Construction, Forestry, Maritime, Mining and Energy Union & Anor v Personnel Contracting Pty Ltd

[2021] HCATrans 138

[2021] HCATrans 138

IN THE HIGH COURT OF AUSTRALIA

Office of the Registry
  Perth  No P5 of 2021

B e t w e e n -

CONSTRUCTION, FORESTRY, MARITIME, MINING AND ENERGY UNION

First Appellant

DANIEL McCOURT

Second Appellant

and

PERSONNEL CONTRACTING PTY LTD

Respondent

KIEFEL CJ
GAGELER J
KEANE J
GORDON J
EDELMAN J
STEWARD J
GLEESON J

TRANSCRIPT OF PROCEEDINGS

AT CANBERRA BY VIDEO CONNECTION TO BRISBANE, SYDNEY AND MELBOURNE

ON TUESDAY, 31 AUGUST 2021, AT 10.05 AM

Copyright in the High Court of Australia

KIEFEL CJ:   The record will show that Justices Keane, Edelman and I are sitting in Brisbane, Justices Gageler and Gleeson in Sydney, and Justices Gordon and Steward in Melbourne.  I will announce the appearance of counsel appearing remotely. 

MR B.W. WALKER, QC appears with MR M.A. IRVING, QC and MR T.J. DIXON for the appellants.  (instructed by Construction, Forestry, Maritime, Mining and Energy Union)

MR J.B. BLACKBURN, SC appears with MR M.L. FELMAN for the respondent.  (instructed by Hotchkin Hanly Lawyers)

KIEFEL CJ:   Yes, Mr Walker.

MR WALKER:   May it please your Honours.  Your Honours, the figure of speech that has been adopted in relation to cases of a kind of which this one provides an example is to describe them as triangular.  That is in danger of suggesting a similarity with tripartite contracts.  That is not this case.  It is triangular only in the sense that there is one contract between parties A and B, and another contract between parties A and C.  That may not make a triangle, because there is not a contract between B and C.

In our submission, this is one of those cases which might be described as by far the most usual case where employment is the result of a contract and, as long‑established principle and judicial approach in this Court demonstrates, that requires, case by case, an investigation of the terms of the contact. 

This is not one of those cases, again familiar from the method and authority of this Court, where that investigation involves variation of contract, whether by express terms or by terms or dealings implied from conduct.  Nor is this case one where the investigation of the terms and effect of the contract includes such notions as sham and related ways in which the express terms of the contract are disregarded as those that bind between the parties.

However, this is a case that involves, again, an approach well familiar in the authority of this Court to what might be called a species of repugnancy between the express terms of a contract.  As your Honours know, without developing it at present, we in particular call in aid the established need to distinguish between express terms which purport to apply a legal label, or to use legal technical nomenclature, for the relationship created by the contract itself as opposed to an examination of what I am going to call the operative terms imposing rights – granting rights and imposing obligations that operate between the parties.  None of that is…..

Your Honours, may I start by recognising, as to look ahead, we will develop at paragraphs 8, 9 and 10 of our outline, that obviously the litigated dispute between these parties exists because of claimed statutory rights.  However, those claimed statutory rights, for reasons that we will develop in 8, 9 and 10, are rights which turn upon the notion of employment, a matter which in this Court perhaps formerly could have been regarded as securely and, for all practical purposes, with exceptions that usually have no purchase, ought to be regarded as the modern equivalent of the rather grating expression “master and servant”.

Your Honours, it is for those reasons that we submit that one starts with the contract which is the source of the punitive employment, that is, the contract, the operation of which would have been held to have constituted Mr McCourt an employee of the respondent – whom I will mostly call Construct, its corporate title being Personnel Contracting.

They would have so held but for the discipline their Honours perceived themselves to be under not to depart from the West Australian Full Court decision in a materially very similar case involving Construct, given their Honours declining to regard the reasoning and outcome of that decision as plainly wrong, a matter which will not deflect your Honours from considering whether it was wrong.

The contract can conveniently be found in the reasons, starting in the core appeal book at page 102.  There are, in our submission, and intending no great disrespect, some euphemisms and deflective language employed by those who drafted the contract, and your Honours ought not to regard that as likely to have included Mr McCourt on the drafting committee.  Hence its description, as acronym, as the ASA, picking up the notion found in the recital:

A.Construct is an administrative services agency . . . liaising between builders . . . and self‑employed contractors –

and “self‑employed contractors” is the first of the exercises of nomenclature or labelling concerning the nature of a relationship, or the absence of a relationship to which my earlier opening remarks were directed. 

Your Honours see that the commerce contemplated by the working out of this contract, in effect, is that it concludes with the provision of labour to builders.  It is said also to be supplying financial and administrative services to the workers, to use a neutral expression for the tendentious expression “self‑employed contractors”.  Those financial administrative services surely do not include receipt of what I will call wages, but do, on their face, include what I will call appropriate documentation with respect in particular to taxation.

The agreement, under the heading of “Construct’s Responsibilities”, includes an obligation in subclause 1(b) to:

Inform the Contractor when, and on what basis, an opportunity arises for the Contractor to supply labour to a builder -

the word “contractor” again standing for those earlier described as self‑employed contractors and that I will mostly neutrally use the expression “worker”.  In clause 1(c), Construct’s responsibilities include liaison, regarding the means by which the worker supplies labour to such builders, including the duration, the place, the daily hours of work, et cetera.  In other words, in that expression, bland or not very informative as it may be, “liaise”, lies the link that your Honours understand exists by another contract between Construct and builders, such as Hanssen in this case. 

In clause 1(d) another deflecting word can be found as to Construct’s responsibilities.  In return for performance by the worker of his obligations under this agreement – I stress “under this agreement” – Construct shall, as it is put:

underwrite payment to the Contractor -

Your Honours ought not to understand that anything grand is meant by the word “underwrite”.  It means late payment, as can be seen by the terms to which I will come.  The receipt of an invoice, as your Honours know from the facts in this case, is either regarded as fulfilled or treated as dispensed with as a requirement to receive payment on the part of the worker by the practice of records of hours worked recorded by a bundy system directly sent from the builder to Construct.

Clause 2 deals with Construct’s rights and in clause 2(a) there is an entitlement, as it is put, to:

Negotiate . . . a payment rate for the supply –

by the worker of labour.  Were there no other terms than that, your Honours might see there suggestions of a formal agency, which we are not suggesting would be a realistic prospect, let alone one with fiduciary obligations.  One sees again that, introduced by the perhaps clumsy phrase “subject to”, the closing words of clause 2(a) suggest that the payment rate, which might be increased, is subject to the contractor properly performing his obligations under this agreement.  That presumably means in return for or upon satisfactory completion of - in other words, pay for work.

Your Honours see as well that the business model involves what I am going to call profit for Construct by reason of a negotiated rate called commission that one can see in clause 2(b) - it is called “remuneration” in clause 2(c) “of any increase”, by which there is what might be called a mark‑up on the price charged by Construct to a client such as Hanssen, the builder, for the supply of labour of a worker such as Mr McCourt.

Your Honours can see in a nutshell in those terms without proceeding further that the manifestation – to use a term from the authorities of the business of Construct – is in the supply of labour for financial return.  To put it in a harsh fashion, the workers are the stock in trade of the labour hire firm.  They are not incidental or collateral, they are central, and their work is the subject matter of that which is traded for profit by the labour hire company.

There is then in clause 3 something which your Honours may forgive me for not dwelling as to its terms because as to term 3 we say it lies in the future were we to succeed in this Court to ascertain what effect, if any, would be given to its terms.  It suffices in this bristling array of promises in the form of warranty, so‑called, by the worker designed, as it were, to ensure that anything that could be found in Halsbury against the position of Construct is negatived by a promise, and some of those promises are, as it were, promises to maintain a fiction which may be none the worse for that, but in due course were we to win here depending upon issues joined and arguments presented may involve questions of the efficacy of such promises in the face of a statutory entitlement.

So then we come to that which is at the heart of our argument here, as your Honours will have seen from our written submissions, and that is in clause 4 which is appropriately and correctly headed “The Contractor’s Obligations”, the appropriateness and correctness being the word “obligations”, “contractor” being part of the neutral, that is, the party to this contract or tendentious, namely the so‑called self‑employed or independent contractor of the recital.

In 4(a) the nub of the matter, so far as we have advanced it below and here, is presented, and it is presented in terms which are perhaps intended to soften or blur what on any proper understanding that this is a contractual term imposing a so‑called obligation could have been rendered in plainer English.  Nonetheless, the word “co‑operate” and the expression “in all respects” followed by the phrase combining constructor and the client builder makes it clear that the expression “in the supply of labour to the Builder” is referring to the work which leads us to call persons such as Mr McCourt a worker.

And co‑operating in all respects, in our submission, involves at the very least an obligation to do that which you are obliged to do in favour of Construct and also as an obligation owed to Construct and as contractual obligation owed only to Construct to co‑operate with the builder.

Now, looking ahead in a way that we do not need to go to in order to understand the question of the relationship created by this contract between Construct and Mr McCourt, one knows that there is a promise by Construct to its clients, such as Hanssen, which includes the “capacity”, to use a neutral expression, the capacity for the client to give directions to supplied labour, that is, workers such as Mr McCourt.  His labour is supplied to a builder by Construct. 

I do not need to dwell on those terms because no one has said, either in this case or in cases similar to it, that that has the effect of rendering the worker contractually obliged to the client builder, and we stress, one can confidently expect that Personnel Contracting trading as Construct would never embrace the proposition that contracts, let alone of employment, are created by the provision of labour by Construct to client builders such as Hanssen. 

That co‑operation in all respects, with Construct and the builder, means, in our submission, that the means by which subordination of the worker for the doing of the work is created and is rooted by authority in the obligation owed by Mr McCourt, the worker, the so‑called contractor, to Construct, as opposed to ‑ ‑ ‑ 

STEWARD J:   Mr Walker, could I ask you a question.  How do you reconcile the selection of the words “co‑operate in all respects” with your contention that there is a relationship of subordination or, I think the word that Justice Lee used, subservience, which is a hallmark of an employee/employer relationship?  Does not the word “co‑operate” suggest that there is reserved to Mr McCourt some level of independence in the way in which he shall fulfil his obligations?

MR WALKER:   No, “co‑operate” is one of those words, weasel words, if you like, in this text.  In ordinary idiomatic English, “co‑operation” suggests the relation of peers, each with discretion, or persons joined in what might be called a common endeavour, and in both commercial and legal usage that particular flavour is very often conveyed, familiarly, of course, in business organisations which are so‑called co‑operatives, but, in our submission, notwithstanding what we would submit is the obvious possibility that the word has been selected in order to deflect the characterisation of the requisite subordination for employment, properly understood, the only way in which the so‑called contractor, the worker, can co‑operate, is to do those things which are inherent and explicit in the work to be performed, which is, by definition, the work at the direction of the client.

It is for those reasons, in our submission, that there is no independence here, apart from the independence available to everybody, independent contractor or full‑fledged employee, namely either not to take the job or to terminate the contract, to resign. 

There is, in our submission, for example, in 4(c), the obligation to attend at any building site as agreed with the builder, an expression followed by the phrase “at the time required by the builder”, which rather puts paid to the notion that there is anything contemplated in the nature of what might be called a contractual negotiation between the so‑called contactor and the builder.

No one says that there is a contract concerning attendance at a building site, notwithstanding the use of the word “agreed” in 4(c).  That is merely a consensus, which is achieved upon what the contract calls the liaison by which opportunities are offered to the worker by Construct and that liaison with the builder is reflected, as your Honours have seen from the findings of fact, with what might be called the assignment so‑and‑so builder wants someone to do such and such a job and be there tomorrow at 6.30 am.

EDELMAN J:   Mr Walker, I realise nobody is putting this submission, but is there any reason in principle why a worker such as Mr McCourt could not be an employee of both the labour hire company and the builder with the employment relationship between the builder arising not by clauses such as clause 4(c) but by conduct between the worker and the builder that evinces an agreement in similar terms to clause 4(c)?

MR WALKER:   Your Honour, the answer is in two parts.  There is nothing in the common law, we submit, that prevents as a possibility that which can be seen from time to time in commerce, namely so‑called joint employment.  Now, I do not mean the true but trivial proposition that a partnership unincorporated – that means that there are numerous employers of the staff of the firm.  I am not referring to that.  I am referring to what is seen from time to time, particularly in corporate groups but not only in corporate groups.

EDELMAN J:   But the common law goes even further than that, does it not?  I mean, there are vicarious liability cases like Viasystems, which recognise that, for the purposes of, at least for vicarious liability, there can be two employers of a worker.

MR WALKER:   Yes, is the short answer, and your Honour has gone to the second part of my answer.  It is clear that this is a case‑by‑case question, as vicarious liability, being the most – the context in which the distinction between employment and independent contracting is most crucial, necessarily turns on the particular facts of each particular case.  It is, above all else, circumstantial, which is one of the reasons there really cannot be a serious or true precedential effect in the holdings in one case, notwithstanding the employment of similar written terms.

However, when one looks at the nature, taken as a whole, phrases that are hallowed in this Court’s consideration of the matter, one will rarely, in our submission, see the spelling out of employment by the clients of a labour hire company, particularly in the case of casual employees, of those workers by the client of the labour hire company. 

Now, that is not to say it cannot happen, and it is not to say that casual employees who turn out to enjoy sustained periods of what, in psychological and financial terms may be a stable way, might not, by dint of conduct, including the flow and exercise of authority in one direction and service in the other direction, produce a true relation of employment, query, a contract of employment, between the labour hired worker and the client of the labour hire company.  That is not this case, of course, but one can envisage that occurring.  It is familiar and unremarkable that such contracts and/or relationships which in the main will flow from a contract, can be spelled out by the implications conveyed by conduct, the way in which people conduct themselves. 

Now, Justice Edelman has asked a question which is prefaced by noting that your Honours can proceed on the basis that none of the parties before you perceive it in their interests to urge the creation, in our case, simultaneously with the creation of a relationship between Construct and Mr McCourt of a contractual relationship of employment between Mr McCourt and Hanssen.  The incentives are no doubt far more powerful, if less broad in their implications, for our opponent’s client.

But, in our submission, leaving aside what the parties before this Court do not wish to argue, for reasons that may appear self‑evident, there will in principle and in practice often be cases where there are serious circumstances tending strongly against the spelling out or discernment of such a relation between the labour hired worker and the client of the labour hire company including, in particular, for people whose work may be a day here, a week there, a month between different sites and the like, including wishing to avoid that whatever inconvenience, in particular their skilled workers may sensibly perceive in having to deal, at the end of the year, with a relatively large number of so‑called employers with respect to, among other things, tax obligations and the obtaining of benefits such as awards, enterprise agreements and statutory force that may give rise.

In other words, there is practical and therefore likely an implied strength or strength of implication in the nature of the tasks that a worker such as Mr McCourt offers to what I might call the market generally being marshalled by the provision of that work, that is his work, by someone who contracts to do so in favour of, as it were, anybody interested in obtaining such work from time to time.

Now, it is for those reasons, in our submission, that though there is no objection in law at all to what I will call simultaneous - or “concurrent” perhaps is a better word – concurrent relations of employment stemming from different dealings between A and C, both with B, that is not something which, as it were, ought to be treated as prima facie or the usual outcome of a labour hire arrangement such as is before the Court today.

The closer resemblance for a case such as today is surely with the extremely familiar model, not particularly modern, of the employer of what I will call gangs – I do not mean it disrespectfully; it is historical usage – whose work can be made available, say, to farmers or road makers or builders for relatively unskilled labouring such as digging ditches from time to time and place to place.

The employment of every member of the gang by the person who hires out, so to speak, or places their labour on particular sites for clients or customers of that labour hirer, would not, in our submission, ever require by ordinary implication the existence concurrently of ad hoc, perhaps relatively fleeting, employment by those clients of each member of that gang.

It is for those reasons, in our submission, that though that is of course a possibility that may arise according to the circumstances, this is a case where it is not available as an outcome by the court, (a) because no one argues for it, and (b) because the parties in making those forensic choices are not, with great respect, either of them, any of them, acting in any manifestly counterintuitive or legally inappropriate fashion.

GAGELER J:   Mr Walker, can I ask a question that is, I suppose, conceptual about the way you use certain matters of fact in your argument.  When you were taking us to clause 1(c) you spoke about the practice of bundying on and keeping records and when you got to clause 4(a) and (c) you referred to the contract between Construct and the builder.  How do you say we should use those references?  Are you inviting us to treat them as part of the matrix of the fact for the construction of this contract or do you point to them as societal facts about how one would expect a contract of this nature to operate in practice or is there some other conceptual basis upon which you draw attention to those facts?

MR WALKER:   The two choices that your Honour expressed are not, of course, mutually exclusive.  They are obviously concepts that can overlap.  That is, a broader societal setting is not necessarily to be divorced from a contractual so‑called matrix.  There is a third at least – I am not suggesting there is not more – there is a third possibility to which I have already made reference, namely, the way in which the relation, that is the work by Mr McCourt and the payment for it by Personnel Contracting, called Construct, actually turns out in practice, including by those dealings to which I refer that your Honour has noted, such as supplying the bundy records.

They familiarly are available in a case where parties make it an issue to examine whether or not a pre‑existing contract has been varied or a new contract has been made to be implied by conduct.  When I say by conduct I do not mean dumb show only, there will often be words involved:  we will send your bundy records directly to Construct, or as is more likely and happened in this case, Construct and Hanssen making that arrangement themselves.  In other words, no requirement for invoice, indicated by no refusal to pay because of absence of invoice.

Now, whichever of those three ‑ and I am not suggesting there that exhausts the possibilities ‑ conceptual ways in which such material might be resorted to in an argument such as today’s, we ought to make this clear, we submit that in this Court under the various banners of reality or the real relation or the whole of the relation or the way in which things operated, and there are other phrases with which your Honours are familiar, whichever one of those or all of those that one is looking at the manner in which the terms of – the express terms of the contract are seen to be performed in practice can, in our submission, properly be called in aid for the characterisation question.

Now, I appreciate that that is very straightforward when one is talking about a variation case and we are not talking about a variation case, but it is either straightforward or not particularly remarkable to observe the ways in which parties to written agreement appear to act in apparent contemplation, each of them and both together, that they are performing their contract according to its tenor.

EDELMAN J:   Mr Walker, does that mean that if on the proper construction of the contract at the time it is made and in all the circumstances in which it is made the relationship, let us say, is one of independent contractor and principal, then that relationship can change as time changes in the performance of the work and presumably can then change back again if the performance of the work changes again without any variation in the contract terms?

MR WALKER:   No, probably not, your Honour, probably not.  Your Honour has asked whether time could do that.  On any view, it would need to be more than time, otherwise one would be committing the fallacy, for example, that you are not a casual employee because you have enjoyed casual employment with the same employer doing the same thing at the same place for a considerable period.  Leaving aside so‑called statutory conversions, that is not, in our submission, entailed as some late‑arriving common law approach. 

The obvious and proper first inquiry in a case where there is some temporal duration of consistent conduct that might be thought to give rise to such a possibility is to inquire whether there has been a variation and in particular one of the distinguishing features between independent contracting and employment has to do with the latter’s definitional requirement for what I will call subordination.

That does not mean that there are not things which resemble the general relation conveyed by the notion of subordination in independent contractors.  It is, as is well known, a characterisation question that does not lend itself to bright lines, let alone lines of no breadth.

So it is clear, in our submission, that individual cases could yield the…..somebody has ceased to be an independent contractor and has become an employee.  It is difficult to think how, in the absence of a variation implied by conduct, that would be carried out, unless, for example, the terms of the contract under which the worker was initially an independent contractor was so spare and open in their stipulations as to accommodate by usage that they change in the nature of the relationship.

We would hesitate to suggest how that might commonly happen, otherwise than by variation, and I, with some trepidation, throw up the obvious possibility for the operation of estoppels between parties to such contracts, which unquestionably might arise according to circumstances, were someone who has for years been requiring someone to work, for example, to a roster that they sign up to for months and months and months ahead, were to resort or revert to a position where, on two hours’ notice, all their service could be dispensed with. 

Those are cases that will await factual investigation of a kind that has no real corresponding feature in this case.  The facts were investigated in this case, but they do not show anything of that kind, of course.  I hope that ‑ ‑ ‑ 

GORDON J:   Mr Walker, may I ask a question?  There seem to be three issues in play.  One is the temporal question that Justice Edelman asked you, and Justice Gageler asked you.  We then have the label problem, which you identified by describing in the contract someone as a contractor, and then we have a third question, and that is, in effect, looking at the substance of the relationship and how you assess that.

MR WALKER:   Yes.

GORDON J:   Given the way in which you have analysed the contract between Construct and Mr McCourt, I wonder whether or not, in effect, that triplet of ideas depends so very much upon, as you would, as I understand, put it, the nature of the business being carried out by Construct itself.  It may very well be that those sorts of questions and those sorts of indicia take on a different weight, relevance, depending upon the nature of the business itself being conducted by the purported employer.

I say that for this reason.  If you look at the clauses you took us to, in particular, I think, staying with recital A, but 1(c), 1(d), 2(a), 2(b), 4(a) and 4(c), and one asks what is the substance or nature of the relationship, it is a relationship where you have a business being conducted by a purported employer to supply labour, where that business is one which they negotiate, in a sense, the terms upon which this worker is going to turn up, they pay him, and all the other indicia that you would look at, but that sort of analysis is, of course, driven by reason of the nature of the work being carried out by the purported employer.  It is a very different question for some other forms of relationship between purported employer and employee.

MR WALKER:   Yes.  This is a business model that, if efficacious according to the legal content of all the terms that are pleonastically piled up, not only in clause 3 but, for example, in the obligation in 4(h), if they operate according to their tenor, then it is certainly the case that anything which the law, from time to time, and that would include the common law as well as statute - it is statute that is in question in this case - in favour of an employee will not be available and if, as in this case, that involves paying what I am going to call a “wage” lower than the law would otherwise require, then there is manifest advantage to be gained from the operation of those terms for one of the parties to the contract.

The advantage is commensurate, case by case, with the disadvantage suffered on the other side of the transaction and, of course, the advantage has a – which is far greater than simply the aggregate of its parts, bearing in mind the business model involved. 

Our point is this.  The subordination that is one of the distinguishing features to be examined, no doubt, on something in the nature of a spectrum between independent contracting and employment is in this case well conveyed by the colloquial expression “labour hire”.  The labour of Mr McCourt is that which Construct commercialises.  It is what it offers to the market, to clients like Hanssen.  I have called it the stock in trade.  It is central, definitional, and is the main, really, only, manifestation of the commerce of Construct.

It is for those reasons, in our submission, that the promises by the worker, called the contractor, in clause 4 are absolutely necessary for that business model, as is well recognised from the recitals onwards in this contract.  I do not need to go, and should not go, to another contract in that regard, because the co‑operation in all respects, with Construct and the builder in the supply of labour to the builder, is, in terms, the supply of subordinated service. 

Clause 4(c) makes that clear with respect to who has to turn up and where, so not one of – not a member of the staff of this independent contractor, but the so‑called independent contractor, the worker, himself or herself.  Then in 4(d), lest there be any doubt about what Construct is undertaking, it is to supply labour, and if the client is dissatisfied in the way which produces a claim for recompense, the worker is obliged, according to 4(d), to indemnify, in other words, will have breached his contract to Construct under 4(a) and 4(c).

GLEESON J:   Mr Walker, does that mean that on the particular facts of this case it is not necessary to get into the complexities of external facts, it is just a matter of looking at the contract at the time that it is formed?

MR WALKER:   I wish, your Honour, but they are not very complex.  It is correct that in the main, which is why I have started here, it is the terms of the contract, properly or sensibly understood, without any distortion and raising an eyebrow, as it were, at much of the tendentious language of labelling, but it is the terms of the contract as to rights and obligations concerning the provision of work by Mr McCourt by dint of the commerce of Construct to customers or clients such as Hanssen that produces, in our submission, the outcome which, but for the Western Australian decision, is the outcome that all three judges in the Full Court regarded as the proper one, the alternative being counterintuitive.

STEWARD J:   Mr Walker, can I ask a question – I am sorry.  Is 4(d) really against your case?  One does not ordinarily see an employee indemnifying their boss for their conduct at their client’s premises.

MR WALKER:   No, it is not against us.  That is precisely what could have happened but for legislation and what might be called social enlightenment.  There is nothing to prevent an employer at common law from suing an employee for breach of the employment contracts, such as careful work.

STEWARD J:   I understand that, but does one normally see an employee giving an indemnity to their boss?

MR WALKER:   Your Honour, that is a sociological question to do with market observation and neither is particularly determinative of, we would respectfully submit ‑ ‑ ‑

STEWARD J:    Does that mean 4(d) does not go one way or the other?

MR WALKER:   No, it goes very strongly our way because it backs up the promises in 4(a) and (c).  These are matters that subordinate persons in Mr McCourt’s position to the satisfaction of – that means truly ‑ including at the direction of Construct’s client who, with a grievance thought to be actionable, gets a claim against its supplier of labour, Construct, who, in 4(d), as it were, menaces financially by way of one of the sanctions for breach of 4(a) and 4(c).  That is why we say unequivocally it is in favour of us.

STEWARD J:   All right.  Could I ask you this question while I am still unmuted, for the moment?  Is it your case that you cannot enter into a labour hire arrangement with independent contractors?  Is your case as broad as that?

MR WALKER:   No, if I may say so.  Long before business models like Construct’s or Odco became attractive to accountants advising entrepreneurs, if you will forgive my old language, there were talent agencies.  I do not understand that Greta Garbo was anything other than an independent contractor and the talent agency model of what might be called bathetically “labour hire” is obviously very different from this case. 

STEWARD J:   All right, I accept that.  Then the next question is, on your case, is Odco wrongly decided?

MR WALKER:   Yes.

STEWARD J:   So we will ‑ ‑ ‑

MR WALKER:   I am too glib in giving your Honour a monosyllabic answer.  Let me elaborate slightly.  As I said earlier, it is critical not to go down the false path that accorded precedential value to the outcome of previous cases with their own facts ‑ not just with their own terms of contract but also with their own facts - when the law in question is the method by which a characterisation according to a legal category – in this case, employment or independent contracting – is the question at hand.

There will be a misleading of the exercise if the command basic to justice that like cases be decided alike is taken to, as it were, involve some spreadsheet comparison of the particular facts of particular cases.  That is not to say there could not be or should not be guidance and an observance of what I might call the Zeitgeist judicially with respect to particular forms of conduct being characterised one way or another.  Of course that will be so, but the question is always, in a particular case, what is the proper characterisation – in this case the question being employment or not – and it is for those reasons ‑ ‑ ‑

EDELMAN J:   Mr Walker, I understand that is the sort of narrow basis upon which you put your submissions but there is also a broader basis, is there not, which is that the reasoning in cases like Odco is incorrect or wrongly decided because what might be called the multifactorial test has nothing to root it, no ultimate principle which the courts have enunciated as supplying the relative weight to various different factors or providing a means by which the relative factors can be assessed.

MR WALKER:   I think the short answer is yes, but with trepidation can I explain?  I confessed myself unable to offer what might be called in…..ultimate principle and I am not in terms of authority going to suggest that the grandiose and not very helpful expression “multifactorial” is not the law.  It is the law, but we would tend to, with respect, reduce it simply to this utterly unremarkable mundane status, namely, this is a characterisation question which involves looking at everything relevant, there not being simply one test or indicator.

EDELMAN J:   I understood your sort of ultimate grounding principle to be that all of these particular factors pointed to whether or not the worker was part of the enterprise of the labour hire organisation or the relevant principle.

MR WALKER:   That is one of the ways that we invite but it is, of course, only one of the ways in which one can term the question:  is this person an employee or, as what we submit is a definitional contrast, is he or she conducting their own business?

Now, this is not one of the cases where there is some hybrid analysis that would be appropriate on the facts.  We can leave that until there is some really expert worker whose labour, so‑called, is supplied ad hoc for very special occasions to bill the clients by Construct where everything that this Court has engaged in familiarly in independent contractor employee contrasts can be called in aid - the bicycle worker, as opposed to, for example, the highly specialist tow‑truck operator.

Now, there is, in our submission, a question whether or not an ultimate question, to answer “employment or not” can be expressed as being, “are you or are you not conducting your own business?”.  As your Honours know, that has been regarded as, probably not very helpfully proposed, as a test or step in the reasoning towards the conclusion, but rather a different way of expressing the same ultimate question, and that is because they are two sides of the one coin. 

Now, this is not a case where we have facts or issues requiring exploration of, if you will forgive the nonsense, whether the coin has more than two sides.  We do not have to go into those marginalia at all, this being a straightforward case in terms of the way the work was provided, the way the work was done, the way the work was paid for, the way the work was supervised. 

GORDON J:   Mr Walker, can I ask a question about that, just so I understand it.  Is that to accept a proposition that the dichotomy between employment and independent contractor is not a dichotomy which is either clearly defined, and is something which, in the modern – especially in the gig economy, is probably an unhelpful, either step in the reasoning, or even a different way of putting the end proposition?

MR WALKER:   I think the answer is yes.  Can I elaborate?  There are so many forms of modern relations about how people work that are, as I understand it, conjured up by the colloquial expression “the gig economy” that it would not be sensible, as a matter of a common law argument for the purposes of characterising a statutory term said to bear its ordinary meaning, as if there are templates that can be laid across the probably infinite variety of arrangements made, formally or informally, in a fixed or invariable form by people who work, people who benefit from the work, and people who clip the ticket.

In our submission, for cases such as the present, it does suffice to say that, for all practical purposes, the long‑established and substantively important distinction between employment and independent contracting is evergreen in its usefulness in approaching these cases.

Now, that does not mean, of course - this goes back to Justice Edelman’s question about what I will call identification of enterprise - that in that area of great substantive significance, vicarious liability, that persons who are not employees are automatically never to be considered as being the cause of vicarious liability being imposed on a person who is not their employer. 

That has already been, as it were, worked out, not finally, I suspect, with great respect, in the necessary case‑by‑case approach that vicarious liability throws up, but in our submission, in the run of cases, that remains a particularly useful and normally dispositive contrast if employee, employer vicariously liable, if not employee, subject to exceptions that have no footing in our case, no purchase in our case, the person contracting with that independent contractor not vicariously liable.

Now, moving, then, away from vicarious liability to what Justice Gordon has asked me about the, what I am going to call, now manifest opportunities for doubts and uncertainties about how to characterise relations between a person who works and somebody who benefits from it, or who benefits indirectly, by commission, from it, in our submission, it is very important, as a matter of judicial method, that straightforward questions of a kind that one could imagine sensibly being submitted to a jury with sensible and practical directions, should be the hallmark of the Court’s preferred approach.  It is the common law.

It is for those reasons, in our submission, that the question whether a worker is the employee of a putative employer does not become bereft of guidance in the cases, or in common sense, that the cases, with great respect, in general terms, seek to systematise.  That is why, if I may call it, fashions, or fluctuating favour or disfavour of considerations like control, or the very closely related, slightly broader notion of subordination, or other matters such as identification with enterprise or enterprise organisation approach, or, converse of independent contracting, that is, that which is not possible if you simply do not have your own business at all, you are not conducting your own business, then, in our submission, those are matters which, in a familiar common law fashion, for mischaracterisation notwithstanding, they do not supply bright lines which, as it were, render it unimaginable that judges would ever be bothered with the decision, so clear that people in commerce can work it out.

Now, it is clear that this Court has appreciated those inherent uncertainties and marginal arguable cases as simply an attribute of the fact that the law calls for characterisation in terms which have to be sufficiently broad and encompassing so as to be useful.  We are not in this case, at least to my knowledge, concerned with any of the common law consequences of this being employment rather than contracting, but we are concerned with something which proceeds in exactly the same fashion because of the statute’s choice, as your Honours have seen, to define the statutory criterion of entitlement, employment, by its so‑called ordinary meaning.  The extensions and exceptions to that do not matter in this case.

That ordinary meaning is not just a reference to what I will call linguistic usage, which any lexicographer will say is both various at the same…..varies overtime.  The common law can also, one hopes with a bit of an intellectual sea anchor, follow but not be simply buffeted around day by day by differences between individual’s linguistic usage, let alone differences over a short period of time.

So, with the slower moving changes the common law can adapt to things like, though I shudder to use the expression, “the gig economy”, and so the common law’s change cannot and should not be overnight, to put it mildly, and in our submission, this is an area above all other areas.  One might think of social relations where parliamentary experimentation and regulation is made to measure as opposed to a judicial weathervane approach according to perceptions of social justice.

It is for all of those reasons, if you will forgive me, that this is a case where we ought to be looking in sufficiently general and plain jury direction terms for what are, to use the Latin, the indicia of employment or not.

KIEFEL CJ:   In that regard, Mr Walker, you have taken, in your outline, as the starting point, the indicia of the right to control, direct, or command - as indicia of the relationship of employer/employee.

MR WALKER:   Yes.

KIEFEL CJ:   So, you obviously regard that as a very important feature of this case.

MR WALKER:   Yes.  I have used the word “subordination” and repeat again the old, not disconnected, notion of “master/servant” to distinguish in the same way as the legal cliché “contract of service/contract for services” is intended to point up an instructive and applicable contrast.  It does not mean that one will always have everyone agreeing on which is true, but it does mean that you will, in nearly all cases, have a very large preponderance of informed opinion one way or the other.

That is why, when we come to one of the next tests that I am going to come to in the outline, which we tersely, but I hope forcefully, express in proposition 4 in our outline, that we accept that it may be unrewarding semantics to consider whether that is a step towards a goal or a test for an outcome, or whether it, as perhaps proposed by Justices Wilson and Dawson in Stevens v Brodribb 160 CLR 35, about point 8, meant when they commented upon the dictum, albeit in dissent, nonetheless influential and, in our respectful submission, correct, of Sir Victor Windeyer in Marshall v Whittaker’s 109 CLR 217. Sir Victor’s remark at a conceptual level about characterisation, that:

the distinction between a servant –

that is, an employee:

and an independent contractor “is rooted fundamentally in the difference between a person who serves his employer in his, the employer’s, business, and a person who carries on a trade or business of his own” –

Justices Wilson and Dawson suggested that, or stated that that was Sir Victor:

really posing the ultimate question in a different way rather than offering a definition which could be applied for the purpose of providing an answer.

The differences may not be greatly significant, but we, as your Honours know, draw on that approach, with great respect, commended to your Honours as a handy and useful approach because it emphasises the centrality, what we have been so bold in our proposition 5 as to describe as a determinative approach, that is, definitionally, if you are working in another’s business, as surely Mr McCourt was working in Personnel Contracting’s business, because he was the stock in trade, and you are not conducting a business of your own thereby or in connection with that, then, if it is necessary to add the presence of a contract, one adds the presence of a contract, which we have here. 

It includes the consideration by way of remuneration, which would be called “wages” but for the predilection for tendentious deflections or euphemisms, then, in our submission, it is a dichotomous choice, then you are an employee.  Now, apparently ‑ ‑ ‑ 

GORDON J:   Mr Walker, may I ask a question?  The reverse does not work though, does it?  I can be an employee of Construct on a Monday but still run my own business and be an independent contractor in relation to someone else on a Tuesday.

MR WALKER:   I think it is compulsory for Qantas pilots, your Honour.

GORDON J:   It may be but, I mean, the proposition I put to you is a serious one.  One can be in an employment relationship on a Monday but still have your own business being an independent contractor for somebody else on Tuesday.  So, when the proposition you put in 5 as being determinative, it is determinative here on the facts, not determinative as a matter of proposition.

MR WALKER:   I think by and large the answer is yes.  Can I just qualify that?  Undoubtedly, a bricklayer could be employed, say, four days a week, and because he or she would really prefer to get six days’ remuneration could ply the trade by classifieds in a local newspaper, if they still exist, which would obviously be independent contracting jobs for people who want a garden wall put up.

So exactly the same kind of work, exactly the same level of skill, the work provided as an employee during what I will call the four‑day job and as an independent contractor for whatever jobs are picked up for the other two days of the week, that would be, we suggest, an extremely common pattern of conduct, particularly where there are not, as it were, great trade advantages in the employer, the four‑day employer, preventing an employee from offering his or her services elsewhere to others.

So, where there is no trade secret or any competitive urge then that will be an ordinary mundane exercise.  It is well and truly, in our submission, in the area of discourse that Sir Victor Windeyer was referring to.  The four‑day job is manifestly as an employee, not carrying out your own business in the four‑day job, but you have a skill and you are at liberty to pick up whatever ad hoc assignments as an independent contractor where you are conducting your own business.  Indeed, you may advertise your own business by reference to your employment with another.

KIEFEL CJ:   Mr Walker, that might be a convenient time for the Court to take its morning break.

AT 11.19 AM SHORT ADJOURNMENT

UPON RESUMING AT 11.36 AM:

KIEFEL CJ:   Mr Walker, before you proceed, there was a question raised I think by the CFMMEU parties, by which I mean appellant and respondent, as to whether or not they might have the opportunity to in effect reply to the ZG Operations submissions tomorrow.  The Court does not really see the need for oral submissions.  The Court takes the view that the parties in this matter are pretty well on notice as to what is being said in those other

proceedings, but if the parties in this matter would wish to put in a note in response, that might be the appropriate way to deal with the need for extra time.  Do you see any difficulty with that, Mr Walker?

MR WALKER:   None whatever if I may request that the note be limited to a very brief note.

KIEFEL CJ:   So, having something like a note within five days?

MR WALKER:   Yes, within five days and also of very brief length.

KIEFEL CJ:   Within two pages.

MR WALKER:   Thank you.

KIEFEL CJ:   Mr Blackburn, are you content with that course?  I think you might be on mute, Mr Blackburn.

MR BLACKBURN:  I do not appear to be on mute from this end.

KIEFEL CJ:   You are coming through now.

MR BLACKBURN:   Thank you.

KIEFEL CJ:   Are you content with that course ‑ any further note you may wish to make by way of comment on the argument tomorrow within five working days and no more than two pages in length?

MR BLACKBURN:   Yes, your Honour.  It is unlikely that we would need to, but we just sought that liberty as a precaution.  So yes, thank you.

KIEFEL CJ:   Thank you.  There will be directions in those terms.  Yes, Mr Walker.

MR WALKER:   May it please your Honours.  Could I, resuming the thread of some of the matters particularly in answer to a number of your Honours’ questions, remind your Honours of the considerations in Justice Lee’s reasons.  I do not need to take you to them.  The references are in paragraphs 50, 151 and 160 to matters introduced by the description that there are a number of other documents that shed light on the nature of the relationship.

Paragraphs 151 and 160 conclude with the proposition that the document called “Construct Contractor Solutions, Contractor Safety Induction Construction” is a very important part.  You will find that in the respondent’s book of further materials starting at page 35 and I want to take you in particular to pages 36 and 44.

While your Honours are doing that, I am sorry, I misled you.  The findings concerning these documents are found in the trial judge’s reasons, I am sorry, at 151 and 160.  I have confused myself, your Honours.  Could I just go to the book of further materials at 36?  On the third paragraph of the introduction your Honours read the words about it being:

intended as a general guide to workplace safety and health . . . not a complete list of procedures and is not intended to replace instructions given on site by our clients, their supervisors, or other authorised persons.

Then the acknowledgment at 44 signed by workers like Mr McCourt:

2.I will follow all worksite safety rules and procedures given by the ‘host client’.

. . . 

4.I will NOT conduct any work other than that which is specifically assigned to me.

5.I will NOT conduct any work . . . for which I am not currently qualified . . . 

7.I will immediately advise CONSTRUCT if my job is altered by the ‘host client’.

Those are matters which are held to form part of the contractual arrangement.  They are, in our submission, in accord with what I have already argued from clause 4(a) of the ASA, namely, that there is an obligation owed by Mr McCourt to Construct to work at the place notified to him – for the client notified to him, subordinated himself through and to Construct in order that Construct may provide its stock in trade, namely, his labour, to Construct’s client, namely, Hanssen.

It is, in that sense, in our submission, that – and this is proposition 3 of our outline – it is in that sense that this is, in our submission, a straightforward, not a complicated or complex, form of control, no different whatever from an employee of a gardening company requiring its employed gardeners to act in accordance with the preferences of the garden owner.  In our submission, the notion that the gardener owner suddenly becomes the employee of the person requested to plant the daffodils is too silly for words and it confuses the critical concept of authority.

In our submission, “authority” has meaning only if one can name in juristic terms what it is that gives a direction or instruction or other conduct such as purported dismissal legal force and ‑ ‑ ‑

GAGELER J:   Mr Walker, could I ask as a point of clarification about the point you just made in taking us to this contractor safety induction document.  I may be wrong, but I do not read Justice Lee at paragraph 160 as ascribing contractual force to this document.  He refers to it in context with the Hanssen induction form and Hanssen’s site rules as forming part of the totality of the relationship.  So, he seems to treat the relationship with the builder as part of the totality of some broader relationship.  There may be a finding that this has contractual force, but it is not obvious that you get it from that paragraph.

GORDON J:   Mr Walker, I had understood that it was dealt with at paragraph 50 by Justice Lee on core appeal book 104 where he said that those documents “shed light on the nature of the relationship”, that in addition to the ASA there were the frequently asked questions, there was this induction document and then there was that wonderful diagram which was set out as annexure B to Justice O’Callaghan’s judgment.

MR WALKER:   Yes.  Your Honours, the safety induction manual, as one sees from it the paraphrase in paragraph 50 of Justice Lee’s reasons, is the document to which I have taken you, unless I am much mistaken.  If it is not that document, it is a document that does the same thing and that is why the reference in 160, in answer to Justice Gageler - and I do apologise if I have been responsible for confusion.  It is a defined term in paragraph 50.  I had understood that to be the document I took you to.

What matters, however, is that what is described in 50 as the safety induction manual, in which he agreed inter alia to follow all safety rules, et cetera, contains the terms which are germane to my argument and that is what was held to be contractual in nature imposing obligations on Mr McCourt in paragraph 160 of Justice Lee’s reasons.

GAGELER J:   I am sorry, Mr Walker, I do not want to dwell on this, but does that go also for the Hanssen induction form and the Hanssen site rules?  Are they contractual in this sense?

MR WALKER:   No, I do not understand that is what Justice Lee is saying in 160.  They are simply, as it were, conduct of a kind which indirectly has the effect of imposing or supplying the content of a previous contractual obligation, no different from the employed gardener being told, “Do what the garden owner wants”.  What the garden owner wants is not by force of the simple statement for any garden owner and gardener contractual, but it is by force of the anterior promise to do that which the garden owner wants.

The authority is given by the anterior promise.  The anterior promise is basically 4(a) but it is provided somewhat in overlapping repetition, given further content with respect to matters as we all know that have considerable statutory ramifications in relation to safety in the safety induction manual held by the court below, not challenged as we understand it to be contractual, and as such to provide important character to the relation, which is the relation in our submission of subordination ‑ that is, obedience to directions.

The authority is supplied and supplied only by the contract between Construct and Mr McCourt, and it is for those reasons that it is shorthand, and for analytical purposes, inaccurate paraphrase, to say that the client is given authority.  This is not an agency between the labour hire company and the client, the so‑called host. 

There is a figure of speech that one could use in terms of devolved control, but these are just figurative language for what is, in contractual terms, a promise by B to A to do what C says from time to time.  That does not make C the person with authority.  It makes C a person whose word is given the authority of A.

Your Honours, proposition 4, I have, in our submission, sufficiently adumbrated already.  Factually, that is, surely beyond contest, the case could not be a clearer one in that regard.  That does not mean that the principles for which we contend, I am coming up to proposition 5, is not one which embraces, in an ordinary common law characterisation sense, the fact that there may be arguable marginal cases.  That is not the point, and I note that I am coming up to questions of so‑called tiebreak or default.

In proposition 5, for the reasons we have put, particularly drawing on the strength of seeing Sir Victor Windeyer’s expression as being really a different way of stating the ultimate question, it cannot, in our submission, be doubted that in all cases of an ordinary kind, probably close to universal, but does not have to be, the determination, that is, the discernment that a person who is working for another person, that other person having its own customers or clients, and in so doing is not conducting the worker’s own business is, by reason of performing work, being paid and subject to directions, an employee.

In that course of reasoning, in our submission, the distinction remains a valuable, not merely informative, but in such cases will be determinative that such a person is, by dint of not conducting their own business, therefore working in another’s business, that being the ultimate way of describing a relationship of employment, that is, use by another, employment as opposed to independent contracting.

The fact that there may be highly skilled employees is a matter that will require its own factual consideration in a particular case, but it is, in our submission, conventional and unremarkable that even very highly skilled employees not conducting their own business pay well to bring their skills that the employer could not possibly hope to second‑guess as to actual manner of discharge, is nonetheless, because not conducting his or her own business, and nonetheless providing work for another, thereby an employee.  It therefore covers a very large spectrum of relations, even if it does not cover all of the possibilities that may yet to be imagined, sufficient unto the day.

Now, as your Honours have seen, and with the given time I will simply refer generally to what we have written about this, we submit that it is nothing incidental or merely historical that the distinction in question, which needs to be practically expressed in such a way as both to lend itself to what I will call jury directions, but also a judicial characterisation of a familiar kind, stems from the need to indicate the imposition of vicarious liability or not.  This is absolutely not the case to expatiate on the state of the law in this Court concerning vicarious liability, which both parties have addressed in detail in their written submissions.  Our point ‑ ‑ ‑ 

EDELMAN J:   Mr Walker, can I just ask what you mean by “vicarious liability”?  Are you using the phrase in the sense of meaning an attribution of the acts of one person to another, the principal, or are you using it in the sense of the attribution of the liability of one person to another, the two senses being those which divided Justice Kitto and Justice Fullagar in Darling Island Stevedoring?

We have included the relevant statutory provisions in the joint book of authorities in volume 2, Part B, tabs 4, 5 and 7 and also in volume 7, Part E at tab 46.  I just wanted to get that…..out of the way.  May it please the Court.

KIEFEL CJ:   Yes, thank you.  Is there anything arising out of that, Mr Walker?

MR WALKER:   Just very briefly.  Statutory treatment of various statutory obligations is of no moment when considering the approach to the ordinary meaning of “employment” in accordance with the principles and approaches that have been debated.  That is the first point.

The second point is that the statutory provision for independent contractors, like the statutory provision in the Fair Work Act for employees positively requires an appreciation and proper application of those matters which are germane to the correct characterisation of one or the other.  I am not going to say, but the fact that there are bookended statutes means that there is a perfect and exclusive dichotomy, but we do say that the existence of that statute is absolutely no reason to depart from a proper approach to

the interpretation of “employee” in the Fair Work Act.  May it please the Court.

KIEFEL CJ:   The Court reserves its decision in this matter and adjourns to 10.00 am tomorrow.

AT 4.17 PM THE MATTER WAS ADJOURNED