BSA Ltd v Victorian Workcover Authority
[2018] VSCA 265
•23 October 2018
SUPREME COURT OF VICTORIA
COURT OF APPEAL
S APCI 2018 0030
| BSA LTD (ACN 088 412 748) | Applicant |
| v | |
| VICTORIAN WORKCOVER AUTHORITY | First Respondent |
| -and- | |
| TAL YORESH | Second Respondent |
| -and- | |
| CLOUDLESS VISION PTY LTD (ACN 110 660 252) | Third Respondent |
---
| JUDGES: | TATE, McLEISH and HARGRAVE JJA |
| WHERE HELD: | MELBOURNE |
| DATE OF HEARING: | 10 September 2018 |
| DATE OF JUDGMENT: | 23 October 2018 |
| MEDIUM NEUTRAL CITATION: | [2018] VSCA 265 |
| JUDGMENT APPEALED FROM: | [2018] VSC 46 (McDonald J) |
---
ACCIDENT COMPENSATION – Contractor providing services to principal – Individual sole employee of contractor – Contractor engaged solely by principal – Contract provisions detailed and highly prescriptive – Whether principal deemed employer of individual deemed worker – Whether contractor carrying on ‘independent trade or business’ in provision of services to principal – Whether contractor subject to control or subordination by principal – Whether contractor dependent on principal for existence in relevant period – Principal deemed to be employer of individual – Leave to appeal granted – Appeal dismissed – Workplace Injury Rehabilitation and Compensation Act 2013 s 4(3), sch 1 cl 9 – Humberstone v Northern Timber Mills (1949) 79 CLR 389 considered.
WORDS AND PHRASES – ‘carrying on an independent trade or business’.
---
| APPEARANCES: | Counsel | Solicitors |
| For the Applicant | Mr P M O’Grady QC with Mr L M Stanistreet | Aitken Partners |
| For the First Respondent | Mr M F Fleming QC with Ms A L Robertson | Maddocks Lawyers |
| For the Second Respondent | Mr A E Klotz | Lardners Solicitors |
| For the Third Respondent | No appearance |
TATE JA:
I have had the advantage of reading the reasons of McLeish JA, in draft form. I agree, for the reasons his Honour gives, that leave to appeal should be granted but the appeal dismissed.
McLEISH JA:
The Workplace Injury Rehabilitation and Compensation Act 2013 (‘the Act’) includes within the definition of ‘worker’ a person who is deemed to be a worker, including under cl 9 of sch 1 to the Act which is entitled ‘Contractors’. Clause 9 does not apply in respect of a contractual arrangement between a principal and a contractor if, in providing services to the principal, the contractor ‘is carrying on an independent trade or business’. This expression has not previously been considered by this Court.
The applicant (‘BSA’) provides installation, servicing and upgrading services to telecommunications providers. At the relevant time, it held a contract with Foxtel for the installation and maintenance of satellite television equipment in Victoria. The third respondent (‘Cloudless Vision’) is a corporation of which the second respondent (‘Mr Yoresh’) was the sole employee, relevantly until 18 May 2015. At the relevant time, Cloudless Vision and BSA were parties to a contract for Cloudless Vision to install and upgrade satellite television equipment for Foxtel customers.
In circumstances explained more fully below, the first respondent, the Victorian WorkCover Authority (‘the Authority’) determined that Mr Yoresh was a deemed worker, in respect of whom BSA was the employer. In particular, the Authority determined that, in providing services to BSA, Cloudless Vision was not carrying on an independent trade or business. BSA was unsuccessful in an appeal to a judge in the Trial Division in respect of that decision and now seeks leave to appeal to this Court. For the reasons that follow, leave should be granted but the appeal must be dismissed.
Legislative provisions
The Act provides, among other things, for the payment of compensation to workers in relation to injuries or death arising out of accidents and diseases in the workplace. For that purpose, it provides for WorkCover premiums to be calculated and paid by employers. The definition of ‘rateable remuneration’ contained in cl 24 of sch 1 to the Act takes account of remuneration paid or payable by an employer in respect of services performed or rendered by a worker.
Section 3 defines ‘worker’ in the following terms:
worker means an individual—
(a) who—
(i) performs work for an employer; or
(ii) agrees with an employer to perform work—
at the employer’s direction, instruction or request, whether under a contract of employment (whether express, implied, oral or in writing) or otherwise; or
(b) who is deemed to be a worker under this Act;
The term ‘employer’ is relevantly defined as follows:
employer includes—
(a) a person—
(i) for whom a worker works; or
(ii) with whom a worker agrees to perform work—
at the person’s direction, instruction or request, whether under a contract of employment (whether express, implied, oral or in writing) or otherwise; and
(b) a person who is deemed to be an employer under this Act; …
It is convenient to refer to paragraph (a) of these definitions as the primary definitions of ‘worker’ and ‘employer’.
Section 4(3) states that pt 1 of sch 1 provides that certain persons are deemed to be workers or employers for the purposes of the Act. Clause 9 of that schedule relevantly provides as follows:
Contractors
(1) This clause applies if—
(a)an entity (the principal), in the course of, and for the purposes of, a trade or business carried on by the entity, enters into a contractual arrangement with another entity (the contractor) for the provision by the contractor of services (not being transport services within the meaning of clause 8) to the principal for reward in respect of a relevant period; and
(b)the provision of the services by the contractor under the contractual arrangement is not ancillary to the provision of materials or equipment by the contractor to the principal under the contractual arrangement; and
(c)at least 80 per cent of those services are, or are to be, pursuant to the contractual arrangement, provided by the same individual (the individual) being—
(i) the contractor; or
(ii)if the contractor is a partnership, an individual member of the partnership; or
(iii)if the contractor is a body corporate—a member, director, shareholder or employee of the body corporate; or
(iv)if the contractor is the trustee of a trust—a person who may benefit under that trust or is an employee of the trustee; and
(d)the gross income of the contractor that is, or is to be, derived from the provision of the services pursuant to the contractual arrangement is, or is to be, at least 80 per cent of the total gross income of the contractor earned from services of the same class provided by or on behalf of the contractor in the relevant period.
(2)This clause does not apply in respect of a contractual arrangement if the Authority determines that, in providing services to the principal, the contractor is carrying on an independent trade or business.
…
(5) If subclause (1) applies—
(a)the individual is deemed to be a worker in respect of the relevant period; and
(b)the principal is deemed to be the employer of the individual in respect of the relevant period; and
(c)the total amount paid or payable by the principal to the contractor under the contractual arrangement, less—
(i) the applicable prescribed percentage (if any); or
(ii)if there is no applicable prescribed percentage, the part of that total amount not attributable to the provision of labour—
is deemed to be remuneration.
…
By cl 11, if an individual referred to in cl 9(1)(c)(iii) or (iv) is deemed by cl 9(5) to be a worker employed by the principal and makes a claim for compensation in relation to an injury arising out of, or in the course of, being so employed, the claim must be made against the principal within the meaning of cl 9. That meant, in the circumstances of the present case, that the claim made by Mr Yoresh, mentioned below, had to be made against BSA rather than Cloudless Vision if BSA were the deemed employer.
Background to the proceeding
Mr Yoresh was injured on 22 December 2014 while performing work for Cloudless Vision in respect of its contract with BSA for the installation and upgrading of equipment for Foxtel customers. Allianz Australia Workers Compensation (Vic) Ltd on behalf of the Authority accepted liability in respect of a claim made by Mr Yoresh on the basis that Mr Yoresh was a deemed worker in respect of whom BSA was the employer. BSA objected under s 79 of the Act in respect of the decision to accept the claim. On 13 July 2015, the Authority confirmed the decision under review, pursuant to s 84 of the Act.
Section 85 of the Act provides for a ‘claimed employer’ who is not satisfied with a decision made under s 84 to appeal against that decision to the Supreme Court. On the hearing of such an appeal, the Court may make any order that it thinks fit and by order confirm, reduce or vary the decision of the Authority under s 84.[1]
[1]See s 87.
An order was made in the present proceeding for the trial of a separate question pursuant to r 47.04 of the Supreme Court (General Civil Procedure) Rules 2015 as to the nature of an appeal under s 85 of the Act. On 29 July 2016, Garde J gave judgment to the effect that the separate question raised for determination should be answered by stating that an appeal under s 85 is by way of hearing de novo.[2]
[2]BSA Ltd v Victorian WorkCover Authority [2016] VSC 435.
The appeal was duly heard by a judge in the Trial Division on 6 and 7 December 2017. In the circumstances, it will not be necessary to set out the basis upon which the Authority made its decision under s 84 confirming the decision under review.
Factual background
The factual background to the case is largely not in dispute. Mr Yoresh was a director and the sole employee of Cloudless Vision at the time of the accident. In 2007, he completed a two-day cabling course at Swinburne University of Technology and undertook four weeks of on the job training with an existing BSA contractor.
On 28 August 2007, Cloudless Vision entered its first contract with BSA for the installation and maintenance of satellite television equipment on the Foxtel platform. In 2011, Mr Yoresh travelled to Israel where he remained for approximately one year. Upon his return to Australia in 2012, he approached BSA about resuming satellite installation work. On 12 June 2012, Cloudless Vision entered into a second contract with BSA for the installation and upgrading of satellite television equipment for Foxtel customers. A third contract was executed on 18 May 2015.
The business conducted by Cloudless Vision under the second contract (entered into in 2012) is the relevant business for the purposes of this proceeding, given that this was the contract in force at the time of the accident. In that regard, the judge held that the ‘relevant period’ for the purposes of cl 9 of the schedule was the financial year ending 30 June 2015.[3] The Court held that, when considering the potential application of cl 9(2), the Court would look to whether, in providing services to BSA under the contract entered into in 2012 between 1 July 2014 and 18 May 2015 (when that contract came to an end), Cloudless Vision was carrying on an independent trade or business. The identification of the ‘relevant period’ is not in issue in the present appeal.
[3]BSA Ltd v Victorian WorkCover Authority [2018] VSC 46 [29] (‘Reasons’).
BSA required all of its contractors to be incorporated. Between 2007 and 2011, Mr Yoresh, as an employee of Cloudless Vision, worked solely for BSA. Cloudless Vision did not provide services to any other company.
There was no negotiation between Mr Yoresh and BSA regarding the terms of the 2012 contract. It was presented to him by BSA on a ‘take it or leave it’ basis.[4] During the relevant period, Mr Yoresh remained the only employee of Cloudless Vision and it provided services only to BSA.
[4]Ibid [13].
For standard jobs, Cloudless Vision was paid for each job completed at a fixed rate set by BSA. For non-standard jobs, Mr Yoresh would provide BSA with a quote based on an hourly rate which BSA would pass on to the customer. If the job took less time than was quoted, Cloudless Vision was still paid the quoted amount. Mr Yoresh would undertake between 15 and 20 non-standard jobs each year.
Invoices in respect of the services that Cloudless Vision provided to BSA were generated by BSA’s computer system after Mr Yoresh closed off a job by entering a job code through BSA’s website. BSA paid Cloudless Vision on a fortnightly basis. It would deduct amounts for any materials which Cloudless Vision had purchased from BSA. Cloudless Vision had no financial dealings with Foxtel customers.
Under the contract, Cloudless Vision submitted details of its availability to undertake work three months in advance. It was not required to submit any availability at all if it chose not to. This meant that Cloudless Vision was free to choose in advance the dates upon which it would perform work. BSA allowed contractors to alter their submitted availability up to about one month in advance. Some adjustments could be made after that, as long as enough notice was given (usually about 10 days).
If Cloudless Vision specified that it was free for an entire day, it was expected to take the jobs assigned to it for that day, although changes could be negotiated with a BSA manager if Cloudless Vision wanted more or less work. BSA did not guarantee Cloudless Vision any work.
If a job was allocated to Cloudless Vision, it was expected to do the job. It was not open to Mr Yoresh to say on behalf of Cloudless Vision that he did not want to do a job that had been allocated.
If Cloudless Vision submitted availability during any month, it would also have to submit availability for at least one weekend day every second weekend during that month. Apart from that, Cloudless Vision controlled how much work it wanted from BSA and when its services would be available to BSA on the terms in the contract.
Foxtel advised BSA of the services it required about two days in advance. BSA then advised Cloudless Vision on a daily basis what jobs it had allocated to Cloudless Vision for the following day. Mr Yoresh would log onto an online portal to see the workload for the next day on the night before. This allocation was required to be viewed at some point after 6:00 pm. Cloudless Vision was encouraged to check the following morning for any changes to the allocation. Jobs were allocated to particular time slots. The contract provided for a fine if a job was not performed at the allocated time. On average, Mr Yoresh would be allocated five or six jobs each day.
The majority of the work undertaken by Mr Yoresh was not subject to direct supervision by BSA. Contractual provisions stipulated what was required of Cloudless Vision. BSA conducted quality assurance checks and would randomly audit the jobs completed by technicians to ensure that they met service standards. It also conducted workplace health and safety audits. These checks and audits occurred at least once per month and could take place whether or not Mr Yoresh was on site. If a service standard was not met, Cloudless Vision could be penalised and was required to fix the issue at its own expense.
Cloudless Vision was required to provide its own means of transport. The vehicle Mr Yoresh used had no branding on it. He wore a grey T-shirt with a prominent Foxtel logo and a 6–7 centimetre wide and 3 centimetre high BSA badge on the sleeve. When attending customers’ residences, Mr Yoresh introduced himself as being from Foxtel. He never made any mention of Cloudless Vision.
Cloudless Vision was registered for GST from 1 July 2006. It held an ABN and collected and remitted GST on payments it received in respect of the services provided to BSA. It lodged quarterly BAS statements in respect of its sales and remitted PAYG tax to the Australian Taxation Office in respect of payments to its employees (relevantly, to Mr Yoresh).
Cloudless Vision invested in equipment necessary to perform the services for BSA. This included vehicles, satellite meters, ladders, drills and other hand tools. Cloudless Vision owned three vehicles which it used in providing the services to BSA. In a given fortnight, Cloudless Vision would purchase materials valued at between $1,000–$4,000 from BSA and others, depending on its needs at that particular time. Cloudless Vision maintained insurance for property and public liability. It also had a WorkCover insurance policy.
Cloudless Vision was able to sub-contract its work from BSA to other contractors. It did this during the term of its third contract by sub-contracting some work to Ready Set Connect Pty Ltd (‘RSC’). In respect of that work, Cloudless Vision provided RSC with all equipment, materials and insurances and made a profit of 35 per cent from the services component of each work order.
There were four companies who operated in the same market as BSA during the period in question. Those companies had contracted with Foxtel to provide satellite installation services. Each of them did so through incorporated contractors. When BSA’s contract for the provision of services to Foxtel ceased in October 2016, Cloudless Vision entered into a contract with one of those other companies contracted to Foxtel.
Mr Yoresh was qualified to undertake cabling services. The potential market for those services was comprised of companies other than Foxtel. He did not undertake cabling work for anybody other than BSA because he was already committed three months in advance by reason of the scheduling arrangements in place with BSA.
Mr Yoresh never advertised Cloudless Vision as a provider of satellite installation or other services.
Relevant provisions of the contract
The contract defined Cloudless Vision as the ‘Contracting Company’. It recited that Cloudless Vision was an independent contracting company and that BSA had agreed to engage it on that basis. Clause 2.2 provided that Cloudless Vision was to provide the services under the contract to BSA ‘as an independent contracting company’ and ‘in the manner, frequency, quantity and times provided by this Agreement, the Scope of Works’ and the Foxtel domestic installation manual. Under cl 2.5(d), Cloudless Vision warranted that it was ‘an independent contracting company’.
Clause 3 of the contract dealt with personnel. It provided that Cloudless Vision was not to use, in the provision of the services, any personnel whom BSA had notified Cloudless Vision were not acceptable to BSA, acting reasonably and having regard to the services to be performed in the interests of customers, Foxtel and BSA. Clause 3.8 provided that personnel may be deemed objectionable, unacceptable or unsatisfactory to BSA, including if such personnel made a derogatory comment or harmful or threatening statement to the detriment of a customer, Foxtel or BSA employee, or induced a third party to do so. Under cl 3.10, Cloudless Vision was required to keep detailed records of all personnel. Those records were required to be made available to BSA in accordance with cl 3.5 or otherwise on request of BSA. The records had to include the name, contact number, BSA and Foxtel identification numbers, certificates of insurance, police background checks, individual accreditations and other training records in respect of each person. Such details were required to be provided in writing to BSA at least 14 business days before the person commenced work or within seven business days of being changed.
Clause 4.1 provided as follows:
The Contracting Company acknowledges and agrees with BSA that in providing the Services to BSA it is doing so as an independent contracting company and that neither this Agreement nor the provision of the Services shall create any relationship of employer and employee or partnership between BSA and the Contracting Company or BSA and any Personnel.
Under cl 5.1, Cloudless Vision agreed to comply with the requirements in the schedules to the contract and the work orders accepted by it from time to time in performance of the services. Clause 5.5 required Cloudless Vision to maintain a personal computer with internet access and mobile phone with voicemail facility at its cost. It was also required to purchase an approved personal digital assistant handheld field device or mobility device for each of its personnel, compatible with BSA software, in order to carry out the services. Under cl 5.7, Cloudless Vision was required to provide and maintain its own vehicles and all necessary tools to perform the services.
Clause 6.1 required Cloudless Vision to achieve the service levels set out in sch 4, referred to below.
Under cl 7.2, Cloudless Vision authorised BSA to produce a recipient created tax invoice for each job on its behalf.
Clause 8 dealt with work orders. Under cl 8.1, Cloudless Vision agreed to undertake the services to complete work orders issued during its availability periods as nominated in accordance with the clause. Cloudless Vision was required to carry out and complete the services set out in the work order to the satisfaction of BSA. Clause 8.4 provided for Cloudless Vision to notify BSA at least three months before the beginning of each month of the times that it would have personnel available to perform the services. Cloudless Vision acknowledged and agreed that ‘the services were to be provided on agreed weekends and certain agreed public holidays’. Cloudless Vision agreed that the contractor availability period may include ‘up to 2 Saturdays and up to 2 Sundays’ in each month as nominated by it ‘under consultation with BSA’, as well as public holidays as negotiated and agreed. Clause 8.4 further provided that the parties agreed that Cloudless Vision would be available to provide ‘other services to other companies under other contractor services agreements’.
Under cl 14.4, the contract could be terminated by BSA or Cloudless Vision at any time by giving seven business days’ written notice to the other party.
Clause 23 dealt with the ability of Cloudless Vision to contract with other parties. It is necessary to set it out in full:
23.1The Contracting Company warrants that as at the Commencement Date it does not, directly or indirectly, have any contract or relationship with FOXTEL or any competitor of BSA without prior written consent.
23.2The Contracting Company agrees and acknowledges that during the Term the Contracting Company shall not, directly or through any interposed entity, provide to FOXTEL, or related body corporate of FOXTEL, services that in the reasonable opinion of BSA are similar to the Services without first seeking the prior agreement of BSA which shall not be unreasonably withheld.
23.3Subject to Clause 23.2 above, the Contracting Company may provide services similar to the Services to any entity provided that the Contracting Company must continue to provide the Services in accordance with this Agreement including in a timely and professional manner in accordance with the schedules and attachments to this Agreement and must comply with obligations in relation to Confidential Information.
23.4The Contracting Company must not display, use or distribute any printed material or any BSA or FOXTEL branded matter, clothing or signage when carrying out work for other persons. The Contracting Company must not display, use or distribute any printed material, clothing, signage or other matter bearing the brands or trademarks of other telecommunications carriers or competitors of FOXTEL or BSA when performing the Services.
23.5Subject to Clauses 23.2, 23.3 and 23.4, the contractual relationship between the parties to this Agreement shall not be exclusive as between them and either Party shall be at liberty to contract with and carry out works for and with other persons or corporations in competition with the other Party.
Schedule 4 to the contract provided for service levels. Among other things, it specified service level targets and ‘remedial deductions’ for failure to meet those targets. For example, there was to be a deduction of $65 for each work order not attended to in the allocated timeslot.
Schedule 5 contained detailed ‘operational procedures’ extending over more than 40 pages. For example, cl 6 provided for work order allocation, in the following terms:
(a)The Contracting Company must access Work Orders from the BSA Web Page. This can be done only the night prior to the scheduled date. The work details are available each evening from 6.00pm onwards.
CONTRACTING COMPANIES MUST NOT DOWNLOAD THEIR WORK ORDERS PRIOR TO THIS TIME.
(b)It is recommended that the BSA Web Page is re-checked again in the morning of the scheduled date for any changes that may have occurred overnight. The Contracting Company is to accept changes within reason. Any disputes are to be escalated to BSA.
(c)All Contracting Companies are required to be online to operate with BSA.
If a Contracting Company has any concerns regarding the Work Orders received then it should immediately contact either the BSA Call Centre or State Manager.
Clause 8 of sch 5 provided that Cloudless Vision was required to call all customers the night before an appointment, prior to 9:00 pm. Cloudless Vision was instructed not to give a specific time at which Mr Yoresh would arrive. Instead, Cloudless Vision personnel having closed their current job were required to call the next customer and provide an estimated arrival timeframe inside one hour. If the customer was not then in attendance, Cloudless Vision was required to call the next customer and inform them that it was en route. Clause 8 provided that Cloudless Vision ‘must always try all customer contact numbers and should avoid leaving voicemail or message bank messages’. If a customer requested a change to their appointment time, Cloudless Vision was required to contact the BSA call centre. No calls were to be made to any customer unless specifically requested by that customer before 7:00 am or after 9:00 pm.
Among other relevant provisions, cl 9 provided that BSA expected all installers to be on site for their first morning appointment by no later than 7:30 am. Clause 9 also provided that failure to inform BSA of late appointments in accordance with the procedures would result in remedial deductions as outlined in sch 4.
Clause 10 of sch 5 provided for matters Cloudless Vision was required to confirm upon attending a customer’s premises.
Clause 12 referred to the fact that Foxtel had identified preferred materials, tools and test equipment to be used by Cloudless Vision in carrying out all field work. BSA’s prior consent was required to substitute these materials.
Clause 19 of sch 5 provided for procedures to be followed upon successful completion of a work order. Cloudless Vision was required to complete the work order form with details including the customer’s details, the job detail description, various numbers and serial numbers and technical details. It was provided that, when the appointment had been completed, Cloudless Vision was required to remain at the customer’s premises to ensure that the work order closed and that the service had been activated. Cloudless Vision was required to provide the customer with marketing material as required.
Clause 23 of sch 5 provided that recruitment and selection of personnel was the responsibility of Cloudless Vision.
Primary judge’s reasons
As already mentioned, the judge decided that the ‘relevant period’ for the purpose of applying cl 9(2) in the present case was the financial year 1 July 2014 to 30 June 2015.[5] At the same time, he held that the question which the Court would be determining was whether, in providing services to BSA under the contract entered into in 2012 between 1 July 2014 and 18 May 2015, Cloudless Vision was carrying on an independent trade or business. Although the period after that date related to a different contractual arrangement, the judge held that the manner in which Cloudless Vision carried on business between 18 May 2015 and October 2016 might be relevant to the question whether it was carrying on an independent business before 18 May 2015.[6] The fact that Cloudless Vision had the capacity to enter into a contract with another contractor to undertake work for BSA, as it did with RSC on or about 20 May 2015, was relevant to whether Cloudless Vision was carrying on an independent trade or business prior to that contract being entered into.[7]
[5]Reasons [29].
[6]Ibid [31].
[7]Ibid.
The judge noted that there was no issue in respect of the application of cl 9(1) of sch 1 to the Act because BSA accepted that the criteria in paras (a), (b), (c)(iii) and (d) were all satisfied.[8] Mr Yoresh was thus a deemed worker, in respect of whom BSA was the deemed employer, unless Cloudless Vision carried on an independent trade or business.
[8]Ibid [32].
The judge observed that the phrase ‘independent trade or business’ is not defined in the Act. He held that the meaning of the expression involved a question of statutory construction. The judge held that neither the context nor the purpose of cl 9 provided a justification for departing from the ordinary and natural meaning of the phrase ‘independent trade or business’.[9] He held that the statutory purpose of cl 9 was to extend the obligation to pay WorkCover premiums to a principal who enters into a contractual arrangement with a contractor in circumstances satisfying cl 9(1). Clause 9(2) constitutes an exception to the deeming provision.
[9]Ibid [34].
The judge set out dictionary definitions of the word ‘independent’ and found that the following definitions were of particular relevance: ‘not in a position of subordination or subjection’, ‘not subjected to external control or rule’ and ‘not dependent on something else for its existence’.[10]
[10]Ibid [37].
The judge held that, applying the ordinary meaning of ‘independent’ in the phrase ‘independent trade or business’, in providing services to BSA, Cloudless Vision was not carrying on an independent business of satellite installation. He explained the significant factual considerations underlying that finding as follows:
Throughout the 2015 financial year when providing satellite installation services to BSA under the terms of the 2012 contract, [Cloudless Vision] was totally dependent upon BSA. BSA was [Cloudless Vision’s] sole source of income during this period. [Cloudless Vision] never advertised its services to other potential customers: Downer EDI, ISGM, Visionstream or Servicestream. It did not present to the world at large as having any independent existence from BSA. Foxtel customers who received the benefit of the satellite installations carried out by [Cloudless Vision] were oblivious to its existence. [Cloudless Vision’s] van had no signage. Mr Yoresh introduced himself to customers as being from Foxtel. He wore a Foxtel T-shirt with BSA insignia. [Cloudless Vision] was subject to significant external control by BSA.[11]
[11]Ibid [39].
The judge then set out relevant provisions of the contract. He observed that the provisions of the contract were extensive. He stated that they regulated ‘every conceivable aspect’ of the satellite installation business conducted by Cloudless Vision and that many of the provisions were expressed in mandatory terms.[12] He stated that the ‘highly prescriptive nature’ of the contract weighed heavily against a finding that Cloudless Vision was conducting an independent trade or business.[13]
[12]Ibid [40].
[13]Ibid.
In particular, the judge described the procedures set out in sch 5 of the contract as regulating ‘every aspect’ of the work to be undertaken by Cloudless Vision, the obligations upon Cloudless Vision to communicate with BSA, inventory management, recruitment and selection and complaints procedures.[14]
[14]Ibid [45].
The judge gave close attention to cl 23 of the contract. While cl 23.5 provided that the parties were at liberty to contract with and carry out works for other persons in competition with the other party, this provision was subject to cls 23.2, 23.3 and 23.4. The judge described that proviso as being significant.[15] He held that the effect of cl 23.2 was that, without the agreement of BSA, Cloudless Vision was precluded from providing any services to Foxtel via the other four companies which provided those services. He held further that the effect of cl 23.3 was to preclude Cloudless Vision from providing any services to any entity other than BSA which would impact upon compliance by Cloudless Vision with the three-month availability period. Further, the judge held that the practical effect of cl 23.4 was to prevent Cloudless Vision from undertaking work for other companies who provided services to Foxtel, on the basis that it could be inferred that such companies would require contractors engaged by them to wear Foxtel branded clothing, which cl 23.4 prohibited.[16]
[15]Ibid [49].
[16]Ibid [48]–[53].
The judge went on to hold that, in addition to these contractual provisions, the practical position was that it was ‘simply impossible for Mr Yoresh to undertake work for anyone other than BSA during the period the 2012 contract was in operation’.[17] He held that the relationship between Cloudless Vision and BSA was in truth exclusive and that there was no practical capacity for Cloudless Vision to undertake satellite installation services for a competitor of BSA while the contract remained operative. The judge continued:
Apart from the contractor availability period of three months, there was the practical consideration that Mr Yoresh was advised of the work allocated to him at 6.00 pm on the previous day. Having been allocated work he was fully occupied. He worked an average of 7.5 to 8 hours each day. The injury claim form which he completed on 6 January 2015 states that Mr Yoresh’s ordinary hours of work were 7.30 am to 16.30 pm five days per week. The injury claim form also states that Mr Yoresh worked 45.5 hours per week. These work practices left no capacity for Mr Yoresh to undertake work for any other party.[18]
[17]Ibid [54].
[18]Ibid.
The judge accepted that the majority of the work undertaken by Mr Yoresh was not subject to direct supervision by BSA. He accepted that there were matters which supported a finding that Cloudless Vision was carrying on an independent business. Those matters were the requirement for Cloudless Vision to invest in significant capital assets, the requirement that it have stock on hand, some of which it could source independently of BSA, the fact that the provision of its services was largely unsupervised and the fact that it could earn additional income by engaging other contractors to do work for BSA, as it had with RSC. The judge held that it was nonetheless clear from the contract that Cloudless Vision was subject to significant levels of control and direction by BSA. The judge explained:
However, the existence of the right to engage other personnel, when weighed against the many other considerations consistent with dependence by CV upon the business of BSA, does not support a finding that CV was conducting an independent business. Further, it is significant that had CV sought to engage personnel whilst the 2012 contract was operative, BSA retained a right of veto over who could be engaged. The existence of this right is inconsistent with CV carrying on an independent business under the terms of the 2012 contract. An unfettered right to hire and fire is a hallmark of an independent business.[19]
[19]Ibid [58].
Finally, the judge considered that the facts of the case were similar to those in Humberstone v Northern Timber Mills.[20] In that case, Dixon J concluded that Mr Humberstone was an independent contractor rather than an employee. He would have held him to be a deemed employee if the relevant deeming provision had applied to contracts already on foot when it was enacted. In the course of his reasons, Dixon J identified as relevant to the scope of the deeming provision whether the worker was conducting an ‘independent trade or business’.[21] In that context, Dixon J held that Mr Humberstone did not conduct such a business, placing weight upon the fact that he worked almost exclusively for one company and did not hold himself out as being available to provide services to anyone else. The judge in the present case held that these considerations applied equally here.
[20](1949) 79 CLR 389 (‘Humberstone’).
[21]Ibid 401.
The judge stated further that the failure of Cloudless Vision to advertise its services to the world at large, notwithstanding that there were only four companies who provided satellite installation services to Foxtel, and the failure of Cloudless Vision to make any approach to these companies, supported a finding that Cloudless Vision was not conducting a business independent of BSA. The judge reiterated that the ‘practical effect of the three month contractor availability period, combined with notice of work only being given at 6:00 pm on the previous evening, was to require exclusivity as between’ Cloudless Vision and BSA.[22]
[22]Reasons [67].
The judge noted in conclusion that the capital investment in vehicles and other equipment made by Cloudless Vision supported a finding that it was conducting a satellite installation business. However, the judge held that this investment did not, of itself or in combination with other evidence, support a finding that in providing services to BSA, it was carrying on an independent trade or business.
Application for leave to appeal
BSA’s amended application for leave to appeal sets out three proposed grounds of appeal. In essence, they seek to challenge the primary judge’s conclusion that Cloudless Vision was not carrying on an independent trade or business within the meaning of cl 9(2) of sch 1 to the Act during the relevant period. It is convenient to turn directly to the submissions of the parties.
BSA submitted that the judge had erred by construing the phrase ‘independent trade or business’ by combining dictionary definitions of its component parts, without having proper regard to the context and purpose of cl 9(2). It was submitted that cl 9 was an anti-avoidance provision directed to avoiding artificial or contrived outcomes and that it was necessary to examine the whole landscape of relevant considerations in order to identify the substance of the relationship between the identified principal and contractor. It was submitted that the legislative history of cl 9 revealed that it was intended to ensure that relationships akin to employment were not used in order to avoid liability for insurance levies.
BSA initially submitted that cl 9(2) raised for consideration the range of factors considered by the courts in deciding in other contexts whether a person is an independent contractor or an employee.[23] As the submission developed, however, counsel placed emphasis on the fact that cl 9(2) concentrates on the relationship between the principal and the contractor, differentiating it from the employee/independent contractor inquiry.
[23]Humberstone (1949) 79 CLR 389, 404–5 (Dixon J); Hollis v Vabu Pty Ltd (2001) 207 CLR 21; On Call Interpreters and Translators Agency Pty Ltd v Federal Commissioner of Taxation [No 3] (2011) 214 FCR 82, 123 [208]–[209] (Bromberg J).
Here, BSA submitted, there was no suggestion that the arrangement between BSA and Cloudless Vision was directed at any artificial result. The contractual arrangements reflected obligations BSA owed to third parties, including Foxtel customers, under occupational health and safety laws and the need for BSA to ensure that Foxtel standards were applied in Cloudless Vision’s work.
It was submitted that the judge had impermissibly narrowed the scope of relevant factors. It was said that he had failed to take into account, or gave inadequate weight to, the arrangements for invoicing, payment and taxation treatment of payments, all of which reflected the reality of the situation in which Mr Yoresh was employed by Cloudless Vision. BSA relied on Tattsbet Ltd v Morrow,[24] in which an operator of a betting agency was found by the Full Court of the Federal Court to be an independent contractor rather than an employee. It was submitted that the Court’s treatment of taxation issues, in particular, was applicable to the present case.
[24](2015) 233 FCR 46 (Allsop CJ, Jessup and White JJ).
Moreover, BSA submitted, the ability of Mr Yoresh, through Cloudless Vision, to undertake other work or to be unavailable for BSA’s work, was genuine. Cloudless Vision had free choice, it was submitted, as to whether to work for BSA, when to do so and whether to seek out alternative work. In that context, Cloudless Vision supplied its own vehicles, tools and equipment and was responsible for the cost of consumables used in its installation work. It could also choose to sub-contract, as it subsequently did to RSC. These matters were said to be indicative of Cloudless Vision’s independence of BSA.
BSA submitted that the matters suggestive of ‘control’ by BSA of the operations of Cloudless Vision had to be considered in the context of the need to ensure compliance with Foxtel’s service and other obligations. The evidence showed that Mr Yoresh worked with a level of flexibility; he could take time off as needed and work shorter days if required. It was submitted that the judge had focussed on whether the relationship between BSA and Cloudless Vision was exclusive, and in that regard had wrongly treated cl 23 of the contract as going beyond the legitimate protection of BSA’s interests. Clause 23 did not have the effect that Cloudless Vision could only work for BSA; it was prevented only from working directly for Foxtel, or from using BSA or Foxtel insignia when working for another entity.
The Authority submitted that the judge had correctly approached the construction of cl 9(2) of sch 1 to the Act. It was submitted that cl 9 was designed to prevent artificial contracting arrangements and situations where the principal has significantly greater bargaining power and an ability to construct a formal contractual relationship beyond the reach of common law notions of employment. It was submitted that cl 9 was a beneficial or remedial provision, to be construed widely, and that the exception in cl 9(2) was to be construed correspondingly narrowly so as to apply only in limited and exceptional circumstances.
The Authority further submitted that cl 9 arose for consideration only after the question had already been answered in the negative whether the individual was an employee of the principal at common law. As such, the question asked under cl 9(2) could not be the same as the inquiry at common law, which required consideration whether the individual was an independent contractor.
In relation to the application of cl 9(2) to the facts of the present case, the Authority submitted that the judge had not failed to take account of any matter that he was obliged to consider. Most of the matters raised by BSA were said to go to the question whether Cloudless Vision was carrying on a business (which had not been in issue), rather than to whether that business was independent of BSA. In any event, it was said that the judge had taken the matters relied upon by BSA into account and reached the correct conclusion. In particular, Cloudless Vision did not present as independent to the world at large and was subject to a high degree of direction and control by BSA (including an effective right of veto over any employee or subcontractor), such that it was practically impossible for Mr Yoresh to work for anyone other than BSA.
Construction of cl 9(2)
Clause 9(2) must be construed starting and ending with its text, considering the provision in its context (including the other provisions of the legislation and the history of the legislation) and with its statutory purpose in mind.[25]
[25]Alcan (NT) Alumina Pty Ltd v Commissioner of Territory Revenue(2009) 239 CLR 27, 46–7 [47] (Hayne, Heydon, Crennan and Kiefel JJ); Thiess v Collector of Customs(2014) 250 CLR 664, 671 [22]; Project Blue Sky Inc v Australian Broadcasting Authority (1998) 194 CLR 355, 384 (McHugh, Gummow, Kirby and Hayne JJ); Commissioner of Taxation of the Commonwealth of Australia v Consolidated Media Holdings Ltd(2012) 250 CLR 503, 519.
The expression ‘independent trade or business’ is a phrase with an ordinary English meaning. It has resonance with expressions that have been used in determining in other contexts whether a person performing work for another does so as an employee under a contract of service or as an independent contractor under a contract for services. As the primary judge observed, Dixon J used the expression in Humberstone in the course of concluding that a deceased worker was not deemed to be an employee under the Workers’ Compensation Act 1928. Dixon J construed the relevant provision as extending workers’ compensation, relevantly to ‘men who work for the principal but have no independent business or trade’ of their own.[26] The judge recognised that the judgment of Dixon J therefore offered ‘useful guidance’.[27] But that is not to say that the expression in this particular context necessarily has the same meaning as Dixon J gave it. It is necessary to look at the expression in its particular context and bearing in mind the statutory purpose for which it is used.
[26]Humberstone (1949) 79 CLR 389, 401.
[27]Reasons [62].
There is little doubt about the meaning of the words ‘trade’ and ‘business’, at least in the present context. As far as ‘independent’ is concerned, the primary judge helpfully identified dictionary definitions that could intelligibly be applied. Given that the purpose of the definition is to decide whether a person should be deemed to be a worker employed by a particular entity (the principal), it is appropriate to apply a definition that addresses the nature of the relationship between the principal entity and the contractor with whom that individual is connected in one of the ways described in cl 9(1)(c). On that basis, and recognising always that it is necessary to apply the statutory language rather than any gloss, ‘independent’ in my opinion here refers to a contractor’s trade or business which is not subject to control or subordination by the principal and which does not depend on the principal for its existence in the relevant period. This corresponds to the approach of the primary judge.
In reaching that conclusion, I have not found other aspects of the context or purpose of cl 9(2) relied upon by the parties to be of particular assistance. I turn to explain why that is so.
Clause 9 is, as the parties both accepted, a deeming provision whose purpose is to bring within the scope of the statutory concepts of ‘worker’ and ‘employer’ persons who would not otherwise be so regarded under the primary definitions in the Act. The Act makes provision for a system for claims to be made by injured workers and compensation paid to them as part of a scheme under which employers are registered and pay premiums calculated by reference to the number of employees they have and their claims history. Both parties rightly accepted that cl 9’s purpose is to treat as workers and employers persons who are in a relationship akin to employment. In other words, cl 9 is directed to ensuring that employers cannot avoid their obligations under the Act by adopting arrangements by which a person working for them is not treated as a worker under the Act. In that regard, the explanatory memorandum for the Workplace Injury Rehabilitation and Compensation Bill 2013 said of cl 9(2):
There may be rare instances where the individual, and his or her contractor entity, ‘passes’ the objective clause 9(1) tests, but there are other factors that very strongly indicate that the individual is operating (through the contractor entity) a genuinely independent trade or business, and in such circumstances, it would be unfair or inappropriate for the individual to be treated as the deemed worker of the principal (deemed employer). The intention of clause 9(2) is to reserve to the Authority the power to determine, in such cases, that clause 9 will not apply to deem an employment relationship to exist between the parties.
The parties sought to draw different implications from the purpose of cl 9. BSA submitted that cl 9(2) applied where there was no anti-avoidance purpose revealed by the arrangements between the principal and the contractor. To that end, many of its submissions were directed to establishing a legitimate commercial or legal basis for the terms of the contract between BSA and Cloudless Vision and rebutting the notion that their relationship was akin to employment. The Authority submitted that cl 9(2) applied only in exceptional cases. It submitted that a multi-factorial approach was appropriate, but that the nature and significance of the relevant factors would only emerge from the decided cases over time.
Clause 9 must of course be read in its context. In particular, it has application by virtue of s 4(3) of the Act and the definitions in s 3 of ‘worker’ and ‘employer’, each of which contemplates the application of deeming provisions under the Act. Each of those definitions provides for a primary definition which draws upon concepts used in determining whether persons are in an employment relationship at common law, in particular the concepts of ‘direction’, ‘instruction’ and ‘contract of employment’. It is not necessary to examine further how those definitions operate, or to consider to what extent they replicate or depart from the common law tests. Clause 9(1), read with cl 9(5), then extends the two definitions by treating certain other individuals as workers and stipulates their deemed employer. Broadly speaking, these workers are individuals who, on their own account or on behalf of a closely-related contractor, perform at least 80 per cent of particular services for the provision of which a principal has contracted, where the contract with the principal also represents at least 80 per cent of the contractor’s gross income from services of the same class in the relevant period.
Against that background, by the time that cl 9(2) comes to be applied, the criteria in cl 9(1) have been met. Among other things, that means that the contractor and the principal have entered into a contractual arrangement for the provision by the contractor of services for reward. The twin 80 per cent thresholds are then applied so as to determine whether the clause applies, affording a relatively easily applied test. In that context, cl 9(2) operates as a mechanism to ensure that the application of that broad test does not bring within the clause arrangements where the contractor is in fact carrying on an independent trade or business.
In other words, cl 9(2) protects arrangements between independent trades or businesses from the operation of the anti-avoidance provision. As such, it is also part of that provision and can be seen as serving the anti-avoidance purpose of cl 9 as a whole. However, in my opinion that purpose does not assist in identifying the meaning of ‘independent trade or business’. The legislature adopted that expression as part of the overall test, rather than language addressing the existence of any anti-avoidance purpose. It would be wrong, therefore, to approach cl 9(2) on the basis that attention must focus upon whether or not a purpose of avoiding the Act can be discerned in the contractual arrangement.
Similarly, despite the expectation recorded in the explanatory memorandum that cases for the application of cl 9(2) will be rare, there is no warrant in the text or the purpose of the provision for importing any requirement of exceptional circumstances into the provision. Clause 9(2) uses no such language. It is expressed in clear and straightforward language which presents a single issue for decision, based on the facts of the case.
However, the anti-avoidance purpose, together with the language of cl 9(2) itself, does show that cl 9(1) applies unless the Authority makes a determination having the contrary effect. This in turn indicates that the onus under cl 9(2) lies on the person seeking to rely on the exempting operation of that provision.
The Authority also submitted that the meaning of cl 9(2) was affected by the consideration that the provision only falls to be applied if the primary definitions of ‘worker’ and ‘employer’ are not satisfied. So much may be accepted. But it is not clear what effect, if any, that may have on the meaning of ‘independent trade or business’. For example, in the case of a worker, it may be assumed that it has been decided that he or she does not perform work at the employer’s direction, instruction or request. But while that serves to raise the question whether cl 9 applies, it does not help to answer that question. At most, some of the factual circumstances bearing on the application of the primary definition may also be relevant to the application of the deeming provision.[28]
[28]The Authority’s submission appeared to be predicated on the assumption that the primary definitions incorporated the question whether the individual is an independent contractor at common law. As already noted, that assumption (which was not the subject of argument) does not need to be addressed in the present case. Even if the assumption were to be correct, for the reasons given the primary definitions would still not ultimately inform the meaning of cl 9(2).
It follows that the primary judge did not err in his construction of cl 9(2). It is then necessary to turn to the application of the provision to the facts of this case.
Application of cl 9(2)
For the reasons just given, it is not illuminating when applying cl 9(2) to inquire whether aspects of a contractual arrangement are explicable by legitimate commercial or legal concerns rather than a desire to avoid the operation of the Act. The inquiry is instead into the independence of the trade or business. It is therefore not to the point that the prescriptive measures contained in the contract are explicable according to the commercial requirements of Foxtel or the legal obligations imposed upon BSA under occupational health and safety or other legislation. At best, such considerations might serve to inform why Cloudless Vision is subject to a measure of control by BSA, but not whether that amounts to a loss of its independence.
It is also not pertinent in the present case to concentrate upon the features showing that Mr Yoresh was in fact employed by Cloudless Vision, or that Cloudless Vision operated a business paying GST and deducting amounts in respect of payments made to Mr Yoresh, or that Cloudless Vision owned vehicles, tools and other equipment. Those matters go to the question whether Cloudless Vision carried on a business and the question of Mr Yoresh’s employment by that business. None of those matters bore on whether such a business was independent of BSA. Moreover, because there was no question that Cloudless Vision operated a business, cases such as Tattsbet v Morrow in which the issue is whether an individual is an employee or an independent contractor operating a business in their own name are of little if any assistance in this regard. The case is closer to Humberstone, where it was held that Mr Humberstone was an independent contractor, but the deeming provision in the statute raised the question, on the approach of Dixon J, whether he had an ‘independent business or trade’.
The critical question is whether, given the degree of control and exclusivity for which the contract provided and the manner in which Cloudless Vision conducted its business, Cloudless Vision carried on a trade or business independently of BSA. That involves asking whether Cloudless Vision’s trade or business was subject to control or subordination by BSA and whether the trade or business depended on BSA for its existence. The answers to both questions will serve to inform an answer to the statutory question. The issue is to be addressed by reference to the relevant period, not by reference to Cloudless Vision’s conduct or its potential business over some different period. In the present case, Cloudless Vision conducted its business wholly with BSA during the relevant period. It is not decisive that it could have chosen, exercising its freedom of contract, not to do so. If by doing so it surrendered its independence for the relevant period, then it was not carrying on an independent trade or business for that period.
It is convenient to deal firstly with the judge’s conclusion that the relationship between BSA and Cloudless Vision was in truth ‘exclusive’.[29] This conclusion rested on cl 23 of the contract and the practical considerations flowing from the requirement that Cloudless Vision notify BSA of its availability three months in advance and do work allocated at 6:00 pm the previous day. Those practical considerations, of themselves, would not suffice to show an exclusive relationship. Subject to cl 23, Cloudless Vision could simply not make itself available for months at a time while it worked for other parties. That possibility would be suggestive of independence rather than exclusivity.
[29]Reasons [54].
The finding of exclusivity must confront the fact that cl 23.5 of the contract provided that, subject to cls 23.2, 23.3 and 23.4, the contractual relationship between the parties was not exclusive and each of them was at liberty to contract with and carry out work for and with other entities in competition with the other party. As the judge recognised, this means that a great deal turns on the operation of those sub-clauses of cl 23.
Clause 23.2 prohibited Cloudless Vision from ‘directly or through any interposed entity’ providing Foxtel with services similar to those under the contract, without the prior agreement of BSA which was not to be unreasonably withheld. BSA submitted that the reference to an interposed entity did not mean that Cloudless Vision could not work for a competitor of BSA. Rather, cl 23.2 meant that Cloudless Vision could not work for Foxtel either directly or by means of an interposed entity such as a subsidiary corporation. That would mean that cl 23.2 is a relatively confined exception to the non-exclusivity provision in cl 23.5.
A possible difficulty with this construction is that, in reading down the expression ‘interposed entity’, BSA would have it that Cloudless Vision could contract with a BSA competitor without seeking BSA’s prior agreement. Yet cl 23.1 contained a warranty by Cloudless Vision that it had no contract or relationship with any competitor of BSA at the commencement date without BSA’s prior written consent. It might be thought surprising, in that context, if the parties permitted such a contract or relationship to be freely established immediately after the commencement date. The literal terms of cl 23.2 rather suggest the contrary.
However, on balance the construction advanced by BSA should be accepted. In my opinion, if Cloudless Vision were to provide services to one of BSA’s competitors in the market for providing Foxtel services, Cloudless Vision would not be providing services to Foxtel, either directly or ‘through’ an interposed entity. It would be providing services to that competitor. In the same way, Cloudless Vision was not providing services to Foxtel when it performed work under the contract with BSA. So, when cl 23.2 prohibited Cloudless Vision from providing services to Foxtel ‘through any interposed entity’, it was not addressing the provision of services to competitors of BSA. The fact that cl 23.1 directly addresses relationships with a ‘competitor of BSA’, and cl 23.2 does not use the same language, supports this conclusion.
I have therefore concluded that cl 23.2 did not prevent Cloudless Vision from providing services to the competitors of BSA without BSA’s prior agreement. It required BSA’s agreement instead to any arrangement whereby Cloudless Vision provided services to Foxtel either directly or through an interposed entity through which Cloudless Vision conducted its business.
Clause 23.3 did not effectively restrict the non-exclusivity clause either. Its effect was that the provision of services to other entities must not prevent Cloudless Vision from complying with its obligations to BSA. Of course, if Cloudless Vision fully committed to BSA three months ahead of time, it would not have other capacity. But that would not be the result of any contractual exclusivity. It would be a consequence of Cloudless Vision choosing, within the framework of a non-exclusive arrangement, to work solely for BSA.
Again, cl 23.4 envisaged that Cloudless Vision may work for other persons. The restriction on displaying BSA or Foxtel branding or using their printed material is to be read as applying when working for competitors of BSA and for competitors of Foxtel respectively. In other words, if Cloudless Vision were to be working for a competitor of BSA , it could not use BSA branding or materials, but if that competitor was itself engaged by Foxtel, cl 23.4 would not prevent Cloudless Vision from using Foxtel branding or materials. Conversely, cl 23.4 prohibited Cloudless Vision from displaying branding or using materials of competitors of Foxtel or BSA when performing services under the contract.
I therefore reach a different conclusion to the judge as to the operation of cl 23. This conclusion is reinforced by cl 8.4 of the contract which, among other things, provided that Cloudless Vision ‘will be available to provide other services to other companies under other contractor services agreements’ and that the parties entered into the contract on that basis.
While in my view the contract did not mandate an exclusive relationship, that does not detract from the fact that, during the relevant period Cloudless Vision worked exclusively for BSA (either itself or through sub-contracting with RSC). In that way, Cloudless Vision did depend on BSA for its business. In this respect, the case is like Humberstone, in which Mr Humberstone’s work had been substantially confined, perhaps for 25 years, to working for one company and he had not held himself out as available to others.[30] Even though Cloudless Vision could have refused work from BSA and worked for others, it did not do so and did not seek to do so. These considerations point towards a surrender of independence in the carrying on of the business during the relevant period.
[30]Humberstone (1940) 79 CLR 389, 400 (Dixon J).
It is then necessary to consider the question of control by BSA of Cloudless Vision’s business. Sufficient indications of control by BSA over the manner in which Cloudless Vision carried on its business would serve to show that Cloudless Vision was not independent of BSA during the relevant period. That question must here be answered against the factual background that, during the relevant period, Cloudless Vision worked solely for BSA. Its ‘business’ for the purposes of cl 9(2) is to be understood accordingly.
Here, in my opinion, the features showing that BSA exerted control over Cloudless Vision’s business are very considerable. First, and most significantly, Cloudless Vision could not employ personnel, or sub-contract to another entity, without the approval of BSA (albeit not to be unreasonably withheld). It was required to keep BSA advised of extensive details about the persons it employed, including police background checks and training records. Those persons were not permitted to make derogatory comments about BSA or to denigrate BSA in any way. Secondly, having committed to working for BSA, Cloudless Vision was required to attend upon customers at times stipulated by BSA. Fines were prescribed for failing to do so. Thirdly, Cloudless Vision was required to deal with customers in ways closely prescribed by the contract, including by contacting them at certain times before attending upon them and performing the work in accordance with stipulated requirements. Fourthly, Cloudless Vision was required to use specified materials, including some that were required to be supplied by BSA. Fifthly, Cloudless Vision did not bill the Foxtel customers whose services it installed but authorised BSA to do that instead and was required to facilitate that process in respect of each customer. BSA then paid Cloudless Vision on a fortnightly basis after deducting equipment costs and other applicable charges. As such, Cloudless Vision had no financial dealings with the customers at all.
Added to these contractual stipulations, as already noted, Cloudless Vision did not present itself to the outside world, including its own customers, as having any existence independent of BSA and Foxtel. It used the branding of those companies and Mr Yoresh described himself to customers as being from Foxtel. These features of Cloudless Vision’s business were consistent with the surrender of its independence represented by the aspects of the contractual relationship just identified. They support the judge’s finding that Cloudless Vision did not carry on its business independently of BSA.
It may be accepted, as BSA submitted, that these arrangements served the interests of the parties in ensuring that Foxtel’s commercial requirements were met and that BSA satisfied its various statutory obligations. However, in doing so, Cloudless Vision entered into an arrangement by which it could not be said to be carrying on its business independently of BSA. That it did so voluntarily, and could have chosen not to work exclusively for BSA (or to terminate the contract), does not in my view alter the fact that, during the relevant period, Cloudless Vision in fact conducted its business in the manner described.
Conclusion
For the reasons set out, in my view the primary judge was correct to decide that cl 9(2) of sch 1 to the Act was inapplicable. I would grant leave to appeal but would dismiss the appeal.
HARGRAVE JA:
I agree with McLeish JA that, for the reasons he gives, leave to appeal should be granted but the appeal should be dismissed.
- - -
7
11
0