Building Workers Industrial Union of Australia & Ors v Odco Pty Limited

[1991] HCATrans 144

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--

IN THE HIGH COURT OF AUSTRALIA

Office of the Registry

Melbourne No Ml3 of 1991

B e t w e e n -

BUILDING WORKERS' INDUSTRIAL

UNION OF AUSTRALIA, WILLIAM

OLIVER, JOHN McPARTLIN,
VICTORIAN STATE BUILDING TRADES

UNION, HUGH HARKINS, and MARTIN

BINGHAM

Applicants

and

ODCO PTY LIMITED

Respondent

Application for special leave

-to appeal

MASON CJ DAWSON J MCHUGH J

Odco 1 7/6/91

TRANSCRIPT OF PROCEEDINGS

AT MELBOURNE ON FRIDAY, 7 JUNE 1991, AT 10.32 AM

Copyright in the High Court of Australia

MR D.M.J. BENNETT, QC:  May it please the Court, I appear

with my learned friend, MR s.c. ROTHMAN, for the

applicants. (instructed by Ryan Carlisle Thomas)

MR C.N. JESSUP, QC:  May it please the Court, I appear with

my learned friend, MR P.H. COSTELLO, on behalf of

the respondent. (instructed by McHenry Harris)

MASON CJ:	Mr Bennett.
MR BENNETT:	If the Court pleases. Your Honours, I hand up

an outline of submissions.

MASON CJ: Thank you.

MR BENNETT: If the Court pleases, we submit that the issue

in this case is one of the greatest significance

for industrial relations generally. That issue is

whether it is possible to avoid the creation of the

relationship between employer and employee by a

device which has two principal characteristics.

The first is that it splits the functions of the

employer between two putative employers, one of

whom controls but does not pay and one of whom pays

but does not directly control. And the other is

that the worker has the choice as to what days he

works and how long he works for. He contracts for

a specific day at a time and is bound to work that

day out, but he is free to work as many days as he

wishes.

McHUGH J: But there is nothing terribly unusual about this,

even in the field of industry. I mean, take film

stars' agents or actors' agents or performers'

agents: their work is got for them by agents who

often hire them out.

MR BENNETT: There are a large range of areas where one can

have that sort of division. The example

Your Honour gives, the person might well be taken

to be the employee of the special employer, the

person who is making the film. If one takes

another example, one takes the adult son who

employs a companion for his aged mother, he pays

her salary, looks after all aspects of the

employment, but says, "Your job is to obey

my mother's directions and serve her". Now,

again, you have a division between control and

contract and payment. In that case, one would say

it was the general employer, the son, who was the

employer of the companion. And one has the Mersey

Docks type of case where that result was reached

too.

What we say is that in the present case, what

the court did was to start with the words in

Stevens v Brodribb where this Court said one

Odco 2 7/6/91

balances criteria, and His Honour then took almost

verbatim the list of criteria from the

Chief Justice's judgment in that case - he added a

few - and he then said, "Well, there are 12 things

I have got to look at". He went through those 12.

Eight of them were neutral and the other four were
discussed and said to be factors of a minor or

major degree, two went one way, two went the other,

and he then says, "Well, looking·at all that and

weighing everything up, I come to the conclusion
that these people were not employees either of

Troubleshooters or of the builder".

Now, if the only matter in the case was simply

applying and weighing criteria, obviously this

would not be a case for special leave. But in

doing so what has happened are a number a things.

McHUGH J:  Mr Bennett, before you go on, have you not left

out the most important part of the trial judge's

reasoning. The trial judge said, "It was the

intention of these parties that they should not be
in an employer/employee relationship, and when I

look at the traditional indicia of an

employer/employee relationship I see nothing which

shows that the intention of the parties as

expressed in their agreement is incorrect".

MR BENNETT:  Your Honour, that was the first of the

12 indicia relied on, and it was one of the ones

that went my learned friend's way. But,

Your Honour, what the authorities say in relation

to that indicium is that if there is ambiguity, if

one has a borderline case which is teetering on

employment or some other form of relationship,

certainly one may look at what the parties have

labelled it and what their intentions are as to the ultimate relationship to see which side of the line

it falls on.

But if it falls clearly on the other side of the line, in that the parties intend a relationship

which has all the characteristics of employment,

but do not want it to be called employment, then of

course it is on the other side of the line. And

that, we would say, is the position here. There is

good reason in this case for taking what must be

one of the most traditional relationships of

employer and employee in this company, that of

master builder and labourer, and by a scheme or

device a relationship is set up which it is said

means that although the builder gives all the same

directions that he gives to his employee, and

although no one looking at the site can look at the

person and say, "You're different to you in what

you are doing", nevertheless it is said there was

Odco 3 7/6/91

no employee relationship with either the builder or

with the general employer, Troubleshooter.

McHUGH J:  I do not see how the builder illustration

supports you. I mean, you could make the same

criticism of a case where the person was a

subcontractor, without any argument whatsoever; had

his own subcontracting business. He goes along, he

is directed by the builder to do this and do that.

MR BENNETT:  Yes, well, Your Honour, His Honour held that,

in three sentences, the differences. He said,

there is no apparent difference in the degree of

control between a genuine independent contractor on

the site, whom everyone agrees is an independent

contractor, and a Troubleshooters tradesman. There is no difference in the degree of control between a

Troubleshooters tradesman and a Troubleshooters

labourer. And there is no difference in the degree

of control between a Troubleshooters labour~r and an employee of the builder labouring on the site.

So if one puts the sorities together, there is

no difference in the degree of control between the

independent contractor tradesman, plumber, on the

site, and the builder's labourer who is employed by

the builder. Now, whether one can put the sorities
together and get a proposition as extreme as that

may be a question of some difficulty.

What we say is the factor which both His Honour and the Full Court seem completely to have

ignored, it is just not mentioned, is what we

submit is one of the most significant factors in

this case. That is that treating, as we submit one

should, Troubleshooters as the employer, it is not

correct to say Troubleshooters did not exercise the

requisite degree of control, though it is said it

did not exercise that control because (a) it was the builder who gives the directions and (b) the

worker can, from day to day, come and go as he

pleases.

But in relation to the first, that ignores the

fact that if the general employer says, "I instruct

you as my employee that your job is to go and take

orders from some third party", that is just as much
control as if he gives the orders himself. There

are numerous situations where the general employer

may say to the employee, "You go and obey what you

are told by someone else who isn't the employer",

and you may look like an employee of that person to
anyone seeing what you are doing and seeing the

orders being given.

But we submit, and this is the factor that is

never mentioned in the courts below, that is an

Odco 4 7/6/91

exercise of control. It is certainly an ability to

exercise control. Now, the court says,

Troubleshooters did not go on to the site and tell

the man where to dig that hole.	Of course it did
not.	And maybe its relationship with the builder

would have precluded it from doing that. But that

does not matter. Troubleshooters is exercising the

requisite degree of control, and illustrating that

it has it, by saying, "Go and obey someone else".

Now, that, we submit, is something of vital

importance which is a matter of general importance

in these cases which is just totally ignored here.

And the assumption is made here that, "Oh, the

person who controls is the man who says, 'That's

where you put the hole'.".

Now, the second matter in relation to which we

submit the true control approach was ignored is the

enormous emphasis placed below on the question of

whether a man could be sent from one site to

another and whether he could say, "I choose not to

work today". But, Your Honours, the answer to

that, we submit, is that this relationship, on one

of the two views one can take of it, simply arose

each time the employee went to a site.

In other words, one can construe the

relationship this way. Troubleshooters says, "You

tell me when you feel like working, on a particular

day. If I find a job for you, you and I will then

agree that you will be my employee for that day and

your task as my employee is to obey the orders of

the builder on that site".

Your Honours, there is nothing in that

characterization which, we submit, is other than

pure employer/employee relationship. And yet the

whole tenor of both judgments is that once you have

the man who decides himself when he is going to

work each day, that is showing an absence of

control. It is not showing an absence of control

at all. It might be showing an absence of control

if the employment is treated as being a continuing

thing, although even there it probably would not.

But it is not - it might be an indicium, but a

small one, but it certainly is not showing an
absence of control where one says, "As soon as they

agree, they are then employer and employee for that

day for that job on that site". Your Honours, that

factor was completely ignored.

I should say this as far as direction is

concerned. There are six very short references in

the judgment I might very quickly remind

Your Honours of, in the judgment of

Mr Justice Woodward, in relation to my submission

Odco 7/6/91

about direction to obey orders. At page 22, in the

agreement between the worker and Troubleshooters,

paragraph 2 says:

I hereby agree to work for ....... per hour for actual on-site hours or job price to be agreed.

Your Honours see "agree to work".	On the next
page, paragraph 7:

It is agreed that I (the undersigned) must

carry out all work that I agree to do -

so he may have the degree of choice as to whether

he agrees to accept the particular job on the

particular day. Having accepted it, we submit he

is an employee in every sense of the word for that

day.

The third is at page 55, and His Honour, at

the top of that page, says:

The agreement is, in each case, concluded when

the offer of work is made, usually over the

telephone -

by Troubleshooters -

and the worker indicates his willingness to

take the position. He thereby agrees to

attend at the time and place indicated, to

report to the person nominated, and to work as

required for up to 8 hours on that day.

8 hours is the standard working day in the

industry. If the builder indicates a

continuing requirement for his work, the man

may accept or reject each subsequent day's

work as he pleases.

So his contract is to work as required, on a

building site, doing a normal day's work, for that

builder. The only difference is he does not have

to come back and have another contract the next

day.

The fourth one is at page 88 where, in

relation to the right of exclusive services,

His Honour says that the right to exclusive

services of a worker is one of the indicia and

Troubleshooters does not have that because the

worker does not have to come on any particular day,

he can go and drive a taxi or have any other job he

likes. But if you accept our submission that the

period of employment is each day at work, the

employer does have the right to exclusive services.

So that indicia, which is the only other one

Odco 6 7/6/91

His Honour really found in favour of

Troubleshooters, is in fact the opposite way to the

way found by His Honour. It is an indicium of

actual working - and Your Honours see at page 88,

at line 20:

The right to exclusive services during normal

hours resides in the builder as against

Troubleshooters and in Troubleshooters as

against the worker.

We say that is an indicium that Troubleshooters is

the employer; it has the right to exclusive

services during what we define as the period of

employment.

The next one is page 89, the following page. That is the passage I told Your Honours about

before where the sorities appears, and the three
paragraphs are those at the bottom of page 89, (a),

(b) and (c), but the third one is the significant

one for present purposes:

I can equally find no significant difference

in the degree of control over Troubleshooters

labourers and over the builder's own labourers

employed on wages - except that the

Troubleshooters men may tend to be more

intelligent and reliable than the general run

of employed labourers.

Finally, at page 93, there is one of the

clearest ones. The material supplied by

Troubleshooters to potential building clients has

this sentence, at line 10:

The personnel we supply to you are yours to

direct -

Now, His Honour then says, "Well, that is ambiguous. That can mean direct in the sense of

having work done by him as one might employ a

professional man or a subcontractor of the normal

type", and he also says, "As this documentation is

so clearly designed to achieve the scheme that the

worker is not an employee, why should I construe

this as breaking the scheme?" We would submit one

would rather draw the opposite inference. It is,

truth will out, even in a document designed for a

specific purpose.

But leaving that, perhaps debating point

argument aside, what is important is, the employer

is told:

The personnel we supply to you are yours to

direct -

Odee 7 7/6/91

I am sorry, the builder is told, "They are yours to

direct". Those six matters, we submit, those six

extracts, make it absolutely clear that what is

being done here is to give directions to the

employee by Troubleshooters, saying in effect,

"Work for someone else".

Now, the way it was dealt with by the

Full Court, in Troubleshooters, appears in a

passage at page 224 and the following pages. They

set out there an extract of His Honour's judgment

and then over the next few pages indicate general approval of it. That passage is really the ratio of why Troubleshooters is not the employer, and

there were eight things said.

The first one is at line 16:

It makes it clear it does not intend its

workers to be its employees.

So much may be assumed. I have indicated our

submission as to the significance of that.

They are not paid a weekly wage -

is the second one. No, they are paid an hourly rate for the work they do on the site. Nothing

inconsistent with employment about that. It is not

a factor either way.

nor do they receive any of the normal benefits

of a wages employee, particularly annual leave

and sick leave.

His Honour also held in his judgment that was a

neutral factor, for other reasons. Fourthly:

There is no obligation upon any man registered

with Troubleshooters to work at any particular

time.

That we dispute. Once he agrees to work, he is

bound, and that is when the contract comes in to

existence. So that one is contrary to what

His Honour has said.

Equally there is no obligation on

Troubleshooters to find work for the man on

any particular day.

That again is the opposite because while it is true

there is no obligation to find work, once they have

agreed and the contract comes into existence on a

particular site, there is an obligation on

Troubleshooters to provide that site for that

Odea 8 7/6/91

worker on that day.	So that is the opposite way to
the way it is found.

The sixth one is at line 28:

It is true that Troubleshooters normally pays

the workers before it has received anything from the builder and, furthermore, it makes the payment even though it may never receive

payment from the particular builder. But

Troubleshooters only pays its men for work

which they claim actually to have done for a
builder, and it does so in the confident

expectation that it will soon be reimbursed. That is a factor my way because that is clearly

indicative of employment between Troubleshooters

and the worker. Seventh, at line 35:

So far as control is concerned, the workers

are free to work when they please.

That is the same point that has been made twice, in

items 4 and 5, and I have told Your Honours why

that is in fact a factor our way. It assumes the

contract argued for is a continuing one, not a

short term one. Finally, number eight is the one

where His Honour completely ignores, with respect,

what I have called the major factor. He says:

Troubleshooters exercises absolutely no

control over the way in which work is carried

out. It merely passes on to the worker the

time and place at which a builder wishes him

to report. If the worker does not like the

sound of the particular job ..... he is under no

obligation -

well, that part of it is the temporal part,

but -

McHUGH J: But Troubleshooters could not say to the worker,

"Pour the cement this way".

MR BENNETT:  Your Honour, they could not, for this reason,

that they have said to the worker, by implication,

"If the builder instructs you to pour the cement in

any particular way, you do what he tells you".	In
other words, they have delegated to the builder

that part of the function, and the full control of

an employer over how the work is done is an

exercise by the builder.

McHUGH J: But if it was a true employer/employee

relationship, they could revoke that delegation and

tell the worker how to do the work. They might be

in breach of their agreement with the builder, but

Odco 9 7/6/91

does that not merely serve to emphasize that

Troubleshooters have got no control over the manner in which the worker does his work?

MR BENNETT:  No, Your Honour. The employer has contracted

not - he has delegated one of his functions as

employer and has contracted not to revoke the

delegation. He has contracted to supply labour, is

another way of putting it, but he has contracted

not to revoke the delegation and, Your Honour, that

does not take away, in our respectful submission,

the power of control, the overriding power of

control, which it has.

Now, at the bottom of 226, four lines from the

bottom:

In our view there was no reservation of a

power in Troubleshooters to require one of its

workers to move from one site to another, or

to work beyond the initial agreed day -

that does not matter. The agreement is that he

will work for that day on that site. That is the

nature of the employment.

McHUGH J: What about the passage at the bottom of page 225:

It seems to have been accepted by counsel for

the appellants in the course of argument that

Troubleshooters had no power to direct or require one of its workers to rectify allegedly defective work.

MR BENNETT: Well, Your Honour, the reason for that is that,

at the time the defective work is brought to

attention, the employment is terminated. The

employment is 8 to 4, or whatever the hours are.

The employment is for the period of hours on the

site. If defective work emerges thereafter, he is

no longer the employee. An employer has no right

to direct an ex-employee to rectify defective work.

That, we submit, is a neutral factor.

McHUGH J: But what is the difference between this case and,

say, a model agency? A model agency hires a model

out to David Jones, Myers; Myers pay the model

agency. What is the difference between that sort

of case? How does the model - does she become an
employee of the model agency or an employee of

Myers? -

MR BENNETT: It depends on the overall circumstances. If

she is paid a salary by the model agency, or she is

paid an hourly rate by the model agency for the

period when she works, and she is told to observe

the directions, she may well be. On~. would have to

Odco 10 7/6/91

look at a number of the indicia, as was done here.

But what was done here, we submit, was to look at

the wrong test in relation to control, in that

there was a failure to appreciate that delegated

control could amount to control, and that a

splitting of it in effect destroyed the element,

and an undue emphasis on the question of not having

to turn up on any particular day when the period of

employment contended for is the period of the

particular work. Those are the errors, we submit.

Now, Your Honours, the importance of the case

is perhaps more specific than that. This is a case

where we submit the ultimate importance lies not so

much in the questions of master and servant law

which I have just put to the Court. We put those

as important questions but they are less

significant in this case than the fact that this is

a case where a device has succeeded which, if it is

to succeed and to be accepted in the future, will

have a major effect on the Australian industrial

relations scene. That may be a good thing, it may

be a bad thing. That is not a matter I need to

argue on a special leave application. It may not

be a matter that is relevant to the appeal either.

But it makes the case important because if the

submissions I have put to the Court are right as to
the law, and if this is in reality an
employer/employee relationship, and one does not
succeed in changing the nature by this type of
documentation, that is a matter the importance of

which is very hard to underestimate.

DAWSON J: Undoubtedly it is important in a practical sense

but as a matter of the application of legal
principle it is not·important, it is just the
application of established principles to a set of

facts.

MR BENNETT: Well, it is more than that, Your Honour. If

the result of the submissions I have just made to

the Court as to the law - and those submissions

when expanded at an appeal - is that it is

basically impractical to construct a relationship

which is not one of employer and employee in this

type of case, then that is a matter of enormous

importance. That is not merely application of law

to facts. That is a result that the relationship

is going to exist and it cannot be easily avoided.

And that is a result which has great practical

significance.

Now, Your Honour, in my respectful submission,

one of the factors the Court looks at in granting special leave is not merely the importance of the abstract proposition of law but also the importance

of the decision itself, not only to the parties,

Odco 11 7/6/91

although the parties in this case are in one sense
general institutional parties who are concerned

with the overall question, but to this community as

a whole. And in my respectful submission, it could

be a major threat to the industrial relations

system if it is as easy as this to avoid, by this

device, the relationship of employer and employee.

If, as a result of the decision allowing the appeal, it is much harder to do that or it is not

really practical to do that in a way which enables

one to carry on the sort of business the respondent

wishes to carry on, then that is a matter of

enormous significance, Your Honour, and we would

submit it is sufficiently important on its own,

even if this were mere application of law to facts,

to justify granting special leave. But we say, for

the reasons I have given, it is a bit more than

that anyhow, because the court has committed errors

in the way it has looked at control and the factors

it has treated as relevant to control.

DAWSON J: Really, what you are asking is that we should go

through the same exercise as has been gone through

at first instance and in the court below with a

view to you persuading us we should come to a

different result, but it is not going to involve

any exploration of principle at all.

MR BENNETT:  No, Your Honour. We would respectfully just

put this. The bulk of the matters raised in the

very lengthy judgments would not arise on an

appeal. Those matters - our simple point is, once

we create an employer/employee relationship with

Troubleshooters, that is really the end of the

case. There may be some short submissions about

justification and the effect of subsections in the Trade Practices Act, but really that is the issue.

McHUGH J:  You have got a long way to go after that, have you not? That only gets you off the ground.

MR BENNETT:	We would submit it is a fairly short way, Your Honour. Under section 45G there is a specific
exclusion in relation to working conditions of
employees.  So 45G would be up automatically once
they are employees.  In relation to 45E and in
relation to the common law. count, we would submit
that once the purpose becomes the enforcement of
the law, in other words once there is a breach of the awards and building agreements in relation to
these people, and it can be demonstrated that that would exist, then the other purpose becomes a
lawful purpose.

Odco 12 7/6/91

At least, it may well be that the Court would

simply send it back, because the courts below

refrained from deciding - - -

MCHUGH J: Yes.

MR BENNETT: So, in a sense, the Court could deal with it

that way. And indeed, we would not oppose that.

We would be content if this Court simply said, "We

find that there is a relationship of employer and

employee with Troubleshooters, as we did for a

statutory purpose in the previous Odco case, and

therefore it should be sent back to deal with the

consequences of that in the light of the other

matters", and that would mean it would be a fairly

short appeal.

Your Honours, may I just say one other thing.

That case to which I referred, Accident

Compensation Commission v Odco, it does not decide

the issue because that case was concerned with the

relationship under a statute, not at common law,

but the passage from Your Honour's decision at
pages 222 to 223, we would submit, does give some
support to us in relation - - -

McHUGH J: Is that the correct passage, or is the reference

wrong, because it has got 95 ALR 641?

MR BENNETT:  I am sorry, 222 is the application book,

Your Honour.

MCHUGH J:	I see, yes.
MR BENNETT:	It is a passage cited in the judgment of the

Full Court. Your Honour sees that, on page 222 at

line 25, the agreement to contract is referred to

and Your Honours said that:

That document contains the terms which are to govern the contractual relationship which

arises between him and TSA ..... the document

contains a promise by the tradesman to TSA to:

'carry out all work that I agree to do -

now, once he agrees to do it, it is there. At line

41:

In the circumstances outlined by the

affidavit, on the oral acceptance by the

tradesman of the communicated offer by TSA of

work, an agreement arises between TSA and the

tradesman constituted by that offer and

acceptance and the terms set out in the

document entitled 'AGREEMENT TO CONTRACT'.

That agreement is one whereby the tradesman

agrees with TSA to perform work for the

Odco 13 7/6/91

benefit of TSA in the sense that the work is

done for the purposes of TSA's business and

enables TSA to derive remuneration -

In other words, this Court accepted precisely

what I have put, and what the courts below in this

case ignored, namely that the period of the

relevant contract is 8 to 4 on each day he agrees

to work. And once one accepts that it just removes

all the arguments about he can work when he likes.

On the next page, page 223, at line 30, Your Honours said:

the tradesman agreed to perform work at the

site at the builder's direction for

remuneration to be paid by TSA, it follows as

a matter of plain language that the tradesman

supplies services to TSA by attending at the

site and doing work there.

Well, that is our point, of course. He provides

services to TSA by attending at the site and doing

work there.

Now, the Court was, of course, concerned with

a different question but, in my respectful

submission, much of what the Court said is relevant

to the common law relationship and is of assistance

to us.

I have said in paragraph 6 there are some

other minor issues: there is the argument that the

workers were employees of the builders, which is

very short; there are arguments both ways about

justification, which could, as I say, be sent back;

but the issue of employment by TSA is the important

issue and, we respectfully submit, for the reasons

I have given, that it is a case where special leave

should go. May it please the Court.

MASON CJ: Thank you, Mr Bennett. The Court need not

trouble you, Mr Jessup.

The Court is not persuaded that the Full

Court's conclusions that there was no contract

between the worker and the builder, and no contract

of employment between the worker and

Troubleshooters Available, are attended with

sufficient doubt to warrant the grant of special

leave to appeal. Nor is the Court persuaded in any

event that a challenge to the correctness of those

conclusions would raise a question of general

principle.

In the circumstances, the application for

special leave is refused.

Odco 14 7/6/91

MR JESSUP:  I seek costs, Your Honour.

MASON CJ:  Yes. You cannot oppose costs, Mr Bennett?

MR BENNETT:	I cannot say anything.
MASON CJ:	The application is refused with costs.

AT 11.07 AM THE MATTER WAS ADJOURNED SINE DIE

Odco 15 7/6/91