Was Mr. Rauk an employee of Transtate
74 In seeking to advance his submission that Mr. Rauk was an employee - as opposed to being regarded as in the nature of an employee - of Transtate, Mr. D.G.T. Nock SC, who appeared with Ms. S.B. Piedade for Transtate, relied heavily on the decision of the High Court in Hollis v. Vabu Pty. Ltd. [2001] HCA 44; (2000-2001) 75 ALJR 1356; 181 ALR 263, in which case the majority of the High Court (Gleeson CJ, Gaudron, Gummow, Kirby and Hayne JJ) held that the relationship between the respondent courier company and its bicycle couriers - no view being expressed as to the position in relation to the couriers who used motor cycles or motor vehicles supra at [47] - was to be regarded as that of employer and employee supra at [57], [61]. In particular, our attention was drawn to the following passage in the Judgment of the majority:
"[58] It should be observed that this conclusion is different from a decision of the Court of Appeal of New Zealand upon somewhat similar facts in TNT Worldwide Express (NZ) Ltd v. Cunningham ([1993] 3 NZLR 681). There, an 'owner-driver' vehicle courier employed under a standard form of contract was held to be an independent contractor. One term of the contract stated that 'THE relationship between the Contractors and the Company is and shall be for all purposes that of an independent Contractor and neither this Agreement nor anything herein contained or implied shall constitute the relationship of employer and employee between the parties'. Although such terms are not of themselves determinative, as parties cannot deem the relationship between themselves to be something it is not, this term was held to summarise the relationship between the parties accurately. Casey J pointed out that the contract contained terms which suggested that 'each party was genuinely trading off benefits under one relationship for perceived advantages under the other'. Thus, for example, although the courier company controlled the appearance of the courier's vehicle, the courier was given control of his own chosen area of territory, was responsible for employing relief drivers, and 'could certainly profit from sound management and performance of his task. Indeed, it seems obvious that this was the principal attraction of the arrangement'. The courier was required to hold a continuous goods service licence under the Transport Act 1962 (NZ), was assured a guaranteed minimum payment per month and was subject to a 12 month restraint of trade clause from the date of termination of the agreement. As a result, by reason of the terms in the contract, the courier 'accepted only that degree of control and supervision necessary for the efficient and profitable conduct of the business he was running on his own account as an independent contractor'. This is unlike the present case where, as discussed above, the bicycle couriers could not be said to have been conducting any business of their own."
75 With respect, it seems to me that counsel's reliance upon the decision of the majority in Hollis v. Vabu Pty. Ltd. is misconceived, if only because it fails to recognise that, in that case, the relevant contracts were between the courier company on the one hand and the individual bicycle couriers on the other, whereas, in the present case, the relevant contract - which is not suggested to have been a sham - was between Transtate on the one hand and Restisle on the other, that contract being for the provision of Mr. Rauk's services to Transtate (see, for example, Boral Roof Tiles Limited v. O'Brien (1994) 15 NSWCCR 1).
76 Although, as McHugh J wrote in Hollis v. Vabu Pty. Ltd. supra at [84], the practice of employers contracting out work that, in former times, was done by their employees, is nowadays a common practice, it is far from being the case that the practice of engaging an independent contractor to provide the services of his or its employees is of recent origin. On the contrary, the case of Quarman v. Burnett (1840) 6 M & W 499; 151 ER 509, to which reference is made in the Judgment of the majority in Hollis v. Vabu Pty. Ltd. supra at [51], provides an early example. In such cases, the question which falls for determination is whether the person who performs the services is to be regarded as the employee of the general permanent employer or whether the effect of the transfer of that person's services was to constitute him pro hac vice the employee of the hirer.
77 The Judgment of Parker J (as he then was) in Garrard v. A E Southey & Co. and Standard Telephones and Cables Ltd. [1952] 2 QB 174 provides a convenient example of the approach to be adopted when such a question arises. In that case his Lordship said supra 176-178:
"The first question to determine is who, at the time of the accident, was the master of the plaintiff, as the person who would owe the duty of a master to his servant to provide proper plant and equipment. Of course, the plaintiff remained throughout in the general employment of Messrs. Southey & Co. They paid his wages and stamped his cards and had the right - and the sole right - to dismiss him from employment; but it is said that in the particular circumstances of this case he was nevertheless at the time of the accident in the special employment of Standard Telephones.
What is the test to apply, in the circumstances, to determine whether at the particular moment of this accident the workmen had come into a relationship of master and servant of the people to whom he had been lent. The question has arisen many times and usually arises where an employee who has been lent has negligently injured a third party, and the question then arises: who is liable for his negligence? Is it the general employer, or is it the person to whom he has been lent? The authority that one looks to in considering that question is Mersey Docks & Harbour Board v. Coggins & Griffith (Liverpool) Ld. ([1947] AC 1). In that case a crane and driver had been lent; the driver in operating the crane had injured a third party, and the question was whether it was the general employer of the crane driver who was liable for his negligence, or the person to whom the crane and driver had been lent. Lord Simon said: 'It is not disputed that the burden of proof rests on the general or permanent employer' - in that case the Mersey Docks & Harbour Board - 'to shift the prima facie responsibility for the negligence of servants engaged and paid by such employer so that this burden in a particular case may come to rest on the hirer who for the time being has the advantage of the service rendered'. Then he went on: 'And, in my opinion, this burden is a heavy one and can only be discharged in quite exceptional circumstances,' and later he laid down the test which he thought should be applied in those circumstances: 'I would prefer to make the test turn on whether the authority lies to direct, or to delegate to, the workmen, the manner in which the vehicle is driven It is this authority which determines who is the workmen's 'superior'".
Lord Porter said: 'Many factors have a bearing on the result. Who is paymaster? Who can dismiss? How long the alternative service lasts? What machinery is employed? have all to be kept in mind. The expressions used in any individual case must always be considered in regard to the subject matter under discussion but amongst the many tests suggested I think that the most satisfactory, by which to ascertain who is the employer at any particular time, is to ask who is entitled to tell the employee the way in which he is to do the work upon which he is engaged. If someone other than his general employer is authorised to do this he will, as a rule, be the person liable for the employee's negligence. But it is not enough that the task to be performed should be under his control, he must also control the method of performing it. It is true that in most cases no orders as to how a job should be done are given or required: the man is left to do his own work in his own way. But the ultimate question is not what specific orders, or whether any specific orders, were given, but who is entitled to give the orders as to how the work should be done. Where a man driving a mechanical device, such as a crane, is sent to perform a task, it is easier to infer that the general employer continues to control the methods of performance since it is his crane and the driver remains responsible to him for its safe keeping'.
Lord Uthwatt said: 'To establish the power of control requisite to fasten responsibility on him' - that is, on the hirer - 'the hirer must in some reasonable sense have authority to control the manner in which the workmen does his work, the reason being that it is in the manner in which a particular operation (assumed for this purpose to be in itself a proper operation) is carried out that determines its lawful or wrongful character. Unless there be that authority the workmen is not serving the hirer, but merely serving the interests of the hirer, and service under the hirer in the sense I have stated is essential. Whether there is or is not such service in any particular case is a question of fact, the object being to ascertain the broad effect of the arrangement made.'"
78 Although the decision of the House of Lords in Mersey Docks & Harbour Board v. Coggins & Griffith (Liverpool) Ld to which Parker J referred was concerned with determining whether it was the general permanent employer or the hirer who was to be regarded as responsible for the negligence of the crane man who, by his negligence, had caused injury to a third party, Parker J was concerned to determine whether the hirer was liable to a workmen, whose services had been lent on hire, who had been injured as the result of the negligence of one of the hirers other employees. Later in the course of his Lordship's Judgment, after referring to a decision of the Court of Appeal in Holt v. W. H. Rhodes & Son Ld ([1949] 1 AER 478, a case in which the workman whose services had been lent had been injured, his Lordship continued supra at 179:
"I am not altogether convinced that the approach is necessarily the same in the two cases, that is to say, in the case where a workman who has been lent has injured a third party and the case, as here, where he himself has been injured. As Lord Simonds pointed out in the Mersey Docks & Harbour Board case, where, as in that case, a workman and a crane had been supplied, it is the duty of the general employers to provide a proper crane and a skilled driver, and, that being their duty, it would require exceptional circumstances to fix the responsibility on to some other person for the accident caused by the unskilful act of the driver. On the other hand, when one is considering a case such as the present, there is something to be said for the view that it would be strange if the person to whom the employee was lent, who was himself the occupier of the factory, who was himself providing all the tools, who was himself providing all the equipment and advising on the system of working, could, as it were, fix the responsibility for providing safe plant and equipment on the general employers, who would in those circumstances have no control over him.
Again, it seems to me that there is a distinction to be drawn between cases such as the Mersey Docks & Harbour Board case, where a complicated piece of machinery and a driver are being lent and the case where labour, and labour only, not necessarily of a highly skilled character, is lent. In the former case it is easy to infer that the general employer does not intend to permit the hirer to have control over his valuable piece of machinery, control in the sense of being able to tell the workman how to work it. On the other hand, when it is a matter of labour only and, perhaps, labour which is not very highly skilled, it seems to me much more easy to infer that the hirer should not merely control in the sense of being able to tell the workman what he wants doing, but control the manner of doing it as well."