Ready Mixed Concrete>> (South East) Ltd v Minister of Pensions and National Insurance
Minister of Social Security v Green ham Ready Mixed Concrete * Ltd and Another
Minister of Social Security v Ready Mixed Concrete * (South East) Ltd and Another
QUEEN'S BENCH
DIVISION MCKENNA I 3, 4, 5, 6, 9, 1 0, 11 OCTOBER,
National Insurance -"Employed person" Owner drivers employed by manufacturers of concrete to deliver concrete - nether contracts of carriage with independent contractors or contracts of service.
L had been employed by the applicant company as a yardman batcher in and after 1958. In 1959 the company, which made and sold concrete, introduced a system of delivery by owner drivers. It was the company's policy that the making and selling of concrete should be carried on separately from that of delivering it. A purpose of the owner driver scheme was that it would stimulate efficient cartage and care of the vehicle. In May, 1965, L entered into a new contract with the company for the carriage of concrete. He also entered into a hire-purchase agreement for a lorry with an associated hire-purchase company. The lorry was painted in the concrete company's colours and was adapted to carry their mixing unit. L was to procure an "X' carriers' licence, was to make the lorry available at all times to the company, and was to use it for no other purpose. He was entitled to employ competent substitute drivers, but if the company were dissatisfied he was to provide another substitute; the company was entitled to require L himself to drive the lorry for the maximum hours permitted by law, save for holiday periods. L was to wear the company's uniform and to carry out all reasonable orders from competent servants of the company,"as if he were an employee of the company". L was to maintain both the lorry and the mixing unit, including the making of fair wear and tear renewals at his own expense. He was to pay all running costs, and not to charge the vehicle or mixing unit, which were to be insured by the company. Payment to the owner driver was to be at fixed rates per cubic yard for each radial mile, with provision for minimum annual earnings. L, with other owner drivers, employed and paid a relief driver with the company's consent. Either party could determine the contract by notice, the company having the right to acquire the vehicle. The company gave no instructions to L about the method of driving the trucks from the plant to the place of delivery. The contract contained a declaration that L was an independent contractor. The company in busy seasons also employed employee-drivers at different remuneration. On the question whether L was an "employed person", viz, employed under a contract of service for the purposes of s 1(2)(a)' of the National Insurance Act 1965,
a Section 1(2) of the National Insurance Act 1965 provides: "For the purposes of this Act, insured persons shall be divided into the following three classes, namely (a) employed persons, that is to say, persons gainfully occupied in employment in Great Britain, being employment under a contract of service@(b) self-employed persons, that is to say, persons gainfully occupied in employment in Great Britain who me not employed persons@..." In s 114(l) of the Act of 1965 "contract of service" is defined to mean "my contract of service or apprenticeship, whether written or oral and whether express or implied'% and "employment" is defined to include "my trade, business, profession, office or vocation" and "employed" is to be construed accordingly except in the expression "employed persons". By s 3(l) of the Act of 1965-"subject to the provisions of this Act-.. (b) every employer of an employed person of my description set out in column I of Part 2 of Sch I to this Act ... shall be liable to pay weekly contributions in respect of that person at the rate set out in relation to that description ... "
Held - A
contract of service existed if three conditions were fulfilled (for which see
p 440, letter a, post), and, though one of these was that the servant should
be subject to the control of the master to a sufficient degree, yet for
present purposes the important condition was the third, viz, that the
provisions of the contract should not be inconsistent with its being a
contract of service; in the present case the rights conferred and the duties
imposed by L's contract with the company were not such as to make the contract
one of service, and his contract was one of carriage, with the consequence
that L was not included within the class of employed persons for the purposes
of s 1(2)(a) of the National Insurance Act 1965 (see p 440, letterf and p 446,
letter g post). Queensland Stations Pty v Federal Comr of Taxation ((1945), 70
CLR 539) and opinion of Lord Wright in Montreal Locomotive Works Ltd vMontreal
andA-Gfor
Notes As to employed persons for the purposes of national insurance, see 27 Halsbury's Laws (3rd Edn) 711, 712, para 1295. As to contracts of service, see 25 Halsbury's Laws (3rd Edn) 448, 449, para 872, s 1(2), s 3; and for cases on the factors giving rise to the relationship of master and servant, see 34 Digest (Repl) 17, 18, 8 20, and 30, 31, 82 91. For the National Insurance Act 1965, see 45 Halsbury's Statutes (2nd Edn) 952, 954.
Cases referred to in judgment
Amalgamated Engineering Union v Minister of Pensions and National Insurance [1963] 1 All ER
864,[1963] 1 WLR 441, Digest (Cont Vol A) 1133, 2632a.
Bank Voor Handed en Scheepvaart, NVv Slatford [1952] 2 All ER 956,[19531 1 QI3 248,[1954] 2 WLR
867, revsd sub
nom Bank Voor Handel en
Property,[1954] 1 All ER 969,[1954] AC 584,[1954] 2 WLR 867, 2 Digest (Repl) 269, 614.
Clarke vBailieborough Co-operativeAgricultural andDairy Society, Ltd (1913), 47 ILT 113.
Doggett v Waterloo Taxi-Cab Co Ltd [1910] 2 KI3 336, 79 LJKI3 1085, 102 LT 876, 34 Digest (Repl) 37,
127.
Hardaker v Idle District Council [1895-99] All ER Rep 311,[18961 1 QI3 335, 65 LJQI3 363, 74 LT 69,
60 JP 196, 34 Digest (Repl) 201, 1416.
Humberstone vNorthern TimberMills [1949] ALR 985, 79 CLR 389, 34 Digest (Repl) 3 L* 53.
MontrealLocomotive Works vMontreal andA-Gfor
Mooney v Sheehan (1 903), 37 ILT 166.
NationalLabourRelations Board vNu-Car Carriers (1951), 189 Fed 2nd 756.
O'Donnell v Clare County Council (1912),47 ILT 41, 6 BWCC 457,34 Digest (Repl) 358,* 1480.
Park v Wilsons & Clyde Coal Co, Haggerty v Wilsons & Clyde Coal Co, 1928 SC 121, affd, 1929 SC 38,
3 4 Digest (Repl) 3 3, * 63.
Queensland Stations Pty vFederal Comr of Taxation (1945), 70 CLR 539.
Short vHenderson Ltd (1946), 115 LJPC 41, 174 LT 417, 34 Digest (Repl) 343, 2635.
Zuilus v Wirth Brothers Pty Ltd (1955), 93 CLR 56 1.
Cases Stated
These were three appeals by cases stated from determinations whether each of
three owner drivers were employed under a contract of service for the purposes,4.434
@a of the National Insurance Act 1965, s 1(2). The decisions on two of these
appeals were to follow from that on the appeal of Mr Latimer, and accordingly
the matter relevant to that appeal alone is set out here. On 15 November 1965,
Ready Mixed Concrete (South East)("the company") applied to the Minister of
Social Security under s 64 of the National Insurance Act 1965 (the Case Stated
being brought under s 65 of the Act of 1965 and RSC Ord 1 1 1) to determine
the question whether Mr Latimer was, by virtue of the contract between himself
and the company dated 15 May 1965, an employed or self-employed person for the
purposes of the Act of 1965 during the week beginning 8 November 1965, and
also whether the company were liable for payment of flat rate contributions in
respect of him for the purposes of s 3 of the Act of 1965 during that week.
The Minister accepted evidence at an inquiry held on 1 1 January and
b See the suratuary which states relevant tenns of the contract, p 437, letter b, to p 439, letter a, post. c As to the irrelevance in law of these considerations, see p 439, letter h, post.
Mr Latimer
became employed under a contract of service by a member of the group in 19 5 8
as a yardman batcher at Northfleet. In 1960 he was transferred to the plant at
Crayford (where the company later operated) as a batcher. In 1963 he entered
into a contract with the company whereby he agreed to collect, carry and
deliver concrete as an owner driver for two years. At the same time he entered
into a hire-purchase agreements relating to a Leyland lorry. 435 @a He
finished paying for this in about one year, and the vehicle then became his
property. On 15 Ma) 1965, he entered into a new contract with the company
whereby he agreed to collect, carry and deliver concrete as an owner driver
for a further period of five years. On 17 June 1965, he entered into a
hire-purchase agreement with Readymix Finance whereby in place of his former
vehicle which he sold, he agreed to purchase a Leyland vehicle by means of
forty-eight consecutive monthly instalments of L62 l9s 6d the first
instalments being payable on 1 July 1965. Since
contract between them then in force. After the payment of all expenses the net amount of remuneration remaining in Mr Latimer's hands for the two years was 0,327 and E2,004 respectively. In November, 1965, as many as 709 persons were employed as owner drivers under contracts with members of the group, forty-eight persons were so employed by the company and eight persons, in addition to Mr Latimer, were so employed at the company's Crayford plant.
d His Lordship intimated that there was nothing musual in the provisions of the hire-purchase contract, mentioning that Nlr Latimer was described in the contract as a "contractor self-employed".
Further facts found in the Case Stated were summarised by His Lordship (MacKenna J) as follows. Loading at the plant began at a time fixed by the plant manager. The nine owner drivers had established a system under which the truck first loaded on one day would be last loaded on the next day and so on in rotation. The owner driver waited in a mess room until a loudspeaker called him for loading. When he had delivered his load he returned to collect another, and so on through the day. He did not work set hours and had no fixed meal break. While on the plant premises he was expected to comply with directions given on the company's behalf to secure an orderly and safe system of loading, parking and driving, and he complied with them. The company gave no instructions to owner drivers about the method of driving the trucks from the plant to the place of delivery or of discharging the concrete, and did not tell them what routes to take. While on the delivery site they followed the site foreman's instructions about discharge. The nine owner-drivers arranged the dates of their holidays so as to ensure as far as possible that no more than one driver was on holiday at any one time. With the knowledge and approval of the company they employed between them a single relief driver, contributing equally to his weekly wage of E25. He took over the operation of any vehicle whose regular owner driver was absent through sickness, or because he was on holiday, or for any other reason. During the busy season the company employed three or four additional drivers under contracts of service. These men worked fixed hours and were paid at the hourly rate of 5 s. 1 1 d. Their wages (with overtime at a higher rate) averaged between El 8 and E20 a week. They were not responsible for the maintenance or running costs of the trucks they drove. When not engaged in delivering concrete, they, unlike the owner drivers, did other jobs. They were told what routes to take. The owner drivers could, if they wished, buy their petrol from a pump on the plant premises. Mr Latimer did not. The additional drivers in the busy season mentioned had to take their supplies from the pump. Owner drivers were allowed to use the company's maintenance facilities, but they were charged for all work done to their vehicles. The company had made no rules, regulations or requirements under cl 14 (b), which clause of Mr Latimer's contract with the company required him to observe such rules, regulations and requirements, except for securing orderly and safe working at the plant. If anyone acting for the company were to seek to instruct Mr Latimer how to deliver concrete or how to drive his truck, he would (so it was found in the Case Stated) have told that person to mind his own own business'. A. 436 @2 Nobody had sought to instruct him. The accounts prepared for him by his accountant in accordance with the requirements of the contract were headed "T H Latimer Esq, haulage contractor, Ready Mixed Concrete, 13 Morgan Drive, Stone, Kent". Mr Latimer held an "A" licence. The cost of the mixing unit was E2,000. Mr Latimer had not been required to deliver materials for other group companies.
' As to the irrelevance in law of this consideration, see p 439, letter g, post.
The contract between the company and Mr Latimer was set out in a schedule to the Case Stated. The following summary of relevant provisions is taken from the judgment. The commencement date was 1 June 1965, and the termination date was 30 April 1970. The company were to procure that the hire-purchase company would offer to sell the Leyland lorry to Mr Latimer on credit terms, painted in colours and with distinguishing signs selected by the company, and adapted to carry the company's concrete mixing unit, fleet number 52140, which the company would fix to the lorry, and he was to buy the lorry from the hire-purchase company. The contract referred to the Leyland lorry as "the vehicle", and to the Leyland lorry with the mixing unit attached as "the truck"; these descriptions are used in the summary. If required to do so Mr Latimer had at his expense to instal radio equipment on the vehicle. He was to procure an "A" carriers' licence under the Road Traffic Act, 1960, covering the use of the truck. Clause 5 provided
"The owner driver shall at all times of the day or night during the term of this agreement (excepting only in accordance with the terms hereof) make available the truck to the company for the purpose of collecting carrying and delivering the material used for or in connexion with the business of the company (not being a business of carrying or arranging for the carriage of goods whenever and wherever so required by the company whether such requirement is notified to the owner driver or to his servants or agents and shall duly and promptly collect carry and deliver such quantity or quantities of the materials as and when required in the manner at the time and to the destination directed by the company and it is further provided that the truck shall be used exclusively for the purposes set out in this agreement and for no other purpose. In furtherance of the terms of this clause the owner driver shall if so required by the company at his own expense ensure that the company is able to contact him by telephone at his usual residence or residences." The company could call on Mr Latimer to make the truck available for delivering the materials of any other group company, subject to his obtaining a "B" licence, which he must in that case try to get. He had to comply with the conditions of his licences and obey and other rules or regulations, parliamentary, local or parochial. Under cl 10 he might, with the company's consent and subject to cl 12, appoint a competent driver to operate the truck in his place. He must pay this driver National Joint Council wages or better, and if the company were dissatisfied with the driver he must provide another. Clause 12 was in these terms:
" 1 2. Notwithstanding the provisions of cl. 1 0 of this schedule the company shall be entitled to require the owner driver himself to operate the truck on every or any day doing up to the maximum number of hours permitted under the provisions of s. 73 of the Road Traffic Act, 1960, or any statutory amendment or re-enactment thereof and the owner driver shall comply with such requirement unless he shall have a reason for not so doing which would have been valid had he been the employed driver of the company and shall have notified the company in advance of such reason and shall be able to produce and upon the request of the company in fact produce evidence to substantiate the same. The owner driver shall not himself be obliged to operate the truck during such holiday times and% 437 @a periods (not extending for more than two weeks in any calendar year) as have been agreed by the company in writing." His Lordship intimated that he read cl 1 0 and cl 12 to mean that Mr Latimer must drive himself if required to do so by the company, unless he had an excuse which would be valid in the case of a servant. Mr Latimer was further bound by the contract as follows. He was not to operate as a haulier or carrier of goods except under the contract. If he failed to operate the truck himself or to cause another driver to do so, the company might appoint a driver on his behalf, and Mr Latimer had to pay this driver's wages, and this driver should be deemed to be in his employment. Mr Latimer had to wear the company's uniform, complying with all the company's rules, regulations or requirements (cl 14(b) of the contract), carry out all reasonable orders from any competent servant of the company "as if he were an employee of the company", and by his conduct and appearance "including the speed and manner in which he operates the truck" use his best endeavours to further the good name of the company. He must not alter the truck without the company's consent. He must keep it freshly painted in the colours and with the signs directed by the company. He must keep it washed, cleansed, oiled, greased, maintained and in good and substantial repair. This obligation extended to the company's mixing unit, whose worn parts he must, with certain exceptions, renew if the need for renewal wad due to fair wear and tear. All these things were to be done at his expense. Where the repairs would cost more than f 50 or take more than a day to execute, the company might require the work to be done by a named group company or by someone else of the company's choice. The company might specify any repair work which the company thought should be done, and Mr Latimer had to do it. For all these services Mr Latimer was to be paid 8s 6d per cubic yard for the first radial mile and Is Id per cubic yard for each mile thereafter.
Provision was made for minimum annual earnings: f 1500 x (280-Y)/ 280 where Y represented the number of days in excess of eighty-four when the truck and a driver were not available for at least four hours. Those rates were to be revised at the request of either party if there were any alteration in the National Joint Council's rates of wages or in the cost of fuel, or at his request "in the event of any substantial reduction in the profitability of the agreement to the owner driver by reason of any levy or tax imposed by Parliament on carriers of goods by road transport generally". Mr Latimer was to pay all the running costs. He might not charge the vehicle or the mixing unit or make them subject to any lien except under the hire-purchase contract. The company, if the company wished, might pay the hire-purchase instalments direct, and debit them to him. If Mr
Latimer did
not pay his bills, the company might pay them for
him. He must have his accounts prepared in a form and by an accountant
approved by the company. If any provision was made in the account, he must set
it aside in a manner approved by the company. The company were to insure the
vehicle in his name and the mixing unit in his or theirs, in each case in such
form and for such amounts as they thought fit but at his expense, debiting his
account with the charges which he authorised them to pay. He was to spend any
money which he received under these policies in repairing or replacing the
insured property. He had, if required to do so, to assign to the company any
rights he might have under the policies. The company were given the right to
acquire the vehicle on the expiration or determination of the contract. Either
party might determine the contract by notice after
f Simmon v Heath Laundry Co[19101 I KB 543, Braddell vBaker,(1911), 104 LT 673, Watcham vA-G of East Africa Protectorate,[1918-19] All ER Rep 455,[19191 AC 533, Binding v Great Yarmouth Port and HavenComrs,(1923),128 LT 743, Century Insurance Co Ltd v Northern Ireland Road Transport Board, [19421 I All ER 491, Mersey Docks& Harbour Board v Coggins &Griffiths (Liverpool) Ltd and McFarlane, [19461 2 All ER 345,[19471 AC 11, Gould v Minister Of NationalInsuranceJ195111AIIE 368,[1951]IKB731,Stevenson,Jordan&HarrisonLtdvMaedonald&Evans,[1952]1 TLRIOI,DenhamvMidlandEmployers'MutualAssuranceLtd[195512AIIER561,[195512-QB437,O'ReillyvlmperiaI ChemicallndustriesLtd[195512AIIER567,ReCW&ALHughesLtd[196612AIIER702,nittakervMinisterof PensionsandNationallnsurance,[196613AIIER531,[1967]IQB156,RolIsRazorLtdvcox,[I967]IAIIER397,[196711 QB 552.
R J Parker QC and G Slynn for Ready Mixed Concrete (South East) Ltd, Mr Latimer and Mr Bezer. HA P Fisher QC and Adrian Hamilton for Greenham Ready Mixed Concrete Ltd and Mr King. Nigel Bridge for the Minister of Social Security, formerly the Minister of Pensions and National Insurance.
Cur adv vult
MACKENNA J read the following judgment, in which he stated the question which arose for determination, reviewed the facts and summarised the provisions of Mr Latimer's contract with the company, Ready Mixed Concrete (South East) as hereinbeore set out. In relation to cl 30 of the contract, which declared that Mr Latimer was an independent contractor, His Lordship observed that the question whether the relation between parties to a contract was that of master and servant or otherwise was a conclusion of law dependent on the rights conferred and the duties imposed by the contract; and that if these were such that the relation is that of master and servant, it was irrelevant that the parties had declared it to be something else. Such a declaration was not necessarily ineffective, for if it were doubtful for what rights and duties the parties wished to provide, such a declaration might help in resolving the doubt and in fixing them in the sense required give effect to the expressed intention. His Lordship further intimated that the Minister in reaching her conclusion had been right to disregard the following matters-(i) the finding that if anybody acting for the company had sought to instruct Mr Latimer how to deliver concrete or how
to drive his truck, Mr Latimer would have told that person to mind his own business and that nobody had sought to instruct him (see p 436, letter i, ante);(ii) that in 1962 the Minstry of Pensions and National Insurance had expressed the opinion that the form of contract then used by the company (which omitted provisions present in the later form of contract) was not one of service; and (iii) that it had been the intention of the group and of the owner drivers that the latter should be treated as independent contractors and not as servants of member companies of the group (see p 43 5, letter g, ante). His Lordship continued:- I must now consider what is meant by a contract of service. A contract of service exists if the following three conditions are fulfilled: (i) The servant 14. 439 @a agrees that in consideration of a wage or other remuneration hc will provide his own work and skill in the performance of some service for his master. (ii) He agrees, expressly or impliedly, that in the performance of that service he will be subject to the other's control in a sufficient degree to make that other master. (iii) The other provisions of the contract are consistent with its being a contract of service. I need say little about (i) and (ii). As to (i). There must be a wage or other remuneration. Otherwise there will be no consideration, and without consideration no contract of any kind. The servant must be obliged to provide his own work and skill. Freedom to do a job either by one's own hands, or by another's is inconsistent with a contract of service, though a limited or occasional power of delegation may not be: see MR Atiyah's Vicarious Liability In The Law Of Torts (1967), pp 5 9-6 1, and the cases cited by him. As to (ii). Control includes the power of deciding the thing to be done, the way in which it shall be done, the means to be employed in doing it, the time when, and the place where it shall be done. All these aspects of control must be considered in deciding whether the right exists in a sufficient degree to make one party the master and the other his servant. The right need not be unrestricted.
"What matters is lawful authority to command, so far as there is scope for it. And there must always be some room for it, if only in incidental or collateral matters." Zuilus v Wirth Brothers PtyLtd ((1955), 93 CLR 561 at p 571.). To find where the right resides one must look first to the express terms of the contract, and if they deal fully with the matter one may look no further. If the contract does not expressly provide which party shall have the right, the question must be answered in the ordinary way by implication. The third and negative condition is for my purpose the important one, and I shall try with the help of five examples to explain what I mean by provisions inconsistent with the nature of a contract of service. (i) A contract obliges one party to build for the other, providing at his own expense the necessary plant and materials. This is not a contract of service, even though the builder may be obliged to use his own labour only and to accept a high degree of control: it is a building contract. It is not a contract to serve another for a wage, but a contract to produce a thing (or a result) for a price. (ii) A contract obliges one party to carry another's goods, providing at his own expense everything needed for performance. This is not a contract of service, even though the carrier may be obliged to drive the vehicle himself and to accept the other's control over his performance: it is a contract of carriage. (ii) A contract obliges a Tabourer to work for a builder, providing some simple tools, and to accept the builder's control. Notwithstanding the obligation to provide the tools, the contract is one of service. That obligation is not inconsistent with the nature of a contract of service. It is not a sufficiently important matter to affect the substance of the contract. (iv) A contract obliges one party to work for the other, accepting his control, and to provide his own transport. This is still a contract of service. The obligation to provide his own transport does not affect the substance. Transport in this example is incidental to the main purpose of the contract. Transport in the second example was the essential part of the performance. (v) The same instrument provides that one party shall work for the other subject to the other's control, and also that he shall sell him his land. The first part of the instrument is no less a contract of service because the second part imposes obligations of a different kind (Amalgamated Engineering Union v Minister of Pensions and National Insurance ([1963] 1 All ER 864 at pp 869, 870.)). 1 can put the point which I am making in other words. An obligation to do 14. 440 @a work subject to the othei party's control is a necessary, though not always a sufficient, condition of a contract of service. If the provisions of the contract as a whole are inconsistent with its being a contract of service, it will be some other kind of contract,
and the person doing the work will not be a servant. The judge's task is to classify the contract (a task like that of distinguishing a contract of sale from one of work and labour). He may, in performing it, take into account other matters besides control. I find authority for this way of dealing with the case in the judgment of Dixon J in Queensland Stations Pty v Federal Comr of Taxation. There the question was whether a payment made by the company to a drover was "wages" within the meaning of a Pay-roll Tax Assessment Act, which depended on whether the relation between the company and the drover was that of master and servant. The drover was employed under a written contract to drive 317 cattle to a destination. The contract provided that he should obey and carry out all lawful instructions and use the whole of his time, energy and ability in the careful driving of the stock, that he should provide at his own expense all men, plant, horses and rations required for the operation, and that he should be paid at a rate per head for each of the cattle safely delivered at the destination. He was held to be an independent contractor. This passage comes from the judgment of Dixon J ((I 945), 70 CLR at p 5 52.):
"There is, of course, nothing to prevent a drover and his client forming the relation of employee and employer ... But whether they do so must depend on the facts. In considering the facts it is a mistake to treat as decisive a reservation of control over the manner in which the droving is performed and the cattle are handled. For instance, in the present case the circumstance that the drover agrees to obey and carry out all lawful instructions cannot outweigh the countervailing considerations which are found in the employment by him of servants of his own, the provision of horses, equipment, plant, rations, and a remuneration at a rate per head delivered. That a reservation of a right to direct or superintend the performance of the task cannot transform into a contract of service what in essence is an independent contract appears from ..." There follows the citation of a number of English cases, including Hardaker v Idle District Council, the building contractor's case. If the independent contractor need not be free from the other party's control "in the performance of the task", what freedom must be possess if he is to be called "independent"? Must he be free to choose the plant, equipment and materials as he wishes, or can he submit to some control in these respects too without affecting the substance of his independent contract? I do not see why not. In practice there will always be some scope for independent action by the man who undertakes to provide the means of performance and to accomplish the result for which he is to be paid. I compare, and to some extent contrast, with this judgment of Dixon J's another judgment of the same judge in Humberstone v Northern Timber Mills. There the question was whether the owner driver of a truck was a servant under a contract of service so as to be covered by a Workmen's Compensation Act. For a number of years the owner had taken his truck at about the same time each day to the respondents' factory where he had been given goods to deliver to their customers. He carried on delivering goods until about the same time each evening when he knocked off. He maintained the truck and supplied the fuel at his own expense, and was paid for goods carried at a rate per car-mile. From these facts it was inferred that there was a continuing contract between the respondents and the owner which was not a contract of service. For this last conclusion Dixon J gave these reasons ((1949), 79 CLR at p 404.):
"The question
is not whether in practice the work was in fact done subject to a direction
and control exercised by an actual supervision or whether an actual
supervision was possible but whether ultimate authority over the man in the
performance of his work resided in the employer so that he was subject to the
latter's order and directions. In the present case the contract by the
deceased was to provide not merely his own labour but the use of heavy
mechanised transport, driven by power, which he maintained and fuelled for the
purpose. The most important part of the work to be performed by his own labour
consisted in the operation of his own motor truck and the essential part of
the service for which the respondents contracted was the transportation of
their goods by the mechanical means he thus supplied. The essence of a
contract of service is the supply of the work and skill of a man. But the
emphasis in the case of the present contract is on mechanical traction. This
was to be done by his own property in his own possession and control. There is
no groundfor imputing to the parties a common intention that in all the
management and control of his own vehicle, in all the ways in which he used
itfor the purpose of carrying their goods, he should be subject to the
commands of the respondents. "In essence it appears to me to have been an
independent contract and I do not think that it was open to the board to find
otherwise. "The subject has recently been dealt
with in this court in Queensland Stations Pty., Ltd. v. Federal Comr. of
Taxation. As in that case the contract is one for the performance of a service
for one party by another who is to employ plant for the purpose and to be paid
by the results." Were it not for the words which I have italicised I would
have said that the reasoning here was the same as in the earlier case. Because
of the driver's obligation to provide the truck, to maintain and fuel it, and
to accept payment by results, it was a contract for the transportation of
goods and not a contract of service. But the italicised words seem to make the
consignor's right of control (if it exists) a sufficient condition of a
contract of service, and to treat the owner driver's obligation to provide the
truck, etc, merely as evidence, making difficult, or precluding, the
imputation of an intention to the parties that he should be subject to
control. If the obligation to provide the truck, etc, were relevant only as
evidence of intention in the matter of control, it would cease to be relevant
where the parties had expressed their intention in that matter, and if, as in
the Queensland case, the contract expressly provided that the driver should be
subject to the other party's control, he would be a servant. But the
"In earlier
cases a single test, such as the presence or absence of control, was often
relied on to determine whether the case was one of master and servant, mostly
in order to decide issues of tortious liability on the part of the master or
superior. In the more complex conditions of modem industry, more complicated
tests have often to be applied. It has been suggested that a fourfold test
would in some cases be more appropriate, a complex involving (1)
control;(2) ownership of the tools;(3) chance of
profit;(4) risk of loss. Control in itself is not always conclusive. Thus the
master of a chartered vessel is generally the employee of the shipowner though
the charterer can direct the employment of the vessel. Again the law often
limits the employer's right to interfere with the employee's conduct, as also
do trade union regulations. In many cases the question can only be settled by
examining the whole of the various elements which constitute the relationship
between the parties. In this way it is in some cases possible to decide the
issue by raising as the crucial question whose business is it, or in other
words by asking whether the party is carrying on the business, in the sense of
carrying it on for himself or on his own behalf and not merely for a
superior." In Lord Wright's first illustration of the shipowner, the charterer
and the shipmaster, control is shown in two ways not to be conclusive. Though
the ship-owner had delegated to the charter his right to give directions to
the ship-master, and in that limited sense no longer had control, he was still
the master. Again, though the charterer had the power of giving directions,
and in that sense had control, he was not the master. The second illustration
shows that a right of control limited by law or by trade union regulations may
be sufficient for the relation of master and servant. This does not take us
very far in the direction of a fourfold test. It is easier to relate Lord
Wright's (2),(3) and (4) to the case mentioned in
the last sentence of the quotation. If a man's activities have the character
of a business, and if the question is whether he is carrying on that business
for himself or for another, it must be relevant to consider which of the two
owns the assets ("the ownership of the tools") and which bears the financial
risk ("the chance of profit","the risk of loss"). He who owns the assets and
bears the risk is unlikely to be acting as an agent or a servant. If the man
performing the service must provide the means of performance at his own
expense and accept payment by result, he will own the assets, bear the risk,
and be to that extent unlike a servant. I should add that there is nothing in
the Canadian case to support the view that the ownership of the assets is
relevant only to the question of control. Lord Wright treats his three other
tests as having a value independent of control in determining the nature of
the contract.
"Giving full consideration to the concurrence of the two lower courts in a contrary result, we cannot agree that the unloaders in the Silk case were independent contractors. They provided only picks and shovels. They had no opportunity to gain or lose except from the work of their hands and these simple tools. That the unloaders did not work regularly is not significant. They did work in the course of the employer's trade or business. This brings them under the coverage of the Act. They are of the group that the Social Security Act was intended to aid. Silk was in a position to exercise all necessary supervision over their simple tasks. Unloaders have often been held to be employees in tort cases." Silk's drivers owned the trucks in which they delivered coal to Silk's customers. They paid all the expenses of operating their trucks including the wages of any extra help they needed or chose to employ. They came to the yard when they pleased and were free to haul goods for other people. They were paid for their deliveries at a rate per ton. Greyvan carried on a road haulier's business. Their drivers to owned their trucks and were required to pay all the costs of operation. They were not allowed to work for anyone else but Greyvan, and had to drive the trucks
themselves or, if they employed a relief driver, to be present when he drove. They had to follow all the rules, regulations and instructions of Greyvan. They were paid a percentage of the tariff which Greyvan charged the customers. By a majority of the court both sets of drivers were held to be independent contractors ((1946), 331 US at p 719.):
where
the arrangements leave the driver-owners so much responsibility for investment
and management as here, they must be held to be independent contractors. These
driver-owners are small businessmen. They own their own trucks. They hire
their own helpers. In one instance they haul for a single business, in the
other for any customer. The distinction, though important, is not controlling.
It is the total situation, including the risk undertaken, the control
exercised, the opportunity for profit from sound
management, that marks these driver-owners as independent contractors."
This reasoning apparently requires that there should be some power of control
vested in the driver if he is to qualify as an independent contractor. That
the power need not be very extensive appears from the facts in Greyvan's case.
The driver's investment, and the risk undertaken by him,
seem to be the important things. The authorities which I have already
cited (the judgment of Dixon J in the
"(e) whether the employer or the workman supplies the instrumentalities, tools, and the place of work for the person doing the work." The comment on the first part of this paragraph is in these words:
"Ownership of instrumentalities. The ownership of the instrumentalities and tools used in the work is of importance. The fact that a worker supplies his own tools is some evidence that he is not a servant. On the other hand, 14. 444 @2 if the worker is using his employer's tools or instrumentalities, especially if they are of substantial value, it is normally understood that he will follow the directions of the owner in their use, and this indicates that the owner is a master. This fact is, however, only of evidential value." This says in effect that the employer's ownership of the instrumentalities is relevant only because of a rebuttable presumption that the parties meant him to control the use of his own property. It also says that the worker's ownership is evidence that he is not a servant, but it does not say why. If the reason is the same in both cases, and the worker's ownership is evidence only because of its bearing on control, it is plain from what I have already said that I do not agree. The point is discussed by MR Atiyah op cit at p 65. 1 quote those three sentences:
"It seems,
therefore, that the importance of the provision of equipment lies in the
simple fact that, in most circumstances, where a person hires out a piece of
work to an independent contractor he expects the contractor to provide all the
necessary tools and equipment ... Indeed it may well be that little weight can
today be put on the provision of tools of a minor character, as opposed to the
provision of plant and equipment on a large scale. In the latter case the real
object of the contract is often the hiring of the plant, and the services of a
workman to operate the plant are purely incidental." I have had these
sentences in mind when framing my five examples. I note a
"In this connexion I would observe the test of being a servant does not rest nowadays on submission to orders. It depends on whether the person is part and parcel of the Organisation." This raises more questions than I know how to answer. What is meant by being "part and parcel of an Organisation"? Are all persons who answer this description servants? If only some are servants, what distinguishes
them from the others if it is not their submission to orders? Though I cannot answer these questions I can at least invoke the dictum to support my opinion that control is not everything. Then there are "the four indicia" of a contract of service, first mentioned in Park v Wilsons & Clyde Coal Co Ltd and repeated by Lord Thankerton in Short v Henderson Ltd ((I 946), 174 LT 417 at p 42 L):
"(a) the master's power of selection of his servant;(b) the payment of wages or other remuneration;(c) the master's right to control the method of doing the work, and (d) the master's right of suspension or dismissal." It seems to me that (a) and (d) are chiefly relevant in determining whether there is a contract of any kind between the supposed master and servant, and that they are of little use in determining whether the contract is one of service. The same is true of (b), unless one distinguishes between different methods of payment, payment by results tending to prove independence and payment by time the relation of master and servant. Reference to the facts in Park's case shows'i4. 445 @2 the use for which these three tests were devised. Park had contracted with the company to drive a stonemine at a money rate per fathom, and he had engaged Haggerty to help him. Park and Haggerty had been injured by the negligence of other men admittedly in the company's service. The question was whether Park and Haggerty were fellow servants of those whose negligence had injured them, so as to be caught by the doctrine of common employment. In deciding whether Haggerty was a servant of the company or of Park, it was obviously relevant to inquire who had selected him, who paid his wages and who had the right of suspending or dismissing him, and if Park did (or could do) these things otherwise than as the company's agent, he himself was unlikely to be their servant. Three workmen's compensation cases in Ireland raised the question was whether men, whose work was carrying goods and materials, were employed under contracts of service. Mooney v Sheehan, O'donnell v Clare County Council, and Clarke v Bailieborough Co-operative Agricultural and Dairy Society Ltd. It appears from the statement of facts in each case that the workman had his own horse and cart, but this is not referred to either in the arguments or in the judgments which held that the men were employed under contracts of service. Doggett v Waterloo Taxi-Cab Co Ltd, is an English case under the same Act in which it was held that the owners of a taxi-cab, hired by them to a driver in consideration of a share in the takings, were not his employers under a contract of service. I mention these cases to show that they have not been overlooked. I mention also, and for the same reason, an argument addressed to me by counsel for the company, on the provisions of the Road Traffic Act, 1960. The argument, founded on s 164(l) and (3), was to the effect that when Latimer was driving his truck a licence was needed under this part of the Act only if he was carrying on his own business. If he was merely the company's servant employed by them to drive his own vehicle on their business, no licence was needed. This cannot have been intended. The draftsman must have considered that a man in Mr Latimer's position would always be an independent contractor, and if he did so he was probably right. That was the argument. But one cannot be sure than he considered the point, and if one is not sure of that the argument proves nothing. It is now time to state my conclusion, which is that the rights conferred and the duties imposed by the contract between Mr Latimer and the company are not such as to make it one of service. It is contract of carriage. I have shown earlier that Mr Latimer must make the vehicle available throughout the contract period. He must maintain it (and also the mixing unit) in working order, repairing and replacing worn parts when necessary. He must hire a competent driver to take his place if he should be for any reason unable to drive at any time when the company requires the services of the vehicle. He must do whatever is needed to make the vehicle (with a driver) available throughout the contract period. He must do all this, at his own expense, being paid a rate per mile for the quantity which he delivers. These are obligations more consistent, I think, with a contract of carriage than with one of service. The ownership of the assets, the chance of profit and the risk of loss in the business of carriage are his and not the company's. If (as I assume) it must be shown that he has freedom enough in the performance of those obligations to qualify as an independent contractor, I would say that he has enough. He is free to decide whether he will maintain the vehicle by his own labour or that of another, and, if he decides to use another's, he is free to choose whom he will employ and on what terms. He is free to usei4. 446 @2 another's services to drive the vehicle when he is away because ol sickness or holidays, or indeed at any other time when he has not been directed to drive himself. He is free again in his choice of a competent driver to take his place at these times, and whoever he appoints will be his servant and not
the company's. He is free to choose where he will buy his fuel or any other of his requirements, subject to the company's control in the case of major repairs. This is enough. It is true that the company are given special powers to ensure that he runs his business efficiently, keeps proper accounts and pays his bills. I find nothing in these or any other provisions of the contract inconsistent with the company's contention that he is running a business of his own. A man does not cease to run a business on his own account because he agrees to run it efficiently or to accept another's superintendence. A comparison of Mr Latimer's profits with the wages earned by men who are admittedly the company's servants confirms my conclusion that his status is different, that he is, in the words of the judgment in Silk's case, a "small businessman", and not a servant. That is all I need to say about Mr Latimer's case. Happily I need say less about the two other cases, Mr King's and Mr Bezer's. In each of these the question is whether the man's contract is one of service. The parties are agreed that if Mr Latimer's contract is not one of service, neither is Mr King's nor Mr Bezer's. I agree, and these two cases will be decided accordingly.
Judgments accordingly.
Solicitors: Linklaters & Paines (for Ready Mixed Concrete (South East) Ltd, Thomas Henry Latimer and Arthur William Bezer); McKenna & Co (for Greenham Ready Mixed Concrete Ltd, and John King); Solicitor, Ministry oJ Social Security.
Mary Colton Barrister.