Characteristics, not labels, determine whether an entity is a constitutional corporation

Communications, Electrical, Electronic, Energy, Information, Postal, Plumbing and Allied Services Union of Australia v Queensland Rail [2015] HCA 11

The High Court held that a statutory authority with separate legal personality was a trading corporation within the meaning of s 51(xx) of the Constitution, even though the Act that established the authority expressly provided that the authority “is not a body corporate”.

The Queensland Rail Transit Authority Act 2013 (Qld) (the QRTA Act) established the Queensland Rail Transit Authority (the Authority), now called Queensland Rail. The Authority operates as a labour hire company, providing labour used by Queensland Rail Limited (a company wholly owned by the Authority) to operate railway services in Queensland.

The QRTA Act provides that the Authority has all the powers of an individual, including owning property. It also provides that the Authority can sue and be sued in its own name. However, the QRTA Act provides that the Authority “is not a body corporate” and “does not represent the State”.

Part of the legislative design of the QRTA Act was to take the Authority outside the operation of the Fair Work Act 2009 (Cth), which governs employment by constitutional corporations to the exclusion of State and Territory industrial laws. In proceedings brought in the original jurisdiction of the High Court, the plaintiffs (various associations of employees) alleged that the Authority was a trading corporation within the meaning of s 51(xx) of the Constitution, and was therefore subject to the Fair Work Act 2009 (Cth).

Much of the argument at the hearing was directed to the question whether the Authority was a “corporation” within the meaning of s 51(xx). No party argued that s 51(xx) should be read as granting power to deal only with corporations of a kind known to law at the time of federation. The plaintiffs submitted, in effect, that any artificial legal entity with separate legal personality (which is not a body politic) is a corporation within the meaning of s 51(xx). The Authority submitted that not all artificial legal entities with separate legal personality are corporations — rather, whether an artificial legal entity is a corporation will depend on the intention of the Parliament that created the entity.

The High Court rejected the Authority’s argument. It held that the Authority had not identified criteria that would differentiate between “corporations” or “bodies corporate” on the one hand and “other artificial legal entities” on the other. In particular, the Court held that the intention of the Parliament creating an entity is not a satisfactory criterion for determining whether the entity is a corporation within the meaning of s 51(xx) — a mere “labelling intention” or “statutory declaration” could not determine the content of federal legislative power.

The Court did not regard it as necessary to state exhaustively the defining characteristics of a corporation. The characteristics of the Authority — a separate legal entity with the ability to own property and to sue or be sued — were sufficient to bring the Authority within the constitutional description of a corporation. The Court held that the declaration that the Authority “is not a body corporate” could still have work to do in excluding the Authority from the operation of certain provisions of the Government Owned Corporations Act 1993 (Qld).

Having established that the Authority was a “corporation”, the High Court dealt relatively briefly with the question whether the Authority was a “trading corporation”. The Court held that, whether one looked at the Authority’s purposes or its activities (or both), it was clear that it was. The plurality observed that labour hire companies are now a common form of enterprise. Their Honours held that the engagement of personnel by one enterprise for the supply of their labour to another enterprise is a trading activity — the fact that the supply arrangement here was between related entities, and yielded no profit to the Authority, did not deny that characterisation.

Print Friendly, PDF & Email

You may also like...

Leave a Reply

Your email address will not be published. Required fields are marked *