100425473

WESTERN AUSTRALIAN INDUSTRIAL MAGISTRATES’ COURT

PARTIES ELIZABETH SINCLAIR

CLAIMANT

 -v-

 STARTUNE HOLDINGS PTY LTD

RESPONDENT

CORAM MAGISTRATE G CICCHINI IM

DATE WEDNESDAY, 15 SEPTEMBER 2004

CLAIM NO M 24 OF 2004

CITATION NO. 2004 WAIRC 13193

_______________________________________________________________________________

Representation

Claimant Mr N Irvine of Workplace Negotiations (WA) appeared as agent for the Claimant.

Respondent Mr T Caspersz (of Counsel) and with him Ms R Taseff (of Counsel) instructed by Blake Dawson Waldron Lawyers appeared for the Respondent.

_______________________________________________________________________________

Reasons for Decision

Introduction

1         The Claimant is and was at all material times a medical practitioner practising in Western Australia.

2         Between 1988 and 6 August 1998 she worked with the Barkhouse Trust Medical Practice situated at Adelaide Terrace, Perth.  Dr David Barkhouse and Mrs Jennifer Barkhouse owned that practice as trustees for the Barkhouse Family Trust (the Barkhouse Trust).  Her engagement from 1988 to 1991 was on a part-time basis and thereafter on a full-time basis.  The Claimant contends that she was during those periods an employee of the Barkhouse Trust.

3         In about June or July of 1998 Dr Barkhouse informed the Claimant that he was negotiating to sell the Barkhouse Practice to Westpoint Pty Ltd in exchange for an agreement that Westpoint provide all administration services to Dr Barkhouse’s practice which he intended to amalgamate with the medical practices of Dr Bateman and Dr Linfoot.  It was proposed that the amalgamated practices should operate from a new centre that Westpoint proposed to open located at 160 St Georges Terrace, Perth in the hub of the central business district.  It was envisaged that it would attract lucrative corporate medical work.  In addition the new centre would provide other healthcare services such as physiotherapy, thereby making the centre more attractive to patients.  Dr Barkhouse’s negotiations with Westpoint were conducted through Martyn Harris, a business broker specialising in the sale of medical practices.  The Claimant was involved in the process.  Indeed she discussed with Mr Harris certain implications of the proposal directly impacting upon her.  The negotiations eventually culminated in the sale of the Barkhouse business to the Respondent, which was at that stage a subsidiary of Westpoint.  The Agreement was formally concluded on 6 August 1998.

4         On or about 6 August 1998 the Claimant discussed with Dr Barkhouse the implications of the sale of his practice and in particular whether the Service Agreement which she had been asked to sign by the Respondent would result in changes once the Respondent had taken over.  The Claimant says that Dr Barkhouse informed her that “nothing would change”.  She took that to mean that she would remain an employee.  Dr Barkhouse told her that she should sign the Service Agreement, which she duly did.

5         Dr Barkhouse concedes that he may have told the Claimant that nothing would change but said that if he did so it was said in the context of the medical work remaining the same and the level of percentage taken out of Dr Sinclair’s gross billing remaining the same.  That is, under the Services Agreement Dr Sinclair would pay 50% of her gross billings for the Respondent’s administration services as she was already then paying to the Barkhouse Trust for similar administration services.

6         The Services Agreement executed on 6 August 1998 (Attachment ES 14 to the supplementary affidavit of the Claimant sworn 12 July 2004), had been made available to the Claimant some time prior to its execution.  Indeed she was given ample opportunity to read and consider the same and, if necessary, to obtain legal advice about it.  It seems that the Claimant did not seek legal advice concerning the document.  The agreement entitled “Services Agreement (Adelaide Terrace Medical & Dental Centre)” contained various recitals under the heading “Introduction”.  It also contained the operative clauses of the agreement.  The recitals state inter alia:

1. The Practitioner has, for some years, conducted a medical practice in the Central Business District of Perth.
2. …
3. The Practitioner wishes to concentrate on the provision of her medical services and previously has procured the provision of premises, facilities from which to conduct her medical practice and also the provision of a broad range of administrative services from the Current Manager.
4. Under the Sale & Purchase Agreement the Current Manager is selling and the Manager is purchasing the medical administration business of the Current Manager including the exclusive right to provide medical administration services to the Practitioner.

 …

7         Notwithstanding that in executing the agreement, the Claimant has accepted those recitals; she now resiles from the same.  In her supplementary affidavit sworn on 12 July 2004 she denies that she had for some years conducted a medical practice in the Central Business District of Perth, and further, that she had procured the provision of premises and facilities from which she conducted her medical practice or that she had procured a broad range of administrative services from the Barkhouse Trust.  Further, the Claimant denies that the Barkhouse Trust had hitherto the exclusive right to provide medical administration services to the Claimant as it did not have any such agreement with her and as such had no right to sell the same to the Respondent.

8         The Services Agreement purports to create a relationship of independent contractor and specifically disavows any other relationship between the parties and, in particular, partnerships, joint ventures and employment relationships (see Clause 7.10).  The Services Agreement expired on 13 December 2001.

9         On or about 5 February 2002 the Claimant was informed that due to changes in management that her current position at the St Georges Terrace Centre Practice would cease with effect on 22 February 2002.  Dr Flett, as agent for the Respondent, instructed her that she would not be entitled to copy or retain any patient files or inform patients that she was leaving.

10     On 18 March 2002 the Claimant commenced practice at the Mill Street Medical Practice.  Many of her pre-existing patients followed her to that practice.  In June of this year she commenced work in Beechboro, as there was insufficient work in Perth.

Issues

11     The pivotal issue in this matter is whether at the material times the Claimant was an employee or, alternatively, an independent contractor.  The Claimant avers that at all material times she was an employee of the Respondent and not an independent contractor.  She says that the fact that she was an employee is reflected inter alia by aspects of the agreement, when considered in the light of her actual circumstances in the performance of her duties including the mode of remuneration and method of termination.

12     The Claimant says that the document entitled “Services Agreement” purporting to create a relationship of principal and independent contractor is no more than a “sham, a ruse that’s (sic) sole purpose was to disguise a true relationship of employer and employee” (see item 66 of the Claimant’s affidavit sworn 29 June 2004).  Further, the Claimant maintains that notwithstanding the terms of the written agreement between the parties that they nevertheless throughout the course of their relationship acted in the way that an employer and employee would as is evidenced by the following:

• The Claimant did not operate her own business.
• The Claimant did not have any business structure.
• The Claimant did not invoice the Respondent for any work done.
• The Respondent did not pay any GST to the Claimant on amounts earned.
• The Claimant was paid as per a fixed amount per annum, adjusted every three months.
• The Respondent handled all administration – appointments, billing, supply of materials/medicines.
• Control of the business lay totally in the hands of the Respondent.
• The Claimant was paid for labour only.
• The Claimant did not supply any materials.
• The Claimant had little or no opportunity to pursue any genuine business enterprise.
• The Claimant was not paid for any business expenses i.e. phone, travel.
• The Claimant worked regular hours.
• The efforts of the Claimant comprised the very essence of the public manifestation of the Respondent’s business.
• The Respondent set the hours of work and the Claimant could only work hours she was directed.
• The Claimant had no time to work for anyone else.
• The Claimant worked exclusively for the Respondent.
• The Claimant was at work irrespective of whether or not there were patients to see.
• The Respondent varied the hours of work unilaterally.
• The Respondent unilaterally changed the Claimant’s place of work.
• The Respondent determined the Claimant’s rosters.
• The Claimant worked as an integral part of the Respondent’s organisation.
• The Respondent unilaterally increased the Claimant’s fixed annual salary.
• The Claimant was unable to delegate shifts to others.
• The Claimant could not employ another medical practitioner to fill in for her.
• When her employment was terminated, the Claimant was not permitted to contact any of her clients following termination.
• The Claimant was not permitted to take any of her patient’s medical files with her.
• The Claimant was not permitted to copy the patient’s medical files.

13     The Claimant’s claim made under the provisions of the Minimum Conditions of Employment Act 1993 for unpaid accumulated annual leave entitlements together with her claim made pursuant to section 170CM of the Workplace Relations Act 1996 (Commonwealth) for the alleged failure to give adequate notice of termination are contingent upon her being able to establish, on the balance of probabilities, that she was, at all material times, an employee.

14     The Respondent denies the Claimant’s claim in its entirety.  It says that it is in the business of providing medical support services such as administration services and accounting services to medical practitioners.  The Respondent provides such services at a number of medical centres, including that at 160 St Georges Terrace, Perth.  The Respondent says that the Claimant was not, during the material times, an employee and, therefore, is not entitled to payment for annual leave pursuant to the provisions of the Minimum Conditions of Employment Act 1993 or to notice pursuant to section 170CM of the Workplace Relations Act 1996.

15     The Respondent contends that the agreement with the Respondent was one to provide various services to the Claimant to assist her to carry out her medical practice, which is evidenced inter alia by the following:

• The Respondent provided premises, facilities and administrative services such as scheduling patients, maintaining records and collecting professional fees for which the Claimant paid to the Respondent a fee based on a percentage of revenue generated.
• The Claimant had the sole and unfettered conduct of her medical practice and was not subject to any direction.  She had complete control over the nature and length of consultations as well as the amount charged for the consultations.
• The Respondent had no effective control over the hours the Claimant chose to work and when she chose not to attend the medical centre.
• The Claimant was responsible for her own insurance and was liable for the conduct of her medical practice.
• The Claimant had the ability to assign her rights and obligations with the consent of the Respondent.
• The Claimant received tax invoices from the Respondent.
• The Claimant conducted her affairs as a business as is reflected in her obtaining an Australian Business Number (ABN) and is also reflected in the material income tax returns filed by the Claimant (see exhibit 4) which indicate that she was at the material times conducting her own business.

16     In short the Respondent contends that the terms and conditions of the Services Agreement, when considered in the light of the Claimant’s work conditions, method of remuneration and the degree of control she exercised in carrying out her duties, demonstrate that she was an independent contractor.

Evidence

Claimant’s Case

Dr Elizabeth Sinclair

17     The Claimant’s evidence in support of her claims is found in two affidavits sworn by her on 29 June 2004 and 12 July 2004.  Prior to the commencement of the hearing the parties agreed that certain portions of her affidavit ought to be struck out and, accordingly, I have received into evidence those affidavits with the offending portions struck out.

18     In her first affidavit the Claimant recited a history of events leading up to her signing the Services Agreement.  She also addressed the nature of her engagement by the Barkhouse Trust and contends that she was an employee of the Barkhouse Trust because she:

• Worked regular rosters;
• Was provided with weekly pay slips;
• Was paid superannuation;
• Had income tax withheld; and
• Received an annual group certificate.

19     Further the Claimant swore that she worked as the Respondent’s employee throughout the material period as is evidenced by the following:

• Working Conditions

The reception staff over which the Claimant had no control booked in patients.  The Claimant was unable to give direction in that regard.  Further, the Respondent directed her as to where she should work off-site in the performance of health checks on corporate staff, visiting patients in nursing homes, conducting home visits, giving immunisation injections and other services.  Furthermore the Claimant worked exclusively for the Respondent.  She did not supply materials and was paid for her labour only.

• Rosters

The Claimant worked a regular roster every week.  The Respondent as evidenced by its unilateral decision to cancel Saturday work controlled the rosters.  The Claimant’s hours of work were set by the Respondent and she worked those hours as directed.

• Remuneration

The Claimant was in the main paid a percentage of her patients’ fees except for a short period in March 2000 when she agreed to work at the Respondent’s Mill Street Clinic.  Whilst working at that place she was paid at the rate of $60.00 per hour.

The Claimant was also paid a portion of the total Practice Incentive Payment (PIP) that the practice received from the Federal Government, paid each quarter based on her percentage of the total practice billings for the quarter.

All fees and charges were set at a practice level following discussion between the doctors at the practice and the Respondent’s representative held each October.

• Guaranteed Income

The provision in the Services Agreement for the payment of a guaranteed income was reflective of the payment of a minimum salary regardless of the amount of patients seen.  Notwithstanding that facility, the Claimant’s income always exceeded the minimum guaranteed amount in any event.

• Lack of Goodwill

The Claimant says that she did not derive, and was unable to derive, any goodwill from the practice, being demonstrative of her employment situation.  The fact that the practice was that of the Respondent rather than the Claimant is gleaned by the following, inter alia:

• She was not at the conclusion of the agreement permitted to take any of her patient medical files with her.
• She was not permitted to copy patient medical files.
• She could not employ another practitioner to fill in for her.
• Her patients were contacted after she left the practice reminding them to attend the practice.  The reminder letter purported to issue from the Claimant purporting that she was still at the practice despite that she had departed the same.

•      Termination

The circumstances of termination including the refusal to permit the Claimant to copy or retain patients files together with the direction given to her that she should not inform her patients that she was leaving the practice are demonstrative of her employee status.

Dr David Barkhouse

20     The affidavit of Dr Barkhouse sworn on 24 August 2004 was received into evidence by consent and tendered by the Claimant in support of her claim.

21     In his affidavit Dr Barkhouse addressed the nature of the relationship with the Claimant, the circumstances leading up to the creation of the relationship with the Respondent and his own Services Agreement with the Respondent.  He also addressed certain matters raised in the affidavit of the Claimant.

22     Dr Barkhouse’s evidence concerning his Service Agreement found at pages 4 and 5 of his affidavit is as follows:

“My services Agreement

30. At the same time I executed the Sale Agreement, I also entered into my Services Agreement.

31. The percentages charged by the respondent for its services which are set out in the Schedule to my Services Agreement were generally accepted by me as representing the ‘going rate’.  They were similar to what other corporate entities had been offering to me in the past.  In my experience, overheads generally represent 50% of the takings of a medical practice.  The percentage charges vary depending on the level of services which the respondent provides, for example, the respondent charges 25% for services rendered for home visits.  This difference in fee was included to reflect the lower level of services provided by the respondent to me if and when I perform home visits.

32. I understand that Dr Sinclair entered into a services agreement, similar to the one that was offered to me, albeit for a shorter term.

33. Following the Settlement Date, I have continued to conduct my medical practice, and have accepted the respondent's administrative services in accordance with my Services Agreement to enable me to do so.  I do not report to anyone in the conduct of my medical practice.

34. I have total control over what I do, and the way in which I do it.  There is no review (formal or otherwise) of the decisions I make in my work by other doctors at the Centre, or by management of the respondent or Endeavour.

35. I have no productivity budgets or profitability budgets.  My earnings are dependent on the number of patients I see, and what I charge.

36. There are guidelines for charges for particular services.  The charges for corporate medical services are usually negotiated between Endeavour and the particular corporate client, and then advised to me.  The travel medicine charges are similarly advised to me.  I charge those fees for those services as set fees as they are in my interest to do so.

37. As concerns charges for individual, non-corporate patients (such as general practice patients), I have and exercised discretion in what to charge them - e.g. to bulk bill, or to charge a private consultation fee.

38. I can take, and have taken, sick leave or annual leave when I wish, and do not get paid when I do.  I do not need to apply for leave although I usually give the respondent one month's notice of my intention to take leave so as to ensure the smooth running of the Centre.  It is in my interests to do so as any impact on the efficiency of the Centre could undermine its appeal to patients and, consequently, the profitability of my medical practice conducted from it.

39. I arrange and maintain my own professional indemnity insurance.  I am responsible for my own taxation.

40. Under the terms of the services agreement I have the right to issue reasonable directions to the administrative staff engaged at the Centre, such as receptionists.  Directions are issued to them every day as part of the ordinary course of running my medical practice.  Staff are directed to fetch files, bill patients, take messages, enter certain appointments, block out time in a diary, order supplies, and so on.

41. Immediately following Settlement Date, the respondent took possession of, and control over, the patient files of the Barkhouse business.  I don't personally now have any patient files.  The respondent controls all patient files.”

23     I do not intend to review Dr Barkhouse’s evidence concerning the pre Services Agreement arrangement with Dr Sinclair except to say that his evidence in that regard is consistent with that of the Claimant.

Kerry Furler

24     The Claimant called Kerry Furler.  The Claimant in support of her claim tendered Ms Furler’s affidavit sworn 29 June 2004 with certain sections struck out as agreed.

25     The Respondent employed Ms Furler as a registered nurse from November 1999 until February 2000 and then as a full-time practice manager until October 2001.  She worked at 160 St Georges Terrace, Perth.  Her function was to oversee the operation of the practice and report back to head office.

26     Her evidence is that reception staff scheduled all appointments for the doctors under her supervision.  Further that the administrative and nursing staff together with doctors and head office staff held regular meetings concerning the operation of the practice and that head office staff were called in regularly to attempt to resolve disputes between doctors including those relating to doctors taking other’s patients.

27     Ms Furler said that doctors worked regular rosters each week and were not permitted by the Respondent to change their roster.  She said that in 2000 she was instructed by head office to cease operating on Saturdays.  Dr Sinclair was advised of that decision only following the decision having been made.  She testified that Dr Sinclair was directed to perform certain tasks off-site such as conducting flu vaccinations and performing nursing home visits.

28     Ms Furler said that doctors were paid a guaranteed minimum per quarter even if they did not work.  In that regard she recalled Dr Bateman having taken six week’s leave and still being paid the guaranteed minimum for the whole quarter.

29     When cross-examined Ms Furler conceded that she did not regard herself to be in a position to discipline doctors.  She conceded also that she could not force doctors to do anything or indeed force them to work their rostered hours.  In that regard she admitted that doctors would cause certain times to be blocked out of their appointment schedules and that they would make themselves unavailable during those times.  They would instruct receptionists in that regard.  Receptionists could not countermand the doctor’s instruction.

Respondent

30     The Respondent called two witnesses.  They were Amanda Jayne Piercy and Trevor Green each employed by Endeavour Health Care Limited (Endeavour) of which the Respondent is a wholly owned subsidiary.

Amanda Piercy

31     Amanda Piercy is Endeavour’s “Operations Manager Primary Care – Western Australia (Southern Clinics)”.  She was, from about 5 September 2001, responsible for overseeing the practice manager at the medical centre at 160 St Georges Terrace, Perth.

32     In her affidavit sworn on 2 August 2004 filed in response to the claim she said that patients who attended the medical practice were treated as private patients.  However it was not uncommon for a private patient attending the medical practice, to over time, see more than one doctor.  Such would often occur if his or her doctor was unavailable.  In such circumstances in order to avoid waiting the patient would see another doctor.  It was not uncommon for private patients to see more than one doctor over a period of a number of consultations.  All the various doctors who saw the patient would use the same patient file for reference to notes of previous consultations, and would use that same file to record notes themselves of that particular consultation.  Accordingly the patient files became shared files.  The situation was similar in the case of corporate patients.  Consequently the medical centre regarded itself as obliged to hold the file.  As a result the patient file did not leave the centre without the patient’s written permission.

33     With respect to billing Ms Piercy said that the doctor had complete discretion as to what to charge private clients.  The Respondent had no control over whether the doctor bulk-billed or charged a private fee.  The individual doctor always determined that.  As to corporate clients the Respondent on behalf of the doctors as a service to the doctors negotiated a fee.

34     Ms Piercy testified that doctors could take leave at any time.  There was no requirement to apply for leave.  Although the Respondent requested that doctors notify it of their planned leave before taking the same for reasons associated with rostering and staff levels, there was no obligation to do so and no disciplinary action was taken or could be taken when that was not done.

35     If any complaints were received about doctors, the complaints would be passed on directly to the doctor.  The Respondent did not have the ability to, nor did it try to discipline or otherwise manage the conduct of the doctor.  The Respondent did not direct doctors to engage in continuing medical education or training.  It did not pay for the same.  That was left up to the individual doctor’s sole discretion.

36     With respect to rosters and work hours Ms Piercy said that whilst doctors had their rosters formulated in accordance with their Services Agreements, the Respondent could not discipline or otherwise take action against a doctor who did not work strictly in accordance with the hours set in their agreements.  Indeed doctors did not always make themselves available for all of the hours set out in their rosters.  If a doctor wanted to take time off they simply did so.  They did not need to obtain authority to do so.

37     Furthermore the rostered hours could only be varied with the consent of the individual doctor.  A doctor could not unilaterally have his or her hours varied by the Respondent.

Trevor Green

38     The affidavit of Mr Green, sworn 30 July 2004, was tendered in evidence.

39     Mr Green, in his affidavit, addressed the nature of Endeavour’s business and its connection with the Respondent.  He also gave an historical overview of the corporatisation of the practice of medicine both in Australia and overseas and addressed current trends in that regard.

40     Mr Green, within his affidavit, also went on to interpret various aspects of the Services Agreement.  That, in my view, was unhelpful as the agreement speaks for itself.

41     With respect to the issue of the Respondent’s control over doctors, Mr Green said the following at pages 7 to 9 of his affidavit:

“32.  GPs such as Dr Sinclair who conduct their practices under services agreement such as the Services Agreement are not subject to any supervision, and are not responsible to anyone within the services company.  Neither I, nor any employees of the services company, can discipline such a GP, or counsel them on the manner in which they conduct their practice.

33.  There is no such thing as performance management by the services company of an underperforming doctor - e.g. one who is not earning sufficient fees.  There are no productivity (gross billings) or profitability budgets set for GPs.

34.  The earnings of GPs are entirely dependent on the ambition and energy of the doctors to make money.  GPs' billings can vary from day to day, and month to month.  Billings depend on things like the season, the hours worked and the patient mix (eg, older patients take longer to see than younger patients).  The number of patients a GP sees in any given hour will vary from GP to GP, with some GPs having a higher workload in terms of patients seen per hour, but less lucrative practice, and other GPs having a lower workload but higher billings.

35.  The services company has no ability to direct GPs to see certain patients, to direct GPs to bulk bill or privately bill, or to see a set number of patients within a given hour or time frame.  At the extreme, there is nothing to stop a GP from seeing one patient a day should he or she so desire.

36.  Services agreements are usually for a set term.  Short of material breach by a GP of their services agreement, the services company has no right to terminate the services  agreement (although I have known the situation where individual GPs have walked away from services agreements, leaving services companies with very little, practical remedies for such breach).

37.  If an individual patient complains to a Practice Manager or to me about the medical treatment provided by a GP, the response given to that patient is that it is a matter they must pursue with the GP.  If a patient complains in writing to me, my practice is to write back to the patient and inform them that they must take the matter up with the GP directly.  I copy the GP in on the correspondence.  There is no ability on my part, or anyone else within the organisation to resolve the complaint.  If the patient remains dissatisfied then they are referred to the Medical Board of Western Australia.

      (v)     Directions to Staff clause

38.  Clause 4.2 of the Services Agreement provides that the GP can give reasonable directions.  On a daily basis, GPs issue numerous instructions to staff, including the collection of patient files and instructions on how much to bill a patient.  Receptionists and other staff, including Practice Managers (who are the managers of centres), respond to instructions, directions and requests from GPs as far as practically possible.

39.  Patients, if they are new patients, are asked by reception staff to whom they first speak, whether they have a preference for any particular GP, or a male or female GP.  They are then allocated to a GP by the reception staff to suit their stated preference, depending upon availability at the time, and any specific instructions from a particular GP (e.g. some GPs might only want to do 2 PAP smears a day and, so, if the patient requires a PAP smear, they will not be allocated to that GP if they already have 2 PAP smears to do on the day).

40.  If such a patient subsequently wants another consultation, then the reception staff will offer them the GP they first saw, subject to availability, unless the patient requests a different GP for reasons of their own.  If the GP is unavailable, then the patient is given the choice of waiting for that GP, or consulting another one.

41.  Reception staff cannot, and do not, tell patients to consult a particular GP.  It is left to the patient to choose which GP to consult, within the parameters referred to above.

      (vi)     Liability and Insurance clause

42.  GPs are always responsible for securing and maintaining their own professional indemnity insurance.  The services company plays no part in this.”

42     When subjected to cross-examination on various issues Mr Green was less than forthcoming.  I gained the view that he was a hesitant witness concerned with protecting the interests of the Respondent.

43     During the course of cross-examination he conceded that doctors the subject of the Services Agreement including the Claimant brought no more than “labour” to their relationship.  He also somewhat reluctantly agreed there was nothing in the Services Agreement governing who had control and authority over patient files.  He maintained that the reason behind the Claimant being instructed to desist from photocopying of patient files related to one of cost only.  Further he could not explain why the Claimant was prohibited from copying her own patient files in her own time at her own cost.  Mr Green’s evidence concerning patient files was, in my view, less than satisfactory and aimed at justifying the Respondent’s conduct, which on the face could not be supported by the Services Agreement.

Determination

44     The Claimant submits that the totality of the relationship between the parties following the execution of the Services Agreement can only be characterised as an employment relationship having regard to the indicia of what constitutes such a relationship as set out by the Full Bench of the Western Australian Industrial Relations Commission in The Western Australian Builders’ Labourers, Painters and Plasterers Union of Workers v RB Exclusive Pools Pty Ltd trading as Florida Exclusive Pools 77 WAIG 4 and as applied in Peters v James Turner Roofing Pty Ltd 81 WAIG 3093.  That is particularly so if this Court has regard to the nature of the relationship existing between the Barkhouse Trust and the Claimant prior to the Services Agreement and also to the representations made to the Claimant by Dr Barkhouse concerning what was to occur following the sale of his practice to the Respondent.

45     In my view the status of the Barkhouse Trust’s relationship with the Claimant is irrelevant to my considerations in this matter.  It is self evident that the Claimant knew that she would be entering into a new agreement with the Respondent and that the terms of the agreement were to be contained within the written Services Agreement.  Indeed the Claimant negotiated her position in that regard with Mr Harris, the business broker engaged to conclude the transaction between the Barkhouse Trust and the Respondent.  Furthermore, to the extent that it could be said that on the evidence it would be possible to find that the Claimant’s relationship with the Barkhouse Trust was an employment relationship and that Dr Barkhouse represented to the Claimant that the circumstances would not change under the Respondent, it cannot, in any event, be established that Dr Barkhouse’s representations were made on behalf of the Respondent.  I agree generally with the submissions made by Mr Caspersz on point in concluding that the pre-existing relationship between the Barkhouse Trust and the Claimant is almost entirely irrelevant in my considerations of whether the relationship between the Claimant and the Respondent was one of employment or otherwise.

46     In reality, the Claimant knew immediately prior to executing the Services Agreement that her relationship with the Barkhouse Trust was to end and she was being asked to enter into a new and written agreement with the Respondent.  She was given a copy of the agreement to read and consider.  If necessary she could have obtained legal advice about it.  The Services Agreement is not a complicated document.  Indeed it is easy to read and is written in plain language.  Given the Claimant’s level of education she would have had no difficulty in understanding its terms.  Indeed she did understand its terms.  The Claimant executed the agreement quite willingly.  It was open to her at the time to reject its terms but she chose not to do so.  She accepted the terms of the agreement, which expressly describes the nature of the relationship to be one for the provision of services.  It expressly disavows an employment relationship.

47     The Claimant says however that notwithstanding the terms of the agreement, the reality was that the agreement was “a sham” or “a ruse” because its actual operation was not consistent with its terms.  Indeed the Claimant suggests that when the evidence relating to work practices and other aspects of the relationship are considered that the inevitable and inescapable conclusion that must be reached, notwithstanding the terms of the Services Agreement, is that at all material times the Claimant was an employee of the Respondent.  That is so notwithstanding the Respondent’s attempt at trying to label the relationship differently to that which it was.  The Claimant submits that the Court should have regard for what Lord Denning MR said in Massey v Crown Life Insurance Co [1978] 2 All ER 576 at 579 where he said;

“ … if the true relationship of the parties is that of master and servant under a contract of service, the parties cannot alter the truth of that relationship by putting a different label on it.”

48     In Federal Commissioner of Taxation v Krakos Investments Pty Ltd 133 ALR 545 the Full Court of the Federal Court of Australia held per Hill J (Von Doussa and O’Loughlin JJ concurring) that:

“The parties cannot determine the proper characterisation of a relationship by the label which they choose to attach to it.  However, where a transaction is not a sham, and it is not suggested that the label used is not a genuine statement of the parties’ intention, that label will be given its proper weight.”

Australian Mutual Provident Society v Allen (1978) 18 ALR 385;52 ALJR 407; Narich Pty Ltd v Commissioner of Pay-Roll tax [1983] 2 NSWLR 597, applied.

49     The weight to be given to the Services Agreement is to be determined only after consideration of whether or not the same was a sham.  In Sharrment Pty Ltd and Others v Official Trustee in Bankruptcy (1988) 18 FCR 449 at 454 His Honour Lockhart J said:

“A ‘sham’ is therefore, for the purposes of Australian law, something that is intended to be mistaken for something else or that is not really what it purports to be.  It is a spurious imitation, a counterfeit, a disguise or a false front.  It is not genuine or true, but something made in imitation of something else or made to appear to be something which it is not.  It is something which is false or deceptive.”

50     Can it be said that the Services Agreement is a sham?  The answer is clearly, no.  I say that because the Claimant was aware of the terms of the agreement.  She is a well-educated, sophisticated woman not unfamiliar with business matters as is reflected in her taxation returns (exhibit 4).  She had the opportunity to read and did read the Services Agreement.  The Services Agreement is uncomplicated.  It is quite readable and easily understood.  The Claimant reflected upon its terms prior to signing it.  She understood how the agreement would operate.  In those circumstances it could not be maintained that the agreement was a ruse or a sham.  The Services Agreement constitutes the agreement between the parties.  The recital within the Services Agreement reflected the pre-existing situation.  In my view the Claimant is now estopped from resiling from the recitals forming part of the agreement, which she freely entered into.  The Services Agreement was not a sham or a ruse and accordingly should be given its full weight.

51     Having arrived at that conclusion, the matter does not end there because I need to consider whether the conduct of the parties in pursuance of the Service Agreement, notwithstanding its terms, was one which characterised a provision of services by the Claimant to the Respondent or whether, in reality, it constituted an employment relationship.  The question of whether a worker is an employee or, alternatively, an independent contractor may be, having regard to the nature of the relationship, difficult to resolve.  It can only be resolved by having regard to the type of approach taken by the Full Bench in Florida Exclusive Pools (supra).  Accordingly a consideration of various indicia is necessarily required notwithstanding what the parties may have designated the relationship to be.  It is the duty of this Court to determine the nature of the relationship.  (see R v Foster and Others; Ex Parte The Commonwealth Life (Amalgamated) Assurances Limited (1951-1952) 85 CLR 138).

52     The indicia to be considered, without being an exhaustive list, in determining the issue include the following:

• Control
• Hours worked
• Start and finish times
• Obligation to work
• Mode of remuneration
• Taxation and other deductions
• Business arrangements of the worker
• Provision of equipment
• Organisational arrangements; and
• Contractual arrangements

53     Quite often the indicia within any given relationship may be conflicting with some suggestive of an employment relationship and others of an independent contractor relationship.  In Hollis v Vabu Pty Ltd (2001) 207 CLR 21 the High Court of Australia considered the competing indicia.

54     At first instance the trial judge found that the bicycle couriers who worked for Vabu were not its servants or agents but were independent contractors with the result that Vabu was not liable for their negligent acts.  That decision was confirmed on appeal.  The majority of the High Court comprised of Gleeson CJ, Gaudron, Gummow, Kirby and Hayne JJ found that the Court of Appeal fell into error in classifying bicycle couriers as independent contractors in making too much of the circumstance that bicycle couriers owned their own bicycle, paid the expenses of running them and supplied many of their own accessories.  Viewed as a practical matter bicycle couriers were not running their own business or enterprise nor did they have independence in the conduct of their operation.  A consideration of the nature of their engagement, as evidenced by documentary evidence and the work practices imposed by Vabu, indicated that they were employees.

55     The Court found, inter alia, that a courier had little control over the manner of performing their work.  They were required to be at work by 9.00 am and were assigned work in a roster.  They were not able to refuse work.  It was most unlikely that they could have delegated their work to others or worked for another courier company on the same day.  Further the nature of Vabu’s requirements was such as to leave the couriers with limited scope for the pursuit of any real business enterprise on their own account. Additionally, the fact that couriers were responsible for their own bicycles reflects only that they were in a situation of employment more favourable than not to the employer; it did not indicate the existence of a relationship of independent contractor and principal.  Vabu retained control of the allocation and direction of the various deliveries.  The couriers had little latitude.  Vabu’s fleet controller allocated their work.  They were to deliver goods in the manner in which Vabu directed.  In this way Vabu’s business involved the marshalling and direction of the labour of the couriers, whose efforts comprised the very essence of the public manifestation of Vabu’s business.

56     The Court also held that even considerations respecting economic independence and freedom of contract are not of themselves determinative of the legal character of the relationship.

57     That approach, it seems, was taken in the matter of G. Bibic v First Interstate Security (unreported, Full Bench of the Australian Industrial Relations Commission, Polites SDP, Watson, SDP and Smith C, delivered on 22 June 2000, Print S7290).  In that matter there were a number of indicia that supported the contention that the relationship was not one of employment.  They were:

• The applicant was required to establish a business entity before he could commence with the respondent.
• The applicant established a company specifically for the purpose.
• The company invoiced the respondent on the basis of hours worked.
• The respondent paid the company by cheque as a lump sum.
• The applicant was responsible for his own income tax, annual leave and sick leave.
• The applicant was responsible for the provision of his uniform.
• The respondent did not require exclusive use of the applicant’s services.

58     Notwithstanding that, the Full Bench concluded that the substantive nature of the relationship, when examined, was that of employer and employee.  It arrived at that conclusion because:

• There was evidence that a supervisor was on site during most of the time that the applicant was employed and that the supervisor directed the applicant as to any work to be performed that was out of the ordinary.
• When the applicant was engaged a representative of the respondent showed him around the site.
• The applicant was under an obligation to work on behalf of the respondent.
• The applicant was provided with a uniform.
• The applicant was unable to delegate shifts to others.
• The respondent determined the rosters.
• The respondent did not pay Holiday leave but it did pay work cover and superannuation.

59     It will be noted from the authorities referred to above that whether or not there is the existence of control is significant.  However, whilst it is significant, it is not the sole criteria by which to gauge whether a relationship is one of employment.  The approach that must necessarily be taken is to regard control as only one of a number of indicia that must be considered in the determination of the question.  Mason J said in Stevens v Brodribb Sawmilling Co Pty Ltd [1985-1986] 160 CLR 16 at 24:

“Other relevant matters include, but are not limited to, the mode of remuneration, the provision and maintenance of equipment, the obligation to work, the hours of work and provision for holidays, the deduction of income tax and the delegation of work by the putative employee.”

60     In the present matter the Claimant argues that the Respondent’s control over her was such that it is indicative of an employment relationship.  The following manifested control, which is not an exhaustive list:

• Head office having control of the hours worked as indicated by the Respondent unilaterally ceasing Saturday work without consultation.  (Evidence of the Claimant as corroborated by Ms Furler).
• Head office refusing to change the hours of Drs Bradford and Linfoot.
• The requirement that the Claimant attend certain off-site duties arranged without direct consultation with her.
• The direction that she work at the Mill Street Practice.
• The nature of the roster designating set days and times of work.
• Being directed to acquire an ABN.
• Seeing patients allocated by the Respondent.
• Being directed not to copy patients’ records or remove them from the premises.
• Being instructed not to disclose to patients the fact that she was leaving or where she was going.

61     In determining whether the Respondent exercised control over the Claimant in the performance of her work it is readily apparent that the provision of rosters and set work times was not a manifestation of control.  I say that because it is self evident that the ability of the Respondent to provide the services it contracted to provide could only be delivered if there was knowledge on the part of the Respondent of the hours that doctors would work.  It was the commercial reality that there had to be some certainty in the designated hours in order to facilitate the provision of nursing and administrative services.  In any event the evidence of Ms Piercy and Ms Furler establishes that doctors were able to unilaterally choose whether or not they worked on any given day.  Further their evidence dictates that they were not subject to disciplinary action for failing to meet the rostered allocations.  The refusal of the Respondent to change the agreed rostered hours of Doctors Bradford and Linfoot must be considered in light of the necessity to have certainty and continuity.  Indeed the continued provision of reasonable hours was also necessary to ensure the Respondent’s own viability.  I recognise, however, that the unilateral cessation of Saturday work is indicative of control.  However had the Claimant insisted, she could have demanded the continuation of Saturday morning work, in which case, the Respondent was bound to facilitate the same.  In that way it will be seen that the Claimant always retained the upper hand and was in fact in control.

62     The contention that the direction to the Claimant that she was to work off-site in the provision of services was indicative of control is, in my view, not sustainable.  I say that because it is quite obvious that, given concessions made by the Claimant, she worked off-site by agreement and with her concurrence.  There is no suggestion that she was forced to work off-site or that she did so unwillingly or under protest.

63     The allocation of patients was not an indication of control but rather a necessary function of the Respondent in providing its services to the Claimant and the other doctors.  Further I accept that the Claimant was not directed to obtain an ABN but rather was advised to do so in the light of the implementation of GST.  In any event the provision of the ABN was a necessary requirement for the facilitation of her business activities as noted in the Claimant’s tax returns.

64     Finally, dealing with the issue of control with respect to the copying and the removal of files, I accept that the Respondent had, as custodian of the records, a legitimate role to play in ensuring that the records were maintained.  Additionally, its duty to other doctors, given the composite nature of the medical files required it to ensure that the files were not copied without consent.  Furthermore, given the impact of a doctor’s departure and the consequent potential loss of custom, one can well understand why the Respondent took the stance that it did in seeking to prevent disclosure by the Claimant of the fact that she was leaving and where she was going to.  Whether the Respondent could legally do so is in doubt, but in any event the Claimant had present the ability to ignore such request and was not bound to follow the directive.

65     For those reasons and others such as the ability of the Claimant to choose not to work, take leave when she wanted, charge patients how she wanted and the amount she wanted is demonstrative of lack of control.  I accept the evidence of Ms Piercy on such issues.  Indeed if the Claimant chose not to work there was little the Respondent could do.  She could not be disciplined.

66     Other indicia such as the mode of remuneration, the arrangement concerning tax, the failure to seek annual leave and sick leave and, importantly, the Claimant’s failure to demand the same at the material times are all indicative of the fact that the Claimant ran her own business.  She controlled the amount of income received, subject to deduction for administration, by deciding the method of charging and quantum of charging.  In that regard she was in full control.  Indeed the Respondent was very much subject to the Claimant’s decision making in that regard.  She had latitude and complete independence in that regard and the way she dealt with the patients.  The facilitation of a minimum payment is, of itself, not indicative of employment but rather a commercial carrot to encourage the Claimant to enter into the agreement.  Given the relocation that occurred, that safety net provision had real commercial application, albeit that the Claimant was never caused to rely upon it.  The Claimant’s conduct in paying for her own professional indemnity insurance as well as her own disability insurance is also indicative of the fact that she was running her own business.  She could not, in the circumstances, be said to be part of the Respondent’s business.  Indeed the reverse is probably more accurate.  The fact that the Respondent provided the Claimant with equipment is in keeping with the contract for the provision of services and is not demonstrative of an employment relationship.

67     One of the main thrusts of the Claimant’s argument is that if the arrangement were considered to be a true contract for services, it would result in the Claimant leaving the arrangement with nothing to show for it.  That is, there is no goodwill.  She would leave with nothing, however, that is not so.   Indeed the Claimant left with her goodwill established in the relationship formed with her patients.  Exhibit 5 reflects that many of her clients followed her to the new practice at Mill Street following her departure from St Georges Terrace.  That is demonstrative of goodwill.

68     Finally, regard must be had to the Services Agreement itself.  It clearly states the intention of the parties.  The conduct of the Claimant does not vitiate it but rather reinforces it, particularly having regard to her taxation arrangements and her failure at the material times to demand the provision of the benefits, which she now seeks.

69     I am satisfied on the balance of probabilities that at all material times the Claimant was an independent contractor for whom the Respondent provided services.  There was no employment relationship.

70     In view of the above finding the Claimant’s claim does not succeed and she is not entitled to the sums claimed.

G Cicchini

Industrial Magistrate