Absence of ‘commercial aspect’ — not constitutional corporation

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Absence of ‘commercial aspect’ — not constitutional corporation

The WA Court of Appeal has found that a lawyer dismissed by the Aboriginal Legal Service (ALS) in WA had the right to pursue an unfair dismissal claim in the state tribunal because the organisation was not a constitutional corporation and so was covered by state law, not federal.

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The WA Court of Appeal has found that a lawyer dismissed  by the Aboriginal Legal Service (ALS) in WA had the right to pursue an unfair dismissal claim in the state tribunal because the organisation was not a constitutional corporation and so was covered by state law, not federal. 
 
Funding arrangements introduced by the Howard Government in 2005 were central to the decision that the Service was not a trading corporation under s51(xx) of the Constitution.
 
Background
 
The Service contended that the WA Industrial Commission lacked the jurisdiction to hear the claim. It submitted that it was a constitutional corporation for the purposes of the Workplace Relations Act 1996 (Commonwealth Act) because it was a trading corporation for the purposes of s 51(xx) of the Constitution. If that was so, the Commonwealth Act applied to the exclusion of the State Act.
 
The key issue for the Industrial Appeal Court in deciding whether the ALS was a trading corporation under s51(xx) of the Constitution.
 
Public welfare service provider
 
The President, Justice Steytler, with whom Justice Pullin agreed, found that the character of the Service was a public welfare service provider rather than a trading corporation.
 
The services performed by the employee under the contract were essentially for a public interest purpose. The funding still came primarily from government.
 
The bench noted:
‘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, non-profit 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 government-run legal aid agency …’
 
 
Compare non-profit service profider
 
A similar conclusion as to a 'constitutional corporation' was reached in relation to a non-profit service provider in the NSW Industrial Court: Hillman v Bankstown Handicapped Children's Centre Association Incorporated [2008] NSWIRComm 64 (16 September 2008) 
 
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