Swift Placements Pty Ltd v. WorkCover Authority of New South Wales

[2000] NSWIRComm 9
Matter no. IRC 1591 of 1999

(Judgment by: Wright J, President Walton J, Vice-President Hungerford J)

Between: Swift Placements Pty Ltd
And: WorkCover Authority of New South Wales (Inspector Louise May)

Court:
Industrial Relations Commission of New South Wales

Judges:
Wright J

President Walton J

Vice-President Hungerford J

Legislative References:
Criminal Appeal Act 1912 - s 5AA, 5AB
Industrial Relations Act 1996 - s 196
Occupational Health and Safety Act 1983 - s 4(1), 15(1)
Accident Compensation Act 1985 (Vic) - s 8, 9
Trade Practices Act 1974 (Cth) - s 45D; s 45E

Case References:
Warman International Limited v WorkCover Authority of New South Wales - (1998) 80 IR 326
Fletcher Construction Australia Limited v WorkCover Authority of New South Wales (Inspector Fisher) - (1999) 91 IR 66
Clarkson v Dent - (1998) 84 IR 250
Massey v Crown Life Insurance Co - [1978] 1 WLR 676
Narich Pty Limited v Commissioner of Pay-roll Tax - [1983] 2 NSWLR 597
Australian Mutual Provident Society v Allan - [1978] 52 ALJR 407; (1978) 18 ALR 385
Stevens v Brodribb Sawmilling Co Pty Limited - (1986) 160 CLR 16
Accident Compensation Commission v Odco Pty Ltd - (1990) 95 ALR 641
Building Workers' Industrial Union of Australia v Odco Pty Ltd - (1991) 99 ALR 735
Drake Personnel Ltd v Commissioner of State Revenue (Vic) - (1998) 40 ATR 304
Pitcher v Langford - (1991) 23 NSWLR 142
Mead v New England Seed Traders Pty Limited - [1972] WCR 113
Poulson v John Jarvis and Co Limited - [1919] 122 LTRep 471
McCartan v Belfast Commissioners - (1911) 2 Ir Rep 143
Hewitt v Bonvin - [1940] 1 KB 188
Attorney-General for New South Wales v The Perpetual Trustee Company (Limited) - (1952) 85 CLR 237
Dalgety Farmers Ltd t/as Grazcos v Bruce - (1995) 12 NSWCCR 36
The Queen v Foster; ex parte The Commonwealth Life (Amalgamated) Assurances Limited - (1952) 84 CLR 138
Knowles v The Anglican Church Property Trust Diocese of Bathurst - (1999) 89 IR 47
Cassidy v Ministry of Health - [1951] 2 KB 343
Byrne v Australian Airlines Limited - (1995) 185 CLR 410
Connelly v Wells - (1994) 10 NSWCCR 396; (1994) 55 IR 73
The Federal Commissioner of Taxation v J Walter Thompson (Australia) Pty Limited - (1944) 69 CLR 227
Ryde-Eastwood Legues Club Limited v Taylor - (1994) 56 IR 385
Doyle v Sydney Steel Company Limited - (1936) 56 CLR 545
Australasian Meat Industry Employees' Union v Sunland Enterprises Pty Ltd (t/as Sundland Wholesale Meats) - [1988] 24 IR 467
Licensed Clubs Association of Victoria v Higgins - (1988) 4 VIR 43
Australasian Meat Industry Employees' Union v R J Gilbertson (Qld) Pty Ltd - [1988] 26 IR 237
Automatic Fire Sprinklers Pty Ltd v Watson - (1946) 72 CLR 435
Stevenson Jordan and Harrison Ltd v Macdonald - [1952] 1 The Times LR 101
Mersey Docks and Harbour Board v Coggins and Griffith (Liverpool) Ltd - (1947) AC 1
Baldi & Fletcher Pty Ltd v Rabmar Pty Ltd - [1988] 25 IR 101
Steel Structures Ltd v Rangitikei County - [1974] 2 NZLR 306

Hearing date: 14 September 1999
Judgment date: 3 March 2000

Judgment by:
Wright J

President Walton J

Vice-President Hungerford J

Appeal by Swift Placements Pty. Limited against a decision of and orders by Mr. Justice Marks respectively on 26 March 1999 and 9 September 1999 in Matters Nos. IRC 7104, 7105 and 7106 of 1997 re prosecutions under s.15(1) of the Occupational Health and Safety Act 1983.

1 On 5 January 1996, at the premises of Warman International Limited (Warman) at Artarmon in the State, Rudolf Steven Terkes was cleaning a sand mixing machine on the moulding line in the foundry when he suffered injuries to his right hand from moving metal blades causing the loss of two fingers and severe lacerations. It seems that the appellant, Swift Placements Pty. Limited as a personnel agency and supplier of labour to industry, had arranged for Mr. Terkes to perform work at Warman's premises; the respondent, Louise May, as an inspector of the WorkCover Authority of New South Wales, initiated prosecutions against the appellant for three breaches of s.15(1) of the Occupational Health and Safety Act 1983 arising out of the accident on 5 January 1996 to Mr. Terkes.

2 The prosecution proceedings were heard by Marks J. in which the only defence raised was that Mr. Terkes was not an employee of the appellant when he sustained the injuries at the premises of Warman. Otherwise, it was conceded that the appellant was an employer and the remaining essential ingredients of the offences were admitted so as to enable them to be found proven. His Honour held on 26 March 1999, in the decision now under challenge, "that there was an employment relationship on the relevant occasion between the defendant (the appellant) and Mr. Terkes. ... the prosecutor has proven beyond a reasonable doubt that the defendant was the employer of Mr. Terkes on 5 January 1996 whilst Mr. Terkes was working at the premises of Warman". On 9 September 1999, Marks J. made orders convicting the appellant of each of the offences and imposed a fine of $15,000 for each offence with a moiety to the prosecutor plus costs; his Honour stayed the orders for the payment of the penalties and costs until the determination of the present appeal or until further order.

3 The sole issue raised for determination is whether or not Mr. Terkes was an employee of the appellant at the relevant time when he sustained injuries at Warman's Artarmon premises. If that not be so, there was no basis for his Honour convicting the appellant of the three charges, including the imposition of sentences, and each charge should have been dismissed with costs; that was the relief claimed by the appellant on appeal.

4 The appellant mounted its challenge to the orders of Marks J. pursuant to s.196 of the Industrial Relations Act 1996 and s.5AA of the Criminal Appeal Act 1912 by way of an appeal as of right and as a rehearing on the evidence given at first instance. The proper approach to adopt on appeal was stated by a Full Bench (Fisher P., Peterson and Schmidt JJ.) of the Court in Warman International Limited v. WorkCover Authority of New South Wales (1998) 80 I.R. 326 at 338-339 as follows:

We accept the submissions of the appellant that the approach to be adopted by this Court to the determination of appeals brought to it in respect of criminal proceedings taken before a judicial member must be the same as that adopted by the Court of Criminal Appeal to appeals brought to it under s.5AA of the Criminal Appeal Act. Section 196(2) of the 1996 Act in applying to such an appeal the Criminal Appeal Act in the same way that it applies in the Court of Criminal Appeal requires the application of s.5AA(3) "any such appeal is to be by way of rehearing on the evidence ...".

There is no scope for the possibility that those words applied to proceedings here could be given a different meaning and effect to the same provision applied in the context of the Court of Criminal Appeal.

The approach of the Court of Criminal Appeal to s.5AA has been discussed in numerous decisions to which we have earlier made reference, particularly Camilleri (1993) 32 N.S.W.L.R. 683 and BWM (1997) 91 A. Crim. R. 260. It follows from the principles elaborated in those cases that the appellant here is not obliged to demonstrate error of the trial judge. The appeal comes to the Court by way of rehearing and the Court will consider the question of sentence for itself. That does not mean that the appeal bench will of necessity come to a conclusion in relation to penalty different from the sentencing judge. A different result need not necessarily flow from the appeal court's exercise of the sentencing discretion; it must nevertheless exercise that discretion.

5 We will so consider the present matter as did the Full Bench of this Court in Fletcher Construction Australia Limited v. WorkCover Authority of New South Wales (Inspector Fisher) (1999) 91 I.R. 66 at 75, although in the context of adopting the view of the Court of Criminal Appeal in Histollo Pty. Ltd. v. Director-General of National Parks and Wildlife Service (1998) 45 N.S.W.L.R. 661 that legislative reconsideration should occur of the nature of appeals pursuant to s.5AA and s.5AB of the Criminal Appeal Act. It need only be mentioned that no separate appeal was made against the sentences imposed by Marks J., simply that because Mr. Terkes was not an employee of the appellant the charges could not be sustained and should be dismissed. If, however, the appellant be unsuccessful on that issue, no submissions were made against the sentences per se.

6 The obligation under the Occupational Health and Safety Act found to be breached by the appellant is stated in this way:

15 Employers to ensure health, safety and welfare of their employees
(1)
Every employer shall ensure the health, safety and welfare at work of all the employer's employees.
...

7 Thus, an essential ingredient of the offence is that the person subject to the relevant detriment to safety must be an employee of the employer defendant. Section 4(1) of the Occupational Health and Safety Act defines an "employee" and an "employer" in the following terms:

employee means an individual who works under a contract of employment or apprenticeship.
employer means a corporation which, or an individual who, employs persons under contracts of employment or apprenticeship.

8 The question for determination therefore turns on whether Mr. Terkes was an "employee" of the appellant in the common law sense, that is, under a contract of employment between Mr. Terkes and the appellant whereby he was performing the work at the premises of Warman when he was injured.

9 It is, we think, fundamental in resolving the present issue to have in mind that the ultimate conclusion as to whether Mr. Terkes was an employee of the appellant is a question of fact, although it is to be acknowledged that in reaching that conclusion questions of mixed law and fact may, and probably will, arise: see Clarkson v. Dent (1998) 84 I.R. 250 at 252-253 and the authorities cited therein. The learned authors of The Liability of Employers (Glass, McHugh and Douglas, 2nd. ed., 1979, Law Book Company) put it in the following way (at pp.69-70):

Whether or not the relationship of employer and employee exists depends upon whether the person employed works under a contract of service or a contract for services. The distinction between a contract for services and a contract of service is that, in the former case the employer can only order or require what is to be done. In the latter case, however, he can not only order or require what is to be done, but can also direct how it is to be done (Collins v. Hertfordshire County Council [1947] K.B. 598, per Hilbery J. at p.615; [1947] 1 All E.R. 633, at p.638).
This test, which may be conveniently called the control test, is the most valuable criterion for determining whether the relationship of employer and employee exists. The question whether the relationship exists is one for decision by a jury in accordance with the tests laid down by the trial judge (Fitzpatrick v. Evans & Co. [1902] 1 K.B. 505, at p.510; Simmons v. Heath Laundry Co. [1910] 1 K.B. 543, at pp.548-9; Smith v. General Motor Cab Co. [1911] A.C. 188, at p.193). It is in this sense that statements (see e.g. Performing Right Society Ltd. v. Mitchell & Booker Ltd. [1924] 1 K.B. 762, per McCardie J. at pp.765-6; Federal Commissioner of Taxation v. J. Walter Thompson (Aust.) Pty. Ltd. (1944) 69 C.L.R. 227, per Latham C.J. at p.229) are to be understood to the effect that the question is a mixed question of law and fact.
It is certainly true that if the only evidence relating to the nature of the relationship is to be found in a written document a question of law is involved (Performing Right Society Ltd. v. Mitchell & Booker Ltd. [1924] 1 K.B. 762). However, such a situation will rarely arise in actions for damages for personal injury. There is bound to be some oral evidence of the industrial relations which existed during the period before injury occurred. It will then be for the jury to consider any written agreement in the light of evidence concerning the actual course of dealing between parties. It will be entitled to disregard the written document if this does not correspond to the real arrangement between them.

In R. v. Foster; Ex parte Commonwealth Life (Amalgamated) Assurances Ltd. (1952) 85 C.L.R. 138 the terms of employment of certain insurance agents were contained in a written document. The agreement purported to exclude the relationship of employer and employee and contained a clause that no communication from the employer was to be regarded as binding on the agent but was merely to be considered as in the nature of advice. Dixon, Fullagar and Kitto JJ. were of the opinion that neither the clause nor the agreement was to be regarded as finally determining the relationship of the parties. If the relationship of employer and employee existed in fact the terms of the written agreement could not prevent effect being given to it. They said ((1952) 85 C.L.R. 138 at p.151. cf. when the relationship is ambiguous A.M.P. Society v. Allan (1978) 52 A.L.J.R. 407):

"Provisions of this character are perhaps more likely to arouse misgivings as to what the practical situation of the agent may be than to prevent a relation of master and servant being formed.
For, if in practice the company assumes the detailed direction and control of the agents in the daily performance of their work and the agents tacitly accept a position of subordination to authority and to orders and instructions as to the manner in which they carry out their duties, a clause designed to prevent the relation receiving the legal complexion which it truly wears will be ineffectual."

10 That latter comment by the High Court in Foster as to the existence in fact of an employment relationship was reflected later in what Lord Denning M.R. said in Massey v. Crown Life Insurance Co. [1978] 1 W.L.R. 676 at 679, that is:

The law, as I see it, is this: if the true relationship of the parties is that of master and servant under a contract of service, the parties cannot alter the truth of that relationship by putting a different label upon it. ...
On the other hand, if the parties' relationship is ambiguous and is capable of being one or the other, then the parties can remove that ambiguity, by the very agreement itself which they make with one another. The agreement itself then becomes the best material from which to gather the true legal relationship between them.

11 Lord Denning's statement was accepted by the Privy Council in Narich Pty. Limited v. Commissioner of Pay-roll Tax [1983] 2 N.S.W.L.R. 597 at 601 as correctly stating the position and in which their Lordships adopted the principle to the same effect as stated by the Privy Council in Australian Mutual Provident Society v. Allan [1978] 52 A.L.J.R. 407 at 409; (1978) 18 A.L.R. 385 at 389-390 per Lord Fraser of Tullybelton. One need only add the observation made by Lord Fraser therein that "where there is no reason to think that the clause (in the parties agreement as to the nature of their relationship) is a sham, or that it is not a genuine statement of the parties' intentions, it must be given its proper weight in relation to other clauses in the agreement".

There was no suggestion in the present case that the arrangements made between the persons concerned (the appellant, Mr. Terkes and Warman) to regulate their relationships were a sham or were otherwise not genuine statements of their intentions. Rather, as the arguments were presented, the appellant and the respondent contended that the consequences of those arrangements in terms of legal principle led to competing or different results. On the one hand, the appellant said Mr. Terkes performed the work as an employee of Warman, even though it (the appellant) had to show only that it had not been proven beyond reasonable doubt that it was the employer; on the other hand, the respondent claimed Mr. Terkes was employed by the appellant in the performance of the work at Warman's premises.

12 Given that the true relationship between parties is a question of fact, but in which issues of law will arise (such as, the construction of documents and the relevant legal tests or principles), it is convenient, firstly, to review the facts of the present case and then, secondly, to assess the significance of the facts so found in accordance with the proper principles of law in order to determine the true nature of the relationship, if any, which existed between the persons concerned on 5 January 1996 when Mr. Terkes suffered the detriment to his safety while working at the premises of Warman. In other words, the task involved, as directed by the applicable definitions in s.4(1) of the Occupational Health and Safety Act, is to determine whether at the relevant time Mr. Terkes was performing the work as an employee of the appellant under a contract of employment between them or pursuant to some other relationship.

13 As the facts in this matter as set out in the judgment of Marks J. were not disputed, although the proper conclusions to be drawn therefrom were sharply contested, it is convenient to recite what his Honour recorded, as follows:

The following narration is based on oral evidence given and documentary evidence tendered in the proceedings.

The defendant operates an employment agency from which it places persons to perform work in establishments operated by its clients. One of those clients is Warman. It issued a document entitled "Benefits of Swift Placements Temporary Staffing" which described its services and the basis upon which it operates, and Warman was aware of the contents of that document and dealt with the defendant on the basis of information and assertions made in that document. The defendant advertised by way of that document its ability to provide staff for clients in a number of areas including labourers. All personnel were evaluated in terms of basic numeracy and personal abilities skills.

Under the heading "Advantages" the document stated that administration costs of clients would be reduced because group certificates would be prepared by the defendant and it would process payroll and manage the hiring for labour shortages and turn-over problem areas. There was reference under this heading to "Swift Placements Employees".

Under a heading "Quality Control" the document said that: "Swift Placements maintains a quality control program on each of our field employees. All our employees understand that their performance is constantly measured which in itself ensures a high degree of productivity and accuracy."

The defendant undertook to consult the direct supervisor of its employee within the first four hours of an assignment to ascertain satisfactory performance with an undertaking to replace "the employee" immediately without charge in the event of dissatisfaction. The defendant would obtain details of hours worked over the previous week by its employees each Thursday morning.

With respect to overtime the document said: "Although all overtime worked will be paid to our employees at time and a half and double time, you will only be charged at time and 40% and 80% respectively." Allowances payable under a relevant award would be charged to the client at cost. All temporary staff were to be paid a minimum of three hours working time each day.

The responsibilities of the defendant and the client were described in the document in the following terms:

"CLIENT RESPONSIBILITIES
To instruct and supervise Swift Placement employees in the operations they are required to perform.
To accurately inform Swift Placements of the job classification, or any changes to the job description.
To inform Swift Placements of any accidents, sickness or problems relating to its employees immediately.
To keep an accurate record of the daily hours worked by Swift Placements employees. These hours will be obtained from you by Swift Placements, by telephone/facsimile, Thursday mornings. Both the employees' pay and invoice to you are produced from these hours. Time sheets can be provided if required.
Submitted timesheets should be authorised and signed by relevant supervisory staff. Swift Placements cannot take responsibility for receipt of unsigned timesheets."

Under a heading "TERMS AND CONDITIONS" applying to temporary placements the following material was included as to salaries:

"All salaries, income tax deductions, annual holiday pay, payroll tax and workers' compensation insurance are covered by Swift Placements for temporary employed staff."

Under a sub heading "TERMINATION" the document provided:

"Staff provided are Swift Placements employees. Clients engaging members or former members of our temporary staff as their own employees, or engaged through other sources, whether permanently or for a limited period, and whether the offer of employment is made during or at any time within six months after the termination of the temporary engagement, must notify Swift Placements immediately and may be charged permanent placement fee. It is the clients responsibility to notify Swift Placements prior to cessation or extension of the assignment."

...

Mr Terkes first came into contact with the defendant when he saw an advertisement for a job in a newspaper. He made an appointment to see Mr Colin West the managing director of the defendant and was interviewed by him on 31 October 1995. On this occasion Mr Terkes was asked to fill in a number of forms which he did. One of these was entitled "Temporary Application Card" which sought a number of personal details and in particular recent work experience and nature of the work which Mr Terkes was seeking. Another document was a health questionnaire. The third document was entitled "Swift Placements Pty Ltd Offer of Casual Employment". Because of the significance that this document assumed in the proceedings I shall set out all of its terms verbatim:

"This is to confirm the offer of casual employment as a casual employee, made to you, subject to the following terms and conditions.

1.
Where not specifically referred to herein, your employment is governed by the provisions of the applicable Award (an Award of the NSW Industrial Commission).
2.
Your rate of remuneration will be based on a rate per hour, which includes Casual Loading and a factor of 1/12th representing Annual Holiday Leave Entitlement. Payment will be for a minimum of four hours on each day of engagement. Termination of employment will be on a day to day basis dependant upon work requirements by the client.
3.
In addition to your remuneration, the percentage amount under the Occupational Superannuation Standards Act of your ordinary earnings (that is, not including the loadings referred to as part of your remuneration), will be paid into a Superannuation Fund administered through the National Flexi Super Plan (which is a fund having "approval" for purposes of the Occupational Superannuation Standards Act). Such payment will be made with respect to each month where your hours of work exceed 38. If you advise that you wish to terminate this Contract of Employment, then an amount "accumulated" will be paid to the fund of your account. The fund nominated for purposes of meeting occupational superannuation contribution obligations provides benefits at least equal to, but potentially better than, that provided under the Award, but is nominated in order for Swift Placements to avoid a multiplicity of funds for purposes of meeting it's (sic) collective obligations for employees, and is provided for the majority of our employees on the basis of agreement reached at the enterprise level.
4.
The rate of pay referred to in 2 above will be adjusted from time to time in accordance with variations made under the Award referred to. The rate of contribution for occupational superannuation contributions will also be adjusted to accord with Award variations, or as prescribed under the Occupational Superannuation Standards Act.
5.
Upon cessation of employment and where relevant, the return to your original Country of residence, the onus must be on you the employee to make contact with the Superannuation Fund and thus inform them where accumulated funds can be sent. The contact number is 1800 331 240.
6.
Under the terms of employment, you are required to contact Swift Placements each day between 8.00am and 8.30am to ascertain whether work is available on such day, or some subsequent day. Once work has been allocated you must attend at the place nominated and undertake the work directed.

PROVIDED HOWEVER that, in the event of your being unable to perform the work provided on account of illness, injury or other pressing necessity you are required to notify Swift Placements no later than 7.45am on the day that the work has been arranged. You must undertake the work directed with dispatch and diligence, and subject to the supervision of the person nominated by Swift Placements for the purpose. With respect to the administration arrangements, you are responsible to Swift Placements, and you are not to agree to undertake any work for the client which has not been arranged or directed through this office.

7.
Where requested safety boots/clothing must be worn and where applicable safety equipment must be utilised at all times. Failure to comply with the above will result in loss of employment.
8.
Whilst you remain bound at all times to observe proper conduct towards Swift Placements (including, but not limited to, not being party to either any act of omission, any conduct which may, or be calculated to, cause damage to Swift Placements, it's (sic) property or reputation but you will at all times and in all reasonable ways continue to treat and refer to Swift Placements with respect and propriety), you are also bound not to at any time, either during employment or subsequently, divulge kind or nature whatsoever relating to the business of any client of Swift Placements where you may have been engaged to work, which has been acquired during or as a consequence of your engagement with the client of Swift Placements, or with the Company.
9.
You must notify Swift Placements as soon as you have completed any work or assignment for any client of Swift Placements, and ensure that with respect to the work undertaken Time Sheets or other relevant records relating to the work have been properly completed and properly verified by the client. Failure to complete these records will be seen as a wilful breach of duty, and may result in your not being paid for the work.
10.
Completed Time Sheets, when used will be provided to Swift Placements by Thursday at 10.00am each week. Remuneration will be calculated with respect to all work complete up to and including each Wednesday to 12.00pm (sic) midnight.
11.
If you wish your wages to be paid direct into your bank account, you must supply us with all the relevant details. These should be given to us by 12.00pm on Wednesdays, or if you wish you can receive your pay by the following methods.

You collect your cheque from the reception after 2.00pm Friday
We post your cheque to a private address only.

12.
You are entitled to coverage by Swift Placements under the provisions of the Workers' Compensation Act, 1987. Pursuant to the provisions of the said Act you are required to give notice of any injury to Swift Placements as soon as practicable after the incident giving rise to the injury, and prior to your leaving the place at which are engaged to perform work. You are also required to make a claim for Worker's Compensation on the approved form as soon as practicable.

SIGNED:....................................DATE..................."

About two and a half weeks later Mr West telephoned Mr Terkes and told him that there was a job available at Artarmon which involved heavy lifting and that there was a lot of overtime. Mr West asked him whether he wished to take it and Mr Terkes said that he would. Mr West gave Mr Terkes the address of Warman and he was told to contact a person named Gary at that establishment and to be there before 6am the next day.

Upon attending Warman Mr Terkes was introduced to Gary who asked him whether he knew how to grind. After indicating that he did he was shown what to do and before starting work was given some protective safety items and overalls to wear. After about four weeks working the grinder Gary then moved Mr Terkes into the moulding section where he did some sweeping and other jobs. He was in that section for about a week during which time he was helping an employee named Jerry with the cleaning of machinery. On 5 January 1996 Jerry did not attend work and Mr Terkes was asked to clean the machine. This was when the accident previously described occurred.

Under cross examination Mr Terkes agreed that whilst he was working on the premises of Warman, personnel of that organisation directed him as to what work to do, where to work in the premises, when to work on various projects, what hours he would work including overtime, what safety equipment should be used, how to perform certain tasks which were allocated to him, to which Warman employee he was to report and what training and instruction he should receive. He did receive on-the-job training and instruction in a number of areas and was, as I have said, transferred from one area to another.

In a statement made to the prosecutor, Mr Colin West said that the defendant provided its clients "with the staff according to what they want, it's up to them to provide suitable and safe equipment as we cannot impinge on there (sic) territory. We provide the person they provide the equipment that is safe to use, it's the responsibility of the client to provide safe equipment in a safe working environment and Rudolf Terkes should have an awareness of the responsibilities of a fettler."

The defendant had effected workers' compensation insurance with MMI Workers' Compensation (NSW) Ltd. Consequent upon Mr Terkes' injury the defendant filled in an employer's report of injury form in which it described Mr Terkes as a worker and which it completed as an employer. Mr Terkes completed a workers' compensation claim form in which he described the defendant as his employer.

On 15 July 1998 the defendant issued a 1998 Group Certificate showing that it was the employer of Mr Terkes between 2 July 1997 to 7 January 1998, a period which I observe is irrelevant for the purposes of these proceedings.

On 8 January 1996 Warman completed an accident report form for the WorkCover Authority of New South Wales. That form noted Mr Terkes as being an injured person but stated that he was not an employee of that company.

On 22 February 1996 National Australia Financial Management Ltd received from the defendant an "employer contribution" on behalf of Mr Terkes being an occupational superannuation payment made for the period 30 June 1995 to 24 September 1998.

14 We would wish to add to his Honour's summary some additional facts from the unchallenged evidence. In the document intituled "BENEFITS OF SWIFT PLACEMENTS TEMPORARY STAFFING BRINGING PROFESSIONALISM TO THE INDUSTRY", a copy of which was provided to Warman, the opening words stated:

People are the most vital resource in industry today. At Swift Placements, we know the importance of employing the right people for your business.

Warehouse and Distribution
Professional Engineering
Manufacturing/Production Trades
Shutdowns
Stocktakes
Sales and Marketing

Whatever your requirements, WE CAN HELP by providing staff which could include management personnel in the area of production, materials handling, warehouse and distribution. In addition we will provide supervisors, engineers, trade people, process workers or labourers.
SKILLS EVALUATION
For Swift Placements to ensure excellence in placement requirements and commitment to professionalism, all personnel are numeracy tested and personal abilities assessed in the Swift Placements evaluation program.

15 Under the heading "ADVANTAGES", that same document in para. 2 said that "Reliable staff can be obtained at short notice, thus reducing down time"; under the heading "SPEED AND EFFICIENCY", the document claimed that "We (the appellant) appreciate that often our clients are unable to predict needs for temporary staffing and in many instances the need will arise on an 'immediate' or 'urgent' basis. At Swift Placements, we are committed to the provision of a fast and efficient service"; and under the heading "SWIFT PLACEMENTS RESPONSIBILITES", the document stated:

To ensure smooth operations Swift Placements will exert their best endeavours to perform the following functions;

(a)
To provide suitable screened personnel, as and when required.
(b)
To make every effort to assign the same personnel each time.
(c)
To keep accurate payroll records as required by law and make all statutory remittances on behalf of the employees, such as income tax, superannuation and worker's compensation.
(d)
To use our best endeavours to replace any Swift Placements employee absent through sickness, to ensure continuity of work.

16 We would add also that in a statement made to the respondent as prosecutor on 18 December 1996, the appellant's Managing Director, Mr. Colin West, admitted in response to a question whether he had authority "to speak legally on behalf of the company" that he had "full authority" and undertook to produce written authority to that effect. The following is an extract from the recorded interview of Mr. West by the respondent:

Q: How many employees work for Swift Placements.
A. 14 that is inclusive of Directors that is full time not the casuals.
Q. How many Casuals?
A. There are approximately 200 on a weekly basis and about 400-450 on the books that varies if someone gets another job or goes back overseas.
Q. What is the nature of Swift Placements Pty Ltd business?
A. Employment agency.
Q. How long has the company been in business?
A. 5 years.
Q. Was Rudolph Terks (sic) an employee of Swift Placements on 5/1/1996?
A. Yes.
Q. How long had Rudolph Terks (sic) been working for Swift Placements when he sustained his injury on 5/1/1996?
A. He commenced on the 27/11/1995.
Q. Did Rudolph Terks (sic) sustain a work related injury on 5/1/1996?
A. Yes.
Q. When Rudolph Terks (sic) sustained his work related injury on 5/1/1996 was he working on the premises of Warman International 1 Marden St Artarmon NSW 2064?
A. Yes.
Q. Was Rudolph Terks (sic) performing his normal duties at the time of the accident?
A. Yes.
Q. What were Rudolph Terks (sic) normal duties?
A. He was employed as a general labourer.

17 Mr. West was further interviewed by the prosecutor on 28 October 1997. As to the steps taken by the appellant in assessing the work environment at Warman for safety purposes, he said it "continues to be done ... happens all the time ... (by) ... a workplace visit and discussion with Warman staff, and the discussion is based on safety aspects and other things". Mr. West added the following information concerning the work Mr. Terkes was required to perform at Warman, including the cleaning of the sand mixing machine at the time he was injured, and the training for such work:

Q. Was Swift Placements Pty Ltd aware that Rudolph Terks (sic) may be required to clean the sand mixing machine on the fast loop moulding line?
A. Yes, if they go as a labourer or a Fettler they are required to move around as requested by Warman International because it is an unskilled job.
Q. Did you make any inquiry as to the training and instruction Mr. Terks (sic) received from Warman International in performing that task?
A. No, not required.
Q. Did Swift Placements make any inquiry of the training Rudolph Terks (sic) had received from Warman International?
A. Not specific because we know that every person that goes in there are trained according to the specific requirements.
Q. What system did Swift Placements Pty Ltd have in place to ensure it was advised of the items of plant and equipment it's (sic) employees, and in particular, Rudolph Terks (sic), would be required to operate while working for Warman International?
A. We provide them with the staff according to what they want, its up to them to provide suitable and safe equipment as we cannot impinge on there (sic) territory. We provide the person they provide the equipment that is safe to use, its (sic) the responsibility of the client to provide safe equipment in a safe working environment and Rudolph Terks (sic) should have an awareness of the responsibilities of a fettler.

18 The appellant's wages record for Mr. Terkes disclosed hours worked and gross wages paid from his commencement at Warman in November 1995 to the date of the accident on 5 January 1996. Specifically, for the week ended 10 January 1996, during which week the accident occurred, the wages record showed that Mr. Terkes worked for 17.20 hours and gross wages paid to him amounted to $227.14; the appellant's invoice to Warman in respect of that same week for the services of Mr. Terkes as a fettler was for 17.20 hours worked for which the fee was a total of $379.98; thus, the appellant received from Warman an amount of $152.84 over and above the wages it actually paid to Mr. Terkes no doubt representing for those 17.20 hours the appellant's fee to cover profit, expenses and associated labour costs in the employment of Mr. Terkes. Support for those financial arrangements appeared from the appellant's report of the injury to its insurer where Mr. Terkes' wage rate was shown as $12.48 per hour ($474.00 per week average) whereas the hourly rates the appellant charged Warman for Mr. Terkes' services were $21.11 for ordinary hours and $29.55 for overtime hours.

19 Marks J. approached the matter by considering firstly whether there was any contractual relationship between Mr. Terkes and the appellant and what were the terms and conditions of that contract. His Honour reasoned that the offer of casual employment document was just that, an offer, and did not itself bring any contract of employment into existence; however, once Mr. Terkes had notified the appellant of acceptance of a particular position then, as his Honour found, "the terms and conditions contained within the offer of casual employment document ... manifested an intention of both parties to enter into a legally binding contract of employment". After accepting that any characterisation given to a relationship by the parties themselves could not foreclose the ability of a court to correctly categorise the relationship in another way if to do so would be in accordance with established principles of law, his Honour referred to Narich and to Australian Mutual Provident Society for the proposition "that any ambiguity may be resolved by reference to the professed intention of the parties as to the true legal relationship between them".

20 His Honour considered that the intention of the appellant and Mr. Terkes to enter into a legal relationship of employment was consistent with the manner in which the appellant dealt with Warman and concluded that such dealing was "on the basis that Mr. Terkes would be the defendant's employee and not the employee of Warman".

21 His Honour further concluded, on the facts, that there was no intention on the part of Warman to enter into a contract of employment with Mr. Terkes in that "there is absolutely no evidence" of such an intention which would, in any event, "have been inconsistent with the nature of the business arrangement which Warman had with the defendant". His Honour concluded also that there was no evidence Mr. Terkes saw himself as an employee of Warman.

22 Having found a relationship between the appellant and Mr. Terkes, the professed intention of which was a relationship of employer-employee, Marks J. then attended to the essential question as to whether the relationship truly constituted a contract of employment or rather should be characterised other than as an employment relationship according to law. For that purpose, his Honour cited and followed the judgment of Mason J., as he then was, in Stevens v. Brodribb Sawmilling Co. Pty. Limited (1986) 160 C.L.R. 16 at 24, 28-29 in relation to the degree of control exercised by a person who engages another to perform work over the person so engaged. After referring to the problems which have emerged over the years in the application of the control test with a skilled workforce, working patterns and the organisation of labour (particularly, as here, where labour is outsourced or hired to a third party), Marks J. said "there can be no doubt that substantial direction and control over the work activities of Mr. Terkes devolved upon Warman personnel".

23 His Honour then analysed, but distinguished on the facts, recent decisions of both the High Court and the Federal Court concerning the nature of the relationship established between a labour hire company and a worker performing services for a third party: see Accident Compensation Commission v. Odco Pty. Ltd. (1990) 95 A.L.R. 641 and Building Workers' Industrial Union of Australia v. Odco Pty. Ltd. (1991) 99 A.L.R. 735. After referring to the decision of Balmford J. in the Supreme Court of Victoria in Drake Personnel Ltd. v. Commissioner of State Revenue (Vic.) (1998) 40 A.T.R. 304, the facts of which were said to "bear a striking resemblance to the facts in these proceedings" but with which decision his Honour disagreed, Marks J. then concluded:

For the reasons which I have advanced Mr Terkes could not have been an employee of Warman at the time of the incident which gave rise to these proceedings. There is simply no evidence of any contractual relationship between him and Warman which would found any employment relationship.
On the other hand there is ample evidence of a contractual relationship between Mr Terkes and the defendant. The contract came into being at the time that Mr Terkes accepted the offer to perform work at Warman and the terms and conditions were established by the offer of casual employment document. There was a clear intention to create an employment relationship. The only feature missing from the terms and conditions of the contract of employment which would otherwise clearly characterise the relationship created by the contract as being one of employment in the traditional sense was the provision of detailed direction and control in connection with the performance of the work.
However it was a term and condition between the defendant and Mr Terkes that Mr Terkes would be subject to detailed direction and control by Warman personnel. To this extent there was a provision contained within the contract between the defendant and Mr Terkes concerning detailed direction and control and Warman personnel were appointed to carry this out. As I have previously indicated this is not a traditional employment situation. It is a contemporary situation now not uncommonly encountered within the business world. New and evolving techniques require the law to continually evaluate its approach to the characterisation of relationships and rights and obligations which may flow from them. Such detailed control and direction as was necessary to establish an employment relationship did not necessarily have to devolve on the defendant personally.
...
I have no doubt for the reasons which I have earlier outlined that there was an employment relationship on the relevant occasion between the defendant and Mr Terkes. Accordingly I find that the prosecutor has proven beyond a reasonable doubt that the defendant was the employer of Mr Terkes on 5 January 1996 whilst Mr Terkes was working at the premises of Warman.

24 Counsel for the parties helpfully provided written submissions which were supplemented by oral argument. Those submissions analysed the facts in light of the authorities as referred to in the judgment of Marks J., but with different results. Counsel for the appellant, the Hon. Mr. J. J. Macken and Mr. H. J. Mater, for their part, made the following main points -

(1)
Marks J. erred in determining that it was proven beyond a reasonable doubt that the appellant was the employer of Mr. Terkes on 5 January 1996 while he was working at the premises of Warman.
(2)
The proper statement of principle in determining whether an employment relationship existed was contained in the judgment of Mason J. in Stevens v. Brodribb Sawmilling (160 C.L.R. at p.24), namely, a prominent factor is the degree of control exercised in the sense of ultimate authority over the employee in the performance of his work residing in the employer so that he was subject to the latter's order and direction; however, control is not the sole criterion by which to gauge whether a relationship is one of employment but rather to regard it merely as one of a number of indicia which must be considered in the determination of the question.
(3)
On the facts of this case, Marks J. was correct in finding that substantial direction and control over the work activities of Mr. Terkes devolved upon Warman personnel in that direct control and supervision, including training and the like, were all in the hands of Warman.
(4)
Throughout the time Mr. Terkes was at Warman's premises, and particularly on the date of the accident, the appellant could not control, and had no right to control, the work which Mr. Terkes performed.
(5)
Marks J. was in error in finding that all indicia other than control pointed to an employment relationship between the appellant and Mr. Terkes; those indicia included the absence of ultimate authority in the appellant to order and direct Mr. Terkes in the performance of his work, the appellant paid remuneration to Mr. Terkes but the amount was reimbursed by Warman, Warman had the exclusive responsibility to provide and maintain equipment (including personal protective equipment) for Mr. Terkes' use, Mr. Terkes was not obliged to perform work when it was offered by the appellant, the hours of work were determined by Warman not by the appellant and the deduction of income tax by the appellant from Mr. Terkes' wages was merely a paper transaction.
(6)
To the extent it has been said (see Stevens v. Brodribb Sawmilling per Mason J. (160 C.L.R. at pp.28-29) and Pitcher v. Langford ((1991) 23 N.S.W.L.R. 142 per Kirby P. at p.150) that the notion of "control" is particularly inapposite in determining the nature of some relationships in modern post-industrial society, such observations have no application to the present case which involves an unskilled labourer who was, in fact, under constant and detailed instruction and supervision by Warman.
(7)
Adopting the classic test of "control" for determining whether a particular relationship is that of master and servant, as stated by Wilson and Dawson JJ. in Stevens v. Brodribb Sawmilling (160 C.L.R. at p.35) Mr. Terkes was not subject to the command of the appellant either as to what he should do in the course of his employment or as to how he should do it.
(8)
Marks J. was in error in not following the reasoning in Accident Compensation Commission v. Odco, Building Workers' Industrial Union v. Odco and Drake Personnel v. Commissioner of State Revenue so as to fail to hold that Warman, and not the appellant, was the real employer of Mr. Terkes; essentially from those authorities, his Honour was wrong in not recognising the overriding principle that where the day-to-day control of the work being carried out rests with the client (here Warman) and not with the labour hire agency (here the appellant) then the client is the employer and not the agency.
(9)
Notwithstanding the language used in the apellant's document offering casual employment to Mr. Terkes, the totality of the evidence established that the contract between those persons was not a contract of employment; alternatively, the evidence in that document did not permit a finding beyond reasonable doubt that on the relevant date when Mr. Terkes was working at the premises of Warman he was an employee of the appellant.
(10)
The document outlining the benefits of temporary staffing provided by the appellant to Warman dealt with "paper matters" and could not prevent a court discerning the real nature of the relationship between parties which here, on the facts, was not that of employer-employee as between the appellant and Mr. Terkes: see Pitcher v. Langford (23 N.S.W.L.R. at p.162 per Handley J.A.).
(11)
Marks J. was in error in concluding there was no evidence of any contractual relationship between Mr. Terkes and Warman which would found a relationship of employment in that there was abundant evidence of such a contract meeting the control test and other indicia; there was no need for the terms to be formally agreed as they could be implied from the facts which here pointed to Warman as being the employer.
(12)
The contract between the appellant and Mr. Terkes was one of agency by which the appellant arranged a contract of employment between Mr. Terkes and Warman. The appellant also was Warman's agent with respect to the transmission of wages and entitlements to Mr. Terkes in consideration of fees paid by Warman to the appellant.

25 In his oral submissions, Mr. Macken vividly described in the following way how the relationships between the various parties should be seen:

Many employers these days - and his Honour refers to this development - outsource the accounting department, outsource the maintenance department, outsource the accountancy department, outsource the public relations department. They get rid of them to other firms and you can just as easily outsource your personnel employee relations department and that is the way, we submit, this whole question should be approached.
Swifts are an outsourced human resources department of Warmans. You can say to a head hunter: We want such and such staff. We want them to have these qualifications. We want you to select them, train them, bring them to a satisfactory state and we want you to send them to us and to make the arrangement work, you pay them and we will reimburse you. We will tell you the overtime and you pay them. It is an outsourced human relations department but there is no reason whatever to argue that a head hunter has become the employer - and mostly they don't. A firm may ring up and ask for a new professional engineer and they are provided. The head hunter does not become the employer.
The contractor who wants the employee stays the employer and that can be the position here and all the advantages that come from vicarious employment can remain on foot.

26 In resisting the appeal, counsel for the respondent, Mr. S. Crawshaw S.C. and Mr. M. F. Taylor, adopted the reasoning of Marks J. as set out in the challenged judgment. The basic submission was, as Mr. Crawshaw said, that "the evidence points overwhelmingly to Swift (the appellant) as being the employer". The particular categories of evidence relied upon for that result included the admission by the appellant's managing director that Mr. Terkes was employed by it, the various documents all suggested the appellant was the employer, the appellant made all payments to Mr. Terkes relevant to the employment relationship, the direction and control of Mr. Terkes was with the appellant as well as with Warman and the ultimate authority over or legal control of Mr. Terkes resided with the appellant. In summary, Mr. Crawshaw put the position in this way:

When it comes down to it, as I said, the indicia are overwhelming in favour of Swift and that, in our submission, is why my friend is forced to resort to this idea of agency. Because there are so many indicia of employment between Swift and Mr. Terkes, the appellant is forced to put a position that Swift is the agent of Warman. The problem with that argument is that no evidence is cited for the proposition at first instance and Marks J. correctly found ... that there was no evidence for this proposition - no evidence has been cited for that proposition on appeal - and in particular, if you look at the benefits of the Swift Placements document ... there's no mention of an agency in any form whatsoever. It's really in that document, which sets out the relationship between Swift and Warman, where you would expect to find this agency if it existed. There's no suggestion in that document in any way that there is an agency ...

27 At the outset of our consideration of this appeal, it is necessary to identify the ultimate question to be decided. That question is whether Mr. Terkes was employed by the appellant under a contract of employment on 5 January 1996 when he suffered the detriment to his safety at the Artarmon premises of Warman. It was accepted by both parties that Mr. Terkes was employed by somebody while he was performing the work of cleaning the sand mixing machine; the real issue dividing the parties was not that there was no legal relationship between the appellant and Mr. Terkes but rather the nature of that relationship. On the one hand, the appellant said it was the agent of Mr. Terkes by which it arranged a contract of employment between Mr. Terkes and Warman and also it was Warman's agent in the transmission of wages and entitlements to Mr. Terkes in consideration of fees paid by Warman to it. The rationale for that approach was, as Mr. Macken urged, the appellant's position as a "head hunter" or outsourced human resources department of Warman in obtaining appropriately qualified persons from those, like Mr. Terkes, who had indicated a desire to perform certain work. On the other hand, the respondent said the appellant was and remained the true employer of Mr. Terkes at all relevant times.

28 Whether a person is the "employee" of another who is the "employer" (or, to use the older terminology, the "servant" of a "master") at any particular time or for any particular purpose seems to us, as we have indicated earlier, to be a question of fact to be determined according to given criteria: see Mead v. New England Seed Traders Pty. Limited [1972] W.C.R. 113 per Kerr C.J. and Hope J.A., with whom Holmes J.A. agreed, at pp.113, 118. However, as Wilson and Dawson JJ. observed in Stevens v. Brodribb Sawmilling (160 C.L.R. at p.37), "any attempt to list the relevant matters, however incompletely, may mislead because they can be no more than a guide to the existence of the relationship of master and servant". In Poulson v. John Jarvis and Co. Limited [1919] 122 L.T. Rep. 471, a case not dissimilar to the present in which the issue was which of two employers was the true employer, Lord Sterndale M.R. referred (at p.472) to the difficulty in answering such a question by observing that there were "many cases on the subject, and they are not easy to reconcile with one another, the reason being ... that it comes eventually to a question of fact upon which the judges have drawn different conclusions in the different cases, and that from the reports it is not easy to discover the exact reasons for drawing the different conclusions". The Master of the Rolls added (at pp.474-475), by adopting the words of Lord Loreburn in McCartan v. Belfast Commissioners (1911) 2 Ir. Rep. 143 at p.145, that:

Decisions are valuable for the purpose of ascertaining a rule of law. No doubt they are also useful in enabling us to see how eminent judges regard facts and deal with them, and great numbers of recorded precedents are useful in no other way. But it is an endless and unprofitable task to compare the details of one case with the details of another in order to establish that the conclusion from the evidence in the one case must be adopted in the other case. Given the rule of law, the facts in each case must be independently considered in order to see whether they bring it within the rule or not.

29 And, with respect, so we think it to be in the instant case before us as concerns the true nature of the relationship between the appellant and Mr. Terkes.

30 Even given the doubts as to the utility in law of definitions, as expressed by Hart in Definition and Theory in Jurisprudence (1954) 70 L.Q.R. 37, it is nevertheless helpful, we think, as a starting point in addressing the present issue to refer to the following statement by MacKinnon L.J. in Hewitt v. Bonvin [1940] 1 K.B. 188 at 191-192:

I think the definition of a servant in Salmond on Torts can hardly be bettered:
"A servant may be defined as any person employed by another to do work for him on the terms that he, the servant, is to be subject to the control and directions of his employer in respect of the manner in which his work is to be done."
The emphasis on the control and directions of the employer in this has no doubt reference to the well known case of Quarman v. Burnett (6 M. & W. 499). The driver of the vehicle there was obviously a servant, but he might be regarded as the servant of one or other of two persons as his employer; which of them was his employer depended on the question of control and direction; and that emphasis is further material upon the difference between a servant and an independent contractor.
But before any question as to the right of control and direction over the tortfeasor arises at all, it must be established that in doing the act complained of he was employed by the third party to do work for him. This cannot be established by mere proof that the tortfeasor is using a chattel, or driving a vehicle, which is the property of a third party, though that may, in the absence of any further explanation, be some evidence of the proposition. (emphasis added)

31 That comment is instructive for present purposes in that it emphasised, apart from the important aspect of "control", an initial and essential feature of the existence of a master-servant relationship as being that the servant be employed by the putative master to do work for him but where the use by the servant of the property of the other party was merely some evidence that the relevant relationship existed. Here, of course, Mr. Terkes operated the machine owned by Warman and at its premises, but, unless Warman engaged him to do work for it on certain terms then the fact it may have had a degree of control over such work would count for little other than as providing some evidence that it may have so employed him. Necessarily on that reasoning, with which we concur, for a conclusion to prevail of an employment relationship between Warman and Mr. Terkes would require a finding that the appellant did not employ Mr. Terkes to do any work for it and for its own purpose. Put another way, it would have to be found, in our view, that Warman did not engage the appellant itself to do the work concerned, albeit by the appellant using its own employee, but rather that Warman engaged Mr. Terkes himself. It will be apparent, therefore, and as we have intimated, that much depends upon the particular circumstances as disclosed by the facts found.

32 The range of relevant facts and the essential elements involved in the employer-employee relationship were considered in detail by the High Court in Attorney-General for New South Wales v. The Perpetual Trustee Company (Limited) (1952) 85 C.L.R. 237 where the development of the law of master and servant was traced from its root in the familial relationship to modern commercial situations. In particular, Kitto J. explained the connection and resultant elements of the employer-employee relationship in the following way (at pp.299-300):

Of course the widening of the range of private enterprise meant that the link between many kinds of servants and the households of their masters became attenuated and ceased to have any reality; but the relation has remained in the law as one which enables a man in the conduct of his private affairs to avail himself of the services of others who will enter into the appropriate relationship with him for that purpose. This is reflected in one of the definitions of "service" given in the Oxford English Dictionary: "work done in obedience to and for the benefits of a master"; and the correlative definition of a "servant" may be quoted from the same source: "one who is under obligation to work for the benefit of a superior and to obey his (or her) commands". The definition in the American Restatement of the Law, Vol. 1, Agency, p.483 is to the like effect: "A servant is a person employed to perform service for another in his affairs, and who, with respect to his physical conduct in the performance of the service, is subject to the other's control or right to control": (quoted, as being in accordance with our law, by Latham C.J. in Federal Commissioner of Taxation v. J. Walter Thompson (Aust.) Pty. Ltd. (1944) 69 C.L.R. 227, at p.233).
It will be seen that three elements are involved: first, the relationship must entail, on the part of the servant, obedience to orders; secondly, the obedience to orders that is required is obedience to orders in doing work; and, thirdly, the doing of the work must be for the benefit of the master, that is, it must relate to his own affairs. As to the first, no more need be said than this, that the obligation of obedience exists while the relationship continues.
The relationship may be voluntary; and whether voluntary or not, it may be determinable at the will of either party; but without the obligation to obey orders there can be no meaning in the relationship, and it therefore cannot subsist. As to the second element, that the obedience entailed must be obedience to orders in doing work, the point which is vital is that the master's authority must extend both to ordering that the work shall be done and to directing how it shall be done. Bramwell L.J. said, in Yewens v. Noakes (1880 6 Q.B.D., 530, at pp.532, 533:
"A servant is a person subject to the command of his master as to the manner in which he shall do his work";
and in Mersey Docks and Harbour Board v. Coggins and Griffith (Liverpool) Ltd. (1947) A.C. 1, at p.17, Lord Porter said
"... it is not enough that the task to be performed should be under his (the master's) control, he must also control the method of performing it".
Citations to the like effect might be multiplied. As to the third element, the statement that the doing of the work must be for the benefit of the master does not mean, of course, that the direct benefit from the work itself must necessarily accrue to the master; he may, without altering the relationship, direct his servant to do work which will benefit another. A good illustration of this may be found in Mersey Docks and Harbour Board v. Coggins and Griffith (Liverpool) Ltd. (1947) A.C. 1. But the doing of work by one person must be required by another as a means whereby that other may attain ends of his own. A foreman, a head of a government department, or an army officer, may have full power to give the most detailed orders to a subordinate as to the manner in which the latter shall do work, and yet no one would suppose that the relation of master and servant exists between them. The point is that the power of direction residing in a person must belong to him for the purpose of enabling him to conduct his own affairs; and only if that is the situation is it possible for him to complain that conduct causing him to lose the service is an infringement of a right to enjoy them which he may vindicate in an action per quod servitium amisit.

(emphasis added)

33 The above statement of the legal principle, consistent as we think it is with what was said in Hewitt v. Bonvin by MacKinnon L.J. (with whom du Parcq L.J. and Bennett J. agreed), laid stress on the initial requirement, that is, the creation of a legal relationship between the parties concerned for the performance of work. Then, but only then, arises the need to ascertain whether the relationship so created be one of employment (under a contract of service) or of some other kind (such as, principal - independent contractor or principal - agent). In Dalgety Farmers Ltd. t/as Grazcos v. Bruce (1995) 12 N.S.W.C.C.R. 36, Kirby A.-C.J. put the matter in this way (at pp.47-48):

In determining whether a contract of service has been entered, and if so with whom, it is necessary to look to the circumstances of the engagement and to ascertain who it was that offered employment, and whether the worker accepted that offer. To determine whether what then ensued was indeed employment (in the sense of a contract of service) it is necessary to look to the whole of the relationship.

34 His Honour then dealt with the relevant criteria, including the right of control, in categorising a relationship; we will in due course deal with that process. Clarke and Cole JJ.A. agreed with the Acting Chief Justice.

35 Marks J. found that "there is simply no evidence of any contractual relationship between (Mr. Terkes) and Warman which would found any employment relationship". In denying liability under the Occupational Health and Safety Act as the employer of Mr. Terkes, the appellant challenged his Honour's finding and submitted "that the dealings between Mr. Terkes and Warman evidence a contract of employment between them, with the arrangements for payment of wages and other 'paper matters' being outsourced to Swift". Against his Honour's finding as to the evidence, the appellant based its submission on "the existence of abundant evidence" of an employment contract between Mr. Terkes and Warman which met the control test and other indicia of employment. The evidence relied upon was said by Mr. Macken to be that Warman directed Mr. Terkes what work to do, told him where to work within the premises, told him when to work on various projects, told him what hours he would work (including any overtime), issued him with appropriate safety equipment, instructed and trained him how to perform certain tasks, transferred him between various sections of the factory and told him which supervisor of Warman he was to report to; also, the Assistant Foundry Manager of Warman believed he had the power to suspend Mr. Terkes if thought necessary.

36 However, the evidence also was that Mr. Terkes commenced work at Warman's Artarmon premises on 27 November 1995 after accepting the offer made by the appellant; on attending he was simply asked whether he could perform the work outlined and, on saying he could, he commenced the job. The evidence of the appellant's Managing Director, Mr. West, was that at the time Mr. Terkes sustained the injuries he was employed as a general labourer at Warman performing "normal duties". In respect of the arrangement as between Warman and the appellant, Warman was to advise the work to be performed by Mr. Terkes and any proposed changes thereto; as between Mr. Terkes and the appellant, the arrangement was that he was not to undertake any work for Warman which had not been organised or directed through the appellant.

37 It will be apparent that Mr. Macken's submission did not attend to the primary question arising, namely, whether there was an intention to create a legal relationship between Mr. Terkes and Warman but rather assumed such a relationship and characterised it according to various criteria, principally control, as an employment contract. Having in mind the proper process referred to above in Hewitt v. Bonvin, Perpetual Trustee Company and Grazcos to look first to the circumstances of the engagement to ascertain whether a legal relationship was created before determining the nature of that relationship, we consider the submission to be flawed and not supportive of the appellant's case. Indeed, on the facts as found, we are satisfied that Marks J. was correct in finding no evidence of any contractual relationship between Mr. Terkes and Warman.

38 Shortly stated, Mr. Terkes obtained the work from the appellant and agreed to perform it on the appellant offering it to him; attendance by him at Warman's premises to commence and continue performance of the work involved no separate or distinct offer by Warman nor acceptance by Mr. Terkes. It follows, in our view, that to the extent any legal relationship existed it did so between the appellant and Mr. Terkes, although, of course, the nature of such relationship is another question.

39 We should refer to Mr. Macken's reliance on Mead ((1972) W.C.R. at p.117) for the proposition that the facts may ground an inference of an implied contract of service, even though the parties thereto may not be conscious of the legal consequences of what they have done, so that the law will spell out such a contract from their dealings. Whilst we do not doubt the proposition so stated in Mead, the case is to be seen as distinguishable in that it was decided in the context of an accepted legal relationship (a director of a corporation performing work) and it was a matter of determining the nature of it. Similarly, Mr. Macken's reliance on The Queen v. Foster; ex parte The Commonwealth Life (Amalgamated) Assurances Limited (1952) 85 C.L.R. 138 and 151 was misplaced. Again, that case was concerned with whether the accepted legal relationship between the parties, which was described as one of agency according to a written agreement, was truly an employer-employee relationship because the alleged employer assumed the detailed direction and control of the agents in the daily performance of their work and the so-called agents tacitly accepted that position. The present case on the facts, as we have said, is markedly different with no real factual support for any legal relationship between Warman and Mr. Terkes.

40 The further argument by Mr. Macken in support of this proposition, that the relationship between Mr. Terkes and Warman was to be viewed using the test of objective intention, relied upon the statement to that effect contained in Carter and Harland, Contract Law in Australia (3rd ed., Butterworths, 1996) as said to be quoted with approval by Wright J., President, in Knowles v. The Anglican Church Property Trust, Diocese of Bathurst (1999) 89 I.R. 47 at 72. Again, however, and without wishing to qualify the learned authors' statement of law, it is to be repeated that it was made in the context of a party seeking to enforce a contract as distinct from whether, as here, any contract existed. In any event, it should be pointed out that the President's citation of the extract was not an expression of his Honour's view but rather as part of the summary of the arguments put by the then applicant in Knowles.

41 We turn now to the decisive issue of the relationship as between Mr. Terkes and the appellant. The relationship is to be viewed, in our opinion, in light of contemporary employment practices by applying the established legal principles and tests but recognising the variety of different employment situations which have arisen in modern Australian society. At first instance in this case, Marks J. recognised as much, in a way with which we agree, when he said that "this is not a traditional employment situation" but was "a contemporary situation now not uncommonly encountered within the business world" so that "new and evolving techniques require the law to continually evaluate its approach to the characterisation of relationships and rights and obligations which may flow from them". His Honour was directing those comments particularly at the use of the control test in assessing the nature of a work relationship, a test heavily relied upon by the appellant before his Honour and on appeal before us. As Kirby A.-C.J. commented in Grazcos (12 N.S.W.C.C.R. at p. 48) - "... those relationships can be quite unusual with features far distant from the ordinary engagement for weekly wages with which the courts were once so familiar". In Stevens v. Brodribb Sawmilling (160 C.L.R. at p.24), Mason J. observed, in effect, that whilst the existence of control was significant it was not the sole criterion by which to gauge the nature of an employment relationship but merely as one of a number of indicia to be considered in determining that question. His Honour relevantly added (at pp.28-29):

The traditional formulation, though attended with some complications in its application to a diverse range of factual circumstances (Federal Commissioner of Taxation v. Barrett (1973) 129 C.L.R. at p.400), nevertheless has had a long history of judicial acceptance. True it is that criticisms have been made of it. It is said that a test which places emphasis on control is more suited to the social conditions of earlier times in which a person engaging another to perform work could and did exercise closer and more direct supervision that is possible today. And it is said that in modern post-industrial society, technological developments have meant that a person so engaged often exercises a degree of skill and expertise inconsistent with the retention of effective control by the person who engages him. All this may be readily acknowledged, but 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 C.L.R., at p.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.

42 To a similar effect, Wilson and Dawson JJ. in Stevens v. Brodribb Sawmilling (at pp.36-37) said:

In many, if not most, cases it is still appropriate to apply the control test in the first instance because it remains the surest guide to whether a person is contracting independently or serving as an employee. That is not now a sufficient or even an appropriate test in its traditional form in all cases because in modern conditions a person may exercise personal skills so as to prevent control over the manner of doing his work and yet nevertheless be a servant: Montreal v. Montreal Locomotive Works [1947] 1 D.L.R. 161, at p.169. This has led to the observation that it is the right to control rather than its actual exercise which is the important thing (Zuijs v. Wirth Bros. Pty. Ltd. (1955) 93 C.L.R. 561, at p.571) but in some circumstances it may even be a mistake to treat as decisive a reservation of control over the manner in which work is performed for another. That was made clear in Queensland Stations Pty. Ltd. v. Federal Commissioner of Taxation (1945) 70 C.L.R. 539, at p.552, a case involving a droving contract in which Dixon J. observed that the reservation of a right to direct or superintend the performance of the task cannot transform into a contract of service what in essence is an independent contract.
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 the 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.
Having said that, we should point out that any attempt to list the relevant matters, however incompletely, may mislead because they can be no more than a guide to the existence of the relationship of master and servant. The ultimate question will always be whether a person is acting as the servant of another or on his own behalf and the answer to that question may be indicated in ways which are not always the same and which do not always have the same significance.

43 The importance of placing the concept of control in its proper context in considering the nature of modern industrial relationships, so as to emphasise the proper enquiry as being the totality of the relationship between the parties concerned, no doubt led Kirby A.-C.J. in Grazcos (12 N.S.W.C.C.R. at p.48) to comment "that, in modern circumstances, the actual exertion of control will be rarer and more subtly applied". And here, after considering the totality of the relationships (as between the appellant and Warman; Mr. Terkes and Warman; and Mr. Terkes and the appellant) Marks J. said:

One way of considering the relationship between Mr. Terkes and the defendant is to say that the contract between them was that in consideration for the payment of remuneration, Mr. Terkes would carry out work at Warman for the assignment which he had agreed to accept under the full direction and control of Warman. That is, it was a term and condition of his contract with the defendant that control as to the manner, method, time and duration of the work would repose in Warman personnel. Looked at in this way all of the traditional elements of control are present but Mr. Terkes agreed that he would be answerable in this regard to a third party, the client of the defendant. Seen in this way this is a classic case of an employee whose services are lent on hire by the employer to another person.

44 Seen in that way, which we think was wholly open on the evidence, control by an employer over an employee is not to be viewed merely in the on-the-job situation in directing a person what to do and how to do it, but rather in the sense of the ultimate or legal control over the person to require him to properly and effectively exercise his skill in the performance of the work allocated in default of which disciplinary measures may be adopted, including the final step of dismissal. To the extent here that Mr. Macken suggested the appellant did not exercise detailed direction and control over Mr. Terkes, which was said to reside in Warman, and particularly where Mr. Terkes was regarded as an unskilled labourer, we consider that such an approach misapplied the essential nature of the control test. After all, although Mr. Terkes was a labourer he could not truly be said to be "unskilled" as he must necessarily have exercised some degree of skill, albeit perhaps in the lower range, in performing his various functions operating and cleaning machines at Warman's Artarmon factory. This aspect was considered by Denning L.J. in Cassidy v. Ministry of Health [1951] 2 K.B. 343 at 360 in the following way:

It is no answer for them to say that their staff are professional men and women who do not tolerate any interference by their lay masters in the way they do their work. The doctor who treats a patient in the Walton Hospital can say equally with the ship's captain who sails his ship from Liverpool, and with the crane driver who works his crane in the docks, "I take no orders from anybody". That "sturdy answer", as Lord Simonds described it, only means in each case that he is a skilled man who knows his work and will carry it out in his own way; but it does not mean that the authorities who employ him are not liable for his negligence. See Mersey Docks and Harbour Board v. Coggins and Griffith (Liverpool) Ld. [1947] A.C. 1, 20. The reason why the employers are liable in such cases is not because they can control the way in which the work is done - they often have not sufficient knowledge to do so - but because they employ the staff and have chosen them for the task and have in their hands the ultimate sanction for good conduct, the power of dismissal.

45 The evidence established that Mr. Terkes had the requisite degree of skill to enable the above approach to apply - in the document provided by the appellant to Warman detailing the benefits of the appellant's temporary staffing, the placement of labourers was subject to "skills evaluation" according to the appellant's evaluation programme (including numeracy testing and assessment of personal abilities), the appellant constantly measured the performance of placements under a quality control programme and suitably screened personnel were provided.

46 Further, that same document, which formed the terms of the agreement between the appellant and Warman, provided under the heading "TERMINATION" that "Staff provided are Swift Placements employees"; the plain inference, we think, is that the client, Warman, was being told that it was the appellant as the employer who would control the termination of employment of persons, like Mr. Terkes, placed with the client. Also, the document contained the following provisions as to the appellant monitoring the continued performance of the person placed:

TELEPHONE ASSESSMENT - FIRST DAY OF ASSIGNMENT
During the first four hours of an assignment, Swift Placements will consult with the direct supervisor of our employee to ascertain satisfactory performance. If, for any reason, there is not complete satisfaction we will replace the employee immediately without charge (for non-production time incurred by the original placement) if notified to the Swift Placements office within three (3) hours of commencement of the field employee.
TELEPHONE ASSESSMENT - ON-GOING
Swift Placements will telephone on a regular basis to ascertain the continued performance of our employee/s.

47 Again, that is further compelling evidence, having in mind the modern practice of labour hire arrangements for the performance of work, that the appellant was retaining the requisite degree of control over Mr. Terkes in terms of ensuring his compliance with the employment obligations. To a similar effect, paras. 6 and 7 of the document setting out the offer by the appellant of casual employment to Mr. Terkes (earlier cited but which it is worthwhile to repeat for present purposes) dealt with the obligations imposed on him to perform the work allocated in a proper manner and the consequences of failure to do so, as follows:

6. Under the terms of employment, you are required to contact Swift Placements each day between 8:00am and 8:30am to ascertain whether work is available on such day, or some subsequent day. Once work has been allocated you must attend at the place nominated and undertake the work directed.
PROVIDED HOWEVER that, in the event of your being unable to perform the work provided on account of illness, injury or other pressing necessity you are required to notify Swift Placements no later than 7:45am on the day that the work has been arranged. You must undertake the work directed with dispatch and diligence, and subject to the supervision of the person nominated by Swift Placements for the purpose. With respect to the administration arrangements, you are responsible to Swift Placements, and you are not to agree to undertake any work for the client which has not been arranged or directed through this office.
7. Where requested safety boots/clothing must be worn and where applicable safety equipment must be utilised at all times. Failure to comply with the above will result in loss of employment.

48 Paragraph 8 thereof forthrightly laid down the duty of Mr. Terkes to the appellant to observe proper conduct towards it and to its clients; para. 9 required Mr. Terkes on completion of any work assignment for a client to complete and have verified by the client the time sheets and other relevant records - failure to do so was to "be seen as a wilful breach of duty, and may result in your not being paid for the work". It is perhaps difficult to imagine that those requirements on Mr. Terkes were anything other than direct control and direction of him with respect to the work undertaken.

49 There was no issue that some relationship existed between the appellant and Mr. Terkes. The appellant categorised it as one of agency by which the appellant arranged a contract of employment between Warman and Mr. Terkes; the respondent categorised it as a contract of employment so as to make effective as against the appellant the provisions of s.15(1) of Occupational Health and Safety Act. In view of our earlier finding that no legal relationship existed between Warman and Mr. Terkes, it is strictly unnecessary to consider further the question of agency. All we need say about it, given the general proposition that the relationship of agency exists where one person (the principal) agrees that the other person (the agent) should act on his behalf so as to affect his relations with third parties (see Bowstead and Reynolds on Agency (16th ed., Sweet & Maxwell, 1996 at art. 1-001), is that there was no evidence in the proceedings to support such a contract. Indeed, to the contrary, the acceptance by Mr. Terkes of the offer of casual employment made by the appellant on 31 October 1995 directly negates any agency and where he applied for a job in response to an advertisement by the appellant for labour.

50 It is perhaps trite that the relationship of employer-employee is founded in contract: see Byrne v. Australian Airlines Limited (1995) 185 C.L.R. 410 at 436 per McHugh and Gummow JJ. We do not doubt in the circumstances that there was an intention between the appellant and Mr. Terkes to enter into a legal relationship and that that relationship was pursuant to the terms agreed on 31 October 1995 as set out in the offer of casual employment document earlier referred to. But was it properly characterised as a contract of service between them? In Knowles (89 I.R. at pp.78-79), Wright J. in answering such a question cited and followed with approval the following passages from the judgment of Gleeson C.J. in Connelly v. Wells (1994) 10 N.S.W.C.C.R. 396 at 398; 55 I.R. 73 at 74:

Where the relationship between two persons is founded in contract, the character of the relationship depends upon the meaning and effect of the contract. In the absence of a suggestion that a contract was varied after it was originally made, its meaning and effect must be determined as at the time it was entered into. If the contract is in writing, then the Court which is considering the nature of the relationship between the parties is directed to an examination of the terms of the written agreement in the light of the circumstances surrounding its making (Narich Pty Ltd v. Commissioner of Pay Roll Tax [1983] 2 N.S.W.L.R. 597 at 601).
In some cases, of which the present is an example, the contract may have been entered into without writing, and in circumstances of considerable informality. This may mean that it is more difficult to reach a conclusion as to when the contract was entered into, and as to the terms of the agreement which the parties made. The conduct of the parties may need to be examined for the purpose of reaching a conclusion as to their common intention as to the terms and conditions on which they were contracting with one another. However, the basic principles remain the same.

51 We affirm the correctness of Wright J. in so approaching the issue. Here, the contract was in writing and, so, its nature is to be considered as at the time it was entered into and according to its terms in light of the circumstances surrounding its making. As Gleeson C.J. in making those remarks relied on the judgment of the Privy Council in Narich, and although we have earlier made short reference to that case, it is convenient to recite for present purposes the three principles of law stated therein and formulated by their Lordships from the judgment of the Judicial Committee in Australian Mutual Provident Society, also referred to earlier by us; those principles were stated in Narich ([1983] 2 N.S.W.L.R. at p.601) thus:

The first principle is that, subject to one exception, where there is a written contract between the parties whose relationship is in issue, a court is confined, in determining the nature of that relationship, to a consideration of the terms, express or implied, of that contract in the light of the circumstances surrounding the making of it; and it is not entitled to consider also the manner in which the parties subsequently acted in pursuance of such contract. The one exception to that rule is that, where the subsequent conduct of the parties can be shown to have amounted to an agreed addition to, or modification of, the original written contract, such conduct may be considered and taken into account by the court: see the AMP case (1978) 18 A.L.R. 385, at 392; 52 A.L.J.R. 407, at 411.
The second principle is that, while all relevant terms of the contract must be regarded, the most important, and in most cases the decisive, criterion for determining the relationship between the parties is the extent to which the person, whose status as employee or independent contractor is in issue, is under the direction and control of the other party to the contract with regard to the manner in which he does his work under it: see the AMP case (at 387; 408).
The third principle relates to cases where the parties have, as in the present case, included in their written contract an express provision purporting to define the status of the party engaged under it, either as that of employee on the one hand, or as that of independent contractor on the other. With regard to a clause of this kind Lord Fraser of Tullybelton said in the AMP case (at 389, 390; 409):
"Clearly cl.3, which, if it stood alone, would be conclusive in favour of the Society, cannot receive effect according to its terms if they contradict the effect of the agreement as a whole. Nevertheless, their Lordships attach importance to cl.3, and they consider that the following statement by Lord Denning M.R. in Massey v. Crown Life Insurance Co. [1978] 1 W.L.R. 676 correctly states the way in which it can properly be used:
'The law, as I see it, is this: if the true relationship of the parties is that of master and servant under a contract of service, the parties cannot alter the truth of that relationship by putting a different label upon it ...
On the other hand, if their relationship is ambiguous and is capable of being one or the other [ie either service or agency], then the parties can remove that ambiguity, by the very agreement itself which they make with one another. The agreement itself then becomes the best material from which to gather the true legal relationship between them.'
In the present case, where there is no reason to think that the clause is a sham, or that it is not a genuine statement of the parties' intentions, it must be given its proper weight in relation to other clauses in the agreement."

52 Marks J. below agreed with the appellant that the written offer of casual employment, even though signed by Mr. Terkes on 31 October 1995, was nothing more than an offer of employment as a casual employee; in other words, as his Honour said, the offer "would be more in the nature of an invitation to treat rather than an offer". However, his Honour went on to hold "that when Mr. Terkes accepted any offer of casual employment in a particular position arranged by the defendant, the terms and conditions of that employment would be as set out in ... the offer of casual employment document and such other conditions as were agreed either orally or in writing including the precise location, the general nature of duties, time and date of commencement of employment, the amount of remuneration etc." On that reasoning, and again as his Honour found, "the contract came into being at the time that Mr. Terkes accepted the offer to perform work at Warman (27 November 1995) and the terms and conditions were established by the offer of casual employment document. There was a clear intention to create an employment relationship". That employment continued at Warman until 5 January 1996 when Mr. Terkes was injured so that as at that last-mentioned date his Honour found the appellant to be the employer of Mr. Terkes while he was working at Warman.

53 We interpose, although it is strictly unnecessary to finally decide in view of the conclusion we have otherwise reached, that we have serious doubts of the correctness of the rejection by Marks J. of any contract between the appellant and Mr. Terkes as from 31 October 1995 and finding a contract only as from 27 November 1995. Indeed, we incline to the view that a contract (whether of service or otherwise is yet to be determined) was made between them on 31 October 1995 which contract continued on a day-to-day basis with Mr. Terkes having the status of a casual. The offer of casual employment, accepted by Mr. Terkes on 31 October 1995, was quite excessive if it was merely an "invitation to treat" rather than an "offer of casual employment". We think it to be a complete statement of the necessary and relevant conditions for the performance of work once the work be available. The fact the actual work was not then available matters not, it seems to us, and even though work be a necessary ingredient for a contract of service (see Perpetual Trustee Company (85 C.L.R. at p.299)); what matters is that "work" must be the object of the contract but which work may be performed at some future time or even from time-to-time. For instance, in The Federal Commissioner of Taxation v. J. Walter Thompson (Australia) Pty. Limited (1944) 69 C.L.R. 227 an issue was whether an employment relationship existed between a company presenting radio plays and artists suitable for the various parts on their selection after rehearsals, fees (wages) being paid for actual performances but not for rehearsals. Latham C.J. in finding the existence of an employer-employee relationship for the whole of the period concerned, including rehearsals, made the following observations (at pp.232-234):

It was argued that the fact that the terms of engagement provide that there were to be no fees for rehearsals shows that the employment related only to the actual acting on the night of the production of the play. In my opinion this is not the case. The artists were bound under their engagement to attend rehearsals, and were subject to direction during those rehearsals, though no fee was payable unless the performance actually took place. Even on the night of the actual performance, detailed control and supervision by the producer is essential to the performance.
The fact that the artists are not whole-time employees does not show that they are not employees of the company. ...
...
The employment of a servant may be limited to a particular occasion or may extend over a period. It may be continuous during that period or discontinuous. In the present case the artists are as truly employed for rehearsals as for the final performance, though they receive no pay unless the performance takes place and they then play their parts. They are bound to attend rehearsals as specified in their contract, and are bound to conform to the directions of the producer during those rehearsals. (emphasis added)

54 In the present case, Mr. Terkes was obliged under the contract to contact the appellant each day to ascertain whether work was available and once work had been allocated to him he had to attend the place nominated and undertake the work directed. Thus, during the period when he was not working at a nominated location Mr. Terkes was nonetheless required to make contact with the appellant and was under an obligation to accept work if it were available. In a very real sense, we think, the arrangement (to use a neutral word) settled on 31 October 1995 was the commencement of a period during which Mr. Terkes was to be offered work at the premises of the appellant's clients from time-to-time and during the performance of such work he was to be paid the specified wages; termination of employment was to be on a day-to-day basis depending upon the client's work requirements so that Mr. Terkes and the appellant may reasonably be said to have an ongoing relationship.

55 The case of Ryde-Eastwood Leagues Club Limited v. Taylor (1994) 56 I.R. 385 concerned a claim for the reinstatement of a person employed as a casual from time-to-time and who was dismissed while awaiting further casual work. The Full Commission (Bauer and Hungerford JJ., and Murphy C.C.) of the former Industrial Relations Commission under the Industrial Relations Act 1991 held there was jurisdiction to reinstate the person on the basis that he had been dismissed from employment. In presently relevant respects, the Full Commission said (at pp.399, 401-402):

In principle, and using the technical terminology of contract, an enforceable contract may readily be drawn, namely - in consideration of a payment by X to Y, in accordance with the relevant award or enterprise agreement for work actually performed, X agrees to employ Y as a casual employee on work as mutually agreed as and when it arises from time-to-time pursuant to a weekly roster published by X at least seven days in advance of such work and Y agrees to make himself available to perform such work subject to the release of Y allowed by X for illness, holidays and other reasonable cause. Such a contract, in our opinion, would represent an appropriate common law contract of employment to give effect to an ongoing or continuing enforceable contract of casual employment. ...
...
It is apparent that two classes of employee colloquially described as "casual" can readily be identified in the organisation of industrial relationships. The first class refers to those employees who are truly casual in the sense that there is no continuing relationship between the employer and the employee. The second class is where there is a continuing relationship which amounts to an ongoing or continuing contract of employment; ...

56 It is not our intention to further the reasoning on this aspect because, as we have said, it is strictly unnecessary to finally rule upon it here. Even so, it is an approach which obviously could well arise in situations comparable to the present and we therefore think it timely to raise it, particularly as it was argued below and was the subject of a finding by Marks J. to a contrary effect. Suffice it for us to simply refer to authorities relating to the preliminary view which we have expressed: see Doyle v. Sydney Steel Company Limited (1936) 56 C.L.R. 545 at 551, 565; Australasian Meat Industry Employees' Union v. Sunland Enterprises Pty. Ltd. (t/as Sunland Wholesale Meats) [1988] 24 I.R. 467 at 473; Licensed Clubs Association of Victoria v. Higgins (1988) 4 V.I.R. 43 at 49-50; and Australasian Meat Industry Employees' Union v. R. J. Gilbertson (Qld.) Pty. Ltd. [1988] 26 I.R. 237 at 250. For completeness on this aspect, we would add the observations of Latham C.J. in Automatic Fire Sprinklers Pty. Ltd. v. Watson (1946) 72 C.L.R. 435 at pp.452-453, as follows:

The general rule with respect to contracts of employment was stated in Browning v. Crumlin Valley Collieries Ltd. (1926) 1 K.B. 522, at p.528 by Greer J. in the following words "The consideration for work is wages, and the consideration for wages is work." In O'Grady v. M. Saper Ltd. (1940) 2 K.B. 469, at p.473, MacKinnon L.J. in the Court of Appeal said: "It was rightly said ... by Atkinson J. (Petrie v. Mac Fisheries Ltd. (1940) 1 K.B. 258, at p.269), 'The question must depend, as is indicated in the notes to Cutter v. Powell (1795) 6 T.R. 320 [101 E.R. 573] (Smith's Leading Cases, 13th ed. (1929), vol. 11, p.49), on the terms of the contract. "The right to wages depends upon whether the consideration therefor has been performed." It is submitted in the notes to that case, as I think rightly, that it must be ascertained from the contract whether the consideration for the payment of wages is the actual performance of the work, or whether the mere readiness and willingness, if of ability to do so, is the consideration.'"
In the present case, the contract between the parties (clause 5) provides for the payment of salary, expenses, bonuses and commission "as consideration for his" (Watson's) "services and for the faithful observance and performance of the terms and conditions of these presents by him to be observed and performed." It is therefore, I think, clear in the present case that Watson was not entitled to salary and other payments under the contract unless he did the work of general manager for which the contract provided.

(emphasis added)

57 Dixon J. put the matter in that case in the following way (at pp.465- 466):

A contract for the establishment of the relation of master and servant falls into the same general category of agreements to pay in respect of the consideration when and so often as it is executed, and is, therefore, commonly understood as involving no liability for wages or salary unless earned by service, even though the failure to serve is a consequence of the master's wrongful act.
...
Some difficulty has been felt in saying what is the service which carries wages. The wages are incident to the subsisting relationship of master and servant. ... They also serve who only stand and wait. ... But, broadly speaking, it is enough to say that wages are for the service reasonably demanded under a subsisting relationship of master and servant.

(emphasis added)

58 In our opinion, Mr. Terkes and the appellant had a legal relationship according to a contract for the performance of work on a casual basis from time-to-time and where the performance of the work, for which wages would be paid, would depend upon the appellant allocating work to Mr. Terkes according to the requirements of its clients and where Mr. Terkes was obliged to accept such work once it was allocated. That contract came into existence at least from 27 November 1995, but possibly as early as 31 October 1995. It was a contract which was in existence when Mr. Terkes was injured at the Artarmon premises of Warman on 5 January 1996.

59 In light of the legal principles referred to by us as developed and formulated in the authorities cited, and in particular Stevens v. Brodribb Sawmilling, we entertain no doubt that on the totality of the facts of this case the relationship we have found between the appellant and Mr. Terkes was that of employment pursuant to a contract of employment between them. That relationship was of an ongoing nature at least from 27 November 1995 when Mr. Terkes commenced work at Warman, but arguably as from 31 October 1995 on Mr. Terkes acceptance of the offer of casual employment; it was certainly a subsisting relationship as at the date of the accident at Warman's Artarmon premises on 5 January 1996. Indeed, we are of the view that the facts were, as Mr. Crawshaw suggested, overwhelming to that effect. One may be mindful in this situation, we think, of the words of Somervell L.J. in Cassidy ([1951] 2 K.B. at pp.352-353), referred to with approval by Denning L.J. in Stevenson Jordan and Harrison, Ltd. v. Macdonald [1952] 1 The Times L.R. 101 at 111, in dealing with the control test that "One perhaps cannot get much beyond this 'Was the contract a contract of service within the meaning which an ordinary person would give under the words?' "

60 The written provisions of the casual employment made available by the appellant for Mr. Terkes make it plain to us that all relevant and necessary terms for a contract of employment were in place. The indicia of an employment relationship contained therein were manifest and comprehended award coverage, payment by the appellant of wages for hours worked (including casual loading and annual holiday entitlements), method of payment of wages, engagement by the day, termination of employment on a day-to-day basis dependent on the work requirements, provision for superannuation, adjustment of the rate of pay in accordance with relevant award variations, provision of completed time sheets to the appellant in respect of any work or assignment completed (failure to do so being "a wilful breach of duty"), notification to the appellant of any absence from work, requirement to wear safety boots/clothing at all times on pain of loss of employment and coverage for workers' compensation benefits.

61 As to the control of Mr. Terkes by the appellant, the contract required him to contact the appellant daily to ascertain whether work was available and, once work had been allocated, to attend at the place nominated and undertake the work directed; he was required to do so with dispatch and diligence subject to the supervision of the person nominated by the appellant for that purpose and, importantly, with a direction that he was not to undertake any work for a client not arranged or directed through the appellant. The contract contained stringent provisions for Mr. Terkes to observe proper conduct towards the appellant so as not to cause damage to it, its property or reputation and during employment or subsequently he was not to divulge information relating to the business of any of the appellant's clients where he had worked.

62 The evidence of Mr. Terkes in the proceedings was that he regarded himself as an employee of the appellant; for its part, the appellant, as admitted by its Managing Director, said it was the employer of Mr. Terkes: see Pitcher v. Langford (23 N.S.W.L.R. at p.160 per Handley J.A., Kirby P. agreeing at p.147) for the proposition that admissions as to the true nature of a relationship were admissible and entitled to considerable weight. There was no suggestion, nor on the facts could there be, that the stated relationship between them of employer-employee was a sham. The integrity of the written employment contract was affirmed also by evidence showing that the appellant deducted income tax from Mr. Terkes' wages and issued to him taxation group certificates noting it as the employer.

63 If more be needed of the genuineness of a contract of employment, and we do not think it is, after the accident at Warman's factory the appellant reported the injury sustained to its workers' compensation insurer by advice dated 9 January 1996 in which it declared as true and correct that it was the employer and, in a corresponding way, Mr. Terkes' compensation claim dated 8 January 1996 submitted to the insurer showed the appellant as his employer.

64 Even though the employment contract was in clear and unambiguous terms, we emphasise that its meaning and effect must be determined as at the time it was entered into absent any suggestion, and none existed here, that the contract was varied after it was originally made: see Connelly (10 N.S.W.C.C.R. at p.398; 55 I.R. at p.74). The agreement between parties as to their relationship for the performance of work is the best material from which to gather the true legal relationship: see Narich ([1983] 2 N.S.W.L.R. at p.601); Australian Mutual Provident Society (18 A.L.R. at p.389; 52 A.L.J.R. at p.409); and Massey ([1978] 1 W.L.R. at p.679). We are satisfied that the true intention of the parties as to the nature of their relationship was as evidenced in the written contract between them.

65 The circumstances in which the contract was made involved the prior agreement between the appellant and Warman as set out in the document dealing with the benefits of the appellant's temporary staffing which was replete in its terms, both express and implied, that a person placed with a client was an employee of the appellant. That document, in our view, made it patent that there was an agreement between the appellant and Warman whereby the appellant would provide the services of persons, on a temporary staffing basis as required, to Warman in consideration of Warman paying a fee to it. Mr. Terkes was so made available.

66 We have said earlier that an element involved in an employment relationship was that the performance of the work concerned must be for the benefit of the employer. Here, of course, the work performed by Mr. Terkes at Warman's Artarmon factory was subject to regular on-the-job control by Warman as to the work to be performed and how that should be achieved. Indeed, it was that aspect which was at the core of Mr. Macken's case that the control and direction over Mr. Terkes was exercised by Warman so that it was the true employer of him and that was so because the work was for Warman as part of its manufacturing process. As much as that may be, we do not consider mere on-the-job direction of a person necessarily makes that person the employee of the person directing.

67 In this case, having in mind the way in which we have formulated the contract between the appellant and Warman, the services of Mr. Terkes were provided to Warman by the appellant in return for a fee and in respect of which it was for the purposes of the appellant's business as a provider of labour. The point was made by the High Court in Accident Compensation Commission v. Odco in which Odco carried on business under the name of Troubleshooters Available (TSA) as a labour agency providing the services of tradesmen to builders. The High Court observed (95 A.L.R. at p.652):

Once it is accepted that there was

(1)
an agreement between TSA and the builder for the supply of a tradesman to the builder to do certain work on terms that the builder was to remunerate TSA for supplying the tradesman and for the work which he did, and
(2)
an agreement between TSA and the tradesman whereby the tradesman agreed to perform work at the site at the builder's direction for remuneration to be paid by TSA,

it follows as a matter of plain language that the tradesman supplies services to TSA by attending at the site and doing work there. By attending there and doing work, he supplies services to TSA for the purposes of its business, notwithstanding he also at the same time supplies the same services to the builder for the purposes of its business.

68 This same point was made by Kitto J. in Perpetual Trustee Company (85 C.L.R. at p.300), by following the illustration in Mersey Docks and Harbour Board v. Coggins and Griffith (Liverpool) Ltd. (1947) A.C. 1 at 17, that "the statement that the doing of the work must be for the benefit of the master does not mean, of course, that the direct benefit from the work itself must necessarily accrue to the master; he may, without altering the relationship, direct his servant to do work which will benefit another". We understand that to be the position here. Baldi & Fletcher Pty. Ltd. v. Rabmar Pty. Ltd. [1988] 25 I.R. 101 further illustrates the point where Clarke J.A., with whom Samuels and McHugh JJ.A. agreed, commented (at p.102):

It is, I think, beyond argument that Baldi and his accountants organised his affairs in such a manner that he became the employee of Rayneb Pty. Ltd. which provided his services for reward to B & F. In these circumstances it could not be said, as a matter of law, that Baldi was the servant of B & F. He was not. He was the servant of his family company Rayneb Pty. Ltd., which was the entity which entered into the contract or arrangement with B & F.

69 And, in our opinion, so it is in the instant case where the services of Mr. Terkes as an employee of the appellant were provided for reward to Warman so that he remained the employee of the appellant and did not become the employee of Warman.

70 Taking Mr. Macken's submissions at their highest, the most he could achieve by relying upon what we have found to be the limited degree of control exercised by Warman over Mr. Terkes' work would be to view Mr. Terkes pro hac vice the employee of Warman at the precise time on 5 January 1996 when he was cleaning the sand mixing machine. In Steel Structures Ltd. v. Rangitikei County [1974] 2 N.Z.L.R. 306, the New Zealand Court of Appeal considered the liability of a master to third persons due to the negligence of its employee temporarily under the direction and control of another person. Their Honours put the principle in the following way (at pp.310-311):

It is well established that there are circumstances in which the permanent employer of a tortfeasor can say that his employee was to such an extent under the control and direction of someone else in authority in a particular operation that a temporary transfer of the employee pro hac vice should be held to have occurred. Mersey Docks and Harbour Board v. Coggins and Griffith (Liverpool) Ltd. [1947] AC 1; [1946] 2 All ER 345 , is the classic authority in this area.
There, it was said that the burden of establishing such a transfer is a heavy one, and can only be discharged in quite exceptional circumstances. In Denham v. Midlands Employers Mutual Assurance Ltd. [1955] 2 QB 437,: [1955] 2 All ER 561 , Denning LJ added that such a transfer rarely takes place when a man is lent with a machine, such as a crane or a lorry, or where a skilled man is lent so as to exercise his skill for the temporary employer. In such cases the parties do not contemplate that the temporary employer shall tell the man how to manipulate his machine or to exercise his skill. O'Reilly v. Imperial Chemical Industries Ltd. [1955] 1 WLR 1155; [1955] 3 All ER 382 is an instance of a driver being on permanent loan with his lorry, but even then the Court held that the plaintiffs had not discharged the heavy onus of establishing that the defendants had the right to direct how the particular work was to be done.
In New Zealand these principles were applied by this Court in Ferguson Construction Co. Ltd. v. Hargreaves [1973] 1 NZLR 634. There, however, the situation was a little different, for the plaintiff was seeking to recover not only from his permanent employer, the owner of the crane, but also from the hirer of the crane. The difference is adverted to by Salmond on Torts (15th ed.) 619. Nevertheless, all the cases show that the test in all circumstances is one of the right to control not merely what is done but how it is to be done. Each case must necessarily be decided on its own facts, and such observations as those of Lord Denning in Denham's case are better not treated as propositions of law but instead as reflections on the facts of a particular case.

71 It will be apparent that whether the employee of the general employer becomes the employee of the particular employer will depend upon the circumstances of the case concerned and where, in any event, such a transfer in employment occurs only "in quite exceptional circumstances" and where the obligation to establish a new employment was a "heavy onus". The difficulty was adverted to by Lush J. in Poulson (122 L.T.Rep. at p.478) in the following way:

To what extent must the particular employer have taken over the control before he can be said to have become the master, responsible for the acts of the workman as being the acts of his servant? The hirer always gives some directions to the workman. He tells him where the work is to be done and what it consists of. That is not a taking over the control. The hirers in Jones v. Corporation of Liverpool (14 Q.B. Div.890) told the servant what streets to water, but they were held not to have controlled the servant. There must be a taking over by the particular employer of the complete control - a complete transfer of the service - before he can be held to be the responsible employer of the workman. "The great test," said Bowen, L.J., in Moore v. Palmer (2 Times L. Rep. 781, at p.782), "was this - whether the servant was transferred or only the use and benefit of his work?" a test which Lord Dunedin adopted in McCartan v. Belfast Harbour Commissioners (1911, 2 Ir. Rep. 143).

72 The facts of the present case, on any view of them, do not, in our view, demonstrate the degree of control exercised by Warman over Mr. Terkes at the time of the accident as being "a complete transfer of the service"; on the facts as found, and as Lush J. reasoned, the test is "whether the servant was transferred or only the use and benefit of his work". Here, as we have earlier said, the appellant provided the services of Mr. Terkes to Warman but there was no evidence otherwise of a transfer of the employment. It follows, in our view, that when Mr. Terkes was cleaning the sand mixing machine on 5 January 1996 at the Artarmon factory of Warman he was not pro hac vice the employee of Warman but remained the employee of the appellant.

73 Finally, we should deal with the submission by Mr. Macken to the effect that the appellant was a "head hunter" or an outsourced human resources department of Warman in providing labour, such as Mr. Terkes. We disagree as the submission was not supported by and, indeed, was contrary to the evidence. The submission may be tested by reference to the document setting out the agreement between the appellant and Warman; it expressly provided under the heading of "TERMINATION" that "Staff provided are Swift Placements employees" and where a client itself employs one of the appellant's employees or former employees on the temporary staff then it "must notify Swift Placements immediately and may be charged permanent placement fee". That provision is directly inconsistent with Mr. Macken's submission in that persons placed by the appellant with a client were its employees unless the client engaged them as its employees, either permanently or for a limited period, in which case a placement fee may be charged. In other words, the traditional reward to a "head hunter" or labour agency of a placement fee only occurs where the client ceases the temporary placement and assumes full responsibility for the person concerned. That was not the position in the present case.

74 It remains only to deal with three recent cases specifically relied upon by Mr. Macken concerning the operations of labour hire companies and the nature of their relationship with persons placed in work with third parties. Marks J. examined those cases in detail and either distinguished them on the facts or disagreed with the conclusion reached. We do not propose to repeat the complex of facts which are set out in his Honour's reasons and will attempt to deal with them as shortly as possible. In that exercise, we are reminded of the comment by the Court of Appeal in Steel Structures ([1974] 2 N.Z.L.R. at p.311) that "each case must necessarily be decided on its own facts, and ... observations ... are better not treated as propositions of law but instead as reflections on the facts of a particular case".

75 Accident Compensation Commission v. Odco in the High Court was principally concerned with the liability of a labour agency providing the services of persons to industry to pay a levy under the Accident Compensation Act 1985 (Vic.), ss.8, 9; the issue involved the interpretation of those statutory provisions and not, as here is the case, whether the relationship was that of employer-employee. Like Kirby A.-C.J. in Grazcos (12 N.S.W.C.C.R. at p.48), and as his Honour said of it, "The facts were rather special. I see little analogy to assist in the determination of who was the worker's employer in this case".

76 The second case in this category, Building Workers' Industrial Union of Australia v. Odco Pty. Ltd. (1991) 99 A.L.R. 735, was before a Full Court of the Federal Court and concerned a claim for relief against a trade union by Odco, trading as Troubleshooters Available and being the entity involved in the earlier High Court proceedings, in respect of inducement to breach contracts and breaches of the Trade Practices Act 1974 (Cth.) ss.45D, 45E.

77 Shortly stated, Troubleshooters Available provided labour to builders and the persons who worked under the arrangement signed contracts with Troubleshooters Available in which it was agreed that the relationship created was one of principal-independent contractor rather than employer-employee; that agreement was supported by express provisions that the contractors were self employed, not bound to accept any work through Troubleshooters Available, payment was to be for actual on-site hours or a job price, the contractors and not Troubleshooters Available were to be responsible for any liability in respect of insurance, PAYE taxation deductions were expressly forbidden, the contractors had no claims on Troubleshooters Available in respect of holiday pay, long service leave, sick pay or any similar payment, the contractors were to carry out all work in a workmanlike manner, all faulty work had to be made good by them and the contractors were to supply their own plant and equipment, safety gear, boots, gloves or any necessary ancillary equipment. Importantly, the contractors operated either as individuals, persons in partnerships, persons employed by a company or persons employed by a trustee.

78 The Full Court, in upholding the trial judge's decision that the relationship was not one of employment but that of an independent contractor held, following Stevens v. Brodribb Sawmilling, that there was an absence of the requisite degree of control by Troubleshooters Available over the contractors and, following Australian Mutual Provident Society and Narich that the written agreement was not a sham and became the best material to gather the nature of the true legal relationship. Significantly, however, the Full Court found no contract of employment between the contractors and the builders for whom the work was performed. If we may say so, with respect, and having in mind our reasoning in the present case, we find the conclusions reached in that case in the Federal Court to be not unexpected as the facts were clearly in marked contradistinction to those before us.

79 The third case in this category, Drake Personnel Ltd. v. Commissioner of State Revenue (Vic.) (1998) 40 A.T.R. 304 before Balmford J. in the Supreme Court of Victoria, involved the issue whether persons provided by an employment agency to clients to perform work were the employees of the agency, Drake Personnel. Marks J., in considering that case, commented that the facts bore "a striking resemblance" to the facts in the proceedings before him. Balmford J., in considering whether the temporaries were employees as such, dealt with various authorities, including Stevens v. Brodribb Sawmilling and Building Workers' Industrial Union v. Odco. Her Honour held that in performing work the temporary staff were not subject to Drake Personnel's control or directions and there was no reservation of a power in Drake Personnel to require one of its workers to move from one site to another or to work beyond the initial agreed day sufficient to permit a right of control to be found. After reviewing her Honour's reasons, in light of the facts stated therein, Marks J. expressed disagreement with the conclusion that there was no contract of employment between Drake Personnel and the temporary staff.

80 Our review of the judgment of Balmford J. does not satisfy us that the facts were relevantly consistent with those in the present case, although one may accept some similarity. For instance, a person on the books of Drake Personnel was not obliged to accept an assignment offered and could not be compelled to do so; also, it is not obvious from the reasons of her Honour whether a written contract was made between Drake Personnel and the temporary concerned nor how and in what way the parties themselves considered the nature of their relationship. A perusal of her Honour's decision seems to us to show that it rested on a view that it was the client who, on the facts, exercised such a degree of control over the work of the temporary as to become the employer. It is not for us independently and separately to make a qualitative assessment of the evidence before her Honour. However, with respect, to the extent her Honour placed greater, almost decisive, reliance on the test of control than we would in the total circumstances, then we disagree with the reasoning and consequent result. Mr. Macken's submission that we should follow the decision in Drake Personnel so as to hold Mr. Terkes not to be an employee of the appellant also was based very much on the single issue of on-the-job control; we decline to accept it.

81 For the foregoing reasons, we are satisfied beyond a reasonable doubt that Mr. Terkes was employed by the appellant under a contract of employment within the meaning of the common law principles. The appellant was the employer of Mr. Terkes for the purposes of s.15(1) of the Occupational Health and Safety Act at all relevant times, including on 5 January 1996 when the accident occurred at the Artarmon factory of Warman causing injury to Mr. Terkes. The appeal must, therefore, fail and with the respondent to have the benefit of its costs.

82 We make the following orders -

1.
The appeal is dismissed.
2.
The stay of the orders made at first instance by Marks J. is set aside.
3.
The appellant is to pay the respondent's costs in an amount as agreed or as assessed.

LEGAL REPRESENTATIVES
APPELLANT
Hon Mr J J Macken (of counsel) with
Mr H J Mater (of counsel)
SOLICITORS
Dexter, Healey
RESPONDENT
Mr S Crawshaw SC with
Mr M F Taylor (of counsel)
SOLICITORS
Mr J Lucas, WorkCover Authority of New South Wales