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Richard Bowerman v. Sinclair Halvorsen Pty Ltd

[1999] NSWIRComm 21



(Judgment by: BISHOP)

Between: Richard Bowerman
And: Sinclair Halvorsen Pty Ltd

Court:
INDUSTRIAL RELATIONS COMMISSION OF NEW SOUTH WALES

Judge:
BISHOP C

Judgment date: 2 February 1999


Judgment by:
BISHOP

D E C I S I O N

This is an application by Richard Bowerman against Sinclair Halvorsen Pty Ltd for a remedy pursuant to S.84 of the Industrial Relations Act, 1996.

Mr Halvorsen alleged that he was dismissed from the position of truck driver with the company on 9 September 1998. He has sought reinstatement, re-employment or, alternatively, monetary compensation in lieu thereof.

The matter was listed for a preliminary hearing before me on 19 0ctober, 1998.

The respondent raised the threshold jurisdictional issue that the applicant was not an employee but a contractor and therefore not entitled to make an application concerning Unfair Dismissal. This was contested by the applicant.

As no conciliation was possible on this issue the matter was set down for Hearing 19 November, 1998 and Directions issued concerning the filing and exchange of witness statements.

At the Hearing Mr Latham of Counsel appeared for the applicant with Ms Bott, solicitor, appearing for the respondent.

Ms Bott called two witnesses to give evidence Mr Kevin Montgomerie and Mr Lloyd Coombs, while Mr Latham called the applicant.

Background

In August 1997 the applicant replied to an advertisement in a major daily newspaper advertising "truck with work". He subsequently bought the truck and entered into a contract with Sinclair Halvorsen as a driver. Sinclair Halvorsen supplies offices and businesses throughout Sydney with various products such as tea, coffee, biscuits, soft drinks etc. Mr Bowerman was one of 3 contract delivery drivers who each had a geographic area within which they made their daily deliveries. Deliveries were collected from the warehouse each morning and delivered as per invoices to the required customer location. In August 1998 Mr Bowerman was suspended for a 14 day period from his delivery run as a consequence of alleged complaints by customers and the relationship between the parties was terminated on 9th September, 1998. The applicant alleged that at all times he was an employee of the respondent and under the control and direction of the respondent. The respondent maintained that the applicant was a contractor as per the terms of the contract entered into between the parties on 9th September, 1997.

The Evidence

The Respondent's Case

Mr Kevin Ian Montgomerie deposed in his witness statement (Ex.1) that he had been employed at Sinclair Halvorsen as warehouse manager for some 22 years. As such he was responsible for the day to day running of the warehouse, including packing and despatching of orders, supervision of both warehouse staff and the loading facilities of contract drivers.

It was Mr Montgomerie's evidence that he came to know the applicant when he was introduced to him by Mr Ross Flood the former State Manager as the person who was interested in purchasing the "west run" from Clive Dunn, one of the company's contract drivers. Mr Dunn had 2 persons carry out driving duties using his truck for a trial period of 6 months and payment would be made to Mr Dunn on an invoice basis.

When Mr Bowerman commenced he was supposed to spend a period in the warehouse and learn the products. However after only half a day the applicant said "It's not necessary for me to learn your products, I'll learn it as I go".

Mr Montgomerie did not consider that Mr Bowerman was an employee as he was not under his control whereas if staff under his control refused to work or did anything malicious against the company they could be dismissed. The applicant was not an employee and did not fill out a time sheet.

Mr Montgomerie's evidence was that the contract drivers would come into the warehouse at a time depending on when it was opened up e.g. 6.45 a.m., take the invoices left in their pigeon hole (allocated as east run, west run, city run, north run) which would then be written up by the driver on a run sheet. Any problems would be discussed with Mr Montgomerie. Goods would then be selected from the warehouse to match the invoices by Mr Montgomerie and other staff, if available, and provided to the driver who would load his truck according to how he wanted it. The drivers determined the order of delivery on the run sheets subject to the requirements of the client (i.e. whether goods were to be delivered by a certain time etc.). A photocopy of the run sheet was kept at the warehouse in case problems arose during the day as to a driver's location at a certain time. The drivers would not be seen until the next day. Only on a Friday, if goods were to be returned, would the drivers return to the warehouse at the end of the day (rather than keep goods in their vehicle over the weekend). There was no set finishing time, it depended on the run. The starting time was also not set but mainly took place at the time it did to enable drivers to get out on the road before peak hour traffic. If for some reason goods couldn't be delivered on the day as required other arrangements would be made via a courier.

Mr Montgomerie deposed that

"After a while, Mr Bowerman began to frequently inform me that he would not complete all of the deliveries assigned to his run on a particular day. The reasons he gave for his refusal to make the deliveries included:

Mr Bowerman : "I won't do it. I'm not going there. I can't do it. I've already been there once this week and I'm not going back again. I'm going to be there on Thursday. Why can't I do it then?"

When I told Mr Bowerman he had to make the deliveries in accordance with his contract he would say to me words to the effect:

Mr Bowerman : "You aren't meant to know what is in my contract. I won't make the deliveries".

Mr Montgomerie said he couldn't force Mr Bowerman to take the goods, he wasn't in a position to as he "wasn't his boss".

Mr Montgomerie also gave evidence about a proposal to remove some of the delivery work from Mr Bowerman that he wasn't prepared to do however Mr Bowerman complained and he and the other 2 drivers refused to load their vehicles and the deliveries proposed to be given to couriers were given back to Mr Bowerman .

Mr Montgomerie also deposed that:

"The amount of control I had over the drivers, including Mr Bowerman , in how they carried out their runs was limited. My understanding of the contractor agreements was that the contract drivers were required to deliver the goods on the same day as we dispatched them , and to deliver the goods in accordance with any special delivery instructions of our customers. If they could not physically make any deliveries, we could arrange a courier to complete those particular deliveries. 0ther than the requirement to deliver the goods on the same day as we dispatched them, and to deliver the goods in accordance with any special delivery instructions of our customers, the drivers had complete discretion how to construct their runs in terms of the order and time of deliveries. I did not tell any of the drivers, including Mr Bowerman , what he had to do on any particular day."

On cross examination Mr Montgomerie agreed that the workload was based on an existing number of customers and deliveries on a month-to-month basis would be fairly constant although the varieties of stock ordered and the volume varied greatly. Mr Bowerman was responsible to the State Manager and Board of Directors only not to Mr Montgomerie.

Mr Montgomerie agreed that it was important to both drivers and the company that they understood the product and the drivers were an integral part of the operation as were the couriers.

Mr Montgomerie re-iterated that he had no control over Mr Bowerman's times. Those were set by the dictates of the customers as to time the goods had to be delivered and the physical location. This information was on the invoice. If it was not physically possible for a driver to make a delivery because of competing requirements of clients and that was agreed, Mr Montgomerie would make alternate arrangements. If the delivery was possible to do then the driver was expected to provide the goods on time.

Mr Montgomerie agreed the drivers were provided with uniforms with the company name on and company signage for the trucks.

Mr Montgomerie was asked a number of questions about Mr Bowerman's obligations under the contract however as he was not aware of the detail of the contract and admitted he did not have a thorough knowledge of the contract. I do not consider his evidence carries any weight on this issue.

Mr Montgomerie was aware however that the drivers were paid fortnightly and that payment was based on a rate for a delivery. The rate scale varied according to the number of cartons delivered. Over the period Mr Bowerman held the run the number of deliveries went down significantly. Runs could go up as Mr Montgomerie put it -

"A. If the driver fulfilled the things that were expected of him by delivering to the customers as the customers stipulated, as a general rule on the other runs, the customers do incline to order more stock and we gain more custom that way. If the customers are happy they do let other people know and other people do use our services."

0n re-examination Mr Montgomerie stated that by and large invoices didn't specify the exact time the goods were to be delivered the majority just had an address where they were required to be delivered to and it was up to the driver as to when he made that delivery on his run.

The company uniforms were provided towards the end of Mr Bowerman's time with the company. They hadn't been worn before. Mr Bowerman did not wear his uniform (Mr Montgomerie observed this on a daily basis) as he said it did not fit. Whilst the west run (Mr Bowerman's) had decreased the other runs had increased.

Four different courier companies were used - one of them on a daily basis doing the outlying areas or one-off deliveries.

Mr Lloyd George Coombs' evidence by way of Witness Statement (Exhibit 2) was that he is State Manager for Sinclair Halvorsen and has held that position since January 1998. His duties include responsibility for the day to day operations of the New South Wales Branch including administration, sales, customer service, inventory control and the warehouse.

Mr Coombs detailed the structure of the company, reporting lines and numbers of employees by category. Annexed to his witness statement was a typical letter of appointment for a sales representative, its content was similar to that used for other employees. All employees served a mandatory trial or probationary period since the change in the Act, however Mr Coombs believed this also applied before his tenure started.

The company had engaged three contract drivers prior to Mr Bowerman's departure. Mr Coombs had annexed to his witness statement a copy of the contract between the company and the applicant and earlier agreements with contract drivers going back to March 1990 . No employees of the company entered into such agreements and the agreements did not provide for the serving of probationary periods.

Mr Coombs was also referred to internal company memos attached to his statement (annexures g and h) one from Ross Flood, the former State Manager and one from Michael Crouch, Customer Services and Business Development Manager which advised of certain issues within the company. Both memos differentiated between staff and contract drivers and Mr Coombs said this was consistent with the distinctions made by the company between staff and contract drivers, a distinction maintained by Mr Coombs. Mr Coombs described the position of storeman/driver, an employee of the company, the duties he performed and the fact that he was supplied with a company vehicle to perform his duties with the company paying all running costs (including registration etc.). The employee was paid an hourly rate and received entitlements such as sick leave, holidays etc.

Mr Coombs was familiar with the contract agreement with Mr Bowerman and he understood that it provided that:

"Mr Bowerman was a contractor driver to the organisation. He was contracted to deliver goods within a territory at which he was paid a rate based on the number of parcels or items he delivered within that territory. He was responsible for ensuring that the goods were delivered and he was responsible for ensuring he had the right equipment, the right vehicle, capable etcetera of delivering those goods within that defined territory to our customers."

Mr Coombs agreed that the company attached signage to Mr Bowerman's truck at company expense and removed it at company expense when his services were terminated. To the best of his knowledge the company had always required contract drivers to effect various insurance policies agreed to in the contractor's agreement, including fully comprehensive motor vehicle and public liability insurance.

After Mr Coombs commenced with the company he found that the 3 drivers did not have public liability insurance. He questioned them individually and they told him they didn't have to have it. Mr Coombs told them it was in the agreement and the company was entitled to ask for a copy of the insurance certificate showing they did have public liability insurance. Several discussions ensued over the next few months and at one stage he was asked by the drivers whether the drivers could be attached to the company's public liability insurance. This was investigated but discounted. Finally the company set a deadline of 1 May. The drivers sought legal advice and shortly thereafter Mr Coombs received public liability certificates from each of the contract drivers. A number of memos relating to this issue were also attached to Mr Coombs' statement.

Mr Coombs also gave evidence about an approach to him by Mr Bowerman that he only make deliveries to Badgerys Creek and Penrith once a week rather than daily. Mr Coombs commenced looking into it and had a sales representative contact customers but due to other more pressing matters it was not pursued. Mr Bowerman did not pursue the issue either apart from a couple of comments to Mr Coombs who advised him that the matter was being looked into.

To the best of Mr Coombs' knowledge of the Contractor's agreement, Mr Bowerman was not required to provide his services to the company exclusively and was remunerated on the basis of the number of cases delivered per job. Every fortnight he would submit an invoice detailing the number of rates and the total amount due. The amount would be paid less P.P.S. tax at the rate of 20%. Income tax was not deducted. No hourly rates or salary were paid in lieu of the rate, to the best of Mr Coombs knowledge. Examples of the invoices submitted were annexed to his statement (q).

Mr Coombs also gave evidence about the uniform issue. A corporate decision had been made to have uniforms worn across the three branches of the company. A uniform was finally selected and issued. When supplied to Mr Bowerman he said they were too small. Whilst the other drivers were given new pants (the first issue being too large) a new uniform wasn't ordered for Mr Bowerman as he confidentially told Mr Coombs he intended to sell his run so Mr Coombs saw no reason to order another uniform.

Mr Coombs also indicated that dictaphones had been supplied to the contract drivers to enable information on customers to be updated and passed on to the company more readily e.g. when details needed to be corrected or added to. Mr Bowerman , to the best of Mr Coombs' knowledge, did not use the dictaphone supplied and it was returned still in the case as basically Mr Bowerman refused to use it.

Mr Coombs further stated that Mr Bowerman supplied his own truck and was responsible for all on-road and running costs. Mr Bowerman also supplied padlocks, straps, trolleys, and street directory as these were not supplied by the company. Mr Bowerman had not taken any time off but if he had it was his responsibility to ensure someone was available to make deliveries and he would have had to advise the company about any absence of his replacement. Whilst Mr Bowerman would have been free to get whoever he wanted the company would want to "make sure it was somebody who was going to maintain the integrity of the company." There was a particular occasion when Mr Bowerman finished early to go to a funeral and Mr Coombs said Mr Bowerman spoke to him as follows:-

"He said, "If we need to, get any couriers to make my deliveries because I got to finish early. He said, "Just send me the bill and I'll pay it."

In any event Mr Bowerman was able to complete his designated deliveries on the day and no other arrangements needed to be made.

As a consequence of Mr Bowerman ringing him to say he was thinking of selling his run Mr Coombs sent the following letter on 30th May 1998.

"Dear Richard,

Re : Possible Sale of your Run

With reference to our recent discussion regarding the possible intended sale of your contract delivery run (hereafter referred to as the 'run'), we would draw your attention to the following:

1.
 The prospective purchaser would be required to sign the attached document and return to us an original signed by them before consideration of Sinclair Halvorsen issuing a new Contractor's Agreement.
2.
 As discussed we would require an interview with the prospective buyer (including validation of any references) prior to consideration of issuing a Contractor's Agreement to them.
3.
 The potential buyer would need to agree to a training schedule as determined my myself.
4.
 All the current terms and conditions of the Contractor's Agreement would need to be met upon signing eg, certificates of currency of all applicable insurances, registration etc. made available.
5.
 We would draw your attention to Clauses 14 & 15 of your Contractor's Agreement in the event that a successful sale of the run is transacted.

Should you have any further questions or require clarification of any point we would be pleased to hear from you.

Yours faithfully,

Lloyd Coombs"

On cross-examination Mr Coombs denied that the contract covering Mr Bowerman set out a number of controls the company had over the drivers. As far as he was concerned the contract set out the terms and conditions between the contract drivers and the company. The contracts for each of the three contract drivers were identical except for the attached map defining the territory or the rates.

Mr Coombs essentially agreed that the contract formed the basis of the agreement between the parties and could not be altered except by agreement. Although Mr Bowerman's contract stipulated fortnightly rather than weekly payment and presumably that was agreed to, Mr Coombs rejected the proposition that the contract gave the company powers in relation to the way that work is performed by the contract drivers. Rather Mr Coombs said that essentially so long as the contract driver "maintains a level of integrity and represents the company accordingly, they are free to make the deliveries on their territory as they see fit, provided they meet the requirements of the customer at each individual location."

Mr Coombs further agreed that a contract driver had to have a vehicle appropriate to deliver the goods on a run whose boundary was defined by the company and which boundary could not be reduced without discussion with the contractor.

Mr Coombs also agreed the contractor would have to pay for a replacement vehicle if necessary and was required to service and lock the vehicle when carrying company goods. The goods were required to be delivered on the same day in accordance with the invoice requirements to the designated place and the driver be competent to do the work. The work could not be delegated without company permission. There were disciplinary procedures if the work wasn't done properly which Mr Coombs said could be taken provided it was done in accordance with the agreement. The agreement was specific to the person who signed it and the work could only be delegated with agreement of the company.

The agreement also provided for a confidentiality clause. When asked what would happen if a contract driver didn't turn up, Mr Coombs said they would endeavour to contact him and find out the circumstances. Mr Coombs was also asked what would happen if a contract driver said "I don't want to work today. I'm quite happy not to be paid any money but I don't want to work today". Mr Coombs replied that the company would have to explore their options as per the agreement.

Mr Coombs denied there were strict starting times for the drivers saying they could turn up virtually when they wanted provided they can get all their deliveries made. However there was a process introduced concerning how the runs were loaded, in order, Mr Coombs said "to get the particular drivers off the premises as best suits the staffing levels and as best suits the runs concerned." This was in a certain order Mr Coombs agreed.

Mr Coombs indicated that his "feel" for the earnings of the applicant was that the applicant put in a bill fortnightly for $2000 which after PPS was in the vicinity of $1,600, this would have been an average amount per fortnight.

Mr Coombs believed the applicant had the ability to both increase and decrease his earnings on the run given the way the business was structured however he didn't consider earnings could be increased the way the applicant performed his duties. Mr Coombs also agreed it was possible a contract driver could lose money if the company lost a large customer. However whilst the runs were based on customers and orders based on the company's own marketing and advertising it was possible Mr Coombs said "that the conduct and actions of the driver can have a bearing on the business."

The following exchange then took place:

"Q. I accept that. Could I ask you this question? You were asked whether, or in your affidavit you made a number of statements that you thought certain people were employees and certain people were contractors. On what basis did you make those decisions, or reach those conclusions?

A. I am directly responsible for the employees of the organisation. They're employed under employment agreements with the company. I pay their wages, I accrue sick leave, holiday pay, superannuation for them and they're subject to all the terms and conditions of employees.

Q. Yes. Why are the drivers not employees"

A. They operate with Sinclair Halvorsen under a contractors' agreement.

Q. It's simply the fact that they've got a document that says this is a contractors' agreement and the others have got other documents?

A. They operate with Sinclair Halvorsen under a contractors' agreement.

Q. It's simply the fact that they've got a document that says this is a contractors' agreement and the others have got other documents"

A. I also pay them differently. We have different requirements of them over employees and in the securement of employees versus contract drivers, there's different considerations. In the termination of employees versus contract drivers there's different considerations.

Q. These considerations, assumedly, are set out the contract of both?

A. The contract drivers?

Q. Yes.

A. Yes, there is."

Mr Coombs was not aware whether Mr Bowerman had worked for anyone else whilst working for Sinclair Halvorsen. He was free to do so if he wanted to under the terms of the agreement between the parties.

In re-examination Mr Coombs agreed that not only were the contract drivers an important part of the Sinclair Halvorsen team but so also were the couriers who were also not employees of the company.

Mr Coombs said the applicant did not always deliver the goods on the day as required and gave a "raft" of reasons. When that happened he wasn't paid for the delivery. The company would try and reason with him. Sometimes he said yes sometimes no and the company would have to make other arrangements. Mr Coombs agreed the company could not just terminate the agreement but had to give the applicant 14 days to respond.

Mr Coombs gave extensive detail about the Warehouse loading procedures and times and the reasons for the procedures being put in place which was as a result of discussion with the drivers about their requirements to get out of the building and on the road. Mr Bowerman particularly had a number of miles to travel to do his run.

Mr Richard Arthur Bowerman , the applicant relied on an Affidavit (Exhibit 3) and oral evidence. Mr Bowerman deposed that in approximately August 1997 he had answered an advertisement in either the Sydney Morning Herald or Daily Telegraph for a "truck with work". Mr Bowerman purchased the truck from Clive Dunn. He rang Mr Ross Flood from Mr Dunn's house and arranged an appointment to go and see him at Sinclair Halvorsen's premises. Mr Flood informed him about working in the warehouse to familiarise himself with the product and explained about the contract. Mr Bowerman did not seek independent legal advice and said he did not fully understand all of it. Mr Bowerman's level of education was that he left school before he turned 13.

As Mr Bowerman understood he could not ring up the company and say he "didn't want to work today". He thought the company had the right of control over the way his work was performed because he was asked of a morning what he could do, whether he could or couldn't do a delivery and what times deliveries had to be at certain designations. He could not delegate his work to someone else and under the contract there were provisions for dismissal or discipline if he didn't perform.

Mr Bowerman did not think there was any capacity under the contract to make a much greater profit and he would make less money if the company didn't have the customers and the goods to deliver.

Mr Bowerman's invoice book was tendered (Exhibit 4) showing the payments made ranging from $826 (Christmas period) to $2064 on a fortnightly basis.

Mr Bowerman also deposed that whilst clause 11 of the contract said he had to provide insurance including public liability and income protection, he didn't think he should have to and spoke to Ross Flood about that and was told words to the effect of "you won't need insurance". Mr Bowerman queried this but Mr Flood asked if his insurance on the truck was comprehensive and then when told it was then said "don't worry". When Mr Bowerman queried what would happen if something was stolen he was told that as long as he had a padlock on the truck it would be ok and the company would cover it. Later after Mr Coombs became the State Manager he received a memo about insurance. This came as a surprise to him as he thought the issue settled with Mr Flood.

Mr Bowerman also deposed that in February 1998 he had spoken to Mr Coombs about only making deliveries to certain areas of his run weekly rather than daily as a more viable proposition. Mr Coombs assured him he'd make such arrangements but this agreement did not materialise.

The Company also arranged for their signage to be placed on his truck. He was also provided with a uniform which was to be worn by all drivers.

From the outset Mr Bowerman deposed that he was subject to the company's control. He was given a fixed run and told when and where to carry out deliveries. Mr Bowerman provided his labour as a driver and was paid on a fortnightly basis.

Once Mr Flood had signed the contract he handed over a cheque for $25,000 for the cost of the truck to Clive Dunn.

On cross-examination Mr Bowerman stated that the newspaper advertisement said to get in touch with Clive Dunn the owner of the truck. It was Mr Dunn who put him into contact with Ross Flood, the State Manager, of Sinclair Halvorsen. Clive Dunn rang Mr Flood and then put Mr Bowerman on the phone. Mr Bowerman met with Mr Flood twice about the contract. He agreed this could have been over a two week period and that he was able to take the contract away for a couple of days and think about it before signing it. 0nce Mr Flood had signed the contract Mr Bowerman handed over a cheque for $25,000 for the cost of the truck to Clive Dunn. Mr Bowerman had not seen Clive Dunn's contract. Mr Bowerman was initially shown the run for 7 to 8 days by a man called Eric who worked for Clive Dunn.

Mr Bowerman denied that he was the one who said he didn't want to spend 14 days working in the warehouse or that he said words to the effect of "I'm a driver, not a storeman. I don't want to work inside. I'm an outdoors person". Mr Bowerman also denied that he was actually asked to work two days in the warehouse but walked out after one day.

Mr Bowerman reiterated that it was Mr Flood who said he didn't need public liability insurance or workers compensation and that as long as his truck was insured it was alright.

Mr Bowerman agreed the start time in the morning depended on how the traffic was and who was there to open up the workplace. Mr Bowerman described his run in some detail and how he would determine the best order of deliveries and sort the

invoices accordingly taking into account specific customer requirements if things had to be there at a certain time. Quite a few of the deliveries had special instructions about where to actually take the goods. Mr Bowerman insisted that up to one third specified the time for delivery. Mr Bowerman also said he was "advised" by Mr Montgomerie about his deliveries as follows:

"Q. How did he advise you"

A . He'd come and ask me what could I do, what couldn't I do. and I'd say to him - like this is an example, Badgerys Creek which was Inghams the chicken people, was gone by 4 o'clock. So you had to structure the run so you could get there by 4.00, and a lot of places would say - I'm just trying to think of one that actually had on the invoice, "Bring to reception," by certain time. It had some funny little things like, they have legs or something. Meaning they walk away or something like that. Something to those words.

Q. So would it be true to say that, you constructed your run and then either you told Kevin which ones you couldn't do or he asked you which ones you couldn't do"

A. No. He used to work in of a morning and say, "How's the happy little vegemites this morning" What can you do today" What can't you do today" What can you do?" And he'd just walk around and get it and he'd say, "That can go tomorrow. This can go this. That can go on a courier." Words to that effect."

Mr Bowerman denied that he had ever refused outright to make a delivery or that he refused to make a delivery because he had already delivered to that customer that week. Mr Bowerman also described the process of loading the truck which was based on the order of the invoices as sorted by Mr Bowerman with Mr Montgomerie or someone else reading off the invoice and the goods being put on one side of the truck by a warehouse employee with Mr Bowerman then placing it on the other side of the truck in delivery order.

Mr Bowerman agreed that on a normal day after making his deliveries he would go home. About once a fortnight there might be the need to return goods to the warehouse that were sent back by a customer. Mr Montgomerie's supervision finished once he had loaded up and left the warehouse, however he would get calls through the day from various people e.g. Mr Montgomerie, sales staff and Lloyd Coombs.

Mr Bowerman also related the incident which occurred concerning the attempt to reduce his run which was subsequently restored after support by the other drivers.

In relation to the issue about the public liability insurance, Mr Bowerman said that when the issue was raised by Lloyd Coombs he told him he would get it if the other drivers got it. He did not seek legal advice about the issue although the other drivers did.

Mr Bowerman agreed he paid for comprehensive car insurance and all other outgoings and equipment associated with running the truck. Mr Bowerman was unable to say how much it cost to run the truck as he gave all his receipts to his account who did his tax. Mr Bowerman was shown a copy of his 1998 Income Tax Return and agreed they showed expenses of $38,558 and that they were considerable expenses when one earnt $39,508. Mr Bowerman agreed that the only income earned from employment shown in his return was an amount from a smash repair company and that he recorded himself under Business Expenses as a "truck hire service, with driver."

Mr Bowerman's Income Tax Return for 1997 - 1998 was tendered as Exhibit 5.

Mr Bowerman said he had not worked for anyone else whilst driving for Sinclair Halvorsen and denied he had been involved in a business at the markets or in a car trading business. He understood that because his truck had company signage and he was told what to do by Kevin Montgomerie that he couldn't work for anyone else. Mr Bowerman could not point to any provision in the contract which said this but said he didn't understand the contract one hundred per cent. He agreed he was paid fortnightly based on the invoices he submitted which in turn were based on deliveries made and if he had not handed in his invoices he agreed he would not have been paid but thought they would've "chased him up" about it.

Mr Bowerman agreed he did not wear the supplied uniform but said it was because it didn't fit. He did not use the dictaphone provided and returned it to Mr Coombs as he preferred to phone in any changes "on the spot as they happen" and Mr Coombs was quite happy to comply with that.

In relation to a day when he told the company he couldn't complete his run due to a funeral, an arrangement was made that if a courier was used he would pay the difference between the courier's cost and his normal rate. This was the usual practice he said. However, had not been necessary to do this.

It was Mr Bowerman's view that he was an employee and that he had always been an employee although he had made no claims in relation to annual leave (as he wasn't there long enough) or sick leave (he didn't get sick). In any event he was not paid any pro-rata leave when he left the company. As for his tax return he didn't understand it and his accountant filled it in in July or August and he hadn't read it fully. Mr Bowerman maintained that there had been one occasion when he had told Mr Coombs he didn't think he was an employee. Mr Coombs had not said anything but had just looked at him.

Submissions

Ms Bott for the Respondent submitted that for the applicant to be able to bring S.84 proceedings he had to show he was an employee of the Respondent. This was denied by the Respondent who relied on the contractors agreement between the parties dated 9th September, 1997.

Ms Bott submitted that the matter essentially turned on the facts with the correct principles to be applied those enunciated by the High Court in Stevens v Brodribb (1986) ALR 513 and the NSW Court of Appeal in Vabu Pty Ltd v Federal Commissioner of Taxation (1996) 33 ATR 537.

In Stevens v Brodribb Ms Bott relied on the following passage from the judgement of Mason J. at p.517:

"A prominent factor in determining the nature of the relationship between a person who engages another to perform work and the person so engaged is the degree of control which the former can exercise over the latter. It has been held, however, that the importance of control lies not so much in its actual exercise, although clearly that is relevant, as in the right of the employer to exercise it: Zuijs v Wirth Bros Pty Ltd (1955) 93 CLR 561 at 571: FC of T v Barretta (1973) 2 ALR 65; 129 CLR 395 at 402; Humberstone v Northern Timber Mills (1949) 79 CLR 389. In the last-mentioned case Dixon J said (at p.404):-

"The question is not whether in practice the work was in fact done subject to a direction and control exercised by an actual supervision or whether an actual supervision was possible, but whether ultimate authority over the man in the performance of his work resided in the employer so that he was subject to the latter's order and directions."

The judgements of Wilson & Dawson JJ at page 526 were also relied upon as to further detail about the different indicia which can be considered as follows:-

"The other indicia of the nature of the relationship have been variously stated and have been added to from time to time. Those suggesting a contract of service rather than a contract for services include the right to have a particular person do the work, the right to suspend or dismiss the person engaged, the right to exclusive services of the person engaged and the right to dictate the place of work, hours of work and the like. Those which indicate a contract for services include work involving a profession, trade or distinct calling on the part of the person engaged, the provision by him of his own place of work or of his own equipment, the creation by him of goodwill or saleable assets in the course of his work, the payment by him from his remuneration of business expenses of any significant proportion and the payment to him of remuneration without deduction for income tax. None of these leads to any necessary inference, however, and the actual terms and terminology of the contract will always be of considerable importance."

This case was now clear authority that all those different elements were a useful guide as to the correct nature of the relationship, Ms Bott submitted. However they were only a guide and "any circumstances which may shed light on the nature of the relationship must be considered." Counsel for the applicant had sought to establish in cross-examination that the degree of control exercised by the respondent was such as to establish a relationship of employer and employee rather than principal and contractor.

The same issue had arisen in Stevens v Brodribb and at p.518 Mason J. said -

"Brodribb's bush boss was responsible for the overall co-ordination of activities within the logging areas and had the task of ensuring a steady flow of timber to the sawmill. Fellers, sniggers and truck drivers were subject to his direction. He liaised with officers of the Commission, allocated individuals to particular compartments, settled disputes, issued directions as to the type of logs to be snigged, and monitored the volume and quality of production. He also decided whether work should take place in inclement weather. His allocation of individuals to compartments, at least in relation to truck drivers, could vary on a daily basis.....".

The type of control exercised was not insignificant submitted Ms Bott and she then took the Commission to how that control was interpreted by Mason J. again at page 518 as follows:-

"The authority of Brodribb's bush boss seems to have been confined to the organization of activities in the forest, determining the location of roads and ramps, selecting the logs to be snigged, monitoring the volume and quality of production and deciding whether work would take place in bad weather. There is, in my opinion, no basis for inferring an intention that the bush boss should have authority to direct Stevens and Gray in the management and control of their equipment which they were using for the purpose of delivering timber to the mill."

The same conclusions were reached by Wilson and Dawson JJ at p.527.

Ms Bott submitted that Vabu's case was very much in point to this matter where the issue of control was raised. A number of the elements of control exercised over the couriers in Vabu could be related to the type of control that Sinclair Halvorsen was alleged to have over the applicant and the other contract drivers and Ms Bott relied on the judgement of Meagher J. at p.538.

"Learned Senior Counsel for the respondent, Mr J L Trew QC, stressed in the course of his submission, that the company always retained a considerable measure of control over the couriers, and that the couriers were employees. Thus, the documents to which I have referred provide that operatives are to be neat and tidy, are to wear uniforms provided by the company, are to replace their vehicles when the company considers them to be unsatisfactory, are to observe a starting time and to work a prescribed number of hours, and are not to use foul language on the telephones. They must accept work allocated to them by the company, deliver goods in the manner directed by the company, accept re-routing if told to by the company, and take no more leave than is permitted. The cumulative effect of these conditions certainly gives the company a deal of control over its courier. However, a person may supervise others without becoming their employer."

In addressing the degree of similarity of control in Vabu's case with that alleged to be held by the respondent over the applicant, Ms Bott pointed to the provisions of Clauses 1 and 2 of the contractor's agreement. Mr Bowerman was required to carry out the work assigned to him in a conscientious, expeditious and workmanlike fashion and to deliver goods on the same day that they were despatched. The applicant also had to accept the work given to him unless he was not physically able to make all the deliveries just like the couriers in Vabu. Ms Bott pointed out however that it was the evidence of both Mr Montgomerie and Mr Coombs that Mr Bowerman would not accept all the deliveries assigned to him for a variety of reasons. This was rejected by Mr Bowerman but the evidence of the respondent should be accepted. This was an issue raised at the time the contract was terminated.

Ms Bott highlighted the other similarities between the applicant's contract and that applying to the couriers such as being courteous, having signage attached to the vehicle, using communication equipment supplied, securing and locking the vehicle and wearing a provided uniform which, unlike the couriers, Mr Bowerman did not do. It was arguable that he observed a starting time but there were no set hours and no set finishing time which in fact contrasted with Vabu. And, Ms Bott submitted, the Full Court found in Vabu that despite the amount of control exercised over the couriers they were still independent contractors. This was highlighted in the following extract from the judgement of Meagher J at p.538.

"And there are several considerations which make me think that on balance the couriers are not employees. In the first place, they supply their own vehicles (be they bicycles, motorbikes, cars, utilities or vans). They have to bear the expense of providing for and maintaining these vehicles: they pay for running repairs, petrol, insurance and registration. The company provides telephones, uniforms and signage. The couriers' expenses are very considerable. To quote McKenna J in Ready Mixed Concrete (South East) Ltd v Minister of Pensions and National Insurance [1968] 2 QB 497 at 526: "The ownership of the assets, the chance of profit and the risk of loss in the business of carriage are his and not the company's, a consideration which points to the couriers being independent contractors.

The taxation position of the couriers is also important. The couriers were taxed as independent contractors and not as employees. The gross payments to each carrier were subject to deduction of the 20% Prescribed Payment System tax, which does not apply to employees. In this regard, Mr Trew QC submitted that the tax documents should be disregarded because they are self-servicing declarations by the taxpayer and as such are hardly evidence of anything. This is true, but it misses the point. What is significant is not that the couriers tell the Commissioner that they are independent contractors not employees, but that the Commissioner, presumably after making whatever investigation he deems proper, acquiesces in their description of themselves and taxes them accordingly.

Another indicium is that the couriers have to provide themselves with their own street directories, telephone books, trolley, ropes, blankets and tarpaulins.

Another, very important, indicium is that the couriers receive no wage or salary. Normally, if they were true employees, one would expect a certain sum to be paid each day, week or month. The company's documents provide for no such think. They are paid a prescribed rate of the number of successful deliveries they make. It is not, I think, fanciful to say that each courier conducts his own operation, permitting himself for his own economic advantage to be supervised by the company. If this were not so, why would the documents anticipate that the courier may use a business name or corporate name if he so wishes. A company does not usually have employee corporations.

Although this part of the case is hardly without difficulty, on the whole I am disposed to conclude that at common law the couriers must be classified as independent contractors."

The judgement was supported by the other judges and Ms Bott drew the Commission's attention to an extract from the judgement of Sheldon J at p.541 where after referring to all the different elements necessary his Honour said:

"They were left to provide for themselves in matters which if a relation of employer and employee existed would normally be provided for by the employer. This was the reality of the relationship and fitted easily with the kind of work the couriers were performing. Such a circumstance diminishes the significance of the various matters which are pointed to and suggest some control."

Ms Bott submitted that the facts in this matter were simple and summarised them pointing out that Mr Bowerman initially responded to Mr Dunn's advertisement the previous owner and driver of the run. There was no advertisement by the Respondent. During the period when Mr Dunn tried to sell his run it was Mr Montgomerie's evidence that Mr Dunn trialled two drivers in addition to Mr Bowerman with invoices still made out in Mr Dunn's name. Thus Mr Dunn had the power to delegate just as the contractors agreement signed by the applicant allowed him to delegate his duties.

Clause 11 also contemplated Mr Bowerman having his own employees and dealt with workers compensation and insurance in such a situation.

Ms Bott also went on to submit that the actual level of control exercised by Mr Montgomerie was limited to the supervision of the loading of the trucks. The applicant constructed his run and decided how to carry out the run, certainly within any requirements of the customer. Changes could be made during the day and it was the applicant's evidence that he had the power to change the order of deliveries as he wished. Ms Bott submitted that in this there was little control exercised by the respondent but that the applicant exercised his judgement in how he would complete his run. The applicant also provided and maintained the vehicle and paid all associated running costs, which were almost $40,000.

The issue of the public liability insurance, a commonsense business practice for independent contractors, was not an issue of control exercised by Mr Coombs but an issue of enforcement of a contract provision.

Ms Bott pointed to other matters such as no salary or hourly rate, no PAYE tax, no holiday pay, no allowance for such leave etc. and whilst each of these on their own would not be decisive, Ms Bott submitted that when the circumstances as a whole were looked at they clearly showed the applicant was an independent contractor. Ms Bott also pointed out that the contractors agreement also clearly stated that there was no employment relationship established and that agreement had been signed by both parties. There was no evidence that the contract was either a sham or supplemented by a separate contract of service.

Ms Bott further submitted that whilst the applicant said he didn't fully understand the contract he must certainly have been aware that purchase of a truck for $25,000, invoicing for payment deductions, PPS tax were not normal for employees notwithstanding his insistence that he always considered himself to be an employee.

Ms Bott finally submitted that the company at all times considered its contract drivers including Mr Bowerman to be contractors not employees as evidenced by the internal correspondence attached to Mr Coombs' witness statement.

The Applicant

Mr Latham submitted that determining the difference between a contractor and an employee was a complex issue. It was a question of degree and one needed to look at the totality of the relationship as per Stevens and Brodribb and at all the evidence. Mr Latham submitted that in this matter whilst it was not an open and shut case all the evidence pointed to an employment relationship.

Mr Latham submitted that the contractors agreement could be used to establish the intentions of the parties though that was not necessarily conclusive. That agreement sets out a number of controls by the company over the worker. Mr Latham summarised the relevant provisions of the contract as follows:-

Clause 1 : referred to how the work is to be carried out, the provision of vehicles, the provision of signage, the carrying of communications equipment and the security and locking of the vehicle.

Clause 2 : referred to the work being done in the delivery area defined in the schedule and that was defined by the employer.

Clause 3 : referred to an obligation to deliver all goods in his delivery area on the same day as despatched and to deliver to the customer at any reasonable designation within the customer's premises.

Clause 4 : referred to warranties as to competence and skill

Clause 5 : referred to a disciplinary process in relation to the employees of the supposed contractor.

Mr Latham submitted this was no different from a vast number of contracts of employment in the classic sense.

Clause 8 referred to disciplinary procedure that can take place where there's neglect of duty, breach of terms of the agreement or refusal to comply with any reasonable instruction or directions given by the principal.

Mr Latham submitted this was a clear situation of legal control and whilst it may not always be exercised that was not the test as far as the High Court was concerned.

Mr Latham submitted that the High Court was concerned about whether people have got the legal right to direct and clause 8 makes it absolutely clear that the company has that right.

Clauses 8 and 9 were the most important parts of the agreement and really went to the essential relationship between the parties. Clause 9 was important as the High Court on a number of occasions has said the essence of the issue is whether the relationship is a personal one as in employing a particular person or engaging a contractor to have services done.

A driver, in this matter could not say he was not going to turn up for a couple of weeks and get someone else to do the work. That was specifically not allowed under this contract. This again was a clear indication that it was a contract of employment Mr Latham submitted.

Clause 12 : referred to the provision of liability

Clauses 13, 14 and 15 referred to the prohibition of disclosure of confidential information.

Clause 16 referred to the reliance by the parties that there was no employment relationship but a contractual one.

Mr Latham submitted that whether the parties say they are contractors or not is not in any way definitive. (AMP Society v Chaplin 18 ALR 385 at page 389). This was particularly the case when the applicant had limited education and no independent legal advice on the contract.

Clause 16 was simply a sham because it was inconsistent with the rest of the agreement, inconsistent with the arrangements between the parties as detailed in the evidence and certainly inconsistent with the legal relationship between the parties.

Regarding the latter part Mr Latham pointed to the evidence of Mr Coombs that there was an obligation upon the drivers to work and relying on Stevens and Brodribb that was a clear indicator of employment status.

Mr Latham also submitted that the right of control over the manner in which work is performed was relevant again relying on Stevens and Brodribb. In particular on this point there were the issues of training, of working in the warehouse prior to commencing driving, being told how to do the runs, time limits, commencement times, provision of uniforms, provision of signage and provision of a dictaphone for ongoing feedback. These issues all showed a clear level of control Mr Latham submitted. There was also the power to select a particular person which was an important criteria. (Zuijis v Wirth Bros Pty Ltd 93 CLR 561 at 572). That was certainly there and exercised on the part of both Mr Montgomerie and Mr Coombs on the

evidence. There was also no unlimited power to delegate on the part of the applicant (AMP Society v Chaplin). It was also the evidence of Mr Coombs and Mr Montgomerie that there was a right to dictate the place and hours of work (Stevens v Brodribb).

Another test which the High Court and courts generally have used was the right to discipline referred to in the contract. That right not only existed in a legal sense it existed in a practical sense. This was a further issue about control. (See ATWU v Monaro Sawmills 322 at p.329).

Mr Latham also submitted that there was another test which could be relied on and which featured in Decisions issued in British Courts and that was the integration test, that is whether the work itself was integral to the organisation or whether there were two separate businesses. The evidence of both Mr Montgomerie and Mr Coombs on this issue was that the work done by the drivers was absolutely integral to the business and this would have been also understood by outside customers.

One factor that distinguished this case from a number of other cases referred to was the assumption of loss or risk Mr Latham contended. It was not the case in this matter that the applicant was told he had a contract and could perform it how he wished and at the end of the day had the right to increase his benefits from the contract or have them replaced.

The invoices of the applicant proved his income was constant almost for the period of his employment. It may have gone up or down by $1,000 on a fortnightly basis but it was a very constant amount because the applicant did not have the ability to substantially increase or decrease the business he was performing. Whilst he had the responsibility to provide a vehicle, damage to the vehicle would probably be covered by insurance and it was not a risk in any event to the level of profit if he can fulfil his contract competently.

The most that the applicant or other drivers could do would be to get off early at the end of the day or have their run reduced or increased, that was the actual limit of their risk which was a different scenario to the person who was able to keep working as much extra work as was coming in. Both the respondent's witnesses admitted this. The workload of the drivers was also very stable, there were no huge peaks and troughs.

In relation to conditions of employment such as sick leave, annual leave and PAYE tax, clearly the drivers didn't have those things but that was as a result of the negotiation process itself rather than the nature of the relationship. Mr Latham contended that the mere fact that two parties allegedly agree to an arrangement where certain things aren't paid didn't make that a contract situation rather than an employment one. Mr Latham accepted however that there was no element of the relationship that sufficiently concerned the applicant so much that he felt the need to raise it during the relationship although the applicant himself said he thought he was an employee and that evidence was never contradicted.

Mr Latham finally submitted that when all of the criteria were looked at and the two major tests applied it was clearly a relationship of employment that existed between the parties.

Ms Bott in reply took issue with Mr Latham's reliance on the control test and the organisation or integration test. Ms Bott submitted that in Stevens and Brodribb the High Court was clearly saying you can't rely solely on the control test and by adding up all the factors say there's control so therefore he's an employee. A whole range of different circumstances had to be taken into account.

Ms Bott challenged Mr Latham's reliance on the respondent's right to terminate the agreement (particularly in relation to control) and referred again to Stevens and Brodribb and the judgement of Wilson and Dawson JJ at p.527

"Even the most independent of independent contractors is subject to some direction in the performance of his work and some circumstances will justify the termination of the engagement. This leads to a consideration of the other factors which are relevant to determine the nature of the relationship."

Ms Bott submitted that in any event the company did not have the right to terminate the agreement on the spot, the driver had to be given notice and 14 days to respond to allegations made. In the case of Mr Bowerman this was the procedure followed.

Ms Bott submitted that there were certainly issues of control in both Stevens and Brodribb and Vabu but she contended it would be very difficult to find a circumstance where a company could contract with a person on a contractor basis and have absolutely no control. Even employing someone as a consultant involves wanting them to come during business hours etc. The decisions make it clear that a whole range of issues must be considered.

Ms Bott also challenged Mr Latham's reliance on the organisation test and submitted that this issue was also considered in Stevens V Brodribb and again relied on the judgement of Mason J at page 519 (agreed by both Brennan and Deane JJ:

"For my part I am unable to accept that the organisation test could result in an affirmative finding that the contract is one of service when the control test either on its own or with other indicia yields the conclusion that it is a contract for services. Of the two concepts, legal authority to control is the more relevant and the more cogent in determining the nature of the relationship."

Ms Bott submitted that reliance could not be placed on just the control test or the organisation test, a whole range of circumstances had to be examined which had been done in both Stevens and Brodribb and Vabu. In both those cases there were elements of control and in Vabu that control was quite considerable yet the couriers were held to be independent contractors.

In response to Mr Latham's extensive submissions as to risk, Ms Bott contended that the evidence of Mr Montgomerie and Mr Coombs did not show conclusively that there was no way at all the applicant could increase his earnings. The evidence of Mr Coombs was that if he'd gone out of his way he could have increased his run and found further customers. Mr Montgomerie's evidence was that there were a series of complaints against the applicant and certainly less deliveries made in his run which was not a problem in the other runs. Although the applicant was dependent on the company for what deliveries he made just as the couriers in Vabu there was an element of risk relating to loss of the vehicle and issues of insurance which was why the respondent had enforced the issue of public liability insurance.

Ms Bott refuted Mr Latham's submissions that essentially Mr Bowerman was handed an agreement and told "you're going to be a contractor" and he signed it and it was what he was in the company's view. That didn't happen at all Ms Bott contended. He responded to an advertisement of Mr Dunn, the previous owner and driver and obviously had discussions with him and ended up purchasing the vehicle. Ms Bott submitted that the applicant was very aware of what he was getting into. His tax return also clearly shows he considered his earnings not derived from employment but an independent business venture and he claimed all expenses as business deductions.

Whilst Ms Bott said she did not argue with the fact that the applicant did not have an extensive eduction and may or may not have sought legal advice, there was no evidence which showed he didn't know he was entering into a contractual relationship rather than an employment one. Whilst he did admit to making one comment to Mr Coombs there was also no evidence that he raised the issue of his employment status during the course of his engagement with the company. Ms Bott also submitted that it was not true that Mr Bowerman had an obligation to work and could not have got someone else to do his run and pointed to the witness statement of Mr Coombs concerning this issue as follows:-

"To the best of my knowledge Mr Bowerman did not take any time off for holidays while engaged as a delivery driver for Sinclair Halvorsen. If Mr Bowerman had wanted to go on holidays he would have needed to inform Sinclair Halvorsen that he was taking time off and who would be doing his run. Mr Bowerman , like all our contract drivers, would have been required to find a replacement driver if he had decided to take time off for holidays."

Thus it was simply not the case that Mr Bowerman could not get other people to do his run and take time off though admittedly the approval of the company was required.

Ms Bott submitted on this issue that one had to distinguish between a contract for services - for work to be done, and a contract for employment - employing the person.

In a contract for services it didn't matter who did the work as long as it got done. If the work wasn't done, or couldn't be done then legal action could be taken for breach of contract. An employer in a contractual situation did not have the right to say that a specific person or a specific sort of person must do the work as that was importing into a contract of service implied notions of employment.

Consideration

I have given very careful consideration to the evidence of the witnesses and the submissions of the parties in this matter. The evidence is of particular importance as establishing whether or not a person is an employee or an independent contractor is firstly an issue of fact. Quite clearly in my mind when considering the facts in this matter within the context of the cases and tests applicable the inescapable conclusion that is reached is that Mr Bowerman was an independent contractor and not an employee of Sinclair Halvorsen.

Mr Bowerman responded to an advertisement from Mr Clive Dunn, a contract driver with the company, for a "truck with work". Mr Dunn was not just selling his truck, he was also making available the opportunity for the contract work he had previously performed with the company, though obviously this was subject to the successful concluding of a new contract between Mr Bowerman and the company. While Mr Bowerman may not have seen Mr Dunn's contract I find it very hard to believe that there was not some sort of discussion between them about the nature of the work to be carried out for the company, its basis and the conditions under which it would be carried out. It is Mr Dunn who contacts by phone Mr Flood from the company and then passes him over to Mr Bowerman so he can talk to him and arrange a meeting. Mr Bowerman does not seek independent legal advice about the contract. That was his decision and his alone. Just as he later did not seek legal advice when the issue of the public liability insurance was raised by Mr Coombs but relied on the legal advice obtained by the other two drivers. There is certainly no evidence of coercion or any attempt by the company to deceive or confuse Mr Bowerman about the contract. It was explained to him, he was given time to take it away and consider it (and obtain legal advice if he wished) and he consulted with his wife on the matter. I just do not accept that he did not understand or appreciate that he was not entering an employment relationship and the fact that he never seriously or consistently and indeed not even in any way presses the issue of being an employee or voices dissatisfaction with the terms of the agreement during the course of his relationship with the company reinforces my view on this issue.

When one looks at the actual circumstances of the work performed and the manner in which it was performed the similarities with and the comparisons that can be drawn to both Stevens v Brodribb and Vabu's case are striking and I will return to this issue.

Work was determined by the requirements of the customers. It was the customers, not the company that dictated what goods were to be delivered, where they were to be delivered to (including more specific delivery directions within the customer's establishment) on what day they were to be delivered and in some circumstances the actual time of delivery on that day.

The company simply constructed geographic runs that facilitated and expedited satisfaction of the customer requirements. The drivers determined the order of the deliveries (subject to any specific customer requirements) and indeed it was the drivers who told Mr Montgomerie if they could not make a delivery for some reason and whilst options may have been discussed with Mr Montgomerie it was the drivers who initiated their decision making ability about what they did not consider they were able to do . Mr Montgomerie's role was to then determine what alternate arrangements were to be made and on the evidence that generally involved the use of a courier.

Four couriers were used with one being used on a daily basis to take "cold" deliveries etc. And clearly on the evidence the use of couriers, extensive and frequent as it was, was also integral to the company's operations.

Starting times were purely determined by the drivers' need to be on the road to beat traffic and the order of loading and departure dependent on who had furthest to travel and who was there to open up the warehouse first thing. There was absolutely no instruction as to finishing time or length of time to do the job saving that each day's deliveries were to be completed in that day. Presumably if they could complete a run in half a day the rest of the day was theirs.

It seems to me that all Mr Montgomerie supervised was the loading of the trucks to ensure that it met both the requirements of the customers as set out in the invoices and the requirements set by the drivers in determining their run for the day and the order of that run. Indeed the supervision carried out was in fact supervision of the warehouse employees who actually loaded the trucks according to the driver's invoices. It was the evidence that the driver stood in his truck and moved the goods from one side (where they were placed by the warehouse employee) to the other side in the order that best suited the driver in terms of the order of the deliveries to be made (as already determined by the driver). The supervision exercised can hardly be classed as an exercise of "control" by the company and even if Mr Montgomerie had directly supervised Mr Bowerman the comment by Meagher J. in Vabu's case (at p.538) is most compelling "however a person may supervise others without becoming their employers".

There seems to have been no argument that the drivers were the ones to say what they could and couldn't take, and in relation to the many refusals and excuses put forward by Mr Bowerman about making certain deliveries (and I accept the evidence of Mr Coombs and Mr Montgomerie on this issue) no disciplinary action was taken against him until the final 2 week suspension (in terms of the contract) which led to the termination of the contract. This would surely not have been the position if he had been classed as an employee. I am sure that if a direct employee had refused to make a delivery he would have been subject to immediate disciplinary action by the company. Even the earlier attempt to reduce the run because of Mr Bowerman's obvious problem with the workload was reversed when he kicked up a fuss about it, again would this have happened if he had been an employee?

Mr Montgomerie and Mr Coombs were also powerless to take any disciplinary action against Mr Bowerman for not wearing a uniform or using the dictaphone. Even though the uniform did not fit the wearing of such was not pressed by the company. Significantly one of the reasons was that Mr Bowerman had told Mr Coombs he was going to sell his truck and the run, which prompted Mr Coombs letter of 30th May, 1998. This was not contested either in cross examination or in Mr Bowerman's evidence.

Once Mr Bowerman left the warehouse each morning any supervision by Mr Montgomerie ceased apart from inquiries during the day as to his whereabouts which on Mr Bowerman's evidence seemed to be reasonably frequent and from a range of people including the State Manager of the company which seems rather unusual to me.

The requirement to work in the warehouse prior to commencing driving could hardly be called training, it was nothing more than familiarisation with products, a pretty essential requirement I would have thought to carrying out deliveries successfully. In any event Mr Bowerman walked out without completing the day again with no action taken by the company consistent with his status as a contractor rather than an employee. And again I prefer the evidence of the company on this issue and I have to say at this point that overall I was singularly unimpressed with Mr Bowerman as a witness and his version of events throughout his time with the company, indeed I consider on many issues he was less than truthful and on others evasive.

In relation to the issue of the public liability insurance I agree with Ms Bott that this was not an issue of control in any way, shape or form but merely enforcing compliance with the agreement between the parties. I don't consider that the issue of what Mr Flood did or didn't say to Mr Bowerman about this to be of any overwhelming relevance at all to the issue of whether or not Mr Bowerman was a contractor.

Mr Bowerman completed and submitted invoices based on the number of cartons and deliveries made and if a delivery was not made then he was not paid for it. Even Mr Bowerman must have realised this is not how employees are normally remunerated after all he is a man of mature years who has been working since he was 13. I just do not believe that Mr Bowerman did not realise what he was getting into. However he may not have realised what hard work it would be to earn the money he was to get or the miles he would have to travel but I am sure he knew he was not an employee and was certainly not being treated like an employee.

Tax was deducted on a P.P.S. basis and whilst this in itself is not conclusive it is clearly one of the indicia that can be relied on. Also on the issue of taxation it is not insignificant that Mr Bowerman himself submits his 1997-1998 tax return on the basis that he is carrying out the business activity of "Truck Hire Service - With Driver". To blame it all on the accountant because he did the tax return and Mr Bowerman hadn't read it is ludicrous in my view. Clearly the accountant has completed the return based on the information both oral and documentary (including receipts etc.) given to him by Mr Bowerman , he has not made it up nor has he completed it without any consultation with Mr Bowerman and any advice he has given to Mr Bowerman has clearly been accepted hence the signing of the tax return and the filing of same. And significantly the return was completed and submitted whilst Mr Bowerman was still with the company in a relationship which he had not queried or questioned at all during its course yet now seeks to maintain that at all times he thought of himself as an employee.

In Vabu the issue of taxation was also raised and Meagher J.A. had this to say at p.538-39.

"The taxation position of the couriers is also important. The couriers were taxed as independent contractors and not as employees. The gross payments to each carrier were subject to deduction of the 20% Prescribed Payment System Tax, which does not apply to employees. In this regard, Mr Trew QC submitted that the tax documents should be disregarded because they are self-servicing declarations by the taxpayer and as such are hardly evidence of anything. This is true, but it misses the point. What is significant is not that the couriers tell the Commissioner that they are independent contractors not employees but that the Commissioner, presumably after making whatever investigation he deems proper, acquiesces in their description of themselves and taxes them accordingly."

True it is that nothing was put forward as to whether Mr Bowerman's tax return has been accepted however his contractual arrangements were the same as the other 2 drivers and previous drivers (except as to fortnightly submission of invoices). Those arrangements have provided for P.P.S. taxation since at least 1990 on the evidence of Mr Coombs about earlier driver contracts and it would seem reasonably capable of being concluded that the taxation office has concurred with that arrangement and the designation of the drivers as independent contractors rather than employees simply by the fact that this has been the practice for some years without apparent challenge that would have presumably resulted in some change to the arrangement and the appropriate P.A.Y.E. tax deducted.

Mr Bowerman provided his own truck which he maintained and all associated costs were paid by him such as registration, insurance, petrol etc. He also supplied any necessary equipment such as straps, padlocks and road maps. The only items supplied by the company were signage for the truck, uniform and dictaphone. This is not unlike the situation in Vabu's case where the couriers provided their car etc. and bore all costs but the company provided a uniform which the couriers were required to wear and also provided signage and telephones. This was clearly a substantial capital outlay on the part of Mr Bowerman . It was his evidence that the truck cost him $25,000 and in his tax return he lists expenses (together with the outlay on the truck, depreciation, rent and other expenses) as $39,558. This was quite a considerable expenditure, with a considerable associated loss if the truck was damaged and off the road for repairs etc. or if Mr Bowerman could not work for any reason. In this event it would be Mr Bowerman's responsibility to be able to provide alternate transport or an alternate driver to enable him to make his deliveries or he simply would not be paid.

In Vabu Meagher JA had this to say about provision of equipment at p.538.

"And there are several considerations which make me think that on balance the couriers are not employees. In the first place, they supply their own vehicles (be they bicycles, motorbikes, cars, utilities or vans). They have to bear the expense of providing for and maintaining these vehicles: they pay for running repairs, petrol, insurance and registration. The company provides telephones, uniforms and signage. The couriers' expenses are very considerable. To quote McKenna J in Ready Mixed Concrete (South East) Ltd v Minister of Pensions and National Insurance [1968] 2 QB 497 at 526: "the ownership of the assets, the chance of profit and the risk of loss in the business of carriage are his and not the company's", a consideration which points to the couriers being independent contractors."

If Mr Bowerman could not make the required deliveries for any reason he suffered the loss of non-payment for such whereas the company simply made other arrangements, substantially via the use of couriers, thus not sustaining any significant loss notwithstanding that the courier still had to be paid (just as Mr Bowerman would have to have been).

This was also an issue in Steven v Brodribb and Mason J. commented at p.527:

"He used his own tractor and paid his own expenses. Since the performance of the work by Gray was as much dependent upon the provision of mechanised power as it was upon the provision of his own labour, the case resembles that of Humberstone v Northern Timber Mills (1949) 79 CLR389 where the most important part of the work to be performed consisted in the operation of a motor truck supplied by the person engaged to do the work. That was held to establish an independent contract. Gray was paid by reference to the volume of timber which he snigged and loaded and it does not appear that any deductions were made for income tax. He was engaged to snig and load a fixed quantity of timber for the relevant season, but his hours were his own."

Thus there was clearly the opportunity for loss arising from the failure or inability to make a delivery and thus not receive payment. Certainly the ability to make a profit was less certain however on the evidence of the respondent's witnesses it was not beyond the realms of possibility that custom could be increased through existing customers, satisfied with the service they received, increasing orders, and other customers being brought on board as a result of either word of mouth or drivers advising of other businesses close by that could be contacted. This was the evidence of Mr Montgomerie and Mr Coombs. I should say however that the issue of profit as distinct from loss, was not at all significant it would appear in Stevens v Brodribb where in fact Gray was engaged to "snig and load a fixed quantity of timber for the relevant season" (at p.527).

Mr Latham made much of the terms of the contract requiring the drivers to perform work and the disciplinary action that could be taken. Yet are not contracts at their core concerned with the issue of performance in some form or other as agreed between the parties and thus binding on the parties with penalties or procedures to be effected for non-performance or breaches of the agreement by either party.

On the issue of delegation Mr Bowerman under the terms of the contract and on the evidence, clearly had the power to delegate. The fact that any substitute driver had to be approved by the company does not give the respondent control over that delegation. In terms of the contract I don't believe approval of an appropriate person was such an unreasonable condition, the company surely had the right to be confident that any substitute driver was competent to do the job and maintain the "integrity" of the company as Mr Coomb put it. What must not be forgotten is that it would have been Mr Bowerman's responsibility to seek a replacement if necessary (or indeed have someone else do part of his work on a permanent basis and take a reduced profit). This is not the action of an employee. When an employee is sick or on leave or does not present for work for whatever reason it is not the employee's responsibility to organise a replacement (or even determine that replacement is necessary) it is the role and responsibility of an employer to determine whether such employee is to be replaced, by whom and on what terms.

As to the integration test relied on by Mr Latham its relevance is diminished by the fact that whilst clearly the drivers were of necessity integral to the respondent's business engaged at it was in the supply of goods to customers, the couriers used were also integral to the company's business given the frequency with which they were used. Indeed one courier was used on a daily basis to make "cold" deliveries and deliveries to outlying areas and other couriers made the deliveries that the contract drivers (including Mr Bowerman ) determined that they could not or would not make. It was Mr Coombs' evidence that the couriers were also integral to the respondent's business and this is quite clear and yet the couriers were not employees and being integral to the business did not make them so.

As I mentioned earlier the comparisons and parallels that can be drawn between the facts in this case and the factual circumstances of both Brodribb v Stevens and Vabu's case are striking. Ms Bott's submissions on this issue are most compelling and I find it impossible to go past Vabu's case for the comparisons afforded. Indeed if control be a determining factor then the degree of control exercised or the parameters determined for the couriers in Vabu in my view, was not merely similar but were greater than that exercised by Sinclair Halvorsen over Mr Bowerman . Yet in Vabu's case the couriers were held to be contractors. Again in Stevens v Brodribb the issues of direction, supervision, pre-determined and contracted loads, provisions of truck and labour etc. are almost parallel the circumstances in this matter.

It must also not be forgotten that the contract itself sets out the agreement between the parties and establishes the basis of the relationship. I found no hint of any evidence that this was a sham or a contrived arrangement and whilst as Mr Latham quite rightly points out the contrast of itself cannot solely determine the relationship when one looks at the evidence of how the relationship between the parties was carried out in reality the intent and substance of the contract cannot, in my view be overturned.

Thus relying on the principles and tests enunciated in the relevant cases, particularly Brodribb v Stevens and Vabu, and applying these to the facts and evidence in this matter, there is only one conclusion I can come to and that is that Richard Bowerman was not an employee of Sinclair Halvorsen and thus is not entitled to make a S.84 application.

The application is therefore dismissed.

 


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