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ZG Operations Australia Pty Ltd v Jamsek

ZG Operations Australia Pty Ltd v Jamsek

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HIGH COURT OF AUSTRALIA
KIEFEL CJ,
GAGELER, KEANE, GORDON, EDELMAN, STEWARD AND GLEESON JJ
ZG OPERATIONS AUSTRALIA PTY LTD & ANOR APPELLANTS
AND
MARTIN JAMSEK & ORS RESPONDENTS
ZG Operations Australia Pty Ltd v Jamsek
[2022] HCA 2
Date of Hearing: 1 September 2021
Date of Judgment: 9 February 2022
S27/2021
ORDER
1.Appeal allowed.
2. Set aside the orders of the Full Court of the Federal Court of Australia made on 16 July 2020.
3. The issues raised by the notice of cross-appeal be remitted to the Full Court of the Federal Court of Australia for determination, and the Full Court to otherwise make orders in accordance with the reasons of this Court.

On appeal from the Federal Court of Australia
Representation
S J Wood QC and D Ternovski for the appellants (instructed by Agnew Legal)
N C Hutley SC and R S Francois with A D Crossland for the respondents (instructed by Watson Law)
New South Wales Business Chamber Limited appearing as amicus curiae, limited to its written submissions
Notice: This copy of the Court's Reasons for Judgment is subject to formal revision prior to publication in the Commonwealth Law Reports.

KIEFEL CJ, KEANE AND EDELMAN JJ. Between 1977 and 2017, Mr Jamsek and Mr Whitby[1] ("the respondents") were engaged as truck drivers by the second appellant's predecessors in business and subsequently by the second appellant itself. That business has undergone several changes of ownership during the period of the respondents' engagements. From the respondents' commencement in 1977 until 1986, the business was owned by Associated Lighting Industries Pty Ltd. The business was transferred in 1986 to Thorn EMI Pty Ltd and again in 1993 to the first appellant, which was then named Thorn Lighting Pty Ltd. Finally, in 2015, there was a corporate restructure by which Thorn Lighting Pty Ltd was renamed ZG Operations Australia Pty Ltd ("ZG Operations") and responsibility for the sales division of the business, which included the arrangements with the respondents' partnerships, was transferred to the second appellant, ZG Lighting Pty Ltd ("ZG Lighting"). ZG Lighting engaged the partnerships until the date of their termination on 20 January 2017[2]. For convenience, the various entities which engaged the respondents and their partnerships will be referred to in these reasons compendiously as "the company".
[1]Mr Whitby having been declared bankrupt, the second and third respondents in the appeal to this Court were the trustees of Mr Whitby's estate in bankruptcy. It is convenient, however, in these reasons to refer to Mr Whitby personally.
[2]Jamsek v ZG Operations Australia Pty Ltd (2020) 279 FCR 114 at 121 [27], 131 [89]‑[91], 132 [95].
The respondents were initially engaged as employees of the company and drove trucks provided by the company. However, in late 1985 or early 1986, the company insisted that it would no longer employ the respondents, and would continue to use their services only if they purchased their trucks and entered into contracts to carry goods for the company. The respondents agreed to the…

Grounds of appeal

[14] The appellant contends that the primary judge erred in finding that the respondent had discharged the onus of establishing the matters required under the relevant provision.

[15] It was submitted that his Honour failed to give adequate weight to the evidence of the second witness, and that the findings of fact were not reasonably open on the material before the Court.

[16] The respondent, for its part, submits that no error is disclosed, and that the conclusions reached were well within the range of outcomes available to the primary judge.

Consideration

[17] It is convenient to deal first with the question of construction, as the resolution of that issue informs the remaining grounds advanced by the appellant.

[18] For the reasons that follow, we are of the view that the appeal should be allowed in part and the matter remitted for further determination.

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Details

Case: [2022] HCA 2
Decision Date: 9 February 2022

CaseChat Overview and Summary

The High Court of Australia considered the nature of the employment relationship between ZG Operations Australia Pty Ltd and the respondents, Mr Jamsek and Mr Whitby. The dispute arose from the respondents' claims that they were employees of the company, despite having entered into written contracts in 1986, on behalf of partnerships with their respective spouses, to provide delivery services as independent contractors. Prior to 1986, both individuals had been employed by the company as truck drivers, with the company providing the vehicles.

The central legal issue before the High Court was whether, in substance and reality, the respondents were employees of ZG Operations Australia Pty Ltd, notwithstanding the existence of written contracts designating them as independent contractors operating through partnerships. This required the Court to determine the legal principles governing the characterisation of a worker as an employee or an independent contractor, particularly when a written contract exists and the parties' conduct over a long period is relevant.

The High Court reasoned that the contractual rights and obligations agreed upon by the parties at the time the contract was made are paramount in determining the nature of the relationship. The Court held that the "substance and reality" of the relationship, in terms of the totality of the relationship, is determined by the terms of the written contract, not by the parties' conduct or the "control" test in isolation. The Court found that the 1986 contract, which stipulated that the partnerships would purchase their own trucks and be paid for delivery services, established the legal framework of the relationship. The Court emphasised that the respondents' claims did not suggest that their day-to-day performance of the contract superseded the rights and duties established by that contract.

The High Court allowed the appeal, setting aside the orders of the Full Court of the Federal Court of Australia. The issues raised by the notice of cross-appeal were remitted to the Full Court for determination, with the Full Court to otherwise make orders in accordance with the reasons of the High Court.

Orders

Orders of the court

1. Appeal allowed.

2. Set aside the orders of the Full Court of the Federal Court of Australia made on 16 July 2020.

3. The issues raised by the notice of cross-appeal be remitted to the Full Court of the Federal Court of Australia for determination, and the Full Court to otherwise make orders in accordance with the reasons of this Court.

Background

Background to the litigation

In addition, as a practical matter of the due administration of justice, the task of raking over the day‑to‑day workings of a relationship spanning several decades is an exercise not to be undertaken without good reason having regard to the expense to the parties and drain on judicial time involved in such an exercise. The claims made by the respondents in this case did not give rise to an occasion for such an exercise, those claims involving no suggestion that any aspect of the day‑to‑day performance of the contract superseded the rights and duties established by the contract. That having been said, however, in order to aid an understanding of the reasons of the courts below and of the arguments in this Court, it is desirable to summarise the salient aspects of the history of the dealings between the parties.The factual background Mr Jamsek and Mr Whitby left high school at 14 and 15 years of age respectively. Neither has any formal qualifications, and both have only ever worked in jobs requiring manual labour. Both Mr Jamsek and Mr Whitby began working for the company in 1977 and became delivery drivers in 1980. There is no dispute that, at least until late 1985 or early 1986, they were employees of the company[7]. During this time, they drove trucks that were provided by the company[8].[7]Jamsek v ZG Operations Australia Pty Ltd (2020) 279 FCR 114 at 121‑122 [30]‑[32], [34].[8]Jamsek v ZG Operations Australia Pty Ltd (2020) 279 FCR 114 at 153 [202].The 1986 contract In late 1985, aware that the company was planning to move locations, Mr Jamsek and another truck driver approached the company to request a pay rise to compensate them for the additional travel time. The request was rejected. A few weeks later, the company informed all five of its drivers, including Mr Jamsek and Mr Whitby, that it would not offer a pay rise but instead would offer the opportunity for the drivers to "become contractors", which would involve the drivers purchasing their own trucks. The drivers were told: "If you don't agree to become contractors, we can't guarantee you a job going forward"[9]. [9]Jamsek v ZG Operations Australia Pty Ltd (2020) 279 FCR 114 at 122 [38]‑[39]. Each of the company's five drivers accepted the offer[10]. Each of Mr Jamsek and Mr Whitby, on the advice of his accountant, set up a partnership with his wife (referred to in these reasons as "the Jamsek partnership" and "the Whitby partnership" respectively)[11]. To give effect to the new arrangements, Mr Jamsek and Mr Whitby executed a written contract with the company ("the 1986 contract"). A copy of the 1986 contract could not be located when the proceedings commenced, and it was not in evidence at trial. Nevertheless, the primary judge inferred that, consistently with later contracts, each respondent entered into the 1986 contract on behalf of his partnership[12].[10]Jamsek v ZG Operations Australia Pty Ltd (2020) 279 FCR 114 at 122 [40].[11]Jamsek v ZG Operations Australia Pty Ltd (2020) 279 FCR 114 at 122 [35]‑[36].[12]Whitby v ZG Operations Australia Pty Ltd [2018] FCA 1934 at [22].

Evidence

Evidence Before The Court

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Decision

Reasons for decision

KIEFEL CJ, KEANE AND EDELMAN JJ GAGELER AND GLEESON JJ (dissent) GORDON AND STEWARD JJ

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Ratio Decidendi

Legal Principle Established

Established by: KIEFEL CJ, KEANE AND EDELMAN JJ, GORDON AND STEWARD JJ

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