'Trading corporation' and WorkChoices: wide interpretation

Cases

'Trading corporation' and WorkChoices: wide interpretation

The High Court, in its landmark decision on 14 November, confirmed a broad approach to what is covered by 'trading corporation'. On the same day, a NSW non-profit community housing corporation was also found to be covered by WorkChoices because of its substantial trading activities.

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The High Court, in its landmark decision on 14 November, confirmed a broad approach to what is covered by 'trading corporation'. On the same day, a NSW non-profit community housing corporation was also found to be covered by WorkChoices because of its substantial trading activities.

The High Court found the WorkChoices legislation to be constitutionally valid in a decision handed down on 14 November 2006.

High Court on trading corporations

The majority judgment (Gleeson CJ, Gummow, Hayne, Heydon and Crennan JJ.) gave a broad interpretation to 'trading corporation':

' … The dissenting members of the Court in Re Dingjan, Mason CJ, Deane and Gaudron JJ, took a view of the reach of s 51(xx) [corporations power] wider than that of the majority.

'Particular reference need now be made only to the reasons of Gaudron J (with which Deane J agreed). Her Honour's reasoning proceeded by the following steps. First, the business activities of corporations formed within Australia signify whether they are trading or financial corporations, and the main purpose of the power to legislate with respect to foreign corporations must be directed to their business activities in Australia. Second, it follows that the power conferred by s 51(xx) extends "at the very least" to the business functions and activities of constitutional corporations and to their business relationships. Third, once the second step is accepted, it follows that the power "also extends to the persons by and through whom they carry out those functions and activities and with whom they enter into those relationships".

'This understanding of s 51(xx) was subsequently amplified by Gaudron J in her reasons in Re Pacific Coal Pty Ltd; Ex parte Construction, Forestry, Mining and Energy Union [230] where her Honour said:

"I have no doubt that the power conferred by s 51(xx) of the Constitution extends to the regulation of the activities, functions, relationships and the business of a corporation described in that sub-section, the creation of rights and privileges belonging to such a corporation, the imposition of obligations on it, and in respect of those matters, to the regulation of the conduct of those through whom it acts, its employees and shareholders, and also, the regulation of those whose conduct is or is capable of affecting its activities, functions, relationships or business."

'This understanding of the power should be adopted. It follows, as Gaudron J said, that the legislative power conferred by s 51(xx) "extends to laws prescribing the industrial rights and obligations of corporations and their employees and the means by which they are to conduct their industrial relations". …'

New South Wales v Commonwealth of Australia; Western Australia v Commonwealth of Australia [2006] HCA 52 (14 November 2006)

Related

WorkChoices OK says High Court

Non-profit housing organisation covered by WorkChoices

Commissioner Connor in the NSW Industrial Relations Commission has found that a NSW non-profit community housing corporation was covered by WorkChoices because of its substantial trading activities. The High Court's decision was not available to Commissioner Connor at the time of this decision.

The Commissioner noted:

'As I indicated in my unreported decision of Thursday, 12 October, 2006 in Sheehan v. Manly Warringah Pittwater Community Aid Service [Matter No.IRC 2945 of 2006 at p.5], words like "significant", "insubstantial" or "peripheral" are not particularly precise and leave much room for argument which, until the High Court resolves the question before it, will remain unanswered.

'… Hall P of the Queensland Industrial Court [on] ... 10 July, 2006 in the Educang Case [C/2006/35] concluded that trading activities amounting to 16% to 17% of operating revenue for an educational body would bring that body under s.51(xx) as a trading corporation.
In its unreported 1998 decision in Burrows v. Shire of Esperance [1373/98 M Print Q8680] Polities SDP of the Australian Industrial Relations Commission regarded trading activities for an organisation to the value of 14.93% of revenue as constituting substantial trading activities, and thereby making the organisation in question a trading corporation ... '

Still employers outside WorkChoices net

Commissioner Connor continued:

'That having been said, some - possibly many - community-based organisations with mixed activities may still escape WorkChoices notwithstanding the fact that they have some trading and/or financial activities.

'I have in mind ... many church-run educational bodies, welfare organisations or small recreational clubs whose activities will always be predominantly directed towards providing a service to the community they serve, and only incidentally and peripherally involved in activities of a trading and/or financial character … '

The Commission held that the claim was outside the NSW IRC's jurisdiction.

Harmer v. Shoalhaven Community Housing Scheme Limited [2006] NSWIRComm 1165 (14 November 2006)

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Constitutional corporations and WorkChoices - the facts

  

 

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