Deva v University of Western Sydney.

ON CALL INTERPRETERS AND TRANSLATORS AGENCY PTY LIMITED v COMMISSIONER OF TAXATION (NO.3) [2011] FCA 366 (13 APRIL 2011)

Justice Bromberg has provided a useful summary of the applicable law in relation to the common dispute as to whether a particular person is an employee or an independent contractor.  This case involved a challenge by On Call Interpreters and Translators Agency Pty Limited (On Call) against  a finding by the Commissioner of Taxation that its interpreters and translators were properly characterised as employees. As a consequence of which On Call should have paid the superannuation guarantee charge on the remuneration it had paid. In reaching his conclusion, Justice Bromberg traversed the major authorities and tests established by the High Court and other senior courts. He supported the need to go behind the label parties may expressly place upon their relationship in order to determine its proper legal characterisation. He referred to the colourful language Justice Gray  adopted from one of the senior counsel( Michael Black  QC) in  Re Porter; Re Transport Workers Union of Australia [1989] FCA 226; (1989) 34 IR 179 at 184  where he said that:

“The parties cannot create something which has every feature of a rooster, but call it a duck and insist that everybody else recognises it as a duck.”

Continuing  the analogy  drawn from the animal kingdom, he referred to Lord Wedderburn’s multi-factorial test of looking at the whole picture as the ‘“elephant-test” – an animal too difficult to define but easy to recognise when you see it.’(The Worker and the Law, (3^rd Edition, Penguin Books Limited, 1986 at 116) at [205].  He cited with approval the majority opinion in the High Court in  Hollis v Vabu . He said the distinction between an employee and an independent contractor is “rooted fundamentally” in the fact that when personal services are provided to another business, an independent contractor provides those services whilst working in and for his or her own business, whereas an employee provides personal services whilst working in the employer’s business [207].  Justice Bromberg stated that an independent contractor when providing personal services will be typically “autonomous rather subservient in its decision-making; financially self-reliant rather than economically dependent upon the business of another; and, (as I have said), chasing profit (that is a return on risk) rather than simply a payment for the time, skill and effort provided.” Whereas, an employee seeks the security of fixed and certain remuneration  nor desire in the exposure to the risk of loss in return for a chance of profit [214]-[215].

In reaching his conclusion, Justice Bromberg does not ignore the so-called   “control test,” however sets out a detailed assessment as to what constitutes a business and what constitutes working within one’s own business.  He usefully identifies the relevant indicia of what distinguishes  an independent contractor from an employee.

In this case, one of the difficulties for On Call was Justice Bromberg’s criticism that the few employees it called as witnesses ,out of 2,500 people engaged , were not agreed to be a representative of the whole.  Of the seven called, five were interpreters and two were translators.  Justice Bromberg found that the two translators were in their own business, whereas the interpreters were not. These findings could  not affect all of the 2,500 employees as each person’s individual circumstances might be different.  On Call lost the case because it was the party which bore the onus that the assessments made by the ATO were wrong.

This case provides further example of the evidentiary and legal burden imposed upon someone seeking to have set aside a decision that a particular individual is or is not an employee.  The tests are reasonably clear as to what has being referred to as “the totality” or “the business” tests.  Each case needs to be looked at on its merits.  It may be difficult to draw conclusions from an alleged representative sample( but see Redeemer Baptist School Limited v Glossop [2006] NSWSC 1201 where the sample called was found to be representative). Courts will not be motivated by speculation, generalisations and extrapolation, such concepts being decidedly unhelpful [224].

On The Case By Jeffrey Phillips

1. In the ABC Insiders’ compere Barry Cassidy’s new book called, “Party Thieves” (Melbourne University Press), former Prime Minister Kevin Rudd is said to have referred to the United Nations Secretary-General Ban Ki-Moon as “Spanky Banky”. However, New South Wales Supreme Court Justice Michael Adams, in a series of decisions , whilst on secondment to the United Nations’ internal employee tribunal , the United Nations Dispute Tribunal( UNDT) has given some UN officials a thorough spanking. (See Betucci ats Secretary-General of the United Nations Judgment Order No. 59(NY/2010)/Rev.1). Justice Adams who a few years ago, delivered a leading case on gross workplace bullying (Naidu ats Group 4 Securitas Pty Limited & Anor [2005] NSWSC 618) was not going to be bullied by some unknown UN officials unwilling to submit to the orders of their own tribunal.

2. The UNDT is a tribunal which provides an internal justice system for the United Nations and its many thousands of employees. It became operational on 1 July 2009 taking over from what previously had been the United Nations Administrative Tribunal (UNAT) which had been established in 1949. The UNDT operates on a full time basis and is composed of a number of full time, part time and ad litem judges. It has registries in New York, Geneva and Nairobi. The tribunal, which also has an appeal panel, deals with employee contractual disputes, discipline and administrative matters such as promotional appeals. Justice Adams took up a year long appointment in New York as an ad litem judge with an option to renew. Whilst presiding he was referred to as Judge Adams.

3. The case of Betucci had a tangled history before the UNDT . The case concerned the legality of the selection process for the post of Assistant Secretary-General (ASG) in the Department of Economic and Social Affairs (DESA). The disappointed applicant was already a staff member, was short-listed but not selected. One interlocutory issue before Judge Adams was that the applicant had sought access to certain documents claimed to be relevant. The respondent (that is the Secretary-General) submitted that the documents were irrelevant in that the decision to appoint an ASG was comparable to that of a “head of state appointing cabinet level officials who is accountable politically, but not just judicially.” It was submitted therefore that , the Secretary-General’s decision was “not justiciable” [1].

4. This submission was rejected. However, the Secretary-General’s legal representative refused to produce the documents as ordered. The decision recounts the contumelious prevarication enlisted by the representatives of the Secretary-General refusing to produce the documents. Judge Adams was careful to note that his comments naming the Secretary-General were not made against Ban Ki-Moon personally, but related to those unnamed individuals within the United Nations who had refused to comply with his orders. Judge Adams, bristling but in clear, simple language, sets out some fundamental principles necessary for the orderly administration of justice. Such principles, irrespective of a common law or a civil law system, appear to have been unknown or unwilling to be followed by the nameless officials who continued to disobey his orders. He notes that the production of evidence at trial is “essential to the integrity of the administration of justice but also the right of the applicant to a fair hearing.” [3]. He concludes that a party who wilfully disobeys a direct order of a tribunal is not entitled to advance its case or call any evidence until the disobedience has been purged [4]. An order was even made for the person who made the decision not to comply with the order to appear before him. He was informed that such a legal officer would not be appearing as ordered. Counsel appearing before the tribunal was asked to explain this further disobedience. This was met with the previously rejected submission without elaboration. On further inquiry by the judge of counsel appearing before him said that the identity of the individual concerned was not known and it was not known whether the order previously made by the judge had been brought to that person’s attention. An order was then made for the respondent, within 24 hours, to supply the name and contact details of the officer who made the decision to disobey the order in the first instance. Inexplicably and lamentably it was noted, “It is a professional obligation of a lawyer to convey decisions of the court to the client.” [12] It was observed that an order made by a tribunal must be obeyed whether it is legally in error or not subject to it being reversed on appeal. It is “extant and compliance by the party to whom it is directed is an undoubted legal obligation.” [14]. With further dismay, his Honour referred to another aspect of a written submission made by counsel for the respondent who submitted,

“counsel reiterates the great respect the Secretary-General has for the administration of justice and as embodied by the system of justice which came into effect on 1 July 2009 and the judges of the Dispute and Appeals Tribunal.”

This which purported to be on instructions or authorised by the Secretary-General, was made on neither basis but, as His Honour described was a “mere advocate’s flourish” not consistent with “proper notions of professional integrity.” [18] He noted that the clients are not “mere mouthpieces of their client.” Further, “It is grossly improper for counsel to make statements attributed to their client but not actually made by the client.” This undermined “the necessary relationship of implicit trust between the Bench and the Bar.” [18] Another asinine submission made by the respondent was tartly dismissed with “I will not waste time attempting to prove a negative.” [28] The judge, now exasperated said that the Secretary-General( ie nameless officials) is not to determine the legality or otherwise of any particular order but that was for the tribunal as set up by the UN General Assembly. His despair is summed up by his rejection of a submission that the documents were protected by some privilege said to be for the benefit and protection of the organisation as,

“The decision in question was not made by the Secretary-General but by some anonymous official of whatever rank who refuses to be identified or to take any responsibility for it amounts to the assertion that this claimed overriding discretionary protective power is reposed in any official who happens to decide he or she will do so, at the same time remaining unidentified. This cannot be correct. And protect from whom? The Dispute Tribunal? Such an argument is completely unacceptable.” [30]

His Honour also deals with the inherent power of tribunals exercising judicial power to protect its own processes from abuse [40]. This is so irrespective of whether one comes from the common law or civil law systems [42]. He outlines the jurisdiction of a tribunal itself having an obligation to determine whether or not its proceedings are stayed [44]. He deals with the principle of functus officio and whether a preliminary order or provisional judgment can be varied and when a res judicata has arisen.
5. He delivered a decision finding for the applicant on the merits in May 2010 ( UNDT /2010/080) . It is under appeal. In an addendum to that decision he deplores the professional ethics of the UN lawyers involved who had every opportunity to appear and explain their behaviour. They did not do so. The last sentence of the addendum is eloquent in its force and simplicity “They cannot by their silence expect to contrive the silence of the Tribunal” .Judge Adams had the option to stay in New York for 2011 as a judge ad litem .He is happily back on the bench in Sydney.

Image from The Australian National Affairs website

(this article was published in the December 2010, Workplace Review (2010) 1 WR108.

Liability limited by a Scheme approved under Professional Standards Legislation

Here is a recent Court of Appeal case from New South Wales which will brighten the eyes of many an uphappy executive. Click here to read my case review of Silverbrook Research Pty Ltd v Lindley as published in Work Place Review

McDonald’s Australia Enterprise Agreement 2009 Appeal [2010] FWAFB 4602

A Full Bench of Fair Work Australia (FWA) (Vice President Watson, Senior Deputy President Kaufman and Commissioner Raffaelli) on the 21 July 2010, have handed down its reasons for a decision in an appeal relating to the McDonald’s Australia Enterprise Agreement 2009. The decision at first instance was reported in Workplace Review (see (2010) 1 WR 20) in an article entitled “Egg McMuffin Over The Face” dealing with the decision of Commissioner Donna McKenna ([2010] FWA 1347 ,23 April 2010), in which she refused to approve the Enterprise Agreement covering McDonald’s 80,000 employees at its many outlets throughout Australia.

The Full Bench referred to Commissioner McKenna’s very lengthy decision, in which she dismissed  the application on each of the following grounds:

1. “The application, even with supplementary declarations, remains deficient as to the provision of required information;
2. McDonald’s did not take the required steps under s 180(3) of the Act;
3. McDonald’s did not discharge its responsibilities concerning the provision of information to satisfy the requirements of s 180(5)(a) of the Act;
4. The application failed to address the obligations in s 180(5)(b) and s 180(6) of the Act;
5. The employees who voted in favour of the Agreement cannot be said to have generally agreed to the Agreement;
6. There was a failure to comply with the provisions of s 180(2) of the Act;
7. The Agreement does not satisfy the no-disadvantage test.” [6]

The Full Bench stated that:

“The appeal under s 604 of the Fair Work Act is that of a re-hearing and the predecessor provisions in the Work Place Relations Act are equally applicable under the Fair Work Act.  Further, a successful appeal requires the identification of error on the part of the primary decision maker.”  [8]

The Full Bench neatly summarises the principles governing appeals under  the Act. This case is a good primer for anybody needing to understand  in a nutshell, what  appellate principles will be applied by Full Benches  .  (See [8]-[11] inclusive).

Commissioner McKenna below had said that each of the matters upon which she decided to reject the approval of the Enterprise Agreement alone, would have led to its demise let alone cumulatively.  The Full Bench dealt with  each of the  matters referred to above.It found that each finding  of the tribunal at first instance, was in error and amenable on appeal.

Some of the McNuggets of wisdom proffered by the Full Bench in setting aside the Commissioner’s decision were variously described as:

(i)    “(it) imposed additional statutory tests contrary to the terms of (the Act) [21]”; 

(ii)  “(Its) approach was not consistent with the Act [25]”;

(iii) “(It) mis-stated the (statutory) test [29] – [41]”;

(iv) “(The Commissioner) erred in her approach [34]”;

(v)  “No proper basis for (so) concluding [39]”; and

(vi) “(The Commissioner’s) conclusions were unsustainable [50].”

It appears what the Commissioner neglected to have regard to in an overall sense were the objects of the Act, in that the Fair Work Act was to provide a simple, flexible and fair framework for enterprises (s 171(a)).  Further, an object of Fair Work Australia was to facilitate the making of enterprise agreements (s 171(d)).  The Full Bench said:

“In considering the facilitative aspects of these objectives, the approval of enterprise agreements should be considered in a practical, non-technical manner and that reasonable efforts should be made to clarify matters with the parties and consider undertakings to clarify all remedy concerns to the extent that they may be available under s 190 of the Act” [13].

The union’s argument, inter alia, suggested that the Commissioner had an approach of “trying to find defects” [24].

An aspect of the Full Bench approach, in stark contrast to the approach of the Commissioner, was in the language used to describe either the parties or aspects of the proposed Enterprise Agreement.  The Commissioner had described parts of the Enterprise Agreement as “industrially confronting”[1] “exploitative”[2] whereas the Full Bench praised the “collaborative approach of the parties and commended them for their efforts [26].”

This decision comes no doubt as a great relief to McDonald’s, but more particularly to Australia’s largest and politically powerful union the socially conservative  Shop Distributive and Allied Employees’ Association (SDA).  One thing however is certain, that  after having digested this judgment one member of FWA will not be sitting down for a Happy Meal anytime soon.

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[2010] FWA 1347 at [118]