The first element essential to the existence of any contract is the requirement that the parties have a mutual intention to create a legally enforceable bargain.
69 Both counsel referred to the following cases as being of assistance in determining whether the applicant was employed by the AHS. To my mind, these cases do not greatly assist as they focus on whether the relationship between two persons involves that of principal and independent contractor or that of employer and employee. Nevertheless, I set out the relevant passages to which the Commission's attention was directed.
70 In Stevens v Brodribb Sawmilling Co Pty Ltd (1986) 160 CLR 16, Mason J, with whom Brennan J agreed, said at 23, 24 (omitting some citations):
The first question to determine is whether the relationship between Brodribb and Gray was one of employer and employee or one of principal and independent contractor. …A prominent factor in determining the nature of the relationship between a person who engages another to perform work and the person so engaged is the degree of control which the former can exercise over the latter. It has been held, however, that the importance of control lies not so much in its actual exercise, although clearly that is relevant, as in the right of the employer to exercise it: Zuijs v. Wirth Bros. Pty. Ltd. (1955) 93 CLR 561, at p 571; Federal Commissioner of Taxation v. Barrett (1973) 129 CLR 395, at p 402; Humberstone v. Northern Timber Mills (1949) 79 CLR 389 at p 404. In the last-mentioned case Dixon J. said:
'The question is not whether in practice the work was in fact done subject to a direction and control exercised by an actual supervision or whether an actual supervision was possible but whether ultimate authority over the man in the performance of his work resided in the employer so that he was subject to the latter's order and directions.'
71 However, his Honour went to say at 24 that:
…the existence of control, whilst significant, is not the sole criterion by which to gauge whether a relationship is one of employment. The approach of this Court has been to regard it merely as one of a number of indicia which must be considered in the determination of that question. … Other relevant matters include, but are not limited to, the mode of remuneration, the provision and maintenance of equipment, the obligation to work, the hours of work and provision for holidays, the deduction of income tax and the delegation of work by the putative employee.
72 Similarly, in that case, Wilson and Dawson JJ said at 35:
… The classic test for determining whether the relationship of master and servant exists has been one of control, the answer depending upon whether the engagement subjects the person engaged to the command of the person engaging him, not only as to what he shall do in the course of his employment but as to how he shall do it. …The modern approach is, however, to have regard to a variety of criteria. This approach is not without its difficulties because not all of the accepted criteria provide a relevant test in all circumstances and none is conclusive. Moreover, the relationship itself remains largely undefined as a legal concept except in terms of the various criteria, the relevance of which may vary according to the circumstances.
73 In Hollis v Vabu Pty Ltd (2001) 207 CLR 21; (2001) 106 IR 80, the majority (Gleeson CJ, Gaudron, Gummow, Kirby and Hayne JJ) pointed to the increasing difficulty in applying the control test in more modern times. In the course of referring to the history of that test, they quoted at [43], The Liability of Employers in Damages for Personal Injury, 2nd ed (1979), pp 72 - 73:
"The control test was the product of a predominantly agricultural society. It was first devised in an age untroubled by the complexities of a modern industrial society placing its accent on the division of functions and extreme specialisation. At the time when the courts first formulated the distinction between employees and independent contractors by reference to the test of control, an employer could be expected to know as much about the job as his employee. Moreover, the employer would usually work with the employee and the test of control and supervision was then a real one to distinguish between the employee and the independent contractor. With the invention and growth of the limited liability company and the great advances of science and technology, the conditions which gave rise to the control test largely disappeared. Moreover, with the advent into industry of professional men and other occupations performing services which by their nature could not be subject to supervision, the distinction between employees and independent contractors often seemed a vague one."
74 Further, McHugh J pointed out, in that case at [71], that "The right to supervise or direct the performance of a task cannot transform into a contract of service what is in substance an independent contract … ".
75 Hollis was a case which involved an issue of vicarious liability. There, the Court placed some emphasis on the question whether the workers in that case (bicycle couriers) were carrying on a trade or business of their own or were serving the employer in its business. Distinctions of this kind go back some time in this context. In Colonial Mutual Life Assurance Society Ltd v Producers and Citizens Co-operative Assurance Co of Australia Ltd (1931) 46 CLR 41 at 48 (in a passage since quoted in Hollis at 39) Dixon J said, of an independent contractor, that:
"[t]he work, although done at [the principal's] request and for his benefit, is considered as the independent function of the person who undertakes it, and not as something which the person obtaining the benefit does by his representative standing in his place and, therefore, identified with him for the purpose of liability arising in the course of its performance. The independent contractor carries out his work, not as a representative but as a principal.
76 Gleeson CJ, Gaudron, Gummow, Kirby and Hayne JJ, in Hollis, after considering what had been said by Dixon J, went on to say at 39:
This statement merits close attention. It indicates that employees and independent contractors perform work for the benefit of their employers and principals respectively. Thus, by itself, the circumstance that the business enterprise of a party said to be an employer is benefited by the activities of the person in question cannot be a sufficient indication that this person is an employee. However, Dixon J fixed upon the absence of representation and of identification with the alleged employer as indicative of a relationship of principal and independent contractor. These notions later were expressed positively by Windeyer J in Marshall v Whittaker's Building Supply Co (1963) 109 CLR 210 at 217. His Honour said that 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". In Northern Sandblasting at 366, McHugh J said:
"The rationale for excluding liability for independent contractors is that the work which the contractor has agreed to do is not done as the representative of the employer."
77 Where the parties have defined their relationship by a clause in a contract made between them, that clause will be given weight (if it is not a sham), although it will not be determinative. In Australian Mutual Provident Society v Chaplin (1978) 18 ALR 385; (1978) 52 ALJR 406, the Privy Council said (at 389) that a term of this kind cannot be given effect if it contradicts the effect of the agreement as a whole. Their Lordships applied the following statement by Lord Denning MR in Massey v Crown Life Insurance Co [1978] 2 All ER 576 at 579 - 580:
The law, as I see it, is this: if the true relationship of the parties is that of master and servant under a contract of service, the parties cannot alter the truth of that relationship by putting a different label upon it … On the other hand, if their relationship is ambiguous and is capable of being one or the other [that is, either service or agency], then the parties can remove that ambiguity, by the very agreement itself which they make with one another. The agreement itself then becomes the best material from which to gather the true legal relationship between them.
78 This passage was cited with approval by the Privy Council in Narich Pty Ltd v Commissioners of Pay-roll Tax (NSW) (1983) 2 NSWLR 597 at 607 (see also Building Workers' Industrial Union of Australia v Odco Pty Ltd (1991) 29 FCR 104 at 126).
79 In Stevens, at 37, Wilson and Dawson JJ said that "the actual terms and terminology of the contract will always be of considerable importance". More recently, in Hollis, at 45, Gleeson CJ, Gaudron, Gummow, Kirby and Hayne JJ reiterated (citing R v Foster; Ex parte Commonwealth Life (Amalgamated) Assurances Ltd (1952) 85 CLR 138 at 150 - 151; Adam v Newbigging (1888) 13 App Cas 308 at 315; Ex parte Delhasse; In re Megevand (1878) 7 Ch D 511 at 526, 528, 532 and TNT Worldwide Express (NZ) Ltd v Cunningham [1993] 3 NZLR 681 at 699) that such terms are not of themselves determinative as parties cannot deem the relationship between themselves to be something it is not.
Consideration
80 In my view, the characterisation of the relationship between the applicant, UNSW and the AHS must proceed by reference to the totality of that relationship, including the position to which the applicant was appointed, the work practices imposed by the UNSW and AHS and, of course, an analysis of the terms of the contract entered into by the applicant and UNSW. A further important question is whether Professor Hall entered into a contract of employment with the AHS.
81 It is clear that the applicant has been employed by UNSW in the position of Professor of Medicine and Director, Division of Medicine, tenable at the Liverpool Hospital, within the AHS. It was this position that the applicant applied for and commenced employment in July 1991. In this position and role, the applicant was required to head the applicable clinical division within a major teaching Hospital and perform a clinical role. He was also required to provide various services in the Hospital, in particular, clinical management and treatment of public and private patients, teaching and research and other administrative services directly associated with those activities. Clearly, in performing those services, the applicant was acting within the course of his employment with UNSW.
82 At the time that the applicant was employed by UNSW, the position attracted a salary and allowances, the allowances being payable by the AHS where the services performed by the applicant in the Hospital exceeded eight hours per week. In my view, and I find, these allowances were only payable as a condition of the applicant's employment with UNSW upon the basis that he provide the various services in the Hospital.
83 Mr Ginters submitted that, as a result of the appointment by UNSW, the applicant was required to complete an application for employment with the AHS. The completion of this document needs to be seen in its proper context. There is no evidence, whatsoever, that the applicant applied for a position with the AHS. In this regard, in 2002, the applicant asserted to the Board of the AHS that he was employed by the UNSW and "all investigations into my workplace activities must be conducted by or approved by the UNSW, through the Vice-Chancellor". I will return to this evidence later in these reasons.
84 For present purposes, I accept the evidence of Mr Driver that after the applicant commenced performing clinical duties, he became entitled, in accordance with the then existing arrangements to be paid various allowances. To achieve this result, the applicant was required to complete the necessary documentation which is recorded in the human resources information system of the AHS in order to generate the payment of the allowances.
85 The applicant completed a form which was titled "Application for Employment [with] South Western Sydney Area Health Service". It is not suggested, and nor could it be, that the applicant ever applied for a position with the AHS. The documentation was completed approximately two months after the applicant had commenced performing the services. Furthermore, the evidence does not disclose that there was any offer of employment made to the applicant by the AHS.
86 The evidence discloses that the AHS had previously agreed with the UNSW that where university professorial appointments were made, that it would consider designating the appointee as head of the appropriate clinical department within the AHS, and as such would provide the appointee with appropriate support staff to undertake the relevant hospital administrative and medical duties.
87 The AHS also previously had agreed that where university appointments are made, the appointees will be accredited to the AHS as visiting medical officers (practitioners) with clinical responsibilities and duties to be defined according to the needs of the AHS and the interests of the particular academic. Such accreditation would terminate in the event that the appointee ceased to hold a university appointment.
88 Following the applicant's employment by the UNSW, he was granted the status of visiting practitioner with clinical responsibilities and duties in respect of patients treated in the Hospital.
89 Chapter 8, Pt 1 of the Health Services Act 1997 deals with visiting practitioners. Section 76 of that Act is in these terms:
76 Who is a visiting practitioner?
A visiting practitioner is a medical practitioner or dentist who is appointed by a public health organisation (otherwise than as an employee) to practise as a medical practitioner or dentist in accordance with the conditions of appointment at any of its public hospitals or health institutions, or in relation to any health service it provides, specified in the appointment.
90 It is contended by the AHS that the applicant is therefore not entitled to perform any clinical services to patients and practice as a medical practitioner unless he has been accorded visiting practitioner status in accordance with the above Act.
91 Historically, clinical academics did not receive any payments from hospitals when they provided services to hospital patients. However, it was regarded as desirable by the Department of Health that clinical academics employed by UNSW (and other academic institutions who perform services of the kind referred to above), should be rewarded over and above normal university salaries and conditions which they would receive from the University for performing clinical duties associated with the academic position held.
92 This was done within the pay structures and policies of the UNSW and also of the AHS. The applicant's employment was and continues to be regulated by the University of New South Wales (Academic Staff) Enterprise Agreement 2003, an agreement certified by the Australian Industrial Relations Commission.
93 Mr Driver's evidence is that in December 1985, the Department reached an agreement with the Public Medical Officers' Association (the predecessor to ASMOF) for the payment of an administrative allowance in respect of medical services provided in public hospitals. The agreement set out the arrangements to be applied to clinical academics who voluntarily agree to participate in the on-call roster with staff specialists.
94 On 1 November 1988, the Department wrote to the Deputy Commissioner of Taxation stating that senior clinical academics were not employees of public hospitals but of universities.
95 The payments made to clinical academics were renegotiated from time to time so as to ensure that the senior medical practitioners (academic) did not fall behind persons actually employed in the AHS and also to ensure that their benefits were continually improved.
96 It is the negotiations that occurred between the Department of Health and ASMOF in 1998 that resulted in new remuneration arrangements for senior medical practitioners (academic). It was submitted by Mr Ginters that these negotiations resulted in the applicant becoming a part-time employee of the AHS. Mr Ginters relies on a without prejudice letter dated 2 October 1998 from the Department to ASMOF which purports to set out the agreement reached between the parties in respect of the new remuneration arrangements.
97 It will be recalled that in the paragraph headed "Employee Status" in the letter it was stated "clinical academics… would in future be part-time employees of health services with fractional staff specialist appointments."
98 This purported part of the agreement however, did not find its way into the Department's Circular that reflected the remuneration agreement reached between the parties.
99 The Department's Circular of January 2000, contains under the heading "Definitions", the following:
Clinical academic - a clinical academic for the purposes of this Circular is defined as a medical practitioner member of a university faculty of medicine employed by the university who holds a public hospital appointment as a Visiting Medical Practitioner and provides services for the public hospital's patients.
100 However, the Circular goes on to state that senior medical practitioners (academic) will be classified as part-time employees and it then provides that such academics will be "engaged".
101 Reference is made in the Circular to the senior medical practitioners pay scale. This is a reference to the Salaried Senior Medical Practitioners (State) Award. It was the pay scale for senior medical practitioners (lecturer, senior lecturer, associate professor and professor) which was used to calculate the 40 percent appointments salary for clinical academics.
102 Clinical academics who provide clinical and administrative services to public patients for periods greater than eight hours per week were described as senior medical practitioners (academic) and classified as part-time employees. It is these clinical academics which were engaged as part-time senior medical practitioners who were to receive 40 percent appointments calculated on rates found in the Award. Clinical academics who provided up to eight hours public patient work were not engaged as senior medical practitioners (academic) and did not attract the 40 percent appointment. It will be recalled that these clinical academics received a university clinical loading which was paid by the UNSW.
103 The Circular provided that, except as otherwise specified, the provisions of the Salaried Senior Medical Practitioners (State) Award applied to senior medical practitioners (academic). Entitlements such as annual leave, long service leave, sick leave, personal carers leave and parental leave under the Award were to be provided on a pro-rata basis, based on the 40 percent fractional appointment. Salary packaging was also made available on the same basis as that for staff specialists. Superannuation was also payable on the remuneration provided to senior medical practitioners (academic). These entitlements were retrospective to 1 July 1998. Persons appointed as senior medical practitioners (academic) were entitled to automatic appointment as a visiting medical practitioner in accordance with s 76 of the Health Services Act. Such practitioners, it will be recalled, are appointed otherwise than as an employee.
104 In Gapes v Commercial Bank of Australia Limited (1981) 37 ALR 20, the Full Federal Court (Smithers, Evatt and Deane JJ) considered the relationship between the terms of an award and the terms of a contract of employment. In the joint judgment of Smithers and Evatt JJ at 22 - 23, their Honours referred to the observations of the then Chief Justice, Sir John Latham in Amalgamated Colleries of W.A. Ltd -v- True (1938) 59 CLR 417 at 423 - 424 where the Chief Justice stated:
When any person is employed to do work to which an award applies, the parties are bound by a contract. Their legal relations are in part determined by the contract between them and in part by the award. The award governs their relations as to all matters with which it deals
…
But an award never deals with all the matters which affect the relations of any particular employer and any particular employee. The creation of the relation of employer and employee depends upon an agreement between them and not upon any award. Thus the existence of the obligations under an award in relation to a particular employer and employee always depends on the existence of a contract between them. So, also, there are terms of their relationship which do not depend upon any award. For example, the employee must always obey the lawful orders of his employer, but awards do not commonly include a term to that effect. In my opinion, however, it is unnecessary in this case to work out in detail the basis of the relations created by employment under an award. For the purposes of this case it is sufficient to refer to what was said in a unanimous judgment of this court in Mallinson -v- Scottish Australian Investment Co. Ltd (1920) 28 CLR 66 at p.73: "Apart from the Act" (The Commonwealth Conciliation and Arbitration Act) "the right to receive wages sprang from the existence of the relationship of master and servant and the performance of services therein, and notwithstanding the Act it is still the existence of this relationship and the performance of services therein which confers on the employee the right to remuneration - all that the Act has done in this respect is to substitute another method of determining the amount of remuneration."
105 After referring to the above passage, their Honours observed at 23:
Every obligation in the award is conditional on the existence of at least, a contract of employment. But once that condition is fulfilled the award operates and governs the obligations of the parties to the extent that it deals therewith.