Analysis
88 I start with the parties' respective submissions about the effect of the recent High Court decisions in Personnel Contracting and ZG Operations.
89 EFEX submits that the recent decisions of the High Court in Personnel Contracting and ZG Operations support the following propositions. First, in the case of an informal contract, that is, a contract which is not in writing and is one entered into in circumstances of considerable informality, the Court in Personnel Contracting (at [43], [46] per Kiefel CJ, Keane and Edelman JJ; and [162] per Gordon J) said that a court may have regard to the conduct of the parties to ascertain their common intention (Connelly v Wells (1994) 55 IR 73 at 74 per Gleeson CJ), but the emphasis must be on contractual rights and obligations and not on matters that bear no necessary connection with the contractual obligations of the parties. Secondly, the Court in ZG Operations (at [63] per Kiefel CJ, Keane and Edelman JJ) emphasised the importance of the taxation arrangements between the parties in determining the nature of their relationship. Finally, EFEX accepts that as a result of Personnel Contracting (at [63]-[66] per Kiefel CJ, Keane and Edelman JJ; at [127] per Gageler and Gleeson JJ; at [184] per Gordon J), not only is the label the parties attribute to their relationship not determinative, but it will rarely assist the Court in characterising the parties' relationship by reference to their contractual rights and obligations. Unsurprisingly in the circumstances of this case, that proposition is not disputed by Mr Bennett.
90 Mr Bennett submits correctly that both Personnel Contracting and ZG Operations involved a comprehensive written contract and not an informal arrangement as is the arrangement in this case. In ZG Operations, the Court noted (at [63] per Kiefel CJ, Keane and Edelman JJ) that the contracting party was a partnership of which the alleged employee was a member. That means, Mr Bennett submits, that the case is of limited relevance. Mr Bennett submits that a number of relevant principles emerge from Personnel Contracting. First, the dichotomy between a worker conducting their own independent business and a worker serving in the business of another is a meaningful framework for determining the nature of the relationship (at [39] per Kiefel CJ, Keane and Edelman JJ; at [113] and [121] per Gageler and Gleeson JJ). Secondly, the multifactorial approach remains appropriate providing the focus is on the contractual rights and obligations of the parties (at [59]-[61] per Kiefel CJ, Keane and Edelman JJ; at [113], [119]-[120] per Gageler and Gleeson JJ; at [174] and [185]-[189] per Gordon J). Thirdly, the right to control is important because it focuses attention on the subservient and dependent nature of the work of the employee (at [73] per Kiefel CJ, Keane and Edelman JJ; at [113] and [122] per Gageler and Gleeson JJ). Finally, exercises of control must be manifestations of a contractual right of control. Mr Bennett submits that the exercises of control in this case do manifest "the right of control that the parties must be taken to have agreed as a right exercisable by EFEX" (at [42] per Kiefel CJ, Keane and Edelman JJ).
91 This case is at the other end of the spectrum from a case where the terms of the parties' relationship are comprehensively committed to a written contract (Personnel Contracting at [43] per Kiefel CJ, Keane and Edelman JJ). The key figures were friends, there was no written document, the oral discussions were brief and one of the key statements was that the engagement would be on the same basis as another person providing "work" for or to the company.
92 As I understand it, both parties in this case accept that the Court can and should have regard to subsequent conduct to determine the nature of their relationship. EFEX submits that the Court is confined to a consideration of contractual rights and obligations. That is significant because the arrangement did not involve, for example, a contractual obligation on Mr Bennett to work particular hours or follow particular instructions from EFEX. Mr Bennett did not seem to disagree with the emphasis on contractual rights and obligations, but he submitted that the Court could examine subsequent conduct to see what the parties tacitly agreed. The differences between these two approaches was not the subject of detailed submissions.
93 The parties plainly intended for the arrangement to work and acted under the arrangement. I consider that the Court can consider subsequent conduct to determine what the parties tacitly agreed.
94 The second general matter relates to the use of the multifactorial approach. It would seem that it remains a useful approach providing the focus is on contractual rights and obligations (Personnel Contracting at [61] per Kiefel CJ, Keane and Edelman JJ; at [120]-[121] per Gageler and Gleeson JJ).
95 The third general matter is that the assessment of the various factors is affected by the nature of the role performed by the alleged employee. An employed professional such as a solicitor may by virtue of his or her role be subject to less control than an employed factory worker. An employed salesperson may be accorded considerable latitude in terms of the performance of his or her role. Mr Bennett was a Business Development Manager, almost entirely involved in sales and, in effect, a salesperson.
96 The fourth general matter is that a useful framework for analysis is the dichotomy between a person conducting their own independent business and a person serving in the business of another.
97 Mr Bennett identified 10 matters which he submitted were relevant to the characterisation of his relationship with EFEX and he submitted that seven of them supported to varying degrees a finding of an employment relationship. The seven matters were as follows: (1) EFEX had the right to control Mr Bennett's performance of his work; (2) EFEX held Mr Bennett out as part of the EFEX organisation; (3) Mr Bennett's right to obtain other employment was limited in that he had a limited ability to work for others; (4) In practical terms, Mr Bennett had no ability to delegate any of his work for EFEX to others; (5) Mr Bennett did not provide significant capital or assets towards or in relation to his work for EFEX; (6) Mr Bennett had no ability to generate goodwill or other saleable assets in connection with his work for EFEX; (7) the basis upon which Mr Bennett was remunerated by EFEX, namely, by payment of a fixed amount each month, was strongly suggestive of an employment relationship.
98 Mr Bennett accepted that there were matters which pointed to an independent contractor relationship, but submitted that these matters were clearly outweighed by the matters pointing to an employment relationship. Two of the matters he identified were as follows: (1) the taxation arrangements adopted by the parties suggested an independent contractor relationship; and (2) the informal arrangements concerning "leave" for Mr Bennett are consistent with an independent contractor relationship. Mr Bennett also referred to the fact that the parties understood that Mr Bennett was a contractor not an employee.
99 EFEX relied on the three matters Mr Bennett identified, but also submitted that the right of control was minimal as reflected in the following: (1) there was no direction that Mr Bennett be in the office at any particular time; and (2) Mr Bennett had almost total freedom in how he carried out his sales activities. He also submitted at one point that the English approach of the "organisation test" had not been adopted in Australia. That is correct (Stevens v Brodribb Sawmilling Co Pty Ltd [1986] HCA 1; (1986) 160 CLR 16), but that should not be taken to mean that, as the High Court said in Personnel Contracting, the own business/employer's business dichotomy does not provide a useful framework of analysis.