Hartnett, Richard v Aardvark Security Services Pty Ltd [1998] FCA 1025

IN THE FEDERAL COURT OF AUSTRALIA

NEW SOUTH WALES DISTRICT REGISTRY NI 1783 of 1996

BETWEEN: RICHARD HARTNETT

Applicant

AND: AARDVARK SECURITY SERVICES PTY LTD

Respondent

JUDGE: WILCOX J

DATE: 14 august 1998

PLACE: SYDNEY

EXTEMPORE REASONS FOR JUDGMENT WILCOX J: The only issue in this case is whether the applicant before the Judicial Registrar, Richard John Hartnett, was an employee of the respondent, Aardvark Security Services Pty Limited. The Judicial Registrar held he was, held there was a breach of Division 3 of Part VIA of the Industrial Relations Act 1988 and assessed compensation. Mr Lancaster, counsel for the applicant for review, Aardvark Security Services, has told me the only issue relates to the Judicial Registrar's finding of an employer/employee relationship. If that issue is found adversely to his client, there is no dispute there was a breach of the Act in relation to termination and no quarrel with the quantum of compensation. Mr Tullgren, for the respondent on review, Mr Hartnett, also takes no issue with the quantum of compensation. I have considered the evidence in regard to the association between Mr Hartnett and Aardvark Security Services as put before me by both sides. I have had the benefit of Mr Hartnett's oral evidence this morning. It seems to me the conclusion is overwhelming that he was employed by Aardvark Security Services at all material times. It is necessary for me to mention only a few matters. First, it is common ground that the relationship commenced in May 1991, when Mr Hartnett was employed as a security guard, in the ordinary sense of the word "employed". In other words, it is conceded by Aardvark Security Services that, at that time, there was an employer/employee relationship. Mr Hartnett was directed to various jobs, where he had to carry out guard duties on behalf of customers of Aardvark Security Services. The location of his work varied from time to time and the hours were irregular. He was apparently paid on the basis of the award which provided a particular rate, I gather about $11.00 per hour, for ordinary time and something like $17.00 per hour for overtime. Late in 1992 Mr Hartnett was told he should submit invoices as a contractor and that for this purpose he should register a business name. Mr Hartnett made it abundantly clear in his evidence that he was reluctant to take this course and he did so only because he was given to understand that, if he did not, there would be no more work for him. He said that, at the time, there was a recession and he did not have many options. He also referred to the fact that other employees felt the same pressure and took the same course. Some time later, apparently in 1993, Mr Hartnett was informed he ought to form a company. There is some documentary support for this statement. He says he resisted doing so for some time, apparently for about three months, and finally did so after he was told that, unless he had formed a company by a particular date, there would be no further work. On the day before the deadline, a company called Harle Group Pty Limited was incorporated. The directors of the company were Mr Hartnett and Mr John Leggett, who was a fellow security guard employed by Aardvark Security Services and apparently a friend of Mr Hartnett. Thereafter, invoices were submitted in respect of the work done by Mr Hartnett in the name of Harle Group Pty Limited. Mr Hartnett said one effect of the change that commenced in late 1992 was that, instead of a differential hourly rate according to whether the work was ordinary time or overtime, there was a flat rate. Initially, he said, this was about $18.00 but then it was unilaterally reduced to $13.00 and eventually to $12.00. He claims the result was he was worse off than he had been when working under the award. Mr Hartnett said nothing changed when the company was formed, in the sense that he was still subject to direction as to his duties, both as to location and time, in exactly the same way as previously. At no stage did Mr Hartnett contribute anything other than his personal services; he did not supply equipment or the services of anybody else, he simply worked as directed. He worked in a uniform supplied by Aardvark Security Services and carried out such instructions as he was given, in exactly the same way as when he was concededly an employee. In October 1995, towards the end of his employment, Mr Hartnett had the opportunity of working in the control room at Surry Hills from which directions had from time to time been given to him and other guards. Apparently the person who was in charge of the control room at that time was one Michael Sutton. He said he had a discussion with him and with Mark Tisdell, who was also involved in the control room. He was given some training by Mr Tisdell and he commenced working there. So far as he was concerned he was still working for Aardvark Security Services - nobody told him any different. Mr Hartnett agreed his duties in the control room also involved directing people who were carrying out work on behalf of an associated company, Combined Area Response Services Pty Limited ("CARS"). Mr Hartnett said that, on some shifts, he would have spent more time doing CARS work than what he understood to be Aardvark Security Services work. On other occasions, the reverse occurred, particularly where it was necessary to arrange for a number of guards to go to sites where an emergency had occurred. Mr Hartnett worked under the direction of the manager of the control room at all times and still contributed nothing but his personal services. Not long after Mr Hartnett started at Surry Hills, the control room was moved to new premises at Marrickville. There are photographs in evidence which show the Aardvark logo at these premises, although they also have the name Combined Area Response Services displayed. Mr Hartnett said he did not normally work in uniform; because he and his fellow workers were not in contact with the public, they wore casual clothes. However, a couple of days before a photographer came to take photographs at the control room, he was issued with a uniform bearing the CARS insignia. The evidence contains a batch of photographs taken on that occasion. Mr Hartnett says that at no time did anybody tell him that he was now working for CARS rather than Aardvark Security Services, whether as an employee or an independent contractor. So far as he was concerned, he at all times worked for Aardvark Security Services. It seems to me the case in favour of the proposition that Mr Hartnett was at all material times an employee of Aardvark Security Services is overwhelming. If one applies the tests laid down in the authorities and looks at the nature of the services rendered and the matter of control, one finds he did nothing more than any employee would do - namely he provided his own services and nothing else - and he worked under the detailed control of a superior officer. It is obvious that those associated with Aardvark Security Services thought there was some advantage to them in erecting a facade of an independent contractor relationship and, for reasons which escape me, having the independent contractors incorporate themselves; but this cannot affect the reality of the situation. The only ground which is advanced as an issue in the review fails. In my view the application for review should be dismissed. This will have the effect that the order of the Judicial Registrar will be confirmed. I understand that money was paid into Court pursuant to a direction. I direct that, within 14 days, the parties advise the District Registrar of the amount of tax that ought to be remitted to the Australian Tax Office and thereafter that amount be paid by the District Registrar to the Australian Tax Office and the balance, including any accrued interest, to the applicant, Richard John Hartnett, on account of the total amount payable to him after calculation of the interest that has accrued on the compensation since the date of the order, 24 March 1997. I say that because, although there will be some interest earned, it will be very small and less than the rate laid down in the Court's Rules for post judgment interest. Mr Hartnett is entitled to have the difference paid to him on top of what is paid out of Court. However, as there will be some tax liability, that needs to be worked out and I will leave the parties to do that. I certify that this and the preceding four (4) pages are a true copy of the Reasons for Judgment herein of the Honourable Justice Wilcox