Case: New South Wales v Commonwealth (Work Choices Case) [2006] HCA 52 ; (2006) 229 CLR 1
Outcome: followed
On 14 November 2006, the High Court delivered judgment in New South Wales v Commonwealth (2006) 229 CLR 1 ; [2006] HCA 52 ( Work Choices Case ) concerning the validity of the Workplace Relations Amendment (Work Choices) Act 2005 (Cth) (the Work Choices Act) as enacted in December 2005. The Work Choices Act changed the constitutional basis for the WRA. As a consequence of the Work Choices Act, the WRA is now substantially an exercise of the corporations power under s 51(xx) of the Constitution , rather than an exercise of the conciliation and arbitration power under s 51(xxxv). 5 The WRA, as amended, defines "employee" in s 5(1) as an individual so far as he or she is employed, or usually employed, by an employer as defined in s 6(1). 6 "Employer" is defined in s 6(1) as meaning: (a) a constitutional corporation, so far as it employs, or usually employs, an individual; or (b) the Commonwealth, so far as it employs, or usually employs, an individual; or (c) a Commonwealth authority, so far as it employs, or usually employs, an individual; or (d) a person or entity (which may be an unincorporated club) so far as the person or entity, in connection with constitutional trade or commerce, employs, or usually employs, an individual as: (i) a flight crew officer; or (ii) a maritime worker; or (iii) a waterside workers; or (e) a body corporate incorporated in a Territory, so far as the body employs, or usually employs, an individual; or (f) a person or entity (which may be an unincorporated club) that carries on an activity (whether of a commercial, governmental or other nature) in a Territory in Australia, so far as the person or entity employs, or usually employs, an individual in connection with the activity carried on in the Territory. 9 The High Court in the Work Choices Case , by a majority of five to two, held that the Work Choices Act was valid. The majority concluded that the understanding of the power conferred by s 51(xx) as explained by Mason CJ, Deane and Gaudron JJ in Re Dingjan; Ex parte Wagner (1995) 183 CLR 323 ; 128 ALR 81 ; [1995] HCA 16 ( Re Dingjan) and amplified by Gaudron J in Re Pacific Coal Pty Ltd; Ex parte Construction, Forestry, Mining and Energy Union (2000) 203 CLR 346 ; 172 ALR 257 ; [2000] HCA 34 ( Pacific Coal ) should be adopted. 17 The majority in the Work Choices Case , in seeking to determine the ambit of laws which apply to constitutional corporations, referred to the dissenting members of the Court in Re Dingjan [1995] HCA 16 ; (1995) 183 CLR 323. The majority said, at [177]: ... Particular reference need now be made only to the reasons of Gaudron J (with which Deane J agreed). Her Honour's reasoning proceeded by the following steps. [1995] HCA 16 ; [(1995) 183 CLR 323 at 365; [1995] HCA 16 ; 128 ALR 81 at 111]. First, the business activities of corporations formed within Australia signify whether they are trading or financial corporations, and the main purpose of the power to legislate with respect to foreign corporations must be directed to their business activities in Australia. Second, it follows that the power conferred by s 51(xx) extends "at the very least" [1995] HCA 16 ; [(1995) 183 CLR 323 at 365; [1995] HCA 16 ; 128 ALR 81 at 111] to the business functions and activities of constitutional corporations and to their business relationships. Third, once the second step is accepted, it follows that the power "also extends to the persons by and through whom they carry out those functions and activities and with whom they enter into those relationships". [1995] HCA 16 ; [(1995) 183 CLR 323 at 365; [1995] HCA 16 ; 128 ALR 81 at 111]. 21 If it is, the acceptance by the majority in the Work Choices Case of the ambit of the power of the Commonwealth under s 51(xx) as described by Gaudron J in Pacific Coal , would mean that the Commonwealth has power to regulate the activities, functions, relationships and the business of the Etheridge Shire Council; the creation of rights and privileges belonging to the Etheridge Shire Council; the imposition of obligations on it; and, in respect of those matters, the regulation of the conduct of those through whom it acts, its employees, and also the regulation of those whose conduct is or is capable of affecting its activities, functions, relationships or business. 23 The constitutional framework erected by the Constitution referred to in the majority judgment in the Work Choices Case set out at para [12] above, including the observation from the Melbourne Corporation case, emphatically denies that possibility. 24 In the Work Choices Case , the majority of the High Court noted, at [9]: The term "constitutional corporation" is defined in s 4 to mean a corporation to which s 51(xx) of the Constitution applies. That paragraph refers to foreign corporations, and trading or financial corporations formed within the limits of the Commonwealth. No doubt there may be room for dispute, in relation to some corporations, about whether they are constitutional corporations within the meaning of the new Act. However, in the application of para (a) of the basic definition of employer, and the corresponding definition of employee, to a given corporation, the hypothesis is that it is a constitutional corporation. 28 Subsequent to the judgment of the High Court in the Work Choices Case , the Australian Workers Union of Employees, Queensland (the applicant), filed an application in this Court on 6 December 2006. Subsequently, an amended application, which included the Queensland Services, Industrial Union of Employees as the second applicant, was filed on 22 December 2006. That application sought "declaratory orders pursuant to s 21 of The Federal Court of Australia Act 1976 (Cth)" declaring: ... the respective rights of the parties regarding a purported Workplace Agreement lodged by the First Respondent with the Second Respondent, purportedly in reliance upon sections 342 , 344 and 345 of the Workplace Relations Act 1996 on the 21st October 2006, and described as "Etheridge Shire Council Australia (Employee Collective) Workplace Agreement 2006" (hereinafter called "the Etheridge Agreement"). 29 The applicants sought that: It be declared: (i) that the First Respondent is not an "employer" within the meaning of section 6 of the Workplace Relations Act ; (ii) that the First Respondent was not lawfully entitled to lodge the Etheridge Agreement with the Second Respondent on 21 st October 2006, or at any time thereafter, under Part 8 of the Workplace Relations Act 1996 ; (iii) that the Etheridge Agreement did not come into operation as a workplace agreement in accordance with section 347(1) of the Workplace Relations Act 1996 on 21 st October 2006, nor any time thereafter. (iv) that the Etheridge Agreement has no force and effect as a workplace agreement under the Workplace Relations Act 1996 ; 30 On 5 February 2007, in proceedings QUD 39 of 2007, the State of Queensland sought similar declarations. 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.