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Federal Court of Australia - Full Court Decisions |
Last Updated: 10 December 2003
Damevski v Giudice [2003] FCAFC 252
RISTE DAMEVSKI v THE HONOURABLE JUSTICE GEOFFREY MICHAEL GIUDICE, PRESIDENT OF THE AUSTRALIAN INDUSTRIAL RELATIONS COMMISSION, THE HONOURABLE DR ALEXANDER JOHN NICHOLAS BLAIN, A DEPUTY PRESIDENT OF THE AUSTRALIAN INDUSTRIAL RELATIONS COMMISSION, PETER ASHBY LAWSON AND GARETH SIMON GRAHAM GRAINGER, MEMBERS OF THE AUSTRALIAN INDUSTRIAL RELATIONS COMMISSION
N 313 of 2003
WILCOX, MARSHALL and MERKEL JJ
13 NOVEMBER 2003 (CORRIGENDUM DATED 10 DECEMBER 2003)
SYDNEY
IN THE FEDERAL COURT OF AUSTRALIA |
|
NEW SOUTH WALES DISTRICT REGISTRY |
N313 OF 2003 |
BETWEEN: |
RISTE DAMEVSKI APPLICANT |
AND: |
THE HONOURABLE JUSTICE GEOFFREY MICHAEL GIUDICE, PRESIDENT OF THE AUSTRALIAN INDUSTRIAL RELATIONS COMMISSION, THE HONOURABLE DR ALEXANDER JOHN NICHOLAS BLAIN, A DEPUTY PRESIDENT OF THE AUSTRALIAN INDUSTRIAL RELATIONS COMMISSION, PETER ASHBY LAWSON AND GARETH SIMON GRAHAM GRAINGER, MEMBERS OF THE AUSTRALIAN INDUSTRIAL RELATIONS COMMISSION FIRST RESPONDENTS ENDOXOS PTY LIMITED SECOND RESPONDENT |
JUDGES: |
WILCOX, MARSHALL AND MERKEL JJ |
DATE: |
13 NOVEMBER 2003 (CORRIGENDUM DATED 10 DECEMBER 2003) |
PLACE: |
SYDNEY |
CORRIGENDUM
1. In [122] remove the words "and "Act" for the "Migration Act"".
2. In [122] replace the word "for" with "with".
I certify that this is a true copy of the corrigendum made to the Reasons for Judgment in this matter of the Honourable Justices Wilcox, Marshall and Merkel. |
Associate:
Dated: 10 December 2003
Damevski v Guidice [2003] FCAFC 252
INDUSTRIAL LAW - Application for prerogative relief - Alleged termination of employment - Whether applicant had a contractual relationship with second respondent - Whether there was an employment relationship.
Building Workers' Industrial Union of Australia v Odco Pty Ltd (1991) 29 FCR 104, distinguished
Country Metropolitan Agency Contracting Services Pty Ltd v Slater and WorkCover/CGU Workers Compensation Insurance (SA) Pty Ltd [2003] SAWCT 57 (unreported, Jennings P, Crawthorne DP and McCusker DP, 30 May 2003), referred to
Dacas v Brook Street Bureau (UK) Ltd [2003] IRLR 190, referred to
Mason & Cox Pty Ltd v McCann [1999] SASC 544; (1999) 74 SASR 438, distinguished
McMahon Services Pty Ltd v Cox [2001] SASC 33; (2001) 78 SASR 540, distinguished
Swift Placements Pty Limited v Workcover Authority of New South Wales (Inspector May) (2000) 96 IR 69, distinguished
Advanced Australian Workplace Solutions Pty Ltd v Kangan Batman TAFE (unreported, AIRC, Full Bench, Print S0253, 25 October 1999), distinguished
Oanh Nguyen and A-N-T Contract Packers Pty Ltd, t/as A-N-T Personnel v Thiess Services Pty Ltd t/as Thiess Services, [2003] NSWIRComm 1006 (unreported, IRCNSW, McKenna C, 3 March 2003), referred to
Morgan v Kittochside Nominees Pty Ltd (2002) 117 IR 152, referred to
Josie Bianchi v Staff Aid Services (unreported, AIRC, Commissioner Lewin, PR937820, 12 September 2003), referred to
Franks v Reuters Limited and First Resort Employment Ltd [2003] EWCA Civ 417 (unreported, Supreme Court of Judicature Court of Appeal (Civil Division), President, Lord Justice Thorpe and Lord Justice Mummery, 10 April 2003), referred to
Brambles Holdings Ltd v Bathurst City Council [2001] NSWCA 61; (2001) 53 NSWLR 153, followed
Air Great Lakes Pty Ltd v K S Easter (Holdings) Pty Ltd (1985) NSWLR 309, followed
Blackpool and Fylde Aero Club Ltd v Blackpool Borough Council [1990] EWCA Civ 13; [1990] 3 All ER 25, referred to
Orion Insurance Co Plc v Sphere Drake Insurance Plc [1990] 1 Lloyd's Rep 465, referred to
New Zealand Shipping Co Ltd v A M Satterthwaite & Co Ltd [1975] AC 154, referred to
Australian Broadcasting Corporation v XIVth Commonwealth Games Ltd (1988) 18 NSWLR 540, followed
Toyota Motor Corp Australia Ltd v Ken Morgan Motors Pty Ltd [1994] 2 VR 106, referred to
Hollis v Vabu Pty Limited [2001] HCA 44; (2001) 207 CLR 21, referred to
Pawel v The Australian Industrial Relations Commission [1999] FCA 1660; (1999) 97 IR 392, followed
Mohazab v Dick Smith Electronics Pty Ltd (No 2) (1995) 62 IR 200, referred to
Sammartino v Foggo [1999] FCA 1231; (1999) 93 IR 52, referred to
Mann v Ross (1999) FCA 273; (1999) 88 FCR 274, referred to
R v Gray; ex parte Marsh [1985] HCA 67; (1985) 157 CLR 351, followed
R v Federal Court; ex parte W A National Football League [1979] HCA 6; (1974) 143 CLR 190, referred to
Minister for Immigration and Multicultural Affairs v Eshetu [1999] HCA 21; (1999) 197 CLR 611, applied
Craig v The State of South Australia [1995] HCA 58; (1995) 184 CLR 163, applied
Minister for Immigration and Multicultural Affairs v Yusuf [2001] HCA 30; (2001) 206 CLR 323, applied
RISTE DAMEVSKI v THE HONOURABLE JUSTICE GEOFFREY MICHAEL GUIDICE, PRESIDENT OF THE AUSTRALIAN INDUSTRIAL RELATIONS COMMISSION, THE HONOURABLE DR ALEXANDER JOHN NICHOLAS BLAIN, A DEPUTY PRESIDENT OF THE AUSTRALIAN INDUSTRIAL RELATIONS COMMISSION, PETER ASHBY LAWSON AND GARETH SIMON GRAHAM GRAINGER, MEMBERS OF THE AUSTRALIAN INDUSTRIAL RELATIONS COMMISSION
N 313 of 2003
WILCOX, MARSHALL and MERKEL JJ
13 NOVEMBER 2003
SYDNEY
IN THE FEDERAL COURT OF AUSTRALIA |
|
NEW SOUTH WALES DISTRICT REGISTRY |
|
1. A writ of certiorari issue to the Australian Industrial Relations Commission (`the Commission'), removing into this Court and quashing the decision of the Full Bench of the Commission of 13 September 2002 in Matter No C2002/2307, being an application by the present applicant for leave to appeal against a decision of Commissioner Grainger dated 9 May 2002 in Matter No U2002/1089.
2. A writ of mandamus issue to the Commission, directing it to hear and determine Matter No C2002/2307 in accordance with law.
Note: Settlement and entry of orders is dealt with in Order 36 of the Federal Court Rules.
IN THE FEDERAL COURT OF AUSTRALIA |
|
NEW SOUTH WALES DISTRICT REGISTRY |
|
JUDGES: |
WILCOX, MARSHALL AND MERKEL JJ |
DATE: |
13 NOVEMBER 2003 |
PLACE: |
SYDNEY |
1 I have had the advantage of reading, in draft form, the reasons for judgment of each of Marshall and Merkel JJ. I agree with their Honours that the applicant is entitled to the relief sought by him (writs of certiorari and mandamus).
2 There is a difference between my colleagues as to whether or not the contract between the applicant, Riste Damevski, and the second respondent, Endoxos Pty Limited (`Endoxos'), should be regarded as having been effected through the agency of MLC Workplace Solutions Pty Ltd (`MLC'). I doubt that the difference matters very much, but I prefer the view of Marshall J.
3 It is clear that nobody connected with MLC ever had a subjective intention of effecting a contract between Mr Damevski and Endoxos. The whole point of MLC's intervention was to replace the existing employment contract between Mr Damevski and Endoxos with an arrangement that would enable Endoxos to avoid some of the obligations that attached to the employment contract. However, the question is whether this intention was achieved. That question must be evaluated by considering the evidence that was before the Australian Industrial Relations Commission as to relevant events and, in particular, the terms of the relevant documents. Although intention is a necessary ingredient in the formation of a contractual relationship, as Marshall J points out, the test of intention is objective, not subjective; intention may be inferred from conduct.
4 I need not repeat all the points made by my colleagues about the conduct of the parties. Their finding that there was a contract of employment between Endoxos and Mr Damevski is compelling, whether one focuses on the evidence relevant to the existence of any relationship between Mr Damevski and MLC or that relevant to any relationship he had with Endoxos.
5 I refer first to MLC's position. There is no evidence that Mr Damevski entered into either a written or oral agreement with MLC. No evidence was adduced of any conversation between Mr Damevski and any representative of MLC. No document addressed to MLC, and signed by Mr Damevski, was put into evidence. There is a total absence of the material that would be necessary to enable either Mr Damevski or MLC to prove the existence of a contract between them.
6 In relation to Endoxos, it is clear from the conduct of Endoxos' managing director, Lindsay Burke, that, whatever may have been his belief about the contractual position, Mr Burke intended there would be no change in the nature of the relationship between his company and Mr Damevski. He said `nothing will change'; and nothing did change. Mr Damevski continued to do the same work, after 19 August 2001, as he had done before that date; under the same direction and control; using the same Endoxos vehicle, uniform and equipment; and, importantly, having his remuneration fixed and paid by Endoxos. Endoxos clearly intended that the relationship between Mr Damevski and itself would function in the same way as it did before 19 August 2001.
7 Counsel for Endoxos placed much reliance on the Full Court decision in Building Workers Industrial Union of Australia v Odco Pty Ltd (1991) 29 FCR 104. I was a party to that decision. I do not resile from anything there decided. However, as both my colleagues point out, the facts of that case were significantly different from those of the present case.
I certify that the preceding seven (7) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Wilcox. |
Associate:
Dated: 13 November 2003
IN THE FEDERAL COURT OF AUSTRALIA |
|
NEW SOUTH WALES DISTRICT REGISTRY |
N313 OF 2003 |
BETWEEN: |
RISTE DAMEVSKI APPLICANT |
AND: |
THE HONOURABLE JUSTICE GEOFFREY MICHAEL GIUDICE, PRESIDENT OF THE AUSTRALIAN INDUSTRIAL RELATIONS COMMISSION, THE HONOURABLE DR ALEXANDER JOHN NICHOLAS BLAIN, A DEPUTY PRESIDENT OF THE AUSTRALIAN INDUSTRIAL RELATIONS COMMISSION, PETER ASHBY LAWSON AND GARETH SIMON GRAHAM GRAINGER, MEMBERS OF THE AUSTRALIAN INDUSTRIAL RELATIONS COMMISSION FIRST RESPONDENTS ENDOXOS PTY LIMITED SECOND RESPONDENT |
JUDGES: |
WILCOX, MARSHALL AND MERKEL JJ |
DATE: |
13 NOVEMBER 2003 |
PLACE: |
SYDNEY |
MARSHALL J:
8 This application for prerogative relief was remitted to the Court by the High Court of Australia pursuant to s44 of the Judiciary Act 1903 (Cth). The applicant, Mr Riste Damevski, challenged a decision of a Full Bench of the Australian Industrial Relations Commission ("Commission"), which refused him leave to appeal from a decision of Grainger C.
9 Mr Damevski had applied to the Commission pursuant to ss170CE and 170CM of the Workplace Relations Act 1996 (Cth) ("Act") for relief in respect of what he alleged was the termination of his employment by the second respondent, Endoxos Pty Ltd ("Endoxos"), on 8 February 2002. At first instance Grainger C "struck out" the application, holding that no employment relationship existed between Mr Damevski and Endoxos at the relevant time. The Full Bench agreed with that view.
10 The issue which arises for determination in this appeal is whether the Commission was correct in its view that it had no jurisdiction to entertain Mr Damevski's application. In other words, on the evidence before it, was the Commission correct as a matter of law to find that no contractual relationship subsisted between Mr Damevski and Endoxos as at 8 February 2002.
INTRODUCTION
Background facts
11 Mr Damevski commenced employment with Endoxos in August 1998. There was no dispute that Mr Damevski was employed by Endoxos as a cleaner on a full time basis up until 19 August 2001.
12 On 19 August 2001, Mr Damevski "resigned" from his employment with Endoxos. Mr Damevski was given the "choice" by Endoxos to resign and "contract" his services to a company called MLC Workplace Solutions ("MLC"), or not be provided with any work by Endoxos. The letter setting out this choice is on Endoxos letterhead, dated 16 July 2001. It is reproduced in the reasons for judgment of Merkel J at [152].
13 Mr Damevski signed the following statement at the bottom of the letter:
"I, (name) R. Damevski (handwritten) understand the information supplied to me agree [sic] to accept the AICA/MLC offer as detailed in the information pack delivered to me."
14 At a meeting of Endoxos employees held to discuss the impending "transition to MLC", Mr Lindsay Burke, an Endoxos manager, told the employees "nothing would change". At a subsequent meeting held with Endoxos employees, Mr Lindsay Burke told them, including Mr Damevski, that if they did not "sign with MLC they would not have any work".
15 A standard document of resignation, prepared by Endoxos and signed by Mr Damevski on 16 August 2001, referred to the cessation of employment with Endoxos on 19 August 2001 "on mutually agreeable terms which will encompass the payment (or drawing down) of accrued entitlements due ... as at the above date".
16 The "resignation" document provided as follows in its final substantive paragraph:
"I understand that once my entitlements are calculated (as at the above date), I will be informed in writing of said entitlements, and I will be offered the choice of one of the following options:(i) receiving the monetary equivalent of the entitlements, or
(ii) availing myself of leave at a future date (at a time mutually agreed upon by both parties), and drawing down on the entitlement."
17 Part of the facts as found by Grainger C are reproduced below:
"[12] Mr Damevski was quite clear in his evidence at the hearing that he understood that in signing that letter on 16 August 2001 he had resigned from Endoxos (PN 1019-1024) and that although he was not happy about being placed in a position where he had to resign he understood clearly that he was resigning from Endoxos at that time (PN 1060-1064). Mr Damevski was also clear in his evidence at the hearing that from 20 August 2001 he was engaged as a subcontractor (PN 1065) but was confused as to whether his relationship as a subcontractor was with MLC or with Endoxos (PN 1066-PN 1068). He was, however, in no doubt that from 20 August 2002 [sic] it was MLC which paid him (PN 1088)." (emphasis supplied)
18 Grainger C's questioning of Mr Damevski at PN1065-PN1068, as referred to, was as follows:
"And who did you understand - on 20 August - who did you understand you were working for, either as a contractor or as an employee? Who did you understand you were working for on 20 August? --- I was as a sub-contractor, but I have to take ---For who? For MLC or? ---From - to Endoxos or ---
Yes, or MLC, is that right? ---Yes.
Yes. You were confused were you? --- I was, yes.
19 At [13] Grainger C's findings of fact included the following:
"[13] Mr Damevski registered a business name on 21 January 2002 (PN 1094-PN 1095).[14] At the time of termination of his employment by Endoxos on 19 August 2001 Mr Damevski was paid out all his outstanding and leave accrued entitlements (PN 139-PN 140).
...
[17] Mr Damevski together with the other independent contractors continued to wear Endoxos clothing after 19 August 2001 (PN 359) although independent contractors are free to wear other clothing if they wish (PN 366-PN 367). Mr K Burke agreed in evidence at the hearing that the parties whose premises were being cleaned would not know whether the cleaners were independent contractors or Endoxos employees (PN 368).
[18] Mr Damevski submitted timesheets to MLC but also continued to submit the same timesheets to Endoxos (clause 27 exhibit A3). At all times after 20 August 2001 he was paid by MLC (PN 1088)."
20 Mr Damevski gave part of his evidence regarding timesheets at PN1132 - PN1134 as follows:
"MR RYAN: [cross-examining] So, I would put to you there was no actually formal requirement for you to give timesheets to Endoxos to get paid, is that right? ---No not to get paid, but I was asked to do a time-sheets the jobs I was doing during the day, and I have to send that in to Endoxos when I was sending this one to MLC.You were asked? --- The same, yes.
You were asked, is that correct? --- I was asked. Yes."
21 Grainger C completes the summary of facts as follows:
"[19] On 8 February 2002 Mr Damevski was called to the office of Endoxos where Mr Lindsay Burke (Mr L. Burke), the managing director of Endoxos, informed him that he was "being taken off the job" and that he would be losing the Endoxos van and telephone (clause 42 exhibit A3). MLC did not contact Mr Damevski to discuss this issue.[20] Mr Damevski called MLC to inform it of the situation and MLC subsequently offered him no work, providing him with a separation letter so that he could claim unemployment benefits (clause 47 exhibit A3).
[21] Mr Damevski has received no further work from MLC or Endoxos since that date."
22 Prior to and after 19 August 2001, Endoxos provided Mr Damevski with the following:
* a van with Endoxos livery, which was maintained and fuelled by Endoxos
* shirts and a hat with Endoxos livery
* two pairs of trousers
* a mobile phone to enable his supervisors at Endoxos to contact him if they required him to alter his starting times
* job sheets describing the jobs which Endoxos required him to perform and the starting and finishing time of his shifts
* all the necessary equipment required to perform his cleaning duties
23 Prior to and after 19 August 2001, Mr Damevski worked as part of a team directed by a leading hand appointed by Endoxos. Endoxos management also conducted occasional oversight and monitoring of Mr Damevski's work.
24 After 19 August 2001 Endoxos was required to pay MLC for Mr Damevski's services within 24 hours of the weekly invoice sent by MLC. Mr Damevski was paid by MLC fortnightly. MLC deducted amounts from Mr Damevski's pay with respect to accident and public liability insurances, long service leave and superannuation.
25 After 19 August 2001, Mr Damevski continued to work at the direction of Endoxos, in the same manner in which he had worked for Endoxos prior to 19 August 2001. Mr Damevski did not trade under a business name, only acquiring a business name on 21 January 2002 some 5 months after his August 2001 resignation and 18 days before the day Mr Damevski alleged he was terminated by Endoxos.
26 After 19 August 2001, the only work Mr Damevski performed was work for Endoxos. Mr Damevski did not reduce his level of tax after 19 August 2001. When Mr Damevski was sick he notified Endoxos, not MLC. Endoxos relocated him in his work areas, without any consultation with MLC either by Endoxos or Mr Damevski.
27 On 23 October 2001, Endoxos increased Mr Damevski's pay from $130 per day to $135 per day, after discussions with Mr Kelvin Burke on behalf of Endoxos. The actual payments to Mr Damevski continued to come from MLC as they had after 19 August 2001.
28 In January 2002, Mr Damevski performed night shift work. He had been performing work on that shift at a particular location since 1999. An Endoxos supervisor met him at the job and told him he was being taken off that site. On 8 February 2002 he performed day shift work at another site. After completing his work at that site he rang an Endoxos leading hand and asked where he was to work next. He was told to come to the Endoxos office where an Endoxos management representative and an Endoxos supervisor informed him that he was being taken off the day shift job. He was also told that he would lose the van and the mobile phone and be relocated to work at the Australian Federal Police Headquarters. He was unable to work at that location without the benefit of the van, due to having only one car in his family and due to his wife's illness. He was not offered any further work by Endoxos. MLC did not offer him any work.
29 The nature of events on 8 February 2002 gives one the distinct impression that Endoxos considered it had the right to terminate Mr Damevski without any notification to MLC.
Documentary evidence
30 The Endoxos letter of 16 July 2001 was accompanied by an "information pack". The information pack included `The Contractors Guide - The Agency Contracting System', which was an MLC "badged document" of the Australian Independent Contractors Agency Pty Ltd ("AICA"). The guide portrays MLC, which was an agent of AICA, as a service provider to "self-employed people". It explains that MLC provides the administrative services of a contractor management agency to bona fide self-employed contractors who do not wish to be bound by the "constraints" of the wages system. Merkel J reproduces relevant parts of the guide at [163] - [167].
31 The guide contains a section entitled `Information for Accountants - Taxation issues for independent contractors working through "Odco" style Labour hire arrangements'. This is a reference to the arrangement discussed in Building Workers' Industrial Union of Australia v Odco Pty Ltd (1991) 29 FCR 104 ("Odco"). Under the heading `What are Odco style labour hire contractors?' it states:
"Odco independent contractors are people who work through specific labour hire arrangements where:* No common law employment exists
* Each contractor has a daily hire contract with the labour hire agency
* No contract exists with the user of the contractor service
Odco contractors working through the Australian Independent Contractors Agency usually register a business name as a sole trader with the NSW Department of Fair Trading. They register their principal place of business as their residential address. Clauses 1 and 2 of the Agreement to Contract stipulate that contractors utilising the Odco contract system accept (or reject) work on an hourly or day to day basis with clients of the Agency. The contractor is available for work where the Agency places him/her."
32 The information pack also contains an unsigned pro-forma AICA document entitled "Agreement to Contract", the contents of which are reproduced by Merkel J at [155]. It is not clear whether Mr Damevski signed this document, as a signed copy was not produced. In fact, Mr Damevski's signature is not attached to any document in the information pack, or any other MLC or AICA document in evidence.
33 The Agreement to Contract is a blank pro-forma document used by AICA and contains no mention of MLC. It is not clear whether MLC regularly uses this document when signing up independent contractors under the arrangement set out in the information pack.
34 The MLC Workplace Solutions Hiring Agreement is an agreement between MLC and Endoxos for the provision of contract personnel. The terms of the Hiring Agreement are reproduced by Merkel J at [161]. The agreement instructs Endoxos to provide MLC with feedback on the performance of contractors and, in the event Endoxos is unhappy with a contractor, to inform MLC and send the contractor off-site.
The Full Bench of the Commission
35 The Full Bench of the Commission did not properly address whether on the evidence available to it there was a contract between Mr Damevski and Endoxos, in particular, whether the existence of a contract could be implied from the conduct of Mr Damevski and Endoxos. The Full Bench referred to Grainger C's decision as follows:
"[19] The Commissioner decided that there was no contract in existence between the appellant and Endoxos after 19 August 2001 and that after that date the only contract to which the appellant was a party was one with MLC. The matters upon which the Commissioner relied were the appellant's resignation from Endoxos, his entry into a written contact [sic] with MLC, the circumstances surrounding that change and the fact that MLC paid him according to time sheets he submitted to MLC. Although the Commissioner also found that the contract between the appellant and MLC was one for the provision of services, that issue did not need to be decided.[20] In order to succeed in the appeal, the first task confronting the appellant was to demonstrate that he was in a contractual relationship not with MLC but with Endoxos at the relevant time.
...
"[22] It is clear, in our view, that the documentary evidence shows that the appellant agreed to perform work for MLC and to be paid for it by MLC. That the work was to be performed pursuant to a contract between MLC and Endoxos tends to confirm the absence of a contract between the appellant and Endoxos. We think this evidence is conclusive and the Commissioner was correct so to find." (emphasis supplied)
36 The Full Bench, like Grainger C at first instance, assumed that Mr Damevski was tied to the Hiring Agreement entered into between Endoxos and MLC. It also did not appear to consider it possible for Mr Damevski to enter into a separate and different contract with each party. Even assuming Mr Damevski was an independent contractor, he was not prevented from forming an employment relationship with Endoxos.
37 Without clearly setting out its reasons for doing so, the Full Bench concluded:
"There is no evidence upon which a finding could be made that a new and separate employment relationship was subsequently entered into by the appellant and Endoxos."
38 The possibility of joint employment is also ignored.
39 Although the Full Bench is correct to state that the task was to demonstrate a contractual relationship between Mr Damevski and Endoxos, a clear understanding of the nature of the contract between MLC and Mr Damevski is essential to a consideration of the circumstances concerning whether there was a contract between Endoxos and Mr Damevski.
Commissioner Grainger
40 The Full Bench's errors of law were, in a number of respects, repetitive of the errors made by Grainger C. At [26] and [27] of his decision Grainger C discussed the issue of whether there was a contract between Mr Damevski and Endoxos:
"[26] In Australian Workplace Solutions Pty Ltd v P. Fox [Print S0253] (Fox and Kangan Batman TAFE) the Full Bench set out the elements of a contract:"The elements of a contract are stated in Macken, McCarry and Sappideen's "The Law of Employment" (4th edition, 1997 by the Hon James Macken, Paul O'Grady and Carolyn Sappideen) (Macken, McCarry and Sappideen), a text to which reference was made both before Simmonds C and us, as follows (p.74):
"The law holds that before any simple contract is enforceable it must be formed so as to contain various elements. These are:
1. There must be an `intention' between the parties to create a legal relationship, the terms of which are enforceable.
2. There must be an offer by one party and its acceptance by the other.
3. The contract must be supported by valuable consideration.
4. The parties must be legally capable of making a contract.
5. The parties must genuinely consent to the terms of the contract.
6. The contract must not be entered into for any purpose which is illegal."
"In relation to the first of these elements, the learned authors say (p. 74):
"The first element essential to the existence of any contract is the requirement that the parties have a mutual intention to create a legally enforceable bargain."
[27] From 20 August 2001 there is no evidence of a direct contractual relationship which covers these ingredients between Mr Damevski and Endoxos. Exhibit R8 [Hiring Agreement] evidences a direct contractual relationship between Mr Damevski and MLC. Whilst there is no doubt that Endoxos continued to have a significant role in relation to the work undertaken by Mr Damevski after 19 August 2001 there is no evidence of a direct contractual relationship between Mr Damevski and Endoxos from that date." (emphasis supplied)
41 Grainger C also referred to the Hiring Agreement at [9] of his judgment, opining that it:
"...made clear that if Mr Damevski accepted the terms being put to him by Endoxos it would have the effect of causing him to cease to be an employee of Endoxos on 19 August 2001 and becoming an independent contractor whose direct contractual relationship would be, not with Endoxos, but with an independent company, MLC Workplace Solutions Pty Ltd."
42 It is surprising that Grainger C was able to characterise the nature of the contractual relationship between Mr Damevski and MLC, and dismiss the possibility of a contractual relationship between Mr Damevski and Endoxos, on the basis of a Hiring Agreement that makes no reference to Mr Damevski and to which Mr Damevski is not a party. The Hiring Agreement and Grainger C's conclusion regarding the existence of a contract between Mr Damevski and MLC cannot be determinative of the existence of a contract between Endoxos and Mr Damevski.
43 Grainger C at [29] was also influenced by his view that Mr Damevski:
"...accepted a rate of remuneration from MLC which took into account his changed status as an independent contractor. He received valuable consideration for accepting his new status as an independent contractor."
44 There was no evidence to support that finding. The evidence was that Endoxos paid $130 gross to Mr Damevski for an 7.6 hour day and that Endoxos, not MLC, increased the rate to $135 gross, subsequently to the interposing of MLC into the relationship between Endoxos and Mr Damevski.
45 Despite the evidence indicating that Mr Damevski dealt almost exclusively with Endoxos and had limited contact with MLC, Grainger C summarised his finding at [30] saying:
"[30] I find that MLC is, on the evidence available before me, completely independent from Endoxos and that from 20 August 2001 MLC was the principal contractor dealing directly with Mr Damevski in his role as an independent sub-contractor carrying out cleaning services."
CONSIDERATION
46 Counsel for Endoxos asserted that there was no evidence of a direct contractual relationship between Mr Damevski and Endoxos given there was no intention to create legal relations. Counsel pointed to Mr Damevski's resignation from Endoxos and his payment of accrued annual leave. Counsel also pointed to the existence of an agreement by Mr Damevski to perform work for MLC.
47 Counsel for Endoxos had no alternative submission as to the nature of any contract between Mr Damevski and Endoxos, if it existed. He submitted that Mr Damevski's contract was with MLC, and that Endoxos had an express intention to end its legal relationship with Mr Damevski.
The reality of the situation
48 There was no clear and unambiguous contract between MLC and Mr Damevski. The only evidence of any agreement for Mr Damevski to perform work for MLC was the Endoxos letter of 16 July 2001. Mr Damevski agreed with Endoxos to accept the AICA/MLC offer. There is no evidence that Mr Damevski signed any agreement with MLC, nor any evidence produced regarding discussions or negotiations between Mr Damevski and MLC concerning a contractual agreement. Under the Hiring Agreement between MLC and Endoxos, MLC was to supply "contract personnel" to Endoxos. However, Mr Damevski was not "supplied to" Endoxos by MLC. Mr Damevski already had a relationship with Endoxos.
49 Even if it was assumed that Mr Damevski's signature on the Endoxos letter of 16 July 2001 was sufficient to create a contract with MLC, it is questionable whether the contract was ever fulfilled or exercised by either party. The only evidence regarding the terms and conditions of any contract between Mr Damevski and MLC is the information pack, referred to above at [30]. The arrangement detailed in the information pack, however, bears little resemblance to what actually occurred.
50 Mr Damevski was not a "bona fide" independent contractor who did "not wish to be bound by the constraints of the wages system". MLC did not perform the role described in the information pack, apart from performing the administrative role of paying Mr Damevski's wages. The evidence was that Mr Damevski worked solely for Endoxos pursuant to an arrangement where he would be paid by MLC, who would in turn look to Endoxos for reimbursement of such payments plus an administration fee.
51 In retaining its right on and from 19 August 2001 to direct and control the performance of work by Mr Damevski, and to terminate Mr Damevski's services, Endoxos did so on its own behalf and not as an "agent of MLC". Equally, considering the entire factual matrix, it could not be said that MLC was Mr Damevski's employer. Rather, MLC acted as an agent for Endoxos in paying Mr Damevski, on Endoxos' behalf. This was the only role it performed.
52 Mr Lindsay Burke's prediction that "nothing would change" was correct.
Was Mr Damevski an independent contractor?
53 There is no evidence in the current case of Mr Damevski providing his services as an independent contractor, using the introduction and administrative services of MLC.
54 The arrangement detailed in the information pack would have Mr Damevski as an independent contractor running his own cleaning business, calling MLC when he was available for work and being directed to various companies holding contracts to clean government and private premises. In running his own business, Mr Damevski would presumably also build his own contacts and provide cleaning services outside of his arrangement with MLC. To maintain consistency in his workflow he would "stay in contact" with MLC.
55 To argue that the above occurred in the present case is to defy reality.
56 The only evidence used to show that Mr Damevski actually performed the role of an independent contractor is that, as requested, he registered a business name 18 days before he was allegedly terminated. There are no other indicators that would suggest Mr Damevski was engaged in his own "economic enterprise": see Country Metropolitan Agency Contracting Services Pty Ltd v Slater and WorkCover/CGU Workers Compensation Insurance (SA) Pty Ltd [2003] SAWCT 57 (unreported, Jennings P, Crawthorne DP and McCusker DP, 30 May 2003) and Dacas v Brook Street Bureau (UK) Ltd [2003] IRLR 190.
57 Dacas is a decision of the Employment Appeal Tribunal, following an appeal from a decision that had found that the appellant was not employed by either the Brook Street Bureau employment agency or the agencies client, Wandsworth Borough Council. Burton J, presiding, discussed the Employment Tribunal's application of the control test and the "mutuality of obligation" test, but pointed out that:
"They did not operate a Market Investigations test. Had they done so, it appears quite inevitable that they would have found, insofar as it assisted in the conclusion, that the Appellant was not carrying on a business of her own. This Appellant was not offering any kind of specialist services; she was not a nurse or a physiotherapist at the hostel, she was a cleaner. This Appellant was not providing, on the evidence at any rate, such services to anyone else. She was full-time working at West Drive, as it was seemingly found by the Tribunal. On the face of it, she would in ordinary parlance, working as a cleaner on an hourly rate full-time at a hostel, seen to be an employee, but she would certainly not look like someone who was carrying on business on her own account, yet the Tribunal concluded that she was not an employee and they did so, by reference to the label or rubric in the Temporary Worker Agreement......It appears to us quite clear, that all the pointers on the findings of fact by the Tribunal were in favour of employment, and because all the other factors found by them to be neutral, no pointers existed pointing against employment. The only pointer was the label, but, albeit that they were no doubt entitled to take that into account, if it pointed the opposite way to all the indications which on their own findings otherwise existed in this contract, then they were not entitled to treat that label or rubric as determinative or decisive, as they appear to have done."
58 Mr Damevski was not carrying on a business of his own. In truth, the relationship between Endoxos and Mr Damevski was one of mutual dependence and involved no one else, other than MLC in a confined capacity which related entirely to the manner of effecting Mr Damevski's remuneration. Mr Damevski had no right to delegate his shifts to other persons. He worked solely for Endoxos. He was provided with equipment by Endoxos to perform work.
59 The circumstances surrounding Mr Damevski's alleged dismissal indicate that he was not able to refuse work without the likelihood of not receiving any more work. Upon Mr Damevski's termination MLC did not find any replacement work for him. Although MLC actually states in its information pack that the disadvantages attending a transfer to agency contracting are offset because contractors are offered continuity of work through different clients, there is no evidence that MLC had any other cleaning contractor clients for whom Mr Damevski could work.
Odco
60 It is apparent from the information pack that MLC was attempting to replicate the arrangement discussed in Odco. Labour hire agencies that rely on Odco to legitimise particular activities should bear in mind that the existence of a contractual relationship and employment relationship, in any given set of circumstances, is ultimately a question of law. When attempting to replicate the arrangement discussed in Odco, it is not sufficient to give lip service to it. There is no legitimacy in arrangements which merely attempt to exploit difficult areas of law and create vehicles designed, inter alia, to enable employers to avoid their award and statutory obligations.
61 Merkel J provides a summary of relevant aspects of the Odco decision at [149] - [151]. Contrary to the current case, the workers discussed in Odco were first "screened" at interviews conducted by the labour hire company, Troubleshooters Available ("Troubleshooters"). Inquiry was made of the worker's reasons for wanting to be self-employed, whether they had been self-employed before, whether they were members of a relevant union and superannuation scheme, and whether they had construction industry long service leave registration.
62 A worker was invited to sign an `Agreement to Contract', in much the same form as the AICA Agreement to Contract, provided satisfactory answers were given at the interview. The result of this was to make the worker eligible to be offered work from time to time on some particular site for some particular builder client of Troubleshooters.
63 In Odco, the Court dismissed many of the arguments advanced by the relevant union to show that Troubleshooters had no real control over the workers and that Troubleshooters' role was in reality one of agent. The Court, however, accepted that the maintenance of communication between a worker and Troubleshooters does not negate the existence of a contractual relationship between the worker and the builder. The Court also made it clear that payment of wages by a third party is not fatal to the existence of a contract of employment between a worker and a putative employer.
64 The Court found, ultimately, that the evidence indicated that it was always intended that Troubleshooters would be liable to pay the worker for all work, at the rate which it had agreed with the worker, whether or not it received payment from the builder. Relevant to this was the fact that Troubleshooters was the entity that fixed and adjusted the remuneration to which the worker was entitled and the builder was not always aware of the rate paid to the worker by Troubleshooters. In the instant case, Endoxos, not MLC, determined Mr Damevski's rate of pay.
65 Endoxos did not establish an arrangement in the form recognised in Odco or any like arrangement.
Labour-hire arrangements
66 At [173] and [174] Merkel J distinguishes the present case from a number of cases where no employee-employer relationship has been found to exist between a worker and a client of a labour hire agency. I agree with respect with Merkel J, for the reasons given by him, that the current case differs from those cases, and from Odco.
67 It is worth considering some of the differences between the cases referred to by Merkel J and the instant case. The cases of Mason & Cox Pty Ltd v McCann [1999] SASC 544; (1999) 74 SASR 438 and McMahon Services Pty Ltd v Cox [2001] SASC 33; (2001) 78 SASR 540 are very similar to each other. These cases concerned claims for damages for personal injury against clients of labour hire companies, for whom the workers were providing services. In both cases the worker had already received compensation under the Workers Rehabilitation and Compensation Act 1986 (SA) based on a finding that the labour hire company was the employer. Having received compensation on that basis, perhaps unsurprisingly it was held in these subsequent cases that the labour hire agency, and not the client of the labour hire agency, employed the worker.
68 In Mason & Cox, the court held that the fact of control alone does not lead to the conclusion that there is a contractual relationship and drew attention to the fact that there was no evidence of a legal, as opposed to a practical, right to control the worker. McMahon approved the reasoning in Mason & Cox, and further held that it was essential to look closely at the facts of each case when applying the criteria set out in the definition of contract of service in the Workers Rehabilitation and Compensation Act.
69 In Swift Placements Pty Limited v Workcover Authority of New South Wales (Inspector May) (2000) 96 IR 69, it was held that control over a worker did not merely relate to the on-the-job situation, but rather the ultimate or legal control over the worker. Like the decision in McMahon, the court also noted that much depended upon the particular circumstances as disclosed by the facts found.
70 The reference to the importance of the existence of `legal control' as opposed to `practical control' may have been appropriate in those cases; however, it is a curious and unhelpful concept when the evidence concerning the nature of the relationship is unclear. A finding based on which entity holds `legal control' tends towards a circular argument when `legal control' is a conclusion of law and is, in effect, the question that the court is being asked to determine.
71 The relationships in the instant case are different to those in the cases referred to above. There was no employment relationship between Mr Damevski and MLC. Mr Damevski was compelled to sign a statement at the bottom of an Endoxos letter stating he would participate in the MLC arrangement. Mr Damevski never asked MLC to find him work. MLC did not introduce Mr Damevski to Endoxos. MLC did not direct Mr Damevski to work at Endoxos. Mr Damevski did not contact MLC to inform them he was available for work. There was no contact between Mr Damevski and MLC regarding the performance of his work.
72 The decision of the Full Bench of the Commission in Advanced Australian Workplace Solutions Pty Ltd v Kangan Batman TAFE (unreported, AIRC, Full Bench, Print S0253, 25 October 1999) also concerned an Odco type arrangement. Unlike Mr Damevski, Ms Fox, who had applied for relief in respect of her termination, had actually signed an Agreement to Contract in a similar form to the one included in the MLC information pack. The Full Bench in Advanced Australian Workplace Solutions relied heavily on the evidence of both Ms Fox and the representative for Kangan, which indicated that neither of them thought that they were in a relationship of employee and employer. The Full Bench acknowledged that in Meade v New England Seed Traders Pty Ltd [1972] WCR 113, the New South Wales Court of Appeal had said at p.117:
"There is certainly evidence that neither Mr Mead nor Mr Crofts realized that he was an employed worker, but while this may be some evidence to rebut the existence of contracts of service, it does not, in the circumstances, seem to be of very much weight."
73 Nevertheless, the Full Bench in Advanced Australian Workplace Solutions repeatedly stated that, in the circumstances, it chose to give that evidence considerable weight.
74 The Full Bench in Advanced Australian Workplace Solutions acknowledged that sometimes contracts of employment are entered into with a minimum of formality. However, it was found that the evidence did not establish offer and acceptance, intention to create a legal relationship or valuable consideration.
75 Interestingly, in concluding the Full Bench said:
"None of the cases to which we have referred determines the present one. In particular, Odco (above) does not determine the present case. Although the documentation between AAWS and Ms Fox and between AAWS and Kangan is the same as that in Odco, other facts, as Simmonds C noted, differ. He said that he did not find the reasoning in Odco to be determinative in this matter. We, with respect, agree. Our conclusions arise from the facts of the case before us."
76 There are a few recent examples of cases concerning labour hire arrangements in which either contractual relationships have been found between a worker and a `host employer', or where the concept of dual employment has been entertained: see Oanh Nguyen and A-N-T Contract Packers Pty Ltd, t/as A-N-T Personnel v Thiess Services Pty Ltd t/as Thiess Services, [2003] NSWIRComm 1006 (unreported, IRCNSW, McKenna C, 3 March 2003); Morgan v Kittochside Nominees Pty Ltd (2002) 117 IR 152; Josie Bianchi v Staff Aid Services (unreported, AIRC, Commissioner Lewin, PR937820, 12 September 2003).
77 The outcomes in English case law relating to labour hire arrangements also vary. In Franks v Reuters Limited and First Resort Employment Ltd [2003] EWCA Civ 417 (unreported, Supreme Court of Judicature Court of Appeal (Civil Division), President, Lord Justice Thorpe and Lord Justice Mummery, 10 April 2003), the court allowed an appeal from a decision of the Employment Appeal Tribunal that Mr Franks was not an employee of Reuters Limited. Mr Franks had found work with Reuters through the employment agency, First Resort Employment Limited. In the leading judgment, Lord Mummary, referring to the House of Lords decision in Carmichael v National Power Plc [1999] UKHL 47; [1999] 1 WLR 2042, drew attention to the need to look "beyond and beneath the documents" and not reach a decision concerning the existence of an employment contract on the basis of construing the correspondence. Lord Mummary pointed out that:
"Drawing a line between those who are employees (and so have statutory employment rights) and those who are not entitled to statutory employment protection has become more, rather than less, difficult as work relations in and away from the workplace have become more complex and diverse. This development makes it all the more important that the employment tribunal, as the tribunal of fact, should consider all the relevant evidence about the dynamics of the work relationship between the person claiming to be an employee and the putative employer."
78 Lord Mummary said that even where the work relations are documented, it was necessary to examine not only the correspondence, but also the circumstances surrounding it, the subsequent conduct of the parties, and the way in which the parties operated and understood the situation.
Existence of a contract
79 The ambiguity of the contract between MLC and Mr Damevski and the inconsistency between the information pack and the reality of the situation, requires one to examine the entire factual matrix to establish what legal relationship, if any, actually existed.
80 Despite the inadequacy of the documentary evidence, the Full Bench concluded that it was clear on the documentary evidence that Mr Damevski performed work for MLC. The Full Bench was in error by not looking beyond the documentary evidence.
81 Although there is no evidence of an express contract between Mr Damevski and Endoxos, the Full Bench failed to properly apply established principles of contract law and address, after considering all of the relevant evidence, whether there was a contract which could be implied to exist based on the conduct of the parties.
82 Although contracts are not to be implied lightly, the Court may find exceptions to the general rule concerning express intentions. The Court may imply a contract by concluding that the parties intended to create contractual relations after examining extrinsic evidence, including what the parties said and did: see Brambles Holdings Ltd v Bathurst City Council [2001] NSWCA 61; (2001) 53 NSWLR 153; Air Great Lakes Pty Ltd v K S Easter (Holdings) Pty Ltd (1985) NSWLR 309; Blackpool and Fylde Aero Club Ltd v Blackpool Borough Council [1990] EWCA Civ 13; [1990] 3 All ER 25 at 31 per Bingham LJ and Orion Insurance Co Plc v Sphere Drake Insurance Plc [1990] 1 Lloyd's Rep 465 at 492-4 per Hirst J.
83 Prerequisites for an enforceable contract were set out by Grainger C and are reproduced at [40] above. However, as discussed in the relevant chapter of `The Law of Employment, which was the source for the list of prerequisites, those elements of contract are to be applied subject to the various nuances of contract law. In relation to the second element listed, offer and acceptance, it is pointed out in Cheshire, Fifoot & Furmston's Law of Contract, 14th ed, (M P Furmston), (2001), England, Butterworths LexisNexis, at p.33 that:
"These complementary ideas present a convenient method of analysing a situation, provided that they are not applied too literally and that the facts are not sacrificed to phrases."
Lord Wilberforce's judgment in New Zealand Shipping Co Ltd v A M Satterthwaite & Co Ltd [1975] AC 154 at 167 is quoted and reference is made to cases where the courts have held that there is a contract despite the difficulty or impossibility of analysing the transaction in terms of offer and acceptance. Below the relevant passage from the decision of Lord Wilberforce in New Zealand Shipping is set out more fully:
"It is only the precise analysis of this complex of relations into the classical offer and acceptance, with identifiable consideration, that seems to present difficulty, but this same difficulty exists in many situations of daily life, e.g., sales at auction; supermarket purchases; boarding an omnibus; purchasing a train ticket; tenders for the supply of goods; offers of rewards; acceptance by post; warranties of authority by agents; manufacturers' guarantees; gratuitous bailments; bankers' commercial credits. These are all examples which show that English law, having committed itself to a rather technical and schematic doctrine of contract, in application takes a practical approach, often at the cost of forcing the facts to fit uneasily into the marked slots of offer, acceptance and consideration."
84 Documentary evidence of an offer from Endoxos to re-employ Mr Damevski, and a signed acceptance by Mr Damevski, is unnecessary. Although there was no formal offer of a new employment contract, it is not uncommon for two commercial entities to informally enter into a contract. There is no reason to treat an employment relationship any differently. The agreement between the two can be evinced by their conduct. In Anson's Law of Contract, 28th ed, (J Beatson), (2002) Oxford, Oxford University Press, it is pointed out at p.30 that:
"An agreement may be inferred from conduct alone; the intention of the parties is a matter of inference from their conduct, and the inference is more or less easily drawn according to the circumstances of the case." (footnote omitted)
85 In Brambles Holdings Ltd v Bathurst City Council [2001] NSWCA 61; (2001) 53 NSWLR 153, conduct of the parties was held to be determinative in establishing acceptance and intention in relation to formation of contract. After pointing out that pre-contractual conduct is only admissible on questions of construction where the contract is ambiguous, Heydon JA said at 163 and 164:
"The second relevant principle is that post-contractual conduct is admissible on the question of whether a contract was formed: Howard Smith & Co Ltd v Varawa [1907] HCA 38; (1907) 5 CLR 68 at 77; Barrier Wharfs Ltd v W Scott Fell & Co Ltd [1907] HCA 79; (1908) 5 CLR 647 at 668, 669, 672; B Seppelt & Sons Ltd v Commissioner for Main Roads (1975) 1 BPR 9,147 at 9,149, 9,194-9,156; Film Bars Pty Ltd v Pacific Film Laboratories Pty Ltd (1979) 1 BPR 9,251 at 9,255."
86 In providing his exposition of the case law relating to formation of contract, Heydon JA said at 177:
"But limited recognition has been given to the possibility of finding contracts exist even though it is not easy to locate an offer or acceptance. In Integrated Computer Services Pty Ltd v Digital Equipment Corp (Aust) Pty Ltd (1988) 5 BPR 11,110 at 11,117 - 11,118, McHugh JA (Hope JA and Mahoney JA concurring) said:"It is often difficult to fit a commercial arrangement into the common lawyers' analysis of a contractual arrangement. Commercial discussions are often too unrefined to fit easily into the slots of `offer', `acceptance', `consideration' and `intention to create a legal relationship' which are the benchmarks of the contract of classical theory. In classical theory, the typical contract is a bilateral one and consists of an exchange of promises by means of an offer and its acceptance together with an intention to create a binding legal relationship...
Moreover, in an ongoing relationship, it is not always easy to point to the precise moment when the legal criteria of a contract have been fulfilled. Agreements concerning terms and conditions which might be too uncertain or too illusory to enforce at a particular time in the relationship may be reason of the parties' subsequent conduct become sufficiently specific to give rise to legal rights and duties. In a dynamic commercial relationship new terms will be added or will supersede older terms. It is necessary therefore to look at the whole relationship and not only at what was said and done when the relationship was first formed."
Those passages were cited with approval by Ormiston J in Vroon BV v Foster's Brewing Group Ltd [1994] 2 VR 32 at 82-83."
87 Heydon JA also said that:
"One further observation of McHugh JA in Integrated Computer Services Pty Ltd v Digital Equipment Corp (Aust) Pty Ltd (at 11,117) is relevant:"...it is an error `to suppose that merely because something has been done then there is therefore some contract in existence which has thereby been executed'....Nevertheless, a contract may be inferred from the acts and conduct of parties as well as or in the absence of their words. ...The question in this class of case is whether the conduct of the parties, viewed in the light of the surrounding circumstances shows a tacit understanding or agreement. The conduct of the parties, however, must be capable of proving all the essential elements of an express contract... ."
See also, to the same effect, Pagnan SpA v Feed Products Ltd [1987] 2 Lloyd's Rep 601 at 611 (affirmed on appeal (at 615))."
88 Mason P supported the observations of Heydon JA, saying at 155 in Brambles:
"As Heydon JA demonstrates, this case shows the difficulties of pressing too far classical theory of contract formation based on offer and acceptance (see also Pobjie Agencies v Vinidex Tubemakers (2000) Aust Contract Reports 90-112 (91,217))."
89 When Mr Damevski returned to work after his resignation on 19 August 2001 he began working with Endoxos again, without any relevant role having been played by MLC. Viewed objectively, it can be implied that Endoxos and Mr Damevski informally re-entered an arrangement in the nature of a contract of service on the same terms and conditions under which Mr Damevski had previously worked for Endoxos the preceding day.
90 As nothing changed in the relationship between Endoxos and Mr Damevski after 19 August 2001, all terms and conditions had been addressed by the parties, as they were the same as under the previous employment relationship, subject to varied pay arrangements which occurred later.
91 The third element of an enforceable contract, in the list referred to by Grainger C is "consideration". Although MLC paid Mr Damevski, a realistic reading of the facts indicates that consideration passed between Mr Damevski and Endoxos. Mr Damevski provided cleaning services to Endoxos, not MLC. Endoxos, not MLC, determined the rate it would pay for those cleaning services. MLC merely performed an administrative function by providing Mr Damevski's pay, on behalf of Endoxos.
92 Counsel for Endoxos relied upon the requirement for an intention to create legal relations to assert that there was no evidence of a legally enforceable contract. Subject to a rebuttal, it will be presumed in commercial agreements that the parties intend to create legal relations. Although the Hiring Agreement indicates Endoxos set about making arrangements to obtain its labour through MLC, this is not a clear rebuttal. Relationships can be established outside the Hiring Agreement. The Hiring Agreement cannot be determinative of the intentions of Endoxos and Mr Damevski to create legal relations.
93 Anson's Law of Contract, 28th ed. at p.31, discusses the test applied to intention for the purpose of establishing an agreement:
"In common with most European legal systems, the test of a person's intention is not a subjective, but an objective one; that is to say, the intention which the law will attribute to a person is always that which that person's conduct bears when reasonably construed by a person in the position of the offeree, and not necessarily that which was present in the offeror's own mind....
Although the approach is objective, it is not purely objective in the sense that the intentions of the parties are entirely irrelevant so that a contract may be formed which is in accordance with the intention of neither party. It has been stated that `the judicial task is not to discover the actual intentions of each party; it is to decide what each was reasonably entitled to conclude from the attitude of the other."
94 Anson's Law of Contract also refers to the test of intention in relation to the creation of legal relations at p. 71:
"The test of an intention to effect legal relations is an objective one. It may be that the promisor never anticipated that the promise would give rise to any legal obligation, but if a reasonable person would consider there was an intention so to contract, then the promisor will be bound."
95 It is an accepted principle of contract law that although a person's apparent intention will generally represent their real intention, an objective approach should be taken in establishing intention: see Australian Broadcasting Corporation v XIVth Commonwealth Games Ltd (1988) 18 NSWLR 540; Air Great Lakes Pty Ltd v K S Easter (Holdings) Pty Ltd; Blackpool and Fylde Aero Club Ltd v Blackpool Borough Council [1990] EWCA Civ 13; [1990] 3 All ER 25 and Toyota Motor Corp Australia Ltd v Ken Morgan Motors Pty Ltd [1994] 2 VR 106 at 176 per Brooking J and 176 per Tadgell J.
96 Endoxos may have set about making arrangements for the provision of labour through a third party, but ultimately it acted in a way that showed that it in fact intended to create legal relations. The evidence indicates that Endoxos wanted to maintain control of Mr Damevski, expected him to use their equipment and clothing emblazoned with Endoxos livery and, ultimately, wanted to be able to dismiss Mr Damevski.
97 In Air Great Lakes Pty Ltd v K S Easter (Holdings) Pty Ltd, Mahoney JA said at 330:
"It is generally accepted that, in determining whether what the parties have done results in a binding contract, their intention is significant. And there is reference in the cases and the textbooks to the question whether, for there to be a binding contract, it is necessary that the parties have an actual or subjective intention to contract: see, eg, the cases referred to by McLelland J in Film Bars Pty Ltd v Pacific Film Laboratories Pty Ltd (1979) 1 BPR 9251; see generally, Halsbury's Laws of England, 4th ed, vol 9, par 300 at 175. But questions in that form are, I think, apt to mislead: it is, in my opinion of more assistance to ask whether actual or subjective intention to contract plays a part in determining whether there is a binding contract, and (if it does) what part it plays.The proper view is, in my opinion, that the existence of a contract is a consequence which the law imposes upon, or sees as a result of, what the parties have said and done. Actual subjective intention to contract is a factor which the law takes into account in determining whether a contract exists but it is not, or not always, the determining factor."
98 Although Endoxos turned its mind to the potential advantages of using the arrangement offered by MLC, it did not ask itself whether the way it continued its relationship with Mr Damevski would result in the entering of contractual relations. Its intention can only be inferred from its conduct.
99 The conclusion of a reasonable bystander would be that a contract existed between Endoxos and Mr Damevski, and that MLC was engaged to provide payment services. Endoxos held the position of responsibility and wielded the power.
CONCLUSION
100 The Commission, both at first instance and at Full Bench level, erred in concluding that Mr Damevski and Endoxos were not in a legal relationship. Looking objectively at what occurred after 19 August 2001, it is plain that Mr Damevski entered into a new contractual relationship with Endoxos where he started afresh, in the context of his rights to accrued annual leave entitlements, and whereby the work he performed for Endoxos resulted in MLC paying him his wages as a consequence of an arrangement between MLC and Endoxos.
101 Although Endoxos had an intention to remove costs related to its role as an employer (such as increases in public liability insurance premiums), through its actions it also displayed an intention to establish a contractual relationship with Mr Damevski after his "resignation" on 19 August 2001. Endoxos directed Mr Damevski to worksites, called Mr Damevski to its offices for further instructions when necessary, gave Mr Damevski attire and equipment to enable him to perform work, and received pay slips from him. Mr Damevski also showed an intention to re-enter the legal relationship with Endoxos, by once again taking up the role he held with Endoxos before 19 August 2001.
102 The facts of this case also reveal that the contractual relationship that existed between Mr Damevski and Endoxos was one of employee and employer. As previously pointed out, the only difference between the relationship before and after 19 August 2001 was that MLC was given the role of paymaster. The latest pronouncement of the High Court on the issue of the existence a contract of employment or an independent contractual relationship demonstrates that when one seeks to characterise a contractual relationship dealing with work, one looks to the reality of the situation and eschews unrealistic descriptions of employees as independent contractors when the facts of a case disclose the contrary: see Hollis v Vabu Pty Limited [2001] HCA 44; (2001) 207 CLR 21 at [47] to [57].
Relief
103 The Commission was incorrect in determining that Mr Damevski was not an employee and this was a fundamental jurisdictional issue. In this circumstance it is appropriate for this Court to give prerogative relief. In Pawel v The Australian Industrial Relations Commission [1999] FCA 1160 at [14]; [1999] FCA 1660; (1999) 97 IR 392 at 395, Branson and Marshall JJ said:
"... although the Commission on an application under s170CE(1)(a) must determine whether the applicant was an employee in one of the categories specified in s 170CB(1), the jurisdiction of the Commissioner under s170CE(1)(a) is contingent on the fact that the applicant was such an employee, and not the Commission's opinion or satisfaction in this regard. That is, to adopt the language of Gummow J in Minister for Immigration and Multicultural Affairs v Eshetu [1999] HCA 21; (1999) 162 ALR 577 at para 127, the determination of whether the applicant is an employee in one of the categories specified in s 170CB(1) is a determination not only of jurisdictional fact but a determination of "constitutional facts" (see also v Judges of the Federal Court of Australia Ex parte W.A. National Football League [1979] HCA 6; (1979) 143 CLR 190 at 214-215"
104 In Pawel, the relevant employee sought to invoke the jurisdiction of the Commission to entertain a claim that his employment had been terminated harshly, unjustly or unreasonably. At first instance Simmonds C held that Mr Pawel's employment had not been terminated at the initiative of his employer. He declined to entertain the application. The Full Bench held that the Commissioner's findings, which led him to his conclusion that Mr Pawel's employment had not been terminated at the initiative of the employer, were open to him. Essentially it agreed with the conclusion of Simmonds C; however its use of the expression "reasonably open" prompted Branson and Marshall JJ to say at [14]:
"On an appeal to the Full Bench of the Commission with respect to a determination of a Commissioner as to whether an applicant was an employee in one of the categories specified in s 170CB(1), the Full Bench would be concerned with whether the Commission reached the right conclusion as to whether an applicant under s 170CE(1)(a) was such an employee. It would not be concerned simply with whether the decision of the Commissioner was reasonably open to him or her."
105 At [15] their Honours noted that it would have been open to the legislature to make any question of whether a person was "an employee whose employment was terminated by the employer" a question for the Commission's satisfaction, but that it did not.
106 At 16 their Honours said that:
"There seems to be no reason not to construe s 170CE(1) in accordance with the ordinary meaning of the words used in it. That is, that the jurisdictional fact which conditions the powers of the Commission under s 170CE(1) is that the applicant is "an employee whose employment has been terminated by the employer" within the meaning of the subsection. As Gummow J pointed out in Eshetu at para 127, a court or tribunal cannot give itself jurisdiction by erroneously deciding that a jurisdictional fact exists (see also R v Judges of the Federal Court of Australia (at 214). On an appeal to the Full Bench of the Commission with respect to a determination of a Commissioner as to whether an applicant was "an employee whose employment has been terminated by the employer", the Full Bench would be concerned with whether the Commissioner reached the right conclusion as to whether the applicant was such an employee. It would not be concerned simply with whether the decision of the Commissioner was reasonably open to him or her."
107 Their Honours observed at [26] that the approach taken by the Commissioner, to the question of whether Mr Pawel's employment was terminated by the employer, was inconsistent with authority of the Full Court of the Industrial Relations Court of Australia in Mohazab v Dick Smith Electronics Pty Ltd (No 2) (1995) 62 IR 200. Their Honours essentially found that the Full Bench fell into the same error.
108 At [35] their Honours observed that in Sammartino v Foggo [1999] FCA 1231; (1999) 93 IR 52, a Full Court issued a writ of certiorari to quash a decision of a Full Bench of the Commission "refusing leave on the basis that the Full Bench had fallen into an error of law which caused it to identify the wrong issue for its consideration".
109 Reference was made at [36] to Mann v Ross (1999) FCA 273; (1999) 88 FCR 274 where a Full Court issued a writ of certiorari to quash a decision of a Commissioner that the Commission lacked jurisdiction to hear and determine Mr Mann's application in respect of what he alleged to be an unfair dismissal.
110 It was not contended in the instant case that Pawel, Sammertino or Mann were incorrectly decided. I do not consider that they were incorrectly decided. They are at least not clearly wrong.
111 In Pawel at [39] it was observed that prerogative relief should be granted because "... the Full Bench misdirected itself to the proper approach to be taken to the application for leave to appeal in a way which affected the exercise of its power to grant leave."
112 However, the Full Court in Pawel did not intend to confine the availability of prerogative relief to circumstances where the Full Bench had taken the wrong approach to an application for leave to appeal. Such relief, as Sammertino and Mann show, is also available where the Commission incorrectly determines a jurisdictional fact. Whether or not Mr Damevski was an employee of Endoxos was a jurisdictional fact, which provided the gateway for his access to the unfair dismissal regime administered by the Commission. It was pivotal to its exercise of its jurisdiction.
113 The Commission does not have the power to determine conclusively a matter upon which its jurisdiction depends; see R v Gray; ex parte Marsh [1985] HCA 67; (1985) 157 CLR 351 at 371-372 per Gibbs CJ, 379 per Wilson J and 381-382 per Brennan J.
114 As Gibbs CJ said in Marsh at 371-2:
"There is a well recognized distinction between an error made by a tribunal in the course of deciding a matter, on the one hand, and an absence or excess of jurisdiction on the other: see, e.g., R. v. Taylor; Ex parte Professional Officers' Association -- Commonwealth Public Service (38) and Reg. v. Federal Court of Australia; Ex parte Pilkington A.C.I. (Operations) Pty. Ltd (39). However, the question on which side of the line a particular case should fall may be a very difficult one: Reg. v. Commonwealth Court of Conciliation and Arbitration; Ex parte Amalgamated Engineering Union, Australian Section (40). Since Anisminic Ltd. v. Foreign Compensation Commission (41) it has been more clearly understood that an error of law may amount to a jurisdictional error even though the tribunal which made the error had jurisdiction to embark on its inquiry. In that case Lord Wilberforce said (42):" ... the cases in which a tribunal has been held to have passed outside its proper limits are not limited to those in which it had no power to enter upon its inquiry or its jurisdiction, or has not satisfied a condition precedent. Certainly such cases exist ... but they do not exhaust the principle. A tribunal may quite properly validly enter upon its task and in the course of carrying it out may make a decision which is invalid -- not merely erroneous. This may be described as ´asking the wrong question' or ´applying the wrong test' -- expressions not wholly satisfactory since they do not, in themselves, distinguish between doing something which is not in the tribunal's area and doing something wrong within that area -- a crucial distinction which the court has to make."
See also per Lord Reid (43) and per Lord Pearce (44).
In Anisminic Ltd. v. Foreign Compensation Commission, Lord Pearce said (45):
"It would lead to an absurd situation if a tribunal, having been given a circumscribed area of inquiry, carved out from the general jurisdiction of the courts, were entitled of its own motion to extend that area by misconstruing the limits of its mandate to inquire and decide as set out in the Act of Parliament."
115 If the Commission wrongly declines to exercise jurisdiction on the basis that it finds a person does not qualify to access that jurisdiction, whereas the facts before it demonstrate that the person does in fact qualify, the Commission has made an error which goes to the very exercise of its jurisdiction. In this case the Commission has wrongly refused to allow Mr Damevski to access the provisions of s170CE of the Act when, on the facts before it, he had such an entitlement.
116 In any event, by concentrating entirely on "the documentary evidence" and considering it to be conclusive, without reference to the totality of the evidence before it, the Full Bench misdirected itself and asked itself the wrong question by failing to consider the possibility that a contract of employment subsisted between Mr Damevski and Endoxos after the 19 August 2001. It shut its eyes to uncontested evidence which demonstrated the reality of what occurred between Endoxos, MLC and Mr Damevski.
117 No provision in the Act makes the existence of an employment relationship between an applicant and a putative employer a matter which the Commission is empowered to determine exclusively based on its satisfaction of whether a certain state of facts exists. The Commission is empowered to deal with claims for harsh, unjust or unreasonable terminations. Such a claim is made by "an employee whose employment has been terminated by the employer". Section 170CE is not conditioned on the existence of the Commission's satisfaction that an applicant is such an employee. That question is a question of jurisdictional fact to be determined on an objective basis on the evidence before the Commission. As Gibbs J said in R v Federal Court; ex parte W A National Football League [1979] HCA 6; (1974) 143 CLR 190 at 214:
"...where a court is once created by Parliament acting under limited powers given by the Constitution the existence of a state of things necessary to bring a case within the scope of these powers must be a condition of the jurisdiction of the court."
118 In this case the attack on the decision of the Commission is not directed to the exercise of a discretionary power. It is a case where Parliament has made the existence of some fact or event a condition upon which the exercise of the jurisdiction of the Commission depends. That fact is the existence of an employment relationship between the parties. The Commission cannot give itself jurisdiction by erroneously deciding that fact or decline jurisdiction by doing likewise: see Minister for Immigration and Multicultural Affairs v Eshetu [1999] HCA 21; (1999) 197 CLR 611 at [127], per Gummow J, whose language I have adopted to the instant circumstances.
119 The decision of the Full Bench is amenable to constitutional writs because it contained an error of law on a matter that went to the heart of its jurisdiction.
120 Alternatively, the Commission's error may be described as follows. The Full Bench fell into an error of law by ignoring relevant material, that is, material going to the existence of a subsisting contract of employment between the parties. That error caused it to reach a mistaken conclusion and adversely affected the exercise of its power such that it wrongly declined jurisdiction: see Craig v The State of South Australia [1995] HCA 58; (1995) 184 CLR 163 at 179.
121 The Commission's ignoring of relevant material occurred in a way that affected the exercise of its power such that it made an error of law by wrongly declining jurisdiction: see Minister for Immigration and Multicultural Affairs v Yusuf [2001] HCA 30; (2001) 206 CLR 323 at [82], per McHugh, Gummow and Hayne JJ.
122 As was said in Yusuf at [82], and is adaptable to the instant case if one substitutes "Tribunal" for "Commission" and "Act" for the "Migration Act":
"Nothing in the Act suggests that the Tribunal is given authority to authoritatively determine questions of law or to make a decision otherwise than in accordance with the law."
I certify that the preceding one hundred and fifteen (115) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Marshall. |
Associate:
Dated: 13 November 2003
IN THE FEDERAL COURT OF AUSTRALIA |
|
NEW SOUTH WALES DISTRICT REGISTRY |
N 313 OF 2003 |
BETWEEN: |
RISTE DAMEVSKI APPLICANT |
AND: |
THE HONOURABLE JUSTICE GEOFFREY MICHAEL GUIDICE, PRESIDENT OF THE AUSTRALIAN INDUSTRIAL RELATIONS COMMISSION, THE HONOURABLE DR ALEXANDER JOHN NICHOLAS BLAIN, A DEPUTY PRESIDENT OF THE AUSTRALIAN INDUSTRIAL RELATIONS COMMISSION, PETER ASHBY LAWSON AND GARETH SIMON GRAHAM GRAINGER, MEMBERS OF THE AUSTRALIAN INDUSTRIAL RELATIONS COMMISSION FIRST RESPONDENT ENDOXOS PTY LIMITED (ACN 052 513 514) SECOND RESPONDENT |
JUDGES: |
WILCOX, MARSHALL AND MERKEL JJ |
DATE: |
13 NOVEMBER 2003 |
PLACE: |
SYDNEY |
MERKEL J:
123 The present matter concerns an employer's endeavour to terminate the employment of its employees and to simultaneously contract with an independent agency for the provision by those employees, supposedly acting as independent contractors, of the same services the employees had previously provided in their capacity as employees. The issue arising is whether, after the termination of their employment, the former employees provided their services to their former employer as employees or as independent contractors. That issue is of some importance because of a trend for both public and private sector organisations to outsource some of their labour requirements: see A Stewart, "Redefining Employment? Meeting the Challenge of Contract and Agency Labour", (2002) 15 Australian Journal of Labour Law 235 at 251-256.
124 The applicant ("Damevski") had his employment as a cleaner terminated by his employer, the second respondent ("Endoxos"), as from 19 August 2001. However, as from 19 August 2001 Damevski continued to provide to Endoxos the same services, as a cleaner, that he had previously provided to it. The services were provided pursuant to contractual arrangements purportedly made between:
* Endoxos and MLC Workplace Solutions Pty Ltd ("MLC") and/or Australian Independent Contractors Agency Pty Ltd ("AICA") ("the Endoxos agreement"); and
* Damevski and MLC and/or AICA ("the Damevski agreement").
125 Pro forma contract documents contained in an information pack provided by Endoxos to Damevski state that the Endoxos agreement was to be between Endoxos and MLC and the Damevski agreement was to be between Damevski and AICA. MLC and AICA appear to be related companies. However, there is some confusion as to the precise role played by each company. The confusion has arisen because no evidence was adduced by representatives of MLC and AICA and those companies do not appear to have acted strictly in accordance with the pro forma contract documents. Because the parties made no distinction between AICA and MLC it is appropriate to treat the relevant contracting party as "AICA/MLC".
126 On or about 8 February 2002, Damevski was informed by Endoxos that his services as a cleaner were no longer required. Shortly thereafter Damevski was informed by AICA/MLC that it could not provide him with any further work. As a consequence, Damevski's employment was effectively terminated during February 2002.
127 Damevski applied for relief against Endoxos in the Industrial Relations Commission pursuant to ss 170CE(1) and 170CM(1) of the Workplace Relations Act 1996 (Cth) ("the Act") in respect of the termination of his employment during February 2002. Relevantly, ss 170CE(1) provides:
"... an employee whose employment has been terminated by the employer may apply to the Commission for relief in respect of the termination of that employment:(a) on the ground that the termination was harsh, unjust or unreasonable; or
(b) on the ground of an alleged contravention of section ... 170CM ...;"
Section 170CM(1) relevantly provides:
"... an employer must not terminate an employee's employment unless:(a) the employee has been given the required period of notice ...; or
(b) the employee has been paid the required amount of compensation instead of notice ... ; or
(c) the employee is guilty of serious misconduct, that is, misconduct of such a nature that it would be unreasonable to require the employer to continue the employment of the employee concerned during the required period of notice ... "
128 Commissioner Grainger (at PR 917597), and on Damevski's application for leave to appeal, the Full Bench of the Industrial Relations Commission (constituted by President Guidice J, Deputy President Blain and Commissioner Lawson at PR 922380) ("the Commission") decided that:
* Damevski was not an employee of Endoxos at the time of the alleged termination of Damevski's employment during February 2002; and
* as a consequence, Damevski's application for relief pursuant to ss 170CE(1)(a) and 170CM(1) of the Act in respect of the termination must be dismissed for want of jurisdiction under both sections.
129 The jurisdiction of the Commission in respect of Damevski's application for relief under ss 170CE(1) and 170CM(1) of the Act is conditioned upon an employee-employer relationship existing at the date of the termination of employment between the employee claiming relief and the employer against whom relief is being claimed: see Pawel v Australian Industrial Relations Commission [1999] FCA 1660; (1999) 94 FCR 231 at 235 per Branson and Marshall JJ. Accordingly if, contrary to the decisions made in the Commission, an employment relationship existed between Damevski and Endoxos during February 2002 the Commission would have erred in law in dismissing Damevski's application for relief for want of jurisdiction and Damevski would be entitled to the relief he is seeking to quash the decisions of the Commission and direct it to hear and determine his application for relief in respect of the termination of his employment according to law.
130 The evidence before the Commission was summarised by the Full Bench at [2]-[13]:
"[2] It is common ground that the appellant commenced employment with Endoxos as a cleaner in August 1998 in Canberra. He worked cleaning buildings pursuant to contracts obtained by Endoxos. From the commencement of his employment he was provided with a van bearing Endoxos identification and with petrol and maintenance also paid for by Endoxos. Endoxos also provided a company uniform.[3] On 14 July 2001 Endoxos held a meeting with all of its staff to discuss a restructure. The appellant received notification of the meeting but did not attend. Two days later, on 16 July 2001, Endoxos wrote to the appellant and indicated that, as had been explained at the meeting, the company was under severe cost pressures and it had decided to abandon its existing employment arrangements and to adopt a contracting system. The employees could participate in this arrangement by becoming contractors to a company called MLC Workplace Solutions Pty Ltd (MLC). It was also indicated that if employees did not wish to become contractors Endoxos would be forced to relinquish its cleaning contracts. It was explained that if that occurred the appellant would lose his job with Endoxos and his employment with any new contractor could not be guaranteed.
[4] Endoxos' letter of 16 July 2001 included detailed material in relation to the contract proposal. There were formal documents which required completion if the appellant decided to relinquish his employment with Endoxos and to become a contractor to MLC. Apart from the formal documents there was a 16 page booklet produced by MLC entitled `The Contractors Guide, The Agency Contracting System.' The booklet outlines the relationship between MLC and its contractors and between MLC and its clients, such as Endoxos, to whom it provides labour. The booklet also contains information about the advantages to employees of becoming contractors and deals with loss of income insurance, taxation and other matters.
[5] On 23 July 2001 the appellant signed and returned to Endoxos a written acknowledgment that he understood the information in Endoxos' letter of 16 July and agreed to the proposal that he become a contractor to MLC. The acknowledgement was a pro forma which had been included with the letter of 16 July.
[6] On 16 August 2001 the appellant also signed and returned to Endoxos another pro forma document in the following terms:
`I, Riste Damevski, of [address], hereby confirm that my employment with Endoxos Pty Ltd ceased/will cease on 19 August 2001, on mutually agreeable terms which will encompass the payment (or drawing down) of accrued entitlements due to me as at the above date.
I understand that once my entitlements are calculated (as at the above date), I will be informed in writing of said entitlements, and I will be offered the choice of one of the following options:
i) receiving the monetary equivalent of the entitlement, or
ii) availing myself of leave at a future date (at a time mutually agreed upon by both parties), and drawing down on the entitlement.
(signed by Riste Damevski 16/8/01 and for and behalf of Endoxos Pty Ltd 17/8/01)'
[7] On 19 August 2001 Endoxos paid the appellant all of his outstanding entitlements in relation to his contract of employment with it. Thereafter it appears that the appellant continued to carry out cleaning work pursuant to contracts between Endoxos and its various clients. It is accepted that after 19 August the appellant supplied timesheets to both MLC and Endoxos. He continued to wear Endoxos clothing, although he apparently was not obliged to do so, and to use the Endoxos van. He was also supplied with a telephone.
[8] The appellant registered a business name on 21 January 2002.
[9] On 8 February 2002 the appellant was called to the Endoxos office and told by the Managing Director of Endoxos, Mr Lindsay Burke, that he was `being taken off the job' and that he would lose the Endoxos van and telephone. MLC did not contact the appellant about this issue although he contacted MLC and informed it of the situation. MLC offered him no other work but provided him with a separation letter so that he could claim unemployment benefits.
[10] The appellant said in oral evidence before the Commissioner that he understood that in signing the document on 16 August 2001 and sending it to Endoxos he was resigning from the company and that from 20 August he would be engaged as a sub-contractor. He said he was unaware whether he would be contracting with Endoxos or with MLC. He also testified that from 20 August, until the termination of his engagement in February 2002, he was paid by MLC.
[11] Evidence was given on behalf of Endoxos to the effect that Endoxos no longer has any employees in the Australian Capital Territory although it still holds a number of cleaning contracts. MLC, described as a contracting agency, provides labour to Endoxos for the purpose of those contracts. There is no legal connection between Endoxos and MLC other than the arrangements for the provision of labour.
[12] For the most part our summary of evidence is drawn from the Commissioner's decision. The appellant submitted on the appeal that the following matters, which were not mentioned by the Commissioner in his decision, are also relevant:
* precisely the same work practices and arrangements existed after 19 August 2001 as before that date;
* there was the same level of supervision including the allocation of work at the new sites, including the use of the mobile phone supplied by Endoxos;
* the appellant did not have any capacity to delegate the work; and
* the appellant did not submit invoices to Endoxos or MLC.
[13] The last point requires some clarification. The material contained in the Contractors Guide provided for contractors to notify MLC of their hours and a form was provided. Prior to his resignation from Endoxos the appellant filled in a timesheet regularly and gave it to that company. After August 2001 he continued to do so but also gave a copy of the timesheet to MLC."
131 The conclusions arrived at by the Full Bench appear at [22]-[27]:
"[22] It is clear, in our view, that the documentary evidence shows that the appellant agreed to perform work for MLC and to be paid for it by MLC. That the work was to be performed pursuant to a contract between MLC and Endoxos tends to confirm the absence of a contract between the appellant and Endoxos We think this evidence is conclusive and the Commissioner was correct so to find.[23] With one qualification we endorse the Commissioner's finding in the following passage:
`[29] I find that from 20 August 2002 Mr Damevski was, however unwillingly and unhappily, an independent contractor whose direct contractual relationship was with MLC and not with his former employer, Endoxos. It is clear that he accepted the payout of his accrued entitlements on or about 19 August 2001 from Endoxos and it is equally clear that he accepted a rate of remuneration from MLC which took into account his changed status as an independent contractor. He received valuable consideration for accepting his new status as an independent contractor. However unusual I might consider the structure of this relationship between Endoxos, MLC and Mr Damevski and whatever public policy issues this type of arrangement may raise, it was a relationship entered into by all parties with eyes wide open for specific commercial reasons on the part of MLC and Endoxos and, on the part of Mr Damevski, because he understood clearly that if he did not enter into the new arrangement Endoxos would cease to undertake cleaning contracts on which he was formerly employed and he would cease to receive work pursuant to those contracts.'
[24] With respect to him the Commissioner's analysis seems to us to be correct. There is no evidence upon which a finding could be made that the appellant's resignation from Endoxos and entering into a contract with MLC were vitiated by lack of consent or fraud. There is no evidence upon which a finding could be made that a new and separate employment relationship was subsequently entered into by the appellant and Endoxos.
[25] It was contended that Vabu [ie Hollis v Vabu Pty Limited [2001] HCA 44; (2001) 207 CLR 21], properly understood, requires us to disregard the documentary evidence unless it is consistent with the position revealed by other evidence. On this approach, we should look first at the indicia relied upon by the appellant relating to the everyday working arrangements to determine whether there is a contract with Endoxos and if we so conclude, to disregard the fact that the appellant consciously signed a resignation from Endoxos and entered into a contract with MLC. We do not think that Vabu has taken the law that far. It is clear that Vabu concerned the characterisation of an existing legal relationship. No question arose whether the parties were in a contractual relationship. In this case the issue to be resolved is an antecedent one, whether there was an existing legal relationship between the appellant and Endoxos at the relevant time. We agree with the Commissioner's finding that there was not. Nothing in Vabu requires a different conclusion.
[26] We mentioned that our approval of the passage we have set out from the Commissioner's decision was qualified. The qualification relates to the Commissioner's finding that the contractual relationship between MLC and the appellant was one of principal and independent contractor. That question is not one which it was necessary to decide. While the agreements between MLC and the appellant on the one hand and MLC and Endoxos on the other indicate that the appellant was not an employee, as Vabu shows, the conduct of the parties needs to be considered and the various indicia weighed in order to discern whether a written agreement truly reflects the nature of the relationship. The Commissioner seems to have regarded the written agreement between the appellant and MLC as conclusive. He does not appear to have analysed the conduct of the parties in any detail. Since the issue is in strictness not relevant and MLC was not a party to the proceedings we do not need to say any more about it.
[27] There was no employment relationship between the appellant and Endoxos at the relevant time. We decline to grant leave to appeal."
132 In his application to the Full Court of this Court Damevski relied upon the evidence adduced before the Commission. The question for the Full Court is whether, on that evidence, the Commission was in error in concluding that no employment relationship existed between Damevski and Endoxos when his employment as a cleaner was terminated during February 2002.
133 Counsel for Damevski, relying upon the decision of the High Court in Hollis v Vabu Pty Limited [2001] HCA 44; (2001) 207 CLR 21 ("Vabu") at 41-45, contended that "as a practical matter" nothing changed in relation to Damevski's employment with Endoxos after 19 August 2001 and as a consequence he remained, or was re-employed as, its employee.
134 Counsel for Endoxos disputed that contention claiming that Vabu is of no assistance to Damevski as it was not concerned with the issue arising on the present application namely, the consequences of the interposition of a labour hiring agency between an employer and employee after the employee had voluntarily agreed to the termination of his employment with that employer. Rather, it was contended that Vabu was concerned with the quite different question of whether certain persons who were performing services for Vabu Pty Limited, with whom they were in a contractual relationship, were doing so as employees or as independent contractors. Endoxos contended that that issue did not arise in the present case because after 19 August 2001 Damevski's only contractual relationship in relation to his employment as a cleaner was with AICA/MLC. Accordingly, it was said that the Full Bench correctly decided that, as from 19 August 2001, Damevski's employment with Endoxos ceased and that, irrespective of whether his status with AICA/MLC after 19 August 2001 was as an employee or as an independent contractor, he was not an employee of Endoxos.
135 The question in Vabu was whether certain bicycle couriers were employed by Vabu Pty Limited as employees, rather than independent contractors, Gleeson CJ, Gaudron, Gummow, Kirby and Hayne JJ observed at 41 [47]:
"In classifying the bicycle couriers as independent contractors, the Court of Appeal fell into error in making too much of the circumstances that the bicycle couriers owned their own bicycles, bore the expenses of running them and supplied many of their own accessories. Viewed as a practical matter, the bicycle couriers were not running their own business or enterprise, nor did they have independence in the conduct of their operations. A different conclusion might, for example, be appropriate where the investment in capital equipment was more significant, and greater skill and training were required to operate it. The case does not deal with situations of that character. The concern here is with the bicycle couriers engaged on Vabu's business. A consideration of the nature of their engagement, as evidenced by the documents to which reference has been made and by the work practices imposed by Vabu, indicates that they were employees."
136 At 42-45 [48]-[57] their Honours listed particular factors that led them to conclude that the bicycle couriers were employees of Vabu Pty Limited. Those factors included:
* the unskilled labour provided by the couriers made it difficult to find that an independent business was being conducted by each courier;
* the couriers had little control over the manner of performing their work;
* the couriers had to wear uniforms with Vabu Pty Limited's logo on it;
* Vabu Pty Limited supervised the couriers' finances, requesting that any problems with pay be reported to it;
* there was no scope for the couriers to bargain for rates of remuneration;
* annual leave could not be taken over certain periods leaving the couriers with little opportunity to engage in independent pursuits;
* tools and equipment were provided by Vabu Pty Limited; and
* Vabu Pty Limited retained control of the allocation and direction of the deliveries of the couriers.
137 Counsel for Endoxos was correct in so far as he submitted that the present case is concerned with an issue that did not arise in Vabu, being whether a particular employee's employment ceased and did not resume thereafter. The contractual arrangements made between Endoxos, Damevski and MLC/AICA will be determinative of that issue.
138 At the outset it is appropriate to observe that, although Damevski stated he was "confused" about the contractual arrangements he entered into, Damevski did not claim that he did not read or understand the documents he signed. Thus, the present case is not one in which the applicant is claiming that he is not bound by the documents that he signed because those documents were fundamentally, radically or totally different from that which he thought he was signing: see Saunders (Executrix of the Will of Rose Maud Gallie, deceased) v Anglia Building Society [1970] UKHL 5; [1971] AC 1004 at 1017, 1019, 1022, 1026 and 1039. There is therefore no basis for a non est factum plea, which does not apply to cases of simple confusion or carelessness.
139 It also needs to be observed that Damevski has not claimed that the contractual arrangements made between him and Endoxos in relation to the termination of his contract of employment as from 19 August 2001, and between him and AICA/MLC in relation to the provision of his services to Endoxos as from 19 August 2001, were a "sham" and were therefore not binding upon him. A "sham" transaction was described by Lockhart J in Sharrment Pty Ltd v Official Trustee in Bankruptcy (1988) 18 FCR 449 at 454 as:
"something that is intended to be mistaken for something else or that is not really what it purports to be. It is a spurious imitation, a counterfeit, a disguise or a false front. It is not genuine or true, but something made in imitation of something else or made to appear to be something which it is not. It is something which is false or deceptive."
140 In Re Willow Fashions (Australia) Pty Ltd (In Liq); Leveque v Downey as Liquidator of Willow Fashions (Australia) Pty Ltd (In Liq) (unreported, Supreme Court of Victoria, Hayne J, 27 April 1995) ("Re Willow") certain employees of one company agreed to cease working for that company and to be simultaneously employed by a related company after they had been told that their work and conditions would be "the same". Hayne J (at 13) found that the employees intended that the agreement they reached would "create the legal rights and obligations which those agreements gave the appearance of creating". In accepting that the employees could not claim unpaid wages from their former employer after the related company became insolvent Hayne J (at 10-11) noted that, even if the purpose of the contractual arrangements made by the controllers of the respective employers was unworthy, dishonourable or even dishonest, that "does not demonstrate that the agreements which they caused the companies which they controlled to make were unreal". Re Willow is an example of a case where the parties were bound by their "common intention" to enter into the agreements they made concerning cessation of employment with one employer and commencement of employment with another, albeit related, employer. As was observed by Lord Diplock in Gissing v Gissing [1971] AC 886 ("Gissing") at 906:
"the relevant intention of each party is the intention which was reasonably understood by the other party to be manifested by that party's words or conduct notwithstanding that he did not consciously formulate that intention in his own mind or even acted with some different intention which he did not communicate to the other party."
141 In Australian Broadcasting Corporation v XIVth Commonwealth Games Ltd (1988) 18 NSWLR 540 ("Australian Broadcasting Corporation") at 548-550 Gleeson CJ considered the issue of intention to conclude a contract in circumstances where intention was to be determined from a consideration of a series of communications exchanged between the parties, rather than on the basis of the construction of a single document. In that context his Honour stated at 550:
"The case involves the objective determination of the intention of the parties from a consideration of a series of communications exchanged by them in the context of their dealings over a period of time. In those circumstances it is both appropriate and necessary to have regard to the commercial circumstances surrounding the exchange of communications and, in particular to the subject matter of those communications: Allen v Carbone [1975] HCA 14; (1975) 132 CLR 528 at 531-532. Furthermore, as was noted earlier, it is proper to have regard to communications between the parties subsequent to the date of the alleged contract to the extent to which those communications throw light upon the meaning of the language which is being considered for the purpose of determining whether it expresses an intention one way or the other upon the critical matter. At the least, such subsequent communications will often form part of the context in which the particular exchanges in question are to be evaluated."
142 Counsel for Damevski conceded, correctly in my view, that the evidence demonstrates that Damevski and Endoxos intended that Damevski's employment with Endoxos was to be terminated by mutual agreement on 19 August 2001. The concession was correctly made because:
* Damevski confirmed in writing to Endoxos that the termination as from that date had been arrived at on "mutually agreeable terms";
* Damevski exercised his right, pursuant to those terms, to be paid his accrued entitlements, which only became payable by Endoxos on termination;
* Damevski's accrued entitlements were paid on 19 August 2001.
143 It is also clear that, although Damevski continued to carry out his cleaning services for Endoxos as from 19 August 2001 in precisely the same manner as he had done previously, Damevski, Endoxos and AICA/MLC intended that Damevski was doing so as a consequence of the Endoxos agreement and the Damevski agreement. Viewed objectively all three parties intended that those agreements would enable Damevski to continue working for Endoxos as he had done previously, save that he was now doing so through the agency of AICA/MLC, as provided by those agreements. In that regard Damevski gave evidence before the Commission that, although he wanted to remain a direct employee of Endoxos, he reluctantly agreed to sign a letter accepting AICA/MLC's offer "as detailed in the information pack" delivered to him.
144 However, it does not follow that, because Damevski terminated his employment as a cleaner with Endoxos as from 19 August 2001 and entered into contractual arrangements with AICA/MLC in relation to his employment as from 19 August 2001, he had no contractual relationship with Endoxos in respect of that employment. Whether such a contractual relationship existed depends on the proper characterisation of the contractual arrangements made between the various parties. In determining that characterisation the labels used by the parties to describe their relationship are relevant but, as was observed by Isaacs J in Curtis v The Perth and Fremantle Bottle Exchange Co Ltd [1914] HCA 21; (1914) 18 CLR 17 at 25:
"Where parties enter into a bargain with one another whereby certain rights and obligations are created, they cannot by a mere consensual label alter the inherent character of the relations they have actually called into existence. Many cases have arisen where Courts have disregarded such labels, because in law they were wrong, and have looked beneath them to the real substance."
145 The Full Bench concluded that Damevski's employment as from 19 August 2001 was pursuant to the Damevski agreement which was between Damevski and AICA/MLC rather than between Damevski and Endoxos and, as a consequence, Damevski had no contractual relationship with Endoxos as from 19 August 2001. However, the Commission did not consider whether AICA/MLC acted as an agent for Damevski or as an agent for Endoxos in establishing a new contractual relationship between Damevski and Endoxos as from 19 August 2001.
146 Agency connotes "an authority or capacity in one person to create legal relations between a person occupying the position of principal and third parties": International Harvester Company of Australia Proprietary Limited v Carrigan's Hazeldene Pastoral Company [1958] HCA 16; (1958) 100 CLR 644 at 652. An agent may conclude a contract on behalf of a principal, inter alia, by creating privity of contract between the third party and the principal with, or without, the agent becoming a party to the contract: see Australian Trade Commission v Goodman Fielder Industries Limited [1992] FCA 307; (1992) 36 FCR 517 at 521 and Teheran-Europe Co Ltd v ST Belton (Tractors) Ltd [1968] 2 QB 53 at 59-60. It is, however, necessary for the principal and agent to consent to the relationship of agency. In Garnac Grain Company Incorporated v HMF Faure & Fairclough Ltd [1968] AC 1130 ("Garnac Grain") at 1137 Lord Pearson observed:
"The relationship of principal and agent can only be established by the consent of the principal and the agent. They will be held to have consented if they have agreed to what amounts in law to such a relationship, even if they do not recognise it themselves and even if they have professed to disclaim it... But the consent must have been given by each of them, either expressly or by implication from their words and conduct. Primarily one looks to what they said and did at the time of the alleged creation of the agency. Earlier words and conduct may afford evidence of a course of dealing in existence at that time and may be taken into account more generally as historical background. Later words and conduct may have some bearing, though likely to be less important."
147 Although Damevski signed a letter accepting AICA/MLC's offer the present case is not one in which the contract entered into by Damevski with AICA/MLC is to be found in a single document. Rather, the tripartite contractual arrangements made between Endoxos, AICA/MLC and Damevski were partly in writing, partly oral and partly to be implied. Thus, as was explained in Gissing, Australian Broadcasting Corporation and Garnac Grain, it is necessary to consider the course of dealing and the communications between the three parties, both before and after 19 August 2001, in order to determine whether AICA/MLC created privity of contract between Endoxos and Damevski.
148 The AICA/MLC documents provided by Endoxos to Damevski stated that AICA/MLC's contracting system was an "Odco style Labour hire" arrangement. AICA/MLC described that arrangement as one in which there is a daily contract between the contractor and the hiring agency and no contract exists with the user of the contractor's services.
149 The AICA/MLC "Odco style Labour hire" arrangement was based on the arrangement considered by the Full Court in Building Workers' Industrial Union of Australia v Odco Pty Ltd (1991) 29 FCR 104 ("Odco"). In that case a hiring agency (Troubleshooters) interviewed potential workers who, if successful, were then placed "on the books" of Troubleshooters, by signing up to a contract specifying that there was no employment relationship between the workers and Troubleshooters, and that the workers would supply their own equipment and would be self-employed. The rates of remuneration payable by Troubleshooters to the workers were determined, and adjusted from time to time, by Troubleshooters. Troubleshooters contracted with a builder to supply labour and the builder directed the work the workers were to carry out on a daily basis. The builder was liable to pay Troubleshooters for every hour the workers worked, plus administrative fees. In turn, Troubleshooters was liable to pay the workers. The worker's only entitlement in respect of remuneration was against Troubleshooters and the builder's only obligation in respect of remuneration was to pay Troubleshooters.
150 The Full Court found that the workers were not employees of either the builder or Troubleshooters, but were independent contractors. In considering whether Troubleshooters might have been acting as the agent for the builder in procuring the services of the workers, or as agent for the workers in finding work, the Full Court stated (at 119):
"An alternative analysis ... was that Troubleshooters was the agent of the builder in engaging the services of the worker and brought about a contract of employment between its presumptive principal and the worker. The chief objection to this analysis arises from the evidence that it was Troubleshooters which fixed, and adjusted from time to time, the remuneration to which each worker was entitled. That was apparently done without reference to the builder who was only concerned to know the gross amount which he was obliged to pay Troubleshooters in respect of workers made available by it.To accommodate this alternative analysis to the fact that Troubleshooters itself made payments of wages to each worker after it had, as presumptive agent of the builder, brought into existence a contract of employment, counsel for the appellants postulated a further relationship of agent and principal between Troubleshooters and each worker whom it made available to a builder. As it was put, `in administratively securing the moneys from the builder and deducting its commission it acts as agent for the man'. However, this contention cannot be reconciled with the clear expression of intention that Troubleshooters is liable to pay remuneration at the agreed rate to the worker, whether or not it is itself paid by the builder."
151 In Odco the evidence was that Troubleshooters acted as a general labour hiring agency hiring out workers as independent contractors to builders with whom the workers, in general, had no prior contractual relationship. The facts in the present case are quite different to those in Odco. AICA/MLC was requested by Endoxos to act as its labour hiring agency to hire all of Endoxos' former staff in the Australian Capital Territory ("ACT"), including its managers and supervisors, to work for Endoxos (purportedly as independent contractors) as from 19 August 2001 in the same manner as they had previously worked for it. While the decision in Odco might apply to AICA/MLC's general hiring system in respect of workers hired out by it to clients with whom the workers, in general, had no prior contractual relationship, there is a difficulty in applying the decision in Odco to the specific tripartite arrangement made between Endoxos, its ACT staff (including Damevski) and AICA/MLC. In order to appreciate that difficulty it is necessary to consider that arrangement in more detail.
152 The first document signed by Damevski was a letter from Endoxos to him dated 16 July 2001. The letter was in the following terms:
"Dear ChrisI was disappointed to note that you were unable to attend the special meeting which took place on Saturday. The meeting was convened to explain in full to all personnel the situation in which the company finds itself, due to circumstances beyond its control.
You may be aware of the horrendous increases in Workers' Compensation and Public Liability insurance premiums which have recently occurred in the cleaning industry, and which have left some companies no alternative but to hand back contracts, thus resulting in staff losing their jobs.
In an attempt to avoid this eventuality at Endoxos, we have recently held discussions with Australian Independent Contractors Association (AICA/MLC), who have provided us with an alternative which will not only allow us to carry on servicing our clients (and hopefully give us a competitive edge in obtaining new business in the future), but also offers many exciting options to our existing personnel.
Following my presentation to the meeting, during which I explained the dire situation the cleaning industry is experiencing, representatives of AICA/MLC spoke and explained in detail the benefits that joining their organisation has to offer. It was then left to staff members individually to make their decision, based on the information put before them.
Unfortunately I am not able to detail in this letter all the benefits of the AICA/MLC proposal, but there are choices with regard to the amount of Superannuation you can elect to contribute, flexibility to be paid some entitlements on an ongoing (fortnightly) basis - such as annual leave, sick leave, long service leave etc., and taxation benefits which are available to `contractors'.
You will find enclosed an information pack, which contains full details of AICA/MLC, an explanation of the principles of `contracting', an offer of employment which includes the rate of pay you are being offered, and several documents which will need to be completed and returned to AICA/MLC.
Should you have any questions regarding the offer, the forms which require completion, or the contents of the package in general, please contact Steve Harrison or Scott Yates at AICA/MLC on ...
The decision to become a `contractor' is entirely up to each individual, and all I can do is strongly recommend that you give it your favourable consideration, however it would be remiss of me not to inform you of the potential ramifications for you should you not accept the AICA/MLC proposal.
Should you or any other staff member decline the AICA/MLC offer, I will be left with no alternative but to write to our client(s) and inform them of our intention to relinquish the relative contract(s). In that regard, you may be offered a position by the contractor appointed to take over the site(s), but such subsequent employment cannot be guaranteed.
For obvious reasons I must request that you respond to this letter by 20 July 2001, once you decide to accept the AICA/MLC offer in order to enable us to make appropriate arrangements as mentioned above. Please confirm your decision by signing the statement below, and returning it to this office (fax. will suffice) by the above date.
I will be writing to you separately in the near future regarding your accrued entitlements. I thank you for your understanding and support, and sincerely hope that the relationship we have developed in the past can continue long into the future.
Yours truly,
[Signed]
[for] Lindsay T Burke
Managing Director
16 July 2001
I, (name) [R DAMEVSKI] understand the information supplied to me agree to accept the AICA/MLC offer as detailed in the information pack delivered to me.
(signed) [Signed] [23] / [07] / [01]"
153 It is clear from the letter, that the proposal involved all of Endoxos' staff agreeing to accept AICA/MLC's offer to enable Endoxos to continue with, rather than relinquish, the cleaning contracts it had with its clients so that the relationship Endoxos had developed with its employees in the past "can continue long into the future". Damevski was informed of the proposal by Mr Lindsay Burke ("Lindsay Burke"), the managing director of Endoxos, who informed Damevski and other Endoxos staff that, although they would need to go onto subcontracts, "nothing would change".
154 Indeed, nothing did change in relation to the manner in which Damevski provided his services to Endoxos after 19 August 2001. Damevski worked for the same clients, was supplied by Endoxos with the same clothing, vehicle and equipment (with the Endoxos logo) with which he had previously been supplied as an employee. He continued to be provided with the same shifts and to be supervised in respect of his work by the same Endoxos managers and supervisors, albeit that they were now also "independent contractors". Mr Kelvin Burke, the resources manager of Endoxos, who also became an "independent contractor", stated that to Endoxos' clients "there would appear to be no difference" because they would see the same people, equipment and vehicles.
155 The information pack included AICA/MLC's "Agreement to Contract" with the worker, which was in the following terms:
"AGREEMENT TO CONTRACT CONDITIONS OF CONTRACT
1. I acknowledge and agree that there is no relationship of employer / employee with AUSTRALIAN INDEPENDENT CONTRACTORS AGENCY PTY LTD (AICA) and that AICA does not guarantee me any work. I am self-employed and, as such, I am not bound to accept any work through AICA.
2. I hereby agree to work for an agreed amount per hour for actual on-site hours, or job price to be agreed.
3. I Instruct AICA to make deductions under the PAYG system of taxation.
4. I hereby agree that I have no claims on AICA in respect of Holiday Pay, Long Service Leave, Sick Pay, or any similar payment.
5. I hereby agree that AICA has no responsibility or liability to me, except that I am guaranteed to be paid for actual on-site hours worked or agreed job price for work done.
6. It is agreed that I must carry out all work that I agree to do through the Agency of AICA in a proper manner and AICA is hereby guaranteed against faulty work. All work must be made good. Further, I agree to cover the work (where necessary) for Public Liability, Accident Insurance, Long Service, and Holiday Pay, and have no claims on AICA in respect of the above.
7. I hereby agree to supply my own equipment, including safety equipment, where necessary for perform the work, and that I have no claim on AICA in respect of the above.
SIGNED:_____________________________DATE:_________________
(CONTRACTOR)
SIGNED:_____________________________DATE:_________________
For and on behalf of AICA"
156 The "Agreement to Contract" has a number of relevant features. Significantly, in contrast to the facts in Odco, the amount per hour referred to in cl 2 was not agreed in an arms length transaction between AICA/MLC and Damevski. Rather, Endoxos "instructed" AICA/MLC that the award rates and conditions were to be maintained or exceeded in respect of its former employees. Ultimately, Damevski's rate of $135 per day (an increase of $5 per day) was stipulated by Kelvin Burke, acting as Endoxos' resource manager, to Damevski to be his "raise" in pay.
157 It is likely Damevski's increased rate of pay was arrived at as a result of Endoxos agreeing to pay to AICA/MLC an award or over award rate of pay determined by Endoxos, plus AICA/MLC's "administration charge". Although there is little evidence on that matter I have arrived at that conclusion because, save for its administration charge, AICA/MLC had no real interest in determining the rates of pay Endoxos' former employees were to receive for doing the same work they previously performed. In contrast, Endoxos had a real interest in determining the rates it would have to pay for the services of its former employees. The position might have been otherwise if AICA/MLC had other cleaning companies as its clients but there is no evidence that it did. Indeed, the inference I would draw is that it probably did not have any cleaning companies in the ACT as clients other than Endoxos. The reason for drawing that inference is that the AICA/MLC's arrangement with Endoxos appears to have been specific to Endoxos and, when Endoxos no longer required Damevski's services, AICA/MLC was unable to offer him any other work.
158 The second feature of the "Agreement to Contract" is that the contractor was to carry out work through the "Agency of AICA". The suggestion of "agency" on the part of AICA/MLC also appears in other documents. The use of that word raises the question of whether the "agency" was for Endoxos and Damevski.
159 The other feature is that, contrary to cl 7, it formed no part of any arrangements entered into by Damevski in relation to the services he was to provide to Endoxos that he was "to supply [his] own equipment". Rather, Endoxos agreed to continue to supply its equipment as it had done previously. That feature of the contract is an example of the inappropriateness of standard pro forma contracts being proposed in a situation where aspects of the contracts are inapplicable to the circumstances of a particular case.
160 The second document, which was signed by Damevski on 16 August 2001, related to the termination of his employment with Endoxos as from 19 August 2001. The terms of the document are set out in [6] of the reasons for decision of the Full Bench of the Commission. As explained earlier in these reasons the document makes it quite clear that Damevski's employment as an employee of Endoxos was terminated as from 19 August 2001. However, the document is silent on what is to occur as from 19 August 2001.
161 A "Hiring Agreement" was entered into between AICA/MLC and Endoxos on 17 July 2001. The agreement was in the following terms:
"MLC WORKPLACE SOLUTIONS PTY LTD (MLCWS) is a service company that operates a licensed agency contracting system which has been supplying contract personnel to commerce and industry on a casual basis for over 20 years. We supply a high standard of worker / tradesperson and we deal in volume, which means that you save time, money, and effort for a better result.The personnel we supply to you are yours to direct and the onus of inspection and satisfaction is yours. If, for any reason, you are unhappy with the contractor, simply send the person off site and inform us of your dissatisfaction. Our service MUST supply good personnel to ensure your continued usage. We therefore ask for feedback from you as to the workers' performance.
We refer you to our Conditions of Hire and the Special Conditions of Hire (overleaf), which are binding on you upon the signifying of this agreement.
...
CONDITIONS OF HIRE:
i) Tools: basic tools of trade are included in our rates.
ii) Work done out of normal hours is negotiable - eg. overtime, weekends, public holidays, afternoon/night shift and country jobs.
iii) A safe workplace is to be provided.
PAYMENT TERMS AND CONDITIONS:
You are invoiced per site per week for all personnel on that site. Your obligation is to pay within 24 hours of invoice and within the terms agreed to with MLCWS.
RATES: Our rates include an administration charge plus all statutory obligations for the contractors that the agency is legally responsible for. You, the client, are free from such liabilities as income tax deductions, workers, compensation, payroll tax and Superannuation.
TAXATION:
We administer PAYG tax for the contractors we supply to your business. PAYG tax is withheld at the appropriate rate and forwarded to the ATO as required.
DISSATISFACTION:
If you are not satisfied with any worker's performance, simply notify us and send the worker off site immediately. You will be charged for hours on site or units delivered only. You are not liable to make any other payment for the services supplied. The workers supplied are not your employees and are not ours; they are bona fide independent contractors."
162 Under the agreement Endoxos can "direct" the contractor. That entitlement is relevant in determining whether an employment relationship exists although it is not as important as it may once have been, particularly in a labour hiring agency context: see Mason & Cox Pty Ltd v McCann [1999] SASC 544; (1999) 74 SASR 438 at 442 [24]- [29] and Drake Personnel Ltd v Commissioner of State Revenue [2000] VSCA 122; [2000] 2 VR 635 at 657 [55]. Further, contrary to cl (i) of the "Conditions of Hire" the "tools of trade" which were provided by Endoxos, were not included in AICA/MLC's rates.
163 The information pack referred to in Damevski's acceptance of AICA/MLC's offer included "The Contractor's Guide" to "The Agency Contracting System". AICA/MLC was described in the guide as providing "the administrative services of a contractor management agency, supplying self-employed contractors to commerce and industry". The "Guidelines" included:
"TO OBTAIN WORK:If looking for work we recommend that you call and advise us of your availability. Remember to STAY IN TOUCH.
ACCEPTING WORK:
When a contract is offered to you and accepted by you, there is a contractual obligation for you to fulfil the requirements of that position. It is your right to accept or decline any work offered to you.
ATTENDANCE:
If you have accepted work through the agency and for any reason you are unable to attend, it is essential that you call and advise us of the problem as soon as possible. Prompt notification by you will enable us to send a replacement, which keeps the client satisfied. Remember - by not phoning in, you may be putting another agency contractor out of work or making an agency client dissatisfied. STAY IN TOUCH!
...
INVOICING & PAYMENT:
The working week runs from Wednesday to Tuesday. You must advise the agency by telephone of your weekly work details by 6.30 pm on Tuesday (or 9.30am on Wednesday if you are working late on the Tuesday).
...
CONTINUITY OF WORK:
Being a contractor agency, the level of work available through the agency is variable. As our business supplies contractors on an as-needs basis, we must rely on demand by our clients. We have no control over this and for this reason, we cannot guarantee any amount of work.
The number one priority is that you maintain a consistent, professional approach. Secondly, ensure that the agency knows that you are looking for work. When finishing a contract and you realise that the agency will not be aware that you will be available for work the following day, phone and let us know. STAY IN TOUCH!
...
ATTIRE:
It is the duty of each contractor to be properly attired for work. The contractor must supply all relevant workwear and is expected to be neat, clean and tidy at all times.
EQUIPMENT:
It is the duty of each individual contractor to provide a standard set of equipment necessary to the performance of their profession or trade. Consult the agency if you require further details
CLIENT DIFFICULTY PROCEDURES:
Please inform us of any difficulties or problems experienced on site. Examples of difficulties could range from personality clashes with client personnel or other contractors, unsafe work practices, etc. Stay within the vicinity of the client's business, phone the agency, and we will do everything possible to rectify the problem quickly and effectively.
...
GST and Labour Hire arrangements
Individual Contractors do not include GST in the rate they charge the agency, ie, the contractor pay rate."
164 The guidelines are consistent with an Odco style labour hire arrangement but, as explained above, the arrangement in the present case was intended to be specific to Endoxos and therefore differed significantly from the Odco situation. In the Odco situation the identity of the contractor is not critical. However, Damevski's evidence was that he was required to perform the tasks allocated to him and that he was not free "to get someone else to do the job". Further, the only "Continuity of Work" established by the evidence was continuity of the same work that Damevski had performed for Endoxos prior to 19 August 2001.
165 A page headed "Who Can Use the Agency Contracting System?" stated:
"1. ANY WORKER WHO WISHES TO CONTRACT THEIR SERVICES TO BUSINESS, AND NEEDS MORE FLEXIBILITY AND CONTROL OVER THEIR WORKING LIVES."
166 Advantages and Disadvantages of "transferring to Agency Contracting" were described in the information pack on the assumption that the contractors were not employees. Disadvantages were described as follows:
"? Security of employment - unfair dismissal- redundancy issues
* These disadvantages are offset because under our Agency system, contractors are offered continuity of work (i.e. with different clients), as opposed to security with a single client. That is, if work is not progressing satisfactorily at a given site, we will look at placing you elsewhere with other clients."
167 The section entitled "Information for Accountants" described the "Odco" style labour hire contract as follows:
"Odco independent contractors are people who work through specific labour hire arrangements where* No common law employment exists.
* Each contractor has a daily hire contract with the labour hire agency
* No contract exists with the user of the contractor service.
Odco contractors working through the Australian Independent Contractors Agency usually register a business name as a sole trader with the NSW Department of Fair Trading. They register their principal place of business as their residential address. Clauses 1 and 2 of the Agreement to Contract stipulate that contractors utilising the Odco contract system accept (or reject) work on an hourly or day to day basis with clients of the Agency. The contractor is available for work where the Agency places him/her"
168 I have set out the contents of the documents in the information pack in some detail as it is clear that the proposal put to Damevski and other Endoxos staff in respect of the continuation of the services they had previously provided to Endoxos is not reflected in the documents, which relate to the quite discrete subject matter of the services the contractors might provide to entities other than Endoxos. That is made quite clear from the following chart, which outlined the proposed relationship between the client, AICA/MLC and the "independent contractor":
[ IMAGE ]
169 The chart is informative in so far as it applies to the provision of services to Endoxos. It provides for AICA/MLC to "provide access to independent contractors to perform a contract for service". It shows Endoxos to be in a direct relationship with the contractor who has confirmed his or her "availability to perform a contract", which has been offered to that contractor. The independent contractor's contract is "to service Endoxos' prime contract" with its client. "Other contract work" the contractor might perform is dealt with as a separate matter. Although the chart does not expressly state that the contractors are in a contractual relationship with Endoxos, it is not inconsistent with the role AICA/MLC undertook for it to have been acting as an agent for Endoxos and its former staff in creating a contract by which the contractors are to "perform a contract for service" for Endoxos. In so far as the chart concerns the relationship proposed between Endoxos and its former employees it is consistent with a contract that confers rights and imposes obligations upon all three parties to the contract: Endoxos; the "independent contractors"; and, in relation to payment, AICA/MLC in its capacity as the hiring "agency". It is also consistent with other statements in the documentation that, when the former employees agree to again work for Endoxos they enter into a specific contract to perform that work. Thus, the documentation is not inconsistent with a common intention that AICA/MLC is to create privity of contract between Endoxos and its former employees. Whether that privity exists will depend upon all the circumstances of the case.
170 Pursuant to the Endoxos and Damevski agreements:
* Damevski sent his time sheets in respect of the services provided to AICA/MLC and to Endoxos;
* Endoxos paid AICA/MLC for the services provided by Damevski;
* AICA/MLC paid Damevski for the services he provided to Endoxos;
* Damevski's daily rate for his services increased from $130, which had been his salary when employed by Endoxos, to $135.
* Damevski was required to register himself as a business name, which he did on 23 January 2002.
171 The documentary evidence as to AICA/MLC's role as an "agent" is ambiguous. In one instance it is stated that contractors contract their services to businesses. There are, however, other indications that, although AICA/MLC is a labour hiring agency, it is not intended that its contractors have a contractual relationship with the client to whom the contractors are to provide their services. Those indications appear substantially in the documents that purport to describe Odco style labour hire arrangements which, as explained above, is distinct from the specific arrangement entered into between Endoxos, AICA/MLC and Damevski.
172 Approaching the issue of intention to contract and agency in the manner discussed in Gissing, Australian Broadcasting Corporation and Garnac Grain I have concluded that, notwithstanding the labels employed in the relevant documents, the "real substance" of the Endoxos and Damevski agreements was that AICA/MLC's role in the relationship between Endoxos and its former employees was that it acted as agent for both parties in creating privity of contract between them. The reasons for that conclusion are as follows:
1. Under the respective agreements entered into by Endoxos in respect of all of its employees in the ACT, including its managers and supervisors, those employees were to be employed precisely as they had been previously, save that the arrangements for payment were to differ as a result of the interposition of AICA/MLC as a conduit for payment of the new rates of pay payable to the employees. AICA/MLC's role was to receive the "contractors" time sheets and pay them the amount due, which I infer is the amount determined by Endoxos, and receive AICA/MLC's administration charge. There is some evidence that AICA/MLC paid Damevski only after it was paid by Endoxos. That evidence is also consistent with a principal/agent relationship between Endoxos and AICA/MLC. In any event, as was pointed out in Odco at 119, payment by an "intermediary" is not fatal to the existence of an employment relationship between the contractor and the putative employer.
When the role of AICA/MLC in the relationship between Endoxos and its former employees is considered it is difficult to see it as anything other than an intermediary employed by both parties to create privity of contract between them. It is significant that AICA/MLC was to play, and played, no role in determining the rates payable, other than to ensure they included its administrative charges, or in determining the time and content of the services to be performed by the former employees. Both of those matters were determined by Endoxos. AICA/MLC's role as an intermediary was for the purpose of creating an independent contractor, rather than an employment, relationship between Endoxos and those employees. Whether it succeeded in doing so is a different question to whether it created privity of contract between them.
2. Endoxos, rather than AICA/MLC, made all of the specific arrangements relating to Damevski's re-engagement to work as a cleaner for it as from 19 August 2001. Endoxos determined and informed Damevski about where, when and how he was to work under the Damevski agreement and how much he was to be paid for that work. Endoxos provided Damevski with the vehicle, clothing and equipment that enabled him to carry out his cleaning work for Endoxos. When Endoxos no longer required Damevski's services that effectively brought to an end his employment under the Damevski agreement. Endoxos' conduct is consistent with it acting as a principal, rather than as an agent for AICA/MLC, in relation to Damevski's employment after 19 August 2001.
3. All of the relevant features of Damevski's employment, save for the manner and quantum of payment, remained unchanged. Damevski did not supply any of the equipment required to perform his services. Viewed as "a practical matter" Damevski did not conduct his own business or enterprise or have any independence in the conduct of the cleaning services he provided to Endoxos. Little skill or training was necessary for him to carry out his services. Neither Damevski, or his putative agent AICA/MLC, had any real scope for bargaining for rates of remuneration. Damevski could not take work or annual leave as and when he wanted. His tools and equipment were provided by Endoxos, which controlled and directed where, when and how he was to work. Applying the factors relied upon in the joint judgment in Vabu it is clear that, notwithstanding the labels employed by the parties, Damevski provided his services to Endoxos as from 19 August 2001 as an employee, rather than as an independent contractor. That raises the question of whether, under the Damevski and Endoxos agreements, Damevski was an employee of AICA/MLC or whether, in reality, he was an employee of Endoxos, albeit by reason of AICA/MLC contracting on behalf of Endoxos and Damevski for Damevski's re-employment by Endoxos to provide the same services that he had previously provided.
For the reasons given above I am satisfied that the common intention of the parties, viewed objectively, manifested by their words and conduct, was that Damevski was to be re-employed by AICA/MLC acting as agent on behalf of Endoxos and Damevski. Save for AICA/MLC's role in respect of payment the evidence does not establish that it was to have any role as principal in relation to Damevski's employment relationship with Endoxos as from 19 August 2001. That conclusion is also consistent with the commercial circumstances surrounding the communications and with the subject matter of those communications. Those circumstances and that subject matter can be simply stated as Endoxos requiring that its workforce and their work continue in all respects as before, save that the workforce perform that work as independent contractors. The failure of Endoxos to achieve that outcome is a result of the parties not having the legal capacity to determine the nature of their contractual relationship by the use of labels that do not accord with the real substance of that relationship.
4. The factors that led the Full Court to reject a similar agency argument in Odco are absent in the present case. Endoxos, rather than AICA/MLC, effectively fixed the remuneration to which Damevski was entitled. Further, AICA/MLC played virtually no role in relation to Damevski's employment relationship with Endoxos. Although AICA/MLC was to be liable to pay Damevski the agreed rate, I am not satisfied that the evidence justifies a finding that there was a common intention that Damevski could not look to Endoxos for payment for his services. Rather, the re-employment relationship I am satisfied existed between Endoxos and Damevski as from 19 August 2001 would have entitled him to look to Endoxos for payment if, for some reason, AICA/MLC was not paid by Endoxos in respect of Damevski's services. That conclusion is supported by the evidence, to which I have earlier referred, that AICA/MLC withheld payment of an amount payable to Damevski until Endoxos paid it that amount.
173 In general, the courts have held that the interposition of a labour hiring agency between its clients and the workers it hires out to them does not result in an employee-employer relationship between the client and the worker: see Mason & Cox Pty Ltd v McCann [1999] SASC 544; (1999) 74 SASR 438; Skilled Engineering Pty Ltd v Gill (unreported, Full Court of the South Australian Supreme Court, King CJ, Cox and Bollen JJ, 11 July 1991); McMahon Services Pty Ltd v Cox [2001] SASC 33; (2001) 78 SASR 540; Swift Placements Pty Limited v Workcover Authority of New South Wales (Inspector May) (2000) 96 IR 69; Drake Personnel Ltd v Commissioner of State Revenue [2000] VSCA 122; [2000] 2 VR 635; Construction Industry Training Board v Labour Force Ltd [1970] 3 All ER 220; McMeechan v Secretary of State for Employment [1997] ICR 549; Montgomery v Johnson Underwood Ltd [2001] ICR 819.
174 However, the present case differs in significant respects from those cases. In those cases, in general, the hiring agency interviewed and selected the workers, and determined their remuneration, without reference to the client. Usually, a client requesting a worker with particular skills was provided with one, who may or may not have been "on the books" of the hiring agency at the time the order was placed. The workers of such hiring agencies were usually meant to keep the agency informed of their availability to work, and in many cases were not to agree to undertake work for the client which had not been arranged or directed by the hiring agency. Equipment was either supplied by the worker themselves, or by the hiring agency, except for specialist safety equipment which the client often supplied. Dismissal of a worker was only able to be effected by the hiring agency. The client can only advise the hiring agency that the particular worker is no longer required by it. Had AICA/MLC acted as a labour hiring agency for Damevski to contract his services to other cleaning companies, as suggested in the chart and in the information pack, then the decisions in the above cases may have been applicable to this situation. However, that did not eventuate in the present case.
175 For the above I reasons I am satisfied that the Commission erred:
* in concluding that Damevski was not an employee of Endoxos during February 2002; and
* in declining to exercise its jurisdiction in respect of his claims under ss 170CE(1) and 170CM of the Act.
176 Accordingly, Damevski is entitled to the relief he seeks quashing the decisions of the Commission and directing it to hear and determine his claims in accordance with law.
I certify that the preceding fifty-four (54) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Merkel. |
Associate:
Dated: 13 November 2003
Counsel for the Applicant: |
Mr J Nolan |
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Solicitor for the Applicant: |
Steve Masselos & Co |
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Counsel for the 2nd Respondent: |
Mr P Walker |
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Solicitor for the 2nd Respondent: |
Meyer Clapham |
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Date of Hearing: |
18 August 2003 |
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Date of Judgment: |
13 November 2003 |
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URL: http://www.austlii.edu.au/au/cases/cth/FCAFC/2003/252.html