ACE Insurance Ltd v Trifunovski

Date of hearing: 7 March 2011 - 30 March 2011

Counsel for the Applicant: Mr A Leopold SC with Mr T Saunders

Solicitor for the Applicant: Allens Arthur Robinson

Solicitor for the Respondents: K P O'Donnell & Associates

FEDERAL COURT OF AUSTRALIA ACE Insurance Ltd v Trifunovski [2011] FCA 1204 CORRIGENDUM

1. In the third last sentence of paragraph 96 of the reasons for judgment, the word "surprisingly" should be replaced with the word "unsurprisingly". I certify that the preceding one (1) numbered paragraph is a true copy of the Corrigendum to the Reasons for Judgment herein of the Honourable Justice Perram.

Associate: Dated: 18 November 2011 IN THE FEDERAL COURT OF AUSTRALIA NEW SOUTH WALES DISTRICT REGISTRY GENERAL DIVISION NSD 1860 of 2008

JUDGE: PERRAM J DATE OF ORDER: 25 OCTOBER 2011 WHERE MADE: SYDNEY

1. The parties bring in short minutes of order within 14 days. 2. The matter be listed for directions at 9:30am on 18 November 2011. Note: Entry of orders is dealt with in Rule 39.32 of the Federal Court Rules 2011. IN THE FEDERAL COURT OF AUSTRALIA NEW SOUTH WALES DISTRICT REGISTRY GENERAL DIVISION NSD 643 of 2009

JUDGE: PERRAM J DATE OF ORDER: 25 OCTOBER 2011 WHERE MADE: SYDNEY

1. The parties bring in short minutes of order within 14 days. 2. The matter be listed for directions at 9:30am on 18 November 2011. Note: Entry of orders is dealt with in Rule 39.32 of the Federal Court Rules 2011. IN THE FEDERAL COURT OF AUSTRALIA NEW SOUTH WALES DISTRICT REGISTRY GENERAL DIVISION NSD 644 of 2009

JUDGE: PERRAM J DATE OF ORDER: 25 OCTOBER 2011 WHERE MADE: SYDNEY

1. The parties bring in short minutes of order within 14 days. 2. The matter be listed for directions at 9:30am on 18 November 2011. Note: Entry of orders is dealt with in Rule 39.32 of the Federal Court Rules 2011. IN THE FEDERAL COURT OF AUSTRALIA NEW SOUTH WALES DISTRICT REGISTRY GENERAL DIVISION NSD 646 of 2009

JUDGE: PERRAM J DATE OF ORDER: 25 OCTOBER 2011 WHERE MADE: SYDNEY

1. The parties bring in short minutes of order within 14 days. 2. The matter be listed for directions at 9:30am on 18 November 2011. Note: Entry of orders is dealt with in Rule 39.32 of the Federal Court Rules 2011. IN THE FEDERAL COURT OF AUSTRALIA NEW SOUTH WALES DISTRICT REGISTRY GENERAL DIVISION NSD 647 of 2009

JUDGE: PERRAM J DATE OF ORDER: 25 October 2011 WHERE MADE: SYDNEY

1. The parties bring in short minutes of order within 14 days. 2. The matter be listed for directions at 9:30am on 18 November 2011. Note: Entry of orders is dealt with in Rule 39.32 of the Federal Court Rules 2011. IN THE FEDERAL COURT OF AUSTRALIA NEW SOUTH WALES DISTRICT REGISTRY GENERAL DIVISION NSD 649 of 2009

JUDGE: PERRAM J DATE OF ORDER: 25 OCTOBEr 2011 WHERE MADE: SYDNEY

THE COURT ORDERS THAT: 1. The parties bring in short minutes of order within 14 days. 2. The matter be listed for directions at 9:30am on 18 November 2011. Note: Entry of orders is dealt with in Rule 39.32 of the Federal Court Rules 2011.

IN THE FEDERAL COURT OF AUSTRALIA NEW SOUTH WALES DISTRICT REGISTRY GENERAL DIVISION NSD 1860 of 2008

IN THE FEDERAL COURT OF AUSTRALIA NEW SOUTH WALES DISTRICT REGISTRY GENERAL DIVISION NSD 643 of 2009

IN THE FEDERAL COURT OF AUSTRALIA NEW SOUTH WALES DISTRICT REGISTRY GENERAL DIVISION NSD 644 of 2009

IN THE FEDERAL COURT OF AUSTRALIA NEW SOUTH WALES DISTRICT REGISTRY GENERAL DIVISION NSD 646 of 2009

IN THE FEDERAL COURT OF AUSTRALIA NEW SOUTH WALES DISTRICT REGISTRY GENERAL DIVISION NSD 647 of 2009

IN THE FEDERAL COURT OF AUSTRALIA NEW SOUTH WALES DISTRICT REGISTRY GENERAL DIVISION NSD 649 of 2009

JUDGE: PERRAM J DATE: 25 OCTOBER 2011 PLACE: SYDNEY

REASONS FOR JUDGMENT I. Introduction [1] II. Legal framework [7] (a) Annual leave [8] (b) Long-service leave [20] (c) Employees [23] (d) Employment at common law [25] III. Facts [31] (a) Sales Representatives [38] (b) Territory Representatives [47] (c) Sub-regional Representatives [57] (d) Regional Manager [60] (e) The three roles beneath the regional manager [61] (f) Control [62] (g) Appearance [82] (h) Goodwill [83] (i) Cars [88] (j) Taxes [89] (k) Holidays and hours [92] (l) Incurring of expenses [94] (m) The ability to incorporate [95] (n) The ability to engage other staff [96] (o) Payment by commission [97] (p) Agents believed they were independent contractors [98] (q) Terms of the contracts [99] The sub-regional representatives [101] The territory representatives [110] The sales representatives [111] All contracts [112] The Independent Contractors Clause [114] Contracts pre-dating 1984 [115] (r) Other Miscellaneous Matters [116] IV. Were the agents employed? [121] V. Combined's Defences [124] (a) Misleading and deceptive conduct [127] (b) Estoppel [134] (c) The indemnity claims [147] (d) The proper construction of clause 4.1 of the Award [153] (e) Whether claims statute barred [156] VI. Conclusion [164]

I. Introduction 1 The Combined Insurance Company of America trading as Combined Insurance Company of Australia ('Combined') is a foreign corporation incorporated in the United States of America carrying on business in this country as a general insurer. More particularly, it sells income protection policies typically, although not entirely, in rural and district areas. It does so through a sales force of travelling agents who work under contracts which declare their status to be that of an independent contractor rather than that of an employee. Effective from 1 October 2010, the business of Combined was transferred to ACE Insurance Limited under a scheme governed by the Insurance Act 1973 (Cth) and with it, any liabilities arising in respect of Combined's business. Following the hearing, the parties requested that ACE Insurance Limited become the named party to these proceedings in place of Combined and that course was so ordered. However, because at all times relevant to this litigation the insurer was known as Combined, the agents' contracts and dealings were with Combined and the parties referred to it during the trial as such, I will adopt the same convention. 2 This case concerns the question of whether five agents ('the agents'), none of whom are any longer engaged by Combined, were in fact employees. Each was paid commission on the premiums which they collected; used his or her own vehicle; did not have income tax deducted from earnings; and issued tax invoices to Combined for the services each provided. On other hand, those tax invoices were generated by Combined and issued to itself; the agents accrued no goodwill in their own businesses; were in practical terms quite unable to work for any other insurer; sold only Combined's policies to Combined's customers; and were trained by Combined in a system of business devised and maintained by Combined. Having no goodwill, they had no business which could be sold. In real terms, as will be seen, they were also under Combined's practical control. 3 The agents now claim payment from Combined of annual leave and long service leave entitlements. These entitlements are not provided for in their contracts but are conferred by law, in certain circumstances, upon employees. The principal issue in these claims therefore is whether the agents were employees. There are other issues too: a defence by Combined that some of the claims are time barred; a defence that, on its proper construction, the instrument conferring the right to annual and long service leave does not apply to these agents even if they were employees; and a defence that the agents are estopped from asserting they are employees by reason of a common assumption shared with Combined to the contrary or, alternatively, by their own conduct in executing contracts under which they represented they would act as independent contractors. A separate issue concerns the agents' allegation that Combined should have imposed upon it a civil penalty to punish it for its conduct in not recognising their leave entitlements. 4 Quite apart from these defensive matters, Combined has also commenced its own proceedings against the agents. In that case, it alleges that it has suffered loss and damage by reason of misleading and deceptive conduct by the agents consisting of their execution of the written contracts under which they agreed that they were independent contractors. The damages it seeks against them is the quantum of whatever liability it has to them on their claims. It also sues each of the agents on an indemnity contained in their contracts not only for any liability it has to them but also in respect of any unrecoverable costs it incurs in these proceedings. 5 I have concluded that the five agents are employees; that, apart from some of its limitation defences, Combined's defences otherwise fail; and that Combined's claims for damages and indemnity should be dismissed. The parties were in agreement that should it be necessary, as it now is, to quantify the agents' entitlements or to impose a civil penalty, those issues should be postponed for further argument. To that I will add the issue of costs. 6 There are five agents. The oldest claim is brought by Mr Peries who was first engaged by Combined on 26 October 1981 and whose engagement ended on 15 December 2005. There is a claim brought by Mr Perez who commenced on 29 October 1990 and who was dismissed on 12 October 2006. Mr Trifunovski's claim commences on 1 June 1992, when he was engaged by Combined as a trainer; however he ceased to act in that role in late 1993 and commenced work as an agent on 1 January 1994. Mr Trifunovski claims he remained contracted to Combined until he resigned on 18 September 2005; Combined, however, pleads a limitation defence on the basis that Mr Trifunovski resigned in July 1994 (but recommenced four weeks later). It appeared Mr Trifunovski had also been engaged by Combined at earlier times but these were not the subject of his claim. The last two claims are brought by Mr and Mrs Dicinoski both of whom commenced in late 2001 and both whom finished up in 2005.

II. Legal framework 7 The agents' various claims cover a period running from October 1981 to October 2006. It was said that the entitlement to annual leave arose from ss 232 and 720 of the Workplace Relations Act 1996 (Cth) and the former Insurance Industry Award 1998 (Cth) ('the Award'). Although the agents' submissions did not identify either which clause of the Award was relied upon or in respect of which period, it seems to me likely that it is cl 22 (which deals with annual leave) and that the period in question must at least be the period prior to 27 March 2006, when s 232 came into force. The claim for long service leave is based entirely on cl 25 of the Award. These statements conceal a considerable amount of detail, not all of which was addressed by the parties' submissions. It should nevertheless be explained.

(a) Annual leave 8 Prior to its repeal on 1 July 2009, s 232(2) of the Workplace Relations Act provided that '[an] employee is entitled to accrue an amount of paid annual leave, for each completed 4 week period of continuous service with an employer, of 1/13 of the number of nominal hours worked by the employee for the employer during that 4 week period'. Section 232 was contained in, and formed part of, Part 7 which was entitled 'The Australian Fair Pay and Conditions Standard' ('the Standard'). Why does this matter? Because the Standard was said in s 717 to be an 'applicable provision' and item 2 of the table in s 718(1) conferred upon an 'employee' (of which, more later) a right to apply for a remedy for breach of such an 'applicable provision'. The remedy was not specified but this is of no moment because of s 720. According to it '[if] an employer is required by an applicable provision…to pay an amount to an employee…the employee…may, not later than 6 years after the employer was required to make the payment…sue for the amount of the payment in an eligible court'. What was an eligible court? Section 717 told one that the concept of an eligible court included 'the Court' and that expression in turn was defined, 589 pages beforehand, in s 4, to mean the 'Federal Court of Australia'. This Court, therefore, had jurisdiction under the former Workplace Relations Act to entertain a suit for unpaid annual leave entitlements arising from s 232. 9 The terms of the Standard were in most cases minimum standards which could not be bargained away by contract (cf ss 171(1), 172(2), 173). That said, however, they did not apply prior to 27 March 2006 when the Standard was first inserted into the Workplace Relations Act because they did not exist. This is not a trivial observation for prior to the coming into effect of the amendments wrought by the Workplace Relations Amendment (Work Choices) Act 2005 (Cth) (hereafter, 'the Work Choices Amendments'), the Workplace Relations Act did not seek to regulate the industrial affairs of all employers and employees but was much more limited in its scope. Further, that Act was itself repealed on 1 July 2009 and replaced by the Fair Work Act 2009 (Cth). It follows that, on its own terms, s 232 only governed the claims of the agents for annual leave to the extent that those claims fell in the period between 27 March 2006 and 1 July 2009. In fact, only one of the agents, Mr Perez, was engaged by Combined during any period after 27 March 2006 and even that came to an end shortly thereafter on 12 October 2006. It follows that the claims for annual leave under s 232 are a minor part of this case. There is a further factor limiting the relevance of the s 232 claim, to which I will return below, relating to the manner in which Mr Perez's entitlements under the Standard interact with his claims under the Award. 10 The repeal of the Workplace Relations Act and its replacement with the Fair Work Act has no impact on that analysis. So much would have been plain under s 8 of the Acts Interpretation Act 1901 (Cth) which for over a century has provided that the repeal of an Act does not 'affect any right privilege obligation or liability acquired accrued or incurred under any Act so repealed'. Recent Parliaments have been prolix and obscure and are not satisfied with the clarity of thought or diction on display in s 8. One begins instead with the torpid bulk of Sch 2 to the Fair Work (Transitional Provisions and Consequential Amendments) Act 2009 (Cth) ('the Transition Act') which by item 11(1) deems that the Workplace Relations Act 'continues to apply, on and after the WR Act repeal day, in relation to conduct that occurred before the WR Act repeal day' (the expression 'WR Act' meaning the Workplace Relations Act). Consequently, s 232 continues to apply to matters factually occurring prior to 1 July 2009. This Court has jurisdiction to entertain such claims by reason of item 21 of Part 5 of Sch 17 to the Transition Act which confers upon it jurisdiction in, inter alia, civil claims arising under the Workplace Relations Act. This Court has jurisdiction, therefore, to entertain claims for enforcement of the former Standard notwithstanding its repeal. 11 That leaves unexplained the claims for annual leave which relate to the period before 27 March 2006 when the Work Choices Amendments took effect. Until that day there was in force the Award, which was a federal award to which Combined was a respondent. Clause 22 provided for four weeks of annual leave to 'employees' to whom the Award applied. Leaving to one side for now Combined's argument that the Award, on its proper construction, only provided coverage to clerical and office workers which, even if they were employees, the agents were not, there are two questions which immediately arise: the first is how this Court comes to have jurisdiction to enforce the provisions of the Award; the second is how the Award applies to the period prior to 3 June 1998, which is the date, according to cl 5 of the Award, when it came into force. The second question is not idle: several of the claims antedate the Award's making. 12 As to the question of how this Court had jurisdiction to enforce a federal award in force prior to 27 March 2006 the agents submitted that the answer was to be found in cl 107 of Sch 6 to the Workplace Relations Act as it stood on and after 27 March 2006. That answer was not developed. However, I believe the agents' submission was as follows: Sch 6 was headed 'Transitional arrangements for parties bound by federal awards'. By cl 4 of that schedule, awards which had existed immediately before 27 March 2006 continued in force. The award thus continued was to be known as a 'transitional award': cl 4(4). 13 Section 720 of the Act provided for an action by an employee for payment due by an employer under 'an applicable provision'. Section 717 included amongst the applicable provisions the terms of an award. Both of those provisions were contained in Part 14 which deals with enforcement. Why does that matter? Because cl 107 of Sch 6, which the agents invoke, extends the operation of Part 14 beyond the enforcement of awards to permit the enforcement of 'transitional awards'. 14 This argument is incorrect and I reject it. Upon the passage of the Work Choices Amendments the Parliament sought to expand greatly the coverage of its industrial regulation. Prior to 27 March 2006 the Workplace Relations Act had rested on a narrower constitutional basis. After 27 March 2006 the Act expanded to cover a much larger number of employers. Under s 6 of the Workplace Relations Act the concept of employer was expanded to include, in effect, any foreign, trading or financial corporation which employed staff. This represented an assertion of jurisdiction dependent upon the legal nature of the identity of the employer. Prior to 27 March 2006, jurisdiction had been asserted on the basis of awards made as a result of the conciliation or arbitration of industrial disputes extending beyond the limits of any State (I leave to one side the limited use of the corporations power in relation to the former Australian Workplace Agreements). This kind of jurisdiction did not depend on the identity of the employer but, rather, on the nature of the dispute. 15 When the Work Choices Amendments took effect there arose the practical necessity of continuing in existence the federal awards which had been made under the prior rÉgime. Not all parties to those awards were corporations. Since, after 27 March 2006, the Workplace Relations Act largely rested on the corporations power (I leave to one side the limited use of the trade and commerce power and the territories power in s 6) its ability to extend those awards using that power and, at the same time, varying those awards or authorising direct modification to them, was limited largely to those awards insofar as they dealt with corporations. To the extent that the awards bound parties who were not corporations the awards could be extended but only using the conciliation and arbitration power found in s 51(xxxv) of the Constitution. Of course, modification of those awards was circumscribed by the process of conciliation and arbitration. 16 The Work Choices Amendments therefore generated two kinds of transitional awards. The first was known as a 'pre-reform award' and this was a transitional object which applied to any employer which the Workplace Relations Act, in its post 27 March 2006 form, regulated, principally corporations. The second was known as a 'transitional award' and applied to the remaining employers (frequently individuals). It is the second kind of award which the agents invoke and it is a kind governed by Sch 6. Clause 4(2) makes plain that transitional awards apply only to 'excluded employers'; a term defined in cl 2 to mean an 'employer (within the ordinary meaning of the term) so far as the definition of employer in subsection 6(1) does not cover the employer'. In this case, Combined is a constitutional corporation so it is an employer to whom s 6 applies. In that situation, it cannot be an 'excluded employer'; ergo, Sch 6 is inapplicable. 17 However, the Award was also replaced with a 'pre-reform award'. This curiosity arises from the operation of Sch 4 to the Work Choices Amendments which by cl 4(3) provides: The original award is taken to be replaced by an instrument (the pre-reform award) in the same terms as the original award that, on and from the reform commencement, has effect under the Workplace Relations Act 1996 and binds the following: (a) each employer that was bound immediately before the reform commencement by the original award 18 The definition of 'award' in the Workplace Relations Act picks up a pre-reform award (see s 4). Consequently, its enforcement is the enforcement of an 'award' which is an 'applicable provision' in s 717. There are textual problems with the pre-reform award which I will shortly note but, since no point was taken by Combined about them, I will not resolve. The pre-reform award applies 'on and from the reform-commencement', that is, 27 March 2006. Combined did not seek to argue that in the period before 27 March 2006 the matter was directly governed by the Award as it then stood or to develop a submission that this Court may appear to have no jurisdiction to enforce such a claim. On that view of things, the fact that the Court had jurisdiction to enforce a pre-reform award did not give it jurisdiction to enforce the award which the pre-reform award replaced. It would then be necessary to identify a grant of jurisdiction to this Court in respect of former federal awards, the former explicit grant under the Workplace Relations Act having been repealed. An answer to that problem may lie in s 39B of the Judiciary Act 1903 (Cth); another answer, less palatable perhaps, is that the words in cl 4(3) 'on and from the reform commencement' mean 'before and after the reform commencement'. That reading might derive some comfort from s 527 of the Workplace Relations Act. However, it is not necessary to resolve this issue. 19 It seems to me that I should therefore proceed on the following basis: (a) the claims for annual leave arising between 3 June 1998 and 27 March 2006 are governed by the Award applying (possibly questionably) as a 'pre-reform award' so that this Court has jurisdiction to hear and enforce the claims under the Workplace Relations Act; (b) the claim for annual leave arising between 27 March 2006 and 26 October 2006 (made only by Mr Perez) is governed by the Award which, in that period, certainly was a pre-reform award. The period is also governed by the Standard applied by s 232(2) of the Workplace Relations Act. No party sought to explain how the issue of double application was to be resolved but it seems likely the answer lies in s 529 which will make applicable whichever is more generous; (c) the claims for annual leave arising before 3 June 1998 (that is, before the Award came into force) do not seem susceptible of being maintained since the asserted right does not appear to exist. Combined took issue about this in relation only to the claims of Mr Trifunovski and Mr Peries. No point was taken about this in relation to the claim by Mr Perez.

(b) Long-service leave 20 The Award conferred a right to long service leave of 13 weeks per 15 years service and thereafter an additional 4 1/3 weeks per five years of service: cl 25. The entitlement could not be taken until after 15 years (cl 25.1) but, if the employment relationship was ended at anytime after 10 years but before 15 years of service the employee was entitled to payment in lieu for the amount accrued. A similar accrual arrangement obtained after 15 years. 21 It is apparent from the terms of the Award that it intended its long service provisions to apply retrospectively prior to 3 June 1998. Clause 25.3 explicitly dealt with the position of employees who had commenced employment prior to 1 August 1964 which makes no sense if the Award did not apply, at least in relation to long service leave, prior to 3 June 1998. It follows that the Award, subject to Combined's other construction arguments, applied for long service leave purposes throughout the period from 26 October 1981 (when Mr Peries commenced) through to 27 March 2006, when it became thereafter a pre-reform award. I will assume for reasons already given, but not without some hesitation, that it was a pre-reform award prior to 27 March 2006 as well. 22 In any event, it is an essential step under the agents' argument that they establish that they are employees under the Award and, in Mr Perez's case, that he is an employee within the meaning of s 5 of the Workplace Relations Act on and after 27 March 2006.

(c) Employees 23 The claim for annual leave pay under s 720 of the Workplace Relations Act is conditioned on the presence of an 'employee'. The expression 'employee' is defined in s 5 to mean 'an individual so far as he or she is employed, or usually employed…by an employer'. An 'employer' is defined in s 6 to include a range of different kinds of entity over which the Commonwealth Parliament has legislative authority, 'so far as it employs, or usually employs, an individual'. The class of entity over which the Commonwealth Parliament has legislative authority includes foreign corporations such as Combined. What is critical, therefore, for the agents' claims under s 720 is that they are - combining the two definitions - individuals employed by someone who employs them. The Workplace Relations Act does not seek to define what employment is beyond the prescription of s 7 that employment 'means the employment of an employee by an employer'. 24 That concept imports the common law's understanding of employment. As a matter of legislative history the use of the words 'employer' and 'employee' in ss 5-7 of the Workplace Relations Act is not new. Those words were found in each of the predecessors to that statute. They appeared in s 4 of the former Conciliation and Arbitration Act 1904 (Cth). In The Queen v Foster; Ex parte The Commonwealth Life (Amalgamated) Assurances Ltd (1952) 85 CLR 138 an insurer argued that insofar as the Industrial Life Assurance Agents (Commonwealth Life (Amalgamated) Assurances Ltd) Basic Wage Award 1951 purported to fix the wages of persons who were canvassers of its policies or collected premiums on its behalf it was beyond jurisdiction because they were independent contractors rather than employees. Jurisdiction to make the award was conferred on the then Court of Conciliation and Arbitration in respect of 'industrial matters' which was defined in s 4 to mean 'all matters pertaining to the relations of employers and employees'. Dixon, Fullager and Kitto JJ thought those were words were apt to import the common law: 'We think that the kind of relationship to which the definition in s 4 of "industrial matters" refers by the expressions "employer" and "employee" is, under another name, in substance the relation called at common law master and servant' (at 153). Those same words were then used in much the same way in s 4 of the Industrial Relations Act 1988 (Cth) and again in s 4 of the original form of the Workplace Relations Act. Given what the High Court had said in Foster it is apparent that Parliament proceeded on the basis that the use of those words connoted the common law test. There is no reason to think that any different approach should be taken to the same words in the post-Work Choices Amendments version of the Workplace Relations Act. The right to enforce the Award and the Standard are both conferred by s 720 on an 'employee'. It follows that it is an essential step that the agents demonstrate that they were Combined's employees at common law.

(d) Employment at common law 25 The common law's interest in the question of employment is limited. In modern times it is largely confined to the question of whether one person should be vicariously liable for the torts of another. At earlier times the common law also fixed upon the master-servant relationship as an integer in some species of criminal liability. It recognised the offence of larceny by a servant: see, for example, Anonymous (1473) Jenk 132, 145 ER 93; R v Bass (1782) 168 ER 228; R v Metcalf (1835) 168 ER 1333; R v Jackson (1838) 169 ER 13; R v Heath (1838) 169 ER 13; R v Cooke (1871) LR 1 CCR 295. To a charge of that offence it permitted a defence that the accused was not a servant: R v Hey (1849) 175 ER 413; and R v Bulmer (1864) 169 ER 1479. Further, in very early times it seems likely that that killing of a master by a servant was petit treason although this was made a statutory offence during the reign of Edward III: 25 Edw. III c2 (1351). These obscure matters have, however, become redundant and it is only now for the purpose of attributing vicarious liability that the common law still seeks to identify who is, and who is not, an employee. As five Justices recently said in Sweeney v Boylan Nominees Pty Ltd (2006) 226 CLR 161 at 171-172 [27]: These bounds should not now be redrawn in the manner asserted by the appellant. Hitherto the distinction between independent contractors and employees has been critical to the definition of the ambit of vicarious liability. The view, sometimes expressed [Scott v Davis (2000) 204 CLR 333 at 370 [110] per McHugh J; Hollis v Vabu Pty Ltd (2001) 207 CLR 21 at 57-58 [93] per McHugh J], that the distinction should be abandoned in favour of a wider principle, has not commanded the assent of a majority of this Court. 26 It is true that many legislatures have used the common law's approach to employment as a factum by which other statutory rights and liabilities have been imposed. For example, most Australian States impose a tax on businesses which is referable to the wages paid by them to their employees (see, for example, ss 6 and 11 Payroll Tax Act 2007 (NSW)); persons who employ others are required by s 12-35 of Sch 1 to the Taxation Administration Act 1953 (Cth) to withhold from an employee's wages income tax; and, there is a corresponding obligation to make superannuation payments imposed by the Superannuation Guarantee (Administration) Act 1992 (Cth). Various industrial statutes, both State and Federal, confer rights (and liabilities) on employers and employees - the Fair Work Act is the current example. 27 Although it is true that each of these Acts fixes upon, and uses, the common law's concept of what employment is, they do not have any impact upon the common law's content which remains concerned with, and focused upon, the imposition of vicarious liability. So much will be obvious from the conflicting nature of the statutes in question: a broad approach to the concept of employment might ensure that more persons have superannuation paid on their behalves; but it would also mean that tax would be withheld from their remuneration denying them the benefit of the use of that money pending its remittal at return time to the Commissioner. In the same way, a broad approach to the concept of employment would certainly increase the ambit of the prevailing industrial legislation of the day, but whether that was a matter favourable to employees or not would rather depend upon what the content of those industrial laws might be. 28 For that reason, the issues in the present litigation are not to be approached on the basis that the common law concept of employment should serve as a shield extending industrial protection to a class of independent contractors who are unable to look after themselves. They are instead to be approached from the common law's perspective on the imposition of vicarious liability and with it a subsisting policy debate about the distributive allocation of losses between tortfeasors and their victims. 29 With that in mind one can at least say this: first, the distinction between an employee and an independent contractor is 'rooted fundamentally in the difference between a person who serves his employer in his, the employer's, business, and a person who carries on a trade or business of his own' (Hollis v Vabu Pty Ltd (2001) 207 CLR 21 at 39 [40] per Gleeson CJ, Gaudron, Gummow, Kirby and Hayne JJ citing Marshall v Whittaker's Building Supply Co (1963) 109 CLR 210 at 217 per Windeyer J); secondly, the answers to that question are to be determined by reference to the 'totality' of the relationship (Hollis at 33 [24]); thirdly, a number of indicia have accreted over time in the authorities which are thought to throw light to varying degrees on the outcome without being determinative: the terms of the contract; the intention of the parties; whether tax is deducted; whether sub-contracting is permitted; whether uniforms are worn; whether tools are supplied; whether holidays permitted; the extent of control of, or the right to control, the putative employee whether actual or de jure; whether wages are paid or instead whether there exists a commission structure; what is disclosed in the tax returns; whether one party 'represents' the other; for the benefit of whom does the goodwill in the business inure; how 'business-like' is the alleged business of the putative employee - are there systems, manuals and invoices; and so on - the list is neither exhaustive nor short: see Stevens v Brodribb Sawmilling Company Pty Ltd (1986) 160 CLR 16 at 24 per Mason J and 36-37 per Wilson and Dawson JJ; for application see Hollis at 42-45 [48]-[57] per Gleeson CJ, Gaudron, Gummow, Kirby and Hayne JJ; Sweeney at 172-173 [30]-[33] per Gleeson CJ, Gummow, Hayne, Heydon and Crennan JJ. It will be necessary to refer to some of these factors later in these reasons and the authorities upon which they rest. 30 It is useful then to turn to the facts.

III. Facts 31 Combined is a general insurer incorporated in the United States of America. Since 1959 it has operated in Australia although in this country it trades under the name 'Combined Insurance Company of Australia'. It is a general insurer providing income protection policies to customers largely located in non-urban areas. It is divided into a 'healthcare division' which provides income protection insurance against losses of income caused by ill-health and an 'accident division' which provides income protection insurance against losses of income caused by misadventure. The policies of these two divisions are sold by two corresponding sales forces each of which is made up of travelling insurance sales agents; that is to say, there is a sales force of agents for the healthcare division and a sales force for the accident division. In one respect Combined's evidence about these two divisions was contradictory. Mr Gurney, who was previously Combined's Assistant Vice-President for Legal and Insurance Services, gave evidence that the sales force responsible for the sale of its healthcare policies had 'no involvement in the renewal of these policies'. But the evidence of its Deputy Director of Training, Mr Hanna, was that each customer for both divisions was visited twice per year, that the policies for both were of six months' duration and that both needed to be renewed in that time frame. The evidence of Mr MacDonald, who previously sat on the 'executive committee' of Combined, was to similar effect (by way of explanation, as an American corporation Combined's actual directors are not situated in this country; despite that, however, the day-to-day affairs of Combined in Australia are overseen by a local executive committee). Although there are some minor differences of detail between the two sales forces I have not found any of those differences material to the resolution of the issues which this litigation presents. Save where the context unavoidably demands that they be distinguished I will treat the two divisions interchangeably. 32 The agents are all nominally independent contractors operating under detailed written contracts. They are arranged hierarchically in three tiers: sales representatives; territory representatives; and sub-regional representatives. The sub-regional representatives in turn are themselves responsible to a position known as a 'regional manager' and that position is filled by a person who, it is not in dispute, is an employee of Combined. The structure of the business therefore appears to be one in which Combined administers geographical 'regions' through the direct actions of its own staff; that each of the regions is further divided into sub-regions under the aegis of a sub-regional representative; that each sub-region is itself further constituted by territories headed up by a territory representative; and that, within that territory structure, sales representatives under the territory representative are engaged in the business of selling insurance policies to the public. There being no debate that the pyramidion of this structure - the regional manager - was employed by Combined, the parties join issue about the status of its lower levels: that is, the sub-regional, territory and sales representatives. 33 For the sake of clarity it should be noted that the issues in the case range across the whole of the period 1981 to 2006, involve five agents, 36 written contracts and the involvement of those agents at various levels within the structure at different times. In addition, to make matters more diophantine Combined changed the names it gave to the various positions throughout the period. At one time territory representatives were known as area representatives. At another, there existed a position known as district representative which was somewhere between a sub-regional representative and a territory representative. Understanding its intricacies brings one no closer to the resolution of the issues which this case presents and I will treat it as if it were a territory representative. Other nomenclatures abound: salesman, sales manager, district manager to name but a few. None of this assists; it is to be noted only to avoid later confusion. The basic structure is as I have described: sales representatives; territory representatives; sub-regional representatives and, above them all, the regional manager. 34 Combined submitted that the issues which arose had to be considered on a contractor-by-contractor and period-by-period basis: the question which arose in every case was whether this contractor at this time was an employee. As a corollary it was inutile to investigate the broader question of whether, for example, sales representatives in general were Combined's employees. It followed that attention had to remain focussed on each agent's account and evidence of a general kind should not be resorted to; similarly, it was not appropriate to introduce conclusions reached in relation to one agent as bearing on the situation of another. 35 I do not accept the general thrust of this submission. It is possible that at a theoretical level different answers on the employment question could be given in respect of different agents. This is certainly the case where the agents fill different positions within the pyramid. That observation, however, is more reflective of the differences between the positions than differences between circumstances of individual agents. I do not discount that in appropriate cases the situations of individuals alleged to be employees might fluctuate depending on particular circumstances. But when the basal question is in whose business was the putative employee toiling, it is likely, in very many cases, that this will invite an examination of the business structures involved and this, in turn, suggests that systemic issues are likely to be relevant. 36 This observation is especially pertinent when it comes to the question of control with which I deal below. Combined strove to expunge from the evidentiary record all of the agents' evidence on this topic principally on the basis of form. In any event, I do not think it safe to approach such issues by reference to individual testimonies given at a distance of up to 20 years. A much surer guide, as will be seen, consists of the contemporaneous documents which exist and the inferences which may be drawn from them. 37 It is useful, at this point, to say a few words about the nature of the sales, territory and sub-regional representatives.

(a) Sales Representatives 38 It was the task of sales representatives to travel door-to-door collecting policies from customers whose policies were up for renewal and seeking to sell new policies to new customers. A sales representative earned commission on the new policies which were written (including renewals) and on any premiums which were collected (either in person or when premiums were paid by direct debit or credit card). They were not entitled to any trailing commission in respect of renewals of policies originally written by them. This is an important fact because it means that the right to receive commission rested in the hands of those who in fact renewed the policies, so that upon ceasing to be a sales representative an agent was entitled to no further commission. The sale by assignment of a sales representative's 'business' was quite impossible in practice - there was nothing to sell. In addition to these commissions, sales representatives were also paid bonus commissions to reward superior selling activity. 39 Sales representatives were organised into teams which worked principally in a physical area known as territory (which was overseen by a territory representative). Most of Combined's 140,000 customers were located in rural areas and most of the territories which existed were similarly located. Each territory was broken into six sub-zones known, within Combined, as 'route months' and each team of sales representatives worked in each route month for one month every six months before moving on to the next route month. Put another way, the team moved systematically through the whole territory once every six months spending one month in each route month. Every route month was, therefore, visited by the team twice per year. 40 This six monthly structure arises from the fact that Combined's policies generally expired after six months. Typically, the policies written in a particular route month will be due for renewal six months later which will be when the sales team returns to that route month. A sales team, however, is unlikely to consist of the same people six months later. There is a very high turnover in sales representatives which is between 300% and 400% per annum. It is Combined, therefore, which keeps track of which customers' policies are coming up for renewal in any particular 'route month' in a particular month. This is done through the provision by Combined of 'leads' of which there are several different kinds. The simplest is the customer whose policy is due to expire. But there are also leads generated for customers whose policies have been cancelled as well as those who are customers of Combined's other division (that is, Combined uses the customers of its accident division as leads for its healthcare division and vice versa). Prior to the team moving to the next route month, Combined's computer system (or prior to that, its manual system) generates leads for that route month which Combined then provides to the territory representative for the particular area. The territory representative in turn delegates the leads to the sales representatives. 41 It should be noted that the leads were of varying quality. It might be quite hard to sell a policy to a customer who had cancelled a policy but a customer whose policy had lapsed by effluxion of time might reasonably be expected to renew. That aspect of the sales representative's work - renewing expired policies - 'was like a debt collecting job really' according to one of Combined's executives, Mr Owen-Schwind, a proposition which I accept. 42 So much for the organisational structure. The activities for an ordinary week of a sales representative were as follows. Each morning the sales representative would attend what was known as a 'PEP meeting' organised by the territory representative. It would generally last about 15-20 minutes. Its purpose was to motivate the team. In addition, Mr Owen-Schwind gave evidence that at these meetings the territory representative would inspect the sales representatives' paperwork and 'make sure it was correct and up to date'. He was talking of his own experience as a sales representative but I did not take from his evidence - particularly given his status as the Director of Training - any suggestion that this had changed. 43 Following the PEP meeting the team would then sally forth and begin the business of renewing policies, collecting premiums and selling new policies. My impression was that this was very hard work of a reasonably dispiriting kind involving, as it did, constant knockbacks from disinterested and sometimes hostile members of the public. Much of Combined's training material, therefore, seems to have been directed to maintaining in sales representatives the will to sell. On Monday nights (or sometimes Tuesday mornings) there would be another meeting which typically lasted 60-90 minutes which was conducted by the territory representative. These meetings included what was referred to as a warm-up, followed by a session on Combined's somewhat idiosyncratic company philosophy together with the setting of objectives and motivation for the coming week. The warm-up often consisted of rhythmic chants ('1-2-3-4 Let's go, Door-to-door!') which fed into motivational songs, some obscure (including lyrics such as 'Owned by Aon we might be, But Combined will be at the Top of the Tree') and others canonical ('Oh, I do like to be beside the seaside'). At the end of the week on the Friday night (but sometimes on the Saturday morning) there was held a 'check-in' or 'cash-in' meeting at which time sales representatives would hand over to the territory representative the policies which they had sold or renewed during the week together with the premiums they had collected. At earlier times, sales representatives deducted their commissions from the premiums prior to handing them in on a Friday night but, more recently, that practise has changed so that all commission is handed in to the territory representative with Combined subsequently paying the sales representatives the commissions which are due through an agency account arrangement. 44 Over time there have been some alterations to the manner in which the sales task has been performed. Since 11 March 2002 sales representatives have been banned from 'cold calling' which is the practise of arriving unannounced at premises and seeking to sell insurance. From about the same time the agents have also been 'authorised representatives' of Combined and have carried cards to that effect. At no time, however, has there ever been a uniform for the sales representatives to wear. Regardless, there is no doubt that sales representatives have been encouraged to represent themselves as being 'from Combined'. For example, they have been encouraged to use detailed manuals which were prepared by Combined containing scripts of what to say to customers when seeking to sell them insurance. These scripts very often had the sales representative introducing himself or herself as being 'from Combined' or using sales formulas such as 'As the President of our company says…'. Indeed, Mr Owen-Schwind gave evidence that when he sold products to customers he would say: Thanks Mr Jones. As the President of our company says, as long as you carry these policies nothing in the world will ever happen to you. Thanks again, I'll see you again in six months. 45 Further, the policies being written were of course Combined's policies - a fact underscored by the ability of the sales representatives to issue a policy on the spot to a customer who agreed to purchase it (a process referred to in Combined's evidence as 'pre-issue'). This too is an important matter. At the very moment when the transaction was being consummated - the moment of underwriting - the agents were not performing any function in their own 'businesses' for they were not insurers. At that moment they were acting on behalf of Combined. Whatever the contractual terms this conclusion is inescapable. It is the reason why the High Court concluded in Colonial Mutual Life Assurance Society Ltd v Producers and Citizens Co-operative Assurance Co of Australia Ltd (1931) 46 CLR 41 that an insurer was liable in defamation for statements made by its door-to-door sales representatives even though, in that case, they were not its servants. There are, of course, limits in the use of the concept of representation as a touchstone for the presence of an employment relationship as the High Court's decision in Sweeney shows. But here I do not think they arise. Unlike the fridge mechanic in that case (but like the canvassers in Colonial and the cyclists in Hollis) these agents represented Combined when it came to selling policies. 46 Overall I have no doubt that the impression the customers received was that they were dealing with a representative of Combined rather than a freelance insurance consultant. It is true that there was no formal prohibition on sales representatives selling policies for other insurance companies provided this did not conflict with their business of selling Combined's policies and, from 2003, provided also that Combined's approval had been obtained. In practice, however, for reasons I give later that liberty was in reality empty. The standard form of contract for sales representatives from 1987 provided that sales representatives were permitted to engage in 'other activity or business which does not conflict with…the undertakings and obligations' of the contract. I do not regard that as detracting from the conclusion that the sales representatives in practise only sold Combined's policies. The system of route months and territories made it quite impossible for affairs to be otherwise.

(b) Territory Representatives 47 Each territory had assigned to it (by Combined) a single territory representative who was responsible for its administration. The tasks of the territory representatives were several. One part was to train the sales representatives for a period, previously of one week and presently of two weeks, after they completed a two week training course conducted by Combined. This training was known as field training. Another task - important in a day to day sense - was to distribute the leads which the territory representative had received from Combined. In practice, Combined provided each territory representative with a 'route plan' of the area to be canvassed and a card containing leads for that area. The territory representative would then plan the areas (down to particular streets) into which each sales representative would go. Mr Owen-Schwind gave evidence - typical I assume - that this task of allocation required some assessment of how many business locations could be canvassed in a day and the plans had to be drawn accordingly. 48 It was the territory representative, too, who organised the various meetings which took place during the week and who was also responsible for packaging up the policies and premiums on Friday nights for forwarding to the territory representative's own sub-regional representative (and thence on to Combined). Reference has already been made to Mr Owen-Schwind's evidence as to territory representatives inspecting sales representative's paper work to make sure it was correct and up-to-date. In addition to all of these duties, territory representatives also engaged in the actual selling of policies to customers and collecting of premiums. 49 Territory representatives were not remunerated by anyone for the administrative tasks which they carried out as opposed to their sales activities upon which they received commission. They were, however, entitled to additional commission on the commissions earned by the sales representatives on 'their' team (of course, none of 'their' team was engaged by them - the team was engaged by Combined). This commission was known as 'override commission'. In addition, when field training new sales representatives it is the present practice of Combined to split any commission earned between the sales representative being trained and the territory representative. At earlier times the territory representative conducting the field training received only the override commission with the sales representatives receiving the commission; at other times the sales representative has received a bonus during field training and all of the commission has been paid to the territory representative. I do not regard the difference in those two practises as being material to any issue for determination although the existence of a single unified practice on this topic undercuts somewhat the notion that anything but a single business was being conducted. 50 In addition to these activities, the territory representatives were also encouraged to seek to recruit persons who might themselves be suitable as sales representatives (a practice known as field recruiting). A territory representative received a bonus for each such an act of recruitment. It should be noted that this process of recruitment did not result in the person recruited forming part of the territory representative's own business. All agents were contracted only to Combined. As will be seen later this is an important fact. 51 Insofar as the territory representative sold Combined's policies it is difficult to distinguish their position from that of the sales representatives they nominally led: they held themselves out as being agents of Combined and sold its policies. Insofar as their administrative, recruiting and training functions are concerned a similar conclusion should, I think, be drawn. The training of sales representatives took place during a two week business course conducted by Combined (which I deal with in more detail below). The field training carried out by the territory representative was the practical conclusion of that training course. As such it was the practical continuation of Combined's own training system. 52 The impression that the territory representatives were participating in a business conducted by Combined is enhanced when ones bring to account, as one must, the process of field recruiting of new potential sales representatives. So viewed what is depicted is a state of affairs in which persons holding themselves out as Combined's insurance agents sold Combined's insurance policies to a public from which they sought also to recruit, at the same time, fresh persons for Combined to engage as sales representatives in the same structure. 53 The Friday night check-in meeting was the system whereby policies and premiums were conveyed from the sales representatives through the conduit of the territory and sub-regional representatives to Combined itself. This was not some incidental function which was beneficial for Combined to see achieved - to the contrary: in a real sense, the collection of the policies and premiums was the lifeblood of Combined's operations. 54 Flowing in the opposite direction - but just as instrumental in Combined's operations - was Combined's practise of providing leads to the territory representatives for distribution amongst the sales representatives. Viewed together one sees a process in which Combined engaged in a corporate form of respiration: exhalation of leads for each route month to the territory representatives and down to the sales representatives; conversion by the sales representatives of the leads into written policies and premiums through the process of working the route month; inhalation of written policies and premiums from the territory representatives (gathered in from the sales representatives at check-in meetings). Thus depicted is a business operated by Combined. 55 Within this enterprise, the other meetings organised by the territory representatives may be seen in their proper light. The daily sending out into the field of the sales representatives was preceded by the PEP meeting whose purpose was to encourage the sales representatives to further their sales activities. But those sales activities were merely part of Combined's business of transforming leads into premiums. The Monday night meetings - with their particular emphasis on Combined's philosophy - bear a similar characterisation. Any other view leaves altogether unresolved what it was that the participants at these meetings were doing when they sang songs about Combined (with lyrics such as 'Owned by Aon we might be, But Combined will be at the Top of the Tree'). This is not the behaviour to be expected of persons running their own businesses. 56 The contrary view requires one to conclude that what was in play were separate businesses conducted by the sales representatives and the territory representatives; that what was occurring was not Combined's business; and that the apparent identification of the participants with the Combined business was coincidental. There was no debate, however, that apparently the same structure was to be seen in every territory. That is, across the nation on Friday nights (or sometimes Saturday mornings) sales representatives would be gathering to hand in the policies and premiums to their territory representative for forwarding to Combined. It is altogether too much to think that what was involved was a vast array of identical businesses co-incidentally swaying to the rhythm of some unheard tune. Much more realistic is the obvious: that one business was being conducted - Combined's business on Combined's terms.

(c) Sub-regional Representatives 57 The next organisational structure above a territory is the sub-region. Each sub-region consists of a number of territories. To each sub-region a single sub-regional representative is assigned by Combined. A sub-regional representative does not generally engage in the sale of any policies to customers and in that regard is different to the position of the sales or territory representatives. 58 The very high level of turnover of sales representatives has already been noted. As a result there existed a consistent demand for new sales representatives. A significant part of the role of a sub-regional representative was to find persons willing to become sales representatives. Mr Owen-Schwind's evidence was that when he became a sub-regional representative he was taught 'how to hire [sales representatives]'. This involved placing advertisements for the position in the local press, taking telephone calls from interested applicants and arranging an interview. The sub-regional representative was also responsible for providing premises in which such interviews might take place. Another role of the sub-regional representative was conducting field training of new sales representatives if one of the territory representatives was unable to perform that function (either by being on holidays or sick). Finally, it was the sub-regional representative who checked the policies and premiums handed in at Friday night meetings before forwarding them to Combined. 59 A sub-regional representative was paid an override commission on all of the commissions earned by the sales and territory representatives within his or her sub-region. In addition, they also received a field recruiting bonus for each sales representative who was recruited, together with half of the commission earned during field training of new recruits. The role of the sub-regional representative was therefore truly representative; it was a role of procurement by which members of the public were introduced to Combined so that Combined might engage them as its sales or territory representatives. Combined's case that the sub-regional representatives were conducting their own business is difficult to reconcile with the fact that they could not, and did not, hire any of the insurance staff ostensibly working for them who were solely contracted to Combined and, in respect of whom, from the sub-regional representative's perspective contractual rights of termination and therefore discipline did not exist. The only way a sub-regional representative could sack a member of his team would be to persuade Combined to do so.

(d) Regional Manager 60 The regional manager was an employee of Combined. It appeared to be a State based position, that is, each State had at least one regional manager. Mr Owen-Schwind was the regional manager for New South Wales in 1987 and Mr Bosnic, now the Executive Vice President of Combined for Australia and New Zealand, was regional manager for QLD for the latter part of the 1990s. While it varied over the relevant period, at one point each of NSW, QLD, WA and Victoria had its own regional manager, and SA and TAS were rolled together into one of those state regions.

(e) The three roles beneath the regional manager 61 The structure just described is a pyramid with the regional manager at its apex. The numbers of persons involved varied. As at 20 March 2009 there were 301 sales representatives, 83 territory representatives and 26 sub-regional representatives. Those figures suggest that for each sub-regional representative there were about three or so territory representatives and for each territory representative around three to four sales representatives. On average each sub-regional representative is likely to have had a team of about 15 people beneath him or her made up of three or so territory representatives and 11 or 12 sales representatives. This lowest tier was constantly changing in its composition (three to four times per year) and the duties of the top two tiers included the constant renewal of this primary sales tier.

(f) Control 62 One should begin with that which is at least clear. The idea that there would be a pyramidal structure consisting of sales, territory and sub-regional representatives was Combined's concept. Each of the three tiers was dependent, to some extent, on the other two tiers. The 'business' of a sales representative would not have persisted for a moment if there had been no territory representatives to distribute leads to that representative or, indeed, to tell him or her where to go. The territory representative's 'business' made no sense at all without a team of Combined's sales representatives to administer. There could be no such thing as a territory representative without either a team or a territory. Where did the team and the territory come from? Both were solely determined by Combined. It was Combined which allocated territories to particular individuals and Combined which allocated new sales representatives to those territories. Territory representatives might be involved in field recruitment but, as will be seen, it was Combined which trained the sales representatives and Combined who then retained the agents and assigned them to individual territories. 63 In just the same way, the position of sub-regional representative made no sense without a team of territory and sales representatives beneath it, for the role depended entirely on override commission to generate revenue and override commission could only be earned on the activities of Combined's agents operating the sub-region. Further, because the sub-regional representative's position largely involved recruiting sales representatives for Combined to maintain the team it provided him or her with, it was a job which simply made no sense in the absence of Combined. 64 Once those matters are appreciated it will be seen that it is difficult to describe any of these positions as 'independent'. Perhaps one matter which underscores the unreality of treating these 'businesses' as independent arises when one comes to consider how a contractor might move up the pyramid. In a system of truly independent contractors one might expect that it would be the contractor who decided to branch out into new fields. But it was not so with this structure. Movement from one level of the pyramid to the next was strictly controlled by Combined. Invitations were issued by it to attend its training courses and participants were given manuals at these courses which were written by Combined. If successful on the course Combined would then allocate the agent to a new position (under, of course, a new contract). There were examples, too, of agents being moved down the structure: for example, Mr Perez was demoted from the position of sub-regional representative to that of territory representative on 12 June 2005. This is not surprising since the practical power of termination rested solely in Combined's hands. 65 Combined submitted that its training manuals were not compulsory but I conclude that this is an untenable proposition. Since it was Combined which controlled who got promoted within the sales force pyramid the idea that its training manuals could simply be ignored by an agent is unrealistic. No doubt it is true that amongst Combined's more successful sales representatives (the overwhelming minority since the turnover rate was 300%-400% per annum) the self-interest generated by the commission structure might be expected to provide motivation so that formal instruction might not be necessary. It is highly likely that a number of witnesses called in Combined's case fell into that category. But I do not think that such a view is more generally realistic and, more importantly, it is demonstrably not consistent with the documentary record to which it is now useful to turn. 66 I have no doubt that Combined exercised direct control over the sub-regional representatives. In Schedule One I have set out a series of excerpts from letters written by Combined to its sub-regional representatives over a number of years. There is no substitute for reading that correspondence. It shows a relationship of direction. Indeed, it shows that Combined was directly across more or less every aspect of the structure and how it was performing, and in command of it. In light of this correspondence I simply cannot accept the evidence of Combined's witnesses that Combined never told sub-regional representatives how to conduct 'their' businesses. 67 The correspondence set out in Schedule One is useful for another purpose. It suggests the existence of a command relationship between the sub-regional representatives and the territory representatives and it hints at a similar relationship between the territory representatives and the sales representatives. In a sense that relationship is an obvious artefact of the pyramidal architecture erected by Combined. The sales representatives were organised into teams under a territory representative. The territory representatives fell under the leadership of a sub-regional representative. These were relationships of control, without which the pyramid made no sense. The instrument of control was dismissal but this industrial tool lay not in the hands of the territory or sub-regional representatives. Its ultimate legal expression rested with Combined in whom it was vested by every contract with every representative. 68 Combined's answer to this argument was to observe that if the sub-regional representatives gave instructions to the territory representatives and both gave instructions to the sales representatives this, in effect, was nothing to do with Combined. It never instructed territory or sales representatives what to do. Such instructions as were given were not Combined's. I do not accept this argument. Those instructions were obeyed only because of the existence of Combined's right to terminate the agent involved. The territory or sales representatives had no right to dismiss the agents from their teams. That could only be done by Combined. In any event, the conclusion (which I draw below) that the sub-regional representatives were employees of Combined leads to the conclusion that their instructions were Combined's instructions. In a similar way, the instructions of the territory representatives were also Combined's instructions. At every level within the structure, the instructions were Combined's; composed according to its business model; policed by its power of termination; and all generally pitched to the end of selling its policies to its customers. 69 The fact of Combined's organisational control is emphasised by its control of the training of all three levels within the structure. Each level had its own training course. At the lowest level there was the business course. Persons who were successful in their applications to Combined to become sales representatives were sent on a two week course conducted by it. Trainees were flown, at Combined's expense, to the course and their accommodation and some of their daily expenses met. At these courses, they were introduced to Combined's sales manuals which reflected the personal selling philosophy of Combined's founder, Mr W Clement Stone. The late Mr Stone's inspirational work 'The Success System that never fails' (admitted before me in softcover as Exhibit 26) offered advice on how to get ahead in life through means of positive thinking. The sales manuals reflected similar themes ('You cannot possibly fail to develop a tremendously large income immediately while at the same time laying the foundation for a prosperous future for yourself, if…you sincerely desire to succeed'). 70 At a later time the sales manuals were revised in light of Australian regulatory requirements concerning unconscionable and misleading and deceptive conduct but even then the manuals set forth Combined's views on how a sales representative should operate. The manuals suggested particular scripts which should be said to customers together with what it termed 'rebuttals' to deal with negative responses from customers. The manuals are replete with statements to the effect that if a sales representative is not succeeding it is because he or she is not carrying out the methods prescribed by the manuals. 71 The system disclosed in the sales manuals given to new sales representatives was one wholly devoted to the conduct of Combined's business. Sales representatives may have been free, as a matter of contractual theory, to sell other companies' insurance policies but the training they received was not about the sale of insurance policies generally but about the sale of Combined's policies. The business disclosed in the manuals - with its scripts, its rebuttals, its inspirational leitmotifs - was Combined's business and the sales representatives were receiving training in that business. 72 Once a sales representative had finished training and had been dispatched to the field he or she, as has already been mentioned, would do one week of field training (later, two weeks) with a territory representative. Following that, the process of selling would begin. Sales representatives were presented by Combined with incentives to perform. An elaborate system of rewards was in place whose evident intent was to provide motivation to the sales representatives to sell more policies. The incentives were linked to bonus commissions. Additionally, there were several weeks of the year which were devoted to sales competitions (with names like 'First Start Week' and 'the W Clement Stone Celebration Week') and, from time to time, an 'Ardmore' in which sales representatives from multiple territories got together in a single location for what appears to have been some form of sales jamboree. These Ardmores were incentive programmes and were conducted by an employee of Combined, the Head Offices Sales Manager (a position filled at one time by Mr Owen-Schwind). 73 There were not just incentives of remuneration but also of advancement. A sales representative might become a territory representative if certain of Combined's criteria were met. The first was that the sales representative had to complete three modules of what was once known as the JET Training Course ('JET' is an acronym for 'Junior Executive Training') later renamed the Personal Development Program ('PDP'). The right to take these courses was contingent on increasing sales levels; that is, one needed to have a strong sales record to be permitted to sit the modules. Once the three modules were completed the sales representative would be invited on a one week course - often enough on the Gold Coast - which was the fourth, and final, module of the JET training course. This was conducted by Combined and the successful candidates who had been admitted to the course were flown to the venue and their accommodation paid for. During the course they were provided with manuals - the JET manuals (later, PDP manuals) - which again provided Combined's theory of how a territory representative should go about his or her business. 74 This structure, of course, provided a strong incentive to sales representatives to achieve higher levels of sales. On completion of the JET course the representative might expect to be welcomed into the world of earning override commissions and of running a team rather than merely selling insurance door-to-door. 75 A similar arrangement existed once a person became a territory representative. With sufficient success a territory representative might eventually be invited on the Special Program for Executive Educational Development (the 'SPEED Course'), later known just as the SPED Course (the Executive 'E' was dropped), which was a training course for sub-regional representatives. It, too, was a course conducted often enough on the Gold Coast and it, too, was accompanied by a SPEED Manual (later an Australian SPED Manual) which set out Combined's theory of how a sub-regional representative should go about his or her work. Of particular importance was the business of the recruitment of further sales representatives. Thus were the training programmes. 76 One of Combined's contentions in this case was that it did not instruct any of its representatives as to the manner in which they went about their work and, more particularly, that they were neither instructed that they had to use the methods disclosed in the manuals nor that they had to attend particular meetings. The manuals lacked the 'imperative character' just as similar manuals had in Commissioner of Pay-roll Tax (Vic) v Mary Kay Cosmetics Pty Ltd [1982] VR 871 at 880. There was some evidence to support this proposition. Combined's Director of Training, Mr Owen-Schwind, gave evidence that he had done the business course himself in 1972 (that is, to become a sales representative) and that during the course he had been told that he did not have to follow the scripts if he did not want to; somewhat confusingly, he also gave evidence that on the same course he was asked 'by the person running the course to learn some of the sales scripts and some of the rebuttals because I had no sales experience'. 77 There is little doubt that Combined was well aware of the need to ensure, so far as possible, that its sales force were not employees. There is similarly little doubt that it was aware that the existence of any ability on its part to control its representatives carried with it the risk that an employment relationship might be found to exist. Some of its witnesses gave evidence that they were unaware of Combined ever having issued instructions to representatives about how they did their job; that they did not regard the sales manuals as compulsory; or that they were unaware of any representative ever having been told to attend a meeting. In the end I have come to the view that much of this evidence was wishful thinking. The witnesses called by Combined all had, in the main, lifelong associations with the company starting with their initial engagement as sales representatives. I do not doubt their sincerity but I have found it impossible to reconcile their evidence that Combined did not exercise control in this structure with either the documentary record or the structural implications to which I have referred. 78 Combined submitted that the importance of control had to be seen in a context which included the fact that it was obliged by regulatory requirements to exercise supervision over the agents. Such mandatory matters have been thought to have less impact on the control issue: Australian Mutual Provident Society v Chaplin (1978) 18 ALR 385 at 393. I accept that this is so. I do not think that it assists, however. The control it exercised was much broader in its operation as Schedule One shows. It was not by any means limited to ensuring agents did not break the law; rather, it was directed to ensuring that they carried out their sales tasks in accordance with Combined's modes and methods. 79 I have spent some time explaining the training arrangements to emphasise what should already be clear - that the structure of all of these arrangements was Combined's structure. The training courses were conducted by Combined and the manuals were provided by it too. Territory representatives did not perform the tasks associated with that office because it struck them as a useful business structure - they performed it because it was the only way it could be done. 80 A useful endnote to this discussion of control is a letter written by Combined to all of its sales representatives in May 1983 which throws some light on the true relationship between Combined and its sales force. It is from Mr Perry, the Resident Vice-President of Pacific Operations for Combined, and was sent apparently to all sales representatives and certainly to Mr Peries. It is in these terms: The Health Care Sales & Management Force We have a problem ... and that's good. I believe that you will have to ask yourself if you are "part of the problem, or part of the solution." Recently we have had a tremendous increase in the amount of cancellations and complaints from our Policyholders regarding the activities of our Health Cares Sales Force. It was serious enough to warrant an in depth study and investigation from our Policyholders trying to determine those individuals who are not using the proper sales talks and the proper sales techniques, but were in fact confusing our Policyholders both with the policies themselves and the Cemtex explanation. Some of course, were just plain dishonest and were lying to our Policyholders … and consequently a very large number of our Policyholders have not only cancelled their Health Care Policies, but have cancelled their Accident business as well. "Honesty is not the best policy … It's the only policy" … And any misrepresentation to our Policyholers [sic] will not be tolerated. The Accident business is the "Goose that lays the golden egg" and since we don't want to "kill that Goose" strong measures must be taken to ensure that our Policyholders receive fair treatment. A number of representatives have already been terminated for their activities in the field, and if any additional investigation warrants it … others will be terminated. This letter is to let everyone know that any representative that misleads our Policyholders by inferring the Health Care coverage is really the Accident business that they are merely renewing … or that the Health Care coverages will cover them for both Accident and Health … or that they are not totally informed as to how the Cemtex works … immediate action will be taken. That action is the immediate termination of any representative that "misrepresents." Obviously this does not affect most of the people in Health Care … and it's a shame that so very few are jeopardising the future's [sic] of so many … Therefore you can understand why my concern and why such drastic action is taking place. If there is any clarification or information that you may need please don't hesitate to drop me a line. Very truly yours 81 The references to 'proper sales talks' and 'proper sales techniques' are instructive as is the threat of termination.

(g) Appearance 82 It is apparent from the manuals that the agents were encouraged to behave as if they were part of an organisation. Set out in Schedule Two are a series of extracts from manuals for each of the three positions. It will be apparent that the manuals contemplated one business which was Combined's and that this was to be the face presented to the public.

(h) Goodwill 83 The sale by a sales representative of his or her business was impossible because there was nothing to sell. This reflected the fact that the nature of the sales representative's business was to act upon the leads which were given to him or her by Combined (through the territory representative). Even where a sales representative sold a new policy to someone who was not already one of Combined's leads the very act of doing so would have meant that six months later that customer would have been produced by Combined's computer (or manual) system as a lead. This shows that the act of selling by a sales representative to a new customer did not augment the sales representative's (non-existent) client base, but, instead, increased Combined's client base. There was an additional effect too. Because the terms of the policies were generally only six months in duration the theoretical possibility that the right to receive commission from Combined might be assigned to a purchaser was practically likely to be worthless given that it was a right which would inevitably expire in six months. This underscores the absence of a right to receive trailing commissions in the Combined structure. The representative who was entitled to the commission on any policy was the representative who sold or renewed it. Predecessors in the customer relationship were irrelevant. 84 Those matters show that the sales representative had no goodwill in the activities they were carrying on. They also show that the activities did generate goodwill but that it ended up with Combined in the form of its lead system. That result is consistent with - and strongly corroborative of - the proposition that the business being carried on by the sales representatives was the business of Combined. 85 The analysis in the case of the territory representatives is similar although not identical. Because the lifecycle of the policies was generally six months, the right to receive override commission was subject to a similar lifespan. Sale of the right to receive the override commissions was therefore not practical. Because the written contacts did not give the territory representatives any right to receive leads the assignment of the territory representative's contractual rights could not carry with it the ability to compel Combined to provide leads to the assignee. Further, because all of the contracts were determinable without cause on relatively short periods of notice there was no way that a territory representative could provide to any potential purchaser anything of tangible value. And, just as with the sales representative, the territory representative did not maintain customer lists waiting instead for the provision by Combined of leads. For those reasons, all the goodwill generated by a territory representative from his or her work inured entirely to the benefit of Combined. Again, this is consistent with the idea that the business being conducted was Combined's business. 86 The position of sub-regional representative was a little different. His or her only business was that derived from the making of override commission and recruitment. For reasons already given, the six month nature of the policies made the right to receive override commission valueless as an asset. Having no customers there was nothing which might be sold. So too, the business of recruiting members of the public to become Combined's contractors was not a business which could meaningfully be the subject of a disposal. 87 I deal with the contractual terms in detail below. For present purposes it is to be noted that by contract the agents agreed that the customer lists belonged to Combined. Although there was some evidence which suggested that Mr Perez had taken some Combined customers to a new firm, this is likely to have been an unlawful act which Combined could have restrained.

(i) Cars 88 The three topics just examined above - control, appearance and goodwill - all favour the conclusion that the representatives were employees. A number of other factors, however, do point in the other direction. There is no doubt that each representative drove their own vehicle. The contracts did not require the representative to own a car but it would have been quite impossible to perform the role of a travelling insurance sales agent without one. Most of the agents purchased vehicles especially for the purpose of the job often enough doing so with financing of some description and thereafter claiming as deductions against their assessable income both the finance costs and depreciation. After the introduction of the GST legislation the agents also derived the distinct benefit of being able to purchase the vehicles GST free by reason of it being a business asset which, it should be accepted, is not a benefit they would have obtained had they not been registered for GST. I am inclined, however, to regard this perhaps of less significance than it might otherwise have been. The agents' motor vehicles, like the bicycles in Hollis, could be used for personal use as well and hence are more difficult to categorise as working tools. It is true that in this case many of the agents in their tax returns claimed the benefit for write-down purposes of 100% business use of the vehicles in question. But that is not really the question. The real issue is whether the vehicles were inherently capable of use only for the sale of insurance policies: Roy Morgan Research Pty Ltd v Federal Commissioner of Taxation (2010) 184 FCR 448 at 463 [41] per the Court. I do not think they can be so described.

(j) Taxes 89 There is no doubt too that Combined did not deduct income tax instalments from the commission it paid to the agents. At the same time, because each of the agents was required by Combined to be registered for GST (after its introduction) each agent collected from Combined the GST due on its services. The force of this is somewhat dented, however, when there is brought to account also the fact that it was Combined which issued the tax invoices to itself on behalf of the agents. 90 There are a number of authorities which suggest that the deduction of income tax instalments is relevant to the question of employment: see Vabu Pty Ltd v Commissioner of Taxation (1996) 81 IR 150 at 152 per Meagher JA; Stevens (1986) 160 CLR 16 at 37 per Wilson and Dawson JJ; Australian Air Express Pty Ltd v Langford (2005) 147 IR 240 at 254 [54] per McColl JA (Ipp and Tobias JJA agreeing); cf Re Porter; Re Transport Workers Union of Australia (1989) 34 IR 179 at 185. Because the deduction of income tax from wages will invariably be a matter of consent between employer and employee (or principal and independent contractor) there is little reason to doubt that the tax treatment of the payments provides an important and contemporaneous insight into what the parties intended and understood about this relationship. And, equally, there is no question but that the parties' intention is an important, although by no means determinative, matter. I do not grasp as a matter of analysis, however, why it is that the tax treatment of the payments advances matters beyond disclosing the parties' understanding of the relationship. The Commissioner is not involved in that process and, even if he were, it is difficult to see how the relationship between A and B for vicarious liability purposes should be affected in substance by the attitude of government official C. 91 In this case, I accept that each of the sales representatives understood that he or she was an independent contractor at all material times. Their status as independent contractors was one of the attractions of the position. Indeed, none of them denied that understanding. It is hardly surprising in that circumstance that income tax was not deducted from their commissions or that they each obtained an ABN. Beyond throwing light on the parties' understanding, however, I do not think this advances matters very far.

(k) Holidays and hours 92 It appears likely that the agents usually informed Combined when they were taking time off to which Combined usually replied that there was no necessity to inform it of this fact. I assume in Combined's favour that these letters were not self-serving and reflect the truth of the situation. I proceed on the basis that the agents were at liberty, in principle, as to the times at which they worked. This liberty however was not reflective of the underlying reality which consisted instead of a very hard work schedule in which time off was an illusory concept. 93 Combined pointed to the fact that representatives were not prevented from, and had engaged in, other work while contracted to Combined. It submitted that Mr Perez had been engaged as a contractor with Advanced Hair whilst still contracted to Combined. I reject this on the facts. Despite the fact that formal termination did not occur for some time, I find that he had finished working for Combined at the time he started working for Advanced Hair. There was also evidence that Mr Trifunovski's company, Heraclea Pty Ltd, had conducted a cleaning business. But Mr Trifunovski's evidence was that he was not operating that business 'physically' because 'physically' he was unable to do anything else whilst working for Combined. In fact, Heraclea Pty Ltd was conducting Mr Trifunovski's family business and his role in it was confined to administrative functions in the evenings and did not intrude into the working day. I do not think this therefore bears upon the issue at hand. Into the same category may be placed Mrs Dicinoski's evidence that she worked some evenings at the La Porcetta restaurant.

(l) Incurring of expenses 94 I also accept that many of the representatives incurred significant expenses beyond the operation of their cars. These were not especially significant at the level of the sales representatives but at the level of the sub-regional representative they included the rental costs of premises and not inconsiderable office expenses. I also accept that the expenses in many cases were nearly as large as the revenues which were being generated. Frequently, this occurred because expensive cars were being leased. The sub-regional representatives also incurred a number of expenses such as: taxi fares, advertising expenses, superannuation contributions for wives employed as secretaries, interest payments on vehicles, overdraft interest, car hire, postage, accommodation, travel and telephone expenses. In the ordinary case these would be good pointers to the absence of an employment relationship. In this case, however, the compelling case that a single business - Combined's business - was being conducted requires these matters, admittedly relevant, to be accorded less weight.

(m) The ability to incorporate 95 All of the contracts permitted the agents to operate, if they chose, through a corporation. In relation to the sales representatives I regard this contractual opportunity as elusive and there was no evidence that any of these five agents had done so. There was also no evidence that the agents had incorporated at the level of the territory representatives. As sub-regional representatives, Mr Peries and Mr Trifunovski did at certain times conduct their operations through two corporations, Renham Pty Ltd and Heraclea Pty Ltd. One of Combined's witnesses, Mr Bosnic, also contracted through a corporation as a sub-regional representative. But these arrangements did not suggest that the services which were to be provided were other than those of Mr Peries or Mr Trifunovski or Mr Bosnic. In substance, the corporate vehicle merely allowed the commissions to be received by the companies and for the incurring by them of expenses. As the Full Court noted in Roy Morgan Research at 464 [43] the Tribunal in that case had committed no error in giving this matter little weight when 'the entity selected to do the work… was the individual interviewer, and the company featured only as the recipient of the fees that would otherwise have been paid to the interviewer'. A similar conclusion applies in this case.

(n) The ability to engage other staff 96 Each of the contracts contained a provision which permitted the agents to hire secretarial or administrative staff to assist them. This liberty did not extend to engaging persons to assist in the process of selling insurance (in the case of the sales representative) or of engaging sales representatives (in the case of territory representatives) or of engaging sales or territory representatives (in the case of sub-regional representatives). Nor did it extend so as to allow any agent to delegate any functions conferred upon them by their contracts to others. It strictly related to secretarial and administrative assistance. Since sales representatives handed their own paperwork in on Friday nights they had no need of such services and there was, surprisingly, no evidence of such hiring taking place. I accept that the sub-regional representatives (who were, at various times, Mr Trifunovski, Mr Peries and Mr Perez) did employ their own wives to assist with the paperwork. This is a factor tending against the existence of an employment relationship and it is not, it should be accepted, a minor one.

(o) Payment by commission 97 Plainly, the agents earned money on commission but the commission rates were all set by Combined rather than by negotiation with the agents. It is true, as Combined submitted, that the Court of Appeal had thought that payment on a commission basis was an important indication against a finding of employment in Vabu (1996) 81 IR 150 at 152. But the High Court's approach to largely the same facts in Hollis - and its particular observation that the cyclists in that case could not negotiate the rates - requires one to approach this issue with some caution. That said, I accept that the fact that the territory and sub-regional representatives earned commission on the activities of other persons on their teams sits uncomfortably with the relationship being one of employment.

(p) Agents believed they were independent contractors 98 As I have said above, I accept that each of the agents at all times understood himself or herself to be an independent contractor.

(q) Terms of the contracts 99 Combined required its agents to enter into elaborate written contracts. Generally speaking, there was one kind of contract for each class of contractor; that is to say, there was a contract for sales representatives, a contract for territory representatives and a contract for sub-regional representatives. Because the terminology employed fluctuated over the period 1981 to 2006 these contracts can appear confusing both in their terms and in their numbers. Further, the terms of the various contracts also varied subtly from time to time. The situation is further exacerbated by the fact that each of the agents filled more than one of the positions. Mr Trifunovski entered into 12 different written contracts and a thirteenth one involving his service company, Heraclea Pty Ltd. Mr Peries executed seven contracts and his service company Renham Pty Ltd another four. Mr Perez executed seven. Mr Dicinoski signed two whilst his wife signed three. In all there were 36 written contracts which occupied the three lever arch folders constituting Volumes 17-19 of Exhibit 28. 100 It is usual in cases such as the present to set out verbatim the precise terms of the contracts in question. In this case, given the quantity involved I do not think that doing so would increase the level of illumination. Instead, it is useful to approach the issues by reference to each position in the contracts. The contracts governing the early part of Mr Peries' claim, from 1981-1984, are slightly different in their terms. The arguments advanced by Combined related to the form of the contracts used from the late 1980s, which did not materially differ during the balance of the period of the agents' claim, that is, until October 2006. The Court was invited to use this form of contract as a 'base' contract for analysis. What follows is an analysis, by position, of those contracts; separate consideration is given to the early contracts below.

The sub-regional representatives 101 Mention has already been made of the system of leads which were provided by Combined. The leads lay at the heart of the contracts. Under the sub-regional representatives' contracts Combined bound itself to supply to the sub-regional representative a reasonable number of leads in the sub-region together with the identity of customers whose policies had lapsed or which required renewal (cl 5). The sub-regional representative was entitled to earn standard sales commission if he was the person who actually renewed the policy with a customer or secured business from a lead (cl 3(a)). But more importantly, the sub-regional representative was entitled to override commission on the policies sold or renewed in the sub-region by members of the sales team (cl 3(b)). The sales team was not defined but the scope of the agency was defined in such a way so as not only to recognise the existence of territory and sales representatives but also further to promote their activities by the allocation of leads (cl 1(e)). This suggests that the agency agreement provided an economic incentive to earn override commission on the sales activities of territory and sales representatives rather than through the business of the sub-regional representative actually selling policies himself. The correctness of that suggestion is supported both by the facts and by the terms of the contracts. As to the facts, the only evidence of sub-regional representatives ever being involved in the sales process directly (and thereby earning ordinary commission) was during field training of new recruits. As to the terms of the contracts, it was provided in the override commission clause that it 'is clearly understood by the parties to this Agreement that the Company offers to the Sub-Regional Representative the opportunity to earn Override Commissions in order to induce and encourage the Sub-Regional Representative to promote the sale of Policies in the Sales Territory by structuring and organising the Sub-Regional Representative's affairs so as to be free to carry out and undertake the activities authorized under Clause (1) and Clause (5)'. The activities referred to in clause 5 were the distribution of leads in the sub-region. 102 The contract therefore encouraged sub-regional representatives (in a fashion which was completely efficacious) to earn override commissions through distributing leads down to territory and sales representatives. Combined made much of another provision in the contract (cl 1(h)) which permitted the sub-regional representative to 'engage in other activity or business which does not conflict or compete with the undertakings and obligations of the Sub-Regional Representative under this Agreement'. As a matter of fact, this clause was without content in its practical operation. The business of the sub-regional representative was the recruitment, for Combined, of new agents and the supervision of the territory and sales representatives in the sub-region and, at least according to the contract, the distribution of leads in the sub-region. Although the scope of the sub-regional representative's agency included, as has been noted, furthering and promoting the activities of the territory and sales representatives by the distribution of leads, the same provision made quite clear that the only leads which the sub-regional representative was permitted to distribute to the territory and sales representatives were Combined's leads (cl 1(e)). Further, the sub-regional representative's principal task as a recruiter for Combined simply made no sense as a business which could provide services to anyone else but Combined. 103 The contract, therefore, foresaw and encouraged a state of affairs where the sub-regional representative would be a person earning override commission on teams of territory and sales representatives but prevented the sub-regional representative from using that team for anything but the distribution of Combined's leads. The existence of a contractual entitlement to operate some other business was therefore quite illusory. 104 That observation highlights another important structural feature of these arrangements. It is easy to think of the sub-regional representative as, in a sense, possessing or owning the teams of territory and sales representatives. This, however, would be inaccurate. As noted above the sub-regional representative had no entitlement to engage either sales representatives or territory representatives as elements in their own business. Clause 1(d) involved the sub-regional representative in the recruitment of sales representatives but it was Combined who was, in every case, the contracting party with the sales representatives so recruited. It is true - as Combined pointed out - that the sub-regional representatives were entitled to engage other persons to provide 'secretarial, administrative or other services' to the sub-regional representative (cl 1(i)) but as already noted this did not permit - and cl 1(d) expressly prohibited - the appointment of a sales representative by anyone other than Combined. 105 One sees, therefore, a structure in which independence is more apparent than real. The sub-regional representative was a distributor of Combined's leads and customer contacts and a recruiter of Combined's staff. But he could only earn override commission if the policies in question were sold through Combined's own territory and sales representatives. Further, although those agents formed 'his' team they were, in truth, not his team at all but rather Combined's. Consequently, the sub-regional representative had no legal power to terminate the services of a territory or sales representative and, not being his team, they could be used only for the distribution of leads provided by Combined. 106 Consistent with that view of affairs, Combined at all times retained ownership of its customer lists (cl 4) and the information about its insureds. Additionally, the sub-regional representative's entitlement to receive commission, whether standard or override, was contingent upon the sub-regional representative remaining the agent for that sub-region. If the sub-regional representative ceased to fill that role he ceased to be entitled to any commission (cl 3(h)). The interaction of these two clauses meant, as previously noted, that a sub-regional representative never had any goodwill in his business. Effort spent on expanding the team and increasing the number of customers in the sub-region inured exclusively for the benefit of Combined. Given that the sub-regional representative was distributing, on a practically exclusive basis, Combined's leads, overseeing teams of agents retained by Combined and collecting from them the premiums collected from Combined's customers this is, perhaps, unsurprising. 107 Pausing there, the contractual arrangements suggest that the sub-regional representatives were conducting Combined's business and not their own. But there are some indications which tend to the opposite conclusion. There was a power to advertise and this power was used. But the advertisements were required under cl 1(c) to have been approved in writing by Combined. There was, as I have said, a provision which entitled the sub-regional representative to assign to a corporation the 'rights and benefits' of the contract on notice (cl 1(g)) and to conduct the business under the agreement through that corporation. I am by no means clear that the burden of the agreement could be assigned - that is, the obligation to distribute the leads and run the sub-region - the most likely interpretation of the provision is merely that it permitted the sub-regional representative to direct the payment of commission due to a corporate vehicle and from which other expenses (such as rent and so on) might be charged. In the case of Mr Trifunovski and Mr Peries this provision seems to have been utilised. 108 There were also clauses requiring the sub-regional representative to maintain all relevant government licences and to give all appropriate legal notices to Combined's customers; to meet their own expenses and be responsible for their own credit arrangements; a clause making Combined's obligation to pay commission contingent on it receiving the relevant premium; and a clause allowing Combined to recover the amount of any outstanding premiums from the agent where a policy was cancelled. I do not regard any of these as throwing much light, in this case, on whether a sub-regional representative was part of Combined's business. In the same category may be placed another provision by which the sub-regional representative promised that he would not permit his servants or agents to do anything which would put him breach of the agreement. Given that territory and sales representatives were not persons answering that description it is difficult to see that this clause could refer to anything other than secretarial support. Although I accept that secretarial staff could put a sub-regional representative in breach of contract with Combined, I do not think that clause had much work to do when it did not apply to the members of the sub-regional representative's team. 109 There were two provisions in the sub-regional representative's contract which provided more cogent support for Combined's case. The first was the fact that the contract provided for payment by commission on the activities of others in the form of the override commission. The second was that it expressly provided that the sub-regional representative would operate 'as an independent contractor' and there would be no relationship of employment. I have dealt with the commission issue above and I deal with the significance of the independent contractor clause below. It is also to be noted that most of the contracts provided for termination without cause by either party on seven or 30 days notice. The ability on Combined's part to terminate the contract of a sub-regional representative had practical consequences relating to obedience.

The territory representatives 110 Although as a matter of fact the roles of territory and sub-regional representative were quite different this was not really disclosed in the contractual arrangements. In substance, the territory representative contract and the sub-regional representative contract were largely the same. The only real difference was that the territory representative contract only referred to the role of sales representatives whereas the sub-regional representative contract referred to both sales and territory representatives. I have explained the practical differences between the two roles above; those differences are not grounded in the terms of the contracts although they do find foothold in the practical power relations erected by Combined's structure.

The sales representatives 111 The terms of the contract for sales representatives were, with some important exceptions, largely the same as those for territory and sub-regional representatives. However, the contract made no reference to the distribution of leads or to the earning of override commission or to the recruitment of individuals to be sales representatives. It also made no reference to the existence of the sub-regional representative or the territory representative.

All contracts 112 One feature of all three contracts deserving of note is the fact that each contract refers to the positions of agents who are lower in the structure but not those who are above. To read the sales representative contract in isolation would give a completely inaccurate picture of what was going on, for it would leave out of account the fact that leads would be provided to the sales representatives for them to sell. It will be apparent from the description above that in reality sales representatives were organised into teams headed by territory representatives and that the territory representative was, in a practical sense, the immediate superior. That observation, however, has no basis in the contract. It has a basis in the territory representative's contract, which deals with the role of the sales representative and the distribution of leads to sales representatives. But that contract makes no mention of the sub-regional representative and, again, viewed in isolation the territory representative's contract is only half the picture. 113 In fact, the only way these three sets of contracts can be made to cohere with the reality of what took place is by bringing to account the power of termination which rested in Combined's hands as against each layer of agent. That power - sometimes exercisable on seven days notice, sometimes on 30 days - gave Combined the legal authority to procure obedience to its ways. It was contractually possible for a sales representative to decline to work in the team to which he or she had been assigned but such a course was not practically possible because Combined would not suffer it to be so. In practice, Combined had no need to do this directly: its training arrangements and the positions of authority filled by the territory and sub-regional representatives meant that in almost every case the sales representatives conformed to the model.

The Independent Contractors Clause 114 Each contract contained an appointment clause which provided, inter alia, that the agent would 'operate hereunder as an independent contractor' and also that nothing in the agreements 'shall create any relationship of employer and employee'. The approach to such clauses was explained by Dixon, Fullager and Kitto JJ in Foster (1952) 85 CLR 138 at 151: 'Provisions of this character are perhaps more likely to arise misgivings as to what the practical situation of the agent may be in fact than to prevent a relation of master and servant being formed.' More recently Gleeson CJ, Gaudron, Gummow, Kirby and Hayne JJ observed (citing Foster) that the 'parties cannot deem the relationship between themselves to be something it is not': Hollis at 45 [58]. It may be that where matters are equivocal the presence of such a clause may tip the scales in one direction but in doing so this is merely reflecting the significance of the parties' intentions and understandings: cf. Chaplin at 389. But the approach depends upon antecedent ambiguity which is lacking here. If those intentions and understandings are simply wrong then the stipulation is ineffective. This is not to put the contract at nought: it is only to recognise its proper role as one factor among the many contemplated by the totality test.

Contracts pre-dating 1984 115 There were two contracts in evidence on Mr Peries' claim which differed materially from the latter form of contract. The earliest contract in evidence was dated 26 October 1981. It was a sales representative contract then known as a salesman. This contract did in fact mention both roles above the sales representative in the pyramid (then, sales manager and district manager; equivalent to territory and sub-regional representative). Under the contract, the sales representative was to work in the territory agreed with the territory or sub-regional representative; deposit with the territory or sub-regional representative, in advance, the net amount due to Combined upon policies or renewals; and forward all policy and renewal applications to the territory or sub-regional representative. Mr Peries also signed a contract dated 3 January 1983 for a territory representative position. Both the early sales representative and territory representative contracts differed from the later form of contract in two ways: first, they provided, in supplementary clauses, for remuneration of $208.33 per month (or a greater amount in certain circumstances); and secondly they proscribed that a period of not less than 40 hours Monday to Friday inclusive was to be devoted to the disposal of policies and renewals. Further, the contracts also provided for continued payment of commission for a certain number of years on the event of retirement or permanent disability.

(r) Other Miscellaneous Matters 116 Clause 2(b) of most of the contracts required the agents to maintain an account with Combined against which Combined could off-set amounts owing to it by each agent. Combined submitted that this was essentially a bond to guarantee performance. There was no evidence of this clause ever being used as a bond arrangement. A more likely interpretation is that the account was simply a running account between commissions earned by the agent and amounts refundable to Combined. I do not think it is to be characterised as a guarantee. 117 Nor do I find persuasive the fact that the contracts obliged the agents to pay for all licences required by governmental authorities (cl 2(c)). No government licences to which this had ever applied were pointed to. 118 Combined also submitted that cl 2(f), which required the agents to indemnify Combined against expenses incurred by them in the conduct of the business, was indicative of a relationship of independence rather than employment. I accept that this as a factor tending against an employment relationship. I also accept that a similar obligation flowing from cl 2(g), requiring the agents to bear sole responsibility for credit arrangements, trends in a similar direction. 119 It will be obvious from the nature of the present claims that Combined did not give the agents annual or long-service leave. Nor, it should be added, did it contribute superannuation on their behalves. As with the question of the tax treatment of their remuneration, I consider that this reveals the parties' understanding of the arrangement. It is not determinative. 120 Combined submitted that the finding of employment should not lightly be made as this would create retrospective criminal liability in it: Hollis at 49 [69] per McHugh J. His Honour there was in dissent. I do not regard this as a compelling reason to conclude that there was no relationship of employment: cf. Roy Morgan Research at 467-468 [52]-[57].

IV. Were the agents employed? 121 It will follow from what I have said above that there was only one business being conducted and that was Combined's business of renewing the policies of its existing customers and chasing up those which had lapsed or cancelled. The business of a sub-regional representative was the business of Combined. He administered Combined's team of agents for it; he hired staff for its business; he trained its staff; he passed on its policies and premiums; he distributed its leads to its agents to sell to its customers. Further, he conducted this 'business' in accordance with Combined's very active instructions and pursuant to training which had been given to him by Combined at its expense. He generated no goodwill in the conduct of the 'business' and his 'business' could not be sold. 122 There are features which do tell with some strength against an employment relationship nevertheless. The contracting by Mr Trifunovski and Mr Peries through companies; the payment of commission earned on the labour of others; the ability to engage secretarial support taken up in some cases; the substantive advantage obtained being registered for GST; most importantly, the fact that the parties to the contract understood that there was no employment relationship. At the end of the day, however, I am unable to accord these decisive weight. In my opinion, the sub-regional representatives were employees. The same reasoning inevitably supports the conclusion that the territory representatives were employees. 123 The situation with the sales representatives is not quite the same. They were the endpoint to which Combined's leads were distributed; they represented Combined to the public in selling Combined's policies. They were trained by Combined, at its expense, in its procedures. They were assigned to teams organised by Combined under the leadership of two layers of management - the territory and sub-regional representatives - who I have found to be employees of Combined. I do not accept that they were running their own businesses. I conclude, therefore, that the sales representatives were also employees.

V. Combined's Defences 124 Combined's principal defence was that the agents were not employees which I have rejected. In addition, it pursued the following defensive arguments: (a) a claim that the agents had engaged in misleading and deceptive conduct which had caused Combined loss and damage precisely equal to whatever Combined's liability to the agents might be; (b) a claim that Combined was entitled to be indemnified by the agents for any liability it had to them pursuant to a clause in their written agreements; (c) a claim, similar to the misleading and deceptive conduct claim, that the agents were estopped from asserting that they were employees; (d) a claim that the agents were not entitled to rely upon the Award because they were not 'clerical or administrative staff' within clause 4.1 of the definition of employee in the Award and, even if they were, because they were neither involved in 'assessing, surveying and risk control duties' nor had any substantial 'product sales functions'; (e) a claim that certain elements of the claims were statute barred. 125 Before embarking upon an assessment of these contentions, one procedural matter should be noted. A number of these contentions appeared both in Combined's defences to each of the agents' claims and also in Combined's own substantive proceeding against the agents. At trial, and in its closing submissions, Combined focused its submissions on the latter; in particular, in relation to the issue of estoppel it sought a declaration that the agents were estopped from pursuing their allegation that they were employees. It was implicit in the way both parties approached this procedural issue that it was accepted that if the estoppel arose it would operate in bar of the agents' claims. Put another way, even if the declaration were to be made there comes a point in the disposition of the agents' claims where estoppel must have some impact at a procedural level on the pursuit of the employment claim and, so it seems to me, the only effect it can sensibly have is as a defence. Combined, of course, pleaded estoppel as a defence so there is no question but that this course is open to take. I make this point to acknowledge that not all of Combined's defences are procedurally of that character. However, given the morass of pleadings in this case it will serve as a convenient shorthand. 126 I turn then to the first of Combined's defences: the misleading and deceptive conduct claim.

(a) Misleading and deceptive conduct 127 Each of the contracts from 1987 contained the following clause: WHEREAS, The [agent] is engaged in the business of selling insurance on his own account as an independent contractor and the Company is engaged in the accident and health insurance business in Australia, NOW THIS AGREEMENT WITNESSES THAT IN CONSIDERATION of the mutual promises of the parties in this Agreement IT IS HEREBY AGREED AS FOLLOWS: (1) APPOINTMENT AND SCOPE OF AGENCY The Company hereby appoints the [agent] and the [agent] hereby accepts appointment as the Company's agent to sell and renew the Policies in the Sales [area] in accordance with the terms of this Agreement. The [agent] shall operate hereunder as an independent contractor. Nothing in this Agreement shall create any relationship of employer and employee or of joint or co-venturers or partners between the Company and the [agent]. The Company authorises the [agent]: … The contracts in evidence from 1981-1987 contained a statement to similar effect, that is, that the agent was engaged 'on his own account as an independent contractor'. 128 Combined's argument was that the words 'shall operate hereunder as an independent contractor' and their predecessors constituted a contractual promise and that such promises were capable of being seen as involving a representation as to a future matter (citing Futuretronics International Pty Ltd v Gadzhis [1992] 2 VR 217 at 240-241 per Ormiston J). That promise, according to Combined, conveyed to it that each agent 'on a continuing basis from the time when each promise was made in each contract' would at all times 'operate in conformity with the rights of an independent contractor'. Quite apart from the terms of the actual written contracts, Combined also relied on a series of other factual occurrences as conveying the same representation such as: signing a form including the words '[this] is not an application for employment'; signing a form before each undertook the initial training course including an agreement by each agent that he or she wished 'to sell Insurance on his/her own account as an Independent Contractor'; failing to cause income tax to be withheld from their commissions; bearing heavy capital expenditure without reimbursement from Combined; applying for an ABN number; and supplying (or permitting Combined to supply to itself) tax invoices. 129 I do not think that the representation for which Combined contends - with its critical element of futurity - was conveyed either by the terms of the clause or by the conduct upon which it now relies. As to the conduct, the conclusion is straightforward. I accept that each of the matters relied upon by Combined occurred but there was nothing represented by that conduct other than that, as at each moment of occurrence, each agent understood himself or herself to be an independent contractor. I see nothing in that conduct which would convey any representation, as Combined alleges, that each agent in the future would operate 'in conformity with the rights of an independent contractor'. 130 Nor do I think the situation is any better under the written clause. The words of that clause - 'shall operate hereunder as an independent contractor' - do not involve a promise to do anything. It is true that the clause is mildly ambiguous and may be read in two different ways. It can be read, as Combined reads it, as a promise about what the agent is going to do in the future. It can also be read as an agreement between the parties as to the status of their relationship and as not containing any promise by the agent about his or her future conduct. The second reading is, however, much more natural than the first. The first encounters the difficulty - with which I pressed Mr Leopold SC who appeared for Combined - that it is difficult to specify what exactly it is in the future that the agent might be promising to do by promising to operate 'as an independent contractor'. The appellation 'independent contractor' does not arise because a contractor promises to do one or more things. The whole course of authority in this area demonstrates that whether a person is an independent contractor or not turns on very much more than just what that party has promised to do. Put another way, there is no particular contractual activity on the agents' part which can bring about the status of an independent contractor. It is driven, as the cases plainly establish, by the totality of the relationship. I do not think Combined's reading of the clause is the natural one and more importantly I do not think it was how an ordinary reasonable recipient of the clause would have understood it. In those circumstances, I do not accept that the clause conveyed any more to Combined than that each agent agreed that the status of his or her relationship with it was that of an independent contractor. 131 That is the end of Combined's case on this point. This is because it did not seek to show that it was misleading and deceptive to suggest that the relationship between Combined and the agents was that of independent contractor and principal, that is, it did not rely upon a misrepresentation about the present status of the relationship. The tactical reasons for that will be apparent for it would have required Combined to accept, not only that its primary case that the agents were independent contractors was incorrect, but that even to suggest to the contrary would be misleading and deceptive. Confronted with that dilemma Combined put its case on the basis that the agents' conduct was as to a future matter. Combined sued under the now repealed s 42 of the Fair Trading Act 1987 (NSW) (although the agents took no point about that) and expressly invoked s 41 of the same Act. Section 41 contained two relevant proscriptions: first, by s 41(1) 'where a person makes a representation with respect to any future matter…and the person does not have reasonable grounds for making the representation, the representation shall be taken to be misleading'; secondly, s 41(2) throws the onus of proving that a representation was made with reasonable grounds on its maker ('[the] onus of establishing that a person had reasonable grounds for making a representation referred to in subsection (1) is on the person'). Having signalled quite clearly that it was going to rely upon s 41, Combined submitted that the agents had failed to discharge the onus thrown upon them by s 41(2) with the concomitant deeming under s 41(1) of the conduct to be misleading and deceptive. 132 For the reasons given, however, the premise of this argument - that the representation was as to a future matter - is not made good. Section 41 does not apply; no deeming arises. The agents also mounted an argument that even if relief was available under s 42 it was a State law and was inoperative in the face of their claims which were sourced in Federal law. In the view of the matter at which I have arrived it is not necessary to express a view on that issue. 133 Combined also pleaded, in relation to Heraclea Pty Ltd, misleading and deceptive conduct under s 52 of the Trade Practices Act 1974 (Cth) by virtue of s 51A, which similarly requires a representation with respect to a future matter. For the same reasons, the premise of this argument is not made good.

(b) Estoppel 134 In its pleading Combined claimed a number of estoppels but its submissions were limited to estoppel by convention. It submitted that it was plain, having regard to the contracts, that both Combined and the agents had for many years proceeded upon the understanding that the agents were independent contractors. I accept this contention which was borne out both by Combined's and the agents' evidence. The agents were generally candid under cross-examination that they had believed, until more recent legal advice, that they were and had been independent contractors. The position of Combined was no different. 135 Often enough statutory provisions will prohibit the making of certain contracts or will declare that certain contracts or agreements, if made, will be of no force or effect. Whether laws concerning estoppel may achieve the very result which the forbidden contract may not has, in the main, turned upon a consideration of the policy at which the legislative prohibition is aimed. According to the Privy Council in Kok Hoong v Leong Cheong Kweng Mines Ltd [1964] AC 993, the appropriate course to take in considering the effect that statutory prohibitions on certain species of contract have on estoppel is to ask 'whether the law that confronts the estoppel can be seen to represent a social policy to which the court must give effect in the interests of the public generally or some section of the public, despite any rules of evidence as between themselves that the parties may have created by their conduct or otherwise' (at 1016). There was perhaps some narrowing of that approach - which required a consideration of the nature of the public policy involved - in the Court of Appeal's decision in Keen v Holland [1984] 1 WLR 251. There the English Agricultural Holdings Act 1948 provided particular protections for holdings of land to which it applied and the Court of Appeal accepted - on the strength of Johnson v Moreton [1980] AC 37 - that the parties could not reach an agreement which treated those protections as inapplicable. More importantly, the Court was not disposed to accept that an estoppel could achieve the same result: 'If an express agreement to this effect would be avoided, as it plainly would, then it seems to us to follow that the statutory inability to contract out cannot be avoided by appealing to an estoppel' (at 261). I am not so sure that it follows that merely because a particular contract is prohibited no estoppel can ever arise. Such an approach is unnuanced. As the Privy Council noted in Kok Hoong (at 1015-1016) there are well-known categories where equitable estoppels flourish in the face of statutes which render certain contracts unenforceable not the least of which concerns the Statute of Frauds 1677 and the doctrine of part performance. 136 In this Court, the principle in Keen v Holland has been applied by a number of first instance judges. In Beckford Nominees Pty Ltd v Shell Company of Australia Ltd (1986) 73 ALR 373 a franchisee sought to outflank the operation of a provision in a statute which denied its right to renew a licence. Another provision in the same legislation (s 7) provided that any contractual provision which was inconsistent with the statute would be void to the extent of the inconsistency. 'I do not read s 7 as saying anything explicitly about estoppel,' said Pincus J 'but it is necessarily implicit in that provision that the same result cannot be achieved by an estoppel' (at 378-379). French J followed Beckford Nominees in the Full Court's decision Metropolitan Health Service Board v Australian Nursing Federation (2000) 99 FCR 95 at 104 [20]-[21] but in terms which are consistent with the more nuanced approach in Kok Hoong: 'The application of principles of estoppel and waiver to the enforcement of statutory rights depends upon their consistency with the terms and purpose of the statute creating the rights' (at 104 [21]). The other members of bench on that occasion - Lee and Carr JJ - expressly declined to consider whether an estoppel could be mounted against the operation of a federal award concluding instead that, on the facts, there was no estoppel (at 114 [62]). 137 The Kok Hoong approach was adopted by the Queensland Court of Appeal in Neumann Contractors Pty Ltd v Traspunt No.5 Pty Ltd [2010] QCA 119 at [67] and also by the NSW Court of Appeal in Overmyer Industrial Brokers Pty Ltd v Campbells Cash & Carry Pty Ltd [2003] NSWCA 305 at [51]. These being decisions of intermediate appellate courts I should, and will, follow them. That being so, it is necessary to consider the particular statutory prohibitions which apply and then to discern from them whether they identify a particular social policy which an estoppel might undermine. 138 Mr Perez's claim for annual leave entitlements rests upon the wording of Workplace Relations Act following the Work Choices Amendments in 2006. The critical provision was s 230 which erected the right to annual leave. Section 232 was part of Part 7 which was entitled 'The Australian Fair Pay and Conditions Standard'. Section 171(1) - with which the Part opened - provided at the outset that the 'purpose of this Part is to set out key minimum entitlements of employment'. Section 172(1) incrementally built upon this aspiration by providing that the 'Australian Fair Pay and Conditions Standard provides key minimum entitlements of employment for the employees to whom it applies'. It thus contemplated that it was possible for some employees not to have the benefit of the Standard. But in the case of annual leave it was made plain that the only employees exempted were casual employees: s 227. The Workplace Relations Act specifically dealt with attempts to circumvent the Standard for s 173 provided that a 'term of a workplace agreement or a contract has no effect to the extent to which it purports to exclude the Australian Fair Pay and Conditions Standard or any part of it'. 139 A number of authorities have, of course, established that provisions of this kind operate to prevent parties contracting out of their entitlements: Josephson v Walker (1914) 18 CLR 691 at 700-701 per Isaacs J; Byrne v Australian Airlines Limited (1995) 185 CLR 410 at 421 per Brennan CJ, Dawson and Toohey JJ. The agents submitted that these cases also showed that principles of estoppel and waiver did not apply to such obligations but so far as I can see neither case contains any such statement. On the other hand, in Jackson v Monadelphous Engineering Associates Pty Ltd [1997] IRCA 281 Moore J considered that the approach in Josephson and Byrne should be extended to awards existing under the then Industrial Relations Act. His Honour approached the matter in a way which was consistent with Kok Hoong, that is to say, he sought to discern the purpose of the statutory prohibitions: 'I consider that Division 3 should be approached on the same footing having regard to the stated purpose of it. It is beneficial legislation…and intended to confer rights on employees.' Consequently, so his Honour reasoned, 'it is unlikely an estoppel precluding their enforcement can arise from the conduct of an employee'. He left open whether the same approach would be correct under the Workplace Relations Act. Why was this left open? Until the Workplace Relations Act all of the instruments under the legislation had been created through the process of industrial arbitration; under the Workplace Relations Act there was a shift towards instruments derived through consensual arrangements (at least in some circumstances). Moore J thought that this consideration might have some impact on the questions of estoppel and waiver. 140 Ultimately, the doubts of Moore J did not materialise. The first tentative answer came in Metropolitan Health Service Board where French J suggested, in obiter, that the position would be no different under the Workplace Relations Act to that which it had been under the Industrial Relations Act (that is, that estoppel and waiver would not be available): 'On the face of it though it does seem that, notwithstanding the emphasis of that Act on agreements rather than awards, awards are maintained as a "safety net" specifying minimum conditions on certain matters including rates of pay. The provisions of the Act under which they are made are likely therefore to be construed so as to continue to render ineffective attempts to contract out for lesser than minimum conditions' (at 107 [24]). Subsequently, in Textile, Clothing and Footwear Union of Australia v Givoni Pty Ltd (2002) 121 IR 250 Goldberg J reasoned (at 258 [32]) that these obiter remarks of French J should be applied and concluded that it was not possible to contract out of the benefit of an award under the Workplace Relations Act. He concluded at the same time that notions of estoppel and waiver could not be used to outflank that result. 141 The conclusions of French and Goldberg JJ apply to the Workplace Relations Act as it was prior to the passage of the Work Choices Amendments on 27 March 2006. The annual leave provisions relied upon by the agents are, of course, provisions which did not exist in that statute or of its predecessors at any time prior to 27 March 2006. The structure of the Standard contained in Part 7 of the form of the Workplace Relations Act as it was after the Work Choices Amendments on 27 March 2006 is radically different to the form of any Federal industrial statute theretofore. The utilisation by the Commonwealth Parliament of the power in s 51(xx) of the Constitution directly to regulate the industrial affairs of those corporations falling within its constitutional remit (and certain other employers falling within other heads of constitutional legislative power) transformed the nature of the regulation involved. It was no longer arbitral as it had been until the introduction of the original form of the Workplace Relations Act nor was it partly arbitral and partly consensual as it was after that legislation had been passed. From 27 March 2006 the Act operated (leaving aside its transitional arrangements) in the case of minimum conditions proscriptively for the vast bulk of employees in Australia (apart from those employed by the States other than Victoria). 142 I do not, however, think that that difference between the post-2006 form of the Workplace Relations Act and its pre-2006 form matters for the purposes of the law of estoppel or waiver. To the contrary, s 171 made plain that what was being put in place was a form of minimum standards connected to a prohibition in s 173 on contracting out. It is not possible to distinguish the situation thrown up by the post-2006 form of the Act from its earlier form; consequently, it must follow that estoppel and waiver cannot be set up against s 232. 143 The other claims for annual leave and long service leave, arising before 27 March 2006, depend on the operation of the Award. 144 The complexities attending its operation prior to 27 March 2006 have already been noted. The resolution of the estoppel issue turns on an analysis of the policy being sought to be achieved by the operation of those provisions in the legislation at that time prohibiting contracting out of awards (considered by French and Goldberg JJ). Although those provisions appear not to be continued after 27 March 2006 it is, I think, appropriate to conclude that if estoppel could not have been set up against the Award prior to 27 March 2006 it is unlikely that it can be set up against the pre-reform award which replaced it on that day. For reasons already given, I accept that an estoppel could not be set up against an award during those periods and I conclude therefore that an estoppel cannot be set up against the pre-reform award. 145 In an industrial context the conclusion that an estoppel may not be deployed against protective provisions is not new as the striking facts in Walsh v Commercial Travellers Association of Victoria [1940] VLR 259 show. In that case, a 24 year old man answered a job advertisement for 'lad 18 or 19 years as junior billiard maker' by lying to the prospective employer that he was 19. He obtained the position and was thereafter paid the rate due to a 19 year old billiard maker. He subsequently claimed the wages due to a 24 year old (his true age) to which the billiard maker pleaded an estoppel based on the man's fraudulent representation as to his age. That defence was rejected by the Full Court of Victoria: 'It would destroy in a large measure the operation of the statute to allow a plea of estoppel where the statement relied upon constituted the means employed to bring about a contract of employment although the contract itself can afford no defence' (per Mann CJ at 263). 146 The claim based on estoppel must therefore be rejected.

(c) The indemnity claims 147 Each contract contained a clause that required the agent to pay 'all rent, transportation, hiring, postage, telegrams, telephone, advertising and all premiums if any, in respect of workers compensation, income protection, health, accident and other insurances, superannuation contributions and all other expenses whatsoever incurred in connection with the [agent's] business hereunder'. The first step in the argument was to submit that the obligation to pay annual or long service leave was an 'expense' which could be described as 'incurred in connection with the [agent's] business hereunder'. The second step was to observe that the same clause also required the agent to 'hold the Company harmless against any and all claims, demands, proceedings, actions, suits, losses, damages or awards whatsoever brought against or suffered by the Company in relation to any such costs, expenses and taxes.' 148 There may be much to be said for the view that the argument fails at the first step. One reading of this clause is that the expenses referred to in it must be ones which can in fact be paid by the agent. On this view, the expenses constituted by the obligation to pay the agent's entitlements to annual and long service leave are not expenses which the agent can pay for, as a matter of legal theory, the agent can have no obligation to pay money to himself since a debt or contractual obligation must at least be bilateral. If this were so, it would follow that the obligation to pay the entitlements could not be an expense to which the first part of the clause refers. That being so it would not be covered by the indemnity in the second part. In that context, Combined's reliance upon the wide connotation of the word 'whatsoever' would not avail it for the difficulty does not arise from the width of the concepts but from the identity of the obligor in the first clause. 149 I do not need to decide that issue, however, which was not advanced by the agents. Their submission instead was that any such indemnity would be contrary to public policy and unenforceable. In principle, I accept this submission both in the context of the claim under the Standard and the claims under the Award. The authorities to which I have made reference above in the context of estoppel well-show the inability of parties to bargain away industrial entitlements. This indemnity, if effective, removes such an entitlement and flies directly in the face of the statutory prohibition on contracting out referred to above. 150 Combined submitted that conclusion ought not to follow citing the High Court's decision in Qantas Airways Ltd v Aravco Ltd (1996) 185 CLR 43. In that case, Qantas was retained to do maintenance work on a plane by its operator. The operator of the plane was not, however, its owner. During the maintenance procedures the plane was damaged and Qantas was sued, not by the operator which had hired it, but instead by its owner. In the contract between Qantas and the operator there was an indemnity against any liability that Qantas might have arising from its performance of the maintenance contract. Qantas cross-claimed against the operator on that indemnity seeking to recover its liability to the owner of the plane. There was a term implied into the contract by the then Trade Practices Act which operated as a warranty that Qantas' services would be provided with reasonable care and skill. The contract between Qantas and the operator contained a further term that purported to limit Qantas' liability to the cost of supplying the services again (which was very much less than the cost of the damage to the plane). Had the operator sued Qantas for breach of the statutory warranty Qantas could have pleaded this provision in its defence but the operator could then have pleaded in reply the provisions of s 68 which rendered any attempt to contract out of the implied warranty ineffective unless those attempts were 'fair and reasonable'. 151 However, the operator did not sue Qantas on the statutory warranty and Qantas never needed to plead reliance upon the contractual defence. Qantas' cross-claim against the operator was disconnected from its breach of the statutory warranty about which no issue arose in the proceedings. The Court of Appeal had thought that Qantas' indemnity clause was inconsistent with s 68 and hence unenforceable but the High Court reversed this conclusion. As it noted, the operator's position was procedurally unfair to Qantas. If it had wished it could have cross-claimed against Qantas on the statutory warranty and Qantas could then have pleaded the provision limiting its liability. The operator could then have pleaded in reply that that provision was not fair or reasonable within s 68. However, that had not been done and the Court's conclusion was only that the operator could not shortcut that procedural route by pleading that s 68 applied directly on Qantas' initial indemnity claim. Once that is appreciated it is apparent that the case says nothing about the operation of provisions such as s 68; indeed, Qantas did not seek to submit to the contrary accepting, as it did, that s 68 could have been pleaded in reply to its defence based on the limitation clause. 152 In those circumstances, Aravco does not assist. Even assuming the indemnity could, on its proper construction, apply to these claims (about which I am doubtful), it is unenforceable.

(d) The proper construction of clause 4.1 of the Award 153 Clause 4 of the Award provides relevantly that: 4.1 "Employees" means 4.1.1 The clerical and administrative staff of the respondent employers including …. 4.1.1(b) Representatives employed in the insurance industry … 4.2 "Representative" means an employee who works away from the office undertaking assessing, surveying and risk control duties as directed or product sales functions." 154 As a matter of ordinary English, I do not doubt that all of these agents were engaged in product sales functions. The definition does not say 'product sales' but product sales functions. No doubt, selling is itself a product sales function but this does not mean that all such functions are limited to sales. Organising a small team of sales agents to sell policies is such a function as is organising a larger group. The functions of the sales, territory and sub-regional representative all differed in various ways but they were all engaged in 'product sales functions'. 155 Combined submitted that the words 'clerical and administrative staff' qualified 'Representative' and that these agents were not clerical or administrative in nature. There is a conflict between the general words of the definition and the wording of cl 4.2. A representative who works away from the office doing surveying or doing product sales functions is not performing a clerical or administrative task. The question then is which should prevail. Established principle requires the specific provision to supersede the general. It follows that the words 'clerical and administrative' do not qualify the word 'Representative' so that the Award applies. I do not accept, as Combined submitted, that this renders the words 'clerical and administrative staff' otiose. These words continue to apply to the other parts of cl 4.1.1.

(e) Whether claims statute barred 156 Combined pleaded a limitation defence to the claims of Mr Peries and Mr Trifunovski. These claims are brought by the agents under s 720 of the Workplace Relations Act. Section 720 provides a recovery procedure for breaches of 'applicable provisions'. As has already been discussed 'applicable provisions' includes a claim for annual leave pay under s 232 and also the enforcement of a pre-reform award. Section 720, however, requires that such claims be made 'not later than 6 years after the employer was required to make the payment to the employee'. Prima facie, the effect of s 720 will be, therefore, to bar all claims for annual leave and long service leave which were due to be paid more than 6 years before the commencement of the proceedings. 157 It is necessary then to identify when the obligation to make the payment arose as this is not the same thing as the obligation to make the leave available. The obligation to pay the leave entitlement to each agent arose under the Award only on the cessation of each agents' employment: cll 22.9 (annual leave) and 25.2 (long service leave). It might be noted that the obligation arises at the same time also under the Standard (s 235(2)) although this is not material since the Standard only applied to Mr Perez and no true limitation defence is pleaded against him. 158 The actual defences were as follows: in the case of Mr Trifunovski, Combined says that prior to the cessation of his employment on 18 September 2005, there had previously been a cessation of his employment on 25 July 1994 and a break in contracting with Combined from that time until 22 August 1994. Accordingly, Combined pleaded a limitation defence to Mr Trifunovski's claims to the extent that they arose prior to 22 August 1994. In the case of Mr Peries, Combined says that from 16 December 2002 to 15 December 2005 Mr Peries was employed as a regional manager (which it is not disputed was an employee position within Combined's structure, discussed above) and all sums due to him in respect of annual leave in that period have been paid. I accept this. Combined says also that all claims made by Mr Peries relating to his contracts which were entered into prior to February 2001 are statute barred. It should be noted for completeness that both Mr Trifunovski and Mr Peries commenced their present claims in the Chief Industrial Magistrate's Court on 15 February 2007. The proceedings were thereafter transferred to this Court. 159 The agents made no submissions as to when the employment of a particular agent was to be taken as having been determined. Instead, they sought to outflank s 720 on one basis alone and this was to argue that Combined had itself engaged in misleading and deceptive conduct by producing written agreements containing the clause by which the agents had agreed they were independent contractors. It was in reliance upon that statement, so it was argued, that the agents had not discovered that they were employees. Had they discovered that they were employees they would have demanded their entitlements earlier. 160 The agents put this case against Combined on precisely the same basis as Combined put the same case against them. In particular, the agents expressly picked up the argument that the contractual statement was a representation as to a future matter which Combined had failed to show was made on reasonable grounds. I have already rejected the argument that that the statement was anything more than a present statement about the nature of the parties' relationship. It follows that the agents' claim on this basis must fail for the same reason that Combined's identical claim fails. It may well have been possible for the agents to run their argument on the basis of a present representation - something which Combined could not do from a practical perspective - but this was not the way the case was run. 161 It follows that in principle Combined's limitation defence is available. The question then becomes whether or not Mr Trifunovski's or Mr Peries' employment was terminated more than six years before their claims were brought on 15 February 2007, that is, 15 February 2001. There was tendered in evidence a letter from Mr Trifunovski notifying Combined of his resignation as from 25 July 1994. It appears that Mr Trifunovski had resigned verbally on 23 July 1994 and that was confirmed by letter from a Mr Ritchie, the Divisional Manager/Vice President. Confusingly, on 1 August 1994, Mr Ritchie again wrote to Mr Trifunovski giving 'seven days Notice of Termination' of the sales representative contract (in 1994, Mr Trifunovski was, in fact, a district representative). Combined submitted that this may have been done out of an abundance of caution. That second letter, however, adds nothing. It is clear from Mr Trifunovski's own letter that he had resigned and whether the date of termination of his employment for the purposes of his claim was 25 July 1994 or a date seven days from the second letter (being 8 August 1994), both dates are well outside the six year limitation period. Accordingly, Mr Trifunovski's claims which predate his contract of 22 August 1994 are statute barred. 162 Combined advanced no submissions, orally or in writing, about its pleaded limitation defence to the claims made by Mr Peries. In relation to it I reject the proposition that Mr Peries' transition from one form of employment with Combined (sub-regional representative) to another (regional manager) in 2002 was a cessation of employment: it was a promotion. Consequently, I reject the proposition that claims in respect of his employment under contracts prior to February 2001 are statute barred; there was no relevant termination of Mr Peries' employment prior to 15 December 2005 to which a limitation defence might attach. I accept that the period in which Mr Peries was a regional manager should be included in his claim for long service leave. 163 Although not strictly a limitation matter, Combined also pleaded, in defence to the claims of Mr Trifunovski and Mr Peries, that the Award could not apply to contracts which they entered into prior to 3 June 1998, being the date that the Award came into force. This pleading was not repeated in respect of Mr Perez's contracts entered into prior to 3 June 1998 and I disregard these issues in relation to his claim. For reasons given above at [19(c)] and [21], I accept that the Award cannot apply to Mr Trifunovski's and Mr Peries' claims for annual leave prior to 3 June 1998 but I do not accept this in relation to the claims for long service leave.

VI. Conclusion 164 I conclude therefore that Mr and Mrs Dicinoski should succeed on the whole of both of their claims for annual leave; that Mr Peries is entitled to succeed on his claim for annual leave between 3 June 1998 and 16 December 2002 and on his claim for long service leave between 26 October 1981 and 15 December 2005; and that Mr Perez is entitled to succeed on his claim for both annual leave and long service leave between 29 October 1990 and 12 October 2006 (because the non-existence of the Award in relation to annual leave prior to 3 June 1998 was not pleaded). After 27 March 2006 he will be entitled to payment in respect of annual leave under whichever of the Award and the Standard is more generous. In relation to Mr Trifunovski, I conclude that he will be entitled to annual leave between 3 June 1998 and 18 September 2005; and long service leave between 22 August 1994 and 18 September 2005. 165 The parties did not formulate a separate question for trial indicating only that quantum and penalty should be dealt with later. In order to facilitate an orderly process, the parties should now pose for determination some questions to which these reasons for judgment may then provide the answers. In the meantime, I will only direct that the parties bring in proposed short minutes of order within 14 days and that the matter be listed for directions on 18 November 2011. 166 I will hear the parties on costs. I certify that the preceding one hundred and sixty-six (166) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Perram.

Schedule One Correspondence relating to the control of sub-regional representatives (i) 2 October 1990 Letter - Combined to Mr Rienzie Peries 2nd October, 1990 Mr. Rienzie Peries, 5, Woodhaven Court, SUNNYBANK QLD 4109 Dear Rienzie, I have taken time to look at Health Care in the Pacific, and specifically your District, to see what and where are our areas of Challenge. Two or three areas come to light immediately, and are concerning me greatly. The first is Rolls in the Field. Rienzie, right now (To Week 12), you have had 248 Manweeks available, yet only 163 in the Field. In other words, 34.2% out of the Field, so far this Cycle, and this is reflected greatly in other areas. It is imperative that you, Max and I see this trend improve significantly to around 15% OOF for purely selfish reasons - one of these being our A.T.O., as it is my considered opinion that for each Manweek OOF is a potential Red Flag. Much more emphasis must be given to this, as it is costing you money in Overrides and Bonuses. It is also interesting to note that you are also 34% down on the Objective that we agreed to at the beginning of the Cycle. However, Rienzie, what does concern me more is the fact that your Dollar per Roll has dropped alarmingly this 6 months/last 6 months, and this alone, without Manpower, is hurting you badly - $1,155/$835. Rienzie, I am most concerned as I know that you and your Group have always displayed Top Drawer Results over a number of years. Something is lacking - maybe Planning, running successful Ardmores, proper F/T at all Levels, and perhaps simply earning too much with little effort. What I would like you to do is to write to me with your ideas and plans as to what you propose to do to pick things up again, so that we can see each other in Fiji in March. Looking forward to your reply with interest. [sic] (ii) 25 September 1997 Letter - Combined to Mr Rienzie Peries … Rienzie Approximately 2 weeks ago I handed you a complaint concerning Luis Camargo. We need to have a reply to this complaint. Please advise the Regional office of the outcome of your interview with Luis. The same situation applies to the complaint concerning Bijan Esfandari entering a policyholders house [sic] without permission. These complaints must be dealt with. (iii) 13 February 1998 Letter - Combined to Mr Rienzie Peries … Dear Rienzie, I will be holding a Senior Executive Meeting on the 4th and 5th of March at the Star City Hotel Sydney and as part of your future development I would like you to attend. … I look forward to seeing you in Sydney and to helping you develop so that when the time comes for future promotions you will be equipped to handle a higher position. (iv) 1 July 1998 Letter - Combined to Mr Rienzie Peries … Dear Rienzie, Just a short note to reinforce our conversation regarding the Field Training. I am just advising you that some of the standards of Field Training seem to have dropped dramatically. For example the Lewis Maciver episode which we know about and you have taken action on. I understand Colin has since field trained Lewis for 3 days which is fantastic. Another challenge appears to be Don Knight who graduated from the same Business Course as Lewis and was left alone for an entire week. Just to give you an example, Didier and Don met on Monday morning and he was issued an Assignment for the entire week. He wasn't issued 2x2x1 assignments as is Company procedures. Nobody spent any time with him for the entire week and obviously because of this he is a Red Flag. I do understand that Isjla met him briefly on Wednesday morning. We need to probably just keep an eye on the Field Training standards especially in the first five or six weeks. If we can do that, we know what the outcome can be. Rienzie I know your standards are slightly higher than the Companies and my intention is just to advise what we have heard happens in the Field and I know you have already spoken to Peter about these situations. Let's hope we can change it for the better. … [sic] (v) 19 November 1998 Letter - Combined to Renham Pty Ltd … Dear Rienzie, You have been requested to attend a meeting with JBT on the 26th November, 1998 commencing at 8.30am sharp at the Sheraton at Noosa. You will need to bring the following information with you. • Analysis of what has occurred over the past six months in the Sub-Region. Both good points and not so good. • The critical factors for the past six months. • The Management development analysis, with particular attention as to why we only had one person attending the JET IV. • The Manpower growth - analysing the start of 1998, start of 2nd cycle manpower and start for 1999. • A.T.O • Management power - why out of the 17 territories we only have 8 Territory Representatives. Basically, we will require an analysis for the entire six months on all of the critical factors. • What definite plans you have in place for the next cycle. In other words, specific plans as to how you are going to change the current trend. • What activities you are going to engage in, on a week to week basis over the next six months, to change the trend dramatically. • What specific plans and activities your District Representatives will be engaged in over the next six months. You will need to have this done in a presentation form and have handouts, one for Johna nd [sic] one for myself. If you have any queries or need any assistance regarding the preparation, do not hesitate to contact me. I look forward to seeing you in Noosa. … (vi) 30 June 1999 Letter - Combined to Mr Rienzie Peries … Dear Rienzie, Des requests all Sub-Regional and District Representatives to prepare a presentation identifying the following:

1. What your objectives were for the 1st Cycle and how these were or were not realised;
2. What your objectives are for the 2nd cycle in every aspect of the business. A time of 9:00am on Thursday 22 July 1999 has been tentatively booked for your presentation. If there are any problems with the above time please do not hesitate to contact me at your earliest convenience. … (vii) 19 July 1999 Letter - Combined to Mr Rienzie Peries … I would like to invite you to attend a meeting with Mr John B. Thomson and Mr Phil Ainsworth on Wednesday 11 August 1999. Discussions will focus on the proposed break up of certain territories and future restructuring plans for the Greatest Region. The venue for the meeting is the Sheraton Brisbane and specific times will be advised closer to the event. … (viii) 25 August 1999 Memorandum - Ian Rogerson to Mr Rienzie Peries … Dear Rienzie, Further to our discussion on Tuesday regarding [district figures] the Saturday communication figures faxed to the Regional office indicate that Roger Reid is still doing the district summary figures and the daily figures appear not to have Isle's team included. Please be advised that the company requires that all TR figures are communicated to yourself and that you summarise these and on fax to the office in both daily and Saturday communications. Clearly the taking and summarising of District figures is not now Roger's responsibility at this point in time. Would you please act on this directive effective immediately. … (ix) 6 September 1999 Letter - Combined to Mr Rienzie Peries … Dear Rienzie RE: S.P.E.E.D. PHASE 2 REVISION You are required to attend the abovementioned seminar which will be held at the Gold Coast International Hotel - during the week of 27 September 1999. This will be a three (3) day seminar, starting on Wednesday 29 September at 2.00pm, and finishing on Friday 1 October 1999 at approx 2.00pm. For those travelling by air, your travel arrangements are attached. Would you please revise your S.P.E.E.D. Phase 2 manual as there will be a questionnaire on those subjects. Please ensure you not only bring you PMA but also you S.P.E.E.D. Phase 2 manual. Looking forward to seeing you there. … (x) 11-13 October 1999 Key Points Sub-Regional/District Representative's Meeting Key Points Sub-Regional/District Representative's meeting Couran Cove Resort 11th-13th October 1999

Attendees: Des Bosnic Mike Barnes Ian W. Rogerson Didier Villalobos Rienzie Peries Bill Trifunovski Roger Hasler Nilanthi De Saram Ted Ruttley Petrina Trajer Walter Brazda

Introduction - Des Bosnic … √ How to achieve results

1. Promote Winners Scores (WCS)
2. Training - Monday Night Meetings and Field Training
3. Monthly Review Meetings
4. Promote Incentive Weeks
5. In field - Monitor Monday and Tuesday and take appropriate action
6. Inspections - attend cash ins Results Vs Objectives - Subs/DRs √ At TR level you must concentrate on:
7. Attitude
8. Review meetings - work out what you are going for.
9. Determine a goal and get excited
10. Beat last cycle profit per route
11. Beat yourself by 10%, 15%, 30% on last cycle √ Full compliment of TR's allows you to develop and grow. √ Exam scores reflect performance of salespeople - got to have material knowledge. √ Send a TR to someone else's meeting and always have a 2IC ready as a back up plan. … √ Terminate problems immediately. Have new people field trained by a good performing TR even if he/she is from another district. … √ Do not wait to evaluate TR's - should meet on a one-on-one basis every month. … Evaluating TR's Performance - Subs/DRs √ Des revealed some of the reasons agents have terminated are:
12. TR's did not Field Train correctly
13. Agents were give [sic] the impression the TR did not care about them
14. TR's do not use the same sales talks as agents are taught in school
15. TR's and agents did not get on
16. TR's make it clear to trainee they are only training them because the Sub/DR asked them to. √ Des emphasised the need to follow JBT's field training blue print to eliminate these problems. Show TR's how it should be done and follow through with inspections. … √ It was agreed that all TR's should conduct a different training session at each review meeting. Subs/DRs will advise the TRs of the subject so they can study but the presenter will not be selected until the time of presentation so everyone prepares and learns. (Draw name out of a hat). … [sic] (xi) 11 January 2000 Letter - Combined to Mr Rienzie Peries Dear Rienzie, Thank you for your report on Serge Goldin. It, no doubt, disappoints us both to see someone we are considering for a senior position not practicing the company standards. I would like you to inform me of what action you and Bill intend to take regarding the cash-in and Pep-Up Meeting. We need to implement some plans immediately to minimise the cancellations in this team and to train Serge to be a better Territory Representative. (xii) 21 February 2000 Letter - Combined to Mr Rienzie Peries … Dear Rienzie, I have just evaluated the apps that were written last week to determine whether or not we finish on an increase for the quarter. As you can see Didier Villalobos wrote exactly 113 apps. This is what he needed to maintain his increase for the quarter. Nilanthi De Saram needed 121 apps but only wrote 84 apps. Obviously this increases her objective to 127 apps per week. Q05 needed 60 apps and wrote 73 apps resulting in a reduced objective of 58 apps per week. The unfortunate thing, Rienzie is that Bill Trifunovski needed 169 apps but only wrote 125 therefore increasing his objective to 177 apps per week. Obviously we need to have a specific plan, similar to an Ardmore, to ensure we get back on track. As a result you now require 476 apps per week for the next six weeks to finish on target. I believe with some of the Ardmores you have in mind chances are we can achieve this result. I hope this is of some assistance. (xiii) 22 February 2000 Letter - Combined to Mr Rienzie Peries … Dear Rienzie, As you know last week Petrina wrote you a letter (copy attached) regarding providing me with a Cash-in Report. … We need to continue our strategy and consistently attend Cash-ins. This not only involves collecting a parcel to ensure the production is right but actually ATTENDING the Cash-in. It is the responsibility of ALL Senior Executives to ensure our cancellations rate is reduced. … Rienzie, after six weeks our figures are not looking too good. We need to have a look at the Rolls. We are running at a 14.7% decrease. I guess this explains why the new premium is so low. We need to find a way to get back on track and I guess the biggest factor is the manpower decrease. Once we get this under control the rest will most likely come through the Ardmores you have planned. If you need any assistance please do not hesitate to contact me and please ensure we maintain our standards with the Cash-Ins. [sic] (xiv) 12 April 2000 Letter - Combined to Mr Rienzie Peries … Dear Rienzie, At present I am evaluating the activities of the Subs/DRs in the Greatest Division and am very disappointed to see that you as a Senior Sub-Regional Representative have not sent in a report of last Friday night's cash-in. Rienzie, you and I made a decision at the beginning of this year that we would be passionate about inspecting cash-ins. You obviously have not lived up to your end of the bargain. It is important that you lead from the front and show the DRs that you really mean business. You know our cancellations are skyrocketing. Unless we take action and inspect different teams each and every week we will pay the ultimate penalty at the end of this cycle. I have not received a cash-in report from Didier either. I will not tolerate any individual in Senior Management not attending a Friday night cash-in. It is totally unacceptable and I trust that you will ensure this does not occur again. We have the highest cancellations in the country and my aim is reduce them. I am sure you feel the same. If you need any assistance please do not hesitate to contact me. … [sic] (xv) 27 April 2000 Letter - Combined to Mr Rienzie Peries … Dear Rienzie, … Rienzie, you are the Senior Sub-Regional Representative of the area so it is your responsibility to ensure that everybody under your supervision follows the company guidelines. I find it frustrating when I see that our cancellations have gone through the roof yet we still allow people to check-in without all the boxes complete, without deposit slips and more so, agents writing cold when we know there was a lead. Rienzie could you please attend Friday night cash-in and rectify the situation in this district. (xvi) 19 August 2002 Executive Sales Memo From Combined to P Butler, P Kenton-Barnes, R Russell, R Hasler, R Peries, P Kelly, I Rogerson To: Peter Butler Roger Hasler Paul Kelly Paul Kenton-Barnes Rienzie Peries Ian Rogerson Robbie Russell … From: John B. Thomson Date: 19th August, 2002 … Budgets and Forthcoming Kick Off Meetings As you are all no doubt aware everyone at this moment in time is over budget and because of this I have decided to reduce the number of meetings that we will have to kick off Founder's Week. What I would like done is the following: 1. Sub Regional Meeting to be held in your Boardroom on the Wednesday prior to Founder's Week 2. The Sub Regionals to hold their own T.R. meetings on the Thursday prior to Founder's Week. By doing the above we will reduce our costs considerably with no accommodation costs or meeting room costs - with the exception of the Friday afternoon meeting charge. All we need to supply is coffee and tea on arrival and once the meeting finishes the people can head back home. Would you please also adopt a similar format for the Power of One Kick Off Meetings. Acting T.R.s Would you please be kind enough to supply to Malcolm Strain the names of the people who will be Acting T.R.s in the final quarter. Malcolm, in agreement with yourself, will put together a fourth quarter bonus program on 2 factors. a. Manweeks b. New Sales P.V. New Business Bonus for Trainees It has been brought to my attention that our T.R.s are being paid the New Business Bonus while training the new person during their first week in field. As of Monday 26th August, the New business Bonus earned will be credited to the new trainee, thus reducing the $500 liability that they are given during the first week's training. Should anyone have any questions on the above, then please do not hesitate to contact me. Please inform everyone concerned about the above. (xvii) 5 May 2004 Letter - Combined to Mr Blagoja Trifunovski … Dear Bill, Following your interviews of last week this is to let you know how disappointed I am as regards what happened to Trevor Bailey. The standards that you have as regards how a new person should be treated are certainly not up to my expectations and I never want to hear of such a thing ever occurring again. Bill, you have a great responsibility as a Sub Regional Representative and one of these responsibilities is to make sure that every person who leaves the Business Course is given a fair crack of the whip. We as a company promise everyone a full week of infield training following a specific Blue print and this is something that I will be expecting you to inspect to ensure that the above takes place. From now on I will be asking Robbie Russell to do some inspections on a regular basis so that the Athletics Region can have standards that everyone is proud of. Always remember the old saying and that is to treat people as you would like to be treated yourself. From now on I hope I can rely on you to do things by the book. (xviii) 12 April 2005 Letter - Come Alive in 2005 to Mr Blagoja Trifunovski … Please find attached a copy of your Week 13 Sales Trends for the 1st Cycle 2005 for The Wise Guys. Looking at the numbers for Week 13 I have some concerns relating to the following issues:

(1) Sales Representatives (i) Prior to the introduction, it is advantageous to seek confirmation of the prospect's name, or title ie: Proprietor, Manager, and to state your name and who you are representing. Mentioning your prospect's name during the introduction can aid in attracting attention. Avoid referring to a prospect or policy holder as "Sir". "Good Morning - are you the proprietor?" "My name is …. From Combined" "I believe THIS will interest YOU…ALSO" (ii) Some of our sales representatives prefer working large towns because they never run out of people. Conversely, some of our representatives prefer working in the country because the names of people are familiar to everyone. What really matters though of course, is the sales representative's attitude and not the area being canvassed. (iii) FORMULA FOR SUCCESSFUL PRESENTATIONS The formula to be used for successful presentations regardless of the product being explained, is a combination of the principles, ideas and techniques described previously in this Sales Manual. The following points highlight the major areas to be concentrated on a logical progression. Use a Company approved presentation. (iv) Overcoming Scepticism Where appropriate, show additional names of policyholders in the area in which you are working (note that permission to show names must have been granted). Demonstrate the Company's assets by showing our Financial Statement. Show your identity card. (v) Company Ethics Your Representatives Handbook deals with ethics. Our Sales System is based on every sales representative maintaining high standards of commercial honour and selling our products in compliance with company underwriting guidelines and the law. As a Combined Representative you are expected to act professionally and act in the best interests of the policyholder, you, and the company. (vi) EXISTING POLICY HOLDERS A Policyholder is the most important person in our business and deserves the most courteous and attentive treatment we can give them. Think in terms of their interests and you will automatically fulfil your own. Our business is a repeat business and is built on policyholder satisfaction. Your actions and attitude when calling on existing policyholders to service their business determine company growth. (vii) IMPORTANT NOTE Do not involve yourself in assessment of policyholder claims other than explaining how to make a claim and the claims provisions of the policy. It is not your duty to enter into a detailed discussion of a claim or determine the amount of benefit that could be claimed or make snap judgments as to the company's liability. (YOU ARE NOT IN POSSESSION OF ALL RELEVANT DOCUMENTS!). Point the customer in the direction of the Claims Department on the toll free line 1300 300 480 and explain the 3 steps as per Code Of Practice.

(2) Territory Representatives (i) JET Phase I Questionnaire Answers Write the 'Wife/Partner' rebuttal. (10) "As you know many companies do not insure the non-income earning partner payment them a weekly income for sickness disability. However, our company will, and even though they may not have an independent income of their own, we would pay them the same as you… (ii) Write the Standard Healthcare introduction FROM AN Accident Lead. (4) "Mr Jones! My name is ………… from Combined Insurance. As you know our Accident Representatives call each six months to service your Accident Policies. The reason for my special call is that you may now be eligible for one of the finest Healthcare Programs ever written, providing of course you can qualify. Here, I'll show you what I mean." (iii) Write the 'Reassurance' (Close) rebuttal. (10) "You know what you'll really like about this policy… There are 3 things that most people say makes our policy different and worthwhile: Firstly, you notice that we pay you from the very first day. With most companies you have to be off at least one week or more. In fact in most cases, if you were sick with the benefits you'd receive from our company you would have your premium back for six months. Secondly, We even pay you while at work, partially disabled through sickness. Thirdly, is the fact that the longer you keep the policy the more valuable it becomes, and quite frankly, Mr Jones, most people tell me that this one thing alone makes our policy different and worthwhile. So why don't you try it for six months? Ok, just for six months." [sic] (iv) INTRODUCTION JET PHASE TWO (Is to be conducted by a Sub-Regional Representative) A one week "In field" program for the purpose of inspecting the Sales knowledge of those being considered for Phase III of the Junior Executive Training Program. i. Morning Training Sessions on "Sales Material" and some of the basics of Combined's Sales Management principles. ii. Field Training during the day. iii. Follow through interview with each participant by Sub Regional Representative. (v) GENERAL COMMENTS & SUGGESTIONS FOR TRAINER … 2. The daily training sessions are also to train on basic sales material … iv. Company philosophy. (vi) SUNDAY EVENING AGENDA JET PHASE II 5.30 pm Conditioning

1. Why you were selected … (b) Our need for additional Territory Representatives. … (d) To help you and Combined build for the future. … (vii) INTRODUCTION JET PHASE III (Is to be conducted by a Sub-Regional representative) … SELECTION OF PARTICIPANTS They should be JET trainees who:-
2. Have qualified through Phase I and II of the program and have achieved their PEARL AWARD. … and are proving through their sales results that their stated "goals to progress within the Organisation are genuine". (viii) "FIELD RECRUITING" … WHY? Well lets consider some key advantages of Field Recruiting and some of the reasons why we should be Field Recruiting more people to the Company: (Have group write down Key Points) ...
3. Field Recruiting enables you to recruit quality people whilst at the same time, engaging in field production.
4. History tells us that Field Recruits generally stay longer with the Company. … (ix) Manpower is our No.1 Critical Factor - As a T/R, you are evaluated on your ability to build and maintain an adequate and well trained sales force. … DEFINITION OF FIELD RECRUITING (Have group write down)
5. Finding or attracting, selecting and motivating qualified individuals to join our Organisation, through a family member, friend, acquaintance or Policyholder.
6. To select an individual, determine what they are looking for, and show them how they can find it in our Organisation. (x) POLICYHOLDER REFERRAL (Read Out)
7. Policyholder Referral … While you're there doing business with the Policyholder or the Prospect, why not take that opportunity to ask if they know of anyone who will be particularly well suited, for Combined. (xi) … Over the years, Combined has developed some effective techniques for obtaining referrals from Policyholders. … c. POLICYHOLDER/PROSPECT: "Does your Company have a Training Program for its Salespeople?"

This recruiting signal is another leading question loaded with opportunity. If you receive one of these three direct recruiting signals, immediately begin to romance the opportunity and try to recruit the Policyholder. (xii) 3. Direct Recruiting This ability to personally choose the most desirable people obviously leads to a higher, qualified level of personnel. Ask any one who has done their share of Field Recruiting and you will realise that Field Recruits tend to achieve higher standards more quickly. Probably the main reason why they generally remain with the Company longer. … [sic] (xiii) RECRUITING REQUIREMENTS, RESTRICTIONS AND RECOMMENDATIONS (Read Out) It is our objective through the implementation of these standards, to upgrade the quality and improve Retention in our sales force. … It is the responsibility of all Recruiters to understand, and adhere to these requirements, restrictions and recommendations. (Have Group Write Down) "Combined Insurance Company of Australia is an equal opportunity employer". … (xiv) Remember Get their name and phone number and pass on to your Territory Representative Don't guarantee them a job but guarantee them an interview. (xv) QUALIFICATIONS NECESSARY TO BECOME A TERRITORY REPRESENTATIVE 4. LOYALTY A good T/R is enthusiastically loyal to Mr. Stone, the Company and the people under their supervision and has a willing interest in the discharge of their duties. … 7. DEPENDABILITY A good T/R is dependable, in all the assignments given by the Company as Assignments are entrusted to them. They are obligated to carry out all assignments in the manner in which the Company expects.

(3) Sub-Regional Representatives (i) FIELD RECRUITING FOR SUCCESS INTRODUCTION WELCOME GROUP - CONDITION FOR SESSION … In this session, we are going to show and discuss… Techniques… Ideas and Principles of Field Recruiting and in addition share with you the personal stories of Successful people who have been Field Recruited to the company. You see, recruiting quality people is a system the same as our Sales System… The Key is to follow the System. (ii) To being with, let's start with some video footage: SHOW VIDEO

D.R. Good Morning. Are you the manager? Manager Yes I am D.R. My name is … from C.I.C.A... … (iii) FIELD RECRUITING BUILDS TEAM SPIRIT … TEAM SPIRIT can be defined as the attitude of the Organisation. Therefore, our Team Spirit, is vastly improved when there is more Field Recruiting, and there is a good reason, Why. … [sic] (iv) HOW TO HOLD AN EFFECTIVE INTERVIEW WITH A PROBABLE TERMINATION - WHO YOU WANT TO SAVE TO THE COMPANY From time to time individuals who we believe have a good future with the Company decide to leave and take up a new position elsewhere. Sometimes this will be a 'bolt out the blue' … but most times it will be predictable. … (v) 4) If you feel you still have not established the REAL reason for leaving here are some suggested questions to 'OPEN UP' THE CONVERSATION. A) "What do you like most about working for Combined?" B) "What do you dislike most about working for Combined?" C) "What does your wife/partner think about the situation that you are considering leaving Combined? … L) "Do you think you will achieve those goals if you take up this new position and leave Combined?" M) "What do you think you would need to do to achieve these goals working for Combined?" (vi) … If at this stage you have been successful in persuading the salesperson that their future lies with Combined IT IS VITAL A THAT RE-TRAINING PROGRAMME IS SET UP INVOLVING THE T.R. - BUILD INSPECTION AND COMMUNICATION. If you are not successful be sure to leave the door open for the salesperson to return to the Company in the future. … IF YOU ARE SUCCESSFUL IN SAVING THIS SALESPERSON TO THE COMPANY AND THEY GO ON TO HAVE A SUCCESSFUL AND REWARDING CAREER WITH COMBINED, THEY WILL BE FOREVER GRATEFUL THAT YOU TOOK THE TIME ON A CERTAIN DAY TO TALK