Martin Anthony Purvis v Chieftain Management Pty Ltd trading as Brookes Maintenance Services

[1995] IRCA 527

CATCHWORDS

INDUSTRIAL LAW - TERMINATION OF EMPLOYMENT - whether the relationship between the parties was of an employer and employee or principal and contractor - factors indicating the nature of the relationship - degree of control exercised over alleged employee.

Industrial Relations Act 1988 s 170EA

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

Re Porter; Re Transport Workers Union of Australia (1989) 34 IR 179

Bennett v E Z Risdon Golf Club Inc IT 1143 of 1995, Industrial Relations Court of Australia, 3 August 1995, Ryan J, unreported.

No. WI 1582 of 1995

MARTIN ANTHONY PURVIS v CHIEFTAIN MANAGEMENT PTY LTD
Trading as BROOKES MAINTENANCE SERVICES

Marshall J
Perth
29 September 1995

IN THE INDUSTRIAL RELATIONS COURT            )  
  )  

OF AUSTRALIA  )  

)  No. WI 1582 of 1995.  

WESTERN AUSTRALIA DISTRICT REGISTRY     )  

BETWEEN:  

MARTIN ANTHONY PURVIS

Applicant

AND:  CHIEFTON MANAGEMENT PTY LTD
  Trading as BROOKES MAINTENANCE
  SERVICES

Respondent

JUDGE:     Marshall J

PLACE:     Perth

DATE:      29 September 1995

ORDER

THE COURT ORDERS THAT:

1.It is declared that the applicant was employed by the respondent pursuant to a contract of service.

2.The application is to be heard by a Judicial Registrar on a date to be fixed.

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

IN THE INDUSTRIAL RELATIONS COURT            )  

)
OF AUSTRALIA  )  
  )  No. WI 1582 of 1995.
WESTERN AUSTRALIA DISTRICT REGISTRY     )  

BETWEEN:  MARTIN ANTHONY PURVIS

Applicant

AND:   CHIEFTON MANAGEMENT PTY LTD
  Trading as BROOKES MAINTENANCE
  SERVICES

Respondent

JUDGE:     Marshall J

PLACE:      Perth

DATE:        29  September 1995

REASONS FOR JUDGMENT

BACKGROUND

On 16 May 1995, the applicant lodged in the Western Australia District Registry of the Court (“the Registry”), an application under s170EA of the Industrial Relations Act 1988 (“the Act”) for orders,  including an order for compensation.

On 23 May 1995, Mr John Englishby, (“Mr J Englishby”) the General Manager of the respondent, filed in the Registry a “notice of employer’s appearance”.  On that form, Mr J. Englishby stated that the respondent was not the employer of the applicant and that the true employer was Yakkamunda Australia Pty Ltd of 12 Lynburne Drive, Hillarys, Western Australia.

On 24 May 1995, a Deputy District Registrar of the Court referred the application to the Australian Industrial Relations Commission (“the Commission”) for conciliation.  On 27 June 1995, Commissioner O’Connor certified that the Commission had been unable to settle the matter by conciliation.  On 20 July 1995, Deputy District Registrar Richardson made certain procedural orders, including an order that:

“This matter is to be set down for a preliminary hearing before a Judge as to the question of the nature of the relationship between the Applicant and the Respondent, such hearing date to be advised by the Registry.”

On 10 August 1995, the Court heard the evidence of the parties on the preliminary question raised in the order set out above.  The Court then set down a timetable for the receipt of written submissions on the preliminary question.  The failure of the applicant’s advocate to comply with that timetable has inevitably delayed the judgment in this matter.

As a result of such non-compliance the matter was listed for a directions hearing on 25 September 1995 at which time the Court advised the parties of its intention to hear submissions on 26 September 1995.

The parties were agreed that should I decide in favour of the applicant on the preliminary question, the matter would be listed for hearing before a Judicial Registrar on the basis that the application was jurisdictionally competent.  The parties were also agreed that should I decide the preliminary question in favour of the respondent, then the application would be dismissed.

THE EVIDENCE

Exhibit B before the Court was a “Minute of Agreed Facts”.  It provided as follows:

“Period of Engagement between the Respondent and the Party Engaged was from 31 October 1994 to 8 May 1995.

Payments were made by the respondent to the party engaged on/about - 1) 7/12/94 2) 13/1/95 3) 6/2/95 4) 10/3/95 5) 16/3/95 6) 6/4/95 7) 16/5/95.

Martin Purvis is a Licenced (sic) Electrical Mechanic (Licence No: EW129676.

Yakkamunda Pty Ltd is a Registered (sic) with the Australian Securities Commission.

Yakkamunda Australia is a registered Business Name with the Ministry of Fair Training.

The Party engaged was provided with various written instruction (sic) in the form of Job Sheets, Facsmilie Cover Sheets, Electrical Callbacks, Notes and Memo’s (sic).

The Party Engaged provided his own vehicle and Hand & Power tools of the trade.

The Respondent provided the party engaged with all materials & consumerables (sic), unused items of which were returned by the party engaged to the Respondent at the end of period of engagements.”

It appears from the agreed facts document that the respondent no longer persists in its position that Yakkamunda Australia Pty Ltd was the true employer of the applicant.  Rather, its case is that the applicant was engaged by the respondent as an independent contractor and that, consequently, the respondent did not employ the applicant.

The applicant and respondent’s paths first crossed as a result of the respondent placing an advertisement (“the advertisement”) in “the West Australian” newspaper on Wednesday, 26 October 1994.  The advertisement was in the “Trades and Apprentices” part of the “Employment” section.  Nothing turns on it being in that section.  The advertisements in that section were variously, on their face, of a kind that may apply to an employee or an independent contractor.  The particular advertisement here relevant was in the following terms:

“ELECTRICAL Contractor for
  piece and hourly rate work
  Call Barry 4701612 between

8 am and 4 pm today”

The “Barry” referred to in the advertisement is Mr Barrie Englishby. (“Mr B Englishby”).

Mr B Englishby was the maintenance manager for the respondent for the entire period of the applicant’s engagement by the respondent other than the last week thereof.  It was Mr B Englishby who caused the advertisement to be placed in the newspaper.  He told the Court that:-

“I just requested of the secretarial staff to put an ad in the paper for a tradesman.”

He agreed that:-

“... the job became available because the previous gentleman had abandoned it”.

The applicant responded to the advertisement and was subsequently interviewed by Mr B Englishby.  At the interview, Mr B Englishby explained to the applicant that the respondent was contracted to Homeswest to provide certain services to it pursuant to some arrangements in such contract which contained specific criteria which, in turn, had to be rigidly adhered to.  Mr B Englishby said that the job was for an electrician who was qualified as an electrical contractor.

At the interview, the applicant produced an electrical contractor’s licence which was held by Yakkamunda Australia Pty Ltd.  It was his evidence that there was no requirement for him “to have a company” in order to get the work which would flow from a successful interview.  He said that he “was trading under a business name at that stage”.  The business name was “Yakkamunda Australia”.  The business name, according to a business names extract from the Ministry of Fair Trading (Western Australia) is held in the name of the applicant’s wife.  The applicant at an earlier time believed it was in his name and his wife’s name but as he said “I subsequently found out it is in my wife’s name”.  The applicant operated one bank account in the name of “Yakkamunda Australia”.  He paid all his remuneration from the respondent into that account.  The cheques he received from the respondent were all  made out to the business name except for one which was made out to “Martin Purvis”.  The applicant did not draw a wage as such from the account.  He merely withdrew money on an as needs basis.  The company, Yakkamunda Australia Pty Ltd, notwithstanding its holding of an electrical contractor’s licence did not at any material time hereto carry on business.  Mr B Englishby admitted that it was not a necessary requirement for the applicant to hold such a licence to perform his work.

The applicant said that Mr B Englishby informed him that the respondent would cover him for workers’ compensation insurance.  He could not recall there being anything said to him at the interview as to whether the applicant was required to take out his own accident and sickness insurance and public liability insurance, Mr B Englishby said in answer to a question on such matters that:-

“I believe I would have also said that he would have had to have provided his own insurances, public liability.”

Mr B Englishby denied mentioning workers’ compensation at the interview and in fact the applicant was not relatively covered.  He said he did not raise sick pay or annual leave.  As to sick pay he said:

“One of the reasons they were contractors is because we didn’t pay that.”

Whilst “working for” the respondent, the applicant received quite detailed instructions on “job cards” as to the various tasks he was required to perform.  Precise times were allocated to the performance of tasks for the purposes of calculating his remuneration.  If he was required to work outside of ordinary hours, he was paid overtime at a penalty rate.  He was also paid extra for “call-backs”.  He had to receive authorisations from the respondent or the maintenance manager at Homeswest to vary any requirements on the job cards.  He was allocated a particular geographical area within which he was to perform his work.  When he “tagged tools” he was paid separately for that work as an extra remuneration.  He performed occasional work at weekends for people other than the respondent on a very casual basis.  His only substantial overhead was the cost of fuelling and maintaining his work vehicle for the purpose of travelling to and from various locations where he was directed to travel by the respondent.

No taxation was deducted from his remuneration.  The respondent paid the applicant’s mobile phone bills.  He received nightly work instructions which were faxed to him at home.  He was not allowed to bring someone else onto a worksite to assist him without permission from the respondent.

Mr B Englishby gave evidence of having frequent contact with the applicant during the course of the applicant’s engagement.  He agreed with the proposition put to him in cross examination regarding the applicant that:-

“In essence ... other than his work as the electrician turning the screw driver, he was under complete supervision.”

Mr J Englishby disagreed with the evidence of Mr B Englishby referred to immediately above.  I prefer the evidence of Mr B Englishby given that he had far more to do with the applicant than did Mr J Englishby.  Further, Mr B Englishby is no longer connected with the respondent and his evidence may be viewed as more impartial than that of Mr J Englishby.

Mr J Englishby gave evidence that the respondent maintained a wages workforce, a subcontract workforce and administration staff.  Mr Noel Hughes (the maintenance manager of the respondent) said that the respondent had had electricians on the wages workforce up to mid-1994 and that such persons performed “very similar duties” to those performed by the applicant.  He said the respondent had more direct control over its wages workforce, but in light of Mr B Englishby’s evidence about the respondent’s control over the applicant, I find that aspect of Mr Hughes’ evidence very difficult to accept, at least in the context of electricians.  On the evidence it seems that the only differences between employee electricians and those said by the respondent to be “contractors” were (on the evidence) as follows:-

a)PAYE tax was extracted from the wages of “employees”

b)“employees” received sick pay

c)“employees” were covered for workers’ compensation

In fact, Mr Hughes’ evidence was that “employees” provided their own tools, as did “contractors” and “employees” filled in job cards as did “contractors”.

THE LAW

The current state of the law in Australia on the vexed question of determining whether a person is an employee or an independent contractor is conveniently set out in Stevens v Brodribb Sawmilling Co Pty Ltd (1986) 160 CLR 16. At 24, Mason J (with whom Brennan J was in general agreement) said:

“... 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 former 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 is the right of the employer to exercise it....”

“But the existence of control, whilst significant, is not the sole criterion by which to gauge whether a relationship is one of employment ....  Other relevant matters include, but are not limited to, the mode of remuneration, the provision and maintenance of equipment, the obligation to work, the hours of work and the provision for holidays, the deduction of income tax and the delegation of work by the putative employee.”

At 36-37, Wilson and Dawson JJ said:-

“In many, if not most, cases it is still appropriate to apply the control test in the first instance because it remains the surest guide to whether a person is contracting independently or serving as an employee.  That is not now a sufficient or even an appropriate test in its traditional form in all cases because in modern conditions a person may exercise personal skills so as to prevent control over the manner of doing his work and yet nevertheless be a servant: Montreal v. Montreal Locomotive Works [1947] 1 DLR 161, at p.169. This has led to the observation that it is the right to control rather than its actual exercise which is the important thing (Zuijs v. Wirth Bros. Pty. Ltd. (1955) 93 CLR 561 at p.571) but in some circumstances it may even be a mistake to treat as decisive a reservation of control over the manner in which work is performed for another. That was made clear in Queensland Stations Pty. Ltd. v. Federal Commissioner of Taxation (1945) 70 CLR 539, at p. 552, a case involving a droving contract in which Dixon J. observed that the reservation of a right to direct or superintend the performance of the task cannot transform into a contract of service what in essence is an independent contract.

The other indicia of the nature of the relationship have been variously stated and have been added to from time to time.  Those suggesting a contract of service rather than a contract for services include 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 and the right to dictate the place of work, hours of work and the like.  Those which indicate a contract for services include work involving a profession, trade or distinct calling on the part of the person engaged, the provision by him of his own place of work or of his own equipment, the creation by him of goodwill or saleable assets in the course of his work, the payment by him from his remuneration of business expenses of any significant proportion and the payment to him of remuneration without deduction for income tax.  None of these leads to any necessary inference, however, and the actual terms and terminology of the contract will always be of considerable importance.

Having said that, we should point out that any attempt to list the relevant matters, however incompletely, may mislead because they can be no more than a guide to the existence of the relationship of master and servant.  The ultimate question will always be whether a person is acting as the servant of another or on his own behalf and the answer to that question may be indicated in ways which are not always the same and which do not always have the same significance.”

The respondent, in my view, exercised a very substantial degree of control over the applicant in all but the actual application of his skill.  It also asserted a right to exercise such control by its directions to the applicant as to what work would be done, where it would be done and how long it was to take to be done.  The application of the “control test” in the circumstances favours the existence of an employment relationship in this case.

There are other indicia present which also support such a position.  The normal hours of work were fixed with penalty rates being paid for overtime and call back.  There was an obligation to work, ie. to perform particular tasks at particular places within time parameters.  Permission from the respondent was required for the applicant to seek assistance in the performance of his work.  Reasonably regular payments were received for the work done.  The respondent presumed a right to dismiss the applicant and did do so.  For every week day purposes, the applicant was for all practical purposes at the exclusive call of the respondent.

A few relevant indicia point in the opposite direction.  The applicant provided his own vehicle.  He was paid without deduction of income tax and he was paid, except in one case, by cheque made out to a business name.  He received no holiday or sick pay and was not covered for workers’ compensation.  The applicant’s relationship with the respondent was labelled by the respondent as one of an independent contractual nature for its internal workings.

On the issue of “the label” ascribed by the parties, Gray J said in Re Porter; Re Transport Workers Union of Australia (“Re Porter”) (1989) 34 IR 179, 184:-

“... A court will always look at all of the terms of the contract, to determine its true essence, and will not be bound by the express choice of the parties as to the label attached to it. ... [T]he parties cannot create something which has every feature of a rooster, but call it a duck and insist that everybody else recognise it as a duck.”.

With respect, I agree with the views there expressed by Gray J.

As was also clear from Re Porter that the ownership of a vehicle which is used by a worker to obtain remuneration is not decisive of the relevant relationship. As Gray J said at 185:-

“... There are many persons who perform work for others, undoubtedly in the capacity of employees, and who provide their own equipment for the purpose of performing such work.  A carpenter, plumber, electrician [emphasis supplied] or butcher may provide tools of trade, without that provision being regarded as a conclusive factor, or even a major factor, against their being parties to contracts of employment. ... Ordinarily, that tradesman will provide his or her own tools.  Equally, a plumber may be engaged on a building site for a long period as an employee, still providing his or her own tools.  A person who owns a truck might trade as a common carrier, carting goods for anyone who wishes to hire his or her services.  There seems to be no reason in principle why an owner-driver should not also be engaged on a longer term contract for one person, carting only the goods of that person, and as an employee.  The amount of capital invested in a truck may vary widely, depending on factors such as the size and age of the vehicle, and the purpose for which it has been designed.  Ownership of a truck may result from nothing more than the reality that it is easier to obtain work by owning one than by offering oneself as a driver of vehicles owned by others.  The reality is that there are those who seek to avoid the responsibility for the capital cost of trucks by casting it on those who actually drive the trucks, and perform carrying services for them.  No doubt in fixing the remuneration of an owner-driver, there will be recognition of the owner-driver’s responsibility for the capital cost of the truck.  So also might a tool allowance in an award recognise an employee tradesman’s responsibility for the provision of tools.”

The applicant did not have PAYE taxation taken out of the payments he received from the respondent.  In Stevens it is suggested that this is a criterion tending against the existence of an employment relationship.  This might be so in isolation.  However, here the non-deduction of taxation stems from the applicant’s provision to the respondent of a tax exemption number which he obtained through his accountant.  In my view, in the circumstances, the payment of remuneration in gross to the applicant means no more than either that the applicant has not discharged his proper obligation to pay income tax or that the respondent has incorrectly had regard to the tax exemption number in the circumstances.  If the latter is correct, I make no criticism thereby of the respondent given the legal questions it would have had to consider in order to ignore the tax exemption number.

On the question of payments to a business name, I find that the applicant was not in essence carrying on a business of his own as such.  He was economically dependent on the respondent for his week day work.  His expenses to income ratio was low.  If he had any liberty to work for others in the short time left available after fulfilling commitments with the respondent, then, as Gray J said in Porter at 186:-

“... Such liberty, however, may be no more important than the same liberty of a casual employee, to seek work from other employers, or even to carry on a business, when not required to work by his or her employer.”

On the questions of the non receipt of holiday or sick pay it should be observed that there was no evidence of the applicant being sick or applying for a break from work (whether it be leave or something else).  In fact his “engagement” was only for about seven months.  If annual leave or sick pay was not paid it would, in the circumstances, mean no more than the relevant State award may not have been complied with by the respondent.  Similar considerations would apply to the obligations of the respondent under State legislation dealing with workers’ compensation.

In my opinion, when one balances all the relevant indicia reinforced by the Court’s impression of the relationship (as to which see Re Porter at 184 and Bennett v E Z Risdon Golf Club Inc TI 95/1143, 3 August 1995, Industrial Relations Court of Australia, Ryan J, as yet unreported, at 13), the inescapable conclusion is that the applicant was employed by the respondent pursuant to a contract of service.

I therefore order as follows:-

1.It is declared that the applicant was employed by the respondent pursuant to a contract of service.

2.The application is to be heard by a Judicial Registrar on a date to be fixed.

I certify that this and the preceding 10 pages are a true copy of the Reasons for Judgment herein of his Honour Justice Marshall.

Associate:

Date:  29 September 1995

Advocate for the Applicant:            Mr A Lovell of the Communications, Electrical, Electronic,   Energy, Information, Postal, Plumbing and Allied Services Union   of Australia

Counsel for the Respondent:           Mr G Chitty

Solicitor for the Respondent:           Mr G Chitty

Date of hearing:  10 August, 25 September, 26 September 1995

Date of judgment:  29 September 1995