The Specialist Centre v Medical Practitioner
[2019] ACAT 37
•26 March 2019
ACT CIVIL & ADMINISTRATIVE TRIBUNAL
THE SPECIALIST CENTRE v MEDICAL PRACTITIONER (Civil Dispute) [2019] ACAT 37
XD 589/2018
Catchwords: CIVIL DISPUTE – management fee – lack of formal contract – jurisdictional issue – employment law – nature of relationship – employment arrangement – independent contractor – commercial lease – late amendment of response – application for costs
Legislation cited: ACT Civil and Administrative Tribunal Act 2008 ss 16, 18, 22, 32, 36, 39, 48, 54, 77, 78, 79, Part 4
Fair Work Act 2009 (Cth) ss 14, 26, 27, 324, 326, 357, 358, 359
Independent Contractors Act 2006 (Cth) ss 7, 12
Jurisdiction of Courts (Cross-vesting) Act 1987 (Cth) s 8
Leases (Commercial and Retail) Act 2001 ss 10, 12, 17, 144
Magistrates Court Act 1930 Part 4.2
Cases cited:ACE Insurance Ltd v Trifunovski [2011] FCA 1204
ACT Visiting Medical Officers Association – re Application for registration – PR946319 [2004] AIRC 439
Barker v Plunkett & Anor Trading as M & J Plunkett Builders [2018] ACAT 9
Campbell v Blackshaw [2019] ACTCA 1
CIC Australia Ltd v ACT Planning and Land Authority, Mainore Pty Ltd and ACT Civil and Administrative Tribunal [2013] ACTSC 96
Corporation of the City of Enfield v Development Assessment Commission [2000] HCA 5
Ervin v Smipat Pty Ltd t/as L J Hooker Burleigh Heads [2013] QCATA 153
Fair Work Ombudsman v Quest South Perth Holdings Pty Ltd [2015] FCAFC 37
Ford v Thexton trading as Family Legal and Thexton Lawyers [2014] QCATA 180
Garsec Pty Ltd v His Majesty The Sultan of Brunei [2008] NSWCA 211
Henry v Henry [1996] HCA 51
Hollis v Vabu Pty Ltd [2001] HCA 44
London Australia Investment Co Ltd v Federal Commissioner of Taxation [1977] HCA 50
Oceanic Sun Line Special Shipping Co Inc v Fay [1988] HCA 32
Voth v Manildra Flour Mills Pty Ltd [1990] HCA 55
Welch v Erica’s Aesthetics Pty Ltd [2017] ACAT 68
Wesfarmers Federation Insurance Ltd v Stephen Wells trading as Wells Plumbing [2008] NSWCA 186
Yaraka Holdings Pty Ltd v Giljevic [2006] ACTCA 6
List of
Texts/Papers cited: Lee Aitken “The Meaning of “Matter”: A Matter of Meaning – Some Problems of Accrued Jurisdiction” (1988) 14 Monash University Law Review
M Davies, A S Bell and P L G Brereton, Nygh’s Conflict of Laws in Australia (LexisNexis Butterworths, 8th ed, 2010)
Carolyn Sappideen, Paul O’Grady and Joellen Riley, Macken’s Law of Employment (Thomson Reuters, 8th ed, 2016)
Tribunal: Senior Member H Robinson
Date of Orders: 26 March 2019
Date of Reasons for Decision: 26 March 2019
AUSTRALIAN CAPITAL TERRITORY )
CIVIL & ADMINISTRATIVE TRIBUNAL ) XD 589/2018
BETWEEN:
THE SPECIALIST CENTRE
Applicant
AND:
MEDICAL PRACTITIONER
Respondent
TRIBUNAL:Senior Member H Robinson
DATE:26 March 2019
ORDER
The Tribunal orders that:
1.The respondent is to pay the applicant the sum of:
a) $25,000; and
b)$1,508.63 interest in accordance with the ACT Civil and Administrative Tribunal Directions 2010 (No 1) and the Court Procedures Rules 2006; and
c)$300 tribunal filing fee.
………………………………..
Senior Member H Robinson
REASONS FOR DECISION
1. This application raises questions about the tribunal’s jurisdiction and procedure in circumstances where an aspect of the respondent’s response or defence lies, or may lie, outside of the tribunal’s jurisdiction, but where no proceedings are on foot in another jurisdiction.
2. In the reasons below, a reference to ‘ACAT’ or ‘tribunal’ refers to the ACT Civil and Administrative Tribunal generally, whereas ‘Tribunal’ refers to the member who heard the application.
The application
3. The applicant, a corporation that operates a specialist medical centre (the premises or the centre), seeks to recover an outstanding “facility fee” it says is owed to it by the respondent, a consulting medical specialist who practiced there. The respondent does not contest that the amount is payable under the written terms of the agreement between the parties (such as they are). However, he objects to the tribunal hearing the matter, on the basis that the contract between the parties was in fact an employment arrangement that lies outside the scope of the tribunal’s jurisdiction. His alternative argument is that, if the agreement is an independent contractor arrangement, it may be an unfair arrangement under the Independent Contractors Act 2006 (Cth) (IC Act). Resolution of this issue also lies outside the scope of this tribunal’s jurisdiction.
4. The contractual agreement between the parties was imprecise and, as such, a primary issue at the hearing was how to characterise it. There were several possibilities, including:
a) a commercial contract for a licence to occupy the premises and the payment of a ‘management fee’;
b) an independent contractor arrangement;
c) an employment contract;
d) a commercial lease; or
e) (perhaps) some combination thereof.[1]
[1] No party argued that the arrangement was a partnership, although it perhaps bears some of the hallmarks of that, too
5. An interrelated issue was whether the Tribunal could or should undertake this characterisation exercise. The respondent submitted that the Tribunal should decline to consider this matter further, and instead refer it to a forum that has the capacity to hear the whole of the proceedings, no matter the nature of the agreement.
The parties
6. The applicant was represented throughout these proceedings by a solicitor, Ms Teresa Tranzillo of Trinity Law. The applicant’s director, referred to in these reasons as Dr C, gave evidence and was cross‑examined.
7. The respondent was represented throughout these proceedings by Mr Tony Chase, Manager, Workplace Relations and General Practice with the Australian Medical Association. The respondent also appeared, gave evidence and was cross-examined.
8. During the course of the proceedings, the Tribunal made an order that the hearing of the application be in private pursuant to section 39(2)(a) of the ACT Civil and Administrative Tribunal Act 2008 (the ACAT Act). The order was made because, despite the best efforts of the parties to ensure the confidentiality of patients, there was some evidence given about clinical and operational issues, and the privacy of patients may be compromised were the file or the transcript to be publically available.
Background
9. The applicant is the sub-lessee of a premises near a major medical facility. The premises are equipped as a specialist medical practice, with several consultation rooms, a waiting room, a kitchenette, administrative areas and various other utilities, including bathroom facilities. The applicant directly engages a number of administrative staff, including a practice manager who oversees the administrative services provided at the centre. These administrative services include typing, appointment making, billing and other similar secretarial services. Practitioners who practise at the centre are assigned a dedicated consulting room, and share access to the kitchenette and other utility areas.
10. The respondent is a recently qualified specialist medical practitioner. He practices in the same specialist field as Dr C, although in another sub‑speciality. Their practices have a different focus.
11.In August 2017 the applicant, through Dr C, and the respondent entered into negotiations with a view to the respondent commencing practice at the centre. The negotiations consisted of telephone calls, face to face meetings, and some email correspondence.
12.On 23 September 2017, Dr C sent the respondent an email in which he set out his understanding of the agreed terms of the arrangement (the September email). It reads, relevantly, as follows:
I am pleased to have finalised negotiations with you today.
… This agreement will take effect from September 26 2017 as the first day of your work at [the Specialist Centre].
This is an agreement between yourself, and [the Specialist Centre].
We welcome (and frankly speaking, really looking forward) you and your work as a Consultant… We will provide the administrative support for your work as per the terms of this agreement.
As discussed today, the terms are as follows:
the management fee to be paid to [the Specialist Centre] is set at $200,000pa, to be paid in fortnightly amounts. There will be an annualised increase of 3% for the duration of our agreement.
This agreement will last for an initial period of THREE months, at which point, you are free to exit should you wish to, without any penalty. After this point you have agreed to be bound by contract to remain as a contractor on the same terms for work as a Consultant [Specialist] for a period of THREE years; should you exit before this date, there will be a penalty to be determined at the three month review date {addendum: this three month mark is set at February 1 2018, or next available date given your personal circumstances}
You are expecting to work Monday to Friday, from 9 AM to 5 PM. Additional hours will accrue extra costs which will be borne by you.
There is an additional fee of 10% for the management and handling of reports, such as medicolegal reports.
You are expecting to work for 48 weeks in a calendar year.
Thank you for your time today and I am personally looking very forward to watching your clinical business grow, and with a view to a conversation in the next few years about broadening the scope of [the respondent’s speciality work] in Canberra and perhaps even taking over the business of [the Specialist Centre].
13.The respondent did not reply to this email, but he commenced practising at the centre from about 26 September 2017.
14.On the respondent’s evidence, the parties intended to formalise the terms. They never did. Still, in the circumstances, it could not be seriously disputed that the September email set out the major terms and written component of the agreement between the parties at the commencement of the relationship, on 26 September 2017. Nor could it be seriously disputed that other, oral discussions, and indeed the actual practice of the parties, formed additional oral and implied terms of the contract.
15.At no stage did either party seek legal or financial advice as to the legal mechanisms underpinning their relationship. That such a potentially lucrative arrangement was made with such minimal paperwork is surprising, but can perhaps explained by the informal nature of the negotiations and the fact that the arrangement was only intended to be a three month ‘trial’. The Tribunal’s observations are that Dr C took an aspirational and entrepreneurial approach with an assumption that goodwill would prevail, while the respondent appeared equally uninterested in the legal technicalities, being perhaps naïve about business structures, but, in any case, (understandably) mainly focused on achieving the best outcome in terms of remuneration and entitlements. This is not a criticism of either party — no doubt both had good intentions. But, as often happens, the tribunal is now being asked to fill in the gaps of a vaguely worded arrangement.
16.Unfortunately, despite the goodwill at the commencement of the relationship, the arrangement was not a successful one, and the parties agreed, by late December 2017, that it would not continue. For reasons that will be apparent, the Tribunal does not need to make any determinative findings as to the cause, or causes, of the breakdown of the relationship between the parties. Nonetheless, it is useful, for context, to briefly summarise their positions.
17.Dr C’s evidence was that, within a short time of the respondent commencing practice at the centre, he started to receive complaints from the centre’s administrative staff about the workload that the respondent’s work practices were creating, as well as complaints from staff about his engagement with them and, sometimes, with clients. He also received feedback about the respondent’s manner from patients. Although reluctant to get involved in the respondent’s clinical conduct, on at least two occasions he formed the view that his professional duties required that he intervene in a patient’s care.
18.The respondent’s evidence, meanwhile, was that he soon realised that the arrangement was not as mutually beneficial as had been suggested, forming the view that the applicant charged excessive costs and reaped excessive profit. He also felt that the applicant, through Dr C, was exercising an unreasonable and impermissible degree of control over both the administrative and clinical aspects of his practice.
19.As a consequence of this, in late December 2017, the respondent notified the applicant that he would not be continuing the arrangement. Both parties saw patient care as a priority, and this meant that the relationship could not be ceased abruptly. They agreed that the arrangement would end in the first week of March 2018. The respondent acquired a new premises and began to advise his clients and referring practitioners. He stopped paying the so-called management fee from February 2018, but continued to practice from the centre until 8 March 2018, when he finally vacated.
20.As set out in the September email, it was a term of the agreement that the respondent would pay the applicant a “management fee” of $200,000, plus GST, per annum. The applicant raised invoices for this management fee on a fortnightly basis. The applicant contended that, as at the time of this application, the outstanding management fee, less an offset amount received for consulting services, totalled $30,824.50. This figure was not disputed by the respondent. The applicant waived the excess above $25,000 to bring the matter within the jurisdiction of the tribunal.
21.In response, the respondent argues that there was an employment relationship between himself and the applicant, and that the terms of that arrangement need to be appropriately decided in a forum with the necessary jurisdiction for resolution of this question and related issues (the employment argument).
22.The respondent’s submissions state:
the nature of the contractual arrangement between the two parties should properly be the subject of a determination before the Fair Work Ombudsman (FWO) or in the event of litigation, a judgement in the Federal Circuit Court (Industrial Division)[2]
[2] Respondent’s final submissions dated 8 February 2019 page 2
23.Further, the respondent submitted that the Tribunal should defer any decision in this matter, pending the outcome of one of these alternative processes. Notably, however, the Fair Work Ombudsman’s investigation only appeared to be at a very early stage, and no proceedings had been commenced in the Federal Circuit Court.
24.For its part, the applicant denies that the relationship between the parties was an employment arrangement. The applicant’s characterisation of the relationship has varied somewhat: in its initial claim,[3] it appears to suggest that the arrangement was little more than a bare licence to use the premises coupled with a “facilities fee” paid for the provision of services, but in closing submissions it appears to characterise the relationship as one of principal and independent contractor. The applicant argued that, on either view, this is a debt claim, over which this tribunal has jurisdiction, and given the amount claimed, the tribunal is the appropriate forum to hear the proceedings.
Consideration of the jurisdictional issue
[3] Civil Dispute Application lodged 18 May 2018, Annexure A
25.The first issue for any court or tribunal is whether or not it has jurisdiction to hear the dispute. It is therefore necessary to briefly consider the tribunal’s jurisdiction, as it relates to this matter.
26.As a statutory body established by the ACAT Act the tribunal has only such jurisdiction and powers as are conferred on it by statute.
27.Nonetheless, the tribunal’s civil jurisdiction, under which this action is brought, is rather unusual in that the statute confers on the tribunal a ‘carved out’ section of the Magistrates Court’s jurisdiction — effectively, what used to be the Magistrates Court’s ‘small claims’ jurisdiction.
28.The tribunal’s jurisdiction to hear civil disputes is set out in Part 4 of the ACAT Act. A ‘civil dispute’ is defined in section 16 of the ACAT Act, relevantly, as follows:
civil dispute means a dispute in relation to which a civil dispute application may be made.
civil dispute application means an application that consists of 1 or more of the following applications:
(a) a contract application;
(b) …(c) a debt application …
29.The applicant’s claim, as pleaded, is a debt application within the meaning of section 16(c).
30.Section 18 of the ACAT Act then provides that the tribunal’s jurisdiction is limited to applications claiming amounts of not more than $25,000, subject to certain exceptions including, for example, where the parties agree to a higher limit.
31.Section 22 of the ACAT Act provides that the tribunal has, in relation to civil dispute applications, the same jurisdiction and powers as the Magistrates Court has under the Magistrates Court Act 1930, part 4.2 (Civil jurisdiction). What this means in practice is that, as long as a dispute falls within the meaning of a ‘civil dispute’ in section 16 of the ACAT Act, and where the applicant claims a monetary sum that falls within the tribunal’s jurisdiction as set out in section 18 of the ACAT Act, the tribunal may exercise the powers of the Magistrates Court in determining the matter. There may be some question as to the tribunal’s jurisdiction in claims for non-monetary orders, but that issue is not relevant to this proceeding.[4]
[4] Campbell v Blackshaw [2019] ACTCA 1
32.Section 36 of the ACAT Act provides that the tribunal must hear each application made to it, unless the application is dismissed or the tribunal determines not to hear it under some other power. However, the tribunal cannot hear a matter over which it has no jurisdiction.
The tribunal and ‘employment law’ matters
33.One area in which the tribunal has limited jurisdiction is employment law. The respondent argues that he was, or at least may have been, an employee. If correct, what are the consequences for this proceeding?
34.The Fair Work Act 2009 (Cth) (FW Act) provides for the terms and conditions of employment for ‘national system employees’. If the respondent was an employee of the applicant, he would have been a national system employee by operation of section 14(1)(f) of the FW Act, which extends the definition to include all persons employed in the Australian Capital Territory.
35.It is well established that this tribunal does not have jurisdiction to determine claims for the recovery of lost wages or claims about the entitlements of ‘national system employees’ whose terms and conditions are covered by the FW Act or by other Commonwealth instruments made under that Act.[5] The respondent’s response does not clearly articulate a claim of this nature, but it may be anticipated that, were the respondent an employee, the applicant’s claims would be resisted or offset by reference to other entitlements that may have been payable by virtue of the nature of the relationship. The tribunal would not have the jurisdiction to determine such a response. Indeed, it is likely that the tribunal would not have jurisdiction to decide any aspect of the matter that required the determination of the respondent’s terms and conditions of employment, at least so far as they were covered by the FW Act or an industrial instrument.
[5] Welch v Erica’s Aesthetics Pty Ltd [2017] ACAT 68 (Welch)
36.What is less clear is whether the tribunal would have jurisdiction to determine any contractual matters arising out of any employment relationship.
37.The FW Act is expressly stated to exclude “all State and Territory industrial laws so far as they would otherwise apply to a national system employee or a national system employer”.[6] The definition of a “Territory industrial law” in section 26(2) of the FW Act extends to laws that “apply to employment generally”.
[6] FW Act section 26(1)
38.In Ford v Thexton trading as Family Legal and Thexton Lawyers[7] (Ford), Judge Horneman-Wren and Judicial Member Cullinane QC, sitting as the Queensland Civil and Administrative Tribunal (QCAT) Appeal Tribunal, considered whether the Queensland Civil and Administrative Tribunal Act 2009 (QCAT Act), which gave QCAT authority to hear and determine a “minor civil dispute”, was a law precluded by operation of section 26 of the FW Act. They concluded that the QCAT Act was not such a law. In Welch v Erica’s Aesthetics Pty Ltd [2017] ACAT 68 (Welch), Presidential Member McCarthy of this tribunal cited Ford and observed that “it would appear (although I make no finding) that the ACAT Act is similarly not a law excluded by section 26 of the FW Act.”[8] Consequently, it may be that the tribunal retains some jurisdiction in relation to civil debt claims that arise in an employment context, although not claims in relation to unpaid or underpaid entitlements.
[7] Ford v Thexton trading as Family Legal and Thexton Lawyers [2014] QCATA 180
[8] Welch [40]
39.This position also seems to be confirmed by section 27(1)(c) of the FW Act, which provides that section 26 of that Act “does not apply to a law of a State or Territory so far as the law deals with any non-excluded matters”. ‘Non‑excluded matters’ are listed in section 27(2) of the FW Act and include, under section 27(2)(o), “claims for enforcement of contracts of employment” save for an exception that is not here relevant.
40.In Ford, the QCAT Appeal Tribunal ultimately concluded that claims for debts or liquidated demands arising from a contract of employment — but not from the FW Act or any instrument made under it (for example, an award) — can be recovered in the QCAT in its minor civil dispute jurisdiction. However, in another case, Ervin v Smipat Pty Ltd t/as L J Hooker Burleigh Heads[9] (Ervin), Justice Wilson, then President of the QCAT, took a somewhat different view, at least in relation to claims brought by employees in relation to their entitlements, stating that:
In my opinion … the courts referred to in the [FW Act] form an exhaustive list of appropriate forums in which an employee may choose to commence proceedings against current and former employers.[10]
[9] [2013] QCATA 153 [14]; see discussion in Welch
[10] Ervin [29]
41.The Tribunal in Welch did not need to decide this issue.[11] On any view, however, this Tribunal would not have the jurisdiction to consider any counterclaim by the respondent that raised the issue of his statutory entitlements, be it by way of counterclaim or off-set.
[11] Welch [56]
42.What is less clear is the Tribunal’s jurisdiction in relation to claims by an employer against an employee – such as the claim in this case for the recovery of the “management fee”.
43.While the FW Act sets out an exclusive process by which employees can recover payments owed by employers, it does not set out any process under which employers can recover overpayments or debts allegedly owed to them by employees. Section 324 and 326 of the FW Act do prescribe the circumstances under which deductions may be made by employers by agreement, and prohibit deductions otherwise than in accordance with those provisions, but otherwise the FW Act is silent about debt recovery claims by an employer. The only apparent practical solution is that employers who are owed contractual debts by employees must be able to recover them as contractual or debt claims in courts or tribunals with the appropriate civil jurisdiction. Given that, in the Australian Capital Territory, jurisdiction to hear civil debt claims of up to $25,000 lies exclusively with this tribunal,[12] whether the respondent is an employee or not, the tribunal would appear to have the relevant jurisdiction to decide at least the applicant’s claim.
[12] ACAT Act Part 4
44.Consequently, it appears that, provided the ‘management fee’ is a permissible clause in an employment contract, the debt that is claimed to be owed under it may be recovered in this tribunal.
45.Of course, the practical difficulties that arise are, first, determining the issue of whether the respondent was an employee and, second, if so, whether the ‘management fee’ is a permissible or recoverable term in the context of an employee contract. If the respondent were found to be an employee, then it is difficult to see how the proceedings would not require the consideration of the relationship between the parties, the lawfulness of the agreement and, in that context, what the broader entitlements in that relationship were. Accordingly, if this arrangement was, in substance, an employment arrangement, then once a counter‑claim were made, the tribunal would no longer be vested with authority to decide ‘the matter in dispute’ and the matter would be more appropriately determined in another forum, one with the necessary jurisdiction to determine each party’s respective entitlements. The practical consequences of this position are obvious but there is, at present, no easy solution.
The independent contractor argument
46.The second basis for the respondent’s objection to the tribunal hearing this matter is that, if he is not an employee but an independent contractor, he intends to make a claim for a remedy for an ‘unfair contract’ under the IC Act.
47.By way of background, the IC Act has a number of purposes, one of which is to provide a framework for dealing with disputes about ‘unfair’ contracts involving a contractor and a principal. In this regard, it sits alongside the common law, and offers a separate scheme under which certain remedies can be sought in disputes where it is alleged that a contract is unfair, harsh, unjust or against the public interest. Such actions must be commenced in a court that is vested with jurisdiction under the IC Act.[13] The tribunal is not such a court.
[13] IC Act section 12
48.Section 7 of the IC Act also expressly excludes the operation of certain State and Territory laws. Accordingly, another question before the Tribunal is whether anything the applicant seeks in its claim would do something or have an effect which is excluded by section 7(1). This section provides, relevantly, that:
Exclusion of certain State and Territory laws
(1) Subject to subsection (2), the rights, entitlements, obligations and liabilities of a party to a services contract are not affected by a law of a State or Territory to the extent that the law would otherwise do one or more of the following:
(a)take or deem a party to a services contract to be an employer or employee, or otherwise treat a party to a services contract as if the party were an employer or employee, for the purposes of a law that relates to one or more workplace relations matters (or provide a means for a party to the contract to be so taken, deemed or treated);
(b)confer or impose rights, entitlements, obligations or liabilities on a party to a services contract in relation to matters that, in an employment relationship, would be workplace relations matters (or provide a means for rights, entitlements, obligations or liabilities in relation to such matters to be conferred or imposed on a party to a services contract);
(c)without limiting paragraphs (a) and (b) — expressly provide for a court, commission or tribunal to do any of the following in relation to a services contract on an unfairness ground:
(i)make an order or determination (however described) setting aside, or declaring to be void or otherwise unenforceable, all or part of the contract;
(ii)make an order or determination (however described) amending or varying all or part of the contract.
49.As these issues may be resolved comparatively easily, it is opportune to deal with those issues now.
50.The applicant’s claim does not ask the tribunal to apply any State or Territory law which would “take or deem a party to a services contract to be an employer or employee”. Therefore, section 7(1)(a) of the IC Act does not exclude the claim from the tribunal’s jurisdiction.
51.Section 7(1)(b) of the IC Act prevents the tribunal from applying to a services contract a State or Territory law which would “confer or impose” on a party to a services contract any rights, obligations or the like in relation to matters which would, in an employment relationship, be workplace relations matters. A ‘workplace relations matter’ is defined in section 8 to, effectively, include matters between employees and employers. This application does not rely on any law that may confer or impose workplace relations matters on the agreement. The applicant merely seeks to enforce what it says are the agreed terms of a contract.
52.Section 7(1)(c) prohibits a law which would permit the tribunal to make an order setting aside, declaring void or otherwise changing or varying the contract. The applicant does not seek such an order. Again, the applicant merely seeks to enforce what it says are agreed terms.
53.Accordingly, there is nothing in the application that would require the tribunal to exercise any power that invokes the exclusionary provisions of the IC Act, and there is nothing in the IC Act that would prohibit these proceedings.
54.That said, if the respondent does wish to make an application under the IC Act, hearing it would be beyond the jurisdiction of this tribunal. This presents some of the same practical difficulties identified above in relation to the employment argument.
The practical solution
55.The respondent does not necessarily seek that these proceedings be dismissed. Rather, he asks that the Tribunal make an order either transferring them to another jurisdiction that does have jurisdiction to hear the matter, or staying them pending resolution of the dispute elsewhere.
56.While a transfer of the proceedings may be a sensible suggestion, the Tribunal has no power to do this. The only referral powers this tribunal has lie in section 77 of the ACAT Act, which deals with referrals on questions of law within the tribunal, and sections 83 and 84, which relate to referrals to the Supreme Court. There is no power to refer a matter to, for example, the Magistrates Court.
57.There is capacity, pursuant to section 8 of the Jurisdiction of Courts (Cross‑vesting) Act 1987 (Cth), for an application to be made to the Supreme Court to have a matter transferred to another jurisdiction. The Tribunal would need to transfer the matter to the Supreme Court for such consideration. Neither party requested this, nor is it likely that the amount claimed in this proceeding would justify such a step.
58.So, if the Tribunal cannot refer the matter, what can it do?
59.The starting point for the tribunal is that, just as it must decline to hear matters outside its jurisdiction, it must also hear matters that are within its jurisdiction, subject to any application or decision by the tribunal to have the proceedings:
a)struck out or dismissed under section 32 of the ACAT Act; or
b)disposed of without a hearing under section 54 of the ACAT Act.
60.No formal application has been made for summary dismissal under either of these sections, but none is required if the tribunal thinks dismissal appropriate on its own initiative.
61.Section 32 of the ACAT Act is the most relevant section, and sets out the circumstances where the Tribunal may dismiss or strike out a proceeding prior to hearing. It provides:
Dismissing or striking out applications
(1) This section applies if the tribunal considers that an application, or part of an application is––
(a)frivolous or vexatious; or
(b)lacking in substance; or
(c)otherwise an abuse of process; or
(d)made by a person who has been dealt with by a court or tribunal in Australia as frivolous or vexatious.
(2) The tribunal may, by order, do 1 or more of the following:
(a)refuse to hear the application or part of the application;
(b)dismiss the application or part of the application;
(c)direct that the person who made the application not make a subsequent application to the tribunal of the kind stated in the direction—
(i) within a stated period of time; or
(ii)without the leave of the tribunal. [note omitted]
(3) The tribunal may make an order under subsection (2) on its own initiative or on application by a party.
…
Note The tribunal must observe natural justice and procedural fairness (see s 7).
62.A proceeding that is brought in a “clearly inappropriate forum”[14] may be dismissed if it is vexatious or an abuse of process, but this is not an easy test to meet. An applicant has a prima facie right to commence proceedings in the forum of their choice, and the onus lies on the respondent to establish that the forum chosen is clearly not an appropriate one.[15] Numerous cases have expounded factors to be considered[16] but, in the context of this case, the test would essentially come down to whether the matter can be effectively heard by the tribunal.
[14] Oceanic Sun Line Special Shipping Co Inc v Fay [1988] HCA 32 [7]; see also Voth v Manildra Flour Mills Pty Ltd (Voth) [1990] HCA 55; Garsec Pty Ltd v His Majesty The Sultan of Brunei [2008] NSWCA 211; Henry v Henry [1996] HCA 51
[15] Voth [17] per Mason, Deane, Dawson and Gaudron JJ
[16] M Davies, AS Bell and PLG Brereton, Nygh’s Conflict of Laws in Australia (LexisNexis Butterworths, 8th ed, 2010) chapter 8
63.The alternative to dismissing the proceedings is staying them indefinitely, pending the commencement of proceedings in another jurisdiction. In Nygh’s Conflict of Laws in Australia,[17] the authors set out a list of factors to be considered in staying proceedings in one jurisdiction while proceedings are pending in another. These factors broadly involve a balancing exercise of the advantages, disadvantages and utility of the competing forums.
[17] M Davies, AS Bell and PLG Brereton, Nygh’s Conflict of Laws in Australia (LexisNexis Butterworths, 8th ed, 2010) [8.48]
64.The practical problems set out above are compelling reasons why this forum may not be ideal. Had the respondent commenced proceedings in another, more convenient or appropriate forum with the clear jurisdiction to determine his counter-claim, then he may have had a strong argument for staying or dismissing these proceedings pending the outcome of the others. Indeed, these proceedings would likely have been stayed as a matter of course were alternative proceedings commenced in a superior court. This, however, has not happened. At most, I understand that an enquiry has been made to the Fair Work Ombudsman, but that has not been progressed beyond its initial stages. No proceedings under the FW Act, the IC Act or at all have been lodged in the federal jurisdiction. Accordingly, there are no other proceedings to take account of in determining whether the tribunal can or should hear this matter.
65.Perhaps, with the benefit of hindsight, it maybe that this proceeding would have been better brought in the federal jurisdiction or in the Magistrates Court (noting that an excess was waived to bring the matter within the jurisdiction of the tribunal). In relation to the federal jurisdiction, facts that give rise to federal jurisdiction may be found not only in the applicant’s statement of claim but also in a defence.[18] However, the applicant had no reason to anticipate the defences raised by the respondent, so doing so would have taken impressive foresight. No doubt, the applicant also wanted to minimise costs by proceeding in this tribunal.
[18] Lee Aitkin, ‘The Meaning of “Matter”: A Matter of Meaning – Some Problems of Accrued Jurisdiction’ (1988) 14 Monash University Law Review 162
66.This leaves the Tribunal, and the parties, in something of a dilemma. I acknowledge that the tribunal is not the ideal forum in which to ventilate the entirety of the issues raised in this case. However, the starting point must be the applicant’s claim, and that claim is based on a contention that the relationship between the parties is a commercial contract that gives rise to a debt. That is a claim that the tribunal has the jurisdiction to hear, and the onus lies upon the applicant, as claimant, to establish, to the Tribunal’s satisfaction, that the intended characterisation is correct.
But can the tribunal determine whether the respondent is an employee or an independent contractor?
67.The respondent’s position is based in part upon a contention that this tribunal either cannot, or should not, determine whether the respondent is an employee or an independent contractor (or possibly something else, but that is not part of the respondent’s argument). This is a question that the respondent says is better decided in a forum in which that question is more regularly ventilated.
68.There are provisions in sections 357 to 359 of the FW Act that deal with “sham contracting”. These are civil remedy provisions under the FW Act, meaning that a person who infringes these provisions may be liable for a civil penalty — effectively, a fine. Certainly, the tribunal has no jurisdiction in relation to these provisions, but I do not understand these proceedings to actually engage them.
69.A ‘sham’ arrangement of the kind contemplated by the FW Act (and the common law) is one which is the product of the common intention of the parties to deliberately deceive third parties.[19] Notwithstanding some of the more rhetorical flourishes during the hearing before the Tribunal, it does not seem to me that the respondent is truly suggesting, at least for the purposes of these proceedings, any deliberate or even reckless pretence by the applicant to misrepresent the relationship. Rather, the respondent’s assertion seems to be that, whatever was initially agreed by the parties in the September email, the reality of the relationship turned out to be something quite different.
[19] Fair Work Ombudsman v Quest South Perth Holdings Pty Ltd [2015] FCAFC 37 (Quest) [144], citing Raftland Pty Ltd v Commissioner of Taxation of the Commonwealth of Australia [2008] HCA 21 [33] [35] and [58] per Gleeson CJ, Gummow and Crennan JJ) and [85], [112] and [148] per Kirby J; and Snook v London and West Riding Investments Ltd [1967] 2 QB 786 [802] per Diplock J. (Quest was overturned by the High Court of Australia on other grounds.)
70.That said, there is the possibility that “sham contracting” proceedings will be brought under the FW Act, perhaps by the Fair Work Ombudsman. There is the possibility that such proceedings may traverse the same question now before the Tribunal — that is, the characterisation of the relationship between the parties. However, such proceedings would be civil remedy proceedings, commenced in the Federal Court or the Federal Circuit Court. Although the same common law legal tests may apply, the nature of the proceedings would be different. Intention would be an issue. The rules of evidence would apply. There is not necessarily a risk of a different conclusion being reached on the same set of facts, because the evidentiary findings may be different. While the possibility of other proceedings is less than ideal, it does not seem to me that the mere prospect of such proceedings being commenced means that Tribunal cannot or should not reach factual conclusions in this case.
71.Secondly, the question before the Tribunal — that of the characterisation of the relationship between the parties — is a question of jurisdictional fact. The High Court in Corporation of the City of Enfield v Development Assessment Commission said as follows:
The term “jurisdictional fact” (which may be a complex of elements) is often used to identify that criterion, satisfaction of which enlivens the power of the decision-maker to exercise a discretion. Used here, it identifies a criterion, satisfaction of which mandates a particular outcome.[20]
[20] [2000] HCA 5 [28]
72.As set out above, if the tribunal has jurisdiction in a matter, it must exercise that jurisdiction. The tribunal has the jurisdiction to hear a debt claim between a principal and a sub-contractor, or indeed between principals or parties to a services agreement or any other commercial contract (to the limit of the tribunal’s jurisdiction). Given the Tribunal’s obligation to hear matters that fall within its jurisdiction, it must turn its mind to whether it has jurisdiction to hear this matter, and this necessarily involves consideration of the characterisation of the relationship as a jurisdictional fact.
73.There is nothing in the legal framework that would prevent this Tribunal from turning its mind to whether the respondent is an employee or an independent contractor. The distinction is determined by reference to common law principles, having regard to determined facts. The Tribunal has heard the evidence of both parties that goes to the facts. The Tribunal can make findings of fact and apply the common law principles to reach a determination as to whether the agreement between the parties is a commercial one rather than an employment contract. This is the most efficient and expedient means of resolving the dispute and it does not, as best I can determine, compromise any proceedings that may be commenced by the respondent under any other Act.
74.It is therefore to the characterisation of the contractual arrangements between the parties that I will turn.
Issue 1: Is the respondent an employee or an independent contractor?
Preliminary comments — the applicant’s objection to the late amendment of the respondent’s response
75.The respondent’s initial response to these proceedings did not raise any question as to whether the relationship between the parties was an employment relationship. That issue was only raised after the respondent engaged Mr Chase and the Australian Medical Association. On this basis, the applicant submitted that the employment law argument was a recent invention of the respondent, and that the Tribunal should not permit the issue to be raised so late in the proceedings. Alternatively, the applicant submitted, the late amendment of the response should go to the respondent’s credibility.
76.I do not intend to delve into this line of argument in any detail, as it is ultimately unproductive in terms of resolving this dispute. I will make this observation, however: an issue going to the jurisdiction of this tribunal to decide a matter can (and, if apparent, should) be raised at any stage in the proceedings and, once raised, the tribunal must decide it.
77.Secondly, the tribunal is not a forum in which the parties are bound by formal ‘pleadings’. The tribunal’s main concern is to ensure the real issues are identified and dealt with. I am satisfied that the amendments were made with sufficient notices so as not to unduly prejudice the applicant.
78.The applicant’s application for costs on the basis of the late amendment of the response is considered further below.
An employment relationship — the relevant factors
79.In broad terms, when considering whether a relationship meets the description of an ‘employment arrangement’, the totality of the relationship between the parties must be considered, rather than simply the words of the agreement between the parties.[21] This is generally assessed by reference to a number of indicia. As the concept of an employee is an evolving one,[22] no factors are decisive, but a broad list of relevant considerations can be identified. Many of these were usefully set out by Justice Perram in ACE Insurance Ltd v Trifunovski as follows:
the terms of the contract; the intention of the parties; whether tax is deducted; whether sub-contracting is permitted; whether uniforms are worn; whether tools are supplied; whether holidays permitted; the extent of control of, or the right to control, the putative employee whether actual or de jure; whether wages are paid or instead whether there exists a commission structure; what is disclosed in the tax returns; whether one party ‘represents’ the other; for the benefit of whom does the goodwill in the business inure; how ‘business-like’ is the alleged business of the putative employee – are there systems, manuals and invoices; and so on – the list is neither exhaustive nor short…[23]
[21] Hollis v Vabu Pty Ltd [2001] HCA 44 [24] per Gleeson CJ, Gaudron, Gummow, Kirby and Hayne JJ
[22] Carolyn Sappideen, Paul O’Grady and Joellen Riley, Macken’s Law of Employment (Thomson Reuters, 8th ed, 2016) (Macken’s Law of Employment) [2.20]
[23][2011] FCA 1204 [29]
80.I have set out the consideration of these factors, so far as they are relevant, below.
81.It is not entirely clear whether the respondent says that the relationship was always inherently an employment arrangement, or whether it quickly became one in practice, but perhaps it does not ultimately matter in this case. The possibility of a non-employment arrangement mutating into an employment contract was examined by the Federal Court in in Fair Work Ombudsman v Quest South Perth Holdings Pty Ltd [2015] FCA 45 (Quest). Noting that the Full Court’s decision was overturned on appeal, but on other grounds, their observations about the nature of changing arrangements, and the considerations that apply, are nonetheless useful in this case:
Even in the absence of a sham or pretence, the parties’ characterisation of their relationship, whether direct (by the application of a label) or indirect … may not be given effect according to its terms, because that characterisation contradicts the nature of the relationship the parties have actually created … In that situation, the character of the relationship created by the contract will be revealed by all the terms of the contract … examined in the light of the circumstances surrounding the making of it…
In other cases, the disparity between what was recorded on the face of the contract and what is demonstrated to have occurred by reference to the subsequent conduct of the parties may be explained by the recognition that, by their conduct, the parties have impliedly varied their contract by adding to or modifying its terms …
…Ultimately, the search for the reality or truth of what has been agreed, is a search for the common intention of the parties. That common intention is to be determined by what a reasonable person would have understood the parties to mean and, normally, requires consideration not only of the text, but also of the surrounding circumstances known to the parties, and the purpose and object of the transaction … Whilst well known contractual principles are to be applied, an overly technical approach to contractual analysis is to be avoided.
McHugh JA (with whom Hope and Mahoney JJA agreed) said in an often cited passage from Integrated Computer Services Pty Ltd v Digital Equipment Corp (Aust) Pty Ltd (1988) 5 BPR 11, 110 at 11,117–118:
Moreover, in an ongoing relationship, it is not always easy to point to the precise moment when the legal criteria of a contract have been fulfilled. Agreements concerning terms and conditions which might be too uncertain or too illusory to enforce at a particular time in the relationship may by reason of the parties’ subsequent conduct become sufficiently specific to give rise to legal rights and duties. In any dynamic commercial relationship new terms will be added or will supersede older terms. It is necessary therefore to look at the whole relationship and not only at what was said and done when the relationship was first formed.[24]
[24] Quest [148]-[150]
82.In this case, the parties’ contractual relationship was relatively brief — only around six months. There was limited capacity for contrary practices and relationships to develop. Still, it is open to the respondent to argue that, even within the short period that the relationship was in effect, the parties’ practices did not reflect the written agreement. With that observation, I turn to an analysis of the considerations in this case.
The terms of the contract
83.The written terms of the September email refer to the respondent as being “a contractor”. It sets out “working hours”. However, it also states the applicant must pay a “management fee”. It arguably reflects an independent contractor arrangement. It does not reflect an employment relationship.
The intention of the parties
84.The intention of the parties is ascertained on an objective basis, by reference to what a reasonable person would have understood the parties to mean.[25] On any view of the terms, neither party intended to create an employment arrangement, and the clear intention of the terms of the agreement were that something else was envisaged. At the same time, however, neither party truly considered nor understood what those terms meant, and the language was clearly not intended to reflect legal concepts in anything other than a broad sense. The objective intentions of the parties appear to weigh slightly in favour of an independent contractor arrangement, but I do not give this factor great weight.
Taxation and regulation
[25] Macken’s Law of Employment [4.50]
85.The regulatory requirements of a business, including business name registration, taxation, GST and ABN registration and compliance, will generally be met by the business, and not by an employee.[26]
[26] Wesfarmers Federation Insurance Ltd v Wells [2008] NSWCA 186 [39]–[42]
86.In this case, the respondent has his own ABN and managed his own taxation and superannuation. This is indicative of an independent contractor arrangement.
Whether sub-contracting or delegation is permitted
87.An independent contractor may have the ability to delegate or subcontract the work, while an employee usually will not.
88.The nature of the work undertaken by the respondent meant that delegation was not appropriate. The respondent’s evidence was that when he wished to take leave he blocked out or cancelled appointments. It is not clear whether he was entitled to appoint a locum, but certainly nothing in the terms of the arrangement suggested that he could. The lack of any practical capacity to delegate work is more indicative of an employment arrangement than an independent contractor, but this criteria is very difficult to apply to the engagement of a medical practitioners to whom patients are personally referred.
Whether uniforms are worn
89.The respondent did not wear a uniform or any other insignia of the centre.
Equipment
90.The centre provided most of the equipment, including the room, access to a kitchen, a computer and access to a medical database that housed all the practitioner’s accounts and patient records (billings, medical notes, investigations, correspondence and the like). According to Dr C, this computer system has special protection measures to safeguard data access, which was one reason he required the respondent to use it. The database also tied in with the Tyro payments system through which accounts and payments were progressed by the centre’s administrative staff. These arrangements were part of what the respondent paid to access through the “management fee”. Absent this fee, the arrangements were perhaps broadly more indicative of an employment arrangement than a contractor arrangement, but again this is not a particularly relevant criteria given the nature of the enterprise.
Whether holidays are permitted
91.The annual management fee was calculated on the assumption that the respondent would take 4 weeks leave a year. The respondent was not paid for this leave per se, but his assumed absence for four weeks appears to have been factored into the calculation of the facilities fee. Presumably, during this time, the respondent would remain in occupation of his room but the applicant would not be required to provide the respondent with administrative services. It is not clear what would have happened if the respondent in fact did not take leave: would the resulting additional administrative costs fall on the applicant or the respondent? This arrangement is broadly more indicative of an independent contractor arrangement.
The extent of control
92.Generally, where a principal has control over the way in which work is performed, the relationship is more likely to be an employment relationship, and vice versa. However, the control test is not always useful.
93.The concept of ‘control’ denotes some ability by the control the work of the putative employee. This test is difficult to apply in situations where the putative employee exercises a high degree of skill or professional judgement. As was observed by the then Australian Industrial Relations Commission in ACT Visiting Medical Officers Association – re Application for registration – PR946319 (the VMO case):
The nature of the services provided by VMOs in a hospital setting and skill and professional judgement exercised by VMOs in the performance of their work means that, in carrying out those services, they are not always readily susceptible to control in the sense that there is little, if any, scope for the hospital to interfere. As Gray J remarked in Porter a “hospital administrator would hardly be expected to tell a brain surgeon how to perform operations”. On the other hand, it has been recognised that “many modern employees perform specialist skills and exercise discretions that may yet be compatible with a modern notion of the ‘contract of employment’”. Provided, therefore, that there is some scope for control, it does not matter that there is such scope only in incidental or collateral matters. A hospital administrator may well be able to tell a brain surgeon when and where and upon whom she or he will perform operations at the relevant hospital. [footnotes omitted][27]
[27] [2004] AIRC 439 [54]
94.The VMO case considered whether visiting medical officers engaged in the public sector were independent contractors or employees. While the contractual arrangements for visiting medical officers are not identical to the respondent’s, there are similarities, and many of the same problems arise in relation to ‘control’. The VMO case illustrates that in cases where the worker provides highly skilled, professional services, the question is not whether the employer can control how all the work is to be done (that being a specialist skill), but rather whether the employer can control the work “so far as there is scope for it”, even if limited to collateral and incidental matters.[28]
[28] Macken’s Law of Employment [2.220]
95.I am satisfied that neither the applicant nor its agents exercised any kind of regular control over the respondent’s clinical practice, but that Dr C did intervene in some aspects of the respondent’s clinical practice where he was concerned about consequences for the applicant’s reputation. The two incidents can be summarised as follows:
a)following a complaint by a parent about the respondent, Dr C revised a letter about a child, including reconsidering some clinical matters; and
b)taking a call from a parent whose child had had a reaction to medication prescribed by the respondent and taking steps to resolve the situation.
96.Additionally, it appears that staff at the centre raised concerns with Dr C about how the respondent engaged with staff and, occasionally, patients, and Dr C in turn raised this with the respondent. These were more managerial than clinical issues.
97.Such interventions by Dr C were clearly a source of annoyance for the respondent, and he has suggested that they were contrary to the originally agreed arrangement. That may be the case — I cannot make sufficient finding on that point, and do not need to anyway — but the mere fact that Dr C may have overstepped the professional (and even contractual) boundaries on occasion does not, of itself, change the nature of the legal relationship between the parties.
98.For his part, Dr C explained his involvement in the management of the workplace as follows:
…as practice owner, it’s my job to look after the corporate viability and that of course is connected to the clinical work that people are doing. And in this case, when multiple complaints started happening, [as] the boss of the place, I have to make sure that my staff are well looked after, that’s my job as their boss and also patient welfare. In those two particular instances, I have a clinical duty[29]
[29] Transcript of proceedings 24 January 2019 page 52 [23]-[28]
99.The staff to whom he was referring in this statement, Dr C clarified, were the administrative staff, not the medical practitioners. This explained his involvement in speaking with the respondent about his interactions with staff.
100.In relation to his interactions with the health and medical practitioners, Dr C clearly saw his role as more of a mentor. In relation to the respondent, he saw himself as a senior practitioner with a complimentary specialty to that of the respondent. On his evidence, he provided that assistance informally, usually over breakfast or lunch (which, he said, he usually paid for). He also had ‘corridor discussions’ about patients, and he sometimes initiated ‘door knock’ conversations. He intervened when he thought he had professional obligations to do so, or perhaps when he thought the centre’s reputation was at risk, but otherwise the clinical work was independent of his scrutiny. The differences between the Dr C’s evidence and the respondent’s evidence about these things was mainly a difference of tone and emphasis rather than detail, with the respondent having a good recollection of those events he saw as being overreaches because of the personal effect they had on him. These arrangements in relation to clinical practice are slightly more indicative of an independent contractor arrangement than an employment arrangement, but this factor is of minimal weight given the circumstances of the case.
101.The applicant company did, however, appear to exercise a much higher degree of administrative and management control over the respondent. Much of this control was due to the applicant company’s control of the resources: for example, the centre’s operational hours determined the respondent’s working hours. However, other aspects of the arrangement appear more ‘employment like’: for example, the applicant gave guidance about things such as how the respondent should address patients; it required that the respondent use its computer system; his computer diary was shared with administrative staff, and those staff booked patients.
102.If one accepts that the only matters that the applicant could practically control were the administrative arrangements, then it clearly did have some degree of control over the respondent “so far as there was scope for it”. This factor is indicative of an employment arrangement.
Whether wages are paid or instead whether there exists a commission structure
103.On one view, the answer to this question is simple: the applicant did not pay the respondent at all. Rather the respondent paid the applicant, ostensibly in exchange for access to the centre and administrative services. Certainly, there was no agreed salary, wages or commission. Additionally, this was not a profit-share arrangement, but rather a lump sum, agreed in advance, and payable by the respondent on a fortnightly basis. Moreover, Dr C did not know how much the respondent earned and exercised no control over it. He denied even having any knowledge of the applicant’s fee structure until after the respondent left in March.[30] On any view, such an arrangement is not consistent with an employment arrangement.
[30] Transcript of proceedings 24 January 2019 page 46 [21]-[22]
104.However, the situation is perhaps not that simple. The respondent was certainly remunerated for his work, and remuneration need not necessarily be paid by a person’s employer. The usual example of such a third-party arrangement is labour-hire, but certain sales professionals may, for example, be paid on a commission-only basis. Accordingly, it is possible to conceive of this relationship as a commission-only arrangement, under which the respondent was entitled to keep the entirety of profits above the “management fee” sum of $200,000 per annum (plus GST) as remuneration. This is, however, a rather tortuous characterisation.
105.Characterising this aspect of the arrangement as either an independent contractor arrangement or an employment arrangement is uncomfortable. It is perhaps more consistent with a partnership, but no party suggested that this arrangement was of that nature, and I do not intend to explore that any further.
106.On balance, the payment arrangement between the parties is indicative of some kind of a commercial contractual arrangement that is not an employment arrangement.
What is disclosed in the tax returns?
107.The respondent made his own tax arrangements and engaged an accountant. He had not completed his tax return for the 2018 taxation year, so there was no evidence before the Tribunal as to how he characterised income from the contractual arrangement with the respondent.
Is the applicant a representative of the business?
108.The respondent used the centre’s business cards and letterheads, and had an email address with its domain name. Invoices went out under the centre’s letterhead, and for some time at the beginning of the arrangement, they even had the centre’s ABN and banking details.
109.Dr C explained that the use of the computer system and database was necessary due to security and privacy issues — the database being a secure platform, and also being linked to the Tyro payments system. The respondent was required to use the centre’s account at the commencement of the arrangement, but once the respondent established his own account, most payments went directly to him, although some government payments went through the centre.
110.This factor is not determinative of either arrangement. Clearly, the respondent was both representing the centre, and attempting to establish his own name, but he was doing so under the auspicious of another entity, whose name was promoted conjunctively with his own. Still, it is probably more indicative of an employment arrangement than a contractual one.
Goodwill
111.If the work undertaken is likely to enhance the value of the worker’s own business, this is evidence of the contractor relationship.[31]
[31] Yaraka Holdings Pty Ltd v Giljevic [2006] ACTCA 6
112.The goodwill developed in this case appears to have been shared between the applicant and the respondent practitioner, with good reputations and strong client relations clearly being of benefit to both parties. Ultimately, however, the relationships with the patients were acknowledged as being the property of the respondent, and the applicant facilitated the transfer of those arrangements to the respondent after he left the practice. This is indicative of an independent contractor arrangement.
Expectation of work
113.The respondent was expected to obtain his own referrals, but was given business support by the applicant in order to establish his practice and reputation. There appears to have been an expectation of cooperation or mutual endeavour in obtaining clients, but the respondent was not entitled to assume that the applicant would provide him with work. Patients were always referred to a named practitioner, not to the centre, and the management fee appears to have been payable no matter how many patients the respondent saw. This is indicative of a contractor arrangement.
Risk and liability
114.The respondent held his own liability insurance. However, the applicant bore some reputational risk, and Dr C may also have borne some liability through his professional obligations, both as a registered medical practitioner and as a director of the applicant. Again, this is a difficult factor to apply to the circumstances of this case.
Was the respondent running his own business?
115.In broad terms, a genuine ‘independent contactor’ is running their own business — albeit, sometimes only a small one — while an ‘employee’ is working for their employer’s business. This test can be relatively straightforward when a person is working for many parties, but is a more difficult to apply where, as here, the worker is providing personal services to a single principal.
116.It is not possible to exhaustively enumerate the facts and circumstances which will support the inference that a course of activity is a business.[32] It can be particularly difficult to identify the characteristics of a business where there is a small-scale enterprise and the work is performed by a single person. Moreover, many of those circumstances are the same as those set out above, anyway. As the Federal Court observed in Quest:
Of central concern to the issue which arises here are the characteristics of a business in which personal services are provided either entirely or predominantly by the business’s principal or owner. That kind of business is more likely to have a simple and less sophisticated structure. Nevertheless, even a small, simple commercial enterprise will have some of the fundamental hallmarks of a business, even though they may be modest or muted. The pursuit of profit is at the core of entrepreneurship and to be regarded as one of the primary hallmarks, if not the primary hallmark, of a business. A commercial enterprise, no matter how small, is an undertaking in which time, money, and effort are risked in the hope of making a profit. Unlike the employee, who will be content to be remunerated with a wage which reflects the value of the personal services provided, the entrepreneur providing commercial services will want to be remunerated by making a profit. In pursuit of a profit, the independent contractor will not merely seek remuneration commensurate with the value of the personal services or work provided, but will want a return on the risk and expense involved in running a business.[33]
[32] London Australia Investment Company Limited v The Commissioner of Taxation of the Commonwealth of Australia [1977] HCA 50 [22]
[33] Quest [181]
117.The facts here indicate that the respondent was engaging in a commercial enterprise in which his own time was expended in exchange for profit, rather than remuneration. The fee he paid to the applicant was a set fee, and apparently payable no matter whether he was successful or not. The respondent bore most of the risk but also stood to gain any profit, including windfall profits above the management fee. This is indicative of an independent contractor arrangement, rather than employment.
Conclusion on the employment issue
118.On the evidence before the Tribunal, and having regard to all the factors considered above, I am satisfied that the relationship between the parties was not an employment arrangement. While some of the borders between the various aspects of the parties’ arrangements were uncertain, the arrangements were sufficiently clear that I can comfortably conclude that, as at the time it was terminated, the relationship was a non-employment commercial contract between two principals. I do not need to characterise the arrangement beyond that.
119.However, it is also clear that the boundaries between the applicant’s business and the respondent’s were imprecise. The respondent was very much operating under the applicant’s business name. He was a representative of the business. He used the applicant’s business card and letterhead and operated under their marked premises. The relationship was clearly mutually beneficial, or at least was intended to be. Dr C saw his role as a mentoring one, and he did guide and direct the respondent. There may have been a certain degree of control, and perhaps even a growing degree. It is not beyond the realms of possibility that the relationship may have transformed into an employment arrangement given more time and increased intervention by Dr C. However, the parties were a long way from that at the time the arrangement ceased and when the management fees fell due.
A side issue: Is this a commercial lease?
120.I note, for completion, that following the conclusion of the hearing, the Tribunal asked the parties to address, in their written submissions, whether this arrangement could be characterised as a commercial one under the Leases (Commercial and Retail) Act 2001 (the Leases Act).
121.This question goes directly to the tribunal’s jurisdiction. Under Part 14, section 144, of the Leases Act the Magistrates Court has exclusive jurisdiction to deal with “commercial leases” as defined in that Act, including, it would appear, exclusive jurisdiction in relation to the recovery of unpaid rent.[34] Consequently, if this matter involves unpaid rent under a “commercial lease”, it is not a matter over which this Tribunal may make any determination.
[34] Leases Act section 17, Table 17, item 5
122.“Commercial lease” is defined in section 12(1) (f) of the Leases Act to include “premises under a lease that are used to provide a combination of business accommodation and secretarial services.” If the Tribunal were to accept the applicant’s characterisation of the ‘facilities fee’, it potentially falls within this definition.
123.However, section 12(2)(c) of the Leases Act provides that the Act does not apply to a lease if “the lease is for less than 6 months, unless the lease is a continuous occupation lease”.
124.“Continuous occupation lease” is defined in section 10(1) as follows:
10 What is a continuous occupation lease?
(1) A continuous occupation lease is a lease for premises for a term of less than 6 months if—
(a) the tenant was in occupation of the premises with the owner’s consent when the lease was entered into; and
(b) the tenant has been in continuous occupation of the premises with the owner’s consent for at least 6 months.
125.On the undisputed evidence before the Tribunal, the parties agreed that the agreement would last for an initial period of three months. It in fact lasted for just short of six months. On the evidence it would appear that the condition precedent of an ongoing arrangement was dependent on the parties agreeing, after the initial three months, to enter into one. This did not occur. It any case, the total period during which the respondent has been in occupation of the premises was less than six months.
126.I am satisfied that this is not a commercial lease within the meaning of the Leases Act and the Tribunal has jurisdiction pursuant to its general civil jurisdiction to make a determination about the contractual arrangements between the parties.
Summary and conclusions on the employment contract issue
127.This matter has raised serious issues about the nature and extent of the tribunal’s jurisdiction.
128.In part, this uncertainty in the tribunal’s jurisdiction is a consequence of the parallel uncertainty in the terms of the arrangement between the parties. Dr C admitted under cross-examination that if he were to repeat the arrangement he would get a proper contract in place. This is prudent, lest this kind of dispute happen again.
129.However, the other part of the uncertainty stems from the tribunal’s statutorily—based civil claims jurisdiction, and the complicated interaction between that jurisdiction and the FW Act. I am satisfied that the tribunal has jurisdiction to hear a debt application brought by an employer against an employee, subject to the jurisdictional limit of $25,000. However, it is not unusual — and indeed, it is likely commonplace — that such claims will involve counter-claims by employees, or at least considerations about terms and conditions of employment established by federal instruments, and the tribunal will, in such cases, likely not have the authority to determine the whole of such a matter.
130.In this case, however, I am satisfied that the Tribunal may, as a facet of determining its jurisdiction, make a finding as to the nature of the contractual arrangement between the parties. The situation is a potentially messy one, and there is some risk that the facts of this matter may also be subject to adjudication in another forum, albeit under a different legal framework, but the Tribunal must exercise the jurisdiction that it has, and therefore the Tribunal must decide whether it has jurisdiction. It cannot avoid that question simply because it is complicated or (without more) because it may be more conveniently determined elsewhere.
131.Nonetheless, the respondent’s proposed solution to this matter is a good one. An ability for the tribunal to refer proceedings to another forum, such as the Magistrates Court, with the capacity to hear more of the dispute, would go some way toward resolving this issue.
Issue 2: The fairness argument
132.Much of the respondent’s evidence went to the alleged unfairness of the arrangement. It is outside the scope of this tribunal’s jurisdiction to review the fairness or otherwise of the arrangement and therefore I have not considered this issue.
The applicant’s application for costs
133.The applicant sought an order for costs incurred by reason of the late amendment of the respondent’s response, and the alleged unmeritorious nature of that response.
134.In many forums, where new arguments are raised late as they were here, there may be costs ramifications for the party who raises them. However, the tribunal’s costs power is limited to those circumstances set out in section 48(2)(b) and (c) of the ACAT Act.[35]
[35] CIC Australia Ltd v ACT Planning and Land Authority, Mainore Pty Ltd and ACT Civil and Administrative Tribunal [2013] ACTSC 96
135.Relevantly, section 48(2)(b) provides that:
if the tribunal considers that a party to an application caused unreasonable delay or obstruction before or while the tribunal was dealing with the application—the tribunal may order the party to pay the reasonable costs of the other party arising from the delay or obstruction.
136.Such orders are made sparingly. In Barker v Plunkett & Anor Trading as M& J Plunkett Builders (Plunkett), the Registrar made the following observations in relation to costs orders:
There must be something to depart from the general rule, which is each party bears their own costs. There are some limited circumstances where a costs order is appropriate, for example, there has been unreasonable delay or obstruction. When looking at this provision, the ordinary meaning of ‘delay’ and ‘obstructs’ is to be used. Delay is relevantly defined as: “make (someone or something) late or slow” and “postpone or defer an action”. Delay must be unreasonable and “can be minor or occur unintentionally and/or unavoidably.” ‘Obstructs’ is relevantly defined as “prevent or hinder (something or someone in motion)” and “deliberately make (something) difficult”.
…
It is unfortunate that the respondents have now accrued costs in these proceedings that exceed the value of the applicant’s claim. However, it does not follow that costs can or should be awarded against the applicant solely on that basis, even when the application … was not successful … Smith v J&C Whyte Family Trust & Anor [[2016] ACAT 132]provides that ‘delay’ or ‘obstruction’ in section 48(2)(b) of the ACAT Act does not encompass an unmeritorious action, or bringing an action that amounted to bad faith or abuse of process.[36] [footnotes omitted]
[36] [2018] ACAT 9 [33]-[35]
137.Plunkett involved an application to re-open proceedings. Nonetheless, I echo the Registrar’s sentiments in that case here. It is unfortunate that these proceedings have been so protracted. It is unfortunate the respondent’s first response was not reflective of his ultimate defence. It is unfortunate that the applicant was put to additional expense in responding to the amendment response. However, such matters do not, without more, warrant a costs order.
138.This tribunal — particularly when sitting in its small claims and civil jurisdiction — is intended to be quick, efficient and amendable to self-represented litigants. It is important that people be able to bring and defend claims here without the expense of engaging legal representatives themselves, or the fear of having to pay for someone else’s. That principle applies even if the defence is not strong, and is ultimately not successful. The applicant in this case chose to engage legal representation prior to commencing proceedings. The applicant’s advocate was at all times professional, and her assistance was much appreciated by the Tribunal, but ultimately the decision to engage her was a commercial decision for the applicant, one presumably made with knowledge that those costs were likely not recoverable. There is nothing in this case to justify a departure from the usual rule that each party bear their own costs, and I decline to make any costs order.
Conclusion
139.The respondent admits the quantum of the debt as alleged, subject to any findings that it was contrary to an employment arrangement, or unfair pursuant to the IC Act. Having regard to my conclusion that the respondent is not an employee, and that the Tribunal has jurisdiction to hear the debt claim, I will order that the respondent pay the debt claimed.
140.Accordingly, the Tribunal orders that the respondent is to pay the applicant the sum of:
a)$25,000; and
b)$1,508.63 interest in accordance with the ACT Civil and Administrative Tribunal Directions 2010 (No 1) and the Court Procedures Rules 2006; and
c)$300 tribunal filing fee.
………………………………..
Senior Member H Robinson
HEARING DETAILS
FILE NUMBER:
XD 589/2018
PARTIES, APPLICANT:
The Specialist Centre
PARTIES, RESPONDENT:
The Medical Practitioner
COUNSEL APPEARING, APPLICANT
N/A
COUNSEL APPEARING, RESPONDENT
N/A
SOLICITORS FOR APPLICANT
Trinity Law
SOLICITORS FOR RESPONDENT
Australian Medical Association
TRIBUNAL MEMBERS:
Senior Member H Robinson
DATES OF HEARING:
24 January 2019
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