The parties' and the intervener's submissions
31 The CFA submitted the Agreement was approved by the Commission on 21 October 2010. For the purposes of the legislative power of the Commonwealth empowering FWA to approve the Agreement, the issue was accordingly whether, as at 21 October 2010, the CFA was a trading corporation. That this was the issue was not disputed.
32 On the present state of the authorities, the CFA submitted, the test of whether a corporation was a trading corporation focused on the activities of the corporation, rather than the purpose of incorporation. The CFA referred to Hughes v Western Australian Cricket Association (Inc) (1986) 19 FCR 10; New South Wales v Commonwealth [2006] HCA 52; (2006) 229 CLR 1 (the Work Choices Case); R v The Judges of the Federal Court of Australia; Ex parte The Western Australian National Football League (1979) 143 CLR 190 (Adamson); Actors and Announcers Equity Association v Fontana Films Pty Ltd (1982) 150 CLR 169; State Superannuation Board v Trade Practices Commission (1982) 150 CLR 282 (State Superannuation Board); Bankstown Handicapped Children's Centre v Hillman [2010] FCAFC 11; (2010) 182 FCR 483 (Bankstown); and Quickenden v O'Connor [2001] FCA 303; (2001) 109 FCR 243 (Quickenden).
33 The essential nature and key duties and functions of the CFA were not in dispute below. The CFA is a statutory authority established pursuant to the CFA Act. In respect of the CFA:
(a) its purpose is the "more effective control of the prevention and suppression of fires in the country area of Victoria": s 6(1); and
(b) its general statutory duty is "[T]he duty of taking superintending and enforcing all necessary steps for the prevention and suppression of fires and for the protection of life and property in case of fire": s 20.
34 Section 6F of the CFA Act (which we note was inserted by Act No. 10/2011 s 4 with effect from 11 May 2011) recorded the Victorian Parliament's recognition that the CFA "... is first and foremost a volunteer-based organisation, in which volunteer officers and members are supported by employees in a fully integrated manner". Consistent with s 6F, in practice the CFA carried out its duties and functions via about 55,000 volunteers, 680 career firefighters and 1500 support staff. The CFA had about 1,216 fire brigades, including 31 fire brigades manned by both volunteers and career firefighters. The CFA's volunteers performed both operational and response work and also a range of non-operational work. The primary judge correctly found that the CFA was properly characterised as a "volunteer and community based fire and emergency services organisation".
35 The CFA submitted that the primary judge erred in applying the activities test by applying an absolute test rather than a relative one and by not having regard to the CFA's total activities, and in particular the activities of its approximately 55,000 volunteers. His Honour failed to have regard to or give weight to a relevant, and indeed critical, consideration, namely, the CFA's unchallenged evidence that the annual economic value of the activities of the CFA's volunteers is about $840 million.
36 Even assuming that the Court applied a relative rather than an absolute test (which the CFA disputed), a comparison undertaken without regard to the substantive activities of volunteers, involved clear error: total revenue was only one component of the CFA's total activities.
37 Substantial, and not merely peripheral, trading activities were simply a prerequisite to a finding that a corporation was a trading corporation and not the answer in itself. The fact that trading activities may be substantial, and not peripheral, did not in itself mean that the corporation was a trading corporation.
38 The CFA only derived limited revenue from its trading activities to carry out its statutory duties. It did not in any real sense trade in its fundamental fire prevention services. Its trading activities did not form a sufficiently significant proportion of its overall activities.
39 Further and alternatively, even if a relative test was applied, the CFA's trading income (based on the factual findings of the primary judge) was only 2.7% of its overall income.
40 The primary judge also had regard to additional matters which, it was submitted, were not relevant to whether the CFA was a trading corporation. For example: the CFA's apparent opinion that activities which generate trading income are important; that the CFA's trading income could not easily be forgone, because the service could not be provided if fees could not be charged; and whether the CFA's trading income arose in a fortuitous or casual way.
41 As we have said, the CFA also submitted that the primary judge erred in finding that: rental income of $48,320 from the subsidised rental of properties to CFA employees; fees of $1,495,470 from the TAC for attending at compensable incidents; and $31,433 for advice regarding dangerous goods; constituted income from trading.
42 In respect of the meaning of "trading" in the trading corporation context, the CFA referred to R v Trade Practices Tribunal; Ex parte St George County Council (1974) 130 CLR 533 (St George County Council) at 570 (Stephen J); "The word 'trade' is used with its accepted English meaning: traffic by way of sale of exchange or commercial dealing ... it… is ... commonly used to denote operations of a commercial character by which the trader provides to customers for reward some kind of goods or services": Re Ku-ring-gai Co-operative Building Society (No. 12) Ltd (1978) 36 FLR 134 at 139 (Bowen CJ); and "trading activities" generally connote activities of a commercial nature involving, in essence, the exchange of goods and services for reward: Aboriginal Legal Service of Western Australia (Inc) v Lawrence (No 2) [2008] WASCA 254; (2008) 37 WAR 450 (Lawrence (No 2)) at [67] (Steytler P) and [104] (Le Miere JA). Further, an activity was unlikely to constitute a trading or commercial activity "where it involves the carrying out of a regulatory or governmental function in the interests of the community or the performance of a statutory duty in respect of which fees are charged": Village Building Co Ltd v Canberra International Airport Pty Ltd [2004] FCA 133; (2004) 134 FCR 422 at [90(5)] (Finn J). See also Mid Density Developments v Rockdale Municipal Council (1992) 39 FCR 579 at 585 (Davies J) and JS McMillan Pty Ltd v Commonwealth (1997) 77 FCR 337 at 355 (Emmett J). The activities found by his Honour to be trading activities were activities directly associated with the discharge by the CFA of its statutory duties and functions.
43 The Attorney-General for Victoria submitted that the expression "trading corporation" is a "composite expression" where the word "trading" signifies a distinguishing attribute or characteristic of the corporation. Thus, in assessing whether a corporation is a "trading corporation" within the meaning of s 51(xx) of the Constitution, the ultimate inquiry is whether the "true character" or "true nature" of the corporation is that of a "trading" corporation, to be distinguished from corporations whose true character or nature is otherwise.
44 The process of characterisation called for a consideration of all of the circumstances touching the corporation in question before one can determine whether it satisfies the constitutional description. Whether it was apt to characterise a corporation as a trading corporation was "very much a question of fact and degree". The oft-quoted passage of Mason J's in Adamson at 233 that the constitutional expression "trading corporation" is "[e]ssentially ... 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" should be understood in the context of those general principles. The Attorney-General also referred to the Work Choices Case at 74 [55], 75 [58] and 108-109 [158] and Williams v Commonwealth (No 2) [2014] HCA 23; (2014) 88 ALJR 701 (Williams (No 2)) at 712 [51].
45 In Adamson, Mason J did not purport to define the threshold at which a corporation's trading activities are "sufficiently" significant to merit the description. Considered in isolation, the passage quoted above therefore bore a protean and somewhat circular quality. It certainly did not represent a complete or definitive "test" to be adopted in characterising a corporation. A corporation was not to be characterised as a "trading corporation" simply because its trading activities might be said to be "significant" in some abstract and unarticulated sense.
46 Moreover, insofar as a corporation's activities are a guide to its true character, then the High Court authorities established that what mattered was the proportion of its total activities that were trading activities, rather than the total value of its trading activities in a quantitative sense. The applicable standard is a relative rather than an absolute one.
47 The rationale for attributing limited significance to corporate "purpose" had substantially less force when characterising a statutory corporation of limited functions and powers, such as the CFA. The capacity of a statutory corporation such as the CFA to trade was circumscribed by reference to the functions and powers statutorily conferred on the corporation. Thus, while ss 124 and 125 of the Corporations Act 2001 (Cth) effectively abolished the ultra vires doctrine with respect to companies registered under that Act, statutory corporations such as the CFA were plainly in a different position. Even if it may be "difficult" to ascertain the purpose of an ordinary company by reference to its constitution, no such difficulty arises in ascertaining the purposes of a statutory corporation such as the CFA.
48 Where a statutory corporation engaged in limited trading activity, and an examination of its statutory functions and powers revealed that its raison d'etre had nothing to do with trade, it may be inapt to describe it as a trading corporation.
49 The Attorney-General supported the submissions of the CFA to the effect that carrying out a function of government in the interests of the community will not ordinarily involve trade, even when it entails some buying or selling of goods or services. The ultimate constitutional inquiry concerns characterisation of the true nature of the corporation itself, even though characterisation of the principal activities of the corporation may be relevant to that inquiry in a subsidiary way.
50 The characterisation of the CFA as a trading corporation by the primary judge was affected by error for the following reasons. First, the figure of 2.7% - representing the proportion of the CFA's total revenue attributable to CFA's trading revenue - was insubstantial. Secondly, the primary judge erred by failing to attribute sufficient significance to the fact that the CFA was "first and foremost a volunteer-based organisation" that deployed 55,000 volunteers to perform its statutory functions. Thus, because the figure of 2.7% failed to account for the vast volume of activities of the CFA that were performed on a voluntary basis, the figure substantially inflated the fraction of the CFA's total activity that was trading activity. In any event, the financial value of activities was only one way to measure the significance of those activities. Thirdly, the trial judge erred in characterising the CFA as a trading corporation on the basis that the income that it received in connection with the provision of certain services assisted it to provide those services. The relevant question was not would the CFA be "impaired" in its capacity to provide particular services if it were to "forego" the income that it presently received in connection with the provision of those services? Rather, the relevant question was whether trading signified a distinguishing attribute or characteristic of the CFA having regard to its relative significance in the context of all of the activities of the CFA, and in the light of its statutory functions and powers. Fourthly, the trial judge erred by attributing little to no significance to the limited statutory functions and powers of the CFA. Reference to the CFA's statutory functions and powers tended strongly to confirm that the CFA's minimal trading activity was properly to be seen as incidental or peripheral to its principal non-trading activity, which is the prevention and suppression of fires. Finally, the trial judge erred in finding that the CFA engaged in trade to the extent that it subsidised the rent of certain employees as part of their remuneration package. Just as the payment of wages or salaries to employees of a corporation does not amount to trade, the provision of remuneration to employees in another form (subsidised rent) likewise does not amount to trade.
51 The UFU submitted that the purpose test applied in St George County Council had been overruled in Adamson and the CFA's primary contention must fail.
52 The orthodox position in respect of what constitutes a trading corporation was most recently dealt with by a Full Court in Bankstown especially at [48]-[49]. The UFU submitted that the following principles were particularly relevant to the present case. There was no bright line delineating what was or was not a trading corporation (Bankstown at [52]). There were decisions of the Federal Court holding that 5% trade as a proportion of total activities was substantial (United Firefighters' Union of Australia v Metropolitan Fire and Emergency Services Board [1998] FCA 551; (1998) 83 FCR 346 at [93]) or that the commitment of 5% of total assets to financial activities was sufficient (Quickenden per Carr J at [110]). As long as the trading was not insubstantial, the fact that trading was incidental to other activities did not prevent it from being a trading corporation (Adamson per Murphy J at 239). In Quickenden, Black CJ and French J (at [51]) treated "substantial" and "non-trivial" as synonymous. "Substantial" activities can be measured by absolute or relative means: Adamson at 239 per Murphy J; E v Australian Red Cross Society (1991) 27 FCR 310 at 345 (Australian Red Cross Society). If a relative assessment was to be undertaken, then the trading activities must be assessed against activities as a whole. The mere identification of income does not demand the characterisation of such sums as non-trading 'activity'. For example, grant monies can be used to purchase and maintain assets (without there being any concomitant 'activity') or simply be banked (see the approach of Wilcox J in Australian Red Cross Society). Trading activities were not necessarily profit making or even profit motivated activities (Adamson at 219 per Stephen J and at 234 per Mason J). It followed that the classification of an organisation as non-profit or a government instrumentality did not preclude its characterisation as a constitutional corporation (see United Firefighters' Union of Australia v Metropolitan Fire and Emergency Services Board; Orion Pet Products Pty Ltd v Royal Society for the Prevention of Cruelty to Animals (Vic) [2002] FCA 860; (2002) 120 FCR 191 (Orion); Australian Red Cross Society; Commonwealth of Australia v The State of Tasmania (1983) 158 CLR 1 (the Tasmanian Dam Case) per Mason J at 156. Trading was a broad concept beyond the mere exchange of goods and services (see Concrete Constructions (NSW) Pty Ltd v Nelson [1990] HCA 17; (1990) 169 CLR 594 at 613; cf Lawrence (No 2) at [95]-[106] per Le Miere J (in dissent)). Trading activities may involve no more than simple cost recovery (Orion esp at [154] and [161] per Weinberg J). That a government body was able to charge or levy rates did not preclude its characterisation as a trading corporation (see Barwick CJ in St George County Council at 545; approved by Mason J in the Tasmanian Dam Case at 155). Services provided under a statutory obligation and at a fee determined by law may constitute trading activity (the Tasmanian Dam Case per Mason J at 156).
53 Provisions in the CFA Act clearly contemplated trading activities: ss 6(2), 20AA, 21, 87, 87A and 87AA. The Country Fire Authority Regulations 2004 (Vic) (the CFA Regulations) themselves expressly empowered the CFA to generate revenue from the provision of services (see regs 96, 97, 98 and 100). The six types of activity accepted by the primary judge as trading activities and identified at [95] were central to the CFA's operations. As the primary judge observed at [98], they were not incidental or arising fortuitously out of some other activity. His Honour was correct in determining at [99] that nearly $13 million of trading revenue should not be regarded as "minimal, trivial or insignificant". Those conclusions were plainly open to his Honour and were correct.
54 As to the CFA's 55,000 volunteers, the economic value of which was said to be $840 million per year, it was submitted that the primary judge dealt with this issue correctly at [84]-[87].
55 Similarly, the complaint that the primary judge wrongly applied an absolute test was ill-founded. The UFU submitted below that the amount of trading activity (as measured in dollars) was a consideration to be weighed when determining whether the CFA was a trading corporation. The primary judge did that at [89], adopting the statement of the Full Court in Bankstown. He did not, as submitted by the CFA, simply adopt an absolute test. Indeed his Honour expressly stated at [102] that he was not applying such a test.
56 The question was not whether there should be an absolute or a relative approach. The task for a court was to determine which of the activities of a corporation were trading activities, and the nature of those activities in the context in which they were undertaken and assess whether they should be regarded as substantial or insubstantial. There was no error in his Honour's approach. His Honour's analysis at [92] to [94], based on Quickenden, was clearly correct. It was also consistent with Bankstown.
57 As to the CFA's contention that the purpose of the CFA was fire prevention and suppression, while it was true that this was the CFA's broad purpose, the UFU submitted that that observation said nothing about whether or not it traded. It was neutral on that question. Section 20 of the CFA Act set out the "General Duty" of the CFA and s 20AA set out its powers. A number of these would clearly give rise to trading activities if exercised.
58 It may be accepted that the CFA's opinion of whether the revenue from its trading activities was of importance was of only limited relevance. However, the matters dealt with in [99], that the revenues could not easily be foregone, and in [96], that they do not arise in a fortuitous or casual way, were of considerable importance to the issue in hand.
59 The UFU maintained the submissions that it advanced below that a number of the CFA's sources of revenue, which the primary judge found were not related to trading activity, were so related when properly analysed and that the primary judge correctly found the following to be trading activities: (i) Subsidised rental of properties ($48,320); (ii) Road accident rescue services ($1,495,470); (iii) Provision of advice in respect of dangerous goods ($31,433).
60 By way of conclusion in relation to trading activities, the UFU submitted that if the False alarm, Hazmat, and Building Fire Protection Service revenue was included, the total trading revenue of the CFA in the relevant year was increased by $2,434,149 to a total of $15,159,360. If the other contested amounts were also included it increased by $326,376,592 to $341,535,952.
61 In answer to the submissions of the Attorney-General, the UFU submitted the authorities did not support the approach that, where the activities of a statutory corporation were concerned, some different approach was to be taken to determining the significance of trading activities undertaken by that body. The UFU submitted that if trading activities could not be dismissed as insignificant or insubstantial, this would not lead to the conclusion that a statutory corporation is not a trading corporation, regardless of the relationship between the raison d'être and the asserted trading activities: Quickenden at [51] per Black CJ and French J. Attempts to qualify the approach to the test by reference to the consideration that a company was a statutory corporation, or was carrying out the function of government in the interests of the community suggested an attempt to resurrect the notion of a divide between governmental activity and trading activity which was emphatically rejected by the High Court in in AEU at 188 and 230. Acceptance of the proposition that the commercial nature of an activity was an element in deciding whether the activity was trade (Adamson at 209 (Barwick CJ)) simply redirected attention to the elusive question of what was meant by the "commercial nature" of an activity: Re Ku-ring-gai Co-operative Building Society (No 12) Ltd at 139 (Bowen CJ) and 167 (Deane J); Lawrence (No 2) at [95]-[106] (Le Miere JA). To suggest that a company whose principal activities were trading ones would nonetheless be regarded as not being a trading corporation because those activities were carried out in the public interest, would again be contrary to authority.
62 The Attorney-General's submission that the reasoning in Australian Red Cross Society, asserted to be erroneous, "infected" the judge's analysis and decision should be rejected. It was clear from [102] that the primary judge did not simply apply an absolute test. His Honour considered the trading activities proffered, acknowledged their relationship to the CFA's overall activities and rejected the contention that the activities were "peripheral, insignificant, incidental or trivial", when considered either in absolute or relative terms. His Honour was quite entitled to refuse to treat almost $13 million of revenue as minimal, trivial or insignificant and to rely on the fact that the CFA put on no cogent evidence that the income from trading revenue was insignificant to its operations: NT Power Generation Pty Ltd v Power and Water Authority [2004] HCA 48; (2004) 219 CLR 90 at [55]. His Honour was entitled to proceed on the basis that, on the evidence, there was a clear relationship between the trading income that he accepted and the capacity of the CFA to undertake activities regarded by it as important relating to fire safety and accident rescue.
63 In circumstances where his Honour accepted that the CFA's trading revenue was "dwarfed" by its non-trading revenue, regardless of any consideration of the activities of volunteers, it was not readily apparent why that conclusion would have been affected had his Honour been prepared to identify the total scope of the activities of the CFA (including volunteer activities) and compare the extent of the trading portion with the non-trading portion of that total.
64 Contrary to the submissions of the Attorney-General, his Honour committed no error in finding that, on the evidence before him, it could not be found that the sum of almost $13 million was not significant to the continued operations of the CFA or able to be dismissed as trivial. It may be noted that what the Attorney-General described as "the relevant question" was not the question asked and answered in Quickenden where Black CJ and French J: (a) observed, at [45], that there was nothing in Adamson to lend support to the view that a corporation carrying on independent trading activities on a significant scale will not properly be categorised as a trading corporation if other, more extensive non-trading activities properly warrant it being also categorised as a corporation of some other type; and (b) determined, at [51], that in circumstances where the trading activities found to exist were greatly overshadowed by other activities, nonetheless they were: "a substantial, in the sense of non-trivial, element" regardless of the fact that the university in Quickenden was not established for the purpose of trading.
65 As to the contention that the primary judge erred in refusing to distinguish between income from subsidised rental properties and other property rental income on the ground that it was activity designed to enhance the remuneration package of employees, the primary judge appreciated that the receipt of moneys by way of subsidised rental remained a commercial arrangement and was indistinguishable from the income recognised as trading income in Quickenden.