UNFAIR DISMISSAL APPLICATION

WESTERN AUSTRALIAN INDUSTRIAL RELATIONS COMMISSION

CITATION : 2024 WAIRC 00330

DELIVERED : friday, 14 June 2024

FILE NO. : U 16 OF 2023

Applicant

AND

Looma Community Inc

Respondent

CatchWords : Unfair dismissal - Jurisdiction - National system employer - Trading corporation - Trading activities - Whether trading activities substantial - Not for profit

Legislation : Housing Act 1980 (WA)

Result : Jurisdiction Found

Representation:

Applicant : Mr S Kemp (of counsel)

Respondent : Mr N Ellery (of counsel)

Case(s) referred to in reasons:

Aboriginal Legal Service of Western Australia (Inc) v Lawrence (No 2) [2008] WASCA 254; (2008) 89 WAIG 243

Bankstown Handicapped Children’s Centre Association Inc and Another v Hillman and Others [2010] FCAFC 11, (2010) 182 FCR 483

Ms Marie Pasalskyj [2015] FWC 7309

Quickenden v Commissioner O'Connor of the Australian Industrial Relations Commission [2001] FCA 303 [51]

Re Ku-ring-gai Co-operative Building Society (No 12) Ltd (1978) 36 FLR 134

Springdale Comfort Pty Ltd trading as Dalfield Homes v Building Trades Association of Unions of Western Australia (Association of Workers) (1987) 67 WAIG 325

United Firefighters Union of Australia v Country Fire Authority [2015] FCAFC 1; (2015) 228 FLR 497

Reasons for Decision

1         Mr Warren Johnson was employed by Looma Community Inc (Looma Community) from 28 January 2022 until 24 February 2023.  From 27 April 2022, Mr Johnston worked as the Manager of the Camballin Caravan Park and Camballin Houses.

2         Mr Johnston claims on 7 February 2023 he was informed by the Chief Executive Officer of Looma Community that he no longer was the Manager, and his duties would be limited to ‘talking to tourists’ and taking bookings for the Camballin Caravan Park and Houses.  Mr Johnston says the changes to his duties were made unilaterally by Looma Community and had the effect of reducing his duties and responsibilities.  Mr Johnston contends that he was left with no option but to accept the repudiation of his employment contract and, in this circumstance, he was unfairly dismissed.  Mr Johnston seeks compensation for the loss he has incurred because of the dismissal.

3         Looma Community denies Mr Johnston was dismissed because it says Mr Johnston’s employment was terminated when he voluntarily resigned on 24 February 2022.

4         In addition, Looma Community maintains that it is a national system employer for the purposes of the Fair Work Act 2009 (Cth) (FW Act) and therefore the Western Australian Industrial Relations Commission (Commission) lacks jurisdiction to hear and determine Mr Johnson’s claim.

5         In accordance with the Western Australian Industrial Appeal Court’s decision in Springdale Comfort Pty Ltd trading as Dalfield Homes v Building Trades Association of Unions of Western Australia (Association of Workers) (1987) 67 WAIG 325, the Commission is unable to proceed unless satisfied that the Commission has the necessary jurisdiction to do so.

Questions to Be Decided

6         In deciding whether Looma Community is a national system employer because it is a trading corporation, I must conduct an overall assessment of its operations and activities and decide whether they have the character of trading that is not unsubstantial.  If I conclude that it is a trading corporation, the Commission lacks jurisdiction to hear and determine the claim.

Principles

7         Section 14(1)(a) of the FW Act defines a national system employer as a constitutional corporation so far as it employs or usually employs an individual and s 13 of the FW Act defines a national system employee as an individual employed by a national system employer.  Section 12 of the FW Act defines constitutional corporations as corporations which are trading, or financial corporations formed within the limits of the Commonwealth.  Section 26 of the FW Act states that it applies to the exclusion of all state or territory industrial laws that would otherwise apply to a national system employee or employer including the FW Act.  If an employer is a trading corporation, it is a national system employer, and this Commission does not have jurisdiction to consider, hear or determine an unfair dismissal application.

8         In Aboriginal Legal Service of Western Australia (Inc) v Lawrence (No 2) [2008] WASCA 254; (2008) 89 WAIG 243 (Lawrence), the Western Australian Industrial Appeal Court set out the principles to be applied by the Commission when considering whether an entity is a trading corporation [68].

(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: Ku-ring-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); Ku-ring-gai (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); Ku-ring-gai (160); State Superannuation Board (304 – 306); E (343).  Consequently, the fact that the trading activities are conducted is 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], [l01]; 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); Ku-ring-gai (139, 142, 160, 167); Bevanere (330); Hughes (19 - 20); E (343); Fowler; Hardeman [26].

9         The decision of the Court in Lawrence has been affirmed in the appellate court decisions of United Firefighters Union of Australia v Country Fire Authority [2015] FCAFC 1; (2015) 228 FLR 497 and in Bankstown Handicapped Children’s Centre Association Inc and Another v Hillman and Others [2010] FCAFC 11; (2010) 182 FCR 483 (Bankstown).

10      In Bankstown, the activities of the Association were directed at the public good, nevertheless the Full Court of the Federal Court concluded the operations and activities were trading activities and had a commercial character.  The Full Court of the Federal Court considered the description of the relationship between the parties in the relevant contract and the overall activities of the organisation [54].

Background and Facts

13      The Chairperson of Looma Community gave evidence on behalf of Looma Community and provided an extract of the ASIC Association Summary, an extract of the Australian Charities and Not-for-profits Commission record, a copy of the Constitution of Looma Community Incorporated July 2020, and a Statement of Income Expenses for the financial years ending on 30 June 2019 and 30 June 2020 and a second Statement of Income Expenses for the financial years ending on 20 June 2021 and 30 June 2022. A copy of a Housing Management Agreement (HMA) and a Grant Agreement Maintenance to Housing Assets in Looma (Grant Agreement) were also submitted. The Chairperson described the operations and activities of the organisation, as well as the nature of the arrangements for the raising of revenue to support such activities. Mr Johnston’s evidence, given by the former accountant for Looma Community and his defacto partner, Ms Shelley Johnston, set out further details and explanation of the entries in the profit and loss statements and negotiations over the HMA and Maintenance Agreement. Ms Johnston’s evidence included her opinion of the commercial character of a number of transactions described by the Chairperson.  I am of the view that it is for the Commission to form an assessment about the character of the transactions from the evidence submitted and Ms Johnston’s opinions have not been considered in undertaking this evaluation.

Is Looma Community Inc a Corporation?

14      Looma Community contends it is a corporation because it is an incorporated association.

15      Mr Johnston does not deny that Looma Community is an incorporated association and therefore a corporation, however he says that its activities are not those of a trading nature.

16      It is not contested that Looma Community is an incorporated body and I find that it is a corporation.

Is Looma Community Inc a Trading Corporation?

17      The second question to be determined is whether the overall activities of Looma Community have the character of trading activities. 

18      When deciding if the respondent is a trading corporation, an assessment of the activities carried out by the respondent at the relevant time within the context of the purpose of the organisation and whether the activities engaged in are not insignificant and unsubstantial.

19      The Objectives of the Constitution of Lomma Community Incorporated sets out the purpose of the organisation:

2. Objectives

The objectives of the Association are to assist in the relief of poverty, sickness, destitution, helplessness, distress, suffering and misfortune among Aboriginal and Torres Strait Islander people, through the process of supporting social and economic development.

The Association aims to:

● Operate community enterprises and build a strong financial base for community development activities and infrastructure.

● Contribute to the self support of the Community and its members by the development of economic projects and industries.

● Promote community development by acting as a resource for the community and stakeholders in the areas of education, health, housing, employment and welfare.

● Act as a clearing house to facilitate the exchange of information and skills, participation and maintenance of community development activities, community services, employment and housing for the community.

● Assist and encourage the Community to develop an effective system of local self-government upon its own lads.

● Assist and encourage the individual members of the Community to preserve and develop a satisfying sense of community identity.

● Support the social development of its members in all ways.

● Foster mutual trust and friendly relationships within the Community and with the community at large.

● Receive and spend grants of money from the Government of the Commonwealth or of the State or from other sources.

● Advocate for the community in relation to Native Title matters.

● Uphold and maintain the Community By-Laws.

● Operate and maintain a gift fund to be known as ‘Looma Community Inc Gift Fund’ in accordance with the requirements of the Income Tax Assessment Act 1997.

20      In her evidence and statutory declaration, the Chairperson of Looma Community described the organisation as:

1. not-for-profit Aboriginal association that provides assistance to the residents and members of Looma community, a remote Aboriginal community in Western Australia. My grandfather is one of the founders of Looma.

2. Looma provides assistance with housing, education, employment, social welfare and cultural issues.

3. Looma Constitution (Constitution) states that the objectives of Looma are to assist in the relief of poverty, sickness, destitution, helplessness, distress, suffering and misfortune among Aboriginal and Torres Strait Islander people through the process of supporting social and economic development.

4. Under the Constitution Looma aims to, for example:

a) operate community enterprises and build a strong financial base for community development activities and infrastructure; and

b) to contribute to the self-support of Looma community and its members by the development of economic projects and industries.

21      Based on the evidence, I find the overriding purpose of Looma Community is to assist and support the members of the community through assisting community members with housing, education, employment and social welfare and cultural issues and provide support for social and economic development initiatives. The purpose of the organisations may be achieved through different means including direct assistance or support of economic development initiatives.  As observed in Bankstown, the purpose of the organisation is not necessarily determinative, and an assessment of its activities and whether these have the character of trading is required.

22      It is clear from a review of the Statement of Income Expenses that Looma Community expends funds on a variety of expenses including staffing, accommodation, communications, financial, insurance and banking, furniture and fittings, subscriptions, sponsorships, and travel.

23      To support its objectives and activities, and fund its expenses, Looma Community engages in activities which raise income:

a) rental income from tenants of residential housing and community contributions from tenants;

b) revenue from maintenance of residential housing;

c) income from leasing vehicles, plant and equipment owned by the Respondent;

d) income from Looma Store;

e) income from providing rubbish collection services;

f) income from owning and operating the Camballin Caravan Park and Camballin Houses; and

g) income from providing aged care services in the community.

24      Looma Community contends these activities are trading activities and they are not insignificant nor insubstantial.

25      In most cases the applicant opposes the assertion that these activities are trading and submits that an examination of the funding arrangements, nature of the income and the activity will reveal that the true character of the income is not a result of trading.  The applicant contends that any trading activities are not significant and are insubstantial.

26      I assess the characteristics of the activities as follows.

Community Housing

27      Looma Community contends that it has a leasehold interest over the Crown Land which the community is located. Under the terms of a lease agreement between the respondent and the Aboriginal Land Trust (Trust), Looma Community has leased the land for a term of 99 years from the Trust. The Lease Agreement entitles Looma Community to use the land for its objectives, set out in its Constitution, and erect buildings or make improvements on the land with the Trust’s permission, and assign, mortgage, sublet or part with possession of any part of the land with the Trust’s permission.

28      Looma Community’s evidence is that it received rental income and community contribution fees of $497,604.00 from the tenants of the residential housing in Looma Community in the financial year ended on 30 June 2022.  The rental income was $452,000.00.  The rental income and community contribution fees received in the financial year ended on 30 June 2021 were $336,421.00.  The audited financial statements for the year ended on 30 June 2020 evidence the receipt of rental income and community contributions of $80,759.00 for the year ended 30 June 2020 and $61,980.00 for the year ended on 30 June 2019.

29      Looma Community submits that the HMA provides for the Housing Authority control and management of the letting and leasing of residential housing for and on behalf of Looma Community.  The terms upon which the Housing Authority is to control and manage the letting and leasing of residential housing and maintain and repair the housing stock is set out in the HMA between Looma Community and the Housing Authority.  Looma Community submits that rent is paid by the occupants of the houses to the Housing Authority, however ownership of the residential houses is not acquired by the Housing Authority.

30      Looma Community asserts that the rental payments are trading activities.

31      There is a significant difference between the rental income received in the earlier two financial years ending on 30 June 2019 and 2020 and that received in the latter two financial years ending in 2021 and 2022.  This is explained by a change in the practice of rental payments.  The evidence is that in the latter two years Looma Community considered it was in dispute with the Housing Authority.  Looma Community says it did not have an agreement with the Housing Authority for the three financial years ending on 30 June 2020, 30 June 2021 and 30 June 2022.  Consequently, Looma Community arranged for rental payments to be paid to Looma Community and not the Housing Authority.

32      On 16 December 2022, Looma Community and the Housing Authority executed the HMA which provides for rent to be paid to the Housing Authority by tenants of residential houses that are agreed between the parties to be subject to the HMA.

33      The relevant period to consider in an unfair dismissal claim is the time of the termination of employment.  The relevant time is that of the time of the employment and the termination of the employment relationship.  In Quickenden v Commissioner O'Connor of the Australian Industrial Relations Commission [2001] FCA 303 [51]:

…The University was not established for the purpose of trading and at another time, closer to the time of its creation, it may not have been possible to describe it as a trading corporation.  But at the time relevant to this case and at present, it does fall within that class.

34      In this matter, the termination of employment occurred in February 2023.

35      Looma Community assert that the rental income is a trading activity and refer the Commission to the rent and community contribution fees of $497,604.00 received by Looma Community in the financial year ended on 30 June 2022.  However, the arrangements changed after 1 July 2022 and before the date of termination of Mr Warren Johnson’s employment in February 2023.  Therefore, the activity to consider is the arrangements in February 2023.

36      The receipt of rental payments in the financial year ended on 30 June 2022 in accordance with or in breach of an agreement are not relevant for the consideration of the activities of Looma Community in relation to whether it was a national system employer in February 2023.

37      The arrangements for rental payment in February 2023 are set out in the HMA which clearly states that rental payments are to be made to the Housing Authority. 

38      Looma Community contend that that the Housing Authority collects rental income on behalf of, and holds the funds in trust for, Looma Community.  Additionally, the Housing Authority applies rental income to the maintenance of the residential housing in Looma Community.

39      The applicant refutes that the rental income is held in trust for Looma Community and says that any unspent funds are not returned to the community and are retained by the government on its own account.

40      I have considered the issue of income received from rental of residential accommodation in matters considered in Ms Marie Pasalskyj [2015] FWC 7309 (Pasalskyj).  In these matters, the organisations concerned were contracted by the relevant government authority to undertake the management of tenancies and/or collection of rents from tenants following a competitive tender process where the organisation competed for the work of management of accommodation services.  The trading activities were the transactions between one party, the government agency, that paid the organisation for the services it provided to the government agency.

41      In this case, it is the Housing Authority that is engaged by Looma Community to undertake the management of accommodation services.  There is no evidence that Looma Community pays the Housing Authority for the services it provides.  There is no evidence that Looma Community seeks alternate providers to the Housing Authority for the services of tenancy management.

42      The evidence is that the Housing Authority determines the amount of rent payable in accordance with the Housing Act 1980 (WA) (the Housing Act).  The rent is payable to the Housing Authority in accordance with the Housing Act.

43      Despite Looma Community’s assertion that the rental income received by the Housing Authority is held in trust by the Housing Authority for the benefit of Looma Community, I am unable to find any support for this proposition.

44      It is not disputed that the Housing Authority expends funds on maintenance and repairs of the residential accommodation in Looma Community.  The terms of the HMA oblige the Housing Authority to maintain houses in a reasonable state of repair and conduct any repairs required.  Therefore, the Housing Authority expends funds on these activities and at least some of the funds required may be sourced from the rental payments.  However, this does not entitle Looma Community to the rental payments made to the Housing Authority.

45      I find that the trading activity of the rental payments is an activity transacted between the tenants of the residential houses and the Housing Authority.  It is not an activity conducted between the tenants and Looma Community and, therefore, it is not a trading activity of Looma Community.

Community Contribution Fees

46      All working adult residents are to pay a community contribution fee of $10.00 per week.  This is reduced to $5.00 per week for all non-working adult residents.  These funds are used to provide and support a variety of community facilities such as basketball court lights, community oval expenses, youth centre expenses, football clubs’ expenses and road maintenance costs.  The community contribution fees amounted to $44,905.94 in the financial year ended on 30 June 2022.

47      It is not contested that the contribution fee is voluntary and payment is not enforced.

48      I cannot find a basis to characterise the payment of a voluntary contribution as a transaction of a trading nature.

Housing Maintenance

49      The Housing Authority is responsible for the state of repair and maintenance of the residential properties it administers under the HMA.  Looma Community has a grant agreement with the Department of Communities for the maintenance of housing assets (Grant Agreement).  Under the HMA, Looma Community receives grant funding from the Department of Communities to undertake maintenance of all residential properties.  Looma Community undertakes some maintenance tasks on behalf of the Housing Authority.  Looma Community says the Housing Authority has contracted out the responsibility for maintenance to Looma Community and submits that this activity is trading.

50      The applicant contends that the grant agreement provides that Looma Community is required to be accountable for the grant funds it receives.  The grant funds are to be used solely for the approved purposes, namely the repairs and maintenance of the houses.  The Grant Agreement states that Looma Community must repay any grant funds that it has been paid which are not used strictly in accordance with the agreement, unless there has been written agreement otherwise between the parties.

51      Further, the applicant says that the maintenance agreement only allows Looma Community to attend to nonessential and planned maintenance, and Looma Community is not contracted to attend to essential maintenance, such as electrical and major plumbing, nor appliance repairs or replacements.  Generally, Looma Community is only contracted to do maintenance works, not requiring licence or qualified trade persons.

52      The respondent’s evidence is that no funds have been paid back to the Department because the funds were not sufficient to cover the costs of the maintenance and repairs undertaken.  However, if there were unspent funds these funds would be carried over to the following year.

53      In Pasalskyj, Commissioner Hampton of the Fair Work Commission, considered the characteristics of government funded activities and provided a description of the characteristics that define whether the activities are trading:

[57] The decisions discussed earlier in this decision suggest that there is a dichotomy between activities that are undertaken by organisations similar to Outcare where the government pays for a service to be provided. Typically, these involve the delivery of services to government (often in the form of services available to the community) that result from competitive tendering processes where the Government is seeking specific services at competitive rates, and where payment is made for the actual services provided. That is, the “State” effectively purchases the services. In most cases, these activities are either undertaken for profit, or at least to generate revenue to support other activities or the organisation as a whole. The OOHC service in Bankstown is an example of this form of trading activity. Activities of this nature are considered to be trading activities for present purposes. 

[58] Alternatively, there are activities that are undertaken by organisations similar to Outcare that are the subject of government payments whereby governments subsidise the services provided by the organisation. Typically, these involve the provision of bulk grants that might be linked to performance requirements and benchmarks, but do not involve fee for service in the conventional sense. These services lack the character of buying and selling between the organisation and the funding agency, and are often provided gratuitously to the public and are considered to be an end in themselves. That is, the purpose of the service is not to generate income but rather, to provide the service itself. The provision of blood products by the Red Cross in E v Red Cross is an example of this form of non-trading activity. Activities of this nature are not considered to be trading activities for present purposes.

[59] These two characterisations represent points on a spectrum, and the real world, as in this case, often involves a mix of such indicia. It is also important to consider the entire context in which the activities are undertaken.

54      The Grant Agreement was agreed between the Department of Communities and Looma Community following discussions to resolve the concerns of Looma Community over ineffective maintenance services.  The terms of the Grant Agreement provide for the payments of grant funds throughout the year.  There is no evidence that the agreement is a product of a competitive tendering process with negotiations concerning prices for services.

55      Looma Community does not invoice the Housing Authority nor the Department of Communities for work undertaken.  The Grant Agreement does not include a schedule of costs for maintenance and repair activities.

56      On a quarterly basis, Looma Community provides the Department with copies of all records of work carried out, financial reports, reports of compliance with a safety management plan and annual asset management plans, and progress reports on the expenditure of grant funds and the achievement of specified milestones.

57      I am of the view that the arrangements for maintenance between the Housing Authority, the Department of Communities, and Looma Community, do not have the character of trading.  Grant funds are provided by the state government, Looma Community expends these funds and accounts for the grant money expenditure by way of quarterly reports to the funder.  Unlike, Pasalskyj, Looma Community does not provide maintenance services through arrangements that are subject to competitive tendering or competitive purchasing processes.  The funding for the housing maintenance undertaken by Looma Community is more aptly captured by the description in [58] of Pasalskyj.

58      I find that the nature of the arrangements for the attendance to non-essential maintenance does not have the character of trading transacted between the Department of Communities and Looma Community.

Leasing of Vehicles, plant and equipment owned by Looma Community

59      Looma Community receives income from leasing or renting vehicles and equipment.  In the financial year ending on 30 June 2022, this income was $28,987.00 which is 1.32% of the respondent’s total income for the financial year ended on 30 June 2022.

60      Looma Community refers to the invoices for the hire of its vehicles it submitted into evidence.  Unlike the invoices for rubbish collection services tendered in evidence, the invoices for hire of vehicles and equipment tendered in the respondent’s evidence is not accompanied by a ‘Transaction Details by Account’ report for the hire of vehicles.

61      The applicant asserts that the income claimed by Looma Community is an allocation against the housing maintenance grant funds and is not a product of a ‘trade’ between Looma Community and the person, usually a member of the community, who ‘hires’ or uses the vehicle.  The hiring of the vehicles is not subject to formal hire agreements and stamp duty is not paid on hire fees.

62      The applicant contends that at least part of the ‘hire of vehicles’ income entered into the financial statements are accounting entries that are adjustments to reflect expenses against grant funding.  The transaction statements submitted by the applicant show some entries for vehicle hire as ‘general ledger’ whereas other transactions are ‘tax invoices.’  Those marked ‘general ledger,’ are those the applicant says are adjustments against grant funds and therefore, not genuinely a trade.

63      I find that at least some of the activities of hiring of vehicles and equipment is a trading activity.  The activity that are noted as being invoice in the transactions report are trading activities, whereas the activities that are noted as entries that are from grant income have a similar characteristic to the activities described in Pasalskyj [58].

Hire of space and facilities

64      Looma Community owns several buildings and a compound area which are leased.  The income in the financial year ending on 30 June 2022 from these leases include Looma Store, $10,400.00 from the lease of a compound for storage for vehicles, plant and equipment; $36,000.00 from the lease of administration offices and $23,840.00 from the lease of an Art Shed and room for meetings and activities of a playgroup and training providers.

65      Looma Community rents these properties to employees and others attending the community to undertake work and provide services.  The combined rental income for these buildings for the year ended on 30 June 2022 was $118,726.00 which amounts to 5.42% of the respondent’s total income.

66      I agree with the applicant that the entry in the profit and loss statement for administration offices of $36,000.00 in the financial year ended on 30 June 2022 is an adjustment against the Grant Agreement and is not income paid to Looma Community that has a trading characteristic.

67      The applicant further contends that the rental of the compound by Kimberley Regional Service Providers to store plant and equipment should not be considered trading.  The service provider fenced off this area to store their equipment and the space is not available to the public at large.  I find the activity whereby Looma Community provides the area for the use by another entity and receives a payment in exchange for the use of the area is a trading activity.

68      Mr Johnston contends that the Art Shed and Playgroup Centres are used by service providers who receive government grant funding to operate these services provided for Looma Community.  The applicant contends the buildings/facilities are provided at a subsidised rate to the organisations offering public services to the community and are not trading activities.

69      The provision of facilities and accommodation at a subsidised rate does not in itself mean the transaction and activity is not of a trading nature.  In this matter I find that the activity involves Looma Community providing a facility or space to service providers in exchange for payment.  The fact that the organisation or service provider using the facility receives funding from a government grant does not change the nature of the activity between Looma Community and the lessee of the facility.  I do not agree with the applicant, and I find that this activity is trading.

70      I find that the value of the trading activities of hiring of space and facilities from Looma Community is $82,726.00 in the financial year ended on 30 June 2022.

Looma Store

71      Looma Enterprises, a wholly owned subsidiary of the respondent, operates Looma Store.  Profits made by Looma Store are declared in the form of dividends and are paid to the respondent.  In the financial year ended on 30 June 2022, the respondent contends it received a monthly dividend of $1,368.56 from Looma Store, which totalled $16,423.00 for the year.  The respondent says this is trade.

72      The applicant asserts Looma Community has not received a dividend since 30 June 2017 and that the dividend payments are applied to a loan that the respondent has with a bank.  The applicant says this is not trade.

73      In this matter, a dividend has not been paid to Looma Community as a shareholder.  Dividends or payments equivalent to a dividend has been paid to a financial institution.  Looma Enterprises is essentially investing at least a portion of its profits in its business operations.  In these circumstances, I find that the payment of a dividend is not a trading activity.

Rubbish Collection Services

74      Looma Community is engaged by the Shire of Derby, West Kimberley, to undertake the household rubbish collection at Camballin as well as the Camballin highway rubbish bins.  Looma Remote Community School and Looma Store also engage Looma Community to undertake rubbish collection services.  In the financial year ended on 30 June 2022, the combined total income from undertaking these services was $43,820.00 representing 2.0% of the respondent’s total income for the financial year ended on 30 June 2022.

75      I find that the rubbish collection activity is a trading activity where Looma Community is engaged to undertake a service for which payment is received.

Camballin Caravan Park and Camballin Houses

76      Looma Community owns and operates a caravan park and short term stay accommodation.  In the financial year ended on 30 June 2022, the total rental income for the Camballin Houses was $74,896.00 and for the Caravan Park, $2,477.00.  This is $77,373.00 and 3.53% of the respondent’s total income for the financial year ended on 30 June 2022.

77      The applicant contends that the income from the leasing of these properties is from service providers who require short stay accommodation for their employees undertaking work in the community and some income claimed is a journal entry to allocate expenses against a grant.

78      The evidence is that Looma Community provides accommodation at a cost to persons who also are engaged to provide services to Looma Community or visit Looma Community for purposes associated with the work they undertake.  There is a transaction in which payment is made to Looma Community.  The options for short stay accommodation may be limited, however that does not change the nature of the transaction.  I find that the income reflected in the financial statements that is raised from these transactions are from trading activities.

79      However, the income from ledger entries to allocated expenses against grant income of $10,000.00 for shorty stays at the Camballin Houses is not from trading activities.  This results in a rental income for the Camballin Houses of $64,896.00 and for the caravan park of $2,477.00 in the year ended on 30 June 2022 of income from trading activities.

Aged Care Services

80      Looma Community provides aged care services through Home and Community Care (HACC) funding and through service arrangements with individuals and providers.  In addition, the National Disability Insurance Scheme contracts to Far North who subcontract to Looma Community to deliver services for individuals including meal contributions and services.

81      In the financial year ended on 30 June 2022, the total income for HACC meal contributions and HACC services that were not grant funded was $35,973.00 and disability services was $27,625.00, totalling $63,598.00, which is 2.90% of the respondent’s total income for the financial year ended on 30 June 2022.

82      I consider that the activities provided by Looma Community that are conducted on a fee for service basis and are paid by the receipt of the service are activities that have the character of trading activities.  These activities involve contracting with various organisations predominantly businesses for payment in exchange for provision of a service.  That is, they have the character of commercial trade in services or elements of exchange:  Re Ku-ring-gai Co-operative Building Society (No 12) Ltd (1978) 36 FLR 134 (139, 159 - 160) cited in Lawrence.

Conclusion

83      In Bankstown [52] the Full Court observed that there is no bright line that determines what proportion of trading activities is substantial.

84      I have found that some of the activities undertaken by Looma Community, such as the caravan park and the hiring of facilities by service and training providers, are trading activities.  However, these activities represent a small proportion of the income.  These activities are also often incidental to functions that are not trading.

85      It is not an exercise of arithmetic involving the totalling of the elements that are trading or not trading.  The assessment involves a consideration of the overall nature of the activities of the organisation.

86      My overall assessment of the nature of the operations and activities of Looma Community is that it is a community based organisation that primarily undertakes its activities supported through government grants and programs.  The activities of a trading nature are incidental and marginal to the primary activities associated with the provision of support and assistance to the community.

87      For these reasons, I conclude that Looma Community Inc is not a trading corporation.  This finding reflects an overall assessment of the nature of the operations and activities on the material provided to me.

88      In concluding that Looma Community Inc is not a trading corporation, I conclude that this Commission has the necessary jurisdiction to hear and determine this matter.