Australian Mutual Provident Society v Chaplin and Another

18 ALR 385

Between: Australian Mutual Provident Society
And: Chaplin and Another

Court:
Judicia Committee of the Privy Council

Judges:
Lord Diplock
Lord Simon of Glaisdale
Lord Fraser of Tullybelton
Lord Russell of Killowen
Lord Scarman

Subject References:
Industrial law
Long service leave
Entitlement to
Insurance company representative
Whether employed under contract of service
Written agreement
Interpretation
Effect of subsequent conduct
Agency
Features of
Contract of service distinguished
Insurance company representative
Written agreement
Interpretation
Effect of subsequent conduct
Entitlement to long service leave

Legislative References:
(SA) Long Service Leave Act 1967 - s 3(1)

Hearing date:
Judgment date: 14 March 1978

London


In 1967 the appellant appointed the respondent as one of its representatives, upon terms set out in a detailed written agreement. Clause 3 of the agreement stated:


"The relationship between the Society and [the respondent] is that of Principal and Agent and not that of Master and Servant."

The respondent later claimed that he was entitled to benefits under the Long Service Leave Act 1967 (SA), because he was a "worker" as defined in the Act. That definition in s 3 said:


"'worker' means a person employed under a contract of service and includes a person so employed who is remunerated wholly or partly by commission."

When the Full Court of the Supreme Court of South Australia held that the respondent was employed under a contract of service, the appellant appealed to the Privy Council.

Held, per curiam, allowing the appeal:-

(i)
The possession by an alleged employer of the power to control the manner of doing the work was a very important indication of a contract of service, perhaps the most important of such indicia.
(ii)
Clause 3 could not receive effect according to its terms if they contradicted the effect of the agreement as a whole. However, if the relationship of the parties was ambiguous and capable of being either service or agency, then the parties could remove that ambiguity by the very agreement itself which they made with one another. In the present case, where there was no reason to think that the clause was a sham, or that it was not a genuine statement of the parties' intentions, it must be given its proper weight in relation to other clauses in the agreement.
(iii)
A detailed examination of the written agreement led to the conclusion that it provided for a contract of agency and not of service.
(iv)
In relation to particular clauses:-

(a)
Clauses imposing negative prohibitions of certain practices were entirely consistent with a contract of agency, and might be contrasted with the detailed positive instructions that would more appropriately be given to a servant.
(b)
The power given to the respondent of unlimited delegation of the whole performance of his work to one or more sub-agent was almost conclusive against the contract being a contract of service.
Re Mutual Aid Permanent Benefit Building Society; Ex parte James (1883) 49 LT 530; Robinson v Hill [1910] 1 KB 94 ; Murphy v Ross [1920] 2 IR 199, distinguished.
(c)
A further important indication against the agreement being a contract of service was the right of the respondent to incorporate himself.
Montreal v Montreal Locomotive Works [1947] 1 DLR 161 , distinguished.

(v)
It was proper to consider the actions of the parties subsequent to the written contract for the limited purpose of seeing whether they had had the effect of varying the written agreement.
Whitworth Street Estates Ltd v Miller [1970] AC 583 ; Wickman Tools v Schuler A G [1974] AC 235 ; [1973] 2 All ER 39 , followed.
(vi)
In the present case the written contract had not been varied in any material respect by the subsequent conduct of the parties. The conclusion which necessarily emerged from the whole facts in the case was that the respondent was not employed under a contract of service.

Appeal

This was an appeal to the Judicial Committee of the Privy Council from a decision of the Full Court of the Supreme Court of South Australia, which had discharged an order nisi for certiorari directed to a judge of the Industrial Court of South Australia. The circumstances appear in the advice of their Lordships.