EDUCANG Ltd v Queensland Industrial Relations Commission and Queensland Independent Education Union of Employees [2006] ICQ 39 (2006) 182 QGIG 491

[Extract from Queensland Government Industrial Gazette, dated 21 July, 2006, Vol. 182, No 13, pages 491-503] INDUSTRIAL COURT OF QUEENSLAND Industrial Relations Act - s. 248(1)(e) - application for declaratory relief and prerogative relief EDUCANG Ltd AND Queensland Industrial Relations Commission and Queensland Independent Education Union of Employees (C/2006/35) PRESIDENT HALL 10 July 2006 DECISION On or about 6 April 2006, the applicant terminated the employment of a member of the second respondent, an organisation of employees under the Industrial Relations Act 1999. On 23 April 2006, the second respondent filed an application for reinstatement on behalf of the member in the Queensland Industrial Registry seeking relief pursuant to s. 74 of the Act. On 26 April 2006, the Deputy Industrial Registrar issued a sealed Directions Order in the following terms (formal parts omitted): "AFTER READING the Application filed in the above matter filed on 24 April 2006, IT IS ORDERED: 1. That the parties be the Queensland Independent Education Union of Employees on behalf of Sandie Thorncarft, APPLICANT, and EDUCANG Ltd Employment, RESPONDENT. 2. That the Applicant immediately serve a copy of the Application and this Directions Order on the Respondent. 3. That a Conference be held before Deputy President Swan, at the Queensland Industrial Relations Commission, Central Plaza 2, Floor 13, 66 Eagle Street, (Cnr Elizabeth and Creek Streets), Brisbane, on 11 May 2006, commencing at 09:00 AM. 4. Should either party wish to be represented by an Agent, a Form 22 - Notice of appointment of agent or in the case of a Solicitor Form 24 - Lawyers notice of address for service must be filed in the Industrial Registry at least 24 hours prior to 11 May 2006. 5. That any other Directions stand over.". The applicant's argument assumes that the Directions Order was issued for the Queensland Industrial Relations Commission in the discharge of the obligation imposed upon the Commission by s. 75(1) to hold a conference to attempt to settle an application under s. 74. Subsequently, by a facsimile of 5 May 2006, the Industrial Registrar informed the applicant and the second respondent that the listing for 11 May 2006 was cancelled and that the matter had been given an amended listing of 9:00 a.m. on 17 May 2006. The conference did not take place and has yet to occur. Given the filing of the application now before this Court on 15 May 2006, the decision to refrain from holding the conference is understandable and appropriate. By s. 16(1), the Workplace Relations Act 1996 (Cwth) expresses an intention to apply to the exclusion of, inter alia, a state industrial law that would otherwise apply in relation to an employee or employer. By s. 4(1), the Industrial Relations Act 1999 is a state industrial law. It is the effect of the definition of "employee" at ss. 4(1) and 5, and of "employer" at ss. 4(1) and 6, that, if the applicant is a "constitutional corporation", the second respondent's member was an employee of the applicant. By s. 4(1) "constitutional corporation" means a corporation to which paragraph 51(xx) of the Constitution applies. A critical and controversial issue on EDUCANG Ltd's application for declaratory relief and a prerogative order of prohibition is whether the applicant is a "trading corporation" within s. 51(xx). There is not, as I understand the matter, any controversy that, if the applicant is a "trading corporation", s. 643 deals with the matter of termination in such a way that in consequence of s. 16(1), Chapter, Part 2 of the Industrial Relations Act 1999 is excluded. EDUCANG Ltd is a Public Company limited by guarantee under the Corporations Law. Its commencement date was 27 July 1993. At that time its name was Forest Lake College Ltd. The change of name occurred on 27 February 1998. EDUCANG Ltd's Australian Company Number is 060 936 576. The members of EDUCANG Ltd are the Corporation of the Synod of the Diocese of Brisbane and The Uniting Church in Australia Property Trust (Q). EDUCANG Ltd is the vehicle by which the members seek to give effect to a Joint Venture Members' Agreement last reworked on 18 August 2005. In describing EDUCANG Ltd as the vehicle for the attainment of the joint venturer's purpose, I in no way overlook that EDUCANG Ltd has an artificial legal personality entirely distinct from that of its members and that the purpose of EDUCANG Ltd is to be gleaned from its own Constitution. So much has long since been settled. In Gas Lighting Improvement Co v Inland Revenue Commissioners [1923] AC 723 at 740-741, Lord Sumner said: -- 1 of 12 -- 2 "It is said that all this was machinery, but that is true of all participations in limited liability companies. They and their operations are simply the machinery, in an economic sense, by which natural persons, who desire to limit their liability, participate in undertakings which they cannot manage to carry on themselves, either alone or in partnership, but, legally speaking, this machinery is not impersonal though it is inanimate. Between the investor, who participates as a shareholder, and the undertaking carried on, the law interposes another person, real though artificial, the company itself, and the business carried on is the business of that company, and the capital employed is its capital and not in either case the business or the capital of the shareholders. Assuming, of course, that the company is duly formed and is not a sham (of which there is no suggestion here), the idea that it is mere machinery for effecting the purposes of the shareholders is a layman's fallacy. It is a figure of speech, which cannot alter the legal aspect of the facts.". That passage, I should add, was adopted by Kitto J in Hobart Bridge Co Ltd v Federal Commissioner of Taxation (1951) 82 CLR 372 at 385. The justification for going to the Joint Venture Members' Agreement is to avoid construction of EDUCANG Ltd's Constitution unilluminated by its origin and history, compare discussion by Burchett J in Short v F W Hercus Pty Ltd (1993) 40 FCR 511 at 517 to 520. Importantly, the Joint Ventures Members' Agreement articulates the main purpose of EDUCANG Ltd to be the conduct of "Colleges" on the land specified in Schedule 1. The "Colleges" are defined to mean Forest Lake College, The Springfield College, Mary McConnell School, The Lakes College and "any other school established and owned by the Company from time to time", i.e. the agreement contemplates that additional Colleges may be established in the future. Whilst the Constitution of EDUCANG Ltd, to which I shall shortly turn, and to which the Joint Venture Members' Agreement expressly refers, makes clear that EDUCANG Ltd is no mere "economic mechanism", it is plain from clause 5.1 of the Agreement that the joint venturers always envisaged that "school fees" would be a principal revenue source, and clear from clause 3.3 that participation by the Colleges in commercial activities was envisaged. To the Constitution of EDUCANG Ltd I now turn. A convenient starting point is clause 3, viz. "application of income and property" and clause 4, viz. "no distribution to members". There is an explicit bar* on the payment of dividends, bonuses or other such payments to the members and an obligation to utilise the income and property of the Company, howsoever derived, solely in the promotion of the objects of the Company. [*Payment of interest at prevailing commercial rates on loans by members and payment of reasonable and proper rent to a member for the lease of premises is accepted. The Joint Venture Members' Agreement contemplates arms length loans by members.] The general objects of the Company appear at clause 7. It is useful to reproduce clause 7 in whole: "7.1 General Objects The Company will conduct co-educational schools for the purpose of developing a community of faith based on a belief in God and a Christian way of life. In particular, the aims of the Company are: (1) Spiritual Awareness To promote the spiritual growth of the individual in a school community which is founded on Christian principles. (2) Scholastic Attainment To use its best endeavours to:  ensure that each student strives to achieve his or her maximum level of scholastic attainment;  ensure that emphasis is placed on literacy and numeracy and the ability to make sound judgments based on sound factual knowledge; and  provide opportunities for the student to develop attitudes and skills that will factilitate lifelong learning. (3) Personal growth To:  provide a balanced programme of cultural, intellectual, physical and spiritual activities in order to assist the growth of the whole person; and  encourage such qualities as honesty, tolerance and mutual respect. (4) Service To:  develop a sense of responsibility and concern for others, both within the school and in the community at large; and  develop an understanding and appreciation of a community. -- 2 of 12 -- 3 7.2 Regard to general aims In discharging their respective duties, the directors and the CEO will have regard to the general aims and objectives of the Company. 7.3 Affiliation and arrangements Subject to the prior approval of the Archbishop-in-Council and the Synod, the Company may: (1) affiliate or enter into formal relations with other school governing bodies, educational institutions or associations having similar objects and purposes as the Company and to become a member of and co- operate with any such bodies; and (2) enter into any arrangements with any government or authority, municipal, local or otherwise that may seem conducive to the Company's objectives or any of them and to obtain from any such government or authority any rights, privileges and concessions which the directors may think desirable to obtain and to carry out, exercise and comply with any such arrangements, rights, privileges and concessions. 7.4 The Company must pursue charitable purposes only and must apply its income in promoting those purposes.". In light of the authorities to which I shall subsequently turn, it is useful to note that whilst I accept that the purpose of EDUCANG Ltd may be summarised as the conduct of co-educational schools for the purposes of developing a community of faith based on a belief in God and a Christian way of life, clause 7 is plainly susceptible of a construction which distinguishes between the immediate purpose of the Company and the ultimate purpose sought to be achieved. The immediate purpose is the conduct of "co-educational schools". It is by that means that the Company seeks to develop a community of faith based on a belief in God and a Christian way of life (given the identity of the members, a less than surprising aim). Further indication that the Company is not about a simple exercise in proselytizing is to be found in clause 63.2 which deals with the matter of "enrolment preferences": "63.2 Enrolment preferences The Board may prescribe criteria and procedures which limit enrolment to or give preference of enrolment to: (1) Christians including those adhering to any one or more Christian denominations determined by the Board from time to time; (2) children living within any given region defined by the Board from time to time; (3) children for whom a College is the most convenient non-Government school or college to their place of residence; (4) children who are brothers or sisters or sons or daughters of current or previous students of the Colleges; or (5) children on any other grounds which the Board may consider reasonable.". When clause 63.2 is read with clause 3 of the Mission Statement which provides, "the College will be open to all children insofar as they subscribe to the College's philosophy, irrespective of their ethnic or religious origins," it is apparent that there is a targeting of students drawn from families predisposed to the values which the Company seeks to develop. Doubtless, it is a purpose of the Company to nurture and reinforce what may be perhaps fledgling values - indeed, so much appears from the statement of "College Objectives" - but the operation of the co-educational institutions are in part by way of providing a service to and targeting families interested in procuring a particular type of educational environment for their children. And, as in the case of the Joint Venture Members' Agreement, the Constitution makes clear at 64.1 that fees will be paid for the services provided. Clause 8, which deals with the powers of the Company, is of some interest. Whilst the Company does not have the power to issue shares, it has all the powers of an individual and a body corporate, though being limited to the exercise of those powers only to pursue the objects of the Company, see clause 7. Clauses 8.3 and 8.4, which deal with the basis upon which business may be transacted, the preparation of accounts, borrowing and investment, plainly contemplate participation by the Company in financial transactions. Clause 8.4 is of particular interest. It provides that the Company may (subject to the passing of a unanimous resolution at a meeting of members beforehand): "...change the nature or scope of the Company's mission of the church in education or its business as carried on for the time being to a material extent (including cessation) or commence any new business not being ancillary or incidental to such business (for the avoidance of doubt a proposal to establish any commercial trading operation with any of the Colleges will require the prior approval in writing of the members).". Once again one may notice the difference between the ultimate purpose or mission of the Company and the business activity by which it seeks to achieve that ultimate purpose. [It also appears that the Constitution treats the existing business activity of the Company as being other than a commercial activity. Though I must confess that it seems to me that that notion sits ill with clause 92.1(1)(d) which entrusts the Company with the function of marketing its business.] -- 3 of 12 -- 4 It must be conceded that EDUCANG Ltd's Mission Statement places greater emphasis on what I have chosen to describe as EDUCANG Ltd's ultimate purpose. In his written submissions, Counsel for the second respondent conveniently summarises the documentation as follows: "24. The applicant's Mission Statement, under the heading of 'Our Authentic Purpose', provides: 'To lead in providing:  high quality, inclusive, holistic education; and  appropriate resources for other core functions of Christian family life, whilst  embracing Scriptural values in a living faith environment;  adapting the best practices of extraordinary schools; and  integrating modern technologies.' 25. The applicant has a Mission Statement. Under the heading of 'Philosophical Statement' the Mission Statement provides: 'EDUCANG Limited will operate co-educational day schools, which will provide a holistic approach to education and individual development of students based on the spiritual traditions of the Anglican Church of Australia and The Uniting Church of Australia. Such schools will be Christ-centred and will seeks to implement the following aims: 1. The College will be based on Christian principles and values. 2. Christian commitment and positive attitude to the philosophy of the College will be of primary importance in the appointment of staff. The Principal will be a Communicant member of either the Anglican Church of Australia or The Uniting Church in Australia. 3. The College will be open to all children insofar as they subscribe to the College's philosophy, irrespective of their ethnic or religious origins. 4. The College will develop a stimulating environment to foster the whole person. Students will be encouraged to develop spiritually, morally, intellectually, socially, emotionally and physically through a balanced and integrated program of curriculum, co-curricular and extra-curricular activities. 5. The College will foster the philosophy of equal opportunity throughout the students' formative years. 6. The College will encourage academic excellence by the development of the intellectual potential of each student. The College proposes to be in the forefront of educational development. 7. The College will provide those cultural, sporting skills and interests for students which would promote a love of the arts and physical fitness allowing them to maximise their leisure time during their school and later adult life. 8. Strong bonds will be encouraged between staff and parents whose role in the education of their children will be recognised with the fostering of the genuine human relationships among students, staff, parents and the whole school family. 9. Emphasis will be on the promotion of a climate which will engender tolerance and harmony, together with a controlled freedom that will allow students to develop a sense of social responsibility and to develop into dignified, poised and gracious young men and women. 10. The College will seek to establish strong links with the wider community through the co-operative effort of the Anglican and Uniting Churches, the College's governing body, parents and friends and support groups, staff and students.' 26. Under the same heading of 'Philosophical Statement' and under the sub-heading of 'College Objectives', the following objectives are also set out: 'College Objectives Spiritual Development 1. The aim of the Religious Education programme will be to demonstrate that the ethos of Anglicanism and that of The Uniting Church is perceived as a living faith; 2. The living faith will be experienced by students in concrete ways by relating their own real life activities to the teachings of Christ, which in turn leads to the faith dimension; 3. Through gradual introduction to the Sacraments, students will be able to form bonds of love, friendship, loyalty and compassion for others; 4. The role of prayer, both formal and informal, will be central to the Religious Education Programme. Students will be guided in the different types of prayer such as Intercession, Thanksgiving, Meditation and moments of silence during which a deepening awareness of God is realised; -- 4 of 12 -- 5 5. The College will provide opportunities for students and staff to gather together in celebration of the Holy Eucharist; 6. A Religious Education Co-ordinator will be responsible for the implementation of a dynamic and comprehensive programme. Educational Objectives 1. Students will be encouraged to maximise their innate talents during the process of becoming literal and numerate. Educational opportunities will be provided to enable students to attain their potential; 2. An integral part of the curriculum will be concerned with effective communication, both verbal and non- verbal; 3. Attention will be given to the acquisition of efficient learning and study skills, organisation of information, problem solving techniques, decision-making processes, critical and lateral thinking, developing an argument, and the recognition and detection of bias; 4. As a means of attaining academic excellence, students will be expected to demonstrate consistent effort during time-on-task, punctuality regarding completion of assignments and acceptable presentation of work; 5. Literacy in modern technology (eg., computing) will be regarded as essential for the student with specialisation available for senior school; 6. A supportive environment where the developmental stage of the student is quintessential will be created in classrooms to foster social and emotional security and positive self image; 7. Students will be encouraged to be creative and innovative in all subjects; 8. As part of the social learning, students will be expected to attend to their appearance, neatness of dress, etiquette, deportment and modes of speech; 9. Academic staff will encourage innovative learning opportunities with a Pre-Grade 1-12 developmental environment. Within such an environment it will be recognised that there are individual styles and rates of learning. Teachers and students can expect support from a Resource Specialist for:- o Remedial work with slow learners; and o Programmes for the gifted and talented students. Personal Development 1. The College will offer pastoral care based on Christian beliefs; 2. The College will offer a counselling service to assist students with personal guidance, problems, subject choices, careers and work experiences; 3. The Student Counsellor will assist in developing integrated programmes in Human Relationships Education throughout the College. Some of the topics covered will include self esteem, problem solving and clarification of values. All personal counselling will be strictly confidential; 4. The Christian value of self-discipline is to be perceived as an essential element in the growth of a socially responsible individual; 5. Rules will be formulated to provide a secure, non-threatening disciplined environment in which all students can participate fully in every area of College life; 6. Students will be expected to adhere to the College rules within the classroom, in College groups and off campus; 7. Students will be expected to demonstrate a concern for the welfare of others, a sensitivity to the feelings of others and a respect for the property of others.' ". It would be wilful judicial blindness to ignore such clearly expressed and repetitive enunciation of purpose in determining the nature of a company established by significant "limbs" of two major Christian Churches. However, it has to be said that Mission Statement rather assumes the existence, staffing and pupilling of co-educational schools, and instead goes to the conduct of the schools and the reasons for their creation. Certainly, there is nothing in the materials to indicate that the immediate purpose of EDUCANG Ltd is other than the establishment and conduct of co-educational schools. Before moving to the activities of EDUCANG Ltd I should note that, because it must be, EDUCANG Ltd is accredited as a non-state school under the Education (Accreditation of Non-State Schools) Act 2000. Such a school must be conducted on a "not for profit" basis and have no direct or indirect connection with a "for profit" entity that could reasonably be expected to compromise the independence of the school when making financial decisions. It is useful to record also that pursuant to reg. 6 of the Education (Accreditation of Non-State Schools) Regulations 2001, a non-state school must have a Statement of Philosophy and Aims adopted by its governing body that is used as a basis for the school's education programme and a guide for the school's educational and organisational practices. That requirement (perhaps) gives rather a different gloss to the Mission Statement. One must also note the Education (General Provisions) Act 1999 which provides for compulsory schooling for children of school age at either as state educational institution or an accredited non-state school. The applicant carries the burden of attaching the epithet "trading -- 5 of 12 -- 6 corporation" to a not for profit organisation operating in a regulated (and perhaps distorted) market where, as shall be seen, pupils enjoy government subsidies. I turn now to some factual matters. The schools operated by EDUCANG Ltd are Forest Lake College, The Springfield College, The Lakes College, Mary McConnell School and Forest Lake College International Centre. In each case the school name is a registered business name of EDUCANG Ltd. Each of Forest Lake College and The Springfield College is accredited to deliver pre-school, primary and secondary education. The Lakes College is accredited to deliver pre-school and primary education. EDUCANG's intention is to progressively add years until the full compliment of classes through to year 12 are provided. The Mary McConnell School is accredited to provide special needs education. In addition to providing special needs education it also provides its students with access to the facilities at Forest Lake College and The Springfield College. The Forest Lake College International Centre provides English language intensive courses for overseas students approved by the State and Federal Government. Upon successful completion of the school preparation programme, the overseas students may enter either Forest Lake College or The Springfield College as full- fee paying international students. Approximately 90 such students are currently enrolled. The fees for full-fee paying international students, I should add, are more than double those of domestic students in the case of Forest Lake College and more than triple those of domestic students at The Springfield College. The fees for both domestic and overseas are in evidence. It is sufficient to say that for each student the fees are sizeable. Some ancillary services marketed by EDUCANG Ltd are described at paragraphs 28 to 32 of the Affidavit of Joseph Steven McMeniman: "28. EDUCANG has marketed an excellence in golf program to overseas students. This golf program is conducted in conjunction with A Game International Golf Academy. There are currently no students enrolled in this program. 29. EDUCANG also provides study tours for overseas students as part of FLCIC. Under these tours overseas students undertake a short term intensive English language course and a process of cultural immersion for a period of between 1 and 4 weeks. The students involved in these study tours pay fees for the course and homestay accommodation. These study tours are of much shorter duration than our ELICOS program and also involve a variety of Australian cultural experiences. Up to 400 students a year enrol in study tours with us. 30. EDUCANG's homestay program is directly related to overseas study tours and full fee paying international students. As part of this program, EDUCANG provides homestay accommodation with local families to overseas students. EDUCANG employs a Homestay Co-ordinator who monitors the delivery of the homestay program. EDUCANG charges its student a fee for the provision of homestay. EDUCANG pays an allowance to the home stay parents. EDUCANG covers the cost of administration of this program by recovering a margin from the client. 31. EDUCANG has previously undertaken adult education as part of its Life Long Learning (LLL) program. This program utilised the facilities of Forest Lake College and provided a number of skill based courses. EDUCANG was accredited as Registered Training Organisation to deliver these courses. This program operated for a number of years but did not provide a return to the organisation and in about early 2005 this program ceased. Should we wish to revitalise the program it could be done using Forest Lake College's status as a Registered Training Organisation. 32. EDUCANG provides a [sic] After and Before College Care (ABCC) service for parents at The Springfield College and The Lakes College. This service is intended for parents who have enrolled their children in those Colleges. These services are offered on a fee for service basis. Forest Lake College also provides After and Before College Care but this services is currently undertaken by the Forest Lake College Parents and Friends Association. Negotiations between EDUCANG and the P&F are pending to have the provision of that service transferred to EDUCANG. When transferred to EDUCANG the ABCC services at Forest Lake will also be provided by EDUCANG on a fee for service basis. I am aware than many other independent Schools provide a full child care facility as part of their services. I believe that there is potential for EDUCANG's After and Before College Care Programs to evolve into such a facility.". Each of EDUCANG Ltd's schools operates as a separate revenue and cost centre. However, the Affidavit of Mr McMeniman, previously referred to, happily aggregates the operating income of EDUCANG Ltd (as a whole) for the 1 January to 31 December 2005 financial year. I reproduce below Mr McMeniman's summary and the notes necessary to an understanding of the summary. However, in light of the remarks of Lee J in Quickenden v O'Connor and Others (1999) 91 FCR 59 at 60, in determining whether a corporation is a trading corporation, I should first interpose the unchallenged evidence of Mr McMeniman that each of the Colleges utilise marketing and promotion material developed by EDUCANG Ltd to advertise its activities (copies exhibited to the Affidavit) and that through the Forest Lake College EDUCANG Ltd owns and operates an FM radio station to promote the school in the local catchment area. It turn now to Mr McMeniman's summary (and notes): -- 6 of 12 -- 7 "35. EDUCANG's operating income for the year ended 31 December 2005 can be summarised as follows:- Actual $ Percentage of Total Tuition and other fees 8,175,510.00 35.8% Full fee paying international student fees 2,028,198.00 8.9% Overseas study groups 300,098.00 1.4% Homestay income 849,437.00 3.7% State recurrent grants 2,823,080.00 12.4% Commonwealth recurrent grants 7,077,407.00 31.0% Other miscellaneous grants 224,336.00 1.0% Other income 339,704.00 1.5% Trading accounts income 987,585.00 4.3% 36. Tuition and other fees are tuition fees received for domestic students. This includes gross tuition fees (less family and other fee discounts and scholarships), building fund income and receipts for music hire. The receipts for music hire is revenue received by EDUCANG for renting musical instruments to students. 37. Full fee paying international student fees are fees paid on behalf of overseas students and includes FLCIC and mainstream school fees, A game income and other receipts. 38. Overseas study group income is fees generated by overseas students undertaking study tours at EDUCANG. 39. Homestay income reflects income received from overseas students and those involved in study tours in placing them in homestay accommodation. 40. State recurrent grants are grants received by EDUCANG on an annual basis from the State Government. These grants are based on Enrolment census date of students at each campus, with a base grant payment per student. 41. Commonwealth recurrent grants are grants received from the Commonwealth Government. These grants are generally based on the enrolment census data of students at each campus. We are required to collate and forward to the Commonwealth census data showing the collection districts which students live in. The Commonwealth then uses this data to determine a weighted average and allocate an SES score. This score is then utilised to determine a level of funding based on the number of students. An SES score is determined for each Campus. The higher the score received, the lower the level of funding per student. EDUCANG's Campuses have different SES scores. For example, Forest Lake College has an SES score of 105 while The Springfield College has an SES score of 98. There are some additional grants based on the ascertainment levels of special needs students. The Mary McConnell School receives special education and literacy and numeracy grants. 42. Other miscellaneous grants are grants received from either the State or Federal Governments which are not of a recurrent nature. These grants are generally for a special purpose and are applied by individual teachers or members of staff to support a specific aspect of their program. 43. Other income refers to all income sources not included under another heading. It includes interest earned on short term funds investments and transactional bank account interest earnings, bus and transport income from both student fares and bus charters to third parties, application fees paid by parents at the time of submitting an application to enrol, forfeited enrolment deposits where parents withdrew a student without providing sufficient notice, bad debts recovered, inter College charges for the use of assets or resources owned by one College but used by another, and sundry income. 44. Trading accounts income includes income received from After and Before College Care, uniform shops, book shops, canteens and vending machines and private tuition fees.". Section 51(xx) of the Constitution vests the Federal Parliament with power to make laws for the peace order and good government of the Commonwealth with respect to "Foreign corporations, and trading or financial corporations formed within the limits of the Commonwealth". The critical issue is whether EDUCANG Ltd is a "trading corporation". There is no dispute that EDUCANG LTD was "formed within the limits of the Commonwealth". Judicial analysis of the meaning of "trading corporation" at s. 51(xx) commenced with the decision in Huddart Parker and Co Pty Ltd v Moorehead (1909) 8 CLR 330 at 393 whereat Isaacs J said (emphasis added): "It is always a preliminary question whether a given company is a trading or financial corporation or a foreign corporation. This leaves entirely outside the range of Federal power, as being in themselves objects of the 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; a strong circumstance to show how and to what extent the autonomy of the States was intended to be safeguarded. The federal power was sufficiently limited by specific enumeration, and there is no need to place further limits on the words of the legislature.". -- 7 of 12 -- 8 The matter was revisited in Reg v Trade Practices Tribunal and Others; Ex parte St George County Council (1974) 130 CLR 533. The St George County Council was created and incorporated under Part XXIX of the Local Government Act 1919 (NSW). It was an overarching body discharging functions within and for the benefit of what would otherwise be separate local government areas. The functions were functions relating to the supply of electricity and the supply and installation of electrical fittings and appliances. It was the conduct of the Council in or about the sale of electrical water heaters which had led the Commissioner for Trade Practices to institute proceedings under the Restrictive Trade Practices Act 1971. The issue before the High Court was whether St George County Council was a trading corporation within the meaning of s. 51(xx). The majority of the Court, composed of McTiernan, Menzies and Gibbs JJ held that the St George County Council was not a trading corporation. Barwick CJ and Stephen J dissented. It is sufficient to reproduce passages from the decisions of Gibbs J and Barwick CJ because it is the division of opinion between those members of the Court to which all subsequent debate may reasonably be traced. At pp. 562 to 563, following upon a reference to the opinion of Isaac J (reproduced above), Gibbs J said (footnotes deleted, emphasis added): "It is unnecessary to decide whether or not Isaacs J. was right in saying that a purely manufacturing company, or a mining company, is not a trading corporation, and of course the correctness of all his views as to the scope of the power conferred by pl. (xx.) does not now fall for consideration. Whether or not it is necessary to place 'further limits' on the words of the placitum, I completely agree that the power is limited to the corporations specifically enumerated, since the only possible reason for expressly referring to three kinds of corporation was to exclude all other kinds from the range of the power. In short, the power given by s. 51(xx.) is not in respect of trading, and it does not extend to corporations generally; a corporation, even if trading, is not within the power unless it is a foreign, trading or financial corporation. A trading corporation is one formed for the purpose of trading. However, as I have indicated, the mere fact that a corporation is trading does not mean that it is a trading corporation. It is necessary to determine the true character of the corporation, upon a consideration of all the circumstances that throw light on the purposes for which it was formed. Thus there is no difficulty in holding that the fact that a corporation carries on some trade which is merely incidental or ancillary to the fulfilment of its main purpose does not give it the character of a trading corporation. In the course of argument the learned Solicitor-General for New South Wales gave some examples of corporations which, although engaged in some trading activities, clearly could not be described as trading corporations, e.g. an eleemosynary corporation such as a hospital, which conducts a kiosk or a restaurant for the convenience of visitors, an educational corporation which conducts a tuckshop at its school or a municipal corporation which sells literature containing information about the municipality. However, in the present case the activities of the County Council which the Commissioner asserts are trading activities are not subordinate or subsidiary to some other dominant activity. The County Council was formed for the purpose of conducting what the Act itself describes as a 'trading undertaking' - namely, the supply of electricity and the supply and installing of electrical fittings and appliances. The conduct of that undertaking is its main, if not its only, activity, and, according to the submission advanced on behalf of the Commissioner, the County Council in engaging in that activity is engaging in trade. Therefore, it was said, the County Council is a corporation which was set up to trade and does in fact trade and is a trading corporation. I would agree that the activities of the County Council can properly be described as trading. The supply and installation of electrical fittings and appliances, with a view to profit, would of course be a form of trading. The supply and installation of electrical fittings and appliances, with a view to profit, would of course be a form of trading. Further, since trade is not limited to the buying and selling of taxable commodities, the supply of electricity for profit would also constitute trading: cf. Bank of New South Wales v The Commonwealth. In the present case the County Council must endeavour so to conduct its undertaking as to avoid making a profit. However, it has been held in a number of cases that, although in general trade is carried on with the intention of making a profit, it is not essential to the carrying on of a trade that the persons engaged in it should make or desire to make a profit.". At pp. 542 to 543 Barwick CJ articulated the contrary view as follows (emphasis added): "The power quite obviously, in my opinion, is given to the Parliament to enable it by legislation to control amongst other things at least some of the activities of corporations which fall within its description. It seems to me that the activities of a corporation at the time a law of the Parliament is said to operate upon it will determine whether or not it satisfies the statutory and therefore the constitutional description. Thus, in my opinion, the identification of the corporation which falls within the statutory definition will be made principally upon a consideration of its current activities. To say that a corporation's description for the relevant purposes will be determined by its activities does not mean, of course, that a corporation which to any extent engages in trade is a trading corporation. It is evident that the legislative power given by s. 51(xx.) is not a power to legislate with respect to trading. It is a legislative power with respect to some corporations. But a corporation whose predominant and characteristic activity is trading whether in goods or services will, in my opinion, satisfy the description: and a corporation which does nothing but trade and, if it matters, was incorporated so that it could trade, i.e. exercise the trading powers of the constituent local government councils, is, in my opinion, properly described as a trading corporation within the constitutional power. -- 8 of 12 -- 9 It seems to me that the reason why a corporation trades as its sole or predominant and characteristic activity is irrelevant to the description of the corporation for present purposes, that is to say, the ends which such a corporation seeks to service by trading are irrelevant to its description. As I have indicated, the purpose of the grant of legislative power includes the control of the corporate activities of the corporation: it is not so concerned with the motives which prompt those activities, nor the ultimate ends which those activities hope to achieve. If, upon that consideration, the corporation can fairly be described by reason of those activities, their extent and relative significance in the affairs of the corporation as a 'trading corporation' it will, in my opinion, be nothing to the point that it is also a government or State or municipal corporation. The effect of the of the trading activities of such a corporation upon and in the community will not be lessened or necessarily affected by the fact that it is a State or municipal instrumentality.". And earlier His Honour said: "Though profit-making is perhaps not of the essence of trading, it is a usual concomitant..." (at 539). The meaning of the expression "trading corporation" was reconsidered a mere five years later in Reg v The Judges of the Federal Court of Australia and Another; Ex parte the Western Australia Football League (Incorporated) and Another ('Adamsons Case') (1979) 143 CLR 190. Only Gibbs J adhered to the view taken by the majority in Reg v Trade Practices Tribunal; ex parte St George County Council (1974) 130 CLR 533. Stephen J (with whom Aicken J concurred) joined Gibbs J in dissent because, whilst adhering to the minority view in Reg v Trade Practices Tribunal; ex parte St George County Council (1974) 130 CLR 533, his Honour considered that in the application of that test to the facts the prosecutors were not trading corporations. There were differences in the views expressed by the majority (Barwick CJ, Mason, Jacobs and Murphy JJ), but all were prepared to take a more expansive view than the minority in Reg v Trade Practices Tribunal; ex parte St George County Council (1974) 130 CLR 533. The critical passages in the decision of the Chief Justice appear to be (emphasis added): "Whilst it is in a sense true to say that the constitutional power is not a power to legislate with respect to the trading activities of corporations the constitutional description cannot, in my opinion, properly be limited to the making of laws with respect to corporations which were formed as trading corporations, that is to say, as corporations the sole or predominant purpose of whose incorporation was to trade, however widely that word might be defined." (at 207 to 208). "I remain of the firm conviction that for constitutional purposes a corporation formed within the limits of Australia will satisfy the description "trading corporation" if trading is a substantial corporate activity. Its activities rather than the purpose of its incorporation will designate its relevant character. But so to say assumes that such trading activities are within its corporate powers, actual or imputed. It is the corporation which satisfies the description which is the subject matter of the power. Thus its corporate capacity or incapacity cannot be ignored. But once it is found that trading is substantial and not merely a peripheral activity not forbidden by the organic rules of the corporation, the conclusion of the corporation as a trading corporation is open." (at 208). Mason J expressed very similar views: "For my part, I prefer the minority view as expressed in the St. George County Council Case, in particular remarks of Barwick C.J., when his Honour said that to fall within s. 51(xx.) it is not necessary that a corporation be formed for trading or financial purposes and that 'the activities of a corporation at the time a law of the parliament is said to operate upon it will determine whether or not it satisfies the statutory and therefore the constitutional description'. 'Trading corporation' is not and never has been a term of art or one having a special legal meaning. Nor, as the Chief Justice pointed out, was there a generally accepted definition of the expression in the nineteenth century. Essentially it is a description or label given to a corporation when its trading activities form a sufficiently significant proportion of its overall activities as to merit its description as a trading corporation." (at p. 233). "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 a school, that it could not be described as a trading a corporation. Whether the trading activities of a particular corporation are sufficient to warrant its being characterized as a trading corporation is very much a matter of fact and degree." (at 234). "I do not limit the concept of trading to buying and selling at a profit; it extends to business activities carried on with a view to earning revenue." (at 235). "The fact that no part of the club's revenue or profit can be distributed to the members is a circumstance to be taken into account in deciding whether it is a trading corporation, though in my judgment it is outweighed by other considerations..." (at 236). -- 9 of 12 -- 10 Jacobs J agreed with Mason J. Murphy J took the broadest view of all (at 239): "Even though trading is not the major part of its activities, the description 'trading corporation' does not mean a corporation which trades and does nothing else or in which trading is the dominant activity. A trading corporation may also be a sporting, religious, or governmental body. As long as the trading is not insubstantial, the fact that trading is incidental to other activities does not prevent it from being a trading corporation. For example, a very large corporation may engage in trading which though incidental to its non-trading activities, and small in relation to those, is nevertheless substantial and perhaps exceeds or is the same order in amount as the trading of a person who is clearly a trader. Such a corporation is a trading corporation and is the subject of the legislative power in s. 51(xx.)... ...It follows that in my view Reg v Trade Practices Tribunal; ex parte St George Council was wrongly decided and should be overruled.". And to give content to the extent of the commercial activity to which the language "substantial", "not insubstantial", and "a sufficiently significant proportion of its overall activities as to merit description as a trading corporation" were directed, it is perhaps useful to say something of the business returns of the various football clubs held to be trading corporations. In the case of the WA League, total gate receipts in 1976 were $1,102,150 and in 1977 $1,310,587. The distribution to member clubs was $594,722 in 1976 and $754,133 in 1977. The WA League had other sources of income e.g. receipts from broadcasting and television rights, sponsorship, advertising, catering, sale of and advertising in a weekly program etc. In 1976 the total income from that source was $58,427 and in 1977 $84,876. The incomings of the SA League were similar in nature but lower in dollar value. In the case of the West Perth Club, apart from gate receipts received from the WA League, the Club had a gross income from bar trading and catering of $116,277 in 1976 and $139,644 in 1977. Its net profit from trading in those years was $41,087 in 1976 and $49,925 in 1977. In a case in which no evidence has been led of changes in value of money of the past 30 years the figures cannot be applied as a litmus test, but it is very difficult to avoid the conclusion that the majority of the High Court would have classed EDUCANG Ltd as a "trading corporation". The next significant case was State Superannuation Board v Trade Practices Commission (1982) 150 CLR 282. The critical issue was whether the State Superannuation Board (Vic) was a "financial corporation". However, in the course of the majority judgment, Mason, Murphy and Deane JJ made the following (presently relevant) observation: "It is our view 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 between 'trading' and 'financial'. ... ...In this respect the decision in Adamson is of importance for two reasons. First, the majority of the Court (Barwick C.J., Mason, Jacobs and Murphy JJ.), rejecting the argument that the purpose for which a corporation is formed is the sole or principal criterion of its character as a trading corporation, concluded that the relevant character of the football leagues and the football club was to be ascertained by reference to their established activities. In adopting this view their Honours disapproved the approach taken by the majority in St. George which placed emphasis on the purpose for which the County Council was formed." (at 303 to 304). The majority judgment continues at page 304 to quote the passages from the judgments of Barwick CJ, Mason J and Murphy J in Adamsons Case (cited above). For fullness, I add that Gibbs CJ (with the concurrence of Wilson J) adhered to the view which his Honour had previously expressed. Given the extent of the extracts set out above, it seems to me to be legitimate to limit myself to nutshell quotations in dealing with the last of the High Court Cases upon s. 51(xx) of the Constitution with which I propose to concern myself viz. The Commonwealth of Australia v The State of Tasmania and Others (1983) 158 CLR 1. In dealing with the question of whether the Hydroelectric Commission constituted by the Hydroelectric Commission Act 1948 (Tas) was a body corporate within the meaning of s. 51(xx) of the Constitution, Gibbs CJ adhered to the view previously attributed to his Honour, whilst Dawson and Wilson JJ found it unnecessary to determine the point. The learned justices who constituted the majority of the Court, viz. Mason, Murphy, Brennan and Deane JJ did deal with the matter. Materially Mason J observed: "The decision in Reg v Trade Practices Tribunal; Ex parte St. George County Council is no longer to be regarded as correct. The majority of the Court in Reg v Federal Court of Australia; ex parte W.A. National Football League considered it to have been wrongly decided: see also State Superannuation Board v. Trade Practices Commission (at 155).". -- 10 of 12 -- 11 "The trading activities of the Commission therefore form a much less prominent feature of its overall activities than was the case with St. George County Council. The Commission has an important policy-making role. It is the generator of electrical power for Tasmania, for distribution to the public and for this purpose it engages on a large scale in the construction of dams and generating plants. In this respect its operations are largely conducted in the public interest. However, W.A. National Football League demonstrates that these considerations do not exclude the Commission from a category of 'trading corporations'. The majority judgment in State Superannuation Board pointed out that the case decided that a trading corporation whose trading activities take place so that it may carry on some other primary or dominant undertaking (which is not trading) may nevertheless be a trading corporation. The agreed facts shows that the Commission sells electrical power in bulk and by retail on a very large scale. This activity in itself designates the Commission as a trading corporation." (at 156). Brennan J (at 239 to 240) described the extent of the activities of the Hydroelectricity Commission and the scale of its financial dealings, and it is proper to add that the scale of the Commission's financial dealings was very much greater than the scale upon which EDUCANG Ltd operates, and concluded: "Consistently with the views which have prevailed in this Court (see State Superannuation Board v. Trade Practices Commission; Reg v Federal Court of Australia; ex parte WA National Football League ("Adamson's Case") the H.E.C. must be held to be a trading corporation." (at 240). Mr Justice Deane (at p. 292) posed the question whether the Hydroelectric Commission could be said to be a "trading corporation". The Hydroelectric Commission, I should add, was created by statute established to perform a number of functions of a semi-governmental nature, including the recommending of regulations and orders to the Governor-in- Council. His Honour gave the answer: "In State Superannuation Board v Trade Practices Commission, Mason J, Murphy J. and I pointed out that the approach taken by the majority in Reg. v Trade Practices Tribunal; Ex parte St. George County Council had be subsequently disapproved by the majority of the Court in Reg. v Federal Court of Australia; Ex parte W.A. National Football League ('Adamson'). We went on to express the view that the fact that a trading corporation carries on extensive non-trading activities which might properly warrant its being categorized as a corporation of some other type will not prevent it from being properly categorised as a trading corporation by reason of its trading activities. In that regard, we referred to a comment of Mason J. in Adamson that the expression 'trading corporation' is essentially a 'description or label given to a corporation when its trading activities form a sufficiently significant proportion of its overall activities as to merit its description as a trading corporation'. The H.E.C. is, by virtue of its wide semi-governmental powers and functions, a corporation of an unusual type. It could not inaccurately be described as a 'public utility' corporation. It is, nonetheless, a corporation of which a main objective is the sale of power to consumers in Tasmania and which carries on the trading activity of selling such power on a very large scale indeed. Whatever other description might be applied to it, it is, in the context of its overall activities as described in the agreed facts, a trading corporation both for the purposes of s. 51(xx) of the Constitution and s. 10 of the Act." (at 292 to 293). The Court was also taken to the decision of Wilcox J in E v Australian Red Cross Society and Others (1991) 27 FCR 310, and to the decision of the Full Court of the Federal Court in Quickenden v O'Connor and Others (2001) 109 FCR 243. The decision in E v Australian Red Cross Society and Others, op cit, may be shortly disposed of. For present purposes, the decision should be regarded as an authority upon which an argument may be based that the very large sums received by EDUCANG Ltd from government sources in the return for the provision of educational services to students which might have otherwise been an impost upon the government are, like the sums of money provided to the Australian Red Cross Society in return for the welfare service of distributing blood and blood products, to be disregarded in determining whether or not EDUCANG Ltd is a trading corporation. Counsel for EDUCANG Ltd has, of course, consistently argued that EDUCANG Ltd is to be treated as a trading corporation even if those sums are to be wholly left out of account. The decision of the Full Court in Quickenden v O'Connor and Others, op cit, is (perhaps) of greater assistance. The issue of present relevance was whether the University of Western Australia was a "trading corporation" within the meaning of s. 51(xx) of the Constitution. In the result the majority, Black CJ and French J, put aside the University's argument that the sums of money received pursuant to the Higher Education Funding Act 1988 (Cwth) were to be taken into account in evaluating whether or not the University was a "trading corporation". Under the legislative scheme established by Higher Education Funding Act 1988 (Cwth) a statutory obligation was imposed on each tertiary institution to require payment from students, a liability was then created for the contribution owed by the student to the tertiary institution, and (finally) provision was made for the Commonwealth to lend the requisite amount to the student to discharge that liability and to pay the sum loaned directly to the tertiary institution. It was understandable that the University, which contended that it was indeed a trading corporation, wished to take those fees into account. In 1995 -- 11 of 12 -- 12 fees paid directly by students to the University amounted to $8,849,000 whilst fees paid by the Commonwealth pursuant to the loan scheme amounted to $17,318,000. In the result, because of the nature of the quite original legislative scheme, the majority held that the revenue so derived was not revenue from trading. This Court is not concerned with any such legislative scheme. This Court is concerned simply with the levying of fees pursuant to powers within the Constitution of EDUCANG Ltd so as to provide EDUCANG Ltd with sources of revenue to enable it to discharge its immediate purpose of providing co-educational education services: compare the language of the trial judge (Lee J) in Quickenden v O'Connor and Others (1999) 91 FCR 597 at 607 to 608. Where the decision of the Full Court is of assistance is in its application of the High Court authorities (previously quoted) to the activities of the University. The Full Court found incidental activities that "are a substantial, in the sense of non-trivial, element, albeit not the predominant element of what the university does", did amount trading activities. The activities looked at were the University's investment activities, including the buying, selling and renting of property, from which it derived $44,393,000 in 1995 and $48,048,000 in 1996 (16.83% and 16.97% of total operating revenues for the two years respectively). Other business activities relied upon were the Festival of Perth (intentionally not carried on for profit), the sale of publications, parking, provision of student accommodation, and provision of computer services through Winthrop technology. Here, of course, the percentage of total revenue derived from government grants is very much less than the percentage derived from trading activities. So high is the percentage of operating revenue derived from trading activities, and so large are the sums involved, that this Court could not resist the conclusion that EDUCANG Ltd is a trading corporation without failing to discharge its duty to accept and follow decisions of the High Court of Australia. Further if one were to take a global view of the purpose and activities of EDUCANG Ltd, the Company is acting to fulfil its immediate purpose. Even if only the purpose of the Company is considered, the activities confirm that the immediate purpose gleaned from the documents is the immediate purpose and not mere words. Indeed, Counsel for the respondent was ultimately compelled to submit that because of the unique features the "orthodox approach" should not be followed. The Industrial Court of Queensland is a Superior Court of Record and is bound by the Constitution, see Constitution Act 1900 (Cwth), s. 5; contra Massey v Sphere Pty Ltd trading as Barron' s Char Grill, T12672 of 2006, 4 July 2006, Commissioner McAlpine. The respondent opposes the grant of declaratory relief. The submission does not seek to go behind the decision of this Court in Floorlevel Australia Pty Ltd v CFMEU (2005) 180 QGIG 185 at 185 to 186 that declaratory relief is available pursuant to s. 248(1)(e) of the Industrial Relations Act 1999. Rather, the submission is that declaratory relief is sought for the extraneous purpose of advancing the applicant's position in pending negotiations about an enterprise agreement. It is clear as a matter of fact that such negotiations are pending and that an issue is whether the relevant statutory instrument is the Industrial Relations Act 1999 or the Workplace Relations Act 1996 (Cwth). That the grant of declaratory relief will have an impact on that debate seems to be clear to the point of inevitability. But the issues before the Commission arising out of application TD/2006/358 filed in the Queensland Industrial Registry on 24 April 2006 and brought before this Court on the application for declaratory relief are real, require a present answer and have been fully argued. The case is in truth the converse of McGarrigle v Public Service Board (1979) 1 NSWLR 292, especially at 295 per Moffitt P. It also seems to me that the application for a prerogative order by way of prohibition should be granted. At the time that this application was brought on, the Commission was on the cusp of exercising jurisdiction by way of attempting to conciliate the application for relief in respect of the second respondent's member. Indeed, there is much to be said that the issue of the Directions Order bearing the seal of the Commission by the Deputy Industrial Registrar was in itself the exercise of jurisdiction by the Commission. (The standing of the variation of the original Directions Order by way of a notice about change of listing may be left to another day.) In my view the applicant is entitled to both declaratory and prerogative relief. Counsel for the applicant is to draft the formal orders, circulate the same to Counsel for the respondent and liaise with my associate to fix a convenient date on which to mention the matter. There can be no question as to costs. Dated 10 July 2006. D. R. HALL, President. Released: 10 July 2006 Appearances: Mr A. Horneman-Wren instructed by Livingstones (Australia) for the appellant. Mr J. Merrell instructed by Macrossans Solicitors for the Queensland Independent Education Union of Employees. Government Printer, Queensland The State of Queensland 2006. -- 12 of 12 --