Vella v Integral Energy [2011] FMCA 6 (31 January 2011)

Last Updated: 4 February 2011

FEDERAL MAGISTRATES COURT OF AUSTRALIA

VELLA v INTEGRAL ENERGY

[2011] FMCA 6

INDUSTRIAL LAW – Whether the applicant was an employee of or an independent contractor with the respondent considered. PRACTICE AND PROCEDURE – Determination of a preliminary issue on an interlocutory basis of whether the applicant has advanced a prima facie case on the issue of the applicant’s employment status.

Fair Work Act 2009 (Cth) Federal Magistrates Act 1999 (Cth), s.17A Independent Contractors Act 2005 (Cth)

Bulong Nickel Pty Ltd v Bateman Project Engineering Pty Ltd [2001] FCA 1900 Caterpillar Inc v John Deere Ltd [1999] FCA 1503

Applicant:

ADAM VELLA

Respondent:

INTEGRAL ENERGY

File Number:

SYG 671 of 2010

Judgment of:

Driver FM

Hearing date:

18 November 2010

Delivered at:

Sydney

Delivered on:

31 January 2011

REPRESENTATION

Counsel for the Applicant:

Mr I Latham

Solicitors for the Applicant:

Turner Freeman Lawyers

Counsel for the Respondent:

Ms K Nomchong

Solicitors for the Respondent:

Middletons

ORDERS

(1) The Court declares that the applicant has failed to establish a prima facie case that he was an employee of the respondent or of its predecessor organisations.

FEDERAL MAGISTRATES COURT OF AUSTRALIA AT SYDNEY

SYG 671 of 2010

ADAM VELLA

Applicant

And

INTEGRAL ENERGY

Respondent

REASONS FOR JUDGMENT

Introduction and background

1. This judgment concerns an Application in a Case filed on 22 October 2010. The application relates to proceedings under the Fair Work Act 2009 (Cth) and the Independent Contractors Act 2005 (Cth). The principal application is brought on alternative bases that the applicant is an employee or an independent contractor. The respondent sought to put the applicant to an election on that issue. That was resisted by the applicant on the basis that he was entitled to argue alternative bases for his claim. I put to the parties that, as a preliminary issue, the Court might determine, on an interlocutory basis, the question of whether Mr Vella was an employee or an independent contractor with the respondent. It was agreed that that issue could not, in an interlocutory judgment, be determined definitively but that the Court might determine whether the applicant has reasonable prospects of success in arguing that he was an employee. Given that the Application in a Case seeks a declaration on the point, I have taken the view that the Court should make a interlocutory ruling.
2. The issue was argued before me on the basis that the Court would determine whether the applicant has advanced a prima facie case that he was an employee. That is a higher standard than applies in relation to an arguable case[1]. The purpose of seeking to establish a prima facie case, at this stage, is to determine whether it is worth the time and expense for the parties to research and argue the issue at a final hearing. Ultimately, both parties and the Court agreed to that course.
3. The interlocutory hearing on the separate issue proceeded on the basis of written and oral submissions.

Submissions of the parties

4. The applicant relies upon a bundle of documents tendered in support of the Application in a Case and the parties made submissions by reference to those documents. The applicant relevantly submits as follows:
   • The applicant seeks a separate determination as to whether the applicant is an employee or independent contractor. In support of this application, the applicant submits that there is at least a prima facie case that the applicant is an employee.

The meaning of prima facie

The phrase prima facie is derived from the latin words for first appearance. Broadly speaking it means that the applicant must show that a case supporting the claim for relief can be found in the material presented to the court and it is assumed that the facts pointed to by that material will be provide: Bulong Nickel[2].

• The nature of such proof in a civil context was examined in Caterpillar[3]. In that case, the Full Court summarised the authorities saying relevantly that such a test does not suggest the kind of scrutiny that would occur in a submission of no case to answer following the closure of an applicant’s case at trial ... It may be therefore that a court at this stage might draw inferences more readily in favour of an applicant, bearing in mind, amongst other things, that the applicant will not have had the advantage of discovery, subpoena and other procedural aids to the making out of a prima facie case at trial.’

‘a prima facie case is made out if, on the material before the court, inferences are open which if translated into findings of fact, would support the relief claimed’.
‘Such a preliminary question should not call for a substantial inquiry. The kind of evidence adduced on a preliminary inquiry of this kind should be in proportion to the nature of such an interlocutory issue ... [The] purpose is to determine by way of a mini rather than a mega trial whether the applicant has a prima facie case.’
The determination as to employment
The law as to the distinction between independent contractor and employee is recounted in Butterworth’s Commentary to the Independent Contractors Act s.4. Broadly speaking, the single test of ‘control’ has been incorporated into a multiplicity of indicia. Those indicia are well summarised in Viewdaze[4] as including:

• Whether the putative employer exercises, or has the right to exercise, control over the manner in which work is performed, place of work, hours of work and the like;
• Whether the worker performs work for others (or has a genuine and practical entitlement to do so);
• Whether the worker has a separate place of work and/or advertises his or her services to the world at large;
• Whether the worker provides and maintained significant tools or equipment;
• Whether the work can be delegated or subcontracted;
• Whether the putative employer has the right to suspend or dismiss the person engaged;
• Whether the putative employer presents the worker to the world at large as an emanation of the business;
• Whether income tax is deducted from remuneration paid to the worker;
• Whether the worker is remunerated by periodic wage or salary or by reference to completion of tasks;
• Whether the worker is provided with paid holidays or sick leave;
• Whether the work involves a profession, trade or distinct calling on the part of the person engaged;
• Whether the worker creates goodwill or saleable assets in the course of his or her work;
• Whether the worker spends a significant portion of his remuneration on business expenses.

It is dangerous to assume that the determination of employment can be made by some mathematical reference to a checklist. As held in Lorrimer[5], such determination;

• is not a mechanical exercise of running through items on a check list to see whether they are present in, or absent from, a given situation. The object of the exercise is to paint a picture from the accumulation of detail. The overall effect can only be appreciated by standing back from the detailed picture which has been painted, by viewing it from a distance and by making an informed, considered qualitative appreciation of the whole. It is a matter of the overall effect of the detail, which is not necessarily the same as the sum total of the individual merits. Not all details are of equal weight or importance in any given situation. The details may also vary in importance from one situation to another.

There are three broad categories in which such criteria fit. The first are the criteria that go to the question of control (the so called control test). The second are the criteria that go to the organisational integration into the business (the so-called integration test). The third goes to the way that the parties define their own relationship.
Evidence as to control
The applicant deposes at paragraph 46 and 48 at p 7 TB and to the exercise of detailed control over him by the leading hand and foreman of the respondents. The requirement to accept that control is set out in paragraph 4 of the contract p 215 TB between the applicant and respondent. The point is admitted in the respondent’s points of defence at paragraph 4(a). There is no evidence that the applicant ever delegated the work. The applicant deposes at paragraph 60-63 p 8-9 TB to being prohibited from working for anybody else.
Evidence as to organisational integration
The applicant provided very long service to the respondent and its predecessors. He worked closely with other employees; he worked the same hours as they did; he worked in the same workplace. He was a member of a gang: paragraphs 43-44 TB p 7. He had no separate place of work: paragraph 46 p 7 TB. There is no evidence that the applicant advertised until after the termination. The applicant deposes to being provided with company livery at paragraphs 39-42 page 6 TB. He deposes to having stickers of the respondent placed upon his truck at paragraph 49 P 7 TB. The applicant deposes at paragraph 51 and 51 p 8 TB to receiving internal training by the respondent.
The applicant accepts that he provided and maintained his own tools and equipment. It is worth noting however that the machinery was only worked for a relatively small proportion of the day and that most of the time involves his labour alone: paragraph 47 p 7 TB. There is no suggestion that the applicant had the capacity to sell his business.
How the parties defined the relationship
The applicant does not claim that he received paid holidays, sick leave, annual leave, superannuation, public holiday pay, long service leave or any other allowances. He accepts that he was not taxed as an employee.
On the other hand, the applicant deposes to working regular hours at paras 33 to 36 TB p 6. He also received overtime paragraph 69 to 73 TB p 9.
The applicant accepts that he was paid by reference to an invoice. Nevertheless that invoice was referable to time worked rather than task performed.
In their letter to the then Premier, the respondent describes the applicant as alternatively an employee and contractor through his own company TB p 394. The applicant does not understand the reference to engagement through his own company.

Conclusion
The applicant does not assert that the evidence is unambiguously in favour of a finding of employment. Conversely it could not be asserted that the evidence is unambiguously in favour of a finding of independent contractor. The question for the court is whether there is a prima facie case for a determination of employment; that is to say that there is a case supporting the claim of employment on the evidence taken at its highest. On this question; the court can be relatively comfortable there is a prima facie in case that the applicant would be found to be an employee. On the basis of that conclusion; the court should determine that issue as a separate question.

5. The respondent’s submissions in relation to whether there is a prima facie case that the applicant was an employee are:
   • At all material times, the Respondent contracted with a partnership trading as “A. Vella Backhoe/Excavator/Tipper Hire” (ABN 32 851 497 858) (the Partnership) on the basis that it was an independent contractor. The Applicant was a partner in the Partnership. Kathleen Vella was the other partner.
   • On 10 December 2009, the Partnership was advised that it had been unsuccessful in a tender process (for all independent contractors providing excavator services to the Respondent) that had commenced in 2009.
   • The last day on which the Partnership provided services to the Respondent was 21 March 2010.
   • Subsequently, the Applicant commenced these proceedings in which he has pleaded his claim in the alternative, alleging that he was either an independent contractor or an employee.
   • The parties have consented to the Court making a determination as to whether the Respondent ought be put to the time and expense of determining whether the Applicant was an employee as a preliminary issue. In order to assist the Court in this determination, the parties have been directed to file written submissions as to whether there is a prima facie case that the Applicant was an employee.
   • A prima facie case exists where there is sufficient evidence to support the legal claim. Accordingly, the question for the Court is whether there is sufficient material on which draw the relevant inferences which, if translated into findings of fact, would establish that the Applicant was, at all relevant times, and employee: Western Australia v Vetter Trittler Pty Ltd (In liq) (1991) 30 FCR 102 at 110.
   • It is not an exercise which is satisfied by the presentation of merely a scintilla of evidence construed in a favourable way.
   • Relevant principles
   • It is accepted that the determination of whether a person was an employee is undertaken by reference to a series of factors: Hollis v Vabu Pty Ltd [2001] HCA 44; (2001) 207 CLR 21; Sweeney v Boylan Nominees Pty Ltd (2006) 226 CLR 121; Stevens v Brodribb Sawmilling Co Pty Ltd [1986] HCA 1; (1986) 160 CLR 16; Abdulla v Viewdaze Pty Ltd (2003) 122 IR 215 at [34].
   • In this matter, a number of indicia are equally balanced in that they do not point conclusively one way or the other as between employment or a contract for services. The remaining criteria, however, point to a contract for services and that is consistent with intention of the parties and the manner in which the parties actually contracted with each other.
   • Accordingly, the application of the principles to the facts of this matter disclose that there is insufficient material in which the Court could make a finding that an employment relationship existed.
   • Facts
   • The Respondent contracted with the Partnership between approximately 1 March 1996 and 21 March 2010. Prior to 1996, there was a similar arrangement with Prospect County Council.
   • The Partnership was responsible for:
     • (a) negotiating the rates of payment for the provision of Plant & Operator to the Respondent;
     • (b) payment of monies to the Applicant (which was reflected in the Partnership’s Tax Returns and the Applicant’s own tax returns);
     • (c) the determination of which expenses could be deducted from its income in accounting for tax;
     • (d) collection of GST and payment of tax for the Partnership;
     • (e) payment of superannuation to its employees;
     • (f) workers’ compensation insurance for the Applicant and any other employees; and
     • (g) public liability insurance for its plant & equipment.
   • At all times, the Partnership held itself out as an independent contractor with its own trading name and ABN number.
   • The Respondent required all independent contractors providing backhoe and excavation services to submit to a tender process in June 2009.
   • The Partnership submitted its tender on 7 July 2009.
   • As stated above, the Respondent advised the Partnership that its tender had been unsuccessful on 10 December 2009 and that therefore the Respondent would not be purchasing goods and services from the Partnership in the future. The last day on which the Partnership performed work for the Respondent was 21 March 2010.
   • Control
   • The issue of control, whilst it may be relevant, is not determinative: Stevens v Brodribb Sawmilling Co Pty Ltd [1986] HCA 1; (1986) 160 CLR 16 at 36. Control is not about supervision. Clearly, an independent contractor can be equally supervised as to the manner in which they carry out their work as can an employee. An electrician may be called in on a construction project and directed to work as part of the overall construction team and be monitored and supervised as to what to do and when to do it. That level of control will not characterize the electrician as an employee if he is running his own business and contracting for services. Control is about the reality of the situation – who is responsible for the provision and maintenance of tools and equipment; how payment is made; how that plant and equipment is operated and whether the contractor can provide labour other than his own.
   • For the independent contractor working as an electrician as part of a construction team, he undertakes to produce “a given result... and may use his own discretion in things not specified before hand.”[6] The same is true of the Partnership in this matter.
   • The Partnership was contracted to provide a backhoe and sometimes an excavator (Plant) together with a person who could operate that Plant (Operator) in accordance with directions given by employees of the Respondent. The manner in which that Plant was provided was at the discretion and control of the Partnership. The manner in which the Operator (in this case, the Applicant) operated the Plant was in accordance with his skills and by utilising his discretion on how to undertake those tasks. Indeed, the Applicant says in his Affidavit, “No-one else operated my backhoe or excavator.”[7]
   • It is instructive that the Applicant originally worked as an employee for another company in providing the services to the Respondent and then set up his own business. In setting up that business, it was the Applicant who made the decisions as to how to do that. It was the Applicant who went to his accountant and set up the Partnership.[8] It was the Partnership who held the discretion as to which Plant to purchase.[9] There is no evidence that the Respondent directed the Applicant as to the purchase of a particular kind of Plant. It was the Partnership that decided to purchase a truck in 2003,[10] an excavator in 2004[11] and a trailer.[12] And it was the Partnership that determined which makes and models to purchase.
   • It is accepted that as the Applicant followed instructions from the supervising foreman, he was under some aspect of supervision by the employer. However, it is important to note that direction and obedience is not necessarily inductive of a right to control and should not be considered the decisive factor for establishing a prima facie case. The Applicant’s reliance on clause 4 of the Hire of Plant Agreement (executed in 1989) is misplaced. It simply requires compliance “with all reasonable directions of the Engineer.”[13] A contractual requirement of that kind is equally available in a contract for services.
   • Moreover, it is a mistake to treat as decisive a reservation of control over the manner in which work is performed for another. Queensland Stations Pty. Ltd v Federal Commissioner of Taxation [1945] HCA 13; (1945) 70 CLR 539 was a case involving a droving contract in which Dixon J observed that “the reservation of a right to direct or superintend the performance of the task cannot transform into a contract of service what in essence is an independent contract."
   • In this matter, there was no requirement for the Applicant himself to be provided as the Operator. There is nothing in the Hire Agreement to that effect.
   • Most significantly, it was a clear term of the agreement that if the Plant was not operational, then the Applicant did not work.[14] Nothing could be a clearer indication of a contract for services.
   • Plant & Equipment
   • As stated above, the contract between the Partnership and the Respondent required the provision of Plant.
   • That Plant was owned by the Partnership.
   • The Partnership paid for the associated costs of the Plant, [15] in that it paid for the fuel and capital costs (interest on loans) associated with the Plant, including maintenance costs.[16]
   • It is significant that Mrs. Kathleen Vella assisted in the maintenance of the Plant and in the provision of the Plant to the Respondent. In his Affidavit the Applicant notes that Mrs. Vella would deliver parts to the site where the Applicant was working and that the Partnership had to bear the cost of her travel and the parts.[17]
   • The Partnership was required to provide the Plant in good order and make it available at those various times for which it was contracted to the Respondent but was not otherwise to keep available the said Plant for the Respondent. There was no preclusion on the Plant (or the Operator) being contracted out to others at the times for which they were not contracted to provide services to the Respondent. As stated above, if the backhoe was not operational, then the Partnership would not be required to provide any work and was not paid.[18]
   • The capital costs were quite substantial. For example, the excavator cost $44,000.[19]
   • The depreciation costs of the Plant and equipment were deducted as expenses by the Partnership.[20] Indeed, a Storage Shed (presumably one which housed the Plant) was also a subject of capital expense tax deductions.[21] The fuel, registration, insurance, maintenance and interest on Plant and motor vehicles were all deducted as business expenses by the Partnership.[22]
   • The tax returns for the Partnership in the Applicant’s Bundle provide those for the years 2005, 2006, 2007 and 2008. In all of those, the depreciation and business deductions for the Partnership in relation to Plant, equipment, storage shed, maintenance and fuel are evident. The Court can infer that this is the same practice that would have been adopted by the Partnership throughout the term of the contract.
   • In Australian Air Express Pty Ltd v Langford[23] a delivery driver who worked under arrangements similar to the courier in Hollis v Vabu was held by the New South Wales Court of Appeal to be a contractor. The fact that he was required to own and supply an expensive truck, and could substitute another driver with the delivery company’s approval, was considered to be sufficient to justify that conclusion.
   • The ownership, maintenance and payment for Plant and equipment by the Partnership are very strong indicators that the arrangement between the Partnership and the Respondent was one of a contract for services.
   • Invoicing & Payment
   • In Sweeney v Boylan Nominees Pty Ltd[24] the High Court placed particular importance not only on the fact that the worker supplied his own tools and equipment but also on the fact that the worker was required to invoice for each job he did and was required to maintain his own insurance. It did not matter that he may have been acting for the firm, or in some sense representing them.[25]
   • In this matter, the Partnership was not paid unless it submitted an invoice identifying the provision of its services. This is common ground. Whilst the Applicant has chosen to insert into the Applicant’s Bundle a large number of invoices from the early part of the contractual arrangement, the recent invoices are more instructive. For example, those invoices commencing from page 182 of the Applicant’s Bundle contain the following:
     • (a) the identity of the Partnership as “A. Vella Backhoe Hire” setting out an address, telephone number and mobile phone number and containing the condition “MINIMUM 4 HOURS”;
     • (b) an ABN number: 32 851 497 856;
     • (c) the document is identified as a tax invoice.
     • (d) it identifies the particular machine that is being provided – ie the backhoe, excavator etc;
     • (e) the name of the Operator being provided;
     • (f) the particular Order Number;
     • (g) that GST is included; and
     • (h) it contains conditions of hire (bottom left-hand corner)
   • It is significant that the process of invoicing also involved Mrs. Vella, who was responsible for mailing the invoices to the Respondent, picking up cheques on a weekly basis from the Parramatta Office and being a signatory to a joint bank account into which direct deposits were made.[26]
   • This invoicing and payment arrangement is indicative of an independent contractor arrangement.
   • Taxation Arrangements
   • The manner in which the parties arranged their business including taxation is also a factor which may be taken into account.
   • As has been stated above, the invoicing and payment arrangements between the Respondent and the Partnership involved a request for and payment of Goods and Services Tax (GST) and the collection of that tax and remittance of it to the Australian Taxation Office. This is evident from the invoices and the Partnership Taxation Returns contained in the Applicant’s Bundle. It can be inferred that this was the process which was adopted by the parties for the whole of the contract (noting the GST was not a requirement for the entirety of the contractual period).
   • Upon receipt of the income from the Respondent, the Partnership determined (as has been set out above) which business expenses to deduct. These included the costs of:
     • (a) advertising and promotion;
     • (b) depreciation of capital assets;
     • (c) office expenses;
     • (d) insurance premiums;
     • (e) interest expenses on loans for capital acquisition;
     • (f) motor vehicle expenses (including depreciation, fuel, registration, insurance, repairs
     • (g) and maintenance and interest);
     • (h) protective clothing (including replacement and laundering);
     • (i) repairs and maintenance;
     • (j) sunscreen products;
     • (k) mobile telephone expenses.[27]
   • It is notable that in the taxation return to 2007, there was also an expense for:
   • (a) security;
   • (b) casual labour;
   • (c) staff training.[28]
   • After deduction of business related expenses, the Partnership determined to distribute the income from the Partnership earnings equally between the Applicant and Mrs. Kathleen Vella.
   • The Applicant and Mrs. Vella then submitted their own taxation returns from which they made further deductions.[29]
   • This business and taxation system illustrates that the arrangements adopted by the Partnership (including the Applicant) was one determined by the Partnership. As such it is indicative of a separate business or an independent contractor.
   • Insurance Arrangements
   • The Partnership was responsible for its own insurance arrangements.
   • The Respondent required the Partnership to ensure that there was public liability insurance for the Plant that it provided to the Respondent. This is evident from the Hire Agreement.[30] It is also evident from the Business Insurance policy document that the Partnership took out for the period commencing 18 February 2009.[31]
   • The insurance arrangements are also evidenced by the deduction of those insurance premiums by the Partnership as tax deductable expenses (as discussed above).
   • The Applicant, in his affidavit, asserts that he never had workers’ compensation insurance. That is a risk that the Partnership undertook because, at no relevant time, was the Applicant ever told that he was an employee of the Respondent and therefore covered by the Respondent’s workers compensation insurance.
   • These insurance arrangements are indicative of an independent contractor running its own business.
   • Clothing & Sticker
   • The Applicant’s evidence as to the attachment of a sticker to the windscreen of his truck is facile. The Applicant’s Bundle asserts that page 286 is a photograph of the sticker in his truck. It is not.
   • It is common ground that the sticker measured no more than 20cm x 10cm. It is consistent with a sticker that might be handed out to customers or school children, not a large insignia identifiable at any distance. Moreover, the Applicant provides no evidence as to who placed the sticker there or whether there was any requirement to do so. It is inconsistent with a requirement that the insignia of the Respondent be attached to the truck belonging to the Partnership.
   • As to the shirts (with the Respondent’s insignia) this is not a sufficient piece of evidence to justify a finding (even on a prima face level) that an employment relationship existed.
   • In Reliable Couriers Pty Ltd v Q-Comp [2005] QIC 51, the Commission held that because other factors were present, the mere fact that the workers were required to wear the company uniform did not mean that they were not independent contractors.
   • Absence of employee entitlements
   • The evidence in this regard is indicative of an independent contractor arrangement. Whilst the Applicant asserts that he took time off during the Christmas break, logically that has little relevance. Given that the Respondent’s employees were not present during that time, the carrying out of work and the provision of Plant by the Partnership would not be necessary.
   • The Applicant concedes (see paragraph 10 of his Written Submissions) that he received none of the usual employee entitlements of paid holidays, sick leave, annual leave, superannuation, public holiday pay, long service leave or any other allowance. As such he was not treated as an employee and nor did he seek out any of those benefits during the course of the contractual arrangement between the Partnership and the Respondent.
   • Organisational integration
   • The Applicant asserts in his Submissions that there was “no suggestion that the Applicant had the capacity to sell his business”.[32] Such a statement is unhelpful. The better analysis is that there was no impediment upon the Applicant or the Partnership to create a corporate entity to interpose between himself and the Respondent – as did many of the other independent contractors who provided goods and circumstances to the Respondent in the same manner as the Applicant.
   • The combination of the factors discussed above (invoicing and payments system, ownership of Plant, taxation arrangements, business expenses and the employment of casual labour by the Partnership) are indicative of an independent contractor rather than a person who is part and parcel of the Respondent’s organisation.
     
   • The tender process
   • The Applicant, together with all other independent contractors providing excavation, Plant and services to the Respondent, were required to tender for ongoing work with the Respondent in June 2009.
   • The tender document was provided by the Respondent to the Partnership.[33]
   • The tender document set out the manner in which independent contractors were required to contract with the Respondent and that system reflected the very way that the Respondent and the Partnership had been contracting up to that time. For example, the payment rates were required to be inclusive of matters such as plant hire charges, operator charges, overtime and weekend rates, superannuation, GST and the like.[34] The supervision of the worksite and therefore the work performed by the independent contractor was again identified as being undertaken by the Project Manager or Leading Hand.[35] Invoicing was required.[36] Occupational health and safety training and risk assessments were required.[37] Contractors were required to retain their own public liability insurance.[38]
   • Despite the clear requirements of the tender process, the Partnership submitted a tender in the most scant and inadequate terms and was unsuccessful.[39]
   • The manner in which the parties approached the tender process obviously and clearly identified the nature of the relationship between them as that of a contract for services.
   • Miscellaneous factors
   • There are a number of other factors which do not assist the Court one way or another. For example, the Applicant asserts that the provision of internal training by the Respondent was an indicia of employment. However, the Court would recognise that occupational health and safety training (being that described by the Applicant in his Affidavit at paragraphs 51 and 52) is required for all persons at a workplace whether they be visitors to the workplace or employees.
   • Similarly, the alleged direction by the Respondent that the Applicant was not entitled to work for anyone else was, according to the Applicant, a direction also given to the Respondent’s employees.[40] Accordingly, that factor cannot be taken into account one way or the other.
   • The reliance on the letter to the then Premier ought be given no credence because, even taken at its highest, it is hardly evidence of the real nature of the relationship. It would be equally facile for the Respondent to rely on the representation made by the Applicant in his tender letter in which he describes himself as “a Sole Operator”.[41]
   • In these circumstances, the parties’ expressed intention or understanding as to the nature of their relationship, has relevance where the equation is otherwise finely balanced.[42] Accordingly, the Respondent contends that the identification of the Relationship between the parties as that of principal and independent contractor is the one which applies.
   • Conclusion
   • It is manifestly clear that although some minor indicia of employment exists, the overwhelming conclusion which must be reached is that there is insufficient material on which the Applicant could mount even a prima face case that an employment relationship existed.
   • The Respondent submits that it ought not be put to the time, trouble and expense of bringing evidence to meet each of the claims made by the Applicant in this regard.

Consideration

6. In Bulong Nickel at [34] Lee J said:
   • It appears to be accepted that the requirement that there be a prima facie case does not require assessment of an applicant's case as if a determination were being made at trial. As stated by Heerey J in Merpro Montassa Ltd v Conoco Specialty Products Inc [1991] FCA 70; (1991) 28 FCR 387, at this stage the Court might draw inferences more readily in favour of an applicant than at trial. In Western Australia v Vetter Trittler Pty Ltd (in liq) (1991) 30 FCR 102 at 110 French J said: "a prima facie case is made out if, on the material before the court, inferences are open which if translated into findings of fact, would support the relief claimed". As I said in Century Insurance Ltd (NL) v New Zealand Guardian Trust Ltd [1996] FCA 376, the applicant must show that a case supporting the claim for relief can be found in the material presented to the court and it is assumed that the facts pointed to by that material will be proved.
7. Further, in Caterpillar at [19] the Full Federal Court stated:
   • The requirement to show a "prima facie case for the relief sought" was considered in Sydbank Soenderjylland A/S v Bannerton Holdings Pty Ltd (1996) 68 FCR 539 at 549. The Full Court said:
     • In addition to bringing a case within one of the paragraphs of r 1, an applicant must show a `prima facie case for the relief which he seeks'. In Merpro Montassa Ltd v Conoco Specialty Products Inc [1991] FCA 70; (1991) 28 FCR 387 at 390, in a passage which has been cited with approval on many occasions, Heerey J said:
       • `the requirement of O 8, r 2(2)(c) has to be met at the outset of the proceedings. It does not suggest the kind of scrutiny that would occur in a submission of no case to answer following the closure of an applicant's case at trial ... It may be therefore that a court at this stage might draw inferences more readily in favour of an applicant, bearing in mind, amongst other things, that the applicant will not have had the advantage of discovery, subpoena and other procedural aids to the making out of a prima facie case at trial.'
     • In Western Australia v Vetter Trittler Pty Ltd (In liq) (1991) 30 FCR 102 at 110, after setting out this passage, French J said that `a prima facie case is made out if, on the material before the court, inferences are open which if translated into findings of fact, would support the relief claimed'. In WSGAL Pty Ltd v Trade Practices Commission [1992] FCA 510; (1992) 39 FCR 472 at 476 Beaumont J said:
       • `Such a preliminary question [... whether a prima facie case exists] should not call for a substantial inquiry. The kind of evidence adduced on a preliminary inquiry of this kind should be in proportion to the nature of such an interlocutory issue ... [The] purpose is to determine by way of a mini rather than a mega trial whether the applicant has a prima facie case.'
   • After referring to that passage, the judge at first instance added:
     • It only needs to be added that in the present case Caterpillar obtained on subpoena from Deere Australia a large number of documents concerning dealings between Deere Australia and Deere US. Thus the readiness of a court to draw inferences might be pro tanto less, given that Caterpillar has already taken substantial advantage of one procedural aid. In any event, I think the documents tend against the finding of a prima facie case.
   • ...
8. The issue in the present case is whether or not on the evidence presently available (albeit limited but including the fruits of documents subpoenaed from the respondent) the applicant has established a prima facie case that he was an employee of Integral Energy, rather than an independent contractor. As already noted, his case is pleaded in the alternative. While the formal contractual arrangements between the parties suggest that Mr Vella was an independent contractor, as is pointed out in the parties’ submissions, some indicia of the arrangements between them might, hypothetically, support a contention that, in reality, the relationship between the parties was one of employment.
9. The parties’ submissions have identified the relevant indicia of the relationship. The assessment of whether the applicant has a prima facie case of an employment relationship is not, in my view, to be answered by a mathematical assessment of the various indicia, or a laborious weighing of the detail of the available evidence. Rather, the correct approach is to look at the form and substance of the relationship between the parties and the general weight of the available evidence. In addition to the factors referred to by the parties in their submissions, I take into account that working arrangements have been significantly liberalised in recent years and, in the more flexible working environment that now exists, it ought to be open to the parties to determine whether the relationship is one of employment or independent contract. That must be subject to several qualifications. The first is that the parties cannot turn an employment relationship into an independent contracting relationship which is a sham, for example, for the purposes of defrauding the revenue. Secondly, an employer should not be permitted to deprive a vulnerable employee of employment entitlements by attempting to dictate an arrangement of independent contract. Leaving aside taxation shams and arrangements imposed by duress and a gross inequality of bargaining power I see no general reason to deconstruct the fundamental nature of the relationship which the parties intended.
10. In the present case, Mr Vella, prior to the termination of his services, had been performing essentially the same job for a remarkable 37½ years. It is noteworthy that initially Mr Vella was employed by a business call Robshaw Earthmoving, which provided services to the Prospect County Council. In about March 1973, following discussion between Mr Vella and Mr Stone of the Prospect County Council, Mr Vella began providing services directly to the County Council. The County Council later became Prospect Electricity and, more recently, Integral Energy. Mr Vella’s services were terminated on 26 March 2010.
11. It appears to me from the affidavit of Mr Vella that the arrangement that was envisaged between him and the Prospect County Council was a similar one which had formerly existed between the County Council and Robshaw Earthmoving. Mr Vella provided the necessary equipment at his own expense and operated it at his own expense. He was paid for his services upon rendering invoices. In the performance of those services he was subject to direction in a similar way to employees of the County Council, and later Integral Energy. I do not regard the issue of direction, however, as one of fundamental importance. Neither do I regard the issue of integration as determinative. It appears to have been convenient to Integral Energy and its predecessors to use Mr Vella’s services in co-ordination with those of its other contractors and employees as seamlessly as possible. Mr Vella was not provided with the usual benefits of employment such as a salary in accordance with usual rates, leave et cetera. He provided services through a partnership with his wife and arranged his taxation affairs on the basis that the partnership contracted with Integral Energy and its predecessors and provided services for reward. The weight of the evidence points to a contractual arrangement for the provision of services rather than a contractual arrangement of service.
12. In weighing the evidence, I prefer the submissions of Integral Energy to those of Mr Vella. In my view, there are no indicia of the relationship which point with particular force to the existence of an employment relationship. That is because those indicia relate to superficial aspects of the relationship, rather than the substance of it. There are multiple indicia which point strongly to a relationship of independent contract. The relationship was a remarkably longstanding and apparently exclusive one. However, it was not a sham for taxation purposes, although Mr and Mrs Vella derived taxation advantages from it. The bargaining position of the parties may not have been equal but it does not appear that Mr Vella was subject to duress.
13. Mr Vella does not believe that he was been treated fairly. Before these proceedings, his grievances were taken up with Integral Energy by the then Premier of New South Wales. In correspondence to the Premier dated 23 July 2009, Integral Energy stated:
    • While Mr Vella had previously been an employee of Integral Energy’s predecessor organisation, he has been engaged as an contractor through his own company for the past 10 years.
14. I do not place particular significance on that statement. It is plainly wrong in that there is no evidence that Mr Vella has ever been engaged through a company. He had been engaged for a long period through his partnership with his wife. Neither does it appear to me that there is any evidence of a fundamental difference between the basis upon which Mr Vella was engaged with Integral Energy and the basis upon which he was engaged by its predecessor organisations.
15. I make no judgment on the question of whether the arrangements between Mr Vella and Integral Energy (and its predecessor organisations) were fair. That is a matter that can be determined at a final hearing. It is arguable that Mr Vella was treated unfairly vis a vis the employees or other contractors of Integral Energy and its predecessors who performed work as part of a team with Mr Vella. It is not, however, reasonably arguable that Mr Vella should, by reason of any such unfairness, have his status redetermined to equate to that of any employees with whom he worked. It may be argued that, rather, the contractual arrangements require rectification or that he should in some other way be compensated. Again, that is an issue that can be pursued at a final hearing.
16. I will declare that Mr Vella has failed to establish a prima facie case that he was an employee of Integral Energy and its predecessors.
17. I will hear the parties as to costs.

I certify that the preceding 17Error! Style not defined.!Syntax Error, !Error! Style not defined.Error! Style not defined.!Syntax Error, !seventeenseventeen (17) paragraphs are a true copy of the reasons for judgment of Driver FM

Date: 31 January 2011

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[1] See s.17A of the Federal Magistrates Act 1999 (Cth)
[2] Bulong Nickel Pty Ltd v Bateman Project Engineering Pty Ltd [2001] FCA 1900 (25 June 2001) at [34]
[3] Caterpillar Inc v John Deere Ltd [1999] FCA 1503 (1 November 1999) at [19]
[4] Abdalla v Viewdaze Pty Ltd 122 IR 215 at [34]
[5] Hall (Inspector of Taxes) v Lorimer [1992] 1 WLR 939 at 944; adopted in Bowden v Chief Commissioner of State Revenue (2001) NSWCA 125; (2001) 105 IR 66, 47 ATR 94

[6] Performing Right Society v Mitchell and Booker [1924] 1 KB 762 at 766-768

[7] applicant’s bundle, page 7, paragraph 46

[8] applicant’s bundle, page 4, paragraph 19

[9] applicant’s bundle, page 3, paragraph 13

[10] applicant’s bundle, page 7, paragraph 49

[11] applicant’s bundle, page 8, paragraph 58

[12] applicant’s bundle, page 8, paragraph 57

[13] applicant’s bundle, page 215 clause 4

[14] applicant’s bundle, page 9, paragraph 66

[15] applicant’s bundle, page 9, paragraph 74

[16] applicant’s bundle, page 10, paragraph 75-76

[17] applicant’s bundle, page 10, paragraph 77

[18] applicant’s bundle, page 9, paragraph 66

[19] applicant’s bundle, page 10, paragraph 83

[20] applicant’s bundle ,pages 397, 400

[21] applicant’s bundle, pages 401; 431

[22] applicant’s bundle, pages 403; 430

[23] (2005) 147 IR 240

[24] [2006] HCA 19; (2006) 226 CLR 161

[25] [2006] HCA 19; (2006) 226 CLR 161 at 12

[26] applicant’s bundle,page 10, paragraphs 78-81
[27] applicant’s bundle, pages 403 and 448
[28] applicant’s bundle, page 430
[29] applicant’s bundle, pages 221–285; see also pages 405-425
[30] applicant’s bundle, page 215, clause 6A
[31] applicant’s bundle, pages 218-220

[32] See paragraph 9, applicant’s written submissions

[33] applicant’s bundle, pages 287 - 392

[34] applicant’s bundle, page 323

[35] applicant’s bundle, page 328

[36] applicant’s bundle, page 328

[37] applicant’s bundle, page 340

[38] applicant’s bundle, page 391

[39] applicant’s bundle, page 393

[40] applicant’s bundle, page 9, paragraph 63

[41] applicant’s bundle, page 393

[42] Australian Mutual Provident Society Ltd v Chaplin (1978) 18 ALR 385 at 389 – 90