Murray v Danzas Pty Limited
[2002] WADC 173
•9 AUGUST 2002
JURISDICTION : DISTRICT COURT OF WESTERN AUSTRALIA
IN CIVIL
LOCATION: PERTH
CITATION: MURRAY -v- DANZAS PTY LIMITED [2002] WADC 173
CORAM: VIOL DCJ
HEARD: 1-2, 8-9 NOVEMBER 2001, 15 & 16 MAY 2002
DELIVERED : 9 AUGUST 2002
FILE NO/S: CIV 3337 of 1998
BETWEEN: DAVID MURRAY
Plaintiff
AND
DANZAS PTY LIMITED
DefendantZURICH AUSTRALIAN INSURANCE LIMITED
Third Party
Catchwords:
Negligence - Plaintiff injured whilst working as parcel delivery driver - Preliminary issue as to whether plaintiff employed by defendant under contract for services or contract of service - Turns on own facts
Legislation:
Nil
Result:
Plaintiff's employment found to be under a contract for services
Representation:
Counsel:
Plaintiff: Mr T N Cullity
Defendant: Mr R L Le Miere QC and Mr P D Quinlan
Third Party : Mr M W Schwikkard
Solicitors:
Plaintiff: Dwyer Durack
Defendant: Gibson & Gibson
Third Party : Srdarov Richards Burton
Case(s) referred to in judgment(s):
Hollis v Vabu Pty Ltd (2001) 181 ALR 263
Humberstone v Northern Timber Mills (1949) 79 CLR 389
Marshall v Whittaker's Building Supply Company (1963) 109 CLR 210
Queensland Stations Proprietary Limited v The Federal Commissioner of Taxation (1945) 70 CLR 539
Ready Mixed Concrete (South‑East) Ltd v Minister of Pensions & National Insurance [1968] 2 QB 497
Stevens v Brodribb Sawmilling Co Pty Ltd (1986) 160 CLR 16
Case(s) also cited:
Alison Joy Ranauro & Vanessa Jaye Ranauro v Bristol-Myers Co Pty Ltd (1981) 1 WCR (WA) (Pt 1) 256
Australian Mutual Provident Society v Chaplin sub nom Australian Mutual Provident Society v Allan (1978) 18 ALR 385
Barro Group Pty Ltd v Fraser & Anor [1985] VR 577
Climaze Holdings Pty Ltd v Dyson & Anor (1995) 13 WAR 487
Dare v Dietrich (1979) 26 ALR 18
Global Plant Ltd v Secretary of State for Social Services [1972] 1 QB 139
Hollis v Vabu Pty Ltd t/as Crisis Couriers (1999) 31 MVR 49
Leighton Contractors Pty Ltd v Panizza, unreported; SCt of WA; Library No 950562; 19 October 1995
Pauley v Kenaldo Ld [1953] 1 WLR 187
Price v Grant Industries Pty Ltd (1978) 21 ALR 388
Sammartino v Mayne Nickless Express t/a Wards Skyroad (2000) 98 IR 168
Schrandt v TNT Overnight Express (1982) 2 WCR (WA) (Pt 1) 13
Stevenson Jordan & Harrison Ltd v McDonald & Evans [1952] 1 TLR 101
TNT Worldwide Express (NZ) Ltd v Cunningham [1993] 3 NZLR 681
Vabu Pty Ltd v Commissioner of Taxation of the Commonwealth of Australia (1996) 33 ATR 537
Wright v Attorney-General for the State of Tasmania & Ors (1955) 94 CLR 409
Zurich Australian Insurance Ltd v Amec Services Pty Ltd & Anor, unreported; FCt SCt of WA; Library No 980139; 31 March 1998
VIOL DCJ: On 2 October 1997, the plaintiff was injured at the premises of PEP Transport ("PEP"), such premises then being owned and/or occupied and/or under the control of the defendant.
The business of the defendant involved a variety of transport operations which can be classified broadly into three areas - taxi truck drivers, courier drivers and parcel delivery drivers. The plaintiff was in the third category.
As a result of the injury, the plaintiff commenced action against the defendant, alleging negligence and/or breach of the defendant's obligation as an occupier of the premises. The defendant sought an indemnity from the third party (as insurer of the defendant) in respect of any compensation for which the defendant was found liable to the plaintiff.
The plaintiff alleged that he was engaged as a parcel delivery driver either as a sub‑contract owner/driver pursuant to a contract for services, or, alternatively, as a servant pursuant to a contract of service.
It was the plaintiff's position at trial that the engagement with the defendant was as an independent contractor ie. under a contract for services. As to this, the defendant adopted the same position as the plaintiff. The third party, on the other hand, put its case on the basis that the plaintiff was employed by the defendant under a contract of service.
The matter was heard and argued on this basis, as a preliminary question, the question of the assessment of damages being left to be determined, if applicable, at a later time.
Since the trial, a perusal of the transcript and the submissions has revealed that there are few matters of fact in contention and that there are a number of factual conclusions which can be readily drawn from the evidence. This being so, it is not necessary, in my view, to record and deal with the evidence in detail.
It is appropriate that the broad factual conclusions which are open on the evidence, and/or which can be derived by way of inference, should be set out. The conclusions are set out under headings of the type generally considered by the court:
Employment
1.The plaintiff had worked as a parcel delivery driver for the defendant for some 27 years - there was no written contract.
2.The plaintiff and defendant, at all material times, regarded the relationship between the plaintiff and the defendant as principal and sub‑contract driver - there are a number of documentary exhibits which confirm this, as well as the evidence generally.
3.The defendant had 34 parcel delivery drivers, 50 couriers and 24 taxi truck drivers.
4.All parcel delivery drivers were employed by the defendant on the same basis, whereas there were variations in the basis of the employment of other categories of employees.
5.There were administration staff employed by the defendant involved in a variety of aspects of the administration of the defendant's business.
6.The defendant had a holiday scheme and the plaintiff contributed to such scheme on a regular basis and these moneys were repaid to the plaintiff at the end of the year.
7.There were a limited number of clients of the defendant which the plaintiff was required to service on a regular schedule - if other pickups were required, the plaintiff would be contacted by a two‑way radio system.
8.The plaintiff was required to wear a uniform with the name of the defendant upon it.
9.The defendant provided signage and delivery for the plaintiff's motor vehicle at the defendant's cost.
10.If the plaintiff wished to have time off work, he was required to make application to the defendant and was required to take time off at a time that was convenient to the operations of the defendant so far as practicable.
11.The plaintiff had morning and afternoon deliveries in accordance with the defendant's arrangements with customers.
Business
1.At the relevant time (from June 1992), the plaintiff had a partnership with his wife in the name of "D J & V N Murray" and this was changed on the advice of his accountant in 1996 to "Dave's Deliveries". Income from the defendant, and expenses incurred by the plaintiff, were dealt with by these businesses.
2.There was deducted from the amount payable to the plaintiff, an amount of 20 per cent for prescribed payment system tax and this was paid direct by the defendant to the Australian Taxation Office. There were no deductions from the plaintiff on a PAYE basis. The plaintiff never provided invoices to the defendant in relation to these deductions.
3.The plaintiff was entitled, when he wished, to sell his parcel delivery run for a negotiated price and this price included an amount for goodwill. The defendant was not involved in such negotiations. When such sale took place, the excess of the sale price over the depreciated value was declared as income: See exhibit "A1" - 1999 income tax return of plaintiff.
4.When there was a sale of a driver's business, prospective incoming drivers had to be interviewed, scrutinised and put through a training program. The new driver was not permitted to take over and pay the outgoing driver until the defendant had accepted the candidate as a driver.
5.The drivers were permitted to own more than one "run" and could get some other person to drive the run for them.
6.The approximate percentage of costs to revenue the drivers was between 20 per cent and 25 per cent.
Control
1.The only time restraint upon the plaintiff in terms of his employment was to be at the defendant's depot during the midday period to exchange freight for the afternoon delivery service.
2.If complaints were received from customers, the plaintiff was required to rectify any work involved which was said to be improperly done, and the plaintiff received, on several occasions, written "warnings" from the defendant arising from customer complaints.
3.When parcel delivery drivers were absent as a result of planned arrangements, they were encouraged to find their own replacements.
4.There was a driver's manual provided to the plaintiff with guidelines relating to payment for overweight parcels, payment to sub‑contractors, basic equipment required by drivers, instructions on the completion of delivery running sheets and call card procedures.
5.The plaintiff was able to make arrangements directly with the defendant's customers, to set the exact times at which the parcels were to be collected or delivered, and was at liberty not to accept an additional order if this meant returning to the same place to collect it. The plaintiff was able to set up his own delivery and collection system in accordance with arrangements made with the defendant's customers subject to the one requirement - that he be present at the depot during the midday period to exchange freight for the afternoon service.
6.The plaintiff was able to engage in external work. Subject to the drivers completing their deliveries as required, they were able to use their vehicles for other purposes and to earn income for this. This involved a "rag business", distributing packing boxes, conducting private delivery jobs and carrying out weekend furniture removal. Some of these activities took place during times that the plaintiff was engaged in deliveries with the defendant.
7.Additional work performed by the plaintiff was not permitted if it involved working for a competitor and, if any such work was done pursuant to a business arrangement between the defendant and the competitor, any remuneration payable by the competitor was paid by the driver to the defendant.
Equipment
1.The plaintiff was required to pay for his own motor vehicle and sickness insurance premiums. The defendant collected these on behalf of the plaintiff and deducted these amounts from the weekly payments received by the plaintiff.
2.The plaintiff purchased his own motor vehicle and was required to replace such vehicle if and when necessary at his own cost. The plaintiff was also required to purchase other equipment for the carrying out of his work.
3.The plaintiff was required to provide all running expenses for his motor vehicle including fuel and to provide his own insurances, although the plaintiff could take advantage of insurances negotiated through the defendant's insurance broker. All expenses identified in the plaintiff's and the partnership's financial accounts were directly associated with the operation of the business.
Remuneration
1.The plaintiff was required, on occasions, to pay for breakages and lost parcels.
2.The defendant contributed an amount of $3.88 per day toward superannuation for the plaintiff.
3.There was a drivers' committee which negotiated with the defendant to arrive at a remuneration to be paid to parcel delivery drivers and the rates of payment took into consideration the cost of inflation. The plaintiff had to work to be paid by the defendant.
4.There was an employer's indemnity policy owned by the defendant, but this did not cover parcel delivery drivers.
5.The plaintiff was not paid wages or salary, but paid according to the number of successful pickups and deliveries he completed. He did not receive any remuneration during days he was not delivering parcels for the defendant. The plaintiff was entitled to a minimum guaranteed payment for the periods during which he undertook deliveries, although, as previously stated, the plaintiff had to work to be paid.
6.The plaintiff paid the defendant a fee of $2.00 per week for the hire and repair of the two‑way communication system used by him.
7.The plaintiff completed a daily pay claim which summarised his pickups and deliveries and was paid pursuant to the summaries on a weekly basis, the amount of the summaries or the guaranteed weekly minimum, whichever was the higher figure.
8.The plaintiff was not entitled to be paid sick leave or annual leave entitlements and when he took leave, he was at liberty to arrange a replacement driver to perform the work that he did for the defendant.
9.Superannuation was deducted by the defendant from moneys owing to drivers if they were members of the appropriate union.
There are a number of relevant cases dealing with contracts embodying the matters categorised above. It is not necessary to deal with all these authorities. It is sufficient, in my view, to consider the more important factual aspects, and those cases relevant to such aspects.
It is appropriate to confirm at the outset that there is no single test for determining whether a person is engaged pursuant to a contract of service or a contract for services. Courts have spoken of the "control" test, the "organisational" test and mixed tests for the determination of this question. The current judicial approach is to consider a range of indicia which may be relevant and to consider "the totality of the relationship between the parties": See Stevens v Brodribb Sawmilling Co Pty Ltd (1986) 160 CLR 16 at 24 and 29.
Also, in Hollis v Vabu Pty Ltd (2001) 181 ALR 263, the High Court confirmed that the "multi‑factural" test was the appropriate one. There is, it should be noted, a tendency for the courts to regard owner/drivers as sub‑contractors rather than employees: See Stevens v Brodribb Sawmilling Co Pty Ltd (supra) and Marshall v Whittaker's Building Supply Company (1963) 109 CLR 210.
In Stevens v Brodribb Sawmilling Co Pty Ltd (supra) at 36 to 37, Wilson and Dawson JJ summarised some of the relevant indicia to be considered:
"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 dictate a contract for services include the 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 or 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."
Keeping these broad principles and the factual conclusions in mind, the first matter of significance, in my view, is a consideration of the overall workforce of the defendant. There was a wide variety of work done and, of all the employees, the only ones not paid on a "wages" basis were the parcel delivery drivers such as the plaintiff. All the parcel delivery drivers were engaged by the defendant on the same basis.
As the factual conclusions demonstrate, there was a wide range of equipment provided by the plaintiff and this confirms that "the chance of profit and the risk of loss in the business" lay with the drivers: See Ready Mixed Concrete (South‑East) Ltd v Minister of Pensions & National Insurance [1968] 2 QB 497 per McKenna J at 526. This being so, the service being provided by the parcel delivery drivers was not only their own work and skill, but the provision of their vehicles and other equipment. The service by the plaintiff was "done by his own property in his own possession and control": See Humberstone v Northern Timber Mills (1949) 79 CLR 389 per Dixon J at 404. This decision was cited with approval and applied in Stevens v Brodribb Sawmilling Co Pty Ltd (supra) in finding that the owner/drivers were not employees, but working under a contract of service. It was submitted on behalf of the third party that the provision of a capital item of equipment is not necessarily an indication of a contract for services. Examples were given, however, in many of those examples, there was the reimbursement for the use of the driver's motor vehicle on a mileage basis - such is not the position in this case. Considerable reliance was placed by the third party on Hollis v Vabu Pty Ltd (supra). There had been a finding by the New South Wales Court of Appeal that a bicycle courier rider engaged by the respondent had been an independent contractor ie. engaged under a contract for services. This was reversed by the High Court. The couriers in that case owned their own bicycles. A consideration of the facts in that matter, in my view, however, confirms that the present case is considerably different to that in Hollis v Vabu Pty Ltd (supra). In particular, there was no scope for negotiation of rates between the parties, there was far more control over the couriers in Hollis v Vabu Pty Ltd (supra) and the equipment supplied was minimal compared with the equipment in the present case. In particular, the bicycle couriers were not running their own business or enterprise, nor do they have independence in the conduct of their operations to any extent. On a day‑to‑day basis also, the bicycle couriers had far less independence than the position in this case.
It is my view that the provision of a motor vehicle is significant in the present case, particularly when it is remembered that when the plaintiff sold his vehicle, the excess of the sale price over its depreciated value was declared as income.
Similarly, the generation of goodwill and the ability of the plaintiff to work to appreciate the value of his business is a significant factor and one which, in my view, points to the plaintiff being involved in a contract for services rather than a contract of service. The circumstances in which the runs were owned and sold by the drivers confirms, in my view, that there were essentially two businesses being operated so far as courier drivers were concerned ie. that of the defendant and those of the drivers. In Hollis v Vabu Pty Ltd (supra), the High Court confirmed that unlike the motor vehicle couriers, bicycle couriers "could not be said to have been conducting any business on their own".
So far as the question of "control" is concerned, the factual conclusions referred to above suggest that there was relatively little control over the drivers employed by the defendant. There was a considerable degree of autonomy so far as the drivers were concerned. The fact that the defendant may have been able to terminate the contract with the plaintiff is not, in my view, a determining factor. Indeed, in Marshall v Whittaker's Building Supply Company (supra), the right to terminate the contract by the company involved if the plaintiff in that case "misconducted himself to the company's detriment" was considered to be no basis for concluding that the contract was one "of service" rather than "for services": See page 214. See also Queensland Stations Proprietary Limited v The Federal Commissioner of Taxation (1945) 70 CLR 539 at 552.
The plaintiff, as can be seen from the above, was in a position to delegate some of his functions to the extent that where the driving of the vehicle was delegated by drivers when required, the replacement driver was not paid by the defendant, but by the owner/driver. Although the plaintiff did not, in fact, delegate the driving of his delivery run, he had the capacity to do so and this, in my view, is significant. The plaintiff also, as stated above, had the right to engage in a variety of other activities, such right to engage in external work has been found to suggest a relationship of principal and independent contractor: See Stevens v Brodribb Sawmilling Co Pty Ltd (supra) and Hollis v Vabu Pty Ltd (supra).
As confirmed, the plaintiff was not paid wages or salary, but paid according to the number of pickups and deliveries completed - he did not receive any remuneration during days he was not delivering parcels for the defendant. The fact that the plaintiff was able to claim a minimum guaranteed payment does not, in my view, detract from the view that the mode of remuneration suggests, in this case, a contract for services.
Consideration should be given to the basis upon which the drivers conducted their business affairs. They were able to operate business structures which best suited their own affairs and the payment of taxation on a PPS, rather than PAYE, basis, and the payment of other business expenses, in my view, further supports a conclusion that the plaintiff was working under a contract for services. It was the case that the drivers were required to wear the livery of the defendant but, in my view, this is not a significant factor in the light of the fact that there are a number of relationships in which this is the case and in which there is a true independent contractor relationship.
The duration of the contract between the plaintiff and the defendant was regarded as significant by the third party as was the fact that there was no written contract entered into. It was suggested that the length of service was inconsistent with a contract for services which, it was said, was usually for a rather more limited period of time such as a building contract. With respect, I do not agree with this suggestion and there are many examples of a contract for services for lengthy periods of time, for example, family lawyers.
As can be seen, it is my view that the preponderance of evidence in this case suggests very strongly that the relationship between the plaintiff and the defendant was that of principal and independent contractor. Those matters provided, by way of summary, on behalf of the plaintiff categorise the important matters which I also consider to apply in this case ie. that the plaintiff:
1.Provided his own motor vehicle.
2.Was responsible for all running expenses of the vehicle.
3.Operated for many years in partnership with his wife.
4.Had taxation deductions based on the prescribed payment system.
5.Was at liberty to perform work for persons other than the defendant.
6.Was not entitled to sick leave or holiday pay.
7.Could delegate his work to another party and could sell his delivery round.
It is my view, therefore, that the preliminary question in this matter should be determined on the basis that the plaintiff was an independent contractor employed pursuant to a contract for services.
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