James Benignus Teehan v Ming Hung Ng t/as New Tech Driving School

[1995] IRCA 279

C A T C H W O R D S

INDUSTRIAL LAW -  TERMINATION OF EMPLOYMENT- claim of UNLAWFUL TERMINATION - whether applicant an independent contractor

INDUSTRIAL RELATIONS ACT 1988, Ss 170EA

Stevens v Brodribb Sawmilling Co Pty Ltd (1985) 160 CLR 16

JAMES BENIGNUS TEEHAN -v- MING HUNG NG T/AS NEW TECH DRIVING SCHOOL - WI 95/1311

BEFORE:                 BOON JR
PLACE:  PERTH
DATE:  9 JUNE 1995

IN THE INDUSTRIAL RELATIONS    )
COURT OF AUSTRALIA  )
WESTERN AUSTRALIA  )
DISTRICT REGISTRY  )          No. WI 95/1311

BETWEEN:  JAMES BENIGNUS TEEHAN
  -       Applicant

AND:  MING HUNG NG TRADING AS
  NEW TECH DRIVING SCHOOL
          -       Respondent

MINUTE OF ORDERS

BEFORE:                 BOON JR

PLACE:  PERTH

DATE:  9 JUNE 1995

THE COURT ORDERS THAT:

1. The application be dismissed.

NOTE:         Settlement and entry of Orders dealt with by Order 36 of the   Industrial Relations Court Rules

IN THE INDUSTRIAL RELATIONS    )
COURT OF AUSTRALIA  )
WESTERN AUSTRALIA  )
DISTRICT REGISTRY  )          No. WI 95/1311

BETWEEN:  JAMES BENIGNUS TEEHAN
  -       Applicant

AND:  MING HUNG NG TRADING AS
  NEW TECH DRIVING SCHOOL
          -       Respondent

BEFORE:              BOON JR

PLACE:                 PERTH

DATE:                   9 JUNE 1995

EX TEMPORE REASONS FOR JUDGMENT
(as revised from transcript)

The applicant has applied under Section 170EA of the Industrial Relations Act 1988 for compensation arising out of an alleged unlawful termination of his employment with the respondent. The respondent maintains that the applicant was never employed by him and was in fact an independent contractor.

By way of background, the respondent, Tony Ng operates a driving school known as the New Tech Driving School.  Mr Ng has been a driving instructor for some 17 years and for the past four years, approximately, he has operated his own driving school.  Mr Ng and the applicant, Mr Teehan, were friends and worked together at Transperth as drivers.  In or around April 1994 the applicant became aware that Mr Ng may require some assistance with his driving school.

Mr Teehan approached Mr Ng and asked him if he would teach him how to become a driving instructor.  The two men agreed that, for a fee of $300, Mr Ng would teach Mr Teehan how to become a driving instructor.  The applicant had some lessons with Mr Ng and eventually passed his driving instructor's certificate. 

Once Mr Teehan had received his certificate, the two men discussed the possibility of Mr Teehan obtaining some work through the New Tech Driving School.  In or about June 1994, the two men held some discussions and it was agreed between them that Mr Teehan would purchase his own motor vehicle and have a dual control unit fitted to this vehicle for the purpose of taking driving lessons.  Subsequent to the fitting of the dual control unit, Mr Teehan approached Tony Ng in relation to receiving some students from him.  I am satisfied on the evidence that Mr Ng agreed that, in the event of his driving school being over-booked, Mr Ng would refer excess students to Mr Teehan.

Each student would pay to Mr Teehan a fee of $20 per driving lesson per hour.  In return, Mr Teehan would pay to Mr Ng a sum of $2 per lesson as a commission or spotter's fee.  The customary practice was that Mr Teehan and Mr Ng would telephone each other every evening to discuss how many new students there were for Mr Teehan to teach on the following day.  Both men kept a diary and Mr Ng would refer new students to Mr Teehan in the event of there being too many students for Mr Ng to teach.  On average, Mr Teehan would take between 15 and 25 students per week over and above his Transperth job during the day time.

Mr Teehan purchased his own vehicle.  He paid for his own petrol in relation to the driving lessons and he paid for his own insurance.  Mr Teehan himself would collect the $20 per lesson from the students, and at the end of each week the two men would sit down and settle the accounts whereby Mr Teehan would pay Mr Ng $2 per each hour of work he had obtained through the driving school.

There was no provision for holiday pay.  Mr Ng did not deduct any income tax from Mr Teehan's remuneration.  Mr Teehan stated that he was concerned about the question of payment of income tax and he raised this matter with Mr Ng.  Mr Teehan's understanding of the matter was that Mr Ng would eventually take care of the matter.  Mr Ng, on the other hand, said in his evidence that it was, as far as he was concerned, never an employment relationship and that the question of income taxation was a matter solely for Mr Teehan.  Mr Ng did state, and I accept his evidence on this point, that Mr Teehan raised the question of income taxation with him and he told Mr Teehan not to worry because there would not be very much income taxation payable by him, because of the many expenses associated with the operation of the vehicle, such as depreciation.  I am satisfied that as far as Mr Teehan was concerned he was “working for Mr Ng”, but the classification of that relationship remains one for this Court to decide.

Under Section 170EA of the Act, "An employee may apply to the Court for a remedy in respect of the termination of his or her employment". Whether or not a particular relationship is to be categorised as an employment relationship has been dealt with by a number of authorities. One of the leading cases in Australia is that of Stevens v Brodribb Sawmilling Company Proprietary Limited (1985) 160 CLR 16. In that case, Mason J said at page 24:

“A prominent factor in determining the nature of the relationship between a person who engages another to perform work, and the person so engaged, is the degree of control which the performer can exercise over the latter.  It has been held, however, that the importance of control lies not so much in its actual exercise, although clearly that is relevant, as in the right of the employer to exercise it”.

In this case, Mr Ng's evidence was that he exercised no control over Mr Teehan in relation to the performance of the work by Mr Teehan.  That is not necessarily the end of the matter.   I am satisfied from the evidence, however, that there was no actual right of control on the part of Mr Ng over Mr Teehan. 

The other relevant factors to take into account, according to Mason J, are as follows and I quote from page 24 of the decision:

“... the mode of remuneration, the provision and maintenance of equipment, the obligation to work, the hours of work and provision for holidays, the deduction of income tax and the delegation of work by the putative employee”.

In this matter, as to the mode of remuneration, Mr Teehan collected the money from the students himself and this is consistent with the relationship being one of independent contractor.  As to the provision and maintenance of equipment, Mr Teehan purchased his own vehicle and maintained it himself, and that is one of the primary indicators of the existence of  a relationship of principal and independent contractor.  As to the obligation to work,  the evidence was that each student who telephoned the driving school would leave his or her name and address and phone number.  Mr Ng would then telephone Mr Teehan to see if he was available to take that student, and once he had received confirmation from Mr Teehan that he was able to take on that student, the student was in fact booked for a lesson with Mr Teehan.  Although Mr Teehan rarely refused to take on a student, I am satisfied on balance that there was no obligation on him to take on each student referred by Mr Ng.

Similarly, the hours of work were determined partly by the number of students who would phone the driving school each week, but also by the availability of Mr Teehan to take those students.  There was no provision for holiday pay, and as I have said there was no deduction of income tax or superannuation from Mr Teehan's remuneration.  The question of delegation of work by the putative employee did not arise in this case as Mr Teehan was able to take on most of the students referred by Mr Ng. 

In these circumstances, I am satisfied that the correct characterisation of the relationship between the two men was that of principal and independent contractor. Mr Teehan was not an employee within the meaning of Section 170EA of the Act and therefore the application must fail. I dismiss the application.

I certify that this and the preceding five pages are a true copy of the Reasons for Judgment of Judicial Registrar Boon.

Associate

Date:

The applicant appeared in person.

Counsel for the respondent:               Mr M Ellis
Solicitors for the respondent:  Messrs James Chong & Co

Hearing date:         9 June 1995
Judgment date:      9 June 1995