Fair Work Ombudsman v Avert Logistics Pty Ltd

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FEDERAL CIRCUIT AND FAMILY COURT OF AUSTRALIA

(DIVISION 2)

Fair Work Ombudsman v Avert Logistics Pty Ltd [2021] FedCFamC2G 153

File number(s): BRG 1094 of 2019
Judgment of: JUDGE JARRETT
Date of judgment: 14 October 2021
Catchwords: INDUSTRIAL LAW – Alleged contraventions of the Fair Work Act 2009 (Cth) – whether applicant an employee or a subcontractor.
Legislation:

Fair Work Act 2009 (Cth):ss11, 44(1), 45, 335, 545, 546(1), 547(2), 559

Work Health and Safety Act 2011 (Qld)

Transport Operations (Road Use Management – Fatigue Management) Regulation 2008 (Qld)  
Cases cited:

ACE Insurance Ltd v Trifunovski & Ors (2011) 84 ATR 561

Construction, Forestry, Maritime, Mining and Energy Union v Personnel Contracting Pty Ltd [2020] FCAFC 122

Fair Work Ombudsman v Quest South Perth Holdings Pty Ltd (2015) 228 FCR 346

Hollis v Vabu Pty Ltd (2001) 207 CLR 21

Jamsek v ZG Operations Australia Pty Ltd [2020] FCAFC 119

R v Foster; Ex parte Commonwealth Life (Amalgamated) Assurances Ltd (1952) 85 CLR 138

Stevens v Brodribb Sawmilling Co Pty Ltd (1986) 160 CLR 16

Sweeney v Boylan Nominees Pty Ltd (2006) 227 ALR 46
Division: Division 2 General Federal Law
Number of paragraphs: 67
Date of last submission/s: 28 September 2020
Date of hearing: 28 September 2020
Place: Brisbane
Counsel for the Applicant: Mr McKenchnie
Solicitor for the Applicant: Norton Rose Fulbright
Counsel for the Respondent: Mr Spence
Solicitor for the Respondent: Workdynamic

ORDERS

BRG 1094 of 2019

FEDERAL CIRCUIT AND FAMILY COURT OF AUSTRALIA (DIVISION 2)
BETWEEN:

FAIR WORK OMBUDSMAN

Applicant
AND:

AVERT LOGISTICS PTY LTD ACN 139 205 244

Respondent

ORDER MADE BY:

JUDGE JARRETT

DATE OF ORDER:

14 OCTOBER 2021

THE COURT ORDERS THAT:

1.The application filed on 18 December, 2019 be dismissed.

Note: The form of the order is subject to the entry in the Court’s records.

Note: This copy of the Court’s Reasons for judgment may be subject to review to remedy minor typographical or grammatical errors (r 17.05(2)(g) Federal Circuit and Family Court of Australia (Division 2) (General Federal Law) Rules 2021 (Cth)), or to record a variation to the order pursuant to r 17.05 Federal Circuit and Family Court of Australia (Division 2) (General Federal Law) Rules 2021 (Cth).

REASONS FOR JUDGMENT

JUDGE JARRETT

  1. The applicant alleges that the respondent contravened the Fair Work Act 2009 (Cth) (“the Fair Work Act”) by not paying four delivery drivers various entitlements that were due to them as employees. The respondent purports to have engaged the drivers as independent contractors but the applicant’s case is that, when assessed holistically, the relationship between the drivers and the respondent was one of employment.

  2. The applicant submits that the evidence in this case reveals, inter alia, that the drivers:

    (a)were obliged to perform work during hours, and in a manner dictated by and controlled by the respondent;

    (b)could not take any leave (including sick leave) without seeking and obtaining the permission of the respondent;

    (c)drove trucks owned by and branded with the livery of the respondent;

    (d)wore clothing…

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Details
Case
[2021] FedCFamC2G 153
Decision Date

CaseChat Overview and Summary

In the case of Fair Work Ombudsman v Avert Logistics Pty Ltd, the Fair Work Ombudsman contested that the drivers engaged by Avert Logistics Pty Ltd were employees rather than subcontractors, alleging contraventions of the Fair Work Act 2009 (Cth). The Federal Circuit and Family Court of Australia was tasked with determining the legal status of the drivers under the contracts they had with Avert Logistics.

The central legal issue was whether the drivers were employees or independent contractors under the agreements they had with Avert Logistics. The court needed to examine the written contracts, the nature of the work performed, and the intentions of the parties as expressed in the contracts.

The court considered the terms of the written agreements between Avert Logistics and the drivers, noting that the contracts explicitly classified the drivers as contractors and not employees. The court held that the characterisation of the relationship in the contracts was a significant factor and, in the absence of evidence suggesting otherwise, found that the agreements reflected the true intent of the parties. The court also highlighted the importance of contractual certainty and declined to depart from established legal principles regarding the classification of independent contractors.

The court ultimately ruled in favour of Avert Logistics, concluding that the drivers were correctly classified as independent contractors under the terms of their contracts. The Fair Work Ombudsman's appeal was dismissed, and the court affirmed the status of the drivers as independent contractors.

Orders

Orders of the court

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Background

Background to the litigation

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Evidence

Evidence Before The Court

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Decision

Reasons for decision

In Personnel Contracting (Supra), Lee J summarised the primary judge’s consideration of the relevant contract in the following way at [144] to [145]:Seventhly, and of critical importance, was the weight placed by the primary judge on the written terms of the agreement between the parties. In concluding (at J[170]) that “there are significant matters that point in opposite directions on the critical question of whether Mr McCourt was an employee”, the primary judge noted (at J[172]) that “it is always important to pay close regard to the way in which the parties have characterised their relationship”. On this basis, and relying on a number of authorities (see J[173]–[176]), his Honour came to the following conclusion (at J[177]–[179]):In those circumstances, where the question might be seen to be reasonably evenly balanced, and where any suggestion of sham or pretence is disavowed, it seems to me that there is no sufficient reason not to find that the parties’ agreement that Mr McCourt was self-employed means, and was intended to mean, what it says. The terms of the ASA clearly indicated that the relationship between Construct and McCourt was to be one of principal and self-employed contractor, including as follows:Mr McCourt was defined and referred to throughout the document as the “Contractor”, not an employee;“Construct is an administrative services agency ... liaising between builders … and self-employed contractors for the provision of labour by self- employed contractors to builders and supplying to the self-employed contractors financial administrative services” (Recital A);“The Contractor warrants that: ... he is self-employed” (clause 3(b)); and“The Contractor shall ... not represent himself as being an employee of Construct at any time” (Clause 4(h)).Each of these statements is a clear statement of intent that the relationship between Construct and Mr McCourt was not to be one of employment, but one of principal and self-employed contractor.Mr McCourt acknowledged that he read all the documents he was given, including the ASA. So, absent some other reason (none is advanced) he is taken to have read and approved them. And that must be so, because otherwise serious and obvious mischief might result.(citations omitted)Stated simply, the primary judge, in weighing the various indicia and coming to the conclusion that, as is often the case, there were matters which pointed in different directions, resorted to the express terms of the agreement between the parties seeking to characterise the relationship as the “tie-break” factor.”In this matter, in accordance with principles set out above, it is “important to pay close regard to the way in which the parties have characterised their relationship.”70 These are circumstances where it is “perfectly legitimate to give significant weight to its negotiated terms”.71As outlined above, all of the drivers had pre-existing entities through which they contracted with the respondent, excepting Ms Keable, who was a sole trader, using the ABN that she used for her business as a mail sorter with Australia Post.72The applicant has failed to provide any evidence that demonstrates the terms of the written contracts were not followed or that the contracts were not freely entered into.In Personnel Contracting, Lee J said the following (at [117]) about the driver being considered:“…it is difficult to reconcile the central conception of a multi-factorial inquiry with the notion that the legal construct reflected in a contract of adhesion presented to an eager a 22-year-old backpacker, can assume decisive importance as a “default” or as a “tie-break”.Despite this, his Honour determined to dismiss the appeal, and in doing so, said the following [185]:“There exists tensions in the application of the multi-factorial approach to new and novel labour arrangements and there is force in the criticisms advanced by the CFMMEU of the current state of the law. While the above reasoning demonstrates that if approached tabula rasa, I would have concluded the notion of Mr McCourt being an independent contractor is somewhat less than intuitively sound, the current circumstances demand more. The reality is that the arrangement the subject of this appeal is materially identical to that considered by the WAIAC in 2004. The importance of certainty means this Court ought not to depart from a decision in relevantly indistinguishable circumstances (being an evaluative decision that was open on the circumstances common to both cases). On the current state of the law, the judgment and orders made by the primary judge have not been demonstrated to be erroneous and, as a consequence, the appeal must be dismissed.” (emphasis added)

Ratio Decidendi

Legal Principle Established

The respondent submits that the principles applied in Personnel Contracting are apposite to the facts in this matter regarding the way in which the respondent engaged the drivers to perform deliveries for their customers, with their customers setting the start and finish times and controlling the work performed of the driver.Consideration The respondent is a national system employer. Its business provides road transport, distribution, logistics, heavy vehicle operations, warehousing, import, retail and airfreight services. The work performed by the drivers under the contracts between them and the respondent was work that the respondent was obliged to perform according to its contractual relationships with its customers such as Toll Priority, StarTrack, and UPS. The drivers were engaged by the respondent to drive vans, picking up packages and delivering packages to homes and businesses. The drivers’ duties were performed pursuant to the following written agreements:(a)written agreement with Ms Emily Keable dated 10 October, 2017;(b)written agreement with M+K Ready Solutions, a partnership between K Kailea & Sela Mahe, dated 23 October, 2017;(c)written agreements with Mr Michael Rickards as a partner of the partnership known as M Rickards & L Lockyer, dated 23 November, 2016 and 29 March, 2017; and(d)written agreements with Rodmarda Pty Ltd, a company owned by Mr Rodney Smith, dated 15 March, 2016 and 17 March, 2017. Ms Sela Mahe signed the contract for M+K Ready Solutions. She worked as a driver for the purposes of providing the services to the respondent specified in the contract. Similarly, Mr Michael Rickards worked as a driver for the purposes of providing the services to the respondent specified in the contract with M Rickards & L Lockyer. Mr Rodney Smith worked as a driver for the purposes of providing the services to the respondent specified in the contract with Rodmarda Pty Ltd. The contracts (and the latest versions of those contracts signed by Mr Rickards and Mr Smith) were in the same terms. They were all prepared on behalf of the respondent and provided by the respondent to the drivers for acceptance and signature. The contracts in the present case are not suggested to be a sham. That is a significant matter in my view. The terms of the engagements use the language of contracting and strongly suggest, in my view, that the drivers were contracting their services to the respondent. Relevantly, the contracts each provided as follows:by clause 6(g):it was the responsibility of the Contractor/Supplier to ensure a replacement driver was available to cover time off for extended periods such as annual leave, days-off, sick leave etc. if possible. by clause 6(j):The Contractor/Supplier will allow the Principals signage to be displayed on the Contractors vehicle. Signage to be at the Principals cost.By clause 7:PaymentIn consideration for the Contractor/Supplier providing the Services to the Principal, the Principal will make the payment to the Contractor/Supplier in accordance with the provisions of this clause. Payments will be paid to the Contractor 14 days of the receipt of a GST-compliant invoice detailing the deliverables in arrears and following verification by the Principal of the successful completion of those deliverables.…Contractor/Supplier Invoice to be sent to the Principal no later than 5.00pm on the Saturday following the weekending closure, if received after cut-off will result in delayed payment by an additional 7 days. Payments will be subject to the Principal receiving payments from the Client.by clause 8:the contract may be terminated by either party, if the Agreement shall expire or be terminated for any reason, by the giving of “21 days (15 Working Days) written notice by the Contractor/Supplier”.by clause 11:11. Freedom to Contract: The Contractor/Supplier will be free to enter into contracts with third parties for the provision of services by the Contractor/Supplier to the third party while this Agreement is in force, subject to the Contractors/Suppliers not being placed in a conflict of interest, or in a possible conflict of interest, as between the Contractor’s/Supplier’s obligations to the Principal under this Agreement upon written permission by the Principal, the Principal retains the right to withdraw permission whenever warranted.clause 13: 13. Insurances:The Contractor/Supplier must indemnify Company for all loss or damage to the goods in transit and must have in place their own insurance policies as per specified.The Contractor/Supplier must provide evidence of these insurance policies, including copies of certificates of currency. Certificates of currency renewals must be provided to Company each time an insurance policy expires.The Contractor/Supplier agrees to perform and observe all obligations and requirements of it by law in relation to the Contractor, including but not limited to, paying all necessary taxes, duties and imposts and taking out and continuing all necessary insurances, including public liability, professional indemnity and compliance with workers’ compensation obligations.by clause 20:20. Nature of the Relationship: The Contractor/Supplier and the Principal agree that the Contractor/Supplier will provide the Services to the Principal as a Contractor/Supplier and will not be in the partnership with the Principal or an employee, servant or agent of the Principal for any purposes whatsoever.by clause 22:Assignment: The Contractor/Supplier can not assign its rights and obligations under this Agreement to any other party. There is to be no assignment of the agreement, as it is considered personal between both parties, and as such no assignment is permitted. Under no circumstances can the Agreement be sold with a goodwill component or as a business.