C2004/6117, Transcript of Proceedings [2004] AIRCTrans 4069 (22 October 2004)

AUSCRIPT AUSTRALASIA PTY LTD
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TRANSCRIPT OF PROCEEDINGS

O/N 14221
AUSTRALIAN INDUSTRIAL

RELATIONS COMMISSION

VICE PRESIDENT LAWLER

C2004/6117

APPEAL UNDER SECTION 45 OF THE ACT
BY AGC PTY LIMITED AGAINST THE
DECISION OF COMMISSIONER DEEGAN IN
PR951895 OF 15 SEPTEMBER 2004 IN
U2004/1932

SYDNEY

2.12 PM, TUESDAY, 12 OCTOBER 2004

PN1

MR STEINER: I appear on behalf on the appellant.

PN2

MR CHEN: I appear for the respondent in this matter.

PN3

THE VICE PRESIDENT: Please feel free to remain seated. Yes, Mr Steiner, it is your application.

PN4

MR STEINER: This is an application pursuant to section 45(4) of the Workplace Relations Act seeking a stay of these proceedings pending the determination of appeal back to the Commission.

PN5

THE VICE PRESIDENT: Pardon me one moment, Mr Steiner. I suppose I should check. Mr Chen, do you oppose the grant of a stay pending the appeal, bearing in mind that it is probable, highly probable, that the appeal will be heard on 9 November.

PN6

MR CHEN: No, I have no instruction to oppose it. I will just leave it to the Commission to decide. I suppose our position is no objection.

PN7

THE VICE PRESIDENT: Thank you, Mr Chen. Yes, Mr Steiner, then you have to make out your case for a stay.

PN8

MR STEINER: The reason for the stay, Vice President, is that the application before the Commission at the moment concerning the decision that was made by Commissioner Deegan was a decision related to the jurisdiction of the Commission to determine this matter. There is a dispute between the parties as to whether or not the applicant was an employee as defined in the Act, and so in those circumstances, it seems to me, with the greatest of respect, that it would be rather futile for the Commission to proceed to a conciliation of this matter prior to this jurisdictional issue being determined on appeal, and it seems to me that the sensible approach in the matter would be that the appeal be determined.

PN9

In the event that the appeal is successful to my client, that would represent the end of the proceedings subject, of course, to any action that the respondent takes to further appeal. In the event that the appeal was unsuccessful, then the matter would then proceed to conciliation once the jurisdiction of the Commission had been resolved.

PN10

THE VICE PRESIDENT: Yes, okay, that is the purpose. Where is the arguable case that leave would be granted and the appeal would succeed?

PN11

MR STEINER: Counsel is presently briefed to prepare the appeal documents. However, it is my submission that the appeal that is to be run will be only an appeal with respect to more. The appellant is satisfied on the findings of fact that were made by the Commissioner, but the appellant contends that the Commissioner misapplied High Court authorities with respect to the control test and so there will be an appeal on the question of the control test.

PN12

THE VICE PRESIDENT: Specifically, what is the arguable error in relation to the application of the control test?

PN13

MR STEINER: The situation in this case was that there was an intermediary between the applicant and the respondent, that intermediary being the Joint House Department which is a Commonwealth Government agency responsible for administering the maintenance program at Parliament House. Now, the situation, Vice President, was that the appellant company was retained by the Joint House Department to provide contractors to perform maintenance duties at Parliament House. The work that was required to be performed was dictated by the Joint House Department, both to our client and then, in turn, to people in the respondent's position.

PN14

So the Commissioner has found in her judgment that the control test was satisfied in this case because the appellant, AGC Services, effectively was telling the respondent where to work and how to work etcetera. However, in this situation, it was really the way it had to be because the maintenance can only be performed at times when Parliament is not sitting, and so they were requirements dictated by the Joint House Department as opposed to our client and our client, as a contractor of the Joint House Department, was required to adhere to those requirements or alternatively lose the contract.

PN15

We contend that that was the same position in respect of the respondent. It is not ..... to say that the respondent was controlled by AGC Services when ..... controlled by the nature of the work that he was hired to do or contracted to do.

PN16

THE VICE PRESIDENT: Sir, perhaps then you do find - you do challenge some findings of fact? I think you started off by saying you were content with the findings of fact and it was merely a question of law because paragraph 47 has this in it.

PN17

He -

PN18

that is the applicant - the respondent on the appeal -

PN19

was, however, subject to AGC direction as to how he carried out his brief. AGC determined how staff should be employed and paid. Approved purchases determined the standard of equipment that could be used to perform contracted tasks." That looks to me like a finding of fact.

PN20

MR STEINER: Well, in that sense, I guess, yes, Vice President, you are correct. However, we have been looking at it on the basis that those findings of fact were, in fact, correct but they were really findings as against the Joint House Department as against the appellant.

PN21

THE VICE PRESIDENT: So you say on the evidence, control was exercised by the Joint House Department rather than by AGC?

PN22

MR STEINER: Exactly.

PN23

THE VICE PRESIDENT: Do you say that there's been some - what do you say about the application of the Fox v Percy, and Abalofs v Devries principles?

PN24

MR STEINER: Well, at this stage, I would rather not comment in great detail because, as I said previously, counsel is awaiting advice on specifically that issue.

PN25

THE VICE PRESIDENT: Are you familiar with Domevsky, the decision of the Full Federal Court in Domevsky? It is a situation, if any extent, more - if at all, more extreme than the set of circumstances here. Nevertheless, notwithstanding the plain words of contracts, the Full Federal Court found that the particular individual was an employee of the relevant entity. At the moment, I'm struggling to see where there's an arguable error in this decision in the sense that the Commissioner has quoted at length the summary of principle from the decision of the Full Bench of the Commission in Abdulla v Viewdaze.

PN26

That decision, in turn, was an attempt to distil the relevant High Court authorities and you will see in the extract from Abdulla v Viewdaze that the extract is replete with footnotes into the relevant High Court authorities and, in fact, is cast in the very language of those authorities. So I don't imagine that you suggest that there's any error in reliance on that statement of principle?

PN27

MR STEINER: No, there's not a reliance on that statement of principle, but where the error does lie, in my respectful submission, is the failure to recognise that the control exercised by AGC, which was in fact dictated to AGC by the Joint House Department, was a matter of reality in performing this contract. For instance, it was analogous to a situation where a painter might be retained at arms length by an individual householder who asked that painter not to come between, for instance, the hours of 12 and 3 in the afternoon because that person would be at work, and the contractor has to agree to that and perform the contract in terms suitable to the owner of the house, or alternatively has to say: I can't assist and somebody else gets the job.

PN28

That is what we say was, in fact, the situation in this case. It wasn't as it was made that it was control being exercised, but it was control necessary to perform the contact - namely, the maintenance of Parliament House which, as I indicated earlier, must be done for security and other reasons at times when Parliament is not sitting. In those circumstances, it is not, in our respectful submission, enough to say: well, he was told when to work and how to work so, therefore, he must be an employee. We say that that - - -

PN29

THE VICE PRESIDENT: That is not a fair characterisation of her Honour's analysis. Her Honour has gone through and looked at each of the indicia that are listed in Abdulla v Viewdaze not as an exclusive list but as an inclusive list, and she has made findings in relation to those indicia that are relevant, and her conclusion is that on balance, the indicia clearly point in favour of an employment relationship, even though some of them point the other way and control is simply another factor that she has brought to account, not the sole criterion, and that is paragraph 66.

PN30

She has said that that weighs in favour of a finding of employment. The fact that AGC is constrained to exercise its control in a particular way does not detract from the proposition that it was still exercising control over the applicant below, does it?

PN31

MR STEINER: No. Well, I guess that is one of the matter we will be asking the Full Bench to examine in detail for us. One of the other issues too is - - -

PN32

THE VICE PRESIDENT: Mr Steiner, my obligation under the authorities is only to grant a stay if I'm satisfied that there's an arguable case that leave to appeal will be granted and the appeal will succeed. That distils to being there's an arguable case for error. The balance of convenience is a broad concept that would include the concept of purpose. I can see that the balance of convenience would favour a stay but for the moment, I am having difficulty seeing how what you have put rises to the point of there being an arguable case of error.

PN33

MR STEINER: There is one further - - -

PN34

THE VICE PRESIDENT: Because you haven't sought to challenge the findings of fact and the Commissioner cited the correct principle, purported to apply the correct principle, appears to have applied the correct principle in the sense of weighing the various indicia, noting that control is not the sole criterion. It is hard to see - I mean, clearly you may be able to develop this in the course of written submissions and argument and expose an error but at the moment, I'm having difficulty seeing which paragraph of this decision contains an arguable error.

PN35

MR STEINER: If I may, that point I neglected to make earlier which is also that they had used that argument is that at paragraph 68 the Commissioner accepted the evidence that the probation arrangements were put to him by me in cross-examination. Now, that in effect, revealed two useful exclusive scenarios. The applicant either maintained that he was an employee throughout the entire employment and then willingly committed what we would effectively call taxation fraud by claiming deductions which he wouldn't have been entitled to as an employee as well as income splitting on them pursuing to a business loan that he wouldn't have been entitled to, have an advantage or benefit of as an employee.

PN36

As against the circumstances where - or the alternative scenario being that he was a contractor and therefore he didn't commit any tax fraud in that sense, the decision by the learned Commissioner isn't correct. So we have a situation too that is a matter not only called in the matter of public policy as well. So this is a gentleman who made independent representations well in advance to these proceedings to the Taxation Officer, effectively saying to the Taxation Office that I am a contractor, I am entitled to a deduction for my motor vehicle, my home office, etcetera, etcetera.

PN37

I'm entitled to income, I spent half of my money which I acknowledge I earned solely for my own self exertion, thereby having the effect of putting into a lower taxation bracket and whilst the Commissioner has accepted all of that, I find that that is not sufficiently relevant to determine the stress of employment when compared to the control test, another test that she refers to.

PN38

THE VICE PRESIDENT: But has not the Commissioner dealt with these matters by reference to sound authority, in paragraph 69 and following? I mean, that is not to say that there isn't some argument that may be able to be coupled together but at the moment, the mere fact of the problem that you highlighted in that submission is not determinative as those authorities set out. In fact, if you look at Domevsky, there was a similar situation in Domevsky.

PN39

MR STEINER: My understanding of those authorities is that they really dealt with the distinction between the old PPS taxation system and the PAYD taxation system. In effect, the old PPS taxation system used to be a system whereby contractors would make their own payments, I think they were 20 or 30 per cent of income received independently and they used to pay them to the Taxation Office as opposed to PAYD income tax which was deducted by an employer. This is a slightly different situation in that we have a situation where the applicant has completed the tax returns himself or with the assistance of an accountant and as actually claimed deductions to which he would not have been entitled, had he not been of the mind set that he was a contractor.

PN40

THE VICE PRESIDENT: Well, that is not necessarily so. I've got to be careful because I haven't read the evidence but, I mean, it is conceivable that the way the arrangement would be characterised in due course was an arrangement whereby, so far as tax was concerned, he was engaged by the partnership to do the actual work. I appreciate that there is a tension between that and a finding that he was an employee but those problems have not been an impediment to such a finding.

PN41

Domevsky is the classic example and the ..... Outboard Marine Corporation is another. So what you are saying is that on the - is it either he was putting forward an artificial and potentially fraudulent set of circumstances to the tax office or he was an employee but not both?

PN42

MR STEINER: Exactly. In particular, the main factors significant, we say, we say that it quite correctly could be some arrangement with respect to deductions and he was quite properly using the car or the office in the course of - and they may well be legitimate deductions. But the one area we say that he would struggle to convince the Full Bench of the Commission of was that half the income was being declared as having been earnt by Ms Power who was his de facto partner at all relevant times, also they partnered in the business name Eden Grey which was, at the time, we say he contracted with the appellant agent and services.

PN43

So we say that in effect what the Commission's decision allows him to have a bet each way, as it were, to have a situation whereby he is effectively getting the benefit of both situations without the downfalls of all of them.

PN44

THE VICE PRESIDENT: Well, except that the Tax Department may well revisit his assessments if he succeeds in this particular action. Even if he does not succeed, it would still be open to the Tax Office to revisit the assessments that have been issued thus far. In other words, he is not in the clear from a tax perspective.

PN45

MR STEINER: No, knowing what happens today, that is correct. However, we see those as being significant issues that the Commissioner, whilst dealing with them to some extent in her judgment has not dealt with them in enough detail and in particular has not made a distinguished distinction between the pay as you go or the PPS type tax deductions. In fact, overt tax deduction, over income splitting, we say could not have been entitled to.

PN46

THE VICE PRESIDENT: But she has addressed it squarely. She addresses it squarely in paragraph 70.

PN47

MR STEINER: I think the case Jackson v Wilson actually highlights the submission I'm trying to make in that that case specifically dealt with pay as you go, or PPS type arrangement, which we say aren't that significant, especially in the current tax system where PPS is no longer applicable and it is now pay as you earn as opposed to pay as you go. However, that is the exact - - -

PN48

THE VICE PRESIDENT: But PPS payments were predicated upon the payee being an independent contractor. If you are an employee, under the tax regime as it existed then, your employer was obliged to deduct or remit pay as you earn tax, was it not?

PN49

MR STEINER: Yes, that is correct. However, in the present situation, what we effectively have is somebody who at all relevant times said that he was an employee, yet he was continuing to pay deductions that is not like remittance to tax withdrawn which is what the case of Jackson v Wilson relates to and the remittance of tax on a regular basis, withholding it as an employer. What we are more concerned about is his income splitting and claiming deductions which he must have known you weren't entitled to if you were an employee or alternatively, if you claimed them honestly, then you were accepting and effectively admitting to being a contractor.

PN50

THE VICE PRESIDENT: Yes, look, is there anything further you wanted to say, Mr Steiner?

PN51

MR STEINER: No, I think that sums it up.

PN52

THE VICE PRESIDENT: In terms of the other, there aren't other grounds of error that are focussed on?

PN53

MR STEINER: No, it is just clearly just, as I say, to let him know of the public policy implication of that last ..... we were discussing and also - - -

PN54

THE VICE PRESIDENT: By the way, can I say that the notice of appeal in this matter is inadequate and it needs to be - an amended notice of appeal needs to be filed which adequately particularises the errors. To simply state that the learned Commissioner's decision contains an error of law and it is contrary to the weight of the evidence is not adequate because it is unilluminating. It does not tell the respondent or the Commission what the errors are or what the particular evidence was by reference to a general description that the decision was contrary to.

PN55

I mean, obviously there will be something - we now have a better idea because of the submissions you have made today - but am I right in saying the only area you are focussing on at the moment is this error in the proper application for the principles for the determination of whether a person is a worker is an employer independent contractor, as you have articulated at both on this tax point and the control point?

PN56

MR STEINER: That is correct. My instructions are to file an amended notice of appeal once counsel advice is received which I am told will be this week.

PN57

THE VICE PRESIDENT: Is there anything you want to say, Mr Chen? I assume that you don't want to say anything, given your earlier position?

PN58

MR CHEN: That is exactly right, your President.

PN59

THE VICE PRESIDENT: Thank you. I will just adjourn for a few moments, probably 5 minutes.

SHORT ADJOURNMENT [2.33pm]

RESUMED [2.40pm]

PN60

THE VICE PRESIDENT: Mr Steiner, I note that the appeal is filed by AGC Pty Ltd. The decision refers to AGC Services Pty Ltd. What is the correct entity?

PN61

MR STEINER: The correct name is AGC Services Pty Ltd but I will just check my copy.

PN62

THE VICE PRESIDENT: No, the notice of appeal has referred to AGC Services. It appears that the mistake has been made within the Registry. That is fine. This is an application by AGC Services Pty Ltd for a stay for the decision of Commissioner Deegan given on 15 September 2004. That decision related to a jurisdictional challenge brought by AGC Services in respect of the applicant below standing to bring an application pursuant to section 170CE of the Workplace Relations Act, specifically AGC Services Pty Ltd contends that the Commissioner erred in finding that the applicant below was an employee of AGC Services Pty Ltd.

PN63

Mr Chen, who appears for the applicant below and the respondent in the appeal, neither consents to nor opposes the grant of a stay. The principles governing the grant of a stay were established. Firstly, the applicant for a stay must demonstrate that there is an arguable case that leave to appeal will be granted and that the appeal will succeed. That is, in effect, a requirement to make out a arguable case for error, given that that the High Court has indicated and the Full Federal Court has indicated that leave to appeal ought not be granted unless error is demonstrated.

PN64

Certainly an appeal ought not succeed unless error is demonstrated. Secondly, the balance of convenience must favour the granting of the stay. Thirdly, there must be a purpose for the granting of a stay, although those two elements are, perhaps, different sides of the same coin. I am satisfied that the balance of convenience certainly favours the granting of a stay. Mr Steiner correctly submits that there is a utility and a conciliation occurring but which is, of course, the next step in the proceedings in the event that the appeal is successful.

PN65

However, on the basis of the argument before me today, I can't be satisfied that an arguable case for error has been demonstrated and therefore I can't be satisfied that there is an arguable case that leave for appeal for granted and that the appeal will succeed. Of course, that finding, which I will elaborate on in a moment, in no way inhibits the appellant from pursuing its appeal. There is considerable merit in the proposition that it would be undesirable for any further steps to occur in the proceeding until the appeal has been resolved, which I note is likely to occur following a hearing on 9 November, which is quite close.

PN66

Hopefully, Commissioner Deegan will see the good sense of postponing any conciliation until after the appeal has been heard although, at the end of the day, that is a matter for the Commissioner. Returning to the reasons why I'm not satisfied on the basis of argument thus far that there is an arguable error demonstrated, I note firstly that Mr Steiner does not, at this stage, seek to challenge any findings of fact made by the Commissioner with one qualification that I will return to.

PN67

Secondly, I note that the Commissioner has identified the correct legal principles that apply to the resolution of the jurisdictional challenge which is the subject of her decision. In particular, she cited the summary of law and distinguishing employees from independent contractors contained in the decision of the Full Bench of the Commission in Abdulla v Viewdaze which was itself a summary of the relevant law following the decision of the High Court in Hollis v Vabu.

PN68

The Commissioner purported to apply those principles and determined that the preponderance of the indicia favour to finding that the applicant below is an employee. Mr Steiner submits that there is arguable error in the way in which her Honour dealt with control. However, her Honour has cited the correct principles in relation to control and appears to have applied those principles. Mr Steiner submits that effective control rested with the Joint Houses Department to whom AGC contracted.

PN69

However, whilst it is undoubtedly the case on the findings that were made, and I am prepared to accept the submissions of Mr Steiner that the Joint Houses Department controlled the ambit of various aspects of the work, in particular the hours within work could be performed. It seems equally clear on the findings by the Commissioner, which are not subject to any serious challenge on this application, that AGC exercised control within the parameters laid down by the Joint Houses Department. To that extent, there does not appear on the basis of the present arguments before me to be any relevant error by the Commissioner in finding that AGC exercised a degree of control over the applicants work.

PN70

Of course, the Commissioner recognised that control, while significant, was not the sole criterion and she pointed to various other indicia in paragraph 67 which all point in the direction of a finding of employment, rather than independent contract. Mr Steiner placed particular reliance on the fact that AGC was invoiced by a partnership between the applicant and his domestic partner and certainly that invoicing arrangement and the taxation consequences of it are indicative of a relationship of independent contract.

PN71

However, again, the Commissioner referred to relevant authorities for the proposition that such an arrangement is not conclusive and to those could be added the decision of the Full Federal Court in Domevsky which is perhaps an even more extreme set of circumstances than that which presented themselves to the Commissioner in the present matter. It seems to me that there is no particular consideration which the appellant points to in the Commissioner's reasons on this aspect of the matter which is indicative of a clearly arguable error, or at least arguable error.

PN72

That is not to say that when counsel has given the matter further consideration and a more fulsome notice of appeal has been prepared together with submissions that it may not be the case that at the end of the day error can, in fact, be exposed. But I am obliged to apply the principles that are laid down for governing the grant of stays and those principles prevent me from granting a stay unless I am satisfied that an arguable case of error is demonstrated. I'm not so satisfied and accordingly the application for a stay is refused.

PN73

Mr Steiner, I will speak to Commissioner Deegan's chambers in any event and suggest that it would be sensible to postpone any conciliations till after the appeal has been heard. It will be a matter for the Commissioner but as I say, I will give the Commissioner a call in any event. Gentlemen, if you could note 9 November in your diaries, you should receive a formal confirmation within the next day or so as to that date but that does look to be the date on which the appeal will be heard.

PN74

MR STEINER: Okay. Thank you.

PN75

THE VICE PRESIDENT: The Bench at the moment will be constituted by myself, Senior Deputy President Marsh and Commissioner Tolley.

PN76

MR STEINER: May it please the Commission.

PN77

THE VICE PRESIDENT: It is probably sensible to deal with directions at the moment. Mr Steiner, what is the state of play so far as appeal books are concerned?

PN78

MR STEINER: We are just waiting on one document which I understand they ..... problems. He hasn't, as we speak and then the appeal book will be completed. I have sought and obtained an order for an extension of time in which to lodge the appeal documents. That has been granted to 22 October and at this stage, there will be no difficulty with complying with that.

PN79

THE VICE PRESIDENT: Well, obviously, given the 9 November hearing, the sooner the better so if you are able to get it in before that date so much the better. Presumably, Mr Chen, you have copies of the transcript and the exhibits in any event?

PN80

MR CHEN: No, I haven't got them as yet.

PN81

THE VICE PRESIDENT: Right. Okay, fine. So what was that date, sorry, Mr Steiner? 27 October?

PN82

MR STEINER: 22nd.

PN83

THE VICE PRESIDENT: 22nd. Is there any reason why you couldn't have your submissions done on that day, Mr Steiner?

PN84

MR STEINER: No, Commissioner - - -

PN85

THE VICE PRESIDENT: Do you need to check with counsel in that regard?

PN86

MR STEINER: Counsel has indicated that I should have his advice and a draft submission this week so I am hoping that that date should be more than achievable.

PN87

THE VICE PRESIDENT: Okay, fine, well then I will note that the appeal books are to be filed and served on 22 October and I will direct that the appellant files submissions - file and serve submissions by 22 October. Mr Chen, your submissions?

PN88

MR CHEN: Well, we need one week perhaps following the receipt of the appellant's submissions.

PN89

THE VICE PRESIDENT: Fine. So that is the 29th? In fact, why don't you have until the 4th, which is 2 weeks - of November?

PN90

MR CHEN: Thank you.

PN91

THE VICE PRESIDENT: And the submissions in reply by Monday - sorry, Thursday the 4th.

PN92

MR CHEN: Thursday the 4th.

PN93

THE VICE PRESIDENT: Then for your submissions and the appellant's reply submissions on Monday the 8th. Mr Steiner, you don't anticipate any fresh evidence?

PN94

MR STEINER: No, not at this stage.

PN95

THE VICE PRESIDENT: Fine. Is there anything further that the parties think that the directions ought deal with?

PN96

MR STEINER: Perhaps the filing and service of an amended notice of appeal.

PN97

THE VICE PRESIDENT: Yes, well, can that be done by the 22nd as well?

PN98

MR STEINER: Certainly.

PN99

THE VICE PRESIDENT: Fine. Nothing further, Mr Steiner?

PN100

MR STEINER: No, thank you, Vice President.

PN101

THE VICE PRESIDENT: Nothing further, Mr Chen?

PN102

MR CHEN: No.

PN103

THE VICE PRESIDENT: Then the matter is adjourned and as I say, you should receive some confirmation as to 9 November, within the next 24 hours and some directions will be issued consistent with those that have been discussed now. The Commission is adjourned.

ADJOURNED INDEFINITELY [2.55pm]