Rachev v Rockwell T Security Pty Ltd

[1998] FCA 327

FEDERAL COURT OF AUSTRALIA

INDUSTRIAL LAW - Breach of Award - failure to pay amounts to an employee under the Award - INDEPENDENT CONTRACTOR - whether applicant employed by respondent - AWARD - whether respondent a respondent to the Award

Workplace Relations Act 1996 s179, s179A,
Security Employees (Victoria) Award 1993

Cornwill v Rockwell T Security Pty Ltd (unreported, IRCA, Millane JR, 1 November 1996), discussed.
Paulino v Microantenna Services P/L, (unreported, IRCA, Millane JR, 11 December 1996), discussed.
The Australian Commonwealth Shipping Board v The Federated Seamens Union of Australia and Others (1925) CLR 462, applied.
Clothing and Allied Trades Union of Australia v J and J Saggio Clothing Manufacturers Pty Ltd (1990) 34 IR 26 and Nicol v Parr (1985) 11 IR 141) applied.
Zuijs v Wirth Brothers Pty Ltd (1955) 93 CLR 561, followed.
Stevens v Brodribb Sawmilling Company Pty Ltd,. (1985-1986) 160 CLR 16, followed.
Porter; Re Transport Workers Union of Australia, 34 IR 179, followed.

RACHO HRISTOV RACHEV v ROCKWELL T SECURITY PTY LTD
VG 591 of 1997

MILLANE JR
MELBOURNE
2 APRIL  1998

IN THE FEDERAL COURT OF AUSTRALIA
VICTORIA DISTRICT REGISTRY	VG 591  of   1997

BETWEEN:	RACHO HRISTOV RACHEV APPLICANT
AND:	ROCKWELL T SECURITY PTY LTD RESPONDENT
JUDICIAL REGISTRAR:		MILLANE
DATE OF ORDER:		2 APRIL 1998
WHERE MADE:		MELBOURNE

THE COURT DECLARES THAT:

1. Between 25 May 1995 and 5 May 1997

   (a) the respondent was bound by the Security Employees (Victoria) Award 1993; and

   (b)the applicant was employed by the respondent; and

   (c)there has been a failure to pay the applicant the sums of $6,328.11 and $9,564.93 respectively for work performed during this period

AND THE COURT ORDERS THAT:

1. Within 21 days of the date of making these orders the respondent pay to the applicant the sums of $6,328.11 and $9,564.93 pursuant to s179 of the Workplace Relations Act 1996.

2. Leave is granted to the parties to file and serve within 7 days of the date of the making of these orders any written submission and any minute of proposed orders on the amount and the calculation of interest on the judgment sums pursuant to s179A of the Workplace Relations Act 1996.

IN THE FEDERAL COURT OF AUSTRALIA
VICTORIA DISTRICT REGISTRY	VG 591 of 1997

BETWEEN:	RACHO HRISTOV RACHEV APPLICANT
AND:	ROCKWELL T SECURITY PTY LTD RESPONDENT

JUDICIAL REGISTRAR:	MILLANE
DATE:	2 APRIL 1998
PLACE:	MELBOURNE

REASONS FOR JUDGMENT

By an Application and Statement of Claim filed on 21 November 1997 the applicant makes the following claims:

“1.Under s179 of the Workplace Relations Act 1996, an order for $6,290.84, being my entitlement under the hourly rate, overtime and additional payment clause of the Security Employees (Victoria) Award 1993.

2.Under s179 of the Workplace Relations Act 1996, an order for $9,601.77, being my entitlement under the shift allowance clause of the Security Employees (Victoria) Award 1993.

3.Under s179A of the Workplace Relations Act 1996, an order for interest up to judgment on all orders made”.

Relevantly subs 179(1) of the Workplace Relations Act 1996 (“the Act”) provides that:

“Where an employer is required by an award, order or certified agreement to pay an amount to an employee, the employee may, not later than 6 years after the employer was required to make the payment to the employee under the award, order or agreement, sue for the amount of the payment in the Court or in any court of competent jurisdiction.”

The respondent defends the claims on two bases.  The first is that it engaged the services of the applicant as an independent contractor under two written agreements made on 25 May 1995 and 6 February 1997 respectively  (“the first agreement” and “the second agreement”). The second is that it puts the applicant to his proof on the issue of whether it is the respondent identified in the relevant Award; namely, the Security Employees (Victoria) Award 1993 (“the Award”), a certified copy of which was provided to the Court by the applicant. 

The Witnesses and the Evidence
It is appropriate at the outset to make some observations about the evidence called and the two witnesses who gave evidence, the applicant and the respondent’s only witness, Nigel John Fitton (“Fitton”).  On this occasion Fitton when giving evidence described his occupation as that of a security consultant engaged by Rockwell T Security for some seven years pursuant to a sub-contracting agreement;  the same as that entered into between the applicant and the respondent in 1995 and again in 1997.  The many references to “Rockwell T Security” in Fitton’s evidence and the documents tendered to the Court (as, for example, Exhibits A5, A6, A7 and A15) appear to be shorthand references to the respondent, Rockwell T. Security Pty Ltd.

After hearing all the evidence and having had the opportunity to observe the demeanour of both witnesses over lengthy periods during their evidence I formed the view that where there is conflict between the evidence of the applicant and Fitton on factual issues the applicant’s evidence should be preferred.  This is because the applicant generally impressed me as a truthful witness, who, as with so many witnesses, sought to emphasis matters which advanced his view of the merits of his case, but was nevertheless a more reliable, consistent and plausible historian. In contrast, I found Fitton to be an evasive, inconsistent and unhelpful witness who gave non-responsive answers and who appeared to avoid properly answering questions where to do so may not have advanced the respondent’s case. The summary of the issues and some of the evidence detailed below provide some instances of this.

On 1 November 1996 I handed down judgment in the Industrial Relations Court of Australia in the matter of Cornwill v Rockwell T Security Pty Ltd (unreported, IRCA, Millane JR, 1 November 1996). In that case the same respondent was sued by a security guard alleging that his employment as a security guard, which employment was the subject of a written contract executed on 19 June 1995, was unlawfully terminated by the respondent on 3 November 1995 and, in particular, by Fitton. In that proceeding Fitton described himself as the respondent’s senior supervisor.

Relying on the matters and documents referred in the Cornwill judgment and, in particular, the concessions made by Fitton in giving his evidence in the current proceeding I noted many similarities between the two cases relating to the question of whether or not the applicant was an employee at all relevant times, even though each case was brought under different provisions, of, in the first case the former Industrial Relations Act 1998 and, in the present case, the Act. In the Cornwill decision I found on the facts and evidence adduced to the Court that Cornwill was an employee, despite the wording of the written contract he entered into and the attempt in the pro forma document to describe the security guard as a sub-contractor rather than an employee. 

Fitton’s evidence in the current proceeding confirmed a number of relevant matters.  It included evidence which indicated to me that the first agreement and the second agreement relied upon in this proceeding by the respondent are the same as the agreement Fitton entered into when he was allegedly engaged as a sub-contractor by the respondent and that agreement is the same as the one used by the respondent throughout the period Fitton engaged security guards for the respondent.  Therefore, it is probable that the agreements Fitton asked the applicant to sign in May 1995 and February 1997 contain the same general provisions as those contained in the written contract executed by Cornwill in June 1995.

In the Cornwill judgment I referred to two of the exhibits tendered in that case.  The first was a document entitled “Rockwell T. Security Pty Ltd, Security Guards Memo revised:  22/5/95”.  Again, relying on the matters raised in Fitton’s evidence, I am satisfied that this was a copy of the document tendered in evidence in the present proceedings (Exhibit A4 “Rockwell T. Security Pty Ltd, Security Guards Memo revised:  22/5/95”), which document both the applicant and Fitton agreed was given to the applicant by Fitton on or about 22 May 1995 when he interviewed the applicant and gave the applicant the first agreement, signed by the applicant some days later on 25 May 1995. As can be seen from the discussion of this document  and the facts of this case below I am satisfied that Fitton required the applicant to read and study the document and, therefore, it was intended that the terms of the Security Guards Memo be, and they did, form part of the contractual arrangements entered into between the applicant and the respondent in May 1995 and, subsequently, in February 1997 when he was again given a copy the Memo.

The second document referred to in the Cornwill decision is incorrectly described as “Uniform Security Guards Function, Duties and Standards”.  This description has been corrected to read “Uniformed Security Guards - Function, Duties and Standards”.  In the Cornwill decision I noted that this document accompanied what was referred to as the log book at the Coles stores at which Cornwill performed duties as a security guard.  Like Cornwill the applicant performed security guard duties at Coles stores during the period he was engaged by the respondent as a security guard.  However, in the proceeding before me one of the complete documents tendered to the Court was a document entitled “Security Guard Liaison Folder”, (Exhibit R7), the title of which was changed to “Security Liaison Folder” at some stage during the currency of the applicant’s employment and, subsequently, that folder was replaced by a diary provided by the respondent which the applicant was required by the respondent to make entries in during each shift. 

The Security Guard Liaison Folder contains a number of sections, two of which are pertinent to the present proceeding.  One is the “Incident Log” where the security guards were required to record any security incidents during their shifts and the other is the section entitled “Uniformed Security Guards Functions Duties and Standards”.  It was said by the respondent’s counsel in his final submission to the Court that there was no evidence before the Court in the Cornwill matter that there was a Security Guard Liaison Folder or that the documents relied on in the Cornwill judgment formed part of that folder.  I do not accept this submission as being a correct one.  In the first place Fitton gave no evidence to suggest that this was so and I would expect that if the respondent sought to establish this distinction it would do so through the evidence of this witness, who gave evidence in both proceedings.  More importantly, it is apparent that the Security Guard Liaison Folder (Exhibit R7) contains a section entitled “Uniformed Security Guards Functions Duties and Standards”.  The applicant’s and Fitton’s evidence clearly indicated to me that this section of the Security Guard Liaison Folder in its various forms was in use at the Coles stores patrolled by the respondent from the time the applicant commenced his shifts in May 1995 until about December 1996 when the applicant left for a ten week trip overseas; resuming work in February 1997 as a security guard after executing the second agreement.  Accordingly I am satisfied that, on balance, the section of the Security Guard Liaison Folder used at the Coles Stores and entitled “Uniformed Security Guards Functions Duties and Standards” is a copy of the same document as the exhibit tendered in the Cornwill proceedings bearing a similar description. 

One other evidentiary matter requires comment and that is discovery.  At directions orders were made for mutual discovery and, as a result of a dispute over the extent of the discovery made by the respondent, I made orders for further discovery. At hearing it was apparent to me that the respondent’s approach to proper discovery was a very selective one. For instance, the Security Guard Liaison Folder (Exhibit R7) was not discovered prior to hearing and that complete document only came to light when the respondent sought to cross-examine the applicant on matters pertaining to it. Whilst it was apparent that by then the applicant knew of the existence of the document, having referred to and tendered an extract from it during his evidence in chief (Exhibit A7), it was also apparent that the respondent had not included the folder (or any part of it) in its list of discoverable material or provided a proper explanation for not having done so. Parts of that folder were referred to in the Cornwill hearing and in the present proceeding it was clear from the respondent’s case that it said it referred to and used the folder; for instance, to draft and update the Security Guards Memo document given to the applicant by the respondent before he signed the first agreement and the second agreement.

Apart from the folder, there were also unexplained deficiencies in the respondent’s discovery regarding its relationship with Coles, to whom it supplied security guards and crowd control officers. When Fitton was cross-examined he at first agreed that the respondent has a written contract with Coles but qualified his answer once the document was called for and the respondent’s counsel indicated to the Court that his instructions were that there was no written contract between the respondent and Coles at the time the applicant was engaged. The respondent’s counsel did produce a service agreement (Exhibit A16) entered into between the respondent and Coles Supermarkets Australia Pty Ltd, which service agreement commenced on 1 February 1997. That agreement is clearly relevant at least from the time the second agreement between the applicant and the respondent was signed on 6 February 1997.

When Fitton was questioned about the service agreement he said he had never seen Exhibit A16 before and he informed the Court that this document “...would be in the management...”. I understood his evidence to mean that others in management handled the making of this agreement between Coles and the respondent. Notwithstanding his professed ignorance of the provisions of the written service agreement Fitton was able to tell the Court that any previous agreement between Coles and the respondent was a verbal one arrived at meetings with the respondent’s directors. He also agreed that there were probably letters between Coles and the respondent regarding this earlier arrangement. If there were any documents of this kind, and I would expect their commercial arrangement to be evidenced by some form of documentary material, then the respondent’s discovery ignored the existence of these documents as well as Exhibit A16 and the relevance of these documents to the question of whether the applicant was an employee of the respondent during the two periods of his engagement as a security guard. Contractual obligations entered into between the respondent and Coles for the supply of security guards and crowd control officers may be relevant to determining what the legal relationship between the applicant and the respondent was, particularly if the respondent’s contractual obligations to Coles expressly or impliedly form part of the contractual relationship between the applicant and the respondent (as, for example, was the case in Paulino v Microantenna Services P/L, unreported, Millane JR, 11 December 1996). It is apparent from the contents of Exhibit A16 that the respondent did have contractual obligations to Coles to organise and supervise the performance of the security guards duties at the Coles stores and the existence of these obligations and the other obligations outlined in that document suggest to me that the respondent was seeking to avoid the conclusion that at all relevant times such obligations impliedly formed part of the contractural relationship between the applicant and the respondent, when through Fitton it denied any or any substantial level of organisation and supervision by the respondent of the security guards in the performance of their duties at the Coles stores, and, further, when Fitton asserted that the requirements contained in the Security Guard Memo were requirements directly imposed, not by the respondent but by Coles. As I have already noted that Memo was clearly a contractual document and its requirements were incorporated into the first agreement and the second agreement.

It was submitted by the respondent’s counsel that the Court should not infer that the provisions of the service agreement commencing on 1 February 1997 also applied between Coles and the respondent from 25 May 1995 to 1 February 1997. In circumstances where the respondent’s discovery is manifestly deficient, no proper explanation has been provided for this deficiency and no officer of the company has given evidence, I am able to and do draw an adverse inference against the respondent. In other words, it is likely that any documents evidencing the arrangement between Coles and the respondent for the period preceding 1 February 1997 and at the time the applicant was engaged would not have advanced the respondent’s case that it exercised no real or actual control over the security guards it supplied to Coles and that the instructions it gave to the security guards were in fact Coles’ instructions not the respondents’.

Before leaving the question of discovery to one side it is also necessary to comment on the applicant’s failure to discover a letter from the respondent referred to in paragraph 26 of the applicant’s affidavit sworn on 20 October 1997. At hearing the applicant adopted the contents of his affidavit. Paragraph 26 states:

“I received a letter dated 29 May 1996 signed by Sandra Cooper (administration) indicating that I had been employed by Rockwell T Security, on 25 May 1995.”

Obviously a letter signed by Cooper from the respondent some days after the contract was executed indicating to the applicant that he was employed by the respondent is a relevant document, as is a letter from her dated 31 May 1995 describing the applicant as a “...full time contract Security Guard working under a sub-contract...” (Exhibit A10). In Cornwill’s case the evidence showed that the respondent’s administration manageress made an employer’s statutory declaration to support Cornwill’s application to the registrar of private agents for a provisional licence some three days before the contract was entered into between Cornwill and the respondent. That declaration was one which declared that Cornwill would be employed and trained by the respondent. If a representation that the applicant was employed by the respondent was made in the present case after the first agreement was entered into then its evidentiary significance is limited because the Court must determine what the legal relationship was at the time the first agreement was entered into and not rely on what the parties choose to call the relationship at a later date; unless there is evidence of some variation to the agreement.

The applicant was unable to produce the letter at hearing and suggested that it had been lost because he gave it to his union advisers on an earlier date. My earlier observations indicate that I have generally accepted the truthfulness of the applicant’s evidence as a witness and I do not conclude from his failure to produce the document that the document did not exist.

Respondency to the Award
I have already noted that the respondent put the applicant to his proof on the question of its respondency to the Award. The respondent called no officers of the company or management witnesses who were able to give evidence on this issue.

In its Schedule of Respondents the Award names “the Employer, Rockwell T Security, 45B Industrial Drive, Braeside, 3195”.

During cross-examination of Fitton the following exchange occurred:

“Mr Fitton, how long have you been engaged by Rockwell T Security?....Approximately 7 years.
Are you aware of the company had offices in Braeside at one time?...Yes, I am.
Would that address be 45B Industrial Drive, Braeside?....I’m not certain on the actual address (sic).”

At this point the respondent’s counsel was again asked by the Court if he had obtained instructions from the respondent on whether it was a respondent to the Award. The cross-examination of Fitton proceeded into the next hearing day on which date the respondent’s counsel confirmed that the respondent did not admit respondency to the Award. Fitton was again cross-examined on the issue of the respondent’s identity and the following further exchange took place:

“Rockwell T Security has had a number of different offices over that period, have they?...Two that I know of.
Where were those offices?...Atherton Road and where we are now, which is 54A Portland Street.
Yesterday you gave evidence that you were aware that Rockwell T Security had had an office in Braeside?...I was aware that there was an office there. I never actually went to that office.
Was that office in Industrial Drive, Braeside?...The exact address I’m unsure of.
Do you know when that office was in operation till?...No.
I put it to you that the address of Rockwell T Security was 45B Industrial Drive, Braeside?...I’m unsure of the address.
But you’re sure that there was an office at Braeside?...I heard, I’m not sure, no.
Yesterday you said there was?...I said yesterday there was?
There was an office at Braeside?...I heard that there was - I never stated that I’d been to that office.”

Having observed Fitton’s response to the questions asked of him I am satisfied that when at first he was asked about the address of the Braeside office he sought to avoid giving an answer which would confirm the address as the one referred to in the Award. As can be seen from the two exchanges, by the second day of cross-examination Fitton was much less sure that the respondent previously had an office located at Braeside, however, I am satisfied that by then, in answering as he did, he sought to avoid the consequences of the limited concession he initially made the day before.

There are a number of matters which lead me to the conclusion that the applicant met the onus of proof requirement on the threshold issue. The first is the evidence of Fitton that the respondent, who provided security services, at one time operated an office at Braeside and this appears to have been so during the currency of Fitton’s engagement by the respondent dating back to 1991. The second is connected to my earlier observation that a number of the respondent’s documents tendered in evidence and Fitton regularly referred to and identified the respondent as R T Security. The third is Fitton’s lack of candour when giving evidence on this and other issues before the Court.

I was referred by the applicant to three authorities (The Australian Commonwealth Shipping Board v The Federated Seamens Union of Australia and Others (1925) CLR 462, Clothing and Allied Trades Union of Australia v J and J Saggio Clothing Manufacturers Pty Ltd (1990) 34 IR 26 and Nicol v Parr (1985) 11 IR 141) in which the Court was required to decide the identity of the respondent to an award where the description of the employer in the award misdescribed the intended respondent in some way. These authorities confirm, amongst other things, that extraneous evidence may be relied upon to establish the identity of a respondent to an award and, a variation between the description contained in the award and the name of the respondent does not of itself mean that the maker of the award intended to bind a different entity. Accordingly, I am satisfied that the respondent is the respondent employer named in the Award.

The First Agreement and the Second Agreement
On 15 May 1995 the 27 year old applicant answered the respondent’s job advertisement for security guards from either The Age newspaper or The Herald Sun (see Exhibit A3 and paragraph 5 of the applicant’s witness statement), which advertisement he says was located in the ‘Situations Vacant’ columns. The respondent was not able to produce any documentary record of the contents of the advertisement it placed and Fitton said he was unsure of the contents of the advertisement.

The applicant came to Australia from Bulgaria in 1994 having previously been employed for some years in that country in security work while he completed his university studies in English language and literature. Whilst the applicant’s command of the English language was and is good, the applicant was keen to establish that when he read the first agreement and discussed the position offered some days before signing the agreement on 25 May 1995 his understanding of various words and terms used in that document was limited and he was not then familiar with the difference between, and the implications of, being engaged by the respondent as either a sub-contractor or an employee. However, by the time the applicant executed the second agreement he had communicated with the Australian Tax Office and Wageline and as a result continued to conduct his affairs on the basis that Rachev Security Services, a registered business name, rendered accounts to the respondent for the security services provided by the applicant, paid the applicant his wages and deducted its expenses from the gross sums received by it from the respondent. Accordingly on the evidence I am satisfied that with the passage of time and at least by the time he executed the second agreement the applicant had accepted that he was required to operate through a registered business name if he wanted to work for the respondent as a security guard and this entailed a different means of paying tax and expenses and distributing income received to that used by PAYE employees.

When the applicant was interviewed by Fitton on 22 May 1995 and given a copy of the first agreement to read, which he agreed he read before signing it, he claims that he then needed employment; so that when he was told by Fitton that if he wanted the job he would have to be “on contract” and must register a business name he did all that was required of him. It is entirely consistent with the provisions of the first agreement and, indeed, the second agreement that at the first interview Fitton told the applicant that he must both enter into the contract and register a business name before the respondent would engage him as a security guard.

When Fitton gave his evidence in chief it became apparent that he had no specific recollection of having interviewed the applicant on 22 May 1995 or of having executed the first agreement; although he identified his signature on that document. The best Fitton could do was to give evidence of his practice when conducting interviews with those applying for security guard and crowd control positions with the respondent and to generally dispute the likelihood of him making the statements the applicant attributed to him in the applicant’s affidavit, witness statement (the contents of which were also adopted by the applicant at hearing) and in the applicant’s evidence. However, this appears to be one of the many instances where Fitton gave evidence which he later contradicted; that is to say, having agreed that he did not recall the interview, when it was put to him in cross-examination that at the time the applicant was employed Fitton directed him to speak to an accountant regarding any taxation issues Fitton replied, apparently outlining his recollection of their exchange, by saying, “when I explained to him about the contract, the sub-contract and the benefits of being a sub-contractor, I said to him speak to an accountant who would fill him on the details of it (sic).”

The applicant did concede that his recollection of the events surrounding the making of the first agreement was not a complete one because of the passage of time. Notwithstanding this, he did however have a specific and clear recollection of a number of matters to do with the interview and the execution of the first agreement as well as the statements made to him by Fitton.

By and large I am satisfied that the factual matters asserted by the applicant in his evidence relating to the making of the first agreement and the second agreement represent an accurate overview of what occurred and, in some parts, he provides evidence of actual remarks made by Fitton to him, which prompted him to act in the way he did. For instance, I am satisfied that the following occurred:

(a)having directed the applicant to obtain a business name Fitton did explain to him how this should be done and, acting on this information on 22 May 1995 the applicant attended and applied to register the business name “Rachev Security Services” (Exhibit R2);

(b)on 22 May 1995 the applicant was instructed by Fitton to ring the respondent each Friday to receive instructions on the hours and the location at which he would work during the following week;

(c)the applicant was informed of the hourly rate to be paid and directed to submit weekly time sheets detailing the hours worked and the locations at which he worked;

(d)Fitton gave detailed instructions on how the applicant was to perform his security guard duties, which instructions included the requirements that he report to the store manager when he started his shift, that he not read newspapers or magazines on duty and that he not speak to Coles staff;

(e)before the first agreement was executed the applicant was given the Security Guards Memo and instructed to read it so that he was familiar with his duties and the respondent’s policies, such as its uniform requirement and times for meal breaks et cetera;

(f)the applicant told Fitton that he was having difficulty understanding the first agreement and in response was informed that “a lot of this is a formality. You can trust me”. Fitton also recommended that the applicant speak to an accountant about paying tax; and

(g)when the applicant returned from overseas in approximately February 1997 he contacted Fitton seeking security work and was again given the Memo and the second agreement to execute and that agreement contains the same provisions as the first agreement.

On reading the provisions of the written service agreement between Coles and the respondent operating from 1 February 1997 I am satisfied that they impliedly form part of the contractual relationship between the applicant and the respondent. The service agreement amongst other things casts an obligation on the respondent to provide security guards and supervise them (Clause 3(a) and (h)). It also prohibits the sub-contracting by the respondent of any of the services referred to in that agreement without the prior written consent of Coles except “(...to the extent it (the respondent) employs or acquires the services of individual CCOs where details are provided to Coles under Clause 5.2)” (Clause 5.1). This last obligation clearly impacts on the alleged right the applicant had pursuant to at least the second agreement to delegate the performance of his duties.

The many allegations the applicant made in his evidence regarding the instructions he says he received from Fitton on how he was to perform his duties, how he was to dress and what procedure he was to follow if he was ill or unable to attend a shift are all consistent with the instructions and directions set out in the Security Guards Memo, and as I have already noted, the terms of this Memo were clearly incorporated into the agreements between the applicant and the respondent. Accordingly, the provisions of the Security Guards Memo should be read together with the terms of the first agreement and the second agreement to properly characterise the relationship entered into. The Memo is in reality a detailed written instruction to the security guard from the respondent on how the security guard is to conduct his duties, what he is to wear and what he is to do when he performs duties for the respondent’s clients, including Coles. Amongst other things, the Security Guards Memo requires the security guard to comply with certain requirements of Coles, including the filling in of information in the Coles Security Guard Liaison Folder and Logs. Between pages 6 and 7 of the Memo and under the heading “FUNCTION” to “ACCOUNTABILITY” the Memo does reproduce a small part of the information contained in the Security Guard Liaison Folder but otherwise the Memo contains the respondent’s direct instructions to security guards on its requirements for the performance of the security guards’ duties.

On reading the Security Guards Memo it is apparent that a security guard, on accepting a position with the respondent, is directed in unequivocal terms about the way in which he or she must perform their duties. Three examples of these instructions are set out as follows:

1. “STANDING ORDERS ARE AS FOLLOWS FOR COLES STORES:-

   DUTIES

   -          Guards remain in the vicinity of front end of store.

   -NO random patrols outside the stores or in the rear stock room areas of stores.

   -Maintain visual presence in Coles Stores, as a visual deterrent to any persons considering unlawful acts upon the staff or store.

   You are not there for any other reason (this includes stamping of stock, facing up fixtures, helping unload trucks or replenishing shelves).

   -If the Guard requires to go to the toilet, the front door to the store is to be locked by the Duty Manager, until to the Guard returns to their post. The Duty Manager should remain by the door until the Guard arrives.

   YOU WILL NOT:

   1.Sit Around

   2.Make coffee for staff

   3.Read newspapers, books, magazines/cross word puzzles etc

   4.Chat up female staff

   5.Stand around talking to staff, distracting yourself and staff from their respective duties

   6.“CARPARK” duty Dandenong, sitting in your car is NOT permitted at all

   THE ABOVE WILL AUTOMATICALLY RESULT IN DISMISSAL.”

2. “2)      RE:     RUNNING LATE FOR WORK

   -Guards, BE WARNED for the last time about being late for duty!

   -On three occasions now, Guards have “SLEPT IN” past their 10 pm start time.

   THIS WILL NOT BE TOLERATED, THERE IS TOO MANY COMPLAINTS COMING FROM COLES HEAD OFFICE AND DIRECT FROM THE STORE.”

3. “1)      LOG BOOKS

   Guards, when there is a log book on your site (open sites) you must fill the book in accordingly and at the appropriate times. Do not fill a logbook in ahead of time. Start a new page for a change over shift or a new shift itself.

   FAILURE TO COMPLY WITH THIS COMPANY STANDING ORDER WILL RESULT IN DISMISSAL.”

When Fitton was asked what the purpose of the Security Guards Memo was he denied that it was to instruct the security guards in their duties and claimed that it was to give the security guards “...an insight of what Coles required (sic).” He also claimed that the memo “...wasn’t to make them do their jobs. They were instructions given to us by the management of Coles Myer of what their requirements”(sic). In effect, Fitton sought to establish that the respondent did not have available to it enough Coles Security Guard Liaison Folders to give to each security guard and, therefore, it put together the Memo consisting of Coles instructions to help the security guards perform their duties. As far as Fitton was concerned, he and the respondent did not tell the security guards they had to comply with these instructions and the Memo was certainly not given to them “...to make them do their jobs”.

Apart from the extracts from the Security Guards Memo I have referred to above, it is patently clear on reading the Security Guard Liaison Folder and comparing its contents to the contents of the Memo that the instructions contained in the Security Guards Memo are actually from the respondent to its security guards and, as a consequence, the respondent intended to and did closely supervise and direct the performance of the applicant’s duties  as well as threaten dismissal should the he fail to comply with those instructions. In fact, if the Security Guard Liaison Folder is read in its entirety it is apparent that that document is directed to the management of the Coles supermarket stores advising them about the use of security guards in their stores and its policies and procedures on security matters, including advice on what the security guards “will be required” to do as, for example, the signing of and the use of the Incident Log in that folder. It is not a document directly instructing the security guards on what duties they are to perform and how they are to perform them. These last observations probably explain why the folders were retained in the Coles stores and the respondent created its own document, the Security Guards Memo, covering all the duties the security guard performed whether or not these duties were performed for Coles or its other clients.

Setting to one side the contents of the Security Guards Memo for the moment, the first agreement (Exhibit R4) (and subsequently the second agreement) by the explicit terms and expressions used in it does describe the relationship as one of principal and independent contractor. Agreement by the applicant that he waives any claim to benefits such as holiday pay, overtime, penalty rates, long service leave and superannuation (clause 3), to name a few, does point to a sub-contracting arrangement as does the agreement by the applicant to be paid a gross sum; rather than have tax instalments deducted from the monies paid to him (paragraph 3 of the schedule to Exhibit R4). Nevertheless the written agreement is not by reason of all its terms entirely consistent with a sub-contracting arrangement. For instance, it was said by the respondent that the right to delegate and employ others to perform his duties (Clause 4) indicates a sub-contracting arrangement.

As a general rule the right to delegate is more consistent with a contract for service rather than a contract of service. However, the expression of this right and its context must be considered. In the Cornwill case the fact that the security guard was granted a provisional licence precluding him from employing another private agent meant that there was no effective right to delegate. Clause 4 of the first agreement and the second agreement provides as follows:

“4.THE Contractor shall supply all labour and shall be free to employ other persons if the Contractor shall choose so to do (all such persons engaged in the performance of services for the Company and its customers by the Contractor shall first be approved by the Company after provision by the Contractor of all information references licenses and details required by it and only after authorisation in writing from the Company shall any person be engaged by the Contractor in the performance of such services) and the Contractor shall be solely liable and responsible in all respects for any such labour supplied whether by way of employee entitlements or for any act or omission of such labour and the Contractor acknowledges and covenants that its obligations pursuant to this Agreement shall not be reduced or diminished arising from the employment of others by the Contractor in the performance of the contractor’s obligations to the Company.”

The right to delegate is one which is limited by the respondent retaining the right to approve of such person to whom the duties would be delegated and the respondent’s unrestricted right to give or withhold its written authorisation. Because of this and the obligation the respondent had to seek consent from Coles (see Clauses 5.1 and 5.2 of the Service Agreement) in reality, the right to delegate may amount to nothing and, therefore, I do not attribute significant weight to this as a factor favouring a sub-contracting relationship.

Other factors which are, arguably, more consistent within an employment relationship include the respondent’s written covenant (Clause 12) for the respondent to maintain its cover both for Work Cover for the contractor and Public Liability (insurance).

I have already commented on the contents of the second agreement executed in February 1997 after the applicant’s ten week absence overseas and, after the commencement of the written service agreement entered into between Coles and the respondent. I am satisfied on the evidence that there was no appreciable alteration in the legal relationship between the parties because the applicant was subjected to the same terms and level of supervision and instruction he worked under before going overseas. The respondent not only retained the right to closely supervise and direct the performance of the applicant’s duties on the evidence it also exercised that right.

When he entered into the first agreement and during the currency of that agreement the applicant worked at K-Mart as a part-time security guard and he was then a paid employee of K-Mart. At no time during the relevant period did he undertake any work for any other entity in the name of the business, Rachev Security Services. This shows that there was no real development of any business interests or goodwill, and confirms that the applicant only used the business name the respondent required him to register when he worked for it.

When the evidence is considered as a whole and all the indicia pointing either to an employment or a sub-contracting relationship are considered I am satisfied that the legal relationship over the periods contended for was one of employment particularly where there was reserved not only a right to exercise close supervision and control but the actual exercise of this right (see Zuijs v Wirth Brothers Pty Ltd (1955) 93 CLR 561 and Stevens v Brodribb Sawmilling Company Pty Ltd (1985-1986) 160 CLR 16).

In my decisions in Cornwill’s case and Paulino’s case I had occasion to consider, the numerous authorities on what indicia should be taken into account in determining the true legal relationship between the parties to a contract. It is clear from those authorities that the Court must weigh up the various indicia and not be distracted by the label the parties give to their relationship when that label is at odds with the real terms of the agreement entered into (see, for example, Re Porter; Re Transport Workers Union of Australia, 34 IR 179). Accordingly, I find that the relationship of employment existed at the relevant time and it is, therefore, necessary to consider and determine the two claims made pursuant to the Award, as well as the claim for payment of interest.

ORDERS
Pursuant to an order of the Court the applicant filed and served Further and Better Particulars of the Statement of Claim on 22 December 1997. In part that document particularises the alleged breaches of the Award.  During submissions the applicant handed to the Court a document entitled “Explanation of calculations contained in applicant’s answers to the request for further and better particulars of Statement of Claim”.  The applicant also agreed to the making of orders for further particulars and these were filed on 19 March 1998 as a further submission. 

The respondent called no evidence on this issue only seeking clarification of the way in which each claim was calculated and, in particular, what part or parts of the Award were relied upon to arrive at this calculation.

The particulars and subsequent material filed by the applicant indicate that pursuant to Clause 11 of the Award, which covers the hours, overtime and additional payments claim the final claim made is for $6,328.11 and not the $6,290.84 referred to in the application and Statement of Claim. Similarly the claim made pursuant to the shift allowance provision; namely Clause 14 of the Award, has been altered to $9,564.93 rather than the original amount claimed of $9,601.77.

Relying on the calculations given the orders I propose to make include orders for the payment of the two sums, $6,328.11 and $9,564.93 respectively within twenty-one days of the date of making these orders. In accordance within section 179A of the Act and following the receipt of submissions and any minutes of proposed orders I also intend to make an order for the payment of interest on the judgment sum to the date on which these orders are made.

THE COURT DECLARES THAT:

1. Between 25 May 1995 and 5 May 1997

   (a) the respondent was bound by the Security Employees (Victoria) Award 1993; and

   (b)the applicant was employed by the respondent; and

   (c)there has been a failure to pay the applicant the sums of $6,328.11 and $9,564.93 respectively for work performed during this period

AND THE COURT ORDERS THAT:

1. Within 21 days of the date of making these orders the respondent pay to the applicant the sums of $6,328.11 and $9,564.93 pursuant to s179 of the Workplace Relations Act 1996.

2. Leave is granted to the parties to file and serve within 7 days of the date of the making of these orders any written submission and any minute of proposed orders on the amount and the calculation of interest on the judgment sums pursuant to s179A of the Workplace Relations Act 1996.

I certify that this and the preceding eighteen (18) pages are a true copy of the Reasons for Judgment herein of Judicial Registrar Millane

Associate:
Dated:             2 April 1998

Counsel for the Applicant:	MR N CAMPBELL
Representative for the Applicant:	ALHMWU
Counsel for the Respondent:	MR B M DENNIS
Solicitor for the Respondent:	RIGBY COOKE
Date of Hearing:	10, 11, 12 & 13 MARCH 1998
Date of Judgment:	2 APRIL 1998