Quickenden v O'Connor

[2001] FCA 303

FEDERAL COURT OF AUSTRALIA

Quickenden v Commissioner O'Connor of the Australian Industrial Relations Commission [2001] FCA 303

CONSTITUTIONAL LAW – corporations power – characterisation of laws with respect to trading and financial corporations – criteria of identification of trading and financial corporations – laws relating to certified agreements with trading or financial corporations – whether laws with respect to such corporations – university – whether trading corporation or financial corporation – trading and financial activities – whether substantial or significant – acquisition of property – alleged displacement of common law contractual rights by certified agreement – whether displacement occurred – whether acquisition of property – whether just terms

CORPORATIONS – trading and financial corporations – characteristics – university – trading and financial activities

INDUSTRIAL RELATIONS  - certified agreements – binding on employer and union and on non-party employees – whether law relating to corporations – whether valid exercise of corporations power – whether acquisition of property by effect on common law contractual rights.

Workplace Relations Act 1966 (Cth) ss 170LJ, 347, 170LI, 170LM, 170LE
University of Western Australia Act 1911 (WA) ss 6. 3
Financial Administration and Audit Act 1985 (WA) s 41
Higher Education Funding Act 1988 (Cth)
Judiciary Act 1903 (Cth) s 78B, s 78A

Re Dingjan; Ex parte Wagner (1995) 183 CLR 323 applied
Commonwealth v State of Tasmania (1983) 158 CLR 1 discussed
State Superannuation Board v Trade Practices Commission (1982) 150 CLR 282 referred to
Huddart, Parker & Co Pty Ltd v Moorehead (1909) 8 CLR 330 discussed
Strickland v Rocla Concrete Pipes Ltd (1971) 124 CLR 468 discussed
The Queen v Trade Practices Tribunal; Ex parte St George County Council (1974) 130 CLR 533 referred to
The Queen v Federal Court of Australia; Ex parte Western Australian National Football League (Inc) (1979) 143 CLR 190 discussed
Actors and Announcers Equity Association of Australia v Fontana Films Pty Ltd (1982) 150 CLR 169 discussed
Rowe v Transport Workers’ Union of Australia (1998) 90 FCR 95 mentioned
Fencott v Muller (1983) 152 CLR 570
E v Australian Red Cross Society & Ors (1991) 99 ALR 601 referred to
Palser v Grinling [1948] AC 291 referred to
Dowling v Dalgety Australia Ltd (1992) 34 FCR 109 referred to
ASX Operations Pty Ltd v Pont Data Australia Pty Ltd (No 1) (1990) 27 FCR 460 referred to
Ku-ring-gai Co-operative Building Society (No 12) Ltd (1978) 22 ALR 621 referred to
Byrne v Australian Airlines Ltd (1995) 185 CLR 410 referred to
Nintendo Co Ltd v Centronics Systems Pty Ltd (1994) 181 CLR 134 referred to
Air Services Australia v Canadian Airlines International Ltd (1997) 167 ALR 392 referred to
Re McJannet; Ex parte The Australian Workers’ Union of Employees, Queensland (No 2) (1997) 189 CLR 654 referred to

Quick and Garran, Annotated Constitution of the Australian Commonwealth (1901 Legal Books repr) 606

TERENCE IAN QUICKENDEN v COMMISSIONER O’CONNOR of the Australian Industrial Relations Commission, THE NATIONAL TERTIARY EDUCATION INDUSTRY UNION and THE UNIVERSITY OF WESTERN AUSTRALIA
WAG104 of 1999

BLACK CJ, FRENCH & CARR JJ
23 MARCH 2001
PERTH

IN THE FEDERAL COURT OF AUSTRALIA
WESTERN AUSTRALIA DISTRICT REGISTRY	WAG104 OF 1999

ON APPEAL FROM A SINGLE JUDGE OF THE FEDERAL COURT

BETWEEN:

TERENCE IVAN QUICKENDEN
APPELLANT

AND:

COMMISSIONER O'CONNOR of the Australian Industrial Relations Commission
FIRST RESPONDENT

THE NATIONAL TERTIARY EDUCATION INDUSTRY UNION
SECOND RESPONDENT

THE UNIVERSITY OF WESTERN AUSTRALIA
THIRD RESPONDENT

JUDGES:

BLACK CJ, FRENCH  and CARR JJ

DATE OF ORDER:

23 MARCH 2001

WHERE MADE:

PERTH

THE COURT ORDERS THAT:

1.        The appeal be dismissed.

2.        The Appellant is to pay the Second and Third Respondents’ costs of the appeal.

Note:    Settlement and entry of orders is dealt with in Order 36 of the Federal Court Rules.

IN THE FEDERAL COURT OF AUSTRALIA
WESTERN AUSTRALIA DISTRICT REGISTRY	WAG104 OF 1999

ON APPEAL FROM A SINGLE JUDGE OF THE FEDERAL COURT

BETWEEN:

TERENCE IVAN QUICKENDEN
APPLICANT

AND:

COMMISSIONER O'CONNOR of the Australian Industrial Relations Commission
FIRST RESPONDENT

THE NATIONAL TERTIARY EDUCATION INDUSTRY UNION
SECOND RESPONDENT

THE UNIVERSITY OF WESTERN AUSTRALIA
THIRD RESPONDENT

JUDGES:	BLACK CJ, FRENCH  and CARR JJ
DATE:	23 MARCH 2001
PLACE:	PERTH

REASONS FOR JUDGMENT

Black CJ, and French J:

Introduction

1. Dr Terry Quickenden, a Senior Lecturer at the University of Western Australia (“the University”) challenges the validity of a certified agreement made under the Workplace Relations Act 1996 (Cth) between the University and the National Tertiary Education Industry Union (“the Union”). He is not a member of the Union but would be bound by the agreement if valid. He also challenges the validity of the provisions of the Workplace Relations Act under which the agreement was certified and which give it force and effect. The challenge, which was commenced in the High Court by way of motion for orders nisi for prerogative relief against the Commission, was remitted to this Court and the motion dismissed by Lee J. Dr Quickenden has appealed to the Full Court against that decision. The issues in the appeal concern the scope of the power of the Commonwealth to make laws with respect to trading or financial corporations (Constitution s 51(xx)), whether the relevant provisions of the Workplace Relations Act are laws with respect to such corporations and whether the University is a trading or financial corporation to which those laws apply. There is a separate question whether the certified agreement, by its effect on Dr Quickenden’s pre-existing common law contractual rights, amounts to an acquisition of property required to be on just terms pursuant to s 51(xxxi) of the Constitution. The costs order made by his Honour is also challenged.

   Factual Background

2. On 10 March 1997, the University made an agreement with the Union. The agreement, known as the University of Western Australia Academic, Academic Research and Related Staff Agreement 1997, purported to be binding, according to its terms, on the University, the Union and all persons whose employment was subject to the agreement (cl 4). It was made pursuant to s 170LJ of the Workplace Relations Act and, according to its terms, applied to the University and to academic staff whose terms and conditions were provided by the Awards set out in Schedule A to the agreement and who were members or were eligible to be members of the Union (cl 3).  The agreement took effect from the beginning of the first pay period commencing on or after the date of its certification under the provisions of the Workplace Relations Act and was to remain in force until 31 March 1999 (cl 5). 

3. On 11 April 1997, the University and the Union made application to the Australian Industrial Relations Commission for certification of the agreement under Division 2 Part VIB of the Workplace Relations Act.  The application was heard by Commissioner O’Connor on 9 May 1997.  It was opposed by Dr Quickenden who was granted leave to intervene for that purpose in the proceedings before the Commission.  Dr Quickenden is and was a Senior Lecturer in physical and inorganic chemistry employed by the University.  He is not, and never has been, a member of the Union.  Nevertheless the agreement applied to him as one who was and is a member of the academic staff of the University and eligible to be a member of the Union.  His opposition to the certification of the agreement was based upon the propositions that:

   1.The agreement purported to bind him and he did not wish to be bound by it.

   2.The University is not a constitutional corporation for the purposes of an application for a certified agreement under Division 2 Part VIB of the Act.

   3.Division 2 of Part VIB of the Act is beyond the legislative power of the Commonwealth.

   Notwithstanding Dr Quickenden’s objections, the Commission certified the agreement on 20 June 1997.

4. On 18 December 1997, Dr Quickenden filed a motion in the High Court seeking orders nisi for the issue of writs of certiorari and prohibition against the Commission quashing its certification decision and prohibiting it from certifying or giving effect to the certification of the agreement.  On 5 August 1998, Kirby J remitted the proceedings to the Federal Court at its Western Australian District Registry.  The motion was heard by Lee J on 8, 9 and 10 March 1999 and on 10 September 1999 his Honour made an order that the motion be dismissed with costs.  On 1 October 1999, Dr Quickenden filed a notice of appeal from his Honour’s decision.  In the meantime, on 22 May 2000, the Australian Industrial Relations Commission certified a new agreement, the University of Western Australia Academic Staff Agreement 2000, which has subsumed the previous agreement here in contention. 

   The Grounds of the Appeal

5. The grounds of appeal reflected the grounds upon which the prerogative relief was sought.  As there is some overlap between them, it is convenient to set them out in substance:

   1.The Commission had no jurisdiction to certify an agreement between the University and the Union made binding upon Dr Quickenden when Dr Quickenden was not a party.

   2.The Commission has no jurisdiction to certify the agreement because the University is not a constitutional corporation within the meaning of the Workplace Relations Act, that is to say it is neither a trading nor a financial corporation formed within the limits of the Commonwealth.

   3.Part VIB of the Workplace Relations Act, under which the Commission purported to act, is ultra vires the power of the Commonwealth under s 51(xx) of the Constitution to make laws with respect to trading or financial corporations formed within the limits of the Commonwealth and the incidental power under s 51(xxxix) in that it purports to confer a power to regulate the internal management of officers and employees of such corporations.

   4.The Commission lacked jurisdiction to certify the agreement in that certification contravened the guarantee under s 51(xxxi) of the Constitution by effecting the compulsory acquisition of Dr Quickenden’s property, namely his contractual rights, upon other than just terms.

   In addition, Dr Quickenden seeks an extension of time within which to appeal against the costs order made by his Honour on the basis that, having regard to s 347 of the Workplace Relations Act, no such order ought to have been made.

   Statutory Framework – The Workplace Relations Act 1996 (Cth)

6. The object of Part VIB of the Workplace Relations Act as it stood in 1997 is “to facilitate the making, and certifying by the Commission, of certain agreements, particularly at the level of a single business or part of a single business” (s 170L). Division 2 of Part VIB deals specifically with agreements involving “constitutional corporations” or the Commonwealth. The division is said to set out the requirements that must be satisfied for applications to be made to the Commission to certify certain agreements between employers who are constitutional corporations or the Commonwealth on the one hand, and organisations of employees or employees on the other (s 170LH). The term “constitutional corporation” is defined in s 4(1) of the Act thus:

   “Constitutional corporation means:

   (a)a foreign corporation within the meaning of paragraph 51(xx) of the Constitution; or

   (b)a body corporate that is, for the purposes of paragraph 51(xx) of the Constitution, a financial corporation formed within the limits of the Commonwealth; or

   (c)a body corporate that is, for the purposes of paragraph 51(xx) of the Constitution, a trading corporation formed within the limits of the Commonwealth; or

   (d)a body corporate that is incorporated in a Territory; or

   (e)a Commonwealth authority.”

7. It is a prerequisite of an application made to the Commission under Division 2 that there be:

   “..an agreement in writing about matters pertaining to the relationship between:

   (a)an employer who is a constitutional corporation or the Commonwealth; and

   (b)all persons who, at any time when the agreement is in operation, are employed in a single business, or a part of a single business, of the employer and whose employment is subject to the agreement.”

   (s 170LI(1)).

   The agreement must be made in accordance with ss 170LKJ, 170LK or 170LL (s 170LI(2)). Section 170LJ, which is the material section for present purposes, provides for agreements between employers and one or more organisations of employees. Agreements may be made with one or more organisations of employees where, when the agreement is made, each such organisation has at least one member employed in the single business or part whose employment will be subject to the agreement (s 170LJ(1)(a)). In addition, the organisation must be entitled to represent the industrial interests of the members in relation to work that will be subject to the agreement (s 170LJ(1)(b)). It is a requirement of s 170LJ that the agreement be approved by a valid majority of the persons employed at the time whose employment will be subject to the agreement (s 170LJ(2)). The term “valid majority” is defined in s 170LE. The details are not material for present purposes, save that it is plain that a valid majority does not require anything more in numbers than a majority of those who validly vote for or otherwise decide to approve the proposed agreement.

8. An application to the Commission to certify such an agreement must state that it is made under Division 2 (s 170LM(1)) and, if it is an agreement under s 170LJ, must be made within twenty one days of the day on which it is approved (s 170LM(2)).

9. The processes for certification of agreements are set out in Division 4. If an application is made to the Commission in accordance with Division 2 or 3 then the Commission must certify the agreement if, and must not certify the agreement unless, the requirements of s 170LI are met (s 170LI(1)). These requirements include satisfaction of the no-disadvantage test, a public interest test, genuine approval by a valid majority of employees if made under s 170LJ, appropriate explanation of the agreement, the inclusion of dispute settlement procedures, the absence of coercion and the inclusion of a nominal expiry date no more than three years after the date on which the agreement comes into operation.

10. Division 5 deals with the effect of a certified agreement. Such an agreement comes into operation when certified (s 170LX(1)). Subject to s 170LX it remains in operation at all times afterwards (s 170LX (1)). It ceases to be in operation if the nominal expiry date has passed and it is replaced by another certified agreement (s 170LX(2)). It also ceases to be in operation if terminated under certain other provisions of the Act. While a certified agreement is in operation, subject to s 170LY, it prevails over an award or order of the Commission, to the extent of any inconsistency with the award. (s 170LY(1)(a)). A certified agreement also prevails over terms and conditions specified in a State law, State award or State employment agreement to the extent of any inconsistency (s 170LZ(1)).

11. Division 6 deals with the persons bound by certified agreements. When the application for certification is made under Division 2 the agreement binds the employer and all persons whose employment is, at any time when the agreement is in operation, subject to the agreement (s 170M(1)). The agreement also binds any organisation of employees which has made the agreement with the employer (s 170M(2)).

12. There is a special provision dealing with the question of costs in proceedings under the Act. It is in the following terms:

    “347(1)  A party to a proceeding (including an appeal) in a matter arising under this Act (other than an application under s 170CP) should not be ordered to pay costs incurred by any other party to the proceeding unless the first-mentioned party instituted the proceeding vexatiously or without reasonable cause.
         (2)  “Costs” includes all legal and professional costs and disbursements and expenses of witnesses.”

    Statutory Framework – University of Western Australia Act 1911 (WA)

13. The University of Western Australia is established by the University of Western Australia Act 1911(WA) as a body corporate capable (inter alia) of doing and suffering all such acts and things as bodies corporate may by law do and suffer (s 6). The primary objective of the Act, set out in its preamble, is to provide for “instruction in those practical arts and liberal studies which are needed to advance the prosperity and welfare of the people”. The Senate is the governing authority of the University (s 5). It is empowered to appoint deans, professors, lecturers, examiners, and other officers and servants of the University and has the “entire control and management of the affairs and concerns of the University, and may act in all matters concerning the University in such manner as appears to it best calculated to promote the interests of the University” (s 13). It has the control and management of all real and personal property vested in or acquired by the University (s 14). It may, with the approval of the Governor, grant leases of and mortgage such lands although leases up to twenty one years do not require such approval (s 15). It may invest trust monies of the University not immediately required for the purposes of the trust to erect buildings on University land (s 15A). There is provision for the University to raise loans, subject to guarantee by the State Treasurer and the Governor’s approval (s 15B). The Senate may also dispose of any real or personal property acquired by gifts, devise or bequest, as it thinks fit (s 16). It is empowered to make by-laws (ss 16A-16B), regulations (s 16E) and statutes (s 31). The statutes may relate, inter alia, to the control and investment of the property of the University (s 31(1)(u)). There is provision for the grant of Crown lands to the University (s 35) and for exemption of its property from rates and taxes (s 36). There is also provision for its public funding by “Such amounts as may be appropriated by Parliament from time to time…” (s 37(b)). All fees and all other moneys received by the Senate under the Act shall be applied solely for the purposes of the University (s 38). Subject to certain exceptions, the provisions of the Financial Administration and Audit Act 1985 (WA), which regulates the financial administration, conduct and reporting of statutory authorities, apply to the University (s 41).

    Statutory Framework – The Higher Education Funding Act 1988 (Cth)

14. The University relies upon the provisions of the Higher Education Funding Act in support of its characterisation as a trading or financial corporation.  In substance, the University submits that students incur a liability to it for part of the cost of their courses which liability is their Higher Education Contribution.  Under the statutory scheme provision is made for the Commonwealth to lend to the student an amount equal to the unpaid part of the contribution and apply the amount so lent in discharge of the student’s liability to the University.

15. The University is an “institution” for the purposes of the Act (s 4). By s 39 each institution is, in respect of each semester, to require each “contributing student” undertaking a designated course of study at the institution to pay to the institution in respect of that semester “… a contribution ascertained in accordance with this section, towards the costs of the provision of that course of study”. There are formulae for the calculation of the contribution amount for pre-1997 students and for later year students (ss 39(3)-(7)). Each unit of study is to be allocated to one of three Bands in accordance with Ministerial guidelines. The contribution is worked out by reference to a prescribed Band amount and a “student load” for the Band. The student load for the Band is the student’s student load for the course, in the semester, for units of study in the Band expressed as a proportion of the standard student load for the course in the year in which the semester occurs (s 39(6)).

1. An institution cannot permit a contributing student who is not an excepted student to enrol for, or undertake a designated course of study in a semester unless the student has paid at least seventy five per cent of the contribution and provided a written request to the Commonwealth to pay the remainder of the liability (s 41(1)(a)).  Alternatively, a student can be enrolled if the student gives the appropriate officer of the institution a document requesting a loan from the Commonwealth equal to the unpaid part of the contribution and the application of that loan in discharge of the student’s liability to pay the unpaid part of the contribution (s 41(1)(b)). 

2. There are various other provisions relating to the mechanics of the scheme and the repayment of loans.  Those mentioned illustrate the essential characteristics of an obligation imposed on each institution to require payment from students, the creation of a liability for the contribution owed by the student to the institution and the provision for the Commonwealth to lend the requisite amount to the student to discharge that liability. 

   The Decision at First Instance

3. The first contention raised by Dr Quickenden before his Honour was that the conciliation and arbitration power does not authorise legislation whereby agreements or awards can be made which will bind a person who is not a party to any industrial dispute actual or imminent. His Honour accepted that the Parliament could not, under the conciliation and arbitration power, sanction an agreement or award as between an employer and a union which, in settlement of an industrial dispute, purports to impose obligations on a person who is not a member of the union (although it permits agreements and awards to impose obligations on an employer in respect of such a person). But in the absence of any submission that the conciliation and arbitration power would support Division 2 of Part VIB it was unnecessary to consider that issue. For the purposes of the motion his Honour assumed that, if the relevant parts of Part VIB are not within the corporations power, they are beyond the legislative power of the Commonwealth.

4. His Honour then considered the scope of the corporations power.  He rejected the Commonwealth submission that the power is plenary in the sense that no conditions apply to its exercise.  In so doing he referred to Re Dingjan; Ex parte Wagner (1995) 183 CLR 323. He identified as its ratio the proposition that there must be a sufficient or necessary connection between the law made under the corporations power and a constitutional corporation. The law must fix upon events or circumstances that impact upon, or have significance for, such a corporation by, at least, affecting the activities, functions, relationships or business of the corporation.

5. His Honour then considered the provisions of Part VIB against this criterion.  He concluded that the relevant laws in Part VIB in respect of constitutional corporations are principally laws affecting the relationship of employer and employee.  A law empowering or controlling a corporation in the relationship it may form with its employees had, in his Honour’s view, a necessary or sufficient connection with that corporation by the impact it had upon the activities, functions, relationships or business of the corporation and satisfied the requirements for validity identified in Dingjan. His Honour considered the validity of s 170LM to be not so clear. In binding an employee to an agreement between a constitutional corporation and a union of which the employee was not a member, the Act might be seen as extending its operation to an outsider using a corporation “as a mere peg or reference point for the legislation”. Nevertheless his Honour concluded the provision delivered a benefit to such a corporation albeit it was, in his opinion, an “unusual benefit”. According to the tests applied in Dingjan it would supply the degree of connection to the corporation necessary to attract the corporations power.

6. Having found the legislation to be within power, his Honour then turned to the question whether the University is a constitutional corporation.  Relevantly for this case, that equates to the question whether it is a trading or financial corporation.  There was no issue that it was formed within the limits of the Commonwealth.

7. His Honour referred to the authorities on the characterisation of “trading corporations” and the wider application given to that term in recent times.  So a public authority established for and carrying out public services could at the same time be a trading corporation by reason of the extent of its involvement in trading pursuits – E v Australian Red Cross Society (1991) 27 FCR 310 (Wilcox J). From Commonwealth v State of Tasmania (1983) 158 CLR 1 (the Tasmanian Dam case) his Honour drew the proposition that as long as the trading activities of a corporation are a substantial part of its activities the fact that it performs functions in the public interest will not deny it the character of a trading corporation.  He relied especially upon the reasoning of Mason J which his Honour saw as encapsulating the opinion of the majority.

8. Turning to evidence of the activities of the University, his Honour found that its Annual Reports for 1995, 1996 and 1997 showed that it had engaged in activities that could properly be characterised as trading.  He referred to its conduct of the annual Festival of Perth and revenue generated by ticket sales therefrom and to its sale of publications and services.  He also noted that under the name Withrop Technology the University sold computing equipment and services in 1996 and 1997, returning gross revenue of $4.8 million and $7.1 million in those years respectively.  Fees and charges collected from overseas students in 1997 amounted to $22.5 million.  Accommodation services were provided by the University under the business name “Currie Hall” yielding fees of $1.6 million in 1997.  Parking fees in that year returned $0.8 million.  His Honour observed that:

   “In earlier times the provision of such services and the collection of fees therefor, may have been regarded as an incidental activity necessary for the operation of the University as an institution of learning, not able to be isolated to make the University a trading corporation but the activity must be considered in conjunction with other activities of a trading nature that are undertaken to provide the University with sources of revenue that enable the University to carry on the enterprise of offering education services in return for fees.” (par 50)

   He also characterised the University as “…more than a passive investor receiving interest or dividends from investments”.  It bought and sold properties and obtained revenue as the lessor of a substantial number of properties.  Although the funds and property may have originated in grants, bequests, gifts and endowments of land “…the activities of the University as a lessor and as a developer of land are of such a scale that they may be regarded as part of the business carried on by the University” (par 51). 

9. The trading activities adverted to in the judgment at first instance were found to represent a substantial part of the operations of the University.  Even allowing for the development costs of land and property, the net revenue from these activities amounted to about eighteen per cent of its total operating revenue for 1997.  The hallmarks of a trading corporation were satisfied by these facts and the University was found to be a trading corporation.

10. Although it was strictly unnecessary to do so, his Honour went on to consider whether the University was also a financial corporation.  He referred to State Superannuation Board v Trade Practices Commission (1982) 150 CLR 282 where it was held that investment in loan transactions, including short term loans and use of the skill and advice of persons with expertise in matters of finance to form financial judgments on investment decisions, gave the Board the character of a financial corporation, such activities being carried out on a sufficiently significant scale. He referred to the placement by the University of substantial funds and deposits on the short-term money market and in short-term bills. He inferred from the level of investment activities that considerable administrative services were devoted to them and that they involved the use of financial skills assisted by sound financial advice. His Honour concluded that, having regard to their more than incidental role, these activities led to the conclusion that the University could also be described as a financial corporation in the constitutional sense.

11. The last issue considered by his Honour was whether the certification of the agreement involved an acquisition, other than on just terms, of Dr Quickenden’s common law rights arising under his contract of employment with the University. It was not in contention that a contractual right, amounting to a chose in action, was property for the purposes of s 51(xxxi) of the Constitution. It was not conceded however that Dr Quickenden’s contract provided valuable rights or interests able to be regarded as property. But on the assumption that it did, his Honour concluded that there was no acquisition. The contract was subject to the Tenure Regulations of the University which provided that Dr Quickenden’s employment was subject to the terms of any award or registered agreement pertaining to his employment under appropriate industrial relations legislation. The Tenure Regulations were ambulatory in nature and broad enough to include, as part of the terms of Dr Quickenden’s employment, an agreement certified under Part VIB. Moreover, s 170M of the Workplace Relations Act was properly to be characterised as a law with respect to corporations, not with respect to the acquisition of property. So even if there were an acquisition effected by s 170M it was not a law with respect to the acquisition of property attracting the requirements of s 51(xxxi).

12. His Honour dismissed the motion with costs.

    The Issues for Determination

13. The issues for determination in this appeal reduced to the validity of the impugned provisions of Part VIB as an exercise of the power conferred on the Commonwealth Parliament by s 51(xx) of the Constitution, and if they be valid, whether the University is a constitutional corporation to which they apply and whether, in any event, the certification of the agreement pursuant to Part VIB amounts to an acquisition of property on other than just terms. The question whether the impugned provisions can be supported by the conciliation and arbitration power in s 51(xxxv) need be answered only if they are not supported by the corporations power.

14. There is an ancillary issue about the order for costs made by his Honour, it being contended by counsel for Dr Quickenden, Ms McLure QC, that no order for costs ought to have been made because of the provisions of s 347 of the Act. To enable this issue to be raised we granted leave to appeal out of time against the order for costs.

    The Corporations Power

15. Early consideration of s 51(xx) was affected by the doctrine of reserved State powers and the constructional principle that treated legislative powers conferred by the Constitution as mutually exclusive. On these bases provisions of the Australian Industries Preservation Act 1906 (Cth) prohibiting corporations from engaging in defined anti-competitive conduct were held invalid – Huddart, Parker & Co Pty Ltd v Moorehead (1909) 8 CLR 330. But Griffith CJ, with whom Barton J agreed while publishing separate reasons, considered that if, contrary to his opinion, the power extended to the governance and control of a corporation in domestic intra-state trade it would cover laws prescribing “what officers and servants it shall employ, what shall be the hours and conditions of labour, what remuneration shall be paid to them, and may thus, in the case of such corporations, exercise complete control of the domestic trade carried on by them” (348). That observation, obiter as it was in its context, is interesting for its treatment of terms of employment provided by a corporation as an element of its trade. Isaacs J, in dissent, would have limited the operation of the power to “the conduct of the corporations in relation to outside persons” (396) an application which would not extend to the prescription of “a schedule of wages and hours…for these corporations” (396).

16. The doctrine of reserved State powers passed away with the decision in Amalgamated Society of Engineers v Adelaide Steamship Co Ltd (1920) 28 CLR 129. There was discussion of the corporations power, reflecting some of the approaches taken in Huddart Parker, in the Banking case – Bank of New South Wales v Commonwealth (1948) 76 CLR 1, at 255 (Rich and Williams JJ) and 304 (Starke J). But it was not until Strickland v Rocla Concrete Pipes Ltd (1971) 124 CLR 468 that Huddart Parker was effectively overruled. That case did not give rise to any definition of the limits of the power conferred by s 51(xx). Barwick CJ however, rejected any suggestion that the overruling of Huddart Parker implied that “any law which in the range of its command or prohibition includes foreign corporations or trading or financial corporations formed within the limits of the Commonwealth is necessarily a law with respect to the subject matter of s 51(xx)” (489-490). Nor did it follow “that any law which is addressed specifically to such corporations or some of them is such a law” (490). The sections, wrongly found to be invalid in Huddart Parker, were valid “because they were regulating and controlling the trading activities of trading corporations and thus within the scope of s 51(xx)” (490). It is important to note that this was not a definition of the limits of the power. Neither he nor the other Justices were prepared to essay such a definition.

17. The application of the power to “the activities of corporations which fall within its description” was asserted by Barwick CJ in The Queen v Trade Practices Tribunal; Ex parte St George County Council (1974) 130 CLR 533 at 542. The Chief Justice was there in dissent on the question, not going to validity, whether a local authority fell within the class of corporation to which placitum xx, and in that case, the RestrictiveTrade Practices Act 1971 (Cth) applied. A similar question arose in The Queen v Federal Court of Australia; Ex parte Western Australian National Football League (Inc) (1979) 143 CLR 190, albeit under the provisions of the Trade Practices Act 1974 (Cth). But neither of those cases, which are referred to later in connection with the test for characterisation of a corporation as “trading” or “financial”, considered the scope of the power in relation to such corporations.

18. The scope of the power was the subject of significant elaboration in Actors and Announcers Equity Association of Australia v Fontana Films Pty Ltd (1982) 150 CLR 169. Three of the seven Justices characterised it as plenary. Mason J, with whom Aickin J agreed, said at 207:

    “Even if it be thought that it was concern as to the trading activities of trading corporations and financial activities of financial corporations that led to the singling out in s 51(xx) of these domestic corporations from other domestic corporations it would be mere speculation to say that it was intended to confine the legislative power so given to these activities. The competing hypothesis, which conforms to the accepted approach to the construction of a legislative power in the Constitution is that it was intended to confer comprehensive power with respect to the subject matter so as to ensure that all conceivable matters of national concern would be comprehended. The power should, therefore, in accordance with that approach, be construed as a plenary power with respect to the subjects mentioned free from the unexpressed qualifications which have been suggested.”

    Murphy J also regarded the power as plenary observing that it enabled Parliament “to make comprehensive laws covering all internal and external relations of foreign trading and financial corporations” (212).  The power would authorise “…laws dealing with industrial relations so that in relation to such corporations Parliament, uninhibited by limitations expressed in s 51(xxv), may legislate directly about the wages and conditions of employees and other industrial matters” (212).  This reflected the consequence adumbrated by Griffiths  CJ and Barton J in Huddart Parker on the hypothesis that the power was plenary.  Stephen J, without making any general statement about its scope, appeared to reject the assumption that it was confined to the trading activities of a trading corporation (195).  Brennan J raised the question whether a law which discriminated between constitutional corporations and the public at large fell within its ambit.  But it was not necessary, in his opinion, to answer that question.  The question which had to be answered was whether a law affording a discriminatory protection to the businesses of trading corporations was valid (219). His Honour answered that narrower question in the affirmative.  In so doing he held that the validity of a law under pl (xx) could not be determined “as though the power were expressed as a power to make laws with respect to the trading or some other activities of or relationship with corporations mentioned in par (xx)” (222). 

19. Gibbs CJ, with whom Wilson J agreed, took a less expansive view observing that “the words of par (xx) suggest that the nature of the corporation to which the laws relate must be significant as an element in the nature or character of the laws, if they are to be valid” (182).  Nevertheless a law could be one with respect to a trading corporation although it cast an obligation on a person other than a trading corporation (183).  The Chief Justice’s remarks in his subsequent judgment in the Tasmanian Dam case suggest that in respect of trading corporations, he would have confined the ambit of the power to a power to make laws with respect to their trading activities.  That limitation did not reflect the preponderance of views in the Actors Equity case nor in later cases.  If there were a preponderance of views in the Actors Equity case it would appear to have been in favour of a plenary power and not so limited. 

20. The corporations power, among others, again fell for consideration in the Tasmanian Dam case. Section 10 of the World Heritage Properties Conservation Act 1983 (Cth) prohibited constitutional corporations from damaging or destroying property to which a proclamation made by the Governor-General under s 7 of the Act applied. Proclamations had been made in relation to certain areas of Tasmania affected by a proposed dam and hydro-electric scheme to be carried out by the Hydro-Electric Commission of Tasmania. Gibbs CJ was of the view that the Commission was not a trading corporation but concluded that even if it were and ss 7 and 10 were valid, they “could apply to the Commission only in relation to such of its activities as are properly regarded as trading activities” (117). Mason, Murphy and Deane JJ took a broader view of the power as plenary and as supporting ss 7 and 10 (148, 179 and 268). Brennan J posited, as a necessary condition of validity, that the law must discriminate “that is to say, it must be a law which operates to confer a benefit or impose a burden upon those persons when its operation does not confer a like benefit or impose a like burden on others…”. However his Honour found it necessary to deal only with the issue of validity of one subsection of s 10 which expressly limited the prohibited conduct to conduct for the purposes of the trading activities of bodies corporate to which it applied (241). Wilson J held that the law was not “about trading corporations” but the “protection and conservation of property” (202). Dawson J said that “[f]or a law to be a valid law with respect to a trading or financial corporation the fact that it is a trading or financial corporation should be significant in the way in which the law relates to it” (316).

1. There was no majority formulation of a single test in the Tasmanian Dam case but wide views of the corporations power were expressed in a number of the judgments in Re Dingjan; Ex parte Wagner (1995) 183 CLR 323 which was concerned with the validity of ss 127A, 127B and 127C of the Industrial Relations Act 1988 (Cth). Those provisions, enacted in reliance upon s 51(xx), empowered the Australian Industrial Relations Commission to review contracts for services binding on independent contractors on the grounds that they were unfair, harsh or against the public interest. They were held invalid as not being laws with respect to corporations and not able to be read down to within valid limits. They could have operated on contracts between persons none of whom was a trading corporation. They were too remotely connected to trading corporations to be characterised as laws with respect to them. It is however the criteria for characterisation advanced in that case that are relevant for present purposes. The majority judgments were those of Brennan, Dawson, Toohey and McHugh JJ. Brennan J, applied his previously formulated discrimination test specifying as the condition of validity of a law made under s 551(xx) that it “… discriminate between constitutional corporations and other persons, either by reference to the persons on whom it confers rights or privileges or imposes duties or liabilities or by reference to the persons whom it affects by its operation” (336). His Honour saw no difference between that test and the test proposed by Gibbs CJ in the Actors Equity case that the constitutional character of a corporation should be significant in the way in which the law relates to it. Dawson J said that the way in which the law operates upon constitutional corporations must be such that they impart their character to the law (346). Toohey J characterised the power as “plenary” and regarded the test enunciated by Gibbs CJ as focussing “too narrowly on the process of characterisation” (352). Corporations were identified as the subject matter of the power, but the question was whether there was a sufficient connection between the law and the subject matter to be able to say that the law is one with respect to that subject matter (353). The assessment of the sufficiency of the connection was to be qualitative (353). McHugh J also referred to the power as plenary but required that a law made pursuant to it have a relevance to, or connection with, a s 51(xx) corporation. It is not enough that the law refer to the subject matter or apply to the subject matter (368). It must have “some significance for the activities, functions, relationships or business of the corporation” (369). And if, by reference to the activities or functions of s 51(xx) corporations, a law regulates the conduct of those, inter alia, who work for the corporations it is unlikely that any further facts would be needed to bring the law within the reach of s 51(xx) (369).

2. Mason CJ, Gaudron and Deane JJ dissented in the result. Mason CJ again expressly rejected the proposition that the corporations power is confined in its application to the trading activities of trading corporations and the financial activities of financial corporations: it is a plenary power (333-334). Gaudron J, with whom Deane J agreed, described it in like terms as a plenary power “… to be construed according to its terms and not by reference to implications or limitations which those terms do not require” (364). She did not define the outer limits of the power but held that it extends so that “… at the very least, a law which is expressed to operate on or by reference to the business functions, activities or relationships of constitutional corporations is a law with respect to those corporations” (364). And once it is accepted that s 51(xx) extends to the business functions, activities and relationships of constitutional corporations it follows that “… it also extends to the persons by and through whom they carry out those functions and activities and with whom they enter into those relationships” (365).

3. The case law was recently reviewed by Cooper J in Rowe v Transport Workers’ Union of Australia (1998) 90 FCR 95. His Honour held valid provisions of the Workplace Relations Act imposing penalties for certain classes of industrial action.  He held it to be sufficient for validity that the law in question “in its legal and practical operation operates on or by reference to the business functions, activities and relationships of a constitutional corporation” (105).  The sections in issue in that case were seen as protecting constitutional corporations from adverse effects to themselves and to their activities, functions, relationships or business consequent upon conduct taken against their employees or independent contractors in that capacity (106).  

4. It is neither possible nor necessary for the purposes of this case to extract from these authorities an exhaustive statement of the limits of the corporations power.  It is sufficient to say that the state of the law after Dingjan supports, as a valid exercise of the corporations power, a law that applies expressly and specifically to constitutional corporations in their capacity as such corporations or to other persons or bodies in their dealings with such corporation or their conduct in relation to them. A fortiori a law is a valid exercise of the power under s 51(xx) if it confers rights or powers or imposes duties or liabilities peculiarly on such corporations or those who deal with them or engage in conduct affecting them in connection with those dealings or that conduct. It may be accepted that a law of general application which happens to apply to constitutional corporations among others is not a law with respect to such corporations for the purposes of s 51(xx).

   Whether Part VIB is Supported by the Corporations Power

5. Division 2 of Part VIB deals specifically with agreements involving constitutional corporations as defined in s 4(1) of the Workplace Relations Act. It is not a law of general application but one specifically directed to the subject matter of the power. Its provisions give binding effect to agreements made between such corporations and organisations of employees where such agreements are certified by the Commission. They also purport to bind by such agreements all persons whose employment is, at any time when the agreement is in operation, subject to the agreement. The laws create rights and liabilities between the constitutional corporations to which they apply, the organisations of employees with whom they conclude certified agreements and the employees to whom the agreements apply. The nature of the agreements is defined in s 170LI which describes them as agreements:

   “… about matters pertaining to the relationship between … an employer who is a constitutional corporation and … all persons who, at any time when the agreement is in operation, are employed in a single business or a part of a single business of the employer and whose employment is subject to the agreement.”

   These elements, made essential by s 170LI, are sufficient to indicate that the impugned laws apply directly to constitutional corporations in that character and to their employees. If satisfaction of a discrimination test as enunciated by Brennan J can be regarded as at least sufficient to determine validity then these laws are valid on that basis. They are also valid if the test applied is that of “sufficient connection”. The rights and duties which define the relationship between a corporation and its employees are central to its functioning. It is true that employee relations are not peculiar to constitutional corporations, but neither are trading or financial activities. The fact that the subject of the law is not itself unique does not deprive it of the character of a law with respect to constitutional corporations if it is specifically and uniquely directed to them. That direction is no mere peg or reference point. The constitutional corporation in Part VIB is a necessary party to the agreement for which that Part provides and a necessary repository of the rights and duties which they define. The provisions of Part VIB are therefore a valid exercise of the power.

   Trading or Financial Corporation  - Criteria for Identification

6. The criteria for identifying a corporate entity as a trading or financial corporation have evolved out of a contest between narrow and more expansive approaches adopted by Justices of the High Court, generally reflecting like approaches to Commonwealth power and the scope of federal jurisdiction.  There was little authority on the question before the decision of the Court in the St George County Council case.  Quick and Garran, in the Annotated Constitution of the Australian Commonwealth (1901 Legal Books repr) p 606 said that a trading corporation was “one formed for the purpose of carrying on trade”.  “Financial corporation” was seen as referring to all “financial institutions” formed within the limits of the Commonwealth including “companies which received deposits of money for investment and make advances on the security of land, such as land-mortgage companies and building societies” (607).  The nature of the corporations to which the power applies was not the subject of extensive exposition in Huddart Parker.  Isaacs J would have treated as outside the range of federal power “all those domestic corporations, for instance, which are constituted for municipal, mining, manufacturing, religious, scholastic, charitable, scientific, and literary purposes, and possibly others more nearly approximating a character of trading…” (393). 

7. In Strickland v Rocla Concrete Pipes, Barwick CJ upheld the validity of provisions of the Australian Industries Preservation Act as laws which “…dealt with the very heart of the purpose for which the corporation was formed, for whether a trading or financial corporation, by assumption, its purpose is to trade, trade for constitutional purposes not being limited to dealings in goods” (489).  The implication seems to have been that the purpose for which a body corporate was formed was significant in its characterisation.  This did not, however, reflect his Honour’s position in later judgments.

8. The purpose of formation figured prominently in the judgments of two of the majority Justices, Menzies and Gibbs JJ, in the St George County Council case. In that case a local authority which engaged in the supply of electricity was held not to be a trading corporation within s 5 of the Restrictive Trade Practices Act 1971 (Cth). The Act adopted the class description from s 51(xx) of the Constitution in its definition of the corporations to which it applied. McTiernan J, who was the other member of the majority, focussed upon the legislative intention which he saw as directed to “a free enterprise corporation”. He did not in terms address the scope of the class for the purposes of pl (xx). Menzies J had regard for the purpose for which the Council was formed as indicating “both its original and existing character” (551). It was “… a corporation for local government purposes which has defined trading powers” (552). That a corporation trades was seen as insufficient to bring it within the character of a trading corporation:

   “A university may trade – its bookshop is an example of this – but if incorporated it is not because of its trading within the classification of a trading corporation.” (553)

   A like approach was taken by Gibbs J,  The word “trading”, he said “forms part of a composite expression which indicates the essential attributes of the kind of corporation to which it refers” (561).  A trading corporation was one “formed for the purpose of trading” (562).  Barwick CJ and Stephen J dissented, taking the view that the term “trading corporation” referred not to the purpose of incorporation but to the activities of the corporation at the relevant time (561 Barwick CJ and 568 Stephen J).  Both accepted that not every corporation, which to any extent engages in trade, is a trading corporation (543 and 572).  A corporation whose predominant and characteristic activity is trade will satisfy the description (543).

9. No clear majority view of the scope of the class of trading corporation emerged from St George County Council, having regard to the way in which McTiernan J treated the case as one of statutory rather than constitutional interpretation.  In any event, the approach of the dissenters was vindicated in The Queen v Federal Court of Australia Ex parte; Western Australian National Football League (1979) 143 CLR 190 (“the Football Club case). The majority, comprising Barwick CJ, Mason, Jacobs and Murphy JJ, held that a corporation is a trading corporation if trading is a substantial or significant part of its corporate activities (208 Barwick CJ, 233 Mason J, Jacobs J agreeing at 237 and 239 Murphy J). On this test substantial trading activity is a sufficient condition for characterisation of a corporation as a trading corporation regardless of the purpose for which it was formed. Trading must be, of course, within the corporation’s legal capacity (208). And trading which is a peripheral part of a corporation’s activities will not suffice to lend it the character of a trading corporation (208, 234 and 239).

10. The same approach was taken to the characterisation of financial corporations in State Superannuation Board v Trade Practices Commission (1982) 150 CLR 282. In the joint majority judgment Mason, Murphy and Deane JJ said that “… the Court’s approach to the ascertainment of what constitutes a “financial corporation” should be the same as its approach to what constitutes a “trading corporation”, subject to making due allowance for the difference between “trading” and “financial”.” (303) Moreover the two classes were not to be seen as mutually exclusive. A corporation could be a financial as well as a trading corporation (303). The majority position in the Football Club case was restated and summarised thus:

    “…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 out its primary or dominant undertaking, eg, as a sporting club, may nevertheless be a trading corporation”. (304)

    There was nothing in the Football Club case to lend support to the view that a corporation carrying on independent trading activities on a significant scale will not be properly categorised as a trading corporation if other more extensive non-trading activities properly warrant its being also categorised as a corporation of some other type (304).  The term “financial corporation” does no more than “describe a corporation which engages in financial activities or perhaps is intended so to do” (305).  Just as a corporation could be a trading corporation although its trading activities are entered into in the course of carrying on some primary or dominant undertaking, so too a corporation engaged in financial activities in the course of carrying on its primary or dominant undertaking can be a financial corporation (305).  The “activity” test so called establishes a sufficient condition for description of a corporation as a trading or financial corporation.  But activities are not the only way in which the categorisation may be made.  Absent activity, other indicia may be invoked such as the constitution of a corporation which has not begun to carry on business – Fencott v Muller (1983) 152 CLR 570 at 602.

11. The Tasmanian Dam case required consideration of the nature of a statutory authority, the Hydro-Electric Commission, and whether it was within the reach of pl (xx).  The character of the body corporate as a statutory authority of a State was held not to take it outside the class of constitutional corporation (155 Mason J).  Its trading activities being a substantial part of its overall activities, it was held to be a trading corporation (156 Mason J, 179 Murphy J, 240 Brennan J and 293 Deane J).   See also E v Australian Red Cross Society (1991) 27 FCR 310 in which the Australian Red Cross Society and the Royal Prince Alfred Hospital were held to be trading corporations.

12. Relevantly for the present case, the University of Western Australia will be a trading corporation for the purpose of pl (xx) and therefore a constitutional corporation to which the Workplace Relations Act applies if it engages in substantial or significant trading activities notwithstanding that trading is not its primary purpose.  The same consideration applies to its characterisation, which is not mutually exclusive, as a financial corporation.

    Whether the University of Western Australia is a Trading or Financial Corporation?

13. Dr Quickenden’s submission on whether the University is a trading or financial corporation began by accepting that the question depended largely but not exclusively upon an identification of its activities in order to determine whether trading forms a significant or substantial part of them.  The traditional role of a university in undertaking educational and research activities would not appear to be within the conventional concept of “trading” even when those services are provided for a fee at or near their commercial cost.  Income from research grants and contracts, it was said, should be segregated.  Income from grants and research should not be classified as derived from trading.  Income from consulting and research activities undertaken for industry would fall within that category.  Reference to the consolidated accounts to review the nature of the trading activities of the University concealed the real nature and origin of the income rather than elucidating it.  There was said to have been an absence or failure of proof on this vital issue.

14. The University pointed to various trading activities in which it engages including the buying, selling and renting of property and investing.  From these activities it was said to have derived $44.393 million in 1995 and $48.048 million in 1996.  Its investment income represented 16.83% and 16.97% of total operating revenues for those two years respectively.  Other business activities relied upon were the Festival of Perth, the sale of publications and services, parking, provision of student accommodation and the provision of services through Winthrop Technology.  Each of these activities was carried out by the University and not by a separate entity owned or controlled by it.

15. The University also submitted that the fees charged by it for courses are fees for services notwithstanding that they are regulated by legislation and ministerial guidelines.  So it was said that under the Higher Education Funding Act 1988 (Cth) the regulation of fees is a condition of receiving Commonwealth grants and not a requirement imposed directly by law. The guidelines themselves, it is said, do not limit the University in such a way as to deny the fees the character of payment for services and facilities provided in the courses offered by the University. No limits are imposed on the number or content of the courses nor on their promotion or design, nor on ancillary matters such as accommodation and other student benefits which may attract potential students. Specifically, in respect of payments made by the Commonwealth to the University under the Higher Education Funding Act it is said that they should properly be characterised as revenue from trading activities.  The argument is put thus.  Some students pay HECS contributions directly to the University.  That is, they pay a fee for services rendered to them.  In 1995 fees paid in this way amounted to $8.849 million.  HECS payments by the Commonwealth to the University in that year amounted to $17.318 million.  Those payments, it was submitted, should also be characterised as revenue derived from trading.

16. It is questionable whether the provision of educational services within the statutory framework of the Higher Education Funding Act amounts to trading. The Act creates a liability for each student to the University in respect of each course of study undertaken in a semester. The amount is not fixed by the University but rather by the Minister under published guidelines. The concept of “trading” is a broad one. It is doubtful, however, that it extends to the provision of services under a statutory obligation to fix a fee determined by law and the liability for which, on the part of the student, appears to be statutory. For present purposes, however, this aspect of the claimed trading activities can be disregarded. For it is plain that the other activities cited are trading activities and are a substantial, in the sense of non-trivial, element albeit not the predominant element of what the University does. The University was not established for the purpose of trading and at another time, closer to the time of its creation, it may not have been possible to describe it as a trading corporation. But at the time relevant to this case and at present, it does fall within that class.

1. I agree, respectfully, with his Honour’s conclusion and the reasons set out above.

   CONCLUSION

2. For the foregoing reasons I would dismiss the appeal with costs.

I certify that the preceding sixty-seven (67) numbered paragraphs are a true copy of the Reasons for Judgment of Justice Carr.

A/g Associate:

Dated:             23 March 2001 

Counsel for the Appellant:	Ms C J McLure QC with Mr P J Gethin
Solicitor for the Appellant:	Patrick Gethin & Co
Counsel for the First Respondent:	No Appearance
Solicitor for the First Respondent:	Australian Government Solicitor
Counsel for the Second Respondent:	Mr P W Johnston with Mr W J Ford
Solicitors for the Second Respondent:	Messrs Dwyer Durack
Counsel for the Third Respondent	Mr R L Le Miere QC with Mr D F Parker
Solicitor for the Third Respondent:	Messrs Blake Dawson Waldron
Counsel for the Attorney-General of the Commonwealth, intervening:	Mr H Burmester QC with Mr R D Farrell
Date of Hearing:	31 May, 1 June 2000
Date of Judgment:	23 March 2001