Peter Howard v LD&D Australia Pty Ltd t/a Lion

[2019] FWC 7959

[2019] FWC 7959

FAIR WORK COMMISSION

DECISION

Fair Work Act 2009
s.394—Unfair dismissal

Peter Howard
v
LD&D Australia Pty Ltd t/a Lion
(U2019/10381)

DEPUTY PRESIDENT COLMAN MELBOURNE, 26 NOVEMBER 2019

Application for an unfair dismissal remedy – jurisdictional objection – applicant not an employee – application dismissed

[1] This decision concerns an application by Mr Peter Howard for an unfair dismissal remedy under s 394 of the Fair Work Act 2009 (Act). Mr Howard contends that on 4 September 2019 he was dismissed from his employment as a truck driver with LD&D Australia Pty Ltd, which trades as Lion, following a complaint that he had behaved inappropriately towards a customer at a BP service station in Eltham. Mr Howard claims that his dismissal was unfair and seeks reinstatement or compensation.

[2] Lion objects to the application on the jurisdictional ground that Mr Howard was not an employee of the company and therefore could not have been dismissed within the meaning of s 386 of the Act. It says that Mr Howard was a contractor engaged by Robin Transport Pty Ltd (Robin Transport), a company which Lion contracts to provide transport delivery services, and that he was an owner-driver for the purposes of the Owner Drivers and Forestry Contactors Act 2005.

[3] Mr Howard resisted the jurisdictional objection and maintained that he was an employee of Lion. Despite this, his written materials made certain references to his status as ‘a contractor’ and a ‘contract driver’, however I take into account that Mr Howard represented himself and is not legally qualified. The question of whether he was an employee of Lion must be decided by reference to the evidence of the relationship between him and the company.

[4] The factual background to this matter is largely uncontentious. Prior to 2016, Lion operated an in-house transport service, employing company drivers to deliver its products. Mr Howard was employed by Lion as a driver delivering refrigerated milk. In 2016, Lion outsourced this function to a third-party transport supplier, ANC Pty Ltd (ANC). The employment of Mr Howard, like that of all other company drivers in Victoria, was terminated for reason of redundancy, and he received a redundancy payment. Mr Howard then purchased a truck which he used to provide services to ANC. In January 2017 Lion engaged Linfox as its main supplier of transport and delivery services. At about this time, Mr Howard contracted his services to another company, SGS Logistics Pty Ltd (SGS), which provided transport services to Linfox.

[5] In October 2018, Lion ceased using Linfox’s services and began engaging smaller transport companies to provide transport and delivery services. One of these was Robin Transport. Since that time, Robin Transport has provided Lion with the services of three drivers with refrigerated vehicles. One of these three vehicles is the truck owned and driven by Mr Howard. The drivers pick up Lion’s products from its distribution centre and deliver them to Lion’s customers. It is relevant to note that, around the time that Lion ceased engaging Linfox, Mr Howard approached Lion and proposed that he provide transport delivery services directly to the company as an owner driver. Lion rejected this proposal.

[6] On 29 August 2019 Mr Sam White, Lion’s operations coordinator, learned that Lion had received a complaint from the BP service station in Eltham about the behaviour of the driver on the ‘MEL010 route’. That driver was Mr Howard. Later that day, Mr White asked Mr Howard whether there had been an incident. According to Mr White, Mr Howard told him that he had ‘wolf-whistled’ at a customer. Mr Howard’s evidence was that he told Mr White simply that he had ‘whistled’ at a customer. The question of whose recollection is correct on this point is not relevant to the determination of the company’s jurisdictional objection, however I note that Mr Howard acknowledged in his witness statement that he whistled ‘at the girl’ in question as they had ‘often exchanged friendly banter’. Mr White then told Mr Howard that Lion would need to investigate the matter and asked him not to return to the Eltham BP site until further notice. From 30 August until 4 September 2019 Mr Howard ran the MEL010 route but did not attend the Eltham site.

[7] It is not clear what further investigations Lion undertook in relation to the incident. However, on 3 September 2019, Mr White contacted Mr Gary Singh at Robin Transport and told him that, because of the customer complaint on 29 August 2019, Lion wanted Mr Howard to be removed from the MEL010 route and replaced with another driver as soon as possible. Later that day Mr Singh confirmed to Mr White that Robin Transport could cover the MEL010 route with another vehicle and driver. Mr White told Mr Singh that Mr Howard should return his Lion swipe card and pick up his truck from the Campbellfield distribution centre, which Mr Howard subsequently did.

[8] Mr Howard’s evidence was that, when he returned to the depot after finishing his route on 4 September 2019, Mr White told him that his services ‘were terminated’ and that he would be ‘removed’. Mr White denied saying to Mr Howard anything to the effect that his engagement was terminated, and that he did not do so because he was unaware at that time whether Mr Singh had spoken to Mr Howard about Lion’s decision to seek his removal from the MEL010 route. I prefer Mr White’s evidence on this issue to that of Mr Howard. Mr White’s evidence was clear and precise, and supported by a reason for why he did not say those things at that time. However, even if Mr Howard’s recollection of events were correct, it would not make any difference to my conclusion in this matter. It is not in dispute that Lion asked Robin Transport to remove Mr Howard, which is consistent with Mr Howard having a legal relationship with Robin Transport.

[9] The following facts concerning Lion’s operations are established by the evidence:

•  Lion pays its third-party transport suppliers, including Robin Transport, pursuant to invoices.

•  It does not make payments directly to sub-contractors of these suppliers and did not make any payments to Mr Howard.

•  Lion plans routes for drivers and identifies relevant pick-up times and the products that are to be delivered.

•  Lion does not provide the transport companies or drivers with vehicles or any other tools or equipment, save for its ‘Transport Management System’, which drivers use to collect proof of delivery from customers.

•  Lion is not responsible for the maintenance, insurance, upkeep or other costs associated with trucks used by drivers.

[10] A company search of Robin Transport confirms that it is registered with the Australian Securities and Investments Commission as a proprietary limited company (ACN 618 242 247) and has two directors and shareholders, one of whom is Mr Singh. The company owns two of the three vehicles it deploys to service Lion. Robin Transport issues Lion with tax invoices for all three trucks it assigns to provide services to Lion, including the truck owned and driven by Mr Howard. The company generally charges Lion a daily rate. Robin Transport issues to Mr Howard recipient-created tax invoices and pays to Mr Howard the fee agreed between them, inclusive of GST. Mr Howard is only paid by Robin Transport when he works, and he does not receive any form of leave.

Consideration

[11] In French Accent v Do Rosario, 1 a Full Bench of what was then Fair Work Australia stated that, in determining whether a worker is an employee or an independent contractor, the ultimate question is ‘whether the worker is the servant of another in that other’s business, or whether the worker carries on a trade or business on his or her own behalf: that is, whether, viewed as a practical matter, the putative worker could be said to be conducting a business of his or her own of which the work in question forms part.’ The question is concerned with the objective character of the relationship and is to be answered by considering the terms of the contract and the totality of the relationship.

[12] In the present matter, the evidence establishes conclusively that Mr Howard runs his own business providing transportation and delivery services. It is a business in both form and substance. As well as having an Australian Business Number and being registered for GST, Mr Howard owns a substantial asset, a truck, which he uses to provide his services. He alone is responsible for insuring and maintaining it. Mr Howard contracts to provide his truck and his labour to Robin Transport, as he previously contracted to ANC and SGS. Robin Transport pays Mr Howard for the services he provides to it, together with applicable GST, pursuant to an invoice that identifies Mr Howard’s ABN. Mr Howard is not prevented from providing services to other clients if he so chooses.

[13] Mr Howard says that he worked ‘for Lion’, and did so on a full-time basis, attending its depot and delivering its products. Mr Howard clearly had a relationship with Lion, but it was not a legal relationship. Rather, Mr Howard’s truck and labour were part of the services that Robin Transport agreed to provide to Lion. Robin Transport is not merely a shell company or an artificial conduit. It is a substantive business in its own right. It owns two of the three trucks that are provided to Lion. It also arranges coverage of the relevant transport delivery routes for Lion. Thus, when Lion decided that it did not want Mr Howard to work on the ‘MEL010’ route because of the incidence at the Eltham BP site, Robin Transport found another truck and driver that could do so. Evidently, to use the marketing vernacular of the sector, Robin Transport provides transport and delivery ‘solutions.’

[14] Further, had it not been for Robin Transport, Mr Howard would not have had any ongoing association with Lion. The company decided in 2016 to outsource the transport delivery function of its business. Mr Howard was made redundant and was paid a redundancy payment. Lion did not offer Mr Howard any ongoing work. It decided to source transportation services from corporate providers. Mr Howard chose to offer his services to those providers. In 2018, Mr Howard asked Lion if he could contract to the company directly. That is, Mr Howard wanted to establish a legal relationship with Lion, but the company declined, and no legal relationship was established.

[15] I note that, if in fact Mr Howard had been an employee of Lion at the time of the incident, his employment would presumably have had to continue since the time of his purported redundancy. The implication of this would be that he was not in fact redundant in 2016, and therefore had no right to the redundancy payment, or the concessional taxation treatment such payments attract.

[16] Mr Howard referred to a number of circumstances that he believed to indicate the presence of an employment relationship between him and Lion. He contended that the company ‘disciplined’ him, because it was Mr White who terminated his association with the company. It is true that Lion decided that it did not want Mr Howard working on its MEL010 route, or, it would appear, on any of its routes. Mr White said in evidence that the company had contacted Mr Singh of Robin Transport about the incident, and that Mr Howard’s removal from the site ‘was communicated through Mr Singh as well’. Mr Howard emphasised those last words to argue that it was Mr White who terminated his association with the company. Understood in context however, Mr White was saying that the company had contacted Mr Singh about Mr Howard, and that as well as this, Mr Singh communicated to Mr Howard his removal from the site.

[17] In any event, as I said earlier, even if Mr White had told Mr Howard that he was to be removed, this would not suggest that Mr Howard was an employee of Lion. Lion sourced transportation services from Robin Transport. It asked Robin Transport, through Mr Singh, to change the way it did so by providing a different driver for the route in question. The fact that Lion might have also directly told Mr Howard of its decision to seek his removal would not make any legal difference. Lion did not discipline Mr Howard. It decided that it did not want him running the MEL010 route and asked Robin Transport to provide its services on the route through a different driver.

[18] Mr Howard said that he worked exclusively for Lion. I accept that Mr Howard worked only on assignments for Lion, and that these occupied him on what might be described as a ‘full-time basis’. However, I do not accept that he worked for Lion in the sense of having a legal relationship with Lion. There was no written contract between Mr Howard and Lion, nor was there in my view an unwritten contract. Mr Howard was not obliged to undertake work for Lion, and Lion was not obliged to, and did not, pay Mr Howard. There was also no evidence of anything that would legally have prevented Mr Howard from working for entities other than the one to which he contracted, which was Robin Transport, not Lion.

[19] Mr Howard said that Lion exercised considerable control over his work. He was required to attend the depot, collect the products identified by the company, follow certain routes and deliver the products to Lion’s customers. However, this does not mean that Mr Howard had a legal relationship with Lion, either as an employer or a contractor. Lion assigned to Mr Howard tasks that he was to perform as an agent of Robin Transport. Even if Mr Howard had contracted directly with Lion to provide his services, the dimensions of control mentioned above would have been consistent with service specifications pursuant to a commercial contract, in a relationship of principal and independent contractor, and not indicative of an employment relationship.

[20] Mr Howard also contended that the circumstances of this case disclosed ‘sham contracting’. He invoked ss 357 and 359 of the Act. Section 357 states that a person that employs an individual must not represent to the individual that their contract of employment is a contract for services to perform work as an independent contractor. Section 359 states that a person that employs an individual to perform work must not knowingly make a false statement to influence that individual to enter into a contract for services as an independent contractor performing substantially the same work. However, the evidence in this case establishes that Mr Howard ceased to be an employee of Lion in 2016, and that Lion had no desire to have any future contracting relationship with Mr Howard at all. There is no evidence to suggest that Lion made any representations (let alone false statements) to Mr Howard about his legal status, whether as an independent contractor or otherwise.

[21] Further, I reject Mr Howard’s broader contention that the arrangements involved a ‘sham’. As I have explained, Robin Transport is a real business which owns trucks and provides transport delivery services. Lion sources such services from Robin Transport, and explicitly refused Mr Howard’s proposal to contract directly to Lion. I also reject the submission of Mr Howard that he was ‘forced’ into a contracting relationship. Mr Howard stated in his application that he and Robin Transport were compelled to adopt the current arrangements because Lion did not want to use operators that had fewer than three vehicles. Lion acknowledges that it required service providers to have more than one truck and to be a private incorporated entity. However, Mr Howard was not compelled to do anything. Following his redundancy, Mr Howard bought a truck and provided services to one company, then another, then finally to Robin Transport. This was his choice. It is not entirely clear exactly which contract Mr Howard contended to be a sham. If it is the contract between Mr Howard and Robin Transport that is alleged to be a sham, that contention would be in furtherance of a claim that Mr Howard is an employee of Robin Transport, not of Lion.

[22] Finally, Mr Howard said that he never provided his ABN to Robin Transport. However, Robin Transport has Mr Howard’s ABN, as it appears on the invoices pursuant to which Mr Howard was paid. Mr Howard does not say that the ABN appearing on the invoices is false or is not his ABN. In any event, this does not alter the commercial and operational reality that Mr Howard provided his services to Robin Transport, not to Lion.

[23] It is not necessary for me separately to consider Lion’s contention that Mr Howard was an owner-driver regulated under the Owner Drivers and Forestry Contactors Act 2005.

[24] I have some sympathy for Mr Howard. He maintains that he did not have a fair opportunity to put forward his version of what occurred at the BP Eltham site. However, based on the evidence adduced in this matter, I am satisfied that Mr Howard was not an employee of Lion.

[25] The company’s jurisdictional objection is upheld, and Mr Howard’s unfair dismissal application must therefore be dismissed.

DEPUTY PRESIDENT

Appearances:

P. Howard for himself

J. Arndt for LD&D Australia Pty Ltd

Hearing details:

2019

Melbourne

22 November

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 1   [2011] FWAFB 8307 at [30]