ACE Insurance Ltd v Trifunovski
[2011] FCA 1204
•25 October 2011
FEDERAL COURT OF AUSTRALIA
ACE Insurance Ltd v Trifunovski [2011] FCA 1204
Citation: ACE Insurance Ltd v Trifunovski [2011] FCA 1204 Parties: ACE INSURANCE LIMITED v BLAGOJA TRIFUNOVSKI, HERACLEA PTY LIMITED ACN 007 437 372, JOSEPH VIVIL RIENZIE PERIES, SHANE PEREZ, WILLIAM DICINOSKI and FETIE VICKI DICINOSKI File number: NSD 1860 of 2008 Parties: SHANE PEREZ v ACE INSURANCE LIMITED File number: NSD 643 of 2009 Parties: RIENZIE PERIES v ACE INSURANCE LIMITED File number: NSD 644 of 2009 Parties: FETIE DICINOSKI v ACE INSURANCE LIMITED File number: NSD 646 of 2009 Parties: WILLIAM DICINOSKI v ACE INSURANCE LIMITED File number: NSD 647 of 2009 Parties: BLAGOJA TRIFUNOVSKI v ACE INSURANCE LIMITED File number: NSD 649 of 2009 Judge: PERRAM J Date of judgment: 25 October 2011 Corrigendum: 18 November 2011 Catchwords: INDUSTRIAL LAW – Employment relationship – existence and nature of relationship – whether insurance agents employees or independent contractors – totality of relationship
EMPLOYMENT LAW – Workplace Relations Act – interaction of Workplace Relations Act 1996 (Cth) with pre-reform Award – claim for annual leave under Workplace Relations Act and award – claim for long service leave under award – Insurance Industry Award 1998
ESTOPPEL – Estoppel by convention – effect of statutory prohibition on estoppel defence
TRADE PRACTCES – Misleading or deceptive conduct – whether statement in contract a representation as to a future matter – statement as to relationship between parties
Legislation: Acts Interpretation Act 1901 (Cth) s 8
Conciliation and Arbitration Act 1904 (Cth) s 4
Constitution
Fair Trading Act 1987 (NSW) ss 41, 42
Fair Work (Transitional Provisions and Consequential Amendments) Act 2009 (Cth) Sch 2
Fair Work Act 2009 (Cth)
Industrial Relations Act 1988 (Cth) s 4
Judiciary Act 1903 (Cth)
Payroll Tax Act 2007 (NSW) ss 6, 11
Superannuation Guarantee (Administration) Act 1992 (Cth)
Taxation Administration Act 1953 (Cth) Sch 1
Trade Practices Act 1974 (Cth)
Workplace Relations Act 1996 (Cth) ss 4, 5, 6, 7, 171, 172, 173, 227, 230, 232, 717, 718, 720Workplace Relations Amendment (Work Choices) Act 2005 (Cth)
Cases cited: Anonymous (1473) Jenk 132, 145 ER 93 cited
Australian Air Express Pty Ltd v Langford (2005) 147 IR 240 cited
Australian Mutual Provident Society v Chaplin (1978) 18 ALR 385 cited
Beckford Nominees Pty Ltd v Shell Company of Australia Ltd (1986) 73 ALR 373 cited
Byrne v Australian Airlines Limited (1995) 185 CLR 410 cited
Colonial Mutual Life Assurance Society Ltd v Producers and Citizens Co-operative Assurance Co of Australia Ltd (1931) 46 CLR 41 cited
Commissioner of Pay-roll Tax (Victoria) v Mary Kay Cosmetics Pty Ltd [1982] VR 871 cited
Futuretronics International Pty Ltd v Gadzhis [1992] 2 VR 217 cited
Hollis v Vabu Pty Ltd (2001) 207 CLR 21 cited
Jackson v Monadelphous Engineering Associates Pty Ltd [1997] IRCA 281 cited
Johnson v Moreton [1980] AC 37 cited
Josephson v Walker (1914) 18 CLR 691 cited
Keen v Holland [1984] 1 WLR 251 cited
Kok Hoong v Leong Cheong Kweng Mines Ltd [1964] AC 993 cited
Marshall v Whittaker’s Building Supply Co (1963) 109 CLR 210 cited
Metropolitan Health Service Board v Australian Nursing Federation (2000) 99 FCR 95 cited
Neumann Contractors Pty Ltd v Traspunt No.5 Pty Ltd [2010] QCA 119 cited
Overmyer Industrial Brokers Pty Ltd v Campbells Cash & Carry Pty Ltd [2003] NSWCA 305 cited
Qantas Airways Ltd v Aravco Ltd (1996) 185 CLR 43 cited
R v Bass (1782) 168 ER 228 cited
R v Bulmer (1864) 169 ER 1479 cited
R v Cooke (1871) LR 1 CCR 295 cited
R v Heath (1838) 169 ER 13 cited
R v Hey (1849) 175 ER 413 cited
R v Jackson (1838) 169 ER 13 cited
R v Metcalf (1835) 168 ER 1333 cited
Re Porter; Re Transport Workers Union of Australia (1989) 34 IR 179 cited
Roy Morgan Research Pty Ltd v Federal Commissioner of Taxation (2010) 184 FCR 448 cited
Stevens v Brodribb Sawmilling Company Pty Ltd (1986) 160 CLR 16 cited
Sweeney v Boylan Nominees Pty Ltd (2006) 226 CLR 161 cited
Textile, Clothing and Footwear Union of Australia v Givoni Pty Ltd (2002) 121 IR 250 cited
The Queen v Foster; Ex parte The Commonwealth Life (Amalgamated) Assurances Ltd (1952) 85 CLR 138 cited
Vabu Pty Ltd v Commissioner of Taxation (1996) 81 IR 150 citedWalsh v Commercial Travellers Association of Victoria [1940] VLR 259 cited
Date of hearing: 7 March 2011 – 30 March 2011 Place: Sydney Division: GENERAL DIVISION Category: Catchwords Number of paragraphs: 166 Counsel for the Applicant: Mr A Leopold SC with Mr T Saunders Solicitor for the Applicant: Allens Arthur Robinson Counsel for the Respondents: Mr A Britt Solicitor for the Respondents: K P O’Donnell & Associates FEDERAL COURT OF AUSTRALIA
ACE Insurance Ltd v Trifunovski [2011] FCA 1204
CORRIGENDUM
1.In the third last sentence of paragraph 96 of the reasons for judgment, the word “surprisingly” should be replaced with the word “unsurprisingly”.
I certify that the preceding one (1) numbered paragraph is a true copy of the Corrigendum to the Reasons for Judgment herein of the Honourable Justice Perram. Associate:
Dated: 18 November 2011
IN THE FEDERAL COURT OF AUSTRALIA
NEW SOUTH WALES DISTRICT REGISTRY
GENERAL DIVISION
NSD 1860 of 2008
BETWEEN: ACE INSURANCE LIMITED
ApplicantAND: BLAGOJA TRIFUNOVSKI
First RespondentHERACLEA PTY LIMITED ACN 007 437 372
Second RespondentJOSEPH VIVIL RIENZIE PERIES
Fifth RespondentSHANE PEREZ
Sixth RespondentWILLIAM DICINOSKI
Eighth RespondentFETIE VICKI DICINOSKI
Ninth Respondent
JUDGE:
PERRAM J
DATE OF ORDER:
25 OCTOBER 2011
WHERE MADE:
SYDNEY
THE COURT ORDERS THAT:
1.The parties bring in short minutes of order within 14 days.
2.The matter be listed for directions at 9:30am on 18 November 2011.
Note:Entry of orders is dealt with in Rule 39.32 of the Federal Court Rules 2011.
IN THE FEDERAL COURT OF AUSTRALIA
NEW SOUTH WALES DISTRICT REGISTRY
GENERAL DIVISION
NSD 643 of 2009
BETWEEN: SHANE PEREZ
ApplicantAND: ACE INSURANCE LIMITED
Respondent
JUDGE:
PERRAM J
DATE OF ORDER:
25 OCTOBER 2011
WHERE MADE:
SYDNEY
THE COURT ORDERS THAT:
1.The parties bring in short minutes of order within 14 days.
2.The matter be listed for directions at 9:30am on 18 November 2011.
Note:Entry of orders is dealt with in Rule 39.32 of the Federal Court Rules 2011.
IN THE FEDERAL COURT OF AUSTRALIA
NEW SOUTH WALES DISTRICT REGISTRY
GENERAL DIVISION
NSD 644 of 2009
BETWEEN: RIENZIE PERIES
ApplicantAND: ACE INSURANCE LIMITED
Respondent
JUDGE:
PERRAM J
DATE OF ORDER:
25 OCTOBER 2011
WHERE MADE:
SYDNEY
THE COURT ORDERS THAT:
1.The parties bring in short minutes of order within 14 days.
2.The matter be listed for directions at 9:30am on 18 November 2011.
Note:Entry of orders is dealt with in Rule 39.32 of the Federal Court Rules 2011.
IN THE FEDERAL COURT OF AUSTRALIA
NEW SOUTH WALES DISTRICT REGISTRY
GENERAL DIVISION
NSD 646 of 2009
BETWEEN: FETIE DICINOSKI
ApplicantAND: ACE INSURANCE LIMITED
Respondent
JUDGE:
PERRAM J
DATE OF ORDER:
25 OCTOBER 2011
WHERE MADE:
SYDNEY
THE COURT ORDERS THAT:
1.The parties bring in short minutes of order within 14 days.
2.The matter be listed for directions at 9:30am on 18 November 2011.
Note:Entry of orders is dealt with in Rule 39.32 of the Federal Court Rules 2011.
IN THE FEDERAL COURT OF AUSTRALIA
NEW SOUTH WALES DISTRICT REGISTRY
GENERAL DIVISION
NSD 647 of 2009
BETWEEN: WILLIAM DICINOSKI
ApplicantAND: ACE INSURANCE LIMITED
Respondent
JUDGE:
PERRAM J
DATE OF ORDER:
25 OCTOBER 2011
WHERE MADE:
SYDNEY
THE COURT ORDERS THAT:
1.The parties bring in short minutes of order within 14 days.
2.The matter be listed for directions at 9:30am on 18 November 2011.
Note:Entry of orders is dealt with in Rule 39.32 of the Federal Court Rules 2011.
IN THE FEDERAL COURT OF AUSTRALIA
NEW SOUTH WALES DISTRICT REGISTRY
GENERAL DIVISION
NSD 649 of 2009
BETWEEN: BLAGOJA TRIFUNOVSKI
ApplicantAND: ACE INSURANCE LIMITED
Respondent
JUDGE:
PERRAM J
DATE OF ORDER:
25 OCTOBER 2011
WHERE MADE:
SYDNEY
THE COURT ORDERS THAT:
1.The parties bring in short minutes of order within 14 days.
2.The matter be listed for directions at 9:30am on 18 November 2011.
Note: Entry of orders is dealt with in Rule 39.32 of the Federal Court Rules 2011.
IN THE FEDERAL COURT OF AUSTRALIA
NEW SOUTH WALES DISTRICT REGISTRY
GENERAL DIVISION
NSD 1860 of 2008
BETWEEN: ACE INSURANCE LIMITED
ApplicantAND: BLAGOJA TRIFUNOVSKI
First RespondentHERACLEA PTY LIMITED ACN 007 437 372
Second RespondentJOSEPH VIVIL RIENZIE PERIES
Fifth RespondentSHANE PEREZ
Sixth RespondentWILLIAM DICINOSKI
Eighth RespondentFETIE VICKI DICINOSKI
Ninth Respondent
IN THE FEDERAL COURT OF AUSTRALIA
NEW SOUTH WALES DISTRICT REGISTRY
GENERAL DIVISION
NSD 643 of 2009
BETWEEN: SHANE PEREZ
Applicant
AND: ACE INSURANCE LIMITED
Respondent
IN THE FEDERAL COURT OF AUSTRALIA
NEW SOUTH WALES DISTRICT REGISTRY
GENERAL DIVISION
NSD 644 of 2009
BETWEEN: RIENZIE PERIES
Applicant
AND: ACE INSURANCE LIMITED
Respondent
IN THE FEDERAL COURT OF AUSTRALIA
NEW SOUTH WALES DISTRICT REGISTRY
GENERAL DIVISION
NSD 646 of 2009
BETWEEN: FETIE DICINOSKI
ApplicantAND: ACE INSURANCE LIMITED
Respondent
IN THE FEDERAL COURT OF AUSTRALIA
NEW SOUTH WALES DISTRICT REGISTRY
GENERAL DIVISION
NSD 647 of 2009
BETWEEN: WILLIAM DICINOSKI
ApplicantAND: ACE INSURANCE LIMITED
Respondent
IN THE FEDERAL COURT OF AUSTRALIA
NEW SOUTH WALES DISTRICT REGISTRY
GENERAL DIVISION
NSD 649 of 2009
BETWEEN: BLAGOJA TRIFUNOVSKI
ApplicantAND: ACE INSURANCE LIMITED
Respondent
JUDGE:
PERRAM J
DATE:
25 OCTOBER 2011
PLACE:
SYDNEY
REASONS FOR JUDGMENT
I. Introduction [1] II. Legal framework [7] (a) Annual leave [8] (b) Long-service leave [20] (c) Employees [23] (d) Employment at common law [25] III. Facts [31] (a) Sales Representatives [38] (b) Territory Representatives [47] (c) Sub-regional Representatives [57] (d) Regional Manager [60] (e) The three roles beneath the regional manager [61] (f) Control [62] (g) Appearance [82] (h) Goodwill [83] (i) Cars [88] (j) Taxes [89] (k) Holidays and hours [92] (l) Incurring of expenses [94] (m) The ability to incorporate [95] (n) The ability to engage other staff [96] (o) Payment by commission [97] (p) Agents believed they were independent contractors [98] (q) Terms of the contracts [99] The sub-regional representatives [101] The territory representatives [110] The sales representatives [111] All contracts [112] The Independent Contractors Clause [114] Contracts pre-dating 1984 [115] (r) Other Miscellaneous Matters [116] IV. Were the agents employed? [121] V. Combined’s Defences [124] (a) Misleading and deceptive conduct [127] (b) Estoppel [134] (c) The indemnity claims [147] (d) The proper construction of clause 4.1 of the Award [153] (e) Whether claims statute barred [156] VI. Conclusion [164] I. Introduction
The Combined Insurance Company of America trading as Combined Insurance Company of Australia (‘Combined’) is a foreign corporation incorporated in the United States of America carrying on business in this country as a general insurer. More particularly, it sells income protection policies typically, although not entirely, in rural and district areas. It does so through a sales force of travelling agents who work under contracts which declare their status to be that of an independent contractor rather than that of an employee. Effective from 1 October 2010, the business of Combined was transferred to ACE Insurance Limited under a scheme governed by the Insurance Act 1973 (Cth) and with it, any liabilities arising in respect of Combined’s business. Following the hearing, the parties requested that ACE Insurance Limited become the named party to these proceedings in place of Combined and that course was so ordered. However, because at all times relevant to this litigation the insurer was known as Combined, the agents’ contracts and dealings were with Combined and the parties referred to it during the trial as such, I will adopt the same convention.
This case concerns the question of whether five agents (‘the agents’), none of whom are any longer engaged by Combined, were in fact employees. Each was paid commission on the premiums which they collected; used his or her own vehicle; did not have income tax deducted from earnings; and issued tax invoices to Combined for the services each provided. On other hand, those tax invoices were generated by Combined and issued to itself; the agents accrued no goodwill in their own businesses; were in practical terms quite unable to work for any other insurer; sold only Combined’s policies to Combined’s customers; and were trained by Combined in a system of business devised and maintained by Combined. Having no goodwill, they had no business which could be sold. In real terms, as will be seen, they were also under Combined’s practical control.
The agents now claim payment from Combined of annual leave and long service leave entitlements. These entitlements are not provided for in their contracts but are conferred by law, in certain circumstances, upon employees. The principal issue in these claims therefore is whether the agents were employees. There are other issues too: a defence by Combined that some of the claims are time barred; a defence that, on its proper construction, the instrument conferring the right to annual and long service leave does not apply to these agents even if they were employees; and a defence that the agents are estopped from asserting they are employees by reason of a common assumption shared with Combined to the contrary or, alternatively, by their own conduct in executing contracts under which they represented they would act as independent contractors. A separate issue concerns the agents’ allegation that Combined should have imposed upon it a civil penalty to punish it for its conduct in not recognising their leave entitlements.
Quite apart from these defensive matters, Combined has also commenced its own proceedings against the agents. In that case, it alleges that it has suffered loss and damage by reason of misleading and deceptive conduct by the agents consisting of their execution of the written contracts under which they agreed that they were independent contractors. The damages it seeks against them is the quantum of whatever liability it has to them on their claims. It also sues each of the agents on an indemnity contained in their contracts not only for any liability it has to them but also in respect of any unrecoverable costs it incurs in these proceedings.
I have concluded that the five agents are employees; that, apart from some of its limitation defences, Combined’s defences otherwise fail; and that Combined’s claims for damages and indemnity should be dismissed. The parties were in agreement that should it be necessary, as it now is, to quantify the agents’ entitlements or to impose a civil penalty, those issues should be postponed for further argument. To that I will add the issue of costs.
There are five agents. The oldest claim is brought by Mr Peries who was first engaged by Combined on 26 October 1981 and whose engagement ended on 15 December 2005. There is a claim brought by Mr Perez who commenced on 29 October 1990 and who was dismissed on 12 October 2006. Mr Trifunovski’s claim commences on 1 June 1992, when he was engaged by Combined as a trainer; however he ceased to act in that role in late 1993 and commenced work as an agent on 1 January 1994. Mr Trifunovski claims he remained contracted to Combined until he resigned on 18 September 2005; Combined, however, pleads a limitation defence on the basis that Mr Trifunovski resigned in July 1994 (but recommenced four weeks later). It appeared Mr Trifunovski had also been engaged by Combined at earlier times but these were not the subject of his claim. The last two claims are brought by Mr and Mrs Dicinoski both of whom commenced in late 2001 and both whom finished up in 2005.
II. Legal framework
The agents’ various claims cover a period running from October 1981 to October 2006. It was said that the entitlement to annual leave arose from ss 232 and 720 of the Workplace Relations Act 1996 (Cth) and the former Insurance Industry Award 1998 (Cth) (‘the Award’). Although the agents’ submissions did not identify either which clause of the Award was relied upon or in respect of which period, it seems to me likely that it is cl 22 (which deals with annual leave) and that the period in question must at least be the period prior to 27 March 2006, when s 232 came into force. The claim for long service leave is based entirely on cl 25 of the Award. These statements conceal a considerable amount of detail, not all of which was addressed by the parties’ submissions. It should nevertheless be explained.
(a) Annual leave
Prior to its repeal on 1 July 2009, s 232(2) of the Workplace Relations Act provided that ‘[an] employee is entitled to accrue an amount of paid annual leave, for each completed 4 week period of continuous service with an employer, of 1/13 of the number of nominal hours worked by the employee for the employer during that 4 week period’. Section 232 was contained in, and formed part of, Part 7 which was entitled ‘The Australian Fair Pay and Conditions Standard’ (‘the Standard’). Why does this matter? Because the Standard was said in s 717 to be an ‘applicable provision’ and item 2 of the table in s 718(1) conferred upon an ‘employee’ (of which, more later) a right to apply for a remedy for breach of such an ‘applicable provision’. The remedy was not specified but this is of no moment because of s 720. According to it ‘[if] an employer is required by an applicable provision…to pay an amount to an employee…the employee…may, not later than 6 years after the employer was required to make the payment…sue for the amount of the payment in an eligible court’. What was an eligible court? Section 717 told one that the concept of an eligible court included ‘the Court’ and that expression in turn was defined, 589 pages beforehand, in s 4, to mean the ‘Federal Court of Australia’. This Court, therefore, had jurisdiction under the former Workplace Relations Act to entertain a suit for unpaid annual leave entitlements arising from s 232.
The terms of the Standard were in most cases minimum standards which could not be bargained away by contract (cf ss 171(1), 172(2), 173). That said, however, they did not apply prior to 27 March 2006 when the Standard was first inserted into the Workplace Relations Act because they did not exist. This is not a trivial observation for prior to the coming into effect of the amendments wrought by the Workplace Relations Amendment (Work Choices) Act 2005 (Cth) (hereafter, ‘the Work Choices Amendments’), the Workplace Relations Act did not seek to regulate the industrial affairs of all employers and employees but was much more limited in its scope. Further, that Act was itself repealed on 1 July 2009 and replaced by the Fair Work Act 2009 (Cth). It follows that, on its own terms, s 232 only governed the claims of the agents for annual leave to the extent that those claims fell in the period between 27 March 2006 and 1 July 2009. In fact, only one of the agents, Mr Perez, was engaged by Combined during any period after 27 March 2006 and even that came to an end shortly thereafter on 12 October 2006. It follows that the claims for annual leave under s 232 are a minor part of this case. There is a further factor limiting the relevance of the s 232 claim, to which I will return below, relating to the manner in which Mr Perez’s entitlements under the Standard interact with his claims under the Award.
The repeal of the Workplace Relations Act and its replacement with the Fair Work Act has no impact on that analysis. So much would have been plain under s 8 of the Acts Interpretation Act 1901 (Cth) which for over a century has provided that the repeal of an Act does not ‘affect any right privilege obligation or liability acquired accrued or incurred under any Act so repealed’. Recent Parliaments have been prolix and obscure and are not satisfied with the clarity of thought or diction on display in s 8. One begins instead with the torpid bulk of Sch 2 to the Fair Work (Transitional Provisions and Consequential Amendments) Act 2009 (Cth) (‘the Transition Act’) which by item 11(1) deems that the Workplace Relations Act ‘continues to apply, on and after the WR Act repeal day, in relation to conduct that occurred before the WR Act repeal day’ (the expression ‘WR Act’ meaning the Workplace Relations Act). Consequently, s 232 continues to apply to matters factually occurring prior to 1 July 2009. This Court has jurisdiction to entertain such claims by reason of item 21 of Part 5 of Sch 17 to the Transition Act which confers upon it jurisdiction in, inter alia, civil claims arising under the Workplace Relations Act. This Court has jurisdiction, therefore, to entertain claims for enforcement of the former Standard notwithstanding its repeal.
That leaves unexplained the claims for annual leave which relate to the period before 27 March 2006 when the Work Choices Amendments took effect. Until that day there was in force the Award, which was a federal award to which Combined was a respondent. Clause 22 provided for four weeks of annual leave to ‘employees’ to whom the Award applied. Leaving to one side for now Combined’s argument that the Award, on its proper construction, only provided coverage to clerical and office workers which, even if they were employees, the agents were not, there are two questions which immediately arise: the first is how this Court comes to have jurisdiction to enforce the provisions of the Award; the second is how the Award applies to the period prior to 3 June 1998, which is the date, according to cl 5 of the Award, when it came into force. The second question is not idle: several of the claims antedate the Award’s making.
As to the question of how this Court had jurisdiction to enforce a federal award in force prior to 27 March 2006 the agents submitted that the answer was to be found in cl 107 of Sch 6 to the Workplace Relations Act as it stood on and after 27 March 2006. That answer was not developed. However, I believe the agents’ submission was as follows: Sch 6 was headed ‘Transitional arrangements for parties bound by federal awards’. By cl 4 of that schedule, awards which had existed immediately before 27 March 2006 continued in force. The award thus continued was to be known as a ‘transitional award’: cl 4(4).
Section 720 of the Act provided for an action by an employee for payment due by an employer under ‘an applicable provision’. Section 717 included amongst the applicable provisions the terms of an award. Both of those provisions were contained in Part 14 which deals with enforcement. Why does that matter? Because cl 107 of Sch 6, which the agents invoke, extends the operation of Part 14 beyond the enforcement of awards to permit the enforcement of ‘transitional awards’.
This argument is incorrect and I reject it. Upon the passage of the Work Choices Amendments the Parliament sought to expand greatly the coverage of its industrial regulation. Prior to 27 March 2006 the Workplace Relations Act had rested on a narrower constitutional basis. After 27 March 2006 the Act expanded to cover a much larger number of employers. Under s 6 of the Workplace Relations Act the concept of employer was expanded to include, in effect, any foreign, trading or financial corporation which employed staff. This represented an assertion of jurisdiction dependent upon the legal nature of the identity of the employer. Prior to 27 March 2006, jurisdiction had been asserted on the basis of awards made as a result of the conciliation or arbitration of industrial disputes extending beyond the limits of any State (I leave to one side the limited use of the corporations power in relation to the former Australian Workplace Agreements). This kind of jurisdiction did not depend on the identity of the employer but, rather, on the nature of the dispute.
When the Work Choices Amendments took effect there arose the practical necessity of continuing in existence the federal awards which had been made under the prior régime. Not all parties to those awards were corporations. Since, after 27 March 2006, the Workplace Relations Act largely rested on the corporations power (I leave to one side the limited use of the trade and commerce power and the territories power in s 6) its ability to extend those awards using that power and, at the same time, varying those awards or authorising direct modification to them, was limited largely to those awards insofar as they dealt with corporations. To the extent that the awards bound parties who were not corporations the awards could be extended but only using the conciliation and arbitration power found in s 51(xxxv) of the Constitution. Of course, modification of those awards was circumscribed by the process of conciliation and arbitration.
The Work Choices Amendments therefore generated two kinds of transitional awards. The first was known as a ‘pre-reform award’ and this was a transitional object which applied to any employer which the Workplace Relations Act, in its post 27 March 2006 form, regulated, principally corporations. The second was known as a ‘transitional award’ and applied to the remaining employers (frequently individuals). It is the second kind of award which the agents invoke and it is a kind governed by Sch 6. Clause 4(2) makes plain that transitional awards apply only to ‘excluded employers’; a term defined in cl 2 to mean an ‘employer (within the ordinary meaning of the term) so far as the definition of employer in subsection 6(1) does not cover the employer’. In this case, Combined is a constitutional corporation so it is an employer to whom s 6 applies. In that situation, it cannot be an ‘excluded employer’; ergo, Sch 6 is inapplicable.
However, the Award was also replaced with a ‘pre-reform award’. This curiosity arises from the operation of Sch 4 to the Work Choices Amendments which by cl 4(3) provides:
The original award is taken to be replaced by an instrument (the pre-reform award) in the same terms as the original award that, on and from the reform commencement, has effect under the Workplace Relations Act 1996 and binds the following:
(a) each employer that was bound immediately before the reform commencement by the original awardThe definition of ‘award’ in the Workplace Relations Act picks up a pre-reform award (see s 4). Consequently, its enforcement is the enforcement of an ‘award’ which is an ‘applicable provision’ in s 717. There are textual problems with the pre-reform award which I will shortly note but, since no point was taken by Combined about them, I will not resolve. The pre-reform award applies ‘on and from the reform-commencement’, that is, 27 March 2006. Combined did not seek to argue that in the period before 27 March 2006 the matter was directly governed by the Award as it then stood or to develop a submission that this Court may appear to have no jurisdiction to enforce such a claim. On that view of things, the fact that the Court had jurisdiction to enforce a pre-reform award did not give it jurisdiction to enforce the award which the pre-reform award replaced. It would then be necessary to identify a grant of jurisdiction to this Court in respect of former federal awards, the former explicit grant under the Workplace Relations Act having been repealed. An answer to that problem may lie in s 39B of the Judiciary Act 1903 (Cth); another answer, less palatable perhaps, is that the words in cl 4(3) ‘on and from the reform commencement’ mean ‘before and after the reform commencement’. That reading might derive some comfort from s 527 of the Workplace Relations Act. However, it is not necessary to resolve this issue.
It seems to me that I should therefore proceed on the following basis:
(a)the claims for annual leave arising between 3 June 1998 and 27 March 2006 are governed by the Award applying (possibly questionably) as a ‘pre-reform award’ so that this Court has jurisdiction to hear and enforce the claims under the Workplace Relations Act;
(b)the claim for annual leave arising between 27 March 2006 and 26 October 2006 (made only by Mr Perez) is governed by the Award which, in that period, certainly was a pre-reform award. The period is also governed by the Standard applied by s 232(2) of the Workplace Relations Act. No party sought to explain how the issue of double application was to be resolved but it seems likely the answer lies in s 529 which will make applicable whichever is more generous;
(c)the claims for annual leave arising before 3 June 1998 (that is, before the Award came into force) do not seem susceptible of being maintained since the asserted right does not appear to exist. Combined took issue about this in relation only to the claims of Mr Trifunovski and Mr Peries. No point was taken about this in relation to the claim by Mr Perez.
(b) Long-service leave
The Award conferred a right to long service leave of 13 weeks per 15 years service and thereafter an additional 4 1/3 weeks per five years of service: cl 25. The entitlement could not be taken until after 15 years (cl 25.1) but, if the employment relationship was ended at anytime after 10 years but before 15 years of service the employee was entitled to payment in lieu for the amount accrued. A similar accrual arrangement obtained after 15 years.
It is apparent from the terms of the Award that it intended its long service provisions to apply retrospectively prior to 3 June 1998. Clause 25.3 explicitly dealt with the position of employees who had commenced employment prior to 1 August 1964 which makes no sense if the Award did not apply, at least in relation to long service leave, prior to 3 June 1998. It follows that the Award, subject to Combined’s other construction arguments, applied for long service leave purposes throughout the period from 26 October 1981 (when Mr Peries commenced) through to 27 March 2006, when it became thereafter a pre-reform award. I will assume for reasons already given, but not without some hesitation, that it was a pre-reform award prior to 27 March 2006 as well.
In any event, it is an essential step under the agents’ argument that they establish that they are employees under the Award and, in Mr Perez’s case, that he is an employee within the meaning of s 5 of the Workplace Relations Act on and after 27 March 2006.
(c) Employees
The claim for annual leave pay under s 720 of the Workplace Relations Act is conditioned on the presence of an ‘employee’. The expression ‘employee’ is defined in s 5 to mean ‘an individual so far as he or she is employed, or usually employed…by an employer’. An ‘employer’ is defined in s 6 to include a range of different kinds of entity over which the Commonwealth Parliament has legislative authority, ‘so far as it employs, or usually employs, an individual’. The class of entity over which the Commonwealth Parliament has legislative authority includes foreign corporations such as Combined. What is critical, therefore, for the agents’ claims under s 720 is that they are – combining the two definitions – individuals employed by someone who employs them. The Workplace Relations Act does not seek to define what employment is beyond the prescription of s 7 that employment ‘means the employment of an employee by an employer’.
That concept imports the common law’s understanding of employment. As a matter of legislative history the use of the words ‘employer’ and ‘employee’ in ss 5-7 of the Workplace Relations Act is not new. Those words were found in each of the predecessors to that statute. They appeared in s 4 of the former Conciliation and Arbitration Act 1904 (Cth). In The Queen v Foster; Ex parte The Commonwealth Life (Amalgamated) Assurances Ltd (1952) 85 CLR 138 an insurer argued that insofar as the Industrial Life Assurance Agents (Commonwealth Life (Amalgamated) Assurances Ltd) Basic Wage Award 1951 purported to fix the wages of persons who were canvassers of its policies or collected premiums on its behalf it was beyond jurisdiction because they were independent contractors rather than employees. Jurisdiction to make the award was conferred on the then Court of Conciliation and Arbitration in respect of ‘industrial matters’ which was defined in s 4 to mean ‘all matters pertaining to the relations of employers and employees’. Dixon, Fullager and Kitto JJ thought those were words were apt to import the common law: ‘We think that the kind of relationship to which the definition in s 4 of “industrial matters” refers by the expressions “employer” and “employee” is, under another name, in substance the relation called at common law master and servant’ (at 153). Those same words were then used in much the same way in s 4 of the Industrial Relations Act 1988 (Cth) and again in s 4 of the original form of the Workplace Relations Act. Given what the High Court had said in Foster it is apparent that Parliament proceeded on the basis that the use of those words connoted the common law test. There is no reason to think that any different approach should be taken to the same words in the post-Work Choices Amendments version of the Workplace Relations Act. The right to enforce the Award and the Standard are both conferred by s 720 on an ‘employee’. It follows that it is an essential step that the agents demonstrate that they were Combined’s employees at common law.
(d) Employment at common law
The common law’s interest in the question of employment is limited. In modern times it is largely confined to the question of whether one person should be vicariously liable for the torts of another. At earlier times the common law also fixed upon the master-servant relationship as an integer in some species of criminal liability. It recognised the offence of larceny by a servant: see, for example, Anonymous (1473) Jenk 132, 145 ER 93; R v Bass (1782) 168 ER 228; R v Metcalf (1835) 168 ER 1333; R v Jackson (1838) 169 ER 13; R v Heath (1838) 169 ER 13; R v Cooke (1871) LR 1 CCR 295. To a charge of that offence it permitted a defence that the accused was not a servant: R v Hey (1849) 175 ER 413; and R v Bulmer (1864) 169 ER 1479. Further, in very early times it seems likely that that killing of a master by a servant was petit treason although this was made a statutory offence during the reign of Edward III: 25 Edw. III c2 (1351). These obscure matters have, however, become redundant and it is only now for the purpose of attributing vicarious liability that the common law still seeks to identify who is, and who is not, an employee. As five Justices recently said in Sweeney v Boylan Nominees Pty Ltd (2006) 226 CLR 161 at 171-172 [27]:
These bounds should not now be redrawn in the manner asserted by the appellant. Hitherto the distinction between independent contractors and employees has been critical to the definition of the ambit of vicarious liability. The view, sometimes expressed [Scott v Davis (2000) 204 CLR 333 at 370 [110] per McHugh J; Hollis v Vabu Pty Ltd (2001) 207 CLR 21 at 57-58 [93] per McHugh J], that the distinction should be abandoned in favour of a wider principle, has not commanded the assent of a majority of this Court.
It is true that many legislatures have used the common law’s approach to employment as a factum by which other statutory rights and liabilities have been imposed. For example, most Australian States impose a tax on businesses which is referable to the wages paid by them to their employees (see, for example, ss 6 and 11 Payroll Tax Act 2007 (NSW)); persons who employ others are required by s 12-35 of Sch 1 to the Taxation Administration Act 1953 (Cth) to withhold from an employee’s wages income tax; and, there is a corresponding obligation to make superannuation payments imposed by the Superannuation Guarantee (Administration) Act 1992 (Cth). Various industrial statutes, both State and Federal, confer rights (and liabilities) on employers and employees – the Fair Work Act is the current example.
Although it is true that each of these Acts fixes upon, and uses, the common law’s concept of what employment is, they do not have any impact upon the common law’s content which remains concerned with, and focused upon, the imposition of vicarious liability. So much will be obvious from the conflicting nature of the statutes in question: a broad approach to the concept of employment might ensure that more persons have superannuation paid on their behalves; but it would also mean that tax would be withheld from their remuneration denying them the benefit of the use of that money pending its remittal at return time to the Commissioner. In the same way, a broad approach to the concept of employment would certainly increase the ambit of the prevailing industrial legislation of the day, but whether that was a matter favourable to employees or not would rather depend upon what the content of those industrial laws might be.
For that reason, the issues in the present litigation are not to be approached on the basis that the common law concept of employment should serve as a shield extending industrial protection to a class of independent contractors who are unable to look after themselves. They are instead to be approached from the common law’s perspective on the imposition of vicarious liability and with it a subsisting policy debate about the distributive allocation of losses between tortfeasors and their victims.
With that in mind one can at least say this: first, the distinction between an employee and an independent contractor is ‘rooted fundamentally in the difference between a person who serves his employer in his, the employer’s, business, and a person who carries on a trade or business of his own’ (Hollis v Vabu Pty Ltd (2001) 207 CLR 21 at 39 [40] per Gleeson CJ, Gaudron, Gummow, Kirby and Hayne JJ citing Marshall v Whittaker’s Building Supply Co (1963) 109 CLR 210 at 217 per Windeyer J); secondly, the answers to that question are to be determined by reference to the ‘totality’ of the relationship (Hollis at 33 [24]); thirdly, a number of indicia have accreted over time in the authorities which are thought to throw light to varying degrees on the outcome without being determinative: the terms of the contract; the intention of the parties; whether tax is deducted; whether sub-contracting is permitted; whether uniforms are worn; whether tools are supplied; whether holidays permitted; the extent of control of, or the right to control, the putative employee whether actual or de jure; whether wages are paid or instead whether there exists a commission structure; what is disclosed in the tax returns; whether one party ‘represents’ the other; for the benefit of whom does the goodwill in the business inure; how ‘business-like’ is the alleged business of the putative employee – are there systems, manuals and invoices; and so on – the list is neither exhaustive nor short: see Stevens v Brodribb Sawmilling Company Pty Ltd (1986) 160 CLR 16 at 24 per Mason J and 36-37 per Wilson and Dawson JJ; for application see Hollis at 42-45 [48]-[57] per Gleeson CJ, Gaudron, Gummow, Kirby and Hayne JJ; Sweeney at 172-173 [30]-[33] per Gleeson CJ, Gummow, Hayne, Heydon and Crennan JJ. It will be necessary to refer to some of these factors later in these reasons and the authorities upon which they rest.
It is useful then to turn to the facts.
III. Facts
Combined is a general insurer incorporated in the United States of America. Since 1959 it has operated in Australia although in this country it trades under the name ‘Combined Insurance Company of Australia’. It is a general insurer providing income protection policies to customers largely located in non-urban areas. It is divided into a ‘healthcare division’ which provides income protection insurance against losses of income caused by ill-health and an ‘accident division’ which provides income protection insurance against losses of income caused by misadventure. The policies of these two divisions are sold by two corresponding sales forces each of which is made up of travelling insurance sales agents; that is to say, there is a sales force of agents for the healthcare division and a sales force for the accident division. In one respect Combined’s evidence about these two divisions was contradictory. Mr Gurney, who was previously Combined’s Assistant Vice-President for Legal and Insurance Services, gave evidence that the sales force responsible for the sale of its healthcare policies had ‘no involvement in the renewal of these policies’. But the evidence of its Deputy Director of Training, Mr Hanna, was that each customer for both divisions was visited twice per year, that the policies for both were of six months’ duration and that both needed to be renewed in that time frame. The evidence of Mr MacDonald, who previously sat on the ‘executive committee’ of Combined, was to similar effect (by way of explanation, as an American corporation Combined’s actual directors are not situated in this country; despite that, however, the day-to-day affairs of Combined in Australia are overseen by a local executive committee). Although there are some minor differences of detail between the two sales forces I have not found any of those differences material to the resolution of the issues which this litigation presents. Save where the context unavoidably demands that they be distinguished I will treat the two divisions interchangeably.
The agents are all nominally independent contractors operating under detailed written contracts. They are arranged hierarchically in three tiers: sales representatives; territory representatives; and sub-regional representatives. The sub-regional representatives in turn are themselves responsible to a position known as a ‘regional manager’ and that position is filled by a person who, it is not in dispute, is an employee of Combined. The structure of the business therefore appears to be one in which Combined administers geographical ‘regions’ through the direct actions of its own staff; that each of the regions is further divided into sub-regions under the aegis of a sub-regional representative; that each sub-region is itself further constituted by territories headed up by a territory representative; and that, within that territory structure, sales representatives under the territory representative are engaged in the business of selling insurance policies to the public. There being no debate that the pyramidion of this structure – the regional manager – was employed by Combined, the parties join issue about the status of its lower levels: that is, the sub-regional, territory and sales representatives.
For the sake of clarity it should be noted that the issues in the case range across the whole of the period 1981 to 2006, involve five agents, 36 written contracts and the involvement of those agents at various levels within the structure at different times. In addition, to make matters more diophantine Combined changed the names it gave to the various positions throughout the period. At one time territory representatives were known as area representatives. At another, there existed a position known as district representative which was somewhere between a sub-regional representative and a territory representative. Understanding its intricacies brings one no closer to the resolution of the issues which this case presents and I will treat it as if it were a territory representative. Other nomenclatures abound: salesman, sales manager, district manager to name but a few. None of this assists; it is to be noted only to avoid later confusion. The basic structure is as I have described: sales representatives; territory representatives; sub-regional representatives and, above them all, the regional manager.
Combined submitted that the issues which arose had to be considered on a contractor-by-contractor and period-by-period basis: the question which arose in every case was whether this contractor at this time was an employee. As a corollary it was inutile to investigate the broader question of whether, for example, sales representatives in general were Combined’s employees. It followed that attention had to remain focussed on each agent’s account and evidence of a general kind should not be resorted to; similarly, it was not appropriate to introduce conclusions reached in relation to one agent as bearing on the situation of another.
I do not accept the general thrust of this submission. It is possible that at a theoretical level different answers on the employment question could be given in respect of different agents. This is certainly the case where the agents fill different positions within the pyramid. That observation, however, is more reflective of the differences between the positions than differences between circumstances of individual agents. I do not discount that in appropriate cases the situations of individuals alleged to be employees might fluctuate depending on particular circumstances. But when the basal question is in whose business was the putative employee toiling, it is likely, in very many cases, that this will invite an examination of the business structures involved and this, in turn, suggests that systemic issues are likely to be relevant.
This observation is especially pertinent when it comes to the question of control with which I deal below. Combined strove to expunge from the evidentiary record all of the agents’ evidence on this topic principally on the basis of form. In any event, I do not think it safe to approach such issues by reference to individual testimonies given at a distance of up to 20 years. A much surer guide, as will be seen, consists of the contemporaneous documents which exist and the inferences which may be drawn from them.
It is useful, at this point, to say a few words about the nature of the sales, territory and sub-regional representatives.
(a) Sales Representatives
It was the task of sales representatives to travel door-to-door collecting policies from customers whose policies were up for renewal and seeking to sell new policies to new customers. A sales representative earned commission on the new policies which were written (including renewals) and on any premiums which were collected (either in person or when premiums were paid by direct debit or credit card). They were not entitled to any trailing commission in respect of renewals of policies originally written by them. This is an important fact because it means that the right to receive commission rested in the hands of those who in fact renewed the policies, so that upon ceasing to be a sales representative an agent was entitled to no further commission. The sale by assignment of a sales representative’s ‘business’ was quite impossible in practice – there was nothing to sell. In addition to these commissions, sales representatives were also paid bonus commissions to reward superior selling activity.
Sales representatives were organised into teams which worked principally in a physical area known as territory (which was overseen by a territory representative). Most of Combined’s 140,000 customers were located in rural areas and most of the territories which existed were similarly located. Each territory was broken into six sub-zones known, within Combined, as ‘route months’ and each team of sales representatives worked in each route month for one month every six months before moving on to the next route month. Put another way, the team moved systematically through the whole territory once every six months spending one month in each route month. Every route month was, therefore, visited by the team twice per year.
This six monthly structure arises from the fact that Combined’s policies generally expired after six months. Typically, the policies written in a particular route month will be due for renewal six months later which will be when the sales team returns to that route month. A sales team, however, is unlikely to consist of the same people six months later. There is a very high turnover in sales representatives which is between 300% and 400% per annum. It is Combined, therefore, which keeps track of which customers’ policies are coming up for renewal in any particular ‘route month’ in a particular month. This is done through the provision by Combined of ‘leads’ of which there are several different kinds. The simplest is the customer whose policy is due to expire. But there are also leads generated for customers whose policies have been cancelled as well as those who are customers of Combined’s other division (that is, Combined uses the customers of its accident division as leads for its healthcare division and vice versa). Prior to the team moving to the next route month, Combined’s computer system (or prior to that, its manual system) generates leads for that route month which Combined then provides to the territory representative for the particular area. The territory representative in turn delegates the leads to the sales representatives.
It should be noted that the leads were of varying quality. It might be quite hard to sell a policy to a customer who had cancelled a policy but a customer whose policy had lapsed by effluxion of time might reasonably be expected to renew. That aspect of the sales representative’s work – renewing expired policies – ‘was like a debt collecting job really’ according to one of Combined’s executives, Mr Owen-Schwind, a proposition which I accept.
So much for the organisational structure. The activities for an ordinary week of a sales representative were as follows. Each morning the sales representative would attend what was known as a ‘PEP meeting’ organised by the territory representative. It would generally last about 15-20 minutes. Its purpose was to motivate the team. In addition, Mr Owen-Schwind gave evidence that at these meetings the territory representative would inspect the sales representatives’ paperwork and ‘make sure it was correct and up to date’. He was talking of his own experience as a sales representative but I did not take from his evidence – particularly given his status as the Director of Training – any suggestion that this had changed.
Following the PEP meeting the team would then sally forth and begin the business of renewing policies, collecting premiums and selling new policies. My impression was that this was very hard work of a reasonably dispiriting kind involving, as it did, constant knockbacks from disinterested and sometimes hostile members of the public. Much of Combined’s training material, therefore, seems to have been directed to maintaining in sales representatives the will to sell. On Monday nights (or sometimes Tuesday mornings) there would be another meeting which typically lasted 60-90 minutes which was conducted by the territory representative. These meetings included what was referred to as a warm-up, followed by a session on Combined’s somewhat idiosyncratic company philosophy together with the setting of objectives and motivation for the coming week. The warm-up often consisted of rhythmic chants (‘1-2-3-4 Let’s go, Door-to-door!’) which fed into motivational songs, some obscure (including lyrics such as ‘Owned by Aon we might be, But Combined will be at the Top of the Tree’) and others canonical (‘Oh, I do like to be beside the seaside’). At the end of the week on the Friday night (but sometimes on the Saturday morning) there was held a ‘check-in’ or ‘cash-in’ meeting at which time sales representatives would hand over to the territory representative the policies which they had sold or renewed during the week together with the premiums they had collected. At earlier times, sales representatives deducted their commissions from the premiums prior to handing them in on a Friday night but, more recently, that practise has changed so that all commission is handed in to the territory representative with Combined subsequently paying the sales representatives the commissions which are due through an agency account arrangement.
Over time there have been some alterations to the manner in which the sales task has been performed. Since 11 March 2002 sales representatives have been banned from ‘cold calling’ which is the practise of arriving unannounced at premises and seeking to sell insurance. From about the same time the agents have also been ‘authorised representatives’ of Combined and have carried cards to that effect. At no time, however, has there ever been a uniform for the sales representatives to wear. Regardless, there is no doubt that sales representatives have been encouraged to represent themselves as being ‘from Combined’. For example, they have been encouraged to use detailed manuals which were prepared by Combined containing scripts of what to say to customers when seeking to sell them insurance. These scripts very often had the sales representative introducing himself or herself as being ‘from Combined’ or using sales formulas such as ‘As the President of our company says…’. Indeed, Mr Owen-Schwind gave evidence that when he sold products to customers he would say:
Thanks Mr Jones. As the President of our company says, as long as you carry these policies nothing in the world will ever happen to you. Thanks again, I’ll see you again in six months.
Further, the policies being written were of course Combined’s policies – a fact underscored by the ability of the sales representatives to issue a policy on the spot to a customer who agreed to purchase it (a process referred to in Combined’s evidence as ‘pre-issue’). This too is an important matter. At the very moment when the transaction was being consummated – the moment of underwriting – the agents were not performing any function in their own ‘businesses’ for they were not insurers. At that moment they were acting on behalf of Combined. Whatever the contractual terms this conclusion is inescapable. It is the reason why the High Court concluded in Colonial Mutual Life Assurance Society Ltd v Producers and Citizens Co-operative Assurance Co of Australia Ltd (1931) 46 CLR 41 that an insurer was liable in defamation for statements made by its door-to-door sales representatives even though, in that case, they were not its servants. There are, of course, limits in the use of the concept of representation as a touchstone for the presence of an employment relationship as the High Court’s decision in Sweeney shows. But here I do not think they arise. Unlike the fridge mechanic in that case (but like the canvassers in Colonial and the cyclists in Hollis) these agents represented Combined when it came to selling policies.
Overall I have no doubt that the impression the customers received was that they were dealing with a representative of Combined rather than a freelance insurance consultant. It is true that there was no formal prohibition on sales representatives selling policies for other insurance companies provided this did not conflict with their business of selling Combined’s policies and, from 2003, provided also that Combined’s approval had been obtained. In practice, however, for reasons I give later that liberty was in reality empty. The standard form of contract for sales representatives from 1987 provided that sales representatives were permitted to engage in ‘other activity or business which does not conflict with…the undertakings and obligations’ of the contract. I do not regard that as detracting from the conclusion that the sales representatives in practise only sold Combined’s policies. The system of route months and territories made it quite impossible for affairs to be otherwise.
(b) Territory Representatives
Each territory had assigned to it (by Combined) a single territory representative who was responsible for its administration. The tasks of the territory representatives were several. One part was to train the sales representatives for a period, previously of one week and presently of two weeks, after they completed a two week training course conducted by Combined. This training was known as field training. Another task – important in a day to day sense – was to distribute the leads which the territory representative had received from Combined. In practice, Combined provided each territory representative with a ‘route plan’ of the area to be canvassed and a card containing leads for that area. The territory representative would then plan the areas (down to particular streets) into which each sales representative would go. Mr Owen-Schwind gave evidence – typical I assume – that this task of allocation required some assessment of how many business locations could be canvassed in a day and the plans had to be drawn accordingly.
It was the territory representative, too, who organised the various meetings which took place during the week and who was also responsible for packaging up the policies and premiums on Friday nights for forwarding to the territory representative’s own sub-regional representative (and thence on to Combined). Reference has already been made to Mr Owen-Schwind’s evidence as to territory representatives inspecting sales representative’s paper work to make sure it was correct and up-to-date. In addition to all of these duties, territory representatives also engaged in the actual selling of policies to customers and collecting of premiums.
Territory representatives were not remunerated by anyone for the administrative tasks which they carried out as opposed to their sales activities upon which they received commission. They were, however, entitled to additional commission on the commissions earned by the sales representatives on ‘their’ team (of course, none of ‘their’ team was engaged by them – the team was engaged by Combined). This commission was known as ‘override commission’. In addition, when field training new sales representatives it is the present practice of Combined to split any commission earned between the sales representative being trained and the territory representative. At earlier times the territory representative conducting the field training received only the override commission with the sales representatives receiving the commission; at other times the sales representative has received a bonus during field training and all of the commission has been paid to the territory representative. I do not regard the difference in those two practises as being material to any issue for determination although the existence of a single unified practice on this topic undercuts somewhat the notion that anything but a single business was being conducted.
In addition to these activities, the territory representatives were also encouraged to seek to recruit persons who might themselves be suitable as sales representatives (a practice known as field recruiting). A territory representative received a bonus for each such an act of recruitment. It should be noted that this process of recruitment did not result in the person recruited forming part of the territory representative’s own business. All agents were contracted only to Combined. As will be seen later this is an important fact.
Insofar as the territory representative sold Combined’s policies it is difficult to distinguish their position from that of the sales representatives they nominally led: they held themselves out as being agents of Combined and sold its policies. Insofar as their administrative, recruiting and training functions are concerned a similar conclusion should, I think, be drawn. The training of sales representatives took place during a two week business course conducted by Combined (which I deal with in more detail below). The field training carried out by the territory representative was the practical conclusion of that training course. As such it was the practical continuation of Combined’s own training system.
The impression that the territory representatives were participating in a business conducted by Combined is enhanced when ones bring to account, as one must, the process of field recruiting of new potential sales representatives. So viewed what is depicted is a state of affairs in which persons holding themselves out as Combined’s insurance agents sold Combined’s insurance policies to a public from which they sought also to recruit, at the same time, fresh persons for Combined to engage as sales representatives in the same structure.
The Friday night check-in meeting was the system whereby policies and premiums were conveyed from the sales representatives through the conduit of the territory and sub-regional representatives to Combined itself. This was not some incidental function which was beneficial for Combined to see achieved – to the contrary: in a real sense, the collection of the policies and premiums was the lifeblood of Combined’s operations.
Flowing in the opposite direction – but just as instrumental in Combined’s operations – was Combined’s practise of providing leads to the territory representatives for distribution amongst the sales representatives. Viewed together one sees a process in which Combined engaged in a corporate form of respiration: exhalation of leads for each route month to the territory representatives and down to the sales representatives; conversion by the sales representatives of the leads into written policies and premiums through the process of working the route month; inhalation of written policies and premiums from the territory representatives (gathered in from the sales representatives at check-in meetings). Thus depicted is a business operated by Combined.
Within this enterprise, the other meetings organised by the territory representatives may be seen in their proper light. The daily sending out into the field of the sales representatives was preceded by the PEP meeting whose purpose was to encourage the sales representatives to further their sales activities. But those sales activities were merely part of Combined’s business of transforming leads into premiums. The Monday night meetings – with their particular emphasis on Combined’s philosophy – bear a similar characterisation. Any other view leaves altogether unresolved what it was that the participants at these meetings were doing when they sang songs about Combined (with lyrics such as ‘Owned by Aon we might be, But Combined will be at the Top of the Tree’). This is not the behaviour to be expected of persons running their own businesses.
The contrary view requires one to conclude that what was in play were separate businesses conducted by the sales representatives and the territory representatives; that what was occurring was not Combined’s business; and that the apparent identification of the participants with the Combined business was coincidental. There was no debate, however, that apparently the same structure was to be seen in every territory. That is, across the nation on Friday nights (or sometimes Saturday mornings) sales representatives would be gathering to hand in the policies and premiums to their territory representative for forwarding to Combined. It is altogether too much to think that what was involved was a vast array of identical businesses co-incidentally swaying to the rhythm of some unheard tune. Much more realistic is the obvious: that one business was being conducted – Combined’s business on Combined’s terms.
(c) Sub-regional Representatives
The next organisational structure above a territory is the sub-region. Each sub-region consists of a number of territories. To each sub-region a single sub-regional representative is assigned by Combined. A sub-regional representative does not generally engage in the sale of any policies to customers and in that regard is different to the position of the sales or territory representatives.
The very high level of turnover of sales representatives has already been noted. As a result there existed a consistent demand for new sales representatives. A significant part of the role of a sub-regional representative was to find persons willing to become sales representatives. Mr Owen-Schwind’s evidence was that when he became a sub-regional representative he was taught ‘how to hire [sales representatives]’. This involved placing advertisements for the position in the local press, taking telephone calls from interested applicants and arranging an interview. The sub-regional representative was also responsible for providing premises in which such interviews might take place. Another role of the sub-regional representative was conducting field training of new sales representatives if one of the territory representatives was unable to perform that function (either by being on holidays or sick). Finally, it was the sub-regional representative who checked the policies and premiums handed in at Friday night meetings before forwarding them to Combined.
A sub-regional representative was paid an override commission on all of the commissions earned by the sales and territory representatives within his or her sub-region. In addition, they also received a field recruiting bonus for each sales representative who was recruited, together with half of the commission earned during field training of new recruits. The role of the sub-regional representative was therefore truly representative; it was a role of procurement by which members of the public were introduced to Combined so that Combined might engage them as its sales or territory representatives. Combined’s case that the sub-regional representatives were conducting their own business is difficult to reconcile with the fact that they could not, and did not, hire any of the insurance staff ostensibly working for them who were solely contracted to Combined and, in respect of whom, from the sub-regional representative’s perspective contractual rights of termination and therefore discipline did not exist. The only way a sub-regional representative could sack a member of his team would be to persuade Combined to do so.
(d) Regional Manager
The regional manager was an employee of Combined. It appeared to be a State based position, that is, each State had at least one regional manager. Mr Owen-Schwind was the regional manager for New South Wales in 1987 and Mr Bosnic, now the Executive Vice President of Combined for Australia and New Zealand, was regional manager for QLD for the latter part of the 1990s. While it varied over the relevant period, at one point each of NSW, QLD, WA and Victoria had its own regional manager, and SA and TAS were rolled together into one of those state regions.
(e) The three roles beneath the regional manager
The structure just described is a pyramid with the regional manager at its apex. The numbers of persons involved varied. As at 20 March 2009 there were 301 sales representatives, 83 territory representatives and 26 sub-regional representatives. Those figures suggest that for each sub-regional representative there were about three or so territory representatives and for each territory representative around three to four sales representatives. On average each sub-regional representative is likely to have had a team of about 15 people beneath him or her made up of three or so territory representatives and 11 or 12 sales representatives. This lowest tier was constantly changing in its composition (three to four times per year) and the duties of the top two tiers included the constant renewal of this primary sales tier.
(f) Control
One should begin with that which is at least clear. The idea that there would be a pyramidal structure consisting of sales, territory and sub-regional representatives was Combined’s concept. Each of the three tiers was dependent, to some extent, on the other two tiers. The ‘business’ of a sales representative would not have persisted for a moment if there had been no territory representatives to distribute leads to that representative or, indeed, to tell him or her where to go. The territory representative’s ‘business’ made no sense at all without a team of Combined’s sales representatives to administer. There could be no such thing as a territory representative without either a team or a territory. Where did the team and the territory come from? Both were solely determined by Combined. It was Combined which allocated territories to particular individuals and Combined which allocated new sales representatives to those territories. Territory representatives might be involved in field recruitment but, as will be seen, it was Combined which trained the sales representatives and Combined who then retained the agents and assigned them to individual territories.
In just the same way, the position of sub-regional representative made no sense without a team of territory and sales representatives beneath it, for the role depended entirely on override commission to generate revenue and override commission could only be earned on the activities of Combined’s agents operating the sub-region. Further, because the sub-regional representative’s position largely involved recruiting sales representatives for Combined to maintain the team it provided him or her with, it was a job which simply made no sense in the absence of Combined.
Once those matters are appreciated it will be seen that it is difficult to describe any of these positions as ‘independent’. Perhaps one matter which underscores the unreality of treating these ‘businesses’ as independent arises when one comes to consider how a contractor might move up the pyramid. In a system of truly independent contractors one might expect that it would be the contractor who decided to branch out into new fields. But it was not so with this structure. Movement from one level of the pyramid to the next was strictly controlled by Combined. Invitations were issued by it to attend its training courses and participants were given manuals at these courses which were written by Combined. If successful on the course Combined would then allocate the agent to a new position (under, of course, a new contract). There were examples, too, of agents being moved down the structure: for example, Mr Perez was demoted from the position of sub-regional representative to that of territory representative on 12 June 2005. This is not surprising since the practical power of termination rested solely in Combined’s hands.
Combined submitted that its training manuals were not compulsory but I conclude that this is an untenable proposition. Since it was Combined which controlled who got promoted within the sales force pyramid the idea that its training manuals could simply be ignored by an agent is unrealistic. No doubt it is true that amongst Combined’s more successful sales representatives (the overwhelming minority since the turnover rate was 300%-400% per annum) the self-interest generated by the commission structure might be expected to provide motivation so that formal instruction might not be necessary. It is highly likely that a number of witnesses called in Combined’s case fell into that category. But I do not think that such a view is more generally realistic and, more importantly, it is demonstrably not consistent with the documentary record to which it is now useful to turn.
I have no doubt that Combined exercised direct control over the sub-regional representatives. In Schedule One I have set out a series of excerpts from letters written by Combined to its sub-regional representatives over a number of years. There is no substitute for reading that correspondence. It shows a relationship of direction. Indeed, it shows that Combined was directly across more or less every aspect of the structure and how it was performing, and in command of it. In light of this correspondence I simply cannot accept the evidence of Combined’s witnesses that Combined never told sub-regional representatives how to conduct ‘their’ businesses.
The correspondence set out in Schedule One is useful for another purpose. It suggests the existence of a command relationship between the sub-regional representatives and the territory representatives and it hints at a similar relationship between the territory representatives and the sales representatives. In a sense that relationship is an obvious artefact of the pyramidal architecture erected by Combined. The sales representatives were organised into teams under a territory representative. The territory representatives fell under the leadership of a sub-regional representative. These were relationships of control, without which the pyramid made no sense. The instrument of control was dismissal but this industrial tool lay not in the hands of the territory or sub-regional representatives. Its ultimate legal expression rested with Combined in whom it was vested by every contract with every representative.
Combined’s answer to this argument was to observe that if the sub-regional representatives gave instructions to the territory representatives and both gave instructions to the sales representatives this, in effect, was nothing to do with Combined. It never instructed territory or sales representatives what to do. Such instructions as were given were not Combined’s. I do not accept this argument. Those instructions were obeyed only because of the existence of Combined’s right to terminate the agent involved. The territory or sales representatives had no right to dismiss the agents from their teams. That could only be done by Combined. In any event, the conclusion (which I draw below) that the sub-regional representatives were employees of Combined leads to the conclusion that their instructions were Combined’s instructions. In a similar way, the instructions of the territory representatives were also Combined’s instructions. At every level within the structure, the instructions were Combined’s; composed according to its business model; policed by its power of termination; and all generally pitched to the end of selling its policies to its customers.
The fact of Combined’s organisational control is emphasised by its control of the training of all three levels within the structure. Each level had its own training course. At the lowest level there was the business course. Persons who were successful in their applications to Combined to become sales representatives were sent on a two week course conducted by it. Trainees were flown, at Combined’s expense, to the course and their accommodation and some of their daily expenses met. At these courses, they were introduced to Combined’s sales manuals which reflected the personal selling philosophy of Combined’s founder, Mr W Clement Stone. The late Mr Stone’s inspirational work ‘The Success System that never fails’ (admitted before me in softcover as Exhibit 26) offered advice on how to get ahead in life through means of positive thinking. The sales manuals reflected similar themes (‘You cannot possibly fail to develop a tremendously large income immediately while at the same time laying the foundation for a prosperous future for yourself, if…you sincerely desire to succeed’).
At a later time the sales manuals were revised in light of Australian regulatory requirements concerning unconscionable and misleading and deceptive conduct but even then the manuals set forth Combined’s views on how a sales representative should operate. The manuals suggested particular scripts which should be said to customers together with what it termed ‘rebuttals’ to deal with negative responses from customers. The manuals are replete with statements to the effect that if a sales representative is not succeeding it is because he or she is not carrying out the methods prescribed by the manuals.
The system disclosed in the sales manuals given to new sales representatives was one wholly devoted to the conduct of Combined’s business. Sales representatives may have been free, as a matter of contractual theory, to sell other companies’ insurance policies but the training they received was not about the sale of insurance policies generally but about the sale of Combined’s policies. The business disclosed in the manuals – with its scripts, its rebuttals, its inspirational leitmotifs – was Combined’s business and the sales representatives were receiving training in that business.
Once a sales representative had finished training and had been dispatched to the field he or she, as has already been mentioned, would do one week of field training (later, two weeks) with a territory representative. Following that, the process of selling would begin. Sales representatives were presented by Combined with incentives to perform. An elaborate system of rewards was in place whose evident intent was to provide motivation to the sales representatives to sell more policies. The incentives were linked to bonus commissions. Additionally, there were several weeks of the year which were devoted to sales competitions (with names like ‘First Start Week’ and ‘the W Clement Stone Celebration Week’) and, from time to time, an ‘Ardmore’ in which sales representatives from multiple territories got together in a single location for what appears to have been some form of sales jamboree. These Ardmores were incentive programmes and were conducted by an employee of Combined, the Head Offices Sales Manager (a position filled at one time by Mr Owen-Schwind).
There were not just incentives of remuneration but also of advancement. A sales representative might become a territory representative if certain of Combined’s criteria were met. The first was that the sales representative had to complete three modules of what was once known as the JET Training Course (‘JET’ is an acronym for ‘Junior Executive Training’) later renamed the Personal Development Program (‘PDP’). The right to take these courses was contingent on increasing sales levels; that is, one needed to have a strong sales record to be permitted to sit the modules. Once the three modules were completed the sales representative would be invited on a one week course – often enough on the Gold Coast – which was the fourth, and final, module of the JET training course. This was conducted by Combined and the successful candidates who had been admitted to the course were flown to the venue and their accommodation paid for. During the course they were provided with manuals – the JET manuals (later, PDP manuals) – which again provided Combined’s theory of how a territory representative should go about his or her business.
This structure, of course, provided a strong incentive to sales representatives to achieve higher levels of sales. On completion of the JET course the representative might expect to be welcomed into the world of earning override commissions and of running a team rather than merely selling insurance door-to-door.
A similar arrangement existed once a person became a territory representative. With sufficient success a territory representative might eventually be invited on the Special Program for Executive Educational Development (the ‘SPEED Course’), later known just as the SPED Course (the Executive ‘E’ was dropped), which was a training course for sub-regional representatives. It, too, was a course conducted often enough on the Gold Coast and it, too, was accompanied by a SPEED Manual (later an Australian SPED Manual) which set out Combined’s theory of how a sub-regional representative should go about his or her work. Of particular importance was the business of the recruitment of further sales representatives. Thus were the training programmes.
One of Combined’s contentions in this case was that it did not instruct any of its representatives as to the manner in which they went about their work and, more particularly, that they were neither instructed that they had to use the methods disclosed in the manuals nor that they had to attend particular meetings. The manuals lacked the ‘imperative character’ just as similar manuals had in Commissioner of Pay-roll Tax (Vic) v Mary Kay Cosmetics Pty Ltd [1982] VR 871 at 880. There was some evidence to support this proposition. Combined’s Director of Training, Mr Owen-Schwind, gave evidence that he had done the business course himself in 1972 (that is, to become a sales representative) and that during the course he had been told that he did not have to follow the scripts if he did not want to; somewhat confusingly, he also gave evidence that on the same course he was asked ‘by the person running the course to learn some of the sales scripts and some of the rebuttals because I had no sales experience’.
Letter – Combined to Mr Rienzie Peries
…
Rienzie
Approximately 2 weeks ago I handed you a complaint concerning Luis Camargo. We need to have a reply to this complaint. Please advise the Regional office of the outcome of your interview with Luis.
The same situation applies to the complaint concerning Bijan Esfandari entering a policyholders house [sic] without permission. These complaints must be dealt with.
(iii) 13 February 1998
Letter – Combined to Mr Rienzie Peries
…
Dear Rienzie,
I will be holding a Senior Executive Meeting on the 4th and 5th of March at the Star City Hotel Sydney and as part of your future development I would like you to attend.
…
I look forward to seeing you in Sydney and to helping you develop so that when the time comes for future promotions you will be equipped to handle a higher position.
(iv) 1 July 1998
Letter – Combined to Mr Rienzie Peries
…
Dear Rienzie,
Just a short note to reinforce our conversation regarding the Field Training. I am just advising you that some of the standards of Field Training seem to have dropped dramatically. For example the Lewis Maciver episode which we know about and you have taken action on. I understand Colin has since field trained Lewis for 3 days which is fantastic. Another challenge appears to be Don Knight who graduated from the same Business Course as Lewis and was left alone for an entire week. Just to give you an example, Didier and Don met on Monday morning and he was issued an Assignment for the entire week. He wasn’t issued 2x2x1 assignments as is Company procedures. Nobody spent any time with him for the entire week and obviously because of this he is a Red Flag. I do understand that Isjla met him briefly on Wednesday morning.
We need to probably just keep an eye on the Field Training standards especially in the first five or six weeks. If we can do that, we know what the outcome can be. Rienzie I know your standards are slightly higher than the Companies and my intention is just to advise what we have heard happens in the Field and I know you have already spoken to Peter about these situations. Let’s hope we can change it for the better.
…
[sic](v) 19 November 1998
Letter – Combined to Renham Pty Ltd
…
Dear Rienzie,
You have been requested to attend a meeting with JBT on the 26th November, 1998 commencing at 8.30am sharp at the Sheraton at Noosa. You will need to bring the following information with you.
*Analysis of what has occurred over the past six months in the Sub-Region. Both good points and not so good.
*The critical factors for the past six months.
*The Management development analysis, with particular attention as to why we only had one person attending the JET IV.
*The Manpower growth – analysing the start of 1998, start of 2nd cycle manpower and start for 1999.
*A.T.O
*Management power – why out of the 17 territories we only have 8 Territory Representatives.
Basically, we will require an analysis for the entire six months on all of the critical factors.
*What definite plans you have in place for the next cycle. In other words, specific plans as to how you are going to change the current trend.
*What activities you are going to engage in, on a week to week basis over the next six months, to change the trend dramatically.
*What specific plans and activities your District Representatives will be engaged in over the next six months.
You will need to have this done in a presentation form and have handouts, one for Johna nd [sic] one for myself. If you have any queries or need any assistance regarding the preparation, do not hesitate to contact me.
I look forward to seeing you in Noosa.
…
(vi) 30 June 1999
Letter – Combined to Mr Rienzie Peries
…
Dear Rienzie,
Des requests all Sub-Regional and District Representatives to prepare a presentation identifying the following:
1.What your objectives were for the 1st Cycle and how these were or were not realised;
2. What your objectives are for the 2nd cycle in every aspect of the business.
A time of 9:00am on Thursday 22 July 1999 has been tentatively booked for your presentation.
If there are any problems with the above time please do not hesitate to contact me at your earliest convenience.
…
(vii) 19 July 1999
Letter – Combined to Mr Rienzie Peries
…
I would like to invite you to attend a meeting with Mr John B. Thomson and Mr Phil Ainsworth on Wednesday 11 August 1999.
Discussions will focus on the proposed break up of certain territories and future restructuring plans for the Greatest Region.
The venue for the meeting is the Sheraton Brisbane and specific times will be advised closer to the event.
…
(viii) 25 August 1999
Memorandum – Ian Rogerson to Mr Rienzie Peries
…
Dear Rienzie,
Further to our discussion on Tuesday regarding [district figures] the Saturday communication figures faxed to the Regional office indicate that Roger Reid is still doing the district summary figures and the daily figures appear not to have Isle’s team included.
Please be advised that the company requires that all TR figures are communicated to yourself and that you summarise these and on fax to the office in both daily and Saturday communications.
Clearly the taking and summarising of District figures is not now Roger’s responsibility at this point in time.
Would you please act on this directive effective immediately.
…
(ix) 6 September 1999
Letter – Combined to Mr Rienzie Peries
…
Dear Rienzie
RE: S.P.E.E.D. PHASE 2 REVISION
You are required to attend the abovementioned seminar which will be held at the Gold Coast International Hotel – during the week of 27 September 1999.
This will be a three (3) day seminar, starting on Wednesday 29 September at 2.00pm, and finishing on Friday 1 October 1999 at approx 2.00pm.
For those travelling by air, your travel arrangements are attached.
Would you please revise your S.P.E.E.D. Phase 2 manual as there will be a questionnaire on those subjects.
Please ensure you not only bring you PMA but also you S.P.E.E.D. Phase 2 manual.
Looking forward to seeing you there.
…
(x) 11-13 October 1999
Key Points Sub-Regional/District Representative’s Meeting
Key Points
Sub-Regional/District Representative’s meeting
Couran Cove Resort
11th-13th October 1999____________________________________________________________________
Attendees: Des Bosnic Mike Barnes
Ian W. Rogerson Didier Villalobos
Rienzie Peries Bill Trifunovski
Roger Hasler Nilanthi De Saram
Ted Ruttley Petrina Trajer
Walter Brazda____________________________________________________________________
Introduction – Des Bosnic
…
√ How to achieve results
1. Promote Winners Scores (WCS)
2. Training – Monday Night Meetings and Field Training
3. Monthly Review Meetings
4. Promote Incentive Weeks
5. In field – Monitor Monday and Tuesday and take appropriate action
6. Inspections – attend cash ins
Results Vs Objectives – Subs/DRs
√ At TR level you must concentrate on:
1. Attitude
2. Review meetings – work out what you are going for.
3. Determine a goal and get excited
4. Beat last cycle profit per route
5. Beat yourself by 10%, 15%, 30% on last cycle
√ Full compliment of TR’s allows you to develop and grow.
√Exam scores reflect performance of salespeople – got to have material knowledge.
√Send a TR to someone else’s meeting and always have a 2IC ready as a back up plan.
…
√Terminate problems immediately. Have new people field trained by a good performing TR even if he/she is from another district.
…
√Do not wait to evaluate TR’s – should meet on a one-on-one basis every month.
…
Evaluating TR’s Performance – Subs/DRs
√ Des revealed some of the reasons agents have terminated are:
1. TR’s did not Field Train correctly
2. Agents were give [sic] the impression the TR did not care about them
3. TR’s do not use the same sales talks as agents are taught in school
4. TR’s and agents did not get on
5.TR’s make it clear to trainee they are only training them because the Sub/DR asked them to.
√Des emphasised the need to follow JBT’s field training blue print to eliminate these problems. Show TR’s how it should be done and follow through with inspections.
…
√It was agreed that all TR’s should conduct a different training session at each review meeting. Subs/DRs will advise the TRs of the subject so they can study but the presenter will not be selected until the time of presentation so everyone prepares and learns. (Draw name out of a hat).
…
[sic](xi) 11 January 2000
Letter – Combined to Mr Rienzie Peries
Dear Rienzie,
Thank you for your report on Serge Goldin. It, no doubt, disappoints us both to see someone we are considering for a senior position not practicing the company standards.
I would like you to inform me of what action you and Bill intend to take regarding the cash-in and Pep-Up Meeting. We need to implement some plans immediately to minimise the cancellations in this team and to train Serge to be a better Territory Representative.
(xii) 21 February 2000
Letter – Combined to Mr Rienzie Peries
…
Dear Rienzie,
I have just evaluated the apps that were written last week to determine whether or not we finish on an increase for the quarter.
As you can see Didier Villalobos wrote exactly 113 apps. This is what he needed to maintain his increase for the quarter.
Nilanthi De Saram needed 121 apps but only wrote 84 apps. Obviously this increases her objective to 127 apps per week.
Q05 needed 60 apps and wrote 73 apps resulting in a reduced objective of 58 apps per week.
The unfortunate thing, Rienzie is that Bill Trifunovski needed 169 apps but only wrote 125 therefore increasing his objective to 177 apps per week. Obviously we need to have a specific plan, similar to an Ardmore, to ensure we get back on track. As a result you now require 476 apps per week for the next six weeks to finish on target.
I believe with some of the Ardmores you have in mind chances are we can achieve this result. I hope this is of some assistance.
(xiii) 22 February 2000
Letter – Combined to Mr Rienzie Peries
…
Dear Rienzie,
As you know last week Petrina wrote you a letter (copy attached) regarding providing me with a Cash-in Report.
…
We need to continue our strategy and consistently attend Cash-ins. This not only involves collecting a parcel to ensure the production is right but actually ATTENDING the Cash-in. It is the responsibility of ALL Senior Executives to ensure our cancellations rate is reduced.
…
Rienzie, after six weeks our figures are not looking too good. We need to have a look at the Rolls. We are running at a 14.7% decrease. I guess this explains why the new premium is so low.
We need to find a way to get back on track and I guess the biggest factor is the manpower decrease. Once we get this under control the rest will most likely come through the Ardmores you have planned.
If you need any assistance please do not hesitate to contact me and please ensure we maintain our standards with the Cash-Ins.
[sic]
(xiv) 12 April 2000
Letter – Combined to Mr Rienzie Peries
…
Dear Rienzie,
At present I am evaluating the activities of the Subs/DRs in the Greatest Division and am very disappointed to see that you as a Senior Sub-Regional Representative have not sent in a report of last Friday night’s cash-in.
Rienzie, you and I made a decision at the beginning of this year that we would be passionate about inspecting cash-ins. You obviously have not lived up to your end of the bargain. It is important that you lead from the front and show the DRs that you really mean business.
You know our cancellations are skyrocketing. Unless we take action and inspect different teams each and every week we will pay the ultimate penalty at the end of this cycle. I have not received a cash-in report from Didier either. I will not tolerate any individual in Senior Management not attending a Friday night cash-in. It is totally unacceptable and I trust that you will ensure this does not occur again.
We have the highest cancellations in the country and my aim is reduce them. I am sure you feel the same. If you need any assistance please do not hesitate to contact me.
…
[sic](xv) 27 April 2000
Letter – Combined to Mr Rienzie Peries
…
Dear Rienzie,
…
Rienzie, you are the Senior Sub-Regional Representative of the area so it is your responsibility to ensure that everybody under your supervision follows the company guidelines. I find it frustrating when I see that our cancellations have gone through the roof yet we still allow people to check-in without all the boxes complete, without deposit slips and more so, agents writing cold when we know there was a lead.
Rienzie could you please attend Friday night cash-in and rectify the situation in this district.
(xvi) 19 August 2002
Executive Sales MemoFrom Combined to P Butler, P Kenton-Barnes, R Russell, R Hasler, R Peries, P Kelly, I Rogerson
To: Peter Butler Roger Hasler Paul Kelly
Paul Kenton-Barnes Rienzie Peries Ian Rogerson
Robbie Russell…
From: John B. Thomson
Date: 19th August, 2002
…
Budgets and Forthcoming Kick Off Meetings
As you are all no doubt aware everyone at this moment in time is over budget and because of this I have decided to reduce the number of meetings that we will have to kick off Founder’s Week. What I would like done is the following:
1.Sub Regional Meeting to be held in your Boardroom on the Wednesday prior to Founder’s Week
2.The Sub Regionals to hold their own T.R. meetings on the Thursday prior to Founder’s Week.
By doing the above we will reduce our costs considerably with no accommodation costs or meeting room costs – with the exception of the Friday afternoon meeting charge. All we need to supply is coffee and tea on arrival and once the meeting finishes the people can head back home.
Would you please also adopt a similar format for the Power of One Kick Off Meetings.
Acting T.R.s
Would you please be kind enough to supply to Malcolm Strain the names of the people who will be Acting T.R.s in the final quarter. Malcolm, in agreement with yourself, will put together a fourth quarter bonus program on 2 factors.
a. Manweeks
b. New Sales P.V.
New Business Bonus for Trainees
It has been brought to my attention that our T.R.s are being paid the New Business Bonus while training the new person during their first week in field.
As of Monday 26th August, the New business Bonus earned will be credited to the new trainee, thus reducing the $500 liability that they are given during the first week’s training.
Should anyone have any questions on the above, then please do not hesitate to contact me. Please inform everyone concerned about the above.
(xvii) 5 May 2004
Letter – Combined to Mr Blagoja Trifunovski
…
Dear Bill,
Following your interviews of last week this is to let you know how disappointed I am as regards what happened to Trevor Bailey.
The standards that you have as regards how a new person should be treated are certainly not up to my expectations and I never want to hear of such a thing ever occurring again.
Bill, you have a great responsibility as a Sub Regional Representative and one of these responsibilities is to make sure that every person who leaves the Business Course is given a fair crack of the whip. We as a company promise everyone a full week of infield training following a specific Blue print and this is something that I will be expecting you to inspect to ensure that the above takes place.
From now on I will be asking Robbie Russell to do some inspections on a regular basis so that the Athletics Region can have standards that everyone is proud of.
Always remember the old saying and that is to treat people as you would like to be treated yourself. From now on I hope I can rely on you to do things by the book.
(xviii) 12 April 2005
Letter – Come Alive in 2005 to Mr Blagoja Trifunovski
…
Please find attached a copy of your Week 13 Sales Trends for the 1st Cycle 2005 for The Wise Guys.
Looking at the numbers for Week 13 I have some concerns relating to the following issues:
1.New Sales Premiums
Minus 45.2% Cycle over Cycle
$66,897 of New Business (minus)2.Available to In Field
56% for the Cycle
3.A.T.O. = 328
Bill, as you know we have spoken on many occasions regarding your In Fields and this is the main Critical Factor that I believe, if overcome, could lead your Sub Region to the “Number One Spot” in the Nation.
Could you please give this letter some serious thought and put some quality thinking and planning time into ‘How you will overcome these Critical Factors’.
Having worked with our Vice President, John B. Thomson I am positive that John will be asking a number of questions at our next meeting in May. Please forward your Business Plan no later than the 4th May to Ann Burns in the Victorian Office, detailing your specific game plans to address these concerns.
Should you have any questions or need assistance please feel free to contact me.
…
(xix) 11 May 2005
Letter – Combined to Mr Shane Perez
…
Dear Shane
Please find attached a copy of the outstanding Compliance Modules and a list of which agents need to be trained on these modules.
Shane, please take time to give these sessions as in your Bonus Program clause (6) it states:
·The Sub-Regional Representative must comply with the Compliance Program in order to be eligible to achieve and receive a Bonus Payment.
Please treat this letter as a matter of urgency as most of the Compliance should have been returned to the ATTD by now. Could you please let me know on receipt of this letter when you plan to conduct the outstanding sessions.
If you have any questions re this matter, please do not hesitate to call me.
…
(xx) 18 May 2005
Letter – Combined to Mr Blagoja Trifunovski
…
Bill, it is very disappointing that on a number of occasions we have asked for specific reports and for some reason you have not responded. I would like to point out that it is part of your duties and responsibilities to ensure that queries from either myself or Head Office regarding these matters need to be answered. [sic]
Would you please let me know why you are not keeping within your obligations and duties towards the compliance program.
I look forward to seeing these requests being answered together with other outstanding issues such as outstanding telephone appointments and field recruits.
…
(xxi) 19 May 2005
Letter – Combined to Mr Blagoja Trifunovski
…
As you are aware the Sub-Regional Representatives (SRRs) are required to complete a PPR on all members of their Subregion at least once per cycle. The attached list the Representatives that have been with the company for over 10 weeks and are yet to have been reviewed [sic]. All reps listed on these files need to be reviewed before the end of the week of 06/06/05 (week 26).
Bill Trifunovski
Leah Zarts 94953
Mahinda Rajakaruna 91804
Upali Jayasinghe 91765
John Findley 95029
Patsy Kessler 9982Bill, can you please ensure that the above is conducted by the end of week 26.
(xxii) 24 May 2005
Combined – Sub-Regional Representatives – Champagners region
Business course documents
…
Having completed the checking of all documents submitted for the current Business Course I found it disappointing to see the standard in the completion of these documents has dropped. Following up with trainees on missing information is time consuming for the office staff not to mention the time wasted in the Business Course by the trainer. This should not happen as all paperwork should be checked by the hirer ensuring all details are supplied, before the original documents are given back to the prospective trainee in the envelope, to be handed to the trainer on the Monday.
Head Office require all documentation pertaining to the current business course on Tuesday morning, however in this instance, due to the quantity of information missing and the time spent chasing up this information, we were unable to meet our deadline.
Schedule Two
(1) Sales Representatives
(i)Prior to the introduction, it is advantageous to seek confirmation of the prospect’s name, or title ie: Proprietor, Manager, and to state your name and who you are representing. Mentioning your prospect’s name during the introduction can aid in attracting attention. Avoid referring to a prospect or policy holder as “Sir”.
“Good Morning – are you the proprietor?”
“My name is …. From Combined”
“I believe THIS will interest YOU…ALSO”
(ii)Some of our sales representatives prefer working large towns because they never run out of people. Conversely, some of our representatives prefer working in the country because the names of people are familiar to everyone. What really matters though of course, is the sales representative’s attitude and not the area being canvassed.
(iii) FORMULA FOR SUCCESSFUL PRESENTATIONS
The formula to be used for successful presentations regardless of the product being explained, is a combination of the principles, ideas and techniques described previously in this Sales Manual. The following points highlight the major areas to be concentrated on a logical progression.
Use a Company approved presentation.
(iv)Overcoming Scepticism
Where appropriate, show additional names of policyholders in the area in which you are working (note that permission to show names must have been granted).
·Demonstrate the Company’s assets by showing our Financial Statement.
·Show your identity card.
(v) Company Ethics
Your Representatives Handbook deals with ethics. Our Sales System is based on every sales representative maintaining high standards of commercial honour and selling our products in compliance with company underwriting guidelines and the law. As a Combined Representative you are expected to act professionally and act in the best interests of the policyholder, you, and the company.
(vi) EXISTING POLICY HOLDERS
A Policyholder is the most important person in our business and deserves the most courteous and attentive treatment we can give them. Think in terms of their interests and you will automatically fulfil your own.
Our business is a repeat business and is built on policyholder satisfaction. Your actions and attitude when calling on existing policyholders to service their business determine company growth.
(vii) IMPORTANT NOTE
Do not involve yourself in assessment of policyholder claims other than explaining how to make a claim and the claims provisions of the policy. It is not your duty to enter into a detailed discussion of a claim or determine the amount of benefit that could be claimed or make snap judgments as to the company’s liability. (YOU ARE NOT IN POSSESSION OF ALL RELEVANT DOCUMENTS!). Point the customer in the direction of the Claims Department on the toll free line 1300 300 480 and explain the 3 steps as per Code Of Practice.
(2) Territory Representatives
(i) JET Phase I Questionnaire Answers
Write the ‘Wife/Partner’ rebuttal. (10)
“As you know many companies do not insure the non-income earning partner payment them a weekly income for sickness disability. However, our company will, and even though they may not have an independent income of their own, we would pay them the same as you…
(ii) Write the Standard Healthcare introduction FROM AN Accident Lead. (4)
“Mr Jones! My name is ………… from Combined Insurance. As you know our Accident Representatives call each six months to service your Accident Policies. The reason for my special call is that you may now be eligible for one of the finest Healthcare Programs ever written, providing of course you can qualify.
Here, I’ll show you what I mean.”
(iii) Write the ‘Reassurance’ (Close) rebuttal. (10)
“You know what you’ll really like about this policy…
There are 3 things that most people say makes our policy different and worthwhile:
Firstly, you notice that we pay you from the very first day. With most companies you have to be off at least one week or more. In fact in most cases, if you were sick with the benefits you’d receive from our company you would have your premium back for six months.
Secondly, We even pay you while at work, partially disabled through sickness.
Thirdly, is the fact that the longer you keep the policy the more valuable it becomes, and quite frankly, Mr Jones, most people tell me that this one thing alone makes our policy different and worthwhile. So why don’t you try it for six months? Ok, just for six months.”
[sic]
(iv) INTRODUCTION
JET PHASE TWO
(Is to be conducted by a Sub-Regional Representative)
A one week “In field” program for the purpose of inspecting the Sales knowledge of those being considered for Phase III of the Junior Executive Training Program.
i.Morning Training Sessions on “Sales Material” and some of the basics of Combined’s Sales Management principles.
ii.Field Training during the day.
iii.Follow through interview with each participant by Sub Regional Representative.
(v) GENERAL COMMENTS &
SUGGESTIONS FOR TRAINER
…
2. The daily training sessions are also to train on basic sales material
…
iv. Company philosophy.
(vi) SUNDAY EVENING AGENDA
JET PHASE II
5.30 pm Conditioning
1. Why you were selected
…
(b)Our need for additional Territory Representatives.
…
(d)To help you and Combined build for the future.
…
(vii) INTRODUCTION
JET PHASE III
(Is to be conducted by a Sub-Regional representative)
…
SELECTION OF PARTICIPANTS
They should be JET trainees who:-1.Have qualified through Phase I and II of the program and have achieved their PEARL AWARD.
…
and are proving through their sales results that their stated “goals to progress within the Organisation are genuine”.
(viii) “FIELD RECRUITING”
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WHY?
Well lets consider some key advantages of Field Recruiting and some of the reasons why we should be Field Recruiting more people to the Company:
(Have group write down Key Points)
...3.Field Recruiting enables you to recruit quality people whilst at the same time, engaging in field production.
4. History tells us that Field Recruits generally stay longer with the Company.
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(ix)Manpower is our No.1 Critical Factor – As a T/R, you are evaluated on your ability to build and maintain an adequate and well trained sales force.
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DEFINITION OF FIELD RECRUITING (Have group write down)
1.Finding or attracting, selecting and motivating qualified individuals to join our Organisation, through a family member, friend, acquaintance or Policyholder.
2.To select an individual, determine what they are looking for, and show them how they can find it in our Organisation.
(x) POLICYHOLDER REFERRAL (Read Out)
1.Policyholder Referral
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While you’re there doing business with the Policyholder or the Prospect, why not take that opportunity to ask if they know of anyone who will be particularly well suited, for Combined.
(xi) …
Over the years, Combined has developed some effective techniques for obtaining referrals from Policyholders.
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c. POLICYHOLDER/PROSPECT: “Does your Company have a Training Program for its Salespeople?” This recruiting signal is another leading question loaded with opportunity.
If you receive one of these three direct recruiting signals, immediately begin to romance the opportunity and try to recruit the Policyholder.
(xii) 3. Direct Recruiting
This ability to personally choose the most desirable people obviously leads to a higher, qualified level of personnel.
Ask any one who has done their share of Field Recruiting and you will realise that Field Recruits tend to achieve higher standards more quickly.
Probably the main reason why they generally remain with the Company longer.
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[sic]
(xiii) RECRUITING REQUIREMENTS, RESTRICTIONS AND RECOMMENDATIONS
(Read Out)
It is our objective through the implementation of these standards, to upgrade the quality and improve Retention in our sales force.
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It is the responsibility of all Recruiters to understand, and adhere to these requirements, restrictions and recommendations.
(Have Group Write Down)
“Combined Insurance Company of Australia is an equal opportunity employer”.
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(xiv) Remember
·Get their name and phone number and pass on to your Territory Representative
·Don’t guarantee them a job but guarantee them an interview.
(xv)QUALIFICATIONS NECESSARY TO BECOME A TERRITORY REPRESENTATIVE
4. LOYALTY
A good T/R is enthusiastically loyal to Mr. Stone, the Company and the people under their supervision and has a willing interest in the discharge of their duties.
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7. DEPENDABILITY
A good T/R is dependable, in all the assignments given by the Company as Assignments are entrusted to them. They are obligated to carry out all assignments in the manner in which the Company expects.
(3) Sub-Regional Representatives
(i) FIELD RECRUITING FOR SUCCESS
INTRODUCTION
WELCOME GROUP – CONDITION FOR SESSION
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In this session, we are going to show and discuss… Techniques… Ideas and Principles of Field Recruiting and in addition share with you the personal stories of Successful people who have been Field Recruited to the company.You see, recruiting quality people is a system the same as our Sales System… The Key is to follow the System.
(ii) To being with, let’s start with some video footage:
SHOW VIDEO D.R.Good Morning. Are you the manager?
ManagerYes I am
D.R.My name is … from C.I.C.A... …
(iii) FIELD RECRUITING BUILDS TEAM SPIRIT
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TEAM SPIRIT can be defined as the attitude of the Organisation. Therefore, our Team Spirit, is vastly improved when there is more Field Recruiting, and there is a good reason, Why.
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[sic]
(iv)HOW TO HOLD AN EFFECTIVE INTERVIEW WITH A PROBABLE TERMINATION – WHO YOU WANT TO SAVE TO THE COMPANY
From time to time individuals who we believe have a good future with the Company decide to leave and take up a new position elsewhere. Sometimes this will be a ‘bolt out the blue’ … but most times it will be predictable.
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(v)4) If you feel you still have not established the REAL reason for leaving here are some suggested questions to ‘OPEN UP’ THE CONVERSATION.
A)“What do you like most about working for Combined?”
B)“What do you dislike most about working for Combined?”
C)“What does your wife/partner think about the situation that you are considering leaving Combined?
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L)“Do you think you will achieve those goals if you take up this new position and leave Combined?”
M)“What do you think you would need to do to achieve these goals working for Combined?”
(vi)…
If at this stage you have been successful in persuading the salesperson that their future lies with Combined IT IS VITAL A THAT RE-TRAINING PROGRAMME IS SET UP INVOLVING THE T.R. – BUILD INSPECTION AND COMMUNICATION.
If you are not successful be sure to leave the door open for the salesperson to return to the Company in the future.
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IF YOU ARE SUCCESSFUL IN SAVING THIS SALESPERSON TO THE COMPANY AND THEY GO ON TO HAVE A SUCCESSFUL AND REWARDING CAREER WITH COMBINED, THEY WILL BE FOREVER GRATEFUL THAT YOU TOOK THE TIME ON A CERTAIN DAY TO TALK
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