Gibbons v Vickers [2018] FCCA 327 (2 March 2018)

Last Updated: 5 March 2018

FEDERAL CIRCUIT COURT OF AUSTRALIA

GIBBONS v VICKERS

[2018] FCCA 327

Catchwords: INDUSTRIAL LAW – Application for contravention of ss.357, 535 and 536 of the Fair Work Act 2009 (Cth) – entitlement to annual leave, sick leave, public holidays, long service leave and superannuation – whether the relationship between the parties was that of employer and employee or principal and independent contractor – application dismissed. PRACTICE & PROCEDURE – Duty of Court to draw facts revealed by evidence – referral of judgment and evidence to the Attorney-General.

Legislation: Fair Work Act 2009 (Cth)

Cases cited: ACE Insurance Ltd v Trifunovski (2013) 209 FCR 146; [2013] FCAFC 3 Connelly v Wells (1994) 55 IR 73 Federal Commissioner of Taxation v Barrett (1973) 129 CLR 395; [1973] HCA 49 Hollis v Vabu Pty Ltd (2001) 207 CLR 21; [2001] HCA 44 Humberstone v Northern Timber Mills (1949) 79 CLR 389; [1949] HCA 49 Petera Pty Ltd v EAJ Pty Ltd [1985] FCA 277; (1985) 7 FCR 375 Putland v Royans Wagga Pty Ltd [2017] FCA 910 Stevens v Brodribb Sawmilling Co Pty Ltd (1986) 160 CLR 16; [1986] HCA 1 Zuijs v Wirth Brothers Pty Ltd (1955) 93 CLR 561; [1955] HCA 73

Applicant:

STEPHEN GIBBONS

Respondent:

CHRISTOPHER VICKERS

File Number:

SYG 3698 of 2016

Judgment of:

Judge Smith

Hearing date:

5 & 6 February 2018

Date of Last Submission:

6 February 2018

Delivered at:

Sydney

Delivered on:

2 March 2018

REPRESENTATION

Counsel for the Applicant:

Mr B Fogarty

Solicitors for the Applicant:

RJ Thomas Solicitor

Counsel for the Respondent:

Mr B Miles

Solicitors for the Respondent:

Haywards Solicitors

ORDERS

(1) The application be dismissed.

FEDERAL CIRCUIT COURT OF AUSTRALIA AT SYDNEY

SYG 3698 of 2016

STEPHEN GIBBONS

Applicant

And

CHRISTOPHER VICKERS

Respondent

REASONS FOR JUDGMENT

1. The applicant, Mr Gibbons, is a bricklayer by trade. In about 2007, Mr Gibbons consulted the respondent, Dr Vickers, a specialist gastroenterologist, in connection with his health. During the consultation Dr Vickers offered Mr Gibbons some work replacing the retaining walls on a property owned by him. Mr Gibbons accepted that offer and undertook the work. Mr Gibbons did further work for Dr Vickers over the course of a number of years. He was paid for the work at an hourly rate.
2. In 2016 Mr Gibbons claimed, for the first time, that the relationship between himself and Dr Vickers was one of employee and employer and that, as a consequence, Dr Vickers owed him for unpaid annual leave, sick leave, public holidays, long service leave and superannuation. When those claims were unable to be resolved between the two men, Mr Gibbons commenced these proceedings seeking, amongst other things, the imposition of a civil penalty against Dr Vickers.
3. Mr Gibbons’ claims raise a number of factual and legal issues; however, the parties agreed that the critical question was whether Mr Gibbons was an employee of Dr Vickers. Mr Gibbons agreed that if that issue was decided against him his claim should be dismissed. For the reasons that follow I am not satisfied that Mr Gibbons was ever an employee of Dr Vickers and, accordingly, the application must be dismissed.

The relevant principles

4. There are many circumstances in which it may be necessary to determine whether the relationship between one person and another is that of employer and employee. The determination may have an impact on the duties owed by the two parties to each other or upon the duties owed by one of the parties to third parties. For example, a person found to be an employer may, as a consequence, be vicariously liable for his or her employee’s negligent conduct. Although the different contexts in which the issue arises may give rise to subtle influences on the outcome, the basic question remains the same in all types of cases: ACE Insurance Ltd v Trifunovski [2013] FCAFC 3; (2013) 209 FCR 146 at [28]; [2013] FCAFC 3 (Buchanan J).
5. In this case, as in many others, the competing possibility for the proper characterisation of the relationship between the parties is that of principal and independent contractor. The difference between that relationship and the relationship of the employer and employee is traditionally expressed as being the difference between a contract for services (principal and contractor) and a contract of service (employment): ACE Insurance at [24].
6. Another way of expressing the distinction is that an employee works in the business of the employer whereas a contractor works in his or her own business: ACE Insurance at [93] citing Hollis v Vabu Pty Ltd [2001] HCA 44; (2001) 207 CLR 21 at [39]- [40]; [2001] HCA 44. That is related to the notion of the control which one party has over the other. The question there is the amount and extent of control which one party can exercise over the other: Stevens v Brodribb Sawmilling Co Pty Ltd [1986] HCA 1; (1986) 160 CLR 16 at 24.2; [1986] HCA 1 per Mason J (as the former Chief Justice then was) citing Zuijs v Wirth Brothers Pty Ltd [1955] HCA 73; (1955) 93 CLR 561 at 571; [1955] HCA 73; Humberstone v Northern Timber Mills [1949] HCA 49; (1949) 79 CLR 389 at 404; [1949] HCA 49 and Federal Commissioner of Taxation v Barrett [1973] HCA 49; (1973) 129 CLR 395 at 402; [1973] HCA 49.
7. However, while control is one factor to be considered in characterising the relationship in question, it is like other indicia, an analytical tool by which to measure and assess the relationship. The ultimate question is the nature of the relationship: Putland v Royans Wagga Pty Ltd [2017] FCA 910 at [19]. Other indicia include the way in which the work is remunerated, the provision and maintenance of equipment, arrangements for the hours of work and leave, the obligation to work, arrangements concerning taxation and the capacity to delegate: Stevens at 24.5. The contract between the parties is also important to the nature of their relationship: Connelly v Wells (1994) 55 IR 73 at 74 (Gleeson CJ).

The facts of this case

8. The evidence in the proceedings consisted of two affidavits by Mr Gibbons, an incomplete set of invoice books, some, but not all of Mr Gibbons’ bank records for the period September 2011 to April 2016, a journal kept by Mr Gibbons for July and August 2008, copies of Mr Gibbons’ passports from 2001 and Mr Gibbons’ income tax returns for the years ending 30 June 2010 to 30 June 2015. Mr Gibbons also gave evidence under cross examination.
9. Annexed to the second of Mr Gibbons’ affidavits (July affidavit) was a medical certificate dated 23 July 2013 indicating a diagnosis of a fractured right wrist said to have been incurred on 23 July 2013 and a chain of email correspondence between the parties commencing on 30 March 2016. Objection was taken to the emails commencing on 6 September 2016 on the basis of relevance. The parties agreed that I should rule on that issue upon completion of the hearing. In my view, nothing in the emails to which objection was taken could rationally affect the assessment of the probability of the existence of a fact in issue in the proceeding.
10. The emails in question largely consist of views expressed by the parties as to the correct characterisation of the relationship between them and any entitlements that flow from that characterisation. That is not a question of fact but one of law. Otherwise, there are suggestions in the emails about the possibility of future work by Mr Gibbons for Dr Vickers. That possibility cannot rationally bear upon the way in which the work that had been conducted was undertaken or any of the other indicia of an employment relationship. For those reasons pages 4 to 18 of annexure SG 4 of the July affidavit are rejected.

Mr Gibbons’ credibility

11. At one point in his cross examination Mr Gibbons professed that he does not tell lies. That may be an honestly held opinion by Mr Gibbons but the way in which he gave evidence made it difficult for me to share that opinion. For reasons that will become apparent it is unnecessary for me to come to a concluded view about the truthfulness of Mr Gibbons’ sworn testimony. However, it is necessary to note several instances that undermine his credibility to a significant degree.
12. First, in some instances Mr Gibbons’ recollection of relevantly recent and important events was, at one point, clearly inconsistent with contemporaneous records, and when questioned about those records, was evasive. Mr Gibbons ultimately said that he could not remember what had occurred some 2½ years ago.
13. For example, Mr Gibbons gave evidence that he was dismissed by Dr Vickers in late 2015 and then re-engaged early in the following year. He reiterated that evidence later in the hearing and when it was suggested that he had worked for Dr Vickers in November 2015 he relied upon the fact that there were no invoices at that time. Later, however, once Mr Gibbons had been shown documents, including his bank statements, he said that he had been working in November 2015 and agreed that he had not been “sacked” at that time. It may be noted that the documents upon which Mr Gibbons was cross-examined were put into evidence by him and ought not to have taken him by surprise.
14. Secondly, some of his evidence was inconsistent with the affidavit verifying his discovery. As I have mentioned, there were very few emails in evidence and those were all written in 2016. Mr Gibbons stated that, with the exception of an email which he said he must have discarded, they were the only emails that had ever been in his possession, custody or control. However, in his evidence in the proceedings, as well as in his statement of claim, Mr Gibbons said that he had received instructions by email from Dr Vickers.
15. Mr Gibbons was questioned about his affidavit of discovery, with leave and without objection, and explained that he had not discovered the emails referred to in his evidence because he did not think that they were “documents”. I find that that answer was not truthful. If Mr Gibbons considered that emails were not documents he would not have referred to any emails in his affidavit of discovery. In addition to emails, Mr Gibbons’ discovery was inadequate in respect of both business cards and bank records.
16. Thirdly, there were a number of claims made in Mr Gibbons’ statement of claim which Mr Gibbons accepted under cross examination were not true. There were other claims in his statement of claim for which there was no evidence at all. It is reasonable to infer that the claims made in the statement of claim were made upon the basis of instructions given by Mr Gibbons to his solicitors. If that is the case, Mr Gibbons either told his solicitors things that he knew were not true or which he later came to realise were not true.
17. None of these matters alone were fundamentally important in the proceedings. However, seen together and in addition to my observations of the manner in which Mr Gibbons gave evidence, they undermine the confidence that could be placed upon Mr Gibbons’ ability to accurately recall relevant events. As a consequence, I can give little weight to a large part of Mr Gibbons’ evidence and have greater confidence in the matters revealed by the contemporaneous documents. Unfortunately, as can be seen from the outline of the evidence at [8] and [9] above, those documents presented an incomplete account of the entirety of the relationship between the parties. I turn then to consider what pertinent facts the evidence does reveal.

The relationship between Mr Gibbons and Dr Vickers

18. It is useful to start at the beginning of the relationship. Mr Gibbons met Dr Vickers in his capacity as a consulting gastroenterologist. At some point Mr Gibbons must have told Dr Vickers that he was or at least had been a licensed bricklayer because Dr Vickers asked him if he wanted to do some work replacing a retaining wall on a property owned by him. Mr Gibbons agreed to do that work at the rate of $50 per hour. Subsequently, a higher rate was agreed upon. Mr Gibbons gave Dr Vickers a business card.
19. It may be observed at this point that there were two fundamental aspects of the relationship between the parties established from the beginning. First, Dr Vickers needed some work done on a property owned by him and secondly, Mr Gibbons held himself out as a skilled tradesperson conducting his own business.
20. The type of work, hourly rate and business card all support those conclusions. The fact that, later, Mr Gibbons increased his hourly rate (apparently upon his own initiative) is inconsistent with an employment relationship.
21. Mr Gibbons’ evidence was that once he had half-finished the retaining wall he was “directed” to finish the other half of the wall and “instructed” to build a boundary fence and that he stayed working on the same property for approximately 18 months on a full-time basis. This evidence does nothing to establish the type of control referred to in the authorities that supports the conclusion of an employment relationship:
22. First, Mr Gibbons was engaged to replace an entire retaining wall and hardly needed to be “directed” to finish the job. Secondly, given the vagueness of the word “instructed” and the basis of the existing relationship summarised above, I find that all that occurred in respect of the boundary fence was that Dr Vickers asked Mr Gibbons if he would build a boundary fence on the property and Mr Gibbons agreed to do so.
23. Mr Gibbons next says that during the first 18 months in which he worked for Dr Vickers, Dr Vickers said to him “I don’t have any work for you after this. You can take other work”. This statement supports the view that, from the beginning of their relationship, Dr Vickers offered work on a project basis as and when the need for such work arose.
24. I do not accept that, even if Dr Vickers said that Mr Gibbons could take other work, this meant that there was any type of exclusive relationship and that Mr Gibbons was bound in any way only to work for Dr Vickers. Clearly enough, Dr Vickers, as a landowner, was keen to have a particular project completed before having Mr Gibbons commence other projects. Such works were completed on a project by project basis.
25. Mr Gibbons gave evidence in his affidavit that he was “directed to start working at another property” and that he remained working for Dr Vickers for approximately 8½ years until April 2016. Importantly, Mr Gibbons stated in his first affidavit (December affidavit) at [15]:
    • After I finished each project at the Respondent’s properties he would say to me words to the effect of “Do you want to keep working for me? I have more work for you.” After a while I just expected that he would have work for me on a full time basis. I did not seek other work.
26. That evidence, which I accept, is not consistent with an employment relationship. Rather, it suggests, just as with the first job done by Mr Gibbons for Dr Vickers, that each of the other jobs done by him was on a project by project basis. The fact that Mr Gibbons developed an expectation of more work does not change the nature of the relationship. The ongoing nature of the relationship was not based upon any obligation by Dr Vickers but rather, I infer, on the fact that Mr Gibbons performed each job satisfactorily and for a fee that Dr Vickers was willing to pay.
27. Next it is necessary to examine the type of work undertaken by Mr Gibbons and the way in which he performed it. In his December affidavit Mr Gibbons says that as time went by his role and duties changed. In addition to bricklaying, he performed “property repairs, concreting, landscaping, replacing windows and doors, waste removal and project management.”. Mr Gibbons said that in later times he was responsible for “organising and project managing tradesmen and contractors and organising taking delivery of materials at the Respondent’s properties.”
28. The invoices which were in evidence supported that evidence. However, importantly, those invoices showed that Mr Gibbons himself engaged contractors such as labourers and at least one bricklayer. He also hired equipment and purchased material for the projects. Mr Gibbons charged Dr Vickers for all of that. That fact supports the conclusion that Mr Gibbons was running his own business and that the arrangement between him and Dr Vickers was for the completion of projects, in other words, that the arrangement was for the provision of services rather than one of service.
29. Mr Gibbons’ income tax returns also support that conclusion. First, they show that Mr Gibbons claimed deductions from his taxable income for expenses related to a home office, motor vehicle expenses, clothing, laundry, insurance, subcontractors, and equipment hire. Secondly, they reveal claims for depreciation of certain capital items including tools of trade. Thirdly, Mr Gibbons’ main business activity is described as “bricklaying services”. Fourthly, an ABN is included and fifthly, the address of Mr Gibbons’ main business is shown as his home address.
30. While certain questions arise about the contents of those tax returns, to which I will return later in these reasons, on their face they clearly show that Mr Gibbons was running his own business.
31. Mr Gibbons relies on the fact that he had access to storage rooms on properties owned by Dr Vickers. It is not clear why that is important. There was no evidence that Dr Vickers ever supplied equipment or tools. The evidence only established that Mr Gibbons supplied all the necessary equipment, either by hiring it, buying it or using what he already owned.
32. Mr Gibbons stated that he was given detailed instructions by Dr Vickers and that he was not allowed to decide what method or materials should be used for a particular job. In his July affidavit, Mr Gibbons gave some examples of such instructions, including that he was told not to include mortar joints on pavers, how long to leave paint to dry and where to build a boundary fence and with what footings.
33. It is difficult to accept some of that evidence, particularly in light of Mr Gibbons’ other evidence about Dr Vickers’ ineptitude in laying turf; however, even if I accept it, it does little to assist Mr Gibbons. It is not surprising that a property owner is concerned with the appearance of his or her property and directs certain work on the property to be done in order to enhance that appearance.
34. Mr Gibbons also relied on the fact that he regularly, if not consistently, worked a full working week, 8 hours a day, five days a week and was paid accordingly. However, the fact that he worked those hours does not establish that he was obliged to work those hours. He did not give any evidence that supported the existence of such an obligation.
35. Mr Gibbons also said that he worked some Saturday mornings but was not paid. This evidence, however, was undone when he was confronted with his own invoices. Those invoices reveal that work was done on a Saturday to make up for lost time during the week which had been charged for and paid.
36. Mr Gibbons also complained that he was directed when to take leave and that he was not paid for that leave. In particular, he said that he was told by Dr Vickers to cease work whenever he was travelling overseas. Those claims are inconsistent with the evidence in Mr Gibbons’ passports, the emails and his bank statements. First, the email chain in 2016 showed that Mr Gibbons was working while Dr Vickers was overseas. Secondly, the passport and bank statements show that Mr Gibbons regularly travelled to Bali and stayed there for significant periods. Indeed, Mr Gibbons gave evidence that he held a long-term property lease in Bali.
37. Rather than going overseas only when he was told he could, the evidence suggests that Mr Gibbons travelled whenever he wanted. In an email to Dr Vickers (who was overseas at the time) dated 31 March 2016, Mr Gibbons wrote:
    • ... I have 3 or 4 days left to finish the whole job then I am goi g [sic] overseas for three or four weeks...
38. Mr Gibbons asserted that he was not entitled to undertake work for anybody other than Dr Vickers. There are several problems with this claim. First, while Mr Gibbons gave evidence of instances when he was told by Dr Vickers that he could undertake work when Dr Vickers was overseas, that does not establish that he did not have an entitlement to take other work.
39. Secondly, the records produced by Mr Gibbons were so incomplete that I cannot be confident that they reveal all of the work undertaken by him or, more particularly, all of the sources of work. The invoice books produced only commenced in June 2014, had many pages missing, and the invoices in them, although paginated, were not completed in date order.
40. Mr Gibbons produced records of an account held by him at the National Australia Bank, but that account was only opened in September 2011 and referred to transfers to a Bendigo Bank account which Mr Gibbons said was his savings account but records of which were not produced or even discovered.
41. The tax returns do not assist at all. In his return for the year ending 30 June 2015, Mr Gibbons disclosed business income of $25,360. The invoices for that period that are in evidence suggest an income much higher than that (in excess of $100,000). Even without the invoices, simple arithmetic undermines the income claimed in the return. Mr Gibbons said that he was paid $3,800 per week towards the end of his time with Dr Vickers. At that rate, it would take approximately 7 weeks to earn $25,000.
42. On the basis of this evidence, I do not accept that Mr Gibbons was ever told that he could not work for anybody else while he was working for Dr Vickers.
43. In his submissions, Mr Gibbons asserted that there was no evidence that he spent a significant proportion of his remuneration on business expenses. That submission is not only misguided but untenable. It is misguided because Mr Gibbons bears the onus of proving the relationship. He did not give evidence that he had no substantial business expenses. It is untenable because the evidence that he did give (in the form of his income tax returns) reveals considerable business expenses.
44. In the 2010 year those expenses were around $117,000 against a reported income of $197,560. For the 2011 year, the expenses claimed increased to $155,756 against an income of $195,531. In the 2012 return, expenses of $6,293 were claimed against a taxable income of $15,900. In 2013, $5,843 was claimed for expenses and an income of $24,600 declared. In the 2014 year $30,100 was declared as income and $6,468 claimed as deductible expenses. Finally, for the 2015 year, expenses of $5,792 were claimed against an income of $25,360.

Consideration

45. The reality of the relationship between Mr Gibbons and Dr Vickers was that of principal and independent contractor. Work was offered to Mr Gibbons as and when it arose. That work was for specific tasks for which Mr Gibbons provided not only his expertise and skill, but all of the material and equipment. He engaged others to help him complete the tasks and, when the tasks were completed, he took time to travel. The agreement between the two parties was that Mr Gibbons would be paid for what he did at the rate that was asked for by him.
46. From a distance, the fact that the work was ongoing over a considerable period and involved regular payment might suggest an employment relationship. However, when examined more closely, even that does not assist Mr Gibbons. It simply shows that Dr Vickers had a number of properties that required a lot of work and that he trusted Mr Gibbons to do that work. Further, when seen in the context of the whole of the circumstances, particularly those matters highlighted in this paragraph, the amount of work done does not change the nature of the relationship.
47. Mr Gibbons was not under the control of Dr Vickers in that, while he clearly had to work at particular locations (it being property work), he was not constrained to work any particular hours, or in any particular manner and was not required to complete any task by a particular time.
48. Mr Gibbons held himself out to be a contractor, handing a business card to Dr Vickers, engaging other contractors and claiming substantial business expenses against his taxable income.

Conclusion

49. After consideration of all of the circumstances, I conclude that the reality of the relationship of the parties was that Mr Gibbons was never an employee of Dr Vickers.
50. The parties agreed that if that were my conclusion the proceedings ought to be dismissed. Accordingly, the proceedings will be dismissed.

An additional matter

51. I have mentioned above that I would return to deal with the income tax returns. At [41] and [44] I set out some of the details of those returns that cause me some concern. In particular, it appears that in the four years from 2012 there is a significant discrepancy between the taxable income disclosed in the returns and the amounts which Mr Gibbons says that he was paid by Dr Vickers in return for his services.
52. It was never suggested to Mr Gibbons in cross-examination, and I need not determine, that he was involved in tax evasion. However, it is the duty of the Court to draw the facts revealed by the evidence in this case to the executive branch of government for such action by it as may be thought appropriate: Petera Pty Ltd v EAJ Pty Ltd [1985] FCA 277; (1985) 7 FCR 375, 380.
53. In the circumstances, I propose to direct the Principal Registrar of the Court to forward to the Attorney-General a copy of these reasons for judgment and the evidence of Mr Gibbons and to make available, as may be required, the full transcript of the proceedings and the exhibits for inspection by any officers authorised in that respect by the Attorney-General or the Commissioner of Taxation.

I certify that the preceding fifty-three (53) paragraphs are a true copy of the reasons for judgment of Judge Smith

Date: 2 March 2018