WESTERN AUSTRALIAN INDUSTRIAL RELATIONS COMMISSION CITATION : 2016 WAIRC 00165 CORAM :Chief Commissioner A R Beech HEARD : Wednesday, 3 February 2016 WRITTEN SUBMISSIONS : MONDAY, 22 FEBRUARY 2016; THURSDAY, 25 FEBRUARY 2016 DELIVERED : TUESDAY, 22 MARCH 2016 FILE NO. : U 153 OF 2015 BETWEEN : Alison Palmer Applicant AND Forrest Personnel Inc Respondent CatchWords : Termination of employment – Harsh, oppressive and unfair dismissal claim – Whether Commission has jurisdiction to hear and determine the applicant’s claim – Whether respondent a trading corporation – Whether predominant activities of the respondent are trading activities – Public benevolent institution – Not for profit – Services provided controlled by a Deed with Government – Services provided to clients without charge – Fee for services fixed by Government – Industrial Relations Act 1979 (WA) s 29(1)(b)(i); Fair Work Act (Cth) s 14, 27; Australian Constitution (Cth) s 51(xx) and s 109. Legislation : Associations Incorporation Act 1985 (SA) Associations Incorporation Act 1987 (WA) Australian Constitution s 51(xx), s 109 Industrial Relations Act 1979 (WA) s 29AA(4) Corporations Act 2001 (Cth) Fair Work Act 2009 (Cth) s 14, s 26 Higher Education Funding Act 1988 (Cth) s 39 Result : Declaration that respondent is not a trading corporation; matter re-listed for further hearing Representation: Applicant : Mr K Trainer, as agent Respondent : Mr S Mare, as agent Case(s) referred to in reasons: Aboriginal Legal Service of Western Australia (Inc) v Lawrence [No 2] [2008] WASCA 254; (2008) 89 WAIG 243; (2008) 37 WAR 450 Bankstown Handicapped Children’s Centre Association Inc v Hillman [2010] FCAFC 11; (2010) 192 IR 213 Hoffman v Perth Mobile GP Services Ltd [2013] WAIRC 00816; (2013) 93 WAIG 1488 Pellow v Umoona Community Council Inc PR973365; [2006] AIRComm 426 (Unreported, 19 July 2006) Quickenden v O’Connor [2001] FCA 303; (2001) 109 FCR 243 West v Central Wheatbelt Division of General Practice (Inc) [2016] WAIRC 00029; (2016) 96 WAIG 64 === REASONS FOR DECISION === ¶1 The claim by Alison Palmer that her dismissal from the position of Chief Operations Officer on 14 August 2015 is harsh, oppressive or unfair is opposed by the respondent on the basis that it is a trading corporation and therefore a national system employer. It claims the Commission does not have the jurisdiction to hear and determine her claim. ¶2 Ms Palmer does not accept that the respondent is a trading corporation and submits that the Commission does have the jurisdiction to hear and determine her claim. ¶3 At the commencement of the hearing it became apparent that the respondent considers Ms Palmer’s salary exceeds the cap in s 29AA(4) of the Industrial Relations Act, 1979 (WA) (the Act). Ms Palmer had not come prepared to deal with that issue and, after a brief adjournment, it was agreed that the hearing will be restricted to whether the respondent is a trading corporation, and if it is going to be necessary to decide whether Ms Palmer’s salary exceeds the cap, that will be dealt with at a later date and could be done on the papers. ¶4 It is common ground that if the respondent is a trading corporation then it is a national system employer as defined in s 14 of the Fair Work Act 2009 (Cth) and that by operation of s 26 of that Act and s 109 of the Australian Constitution, the Commission will not have the jurisdiction to hear and determine her claim of unfair dismissal. ¶5 A number of matters are agreed and these were read into the transcript at p 74. Evidence was given for the respondent by Mr Sullivan. Ms Palmer also gave evidence. Their evidence generally did not conflict. Where it has been necessary to prefer the evidence of one over the evidence of the other, this will be referred to in what follows. ¶6 Two bundles of documents were tendered being exhibits A1 and R2 respectively. Where there is an objection to a particular document in a bundle, the objection has been noted and, where necessary in what is to follow, where a document objected to has been referred to, the objection to it is dealt with at that time. The Facts ¶7 The respondent was established in about 1986 and is incorporated under the Associations Incorporation Act 1987 (WA). It is, and on Ms Palmer’s evidence always has been, a community-based not-for-profit charitable organisation. It is a public benevolent institution and pays no income tax on surplus funds or stamp duty on the purchase of its motor vehicles. It offers salary sacrificing to its staff. It is eligible for and has received Lotterywest grants for buildings. It could not operate as it does without the status of being a charitable and public benevolent institution. ¶8 Its constitution (dated December 2014) sets outs its objects, and makes provision about property and income, as follows: 3. Objects The purposes for which the Association is established and maintained are: (a) to arrange for the vocational training and placement of a Person with a Disability; (b) where considered practicable and desirable to provide support and/or supervision for a Person with a Disability entering employment; (c) to investigate and where necessary assist a Person with a Disability to obtain the best possible working conditions and wages; (d) where considered practicable and desirable to create, develop or otherwise establish enterprises and undertake initiatives which are intended to enhance and contribute to the objects of the Association; (e) to promote with the public and with responsible authorities a social conscience and a more affirmative attitude to a Person with a Disability. (f) to purchase, rent or otherwise acquire or deal in, provide and establish, endow, furnish and fit out with any or all necessary furniture, instruments and other equipment, and maintain and manage employment ventures and community enterprises having special reference to a Person with a Disability; (g) to collect funds and accept subscriptions and donations of real or personal property and gifts by will for all or any of the purposes aforesaid; (h) to purchase, sell or deal in or otherwise acquire land or any legal or equitable interest therein and to improve, manage, lease, mortgage or otherwise deal with all or any of the property of the Association; (i) to build and maintain any building for the purposes aforesaid and alter such building and provide any such building with all or any suitable equipment and facilities; (g) to borrow or raise money for or in connection with the above objects in any manner whatsoever and in particular by mortgaging or charging the property of the Association or any part thereof; (k) to invest any moneys of the Association not immediately required in any security authorised by the law of Western Australia for the investment of trust moneys, and generally to manage, invest or expend all moneys and properties belonging to the Association; (1) to undertake and execute any trusts which may be deemed desirable or conducive to the objects of the Association; (m) to enter into arrangements with any Government, municipal, local or other authority or any other society or body that may seem conducive to the objects of the Association or any of them and to obtain from any such Government or authority or society or body any rights, privileges or concessions, and to carry out, exercise and comply with any such rights, privileges and concessions; (n) to make arrangements and enter into contracts to provide and supply services or work or goods, equipment, appliances and other things which the Association may deem necessary or desirable for the purpose of carrying out its objects; (o) to subscribe or donate to or become a member of and co-operate with any other body of persons whose objects are altogether or in part similar to those of this Association, and in particular a federation with similar bodies in Australia, and/or elsewhere; (p) to establish or carry on or participate financially or otherwise, directly or otherwise in the business of printing or publishing of a general newsletter or newsletters, or of books, pamphlets or publications of any kind whatsoever in the interests of and with the main purpose of furthering the objects of the Association; and (q) to undertake and or do all such things or activities which are necessary, incidental or conducive to the advancement of these purposes. 3.2 Property and income of the Association The property and income of the Association shall be applied solely towards the promotion of the objects or purposes of the Association and no part of that property or income may be paid or otherwise distributed, directly or indirectly, to Members of the Association, except in good faith in the promotion of those objects or purposes. ¶9 The respondent’s predominant activity is placing into employment persons with disabilities seeking employment who have been referred to them by the Commonwealth Government via Centrelink. On Ms Palmer’s evidence, the referral is an automated process dictated by market share. Approximately 90% of the respondent’s clients are referred to it in this way. Those who are on a Centrelink benefit have an obligation to look for work with a provider and the clients are obliged to remain with that provider. ¶10 In less than 5% of cases, job seekers with a disability come to the respondent through their own initiative. These are described as walk-in clients. ¶11 The respondent employs persons with disabilities to clean commercial premises, for which it receives what Mr Sullivan described as a fairly small amount of money. Similarly, people with disabilities collect and return trolleys for a supermarket for which the respondent is paid. The respondent owns other premises which it retains in case it needs to expand in the future, and it rents these premises out to other providers. The respondent also receives grants to employ staff to run support programs for people with mental illnesses. These activities are incidental to its predominant activity. The hearing has proceeded on the basis that the issue to be determined is whether the respondent’s predominant activity is ‘trade’ or ‘trading’: if it is, the respondent will be a trading corporation; if it is not, the respondent will not be a trading corporation. ¶12 The evidence of Mr Sullivan, who has been the CEO of the respondent since July 2015, is the respondent tendered for a deed with Department of Social Services (DSS) by which DSS will send persons with a disability to the respondent. Ms Palmer, who was Chief Operations Officer from March 2013 and who had acted as CEO, says there was no tender for the Deed. ¶13 Her evidence, which I accept on this issue given her role and her evidence that she familiarised herself with the respondent’s history, is that the respondent already had been providing these services when the Government changed its funding model from grant funding to the present funding model. As an existing provider, the respondent did not have to tender for the Deed but was invited accept it. It was more of a reallocation of market share than a separate tender. I therefore find that the respondent did not tender for the Deed in 2010. ¶14 A sample copy of a Disability Employment Services Deed effective 2 March 2015 was tendered. It is agreed that it contains the terms of the Deed which the respondent has with DSS and which continues to March 2018. ¶15 The body of the Deed is 127 pages long and divided into 5 chapters with 137 clauses, plus appendices. I draw attention to the following provisions of the Deed. ¶16 The Deed obliges the respondent to deliver the services specified in the Deed. The Deed prescribes how the services are to be carried out: efficiently, effectively and ethically; in accordance with the Deed and not inconsistent with it; in accordance with the respondent’s undertakings given in the tender; in a manner which meets the Objective of the Deed; and so as to achieve an optimum performance when measured against the KPIs and to DSS’s satisfaction. ¶17 The Deed’s Objective is to improve the nation’s productive capacity by employment participation of people with a disability, thereby fostering social inclusion. The location from which the respondent is to provide the services under the Deed is to be accessible to people with a disability and presented in a manner that upholds the good reputation of the services as determined by DSS. The Deed obliges the respondent to be open on business days and at specified times. ¶18 Certain conduct is regulated by the Deed, such as acting in good faith towards DSS and not engaging in practices which would manipulate the service provided so as to maximise payments to it. The Deed provides that DSS does not guarantee volume or type of business, or the number of participants for services. ¶19 The Deed obliges DSS to pay to the respondent the fees provided at the times specified in the Deed, subject to there being sufficient funds and depending upon the services provided, and sets conditions for the respondent to provide documentary evidence to prove its claims for payment. ¶20 The Deed stipulates that the respondent must not demand or receive any other payment or any other consideration from a participant for or in connection with the services. DSS may vary by giving written notice the payments, the number of participants receiving services from the respondent and its business share, and the respondent is obliged to accept those variations and to continue to provide the services unless it relinquishes the Deed. The respondent is obliged by the Deed to provide reports and financial statements and guarantees and provide a customer feedback process in a prescribed manner. ¶21 The Deed requires the respondent to use the DSS computer system. It obliges the respondent to maintain insurance policies for public liability, injury at work, motor vehicle insurance including third-party insurance, professional indemnity and personal accident insurance and product liability insurance and prescribes conditions for these. ¶22 It requires the respondent to produce its constitution to DSS upon request. It prescribes conditions about who the respondent may not employ in its management, financial administration or the performance of services and states that the respondent will breach the Deed if it does not transfer or terminate the employment of someone who has been employed contrary to those conditions and immediately notify DSS of its actions. Any change in the control of the respondent must be notified to DSS. The Deed gives the right to DSS to require the respondent to remove its personnel from work on the service provided. ¶23 It restricts the respondent using a subcontractor to provide services. It requires the respondent to produce and implement a disability employment strategy. It places conditions on the respondent’s publications and advertising. It requires the respondent at its cost to have a certificate of compliance. ¶24 It obliges the respondent to provide the services to all persons who are referred to, or who directly register with, it, at the sites and in accordance with the business share specified. Also, it restricts the respondent from providing the services to a person whose permanent address is outside its business share location. It restricts the respondent to accept only referrals made via the DSS IT system and places restrictions on it providing the services to a person who presents without a referral. It obliges the respondent to provide the services to a person transferred from another service provider. It places time restrictions on the respondent’s delivery of the services to a person and prescribes in considerable detail the manner the respondent is to deliver the services and the assistance it provides to persons. ¶25 The Deed makes clear that the respondent’s entitlement to receive a fee is only if the respondent has provided the service in accordance with the requirements of the Deed. The Deed gives to DSS the right to monitor, measure and evaluate the respondent’s performance and, at its absolute discretion, increase the respondent’s business share for a period of time specified by DSS or alternatively decrease it or require the respondent to discontinue providing the services at a particular site. ¶26 Mr Sullivan described the Deed as very prescriptive and Ms Palmer described the Deed as a complex contract. I agree with their descriptions and with Ms Palmer’s evidence that practically every part of the respondent’s operations is dictated by the Deed’s requirements. ¶27 On Ms Palmer’s evidence, there are also over 1,000 pages of guidelines which dictate in extreme detail what the respondent can and cannot do in its delivery of the service, in terms of the computer system and what can and cannot be claimed. ¶28 The evidence is that DSS made a very substantial number of policy changes, perhaps 1,000 in the last two years on Ms Palmer’s evidence, which generally are imposed without discussion. ¶29 Ms Palmer’s evidence is that there is little difference between the way the respondent conducted its predominant activity in the past when it received block funding and the way it does so now under the Deed, but there is tight control through the Deed of the quality of the services it delivers. ¶30 The respondent assesses clients according to their particular needs around employment, career planning, preparation for employment and assistance to actually get into employment and then supports them to keep their jobs. It prepares a client for future employment by way of either providing TAFE training or preparing them for work by doing a job description for them or giving them access to a job club where they can get help with interview techniques. The respondent also tries to secure employers who are willing to employ persons with a disability; Mr Sullivan and Ms Palmer describe this as absolutely crucial for its financial future. ¶31 On the initial placement of a client with the respondent, it is eligible to receive a fee; it then is eligible to receive further support fees. The fees are not sufficient to cover the cost of supporting clients, so the respondent is reliant on finding employment for a client for which it receives fees after 13 weeks’ employment and then after 26 weeks’ employment. The fees are the maximum which can be claimed, and Mr Sullivan’s evidence is that the respondent claims much less because it may be less successful in finding a job for a client. ¶32 The service fees in Annexure B1 of the Deed are as follows: Table 1 Service Fees – Disability Employment Services – Disability Management Service (1) Time period (2) Fee amount First and second 13 weeks in Employment Assistance $1,595 Third to sixth 13 weeks in Employment Assistance $715 First and second 13 weeks in Extended Employment Assistance $715 JOB PLACEMENT FEES Table 2 Job Placement Fees – Disability Employment Services – Disability Management Service (1) Fee type (2) Fee amount Job Placement Fee $770 per Job Placement OUTCOME FEES Table 3 Outcome Fees – Disability Employment Services – Disability Management Service Period : Pathway Outcome Bonus Fee amount(20% bonus) 13 Week Period : $189 26 Week Period : $290 ¶33 The Deed contains other fees, however the fees above are the Disability Management Service fees identified in the table helpfully provided by Mr Sullivan. They mean the maximum possible fee receivable by the respondent if not successful finding employment for a client is $7,810 and if the respondent is successful, $15,070. The fees are pre-set by DSS and are not negotiable. ¶34 In order to receive the fee, the respondent accesses a shared computer system where DSS has entered the names of the clients which the respondent is to see. When a client arrives at the respondent, it enters into the system that the client has arrived. There is an automatic referral through the DSS computer; the computer automatically generates an invoice which is automatically sent to the Government for payment. If a client is not placed in employment, they will continually get 13 weeks of service until 78 weeks of service has been delivered. At that point in time, there can be an extension for another 26 weeks, but at 104 weeks the client will be automatically exited from the service. ¶35 Mr Sullivan’s evidence is that DSS evaluates whether the respondent is capable of offering the services to the standard required; the higher the standard provided, the greater the market share provided to the respondent by DSS. With a larger market share comes a greater volume of persons sent to the provider by DSS. The higher the market share, the more financially successful and viable will be the service provider. ¶36 Correspondingly, if the provider’s market share is such that it receives a fewer number of persons seeking employment, the provider may become uneconomic and cease to operate. In that event, that provider’s market share may be given by DSS to the more successful provider. In this regard, Mr Sullivan states the respondent is in competition with other such service providers. ¶37 The respondent has grown in the last three or four years from nine locations in 2013 to 17 locations in 2015. Mr Sullivan states that in the last financial year the respondent was offered new market share. The respondent decided to accept some of the market share but made what he described as a ‘commercial trading decision’ that some of the other services that it would take on would not be financially viable. ¶38 The fees paid by DSS to the respondent are the same DSS pays to each service provider; the competition is not between the respondent and DSS about the fees to be charged by the respondent for the service provided; it is that the more efficient and productive the provider is compared to its competitors, the larger the market share which may be given by DSS to that provider. ¶39 I find from the evidence of Ms Palmer that the respondent has submitted a tender only twice: in 2012 and 2014, in limited circumstances where a Government Department delivering services was closed and its market share was put up for tender. ¶40 The respondent did some advertising in 2015 to attract walk-in clients, or potential employers of the respondent’s clients, and spent perhaps $130,000 in 2015. It is taking new initiatives in advertising, such in newspapers, however those new initiatives are since Ms Palmer’s dismissal and are not relevant here because the question is whether the respondent was a trading corporation at the time it dismissed Ms Palmer and she referred her claim of unfair dismissal to the Commission. ¶41 There is some suggestion in the evidence of Mr Sullivan that the respondent’s constitution does not properly reflect its activities, however neither the respondent, nor Ms Palmer, took this suggestion any further and in my view correctly. There is no basis to find that it is acting outside its constitution given at least 3(a), (b) and (c). ¶42 Mr Sullivan’s evidence is that the respondent has decided to review and renew its constitution and bring itself under the Corporations Act 2001 (Cth), however they are matters for the future and do not form part of the consideration here. ¶43 The respondent’s statement of income shows that 90% of its income is received from the Commonwealth Government as represented by DSS. ¶44 FORREST PERSONNEL INC. ¶45 CONSOLIDATED STATEMENT OF INCOME & EXPENDITURE ¶46 For the year ended 30 June 2015 ¶47 2015 2014 ¶48 $ $ ¶49 INCOME ¶50 DSS Income 5,859,998 5,148,150 ¶51 Cleaning Income 33,971 35,480 ¶52 Trolley Income 235,438 225,904 ¶53 Rental Income 117,730 109,001 ¶54 Gain/(Loss) on Sale of Assets 68,504 51,919 ¶55 Partners in Recovery 151,301 - ¶56 Open Workforce 12,987 - ¶57 Misc Income 758 - ¶58 Interest Income 21,440 28,789 ¶59 _____________________________________ ¶60 Total INCOME 6,502,127 5,599,243 ¶61 The respondent’s total expenses for 2015 were $6,427,001 which gave a surplus of $75,126. Submissions ¶62 At the conclusion of the giving of evidence the hearing was adjourned and Ms Palmer and the respondent subsequently provided written submissions and Ms Palmer also made a written submission in reply. It is convenient to refer to the submissions in the course of the consideration which follows. Trading Corporation - The legal principles ¶63 I am bound to follow and apply applicable decisions of the Full Bench of this Commission and of the Western Australian Industrial Appeal Court. The Full Bench of this Commission in Hoffman v Perth Mobile GP Services Ltd [2013] WAIRC 00816; (2013) 93 WAIG 1488 recently considered the principles of determining whether a corporation can be characterised as a trading corporation within the meaning of s 51(xx) of the Australian Constitution. At [31] the Full Bench referred to the summary of those principles by Steytler P in Aboriginal Legal Service of Western Australia (Inc) v Lawrence [No 2] [2008] WASCA 254; (2008) 89 WAIG 243; (2008) 37 WAR 450 (being a decision of the WA Industrial Appeal Court) as follows (references omitted): ¶64 (1) A corporation may be a trading corporation even though trading is not its predominant activity. ¶65 (2) However, trading must be a substantial and not merely a peripheral activity. ¶66 (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. ¶67 (4) The making of a profit is not an essential prerequisite to trade, but it is a usual concomitant. ¶68 (5) The ends which a corporation seeks to serve by trading are irrelevant to its description. Consequently, the fact that the trading activities are conducted in the public interest or for a public purpose will not necessarily exclude the categorisation of those activities as ‘trade’. ¶69 (6) Whether the trading activities of an incorporated body are sufficient to justify its categorisation as a ‘trading corporation’ is a question of fact and degree. ¶70 (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. ¶71 (8) The commercial nature of an activity is an element in deciding whether the activity is in trade or trading. ¶72 I apply those principles, as they have been considered and applied in other matters, in this case. Consideration ¶73 There are a number of factors pointing to the respondent not being a trading corporation. These are that it is not established to trade but rather that it is a public benevolent institution, which is a type of charitable institution, which enjoys tax concessions and which has as its main purpose arranging for the vocational training and placement into employment of persons with a disability. It exists for no other purpose. It does provide a cleaning service and a trolley collection service in a supermarket carpark for which it charges and receives income, and which are trading activities, but there is no suggestion that these activities are not directed to assisting its predominant activity. ¶74 Its constitution requires that its property and income can applied solely towards the promotion of that purpose, and that no part of its property or income may be paid or otherwise distributed, directly or indirectly, to its members, except in good faith in the promotion of those objects or purposes. ¶75 This by itself is not determinative but there are other factors. Almost all of its income is received not from clients or customers but from Government as represented by DSS. Further, the respondent provides the services pursuant to a very prescriptive Deed which tightly controls almost every part of its operations in ways not usually characteristic of commercial business. ¶76 Thus, the respondent does not search for or even choose 90% of the persons to whom it is obliged by the Deed to provide the services: its clients are sent to it by the Government, which usually means via Centrelink. It merely provides a service to clients sent to it by Government. ¶77 Moreover, the respondent is obliged to accept whomever Centrelink sends to it, whether or not the person is a ‘good’ or a ‘bad’ referral from the respondent’s perspective. It cannot choose its clients. However while the Deed commits DSS to providing the prescribed market share, it provides no guarantee relating to the number of clients who may be sent to the respondent. ¶78 This model of service delivery ensures that the persons referred are within a specified disadvantaged group within society, being those with a disability who are seeking employment, so that it is precisely, and only, those persons who are ‘targetted’; in this way the purpose of the Government providing funding is met. It is for the efficient provision of Government funds and the provision of the precise services Government requires, not for the commercial gain of the respondent. ¶79 The respondent may provide the services to a person who is not referred by Government and who comes to the respondent on their own initiative, the walk-in clients, but first must refer them for assessment by allied health professionals who are not part of the respondent. If the walk-in client has no disability, the respondent cannot provide any services to the person. Walk-in clients must reside within the set geographic area which DSS has allocated to the respondent under the Deed and the respondent cannot accept a walk-in client who is already with another service provider. The respondent is not free to seek walk-in clients from anywhere whereas a business buying or selling generally in the community would be free to seek its customers. In any event, the respondent has only a small number of walk-in clients, likely to be 5% of its clients, even if there is possibly an unlimited potential for the number to increase, and if the respondent now is taking steps to try to increase their number. ¶80 The respondent is not free to create or provide its own type of services for revenue to these clients because the only service, or services, it is able to provide is prescribed in detail in the Deed, and the Deed restricts the respondent to provide only those services. ¶81 There are even restrictions on the locations it can provide those services, when the respondent is to be available to provide them, and even regarding the staff who are to provide the services. ¶82 The respondent is not permitted to charge a fee to its clients for any of the services it is obliged to provide to them, and thus it provides the services free of charge to the clients sent to it. ¶83 The respondent made a surplus in 2014 and in 2015, but its constitution requires it to be applied towards the promotion of its objects or purposes and not to be paid or otherwise distributed to its members. The respondent’s purpose or intention is stated to be to arrange for vocational training and placement of persons with a disability rather than to earn a profit. As the authorities show, the making of a profit is not an essential prerequisite to trade, but it is a usual concomitant. This may be of particular importance when considering whether an activity of a public benevolent institution constitutes ‘trade’ or ‘trading’. Therefore the absence of profit, or a profit motive for its predominant activity, is another indicator, no more, that the respondent does not trade. ¶84 The fees it receives for providing the prescribed services come from Government, not the ‘client’ to whom it provides the services and the respondent is not free to fix the fees it can receive – the fees in the Deed are fixed by DSS. In fact, they are the same fees for all providers who sign the Deed. The respondent has no opportunity to tender to provide the required services at a more competitive rate, or indeed at any other rate. ¶85 Mr Sullivan’s evidence is that the respondent is much more focussed now on finding employment for clients that it used to be, however that does not suggest to me that it is now providing different services under the Deed than it used to provide previously. ¶86 Indeed it is open on the evidence to find that the respondent is, in essence, providing the same services as it did in earlier years during Ms Palmer’s employment when it received block funding, or grants, from the Government to provide the services, even if now it is providing services with a less holistic approach, providing them more efficiently and with a greater focus on finding employment for clients, than it used to. Its goals and outcomes are the same. ¶87 All of these factors are more consistent with the respondent providing a Government-funded public welfare service than being engaged in trade or trading. ¶88 The only significant thing that has changed is the Government’s method of providing fees to the respondent. The Government no longer gives block funding to the respondent to provide the services but operates more on a fee-for-service model. The respondent is paid on outcomes: if it has not provided a service, it does not receive a payment. The payments are structured to provide an incentive to the respondent to provide the services: it is entitled to receive an initial consultation fee and thereafter a support fee. If the respondent places a client in employment it is eligible for a bonus if the client remains for 13 weeks and another if the client remains for 26 weeks. ¶89 It is this changed model whereby the respondent invoices the Government for each service it provides, and that the respondent may have its market share increased or decreased, which is the respondent’s strongest argument that its predominant activity is trade, or trading. Mr Sullivan’s evidence is that if the respondent is judged by DSS’s Star Ratings to have a greater success rate in placing people in jobs in its geographic area than the success rate of another provider in that area, it scores high in the Star Ratings and DSS may, at its discretion, allocate a greater client share to the respondent, thus reducing the number of persons Government refers to the other provider and correspondingly increasing the number of persons it refers to the respondent. The evidence of Ms Palmer is to the same effect. ¶90 The greater the number of referrals to the respondent, the greater the number of fees, and thus the greater income, it will receive. Correspondingly, a provider which scores low in the Star Ratings can have its client share re-allocated which may even lead to it not being able to continue to operate. ¶91 This evidence is largely supported by the Deed which provides KPIs by which DSS is able to assess the respondent’s performance. If DSS considers the respondent’s performance warrants it, it may with the respondent’s agreement increase the respondent’s business share (Deed clause 134.1). In this sense, the respondent has an incentive to deliver the services at a higher standard compared to other providers and ‘competes’ for market share. ¶92 The respondent’s bundle of documents contains a document prepared by a peak body for disability employment services ‘Jobs Australia’ which talks about the competitive nature of providing those services. Ms Palmer objected to this document. I have read and considered it, and I do not give it great weight. This is because although it refers to a tender process to award contracts, the evidence in this case is that the respondent did not tender for the Deed in 2010 because it was already providing the services. It is the respondent’s circumstances, and not circumstances generally, with which the Commission is dealing. ¶93 I do note that it refers to the process of mid-contract business reallocations based on provider performance but that it states this process is not automatic and there is not a competitive process to win the additional market share that is up for reallocation. This by itself does not suggest the respondent operates in a competitive environment. ¶94 I found that document and also the NESA document to be of limited assistance given the direct evidence before me of the respondent’s operations and activities, and the lack of ability to cross-examine the writers of those documents. The documents are not persuasive in showing the respondent’s principal activity is trade or trading. ¶95 When considering the evidence about competition for market share, it is important to keep in mind that the issue is not whether the respondent competes for market share, or even that it may be seen as providing a fee-for-service. The issue is whether the respondent’s predominant activity is, in all of the circumstances, trade or trading. ¶96 In other words, just because the respondent provides the services efficiently, and perhaps more efficiently than others providing the same services, does not mean the activity is for that reason a trading activity. I was not referred to any authority for the proposition that if a provider is competing with other providers to provide the services required, providing those services is, for that reason, trade or a trading activity when the evidence as a whole suggests it is not. ¶97 It stands to reason that a non-trading activity, such as the respondent employing staff to run support programs for people with mental illnesses pursuant to grant funding, also may need to be undertaken efficiently. An organisation’s non-trading activity may be an activity also provided by others so that they may be competing with each other in relation to that activity, however that doesn’t mean the non-trading activity therefore changes into a trading activity. ¶98 Nor does the evidence that Government measures the respondent’s efficiency in delivering the services define whether the respondent is ‘trading’ by providing the services under the Deed for a fee fixed by Government. ¶99 In fact it is significant that the respondent does not set the fees it is to be paid for the services it provides and that those fees are fixed by Government because in Quickenden v O’Connor [2001] FCA 303; (2001) 109 FCR 243 the Federal Court of Australia considered whether HECS payments paid directly by students to the University of WA should be characterised as revenue derived from trading. Fees paid directly from students for HECS contributions amounted to $8.849 million and HECS payments paid to the university directly from the Commonwealth amounted to $17.318 million for those students who had taken out HECS loans from the Commonwealth. The amount of the payments was not fixed by the University but by the Minister and were expressed under s 39 of the Higher Education Funding Act 1988 (Cth) as a ‘contribution’ ascertained in accordance with the section towards the costs of the provision of that course of study. Chief Justice Black and French J said at [51]: ¶100 It is questionable whether the provision of educational services within the statutory framework of the Higher Education Funding Act amounts to trading. The Act creates a liability for each student to the University in respect of each course of study undertaken in a semester. The amount is not fixed by the University but rather by the Minister under published guidelines. The concept of ‘trading’ is a broad one. It is doubtful, however, that it extends to the provision of services under a statutory obligation to fix a fee determined by law and the liability for which, on the part of the student, appears to be statutory. ¶101 Although the Court in that matter held that the university was a trading corporation for other reasons not relevant here, the decision shows that it is questionable whether the activity of a university providing educational services to students under a system of fixed fees determined by Government is ‘trading’. Here, the predominant activity of the respondent might be described as delivering the service required by Government to Government-provided clients under a system of fixed fees determined by Government, and Quickenden suggests it is doubtful whether that predominant activity is trading. ¶102 I note in passing too that a university competes with other educational institutions for students, and may well deliver the services efficiently compared to another university, but these were not factors relevant to the Court’s conclusion on whether the activity is ‘trading’. I see those factors as being of limited relevance to the question of whether the respondent’s predominant activity is trade or trading. ¶103 In Pellow v Umoona Community Council Inc PR973365; [2006] AIRComm 426 (Unreported, 19 July 2006) the Council, which was incorporated under the Associations Incorporation Act 1985 (SA), engaged in activities which included the provision of a housing program, a youth program, an alcohol strategy, a child-care centre, a Centrelink agency, an advocacy service and other relief or aid facilities for local communities. ¶104 O’Callaghan SDP distinguished between grant funded social service activities and agency arrangements involving a charge on a Government department for the provision of a designated service. He referred to: ¶105 …the provision of services on an agency basis for Government instrumentalities such as Centrelink. The Centrelink services appear to be undertaken by the Council on an agency basis and must be regarded as trading activities notwithstanding that the Council may have entered into these arrangements with the objective of improving social services for the local community. They differ from a grant in that the agency arrangement involves a charge on a Government department for the provision of a designated service which the department would be otherwise required to provide at its own cost. This is consistent with common arrangements for the delivery of traditional Government services through private providers. For instance, the provision of job search services by a private provider involves trading as the provider makes a charge or even bids to the Government for the right to provide that service. In these instances the trade is actually constituted by the provision of the commodity or service. It reflects a commercial undertaking. In contrast, grant funding is provided for defined purposes which cannot be defined as commercial activities. ¶106 The decision refers to the Council as undertaking Centrelink services on an agency basis and it is not clear from the decision precisely what the relationship was between the Council and Centrelink. ¶107 It was submitted on behalf of the respondent in this matter that a predominant part of the respondent’s work comes from Centrelink, and this is true in that 90% of its clients are referred to it by Centrelink. However the evidence does not show that the respondent has an agency relationship with Centrelink. I therefore find the decision in Pellow of limited relevance here. ¶108 The respondent also submitted that its predominant activity can be likened to a medical practitioner who renders 90% of his services to Medicare, submitting that the medical practitioner has no control over the Medicare rate, which is fixed by Government, and in some cases the recovery of payment directly from Medicare by way of bulk billing could be regarded as trading. ¶109 However, this submission cannot be regarded as a strong submission because, as the Full Bench in Hoffmann (op cit) observes at [45], those cases are medical practices which are usually administered on a fee for profit basis and often require patients to pay a fee that represents the gap between the amount of a Medicare benefit payment or HICAP payment and the fee charged by the general medical practice. In such circumstances, these transactions could clearly be regarded as ‘trade’ or ‘trading’. ¶110 Fee-for-service was referred to in West v Central Wheatbelt Division of General Practice (Inc) (2016 WAIRC 00029; (2016) 96 WAIG 64), but the facts of that matter are quite different to the facts here. In that matter, the purpose of the Central Wheatbelt Division of General Practice (Inc) was not only to provide social facilities to its members but also to provide support for general practitioners and primary health care providers and to operate and manage a number of general practices in the Wheatbelt; it was not a public benevolent institution enjoying tax concessions. Its operation was not subject at all to the tight control of a deed with the Government. ¶111 Significantly, its clients were not sent to it by Government; it had to attract its own clients and in doing so it competed with other medical practices in Northam, and would do so in Toodyay if it was not the sole medical practice there; it charged fees to its patients for some of its services and its general health care activities were carried on with a view to earning revenue, not to delivering a service. ¶112 Further, the amount of revenue it received is a function of the number of patients it can attract, not the number Government sends to it, and the range of its own services it provides to them, leading to the finding that in that case its activities do have a commercial character. The facts of that matter actually illustrate how different the principal activity of the respondent in this matter is from the activities of the incorporated body in that matter. ¶113 The Federal Court of Australia found the Bankstown Handicapped Children’s Association Inc was a trading corporation (Bankstown Handicapped Children’s Centre Association Inc v Hillman [2010] FCAFC 11; (2010) 192 IR 213) however some significant facts of that matter differ from the facts here. That Association provided accommodation and support services and operated a preschool; it had various operational divisions, such as the adult disability accommodation program, the ASPIRE Out-of-Home-Care service, the Occasional Care Centre, the Day Program, Respite Programs and Clinical Support Services. Fees are paid by the participants in most of the programs it provided. As pointed out in Ms Palmer’s submissions, it accepted private clients and fees and there is no finding that its services are prescribed and directed by Government. ¶114 Significantly too, in relation to payments received by it from at least some Government agencies, the prices at which the services were provided were negotiated between the parties having regard to the price at which others provide similar services. The Government did not have to use the services of the Association at all, and the Association for its part did not have to accept any offer or request by the Government to provide such services. Rather, the Government selected those entities which it wished to provide services, once the header agreements were negotiated, on the basis of the quality of the service to be provided, but the Association (or others) did not have to agree to provide them. Thus, the relationship between that Association and the Government was seen as a commercial one involving trade in services. ¶115 The facts of that matter serve to illustrate how different the respondent in this matter is from that Association, and how its predominant activity differs from the activities of that Association. The relationship between the respondent and the Government cannot be seen as a commercial one involving trade in services. ¶116 The leading authority in this jurisdiction on the principles to be applied to the facts in this matter is the majority decision in Aboriginal Legal Service (ALS). The facts of that matter are not identical to the facts in this matter, as Mr Mare for the respondent correctly submits. In particular, the ALS received payments similar to block funding, in contrast to the model here. ¶117 Nevertheless, there are parallels. In reaching the conclusion that what the ALS does does not have a commercial character, Steytler P concluded at [74]: 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. 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 (Ku-ring-gai (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 re-imbursed 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); Ku-ring-gai (142) (Bowen CJ), (167) (Deane J). ¶118 Here, the respondent’s services are provided free of charge to the client; they are provided for altruistic purposes not shared by ordinary commercial enterprises, under a constitution which requires the respondent to act only in furtherance of the altruistic objects. ¶119 Although the services have been ‘purchased’ by the Commonwealth under the Deed, the issues set out in the preceding paragraphs lead to the conclusion that the respondent’s operation is so tightly constrained by the obligation to abide by the conditions of the Deed that its predominant activity is restricted to providing only the precise services required by Government in the Deed. The services under the Deed are overseen and controlled by Government for a fee fixed by Government and which cannot be varied by the respondent whether or not it provides the service in a businesslike, or comparatively efficient, way. ¶120 Its funding arrangements, the ‘fee-for-service’ structure, which can be seen as providing an incentive to the respondent to provide the services, cannot be viewed in isolation from all of this. Rather, it is to be viewed in the context of all of the evidence. In the words of Steytler P at [72], although fees are paid on invoice, this is merely an accounting device and the fees must be provided in the pre-ordained sums, so long as the contracted services are provided. In this case too, the invoice system is automated on the DSS computer. The respondent does not use its own system to generate the invoice. Its entering into the Deed lacked any commercial aspect of tendering and price was not able to be negotiated. ¶121 Even in relation to market share, it is difficult to conclude that the respondent is freely competing in the open marketplace for market share because it cannot increase its own market share by its own efforts. Its market share is allocated to it by Government; therefore an increase in its market share is not within its own control but depends upon a decision by DSS, at DSS’s absolute discretion, whether to increase, or even reduce, the respondent’s market share. It is a reallocation process by DSS and there is even, on Mr Sullivan’s evidence, some randomness in it. ¶122 This decision by DSS is more about how DSS considers the services are being delivered than it is about the respondent’s interests because an improvement by the respondent in the quality or efficiency of the services it provides under the Deed does not necessarily lead to an increase in its market share if its competitors also increase the quality or efficiency of their service delivery. The respondent may accept or decline DSS’s offer of market share, but it cannot set it. ¶123 The respondent may seek to attract ‘walk-in’ job seekers looking for work however they are such an insignificant part of the respondent’s predominant activity that this is not a determinative issue here. ¶124 Mr Trainer, who appeared on behalf of Ms Palmer, submits that the respondent’s activity under the Deed is not commercial in character and in my view that submission is correct. When seen as a whole, the respondent’s predominant activity lacks a ‘commercial aspect’. The respondent’s predominant activity of placing into employment persons with disabilities seeking employment who have been referred to them by the Commonwealth Government is not trade or a trading activity. ¶125 This predominant activity accounts for 90% of its income. It is agreed that its cleaning services, trolley collection service and rental of buildings are trading activities, however it was not argued that these activities alone mean that the respondent is a trading corporation. In my view, these activities, which earned the respondent $33,971, $235,438 and $117,730 respectively representing only 6% of its total income, are peripheral and not substantial. They by themselves cannot characterise the respondent as a trading corporation. ¶126 Income received as ‘Partners in Recovery’ and ‘Open Workforce’ is agreed to be from non-trading activities. ¶127 The respondent has a certified agreement in the Fair Work Commission (the FWC) however this does not show that it is a trading corporation. There is nothing to show that the lodging of the certified agreement involved a decision by the FWC that the respondent was a trading corporation. It appears to have been lodged by the respondent without any such decision being made. In that respect, the respondent cannot ‘choose’ to be a national system employer if it is not either a trading corporation. Conclusion ¶128 For the above reasons, I find that the respondent’s predominant activity of placing into employment persons with disabilities seeking employment in the circumstances set out above is not trade or a trading activity. I find also that the respondent’s activities generating the income described as Partners in Recovery and Open Workforce are not trade or trading activities. ¶129 I further find that the respondent’s cleaning services, trolley collection service and rental of buildings are trading activities, however these are peripheral and not sufficient by themselves to characterise the respondent as a trading corporation. ¶130 I declare that the respondent is not a trading corporation. A Minute of a Declaration and Order now issues to that effect and ordering that Ms Palmer’s claim of unfair dismissal be re-listed for further hearing and determination. ¶131 Before the claim will be re-listed, the parties are directed to confer about the remaining issues and whether further conciliation is desirable.