Chief Commissioner of State Revenue v Ferrington

SUPREME COURT OF SOUTH AUSTRALIA
(Full Court: Civil)
THE COMMISSIONER OF STATE TAXATION v THE ROY MORGAN RESEARCH CENTRE PTY LTD
Judgment of The Full Court
(The Honourable Justice Mullighan, The Honourable Justice Nyland and The Honourable Justice Anderson)
17 September 2004
INDUSTRIAL LAW - SOUTH AUSTRALIA - DEFINITIONS AND INTERPRETATION - EMPLOYER AND EMPLOYEE
TAXES AND DUTIES - PAY-ROLL TAX - LIABILITY TO TAXATION
INDEPENDENT CONTRACTOR OR EMPLOYEE
The respondent company conducted a market research business by way of face-to-face interviews with householders in designated areas - an agreement between the company and the interviewers stated that the relationship was that of independent contractor and not employee - it was also stated that PAYE tax was not deducted nor were they paid any leave entitlements - WorkCover levy and superannuation was paid for each interviewer - interviewers were paid on completion of each assignment, not on an hourly basis - whether relationship between company and interviewers was that of employer/employee or independent contractor - whether company had level of control over interviewers sufficient to evidence employer/employee relationship - whether statements in agreement sufficient to designate relationship - held: respondent had level of control of that of employer, agreement created by respondent could not designate the type of relationship - the interviewers were employees and therefore the payments made to them are wages under the Payroll Tax 1971 - appeal allowed - assessments of Commissioner of State Taxation restored
Taxation Administration Act 1996 (SA) s 92; Payroll Tax Act 1971 (SA), referred to.
Connelly v Wells (1994) 10 NSWCCR 396; Graham v Chick (unreported, Court of Appeal of NSW, CA 40671 of 1993); Stevens v Brodribb Sawmilling Company Pty Ltd (1985-1986) 160 CLR 16; Roy Morgan Research Centre Pty Ltd v Commissioner of State Revenue (VIC) (1997) 37 ATR 528; Market Investigations Ltd v Minister of Social Security [1969] 2 QB 173; Hollis v Vabu Pty Ltd (2001) 207 CLR 21, applied.
Narich Pty Ltd v Commissioner of Pay-roll Tax [1983] 2 NSWLR 597, discussed.

THE COMMISSIONER OF STATE TAXATION v THE ROY MORGAN RESEARCH CENTRE PTY LTD
[2004] SASC 288
Full Court: Mullighan, Nyland and Anderson JJ

MULLIGHAN J: I agree that the appeal should be allowed for the reasons given by Anderson J and I agree with the orders that he proposes.
NYLAND J: I agree with Anderson J for the reasons expressed by him and with the orders that he proposes.
ANDERSON J: This is an appeal from a decision in which the learned trial judge reversed a determination by the Minister who had confirmed assessments by the Commissioner of State Taxation made pursuant to the Taxation Administration Act 1996 (SA) relating to the respondent (“RMRC”) being required to pay a total of $128,826.11 by way of payroll tax pursuant to the Payroll Tax Act 1971 (SA).
The issue is whether people working as interviewers on behalf of RMRC were engaged as employees or as independent contractors.
The appeal to the learned trial judge is pursuant to section 92 of the Taxation Administration Act. The learned trial judge dealt with the background facts in some detail but as the parties, with only minor exceptions, generally accept the factual findings set out by the learned trial judge in [16-96] of his reasons with respect to his Honour I will merely repeat them:
“[16]The narrative account which follows encompasses my findings of fact based upon the evidence given by the three witnesses, Ms Levine, Ms Katiforis and Ms Gray, including their affidavits and the various exhibits appended to the affidavits.
[17]RMRC operates an Australia-wide business, the primary focus of which is in the field of market research.
[18]The company gathers information by a variety of means. One of the techniques employed by the company involves the use of interviewers who conduct surveys by interviewing householders.
[19]The disputed assessments relate to payments made by RMRC to the interviewers.
[20]I will refer to the period covered by the disputed assessments, that is, the period between July 1993 and June 1999, as “the relevant period”. Unless otherwise stated, my findings relate to that period. For convenience, I generally use the present tense in referring to work practices which applied in the relevant period.
[21]Throughout the relevant period, three departments of RMRC engaged interviewers.
[22]They were the Consumer Opinion Trends Department (“COT”), the department known as the Ad Hoc Department, and the Computer Aided Telephone Interviewing Department (“CATI”).
[23]The COT and Ad Hoc Departments regularly used interviewers who operated in the field to conduct the surveys. The CATI Department used interviewers who conducted telephone interviews from RMRC’s premises.
[24]Most of the evidence in the case related to the COT interviewers. The majority of field interviewers are engaged in that department.
[25]Unless I indicate otherwise, my references to interviewers applies to the COT interviewers.
[26]During the relevant period, Australia-wide, RMRC regularly utilised the services of about 150 interviewers.
[27]In South Australia the number was about 40.
[28]The engagement of interviewers and the manner in which they carry out their work is the same throughout Australia.
[29]Interviewers only work at weekends. Their task is to conduct face-to-face interviews with householders (whom I will call “respondents”) in a designated area. They are furnished with questionnaires, and must conduct the interview by reading the questions precisely as formulated in the questionnaires and recording the responses. The questionnaires are drafted with precision. The integrity of the collection of data would be compromised if there was to be any deviation from them.
[30]Most interviewers work two weekends per month. The work allocated to them for a given weekend is described as an “assignment”. There are eight interviews per assignment.
[31]As well as conducting the interviews required for each assignment, COT interviewers also invite the respondent to complete a self-completion survey. This is a questionnaire which is filled out by the respondent in his or her own time and returned to RMRC.
[32]Most of the information received by the company comes from the self-completion surveys rather than from face-to-face interviews.
[33]The Adelaide office of the company, as is the case with the other State offices, maintained a register of interviewers willing to accept assignments. Allocation of assignments was generally arranged on a week by week basis to interviewers willing to accept an assignment for the coming weekend.
[34]It is convenient at this stage to look more closely at two critical aspects of the case: the engagement and training of interviewers, and the nature of the work performed by them.
[35]I will deal with each of those questions in turn.
(a)The engagement and training of interviewers
[36]Ms Gray gave detailed evidence as to the process by which interviewers are engaged by RMRC.
[37]RMRC advertises the availability of the work in newspapers circulating in the State.
[38]In response to the advertisement, aspiring interviewers telephone RMRC. They are there and then asked a series of questions directed to making an initial determination of their suitability for the job. The questions asked are recorded on a pro forma sheet headed “COT Inquiries Record (Screener).”
[39]Apart from noting the full name and address and contact details of the caller, the callers are asked whether they have a car and a telephone, and whether they are available two weekends a month and are prepared to travel up to 100 kilometres.
[40]A negative answer to any of those matters results in the telephone interview being terminated.
[41]In the event of a positive answer as to those matters, a number of other questions are asked, such as whether or not the caller is a student, if so whether the demands of study might interfere with their availability, whether they speak more than one language, what interest they have in doing the work, and the like.
[42]If a potential interviewer is considered suitable after the initial telephone screening, they are sent an application form. This repeats in written format many of the questions asked over the telephone, and requests additional information, such as the name of two referees.
[43]The form concludes with a short section headed “Agreement” which reads:
“I understand that as an Interviewer I will be required at all times, while representing the company, to maintain confidentiality, to conduct myself with integrity and in a professional manner. I understand that the ID card, and canvas bag I receive are the property of Roy Morgan Research. In the event of my resignation or termination I will return the aforementioned items to Roy Morgan Research”.
[44]If the prospective interviewer returns the application and it is regarded as satisfactory, and if they reside in the metropolitan area, they are invited to attend an information session. The information session is conducted at the office of RMRC.
[45]At the session, the importance of asking survey questions exactly as they are written and the importance of properly completing the questionnaires is explained and stressed, and an explanation is given as to how RMRC determines interview areas.
[46]In her affidavit, Ms Gray explains the information session in this way:
“22.         RMRC does not offer any formal training for the interviewers. At the information sessions ... interviewers are shown the correct RMRC procedure for filling out questionnaires and are reminded and/or advised as to the over-arching importance of statistical accuracy. It is stressed to the interviewers that, in order to provide a valuable statistical product, it is imperative that interviewers ask questions in exactly the same manner and without deviation from the way in which they are worded. It is imperative that questionnaires are properly administered and filled out - to do otherwise (for example, to incorrectly or ambiguously circle respondent answers or to ask questions that, by virtue of previous answers, should not have been asked) would be to put at risk the statistical accuracy and value of the product ultimately sold by RMRC. Furthermore, it is imperative that the questionnaires are completed such that they can be processed by RMRC’s data entry and coding staff - computer software is involved in the compilation and tabulation of survey data, which requires that the questionnaires be filled out according to established protocols. As a result of all of this, the information sessions are held with interviewers to establish the exact task for which they are to be engaged. In relation to the performance of that task - which involves gaining permission from potential respondents to conduct the interview in their homes and establishing and utilising techniques for liaising with the public generally - RMRC does not provide, beyond useful guiding tips, any training at all, as this is considered (and is communicated to the interviewers) to be the sole domain of the interviewers.”
[47]On leaving the information session, potential interviewers are provided with a number of documents, including a “practice” interview questionnaire, which is a sample of an interview sheet, a document described as a “finding sheet” which details the work performed by RMRC and which is a document handed to respondents, and a two-page document of instructions as to how to conduct the interview.
[48]The potential interviewer is asked to complete the “practice questionnaire” with a friend or relative, and is given some instruction as to how to go about it. The completed practice questionnaire must then be returned to RMRC by the intending interviewer.
[49]Amongst the documents given to the intending interviewer at this stage is a document headed “Key Facts for Interviewers”. This reads:
“Roy Morgan Research, the people who conduct the Morgan Gallup Poll, is the Market Research company most widely recognised by the community and is considered to be the most accurate. You may have seen results of our surveys published each week in the ‘Bulletin’ magazine and broadcast on programs like ‘The 7.30 Report’.
We are a proudly Australian company established in 1941, which now has offices in Melbourne, Sydney, Brisbane, Adelaide, Perth, Canberra and New Zealand.
We specialist (sic) in opinion polling in the areas of Market, Social and Political research.
The following are some facts, with which you need to be familiar, in order to fulfil your role as an interviewer for Roy Morgan Research.
—      You are required to conduct 8 face-to-face interviews per weekend in the homes of local residents. You are limited to 1 interview per household.
—      Your work is scheduled up to 3 months in advance, therefore you can organise your other commitments around your interviewing.
—      You are scheduled to work on 2 weekends per month (this may vary in some country areas), however extra weekend work is often available. Please indicate your availability on your availability schedule or arrange extra work with your Supervisor or Team Leader.
—      You commence interviewing on Saturday at 9.30 am and complete your assignment by late Sunday afternoon.
—      You work reasonably close to home, however, on some occasions you could be asked to travel up to 100 km from your home. (There is a reimbursement payment for kilometres travelled.)
—      Fees for assignments vary depending on the length of the questionnaire. The fee is calculated on the average predicted time which would be taken to complete all 8 interviews.
—      Bonuses are often awarded for completing extra or special tasks.
—      Our interviewers are Independent Contractors and tax is not deducted. This means that you are required to provide Roy Morgan Research with an ABN (Australian Business Number). We abide by all legal requirements such as Superannuation.
—      ID badges and contact telephone numbers are readily supplied so that people you interview can be reassured that you (and our Company) are genuine.
—      Good grooming is essential but no special clothing is required (neat, clean, comfortable attire is all that is needed).
—      Personal instruction (briefing) and manuals are provided. Advice, assistance and support is available at all times (weekends included).”
[50]It will be seen that in that document there is written confirmation of the status of interviewers as independent contractors.
[51]If their practice interviews are completed satisfactorily, prospective interviewers are then placed on the interview register. The interviewers are informed of their appointment as such by telephone, and a number of other documents are sent out to them.
[52]The process for appointing country interviewers is largely similar, except that no information session is held. Instead, country interviewers simply complete a practice interview after their telephone screening.
[53]The documents sent out to the interviewers once they are placed on the register, include an appointment letter, which notifies the date of the first scheduled assignment, and again stresses the importance of reading the interviewer manual. The appointment letter encloses, and asks to be returned to RMRC, various other documents. These include an “understanding letter” which seeks answers to questions designed to ensure that the interviewer understands the various points associated with the technique of interviewing, and a “confidentiality agreement and undertaking”.
[54]The confidentiality agreement and undertaking includes the following statement:
“2.           The recipient will be retained by the company as an independent contractor.”
[55]Apart from that statement, the confidentiality agreement and undertaking stresses that the interviewer must “keep in strictest confidence all knowledge or information concerning the business, affairs and property of the Company and its clients”.
[56]In several places it speaks of “termination of his [the interviewer’s] contract”.
[58]The confidentiality agreement and undertaking provides spaces for signing by both the interviewer and RMRC.
[58]The other document which is sent out with the appointment letter is the interviewer’s manual, which is a substantial document containing detailed instructions as to how to conduct interviews.
[59]The manual contains many dos and don’ts, some of them expressed with more emphasis than others.
[60]When the “understanding” letter and the confidentiality agreement and undertaking have been returned to RMRC, prior to the date shown on the appointment letter, the interviewers are sent out their first assignment.
[61]I deal with the documents sent out at that stage in the next section of these reasons.
[62]As I have explained, it is expressly agreed in writing between interviewers and RMRC that the interviewer is, vis a vis RMRC, an independent contractor. Consistently with that agreement, no PAYE income tax is deducted from payments to the interviewers, and they do not receive any paid sick leave or annual leave, or any amounts in lieu of those entitlements.
[63]Since 1992, superannuation in accordance with the Superannuation Guarantee (Administration) Act 1992 (Cth) has been provided for interviewers where total fees paid for a given month reach the required minimum level.
[64]In South Australia, the WorkCover levy is paid pursuant to the Workers Rehabilitation and Compensation Act 1986.
[65]The superannuation and workers compensation cover is paid for by RMRC in response to legal advice which it has received that the definitions of “worker” or “employee” in the relevant Acts is wide enough to include contract interviewers, notwithstanding that it is asserted that they are not employees at common law.
[66]I accept that both Acts embody extended definitions of “worker” or “employee”, and I accept the evidence that RMRC acted on legal advice in dealing with those two aspects of the matter.
[67]Interviewers are not given an assurance that they will be offered work, nor are they guaranteed work. Furthermore, they are not obliged to accept it when offered. Interviewers frequently refuse assignments, sometimes because they have similar or other employment elsewhere. There is no penalty imposed if they do not accept assignments.
[68]Some interviewers are engaged through a proprietary limited company, and some contract under a business name. However, the evidence as to this appears to relate to the position Australia-wide. There was no evidence of that which was specific to South Australia. I therefore cannot rely on that evidence for the purposes of this case.
(b)        The nature of the work performed by interviewers
[69]I have already explained that interviewers are allocated “assignments” and that there are eight interviews per assignment.
[70]The assignment must be performed within a given weekend. It will have been seen from the “key facts” document that interviewers are expected to commence interviewing from 9.30 am on the Saturday and to complete the assignment by late on Sunday afternoon.
[71]The amount of time actually spent completing an assignment varies according to the skills of the interviewer, the area within which a particular assignment is to be carried out, the nature of the questionnaire and other variables. However, it appears from the evidence that on average a single interview takes between 45 minutes and one and a quarter hours.
[72]A particular assignment is confirmed in writing sent out to the interviewer concerned. With confirmation of the assignment, a number of documents are sent to the interviewer. These include the “show cards” document which contains a suggested introductory spiel to be adopted when commencing an interview and the survey or interview form.
[73]As well, the interviewer is given a “record of calls” sheet and a document headed “Interviewing Instructions”.
[74]This is a sheet which gives certain instructions of general application, such as a reminder to read the questionnaire thoroughly, together with information specific to the particular assignment, such as notes as to areas in which to take care or to place particular emphasis with respect to certain of the questions to be asked.
[75]The interviewing instructions also indicate a fee to be paid on completion of the assignment and the amount per kilometre to be allowed towards the cost of travel.
[76]Interviewers administer the questionnaire to consenting respondents. They do so in their own time, within the broad parameters set in the assignment documents.
[77]As I have said, the manual and the “show card” contain very specific instructions as to, for example, introductory remarks to be made by an interviewer when first making contact with the respondent. But I accept the evidence of the witnesses that however emphatically the instructions are given, interviewers do not take them literally and are likely to adopt their own style of approach to respondents.
[78]There are several reasons why this is so. It is in the nature of things that individual interviewers will need to give expression to their own personalities in successfully engaging the attention of a potential respondent, and they will also have to deal effectively on the spur of the moment with the varying reactions which will come from a respondent when the door is opened and the interviewer endeavours to engage the co-operation of the respondent. They cannot hope to cope satisfactorily with that situation by parroting a suggested form of words. I accept that in practice they do not do so.
[79]I accept also the evidence of the witnesses that even where the manual describes aspects of the way in which the work of the interviewers is to be discharged very specifically, interviewers regard the manual as a source of guidance only.
[80]For example, when the manual states, “3.2 First impression. You will, of course, be neat and well-groomed”, the manner of dress of the interviewers varies considerably. No uniform is used, although an ID badge is supplied.
[81]I accept Ms Katiforis’ evidence that she has seen some interviewers in what she described as “quite bizarre dress”.
[82]It is essential to the exercise that the actual questions embodied in the questionnaire must be put precisely, and efforts are made in a variety of ways to ensure that interviewers understand that.
[83]The actual interviewing is unsupervised, in the sense that the interviewer is unaccompanied by any representative of RMRC.
[84Although the interviewers have a telephone number which they may ring to speak to a so-called “supervisor”, I accept the evidence that this is something of a misnomer, in that the so-called “supervisor”, who is a permanent employee of RMRC, is not in a position to give any effective supervision as to the manner in which the interviewer actually conducts the interview.
[85]In South Australia it is Ms Gray’s telephone number which the interviewers are given to ring if they want any help. As Ms Katiforis said in her affidavit:
“84.         During the periods in which contract interviews are being conducted, RMRC has a person on standby in order to provide limited assistance to interviewers. The assistance is limited to very basic help. An example of the kind of assistance given includes advice to interviewers who are unable to find any houses in a street where they are directed to start, are missing parts of the materials needed for interviews, or where the interviewer cannot understand the directions in a questionnaire. Most of the time, the person can only tell the interviewer to read the questionnaire as written. They cannot assist with questions or recruiting participants.”
[86]Interviewers are paid upon the completion of an assignment, and not before. Some interviewers do not complete an assignment, in which case they remain unremunerated.
[87]Upon completion of an assignment, the interviewers return the completed questionnaires and a time sheet to RMRC. They are then paid for that assignment.
[88]From time to time RMRC conducts what is described as an “audit”. The audit is performed by an employee of RMRC ringing some of the respondents to a particular survey to confirm that the interview had in fact been conducted. The audit phone call also provides an opportunity for the respondents contacted during the audit to register any complaint as to the manner in which the survey may have been conducted.
[89]Subject to that, I accept Ms Levine’s evidence that the audit process reveals whether the interviewer has done the work, that is, performed the interview, but it does not tell RMRC how they may have performed their work.
[90]All that RMRC expects to receive from the interviewers are the completed questionnaires and the other documents returned on completion of the assignment. RMRC has no means of ascertaining how accurately the interviews may have been conducted. In that respect, RMRC relies on the expertise of the individual interviewer.
[91]The Ad Hoc Department interviewing is highly irregular and does not involve any continuous work. The ad hoc interviewers do not receive the training manual. When RMRC advertises for the ad hoc interviewers, which I understand relates to a particular task, the interviewers who are engaged are generally people who have previously worked as interviewers with RMRC or for other market research companies. No further training or instruction is offered.
[92]While some Ad Hoc Department interviews are conducted on a door-to-door basis, they may, depending on the requirement of the client, be conducted at a particular venue, such as a shopping centre, sporting ground or workplace.
[93]Organising interviewers for the Ad Hoc Department interviews was described by Ms Katiforis as “even more sporadic than the COT Department”. I assume from that, that there was even less regularity in engagement, and each assignment had to be separately negotiated with the interviewer.
[94]There was very little evidence specific to CATI interviewers.
[95]As I have explained, they conduct interviews by telephone at the office of RMRC. Their engagement is otherwise on a similar basis to the COT field interviewers, except that there is a better opportunity to audit their performance, by listening in to the calls.
[96]Ms Katiforis said in her affidavit:
“The CATI Department was more similar to the Ad Hoc Department than the COT Department. Whilst the interviewing was by telephone, it was necessary to negotiate with the interviewer regarding the time and date of the particular assignment, along with the subject matter. Again, interviewers were not rebuked for refusing particular assignments.”

It is clear that when the interviewers working for the appellant conduct direct interviews with householders, they are required to follow quite specific instructions in relation to what matters they have to cover in these interviews. There are certain questions formulated by the respondent which are read to the householders and then the interviewer is required to record the householder’s answers. These are important factors when determining whether RMRC has the right to control these interviewers.
The learned trial judge deals with the topic of the interviewers and whether they are independent contractors in his reasons at [49], [50] and [54]. The document referred to by his Honour at [49] is a publication produced by the respondent headed “Key Facts for Interviewers” and handed to the interviewers. I do not agree that it should be regarded as “written confirmation of the status of interviewers as independent contractors”, as found by the learned trial judge in his reasons at [50]. It is simply a unilateral statement in a “hand-out” document provided to the interviewers.
In relation to the confidentiality agreement and undertaking referred to by his Honour in his reasons at [54], it seems to me that this is merely one of the many indicia which must be taken into account in considering what the overall arrangement is.
Following the conclusion of argument, both parties provided, by way of supplementary submissions, tables of references to various words used in the documents. On the one hand, it was argued, that certain words in the documents indicated a relationship of principal and independent contractor, and on the other hand, that of employer and employee. I refer to the words of Gleeson CJ in Connelly v Wells (1994) 10 NSWCCR 396 (at 398).
“Sometimes, when a dispute has arisen as to the legal nature of their relationship, the parties to the relationship will assert, in or out of court, their individual intentions or understandings on that question. For reasons that are explained in Australian Broadcasting Corporation v XIVth Commonwealth Games Ltd (1988) 18 NSWLR 540 at 650, and which I shall not repeat, such assertions are usually unhelpful and legally irrelevant. In the present case, for example, the respondent, a young man whose occupation was that of farm labourer and mechanic, was cross-examined at some length as to whether he believed he was an employee of the appellant. Since he had probably not made a close study of the relevant authorities, his personal opinions on that issue of law were unlikely to have been of assistance to the trial judge.”
In this case, of course the interviewers would all come from a wide variety of backgrounds, and I think words of Gleeson CJ would, with respect, be relevant also to those interviewers.
The words used by Cole JA in Graham v Chick, (unreported judgment of the Court of Appeal of New South Wales, CA 40671 of 1993) in adopting the words of Gleeson CJ are also, with respect, helpful. His Honour says:
“In my view, little weight can be attached to any such so called admission by a layman when the very matter in dispute before this Court involves the question of the characterisation of the relationship requiring, as it does, a careful balancing and weighing of a plethora of facts and circumstances. The reality is that such facts and circumstances are neither considered nor assessed by a layman prior to making any so called admission, even were the layman aware of the various facts and circumstances which require consideration.”
With respect, I agree with his Honour’s statement.
In relation to the actual interview, although guidelines are set out, the interviewer conducts the interview unsupervised by any representative of the respondent. There are, as the learned trial judge puts it, “dos and don’ts” in the guidelines and certain directions in the dot points set out in paragraph [49] of his Honour’s reasons.
In my view the learned trial judge correctly directed himself that it was the totality of the relationship which was relevant. See reasons [104]. His Honour accepted that the element of control was an important factor – see his reasons [106]. He however concluded that in this case on the undisputed facts now before this court, the control was only in respect of what his Honour called peripheral matters and that therefore little weight should be attached to the element of control – see his reasons [114] and [115] which are set out later in these reasons.
One of the leading cases discussed in argument was that of Stevens v Brodribb Sawmilling Company Pty Ltd (1985-1986) 160 CLR 16. His Honour deals with that decision in [98] of his reasons. His Honour used that decision in directing himself to move from the question of control simplicitur to the totality of the relationship between the parties. This reference to the totality of the relationship by Mason J in Stevens v Brodribb was approved in Hollis v Vabu Pty Ltd (2001) 207 CLR 21 (at 41).
The passage from the judgment of Mason J approved in Hollis v Vabu Pty Ltd is:
“the common law has been sufficiently flexible to adapt to changing social conditions by shifting the emphasis in the control test from the actual exercise of control to the right to exercise it, ‘so far as there is scope for it’, even if it be ‘only in incidental or collateral matters’: Zuijs v Worth Brothers Pty Ltd. Furthermore, control is not now regarded as the only relevant factor. Rather it is the totality of the relationship between the parties which must be considered.”
It was contended by the appellant that the trial judge erred in not giving sufficient weight to the control factor in determining whether the employer/employee relationship existed. The appellant argues that for the reasons set out in its written outline there were strong indications that this was in fact an employer/employee relationship:
1.The manner in which the respondent advertises for, engages and inducts interviewers to the organisation.
2. The rate of remuneration is non-negotiable.
3.Superannuation is paid to the interviewers and Work-Cover levies are paid in respect of the interviewers.
4.The respondent reimburses travel and other direct business expenses such as telephone calls.
5.Interviewers are held out to the public as part of the respondent organisation. They are given certain directions in relation to attire to be worn during interviews.
6.Market research is not the type of work that allows interviewers to create a business enterprise of their own through, for example the accumulation of goodwill. The interviewers are clearly participating in the business of the respondent company.
7.Interviewers have no responsibility for capital investment or financial management and have limited financial risk.
8.Interviewers have little or no scope to profit from sound management in the performance of their task, fees being based on the time that the surveys are expected to complete.
9.If an interviewer proves to be unreliable they will be asked to improve or will not be asked for further assignments.
10.Interviewers are not able to use the interviewing situation for any purpose other than that of Roy Morgan.
It was argued by the appellant that the learned trial judge was wrong in characterising the engagement of the interviewers as one for the provision of an end product, that is, the return of completed questionnaires, rather than examining the manner in which the questionnaire was completed. The decision in Narich Pty Ltd v Commissioner of Pay-roll Tax [1983] 2 NSWLR 597 was cited, in which their Lordships in the Privy Council stated (at 606):
“It matters not by what means the engagor is contractually entitled to direct and control the manner in which the engagee does his work. What matters is that, by one means or another, the engagor is, as a matter of law arising from the terms of the contract concerned, entitled to do so.”
It was also suggested by the appellant that the learned trial judge erred by placing excessive weight on the common intention of the parties to engage as independent contractors. It was argued that the substance and content of the relationship is determined by the underlying contractual term but which can neither be created nor denied by the intention of the parties.
In his reasons the learned trial judge said:
“[112]While I accept also that it is a question of the right of control rather than the actual exercise of it which is important, this case seems to have a distinguishing feature. In this case, there is simply no practical ability to control the actual performance of the work. It follows that in this case, the right of control lacks relevant content and ceases to be such an important factor.
[113]The comment by the authors of the joint judgment in Vabu (supra) ‘this is not a case where there was only the right to exercise control in incidental or collateral maters’ (my emphasis) is apposite.
[114]Here, if there was scope for control, it was only in respect of incidental matters.
[115]Putting it another way, the fact that the scope for control in the actual carrying out of the contract is limited to relatively peripheral matters must mean that the weight to be accorded the element of control in considering the totality of the relevant circumstances is less than would otherwise be the case.”
The respondent submitted that the learned trial judge’s consideration of the question of control was correct. Likewise it was suggested that the learned trial judge properly had regard to the totality of the relationship between the respondent and the interviewers.
It appears that the matters which finally influenced the learned trial judge in coming to his conclusion are set out by his Honour in his reasons:
“[133]I have had particular regard to the question of control; to the fact that work for the interviewers is not guaranteed; that they may refuse work; that they are not entitled to payment until each assignment is completed; that they provide their own motor vehicle (although there is some reimbursement in the nature of an allowance per kilometre travelled) and telephone; that income tax is not deducted; that they do not receive any paid sick leave or annual leave, or any amounts in lieu of those entitlements; and that both parties have expressly contracted on the footing that the interviewers are independent contractors.
[134]For the reasons which I have given, the fact that the Superannuation Guarantee Levy and the Work Cover Levy are paid by RMRC, does not deflect me from the conclusion which I have reached. In the first place, that fact must be considered within the totality of relevant circumstances. In the second place, the significance of the payments is considerably less than might otherwise be the case, by reason of the fact that in paying the levies, RMRC is acting on legal advice to the effect that the terms of the relevant legislation operate to widen significantly the concept of “worker” and “employee” beyond that which is defined by the common law.
[135]There is no inconsistency between maintaining on the one hand that the relationship at common law is that of principal and independent contractor, and at the same time, recognising that legislation which defines “worker” and “employee” more widely than the common law, may lead to a different result for the purposes of that legislation.”
These are important indicia used by his Honour in deciding the relevant question and clearly his Honour placed considerably more weight on these matters than the matters which are set out earlier in these reasons at [15], which the appellants contend are more significant.
It is my view that the matters set out at [15] of these reasons, which are in summary form, are persuasive both as to the right to control and the whole totality of the relationship. In my view there were sufficient elements of control in any event within the test as outlined in Stevens v Brodribb and Hollis v Vabu to establish the relationship of employer and employee.
On my view of the facts, I do not agree with the learned trial judge when he says at [112] that, “there is simply no practical ability to control the actual performance of the work.” The fact is that the respondent has chosen not to exercise control in the actual performance of the work but it does, in my view retain the practical ability to control the performance should it so desire. I also disagree that the scope for control here was only in respect of incidental matters or relatively peripheral matters as found by the learned trial judge at [114] and [115]. Even if they are regarded as incidental or collateral matters, they are nevertheless important in assessing the right to exercise control - see para [14] of these reasons.
The learned trial judge referred to decisions in Victoria involving the same respondent RMRC, with almost identical facts to those found by his Honour, and came to a different conclusion on those almost identical facts from the decisions in Victoria at first instance and on appeal.
In Roy Morgan Research Centre Pty Ltd v Commissioner of State Revenue (Vic) (1997) 37 ATR 528 the Court of Appeal in Victoria upheld the decision at first instance by Byrne J. In that case the Court, comprising Winneke P, Phillips and Kenny JJA, found that the appellant had not demonstrated any error by the trial judge but went on to say that even if the members of the court had acted on their own view of the facts, the result would be the same because they agreed with the learned trial judge’s conclusion.
The Court of Appeal held that it was open to the trial judge on the material before him to find that the extensive degree of control the appellant exercised over the interviewers in relation to both the nature of the task and the manner of its performance pointed towards the relationship of employer/employee. Furthermore the court held that on no sensible view could it be said that the interviewers were conducting such a business on their own account as distinct from participating in the business of RMRC.
In my view the words of the Court of Appeal are persuasive. Their Honours’ said (at 538):
“In my (sic) opinion, on no sensible view of the evidence could it be said that the interviewers were conducting such a business on their own account, as distinct from participating in the business of the appellant. In truth they were engaged by the appellant to conduct interviews on behalf of the appellant in a manner and form strictly controlled by the instructions given to them by the appellant. Accordingly they were told to represent themselves to respondents as engaged in a ‘Morgan’ research programme to give credibility to their task. If the function was not performed in accordance with the instructions given the sanction was that no further assignment would be made available. Close conformity with instructions was essential to the appellant in order that it could comply with its own obligations to its customers to provide accurate survey results.”
The Court of Appeal went on to say (at 538):
“In these circumstances interviewers were engaged in the service of the appellant as distinct from being independent contractors. Although it is true, as I (sic) have said, that no single test is decisive of the relationship between the engagor and the engagee, in a case like the present the degree of control exercised by the appellant over its interviewers, both as to the nature and manner of their task, is a very significant criterion pointing towards the relationship of employer/employee.”
There were similar statements made by Cooke J in Market Investigations Ltd v Minister of Social Security [1969] 2 QB 173 which was discussed by Byrne J in his reasons and also by the Court of Appeal. In that case the facts once again involved part-time interviewers of a company engaged in market research. Cooke J found that the extent of control exercised by the company was so extensive as to be consistent with the interviewer being employed under a contract of service, notwithstanding that the interviewer had a discretion as to when to do the work. Again, the question was whether, having regard to the contract as a whole, it could be said that the interviewer was in business on her own account as distinct from being an employee.
The appellant argued that because the learned trial judge acknowledged that the facts relied on in the Court of Appeal “closely equated” with his own findings of fact, he should then have applied the common law of Australia. It is not necessary to decide this point because of the view I have taken on the facts, but as I have indicated, I have treated the decision of the Court of Appeal and the reasoning as persuasive.
The facts in this matter are not really in dispute, and because the facts in the Victorian decision are so similar, I am of the view that on the face of the materials provided, the learned trial judge did place undue weight on some aspects and not enough weight on other aspects which in turn led him to a different conclusion than was reached in Victoria. It seems to me that the Victorian viewpoint and, indeed consistent with the view expressed by Cooke J in the Market Investigations case are persuasive.
On these virtually identical facts, which are not disputed before us, I would adopt with respect the same reasoning as set out above in the consideration by the Court of Appeal in Victoria and find that the interviewers were engaged in an employer/employee relationship.
It follows that RMRC should therefore be required to pay payroll tax pursuant to the Payroll Tax Act as originally assessed by the Commissioner of State Taxation.
For the reasons published I would allow the appeal and restore the assessments revoked by the trial judge

[2004] SASC 288

17 September 2004

Key Legal Topics

Areas of Law

Industrial Law

Taxation Law

Legal Concepts

Employer and Employee

Liability to Taxation