Quickenden v O'Connor

[1999] FCA 1257

FEDERAL COURT OF AUSTRALIA

Quickenden v O’Connor [1999] FCA 1257

CONSTITUTIONAL LAW - powers of Commonwealth Parliament – trading or financial corporations – University established by statute – activities – The Constitution s 51(xx) – Workplace Relations Act 1996 (Cth) Pt VIB.

CONSTITUTIONAL LAW – powers of Commonwealth Parliament – acquisition of property – adjustment of contractual rights – The Constitution s 51(xxxi) – Workplace Relations Act 1996 (Cth) Pt VIB.

Judiciary Act 1903 (Cth) ss 78A, 78B
Workplace Relations Act 1996 (Cth) Pt VIB (Div 1, s 170LB(1)), (Div 2, ss 170LH - 170LM), (Div 3, ss 170LN – 170LS), (Div 4, ss 170LT – 170LW), (Div 6, ss 170M, 170MA), (Div 8), (Div 10, ss 170ND, 170NF); Pt IX; ss 3, 4(1), 170LE
University of Western Australia Act 1911 (WA) ss 3, 6

The Constitution ss 51(xx), 51(xxxi), 51(xxxv)

W J Ford, “Reconstructing Australian Labour Law: A Constitutional Perspective” (1997) 10 Australian Journal of Labour Law 1

Re Finance Sector Union of Australia; Ex parte Financial Clinic (Vic.) Pty Ltd (1993) 178 CLR 352 cited
Re National Tertiary Education Industry Union; Ex parte Quickenden (1996) 71 ALJR 75 cited
Re Dingjan; Ex parte Wagner (1995) 183 CLR 323 followed
Newcrest Mining (WA) Limited v The Commonwealth of Australia (1997) 190 CLR 513 cited
Rowe v Transport Workers’ Union of Australia (1998) 160 ALR 66 cited
Reg v Trade Practices Tribunal; Ex parte St. George County Council (1974) 130 CLR 533 cited
E v Australian Red Cross Society (1991) 99 ALR 601 cited
Reg v Federal Court of Australia; Ex parte Western Australian National Football League (Incorporated) (1979) 143 CLR 190 cited
The Commonwealth v Tasmania (1983) 158 CLR 1 cited
Fencott v Muller (1983) 152 CLR 570 cited
The Australian Beauty Trade Suppliers Limited v Conference and Exhibition Organisers Pty Limited (1991) 29 FCR 68 cited
State Superannuation Board v Trade Practices Commission (1982) 150 CLR 282 cited
Re Ku-ring-gai Co-operative Building Society (No 12) Ltd (1978) 22 ALR 621 cited
Mutual Pools & Staff Pty Limited v The Commonwealth of Australia (1994) 179 CLR 155 cited
Clunies-Ross v The Commonwealth of Australia (1984) 155 CLR 193 cited
Bank of New South Wales v The Commonwealth (1948) 76 CLR 1 cited

The State of Victoria v The Commonwealth of Australia (1996) 187 CLR 416 cited

The Minister of State for the Army v Dalziel (1944) 68 CLR 261 cited
National Trustees Executors and Agency Company of Australasia Limited v FCT (1954) 91 CLR 540 cited
Commonwealth v WMC Resources Limited (1998) 194 CLR 1 cited
Burns Philp Trustee Co Ltd v Viney [1981] 2 NSWLR 216 cited
P J Magennis Proprietory Limited v The Commonwealth (1949) 80 CLR 382 cited
Australian Tape Manufacturers Association v The Commonwealth of Australia (1993) 176 CLR 480 distinguished
Georgiadis v Australian & Overseas Telecommunications Corporation (1994) 179 CLR 297 cited
Nintendo Company Limited v Centronics Systems Pty Limited (1994) 181 CLR 134 followed

TERENCE IVAN QUICKENDEN v COMMISSIONER O’CONNOR OF THE AUSTRALIAN INDUSTRIAL RELATIONS COMMISSION and THE NATIONAL TERTIARY EDUCATION INDUSTRY UNION and THE UNIVERSITY OF WESTERN AUSTRALIA
WAG 106 OF 1998

LEE J
10 SEPTEMBER 1999
PERTH

IN THE FEDERAL COURT OF AUSTRALIA
WESTERN AUSTRALIA DISTRICT REGISTRY	WAG 106 OF 1998

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

JUDGE:

LEE J

DATE OF ORDER:

10 SEPTEMBER 1999

WHERE MADE:

PERTH

THE COURT ORDERS THAT:

1.        The motion be dismissed.

2.        The applicant pay the costs of the second and third respondents.

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	WAG 106 OF 1998

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

JUDGE:

LEE J

DATE:

10 SEPTEMBER 1999

PLACE:

PERTH

REASONS FOR JUDGMENT

1. The applicant (“Dr Quickenden”), by a motion filed in the High Court, sought orders nisi; first, for the issue of a Writ of Certiorari to quash a decision of the Australian Industrial Relations Commission (“the Commission”) as a decision made without, or in excess of, jurisdiction, and second, for the issue of a Writ of Prohibition directing other respondents to the motion not to act upon the decision of the Commission.

2. By consent, the High Court ordered that the motion be remitted to this Court for determination. The Court directed Dr Quickenden to give notice to the Attorneys-General, pursuant to s 78B of the Judiciary Act 1903 (Cth), of any matter arising under the Constitution, or involving its interpretation, and directed that the hearing of the motion be treated as the hearing of an application for orders absolute. In response to the notices given to the Attorneys-General, the Attorney-General of the Commonwealth, pursuant to s 78A of the Judiciary Act, intervened on behalf of the Commonwealth. The Commission filed a submitting appearance.

3. The application for prerogative relief rests on the contention that the Commission was not validly empowered under Pt VIB the Workplace Relations Act 1996 (Cth) (“the Act”), to certify an agreement (“the Agreement”) made between the second respondent (“the Education Union”) and the third respondent (“the University”) in March 1997, the effect of such certification being that the Agreement bound Dr Quickenden, a person who was not a party to the Agreement nor a member of the Education Union.

4. It was not in issue that Dr Quickenden has standing to prosecute the proceedings.

5. The relevant facts are as follows. Dr Quickenden is a Senior Lecturer in the Faculty of Science of the University. In April 1997 the University and the Education Union applied to the Commission under s 170LM of Div 2 of Pt VIB of the Act for the Commission to certify the Agreement. Dr Quickenden gave notice to the Commission that he objected to certification of the Agreement in so far as it purported to bind him as a member of the academic staff of the University eligible to be a member of the Education Union. Dr Quickenden was given leave to intervene in the proceedings before the Commission. He submitted that the Agreement would have the effect of altering, without his consent, the terms and conditions of his employment with the University, in particular it was a provision of the Agreement that employees of the University be subject to “performance reviews… conducted on a three (3) yearly basis according to the procedures agreed between the (University and the Education Union)”, a provision that was not a term of the contract of employment made between Dr Quickenden and the University.

6. In June 1997 the Commission certified the Agreement.

7. In a statutory declaration made by the Acting Vice-Chancellor of the University in support of the application filed with the Commission, it was stated that the total number of employees “covered” by the Agreement was 1,528. The declaration indicated that the means used to ascertain whether “a valid majority of the persons employed at the time” approved the Agreement was a ballot. It was stated that ballot papers were distributed to “all academic staff” and that as at 8 April 1997, 469 votes received approved the Agreement and 26 votes opposed it.

8. Division 2 of Pt VIB of the Act (ss 170LH – 170LM), headed “Making agreements with constitutional corporations or the Commonwealth”, sets out the requirements that must be satisfied for an application to be made to the Commission to certify an agreement between an employer that is a constitutional corporation and an organisation of employees, or between such an employer and employees.

9. Section 4(1) of the Act defines a “constitutional corporation” as, inter alia, a body corporate that is, for the purposes of s 51(xx) of the Constitution, a financial corporation or a trading corporation formed within the limits of the Commonwealth.

10. Section 170LI states that for an application to be made to the Commission under the Division there must be an agreement, in writing, about matters pertaining to the relationship between such an employer and all persons who, at any time when the agreement is in operation, are employed in a “single business”, or part of a “single business” of the employer.

11. “Single business” is defined in s 170LB(1) of Div 1, Pt VIB as, inter alia, the activities carried on by a body, or other entity established for a public purpose by, or under, a law of a State.

12. The University is a body corporate established under s 6 of the University of Western Australia Act 1911 (WA) (“the University Act”). If regard is given to the preamble to the University Act it may be assumed that the University has been established under s 3 of that Act to provide “further instruction in those practical arts and liberal studies which are needed to advance the prosperity and welfare of the people” and to afford “special encouragement and assistance … [to] … those who may be hindered in the acquisition of sound knowledge and useful learning by lack of opportunity or means.” Accordingly, the public purpose for which the University has been established may be so defined and the activities which constitute the “single business” of the University would be the activities carried on by the University to effect that purpose.

13. Under s 170LJ(1) an employer may make an agreement with an organisation of employees. The Education Union is an organisation of employees registered under Pt IX of the Act. Section 170LJ(2) provides that the agreement must be approved by a “valid majority of the persons employed at the time whose employment will be subject to the agreement”.

14. Section 170LE states that a “valid majority of persons employed at a particular time whose employment is or will be subject to an agreement” approves an agreement if the employer gives all of the persons so employed a reasonable opportunity to decide whether they want to give the approval and, if the decision is made by a vote, a majority of the persons who cast a valid vote decides it wants to give that approval.

15. The Act does not specify how a “vote” is to be conducted. It is assumed that the University complied with the requirements of s 170LE and, in particular, that “all academic staff” to whom ballot papers were distributed, were all of the persons, employed at the time, whose employment would be subject to the Agreement.

16. Dr Quickenden submits that in so far as the provisions of Div 2 of Pt VIB of the Act purport to provide that an agreement made between an employer and an organisation and certified thereunder may make the “employment” of an employee who is not a member of the organisation, subject to the agreement, those provisions are beyond the legislative power of the Commonwealth, provided under s 51(xx) (the corporations power) or s 51(xxxv) (the conciliation and arbitration power) of the Constitution.

17. Neither the University, the Education Union nor the Commonwealth submits that the conciliation and arbitration power enables the Commonwealth to enact the provisions of Div 2 and states that those provisions are supported by the corporations power.

18. Dr Quickenden submits that if the relevant provisions are supported by the corporations power, the University is not a trading corporation and is unable to make, and have certified, an agreement under Div 2 of Pt VIB of the Act. The University contends that it is both a trading corporation and a financial corporation.

19. Dr Quickenden further submits that if Pt VIB of the Act makes the Agreement binding upon him, such provisions constitute an acquisition of property not on just terms and, therefore, those provisions are beyond the legislative power conferred on the Commonwealth by s 51(xxxi) of the Constitution.

20. The Education Union and the Commonwealth submitted that no acquisition of property was effected by the legislation but if it were, it was not an acquisition other than on just terms.

    Conciliation and arbitration power

21. Dr Quickenden submits that, not being a member of the Education Union, he was not at any time a party to any “industrial dispute” between the University and the Education Union, whether actual or imminent. Accordingly, it was submitted, no law could be enacted which relied on the conciliation and arbitration power purporting to make an agreement made between industrial disputants binding upon a person not a party to the dispute. (See:  Re Finance Sector Union of Australia; Ex parte Financial Clinic (Vic.) Pty Ltd (1993) 178 CLR 352 at 359 - 360.)

22. It may be accepted that the conciliation and arbitration power does not enable Parliament to sanction an agreement, or award, between an employer and an organisation which, in settlement of an industrial dispute, purports to impose obligations on a person who is not a member of the organisation, but the power does permit agreements and awards to impose obligations on an employer in respect of such a person. That is, the provisions of the agreement or award “cover” such a person but that employee is not bound by the agreement or award and any rights obtained by the employee by reason of the existence of the agreement or award are obtained under the Act. (See: Re National Tertiary Education Industry Union; Ex parte Quickenden (1996) 71 ALJR 75 per Toohey J at 77.)

23. In the absence of any submission that the conciliation and arbitration power provides authority to legislate in the terms of Div 2 of Pt VIB, it is unnecessary to consider that issue. For the purposes of the motion, it will be assumed that if the relevant parts of Pt VIB are not within the corporations power, they are beyond the legislative power of the Commonwealth.

    Corporations power

24. The Commonwealth submits that the corporations power is a “plenary” power supporting laws which control and regulate the activities and relationships of trading and financial corporations. Dr Quickenden submits that the corporations power is a more limited power which excludes legislation that refers to such corporations for the purpose of affecting the activities of others without affecting the corporations in a material way.

25. A series of cases in the High Court has examined carefully the scope of the corporations power culminating in the decision in Re Dingjan; Ex parte Wagner (1995) 183 CLR 323. The construction of the corporations power set out by the majority of the High Court in that case would not support a contention that the corporations power is a “plenary” power if that word is used in the sense that no conditions apply to the exercise of the power. (See: Newcrest Mining (WA) Limited v The Commonwealth of Australia (1997) 190 CLR 513 per Gummow J at 605, 611 – 612.) In Dingjan Mason CJ stated that the corporations power is a “plenary” power, unconfined, except that the law made in exercising the power must exhibit, in its practical operation, a substantial or sufficient connection with constitutional corporations (pp 333 – 334). Brennan J stated that to be a law with respect to a constitutional corporation, a relationship governed by the law must affect the constitutional corporation in a discriminatory manner. That is, a provision indistinguishable in its impact or operation on constitutional corporations, or their businesses, and on other persons or entities, is not a provision which has the character of a law with respect to trading or financial corporations (pp 338 – 339). There must be a necessary connection between the legislative provisions and the constitutional corporation, or its business (p 340). Deane J agreed with Gaudron J who held that the corporations power is a “plenary” power, the scope of which was unnecessary to define because on the facts of that case the legislation was valid whatever limitation was applied to the power (pp 364 – 366). Dawson J held that a law addressed to constitutional corporations is not a law with respect to such a corporation unless it draws its character from such corporations rather than the activity which the legislation seeks to regulate. The fact that the corporation is a trading or financial corporation must be “significant” to the way in which the law relates to such a corporation (pp 345 – 346). The corporations power does not permit reference to a constitutional corporation to be the peg on which legislation hangs to have effect upon an entirely different subject (p 347). Toohey J held that the corporations power is a “plenary” power but there must be a “sufficient connection” between the law and a constitutional corporation. Whilst acknowledging the incipient circularity in such a test, his Honour explained that it is not enough that the law identify constitutional corporations as a reference point so as to affect the activities of others. The law must operate on the rights, duties, powers or privileges of constitutional corporations in such a way as to evidence a sufficient connection between the law and such corporations (pp 352 - 353). His Honour thought that to require the way in which the law relates to a constitutional corporation to be “significant” may be too narrow a focus (p 352). McHugh J expressed the opinion that to be a valid law under the corporations power, the law must concern something of significance for the corporation, for example, an event which confers a benefit or imposes a detriment on a constitutional corporation, or affects the activities, functions, relationships or business of the corporation. It is not enough for the law to have no greater connection with such a corporation than to “relate” to the business of the corporation (p 371).

26. Brennan, Dawson, Toohey and McHugh JJ held that the challenged legislation did not meet the criteria they had identified as necessary for a law made under the corporations power. Mason CJ, Deane and Gaudron JJ were satisfied that the legislation had been made within the corporations power according to the limits thereof they had defined.

27. The ratio of Dingjan would appear to be that there must be a sufficient or necessary connection between the law made under the corporations power and a constitutional corporation in that the law fixes 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. (See:  Rowe v Transport Workers’ Union of Australia (1998) 160 ALR 66 per Cooper J at 74 – 75.)

28. Do the relevant provisions of Pt VIB fall within the corporations power so defined?

29. The first point to note about Pt VIB is that the object of the Part is “to facilitate the making, and certifying by the Commission, of certain agreements, particularly at the level of a single business”. In fact the operative provisions of the Part appear to extend no further than a single business. Parties to such an agreement, and the nature of the agreement able to be certified, are set out in Divs 2 and 3 of Pt VIB. As noted above, under Div 2 an agreement may be made between a constitutional corporation and an organisation, or between a constitutional corporation and employees of the corporation.

30. In Div 3 (ss 170LN – 170LS) certifiable agreements are those made, inter alia, to settle or prevent industrial disputes or to prevent “industrial situations” giving rise to industrial disputes. An “industrial situation” is defined in s 4(1) as “a situation that, if preventive action is not taken, may give rise to” an industrial dispute as defined in the Act. [emphasis added] The definition of “industrial dispute” in s 4(1) includes a situation likely to give rise to an industrial dispute.

31. Under Div 3, an agreement able to be certified is one made between the employer carrying on a single business and an organisation. It does not include an agreement between an employer and employees. The agreement must be approved by “a valid majority of employees” whose employment will be subject to the agreement.

1. Division 4 (ss 170LT – 170LW) sets out the requirements of an agreement able to be presented to the Commission to be certified, whether made under Div 2 or Div 3. One of the requirements of Div 4 is that the agreement must include procedures for settling disputes between the employer and the employees whose employment will be subject to the agreement, about matters arising under the agreement.

2. With the exception of ss 170M and 170MA in Div 6, the remainder of Pt VIB does not distinguish between a certified agreement made under Div 2 or Div 3. In particular, the provisions of Div 8 relating to the negotiation for certified agreements involving bargaining periods and “protected action” in the course thereof, apply equally to Div 2 and Div 3 agreements. Under s 170M(1) a certified agreement made under Div 2 “binds … all persons whose employment is … subject to the agreement”. Section 170MA provides that a certified agreement made under Div 3 “binds … all members of the … organisation[-] … concerned”. It is to be noted that s 170MA recognizes that under the conciliation and arbitration power, a certified agreement cannot be said to bind a person not a member of the organisation with which the agreement is made. However, under s 170M it is provided that an agreement made between a constitutional corporation and an organisation will bind a person who is not a member of the organisation.

3. Under ss 170MN(1) and (2), 170ND and 170NF an employee whose employment is “subject” to the agreement, who engages in “industrial action” against the employer, is liable to the imposition of a penalty to a limit of $2,000. Ascertaining who is an employee, whose employment is subject to the agreement, would be a matter of construction of the agreement.

4. From the foregoing, what distinguishes that part of Pt VIB, which relies upon the exercise of the corporations power, as legislation with a sufficient or necessary connection with a constitutional corporation? To what events or circumstances is the law directed that impact upon, or have significance for, such a corporation by affecting the activities, functions, relationships or business of a corporation?

5. Principally, the relevant laws in Pt VIB in respect of constitutional corporations are laws affecting the relationship of employer and employee. Whether the test of legislative competence under the corporations power is the discriminatory effect upon such corporations, or the significance of the relationship between the law and such corporations, it may be said that a law empowering, or controlling, a corporation in the relationship it may form with its employees has a necessary or sufficient connection with that corporation by the impact it has upon the activities, functions, relationships or business of the corporation and satisfies the requirements for validity identified in Dingjan. Counsel for Dr Quickenden submitted that the purpose of Pt VIB is to be found in the context thereof which is concerned with the settling of actual, potential, or notional industrial disputes. But Pt VIB may be said to have varying purposes. Division 2, in its operation, is much wider than Div 3 and, in effect, acts as a statutory aid to a constitutional corporation in the conduct of contractual negotiations with its employees, supporting such corporations by statutory provisions which enforce agreements made thereunder (s 178).

6. The validity, however, of s 170M is not so clear. Section 170M purports to make certified agreements binding upon persons who are not members of the organisation with which a constitutional corporation has made an agreement, or upon an employee who has rejected the agreement made by the corporation with other employees. Under ss 170LI(2) and 170LK a corporation may make the agreement with a “valid majority” of persons then employed whose employment will be subject to the agreement. Under s 170LI(1) the agreement must be about matters pertaining to the relationship between a corporation and all persons employed in the business of the corporation whose employment is subject to the agreement. A “valid majority” is defined by s 170LE as noted earlier. In binding an employee to an agreement made by a constitutional corporation with an organisation of which the employee is not a member, or with a group of employees which did not include the employee, the Act may be seen to be extending the operation of the Act to an “outsider” using a constitutional corporation as a mere peg, or reference point, for the legislation. However, the provision delivers a benefit to such a corporation in that it obtains the assurance from the Act that it will be able to impose on all relevant employees employed by it during the course of the agreement, adherence to the obligations in the agreement accepted by those employees who constituted the “valid majority” which made the agreement, or approved an agreement made with an organisation, notwithstanding that the “valid majority” may be a small minority of those employees whose employment is subject to the agreement.

7. According to the tests applied in Dingjan, the provision of such an unusual benefit to a corporation would supply the degree of connection between s 170M and constitutional corporations necessary to attract the corporations power. (See: W J Ford, “Reconstructing Australian Labour Law: A Constitutional Perspective” (1997) 10 Australian Journal of Labour Law 1 at 26 – 30.)

   Trading or financial corporation

8. I turn now to the question whether the University is a trading or financial corporation, and, therefore, a constitutional corporation to which Pt VIB applies.

   a) Trading corporation

9. When the elements of constitutional law were taught in the Faculty of Law of the University forty years ago, it would not have occurred to the Dean of the Faculty, who delivered those lectures, that the institution assisting students to seek wisdom was a trading corporation, much less that the University would assert that it was.

10. The essence of trade remains the buying or selling of goods and services, (Reg v Trade Practices Tribunal; Ex parte St. George County Council (1974) 130 CLR 533 per Barwick CJ at 539; E v Australian Red CrossSociety (1991) 99 ALR 601 at 632) but, in earlier times, conduct in the nature of trade engaged in by authorities established for public purposes, such as Universities and other educational bodies, eleemosynary bodies such as churches and hospitals, and municipal corporations and like public authorities, did not stamp those authorities with the character of trading corporations. (See:  Reg v Trade Practices Tribunal; Ex parte St. George County Council per Menzies J at 553, Gibbs J at 562; Reg v Federal Court of Australia; Ex parte Western Australian National Football League (Incorporated) (1979) 143 CLR 190 (“the Adamson Case”) per Stephen J at 219.)

11. In more recent times the term “trading corporation” has been taken to have wider application and, as Wilcox J stated in E v Australian Red CrossSociety (p 635), it is now accepted that public authorities, established for, and carrying out, public services, may be, at the same time, trading corporations for the purpose of s 51(xx) of the Constitution. In E v Australian Red Cross Society, Wilcox J held that the Prince Alfred Hospital, a public hospital established by statute, was a trading corporation by reason of the extent of its involvement in trading pursuits which included receipt of fees for the delivery of services to patients and receipts from “business activities”.

12. The expansion of trading activities was described by Murphy J in the Adamson Case (at 240) as follows:

    “A few centuries ago trade was mostly centred around primary industry, a generation or so ago mostly around secondary industry; now it is overwhelmingly centred around tertiary industry. Most Australian workers now work in areas of entertainment, information, education, health, tourism, leisure, sport, transport and similar services. Many activities which once would not have been regarded as trade have come to be recognized as trade (see Walker v. Crystal Palace Football Club Ltd. [1910] 1 K.B. 87 and Brimelow v. Casson [1924] 1 Ch. 302.) The commercialization of sport, education, religion, medicine and other social or professional activities is a world-wide phenomenon.”

13. Accordingly, in the Adamson Case and The Commonwealth v Tasmania (1983) 158 CLR 1 (“the Tasmanian Dam Case”) the High Court applied a more extensive meaning for the term trading corporation.

14. In the Adamson Case, the reasons of the majority accepted that the character of a corporation was determined by the activities it undertook and was not restricted to the purpose of the corporation as stated in the memorandum of association. If trading activities were a “substantial” part, or “sufficiently significant proportion”, of the overall activities of the corporation, it could be described as a trading corporation. It was not a requirement that trading be the sole, predominant or principal activity. In that case, the football clubs and the League comprised of those clubs, were found to be trading corporations by reason of the “substantial” trading activities engaged in, the sale of tickets for entrance to football matches, sale of food and beverages, sale of goods and merchandise relating to players and clubs, and the sale of rights to broadcast descriptions of matches in which the clubs participated.

15. The test of sufficiency of trading activities was explained by Mason J (at 234) as follows:

    “Not every corporation which is engaged in trading activity is a trading corporation. The trading activity of a corporation may be so slight and so incidental to some other principal activity, viz. religion or education in the case of a church or school, that it could not be described as a trading corporation. Whether the trading activities of a particular corporation are sufficient to warrant its being characterized as a trading corporation is very much a question of fact and degree.”

16. In the Tasmanian DamCase the opinion of the majority was encapsulated in the reasons of Mason J, who stated that as long as the trading activities of a corporation are a “substantial” part of the corporation’s activities, the fact that a corporation performs functions of a greater degree “in the public interest” will not mean that it does not have the character of a trading corporation. In that case, the sale of electrical power by the Hydro-Electric Commission, on a large scale, attracted the character of a trading corporation to the Commission, notwithstanding that it was a public authority formed for a public purpose.

17. Characterization of a corporation by its activities is not the only determinant however. If a corporation does not carry on any activities by way of trade, it may be a trading corporation if that is an object for which it has been established, or if that has been its previous character. (See:  Fencott v Muller (1983) 152 CLR 570 per Mason, Murphy, Brennan and Deane JJ at 602.)

18. In the instant case, the Annual Reports of the University for the years 1995, 1996 and 1997 show that the University has engaged in activities that may be properly characterized as trading activities. First, the University conducts an annual event known as the Festival of Perth at which numerous artistic and other endeavours are presented to the public, some for attendance free of charge, but most by sale of tickets. The revenue received by the University from sales generated by this enterprise was in the order of $4.5m in 1997. Although the Festival returns little or no profit to the University, it is not the receipt of profit, or the intention to obtain a profit, that makes the sale of goods or services an activity by way of trade. Conduct of the Festival is a significant commercial enterprise. (See:  The Australian Beauty Trade Suppliers Limited v Conference and Exhibition Organisers Pty Limited (1991) 29 FCR 68 at 72.) Sales of publications and services by the University in 1997 yielded approximately $1m and substantially more in preceding years. The material submitted to the Court does not identify the nature of the publications and services sold and if it were restricted to faculty handbooks or course outlines, it may be said to be an activity incidental to the University’s principal purpose having only a slight connection with an activity by way of trade. However, it is the composite effect of various activities in the nature of trade that is relevant, and on its face the sale of publications and services is one of such activities. Under a business name, Winthrop Technology, the University sold computing equipment and services for gross revenue which was $4.8m in 1997 and $7.1m in 1996. Fees and charges collected from “overseas students” amounted to $22.5m in 1997. The “sale” of tertiary education places to such students takes place in a market for such services in which tertiary institutions compete. The 1997 Annual Report of the University states (at 22) as follows:

    “It is difficult to tell at this stage the effect on the demand for student places from overseas. There is a slight downturn in what was previously a very buoyant market for new Asian students, but there is no significant evidence yet of withdrawals by continuing students who are unable to maintain their fee payments.”

19. Under the business name “Currie Hall”, the University charged fees for accommodation services provided for students by the University. The revenue received from fees collected in 1997 was approximately $1.6m. Fees charged for the use of parking spaces controlled by the University in 1997 rendered revenue of $0.8m. 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.

20. In addition to the foregoing, the University is more than a passive investor receiving interest or dividends from investments. It buys and sells properties and obtains revenue as a lessor of a substantial number of properties. Although the source of funds available for investment and the source of proprietorship of property may have been grants, bequests, gifts and endowment of lands, 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. The rental income received in 1997 was $17.5m; the income from the sale of land and property developed for sale was $68m, albeit offset by development costs of $70m.

21. Taken together these elements represent a “substantial part” of the operation of the University. Even if allowance is made for the development costs of land and property developed and sold, the net revenue obtained from those activities represents approximately 18 per cent of the total operating revenues of the University in the 1997 year. The hallmarks of a trading corporation, described in the authorities referred to above, are satisfied by the foregoing facts and for the purposes of the Act the University is a constitutional corporation.

    b)        Financial corporation

22. It is unnecessary to determine whether the University is also a financial corporation but on the facts presented the question may be answered in short terms.

23. The term “financial corporation” describes a corporation which engages in financial activities or, perhaps, is intending so to do. (See:  State Superannuation Board v Trade Practices Commission (1982) 150 CLR 282 per Mason, Murphy and Deane JJ at 305.) A corporation may be a financial corporation if it engages in financial activities in the course of carrying on a primary or dominant undertaking not of that character. It is necessary, however, that the corporation be engaged in an activity such as commercial dealing in finance or provision of management or advisory services in relation to financial matters. (See: Re Ku-ring-gai Co-operative Building Society(No 12) Ltd (1978) 22 ALR 621 per Deane J at 642.)

24. In the Superannuation Board Case 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.

25. In the instant case, as part of its investment strategy, the University places substantial funds on deposit on the short-term money market and in short-term bills. The approximate amount so placed at the end of each of the respective financial years was as follows:

Year	Short-term Money Market	Short-term Bills
1997	$29m	$19m
1996	$24m	$7m
1995	$33m	$1.5m

1. At all times, the principal part of the University’s current assets is committed to such activities and, in 1997, approximately 5 per cent of the total assets of the University were so employed.

2. Although there is a paucity of material which explains how investment strategies are undertaken by the University and what resources are applied to that function, it should be inferred from the level of investment activities that considerable administrative services are devoted to the exercise and that it requires the use of financial skill assisted by sound financial advice.

3. Taken together, the organisation of dealing in money on the short-term money market, and providing finance for short-term bills, and the acts of dealing therein, and the more than incidental role of those activities in the activities and functions of the University generally, lead to the conclusion that the University may also be described as a financial corporation and, therefore, a constitutional corporation for the purpose of the Act.

   c)        Acquisition of property on just terms

4. Under s 51(xxxi) of the Constitution, the Commonwealth may legislate for the acquisition of property on just terms from any person for any purpose in respect of which the Parliament has power to make laws for the peace, order and good government of the Commonwealth.

5. Dr Quickenden submits that the common law rights arising under his contract of employment with the University constitute a “chose in action” and, therefore, property possessed by Dr Quickenden. It was submitted that certification of the agreement under Pt VIB has displaced, or eroded, those rights to the extent that it may be said that acquisition of property has been effected by the operation of that legislation. Dr Quickenden submits that contrary to s 51(xxxi) such an acquisition has not been effected on just terms or, alternatively, that it has not been effected for a purpose in respect of which the Parliament has power to make laws, namely laws for the peace, order and good government of the Commonwealth with respect to trading or financial corporations.

6. Counsel for the Attorney-General accepts that a contractual right, amounting to a “chose in action”, is “property” for the purposes of s 51(xxxi). Counsel for the University submits that Dr Quickenden’s rights or interests under his contract with the University were “in the abstract” and not a valuable right or interest able to be considered as “property” under s 51(xxxi).

7. In so far as the exercise of the power provided by s 51(xxxi) is limited by the requirement to provide just terms, the meaning of “property” in respect of which the power may be exercised, is broad and not restricted. (See:  Mutual Pools & Staff Pty Limited v The Commonwealth of Australia (1994) 179 CLR 155 per Mason CJ at 172, Deane and Gaudron JJ at 184 – 185; Clunies-Ross v The Commonwealth of Australia (1984) 155 CLR 193 per Gibbs CJ, Mason, Wilson, Brennan, Deane and Dawson JJ at 201 - 202.) It extends to “innominate and anomalous interests”. (See: Bank of New South Wales v The Commonwealth (1948) 76 CLR 1 per Dixon J at 349.)

   “It is well established that the guarantee effected by s 51(xxxi) of the Constitution extends to protect against the acquisition, other than on just terms, of ‘every species of valuable right and interest including … choses in action’.”

   (The State of Victoria v The Commonwealth of Australia (1996) 187 CLR 416 per Brennan CJ, Toohey, Gaudron, McHugh and Gummow JJ at 559.)

1. It may be accepted that a contractual right able to be enforced or made the subject of an award of damages for its breach, is a valuable right, or interest, within the meaning of “property” in s 51(xxxi) (The Minister of State for the Army v Dalziel (1944) 68 CLR 261 per Starke J at 290), but it is not necessary that the contractual right be an assignable “chose in action” or enforceable before it becomes “property”. (See:  National Trustees Executors and Agency Company of Australasia Limited v FCT (1954) 91 CLR 540 per Dixon CJ at 558.) The purpose of the protective limitation in s 51(xxxi) is to protect a subject against the loss of valuable rights or interests by exercise of sovereign power on other than just terms and the meaning of “property” is, correspondingly, wider than a jurisprudential concept. (See: Dalziel per Rich J at 286.)

2. As it is, the meaning of property under the general law includes as a “chose in action” a meaning that has been progressively extended to accommodate many forms of personal property not within the original conception. (See:  National Trustees Executors and Agency Company of Australasia Limited  v FCT per Kitto J at 584; Commonwealth v WMC Resources Limited (1998) 194 CLR 1 per Gummow J at 69; Burns Philp Trustee Co Ltd v Viney [1981] 2 NSWLR 216.)

3. If, for the purpose of Dr Quickenden’s submissions, it is assumed that Dr Quickenden’s contract of employment with the University provides valuable rights or interests able to be regarded as “property” under s 51(xxxi), it is necessary to determine if such property has been acquired by operation of Pt VIB.

4. Acquisition is not limited to acquisition of property by the Commonwealth. (See:  P J Magennis Proprietory Limited v The Commonwealth (1949) 80 CLR 382 per Latham CJ at 401 – 402.) Therefore, if it may be said that the University obtains an interest in property by reason of the operation of Pt VIB, it would follow that the interest had been “acquired” for the purpose of s 51(xxxi). However, legislation which adversely affects, or terminates, property does not, in itself, effect an acquisition. (See: Tasmanian Dam Case per Mason J at 145.)

5. If the extinction, or diminution, of “property” of Dr Quickenden does not confer “property” upon the University, no “acquisition” will be effected. (See:  Mutual Pools per Deane and Gaudron JJ at 185.)

6. As noted earlier, s 170M of the Act states that an agreement made and certified under Div 2 binds all persons whose employment is “subject” to the agreement. The effect of that provision, on which Dr Quickenden relies for the argument that his “property” has been “acquired”, is the application to Dr Quickenden’s contract of employment with the University of the term of the Agreement which provides that Dr Quickenden, as an employee of the University to whom the agreement applies, is subject to a system of periodic performance review and to the imposition of “mentoring” at the direction of the University.

7. If the provisions of the Agreement override the terms of Dr Quickenden’s contract of employment with the University, it would follow that the right Dr Quickenden would have to treat such conduct by the University as a breach of contract and obtain relief therefrom by action against the University, would be negated and a corresponding benefit conferred on the University. That is, the University would be enabled at law, by reason of Pt VIB, to resist an action for breach of contract that may otherwise become available to Dr Quickenden if it sought to impose such obligations on Dr Quickenden as part of the employment relationship. Not only the negation of a right in contract would occur, but also the passing of a correlative benefit to the University in respect of that right. The re-ordering of contractual rights of the University and Dr Quickenden would represent an adjustment of property amounting to an acquisition distinguishable from the circumstances in Australian Tape Manufacturers Association v The Commonwealth of Australia (1993) 176 CLR 480 in which the effect of the legislation was to reduce a statutory right of copyright concurrently with removal of liability of others for acts in infringement of that right. Neither the modification of a statutory right nor the relief from liability for breach of a right granted by statute was proprietary in nature. (See: Georgiadis v Australian & Overseas Telecommunications Corporation (1994) 179 CLR 297 per Mason CJ, Deane and Gaudron JJ at 305 – 306; Commonwealth v WMC Resources Limited per Gummow J at 71.)

8. However, on the facts presented, it appears that at material times Dr Quickenden’s contract of employment with the University has been subject to the Tenure Regulations of the University which, in turn, have provided that Dr Quickenden’s employment is subject to the terms of any award or registered agreement pertaining to his employment under appropriate industrial relations legislation. The University, as a term of the contract of employment, has provided that such an agreement, upon taking effect under relevant industrial legislation, will affect the employment contract. That is, Dr Quickenden’s employment is made subject to such an agreement, subject to the precondition that the agreement is registered under relevant industrial legislation. Dr Quickenden submits that until Pt VIB was introduced, no agreement registered under the Act could have pertained to his employment, he not being a person able to be bound by such an agreement as discussed earlier. It was submitted that provisions of the character of the Agreement were not contemplated in the terms of the Tenure Regulations. It was not submitted that anything turned on the Agreement being “certified” rather than “registered”.

9. Dr Quickenden further submitted that to construe the Tenure Regulations as anticipating the terms of the Agreement would deny fundamentally the plain terms of the employment contract. I am satisfied that the terms of Dr Quickenden’s employment are contained in the relevant letter of appointment, the Tenure Regulations and in the terms of the Agreement incorporated by operation of those Regulations. The Tenure Regulations are ambulatory in nature and broad enough to include as part of the terms of Dr Quickenden’s employment, the terms of an agreement certified under Pt VIB.

10. Furthermore, although s 51(xxxi) operates as a constitutional guarantee of just terms, and as a fetter on any legislative power that does not display the intention to exclude it, (Newcrest Mining (WA) Limited v The Commonwealth of Australia per Toohey J at 560, Gaudron J at 568, Gummow J at 595 – 596 and Kirby J at 655), it does not operate indirectly to exclude from another grant of legislative power enactment of an acquisition of property unless the law can be fairly characterized as a law with respect to the acquisition of property. (See: Mutual Pools per Deane and Gaudron JJ at 188.)

11. As indicated earlier, when considering the manner of operation of s 170M, the object of that provision is to adjust the mutual rights of employers that are trading or financial corporations, and their employees. That is, the legislation, as a law with respect to trading or financial corporations, impacts upon the activities of such corporations by, inter alia, adjusting the rights of constitutional corporations and their employees. (See:  Australian Tape Manufacturers Association v The Commonwealth of Australia per Mason CJ, Brennan, Deane and Gaudron JJ at 510.) It is properly characterized as a law with respect to such corporations by regulating the conduct rights and obligations thereof. Incidental to that operation there may be an acquisition of property but it is not a law with respect to the acquisition of property of a person for the purpose of the corporations power. (See: Mutual Pools per Brennan J at 179 – 180, Deane and Gaudron JJ at 188 – 189; Georgiadis v Australian & Overseas Telecommunications Corporation per Mason CJ, Deane and Gaudron JJ at 306 – 307.)

12. The principle is explained by Mason CJ, Brennan, Deane, Toohey, Gaudron and McHugh JJ in Nintendo Company Limited v Centronics Systems Pty Limited (1994) 181 CLR 134 at 161:

    “The cases also establish that a law which is not directed towards the acquisition of property as such but which is concerned with the adjustment of the competing rights, claims or obligations of persons in a particular relationship or area of activity is unlikely to be susceptible of legitimate characterization as a law with respect to the acquisition of property for the purposes of s. 51 of the Constitution [fn: See, e.g., Australian Tape Manufacturers Association Ltd. v. The Commonwealth (1993), 176 C.L.R. 480, at p. 510; Mutual Pools & Staff Pty. Ltd. v. The Commonwealth (1994), 179 C.L.R. 155, at pp. 171-173, 177-178, 188-189; Re Director of Public Prosecutions; Ex parte Lawler (1994), 179 C.L.R. 270 at pp. 285-286; Health Insurance Commission v. Peverill (1994), 179 C.L.R. 226, at pp. 236-238; Georgiadis v. Australian and Overseas Telecommunications Corporation (1994), 179 C.L.R. 297, at pp. 305-308.] The Act is a law of that nature. It cannot properly, either in whole or in part, be characterized as a law with respect to the acquisition of property for the purposes of that section. Its relevant character is that of a law for the adjustment and regulation of the competing claims, rights and liabilities of the designers or first makers of original circuit layouts and those who take advantage of, or benefit from, their work. Consequently, it is beyond the reach of s. 51(xxxi)’s guarantee of just terms.”

13. It follows that if it could be said that an acquisition of Dr Quickenden’s property is effected by operation of s 170M, that section cannot be characterized as a law with respect to the acquisition of property for a purpose in respect of which the Parliament has power to make laws. It is unnecessary to consider whether the requirement to provide just terms under s 51(xxxi) has been met.

14. The motion must be dismissed.

I certify that the preceding seventy-seven (77) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Lee.

Associate:

Dated:             10 September 1999

Counsel for the Applicant:

E M Heenan QC

P J Gethin

Solicitors for the Applicant:

Patrick Gethin & Co

Counsel for the Second Respondent:

P W Johnston

W J Ford

Solicitors for the Second Respondent:

Dwyer Durack

Counsel for the Third Respondent:

R L Le Miere QC

D F Parker

Solicitors for the Third Respondent:

Blake Dawson Waldron

Counsel for the Commonwealth Attorney-General intervening

H C Burmester QC

R D Farrell

Solicitor for the Commonwealth Attorney-General intervening

Australian Government Solicitor

Dates of Hearing:

8, 9, 10 March 1999

Date of Judgment:

10 September 1999