Selim De Borzatti v Hanson Construction Materials Pty Ltd - [2022] FWC 2693

[2022] FWC 2693

FAIR WORK COMMISSION

REASONS FOR DECISION

Fair Work Act 2009

s.394—Unfair dismissal

Selim De Borzatti
v

Hanson Construction Materials Pty Ltd

(U2021/8935)

DEPUTY PRESIDENT ASBURY

BRISBANE, 6 OCTOBER 2022

Application for an unfair dismissal remedy – Jurisdictional objection – Whether the Applicant is a person protected from unfair dismissal – Whether the Applicant was an employee or independent contractor – Finding that Applicant operated a company which was engaged for the provision of Carrier Services by another company and was not an employee of the latter company.

Overview

Mr Selim De Borzatti (Applicant) applied to the Fair Work Commission (Commission) under s. 394 of the Fair Work Act 2009 (the Act) for an unfair dismissal remedy. In the Form F2 Application, the Applicant named Hymix Australia Pty Ltd (Hymix) and Hanson Construction Materials Pty Ltd (Hanson), as Respondents. Hymix is a wholly owned subsidiary of Hanson. The Applicant claimed that he was dismissed with effect from 15 September 2021 and that his dismissal was unreasonable and unjust on a number of procedural and substantive grounds and seeks remedies including reinstatement and/or compensation and damages for shock and distress arising from alleged contraventions of civil remedy provisions of the Act.

Hymix objected to the application, asserting that it did not employ the Applicant as no employment relationship ever existed between the Applicant and Hymix. Rather, the Applicant is a director and the shole shareholder of his own business – De Borzatti Concrete Cartage Pty Ltd (De Borzatti Pty Ltd) – which entered into a Concrete Carrier Agreement with Hymix on 9 May 2019. The Carrier Agreement was a contract for services, and Hymix exercised its right to terminate that Agreement with effect from 15 September 2021. Hanson objected to the application asserting that there was no evidence of any legal relationship between it and the Applicant, either as an employee or an independent contractor.

By Order issued on 26 September 2022[1] I upheld the jurisdictional objection and dismissed Mr De Borzetti’s application for an unfair dismissal remedy. These are the reasons for my Decision.

Procedural matters

As previously noted, the Applicant nominated two putative employers in his application. A Mention was held on 31 January 2022 and Directions were issued for material to be filed and served by the parties in relation to a hearing into the jurisdictional objection. The Applicant was also directed to confirm his position in relation to the entity he claimed had employed him, by 3 February 2022. The Applicant did not comply with this direction and on 14 February sent an email to the Commission asserting that he had been employed by Hanson on the basis that this Company had deposited money into his bank account monthly. In his written submissions, and first witness statement, the Applicant asserted that he was employed by both Hymix and Hanson.

The Applicant tendered an email from Ms Konings dated 3 February 2022, in which she stated her belief that there was some confusion at the Mention held on that date and sought to clarify the “employing entity”. In the email, Ms Konings stated that:

“Mr De Borzatti was employed on a Cartage Agreement … by Hymix Australia Pty Ltd. Hymix is owned by Hanson Construction Materials Pty Ltd.”

Rather than clarifying the situation, this email added to the confusion, due to the use of the term “employed”. The Applicant responded by stating that if Hanson’s Human Resources Manager Ms Konings confirmed in writing that he was employed by Hymix then he would accept that statement. Clearly, given the Respondent’s jurisdictional objection, and the fact that the Carrier Agreement was attached to the email, it was intended to confirm that the Applicant was engaged by Hymix. Under cross-examination, the Applicant initially maintained the position that he was employed by Hymix and Hanson but ultimately accepted that his claim was that he was employed by Hymix which is owned by Hanson.

On 9 February 2022, after the Directions in this matter were issued, the High Court handed down decisions in Construction, Forestry, Maritime, Mining and Energy Union and Anor v Personnel Contracting Pty Ltd[2] (Personnel Contracting) and ZG Operations Australia Pty Ltd v Jamsek & Ors[3] (Jamsek). Given the significance of these decisions to the current proceedings, copies were sent to the parties to ensure that they were addressed in submissions.

A submission was filed on behalf of the Respondents seeking permission to be represented by a lawyer. The Applicant objected. I granted permission for the Respondent to be legally represented on the basis that I considered that representation would enable the matter to be dealt with more efficiently, having regard to its complexity. In this regard, I also considered that at the time of the hearing there were two recent High Court decisions which had brought about a change to the approach of identifying whether a relationship is one of employment or independent contract. In light of the lack of clarity in relation to the identity of the putative employer, Hymix and Hanson were both represented by Mr Nigel Ward and Ms Tamsin Lawrence of Australian Business Lawyers & Advisors. The Applicant represented himself with assistance from his sister, Ms Aracne De Borzatti.

The hearing was conducted by video conference. The Applicant participated by telephone as he did not have access to a computer and declined assistance offered by the Respondent’s legal representative to facilitate access to a computer. The Applicant gave evidence on his own behalf and filed two witness statements (including a statement in reply to the Respondent’s evidence) and an outline of submission which also contained some information in the form of evidence.[4] Evidence for the Respondent was given by Mr Josh Moore, the Queensland State Manager of Hymix[5] and Ms Therese Konings, Regional Human Resources Manager for Hanson.[6] As the Respondent raised a jurisdictional objection, the Respondent presented its case at the hearing, before that of the Applicant.

Evidence and submissions

Respondent

Mr Moore’s evidence can be summarised as follows. Hymix is in the business of premixed concrete, aggregates and precast and supplies concrete across Queensland, New South Wales and Victoria. The Application relates to the transportation and delivery of concrete for Hymix in Queensland.

Mr Moore tendered Company search establishing that the Applicant was the sole director and shareholder of De Borzatti Concrete Cartage Pty Ltd ACN 135 166 942 (De Borzatti Pty Ltd), which was formed on 2 February 2009.[7] Mr Moore said that in or around 2019, Hymix was looking to reconfigure its premixed concrete fleet and advertised in local papers for contractors. The core function of Hymix’s premixed concrete fleet is to load and deliver premixed concrete to customers in the commercial and residential building industry and the civil construction industry. De Borzatti Pty Ltd was engaged to provide delivery services to Hymix using its own manned prime mover under a Carrier Agreement entered with Hymix on 9 May 2019, that designated the arrangement between the parties as one of principal and independent contractor.

The Carrier Agreement tendered by Mr Moore is signed by the Applicant on behalf of De Borzatti Pty Ltd, in his capacity as Director, but is not signed on behalf of Hymix.[8] The evidence establishes that the Carrier Agreement operated and that services were provided to Hymix and payment for those services was made, consistent with the terms of the Agreement. Mr Moore also stated that the Applicant has at all times operated through De Borzatti Pty Ltd and that Company has provided services to Hymix in the form of concrete cartage services as a contractor. Outside of this the Applicant has no relationship with Hymix, or its owner, Hanson.

In relation to the way Hymix engages Carriers Mr Moore said:

· The performance of cartage services by Carriers is charged at an agreed rate based on the travel distance (kilometres) and load size (cubic meters) of a delivery plus any cartage adjustments;
· Payment to Carriers is paid by Hanson Construction Materials Pty Ltd (Hanson), as a payment agent for Hymix for the purposes of payment, on a monthly basis pursuant to a Recipient Created Tax Invoice (RCTI) prepared in accordance with cartage dockets issued by Hymix to a Carrier during a certain month;
· Neither Hymix (nor Hanson acting as a payment agent for Hymix), makes any payments directly to any Carrier drivers;
· The cartage provided by Carriers is a taxable supply for the purposes of GST and as such GST is paid by Hymix to and for the services provided by Carriers;
· Hymix does not withhold income tax with respect to the Carriers or their drivers;
· Hymix does not pay for or hold any insurances or workers compensation for Carrier vehicles, their subcontractors or employees; and
· Hymix does not make superannuation contributions to the Carrier or its drivers.

With respect to services performed by Carriers for Hymix Mr Moore said:

· Carriers are required to provide their own prime mover. All prime movers are subsequently fitted with a barrel and mixer (agitator), owned by Hymix, for use during the term of the particular Carrier Agreement;
· Carriers can operate one or more vehicles. Where the Carrier operates a single vehicle then the principal driver for the vehicle must be a director and controlling shareholder of the Carrier but they can use a relief driver when required;
· Carriers are responsible for the maintenance, upkeep and on-road costs (excluding tolls) associated with their vehicles;
· Carriers are required to be registered for GST purposes;
· Hymix provides paint and signage for vehicles used by Carriers and requires Carrier drivers to wear uniforms provided by Hymix when delivering Hymix loads;
· Carriers are allocated to a Hymix concrete plant but can be allocated loads from the Hymix plant network;
· Carriers will first load based on a cyclic roster and then load based on return to plant;
· No Carrier is required to work a set number of hours in a day with work being dictated by customer demand and fatigue laws. If there is work, then Carriers stay to complete it. As work slows in a day Carriers will cease work progressively;
· Hymix provides Carriers with a tablet for each vehicle which is required to be used to monitor and track deliveries;
· If a Carrier vehicle breaks down or is unable to be used, a Carrier does not receive payment on the day of the breakdown; and
· If a Carrier vehicle is unmanned or unavailable it receives no payment.

Mr Moore also said that under the Carrier Agreement, De Borzatti Pty Ltd was required to, and provided, its own manned specialist vehicle. To meet this requirement, De Borazatti Pty Ltd provided a large 8-wheeler 2016 Isuzu FYJ Series, with an estimated value on commencement of the Carrier Agreement of $240,000. De Borzatti Pty Ltd also took on all maintenance costs associated with the vehicle such as finance, fuel, maintenance and insurances. De Borzatti Pty Ltd was required to paint and display signage on the vehicle and Carrier drivers to wear uniforms provided by Hymix when delivering Hymix loads. De Borzatti Pty Ltd was also required to maintain its own extensive insurances including motor vehicle, agitator and public liability insurance at its own expense. Further, De Borzatti Pty Ltd was permitted to use relief drivers with prior consent and where a relief driver was engaged, responsibility for payment for their work rested with that Company.20

In relation to payment under the Carrier Agreement, Mr Moore said that De Borzatti Pty Ltd completed its first delivery for Hymix on 21 May 2019 and the first Recipient Created Tax Invoice (RCTI) was made by Hanson acting as Hymix’s payment agent, on 14 June 2019. Mr Moore also tendered an Agreement for Recipient Created Tax Invoices completed by the Applicant indicating that the supplier’s name is De Borzatti Concrete Cartage Pty Ltd and providing the supplier’s bank account details.

Ms Konings’ evidence was that she had conducted a search of Hanson’s HR system which holds the employment contract, tax file number, personal details, relevant enterprise agreement and classification of each employee. The HR system also holds leave records as well as related documents such as medical certificates relating to personal leave for employees. Ms Konings’ evidence is that there are no records of any kind on the HR system concerning “Salim De Borzatti”. Ms Konings said that “Salim” may have attended training co-ordinated by Hanson, as the employed driver for De Borzatti Pty Ltd, and that Hanson co-ordinates all such training for Hymix concrete contractor employees. Ms Konings also understands that Hanson acts as a payment agent for Hymix as a wholly owned subsidiary, when Hymix pays De Borzatti Pty Ltd for carriage services.

It is also Ms Konings’ understanding that Hanson utilises the “grouping” provisions under the Goods and Service Tax (GST) legislation which allows Hanson to affect its GST obligations for all Hanson owned entities, as a group. Hanson utilises these grouping provisions to issue RCTIs and payments to De Borzatti Pty Ltd for carriage services undertaken for Hymix. Under cross-examination, Ms Konings accepted that she had misspelled the Applicant’s name in her witness statement but maintained that she had searched the name “De Borzatti” in the employment of both Hanson and Hymix and had found no evidence that a person with that name was employed by Hanson or Hymix.

In their outline of submissions, the Respondents referred to the legal principles relevant to the assessment of whether a person is a contractor or employee and that this is to be undertaken on the basis of the substance of the relationship between the parties, which includes how they describe the relationship. The totality of the relationship between the parties[9] is considered by reference to the various indicia of employment.[10] Reference was also made to the High Court decision in Personnel Contracting[11] where it was held that a strong emphasis will be placed on the written agreement in determining the legal character of the relationship where its terms are comprehensively committed to a written contract.

In the present case, the Carrier Agreement was between two incorporated proprietary companies (De Borzatti Pty Ltd and Hymix) and is expressly characterised in the agreement as a relationship of principal and independent contractor, not employer and employee. Under the Carrier Agreement, De Borzatti Pty Ltd and not the Applicant, was liable to transport concrete for Hymix, and was required to provide a manned specialist vehicle suitable for the performance of the cartage work. De Borzatti Pty Ltd was responsible for making provision for all wages and salaries, sick leave, annual leave, long service leave, superannuation, maintaining relevant insurances, including workers compensation, payroll tax33, being registered for GST, and could provide a driver who was also a director of De Borzatti Pty Ltd (and it is assumed an employee) or another person employed by that Company as a relief driver.

De Borazatti Pty Ltd was only paid based on the concrete carted in that Company’s vehicle and the payments were based on the volume of concrete carted (load size) and the distance it was carted with some specific additional surcharges and absent this, received no payments. This was submitted to be a highly decisive factor weighing toward a finding that the Applicant was not an employee but at all times operated through De Borazatti Pty Ltd, which was an independent contractor providing cartage services to Hymix under a Carrier Agreement. Consistent with the judgment of Kiefel CJ and Keane and Edelman JJ in Jamsek[12] the Applicant was not an employee of Hymix or Hanson. Reference was also made to the consistent line of High Court authority supporting the view that owners of expensive equipment such as a truck are independent contractors.[13]

In the present case, it was submitted that the Applicant’s company, De Borzatti Company, brought a substantial business asset to their engagement with Hymix, a truck – a large 8 wheeler 2016 Isuzu FYJ Series – worth approximately $240,000 on commencement of the Carrier Agreement and was responsible for the expense of maintenance, and substantial running costs associated with the asset including insurance, registration and operation. On any view, the vehicle is a substantial asset, requiring significant investment of capital and a high level of skill and training to operate. This is a key factor pointing in favour of the view that De Borzatti Pty Ltd was a contractor and the Applicant a director/employee of that Company, given the “conventional view” the Courts take to the provision of significant assets by persons offering services.

Reference was also made to the terms of the Carrier Agreement which allowed the De Borzatti Pty Ltd to use a relief driver with Hymix’s approval and that Hymix’s right to grant or withhold approval simply recognised its interest in the safe transport of its goods. This was a right under the Agreement regardless of the fact that the Applicant did not avail himself of the right. It was also submitted that the importance of control lies not only in its existence but in the right of the business operator to exercise it. The power to delegate the performance of a contract tells against there being an employment relationship. It was also submitted that the work performed under the contract was specialised and this weighed in favour of the De Borzatti Company being an independent contractor, consistent with the judgement of Kiefel CJ, Keane and Edelman JJ in Jamsek. Similarly, that the Applicant’s truck bore Hymix Signage and paint and he wore a particular uniform, was not inconsistent with the relationship of independent contractor. In this regard, reference was made to the judgement of Kiefel CJ, Keane and Edelman JJ in Jamsek, who said that this “is quite consistent with the sensible, self- interested response of an independent contractor to legitimate commercial pressure from its best customer.”[14]

It was also submitted that the Applicant was solely responsible for tax affairs including being registered for GST and that Hymix paid no superannuation or income tax on behalf of the Applicant. Rather, De Borzatti Pty Ltd was the bearer of this responsibility. Further, the Applicant, through De Borzatti Pty Ltd, was solely responsible for all his insurance arrangements related to the vehicle including:

· Motor Vehicle insurance to the value of $100,000 and legal liability to the value of $35,000,000;
· Agitator insurance to the value of $55,000; and
· Public Liability insurance to the value of $20,000,000.

Consistent with court authority, the payment of remuneration without deduction for tax is consistent with a contract for services, and this weighs in favour of De Borzatti Pty Ltd (and the Applicant as a director/employees of that Company) being an independent contractor providing cartage services. In relation to working hours and leave, it was submitted that the following factors also weigh in favour of De Borzatti Pty Ltd being an independent contractor and the Applicant a director/employee of that Company providing cartage services:

· Where the Applicant, as the principal driver of the truck was not available to work, De Borzatti Pty Ltd was entitled to use, with the approval of Hymix, a relief driver to be able to perform the necessary obligation under the Carrier Agreement;
· The Applicant, as the principal driver of the truck was not required to work a set or minimum number of hours, and if there was work to do then De Borazatti Pty Ltd was required to do it; and

· The Applicant did not receive paid holiday or personal leave from Hymix.

Under the Carrier Agreement, the Applicant, as a director and sole shareholder of De Borzatti Pty Ltd, was entitled to assign the benefit of the Carrier Agreement to a third party. Despite not exercising this right, the creation of a saleable asset under the contract is an indication of a contract for service and therefore the existence of a contractor relationship over an employment one.[15] It was also submitted that there was no prohibition on De Borzatti Company Pty Ltd performing work for others and even if this did not occur, this would add little weight to the status of the Applicant as an employee.[16]

Applicant

The Applicant states that he worked for Hanson/Hymix from 9 May 2019 until 14 September 2021. While accepting that he signed a Carrier Agreement the Applicant stated that it was never countersigned by Hymix and to this date remains unsigned. The Applicant also acknowledged that he signed the RCTI and said that this document and his bank statements name Hanson Construction as one of his payers, which is why he referred to Hanson as his employer. the Applicant said that Hanson created RCTIs and emailed these, similar to a pay slip. The Applicant did not send Hanson invoices from his Company at any time and payments from Hanson were paid directly into the Applicant’s personal bank account and not to a company bank account. The Applicant tendered a copy of a bank statement for his personal bank account covering a period from February to March 2020. The bank statement evidences payments from both Hanson and Hymix. It also evidences a lease payment, presumably for the Applicant’s vehicle.

The Applicant said that contrary to Mr Moore’s evidence, maintenance for the “bowl” on his vehicle was paid for and taken care of by Hymix/Hanson and he was informed by the Fleet Manager that his bowl was to be brought to a specific mechanic only. The Applicant also said that he was required to provide Hymix/Hanson with certificates of currency for his truck registration and the required insurances, including insurance for the bowl which the Applicant does not own. If certificates of currency expired trucks were prevented from being loaded with concrete.

The Applicant was originally based at the Southport concrete plant in May 2019. This plant was temporarily closed for repairs in May 2020, and the Applicant was sent to work at the Coomera concrete plant. When the Southport plant reopened, which is close to the Applicant’s home, he was not asked to go back and work there. In June 2021 the Applicant was sent to the Park Ridge concrete plant to work. The Applicant said that he discussed that all trucks can be transferred daily to other concrete plants in the fair roster system but not relocated permanently. From June 2021, the Applicant would begin work from the Coomera concrete plant and drive 45 minutes to the Park Ridge plant to receive his first load of the day. The Applicant also submitted cartage adjustments for travel to the Park Ridge plant on all occasions so that he could be paid the kilometres travelled. In response to that claim, the Applicant received an email saying the claim had been rejected and was told that his truck was based at the Park Ridge concrete plant. The Applicant said that Company owned trucks can be permanently relocated to other concrete plants and do not receive cartage adjustments when travelling to other concrete plants.

The Applicant stated that he was a conscientious worker and took no time off work, other than when the plant closed down at Christmas for forced leave as acknowledged by Mr Moore. The Applicant worked solely for Hanson/Hymix the entire time and was required to undertake many Hanson/Hymix training modules. The Applicant did these on the Company’s premises and using their computers. According to the Applicant, this indicates that Mr Moore’s evidence that he did not perform tasks for Hymix other than cartage work, is incorrect. It is the Applicant’s belief, based on this evidence, that he was an employee and was unfairly dismissed.

In his outline of submissions, the Applicant said that the Carrier Agreement is a contract of employment disguised as an independent contractor agreement, for the following reasons:

· The Applicant worked for Hanson/Hymix since 9 May 2019;
· The Applicant is the director of De Borzatti Concrete Cartage Pty Ltd and did sign a Carrier agreement on 9 May 2019, but this was never countersigned by Hanson/Hymix and remains unsigned;
· The Applicant only worked for Hanson/Hymix, on an ongoing basis and needed to be available to provide cartage, required to meet demands of Hymix customers 52 weeks per year (Carrier Agreement 7.4);
· The Applicant did not source any of his own clients, he did not advertise his product or services and Hymix advertised on his vehicle;
· Hanson/Hymix arranged servicing of the mixer attached to vehicles (Carrier Agreement 19.5);
· The Applicant did not work for more than one client and the Respondent was his only employer;
· Hanson/Hymix provided and expected that the Applicant wear a company uniform, which he complied with at all times (Carrier Agreement 18.3);
· Hymix supplied its colour choice of paint to the Applicant’s professional spray painter so his truck would only be painted in Company colours and logo displayed, thereby stopping the Applicant from sourcing any alternate work (Carrier Agreement 15.1);
· The Applicant had no independence in the conduct of his operations, he was told what load size, where to go and what times to start (Carrier Agreement item 7.1/7.2);
· The Applicant could not hire anyone without Hymix’s prior consent and without them undergoing training with Hymix, that he must also pay for and Hymix had total control over his option of employing a relief driver (Carrier Agreement 11.1/13);
· The Applicant did not quote for any work, including setting or negotiating prices and there was no scope to bargain for rates of pay which were pre-determined by Hymix/Hanson (Carrier Agreement 8.1);
· The Applicant could not have an independent career as a freelancer driver, due to Hymix logos and colours painted on his truck;
· Item 7.4 of Carrier Agreement states that “the carrier needs to be available to provide cartage, and required to meet the demands of Hymix customers 52 weeks per year” leaving no scope for other employment”; and
· The Applicant could not generate any goodwill.

The Applicant said that the degree of control exercised over him by Hymix/Hanson is evidenced by requirements such as his appearance, wearing of uniforms, the standard of his vehicle, start times and the requirement to accept allocated work. The Applicant also said that he had no independence in the conduct of his operations. The Applicant disputed the Respondent’s submissions that invoices were sent and said that he did not send invoices directly to Hanson/Hymix. Instead, he was given docket slips for each job and then Hanson/Hymix produced RCTIs which they sent to the Applicant monthly. Insurance policies listed Hymix as principle as shown by Mr Moore’s evidence, indicating that Hymix was the Applicant’s employer. Also contrary to Mr Moore’s evidence that the Applicant took on all related costs, Hymix was responsible for the mechanical maintenance of the agitator as well as the supply of paint to the Applicant’s spray painter.

The Applicant cited the decision of the High Court in Hollis v Vabu[17] in relation to the finding that too much had been made of the circumstances that the bicycle couriers owned their own bicycles, bore the expense of running them and provided their own accessories and that viewed as a practical matter, the bicycle couriers were not running their own business or enterprise and did not have independence in the conduct of their own operations.[18] Reference was also made by the Applicant to the decision of the High Court in Stevens v Brodribb Sawmilling Co Pty Ltd[19] in relation to control being the classic test for determining whether an employment relationship exists, with the answer depending on whether the engagement subjects the person engaged to the command of the person engaging him, not only as to what he shall do in the course of his employment but as to how he shall do it. In conclusion it was asserted that:

· The Applicant was involved in a Sham Carrier agreement based on the information provided and therefore is employed by Hanson/Hymix;
· The Applicant was operating under an unsigned counter signature, from Hanson/Hymix in the Carrier Agreement;
· The Applicant was being paid directly into his personal bank account;
· The Applicant was unable to control his work, hours, place of work and income, none of which is aligned with being a contractor;
· The Applicant was not able to act independently of Hanson/Hymix, the truck was painted in their colours and Logo, he wore a uniform supplied by Hymix and he was given set rate of pay with no chance to negotiate; and
· The Applicant was stood down for alleged incidents that were not deemed “serious matters” as per Carrier Agreement 14.4.

The Applicant also submitted that item 14.2 of the Carrier agreement states that if person commits acts of serious misconduct, then they can be stood down immediately and as the Applicant was not immediately stood down it is reasonable to conclude that these warnings were not of a serious nature.

In his further statement in response to the evidence of witnesses for the Respondent, the Applicant questioned Ms Konings referring to him in her statement as “Salim”. The Applicant said that he has worked out of many Hanson concrete plants and has spoken to plant managers, batchers in charge and many drivers who wear the Company uniform and has been drug and alcohol tested by Hanson in its Jindalee concrete plant. The Applicant has worked in ten Hanson plants and has used facilities at those plants including tea rooms where he has drunk tea and coffee provided by the Company. The Applicant has always been paid into his personal bank account rather than into the account of De Borzatti Concrete Cartage Pty Ltd.

In relation to the evidence that De Borzatti Pty Ltd was responsible for maintaining insurances including workers compensation, the Applicant said that he does not pay workers compensation insurance and unlike other insurances, truck registration and HR licence has never been asked to prove that he has current workers compensation insurance. The Applicant tendered a copy of an email received from Hanson on 1 April 2022 reminding him to renew his public liability insurance and asserted that this proves his “association with Hanson”. The Applicant also tendered the email referred to above, stating that there was confusion about the employing entity raised at a conference before the commission in relation to the Applicant’s case and stating that: “Mr De Borzatti was employed on a Cartage Agreement … by Hymix Australia Pty Ltd. Hymix is owned by Hanson Construction Materials Pty Ltd.”[20]

Under cross examination, when asked whether he was asserting that Hanson employed him, the Applicant said that he accepted Ms Konings’ statement that he was employed on a cartage agreement by Hymix and that Hymix is owned by Hanson. The Applicant also variously said that he is employed by both Hymix and Hanson[21] and that Hymix is owned by Hanson and that they are therefore the same company. Ultimately the Applicant accepted that he was asserting that his employer was Hymix.[22] The Applicant accepted the accuracy of the ASIC return tendered by Mr Moore and that he is the Director of De Borzatti Concrete Cartage Pty Ltd.

The Applicant also accepted the accuracy of the ASIC record indicating that De Borzatti Pty Ltd started in 2009 and said that from 2009 until October 2018 the Company was delivering concrete for Boral and after a break commenced delivering concrete for Hymix, in May 2019. The Applicant agreed that he became aware of the opportunity to undertake deliveries for Hymix in or around December 2018 after being told about this by a friend and that he went to a session where Hymix discussed its desire to have more incorporated contractors.

In relation to the Carrier Agreement, the Applicant said that he did not fill in the date and the designated vehicle number on the second page, but filled in the name of the De Borzatti Company, the ACN, ABN, and address.[23] The Applicant accepted that he signed the Carrier Agreement first stating that he signed it personally and later conceding that he signed as a Director of De Borzatti Company. The Applicant also accepted that De Borzatti Company provided a prime mover and that Hymix provided an agitator. The Applicant said that without Hymix supplying the agitator no work would be done. The Applicant agreed that the vehicle the De Borzatti Company provided was an Isuzu 8 wheeler truck and said that he bought the vehicle new in 2016, paying around $180,000.00 for it.[24] The Applicant agreed that the De Borzatti Company was the insured party for the Isuzu vehicle and explained that the difference in the registration number on the policy was because he had been required by Mr Moore to obtain a new numberplate to replace one that was worn.

The Applicant also agreed that he was the only driver of the Isuzu vehicle. The Applicant confirmed that consistent with the cartage rate detailed in Schedule A of the Carrier Agreement, he was paid for loads depending on the size of the load and distance travelled. In relation to the RCTI agreement tendered by Mr Moore[25], the Applicant accepted that he filled it out personally and that he wrote on the document that the suppliers name is De Borzatti Concrete Cartage Pty Ltd and its ABN. The Applicant noted that the document was not signed by Hymix. In relation to banking details, the Applicant agreed that he wrote the details of his personal bank account on the document when he should have written the banking details for De Borzatti Pty Ltd but maintained that he had made a mistake in doing so. The Applicant also said that he was not informed by Hymix or Hanson that he should have the contract reviewed by a lawyer before signing it. The Applicant agreed that he signed the document entitled Agreement for Recipient Created Tax Invoices, as a Director of De Borzatti Pty Ltd. The Applicant also agreed that he held insurance for his truck, the agitator and public liability as required by the Carrier Agreement, and informed Hymix of this.

Terms of the Carrier Agreement

The Carrier Agreement was tendered by Mr Moore, and reference was made to its provisions by the Applicant and Mr Moore. Relevantly, the preamble to the Carrier Agreement makes clear that the Carrier is duly incorporated and operates as a contractor. By virtue of clause 3 the Carrier is at all times, and remains, an independent contractor and at no time is an employee of Hymix. The Carrier is responsible for wages, leave entitlements, superannuation, workers compensation and other entitlements of all persons employed or otherwise engaged, in connection with the provision services to Hymix under the Agreement and for all payroll and other taxes payable in respect of those persons. Clauses 5 and 6 deal with the standard of trucks supplied by Carriers and their replacement.

Clause 7 deals with Cartage and Carrier Availability, and provides as follows:
“7.1        The Carrier shall cart such loads of pre mixed concrete or associated materials as are required to be carted by Hymix from any of the concrete plants nominated in Clause 4 and from such other concrete plants as are nominated by Hymix to the Carrier from time to time.
7.2       Hymix has absolute discretion to load the Carrier's truck and mixer with any load size, provided the maximum legal carrying capacity of the truck and mixer is not exceeded.
7.3       The Carrier is responsible for providing a street directory or other navigation equipment to enable deliveries to be completed in an efficient manner.
7.4       The Carrier shall as a fundamental condition of this Agreement be available to provide cartage of concrete for Hymix at such times as Hymix may require so as to meet the demands of Hymix's customers 52 weeks per year during the term of this Agreement, PROVIDED HOWEVER that in periods when demand is low Hymix may grant permission to the Carrier to take leave without the need for the provision of a relief driver but this is a matter for the absolute discretion of Hymix.
7.5       Where the Carrier is unable to supply its truck together with a trained and competent driver approved by Hymix, then Hymix may terminate this Agreement save and except where the cause of the unavailability of the Carrier arises from the breakdown or mechanical fault of the mixer.”

Payment for cartage is provided for on a monthly basis, pursuant to a Recipient Created Tax Invoice (RCTI) prepared by Hymix in accordance with cartage dockets issued by Hymix to the Carrier in the course of the relevant monthly period. There is a procedure for Carriers to make claims for non-payment or incorrect payment and a disputes procedure. Clause 10.3 provides as follows:

“10.3 Hymix as "Recipient" and the Carrier as "Supplier' agree that in relation to services provided pursuant to this Agreement, for the term of this Agreement:-
(i)the Recipient can issue tax invoices in respect of the services;
(ii)the Supplier will not issue tax invoices in respect of the services;
(iii)the Supplier acknowledges that it is registered for GST when it enters into the Agreement and that it will notify the Recipient if it ceases to be registered;
(iv)the Recipient acknowledges that it is registered for GST when it enters into the Agreement and that it will notify the Supplier if it ceases to be registered for GST or if it ceases to satisfy any of the requirements of any determinations or rulings issued in relation to RCTls.”

By virtue of clause 11.1, the Carrier must ensure that the principal driver of the truck supplied for the purposes of the Agreement is a director and controlling shareholder of the Carrier unless otherwise agreed by Hymix, and relief drivers must be approved by Hymix. The Carrier must also ensure that it remains incorporated throughout the term of the Agreement. Clause 12 requires that the Carrier as a fundamental condition of the Agreement, must have insurances listed in the clause including for workers compensation and the mixer supplied and installed to the vehicle. Clause 13 of the Agreement provides for a process of assignment of the Agreement to a third party subject to approval by Hymix and Hymix having an option to pay an early termination payment with the result that the Agreement cannot be assigned. Clause 13 also provides that if the Carrier assigns the Agreement on the open market, no goodwill is attached to the Agreement.

Clause 14 of the Agreement provides for termination in a range of circumstances and prescribes notice periods depending on the circumstances in which the Agreement is terminated. The clause also deals with misconduct on the part of the principal driver of the truck and termination for such misconduct. Clause 15 provides that Hymix will provide painting and signage for the truck used by the Carrier for the Agreement and must approve the paint job before it will offer any loads to the Carrier and for the removal of signage if the Carrier sells or disposes of the truck. Clause 18 deals with the presentation of the truck and the driver and provides that the Carrier acknowledges that all drivers represent Hymix when carryin gout their duties

There are clauses dealing with maintenance of the truck and the mixer (agitator) and responsibility for such maintenance. Generally, the carrier is responsible for the maintenance of the truck with Hymix taking some responsibility for maintenance of the agitator. Clause 20 deals with the responsibility of the Carrier for the load. Clause 29 deals with risk management and compliance with road laws and provides for a show cause process in the event of non-compliance by a Carrier. Clause 30 provides for the Carrier to purchase product from Hymix on an account basis and for set off if the Carrier breaches account terms. By virtue of clause 31, the Carrier indemnifies Hymix for any loss, liability or damage caused by negligent acts of the carrier, its officers, employees or contractors. Clause 34 sets out a dispute procedure in relation to any between the parties during the life of the Agreement and for mediation prior to the commencement of litigation.

Consideration

The approach to identifying an employment relationship

It is axiomatic that an application for an unfair dismissal remedy can only be made by a person who was an employee of the entity asserted to have dismissed the person. As Gageler J and Gleeson J observed in Personnel Contracting:
“The Fair Work Act 2009 (Cth) for the most part confers rights and imposes obligations on, and in respect of the relationship between, an employer and an employee. The terms ‘employer’ and ‘employee’ are defined to ‘have their ordinary meanings’. The ‘ordinary meanings’ to which that foundational definition refers are not the grammatical meanings of the legislatively chosen words purposively construed in their statutory context. The reference in the definition is instead to the meanings ascribed to ‘employer’ and ‘employee’ at common law.” [26]
There have been two recent Full Bench decisions of the Commission which have considered Personnel Contracting and Jamsek. Most recently, in Deliveroo Australia Pty Ltd v Diego Franco[27] (Deliveroo) a Full Bench of the Commission said:

“[33]       The key propositions in Personnel Contracting which are to be applied in this appeal are to be derived from the judgment of Kiefel CJ and Keane and Edelman JJ, and from the judgment of Gordon J (with whom Steward J agreed as to the relevant principles but not the outcome). Although Gageler and Gleeson JJ formed part of the majority in Personnel Contracting, the approach they took to the analysis whereby the “totality of the relationship”, including both the terms of the employment contract and the manner of performance of the contract, must be considered no longer commands majority support in the High Court. Gageler and Gleeson JJ noted that the approach they preferred was one previously applied by trial and intermediate courts in Australia, as well as by the High Court, and it was certainly the approach applied by the Commissioner in the decision under appeal (as well as by the parties before us in their submissions made prior to Personnel Contracting).
[34]       We respectfully adopt the summary of the key propositions in Personnel Contracting stated in the Full Bench decision in Chambers and O’Brien v Broadway Homes Pty Ltd as follows:
(1)    When characterising a relationship regulated by a wholly written, comprehensive contract which is not a sham or otherwise ineffective, the question is to be determined solely by reference to the rights and obligations under that contract. It is not permissible to examine or review the performance of the contract or the course of dealings between the parties.
(2)    The subsequent conduct of the parties may be considered to ascertain the existence of variation of contractual terms.
(3)    The multifactorial approach only has relevance in respect of the required assessment of the terms of the contract.
(4)    It is necessary to focus on those aspects of the contractual relationship which bear more directly upon whether the worker’s work was so subordinate to the employer’s business that it can be seen to have been performed as an employee of that business rather than as part of an independent enterprise. The question is: whether, by the terms of the contract, the worker is contracted to work in the business or enterprise of the purported employer.
(5)    Existence of a contractual right to control the activities of the worker (including how, where and when the work is done) is a major signifier of an employment relationship.
(6)    The label or characterisation placed on the relationship by the contract is not relevant even as a “tie breaker”, or at least it is not determinative.

[35] To this, it is relevant to this appeal to add one further proposition, namely that a contractual freedom on the part of the party performing the relevant work to accept or reject any offer of work and to work for others is not necessarily a contraindication of employment and may rather be consistent with casual employment.”

The central proposition in the judgment of Kiefel CJ and Keane and Edelman JJ in Personnel Contracting is that:

“Where the parties have comprehensively committed the terms of their relationship to a written contract the validity of which is not in dispute, the characterisation of their relationship as one of employment or otherwise proceeds by reference to the rights and obligations of the parties under that contract. Where no party seeks to challenge the efficacy of the contract as the charter of the parties’ rights and duties, on the basis that it is either a sham or otherwise ineffective under the general law or statute, there is no occasion to seek to determine the character of the parties’ relationship by a wide‑ranging review of the entire history of the parties’ dealings. Such a review is neither necessary nor appropriate because the task of the court is to enforce the parties’ rights and obligations, not to form a view as to what a fair adjustment of the parties’ rights might require.”[28]

Their Honours went on to hold that the principles governing the interpretation of a contract of employment are no different from those that govern the interpretation of contracts generally and that:

“The foregoing should not be taken to suggest that it is not appropriate, in the characterisation of a relationship as one of employment or of principal and independent contractor, to consider ‘the totality of the relationship between the parties’ by reference to the various indicia of employment that have been identified in the authorities. What must be appreciated, however, is that in a case such as the present, for a matter to bear upon the ultimate characterisation of a relationship, it must be concerned with the rights and duties established by the parties’ contract, and not simply an aspect of how the parties' relationship has come to play out in practice but bearing no necessary connection to the contractual obligations of the parties.”[29]

In relation to the various indicia of employment, their Honours cited Stevens v Brodribb Sawmilling Co Pty Ltd[30] and Hollis v Vabu Pty Ltd[31]. Similarly in Personnel Contracting, Gordon J said:

“The resolution of the central question requires consideration of the totality of the relationship between Construct and Mr McCourt, which must be determined by reference to the legal rights and obligations that constitute that relationship. Where the parties have entered a wholly written employment contract, as in this case, the totality of the relationship which must be considered is the totality of the legal rights and obligations provided for in the contract, construed according to the established principles of contractual interpretation. In such a case, the central question neither permits nor requires consideration of subsequent conduct and is not assisted by seeing the question as involving a binary choice between employment and own business. The totality of the relationship between Construct and Mr McCourt was that of employer and employee.”[32]

Also citing Stevens v Brodribb Sawmilling Co Pty Ltd and Hollis v Vabu Pty Ltd, her Honour went on to observe that:

“The task is to construe and characterise the contract made between the parties at the time it was entered into. The nature of the contracting parties, such as where a contracting party is a separate entity or a partnership, rather than an individual, may suggest that the relationship between the parties is not that of employer and employee. The way that the contractual terms address the mode of remuneration, the provision and maintenance of equipment, the obligation to work, the hours of work, the provision for holidays, the delegation of work, and where the right to exercise direction and control resides may together show that the relationship is not one of employer and employee.
Recourse may be had to events, circumstances and things external to the contract which are objective, which are known to the parties at the time of contracting and which assist in identifying the purpose or object of the contract. The nature of the specific job that the purported employee applied for as well as the nature and extent of the equipment to be supplied by that purported employee for that particular job may well be relevant to the question of characterisation of the contract. Indeed, it is often relevant, but not determinative, to observe that the purported employee must supply some uniform, tools or equipment. But again that observation must be made in context. The context is the nature and extent of what is required to be provided under the contract. In many forms of employment, employees provide their own uniform and bring their own tools to work.”[33]

In Jamsek (delivered at the same time as Personnel Contracting) the High Court decided a case involving the question of whether two truck owner-drivers performing deliveries on an exclusive and long-term basis for a company, were employees of that company. The owner-drivers in that case had established partnerships with their spouses for the purposes of providing services to the Company. The High Court held unanimously the drivers were not employees of the company, but gave different reasons for reaching that conclusion, in the three judgments delivered in the case.
It is of assistance in the present case to consider in detail, the judgment of Kiefel CJ, Keane J and Edelman J in Jamsek and their commentary in relation to findings that the primary judge and the Full Court of the Federal Court made in reaching their conclusions. In short compass, the primary judge found that the drivers were independent contractors. The Full Court allowed an appeal against the decision of the primary judge and found that the drivers were employees. The High Court unanimously allowed an appeal against the decision of the Full Court, finding that the drivers were independent contractors.

In their judgement Keifel CJ, Keane J and Edelman J observed that the case did not require consideration of whether the day-to-day performance of the contract superseded the rights and duties it established but went on to note factual matters and findings made in relation to them by the primary judge and the Full Court and made observations about those findings. In relation to the factual background, it was noted that both drivers purchased their trucks from the company when it sought to move its operations and offered them an opportunity to “become contractors” and were told that if they did not take up the opportunity, they would not have a job moving forward. Each driver set up a partnership with his spouse and executed a written contract with the company under which they were paid a rate for each carton they delivered. Each of the partnerships purchased a truck from the company and later purchased new trucks. The partnerships paid all expenses associated with the trucks, including registration, maintenance and interest on the funds borrowed to finance the purchase of the trucks.[34]

The contract included a term that: “The contractors will … undertake carriage of goods as reasonably directed. The contract also required that contractors could not engage a driver for the relevant vehicle without prior and continuing approval of the company. The drivers had run sheets but apart from these were not required to fill out any other document such as a time sheet. Goods were sorted and packed and trucks loaded by warehouse staff employed by the Company, and drivers waited in the company’s canteen while their trucks were loaded. Drivers were permitted to structure their delivery routes in the manner that they deemed most efficient. Income received by the drivers was declared as income of their respective partnerships and split between partners. Each partnership paid the running costs and other expenses associated with the trucks, including public liability insurance and claimed these items as deductions for tax purposes. Each of the drivers worked what were described as “more or less regular hours” usually arriving at the warehouse between 6.00 am and 7.00 am and finishing around 3.00 pm.[35]

It was also noted that at various times throughout their engagement the drivers were asked by the Company to install tarpaulins bearing the company logo on the trucks and on some occasions installed the tarpaulins themselves while on other occasions the company installed them or contributed to the cost. The drivers were also provided with uniforms bearing the company logo and wore a mix of personal and branded clothing but were not required to wear a uniform. Further, it was noted that the drivers were occasionally asked to perform other tasks beyond their core delivery duties including clerical and cleaning work.

Their Honours went on to note the findings of the primary judge in relation to the matters favouring the characterisation of the drivers as independent contractors, as follows. Firstly, the provision of vehicles – especially given the substantive value of those vehicles – favoured a characterisation of the drivers as independent contractors. Secondly, the provision of services through a partnership also weighed in favour of that finding, as did the fact that the partnerships had conducted their affairs as one would expect of a business and bore the costs associated with purchasing and operating the trucks and thereby the risk that the provision of services to the company would not be a profitable venture. These risks were significantly higher than the drivers would have faced as employees. Thirdly, in relation to whether the work of the drivers developed goodwill, the primary judge found that while the contract restrained the drivers form selling their trucks with any guarantee of continuing work, the clause did not prohibit the sale of the business, and if anything, suggested that the drivers might otherwise have something over and above the value of the trucks to sell, and regarded this factor as insignificant. Fourthly, the primary judge’s conclusion that the company’s right of control was less extensive than was typical of an employment relationship was noted. In this regard, the primary judge emphasised the absence of control over the manner in which the drivers conducted their deliveries or their decisions to purchase the trucks; the absence of any direction to wear a uniform; flexibility around choosing the delivery area, delivery route and whether to return home after completing deliveries; and the circumstance that one of the drivers paid someone else to complete deliveries during a period he was on leave.

Against these factors it was noted that the primary judge regarded the drivers’ length of service, regularity of working hours and consistency of working arrangements as characteristics typical of an employment relationship. The primary judge also considered that while the drivers did not serve customers other than the company, there was no restriction preventing them from serving other customers either by driving their trucks outside the hours they were contracted to work for the company or by engaging others to drive their trucks. The primary judge also observed that the additional duties drivers performed from time to time was not a strong indicator of employment but was consistent with the “give and take” one might expect of a long-standing relationship.[36] Overall, the primary judge found that the drivers were independent contractors.

Kiefel CJ, Keane J and Edelman J went on to consider the decision of the Full Court which allowed an appeal against the decision of the primary judge. After observing that the Full Court had applied an erroneous approach by deciding that it needed to consider “the totality of the relationship” beyond the terms of the written contracts, and in doing so, by preferring the “substance and reality of the relationship … over certain aspects of the contractual obligations governing the relationship, and the legal structures through which the [drivers] contracted”.[37] Their Honours went on to identify matters relied on by the Full Court in reaching its conclusion, to illustrate why the conclusion was not soundly based on principle. Those matters included the Full Court’s view that:

· The bargaining positions of both parties left little or no room for negotiation by the drivers who faced an effective ultimatum of redundancy or the restructured arrangement;
· The significance of the investment in and deployment of the trucks was diminished by the circumstances that the drivers were effectively compelled to purchase the trucks as part of entering into the contract;[38]
· The trucks were subsequently adorned with the company’s logo for most of the duration of the engagements; and
· Driving the trucks did not require an exceptional level of skill.

This “expansive approach” and especially the significance attached to the disparity in bargaining power as affecting the meaning or effect of what the parties had agreed, was said by Kiefel CJ, Keane J and Edelman J to involve “an unjustified departure from orthodox contractual analysis”[39]. Their Honours also considered that the circumstance that the company “ostensibly required or at least expected” that the drivers would wear branded clothing and adorn themselves and their trucks with the company logo, thereby limiting their rights to obtain work from others, did not alter the contractual rights and obligations which characterised the relationship between the drivers and the company. Further, their Honours said that the willingness of the drivers to display company branding on their trucks was “consistent with a sensible, self-interested response of an independent contractor to legitimate commercial pressure from its best customer.”[40]

The observation by the Full Court that because of the time devoted to the company’s business by the drivers, there was “in practice” little time for them to work for others, was seen by their Honours as saying little more than that the demand by the Company for the services rendered by the partnerships was such that the partnerships had no further capacity to serve the needs of other customers. This was not inconsistent with the independent status of the partnerships. It was also considered that such expectations were not apt to alter the rights and duties which characterised the relationship between the partnerships and the company. Similarly, the contracts did not exclude the possibility of engaging alternative drivers with the company’s approval, and the right to grant that approval recognised the interest of the company in the safe transport of its goods. The length of the drivers’ service; that work from the company was their sole source of income; and that they did not drive for any other entity; were not considerations providing a basis for disregarding the effect of the agreement between the partnerships and the company.

In relation to the Full Court’s view that the partnerships generated no goodwill and that the contract denied any continuity of work from the company if the vehicles were sold, their Honours said:
“The circumstance that the contract did not entitle the partnerships to sell their businesses accompanied by a right to continue providing delivery services to the company did not prevent the generation of goodwill. Each partnership was at liberty to introduce a purchaser of its business to the company as an established customer. Whether a purchaser would see sufficient value in such an introduction to pay a substantial sum for it would depend upon the circumstances of the market. More importantly, many businesses – such as manufacturers of products for a single customer – do not generate goodwill. That is a feature of the niche in the market occupied by those businesses; it is not a circumstance which denies the independence of such businesses from their customers.”[41]
In relation to the parties’ contentions in the High Court, Kiefel CJ, Keane J and Edelman J held that the finding of the primary judge that the partnerships were engaged in their own business, was clearly correct and that given there was no basis for finding that the drivers were associated with the company on a basis other than via the partnership, there was no basis for concluding that they were employed by the company. Their Honours also found that the only relationship between the drivers and the company was that they were members of partnerships that had agreed to make deliveries for the company. Noting that the orthodox approach to the interpretation of contracts, regard may be had to the circumstances surrounding the making of the contract, their Honours considered that given the genesis of the contract was the company’s refusal to employ the drivers, it was difficult to see how there could be any doubt that they were no longer employees. That this circumstance was brought about by superior bargaining power of the company had no bearing on the meaning and effect of the bargains between the partnerships and the company. While noting that the law in Australia provides remedies for such injustices, those remedies – a claim that the contracts were a sham or that the contracts were invalid either under statute or otherwise – were not invoked by the drivers. Their Honours said: “In Australia, claims of sham cannot be made by stealth under the obscurantist guise of a search for the ‘reality’ of the situation.”[42] Their Honours went on to state:

“Even if this disguised submission of sham were to be countenanced, the reality of the situation is that the partnerships, and not the respondents individually, owned and operated the trucks. The partnerships contracted with the company and invoiced the company for delivery services provided by the operation of the trucks. The partnerships earned income from the company, incurred expenses associated with the ownership and operation of the trucks, and took advantage of tax benefits of the structure. It is not possible to square the contention that the respondents were not conducting a business of their own as partners with the circumstance that, for many years, they enjoyed the advantages of splitting the income generated by the business conducted by the partnerships with their fellow partners.”[43]

In relation to other assertions made by the drivers, their Honours concluded that an argument that the contract between the partnerships and the company divorced the obligations concerning provision of the trucks from the obligations concerning the provision of labour by the drivers, was also rejected. The obligation to undertake carriage as reasonably directed was seen as an obligation as to what carriage was to be undertaken rather than how it was to be carried out, or a power in the company to “micromanage” deliveries. It was also concluded that:

“The services provided by the partnerships involved, compendiously, the truck driving skills of the respondents and the use of the trucks owned by the partnerships. The provision of such services has consistently been held, both in Australia and in England, to have been characteristic of independent contractors, not employees. In the present case, there is no reason to reach a different conclusion.”[44]

Other members of the High Court in Jamsek also made findings that are relevant in the present case. After noting that for common law purposes, the distinction between an employee and an independent contractor is a dichotomy[45], Gageler J and Gleeson J pointed to two features of the relationship that existed in fact that pointed “inexorably” to the conclusion that it was a contract of service rather than a contract for services. As summarised by a Full Bench of the Commission in DeliverooAustralia Pty Ltd v Diego Franco[46] these were firstly that the partnership maintained the truck provided to perform the delivery obligations under the contract and, second, that the company contracted with a partnership, not an individual. In relation to the first of these matters, their Honours said:

“[88] … Mr and Mrs Jamsek were obliged to, and did, maintain the truck which was used to perform the 1993 contract. A relationship of employment is a relationship of personal service. Personal service is not inherently inconsistent with the individual who provides service being responsible for the physical means by which his or her service is provided. Bicycle couriers were found to be employees in Hollis v Vabu Pty Ltd despite having used their own bicycles, just as Mr McCourt has been found to be an employee in CFMMEU despite having purchased and presumably used his own hard hat. But acceptance by the plurality in Hollis that motor vehicle couriers and motorbike couriers in contractual arrangements similar to the bicycle couriers might not have been employees shows that questions of scale can be important and even decisive. Where work contracted for, actually performed by an individual, and paid for, involves use of a substantial item of mechanical equipment for which the provider of the work is wholly responsible, the personal is overshadowed by the mechanical. That was recognised by this Court in Humberstone v Northern Timber Mills and again in Wright v Attorney-General for the State of Tasmania. Those cases were cited as authorities for that proposition in Neale v Atlas Products (Vic) Pty Ltd; they support what has become the ‘conventional view’ that ‘owners of expensive equipment, such as [a truck], are independent contractors’.” (footnotes omitted)

Gageler J and Gleeson J also referred to an argument for Mr Jamsek described as an attempt to “deconstruct and reconstruct the relationship [with the company] portraying it as one within which Mr and Mrs Jamsek in partnership were obliged to and did provide the truck and were responsible for invoicing and receiving payment and as one within which Mr Jamsek alone was obliged to and did do the driving. Their Honours concluded in relation to this argument that:

“… Whilst there is no reason in principle why their relationships could not have been structured and performed that way, that is not what was contracted for and that is not what happened in practice. Mr Jamsek usually drove the truck, but he was not contractually obliged to do so, and on occasions he did not. Mr Jamsek did no substantial work in the performance of the contract other than to load, unload and drive the truck for the purpose of carrying the company's goods. When he did that work in the performance of the contract, the partnership invoiced and was paid for the carriage of goods he provided using the truck. What was contracted for, provided, and paid for, under the contract was the carriage of goods by means of a truck, not the truck and separately Mr Jamsek as an individual to drive it.”[47]

Gordon and Steward JJ observed that the partnerships were established contemporaneously with the drivers being offered, on a take it or leave it basis, the opportunity to “become contractors” and to “[u]ndertake carriage of goods as reasonably directed”. Their Honours first identified factors indicating that the drivers were contractors including the obligations of the partnerships to supply and maintain vehicles of a particular kind and to pay costs associated with such vehicles. Also identified were contract terms relating to the requirement that the vehicles not be offered for sale with any guarantee of continuity of work or implied acceptance by the company and emphasising the significance of the vehicle by providing that its sale, for any reason, terminated the contract.[48] Terms allowing the partnerships to work for other parties provided such work was not detrimental to the company, were also noted as making explicit that the partnerships were not tied to the company and performance of the contractual obligations was not personal to the drivers.[49]
In relation to the contractual obligation to carry goods as reasonably directed by the Company, their Honours found that this was only control of a particular kind, being a power to give directions to make deliveries rather than to direct how that should be done. Their Honours observed that: “Put in different terms, ZG engaged the partnerships to carry its goods to its customers, not to carry goods absent a specific destination”[50] and went on to conclude that:

“Assessing the totality of the relationships between the partnerships and ZG as set out in the 1993 Contract, Mr Jamsek and Mr Whitby were not employed by ZG. The partnerships, not Mr Jamsek and Mr Whitby, were the contracting parties. The partnerships each contracted to provide, to operate and to maintain a truck to carry ZG's goods to its customers. The partnerships were entitled to invoice ZG for carrying the goods that they carried. It is true that the 1993 Contract between the partnerships and ZG addressed the obligations of the partnerships providing drivers. But that is to be expected. A truck could not in 1986 or 1993 carry and deliver goods without a driver.”[51]

Sham

The Applicant in the present case asserted sham on the part of the Respondents – albeit with no evidence. In both Personnel Contracting and Jamsek, Kiefel CJ and Keane J and Edelman J observed that there was no suggestion that the contract between the parties was a sham or had been varied or otherwise displaced by conduct of the parties and there was no claim by the drivers to set aside the contract either under statute or pursuant to equitable doctrines such as those relating to unconscionable conduct.[52] Their Honours also allowed that there may be occasion to determine the character of the relationship between parties by reviewing the entire history of their dealings where it is alleged that a contract is either a sham or ineffective under general law or statute.[53] However, the emphasis on orthodox contractual analysis in the judgment Kiefel CJ and Keane J and Edelman J, suggests that a similar approach should be taken to considering whether a contract is a sham or ineffective under general law. In Khaym v Navitas English Pty Ltd[54] a Full Bench of the Commission provided a summary of recognised categories by which the law excuses parties from the performance of a contract (including sham) and identified the following categories as potentially relevant an employment context:

“● the employee entered into the contract as a result of misrepresentation or misleading conduct by the employer;
● the employee entered into the contract as a result of a serious mistake about its contents or subject matter;
● there has been unconscionable conduct associated with the making of the contract, which may relevantly include that the employer took advantage of a disability affecting the employee such as lack of education, lack of information, lack of independent advice or illiteracy;
● the employment contract was entered into by the employee under duress or coercion (which might include the types of coercion prohibited in ss 343(1)(a), 348 and 355) resulting from illegitimate pressure on the part of the employer;
● the employee lacked the legal capacity to make the contract; or
● the contract was a sham in the sense that it was not intended by the parties to give legal effect to its apparent terms or in the broader sense dealt with in Pt 3-1 Div 6 of the FW Act.”

The principle in relation to when a contract is a sham, is set out in the High Court decision in Equuscorp Pty Ltd & Anor v Glengallan Investments Pty Ltd[55] where the Court stated:
“‘Sham’ is an expression which has a well-understood legal meaning. It refers to steps which take the form of a legally effective transaction but which the parties intend should not have the apparent, or any, legal consequences.”
The broader sense in which “sham” is dealt with in Part 3 – 1 Division 6 of the Act, s. 357 provides as follows:

“357 Misrepresenting employment as independent contracting arrangement
(1)        A person (the employer) that employs, or proposes to employ, an individual must not represent to the individual that the contract of employment under which the individual is, or would be, employed by the employer is a contract for services under which the individual performs, or would perform, work as an independent contractor.
Note:      This subsection is a civil remedy provision (see Part 4‑1).
(2)        Subsection (1) does not apply if the employer proves that, when the representation was made, the employer:

(a) did not know; and
(b) was not reckless as to whether;

the contract was a contract of employment rather than a contract for services.”

The section deals with misrepresentation, and the mere fact that a relationship is one of employment is does not establish a breach. The representation prohibited by the term is not limited to a representation that a contract under which the employee performs or would perform work as an independent contractor, is a contract for services with the employer, and may include a representation about a contract with a third party – for example, a labour hire contractor.[56] I turn now to apply the principles relevant to determining whether the Applicant in the present case was employed by Hymix or Hanson.

Whether the Applicant was an employee

When the relevant principles are applied in the present case, it is apparent that the Applicant was not employed by Hymix or Hanson. Rather, De Borzatti Pty Ltd entered into a contract with Hymix to provide, operate and maintain a truck to carry Hymix’s product to customers. The Applicant in his capacity as a director and/or an employee of De Borzatti Pty Ltd, drove the truck. As was the case in Jamsek what was contracted and paid for by Hymix was the carriage of concrete by means of a truck, not the provision of a truck and separately, the Applicant to drive it. The contract required De Borzatti Pty Ltd, as the operator of a single vehicle, to provide a principal driver who was a director and controlling shareholder of that Company. The Applicant met those requirements and drove the vehicle in that capacity.

While Hymix exercised control over the identity of the driver of the truck, the contract allowed the Applicant to use a relief driver. I accept that any control that Hymix had to grant or withhold approval to a relief driver was related to concern about the safe carriage of its product rather than an indicator of control over the Applicant. In short, the work required use of a substantial item of mechanical equipment – a truck with a value of some $240,000.00 on commencement of the contract – for which the Applicant was wholly responsible and included maintenance and operational costs. While in the present case the truck was owned by De Borzatti Pty Ltd rather than a partnership, and the Applicant was the sole director and did not split his income with a partner, he doubtless took advantage of tax benefits associated with claiming the operating costs of the truck and the business.

The Applicant contends that Hymix exercised a degree of control over him such that he was in fact an employee. In this regard, the Applicant referred to clause 7 of the Carrier Agreement. I do not accept that submission. Clause 7 of the Carrier Agreement was in similar terms to the clause considered in Jamsek. In particular, as did the partnerships in Jamsek, De Borzatti Pty Ltd was responsible for the conduct of deliveries and in that context, the clause created an obligation as to what carriage was to be undertaken rather than how it was to be carried out. Further, the clause makes clear that Hymix cannot load to the truck so as to cause the maximum legal carrying capacity of the truck and the mixer to be exceeded. This is similar to the concept of reasonableness of the direction to undertake carriage in Jamsek referred to in the judgment of Keifel CJ and Keane J and Edelman J in that case.[57] Similarly, as Gordon J and Steward J observed in Jamsek, the requirement to undertake carriage of goods as reasonably directed, was a power to give a direction to make deliveries rather than to direct how that should be done and Hymix engaged De Borzatti Pty Ltd to carry concrete to its customers, not to carry goods absent a specified destination.

Other matters referred to by the Applicant as indicating that he was an employee, are also matters that can indicate that the relationship was a contract for the provision of services. The fact that the Applicant only worked for Hymix and was expected to be generally available for 52 weeks each year, is not decisive of an employment relationship. De Borzatti Pty Ltd decided to enter into a contract that provided consistent work rather than to take its chances as a free-lance operator. That choice is not indicative of an employment relationship. The following matters also indicate a contractor relationship between De Borzatti Pty Ltd and Hymix. Firstly, the contract at clause 7.4 provided that in periods where demand was low, Hymix may grant permission for the carrier to take leave without the provision of a relief driver and also provided for a relief driver, subject to approval by Hymix. Secondly, the carriage of concrete is specialised work, that the Applicant had undertaken previously for another concrete company. That he agreed as a Director of De Borzatti Pty Ltd to the terms of the Carriage Agreement in relation to availability is not inconsistent with an independent contract, in circumstances where the Applicant’s company was providing a truck, he had agreed to have the truck painted in Hymix’s livery and that he would attach an agitator provide by Hymix to his truck so that he could undertake the required work.

The time devoted to the work by the Applicant is not inconsistent with the relationship between De Borzatti Pty Ltd and Hymix, being an independent contract. Consistent with the observation of Kiefel CJ, Keane J and Edelman J in Jamsek, the fact that the Applicant had limited time to work for any other entity says little more than that the demand by Hymix for the services of De Borzatti Pty Ltd was such that it had no further capacity to service other customers. Similarly, the fact that the truck owned by De Borzatti Pty Ltd was required to be painted with certain colours and to bear a Hymix logo, is no more than the Company complying with the requirements of its largest, or its only, customer. The provision of paint by Hymix and that Hymix bore some costs of painting, is also not determinative of the relationship.

The Applicant did not point to a particular provision of the Carrier Agreement preventing or prohibiting De Borazatti Pty Ltd from using the truck for purposes other than carrying Hymix’s product or requiring that the agitator provide by Hymix be affixed to the truck at all times, even when it was not being used to carry Hymix’s product. If there were such a provision in the Carrier Agreement, it would not, in the factual context of this case, alter the contractual relationship between De Borzatti Pty Ltd and Hymix, or the status of the Applicant. De Borzatti Pty Ltd entered into a contract to conduct specialised Carriage of concrete on a constant basis I do not accept that the provision by Hymix of the agitator, altered that contractual relationship as set out in the written terms of the Carrier Agreement and the relative values of the truck and the agitator, with the value of the truck being significantly more than the value of the agitator. It is also the case that the provision of the agitator bowl to De Borzatti Pty Ltd involved the supply of a specialised piece of equipment necessary to cart concrete, to a contracted carrier, which provided the general piece of equipment – a prime mover. The mixer bowl was not provided personally to the Applicant, and it was De Borzatti Pty Ltd that was responsible for insuring and maintaining the agitator by following specified procedures and taking it to a designated maintenance provider.

Further, the fact that the Applicant undertook the work for a relatively lengthy period of five years or that income from Hymix was his sole source of income, does not alter the relationship. In terms of assignment, Carrier Agreement provided that the benefit of the Agreement could be assigned subject to certain terms and conditions, and that no goodwill could be attached to the Agreement when it was assigned on the open market. As was the case in Jamsek, these terms did not prevent the generation of goodwill. De Borzatti Pty Ltd was permitted to utilise the provisions of clause 13 of the Agreement if it wished to assign the Agreement. In a letter of 16 August 2021, the Applicant was advised that the Carrier Agreement with De Borzatti Pty Ltd was to be terminated and given 28 days to find a suitable (Hymix approved) business to absorb the remainder of his Agreement[58]. These provisions also indicate that the parties contemplated that De Borzatti Pty Ltd may have something over and above the value of the truck to sell.

Other matters raised by the Applicant in support of his contention that he was an employee of Hymix and/or Hanson can be dealt with in short compass. The fact that the Carrier Agreement signed by the Applicant on behalf of De Borzatti Pty Ltd was not countersigned on behalf of Hymix, does not invalidate the Agreement and nor does it support the Applicant’s contention that he was an employee. Despite the Agreement not being signed by Hymix, it is not disputed that it operated to determine the rights and obligations of both Hymix and De Borzatti Pty Ltd and that De Borzatti Pty Ltd was paid according to its terms and took the benefit of the Agreement.

The fact that the Applicant was paid by transfer into his personal bank account is also of no assistance to his claim that he was an employee. Quite simply, the Applicant completed a form in which he declared that the bank account he nominated was the bank account for De Borzatti Pty Ltd and agreed that Hanson could issue RCTIs in respect of supplies from De Borzatti Pty Ltd. The Applicant conceded that he completed this form in the capacity of Director of De Borzatti Pty Ltd and erroneously nominated his personal account instead of the Company’s account and he cannot now assert that this error is a basis for him being found to be an employee.

Neither can the Applicant rely on the fact that he did not comply with the requirements of the Carrier Agreement by failing to obtain workers compensation insurance for himself as the nominated driver for De Borzatti Pty Ltd. Nor can the Applicant rely on the fact that Hymix may have exercised its right to require the Applicant to produce documentation relating to De Borzatti Pty Ltd’s public liability insurance and not its workers compensation insurance. Quite simply, workers compensation insurance benefits the Applicant as the director and nominated driver for De Borzatti Pty Ltd while public liability insurance ensures that Hymix is protected. That Hymix was interested in this matter is entirely consistent with the relationship between Hymix and De Borzatti Pty Ltd being a contract for the provision of services.

The fact that the Applicant had no independence in the conduct of his operations in terms of load size, where to go and when to start, may be an indication of employment. However, it is also the case that these requirements are related to the product delivered. In Jamsek the product was boxes or cartons containing electrical goods. These products are apt to be delivered at the discretion of drivers based on the most efficient route and this would also likely impact on the order in which the trucks were loaded. The delivery of concrete is a different proposition. The Carrier Agreement makes clear that there are technical aspects associated with the loading and carriage of concrete which would necessitate this kind of control on the part of Hymix. The control is therefore an incident of the kind of product being delivered rather than of the relationship between Hymix and the Applicant.

Finally, when regard is had to the circumstances surrounding the making of the Carrier Agreement, there are clear indicators of a contractual rather than an employment relationship. The Carrier Agreement between De Borzatti Pty Ltd was made on 9 May 2016. At that point, De Borzatti Pty Ltd had been operating for over established for over seven years and the Applicant had been its sole director for that period. The Applicant was not new to the independent contracting space. He stated under cross-examination that De Borzatti Pty Ltd had undertaken contract work for Boral he had undertaken work for Boral for a period of some eight years between 2009 and 2018. There was no evidence that during this period, the Applicant was working in any other capacity than as a director/employee of De Borzatti Pty Ltd and neither is there evidence that he was employed by Boral or any entity other than De Borzatti Pty Ltd. After having a break, the Applicant was told of an opportunity to work for the Respondent via his company, on the same basis as he had worked for Boral. The Applicant accepted that he attended a session conducted by Hymix at which this was explained to him.

The Applicant had no pre-existing relationship with either Hymix or Hanson. In contrast with the factual situation in Jamsek, the Applicant was not employed by the Respondent prior to entering into the Carrier Agreement. This was not a case of the Applicant as an employee of Hymix being offered the opportunity to purchase a truck from the Company and accepting a “take it or leave it” proposition to become a contractor. Even if this had been the case, Jamsek establishes that the existence of those facts, of themselves, are not sufficient to sway the argument in favour of a finding that the Applicant was an employee. If anything, the facts in the present case weigh more in favour of a finding that there was a contractual rather than an employment relationship when the circumstances surrounding its formation are considered, in comparison with those that were found to exist in Jamsek. Also, for the reasons established in that case, the disparity in bargaining power is not determinative of the relationship. De Borzatti Pty Ltd had a truck and Hymix engaged the Company to deliver its product, which included the Applicant as its sole director driving the truck.

There is no evidence of sham, coercion, misrepresentation or anything approaching conduct that would entitle the Applicant to disavow the relationship established by the Carrier Agreement and maintain that he was at all times an employee of Hymix or Hanson. The overwhelming impression I am left with is that the Applicant disputes the action of Hymix in terminating the contract and seeks to ventilate his grievances in this regard, by making a claim seeking a remedy for unfair dismissal. While the Applicant may have good reason to be aggrieved, he is not an employee and cannot make such an application.

Conclusion

For these reasons, I upheld the jurisdictional objection made by the Respondents and dismissed the application made by the Applicant for an unfair dismissal remedy.

DEPUTY PRESIDENT

Appearances:

S De Borzatti, Applicant.
N Ward and T Lawrence of Australia Business Lawyers & Advisors for the Respondent.

Hearing details:

2022.
Brisbane (by video):
May 19, June 20.

[1] PR746198.

[2] [2022] HCA 1.

[3] [2022] HCA 2.

[4] Exhibit A1 Applicant’s Statement of Evidence; Exhibit A2 Witness Statement Number 2.

[5] Exhibit R1 Witness Statement of Josh Moore.

[6] Exhibit R2 Witness Statement of Therese Konings.

[7] Exhibit R1 Statement of Josh Moore Annexure JM-3.

[8] Ibid Annexure JM-1.

[9] Hollis v Vabu Pty Ltd (2001) 207 CLR 21 at [24].

[10] Stevens v Broadribb Sawmilling Co Pty Ltd (1986) CLR 16.

[11] [2022] HCA 1.

[12] [2022] HCA 2.

[13] Ibid at [88] per Gageler and Gleeson JJ.

[14] Ibid at 53.

[15] Stevens v Brodribb Sawmilling Company Pty Ltd (1986) 160 CLR 16 at [26].

[16] ZG Operations Australia Pty Ltd and Anor v Martin Jamsek and Others [2022] HCA 2 at 55.

[17] [2001] HCA 44.

[18] Ibid at [47].

[19] (1986) 160 CLR 16.

[20] Exhibit A2 Witness Statement Number 2 of Selim De Borzatti Annexure.

[21] Transcript PN181 – 189.

[22] 190 – 192.

[23] Transcript PN224 – 226.

[24] Transcript PN255 – 257.

[25] Exhibit R1 Annexure JM-5.

[26] [2022] HCA 1 at [93].

[27] [2022] FWCFB 156.

[28] [2022] HCA 1 at [59].

[29] Ibid at [61].

[30] (1986) 160 CLR 16 at 29.

[31] (2001) 207 CLR 21 at 33 [24].

[32] Ibid at [162].

[33] Ibid at [174] – [175].

[34] [2022] HCA 2 at [11] – [15].

[35] Ibid at [28].

[36] Ibid at [39] – [43].

[37] Ibid at [47] citing Jamsek v ZG Operations Australia Pty Ltd (2020) 279 FCR 114 at 165 [242].

[38] Ibid at [50].

[39] Ibid at [51].

[40] Ibid at [53].

[41] Ibid at [58].

[42] Ibid at [62].

[43] Ibid at [63].

[44] Ibid at [70] citing Humberstone v Northern Timber Mills (1949) 79 CLR 389; Barro Group Pty Ltd v Fraser [1985] VR 577; Ready Mixed Concrete (South East) Ltd v Minister of Pensions and National Insurance [1968] 2 QB 497.

[45] Ibid at [85].

[46] [2022] FWCFB 156 at [37].

[47] [2022] HCA 2 at [90].

[48] Ibid at [102].

[49] Ibid at [103].

[50] Ibid at [105].

[51] Ibid at [107].

[52] [2022] HCA 1 at [8].

[53] Ibid at [59].

[54] [2017] FWCFB 5162.

[55] Matter B93/2003.

[56] Fair Work Ombudsman v Quest South Perth Holdings Pty Ltd (2015) 256 CLR 137.

[57] [2022] HCA 2 at [69].

[58] Exhibit R1 Annexure JM – 10.

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