U0203 Dec 681/97 P Print P1962

AUSTRALIAN INDUSTRIAL RELATIONS COMMISSION

Workplace Relations Act 1996

s.170LJ application for certification of agreement

University of Western Australia

and

National Tertiary Education Industry Union

(C No. 60180 of 1997)

UNIVERSITY OF WESTERN AUSTRALIA ACADEMIC, ACADEMIC RESEARCH

AND RELATED STAFF AGREEMENT 1997

Academics and related staff

Educational services

   

COMMISSIONER O'CONNOR

PERTH, 20 JUNE 1997

Certification of agreement - whether the University of Western Australia is a constitutional corporation

DECISION

On 11 April 1997, the University of Western Australia (UWA) and the National Tertiary Education Industry Union (NTEU) made an application for certification of an agreement; the University of Western Australia Academic, Academic Research and Related Staff Agreement 1997, under Division 2 of Part VIB of the Workplace Relations Act 1996.

The application was listed before me on 29 April 1997.

At that time Mr Patrick Gethin sought leave to intervene on behalf on Dr Quickenden, a member of the academic staff of the University, whose terms and conditions of employment the agreement sought to regulate.

Mr Gethin contended that the University of Western Australia was not a constitutional corporation and therefore was unable to avail itself of Division 2 of Part VIB of theAct, as required by s.170LH.

The matter came before me again on 9 May 1997 at which time Mr Le Miere appeared for the University of Western Australia, Mr Ford for the NTEU and Mr Tsaknis for Dr Quickenden.

The interveners outline of submissions were:

1. The intervener submits that an agreement proposed to be made between the University of Western Australia and the National Tertiary Education Industry Union titled the University of Western Australia Academic, Academic Research and Related Staff Agreement 1997 ("Agreement") pursuant to section 170LJ of the Workplace Relations Act 1996 (WA)("Act") is not within the powers conferred by that section for the reason

2. "Constitutional corporation" is defined in section 4 of the Act to mean a foreign corporation, a body corporate that is a financial corporation or a body corporate that is a trading corporation for the purposes of paragraph 51 (xx) of the Constitution. The relevant category for present purposes is whether the University is a trading corporation.

3. The term "trading corporation" is not a term of art or one having a special legal meaning. It is a description or label given to a corporation when it's trading activities form a sufficiently significant proportion of its overall activities as to merit its description as a trading corporation:

4. In Adamson Barwick CJ spoke of making a judgement after an overview of all the corporations current activities, the conclusion being open that it is a trading corporation once it is found that "trading is a substantial and not a merely peripheral activity" (at 208). Murphy J thought a corporation should be characterised as a trading corporation so long as it's trading activities were "not insubstantial" (at 239).

5. The State Superannuation Board v The Trade Practices Commission (1982) 150 CLR

6. The decisions in Adamson and the State Superannuation Board were followed by a majority of the High Court in Commonwealth v Tasmania (the Tasmanian Dams Case) (1983) 158 CLR I per Mason J at 155-157; per Murphy J at 179; per Brennan J at 240 and Deane J at 292-3.

7. The authorities were usefully collected by Toohey J in Hughes v Western Australian Cricket Association (1986) 69 ALR 660 at 67 1-2.

8. It is therefore necessary to determine whether the University carries on trading activities and whether those activities are quite "substantial" or "significant". To do that it is first necessary to determine what constitutes "trade" or "trading".

9. The terms "trade and commerce" are not terms of art. They are expressions of fact and terms of common knowledge:

10. The dictionary definition given to these words variously define them to mean "buying and selling for a profit"; "a business" or "commercial arrangement":

11. Of particular relevance in determining whether an activity of a corporation is in trade or trading will be the commercial nature of the activity:

12. The following are relevant factors in determining the commercial nature of a corporation's activities:

13. After an overview of the organisation' s current activities, its trading activities are not sufficiently "substantial" or "significant" to constitute its a trading corporation within the meaning of s51 (xx) of the Constitution. Accordingly, it is not a constitutional corporation within the meaning of sl70LH of the Act.

14. Further, or in the alternative, if, which is denied, the University is a trading corporation with the constitutional definition, s170LH of the Act is in its real substance not a law about trading corporations:

15. The fact that a law is specifically addressed at a trading corporation is not sufficient to make it a law with respect to a trading corporation:

16. The fact a law to come within s51 (xx) of the Constitution the nature of the corporation to which the law relates must be significant as an element in the nature or character of the law. This means that the fact that a corporation is a trading corporation should be significant in way the law relates to it. Section 170LH is not aimed at the enhancement, impairment or protection of the corporations (University's) trade but rather at the internal employment relationship between the University and it's staff. The trading character of the University is not significant in the way the law operates or relates to the University.

17. In the Tasmanian Dams Case (supra) Gibbs CJ, Wilson and Dawson JJ rejected the possibility that a law applying to a s51(xx) corporation was a valid law merely because the law applied to that corporation regardless of the content or character of the law enacted. In their view, 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: per Gibbs CJ at 117-8: Wilson J at 199-202 and Dawson J at 314-318. Of the other judges Mason, Murphy and Deane JJ were prepared to hold that s51(xx) empowered the Commonwealth to legislate with respect to any activity carried on by a trading corporation regardless of whether the activity was carried on for the purposes of its trading activity: per Mason J at 147-150, 156-7: Murphy J at 179 and Deane J at 268-271. Brennan J expressed no view on this point.

UWA's outline of submissions were:

1. The application to certify the agreement is made under Division 2 of Part VIB of the Workplace Relations Act 1996 (the Act).

2. Section 170L1 of the Act provides that for an application to be made to the Commission under Part VIB Division 2, there must be, relevantly, an agreement made by an employer who is a constitutional corporation.

3. Section 4 of the Act defines constitutional corporation to mean, relevantly, "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".

What is a trading corporation?

4. Trading is the activity of acquiring, or supplying, goods or services, in a commercial or business context. It is not necessary that the corporation should make, or desire to make, a profit.

6. A corporation may be regarded as a trading corporation even though its trading activity is only undertaken in order to facilitate some other activity with which it is primarily concerned.

7. Bodies with a close connection to Government and performing a predominantly public function nevertheless may be a financial corporation or a trading corporation.

8. Corporations which have been held to be trading corporations include:

9. In the Red Cross case, blood transfusion was easily the most significant activity carried out by the Australian Red Cross Society, accounting for some 80% of all its activities [99 ALR 628]. The Society received grants of about $45m from the Federal and State Governments to enable it to provide the blood transfusion service [99 ALR 633]. The Society's total income was about $56m [$45m from government grants and $11 from other sources - 99 ALR 629]. The blood transfusion service was not itself a trading activity. The Society did not sell blood. The Society was held to be a trading corporation on the basis of the money it earned by the sale of goods in the course of fund raising, and that earned by charging for attendance at its First Aid courses. The Society earned about $2m from those trading activities [99 ALR 634]. That was less than 4% of its annual income.

10. In the Red Cross case, the Royal Alfred Hospital was also held to be a trading corporation. The predominant activity of that body was the provision of medical and

Investment income

11. The activities of the University in buying and selling property, renting property and investing are clearly trading activities. The University derived $44.393m in 1995 and $48.048 in 1996 from those trading activities. That investment income represents 16.83% and 16.79% of total operating revenue for 1995 and 1996 respectively.

Other business activities

12. Other business activities, other than the supply of education services, from which the University derived income in 1995 and 1996 are:

Fees and charges for educational services

13. The legislation and guidelines under which the fees charged by the University is regulated does not prevent those fees having the character of payment for services provided. First, the compulsion on the University to comply with the guidelines is economic, the regulation of fees is a condition of receiving Commonwealth grants and not a requirement imposed directly by law - see Higher Education Funding Act 1988. Secondly, the guidelines themselves do not limit the University in such way as to deny the character of the fees as payment for the services and facilities provided in the courses. There are no limits imposed on the number or content of the courses; no limits are imposed on either the promotion of the courses, or the design of courses, or those

14. The level of fees for post graduate courses is effectively unregulated. For overseas students a minimum fee is required which is designed to recover the whole of the cost of the courses. But subject to this minimum there is no other limitation of fee level. The fees recovered in each case are retained by the University.

15. Accordingly, the fees recovered by the University from post graduate and overseas students are recovered as payment for services and the use of facilities and constitute revenue from a trading activity.

16. The University's income from full fee paying overseas students and post graduate students was $14.321m in 1995 and $17.371m in 1996. Full fee paying students comprise 14% of all students.

17. The balance of the revenue derived from "fees and charges" of $19.42m for 1995 and $23.729m for 1996 comprise continuing education and other fees and charges for education services. They are fees for providing services.

18. Fees and charges for education services comprise 7.56% and 8.29% of total operating revenue for the University for 1995 and 1996 respectively.

University as a trading corporation

19. The scale of activities for which fees are received is substantial, and significant both as an absolute sum and as a proportion of the University's total budget. Even if attention is confined to fee paying students, property rental, and the trading activities involved in the Festival of Perth and other business activities described above, the revenue from those activities is $80.193m for 1995 and $86.153m for 1996. That is more than 30% of the University's total operating revenue. That is amply sufficient to constitute the University a trading corporation.

Other trading income

20. Apart from the trading income specifically identified, the University derives income from other trading activities. These are identified in paragraphs 19, 20, 25 and 26 of the affidavit of Alan David Robson.

HECS fees

21. HECS contributions are fees for services. Some students pays HECS contributions directly to the University. That is, they pay a fee for the services rendered to them. Fees paid directly by the students to the University amount to $8.849m. Those students who do not pay HECS contributions directly to the University are funded by the Commonwealth which pays such funded contributions to the University. The University competes for students, incurring considerable promotional costs. The legislative and economic framework by which HECS contributions are exacted does not detract from their character as payments on account of services.

22. HECS payments paid by the Commonwealth to the University amount to $17.318m. That should properly be characterised as revenue derived form trading activities. However, it is unnecessary to resolve this issue of characterisation because the University's level of trading is otherwise so significant as to warrant the characterisation of the University as a trading corporation.

The NTEU's outline was:

1. The present application for certification of the agreement between the University of Western Australia and the National Tertiary Education Industry Union is made in accordance Division 2 of Part VIB of the Workplace Relations Act 1996 (Cth)("the Act").

2. The University of Western Australia ("The University") is a body corporate established by s.6 of the University of Western Australia Act 1911 (WA) and falls within the definition of a "single business" contained in s.l70LB of the Act.

3. The National Tertiary Education Industry Union ("NTEU") is an organisation of employees as defined in s.4(1) ("organisation") of the Act.

4. The agreement in respect of which the present application for certification is made is an agreement in writing between the University and an organisation of employees (the NTEU) about matters pertaining to the relationship between the University and such persons employed by the University as are, as are eligible to be, members of the NTEU.

5. The application for certification of the agreement has been made in accordance with, and satisfies the requirements set out in, s.170LM of theAct.

6. The conditions for certification set out in and mandated by s.179LT of the Act have been met. None of the grounds on which the Commission is able and/or required to refuse to certify the agreement pursuant to s.170LU of the Act arise or apply in relation to the present application. The provisions of s.l70LT of the Act therefore require that the agreement be certified forthwith by the Commission.

7. In opposing certification of the present agreement, the Intervener, in his outline of submission, raises two issues, namely:

8. The second of these submissions - that concerning the alleged unconstitutionality of s.l70LH - is not a matter in respect of which the Commission possess jurisdiction. Although under the Act the Commission is not competent to entertain that particular question the argument which the Intervener puts in his outline of submissions is quite clearly contrary to the views expressed by all the Justices of the High Court, with the sole exception of Dawson J, in their reasons for judgement delivered in Re Dingjan; Ex

parte Wagner (1985) 183 CLR 323. All relevant recent authority suggests that s. 170LH is valid, being a law with respect to s.51 (xx).

9. As to the first issue raised and relied upon by the Intervener - that the University of Western Australia is not a constitutional corporation as defined - the information contained in the affidavit of Alan David Robson sworn on 7 May 1997 and lodged with the Commission on the same day unambiguously establishes that in both character and extent various of the activities carried on by the University are such as to merit the University's description as a constitutional corporation. On the evidence before the Commission (particularly the information which is contained in paragraphs 12, 16, 17, 18, 19, 22, 23, 24, 26 and 29 of Alan David Robson's affidavit), the University is a trading corporation in that it is a corporation whose trading activities form a sufficiently significant proportion of its overall activities as to merit its description as a trading corporation. (See R v Federal Court of Australia; Ex parte WANFL (1979) 143 CLR 190 at 233 per Mason J (Jacobs J concurring); Actors and Announcer Equity Association v Fontana Films Pty Ltd (1982) 150 CLR 168 at 221 per Brennan J.) The trading activities of a corporation need only be substantial or significant (either in an absolute sense or relative to its overall operations) to warrant it being properly classified as a trading corporation. Those activities do not have to be the sole, predominant or even principal activities of the corporation. Nor is it any obstacle to a corporation being a trading corporation that it is a body established for public purposes under a State statute.

10. In light of the evidence filed by the Applicants, and given the limited jurisdiction of the Commission to entertain arguments going to the validity of the statute under which it operates, neither of the issues raised by the Intervener provide a proper basis for the Commission to refuse to certify the agreement.

Mr Tsaknis contended that they relied on two matters in arguing that UWA is not constitutional corporation, as defined in s5l(xx) of the Constitution. Firstly the true character of the corporation having regard to its activities are not sufficiently substantial to constitute it as a trading corporation. That on true characterisation of the corporation it is an educational institution nothing more.

He contended the University is a body corporate under s.6 of the Act pursuant to s.3 of the University of Western Australia Act 1911.

He contended that the essential powers under the Act are granted to the Senate. s.32 which sets out the Powers of the Senate of the University of s.31 and all the powers are related to educational activities of some form or another.

He stated there were two exceptions; the University is given control in investment of the property of the University and a catch all at the end of s.31 that generally the University has power of all other matters not inconsistent with the provisions of the Act.

He referred the Commission to what should be the test of a trading corporation. He referred to what is commonly known as the Adamson case, where he contended their Honours asked

whether the activities of a corporation were "not insubstantial" or whether the activities were substantial activities.

He referred to the State Superannuation case, where the Court adopted the observation of Mason J, where he said:

He then contended that one had to balance the extent of trading activities against the total activities. He disagreed with the figures in Mr Robson's statement as to what were genuine trading activities and what were not, taking the Commission through the Balance Sheet and challenging UWA's description of trading activities and eliminating those areas he said were not trading activities.

Mr Tsaknis conceded some 14% of income as being derived for trading activities and argued this was not so great as to constitute a trading corporation. He contended the substantial activity of the University was not trading, but academic and teaching, and therefore should be found to not be a trading corporation.

Mr Le Miere for the University of Western Australia contended that what Mr Tsaknis was proposing was that the Commission should rely on a legal test in determining whether the University was a trading corporation. He contended that this was reflected in the High Court in at least three of the cases Mr Tsaknis relied on, namely Adamson's case, the State Superannuation case and the Tasmanian Dams case.

Mr Le Miere referred the Commission to the State Superannuation Board and Trade

Practices Commission (1982) 150 CLR at page 282. He also referred to the Red Cross

Society case and Royal Prince Alfred Hospital.

In a recent decision of Vice President McIntyre in relation to Wollongong University, he summarised these cases in the following manner:

Mr Ford for the NTEU submitted that the Intervener subscribed to the correct test but then proceeded to apply the wrong test.

He argues that the Intervener invites the Commission to embark on an exercise of determining the essential character of University. He submitted the determination has to be made in accordance with the current activities of the corporation.

I agree with this view and it is one that all the authorities relied upon subscribe to.

An affidavit lodged by Alan David Robson had amongst other matters a breakdown of the University's trading activities: to wit

In the University's interpretation of the figures, trading activities constitute $86m for 1996 or 30%. The Intervener however, would concede $32.8m or 14%.

I don't think on the face of that concession I need to determine whose calculation is right. Mr Le Miere in his submission contended:

Mr Le Miere then went on to say:

This view sits well also with the recent decision of Vice President McIntyre in the University of Wollongong where he found that institution derived trading income sixteen times the amount that was found to be substantial in the Red Cross case.

BY THE COMMISSION:

COMMISSIONER

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