Roy Morgan Research Centre Pty Ltd v Commissioner of State Taxation

[2005] HCATrans 104

[2005] HCATrans 104

IN THE HIGH COURT OF AUSTRALIA

Office of the Registry
  Adelaide  No A60 of 2004

B e t w e e n -

THE ROY MORGAN RESEARCH CENTRE PTY LTD

Applicant

and

THE COMMISSIONER FOR STATE TAXATION (IN HIS CAPACITY AS COMMISSIONER OF PAYROLL TAX)

Respondent

Application for special leave to appeal

GUMMOW J
KIRBY J
CALLINAN J

TRANSCRIPT OF PROCEEDINGS

FROM ADELAIDE BY VIDEO LINK TO CANBERRA

ON FRIDAY, 4 MARCH 2005, AT 9.18 AM

Copyright in the High Court of Australia

MR R.R.S. TRACEY, QC:   If the Court pleases, I appear for the applicant.  (instructed by Tanya Cirkovic & Associates)

MR C.J. KOURAKIS, QC, Solicitor‑General for the State of South Australia:   If the Court pleases, I appear with my learned friend, MR M.J. WAIT, for the respondent.  (instructed by Crown Solicitor’s Office (SA))

GUMMOW J:   Yes, Mr Tracey.

MR TRACEY:   If the Court pleases, the court below was concerned to make a determination for the purposes of the Payroll Tax Act and that that determination was whether the remuneration paid to interviewers engaged by the applicant were paid to the interviewers in their capacity as employees or in some other capacity. 

The trial judge identified a range of contractual terms which governed the relationship between the applicant and the interviewers.  Some of those terms were consistent with there being a contract of service, others were suggestive of some other relationship, and others again were equivocal.  But, importantly, the parties had entered into what his Honour found was a genuine agreement that provided that the interviewers were not engaged as employees and his Honour the trial judge gave effect to that common intention.  Among the factors which he identified which pointed to a relationship other than that of employer and employee were, firstly, payment was by results, there was a marked absence of mutuality, the applicant had no obligation to provide work to the interviewers, and equally, the interviewers, who formed part of a pool, were not obliged to accept assignments that were offered to them from time to time. 

The interviewers were required by the applicant and did supply Australian business numbers.  There was no provision for paid sick leave or annual leave and the interviewers agreed to accept responsibility for meeting taxation obligations and claiming expenses for the work performed by them for the applicant. 

GUMMOW J:   Mr Tracey, the trouble is that the Solicitor-General, if you called on him, would provide an equally cogent list of indicia for the other result, so how is this a special leave case?

MR TRACEY:   Your Honour, in this way, that the very fact that there are competing arguments that call for an assessment which is the trial judge’s function and it involves a subjective analysis and the formation of an opinion and that opinion, once made, absent error, ought not to have been disturbed on appeal, that is the first point.  The second point ‑ ‑ ‑

KIRBY J:   Just let me pause there because I see that that was at the forefront of your argument.  Unless there is something different in the rules of the Full Court of the Supreme Court of South Australia, the principle, as I understand it, stated in Fox v Percy and many other cases, Warren v Coombes much earlier, is that the Full Court has its own separate responsibility and, unless there is some reason for not interfering such as credibility findings and so on, it has to give effect to its own conclusion.  We are not going to add a further impediment that because it is an evaluative decision that the Full Court cannot fulfil its separate statutory responsibility.  Is there some separate rule or different rule in South Australia?

MR TRACEY:   Yes.  Your Honour, I do not apprehend that the position here is any different from the position as it obtains in Victoria, and that was the subject of close analysis by the Court of Appeal in the Roy Morgan Case that was dealt with by that court.  Your Honours, we have provided a reference to that case.  It is No 2 in the volume and we would direct attention to pages 532 to 534 where the learned President sets out at some length the reasons why cases of this kind attract a different judicial technique.  What it really comes down to, your Honours, is that it is an evaluative exercise on the basis of facts ‑ ‑ ‑

GUMMOW J:   You lost at both levels in Victoria, did you not?

MR TRACEY:   Yes, that is so but, importantly, the reason we lost at the second level was because of the application of the principle that no error had been discerned in the approach of the trial judge.

KIRBY J:   That leaves the result then that you would have a different outcome in Victoria and in South Australia.

MR TRACEY:   Yes, and the trial judge here was very alive to that but there was one important difference between the factual situations as they obtained in the two States and it was this, that the status issue had been dealt with in written contractual arrangements here, it had not been ‑ ‑ ‑

CALLINAN J:   Mr Tracey, the Victorian case was decided before Fox v Percy, was it not? 

MR TRACEY:   I think it was, your Honour, yes.  We would say that in a matter of this kind Fox v Percy did not disturb the approach ‑ ‑ ‑

CALLINAN J:   But in this case here there are no disputed matters of fact, are there?

MR TRACEY:   None, your Honour. 

CALLINAN J:   So the Full Court was in an equally good position to carry out its appellate duty.

MR TRACEY:   Yes, your Honour, it was in the position of making a judgment as to the weight to be attributed to various factors in the same way that the trial judge was.

CALLINAN J:   But that is the purpose of an appeal.  A re-evaluation often occurs and you have three judges instead of one to do it.

MR TRACEY:   We accept that, your Honour, but there was of course the benefit that the trial judge had in this matter of ‑ ‑ ‑

CALLINAN J:   What benefit did the trial judge have when there are no disputed facts?

MR TRACEY:   Your Honour, he had seen the witnesses and he ‑ ‑ ‑

GUMMOW J:   Yes, but nothing turned on that.

CALLINAN J:   The facts were undisputed.  It would not have mattered whether the witnesses were blind and deaf; the facts were undisputed. 

MR TRACEY:   Your Honours, what he was required to do was to form an impression.  That impression may be - almost certainly was - influenced by the way in which the witnesses called on behalf of the applicant explained the way the systems worked, things of that kind.  True it is that the principal facts as found were not ultimately in dispute but it was a question of him forming a subjective value judgment, standing back as the authorities required him to do, and making a determination.  Your Honours, that is the first point. 

The second point is related to it and it is this, that the weight question was resolved against our client because the Full Court gave greater weight to the control element in the test than did the trial judge and much less weight to the fact that the parties had made a considered decision about the nature of their relationship.  Your Honours, we say that as a matter of principle, in a modern economy where there are many different forms of relationship between parties, that great respect must be given to the express wishes of the parties in matters such as this.  This Court has held very recently in Toll how important it is that written agreements be accepted and observed for very good reason and that, absent something like mistake or misrepresentation, it matters not that a party to an agreement has not read it ‑ ‑ ‑

CALLINAN J:   Mr Tracey, this sounds very like what I said in Hollis v Vabu which seems to have been decisively rejected by the majority.  I was in dissent in that case and the majority seems to have taken a quite different view.

MR TRACEY:   Your Honour, we would say not.  We would say that the majority left that matter open in Hollis.  Firstly, your Honour will recall that the majority said nothing in Hollis that was in any way critical of the New South Wales Court of Appeal’s decision in the Vabu tax case.

CALLINAN J:   I think what the majority said must have cast a great deal of doubt upon the decision in the taxation case. 

MR TRACEY:   Your Honour, we would say, with respect, not, because what the majority was at pains to say was that the decision was being made in the peculiar context of a vicarious liability claim and that the taxation regime, the statutory regime, the superannuation legislation, that was the subject of the earlier taxation Vabu decision was a different context that raised different issues.  We would submit that the majority in Hollis left this issue open and did so deliberately and, indeed, in paragraph 46 of the majority decision, something is said there quite explicitly about your Honour’s observations as to policy but making it quite clear, in our submission, that there may be factual circumstances where the issues of freedom of contract are relevant as to how the contractual arrangements should be characterised.  We would have thought that the majority has clearly left the issue that arises in this case open.

We would also direct attention to what his Honour Justice McHugh says in paragraph 72 in Hollis v Vabu to the effect that it is undesirable to attempt “to force new types of work arrangements into the so-called employee/independent contractor ‘dichotomy’ based “on medieval concepts of servitude”.  Your Honours, we submit that, given the very wide range of arrangements that can and are on a daily basis put into effect in this community, it is indeed as a matter of policy undesirable to approach the matter in the traditional way and that this case is an appropriate vehicle for this Court to develop the issues that were left undetermined in Hollis v Vabu as to the proper approach where issues of distributive justice and things of that kind do not arise as they plainly do where the issue is one of vicarious liability. 

CALLINAN J:   Has this Court endorsed principles of distributive justice?  I am not aware that it has.

MR TRACEY:   No, your Honour, it was identified as one of the underlying bases for the doctrine of vicarious liability without it being

adopted or endorsed, but it was dealt with by the majority and by the other members of the Court, including your Honour.

CALLINAN J:   Where did I do that?

MR TRACEY:   When you, I think, were dealing with the policy considerations, your Honour, you were distinguishing the different policy considerations that arise depending on the context in which the question of whether a contract of service arises or whether it does not. 

CALLINAN J:   I thought I was very critical in paragraph 117 of so-called distributive justice principles. 

MR TRACEY:   Yes, your Honour, and certainly we are not saying there was any endorsement by you or indeed by any member of the Court of that notion, but there are issues such as representation which loom larger in a case in which vicarious responsibility for the action of, be it an employee, an agent or someone with another status is alleged, that certainly do not loom anywhere near as large in a case such as the present where the issue is one as to whether or not a company is liable to make taxation deductions, pay payroll tax, make superannuation contributions, things of that kind, that the representation issue simply does not deal with.

The other thing that sets these cases apart, of course, is that they do not involve disputation between the parties to the contract.  There is an agreement here that is undisputed as between the parties as to the nature of their relationship.  That, of course, was something that was in hot dispute in a case such as Vabu, where one party is seeking to obtain monetary compensation as a result of the actions of the unnamed and unidentified courier who would otherwise have been a party to the litigation.  Your Honours, we do say that these cases are different, that they do warrant different treatment and that the possibility that that should occur was left open in Hollis v Vabu and that this is an appropriate vehicle in which the issue may be pursued and tested.  If the Court pleases. 

GUMMOW J:   Thank you, Mr Tracey.  We do not need to call on you, Mr Solicitor. 

We are not convinced that the Full Court of the Supreme Court of South Australia erred in the conclusion that it reached and the orders it made.  There were indicia in the evidence that supported the arguments of both parties.  There were no disputed facts.  The Full Court was in a position to perform its appellate function without any relevant impediment:  see Fox v Percy (2003) 214 CLR 118. No error is shown. Moreover, the outcome in South Australia was similar to that reached in the courts of Victoria: see Roy Morgan Research Centre v Commissioner of State Revenue(Victoria) (1997) 37 ATR 528. Nor is this a case for the exploration of any larger questions raised in Hollis v Vabu (2002) 207 CLR 21.

Special leave is refused with costs. 

AT 9.40 AM THE MATTER WAS CONCLUDED