Dec 1257/99 M Print S0253

AUSTRALIAN INDUSTRIAL RELATIONS COMMISSION

Workplace Relations Act 1996
s.45 appeal against decision Print R6604
issued by Commissioner Simmonds on 30 June 1999

Advanced Australian Workplace Solutions Pty Ltd
(C No. 36021 of 1999)

s.170CE application for relief in respect of termination of employment

P Fox

and

Kangan Batman TAFE
(U No. 34844 of 1998)

JUSTICE GIUDICE, PRESIDENT

  

VICE PRESIDENT McINTYRE

  

COMMISSIONER REDMOND

PERTH, 25 OCTOBER 1999

Appeal - whether appellant entitled to appeal - extension of time to appeal - whether applicant for relief under s.170CE employed by respondent to application - whether any contract between applicant and respondent - approach to determining these issues

DECISION

CONTENTS Paragraph

Introduction and issues [1]

The facts [4]

The first issue - is Advanced Australian Workplace
Solutions Pty Ltd entitled to institute this appeal? [30]

The second issue - should we extend the time within
which this appeal may be instituted? [34]

The third and fourth issues - should leave to appeal
be granted and, if so, the merits of the appeal. [38]

Concluding comments [93]

INTRODUCTION AND ISSUES

[1] On 22 July 1999, Advanced Australian Workplace Solutions Pty Ltd (AAWS) filed a notice of appeal under s.45(1)(g) of the Workplace Relations Act 1996 (the Act) against a decision of Simmonds C dated 30 June 1999 (Print R6604) in which he determined (paragraph [29]) "that the true employer in respect of the application pursuant to s.170CE of the Act made by Ms P Fox in U No. 34844 of 1998 is Kangan Batman TAFE".

[2] Four issues arise:

(1) is AAWS entitled to institute this appeal?

(2) should we extend the time prescribed by rule 11(2) of the Australian Industrial Relations Commission Rules 1998 within which this appeal may be instituted?

(3) should we grant leave to appeal?

(4) the merits of the appeal.

[3] The appeal was heard by us in Melbourne on 8 September 1999. Dr C Jessup QC and Mr M McDonald of counsel appeared for AAWS and Mr M Willoughby-Thomas, barrister and solicitor, appeared for Ms Fox. Kangan Batman TAFE (Kangan) was not represented. After the hearing ended, Mr Willoughby-Thomas lodged some supplementary written submissions which we have taken into account.

THE FACTS

[4] On 8 December 1998, Ms Fox filed an application for relief in respect of the termination of her employment under s.170CE of the Act. In her application, Ms Fox named as her employer Kangan. Kangan filed a notice of employer's appearance dated 16 December 1998. This appearance, in answer to the question "Are you the true employer?", replied "No" and said that the true employer was "Advanced Australian Workplace Solutions".

[5] On 17 May 1999, Simmonds C conducted a hearing to determine whether Kangan employed Ms Fox. In this hearing Ms Fox was represented by Mr Willoughby-Thomas and Kangan by Mr R King. Mr L Doyle sought leave to intervene for AAWS. There was no objection to this application and AAWS was granted leave to intervene. In the hearing, oral evidence was given by Mr K P McCann, campus manager of the Laverton North campus of Kangan and by Ms Fox and various documents were tendered.

[6] Kangan is an institute of technical and further education. Its Laverton North campus is within the Port Phillip prison and functions there pursuant to an agreement between the operator of the prison, Group Four Securitas Pty Ltd, and Kangan.

[7] AAWS is, to use its own description in one of its documents, "a service company that operates a licensed agency contracting system which has been supplying contract personnel to commerce and industry on a casual basis for over 18 years". The contracting system used by AAWS is called the "ODCO system". The ODCO system is one that was the subject of considerable litigation some years ago; see, for example, the decision of Woodward J in Building Workers Industrial Union of Australia v. Odco Pty Ltd [No. VG151 of 1998 (unreported)] [24 August 1989] and, on appeal, the decision of the Full Court (Wilcox, Burchett and Ryan JJ) [(1991) 29 FCR 104]. The ODCO system as used by AAWS is described in an AAWS document called "A Flexible Resource Model". This document sets out at some length the services provided by AAWS and the advantages which AAWS claims will accrue to its customers. A sufficient indication of the contents can be gained from the following extract which appears under the heading "Independent Contracting at a Glance":

Whilst this document is part of the general background to the case, there is no evidence that the document itself was read by Mr McCann or Ms Fox.

[8] Ms Fox is a teacher.

[9] On 14 April 1997, Ms Fox signed an "agreement to contract" which we set out:

[10] During 1997, AAWS offered Ms Fox work teaching Japanese but she declined the work telling AAWS that she was not interested in teaching Japanese.

[11] In, it would appear, late 1997 or early 1998, Mr McCann, Kangan's campus manager at the prison, wished to introduce a ceramics course at the prison. He spoke to an associate director of Kangan who told him that Kangan did not have a ceramics department and that Mr McCann should approach AAWS as Kangan had an agreement with AAWS to provide staff in other areas. Mr McCann accordingly contacted AAWS and said that he needed a member of staff to establish and teach a ceramics course.

[12] On 5 January 1998, Kangan signed a "hiring agreement" which we set out:

[13] After Mr McCann told AAWS that he needed a member of staff to establish and teach a ceramics course, AAWS arranged for 3 people, one of whom was Ms Fox, to go to the prison to be interviewed by Mr McCann. In chief, Mr McCann said (T.41):

and a little later (T.42-3):

and, in cross-examination (T.50):

[14] In her evidence in chief, Ms Fox said (T.65):

[15] On or about 18 March 1998, Ms Fox started working for Kangan at the prison as a ceramics teacher. Her first task was establishing the physical resources for teaching ceramics. This involved Ms Fox setting up a room in which to teach and obtaining the necessary materials and library books. These were paid for by the prison. Ms Fox did not provide any of her own equipment or materials.

[16] After working as a ceramics teacher for about 6 weeks, Ms Fox's duties were extended to include art teaching. Ms Fox said (T.65):

[17] Mr McCann said in cross-examination (T.48):

and in re-examination (T.59):

and (T.60):

[18] As a result of taking on the art teaching, Ms Fox's weekly hours increased from 15 to 22.

[19] It will be recalled that the hourly rate specified in the "agreement to contract" was $20.58. When Ms Fox started at the prison she was paid about $26 per hour and this amount was later increased to about $28 per hour. Mr McCann said in cross-examination (T.48):

And also in cross-examination, said (T.53):

And a little later (T.54):

And (T.55):

[20] Simmonds C said (decision paragraph [26]) that "[t]he evidence as to who determined the rate of pay is rather equivocal". In the appeal hearing, AAWS by leave adduced further evidence in relation to the payments through an affidavit of Mr Doyle, a director of AAWS, and who had appeared for it in the proceedings before Simmonds C. In it Mr Doyle said:

[21] There was evidence about preparation work done by Ms Fox. Mr McCann in cross-examination said (T.52):

[22] Ms Fox advised AAWS weekly of the hours for which she believed she was entitled to be paid. She said in chief (T.68):

[23] Following such advice AAWS paid Ms Fox for the number of hours she said she had worked, less deductions for PPS tax and insurance.

[24] As to the arrangements under which Ms Fox worked for Kangan at the prison, Mr McCann said in chief (T.43-44):

And, in cross-examination (T.47):

And, later (T.51):

And (T.56):

[25] Ms Fox said in chief (T.65-66):

[26] Ms Fox attended a conference while she was working at the prison. In cross-examination, Mr McCann said(T.49):

[27] In the proceedings below there was evidence relating to the taking of leave by Ms Fox. Mr McCann said in cross-examination (T.49):

And (T.61):

Ms Fox said in chief (T.68):

[28] There was evidence as to whether Ms Fox could delegate her work. In cross-examination, Mr McCann said (T.55):

[29] In cross-examination by Mr King, Ms Fox was asked (T.76) "What do you believe was your relationship with the Kangan Batman Institute of TAFE?". Mr Willoughby-Thomas objected to this question on the basis that it was a matter for submission. Simmonds C allowed the question saying that the weight he was going to give to the answer will be a question of submission from the parties. The cross-examination then proceeded as follows (T.76-77):

THE FIRST ISSUE - IS AAWS ENTITLED TO INSTITUTE THIS APPEAL?

[30] AAWS submitted that the decision from which it seeks leave to appeal, being a decision that a member of the Commission has jurisdiction, is appealable pursuant to s.45(1)(g). We agree with that submission. The question at issue is whether AAWS has standing to bring an appeal, given that it is not a party to the proceedings brought by Ms Fox. Whether AAWS has standing depends upon whether it is a person aggrieved for the purposes of s.45(3)(d).

[31] The relevant parts of s.45 are:

(3) An appeal under subsection (1) may be instituted:

We understand it to be common ground that "organisation" in s.45(3)(d) means "registered organisation" and that AAWS is relevantly a person and not an organisation. The crucial question is whether it is aggrieved by Simmonds C's decision.

[32] The Industrial Relations Court of Australia dealt with the construction of s.45(3)(d) in the case of Tweed Valley Fruit Processors Pty Ltd v Ross and Others (1996) 137 ALR 70 esp. at pp.90-91. In their joint judgment, with which Moore J agreed in this respect, Wilcox CJ and Marshall J cited with approval passages from Ellicott J's judgment in Tooheys Ltd v Minister for Business and Consumer Affairs (1981) 54 FLR 421 indicating that the description of a person aggrieved extends to "a person who can show a grievance which will be suffered as a result of the decision complained of beyond that which he or she has as an ordinary member of the public" (at p.90) and includes a person affected by a decision because the decision
"may affect him or her in the conduct of a business or....affect his or her rights against third parties" (at p.90). This approach has been followed by the Commission: Australian Workers' Union, Queensland v Australian Maritime Officers Union (1997) 75 IR 227 at p.233. We think the approach provides guidance in this case.

[33] It is clear that the Commissioner's decision may affect AAWS in the conduct of its business. Equally it may affect AAWS' rights against Kangan and Ms Fox. Kangan is a party to the "hiring agreement" with AAWS which requires AAWS to supply labour to Kangan on the basis that the persons providing the labour are not employees of Kangan. Ms Fox is party to the "agreement to contract" with AAWS of which it is a term that she is not employed by AAWS but indeed she is self-employed. AAWS proclaims in its promotional material that in providing labour to its clients the persons performing the work are not employees of AAWS but self-employed. These propositions appear to be fundamental to its relationship with Kangan and Ms Fox and presumably to its relationship with its other customers and contractors. The Commissioner's decision denies the truth of these propositions in this case and may throw doubt on them in other cases. There are other propositions fundamental to the manner in which AAWS provides services which are put in doubt by the decision but it is not necessary to refer to them. Those we have mentioned are sufficient. We have no doubt that AAWS is aggrieved within the meaning of that term in s.45(3)(d).

THE SECOND ISSUE - SHOULD WE EXTEND THE TIME WITHIN WHICH THIS APPEAL MAY BE INSTITUED?

[34] Pursuant to rule 11(2)(a) of the Commission's rules, an appeal must be instituted within 21 days of the decision under appeal. Rule 11(2)(c), nevertheless, confers power on a Full Bench to extend time. Rule 11(2) reads relevantly:

[35] In this case the Commissioner's decision was made on 30 June, 1999. The appeal was filed on 22 July, 1999. The notice of appeal included an application for a stay of the Commissioner's decision pending the resolution of the appeal. When the stay application was listed before the President on 28 July 1999 it was pointed out to counsel for AAWS that the appeal was lodged one day out of time. Counsel then made an oral application for an extension of time in which to lodge the appeal. The application was opposed by counsel for Ms Fox. In a decision made on 6 August, 1999 the President refused to grant the application for an extension of time on the basis that the application could only be dealt with by a Full Bench pursuant to rule 11(2)(c) [Print R8007]. A formal application to extend time was filed on 10 August, 1999.

[36] The onus is upon AAWS to persuade the Commission that time should be extended. If it is unsuccessful the appeal fails at the outset. The cases show that, in exercising the discretion in rule 11(2)(c), the Commission should take into account whether there is a satisfactory reason for the delay, the length of the delay, the nature of the grounds of appeal and the likelihood of one or more of those grounds being upheld if time was to be extended: Meat and Allied Trades Federation v AMIEU (1990) 35 IR 25 at p.26; The National Rail Enterprise Agreement 1993, 1 December 1993 [Print L0238 at pp. 11-12]; Shop Distributive and Allied Employees Association v OPSM Pty Ltd, 2 July 1998 [Print Q2858]; Section 109 Reviews Decision, 12 March 1999 [Print R2700 paragraphs 17-24]. Any prejudice the respondent might suffer if time were extended because of developments after the time for lodgment had expired would also be relevant.

[37] The reason put forward for the delay in this case is a miscalculation on the part of counsel. We accept this explanation. Given that the delay is of one day only and that no prejudice has been shown to have arisen to Ms Fox from the delay, we think this application should be decided by reference to the nature of the grounds of appeal and the likelihood of one or more of them succeeding. For reasons which will become apparent we shall extend the time for lodging the appeal to 22 July 1999.

THE THIRD AND FOURTH ISSUES - SHOULD LEAVE TO APPEAL BE GRANTED AND, IF SO, THE MERITS OF THE APPEAL

Simmonds C's decision

[38] Simmonds C's decision first deals with the contentions, the evidence and the submissions before him. Then, under the heading "Decision", he said that he accepted that, in determining the proper characterisation of the relationship between Ms Fox and Kangan, he had to have regard for the total factual matrix including the agreement between Ms Fox and Kangan, the agreement between Kangan and AAWS and the actual practices of the parties.

[39] After referring to Stevens v Brodribb Sawmilling Co Pty Ltd [(1986) 160 CLR 16], Simmonds C expressed the view that Ms Fox's relationship with Kangan was not a contract for services.

[40] Simmonds C then said that it was clear that Kangan controlled the time of Ms Fox's attendance, prescribed the curriculum to be taught and directed, and had the capacity to direct her in the performance of her duties and in a number of incidental matters. He referred to various matters referred to in the evidence to support this view and said that they pointed strongly to the existence of a contract of service between Ms Fox and Kangan. Against this, he said, was Ms Fox's agreement with AAWS, the method of payment and the non-deduction of income tax. Simmonds C then said:

[41] After saying that the evidence of who determined Ms Fox's rate of pay was equivocal, Simmonds C expressed the view that this uncertainty and the fact that no PAYE deductions were made did not displace the conclusion that Ms Fox was employed under a contract of service by Kangan.

[42] Simmonds C said that, because of a number of differences between the facts in the present matter and those in the Odco litigation, he did not find the reasoning in Odco to be determinative in this matter. He then said that he formally determined that the true employer in the present case was Kangan.

Outline of submissions

[43] Dr Jessup QC, for AAWS, submitted that Simmonds C ignored the fundamental question - was there a contract at all between Ms Fox and Kangan? An examination of the facts demonstrated that there was no contract. In the absence of any contract it was inappropriate to consider decisions such as Brodribb Sawmilling (above) which went to whether a contract was one of service or one for services.

[44] Mr Willoughby-Thomas, for Ms Fox, submitted that the tests to determine the existence of an employment relationship are central to the determination of the existence of a contract of service per se and are not, as contended by Dr Jessup QC, matters which are only to be taken into account after having first determined that a contract exists. Accordingly, the tests applied in cases such as Brodribb Sawmilling are relevant in a case such as this. These tests, especially direction and control, point to the existence of an employment relationship, and a contract of employment, between Ms Fox and Kangan.

Approach to be adopted in determining this appeal

[45] In determining this appeal, we will follow the approach which the Federal Court in Sammartino v Foggo [[1999] FCA 1231] [25 August 1999] said should have been followed in that matter by an appeal bench of the Commission. Mr Sammartino had made an application under s.170CE which was heard by Foggo C. Foggo C decided that Mr Sammartino was not an employee within the relevant provisions of the Act but was an independent contractor and as such was "precluded from the provisions of the Act in relation to the provisions of s.170CE". An appeal was brought from Foggo C's decision. The Commission on appeal, in the words of the Court, "held that it was not satisfied that Mr Sammartino has met the requirements pursuant to House v The King [(1936) 55 CLR 499] for leave to appeal to be granted and accordingly it refused leave and dismissed the appeal" (paragraph 11).

[46] The Court said (paragraphs 8 - 10):

[47] We therefore turn to consider whether Simmonds C made an error of law or an error of fact in determining that Kangan was the employer of Ms Fox. This determination flowed from Simmonds C's conclusion that there was a contract of service between Ms Fox and Kangan.

Conclusion

[48] We have come to the conclusion that, on the evidence, there was no contract of any type between Ms Fox and Kangan.

[49] We have earlier set out the facts in some detail. They clearly show that there was a relationship (a word used by Simmonds C in his decision and a word on which Mr Willoughby-Thomas placed considerable emphasis) between Ms Fox and Kangan. A relationship, however, is not necessarily a contract: see, for instance, the cases to which we refer in the following paragraphs. The elements of a contract are stated in Macken, McCarry and Sappideen's "The Law Of Employment" (4th edition, 1997 by the Hon James Macken, Paul O'Grady and Carolyn Sappideen) (Macken, McCarry and Sappideen), a text to which reference was made both before Simmonds C and us, as follows (p.74):

In relation to the first of these elements, the learned authors say (p.74):

[50] There are a number of cases which demonstrate that a relationship is not necessarily a contract.

[51] In Teen Ranch Pty Ltd v Brown (1995) 11 NSWCCR 197, the New South Wales Court of Appeal considered whether there was a contract between Teen Ranch Pty Ltd, a non-denominational Christian camping facility which employed a small permanent staff supplemented by volunteers, and Mr Brown, one such volunteer (the volunteer). Handley JA, who gave the leading judgment, said (p.200-1):

and then (p.201):

After examining the facts, his Honour concluded that the arrangements between the parties did not evince some clear positive indication that legal relations were contemplated and, therefore, that there was no contract between the parties.

[52] In Construction Industry Training Board v Labour Force Ltd [1970] 3 All ER 220 the Queen's Bench Division considered a situation in which a labour supply company supplied labour to building contractors at specified rates payable by the contractors to the labour hire company. On appeal from a decision of an Industrial Tribunal, Cooke J, who gave the leading judgment, said (p.223):

[53] In O'Sullivan v Thompson-Coon (1972) 14 KIR 108, in response to a request from the owner of a farm (a company called Seawell Cattle Co Ltd), a farm relief service (Goodwins) sent a relief worker (Miss Kennedy) to the farm. Ashworth J, who gave the leading judgment for the Queen's Bench Division, said (pp.113-4):

[54] In Denham v Midland Employers Mutual Assurance Ltd [1955] 2 QB 437, the Court of Appeal considered a situation in which an employer (Eastwoods) engaged a contractor (Le Grands) to do certain work and provided one of his own labourers (Mr Clegg) to Le Grands to help with that work. The issue was whether Mr Clegg was employed under a contract of service with Le Grands. Romer LJ said (pp.446-7):

[55] We now turn to the Odco cases referred to in paragraph [7]. Much time in argument was devoted to these cases because the documentation between Ms Fox and AAWS and between AAWS and Kangan is the same as that between the parties in Odco.

[56] In Odco persons referred to as workers had entered into contracts with a labour hire company referred to as Troubleshooters and Troubleshooters had entered into contracts with persons referred to as builders under which Troubleshooters provided workers to the builders. The Federal Court considered, among other things, whether there was a contract between worker and builder. Woodward J held that there was not and his Honour's conclusion was upheld on appeal.

[57] In the judgment on appeal, the Court said that "[T]he element of consideration which is essential to a contract of employment is the promise by the presumptive employer to pay for service as and when the service is rendered" (1991) 29 FCR 104 at p.114. After referring to Automatic Fire Sprinklers Pty Ltd v Watson (1946) 72 CLR 435 at p.465, the Court said that "on the evidence, there was no promise of payment of periodical sums by the builder to the worker, and no agreement between the builder and the worker as to what those sums should be. The builder's only obligation was to pay Troubleshooters. The worker's only entitlement was against Troubleshooters, and in accordance with a different measure" (p.114).

[58] The Court, after referring to submissions of the appellant, said (p.116):

[59] The Court then rejected submissions of the appellant that the existence of a contract between the builder and the worker was shown by certain arrangements between the builders and the workers. Some of them, the Court said, begged the question whether the relationship was a contractual one.

[60] The Court then said (p.117):

[61] The Court referred to Willett v Boote (1860) 6 H & N 26; 158 ER 11 and said (p.119):

[62] The Court then said (p.119):

[63] After referring to Construction Industry Training Board v Labour Force Ltd (above) and Accident Compensation Commission v Odco Pty Ltd (1990) 95 ALR 641, the Court concluded that there was no contract of employment between worker and builder.

[64] We have earlier said that, in the present case, there was clearly a relationship between Ms Fox and Kangan. In all the cases to which we have referred there was a relationship between the alleged employer and the alleged employee (for example, between Teen Ranch and Mr Brown, between Seawell Cattle Co Ltd and Miss Kennedy and between Mr Clegg and Le Grands). As these cases show, the existence of the relationship did not establish that there was any contract between the alleged employer and the alleged employee.

[65] We therefore turn to consider whether there was a contract between Ms Fox and Kangan.

[66] Earlier, we referred to the elements of a contract specified in Macken, McCarry and Sappideen. One of these was "[t]here must be an `intention' between the parties to create a legal relationship, the terms of which are enforceable". This point is referred to in several of the cases to which we have referred. In Teen Ranch (above) (p.201):

In Denham (above), Romer J said (p.447):

[67] In our view, the evidence does not establish that Ms Fox and Kangan intended to enter into legal relations with each other. Neither Ms Fox nor Kangan thought that there was a contract of employment between them. Ms Fox, in answer to the question "did you believe you were an employee of Kangan Batman TAFE?" said "No, I didn't." (see paragraph [29]). Kangan asserted in its notice of employer's appearance (see paragraph [4]), and in the proceedings before Simmonds C, that it was not the employer of Ms Fox. It told Simmonds C (T.80) that it had written contracts of employment with all the persons it acknowledged were its employees. There was no dispute that there was no written contract between it and Ms Fox.

[68] There can, we think, be no doubt that the view, shared by both Ms Fox and Kangan, that they were not in the relationship of employee and employer carries weight and that the amount of weight to be afforded it depends on the circumstances. For instance, Teen Ranch (above) is a case where such evidence was afforded considerable weight. Handley JA said (p.201):

[69] On the other hand, in Mead v New England Seed Traders Pty Ltd [1972] WCR 113, the New South Wales Court of Appeal, after referring to the circumstances before it, said (p.117):

[70] In the circumstances of the present matter, the view of Ms Fox and Kangan that they were not employee and employer is, we think, evidence of considerable weight.

[71] Prior to the start of any relationship between Ms Fox and Kangan, Ms Fox had signed the "agreement to contract" set out in paragraph [9] and Kangan had signed the "hiring agreement" set out in paragraph [12]. It is worth repeating some of the provisions of these documents.

[72] In the "agreement to contract", Ms Fox, among other things:

[73] In the "hiring agreement", AAWS said, among other things:

The "hiring agreement" contained a special condition that, if Kangan engaged a worker supplied by AAWS, Kangan was to pay a fee to AAWS for the loss of the resource.

[74] Accordingly, when the relationship between Ms Fox and Kangan started (when Ms Fox was interviewed by Mr McCann) and developed in the way we have described, it was in the context, so far as Ms Fox was concerned, of the "agreement to contract" and, so far as Kangan was concerned, of the "hiring agreement". Ms Fox advised AAWS of the hours she worked. AAWS paid Ms Fox pursuant to the arrangement between it and her and invoiced Kangan pursuant to the arrangement between it and Kangan. In all these circumstances, the shared view of Ms Fox and Kangan that they were not employee and employer was, we think, reasonably held and, accordingly, entitled to considerable weight.

[75] It does not appear to us that this shared view of Ms Fox and Kangan was given much, if any, weight by Simmonds C. In outlining the evidence and submissions, he refers (in paragraphs [10] and [11]) to Ms Fox's evidence that she believed that she was not an employee of Kangan, but no reference is made to this evidence in the part called "Decision" and which we outlined in paragraphs [38] to [42]. For the reasons we have given, we think that the matter should have been given considerable weight supporting the conclusion that Kangan was not the employer of Ms Fox.

[76] Another essential element of a contract identified by Macken, McCarry and Sappideen is that there must be an offer by one party and an acceptance by the other. In our view, the evidence in this case does not establish such an offer and acceptance. The circumstances in which Ms Fox came to work for Kangan, the interview between her and Mr McCann and the subsequent conversations which led to her work being extended to cover art teaching have been set out earlier. This evidence when looked at in context does not, we think, establish an offer and acceptance. The context includes the arrangements between Ms Fox and AAWS and between Kangan and AAWS and the need for Mr McCann to be satisfied that whoever got the job could work in a prison environment. Also relevant to the question of offer and acceptance is the view of Ms Fox and Kangan, discussed earlier, that they were not employee and employer. Kangan did not believe it had made an offer to Ms Fox and Ms Fox did not believe she had accepted an offer from Kangan. As previously discussed, we are of the opinion that these views were of considerable weight and were reasonable. They are an indicator of the absence of offer and acceptance.

[77] With respect to the question of acceptance, Mr Willoughby-Thomas referred to the following comments in Macken, McCarry and Sappideen (p.77):

We do not doubt that sometimes contracts of employment are entered into with a minimum of formality. However, each case turns on its own facts. In Mead (above), to which we have earlier referred, the Court of Appeal held that there was strong evidence of a contract of service; for instance, that in the financial records of the alleged employer, the alleged employee was treated as an employed worker and was similarly treated for taxation purposes. Against this was, for instance, the evidence that the alleged employee did not realise that he was an employed worker. The Court, in the circumstances, was of the view that this evidence did not seem to be of much weight. In the present case, on the other hand, we have concluded that the view of Ms Fox and Kangan that they were not employee and employer was, in the circumstances, to be given considerable weight. We add that the Court's remarks quoted in Macken, McCarry and Sappideen perhaps somewhat overlook the need for there to be an intention between the parties to create a legal relationship (see, for example, the passages quoted from Teen Ranch and Denham in paragraph [66]). In any event, as is clear from the judgment, the facts in Mead are, naturally enough, quite different from those before us.

[78] Also, with respect to offer and acceptance, Mr Willoughby-Thomas relied on the passage from the appeal judgment in Odco that we have set out in paragraph [60]. In this passage, the Court said that from time to time the builders, with the consent of the workers supplied by Troubleshooters, sent them to work on sites other than those to which Troubleshooters had been requested to send them or promoted them to work in a higher classification than the one in relationship to which Troubleshooters had initially been requested to supply labour, or the individual workers had unilaterally agreed to work. The Court said this was, perhaps, the strongest argument in favour of the contention that there was a contractual relationship between the worker and the builder.

[79] Mr Willoughby-Thomas submitted that the reason for this view was that the relocation and promotion involved a direct interaction between the worker and the builder and, at the very least, a notional or implied offer and acceptance of the new agreement. In the present case, Mr Willoughby-Thomas submitted, Ms Fox's selection and appointment were made directly by Kangan and that, later, Kangan directly offered Ms Fox the art teacher position. These direct dealings, he argued, were decisive regarding the existence of a contract of employment.

[80] First, the evidence is not, we think, quite as clear-cut as Mr Willoughby-Thomas suggested. For instance, Mr McCann, following his initial interview with Ms Fox was aware that he was dealing with her through AAWS (see evidence set out in paragraph [13]). Similarly, when the art teaching was offered to Ms Fox, he again knew that he was dealing through AAWS (see evidence set out in paragraph [17]).

[81] Second, this evidence has to be seen in context; in particular, the arrangements between Ms Fox and AAWS and between Kangan and AAWS and that neither Ms Fox nor Kangan thought that they were employee and employer. The evidence relied on by Mr Willoughby-Thomas, looked at as part of the total evidence, does not lead us to the conclusion that there was a contract of employment (or of any other sort) between Ms Fox and Kangan.

[82] Another essential element of a contract referred to by Macken, McCarry and Sappideen is consideration. Macken, McCarry and Sappideen say (p.79):

[83] In our view no consideration passed between Kangan and Ms Fox. There was no promise by Kangan to pay Ms Fox's wages. Ms Fox was paid by AAWS pursuant to the arrangement between them. Kangan was billed by AAWS pursuant to the arrangement between them.

[84] The circumstances in which Ms Fox was paid the hourly rates she was (initially $26.62 and later $28.88) are explained, partly in the evidence and partly in Mr Doyle's affidavit referred to in paragraph [20]. It is apparent that the amounts paid were determined, not by Kangan, but by AAWS.

[85] In his decision, Simmonds C held that AAWS acted as Kangan's agent in making payment to Ms Fox; see paragraph [40] above.

[86] We are unable, on the evidence, to accept that AAWS acted as Kangan's agent in making payment to Ms Fox. The arrangements under which AAWS paid Ms Fox and Kangan paid AAWS were as set out in the documents. Simmonds C said "It is clear that AAWS was not paying [Ms Fox] for any service she rendered AAWS". We do not agree. AAWS is a labour hire company. It had to have labour to hire. Ms Fox was a unit of that labour. The service she rendered AAWS was enabling it to carry on its business as a labour hire company. For this, AAWS paid her. There is, on this analysis, no basis for concluding that AAWS did so as Kangan's agent.

[87] Neither do we agree with the view of Simmonds C that had AAWS failed to pay Ms Fox, Ms Fox would have had an action against Kangan. In Odco, the appeal bench said (see paragraph [61] above) that:

In our view, on the facts of the present case, the same conclusion is reached.

[88] We have considered all the evidence before Simmonds C. While there are parts of it that point to a contract between Ms Fox and Kangan, they are, in our view, outweighed by the other parts which, in our view, point to there being no contract.

[89] For the reasons we have given, it is our view that no contract existed between Ms Fox and Kangan because, of the essential elements for a contract, three were missing; namely:

[90] This conclusion necessarily involves a rejection of Mr Willoughby-Thomas's submission that it was appropriate to consider, as Simmonds C did, the existence or otherwise of the indicia specified in, for instance, Brodribb Sawmilling (above). We respectfully agree with the comments of Handley JA in Teen Ranch (above) that, in determining the existence of a contract, the decision in Brodribb Sawmilling is not relevant.

[91] Our conclusion that there was no contract between Ms Fox and Kangan is derived from the facts before us which we have earlier set out in some detail. None of the cases to which we have referred determines the present one. In particular, Odco (above) does not determine the present case. Although the documentation between AAWS and Ms Fox and between AAWS and Kangan is the same as that in Odco, other facts, as Simmonds C noted, differ. He said that he did not find the reasoning in Odco to be determinative in this matter. We, with respect, agree. Our conclusions arise from the facts of the case before us.

[92] Having concluded that Simmonds C made an error of law in determining that there was a contract of service between Ms Fox and Kangan, we grant leave to appeal, uphold the appeal and quash the Commissioner's decision.

CONCLUDING COMMENTS

[93] We have assumed that Kangan is a legal entity capable of being a respondent to an application under s.170CE. In the proceedings before Simmonds C, Kangan did not suggest otherwise. Kangan, as earlier mentioned, was not represented at the appeal.

[94] Although not the subject of any submission, we say something about the procedure to be followed when a threshold issue arises, as in this case, as to whether the respondent named in a s.170CE application was the employer of the applicant. In our view, in such cases, the applicant should go first and adduce evidence directed at establishing that he or she was employed by the respondent. The respondent should then be invited to call evidence on the issue. It will be a matter for the respondent to decide whether or not to call evidence. The respondent may choose to call no evidence and submit that the applicant has failed to establish that the respondent was the employer.

[95] We express this view because we think that establishing that the respondent is the employer is as essential an element in an applicant's case as establishing that his or her employment was terminated by the respondent or establishing (in the case of an application on the ground in s.170CE(1)(a)) that the termination was harsh, unjust or unreasonable.

[96] The Federal Court has recently drawn attention to the distinction between the power exercised by the Commission when dealing with industrial disputes pursuant to Part VI of the Act and the power exercised under Division 3 of Part VIA (which includes s.170CE). The former is described as arbitral power, the latter as quasi-judicial power: Re Australian Industrial Relations Commission; Ex parte Construction, Forestry, Mining and Energy Union (1999) 164 ALR 73 at paras 73, 74, 79. The principles governing the burden of proof in judicial proceedings, to which resort may properly be had, at least in connection with proceedings under Division 3 of Part VIA, are clear. The following extract from the Australian Edition (1996) of Cross on Evidence (paragraphs [7060] and [7065]) encapsulates the approach to be taken in ascertaining where the burden of proof lies:

[97] Normally, we think it would be unfair to require a respondent (to an application under s.170CE) which puts a fundamental element of the applicant's claim in dispute to call evidence first. Equally, it would be unfair to require an applicant to call evidence first when the respondent raises a threshold issue in relation to which the respondent itself bears the onus of proof; for example, that the employee was serving a period of probation.

[98] Finally, we mention that, as so often happens, this case was argued much more thoroughly on appeal than at first instance.

BY THE COMMISSION:

PRESIDENT

Appearances:

Dr C Jessup QC with Mr M McDonald for Australian Advanced Workplace Solutions
Mr M Willoughby-Thomas for P Fox

Hearings:

1999.
Melbourne
28 July
17 August
8 September.

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