Parker v HG Innovations
[2019] FCCA 278
•11 February 2019
FEDERAL CIRCUIT COURT OF AUSTRALIA
| PARKER v HG INNOVATIONS & ORS | [2019] FCCA 278 |
| Catchwords: INDUSTRIAL LAW – FAIR WORK – Claim for declarations and compensation for alleged breach of s.340 of Fair Work Act 2009 – result of claim dependent upon whether applicant was employee or contractor – indicia of employment absent on the facts of the case as a whole – correspondence authored by applicant consistently determinative of applicant being a contractor – application dismissed. |
| Legislation: Fair Work Act 2009 (Cth), ss.340, 341, 342, 365, 545, 546 Federal Circuit Court of Australia Act 1999 (Cth), s.17A |
| Cases cited: Fair Work Ombudsman v Greenan [2017] FCCA 1453 Hollis v Vabu Pty Ltd [2001] 207 CLR 21 |
| Applicant: | PHILIP PARKER |
| First Respondent: | HG INNOVATIONS PTY LTD |
| Second Respondent: | ALPHA FINANCIAL SERVICES PTY LTD |
| Third Respondent: | RIDESHARE SOLUTIONS PTY LTD |
| File Number: | BRG 857 of 2018 |
| Judgment of: | Judge Egan |
| Hearing date: | 7 February 2019 |
| Date of Last Submission: | 7 February 2019 |
| Delivered at: | Brisbane |
| Delivered on: | 11 February 2019 |
REPRESENTATION
| Applicant: | Self-Represented |
| Counsel for the Respondents: | Mr R. Green |
| Solicitors for the Respondents: | Shaw McDonald Lawyers |
ORDERS
IT IS ORDERED THAT:
The application filed on 17 August 2018 be dismissed.
The applicant pay the respondent’s costs of and incidental to the proceeding as agreed or failing agreement as assessed on the Federal Circuit Court Scale of Costs.
| FEDERAL CIRCUIT COURT OF AUSTRALIA AT BRISBANE |
BRG 857 of 2018
| PHILIP PARKER |
Applicant
And
| HG INNOVATIONS PTY LTD |
First Respondent
| ALPHA FINANCIAL SERVICES PTY LTD |
Second Respondent
RIDESHARE SOLUTIONS PTY LTD
Third Respondent
REASONS FOR JUDGMENT
By an originating application filed on 17 August 2018 the applicant sought declarations and orders, each of which was dependent upon the court finding that at all relevant times the applicant was an employee as opposed to an independent contractor.
By an application in a case filed on 4 October 2018, the respondent’s sought an order that judgment be entered against the applicant on the whole of his claim pursuant to the provisions of section 17A(2) of the Federal Circuit Court of Australia Act 1999 (Cth) (‘the Act’). Section 17A of the Act provides as follows:
Summary Judgment
(1) The Federal Circuit Court of Australia may give judgment for one party against another in relation to the whole or any part of a proceeding if:
(a) the first party is prosecuting the proceeding or that part of the proceeding; and
(b) the Court is satisfied that the other party has no reasonable prospect of successfully defending the proceeding or that part of the proceeding.
(2) The Federal Circuit Court of Australia may give judgment for one party against another in relation to the whole or any part of a proceeding if:
(a) the first party is defending the proceeding or that part of the proceeding; and
(b) the Court is satisfied that the other party has no reasonable prospect of successfully prosecuting the proceeding or that part of the proceeding.
(3) For the purposes of this section, a defence or a proceeding or part of a proceeding need not be:
(a) hopeless; or
(b) bound to fail;
for it to have no reasonable prospect of success.
(4) This section does not limit any powers that the Federal Circuit Court of Australia has apart from this section.
(5) This section does not apply if the Federal Circuit Court of Australia is exercising jurisdiction under the Family Law Act 1975 .
Note: For the power of the Federal Circuit Court of Australia to give summary judgment if the Court is exercising jurisdiction under the Family Law Act 1975 , see section 45A of that Act.
The power to enter judgment in favour of a respondent to a claim such as this is governed by well-settled principles concerning applications for summary judgment. [1] The power should be exercised sparingly and only where a party has no real prospects of succeeding at trial. [2]
[1] Fair Work Ombudsman v Greenan [2017] FCCA 1453 at [28].
[2] Adnunat Pty Ltd v ITW Constructions Systems Australia Pty Ltd [2009] FCA 499.
When discussing the characteristics which distinguish a person as being an employee as opposed to an independent contractor, the plurality in Hollis v Vabu Pty Ltd [2001] 207 CLR 21 at [24], [43] and [44] (per Gleeson CJ, Gaudron, Gummow, Kirby and Hayne JJ) said:
[24] It would thus appear that the contractual relationship between Vabu and its bicycle couriers, upon whom, as Ireland J correctly observed in the taxation decision, Vabu imposed its work practices, was partly oral and partly in writing, as evidenced by the third page of the employment form and Documents 590 and 792. Document 590 was produced in May 1990, while Document 792 was produced in July 1992. The latter appeared to supersede the former but both were given to new drivers after July 1992. Some important aspects of the contract, such as the rate of remuneration for deliveries, were not recorded in the written documents. Further, although Documents 590 and 792 both referred to annual and sick leave, Vabu's fleet administrator gave evidence that no payments of annual leave or sick leave were given, and no superannuation deductions were made by Vabu in respect of bicycle couriers in 1994. It should be added that the relationship between the parties, for the purposes of this litigation, is to be found not merely from these contractual terms. The system which was operated thereunder and the work practices imposed by Vabu go to establishing "the totality of the relationship" between the parties; it is this which is to be considered.
…
[43] These notions also influence the meaning to be given today to "control" as a discrimen between employees and independent contractors. In Stevens v Brodribb Sawmilling Co Pty Ltd, the Court was adjusting the notion of "control" to circumstances of contemporary life and, in doing so, continued the developments in Zuijs v Wirth Brothers Pty Ltd and Humberstone v Northern Timber Mills. In Humberstone, Dixon J observed that the regulation of industrial conditions and other statutes had made more difficult of application the classic test, whether the contract placed the supposed employee subject to the command of the employer. Moreover, as has been pointed out63:
"The control test was the product of a predominantly agricultural society. It was first devised in an age untroubled by the complexities of a modern industrial society placing its accent on the division of functions and extreme specialisation. At the time when the courts first formulated the distinction between employees and independent contractors by reference to the test of control, an employer could be expected to know as much about the job as his employee. Moreover, the employer would usually work with the employee and the test of control and supervision was then a real one to distinguish between the employee and the independent contractor. With the invention and growth of the limited liability company and the great advances of science and technology, the conditions which gave rise to the control test largely disappeared. Moreover, with the advent into industry of professional men and other occupations performing services which by their nature could not be subject to supervision, the distinction between employees and independent contractors often seemed a vague one."
[44] It was against that background that in Brodribb Mason J said that, whilst these criticisms might readily be acknowledged:
"the common law has been sufficiently flexible to adapt to changing social conditions by shifting the emphasis in the control test from the actual exercise of control to the right to exercise it, 'so far as there is scope for it', even if it be 'only in incidental or collateral matters': Zuijs v Wirth Brothers Pty Ltd65. Furthermore, control is not now regarded as the only relevant factor. Rather it is the totality of the relationship between the parties which must be considered."
It has been said that the test for distinguishing between an employee and an independent contractor is notoriously imprecise. [3] In On Call Interpreters and Translators Agency Pty Ltd v Federal Commissioner of Taxation (No.3) (2011) 83 ATR 137 at [201]-[220] Bromberg J, when considering what tests were to be appropriately applied, said as follows:
[3] Austin v Honeywell Ltd [2013] 277 FLR 372 at [90].
[201] An analysis of the nature of a legal relationship should commence with a proper identification of the parties to that relationship, their role and function and the nature of the interactions which constitute their relations. The employment relationship classically contains two parties. A worker who provides his or her labour and an entity that receives the benefit of that labour. In an employment relationship, labour (being a combination of time, skill and effort) is traded for remuneration. Like many commercial relationships, there is a provider, a purchaser, an exchange and a contract containing the terms and conditions that regulate that exchange.
[201] An analysis of the nature of a legal relationship should commence with a proper identification of the parties to that relationship, their role and function and the nature of the interactions which constitute their relations. The employment relationship classically contains two parties. A worker who provides his or her labour and an entity that receives the benefit of that labour. In an employment relationship, labour (being a combination of time, skill and effort) is traded for remuneration. Like many commercial relationships, there is a provider, a purchaser, an exchange and a contract containing the terms and conditions that regulate that exchange.
[203] How then is an employee, a person providing personal services for hire, to be distinguished from an independent contractor, and in particular an independent contractor who provides personal services for hire?
[204] Despite the earlier preoccupation of the law with the degree of control exercised by the putative employer as defining an employment relationship, the modern approach is
multi-factorial. As the majority said in Hollis at [24] it is “the totality of the relationship” which is to be considered. A range of indicia may be examined. Some will be more useful than others in some work arrangements but less useful in other work arrangements. Because of the multiplicity and diversity of work arrangements and the ingenuity of those fostering disguised relationships, there is value in a multi-factorial test which recognises that one spotlight will not necessarily adequately illuminate the totality of the relationship. Such an approach also involves what may be described as a ‘smell test’, or a level of intuition. The majority in Hollis (at [48]) described the notion that bicycle couriers were each running their own business as “intuitively unsound”.[205] Lord Wedderburn referred to the use by courts of the multi-factorial test of looking at the whole picture as the “elephant-test” – an animal too difficult to define but easy to recognise when you see it: The Worker and the Law, (3rd ed, Penguin Books Ltd, 1986) at 116. As Mummery J said in Hall (Inspector of Taxes) v Lorimer [1992] 1 WLR 939 at 944.
The object of the exercise is to paint a picture from the accumulation of detail. The overall effect can only be appreciated by standing back from the detailed picture which has been painted, by viewing it from a distance and by making an informed, considered, qualitative appreciation of the whole. It is a matter of evaluation of the overall effect of the detail, which is not necessarily the same as the sum total of the individual details. Not all details are of equal weight or importance in any given situation. The details may also vary in importance from one situation to another.
[206] However, the absence of a simple and clear definition which explains the distinction between an employee and an independent contractor is problematic. It is troubling that in the circumstances of the bicycle couriers dealt with in Hollis, the parties involved needed to travel to the High Court to obtain a clear exposition of the legal status of the couriers. See also Re Porter: Re Transport Workers Union at 184. Workers and those who employ or engage them require more clarity from the law. That is particularly so when important legislation such as the Fair Work Act (and its predecessors dating back to 1904) have steadfastly avoided defining what is an employee, yet demand (on pain of civil penalty) that there be no misrepresentation as to the nature of the work relationship: see s 357 of the Fair Work Act.
[207] In the pursuit of greater simplicity and clarity it is of assistance that the majority in Hollis, whilst applying a multi-factorial approach, provided a focal point around which relevant indicia can be examined. That focal point has been elsewhere expressed as the ‘ultimate question’ posed by the totality approach: Abdalla v Viewdaze Pty Ltd (2003) 122 IR 215 at [34] (referred to with approval by Crispin P and Gray J in Yaraka Holdings Pty Ltd v Gilgevic (2006) 149 IR 339 at [303]); and see Sappideen C, O’Grady P and Warburton G, Macken’s Law of Employment, (6th ed, Lawbook Co., 2009), at [2.80]. As Wilson and Dawson J in Stevens v Brodribb Sawmilling Co Pty Ltd [1986] HCA 1; (1986) 160 CLR 16 observed at 35 “the ultimate question” was posed by Windeyer J in Marshall v Whittaker’s Building Supply Co Ltd [1963] HCA 26; (1963) 109 CLR 210 at 217, in a passage which the majority in Hollis strongly endorsed at [40]. The majority in Hollis (citing Windeyer J) said, the distinction between an employee and an independent contractor is “rooted fundamentally” in the fact that when personal services are provided to another business, an independent contractor provides those services whilst working in and for his or her own business, whereas an employee provides personal services whilst working in the employer’s business: at [40]. Unless the work is being provided by an independent contractor as a representative of that entrepreneur’s own business and not as a manifestation of the business receiving the work, the person providing the work is an employee: Hollis [39], [40], [47], and [57] and see Sweeney v Boylan Nominees Pty Ltd [2006] HCA 19; (2006) 226 CLR 161 at [30]- [32]. The English courts have taken a similar approach. There the “entrepreneur test” seems to be the dominating feature: Selwyn NM, Laws of Employment (2006) Oxford University Press at [2.34].
[208] Simply expressed, the question of whether a person is an independent contractor in relation to the performance of particular work, may be posed and answered as follows:
Viewed as a “practical matter”:
(i) is the person performing the work an entrepreneur who owns and operates a business; and,
(ii) in performing the work, is that person working in and for that person’s business as a representative of that business and not of the business receiving the work?If the answer to that question is yes, in the performance of that particular work, the person is likely to be an independent contractor. If no, then the person is likely to be an employee.
[209] The question which this approach poses appears to me to be the central question in the application of the totality test. The question provides the focal point around which the indicia thrown up by the totality test may be examined. The central question has two elements. The first is whether the person has a business. The second is whether the work or the economic activity being performed is being performed in and for the business of that person: Sweeney at [31].
[210] As to the first element, to carry on a business is to conduct a commercial enterprise as a going concern: Minister for Employment and Workplace Relations v Gribbles Radiology Pty Ltd [2005] HCA 9; (2005) 222 CLR 194 at [83]. It will usually involve the acquisition and use of both tangible and intangible assets in the pursuit of profit: Gribbles Radiology at [39]. The desire to make profit is an important element and generally a business will enter into transactions on a continuous and repetitive basis in the pursuit of profit: Hope v Bathurst City Council [1980] HCA 16; (1980) 144 CLR 1 at 8-9. A business typically has (or at least aspires to have) value (goodwill or saleable assets) beyond its physical assets: Steven v Brodribb at 37. A common intangible asset of a business is its name, brand, reputation or goodwill. Typically, the activities of a business will be organised in a business-like manner, including by the use of systems: Ferguson v Federal Commissioner of Taxation [1979] FCA 29; (1979) 9 ATR 873 at 876-877. The word “business” imports the notion of system, repetition and continuity: Hungier v Grace [1972] HCA 42; (1972) 127 CLR 210 at 216-217. A business will normally operate in a business-like way; Puzey v Commissioner of Taxation [2003] FCAFC 197; (2003) 131 FCR 244 at [48].
[211] It is not possible to exhaustively enumerate the facts and circumstances which will support the inference that a course of activity is a business: London Australia Investment Company Ltd v Federal Commissioner of Taxation [1977] HCA 50; (1977) 138 CLR 106 at 129. The nature of a business will vary and some of the typical indicia I have identified will be less important in some settings than in others. Many of the characteristics of a share trading business will be different to those of a retail shop and different again to those of a business selling personal services. It is to the characteristics of the latter and the distinguishing features between it and an employment that, in this case, attention needs to be given.
[212] A personal services business is a business which is likely to involve system, repetition and continuity in the pursuit of profit. A genuine personal services business will aspire to make profits and not simply be paid remuneration, as is an employee. Such a business will seek to be remunerated not simply for the provision of the labour of the self-employed entrepreneur that provides the personal services, but also for the risks involved in that person being an entrepreneur.
[213] The risk profile of a personal services business is very different to that of an employee. By its very nature, a genuine commercial enterprise is an undertaking which involves risk. Business risk is a product of a need for a business to invest (either in physical assets, time or effort) at a cost and without any certainty or assurance of that cost being recovered and any profit being made. Unlike an employee who generally seeks security, and is not risk-tolerant, a personal services business is prepared to invest time, money and effort with little or no certainty that such investment will be rewarded with a financial return. All of that is done in the hope of making a profit. It is in that sense, that an entrepreneur operating a personal services business seeks profit and not simply remuneration, for the personal services provided.
[214] A genuine independent contractor providing personal services will typically be: autonomous rather than subservient in its decision-making; financially self-reliant rather than economically dependent upon the business of another; and, (as I have said), chasing profit (that is a return on risk) rather than simply a payment for the time, skill and effort provided.
[215] In an employment relationship, there will typically be an entrepreneur, but that will be the employer, it will never be the employee. The employer will take the risk of profit or loss. The employee seeks the security of fixed and certain remuneration. Unlike the independent contractor, the employee has no business, and typically will have no interest or desire, in exposure to the risk of loss in return for the chance of profit.
[216] As Stewart (at 261) has observed:
There does seem to be a fundamental difference, in a capitalist system, between running your own business and working for somebody else’s. It is a distinction that has not only been articulated in these terms by the courts: (See, eg, Marshall v Whittaker’s Building Supply Co [1963] HCA 26; (1963) 109 CLR 210 at 217; Hollis v Vabu Pty Ltd [2001] HCA 44; (2001) 207 CLR 21 at [39], [41]) but that most people in the community would implicitly understand and accept. The entrepreneur risks whatever capital they have been able to accumulate in a bid to profit from their venture. They may earn a little or a lot, or indeed they may lose money. Within whatever constraints are imposed by the need to raise finance and/or the conditions of the relevant product market, the entrepreneur makes their own decisions as to how the business is to operate.
Indicia of a Business
[217] That analysis and an understanding of what constitutes a business and, in particular, a personal services business, suggests the following indicia for consideration in the ‘Is there a business?’ element of the totality test:
Do the economic activities of the putative business involve the taking of risk in the pursuit of profits?: Gribbles at [39]; Hope v Bathurst at 9; Roy Morgan (2010) at [47]; Yaraka Holdings at [41] and [49]; Montreal (City) v Montreal Locomotive Works Ltd [1946] 3 WWR 748; [1947] 1 DLR 161 at 169; Market Investigations v Minister of Social Security [1969] 2 QB 173 at 184; Lee Ting Sang v Chung Chi-Keung [1990] 2 AC 374 at 382.
Does the putative business engage in a repetitive and continuous manner with purchasers of its services?: Hope v Bathurst City Council at 9; Hungier v Grace at 216-217; Puzey at [48]; Commissioner of Taxation v Sleight [2004] FCAFC 94; (2004) 136 FCR 211 at[48];
Does the putative business employ or engage persons other than the owner/operator to carry out its economic activities?: Stevens v Brodribb at 26 and 38;
Is goodwill (name, brand and reputation) being created by the economic activities of the putative business?: Hollis at [48]; Steven v Brodribb at 37; Roy Morgan (2010) at [46]; Re Porter; Re Transport Workers Union at 186;
Is the putative business promoted as a business to the public through advertising or other promotional means?: Hope v Bathurst City Council at 9; Abdalla v Viewdaze at [35]; Yaraka Holdings at [35];
Does the putative business have tangible assets such as buildings and equipment which are utilised to support its economic activities?: Steven v Brodribb at 37; Gribbles Radiology at [39];
Does the putative business have the basic transactional systems that are common of a business of that kind? For instance: invoicing systems; standard rates and terms and conditions of trade; insurance coverage; payment and debt collection systems; appropriate financial records; budgeting or forecasting systems; business based arrangements with a bank or other financial institution: Hollis at [54]; Sweeney at [31]; Hope v Bathurst City Council at 9; Wesfarmers Federation Insurance Ltd v Stephen Wells (t/a Wells Plumbing)[2008] NSWCA 186 at [42]; Ferguson at 874-875;
Do the services provided by the putative business involve the provision of labour of sufficient skill to be suggestive of the pursuance of a profession or trade through a business: Hollis at [48]; Stevens v Brodribb at 36-37; Yaraka Holdings at [51];
Are the regulatory requirements of a business (including business name registration, taxation, GST and ABN registration and compliance) being met by the putative business?: Wesfarmers at [39]-[42];
Indicia as to Whose Business the Economic Activity is Being Performed In
[218] The second element – ‘Whose business is the economic activity being performed in and for?’, raises the following indicia for consideration:
·Does the provision of the economic activity provide an opportunity for profit and involve the risk of loss: Roy Morgan (2010) at [47]; Market Investigations at 185; Lee Ting Sang at 382; or is the payment made largely consistent with the remuneration that an employee would have received for providing the activity?: Hollis at [54]; Commissioner of Taxation v Barrett [1973] HCA 49; (1973) 129 CLR 395 at 405-407; Yaraka Holdings at [41] and [49];
·In that respect and in relation to profit:
- to what extent is the reward for the provision of the activity negotiable and negotiated commercially?: Hollis at [54];
- to what extent does the putative owner/entrepreneur have the capacity to manage the activity so as to maximise the potential for profit?: Hollis at [58]; Roy Morgan (2010) at [47]; Market Investigations at 185; Lee Ting Sang at 382;
·In that respect and in relation to risk:
- to what extent is the agreed payment contingent upon the person providing a satisfactory result (i.e. are there financial consequences for poor performance)?: Roy Morgan (2010) at [47]; Yaraka Holdings at [49];
- who bears the risks associated with providing any equipment or assets required for the performance of the economic activity?: Hollis at [56].
·Does the putative business or the putative employer’s business control and direct or have the capacity to control and direct the manner in which the economic activity is carried out?: Hollis at [43]-[45], [49] and [57]; Stevens v Brodribb at 24 and 35-36; Roy Morgan (2010) at [49].
·Is the economic activity represented or portrayed as the activity of the putative business or that of the putative employer’s business?: Hollis at [50]-[52] and [57]; Yaraka Holdings at [43];
·To what extent is the person providing the economic activity integrated with the business receiving the activity?: Stevens v Brodribb at 26-27 and 35-36; Hollis at [57];
·To what extent is the person providing the economic activity financially self-reliant from, as opposed to, economically dependent upon or organisationally tied to, the business receiving the activity?: Re Porter: Re Transport Workers Union at 184-185. Exclusivity is suggestive of an employment relationship: Federal Commissioner of Taxation v Barrett at 407. However, it does not follow that a person who provides casual or part-time work to multiple purchasers is not an employee: Yaraka Holdings at [34] and [36]; Sgobino v State of South Australia (1987) 46 SASR 292 at 308;
·Is the person providing the economic activity free to employ his or her own means (employees or contracted agents) to produce the activity or must that person personally perform the work?: Stevens v Brodribb at 24-26 and 38; Neale v Atlas Products (Vic) Pty Ltd [1955] HCA 18;(1955) 94 CLR 419 at 425 and 428; Yaraka Holdings at [41]; and see [285] below;
·To whose business does any goodwill created by the economic activity enure?: Hollis at [48]; Stevens v Brodribb at 37; Roy Morgan (2010) at [46]; Yaraka Holdings at [52];
·In contracting to provide the economic activity has the person agreed to provide an outcome or result?: Neale v Atlas Products at 425; Roy Morgan (2010) at [42];
·To what extent is the person providing the economic activity doing so with his or her own tools and equipment?: Hollis at [56]; Sweeney at [32]; Roy Morgan (2010) at [41]; Yaraka Holdings at [37]-[40]; Market Investigations at 185; Lee Ting Sang at 382;
·If the person is providing their own equipment, to what extent can the person be directed in the management and control of that equipment?: Stevens v Brodribb at 26;
·Have the parties involved characterised the economic activity as that of the owner/entrepreneur being performed in and for that person’s business, or alternatively as part of the receiving business, and to what extent does that characterisation reflect the reality?: See [188] to [200] above.
[219] Whether or not income tax has been withheld and whether annual, long service or sick leave is afforded are often also used as relevant indicators: Stevens v Brodribb at 37; Yaraka Holdings at [44]-[48]. It is not incorrect to have regard to these factors, but there are differing views as to the inference which should be drawn from such arrangements: Wesfarmers Federation Insurance at [40]-[42]. Reliance on these factors may involve circularity of reasoning particularly where these factors are based upon the self-assessed and objectively incorrect label that the parties have attached to their relations: see Hollis at [37] and Owens and Riley at 140. Further, it is necessary to appreciate that casual employees are not ordinarily entitled to leave or sick pay: Sgobino at 293 and 308; Yaraka Holdings at [50];
[220] The indicia which I have listed reflect various indicators largely taken from the decided cases. In many respects the indicators are differently expressed to accommodate the particular approach that I have taken which, consistently with the approach in Hollis, seeks to emphasise what I have described as the central question in the application of the totality test. The indicators listed are not intended as exhaustive and many of them will be the subject of qualification depending upon the nature of the economic activity in question and the circumstances in which it is being carried out. The task to be undertaken is not to be performed mechanically by checking off against a list of indicia and without recognising that different significance may attach to the same indicators in different cases: Lopez v Deputy Commissioner of Taxation [2005] FCAFC 157; (2005) 143 FCR 574at [82].
In evidence filed on behalf of the applicant, the applicant asserted that the nature of tasks performed by him ought to give rise to an inference that at all material times he was employed rather than acting independently as a contractor. He stated that he was provided with a desk, stationery, a work phone and that he was given access to computing and document systems. He said that he was given instructions as to how to perform various tasks, including the answering of telephone calls, speaking to customers, obtaining referrals, and arranging the rental of cars owned by the parent company HG Holdings Pty Ltd to the subsidiary third respondent and other entities. All of those allegations are not contested by the respondents, but rather, the respondents submit that those indicia alone, with others, are not probative of the applicant being an employee.
It is not contested that the applicant and Mr Michael Gleeson, a director of each of the respondents, first spoke concerning the applicant’s possible involvement in Mr Gleeson’s businesses on or about 11 October 2017. The documentary evidence adduced on behalf of the respondents in the affidavit of Michael Gleeson filed on 4 October 2018 paints a different picture to that asserted by the applicant. The following evidence contained in that affidavit is of note:
a)
Ex. MG 2 – This was an email dated 21 October 2017 sent by Mr Gleeson to the applicant whereby in general terms the future scope of work to be performed was outlined, as was potential remuneration. The subject matter of the email was recorded as being in respect of ‘Rideshare Solutions / Alpha 390 Financial Services’. The email relevantly included the following:
“Phil
This is an overview of the rideshare rental offering on Uber marketplace currently.
It was designed around the “drivemycar” offering and we have been outsourcing this part of the business to them.
I would like to relook at this with you and come up with a better solution for us that we handle internally with our cars and effectively start our rental business from scratch again. (Audis and the larger fleet)
I will need a more robust system and eventually a “fleet manager” to do the daily handovers and management but this is my next project that I envisage you help set up whilst it’s a bit slow when you start up.
My thought would be to set up a contractor agreement like we do with other brokers on the standard package but with a twist around the Rideshare Solutions / Rental business.
$1K a week
15% of finance deals you write from our leads
40% of deals you find and settle yourself
$ figure for rent2own deals you get
$ figure for rental contracts on the road (or % of rental income)
Other opportunities to be discussed
I have potential opportunities from other dealerships that we can discuss for short term money if you need as well and I am about to open Southside MG at Moorooka next week as discussed and am launching a car brokerage from the Springwood site in the next period.
Mr Gleeson has clearly raised at the outset that he wishes the relationship to be a commercial one on a ‘contractor agreement’ basis.b)
Ex. MG 3 – This was an email sent by the applicant to Mr Gleeson dated 23 October 2017. The email relevantly included the following:
“Morning Michael.
Thanks for the email. Thought I would until Monday to reply so you could have possibly some time off on the weekend. I’m excited by the opportunity and challenge of innovation in this sector. I have a few ideas to run by you and think we can definitely grow rideshare solutions into a great profit centre.
I’m ok with the $1000 retainer, is this excluding GST?
I did get interviews on Friday by Michael from West Point and I think we hit it off. He was going to reference me and come back to me with an offer today.
Ideally as I need to earn some cash in the short term if I come on board with you maybe you could offer me to locum for him occasionally as I think he is just short staffed for only a bit. And this would substitute my commission short fall for a bit while we get rideshare solutions booming!
Give me a call when you are free this morning.
Cheers.”
Of relevance is the fact that the applicant refers to his being ‘ok with the $1000 retainer’. Also of note is that the applicant envisaged him being offered a ‘locum’ to occasionally work for someone else. During the course of discussions at the hearing, the applicant said that the person he countenanced performing a locum for was ‘Michael from West Point’, which was another different business associated with Mr Gleeson.
c)Ex. MG 4 – This was an email dated 24 October 2017 sent by Mr Gleeson to the applicant whereby a copy of a standard contractor’s agreement was attached. The latter is indicative of Mr Gleeson’s clear intention at that time that the applicant was to be engaged as a contractor rather than an employee.
d)Ex. MG 5 – This was an email dated 26 October 2017 sent by the applicant to Mr Gleeson. It included relevant personal details as would be expected to be recorded in a contractor’s agreement; it recorded that the applicant was a ‘Sole trader’; and it provided to Mr Gleeson the applicant’s Australian Business Number. Of relevance is the fact that such email did not include details of the applicant’s Tax File Number, something that would have necessarily been done had the applicant been engaged as an employee where income tax would have necessarily been required to be withheld.
e)Ex. MG 6 – This was a copy Australian Business Register search which relevantly recorded that the applicant had been registered as a ‘Individual/Sole Trader’ since 1 October 2016, and that such registration was current when the ABN was last updated on 8 June 2018.
f)Ex. MG 8 – This is an email dated 16 November 2017 forwarded by the applicant to Mr Gleeson. It referenced the commercial agreement in existence, outside of the arrangements that the applicant had with the respondents, which the applicant then contemporaneously had with the business ‘Uber’.
g)Ex. MG 9 – This is an email dated 17 November 2017 sent by the applicant to West Point Auto evidencing the additional business relationship which the applicant then had with that entity, whereby obtained vehicles he rented out to Uber drivers. The email evidenced the applicant carrying on business in addition to the work carried out by him for one or other of the respondents. It was also sent on the basis that he was ‘General Manager’.
h)
Ex. MG 10 - This is an email dated 17 November 2017 sent by Mr Gleeson to a number of employees and personnel within his organisation, to external motor dealers, and to the applicant. It is an expression of frustration on the part of Mr Gleeson concerning unauthorised directions or requests issued by the applicant. Of relevance is the sentence:
“Somewhere along the line Phil has clearly mistaken my message to investigate the current legislation and prepare a business model to see if we will continue – not reinvent and take over our business. … This report is yet to be furnished to me and as such please do not accept any directions or requests from Phil until further notice if ever.”i)
Ex. MG 11 – This is an email dated 17 November 2017 sent by the applicant to Mr Gleeson in response to Ex. MG 10. Of note is that the applicant stated in such email:
“Trying my best to be fluid, I don’t want to disrupt anything but this is new water and some processes are going to need to be forged which is why I thought I was hired. … Given your email I have removed my title from my email and will await your discussion surrounding my future employment.”j)Ex. MG 13 – This is an email dated 3 December 2017 sent by Mr Doug Taylor to Mr Gleeson and the applicant advising both of them that the ‘contractor agreement’ was not in place at that time but was in the process of being organised. The applicant was again asked to send his entity name and ABN so as to enable the agreement to be prepared.
k)
Ex. MG 14 – This is an email dated 3 December 2017 sent by the applicant to Mr Taylor and Mr Gleeson in response to Ex. MG 13, being the email from Mr Taylor sent earlier that day. The applicant, by way of response, said as follows:
“Probably just go Sole Trader until June 30. Is it a big deal to switch to company/trust later?”The applicant, by his response, clearly contemplated that he was to enter into a contractor arrangement, rather than employment. So much is clear from his intention to be recorded in the agreement as a sole trader until 30 June 2018, after which time the applicant might change the nature of his engagement to be that involving a private company or a trust.
l)
Ex. MG 15 – This is an email dated 22 February 2018 sent by the applicant to Mr Gleeson. When discussing the payment for his girlfriend Monika being paid simultaneously with his payment entitlements, the applicant said:
“Also can you put the $400 for Monika’s services in one lump sum with mine moving forward as I’m going to transition to a partnership ABN for tax off setting this year.”The above is another example of the applicant wishing his affairs to be so arranged, vis a vis the company, in a manner inconsistent with an employee/employer relationship. It was a proposal whereby entitlements due to both Monika and the applicant would be mixed and paid, presumably, into a partnership account on behalf of each of them as partners.
m)
Ex. MG 17 – This is an email dated 31 May 2018 from the applicant to Mr Gleeson whereby the applicant stated that he was:
‘ … arranging for a singular ABN for our written contract for you so this will mean you can claim GST’This is another example of the applicant, just prior to his disengagement/termination, evidencing his endorsement of there being a commercial arrangement between the respondents and him which was inconsistent with him being considered an employee. It is further of note that such email was sent with the applicant being accredited as ‘General Manager’ notwithstanding an earlier direction from Mr Gleeson that he was to remove such title from his emails.
n)Ex. MG 19 – This is an email dated 1 June 2018 from Mr Gleeson to the applicant. It evidences frustration on the part of Mr Gleeson with the applicant, and when read in context, constitutes a termination of the relationship.
During the course of the hearing, the applicant:
a)Admitted that he had received the sum of $1,000.00 per week for the whole of the period of time which he had spent performing work on behalf of one or either of the respondents, that being the ‘retainer’ referred to earlier. He also admitted that he had been paid in full in that regard.
b)Admitted that the agreement that he had with Mr Gleeson concerning the payment of commission, over and above his weekly retainer of $1,000.00, was that he would be paid an amount equal to 7% of gross turnover from company sales and rentals. He further admitted that he had received all payments relating to his 7% gross turnover entitlement.
c)Admitted that no superannuation was to be paid to him consequent upon his engagement.
d)Admitted that he didn’t provide a tax file number to Mr Gleeson for the purpose of the withholding of income tax, or for the purpose of the issue to him of a group certificate after the end of the 2018 financial year.
It is a question of fact, in any given situation, whether a person is an employee or a contractor. In this case, the applicant, during the entirety of his period of engagement with the respondents, either made it clear that he was content to be regarded as a contractor, or actively promoted himself as an independent contractor. He was damned by his own words in that regard. His claims to the contrary are a contrivance. His whole engagement was in the nature of the provision by him of services as part of a personal services business.
To the extent that the applicant, on occasion, adverted to his possibly wanting to arrange his affairs vis a vis the company differently, either by utilising a company, trust, or partnership structure, the use of each was inconsistent with him being an employee as opposed to an independent contractor. The arrangement that the applicant had with Mr Gleeson was that he would be remunerated by way of the payment of a weekly retainer, supplemented by the payment of commission, whilst carrying on the business of a sole trader under his registered business name in and for that business as the representative of that business. [4]
[4]On Call Interpreters and Translators Agency Pty Ltd v Federal Commissioner of Taxation (No.3) (2011) 83 ATR 137at [208].
The applicant has no reasonable prospects of successfully prosecuting his claim should the matter proceed to trial. His claim is without merit and, in the exercise of the court’s discretion, is summarily dismissed in its entirety.
The respondents have succeeded in resisting the applicant’s claims. Costs ought properly to follow the event.
I certify that the preceding twelve (12) paragraphs are a true copy of the reasons for judgment of Judge Egan
Associate:
Date: 8 February 2019
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