do not have the character of commercial trade in services 22 or elements of exchange or other commercial indicia in the payment23 so as to be considered as trading activities for present purposes. The activities resulting from both the DoH service agreement and the DaHCSIA agreement are also provided to the community without charge. They are akin to the non-trading services described by Wilcox J in E v Red Cross.

[55] Having regard to the evidence in this matter and the approach required by the relevant authorities, I find that only the “Other grants” (Y-PRARC and Worksafe) income is capable on being categorised as trading activities for present purposes. This amounted to $82,000 in the 2012/13 year.

[56] Even if I were to include the income from the disposal of assets and treat this as trading activity, this would involve a further $10,831 in the 2012/23 year. I note that the extent of this activity fluctuates from year to year with no income in some years and even a loss in other periods, 24 presumably because the sale price was less than the book value of the assets.

[57] The overall income of PSS in the 2012/13 year was over $2.8m.

[58] The assessment of the nature of the corporation is one of fact and degree. When assessed in context, the income from trading activities, and those that might be considered to be trading activities, is not significant in either relative or absolute terms. Rather, those activities in the overall circumstances evident at PSS can be categorised as being insignificant, peripheral and incidental in the sense contemplated by the authorities.

6. Conclusions and order

[59] In all of the circumstances I am satisfied that PSS is not a trading corporation. Given the absence of other circumstances that would make PSS a constitutionally-covered workplace, there is no jurisdiction for the Commission to deal with the application further.

[60] As a result, this application must be dismissed and I so order.

[61] I have made no findings as to whether the alleged conduct relied upon by Ms McInnes occurred or would be construed as being bullying behaviour. I note however, that there are remaining issues that have been raised by Ms McInnes and these need to be properly dealt with in the context of the party’s ongoing employment relationship.

Appearances:

R Smith for Ms McInnes.

N Harrington of counsel, with permission, for Peninsula Support Services Inc. T/A Peninsula Support Services.

Hearing details:

2014

Melbourne

February 20.

 1   The Full Bench found that Ms McInnes could rely upon the alleged conduct that took place before the commencement of the Anti-Bullying provisions.

 2   Australian Constitution s.52(i).

 3   Exhibit PSS1.

 4   Background and clause 4 of the DoH service agreement.

 5   Audited Financial Statements for year ended 30 June 2013.

 6   Taken from written and oral submission made on behalf of PSS.

 7   Taken largely from written submissions made on behalf of Ms McInnes. This also included an analysis of PSS’s grant funds, payroll expenses and surplus for the period from financial years 2006/07 to 2012-13.

 8 (2008) 252 ALR 136 at par [68].

 9 (2010) 182 FCR 483 at par [48].

 10   Per Steytler P at pars [72] to [74].

 11   Per Le Miere J at pars [133] to [139].

 12   [1998] AIRComm 904 per McIntyre VP.

 13   [2006] AIRComm 426 per O’Callaghan SDP.

 14 Ibid at par [29].

 15 (1991) 27 FCR 310.

 16   Ibid at 343.

 17   Ibid at 345.

 18 (2010) 182 FCR 483 at par [52].

 19 [2014] FCA 17.

 20   Statement of Mr Palioportas - exhibit PSS1.

 21   Ibid at pars 18 to 21.

 22   Bankstown at [34].

 23   UFU v CFA at [75].

 24   Income analysis attached to the statement of Mr Palioportas - exhibit PSS1.

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