Did Panel Interpreters Own and Operate a Business?
221 On Call contended that panel interpreters owned and operated their own businesses. Before analysing the evidence on that issue, I first need to identify the legal and evidentiary burden that On Call carried. The onus of proof falls upon On Call on this issue and every contested issue in the proceeding. On Call carried the burden of establishing affirmatively, and on the balance of probabilities, that the Commissioner's assessments are excessive: George v Federal Commissioner of Taxation (1952) 86 CLR 183 at 201. Not only must On Call show that the assessments are wrong but it must show what the correct assessments should be and what corrections should be made to make those assessments right or more nearly right: Federal Commissioner of Taxation v Dalco (1990) 168 CLR 614 at 623-624, 632, 634. In the absence of evidence, the Court is not able to infer facts in favour of taxpayers: McCormack v Federal Commissioner of Taxation (1979) 143 CLR 284 at 303, 306 and 323.
222 It was for On Call to adduce sufficient evidence to discharge its onus. In relation to each of the panel interpreters utilised by On Call during the relevant period, it was necessary for On Call to establish that the person was not an employee (as the Commissioner's assessment had categorised the person to be) but was instead an independent contractor. In the application of the totality test, that onus called upon On Call to establish that each relevant interpreter owned and operated a business.
223 There is no evidence before me identifying each of the relevant interpreters in question. Nor does the evidence establish the number of interpreters involved other than the very general evidence that in the relevant period On Call had, at any particular time, in the order of 2,500 interpreters on its panel. Of the thousands of panel interpreters in question, On Call called evidence from seven. Beyond that evidence, On Call seeks to rely largely on second-hand observations made by Mr or Mrs Hulusi or seeks to draw upon statistical information gathered from On Call's records (for instance ABN registrations).
224 The question of whether or not a person who provides personal services, owns and operates a business is a complex question in relation to which a wide range of indicators are relevant. Those indicators call for evidence personal to the individual. Generalisations and extrapolations from the circumstances attending one individual to those attending the next are likely to be speculative and unhelpful.
225 Additionally, I do not accept that the seven interpreter witnesses who were called constitute a representative sample of interpreters on the issue of whether the relevant panel interpreters owned and operated their own businesses during the relevant period. In that respect, I accept the contention of the Commissioner that all of the witnesses called were very experienced, well qualified and long-standing interpreters and, that by virtue of those attributes, were more likely to own and operate a business than is the case for interpreters without those attributes. Three of the seven witnesses were either substantially or heavily involved in translation work rather than interpreting. Given that translating accounts for only about 5% of On Call's turnover, the witnesses called were heavily weighted to those interpreters substantially involved in translating and in that respect unrepresentative of panel interpreters generally. That point is of importance as, for the reasons I will shortly address, I consider that translators are more likely than interpreters to own and operate their own businesses.
226 In any event, even if I had been satisfied that the witnesses called were representative of panel interpreters on the issue of whether panel interpreters owned and operated their own businesses, I could not make the finding that On Call seeks. On Call seeks a finding that all of its panel interpreters utilised during the relevant period owned and operated their own businesses. I could only reach that conclusion by inference from the sample if I was satisfied that all of the interpreters called as witnesses owned and operated their own business. For the reasons that I will shortly address, I am only satisfied that two of the seven interpreter witnesses called owned and operated their own businesses. That finding is of little assistance to On Call on the question of the correctness of the Commissioner's assessments beyond, perhaps, those parts of those assessments which are based on the two individuals in question. Even if I was to find (which I am not prepared to do) that two-sevenths of the interpreters in question owned and operated their own businesses, that finding would be of no assistance in identifying which of the relevant interpreters owned and operated their own business and the extent to which (assuming On Call succeeded on other issues) the assessments objected to are excessive. These observations highlight the unsatisfactory basis upon which On Call conducted its case. Other criticisms are also apt, including: the highly generalised fashion in which the evidence was presented; the lack of detail in the evidence of those witnesses who were called; and, the failure of the interpreter witnesses to link their evidence to their activities in the relevant period let alone to those activities the subject of the Commissioner's assessments.
227 Before analysing the evidence of the individual interpreters called, it is useful that I explain why I have come to the conclusion that translating, rather than interpreting, work is more likely to provide an interpreter with the opportunity to establish a business. As the evidence of On Call's clientele demonstrates, interpreting services are mainly sought by institutional purchasers such as government departments, governmental service providers, hospitals, courts and large corporations. Although those services are used in aid of the needs of ordinary members of the public, the services are not purchased by those persons but by the institutions with whom they interact. There was no evidence that to any significant degree, On Call's clientele was comprised of individual members of the public and small business operators. I would infer that the other private agencies have similar clientele and that the public agencies like VITS and TIS have (by their nature) governmental clients.
228 It is most unlikely that large institutional or corporate clients with ongoing and significant needs for interpreting services will ordinarily utilise a one-person business to meet their requirements. Those purchasers are likely to constitute the vast proportion of the market for interpreting services. They are likely to use an agency provider such as On Call which can satisfy their substantial needs and limit their administrative burdens.
229 Whilst there is some evidence of two institutional purchasers creating their own panels and engaging interpreters directly, I am unable to say on the evidence whether those panels are constituted by independent contractors or employees. In any event, insofar as that occurs, it seems to be the exception rather than the rule. The totality of the evidence strongly suggests to me that the market for interpreting services is serviced by the agencies and that there is little scope for one-person businesses in that market. No doubt, there may be exceptions, but in my view it is unlikely that many interpreters earn their living by providing interpreting services beyond the work performed for the agencies. None of the interpreter witnesses called did so. None of their evidence demonstrated that they had direct clients requiring interpreting services in sufficient numbers to sustain a business.
230 In contrast, at least two of the interpreter witnesses (Ms Avila and Mr Giovannoni) gave evidence of a relatively substantial direct client base in relation to their work as translators. That client base is constituted by ordinary members of the public and small businesses such as importers, exporters and solicitors. Unlike large institutional purchasers, these clients are more likely to use small one-person businesses to meet their translating needs.
231 I do not seek to suggest that all the interpreters in question whose activities were dominated by translating work should be regarded as owning and operating a business. On the facts before me I can only infer that some do and some do not. The only point I seek to make is that relatively speaking, the market for interpreting services is likely to be far less conducive to sustaining a one-person business than is the market for translating services.
232 By reference to the indicia I have identified for testing the existence of a business, I have determined that of the interpreter witnesses called, only Mr Giovannoni and Ms Avila owned and operated a business.
233 Mr Giovannoni perceived himself to be an owner and operator of his own business. His putative business was promoted as a business to the public through advertising and other promotional means including through the Yellow Pages and other publications and by the use of business cards and a website. Mr Giovannoni's business engaged with a multiplicity of purchasers of its services in a repetitive and continuous manner. In Mr Giovannoni's case the vast bulk of purchasers of his services were his direct clients and not the agencies. The assets used to support the business were not extensive but were in frequent use. Unlike most of the other witnesses, Mr Giovannoni usually operated from his home office utilising that office and its equipment extensively. Mr Giovannoni did have and did operate transactional systems. He had an invoicing system and he had standard methodologies for quoting or for otherwise assessing what to charge for particular services. He had a separate business banking account. He operated a business-based accounting system.
234 Significantly, Mr Giovannoni's activities involved engaging others to perform work. In that respect, Mr Giovannoni was responsible for making payments to those sub-contractors that he engaged. That activity involved Mr Giovannoni in the taking of risk. It is clear from his evidence that he did so in the pursuit of profits. That his economic activities involved the taking of risk was also acknowledged by the fact that he took out professional liability insurance. The evidence of his regular and substantial clientele demonstrated that his activities generated goodwill which enured to his business. In Mr Giovannoni's case the fact that the regulatory requirements of a business (ABN, GST, taxation returns) were being met had a rational connection to the activities in which he was engaged.
235 I am satisfied that Mr Giovannoni owned and conducted a business. That business overwhelmingly involved the provision of translating services. The provision of interpreting services appears to have been a peripheral part of the business and was engaged in by Mr Giovannoni where convenient or when his more lucrative translating work was not available.
236 Ms Avila perceived herself and portrayed herself (through her business cards and advertising) as owning and operating a business. Her economic activities involved the taking of some risk in the pursuit of profits. The fact that at least some risk was involved in her activities is acknowledged by her taking out her own professional indemnity and public liability insurance. Ms Avila tendered and bid for contracts. She had a multiplicity of purchasers of her services. In particular some 40% of her activities involved a varied portfolio of private clients for whom she did translating work. That demonstrated repetition and continuity of activities. She promoted her activities through the Yellow Pages and by distributing business cards. She had a reputation amongst the Spanish community in Brisbane, which was also likely to contribute to the promotion of her business and which demonstrates that her activities created goodwill which enured to her business.
237 The tangible assets utilised to support her activities were not very significant. There was no direct evidence of Ms Avila operating business transactional systems. I would infer, given the relatively high proportion of the work that she did for private clients that she invoiced and had a rate card or some standard basis upon which she charged for her work. The fact that she participated in tendering and bidding processes suggests that some transactional systems existed, although these may have been rudimentary. Her evidence was that she kept business records but she gave no detail of this. The fact that she was not registered for GST suggests that any business she had is likely to be relatively small in terms of its turnover.
238 The evidence provided to substantiate the existence of a business owned and operated by Ms Avila was not very extensive, although somewhat more detailed than for most of the other witnesses (other than Mr Giovannoni). Of particular significance in my evaluation as to whether there was a business, is the fact that Ms Avila had direct clients which make up in the order of 40% of her work and that she was involved in tendering for work. On balance, it seems to me that Ms Avila had a business which extended at least to include the services (mostly translating) that she provided to her direct clients.
239 I am not satisfied that any of the other interpreters called as witnesses owned and operated a business. To some degree my lack of satisfaction may be the result of the lack of detail in the evidence and the manner in which it was presented. Many of the relevant indicators were simply not addressed in the evidence given by these witnesses. Where those indicators were addressed, the evidence lacked detail and substantiation. An example of that is the evidence given by some of those witnesses that they had direct clients. The extent of or the nature of the clientele was not given.
240 These witnesses did have multiple purchasers of their services. However, overwhelmingly those purchasers were the agencies and I am not satisfied that the provision of services by them to those agencies was an activity of any business they operated, because I consider it more likely that when working for agencies interpreters do so as employees. Insofar as some of them gave evidence of having direct clients, I would infer from the lack of detail and substantiation that if direct clients existed they were minimal and peripheral to the activities of these individuals. In that respect there was no evidence of repetitive and continuous business activities.
241 The interpreters in question performed all of their work personally and did not employ or engage others in the performance of that work. Their evidence of their economic activities did not suggest the taking of risk in the pursuit of profit. Although some mentioned goodwill in the context of gaining and having a reputation, what they regarded as goodwill appears no different to the good reputation which may attach to a valuable employee. There was no evidence of goodwill enuring to any business of these interpreters. At best, the evidence was simply that the particular individual may, as a result of good work, be requested by a client of an agency.
242 All but Mr Gutkin did not promote a business to the public through advertising or other promotional means. Mr Gutkin advertised in the "Russian Yellow Pages", but no detail of the nature of that publication or the extent of any advertising was provided. Mr Gutkin's work overwhelmingly came from the agencies.
243 Each of these witnesses generally accepted the rates offered by the agencies and did not negotiate their own fees. There was no evidence that any of these witnesses had formulated their own standard terms and conditions of trade. There was no evidence of risk taking of the kind that might ordinarily be attached to the engagement in activities in the pursuit of profit. The fact that none of these witnesses took out their own personal indemnity insurance tends to suggest that they did not regard themselves as at risk, despite the fact that a business providing interpreting services is clearly at risk and potentially substantially so in relation to negligent work. None of the witnesses gave evidence of holding separate business banking accounts. Nor did they suggest the utilisation of business-based accounting systems, even rudimentary systems like MYOB as utilised by Mr Giovannoni. None of the witnesses gave any evidence of tendering or bidding for work in contrast to the evidence of Mr Giovannoni and Ms Avila. The evidence of the utilisation of assets to support their activities was minimal although, given the nature of the work, I attach little significance to that.
244 Each of these interpreters perceived themselves to be self-employed and had an ABN. Their evidence also indicated that they interacted with the ATO on the basis that they conducted a business. I attach little weight to those indicators. Obtaining an ABN is a simple process in which the existence of a business is not required to be demonstrated. Further, it is not surprising that in circumstances where these individuals perceived themselves to be self-employed that some of the regulatory requirements of a business were in evidence. For many of the witnesses, their self-assessment of themselves as independent contractors was largely based on their capacity to accept or reject work as it suited them. That self-assessment was also likely to have been significantly influenced by the characterisation of their status by On Call and other agencies. In the absence of other indicators of the existence of a business, the fact that some of the regulatory requirements of a business were in place, is likely to have had more to do with an incorrect self-assessed conclusion of the existence of a business than the fact of such a business existing.
245 For the reasons I have already adverted to, On Call has failed to satisfy me that any of the relevant interpreters, who were not called as witnesses, owns and operates a business. For the sake of completeness, I should comment on the general (but non-specific) impression that the evidence has created.
246 It can be said that there was some evidence that the relevant persons perceived themselves and portrayed themselves to others as owning and operating a business. All of the relevant interpreters used an ABN and some were registered for GST. Those of the interpreters that executed one or more of On Call's standard contracts adopted, at least for the purpose of the contracts executed, the description "independent contractor" and acknowledged that status. However, the labels that the interpreters have attached to themselves are of little assistance if those labels are inconsistent with the real substance or reality of the relationship involved. I am not satisfied that the evidence of the reality supports the labelling utilised.
247 In this respect the evidence suggests that little importance was attached to the contracts made as between On Call and some of the interpreters. That lack of importance is demonstrated by a number of matters. Most of the interpreters did not sign contracts. On Call's disregard for the contracts is demonstrated by its failure to insist upon the contracts being executed by most of the interpreters and that it did not keep records sufficient to identify those who had signed contracts and the contracts that they had signed. Ms Hulusi's evidence was that she did not read the October 2006 Contract, or at least had not substantially done so. Her evidence (and that of some of the individual interpreters called) was that, irrespective of whether contracts had been signed or not, or which version of the contract was being utilised by On Call, nothing changed in terms of the operations of On Call and its interactions with interpreters on its panel. That nothing changed, despite the fact that the terms of the different versions of the contracts varied, also suggests that the terms of the contracts made were of little or no importance to the manner in which the relations between On Call and its interpreters were conducted. The findings I later make at [293]-[294] are also of relevance.
248 To the extent that On Call contends that the economic activities of the interpreters involved the taking of risk in the pursuit of profits, those contentions were confined to a number of peripheral matters not particularly demonstrative of entrepreneurial endeavour. It was said that interpreters could profit from the sound selection and management of assignments. In that respect, On Call relied on the evidence of the capacity of interpreters to take on multiple assignments. I accept that to a limited degree interpreters had such a capacity and that to a limited degree that capacity involved some risk, namely the risk of a clash in the interpreter's capacity to carry out multiple assignments. The risk involved was minimal. There is no evidence to suggest that a clash or conflict of that kind carried the risk of detriment. On Call itself encouraged interpreters to take multiple assignments when it suited On Call. I doubt very much that a clash between assignments (whether assignments from the one agency or a multiplicity of agencies) would, given the practices in the industry, have led to loss of further work. Nor, in this regard was the capacity to select multiple assignments particularly significant in the overall context of the work performed by interpreters. That capacity was not very far removed from the capacity of a casual employee working for multiple employers to select and manage their engagements so as to maximise the remuneration earned.
249 On Call also relied on the contention that interpreters exploit the direct dealings they have with On Call's clients for their own business purposes in order to secure those clients to themselves and deal directly with them. The evidence relied upon in support of that contention was evidence of two occasions in which a client of On Call decided to create their own panels of interpreters and that some interpreters who had formerly been provided to those clients by On Call were utilised in that endeavour. Ms Hulusi suggested that this had involved the poaching by panel interpreters of On Call's clients. The evidence does not establish that to be the case. Firstly, the poaching of clients is a breach of the Code of Ethics. Secondly, the evidence does not establish that any interpreter approached a former client. Conversely, the evidence suggests that former clients recruited the interpreters. Additionally, the evidence does not establish whether when interpreters were recruited, they were recruited as employees of the former client or whether they provided their services through their own businesses. Further, and in any event, if the evidence had supported a finding that some interpreters poach clients, the evidence did not support the existence of that activity to any significant extent.
250 There is little or no evidence of a general nature that supports goodwill (name, brand or reputation) being created by the economic activities of the interpreters. The evidence before me is evidence of the kind that I have already adverted to in relation to the individual interpreters called. From time to time clients of On Call (and I would infer the agencies generally) requested a particular interpreter. Usually that occurred for the purpose of facilitating continuity. That evidence did not establish that any goodwill enured personally to any business of the interpreter concerned. There was no tangible evidence of interpreters being personally advantaged in the conduct of their own businesses as a result of a relationship developed with clients of the agencies.
251 I have dealt with the evidence of advertising by panel interpreters. That evidence does not suggest that generally, interpreters promote their activities as a business to the public through advertising or other promotional means. Instead the evidence suggests that most interpreters do not advertise at all. Consistently with what I have found in relation to the market for translating services, translators are more likely to advertise. The evidence of the extent of that advertising is however not clear and, in any event, translating constitutes a small fraction of the work overall (5% of On Call's turnover). What is apparent is that the vast bulk of interpreters obtain most of, if not all, of their work from the agencies. For that purpose they do not need to advertise. They rely, in the main, on their listings on the websites of Ausit and NaATI.
252 Whilst I accept that most interpreters have a multiplicity of purchasers of their services, it is likely that for the vast bulk of interpreters (less so for those mainly translating) their purchasers are confined to the agencies. The patterns of work of the vast bulk of interpreters is unlikely to be much different to that of casual or part-time employees working for a small number of employers; Yaraka Holdings at [36]; Sgobino at 308.
253 I have earlier summarised the extent of use of other persons to carry out assignments given to interpreters. On Call relies on the prevalence of, what it refers to as "sub-contracting". For the reasons I have already explained, there was little evidence of interpreters on On Call's panel engaging in sub-contracting as opposed to the swapping of assignments or substitution which, overwhelmingly occurred with the consent of On Call. As a rule, interpreters did not delegate their work. They performed it personally. The only reliable evidence of delegation related to Mr Giovannoni and, in that respect, his evidence typified the exception rather than the rule.
254 The evidence indicates that overwhelmingly interpreters did not have their own standard rates and terms and conditions of trade. Generally rates were set and applied by On Call and the other agencies and interpreters accepted those rates without negotiation. The only exception related to a number of rare languages where interpreters were particularly scarce.
255 On Call's panel interpreters did not invoice On Call and, except for a limited number of interpreters, even those interpreters who are registered for GST relied on On Call's invoicing and payment systems rather than having and utilising their own. I would infer that the same situation applied in relation to other agencies. As was the case of bicycle couriers in Hollis, the agencies "superintended" the interpreters' finances: see Hollis at [54]. There was no evidence of interpreters generally having their own debt collection systems, business accounting systems, budgeting or forecasting systems or business-based banking arrangements.
256 On Call also relied on the existence of business names and some incorporated entities. To the extent that there was evidence of that, it was minimal and indicated that overwhelmingly interpreters do not use business names (other than their own name) or operate through incorporated entities. Whilst On Call correctly contends that some interpreters hold insurance policies, again the evidence suggests that those that do were the exception rather than the rule. On Call also relied on panel interpreters having made contributions to On Call's policy of insurance, but that is not particularly probative of whether or not interpreters operated their own businesses when those businesses are said to extend beyond activities generated by On Call.
257 On Call also contented that panel interpreters were paid for a result. I reject that contention for reasons that I will shortly address. The work of interpreters involves sufficient skill to suggest that a career in interpreting can be pursued through self-employment, but as such a career can also be pursued through employment, it is difficult to generalise as to the extent of interpreters who have chosen the path of self-employment. I would infer that some have.
258 In conclusion, I am satisfied that Mr Giovannoni and Ms Avila owned and operated a business. I am not satisfied that any other of the interpreters called as witnesses owned and operated a business. I am unable, on the evidence before me, to make any definitive finding as to the position of those interpreters not called. However, the evidence before me supports the conclusion that most of those interpreters did not own and operate their own businesses. So far as there were such businesses, they were likely to have been focused upon providing translating services.