Sentry Life Assurance Limited v. Commissioner of Pay-roll Tax (N.S.W.).
Judges:Sheppard J
Court:
Supreme Court of New South Wales
Sheppard J.: These cases raise questions of the construction of provisions of the Pay-roll Tax Act 1971 (``the Act''). They are test cases. The cases are appeals, brought pursuant to sec. 33 of the Act, against the disallowance by the Commissioner of Pay-roll Tax of objection to assessments of pay-roll tax made by the two plaintiffs. The
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evidence in the cases is, for the most part, contained in agreed statements of facts.The Legislation:
The immediately relevant provision of the Act which is in question is para. (d) of the definition ``wages'' in sec. 3(1) of the Act. Before I come to that provision I should mention some others. Pay-roll tax, which is defined in sec. 3 of the Act to mean the tax chargeable under sec. 7, is levied, pursuant to the provisions of sec. 7, on all taxable wages. That expression is defined in sec. 3 to mean wages which, under sec. 6, are liable to pay-roll tax. Section 6, so far as it is relevant, provides that the wages liable to pay-roll tax under the Act are wages that are paid or payable by an employer after the month of August 1971 whether in respect of services performed or rendered before, during or after that month.
As I have said, the expression ``wages'' is defined in sec. 3. The definition is as follows:
- ``wages'' means any wages, salary, commission, bonuses or allowances paid or payable (whether at piece work rates or otherwise and whether paid or payable in cash or in kind) to an employee as such and, without limiting the generality of the foregoing, includes -
- (a) any amount paid or payable by way of remuneration to a person holding office under the Crown in right of the State of New South Wales or in the service of the Crown in right of the State of New South Wales;
- (b) any amount paid or payable under any prescribed classes of contracts to the extent to which that payment is attributable to labour;
- (c) any amount paid or payable by a company by way of remuneration to a director or member of the governing body of that company;
- (d) any amount paid or payable by way of commission to an insurance or time-payment canvasser or collector; and
- (e) the provision by the employer of meals or sustenance or the use of premises or quarters as consideration or part consideration for the employee's services.
It is to be observed that the opening paragraph refers to an employee. There is no definition of employee in the Act. The word ``employer'' is defined to mean any person who pays or is liable to pay any wages and includes the Crown in right of the State of New South Wales.
Section 8 of the Act provides that pay-roll tax is to be paid by the employer by whom the taxable wages are paid or payable. Section 13 requires every employer to whom it applies to furnish within seven days after the close of each month in the manner prescribed a return relating to that month. The employer is to specify in that return any taxable wages that were paid or payable by him during that month. Section 13(2) enables the Commissioner to extend the time within which an employer is required to furnish returns or authorise an employer to furnish returns in relation to a period longer or shorter than a month.
Background:
The two plaintiffs carry on business as insurance companies. Sentry Life Assurance Limited (hereinafter called ``Sentry'') carries on business as a life assurance company. It was formerly known as Commercial Life Assurance Limited. General Accident Fire & Life Assurance Corporation Limited (hereinafter called ``General Accident'') carries on business as an insurance company engaged in the field of general insurance. Whether it also carries on the business, as its name implies, of a life assurance company, I do not know. In the way that the case has been presented, that would not be a relevant matter.
Each of the plaintiffs is an employer to whom sec. 13 applies and furnishes returns pursuant to that section accordingly. That is because each has large numbers of employees employed in New South Wales. The cases to be decided do not relate to employees in the true sense who receive wages or salaries for the work which they do, but to persons who are agents of, or engaged as independent contractors by, the two plaintiffs. In other words, they are persons who are not employed pursuant to contracts of service but are persons (they include some partnerships and companies) engaged to provide services for the plaintiffs.
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Preparation of the two statements of facts which, as I say, comprise the bulk of the evidence, began before the decision of the Privy Council in
A.M.P. Society v. Allan (1978) 52 A.L.J.R. 407. That was a case involving the question of whether an agent appointed by the A.M.P. Society was a true employee. The Privy Council decided that he was not. As I understand the position in the present cases, the Commissioner would have wished originally to argue that some of the agents receiving remuneration from the plaintiffs were true employees. In the light of Allan's case that submission was not made and it was accepted by the Commissioner that each of the persons was engaged pursuant to a contract for services rather than a contract of service.
It is the Commissioner's submission that each of the agents of Sentry referred to in the statement of facts filed in its case, and most of the agents of General Accident referred to in the statement of facts filed in its case, are insurance canvassers to whom amounts are paid or payable by way of commission. The amounts so paid or payable are thus said to be wages for the purposes of the Act by reason of the operation of para. (d) of the definition of ``wages'' above set out.
The Evidence:
I next propose to recount shortly the facts of the matters. In the view that I take, the detail of the evidence is not of significance. But the cases are test cases and I should say what the evidence is. Furthermore, tedious though the process of setting it out is, I do think that an understanding of its detail assists when one comes to consider the implications of the parties' submissions.
In referring to the evidence I have used, to a large extent, the agreed language of the parties. Sometimes the meaning of that language is not altogether clear, but it would be unsafe for me to put my own construction or gloss upon it.
In each case there is reference to a period of time during which an insurance agency was carried on. In the cases of agencies which were already carrying on business when the Act came into force, that period commences on 1 September 1971. In other cases it commences with the commencement of the agencies' businesses. The period is the period in each case for which the Commissioner has purported to levy pay-roll tax on commissions earnt by the various agents. I have not found it necessary in all cases to specify what the period was.
There are eight examples of life insurance agents appointed by Sentry in its case and twenty-three examples of general insurance agents appointed by General Accident in its case.
(a) Life Insurance Agents:
I deal first with Sentry. I do not propose to deal with the eight cases in the order in which they appear in the agreed statement of facts. Six of the cases have a similarity. Two concern life insurance agents who are individual persons (Cases 7 and 8), two concern life insurance agents which are partnerships (Cases 3 and 4) and two concern life insurance agents which are companies (Cases 1 and 2). The remaining cases (Cases 5 and 6) are of a special kind. I shall refer to them last of all. With some differences, the individuals in Cases 7 and 8 carry on their businesses as life insurance agents in much the same way as do the partnerships in Cases 3 and 4 and the companies in Cases 1 and 2. The essential difference is that the businesses are carried on either by partnerships or companies as distinct from individuals.
Case No. 7 concerns a life insurance agency carried on by a Mr. Bice. Mr. Bice entered into an agency agreement with Sentry on 12 March 1975. By cl. 1 of the agreement, Sentry appointed Mr. Bice as an agent ``for the purpose of soliciting proposals for new life assurance policies upon and subject to the terms and conditions set forth in its agreement...''. Clause 2 provided that Sentry should have the right to define or restrict the area in which Mr. Bice might solicit proposals for life assurance policies. Clause 4 provided that Mr. Bice should not, except with Sentry's authority, at any time during the currency of the agreement submit proposals for life assurance to or act directly or indirectly for any other life office. By cl. 5, however, Mr. Bice was authorised during the continuance of the agreement to engage in any other business or employment and might carry out the activities, duties and obligations agreed to be performed by him either personally or through his servants, employees or representatives ``at such time and in such manner as it appears to him best
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fitted for the proper performance thereof without direction or control'' by Sentry. Nothing in the agreement was to constitute Mr. Bice an officer or an employee of Sentry. Clause 6 provided for the payment of commission. Clause 11 provided for the manner of its determination. Clause 14 provided that the agreement was not assignable. It is unnecessary to refer to any other provision of the agreement.During the relevant period 90 per cent of Mr. Bice's income came from commissions earnt in effecting life insurance policies with Sentry. The remaining 10 per cent of Mr. Bice's income consisted of commission received by him from effecting insurance other than life insurance.
Shortly after entering into the agreement with Sentry, Mr. Bice approached persons known to him prior to that time with a view to interesting them in life insurance. He contacted such persons by telephone, informed them of his new occupation and asked them whether they required life insurance or whether they knew anyone who needed life insurance. He followed up suggestions made to him and thus made contact with further prospective clients. Mr. Bice usually spent the first few hours each day preparing a list of persons he intended contacting that day and then speaking to them on the telephone. He spoke to them on the telephone from his home, only calling at Sentry's office once or twice a week. When he did so he also made some calls to prospective clients from its office.
When he spoke to clients on the telephone he made appointments with them and went to see them personally. Occassionally he used Sentry's office for this purpose. When endeavouring to interest someone in taking out life insurance, Mr. Bice first discussed the question of life insurance generally. Eventually, however, Sentry's name was mentioned and there were detailed discussions leading to the filling out of the proposal and other necessary documents.
Mr. Bice was paid commission by monthly cheques which were collected by him when he visited Sentry's office. Sentry deducted income tax from the amounts paid to him. He had no agreements with any other insurance companies apart from companies related to Sentry.
Case No. 8 is that of a life insurance agency conducted by Mr. P.J. Mullens at Land Cove. On 1 March 1973, Mr. Mullens entered into an agency agreement with Sentry. The agreement was in a form similar to that signed by Mr. Bice.
On 1 January 1976, which is towards the end of the relevant period Mr. Mullens entered into a partnership with his wife and an agreement in similar terms to the one I have described was entered into by the partnership.
Mr. Mullens operated mainly from Sentry's premises in Clarence Street, Sydney. He had no specific office set aside nor was he provided with a secretary who worked exclusively for him. Sentry made available to him the services of a secretary to type letters and other necessary documents. Mr. Mullens spent approximately the first two hours of each day on the telephone confirming and making appointments with potential ``clients'' (the word used in the agreed statements of facts). This was mainly done from Sentry's office but also from his home. The next three hours were spent meeting potential clients to whom Mr. Mullens had already spoken on the telephone. The names of these potential clients were mostly obtained from Mr. Mullens' own sources. On a very few occasions the existing policy holders wanting further insurance were referred to him by the Divisional Sales Manager or other employees of Sentry.
Mr. Mullens' business originated with his writing down the name of every person he knew. He sought to sell them insurance and also sought from them the names of other persons who might be interested in taking out life insurance. Additionally, he had a number of contacts who referred names or other leads to him. These contacts were solicitors, accountants, persons in government departments or friends who were in a position to refer names to him. Mr. Mullens saw potential clients in the Sentry office and also in their offices or homes or in cars, clubs or hotels. In interviews with clients the name of Sentry was not mentioned until the end of the interview. Mr. Mullens was seeing the potential client about life insurance but it was not necessarily to be provided by Sentry. Notwithstanding the provisions of cl. 4 of his agreement to which
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I have referred above, Mr. Mullens also had an agency with another life insurance company, Occidental Life Insurance Company of Australia Limited. If it was decided that insurance should be arranged with that company, the transaction was arranged with it in a manner similar to the way it was arranged with Sentry. Mr. Mullens received a commission from Occidental Life in respect of any policies effected with it. He also had an agency for Mutual Life & Citizens Assurance Company Limited. His business cards and his stationery made no mention of Sentry. He did not use any stationery supplied by it apart from proposal and other forms used in effecting policies.Case No. 3 is that of a partnership of which Mr. Mullens (dealt with in Case No. 8) was a member. The partnership consisted of Mr. Mullens and his wife. They traded under the name of Peter J. Mullens & Associates during the period 1 January to 31 December 1976. They entered into an agency agreement with Sentry in terms similar to that entered into by Mr. Mullens when he was trading on his own account. The amount of commission received by the partnership represented 80 per cent of their income. The remaining 20 percent came from commissions earnt in effecting general insurance. The partnership carried on business in exactly the same way as was done by Mr. Mullens before the partnership commenced.
Case No. 4 relates to another partnership, Max Crowley & Associates. The partners were Mr. Crowley and his wife. They too entered into an agency agreement in terms similar to that signed by the other agents to whom I have referred. The total amount of commission received by them from Sentry represented 75 per cent of their gross income. The remaining 25 per cent consisted of commission earnt by them as real estate agents.
During the relevant period, the partners each day prepared a list of the names of potential clients they intended calling on the telephone that day. They then spent two hours speaking to the people on the list endeavouring to make appointments with them. The calls were usually made from the partners' office which was in their home. Some calls were made from Sentry's office. The names of the persons to be contacted came from the partners' own sources. The most important sources were leads obtained from existing policy holders. Some supplied the partners with a reliable and steady source of names of potential clients throughout the entirety of the period. Other sources from which names were obtained were from persons working in government departments who were known to one of them. During the period one partner obtained names of prospective clients by visiting various places such as military bases, hospitals and government offices where he was able to see people during working hours. This, however, proved to be only a minor source of business.
After making the telephone calls in the morning, one of the partners would subsequently see potential clients and discuss with them generally the question of life insurance. If a client wished to proceed with a particular life policy with Sentry, the partner arranged for him to complete the proposal form and sign it. Occasionally, if short of time, the partner himself completed the form, inserting information supplied by the client. The partners usually saw clients in their homes or offices. On a few occasions clients were seen in Sentry's office.
Most insurance arranged by the partners was for a number of employees of a particular employer under a group employee insurance scheme. The partners made arrangements for payment of premiums to be made by the employer for all employees covered by the group scheme.
Commission was paid to the partners by Sentry monthly.
Cases 1 and 2 are cases of companies which were appointed agents. Case No. 1 is that of Eric Phillips & Associates Pty. Limited which was incorporated on 12 March 1974. The company carried on business firstly from premises occupied by Sentry and more recently from its own office in Brookvale. The directors of the company are Mr. E.N. Phillips and his wife. Previously Mr. Phillips had an agency with Sentry on his own account. On or about 12 March 1974 his agency was assigned by him to the company by an oral agreement which was entered into with the consent of Sentry. The agreement entered into with Sentry by Mr. Phillips is in similar terms to those
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entered into by the individuals and partnerships already mentioned. The total amount of commission received by the company represented 90 per cent of the gross income of the company during the relevant period. The remaining income consisted of payments made to the company by Sentry pursuant to a sickness and accident policy taken out in respect of Mr. Phillips who suffered an illness during the period.The method by which the directors of the company carried on its business was to prepare each business day a list of persons who might need or be interested in life insurance and who were to be contacted that day. The names of those persons were obtained by the directors from clients for whom they had arranged insurance previously or from friends or acquaintances who had given them the names of such persons or other leads or information.
If a person wished insurance taken out, it was suggested to him that the policy be taken out with Sentry. If this were agreed to, the directors arranged for the client to fill out a proposal form or occasionally filled it out on his behalf. On approximately three occasions during the relevant period clients said that they wished to insure with a company other than Sentry. The directors referred these clients to another insurance agent with whom they had an agreement for exchange of business. No commission was received by the company where insurance was arranged in this way.
Case No. 2 concerns Goldring Insurances Pty. Limited. It has its registered office in Sydney and carried on the business of a life insurance and general insurance agent. On 15 February 1974 it entered into an agency agreement with Sentry in terms similar to those already referred to. The bulk of the company's gross income was received as commissions from Sentry for effecting life insurance. The balance of the income consisted of commissions received from other life insurance companies, notwithstanding the provisions of cl. 4(a) of the agreement.
The directors of the company were Mr. and Mrs. Goldring. They spent approximately 30 per cent of their working time each day speaking on the telephone to people whom they thought might want insurance. The names of the persons to whom they spoke were obtained from persons for whom they had previously arranged insurance and various acquaintances who supplied the company with the names of people who might want life insurance. The company used its own stationery which did not bear Sentry's name. When a person wished to take out a policy of insurance, the directors of the company filled out, or arranged for him to fill out, a proposal form. If he wished insurance with another company, arrangements were made for insurance to be taken out with it and commission was received from that company, either pursuant to an agreement previously entered into or by an agreement which related only to that particular policy. If the policy were effected with Sentry, commission was paid by it in accordance with the terms of the agreement.
Cases 5 and 6 are of an entirely different kind from the cases to which I have so far referred. Sentry is a wholly-owned subsidiary of Sentry Holdings Limited. Another wholly-owned subsidiary of Sentry Holdings Limited is Sentry Insurance (Australasia) Pty. Limited (hereinafter called ``Sentry Insurance'') which carries on business as a general insurance underwriter and life insurance agent. It carried on that business during the period 9 August 1974 to 31 December 1976.
In 1973 Sentry Insurance entered into an oral agreement with Grace Bros. Pty. Limited (hereinafter called ``Grace Bros.'') for the sale of insurance through its stores. Pursuant to the agreement Sentry Insurance, in conjunction with Grace Bros., carried on the business of arranging for the sale of life insurance through sales offices operated in a number of Grace Bros. stores in New South Wales. The business was carried on under the business name ``Grace Bros. Insurance Agency'' which was registered pursuant to the Business Names Act 1962.
Life insurance was arranged by Sentry Insurance with Sentry for customers of Grace Bros. That was done pursuant to an oral agreement between Sentry Insurance and Sentry. The total amount of commission received by Sentry Insurance from Sentry during the period I have mentioned represented.005 of 1 per cent of the total
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gross income of Sentry Insurance. The remaining income of Sentry Insurance came from its business as a general insurance underwriter.During the period in question twenty-five to thirty Sentry Insurance employees were engaged by it to staff the Grace Bros. Insurance Agency sales offices in the Grace Bros. stores where this service was available. These employees either approached customers in the store or stood behind the counter of the sales offices and were approached by customers who saw signs or the actual offices in the stores which said that general insurance and life insurance could be arranged through the Grace Bros. Insurance Agency. Other customers learnt that this was so by reason of having received notices through the mail from Grace Bros. or having heard radio advertisements.
The employees in the sales offices discussed the potential client's insurance needs with him. If he wished to take out a life insurance policy with Sentry, the employees assisted him to complete the proposal and made arrangements for the payment of the premium. If the customer did not wish to take out life insurance with Sentry, Sentry Insurance did not arrange for him to take it out with any other company.
Commission was paid by Sentry to Sentry Insurance. Apparently it in turn paid a commission to Grace Bros. and to insurance agents who procured business, but the ``wages'' which the Commissioner seeks to bring to tax in the present case comprise the commissions earnt by Sentry Insurance as the result of its acting as an agent for its associated company, Sentry.
Case No. 6 concerns a company, Employee Benefits Plans Pty. Limited (hereinafter called ``E.B.P.''). It is also a wholly-owned subsidiary of Sentry Holdings Limited. It carried on, during the period 1 September 1971 to 31 December 1976, the business of effecting insurance with the Grand United Order of Oddfellows (hereinafter referred to as ``Grand United''), which is a friendly society, the Sentry group of companies and other insurance companies. The agreement between E.B.P. and Sentry is contained in two letters dated respectively 17 August 1973 and 27 August 1974. In those letters Sentry is referred to by its earlier name, Commercial Life Assurance Limited.
On 27 July 1972 Grand United had entered into an agreement with E.B.P. It provided that E.B.P. should sell, promote and enrol membership in all funds, schemes and aspects of the business of Grand United, and in particular the enrolling of members in the group or industrial schemes or funds of Grand United. The way in which the agreement operated is described in the statement of facts. Grand United operated primarily as a health insurance establishment. Insurance written by it mainly covered hospital and medical insurance but it also wrote some life insurance and employment disability insurance. Insurance was referred to Grand United from various sources. One source was E.B.P. which generally arranged insurance with Grand United for people working in Government departments, commerce and industry. The insurance effected by E.B.P. with Grand United was either sickness and disability insurance or life insurance.
Grand United only arranged life insurance cover for amounts not exceeding $15,000. In cases where the insurance required did not exceed that sum, E.B.P. always arranged for it to be effected with Grand United. If insurance was required for an amount exceeding $15,000, E.B.P. usually arranged for cover of $15,000 to be effected with Grand United and for the balance of the insurance to be effected with Sentry. If an insured objected to insurance being effected with two companies, E.B.P. arranged for a single policy covering the whole amount to be effected with Sentry. On the insurances effected with Sentry, E.B.P. received commission which represented about 10 per cent of its gross income during the relevant period. The balance of its income consisted of commission received from Grand United, other life insurance companies which were mainly members of the Sentry group, sickness and accident insurance companies and general insurance companies.
On one or two occasions during the period Sentry referred to E.B.P. the names of persons who had telephoned Sentry inquiring about insurance of the type usually arranged with E.B.P. Apart from those occasions, Sentry did not give to E.B.P. the names of
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potential clients. Most insurance arranged by E.B.P. was through group employee insurance schemes. It was usual for insurance to be arranged with a number of the employees in, for example, a particular factory.That completes the account of the work done by life insurance agents who received commission from Sentry.
(b) General Insurance Agents:
I now go to the General Accident cases. It, as its name implies, carries on a general insurance business providing all sorts of insurance cover. There are twenty-three cases dealt with in the statement of facts. In respect of some the Commissioner has conceded that commissions paid to the agent are not the subject of pay-roll tax. But it is necessary to refer to these, as well as the other cases, in order to deal with the submissions which were made. It is helpful to know the distinctions that there are between each case and the others so that one can more readily understand the competing submissions as to the true meaning and effect of the provisions of the legislation which are in question.
Case No. 1 concerns a solicitor, Mr. Dick, who carries on practice in Sydney. On 30 September 1955 Mr. Dick entered into an agency agreement with General Accident. The period which is in question is the period 1 September 1971 to 30 September 1976 during which time the agreement remained in force. The agreement takes the form of an application for appointment as an agent. It does not provide expressly for what the agent is to do or not to do. At the end of it is a scale of commission and underneath the scale the following statement:
``It is understood that, if appointed, I shall treat all matters connected with the Corporation's interests as confidential; that all moneys collected by me on behalf of the Corporation shall be trust moneys in which I shall have no right or property; that the Corporation shall have the right of terminating the Agency at any time; and that commission shall only be payable to me on new or renewal premiums during the currency of the Agency, and provided such premiums are not transferred from my account at the request of the Insured.''
The total commissions received by Mr. Dick during the period in question represented no more than 1 per cent of his gross income, the balance coming from professional fees and returns on investments. Mr. Dick arranged householders insurance for clients in connection with conveyancing transactions. Where the client did not have insurance for a property owned or purchased by him, Mr. Dick suggested that he arrange insurance. He nominated two or three insurance companies including General Accident. If the client gave him instructions to arrange insurance with General Accident, a proposal form supplied by it to Mr. Dick was completed by the client or Mr. Dick and signed by the client or occasionally by the solicitor on the client's behalf.
Commission was paid to Mr. Dick on an irregular basis, generally when the accumulated amount of commission exceeded $150.
It is to be observed that the only circumstances in which Mr. Dick raised the question of insurance with his clients was where they were involved in conveyancing transactions and needed insurance, in most cases presumably when a contract of sale was exchanged.
Case No. 2 concerns a Mr. Ongley who carries on practice as a chartered accountant in Sydney. He entered into an agency agreement with General Accident on 21 February 1956. It is in the same terms as the agreement entered into by Mr. Dick. The period in question is the period 1 September 1971 to 30 September 1976. During that period Mr. Ongley received commissions which represented in all a very small percentage of his gross income. The balance of his income during the period consisted of fees earnt by him in his practice as an accountant.
Clients of Mr. Ongley often asked him whether he was able to provide advice in relation to insurance. When asked so to advise he considered the client's particular insurance needs and discussed with him the different policies offered by different insurance companies. When the client chose to insure with General Accident, Mr. Ongley told him that he would receive a commission in respect of the policy. If the client did not wish to insure with General Accident, Mr.
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Ongley arranged for the insurance to be effected with an insurance company chosen by the client. He did not have agency agreements with other insurance companies and did not receive commission in respect of any policies effected by him with insurance companies other than General Accident. If a client decided to insure with General Accident, Mr. Ongley contacted the new business department by telephone and arranged for the issue of a cover note. The client was then introduced to an employee of General Accident who took over the conduct of effecting the insurance. So far as possible Mr. Ongley tried to introduce clients to General Accident.Case No. 3 concerns a partnership carried on by two solicitors, Messrs. Kennedy & Mooney. On 24 November 1971 they entered into an agency agreement with General Accident which, although not precisely, is in similar terms to those entered into by Mr. Dick and Mr. Ongley. The relevant period is 24 November 1971 to 30 September 1976. The total amount of commission received during that period represented less than 1 per cent of the solicitors' gross income during that period. The balance of the income received by them was in respect of fees earnt in the course of their practice.
House owners and householders combined fire and contents insurance was arranged by the solicitors for their clients in connection with conveyancing transactions. When a client required insurance in connection with a property being purchased by him, the solicitors mentioned that it would be necessary to arrange insurance on the exchange of contracts. The solicitors would ask the client with which insurance company he wished to insure. The statement of agreed facts proceeds:
``When the client nominated General Accident, the solicitors contacted General Accident and requested that General Accident issue a cover note of insurance in respect of the property the subject of the contract.''
Despite the fact that that statement appears in the agreed statement of facts, I would not have thought it likely that the matter would have proceeded in that way in many cases. I would have thought it more likely that the solicitors would have altered the client's attention to the fact that, when contracts were exchanged, the property would be at his risk. I would have thought that some clients would have said that they would make arrangements with their existing insurers. Others may have asked how they went about effecting insurance. The solicitors would then have informed them that they were agents for General Accident. In some cases the clients would have instructed the solicitors to insure with that company. The facts in the statement are not, however, along those lines and I should assume that they are as stated, unlikely though I think that be.
Case No. 4 concerns a Mr. and Mrs. Rich who carry on practice as tax agents. On 29 July 1963, they entered into an agency agreement with General Accident. It is similar in terms to the other agreements to which reference has been made. The period in question is 1 September 1971 to 30 June 1973. During that period the total commission received by Mr. and Mrs. Rich was less than 1 per cent of their gross income, the balance of their income comprising fees received by them in connection with their business and commission received from other general insurance companies.
Unlike the solicitors and the accountant in the previous cases, the Riches actively sought business. They sent circular letters to clients, for whom they acted as tax agents, informing them that they could arrange general insurance for them. They had agency agreements with two other insurance companies. Some clients requested them to effect insurance with a company nominated by the Riches, in which case they arranged insurance with the company they considered to have the policy best suited to the client's needs. In other cases the client nominated the insurer and his instructions were carried out.
Case No. 5 concerns a Mr. Basto who carried on business as a property manager during the period 1 September 1971 to 30 September 1976. He had entered into the usual agency agreement on 16 July 1959. The amount received by him by way of commission pursuant to the agreement during the period I have mentioned was less than 4 per cent of his gross income. The balance of his income consisted of fees received by him for the management of
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properties and profits made by him on sales of land.Prior to commencing business as a property manager, Mr. Basto had been a life insurance salesman, and persons to whom he sold life insurance sometimes asked him to arrange general insurance. When he commenced business as a property manager he thus had a number of clients for whom he arranged general insurance. In addition he arranged insurance on the properties which were managed by him and on properties in which he had an interest. About 60 per cent of any insurance arranged during the period was in respect of properties either managed by Mr. Basto or in which he had an interest. The insurance Mr. Basto effected was all arranged through General Accident.
Case No. 6 concerns Mr. P.J. Cassidy who carries on business as a wine and spirit merchant at Richmond. He had entered into an agency agreement of the usual kind on 29 March 1955. It was in force during the period in question which is 1 September 1971 to 30 September 1976. The total amount of commission received by him during the period was less than 10 per cent of his gross income. The balance of his income consisted of a salary received in his capacity as an employee of two insurance companies and of moneys received in his capacity as a wine and spirit merchant.
He arranged insurance for members of his family, friends, and personal and business contacts. He did not actively approach people asking them about their insurance needs. New clients were referred to him by persons for whom he had arranged insurance previously. He usually suggested that insurance be arranged with General Accident, but when he thought that a better policy of insurance could be obtained from another insurance company, he arranged insurance with it. He had no agency other than that which he had from General Accident and in such a case received no commission.
Case No. 7 concerns Mr. and Mrs. Childs who carried on business as licensed real estate agents at Kirrawee. They entered into the usual agency agreement on 6 March 1968. It was in force during the relevant period which was 1 September 1971 to 30 September 1976. The total commissions received by the Childs during the period represented only a negligible portion of their gross income. The balance of that income consisted of commissions received by them in connection with their business as real estate agents. The Childs occasionally arranged insurance for a purchaser of property. It was arranged purely as a service for the clients. Most insurance arranged by them, however, was for friends, relations and some personal contacts. They did not actively seek insurance business.
Case No. 8 concerns Mr. and Mrs. Friar who live at South Grafton. In the words of the statement of facts, they are semi-retired, although one might be forgiven for thinking that they are now working harder than they did before their ``retirement'' took place. They entered into an agency agreement in the usual form on 28 April 1969. The amount of commissions earnt by them as the result of effecting General Accident policies represented approximately 20 per cent of their gross income during the relevant period which is from 1 September 1971 to 30 September 1976. Other income earnt by them was received as a result of their transporting new motor cars from Sydney to Grafton, work performed by one partner for the Department of Attorney-General and of Justice as a part-time court attendant and from various investments. The Friars knew large numbers of people in the Clarence River area because of the fact that prior to their retirement they had carried on business as garage proprietors. During the relevant period they contacted some of those people and also contacted friends and relations with a view to arranging fire and related insurance for them. At times they went personally from door to door asking people they did not necessarily know whether they needed fire insurance, and, if so, informing them that insurance could be arranged with General Accident or with other insurance companies if the person so wished. They had no agency agreement with any other company but, if a person wished insurance with another company, insurance was arranged through a firm of brokers from whom the Friars usually received a commission.
Case No. 9 concerns a company, Percy Woods & Company Pty. Limited which carries on the business of a real estate agency
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at Cremorne. The company entered into an agency agreement of the usual kind on 9 November 1967. During the relevant period, which is from 1 September 1971 to 30 September 1976, the commissions earnt by the company amounted to less than 1 per cent of its gross income. The balance of its income consisted of commissions received on the sale of properties, management fees and valuation fees. The company arranged insurance mainly on buildings managed by it in connection with its real estate business. The directors of the company periodically renewed insurance on properties. The statement of facts in relation to what the directors of the company actually did is vague and uncertain. I gather, however, that they were in a position, in relation to properties which they managed, to review the insurance needs of the owners of the properties from time to time. This involved them in considering whether the cover upon properties was sufficient and whether premiums being paid in respect of existing policies were too high. In addition to having an agency with General Accident, the company was the agent of Guardian Royal Exchange Insurance Limited and received commissions when insurance was effected with that company. On occasions, however, insurance was not arranged either with General Accident or Guardian. In those circumstances no commission was received. How and in what circumstances policies were effected with General Accident, the statement of facts does not enable me to say.Case No. 10 concerns Mr. Brown of Sylvania Waters who was a life insurance agent during the relevant period which was from 1 September 1971 to 30 September 1976. Mr. Brown had entered into the usual form of agreement on 11 April 1969. He received commissions during the period in question but they represented less than 2 per cent of his gross income. The balance of his income consisted of commission received from Yorkshire-General Life Assurance Company Limited in respect of life insurance effected by the agent with that company.
During the period in question Mr. Brown arranged insurance for clients for whom he also arranged life insurance. When they asked him if he could arrange householders insurance, sickness and accident insurance or motor vehicle insurance, Mr. Brown told them that he could and arranged for a proposal form to be completed. I gather that he always recommended General Accident. About 90 per cent of insurance arranged by Mr. Brown was arranged for members of the New South Wales Police Force.
Case No. 11 concerns Mr. Sponberg of Lugarno who was also a life insurance agent during the relevant period, which in his case is from 1 September 1971 to 30 September 1976. He entered into the usual agreement on 8 March 1967. During part of the period he was an agent for a life company, Commonwealth General Assurance Corporation Limited, and for the remainder of the period he was an agent for another life company, Yorkshire-General Life Assurance Company Limited. During the period he received commissions from General Accident amounting to less than 1 per cent of his gross income. The balance of his income consisted of commission earnt from the life insurance side of his business. During the period the agent, when talking to clients about life insurance, usually mentioned to them that he was able to arrange general insurance if they required it. Other clients for whom he had previously arranged general insurance were referred to him by existing clients for whom he had previously arranged general insurance or for whom he had arranged life insurance. He was also approached by friends and acquaintances who knew of his involvement in the insurance business. He had a general agency with Commercial & General Assurance Corporation Limited as well as with General Accident.
Case No. 12 is one of a series of cases involving Mr. K.E. Mason. The other cases are cases No. 13, 15, 16 and 17, but cases No. 16 and 17 appear to be duplications, respectively, of cases No. 12 and 13. They have apparently been included in the statement of facts as the result of an oversight. I do not, therefore, refer further to cases No. 16 and 17.
In case No. 12 Mr. Mason was in partnership with one Mignon Mason. In case No. 15 he was in business on his own account. In No. 13 he was a director and shareholder of a company, K. & E. Mason Pty. Limited. In each case the usual agency agreement was signed. In all cases the
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business of an insurance broker was carried on. Mr. Mason, along with one Eva Mason, had been appointed an agent of General Accident pursuant to the usual agency agreement which was signed on 10 November 1958. Eva Mason died on 12 September 1971. It is no doubt her death which accounts, at least in part, for the fact that the business has thereafter been carried on by different entities.In 1955 Mr. Mason had been appointed a life insurance agent for Mutual Life & Citizens Assurance Company Limited. This agency was assigned on 10 November 1958 to the partnership he then carried on with Eva Mason. Both agencies were assigned to the partnership he commenced to carry on with Mignon Mason on 27 November 1971. The relevant period so far as concerns case No. 12 is from that date to 30 June 1973. During that period the commissions received by the partnership from General Accident accounted for 75 per cent of the gross income of the partners. The balance of the income consisted of commissions earnt from other insurance companies. As at 27 November 1971 the partners had a substantial clientele for whom they acted as brokers. All insurance effected by them with General Accident was effected for existing clients or for new clients who approached the partners on the recommendation of existing clients. When the partners heard from existing clients, friends, acquaintances or any other source that someone was inquiring about or needed insurance cover, the partners contacted that person seeking his custom. They arranged insurance mainly for service station proprietors and the cover for these persons was periodically reviewed. They usually suggested to clients that insurance be arranged with an insurance company having, in the partners' opinion, the best policy suited to the particular client's needs. They arranged insurance with companies other than General Accident and when this occurred received commission in respect of insurance so arranged.
Case No. 13 shows that the business was carried on by the company K. & E. Mason Pty. Limited from 30 June 1973 to 30 September 1976. The agency agreement was assigned to the company. The business appears to have been carried on by the company in the same way as it had been carried on by the partnership referred to in case No. 12.
Case No. 15, as I have mentioned, concerns Mr. Mason personally. The period involved is the short period between 12 September 1971, when Eva Mason died, to 27 November 1971 when the partnership mentioned in case No. 12 was commenced. The business appears to have been carried on in the same way as already described.
Case No. 14 concerns Mr. Moutzouris. He carried on business as an insurance broker during the relevant period which was from 9 July 1974 to 30 September 1976. He entered into the usual agency agreement on 9 July 1974. Approximately 20 per cent of his gross income came from commissions received by him as the result of effecting insurances with General Accident during the relevant period. The balance of his income consisted of commissions received from other insurance companies and of rent received in the letting of properties. At the time that Mr. Moutzouris entered into the agreement with General Accident he had been carrying on business as an insurance broker for approximately six years. He had a large number of clients at that time. He arranged insurance for existing clients and for new clients who were usually referred to him by the existing clients. He also inherited, from a friend who had died, the friend's list of clients. Paragraphs 14.6, 14.7 and 14.8 of the statement of facts are in the following terms:
``14.6 The Agent never spoke at any functions but simply relied on personal contacts or recommendations from existing clients to obtain new clients contacts and leads.
14.7 The Agent's clients consisted during the said period mainly of proprietors of retail shops, take-away food shops and small businesses generally and of householders.
14.8 The Agent discussed with the client the type of insurance required by him and recommended to the client that a policy be taken out with the insurance company having the policy best suited to the client's needs. When the Agent recommended that a policy be taken out with General Accident, the Agent usually filled out the proposal form with information supplied
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by the client and arranged for the client to sign it. The Agent always used General Accident proposal forms where the client wished to take out insurance with General Accident.''
I have set out these paragraphs because I find the significance of some of what is said, particularly what is said in para. 14.6, difficult to understand.
Case No. 18, which concerns Paul G. Mendelsohn Insurances Pty. Limited, is the case of another broker. On 6 April 1964 Mr. Mendelsohn entered into the usual agreement. The agreement was assigned by him to the company on 16 August 1971. The total amount of commission received by the company during the relevant period amounted to about 10 per cent of its gross income. The balance of its income consisted of commissions received from insurance companies other than General Accident. Paragraphs 18.5, 18.6 and 18.7 of the statement of facts are as follows:
``18.5 As a broker, the Company checked the lists of needs of the clients and considered which insurance company offered the best policy to cover the client's needs. The Company usually arranged sickness and accident insurance through General Accident particularly where these policies were for businessmen or for, say, a large group of employees of an employer. The Company if it considered General Accident offered the best policy recommended that the policy be taken out with General Accident and forwarded to the client a brief circular letter of advice to this effect.
18.6 The company arranged insurance for existing clients and new clients who were referred to the company by existing clients.
18.7 The directors and employees of the Company did not go from door to door seeking insurance business nor did the directors or employees of the Company speak at meetings or other public gatherings seeking insurance business.''
Case No. 19 is that of Mr. Hopkins who carried on business as an insurance broker, firstly from Merrylands and then from Parramatta. He carried on business under the name ``Advantage Insurance Services''. The relevant period is 1 September 1971 to 30 September 1976. During that time the commissions received from General Accident made up about 5 per cent of Mr. Hopkins' income. The balance of his income consisted mainly of insurance commissions received from other insurance companies.
During the period Mr. Hopkins obtained new insurance business from existing clients and from new clients referred to him by existing clients. He also obtained business by writing to various categories of persons, selected from the pink or yellow pages of the telephone directory, informing them that he could arrange both life and general insurance for them. As a result of these letters some people telephoned him. He arranged to see them to discuss their insurance needs.
During the period in question he also acted as a life insurance agent. When he arranged life insurance for a client he would, if it were needed, arrange general insurance for him with General Accident. Sometimes Mr. Hopkins suggested to the client that he could arrange ``the client's general insurance for him'' with General Accident and, if the client agreed, this was done. Mr. Hopkins acted as a general insurance broker. If a client did not wish to insure with General Accident, alternative insurance was arranged with one of a number of other companies.
Case No. 20 concerns Australloyd Insurances Pty. Limited. It is also an insurance broker. It has had the usual agency agreement with General Accident since 1958, although the agreement annexed to the statement of facts is dated as recently as 25 May 1977. The commission earnt by the company during the period in question, which is from 1 September 1971 to 30 September 1976, amounted to approximately 1 to 2 per cent of its gross income. During the period the company acted as a general insurance broker and its gross income consisted almost entirely of commissions received from insurance companies. Paragraphs 20.5, 20.6 and 20.7 of the Statement of Agreed Facts are as follows:
``20.5 Insurance was arranged by the Company for: existing clients; new clients who were referred by existing clients; clients who responded to advertisements placed by the Company in papers and journals; clients referred by other brokers
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and clients referred by other business connections of the Company.20.6 Clients usually asked the directors of the Company to advise on the type of policy that best suited their needs. The directors discussed the types of policies available with the client and when they recommended to the client that a policy be taken out with General Accident, the directors contacted the Bankstown manager of General Accident and obtained from him a quote for the premium payable on the policy. When this was acceptable to the client, the directors asked General Accident to issue a cover note of insurance which was usually forwarded to and kept by the Company on the client's behalf.
20.7 The directors of the Company always made it clear to clients that the Company was acting as a broker and that all risks were with the underwriting company.''
Case No. 21 concerns yet another broker, R.J. Logan Insurances Pty. Limited. Mr. Logan, who is a director of the company, signed, in his personal capacity, the usual agency agreement on 19 March 1967. This has apparently since been assigned to the company which carries on business from premises at Neutral Bay. The total amount of commission received by the company from General Accident during the period in question, which is from 1 September 1971 to 30 September 1976, amounted to no more than 1 per cent of its gross income. The balance of its income consisted of insurance commissions received from other insurance companies. During the period the company acted as a general insurance broker and arranged insurance for existing clients and for new clients referred to it by existing clients.
The company also obtained business by mailing campaigns carried out approximately twice yearly. It would decide on a particular industry and then arrange for 100 or so letters to be sent to firms in that industry, such firms being selected from the yellow pages of the telephone directory and other sources available to the company's directors. It also obtained clients from accountants, solicitors or existing clients who referred persons with a particular insurance need to the company. Normally the directors contacted the person referred by telephone and made an appointment to discuss with him his insurance needs. The directors also advised the client generally as to the type of insurance policies the company considered best suited to the client's needs.
The company has a large ``livestock insurance portfolio'' and advertises its services in magazines dealing with livestock. Most advertising, however, is undertaken at country rodeos. This is done by placing barriers around the rodeo ring with the company's name displayed on the barriers. Sometimes a band is hired and similar barriers are placed around the band. On other occasions the company's name appears on the backs of riders in the ring. Sometimes the company hires the announcer for the day who, between calling the events, advertises the company's services over the public address system.
The company also arranges the insurance of hotels, engineering workshops, and take-away food shops.
In some cases direct approaches to potential clients are made by the company. A representative of the company either makes a personal call on a person or writes to or contacts the potential client by telephone. People so approached are usually contacted because of a personal recommendation by another client. Some new clients come to the company as a result of recommendations from existing clients.
Case No. 22 is that of Mrs. Davies of Ingleburn. She is a housewife who entered into the usual agency agreement on 14 April 1968. The total amount received by her during the relevant period, 1 September 1971 to 30 September 1976, is of the order of $2,000 and represents almost the entirety of her income during that period.
Mrs. Davies' husband is a life insurance agent for the Scottish Amicable Life Assurance Company Limited. When a client of Mr. Davies asks him if he can arrange personal accident or fire or other general insurance cover for him, Mr. Davies arranges for the client to complete and sign a proposal form for such insurance.
Case No. 23 is the case of another housewife, Mrs. McFarland who lives at
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Asquith. She entered into the usual agency agreement on 11 December 1962. During the relevant period, which is from 1 September 1971 to 30 September 1976, she earnt approximately $13,000 which represented almost the entirety of her income. She obtained general insurance business from persons through mailing programmes, leads referred to her by existing clients, her own contacts made by her through social activities and persons referred to her by her husband who is a life insurance agent. At irregular intervals during each year Mrs. McFarland conducts mailing campaigns by sending leaflets prepared by General Accident through the post. Mr. McFarland brings to the notice of life insurance prospects the fact that he, through his wife, can arrange general insurance.As a result of the mailing campaigns, prospective clients have contacted Mrs. McFarland by telephone and arranged insurance in that way. In other cases she has arranged for her husband to discuss the prospect's insurance needs with him.
The Competing Submissions of the Parties.
(a) The Commissioner's submissions:
That concludes the account of the evidence in the two cases. I next propose to set out shortly the substance of the submissions of the parties. The starting point for the Commissioner's submissions is that the payments brought to tax as a result of the operation of the lettered paragraphs appended to the definition of ``wages'' are all amounts (with the exception of those specified in para. (e)) paid to persons who are not true employees. In other words the amounts are not wages in a real sense but amounts deemed to be wages as a result of the definition. Otherwise, so it was submitted, there would have been no need for the enactment of any of the paragraphs (except para. (e)). The payments, if made to true employees would all have been caught by the opening words of the definition. It followed that the fact that each of the agents was engaged otherwise than pursuant to a contract of employment was of no consequence.
The Commissioner's next step was to go to the dictionary definition of ``canvasser''. In his submission each of the life insurance agents and most of the general insurance agents were insurance canvassers within the meaning of that expression where it is used in the relevant paragraph of the definition. It is common ground that the expression ``insurance canvasser'' is an elliptical one because one has to supply some words in order to make the meaning of the expression clear. It means a person who canvasses other people in an endeavour to persuade them to take out insurance policies. But the fact that that is so does not shed light on what meaning the word ``canvasser'' was intended by the draftsman of the legislation to have.
The word ``canvasser'' is defined in the unabridged Oxford Dictionary to mean, inter alia, ``To solicit especially to solicit votes or support previously to an election; also to solicit support, contributions, orders for goods etc.''. That is said to be an intransitive meaning. A transitive meaning of the word is, ``To sue or solicit (persons, a district) for orders, subscriptions, custom, orders, etc.; especially to solicit the support of a constituency by going through and interviewing the individual electors to ascertain by this means the number of one's supporters''. Counsel for the Commissioner submitted that the word ``canvasser'' was synonymous with the word ``solicit''. One of the meanings of this word given in the Oxford Dictionary is, ``To entreat or petition (a person) for, or to do, something; to urge, importune, to ask earnestly or persistently''. Another meaning is, ``To seek, to draw, to induce or bring on, especially by gentle means''. Further meanings include, ``To urge or press (a matter)'', and ``to seek or follow diligently''. The word ``canvass'' is not used in any of the meanings which the dictionary ascribes to the word ``solicit''.
Upon the basis of the dictionary meaning of the word ``canvasser'', counsel for the Commissioner submitted that an insurance canvasser was one who, with the express or implied concurrence of an insurance company, pursued for financial gain the activity of soliciting the making of insurance contracts whether he:
- (a) so canvassed as his sole means of livelihood;
- (b) so canvassed as part of his livelihood derived from activities in the insurance world;
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- (c) so canvassed to an extent sufficient, bearing in mind his other activities to permit it to be said that he had two distinct means of livelihood, e.g. as a service station proprietor and as a canvasser.
Volume was said not of itself to be decisive where the agent:
- (i) made the necessary arrangements so as to establish some relationship between himself and an insurance company including arrangements as to commission;
- (ii) proceeded to act so as to earn commission;
- (iii) from time to time as ``circumstances suggest'' the likelihood of gain and his other activities (business and otherwise) permitted, repeated such acts.
Where the canvassing was normally done as a subordinate and ancillary part of another distinct business carried on he would not, according to the Commissioner's submissions, carry on the vocation or business of an insurance canvasser.
At this point in his argument counsel referred to a number of cases dealing with the question of whether persons who had entered into covenants in reasonable restraint of trade were in breach of those covenants. These cases included
Stuart v. Diplock (1889) 43 Ch.D. 343 and
A. Lewis & Co. v. Bell Property Trust Limited (1940) Ch. 345. The effect of them is to show that some businesses involve the selling of goods which it is also conventional for other businesses to sell. Thus both a tobacconist and a tea-shop customarily sell cigarettes and the sale by a tea-shop of cigarettes is not a breach, therefore, of a covenant not to carry on business as a tobacconist. The relevance of that consideration in the present case was, so it was submitted, that where it was normally a natural part of the carrying on of a business or profession to advise persons or to urge persons to take out insurance, the person carrying on the business was not an insurance canvasser because he was not engaged in that business. He had not approached the person with insurance as his primary object. Insurance was ``merely a natural and incidental part'' of the distinct vocational purpose for which the parties had come together. It was on this basis that counsel for the Commissioner said that Mr. Dick, the solicitor (Case No. 1 of the General Accident cases), was not an insurance canvasser. He raised the question of insurance with clients who were usually the purchasers of property and were, upon the exchange of contracts, about to assume the risk that the property might be damaged or destroyed between the entry into the contract and completion.
Counsel for the Commissioner further submitted that an insurance canvasser was someone who solicited insurance business. This of necessity was said to involve approaching people in person, by telephone or correspondence or otherwise. It was submitted that to import into the ordinary meaning of the word ``canvasser'' the concept that business must be solicited in a particular way was to import a wholly irrelevant factor. It was submitted that a person would still be a canvasser if he solicited insurance business whether or not:
- (a) he did so from his own premises or those of the insurance company;
- (b) the names of likely persons were obtained from the insurance company or from his own records or contacts;
- (c) he solicited only on behalf of one insurance company or more than one;
- (d) he had contracted to solicit or merely did so with the express or implied consent of the insurance company.
Finally counsel for the Commissioner submitted that if a person were an insurance canvasser all payments of commission to him in his capacity as such were caught, notwithstanding that as to some business the agent may not have solicited it. Attention was drawn to the words in the relevant paragraph, ``any amount paid''. It was submitted that the position may have been different if it had provided ``any amount paid or payable by way of commission for canvassing to an insurance canvasser''. It was submitted that that was not the meaning of the words. Moreover, to treat the words as bringing to tax only commission earnt in respect of business actually canvassed would involve the insurance company in investigating the circumstances surrounding the making of every proposal accepted and the Commissioner doing likewise.
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It was submitted that there was no reason why a company or partnership could not be an insurance canvasser or collector. The paragraph was directed at relationships which were not true employer/employee relationships and it did not matter whether the agent was a true employee or not. On that basis there was no reason why the paragraph did not apply to companies and partnerships as well as to individuals.
(b) The plaintiffs' submissions:
The principal submission made by counsel for the plaintiffs was that for a person to be an insurance canvasser within the meaning of the provision he must be contractually obliged to canvass. If he were paid a commission for business he referred, whether he canvassed or not, and if he were retained as an agent regardless of how much time and effort he put into his canvassing, then that must indicate that the concept of canvassing was an inessential element in his vocation. It was said that the fundamental error in the Commissioner's approach was that he took a vocational description of a well-known class of persons and sought to apply it to all other persons whose activities bore a sufficient resemblance to those of that class.
It is convenient at this point to refer to a number of matters relied upon by the plaintiffs as relevant to take into account in construing the paragraph. The first of those matters to which I refer is a judgment of Piper C.J. who was, at the relevant time, the Chief Judge of the Commonwealth Court of Conciliation and Arbitration. The judgment was delivered in a dispute,
Federated Clerks Union of Australia & Ors. v. The Industrial Life Assurance Agents Association 46 C.A.R. 578. The judgment was delivered on 2 March 1942. On 25 November 1941, the Industrial Registrar had registered the Industrial Life Assurance Agents Association as an organisation of employees under the Commonwealth Conciliation and Arbitration Act 1904. Objections were made by the appellants and others to the Association's application but were disallowed. The basis of the objections was that the members of the Association were not employees and thus not persons to whom the provisions of the Act could apply. Piper C.J. said that it was the practice of the majority of the companies, if not all of them, when engaging a canvasser, to enter into a written agreement in a form which in its material parts was common to all companies. In the agreement the canvasser was called ``the agent''. It contained 26 clauses providing for the obligations which the canvasser accepted, one clause as to the society's obligation to pay the canvasser the moneys to which he was entitled and one mutual clause. His Honour set out certain of the provisions of the agreement, to which I do not refer, and continued (pp. 581-2):
``The evidence shows that broadly speaking the practice of all companies transacting what is called industrial business is the same and applies generally to the different States in which they carry on business, with some distinctions in detail. The work of a canvasser is to go from house to house collecting premiums on existing policies and soliciting new business, keeping proper records and making returns to his company and accounting for moneys received. He is paid on a commission basis. The principal difference between industrial life assurance and other life assurance is that the premiums are small and are collected weekly, fortnightly or monthly at the house of the assured, whereas in the case of ordinary life assurance the premium is payable yearly, half-yearly and quarterly at the office of the company. The extent of the business is shown by the fact that there are over 4,500 persons engaged throughout Australia in this occupation. This industrial assurance is availed of by all classes of the community and is not, as its name might imply, limited to what are generally known as workers in industry.
The method of working is that the canvassers are grouped into divisions and work under the direction of a superintendent. If a division is a large one it is further divided into sections, also under a superintendent. Each canvasser has his own particular area of work within the division or section. His main duties are collecting and soliciting new business and he is instructed to make his collections on certain days of each week and on other days he has to meet other canvassers in the division and do what is called `team canvassing'. This consists of the canvassers meeting, by appointment,
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the superintendent who divides them into pairs and allots the pairs certain streets in the district; they then make a house to house canvass in those streets, the superintendent supervising and controlling their activities and frequently assisting in the actual canvass. At lunch time and in the evening the team all meet the inspector to make reports and discuss the work and if necessary the superintendent arranges for a canvasser to go at night to see any `prospect' who was not at home during the canvass.As to collecting, the canvasser is supplied with a book showing the policy-holders he is to call on and in it he enters the collections. He is instructed to bank the moneys and produce the pay-in slips to the superintendent at times fixed by the latter. If the superintendent thinks sufficient money has not been collected he accompanies the canvasser immediately to the houses of those who have not paid to speed up the payments. If he finds that any canvasser has collected money and not paid it into the bank he insists on immediate payment. If the canvasser does not appear at the appointed time each week to account for moneys collected the superintendent immediately seeks him out to ascertain the reason. The canvasser also is given a time at which he is to meet the superintendent to transact other business such as transfers, claims, new business, etc., in all of which matters he acts under the supervision and direction of the superintendent.
In performing all these functions a canvasser is fully occupied for ordinary working time on each day of the week. If the canvasser does not give the time necessary to do his work or if he does not comply with the directions given by the superintendent and keep the appointments which the superintendent allots to him the superintendent might and probably will suspend his appointment. As the main witness said, `If an agent will not co-operate with the superintendent in every possible way the superintendent exercises the right to suspend the appointment'. He also said that it would be possible for an agent to engage in some other business if he worked at night, but to be successful his time is taken up with agency work, and that if he were found taking round other goods, such as silk stockings, whilst doing agency work the superintendent would exercise his discretion as to suspending the agency, as the company would not tolerate a canvasser doing any other work or anything which would interfere with the successful prosecution of his business for the company.
The above remarks apply to the metropolitan area; in country districts the same supervision and control is exercised but not so closely, and of course there is no team canvassing.''
His Honour found that some of the clauses of the agreement which he had considered were not in fact observed by the parties and were thus shams. He decided that the real relationship between the parties was that of employer and employee.
The Pay-roll Tax Act 1971 followed closely the form of the Federal Act (the Pay-roll Tax Assessment Act 1941) which came into force on 2 May 1941. The definition of ``wages'' in sec. 3(1) of the Federal Act contained four rather than five paragraphs. That was because there was not included in the definition a paragraph comparable to the present para. (a). I must say that I find the inclusion of para. (a) puzzling because it seems to involve there being levied upon the Crown in right of the State of New South Wales a tax. But I assume that what I was told by counsel was correct. The States were given the opportunity of levying pay-roll tax to provide them with a growth tax when their power to levy what was known as receipts tax was held to be invalid. The inclusion of payments made by the Crown whether to employees or other persons in the service of the Crown presumably has some relationship to Commonwealth-State financial arrangements. Be that as it may para. (a), (b), (c) and (d) of the definition of ``wages'' in the Federal Act are very much the same as para. (b), (c), (d) and (e) of the State Act now under consideration.
Prior to the Federal Act being passed in 1941 there was no levy of pay-roll tax by any Government, State or Federal, in the Commonwealth. The reason for the tax is explained in the judgment of Barwick C.J. in
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Victoria v. The Commonwealth (1971) 122 C.L.R. 353 at p. 362. His Honour said:
``The Pay-roll Tax Act 1941 (the tax Act) and the Pay-roll Tax Assessment Act 1941 (the Act) were passed by the Parliament as a means of providing revenue to finance the provision of child endowment under the Child Endowment Act 1941. Though the child endowment under the latter Act was to be universal, it was conceived primarily as a supplement to the salary or wages of persons in employment. Consequently, the burden of the endowment was cast on employers, the taxing Act imposing a tax upon all wages paid by an employer. The Crown in right of a State was in each State a considerable employer of labour and at least in some States of industrial labour. All its employees had the benefit of the child endowment along with employees generally. Consequently the Crown in right of a State was included in the definition of `employer' for the purposes of the Act. See sec. 3 of the Act.''
Words similar to those in the relevant paragraph are also to be found in the Income Tax Assessment Act 1936 (sec. 221A) dealing with group tax. The group tax provisions were first introduced into that Act in 1940 (Act No. 65 of 1940). Originally sec. 221A was in Division 2 of Pt. VI of the Act. Division 2 was headed ``Collection of Income Tax by Instalments''. Section 221A contained definitions, including a definition of, ``salary or wages''. Paragraphs (a), (b) and (d) of the definition were in terms similar to para. (b), (c) and (d) of the provision of the State Act here under consideration. In particular, para. (d) provided for the inclusion in the definition of ``salary or wages'' of any payments made ``by way of commission to an insurance or time-payment canvasser or collector''.
It was the submission of the plaintiffs that the origin of the legislation should be treated as though it was 1941 rather than 1971 when the Act now under consideration was passed. That was said to be because the State had simply picked up the words used in the Federal Act which in turn had come from those used in the Income Tax Assessment (No. 2) Act 1940.
Then reference was made to the fact that in the earlier part of this century a number of the life insurance companies wrote large numbers of what were known as industrial life insurance policies. I was provided with a book written by a Mr. A.C. Gray who was at one time assistant manager of the life insurance office, The MLC. In his book is a chapter on industrial insurance (pp. 85 et seq.). It is also mentioned in other parts of his book.
Mr. Gray swore an affidavit in the proceedings which was read subject to the objection of the Commissioner as to its relevance. In his affidavit he referred to his extensive experience in the insurance industry and to his authorship of the book which I have mentioned. Paragraph 2 of his affidavit is as follows:
``There is a well-known distinction in the insurance industry between ordinary insurance and industrial insurance. The essential characteristic of industrial life insurance is that premiums are usually paid at the house of the policy owner to the collector in the employment of a life insurance company and that the premiums shown in the policy are weekly premiums, or in more recent times in Australia monthly premiums. Industrial insurance was first written in 1852 and was first written by the British Industry Life Assurance Company. Because it was the class of business carried on by this company, it came to be known as industrial insurance.''
Mr. Gray went on to say that in the two decades before the Second World War industrial life insurance had expanded in Australia at a faster rate than ordinary insurance. In the post-war period the rate of growth of industrial life insurance declined. Paragraphs 4 and 5 of his affidavit are as follows:
``In 1941 the words `canvasser' and `collector' were words well understood in the insurance industry as applying solely to persons who were concerned primarily with industrial life insurance. The words referred to the canvasser and collector who went from house to house collecting the premiums on industrial policies. Each such canvasser and collector was allocated by the insurance company for whom he
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collected a clearly defined area in which he had the exclusive right and obligation to collect the industrial premiums for the company concerned. In addition, he was required to canvass for new business, mainly for new industrial insurance business, but not limited to that. In practice, most of the canvassing took place within the allocated territory. These persons were at that time (with the exception of Queensland where an award guaranteed an irrecoverable minimum earning) wholly remunerated by commission calculated as a percentage of their collections plus an introductory commission on new business. Where a client with an industrial policy moved to an area outside the allocated area, his premiums would be collected by the agent assigned to the area to which the client had moved. The list of persons from whom premiums were to be collected was provided by the insurance company and the area within which such agents were allowed to canvass new insurance was strictly defined by the insurance company. The canvassers and collectors were subject to a high degree of supervision by a salaried field officer of the insurance company, known as a Superintendent who carried out training and regular checks of the canvassers and collectors to check their work and books (the equivalent of one week per collector in each five weeks) and to ensure that the route taken by them was the most efficient and to ensure that canvassing did in fact take place and to ensure that all premiums collected were paid to the company without delay.The words `canvasser' and `collector' in 1971 had the same meaning in the insurance industry as they did in 1941.''
The plaintiffs tendered a number of awards of the Commonwealth Conciliation and Arbitration Commission made in respect of persons employed in the insurance industry. The persons so employed are obviously persons employed in classifications such as are mentioned by Mr. Gray in his affidavit. The awards are more or less current awards and no doubt replace earlier awards dealing with the same classifications. For completeness counsel for the Commissioner tendered the Time Payment Collectors (State) Award which was made by the Time Payments Collectors Etc. (State) Conciliation Committee, the industries and callings for which are all persons employed as canvassers or collectors for time payment, hire-purchase, cash order or money lending businesses and persons employed as clear out men in connection with such businesses. Again the classifications affected by the award are true employees.
Another matter relied upon by counsel for the plaintiffs was the substantial difficulty which would arise administratively if the Commissioner's submissions were to be acceded to. Counsel resisted very strongly the notion advocated by the Commissioner that all payments to an agent were to be regarded as falling within the section, whether they resulted from the effecting of insurance as a result of canvassing or not. Counsel referred to the fact that in most taxation situations the person liable for a tax has within his own knowledge or means of knowledge the facts to enable him to determine whether receipts are subject to the tax or not. That was said to apply in all income tax situations and in most sales tax situations. It was said to apply also in all gift duty and stamp duty situations. It might not apply in death and estate duty situations but that was because the prime source of knowledge was, by reason of the very nature of the tax, not available.
In the present case, if the Commissioner's submissions were accepted, the taxpayer could not rely on his own knowledge at all. He would have to ascertain from a variety of agents the manner in which, for the relevant period, which was only a month unless extended by the Commissioner, their business had been carried on. Unless every solicitation was regarded as canvassing each of the agents would have to say how each policy resulting in the payment of a premium was obtained. In a case such as R.G. Logan Insurances (Case No. 21 of the General Accident cases) how could an agent say whether a policy had been effected as a result of advertising, whether over the radio or at the rodeos which are referred to in the statement of facts or as a result of brochures being mailed to selections of prospective insurers. The agent himself would not know and would not be in a position to inform the insurance company even if he were willing to
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co-operate in the tedious task which would be involved. Yet the insurance company would be obliged to lodge an accurate return, and be subject to penalty if it did not.The circumstances I have mentioned were said to point to the words in question being intended to have a more limited construction. It was said that the only workable solution was to take the draftsman as having intended that the term ``insurance canvasser'' was to be understood as one that had a well known meaning in the insurance industry. It was to be understood in the context of industrial life insurance and the complete phrase ``canvasser and/or collector''. It applied to a person who, under the regular supervision of an officer of an insurance company, went from door to door in a defined territory on a systematic and full time basis seeking out customers for that insurance company. Essential elements in the description included the following:
- (a) The canvass was required to be systematic.
- (b) The canvasser must canvass, that is he was obliged to canvass; he had no choice as to whether or not he would canvass; his job, whether as a true employee or an independent agent, was to canvass.
- (c) The method of solicitation employed must justify the description ``canvassing''; solicitation could take many forms, some subtle and unobtrusive; canvassing involved an element of physical and peripatetic activity.
- (d) The canvasser was working for one particular insurer.
There was, upon the basis of what is contained in the judgment of Piper C.J. in the case above cited, and Mr. Gray's evidence, a fairly well-known class of persons in 1941 who fitted this description notwithstanding that that class of person is not now well known. At least until the judgment of Piper C.J. which was delivered almost a year after the coming into force of the Federal Act, there was uncertainty as to whether the persons engaged in industrial life insurance canvassing were true employees or not. In any event that case only concerned those whose activities were there considered. For Piper C.J. to reach his conclusion he felt obliged to find some of the provisions of the agreement shams and it may well have been, at least in the mind of the draftsman of legislation, that there were other canvassers who were not true employees but independent agents although carrying on in much the same way as is described by Piper C.J. and Mr. Gray. The view should be taken that the draftsman was in doubt as to whether the persons he described as insurance canvassers or collectors were true employees or independent agents. They were therefore included in the extended part of the definition as a matter of precaution. To give the words a construction such as was contended for by the plaintiffs was a far more likely reflection of the legislator's intention, bearing in mind that it was enacted to provide for a tax on wages. Although the paragraphs indicate that the intention was to catch some payments which were not truly wages, para. (a) and (c), and indeed para. (d) would not suggest that the legislature had in mind catching payments which were not akin to payments made to true employees. To the layman, Crown servants and company directors would be indistinguishable from employees and he would find it difficult to understand why a tax on a pay-roll should not include their emoluments, particularly having regard to the original reason for the tax as explained by Barwick C.J. in Victoria v. The Commonwealth (supra). On the other hand he would find it puzzling to know why, if the legislature had intended the words to have the wide meaning contended for by the Commissioner, payments received by way of commission by insurance agents should be the subject of the tax and yet no other payments by way of commission be subjected thereto; cf.
F.C. of T. v. Barrett 73 ATC 4147; (1973) 129 C.L.R. 395. And why should the legislature stop at commissions. There are many kinds of payments made between business organisations. What was the discrimen which determined that insurance commissions should be the subject of the tax but that no other payments made in business or commerce except wages in the true sense and payments made to the persons in para. (a), (b) and (c) should be brought to tax.
Conclusions:
Having referred in detail to the legislation, the evidence and the submissions of the
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parties, I can state my conclusions and the reasons therefor fairly shortly. Firstly, I accept the plaintiffs' submission that the Act should be construed as if it had been passed in 1941, the date of the Federal Act, rather than 1971. It so obviously derives from the Federal Act that I do not think it could be correct to take any other view. Furthermore, the earlier Federal Act and the Income Tax Assessment (No. 2) Act 1940, introducing the group tax provisions into the Income Tax Assessment Act 1936, should be regarded as statutes, if not in pari materia, then nearly so; cf. Craies on Statute Law, 6th ed., pp. 132-4.The original purpose and object of the legislation is not in doubt; it is stated and explained in the judgment of Barwick C.J. in Victoria v. The Commonwealth earlier referred to. The tax was intended to be a tax on the total amount of wages or salaries paid by employers to their employees. In similar vein were the group tax provisions introduced in 1940 into the Income Tax Assessment Act. They were to provide for the progressive deduction of instalments of income tax from the salaries or wages of employees. Both pieces of legislation were thus primarily concerned with wages or salaries in the true sense. The very title of the Act under consideration indicates that that is so. Nevertheless, it is true that the definitions of ``wages'' in the one case and ``salaries or wages'' in the other do include in the lettered paragraphs thereof payments which were not payments of wages or salaries in the true sense. Otherwise there would have been no need to include the lettered paragraphs (except perhaps para. (e) using the State Act lettering). The payments would all have fallen within the opening words of the definition. But in two cases the payments are closely akin to salaries or wages. To use the lettering of the paragraphs of the definition in the State Act under consideration, that is clearly so in relation to payments made by way of remuneration to company directors (para. (c)) and probably so in relation to amounts paid under prescribed classes of contracts to the extent to which the payments are attributable to labour (para. (b)). I say ``probably'' because I have some reservations as to the meaning and extent of para. (b).
When one has regard to the original purpose and object of the legislation as described by Barwick C.J., it would seem fair and reasonable that each of the payments dealt with in the two paragraphs which I have mentioned might properly be regarded by the legislature as being the subject of a pay-roll tax and properly the subject of a deduction in income tax legislation providing for the deduction of instalments of income tax from payments of salaries or wages. Although there is no paragraph in the Federal legislation similar to para. (a) of the State Act, the payments included within its terms are also closely akin to wages and the same considerations apply to them.
That being the context of the provision in question, it would not readily occur to one that the legislature, in including in the extended meaning of ``wages'' in pay-roll tax legislation, amounts paid or payable to insurance or time-payment canvassers or collectors, would be seeking to affect commissions paid or payable to the vast numbers of independent insurance agents and brokers which there are in the community. On the contrary, one would be inclined to conclude that the persons, payments to whom were made the subject of the tax, like Crown servants, company directors and persons who are paid for their labour, would be persons who carried on activities which had a similarity to those of true employees.
Of course, one has to give meaning and effect to the words which the legislature has used. Although it may be correct, as I think it is, to treat the legislation as if it had been passed in 1941 rather than 1971, expressions, notwithstanding that their meanings remain the same, may gather an enlarged meaning as the years go by, by reason of the fact that new things falling within their connotations come into existence or become known. But this is not a case where that principle of construction has any application. There were insurance brokers and agents long before 1941. If the Commissioner be right, commissions paid to those persons were ``wages'' for the purposes of the Federal Act and were ``salaries or wages'' for the purposes of the Income Tax Assessment Act (No. 2) Act 1940.
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The Commissioner strongly resisted the taking into account of what had been said by Piper C.J. in the industrial case earlier referred to. He did so principally upon the basis that the decision was given during the year following the coming into force of the Federal Act. It was not the usual case of the legislature seeking to change the law so as to remedy what it regarded as an unsatisfactory situation as the result of a judicial decision. But the plaintiffs do not seek to use the decision in that way. They seek to refer to it in order to demonstrate that there was, long before the decision, a class of persons in the community known as insurance canvassers who were treated by those who engaged them not as true employees but as agents or independent contractors. Plainly the judgment of Piper C.J. demonstrates that this was so.
There was, therefore, a readily identifiable class of persons in the community to which the legislation was capable of applying. There was doubt as to whether or not that class of person was a true employee. I reject submissions made by counsel for the Commissioner that the judgment of Piper C.J. demonstrates that there was no doubt about the status of such persons. He was only able to conclude that the persons with whom he was dealing were true employees after holding that some of the clauses in their agreements were not in fact observed. In any event it was not until his decision, given the year after the Federal Act was passed, that it could be said that any doubts were removed. If his decision had put those doubts to rest, a matter which I think is open to question, that only occurred after the legislation had come into force.
To the same effect as the description of the work of insurance canvassers in the judgment of Piper C.J. is the evidence of Mr. Gray. The circumstances in which a judge may receive evidence of the meaning of words used in a modern statute are stated by the Court of Appeal in England in
Marquis Camden v. I.R. Commrs. (1914) 1 K.B. 641. Lord Cozens-Hardy M.R. said (at pp. 647-8):
``I thought that a modern Act of Parliament was framed in language which is intelligible to everybody, and which applies not to any local custom or consideration of that kind, but to the whole of Great Britain (and I think beyond that, elsewhere, but at any rate to the whole of England). But we are asked to say that the Court ought to take evidence as to whether in dealing with this particular property there is some special and peculiar accepted meaning of these words, `nominal rent'. No case has been called to our attention, and I do not believe there is any case, in which, dealing with a modern statute, any such evidence has ever been admitted. The duty of this Court is to interpret and give full effect to the words used by the Legislature, and it seems to me really not relevant to consider what a particular branch of the public may or may not understand to be the meaning of those words. It is for the Court to interpret the statute as best they can. In so doing the Court may no doubt assist themselves in the discharge of their duty by any literary help which they can find, including of course the consultation of standard authors and reference to well-known and authoritative dictionaries, which refer to the sources in which the interpretation which they give to the words of the English language is to be found. But to say we ought to allow evidence to be given as to whether there is any such technical meaning, to be followed up, of course, by evidence as to what that special meaning is, would I think be going entirely contrary to that which seems to be the settled rule of interpretation.''
To the same effect is the dictum of Jordan C.J. in
The Australian Gas Light Co. v. The Valuer-General 40 S.R. 126 in which he said (at p. 137):
``The question what is the meaning of an ordinary English word or phrase as used in the Statute is one of fact not of law;... This question is to be resolved by the relevant tribunal itself, by considering the word in its context with the assistance of dictionaries and other books, and not by expert evidence...''
The reconciliation of the dicta I have cited with the decision of the Privy Council in Attorney-General for
the Isle of Man v. Moore (1938) 3 All E.R. 263, relied upon by counsel for the plaintiffs, is that the Privy
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Council was in that case dealing with a statute which was not a modern one.It is true that if an expression is a technical one or a term of art, evidence of its meaning may be received - Phipson on Evidence, 12th ed., para. 2069. But I think that there is a serious question as to whether the expression ``insurance canvasser'' is a term of art. Certainly it is not a technical term. In those circumstances I think the better view is that Mr. Gray's evidence was not admissible and should be rejected.
That leaves his book. Strangely counsel for the Commissioner did not oppose my reading it. He submitted that it was properly regarded as the work of a standard author of the kind referred to by Lord Cozens-Hardy M.R. in Camden. I have some reservations about that. If counsel be correct, it seems strange that the book can be referred to, but the author cannot be called to give evidence to elaborate what he has written. I do not know what the position would be if the current editor of the Oxford Dictionary were called for the purpose of giving evidence of the meaning of a word not found in the last edition but likely to appear in the next edition. Be that as it may, there is nothing of direct relevance in Mr. Gray's book. He gives an account of the history of industrial life insurance but there is nothing dealing with insurance canvassers.
There is nothing in the authorities to which I have referred which leads me to think that I am not entitled to take into account what is contained in the judgment of Piper C.J. In my opinion it demonstrates, as I have said, that there was in 1941 an identifiable class of persons known as insurance canvassers whose activities were not of the kind of those of any of the insurance agents whose mode of operation or business is described in the evidence. I think, upon the basis of the dictionary meanings of the words ``canvass'' and ``solicit'', to which I have earlier referred, that it may be correct to say that many of the agents, whose activities are described in the evidence, do canvass for business and are thus literally insurance canvassers. But I do not find that rather simplified solution to the problem attractive. When one takes into account the purpose and object of the original legislation, the nature of it, the nature of the activities of the other classes of persons whose remuneration or emoluments are deemed to be wages (in particular persons in Crown service and company directors) and then has regard to what Piper C.J. said so close to the passing of the legislation, I think one is compelled to the view that the persons to whom the legislation was directed were of the kind described by him in his judgment. It follows that I am in agreement with the plaintiffs' principal submission that for a person to be an insurance canvasser within the meaning of the definition, he must be employed (not using that expression in its strict sense) to canvass. Whether he be a true employee, an agent or an independent contractor, he must be bound to canvass, and that must be, if not his sole occupation, his principal one.
I am confirmed in my opinion by two of the ancillary submissions made by the plaintiffs. The first is that based on the administrative difficulties which would occur if the Commissioner's submissions were accepted. I do not agree with the Commissioner's solution to the problem which is to say that, provided a person can properly be described as having the vocation of insurance canvasser, all payments of commission to him are caught as wages, notwithstanding that some were paid in respect of business which he did not canvass. It follows that insurance companies in the position of the two plaintiffs here would be placed in an impossible position in endeavouring to lodge accurate monthly returns (sec. 13(1) of the Act) if the Commissioner's arguments on the construction of the relevant words were accepted. Even if the Commissioner's submission that commissions paid to an insurance canvasser were caught, notwithstanding that some were not received as the result of canvassing, were to be accepted, there would still be substantial difficulty on the part of insurance companies in knowing whether or not particular payments should or should not be included in their returns. Persons might give up altogether the vocation of an insurance canvasser; yet moneys might continue to come in for various reasons.
The second matter which I think supports the conclusion to which I have come is based on puzzlement I have as to why the legislature would, in a pay-roll tax Act, seek
ATC 4611
to impose a tax only on payments made by way of commission to insurance agents and brokers. Why not tax commissions received by other agents as well? There appears to be no valid reason why the legislature should single out insurance agents. Those considerations suggest that it intended only to affect payments to the restricted class of person described in the judgment of Piper C.J.None of the agents appointed by Sentry or General Accident was bound to canvass. The only consequence of any agent failing to seek business or to obtain business might be the termination of his agreement; and that would apply only in the Sentry cases, not in those of General Accident. I have given special consideration to the cases of the two housewives, Mrs. Davies and Mrs. McFarland (Cases 22 and 23 of the General Accident cases). But, like all other agents, neither was obliged to canvass or seek business. I am satisfied that they are not in any different situation from the other agents whose activities are described in the two agreed statements of fact.
For the reasons I have given, I have reached the conclusion that each of the appeals should be allowed. Accordingly, I order, pursuant to the provisions of sec. 33(1) of the Act, that the plaintiffs' objections to the assessments which are in question be wholly allowed. I order the Commissioner to pay the plaintiffs' costs of the proceedings.
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