2009 WAIRC 00455

WESTERN AUSTRALIAN INDUSTRIAL RELATIONS COMMISSION

PARTIES JOHN PATRICK GALEA
APPLICANT
-V-
SHIRE OF RAVENSTHORPE
RESPONDENT
CORAM COMMISSIONER J L HARRISON
HEARD THURSDAY, 19 MARCH 2009
WRITTEN
SUBMISSIONS FRIDAY 3 APRIL 2008, FRIDAY 24 APRIL 2009, THURSDAY 30 APRIL 2009
DELIVERED WEDNESDAY, 15 JULY 2009
FILE NO. U 175 OF 2008
CITATION NO. 2009 WAIRC 00455

Catchwords Termination of employment - Harsh, oppressive and unfair dismissal - Acceptance of referral out of time - Application referred outside of 28 day time limit - Relevant principles to be applied - Commission satisfied applying principles that discretion should be exercised - Acceptance of referral out of time granted - Order issued - Industrial Relations Act 1979 (WA) s 29(1)(b)(i), s 29(2) and (3)
Termination of employment - Harsh, oppressive and unfair dismissal - Whether Commission has Jurisdiction - Trading activities of respondent considered - Commission not satisfied respondent is a constitutional corporation - Claim within Commission's jursidiction - Declaration issued - Industrial Relations Act 1979 (WA) s 29(1)(b)(i); Workplace Relations Act 1996 (Cth) s 4, s 6 and s 16; Commonwealth of Australia Constitution Act 1900 s 51(xx) and s 109; Local Government Act 1995 s 1.3(3), s 2.5 and s 3.1(1)
Result Extension of time granted; Declaration Issued
Representation
APPLICANT MR J HODGKINSON (OF COUNSEL)

RESPONDENT MR S WHITE (AS AGENT)


Reasons for Decision

1 On 5 December 2008 John Patrick Galea (“the applicant”) lodged an application in the Commission pursuant to s 29(1)(b)(i) of the Industrial Relations Act 1979 (“the Act”) claiming that he was harshly, oppressively or unfairly dismissed on 4 November 2008 by the Shire of Ravensthorpe (“the Shire”/“the respondent”).
EXTENSION OF TIME
2 Section 29(2) of the Act requires that applications pursuant to s 29(1)(b)(i) of the Act be lodged within 28 days after the day on which an employee is terminated. As this application was lodged on 5 December 2008 and the applicant was terminated on 4 November 2008 it is three days out of the required timeframe for lodging a claim of this nature.
3 The matter was listed for hearing to allow the parties to put submissions and give evidence as to whether or not this application should be accepted under s 29(3) of the Act. Section 29(3) of the Act reads as follows:
“(3) The Commission may accept a referral by an employee under subsection (1)(b)(i) that is out of time if the Commission considers that it would be unfair not to do so.”
4 In reaching a decision in this matter as to whether it would be unfair not to accept this application out of time I take into account the relevant factors outlined in the Industrial Appeal Court decision in Malik v Paul Albert, Director General, Department of Education of Western Australia (2004) 84 WAIG 683 at 686, as follows:
“"1. Special circumstances are not necessary but the Court must be positively satisfied that the prescribed period should be extended. The prima facie position is that the time limit should be complied with unless there is an acceptable explanation of the delay which makes it equitable to so extend.
2. Action taken by the applicant to contest the termination, other than applying under the Act will be relevant. It will show that the decision to terminate is actively contested. It may favour the granting of an extension of time.
3. Prejudice to the respondent including prejudice caused by delay will go against the granting of an extension of time.
4. The mere absence of prejudice to the respondent is an insufficient basis to grant an extension of time.
5. The merits of the substantive application may be taken into account in determining whether to grant an extension of time.
6. Consideration of fairness as between the applicant and other persons in a like position are relevant to the exercise of the Court's discretion."”
5 When considering the issue of fairness, Heenan J further observed in Malik v Paul Albert, Director General, Department of Education of Western Australia (op cit) at 692 the following:
“I accept that the concept of fairness is central to a decision whether or not to accept an application under s 29 which is out of time but, with all respect, I cannot accept the submission which was put in this case that it is fairness to the applicant which is either the sole or principal concern. Fairness in this situation involves fairness to all, obviously to the applicant and to his or her former employer, but also to the public interest and to the due and efficient administration of the jurisdiction of the Commission which should not be burdened with unmeritorious stale claims.”
6 In applying these guidelines I am mindful that there is a 28 day timeframe to lodge an application and the Commission’s discretion in relation to a matter of this nature should not be exercised unless it would be unfair not to do so.
7 The applicant’s application confirms that he commenced employment with the respondent on 1 May 2008 and he was a leading hand in the respondent’s maintenance section when he was terminated. It was not in dispute and I find that on 4 November 2008 the applicant was terminated in a summary fashion and it was not until 19 November 2008 that the respondent gave him a payment in lieu of notice.
8 The applicant now resides in the eastern states and at the hearing his representative stated that the applicant was not giving evidence at the hearing because he was not capable of doing so given his poor state of health arising out of the way the respondent treated him both during his employment with the respondent and given the nature of his termination.
Applicant’s submissions
9 The applicant submits that the merits of his substantive application are strong on the basis that he was summarily dismissed by the applicant’s supervisor Mr Ian Dickinson without cause or reason. The applicant also maintains that Mr Dickinson victimised, intimidated and bullied him during his employment with the respondent and he claims that Mr Dickinson told numerous people, who told the applicant, that he was going to “get” the applicant, Mr Dickinson persistently told the applicant that he is “a useless bastard who does not know what he is doing”, Mr Dickinson dumped work orders in front of the applicant and said “you better do this today” in a tone that was threatening and intimidating to him and Mr Dickinson used body language in the presence of the applicant in a way that was inappropriately dominant and aggressive. The applicant maintains that as a consequence of Mr Dickinson’s bullying he became depressed and anxious and was unable to sleep properly and as a result was prescribed anti-depressant medication.
10 The applicant made a number of additional submissions in support of his claim that it would be unfair of the Commission not to accept this application. The applicant argues that the respondent was aware that he was contesting his termination soon after he was terminated as within eight days of the applicant being terminated he attempted to negotiate a settlement with the respondent prior to the limitation period ending however these negotiations were unsuccessful. Specifically, the applicant’s representative wrote to the respondent on 12 November 2008 making an offer to settle the applicant’s termination. In response the respondent wrote to the applicant on 20 November 2008 informing him that it would respond to his offer after it had conferred with its industrial advisors and this response was received on 9 December 2008 after the limitation period ended and only subsequent to a further letter being sent by the applicant’s representative on 3 December 2008 seeking an urgent response to his offer.
11 The applicant argues that there is very little prejudice, if any, to the respondent if the extension of time within which to file this application is granted as this application was lodged only three days out of the required timeframe and the respondent had been aware for some time that the applicant was contesting his termination.
12 The applicant’s representative maintains the delay in filing this application was not caused by inaction on the part of the applicant. The applicant’s representative claims that the applicant was not aware that there was a timeframe for lodging this application and that it was representative error which led to this application being lodged outside of the required timeframe.
13 The applicant relies on the following additional information contained in correspondence attached to this application in support of the applicant’s good work history and his poor relationship with Mr Dickinson:
· a reference dated 11 November 2008 given by Ms Rowena Ritchie, Manager Corporate and Community Services, Shire of Ravensthorpe citing the applicant’s good work record;
· a statement made on 6 November 2008 by three of the respondent’s employees with respect to comments allegedly made by Mr Dickinson who was in charge of the respondent’s building maintenance section and who was the person who terminated the applicant, claiming that Mr Dickinson called the applicant “a liar, a snake in the grass, useless and numerous colourful names were used to describe what he thought of him”;
· a letter from the respondent’s Chief Executive Officer (“CEO”) Mr Paul Richards dated 18 July 2008 with respect to the granting of a pay increase to the applicant as a result of his good performance; and
· a statement by the applicant’s medical practitioner dated 5 November 2008 which reads as follows (formal parties omitted):
“To whom it may concern
Re: John Galea DOB: 26 Mar 1962
P.O. Box 382
Ravensthorpe 6346
0427 07 80 22

I know (sic) John since September 2008.
He was exposed to an ongoing bulling (sic) situation at work and was fired on the spot in front of his colleagues.
This caused gradually (sic) worsening of his emotional and mental wellbeing. He suffers from stress symptoms like insomnia and anxiety.”
Respondent’s evidence
14 Mr Dickinson is employed by the respondent as its Works Supervisor. Mr Dickinson gave evidence that after returning from a period of leave he was in his office on the morning of 4 November 2008 and the applicant came in and removed some time sheets from his desk without speaking to him. Mr Dickinson gave evidence that he stepped around his desk and asked the applicant to return the time sheets to him and in response the applicant “flew into a tirade of abuse that lasted between 10 and 12 minutes with threats of physical violence” (T9). When Mr Dickinson told the applicant that he was terminated and asked him to leave the applicant refused to go and Mr Dickinson stated that it was only after he contacted police for assistance that the applicant left. Another employee, Mr Dave Forsythe, was present during this incident and Mr Dickinson stated that after the applicant left both he and Mr Forsythe went to the respondent’s administration office to speak to the CEO about the incident but when they could not locate him they reported the incident to Ms Ritchie.
15 Under cross-examination Mr Dickinson reiterated that the applicant abused him for between 10 to 12 minutes and he stated that he had never been treated like this before by an employee. Mr Dickinson then stated that he believed the applicant was upset and angry for reasons apart from work. Mr Dickinson stated that he got on well with the applicant until 7 September 2008. Mr Dickinson then declined to give any details about the issues which caused difficulties between himself and the applicant after that date however he stated that the issues did not involve him and the applicant but other people and Mr Dickinson stated that the applicant did not like his views about what he was saying and doing in relation to those people.
Respondent’s submissions
16 The respondent submits that it had sufficient reason to terminate the applicant and the respondent relies on the evidence given by Mr Dickinson. The respondent claims that on the morning of 4 November 2008 the applicant launched into a tirade of abuse towards Mr Dickinson in front of another employee and the applicant threatened to physically harm Mr Dickinson and behaved as if he was going to assault him. The applicant initially refused to leave the respondent’s premises and only did so when Mr Dickinson contacted police for assistance. The respondent also submits that the applicant was not summarily terminated as he was given a payment in lieu of notice subsequent to his termination.
17 The respondent argues that the Commission should have regard to the fact that the applicant’s representative was aware that there was a set timeframe for filing this application.
18 The respondent accepts that the applicant contested his termination soon after it occurred and concedes that its response to correspondence from the applicant soon after he was terminated was delayed due to internal issues occurring within the respondent’s operations and because the respondent’s representative was on leave. The respondent also concedes that given the short timeframe of this application being filed late there is no additional prejudice to the respondent.
Findings and conclusions
19 The issue of whether or not there is any merit to the applicant’s claim that he was unfairly dismissed is difficult to determine as the applicant did not appear in these proceedings to give evidence due to his poor state of health and the only person to give direct evidence about the events of 4 November 2008, which resulted in the applicant being terminated, was the applicant’s supervisor Mr Dickinson. Even though Mr Dickinson gave evidence that the applicant abused him for approximately 10 minutes during what he described as an unprovoked tirade against him, the incident between Mr Dickinson and the applicant took place after some months of difficulties between them which it appears resulted in the applicant requiring medical treatment, which is ongoing. In the circumstances, and given that there appears to have been issues between the applicant and Mr Dickinson of an unspecified nature since 7 September 2008, I am not in a position to definitively determine whether or not there is any merit to the applicant’s claim that he was unfairly dismissed on 4 November 2008. As a result I give the issue of merit little if any consideration in this instance.
20 It was not in dispute and I find that the applicant took reasonable and timely steps to engage a representative to act on his behalf to settle his dispute with the respondent concerning his termination and I accept that the applicant relied on his representative to lodge his claim for unfair dismissal however, in this instance, the applicant’s representative failed to fulfil his professional obligations to the applicant to lodge this application within the required timeframe. In the circumstances I find that the applicant has an acceptable reason for the delay in lodging this application on the basis of representative error as the applicant’s representative conceded at the hearing that it was his fault, and not that of the applicant, for this application being lodged three days outside of the required timeframe. I am satisfied therefore that representative error provides an acceptable explanation for the delay in lodging this application and I find that the applicant should not be disadvantaged due to this error (see Clark v Ringwood Private Hospital [1997] 74 IR 413).
21 I also accept that the delay in lodging this application resulted from a less than prompt response by the respondent to a letter written to the respondent by the applicant’s representative on 12 November 2008, which was followed up by further correspondence on 3 December 2008, in order to negotiate a settlement with respect to the applicant’s termination. I find that this correspondence gave a clear indication to the respondent that the applicant intended to contest his termination and the respondent was put on notice in this correspondence that an application of this nature would be filed if the parties did not reach agreement. I therefore find that the prejudice suffered by the applicant would be greater than that suffered by the respondent if this application was not accepted by the Commission and no disadvantage was highlighted by the respondent in meeting this application because of the delay and I accept that there was no additional prejudice to the respondent given the delay in lodging this application.
22 When balancing the above findings and taking into account all of the relevant factors to consider in an application of this nature and when taking into account the issue of fairness to both parties I find that it would be unfair not to accept this application. In reaching this view I take into account that there was an acceptable reason for the delay in lodging this application and I have found that the respondent will not be prejudiced any more than usual in allowing this application given that the applicant advised the respondent within eight days of his termination that he was contesting his termination. I therefore find that in all of the circumstances it would be unfair for the Commission not to exercise its discretion to grant an extension of time within which to file this application and for these reasons an extension of time in order to lodge this application is granted.
23 An order will issue to that effect.
JURISDICTION
24 The respondent maintains that it is a constitutional corporation for the purposes of the Workplace Relations Act 1996 (“WR Act”) and the applicant’s claim is therefore outside of the Commission’s jurisdiction. In contrast the applicant argues that the respondent is not a constitutional corporation and the Commission therefore has jurisdiction to deal with this application.
Respondent’s evidence
25 In support of its claim that the Commission does not have jurisdiction to deal with this application the respondent relies on the evidence of Mr Pascoe Durtanovich which it maintains demonstrates that the respondent is a trading corporation, given the significance and scope of its trading activities (see Witness Statement, Exhibit R3, and amended Witness Statement and supporting documentation lodged in the Commission on 3 April 2009).
26 Mr Durtanovich is employed as the Acting CEO at the Shire and he has held this position since 14 November 2008. Mr Durtanovich has had 42 years of experience working in Local Government in Western Australia, 30 of them as a CEO. Mr Durtanovich maintains that his position as the Acting CEO of the Shire provides him with a good understanding of the Shire’s operations and functions.
27 Mr Durtanovich stated that the Shire is located 536 kilometres from Perth, covers 12,872 square kilometres and has approximately 2,300 residents. Mr Durtanovich maintains that the Shire operates several trading activities in addition to its statutory functions. Mr Durtanovich confirmed that the information contained in his initial witness statement dated 4 March 2009 about the Shire’s trading activities was taken from the Shire’s financial analysis reports for the financial years 1 July 2006 to 30 June 2007 and 1 July 2007 to 30 June 2008.
28 Mr Durtanovich stated that of the total operating revenue of the Shire of $10,538,817.00 during the 2007/2008 financial year, $2,584,212.95 or 24.52 percent was assessed by him as being trading activity. Mr Durtanovich stated that the income the Shire received from its trading activities is reasonably consistent from year to year even though the Shire’s total operating revenue increases or decreases as business needs change.
29 At the hearing Mr Durtanovich provided an amended Appendix A to attach to his witness statement and a further amended Appendix A was provided to the applicant and the Commission following the hearing on 3 April 2009, in response to issues that arose at the hearing. The final document, headed Appendix A, is as follows:
Shire of Ravensthorpe Operating Accounts


2006-2007
2007-2008
Ref#
Name
Trading Income
Trading Income
1
Sale of Council Publications
$546.00
$111.27
2
FESA - Bush Fires
$35,700.00
$38,000.00
3
FESA - Administration Charge
$4,000.00
$4,000.00
4
Fire Map Sales
$30.00
$474.55
5
Grant - Emergency Services Collocation

$1,600,000.00
6
Rent - Martin St, Ravensthorpe

$5,352.00
7
FESA - State Emergency Service
$11,200.00
$11,600.00
8
Crime Prevention Grant


9
Business Refuse Charges
$17,708.24
$22,045.81
10
Business Tip Charges
$11,113.32
$11,017.40
11
Building Sites Tip Charges
$15,008.53
$20,782.56
12
Mine Site Refuse Charges
$188,320.45
$116,671.09
13
Sale of Refuse Bins
$2,070.00
$534.73
14
Cemetery Charges
$499.54
$930.00
15
HalI Hire Charges
$3,617.01
$5,172.17
16
Swimming Pool Admission Charges
$7,934.91
$7,931.05
17
Ravensthorpe Entertainment Centre Charges
$9,065.00
$6,876.73
18
Ravensthorpe Sports Pavilion Hire Charges
$4,700.00
$1,952.50
19
Gym Memberships
$6,321.35
$6,734.06
20
Camping Fees
$7,822.00
$5,306.00
21
Landing Fees and Charges
$39,300.00
$32,715.00
22
Ravensthorpe Nickel Operation Contribution
$185,680.62
$194,621.06
23
Gate Registrations

$270.00
24
Hopetoun Caravan Park lease
$10,000.00
$21,200.00
25
Other Minor Revenue

$500.00
26
Tectonic Resources Lease
$6,545.00
$6,750.00
27
Standpipe Administration Charge
$864.50
$1,759.00
28
Airport Farmland Lease
$25,000.00
$25,750.00
29
Power Connection Morris Camp


30
Private Works Revenue
$27,193.30
$80,618.91
31
Staff Housing Rent - Works

$9,525.73
32
Westpac Banking Corporation In-Store Commission
$55,814.83
$51,925.92
33
Department for Planning & Infrastructure Commission
$33,230.16
$37,965.37
34
Safe Custody Charges
$1,008.02
$854.87
35
Westpac Training

$592.20
36
Rate Search Fees
$15,454.55

37
Profit on Sale of Asset
$1,119.63

38
Reimbursement Fire Fighting Expenses
$28,720.30

39
Rent - Medical House
$872.72

40
Medical Practice Review
$9,090.91

41
Tip Entry Fees
$435.54

42
Sewerage Fees


43
Hopetoun Recreational Facilities
$34,583.00

44
Landcorp Street Tree Project
$87,385.18

45
Subdivision Admin & Supervision
$40,449.99

46
Western Power - Lease of Depot
$12,000.00

47
Ravensthorpe Sewerage Charge
$42,032.47
$48,181.89
48
Ravensthorpe Sewerage in Lieu
$6,588.97
$8,919.35
49
Munglinup Sewerage Charge
$1,849.87
$1,942.60
50
Reimbursement Fire Fighting Expenses


51
Ravensthorpe Sewerage Extensions
$70,072.20
$122,979.34
52
Hopetoun Effluent Cartage
$375,000.00

53
Waste Effluent Dump Charge

$71,649.79






$1,435,948.11
$2,584,212.95


$6,118,024.00
$10,538,817.00


23.47%
24.52%
30 Mr Durtanovich stated that the 24.52 percent of the Shire’s income generated from trading activities in the financial year 2007/2008 was significant both with respect to the monetary value of these activities and their importance to the Shire given that it is a small Local Government.
31 Mr Durtanovich detailed the income received by the Shire in the 2007/2008 financial year which he maintains constitutes trading income.
32 Mr Durtanovich stated that the sale of council publications and fire maps by the Shire generates trading income (see Items 1 and 4). Mr Durtanovich gave evidence that publications sold by the Shire include council minutes and agendas and he stated that the costs charged to the public for these publications cover the cost of printing the publications. He also stated that the majority of these publications are available on the respondent’s website and can be downloaded by the public.
33 Mr Durtanovich claims that a payment of $53,600 to the Shire from the Fire and Emergency Services Authority of Western Australia (“FESA”) should be considered as trading income as this funding enabled the Shire to undertake a State Government responsibility that would not be carried out by the Shire if this payment was not made (see Items 2, 3 and 7). Attached to Mr Durtanovich’s amended witness statement is the grant acquittal form for this payment identifying the expenses incurred by the respondent relevant to the income received (see Appendix B). Mr Durtanovich gave evidence that the payment listed at Item 2 came from the Emergency Services Levy allocated to the Shire on a needs basis for fire control and he stated that the income is used for purchasing items including fire units and protective clothing for brigade members. Mr Durtanovich gave evidence that the payment listed at Item 3 also came from the Emergency Services Levy and he stated that the income was used to purchase items including office equipment, vehicles and protective clothing for the Shire’s State Emergency Service. Mr Durtanovich maintains that the commission paid to the Shire for collecting the Emergency Services Levy constitutes a trading activity.
34 Mr Durtanovich stated that the Shire received a grant of $1,600,000 to facilitate the construction and fit out of a new building in Hopetoun for the housing of fire and emergency services. Mr Durtanovich testified that a building company was used to undertake much of the work and was chosen through a tender process. Mr Durtanovich stated that the Shire was reimbursed out of the grant for administration costs associated with this project (see Item 5).
35 Mr Durtanovich gave evidence that the Shire owns property leased to external bodies and income was received for this leasing arrangement in the amount of $5,352. Mr Durtanovich stated that the majority of these premises were rented to Shire employees at non-commercial rates and he stated that the Shire pays for the upkeep on these properties (see Item 6).
36 Mr Durtanovich gave evidence that the respondent has not included income from domestic refuse collection as a trading activity but he maintains that commercial refuse collection, tip charges for business and building and mine site refuse collection, which are optional services provided by the Shire, should be considered as trading activity. Mr Durtanovich stated that charges levied on business for picking up and disposing of waste, as well as for the use of bins on building sites generated income of $170,516.86 in the 2007/2008 financial year (see Items 9, 10, 11 and 12).
37 Mr Durtanovich gave evidence that in the 2007/2008 financial year the sale of additional refuse bins required by residents and businesses, which were not sold for a profit, generated income of $534.73. Cemetery fees on burials performed by Shire employees, which he maintained were charged at commercial rates, provided $930 in revenue and $14,001.14 in income was received for the hire of halls, the Ravensthorpe Entertainment Centre and for hiring the sports pavilion out to the public. Mr Durtanovich stated that all of these facilities are owned, operated and maintained by the Shire (see Items 13, 14, 15, 17 and 18).
38 Mr Durtanovich stated that the Shire charges entry to the Ravensthorpe swimming pool, which is owned and maintained by the Shire and for gym memberships for residents to use a gymnasium which is operated by the Shire. These facilities generated income of $14,665.11 (see Items 16 and 19).
39 Mr Durtanovich gave evidence that members of the public were charged fees to use camping facilities provided by the Shire and gate registration charges, which was a nominal fee collected for the right of landowners to put gates across public thoroughfares, amounted to $5,306 and $270 respectively in the 2007/2008 financial year (see Items 20 and 23).
40 Mr Durtanovich maintains that the running of the Ravensthorpe airport is a commercial enterprise and he gave evidence that the Shire owns and operates this airport. Mr Durtanovich stated that BHP Billiton’s Ravensthorpe Nickel operation contributes to the operating cost of the facility and he stated that landing fees were charged to users of the airport. In total this amounted to income of $227,336.06 in the 2007/2008 financial year (see Items 21 and 22). Mr Durtanovich stated that some of the equipment used at the airport was paid for out of grant funding and capital works costs relevant to the airport were paid for by BHP Billiton (“BHP”). Appendix C attached to Mr Durtanovich’s amended witness statement contains the expenditure involved in operating the airport.
41 Mr Durtanovich gave evidence that the Hopetoun Caravan Park is on shire vested land and a commercial operator of this park pays $21,200 to the Shire for the lease of the land (see Item 24). Commercial leases for the use of land as farmland at the airport and for a campsite for the use of Tectonic Resources’ employees also generated income to the Shire of $32,500 (see Items 26 and 28).
42 No information was provided by the respondent about the breakdown of the $500 claimed as ‘Other Minor Revenue’ at Item 25.
43 Mr Durtanovich gave evidence that the Shire received $1,759 for the sale of Standpipe water and he stated that these facilities are maintained by the Shire (see Item 27).
44 Mr Durtanovich gave evidence that the Shire received $80,618.91 in income for undertaking private works during the 2007/2008 financial year, which consisted of carting waste water for BHP and for constructing a gravel pit using the Shire’s plant and equipment (see Item 30).
45 Mr Durtanovich stated that the Shire’s works employees paid $9,525.73 to rent Shire owned houses in the 2007/2008 financial year and he confirmed that these rents were not levied at a commercial rental rate (see Item 31). Under cross-examination Mr Durtanovich estimated that the rent that employees paid was 50 to 60 percent less than market rates.
46 Mr Durtanovich gave evidence that the Shire received $89,891.29 in commissions during the 2007/2008 financial year for running a bank agency on behalf of Westpac Banking Corporation (“Westpac”) and for operating an agency for vehicle licensing on behalf of the Department for Planning and Infrastructure (“DPI”). Under these agency arrangements a safe custody service was also provided for Westpac items and $854.87 in income was generated in the 2007/2008 financial year for this service and the Shire was reimbursed $592.20 by Westpac for training staff to work in the bank agency (see Items 32, 33, 34 and 35).
47 Mr Durtanovich stated that residents who choose to connect to the sewerage system provided by the Shire are charged an annual rate for this service and the total revenue for providing these services was $59,043.84 in the 2007/2008 financial year (see Items 47, 48 and 49).
48 Mr Durtanovich gave evidence that $122,979.34 was paid to the Shire by the Department of Industry and Resources to upgrade the sewerage treatment plant (see Item 51 and details at Appendix D of his amended witness statement).
49 Mr Durtanovich stated that $71,649.79 was paid to the Shire by the Water Corporation for the cost of disposing of effluent at the Shire’s licensed facility at Ravensthorpe and this was part of a contract which the Shire had with the Water Corporation to cart effluent from Hopetoun to Ravensthorpe (Item 53).
50 The applicant did not give any evidence about the respondent’s trading activities.
Submissions
Respondent
51 The respondent submits that a corporation is to be regarded as a trading corporation if a substantial proportion of its activities are trading activities and argues that it is well established that it does not matter that the same corporation is engaged at the same time in activities which are not trading activities. The respondent relies on the following decisions in support of this claim: Eric Bell v Shire of Dalwallinu (2008) 88 WAIG 1867 (“Bell”), Jacqueline Ann Bysterveld v Shire of Cue (2007) 87 WAIG 2462 (“Bysterveld”) and Aboriginal Legal Service of Western Australia Incorporated v Mark James Lawrence (2007) 87 WAIG 856 (“Lawrence [FB]”).
52 The respondent maintains that the following summary from Lawrence (FB) is relevant to the Commission’s determination of this application:
“3.1 Whether the respondent is a trading corporation involves questions of fact, to be determined upon the evidence before the Commission.
3.2 The primary focus is on what the respondent does. This determines what its activities are.
3.3 The respondent is a trading corporation if its (sic) substantially engages in trading activity. This necessitates a close analysis of what the appellant (sic) does, and whether this in whole or part constitutes trading. If all of its activities are trading, it is a trading corporation. If a portion of its activities are trading then it is necessary to consider whether that portion is a substantial or significant portion of its overall activities. If so it is a trading corporation.
3.4 It is immaterial if a corporation has a non-profit, benevolent or charitable object; if its trading activities are nevertheless substantial then it will be a trading corporation.”
(Respondent’s submissions dated 4 March 2009)
53 The respondent argues that the authorities of Bell and Bysterveld are relevant as they deal with the test of establishing a constitutional corporation in Western Australian Local Government post the “WorkChoices” amendments to the WR Act.
54 The respondent submits that the decision of Lawrence (FB) provides guidance in distinguishing whether funds supplied by Government constitute trading as it is argued in Lawrence (FB) at 890 of one source of Government funding as follows:
“… the gratuitous provision of a public welfare service, where the money to engage in the service is supplied by government funding, is not trading. In our opinion, and with respect, so broad a proposition is not supported by the decisions of the High Court or the other authorities cited above which discuss the meaning of “trade” or “trading”. In a situation where there is in effect, a tripartite arrangement involving the government it is necessary to look at the basis on which the money is received to provide services to ascertain if any or all of this constitutes trading. … There is no reason in principle why a tripartite arrangement may not constitute trading. The fact that government funds are used for a public welfare service, does not necessarily have the effect that the means by which the funds were received, or the arrangement overall, is not trading.”
55 The respondent maintains that the total operating revenue of the respondent during the 2007/08 financial year was $10,538,817.00 and claims that of this $2,584,212.95 should be assessed as trading activity, 24.52 percent of the respondent’s revenue, which is a significant percentage of the respondent’s total revenue (these figures have been amended subsequent to the hearing). The respondent argues that this claim is consistent with the decision in Bell where the Shire of Dalwallinu had trading activities of 20.88 percent of its total revenue which was sufficient for it to be found to be a trading corporation.
56 The respondent relies on Mr Durtanovich’s confirmation that the total income received from trading activities is reasonably consistent from year to year although fluctuations can occur as business needs change and the respondent submits that the evidence presented both at hearing and in supplementary documentation submitted after the hearing demonstrates that it has the character of a constitutional corporation.
57 The respondent maintains that it is unlikely that an organisation is not a trading organisation when it operates the range of income generating activities detailed in Appendix A and the respondent argues that a substantial proportion of its current activities are trading in nature with about a fifth of the respondent’s activities being derived from trading activities. The respondent also argues that the percentage and financial value of the respondent’s trading activities is in line with other decisions where Local Governments have been determined to be constitutional corporations.
58 The respondent argues that even though some trading activities arise as a result of the statutory obligations of a Local Government (see Items 1 to 5, 7 and 36 - Sale of Council Publications, FESA – Bush Fires, FESA – Administration Charge, Fire Map Sales, Grant – Emergency Services Collocation, FESA – State Emergency Service and Rate Search Fees) trading activities can arise out of statutory obligations.
59 The respondent disagrees with the applicant’s contention that profit being derived from an activity is relevant to the nature of that activity and even though some businesses are profitable at a point in time and some not, this does not alter the nature of the trading activity. The respondent also relies on Mr Durtanovich’s evidence that many of the respondent’s trading activities run at a profit. The respondent argues that bank transactions carried out by the respondent constitute trading activity in the same way as a bank undertaking this role even if it is performed by an organisation acting on their behalf and the nature of the activity is unchanged whether the operations are undertaken by an employee of the respondent or an employee of a contracted organisation. The agency arrangements conducted by the respondent for banking and vehicle licenses are transactions made by members of the public for which the respondent receives a commission for its services and as the payment for this product or service is between the organisation on whose behalf the Shire is acting and its customers the respondent receives trading income for facilitating these services. The respondent offers a similar agency service for FESA by providing fire and emergency services and the respondent maintains that the payment made by FESA to the respondent for administration services performed by the respondent along with the reimbursement of expenses incurred constitutes trading activity. The respondent argues that rent charged for houses owned by the respondent should be included as trading activity and that the discounting of rent for the respondent’s employees is a separate employment matter and even though the rent received is reduced this does not alter that the payments are in return for the provision of housing. The respondent acknowledges that domestic refuse collection may not be considered trading income but argues that as commercial enterprises have the choice of buying these services then the charges arising from mine sites, building sites and businesses should be considered as trading activities. The respondent submits that the Ravensthorpe airport is a commercial enterprise that generated trading income through its use by the Ravensthorpe Nickel operation, along with landing fees. The respondent maintains that the lease for the Hopetoun Caravan Park is a commercial arrangement based on market rates and is therefore a trading activity. The respondent also submits that Mr Durtanovich gave evidence that the private works carried out by the respondent on behalf of external organisations are charged at market rates.
60 In conclusion the respondent claims that it is open to the Commission to find that it lacks jurisdiction to hear this matter.
Applicant
61 The applicant argues that the Commission has jurisdiction to hear his claim. The applicant rejects the respondent’s claim that it is a constitutional corporation in accordance with s 4 of the WR Act and for the purposes of s 16 of the WR Act, which precludes the Commission from dealing with this application if an employer is a trading corporation in accordance with ss 4 and 6 of the WR Act. The applicant submits that whilst the respondent is engaged in some trading activities, those activities are not sufficient to characterise the respondent as a trading corporation and the applicant argues that the character of the trading activities undertaken by the respondent are insufficient to impose the character of a trading corporation on the respondent and as such the Commission has jurisdiction to hear and determine this matter.
62 The applicant submits that whether a corporation is a trading corporation is a question of fact and degree and relies on R v Judges of the Federal Court of Australia and Another; Ex parte The Western Australian National Football League (Inc ) and Another (1979) 143 CLR 190; (1979) 23 ALR 439 (“Adamson”) which was applied by the Full Bench in Crown Scientific Pty Ltd v Leslie Bruce Clarke (2007) 87 WAIG 598 and in Lawrence (FB) at paragraphs 207, 235 and 322(b).
63 The applicant relies on Adamson where the majority stated at 452 (ALR):
“… 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 a substantial and not a merely peripheral activity not forbidden by the organic rules of the corporation, the conclusion that the corporation is a trading corporation is open.”
64 The applicant submits that whether or not a particular activity of the respondent may be considered a trading activity as opposed to a statutory function or non-trading activity is determined by whether that activity has the character of trading. The applicant argues that trading has been defined variously as “traffic by way of sale or exchange” (by Bowen CJ in Re Ku-ring-gai Co-operative Building Society (No 12) Ltd [1978] 36 FLR 134), not limited to buying at a profit but extending to business activities carried out with a view to earning revenue (Mason J in Adamson) and the most important indication is whether a corporation is “engaged in the buying or selling or change of goods or services or valuable intangibles” (Aboriginal Legal Service of Western Australia (Inc) v Lawrence [No 2] [2008] 89 WAIG 243 [“Lawrence (IAC)”]).
65 The applicant argues that the characterisation of a corporation as a trading corporation should be determined by primarily focusing on the activities of the corporation (see Australian Workers’ Union of Employees, Queensland v Etheridge Shire Council (2008) FCA 1268 at paragraph 146).
66 The applicant argues that when determining whether or not trading by the respondent is substantial and not merely peripheral Bysterveld provides some guidance at 2475:
“… Whilst the percentage values are relevant to the question whether it can be said that the trading activities of the Respondent are significant, it is not of assistance to simply analyse these activities only on the basis of comparative dollars of trading activities to the total operating revenue received from rates and grants and other items that are not trading activities…”
67 The applicant argues that the trading activity of the respondent is quite insignificant in relation to the overall consideration of the respondent’s activities which, as a Local Government, exercises extensive legislative and executive functions in the area of Local Government (see Australian Workers’ Union of Employees, Queensland v Etheridge Shire Council [op cit] at paragraph 75).
68 The applicant argues that despite the respondent claiming that its trading activities for the financial year 2007/08 represents 24.52 percent (as amended following the hearing) of their total operating revenue, the trading figures for the previous two financial years show trading activities to be considerably less and the applicant maintains therefore that the percentage of trading activity the respondent claims it undertook in the 2007/08 financial year is not indicative on its own that the respondent is a trading corporation.
69 The applicant submits that where the respondent acts merely as a conduit for the channelling of funds gratuitously provided by the State or Federal government, which are then spent by way of engaging a third party to deliver the good or service, this is not trading. The applicant maintains that the following activities are of that character and should be discounted as trading income from Appendix A of Mr Durtanovich’s amended Witness Statement:
(a) Items 2, 3 and 7 - Mr Durtanovich provided in Appendix B a breakdown of the manner in which the sums of $38,268 and $13,221 are spent by the Shire. The applicant submits that expenditure items 1, 5, 6, 7 and 8 in Appendix B relate to expenditure where the respondent has not traded but has merely acted as a conduit for funds to pay for items which FESA could have bought and these items are distinguishable from expenditure items 2, 3 and 4 where the respondent is using its own capital items in exchange for a payment. The applicant maintains that no evidence has been provided in relation to Item 3 of Appendix A and if this submission is accepted $32,184 would be deducted from the trading income figure for the 2007/2008 financial year.
(b) Item 5 – the applicant submits that no further details have been provided by Mr Durtanovich in relation to this item. The applicant maintains that Mr Durtanovich states that the Shire “facilitated” the construction of a new building however, it has been admitted that the works were not carried out by the Shire and it is not clear what the Shire did, if anything, which would constitute trading. The applicant submits that this item ought not be considered a trading activity and if this submission is accepted, $1,600,000 should be deducted from the trading income figure. Furthermore, this grant of $1,600,000 was an anomaly and inconsistent with the usual trading activity revenue from previous financial years.
70 The applicant argues that as BHP has ceased its operations in Ravensthorpe, the actual trading income for the respondent for the 2008/2009 financial year, which is the period when the applicant was terminated, is likely to be substantially less than the trading income in the 2007/2008 financial year. The applicant submits that if one wholly discounts the categories referred to in the applicant’s submissions and applies an overall discount of 50 percent to the other trading activities of the respondent (given the population of Ravensthorpe/Hopetoun is expected to decline by 50 percent), the percentage of trading activities against non-trading activities may be calculated as $2,584,212.95 less $32,184.00, $1,600,000, $116,671.69 (sic), $227,336.06 and $80,618.91 which equals $527,402.29. $527,402.29 divided by two is $263,701.14. The applicant maintains that $263,701.14 represents 3.2 percent of trading income and is insubstantial in quantitative and qualitative terms when compared with non-trading activities engaged in by the Shire.
71 The applicant argues that without the airport, private works and refuse charges the respondent’s trading activities cannot be characterised as substantial and rather, they may be characterised as minimal and incidental to its other non-trading activities.
(a) Item 12 – the applicant maintains that BHP are unlikely to have any mining refuse and will be unlikely to pay any refuse charges in the 2008/2009 financial year and the applicant argues that if this submission is accepted the sum of $116,671.69 (sic) would be deducted from the trading income.
(b) Items 21 and 22 – the applicant maintains that BHP will no longer need to use the Shire’s airport facilities or pay any contribution to the running of the airport as its Ravensthorpe employees have been redeployed or made redundant and the applicant argues that if this submission is accepted, the sum of $227,336.06 would be deducted from the Shire’s trading income for the 2008/2009 financial year.
(c) Item 30 – the applicant maintains that BHP are unlikely to undertake private works and the revenue for private works is unlikely to be achieved in the 2008/2009 financial year and the applicant argues that if this submission is accepted, the sum of $80,618.91 would be deducted from the Shire’s trading income.
72 In summary the applicant submits that as the respondent is not a trading corporation the Commission has jurisdiction to hear the applicant’s claim for unfair dismissal.
Findings and conclusions
Credibility
73 I have no reason to doubt the veracity of the evidence given by Mr Durtanovich, however, I do not accept Mr Durtanovich’s characterisation of some of the income received by the respondent as being from trading activities. With this qualification, I accept the evidence given by Mr Durtanovich.
74 There is no dispute between the parties and I find that in the financial years 2006/2007 and 2007/2008 the respondent received the income specified in Appendix A, which was attached to Mr Durtanovich’s witness statement (as amended on 3 April 2009) (see paragraph 29). As the applicant was employed for two months during the 2007/2008 financial year and for a little over four months of the 2008/2009 financial year, I will base my findings on the income the respondent received in the 2007/2008 financial year, as the income the respondent received in this financial year was the only complete financial record available as at the date of the hearing.
75 Section 6 of the WR Act defines “employer” as “a constitutional corporation, so far as it employs, or usually employs, an individual” (see also s 14(a) of the Fair Work Act 2009). Section 4 of the WR Act defines a “constitutional corporation” as a corporation to which s 51(xx) of the Commonwealth Constitution applies and s 51(xx) of the Commonwealth Constitution defines a corporation among others as “trading or financial corporations formed within the limits of the Commonwealth”. If the respondent is a trading corporation by virtue of ss 4, 6 and 16 of the WR Act the jurisdiction of the Commission to deal with the applicant's claim is excluded by s 16(1) of the WR Act and s 109 of the Commonwealth Constitution (see Crown Scientific Pty Ltd v Leslie Bruce Clarke [op cit]).
76 Section 16 of the WR Act reads as follows:
“16 Act excludes some State and Territory laws
(1) This Act is intended to apply to the exclusion of all the following laws of a State or Territory so far as they would otherwise apply in relation to an employee or employer:
(a) a State or Territory industrial law;
(b) a law that applies to employment generally and deals with leave other than long service leave;
(c) a law providing for a court or tribunal constituted by a law of the State or Territory to make an order in relation to equal remuneration for work of equal value (as defined in section 623);
(d) a law providing for the variation or setting aside of rights and obligations arising under a contract of employment, or another arrangement for employment, that a court or tribunal finds is unfair;
(e) a law that entitles a representative of a trade union to enter premises.
Note: Subsection 4(1) defines applies to employment generally.
State and Territory laws that are not excluded
(2) However, subsection (1) does not apply to a law of a State or Territory so far as:
(a) the law deals with the prevention of discrimination, the promotion of EEO or both, and is neither a State or Territory industrial law nor contained in such a law; or
(b) the law is prescribed by the regulations as a law to which subsection (1) does not apply; or
(c) the law deals with any of the matters (the nonexcluded matters) described in subsection (3).
(3) The nonexcluded matters are as follows:
(a) superannuation;
(b) workers compensation;
(c) occupational health and safety (including entry of a representative of a trade union to premises for a purpose connected with occupational health and safety);
(d) matters relating to outworkers (including entry of a representative of a trade union to premises for a purpose connected with outworkers);
(e) child labour;
(f) long service leave;
(g) the observance of a public holiday, except the rate of payment of an employee for the public holiday;
(h) the method of payment of wages or salaries;
(i) the frequency of payment of wages or salaries;
(j) deductions from wages or salaries;
(k) industrial action (within the ordinary meaning of the expression) affecting essential services;
(l) attendance for service on a jury;
(m) regulation of any of the following:
(i) associations of employees;
(ii) associations of employers;
(iii) members of associations of employees or of associations of employers.
Note: Part 15 (Right of entry) sets prerequisites for a trade union representative to enter certain premises under a right given by a prescribed law of a State or Territory. The prerequisites apply even though the law deals with such entry for a purpose connected with occupational health and safety and paragraph (2)(c) says this Act is not to apply to the exclusion of a law dealing with that.
This Act excludes prescribed State and Territory laws
(4) This Act is intended to apply to the exclusion of a law of a State or Territory that is prescribed by the regulations for the purposes of this subsection.
(5) To avoid doubt, subsection (4) has effect even if the law is covered by subsection (2) (so that subsection (1) does not apply to the law). This subsection does not limit subsection (4).
Definition
(6) In this section:
this Act includes the Registration and Accountability of Organisations Schedule and regulations made under it.”
77 The issue to be determined when deciding if a corporation is a trading corporation is the character of the activities carried out by a corporation at the relevant time within the context of the purpose of the organisation and whether or not the corporation engaged in significant and substantial trading activities of a commercial nature such that it can be described as a trading corporation for the purposes of the WR Act.
78 In Lawrence (IAC), Steytler, P and Pullin, J decided that the Aboriginal Legal Service of Western Australia (Inc) (“the ALS”) was not a constitutional corporation and found that the tender and contract arrangements the ALS had with the Federal Government did not fundamentally alter the ALS’s character as a public service provider rather than as a trading corporation under s 51(xx) of the Commonwealth Constitution.
79 The principles to apply when determining whether a corporation is a trading corporation are set out by Steytler, P at 254 in this decision and are as follows:
“The more relevant (for present purposes) principles that might be drawn from these and other cases are as follows:
(1) A corporation may be a trading corporation even though trading is not its predominant activity: Adamson (239); State Superannuation Board (303  304); Tasmanian Dam case (156, 240, 293); Quickenden [49]  [51], [101]; Hardeman [18].
(2) However, trading must be a substantial and not merely a peripheral activity: Adamson (208, 234, 239); State Superannuation Board (303  304); Hughes v Western Australian Cricket Association Inc (1986) 19 FCR 10, 20; Fencott (622); Tasmanian Dam case (156, 240, 293); Mid Density (584); Hardeman [22].
(3) In this context, 'trading' is not given a narrow construction. It extends beyond buying and selling to business activities carried on with a view to earning revenue and includes trade in services: Kuring-gai (139, 159  160); Adamson (235); Actors and Announcers Equity Association of Australia v Fontana Films Pty Ltd (1982) 150 CLR 169, 184  185, 203; Bevanere Pty Ltd v Lubidineuse (1985) 7 FCR 325, 330; Quickenden [101].
(4) The making of a profit is not an essential prerequisite to trade, but it is a usual concomitant: St George County Council (539, 563, 569); Kuringgai (140, 167); Adamson (219); E (343, 345); Pellow [28].
(5) The ends which a corporation seeks to serve by trading are irrelevant to its description: St George County Council (543, 569); Kuringgai (160); State Superannuation Board (304  306); E (343). Consequently, the fact that the trading activities are conducted is (sic) the public interest or for a public purpose will not necessarily exclude the categorisation of those activities as 'trade': St George County Council (543) (Barwick CJ); Tasmanian Dam case (156) (Mason J).
(6) Whether the trading activities of an incorporated body are sufficient to justify its categorisations as a 'trading corporation' is a question of fact and degree: Adamson (234) (Mason J); State Superannuation Board (304); Fencott (589); Quickenden [52], [101]; Mid Density (584).
(7) The current activities of the corporation, while an important criterion for determining its characterisation, are not the only criterion. Regard must also be had to the intended purpose of the corporation, although a corporation that carries on trading activities can be found to be a trading corporation even if it was not originally established to trade: State Superannuation Board (294  295, 304  305); Fencott (588  589, 602, 611, 622  624); Hughes (20); Quickenden [101]; E (344); Hardeman [18].
(8) The commercial nature of an activity is an element in deciding whether the activity is in trade or trading: Adamson (209, 211); Kuringgai (139, 142, 160, 167); Bevanere (330); Hughes (19  20); E (343); Fowler; Hardeman [26].”
80 Steytler, P stated the following at 255 when applying these principles to the ALS’s operations:
“It is important to bear in mind, at the outset, that s 51(xx) of the Constitution does not give to the Commonwealth a power to legislate with respect to trading, or even with respect to trading by corporations: State Superannuation Board (295) (Gibbs CJ and Wilson J). It gives a power to legislate with respect to some, but not all, corporations, including those that are classified as trading corporations: St George County Council (543) (Barwick CJ), (546) (McTiernan J).
The appellant in the present case was set up to perform what are best described as public welfare services. As is apparent from cl 4 of its constitution, its function is to provide direct relief to indigenous people from 'poverty, suffering, destitution, misfortune, distress and helplessness caused directly or indirectly by their involvement with [the law] … '. It was for this purpose that it was given power to provide legal assistance to indigenous persons and to receive and spend grants from the Commonwealth. It exists for no other purpose and there is no suggestion that its activities had ever deviated from those necessary to achieve its primary purpose in the public interest.
That, of itself, is not determinative. However, there are other factors which point against the appellant's trading character. As I have said, its constitution requires that all of its income and property, derived from whatever source, be applied exclusively towards the 'promotion' of its objects and its members are not to receive any form of profit, bonus or dividend. There is no suggestion that the appellant earns, or tries to earn, any form of profit, bonus or dividend. Nor is there any suggestion that it profits from, or tries to profit from, its activities under the contract so as to fund any other activities that are permitted under its constitution. There is no suggestion, even, that it undertakes any other activities of any significance at all. Also, I have said that it is classed as a public benevolent institution and that it enjoys tax concessions accordingly. Its services are provided only to those it has been set up to help and it does not compete for those, or any other, clients.
There is nothing in its funding arrangements that alters any of this. Although the appellant tendered for its funding contract, the tender was not one based on price. Rather, as I have said, the whole process was designed to enhance efficiency in respect of services funded by government. The recitals to the contract, and the provisions to which I have referred, make it plain that the funding is designed to ensure that indigenous Australians have access to high quality and culturally appropriate legal aid services so as to enable them fully to exercise their legal rights as Australian citizens. Those who are given access to these services must demonstrate both that they are eligible persons and that they satisfy a means test establishing that they are unable to pay for their legal services. The overwhelming majority of the services are provided free of any charge. If contributions can be made towards expenses, they must be used to enhance the quality of the services provided. Services under the contract are overseen, and controlled, by Government. Although fees are paid on invoice, this is merely an accounting device and the fees must be provided in the preordained sums, so long as the contracted services are provided. The Policy Directions make it plain that the funding is provided in order to achieve a welfare function in fulfilment of government policy.
The services performed by the appellant under the contract are essentially the same services, with the same welfare or public interest purpose, as had previously been the case. Also, as had previously been the case, the funding still came primarily from government. The only change of any substance was that the nature and quality of the services were controlled under the contract rather than by grant conditions. Although, theoretically, a private law firm intending to derive some profit from the contract might have tendered for it, that has no bearing on the characterisation of the appellant. It remained the same public interest, nonprofit organisation that had previously performed welfare services of the same kind.
None of these factors, taken individually, necessarily has the consequence that the appellant is not a trading corporation. A trading corporation can contract with government to provide a charitable or welfare function in fulfilment of government policy. Ordinarily, the provision of large scale legal and allied services, for reward, is trading and the fact that it is not done for profit is not determinative of its character, as I have said. However, when all of the factors to which I have referred are taken together, it cannot be said that what is done by the appellant has a commercial character. Rather, its activities, including its entry into the contract, seem to me to be removed from ordinary concepts of trade or trading, whether for reward or otherwise, in much the same way as those of a governmentrun legal aid agency. As I have stressed, its services are provided, in all but the most exceptional cases, free of charge: St George County Council (569). They are provided for altruistic purposes, not shared by ordinary commercial enterprises (Kuringgai (160) (Deane J)), under a constitution which requires the appellant to act only in furtherance of the altruistic objects. The appellant engages in a major public welfare activity pursuant to an agreement with the Commonwealth under which it will be reimbursed for most of its costs: E (343) (Wilcox J); Fowler. Although its services have been 'purchased' by the Commonwealth under the contract, its activities continue to lack a 'commercial aspect': Hardeman [26]; J S McMillan (355) (Emmett J); Kuringgai (142) (Bowen CJ), (167) (Deane J). It follows from what I have said that the appellant is not a 'trading corporation' for the purposes of s 51(xx) of the Constitution and the notice of contention succeeds. The Commission has jurisdiction to determine the issue before it.”
81 Neither party gave evidence about the respondent’s corporate status. However, I note that s 2.5 of the Local Government Act 1995 (“the LG Act”) provides that each Local Government body in Western Australia is a body corporate and has the legal capacity of a natural person. I therefore find that the respondent is an incorporated body.
82 Section 1.3(3) of the LG Act creates a duty on the respondent to focus on the environment, social advancement and economic prosperity of community members residing within the Shire. Section 1.3(3) reads as follows:
“(3) In carrying out its functions a local government is to use its best endeavours to meet the needs of current and future generations through an integration of environmental protection, social advancement and economic prosperity.”
There is also an obligation on the respondent under the LG Act to provide appropriate governance for its residents. Section 3.1(1) of the LG Act reads as follows:
“(1) The general function of a local government is to provide for the good government of persons in its district.”
Mr Durtanovich also confirmed that the respondent’s role was to carry out its statutory functions in addition to conducting a range of what he described as ‘trading activities’. On this basis I find that the respondent’s main role is to provide a range of infrastructure and other services to the residents of the Shire for their benefit.
83 I also find that the services provided by the respondent are funded from income received by the respondent from rates and service charges as well as from other sources, in the main from grants.
84 It was not in dispute and I find that the applicant was an employee of the respondent and he was terminated on 4 November 2008 (see paragraph 7).
85 I make the following findings about the activities which the respondent maintains were trading activities in the 2007/2008 financial year.
Items 1 and 4 – Sale of Council Publications and Fire Maps
86 The charges for these publications, most of which are available free on the respondent’s website, were levied on a cost recovery basis.
Items 2, 3 and 7 – Income from FESA
87 The income paid to the respondent under Item 3, FESA - Administration Charge, is a commission paid to the respondent for collecting the statutory Emergency Services Levy imposed on the respondent’s ratepayers. The respondent also received income of $49,600 from FESA for the purchase of capital goods and equipment and maintenance costs of this equipment to assist in the running of the respondent’s fire and emergency services for the benefit of community members (Items 2 and 7).
Item 5 – Emergency Services Collocation Grant
88 The respondent was reimbursed administration costs associated with coordinating this project which was funded by a government grant to build and fit out premises for housing fire and emergency services in Hopetoun. Despite the Commission requesting details about the quantum the respondent received from the grant in return for administering this project no information was provided by the respondent.
Item 6 - Rent
89 Income paid to the respondent in return for renting houses owned by the respondent was in the main from employees who paid rent at a subsidised rate.
Items 9, 10, 11 and 12 – Collection of business refuse and business tip charges, building site tip charges and mine site refuse collection
90 These are optional services provided by the respondent to businesses operating within the Shire and all of these services were provided in return for the payment of fees. It was unclear if these services were provided on a cost recovery basis or if a profit was made from the provision of these services.
Item 13 – Sale of refuse bins
91 The income from this activity is from the sale of bins to residents on a cost recovery basis.
Item 14 – Cemetery charges
92 Income arising from this activity is paid to the respondent in return for the provision of burial services to residents and the respondent claimed that these charges are based on commercial rates. It is unclear if the respondent made a profit from the provision of this service.
Items 15, 17 and 18 – Income received from the hire of halls, the Ravensthorpe Entertainment Centre and the Sports Pavilion
93 The respondent received income from the hire of these buildings, which are owned and operated by the respondent. Again, it is unclear if the respondent made a profit from conducting these activities.
Items 16 and 19 – Swimming pool admission charges and gymnasium memberships
94 The respondent received income from the use of these facilities in the form of admission charges and the payment of gym membership however there was no evidence if this income covered the cost of operating these facilities or if the respondent made a profit from these activities.
Items 20 and 23 –Camping fees and gate registrations
95 Income was generated from the provision of camping facilities by the respondent however it is unclear if the fees covered the cost of maintaining these facilities. Although the respondent was paid fees in return for farmers/landowners putting gates across a public thoroughfare there was no evidence of any service or good being provided in return for this charge.
Items 21 and 22 – Landing fees and charges and Ravensthorpe Nickel Operation contribution
96 Landing fees were paid to the respondent in return for the use of the airstrip at the Ravensthorpe Airport and BHP gave the respondent a contribution which covered some of the operating costs of running the airport.
Items 24 and 25 – Hopetoun Caravan Park Lease and other minor revenue
97 The respondent received income from a commercial operator to lease the Hopetoun Caravan Park however it is unclear if this lease arrangement generated a profit for the respondent. No breakdown was provided for the $500 claimed as trading income at Item 25.
Items 26 and 28 – Lease of land owned by the respondent
98 These amounts were paid to the respondent in return for the lease of land for a campsite and for the use of land near the airport.
Item 27 – Standpipe Administration charge
99 Fees were paid to the respondent in return for the use of standpipe water however it is unclear if the fees charged covered the cost of operating the standpipes.
Item 30 – Private works
100 Income was received by the respondent in return for carting waste water for BHP and for the construction of a gravel pit for private use. Mr Durtanovich confirmed that when these private works were undertaken a fee was charged over and above the cost of providing the service and the respondent made a profit from the provision of these services.
Item 31 – Staff housing rent
101 Income was paid to the respondent by its works employees at lower than commercial rates in return for the provision of housing and it is unclear if the rent received covered the costs incurred by the respondent in providing and maintaining the houses rented by these employees.
Item 32 – Westpac Banking Commission, Item 33 – Department for Planning and Infrastructure Commissions, Item 34 – Safe Custody Charges and Item 35 – Westpac Training
102 Commissions were paid to the respondent in return for the respondent providing banking and licensing services on behalf of Westpac and DPI and a fee was paid to the respondent in return for the provision of a safe custody service. The amount claimed for Westpac training, which is reimbursement of costs incurred with respect to training employees to undertake services on behalf of Westpac, was associated with the respondent’s employees providing a service for Westpac.
Items 47, 48 and 49 – Ravensthorpe and Munglinup Sewerage charges
103 This income was generated from the provision of sewerage services to residents who chose to connect to the Shire’s sewerage system however no details were provided about whether this service was provided on a profit making basis.
Item 51 – Ravensthorpe Sewerage Extensions
104 This payment was made to the respondent by the Department of Industry and Resources in return for extending the Shire’s sewerage services as the respondent has a license to operate the Ravensthorpe sewerage system and it is clear that some of the work involved in this project was undertaken by contractors. Even though no breakdown of the amount paid to contractors or information about the respondent’s contractual arrangements with the contractors or the Department of Industry and Resources was provided by the respondent it appears on the evidence and documentation that this activity was conducted on a commercial basis.
Item 53 Waste effluent dump charge
105 The Water Corporation paid the respondent to dispose of effluent at its licensed facility and it appears that the respondent conducted this activity on a commercial basis.
Does the respondent engage in substantial trading activities?
106 The income the respondent received from the following activities, as a percentage of the respondent’s total income for the 2007/2008 financial year, is as follows:
Ref#
Name
2007-2008
Income
Percentage of total income for 2007/2008
1
Sale of Council Publications
$111.27
0.001
2
FESA - Bush Fires
$38,000.00
0.360
3
FESA - Administration Charge
$4,000.00
0.038
4
Fire Map Sales
$474.55
0.004
5
Grant - Emergency Services Collocation
$1,600,000.00
15.182
6
Rent - Martin St, Ravensthorpe
$5,352.00
0.051
7
FESA - State Emergency Service
$11,600.00
0.110
8
Crime Prevention Grant


9
Business Refuse Charges
$22,045.81
0.209
10
Business Tip Charges
$11,017.40
0.104
11
Building Sites Tip Charges
$20,782.56
0.197
12
Mine Site Refuse Charges
$116,671.09
1.107
13
Sale of Refuse Bins
$534.73
0.005
14
Cemetery Charges
$930.00
0.008
15
HalI Hire Charges
$5,172.17
0.049
16
Swimming Pool Admission Charges
$7,931.05
0.075
17
Ravensthorpe Entertainment Centre Charges
$6,876.73
0.065
18
Ravensthorpe Sports Pavilion Hire Charges
$1,952.50
0.018
19
Gym Memberships
$6,734.06
0.064
20
Camping Fees
$5,306.00
0.050
21
Landing Fees and Charges
$32,715.00
0.310
22
Ravensthorpe Nickel Operation Contribution
$194,621.06
1.847
23
Gate Registrations
$270.00
0.002
24
Hopetoun Caravan Park lease
$21,200.00
0.201
25
Other Minor Revenue
$500.00
0.005
26
Tectonic Resources Lease
$6,750.00
0.064
27
Standpipe Administration Charge
$1,759.00
0.017
28
Airport Farmland Lease
$25,750.00
0.244
29
Power Connection Morris Camp


30
Private Works Revenue
$80,618.91
0.765
31
Staff Housing Rent - Works
$9,525.73
0.090
32
Westpac Banking Corporation In-Store Commission
$51,925.92
0.493
33
Department for Planning & Infrastructure Commission
$37,965.37
0.360
34
Safe Custody Charges
$854.87
0.008
35
Westpac Training
$592.20
0.006
36
Rate Search Fees


37
Profit on Sale of Asset


38
Reimbursement Fire Fighting Expenses


39
Rent –Medical House


40
Medical Practice Review


41
Tip Entry Fees


42
Sewerage Fees


43
Hopetoun Recreational Facilities


44
Landcorp Street Tree Project


45
Subdivision Admin & Supervision


46
Western Power – Lease of Depot


47
Ravensthorpe Sewerage Charge
$48,181.89
0.457
48
Ravensthorpe Sewerage in Lieu
$8,919.35
0.085
49
Munglinup Sewerage Charge
$1,942.60
0.018
50
Reimbursement Fire Fighting Expenses


51
Ravensthorpe Sewerage Extensions
$122,979.34
1.167
52
Hopetoun Effluent Cartage


53
Waste Effluent Dump Charge
$71,649.79
0.680





Respondent’s total income for 2007/2008
$10,538,817.00





107 When taking into account the principles outlined by Steytler, P in paragraph 79 and after reviewing the nature of the funds received by the respondent which it claims constitutes income from trading activities and when taking into account the activities of the respondent as a whole and the purpose and role of the respondent I find that the respondent was not a trading corporation at the relevant time for the purposes of this application.
108 I find that when considered collectively the nature of most of the activities undertaken by the respondent which generated income in the 2007/2008 financial year which it claims were trading activities were conducted in the main for the public benefit of residents in the Shire and did not have the requisite commercial character one would normally associate with the activities of a trading corporation. I also find that most of these activities were inconsequential and incidental to the primary activities and functions of the respondent.
109 I find that the income the respondent received with respect to Items 2, 5, 7, 22, 23 and 25 in the 2007/2008 financial year lacks the essential character of trading and can therefore not be regarded as being income from trading. I do not accept that income from gate registrations, Item 23, is a trading activity as no service or good was provided in return for the payment of these monies and I am unable to determine if the income the respondent received from Item 25 was as a result of trading as no details were provided about how this income was generated. I find that the monies the respondent received to purchase equipment to provide fire and emergency services as and when required for community members does not constitute trading as this income was given to the respondent by way of a grant to buy equipment to provide services on a needs basis to community members and fees were not charged by the respondent in return for the provision of these services (Items 2 and 7). I do not consider that the amount claimed by the respondent at Item 5 to be income as a result of a trading activity as the money from this grant was mainly used to fund contractors to construct a community facility. Even though the respondent was paid a portion of this grant in order to facilitate the construction of this building, as no details were provided about the amount it received from this grant for this purpose, I am unable to determine the quantum which can be considered to be income from trading. I find that the funds paid to the respondent at Item 22 do not represent income from trading activities as details were not provided by the respondent about how this contribution made by BHP’s Ravensthorpe Nickel Operations towards the cost of operating the airport was used and whether or not this contribution was paid in return for the provision of goods and/or services by the respondent.
110 I find that with the exception of Items 30, 51 and 53 (2.61 percent of the respondent’s total income for the 2007/2008 financial year) the other activities the respondent claimed were trading activities were not activities which could be regarded as trading activities. There was no evidence that any of the following activities generated a profit for the respondent nor was there evidence that they were conducted on a commercial basis as one would normally expect of the activities of a trading corporation. I am also of the view that many of these activities were incidental and peripheral to the respondent’s main function and I find that many of these activities were to provide services for the benefit of the local community as one would expect of the activities of a Local Government entity given its charter under the LG Act.
· Items 1, 4 and 13
I find that the income from these activities was minor, and these activities were peripheral to the main functions of the respondent and were services provided by the respondent to support the local community. It is the case that publications sold by the respondent were not generated on a commercial basis and refuse bins were also sold at cost.
· Items 3
Whilst the respondent received income for collecting the Emergency Service Levy I find that this activity was provided by the respondent as a community service and I am also of the view that this activity was incidental and peripheral to the respondent’s main activities.
· Items 6 and 31
It is clear that the rent received for the provision of housing to employees was at a subsidised rate and there was no evidence that the respondent made a profit from this activity. It was also plain that lower than commercial rents were charged to employees to enable them to reside and work in the Shire.
· Items 9, 10, 11 and 12
I accept that income the respondent received in exchange for the provision of these services was for activities which were over and above the services which the Shire normally provides, however there was no evidence that these services were undertaken on a profit making or commercial basis.
· Items 14, 15, 16, 17, 18, 19 and 20
Given the nature of these activities in the context of the respondent’s activities as a whole I find that these activities were incidental and peripheral to the main activities carried on by the respondent and in the main were provided as services to the local community. Additionally, there was no evidence that the income the respondent received in return for the provision of these services was on a cost recovery or profit making basis.
· Item 21
The income paid to the respondent from landing fees represents a significant amount of income in return for the provision of a service however it constitutes only a small proportion of the costs of operating this facility. It also appears that the operation of the airport was not conducted on a commercial basis as some of the costs for establishing and operating the airport were met by grant funding and contributions from BHP (see appendix attached to Mr Durtanovich’s amended witness statement).
· Item 24
Although the income from leasing land to the operator of the Hopetoun Caravan Park is not insignificant I find that this is a minor and peripheral activity of the Shire.
· Items 26 and 28
I find that whilst the income from these activities was not insubstantial it results from activities which are incidental and peripheral to the respondent’s main activities.
· Item 27
I find that the income the respondent received from the standpipe administration charge is minor and results from an activity which is incidental and peripheral to the respondent’s main activities. It is also unclear if this activity operated on a commercial basis.
· Items 32, 33, 34 and 35
I find that the income the respondent received in return for operating banking and DPI services, whilst not insignificant, is operated as a public benefit and it can be inferred that this is not a major activity of the respondent given that these services would be attended to by the respondent’s employees on an intermittent basis. Income for providing safe custody is also minor and I find that this activity is incidental and peripheral to the respondent’s main activities.
· Items 47, 48 and 49
I find that the respondent received income in return for connecting residents to the sewerage system, which was paid by an annual fee charged to residents, however it is unclear if this activity was operated on a commercial basis.
111 I find that the following income arises from trading activities which have a commercial character.
· Item 30
The income the respondent received in return for undertaking private works conducted by the respondent is substantial and I find that this income was as a result of a trading activity as the respondent made a profit from these activities.
· Items 51 and 53
I accept that the income paid to the respondent for the upgrade of the sewerage treatment plant and for cartage of effluent is income from trading as the respondent received income on a commercial basis in return for the provision of these activities.
112 It is also the case that the respondent is not a financial corporation as there was no evidence that the respondent engaged in any financial activities.
113 For the reasons set out above I will make a declaration that during the period the applicant was employed by the respondent, the respondent was not a trading corporation. The substantive matter will be listed for hearing on a date to be fixed.