VABU PTY LIMITED v FC of TJudges:
Supreme Court of New South Wales - Court of Appeal
This is one more case on the subject of whether a company's couriers are, for the purposes of the taxation laws of the Commonwealth, employees or independent contractors. The company concerned is the appellant. It sought a declaration that it was not liable to have its affairs governed by the Superannuation Guarantee (Administration) Act, 1992. The matter came on before Ireland J, who declined to grant relief. The company appeals to this Court against that decision.
The company, which then called itself Crisis Couriers, commenced business in 1980. That business, as its name implied, was to arrange for the collection of items which a person wished to deliver, and see to it that they were in fact delivered to their intended destinations. A finding that the couriers, who were engaged to collect and deliver the items, were either employees within the common law meaning of that concept, or within the slightly wider definition contained in s. 12 of the Act, would be to bring the company fairly within the legislation. Under the scheme contained in that legislation an employer is required to pay a prescribed minimum level of superannuation to all employees. When an employer fails to make such a contribution, or the contribution is below the prescribed minimum, the contribution or alternatively the shortfall is collected by way of a charge levied on the employer and paid to the Commonwealth. The Tax Department then redistributes the shortfall through an approved superannuation fund for the benefit of the employee. It is clear that if it is found that there was an employee-employer relationship at
ATC 4900common law, it is unnecessary to consider the ambit of the Act.
The evidence was adduced from the oral evidence of three couriers, Messrs Wiemers, White and Fallon. It emerges from their evidence, which seemed to be virtually uncontested, that when each courier wished to join the Company he was at first interviewed; if having been interviewed he accepted an offer he signed three documents called (a) Crisis Couriers Work Conditions; (b) General Rules for all Drivers (Document 590); and (c) General Rules for All Drivers (Document 792).
Whilst it is almost never an easy task to decide whether a given person is an employee or an independent contractor, there is no doubt what the legal tests are. The old test ``control'' is now superseded by something more flexible. This is made clear by the judgment of Mason CJ in
Stevens v Brodribb Sawmilling Co Pty Ltd (1986) Aust Torts Reports ¶80-000; (1985-1986) 160 CLR 16, and in the earlier judgment of Dixon J in
Queensland Stations Pty Ltd v FC of T (1945) 8 ATD 30; (1945) 70 CLR 539.
Learned senior counsel for the respondent, Mr Trew Q.C., stressed, in the course of his submission that the couriers were employees, that the company always retained a considerable measure of control over the couriers. Thus, the documents to which I have referred provide that operatives are to be neat and tidy, are to wear uniforms provided by the Company, are to replace their vehicles when the company considers them to be unsatisfactory, to observe a starting time, to work a prescribed number of hours, not to use foul language on the telephones. They must accept work allocated to them by the Company, deliver goods in the manner which the company directs, accept re-routing if told to by the Company, and take no more leave than is permitted. The cumulative effect of these conditions certainly gives the Company a deal of control over its courier. However, a man may supervise others without becoming their employer.
And there are several considerations which make me think that on balance the couriers are not employees. In the first place, they supply their own vehicles (be they bicycles, motorbikes, cars, utilities or vans). They have to bear the expense of providing for and maintaining these vehicles: they pay for running repairs, petrol, insurance and registration. The company provides telephones, uniforms and signage. The couriers' expenses are very considerable. Again, to quote McKenna J in
Ready Mixed Concrete (South East) Limited v Minister of Pensions and National Insurance (1968) 2 QB 497 at 526:
``the ownership of the assets, the chance of profit and the risk of loss in the business of carriage are his and not the company's''
a consideration which points to the couriers being independent contractors.
The taxation position of the couriers is also important. The couriers were taxed as independent contractors and not as employees. The gross payments to each carrier were subject to deduction of the 20% Prescribed Payment System tax, which does not apply to employees. In this regard, Mr Trew submitted that the tax documents should be disregarded because they are self-serving declarations by the taxpayer and as such are hardly evidence of anything. This is true, but it misses the point. What is significant is not that the couriers tell the Commissioner that they are independent contractors not employees, but that the Commissioner, presumably after making whatever investigation he deems proper, acquiesces in their description of themselves and taxes them accordingly.
Another indicium is that the couriers have to provide themselves with their own street directories, telephone books, trolley, ropes, blankets and tarpaulins.
Another, very important, indicium is that the couriers receive no wage or salary. Normally, if they were true employers [sic], one would expect there [sic] to be paid a certain sum each day, week or month. Their documents provide for no such thing. They are paid a prescribed rate for the number of successful deliveries they make. It is not, I think, fanciful to say that each courier conducts his own operation, permitting himself for his own economic advantage to be supervised by the company. If this were not so, why would the documents anticipate that the courier may use a business name or corporate name if he so wishes? A company does not usually have employee corporations.
Although this part of the case is hardly without difficulty, on the whole I am disposed to conclude that at common law the couriers must be classified as independent contractors.
The remaining problem is whether the couriers, whilst not being employees at common law, are ``employees'' within the statutory extension of that term. Section 12(3) of the (Federal) Superannuation Guarantee (Administration) Act provides:
``(3) If a person works under a contract that is wholly or principally for the labour of the person, the person is an employee of the other party to the contract.''
This statutory formula, or something very like it, has been used in many revenue statutes of the Commonwealth. As such it has attracted the attention of several courts: see
Neale (Dep Commr of Taxn) v Atlas Products (Vic) Pty Ltd (1955) 10 ATD 460; (1955) 94 CLR 419,
World Book (Australia) Pty Ltd v FC of T 92 ATC 4327; (1992) 27 NSWLR 377. Those cases decide that the relevant question to be asked in the present case with respect to each courier is: is he working for himself or is he providing his labour in the service of another? In view of the fact that each courier provides his own capital and faces the loss of that capital if the venture does not work out, I am of the view that the courier is working for himself.
I therefore think that the following orders should be made:
- 1. Appeal allowed.
- 2. Order that the orders of Ireland J below be set aside.
- 3. In lieu thereof, declare that during the year ended 30 June 1993 the appellant was not the employer of persons engaged by it as couriers.
- 4. Order that the respondent pay the costs of the appellant both at first instance and on appeal, but with respect to the costs of the appeal to have a certificate under the Suitors' Fund Act.