1 From July 2006 until late December 2008, Mr Brian Charles Carter was employed as a bus driver by Carenne Support Ltd ("Carenne"). On 19 December 2008 that employment was terminated and by 24 December 2008 Mr Carter had filed an application for reinstatement pursuant to the provisions of Ch 2, Pt 6 of the Industrial Relations Act 1996.
2 Carenne was established in 2004 to improve the therapy services for disabled students at Carenne School. Carenne described itself as a limited liability company having benevolent status for fund raising and taxation purposes. Carenne contracted with the Department of Education and Training ("DET") to supply special transport services to students at the school. Mr Carter had commenced with Carenne as a relief part-time driver and by mid-2007 had become the regular casual driver and in 2008 the area service was expanded. Carenne claimed that there were a number of complaints about Mr Carter's driving and he was dismissed. Mr Carter claimed that, during his employment, he was employed under the terms of the Transport Industry - Motor Bus Drivers and Conductors (State) Award.
3 In his application in which he claimed to be unfairly dismissed, Mr Carter sought reinstatement to his previous position. In Carenne's reply to Mr Carter's application it was accepted that Mr Carter was employed under the Motor Bus Drivers and Conducts (State) Award and the company advised that, in the proceedings, it would represented by the Legal Services Unit of DET.
4 Following unsuccessful conciliation proceedings held in Bathurst, Carenne filed a notice of motion seeking to have Mr Carter's application dismissed on the basis that Carenne was a constitutional corporation for the purposes of the Workplace Relations Act 1996 (Cth) and as a consequence, s 16(1) of the Workplace Relations Act operated to remove this Commission's jurisdiction in respect of any claim for alleged unfair dismissal by Mr Carter. Ultimately, the parties agreed to file and serve their affidavits in relation to this preliminary issue and also agreed that this issue could be determined on the papers and without the necessity of a formal hearing with oral evidence and submissions. In particular, this course was suitable to Mr Carter because of his personal circumstances and his inability to leave the Bathurst area.
WHAT IS THE NATURE OF CARENNE AND WHAT DOES IT DO?
5 In order to address this threshold question of whether or not Carenne is a constitutional corporation for the purposes of the operation of the Workplace Relations Act, it is necessary to consider the evidence placed before the Commission concerning the operations of Carenne.
6 The evidence for Carenne was constituted by an affidavit and a number of annexures sworn by Mr Geoffrey Salmon, a director of the company since its inception. In approximately 2003, Mr Salmon and his wife became concerned about the lack of therapy services available in the Central West to people with disabilities in that region of the State. Their interest arose from the needs of their son who was assessed early in his life as being developmentally delayed, mentally and physically. Mr Salmon was of the view that the level of support from therapists, particularly speech therapists, physiotherapists and occupational therapists, was inadequate to meet the needs of young people in the region who had a range of disabilities. There did not appear to be an organisation providing advocacy on behalf of disadvantaged young people and so Mr Salmon took steps to establish an independent charitable organisation that could help provide additional therapy services as well as being an organisation that could represent the interests of this particular group.
7 In March 2004 a public charitable company limited by guarantee was registered as Carenne Support Ltd. The constitution of the company was in evidence. Clause 3.1 of the Constitution set out the objects of the company in the following terms:
1. To provide equipment and services for the relief and assistance of disabled persons, including but not limited to, provision of therapeutic, medical and other services for the relief of disabled persons and the provision of ancillary goods, services, equipment etc to assist in the relief and assistance of disabled persons: and
2. To act as a non-profit organisation in the promotion of the objects set out in (1) above.
8 Under cl 3.3 of the Constitution, the income and property of the company was only to be applied towards the promotion of the objects of the company as set out in cl 3.1. Under cl 31.1 the directors may exercise all powers of the company to (1) raise or borrow any sum or sums of money for the purposes of the company and (2) secure the payment or repayment of any amount payable by the company and any other obligation or liability in such manner and on such terms and conditions as they think fit whether upon the security of any mortgage or charge upon all or any of the property, undertaking or assets of the company present and future. Under cl 30.1, subject to the law and the Constitution, the management and control of the business and affairs of the company were vested in the directors. Under cl 48 of the Constitution if the company was wound up and a surplus remained, the surplus was not to be paid to or distributed amongst the members but was to be given or transferred to another institution or corporation having the same objects or similar objects to the company as set out in cl 3.1 and where the Constitution of that company required its income and property to be applied in promoting its objects and the Constitution prohibited it from paying or distributing its income and property amongst its members to an extent at least as great as imposed on the company under cl 3.4 (cl 3.4 provided that no income or property of the company will be paid, transferred or distributed directly or indirectly by way of dividend, bonus or otherwise to any member of the company although allowing specified good faith payments to a member).
9 Annexed to Mr Salmon's affidavit were a number of documents, including a copy of the Australian Business Register of the company showing the type of entity as being an incorporated entity with the industry code, being 96290. On October 2005 the Australian Taxation Office ("ATO") had notified Carenne that it was now registered for pay as you go ("PAYG") withholding purposes.
10 The Carenne financial statement for year ended 30 June 2008 was annexed to Mr Salmon's affidavit. The report stated that the company recorded a profit of over $64,000 in that year following a deficit of a little over $2,000 the previous year. The revenue for 2008 exceeded $185,000 with expenses exceeding $121.000. In 2007 the revenue was over $52,000 with expenses of over $54,000 incurred. The principal activities of the company during the year were described as "therapy services and support for people with a disability". The report noted that, in accordance with the company's Constitution prohibiting the declaring or paying of dividends, no dividends had been paid or recommended for the financial year. In the notes forming part of the financial statement for the 2008 financial year it was indicated that fundraising income accounted for nearly $143,000 with over $37,000 being donations. There was $4,000 in interest income and $1,5000 "other" income. This compared with the 2007 financial year when there was approximately $50,000 by way of fundraising, $3,500 in donations, $800 received for interest and $26 from other income. Under note 8 dealing with property, plant and equipment, motor vehicles were entered at cost being over $99,000 and with depreciation was reduced in value to just over $54,000. Note 11 stated that the company was limited by guarantee and if the company was wound up the Constitution stated that each member was required to contribute a maximum of $100 towards meeting any of the company's outstanding obligations. Note 12 recorded that the directors of the company performed honorary duties and in their capacity as directors did not receive any remuneration for services rendered to the company.
11 In relation to the trading activities of the company, Mr Salmon spoke of his aim for the company to establish a business enterprise that could earn profits which in turn could be applied to further the main charitable purposes of the company being the provision of equipment, relief and assistance services for disabled persons. In approximately mid-2007 the company entered negotiations to acquire a bus which was used by the then transport provider under the DET school students special transport scheme that serviced the Carenne School in Bathurst. The company paid approximately $12,000 for that vehicle which was added to pre-existing vehicles owned by the company. Carenne then entered into a contract with DET for the provision of transport services for students attending Carenne school. That contract was renewed on 5 December 2008. Mr Salmon understood that the level of remuneration set by the contract was the average rate paid by DET to other service providers for the zone covering Bathurst for the same size vehicle. While the initial contract provided for a single run (carried out by the company's three vehicles), in early 2008 a second run was allocated by DET involving, on a daily basis, the transport of a small number of children between Bathurst and Lithgow. Carenne undertook this work using its existing vehicle. During this period Carenne employed between three and four staff. Two or three staff were part-time casual drivers and the other member of staff was Carenne's part-time chief executive officer who was also a speech therapist. Under the 2009 contract for the provision of special transport services with DET, cl 10.4 provided that the service must not be sold, assigned or transferred. Under cl 11.1 there was no guarantee period for the engagement of the service and either party could terminate the agreement at any time by giving the other party two weeks' notice in writing. Under cl 1 of the contract for the provision of special transport services, Carenne agreed to provide transport for students with disabilities and special needs on the understanding that student conveyance needs could be subject to change at minimal notice.
12 Mr Salmon's evidence was that Carenne had been able to provide a range of therapy services and equipment to persons with disabilities in line with the objects of the company by applying funds from donations and the profits from the transport operations. The company had engaged a range of therapists on a fee-for-service basis whereby Carenne paid the therapists' fees while the services were provided free to persons with disabilities.
13 Following consideration of the evidence and submissions of the parties, the Commission requested Carenne to supply further information regarding its operation and revenue streams. In October 2009, Mr Salmon duly filed a supplementary affidavit dealing with the issues raised by the Commission. In that affidavit it was stated that, for the financial year ending June 2007, Carenne had received $42,815 from DET for the provision of transport services and for the financial year ending in June 2008, Carenne had received $135,188 from DET. A document supplied by Carenne showed that, for the year ending June 2007, the profit from "transport activities" amounted to approximately $25,300 while for the financial year ending June 2008, the "profit for transport activities" amounted to just over $81,300. In the financial year ending June 2007, the part-time and casual drivers engaged to provide the contractor transport service with DET were paid wages of approximately $1,900. Those drivers were paid just over $27,700 in wages for the financial year ending June 2008 for the provision of the transport service. However, it was stated that, in order to determine the actual operating profit, it was appropriate to include depreciation costs of the vehicles and other costs such as auditing that should be charged as an expense to the transport activities. On that approach, actual operating profits for the provision of transport services to DET for the year ending 2007 was nearly $6,500 and for the year ending 2008 it was just over $67,000. It was pointed out that other possible expenses, such as vehicle servicing, administration and accounting costs, were provided as donations or on a pro bono basis to Carenne and therefore were not reflected in the financial reports. These profits were applied to the provision of therapy services and equipment for children attending the Carenne Public School. The main expense for the therapy activities was wages paid to therapists.
14 In relation to the three buses used in providing the transport services, Mr Salmon said that the first two buses were purchased in 2005 from fundraising activities carried out by Carenne and from donations received from charitable organisations, notably, the Variety Club of New South Wales who provided approximately half the cost of those two vehicles. These two buses were initially used for facilitating school excursions and other special transport needs for the Carenne school and were provided free with the school supplying the drivers. In May 2006, the Board of Carenne resolved to purchase a third bus from the Trails rganisation ("Trails") who had the contract with DET for a run in the Bathurst area that included the Carenne school. The total cost of purchasing this bus was just over $14,000 which was paid out of existing Carenne funds. Carenne did not borrow any money or use any other source of financing such as leasing to purchase any of the vehicles. The principle purpose for acquiring the vehicle from Trails was to continue to undertake the run pursuant to the contractual arrangements with DET.
15 In relation to any policy adopted by DET concerning those who may apply for accreditation to be a transport provider under the School Students Special Transport Scheme ("SSSTS") for students with disabilities, Mr Salmon had been informed that DET undertook a review of expressions of interest by persons wishing to be accredited as contractors and ascertained whether they met the standard contractual requirements in the contract. In 2001, DET had conducted an open tender process for runs in the Sydney area. A DET website article referred to the scheme as aiming to assist eligible students with disabilities to access educational services in government and non-government schools in New South Wales, with a maximum of two trips per day.
16 In approximately 2006, Carenne had lodged an expression of interest with DET to become a transport service provider under the SSSTS and ultimately succeeded in becoming an approved provider. Under the scheme, Carenne was awarded a contract to provide transport services for students commuting between their home in the Bathurst area and the Carenne school. The current contract was signed by DET in February 2009 and continued until the end of December 2009.
17 Carenne clarified that it did not charge the students for the transport services provided nor did DET charge the students for the service. Carenne was paid by DET under the contractual arrangements for the provision of transport services. Mr Salmon pointed out that all New South Wales school students were entitled to subsidised travel to and from school provided they met eligibility criteria. There were two schemes in New South Wales supporting student travel. The New South Wales Department of Transport and Infrastructure managed the transport scheme for school students without disabilities For students with disabilities the transport services were available through the SSTS for students enrolled in special schools and support classes or where mobility dependent students were placed in regular classes. Carenne did not charge for any other services provided to disabled persons, including the provision of therapeutic or other services and ancillary goods services and equipment. On one occasion, Carenne had invoiced the Department of Disabilities Ageing and Home Care for physiotherapy services provided to an ex-student of the Carenne school. When Carenne commenced providing therapy services, its occupational therapist was paid by the Department of Disabilities to see a child attending the Bathurst public school. Almost all therapy services, however, provided by Carenne have catered for the needs of students at the Carenne school. To date no individual or other organisation has been invoiced for therapy services provided by Carenne. Mr Salmon accepted that Carenne worked to support the Carenne school which was a special school catering for students with an intellectual or physical disability.
18 Carenne was asked to clarify its written submissions where reference was made to cash flows for the year ended 2008 showing that receipts "from customers" was over $180,000. That amount of money was made up by approximately $136,000 by way of DET payments for the transport services, $2,400 for the Department of Disabilities payments for therapy services, just under $5,000 for a Workplace Relations refund and just over $37,000 for donations, with $1500 being received as "other income".
19 Carenne did have Deductible Gift Recipient status which allowed it to receive donations and issue receipts. This status allowed the donor to make a taxable claim for donations to Carenne and that helped its fundraising activities. The major benefit to Carenne was to make donations attractive to donors. Having that status also attracted reporting obligations to the Australian Securities and Investments Commission and the Department of Gaming and Racing - Carenne forwarded its annual independently audited financial statements to these bodies.
20 It was stated that, in the past, Carenne had two major trading activities, the first relating to the provision of transport services for DET and the second relating to the provision of therapy services to the Department of Disabilities. In February 2006, the Department of Disabilities began allocating funds to Carenne to provide therapy services to fill service gaps that had arisen due to vacant therapy positions in that Department. Since July 2006, Carenne had invoiced the Department for physiotherapy services provided to students attending the Carenne school as well as the student from Bathurst High School. The initial brief from the Department was to provide physiotherapy services on a referral basis but as it transpired, only one referral was made for a student who did not attend the Carenne school. This arrangement was terminated in December 2008 when DET employed a physiotherapist in Bathurst. Since that time all of Carenne's income from trading activities has come from the contractor provision of transport services to DET.
21 Carenne accepted that the Deductible Gift Recipient status, its GST concession, its income tax exemption and fringe benefit tax exemption were enjoyed by the company because it was classified as a public benevolent institution. Mr Salmon understood that a public benevolent institution was, by definition, a non-profit institution organised for the direct relief of poverty, distress, sickness, suffering, misfortune, disability or helplessness.
22 Mr Salmon stated that the three vehicles owned by Carenne were also used by the Carenne school staff during the school day for transporting students to activities and programmes that formed part of the school curriculum, including community activities, work experience and sporting activities. This was the extent of the use of those three vehicles for purposes other than the transport of students under the arrangement with DET. No fee was charged nor was any money received for the provision of vehicles when used in non-DET services.
23 It was accepted that neither Carenne nor any of its employees were required to hold a public passenger authority under the Passenger Transport Act 1990. Mr Salmon understood that Act required operators and drivers who carry on a public passenger service for fee or other consideration needed to be accredited by the Minister of Transport. Mr Salmon's own enquiries of DET led him to believe that, because there were eligibility criteria limiting access to the SSSTS, it was not open to the public and presumably therefore a public passenger authority was not required. Based on advice from the Minister for Transport, Mr Salmon had been informed by DET that transport providers under the SSSTS scheme were not required to be accredited under that Act.
24 Mr Carter also filed an affidavit raising a number of issues although in substance dealing with the question of whether or not Carenne was a constitutional corporation. Having regard to the terms of the Notice of Motion, the Commission will consider those parts of Mr Carter's affidavit that are capable of reference to that issue. Mr Carter did not offer a response to the further affidavit evidence of Mr Solomon.
25 Mr Carter asserted that Carenne provided a gratuitous public service to persons with a disability in the Central West of New South Wales and did not "trade". Because of the type of operation undertaken by the company it was not a trading or financial corporation and could not be classified as a constitutional corporation within the Constitution nor under the Workplace Relations Act.
26 Carenne was said to be closely associated with Carenne Public School Bathurst, a school for intellectually disabled students. The membership of Carenne consisted of teachers, parents and local community members and was similar to a Parents and Citizens Association.
27 In relation to the Australian Business Register cited by Mr Salmon, it was pointed out that, the industry code 96290 recorded on the register, under the Australian and New Zealand Standard Industry classification, by reference to that classification as published in 1996 carried the following meaning:
Units of associations, clubs or organisations for the promotion of community interests n.e.c. It also includes units of political parties.
28 Mr Carter stated that the Australian Business Register did not include information as to Carenne's status as a Deductible Gift Recipient nor was reference made to the GST concession, income tax exemption and fringe benefit tax exemption achieved by the company. Mr Carter stated that Carenne enjoyed these benefits because of its classification as a public benevolent institution. A current extract from the Australian Business Register for Carenne as at April 2009 referred to its entity type as "other incorporated entity" and its tax concession status as being a "public benevolent institution" endorsed to have access to nominated tax concessions, namely, a GST concession, an income tax exemption and an FBT exemption. It was also recorded that Carenne was endorsed as a deductible gift recipient. Mr Carter pointed out that Carenne was the holder of a New South Wales authority to fund raise under the Charitable Fundraising Act 1991.
29 Mr Carter contested the relevance of Carenne being registered for PAYE withholding purposes asserting that it meant no more than, where it had employees, the employer withheld tax before remittance to the ATO. He also drew attention to the 2008 financial year statement and the fact that the bulk of the organisation's revenue came from "fundraising". This also applied to the 2007 financial year statement. He contested Mr Salmon's assertion about his desire to earn profits that could be applied for the charitable purposes of the company noting that the Constitution set out the purposes of Carenne and that Mr Salmon was only one of the directors.
30 The three buses operated by Carenne were identified as being a standard Ford Transit minibus, a wheelchair accessible Ford Transit minibus and a wheelchair accessible Toyota Hiace commuter. The two Ford transit minibuses were purchased following an appeal in 2004/2005 by the Carenne Public School, an appeal for buses to assist with transporting students to and from school-related activities. Mr Carter referred to press coverage of these fundraising events. In 2005 the Lions Club of Bathurst had donated more than $30,000 to the Carenne School bus appeal. One article carried a statement from Mr Terence Mahoney a director of Carenne and the Principal of Carenne Public School that the school would now be able to order a bus with wheelchair access. Mr Mahoney had said that the school really needed its own bus to guarantee viability of programmes for the students. Mr Mahoney had mentioned in one of the articles that the well-known charity, Variety, had come to their aid and had donated the remaining funds allowing the purchase of two buses for the school. Those statements made it clear that the purchase of the buses was for the purposes of the operation of the Carenne Public School and its students. Mr Carter asserted that there was no intention to use the vehicles for trade and that would be unusual considering that the funding for the purchase of the vehicles was supplied by donations and other charities such as Variety.
31 Mr Carter asserted that Carenne did not compete with other providers for clients. Clients were assigned to a "run" that became transport obligations of Carenne and this was all at DET's sole discretion. Under the contract with DET, the bus run fitted within Carenne's purpose under the Constitution to provide relief for persons with disabilities and to provide other services for the relief of disabled persons. Carenne did not charge clients/passengers or therapy recipients travelling on the buses for services provided. The contract between Carenne and DET was a tripartite agreement whereby DET paid a loaded rate per kilometre for the transport of students. Unlike an ordinary bus service, Carenne was not paid by the number of passengers it carried but instead was paid by the kilometres it travelled while an approved passenger was aboard.
32 Reference was made to the DET website dealing with School Students Special Transport Scheme for Students with Disabilities. The Department's site dealing with this matter stated:
The School Student Special Transport Scheme ("SSSTS") aims to assist eligible students with disabilities to access education services in Government and non-Government schools in New South Wales with a maximum of two trips per day. The Scheme is administered by the New South Wales Department of Education and Training through the Students' Special Transport Unit located in the Wollongong State office. Transport services are available to students enrolled in special schools and support classes or in placements in regular classes for students who are mobility dependent. To be eligible to apply for transport assistance, students must:
· have an identified disability that meets DET established criteria NSW DET Disability Criteria (July 2000);
· be enrolled in the closest appropriate government or registered non-government school to their home, following consideration of educational needs and the impact of travelling distance and time on individual learning programs;
· have parents and/or carers who have demonstrated in writing their inability to provide or arrange travel for the student either fully or in part; and
· be a permanent resident of New South Wales.
33 It was submitted by Mr Carter that the SSSTS programme was to provide a "gratuitous public welfare service" to students with disabilities and special needs. Carenne's transport of disability students was provided on a free and discretionary basis. In order for students to be transported they had to be approved by the SSSTS and had to meet the guidelines set out by the Department.
34 Mr Carter further asserted that neither Carenne nor its employees were required to hold a Public Passenger Vehicle Authority under the Passenger Transport Act 1990. That Act was said to require operators and drivers of services carrying passengers for fee or other consideration to be accredited by the Ministry of Transport.
35 No affidavit in Reply was filed on behalf of Carenne contesting the variety of facts asserted by Mr Carter. In written submissions for Carenne, however, a number of matters were rejected or contested on the basis that they were not matters relevant to the matters raised in the Notice of Motion.