Bullock v Australian Security Company Pty Ltd; Australian Security Company Pty Ltd v Bullock [2006] ICQ 28 (2006) 182 QGIG 153

[Extract from Queensland Government Industrial Gazette, dated 2 June, 2006, Vol. 182, No .5, pages 153-157] INDUSTRIAL COURT OF QUEENSLAND Industrial Relations Act 1999 - s. 341(2) - appeal against decision of industrial magistrate Gary John Bullock AND Australian Security Company Pty Ltd (C/2005/43) and Gary John Bullock AND Australian Security Company Pty Ltd (C/2005/44) and Australian Security Company Pty Ltd AND Gary John Bullock (C/2005/45) and Australian Security Company Pty Ltd AND Gary John Bullock (C/2005/46) and Australian Security Company Pty Ltd AND Gary John Bullock (C/2005/47) PRESIDENT HALL 19 May 2006 DECISION This is the third released decision dealing with this set of appeals. The earlier decisions are now reported at 181 QGIG 138 and 181 QGIG 626. The appeals arise out of proceedings on complaints by Gary John Bullock that the Australian Security Company Pty Ltd (ASC) had failed to pay wages due and payable to certain employees under the Security Industry (Contractors) Award - State contrary to s. 666 of the Industrial Relations Act 1999. The business conducted by ASC includes the installation and servicing of alarms, security consulting, the provision of access control systems, the provisions of static guard services, and the provision of mobile security patrol services and security response services. Being a company duly incorporated under the law and an artificial person, ASC provides the services through the agency of natural persons. Some of those within ASC's workforce are engaged as employees, e.g. static guards and those who sit within a secure room to monitor security alarms. Characterisation of those who are engaged in the provision of mobile security patrol services, security response services and escort work is a very much more difficult matter. By the decision of 23 January 2006 (now reported 181 QGIG 138) this Court gave the following general description of those labour arrangements (at 181): "It is the practice of ASC to licence what have been described in the proceedings as "primary contractors" to carry out mobile security patrol services, security alarm response services and other security services as directed by ASC to patrolled premises particularised in a schedule to the written contract which grants the licence. The patrolled premises within the licence area are, of course, the customers of ASC within the area.". A principal issue between Mr Bullock and ASC has been whether the primary contractors are employees of ASC. There is further issue as to whether "relief drivers" brought in to perform work in lieu of primary contractors, who are contracted to ASC to work 365 days of the year, are also employees of ASC. The five complaints filed by Mr Bullock sought to resolve those issues. Two of the five complaints wholly failed. A complaint about wages said to have been owing to Mr David Hart for work performed whilst he was a primary contractor was dismissed. The Industrial Magistrate took a firm view that the complaint had been made out neither beyond reasonable doubt nor on the balance of probabilities. That finding disposed of all issues under s. 666(6)(b). A complaint about wages said to be owing to Mr Hohepa Pene both for work performed as a relief driver and later as a primary contractor was also dismissed. Once again the Industrial Magistrate held that the complaint had been made out neither beyond reasonable doubt nor on the balance of probabilities. Once again, that finding brought to an end all issues under s. 666(6)(b). No appeal has been brought to this Court about any decision of the Industrial Magistrate upon the complaints relating to Messrs Hart and Pene. A complaint about wages said to have been due to a Mr Robert Evans for work performed as primary contractor and for work performed as a relief driver was amended during the course of the hearing so as to relate only to work performed by Mr Evans as a relief driver. ASC was convicted on the amended complaint. There was a successful appeal to this Court. The outstanding issue is whether on the application of the civil onus of proof money orders for the benefit of Mr Evans should be made pursuant to s. 666(6)(b). Mr Bullock's complaint about wages said to have been due and owing to a Mr Peter Kidd in respect of work performed as a primary contractor and in respect of work performed as a relief driver failed as to the period of time during which Mr Kidd had worked as a primary contractor but succeeded as to the period of time during which Mr Kidd worked as a relief driver. There was a successful appeal to this Court against the conviction. As in the case of Mr Evans the outstanding issue is whether on the lower civil onus of proof an order for money should be made of Mr Kidd pursuant to s. 666(6)(b). Mr Bullock has not appealed against dismissal of the complaint insofar as it related to the period of time during which Mr Kidd worked as a prime contractor. Neither is there any appeal against the Industrial Magistrate's omission to deal with the s. 666(6)(b) point in relation to that period of time. The availability of relief under -- 1 of 4 -- 2 s. 666(6)(b) where a complaint is partially successful may be left to another day. On Mr Bullock's complaint that Mr Ronnen Easton had not been paid wages due and payable in respect of a period during which he had been a primary contractor and in respect of periods during which he had worked as a relief driver, Mr Bullock was wholly successful. On the appeal, ASC was wholly successful. The outstanding issues are whether on the lower civil onus of proof an order should be made to Mr Easton's benefit requiring the payment of monies to him in respect of both periods. It follows from the summary above that only in the case of Mr Easton is the Court directly concerned with the nature of the engagement of the prime contractors. But the primary contractor by whom Messrs Evans and Easton had been employed was Mr Hart. Mr Evans during the period in which he was a prime contractor, had employed Mr Kidd as a "relief driver". In those circumstances it is important correctly to classify the relationship between Mr Hart and ASC where Mr Hart was a primary contractor to ASC, and the relationship between Mr Evans and ASC when Mr Evans was a prime contractor to ASC. It is necessary to engage in that exercise because the licensing arrangements contemplated that prime contractors would employ relief drivers to cover gaps in the prime contractor's availability. If the relationship bought into existence by the licensing agreement was that of principal and independent contractor it is very easy to treat the prime contractor's engagement of a relief driver, apparently in conformity with the licensing arrangement and apparently in the course of an independent business, as bringing into existence a contractual relationship between the primary contractor and the relief driver. It is more than a little difficult to treat conduct, apparently by way of implementation of a licensing agreement in the course of an independent business, as bringing into existence a relationship of employer and employee between ASC and the relief driver. On the other hand, if the relationship brought into existence between ASC and the prime contractor by the licensing agreement was a relationship of employer and employee, it would not be surprising to find that the relief driver was also an employee of ASC, engaged by the prime contractor within the scope of an agency, and rather surprising to find that an employee of ASC had taken on the mantle of an employer to engage a relief driver to perform his (the prime contractors) obligations under the licensing agreement. (On the evidence there was something of a side issue about whether the relief drivers were employees or subcontractors. The issue only matters if the relief drivers have a contractual relationship with ASC. There were not any proceedings at first instance against the prime contractors.) Because of the amendment to the complaint relating to the engagement of Mr Evans the issue whether, when working as a prime contractor, Mr Evans was an employee of ASC is an open book. By contrast, in my view, there is very much to be said for the view that the decisions of the Industrial Magistrate upon the complaint relating to the engagement of Mr Hart finally determines the nature of his engagement as a prime contractor to ASC for civil and criminal purposes. In any event, since the case relating to Mr Hart's engagement as a prime contractor was the weakest of all cases advanced by Mr Bullock - Mr Hart initially took a licence as a natural person and later by way of a corporate vehicle of which he was the alter ego - and the Industrial Magistrate was indubitably correct, it seems to me to be unnecessary to pursue the point in any detail. I can see no utility in revisiting the proper construction of a licensing agreement. For the reasons developed in the first of the three decisions at 181 QGIG 138, I adhere to the view that on its proper construction the relationship established by the agreement was not that of employer and employee but was that of principal and independent contractor/business man. The only additional argument pursued by Counsel for Mr Bullock was that the use of the word "probation" in connection with the licensing agreements was suggestive of employment. Put aside that the concept of a "probationary licence" is well known outside the area of employment law and assuming the validity of the submission, it does not carry sufficient weight to overwhelm all the factors which point in the other direction. Though reduced to writing and executed by both parties, the terms of the licensing agreement are not determinative of the relationship between the parties. A court is entitled to go behind the documentation if the arrangement is shown to be a sham, or if it is shown that the document is a cloud of words which does not reflect the true relationship between the parties. On such issues the outcome may well vary depending upon whether one applies the criminal or the civil onus of proof. And one must bear in mind that one prime contractor might have been treated differently to another. There is no evidence that the licensing agreement was a sham. To establish that a contract is a sham it is necessary to show "that it was the common intention of the parties that the acts or documents concerned are not to create the legal rights and obligations which they may give the appearance of creating", compare Snook v London and West Riding Investments Ltd [1967] 2 QB 786 at 802 per Diplock LJ and Re Willow Fashions (Australia) Pty Ltd (in liq); leveque v Downey as liquidator of Willow Fashions (Australia) Pty Ltd (in liq), BC 9507250 at [13] per Hayne J. There is absolutely no evidence at all that any of Messrs Evan, Kidd and Easton had any intention of generating a spurious imitation or counter feat, compare Sharrment Pty Ltd v The Official Trustee in Bankruptcy (1988) 18 FCR 449 at 453 per Lockhart J. Counsel for the ASC seeks to strengthen the their case upon the question of whether there is a sham by pointing to direct evidence by Messrs Hart and Easton that they were not employees. It has long been recognised that such statements during the course of a relationship or from the witness box, about the parties' understanding of the legal status of the relationship, "are usually unhelpful and legally irrelevant", Connelly v Wells (1994) 55 IR 73 at 74 per Gleeson CJ. This is just such a case. A critical element in the opinions expressed by Messrs Hart and Easton was that they were not employees because they were not receiving the entitlements, e.g. sick leave, received by the static guards -- 2 of 4 -- 3 and were being required to provide their own motor vehicles. One has to recognise that there have been many personal injury cases in which the question of whether a man has received, e.g. sick leave payments and annual leave or enjoyed the protection of a workers' compensation policy, has been treated as material on issues about the existence of the relationship of master and servant and the imposition of vicarious liability. But in a case in which the very issue is whether a man should have received benefits such as, e.g. sick leave and annual leave and enjoyed the protection of a workers' compensation policy, resort to such ideas is entirely unhelpful. [It is convenient to interpolate that for the same reason I place no reliance upon references provided for prime contractors seeking engagement outside the ASC structure. There is no evidence that the "patrol and guard managers" who drafted the references understood whether or not prime contractors were employees. And there is in any event the difficultly that one of the references is explicitly written about a gentleman who worked for ASC both as a prime contractor and as a static guard.] However, whilst Counsel for ASC may not strengthen his case by reliance upon the express evidence of Messrs Hart and Easton, Counsel for Mr Bullock places the very real difficultly that no witness was able to give evidence of a conversation to the effect that the paperwork was a formality or was to be ignored or that in practice a different regime was to be in place. And that is not in the least surprising. On the evidence, the licensing agreements were carried out according to their terms. To that matter I know turn. The prime contractors did provide their own vehicles. They did provide their own petrol. They engaged relief drivers. Indeed, complaints were made in the course of evidence that there was no alternative because working seven days in each and every week was simply too arduous. The relief drivers were provided with motor vehicles and petrol by the prime contractors. The prime contractors were paid under the licensing agreement at the agreed rate whether the task was performed by the prime contractor or by the relief driver. The whole of the sum received by the prime contractor was not always passed onto the relief driver. On occasion, that was justified by reference to the costs involved in the provision of the motor vehicle and the petrol. The relief drivers were trained by the prime contractors. As a matter of practicality, only the prime contractors might have trained them because only the prime contractors understood the run. The prime contractors made changes to the sequence of visits on the run on a regular basis. Where there was a need to respond to an alarm, the prime contractors were notified by those in the monitoring room and responded. They did what they were asked to do. It was then necessary for the prime contractor concerned to revisit the sequence of visits to deal with the circumstance that he was at quite a different part of his area. It is certainly true that the prime contractors were required to report their location to ASC from time to time and to adhere to the client's brief where the security service involved accessing the client's premises. Given the hazardous nature of the work upon which the security patrols were engaged, the requirement to report in regularly seems to be an entirely prudent safety measure. A worker may be an independent contractor though subject to some measure of control, and an obligation to observe a client's instruction whilst on the client's premises seems in any event to be on the border line of defining the work to be done and directing how the work is to be done. Much reliance was placed upon standing orders issued by ASC on 28 June 2002 which treated all security officers, e.g. patrol officers and static guards, in the same way and which were expressed in peremptory language suggestive of employment. I accept that relationships change. It is a difficultly with the indicia of the relationship of employer and employee that when one turns from construction of the contractual documents to the reality of the relationship, the relationship may change. In other circumstances, the issue of the standing orders on 28 July 2002 may have been critical and may have led to a conclusion that some of the work performed under a licensing agreement was performed as an independent contractor and that some was performed as an employee. But the issue of the standing orders was always irrelevant in the proceedings relating to Mr Evans because the claim related to a period prior to January 2000. It is also irrelevant to the period during which Mr Kidd was the relief driver to Mr Evans. The claim in the case of Mr Kidd was for the period 4 February 2000 to 1 July 2002. At best, the standing orders operated upon that relationship for a mere three days. In the case of Mr Easton the claim pursued was for a period which expired on 30 June 2002. At best, the standing orders were operative for a period of two days. As I understand the transcript, there is no evidence, either in the case of Mr Kidd or in the case of Mr Easton, that anything changed in the short period referred to. It seems to me that by 28 June 2002 the character of the arrangements between Messrs Kidd and Easton and ASC have clearly emerged and that the standing orders are at best a distraction. Counsel for ASC takes the point that in fact prime contractors did enter into labour arrangements with persons other than ASC during the currency of the licensing agreements. They did. They worked as relief drivers for other prime contractors. But in the circumstances of the present appeals, in which one of the issues is whether the relief drivers were in truth engaged by ASC or by the prime contractor, the submission is more than a little question begging. In all the circumstances, I am satisfied on the balance of probabilities that the licensing agreements did set out the actual relationship between ASC and the prime contractors, and that the prime contractors are properly to be classed as independent contractors. There is no evidence to support a conclusion that the relief drivers were anything other than what they purported to be: i.e. employees of/subcontractors to the prime contractors. The reality of the requirement that ASC "approve" relief drivers is to be found in the evidence of Mr Evans who said all that was involved was an inquiry of the prime contractor whether the relief driver could do the job. -- 3 of 4 -- 4 In the premises, there is no basis for any order pursuant to s. 666(6)(b) in favour of any of Messrs Easton, Evans and Kidd and I reject the applications pressed for by Mr Bullock . Appeal numbers C43 and C44 of 2005 are also formally dismissed. I am informed by counsel for the Appellant that his client wishes to make submissions about the costs of proceedings below. There may be issues about the costs of certain issues on the appeals. I reserve all questions as to costs. Dated 19 May 2006. D. R. HALL, President. Released: 19 May 2006 Appearances: Mr A. Horneman-Wren, instructed by Livingstones (Australia) for Australia Security Company Pty Ltd in all matters. Mr M. Plunkett, instructed by Hall Payne, Solicitors, for Gary John Bullock in all matters. Government Printer, Queensland The State of Queensland 2006. -- 4 of 4 --