THE COURT OF APPEAL

UNAPPROVED

Neutral Citation Number: [2022] IECA 124

Court of Appeal Record Number 2020/53

 

 

Whelan J.

Costello J.

Haughton J.

 

 

BETWEEN

 

 

KARSHAN (MIDLANDS LIMITED) TRADING AS DOMINO'S PIZZA

 

APPELLANT

 

 

- AND -

 

 

THE REVENUE COMMISSIONERS

RESPONDENT

 

JUDGMENT of Mr. Justice Haughton delivered on the 31st day of May, 2022 

 

Contents

Introduction. 2

Mutuality of obligation. 2

Where the Commissioner fell into error 11

The findings of difference between the Agreement and day to day operations. 18

Evolution of the test of mutuality of obligation in UK caselaw.. 19

Conclusion. 21

 

 

 

 

 

 

 

Introduction

 

1.             This is an appeal by the appellant (“Karshan”) from the judgment and order of O'Connor J. in the High Court on the Case Stated by the Tax Appeals Commissioner (“the Commissioner”) concerning whether Karshan's pizza delivery drivers worked under contracts of service subject to PAYE and PRSI in accordance with s.112 of the Taxes Consolidation Act, 1997 (as amended) (“TCA 1997”), or whether they were self-employed independent contractors chargeable to tax under Case 1 Schedule D in respect of income of a trade.  The appeal before the Commissioner concerns assessments in respect of 2010 and 2011, and the arrangements in place between Karshan and its drivers in those tax years.

2.             I have had the advantage of reading in draft the judgments to be delivered by my  colleagues Whelan J. and Costello J.  

3.             I am in broad agreement with the judgment of Costello J., and I too would allow this appeal.

4.             In her judgment Costello J. sets out the background facts, including the relevant clauses of the written agreement entered into by each driver with Karshan, and two additional documents, one headed “Social Welfare and Tax Considerations”, and the other entitled “Promotional Clothing Agreement”.  She also sets out the “Material findings of fact” as found by the Commissioner at para. 38 a - i of her Determination, after hearing evidence from witnesses.  It is not necessary to repeat these materials here, although I will refer to certain elements later in this judgment.

Mutuality of obligation

5.             Key to the issue is whether there is ‘mutuality of obligation' in the relationship between the parties because this is a sine qua non of the employment relationship. As Edwards J. put it in Minister for Agriculture v. Barry [2009] 1 IR 215 at page 230 –

“The requirement of mutuality of obligation is the requirement that there must be mutual obligations on the employer to provide work for the employee and on the employee to perform work for the employer.  If such mutuality is not present, then there is no contract at all or whatever contract there is must be a contract for services, or something else, but not a contract of service….”.

6.             Edwards J. went on to agree with the characterisation of the requirement as “one sine qua non which can firmly be identified as an essential of the existence of a contract of service” [1] and “that irreducible minimum of mutual obligation necessary to create a contract of service.” [2] 

7.             That this was the appropriate ‘gateway' test was accepted by the parties in argument before us, and has been approved and applied in a number of High Court decisions [3].  However the test appears to be evolving in England particularly arising from recent appeals from the Upper Tribunal (Tax and Chancery) and Court of Appeal, a subject to which I will return briefly towards the end of this judgment.

8.             In Weightwatchers (UK) Ltd and ors v Revenue and Customs Commissioners [2011] UKIT  433 (TCC), Briggs J. (as he then was), in a decision to which I shall refer in more detail, held at para. 31 that in cases where there is an overarching contract for discontinuous work, with discrete contracts for periods of work, it is necessary to show that “the requisite irreducible minimum of mutual work-related obligation subsists throughout each relevant discrete contract, not merely during the potentially shorter period when the contracted work is actually being done”.

9.             In the present case there is an overarching written agreement, or general agreement (“the Agreement”) between Karshan and each deliverer, the terms of which are agreed facts.  As appears from the recital, the scope of the Agreement is “ the delivery of pizzas” and “the promotion of the brand logo” which are “services” which the Contractor “is willing to provide…to the company”, and clause 1 provides that “The Contractor shall be retained by the Company as an ‘independent contractor' within the meaning of and for all the purposes of the said expression”. 

10.         The respondent accepted, rightly in my view in light of certain terms to which I refer to later in this judgment, that the Agreement of itself does not satisfy the requirement of mutuality of obligation, and that the periods between rosters (as opposed to between shifts on one roster) when the Agreement was still in force were periods when the drivers were not to be treated as employees for the purposes of Schedule E.  However this view is expressed obiter because whether the Agreement on its own meets the requirement of mutuality is a distinct legal issue which the Commissioner did not consider it necessary to determine, and it is not a question posed in the Case Stated.

11.         Beneath the umbrella of this Agreement are a series of discrete contracts which arise either, as the respondent contends, at the time when a driver is placed on a roster for work on one or more shifts, typically for one week, or, as Karshan contends, only when the driver actually commences a work shift. The Case Stated concerns the Commissioner's determination in relation to these discrete contracts. If there is mutuality of obligation then, depending on the application of tests such as the degree of control over the worker, the level of integration of the work undertaken, and the opportunity to profit, these discrete contracts may be contracts of service/employment, or contracts for services. If there is not mutuality of obligation then the appeal succeeds and it is not necessary to consider the application of the further criterion of an employment relationship.

12.         It is clear therefore that it was appropriate and necessary for the Commissioner, as she did, to receive and assess evidence looking beyond the Agreement in order to ascertain what occurred in practice in the series of engagements undertaken by deliverers, described by the Commissioner as “multiple individual contracts for assignments of work”, and to make appropriate findings of fact, in order to determine the issue of law and for the purposes of the Case Stated. [4] 

13.         At the heart of the issue is whether an individual contract with mutual obligations comes into being after a driver indicates availability for work and at the time Karshan places the driver on a roster of shifts, as contended for by the respondent. This was what was determined by the Commissioner, with whom the High Court agreed on the Case Stated.

14.         However, in my view she fell into error, as did the trial judge, in their analysis of the terms of the Agreement and their effect on the issue of mutuality of obligation when considering the discrete contracts. This error was not so much that the terms of Agreement were not considered - they were, in some detail - but rather that inadequate weight was given to the plain meaning of contractually agreed written terms that were incorporated into each of the individual contracts of engagement, and as a consequence in my view her material findings of fact in relation to practice were not considered properly in context.  I am also of the view that both the Commissioner and the trial judge erred in their application of the reasoning of Briggs J. in Weightwatchers to the facts of the present case.  In these respects I also respectfully disagree with the analysis in the judgment of Whelan J.

15.         It hardly needs stating that parties to a work arrangement enjoy freedom to contract, and the starting point must be consideration of the terms of the formal contract actually agreed between the parties and executed by them, which the parties intend are to be incorporated into and govern the relationship between them in each individual engagement of the deliverer under which he/she provides services. 

16.         In saying this it must be accepted that this is a standard format agreement, prepared by Karshan's lawyers for execution by both Karshan and the putative deliverer in the presence of witnesses, and one which the deliverer is required to sign if he/she wants delivery work. In this sense there is inequality of bargaining power, and Karshan dictates the terms - Whelan J. describes it as the “asymmetrical nature of the overarching agreement.”

17.         However, I respectfully differ from Whelan J. insofar as she suggests in her draft judgment that giving effect to the terms of the Agreement may amount to an unduly rigid application of commercial principles governing the construction of contracts.  While it is, from the putative deliverer's perspective, a ‘take it or leave it' contract, it clearly has attractions to drivers.  It is easy to see the appeal of such a contract to a person with their own car, motorbike or bicycle, and availability to work evenings or weekends.  In particular, and as we will see, key terms give deliverers flexibility and control in relation to choosing the shifts that they wish to work, making it attractive to students, or others working during the day and seeking to supplement their income, but not necessarily wishing to be tied to regular shifts, and having the freedom not to work e.g. in the run up to or during exams, or when taking holidays. On the other side, it has clear advantages for Karshan, apart from considerations of taxation and employee rights; it can enter into Agreements with more drivers than it could provide delivery work for, and in that way ensure that it is never short of deliverers, and at little or no additional cost to its enterprise.  As Whelan J. herself observes, it is not the function of the court to re-cast a party's bargain.

18.         It must also be accepted that it is a well-established principle [5] that the expression of intention in contract documentation, and how the parties themselves describe their relationship, will not be accepted as decisive or conclusive in law. The Supreme Court applied this principle to an employment context in Henry Denny & Sons (Ireland) Ltd v Minister for Social Welfare [1998] 1 IR 34. 

19.         Nevertheless the law must accord appropriate deference to what the parties have actually agreed in a written document.  As Geoghegan J. stated in Castleisland Cattle Breeding Society Ltd v Minister for Social and Family Affairs [2004] 4 IR 150, at p.161 in a passage quoted in part in the Commissioner's Determination:

“…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 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.”

20.         Paying close attention to the agreed written terms is particularly important where, as here, the individual engagements by drivers appear for the most part to be carried out in accordance with those written terms, albeit that the Commissioner found some differences in practice.  This is a subject to which I will return later, but in essence I am of the view that the differences found by the Commissioner do not impact on the issue of mutuality of obligation. 

21.         Turning to the Agreement, there are provisions that are very clearly aimed at characterising the deliverers as “independent contractors”, including an express term to that effect in clauses 1 and 17, the description of the deliverer as “the Contractor”, the reference to the “subcontract [out of] delivery of pizzas, and the description of deliverers as “self-employed individuals”.

22.         These characterisations are clearly intended by the parties to avoid creating a contract of service.  While they cannot be determinative of the question, it would be wrong to ignore them entirely. It is appropriate to take into account the express provisions that each deliverer is to “operate his/her own accounting system” (clause 9) and that Karshan “has no responsibility or liability whatsoever for deducting and/or paying PRSI or tax on any monies I may receive under this agreement”.  These clearly set out for the deliverer what is expected of him/her in terms of their tax affairs as an independent contractor in the event that they sign the agreement and undertake work.  They are supplemented and confirmed in a second document that drivers were required to sign titled “Social Welfare and Tax Considerations”.  It will also be readily apparent to any driver entering in the Agreement that it will not entitle them to benefits such as holiday entitlement or sick pay that are characteristics of employment.

23.         Of greater importance are other terms that demonstrate an intent to create an ongoing relationship which is not intended to have mutuality of obligation, and that in my view signify an intent not to import such mutuality into the series of engagements of the deliverer arising under the umbrella of the Agreement. Of central importance in my view are the following provisions:

“9.  The Company points out that in keeping with all self-employed individuals the financial risks and or rewards associated with providing the services as outlined in this contract are strictly under the control of the Contractor, and the Company bears no responsibility whatsoever for same. In particular, the Company does not warrant a minimum number of deliveries.

“11. The Company accepts the Contractors right to engage in a similar contract delivery type service for other companies at the same time as this contract is in force.”

“12. The Company accepts the Contractor's right to engage a substitute delivery person should the Contractor be unavailable at short notice.  Such person must be capable of performing the Contractor's contractual obligations in all respects.

“14. The Company does not warrant or represent that it will utilise the Contractor's services at all; and if it does, the Contractor may invoice the company at agree rates.  The Company, furthermore, recognises the Contractor's right to make himself available on only certain days and certain times of his own choosing.  The Contractor, in turn, agrees to notify the Company in advance of his unavailability to undertake a previously agreed delivery service.

“15. The Company reserves to itself the right to terminate this Agreement forthwith…”

I have underlined certain phrases because these were highlighted by the Commissioner  in her reasoning, to which reference is made below.

24.         Read together, and having regard to the Agreement as a whole, in my view these provisions mean that a Contractor ‘signs up', but has no obligation to make himself or herself ‘available' for work. They mean that Karshan may choose not to roster him/her for, or allocate, any delivery work at all - and the contractor has no remedy in law. In my view the plain and ordinary meaning of clause 14 goes further - even if a Contractor is rostered and turns up for work, Karshan is under no obligation to avail of his/her services - whether for delivery work or wearing company branded clothing. It means that the Contractor has the right to make himself available for work, and equally the right not to offer his/her name for any roster - this is a matter “of his own choosing”, without obligation other than that of notification “in advance of his unavailability”. I agree with Costello J. that, taken at its height, this could be construed as an obligation to give advance notice of a driver's unavailability, but it does not become an obligation to perform work with the meaning of the jurisprudence on mutuality of obligation. It also means that even if a driver puts his/her name down as available, and is rostered for work, there is no obligation to turn up for the rostered work. It is notable (but not determinative) that if that happens there is no sanction available to Karshan, nor is there any sanction for failing to notify Karshan in advance of unavailability The only consequence of absenteeism and/or failure to notify of unavailability would seem to be that a contractor might not be rostered again, or Karshan might terminate the Agreement - although neither of these consequences necessarily follows and no evidence or findings touched on this.  Further the plain and ordinary meaning of the wording in clause 12 is that the Contractor has a right to engage a substitute if unavailable at short notice, but cannot be compelled to engage one.  It is also expressly clear that a driver can do similar contract delivery work for other operators.

25.         These were in substance the arguments pursued by Karshan before the Commissioner [6], in the High Court and in submissions to this court.   The Commissioner disagreed and found that there was mutuality of obligation, on reasoning that found favour with the High Court.

26.         One question that exercised this court during oral submissions was what might amount to repudiation or repudiatory conduct on the part of a driver, and specifically whether, if a driver failed to turn up for a shift for no reason (or for no good reason), this would be a repudiatory breach of contract. Counsel for the respondent accepted that a driver could fail to turn up for a shift for no reason, and that there would be no sanction, and a new contract would come into existence with the substitute driver. He also accepted that the umbrella Agreement could only be terminated in accordance with clause 15, in which Karshan reserved to itself the right to terminate “forthwith”.

Where the Commissioner fell into error

27.         At this point it is necessary to refer to parts of the Commissioner's Determination to identify where, in my view, she fell into error. The Commissioner made the following key finding of fact (upon which there can be no dispute):

“a. I find as a material fact that, practice was that drivers would fill out an ‘availability sheet' approximately one week prior to a roster being drawn up indicating their availability for work and that the roster would be drawn up by a store manager based on the availability sheets.”

28.         The Commissioner then considers “Was mutuality present?” from para.57 onwards.  In that paragraph she observes that “The authorities are clear on the fact that while an individual is working, there is a contract in existence in which mutuality of obligation is present and both parties to the appeal agreed that this was the case.” [7] 

29.         This proposition is not controversial and was not disputed by Karshan.  It is not disputed that once the work is undertaken there is an obligation to pay for the work that is done - but that is a mutuality that applies equally to a contract for services, and is not the mutuality of obligation under consideration, which concerns the obligation to provide work, and the mutual obligation to perform work.

30.         The Commissioner then states:

“59. For a contract to exist the mutuality of obligation requirement must be satisfied in respect of the entirety of each contract. In other words, mutuality must be present for the period of the existence of the contract alleged to amount to a contract of employment and not just in respect of the period of time when the work is being carried out by the drivers.”

31.         This follows the approach taken by Briggs J. in Weight Watchers and is not a proposition that is disputed.

32.         She then records in para. 61 the submission on behalf of Karshan that mutuality was absent because there was no obligation “on the driver to provide work [8]”, and if the driver didn't show up for work no sanction could be imposed by the Karshan, and equally Karshan had no obligation to provide work to the drivers. 

33.         The Commissioner then accepted certain submissions of the Respondent:

“64. The Respondent submitted that each individual contract commenced once the Appellant accepted notification by the driver of his availability for work in respect of a specific shift (or a series of shifts) and placed his name on the roster in respect thereof.  The Respondent submitted that this agreement was the basis of the resulting contract and I accept this submission on behalf of the Respondent.

65. The Respondent submitted that the fact that a driver could exercise a choice in respect of the shifts for which he was available did not alter the fact that the relationship between the driver and the Appellant was and is governed by contract and contains mutual obligations to perform personal service.  The Respondent submitted that mutuality was present for the entire duration of such contracts and I accept this submission on behalf of the Respondent.”

34.         The Commissioner then draws on the decision of Briggs J. in Weight Watchers [9].  There “Leaders” were engaged by Weight Watchers which promoted meetings of those wishing to lose weight.  Leaders were required to arrange and conduct the meetings.  Weight Watchers appealed the determinations that the leaders were subject to PAYE and a contribution similar to PRSI. There was an umbrella contract between Weight Watchers and each Leader, supplemented by multiple individual contracts in respect of each assignment of work, with each assignment involving one or more shifts of work. 

35.         The Commissioner in the present appeal considered clause 12 (the right to engage a substitute if unavailable at short notice) was comparable to condition 10 in Weight Watchers which provided:

“If the leader does not propose to take any particular meetings on any particular occasion and is unable to find a suitably qualified replacement, Weight Watchers (UK) Ltd will if so requested by the Leader, attempt to find such replacement and for this purpose the Leader will give the Area Service Manager as much prior notice as possible.”

36.         Briggs J held that this condition might entitle a Leader to -

“…propose not to take a particular meeting due to circumstances falling short of inability, such as a family wedding or funeral, in which the Leader is for good reason unwilling to take that particular meeting.  But such a proposal by no means leaves the Leader free of any work-related obligation to WWUK, either in relation to that meeting or the series of meetings which she has agreed to take.”

37.         He considered that the Leader was by implication obliged first to try to find a suitably qualified replacement, and secondly, if that failed, to request assistance from the WWUK Area Service Manager with as much notice as possible - and only when a replacement was found or, in default the meeting cancelled, did the original leader's work-related obligation in relation to that meeting entirely cease.

38.         Briggs J also held, in para. 90 that Condition 10 meant that “…where, as usual, a series of meetings has been agreed, a proposal by a Leader not to take a particular meeting leaves her obligation to take the remainder of the series intact.”

39.         The Commissioner then emphasises certain wording in clauses 12 and 14 of the Agreement, which I have underlined above, and finds –

“76. The Appellant contended that the drivers had no obligations whatsoever as they could choose not to turn up for any shift, safe in the knowledge that no sanction would be imposed.  However, the contract envisages cancellation “should the Contractor be unavailable at short notice”, together with a requirement of advance notification in accordance with clause 14. Thus the contract aims to some extent, to regulate the circumstances of cancellation by a driver.  In this regard I note the condition 10 in the Weight Watchers (UK) Ltd case similarly provided for advance notification in relation to cancellations”.

40.         The Commissioner then refers to two UK Supreme Court cases of Pimlico Plumbers Ltd & anor   v Smith [2018] UKSC 29 and Autoclenz ltd v Belcher & others [2011] UKSC 41. While acknowledging that they differ factually from the case before her, she found them of assistance as not supporting the proposition that mutuality of obligation is absent where there is a clause providing that the provider of work has no obligation to offer work, and the putative recipient has not obligation to accept the work.  She reached her conclusion that the requirement of mutuality was satisfied, stating:

“82. In this appeal, the right of a driver to cancel a shift was qualified by the requirement to engage a substitute, to provide advance notification to the Appellant and to work out the remainder of the shifts in the series which had been agreed.

83. I agree with the reasoning of Briggs J. in Weight Watchers (UK) Ltd and I conclude that a contract which provides drivers with the right to cancel shifts at short notice does not relieve a driver of work related obligations in the manner contended for by the Appellant.”

41.          I find this reasoning unconvincing.  Firstly the Commissioner made no finding that Karshan was obliged to provide work to drivers, a key requirement of mutuality.

42.         Secondly, on the terms of her primary finding of fact considered in the context of the Agreement, it was not open to the Commissioner to conclude that rostering created a contractual obligation to turn up and to render personal service.  There is nothing remarkable about the Commissioner's finding of fact as to the practice of drivers indicating availability and then being rostered for certain shifts. Some form of communication between a driver and a Karshan manager was required in order for Karshan to sensibly roster drivers from the panel of drivers who signed Agreements. As counsel for Karshan argued, this merely implements the Agreement, it doesn't modify it. I do not consider that it necessarily follows that the moment a driver is rostered by the manager a discrete contract comes into being and the driver then has a legal obligation to work any shift, still less all of the shifts, for which they have been rostered, or that Karshan has the corresponding legal obligation to give them work on such shifts.  Such an inference in my view flies in in the face of the express wording in the Agreement, and the freedom that the contracting parties clearly intended to be conferred on drivers to work or not to work, and on Karshan to provide or not to provide work.  In this respect I differ slightly from Costello J. and incline to the view that no reasonable Commissioner would have concluded on the basis of her finding on rostering that a contract with mutual obligation came into being at the moment the driver's name was placed on the roster.  In my view the combination of indicating availability and resultant rostering created no legal obligation on either party, and to borrow the words of Irvine L.J. in Carmichael & anor v National Power Plc [1999] 1 WLR 2042,  Karshan and the drivers “at best assumed moral obligations of loyalty in a context where both recognised that the best interests of each lay in being accommodating to the other.”

43.         Thirdly, it is not correct to say that a driver cancelling a shift was subject to any requirement to engage a substitute.  This was a misconstruction of Clause 12. The learned High Court judge also erred in finding that the right to cancel a shift at short notice “imposed obligations to engage a substitute and to work out the remainder of the shifts in the series.”  The Commissioner's finding of fact in respect of Clause 12 was that it –

“permitted drivers to substitute another of the appellant's drivers when they were unavailable and that the substituted driver would be paid by the appellant in respect of this shift of work.  The substitute could also be arranged by the appellant, if required.”  [Emphasis added]

The Commissioner adds, in para. 50 of her Determination, that “This arrangement was akin to the swapping of shifts between drivers.”

44.         Clause 12 confers a contractual right on the driver to engage a substitute, but places no obligation on them to do so, even where the driver is not available at short notice.  It is, as the finding states, permissive of substitution/swapping. I cannot see how clause 12, or the Commissioner's findings in relation to its operation in practice, can have the effect of creating discrete contracts with mutuality of obligation at the moment of rostering. The originally rostered driver remained free not to turn up for work.

45.         This is also an important point of distinction from the facts in Weight Watchers where the wording of clause 10 placed, as Briggs J. found, an implied obligation in the first instance on a Leader who did “not propose to take any particular meetings on any particular occasions” to try and find a suitably qualified replacement - Weight Watchers UK Limited having a fall back duty to “attempt to find a replacement” if so requested.  I therefore cannot agree with Whelan J. that the implied obligation found by Briggs J. pursuant to clause 10 with is analogous to clause 12 in the instant appeal.

46.         Each case must of course be decided on its own facts, and I consider the analogy with Weight Watchers unhelpful on a broader basis.  That case concerned a very different form of work, where trained Leaders were required to set up meetings - Briggs J. found this to be the effect of Condition 6 - and the agreement and conditions in that case contained no provision equivalent to Clause 14 of the Agreement in the instant appeal.   Moreover if the Leader did not turn up to lead the session the customers would (absent a replacement) be left disappointed.  By comparison the failure of a driver to turn up for a rostered shift has the consequence that Karshan may (or may not) be short one driver, with little or no consequence beyond some delay in delivery time for Karshan's customers.  It is easier to understand why the Briggs J. was more inclined to view a proposal by a Leader not to take a session as not leaving the Leader without any work-related obligation in relation to that meeting, and it is notable that on the plain language of Condition 10 he found that a proposal by a Leader not to take one session did not relieve the Leader from the obligation to take the remainder of the series of meetings. I agree with Costello J. that there are no equivalent terms in the contractual arrangements under consideration here.

47.         I therefore agree with Costello J. that the Commissioner, and by extension the High Court, misapplied Weight Watchers. In the present case the mutuality of obligation only applied when work was actually being undertaken - it did not apply during the extended period covered by the rosters. I also agree that the trial judge erred in para.50 where he stated that he “….is not persuaded that mutuality of obligations always requires an obligation to provide work and to complete that work on an ongoing basis as contended for by the appellant.  ‘Ongoing' does not necessarily connote immediate continuation or a defined period of ongoing…”.

48.         In the High Court the trial judge considered that in relying on Weight Watchers the Commissioner “did not go against Irish law but rather recognised the necessity to adapt to modern means of engaging workers.”  Like Costello J. I also consider that the English cases need to be approached with caution given the statutory intervention in that jurisdiction.  It is preferable that if there is to be significant change in this jurisdiction that it should be undertaken by the Oireachtas rather than by incremental adaption by the courts based on developments in the English caselaw.

The findings of difference between the Agreement and day to day operations

49.         In para. 39 of the Case Stated the Commissioner found as material facts three differences between the Agreement terms and the day to day operations.  I do not consider that these material differences assist the respondent. 

50.         The first was that there were in fact no company vehicles available for rent, despite clause 4 which provided that “…If the contractor does not have his own vehicle he ‘may apply to rent a company delivery vehicle' from Karshan ”.  This provision contemplates the possibility of application for such rental, but the fact that no vehicles were in fact available is a deviation from the Agreement that does not in my view have any bearing on the question of mutuality of obligation. 

51.         The second finding was that not all drivers prepared invoices for submission to Karshan, despite clause 9 which required the Contractor “to provide a weekly invoice”.   The first difficulty with this finding is that it implies that some drivers actually did submit invoices.  That aside in my view it also has little or no bearing on the question of mutuality of obligation in relation to work.

52.         The third finding was that “some drivers were asked to perform work which was not stipulated in the contract i.e, the assembly of boxes in store, while waiting for a delivery”.  Again this finding is qualified - only “some” drivers were asked to do this, which implies others were not.  It is not therefore a finding that supports mutuality of obligation in relation the contractual arrangement between Karshan and drivers in general.

53.         Accordingly to the extent that the Commissioner makes these findings that the Agreement was operated somewhat differently in practice to the written terms, in my view none of these differences or variations impact on the question of mutuality of obligation.

Evolution of the test of mutuality of obligation in UK caselaw

54.         I said I would return briefly to the test of mutuality of obligation. It should be recalled that before this court both parties accepted that the ‘gateway' test was as enunciated by Edwards J., in Barry at page 230 i.e. –

“The requirement of mutuality of obligation is the requirement that there must be mutual obligations on the employer to provide work for the employee and on the employee to perform work for the employer”.

55.         The test of mutuality of obligation appears to have undergone some refinement in the tribunals and courts of England and Wales, and this emerges from the recent judgment of Laing L.J. in in the Court of Appeal in Commissioners for Her Majesty's Revenue and Customs v Professional Game Match Officials Limited [2021] EWCA Civ 1370, That is a decision which postdates the hearing of this appeal.

56.         However the changes in approach, or perhaps a  more nuanced approach that than enunciated by Edwards J. in Barry, were not argued by the respondents.  In their written Submission at para. 34 the respondent expressly agrees that mutuality of obligations is the sine qua non of an employment relationship “and this principle is well recognised in the authorities set out by the Appellant at paragraphs 23 to 28 of its Submissions”.  Those paragraphs refer to and quote passages of the judgment of Edwards J. In Barry, of Lavan J. in Mansoor, Gilligan J. in Brightwater, and Ní Raifeartaigh J. in McKayed, the Irish caselaw that was also central to Karshan's oral submissions to this court.

57.         While the respondents adopt the reliance placed by the Commissioner and the High Court on Weight Watchers, and in his judgment Briggs J. does refer to certain authorities later relied on by Laing J. in her judgment in Professional Game,  and also relied on by Whelan J. in her judgment - including the judgments of Waite L.J. in McMeechan [1997] IRLR 353, Sir Christopher Slade in Clark v. Oxfordshire Health Authority (1997) 41 BMLR 18, [1998] IRLR 125, and Cornwall County Council v Prater [2006] IRLR 362– this was not the focus of argument by the respondent.

58.         Accordingly I am of the view that it is not for this court to decide this appeal on principles of ‘mutuality of obligation' as they have evolved in UK caselaw and legal texts, including (but not limited to) the Court of Appeal decision in Professional Game delivered since this appeal was argued, on the basis of arguments which were not pursued before the High Court, or before this court. These arguments may well arise for consideration in a future case.

Conclusion 

59.         In light of my agreement with Costello J. that the requirement of mutuality of obligation is absent from the arrangements/discrete contracts under which drivers undertake delivery shift work, it is not necessary to consider whether the further indicia of a contract of employment are satisfied.  The Commissioner upon the facts proven or admitted was not correct in law in her interpretation and application of the concept of mutuality of obligation. I would therefore allow this appeal, and answer the first question posed in the Case Stated “No”.

Result:     Appeal Allowed