Swift Placements Pty Limited v WorkCover Authority of New South Wales - [2000] NSWIRComm 9 - NSWIRComm 2000 case summary — Zoe

NSWNSWIRComm

Swift Placements Pty Limited v WorkCover Authority of New South Wales

[2000] NSWIRComm 9

Industrial Relations Commission (NSW)|2000-07-01|Before: Wright J, Walton J, Hungerford J

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At a glance

Source facts

Court

Industrial Relations Commission (NSW)

Decision date

2000-07-01

Before

Wright J, Walton J, Hungerford J

Catchwords

Contract of Employment - "Casual" employee - Whether a continuing relationship amounting to an ongoing or continuing contract of employment

Source

Original judgment source is linked above.

Catchwords

Contract of Employment - "Casual" employee - Whether a continuing relationship amounting to an ongoing or continuing contract of employment

Judgment (140 paragraphs)

[1]

Industrial Relations Commission of New South Wales in Court Session

[2]

CITATION : Swift Placements Pty Limited v WorkCover Authority of New South Wales (Louise May) [2000] NSWIRComm 9 APPELLANT Swift Placements Pty Limited PARTIES : RESPONDENT WorkCover Authority of New South Wales (Inspector May) FILE NUMBER: IRC1591 of 1999 CORAM: Wright J President; Walton J Vice-President; Hungerford J Occupational Health and Safety - Appeal by employer against conviction under s 15(1) of the Act - Appellant a labour hire company - Worker engaged by labour hire company to perform work at workplace of another employer - Worker injured at that workplace - Whether legal relationship existed between worker and labour hire company - Whether worker was employee of the labour hire company - Principles to be applied - Nature of control exercised by labour hire company over worker - Control to be understood in the sense of ultimate or legal control - Whether labour hire firm acted as agent for the other employer -Whether employment of worker was transferred from labour hire company to other employer - Held, contract of employment between worker and labour hire company - Appeal dismissed

[4]

Appeal - Whether as of right or by leave - Rehearing on evidence at first instance - Criminal proceedings Criminal Appeal Act 1912 s 5AA s 5AB Industrial Relations Act 1996 s 196 LEGISLATION CITED : Occupational Health and Safety Act 1983 s 4(1) s 15(1) Accident Compensation Act 1985 (Vic) s 8 s 9 Trade Practices Act 1974 (Cth) s 45D s 45E Warman International Limited v WorkCover Authority of New South Wales (1998) 80 IR 326 Fletcher Construction Australia Limited v WorkCover Authority of New South Wales (Inspector Fisher) (1999) 91 IR 66 Clarkson v Dent (1998) 84 IR 250 Massey v Crown Life Insurance Co [1978] 1 WLR 676 Narich Pty Limited v Commissioner of Pay-roll Tax [1983] 2 NSWLR 597 Australian Mutual Provident Society v Allan [1978] 52 ALJR 407, (1978) 18 ALR 385 Stevens v Brodribb Sawmilling Co Pty Limited (1986) 160 CLR 16 Accident Compensation Commission v Odco Pty Ltd (1990) 95 ALR 641 Building Workers' Industrial Union of Australia v Odco Pty Ltd (1991) 99 ALR 735 Drake Personnel Ltd v Commissioner of State Revenue (Vic) (1998) 40 ATR 304 Pitcher v Langford (1991) 23 NSWLR 142 Mead v New England Seed Traders Pty Limited [1972] WCR 113 Poulson v John Jarvis and Co Limited [1919] 122 LTRep 471 McCartan v Belfast Commissioners (1911) 2 Ir Rep 143 Hewitt v Bonvin [1940] 1 KB 188 Attorney-General for New South Wales v The Perpetual Trustee Company (Limited) (1952) 85 CLR 237 CASES CITED : Dalgety Farmers Ltd t/as Grazcos v Bruce (1995) 12 NSWCCR 36 The Queen v Foster, ex parte The Commonwealth Life (Amalgamated) Assurances Limited (1952) 84 CLR 138 Knowles v The Anglican Church Property Trust Diocese of Bathurst (1999) 89 IR 47 Cassidy v Ministry of Health [1951] 2 KB 343 Byrne v Australian Airlines Limited (1995) 185 CLR 410 Connelly v Wells (1994) 10 NSWCCR 396 (1994) 55 IR 73 The Federal Commissioner of Taxation v J Walter Thompson (Australia) Pty Limited (1944) 69 CLR 227 Ryde-Eastwood Legues Club Limited v Taylor (1994) 56 IR 385 Doyle v Sydney Steel Company Limited (1936) 56 CLR 545 Australasian Meat Industry Employees' Union v Sunland Enterprises Pty Ltd (t/as Sundland Wholesale Meats) [1988] 24 IR 467 Licensed Clubs Association of Victoria v Higgins (1988) 4 VIR 43 Australasian Meat Industry Employees' Union v R J Gilbertson (Qld) Pty Ltd [1988] 26 IR 237 Automatic Fire Sprinklers Pty Ltd v Watson (1946) 72 CLR 435 Stevenson Jordan and Harrison Ltd v Macdonald [1952] 1 The Times LR 101 Mersey Docks and Harbour Board v Coggins and Griffith (Liverpool) Ltd (1947) AC 1 Baldi & Fletcher Pty Ltd v Rabmar Pty Ltd [1988] 25 IR 101 Steel Structures Ltd v Rangitikei County [1974] 2 NZLR 306 HEARING DATES: 09/14/1999 DATE OF JUDGMENT: 03/03/2000

[13]

4 The appellant mounted its challenge to the orders of Marks J. pursuant to s.196 of the Industrial Relations Act 1996 and s.5AA of the Criminal Appeal Act 1912 by way of an appeal as of right and as a rehearing on the evidence given at first instance. The proper approach to adopt on appeal was stated by a Full Bench ( Fisher P., Peterson and Schmidt JJ.) of the Court in Warman International Limited v. WorkCover Authority of New South Wales (1998) 80 I.R. 326 at 338-339 as follows : We accept the submissions of the appellant that the approach to be adopted by this Court to the determination of appeals brought to it in respect of criminal proceedings taken before a judicial member must be the same as that adopted by the Court of Criminal Appeal to appeals brought to it under s.5AA of the Criminal Appeal Act . Section 196(2) of the 1996 Act in applying to such an appeal the Criminal Appeal Act in the same way that it applies in the Court of Criminal Appeal requires the application of s.5AA(3) "any such appeal is to be by way of rehearing on the evidence …". There is no scope for the possibility that those words applied to proceedings here could be given a different meaning and effect to the same provision applied in the context of the Court of Criminal Appeal. The approach of the Court of Criminal Appeal to s.5AA has been discussed in numerous decisions to which we have earlier made reference, particularly Camilleri (1993) 32 N.S.W.L.R. 683 and BWM (1997) 91 A. Crim. R. 260. It follows from the principles elaborated in those cases that the appellant here is not obliged to demonstrate error of the trial judge. The appeal comes to the Court by way of rehearing and the Court will consider the question of sentence for itself. That does not mean that the appeal bench will of necessity come to a conclusion in relation to penalty different from the sentencing judge. A different result need not necessarily flow from the appeal court's exercise of the sentencing discretion; it must nevertheless exercise that discretion.

[17]

9 It is, we think, fundamental in resolving the present issue to have in mind that the ultimate conclusion as to whether Mr. Terkes was an employee of the appellant is a question of fact, although it is to be acknowledged that in reaching that conclusion questions of mixed law and fact may, and probably will, arise: see Clarkson v. Dent (1998) 84 I.R. 250 at 252-253 and the authorities cited therein. The learned authors of The Liability of Employers (Glass, McHugh and Douglas, 2nd. ed., 1979, Law Book Company) put it in the following way (at pp.69-70) : Whether or not the relationship of employer and employee exists depends upon whether the person employed works under a contract of service or a contract for services. The distinction between a contract for services and a contract of service is that, in the former case the employer can only order or require what is to be done. In the latter case, however, he can not only order or require what is to be done, but can also direct how it is to be done ( Collins v. Hertfordshire County Council [1947] K.B. 598, per Hilbery J. at p.615; [1947] 1 All E.R. 633, at p.638). This test, which may be conveniently called the control test, is the most valuable criterion for determining whether the relationship of employer and employee exists. The question whether the relationship exists is one for decision by a jury in accordance with the tests laid down by the trial judge ( Fitzpatrick v. Evans & Co . [1902] 1 K.B. 505, at p.510; Simmons v. Heath Laundry Co. [1910] 1 K.B. 543, at pp.548-9; Smith v. General Motor Cab Co. [1911] A.C. 188, at p.193). It is in this sense that statements (see e.g. Performing Right Society Ltd. v. Mitchell & Booker Ltd. [1924] 1 K.B. 762, per McCardie J. at pp.765-6; Federal Commissioner of Taxation v. J. Walter Thompson (Aust.) Pty. Ltd. (1944) 69 C.L.R. 227, per Latham C.J. at p.229) are to be understood to the effect that the question is a mixed question of law and fact. It is certainly true that if the only evidence relating to the nature of the relationship is to be found in a written document a question of law is involved ( Performing Right Society Ltd. v. Mitchell & Booker Ltd. [1924] 1 K.B. 762). However, such a situation will rarely arise in actions for damages for personal injury. There is bound to be some oral evidence of the industrial relations which existed during the period before injury occurred. It will then be for the jury to consider any written agreement in the light of evidence concerning the actual course of dealing between parties. It will be entitled to disregard the written document if this does not correspond to the real arrangement between them.

[78]

23 His Honour then analysed, but distinguished on the facts, recent decisions of both the High Court and the Federal Court concerning the nature of the relationship established between a labour hire company and a worker performing services for a third party: see Accident Compensation Commission v. Odco Pty. Ltd. (1990) 95 A.L.R. 641 and Building Workers' Industrial Union of Australia v. Odco Pty. Ltd. (1991) 99 A.L.R. 735. After referring to the decision of Balmford J. in the Supreme Court of Victoria in Drake Personnel Ltd. v. Commissioner of State Revenue (Vic.) (1998) 40 A.T.R. 304, the facts of which were said to "bear a striking resemblance to the facts in these proceedings" but with which decision his Honour disagreed, Marks J. then concluded : For the reasons which I have advanced Mr Terkes could not have been an employee of Warman at the time of the incident which gave rise to these proceedings. There is simply no evidence of any contractual relationship between him and Warman which would found any employment relationship. On the other hand there is ample evidence of a contractual relationship between Mr Terkes and the defendant. The contract came into being at the time that Mr Terkes accepted the offer to perform work at Warman and the terms and conditions were established by the offer of casual employment document. There was a clear intention to create an employment relationship. The only feature missing from the terms and conditions of the contract of employment which would otherwise clearly characterise the relationship created by the contract as being one of employment in the traditional sense was the provision of detailed direction and control in connection with the performance of the work. However it was a term and condition between the defendant and Mr Terkes that Mr Terkes would be subject to detailed direction and control by Warman personnel. To this extent there was a provision contained within the contract between the defendant and Mr Terkes concerning detailed direction and control and Warman personnel were appointed to carry this out. As I have previously indicated this is not a traditional employment situation. It is a contemporary situation now not uncommonly encountered within the business world. New and evolving techniques require the law to continually evaluate its approach to the characterisation of relationships and rights and obligations which may flow from them. Such detailed control and direction as was necessary to establish an employment relationship did not necessarily have to devolve on the defendant personally. … I have no doubt for the reasons which I have earlier outlined that there was an employment relationship on the relevant occasion between the defendant and Mr Terkes. Accordingly I find that the prosecutor has proven beyond a reasonable doubt that the defendant was the employer of Mr Terkes on 5 January 1996 whilst Mr Terkes was working at the premises of Warman. 24 Counsel for the parties helpfully provided written submissions which were supplemented by oral argument. Those submissions analysed the facts in light of the authorities as referred to in the judgment of Marks J., but with different results. Counsel for the appellant, the Hon. Mr. J. J. Macken and Mr. H. J. Mater , for their part, made the following main points - (1) Marks J. erred in determining that it was proven beyond a reasonable doubt that the appellant was the employer of Mr. Terkes on 5 January 1996 while he was working at the premises of Warman. (2) The proper statement of principle in determining whether an employment relationship existed was contained in the judgment of Mason J. in Stevens v. Brodribb Sawmilling (160 C.L.R. at p.24), namely, a prominent factor is the degree of control exercised in the sense of ultimate authority over the employee in the performance of his work residing in the employer so that he was subject to the latter's order and direction; however, control is not the sole criterion by which to gauge whether a relationship is one of employment but rather to regard it merely as one of a number of indicia which must be considered in the determination of the question. (3) On the facts of this case, Marks J. was correct in finding that substantial direction and control over the work activities of Mr. Terkes devolved upon Warman personnel in that direct control and supervision, including training and the like, were all in the hands of Warman. (4) Throughout the time Mr. Terkes was at Warman's premises, and particularly on the date of the accident, the appellant could not control, and had no right to control, the work which Mr. Terkes performed. (5) Marks J. was in error in finding that all indicia other than control pointed to an employment relationship between the appellant and Mr. Terkes; those indicia included the absence of ultimate authority in the appellant to order and direct Mr. Terkes in the performance of his work, the appellant paid remuneration to Mr. Terkes but the amount was reimbursed by Warman, Warman had the exclusive responsibility to provide and maintain equipment (including personal protective equipment) for Mr. Terkes' use, Mr. Terkes was not obliged to perform work when it was offered by the appellant, the hours of work were determined by Warman not by the appellant and the deduction of income tax by the appellant from Mr. Terkes' wages was merely a paper transaction. (6) To the extent it has been said (see Stevens v. Brodribb Sawmilling per Mason J. (160 C.L.R. at pp.28-29) and Pitcher v. Langford ((1991) 23 N.S.W.L.R. 142 per Kirby P. at p.150) that the notion of "control" is particularly inapposite in determining the nature of some relationships in modern post-industrial society, such observations have no application to the present case which involves an unskilled labourer who was, in fact, under constant and detailed instruction and supervision by Warman. (7) Adopting the classic test of "control" for determining whether a particular relationship is that of master and servant, as stated by Wilson and Dawson JJ. in Stevens v. Brodribb Sawmilling (160 C.L.R. at p.35) Mr. Terkes was not subject to the command of the appellant either as to what he should do in the course of his employment or as to how he should do it. (8) Marks J. was in error in not following the reasoning in Accident Compensation Commission v. Odco , Building Workers' Industrial Union v. Odco and Drake Personnel v. Commissioner of State Revenue so as to fail to hold that Warman, and not the appellant, was the real employer of Mr. Terkes; essentially from those authorities, his Honour was wrong in not recognising the overriding principle that where the day-to-day control of the work being carried out rests with the client (here Warman) and not with the labour hire agency (here the appellant) then the client is the employer and not the agency. (9) Notwithstanding the language used in the apellant's document offering casual employment to Mr. Terkes, the totality of the evidence established that the contract between those persons was not a contract of employment; alternatively, the evidence in that document did not permit a finding beyond reasonable doubt that on the relevant date when Mr. Terkes was working at the premises of Warman he was an employee of the appellant. (10) The document outlining the benefits of temporary staffing provided by the appellant to Warman dealt with "paper matters" and could not prevent a court discerning the real nature of the relationship between parties which here, on the facts, was not that of employer-employee as between the appellant and Mr. Terkes: see Pitcher v. Langford (23 N.S.W.L.R. at p.162 per Handley J.A.). (11) Marks J. was in error in concluding there was no evidence of any contractual relationship between Mr. Terkes and Warman which would found a relationship of employment in that there was abundant evidence of such a contract meeting the control test and other indicia; there was no need for the terms to be formally agreed as they could be implied from the facts which here pointed to Warman as being the employer. (12) The contract between the appellant and Mr. Terkes was one of agency by which the appellant arranged a contract of employment between Mr. Terkes and Warman. The appellant also was Warman's agent with respect to the transmission of wages and entitlements to Mr. Terkes in consideration of fees paid by Warman to the appellant. 25 In his oral submissions, Mr. Macken vividly described in the following way how the relationships between the various parties should be seen : Many employers these days - and his Honour refers to this development - outsource the accounting department, outsource the maintenance department, outsource the accountancy department, outsource the public relations department. They get rid of them to other firms and you can just as easily outsource your personnel employee relations department and that is the way, we submit, this whole question should be approached.

[82]

28 Whether a person is the "employee" of another who is the "employer" (or, to use the older terminology, the "servant" of a "master") at any particular time or for any particular purpose seems to us, as we have indicated earlier, to be a question of fact to be determined according to given criteria: see Mead v. New England Seed Traders Pty. Limited [1972] W.C.R. 113 per Kerr C.J. and Hope J.A., with whom Holmes J.A. agreed, at pp.113, 118. However, as Wilson and Dawson JJ. observed in Stevens v. Brodribb Sawmilling (160 C.L.R. at p.37), "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". In Poulson v. John Jarvis and Co. Limited [1919] 122 L.T. Rep. 471, a case not dissimilar to the present in which the issue was which of two employers was the true employer, Lord Sterndale M.R. referred (at p.472) to the difficulty in answering such a question by observing that there were "many cases on the subject, and they are not easy to reconcile with one another, the reason being … that it comes eventually to a question of fact upon which the judges have drawn different conclusions in the different cases, and that from the reports it is not easy to discover the exact reasons for drawing the different conclusions". The Master of the Rolls added (at pp.474-475), by adopting the words of Lord Loreburn in McCartan v. Belfast Commissioners (1911) 2 Ir. Rep. 143 at p.145, that : Decisions are valuable for the purpose of ascertaining a rule of law. No doubt they are also useful in enabling us to see how eminent judges regard facts and deal with them, and great numbers of recorded precedents are useful in no other way. But it is an endless and unprofitable task to compare the details of one case with the details of another in order to establish that the conclusion from the evidence in the one case must be adopted in the other case. Given the rule of law, the facts in each case must be independently considered in order to see whether they bring it within the rule or not.

[88]

It will be seen that three elements are involved: first, the relationship must entail, on the part of the servant, obedience to orders; secondly, the obedience to orders that is required is obedience to orders in doing work; and, thirdly, the doing of the work must be for the benefit of the master, that is, it must relate to his own affairs. As to the first, no more need be said than this, that the obligation of obedience exists while the relationship continues. The relationship may be voluntary; and whether voluntary or not, it may be determinable at the will of either party; but without the obligation to obey orders there can be no meaning in the relationship, and it therefore cannot subsist. As to the second element, that the obedience entailed must be obedience to orders in doing work, the point which is vital is that the master's authority must extend both to ordering that the work shall be done and to directing how it shall be done. Bramwell L.J. said, in Yewens v. Noakes (1880 6 Q.B.D., 530, at pp.532, 533: "A servant is a person subject to the command of his master as to the manner in which he shall do his work"; and in Mersey Docks and Harbour Board v. Coggins and Griffith (Liverpool) Ltd. (1947) A.C. 1, at p.17, Lord Porter said "… it is not enough that the task to be performed should be under his (the master's) control, he must also control the method of performing it". Citations to the like effect might be multiplied. As to the third element, the statement that the doing of the work must be for the benefit of the master does not mean, of course, that the direct benefit from the work itself must necessarily accrue to the master; he may, without altering the relationship, direct his servant to do work which will benefit another. A good illustration of this may be found in Mersey Docks and Harbour Board v. Coggins and Griffith (Liverpool) Ltd. (1947) A.C. 1. But the doing of work by one person must be required by another as a means whereby that other may attain ends of his own. A foreman, a head of a government department, or an army officer, may have full power to give the most detailed orders to a subordinate as to the manner in which the latter shall do work, and yet no one would suppose that the relation of master and servant exists between them. The point is that the power of direction residing in a person must belong to him for the purpose of enabling him to conduct his own affairs; and only if that is the situation is it possible for him to complain that conduct causing him to lose the service is an infringement of a right to enjoy them which he may vindicate in an action per quod servitium amisit. (emphasis added) 33 The above statement of the legal principle, consistent as we think it is with what was said in Hewitt v. Bonvin by MacKinnon L.J. (with whom du Parcq L.J. and Bennett J. agreed), laid stress on the initial requirement, that is, the creation of a legal relationship between the parties concerned for the performance of work. Then, but only then, arises the need to ascertain whether the relationship so created be one of employment (under a contract of service) or of some other kind (such as, principal - independent contractor or principal - agent). In Dalgety Farmers Ltd. t/as Grazcos v. Bruce (1995) 12 N.S.W.C.C.R. 36, Kirby A.-C.J. put the matter in this way (at pp.47-48) : In determining whether a contract of service has been entered, and if so with whom, it is necessary to look to the circumstances of the engagement and to ascertain who it was that offered employment, and whether the worker accepted that offer. To determine whether what then ensued was indeed employment (in the sense of a contract of service) it is necessary to look to the whole of the relationship. 34 His Honour then dealt with the relevant criteria, including the right of control, in categorising a relationship; we will in due course deal with that process. Clarke and Cole JJ.A. agreed with the Acting Chief Justice. 35 Marks J. found that "there is simply no evidence of any contractual relationship between (Mr. Terkes) and Warman which would found any employment relationship". In denying liability under the Occupational Health and Safety Act as the employer of Mr. Terkes, the appellant challenged his Honour's finding and submitted "that the dealings between Mr. Terkes and Warman evidence a contract of employment between them, with the arrangements for payment of wages and other 'paper matters' being outsourced to Swift". Against his Honour's finding as to the evidence, the appellant based its submission on "the existence of abundant evidence" of an employment contract between Mr. Terkes and Warman which met the control test and other indicia of employment. The evidence relied upon was said by Mr. Macken to be that Warman directed Mr. Terkes what work to do, told him where to work within the premises, told him when to work on various projects, told him what hours he would work (including any overtime), issued him with appropriate safety equipment, instructed and trained him how to perform certain tasks, transferred him between various sections of the factory and told him which supervisor of Warman he was to report to; also, the Assistant Foundry Manager of Warman believed he had the power to suspend Mr. Terkes if thought necessary.

[94]

41 We turn now to the decisive issue of the relationship as between Mr. Terkes and the appellant. The relationship is to be viewed, in our opinion, in light of contemporary employment practices by applying the established legal principles and tests but recognising the variety of different employment situations which have arisen in modern Australian society. At first instance in this case, Marks J. recognised as much, in a way with which we agree, when he said that "this is not a traditional employment situation" but was "a contemporary situation now not uncommonly encountered within the business world" so that "new and evolving techniques require the law to continually evaluate its approach to the characterisation of relationships and rights and obligations which may flow from them". His Honour was directing those comments particularly at the use of the control test in assessing the nature of a work relationship, a test heavily relied upon by the appellant before his Honour and on appeal before us. As Kirby A.-C.J. commented in Grazcos (12 N.S.W.C.C.R. at p. 48) - "… those relationships can be quite unusual with features far distant from the ordinary engagement for weekly wages with which the courts were once so familiar". In Stevens v. Brodribb Sawmilling (160 C.L.R. at p.24), Mason J. observed, in effect, that whilst the existence of control was significant it was not the sole criterion by which to gauge the nature of an employment relationship but merely as one of a number of indicia to be considered in determining that question. His Honour relevantly added (at pp.28-29) : The traditional formulation, though attended with some complications in its application to a diverse range of factual circumstances ( Federal Commissioner of Taxation v. Barrett (1973) 129 C.L.R. at p.400), nevertheless has had a long history of judicial acceptance. True it is that criticisms have been made of it. It is said that a test which places emphasis on control is more suited to the social conditions of earlier times in which a person engaging another to perform work could and did exercise closer and more direct supervision that is possible today. And it is said that in modern post-industrial society, technological developments have meant that a person so engaged often exercises a degree of skill and expertise inconsistent with the retention of effective control by the person who engages him. All this may be readily acknowledged, but the common law has been sufficiently flexible to adapt to changing social conditions by shifting the emphasis in the control test from the actual exercise of control to the right to exercise it, "so far as there is scope for it", even if it be "only in incidental or collateral matters": Zuijs v. Wirth Bros. Pty. Ltd. (1955) 93 C.L.R., at p.571. Furthermore, control is not now regarded as the only relevant factor. Rather it is the totality of the relationship between the parties which must be considered.

[99]

44 Seen in that way, which we think was wholly open on the evidence, control by an employer over an employee is not to be viewed merely in the on-the-job situation in directing a person what to do and how to do it, but rather in the sense of the ultimate or legal control over the person to require him to properly and effectively exercise his skill in the performance of the work allocated in default of which disciplinary measures may be adopted, including the final step of dismissal. To the extent here that Mr. Macken suggested the appellant did not exercise detailed direction and control over Mr. Terkes, which was said to reside in Warman, and particularly where Mr. Terkes was regarded as an unskilled labourer, we consider that such an approach misapplied the essential nature of the control test. After all, although Mr. Terkes was a labourer he could not truly be said to be "unskilled" as he must necessarily have exercised some degree of skill, albeit perhaps in the lower range, in performing his various functions operating and cleaning machines at Warman's Artarmon factory. This aspect was considered by Denning L.J. in Cassidy v. Ministry of Health [1951] 2 K.B. 343 at 360 in the following way : It is no answer for them to say that their staff are professional men and women who do not tolerate any interference by their lay masters in the way they do their work. The doctor who treats a patient in the Walton Hospital can say equally with the ship's captain who sails his ship from Liverpool, and with the crane driver who works his crane in the docks, "I take no orders from anybody". That "sturdy answer", as Lord Simonds described it, only means in each case that he is a skilled man who knows his work and will carry it out in his own way; but it does not mean that the authorities who employ him are not liable for his negligence. See Mersey Docks and Harbour Board v. Coggins and Griffith (Liverpool) Ld. [1947] A.C. 1, 20. The reason why the employers are liable in such cases is not because they can control the way in which the work is done - they often have not sufficient knowledge to do so - but because they employ the staff and have chosen them for the task and have in their hands the ultimate sanction for good conduct, the power of dismissal.

[108]

51 We affirm the correctness of Wright J. in so approaching the issue. Here, the contract was in writing and, so, its nature is to be considered as at the time it was entered into and according to its terms in light of the circumstances surrounding its making. As Gleeson C.J. in making those remarks relied on the judgment of the Privy Council in Narich , and although we have earlier made short reference to that case, it is convenient to recite for present purposes the three principles of law stated therein and formulated by their Lordships from the judgment of the Judicial Committee in Australian Mutual Provident Society , also referred to earlier by us; those principles were stated in Narich ([1983] 2 N.S.W.L.R. at p.601) thus : The first principle is that, subject to one exception, where there is a written contract between the parties whose relationship is in issue, a court is confined, in determining the nature of that relationship, to a consideration of the terms, express or implied, of that contract in the light of the circumstances surrounding the making of it; and it is not entitled to consider also the manner in which the parties subsequently acted in pursuance of such contract. The one exception to that rule is that, where the subsequent conduct of the parties can be shown to have amounted to an agreed addition to, or modification of, the original written contract, such conduct may be considered and taken into account by the court: see the AMP case (1978) 18 A.L.R. 385, at 392; 52 A.L.J.R. 407, at 411. The second principle is that, while all relevant terms of the contract must be regarded, the most important, and in most cases the decisive, criterion for determining the relationship between the parties is the extent to which the person, whose status as employee or independent contractor is in issue, is under the direction and control of the other party to the contract with regard to the manner in which he does his work under it: see the AMP case (at 387; 408). The third principle relates to cases where the parties have, as in the present case, included in their written contract an express provision purporting to define the status of the party engaged under it, either as that of employee on the one hand, or as that of independent contractor on the other. With regard to a clause of this kind Lord Fraser of Tullybelton said in the AMP case (at 389, 390; 409): "Clearly cl.3, which, if it stood alone, would be conclusive in favour of the Society, cannot receive effect according to its terms if they contradict the effect of the agreement as a whole. Nevertheless, their Lordships attach importance to cl.3, and they consider that the following statement by Lord Denning M.R. in Massey v. Crown Life Insurance Co. [1978] 1 W.L.R. 676 correctly states the way in which it can properly be used: 'The law, as I see it, is this: if the true relationship of the parties is that of master and servant under a contract of service, the parties cannot alter the truth of that relationship by putting a different label upon it … On the other hand, if their relationship is ambiguous and is capable of being one or the other [ie either service or agency], then the parties can remove that ambiguity, by the very agreement itself which they make with one another. The agreement itself then becomes the best material from which to gather the true legal relationship between them.' In the present case, where there is no reason to think that the clause is a sham, or that it is not a genuine statement of the parties' intentions, it must be given its proper weight in relation to other clauses in the agreement."

[110]

53 We interpose, although it is strictly unnecessary to finally decide in view of the conclusion we have otherwise reached, that we have serious doubts of the correctness of the rejection by Marks J. of any contract between the appellant and Mr. Terkes as from 31 October 1995 and finding a contract only as from 27 November 1995. Indeed, we incline to the view that a contract (whether of service or otherwise is yet to be determined) was made between them on 31 October 1995 which contract continued on a day-to-day basis with Mr. Terkes having the status of a casual. The offer of casual employment, accepted by Mr. Terkes on 31 October 1995, was quite excessive if it was merely an "invitation to treat" rather than an "offer of casual employment". We think it to be a complete statement of the necessary and relevant conditions for the performance of work once the work be available. The fact the actual work was not then available matters not, it seems to us, and even though work be a necessary ingredient for a contract of service (see Perpetual Trustee Company (85 C.L.R. at p.299)); what matters is that "work" must be the object of the contract but which work may be performed at some future time or even from time-to-time. For instance, in The Federal Commissioner of Taxation v. J. Walter Thompson (Australia) Pty. Limited (1944) 69 C.L.R. 227 an issue was whether an employment relationship existed between a company presenting radio plays and artists suitable for the various parts on their selection after rehearsals, fees (wages) being paid for actual performances but not for rehearsals. Latham C.J. in finding the existence of an employer-employee relationship for the whole of the period concerned, including rehearsals, made the following observations (at pp.232-234) : It was argued that the fact that the terms of engagement provide that there were to be no fees for rehearsals shows that the employment related only to the actual acting on the night of the production of the play. In my opinion this is not the case. The artists were bound under their engagement to attend rehearsals, and were subject to direction during those rehearsals, though no fee was payable unless the performance actually took place. Even on the night of the actual performance, detailed control and supervision by the producer is essential to the performance. The fact that the artists are not whole-time employees does not show that they are not employees of the company. … … The employment of a servant may be limited to a particular occasion or may extend over a period. It may be continuous during that period or discontinuous. In the present case the artists are as truly employed for rehearsals as for the final performance, though they receive no pay unless the performance takes place and they then play their parts. They are bound to attend rehearsals as specified in their contract, and are bound to conform to the directions of the producer during those rehearsals. (emphasis added)

[114]

56 It is not our intention to further the reasoning on this aspect because, as we have said, it is strictly unnecessary to finally rule upon it here. Even so, it is an approach which obviously could well arise in situations comparable to the present and we therefore think it timely to raise it, particularly as it was argued below and was the subject of a finding by Marks J. to a contrary effect. Suffice it for us to simply refer to authorities relating to the preliminary view which we have expressed: see Doyle v. Sydney Steel Company Limited (1936) 56 C.L.R. 545 at 551, 565; Australasian Meat Industry Employees' Union v. Sunland Enterprises Pty. Ltd. (t/as Sunland Wholesale Meats) [1988] 24 I.R. 467 at 473; Licensed Clubs Association of Victoria v. Higgins (1988) 4 V.I.R. 43 at 49-50; and Australasian Meat Industry Employees' Union v. R. J. Gilbertson (Qld.) Pty. Ltd. [1988] 26 I.R. 237 at 250. For completeness on this aspect, we would add the observations of Latham C.J. in Automatic Fire Sprinklers Pty. Ltd. v. Watson (1946) 72 C.L.R. 435 at pp.452-453, as follows : The general rule with respect to contracts of employment was stated in Browning v. Crumlin Valley Collieries Ltd. (1926) 1 K.B. 522, at p.528 by Greer J. in the following words "The consideration for work is wages, and the consideration for wages is work." In O'Grady v. M. Saper Ltd. (1940) 2 K.B. 469, at p.473, MacKinnon L.J. in the Court of Appeal said: "It was rightly said … by Atkinson J. ( Petrie v. Mac Fisheries Ltd. (1940) 1 K.B. 258, at p.269), 'The question must depend, as is indicated in the notes to Cutter v. Powell (1795) 6 T.R. 320 [101 E.R. 573] ( Smith's Leading Cases, 13th ed. (1929), vol. 11, p.49), on the terms of the contract. "The right to wages depends upon whether the consideration therefor has been performed." It is submitted in the notes to that case, as I think rightly, that it must be ascertained from the contract whether the consideration for the payment of wages is the actual performance of the work, or whether the mere readiness and willingness, if of ability to do so, is the consideration.'" In the present case, the contract between the parties (clause 5) provides for the payment of salary, expenses, bonuses and commission "as consideration for his" (Watson's) "services and for the faithful observance and performance of the terms and conditions of these presents by him to be observed and performed." It is therefore, I think, clear in the present case that Watson was not entitled to salary and other payments under the contract unless he did the work of general manager for which the contract provided. (emphasis added)

[128]

70 Taking Mr. Macken's submissions at their highest, the most he could achieve by relying upon what we have found to be the limited degree of control exercised by Warman over Mr. Terkes' work would be to view Mr. Terkes pro hac vice the employee of Warman at the precise time on 5 January 1996 when he was cleaning the sand mixing machine. In Steel Structures Ltd. v. Rangitikei County [1974] 2 N.Z.L.R. 306, the New Zealand Court of Appeal considered the liability of a master to third persons due to the negligence of its employee temporarily under the direction and control of another person. Their Honours put the principle in the following way (at pp.310-311) : It is well established that there are circumstances in which the permanent employer of a tortfeasor can say that his employee was to such an extent under the control and direction of someone else in authority in a particular operation that a temporary transfer of the employee pro hac vice should be held to have occurred. Mersey Docks and Harbour Board v. Coggins and Griffith (Liverpool) Ltd. [1947] AC 1; [1946] 2 All ER 345, is the classic authority in this area. There, it was said that the burden of establishing such a transfer is a heavy one, and can only be discharged in quite exceptional circumstances. In Denham v. Midlands Employers Mutual Assurance Ltd. [1955] 2 QB 437,: [1955] 2 All ER 561, Denning LJ added that such a transfer rarely takes place when a man is lent with a machine, such as a crane or a lorry, or where a skilled man is lent so as to exercise his skill for the temporary employer. In such cases the parties do not contemplate that the temporary employer shall tell the man how to manipulate his machine or to exercise his skill. O'Reilly v. Imperial Chemical Industries Ltd. [1955] 1 WLR 1155; [1955] 3 All ER 382 is an instance of a driver being on permanent loan with his lorry, but even then the Court held that the plaintiffs had not discharged the heavy onus of establishing that the defendants had the right to direct how the particular work was to be done. In New Zealand these principles were applied by this Court in Ferguson Construction Co. Ltd. v. Hargreaves [1973] 1 NZLR 634. There, however, the situation was a little different, for the plaintiff was seeking to recover not only from his permanent employer, the owner of the crane, but also from the hirer of the crane. The difference is adverted to by Salmond on Torts (15th ed.) 619. Nevertheless, all the cases show that the test in all circumstances is one of the right to control not merely what is done but how it is to be done. Each case must necessarily be decided on its own facts, and such observations as those of Lord Denning in Denham's case are better not treated as propositions of law but instead as reflections on the facts of a particular case.

[135]

77 Shortly stated, Troubleshooters Available provided labour to builders and the persons who worked under the arrangement signed contracts with Troubleshooters Available in which it was agreed that the relationship created was one of principal-independent contractor rather than employer-employee; that agreement was supported by express provisions that the contractors were self employed, not bound to accept any work through Troubleshooters Available, payment was to be for actual on-site hours or a job price, the contractors and not Troubleshooters Available were to be responsible for any liability in respect of insurance, PAYE taxation deductions were expressly forbidden, the contractors had no claims on Troubleshooters Available in respect of holiday pay, long service leave, sick pay or any similar payment, the contractors were to carry out all work in a workmanlike manner, all faulty work had to be made good by them and the contractors were to supply their own plant and equipment, safety gear, boots, gloves or any necessary ancillary equipment. Importantly, the contractors operated either as individuals, persons in partnerships, persons employed by a company or persons employed by a trustee. 78 The Full Court, in upholding the trial judge's decision that the relationship was not one of employment but that of an independent contractor held, following Stevens v. Brodribb Sawmilling , that there was an absence of the requisite degree of control by Troubleshooters Available over the contractors and, following Australian Mutual Provident Society and Narich that the written agreement was not a sham and became the best material to gather the nature of the true legal relationship. Significantly, however, the Full Court found no contract of employment between the contractors and the builders for whom the work was performed. If we may say so, with respect, and having in mind our reasoning in the present case, we find the conclusions reached in that case in the Federal Court to be not unexpected as the facts were clearly in marked contradistinction to those before us.

Swift Placements Pty Limited v WorkCover Authority of New South Wales

At a glance

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Catchwords

Judgment (140 paragraphs)

You collect your cheque from the reception after 2.00pm Friday

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Legislation Cited (2)

Cases Cited (19)

Cited By (3)