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Cite as: [2004] IESC 40, [2004] 4 IR 150

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    Castleisland Cattle Breeding Society Ltd. v. Minister for Social and Family Affairs [2004] IESC 40 (15 July 2004)
    Denham J.
    Murray J.
    McGuinness J.
    Hardiman J.
    Geoghegan J.
    408 & 418/03
    JUDGMENT of Mr. Justice Geoghegan delivered the 15th day of July 2004 [Nem Diss]
    This appeal has its origins in a classic type of dispute between one Michael Walsh, a cattle inseminator, and the plaintiff/respondent ("Castleisland") his employer, as to whether his contract was a contract of service or a contract for services or in other words as to whether he was a "servant" of the respondent or an independent contractor providing services to it. A deciding officer in the Department of Social and Family Affairs determined that Mr. Walsh was employed under a contract for services. Mr. Walsh appealed that decision to an appeals officer under the provisions of the Social Welfare (Consolidation) Act, 1993 and the decision was overturned. The appeals officer had conducted an oral hearing in Tralee, Co. Kerry. Under the provisions of s. 263 of that Act "the Chief Appeals Officer" may, at any time, revise any decision of an appeals officer, if it appears to him that the decision was erroneous by reason of some mistake having been made in relation to the law or the facts. I would comment in passing that s. 263 does not appear by its terms to be conferring a double appeal. What seems to be envisaged is that the Chief Appeals Officer may go through the materials which were before the appeals officer and check whether there was any error in law or on the facts. If he were to find that the appeals officer did not have enough facts or the facts which were before him or her were ambiguous there may be circumstances in which the Chief Appeals Officer would require additional evidence, but essentially it is a revising rather than an appellate procedure.
    In the light of the view which I have taken in this case nothing much turns on that distinction. The respondent did request the Chief Appeals Officer in this case to revise the decision of the appeals officer. In a letter of 6th July, 2001 the Chief Appeals Officer simply indicated that he had found nothing erroneous in law or on the facts in the decision of the appeals officer, a finding expanded though only in a very general way in an enclosed memorandum.
    There was still a remedy available to the respondent namely, an appeal on a question of law to the High Court. The respondent seems to have considered that it was entitled to bring two such appeals having regard to the wording of s. 271 of the 1993 Act. That section reads as follows:
    "271.—Any person who is dissatisfied with—
         (a) the decision of an appeals officer, or
         (b) the revised decision of the Chief Appeals Officer,
    on any question, other than a question to which section 265 applies, may appeal that decision or revised decision, as the case may be, to the High Court on any question of law."
    I will return to the procedural history of the case, but I think it appropriate to refer first to the evidence at the oral hearing before the appeals officer.
    That evidence is to be found in a written report of the oral hearing which took place in Tralee on the 28th September, 2000. The oral hearing related to seven appellants in a similar position under the same employer and they included Mr. Michael Walsh. It was explained at the outset by counsel for one of the other appellants that all of these AI men, as they were called, had been under a previous contract of service with Castleisland and were offered redundancy in late 1989. It emerged from the oral hearing that there were two kinds of redundancy packages offered. Those AI men in the employment of Castleisland who did not want to apply to work in the future for the company on an independent contractor basis were to be paid six times the statutory redundancy payment. The others were to be paid twice the statutory redundancy payment but were to be allocated an area for carrying out the AI tests on a contract basis. The arrangement was that the balance of the ordinary redundancy payment package was to be treated as the purchase price for the allocated area. Of the forty-eight artificial inseminators employed by Castleisland under an ordinary contract of service prior to this new contractual arrangement most opted to enter into the new type of contract but sixteen of them broke off their connection with Castleisland altogether and took the full redundancy package. At the same time an advertisement was inserted in the newspaper for applicants for these areas and one of the appellants at the Tralee hearing had not been a former employee of Castleisland but was allocated an area in the ordinary way on foot of answering the advertisement. Apparently, he did not make a payment for the area and this was a point to which the appeals officer attached some importance in arriving at the decision which she made.
    The somewhat strange procedural history of the appeals to the High Court was as follows. A special summons was issued on behalf of the respondents on the 3rd August, 2001 incorporating two alternative appeals under s. 271 of the 1993 Act. The special endorsement of claim first sets out in some detail grounds of appeal from the decision of the appeals officer in respect of Michael Walsh. At paragraph 4 there is then set out an alternative appeal from the decision of the Chief Appeals Officer and grounds of appeal against that decision are set out. In the nature of things and having regard to the wording of the Act the two respective decisions appealed against were different. The decision of the appeals officer being appealed against was in the following terms:
    "Michael Walsh during the period from 1st March, 1990 to date, was employed by Castleisland Cattle Breeding Society Limited/Kerry Group in employment which is insurable for all benefits under the Social Welfare Acts at the standard class A rate of contribution subject to the weekly earnings requirement but for occupational injury benefits only under the Social Welfare Acts at the class J rate of contribution in any week where earnings are below the prescribed amount."
    And the decision was expressed to be on the grounds that
    "on examination of the evidence before me I consider that the relationship between Kerry Group and the appellant is that of master/servant and that a contract of service exists between them."
    The decision of the Chief Appeals Officer appealed against was that the decision of the appeals officer was not erroneous by reason of some mistake having been made in relation to the law or the facts as to warrant a revision of that decision.
    For some reason or other which is not easy to fathom the clarity of the case made in the special summons, that is to say, that there were two alternative appeals of a different nature became blurred to the extent that the learned trial judge in the High Court (O'Donovan J.) in his comprehensive judgment seems to have treated the entire appeal as an appeal against the decision of the Chief Appeals Officer only though, in the course of that exercise, he expressed views which in reality would have determined the other appeal also if he had addressed himself to it. The learned High Court judge mentions in his judgment that it was conceded on behalf of the respondent on this appeal that when determining an appeal pursuant to s. 271 of the Social Welfare (Consolidation) Act, 1993:
    "The court is only concerned with questions of law arising from the refusal of a Chief Appeals Officer to revise a decision of an appeals officer and, accordingly, when determining this appeal, the court is not concerned with the reality of the relationship between the appellant and Mr. Walsh but rather with whether or not as a matter of law the Chief Appeals Officer was correct when he determined that the decision of the appeals officer was not erroneous by reason of some mistake having been made in relation to the law or the facts so as to require revision."
    The judge went on to observe that in his view it was entirely appropriate that that concession should have been made because he was satisfied that when determining this appeal it was no function of his to express any views on the nature of the relationship between the respondent on this appeal and Mr. Walsh. Having heard counsel on the appeal, I am reasonably satisfied that a misunderstanding arose in the High Court and that in so far as Castleisland made the concession referred to by O'Donovan J. it was doing so only in relation to the appeal from the decision of the Chief Appeals Officer and, of course, that would be perfectly logical. It would be wholly illogical to have made that concession in relation to the appeal from the appeals officer and I do not believe any such concession was ever intended. What may have also contributed to the confusion is the fact that in the written submissions on behalf of Castleisland in the High Court, the appeal of the Chief Appeals Officer seems to have been dealt with ahead of the appeal from the appeals officer. This does not seem to me to have been appropriate because if the appeals officer was wrong in law it does not then matter whether the Chief Appeals Officer carried out his revising procedure correctly or not.
    However, there is a more fundamental objection to the approach adopted by the learned High Court judge and it is this. Although under s. 271 an appeal lies to the High Court from a decision of an appeals officer an appeal lies only from "the revised decision of the Chief Appeals Officer". If, as in this case, the Chief Appeals Officer decides not to revise the decision of the appeals officer then it would seem to me there is no "revised decision of the Chief Appeals Officer" and, therefore, no right of appeal. The Act does not appear to give any right of appeal to the High Court from the refusal of a Chief Appeals Officer to revise a decision, though no doubt in an appropriate case there might be grounds for judicial review. In fairness to the learned High Court judge I do not think that this point was adverted to by any party in the High Court.
    There is still another small element in the procedural confusion which arose in this case. Notwithstanding that the learned High Court judge in his judgment dealt only with the appeal from the Chief Appeals Officer the order as drawn up deals only with the other appeal. The order dated the 7th November, 2003 by its express terms refers only to an appeal from the decision of the appeals officer and the only operative part of the order is an order "that the said appeal be allowed".
    Fortunately, neither party is attempting to take advantage out of any of this procedural confusion and at the hearing of this appeal the legality of the respective decisions of the appeals officer and the Chief Appeals Officer were fully aired (the latter being permitted in the circumstances that it was only at a very late stage in the appeal that this court itself adverted to the absence of a right of appeal from the Chief Appeals Officer where he does not revise the decision of the appeals officer). The notice of appeal then goes on to set out grounds of appeal which included the trial judge's findings against the Chief Appeals Officer though interestingly in the light of the notice to vary to which I will be referring, ground No. 6 was in the following terms.
    "The learned trial judge erred in law in failing to consider whether there was sufficient evidence to support the findings of the appeals officer."
    I will return to the notice of appeal but at this stage it is appropriate to move to the notice to vary. The respondent, in that notice, has requested that the order be varied to include a determination that Mr. Walsh was an independent contractor on the grounds that:
    "(a) the court is entitled to make, and in the circumstances of this case, ought to make such a determination in allowing the appeal;
    (b) the learned High Court judge misconstrued his powers on appeal when deciding that on determining the appeal, he had no function to express any views or give any decision on the nature of the relationship between the appellant/respondent and the notice party, Michael Walsh.
    (c) The learned High Court judge erred in law in failing to decide or determine that the relationship between the appellant/respondent and Michael Walsh with regard to the provision of artificial insemination services was that Mr. Walsh operated as an independent contractor."
    It would seem to me to be logical to deal first with the substantive matters arising from the notice to vary though this exercise must necessarily bring in a consideration of ground 6 in the notice of appeal. If, as seems to be the case the appellant considers that the learned trial judge ought to have considered whether there was sufficient evidence to support the finding of the appeals officer then the appellant must be accepting that the learned trial judge would have had the right to form the view that there was no sufficient evidence to support the finding of the appeals officer. Such a determination could be for either of two reasons that is to say, either because the evidence clearly supported the contentions of Castleisland or because there simply was not enough evidence to form a view one way or the other. Clearly, on the authorities the High Court or this court on appeal is entitled to consider whether it was open to the appeals officers to come to the decision which she did arrive at and, if not, whether the evidence conclusively established that Mr. Walsh was an independent contractor. If so, the High Court or this court on appeal can make a declaration to that effect. A statutory appeal on a question of law is not a judicial review and a question of law includes the question of whether the evidence supports only one conclusion.
    Accordingly, I intend to address now the fundamental question raised by the notice to vary, that is to say, as to whether the evidence before the appeals officer clearly established that the contract was one for services and not of service. Although the court was referred to different authorities it is clear that the principles to be applied are those set out in the judgments of Keane J. (as he then was) and Murphy J. in the decision of this court in Henry Denny and Sons (Ireland) Limited v. Minister for Social Welfare [1998] 1 IR 34. That case related to the employment of a demonstrator whose job it was to offer passing shoppers free samples. There was a written contract which had been deliberately structured (as of course is the case here) by the employer so as to create an "independent contractor" relationship rather than a "servant" relationship. The written contract had contained the following sentence "for the avoidance of all doubt, I am obliged to point out to you that you will not be an employee of …, you will be providing it with your services as an independent contractor as and when they are required during the term of the contract."
    Keane J. and Murphy J. with whom Hamilton C.J. agreed made it clear that while obviously the terms of the written contract had to be examined, the appeals officer was nevertheless bound to examine and have regard to what the real arrangement on a day to day basis between the parties was. Indeed, Murphy J. pointed out that a sentence of the kind as set out above is not a contractual obligation at all but is merely a statement which may or may not be correct of what the legal relationship between the parties is. Keane J. referred to and adopted the well known statement of principle enunciated by Kenny J. in his Supreme Court judgment in Mara (Inspector of Taxes) v. Hummingbird Limited [1982] 2 I.L.R.M. 421 at 426:
    "A case stated consists in part of findings on questions of primary fact … these findings on primary facts should not be set aside by the courts unless there was no evidence whatever to support them. The Commissioner then goes on in the case stated to give his conclusions or inferences from these primary facts. These are mixed questions of fact and law and the court should approach these in a different way. If they are based on the interpretation of documents, the court should reverse them if they are incorrect for it is in as good a position to determine the meaning of documents as is the Commissioner. If the conclusions from the primary facts are ones which no reasonable commissioner could draw, the court should set aside his findings on the ground that he must be assumed to have misdirected himself as to the law or made a mistake in reasoning. Finally, if his conclusion shows that he has adopted a wrong view of the law, they should be set aside. If, however, they are not based on a mistaken view of the law or a wrong interpretation of documents they should not be set aside unless the inferences which he made from the primary facts were ones that no reasonable commissioner could draw."
    Keane J., after reviewing a number of authorities dealing with the question of contract of services as distinct from contract for services concluded as follows at p. 50 of the report.
    "It is, accordingly, clear that, while each case must be determined in the light of its particular facts and circumstances, in general a person will be regarded as providing his or her services under a contract of service and not as an independent contractor where he or she is performing those services for another person and not for himself or herself. The degree of control exercised over how the work is to be performed, although a factor to be taken into account, is not decisive. The inference that the person is engaged in business on his or her own account can be more readily drawn where he or she provides the necessary premises or equipment or some other form of investment where he or she employs others to assist in the business and where the profit which he or she derives from the business is dependent on the efficiency with which it is conducted by him or her.
    The question remains as to whether the appeals officer, in the light of the legal principles to which I have referred, was entitled to arrive at the conclusion he did on the facts as found by him. I have no doubt that he was. Obviously, having regard to the nature of the work for which he was employed there was no continuous supervision of Miss Mahon by the appellant. That cannot be regarded as a decisive factor, any more than it was in the case of the market researcher, the nature of whose employment was in issue in the case decided by Cooke J. On the other side of the equation are the facts that Miss Mahon was provided by the appellant with the clothing and equipment necessary for the demonstration and made no contribution, financial or otherwise, of her own and that the remuneration she earned was solely dependent on her providing the demonstrations at the times and in the places nominated by the appellant. The amount of money she earned was determined exclusively by the extent to which her services were availed of by the appellant: she was not in a position by better management and employment of resources to ensure for herself a higher profit from her activities. She did not as a matter of routine engage other people to assist her in the work: where she was unable to do work herself she had to arrange for it to be done by someone else but the person in question had to be approved by the appellant."
    The principles applied by Keane J. ought to have been applied by the appeals officer in this case and, in my view; if they had there would have been a different result.
    For reasons which I will explain, I have come to the conclusion upon carefully reading the full report of the appeals officer of the proceedings before her in Tralee and without having to pay any regard to points made in correspondence subsequently by Castleisland that the case for Mr. Walsh being an independent contractor was so overwhelming that it was not open to the appeals officer to arrive at the decision which she made even assuming her report accurately reflects what exactly was said at the hearing. I arrive at this view on the facts as a whole but in this connection I regard two factors as being fundamental. First of all, Mr. Walsh, as did the other men at the time, knew well the reason why their contracts of service were terminated and that the redundancy arrangements were entered into entirely in the context of what was to happen in the way of new arrangements involving contracts between Castleisland and independent contractors. The change of contractual arrangements had obvious consequences. The most important of these were that the inseminators including Mr. Walsh became self-employed for tax purposes. Mr. Walsh made returns on that basis and claimed tax allowances under the self-assessment system. Even more importantly the inseminators under the new contractual arrangements had to carry their own insurance. It is true that apparently in one instance a loss which would otherwise have been covered by insurance was met by the company and the appeals officer seems to have attached some importance to this. Apparently, this was done merely because the particular inseminator did not have proper insurance cover and this does not seem to have been contested. It would not be justified, in my view, to attach any significance whatsoever to that incident. On the other hand the fact that the men had to carry their own insurance was of huge importance in considering the nature of the contract. Another consequence was that Mr. Walsh lost his pension entitlements. It seems quite clear that these inseminators fully understood the position in 1990 and in no sense did they enter into a bogus contract whether as a consequence of exploitation or otherwise. Castleisland made no secret of their reasons for changing their method of procuring the artificial insemination services. As far as the company was concerned, it was with a view to cutting losses in the company. There is nothing unlawful or necessarily ineffective about a company deciding to engage people on an independent contractor basis rather than on a "servant" basis but as this court has pointed out in Henry Denny and other cases, in determining whether the new contract is one of service or for services the decider must look at how the contract is worked out in practice as mere wording cannot determine its nature. Nevertheless the wording of a written contract still remains of great importance. It can, however, emerge in evidence that in practice the working arrangements between the parties are consistent only with a different kind of contract or at least are inconsistent with the expressed categorisation of the contract. In this case, apart from matters of minor detail the written contract seems to have been the contract that was actually worked. Furthermore, in the case of Mr. Walsh it was worked by him between the 1st March 1990 and the 8th September 1999 without any claim being made by him that he was subject to the Social Welfare Acts and was under a contract of service.
    So much for the circumstances in which the contract was entered into and to which, for the reasons I have indicated, I attach great importance. I believe that the same importance should have been attached to these circumstances by the appeals officer. I now move to the second most fundamental factor which influences me. This is something which was emphasized and, in my view, correctly emphasized by the learned High Court judge. The business of artificial insemination of cattle is regulated by statute and statutory instrument in the form of regulations imposed by the Department of Agriculture. That being so, any contract entered into by Castleisland whether it be of service or for services would have to contain such terms as were necessary to achieve strict compliance with the Department of Agriculture regulations. The way O'Donovan J. puts it is as follows:
    "Furthermore, it seems to me that the appeals officer equated the statutory controls imposed on Mr. Walsh by the legislature by virtue of the provisions of the Livestock (Artificial Insemination) Act, 1947 with control over him by the appellant which, of course, was not the case."
    The trial judge refers there to "controls imposed on Mr. Walsh". But it would have been the obligation of Castleisland to ensure that the testing complied with the statutory requirements. I see no significance whatsoever therefore in the inclusion in the contract of terms which required the approval of Castleisland to any substitute inseminator or to the inability to assign the contract. Indeed even if there were no statutory regulations it would obviously be in the interests of Castleisland's business to ensure competence and, therefore, to include such provision. At any rate as was pointed out by Mr. Paul Gallagher, S.C. at the hearing of the appeal under the ordinary law of contract the burden of a contract cannot be assigned. Only the benefit can be assigned and in this type of contract whether of service or for services the permitting of such an assignment would be extraordinary and quite impractical given that the obligation could not be assigned. Rather than an assignment there would have to be a novation to which all three parties would agree. The taxi driver analogy given by the appeals officer in her report is not a proper analogy and is at any rate incorrect. Even when taxi licences were passing for large sums of money, in the eyes of the law, it was only "hope money" because so called deregulation could have come about at any time.
    While I have described those two factors as fundamental there were other factors pointing the same way. Under the 1990 contract, repeat inseminations have to be done without payment. Payments are made on foot of invoices submitted once a month. Clause 14 of the contract is singularly appropriate to a contract for services. It reads as follows:
    "It shall be the duty of the inseminator to provide from his own resources transport and a communication system which is suitable in all respects for the performance of his functions hereunder. He shall arrange all appropriate insurance cover and shall comply with all the provisions of the Road Traffic Act for the time being in force in respect of the use of such transport. The inseminator hereby indemnifies and holds harmless the AI station against all claims arising out of the use by him of the said mode of transport. The inseminator shall in general perform and provide the insemination service at his own risk and it shall be his responsibility to take all appropriate measures to protect himself from injury and disease and to arrange such insurance cover as he deems appropriate. He shall also provide at his own expense, and, wear such protective clothing, footwear and equipment and shall use such disinfectants and cleaning aids as are appropriate in the circumstances. The inseminator hereby indemnifies and holds harmless the AI station against all claims made on the AI station and all costs and expenses associated therewith and arising out of the gross negligence or deliberate failure of the inseminator to perform his contractual duties hereunder in a safe and proper manner and/or any liability for tax that may be levied on and payable by the AI station in respect of the monies payable by the AI station to the inseminator hereunder. The manager of the AI station having investigated any such failure on the part of the inseminator shall in his sole discretion decide whether any such failure was deliberate or due to the gross negligence of the inseminator."
    The learned High Court judge was critical of the appeals officer for giving the analogy of a carpenter providing himself with a tool set. I am inclined to agree, though in fairness to the appeals officer there does appear to have been some suggestion that the inseminator had to provide his own transport even under the contract of service arrangement and, that furthermore some time after the 1990 contracts were entered into the practice grew up of the company providing the protective clothing. But even if that did happen in relation to the clothing it is not suggested that it happened at the inception of the contract. At most it can be regarded as some kind of waiver of all the strict obligations of clause 14 but it would only be of very marginal relevance, if at all, in an overall consideration of whether the contract was one of service or for services. At any rate it is to be noted that under cross-examination Mr. Stack at the Tralee hearing (Mr. Stack being the main inseminator witness) accepted that under the old contract he was paid a weekly wage plus a daily allowance of £12 to cover travel etc.
    There was evidence before the appeals officer that after the introduction of the 1990 contracts each artificial inseminator was "free to make his own time table" and as a corollary to this he could influence his level of profits and could increase his profits with his own efficiency. Under clause 19 of the agreement fees payable to the inseminator could be reduced in certain circumstances a provision which would hardly be compatible with a contract of service.
    Many of the aspects which the appeals officer regarded as relevant in arriving at the view that the contract was one of service rather than for services were, in my view, neutral in that regard. I have already referred to the Department of Agriculture regulations and, of course, to the obvious self-interests of Castleisland. In these circumstances, strict requirements regarding replacements, time of holidays, on-call availability of the inseminators prior to arrangements relating to the goodwill are natural terms and do not in any way lead to the view that a contract which on the face of it is clearly a contract for services is in fact a contract of service.
    I have not attached great important one way or the other to the fact that the men were to be allowed carry on other businesses provided they did not interfere with their contractual obligations to Castleisland. I think that that could be equally compatible with a contract of service. In this case one of the men for instance had an auctioneering business. But as everybody knows it was common practice in Ireland for small farmers to have various outside employments and these could be contracts of service or contracts for services.
    However, for the clear reasons to which I have attached importance and have set out, I am satisfied that it was not open to the appeals officer to take the view that the evidence established a contract of service rather than a contract for services. The original decision of the deciding officer against whom the appeal to the appeals officer was made was in the following terms:
    "Note on the reasons for decision is set out hereunder
    From the information on file and the social welfare inspector's reports I am satisfied that Mr. Michael Walsh is operating as an independent contractor.
    From 1990 he registered as self-employed, made tax returns under self-assessment and signed a contract for service with the Cattle Breeding Society Limited. He has no entitlement to holidays/sick pay or expenses and has to provide his own insurance, communication and transport. When the contract for service was negotiated between SIPTU on behalf of Mr. Walsh and the other inseminators it was agreed that a portion of their redundancy would be retained by the company. Mr. Walsh has to repeat inseminations at his own cost and expense if earlier inseminations were not successful.
    An ordinary employee does not have to make any payment when negotiating a contract of service or repeat a job at his own expense. In this case therefore I am satisfied that there are more points in favour of a contract for service (self-employment) than contract of service (employee)."
    I am in complete agreement with that excellent summary of the position with the qualification that I do not think in fact that it is a question of balancing some points against others in this case. In my view, it was not open to arrive at any different decision.
    Accordingly, I would have no hesitation in dismissing the appeal from the High Court but with the following variation. The order should expressly state that the decision of the appeals officer ought to be set aside and the decision of the deciding officer restored and there should be a consequential declaration that the said Mr. Michael Walsh was not in insurable employment with the respondents. The order should then provide that the appeal to the High Court from the Chief Appeals Officer and the appeal from the High Court to this court, in so far as it relates to that appeal from the Chief Appeals Officer, be struck out.

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