Australian Workers' Union of Employees, Queensland v Etheridge Shire Council

THE PLEADINGS 31 There is some confusion arising out of the chronology of the pleadings and the dates on which they were filed. 32 In proceedings QUD 39 of 2007, the Statement of Claim of the State of Queensland was filed on 5 February 2007. The defence of the Etheridge Shire Council was filed on 21 February 2007, as was the defence of the Employment Advocate. 33 However, in proceedings QUD 481 of 2006, an Amended Statement of Claim was filed on 22 December 2006. An amended defence of the Etheridge Shire Council to a "Further Amended Statement of Claim" was filed on 12 February 2007, but the "Further Amended Statement of Claim" (which was amended pursuant to my order of 20 December 2006) was not filed until 6 November 2007. 34 After resolving the confusion within the chronology of pleadings, it is common ground between the parties in both proceedings that: 2. The First Respondent is a Local Government within the meaning of the Local Government Act 1993 (Qld) and which, by section 35 of that Act: (a) is a body corporate with perpetual succession; and (b) has a common seal; and (c) may sue and be sued in its name. … 7. The Second Respondent is the Employment Advocate appointed pursuant to Part 5, Division 1 of the WRA. 8. It is a function of the Second Respondent to: (a) accept lodgement of Workplace Agreements made pursuant to the provisions of Part 8 of the WRA; and (Section 151(1)(e)(i)) (b) to analyse Workplace Agreements. (Section 151(1)(1)). 9. The First Respondent: (a) purported to comply with the technical procedures required of an employer by the WRA in order to make an employee collective agreement - entitled the Etheridge Shire Council Australian (Employee Collective) Agreement (hereinafter called "the Etheridge Agreement") - with its employees pursuant to section 327 of the WRA; and (b) lodged that purported agreement with the Second Respondent on or about 21st October 2006. 10. By the actions referred to in paragraph 9 above, the First Respondent has asserted that: (a) it was subject to the provisions of the WRA, and (b) it was entitled to enter into and to lodge the Etheridge Agreement 35 It is also common ground that: 1. The Applicant [in QUD 481 of 2006] is: (a) and was at all material times, an organization of employees registered under the Industrial Relations Act 1999 (Qld); and (b) and was at all material times, a "state-registered association" within the meaning of that term as used in Schedule 10 to the Workplace Relations Act 1996 ("the WRA"); and … 2. In its capacity as an organization registered for the purposes of the Industrial Relations Act 1999 (Qld), the Applicant has the right, and has exercised the right, to enrol and represent a substantial number of employees of the First Respondent, and has for many years prior to 27 March 2006 been a party to Industrial Awards and Certified Agreements made under that Act, which Awards and Agreements regulated the employment of those employees of the First Respondent who are, and are eligible to be, members of the Applicant. … 4. The First Respondent has such powers and jurisdiction as are conferred upon it by the Local Government Act, and in particular, has: (a) a law-making role for local laws; and (b) an executive role for: (i) adoption and implementation of policies; and (ii) administration of local government; and (iii) enforcement of its local laws. (Section 20) 36 The essence of the dispute between the various parties arises out of a claim by the Etheridge Shire Council that it: complied with the technical procedures required of an employer by the WRA in order to make an Employee Collective Agreement, entitled the Etheridge Shire Council Australian (Employee Collective) Agreement, ("the Etheridge Agreement); and lodged that agreement with the Employment Advocate on or about 21 October 2006. 37 The parties accept that by those actions the Etheridge Shire Council asserted that it was subject to the provisions of the WRA, and it was entitled to enter into and to lodge the Etheridge Agreement. 38 In order lawfully to be entitled to make and lodge an agreement under Pt 8 of the WRA, it is necessary that the Etheridge Shire Council be an "employer" as defined in s 6 of the WRA. The applicant parties in both matters assert that the Etheridge Shire Council is not an "employer" within the meaning of that term, as defined in s 6 of the WRA, and assert that the Etheridge Shire Council does not come within the power granted the Commonwealth under para 51(xx) of the Commonwealth Constitution. In particular, the applicants say that the Etheridge Shire Council is not a trading corporation or a financial corporation within para 51 (xx) of the Constitution. 39 Accordingly, the applicant parties submit that the Etheridge Shire Council was not lawfully entitled to lodge the Etheridge Agreement with the Employer Advocate under Pt 8 of the WRA, and that lodgement was not lawfully capable of causing the Etheridge Agreement to come into effect as a Workplace Agreement under, and for the purposes of, the WRA. 40 In each proceeding, no orders were sought against the second respondent. Pursuant to Item 33 of Part 3 of Schedule 2 of the Workplace Relations Amendment (A Stronger Safety Net) Act 2007 (Cth) the Workplace Authority Director was substituted for the Employment Advocate as a party in each proceeding. Mr Baden Powell, for the Workplace Authority Director, indicated that she did not wish to be heard in the proceedings, save on the question of costs. 41 The parties in both proceedings say that it is necessary and desirable that the Court declare the respective rights of the parties regarding the purported workplace agreement to resolve the questions between the parties as to: (a) the legal standing of the First Respondent for the purposes of the WRA; and (b) the legal standing of the purported agreement under the WRA; and (c) the question as to the jurisdiction and legislation which applies to the First Respondent and its employees in relation to the regulation of the terms and conditions of those employees.

IS THE ETHERIDGE SHIRE COUNCIL A TRADING CORPORATION OR A FINANCIAL CORPORATION IN THE RELEVANT CONSTITUTIONAL SENSE? 42 It is important, in my opinion, in the resolution of this question to recognise that, by ss 24 and 25 of the Local Government Act 1993 (Qld) (the LGA), the Etheridge Shire Council has jurisdiction to make local laws for, and to otherwise ensure, the goodwill and government of its local government and geographical area in Far North Queensland. Such local laws, upon commencement, have the force of law of the State of Queensland: s 896 of the LGA. 43 The High Court, in Widgee Shire Council v Bonney (1907) 4 CLR 977, upheld the validity of a power granted to the Widgee Shire Council, which was a local authority in a country district, to make by-laws made for the protection of roads under their control. In doing so, Griffith CJ said, at 983: In my opinion, the legislature has deliberately and intentionally made the local authority, subject to the approval of the Governor in Council, the sole judge of such matters, subject only to this qualification, that, if a by-law is such that no reasonable man, exercising in good faith the powers conferred by the Statute, could under any circumstances pass such a by-law, it might be held invalid on that ground as being an abuse of the power, and therefore not within it. 44 The Etheridge Shire Council has numerous other powers and responsibilities under the LGA, including making a local law which creates an offence constituted by contravening a local law and fixing a penalty for an offence against a local law: s 26 of the LGA. 45 Having regard to the submissions of counsel for all the parties, it is plain that if the Etheridge Shire Council is not a constitutional corporation, then each of the applicants is entitled to the relief which it seeks.

IS THE ETHERIDGE SHIRE COUNCIL A CONSTITUTIONAL CORPORATION? 46 Between the filing of the applications and their hearing, there were changes mooted as to the amalgamation of various local councils in Queensland. This concern involved some delay in the progress of the hearing of these applications, but as events have happened, there was no change to the Etheridge Shire Council, by amalgamation, dissolution or otherwise. 47 The question of whether the Etheridge Shire Council, established under the LGA, and which is a fully functioning elected local authority, or, as counsel for the first and second respondents in QUD 481 of 2006 asserts, a "municipal corporation", is or can be a financial or trading corporation within the meaning of the Constitution, is a question on which there is no High Court, and very little superior court authority directly relevant. 48 The High Court decision of The Queen v Trade Practices Tribunal; Ex Parte St George County Council (1974) 130 CLR 533 (St George County Council) is not directly on point, but, in my opinion, is of assistance on the question of characterisation, when one contrasts the powers and activities the subject of consideration in that case, with the powers and activities of the Etheridge Shire Council in the present case. 49 In that case, the St George County Council was established under the Local Government Act 1919 (NSW) for "local government purposes". It was empowered within its district to supply electricity and to supply and install electrical fitting and appliances, and these were its only activities. The Act provided that the county council should "endeavour so to conduct each trading undertaking that without any loss being incurred the service, product, or commodity of the undertaking may be supplied to the consumer as cheaply as possible". 50 The High Court, by a majority (McTiernan, Menzies and Gibbs JJ, with Barwick CJ and Stephen J dissenting) held that the St George County Council was not a "trading corporation" within s 5 of the Restrictive Trade Practices Act 1971-1972 (Cth). The majority accepted that the St George County Council was not a "trading corporation", notwithstanding that it carried on trading activities. 51 It was submitted on behalf of the State of New South Wales, intervening, that a "trading corporation" connotes more than a corporation which trades. It was submitted that "trading" describes the nature or quality of the corporation itself rather than its actual activities. For the Commonwealth of Australia, it was submitted that the St George County Council was set up to sell electrical fittings and appliances, and that to do that was to trade. It was therefore a "trading corporation". It was submitted that "[I]ts actual activities characterize it." 52 Barwick CJ said, at 538: The question raised by the case involves the construction of the expression "trading corporation formed within the limits of the Commonwealth" as it appears in the Act through the definition for the purposes of the Act of a "corporation". Because of identity of language and the fact that the statutory formula is designed to keep the Act within constitutional power, that construction would be applicable to the words of the Constitution, a circumstance which must influence the construction placed on the statutory formula. I ought to point out at the outset that the ultimate question in the case is to be answered in relation to the applicant and not as to all county councils. The powers and functions which under the Act may be transferred to a county council are diverse (cf., e.g. s. 564(1) and (2)). Consequently, considerations which, in my opinion, are definitive in this case may not be so in the case of other county councils with different powers and activities. (Emphasis added). 53 Importantly, Barwick CJ noted, at 539: … the description "trading corporation", in my opinion, refers not to the purpose of incorporation but to the activities of the corporation at the relevant time. So far then the applicant is evidently a corporation which has been formed within the Commonwealth. It trades in the supply of electricity, of electrical appliances and of electrical services. It has no other purpose or activity. 54 Barwick CJ suggested that there did not appear to have been any generally accepted definition of a trading corporation. He said, at 541: It was assumed, I think, that such a corporation could be identified by its activities. If its nature was being sought, it was to be found in what it did. 55 Barwick CJ said, at 543: To say that a corporation's description for relevant purposes will be determined by its activities does not mean, of course, that a corporation which to any extent engages in trade is a trading corporation. It is evident that the legislative power given by s. 51(xx.) is not a power to legislate with respect to trading. It is a legislative power with respect to some corporations. But a corporation whose predominant and characteristic activity is trading whether in goods or services will, in my opinion, satisfy the description : and a corporation which does nothing but trade and, if it matters, was incorporated so that it could trade, i.e. exercise the trading powers of the constituent local government councils, is, in my opinion, properly described as a trading corporation within the constitutional power. It seems to me that the reason why a corporation trades as its sole or predominant and characteristic activity is irrelevant to the description of the corporation for present purposes, that is to say, the ends which such a corporation seeks to serve by trading are irrelevant to its description. As I have indicated, the purpose of the grant of legislative power includes the control of the corporate activities of the corporation : it is not so concerned with the motives which prompt those activities, nor the ultimate ends which those activities hope to achieve. If, upon that consideration, the corporation can fairly be described by reason of those activities, their extent and relative significance in the affairs of the corporation as a "trading corporation" it will, in my opinion, be nothing to the point that it is also a government or State or municipal corporation. The effect of the trading activities of such a corporation upon and in the community will not be lessened or necessarily affected by the fact that it is a State or municipal instrumentality. (Emphasis added). 56 The first and fourth sentences of this passage identify the basis for his conclusion that, in that case, St George County Council was a trading corporation. 57 Relevant to the contention of the union applicants in QUD 481 of 2006 that the Etheridge Shire Council is a municipal corporation, a tier of State government in its own right, and therefore cannot be also a constitutional corporation, Barwick CJ said, at 544-545: It may be granted that the applicant may properly be styled a "municipal" corporation; it is both the creature and servant of "local government": but it is, none the less, in my opinion, a trading corporation within the statutory definition. It is easily demonstrated that the purpose of the applicant's incorporation and of its activities is the performance of what has come to be regarded as a local government function, its charter being to provide electricity at low cost to the ratepayer. But it is to achieve and satisfy this purpose by trading, both in electricity and in electrical goods and services. It buys and sells - an activity recognized by the Act itself as "a trading undertaking" (s.418(1) and (2)). To say that it is a "municipal" corporation is, in my opinion, to say no more than that it is a government, or local government, agency; or, put another way, that it is a municipal trading corporation. 58 Menzies J in the majority said, at 551: The submission of the Solicitor-General for the Commonwealth, who appeared for the respondents, was that the Council is and has always been a trading corporation. He relied exclusively upon the contention that this Council had been established for no purpose other than to trade and he refrained from submitting, in these proceedings, that a local government corporation which has local government purposes other than trading purposes is a "trading corporation" within the meaning of s. 5. (Emphasis added). 59 Later, at 551, Menzies J said: It is because trading of a council is subordinate to its governmental purposes that the Act contains a section such as s. 419. It is this subordination of trading to community purposes that is, to my mind, the real importance of s. 419 in this case. It reveals the very nature of a council to which it applies. 60 Menzies J said, at 552: It seems to me that trading corporations were in 1900 a well-recognized classification of companies. 61 Later, at 552-553, Menzies J said: The difference between a trading corporation and a municipal corporation was noticed in this Court as early as 1908 in Huddart Parker & Co. Pty. Ltd. v. Moorehead when Isaacs J., in considering the language of s. 51(xx.) of the Constitution, said [(1908) 8 C.L.R. 330, at p.393]: ". . . it is always a preliminary question whether a given company is a trading or financial corporation or a foreign corporation. This leaves entirely outside the range of federal power, as being in themselves objects of the power, all those domestic corporations, for instance, which are constituted for municipal, mining, manufacturing, religious, scholastic, charitable, scientific, and literary purposes, and possibly others more nearly approximating a character of trading; a strong circumstance to show how and to what extent the autonomy of the States was intended to be safe-guarded. The federal power was sufficiently limited by specific enumeration, and there is no need to place further limits on the words of the legislature." 62 Gibbs J (as he then was) said, at 561: The question … is whether the County Council is a trading corporation. In my opinion, the words "trading corporation" in s. 51(xx.) do not mean "a corporation which is trading". The word "trading" forms part of a composite expression and indicates the essential attribute of the kind of corporation to which it refers. It is common to describe corporations according to their nature, and to speak, for example, of ecclesiastical, eleemosynary or municipal corporations. There can be no doubt that the words "foreign corporations" and "financial corporations" in pl. (xx.) describe corporations of a particular kind rather than corporations of any kind which happen to act in a particular way. The same is true of the words "trading corporations" which, in their natural meaning, as well as in the context of the placitum, refer to corporations of a particular kind. 63 At 562, his Honour said: A trading corporation is one formed for the purpose of trading. However, as I have indicated, the mere fact that a corporation is trading does not mean that it is a trading corporation. It is necessary to determine the true character of the corporation, upon a consideration of all the circumstances that throw light on the purpose for which it was formed. Thus there is no difficulty in holding that the fact that a corporation carries on some trade which is merely incidental or ancillary to the fulfilment of its main purpose does not give it the character of a trading corporation. 64 Gibbs J said, 564: When all these facts are considered, the proper conclusion in my opinion is that the County Council is a corporation constituted for the purposes of local government to provide an essential service to the inhabitants of an aggregation of local authority areas, under conditions thought most likely to prove beneficial to them. It is properly described as a municipal corporation. The description to the corporations to which the powers of s. 51 (xx.) extend does not include municipal corporations. 65 Gibbs J went on to say, at 565: It seems to me that the purpose of specifically mentioning the corporations intended to be within the power given by s. 51 (xx.) was to exclude from the scope of the power at least those corporations which could properly be characterized as municipal and charitable corporations. … The purpose of its [the County Council's] formation is more properly described as that of fulfilling a function of local government. 66 Stephen J, who formed a minority with Barwick CJ in St George County Council,was of the view that, (at 570-571): … when a corporation is formed for the sole purpose of undertaking that [trading] function and undertakes none of the functions of local government which typify the activities of a municipal corporation it is … inappropriate to describe it as a municipal corporation. 67 The High Court in Adamson, which was differently constituted from the High Court in St George County Council, departed from the purposive reasoning of the majority in St George County Council and favoured the reasoning of Barwick CJ in that case. 68 In Adamson, Barwick CJ said, at 208: The only sure guide to the nature of the company is a purview of its current activities, a judgment as to its nature being made after an overview of all those activities. 69 The submissions on behalf of the applicants in QUD 481 of 2006 refer to cases decided by the High Court that have considered the question of whether particular entities are trading or financial corporations: a football club in Adamson's case; a statutory corporation generating and selling electricity in Commonwealth v State of Tasmania (1983) 158 CLR 1 (Tasmanian Dams case); a State Corporation conducting financial trading activities in order to finance and operate a superannuation scheme in State Superannuation Board v Trade Practices Commission (1982) 150 CLR 282; and a dormant shelf company which had not yet commenced to trade in any capacity in Fencott v Muller (1983) 152 CLR 570. 70 Those submissions also referred to decisions in the Federal Court and other superior courts. Those cases were concerned with entities such as charities: E v Australian Red Cross Society (1991) 27 FCR 310; statutory corporations set up under State legislation which conduct various business activities: United Firefighters' Union of Australia v Metropolitan Fire and Emergency Services Board (1998) 83 FCR 346; corporations that conduct universities: Quickenden v O'Connor (2001) 109 FCR 243; and schools: Educang Limited v Queensland Industrial Relations Commission (2006) 154 IR 436; yachting organisations: Forbes & Anor v Australian Yachting Federation Inc. (1996) 131 FLR 241; legal aid bodies: Aboriginal Legal Service of Western Australia Inc. v Lawrence [2007] WAIRC 435; and animal welfare organisations: Orion Pet Products Pty Ltd v Royal Society for the Prevention of Cruelty to Animals (2002) 120 FCR 191. 71 Reference should also be made to the judgment of Toohey J in Hughes v Western Australian Cricket Association (Inc) (1986) 19 FCR 10 (Hughes). 72 Toohey J in Hughes summarised the position up until 1986, saying, at 20: The last few years have seen several decisions, particularly by the High Court, in which the notion of a trading corporation has been examined. It is not my intention to refer to those decisions in great detail but rather to state the principles that appear to emerge from them and then to apply those principles to the facts of the present case. 1. The mere fact that a corporation trades does not mean that it is a trading corporation: R v Trade Practices Tribunal; Ex parte St George County Council (1974) 130 CLR 533 at 543, 562 (St George County Council); R v Federal Court of Australia; Ex parte Western Australian National Football League (1979) 143 CLR 190 at 219, 234 (Adamson). 2. The purpose of incorporation, propounded in St George County Council, is no longer a valid test. The test is one of the current activities of the corporation: Adamson; State Superannuation Board v Trade Practices Commission (1982) 150 CLR 282 at 304; (1982) ATPR 40-326 at 43,976-43,977 (State Superannuation Board). 3. But the current activities test is not the sole criterion for determining whether a corporation is a trading corporation. Thus where a corporation has not begun to trade, its character may be found in its constitution. Even when there are current activities, the corporation's constitution is not completely irrelevant: Fencott v Muller (1983) 152 CLR 570 at 602; (1983) ATPR 40-350 at 44,218. 4. Views as to the necessary extent of trading activity have varied. It must be a substantial corporate activity (Barwick CJ in Adamson at 208); the trading activities must form a sufficiently significant proportion of the corporation's overall activities (Mason J in Adamson at 233, with Jacobs J concurring at 237); the trading activities should not be insubstantial (Murphy J in Adamson at 239); the corporation must carry on trading activities on a significant scale: (Mason, Murphy and Deane JJ in State Superannuation Board at 304; 43,976-43,977; Deane J in Commonwealth v Tasmania (1983) 57 ALJR 450 at 559-560. 5. An incorporated sporting body can be a trading corporation if its activities meet the required test: Adamson. 6. In particular, incorporation under a statute such as the Associations Incorporation Act does not prevent a corporate body from being a trading corporation if its activities warrant that description: Adamson at 232. 7. Trading denotes the activity of providing, for reward, goods or services: Re Ku-ring-gai Co-operative Building Society (No 12) Ltd (1978) 36 FLR 134 at 139; St George County Council at 569-570; Bevanere Pty Ltd v Lubidineuse (1985) 7 FCR 325 at 330-331; (1985) ATPR 40-565 at 46,568. 8. The Trade Practices Act itself draws a distinction between trading corporations and financial corporations; nevertheless the two classes are not mutually exclusive: State Superannuation Board at 303. 73 What his Honour referred to in paragraph 3. above may have an important relevance to a "fully fledged" municipal corporation, like the Etheridge Shire Council, as opposed to what might be described as an ersatz municipal corporation that was the subject of consideration in the St George County Council case. 74 As a practical matter, his Honour concluded that the WACA was a trading corporation, but reached a different conclusion in relation to the Cricket Clubs. At 25, he highlighted some difficulties: Where all activities are income producing, it may not be hard to single out some as trading activities and quantify their significance, even if only in a broad way. But where some activities are income producing and others are not, the exercise is not so straightforward … A trading activity may represent a significant part of a club's income but be relatively insignificant in an overall consideration of the club's activities. 75 This observation has a particular resonance in the present case, as will appear later. Such trading activity of the Etheridge Shire Council is quite insignificant in relation to the overall consideration of the activities of the Etheridge Shire Council, which, as a local government, exercises extensive legislative and executive functions in the local government area, and is its raison d'ętre. 76 It was alleged in Mid Density Development v Rockdale Municipal Council (1992) 39 FCR 579 that the council concerned was a trading corporation. The Federal Court rejected that claim, at 585, largely by application of the activities test: Davies J at 584. The judgment of Davies J was overturned on appeal to the Full Court of the Federal Court, but on other grounds. The Full Court did not consider the question of whether the Council was a trading corporation: Mid Density Developments v Rockdale Municipal Council (1993) 44 FCR 290, per the Court, at 302. 77 The applicants submitted that there was no case in any superior Court in which it had been accepted that a local government corporation with the powers and responsibilities of the Etheridge Shire Council was a constitutional corporation.

WHAT IS THE PROPER TEST? 78 The observations of the High Court in the Work Choices Case, at [157] and [158] set out in [13]-[14] above, contrasts the view of the majority in St George City Council that the question of characterisation is to be determined by the purpose for which the corporation is formed, with the dissenting view of Barwick CJ that the "activities test" determines the character of a corporation, and that "a corporation whose predominant and characteristic activity is trading whether in goods or services" was a trading corporation. 79 The comment by the majority in the Work Choices Case that the view of Barwick CJ "did not then command the assent of the majority of the Court" is to be understood as indicating that the "activities test" propounded by Barwick CJ was later accepted by the High Court in Adamson as the applicable test, and is the proper test to apply. 80 Mason J, in Adamson, said of a "trading corporation": Essentially, it is a description or label given to a corporation when its trading activities form a sufficiently significant proportion of its overall activities as to merit its description as a trading corporation. 81 With respect, there is an element of circularity in this observation, but it is not consistent with the view of Barwick CJ in the St George County Council case, set out in [55] above. 82 It is to be noted that Gibbs J in the St George County Council case, said, at 561: The word "trading" forms part of a composite expression and indicates the essential attribute of the kind of corporation to which it refers. It is common to describe corporations according to their nature … 83 And later, in the same paragraph: … the words "trading corporations" … in their natural meaning, as well as in the context of the placitum, refer to corporations of a particular kind. 84 Both Barwick CJ, at 543, and Gibbs J, at 561, thoroughly rejected the contention that a corporation which to any extent engages in trade is a trading corporation. 85 I therefore proceed to enquire whether the Etheridge Shire Council is a trading corporation or a financial corporation, by considering whether, on the evidence, "the predominant and characteristic activity of the Etheridge Shire Council is trading, whether in goods or services", or whether "the predominant and characteristic activity of the Etheridge Shire Council is in finance." 86 In that enquiry, it is necessary to have regard not only to whether the predominant and characteristic activity of the Council is trading or finance, but also, as Barwick CJ indicated in St George County Council at 543, the extent of that activity and its relative significance in the affairs of the Etheridge Shire Council.

THE ETHERIDGE SHIRE COUNCIL 87 The Etheridge Shire Council is established by the LGA, and the powers and activities of the Etheridge Shire Council are governed by that Act. 88 The Etheridge Shire Council was established as a body corporate (in the name Einasleigh Shire Council) in accordance with the Local Government (Divisional Boards) Act 1879 (Qld) by proclamation notice of which was published in the Queensland Government Gazette dated 11 November 1879. 89 The Local Government (Divisional Boards) Act 1879 was repealed and replaced by the Valuation Act 1887 (Qld), 52 Vic No 4, and the Divisional Boards Act 1887 (Qld), 51 Vic No 7. The Local Authorities Act 1902 (Qld) Act provided (in s 5) for the continuation of all existing divisions as if they had been constituted shires under that Act. 90 The name of the Einasleigh Shire Council was changed to Etheridge Shire Council by a notice published in the Queensland Government Gazette on 15 March 1919. 91 The Etheridge Shire Council has remained in existence as an incorporated local government body continuously from September 1882 until the present date in accordance with the successive Acts of the Queensland Parliament relating to local government. 92 The Etheridge Shire Council is presently incorporated as a local authority pursuant to s 35 of the LGA.. 93 Upon its original incorporation in 1882, the Etheridge Shire Council was constituted as a Division. Upon enactment of the 1902 Act, it became known as a Shire. Section 5 of the 1902 Act contained definition of a "local authority" as being the council of a town or of a Shire. Accordingly, the Etheridge Shire Council has been designated as a "local authority" under successive legislation from 1902 to the present date. 94 At all times since 1882 to the present date, the Etheridge Shire Council has been possessed of the power to make by-laws, now known as local laws, which have the force of law in the State of Queensland. (Section 78 of the 1879 Act, the effect of which was continued through successive legislation to s 896 of the LGA. 95 The Etheridge Shire Council was organised as a shire council in 1982 during the gold rush. The shire covers part of Queensland's outback Gulf Savannah region. It lies over a vast formation of ancient pre-Cambrian rock that is rich in minerals and semi-precious stones. The eastern part of the shire sits on the edge of the immense Undara lava field caused by ancient volcanic eruptions in the McBride Plateau some 190,000 years ago. The surrounding country is flat wooded savannah grasslands with isolated hills. The main industries of the shire are pastoralism, mining, and tourism, and the shire contains the townships of Georgetown, Forsayth, Einasleigh, Mt Surprise, and Oak Park. 96 The office of the Shire Council is located in Georgetown on a sealed Gulf Development Road, about 412 kms west-south-west of Cairns, and 301 kms east of Normanton. 97 The LGA is described in the preliminary to the Act as, "An Act to provide for local government, and for related purposes." 98 The objects of the Act are defined in s 2 of the LGA. The objects of this Act include - (a) providing a legal framework for an effective, efficient and accountable system of local government; and (b) Recognising a jurisdiction of local government sufficient to allow a local government to take autonomous responsibility for the good rule and government of its area with a minimum of intervention by the State; and (c) providing for community participation in the local government system; and (d) defining the role of participants in the local government system; and (e) establishing an independent process for ongoing review of certain important local government issues. 99 The object (b) is important in this case, acknowledging the jurisdiction of local government "to take autonomous responsibility for the good rule and government of its area with a minimum of intervention by the State." 100 The dictionary contained in Schedule 2 of the LGA includes definitions as follows: local government means a local government established under this Act. local government Act means an Act under which a local government may exercise the jurisdiction of local government, and includes, for example - (a) this Act; and (b) the Integrated Planning Act 1997; and (c) the Plumbing and Drainage Act 2002; and (d) the Water Act 2000, chapter 2A or 3; and (e) an interim development control provision; and (f) a local law; and (g) a planning scheme. local government area means a part of the State that is established as a local government area under this Act. … minimum general rate levy means an amount fixed as the minimum amount payable as a general rate or differential general rate for all or any rateable land in a local government area. … regulatory fee see section 1071A(1). Section 1071A(1) provides: Power to fix regulatory fees (1) A local government may, by local law or resolution, fix a fee (a regulatory fee) for any of the following - (a) an application for, or the issue of, an approval, consent, licence, permission, registration or other authority under a local government Act: (b) recording a change of ownership of land; (c) giving information kept under a local government Act; (d) seizing property or animals under a local government Act; (e) the performance of a function, other than a function mentioned in paragraphs (a) to (d), imposed on the local government under the Building Act 1975 or the Plumbing and Drainage Act 2002. (2) A regulatory fee must not be more than the cost to the local government of providing the service or taking the action for which the fee is charged. (3) However, subsection (2) does not apply to the extent the regulatory fee includes a tax component under this division. (4) A local government may fix a regulatory fee by resolution even if a corresponding fee had previously been fixed by local law. … 101 "Road" is defined to mean: (a) an area of land dedicated to public use as a road; or (b) an area that is open to or used by the public and is developed for, or has as 1 of its main uses, the driving or riding of motor vehicles; or (c) a bridge, culvert, ferry, ford, tunnel or viaduct; or (d) a pedestrian or bicycle path; or (e) a part of an area, bridge, culvert, ferry, ford, tunnel, viaduct or path mentioned in paragraphs (a) to (d); but does not include a State-controlled road under the Transport Infrastructure Act 1994, or a public thoroughfare easement. 102 There are definitions of Sanitary Drainage, Sewage Treatment Plant, Sewerage System, and Special Rate. There is a definition of Unimproved Value of Land for a financial year, and the dictionary defines Utility Charge as: … a charge for the supply by a local government of water, gas, sewerage or cleansing services to any land or structure. 103 Chapter 12 of the LGA deals with local laws and subordinate local laws. 104 Section 20 provides: In exercising its jurisdiction of local government, a local government has - (a) a law-making role for local laws; and (b) an executive role for - (i) adoption and implementation of policy; and (ii) administration of local government; and (iii) enforcement of its local laws. 105 A local government's jurisdiction to make laws is stated in Ch 2, Pt 1, Div 3 of the LGA. 106 Section 25 provides: Each local government has jurisdiction (the jurisdiction of local government) to make local laws for, and otherwise ensure, the good rule and government of, its territorial unit. 107 Section 26 provides: (1) A local government's jurisdiction of local government includes jurisdiction to make local laws with respect to any matter - (a) required or permitted to be prescribed under this or another Act; or (b) necessary or convenient to be prescribed or exercised for carrying out or giving effect to its local laws. (2) To avoid any doubt, a local law may be made - (a) making it an offence to contravene a local law; and (b) fixing a penalty for an offence against a local law (including different penalties for successive offences against a local law) of not more than 850 penalty units. 108 Division 4 of Ch 2 of the LGA deals with the composition of local governments. Section 32 provides that "A local government consists of a mayor and other councillors" and s 33 provides that "A local government consists of the number of councillors, at least 5, prescribed by regulation." 109 Division 5 of Ch 2 of the LGA deals with the names, legal status, and general powers of local governments. 110 Section 35 provides that a local government: (a) is a body corporate with perpetual succession; and (b) has a common seal; and (c) may sue and be sued in its name. 111 The general powers of a local government are conferred by s 36: (1) A local government has, in the exercise of its jurisdiction, all the powers of an individual. (2) A local government may, for example - (a) enter into contracts; and (b) acquire, hold, deal with and dispose of property; and (c) charge for services and facilities it supplies, other than a service or facility for which a regulatory fee may be fixed; and (d) do other things necessary or convenient to be done in the exercise of its jurisdiction. (3) A local government also has the powers given to it under this or another Act. … 112 Of these powers conferred by the LGA, it is worth noting that in Wingadee Shire Council v Willis (1910) 11 CLR 123, Barton J, at 136, cited with approval the following passage of the judgment of Field J in the United States Supreme Court case of Meriwether v Garrett 102 US, 472 at 511: Municipal corporations are mere instrumentalities of the State for the more convenient administration of local government. Their powers are such as the legislature may confer, and these may be enlarged, abridged or entirely withdrawn at its pleasure. 113 The legal power of the state, in that respect, is reinforced in Chapter 3, Part 2, Division 1 of the LGA, which provides for executive intervention of the state in respect of local government affairs. Section 164 provides for the dissolution of a local government in certain circumstances, including that it has acted in a way that puts at risk its capacity to exercise properly its jurisdiction of local government: Section 164(1)(b). 114 In Chapter 3, Part 2, Divisions 4 and 5 provide respectively for the appointment of administrators and financial controllers. 115 The activities of local governments are funded in part by grants from a number of sources. Currently, the State of Queensland is entitled to receive amounts from time to time from the Commonwealth under the Local Government Financial Assistance Act 1986 (Cth) for financial assistance for local government purposes. Chapter 3, Part 3 of the LGA provides for the establishment and operation of a Local Government Grants Commission to make recommendations to the Minister about the allocation of the amounts to and among local governments. 116 The LGA makes extensive provision for the qualifications and disqualifications for membership of local government; for the entitlements and obligations of councillors, including a code of conduct for councillors and how that code is to be enforced; and how membership of local governments are to be elected, with elaborate provisions for the conduct of quadrennial elections. 117 Section 229 of the LGA defines the role of a councillor: (1) A local government councillor - (a) represents the overall public interest of the local government's area and, if the councillor is a councillor for a division of the area, also represents the public interest of the division; and (b) takes part in deciding the facilities, services and enterprises that are appropriate for the area; and (c) takes part in formulating, adopting and reviewing - (i) the local government's corporate plan and operational plans; and (ii) the policies and goals of the local government; and (d) takes part in making decisions for achieving the goals and implementing the policies of the local government. (2) In performing the role, a councillor - (a) must serve the overall public interest of the area and, if the councillor is a councillor for a division, the public interest of the division; and (b) if conflict arises between the public interest and the private interest of the councillor or another person - must give preference to the public interest. (3) A councillor must ensure there is no conflict, or possible conflict, between the councillor's private interest and the honest performance of the councillor's role of serving the public interest. 118 The LGA provides in Chapter 6 for the general operation for local governments, including the proceedings of local government, local government meetings and committees, the keeping of records including minutes, and the recording of reasons for particular decisions. Part 3 of that Chapter regulates a local government's powers to enter into contracts and related activities. There are principles to which the local government must have regard, including open and effective competition, encouragement of the development of competitive local business, and environmental protection. (s 481(1)). Carrying out of work and the supply of goods or services to the local government comprise procurement activities (s 481A) and disposal of some non-current assets other than land comprise designated disposal activities (s 481B). 119 Chapter 7 of the LGA deals with the financial operation and accountability of local governments, including the preparation and adoption of the corporate plan, and of a revenue policy; the adoption of a budget and a revenue statement; as well as making provision for the borrowing and investment of moneys. 120 Section 525 of the LGA provides: Local governments are statutory bodies (1) Under the Statutory Bodies Financial Arrangements Act 1982, a local government is a statutory body. (2) The Statutory Bodies Financial Arrangements Act 1982, part 2B sets out the way in which the powers under this Act of a local government are affected by the Statutory Bodies Financial Arrangements Act 1982. 121 Section 526 of the LGA provides: Councillors' liability for unauthorised borrowings (1) If a local government borrows money - (a) without authority conferred under the Statutory Bodies Financial Arrangements Act 1982; or (b) for a purpose that is not a proper exercise of its jurisdiction; or (c) in contravention of this Act; the councillors who knowingly agreed to the borrowing are jointly and severally liable to pay to the local government the amount borrowed and all interest, and other penalties incurred by the local government, for the borrowing. … 122 Pursuant to s 531 of the LGA, a local government is required to prepare an annual report for each financial year to be presented to the local government for adoption before 30 November in the year after the end of the financial year to which the report relates. 123 Chapter 8 of the LGA imposes obligations upon local governments which apply to their significant business activities. A "Business activity" is defined by s 545 to mean: Business activity, of a local government, means an activity of the local government trading in goods and services to clients, including, for example, providing cleansing services, water and sewerage services, off street parking and cultural, sporting and recreational facilities, but does not include the construction or maintenance of roads or State-controlled roads or library services. 124 Of the activities in that definition described as "trading in goods and services to clients", water, sewerage, cleansing, and waste collection, and other facilities mentioned can be identified as part of a bracket of core services and facilities traditionally provided by municipal corporations in Australia, not necessarily charged on a fee-for-service basis, although there may be arrangements made for their provision by other entities, whether governmental or non-governmental. 125 Chapter 9 of the LGA provides for the adoption of "competitive neutrality" principles in the conduct of competitive business activities. The code of competitive conduct has to be applied to roads business activities, and to building certification business activities, and the LGA defines when the code must be applied to other business activities. The LGA also deals with the provision of certain water and sewerage services. 126 Chapter 13 of the LGA deals with local government infrastructure, including control of roads. Section 901 provides: (1) A local government has control of all roads in its area. (2) Control of roads includes capacity to take all necessary steps for - (a) survey and resurvey of roads; and (b) construction, maintenance and improvement of roads; and (c) regulation of use of roads; and (d) regulation of movement of traffic and parking vehicles on roads. (3) Subsection (2)(d) is subject to the Transport Operations (Road Use Management) Act 1995. (4) Regulation of use of roads includes - (a) requiring, by local law, an owner of land adjoining a road to fence the land to prevent animals escaping from the land onto the road; and (b) specifying, by local law, the obligations of the owner of the land. 127 That Chapter also provides for malls, marine and aquatic matters, including ferry services; harbours, jetties, breakwaters, ramps and canals; control of the foreshore; and management and regulation of bathing reserves. It also deals with local government control over levee banks and stormwater drainage. Chapter 14 deals with rates and charges, and for their making. Chapter 15 deals with provisions aiding local government, including the power to fix regulatory fees earlier set out. That Chapter includes provisions relating to the enforcement of local government acts, including investigations about offences, and including special provision for local laws about dogs. 128 Chapter 16 deals with local government staff. Chapter 17 deals with superannuation. Finally, Chapter 19 deals with transitional, validation and savings provisions, repeals, and amendments. 129 I have set out a review of the powers and activities of a local government at some length to indicate that a local government, including the Etheridge Shire Council, has extensive legislative and executive functions of a governmental kind in relation to the Etheridge Shire.

TRADING ACTIVITIES OF THE ETHERIDGE SHIRE COUNCIL 130 The evidence establishes that the Etheridge Shire Council engages in some activities which might be described as "trade" as broadly defined. 131 In Bank of New South Wales v Commonwealth (1948) 76 CLR 1, Dixon J said, at 381: It has been said that "trade" strictly means the buying and selling of goods. That, however, is a specialized meaning of the word. The present primary meaning is much wider, covering as it does the pursuit of a calling or handicraft, and its history emphasizes rather use, regularity and course of conduct, than concern with commodities. 132 Counsel for the Etheridge Shire Council submitted the activities of the council in the following areas, constituted trading: Operation of the Terrestrial Centre. [The Terrestrial Centre is described as "a visiting information centre and tourism facility which displays the Ted Elliott mineral collection". It is operated as a tourist attraction in the shire.] Road works for the Department of Works. [It may be recalled that Section 36 of the LGA provides that local governments in Queensland may enter into contracts and charge for services at facilities it supplies, and s 29 of the Transport Infrastructure Act 1994 provides that the Chief Executive of Main Roads may enter into contracts for the State of Queensland with other persons, including local governments, for the carrying out of road works on a state controlled road.] Private Works Hostel Accommodation Child Care Centre Office space rental Residential property rental Sale of land Hire of Halls Sale of Water Services provided by the Shire to the Federal Government 133 Mr K. Watson of Counsel, for the Etheridge Shire Council, submitted as his primary submission that, as at 21 October 2006, these activities together with "the receipt of investment income" either alone, or some, or all in combination, were significant or substantial trading and financial activities of the Etheridge Shire Council, and with the consequence that the Etheridge Shire Council was an "employer" pursuant to s 6 of the WRA. 134 Each of these activities was the subject of detailed analysis by Counsel for the State of Queensland. The Terrestrial Centre The revenue associated with the centre is referred to as "terrestrial sales and admission charges". There is no distinction in the records of revenue designated as "terrestrial sales and admission charges" between the sales from the souvenir shop at the Terrestrial Centre and admission fees. Notwithstanding evidence that the Terrestrial Centre was "intended to operate as a profit making exercise" the operation of the centre is not profitable. The total revenue for the year ended 20 June 2006 was $62,674.96. Of this, $26,195.08 was from admission fees. A "CLS Library Equipment Grant" contributed $500 and trainee subsidies, $11,500. Sales totalled $29,997.45 and internet fees contributed $3,482.43. The total expenditure for the centre was $212,080.52. The centre therefore made an overall loss of $149,405.56. [The contention of behalf of the Etheridge Shire Council is that the operation of the Terrestrial Centre will be cash flow positive "at some point in the future".] Hostel Accommodation The purpose of the operation of the Hostel is to provide accommodation to primary school children attending the Georgetown Primary School. While a fee for services is charged for this accommodation, the shire council considers it an important service to primary school students within the community development and human services provided by the council. The fees paid for the service are insufficient to cover the costs of providing the service, as the council applies money obtained under the State and Federal Government programs for non-governmental schools to the provision of this community service. The evidence indicates the financial results of the operation of the hostel: in each of the years 2003/2004; 2004/2005 and 2005/2006 the fees received of $73,148.46; $102,299.65 and $100,531.80, respectively, represented 1.09%; 1.37% and 1.36% of the total revenues of the Council. Total income for those years was $89,243.46; $126,624.15 and $191,164.30. The total expenditure in each year was, respectively, $151,684.97; $167,697.99 and $176,211.86. In the 2004 and 2005 financial years, it made losses of $62,411.51 and $41,073.84. Childcare centre The childcare centre is operated on a non-profit basis. The fees are insufficient to allow the centre to operate on a break-even basis, and the revenue is supplemented by grants provided by the Department of Communities on behalf of the State of Queensland. In the 2006 financial year, childcare fees contributed $6,260.80 to overall revenues of $33,741.80, and the balance of the revenues having been contributed by an operational subsidy. The overall expenditure was $32,913.18, a surplus over the revenues from fees and grants being $828.62.

Office space rental The council leases one commercial office building. The revenues associated with the leasing of these premises were said to be for the relevant years, $8,096.00 (0.12% of total revenues); $0.00 (0%); $4,231.16 (0.06%); and $3,926.56 (0.04%). There is no evidence as to the costs associated with this activity.

Residential Property Rental During the relevant years, the council earned rents from the leasing of residential premises which it owns. In the relevant years, the rents earned were $38,182.52 (0.57% of total revenues); $55,887.94 (0.75%); $58,741.11 (0.79%); and $65,419.66 (0.74%). It is said that the provision of accommodation to council employees free of charge or at subsidised rentals is a means of attracting and retaining employees.

Sale of land In respect of the sale of land, the evidence indicates one, or perhaps, two, transactions: the sale of one lot in December 2003 for the sum of $40,000, and a contract for the sale of another lot in October 2005 for $500.00. There is no evidence as to the costs of the land to the council, either for its initial acquisition, or for the maintenance over whatever period it was owned, and it is thus not able to be determined whether this "trading activity" was profitable.

Hire of halls The council has available for hire halls at Georgetown, Mt Surprise, and Einasleigh. Fees are charged for the hire of the hall, depending on the time and duration of the hiring and the activity for which it is hired. How the hiring rates are set does not clearly appear from the evidence, but the revenue generated from the hall hire fees in each of the years was $3,967.25 (0.06% of total revenues); $3,753.75 (0.05%); $4,920.57 (0.07%); and $2,902.80 (0.03%).

Sale of Water The Etheridge Shire Council applied a two-part tariff system based on access and consumption for the supply of potable water for Georgetown and Forsayth, the aim of which was said to be the achievement of full cost recovery. It is apparent that full cost recovery is not achieved by the council. The cost to the council for the production of the water for the two towns exceeds the charges for the provision of the service. While there is no evidence as to the total cost of the provision of such services, the overall level of loss, when compared with revenues charged, is unknown. The revenues for Forsayth over the four years varied from 0.11% of total revenue to 0.16% of total revenue. For Georgetown, the figures varied from 0.42% of total revenue to 0.63% of total revenue.

Services provided to the federal government Services provided to Centrelink for total annual fees of $3,673.61 (0.04% of total revenues) and $330.00 for services provided to Medicare for providing a Medicare access point.

Income derived from investments In each of relevant years, the respondent earned revenues of $232,046.42 (3.45% of revenues); $214,069.69 (2.87%); $226,200.45 (3.05%); and $264,164.01 (2.97%).

Assessment of building work applications Mr Warren Olsen, Chief Executive Officer of the Etheridge Shire Council, deposes to arrangements whereby the council charges fees for the assessment of development applications for building work. The council does not actually perform the assessments which they are said to "contract out" to the Atherton Shire Council for a set monthly fee of $898.33.

Private Works Mr Olsen speaks of a "range of services to local residents and other organisations" being provided by council upon request, but there is no detail of the nature of those services. It is apparent from the examples of such works that they include activities which have their source in the regulatory powers of the council, such as the mowing and clearing of allotments and the clearing of rubbish and debris for which a regulatory fee may be charged pursuant to s 1071A of the LGA. 135 The revenue policy of the Etheridge Shire Council for the 2005-2006 year, which is contained in the annual report for that year, makes it plain that the council may decide to subsidise the cost of providing water base access charges, television and radio re-broadcasting services, cleansing and waste management special charges, because of the undue financial hardship that might result from some or all of the factors of high cost of service provision, poor economies of scale, expected availability of grants at the time infrastructure requires replacement, and difficulties in identifying "users" of a service. 136 The borrowing policy, also set out in the Annual Report, reflects the position of the council as the provider of governmental services. The borrowing strategies include the utilisation of services of the Queensland Treasury Corporation for managing existing debt and financing any new borrowing, so as to minimise the ongoing cost of debt. 137 The Annual Report of the Etheridge Shire Council for the year 2005-2006 contains a "Note 3b: Analysis of Results by Function Components", illustrating the components of the council's activities. Note 3a in the Annual Report is "Analysis of Results by Function", and shows a detailed account of the financial operations of the functional components of the Etheridge Shire Council. 138 Schedule A to these reasons is Note 3b to the 2005-2006 Annual Report of the Etheridge Shire Council; Schedule B to these reasons is Note 3a. 139 The Etheridge Shire Council submitted in its written submissions that a trading corporation: [I]nvolves the buying and selling for the purposes of receiving revenue - Adamson at page 235 (Mason J) and is a broad concept. Quickenden v O'Connor (2001) 109 FCR 243 at 261. A corporation may trade even though it enjoys a monopoly. St George County Council's case at 539 or is not motivated by the decision to make a profit. Ku-ring-gai Co-operative Building Society (No. 12) Ltd (1978) 36 FLR 134 at 167. 140 The written submissions on behalf of the Etheridge Shire Council ask the question "How is the significance or substantiality of the trading activities to be assessed?" (a) It is undoubtedly a fact of fact and degree (Adamson at 234); (b) A measurement of what is received from the alleged trading activities against total receipts as an indication of substantiality and significance has been accepted and adopted in a number of cases including:- (i) E v Red Cross (1991) 27 FCR 310 at 345; (ii) United Firefighters Union of Australia v Metropolitan Fire and Emergency Services Board (1998) 83 FCR 346 at 351; (iii) Orion Pet Products v RSPCA (2002) 120 FCR 191 at 219; (iv) Quickenden v O'Connor (2001) 109 FCR 243 at 272 and 273. 141 Both the applicants in QUD 481 of 2006 and the State of Queensland in QUD 39 of 2007 submitted that municipal corporations as they existed at the time of Federation, and at the present time, are identifiable and are distinguishable from trading corporations, and that the Etheridge Shire Council is a municipal corporation. 142 Menzies J in St George County Council, said, at 552: In Halsbury's Laws of England … the distinction between trading and non-trading corporations is conveniently drawn and corporations having statutory powers of local government are included in the classification there appearing of non-trading corporations. It may also be observed that in 1850 James Grant in his Treatise on the Law of Corporations classified "Municipal Corporation" separately from trading bodies and devoted 150 pages of his book to the consideration of municipal corporations. 143 His Honour concluded, at 554: It is not my purpose to attempt to define all that falls within the limits of the classification of "trading corporation". Rather, I am concerned to indicate that the classification has limits and those limits are not to be ascertained simply by asking the question "Does the corporation trade?" As I have indicated, many corporations which do trade are clearly outside the limits of the classification and one group of corporations that is not comprehended is, in my view, corporations of an essentially different character, namely corporations for local government purposes." 144 Mr Herbert of Counsel for the applicants in QUD 481 of 2006 drew attention to the record of the constitutional debates on 17 April 1897, at 793, where Mr Symon said, "In the original Act corporations simply are mentioned. Why this difference?" To which Mr Barton, later an original judge of the High Court, said: The reason of making the difference was this: It having been seen that the word "corporations," as it existed, covered municipal corporations, the term was changed to "trade corporations." 145 In 1891, in the Constitutional debates on whether the corporations power should extend to the registration or incorporation of companies, Sir Samuel Griffiths said, at 686: I do not think we should. There are a great number of different corporations. For instance, there are municipal, trading, and charitable corporations, and these are all incorporated in different ways according to the law pertaining in different states. … It is sometimes difficult to say what is a trading corporation. What is important, however, is that there should be uniform law for the recognition of corporations. 146 In the light of the observations by the High Court in Adamson and the later cases, in the characterisation of a corporation as a trading corporation, or a financial corporation, the primary focus has to be on the activities of the corporation. 147 I note, nonetheless, that in the State Superannuation Board v Trade Practices Commission (1982) 150 CLR 282, Mason, Murphy and Deane JJ said, at 303: … [T]he decision in Adamson is of importance for two reasons. First, the majority of the Court (Barwick CJ, Mason, Jacobs and Murphy JJ), rejecting the argument that the purpose for which a corporation is formed is the sole or principal criterion of its character as a trading corporation. 148 This passage indicates that the purpose for which a corporation is formed is not the "sole" or "principal" criterion for the purposes of characterisation. The passage suggests, however, that the purpose of the formation of a corporation is not irrelevant in that process. 149 The contention for the applicant in both proceedings in this case is that when one looks at the totality of the evidence, including the historical evidence concerning the function of the Etheridge Shire Council, in particular, the fundamental functions of the shire council, being the legislative and administrative responsibility as a local government for the local government area, it is impossible to conclude that the Etheridge Shire Council is a trading corporation. 150 I have set out in detail the evidence in relation to what is said to be the trading activities of the council. 151 All of them, in my opinion, including even the road works aspect of the activity of the council, after close analysis, entirely lack the essential quality of trade. Almost all of them run at a loss. They are all directed, in my view, to public benefit objectives within the shire. Their scale, even in monetary terms (putting to one side the non-monetary significance of the legislative and executive activity of the shire council), are so inconsequential and incidental to the primary activity and function of the Council as to the deny to the Council the characterisation of a "trading corporation" or a "financial corporation". 152 The way in which road building functions are discharged in the local government area of the Etheridge Shire involve a contribution by way of funding by the State to the local government to perform road works, both for the shire, and also to give it some State government work in order to maintain a viable local workforce and to maintain the social infrastructure in those remote areas. The Council's contracts were always on a sole invitee basis, and the State of Queensland had the specific object of retaining or maintaining employment in the Etheridge Shire Council. 153 If, contrary to my view, the Etheridge Shire Council was a trading corporation, the Commonwealth government would have the power that I have set out in para [21] above. Such powers would annihilate any concept in the Constitution of a federal balance, and in a very significant way, permit the Commonwealth to nullify the right of the State to govern in its local government areas. 154 I am of the view that all five judges in the St George County Council case would have determined that the Etheridge Shire Council is not a trading corporation. 155 Accepting that the "activities test" is the appropriate test to apply in determining whether local governments are trading corporations, the application of that test points overwhelmingly to the conclusion that the Etheridge Shire Council is not a trading corporation. 156 Equally, it is not a financial corporation. The only financial activities which, on the evidence, it engages, is maintaining interest-bearing deposits of funds prior to their utilisation for the purposes of the shire council. 157 For these reasons, I will make the declarations sought by the applicants. 158 I will hear the parties on costs. I certify that the preceding one hundred and fifty-eight (158) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Spender.

QUD 481 of 2006 Mr A Herbert Counsel for the Applicants Sciacca's Lawyers Solicitor for the First Applicant Hall Payne Lawyers Solicitor for the Second Applicant Mr K Watson Counsel for the First Respondent Solicitor for the First Respondent King & Company Solicitor for the Second Respondent Australian Government Solicitor Counsel for the Intervener Mr D Jackson QC with Mr S Horneman-Wren Solicitor for the Intervener Crown Law QUD 39 of 2007 Mr D Jackson QC with Mr S Horneman-Wren Counsel for the Applicant Solicitor for the Applicant Crown Law Counsel for the First Respondent Mr K Watson Solicitor for the First Respondent King & Company Solicitor for the Second Respondent Australian Government Solicitor