Stevenson v Barham

It was regarded as clear that this agreement was a share-farming agreement within the meaning of the Agricultural Holdings Act 1941, but I do not think anything turns on this. In my opinion it is also clear that it is a partnership agreement in the proper sense of that term. The agreement is one under which each partner is to provide certain capital assets for the purposes of the partnership as particularized in the agreement itself. Each is to supply the requisite labour for certain specified partnership activities. It is I think also clear that the agreement does not require either partner to perform personally the work involved in that aspect of the partnership activities for which he is to supply labour. However, I think it fair to say that the agreement contemplated that Barham would supply at least some of the labour by his own individual work.

At the hearing before Kelleher J. evidence was given on behalf of the applicant Barham and at the end of his case Kelleher J. permitted counsel for the respondent Stevenson to make a submission with respect to jurisdiction without requiring him to elect whether or not he proposed to call evidence. After hearing argument, Kelleher J. concluded that he had no jurisdiction because the agreement did not answer the description, in s. 88F, i.e., "any contract or arrangement or any condition or collateral arrangement relating thereto whereby a person performs work in any industry". He said as follows:

It is true that the contract or arrangement led to the performance by the applicant of work in an industry but, as appears from the decision in Becker's Case [27] , not all such cases are necessarily within the purview of s. 88F (1). In substance it was a business venture of a type traditionally carried on in the rural sector, conducted on a partnership basis and involving the risks attendant upon its operation. It was not, in my view, a transaction necessarily in intention or effect subversive of the scheme and purposes of industrial legislation, nor a case in which work was performed under some form of contractual arrangement with a person who could be an employer, nor one where the respondent was in the position of an employer or a contractor getting or purporting to get work done for himself in some way. 1. [1972] A.R. (N.S.W.) 298.

In the Court of Appeal, Street C.J. was in favour of making the order that Kelleher J. should duly hear and determine the matter because he took the view that Kelleher J. had been wrong in not requiring counsel for Stevenson to elect before hearing his submissions on want of jurisdiction. He made some general observations concerning the nature of s. 88F and said that the question of whether an agreement fell within that section could only properly be determined upon a consideration of the whole of the evidence that the parties seek to put before it and that accordingly it was not open to a party to contend at the end of an applicant's case that there was no jurisdiction unless he elects to call no evidence himself. Hope J.A. considered the terms of the agreement and referred to a number of decisions of the Industrial Commission, to the decision of the Court of Appeal in Ex parte V.G. Haulage Services Pty. Ltd.; Re Industrial Commission of N.S.W. [28] and to the decision of this Court in Brown v. Rezitis [29] . He said that it was clear that the section was not limited to a contract for the provision of services, although that was no doubt the commonest form of agreement to which the section did apply. He said that it was not enough to take an agreement outside the section that it was either a share-farming agreement or a partnership agreement or both. He concluded that the agreement of 5th November 1968 had the "necessary industrial colour and flavour" and said [30] :

If the parties had so desired, the contract between them could have been one of employer and employee, and, if the contract which was entered into were avoided by the Commission the defendant could be regarded as a person standing in the position of an employer for whom the plaintiff performed work. He evidently regarded those conclusions as sufficient to bring the contract within s. 88F. With due respect I am unable to agree that, without substantial transformation, the contract could have been one of employer and employee. I do not think that, if it were avoided, there would be revealed a situation in which the appellant Stevenson could be regarded as a person standing in the position of an employer for whom the respondent Barham worked. If in fact the agreement were avoided, one would find Barham running and milking his own cows on someone else's property and dividing the net proceeds of that operation with the owner of the property. It is I think, a completely inadequate, and indeed misleading, description of that situation to say that it is one under which Barham performed work for Stevenson or that Stevenson stood in the position of an employer of Barham. It is not to be supposed however that an examination of what would be revealed if the contract were avoided is a test of whether it falls within the section and it is certainly not the test. It may in some cases be some indication of whether the contract, though not a sham, is the kind of subterfuge of which Barwick C.J. spoke in Brown v. Rezitis [31] . 1. [1972] 2 N.S.W.L.R. 81. 2. (1970) 127 C.L.R. 157. 3. [1975] 1 N.S.W.R., at p. 45. 4. (1970) 127 C.L.R. 157.

Hutley J.A. dissented upon the ground that there was material upon which Kelleher J. could properly arrive at his conclusion, notwithstanding that some other judge might have arrived at a different decision. He relied upon the authorities concerning a writ of mandamus and in particular upon R. v. War Pensions Entitlement Appeal Tribunal; Ex parte Bott [32] and the passage from the joint judgment of Rich, Dixon and McTiernan JJ. [33] for the view that the Court of Appeal could not interfere unless Kelleher J. had either actually or constructively refused jurisdiction. Taking the view that he had not done so, Hutley J.A. held that there was no basis for the issue of an order in the nature of a mandamus. In the appeal before this Court this point was not raised, and the only point argued was whether the agreement did answer the description in s. 88F (1).

1. (1933) 50 C.L.R. 228. 2. (1933) 50 C.L.R., at p. 242.

In the Industrial Commission various views have been expressed from time to time as to the proper construction of s. 88F and as to whether any and what restrictions operate to confine the apparent scope of the very wide words used. It is not necessary for present purposes to review all those authorities. Many of them are referred to in the decision of the Commission in Court Session, In re Becker and Harry M. Miller Attractions Pty. Ltd. [No. 2] [34] , but before coming to that decision it is necessary to refer first to the decision of this Court in Brown v. Rezitis [31] . The actual decision in that case was that a person may be a party to proceedings under s. 88F though not a party to the contract or arrangement in question, and that the power of the Commission to make an order for the payment of money under sub-s. (2) is not limited to the making of an order for payment of money by one of the parties to the contract or arrangement but extends to such orders as can reasonably be thought to have a real connexion with the making, variation or avoidance of the contract or arrangement. Barwick C.J. said [35] :

It must be borne in mind that one of the purposes of the section is to deal with subterfuges, subterfuges which will take the worker out of the relationship of master and servant and therefore out of the operation of an industrial award designed, amongst other things, for the protection of workers in industry. There may be persons involved in the subterfuge who are not parties to the contract or arrangement but who are in reality the actors deriving benefit from the making or the execution of the contract or arrangement.

Also the power given to the Commission includes a power to declare the contractual arrangements void as from their making, not merely void as between the parties, but absolutely void. If there are other persons whose rights are known to depend on the continuance of the contract as a valid instrument according to its terms, then natural justice may in the circumstances require the Commission to afford such persons an opportunity to be heard. Again the avoidance of the contract or arrangement may be a step in uncovering the real transaction benefiting at the expense of the worker parties other than those in whose name the contract or arrangement was apparently made.

His judgment is primarily directed to the proper construction and scope of sub-s. (2), and the question whether there was any basis for making the order actually made by the Industrial Commission in that case, namely an order that a variety of persons having connexions both close and remote with transactions could be made jointly and severally liable for the whole of the amount decided upon as necessary to restore the applicant to his previous position. 1. [1972] A.R. (N.S.W.) 298. 2. (1970) 127 C.L.R. 157. 3. (1970) 127 C.L.R., at p. 164.

The section is clearly intended to confer a comprehensive power upon the Commission to go to the substance of an arrangement made for a person to perform work in an industry - and to do so in disregard of the legal dress in which the arrangement has been clothed - in order to put such a worker in no worse a position than if he had been working under a contract of employment protected by award conditions. The central power conferred is to avoid or vary the contract or arrangement for work actually made, upon proof of one of the grounds stated. These have in common the element that advantage has been taken of a worker to obtain cheap labour. His judgment is however confined to the kind of connexion necessary between a respondent and the contract or arrangement in order to justify the making of an order against such person to make payments to the applicant. 1. (1970) 127 C.L.R., at p. 169.

There was no occasion in that case for determining the meaning and scope of sub-s. (1) and I do not consider that that case provides any but the most indirect assistance in the solution of the present problem. The next case is the decision of the Court of Appeal of New South Wales in Ex parte V.G. Haulage Services Pty. Ltd. [38] , in which an order for prohibition was sought against the Commission in respect of certain orders made under s. 88F. In that case two agreements had been entered into in writing by one Kish with V.G. Haulage Services Pty. Ltd. The first agreement provided for him to buy a truck on terms over five years and to enter into a work agreement with that company and the second agreement provided for him to pay to the company the sum of $2,500 in consideration of it obtaining haulage and freight contracts for him over the five year period. The latter agreement was subject to and dependent upon Kish applying for and being allotted 1,000 fully paid redeemable preference shares and it was a term of the agreement that he would be at liberty to employ a driver for the truck. Kish was then serving in the Royal Australian Navy and he made an arrangement with one Fenning that he should drive the truck until Kish obtained his discharge from the Navy. In fact while the agreement was operative Kish did not drive the truck at all and all the driving was done by Fenning. It does not appear whether Fenning was employed by Kish at the award rate or otherwise, or whether he received in effect what Kish would have received from the cartage business if he had been performing the actual work himself. It was held by the Court of Appeal that the Industrial Commission had jurisdiction to make a declaration and orders under s. 88F in any case where the contract is for the performance of work of an industrial character and where "the contract can be regarded as inimical to the purposes of the Act". It was also held that it is not necessary that the contracting party should himself perform the work. For this proposition reliance was placed on Brown v. Rezitis [39] . The judgment of Jacobs J.A., in which Mason J.A. and Hardie A.J.A. agreed, rejected the two principal arguments advanced which were first that there was no jurisdiction where the applicant was not at all times a person who was working in the industry, which was alternatively expressed as an argument that there is no jurisdiction to declare contracts void in favour of an employer of labour. The second ground is not material in the present case. Jacobs J.A. said [40] :

It is not necessary that the party making the contract or arrangement should actually have performed work in the industry under the impugned contract or arrangement. It is in my view certainly sufficient in such a contract as the present one, dealing with the use of one truck sold with a work agreement relating thereto, that the contract or arrangement envisages that the party to the contract or arrangement will during its currency perform work in the industry. Once this factor is present, certainly the Commission has jurisdiction, provided the contract and arrangement has an industrial colour or flavour, if I may so describe it. He then quoted from Sheldon J. in Davies v. General Transport Development Pty. Ltd. [41] where he pointed out that s. 88F: not only proscribes [sic] transactions which directly undermine awards (see (d) and (e)) or threaten general industrial standards (which, I think, is the most relevant "public interest" referred to in (c)), but it also, in (a) and (b), strikes separately at those which are "unfair" or "harsh" or "unconscionable". Presumably, this is because any transaction, leading to work in an industry, which can be so described is regarded as inimical to the purposes of the Act. Jacobs J.A. went on to say [42] : I think this last sentence properly expresses the principle, in that the transaction must directly lead to work in the industry - that is what gives the industrial colour or flavour - but there is no suggestion in the passage that there must be throughout an identity between the person working and the contracting party. The following paragraph appears to me with respect to be for present purposes the critical passage in his judgment [42] : It seems to me that the legislature was concerned to empower the industrial tribunals, more recently the Commission alone, to examine contracts and arrangements which led directly to the employment of persons and the performance of work in any industry, not simply because the contract or arrangement in a commercial sense involves the provision of goods and services, with a consequent performance of work in an industry, but rather because the impugned agreement or arrangement itself directly envisages the employment of a person or persons in industry and has a recognizable impact upon the conditions of that employment, and, whether or not it envisages that a contracting party will perform the work, discloses a purpose that by the adoption of the arrangement the industrial objectives of the legislation will be more or less defeated. As I read that paragraph there are two essential features required: (1) that the impugned agreement or arrangement directly envisages the employment of a person or persons in an industry and has a recognizable impact upon the conditions of that employment, and (2) that it discloses a purpose that by the adoption of the arrangement the industrial objectives of the legislation will be more or less defeated. 1. [1972] 2 N.S.W.L.R. 81. 2. (1970) 127 C.L.R. 157. 3. [1972] 2 N.S.W.L.R., at pp. 86-87. 4. [1967] A.R. (N.S.W.) 371, at p. 373. 5. [1972] 2 N.S.W.L.R., at p. 88. 6. [1972] 2 N.S.W.L.R., at p. 88.

This decision was considered by the Industrial Commission in Court Session In re Becker and Harry M. Miller Attractions Pty. Ltd. [No. 2] [43] where that Commission considered an agreement between an artist and a company which acted as an artist's manager or theatrical agent. Under the agreement the manager was to obtain and negotiate contracts under which the artist would be engaged or employed by other persons to perform on the stage or in films, or on radio or television. It was held that the agreement was one "whereby a person performs work in an industry". The Commission reviewed some of the authorities and referred both to the Court of Appeal decision and to the High Court decision referred to above. They said [44] :

In our view, "a person performs work in any industry" within the meaning of s. 88F when he does so either as an employee or (the more usual case arising under the section) by some form of contractual arrangement with a person who could be an employer. "Performs work" really means "performs work for or through another". This meaning, in our view, provides the necessary industrial link. In argument before this Court counsel for the respondent accepted that construction of the words "performs work". The Commission said that " the word "whereby" has its permitted dictionary meanings of "by means of or by the agency of which"; "in consequence of, as a result of, or owing to which" and that this accords with the statement of Jacobs J.A. in the V.G. Haulage Case that the transaction must "directly lead to work in the industry" [45] ". 1. [1972] A.R. (N.S.W.) 298. 2. [1972] A.R. (N.S.W.), at p. 305. 3. [1972] A.R. (N.S.W.), at p. 308.

At first sight the expression "performs work for or through another" seems unusual, but it is I think made clear by the context of the case with which the Commission was dealing. Primarily, s. 88F is concerned with some person who "performs work for another". The addition of the words "or through" extends the operation to fit the facts of the case in question, because the point relied upon had been that the artist did not perform work for the theatrical agent but obtained employment by other persons either as an employee properly so-called or perhaps as a contractor, introduced by or otherwise obtained by the theatrical agent. The conclusion therefore was that the agency agreement was within s. 88F. Whether the actual decision depending upon the extension effected by the words "or through" is correct is not material to the present case, but it is useful as emphasizing that the basic concept is of a contract whereby one person performs work in an industry for another person. The requirement is illustrated by the decision of the Industrial Commission In re Player and Kacy [46] where the agreement in question was for the sale of his share in a partnership business and of his vehicle by one of four partners, the other three joining in the agreement as consenting parties. The partnership operated as general carriers and under the partnership agreement each partner contributed his own vehicle, which was not partnership property, and the partnership owned an additional vehicle used when a partner's vehicle was off the road. Sheppard J. said [47] :

I do not think however that the Act was intended to apply to such an arrangement. An essential figure is missing - the man who stands in the place of an employer and who seeks to get around or whose activities have the effect of getting around the award system established by the Act. No question of any award being transgressed or bypassed is involved; no question of any person doing work for some other person arises. 1. [1971] A.R. (N.S.W.) 125. 2. [1971] A.R. (N.S.W.), at p. 129.

In my opinion the present agreement does not fall within s. 88F. It is not an agreement by which one person works for another. It is an agreement by which each party agrees to provide substantial capital assets to a partnership business, each retaining ownership of such assets, and to join with the other in subsequent purchases where requisite of other capital equipment which will become partnership property, and to use all such assets in conducting the partnership business of dairy farmers. Each is to be responsible for certain identified work in the business and to provide or supply the necessary labour to carry out such work. There is no obligation to perform the work personally, though, as I have said above, the agreement contemplated that the respondent Barham would perform personally at least some of the work for which he was responsible. Under such an agreement neither party performs work for the other. Each performs or procures the performance of work for the partnership, i.e. for himself and his partner. For that reason this agreement does not meet the statutory requirement of being one whereby a person performs work for another. Nor can it be said of this agreement that it "discloses a purpose that by the adoption of the arrangement the industrial objectives of the legislation will be more or less defeated". I can see nothing in the Act generally with which such a partnership agreement is inconsistent in terms or in policy. The Act is concerned with employment generally and by s. 88E and s. 88F is extended to include other situations regarded as substantially equivalent to, or as substitutes for, employment but the present agreement does not come within the words or the spirit of those extensions. This is not to say that every agreement cast in the form of a partnership agreement or of a share-farming agreement is necessarily for that reason alone outside the section, but the present agreement certainly is.

For these reasons the appeal should be allowed with costs and the order of the Court of Appeal set aside and in lieu thereof there should be substituted an order that the application be dismissed with costs.