WESTERN AUSTRALIAN INDUSTRIAL RELATIONS COMMISSION

PARTIES PAUL ERNEST DALLASTON

APPELLANT

-and-

CANON FOODS

RESPONDENT

CORAM FULL BENCH

  HIS HONOUR THE PRESIDENT P J SHARKEY

  SENIOR COMMISSIONER J F GREGOR

  COMMISSIONER S WOOD

DATE WEDNESDAY, 6 JULY 2005

FILE NO. FBA 50 OF 2004

CITATION NO. 2005 WAIRC 01978

CatchWords Industrial Law (WA) - appeal against decision of a single Commissioner - unfair dismissal - whether appellant was an employee or independent contractor - jurisdiction of Commission - definition of employer and employee - indicia - authorities and principles - Industrial Relations Act (1979) as amended, s7, s23A, s29(1)(b)(i), s49.

Decision Appeal dismissed.

Appearances 

Appellant Mr K J Trainer, as agent

Respondent Mr C S Fayle, as agent

Reasons for Decision

THE PRESIDENT:

INTRODUCTION

1         This is an appeal by the above-named appellant, Paul Ernest Dallaston (hereinafter referred to as “Mr Dallaston”), against the decision of the Commission, constituted by a single Commissioner, made on 9 November 2004 in matter No 52 of 2004.  The appeal is against the whole of the decision.

2         The decision appealed against is constituted by an order made on 9 November 2004 whereby the Commissioner dismissed Mr Dallaston’s application made pursuant to s29(1)(b)(i) of the  Industrial Relations Act 1979 (as amended) (hereinafter referred to as “the Act”), which sought orders pursuant to s23A of the Act.  The application was dismissed for want of jurisdiction.

3         The appeal is brought pursuant to s49 of the Act.

GROUNDS OF APPEAL

4         The grounds of appeal are as follows:-

 “1. The Commission erred in failing to find that the Appellant was at all times an employee of the Respondent.

 2. The Commission failed to give due weight to

  a. the degree of control exercised by the Respondent over the manner in which the Appellant performed the duties of the position.

  b. the exercised right of the Respondent to direct the Appellant’s activities.

  c. the Respondent exercised right to direct the Appellant to participate in activities not associated with the ordinary work of the position.

  d. the right exercised by the Respondent to unilaterally change the Appellant’s terms, conditions and client base

 3. The Commission failed to give due weight to the degree to which the Appellant was an integral part of the Respondent’s business.

 4. The Commission erred in concluding that the Appellant was conducting a business and ought to have concluded that the Appellant was an employee rewarded on a commission only basis.

  a. the Appellant had no goodwill

  b. the Appellant expressed uncertainty as to his status.

  c. the Respondent exercised the right to unilaterally change the client base and terms of engagement.

 5. The Commission placed undue emphasis on the “purchase” of clients and the “sale” of the business and

  a. misconstrued the significance of those matters.

  b. misconstrued or misinterpreted (sic) those matters.

 6. The Commission failed to give due consideration to the nature of the engagement in the previous employment with the Respondent as a factor in identifying the relationship between the parties.

 7. The Commission misdirected itself in the construction and the interpretation of the definition of “employee” in s7 of the Industrial Relations Act 1979.”

BACKGROUND

5         Evidence in documentary form was tendered at first instance, and the “founder” of the company, the Chief Executive Officer, Managing Director and Chairman of the Board of the respondent (hereinafter referred to as “Canon”), Mr Richard Henry Pace, gave evidence for Canon at first instance, whilst the only oral evidence for Mr Dallaston was given by him on his own account.  Mr Gregory Anderson was Canon’s Finance / Administrative Manager at the relevant times, Mr Kerry Lehane was the WA Sales Manager, and Ms Tracy Shaw, a Sales Representative, and after that was Assistant Sales Manager, Food Service until she left in 2003.

6         The appellant, Mr Dallaston, filed an application in the Commission claiming that he was, on or about 19 December 2003, harshly, oppressively or unfairly dismissed by Canon.  Canon denied the claim and said that Mr Dallaston was not, at any material time, an employee of Canon and the matter was therefore beyond the jurisdiction of the Commission.

7         Whether the person is an employee is a question which arises because of the definition of “employee” and “employer” in s7 of the Act.

8         In 1984, Canon was engaged in the manufacture and distribution of food products, including cooked and raw chicken, primarily, in this State, and Mr Dallaston was first employed by Canon, in 1984, as a salesperson, prospecting, selling and delivering products.  His sole remuneration then was, as it was later, commission calculated on the value of sales made of products manufactured and/or by Canon.  He subsequently left Canon’s employ in 1987, but later, on 1 December 1997, after applying through an advertisement in the newspaper, again commenced to work for Canon which continued to be engaged in the manufacture and distribution of food products.  Again, he was paid on a commission only basis, generally at the rate of 10% of the value of sales made by him of Canon products, and as agreed.

9         He provided his own motor vehicle, a Ford van, which was to be used for the purposes of delivering Canon’s products to its customers.  The vehicle had an enclosed back section containing a refrigeration unit, namely a chiller and freezer box.  Canon arranged for the signwriting on Mr Dallaston’s van and insurance on his vehicle and he was invoiced for the cost.  The signwriting was, however, as directed by Canon.  It included the name “Canon Foods” and the office and factory telephone numbers of Canon, as well as a slogan referring to Canon.  There was no reference to Mr Dallaston on any of the livery of the vehicle and he wore a shirt with Canon’s name on it.  Mr Dallaston ran the van at his own expense, paid for all of his own insurance and maintenance on the van and provided his own telephone at his own expense.  He carried no workers’ compensation or public risk insurance and none was carried for him by Canon.

10      Mr Dallaston gave evidence that he was not required originally to obtain an Australian Business Number, but did so as required by the management of Canon in November 1999.  He requested and received a Goods and Services Tax (GST) registration number in July 2000 and he said that this was obtained following requests by Canon after the introduction of the GST.  He complied with these requests until 1 July 2002, when the ABN number was “deregistered” at his request, because, he said, he was not earning enough income to warrant his continued registration, namely less than $50,000.00.

11      He was required to prospect for customers and to sell and deliver all of Canon’s products to customers on a daily basis from his vehicle.  That is, he dealt accordingly with products manufactured or “sourced” by Canon and only those products.    His deliveries were not confined to his own sales.  He had to help out other members of the sales team with deliveries and delivered orders for other sales representatives, too.  He was limited to selling Canon’s products.  No other products were to be sold without the express approval of management.  He would also receive orders on his mobile telephone for delivery of products, which came through the office.

12      When he commenced in 1997, Mr Dallaston was assigned to sell goods and to deliver them to customers such as Spotless Services and the Lunch Bar Association.  On top of that, he had to prospect for his own customers.

13      Mr Dallaston had a business card which described him as “Area Manager Food Service”.  That card was provided to him by Canon who were responsible for so describing him.  It was also produced and designed by Canon.  Additionally, in a document entitled “Canon Foods Profile”, he appeared on an organisational chart under the heading “Food Service”, as one of three “sales representatives”.  On this chart it was noted that he reported to Canon’s WA Sales Manager.

14      His name appeared in other promotional material tendered in evidence at first instance as a “part of the Canon Food’s team”.

15      Mr Dallaston gave evidence that, when he commenced in 1997, he was told by Mr Pace that “my status was going to be probably some kind of self-employment, looking towards self-employment, and I was hoping that that would transmit into something I could build on …. for the future”.  Mr Dallaston also said in evidence that he thought that his status was similar to what he was doing in 1984/85 for Canon, but “I soon realised that it wasn’t” (see page 17 of the transcript at first instance (hereinafter referred to as “TFI”).  Mr Pace was of the view, as he expressed it in evidence, that Mr Dallaston and some of his colleagues were responsible for building up their own businesses.

16      There was a lot of evidence at first instance about how Mr Dallaston engaged, acquired and serviced new customers.  Each day, he would submit his orders to management.  Canon gave to Mr Dallaston price sheets listing products and prices together with any change in the prices of the products. 

17      Each day, he was given delivery documents prepared by Canon setting out what products were to be delivered to what customers.  There was also an expectation that orders for delivery for the following day would be collected in the late afternoon of the previous day.  I would add also that, each day, in accordance with Ms Shaw’s directions, Mr Dallaston was required to be back at Canon’s premises by 3.30pm.  However, when loading up, he was required by management to be at Dispatch at 5.00am for daily stock requirements.  They were given half an hour to load up.  That was the direction to him on and from 23 June 2003.  He thought the direction had been given by Mr Dickinson and Mr Pace.  He would deliver the goods and the customer would then be given an invoice or delivery docket for the goods by Mr Dallaston, and Mr Dallaston would receive all payments for the goods from the customer.  It was his duty to collect the monies.  He would keep a running sheet, which was a summary of activity from his calls for each day of each month, detailing the customer’s name, invoice number, total cost of goods delivered and how the account was paid.  He also recorded cheques and cash received.  He said that he was required by Canon to compile an end of month summary of his sales performance.  All monies received from customers were given by Mr Dallaston to Canon along with his running sheet.  His commission, which was 10% of sales, subject to exceptions which I mention hereinafter, was then subsequently paid to him by Canon, payments being recorded on a pay slip.  From time to time, there were adjustments made to his commission by Canon reflecting overpayments made in error.

18      Management required the sales representatives, including Mr Dallaston, to attend at its offices on the Fridays closest to the end of each month, earlier than they did when they finished their runs on a normal day.  This was required for the purposes of banking the proceeds of sales.

19      Canon gave to all of the sales representatives who worked for it price lists on Canon letterhead, setting out the prices of their product, as I have observed.  Canon would change the prices from time to time and up to date price lists would then be issued to the sales representatives.

20      From time to time, Mr Dallaston secured new customers who were required to complete a customer application.  Customers seeking credit from Canon were required to complete a credit application, all of which documents were then given to Canon.  Mr Dallaston could not grant credit to customers.  That could only be done by management.  The pricing, and allocation of customers, was also controlled by Canon.  Mr Dallaston gave evidence that, on some occasions, customers were taken from his round and given to other sales personnel by management.  He was also required to produce a food service sales report, another document provided to him by Canon, and give that to the respondent.  This recorded the client’s name and the quantity and regularity of sales to the particular customer.  As directed, too, Mr Dallaston was required to inquire of customers what they paid for products from competitors of Canon.

21      In an internal telephone contact document which was described as a “Staff List”, Mr Dallaston and another person are described as “Food Service” in the Sales Department and there were three other persons described as “Sales Rep”.  Other employees were listed in the document.  Mr Dallaston said in evidence that he regarded himself as part of the team of sales representatives working for Canon.

22      Customer complaints were entered onto a complaint form which were also given by him to Canon which dealt with complaints in accordance with procedures which Canon itself had laid down.

23      He was also required to attend regular Food Service meetings.  These were meetings of those selling food products of Canon, known as sales representatives, convened by Canon’s managers and presided over by them.  The sales representatives could not choose not to attend.  These were held every fortnight at a predetermined time.  Some minutes of these minutes contain reference to various directions given by various management personnel to the sales staff.  Mr Dallaston gave evidence that, at the regular Food Service meetings, various matters were discussed which included production ideas, sales performance, customer complaints and production and dispatch issues.  The minutes bear that out.

24      Mr Dallaston was also expected to attend with some of his colleagues exhibitions run by associations and schools and to set up and man display stands for Canon’s products.  They were not paid for those attendances, and they were not paid for attendances at sales representatives’ meetings.  Canon was responsible for the costs associated with these displays as it was for all other publicity and promotions for products.  Mr Dallaston made no financial contribution to them and had no responsibility for advertising.  That was all done by Canon.  He also did, as he was required to do by Canon, hand out Canon’s flyers.  Further, all gifts to customers such as diaries were produced by Canon and given to customers at no cost to him.

25      $100.00 per month was allowed to Mr Dallaston and other sales representatives for samples to provide to customers.  However, the supply of samples had to be requested of management in writing two days ahead of the date required, and the application could be refused or acceded to by management.  These requests usually went to Mr Lehane.

26      Sometimes, some significant customers whom he serviced, namely Eurest, Spotless, Lunch Bar Association and also, I should add, Uniting Church Homes, wrote to Mr Dallaston at Canon, but the correspondence was primarily with Canon’s management.  He was given authority by Canon to visit Spotless premises for keeping a check on what products might be required.

27      He was required from time to time to report on servicing of major customers.  Mr Dallaston was required to give other reports, too, on request, to management.  He was required to comply with Canon’s stock control requirements.  He was required by Canon to keep his mobile telephone on at all times in order to respond to delivery requests.  Mr Dallaston was directed to and kept his code numbering of products correct. 

28      There were also specified requirements for certain customers, advised by Canon to Mr Dallaston, as to the delivery times and specific locations.  It was his evidence that he had no control over Canon’s customers at all, as evidenced by the fact that Canon from time to time moved customers from Mr Dallaston to other sales personnel.

29      Mr Dallaston bought no stock from Canon and held none personally.  All surplus stock at the end of each day had to be returned to Canon, and was returned by Mr Dallaston.

30      From “time to time”, as required by management, Mr Dallaston was required to “chase up” customers who had not paid their accounts and, if possible, to collect from them the amount owing there and then.  He was also required to follow up “inactive accounts” in the course of his daily work, (ie) to persuade them to buy from Canon again.  He was given by Canon lists of both of these classes of customers.

31      Since companies like Eurest required a certain percentage of the price which they paid to be rebated, the amount of the rebate would be deducted from Mr Dallaston’s commission each month.  This was the senior management’s decision.  Mr Dallaston said that he was told this but it was not discussed and he had no involvement in the decision to give Eurest a 10% rebate.  The effect was that his commission was unilaterally reduced by management from 10% to 6.75%.

32      There is also the clear example of the unilateral reduction of commission for deliveries by Mr Dallaston to Jester Foods (see pages 59-60 (TFI)).  The arrangement with Jester Foods giving rise to this reduction, Mr Dallaston believed, was entered into by senior management, namely Mr Dickinson.

33      From time to time, customers were taken from or allocated to sales representatives by Canon.  Some customers were given to sales representatives who were not equipped to deliver the products.  For delivery purposes only and not for sales, management decided that the “equipped” sales representatives would be paid a commission of 7.5% for deliveries.  They were expressly advised of this decision at a sales meeting and there was no discussion.  However, again, as unilaterally decided by Canon, when Mr Dallaston did deliveries for a sales representative called Mariana to customers on her list, he was paid as determined by Canon, 8% on the deliveries.

34      It was probably before 2001 that Canon produced a list of its staff in a Canon Foods booklet called “Canon Foods Profile” in which Mr Dallaston’s name appeared under “Sales Section – Food Service – Sales Representative” (exhibit A18).  Mr Dallaston’s name also appeared as “part of Canon Food’s Team” in other promotional material tendered in evidence at first instance,

35      Some time in 2002, Mr Dallaston attempted to “buy” clients from one of the other sales representatives who was leaving Canon.  This person, Mr Geoffrey Cook, wanted to “sell” his round, or list of customers.  Mr Dallaston wanted to purchase the clients from Mr Cook.  As Mr Dallaston said “we were told we could sell (the round) as a financial structure rather than a commodity structure”.  Mr Cook put on another driver who was going to purchase the round from him, but he allegedly could not keep up with the payments.  However, Mr Cook received permission from management to sell the customers to another representative, Mr Grant Raynel and Mr Dallaston.  He did so, Mr Dallaston paying $6,000.00 for his “share” of the customers listed on Mr Cook’s round.  This was because they had been told by Mr Pace many, many times, Mr Dallaston said, that they had their own business.  However, when they asked Mr Pace what the businesses were, he was unable to tell them that they had a specific thing to sell.  Then Mr Pace also told them, according to Mr Dallaston, that they could sell the “financial aspect”, (ie) “the income that we gained off the deliveries, the commission”.  His evidence was also “We could sell that to people if we wanted to.  And that is what I’m … referring to when I say “sell””.  What they all, (ie) the sales representatives, did was to purchase the income and not the customers, he said.

36      Mr Pace’s evidence was that he saw Mr Dallaston as having ownership in the delivery rights to the particular customers, for which he was paid a commission payment.  However, on his evidence, all of the customers were customers of Canon and not Mr Dallaston.  There was no doubt that customers became Canon’s customers because Canon decided that they should be.  In other words, no such decision could be made by Mr Dallaston and there was no evidence to that effect.  No other sales staff decided that either.

37      Mr Dallaston was not provided with workers’ compensation or other insurance cover, and he was responsible for his own taxation arrangements and for paying tax.  It was not deducted by Canon from his commission.  Mr Dallaston was entitled to no paid leave, but he could not withdraw from work without Canon’s permission, on his evidence.  Mr Pace, however, said that he could without consulting Canon.

38      Having, as I have said, purchased in 2003, in conjunction with another food service colleague, half of Mr Cook’s round for $6,000.00, Mr Dallaston placed an advertisement in “The West Australian” newspaper to sell his “business” for $50,000.00 in about October 2003, not long before the termination of his contract with Canon.  When he advertised the business, he described it as a “Food Service Sales and Delivery” business.  His evidence was that he sold it “on that basis of goodwill”.  He said that he was selling his vehicle and “the goodwill of the income from … the customers’ activities”.  The core of the business was described by him as “commission based job or sales activity” and he was selling the goodwill from the income to be derived with the vehicle as an additional component.  It would seem that he was not successful in selling the business.

39      Mr Dallaston admitted that Canon management spoke to him about his personal hygiene on one occasion.  That was done by both Mr Dallaston and Ms Shaw.  He was once also spoken to by management because his van was dirty.

40      On 19 December 2003 he received a telephone call in the early afternoon from Mr Dickinson, who was a Director of Canon and a manager.  He was asked to see Mr Dickinson in the office when he returned.  He saw him in Canon’s car park, where Mr Dickinson gave him a letter dated 18 December 2003.  This letter referred to a “restructuring of the respondent’s operations”, and, as a consequence, Canon was no longer able to engage Mr Dallaston’s services “as a contractor with Canon Foods Services.”  The arrangement between Canon and himself was terminated effectively as at that day.  Mr Dallaston gave evidence that he had no prior warning that the arrangement between himself and Canon was in jeopardy.  That evidence was not denied.

41      Mr Dallaston said that he presumed that his customer lists were given to other people to look after but did not know that for certain.  He was paid no monies in lieu of notice.  He said that he never believed that he was a contractor but that he was told that he was.

42      Mr Pace’s evidence was that Mr Dallaston, in effect conducted the delivery business through the structure provided by Canon, and that he had property rights in relation to the product delivery component of the business.  Mr Pace said that, since 1987, Mr Dallaston still owed $8,000.00 - $ 9,000.00 for stock purchased by him from Canon.

43      Mr Pace said that he did not control or tell Mr Dallaston where to go to deliver products, and that that was up to Mr Dallaston in accordance with his customer lists.  Mr Pace said that Mr Dallaston was responsible for selling and delivering products that he sold, but Mr Pace agreed that Canon provided much of the infrastructure in terms of management systems etc which were used by Mr Dallaston and others in a similar position to conduct their affairs.  Mr Pace said that, when he started in 1997, Mr Dallaston “gained ownership to be able to deliver product to that client, to the clients he got given initially and any clients … he developed ….”

44      Mr Pace did accept that Mr Dallaston could be regarded as integrated into Canon’s business but said that was no different from the cases where owner/drivers had provided services to businesses in similar circumstances.  Mr Pace agreed that, at certain times, if Mr Pace took Mr Dallaston in to see a customer, he would “be the Area Manager”.  That is of course what he was described as on the business card provided to him by Canon.  Mr Pace gave evidence that if customers did not make payments to Canon, then Mr Dallaston would not be paid his commission, and that he had an interest in pursuing people on the debtors’ list.

45      Mr Pace agreed that Mr Dallaston had two primary functions; one, to prospect for new customers and two, to deliver any orders taken by him or generated through the company, to customers.

46      Mr Pace said that the role of the sales manager was to be responsible for daily sales activity in Western Australia; and the only real requirement imposed on Mr Dallaston was how he presented to customers and the production of sales reports, which was for the purpose of developing Mr Dallaston’s customer base.

47      Mr Pace’s evidence, too, was that the relationship between Canon and Mr Dallaston was no different to the relationship which Canon had with other contractors who provided transport and refrigeration services to Canon.

48      When the agreement between them was terminated, the amount Mr Dallaston paid for Mr Cook’s round of $6,000.00 was not reimbursed (see page 130 (TFI)).  No monies had been paid to Canon by Mr Dallaston when he commenced in 1997, or at any time.  There is no evidence that any list of customers was given to Mr Dallaston to take with him when the contract was terminated, nor was there any evidence that he took such a list with him.

FINDINGS OF COMMISSIONER AT FIRST INSTANCE

49      The Commissioner at first instance found as follows:-

(a)          That within the meaning of s7 of the Act he held that even though paragraph (d) of s7 and the definition of “employee” means one applies the common law tests and if the person is found to be an employee on this basis then the ownership of a vehicle etc is to be discarded.  This construction of the above-mentioned paragraph is not inconsistent with the structure of the definition as a whole and does not lead to any absurdity or repugnance with any other provision of the Act.

(b)          That Mr Dallaston was not to be characterised as an employee, and that there was no jurisdiction in the Commission because the matter was not an industrial matter and he was not an employee because:-

(i)                     He was responsible for his own taxation arrangements.

(ii)                   Canon did not provide workers’ compensation or any other insurance cover for him.

(iii)                 He purchased, for valuable consideration, part of the round of another person, who had a contractual relationship with Canon.

(iv)                 He offered his round for sale himself on another occasion for the sum of $50,000.00 or thereabouts, in late 2003.

(v)                    He would have sold the business if he had found a buyer willing and able to purchase it.

(vi)                 He was conducting a business and he saw it as such.

(vii)               These factors were of great weight and were completely irreconcilable with any notion of employment in the accepted sense.  Of themselves these factors took Mr Dallaston outside of the definition of “employee” for the purposes of paragraph (d), s7, of the definition of “employee”, as it should be interpreted in the Act.

(viii)             He owned and operated his vehicle at his own expense and paid for the livery on it.

(ix)                 There are indicia which point in the other direction towards employment, and these include the obvious degree of integration of Mr Dallaston into Canon’s business, but this factor alone is not at all conclusive.  The representation by Canon of the status of Mr Dallaston from his business card as an “Area Manager”, Canon’s profile document portrayed Mr Dallaston as “part and parcel” of Canon’s business, and the fact that he was paid by commission was not determinative: (see Commissioner of Taxation of the Commonwealth of Australia v Barrett and Others [1973] 129 CLR 395).

(x)                    In terms of the actual reservation of the right to control the manner of the performance of Mr Dallaston’s daily tasks no such right was in existence.  It was up to him how he serviced the customers and in what order he performed his “round”.  It was ultimately up to him the hours which he worked. Although there was a requirement that he load the day’s deliveries at a certain time in the morning, again, in terms of running a business such as Canon’s, that was not surprising as there would need to be a degree of coordination between the manufacture, loading and delivery of food products to customers as there was for pre-mixed concrete in Transport Workers’ Union of Australia, Industrial Union of Workers, Western Australian Branch v Readymix Group (WA) and Others (1981) 61 WAIG 1705 (IAC).

(xi)                 As a matter of fact and law he could not be characterised as an employee.

ISSUES AND CONCLUSIONS

Not a Discretionary Decision

50      I should observe that the facts in this matter are in little, if any, dispute as would be clear from my consideration of the evidence and the background in fact (supra).

51      This application was dismissed for want of jurisdiction because the Commissioner at first instance found that the appellant and respondent in this appeal (the applicant and respondent at first instance) were not “employer” and “employee” as defined in the Act.  Thus, the Commissioner found that he had no jurisdiction to hear and determine the matter.  If the parties were not employer and employee respectively, then the Commissioner was correct in what he found.

52      The decision appealed against was not a discretionary decision as defined by the High Court in Norbis v Norbis [1986] 161 CLR 513 and Coal and Allied Operations Pty Ltd v AIRC and Others [2000] 203 CLR 194.  It was a finding that there was no jurisdiction because there was no contract of service and that was a finding of fact.

Definition of Employer and Employee

53      An “employer” is defined in s7 of the Act as follows:-

“employer” includes — 

(a) persons, firms, companies and corporations; and

(b) the Crown and any Minister of the Crown, or any public authority,

employing one or more employees and also includes a labour hire agency or group training organisation that arranges for an employee (being a person who is a party to a contract of service with the agency or organisation) to do work for another person, even though the employee is working for the other person under an arrangement between the agency or organisation and the other person;”

54      Of course, whether Canon Foods was an employer, at all material times, depends also on whether, at all material times, Mr Dallaston was an employee.

55      The most relevant definitions of “employee” are definitions (a) and (d) in s7 of the Act and read as follows:-

“employee” means — 

(a) any person employed by an employer to do work for hire or reward including an apprentice or trainee;

…

(d) any person who is the lessee of any tools or other implements of production or of any vehicle used in the delivery of goods or who is the owner, whether wholly or partly, of any vehicle used in the transport of goods or passengers if he is in all other respects an employee,”

Labelling

56      It is to be noted that there is no written contract or evidence of the contract between the parties.  In particular, there is no written provision where the parties express the nature of their relationship as employer and employee or at all.  There is no labelling or attempted labelling in any written contract or any document evidencing any contract.  However, there are sparse items of oral evidence as to what the contract was.  There is the business card given to Mr Dallaston and there is evidence of the unilateral labelling of the contract by Canon, acted upon in the attempted selling of goodwill and the vehicle by Mr Dallaston.  However, the absence of any clear labelling in written form distinguishes these facts from those in Personnel Contracting Pty Ltd t/a Tricord Personnel v CFMEU (2004) 85 WAIG 5 (IAC).

Indicia Identified

57      I now deal with a number of matters of facts which can be considered indicia:-

(a)          Mr Dallaston worked for Canon selling and delivering its products.

(b)          His remuneration was not by way of wage or salary, but by a percentage commission fixed by Canon on his sales.

(c)          (i)              He contributed his own van with a freezer unit on the back which he used and which was a contribution of a valuable asset.

(ii)                   He also used his own telephone, the expense of which he bore himself.

(iii)                 He also insured and ran his van at his own expense.

(iv)                 He contributed no other tools or equipment.

(v)                    He paid his own GST and his own PAYG and did not pay PAYE tax.

(vi)                 He maintained an ABN until his income fell below $50,000.00 he said.  Implicit in that was an assertion that he did not have to maintain an ABN once his income fell below $50,000.00.

(vii)               He purchased another sales list from another worker for $6,000.00 and purchased as it were a franchise when he commenced work for Canon, the second time around.

(viii)             Mr Dallaston also in October 2003, a few weeks before the termination of his employment, advertised the sale of his sales list and vehicle, (ie) his vehicle and goodwill.

(d)          It was not in dispute that Canon exercised actual control and the right to control Mr Dallaston in the following activities and aspects of his employment:-

(i)                     The product sold and/or delivered by Mr Dallaston was not confined to his own sales or his own customers.

(ii)                   He sold and delivered only Canon’s product or products owned by Canon, and was not permitted to sell any others without Canon’s permission.

(iii)                 He owned no stock and purchased no stock from Canon after he commenced to work for Canon in 1997.

(iv)                 He was, at all times, directed what products other than Canon’s he could sell.

(v)                    A pricing of products was done only by Canon.

(vi)                 Commissions payable to him were determined only by Canon and controlled by Canon.

(vii)               He collected all monies due for goods sold and delivered to customers and paid the monies to Canon because he was required to.

(viii)             Provision of samples to customers were supplied only by Canon to him and were made available to customers only as directed by Canon.

(ix)                 He was given a list of deliveries to be done each day but how and when they were to be made on the day were matters for him.

(x)                    All complaints by customers were dealt with and determined by Canon’s management according to its own prescribed procedures.

(xi)                 He was held out, both on the business card provided to him by Canon and otherwise, as the Area Manager and a sales representative of Canon.

(xii)               He was required to attend sales meetings with other sales staff without any remuneration additional to his commission.

(xiii)             His starting and finishing times were as directed by Canon.

(xiv)             He was required to and directed to provide reports and running sheets noting his sales and activities on forms provided by Canon.

(xv)               He was given directions about the use of stock codes.

(xvi)             He was required to serve the customers whom Canon directed him to serve.  Thus, his own customers could be and were taken away from him and he was assigned new customers purely upon the decision of Canon.  (This was subject to his right to purchase customers to add to his round).

(xvii)           He was required to seek Canon’s approval in relation to who should be his customers.

(xviii)         Canon spoke to him and purported to counsel him about his appearance.  He was directed about his personal hygiene and the cleanliness of his van by Canon.

(xix)             Canon exercised a right to allow him to be absent or not.

(xx)               Lists of customers were obviously Canon’s property and not his.

(e)          At all material times, Mr Dallaston was an integral part of Canon’s organisation because:-

(i)                     He was ordered and directed in every material facet of his work by or on behalf of Canon.

(ii)                   He was provided by Canon with run sheets which he had to complete daily and return to Canon in the prescribed form.

(iii)                 Canon prescribed the system for the completion of the written orders from customers.

(iv)                 Canon provided the invoices to customers which he used.

(v)                    Canon directed him and supervised him in the pursuit of Canon’s unpaid accounts.

(vi)                 All stationery was supplied by Canon to him and he used none of his own.

(vii)               All billing and account recording was done by Canon as part of its system and Mr Dallaston’s part in it was to perform in accordance with the system.

(viii)             Mr Dallaston used a business card provided for and to him by Canon at its expense which described him as “Area Manager”.

(ix)                 All customer related correspondence to him was addressed to him at Canon Foods.

(x)                    At all material times, Canon held him out to be a member of its staff.

(xi)                 His authority to visit customers came only from Canon.

(xii)               I have already referred to management handling complaints by customers, which was a fact.

(xiii)             He was required to attend sales or staff meetings without additional payment, as I have observed above.

(xiv)             He was required to set up and attend trade exhibitions with no extra remuneration.

(xv)               He investigated the purchasing practices of existing clients and reported these matters to Canon.  This included investigation of customers who had ceased to be active customers.

(xvi)             All advertising and promotion of products was as directed and at the initiative of Canon.

(xvii)           He collected products for Canon.

(xviii)         The sign writing on his van was required, approved and paid for by Canon.

(xix)             All customers prospected by Mr Dallaston or otherwise serviced by him were never his but were at all times Canon’s.

(xx)               He collected debts owing to Canon by customers.

(xxi)             All monies collected by him from customers were handed to and accounted for to Canon by Mr Dallaston.

(f)           (i)              At no time did he operate a business because he believed that the nature of the engagement was the same as in 1984, when he had previously worked for Canon, when for a period he was employed as a salesperson by Canon.

(ii)                   There was no franchise or other contract in writing which could any way evidence a contract for services or of service between the parties.

(iii)                 At the direction of Canon, Mr Dallaston obtained but ceased to maintain an ABN.

(iv)                 The only tools or equipment provided by him were a refrigerated van and telephone.

(v)                    He used stationery designed and provided by Canon.

(vi)                 He had no shares or any financial interest in Canon.

(vii)               He derived no profit from sales of goods.  His only remuneration was his commission.

(viii)             Whilst the job included soliciting and acquiring new customers, the ultimate decision as to who would be the customers of Canon was Canon’s.

(ix)                 He did not own, buy or hold any stock.  He delivered it to the customers to whom he or others sold as directed by Canon.

(x)                    The customers were never Mr Dallaston’s, but were at all times Canon’s.

(xi)                 At all times who his own customers were was a matter for Canon which could remove them from his list of customers and assign him others and did so.

(xii)               There was no goodwill at the end of the engagement which he could take away.

(xiii)             He worked exclusively for Canon.

(xiv)             He collected monies from customers for sales and accounted to Canon for it daily.

(xv)               He was required to keep his van clean for the transportation of Canon’s goods.

(xvi)             If a product were defective, Canon bore the cost.

(xvii)           There is a relevant factor and that is the economic dependency of Mr Dallaston on Canon at all material times.

(xviii)         His earnings were low by any standard.

Authorities and Principles

58      There are a number of relevant authorities.  The binding authorities are Hollis v Vabu Pty Ltd [2001] 207 CLR 21 and Stevens and Gray v Brodribb Sawmilling Co Pty Ltd [1985-1986] 160 CLR 16.  There are also Personnel Contracting Pty Ltd t/a  Tricord Personnel v CFMEU (IAC) (op cit) and United Construction Pty Ltd v Birighitti (2003) 83 WAIG 434 (IAC); see too Transport Workers Union of Australia Industrial Union of Workers v Readymix Group (WA) and Others (IAC) (op cit).

59      In relation to the provision of vehicles by putative employees, there are a number of authorities.  These include Hollis v Vabu Pty Ltd (op cit), Australian Air Express Pty Ltd v Langford (2005) NSWCA 96 (unreported) and Humberstone v Northern Timber Mills [1949] 79 CLR 389.

60      In connection with those authorities, I should observe that, generally speaking, they apply a principle that an owner/driver can accept a degree of control and supervision necessary for the efficient and profitable conduct of the business he is running on his own account as an independent contractor.  In Hollis v Vabu Pty Ltd (op cit), the majority said this at pages 41-42 (paragraph 47):-

“In classifying the bicycle couriers as independent contractors, the Court of Appeal fell into error in making too much of the circumstances that the bicycle couriers owned their own bicycles, bore the expenses of running them and supplied many of their own accessories.  Viewed as a practical matter, the bicycle couriers were not running their own business or enterprise, nor did they have independence in the conduct of their operations.  A different conclusion might, for example, be appropriate where the investment in capital equipment was more significant, and greater skill and training were required to operate it.  The case does not deal with situations of that character.  The concern here is with the bicycle couriers engaged on Vabu’s business.  A consideration of the nature of their engagement, as evidenced by the documents to which reference has been made and by the work practices imposed by Vabu, indicates that they were employees.”

61      In Humberstone v Northern Timber Mills (op cit), applied in Australian Air Express Pty Ltd v Langford (unreported) (op cit), Dixon J said at pages 404-405:-

“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. In the present case the contract by the deceased was to provide not merely his own labour but the use of heavy mechanical transport, driven by power, which he maintained and fuelled for the purpose. The most important part of the work to be performed by his own labour consisted in the operation of his own motor truck and the essential part of the service for which the respondents contracted was the transportation of their goods by the mechanical means he thus supplied. The essence of a contract of service is the supply of the work and skill of a man. But the emphasis in the case of the present contract is upon mechanical traction. This was to be done by his own property in his own possession and control. There is no ground for imputing to the parties a common intention that in all the management and control of his own vehicle, in all the ways in which he used it for the purpose of carrying their goods, he should be subject to the commands of the respondents.

62      Gray J in Re Porter; Re Transport Workers Union of Australia 34 IR 179 and Sammartino v Mayne Nickless t/a Wards Skyroad (2000) 98 IR 168 at 185-186 and 192, 197 and 199 expressed the view that this test was not applicable in modern times.

63      The overall test is that pronounced in the joint judgment of the majority, Gleeson CJ, Guadron, Gummow, Kirby and Hayne JJ, in Hollis v Vabu Pty Ltd (op cit) where Their Honours cited and applied the exposition of the relevant test expressed by Mason J in Stevens and Gray v Brodribb Sawmilling Co Pty Ltd (op cit) at page 29.  His Honour said there:-

“… the common law has been sufficiently flexible to adapt to changing social conditions by shifting the emphasis in the control test from the actual exercise of control to the right to exercise it, “so far as there is scope for it”, even if it be “only in incidental or collateral matters”: Zuijs v Wirth Bros. Pty. Ltd. ([1955] 93 CLR 561 at 571).  Furthermore, control is not now regarded as the only relevant factor.  Rather it is the totality of the relationship between the parties which must be considered.”

64      As a matter of fact, there is no written contract or evidence of a contract in existence to label the contract between Mr Dallaston and Canon (see the clear distinction from what was the case in TNT Worldwide Express NZ Ltd v Cunningham (1993) 3 NZLR 681 at 692).

The Test – Indicia For

65      If one looks at the totality of the circumstances, for the reasons which I have expressed above, and applying the tests laid down in Stevens and Gray v Brodribb Sawmilling Co Pty Ltd (op cit) and Hollis v Vabu Pty Ltd (op cit), the following factors apply to suggest that an employer/employee relationship or contract of service existed:-

(a)          Mr Dallaston was not providing skilled labour.  He drove a van and sold goods to shops.

(b)          The work which he did did not require special qualifications.

(c)          He was integrated, for the reasons which I have expressed above, in the daily activities and the organisation of Canon.

(d)          As a salesman and delivery van driver he was presented to the public and customers and prospective customers of Canon as an emanation of Canon.

(e)          Such persons were encouraged to identify him as “part of Canon’s own staff”.

(f)           His finances were superintended and paid by Canon.

(g)          There was no scope for him to bargain the amount of his remuneration by commission which was unilaterally fixed or varied by Canon.

(h)          There was limited, if any, scope for the pursuit of any real business enterprise on his own account.

(i)            There was actual daily control of who his customers were, what reports he made, and in all of the other elements of control to which I have referred above.

(All of the individual criteria to which I have just referred in (a) to (i) were present in Hollis v Vabu Pty Ltd (op cit)).

66      In addition, there were the strong indicia of control and integration referred to above in paragraph 57(d).

Indicia Against

67      However, as against that, unlike the case in Hollis v Vabu Pty Ltd (op cit), Mr Dallaston provided equipment, namely a van with a freezer unit which involved a comparatively large capital outlay by him.  It was also a van which was not readily usable privately or for other work.  It is therefore thoroughly distinguishable from a courier’s push bicycle, which was the equipment provided by the employees in Hollis v Vabu Pty Ltd (op cit).

68      His work and his equipment, for the reasons which I have expressed above, were integrated in Canon’s organisation.  The integration and control, which was evidence, too, of integration, were not, however, determinative.  In addition, he paid a further fee of $6,000.00 to acquire more customers, the goodwill of a sales round, from another salesperson who had a contract with Canon.  That was very important.  In addition, he attempted, before his contract was terminated, to sell his vehicle and the goodwill of a purported business for $50,000.00, advertising it for sale.  There is no evidence that any sale was achieved but he would have sold it had a buyer who was ready and able to buy came forward.  He was clearly conducting a business and saw it as such.  He was not insured by Canon for workers’ compensation or any other insurance.

69      That fact is very important because, by the advertising for sale of the goodwill of a purported business and the sale of the vehicle which was its major asset apart from goodwill, Mr Dallaston plainly considered that the goodwill of his sales delivery round was his to sell.  That was entirely incompatible with an employment relationship because, in his own mind and as he expressed it, he was conducting a business of his own.  That, as I have already observed, is further borne out by his outlaying $6,000.00 to acquire more customers by way of goodwill from Mr Cook.

70      I have already referred to the considerable scope for the actual exercise of control and the actual detailed daily control of how Mr Dallaston did his work when he did it, who his customers were etc.  However, even having regard to that, the contribution of the van as capital, the purchase of the customers, the advertising for sale of his van and goodwill as his business, are significant counterweights in the consideration of the totality of the facts and circumstances in this matter.  It should be observed that there was no right to control the actual performance, notwithstanding the substantial integration and actual control exercised over Mr Dallaston in other matters.

71      Further, he paid tax on a PAYG basis, not a PAYE basis, and for some time maintained an ABN until his income fell below $50,000.00.  I understood that that meant, according to him, that he was not required to have an ABN anymore.  He also provided for and paid for his own telephone and insurance.  He also paid GST and his own tax (it not being deducted from his commission).  He was not given paid sick leave or paid holiday pay, but those criteria are somewhat neutral because holiday pay or sick leave may not have been paid or afforded by the employer because either the employer or both parties incorrectly thought that a relationship was not an employment relationship.  That he was not paid commission was not determinative on the authority of Commissioner of Taxation of the Commonwealth of Australia v Barrett and Others (op cit).

72      In my opinion, the totality of the circumstances, as I have analysed them, lead to the clear conclusion that Mr Dallaston was, at all material times, notwithstanding the substantial evidence of control and integration, an independent contractor.  His contribution of a valuable capital asset in the van and freezer unit, his purchase of a share of a list of customers for goodwill from Mr Cook, his advertised sale of the goodwill of a “business”, along with his vehicle, bear that out.  Further, Humberstone v Northern Timber Mills (op cit) and the other truck cases support such a conclusion.  Without that, however, all of the other factors, as a totality of circumstances, for the reasons which I have expressed, lead to the correct conclusion that the contract was one for service, not of services.

73      The approach adopted to definition (d) to the word “employee” in Transport Workers’ Union of Australia, Industrial Union of Workers, Western Australian Branch v Readymix Group (WA) and Others (IAC) (op cit) is an agreed approach by Wallace and Brinsden JJ.  Wallace and Brinsden JJ agreed that the correct approach to definition (d), which was then present in the Act in no materially different form from the form of the definition now, was to determine first whether the putative employee was an employee, within the general part of the definition of “employee” in accordance with the accepted common law tests.  Their Honours held that the terms of definition (d) did not take that person out of the category of an employee simply because that person leased or owned a vehicle used in the transport of goods or passengers within the meaning of definition (d).  Brinsden J said at page 1708 as follows:-

“The question being posed however, solely in relation to paragraph (d) I must now turn my attention more closely to that sub paragraph.  The relevant portion is:

 Any person… who is the owner, whether wholly [sic] or partly, of any vehicle used in the transport of goods or passengers if he is in all other respects an employee.

I accept the contention of counsel for the appellant that the only owner spoken of is an owner of a vehicle who uses that vehicle in the execution of the contract with the employer.  In this regard I differ from the view expressed by the President.  Without implying that the vehicle must be one used in the contract with the employer the subsection would be in a form where ownership per se of a vehicle is a relevant factor which I think is not a very sensible conclusion.

The subsection speaks of a person who is “in all other respects an employee”.  It has been argued that cannot possibly mean all the relevant indicia should point, and only point, to the person concerned being an employee, for otherwise if there were 10 relevant indicia (other than ownership of the vehicle) of which nine pointed to a contract of service then the subsection would not apply because of the one indicia which pointed against a contract of service.  But in my view the weighing up of the pros and cons as expressed by Bray C. J. takes place when one is considering whether an employee comes within the first part of the definition, namely whether he is a person employed by an employer to do work for hire or reward.  Subsection (d) makes for a special class of person, being a person who is in all other respects, that is other respects other than being the owner of the vehicle concerned, an employee, and in which case ownership is disregarded.  I think the subsection has no application where the circumstances are that one or more of the indicia point to a contract for services for in that case it is not possible to say that the person concerned is “in all other respects an employee”.

74      I respectfully agree with His Honour’s opinion.  Put another way, definition (d) prevents a person who meets the common law tests of whether she/he is an “employee” being declared not to be an employee because she/he owns or leases a vehicle, whether motor or not, for the purposes of transporting goods or passengers.  The possession of the vehicle does not decide the issue.  What is quite clear, as Brinsden J said, is that definition (d) has no application where the circumstances are that one or more of the indicia point to a contract for services rather than a contract of service.  Kennedy J took a different view, but the view of Brinsden J and Wallace J at page 1706 was sufficiently similar for them to constitute a majority, the ratio of whose judgments, as I have identified them above, I would apply.

75      Clearly, as Brinsden J expressed it, as a matter of common law, Mr Dallaston could not be determined to be an employee and therefore, definition (d) could not negative such a finding.

76      It remains to me to consider whether definition (d) of the definition of “employee” in s7 of the Act alters that view.  I think that it is clear that there are factors outside the mere ownership of a van to which I have referred above which clearly lead to the conclusion that Mr Dallaston was not an “employee”, notwithstanding that he owned a van used in the transport of goods for Canon.  That is because he was not “in all other respects” an employee given that he was carrying on a business as an independent contractor, pursuant to a contract for services, because of those “respects” which preponderantly lead to the conclusion that Mr Dallaston was an independent contractor.

77      As a result, it was open to the Commissioner at first instance and correct of him to find as he did in paragraphs 32 to 35 of the reasons for decision and, in particular:-

(a)          That the offer and acceptance of the purchase of part of Mr Cook’s round and the attempted sale of Mr Dallaston’s “business” were of great weight and completely irreconcilable with any notion of employment in the accepted sense.

(b)          That, of themselves, in my opinion, these factors take the application outside the definition of “employee” for the purposes of paragraph (d) of the definition, as it should be interpreted, and applying the common law test to definition (a).

(c)          That, whilst there was an obvious degree of integration of Mr Dallaston into Canon’s business, this factor alone was not at all conclusive, and not at all conclusive having regard to the other factors.

(d)          That the representation by Canon about the status of Mr Dallaston from his own business card as an “Area Manager” and Canon’s profile document portrayed Mr Dallaston as part and parcel of Canon’s business.

(e)          That, as to control, this was not determinative either because, in an industry such as food manufacturing and distribution, there are many requirements imposed relating to a number of matters, including health and safety, which mean that all persons involved, whether employees or independent contractors, have to observe them.

(f)           That there was no actual reservation of the right to control the manner of performance of Mr Dallaston’s daily tasks and, indeed, no such right was in existence.

(g)          That, in order to run Canon’s business, there was a degree of coordination between the manufacturing, loading and delivering of food products required for it, as there was for the premixed concrete in Transport Workers’ Union of Australia, Industrial Union of Workers, Western Australian Branch v Readymix Group (WA) and Others (IAC) (op cit).

(h)          That therefore, within definition (d) of the word “employee”, Mr Dallaston was not to be characterised in fact or in law as an employee. 

78      It is trite to observe, therefore, that in order to find jurisdiction the Commissioner had to find that, at all material times, there was a contract of service between Mr Dallaston and Canon.  That is that within the meaning of definition (a) of “employee” in the Act (s7), he was employed by an employer to do work for hire or reward.  He certainly did work for hire or reward.  Further, within the meaning of definition (d) of “employee”, he was, at all material times, the owner of a vehicle used in the transport of goods.  Thus, if he was in all other respects an employee, his ownership of the van is and was no impediment to a finding that he was an employee within definition (d) of the definition of “employee”.  However, the provision is quite clear that he must be an employee in “all other respects” before his ownership of the van ceases to be a bar to a finding that he was an employee, at all material times.

79      For all of those reasons, I would dismiss the appeal.

SENIOR COMMISSIONER J F GREGOR:

80      This is an appeal against the whole of the decision of the Commission, constituted by a single Commissioner, made on 9 November 2004 in application No 42 of 2004.  His Honour the President has set out the background in detail to which I have nothing to add.

81      The Commission at first instance dismissed the application because once the common law tests were applied the Appellant herein could not be characterized as an employee. Therefore there was no jurisdiction because the matter was not an industrial matter.

82      The learned Commissioner reached the conclusion he did after a detailed examination of the facts from which he made detailed findings. In his Reasons His Honour the President has analysed the authorities and applied them to the facts which he categorized as indicia although there were strong indications of control in the relationship, these were over whelmed by fact that the Appellant bought and/or sold his round. This was not able to be reconciled with the notion of an employment relationship.

83      Vehicle ownership of course is not fatal to the finding that a person is an employee.  The person must be an employee in all other respects as required by s7(d) of the Act. The Appellant was in his own business, as it were, and for this reason he was not an employee under the Act. The Commission at first instance was correct so to find and I would dismiss the appeal.

COMMISSIONER S WOOD:

84      I have had the benefit of reading the reasons for decision of His Honour, the President.  I agree with those reasons and have nothing to add.

THE PRESIDENT:

85      For those reasons, the appeal is dismissed.

Order accordingly