ROY MORGAN RESEARCH CENTRE PTY LTD v COMMISSIONER FOR STATE TAXATION (SA)
Judges:Perry J
Court:
Supreme Court of South Australia
MEDIA NEUTRAL CITATION:
[2003] SASC 342
Perry J
Civil
1. On 13 January 2000, the respondent, the Commissioner of State Taxation (``the Commissioner'') issued seven assessments against the appellant, Roy Morgan Research Centre Pty Ltd (``RMRC'') requiring RMRC to pay a total of $128,826.11 by way of payroll tax said to be payable under the Pay-roll Tax Act 1971 (``the PT Act'').
2. The seven assessments relate respectively to each year falling between 1 July 1993 and 30 June 1999. The total of the taxable wages said to have been paid by RMRC during that period was $2,632,058.
3. On 14 March 2000, pursuant to s 82 of the Taxation Administration Act 1996 (``the TA Act'') RMRC lodged with the Minister an objection to the assessments. By notice dated 25 August 2001, the Minister confirmed the assessments and dismissed the objection.
4. As required by s 89(2) of the TA Act, the Minister gave reasons as follows:
``Section 8(1) of the Pay-roll Tax Act 1971 (`the Act') provides that all wages are liable to payroll tax. The definition of wages includes remuneration payable to a person in relation to his or her capacity as an employee.
In my opinion the amount paid to the interviewers constituted wages for the purposes of the Act.
Accordingly I uphold the decision of the Commissioner of State Taxation in relation to all seven assessments.''
5. On 29 October 2001, pursuant to s 92 of the TA Act, RMRC lodged a notice of appeal to this Court against the Minister's determination.
6. The procedure for the hearing of such an appeal is governed by certain provisions in the TA Act.
7. Section 96 provides in part:
``96(1) The appellant's and respondent's cases on an appeal are not limited to the grounds of the objection or the reasons for the determination of the objection or the facts on which the determination was made.
96(2) ...''
8. Section 97 provides that on an appeal, the appellant has the onus of proving the appellant's case.
9. Section 98 sets out the powers which may be exercised by this Court in determining an appeal. The section is as follows:
``98 On an appeal, the Supreme Court may do one or more of the following:
- (a) confirm or revoke the assessment or decision to which the appeal relates;
- (b) make an assessment or decision in place of the assessment or decision to which the appeal relates;
- (c) make an order for payment to the Commissioner of any amount of tax that is assessed as being payable that has not yet been paid;
- (d) make any further order as to costs or otherwise as it thinks just.''
10. Having regard to those provisions, the appeal proceeded before me by way of a hearing de novo.
11. I received in evidence several affidavits tendered by counsel for RMRC. They were affidavits sworn by the following persons:
- (a) Tanya Cirkovic, who is a member of the firm of solicitors acting for RMRC in the proceedings. Her evidence was largely as to formal matters, more particularly the history of similar proceedings in which RMRC has been involved in other jurisdictions.
I refer to those proceedings later in this judgment.
- (b) Michele Levine. Ms Levine has been employed by RMRC since about 1984 and has held the position of its chief executive since 1992.
- (c) Athina Katiforis, who started with the company as a trainee researcher in 1990. She has been holding an office known as general manager of quality systems since 2002 and has had wide experience in the different departments of RMRC.
- (d) Carlien Gray, who is employed by RMRC as its South Australian state office and field manager.
12. Each of the deponents to the affidavits, with the exception of Ms Cirkovic who appeared as counsel for RMRC, were presented for cross-examination by counsel for the respondent.
13. I accept the evidence of the witnesses, who I think were endeavouring to give an honest account of the relevant business activities of RMRC and its dealings with the
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interviewers. That is with the qualification that I occasionally detected what I believe to have been a subconsciously defensive attitude as to some aspects of their evidence, which reflected a natural desire not to damage the interests of RMRC.14. However, even allowing for that, most of the evidence of importance in determining the ultimate issues was not put under serious challenge. Much of the relevant evidence is contained in various documents, the authenticity of which was not put in issue.
15. The central question raised by the appeal is whether the payments referred to in the assessments are wages paid by RMRC within the meaning of the PT Act in circumstances attracting a liability to pay payroll tax pursuant to s 8 of the Act.
Factual background
16. The narrative account which follows encompasses my findings of fact based upon the evidence given by the three witnesses, Ms Levine, Ms Katiforis and Ms Gray, including their affidavits and the various exhibits appended to the affidavits.
17. RMRC operates an Australia-wide business, the primary focus of which is in the field of market research.
18. The company gathers information by a variety of means. One of the techniques employed by the company involves the use of interviewers who conduct surveys by interviewing householders.
19. The disputed assessments relate to payments made by RMRC to the interviewers.
20. I will refer to the period covered by the disputed assessments, that is, the period between July 1993 and June 1999, as ``the relevant period''. Unless otherwise stated, my findings relate to that period. For convenience, I generally use the present tense in referring to work practices which applied in the relevant period.
21. Throughout the relevant period, three departments of RMRC engaged interviewers.
22. They were the Consumer Opinion Trends Department (``COT''), the department known as the Ad Hoc Department, and the Computer Aided Telephone Interviewing Department (``CATI'').
23. The COT and Ad Hoc Departments regularly used interviewers who operated in the field to conduct the surveys. The CATI Department used interviewers who conducted telephone interviews from RMRC's premises.
24. Most of the evidence in the case related to the COT interviewers. The majority of field interviewers are engaged in that department.
25. Unless I indicate otherwise, my references to interviewers applies to the COT interviewers.
26. During the relevant period, Australia- wide, RMRC regularly utilised the services of about 150 interviewers.
27. In South Australia the number was about 40.
28. The engagement of interviewers and the manner in which they carry out their work is the same throughout Australia.
29. Interviewers only work at weekends. Their task is to conduct face-to-face interviews with householders (whom I will call ``respondents'') in a designated area. They are furnished with questionnaires, and must conduct the interview by reading the questions precisely as formulated in the questionnaires and recording the responses. The questionnaires are drafted with precision. The integrity of the collection of data would be compromised if there was to be any deviation from them.
30. Most interviewers work two weekends per month. The work allocated to them for a given weekend is described as an ``assignment''. There are eight interviews per assignment.
31. As well as conducting the interviews required for each assignment, COT interviewers also invite the respondent to complete a self- completion survey. This is a questionnaire which is filled out by the respondent in his or her own time and returned to RMRC.
32. Most of the information received by the company comes from the self-completion surveys rather than from face-to-face interviews.
33. The Adelaide office of the company, as is the case with the other State offices, maintained a register of interviewers willing to accept assignments. Allocation of assignments was generally arranged on a week by week basis to interviewers willing to accept an assignment for the coming weekend.
34. It is convenient at this stage to look more closely at two critical aspects of the case: the
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engagement and training of interviewers, and the nature of the work performed by them.35. I will deal with each of those questions in turn.
(a) The engagement and training of interviewers
36. Ms Gray gave detailed evidence as to the process by which interviewers are engaged by RMRC.
37. RMRC advertises the availability of the work in newspapers circulating in the State.
38. In response to the advertisement, aspiring interviewers telephone RMRC. They are there and then asked a series of questions directed to making an initial determination of their suitability for the job. The questions asked are recorded on a pro forma sheet headed ``COT Inquiries Record (Screener).''
39. Apart from noting the full name and address and contact details of the caller, the callers are asked whether they have a car and a telephone, and whether they are available two weekends a month and are prepared to travel up to 100 kilometres.
40. A negative answer to any of those matters results in the telephone interview being terminated.
41. In the event of a positive answer as to those matters, a number of other questions are asked, such as whether or not the caller is a student, if so whether the demands of study might interfere with their availability, whether they speak more than one language, what interest they have in doing the work, and the like.
42. If a potential interviewer is considered suitable after the initial telephone screening, they are sent an application form. This repeats in written format many of the questions asked over the telephone, and requests additional information, such as the name of two referees.
43. The form concludes with a short section headed ``Agreement'' which reads:
``I understand that as an Interviewer I will be required at all times, while representing the company, to maintain confidentiality, to conduct myself with integrity and in a professional manner. I understand that the ID card, and canvas bag I receive are the property of Roy Morgan Research. In the event of my resignation or termination I will return the aforementioned items to Roy Morgan Research.''
44. If the prospective interviewer returns the application and it is regarded as satisfactory, and if they reside in the metropolitan area, they are invited to attend an information session. The information session is conducted at the office of RMRC.
45. At the session, the importance of asking survey questions exactly as they are written and the importance of properly completing the questionnaires is explained and stressed, and an explanation is given as to how RMRC determines interview areas.
46. In her affidavit, Ms Gray explains the information session in this way:
``22. RMRC does not offer any formal training for the interviewers. At the information sessions... interviewers are shown the correct RMRC procedure for filling out questionnaires and are reminded and/or advised as to the over-arching importance of statistical accuracy. It is stressed to the interviewers that, in order to provide a valuable statistical product, it is imperative that interviewers ask questions in exactly the same manner and without deviation from the way in which they are worded. It is imperative that questionnaires are properly administered and filled out - to do otherwise (for example, to incorrectly or ambiguously circle respondent answers or to ask questions that, by virtue of previous answers, should not have been asked) would be to put at risk the statistical accuracy and value of the product ultimately sold by RMRC. Furthermore, it is imperative that the questionnaires are completed such that they can be processed by RMRC's data entry and coding staff - computer software is involved in the compilation and tabulation of survey data, which requires that the questionnaires be filled out according to established protocols. As a result of all of this, the information sessions are held with interviewers to establish the exact task for which they are to be engaged. In relation to the performance of that task - which involves gaining permission from potential respondents to conduct the interview in their homes and establishing and utilising techniques for liaising with the public generally - RMRC does not provide, beyond useful guiding tips, any training at all, as this is considered (and is
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communicated to the interviewers) to be the sole domain of the interviewers.''
47. On leaving the information session, potential interviewers are provided with a number of documents, including a ``practice'' interview questionnaire, which is a sample of an interview sheet, a document described as a ``finding sheet'' which details the work performed by RMRC and which is a document handed to respondents, and a two-page document of instructions as to how to conduct the interview.
48. The potential interviewer is asked to complete the ``practice questionnaire'' with a friend or relative, and is given some instruction as to how to go about it. The completed practice questionnaire must then be returned to RMRC by the intending interviewer.
49. Amongst the documents given to the intending interviewer at this stage is a document headed ``Key Facts for Interviewers''. This reads:
``Roy Morgan Research, the people who conduct the Morgan Gallup Poll, is the Market Research company most widely recognised by the community and is considered to be the most accurate. You may have seen results of our surveys published each week in the `Bulletin' magazine and broadcast on programs like `The 7.30 Report'.
We are a proudly Australian company established in 1941, which now has offices in Melbourne, Sydney, Brisbane, Adelaide, Perth, Canberra and New Zealand.
We specialist in opinion polling in the areas of Market, Social and Political research.
The following are some facts, with which you need to be familiar, in order to fulfil your role as an interviewer for Roy Morgan Research.
- • You are required to conduct 8 face-to-face interviews per weekend in the homes of local residents. You are limited to 1 interview per household.
- • Your work is scheduled up to 3 months in advance, therefore you can organise your other commitments around your interviewing.
- • You are scheduled to work on 2 weekends per month (this may vary in some country areas), however extra weekend work is often available. Please indicate your availability on your availability schedule or arrange extra work with your Supervisor or Team Leader.
- • You commence interviewing on Saturday at 9.30 am and complete your assignment by late Sunday afternoon.
- • You work reasonably close to home, however, on some occasions you could be asked to travel up to 100 km from your home. (There is a reimbursement payment for kilometres travelled.)
- • Fees for assignments vary depending on the length of the questionnaire. The fee is calculated on the average predicted time which would be taken to complete all 8 interviews.
- • Bonuses are often awarded for completing extra or special tasks.
- • Our interviewers are Independent Contractors and tax is not deducted. This means that you are required to provide Roy Morgan Research with an ABN (Australian Business Number). We abide by all legal requirements such as Superannuation.
- • ID badges and contact telephone numbers are readily supplied so that people you interview can be reassured that you (and our Company) are genuine.
- • Good grooming is essential but no special clothing is required (neat, clean, comfortable attire is all that is needed).
- • Personal instruction (briefing) and manuals are provided. Advice, assistance and support is available at all times (weekends included).''
50. It will be seen that in that document there is written confirmation of the status of interviewers as independent contractors.
51. If their practice interviews are completed satisfactorily, prospective interviewers are then placed on the interview register. The interviewers are informed of their appointment as such by telephone, and a number of other documents are sent out to them.
52. The process for appointing country interviewers is largely similar, except that no information session is held. Instead, country interviewers simply complete a practice interview after their telephone screening.
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53. The documents sent out to the interviewers once they are placed on the register, include an appointment letter, which notifies the date of the first scheduled assignment, and again stresses the importance of reading the interviewer manual. The appointment letter encloses, and asks to be returned to RMRC, various other documents. These include an ``understanding letter'' which seeks answers to questions designed to ensure that the interviewer understands the various points associated with the technique of interviewing, and a ``confidentiality agreement and undertaking''.
54. The confidentiality agreement and undertaking includes the following statement:
``2. The recipient will be retained by the company as an independent contractor.''
55. Apart from that statement, the confidentiality agreement and undertaking stresses that the interviewer must ``keep in strictest confidence all knowledge or information concerning the business, affairs and property of the Company and its clients''.
56. In several places it speaks of ``termination of his [the interviewer's] contract''.
57. The confidentiality agreement and undertaking provides spaces for signing by both the interviewer and RMRC.
58. The other document which is sent out with the appointment letter is the interviewer's manual, which is a substantial document containing detailed instructions as to how to conduct interviews.
59. The manual contains many dos and don'ts, some of them expressed with more emphasis than others.
60. When the ``understanding'' letter and the confidentiality agreement and undertaking have been returned to RMRC, prior to the date shown on the appointment letter, the interviewers are sent out their first assignment.
61. I deal with the documents sent out at that stage in the next section of these reasons.
62. As I have explained, it is expressly agreed in writing between interviewers and RMRC that the interviewer is, vis a vis RMRC, an independent contractor. Consistently with that agreement, no PAYE income tax is deducted from payments to the interviewers, and they do not receive any paid sick leave or annual leave, or any amounts in lieu of those entitlements.
63. Since 1992, superannuation in accordance with the Superannuation Guarantee (Administration) Act 1992 (Cth) has been provided for interviewers where total fees paid for a given month reach the required minimum level.
64. In South Australia, the WorkCover levy is paid pursuant to the Workers Rehabilitation and Compensation Act 1986.
65. The superannuation and workers compensation cover is paid for by RMRC in response to legal advice which it has received that the definitions of ``worker'' or ``employee'' in the relevant Acts is wide enough to include contract interviewers, notwithstanding that it is asserted that they are not employees at common law.
66. I accept that both Acts embody extended definitions of ``worker'' or ``employee'', and I accept the evidence that RMRC acted on legal advice in dealing with those two aspects of the matter.
67. Interviewers are not given an assurance that they will be offered work, nor are they guaranteed work. Furthermore, they are not obliged to accept it when offered. Interviewers frequently refuse assignments, sometimes because they have similar or other employment elsewhere. There is no penalty imposed if they do not accept assignments.
68. Some interviewers are engaged through a proprietary limited company, and some contract under a business name. However, the evidence as to this appears to relate to the position Australia-wide. There was no evidence of that which was specific to South Australia. I therefore cannot rely on that evidence for the purposes of this case.
(b) The nature of the work performed by interviewers
69. I have already explained that interviewers are allocated ``assignments'' and that there are eight interviews per assignment.
70. The assignment must be performed within a given weekend. It will have been seen from the ``key facts'' document that interviewers are expected to commence interviewing from 9.30 am on the Saturday and to complete the assignment by late on Sunday afternoon.
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71. The amount of time actually spent completing an assignment varies according to the skills of the interviewer, the area within which a particular assignment is to be carried out, the nature of the questionnaire and other variables. However, it appears from the evidence that on average a single interview takes between 45 minutes and one and a quarter hours.
72. A particular assignment is confirmed in writing sent out to the interviewer concerned. With confirmation of the assignment, a number of documents are sent to the interviewer. These include the ``show cards'' document which contains a suggested introductory spiel to be adopted when commencing an interview and the survey or interview form.
73. As well, the interviewer is given a ``record of calls'' sheet and a document headed ``Interviewing Instructions''.
74. This is a sheet which gives certain instructions of general application, such as a reminder to read the questionnaire thoroughly, together with information specific to the particular assignment, such as notes as to areas in which to take care or to place particular emphasis with respect to certain of the questions to be asked.
75. The interviewing instructions also indicate a fee to be paid on completion of the assignment and the amount per kilometre to be allowed towards the cost of travel.
76. Interviewers administer the questionnaire to consenting respondents. They do so in their own time, within the broad parameters set in the assignment documents.
77. As I have said, the manual and the ``show card'' contain very specific instructions as to, for example, introductory remarks to be made by an interviewer when first making contact with the respondent. But I accept the evidence of the witnesses that however emphatically the instructions are given, interviewers do not take them literally and are likely to adopt their own style of approach to respondents.
78. There are several reasons why this is so. It is in the nature of things that individual interviewers will need to give expression to their own personalities in successfully engaging the attention of a potential respondent, and they will also have to deal effectively on the spur of the moment with the varying reactions which will come from a respondent when the door is opened and the interviewer endeavours to engage the co-operation of the respondent. They cannot hope to cope satisfactorily with that situation by parroting a suggested form of words. I accept that in practice they do not do so.
79. I accept also the evidence of the witnesses that even where the manual describes aspects of the way in which the work of the interviewers is to be discharged very specifically, interviewers regard the manual as a source of guidance only.
80. For example, when the manual states, ``3.2 First impression. You will, of course, be neat and well-groomed'', the manner of dress of the interviewers varies considerably. No uniform is used, although an ID badge is supplied.
81. I accept Ms Katiforis' evidence that she has seen some interviewers in what she described as ``quite bizarre dress''.
82. It is essential to the exercise that the actual questions embodied in the questionnaire must be put precisely, and efforts are made in a variety of ways to ensure that interviewers understand that.
83. The actual interviewing is unsupervised, in the sense that the interviewer is unaccompanied by any representative of RMRC.
84. Although the interviewers have a telephone number which they may ring to speak to a so-called ``supervisor'', I accept the evidence that this is something of a misnomer, in that the so-called ``supervisor'', who is a permanent employee of RMRC, is not in a position to give any effective supervision as to the manner in which the interviewer actually conducts the interview.
85. In South Australia it is Ms Gray's telephone number which the interviewers are given to ring if they want any help. As Ms Katiforis said in her affidavit:
``84. During the periods in which contract interviews are being conducted, RMRC has a person on standby in order to provide limited assistance to interviewers. The assistance is limited to very basic help. An example of the kind of assistance given includes advice to interviewers who are unable to find any houses in a street where they are directed to start, are missing parts of the materials needed for interviews, or
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where the interviewer cannot understand the directions in a questionnaire. Most of the time, the person can only tell the interviewer to read the questionnaire as written. They cannot assist with questions or recruiting participants.''
86. Interviewers are paid upon the completion of an assignment, and not before. Some interviewers do not complete an assignment, in which case they remain unremunerated.
87. Upon completion of an assignment, the interviewers return the completed questionnaires and a time sheet to RMRC. They are then paid for that assignment.
88. From time to time RMRC conducts what is described as an ``audit''. The audit is performed by an employee of RMRC ringing some of the respondents to a particular survey to confirm that the interview had in fact been conducted. The audit phone call also provides an opportunity for the respondents contacted during the audit to register any complaint as to the manner in which the survey may have been conducted.
89. Subject to that, I accept Ms Levine's evidence that the audit process reveals whether the interviewer has done the work, that is, performed the interview, but it does not tell RMRC how they may have performed their work.
90. All that RMRC expects to receive from the interviewers are the completed questionnaires and the other documents returned on completion of the assignment. RMRC has no means of ascertaining how accurately the interviews may have been conducted. In that respect, RMRC relies on the expertise of the individual interviewer.
91. The Ad Hoc Department interviewing is highly irregular and does not involve any continuous work. The ad hoc interviewers do not receive the training manual. When RMRC advertises for the ad hoc interviewers, which I understand relates to a particular task, the interviewers who are engaged are generally people who have previously worked as interviewers with RMRC or for other market research companies. No further training or instruction is offered.
92. While some Ad Hoc Department interviews are conducted on a door-to-door basis, they may, depending on the requirement of the client, be conducted at a particular venue, such as a shopping centre, sporting ground or workplace.
93. Organising interviewers for the Ad Hoc Department interviews was described by Ms Katiforis as ``even more sporadic than the COT Department''. I assume from that, that there was even less regularity in engagement, and each assignment had to be separately negotiated with the interviewer.
94. There was very little evidence specific to CATI interviewers.
95. As I have explained, they conduct interviews by telephone at the office of RMRC. Their engagement is otherwise on a similar basis to the COT field interviewers, except that there is a better opportunity to audit their performance, by listening in to the calls.
96. Ms Katiforis said in her affidavit:
``The CATI Department was more similar to the Ad Hoc Department than the COT Department. Whilst the interviewing was by telephone, it was necessary to negotiate with the interviewer regarding the time and date of the particular assignment, along with the subject matter. Again, interviewers were not rebuked for refusing particular assignments.''
Relevant legal principles
97. I accept the statement of general principle advanced by Dr Bleby, who appeared as counsel for the respondent, which appears in the following passage from his written outline of argument:
``3. In determining whether a relationship is one of employer/employee, or that of independent contract, regard must be had to the totality of the relationship between the parties, one feature of which is the principal's right to exercise control over the putative employee. The totality of the relationship is to be ascertained by obtaining an overall picture from the accumulation of detail.''
98. One of the authorities which Dr Bleby cites in support of that proposition is Stevens v Brodribb Sawmilling Co Pty Ltd.[1]
``... 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
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could and did exercise closer and more direct supervision than 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.[3](1955) 93 CLR at 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.''
(emphasis added)
99. Mason J's reference to the ``totality of the relationship'' between the parties was adopted with approval in Hollis v Vabu Pty Ltd (t/a Crisis Couriers),[4]
``... It should be added that the relationship between the parties, for the purposes of this litigation, is to be found not merely from these contractual terms. The system which was operated thereunder and the work practices imposed by Vabu go to establishing `the totality of the relationship' between the parties; it is this which is to be considered.''
100. In the same joint judgment the observation was made ``... that the couriers had little control over the manner of performing their work''.[6]
101. In Hollis v Vabu there is a reference in the joint judgment to TNT Worldwide Express (NZ) Ltd v Cunningham.[8]
``58.... Although such terms are not of themselves determinative, as parties cannot deem the relationship between themselves to be something it is not,[10]
Referring to this term was held to summarise the relationship between the parties accurately.''; R vFoster; Ex parte Commonwealth Life (Amalgamated) Assurances Ltd (1952) 85 CLR 138 at 150-151; Adam vNewbigging (1888) 13 App Cas 308 at 315. See also Ex parte Delhasse; In re Megevand (1878) 7 Ch D 511 at 526, 528, 532: ``The proper classification of a contractual relationship must be determined by the rights and obligations which the contract creates, and not by the label the parties put on it.'' TNT Worldwide Express (NZ) Ltd vCunningham [1993] 3 NZLR 681 at 699
102. In the same case McHugh J observed:[11]
``71 The right to supervise or direct the performance of a task cannot transform into a contract of service what is in substance an independent contract,[12]
Citing and, when a person has to provide equipment such as a motor vehicle, the conventional view is that the person is not an employee.''. Queensland Stations Pty Ltd vFC of T (1945) 8 ATD 30 at 35;(1945) 70 CLR 539 at 552
103. In their submissions, counsel for the appellant and for the respondent each itemised various aspects of the relationship between the parties which, it was suggested, supported the characterisation of that relationship in the terms which each of them contended for.
104. While no doubt identification of relevant factors is essential to the exercise, the answer is not to be derived by a process of lining up one set of competing considerations against the other. Rather, as I have said, and as has been emphasised in the cases, it is the totality of the relationship to which attention must be paid.
105. I will not therefore attempt to catalogue the various factors pointed to by each party, but I will refer to one or two considerations which seem to me to be important elements in assessing the totality of the relationship.
106. The element of ``control'' is still an important factor to which weight must be given. In that respect, I refer to observations made by Byrne J sitting in the Supreme Court of Victoria in one of the earlier Roy Morgan Research Centre cases involving the question of the liability for payroll tax in that State with respect to payments to interviewers.
107. In Roy Morgan Research Centre Pty Ltd v Commr of Tax Revenue (Vic)[13]
``Counsel for the Commissioner placed great reliance upon the considerable detail in the instructions given to interviewers as to the manner in which they were to perform their task. This, it was said, satisfies the test that RMR reserved to itself the right to control them. On the other hand counsel for
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RMR relied upon the absence of actual supervision. It may be said that the Commissioner's submission loses much of its force when it is seen in the light of the task in question. It is of the nature of market research that interviews should be conducted, as far as possible, without variation between interviewers or between surveys. For this purpose, it is inevitable that a degree of control should be maintained whether the task be carried out by an employee or an independent contractor:
TNT Worldwide Express (NZ) Ltd v Cunningham [1993] 3 NZLR 681 at 697, per Casey J. The paradoxical nature of this argument, however, was identified by the Privy Council in
Narich Pty Ltd v Commr of Pay-roll Tax (NSW) 84 ATC 4035 at 4042-4043; (1983) 15 ATR 153 at 160; (1983) 50 ALR 417 at 426. There, their Lordships emphasised that it is the engagor's contractual entitlement to control the manner in which the task is to be performed which is of importance, a factor emphasised in
Stevens v Brodribb Sawmilling Co Pty Ltd (1986) 160 CLR 16. Moreover, the absence of actual supervision of the interviewer's conduct of interviews is of less significance when it is recognised that it would be difficult, if not impossible, for a supervisor to accompany the interviewer on their visits and that this might have the consequence of introducing into the survey an unacceptable variable with the possibility of affecting the reliability of the result:
Sgobino v State of South Australia (1987) 46 SASR 292 at 305, per Matheson J. To my mind, the degree of control reserved by RMR points to an employer/employee relationship.''(emphasis added)
108. With respect to Byrne J, I have no quarrel with his comment ``... it is inevitable that a degree of control should be maintained whether the task be carried out by an employee or an independent contractor''. But at least on the evidence given before me, I have a difficulty in accepting that in this case the degree of control reserved by RMRC points to an employer/employee relationship.
109. Byrne J refers to the decision of the Judicial Committee of the Privy Council in Narich Pty Ltd v Commr of Pay-roll Tax (NSW).[15]
``It was argued by counsel for Narich that the mere fact that a contract, under which one person is engaged to do work for another, prescribes in great detail not only the nature and scope of the work to be done, but also, in equal or even greater detail, the way in which it is to be done, does not of itself mean that the former person is under such control and direction by the latter as to create a relationship of employer and employee between them. On the contrary, it was submitted that, the greater the detail in which the way in which the person engaged is to do his work is prescribed by the contract concerned, the less scope there is for direction and control of the way in which the work is done during and in the course of its performance.
In their Lordships' view this argument has a paradoxical quality about it. It matters not by what means the engagor is contractually entitled to direct and control the manner in which the engagee does his work. What matters is that, by one means or another, the engagor is, as a matter of law arising from the terms of the contract concerned, entitled to do so.''
110. With respect, I would agree that it does not follow from the fact that a contract prescribes in great detail the way in which the work is to be performed necessarily signals that there is less scope for direction and control.
111. A building contractor may be required to perform his or her work with fine attention to very detailed specifications, but this does not limit the ability of a supervising architect, as agent for the owner, to give directions which descend into the detail of the work to be performed. The fact that very detailed specifications may be given and the fact that the supervising architect can closely supervise the work, are not matters which would ordinarily operate to make the building contractor an employee of the building owner.
112. While I accept also that it is a question of the right of control rather than the actual exercise of it which is important, this case seems to have a distinguishing feature. In this case, there is simply no practical ability to
ATC 4929
control the actual performance of the work. It follows that in this case, the right of control lacks relevant content and ceases to be such an important factor.113. The comment by the authors of the joint judgment in Vabu (supra) ``this is not a case where there was only the right to exercise control in incidental or collateral matters'' (my emphasis) is apposite.
114. Here, if there was scope for control, it was only in respect of incidental matters.[17]
115. Putting it another way, the fact that the scope for control in the actual carrying out of the contract is limited to relatively peripheral matters must mean that the weight to be accorded the element of control in considering the totality of the relevant circumstances is less than would otherwise be the case.
116. The fact that interviewers were neither guaranteed work, nor obliged to accept an offer of an assignment is a matter of some significance; see the observations of Mason J in Stevens v Brodribb Sawmilling Co Ltd (supra):[18]
``Although they were available each working day, fellers, sniggers and truck drivers were not guaranteed work and were free to seek other work if bad weather or other circumstances prevented them from working for Brodribb.''
117. There is also authority for the view, which I accept, that in cases where there is a contract pursuant to which the contractor undertakes to produce a given result and is only entitled to payment when the contractual condition, that is, production of the required result, has been satisfied, the contractor is likely to be regarded as an independent contractor rather than an employee.
118. As it was put by Sheller JA in World Book (Australia) Pty Ltd v FC of T:[19]
``... Undertaking the production of a given result has been considered to be a mark, if not the mark, of an independent contractor: see, for example Queensland Stations Pty Ltd v FC of T.''[20]
at 31 and 33; (1945) 70 CLR 539 at 545 and 548. (1945) 8 ATD 30
119. In this case, interviewers received no remuneration, however many interviews they performed, unless they completed all eight comprised in an assignment.
120. As Dr Bleby pointed out, RMRC has unsuccessfully conducted proceedings in Victoria on what Dr Bleby describes as ``near identical facts''. I have read the decisions to which he referred, some of which apply to RMRC's operations in Victoria during periods other than the period now in question.
121. The first series of appeals in Victoria related to an assessment by the Victorian Commissioner for State Revenue with respect to the period 1980-1986. Further appeals were lodged by RMRC against assessments by the Victorian Commissioner with respect to the periods 1987-1995 and 1995-1996, which overlap or fall within the period relevant to this case.
122. The sequence of decisions in Victoria is as follows:[21]
123. In relation to the period 1980-1986, the following decisions were made:
- Roy Morgan Research Centre Pty Ltd v Commissioner of State Revenue (Vic) (23 January 1996) Administrative Appeals Tribunal of Victoria - Taxation Division; 9 VAR 351 (G Gibson, Member); affirmed by:
- The Roy Morgan Research Centre Pty Ltd v The Commissioner of State Revenue (VSC) No 4508 of 1995, BC9603678; 33 ATR 361; 96 ATC 4767 (Byrne J); affirmed by:
- The Roy Morgan Research Centre Pty Ltd v The Commissioner of State Revenue (Vic) (Victorian Court of Appeal) (1997) 37 ATR 528; 97 ATC 5070.
124. Special leave to appeal from the decision of the Victorian Court of Appeal was refused by the High Court:
- The Roy Morgan Research Centre Pty Ltd v The Commissioner of State Revenue M100/1997 (19 May 1998)
125. In relation to the periods 1987-1995 and 1995-1996, the following decision has been made:
- Roy Morgan Research Centre Pty Ltd v The Commissioner for State Revenue (30 April 1999) Victorian Civil and Administrative Tribunal, General Taxation Division, No 071671 of 1998 (G. Gibson, Member).
126. So far as I am able to glean from the published decisions, the facts accepted in them relating to the nature of the business operation of RMRC and its relationship with the interviewers, closely equates with the essential factual findings which I have made.
ATC 4930
127. There are, however, some minor differences. I have set out rather more detailed findings of fact. However, I do not suggest that the differences satisfactorily explain the different outcome in those cases, compared with the conclusion which I come to in this case.
128. I have carefully considered those cases, particularly the decision of Byrne J which I have already cited in these reasons, and the decision on appeal from Byrne J to the Victorian Court of Appeal. I have been very much assisted by those decisions, and I accord them respect. But however desirable it might be to have uniform decisions between the States in considering the application of uniform legislation to a similar trading operation, I must reach my own decision on the evidence given before me.
129. While obviously, if my decision stands, there will be differences in the application of the payroll tax legislation as between the States, the decision which I come to, in contrast with the Victorian decisions, is at least in harmony with the view taken by the Federal Commissioner of Taxation, who has accepted the claim of the interviewers to be independent contractors for the purposes of assessment of income tax.
Conclusions
130. I have reached the view that the appeal should be allowed.
131. In my view, the contract between RMRC and the interviewers, which is partly oral and partly in writing, is a contract pursuant to which their relationship for present purposes should properly be characterised as that of principal and independent contractor.
132. In reaching my conclusion, I have endeavoured to address what has been described as the ``totality'' of the relationship between the parties.
133. I have had particular regard to the question of control; to the fact that work for the interviewers is not guaranteed; that they may refuse work; that they are not entitled to payment until each assignment is completed; that they provide their own motor vehicle (although there is some reimbursement in the nature of an allowance per kilometre travelled) and telephone; that income tax is not deducted; that they do not receive any paid sick leave or annual leave, or any amounts in lieu of those entitlements; and that both parties have expressly contracted on the footing that the interviewers are independent contractors.
134. For the reasons which I have given, the fact that the Superannuation Guarantee Levy and the WorkCover Levy are paid by RMRC, does not deflect me from the conclusion which I have reached. In the first place, that fact must be considered within the totality of relevant circumstances. In the second place, the significance of the payments is considerably less than might otherwise be the case, by reason of the fact that in paying the levies, RMRC is acting on legal advice to the effect that the terms of the relevant legislation operate to widen significantly the concept of ``worker'' and ``employee'' beyond that which is defined by the common law.
135. There is no inconsistency between maintaining on the one hand that the relationship at common law is that of principal and independent contractor, and at the same time, recognising that legislation which defines ``worker'' and ``employee'' more widely than the common law, may lead to a different result for the purposes of that legislation.
136. It is not a question of determining whether the opinion of the legal advisers as to the effect of the legislation is correct or not. If, as a matter of business prudence, RMRC acts on such advice, its payment of the levies ceases to be of significance in determining the relationship of the parties at common law.
137. I have not overlooked the arguments advanced by Dr Bleby, particularly his argument that there is little scope for the interviewers to create a business enterprise of their own, for example, by the accumulation of goodwill, and that the interviewers are in fact participating in RMRC's business operation. I accept that there is weight in that argument, but in my view, that circumstance is outweighed by the factors pointing the other way.
138. After all, in Humberstone v Northern Timber Mills[22]
ATC 4931
139. The fact that the parties have expressly contracted upon the basis that the interviewers will be independent contractors is not a matter which can lightly be put aside. I have no reason to doubt that the agreement between the parties recorded in writing to that effect is a genuine agreement, and that the interviewers bear their own responsibility for income taxation and claim allowable deductions referrable to expenses incurred by them as sole traders.
140. In those circumstances, when the overall evidence relating to the characterisation of their relationship with RMRC is in the relevant sense at best equivocal, I see no reason why the Court should not give effect to the common intention of the parties.
141. While I have not been influenced in the conclusion which I have reached by the policy considerations referred to by McHugh J in Hollis v Vabu Pty Ltd (supra), nonetheless it seems to me that a conclusion which does not carry with it the risk that employers will be made ``retrospectively guilty of a number of statutory offences'' and which does not ``unsettle many established business arrangements'',[23]
142. I allow the appeal and revoke the assessments in question.
Footnotes
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