Brendan John O'Connor v Kelly & Associates
[1995] IRCA 487
•13 Jul 1995
INDUSTRIAL RELATIONS COURT
OF AUSTRALIA
VICTORIA DISTRICT REGISTRY
VI 1442 of 1995
B E T W E E N :
BRENDAN JOHN O’CONNOR
Applicant
AND
KELLY & ASSOCIATES
Respondent
Before: Judicial Registrar Fleming
Place: Melbourne
Date: 13 July 1995
REASONS FOR JUDGMENT
Introduction
This is an application under Section 170 EA of the Industrial Relations Act 1988 for payment of compensation arising out of the alleged unlawful termination of the Applicant’s employment by the Respondent. The main issue in this matter is whether the Applicant was an employee or independent contractor. The Applicant maintains that he was an employee Solicitor for the duration of his time with the Respondent.
The Respondent maintains that the Applicant was engaged as an independent contractor and is accordingly excluded from the protection of the Act.
Findings of Fact
The Respondent, Kelly & Associates is a law firm. Peter Kelly is a sole practitioner and is the principal of Kelly & Associates.
Mr O’Connor, the Applicant is a graduate of the Leo Cussens Institute. Mr O’Connor gave evidence that after completion of the Leo Cussen course, in order for him to gain a full practising certificate he is required to work for six months under the guidance of a Solicitor with a full practising certificate. Mr O’Connor approached Mr Kelly in late October 1994. This meeting was arranged by Mr O’Connor’s friend Joanne Clarick who was also working with Mr Kelly.
Mr Kelly gave evidence that at the meeting he told Mr O’Connor about the way the firm operated. Mr Kelly told Mr O’Connor that the people engaged by the Respondent were not paid superannuation, long service leave, holiday pay, sick pay, tax was not deducted from their pay and that they could work the hours that they sought to work as long as the requirements of clients and the Law Institute were being satisfied. Mr Kelly gave further evidence that remuneration of people engaged by the Respondent was made when an invoice was provided for the work that was done, and once a client had paid the money in and this money had been applied to disbursements and cleared the amount would be paid on the invoice of the person rendering the invoice on the basis of one third of profit costs to the person rendering the invoice and two thirds to Kelly & Associates.
Mr Kelly gave evidence that the office manager Julie Wilson had an invoice entitled “Julie Wilson Consulting”, that the other Solicitor in the office Joanne Clarick had an invoice entitled “Joanne Clarick Solicitor”, that the cost consultant Penny Dunne had an invoice entitled “Penny Dunne Word Processing”.
At the initial interview Mr Kelly sought the business name that Mr O’Connor would be invoicing on. Mr O’Connor gave him the name of Heyington Financial Management. An invoice was tendered as Heyington Financial Management and this was prepared by Mrs Wilson and details of monies owing were written in by Mr O’Connor. Mr Kelly said that Mr O’Connor would keep his own hours and that he was not working five days per week or forty hours per week. Mr Kelly’s evidence was that Mr O’Connor would work on files and would be renumerated for work performed and invoiced by Heyington Financial Management.
Mrs Wilson gave evidence which I accept that at the initial interview with Mr Kelly and Mr O’Connor she was called in and in her capacity as office manager she informed Mr O’Connor of the way the firm operated. Mrs Wilson was adamant that there be a clear understanding by Mr O’Connor of the way the office was run. I accept her evidence that at this initial meeting Mr O’Connor was told he would be engaged on terms and conditions which were consistent with those described by Mr Kelly.
I accept Mr Kelly’s evidence that he did not see it as his role to train Mr O’Connor and that he was not adopting the role of Mr O’Connor’s principal. Evidence was led by the Respondent that the Law Institute required Mr O’Connor to have professional indemnity insurance. The Respondent refused to pay for Mr O’Connor’s insurance and handed the letter which was exhibited from the Solicitor’s Liability Committee to Mr O’Connor and advised him to pay it. Mr O’Connor gave evidence that he would pay it if required to.
Mr Kelly gave evidence that he thought Mr O’Connor would be able to promote the law firm especially in the financial services field given Mr O’Connor’s experience as an accountant and his contacts.
Mr O’Connor gave evidence that he described himself as a consultant as early as 7 November 1994 in Exhibit number 1 which is a file note in relation to R. Porter.
When Mr O’Connor commenced with the Respondent he set out to market the Respondent drawing on his experience of over 30 years in insolvency accounting, management and financial advisory work. He sought to promote himself to potential clients such as I.T.S.A. This promotion occurred late in 1994 and early January 1995. Mr O’Connor was the draftsman of the “promotion” letters. There are 5 promotion letters in all; three are undated (Exhibit B), one is dated January 1995 (Exhibit C) and the other is dated 13 January 1995 (Exhibit D). Mr O’Connor promotes himself under the letterhead of Kelly & Associates, however he does not describe himself except to refer to his experience in financial advisory work. The closest thing to a description of Mr O’Connor’s role is in Exhibit D wherein he states “The legal work/advice would be handled principally by Mr Brendon J O’Connor, LL.B and Mr O’Connor would be backed up at this stage by the Principal in this firm Mr Peter A Kelly, for example in situations of Mr O’Connor being on leave”. This description as well as the depiction of Mr O’Connor as a very experienced financial adviser is not consistent with the submission by the Applicant that he was an employee solicitor under the guidance of Mr Kelly.
There is no doubt in my mind that Mr Kelly saw the benefits of including Mr O’Connor in the practice of Kelly & Associates. Mr O’Connor’s experience in financial management services was understandably seen by Mr Kelly as a potential asset to his firm. Mr O’Connor was straightforward and open about his other interests in the partnership of Clarke/O’Connor and he described a lunch where his partner Mr Clarke met with Mr Kelly.
Mr O’Connor gave evidence that although he commenced with the Respondent in early November 1994 the application to this Court states his commencement date with the Respondent was the 23 November 1994. Mr O’Connor states the reason for that is that as far as the Law Institute was concerned he could not become an employee Solicitor until the paper work was completed, that is until he obtained an employee practicing certificate. According to Mr O’Connor and this is not disputed, Mr Kelly rang the Law Institute and asked them to send out an application form for an employee Solicitor practising certificate. When those forms were sent out Mr O’Connor gave evidence that he filled them in and he paid the membership fee and the fee relevant to the employees practising certificate on 23 November 1994 after he went into the Law Institute.
I do not accept Mr O’Connor’s evidence that he did not see it as his obligation to pay the Solicitor’s liability committee fee but rather I accept that he would reimburse the amount of $181.00 if required to do so (refer Exhibit 3).
Mobile Phone
Mr O’Connor gave evidence that he was provided with a mobile telephone. Mr O’Connor did not say that he was given this phone as part of office equipment but Mr O’Connor did say that he was given the phone on the basis that he purchase it from Mr Kelly. Mr O’Connor sought to buy a phone from Telecom Mobilenet and when he told Mr Kelly, Mr Kelly said “don’t buy one I have two you can buy one of mine”. Mr O’Connor accordingly sought to purchase Mr Kelly’s mobile phone and sought to pay for it by way of having deductions taken from his remuneration at the Respondent. No deductions were ever made in relation to this mobile phone. When Mr Kelly sought the return of the mobile phone Mr O’Connor refused to return it demanding it was now his property. The episode in relation to the mobile phone was the catalyst for the termination of the relationship between Mr O’Connor and the Respondent. The relationship broke down to the extent that Mr O’Connor wrote an “explanatory” note (Exhibit J) to Mr Kelly but before he could give it to him Mr Kelly had written a letter of termination (Exhibit K).
Computer
Mr O’Connor said that he had been provided with a computer and suggested it was as provision of office equipment. Mr Kelly and Mrs Wilson suggested Mr O’Connor had removed the computer, which did not work, without permission and did not return it when requested. I am satisfied that Mr O’Connor removed the computer to repair it and use it and that it was returned by him to the Respondent. I am satisfied that the Respondent did not authorise the removal or use of the computer by the Applicant.
The Relationship Between the Applicant and the Respondent
The relationship between Mr Kelly and Mr O’Connor was never formalised in any documentation. It is submitted by counsel for
Mr Kelly that a body of case law supports his submission that the relationship was not one of employer/employee but rather of independent contractor. Mr Lithgow referred the Court to several decisions wherein a number of tests have been applied. In Australia the right to “control” is an important element in determining the roles of the parties however it is not the only indicia of determining whether or not it is an employee/employer relationship or relationship of independent contractor. I do not propose to go through the decisions referred to by counsel. What I do propose to do is state the reason for deciding that this relationship was not one of employer/employee but rather that the Applicant was at all times an independent contractor. I make this finding on the basis of the evidence of both Mr O’Connor and Mr Kelly as to what in fact occurred for the period of time Mr O’Connor was with the Respondent.
The Mode of Remuneration
Mr O’Connor was paid on the basis of submitting invoices in his business name Heyington Financial Management and obtaining one third of profit costs. He gave evidence that he submitted invoices and was paid by the job and this points to the fact that the relationship was a contract for services.
The Hours of Work
The hours of work were not stipulated at any time by the Respondent. Mr O’Connor virtually worked the hours he wanted to. He gave evidence that he worked on weekends and that he would work a 40 hour week. The Respondent Mr Kelly was not concerned about the hours worked by Mr O’Connor as long as clients were serviced and money was coming in. Mr O’Connor may have worked a 40 hour week but this was not apparent to the Respondent. Mr Kelly and Mrs Wilson gave evidence he was certainly not in the office for 40 hours a week but was not required to be. I am satisfied that Mr O’Connor adopted flexible working hours and as long as clients were serviced and money was coming in this was acceptable to the Respondent. It became unacceptable when clients complained of a lack of service from Mr O’Connor.
The Conditions of his Work Practice
Mr Kelly gave uncontested evidence that Mr O’Connor was not paid sick pay, holiday pay, that no deductions were made for superannuation or taxation. Although Mr O’Connor was provided with basic office provisions such as stationery he was not provided with office equipment in the form of either a mobile phone or a computer. He borrowed the computer, repaired it and returned it and it seems even after he repaired it he was not permitted to use it. I am satisfied that he was never provided with equipment by the Respondent but rather he was required to provide his own equipment or pay for his own equipment such as a mobile phone.
Payment Law Institute Fees
a) Practicing Certificate
Mr O’Connor gave evidence that he paid for his employee Solicitor’s practicing certificate and I find that he did so because he understood it was his responsibility to do so.
b) Solicitor’s Liability Committee
I accept the evidence of Mrs Wilson and the documentary evidence provided in Exhibit 3 that Mr O’Connor agreed that he would reimburse the amount of the professional indemnity insurance if he was required to do so. There may have been some confusion about who was to pay for it initially but I do not accept the evidence of Mr O’Connor that he believed Mr Kelly would pay for it without seeking reimbursement.
In Re Porter; v Transport Workers Union of Australia (1989) 34 IR 179 Gray J had to decide whether a number of owner drivers in Victoria were employees. In coming to his decision at page 184 he states:-
“A Court determining whether a particular relationship is that of employment or of some other kind can therefore only resort to the process of balancing all of the factors or as they are called in Stevens and other cases, the indicia. In truth, the result may be a matter of impression. It is unfortunate that this is so. It should not be necessary for people to obtain a decision of a Court, in order to know the true nature of their relationship. Unfortunate or not, that is the case. Although the parties are free as a matter of law, to choose the nature of the contract which they will make between themselves, their own characterisation of that contract will not be conclusive. A Court will always look at all the terms of the contract to determine its true essence, and will not be bound by the express choice of the parties as to the label to be attached to it. As Mr Black Counsel for the TWU put it in the present case the parties cannot create something which has every feature of the rooster but call it a duck and insist that everybody else recognise it as a duck”.
In balancing all the factors I am of the view that Mr O’Connor was an independent contractor and accordingly he is not protected by the Act. I order that the application be dismissed.
MINUTES OF ORDERS
THE COURT ORDERS:
The application is dismissed.
NOTE: Settlement and entry of orders is dealt with by Order 36 of the Industrial Relations Court Rules.
I certify that this and the preceding eleven (11) pages are a true copy of the reasons for judgment of Judicial Registrar Fleming.
Associate:
Dated:
Solicitors for the Applicant: Gabriel & Co.
Counsel for the Applicant: Mr Lithgow
Solicitors for the Respondent: T F Grundy & Co.
Counsel for the Respondent: Mr Shaw
Date of hearing: 26 & 27 June 1995
Date of judgment: 13 July 1995
C A T C H W O R D S
INDUSTRIAL LAW - TERMINATION OF EMPLOYMENT - JURISDICTION.
Industrial Relations Act 1988 ss.170 EA.
CASES:Building Workers’ Industrial Union of Australia and Others v Odco Pty Ltd (1991) ALR 735.
Humberstone v Northern Timber Mills (1949) 79 CLR 389.
Stevens & Gray v Brodribb Sawmilling Company Proprietary Limited (1986) 160 CLR 16.
Fowler & Automated Surveys Pty Ltd, decision of Judicial Registrar Boon, 26 May 1995.
Pitcher and Another v Langford and Another (1991) 23 NSWLR at page 142.
Re Porter; v Transport Workers’ Union (1989) 34 IR 179.
BRENDAN JOHN O’CONNOR -v- KELLY & ASSOCIATES
No. VI 1442 of 1995
Before: Judicial Registrar Fleming
Place: Melbourne
Date: 13 July 1995
INDUSTRIAL RELATIONS COURT
OF AUSTRALIA
VICTORIA DISTRICT REGISTRY
VI 1442 of 1995
B E T W E E N :
BRENDAN JOHN O’CONNOR
Applicant
AND
KELLY & ASSOCIATES
Respondent
MINUTES OF ORDERS
Judicial Registrar Fleming 13 July 1995
THE COURT ORDERS:
The application is dismissed.
NOTE: Settlement and entry of orders is dealt with by Order 36 of the Industrial Relations Court Rules.
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