ROY MORGAN RESEARCH CENTRE PTY LTD v COMMR OF STATE REVENUE (VIC)
Judges:Byrne J
Court:
Supreme Court (Vic)
Byrne J
By assessment dated 16 December 1987 the Commissioner for Payroll Tax, whose successor is the respondent (``the Commissioner''), has, pursuant to Pay-roll Tax Act 1971 s. 18(1), assessed the taxable wages paid by the appellant, The Roy Morgan Research Centre (``RMR'') for the period 1 July 1980 to 31 December 1986 as $1,561,490 and calculated the pay-roll tax payable by it in the sum of $91,709.40. RMR on 2 February 1988 lodged an objection with the Commissioner pursuant to s. 32. This was disallowed by decision of the Commissioner, notice of which was served on RMR on 16 April 1992. Pursuant to a request by RMR under s. 33, this decision was referred to the Administrative Appeals Tribunal and, on 23 January 1996, the Tribunal published its decision confirming the decision of the Commissioner and ordering RMR to pay to the Commissioner $5,000, the costs of the referral.
The matter, therefore, is brought before the Court by RMR as an appeal pursuant to s. 33B(4) against the decision of the Tribunal by Notice of Appeal filed on 20 February 1996.
Procedural Matter
Rule 4.05 of Ch. 2 of the Rules of Court obliges an appellant to set out in its Notice of Appeal a number of matters including:
``(iii) the question of law upon which the appeal is brought or which is involved in the decision, as the case requires;
(iv) concisely the grounds of appeal.''
In obedience to that rule, RMR's Notice of Appeal in this case includes the following paragraphs under the heading ``Questions of Law'':
``2. The questions of law raised on the appeal are:
- (a) Did the Tribunal err in concluding on the facts as found by it and the evidence that the persons referred to in its Reasons For Decision as interviewers (`the interviewers') were employees of the Appellant as that term is understood at common law?
- (b) In the circumstances which confronted the Appellant on 19 January 1996 was the Appellant denied procedural fairness or natural justice by virtue of the fact that the Tribunal refused the Appellant's request for an adjournment and in effect gave the Appellant no practical alternative but to proceed with the application without giving the Appellant or the Appellant's legal advisers a reasonable opportunity of preparing and pursuing the application?''
On behalf of RMR counsel put that this was a rehearing de novo of the matter referred to the Tribunal. Accordingly, question (b) above did not arise for consideration before me because it was open to him to call such further evidence as he saw fit. Counsel said, however, he was content to proceed on the basis of the material before the Tribunal but with the further evidence of Michele Levine, a witness who gave evidence before the Tribunal. Counsel for the Commissioner said that he, too, was content to conduct the appeal upon the material before the Tribunal but he resisted the calling of this further evidence. After hearing argument I determined to permit RMR to call the further evidence which it sought and indicated that I would give my reasons later. These are my reasons.
The provision for appeal to this Court from a decision of the Tribunal is found in s. 33B(4):
``The Commissioner or the objector may, within 30 days after the decision of the Tribunal, appeal to the Supreme Court from any decision of the Tribunal under this section which, in the opinion of the Court, involves a question of law, and the Tribunal shall, upon the request of the Commissioner or the objector, refer to the Supreme Court any question of law arising before the Tribunal.''
This sub-section which, I was told, is in a form commonly found in revenue legislation, has been the subject of a long line of judicial exposition. The effect of the provision is that an appeal lies from a decision of the Tribunal provided that some question of law was involved in that decision. It matters not whether the Court considers that the Tribunal was right or wrong on that question of law, and the appeal is not limited to that question of law. The Court on appeal is required to rehear the whole of the matter or controversy:
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Ruhamah Property Co. Ltd. v. Federal Commissioner of Taxation (1928) 41 C.L.R. 148 at 155, per Isaacs, J:
TNT Skypak International (Aust) Pty. Ltd. v. FC of T 88 A.T.C. 4279 at 4281, per Gummow, J., and the cases there referred to. Upon such a rehearing, the facts placed before the Court must be proved in the usual way unless some other proof is consented to:
FC of T v. Miller (1946) 8 ATD 146 at 151; (1946) 73 C.L.R. 93 at 104, per Dixon, J. This is subject to one, and possibly two, qualifications. First, according to Walsh, J. in Krew v. FC of T 71 ATC 4213 at 4216; (1971) 2 A.T.R. 230 at 235, Latham, C.J. in FC of T v. Miller (1946) 8 ATD 146 at 148; (1946) 73 C.L.R. 93 at 98, indicated that the Court should give ``due weight'' to the Tribunal's decisions on questions of fact. Secondly, where the question of law which enlivens the jurisdiction of the Court is the question whether there is any evidence to support a finding of fact, it may be that the task of the Court is to determine whether, on the evidence before the Tribunal, it would have come to the conclusion which it did:
Buckland v. Commissioner of Taxation (1960) 34 A.L.J.R. 60 at 62, per Windeyer, J.;
Comptroller of Stamps (Vic) v. Hutchins & Ors 84 ATC 4820 at 4825; [1985] V.R. 599 at 606, per Kaye, Brooking, Beach, JJ. But compare FC of T v. Miller (1946) 8 ATD 146 at 151; (1946) 73 C.L.R. 93 at 104, per Dixon, J.
Counsel for the Commissioner fastening upon this last proposition invited me to look at the questions of law in the Notice of Appeal which I have set out above and in particular at paragraph (a). He submitted that the question there posed is simply ``whether there is any evidence of facts sufficient to justify a particular conclusion of law''. Accordingly, he submitted that the question must be determined by reference to that evidence and nothing more.
In my opinion the fundamental flaw in this argument becomes apparent as soon as one asks what is the question of law which the Tribunal's decision in this case involved. Rule 4.05(1)(b)(iii) requires the notice to set out whichever of two specified matters the case requires: the question of law on which the appeal is brought; or the question of law which is involved in the decision appealed from. In this case, the latter is the appropriate matter to be dealt with in the notice for it is the existence of that question upon which the right of appeal depends: s. 33B(4). In other types of appeal where the appeal is available only upon a question of law, the rule requires that the question of law be identified. See, for example, the Administrative Appeals Tribunal Act 1984 s. 52(1). The drafter of the Notice of Appeal here has confused the two matters and set out the ``questions of law raised on the appeal''. As soon as the correct question is asked the answer leaps out. The question involved in the Tribunal's decision was this: ``Were the payments made by RMR to interviewers during the period 1 July 1980 to 31 December 1986 wages paid by an employer within the meaning of s. 6 of the Payroll Tax Act 1971?'' So expressed, it is plainly a question of law:
FC of T v. J. Walter Thompson (Aust) Pty. Ltd. (1944) 7 ATD 401 at 402-403; (1944) 69 C.L.R. 227 at 229, per Latham, C.J. Accordingly, the appeal is competent and the task of this Court is to rehear the matter which was before the Tribunal. It is for the parties to determine what evidence they wish to put before the Court for this purpose, subject only to the usual powers of the Court to exclude evidence on some lawful basis. Before me, the parties are content that I act upon the material before the Tribunal, as is their entitlement. In addition RMR wishes to put further evidence before me. No basis for excluding this has been put forward other than that which I have already rejected. I will therefore receive the further evidence of Ms. Levine which, by consent, was received by affidavit verified by her in the witness box and cross-examination.
The Appeal
The question before the Court is whether the payments referred to in the Commissioner's assessment are wages paid by an employer for the services performed or rendered, so that the employer is liable to pay pay-roll tax on them under s. 7. It was accepted by both parties that this question involved the consideration of one issue only, whether the contractual relationship between RMR and its investigators between 1 July 1980 and 31 December 1986 was that of common law employer and employee as the Commissioner contended.
There are some features of this case as it affects that issue which I will note and put to one side. First, the assessment included a sum for allowances paid to the interviewers. No particular argument was directed to these payments and I shall, as requested, not concern myself separately with them. Next, in a case
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which requires an analysis of the contract which existed between each of the interviewers and RMR, there was little evidence of that contract other than that it existed. It was accepted that there was no formal written agreement. No evidence was led of the date of any engagement or of any particular conversation with any interviewer in which an agreement was said to have been reached. Indeed, the identity of the interviewers is not known to me nor whether any of them was engaged before July 1980 or at any particular time up to 31 December 1986. All that I know is that there were a number of them and that they conducted interviews in that period. This caused neither party any difficulty. I was told that they both wished to have a decision on the matter of principle. For this purpose, it was agreed that I should have regard to all of the documents filed pursuant to r. 7.10. This was subject to one qualification. It seems that in 1987 the State Taxation Office carried out an investigation to determine whether RMR's payments to interviewers were, in fact, assessable. In the course of this investigation a number of interviewers were themselves interviewed. The notes of these interviews were included in the r. 7.10 documents but the parties were agreed that I should have no regard to them. Included in these documents, too, was a request for further and better particulars of objection delivered on behalf of the Commissioner dated 29 May 1992. In this request the Commissioner sought particulars of the agreement or arrangement by which each of the interviewers undertook to provide interviewing services. The response of RMR dated 22 June 1992 enclosed four documents of which it was said: ``These exhibits which are currently in use should enable you to enable the information requested''. No complaint was made of the form of these particulars. The documents produced included a standard form letter bearing date 12 February 1992 thanking the applicant for the position of interviewer for their interest, a standard form letter of appointment, undated, and an ``Interviewer's Manual'' dated September 1991. These documents were related to the period 1980-1986 by the evidence of Ms. Levine. She commenced with RMR as a researcher in 1984. She became the Manager of Consumer and Social Research and, about four years ago, the Chief Executive of RMR. She had no direct involvement of the engagement or termination of the engagement of interviewers; her evidence was based on her awareness of the policies associated with their engagement, but no point was taken of that. She said that the procedure for engagement of interviewers and the conduct by them of interviews was in 1980-1986 as set out in the 1991 manual. She produced the RMR Interviewer's Manual dated October 1995. This manual was first produced in 1991, presumably in the form before me dated September 1991, and was, therefore, not in use in the period in question. It was prepared from notes and instructions during that period and ``sets out how the centre expected interviews to be conducted during the relevant period and the basis on which interviewers were engaged''. Other witnesses who gave evidence before the Tribunal were Vera Wroe who was employed with RMR from 1987, Shantina Nadarajah who started with RMR as a coder in 1988, Howard Mitchell who has worked as an interviewer from 1966 to date except for the period 1973-1983, Owen Grimshaw and Sandra Jill Craig both of whom have worked as interviewers with RMR since about 1985. I mention all of this, as I said, to put it to one side because the Commissioner was content to argue the case on the evidence of these witnesses notwithstanding the limitations of their knowledge, and on the basis that the procedures they described were, unless otherwise indicated, applicable in the period 1980 to 1986, and applied generally to all interviewers during that period.Apart from this, the contest before me was a familiar one. Were the interviewers employees or independent contractors? The law in this area is well settled; it has recently and authoritatively been expounded by the High Court in
Stevens v. Brodribb Sawmilling Co. Pty. Ltd. (1986) 160 C.L.R. 16. My task is to examine the entirety of the relationship between the parties and, by reference to those features which have traditionally been regarded as significant, to discern what is the essence of that relationship. See
Mulhall v. Roberts (unreported, C.A. (NSW), C.A. 40009/1994, 19 July 1995) p. 4. This relationship is a contractual one, in this case arising from an agreement which was not reduced to writing. There is evidence that in the early 1980s, initial instructions were always given to perspective interviewers by written notes, but these notes were not produced and no evidence was given of their content, other than that some of their
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content had gone to make up the 1995 manual. The terms of the contract of engagement must be identified by reference to conventional contractual principles; they are to be discerned from an objective assessment of the contracting parties' intent inferred from what they said and did at the time of contract, subject always to the possibility that they may have varied its terms thereafter:Narich Pty. Ltd. v. Commr of Pay- roll Tax (NSW) 84 ATC 4035 at 4038; (1983) 50 A.L.R. 417 at 420-1, per PC, and to the inferences which may legitimately be drawn from their performance of the agreement.
With respect to the evidence of engagement, I find that prospective interviewers were attracted to RMR by newspaper advertisement or by word of mouth. Applicants were required to complete a practice interview and, possibly, to complete a formal application form and declaration. Presumably the potential interviewer, if considered suitable, was advised of this fact. They would attend a briefing or introduction session in which principles of market research were canvassed and RMR procedures explained and any questions answered. This session was conducted either face to face if the potential interviewer lived in the city or, otherwise, by telephone. Mrs. Wroe said that this was always by telephone, but I do not accept this having regard to the evidence of Ms. Levine and Mr. Grimshaw. Applicants were not paid for attending or participating in this introductory session.
According to Mrs. Wroe, she told all applicants at the initial interview stage that they would be ``on contract''. She said that she explained to them that they were classed as independent contractors and not on payroll and that the company ``does not deduct tax on their behalf''. Ms. Nadarajah, too, spoke of telling this to prospective interviewers at the introduction session. She said she used to tell them that they were not paid a wage, but by interview or assignment, and that RMR did not deduct their tax.
The procedures to be followed by the interviewers in the performance of their task were spelled out in considerable detail and doubtless explained at this introductory meeting. I will not attempt to summarise them. They were as set out in the manuals which were, of course, prepared subsequently. These procedures were directed to the selection of interviewees, although some latitude was given to interviewers in this regard; to the manner of questioning, even to the introductory spiel; to the way interviewers were to keep their materials; and to the manner and presentation of reporting back to RMR. A significant area of discretion reserved to interviewers was the time at which they might conduct the interviews. They were told to carry them out over a particular weekend but it was accepted that they might do so over two consecutive weekends. In the period 1980 to 1986 10% to 20% of assignments were not carried out in the specified weekend. The terms of the manuals are such that interviewers were given the impression that the success of the research programme to which they were contributing depended in large part on their reliability and the care with which they followed the detailed procedures there set out.
Following the successful completion of the introductory session, applicants became part of a pool of interviewers available to accept assignments as and when they were offered by RMR. This was all in accordance with the procedures which had been discussed and accepted by interviewers.
For the purpose of conducting interviews RMR provided interviewers with all necessary materials. In the case of pens and stationery, an allowance was paid. I make this finding on the basis of RMR's response to the Commissioner's request for further particulars of objection para. (e). Interviewers were not provided with a uniform although they were required to dress neatly. They were not provided with identification badges or a bag for their materials although Ms. Craig said she received these. I accept nonetheless that some kind of identification was provided. Interviewers were expected to have and to use a clipboard for their papers. RMR made these and a street directory available to interviewers at half price.
Interviewers were paid a fee per assignment which, in the 1980s constituted eight interviews, and payment was made following receipt of each completed assignment. The amount of the fee was fixed by RMR for each assignment by reference to the time required for the performance of that assignment. The fee did not depend upon the actual time taken by the interviewer, the interviewer taking the risk that the assignment might prove difficult or time- consuming for any reason. If the assignment was not completed no fee was payable.
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Interviewers were expected to provide their own telephone and transport but were paid for return trips to and from their home at a fixed rate per kilometre. In the case of interviews in rural areas, travelling expenses were paid for each visit out of the interviewer's home town. In certain circumstances taxi fares were reimbursed. In addition, interviewers were paid an extra allowance in certain circumstances, such as the obtaining of a specified number of interviews within a limited number of dwellings.A significant feature of the relationship between interviewers and RMR was the fact that it was on an assignment basis. Interviewers were part of a pool available to be drawn upon by RMR. They were not entitled to insist upon an assignment and were entitled to decline an assignment for any reason. It was said that poor performance might have the consequence that an interviewer might be removed from the pool or merely offered no more work. I accept, too, that, if a serious breach of protocol were committed by an interviewer, the assignment might be summarily terminated.
Interviewers were told that they were not to delegate the interviewing task. Ms. Levine said, nevertheless, that some delegation was suspected and even tolerated. Nevertheless, in terms of the relationship between RMR and the interviewers, I find that interviewers were expected, no doubt for good reason, to perform their task personally. They were required to declare this in their returns after each assignment.
The legitimacy of an interviewer's returns was checked by a telephone audit procedure and it was made clear to interviewers that this procedure for checking was in fact used. Subject to this, interviewers performed their task without supervision from RMR. Nevertheless, it was emphasised to them that they were members of an Australia-wide network of interviewers contributing to an important market research activity carried out by a prestigious organisation. Advice, assistance and support were available for interviewers at all times and this, it seems, was availed of. Interviewers were given a starting point from which they were to select dwellings for interviews but, it seems that the starting point given might be changed by the RMR National Field Office. I find from the highly structured nature of the interviewer's task and the directive tone of the manual, that the interviewer in every respect of the carrying out of these tasks was subject to the direction of RMR, whether or not that power to direct was ever exercised. I see it as inconceivable that an interviewer who had been given an assignment would see themself as having the right to resist a direction of a senior RMR staff member that the assignment be modified in some way.
Counsel for the Commissioner placed great reliance upon the considerable detail in the instructions given to interviewers as to the manner in which they were to perform their task. This, it was said, satisfies the test that RMR reserved to itself the right to control them. On the other hand counsel for RMR relied upon the absence of actual supervision. It may be said that the Commissioner's submission loses much of its force when it is seen in the light of the task in question. It is of the nature of market research that interviews should be conducted, as far as possible, without variation between interviewers or between surveys. For this purpose, it is inevitable that a degree of control should be maintained whether the task be carried out by an employee or an independent contractor:
TNT Worldwide Express (NZ) Ltd. v. Cunningham [1993] 3 N.Z.L.R. 681 at 697, per Casey, J. The paradoxical nature of this argument, however, was identified by the Privy Council in the Narich Pty. Ltd. v. Commr of Pay-roll Tax (NSW) 84 ATC 4035 at 4042-4043; (1983) 50 A.L.R. 417 at 426. There, their Lordships emphasised that it is the engagor's contractual entitlement to control the manner in which the task is to be performed which is of importance, a factor emphasised in Stevens v. Brodribb Sawmilling Co. Pty. Ltd. (1986) 160 C.L.R. 16. Moreover, the absence of actual supervision of the interviewer's conduct of interviews is of less significance when it is recognised that it would be difficult, if not impossible, for a supervisor to accompany the interviewer on their visits and that this might have the consequence of introducing into the survey an unacceptable variable with the possibility of affecting the reliability of the result:
Sgobino v. State of South Australia (1987) 46 S.A.S.R. 292 at 305, per Matheson, J. To my mind, the degree of control reserved by RMR points to an employer/employee relationship.
Other factors may also bear upon the question. Those pointing in the same direction
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are the fact that RMR advertised for interviewers, not vice versa: Mulhall v. Roberts (unreported, C.A. (NSW), C.A. 40009/1994, 19 July 1995) p. 9; the prohibition upon delegation;Australian Mutual Provident Society v. Chaplin (1978) 18 A.L.R. 385, at 391, per PC; the provision of materials and the payment of certain allowances for the interviewer's expenses:
Queensland Stations Pty. Ltd. v. FC of T (1945) 8 ATD 30 at 32; (1945) 70 C.L.R. 539 at 547, per Latham, C.J.; the prohibition upon the performance of other work by the interviewer when conducting interviews.
Other indicia, relied on by RMR as pointing the other way include the fact that the interviewers were engaged and paid by assignment and that there was no obligation on either party to offer or to accept an assignment. This was a feature of the relationship in the market research case:
Market Investigations Ltd. v. Minister of Social Security [1969] 2 Q.B. 173, and the interpreter case: Sgobino v. State of South Australia (1987) 46 S.A.S.R. 292, both of which led to a finding of an employer/employee relationship. Although this may cause difficulties in defining the contract of employment in a given case, it is not such a feature as to outweigh the matters which favour the existence of that relationship.
Counsel for RMR also referred to the fact that interviewers were told at the time of the engagement that they were independent contractors. This is an important factor and one which would be most telling if it stood alone. In the present case, however, the expression appears to have been used in the context of the non-deduction of income tax instalments and in terms which are not altogether clear in any given case. In any event, it is a matter which must yield in its significance to the nature of the whole relationship between RMR and its interviewees: Narich Pty. Ltd. v. Commr of Pay-roll Tax (NSW) 84 ATC 4035 at 4039; (1983) 50 A.L.R. 417 at 421, per P.C.
Next, reliance was placed on the fact that tax was not deducted by RMR and, perhaps more importantly, that interviewers accepted this at the time of their engagement. Likewise, other benefits ancillary to employment such as superannuation, holiday pay and long service leave were not paid by RMR. That this is a material consideration suggesting the non- existence of an employer/employee relationship cannot be gainsaid: Stevens v. Brodribb Sawmilling Co. Pty. Ltd. (1986) 160 C.L.R. 16;
BWIU v. Odco (1991) 29 F.C.R. 104 at 126, per Full Court. In this case, however, it must be seen in context. It was accepted by prospective interviewers at the same time that RMR would assume the responsibilities of employer under the Workers Compensation Act 1958 and, when it commenced, the Accident Compensation Act 1985. This, being a familiar incident of employment, is an indication in the contrary direction. It is of no consequence that this was done out of an abundance of caution; there was no evidence that this reason was conveyed to interviewers at the time.
Much emphasis was put by the Commissioner on the evidence tending to the conclusion that the interviewers were part of the RMR organisation. It is true that they saw themselves and were encouraged to see themselves as such. They used the goodwill of RMR to persuade interviewees to answer the RMR surveys. There was no evidence that any interviewer sought to use their skills as interviewer for any other market research organisation at a time when they were accepting work from RMR. This is a factor which is of limited significance in the present context as it was in the case of the courier in TNT Worldwide Express (NZ) Ltd. v. Cunningham [1993] 3 N.Z.L.R. 681. Nevertheless, it is another indication which, together with the others to which I have referred, builds up a picture of the relationship of employer/ employee.
I was referred to two cases in which market research interviewers had been held to be employees: Market Investigations Ltd. v. Minister of Social Security [1969] 2 Q.B. 173, a decision of Cooke, J., and a decision of the Australian Industrial Relations Commission:
National Union of Workers v. Elder Research (No. 30272/1994, 27 February 1995, unreported) for which leave to appeal was refused to RMR on 5 September 1995. I was referred also to the decision of the Deputy Commissioner of Taxation of 28 August 1957 to the effect that, in the circumstances disclosed to him, payments made to interviewers were not subject to pay- roll tax. These were all cases where it was by no means clear that the evidence was comparable to that before me. It does appear, however, that in the case before the Queen's Bench Division and that before the Industrial
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Relations Commission a conclusion was reached that a market research interviewer was an employee following the receipt of evidence and full argument. None of these cases is, of course, binding on me. I nevertheless gratefully accept the statements of principle contained in them and am, to some extent, comforted by the fact that they reached the same conclusion on the facts before them as I have on the facts before me.While the matter is not free of difficulty, I have formed the clear view that the relationship between RMR and interviewers is that of employer and employee. I should say that in reaching this conclusion I have placed no reliance upon the words contained in the Record of Call Sheet where the interviewer declared themself to be ``a trained and qualified interviewer'', or the words ``in the event of my resignation/dismissal'' in the Application for Appointment. The evidence that these documents were in use in 1980-1986 is insubstantial and I do not infer that these precise words were used otherwise in that period. My conclusion is that interviewers were not conducting their own businesses when they accepted assignments; they were performing their tasks as part of the business of RMR.
Accordingly, I conclude that the decision of the Commissioner disallowing the objection of RMR was correct and that the assessment should be confirmed and the Commissioner should have his costs.
There was debate before me as to which party should bear the costs of the procedural point taken unsuccessfully by the Commissioner, argument upon which occupied half the first day of the hearing. The Commissioner failed and its costs of taking this point should not be included in those payable by RMR. On the other hand, the point arose largely from the defective form of the Notice of Appeal for which RMR was responsible. I consider that the costs of each party of the procedural point should lie where they fall. I propose therefore the following orders:
1. The appeal be dismissed.
2. The respondent's assessment No. IN400 dated 16 December 1987 be confirmed.
3. The appellant pay the costs of the respondent of this appeal, but not including the costs of the first half day of the hearing.
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