Supreme Court of Tasmania|2004-11-11|Before: Blow JJ, Crawford J, Slicer J

Protective Security Pty Ltd v Bedelph [2004] TASSC 128 (11 November 2004)

CITATION: Protective Security Pty Ltd v Bedelph [2004] TASSC 128

TITLE OF COURT: SUPREME COURT OF TASMANIA (FULL COURT)

Workers Compensation - Entitlement to compensation - Persons entitled to compensation - Who is a "worker" or "employee" - Contract of service or independent contractor - General principles - Effect of agreement between parties.

Stevens v Brodribb Sawmilling Co Pty Ltd (1986) 160 CLR 16; Ferguson v John Dawson & Partners (Contractors) Ltd [1976] EWCA Civ 7; [1976] 1 WLR 1213; Global Plant Ltd v Secretary of State for Social Services [1972] 1 QB 139; Hollis v Vabu Pty Ltd [2001] HCA 44; (2001) 207 CLR 21, applied.

Workers Compensation - Proceedings to obtain compensation - Determination of claims - Appeals, judicial review and stated cases - Question of law - Generally - Whether finding of fact amounted to error in point of law - Whether finding necessarily wrong or unreasonable.

The Australian Gas Light Co v The Valuer-General (1940) 40 SR (NSW) 126; Mahony v Industrial Registrar of New South Wales (1986) 8 NSWLR 1; Vetter v Lake Macquarie City Council (2001) 202 CLR 439, applied.

Judgment ID Number: [2004] TASSC 128

PROTECTIVE SECURITY PTY LTD (trading as TASMANIAN

1 On 1 March 2002, David Bedelph ("the deceased") died in a car crash. His daughter, the respondent, was then only 14 years old. She had lived with him since her mother's death when she was five years old. There is no doubt that at the date of death of the deceased she was his dependant within the meaning of the Workers Rehabilitation and Compensation Act 1988 ("the Act"), s3(1).

2 On 18 November 2002, the respondent claimed from the appellant compensation under the Act arising out of her father's death. The claim was not made within the period of six months after the date of death prescribed by the Act, s32(1)(b). However, by s38(1), the failure to make the claim within that period did not affect the validity of the claim if the failure was occasioned by mistake or other reasonable cause. The appellant did not accept her claim and she referred the following matters to the Workers Rehabilitation and Compensation Tribunal ("the Tribunal"):

(a) whether she was entitled to relief pursuant to the Act, s38(1), from her failure to make a claim within the statutory period; and

3 The Tribunal conducted a hearing and on 3 December 2003, published its reasons for determining that it was not persuaded that the deceased was, at the time of his death, performing his duties consequent upon a contract of service so as to be a worker within the meaning of that term in the Act. The issue had been whether he was working for the appellant under a contract of service or whether he was an independent contractor and working pursuant to a contract with the appellant in the nature of a contract for services. The Tribunal found it unnecessary to determine the other issue arising out of the failure to claim compensation within the statutory time limit. It ordered that the respondent's "applications are dismissed".

4 The respondent appealed to a judge, pursuant to the Act, s63(1), which entitled her to appeal if she was aggrieved "in point of law" by the Tribunal's determination and order. By her first ground of appeal, she complained that the Tribunal erred in law in that on the whole of the evidence, it should not and could not have been satisfied that the deceased was an independent contractor as opposed to a worker. I do not know whether any point was made before the learned judge about the way in which the ground was expressed, but I observe that it incorrectly referred to the Tribunal's determination as a finding that the deceased was an independent contractor. What the Tribunal determined was that it was not persuaded that at the time of his death, the deceased was performing his duties consequent upon a contract of service so as to be a worker under the Act. The respondent bore the onus of proving that.

5 Most of the other grounds of the first appeal complained that the Tribunal failed to adequately consider or give proper weight to items of evidence and made findings that either were not open or were contrary to the evidence.

6 The learned judge determined the appeal in favour of the present respondent and on 22 April 2004, quashed the Tribunal's order, remitted the matter to the Tribunal for determination in accordance with law, declared that the deceased was a "worker" within the meaning of the Act, declared that the deceased died in the course of his employment with the appellant and ordered that the appellant pay the respondent's costs of that appeal.

7 In the course of his Honour's reasons for judgment, he first considered the evidence and the Tribunal's reasons. He then discussed authorities concerning the test or tests to be applied when determining whether a person was working under a contract of service or a contract for services. Recognising that the appeal could only succeed if an error of law on the part of the Tribunal was demonstrated, the learned judge concluded that facts identified by him inevitably led to the conclusion that the deceased was working under a contract of service and was a worker within the meaning of the Act. I will say more about his Honour's reasoning in due course.

1 That the learned judge erred in law in holding that the Tribunal's decision reflected an error of law.

2 That to so hold involved a finding that the only reasonable conclusion open to the Tribunal on the facts before it was that the deceased necessarily fell within the definition of "worker" in the Act, whereas on the facts before the Tribunal the Tribunal's characterisation was one which was reasonably open.

9 The appeal therefore has two aspects. The first concerns the correct test to apply when determining whether the Tribunal's conclusion that it had not been proved that the deceased was a worker, amounted to an error of law. The second concerns whether an application of the correct test establishes that the Tribunal's conclusion was an error of law.

10 Because of difficulties she faced in proving her case, the respondent was forced to call Mr Jason Clarke as a witness. He was the managing director and effectively the proprietor of the appellant company. It was his evidence that he was the only employee of the company and that everyone else who did work for it did so as an independent contractor. It carried on the business of providing security against theft and damage to property. To do this, it engaged people referred to as agents or guards, whose job was to drive around and at irregular times during the night, inspect properties and businesses owned by companies, institutions and persons who had engaged the appellant to provide the security service. The agents or guards were also required to attend premises in the event of an alarm being activated. The number of guards varied according to the demand for the appellant's services.

11 According to the respondent's evidence, she and her father had frequently moved house, both from State to State and within Tasmania, often not stopping in one place for more than a few months. At the time of his engagement by the appellant, he was the holder of a security agent's licence under the Commercial and Inquiry Agents Act 1974. When asked if he had worked much since her mother's death, she said, "no, not really, only with a few security companies". Records from Centrelink showed that since 1 July 1995, a period of nearly seven years, he was in receipt of social security benefits. He owned no assets of substance. When he applied for a security agent's licence in August 2001, he informed a police officer that he was then employed by Eye Watch Protection Services as a security guard. On 20 September 2001, he was granted a security agent's licence for a period of one year. Under the Commercial and Inquiry Agents Act, he could work as a security agent on his own account, whereas a security guard was limited to working as an employee of, or acting for or by arrangement with, a security agent.

12 In evidence was a copy of a typed agreement that had been sealed by the appellant and signed by the deceased. His signature was not witnessed by the signature of another. Mr Clarke's evidence was that the deceased came to see him at the appellant's office in Derwent Park in about mid-January 2002, looking for work. Mr Clarke's evidence was that he had on a computer a form of agreement which had been drawn by a solicitor "many years ago". He said that he gave the unsigned agreement to the deceased two or three days prior to the deceased returning to the office and signing it in his presence. He said that he told the deceased not to sign it on the spot, but he did not go through its terms with him. Mr Clarke said that upon it being signed by the deceased, it was given back to him to take away "because it wasn't witnessed". The original was not subsequently returned to Mr Clarke, but he had retained a copy. It was dated 13 January 2002. In the course of his cross-examination, there was admitted into evidence a statement he made on 22 March 2002. No reference was made to the statement in the Tribunal's reasons. In the statement, Mr Clarke said that he made it very clear to the deceased that he would be engaged as a subcontractor and not as an employee and explained that he did not employ security guards because of industrial relations issues that arose from time to time from employee situations. He said that he told the deceased that he would have to register with the ATO (Australian Taxation Office) for an ABN (Australian Business Number) and he gave to the deceased a bundle of ATO documents. He did not specifically mention workers compensation or personal accident or disability insurance. He said that he suggested to the deceased that he read the agreement, seek legal advice and return it signed if he was happy with it. Within a few days, the deceased had commenced work for the appellant.

13 The agreement described the deceased as "the sub-contractor" and recited that the appellant would engage the services of the subcontractor. In fact, it was a standard form of agreement and described the subcontractor as "it" rather than "he" or "him". Material clauses of the agreement were:

1 The subcontractor would provide the services in Item 1 of the schedule.

2 The appellant would pay the subcontractor for its services whatever was negotiated and agreed. The subcontractor would forward a tax invoice to the appellant on or before the seventh day of each month, charging for its services in the previous calendar month. The appellant would forward payment of that tax invoice within 35 days of its receipt.

3 The agreement would endure until terminated mutually or until, under cl 5, either party elected to give one month's written notice of termination, or the appellant terminated without notice in the event that the subcontractor committed any act or omission which might place in jeopardy the appellant's position in relation to any contract into which it had entered.

4 In the event of a termination under cl 5, "the sub-contractor, its servants, officers or agents will not, for a period of three years from the date of such election, engage in any similar provision of services to any of Tasmanian Protective Services clients in the area encompassed by this Contract".

5 By cl 6, the subcontractor agreed that it would comply with a number of requirements, including (inter alia) the following requirements of paragraphs in Item 5 of the Schedule:

(a) That in no case would "the sub-contractor utilise the services of any person who is not the holder of a security agent or security guard's licence and who has been [sic] approved to be so utilised by Tasmanian Protective Services".

(b) "The sub-contractor shall not employ other personnel without Tasmanian Protective Services approval for work they requested to do and only then use personnel who are properly trained and competent in the provision of the services".

(e) This paragraph specified (inter alia) what the subcontractor was required to do by way of attendance at premises as a consequence of alarm calls.

(g) The subcontractor was to give the appellant "full details of all personnel employed by it, including all licences held by those personnel ... [and] provide satisfactory evidence of current public liability insurance for a sum not less than Ten Million Dollars".

(h) "The sub-contractor shall give to Tasmanian Protective Services full details of registered Business Name, Company, or Corporation including all relevant details pertaining to Shareholders, directors, date of registration, Australian Business Number, etc".

"The sub-contractor hereby acknowledges that it is an independent contractor, and that nothing contained herein shall give rise to a relationship of master and servant or principal and agent, and any such relationship is expressly denied. In order to give full effect to this clause the sub-contractor agrees that it shall comply with all Federal, State and local authority statutes, laws, rules and regulations pertaining to it as an employer including, but not exclusively, all taxation, superannuation and workers compensation legislation".

7 Clause 13 provided (inter alia) that "the sub-contractor acknowledges that it will supply the services in a prompt, professional manner, and will comply with all directions by Tasmanian Protective Services as to the method by which the services are provided ...".

14 The deceased died less than two months after he commenced working for the appellant. He died in a car accident when responding to an alarm call. He had agreed with the appellant that he would be paid a flat rate of $80 per shift. In addition, he was to be paid $12 per hour as a call-out fee for work done outside a normal shift. Such a shift usually commenced at about 6pm and finished at about 6am. An invoice submitted on behalf of his estate after his death, claimed $1,656 for work done by him in February 2002. It included work on 22 of the 28 days. For 18 of those days the claim included the $80 shift fee. The balance was for five alarm calls and for other specific jobs taking one hour, two hours, six hours, one hour and three hours respectively, each hour being charged at $12.

15 He would commence a shift by driving his car to the appellant's office at Derwent Park and then use a vehicle supplied by the appellant for his duties. The vehicle had the appellant's signs displayed on its doors and "security" on the back. The appellant supplied him with a fuel card for the purchase of petrol at its cost. The only equipment provided by him was a torch. The appellant provided him with sheets of paper with its calling cards printed on them, which he had to cut into the size of business cards for use when he attended premises in the course of his duties.

16 Mr Clarke's evidence was that the deceased's employment duties required him to attend a number of premises from Bridgewater to Sorell and Kingston. Agents, including the deceased, were provided with a patrol run sheet which detailed the premises they were required to visit and enabled them to fill out the times at which those visits were performed. The number of times a night they were required to visit each of the premises was laid down, but not the order in which they visited them. They were directed that the visits were not to occur at set times.

17 Work was allocated daily to agents or guards, depending on the work available. A person would be advised the night before, or in the early morning, if required to perform duties on the following night. The deceased worked for no-one else during the time he was working for the appellant. The respondent's evidence was that apart from the record kept of the hours of work he had done and the invoices he sent to the appellant, he had no business records. He had no sickness or disability insurance. Mr Clarke agreed that at the time of the death of the deceased, he had not been provided by the deceased with his ABN for taxation purposes, nor advice of the deceased's insurance details, both of which were obligations of the deceased under the signed agreement.

18 Each agent who performed patrols was provided by the appellant with a document entitled "Standard Operating Procedures". It required the agent (inter alia) to comply with the following:

"1 Patrol Guard to report to Security Office NO later than 15 minutes prior to starting shift.

2 Patrol Guard must READ and SIGN Patrol Incident Folder, noting all relevant documentation for shift.

3 Patrol Vehicle MUST be checked for Damage, before / Finish of shift.

4 Kilometer [sic] Sheet to be filled in at Start /Finish of shift.

5 Control Room contacted and Operator advised of Start of Shift.

6 Keys to be Counted (Number of dogs clips on ring and signed).

7 Patrol Sheets / Incident Report Sheets to be filed in correct area at the end of Shift.

8 Patrol Vechile [sic] to be re-fuelled each night and entered in the Kilometer [sic] sheet.

9 Patrol mobile Phone Switched ON before leaving office.

10 End of shift Mobile Phone to be switched OFF and put on Charger."

It also contained requirements about maintaining the appellant's vehicle, driving to and from assignments and driving in response to alarm signals and back-up requests.

19 Each agent or guard, including the deceased, signed the appellant's policy regarding his use of the appellant's vehicles. Referring to the users as staff and employees, it was in the following terms:

"1 The standing orders with respect to usage of company vehicles are as follows:

2 Vehicles are to be inspected for damage and serviceability prior to the member taking the vehicle out. Any damage, which is not noted prior to taking a vehicle, will be deemed the responsibility of the member returning the vehicle.

3 Vehicles are to be returned to the office having been washed, cleaned within and refuelled.

4 Vehicles are to [sic] signed out and signed back in from the office, and complete logs are to be kept with respect to both mileage, and refuelling details.

5 Vehicles are to be secured at all times when unattended.

6 Vehicles are not, under any circumstances, to be put through automated car washes.

7 No person is to smoke, or eat in any Company vehicle.

8 Vehicles are not to be driven off formed roads, or over kerbs in any circumstances, with the exception of such places where a director has specified in writing that they may be driven in certain areas around schools etc.

9 Under no circumstances are persons other than on duty employees of the company to be allowed in vehicles without the express written consent of a director and an indemnity form being completed.

10 Vehicles are not to be used for any purpose other than a business related activity.

11 No dogs or other animals are to ride in any vehicles until such time as the directors have satisfied themselves as to the reliability of the animals toilet training."

20 A requirement of the written agreement was that the deceased wore a uniform. In the past, the appellant provided the uniforms, but because of a high turnover of persons who did work for the company, it became too expensive and the supply ceased. However, the appellant provided the deceased with company badges to put onto the uniform he wore. Mr Clarke described them as advertising. He agreed that he wanted the deceased to appear as part of the company, as a Tasmanian Protective Services person, adding "that's generally what happens in the industry". The appellant had no radio set-up, but provided the deceased with, and paid for, a mobile telephone for his use while on patrol. Mr Clarke agreed that he would often contact the deceased and other agents when they were working, in order to check how they were going, where they were and if he could get a report on what checks had been done or whether there was any need for help. He denied that such contact amounted to "keeping tabs" on the security agents. He thought that on the night of the deceased's death he contacted him on three occasions. However, he stated that a week could go by without contacting a particular agent.

21 There was evidence that demonstrated that at least when it was convenient to do so, the appellant referred to persons such as the deceased as its employees. An insurance proposal submitted by Mr Clarke on 29 May 2001, for the purpose of obtaining fleet car insurance, declared that the regular drivers were all "employees". On 15 December 2000, the appellant tendered for work for the Education Department. In the tender document, Mr Clarke declared that the company had seven licensed security officers who were paid in accordance with the Security Industry Award. Mr Clarke acknowledged in evidence that he knew from the instructions to tender that if successful, as it was, the company was prohibited from subcontracting the work without permission from the Education Department. On the night of his death, the deceased attended Education Department property. Commencing on 1 July 2002, the appellant entered into a contract with a Melbourne security company to provide security services on its behalf. It was a term of that contract that the respondent was not to subcontract the work without the permission of the Melbourne company. In the insurance claim form for damage done to the appellant's vehicle the deceased was driving on the night of his death, Mr Clarke described the deceased as "worker". In an affidavit made to a police officer sworn eight days after the deceased's death, Mr Clarke described him as "an employee" of the respondent.

The relevant test for an appeal in point of law

22 The learned judge said that: "The question of law ... is whether the facta probantia necessarily establish the factum probandum, viz, that the deceased was not a worker within the meaning of the Act, s3(1)", citing Mahony v Industrial Registrar of New South Wales (1986) 8 NSWLR 1 at 3 and Hope v Bathurst City Council [1980] HCA 16; (1980) 144 CLR 1 at 7. I think, however, that his Honour expressed himself incorrectly, and that what he meant was that the question of law was whether the facta probantia necessarily established that the deceased was a worker within the meaning of the Act, s3(1), for his Honour then directed himself in accordance with the following passage from the judgment of Jordan CJ in The Australian Gas Light Co v The Valuer-General (1940) 40 SR (NSW) 126 at 138:

"[I]f the facts inferred ... from the evidence ... are necessarily within the description of a word or phrase in a statute or necessarily outside that description, a contrary decision is wrong in law."

23 The learned judge appeared to express the test differently when later in his reasons he said that "the question for this Court is whether the Tribunal's conclusion was one that no Tribunal, acting judicially and properly instructed as to the relevant law, could have reached". For myself, there is little practical difference between the two expressions, for if the facts "necessarily" led to a conclusion that the deceased was a "worker" within the meaning of that word in the Act, then it may be said that no Tribunal acting judicially and properly instructed as to the law, could have reached a different conclusion that was correct. That was the view of Hope JA in Mahony v Industrial Registrar (NSW) (supra) at 3. In Haines v Leves (1987) 8 NSWLR 442 at 476, Samuels JA agreed and described the two ways of expressing the test as alternative. I think that the learned judge put beyond doubt the question of the test he was applying when, in the penultimate paragraph of his reasons, after reviewing some of the facts, he said: "All of these facts lead inevitably to the only conclusion that the written contract, and the circumstances in which it was signed by the deceased, did not reflect the reality of the relationship between the deceased and the respondent." It may be inferred that by expressing that conclusion as inevitable, his Honour was holding that the facts led necessarily to a conclusion that the deceased was a worker within the meaning of the Act.

24 The passage from The Australian Gas Light Co v The Valuer-General cited above, was approved by Gleeson CJ, Gummow and Callinan JJ in Vetter v Lake Macquarie City Council (2001) 202 CLR 439 at 450. Their Honours also referred, at 451, to Hope v Bathurst City Council [1980] HCA 16; (1980) 144 CLR 1 at 9, where it was made clear by Mason J, with whom Gibbs, Stephen, Murphy and Aickin JJ agreed, that a question exclusively of law arises if, on the facts found, only one conclusion is open concerning whether the case does or does not come within a statutory expression.

25 An obvious corollary to what was so stated is the following proposition from Mason JA in Williams v Bill Williams Pty Ltd [1971] 1 NSWLR 547 at 557:

"[I]t may happen that the tribunal at first instance is confronted with the task of applying the statutory expression to primary facts in such circumstances that it is reasonably possible to arrive at different conclusions, the question being largely one of degree upon which different minds may take different views. Here, again, it is not possible to conclude that the decision appealed from is erroneous in point of law.

The principle has been enunciated that, if different conclusions are reasonably possible, the determination of which is the correct conclusion is a question of fact."

26 A similar point was made by Jordan CJ in The Australian Gas Light Co v The Valuer-General at 138:

"If, however, the facts so inferred are capable of being regarded as either within or without the description, according to the relative significance attached to them, a decision either way by a tribunal of fact cannot be disturbed by a superior court which can determine only questions of law."

27 The only difference discernable between the submissions for the appellant and the submissions for the respondent concerning the test to be applied was that counsel for the appellant emphasised that the Tribunal's conclusion could not be disturbed unless the facts necessarily led to a conclusion that the deceased was a worker under a contract of service, whereas counsel for the respondent expressed it upon the basis that the Tribunal's conclusion could not be disturbed unless the conclusion was not reasonably open. As I have indicated, I see no practical difference. The learned judge appeared to apply both tests without observing any difference between them. Counsel for the respondent conceded that if reasonable minds may differ about the correct conclusion, or if there is a mix of relevant factors and the Court considers that tribunals could come to competing conclusions, then the Tribunal's order dismissing the respondent's claim for compensation must be allowed to stand.

28 Therefore, the question to be answered by the learned judge, and now by this Court, was whether, on the facts, the question whether the deceased was a worker within the meaning of the Act, necessarily had to be answered in the affirmative. If so, the respondent must succeed. If not, the appellant must succeed.

The test for determining whether the deceased was a worker

29 Both the Tribunal and the learned judge referred to relevant factors for testing whether a person was a worker. The only real disagreement between them on a matter of principle concerned the weight the Tribunal gave to the signed agreement, a subject about which I will say more in due course.

30 A consideration of whether a person was working under a contract of service or a contract for services requires the tribunal of fact to take into account all the factual circumstances of the case. Queensland Stations Pty Ltd v Federal Commissioner of Taxation [1945] HCA 13; (1945) 70 CLR 539 at 552; Marshall v Whittaker's Building Supply Co [1963] HCA 26; (1963) 109 CLR 210 at 218; Federal Commissioner of Taxation v Barrett [1973] HCA 49; (1973) 129 CLR 395 at 401.

31 A prominent factor in determining the nature of the relationship between a person who engages another to perform work and the person so engaged is the degree of control which the former is entitled to exercise over the latter, not merely in regard to what the latter will do, but also in regard to how it is to be done. But the existence of control, whilst significant, is not the sole criterion by which to gauge the matter. It is merely one of a number of indicia. "Other relevant matters include, but are not limited to, the mode of remuneration, the provision and maintenance of equipment, the obligation to work, the hours of work and provision of holidays, the deduction of income tax and the delegation of work by the putative employee". Stevens v Brodribb Sawmilling Co Pty Ltd (1986) 160 CLR 16 at 24. It is the totality of the relationship between the parties which must be considered. Op cit at 29. Criteria "suggesting a contract of service rather than a contract for services include 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. Those which indicate a contract for services include work involving a profession, trade or distinct calling on the part of the person engaged, the provision of him by 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 the remuneration without deduction for income tax. None of these leads to any necessary inference, however, and the actual terms and terminology of the contract will always be of considerable importance." Op cit at 36 - 37. However, having regard to a variety of criteria "is not without its difficulties because not all of the accepted criteria provide a relevant test in all circumstances and none is conclusive. Moreover, the relationship itself remains largely undefined as a legal concept except in terms of the various criteria, the relevance of which may vary according to the circumstances." Op cit at 35. "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. The ultimate question will always be whether a person is acting as the servant of another or on his own behalf and the answer to that question may be indicated in ways which are not always the same and which do not always have the same significance." Op cit at 37.

32 It is obvious that the signed agreement between the parties required careful consideration because it expressly provided that the deceased was an independent contractor and it denied the existence of a relationship of master and servant. It was couched generally on that basis and many of its terms were consistent with that. The Tribunal determined that it was not persuaded that the deceased was performing his duties consequent upon a contract of service so as to be a worker within the meaning of the Act, largely because of what the agreement provided, although at the same time it found that the material provisions of the agreement to that effect were supported by other circumstances.

33 The learned judge referred to a number of authorities concerning the influence that an express agreement may have on the question that arose in this case. In Ferguson v John Dawson & Partners (Contractors) Ltd [1976] EWCA Civ 7; [1976] 1 WLR 1213 it was made clear by Megaw LJ at 1222 - 1223, upon reference to authorities, that the nature of the relationship is determined by the law and not by the label which parties choose to put on it, and it is not necessary to go so far as to find the contractual document containing the label to be a sham. The expression of the parties' intention will be a relevant factor, but is certainly not a conclusive factor, in deciding what is the true nature of the contract. In Global Plant Ltd v Secretary of State for Social Services [1972] 1 QB 139, Lord Widgery said at 152: "One must not overlook that the intention of the parties was that the relationship should be that of an independent contractor, and although the parties cannot by intention make a transaction into something which it is not, yet it is recognised that such intention is a factor for consideration in these cases." That principle was applied at first instance in this State in Johns Perry Hayward Pty Ltd v Greaves A72/1990 at 17 - 18 and Thompson v Cooee Point Abattoirs Pty Ltd [2002] TASSC 41; (2002) 10 Tas R 412 at 419.

34 That circumstances other than the express provisions of the written agreement should be considered in this case, is also supported by what was said by Gleeson CJ, Gaudron, Gummow, Kirby and Hayne JJ in Hollis v Vabu Pty Ltd [2001] HCA 44; (2001) 207 CLR 21 at 33: "It should be added that the relationship between the parties, for the purposes of this litigation, is to be found not merely from these contractual terms. The system which was operated thereunder and the work practices imposed by Vabu go to establishing 'the totality of the relationship' between the parties; it is this which is to be considered. Stevens v Brodribb Sawmilling Co Pty Ltd (1986) 160 CLR 16 at 29."

35 The Tribunal thought that "the primary indicia of the nature of the relationship between the parties is any written agreement entered into by the parties in respect of their relationship", but it acknowledged that "it is open to the Tribunal to discount any express contractual intention if the remainder of the arrangement between the parties show that a different relationship exists in reality". Later the Tribunal said that the written agreement "is the primary evidence of their relationship and ought only be disregarded if on the evidence as a whole it is seen as a sham or otherwise does not truly represent the arrangement and the agreement between the parties". The learned judge criticised what he described as the Tribunal's view "that the written agreement was the primary evidence and the other indicia were to be measured against that primary evidence", considering that in doing so, the written agreement was given a prominence it did not deserve. It is unnecessary to determine the extent to which the criticism was well-founded, for ultimately the learned judge determined the appeal on another basis, that the facts led inevitably, or necessarily, to "the only conclusion" that the deceased was a "worker" and not an independent contractor. It is with that question I finally deal.

Facts that arguably suggest the deceased was an independent contractor

1 The deceased had a security agent's licence and not merely a security guard's licence.

2 Mr Clarke made it clear to the deceased that he would be engaged as an independent contractor and not as an employee.

3 Mr Clarke told the deceased that he would have to register with the Australian Taxation Office for an Australian Business Number.

4 The parties signed a written agreement that described the deceased as a subcontractor and provided:

(a) that the deceased would be paid upon him forwarding a tax invoice charging for his services in the previous month and upon which he would be paid within 35 days of receipt;

(b) for termination of the relationship in accordance with its terms and not in accordance with an award;

(c) for the deceased employing others to do the work he had contracted to do, subject to them being licensed, properly trained and competent, and subject to them being approved by the appellant;

(d) that the deceased was to provide evidence of public liability insurance and give to the appellant full details of his ABN;

(e) that the deceased acknowledged that he was an independent contractor and that the relationship of master and servant did not arise and was expressly denied.

5 The deceased was not paid a wage in accordance with an award and was paid an agreed amount of $80 for shifts, regardless of actual time worked.

6 Entitlements to recreation, sickness and other types of leave were not part of the agreement and no allowance for payment of superannuation was made by the appellant.

7 The deceased was paid only on presentation by him of a monthly invoice and income tax was not deducted from the payment.

8 The appellant did not arrange for workers compensation insurance cover with respect to the deceased.

9 The deceased was free to work for others (but it would have been difficult for him to do so and at the same time be available to work for the appellant).

Facts that arguably suggest the deceased was a worker

2 The requirement of the written agreement that the deceased would "comply with all directions by Tasmanian Protective Services as to the method by which the services are provided".

3 The appellant provided the deceased for his use while working a vehicle, all the expenses of which were paid by the appellant, and it also provided a mobile telephone for his use while working. The only equipment he provided was a torch. Otherwise, he made no capital investment.

4 The deceased was held out to others as the appellant's representative, in that the vehicle he used bore its identifying signs, he wore the company's badge on his uniform and he left the company's calling cards at premises he visited.

5 Work was allocated daily, depending on the work being available.

6 The deceased worked for no-one else at the time and it would have been difficult for him to do so and at the same time be available for the appellant.

7 The deceased had virtually no business records, had not arranged for public liability or sickness and disability insurance cover and had not obtained an ABN, nor had Mr Clarke pressed for it.

8 Much of the manner in which the deceased carried out his work was controlled by the appellant. For example, the agreement specified what had to be done in response to alarm calls and the appellant's Standard Operating Procedures specified what he had to do at the start and end of each shift, and what was required of him in regard to maintenance of the vehicle he used, driving it to and from assignments and driving it in response to alarm signals and back-up requests. Apart from a discretion as to the order in which, and the times at which, he visited premises on a list provided by the appellant, he had little other discretion as to the way in which he did the work.

9 The use by the deceased of the vehicle supplied by the appellant was controlled by the policy the deceased signed. For example, it prohibited him from smoking or eating in the vehicle.

11 The deceased was provided with details of the properties he was required to visit each night and the number of times he had to visit them and, from time to time, Mr Clarke made contact with him to obtain a report as to how matters were proceeding during a shift (although a week might pass without such contact being made).

38 The Tribunal was prepared to give much more weight to the terms of the signed agreement than the learned judge. It regarded the agreement as the primary evidence of the relationship and even if it was not a sham, the Tribunal thought that it should only be disregarded if the evidence as a whole showed that it did not truly represent the arrangement and the agreement between the parties. I think, however, that the signed agreement could largely be treated as representing the arrangements and agreement between the parties without having to accept every part of it in that regard. It represented what the parties had agreed about many things, not merely that the deceased would be an independent contractor, but also, for example, that the deceased would "comply with all directions by Tasmanian Protective Services as to the method by which the services are provided". The latter provision was more consistent with the deceased being a worker than an independent contractor. The Standard Operating Procedures were also to that effect. Having regard in particular to the right to the control and the actual control that was or could be exercised by the appellant, together with the lack of investment by the deceased and the way in which he was held out as the appellant's representative (by signs, badges and other ways), if I had constituted the Tribunal, I would have concluded that the deceased was employed under a contract of service, having regard to the extent to which he was subject to the control of the appellant.

39 I have found it a far more difficult question to determine whether the error of the Tribunal was merely one of fact or one in point of law. Ultimately I have concluded that it was an error in point of law. In my view, the deceased was shown by the evidence to be the servant of the appellant and, necessarily, that was the only conclusion open. I find close to fanciful the suggestion that he was carrying on his own business as an independent contractor when he was carrying out work which was subject to the directions of the appellant as to the manner in which he performed it, at a time when he was wearing the badges of the appellant, driving its vehicles bearing its signs, and communicating with it using its mobile telephone. He was held out as the representative of the company and in no sense was he held out as an independent contractor. The appellant's control over him was substantial and utterly inconsistent with a relationship based on a contract for services. I am not satisfied that the learned judge erred when he upheld the appeal to him.

40 For these reasons, I would dismiss the appeal to this Court.

PROTECTIVE SECURITY PTY LTD (trading as TASMANIAN

41 The questions raised on this appeal concern the basis on which a tribunal might determine a question of fact of the status of a person as a worker or independent contractor and how that finding might be reviewed on appeal. The question of status arose in the consideration of the provisions of the Workers Rehabilitation and Compensation Act 1988 ("the Act").

42 The respondent, aged 14 at the relevant time, was the dependant of a person killed in a single vehicle accident in the course of his employment, who had no other parent or guardian. The Motor Accidents Insurance Board, a statutory authority responsible for the payment of compensation for victims of motor vehicle accidents, has declined to pay benefits on the basis that the deceased was a worker within the meaning of the Act, while the respondent claims that he was not. Such are the ways of modern commerce.

43 The respondent was born in December 1987. Her mother had died in 1993 and since that date she had lived with her father and was fully dependent upon him. He had obtained work with the appellant as a security guard in January 2002 and was killed during the course of his duties in a single vehicle accident on 1 March 2002. The respondent's claim for the payment of funeral benefits and entitlements as a dependant was refused and the matter referred to the Tribunal. There, the appellant argued that the respondent was barred by reason of limitation, and succeeded in its primary contention, and that her father was not a worker under the Act. A judge of this Court upheld the respondent's appeal, finding error on the part of the Tribunal in directing itself on a question of law and, having done so, reached his own factual conclusion, having regard to the decision of the Tribunal on factual matters, that:

"... the written contract, and the circumstances in which it was signed by the deceased, did not reflect the reality of the relationship between the deceased and the respondent ...".

44 The appeal from the Tribunal was against a finding of fact in that the question of whether a person was a worker at a relevant time within the particular meaning of the Act was one for the "fact finder". In one respect, the appeal to this Court likewise is an appeal on a question of fact which requires an approach more inhibited than a determination of legal principle. A difficulty here is that the original finding of fact was expressed in negative language, namely that it was:

"... not persuaded that the deceased was at the time of his death performing his duties consequent upon a contract of service so as to be a worker within the meaning of that term in the Act."

45 The question posed by the learned primary judge in relation to that finding was:

"... whether the Tribunal's conclusion was one that no Tribunal, acting judicially and properly instructed as to the relevant law, could have reached"

"... that absent the agreement, the Tribunal would have immediately concluded that the deceased was a worker within the meaning of the Act."

46 The notice of appeal articulates two bases of error, namely:

"1 ... the learned Judge erred in law in holding that the Tribunal's decision reflected an error of law.

2 ... to so hold involved a finding that the only reasonable conclusion open to the Tribunal on the facts before it was that the deceased necessarily fell within the definition of 'worker' in the Workers Rehabilitation & Compensation Act 1988 whereas on the facts before the Tribunal the Tribunal's characterisation was one which was reasonably available."

47 In order to consider the first basis for this appeal, it is necessary to first see the basis of the appeal brought at first instance. The notice of appeal from the decision of the Tribunal claimed error in the following terms:

"1 The learned Chief Commissioner erred in law in that on the whole of the evidence presented at the Tribunal, the Learned Chief Commissioner should not and could not have been satisfied that the deceased was an independent contractor as opposed to a worker.

2 The Learned Chief Commission [sic] failed to consider and/or give any proper weight to evidence before the Tribunal, namely:

(a) the Affidavit sworn by Jason Ronald Clarke on 9 March 2002;

(b) the failure of the deceased to engage in remunerative employment for the majority of his life;

(d) that the agreement was ongoing and was not to produce a set result;

(e) the provision of identity cards by the Firstnamed Respondent for use by the deceased;

(f) the provision of incident forms by the Firstnamed Respondent for use by the deceased;

(g) the failure by the Firstnamed Respondent to make any claim against the deceased or his estate following the accident;

(h) the use by the deceased of the Firstnamed Respondent's vehicle in a personal capacity.

3 The Learned Chief Commissioner found that the deceased could delegate work to another properly authorised and approved person when such finding was not open and was contrary to the evidence;

4 The Learned Chief Commissioner found that the Firstnamed Respondent was performing work on behalf of other security companies for the State Government and the Glenorchy City Council, when such finding was not open and was contrary to the evidence;

5 The Learned Chief Commissioner failed to consider adequately or at all the provisions of the Australian Tax Office 'Step by Step Guide - Australian Business Number (ABN)' or the Australian Master Tax Guide provisions to which he was referred;

6 The learned Chief Commissioner found (in effect) that the deceased's brother was working under the same arrangement as applicable to the deceased when such finding was not open on the evidence;

7 The Learned Chief Commissioner found that the deceased's failure to make 'necessary arrangements' to properly set up a business could be explained by a lack of time, oversight or tardiness when such finding was not open on the evidence, and further that the evidence suggested the deceased did not intend to make any 'necessary arrangements';

8 The Learned Chief Commissioner failed to consider whether the agreement was a 'sham' designed by the Firstnamed Respondent to avoid the necessity of paying:

9 The Learned Chief Commissioner failed to consider the totality of the relationship between the deceased and the Firstnamed Respondent as to whether the deceased was a worker or a sub-contractor, and thereby placed excessive emphasis on the terms of the agreement;

10 The Learned Chief Commissioner failed to properly apply the rationale in Northern Sandblasting v Harris (1997) 188 CLR 313 in determining whether the deceased was a worker or an independent contractor, namely whether 'the work which the contract has agreed to do is not done as the representative of the employer', when all evidence before the Tribunal indicated that the deceased was working as the representative of the Firstnamed Respondent.

11 The Learned Chief Commissioner failed to consider whether the agreement was in fact operative, given that it was never properly executed."

48 It is clear that the claim of error involved mixed questions of fact and law. It challenged the conclusion reached on the basis of incorrect internal reasoning and erroneous self-direction or application of legal principle. If the latter was inherent in the former, then the decision reflected an error of law. In that eventuality, the second portion of the ground of appeal brought to this Court, even if successful, would not entitle the appellant to succeed. Although both components of this appeal will be considered, the distinction between the components remains important.

49 Central to this appeal is the issue of the distinction between employment as a worker or engagement of an independent contractor. Much of the evidence placed before the Tribunal was not in issue.

50 The appellant conducted a commercial enterprise which provided security against theft and damage to property. It had entered into contracts with other commercial enterprises, corporations and government agencies. It had entered into, by way of tender, an agreement with the Department of Education. That agreement required the appellant to indemnify the Department against loss, damage or legal liability:

"arising from carrying out the Contracted Services to the extent that the injury, death, damage or loss is attributable to an act or omission, negligent or otherwise, of the Contractor or the Contractor's employee, agent or subcontractor"

"B.10.1 The Contractor must take out, and keep current with an insurance office approved in writing by the Crown, the following Insurance:-

(a) public risk insurance to cover liability for personal injury, death or property damage arising from the Contractor's obligations under this Agreement, for an amount not less than TEN MILLION DOLLARS for any one claim or series of claims arising out of a single occurrence. The policy must extend to cover the Contractor's employees, agents and sub-contractors engaged in the carrying out of the Contracted Services;

(b) worker's compensation insurance to cover the Contractor against any liability imposed by statute."

"B.15.2 Despite the degree of direction, control or supervision which the Crown directly or indirectly exercises over or in respect of the Contractor, or the Contractor's employees, agents or sub-contractors in the discharge of duties, obligations, and covenants under this Agreement, the Contractor is taken to be and remain an independent Contractor. The sub-contractors, employees and agents of the Contractor are taken to be and always to have been, and remain, sub-contractors, employees or agents of the Contractor."

51 The agreement provided that despite the degree of supervision and control by the Department, the status of the appellant and its "sub-contractors, employees and agents" remained unchanged. However the rights of the appellant were restricted in its powers of delegation by cl 23, which provided:

"B.23.1 Without the prior written consent of the Delegate, the Contractor must not sub-contract, assign part with or be relieved from, any of its rights, powers and obligations arising under this Agreement."

It permitted only the employment of security officers who were licensed and registered on an approved contractors' list (cl C3.1.1):

"C3.1.1 The Department is committed to ensuring that Security Officers performing duties at its Sites are skilled professionals with the highest ethical standards. In the delivery of any Services to any of the Sites, the Contractor shall only deploy Security Officers that are registered on the Approved Contractors List ('Registered Security Officers')."

52 The Department further provided for criteria as to the terms of employment, supervision of, and equipment for, security officers in terms which included personal hygiene (C4.3), dress (C4.2), fitness (C4.4), conduct (C4.6.1) and drug taking (C4.6.4). Examples of the detailed requirements are shown in terms relating to equipment, conditions of employment and conduct, expressed in the following terms:

"C3.4.1 The Contractor shall pay its staff in accordance with the relevant award or registered employment agreement.

C3.4.2 The Contractor shall provide or otherwise ensure that their Security Officers have all equipment necessary for the safe and efficient provision of Services, including, without limitation:-

* Alternative form of functional communications (radio, Telecard, etc),

C4.6.3 A Security Officer while on duty in a public or other area shall conduct himself/herself in a quiet, courteous manner, being alert, helpful, efficient, conscientious and in keeping with the standing of the position. The following acts shall render a Security Officer liable to removal from duty and cause the Department to review the Contract:

(d) Acting in a manner that may be construed as harassment, including but not limited to sexual harassment.

(f) Lounging around in public view - eg hands in pockets, leaning against walls.

(g) Conduct unbecoming of a Security Officer, including dishonesty, threatening violence or disobeying a lawful order or instruction from the Site Manager, the Department, or sworn member of the Tasmania Police."

The degree of control required of the appellant in relation to security officers was significant and extensive.

53 The appellant engaged persons as security officers through a contract in common form. On 13 January 2002, the father of the respondent entered into a contract with the appellant. It described the deceased as a "sub-contractor" and relevantly stated:

Tasmanian Protective Services has entered into agreements with various clients to provide alarm monitoring and alarm response services and static guard services throughout the State of Tasmania. Tasmanian Protective Services and the sub-contractor have agreed to certain terms and conditions whereby Tasmanian Protective Services shall engage the services of the sub-contractor.

The Contract provides that in the event that Tasmanian Protective Services sub-contracts any of its services then certain terms and conditions shall apply and must be met by those sub-contractors."

54 It further provided (cl 6, par1) that the deceased was to provide services stated in a Schedule and permitted termination (cl 3, par5) by one month's notice. The terms or conditions of the contract did not include many of the terms of the agreement made between the appellant and the Department outlined above. The appellant was committed to a degree of control and supervision which was not reflected in the terms of the agreement made with the "sub-contractors". For the appellant to exercise the degree of control and supervision required, it would need recourse to powers afforded by law as an employer of labour since no such powers were afforded by contract.

55 Central to the appellant's contention of status is the agreement, cl 12, and items 3 and 5 of the Schedule, which provided:

"12 The sub-contractor hereby acknowledges that it is an independent contractor, and that nothing contained herein shall give rise to a relationship of master and servant or principal and agent, and any such relationship is expressly denied. In order to give full effect to this clause the sub-contractor agrees that it shall comply with all Federal, State and local authority statutes, laws, rules and regulations pertaining to it as an employer including, but not exclusively, all taxation, superannuation and workers compensation legislation.

The sub-contractor shall forward a tax invoice to Tasmanian Protective Services, such invoice to cover the prior calendar month. The invoices shall be forwarded to Tasmanian Protective Services on or before the seventh day of each month, and Tasmanian Protective Services shall forward payment of that tax invoice within thirty-five days of receipt of that invoice.

(g) The sub-contractor shall give to Tasmanian Protective Services full details of all personnel employed by it, including all licences held by those personnel. The sub-contractors hall also provide satisfactory evidence of possession of current public liability insurance for a sum not less than Ten Million Dollars. Being the current amount prescribed as appropriate by the contractor."

56 The evidence placed before the Tribunal was that the practical implementation of the terms of the contract differed from that stated. The tax invoice shows claims of $1,656 for the period 1 - 28 February 2002, with no invoicing of any GST component or other deductions. In its insurance proposal of 29 May 2001, the appellant stated:

"C Do you insist on evidence of workers compensation insurance from contractors?

(General Question C) that it insisted on evidence of workers compensation insurance from contractors. The deceased had no such insurance. No ABN number had been issued to the deceased. The patrol run sheet required detailed accountability for time. Documents (Standard Operating Procedures, Vehicle Usage) existing before the date of the contract required far more accountability than that stated in the agreement. The vehicle usage document included a term:

"14 All employees shall have deducted from their wages an amount of 5% of their nett pay, until the amount deducted reaches $400.00. This amount will be kept at this level by the company to cover insurance excess in the event of a claim arising, or to cover any damage caused through negligence or non compliance of standing orders with respect to equipment and vehicles. The balance of this amount of this shall be refunded on termination."

57 There was no evidence of its deduction or repayment. The only evidence relating to repayment of any item is contained in a letter of 15 August 2002 from the appellant's solicitor denying payment of a sum of $77, or objection to pay, but it is not clear to what the amount refers.

58 Analysis of the terms of the agreements, directives and associated documentation has been necessary to see whether there had been an error of law in the Tribunal's approach in accepting the document of 18 January 2001 as "the primary evidence of their relationship and ought only be disregarded if on the evidence as a whole it is seen as a sham or otherwise does not truly represent the arrangement and agreement between the parties".

59 Comparison of the written agreements and documentation shows that whatever the effect of the terms of the agreement it ought not to have been regarded as a "primary" starting point, determining the outcome unless and until other evidence altered its import.

60 There was other significant evidence placed before the Tribunal. The respondent gave evidence that her father worked on a "rotational" shift basis, with regular hours, and drove a marked vehicle, provided by the appellant, to and from work. He wore an issued uniform and obtained petrol by means of a credit card issued to him. He was paid monthly. Little additional material was provided by Mr Clark, a director of the appellant, to the Senior Trust Officer of the Public Trustee. Mr Clark was called as a witness by the respondent at the Tribunal hearing, an unusual course probably required by the "tactics" of the case. The learned primary judge succinctly detailed the evidence of Mr Clark ([2004] TASSC 35, pars19 - 27) and it is unnecessary to repeat it. The Tribunal had found Mr Clark not to be "an impressive witness".

(a) any person who has entered into, or works under, a contract of service or training agreement with an employer, whether by way of manual labour, clerical work or otherwise, and whether the contract is express or implied, or is oral or in writing; and

(b) any person or class of persons taken to be a worker for the purposes of this Act -

and when used in relation to a person who has been injured and is dead, includes the legal personal representatives or dependants of that person or other person to whom or for whose benefit compensation is payable."

62 The Tribunal was required to receive the evidence, consider and analyse it and make findings of accuracy. Having established a factual matrix by acceptance, rejection and assimilation, it was then required to draw inferences from the accepted material and derive a conclusion. That conclusion was whether or not the whole of the evidence accepted established the deceased to be a worker within the meaning of the legislation. The methodology is well accepted as a "judicial" form of reasoning, especially where the court or tribunal is both the "fact finder" and the "applier" of legal principle (Mahony v Industrial Registrar of New South Wales (1986) 8 NSWLR 1; Hope v Bathurst City Council [1980] HCA 16; (1988) 144 CLR 1; Vetter v Lake Macquarie City Council (2001) 202 CLR 429; The Australian Gas Light Co v The Valuer-General (1940) 40 SR (NSW) 126). With due respect to the Tribunal, it did not employ the appropriate methodology. Having used as a commencing point the primacy of the agreement of January 2002, it stated:

"Notwithstanding this agreement the other factors that have been identified as being relevant to the relationship between the parties"

and proceeded to list some 19 other matters as relevant, without assessing their import. After consideration of the evidence of Mr Clark and non-compliance with some of the terms of the agreement, it stated:

"All of this supports rather than detracts from the written agreement"

without evaluation. It was this process which led to the ultimate finding that:

"Taking all of the above matters into account I am not persuaded that the deceased was at the time of his death performing his duties consequent upon a contract of service so as to be a worker within the meaning of that term in the Act."

63 The commencing point was the legislative provision defining "worker". It was not the agreement. The issue concerned an approach to beneficial legislation which originated in the 19th Century. Parliaments enacted protective legislation providing for health, safety and compensation for employees. The Act defines a worker in wide terms. The question to be answered by the Tribunal was whether the father of the respondent was a person within that legislation on the whole of the evidence placed before it. It was not whether the remaining evidence rebutted an assumption based on a particular document or portion of the evidence. The respondent bore the onus of proof based on the whole of that evidence and was not required to rebut a presumption based on a particular document.

64 The learned primary judge correctly identified the error of law in his reasons for judgment at par46 and proceeded to direct himself, again correctly, in accordance with authority, as to the "totality of the relationship" Hollis v Vabu Pty Limited [2001] HCA 44; (2001) 207 CLR 21; Colonial Mutual Life Assurance Society Ltd v Producers and Citizens Co-operative Assurance Co of Australia [1931] HCA 53; (1931) 46 CLR 41 and Stevens v Brodribb Sawmilling Co Pty Ltd (1985) 160 CLR 16. The decision of the Tribunal was a result of an error in the application of legal principle.

Protective Security Pty Ltd v Bedelph [2004] TASSC 128

At a glance

Court

Decision date

Before

Catchwords

Source

Catchwords

Judgment (220 paragraphs)

Protective Security Pty Ltd v Bedelph [2004] TASSC 128 (11 November 2004)

Parties

Cases Cited (16)