Australia: Might a local council be a bully?

Last Updated: 8 December 2016
Article by Mark Paul

Back in April 2015 we asked whether NSW local councils might be "trading corporations" for the purposes of the Constitution, even though the Local Government Act says they are not corporations but are body politics of the State.

We were commenting on the High Court decision of Communications, Electrical, Electronic, Energy, Information, Postal, Plumbing and Allied Services Union of Australia v Queensland Rail [2015] HCA 11 (8 April 2015). The High Court was dealing with the question of whether Queensland Rail Ltd, a corporation, was a trading corporation, and the High Court said yes it was. That meant that Queensland Rail Ltd came under the operation of the Fair Work Act and was no longer within the industrial relations realm of Queensland.

It was the sort of case which you might expect a union would take all the way to the High Court as the stakes were high and the implications significant.

The importance for local councils were the comments by the High Court that the answer to the question of whether something was a trading corporation was not to be found in state legislation but rather was to be evaluated through the lens of the Constitution.

The High Court's decision represents the law on the question but a recent decision, again from Queensland, suggests that there may soon be cases that will test the question of whether NSW local councils are trading corporations notwithstanding being described by the Local Government Act as body politics - whatever that might mean from a legal point of view.

Dr Lim had approached the Fair Work Commission for an order under the Fair Work Act against his employer, Trade and Investment Queensland, to deal with his complaint of bullying. TIQ happened to be a corporation under Queensland legislation but was it a trading corporation? TIQ challenged the Commission's jurisdiction.

On an appeal the Full Bench carefully analysed the evidence about the activities of TIQ and came to the view that it was a trading corporation. That meant that the case was to be returned for further hearing and Dr Lim could continue with his complaint of bullying.

It is interesting that this dispute arose in the context of a complaint of bullying. Dr Lim went through the travails of a jurisdictional challenge and then a Full Bench appeal only to be presented with a hearing yet to come on his substantive bullying complaint. That is an awful lot of energy to invest. Complaints of bullying can involve a lot of emotion; exactly the type of dispute that might prompt somebody to "go all the way to the High Court!"

Just last week (Cowie [2016] FWC 7886) a volunteer complaining of bullying was unsuccessful in arguing that his sporting association was a trading corporation – but he did run the argument.

The TIQ decision is useful for teasing out the issues that might be relevant in deciding whether something is a trading corporation. It didn't really matter that TIQ was a public body funded by the government, had few resources of its own, and earned not a great deal of money from its own activities.

Nor did it matter that it was not about making a profit. TIQ had income from some rental properties and received revenue for some of its activities. That the activities were not for a trading purpose did not necessarily exclude it from meeting the description of a trading corporation.

It is no doubt that many local councils within NSW are engaged in activities of a trading kind. And if a court were to find that local councils are truly corporate in their natures then it is not too far of a jump to conclude they are trading corporations for the purpose of the Constitution and therefore subject to the operation of the Fair Work Act.

Whilst local councils and the unions appear quite happy to work within the NSW Industrial Relations framework, that's not always of use to an individual who wants to make a complaint of bullying. Those without union support will gravitate to the Fair Work Commission and perhaps test the question of whether local councils are trading corporations.

A sleeper of an issue, but not beyond the bounds of possibility.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

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