Case: Fencott v Muller [1983] HCA 12 ; (1983) 152 CLR 570
Outcome: cited
The majority said, at [55]: The challenge to the validity of the legislation enacted in reliance on the corporations power does not put in issue directly the characteristics of corporations covered by s 51(xx). It does not call directly for an examination of what is a trading or financial corporation formed within the limits of the Commonwealth. (Plainly, a foreign corporation is a corporation formed outside the limits of the Commonwealth.) No party or intervener called in question what was said about trading and financial corporations in R v Federal Court of Australia; Ex parte WA National Football League [1979] HCA 6 ; [(1979) 143 CLR 190 ; 23 ALR 439] , Actors and Announcers Equity Association v Fontana Films Pty Ltd [1982] HCA 23 ; [(1982) 150 CLR 169 ; 40 ALR 609] , State Superannuation Board v Trade Practices Commission [(1982) [1982] HCA 72 ; 150 CLR 282 ; 44 ALR 1] or Fencott v Muller [1983] HCA 12 ; [(1983) 152 CLR 570 ; 46 ALR 41]. 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] HCA 21 ; (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] HCA 72 ; (1982) 150 CLR 282 ; and a dormant shelf company which had not yet commenced to trade in any capacity in Fencott v Muller [1983] HCA 12 ; (1983) 152 CLR 570. 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] HCA 7 ; (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] HCA 6 ; (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] HCA 72 ; (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] HCA 12 ; (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] HCA 21 ; (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] FCA 134 ; (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.