ZG Operations Australia Pty Ltd & Anor v Jamsek & Ors

[2021] HCATrans 139

[2021] HCATrans 139

IN THE HIGH COURT OF AUSTRALIA

Office of the Registry
  Sydney  No S27 of 2021

B e t w e e n -

ZG OPERATIONS AUSTRALIA PTY LTD (ACN 060 142 501)

First Appellant

ZG LIGHTING AUSTRALIA PTY LTD (ACN 002 281 601)

Second Appellant

and

MARTIN JAMSEK

First Respondent

DANIEL CIVTANOVIC AS TRUSTEE FOR THE BANKRUPT ESTATE OF ROBERT WILLIAM WHITBY

Second Respondent

STEPHEN HUNDY AS TRUSTEE FOR THE BANKRUPT ESTATE OF ROBERT WILLIAM WHITBY

Third Respondent

KIEFEL CJ
GAGELER J
KEANE J
GORDON J
EDELMAN J
STEWARD J
GLEESON J

TRANSCRIPT OF PROCEEDINGS

AT CANBERRA ON WEDNESDAY, 1 SEPTEMBER 2021, AT 9.59 AM

Copyright in the High Court of Australia

____________________

KIEFEL CJ:   Justices Keane, Edelman and I are sitting in Brisbane, Justices Gageler and Gleeson in Sydney and Justices Gordon and Steward in Melbourne.  In accordance with the remote hearings protocol, I will announce the appearances for the parties.

MR S.J. WOOD, QC appears with MR D. TERNOVSKI for the appellants.  (instructed by Agnew Legal)

MR N.C. HUTLEY, SC appears with MS R.S. FRANCOIS and MR A.D. CROSSLAND for the respondents.  (instructed by Watson Law)

The amicus curiae, the New South Wales Business Chamber Limited, is not appearing, but the Court has received its written submissions.

KIEFEL CJ:   Yes, Mr Wood.

MR WOOD:   Thank you, your Honours.  We listened to the debate yesterday and we wish to start our oral submissions by making two basal points.  The first is the Fair Work Act is facially neutral when it comes to the question of how work should be categorised in a legal sense, that is, work might be regarded as the work of a volunteer, the work of partners in a partnership, it might be the work of an officeholder.  The Fair Work Act treats the common law characterisation of an employee – that is, work done by a person which the common law would regard as employment – as something anterior to the operation of the Act – that is, once that categorisation has occurred, the Act operates, generally speaking.

The second – and this relates to the way in which the appeal has come before this Court – is that the applicants at trial presented a case which stated that all the work that the individual drivers had performed during a period of 40 years for the purposes of the long service leave claim and 31 years for the purposes of the other claims was work performed as employees.  That claim was met by the respondent by saying that legal categorisation of that work is wrong.

Now, the respondents could have stopped there and simply said it was wrong, but they went on to posit a positive case, that is, they said that all that work that the applicants claim is work performed as employees was work performed on one of two bases, that is, during the period when Mr Whitby was a natural person from 2012 to 2017 working other than through the former partnership that he had, it was work that should be categorised as pursuant to a contract for services, an independent contract.

All the other work performed by the drivers on behalf of the Jamsek partnership and the Whitby partnership should be characterised as work performed by them pursuant to the contracts between those partnerships which would be regarded, both of them, as contracts for services.  That is how the debate was framed below, and that is how the case was run, and those are the facts upon which this appeal is based. 

Now, in framing those issues for trial, both parties accepted that the way in which one characterises the work that was performed by reference to the common law tests for determining whether one is an employee or not require, mandate a consideration of the whole relationship between the parties.  That proposition is anchored in authority of this Court that stretches back some 70 years, and you will recall yesterday when our learned friend, Mr Walker, took the Court to R v Foster and referred to what you might call the basal authority for that proposition.

In terms of that proposition, neither party at trial nor on appeal, nor in this Court, has tried to confine the consideration of the relevant facts according to some other test or in some narrower basis, that is, there is no issue, and there was no issue at trial or on the appeal that suggested that the facts that the trial judge considered, nor those that the appeal court considered, should have been more confined, to use the observation of Justice Gordon yesterday, on a more confined temporal basis.  That issue does not arise here in this Court.

Now, related to that is, of course, the fact that the work that was performed and is said to give rise to rights under the Fair Work Act, and perhaps its predecessor, and also awards made under the Fair Work Act, was identical to the work that was performed by the partnerships, and by Mr Whitby directly, which was treated as income of the partnerships, or business income of Mr Whitby, and for which invoices were issued and in relation to which expenses were claimed.  That is, to pick up the observation of Justice Gordon yesterday, there was no Monday and Tuesday issue in this case.  It is a binary question about whether or not the work that was performed should be characterised as giving rise to an employment relationship or one of independent contract.

It seems, and I do not want to put words in my learned friend Mr Hutley’s mouth, it seems that that proposition is accepted.  It was not accepted at the time of our reply but looking at the three‑page outline of argument it seems that it is accepted that that work must be characterised either as work in the business of the partnerships or Mr Whitby, or work carried on by them as employees, that is, there is no dual character to that work. 

The way we put the proposition, and this is set out at 1.3 of our outline, is that the test that we posit is not a substitute for the multifactorial test.  No one is challenging the application of the multifactorial test in this case, no one did below in the Full Court, and no one at trial.  Similarly, no one challenged the totality of the relationship approach, that is, assessment of all the facts. 

All that we say is that on these facts, where the work must be classified in that binary nature we referred to, one way of expressing the ultimate question is to ask is the work being performed by the drivers as employees or are they performing it in the running of their own business?  If the answer to that question is yes, that is, the latter part of that question, the work is being performed in the running of their own business, then that negatives the proposition advanced by the applicants at trial that they were employees.  That is, the respondents have proved their case that it is not employment, which is all they have to do.

We would go further and say if that work performed by the drivers was work wholly performed in the running of their own business, and on the facts there is no other work, they are therefore independent contractors.  They are both not employees and independent contractors.  We do not argue – and the facts that would require some consideration of the converse are not before the Court in this case, that is, we are not dealing with the situation where it is not a fact as found and unchallenged that the drivers were running their own business.

You will recall Justice Keane questioned counsel for the respondents yesterday by referring to ways in which the labourer in that – just excuse me, your Honours, I have a slight technical issue which I will – I am sorry about that, the video just dropped out for a moment.  You will recall yesterday Justice Keane asked counsel for the respondents a question about whether or not the labourer could be said to be an independent contractor, notwithstanding that he possessed no special skill, he was not I think the phrase was a man with a plan, he was not a manager or a supervisor.

The possibility exists, we would accept, that someone could prove if the facts were there to try to defeat a claim that they were an employee that they were in fact an independent contractor and yet failed to prove that they were running a business, the sort of things that Justice Keane was referring to yesterday.  But if they do prove that they were running a business ‑ and the facts are binary in the sense that they are in this case, the overlap is complete ‑ well, that is the end of the inquiry, in our respectful submission, but that is the individuals were running their own business and performing work in that business.  There is nothing unusual or untoward.  It seems to us quite consistent with the authority in this Court, that is, the organising principle, and the result that one would expect. 

That dichotomy, as we have expressed it, was rejected by the Full Court.  They said it is not the central inquiry.  That might be true for the reasons I have just given.  It might be there are other facts where you do not inquire into that situation, but they then went on to say it is not necessarily decisive, but it is decisive in the facts of this case and it must be so.

Once those propositions are understood, as we have set out in points 1.1 to 1.5 of our submissions, and having regard to the fact that it is uncontested in this Court and was uncontested below in the Full Court that the respondents were running their own business, unless the Court was minded to reconsider those facts – that is, that conclusion, which is not challenged – we say that is the end of the matter.

If the Court was minded to allow our learned friends to challenge the proposition that the partnerships are running their own businesses, which they have not below and they do not appear to be doing here, then we have set out a number of facts that lead to a conclusion both, if we are right, that the partnerships were indeed running their own businesses, and Mr Whitby as an individual, and if we are wrong that those facts, having regard to the test that ought be applied – that is, the traditional tests – that those facts would lead to a conclusion that the drivers were not employees.

It is a little bit hard to read body language over this system and I am prepared to go through those facts as we have listed them in point 2 of our outline.  There are quite a number of them.  They are not contested to any significant degree.  The underlying facts are not contested.

EDELMAN J:   Mr Wood, before you start going through the facts, could you explain how you position the facts ‑ in other words, what role the facts have to play in the context of the test of running one’s own business that you pose?  You will have heard yesterday there was some discussion, for example, about what Justice Gordon referred to as “the temporal question”.  If, for example, there are terms of the contract which might be inconsistent with subsequent facts about how the parties are conducting their affairs, does the Court have regard to the term of the contract or the subsequent fact, or there might be facts that are not contained in the contract and may not even be known to the principal.  Does the Court have regard to those facts in characterising the relationship and so on?

MR WOOD:   Yes, your Honour.  The answer to both those questions is yes.  The best place to start is perhaps the decision of this Court in Hollis v Vabu 207 CLR ‑ ‑ ‑ 

GORDON J:   Mr Wood, before you do that, can I just ask one more question about that factual analysis which you might address when you take us to Hollis.

MR WOOD:   Yes, your Honour.

GORDON J:   If, as I understand the position you are going to take us to in relation to Hollis where it talks about not being limited to contractual terms, can I ask a temporal question here specifically because, as I understand the facts, the period of the claim in relation to the fair work is for the period from 1993 onwards.

MR WOOD:   That is subject to the limitations provisions, yes, your Honour.

GORDON J:   Yes, that is why I am asking.  What is the actual period of analysis we are looking at here, because in addition to the matters raised by Justice Edelman, having regard to the debate yesterday, do we start at 1993 here, do we start at the period that would be the subject of the limitation period, do we ignore the history, which this entity, ZG Operations, had nothing to do with?

MR WOOD:   Well, there are six individual claims, and the time period over which the facts are relevant differ.  For example, the long service leave claim stretches back to 1977 and includes a period where, on both parties’ submissions, the individuals were employees, and then it tacks on the next 31 years.  The annual leave claim stretches back 31 years through to – back to 1986.  The overtime claim stretches back only six years because of the limitations provisions in the Act.  The public holidays claim stretches back only six years, because of the limitations provisions in the Act, and the redundancy claim is based upon the situation as it pertained as at January 2017.  The superannuation claim, the last one, I cannot really say very much about, but presumably it goes back to 1991.  Does that answer your question, your Honour?

GORDON J:   We will have to deal with it later, but I do not understand that – I had thought that the appeal from the primary judgment was a complaint about certain periods of time which were much more limited in their focus, and so – I may have misunderstood the claims themselves, but let us put it to one side, and we will deal with the authorities.

MR WOOD:   I see my learned friend, Mr Hutley, nodding at your Honour’s question, your Honour, and maybe when he comes up to address he will say that they are more limited.  I am simply basing that on the case as it was presented at trial and also the quantification extends to over a million dollars, around half a million dollars each because it stretches back over those periods of time.

So, unless there is going to be some suggestion that the quantification of the claim has been reduced that, as we understand it, is the arena in which the plaintiff has said that they wish to fight this case.  On remittal, if the case was remitted back to the primary judge by the Full Court without this Court interfering, I cannot see how we would be able to say that those claims have been somehow limited, either in time or amount.

GORDON J:   We will move on, but I would raise for you what appears at core appeal book 63 where the grounds of appeal from the primary judge to the Court of Appeal set out particular identified periods.  That is what I had in mind.  I do not mean to seek to delay the Court.

MR WOOD:   Thank you, your Honour.  Getting back to Justice Edelman’s question, in Hollis v Vabu 207 CLR 21, dealing with what we might call the temporal point – at paragraph 24 the majority refer to the way in which the assessment should be carried out and at the bottom of 24 you will see the majority say:

It should be added that the relationship between the parties, for the purposes of this litigation, is to be found not merely from these contractual terms.  The system which was operated thereunder and the work practices imposed by Vabu go to establishing “the totality of the relationship” between the parties; it is this which is to be considered.

and the reference in the footnote is back to Justice Mason’s decision in Stevens v Brodribb Sawmilling.  Then at paragraph 42 of the majority decision, there is a reference to – I beg your pardon, in the middle of paragraph 47 you will see:

Viewed as a practical matter –

echoing the sort of things that the majority in R v Foster were talking about:

the bicycle couriers were not running their own business or enterprise, nor did they have independence in the conduct of their operations.  A different conclusion might, for example, be appropriate where the investment in capital equipment was more significant, and greater skill and training were required to operate it.  The case does not deal with situations of that character.  The concern here is with the bicycle couriers engaged on Vabu’s business.  A consideration of the nature of their engagement, as evidenced by the documents to which reference has been made and by the work practices imposed by Vabu, indicates that they were employees.

Now, the Court will recall that the footnote reference to Justice Mason’s decision in Stevens v Brodribb 160 CLR 16 - and perhaps I can go there next – in the discussion by Justice Mason – or the conclusion at page 29 is at the bottom of the first full paragraph on page 29 where his Honour says:

control is not now regarded as the only relevant factor.  Rather it is the totality of the relationship between the parties which must be considered.

If one moves back from that conclusion one can see that at pages 24 through to 26 there is reference to – and it starts at the bottom of 24:

Much of the evidence at the trial was directed to determining the precise nature of the relationship between Stevens and Brodribb and Gray and Brodribb.

One of the references that is made is to both men having extensive experience in the timber industry.  Then over onto 25 - and this answers Justice Edelman’s question to an extent - one of the factors that is taken into account by Justice Mason and also by Justices Wilson and Dawson, is the fact that the profit and loss accounts for two financial years, 1977 and 1978, showed the ratio of his expenses, that is Stevens’ expenses to his gross income to be approximately 71 per cent. 

That is not evidence of any mutuality as between Brodribb and Stevens, the sawmilling company and the carter.  That is something that is independent of any contractual analysis but goes to the relationship, something that Justices Wilson and Dawson put some weight on because not only was this considered but the significant nature of that ratio of expenses to income was held to be important in the application of the multifactorial test.

Going down that page at 25 you will see that there is evidence, including evidence of what other carters and fellers did.  You will see in the middle of that page that there is evidence some truckdrivers – that is, not Stevens and Gray – carried on business in partnership with their wives, but this was not the case with either Stevens or Gray.  Then throughout that paragraph the evidence that is collected there is collected by reference to the conclusion at 29 – that is, the relationship that this evidence shows existed as between Gray and Stevens on the one hand and Brodribb on the other.

Although our learned friend, Mr Blackburn, suggested that the case somehow dismissed or should be taken to have dismissed the idea that the question of whether or not these individuals were running their own businesses was somehow irrelevant, that is now how the case was framed.  The case was framed on the basis that the individuals in that case tried to take advantage of Lord Denning’s so‑called organisation test, which is a test that says if you are part and parcel of an organisation you are therefore and employee.  That test was rejected by Justice MacKenna in the Ready Mixed Concrete Case and it was rejected here by Justice Mason.

You will see, at the bottom of page 27, the organisation test – sorry, on page 26, after the facts are discussed.  It was in relation to the question whether Gray was an employee or an independent contractor.  It was submitted on behalf of Stevens that regard should be had to the so‑called organisation test.  That test is then described in 27:

In the present case it was argued that Gray was part and parcel of Brodribb’s –

I am sorry, did I just cut out then?

KIEFEL CJ:   Yes, you did go awkwardly quiet for a moment.

MR WOOD:   I wonder, did I – I was at 27, where I was referring ‑ ‑ ‑ 

KIEFEL CJ:   Yes, you had just mentioned 27 and then you cut out.

MR WOOD:   Thank you, your Honour:

In the present case it was argued that Gray was part and parcel of Brodribb’s organization in that his snigging activities were integral to the supply of timber necessary for Brodribb’s sawmilling operations at Orbost.

That is Lord Denning’s organisation test, the so‑called part and parcel test, a test that was rejected by Justice Mason.  If it was applied in our case, the part and parcel test, no doubt the applicants would win, but that is not the test.  Then Justice Mason goes on and discusses the organisation test, dismisses it, and concludes at 29, which is where I started, that is:

the totality of the relationship between the parties must be considered.

Justices Wilson and Dawson do much the same thing.  Now, the basis – sorry, your Honour.

EDELMAN J:   Mr Wood, I am struggling to understand how factors to which you refer which are unilateral apply only to one party and which may not be or are not known to the other party can be factors about their relationship.  They are not in relation with each other.  How do matters that are unique to a particular party, particularly those that are not known to the other party, inform the relationship?

MR WOOD:   Well, your Honour, that is an approach that the Privy Council took in the Chaplin Case, and also in the Narich Case which followed shortly thereafter, to refer to the sort of what you might call post‑contractual conduct, or even the type of facts that exhibit no mutuality at all, as irrelevant to the question of whether or not the contract had been varied post‑fact, but that is not the approach that this Court has taken. 

It is simply an approach that is available and has not been adopted, because this Court focuses in – that is, this Court, revealed by the authority of this Court, focuses upon the reality of the situation, that is, were Stevens and Gray operating businesses?  What were the facts governing them and the way in which they operated which would allow the Court to objectively consider whether or not the relationship between Brodribb, the sawmilling company, and Stevens and Gray, should be treated as one of independent contractor and principal, or one of employee and employer? 

EDELMAN J:   Just so I understand then, you say it is the factual relationship but not the legal relationship, at least if they are inconsistent, so that if a contractual term provided for the – the parties would conduct themselves in a particular way and have a particular type of obligation to each other and it happened that, without variation, without waiver, on a number of occasions they had not performed in that particular way, one would look to the facts and not to the legal relationship, as I understand your submission.

MR WOOD:   One would look to both, your Honour, depending upon all the facts.  One might say, for example, that because a right was never exercised that that means one of two things:  that there has been some change to the relationship or, alternatively, that freedom was never taken up.  It would depend upon the circumstances and the particular facts of the case, but that characterisation is available in relation to those what we might call post‑ contractual facts.

GAGELER J:   Mr Wood, I am looking at page 27 of Stevens v Brodribb.  After the reference at about point 8 of the page to Montreal, Justice Mason says:

For my part I am unable to accept that the organization test could result in an affirmative finding that the contract is one of service -

On one view, what his Honour was doing in his judgment was seeking to characterise the contract in a very informal contracting setting as a contract of service or a contract for services, in the traditional parlance.  What is wrong with that analysis of the case?

MR WOOD:   Because the facts that were taken into account by both Justice Mason and by Justices Wilson and Dawson went beyond, for the reasons that Justice Edelman has indicated, beyond those facts that you take into account even in trying to determine the contractual terms of an informal or a very informal relationship because it looks at the position, for example, of the tax treatment by one of the parties of the expenses in running their own operation.  It is hard to see, even in the most informal contract, how that could be relevant to the questions of mutuality.

GAGELER J:   Can I just ask a temporal question?  When I say “temporal”, I mean the sequence of authority.  Before Stevens v Brodribb, was there case law that stood for the proposition that one is characterising a relationship that is broader than a contractual relationship?

MR WOOD:   The best we can find, because there is no reference by way of a footnote in that part of Justice Mason’s decision, in terms of the basis for that proposition goes back to the majority in R v Foster, the observations that this Court made in that case.  Of course, there is a more recent authority of this Court, Hollis v Vabu, where what I have indicated occurred in Stevens v Brodribb happened in that case.  The work practices were had regard to whether or not – there was no suggestion in Hollis v Vabu or in Stevens v Brodribb or indeed in R v Foster that somehow there should be some limitation upon the receipt of this extra contractual material because it is irrelevant to the assessment by the Court.

STEWARD J:   Mr Wood, is your case really this, that if it is found in relation to the undertaking of work that it is being undertaken as part of a person’s business, then it is legally impossible to say in relation to the undertaking of that work that they are an employee?

MR WOOD:   That is quite right, your Honour.

STEWARD J:   The question of whether of you are in a business is a question of fact, which has been said repeatedly by this Court, in other contexts, and you look at anything that bears upon that proposition, and even with limitations or periods of claim, it may still yet be relevant to look at the inception of the business and the reason why it was formed, and all of that is relevant to your factual proposition, “I am undertaking a business in relation to the undertaking of this work”.  Is that right?

MR WOOD:   That is quite correct, your Honour, and that is what happened in Stevens v Brodribb because that examination – the examination took place, both of the business of Stevens and Gray and the business of Brodribb before and after the entry into the arrangements that the sawmilling company had with each of them, and similarly, in Hollis v Vabu, and if we go back to ‑ ‑ ‑ 

GORDON J:   Just before you leave Stevens, Mr Wood, can I ask this question?  I had understood that in Stevens one of the reasons for the broad inquiry was there were no written terms.

MR WOOD:   That is true, your Honour, that is true.

GORDON J:   In contradistinction to the position here.  So, in other words, one of the reasons for the inquiry, because it was alleged to be a relationship by conduct.

MR WOOD:   There is no question that that is true, your Honour, but that does not – that observation does not apply to R v Foster nor Hollis v Vabu.  In both of those cases there were written contracts.  In R v Foster the reason the award was not quashed was because there was extra contractual evidence that suggested that the contract did not, to pick up the wording of the majority, reflect the real relation between the parties.  In Hollis v Vabu the contract was not the be‑all and end‑all, it was the work practices and the system of work. 

KIEFEL CJ:   But in more traditional contractual terms, Mr Wood, would the inquiry not be, in the first place, to the background to the contract which is entered into between the parties, that is, the circumstances leading to it, and then, if it is completely in writing, you might look to subsequent circumstances to see if there has been any variation of the written terms.  If it is partly oral and partly written, then you need to synthesise the terms, and you might look to conduct to assist in that process.  Where it is completely at large, of course, you would look to how the parties conducted themselves, from which you infer the terms, but whichever way one looks at it, the contract is front and centre to the inquiry of the Court in relation to the relationship between the parties, is it not?

MR WOOD:   That is quite true, your Honour, it is a very important consideration.  But because in this type of case one is dealing with the proposition, first advanced by the majority in R v Foster - the possibility the contract – and I am quoting from page 153, I will come to R v Foster eventually:

the contract . . . does not represent the true relation and is nothing but an attempt, by means of a form, to escape industrial regulation is no new thing.

Now, that is the basis upon which the majority said that you have to look at what happens in practice.  You have to look to see whether or not – what the reality of the relation is in practice.

EDELMAN J:   Mr Wood, that is really just polite language for a sham - the contract is expressing in words and in form a relation which does not bear the true relation by which the parties have organised their affairs.

MR WOOD:   Well, it could mean that, your Honour, but it has been taken to deal with the situation where in a relationship, particularly a relationship of longstanding, the facts that give rise to the position during that relationship of one party to another post‑contract are relevant to assessing, objectively speaking, what the legal characterisation of that relationship is, partly for the reasons that Justice Steward gave, that is, looking at it with a business lens, and partly because the Court looks at or tries to assess at the point of time of assessment, looking back, what the real relation is. 

Now, that is not just in a sort of Connelly v Wells situation where there is great informality about the contract, that includes cases where the written contract is the substantial formal document creating the relationship.

GAGELER J:   Mr Wood, can I ask how this submission squares with the recent holding in Rossato?  For my part, I would find it a little odd if you look beyond the contract to work out whether an employment relationship exists, or another way of putting it, beyond the contract to work out whether the relationship that exists is one of employment or not, that then you look only to the contract to determine what sort of employment relationship it is, which as I understand is the holding in Rossato.  How do you square those two?

MR WOOD:   In Rossato, what was attempted to be argued was that the law as it pertained to the assessment of whether someone is an employee or an independent contractor should be applied to the assessment of whether someone is a casual employee or not.  The law that applied in relation to the assessment of whether someone is an employee or an independent contractor had for a very long period required a set of what we might call extra contractual facts.  That was the argument that succeeded at trial and at the Full Court.

In trying to apply that argument to the separate question of whether someone was a casual employee or not, the argument fixed or focused upon whether or not there was a firm advance commitment – I might not have the phrase exactly to hand – but it focused upon whether or not there was a firm advance commitment of work – that is, the agreement between the parties and the way they litigated that case focused on the question of whether or not at the time of contract such a commitment existed.

That says nothing about whether or not what you might call the time‑honoured method of assessing whether or not someone is an employee or an independent contractor should be discarded.  It might be discarded and it is possible to argue, as we are having this argument now, that the facts to which the Court should pay regard should be more limited, but if one does that and simply looks at the contract itself and not what happened thereafter, including the status of the persons who were contracting, then one will inevitably lead to a situation where the true position ‑ that is, the true legal characterisation of someone as an employee, a servant or someone independent – will be determined exclusively or to a very large extent by the contract and with the consequences that will flow from that.

GORDON J:   Mr Wood, can I ask about that.  If one accepts that employment is ordinarily a question of a relationship by agreement between A and B, which I think you accept, then we start with a contract.  You talk about the status of the person’s contract in being part of that - well, they are, they are a contracting party and they take on whatever form they take.  Why is it not consistent with ordinary principles of construction of contracts? 

One then says, well, I can lead evidence to adduce subject to the categories very carefully identified by the Chief Justice, to identify variation; I can, consistent with that approach to construction of contracts, adduce evidence which identifies the extent to which the parties, if not by variation - as Justice Edelman says, it is either polite sham or it does not, in its truth, now reflect the substance of the relationship between the parties, either giving rise to variation or some allegation of sham.  Does that not cover the field?

MR WOOD:   If you are saying, your Honour, that this Court could adopt a more narrow test for the reception of evidence on the question of whether or not a relationship should be construed as one of employment or one of independent contract, of course that is possible.  The Privy Council in Chaplin and in Narich suggested that that sort of approach that you have articulated, and the Chief Justice articulated, is the way in which this sort of assessment should be carried out, particularly in relation to the sort of situation we have now, a written contract.  But that is not how this Court has engaged in that process.

EDELMAN J:   Well, Mr Wood, putting aside some dicta which may be slightly looser in expression than they needed to be, what, as a matter of principle, is wrong with saying to parties, whether they be a putative employer or a putative employee, that you are able to gauge the very important characterisation of your relationship from the terms by which you have accepted obligations, but that things that the other party does, that you may not know about, will not affect the characterisation of your relationship?  What, as a matter of principle, is wrong with that approach?

MR WOOD:   For our part, we do not see any problem with that as a matter of principle, apart from the fact that you will, at the margins, and perhaps more than the margins, allow parties, by use of a contract, to define, amongst themselves, a relationship according to the terms of the contract that, on the current test, that is, looking at the whole relationship, it would not bear.

So as long as there is a recognition that that more limited approach to the assessment of this question could lead to circumstances where persons currently are regarded as employees, or independent contractors, and then they would be, under a more limited approach, regarded as contractors or employees, then that would be a perfectly principled way of approaching things, but for the fact there is no challenge to the way in which the approach has been carried out to date, either in this trial, the trial below, or in the Full Court, or in Hollis v Vabu, or in Stevens v Brodribb.  No party comes before the Court to agitate for a test which sees less evidence received.

Will a case bubble up to this Court at some point where parties agitate for a more strict rule about the reception of evidence?  Possibly.  Justice Gordon referred to yesterday questions of the gig economy.  Maybe someone will come and argue for that proposition at some point.

KIEFEL CJ:   Mr Wood, as I understand your case, it is not so much that the Full Court misstated any principle, it was in the application of the principles to the facts of the case where you say that their Honours fell into error.

MR WOOD:   That is true, your Honour, in both ways – that is, if we leave the ‑ ‑ ‑

KIEFEL CJ:   I was just going to ask you, could you identify where you say the Full Court fell into error in applying the principles to the facts of the case?  Can you summarise it?

MR WOOD:   Yes, your Honour, I can.  The first error, the one I articulated at the very beginning of this morning’s address, was to say that in effect the work performed in running a business, which is the exact work which is said to give rise to an employment relationship, the fact that that work was performed in running a business, a separate business, is not necessarily decisive. 

Paragraph 8 of Justice Perram’s decision with whom Justice Wigney agreed and Justice Anderson was less bold and said that that dichotomy that we posit may not represent a perfect dichotomy, but we say it does represent a perfect dichotomy.  Leaving aside the question of the reception of evidence and how one assesses the totality of the relationship, that is the first and fundamental error the Full Court made.

The second error, if we are wrong about that, is that the Full Court emphasised factors in the same way that this Court found that the Court of Appeal in Hollis v Vabu emphasised factors to too great a degree - emphasised the fact there was ownership of bicycles, emphasised the fact that the bicycle riders had to pay their own expenses. The error in this case by the Full Court was to emphasise the fact of, in Justice Perram’s opinion, there was no practical capacity to generate goodwill and therefore that was, in his Honour’s words at paragraphs 9 to 11, the most important element is the question of goodwill.

In terms of Justice Wigney and Justice Anderson, the errors that their Honours made was to place far too much weight, having found that individuals were running their own businesses, upon an expectation – is the way Justice Anderson refers to it; not a requirement – to wear clothing, to an expectation to display a company logo and to the fact of at least during some periods working a nine‑hour working day.  Now, those facts, the four of them to which I have just referred, your Honour, were given far too much weight in the overall assessment of the question.

KIEFEL CJ:   What you are pointing to then is that in the pursuit of this multifactorial approach that it is not clear to the courts below what to do with the multiple factors, when to elevate them, when not to, what to focus upon as more important than another.  That is where it is falling down.

MR WOOD:   That is certainly the case, your Honour, particularly when one ‑ ‑ ‑

KIEFEL CJ:   The word “multifactorial”, do we find that in High Court authority or is that something which has been created in the Federal Court?

MR WOOD:   I would have to check, your Honour, but it derives from the decision of this Court in Stevens v Brodribb.  It might go back earlier to – it at least comes from there, that one must look at ‑ ‑ ‑

KIEFEL CJ:   It was meant to describe the totality of the relationship.

MR WOOD:   That is correct, your Honour.

KIEFEL CJ:   They are not two separate approaches on the authorities, are they?

MR WOOD:   No, your Honour.  No, one looks at a range of indicia, which is I think the phrase that Justice Mason used, to assess the totality of the relationship, and when one looks at the type of indicia that the Court had regard to in Stevens v Brodribb they had regard to things that demonstrate control, the right to control and also what I might describe compendiously as business‑type activities on behalf of the putative employees.

Now, it is true to say, your Honour, that the decision of this Court in Hollis v Vabu, and the decision of this Court in Stevens v Brodribb, does not provide very much assistance in terms of the weighting of those factors, but there are some limitations, of course, given the facts are so often so different in these cases.

KIEFEL CJ:   Well, it is to be inferred from your arguments the two areas you first ‑ you point to, the first you say was to regard something as not necessarily decisive when it was, which points to an underlying theme there that you say that there are some things which are essential or fundamental in characterising the relationship.  In the second you, I think, might be taken to say that their Honours elevated what are perhaps peripheral factors and they failed to focus.  But somewhere in all of this is an argument, is there not, that their Honours failed to focus upon the more important features of the relationship?

MR WOOD:   That is quite correct, your Honour.  That is exactly correct.

KIEFEL CJ:   What would you identify as the critical features of the relationship here?

MR WOOD:   The critical features are the ones that led to the conclusion that the drivers were operating their own businesses, and those are the ones that we refer to at 2.1 through to 2.2.2.6, that is that the drivers, for 31 years, owned, operated, maintained, insured, repaired, replaced, in the Whitby partnership case, five trucks, three trucks and two utes, they were responsible for selecting the trucks, without any involvement of the companies. 

These were substantial assets, one of the trucks was valued at $70‑80,000 when purchased, another one at $70,000, and that fact, by itself, has proved very influential in all the cases involving owner drivers, from Humberstone, Marshall, Wright, Stevens v Brodribb, just by itself.  Just that one fact by itself was given very little ‑ ‑ ‑ 

KIEFEL CJ:   But is that largely because the – if one goes back to the contract between the parties, the other party knows, to take up Justice Edelman’s point, that the person they are contracting with has a truck and is providing the truck together with their services.  So at some point, are we going to have a look at the contract between the parties, rather than what the drivers actually did, on their own account?

STEWARD J:   I was going to add, on that issue, Mr Wood, is it not decisive to your case that, take the 1993 contract, which is said to be representative, it is a contract between a company and a series of partnerships who are running a business which is unchallenged, that is, it is not challenged that there are partnership businesses, and it is in that capacity that they agree to supply services.  Is that not really the critical thing here?

MR WOOD:   Both things are unchallenged, your Honour.  It is unchallenged that the partnership is running businesses, and it is unchallenged that the contracts were with the partnerships.  To our mind, we have not found any case where any situation of this nature, that is, partnerships operating businesses contracting with a principal, have been regarded as setting up an employment relationship.  It is not only critical, in our view it is decisive. 

When you start at the contract, it is a contract carriers’ arrangement between the partnerships and the company and it sets out that this contract is a contract carriers’ arrangement for general distribution, deliveries, redirections, pickups, exchanges to and from customers, and it was understood at the time of entry into the contract that each of the drivers would have a truck, each of them – that those trucks came, were purchased from the company for $15,000 and $21,000, that they would enter into a contractor arrangement.  They went to take advice from their accountants on it.  Their accountants suggested they set up partnerships, they did so.  They then entered into the contract and they bought the trucks and worked thereafter.

Although we have had some argument today about whether or not post‑contractual conduct is relevant to the assessment of the relationship, we would be happy to fight the case on what you might call the more narrow basis set out by the Privy Council in Chaplin and Narich because you only have to deal with the facts ‑ that is, the matrix of circumstances that govern the entry into the contract and the contract itself – to see that this case is not one of employment between Mr Whitby and Mr Jamsek and the company.  Just stop there; the case is over.

The reason that we have entered into the field of examining the relationship over 30 years is because the applicants wanted to, as is their right under the current authority of this Court, look at the way in which the relationship operated in practice as a way of saying that the relationship in truth should be regarded as one of employment.  But dealing with your question, Chief Justice, you could in effect stop there, in the first 10 lines of the contract.

GORDON J:   Mr Wood, because we have to write a judgment which extends or may have application beyond this case, if you stopped at the end of the first 10 lines of the contract and you were looking at it in terms of the question of statutory construction, then is it the fact that their partnerships jump out at you or is it a relationship between Thorn Lighting and J & J Saliba?  If that is right, does one then have to look at the other terms of the contract, upon which I think you rely at least in some way, to reach the conclusion they were not employees?

MR WOOD:   You know from the entry into the contract that there was a partnership.  It was set up at the instigation of the accountants of Mr Jamsek and Mr Whitby.  So there was a partnership.  It did enter into this contract carriers’ arrangement.  You do know, as part of the background material, that the parties regarded themselves in an employment relationship prior to that date and you do know that there was an attempt – it might not have succeeded – to change that relationship to one of contractor. 

Those are the matrix of facts that one would have regard to in construing the contracts but then when you go on and look at the terms of the contract you see that in clause 1b) they are able to work for other parties, that they will:

Comply with all Acts . . . relating to the registration, third party insurance . . . of the vehicle –

suggesting a relationship of independent contract.  Going back up to 1c):

To present an invoice for work carried out in the preceding week.

Down to 2c):

Pay all legal costs, such as tax and duty, payable in respect of the vehicle and keep the vehicle in a mechanically sound, road worthy and clean  condition.

Then over the page, 2d):

Be responsible for the vehicle equipment and gear -

Now, you do not have to go very far into this contract to say clearly, looking at the contract in the light of the circumstances governing its entry, this was a relationship of a contract for services between two partnerships and the company and not one of employment between Mr Whitby, Mr Jamsek and the company.

EDELMAN J:   Mr Wood, do you also say that in light of the factual matrix or circumstances, probably preceding 1993, that there is either an implied term or an assumption that the contractors will provide the vehicle?

MR WOOD:   Well, it seems that it is a contract for carriage, that it is based on the assumption that there will be a vehicle that is used for the carriage, and there are a whole lot of contractual promises to and fro about the use of the vehicle, the type of vehicle, the maintenance of the vehicle, including ‑ ‑ ‑

GORDON J:   Well, the pay rates in clause 7 are based upon trucks being over one year old with a carrying capacity of not less than five tonnes.

MR WOOD:   Exactly, your Honour.

GORDON J:   That seems to suggest you have to provide a certain kind of truck.

MR WOOD:   Exactly.  Now, I could go through the contract ‑ ‑ ‑

KIEFEL CJ:   Mr Wood, just to be clear, I do not think there is an implication about there being carriage of goods.  Clause 2.1.a) of the 1993 contract says the contractors are obliged to:

Undertake carriage of goods as reasonably directed ‑ ‑ ‑

MR WOOD:   That is quite correct, your Honour.  Now, if there was a more – and I do not mean to say this pejoratively – a more narrow approach to the reception of evidence on questions of this nature, we would be happy to fight the case on that basis.  It just has not been fought on that basis and we are not arguing for it to be fought on that basis, neither of the parties are.  Whether there is a more narrow approach of the type that the Privy Council suggested in the cases to which I have referred or what I might call the more traditional approach revealed in the authority of this Court on either basis we would say that the Full Court erred.

Now, we cannot really criticise them for the first error if they have received evidence that on proper analysis they should not have received because they had no argument on that point, but certainly on the second basis we do criticise the decision of the Full Court.  It would lead to great confusion if you have a situation where it can be found that where the work that is said to give rise to an employment relationship is found to be the work involved in running a business that, nevertheless, those persons who are running the business carrying out that work can be found to be both employees on one hand and running a business on the other.

Elevating other factors such as goodwill or an expectation you wear a logo, or an expectation you wear a uniform, or some period of work which was irregularly observed to overcome the finding that the work that is said to give rise to the employment relationship must be regarded as work carried on in the conduct of a business would just lead to ‑ ‑ ‑

KIEFEL CJ:   Mr Wood, would you say that, from the time of Stevens v Brodribb where there was no written contract, that in more modern times, in current times, that it is more usual to see written contracts entered into between parties to various employment or business relationships?

MR WOOD:   Certainly in employment relationships, your Honour, there is no doubt about that, there has been a move away from collective regulation of employment relationships towards a more individual form of regulation for the last 30, at least 30 years.

GAGELER J:   Mr Wood, can I ask this.  If it is correct to focus the inquiry more narrowly on characterising the contractual relationship, just the contractual relationship, does that not make your dichotomy between carrying on a business and not carrying on a business rather difficult to posit as the decisive dichotomy, given that carrying on a business is multifactorial on any view, and is focused on the course of conduct of one of the parties?

MR WOOD:   It would make it more difficult in one sense, your Honour, particularly in circumstances where there was not evidence that the entry into the contract of the nature of the relationship of the contracting parties, that is, who they were and what they were doing.  There is some evidence here of that type, yes, it would make it more difficult.  What it would do would be to elevate the decision of the parties to choose their form of arrangement to a much higher degree than it currently has. 

You will recall yesterday Justice Edelman asked some questions about whether or not the so‑called label should be given very much weight.  At the moment, and we sent through what we understand to be the root authority, the decision of Lord Denning in Massey, by email to the Court last night, as a result of those….. - Massey is the case that is picked up by the Privy Council in Chaplin and Narich, and then by this Court in Rossato.  Currently, the current authority of this Court is that the position of a label is, in circumstances where things are ambiguous, it might be decisive.  It is not determinative, but it is and must be taken into account.

Now, that position would be strengthened if the way in which one looked at this sort of question was restricted to the facts surrounding the making of the contract, and the contract itself, leaving aside, of course, those sorts of questions that arise, as the Chief Justice alluded to, of very informal contracts where you have to look at post‑contractual conduct as a means of working out what the mutual intention at commencement was.  So, if you lose something in that regard, you would, by definition, elevate a factor that does not have as much prominence as it might have once had.

KIEFEL CJ:   Or, Mr Wood, the other possibility is that the focus would shift back to the inquiry being as to whether there was a contract for service, or a contract for services, as in Marshall’s Case.

MR WOOD:   That is correct, your Honour, that is correct, and the ‑ ‑ ‑ 

KIEFEL CJ:   That might be a convenient time for us to take the morning break.  Thank you.

AT 11.17 AM SHORT ADJOURNMENT

UPON RESUMING AT 11.34 AM:

KIEFEL CJ:   Yes, Mr Wood.

MR WOOD:   Thank you, your Honours.  I had a question before the break from Justice Gageler about how to square Rossato with the submissions we make in this case.  I answered that before the break, but I can also answer it in this way.  At paragraphs 100 through to 101 of the majority judgment and, to an extent, in paragraph 113 of Justice Gageler’s judgment, there is a consideration of the sort of argument that was raised before lunch, and the argument was, at paragraph 100:

authorities concerning the employee and contractor distinction, including Hollis v Vabu Pty Ltd, consider the “totality of the relationship” between the parties.

In answer to that submission that for assessing whether or not someone is a casual one should look at the totality of the relationship, the Court distinguished between a casual employee and an independent contractor at paragraph 101, and they did so on this – the Court did so on this basis:

Hollis v Vabu was concerned with whether a person was an employee or an independent contractor of another.  On one view, the resolution of that question may depend upon the extent to which it can be shown that one party acts in the business of, and under the control and direction of, the other.

The footnote at 118 is to R v Foster at page 151, which I will come to, and then the point of distinction is made at paragraph 101:

It should be borne in mind that the answer to that question affects the rights not only of the parties to the arrangement but also of third parties with whom they deal under its colours . . . The analysis in Hollis v Vabu affords no assistance, even by analogy, in the resolution of a question as to the character of an employment relationship, where there is no reason to doubt that the terms of that relationship are committed comprehensively to the written agreements by which the parties have agreed to be bound.

There is no suggestion, in fact, a recognition, that the appropriate approach to take to the questions of the assessment of whether or not someone is an employer or an independent contractor should continue to be the totality of the relationship approach.  As I have said before the break, no party to this litigation has suggested, as yet, otherwise. 

The reference in the footnote, 118, to R v Foster, is to that part of R v Foster that my learned friend, Mr Walker, took the Court to yesterday.  I will not repeat that reference, but it should be remembered that that quote at 151 is not based upon, as Justice Edelman questioned me before the break, the proposition of some sham.  It is in more neutral terms:

For, if in practice the company assumes the detailed direction and control of the agents in the daily performance of their work and the agents tacitly accept a position of subordination to authority and to orders and instructions as to the manner in which they carry out their duties, a clause designed to prevent that relation receiving the legal complexion which it truly wears would be ineffectual.

Then at 155, again my learned friend, Mr Walker, took the Court to this passage yesterday and he said – and he was right to say there is a typographical error because the corrections in the front of volume 85 of Commonwealth Law Reports point out that there is a triple negative in this quote when there should only be a double negative:

In saying this we mean that they fail to exclude –

that is…..

KIEFEL CJ:   We cannot hear you, Mr Wood.

MR WOOD:   I beg your pardon.

KIEFEL CJ:   You just got to “fail to exclude”.

MR WOOD:   Yes, sorry:

they fail to exclude to our satisfaction the possibility that the real relation between some or all of the agents –

and there is that phrase “real relation”:

between some or all of the agents and the prosecutor company in their actual work, week in week out, is not in fact that of employer and employee, whatever the agreement may say.

Of course, the “not” should be deleted there, as the corrections page in volume 85 says.  Mr Ternovski says the corrections might be in volume – no, they are in volume 85.

Then moving from there back to our submissions, and I simply want to touch upon one other factual matter, that if the week in week out totality of the relationship test is maintained then an important factor is not only the business expenses incurred by the individuals running the business of the partnership, but as Justices Wilson and Dawson said in Stevens Case at page 37:

the payment [to them] from [their] remuneration of business expenses of any significant proportion –

is important.  As we have set out at 2.2.2.5 of our outline, those expenses were substantial, both in their breadth and in their amount.  It was insurance, fuel, maintenance, finance costs for both of them, rent of business premises separate to the family home by the Whitby partnership, repairs, tolls, fines, telephone costs, casual labour. 

The Jamsek partnership in the period of the late 90s engaged $1200 of casual labour, $1000 and $200, and then in one of those years delegated the driving of the vehicle to an individual driver - depreciation of the trucks and the Jamsek partnership built equipment at home, truck port, truck canopy, driveway improvements, office equipment, et cetera.  I mean, there were very significant expenses incurred by the partnerships in the running of the business.

Moving from there to the proposition that the Court might take a more narrow view of the evidence that might be received, if that be the case then, of course, the very things that give rise to the so‑called commercial pressure that led to the entry into the arrangements in 1986 are facts that would be of great import in a question of construction of the arrangement. 

So the very things that are said by the respondents to somehow suggest that this is a relationship of employment would, in fact, on a more narrow approach to the reception of evidence prove, by dint of the surrounding circumstances, there was a clear mutual intention to create a contractual relationship between the company and the partnerships that had been set up.

Unless the Court would want me to address on the factual matters which have been set out at some length in our written submissions, I am not inclined to deal with anything in reply and finish before dealing with the submissions of the amicus and the superannuation point with this observation that the conventional view, as Justice McHugh set out in his dissenting decision in Stevens v Brodribb, is that owners of expensive equipment such as a truck are independent contractors.  We have referred to the decision of the New South Wales Court of Appeal which referred back to Justice McHugh’s observation, and that proposition remains correct.

GLEESON J:   Mr Wood, I think you might be referring to Justice McHugh’s dissenting judgment in Hollis v Vabu.

MR WOOD:   In Hollis v Vabu, I beg your pardon, I am.  I am sorry, Justice Gleeson, you are quite correct - Hollis v Vabu and that proposition advanced by Justice McHugh is correct.  We do not say that in any sort of simplistic way, that because you are a sort of man with a van you are therefore an independent contractor, but when one steps back and looks at this and says, would a decision that these partnerships are in a relation of independent contract with the companies be one that accords with the authority in terms of result, then it accords with every decision made by this Court.

Dealing then with the submissions of the intervener, none of them we see as being relevant.  The question of whether or not the annual leave that is claimed, stretching back to 1986, should be truncated by reference to the contract carriers’ determination is one that could be dealt with on the question of quantification on remittal. 

Similarly, the similar question of whether or not the long service leave, which is claimed for 41 years, should be restricted by reference to the contract carriers’ determination can be dealt with on the remittal, if we were to lose the appeal, and the last proposition that is advanced by the amicus, that is, somehow that the common law of Australia should be altered by reference to a statute passed by one State Parliament, is a proposition that has been rejected by this Court and we have referred to that in our outline, Esso v Commissioner of Taxation (1999) 201 CLR 49 at paragraph 23.

Then dealing, lastly, with the question of superannuation, on one view the declarations that are made would cover the point that is sought to be argued but, of course, there was no argument on this point. Sorry, there was argument on this point in the Full Court but no determination. At paragraph 255 of Justice Anderson’s decision one can see that the so‑called section 12(3) point was not determined by the Full Court. It was determined only very briefly by the trial judge, in eight paragraphs between paragraphs 214 and 221, and the reasoning refers to no decided authority, and is quite short.

Although we have, in our written submissions, said this Court should dismiss that claim, it does strike us as a little bit unfair to the respondents for them to not have their day in court, as it were, that is, to have presented the argument to the Full Court, it not having been determined, and then for us, here, to say, in the absence of any reasoned decision by the Full Court, and any authority referred to by the trial judge, that this Court should, in effect, knock it out.  We would, of course, submit that in an argument for the Full Court, but it does seem a little bit unfair to the respondents.

KIEFEL CJ:   But, Mr Wood, I take it that you do not suggest that the determination of this question bears upon the common law question or the question arising under the IR Act.

MR WOOD:   Under the superannuation question, 12(3)?

KIEFEL CJ:   Yes, the superannuation question does not bear upon the question that you have been dealing with.

MR WOOD:  No, it only bears upon the section 12(1) question – that is, whether or not the individuals were in fact at any point in time relevant to the claims, employees in a common law sense and if they were employees for the whole 41 years, then that question would determine the fundamental question for all six claims in the respondent’s favour, including the superannuation claim, but if the Court was minded to say, in upholding the trial judge’s decision on the question of whether or not they were common law employees, the question would remain about whether or not they fell within the extended definition of “employee” within section 12(3).

GORDON J:   I am sorry, Mr Wood; I am a bit lost.  Is it your submission that we could not determine whether or not they were, on the assumption that they are not employees, not working under a contract that was wholly or principally for the labour of ZG?  Is that right?

MR WOOD:   You could certainly determine it, your Honour, and we are putting submissions saying that you should determine it.  We are just recognising in our oral argument the possibility of some unfairness to the respondents in that regard, that ‑ ‑ ‑

GORDON J:   Is it any more than a question of construction of the same contract?

MR WOOD:   No, your Honour, it is not.  We would prefer that the Court dealt with it.  We are just making the point, we hope in an orthodox fashion, that perhaps the most fair way to deal with it would be to remit it to the Full Court, given the lack of any serious argument on the point and that it is an important question, that is all.  Unless there are any further questions from the Court, those are our oral submissions in support of the appeal.

KIEFEL CJ:   Yes, thank you, Mr Wood.  Yes, Mr Hutley.

MR HUTLEY:   May I address shortly a question which fell from Justice Gordon as to the period with which the case concerns.  The case is concerned from the employment contract basis in all respects from 1993, except with respect to the Long Service Leave Act.  That goes back to 1977.  Your Honours can see that from the form of the declaration which was made by the Full Court and if your Honours go to the core appeal book at page 72, your Honours will see it in prayers 2, 3 and 4.

At trial, longer periods were adverted to and your Honours will see that, for example, from paragraph 7 in the trial judge at core appeal book 9, where the periods went back to as early as 1986.  That was abandoned in the Full Court.  That just deals with that position.

Can I deal firstly and shortly with the amicus ‑ we are in agreement with our learned friends.  Firstly, the bulk of our claims are dealing with the application of a federal award – and your Honours can see that from core appeal book 9 at paragraph 7 – and having regard to paragraphs 26 to 30 of the Fair Work Act – the State Act is irrelevant – it may be with respect to the Long Service Leave Act that that could conceivably be of some relevance.  However, that has never been raised.

With respect to the pre-1996 period, we have given your Honours section 6 of the Fair Work Act, which would only allow the contract determination to which the intervener refers to apply if it were more favourable than would be the position otherwise and that has never been investigated and has never been raised, probably for very good reason.  So we say that the intervener’s contribution, with one small exception, which I will come to, is of no assistance.

Now, the appeal, as we see it, raises three issues.  Whilst it is not clear whether it is said to be a question of principle, or merely an erroneous conclusion, it is whether there is a dichotomy between, on the one hand, being employed, and on the other hand, conducting one’s own business.  Secondly, question of fact as to whether the Full Court was correct to conclude in all the circumstances that Mr Jamsek and Mr Whitby were employees of the appellant within the meaning of section 335 and item 1 in the table at section 342 of the Fair Work Act2009 and, for the purposes of section 12(1) of the Superannuation Guarantee (Administration) Act1992, and next were workers for the purposes of section 3 of the Long Service Leave Act 1995.

The third issue, and this is the - we sought leave to cross appeal…..notice of contention, and I do not think there is…..in the event that the answer is in favour of the appellants in relation to the prior question as to whether Mr Jamsek and Mr Whitby worked under contracts of employment, that is favourable decided, then an issue will arise under section 12(3) of the Superannuation Guarantee (Administration) Act, namely whether those gentlemen worked under contracts which were “wholly or principally for” their labour, within the meaning of section 12(3). Ms Francois will address the Court on the notice of contention/cross‑appeal.

Can I deal with what can be characterised as the question of principle?  The question arises from the observation of Justice Perram in the Full Court at core appeal book 75 in paragraphs 6 and 7, to the effect that there is no dichotomy in working in one’s own business and working for another.

Now, to understand that observation by his Honour it is important to understand what he was considering, and for that purpose one needs to start with his Honour’s judgment in ACE which is – I do apologise, your Honours.  It has come through to the Court recently.  It is ACE Insurance Limited v Trifunovski 209 FCR 532. The relevant paragraph is at paragraph 95 commencing on page 559 of the report, and if your Honours could go to that shortly.

I will not read it out, just make an observation consequent on it, the point being that one might run a business and that business might be in receipt of moneys and provide other services in the course of that business which derive from the owner of the company supplying his or her services as an employee in the business of the payer.

We understood from our learned friend’s reply submissions at paragraphs 2 and 3 that they accepted that analysis, that is, labour being provided by the employee was not the business of the company – in that case, he owned – the business of the company he owned was the receiving of the commission for his labour and the incurring of the expenses associated with that labour.

In the appellants’ words – this is in the reply submissions at paragraph 3 – it was not “the same item of work”.  Accordingly, the employee had their own related business but in terms of their personal labour worked in the business of ACE Insurance.

Now, his Honour’s judgment at first instance was upheld on appeal and it is to that judgment that his Honour makes reference in paragraph 7 of this case, of the appeal.  That analysis led his Honour to observe at paragraph 7:

ACE Insurance was a case where insurance sales agents were working in their own businesses and in the business of ACE Insurance and were employees.

He was not in effect permitting any error of what might be called double counting, treating an item of work as being an item of work in a company owned by a putative employee and of the putative employer.

GAGELER J:   Mr Hutley, who were the contracting parties in ACE Insurance?

MR HUTLEY:   Your Honour, the question of that starts to become a tad complex.  There would be two contracts.  There would be a contract between the employer and the employee, qua employee, and another contract between the employer and the company to which the service their money is paid, potentially, if they are giving consideration of some variety such as invoicing and the like.  In other words, there is not a necessary dichotomy of only being one contract.  The very nature of these sorts of relationships can mean that there is a multiplicity of contracts.

We say that, in essence, was the same analysis which informed the High Court’s consideration in Hollis v Vabu and your Honours have been taken to it on a number of occasions, but your Honours have not been taken to the reference at page 171 to the judgment of Justice Meagher in the Court of Appeal. The very point which our learned friends advanced here was the point that, in effect, Justice Meagher saw as determinative of the conclusion that the services were supplied by the company. Your Honours see the quote.

Thus, like ACE Insurance, the bike couriers in Hollis could have a company to receive payments and account for expenses.  That is undoubtedly a…..business, but they will not relevantly be conducting a business of their own, having regard to the fact of their labour for their employee by that fact.

That takes one back to Justice Buchanan’s observations at paragraph 128 in ACE Insurance, which your Honours will find at the joint book of authorities Part D, page 380, at paragraph 121, if I could just add the reference.  I do not know if your Honours outside the Commonwealth Law Reports are working on the reports or ‑ ‑ ‑

KIEFEL CJ:   If you could give us the report page, that is easier, Mr Hutley.

MR HUTLEY:  Thank you, your Honour. It is (2013) 209 FCR 146. The relevant paragraphs are 121 and 128. As we understood it, our learned friends do not appear to dispute that a partner in a partnership can be an employee of some third entity or hold an office outside the partnership and still have to account to the partnership for his or her wage or salary earned elsewhere. We have given your Honours reference to some cases as old as Collins v Jackson in 1862.  It is reported in the reprints, at 54 ER 1289.

There – and I am not going to take you through them – the relevant partner had to account for income received in a truly entertaining series of roles outside the partnership and your Honours can see them at pages 429 and 430.  I will not go to them ‑ your Honours will see them.

A similar result was reached in Carlyon-Britton v Lumb (1922) 38 TLR 298. Again, I will not take your Honours to it. The case involved a partner having to account for his remuneration received during the First World War to the partnership. These propositions are recognised by the learned authors of Lindley & Banks. We have sent your Honours the relevant extract at paragraph 10.56 and again, I will not take your Honours to them because there does not seem to be any dispute.

The one novel matter which has come about as a result of the advancement of the submissions of the amicus, if I can take your Honours shortly to it, is paragraph 309(1) in the Industrial Relations Act (NSW), and particularly to 309(1)(b). This deals with contracts of carriage. Your Honours see the chapeau – and go down to (b), it says:

where the carrier is a partnership—if no person other than a partner is, except in the prescribed circumstances, employed (whether pursuant to a contract of employment or not and whether by the partnership or not) in driving or riding –

et cetera.  So in other words, the New South Wales legislature appeared to have directly contemplated a situation where there is a partnership conducting what might be called a carrier business, yet the income into that business was the result of employment by one of the partners by a third party.  That is what we say the court has found is here.  We say that there is nothing unusual about that, it is a well‑known manner of structuring business.

STEWARD J:   Mr Hutley, you said there were two contracts in ACE Insurance, but there are not two contracts here, there is one.

MR HUTLEY:   Well, your Honour, can I come to the document, and I am going to go to it, because, your Honour, I am very conscious of the overall – what has been said by the Court, and we say it has always been the law that the contract is a central factor in what has been called the multifactorial test or the whole of the relationship test, and the Full Court does not purport to say anything different to that, and it has always been, in every case, of centrality, and when it is in a written document, it is central.

But if I could, your Honour, come, because I want to take your Honours through it in some little detail as to what it says, and just to tell you where I am going to go, it does not speak by any means with one voice, that document.  It speaks in a whole series of different ways, which are internally at least confusing, if not inconsistent.  But I will come – if I can come to the document in due course.

Thus we say there is, as it were, no dichotomy principle if by dichotomy it means that a person cannot be involved in dealing with an employer by supplying services through another, through a business entity, whilst being employed to supply other services.  We say that is perfectly conventional, it has been known for hundreds of years, and we say the recent legislation, the 1984 legislation, acknowledges the possibility.

The question is did that maintain here and was the court correct to find that it maintained here, because the court was not saying that, in effect, the tasks undertaken by my client by way of driving and carrying the goods was a task undertaken by the partnership.  They found that those tasks were undertaken by them in their capacity as employees of the appellant, one or other of the appellant entities and, therefore, there is no question of principle.

The important point is the Full Court, we say, were correct to reject the framing in the question as to whether a person is an employee by reference to a simple dichotomy between working in one’s own business or working in another business.  In our respectful submission, Justice Perram was right to observe that that is apt to cause confusion.  That is at paragraph 8.

GAGELER J:   Mr Hutley, I may have misheard your submission.  Are you saying that you can simultaneously have a supply of services through a business entity – I think they were your words ‑ ‑ ‑

MR HUTLEY:   No.

GAGELER J:   All right.

MR HUTLEY:   I say you can apply a certain ‑ you can have a situation where a business entity is supplying service X, such as supplying trucks, and that business entity may be a partnership.  One of the partners – and could I call him Mr Jamsek, for example – may, qua partner, be supplying that service in the course of his and his wife’s business.  But at the same time Mr Jamsek is supplying the service of a driver – of a worker on that truck into here the appellant, qua employee, and the partnership – and the agreement maybe is that the partnership receives the remuneration.  There is nothing analytically wrong with that ‑ ‑ ‑

GAGELER J:   Are we going to this point?  Are we saying that although there is one piece of paper, there are actually two contracts?  There is a contract between Mr Jamsek and ZG, whereby he provides his truck‑driving skill, labour, and then there is a contract between the partnership and ZG?

MR HUTLEY:   Your Honour, we ‑ ‑ ‑ 

GAGELER J:   …..supplied, is that the way it goes?

MR HUTLEY:   Your Honour, as my learned friend, Mr Wood, observed, this case has been conducted on the total relationship analysis.  That is how it has been analysed, and that is how it has been conducted, and the so‑called multifactorial test.  We say when properly analysed, including the instrument, and…..call it the instrument, and I will come to that, I am going to – I am coming to it, your Honour, the instrument, that instrument embodies, on any view, a multiplicity of contracts, not just between the company and several partnerships, it involves contracts between the partnerships, it involves rights which are particular to the male members of those partnerships and, in fact, at critical points in time uses the word “his”, not “the contractor’s” and the like, and it…..a complex net of legal relations and ‑ ‑ ‑

STEWARD J:   On this analysis, Mr Hutley, was Mr Jamsek wholly unpaid for the provision of his labour, the partnership receiving all the income?

MR HUTLEY:   No, on this analysis, he received the benefit of the partnership receiving the payment, and that was a benefit to him, qua partner.  That was a real benefit.  So if one speaks in the consideration, in the Vabu sense, was the driver paid, the bicycle individual paid for his services, yes, because the consideration was paid into his private company, which, of course, is of benefit to him.  So he did receive ‑ ‑ ‑ 

STEWARD J:   I am not sure how that would have worked for income tax purposes.

MR HUTLEY:   Your Honour, I fully accept there could be complex issues with respect to income tax.  I do not for a moment dissent from that.  But, your Honour, one of the reasons why, in many of the cases, the courts have adverted to the fact that their conclusions may not mean that, as it were, the taxation affairs of the individuals had been carried out according to…..but we submit that cannot be the determinative criteria, because otherwise one would say the tax department determines the issue as to whether one is an employee.  It is a quotidian event of the Federal Court and this Court to see that people sometimes make fundamental mistakes about their true contractual relations.

STEWARD J:   Save that the advice that they both got here was to do this through their partnerships so they could split their income.  Why, if that is the advice they received, would they enter into such a multiple contracting instrument?

MR HUTLEY:   Your Honour, it is important to look at the facts, if one is going to that position .  Firstly, the facts were – and the Full Court in the judgment of Justice Anderson refers to – what happened here was the organisation determined for reasons associated with moving a business to, in effect, give to their erstwhile employees a proposal which confronted them with a stark choice.  They were basically out of a job or they entered into an agreement.

Now, that agreement was an agreement which had the terms that it had not negotiated, not in any way other than the single decision of the other side, which was proposed to them, and they accepted it.  I do not say it is a sham.  I accept that no argument has been made as to issues of sham and the like and I will come to that in a minute.  That really has been extirpated from this field in great part because of the multifactorial test.  If one departs from that other consequences may arise with respect to how this sort of litigation gets conducted but let us set that aside for the moment.

So what we say in answer to your Honour’s judgment, true it is that an accountant then gave them advice as to what to do, but what was their true relation is, at that point, one has to look at the instrument which was being put before them.  Again, I will come to that in a little while – I just want to make some general points before I do.

We say that no error of principle was made by Justice Perram and the Full Court in relation to that.  Before we come to, as it were, the application of the multifactorial test taken on by the Full Court, and why we say they were right and for the right reasons, can we make some general observations.

As my learned friend has said, the so‑called multifactorial test is common ground and it has – and can we say my learned friend has exposed it fairly how the case was run and what we take to be is the implications of it from the point of view of authority in this Court for what is relevant, or potentially relevant.

Now, if the Court were to depart from that we would say they should wait for – considered it, should only do so in a case where that was in issue because how people conducted the case is fundamentally affected by what might be called the perceived expansive character of that test to avoid, as it were, detailed potential attacks on instruments as potentially being unfair or induced through wrongful…..because the courts look to the substance, giving fair weight to the instruments.  So we say, if your Honours were minded to think that that should be, in effect, taken up for consideration it should await a proper vehicle.

Secondly, the subject matter of the inquiry is the relationship between the relevant actors, that is the putative employer and the putative employee.  We submit that is why it is relevant to what happened over the course of the relationship.  It may be – and in our case it does require consideration of the circumstances which maintained before the first of the various contracts. 

Now, as your Honours know, the various contracts commenced with what is called the 1986 contract, and that is referred to at paragraph 38 of the Court of Appeal’s reasons at core appeal book 83.  It was not in evidence, but the common position was its terms were substantially the same as that of the 1993 contract, although the basis of payment was different.  I do not need to go into it.

The next point:  the need to investigate the course of the relationship is required if for no other reason that the terms of any express contract are never going to, as it were, at a micro level determine how the parties in fact come and conceive themselves as being capable of dealing with one another. 

For example, could I take you here to an example in the so‑called document which I am going to come to in a short while, the contract carriers’ arrangement, as it is called, which your Honours, the 1993 version is in our further materials – that is the respondents’ book of further materials, Part 1 I think it is for your Honours on computer, at page 12.

I will start off by taking your Honour – my learned friend at one stage said that they could stop at the tenth line.  So if I could start there and then go to one clause.  It starts by setting out an arrangement between Thorn Lighting and delivery contractors.  Then it identifies six individuals ‑ seven, I am sorry.  I passed over Mr Robinson:

Hereafter called “Contractors” -

Then it says the purpose of the agreement:

for the general distribution, including deliveries, redirection, pick ups and exchanges, etc. of THORN and RYMER products to and from customers and suppliers within the Sydney metropolitan area and designated country areas.

The arrangement is to commence 5th July 1993 and will continue until termination . . . or until revised by mutual agreement.

The Contractors so named are:

a)Separate legal entities -

That is a curious statement at the outset and reflects a singular lack of understanding of legal relations because, accept the contractors - the legal entities are the individuals as persons, then it is saying the contractors are individuals:

both from each other and THORN LIGHTING.

b)Able to work for other parties, providing that such work is not detrimental to either THORN LIGHTING or THORN LIGHTING customers.

c)To present an invoice for work carried out –

Then it starts:

The Contractors will:

a)Undertake carriage of goods as reasonably directed -

Stopping there - I am going to come to other clauses in due course – on one view, that clause is the most complete example of control one can conceive of.  The contract is for carriage.  That must be a reference back to what the purpose of the contract is in the chapeau, as it is called these days, or recitals for the general distribution and one has here an agreement, in effect, whereby Thorn, if you read it ab initio, could control every one of these separate legal entities – that is no doubt Mr and Mrs Jamsek – in every aspect of this contract.

Thus, for example, if they said, “We want  you to get up on your trucks and on your bodies,” there would be a debate about whether that is undertaking carriage as reasonably directed.  They could say, “It’s in our interests, our business.  You’re in effect out there representing our business.  We want you to do, as long as it is reasonable, anything that we require of you in and about the carriage.”

So if one has looked at the contract at that point, we would say one is off to a fairly good start to say that this is an instrument which confers the most profound degree of control, much greater, might I say, than that which was advanced in the appeal yesterday – much, much greater at every level, in effect, micromanage our tasks.

Now, in fact - and your Honours will have seen from the evidence - that did not happen.  What had happened, and I will take your Honours in due course through this - did happen, is goods were packaged and delivered and put on the back of trucks, and then it was left to my clients to arrange them on the trucks and, subject to, in effect, urgent requirements, deliver them as they thought fit.  Of course, that – and I will again take you to the evidence, was exactly how the business had been conducted before this contract, that is, before 1986.

The courts looked to the fact that there was a fair bit of discretion by my clients in determining whether they were, in effect, employed, may have a discretion, but if one looks solely to the contract, there was, we say, the power to micromanage in every particular aspect.  The law, as it is developed, which says one looks to the entire relationships, makes how, in effect, the contract worked – I am not going to take your Honours to it, in point of fact over from 1996 to 2000 – well, 1993, or 1986 to 2016, some 30 years, in a way which was more nuanced.

Of course, that would be the case, because as one knows, if one had worked in companies with employees, you come over time to trust employees more and their discretions and how you deal with them become a function of your faith in them.  But if you ask at purely the contract level, you can theoretically give them any reasonable direction you want about the subject matter.

So, we say one of the things about the total relationship is that it tends to, in effect, take regard to the contracts, particularly contracts for engagement of services of their nature, cannot, as it were, micromanage – they can, but they tend not to, will be apt to, in effect, express things at levels of generality which, if one does not have regard to how the parties contemplated the Act would take place, and contemplated and see how it takes place, might overstate degrees as fundamental as control. 

KEANE J:   Mr Hutley, can I ask you, did any of the judges of the Full Court reach the conclusion…..as to the proper understanding of clause 2.1.a)?

MR HUTLEY:   No, your Honour, they did not.  No, I accept – all I am saying, your Honour, because of the approach to the multifactorial test, they actually analysed how – and I can give your Honours the relevant paragraphs, how actually it worked day to day, i.e., and I am summarising, but in essence was that deliveries would be packed and put on the back of the truck by the appellants’ employees, then my clients would arrange them on the truck for safety purposes and the like, then my clients would, in effect work out the delivery schedules, et cetera, et cetera, and do so, and do it in the most efficient way from their point of view.  Now, that has happened ‑ ‑ ‑ 

GORDON J:   Mr Hutley, is that ‑ ‑ ‑ 

EDELMAN J:   Mr Hutley, is that ‑ ‑ ‑ 

MR HUTLEY:   I am sorry, your Honour.  I am not sure whether ‑ ‑ ‑ 

GORDON J:   My question is, each of those matters you have just raised find reflection in the very contract itself, do they not, in the sense that ‑ just to pick up the last one, under clause 2.1.d) the contractor is:

responsible for the . . . safe loading of the vehicle and the securing and weather protection of the load.

That is just one example.  Each of the others that you identified find reflection in the contract.

EDELMAN J:   Can I also add to that, Mr Hutley, that you have 20 to 30 years of background as to what the word “reasonableness” means in 1.a) – sorry, 2.1.a).

MR HUTLEY:   Your Honour, can I answer Justice Gaudron’s questions first.

GORDON J:   I do not think I have become Justice Gaudron, Mr Hutley, but I will cop it.

MR HUTLEY:   I am sorry, your Honour.

KIEFEL CJ:   You are showing your age, Mr Hutley.

MR HUTLEY:   That was very kind of your Honour.  Now, d) does not necessarily limit c).  The mere fact that you are responsible – and this goes to another point which I am going to come to – for the vehicle, equipment and safe loading, et cetera, that means it may be your responsibility non constat that you cannot be able to be the subject of reasonable direction.

GORDON J:   Well, I do not know about that because I think this is the difficulty about not looking at the contract as a whole and taking clauses into context because if you then look at e), he undertakes to:

Exercise all reasonable care and diligence in the carriage and safe keeping of the goods –

There is a whole set of – I accept some of them may point in a different way.  One cannot cherry pick.

MR HUTLEY:   No, no, your Honour, the reason I am taking you to 2.1 is I am just – all I am saying, your Honour, if your Honours – the point I was seeking to make – perhaps I am over‑labouring it ‑ is that the jurisprudence of this Court which looks at, in effect, the relationship, how it played out, has traditionally not required, as it were, the potentially fine nuanced construction of the contract in all its aspects.  That is what the result has been.  For example, if I take your Honours to e), e) is, in effect, really cognate with the implied obligation of an employee in relation to the provision of his or her services.

KIEFEL CJ:   Mr Hutley, you said before, I think, that as it turned out, clause 2.1.a) did not come to pass, that things, as they eventuated in day‑to‑day practice at work, were different.  How so?  How was the phrase “reasonably directed” no longer - not followed?

MR HUTLEY:   Your Honour, I think it would be – the best way to put it, the evidence discloses that both before and after these contracts were entered into, my clients were trusted, we say “employees”, before.  They were trusted persons dealing with the company and they had worked, before and after, in a collaborative fashion.  So there never came the, as it were - the rubber never hit the road for somebody having to direct people.  The test of what the content of the obligation is does not arise in many of these sorts of relationships because the relationship, as it were, bumps along generally in a collaborative way, whether an employee or not, because that is the human condition.

All our point is is that the test, which the Court has put, and as I say, is common ground between our learned friends, reflects that reality, and has obviated perhaps the necessity to engage in a precise analysis of each and every aspect of an instrument, to engage in this question of characterisation we are in.  I am content to go through it, I understand the importance, but that is not to say the courts have not thought the instrument was very important.  They have, but they have contextualised it to an instrument.

KIEFEL CJ:   Mr Hutley, just to be clear about it, are you saying that - when you rely upon this as evidence of a contractual term relating to control, are you saying that by this term the employer should be understood to have retained the right to control throughout the contractual period?

MR HUTLEY:   Yes.  If one gets down to a question of construction.  If one sets down, in saying let it be assumed that the employer reasonably thought that the way my clients were stacking the trucks from time to time was not as safe as it could be, and they took a view that there were risks, which had not come to pass but were there, we would say they could give a reasonable direction to change it.  That is what the contract says.

GAGELER J:   Mr Hutley, you just used a different word from the word you have been deliberately using throughout your submissions.  You have been referring to this as “the instrument” and then you have just used the word “contract”.

MR HUTLEY:   I was responding to a question.

GAGELER J:   Is this instrument the totality of the contract between the parties or do you say there are aspects of the contract that are outside the instrument?

MR HUTLEY:   Your Honour, there has not been an identification as to whether certain things which may have occurred from time to time – and can I take an example – such as delivering of the trucks were, as it were, done pursuant to an agreement outside the contract or within the contract.  You will recall that the trucks – and there are photographs of them in the Full Court’s judgment –showed that they were coloured.  Can I take your Honours to them?

EDELMAN J:   Just while you do, Mr  Hutley, and maybe you will want to reflect on this over lunch, it seems to me that part of the difficulty may be in the ambiguity of the word “relationship”, particularly when one sees constant references to the totality of the relationship.  Is that a reference to the legal relationship between the parties which would be the rights, duties, liberties legally assumed and undertaken by the parties or is it a reference to something else, and if it is something else, what is that something else, that may ‑ ‑ ‑

MR HUTLEY:   Your Honour, I will come to it, but I give to a degree the same answer that my learned friend, Mr Wood, gave.  Your Honours, what the scope of the relevant circumstances to in effect defining the relationship has been much affected and in fact, as it should, as it has to be, by the approach in this Court to matters relevant to the relationship.

The classic example which has been debated is the tax affairs, the way in which one or other party to the relationship has dealt with the matter as a matter of taxation.  That is quintessentially something which is not provided for by contract.  It is not a question of obligation under the contract.  So the law has dealt with it that way.

EDELMAN J:   Mr Hutley, would you accept that it is also something about which the other party might be entirely unaware?

MR HUTLEY:   I accept that completely ‑ ‑ ‑

EDELMAN J:   That would mean that the legal characterisation of the relationship between the two parties may change by the unilateral acts of one party that are unknown to the other.

MR HUTLEY:   Because of the multifactorial test at a theoretical level your Honour might be right.  I cannot think of an example at the moment.  But because of the multifactorial test, that has never occurred so far as I am aware and my learned friend, Mr Wood, has not put forward a contract where that case has occurred, and he has much deeper involvement in this field than I do.  So, your Honour, as a logical possibility, I suppose I could accept it as a logical possibility, but whether it is in any way realistic, I doubt. 

I was just going to take your Honours to the photographs.  Your Honours will find those – I will just get the page where they are in the judgment of Justice – yes, your Honours will find them at core appeal book pages 128 and 129 in paragraphs 220 to 221.  Those in effect banners, that covering, was placed upon my client’s trucks for a large part of this relationship.  The details are set out; I do not need to through it.

KEANE J:   Is not the livery of the trucks - that they wear the livery of the principal, is that not consistent simply with the fact that Thorn is their major customer?

MR HUTLEY:   Sole, your Honour.  It is certainly ‑ ‑ ‑

KEANE J:   Sole customer, yes.

MR HUTLEY:   Sole, and your Honour, I accept that.  But it is also consistent with the fact that Thorn wished them to be associated with Thorn and Thorn wished through the provision of the service to increase its goodwill, because this is advertising, as this Court has said in a number of cases.  This is in effect Thorn building its business through the provision by my clients of their services.  That is what they are doing.

KIEFEL CJ:   That might be a convenient time, Mr Hutley.

MR HUTLEY:   Yes, thank you, your Honour.

KIEFEL CJ:   The Court will adjourn until 2.15.

AT 12.46 PM LUNCHEON ADJOURNMENT

UPON RESUMING AT 2.23 PM:

KIEFEL CJ:   Yes, Mr Hutley.

MR HUTLEY:   Thank you, your Honour.  I apologise to your Honours, we had some form of technical glitch.  Before the lunch, I was addressing a question about how one viewed these matters, having regard to the multifactorial test as a matter of contract, and I adverted to the position with respect to the livery on the truck.  The Court will see at paragraph 219 of the Court of Appeal’s judgment at page 128 of the core appeal book, that the arrangement was that half the tarpaulin was paid for by the company, and the company paid the costs of the branding.

Now, whether one characterises that as a variation or an understanding, or really could have been, in effect, although paid, it would not have tended to it, the company, in effect, requiring an undertaking of carriage as reasonably directed.  One has not really investigated that, because of the approach taken by the Court, the principles in relation to this, and that is what I wanted to say about that. 

Before we go down to the precise notes, can we say something about control?  It is hard to imagine, in our respectful submission, a service contract which does not confer, expressly or impliedly, some degree of control upon the party, by the party obtaining the service to a greater or lesser degree.  That leads to the cases to referring to the significance of sufficient control.  Seeking to give a, as it were, a more precise definition of that, in our respectful submission, is doomed to failure, as it is quintessentially to be tested by reference to the overall circumstances, not least the character of the service which lies at the heart of the arrangement and the degree to which one has control in relation to that.

It might be said that one must have sufficient control such as it could be, might be, considered as an arrangement of employment having regard to all the matters but that does not really advance the analysis, that is just again stating the question.

Next, control is not an obligation.  For example, if I take just simply an obligation, if one goes back to the contract, again at the respondents’ further material in Part 1 and one goes, for example, to 2.e) on page 13, that is the obligation I took your Honours to which you say is an obligation which would apply whether you are an employee or not.

But we say that is not control in the relevant sense which the courts have considered.  It is obviously a constraint upon my clients, but control we say in the relevant sense refers to a power, i.e. the ability to act on one party’s part in a fashion so as to subject the corresponding party to an obligation to act.  Whether it needs to be categorised in Hohfeldian terms really does not need – one does not need to state a debate. 

We do submit if there is a significant degree of control over the manner in which a core task in the service to be provided by the putative employee exists, that is a not inconsiderable step along the way to having that person found to be under the contract an employee.

Now, another thing that needs to be guarded against, and my learned friend said he has deferred his dealing with the detail until reply, which I am content with, but there are, as it were, a myriad of cases dealing with these problems and each case has a similarity on the whole with the case with which one is concerned to a greater or lesser degree.  There is, in our respectful submission, little benefit in, as it were, dealing with comparable cases in point of detail other than as an assistance to identify material matters.

Now of course, that which is material and there may be principles to determine the significance of the materiality of others, but individual cases just do not assist.  Your Honours have been given the Australian Air Express Case by our learned friends, which bears some superficial similarities to this Court, but Justice McColl in the New South Wales Court of Appeal – if I could give you the citation. I apologise, I should have done that at the outset. It is reported in (2005) 147 IR 240. It is a judgment of the Court of Appeal.

If one goes through it you will see her Honour’s analysis of a circumstance which her Honour considered at paragraph 65 to be finely balanced.  She stressed a number of matters as highly relevant, for example at paragraph 54, in relation to the fact that it was a Commonwealth authority who had ordered its tax affairs in a particular way, which she considered highly material.

She also considered it was material that the service provider was paid on a piecework basis, although there was a minimum weekly sum, at paragraphs 8 and 74, and various other matters.  It is also interesting that in that case her Honour paid no particular regard to the fact that there was a branding or livery in relation to the company then involved.

What we say is that other cases can only assist to identify the factors which may or may not be relevant but because no case is identical or really beyond, as it were, somewhat abstracted considerations, really close to being on four with another, little assistance can be drafted.

Having said that, can I now go, and I propose as your Honours will see from our outline, to address in effect the criticisms – and your Honours will see that from paragraph 6 of our outline – broadly by reference to how it was dealt with in the Full Court and particularly in the extensive judgment of Justice Anderson.

There has been criticism, at least in writing by our learned friends, as it were of the consideration by the Full Court between paragraphs 192 and 201 of the relevance of the circumstances in which the contract was entered into, so far as they speak to the intentions of the party.  Particular criticism is to paragraphs 192 to 201.

Now, his Honour carefully explained why he took a different view to the primary judge about the fact of the driver’s intentions, and that in a sense turned upon the factual finding that the drivers, in a sense, were confronted with a fait accompli, they had no legal advice in relation to entering into the contract, and there was no negotiation about its terms.

Now, it may be accepted that, objectively, there was contemplated to be a change, some form of change, in the relationships between the company and their erstwhile employees, but that really does not take you very far because, on any view, there was some form of change, the real question is what was the nature of the change? 

STEWARD J:   Mr Hutley, can I ask, were there any findings of fact made about the entry into the 1993 agreement?

MR HUTLEY:   No, your Honour, it was a continuation, I think, your Honour.  I think, as your Honour appreciates, there were periods of hiatus along the way, quite extensive ones, where there was no formal written document, but the court proceeded upon the basis that there was, in effect, a continuum through those periods, and the only, as it were, substantive changes which took place in the terms, the Court concluded, were as to rates.

STEWARD J:   Thank you.

MR HUTLEY:   Also there was the identity of the company, as your Honour appreciates, because of the construction.  Now, our learned friends have referred to the Massey v Crown Life Case as indicating the significance of how the parties characterised the contract.  It is important to look in Massey, and, your Honours, it is reported [1978] 1 WLR 676, and our learned friends have supplied it, your Honours, and it refers to, perhaps, the significance of how the parties characterised their relationship. But it is extremely important to note the context, and the factual context, in which that took place.

It is relevant to look at page 678, in Lord Denning’s judgment, at about line G.  There, Mr Massey, who is the person seeking to assert he remained an employee, in effect went out of his way, for deliberate reasons, which he conveyed to the company, that his advice was that it was important that he move to a particular relationship with the company, and the company, to take up your Honour Justice Edelman’s concern about - things commonly understood between the parties, the company took steps to apprise the taxation authorities of exactly what had transpired.

Now, it is in that sort of context that the references which are made by his Lordship, particularly at 680 to – 679 at letter H over to 680, have to be understood, and in fact, the case was a case where, if your Honours…..his Lordship was actually of the view that Mr Massey, in all likelihood, had never been a servant anyway. 

So the statements and their significance is clearly predicated on the basis that the parties, in effect, are engaged in this process of characterisation, if it is to be of particular significance, and I will not go over the things that my learned friend, Mr Walker, submitted yesterday about characterisation.

But to the extent that one can have regard to, as it were, what the parties’ true intentions were, one has to be certain that…..confronting a factual situation where they have, as it were, what might be called the entrepreneurial spirit, which Mr Massey had, or the like, not merely inferring it from the terms of the instrument, because that of course, assumes – it would not be apt to assume its conclusion.

Now, the next point of significance which our learned friends criticise is the contribution of the vehicles.  That was dealt with and analysed by his Honour at paragraphs 202 to 208 of his reasons.  Vehicles have been significant, there is no getting away from it, and he referred to the cases and what has been said, and particularly what had been said at paragraph 47 of Hollis v Vabu.

I am not going to go to it, your Honours have been taken to it.  Your Honours will note that the High Court there said the significance of the vehicle is particularly so when it is, in effect, allied to significant additional skills, that is, you are supplying equipment of what you might call a specialist variety and there are a number of cases – and we have referred to them, for example, at paragraph 38(c) of our submissions where the mere supply of a vehicle is not held to be determinative, and I think our learned friends accept that.

But the important point to make is there is no doubt that his Honour had regard to it and considered it a factor of weight, but he did not think it was conclusive, there were no particular skills associated with it, and he also had regard to the circumstances is the character of the circumstances in which this relationship was brought about ‑ his relationship was brought about, and he dealt with that at paragraph 206, and we say no error has been demonstrated.

Now we come to the broad contractual mechanics which his Honour dealt with at paragraphs 209 to 211.  Can I take your Honours to the contract, which I have been promising your Honours to do.  That is again in the further materials, tab 1, page 12.  I have referred to the fact that – how it is introduced between – it is an arrangement between Thorn Lighting and Delivery Contractors, and then, in effect, seven persons are named, although on three lists there are two individuals who, at least in the case of my client and Mr Whitby, your Honours can – were Mr Whitby and Mr Jamsek’s spouses.

I have taken your Honours to the introduction “for the general distribution”.  Then we have the strange and potentially significant provision:

The Contractors so named are:

a)        Separate legal entities both from each other –

and contractors are defined as the individuals:

b)Able to work for other parties, providing that such work is not detrimental to either . . . 

c)        To present an invoice –

Then there is an obligation upon the contractors – and I have taken your Honours through a) and I can note b) and c), and then at d):

d)       Be responsible for the vehicle equipment and gear –

and I have said what I……submissions:

e)        Exercise all reasonable care –

and I have taken your Honours to that.  Then it says:

f)Hold at all times and on request produce for inspection, a current driver’s licence –

That seems to be an obligation on individuals, and a person who can hold a licence is the person to whom it is issued.  Then it says:

g)Not engage or use the services of a driver for the vehicle without prior and continuing approval by THORN LIGHTING.  Such driver is to be correctly licensed, suitably dressed, and in all other respects entirely to the satisfaction of THORN LIGHTING.

Now, obviously the cases say a relevant factor is the capacity to delegate, not determinative, but relevant.  The history of this relationship is one event on one holiday by Mr Jamsek in 30 years.  Then it goes on - I can pass over h) and i), but then it says, k):

Not offer his vehicle for sale with any guarantee of either continuity of work for THORN LIGHTING, or implied acceptance by THORN LIGHTING of the purchaser.

So there is an obligation on the individual not to sell with any representation that there is any entitlement to a continuing relationship with Thorn.  Then it says:

Each contractor is entitled to four weeks annual leave without pay.

That is quintessentially directed to an individual, in our respectful submission:

It is normally expected that each Contractor will take at least two weeks over the January factory reduced output period.  The leave dates to be determined on a roster basis which ensures that no more than two trucks are off at the same time.  The roster details are to be arranged between the Contractors -

That seems to impose obligations under this arrangement not only as between individuals and Thorn ‑ I will use Thorn because it is Thorn ‑ but as between themselves. 

More than two weeks annual leave –

I think we can pass over the next.  Then disputes procedure is set down.  The termination rights preclude a contractor from selling his vehicle and then it says:

THORN LIGHTING can summarily terminate a Contractor for misconduct, lack of care with consignments, failure to carry out usual functions or directions, or theft.

Then if you would note the next paragraph about being individuals.  If your Honours go over to page 5 at e), again there is reference to the individual and:

The Contractor should discuss his intentions -

At 6 we have this:

Each Contractor has a mobile phone provided at their own expense.

So one has moved here to a concept of a collective expense.  Then there are pay rates, and your Honours see the amount, but it says:

Contractors will not be paid for any annual leave, public holidays, and sick days as an allowance has been made within the above rates.

These are rates which are quintessentially those which apply to, in effect, the concept of employment, we say:

However, if industrial action by THORN –

It goes on.  Then it says:

The Contractors . . . have agreed to a standard nine hour working day with a usual starting time of 6 a.m., both parties accepting that the actual hours may vary -

They then provide a set way, in effect, subject to downtime, for every week, irrespective of how much one actually works.  In other words, it is not piecework, it is akin, we say, in substance, to a fixed wage, a fixed amount for the service provided, and then it goes on.  There is obligations to present invoices, and then it is sick days:

If a Contractor is ill –

again, directed to, as it were, quintessentially an individual, not an entity, not a partnership:

he is to notify the person in charge of the NSW Branch Warehouse no later -

So that is, again, a promise, not by the partnership, not by partnerships, this is an obligation which lies upon the contractor, who happens to be ill.  Then there is a series, at 9, at operational points.  These, in effect, have a collective aspect which you will see, for example, at 9c).  Then the parties sign, and there were, in effect, as it were, multiple execution copies, and you will see at the bottom of this, Mr – it is signed on behalf of “R & D Whitby”, and then there is “Driver’s licence number”, and that is Mr Whitby’s.

Now, that is the instrument, the arrangement, which governs the dealings, we say, firstly between – and I will just use Mr Jamsek, qua employee, and also Mr and Mrs Jamsek, qua contractors.  There are different obligations, some of which are apt to be viewed as imposed collectively, some of which are apt to be viewed as imposed individually, and the individual ones are exactly the sorts of obligations one would, in effect, see as individual to an employee. 

So, we say this instrument is an instrument on its terms, which is consistent with the characterisation that the Court of Appeal arrived at, namely, in essence, that the partnership ran a business of supplying a truck, together with receiving the remuneration while Mr – and I will use Mr Jamsek was employed to drive it.

That, we say, was a perfectly available characterisation of this somewhat – “ramshackle” might be a way of inelegantly – collocated series of rights, obligations, powers and the like, and it is certainly not of the character of the agreement, for example, you saw yesterday, which was drafted in a completely different fashion.  It is an agreement which, in a sense, is by no means clear as to what it is seeking to achieve, and one has to tease it out.  We say a perfectly available construction is the one we have advanced.

EDELMAN J:   Mr Hutley, could I just ask you about some of the obligations that you say are on individuals as opposed to partnerships?

MR HUTLEY:   Yes.

EDELMAN J:   So, for example, clause 3a), which provides that:

Each contractor is entitled to four weeks annual leave without pay.

Does that mean that the partnership of MJ and PT Jamsek are entitled to eight weeks leave without pay, or that each of the two individuals is entitled to four weeks leave without pay?

MR HUTLEY:   Your Honour, you have to see this in the context, for example, of obligation 2f).  Somebody has to:

Hold at all times –

and produce:

a current driver’s licence -

Now, properly understood, the person who is given this contract objectively contemplates one person will have a driver’s licence, not a multiplicity, but one, and it is to that person that the contractor is entitled to and it is not, for example, on its true construction that, for example, Mrs Jamsek, who – and this contract, by this date, by 1986, going back to then, had been running for 10 years.  No one had ever contemplated that Ms Jamsek would be driving a contract, that would be a mutually known fact.  So when they are talking about here, in the context, is the person who is getting the four weeks annual leave is the person who is leaving work.

STEWARD J:   Mr Hutley, in circumstances where this is a contract between a partnership comprised of individuals in order to supply a carriage service, it is going to be plain that there is going to be an individual who will actually be driving the truck.

MR HUTLEY:   Well, I accept that your Honour – I am sorry.

STEWARD J:   I think what you accepted was Mr Jamsek, as you said, but why would it not make perfect sense to refer to the individual without denying that there is, nonetheless, a contract for the provision of a service between the partnership and Thorn?

MR HUTLEY:   Your Honour, can I say - I cannot say you could not construe it, but we say the better construction is that when one goes to, in effect, the constraints and obligations, they are individualised on the active, as it were, partner in the – that is, the one who is doing the work.  The obligations, such as to supply the truck, are an obligation which exists for both, and part of the circumstances were, and the tax returns showed it, is the trucks were in the names of the husband and wife.  But, your Honour, I do not deny that that could have been made clear, but this contract, in effect, goes out of its way not to be expressed in terms by reference to partnerships at critical points.  It goes ‑ ‑ ‑ 

STEWARD J:   I was going to say - the analogy I was going to put to you is you might enter into a contract for the provision of legal services by King & Wood Mallesons.  There might be a provision that says the partner providing the advice must be legally qualified at all times.  You would not express that requirement as a requirement on the partnership, you would refer to the individual.

MR HUTLEY:   Your Honour, if you wished the particular individual to be the person who supplied your work, you might provide a position as anybody who supplies legal services to mean must be a registered practitioner.  Anything else would be illegal in any event.

Also again can I say once one moves to an analogy such as a professional organisation such as a partnership of solicitors, one brings with that all the concepts and assumptions of, as it were, professional services which are of their character not ones apt to create relationships of employment by their very nature.

What we say is this sort of arrangement, with these sorts of promises, are perfectly, and we say on the better view, to be characterised is the way we put it.  The partners supply the hardware, qua partner, and the individual is employed because they have specific obligations about sick leave, they have significant grants, removements, entitlements to days off.  They have specific obligations, we say, to give notifications and the like.  It is from them that is withdrawn the payment of annual leave, public holidays and sick days.  It is meaningless to speak in terms of sick days being removed from the spouses of my client.

GAGELER J:   Mr Hutley, as I understand the submission, which is put very clearly, you read clause 2.1.a) in an unbundled way when you say relevantly here Mr and Mrs Jamsek in partnership supply the truck and Mr Jamsek supplies the labour.  Is there any way of reading the provisions about pay rates as allowing for those two forms of supply to be paid for separately or is it a significant consideration?

MR HUTLEY:   Your Honour, that is our point.  The cases which provide that many partnerships receive by entitlement earnings by a partner, qua employee of the third person.  There is nothing peculiar about that and that is what these parties have arranged.  You cannot break up the consideration.  I accept that, your Honour; I take that as a given.  But that is perfectly consistent with our analysis – that is, the parties have agreed, in effect, you, Mr Jamsek, will supply your labour; you, Mr and Mrs Jamsek will supply the truck and all the other – do all the arrangements and things like that, and we, the employer, will pay you and Mrs Jamsek the entirety of the consideration by way of a composite payment.

EDELMAN J:   That would mean, would it not, that if in the supply of labour by, say, Mr Jamsek or in the taking of annual leave or in any of the other obligations that you say are individual obligations there is a breach of the contract then the partnership would not be liable, it would only be the individual that is liable.

MR HUTLEY:   Probably, yes.

STEWARD J:   Mr Hutley, if that had been what was intended by the parties the accountants would have told them that the thing does not work for tax purposes because at the time was section 17 of the 1936 Act.

MR HUTLEY:   I do not want to be rude about professionals who have never given any evidence, but, your Honours, there has been the odd occasion when people have not thought about things too deeply and have made fundamental errors.

STEWARD J:   Not section 17, it is a pretty fundamental provision of the Act which every accountant would know about.

MR HUTLEY:   Your Honour, this agreement is, as we have submitted from the beginning, badly drafted if they were seeking to achieve the end that your Honour has adverted to, from the very commencement where the person states these are separate legal entities.  Now, that is at the outset, at the beginning, and reflects a fundamental – if they are trying to treat these things as partnerships, as entities, misunderstanding of what is occurring, on that analysis.

So, your Honour, you are in that circumstance – and I will not take your Honours to the courts – where you are not dealing with what looks like a professionally drafted instrument, one simply is not.  Anyway, your Honour, that is how we put it.  That what we say the Court of Appeal did, and they were perfectly appropriate to do it, and the analysis is correct, and we say it is consistent with the behaviour in this extent and that is why the Court of Appeal did think it was very significant, and that is to do with the…..  They appropriated, in effect, the services of my client to improve their own goodwill.  That is how they ran the business in great part.

Now, that is wholly reflective of seeing my client’s services as theirs, part of their business.  The significance of that was adverted to and was correctly adverted to.  But, your Honour, that is what we say about the contract.  I think I should move on.

Now, Justice Anderson dealt with the day‑to‑day control of contracts of the drivers, at paragraphs 212 to 215 in his Honour’s reasons.  The appellants argue that they had only limited control over the drivers.  That has to be looked at, again, in the context of how these contracts started.  If your Honours would be kind enough to go to the respondent’s book of further materials Part 1, page 50.  That is the affidavit of Mr Jamsek and at paragraph – if your Honours go over to page 52 at paragraph 12, Mr Jamsek is there dealing with how he conducted himself before the contracts, and it goes on.

If your Honours go over to paragraph 22, on page 53, your Honours will see what happened thereafter.  Nothing, it did not change.  Therefore, to say that one has discretions by reference to one’s ordinary behaviour is illusory unless they are compared to the position where you were an employee.  When one returns back to paragraph - to (a), and I am not going to repeat our submissions in relation to that.  Then, at paragraph 32, Mr Jamsek summarised his daily routine and I just commend that paragraph to your Honours.

If your Honours then go on to 63, that is the affidavit of Mr Whitby, and he deals with the similar issue at paragraph 12 on page 66.  Then he said - et cetera, pretty much the same.  The only aspect of that evidence which was challenged was the number of hours worked, and if your Honours go to – there was some cross‑examination about that, at Part 1, 110 and following, particularly at 110, line 25 over to 111, line 45 - I will not trouble your Honours with the details.  The Full Court judgment looked at this at page 129 of the core appeal book, paragraphs 21 to 25.

Accordingly, the level of control over my client was effectively the same before and after they became so‑called independent contractors.  Of course, practically, that level of control was not exercised as tightly as it might, for obvious reasons, that they were competent at the, as it were, relatively simple duties that they performed. 

Now, the appellants also argue that the drivers and trucks were only dressed in the appellant’s livery of their own free will - that is our learned friend’s submissions at 28.  That does not, with respect, grapple with the evidence of Mr Dixon.  If your Honours got to Part 2 of our further materials at page 241, lines 20 to 25, Mr Dixon was the supply chain manager of the relevant appellant company up until 2013 and thereafter the operations manager.  Their clothing, as it were, was worn consistent with the company policy.  They were following the company policy.  It also does not grapple with the analysis of his Honour at paragraphs 219 to 225.

I have made our submissions with respect to the importance of goodwill.  We gave your Honours a reference to JT International v the Commonwealth 250 CLR 1, and particularly the statement of Chief Justice French at paragraph 40 and your Honour the Chief Justice at paragraph 348, which has recently been applied in Kraft Foods Group Brands v Bega Cheese Limited [2020] FCAFC 65, about the significance of building goodwill through, in effect, exactly the same getup or branding with which we are dealing. I do not think that…..

Again, because one looks at the whole circumstances, if your Honours go to our book of further material Part 1, page 38, your Honours will see a letter from the contract carriers of 23 May.  It shows you the intimate degree of identification by my clients with then Thorn and later brought about through Thorn wrapping them in their cellophane, as it were.  Your Honours can see at the last paragraph:

We have outstanding relations with Thorns valued customers and are a source of feedback for Thorn on what the customer are thinking and of any problems they are having –

et cetera.  In other words, there was a deep and profound identification between my client and the company.

The next point is the exclusivity of work and the right to sub‑contract.  I think we have said about as much as we can in our written submissions, and we are at issue with our learned friends about the right to delegate.  The facts are stark.  Mr Jamsek obtained one holiday in some 30 years and that appears in our written submissions.  Now, the appellants seem to now advance the case that my clients were at liberty to, as it were, develop an independent business in all the spare time they had and that shows that they were independent.

Your Honour, firstly, no one from the appellant gave evidence that they would be happy for my clients to drive around in trucks branded with their company logo, and it does not take a moment’s reflection to think of the possible problems of passing off if my clients dared to do that, let alone had the opportunity to do it since they were working, in effect, nine hours a day.  The Court of Appeal rightly dispensed that as wholly theoretical, again a reflection of the realities of the relationship which would exist in the terms of the contract itself having regard to the requirements to be available for up to nine hours a day.  So we say that.

Now, they are the points which our learned friends have advanced against us, otherwise we rely on our written submissions.  But we say the analysis of the Full Court is right, there is no error of principle.  If one looks at the contractual arrangements, they are wholly consistent with the outcome, and there is no occasion for this Court to overturn the Full Court’s judgment.

I will ask my learned friend, Ms Francois, now to address your Honours on the notice of cross‑appeal, unless I can be of further assistance.

KIEFEL CJ:   Yes, thank you, Mr Hutley.

MR HUTLEY:   Thank you, your Honour.

KIEFEL CJ:   Yes, Ms Francois.

MS FRANCOIS: Thank you, Chief Justice. To find that a person is an employee under the extended definition in section 12(3) of the Superannuation Guarantee (Administration) Act requires satisfaction, we say, of three criteria.  One finds that section in the joint book of authorities Part B at page 23.  Those three criteria are there should be firstly a contract, that contract should be wholly or principally for the labour of a person, and that person must work under that contract.

We say that is the plain meaning of the provision apparent on its face, and we embrace the reasons of the Full Court in Dental Corporation v Moffet 278 FCR 502. It is in the joint book of authorities at Part D at page 431, and it is paragraph 82, where Justices Perram and Anderson identify the criteria in those terms, and his Honour Justice Wigney agreed with the plurality.

Like that case, here there is a contract.  It is with the drivers and others, and there is no doubt that the drivers worked under that contract.  So we say the question for the Court is whether the contract was wholly or principally for the labour of the drivers.

KIEFEL CJ: Ms Francois, the primary judge, Justice Thawley, appears to have found that the contracts were not entered into personally by the drivers, and the other reason that it was found not to satisfy section 12(3) was because they provided both equipment and labour, but not principally labour. Is that correct?

MS FRANCOIS:   Yes, your Honour and may I deal directly with the first of those propositions?  In relation to the primary judge’s finding that your Honour referred to, which is core appeal book page 52 at paragraph 219, there are two answers.  Firstly, a partnership is not a separate legal entity, so the contract was directly with Mr Jamsek and Mr Whitby as well as others.  I think Mr Hutley has dealt with that, but it was with those men, and with others, so we reject that on that basis.

Secondly, we say the text of section 12(3) does not require that the contract be made solely with the putative employee. Rather, the section just requires that a person works under a contract and, in this case, there does not seem to be any doubt that both Mr Jamsek and Mr Whitby worked under the relevant contracts, whether written or implied by contract, and that regulated their working activities, including their times at work and their leave and the like, and paid them for their labour on a per‑hour basis.

Dealing with the second of the issues that your Honour identified, that is at core appeal book page 52 in paragraph 220, his Honour identified there, in the short analysis, that:

the contracts were not “principally for the labour –

of Mr Jamsek and Mr Whitby, because the contracts also provided for equipment. However, we say section 12(3) is expressly intended to apply even where the contract may have multiple purposes, and thus the Court’s role is to determine, in such cases, whether the contract – and we accept, for the reasons given by the Full Court in Dental Services, that this is viewed from the perspective of the putative employer, whether or not that contract is principally for the labour of the person working under that contract.

I will not take your Honours to it, but the reason why the Full Court identified that it is from the putative employer is at paragraphs 83 and 85 of the decision, and essentially that is because, from the employee’s perspective, they work for wages, and from the employer’s perspective, they obtain labour.  We do not think there is any dispute that “principally” in this provision means “chiefly” or “mainly”, and we deal with the relevant cases on that at paragraph 60 of our written submissions, and I do not propose to take the Court to them.

So the question is how to determine what is the chief or main purpose of the contract.  We say you cannot simply assume that there are two purposes and each is equal.  The various purposes must be weighed and evaluated.  We say there is no particular touchstone that is to be used.  The question is one of fact and degree and to be approached on a broad and common-sense basis, and I take that language from the judgment of Justice Rath in Sonter v Commissioner of Land Tax which is cited with approval by all the judges in Gray v Mercantile Mutual Insurance (Australia) 63 SASR 63 at 154. That is Part D of the joint book of authorities at page 458 but, with respect, that seems relatively uncontroversial.

So, applying that test, we say that what one has to do to determine the principal purpose of the contract is to firstly obviously look at the contract itself, but also look at the surrounding circumstances objectively and subjectively that might inform determination of the putative employer’s purpose. 

We say applying that to this case, if money is used as the metric of how to see what was most valuable under this contract and its main purpose, then the primary judge had earlier recorded that prior to entry into the contract in 1986 Mr Whitby had been earning $410 a week, and the references to that are in our written submissions, then entry into the 1986 contract provided a minimum of $600 a week and this amount built up over time and Mr Whitby understood that increase was to cover the fact he was now providing the truck and its expenses as well as his labour. 

So we say, having regard to the terms of the contract and the metric of the money, the main purpose of this contract from the employer’s perspective was to maintain its trusted workforce - all of these men who are party to the contract who they knew from their previous working relationship that they could trust. 

That was the most valuable thing under this contract, and we say as well that this metric of money, because obviously it only starts at the entry into the contract – but if one looks at the value of the trucks over time, then the partnership accounts demonstrated that less than 50 per cent of the applicant’s gross income was used to pay their expenses.  That argument is referred to by the primary judge also at 220.

Mr Hutley has taken you to the written contracts but again, just looking at those contracts, the rate of pay was hourly – that is the men’s time.  It includes the allowance for annual leave, public holidays and sick days, and relevantly it provided for pay even when these men could not work due to various circumstances.  That is plainly not referable to the trucks. It is only about the men’s labour and availability to do the work for these appellants and again that is because of the trust.

It is said against us in my friend’s reply that something in our construction, which we say turns on the meaning of “principally”, would lead to a result that might impact any unincorporated service provider such as a plumber, a surveyor, accounting firm, a doctor or a barrister, we say there are at least two responses to that.  The first is the exemption in section 12(11) on page 24 of the joint book of authorities in Part B and that exemption is:

A person who is paid to do work wholly or principally of a domestic or private nature for not more than 30 hours per week is not regarded as an employee in relation to that work.

That would cut out most day‑to‑day types of engagements but secondly, in terms of the provision of professional services, there is also a question of what would “labour” mean.  Does labour mean manual labour, does it mean intellectual labour?  Further, when one engages a barrister or an accountant, you are not really engaging their time, although that is how they charge you.  What you engage them to do is to produce a result.  So for the doctor, “Fix my arm, deal with my cancer”, for the accountant, “Please produce my tax return”, and even for the plumber, “Please fix my tap.”

So although they charge you on an hourly basis, you have not contracted for them to labour for you on an hourly basis.  You have asked them to solve a problem.  So that analysis of “are you contracting for labour or are you contracting for a particular result” also further distinguishes those types of engagements.

But we say in terms of our construction resolving the meaning of the word “principally” and how one evaluates different contractual purposes is unlikely to have the floodgate effect that our appellants contend for.

Finally, my last point, the appellants in their reply cite the High Court authority of Neale v Atlas Products in their reply.  In that case, the relevant contract expressly said, “I will do this work, or my employees will do this work”.  The Court there held that that was not a contract for the person’s labour because it could be so readily done by their employees.  I wanted to take the Court to that just so that the different contractual terms can be observed.  Neale is in Part C of the joint book of authorities at page 244 and the relevant ‑ ‑ ‑

EDELMAN J:   Ms Francois, before you go to that, why could it not be said that if an accountant or a lawyer is not engaged for their labour but rather engaged to achieve a result that the truck drivers are not engaged for their labour but rather to achieve the result of carriage of the goods from point A to point B?

MS FRANCOIS:   That is possible, but we rely on the terms of this contract which paid them for their labour on an hourly basis.  So that is part of the distinction between a piecemeal basis and an hourly basis.  They are not paid to deliver that particular item, they are paid to be available in this contract nine hours a day at a particular rate for their labour.  So, it is possible ‑ ‑ ‑

EDELMAN J:   In many cases that is the same with accountants and lawyers.

MS FRANCOIS:   Well, except it is not, with great respect.  So when one engages an accountant for a particular task, it is please complete my tax return.  That is a finite task, they are not engaged to do it nine hours a day, they can shift their other hours around, and ultimately the quantum of what you pay them might be on an hourly rate.  But the task that you have given them is not nine hours a day every day of the week with an hourly rate just for them turning up and doing what you ask them, and in some cases under this contract paying them not to do anything.

These men were paid to sit around as well and paid when the company could not do things because of other industrial action.  So I accept the premise of your Honour’s question, we just say on the facts of this case that is not this contract.

GAGELER J:   Ms Francois, it just happens that the word “labour” was the key word in the contract that we looked at in yesterday’s case and Mr Walker told us that when we read the word “labour” in that contract we should read it as meaning subordinated service. Is that the same way as we should read “labour” in section 12(3) or does it have some broader meaning?

MS FRANCOIS:   We say that in this case it might not have a different meaning, but the Act is different.  So this is the Superannuation Guarantee Act.  Another case might throw up a different set of facts that your Honours might take a different view.  It is otherwise unconfined in the legislation, so I do not want to preclude someone else on a different set of facts running a different argument.  But, for our purposes, this is the ordinary meaning of “labour” which is you are working – you are giving your time on a time basis on a number of hours per day for someone else’s work that they want you to do.

GAGELER J:   Thank you.

MS FRANCOIS:   I just wanted to quickly address Neale and identify that contract, and the terms of that contract are at page 252 of the joint bundle of authorities, and for those using the Commonwealth Law Reports at page 427.  You will see there it is a short contract.  Apparently it was only ever signed after the work was done but the custom was that everyone accepted they knew those terms when they started the work, and they:

contract to supply the necessary labour –

So the contracting party who claimed to be labourer in fact says they will supply the labour, and then they say on the next line:

I/we will be employing other persons in respect to this work I/we hereby undertake to make –

and then they say all the things they are going to do effectively as an employer of that labour.  So it is a very different contract to the one here where the right to delegate was so closely controlled by the appellants.  You could only get someone else to do the work if the appellants agreed, and it was clearly contemplated that when someone was sick the right to delegate was too hard to put into practice and they had a sick day.  So the truck was not there, the man was not there, because the right to delegate was hard to achieve in practice.

So we say we are very far from that type of case, and those are the reasons why we say this contract was principally for the labour of the

drivers and not principally or mainly or equally for the provision of the trucks.  If the Court pleases.

KIEFEL CJ:   Yes, thank you, Ms Francois.  Do you have anything in reply, Mr Wood?

MR WOOD:   A few small points, your Honour, and then my learned friend, Mr Ternovski, will reply to Ms Francois on the superannuation point, if that is convenient to the Court.  The first is it was never argued in this case that there were two contracts.  The way in which this case was argued at trial and on appeal was that the contract in evidence should be construed as being one with the drivers.  That argument failed, the trial judge found, at paragraph 123, the terms of the contract are clear, identifying the partnerships as the parties.

No challenge was made to that in the further amended draft notice of appeal.  There has never been any contention below, before argument here today, that the partnerships operate a business of providing trucks.  What was put was they operated no business at all.  That is why it is unclear exactly how this argument is put, whether the partnership was supposed to operate a business of providing trucks to the drivers, or the company.  It was never argued below that there was some separate contract between the drivers and the company for labour and as ‑ ‑ ‑ 

MR HUTLEY:   The Full Court ‑ ‑ ‑ 

MR WOOD:   I think Mr – the Full Court did not find that.  It found that the construction for which the respondents contended, that is, that the one contract should be construed as one with the drivers, was not made out.  As Justice Gageler and Justice Steward have pointed out, and my learned friend, Mr Hutley, responded, you cannot break up the consideration under that contract and make some of it out to labour and some of it out to the provision of the trucks, or as Justice Steward said, is it your position that the labourers were wholly unpaid.  It points out the difficulties with this argument. 

The partnership, on the facts, delivered the services by truck.  The partnerships owned the truck, paid the expenses, they rendered invoices pursuant to contract, on rates in the contract, and charging GST.  There is simply no…..the instrument or the facts, and it was never in argument that there was a separate, second contract.

KEANE J:   Mr Wood, in the primary judge’s reasons at paragraph 219, at page 45, his Honour rejects “the contention that the proper construction of the contractual arrangements was that the parties were the individual drivers”, although he makes an exception in relation to Mr Whitby after July 2012.  That is said in relation to the Superannuation Guarantee Act argument, but was it suggested or argued in the Full Court that the parties to the arrangements were the individual drivers or that the individual drivers were somehow themselves parties to these contracts and if it was suggested, how did the Full Court deal with that?

MR WOOD:   It was not contested that the terms of the contract are clear as identifying the partnerships as the parties.  What was suggested in the appeal was that the contract as identifying the partnership as parties should nevertheless be construed as one which the law should regard as one of employment – that is, it created an employment relationship, but it was never suggested there were two separate contracts.  It was never part of any argument that there was one contract for labour and one contract for the provision of the truck.

KEANE J:   Or that there was a separate contract with the drivers individually.

MR WOOD:   That is correct, your Honour, and what was said was that you should construe the contract that was in evidence on the basis that my learned friend, Mr Hutley, has taken you to today as a repetition of that argument that you should look at things like annual leave, sick leave, the use of the word “his” and you should construe that contract as being one which creates an employment relationship between the drivers and the company.  But no, there was never any argument about any separate contract, a second contract.

Justice Gageler asked a question of my learned friend about the ACE’s Case, and I do not think it was answered, as to how many contracts were in that case.  There was one contract, it was held, and it is reported at ACE Insurance v Trifunovski [2013] 209 FCR 146 at paragraphs 134 to 135 in the appeal decision. The contracts were made with individual agents. There were assignable benefits under those contracts between combined and the individual agents, which allowed those benefits to be assigned to a corporation, but the contracts were made with individual agents, and the finding – and this is set out at paragraph 129, was that the Full Court found that the trial judge’s analysis:

showed that the agents had no business of their own; they were working only in the business of Combined.

Therefore, Justice Perram is wrong in paragraph 7 in the appeal decision before this Court, when his Honour said:

ACE Insurance was a case where insurance sales agents were working in their own businesses and in the business of ACE Insurance and were employees.

That was not the factual finding of the Full Court, and even if it was, we would say it must be legally incorrect. 

Moving then to section 309(1)(b) of the Industrial Relations Act 1996, to which our learned friend made reference, in our submissions, before lunch we said you could not use this section and the instruments made thereunder to assist in the construction of the common law meaning of “employee”, because there is one national common law, Australian common law, and this is a State instrument, but if our learned friends want to rely upon section 309(1)(b), it assists our case.

When one looks at that section, one can see that the New South Wales Parliament is trying to deal with the sort of issues that the respondents in this case dealt with by litigation, that is, how do you provide employment‑like benefits to one‑person operations involved in contracts of carriage?  That definition sits, conformably, with the way in which we say the relationship of employment should be found.  Of course, it does not bind this Court, but it is consistent with it.

Moving then to his Honour Justice Steward’s questions about negotiations in relation to the 1993 contract, there were in fact two important changes from 1986.  One is the question of rates, which my learned friend, Mr Hutley, referred to, and there was a finding.  My learned friend, Mr Hutley, said there was not; there was.  It is set out at paragraph 40 of the trial judge’s reasons where it says the individuals approached the company to try to obtain a nine‑hour day because the carton rate – and this is in the evidence, not in the finding – was not providing them with enough work.

The second change that occurred in the 1993 contract – and this is set out in the trial judge’s decision – was that the number of contracting parties moved from five to four, and then in 1998 from four to three.

KIEFEL CJ:   Mr Wood, as a background fact to the 1993 contract, to whom were the payments for carriage made?  To the partnership?

MR WOOD:   Yes, your Honour, in all cases.  Dealing then with the decision of her Honour Justice McColl in the Air Express Case, our learned friend took you to paragraph 74 but he did not read you that paragraph.  That paragraph presents an answer to the proposition he later advanced based on the contract, which is that somehow a nine‑hour day or a weekly rate is something that should be weighed in the balance against the finding of an independent contract relation whereas her Honour found that – and I will just read paragraph 74 out to the Court – her Honour found at paragraph 74 that:

The fact that the respondent received a minimum weekly sum is also not inconsistent with independent contracting . . . It is equally consistent with the notion of a retainer paid to ensure the continued availability of the respondent’s truck and services even in periods where the appellant’s business was not as busy as usual.

Could I ask also the Court to look at paragraph 46 which refers to the assets that were deployed in the business, and at paragraph 44 there is the reference I referred to before lunch about:

the “conventional view” that owners of expensive equipment such as the truck owned by the respondent are independent contractors.

The decision our learned friends referred to but my learned friend, Mr Hutley, did not refer to it by name, but it is set out in the written outline of argument, Re Porter, is inconsistent with every other case that has been referred to by the parties here today.  Re Porter was an attempt to introduce a new test of economic dependency echoing the sort of questions that I think it was Justice Gleeson and Justice Gordon had yesterday, that is, issues concerned with inequality of bargaining power.

They are not the same thing, I understand, economic dependence and inequality of bargaining power but they are similar.  That idea has never been picked up, and in Justice Gray’s decision in Re Porter he failed to distinguish between assets deployed in a business of a large capital nature like trucks and bicycles.  He regarded them as the same.  That is exactly what this Court did not do in Hollis v Vabu.  It has no precedential value at all, we would say respectfully.

Moving then to Massey, our learned friend referred to the early parts of Massey.  Could I ask the Court to look at the later parts, the end of the judgment of Lord Denning and I think Justice Lawton where their Honours – and this might be some answer to your question yesterday, Justice Edelman, about what is the utility of a label, where they – and this is the last sentence of the second‑last paragraph of Lord Denning’s judgment:

Having made his bed as being self‑employed, he must lie on it.

Then Lord Justice Lawton said:

The applicant is asking this court to adjudge that he is entitled to make claims with two different voices.

If the Court looks at that case, you will see that it is strikingly similar to this case, that is, after changing a relationship after a period of time, one of the parties to that relationship upon termination seeks to recharacterise it, having previously changed it.

Lastly, dealing with the contract, there was a question Justice Keane asked about clause 2.1.a) and his Honour asked whether the Full Court dealt with that clause.  The answer is no.  You can see that because the trial judge dealt with it at paragraphs 196 and 197.  The trial judge was dealing with an argument by the respondents that 2.1.a) - and you heard the argument echoed today by my learned friend, Mr Hutley – showed a level of control consistent with an employment relationship. 

The response of the trial judge was the same as the response of Justice Gordon and Justice Edelman today to say, well, you have to look at 2.1.a) in context, that is, you have to look at the clauses that follow and particularly – this is at 196 – at clauses 2.1.d) and 2.1.e). 

No issue was taken with that construction.  The Full Court did not deal with it and it is plain at paragraph 215(f) of Justice Anderson’s decision, though the Full Court did deal with the practical operation of that clause which the trial judge set out at paragraph 197, and that was dealt with at paragraph 215(f) of Justice Anderson’s decision.  It should be recalled that Justice Anderson found as a matter of fact the applicants were not in fact directed in how to conduct their deliveries.

So the trial judge, we would say, is correct.  It was unchallenged.  There was a right to control throughout the contractual period that was exercised in the manner the trial judge found but let us say there was an argument before the Full Court, a fully-fledged argument on this point – that is, 2.1.a) means something and converts what is a contractual relationship to an employment one.

If there was that argument, the answer was given by Justice Dixon about 70 years ago in the droving case, Queensland Stations v Federal Commissioner of Taxation (1945) 70 CLR 539 at 550. The clause in question was “to obey and carry out all lawful directions”, even stronger than this clause. Justice Dixon said at 552:

In considering the facts it is a mistake to treat as decisive a reservation of control over the manner in which the droving is performed . . . For instance, in the present case the circumstance that the drover agrees to obey and carry out all lawful instructions cannot outweigh the countervailing considerations -

That observation has been repeated over and over again in the cases.  As to the other contractual terms, it should be remembered that the contract was not drafted by lawyers.  It has to be given a businesslike construction having regard to the nature of the contracting parties. 

Many of the clauses that my learned friend referred to are equivocal and he certainly skipped over clauses which are redolent of the fact that this is an independent contract.  For example, he skipped over 2.i), the indemnity.  You will recall Justice Steward of I think it was Mr Walker yesterday in the other case about an indemnity clause.

The annual leave clause, when you look at it you can see it is not annual leave for an individual, but it is annual leave for the person, the drivers and trucks.  When you look at the clause, you can see that it has not been given leave, but the trucks are not required to be working during those four weeks including during the two‑week shutdown.

Similarly, other clauses which my learned friend pointed to, do not, either individually or together, convert what is obviously a relationship of independent contract between the partnership and the company into something else.  The case was never put, really, like that.  The case was put on the basis, all right, you have a right to delegate, we understand that, it is not a perfect right, it needs the approval of the company, but in practice it did not happen.  It was not put that the contractual terms about sale of vehicle turned the contract into an employment contract, rather, it was just one of the points that was made about goodwill.

What happened factually thereafter in relation to the powers that were exercisable under the contract, under the logos, under the uniforms, under the nine‑hour day, in relation to the capacity of goodwill and the capacity to service other businesses, are the sorts of things that were the product of the choices, very largely, of the drivers.  I do not mean that in a critical way, but the drivers could have obtained other drivers to drive their trucks when they were not using them.  The drivers were only required to use the trucks Monday to Friday.

The drivers had to prove, because it was their onus, that the right in the contract to carry out other work was a dead letter.  They did not even attempt to prove that, they did not attempt to prove that somehow there was some difficulty in servicing domestic clients in the west of Sydney or the Southern Tablelands because you had a logo on your truck.  They did not prove, or attempt to prove, that because they were requiring the truck for, let us say 12 hours a day, let us say from 5.00 am to 5.00 pm, if there was no other work available for those trucks during the rest of those days, or on the weekends, they just casually turned up and said it was difficult for us,

because we have worked a lot and because there were logos.  That is as far as it went.

KEANE J:   Mr Wood, in relation to clause 2.1.a), why would not one read that as empowering Thorn to give directions as to what carriage should be undertaken, that is to say, it is a power to give directions to make deliveries, other than to direct how that should be done?

MR WOOD:   That is exactly the construction the trial judge put on it, your Honour, and we would say that is the correct construction having regard to all the clauses read ‑ ‑ ‑

KEANE J:   Was the Full Court invited to take a different view of its construction?

MR WOOD:   No, your Honour.  There was no issue with that clause.  It is merely the operation of the relationship thereafter in relation to that clause.  Lastly, before I hand over to – I think I have dealt with everything.  Unless there are any questions, I will hand over to my learned junior, Mr Ternovski, to deal with the superannuation point.

KIEFEL CJ:   Yes, thank you, Mr Wood.  Mr Ternovski.

MR TERNOVSKI: Your Honours I will be very brief. Four points in reply in relation to section 12(3) of the Superannuation Guarantee (Administration) Act.  The first is this.  You would have heard my learned leader, Mr Wood, suggest that there may be unfairness to the respondents in having the matter decided by this Court in the absence of a decision of the court below and the suggestion therefore that it may be appropriate to remit the matter.

Obviously, the respondents have not taken up that invitation and they have advanced argument in support of their position on that section.  Therefore, we press on and we press the submissions we made in our reply submissions on that issue.

Two, in my submission, as a matter of construction, section 12(3) requires the counterparty to the contract to be the worker performing the work. If I could take your Honour to the text of the section, which is found at page 23 of the joint book of authorities, volume 2, tab 6. If your Honours have a look at the text, in particular, the last part of the section, if a condition in the first part is satisfied, the person, the worker, is an employee of the other party to the contract. In my submission, the words “the other party to the contract” strongly suggests that the person, the worker, is the first party.

That is the construction that was given to that section by Justice Bromberg in a decision called On Call Interpreters and Translators Agency Pty Ltd v The Federal Commissioner of Taxation (No 3) 214 FCR 82 at paragraph 309, that is, that the contract must be with the worker.

GAGELER J:   Now, is that submission consistent with Dental Corporation v Moffet?

MR TERNOVSKI:   Aspects of his Honour’s reasoning in On Call were disapproved in Moffet, but Moffet did not, on my reading of it, deal with the issue of the party or to the contract.  There were other aspects ‑ ‑ ‑ 

GAGELER J:   In Moffet, one party was Dental Corporation Limited.  That was on one side of the contract, and on the other was Dr Moffet and his company, and under that contract Dr Moffet was required ‑ ‑ ‑ 

MR TERNOVSKI:   Dr Moffet was directly a party, is my recollection of the facts of that case.

GAGELER J:   Are you saying that Mr Jamsek is not directly a party?

MR TERNOVSKI:   Well, that takes me to the third point of my submission, your Honour, which is it was put that, because the contract was with the partnership, which was not a separate legal entity, therefore Mr Jamsek and Mr Whitby are parties, because they are partners in the partnership, and the answer to that is ‑ ‑ ‑ 

GAGELER J:   That is an issue of law, is it not?

MR TERNOVSKI:   It is, your Honour, except that an answer to that is found in section 72(1) of the Act, which is also in the joint book of authorities, which deems a partnership to be a partnership to be a legal person for the purposes of the Act. 

Finally, your Honours, we embrace the suggestion of Justice Edelman that this was a contract for the provision of a result, and not merely labour, and in that respect, I refer your Honours to paragraph 20(c) of our reply, and otherwise I rely on our reply, in particular paragraphs 17 to 20 of the reply, which deal with this issue. 

GAGELER J:   Does section 72 mean that the partnership can be the person who is providing labour for the purpose of section 12(3)?

MR TERNOVSKI:   As in the partnership could be deemed to be an employee?

GAGELER J:   Yes.

MR TERNOVSKI:   No, your Honour, because the scheme of the Act requires – well, the scheme of the Act gives an employer within the meaning of the Act – and by that I mean the broader definition of “employee”, not just common law employee – a choice of whether to pay superannuation into a complying superannuation account or, if they do not do that, to pay a tax.  That effectively compels the employer to pay superannuation to employees in the broader sense. 

Now, because of the requirement – because the Act contemplates that the superannuation be paid into a complying account, that probably excludes the possibility that the partnership could be the worker because…..the partnership could be a person that holds a complying superannuation account.

GAGELER J:   If that is so, I just do not see what section 72 does to assist your argument.

MR TERNOVSKI:   The way I read it, your Honours, is that a contract with a partnership is not treated for the purposes of the Act as being the same as a contract with each individual person.  It gives the partnership a separate legal personality for the purposes of the Act.

EDELMAN J: You also have to read section 12(3) in its reference to “under a contract” to be as a party to a contract, do you?

MR TERNOVSKI:   That is exactly how I read it, yes, and I rely in particular on the second part of that section which refers to “the other party to the contract”.  Unless there are any further questions, those are my submissions, your Honours.

KIEFEL CJ:   Yes, thank you.

MR HUTLEY:   Your Honours, can I say one small matter having regard to what fell from my learned friend, Mr Wood.

KIEFEL CJ:   Yes, Mr Hutley.

MR HUTLEY:   Thank you, your Honour.  We do not accept that we did not run a position as to what the substance of the obligations under these contracts were.  In fact, the court found at 243 that the obligations on the partnership, or what the partnership provided under the contract was the equipment.  So the court necessarily, in our respectful submission, consistent with the submissions which were made at first instance about -

paragraph 243 of the reasons of the Full Court - they say, in effect, under the contract what was provided by the partnership were the trucking services and did not find that under the contract what was supplied was my client’s services.  They rejected that.  That is why they referred to different services being provided in different ways.  They did not, in effect, set aside that contract.  They did not say it was invalid. 

In our respectful submission, it was wholly consistent with how the argument was put on the appeal at first instance which is reflected in 173 and it is wholly consistent with, in effect, the analysis of Justice Perram.  The whole purpose of the exercise was that you could have different contracts and deal with different suppliers, and it was never in doubt that we were putting forward a case that we were supplying under a contract of employment, and that has been found. 

In our respectful submission, it is just wrong to say that we are precluded from this argument.  In fact, in our respectful submission, unless that in substance was accepted, 243 is just unintelligible.  So our learned friends are at issue about how this matter was dealt with and how the court dealt with it, in our respectful submission.  I have nothing further.

KIEFEL CJ:   The Court reserves its decision in this matter and adjourns to 9.30 am tomorrow for pronouncement of orders, and otherwise to 10.00 am.

AT 3.59 PM THE MATTER WAS ADJOURNED