What is a ‘constitutional corporation’?

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What is a ‘constitutional corporation’?

The University of Wollongong has been held to be a ‘constitutional corporation’, in an important case on the question of what is a ‘constitutional corporation’ for the purposes of the Federal Workplace Relations Act 1996.

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The University of Wollongong has been held to be a ‘constitutional corporation’, in an important case on the question of what is a ‘constitutional corporation’ for the purposes of the Federal Workplace Relations Act 1996.

Significance of employer being a ‘constitutional corporation’

Whether an employer is a ‘constitutional corporation’ is an important issue in a number of areas under the Federal Act.

For example, the principal class of employees who can access the Federal unfair dismissal system are: ‘a Federal award employee who was employed by a constitutional corporation (s170CB(1)(C))’. A further significant example is Div 2 of Pt VIB of the Act, wherein only employers who are constitutional corporations can make certified agreements directly with their employees (s170LH).

Furthermore, the principal class of employers who can enter into AWAs are employers who are constitutional corporations (s170VC(a)).

Determining whether employer a ‘constitutional corporation’

The Act defines ‘constitutional corporation’ as follows (s4(1)):

(a) a foreign corporation within the meaning of paragraph 51(xx) of the Constitution; or

(b) a body corporate that is, for the purposes of paragraph 51(xx) of the Constitution, a financial corporation formed within the limits of the Commonwealth; or

(c) a body corporate that is, for the purposes of paragraph 51(xx) of the Constitution, a trading corporation formed within the limits of the Commonwealth; or

(d) a body corporate that is incorporated in a Territory; or

(e) a Commonwealth authority’.

Whether Wollongong University a ‘constitutional corporation’?

In the matter at hand, the University of Wollongong was seeking to have certified an agreement under Div 2 of Pt VIB.

The Act establishing the University granted it body corporate status. Vice President McIntyre of the Federal Commission stated that being a body corporate does not necessarily mean that this fulfils the definition of constitutional corporation.

The parties agreed that the University did not fit within paragraphs (a), (b), (d) or (e) of the above definition. Accordingly, the question was whether the University was a ‘trading corporation’ as per paragraph (c).

The decisions relied upon by the Commission to determine this issue were: R v Federal Court of Australia; Ex parte W. A. National Football League (Inc) (1979) 143 CLR 190(‘Adamson’s case); State Superannuation Board and Trade Practices Commission (1982) 150 CLR 282; and, E v Australian Red Cross Society (1991) 99 ALR 601 27 FCR 310.

University a constitutional corporation

Vice President McIntyre held (University of Wollongong (Academic Staff) Enterprise Agreement, 1996-1999; Print P1396):

"It seems to me that the critical question is the nature of the University’s activities at the relevant time. Accepting that its predominant activity is the provision of educational facilities, they were not objectives antithetical to the notion of trade. Many trading corporations supply services rather than goods. Many universities provide education facilities for reward with the purpose of thereby trading profitably. There is nothing in the intrinsic nature of the University’s activities to disqualify it as a trading corporation.

"If the question be asked whether the scale of the corporation’s trading activities was ‘substantial’, ‘a sufficiently significant proportion of tis overall activities’ or ‘not insubstantial’ - to apply the tests adopted in Adamson - it is relevant to note that, in the year ended 31 December 1996 it received $30,940,000 in fees and charges in return for services rendered by it. It also received $1,272,000 form the provision of computing services and sales from ‘business activities’. It is true that these amounts were dwarfed by the Commonwealth government grant of $82,759,000. But that does not matter. Trading activities yielding some $32 million per year can only be described as substantial. It seems to me that the scale of the University’s trading activities in 1996 was such that it should be regarded as a trading corporation."

The Commission accordingly certified the agreement.

 
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