Farnan v Insurance Logic Pty Ltd and Anor
[2017] FCCA 595
•28 March 2017
FEDERAL CIRCUIT COURT OF AUSTRALIA
| FARNAN v INSURANCE LOGIC PTY LTD & ANOR | [2017] FCCA 595 |
| Catchwords: INDUSTRIAL LAW – Employer and employee – a consultant who was engaged through a company – consultant changed terms of payment – superannuation – whether contractor was an employee within the extended definition of employee under s.12(3) Superannuation Guarantee (Administration) Act 1992. |
| Legislation: Fair Work Act 2009, ss.117, 340, 341 Superannuation Guarantee (Administration) Act 1992, s.12 |
| Cases cited: ACE Insurance v Trifunovski & Ors (2013) 295 ALR 407 Aufgang v Kozminsky Nominees Pty Ltd [2008] VSC 27 |
| Applicant: | CHRISTINE FARNAN |
| First Respondent: | INSURANCE LOGIC PTY LTD |
| Second Respondent : | BLUE BADGE INSURANCE PTY LTD |
| File Number: | MLG175/2015 |
| Judgment of: | Judge McNab |
| Hearing date: | 4, 5, 6 July 2016 |
| Date of Last Submission: | 16 November 2016 |
| Delivered at: | Melbourne |
| Delivered on: | 28 March 2017 |
REPRESENTATION
| Applicant in Person |
| Counsel for the Respondents: | Mr Davis |
| Solicitors for the Respondents: | DLA Piper |
ORDERS
The application filed 30 January 2015 be dismissed.
There be no order as to costs.
| FEDERAL CIRCUIT COURT OF AUSTRALIA AT MELBOURNE |
MLG175/2015
| CHRISTINE FARNAN |
Applicant
And
| INSURANCE LOGIC PTY LTD |
First Respondent
| BLUE BADGE INSURANCE PTY LTD |
Second Respondent
REASONS FOR JUDGMENT
(As Corrected)
Introduction
The case concerns the questions of whether the Applicant was an employee of the Respondents and whether the Respondents terminated the Applicant’s contract because the Applicant had made workplace complaints within the meaning of s.341(1)(c)(ii) of the Fair Work Act 2009 (Cth) (‘Fair Work Act’).
By an Amended Statement of Claim filed 14 February 2016 the Applicant alleges that:
a)she commenced providing compliance management services to the First Respondent (“IL”) on about 19 March 2013;
b)from about 30 September 2013 to 14 November 2014 she commenced providing compliance management services to the Second Respondent (“BBI”); and
c)she was in substance an employee of BBI and held the position of Compliance and Risk Manager from 30 September 2013 to 14 November 2014.
The Applicant also alleges that the contract between the Applicant and the Second Respondent (whether a Contract of Employment or as an independent contractor arrangement) included terms that:
a)she would be paid within “normal commercial terms” (30 days) of providing services;
b)she would receive superannuation contributions; and
c)that either party could terminate the “arrangement” on reasonable notice.
The Applicant alleges that between 15 October 2013 and 2 October 2014, she made several “employment complaints” to the Respondent as set out at [8] of amended her Statement of Claim (“the employment complaints”).
The Applicant alleges that her engagement was ended or that the Respondents refused to utilise her services as a result of the workplace complaints that she made on about 14 November 2014.
The Applicant claims that as a result of the termination of her employment by the Second Respondent and that as a result of the breaches of the “employment arrangement” she was entitled to:
a)notice of termination pursuant to the operation of s.117 of the Fair Work Act in the sum of $6,000 being what was alleged to be remuneration for two weeks;
b)unpaid annual leave in the sum of $13,800;
c)unpaid personal/carers leave in the sum of $6,600;
d)unpaid outstanding payments which were said to be payments for services rendered in the sum of $36,734.50;
e)unpaid superannuation in the sum of $22,579; and
f)reasonable notice of termination which was that said to be 6 months notice at $12,000 per month being $72,000. The Applicant also sought penalties for these matters pursuant to the provisions of the Fair Work Act .
Factual background
The Applicant provided specialised advisory services within the insurance industry. Ms Farnon gave evidence that she had 35 years experience in the financial services industry and has extensive knowledge of the general insurance sector. Ms Farnon gave evidence that was not disputed that she had developed specialist knowledge in Australian financial services licencing and compliance management systems.
She stated that in mid-2003 she commenced providing compliance management services and had a business running workshops dealing with the then new Australian Financial Services (AFS) licencing regime. This business was conducted via the company Knowork Corporation Pty Ltd (“Knowork”). She says that Knowork was engaged by the First Respondent to apply for an AFS licence on the First Respondent’s behalf in 2003 which was granted on 19 January 2004.[1]
[1] Ms Farnan affidavit 23 December 2015 [11].
Between 2003 and 2014, she worked as a financial services contractor for the First Respondent working on average 1.5 days per year with those services being provided by Knowork and subsequently FIT Corporate Innovations Pty Ltd (“FCI”).[2]
[2] Ms Farnan affidavit 23 December 2015 [12].
IL was established in 1998 as an insurance broker. BBI provides specialised insurance products for Australians with disabilities and limited mobility. IL and BBI operate out of offices in Sydney.
It is not disputed that between 2003 and June 2013, the Applicant provided services to IL for 1 day to 1.5 days per year through two corporate entities: Knowork from 2003 – 2005 and FCI from 2005 – June 2013.
On 30 June 2014, the Applicant provided IL with an invoice bearing that date that was not payable to FCI. This invoice had the words “FIT Corporate Innovations Pty Ltd ABN 72 113 238 056” replaced with the words “Ms Christine Farnan – contractor”.
Provision of Services to BBI
In mid-March 2013, Mr James Cotis, a director of each of the Respondents, contacted the Applicant asking her whether she was interested in assisting with the establishment of the BBI’s business. BBI wished to launch insurance products that were directed to the market of people with disabilities and/ or limited mobility.
By an email dated 11 April 2013 from the Applicant to Mr Cotis, the Applicant thanked Mr Cotis for inviting FCI to provide compliance management services to BBI and set out the proposed terms of the engagement of FCI . The proposal included the statements:
Further to my confidential briefing and earlier support I am pleased to provide the following submission to advance your new and exciting Australian business venture.
Firstly, thank you for inviting my firm to provide extended compliance management services to your company in relation to the new company – Blue Badge Insurance Pty Ltd and its proposed insurance products and services.
The purpose of this email is to set out the proposed terms of reference and engagement terms and also to make some comment in relation to information representations which will be required and relied on for the purposes of varying the Insurance Logic Pty Ltd/ t/as Logical Financial Management (LFM)’s existing Australian Financial Services (AFS) licence number 237633 conditions and compliance program.
Our compliance management services are conducted in accordance with the Australian corporations Law …
In the body of the proposal documents under the heading Proposed Terms of Engagement the Applicant stated the following:
I usually run these assignments as projects like short-term contracts say for 1 – 2 – 3 months (depending on the specifications) and then build (develop and implement) maintenance programs (separate contract/arrangements) to meet the ongoing ASIC AFS licensing and compliance management services obligations.
The Terms of Engagement set out in the proposal provided for payment to the Applicant in the sum of $1,500 per day as the initial rate and to reduce to $1,300. Assistant Administrator, Denise Cox, was to be paid a day rate of $400 for work that she did.
The proposal also set out a scope of work under a heading “Terms of Reference” in the 11 April 2013 email. These included:
a)preparing an ASIC AFS Licence form submission;
b)preparing an ASIC AFS Licence variation application;
c)conducting and drafting a Research and Development plan for the disability industry in Australia;
d)work related to analysing the supplier data base of mobility scooters;
e)drafting and designing website content for BBI products and services; and
f)drafting and designing corporate BBI stationary.
On 15 April 2013, Mr Cotis sent an email confirming that the project would be commenced (save that some of the steps proposed in the scope of works would be put on hold until an underwriter was on board.) It was also contemplated that a person engaged by the Applicant (Denise Scott) would assist the Applicant. The letter concludes with the words:
Thanks again for your assistance, and we look forward to working with you on the project.
The Applicant commenced work on the project from about 17 April 2013.
On 31 May 2013, Ms Farnan wrote to Mr Cotis by email attaching an invoice dated 28 May 2013 headed “ Christine Farnan – Contractor” that states, omitting irrelevant parts:
“[i]n the meantime, I’ve adjusted my day rate to reflect your current needs and appreciate your comments on the value add that I contribute. The hourly rate is $130 closely representing $1,000 per day down from $1,300/$1,500. Both Denise and I are billing you as private contractors up to the end of the financial year and both accounting personally for the tax position – this way you do not pay any GST saving more outgoings.”
The tax invoice rendered with the email is dated 28 May 2013, which covered services from 17 April 2013 to 24 May 2013. It included an “admin fee” of $631.50.
At about the time that Mr Cotis received the 28 May 2013 invoice he had a conversation with Mr Cotis in which she said that she would be invoicing BBI in her own name and that the arrangements that were in place with her company FCI would not be changed. The second invoice rendered by the Applicant to BBI dated 20 November 2013 covered work performed between 28 May 2013 and 6 June 2013.
Ms Farnan gave evidence that between 1 July 2013 and 18 July 2013 she worked two days for BBI and that she did this as an “individual”. She said she worked for one day with Mr Cotis at the IL office on 12 July 2013 before going on an overseas trip. She was overseas from 9 July 2013 to 24 September 2013.[3] The Applicant did not perform any work for BBI during this period and no invoice was raised in respect of this period. The Applicant did not seek permission to travel overseas or indicate that she was taking leave.
[3] Ms Farnan affidavit 23 December 2015 [18].
The Applicant recommenced performing work for BBI on 30 September 2013, working on average for four days a week, initially at LFM’s Surrey Hills office as a Compliance and Risk Officer. She did this until 14 November 2014.[4]
[4] Ibid [20].
Ms Farnan asserts that the work that she performed with BBI from 30 September 2013 until 14 November 2014 was properly characterised as employment. She asserted that:
a)she had no written agreement stating the terms and conditions of the engagement;
b)her remuneration was wholly or principally for her personal labour and skills comprising an hourly rate of $130 a day or day rate of $1,000 whenever it applied;
c)upon presentation of the time sheets and accounts BBI paid remuneration via EFT directly into a private bank account on a monthly basis;
d)she was never remunerated on the basis of achieving a given result, specific task or a series of tasks;
e)she was remunerated as an individual and did not deliver any services through a corporate energy entity and never quoted an ABN or charged GST to BBI;
f)she performed the duties extensively at BBI’s place of business and used the company’s furniture, equipment and systems;
g)she would occasionally work remotely as agreed from Fitzroy, Victoria;
h)she used her own laptop for reasons of convenience and expediency; and
i)she copied the BBI internal client directory and gave electronic files to another co-worker for backup and safekeeping.[5]
[5] Ms Farnan affidavit 23 December 2015 [23]-[27].
The Applicant gave evidence that:
a)she was included on BBI’s Lloyd’s Coverholder Key Persons Register in the role of Claims Management Compliance Officer;
b)she was described in internal telephone lists maintained by BBI as Compliance Advisor and was given an email bearing the name [email protected] and provided with a Skype account set up by the Respondents;
c)the hours of and place of work were directed by BBI’s board and CEO who also allocated her duties;
d)she was subjected to control by employees of the respondent, Mr Witcombe, the CEO and Ms Akhyani, BBI’s Sales and Marketing Manager; and
e)she performed duties as a BBI team member and participated in executive meetings and had no inherent ability to delegate tasks to others.
In relation to the remuneration and hours of work, she says that:
a)she was practically working full-time hours in the BBI business and her income from that business accounted for 95% of the gross remuneration which she received; and
b)as she was working nearly full-time hours for BBI she was not in a position to contract to other businesses or operate a business.
In relation to costs of performing the work, she stated that:
a)Mr Witcombe, a Manager of the Respondents agreed to pay her out-of-pocket expenses for accommodation and meals and some flights;
b)prior to 1 August 2014, she spent a portion of her remuneration on business expenses for which she was not and did not seek to be reimbursed; and
c)in performing her work and reporting requirements of BBI’s Compliance Officer, she reported to:
i)Mr Cotis between 1 July 2013 and 18 July 2013 and from 30 September 2013;
ii)Mr Akhyani, the Sales and Marketing Manager of the Second Respondent from 2 October 2013, who directed her to perform a wide range of duties; and
iii)Mr Nikolas Witcombe, CEO of BBI from about 14 October 2013.
The Respondent’s evidence in relation to the nature of the Applicant’s engagement
Evidence was given on behalf of the Respondents by James Cotis, his evidence in chief being given by an affidavit sworn 28 January 2016, Shirin Akhyani, the Sales and Marketing Manager of the Second Respondent with her evidence in chief being given by an affidavit sworn 28 January 2016 and Nikolas Witcomb the Chief Executive Officer of the Second Respondent with his evidence in chief being given by an affidavit sworn 28 January 2016.
The evidence of Mr Cotis was to the effect that:
a)The First Respondent was established in 1988 and is an insurance broker;
b)BBI provides specialised insurance products for Australians with disabilities and limited mobility. BBI was set up in about March or April 2013. Both IL and BBI operate out of offices in Sydney;
c)Between 2003 and 2014, the Applicant performed approximately 1.5 days’ work per year for the First Respondent IL. The work was originally performed through Knowork and from November 2005, the services were provided through FCI. Mr Cotis formed the impression that the Applicant operated as a consultant to a wide variety of clients and he formed this impression as a result of the work that she told him that she was doing in the insurance industry and the clients for whom she told him she acted.
Mr Cotis denied that there was ever any discussion between himself and the Applicant in relation to the Applicant “securing a future position” with the Second Respondent. Nor was there discussion in relation to the Applicant obtaining a permanent position with the Second Respondent. Mr Cotis gave evidence that the Applicant provided her services after 30 June 2013 in exactly the same manner as she performed them prior to 30 June 2013.
He became somewhat concerned about the absence of the Applicant on a holiday but was advised that she would be returning to Australia on about 24 September 2013 and would be available to work shortly thereafter. The Applicant also told him that she would provide regular updates and check in with the regulator.
Mr Cotis gave evidence that:
a)the Applicant recommenced providing services to BBI on 30 September 2013;
b)there was no renegotiation of the nature of the work or the nature of the engagement;
c)the Applicant was engaged through her company, on behalf of BBI, as an independent provider of specialist compliance services, the scope of works needed to complete the project was provided by the Applicant;
d)the engagement of the Applicant was for the purposes of completing the specific project, that is the launch of the BBI insurance products; and
e)BBI relied on the Applicant to advise it what was needed and worked in accordance with her recommendations as an expert.
In summary form, he gave evidence that:
a)the Applicant had a history of offering her advisory services through a corporate entity and it was her choice to commence providing those services in her own name;
b)the Applicant described herself as a contractor in emails at the time that the work commenced and throughout the relationship;
c)the Applicant was engaged in her own words “on a project by BBI;
d)the Applicant’s CV dated 2014 described herself as a contractor (annexure JC5);
e)the Applicant was able to, and did, engage others to assist her in the performance of her duties and charged BBI for the provision of services by Miss Cox in that capacity;
f)BBI did not control the Applicant’s performance of her duties or the manner in which she created the product that she was supplying;
g)the Applicant was domiciled in and worked from Melbourne;
h)the Applicant worked regular days and hours which is evidenced by the terms of the invoices rendered by her;
i)the Applicant provided her own laptop and mobile phone;
j)the Applicant did render invoices and was paid on a gross basis, did not seek the deduction of tax;
k)the Applicant travelled overseas for her own purposes without permission or seeking the payment of leave;
l)the Applicant had never made a claim for annual leave or personal leave from the period from 30 September 2014 to November 2014; and
m)the Applicant did not, during the course of providing the services, refer to herself in terms of being an employee of BBI.
Statement of Issues
Three issues arise:
a)Whether the Applicant was engaged as an independent contractor or as an employee by IL or BBI;
b)Whether adverse action was taken by the Respondents against the Applicant by terminating her engagement; and
c)Whether the Applicant is entitled to superannuation contributions pursuant to s.12(3) of the Superannuation Guarantee (Administration) Act 1992 (‘SGA Act’).
The issue of determining whether a person is an independent contractor or an employee is not straightforward and involves weighing up all relevant factors.[6]
[6] ACE Insurance v Trifunovski & Ors (2013) 295 ALR 407 [9] (Lander J).
In Aufgang v Kozminsky Nominees Pty Ltd, Smith J provided a helpful summary of the effect of the High Court cases which continue to be relevant:
37…the question whether a person is an employee or independent contractor of another is a question of degree in which a number of factors have to be considered, none of which are determinative. The totality of the relationship is that which has to be considered. It has long been accepted, however, that the distinction between an employee and an independent contractor lies fundamentally in the difference between a person who serves an employer in his, the employer’s business, and a person who carries on a trade or business of his own. As was said in Stevens v Brodribb:
“The ultimate question will always be whether a person is acting as the servant of another or on his own behalf.”
The issue of control has always been a significant matter but it is now established that the when considering the issue of control, what is relevant is not the actual exercise of control but the right to control. Further, the right to control is only one factor and not the only relevant factor.
38 Indicia of the nature of the relationship include, in addition to the right to control:
· the right to have a particular person do the work,
· the right to suspend or dismiss the person engaged,
· the right to the exclusive services of the person engaged,
· the right to dictate the place of work, hours of work and the like,
· whether the work involves a profession trade or distinct calling on the part of the person engaged,
· who provides the place of work and equipment,
· whose goodwill is created as a result of the work,
· ownership of any saleable assets created by the work,
· the person paying business expenses of any significant proportion,
· the payment to the person in question of remuneration without deduction for income tax.[7] (Footnotes omitted).
[7] [2008] VSC 27 [37]-[38].
It is accepted that these indicia are no more than a guide and the actual terms and terminology of the contract will always be of considerable importance.
The nature of the Applicant’s employment is a factual and legal question. It is necessary to examine the reality of the relationship.[8]
[8] ACE Insurance v Trifunovski & Ors (2013) 295 ALR 407. 420.
I have particular regard to what was said by the Full Court of the Federal Court in Tattsbet Limited v Morrow:
As Buchanan J put it in ACE Insurance, “[w]orking in the business of another is not inconsistent with working in a business of one’s own”. On the other hand, if the putative employee’s circumstances exhibit the characteristics of a business, that will undoubtedly be a matter proper to be taken into account in determining the question at hand, so long as sight is not lost of the question itself. The question is not whether the person is an entrepreneur: it is whether he or she is an employee.[9]
[9] (2015) 321 ALR 305 at [61].
Finding in relation to whether the Applicant was an employee of BBI or IL
In my view the evidence does not support a finding that the Applicant was an employee of either of the Respondents in the relevant period.
The evidence supports a finding that the Applicant was conducting her own business as a specialist consultant to the Respondent and in particular to the Second Respondent in relation to compliance management services in order that a particular product could be launched by the Second Respondent. The Applicant was conducting her own business initially via her companies Knowork and FCI and subsequently as a contractor in her own name. The Applicant was engaged on a contract for services, the terms of which were fixed in the letter of engagement that she signed, which were on terms proposed by her and agreed to by the Respondent. The Applicant unilaterally nominated herself as the party to be paid for the provision of services.
Whilst it may be the case that during the period from October 2013 to November 2014, the Applicant performed significant work for the Second Respondent, that was in her capacity in operating her own business, which was distinct from the business of the Second Respondent.
A matter of particular significance was that the Applicant claimed payment in a gross sum without deduction of taxation. The Applicant gave evidence that she had rendered invoices for a gross amount and the Applicant was aware that no amounts were being deducted for income tax purposes. She also gave evidence that she had not filed a tax return in the financial years ending 2012, 2013, 2014 or 2015. While there is no evidence that the Applicant had levied GST on invoices and filed BAS statements, such was the case in Tatsbett Ltd v Morrow, the Applicant has not filed tax returns and has had the benefit of the payment of invoices in a gross amount without deduction of tax.
The Applicant appears to have conducted herself so as to obtain the benefits of self-employment in relation to taxation, management of her time and the ability to work for clients other than the Respondents and then deny that status in order to obtain other benefits. As was stated by the Full Court in Barro Group Pty Ltd v Fraser:
The uncontradicted evidence being that the plaintiffs were in partnership and that the contract was made between the plaintiffs and the defendant, his Honour, for the purpose of ascertaining the character of the legal relations between the parties, ought not to have ignored that the plaintiffs contracted as partners. In Massey v Crown Life Insurance Co [1978] 1 WLR 676, at p. 681; [1978] 2 All ER 576, at p. 581, Lord Denning MR said that strong evidence of their real relationship is provided by a man who, for the purpose of obtaining tax benefits, procured agreement from his former employer that his future engagement would be as a self-employed person. The following passage from the judgment of Lawton L J, at ([1978] 1 WLR) p. 681; ([1978] 2 All ER) p. 581, is apposite to the plaintiffs' claim: "”In the administration of justice the union of fairness, common sense and the law is a highly desirable objective. If the law allows a man to claim that he is a self-employed person in order to obtain tax advantages for himself and the allows him to deny that he is a self-employed person so that he can claim compensation, then, in my judgment, the union between fairness, common sense and the law is strained almost to breaking point. The Applicant is asking this court to adjudge that he is entitled to make claims with two different voices. The problem, it seems to me, is this: what was the status of the appellant at the material time in November 1975? At that time, for his own purposes, he had been claiming for over two years that he was a self-employed person and, if he was such, he could not claim compensation for unfair dismissal. The problem turns in my judgment upon the surrounding facts and the terms of the contract.”[10]
[10] [1985] VR 577, 580.
I do not find that the evidence supports a finding that any employee of the Respondent exercised any particular degree of control over how the Applicant performed work for BBI for the reasons set out below.
Ms Akhyani gave evidence that she was engaged as a Sales and Marketing Manager by the Second Respondent in October 2013; that she had no particular experience in preparing compliance documentation; and that her experience was limited to developing sales models.
She gave evidence that the Applicant was the only compliance expert engaged on the project and that she did not have (then or now) the knowledge or capacity to give her directions on how to perform her work. She said that the Applicant worked on high level business compliance, and risk management legal structuring, none of which was Ms Akhyani’s responsibility. Further, she gave evidence that she never directed the Applicant to attend for work or to perform work, nor did she manage her or her duties. She noted that the Applicant was quite vocal about how others working on the project should perform various tasks and responsibilities so that the Second Respondent’s compliance obligations were met. She also stated that she was never under the impression that the Applicant was working full-time for the Second Respondent and that the Applicant was often unreachable during normal business hours and would remain absent for days at a time. Further the Applicant was based in Melbourne and travelled to Sydney on a sporadic basis and the Second Respondent does not have an office in Melbourne.
The Applicant pointed to a number of emails from Ms Akhyani to her, including one dated 3 October 2013, which was sent shortly after Ms Akhyani commenced employment with BBI as evidence of the level of control exercised over her. The email states (omitting irrelevant parts):
Hi Christine,
It was really nice to meet you yesterday. As promised, below are my contact details and a list of the key priorities Nik and I have that require your input and guidance:
1. An understanding of the different dealer models (distributor, referrer, spotter etc.)
2. A base contract for each of the above for us to present to dealers after we have confirmed their interest.
3. An outline of the scooter policy – all of the items, values, excesses etc.
4. Guidance on what we can and can’t say in sales and marketing collateral, including the website (and probably also a list of what we must say). As I mentioned yesterday, we are currently working with our agency to develop a variety of point of sales materials as well and information packs for the dealers, so it’s important for us to know what parameters we must operate in and any other language imperatives we need to be aware of….
Meetings were held between Ms Akhyani, Ms Farnan and Mr Witcombe to discuss the schedule for the performance of the project and on 15 October 2013, Ms Akhyani sent a letter summarising the actions required.
The Applicant in evidence suggested that this correspondence was evidence of a level of control over her such as to give rise to a finding that she was subjected to control as would an employee. I do not accept that submission. In my view, the correspondence and other correspondence referred to by the Applicant as indicative of that exercise of control was in fact more in the nature of correspondence confirming the work that had to be done by all of the persons involved in the project and the timelines that had been set. Sending an email in the terms referred to does not establish an employment relationship between the Applicant and the Second Respondent.
The Applicant also gave evidence that she claimed that she was subjected to direction by Mr Witcombe. The Applicant asserted that she was given orders to attend meetings, allocated or not allocated certain duties and responsibilities, her work was regularly monitored and supervised and that Mr Witcombe controlled many facets of her workload and particularly relating to launch timelines. Mr Witcombe gave evidence that he regarded the Applicant as an expert in compliance and that none of the other individuals working on the project had the skills and experience to direct her on what to do or how to do it. He stated that he did not have any control over when she worked or the hours that she worked, and did not direct her to work certain hours or certain days. He did give evidence that he simply pressed the Applicant to perform tasks which were scheduled as part of the programmed events. Mr Witcombe gave evidence that he was more concerned with ensuring that the Applicant was completing the work that the company needed her to do and keeping an eye on the amount of money that she was charging.
I accept the evidence of Ms Akhyani and Mr Witcombe in relation to the level of control said to have been exercised over the Applicant by the senior employees of BBI. I do not accept that BBI was directing how the Applicant should perform the work. Once a consultant, whether it be (without intending to be exhaustive) a solicitor, accountant, engineer or software developer says that part of the project will be completed at a particular time and cost, the other party is entitled to follow-up the timeliness of work and its cost without necessarily indicating that this constitutes a level of control exercised by an employer.
Otherwise the evidence disclosed that the Applicant admitted working for another client when engaged by the Second Respondent (on 12 November 2013).
The Applicant accepted under cross examination that:
a)she was never engaged as an employee by the Respondents;
b)there were times that she did no work for BBI during the relevant period;
c)when she did not perform work for BBI she did not charge or bill them;
d)she often worked remotely from Melbourne;
e)she used her own printer and computer and supplied office supplies such as paper; and
f)when she travelled she arranged her own travel and paid for it as her expense and there is no evidence that such expenses were reimbursed.
Claims of Adverse Action
In circumstances where the court has determined that the Applicant was not an employee of the Respondents, all the claims that she makes in respect of breaches of the Fair Work Act must fail save for the claim made pursuant to s.342(1) of the Fair Work Act in relation to the exercise of the workplace rights as an independent contractor. In particular, those matters set out in paragraph 8 of the amended statement of claim must fail. The Applicant was not an employee for the purposes of s.12 of the Fair Work Act.
In respect of the claim that the Applicant has a contract that was terminated by the Second Respondent because the Applicant had certain workplace rights and proposed to exercise them, paragraph 12 of the amended statement of claim pleads relevantly in relation to the Applicant’s status as an independent contractor:
The termination of the Applicant’s engagement with the Second Respondent , and the failure to use the Applicant’s services after 14 November 2014, constitutes adverse action within the meaning of s. 342(1) of the Act (the Adverse Action) as:
(a) …
(b) further and in the alternative, the termination of the Applicant’s engagement as an independent contractor, within item 3A(a) of that section….
The Applicant has pleaded that the Applicant’s engagement with the Second Respondent was terminated by the Second Respondent without notice on 14 November 2014.
The Applicant was engaged to provide services in relation to a particular project, that being the launch of a particular insurance product. Each of the parties referred to the work being done to launch the insurance product as a “project”. The scope of works proposed by the Applicant had an end date.
Mr Cotis gave evidence of the meeting with the Applicant on 14 November 2014 at paragraph 82 of his affidavit. The affidavit states that Mr Cotis discussed the following matters with the Applicant:
a)The completion of a self certification form to be used by the First Respondent;
b)The possibility of the Applicant assisting with a new project, namely the First Respondent entering into a distribution/referral relationship with a logistics trade association; the Applicant indicated she was interested in being involved and would get back to him in the following week;
c)The project was coming to an end and that the Applicant’s ongoing involvement with the Respondent would continue as she was needed; the Respondent would continue to require the Applicant’s consultancy services at a higher and more strategic level for both Respondents for approximately 2 to 3 days of work per month. The Applicant responded to him that she was interested in the proposed work and enjoyed working at a higher and more strategic level as she worked better alone rather than in a team environment.
The chain of email correspondence which followed the meeting of 14 November 2014 commenced with an email from the Applicant to Mr Cotis dated 17 November 2014 (5:21 PM) omitting irrelevant parts the email from the Applicant states:
Hi James
Further to Friday’s meeting and your advice that it’s your intention effective 15 December 2014 to replace me which action has the probable result of bringing our relationship to an end.
I’ve needed the day off to work through this and feel in the circumstances my position is untenable and had you not taken this action I would have remained.
Mr Cotis responded by an email of 17 November 2014 at 5:54 PM, which states:
Hi Christine
Thanks for the email. I appreciate you taking the time tomorrow to tidy up matters for BBIA and providing the PDS to Sam.
I don’t believe that our relationship is come to an end. As I mentioned during the meeting, at the very least, there remains ongoing work in relation to Insurance Logic, such as the new FTA distributor/referrer arrangements we are looking to put in place, plus ongoing compliance and corporate governance support.
I hope you enjoy our working (and social) relationship, and I’d like to think you are able to assist with matters which arise from time to time, just as you have in the past.
On 27 November 2014, Mr Cotis had not heard from the Applicant and followed up with an email dated 27 November 2014 at 11:08 AM which states, omitting irrelevant parts:
I thought I’d send you this quick email as I haven’t heard from you.
As I mentioned in my previous email, I’m very interested to continue our business relationship.
Would you please let me know your thoughts on this.
I’m happy to call you anytime you are available, or meet with you the next time you’re in Sydney.
Having observed Mr Cotis in the witness box, I accept his evidence that there was no intention on the part of himself or the Respondents to finally terminate the relationship between them and the Applicant on 14 November 2014. Mr Cotis appeared to be genuinely nonplussed by the Applicant’s response. I do not accept that there was a termination of the relationship between the Applicant and the Respondents on 14 November 2014 and the evidence suggests that Mr Cotis was keen to maintain an ongoing engagement of the Applicant in her capacity as a specialist consultant. The project which she had been working on between October 2013 and November 2014 had come to an end. There was no termination of the engagement by a particular act of the Respondents. The Respondents clearly identified an intention to continue the relationship.
In those circumstances, I find that there has been no adverse action against the Applicant and that ground must fail. For these reasons, the Applicant’s claims made pursuant to paragraphs [19]-[27] of the amended Statement of Claim must fail.
As I have held that there was no termination of the engagement by any act of the Respondents, it is not necessary to address in detail the allegations that the engagement was terminated because of workplace complaints made by the Applicant.
Superannuation
The amended statement of claim pleads that the Second Respondent failed to make payment to the Applicant’s superannuation account at a rate prescribed under the SGA Act by reason of which the Applicant has suffered loss and damage of not less than $22,579. The particulars under that claim assert that the Applicant was entitled to 9.25% of $12,000 per month from 20 March 2013 to 14 November 2015, the calculation is said to be 19.81 months at $1142 per month which equals $22,579.
Section 12(1) of the SGA Act has the effect of expanding the meaning of the terms ‘employee’ and ‘employer’ for the purposes of that Act. Section 12(3) of the SGA Act has the effect that if a person works under a contract that is wholly or principally for the labour of the person, the person is an employee of the other party to the contract.
The Respondent submits that the expanded definition does not have any impact on the facts of this matter as the contract between the parties leaves a contractor free to perform the work themselves or to employ another person to carry out the aspects of the contractual obligation, and as a result, the payments are not made wholly or at all for the labour of the person to whom the payments are made. It was submitted that because the letter of engagement of the 11 April 2013 made reference to administration works being performed by Denise Cox, then in effect the parties agreed that the work could be performed by persons other than Ms Farnan.
In On CallInterpreters and Translators Agency Pty Ltd v Commissioner of Taxation(No 3) [2011] FCA 336, Bromberg J considered the operation of s.12(3) of the SGGA Act. His Honour referred to the relevant explanatory memorandum and noted that it stated:
A contract is considered to be wholly or principally for labour if more than half of the value of the contract is for labour.[11]
[11] On CallInterpreters and Translators Agency Pty Ltd v Commissioner of Taxation(No 3) [2011] FCA 336 [303].
His Honour stated the following:
The plain words of s 12(3) are potentially very wide in their operation. They clearly extend to persons who provide personal services who are not employees at common law. In that respect, s 12(3) extends to independent contractors who provide personal services under a contract which is wholly or principally for their labour. On a wide construction of the sub-section a contract between a solicitor and a client which is wholly or principally for the provision of the labour of the solicitor would fall within the scope of s 12(3). It seems unlikely that Parliament intended to include within the scope of s 12(3) contracts of that kind. Once it is recognised that some contracts with independent contractors are included within the scope of s 12(3), it becomes difficult to know by reference to the words of s 12(3) alone, where the line is to be drawn. However, the words utilised in the sub-section must be construed in the context of the section as a whole and by reference to the evident purpose of the Act in which the section is found. It seems to me that the dividing line becomes more apparent when attention is given to those matters.[12]
[12] On CallInterpreters and Translators Agency Pty Ltd v Commissioner of Taxation(No 3) [2011] FCA 336 [304].
His Honour stated:
Whilst s 12 of the Superannuation Guarantee Act makes it clear that the scheme for enhancing occupational superannuation was not intended to be restricted to common law employees, it is also clear that the extent of that expansion is to be limited by the evident purpose of the legislation. Parliament did not intend that a client of a sole practitioner solicitor provide for the retirement savings of the solicitor out of the exchange of labour for remuneration that arises out of the relationship of solicitor and client.[13]
[13] On CallInterpreters and Translators Agency Pty Ltd v Commissioner of Taxation(No 3) [2011] FCA 336 [306].
His Honour further stated:
The sub-section seeks to facilitate occupational superannuation being paid out of the exchange of work for remuneration when an independent contractor provides personal services in an employment-like setting which is not of a domestic or private nature (see s 12(11)). Whether an employment-like setting exists may be best answered by asking: Whether, in all the circumstances, the labour component of the contract in question could have been provided by the recipient of the labour employing an employee?[14]
[14] On CallInterpreters and Translators Agency Pty Ltd v Commissioner of Taxation(No 3) [2011] FCA 336 [306].
In my view, engaging a specialist consultant for the purposes of advising a company in relation to the regulatory requirements in order to set up a particular insurance scheme is analogous to that of the engagement of a sole practitioner solicitor for the purposes of advising on a particular transaction.
The engagement of the Applicant was originally through her company which she controlled and it was her decision to nominate herself as the person to receive payments on the invoices that she rendered. The contract was for the performance of a particular result and her engagement as a specialist consultant was analogous to the engagement of a specialist lawyer as a consultant to ensure that the proposed insurance products met the necessary regulatory requirements.[15] Any arrangement for the Applicant to provide services beyond the conclusion of the project was a new arrangement.
[15] See Vabu Pty Ltd v Federal Commissioner of Taxation (1996) 33 ATR 537.
The Applicant was conducting her business as a specialist consultant to the Second Respondent during the relevant period and was also available to perform work for other persons. The Applicant was also able to engage support staff to assist her in the provision of those services and charged for the provision of the work of those persons.
As set out above, the evidence does not support a finding that the Applicant was directed in the manner in which she would carry out the work to perform the project and it is apparent from her own evidence that she regarded herself as an expert in the field.
Although the Applicant was provided an email address within the Respondent's email system for the purposes of communication, I do not find that she was integrated into the company's business as an employee. She was able to work from her office in Victoria and during absences from the office in Sydney was able to work for other contractors.
In my view the Applicant was engaged to produce a result and for that reason I do not accept that she was an employee within the extended definition under s.12(3) of the SGA Act.
For the reasons outlined above, I dismiss the Applicant’s application.
I certify that the preceding eighty (80) paragraphs are a true copy of the reasons for judgment of Judge McNab
Associate:
Date: 28 March 2017
Corrections
In paragraph 45, replacing the reference to ‘Lawton LJ’ with ‘the Full Court’.
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