American Life Insurance Company v National Insurance Board
| Jurisdiction | Bahamas |
| Judge | Adams, J. |
| Judgment Date | 22 September 1983 |
| Court | Supreme Court (Bahamas) |
| Docket Number | Magistrate Appeal Side No. 21 of 1983 |
| Date | 22 September 1983 |
Supreme Court
Adams, J.
Magistrate Appeal Side No. 21 of 1983
Mr. Paul Knowles for the appellant
Mrs. Joan Sawyer & Mrs. Kelphene Cunningham for the respondent
Practice and procedure - Appeals — Whether application for leave to appeal from decision of National Insurance Board is in a case involving question of law — National Insurance (Determination of Claims and Questions) Regulations, 1974, reg. 5(3)
Labour Law - Contract of employment — Contract for services
On 23rd Februarys 1983 the respondent Board made an official ruling regarding the classification of the appellant's agents under the provisions of regulations 3(c) and 4 of the National Insurance (Determination of Claims and Questions) Regulations 1974. Curiously enough, although regulation 3 states that the class or category of insured persons “shall be determined by the Board whose decision shall be finally regulation 5(3) gives a right of appeal to any aggrieved person from that decision to the Supreme Court on any question of law. Ordinarily, in such a context the word “final” means “without appeal.”
The Board ruled that the appellant's agents were employees of the appellant under contracts of service for the purpose of the Act. According to the written ruling the Board logically concluded that the agents' work was essential to the business of the Company and that the Company exercised such a degree of control over their work as to establish the relationship of employer and employees between the Company and the agents and therefore the contracts were contracts of service for the purposes of the National Insurance Act 1972.
The appellant has appealed against this ruling and the consequential direction that the appellant is indebted to the respondent Board for contributions in accordance with section 48(7) of the Act. The appellant's main ground of appeal is that the respondent Board was wrong in law in determining that the appellant's agents were employed under contracts of service and consequently was wrong in law in requiring the appellant to pay both the employer's and employees' contributions in accordance with the Act.
The issue that I have to resolve is whether the appellant's agents are employed persons for the purposes of section 11(1) of the Act. Are they employed and contracts of service or contracts for services?
For me to have jurisdiction the appeal must be on a question of law. In Global Plant Ltd. v. Secretary-of State for Social Services [1972] 1 Q.B. 139, the Secretary of State for Social Services decided that the company was liable as employer to pay contributions in respect of drivers under the National Insurance Act 1965. On appeal the company contended that on the facts found in the case stated the drivers were not in employment under a contract of service. In his decision Lord Widgery C.J. held that since an appeal to the court lay only on a point of law the court had to examine the Minister's decision to see whether it contained a false proposition of law ex facie or whether it was supported by no evidence or whether the facts found were such that no person acting judicially and properly instructed as to the relevant law could have come to the determination under appeal.
At page 152, letter G, Lord Widgery C.J. had this to say:–
“There is no doubt whatever that the only right of appeal to this court is a right of appeal on a point of law and some difficulty may arise in the application of that rule because the question ‘contract of service or no?’ is inevitably a mixed question of law and fact.”
However, in Morren v. Swinton and Pendlebury Borough Council [1965] 1 W.L.R. 576, a case in which the issue of contract or no had to be determined substantially from a written contract, Lord Parker C.J. said:–
“The terms of the contract, of course, are fact, and to that extent the determination depends upon fact, but it seems to me perfectly clear that once the primary facts are found, then it is a pure question of law as to what is the reasonable inference based on the legal interpretation of the contract.”
Lord Widgery C.J. made this observation on Lord Parker's dicta:–
“At first sight it looks as though Lord Parker, C.J. is saying that the conclusion to be drawn, from the-primary, facts on the-issue with which I am concerned is a conclusion drawn as a matter of law, and in so far as he is dealing with the construction of a written agreement he would, if I may say so with respect, obviously be right.”
I am also dealing entirely with the construction of two similar written agreements between the appellant and its agents and I hold that such construction is a question of law.
I do not have to decide between the rival views of the two Chief Justices as to whether, once the primary facts are found, it becomes a pure question of law as to what is the reasonable inference based on the legal interpretation of the contract.
However, it is interesting to observe that in the first title in Annual Employment Law Review for 1983, Mr. David Newell, a Lecturer in Law at the University of Leicester, has expressed the view that the question of whether a person is employed under a contract of service or services is one of law rather than fact. He has referred to recent cases from the EAT, such as Young v. Woods Ltd. v. West (1980) I.R.L.R. 201. There are other cases that seem to support Lord Parker's view.
By section 2 of the National Insurance Act, 1972:– “‘Employed person’ means, subject to sub-section (2) of section 11, any person in an employment specified in the First Schedule.”
Section 11 enacts:–
“11 — (1.) For the purposes of this Act, insured persons shall consist of the following three classes, namely –
(a) employed persons;
(b) self-employed persons;
(c) voluntarily insured persons.
(2) Regulations may modify the class of any insured person or may exclude any person from any class where it appears to the Minister desirable to make a regulation for that purpose by reason of the nature of that person's employment or occupation or otherwise.”
The First Schedule to the Act lists employment as an employed person under four heads, the first of which is:– “employment in the Bahama Islands under any contract of service.” According to section 2 of the Act:–
“‘Self-employed person’ means a person gainfully occupied in an occupation in the Bahama Islands who is not in respect of that occupation an employed person.”
By regulation 3 of the National Insurance (Classification) Regulations, 1974,
“3. Subject to the provisions of regulation 4, every person shall, in respect of any employment specified in any paragraph of the First Schedule, be treated for the purposes of the Act as a self-employed person in so far as he is gainfully occupied in such employment.”
The First Schedule, referred to by regulation 3, deals with 6 situations. The second situation is:–
“2. Employment as an agent paid by commission or fees or a share in the profits, or partly in one and partly in another of such ways, where the person so employed is mainly dependent for his livelihood on his wages from some occupation other than employment as such an agent or where he is ordinarily employed as such an agent by more than one employer, and his employment under no one of such employers is that on which he is mainly dependent for his livelihood.”
This is one of the “employments in respect of which persons are treated as self-employed persons”, according to the schedule. I shall immediately deal with this aspect under regulation 3, because respondent's counsel has submitted that there was no evidence before the Board that the appellant's agents were mainly dependent for their livelihood on their wages from some other occupation and under the terms of their agreement they were precluded from working for any other insurance company.
There is a similar but not identical provision in the 1948 English regulations which speak of “employment under a contract of service as an agent paid by commission” and which was considered by Megaw, J. in Amalgamated Engineering Union v. Minister of Pensions and National Insurance [1963] (5) All E.R. 864. There the learned judge said at page 872 that:–
“Either this regulation must mean that contract of service’ has a wider meaning than it has been commonly supposed to have… or ‘agent’ has some meaning different from the meaning which is ordinarily given to it in law, because ordinarily in law, whatever else an agent means, it does involve that he is not under a contract of service but that he is under a contract for services.”
I am of the same opinion that an agent in the legal sense is under a contract for services.
Counsel for the respondent has submitted that on the assumption that the agents are dependent for their livelihood on their employment under their contracts with the appellant company, they cannot be considered to fall within the definition of self-employed persons.
I do not agree with this submission. First of all, an agent in the legally accepted sense is not a servant. Secondly, the regulations treat, an agent paid by commission as self-employed where he is mainly dependent for his livelihood on his wages from some other occupation. So that even where an agent is mainly dependent on wages, that is to say, inferentially on a contract of service, he is treated, that is to say, regarded as a self-employed person. In my view, if he is employed solely under a contract for services, his position as a self-employed person is preserved and there is no need for him to be treated or regarded as such because he will already have been a self-employed person”
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