JMC Pty Ltd v Commissioner of Taxation

The relevant common law principles 8 The primary judge summarised the principles in Personnel Contracting and Jamsek as follows: [17] First, where the rights and duties of the parties are comprehensively committed to a written contract, the legal rights and obligations established by the contract are decisive of the character of the relationship provided that the validity of the contract has not been challenged as a sham, or that the terms of the contract have not been varied, waived or are subject to an estoppel: Personnel Contracting at [43], [44], [47], [59] (Kiefel CJ, Keane and Edelman JJ), [172] (Gordon J, Steward J relevantly agreeing at [203]). The task is to construe and characterise the contract made between the parties at the time it was entered into: Personnel Contracting at [174] (Gordon J). [18] Second, in order to ascertain the relevant legal rights and obligations, the contract of employment must be construed in accordance with the established principles of contractual interpretation: Personnel Contracting at [60] (Kiefel CJ, Keane and Edelman JJ), [124] (Gageler and Gleeson JJ), [173] (Gordon J). In that respect, regard may be had to the circumstances surrounding the making of the contract, as well as to events and circumstances external to the contract which are objective, known to the parties at the time of contracting and which assist in identifying the purpose or object of the contract: Personnel Contracting at [174]-[175] (Gordon J); Jamsek at [61] (Kiefel CJ, Keane and Edelman JJ), referring to Codelfa Construction Pty Ltd v State Rail Authority of NSW (1982) 149 CLR 337 at 352. The nature of the specific job that the putative employee applied for and the nature and extent of any tools or equipment they have to supply for that job may also be relevant: Personnel Contracting at [175] (Gordon J). It is, however, generally not legitimate to use in aid of the construction of a contract anything which the parties said or did after it was made: Personnel Contracting at [176] (Gordon J). [19] Third, and flowing from the first two principles, the characterisation of the relationship between the parties is not affected by circumstances, facts or occurrences arising between the parties that have no bearing on their legal rights: Personnel Contracting at [44] (Kiefel CJ, Keane and Edelman JJ), [173]-[178] (Gordon J); Jamsek at [109] (Gordon and Steward JJ). A "wide-ranging review of the entire history of the parties' dealings" is neither necessary nor appropriate: Personnel Contracting at [59] (Kiefel CJ, Keane and Edelman JJ); see also [185]-[189] (Gordon J). For a "matter to bear upon the ultimate characterisation of a relationship, it must be concerned with the rights and duties established by the parties' contract, and not simply an aspect of how the parties' relationship has come to play out in practice but bearing no necessary connection to the contractual obligations of the parties": Personnel Contracting at [61] (Kiefel CJ, Keane and Edelman JJ) (emphasis added). [20] It follows that the fact that the parties' subsequent conduct may not have precisely aligned with their contractual rights and obligations, or the fact that a particular contractual right may have never been exercised or utilised, will generally be irrelevant when it comes to characterising the relationship. That is so unless the manner in which the parties conducted themselves after entering into the contract was such as to establish that the contract was a sham, or that the contract had been varied, or that certain rights under the contract were subject to an estoppel. [21] Fourth, the contractual provisions that may be relevant in determining the nature of the relationship include, but are not limited to, those that deal with the mode of remuneration, the provision and maintenance of equipment, the obligation to work, the hours of work, the provision for holidays, the deduction of income tax, the delegation of work and the right to exercise direction and control: Personnel Contracting at [113] (Gageler and Gleeson JJ); [174] (Gordon J), referring to Brodribb at 24 (Mason J); see also 36-37 (Wilson and Dawson JJ). [22] In Brodribb, Wilson and Dawson JJ said (at 36-37) that the indicia which suggested an employment relationship included "the right to have a particular person do the work, the right to suspend or dismiss the person engaged, the right to the exclusive services of the person engaged and the right to dictate the place of work, hours of work and the like", whereas those that suggested a contract for services included "work involving a profession, trade or distinct calling on the part of the person engaged, the provision by him of his own place of work or of his own equipment, the creation by him of goodwill or saleable assets in the course of his work, the payment by him from his remuneration of business expenses of any significant proportion and the payment to him of remuneration without deduction for income tax". Their Honours were, however, careful to note (at 37) that "any attempt to list the relevant matters, however incompletely, may mislead because they can be no more than a guide to the existence of the relationship of master and servant". It should also be emphasised that the list of possible indicia must now be approached on the basis that the focus is on the parties' contractual rights and obligations relevant to those matters, at least where the contract is wholly in writing, not on the way in which the work was actually carried out. [23] Fifth, the characterisation of the relationship as one of service or employment involving an employer and employee, as opposed to a relationship involving an independent contractor providing services to a principal, often hinges on two considerations. The first consideration is the extent to which the putative employer has the right to control how, where and when the putative employee performs the work: Personnel Contracting at [73]-[74] (Kiefel CJ, Keane and Edelman JJ); [113] (Gageler and Gleeson JJ); see also Brodribb at 24 (Mason J) and 36-37 (Wilson and Dawson JJ). The second is the extent to which the putative employee can be seen to work in his or her own business, as distinct from the business of the putative employer - the so-called "own business/employer's business" dichotomy: Personnel Contracting at [36]-[39] (Kiefel CJ, Keane and Edelman JJ); [113] (Gageler and Gleeson JJ); cf [180]-[183] (Gordon J). Neither of those considerations are determinative and both involve questions of degree. [24] As for the element of control, "the existence of a right of control by a putative employer over the activities of a putative employee serves to sensitise one to the subservient and dependent nature of the work of an employee, so as to assist in an assessment of whether a relationship is properly to be regarded as a contract of service rather than a contract for services": Personnel Contracting at [73] (Kiefel CJ, Keane and Edelman JJ). [25] As for the "own business/employer's business" dichotomy, it also "usefully focusses attention upon those aspects of the relationship generally defined by the contract which bear more directly upon whether the putative employee's work was so subordinate to the employer's business that it can be seen to have been performed as an employee of that business rather than as part of an independent enterprise": Personnel Contracting at [39] (Kiefel CJ, Keane and Edelman JJ); cf [180]-[182] (Gordon J). Another way of framing the question, which focusses more directly on the terms of the contract, is whether the person "is contracted to work in the business or enterprise of the purported employer": Personnel Contracting at [183] (Gordon J) (emphasis in original). One consequence of answering that question in the negative may be that the person is not an employee. [26] Sixth, a "label" which the parties may have chosen to describe their relationship is not determinative of the nature of the relationship and will rarely assist the court in characterising the relationship by reference to the contractual rights and duties of the parties: Personnel Contracting at [63]-[66] (Kiefel CJ, Keane and Edelman JJ); [127] (Gageler and Gleeson JJ); [184] (Gordon J). The parties' "legitimate freedom to agree upon the rights and duties which constitute their relationship" does not "extend to attaching a 'label' to describe their relationship which is inconsistent with the rights and duties otherwise set forth" - to permit otherwise would elevate the freedom to "a power to alter the operation of statute law to suit … the interests of the party with the greater bargaining power": Personnel Contracting at [58] (Kiefel CJ, Keane and Edelman JJ). [27] The characterisation of a relationship as being either one of employer and employee, or one involving the engagement of an independent contractor, is ultimately an evaluative judgment that takes into account the totality of the parties' contractual rights and obligations. The exercise may not necessarily be straightforward because, in some cases at least, the parties' contractual rights and obligations may point in different directions. The evaluative exercise also should not be approached on the basis that there is some checklist against which ticks and crosses may be placed so as to produce the right answer. Some degree of uncertainty is unavoidable, particularly in the case of many modern-day work or service contracts. 9 There was no dispute between the parties that this summary was accurate. 10 The decisions of the Privy Council in Australian Mutual Provident Society v Chaplin [1978] UKPC 7; 18 ALR 385 and Narich Pty Ltd v Commissioner of Pay-roll Tax [1983] 2 NSWLR 597 were central to the reasoning of Kiefel CJ, Keane and Edelman JJ in Personnel Contracting that the High Court was doing no more than restating what the law had always been, and disagreeing with the proposition that, where there is a comprehensive written contract, one could look to the performance of the contract in addition to the terms of the contract itself. At [45], their Honours set out the following proposition which the Privy Council in Narich at 601 had drawn from Chaplin: …where there is a written contract between the parties whose relationship is in issue, a court is confined, in determining the nature of that relationship, to a consideration of the terms, express or implied, of that contract in the light of the circumstances surrounding the making of it; and it is not entitled to consider also the manner in which the parties subsequently acted in pursuance of such contract. 11 At [46], Kiefel CJ, Keane and Edelman JJ referred to Australian courts continuing to recognise the decisions in Chaplin and Narich as authoritative. At the end of [48], their Honours stated that it would be a "large step" to interpret the Australian cases which had followed Chaplin and Narich as justifying a departure from the settled law as expressed in those cases. 12 A different view was expressed by Gageler and Gleeson JJ at [143] on this matter of principle: The true principle, in accordance with what we understand to have been the consistent doctrine of this Court until now, is that a court is not limited to considering the terms of a contract and any subsequent variation in determining whether a relationship established and maintained under that contract is a relationship of employment. The court can also consider the manner of performance of the contract. That has been and should remain true for a relationship established and maintained under a contract that is wholly in writing, just as it has been and should remain true for a relationship established and maintained under a contract expressed or implied in some other form or in multiple forms. 13 Gageler and Gleeson JJ were of the view that Narich contained an error of principle which they explained in the following way at [130]: The error of common law principle in Narich lay in conflation of the distinction between the relationship of employment and the contract under which the relationship is established and maintained. Focusing exclusively on the terms of the contract loses sight of the purpose for which the characterisation is undertaken. That purpose is to characterise the relationship. 14 Their Honours also stated at [132]: There will be cases, of which Narich and Chaplin may well have been examples, in which an examination of the manner of performance of a written contract will reveal nothing of significance about a relationship in fact established and maintained by the parties under the contract that cannot be gleaned from an examination of the contractual terms. But there will be cases where, without any variation to the terms of a written contract, the true character of a relationship in fact established and maintained under the contract will be revealed through the manner of the performance of the contract. That will be so where the terms of the written contract are sufficiently opaque or obscure to admit of different manners of performance. And it will be especially so where such a contract is a standard form written contract couched in language that might arguably have been chosen by the putative employer to dress up the relationship to be established and maintained as something somewhat different from what it might turn out to be. 15 Chaplin was an appeal to the Judicial Committee of the Privy Council from the Full Court of the Supreme Court of South Australia. Clause 3 of the contract at issue stated that the relationship between the AMP and one of its representatives was one of principal and agent and not of master and servant. The contract was held by the Chief Justice to be one of employment, notwithstanding this label. The decision turned on the terms of the contract, not the way in which it had in fact been performed. 16 Lord Fraser of Tullybelton, delivering the judgment of the Judicial Committee, considered a number of the contractual clauses, observing at 391 that none of them were conclusive on the nature of the relationship. His Lordship then turned to the representative's right to enter into a partnership in connection with the AMP's business, and his power to appoint subagents. The former was described by Lord Fraser as unusual, but not absolutely inconsistent with a relationship of master and servant; the latter was described as being an even stronger indication of inconsistency with the representative being an employee. Referring to the agent's power to appoint subagents, Lord Fraser stated at 391: In the present case there appears to be nothing in the written agreement to prevent the respondent from delegating the whole performance of his work to one or more sub-agents. In the opinion of their Lordships this power of unlimited delegation is almost conclusive against the contract being a contract of service - see Aliyah op cit p 59, a passage cited by the learned Chief Justice. The unlimited extent of the power of delegation is one consequence of the striking absence of any express obligation upon the respondent to perform any particular duties, or to work any particular hours, or indeed to do any work at all on behalf of the Society. 17 In Stevens v Brodribb Sawmilling Company Pty Ltd [1986] HCA 1; 160 CLR 16 at 26, Mason J (with whom Brennan J agreed) cited Chaplin at 391 as authority for the proposition that the power to delegate was an important factor in deciding whether a worker was a servant or an independent contractor. Wilson and Dawson JJ referred to Chaplin at 391, noting the view expressed in that case that an unlimited power of delegation was almost conclusive against the contract being one of service: Brodribb at 38. 18 Neither Personnel Contracting nor Jamsek cast any doubt on the correctness of Brodribb. In Personnel Contracting, Kiefel CJ, Keane and Edelman JJ said: (a) at [34]: that the reference in Brodribb to the totality of the relationship in that case did not mean that the factors identified to be relevant are of equal weight in the characterisation of the relationship, with some understanding of the relative significance of the various factors being desirable; (b) at [56]: that Brodribb was a case in which the parties had not committed the terms of their relationship to a written contract, unlike in Personnel Contracting or Jamsek and, it might be added, unlike the present case. Where there is no written contract, the terms of the contract might need to be determined by reference to conduct. Their Honours noted that Mason J's reference to the "totality of the relationship" was made in the context of emphasising that the right of one party to control the work was not the only relevant factor. It was not an invitation to broaden the inquiry beyond the contractual rights and duties of the parties; and (c) at [57]: that there was no suggestion in any of the judgments in Brodribb that the Justices entertained any misgivings about the statements of principle in Chaplin and Narich. 19 Gordon J also endorsed Chaplin and referred to the contractual right to delegate the work as one of the indicia of the nature of the relationship being that of an independent contractor: Personnel Contracting at [174]. 20 Clause 2.1(g) of the written contracts in Jamsek provided that the partnerships agreed to "[n]ot engage or use the services of a driver for the vehicle without prior and continuing approval by [the company]": Jamsek at [18]. 21 Kiefel CJ, Keane and Edelman JJ said that the clause did not exclude the possibility of engaging alternative drivers with the company's approval, with the right to grant or withhold approval recognising the company's interest in the safe transport of its goods: Jamsek at [55]. 22 Gordon and Steward JJ at [103] described cl 2.1(g) as making explicit that performance of the contractual obligations was not personal to the workers, and cited both Brodribb at 24 and 36-37 and Personnel Contracting at [198]. The requirement for consent was not suggested as requiring a different conclusion.

The statutory definition of "employee" 23 As to the extended definition of "employee" in s 12(3) of the SGA Act, and in particular the phrase "works under a contract that is wholly or principally for the labour of the person", neither side took issue with primary judge's summary of the applicable principles. His Honour expressed them in the following way: [29] Three elements must be satisfied before a person could be said to be an "employee" within the extended meaning: first, there must be a contract; second, the contract must be wholly or principally "for" the labour of the person; and third, the person must work under the contract: Dental Corporation Pty Ltd v Moffet (2020) 278 FCR 502; [2020] FCAFC 118 at [82] (Perram and Anderson JJ) and [111], [115] (Wigney J agreeing). [30] The question whether the contract is "for" the labour of the person must be approached from the perspective of the putative employer: Moffet at [84]. The question must also be determined by reference to the terms of the contract: Moffet at [86]. The question is essentially whether the terms of the contract reveal that the benefit that the putative employer receives from entering into the contract is "wholly or principally" the labour of the putative employee: Moffet at [84]-[85]. The word "principally" in this context is essentially synonymous with "substantially" (Moffet at [104]) or "predominant[ly]": Moffet at [116]. [31] A contract is not wholly or principally for the labour of the putative employee if the contract is a contract for the provision or production of a result and the putative employee is paid for that result: Neale v Atlas Products (Vic) Pty Ltd (1955) 94 CLR 419 at 425 (Dixon CJ, McTiernan, Webb, Kitto and Taylor JJ); World Book (Australia) Pty Ltd v Commissioner of Taxation (1992) 27 NSWLR 377 at 385-386 (Sheller JA, with Clarke JA agreeing); Vabu Pty Ltd v Commissioner of Taxation (1996) 81 IR 150 at 155 (Sheller JA, with Beazley JA agreeing).

The higher education regulatory regime and its implementation 24 The primary judge found that an important circumstance surrounding the making of the contracts was that JMC was a higher education provider registered by the Tertiary Education Quality and Standards Agency (TEQSA): at [42]. JMC's courses were also accredited by TEQSA. To be registered, a provider had to meet certain threshold standards set by legislative instruments in 2011 and 2015 under provisions of the Tertiary Education Quality and Standards Agency Act 2011 (Cth) (TEQSA Act), as well as provider standards and course accreditation standards. His Honour summarised the obligations imposed upon JMC by this regime as follows: [39] The Provider Registration Standards in the 2011 Threshold Standards included: that the provider had in place effective quality assurance arrangements that encompassed systematic monitoring, review and improvement; that the provider managed human resources to ensure effective performance review and professional development of its personnel; that the qualifications, experience and expertise of the provider's academic staff are appropriate to the nature, level and mode of delivery of the course of study and attainment of expected student learning outcomes; that the provider's staff have an understanding of pedagogical and/or adult learning principles relevant to the student cohort being taught; and that the provider's staff are advised of student and other feedback on the quality of their teaching and have opportunities to improve their teaching. [40] The Provider Course Accreditation Standards in the 2011 Threshold Standards included, in short summary, that the: course design was appropriate; course resourcing and information was adequate; admission criteria were appropriate; teaching and learning were of high quality; assessment was effective and expected student outcomes were achieved; and course monitoring, review, updating and termination were appropriately managed. [41] The 2015 Threshold Standards relevantly included the following standards: that staff with responsibilities for academic oversight and those with teaching and supervisory roles in courses or units of study were equipped for their roles, including having skills in contemporary teaching, learning and assessment principles; that teachers who teach specialised components of a course of study who may not fully meet the standards for knowledge, skills and qualification or experience required for teaching or supervision have their teaching guided and overseen by staff who meet the standard; that comprehensive reviews of courses of study were informed and supported by regular interim monitoring of the quality of teaching and supervision of student progress and overall delivery of units within each course of study; and that academic oversight assured the quality of teaching, including by monitoring and reporting to the corporate governing body on the quality of teaching. [42] The important point to note about both the 2011 and 2015 Threshold Standards is that they effectively required JMC, as a registered higher education provider, to ensure that its academic and teaching staff were appropriately qualified and experienced. JMC could only allow appropriately qualified and experienced individuals to teach its students. Perhaps more significantly, JMC was required to supervise, monitor and review the performance of its academic and teaching staff to ensure that their teaching met the required standard for the accredited courses it provided. JMC could not simply employ or retain teaching staff and leave it up to them to determine when, how and from where they were to teach JMC's students. 25 The primary judge described the nature of the teaching staff retained by JMC and in particular the retention of Mr Harrison as follows: [43] JMC engaged individuals to, among other things, teach and assess TEQSA accredited courses. The accredited courses provided by JMC relevantly included a Bachelor of Creative Technologies (Audio Engineering and Sound Production), a Bachelor of Creative Arts (Film and Television) and a Diploma of Audio Engineering and Sound Production. Each of those courses included units of study relating to audio engineering and sound production. [44] Mr Harrison was at all relevant times a qualified sound engineer or technician. His qualifications included holding a Bachelor of Digital Media (Audio Production Major) from SAE Creative Media Institute conferred in 2008 and a Master of Communication from Victoria University in June 2011. [45] From July 2011 to August 2017, JMC and Mr Harrison entered into a series of contracts pursuant to which Mr Harrison agreed to provide "teaching services" to JMC and JMC agreed to pay Mr Harrison sums of money calculated by reference to specified hourly rates for a "lecture" and "marking". Each of the contracts related to teaching services in respect of specified units of study during a specific period or "trimester". The terms and conditions of some of the contracts were recorded in documents entitled "Memorandum of Agreement" which identified, in a schedule, the units of study and the trimester in which Mr Harrison was to provide teaching services. Other contracts were entered into by the exchange of emails which specified the units of study and the trimester in which Mr Harrison was to provide teaching services, and otherwise adopted or incorporated the terms and conditions of a specified Memorandum of Agreement between Mr Harrison and JMC. The documentary evidence in respect of some of the contracts was scant or, in some cases, essentially non-existent, though the parties generally proceeded on the basis that the terms and conditions of those contracts were relevantly the same as those contracts where greater documentary evidence was available.

The contracts and their terms 26 The primary judge summarised the contracts in the relevant period, and earlier contracts for context: at [47]-[84]. There were in total 22 contracts. The first contract was for the period between July and October 2011, and the last contract was for the trimester commencing on 25 September 2017. There was scant evidence before the Court in relation to some of the contracts: at [45]. 27 Key among the earlier contractual documents was a memorandum of agreement (MOA) signed on 16 October 2012, just under six months before the first of the two periods relevant to the Commissioner's assessments. 28 The terms of the first MOA were essentially replicated in a second MOA signed on 12 April 2013 (soon after the commencement of the first of the two relevant periods on 1 April 2013) and in a third MOA signed on 28 February 2017 (four months before the commencement of the second of the two relevant periods, on 1 July 2017). 29 The appeal was conducted largely by reference to the first MOA. By reason of the principles identified earlier, it is central to the appeal and is set out in full for convenience: MEMORANDUM OF AGREEMENT Parties: The Parties to this Agreement are: JMC Pty Limited (ACN: 003 572 012) of 41 Holt Street, Surry Hills, New South Wales 2010 trading as JMC Academy (the Academy) And Nick Harrison (the Services provider) of [REDACTED ADDRESS] trading as NICHOLLAS HARRISON [registered business name] Recitals: 1 The Academy is a recognised provider of approved Higher Education programmes. 2 The services provider has offered to provide teaching services to the Academy in the Unit or Units set out in the Schedule to this Agreement and has represented to the Academy that she/he is able to provide such services to the Academy at the standard required to deliver Higher Education programmes and that she/he is qualified, capable and suitably experienced to do so with the skills required and in a manner necessary to provide learning outcomes consistent with accreditation requirements. In providing such services she/he is permitted to utilize any of their own tools, props, computer software etc that she/he feels will assist them in their teaching services but must do so with the expressed permission of the academy. 3 Relying on the representations of the Services provider the Academy has accepted the offer by the Services provider to provide teaching services in the Unit or Units set out in the Schedule. 4 This Memorandum records the terms upon which the Parties are agreed that the Services provider will provide teaching services in the Unit or Units set out in the Schedule to the Academy. Terms: 1 It is a condition precedent to this Agreement that, prior to first providing to the Academy the teaching services in the Schedule this Agreement (the Schedule), the Services provider provides to the Academy current documentary evidence establishing that there is no impediment to her/him providing teaching or other services to children or young persons by virtue of legislation relating to the protection of children or young persons enacted in the State or States in which he/she is to provide those teaching services. 2 Subject to the condition precedent in Term1, this Agreement will commence on the date of its execution by the Services provider or upon the date on which the Services provider first provides to the Academy a service in the Schedule, whichever is the earlier. 3 As soon as practicable after the commencement of this Agreement the Services provider will produce to the Academy such original documents establishing that she/he is qualified, capable and suitably experienced to provide the services in the Schedule as the Academy may require, including the original testamurs of her/his Academic Award, and will provide the Academy with certified copies of same. 4 The Services provider will personally provide teaching services to the Academy in accordance with the Schedule and will do so in a manner consistent with the representations set out in Recital 2. 5 The Services provider may sub-contract or assign to another person or corporation the provision to the Academy of the teaching services required of her/him by this Agreement but must do so with the written consent of The Academy's representative. 6 If on any occasion listed in the Schedule the Services provider does not provide teaching services to the Academy without reasonable notice, the Academy may, at its absolute discretion, deduct from any monies payable to the Services provider under these Terms any costs reasonably incurred in securing teaching services for the particular occasion. 7 Subject to these Terms, in consideration for the Services provider providing teaching services to the Academy, the Academy will pay to the Services provider the following sums in respect of teaching services provided to the Academy in accordance with the Schedule: • A Lecture $60.00 per hr • A Tutorial $ N/A • A Demonstration $ N/A • Marking $30.00 per hr • Each other scheduled activity ; approved by Academic Manager (refer to unit assessment marix [sic]) Provided that should the Parties agree to the provision of teaching services additional to those in the Schedule, the consideration for the provision of such services will be that provided for in this Term. 8 Where the Academic officer who is responsible for managing the supplying of teaching service under this Agreement is satisfied that the provision of a particular teaching service in the Schedule by the Services provider has been incomplete or has not adequately dealt with an aspect or aspects of the teaching requirements for the particular service, the Academy may, at its absolute discretion, either require the Services provider to repeat provision of the particular service to the satisfaction of the Academic officer without additional payment or withhold payment from the service provider in relation to the particular teaching service and make such other arrangements for the provision of the particular teaching service as it may deem appropriate, specifically, but not limited to, the return of marked assessments to administration within 7 working days. 9 It is of the essence of the Agreement that at all times when the Services provider is providing teaching services to the Academy she/he will be conversant with and comply with the policies and procedures which the Academy has adopted or may adopt, from time to time, in relation to the Academic operation and governance of the Academy, in particular those relating to the teaching and assessment of the Unit or Units set out in the Schedule. However, the terms of those policies and procedures do not form part of this Agreement. 10 In relation to the teaching services to which this Agreement relates, the Services provider agrees and acknowledges that her/his relationship with the Academy is that of a contractor and indemnifies the Academy in relation to any and all claims, including expenses reasonably and necessarily incurred in relation to such claims, which may be made in relation to any and all entitlements which accrue to an employee under the Fair Work Act 2009 and/or the Superannuation Guarantee (Administration) Act 1992 and any legislation replacing those Acts. 11 The Services provider will be responsible for their own Workers Compensation/Income protection policy of which the amount covered is at the absolute discretion of the service provider and therefore indemnifies the Academy in relation to any and all Workers Compensation claims which arise in relation to the Services provider providing teaching services to the Academy. 12 The Services provider warrants that she/he is conversant with the duties, obligations and responsibilities arising under legislation applying to health and safety in workplaces and indemnifies the Academy in relation to any and all claims, costs and penalties arising from any failure of the Services provider to reasonably discharge such duties, obligations and responsibilities whilst in any workplace of the Academy. Any intellectual property, including musical compositions and programmes of software, bought [sic] into existence by the Services provider, whether alone or with others, in providing the teaching services in the Schedule will fully and absolutely vest in the Academy. The Academy may make or record images of the services provider and may make visual and/or sound recordings of the Service provider whilst she/he is providing the teaching services in the Schedule. The intellectual property in all such images and recordings is exclusively that of the Academy and may be used by the Academy at its absolute discretion for any lawful purpose. 13 The Services provider will not, either when providing the teaching services in the Schedule or after completing the provision of those services, divulge to any person or corporation or apply to her/his own use any confidential information concerning the business, financial arrangements, intellectual property or position of the Academy, or any dealings, transactions or affairs of the business of the Academy or of any related entities or of any customers or students of the Academy, except as required by law or as expressly permitted by the Academy. The Services provider warrants that she/he is conversant with the obligations and responsibilities arising under Privacy Act 1988, and will discharge those obligations and responsibilities in relation to the teaching services in the Schedule, particularly in relation to the personal information of the students of the Academy. The Services provider indemnifies the Academy in relation to any and all claims, costs and penalties arising from any failure of the Services provider to discharge such obligations and responsibilities. 14 In relation to the teaching services which the Services provider will provide to the Academy, the Academy will describe her/him as a being [sic] a Casual Lecturer and the Services provider may describe herself/himself as such. 15 The following trading arrangements will apply: • The Services provider will produce the original certificate of registration of a business name to the Academy and supply the Academy with a certified copy of the certificate before submitting any invoices for teaching services in the Schedule ; • The Services provider will use her/his registered business name when invoicing the Academy for the providing of teaching services to the Academy. All invoices will include the Services provider's Australian Business Number (ABN). Where an Invoice does not include an ABN, the Academy will withhold 46.5% of the invoiced sum for taxation purposes; • Invoices by the Services provider will be dated and numbered and will specify the date of service provision and particulars of the teaching services provided by reference to the Schedule. Invoices will be accompanied by time sheets and signed weekly lesson plans; • Where the teaching serviced [sic] in the Schedule include assessment and the submission of academic results at the end of teaching programme or semester, a final invoice must not be submitted until after the academic results have been submitted and will be accompanied by a signed lesson plan; • Where the Services provider is registered for Goods and Services Tax (GST) purposes, the Services provider will provide invoices in the form of a Tax Invoice and will specify the amount of GST included in the invoiced sum; • The Academy will pay invoices by direct electronic funds transfer to an account at an Australian financial institution which the Services provider will nominate to the Academy; • The Academy will keep the Services provider informed of the identity of the Academic officer who will be responsible for managing the supplying of teaching service under this Agreement; • The Academy will provide the Services provider with copies of both the Lecturer Handbook and the Student Handbook produced by the Academy from time to time. 16 Either the Services provider or the Academy may terminate this Agreement by giving the other the two (2) weeks' notice of termination in writing to the address set out under Parties. Provided that the [sic] upon giving or receiving such notice the Academy may at its absolute discretion make a payment to the Services provider for any occasion in the Schedule falling within the period of notice and forego the provision of teaching services to the Academy during the period of notice. Where the Academy exercises the discretion conferred by this Term the Agreement will terminate on the day on which payment is made. 17 Notwithstanding the provisions of any other Term, either the Services provider or the Academy may terminate this Agreement by giving the other notice of termination in writing to the address of the respective registered offices if any of the following circumstances arise: a. a liquidator, provisional liquidator, receiver, receiver and manager or an official manager is appointed to the other; b. an administrator is appointed to the other pursuant to Part 5.3A of the Corporations Act 2001; c. the other resolves to wind up or is the subject of an order to wind up; or d. the other enters into a scheme of arrangement with its creditors or otherwise compromises or compounds with creditors. Notice given pursuant to this Term will take effect on the day it would be received in the ordinary course of pre paid post. 18 This Agreement will be governed by the Federal law of the Commonwealth of Australia and any legal or administrative proceedings in relation to the Agreement will be commenced only in a Federal court or tribunal of the Commonwealth 19 Should any term of this Agreement be found to be unlawful, unenforceable or of no effect, that Term will be severed from the Agreement and the Agreement will continue in accordance with its remaining Terms. SCHEDULE Teaching services which the Services provider will provide to the Academy through the Nominee Unit: AUDIO202 Audio and Acoustic Design Managing Academic Officer: Robert Care - Head of Audio Engineering & Sound Production Occasions: Trimester 1 - October 2012 Executed by JMC Pty Limited on October 2nd 2012, by Roslyn Tabacco - Campus Manager Melbourne for Chief Executive Officer. In the presence of Managing Academic Officer Executed by NICHOLLAS HARRISON [Services provider name] on 16th October 2012 [date] [signature] In the presence of Campus Manager [Signature and dated 16-10-12] 30 The first relevant period was from 1 April 2013 to 30 June 2016. The fifth of the twenty-two contracts was the first contract directly relevant to the assessments issued. Mr Harrison signed the second MOA on 12 April 2013. It was adopted for the sixth to fifteenth contracts, probably by way of email communications between the parties. 31 It was directly established by email communications between the parties that the second MOA was adopted in relation to the sixteenth and seventeenth contracts. It is convenient to reproduce the first of those emails, which relates to the sixteenth contract, sent to Mr Harrison on 6 May 2016 by Mr Robert Care, JMC's Head of Audio Engineering and Sound Production (emphasis added): I refer to your contract with us dated 2012 and advise that we would like to retain your services for the upcoming Trimester period from 06/06/2016 to 02/09/2016. The schedule of units proposed are; -AUDIO 202 -AUDIO 305 -AUDIO 405 All terms and conditions as per the above contract remain the same. Please advise us by return email before 13/06/2016 of your acceptance of the new schedule of works or of your unavailability to undertake the work proposed. Please also advise if you propose to subcontract the work to another party so we can assess their credentials prior to the trimester starting. 32 On 6 May 2016, Mr Harrison replied, stating: "Thanks Rob, yes I accept". 33 The primary judge observed (emphasis added): [63] It was essentially common ground between the parties that the contract which was entered into as a result of this exchange of emails between Mr Harrison and Mr Care incorporated the terms of the second MOA. The Commissioner contended, however, that the portion of Mr Care's email which is emphasised in the above extract varied or added to the terms of the contract in a potentially important respect. The same argument was advanced in respect of similar statements made in other emails in which Mr Care offered to retain Mr Harrison's services for different trimesters on the same terms and conditions. The Commissioner also contended that Mr Care's emails, considered along with the conduct of the parties, gave rise to a variation by conduct or perhaps an estoppel or waiver. JMC denied that the emails effected any variation to the terms and conditions of the contracts and denied that the emails, or the subsequent conduct of the parties, gave rise to any estoppel or waiver. [64] The Commissioner's contentions concerning variation, estoppel and waiver will be discussed later. It suffices to note at this point that the general effect of the alleged variation, estoppel or waiver was said to be that, if Mr Harrison intended to sub-contract the teaching services to another party, he had to give JMC notice of that intention prior to the commencement of the trimester in which he was to provide the relevant services. In the Commissioner's submission, the effect of the variation, estoppel or waiver was to significantly narrow the scope of Mr Harrison's right to sub-contract. 34 The second of the two relevant periods was from 1 July 2017 to 31 March 2018. The third MOA was applicable to this period. The third MOA contained cosmetic changes and increased the hourly lecture rate from $60 to $65 and changed Mr Harrison's title: at [73]-[74]. Again, there were emails which were sent similar to that shown above, although the sentence particularly relevant to the Commissioner's contentions read, relevantly to the twentieth and twenty-second contracts: "Please also be aware that you must advise if you propose to subcontract the work to another party so we can assess their credentials prior to the trimester starting." It was not contended that the use of the word "must" was material to the arguments advanced.

The principal challenges to the primary judge's conclusions 35 The principal challenges to the primary judge's conclusions related to: JMC's right of control over Mr Harrison; the effect and relevance of cl 5 which provided a right for Mr Harrison to subcontract or assign performance of the teaching services with JMC's consent; the mode and manner of Mr Harrison's remuneration; the retention of intellectual property rights by JMC; the taxation arrangements and insurance; the absence of provision for sick leave and holiday pay; and the question of whether Mr Harrison was conducting his own business or JMC's business. 36 Of these topics, the most significant were control and the allied question of the significance of the right in cl 5 of each of the MOAs to subcontract or assign to another person or corporation the provision of the teaching services with JMC's written consent.

Control: [95]-[142] 37 By the terms of the MOAs, including as adopted via the emails, the primary judge found that JMC had a contractual right of control over Mr Harrison, including how, when and where he was required personally to provide the contracted teaching services. His Honour found that the control over how the teaching services were to be provided was manifested by supervision and monitoring and the mandatory provision of information, relying upon the terms of recitals 1 and 2 in the context of the TEQSA and TEQSA Act regime, and in particular: (a) cl 4, whereby Mr Harrison was required to provide teaching services personally consistently with recital 2: at [120]; (b) cl 8, whereby if the managing academic officer was satisfied that a particular teaching service was incomplete or did not adequately deal with an aspect of the teaching requirements, JMC had a power to (i) require them to be repeated without additional payment or (ii) withhold payment and make other arrangements for them to be provided: at [101]; (c) cl 9, whereby Mr Harrison was obliged to be conversant with and comply with JMC's policies and procedures in relation to teaching and assessment: at [102]; (d) the third dot point of cl 15, whereby Mr Harrison's invoices had to be accompanied by time sheets and signed weekly lesson plans, the content of which had to have been known to JMC and Mr Harrison at the time of contracting. The lesson plans that were in evidence were characterised by his Honour as lengthy, detailed and highly prescriptive, and found by his Honour effectively to direct how lectures were to be delivered, and provided a means by which this could be closely monitored and supervised, including as to content and manner of delivery: at [104]-[105]; (e) the seventh dot point of cl 15, whereby JMC would keep Mr Harrison informed of the identity of the academic officer who would be responsible for managing the supply of teaching services: at [99]. 38 JMC submitted that recital 2, cl 4 and the schedule did no more than oblige Mr Harrison to teach each course to the required standard and did not direct how the lecture would be delivered, and that provision of lesson plans was purely administrative and their content merely suggestive of what was to be covered. The submission was characterised by the primary judge as entailing an overly narrow and confined reading, largely ignoring the TEQSA requirements, and downplaying the significance of the lesson plans. His Honour found that, while Mr Harrison may have been free to employ his own unique teaching style, he was contractually required to provide the lectures in accordance with the lesson plans, over which there was significant control, rendering his work subservient to and dependent upon JMC: at [109]. 39 The primary judge found that control of when and where the teaching services were to be provided was manifested by JMC's use of timetables, without any right to have them varied once set, with this conclusion not being materially affected by there being no control over how, when or where lecture preparation or marking took place: at [112]-[113]. 40 The primary judge found that control over who was to provide the services, namely Mr Harrison personally, was not substantially affected by the right to subcontract or assign in cl 5. His Honour held that this right was "very limited" because it could only be done with JMC's written consent: at [119]. His Honour considered that JMC had "an unfettered power or discretion to refuse consent" (at [129], [130], [138], [142], [184], [197]) although it "may perhaps be accepted that JMC was required to exercise that power or discretion in good faith": at [129]. His Honour concluded that "JMC could refuse consent simply because it wanted, in good faith, to have Mr Harrison perform the services himself": at [129]. Thus, his Honour concluded, JMC "effectively retained the unfettered right to control who provided the relevant teaching services under the contract": at [130]. His Honour twice referred to cl 5 as a "chimera", concluding that it was "highly unlikely to ever be exercisable or exercised": at [180] and [184]. 41 The primary judge considered that cl 5 was a departure from the default and expected position that Mr Harrison would provide the services, reinforced by the terms of recitals 2 and 3 and cll 1, 3 and 4, and the TEQSA requirements: at [120]. 42 As to the emphasised parts of the emails, the primary judge stated at [128]: While there is perhaps some force in JMC's submissions concerning the emails, there is equally some merit in the Commissioner's contention that the relevant emails added to or varied the terms of the relevant contracts. While expressed in fairly informal terms, the emails were clearly intended to be contractual in nature. The Memoranda themselves only applied to the teaching services in the specific units and trimesters identified in the schedules to the Memoranda. The emails were necessarily contractual in nature insofar as they gave rise to new contracts which applied to different units in different trimesters, albeit contracts which otherwise incorporated the terms and conditions in the Memoranda. In those circumstances there is no real reason to doubt that the emails in their entirety were intended to record the terms of the new contracts, including the effective requirement that Mr Harrison notify JMC prior to the commencement of the trimester if he proposed to sub-contract or assign the teaching services. Whether that amounted to a variation of clause 5 of the Memoranda, or an additional term, is of no real moment. Either way, the effect was that, if Mr Harrison wanted to exercise the right to sub-contract or assign, he was contractually required to give JMC notice of that intention prior to the commencement of the relevant trimester. Mr Harrison's replies to the emails amounted to an acceptance of that variation to, or additional term in, the contracts. 43 In summary, the primary judge found that JMC could refuse consent to subcontract or assign if the proposed substitute was not acceptable to it, not just because of a lack of qualifications, experience, skills or capacity in accordance with TEQSA requirements, but also simply because it wanted, albeit in good faith, to have Mr Harrison perform the services himself and therefore insist upon him doing so, without him having any unilateral right to the contrary.

Mode and manner of remuneration: [143]-[153] 44 The primary judge found that Mr Harrison was contracted to provide teaching services to JMC for an hourly rate, not to produce a result or product, which militated towards characterising the relationship as one of employer and employee: at [153]. 45 While JMC challenges this conclusion, and the Commissioner defends it, taken alone it is not a strong indicator either way in the circumstances of this case. Even accepting that the payment as a whole was not payment for a result, the mode of payment was not inherently incompatible with either an employment relationship, or an independent contractor relationship, and minds can reasonably differ as to the relationship with which it better aligns.

Intellectual property and confidentiality: [158]-[160] 46 The primary judge found that the fact that any intellectual property vested in JMC, including in any recordings, brought into existence by either Mr Harrison or JMC while he was providing teaching services, was indicative of Mr Harrison's relative subservience and pointed to Mr Harrison serving in JMC's business, as opposed to him providing services to JMC as an independent contractor: at [159]. His Honour observed that if Mr Harrison was an independent contractor it would be surprising if he did not have the right to retain the intellectual property in any recordings or images he created, and that the fact that JMC had the right to make, retain and use any recordings that were made of Mr Harrison's lessons even after he had ceased to provide services to JMC demonstrated the extent of JMC's control in respect of Mr Harrison's services and indicates that he served in JMC's business. His Honour opined that one would generally expect that if Mr Harrison was conducting his own business as an independent contractor providing teaching services, he would retain that intellectual property. 47 There is room to doubt the correctness of this conclusion, not least because an employer ordinarily retains the intellectual property created by employees, such that express retention of intellectual property rights is needed to a greater extent for independent contractors. However this is increasingly a feature of contracts of employment to facilitate the enforcement of retained intellectual property rights by employers. Addressing intellectual property rights in a contract for the provision of work is not inherently incompatible with either an employment relationship, or an independent contractor relationship, and again minds can reasonably differ as to the relationship with which it better aligns.

Taxation, insurance, sick leave and holiday pay: [166]-[171] 48 As to Mr Harrison's obligation to: (a) use a registered business name when invoicing JMC (noting that there was no evidence Mr Harrison had such a name); (b) include an Australian Business Number (ABN) in his invoices (which he did, contrary to the primary judge's conclusion at [167]); (c) provide invoices in the form of a tax invoice if registered for GST (Mr Harrison was not so registered); (d) be responsible for workers compensation and income protection insurance, and indemnify JMC for any workers compensation claims, the primary judge regarded each of the relevant contractual provisions as simply reflective of JMC's view that Mr Harrison was an independent contractor, and that each clause was no more than a label, and thus "deserving of little, if any, independent weight": at [170]. His Honour considered that "the same can be said about the fact that the [MOA] makes no provision for the payment to Mr Harrison of sick leave, holiday pay or superannuation": at [171]. 49 As to the contractual requirements concerning the trading relationship, including the requirements for invoicing, these are operative contractual provisions giving rise to obligations. There was no allegation of sham, as the primary judge recorded at [32] and there was no suggestion that these provisions were varied or unenforceable. They are not correctly described as mere labels reflecting opinion. They are operative terms of the contract regulating the parties' rights, duties and obligations. They are required to be taken into account in evaluating the effect of the contract. Nevertheless, these terms (and the absence of terms for typical employee benefits) are not of themselves determinative in this case.

Own business or JMC's business: [174]-[180] 50 The primary judge found, on balance, that the terms and conditions of the contracts suggested that Mr Harrison was engaged to work in JMC's business rather than conducting his own business, making specific reference at [176]-[178] to: (a) Mr Harrison being held out by JMC on its website and promotional material as being one of JMC's lecturers, with his position being described initially as "lecturer" and him being inducted; (b) the contractual right under cl 14 of the first MOA and second MOA, to describe Mr Harrison as a "Casual Lecturer", so that he was essentially presented as an emanation of JMC's business; (c) JMC's main business was the delivery of accredited higher education programmes to students, which was carried out by engaging or retaining the services of teachers or lecturers like Mr Harrison; (d) the main component of the teaching services provided by Mr Harrison being the delivery of lectures to JMC's students at JMC's campus in respect of JMC's accredited courses, such that he was integral to, and for the most part integrated or incorporated into, JMC's business; (e) the provision of those teaching services under the contracts being mostly subservient to and dependent upon JMC's business; (f) JMC mostly determining when, where and how Mr Harrison was to provide the teaching services; (g) JMC being required to monitor and review the standard and quality of Mr Harrison's performance so as to ensure that it met the terms of the TEQSA registration and accreditation obligations, with a contractual right to control, direct and supervise the delivery of the relevant teaching services and the delivery of lectures; (h) Mr Harrison being required to deliver lectures at JMC's campus in accordance with course timetables, detailed lesson plans and policies and procedures; (i) JMC having a managing academic officer who was contractually responsible for managing Mr Harrison's supply of teaching services, to whom he effectively reported, and who had the power and discretion to withhold payment, or require the repeat provision of a particular service, if satisfied that delivery of that service was incomplete or that Mr Harrison had not adequately dealt with an aspect of JMC's teaching requirements; 51 In summary, his Honour considered that these matters and the contractual provisions indicated that Mr Harrison's work was integral to JMC's business, that he was essentially integrated or inducted into JMC's business, and that he was, for all intents and purposes, a lecturer who, along with other lecturers, was essential and integral to the conduct of JMC's business of delivering accredited higher education courses to students. His Honour considered that, when the terms of the contracts are considered as a whole, very little, if anything, turned on the fact that the contracts did not require Mr Harrison to wear a name badge or uniform, and that the absence of a staff email address or a dedicated desk deserved even less weight: at [179]. 52 The primary judge considered that, in contrast, there was little, if anything, in the contractual terms to suggest that Mr Harrison was carrying on his own business except for the label in cl 10 and the limited right in cl 5 to subcontract or assign the teaching services: at [180]. This was characterised as "somewhat of a chimera that was highly unlikely to ever be exercisable or exercised": at [180]. 53 It is evident from this reasoning that the primary judge considered the terms of the contract from the perspective of JMC's business: at [174]-[180]. This was not the only perspective. The right to subcontract should be considered in light of the circumstances known to both contracting parties. As the primary judge found, JMC was in the business of delivering accredited higher education programmes to students. The evidence was that JMC sought to engage lecturers with practical experience and achievements in the industries related to the particular courses the subject of the teaching services. Such people could be expected to include people operating their own businesses outside of whatever they did for JMC. Mr Harrison held a number of roles in addition to being engaged by JMC. As at around May 2019, these roles included: Multimedia Producer, Cultural Infusion (2010 - 2011); AV Technician, Melbourne Convention and Exhibition Centre (2011 - 2016); Trainer, Mediacorp Pte Ltd (2014); Lecturer, Box Hill Institute (2015 - 2017); Freelance Photographer, Nick Harrison Photography (2008 - 2017); Freelance Recordist, Truth Recordings (2009 - present); and Lecturer, SAE Institute (2018 - present). 54 It may be inferred that the right to subcontract was of commercial value to Mr Harrison. For example, it could enable him to take up higher paying freelance opportunities. The relevant teaching services to be provided under the various contracts was by no means full time. A typical example was two three-hour lectures per week.

Employee within the ordinary meaning: [181]-[185] 55 The primary judge concluded that the totality of the legal rights and obligations provided for in the contracts indicated a relationship of employer and employee, rather than principal and independent contractor, with Mr Harrison employed by JMC to provide lectures to students and mark their papers: at [181]. His Honour found that the most significant consideration was the contractual right to control when, where and how Mr Harrison was to provide the teaching services personally, with him being subservient to JMC and the teaching services he provided being subservient to and dependent upon JMC's business: at [182]. 56 This conclusion was found by the primary judge to be supported by other indicia: being remunerated at a fixed hourly rate; not being required to provide equipment, tools or other assets; ceding any intellectual property rights arising from the teaching services; being required to provide certain indemnities to JMC; and the fact that his engagement could be terminated on short notice without cause: at [182]. His Honour found that the totality of the legal rights and obligations in the contracts meant that Mr Harrison was engaged or retained to work in JMC's business of providing accredited higher education programmes to its students, with the rights and obligations being such that his work was so subordinate to JMC's business that it could be seen to have been performed as an employee of that business, rather than as part of an independent business or enterprise: at [183]. 57 The primary judge found that the only real basis for a different conclusion was the contractual right to subcontract or assign the teaching services, but that properly construed, that right was "limited, narrow in scope and was in reality a chimera which was unlikely to be ever exercisable or exercised", and could not be unilaterally exercised because it was subject to JMC's effectively unfettered discretion to refuse to consent to any subcontract or assignment: at [184]. His Honour described the right to subcontract or assign the provision of teaching services as being "entirely at odds with the balance of the contracts, which plainly envisaged that Mr Harrison would personally provide the services in accordance with the representations referred to in the recitals": at [184]. His Honour therefore found that the limited right to subcontract or assign was not capable of outweighing all the other considerations weighing in favour of characterisation as contracts of employment and the relationship of employer and employee.

Employee within the extended meaning: [186]-[199] 58 The primary judge considered that the first and third elements in s 12(3) of the SGA Act were plainly satisfied because: there was a series of contracts between JMC and Mr Harrison; Mr Harrison relevantly worked under those contracts; and there could be no doubt that, in providing the teaching services in accordance with his contracts with JMC, Mr Harrison worked, laboured or exerted himself, so as to fall within the ordinary meaning of "work": at [189], see also the primary judge's summary of the principles which was not disputed and is reproduced at [23] above. Accordingly, the only real issue was whether the second element in s 12(3) was met, namely whether the contract was "for" the "labour" of Mr Harrison, approached from the perspective of JMC and determined by reference to the terms of the contracts. His Honour rejected both arguments advanced by JMC as to why that was not so. 59 The two arguments advanced by JMC were that Mr Harrison was to be paid for producing a result, and that Mr Harrison had a right to subcontract or assign the teaching services, such that the contracts were not wholly or principally for his own labour. The primary judge's rejection of both arguments inevitably flowed from the conclusions reached on the ordinary meaning of employee as set out above. The first of the two arguments revisited the remuneration issue. The second turns on the meaning of cl 5.

THE APPEAL 60 The two key issues on the appeal are whether the primary judge erred in consideration of the question of control in the following respects: (a) whether Mr Harrison had a real contractual power to subcontract or assign the performance of the teaching services with consent; and (b) whether - on the correct construction of the written contracts - JMC had control over how, when and where the teaching services were to be provided. 61 The notice of contention was concerned only with the first of these issues.

Subcontracting or assignment of the contracts 62 As noted earlier, cl 5 was in the following terms: The Services provider may sub-contract or assign to another person or corporation the provision to the Academy of the teaching services required of her/him by this Agreement but must do so with the written consent of The Academy's representative. 63 The Commissioner emphasised that cl 5 provides for subcontracting and assignment, not delegation as such. It may be accepted that delegation, subcontracting and assignment are each different. However, the point of particular relevance in the present context is that subcontracting and assignment, like delegation, contemplates that the teaching services might be provided by someone other than Mr Harrison. Indeed, a delegation might be implemented by a subcontract. 64 What matters is the correct characterisation of the relationship created between the parties in light of their comprehensive written contract of which the contractual right bestowed by cl 5 upon Mr Harrison is a part. The parties contemplated by cl 5 that the teaching services could be provided by a person other than Mr Harrison. Whether or not the subsequent emails formed a part of the contractual rights and obligations, the right (even if varied) remained. 65 One of the principal questions raised by JMC on the appeal is whether the primary judge erred by unduly confining the scope of the right to subcontract or assign the provision of teaching services under the contracts, particularly by: (a) overstating the effect of the right of JMC to prevent that from happening by withholding consent; and (b) considering whether it had in fact been exercised. 66 The Commissioner's notice of contention raised five grounds. These were, in summary: (1) The express terms of the emails that constituted each contract were inconsistent with cl 5 of the MOA, and the express terms prevailed to the extent of the inconsistency. (2) The absence of any practice of permitting lecturers to subcontract or assign the whole of the teaching services for a trimester was an objective fact, and thus an aid supporting a very narrow operation of cl 5. (3) Further or alternatively, each contract implicitly required Mr Harrison to notify of any proposed subcontracting or assignment before the start of the trimester in sufficient time for JMC to assess their credentials. (4) Further or alternatively, in circumstances where: (a) clause 5 is the only provision which referred to any possibility of subcontracting or assignment; and (b) the recitals and all the other operative provisions required that Mr Harrison would provide the services; in order to construe each contract consistently with the objective intention of the parties, the meaning of cl 5 must be adjusted such that it was available only in advance of a trimester and was not available in respect of the whole of the teaching services. (5) Alternatively, JMC and Mr Harrison varied cl 5, either by: (a) the exchange of emails between them before the start of each trimester and the absence of any request to subcontract or assign; or (b) their tacit assent in the conduct of the other, by which the parties only engaged in an isolated practice of occasional substitution, with prior consent; with the consequence that the right to subcontract or assign in cl 5 could be exercised only once in a limited window before the start of the trimester in sufficient time for JMC to assess their credentials and could not be exercised so as to subcontract or assign the whole of the teaching services for a trimester. 67 As to ground 1 of the notice of contention, the sentence emphasised by the primary judge in each of the five emails did not form part of the contract. Rather, it constituted a request by JMC for Mr Harrison to indicate before the beginning of a trimester whether he proposed to subcontract the whole of the teaching services, so that JMC could consider the qualities of the person who would be providing the teaching services in order for it to decide whether to grant consent. This is most clear in the case of the earlier emails which were clearly expressed as a request for information. It remains tolerably clear in the case of the later two emails which used the word "must". The emails were not inconsistent with cl 5. 68 As to ground 2 of the notice of contention, the absence of a historical or existing practice of permitting subcontracting or assigning is of little or no weight. First, as a matter of fact, there was some evidence of at least a form of that practice. Secondly and more importantly, the importance of control to the characterisation of the relationship as exposed by the written contract lies in the right to do something, not whether the right has in fact been exercised: Brodribb at 24, 29. As has been mentioned, there was no allegation of sham. The absence of a history of actual exercise of the right to subcontract does not relevantly affect the meaning of cl 5. 69 As to ground 3 of the notice of contention, while an implied term of co-operation is commonplace, there is no proper basis to imply a term that Mr Harrison was required to notify JMC of any proposed subcontracting before the start of any trimester. Doubtless inadequate notice might more readily justify the withholding of consent, but that is a practical matter in the implementation of the contract, not a basis for implying the rather precise term sought to be implied. Further, the implied term does not take into account that cl 5 is not, on its proper construction, confined to subcontracting the whole of the teaching services in a trimester. It also permits a subcontracting of part of the teaching services, with JMC's consent. The fact that Mr Harrison might seek to exercise the right to subcontract during a trimester might be relevant to whether JMC would grant consent, but that is a practical matter of implementation. 70 As to ground 4, there is no need to "adjust" the meaning of cl 5. As discussed further below, an "adjustment" is not necessary to give a harmonious interpretation to the contracts. 71 As to ground 5, cl 5 was not varied by conduct, either by the exchange of emails, or by tacit assent or acquiescence. As noted above, the emails did not vary the contracts in the way contended by the Commissioner. The emphasised sentences merely evidence performance of the contracts, more specifically, a request for information referrable to the right to subcontract in cl 5. 72 The tacit assent or acquiescence was said to be constituted by JMC never permitting subcontracting or assignment, as opposed to a mere substitution or swapping of lecturers. There was no evidence that consent was sought and refused. The most that can be said of this aspect of ground 5 is that Mr Harrison never sought consent to subcontract the whole trimester of teaching services. That is not a basis for concluding that there was a variation of a contract through silence or tacit assent or acquiescence. 73 The relevant principle emerging from Chaplin, endorsed by the High Court in Brodribb and not doubted in Personnel Contracting, is that a right to delegate is an important indication of an independent contractor relationship. A right to subcontract is no different. 74 In Chaplin at 391, in the passage reproduced at [16] above, it was held that a wholly unlimited right of delegation is "almost conclusive" against the representative being an employee. The reasoning of the Privy Council must also apply to a wholly unlimited right to subcontract. As is demonstrated by the reasoning in Jamsek, that conclusion does not mean that a lesser or more qualified contractual right to delegate or subcontract is other than a feature that is generally inherently inconsistent with an employment relationship. The degree of inconsistency must be examined in the characterisation of the relationship as established by the totality of the contractual relationship between the parties. 75 Whatever the precise language deployed in a contract, it is plain enough that, if a person engaged to perform work has a contractual right to have someone else perform that work, that is a matter which at the very least tends against a conclusion that the person is an employee. The existence of the right is inherently inconsistent with an employee relationship. In the absence of significant countervailing considerations, how can you be an employee if, within the scope of the contract, you can lawfully get someone else to perform the entirety of your contractual obligations, whether for a short period, or for a longer period? 76 The degree of inconsistency between a right to delegate or subcontract and the existence of an employment relationship may be greater if the right is entirely unfettered, but its existence is still inconsistent with an employment relationship. It would be different if the clause was a sham or the right was without real content on its face or the right to subcontract was limited in scope, for example relating only to discrete tasks as opposed to the whole. 77 If, on a proper legal construction of the contractual right, it is found to be legally incapable of exercise, as opposed to unlikely to be exercised in the future as a matter of fact, then the right may not carry much weight against contrary and more compelling contractual indicia of an employment relationship. 78 In the absence of any suggestion that cl 5 was a sham, the primary judge erred in finding that Mr Harrison had only an illusory or chimerical right to subcontract or assign and in considering it to be a hollow or empty right. The point of significance to the characterisation of the relationship between Mr Harrison and JMC was that Mr Harrison had a right to subcontract or assign, with consent. 79 The correct way to read cl 5 in the context of the contract as a whole is that the power to withhold consent was a mechanism to enable JMC to give substantive effect to the intended operation of recital 2 and cll 1, 3, 6 and 8 if the contract was to be performed by someone other than Mr Harrison. A requirement for written consent does not, without more, rob a right to subcontract of its legal effect, especially when it is most likely to be implied that consent may only be refused in good faith and will not be unreasonably withheld, and in light of the short two-week notice period for termination by either side in cl 16. 80 The protection afforded to JMC by providing for its written consent to any subcontracting of the teaching services, should not be construed as authorising a capricious approach to the question of giving such consent, such as that suggested by the primary judge of merely wanting Mr Harrison to provide the services himself, somehow in good faith ([129]), or to insist upon him doing so ([130]). Construed objectively, the requirement for consent is primarily directed to the qualifications and quality of the replacement or subcontractor, rather than permitting an almost arbitrary refusal to allow any replacement, no matter how suitable, to provide the teaching services. The objective appropriateness of a requirement for consent was clearer in the contracts in the present case than it was for the contract considered in Jamsek. In that case, the existence of a requirement for consent was no impediment to the finding that the clause supported a conclusion that the drivers were independent contractors: Jamsek at [55] and [103]. 81 There is nothing remarkable about imposing a restriction, achieved by a mechanism of first seeking consent, that the proposed subcontractor be qualified to do the work so as to protect the legitimate commercial interests of the other party to ensure that the work can actually be done to the necessary standard, including by reason of regulatory requirements. 82 The primary judge also erred in giving significant weight to his view that the right was not ever likely to be exercised. 83 At a legal level, it is the existence of the rights which is important, not the question of whether they are likely to be or have in fact been exercised: Brodribb at 24. The question of whether a right is likely to be exercised in the future or whether it was a hollow or empty right, or a "chimera", would be relevant to an argument about sham. In the absence of such an argument, the contract means what it says and the right exists with whatever limitations the parties have agreed between themselves ascertained from an objective construction of the contract. 84 At a factual level, it was ultimately agreed between the parties that the evidence before the primary judge established that Mr Harrison had his teaching responsibilities carried out by another person on three occasions during his relationship with JMC, once in July 2012, and twice in 2015. The first time in July 2012 was before the relevant periods, but the other two times in 2015 were during the first part of the relevant periods, being between 1 April 2013 and 30 June 2016. The relevant facts of those delegations may be briefly stated as follows: (a) In 2012, as a result of a medical issue in Mr Harrison's family, Mr Ben Cook, an audio visual technician Mr Harrison knew from the Melbourne Convention Centre, delivered two lectures in place of Mr Harrison. This was approved by JMC's then national assets and facilities manager, filling in for Mr Harrison's direct contact at JMC. Mr Harrison invoiced JMC for those lectures, and Mr Harrison later paid Mr Cook. (b) In 2015, Mr Harrison had an opportunity to perform other, better paid, work over two days. He sought to have JMC move the class time, but was told that this was not possible, and would need to find a replacement lecturer. Mr Harrison approached a Mr Mark Edwards, the chairperson of the Audio Engineer Society, who had previously delivered several guest lectures at JMC. Mr Edwards delivered the lecture on Mr Harrison's behalf, but was not paid for doing so. (c) Also in 2015, Mr Harrison gave some of his work marking student assessments in one course to Mr David Williams who was another JMC lecturer; and another lecturer engaged by JMC gave some of his work marking student assessments to Mr Harrison in a course that Mr Harrison did not ordinarily teach. 85 The fact that these events took place does not determine the existence of a legal right to subcontract, nor its metes and bounds. It does no more than cast some doubt on the soundness of the primary judge's reasoning that cl 5 was a right which was unlikely ever to be exercised. That is so whether or not those events were strictly within cl 5. 86 Further, the primary judge erred in concluding at [142], [180], [184] and [197] that the right was not "exercisable". Sham was not pleaded and the emails referred to earlier indicated that the parties accepted that there was a right to subcontract. It was not suggested that these contemporaneous emails were an artifice. 87 There were express "personal" obligations imposed upon Mr Harrison. There is no necessary inconsistency in requiring Mr Harrison to provide the services personally absent an exercise of the right under cl 5. The significance of the personal obligations imposed upon Mr Harrison have to be assessed in light of his contractual right to subcontract the performance of those obligations to another person, with JMC's consent. 88 In our view, the primary judge erred in failing to give full effect to the terms of cl 5 and essentially treating it as contractually ineffective, and also in misconstruing the nature and extent of JMC's right to withhold consent. 89 The right bestowed upon Mr Harrison to subcontract or assign the performance of his teaching services, subject to written consent, was a real and substantial right which was inconsistent with an employment relationship between him and JMC. For that reason, the primary judge erred in relation to his determination of whether Mr Harrison was an employee within the ordinary meaning of that word. Clause 5, assessed in the context of the contracts as a whole, strongly pointed towards Mr Harrison being an independent contractor.

Control over how, when and where the teaching services were to be provided 90 The right of a person to control the work of the other is an indicator that a relationship is one of employer and employee: Personnel Contracting at [74], citing Brodribb at 24 and 36. It is not the "detail of the actual exercise of control" or performance which is important as opposed to the right to control: Personnel Contracting at [74]; Brodribb at 24. The focus is on the terms of the comprehensive written contracts, not on the performance of them. 91 The content of the right to control was identified by Wilson and Dawson JJ in Brodribb at 35 as being whether the contractual engagement "subjects the person engaged to the command of the person engaging" not just as to what shall be done, but how it shall be done. In the context of this case, was JMC given the contractual right to direct Mr Harrison how he was to teach as opposed to what he was to teach, namely the course and its content at the required standard and quality? 92 As noted earlier, the primary judge examined cll 4, 8 and 15 (at the third and seventh dot points) and concluded that they empowered JMC to control how Mr Harrison was required to provide the contracted teaching services, manifested by supervision and monitoring and the mandatory provision of information. The primary judge found that Mr Harrison was contractually required to provide the lectures in accordance with the lesson plans, over which there was significant control, rendering his work subservient to and dependent upon JMC. 93 The Court was taken to one such lesson plan during the hearing of the appeal, which was four pages in length, as an example of what was required to be signed and annexed to Mr Harrison's invoice and therefore what he had agreed to do. The first page identifies the topics to be covered in the lesson (listed with three brief dot points), the teaching resources (identified in seven dot points), and the lesson outcomes described in a single short sentence. The bottom of the first page has a section headed "course content successfully covered this lesson", followed by these three sentences - "Class introductions and unit overview. Due dates, readings, moodle, the library and expectations for the unit discussed. Class activity brainstorming observations about sound" - after which there are five blank lines for writing more in. Mr Harrison was overtly being given the opportunity to record what in particular he had covered in the lecture, which it may be noted was anticipated to be delivered over a period of up to about three hours, plus breaks, which was the normal duration of each lecture. 94 The remaining three pages of the sample lesson plan comprise a table headed "suggested class delivery", with three columns headed "time allocation", "teaching methods" and "coverage of unit content". Those headings are followed by rows populated by reference to the headings with suggestions for each section of the lesson. The first row allocates "5-10 minutes" to "introduce lesson" and then provides several dot points as to what might be covered in the introduction. The second row allocates "50-60 minutes" for "Lecture/Presentation" and "Class discussion" and suggests what might be read, described and reinforced, expressed in such general terms as to fall short of being any real requirements as to how this was to be carried out. The third row is broadly similar to the second row, but proposes a suggested time range of 70 to 90 minutes, and the last row is broadly similar to the first row, again with a suggested time allocation of 5 to 10 minutes. A header on the top of each page provides for Mr Harrison to sign an "academic declaration" that the information in the document is a "true and accurate record of the course content" and to confirm "I delivered this lesson". 95 There is no declaration to the effect that the suggested class delivery had been followed, which in any event was short and general. The lesson plan is neither detailed nor proscriptive. It does not dictate how the lesson content is to be conveyed, or even mandate (as opposed to suggest) the duration, method or content. The lesson plan is plainly no more than a guide which, on its face, Mr Harrison was free to follow but which he could deliver in a different way. 96 We disagree with the primary judge's description of the lesson plans as permitting Mr Harrison only limited possible freedom to deploy his own teaching style. Against the context of TEQSA requirements, Mr Harrison was required to provide lectures with generally specified content. How that was to be carried out was indicated by way of what was explicitly no more than a mere suggestion. We do not agree that the lesson plans, and the requirement to attach a signed copy to his invoices, amounted to significant control, rendering Mr Harrison subservient to and dependent upon JMC. To the contrary, the lesson plans tend to indicate very little control beyond broad parameters as to what was to be covered, and only relatively brief and general suggestions as to how that content might be delivered. 97 The requirement imposed upon Mr Harrison to annex signed lesson plans to his invoices, and the content of those plans, do not lead to the conclusion that Mr Harrison was an employee of JMC. The requirements are consistent with Mr Harrison being an independent contractor and confirming that the required content he was engaged to deliver was delivered. 98 We disagree with the primary judge that the requirement to lodge lesson plans with an invoice was an indicum of an employment relationship. 99 The main remaining aspect of control identified by the primary judge related to control of when and where the teaching services were to be provided. His Honour found that substantial control consistent with Mr Harrison being an employee was manifested by JMC's use of timetables, without any right to have them varied once set. The primary judge's reasoning suggests that a lecturer who is an independent contractor must be able to decide when and where lectures would take place. But just as one might require building work to be carried out by an independent contractor during an allocated time or day to allow for other trades to perform their work, so might an institution require lectures to be given at a time or on a specified day in order to manage the delivery of courses. 100 The primary judge's reasoning pays insufficient regard to the practical context, known to both parties, that students enrol in and pay for courses at a time when they are able to attend, and for more than one course to be studied by the same student without timetable clashes. 101 The relevant degree of freedom was in Mr Harrison providing for times when lectures could be given by him, with the evidence indicating that this was negotiated, rather than seeking to vary the timetable after it had been provided to prospective students and enrolment had taken place. The fact that a timetable cannot ordinarily be changed after publication and enrolment should not be viewed as an exercise of employer power, but rather as a matter of education provider necessity. 102 The primary judge considered that cl 6, which gave a right to deduct costs associated with a failure to give a timetabled lecture, as indicative of control and of a relationship of employer and employee: at [113]. In our view, it is inconsistent with such a relationship. An employer does not typically deduct costs of engaging a replacement from payments to an employed teacher who does not provide the services without reasonable notice. 103 The primary judge considered that cl 8 was indicative of control and a relationship of employer and employee: at [146]. This clause gave JMC the power to (a) require teaching services to be repeated without additional payment; or (b) withhold payment and make other arrangements for teaching services to be provided. In our view, this is inconsistent with an employment relationship. Clause 8 did not require Mr Harrison to report to a manager, or to anyone else, nor did it subject him to performance reviews. Clause 8 was directed to ensuring that the quality standards identified in recital 2 were met and said nothing about when or where services were to be provided.

Other matters 104 As mentioned earlier, the mode and manner of Mr Harrison's remuneration does not point strongly either way, although we would incline to it favouring an independent contractor relationship. The intellectual property clause is also essentially neutral, although again we would incline towards it slightly favouring an independent contractor relationship. The manner in which Mr Harrison charged for his services, including the provision of an ABN and invoices, is not consistent with an employment relationship. The ability of JMC to deduct costs or withhold payment under cll 6 and 8 favours characterisation as an independent contractor relationship rather than one of employer and employee.

Conclusion in relation to ordinary meaning of employee 105 Taken as a whole, the contracts did not provide the sort of controls over how, when or where Mr Harrison was required to deliver the lectures such as to amount to indicia that he was an employee rather than an independent contractor. This conclusion flows primarily, but not exclusively, from an examination of control and the correct construction of cl 5.

Section 12(3) of the SGA Act 106 As to the extended meaning of employee in s 12(3) of the SGA Act, the right to subcontract provided by cl 5 indicates that the contract was not "wholly or principally for the labour of the person". For the reasons given above, the primary judge erred in concluding that Mr Harrison only had a limited or illusory right to subcontract the teaching services. It is true that Mr Harrison could perform the contract personally; but it is equally true that he could have subcontracted or assigned the contract with JMC's consent. Section 12(3) requires attention to the rights under the contract not to the actual performance of the contract. The contract was one for the provision of teaching services and not principally for the labour of Mr Harrison.

CONCLUSION 107 Mr Harrison was an independent contractor, not an employee of JMC, both within the ordinary meaning of the term and under the extended definition in s 12(3) of the SGA Act. 108 It follows that the appeal must be allowed and the orders of the primary judge set aside. In lieu thereof, the appeal from the Commissioner's objection decision must be allowed. The Commissioner must pay JMC's costs both below and on appeal. I certify that the preceding one hundred and eight (108) numbered paragraphs are a true copy of the Reasons for Judgment of the Honourable Justices Bromwich, Thawley and Hespe.