Roy Morgan Research Centre Pty Ltd v Commissioner of State Revenue

[1998] HCATrans 167

IN THE HIGH COURT OF AUSTRALIA

Office of the Registry
  Melbourne  No M100 of 1997

B e t w e e n -

THE ROY MORGAN RESEARCH CENTRE PTY LTD

Applicant

and

THE COMMISSIONER OF STATE REVENUE

Respondent

Application for special leave to appeal

GUMMOW J
CALLINAN J

TRANSCRIPT OF PROCEEDINGS

AT MELBOURNE ON TUESDAY, 19 MAY 1998, AT 2.23 PM

Copyright in the High Court of Australia

MS L. LIEDER, QC:   If the Court pleases, I appear on behalf of the applicant.  (instructed by Tanya Cirkovic & Associates)

MR R.L. BERGLUND:   If the Court pleases, I appear on behalf of the respondent.  (instructed by the Solicitor for the Commissioner of State Revenue)

MS LIEDER:   If the Court pleases, we have filed an outline of submissions in this matter.

GUMMOW J:   Yes, we have studied that.

MS LIEDER:   The primary contention that I make, your Honours, is that the question that was determined by the Court of Appeal as to the finding of the primary judge on the issue of control being the decisive factor in the facts of the case before it, in fact begged the question as to whether or not the essential elements of the task to be performed, of themselves, rendered either irrelevant or minimally relevant, that question.

The question that is addressed to this Court, and the primary subject of the special leave application, is whether it is incumbent upon a court, when determining the question of the status of a person engaged to perform work, to consider whether that which should be paramount is whether the arrangement was to produce a given result, or whether it was a contract for services, where the issue of control would still be not the decisive, the significant factor.

It is my submission that given the nature of the workplace, persons are entitled to have freedom of choice between the position of being self‑employed, and availing themselves of whatever benefits they themselves believe are applicable, and the ‑ ‑ ‑ 

GUMMOW J:   Can I just say this?  In the Court of Appeal the President, at page 33 of our application book, says at about line 14 that the primary judge:

applied principles which are well known and have been expounded in a number of cases over the years in which the question has arisen -

et cetera.  Is that not true?

MS LIEDER:   I do not disagree with that, nor do I resile from it, but my contention is that the application of the principles did depend themselves upon an application on the basis of what had been the traditional tests without first considering what is my contention this Court ought to now consider, that the essential elements of the task themselves must first be determined before a court turns to consider how, if at all, the aspect of control becomes relevant.  So that although, indeed, the Court of Appeal, the learned President, and, indeed, the primary judge, applied correct principles, they did so, I would contend, virtually in reverse order.

CALLINAN J:   Ms Lieder, it seems that, from pages 31 and 32 in the President’s analysis, he by no means confined himself to questions of control.  He looked, it seems to me, at the matter upon a very, very broad base indeed.  He took into account all sorts of factors other than the matter of control.

MS LIEDER:   Indeed, that is so, your Honour.  However, upon a symphysis of those factors, as your Honours will see, particularly at page 42 of the application book, when his Honour came to perform that symphysis over the broad base he made a finding that the factual parameters of the case were such as to:

leave very little to the discretion of the interviewers.

Your Honours will find that at line 29 on page 42.  His Honour went on to consider those aspects of lack of ability to exercise discretion in the circumstances, so I would submit, of considering the aspect of control.  It was by no means the decisive factor, but it was a highly significant one in his analysis, and indeed in the finding of the court.

CALLINAN J:   It always will be, though, will it not?

MS LIEDER:   It always will be, but my contention is that before one comes to consider the relevance, or the significance of control, it is first necessary to distinguish the essential elements of the task.  Because, if the task is,itself so highly structured as to permit of little room for manoeuvring, little room for the exercise of discretion, then one could say, as the learned President did, that in those circumstances the control exercised is so great as to be a very significant feature.  But that, as is my contention, begs the question.  If the nature of the task is such that it must be performed in a certain way and in certain circumstances, that of itself should not, in my respectful submission, mean that it necessarily transforms it into a contract of service, which it inevitably will do if the control feature is regarded with the degree of significance that it is still regarded.

That is made particularly clear, in my respectful submission, if the Court examines the matters that appear on pages 36, 39, 37 and 38, which, as your Honours may note, may be transposed in your Honours’ application book.  That is to say pages 10, 12 and 11 of the actual appeal.  So, your Honours need to go from 37 to 39.

GUMMOW J:   No, they have been rearranged.

MS LIEDER:   They have been?

GUMMOW J:   They are in the right order, yes.

MS LIEDER:   They have been.  They were not rearranged in mine, so I was not sure what the case was.  Your Honours will note that the learned President there, in his analysis of that broad‑base matter that your Honour raised, in fact comes to the aspect of direction and control of the task - that is to say manner of performance; again, part of the traditional analysis, in my submission, of the control test.  By no means does his Honour disregard other features.  Indeed, his Honour applies the principles set out in cases such as Stevens v Brodribb, but at the end the analysis is done, not on the basis of the nature of the task itself, but rather, whether the task is, in fact, one which demonstrates the indicia of control.  It is my primary contention that that is in fact the reverse order.

His Honour, in my submission, was absolutely correct in finding, as the court did find, that the nature of the task was such that it was impossible for the applicant to have that task fulfilled unless it was fulfilled in a certain highly structured way.  That was simply so because that is the purpose of market research.  It can be nothing else.  Upon so finding, as his Honour did at page 39 line 14 of the application book, his Honour then went on to consider that the finding by the primary judge, that the interviewer’s task was a highly structured one, necessarily meant that the degree of control that was exercised was so significant as to make it a contract of service rather than a contract of services.

CALLINAN J:   Ms Lieder, I must say I read the ratio as being contained in the last paragraph at page 43 and page 44 where his Honour says:

that the degree of control.....strongly points to the conclusion -

but is not conclusive, itself.  Then his Honour goes on to hold, upon the basis of the matters to which he refers, that the interviewers were engaged in the business of the appellant and not engaged in business on their own account.  So that his Honour has only regarded control, albeit as an important matter, but as only one of the matters.

MS LIEDER:   His Honour also had regard, of course, to the issues that related to the directions given to the manner of performance of the task ‑ ‑ ‑ 

CALLINAN J:   That is an aspect of control, is it not?

MS LIEDER:   His Honour also had regard to the risk that was taken by the interviewees, all as part of the indicia of whether or not they were conducting business on their own.  Our contention is that whether the test of whether or not a person conducts business on their own cannot be confined to those who have sufficient financial backing to incur a capital outlay, that given the nature of the task, whatever risk was taken in terms of assets could not be more than the performance of the interviewees themselves.  That is to say that if the circumstances are that the nature of the task is that a person requires no more than their own ability to communicate, and perhaps pencil and paper and the surveys given out, that, of itself, should not necessarily mean that they are not engaged in business on their own simply because they do not have assets at risk.

My submission would be that although his Honour, and indeed the Court of Appeal, as did the primary judge, did take the principles, which are well‑known principles, and apply them, they were applied in the absence of considering, firstly, as in my submission they should have done, what was the nature of the task, which should be viewed objectively aside from how people are engaged to carry it out.

If, as the court held, or as the court found, and we would submit correctly found, the circumstances were such that the nature of the task meant that there was a very structured way of carrying it out, then this would put it in the same category, in my submission, as the couriers in the case of Vabu Pty Ltd v Commissioner of Taxation, one of the cases cited in my outline of submission.  There, when one considers the factual analysis of the case, it is very much on all fours with the case before the court in Victoria. 

There, the issue was not one whether the task was a structured one.  One cannot conceive of a more structured task than an instruction to delivery a certain parcel to a certain place, and presumably within a certain time.  In so far as instructions as to how to carry out the task are concerned, although the learned President in the case before this Court found that there were guidelines of a structured nature, those guidelines themselves did not, in my respectful submission, do anything other than define the essential nature of the task.

My point is that in this day and age, without attempting to apply general principles as they are set out by the law, that should be done only after there has been a characterisation of what the nature of the task is.  The proliferation of work, to use a neutral term, of this nature - work which may be given on an ad hoc basis, and work which permits persons to carry out the sort of work that they want, and there may be two or three or four different such spheres of work in which they are engaged - is necessarily a product of the way that society now functions.  It is, in fact, nothing more than that which the High Court found in Stevens v Brodribb was the advances of technology which would, as the Court said, not transform a contract of service into a contract of services simply because the person carrying it out was highly skilled and therefore not subject to control. 

I take the other side of what was said by their Honours Justices Wilson and Dawson at pages 36 and 37 of Stevens v Brodribb and say that the Court must have meant there that similarly in circumstances where the task is such that it necessarily is a narrow task, and necessarily a highly structured one, and therefore those indicia which might otherwise have led a court to conclude that there is the degree of control which renders it a contract of service or, alternatively, that it does not bear the normal indicia of carrying out a business - in fact, becomes less and less relevant.

GUMMOW J:   Can I just ask you whereabouts in the President’s judgment is there the passage which you say indicates he took a wrong turning?

MS LIEDER:   In specific terms ‑ ‑ ‑ 

GUMMOW J:   That is what we have to get down to.

MS LIEDER:   In specific terms our submission is that at application book 43 - if your Honour will just permit me, I do not have the line number there.

GUMMOW J:   I think my colleague already took you to 43.

MS LIEDER:   If I might just quote the passage and find the line at a later time.

GUMMOW J:   Yes.

MS LIEDER:   What his Honour said was that:

the degree of control exercised by the appellant over its interviewers, both as to the nature and manner of their task, is a very significant criterion pointing towards the relationship of employer/employee.

As a statement of principle I do not say that that can be faulted.  But, as a statement as applicable to the case before it, I say that is where his Honour, with the utmost of respect, did take that wrong turn.

GUMMOW J:   How do you then get a special leave point?

MS LIEDER:   In my submission, the special leave point arises in this way:  that his Honour there, in our submission, has in fact failed to do that which was incumbent upon the court to do, which was firstly to consider the essential nature of the task before seeking to apply principles which relate to the aspect of whether or not control is or is not significant.  We say that was the primary task and, indeed, your Honour will see at the application book page 32, where his Honour makes an assessment of the nature of the task, in my submission his Honour rightly found that it was the nature of the task itself which was highly structured.  His Honour then failed to apply to the characterisation of that task the appropriate test.  Once his Honour had found, as he did in my submission, that the nature of the task itself was of a highly structured nature, and that, in fact, the applicant could not fulfil his own contractual obligations to his own clients if it was not carried out in this way, then under those circumstances what his Honour then ought to have done is to have found that the question of control must be significantly less important than it would be in circumstances where the task was less rigidly structured.

I say of that that that is a misapplication of the law; that, in fact, that that was what was intended by the High Court, in particular at pages 36 and 37 of Stevens v Brodribb, when their Honours Wilson and Dawson pointed out, as they did, that the nature of the task, or rather the exercise of control over the manner in which a task was performed was of itself not something which would change a contract of services into a contract of service; that, in fact, it was part of the indicia of an independent contractor.  The facts themselves in Stevens v Brodribb, as this Court, of course, is fully aware, was such that there was a very significant structuring of the task at hand over both the truckers and the sniggers - if I have the phrase right - but that, of itself, the High Court held, did not in the modern workplace mean that the persons were anything other than independent contractors.

Again, that is a principle which, in my submission, is not particularly new to the law either, but it seems not to have been applied by the learned President.  In short, it could be said that reservation of a right to direct or superintend the performance of a task, as the Court said in Stevens v Brodribb, cannot change a contract for services into a contract of service.  Therein, their Honours were, of course, relying upon that which fell from the Court in Queensland Stations Pty Ltd v Federal Commissioner of

Taxation, in particular by his Honour Mr Justice Dixon, where it was observed by his Honour that very passage.

What his Honour, the learned President, did in the case before the Court was that his Honour did not apply what, essentially, was the underpinning principle of Stevens v Brodribb as to where control sits.  Control may well be a significant feature, but cannot be a decisive one, so therefore, in my submission, the only criterion can be, under what circumstances is it anything other than decisive.  In my submission, it would be if, in fact, the nature of the task was such as to render it less significant.  Accordingly, it is incumbent upon a court first to determine what the essential elements of a task are.

It is our submission that this is a point of public importance because it goes across the board to a large range of people who carry out the sort of work of this nature, and that precision and clarity is required.  This is not a factual issue; this is an issue of the way in which principles which have been laid down are to be applied, and are to be applied across the board, and certainty is required.  There is no disability which attaches in terms of insurance or Workcover with persons of this nature, so accordingly, in my submission, it is required that this Court consider whether or not the aspect of consideration of the essential elements of the task is the primary function.  That, and, as set out in the submissions, whether the contract is one to produce results.  If the Court pleases.

GUMMOW J:   Yes, thank you, Ms Lieder.  The Court has no need to call on you, Mr Berglund.

We see no error by the Victorian Court of Appeal in the understanding or the application of established principle.  There is no ground made out for the grant of special leave.  Accordingly, special leave is refused.

Do you ask for costs?

MR BERGLUND:   Yes, your Honour.

GUMMOW J:   It is refused with costs.

AT 2.43 PM THE MATTER WAS CONCLUDED