BARBADOS.

IN THE SUPREME COURT OF JUDICATURE HIGH COURT

SAGICOR INSURANCE COMPANY AND LIVINGSTONE CARTER CHARLES ISHMAEL PATRICK HILL MARGARET AUDAIN JUDGMENT Introduction

Plaintiff

Defendants

SIMMONS CJ: These consolidated originating summonses seek a free-standing declaration as to the nature of the employment relationship between the plaintiff (Sagicor) and four categories of its workers, designated variously as canvassers, senior financial services representatives, sales representatives, and representatives. In these proceedings, the defendants are joined and sued as representatives of workers in the various categories. The issue for determination raises the perennial question: are the workers engaged under a contract of service or under a contract for services? It is an issue which has been the subject of voluminous judicial and academic exegesis. Sagicor says that the workers are engaged under the latter type of contract whereas the workers contend that they are employees engaged under contracts of service. [2] Sagicor is the oldest surviving indigenous insurance company in the Caribbean. It was not always known as Sagicor. It began its business as an insurer on 20 October 1840 under the name The Barbados Mutual Life Assurance Society (the Mutual). Cecelia Karch and Henderson Carter contextualise this successful non-bank financial institution in the economy of Barbados in their extremely illuminating work The Rise of the Phoenix The Barbados Mutual Life Assurance Society in Caribbean Economy and Society 1840 to 1990 (1997). The authors record at p.17 that an Act of Parliament was passed on 16 July 1851 to provide for incorporation of the Society instead of having funds vested in Trustees under the original Deed of Settlement. [3] In paragraph 2 of an affidavit deposed to on 21 June 2006, the Executive Vice President, General Counsel and Secretary of Sagicor, Ms. Sandra Osborne, explains that Sagicor was re-incorporated under the Companies Act, Cap.308 of the Laws of Barbados. In fact, Sagicor is now an amalgamation of Sagicor Life Inc. and another company, the former Life of Barbados Limited (LOB). Mr. Hill is a former representative of LOB and, since the amalgamation, continues to work under a representatives agreement concluded with LOB. The other defendants are long-standing workers who began their contractual relationship with The Mutual, although they are now under the Sagicor brand. A. The Legal Principles [4] It is convenient at an early stage of this decision to discuss the legal principles or the tests which the common law has developed to determine whether a person is employed under a contract of service or a contract for services. A determination has to be made as to whether the worker is a servant or an independent contractor, in the traditional vocabulary of the law. All Counsel have generously placed before me a wealth of decided cases from many jurisdictions to assist in my resolution of the issue. I am grateful to them. [5] The tests adumbrated by the courts have to be understood against the background of the social and

economic conditions which prevailed at the times when the tests were developed. These tests have an existence stretching back over 170 years of the common law. Since the second half of the last century, the law has embraced the more egalitarian nomenclature of employer and employee and left behind the Victorian and somewhat demeaning classification of master and servant, although the latter designations still have some applicability in various areas of the law e.g. vicarious liability in the law of torts. (a) The Control Test [6] In the nineteenth century the prevailing test was the control test. This test holds that a worker is in law an employee (servant) if his employer can control or has the right to control not only what the worker does but also the manner in which he does it. In Yewens v Noakes (1880) 6 Q.B.D. 530 at 532 Bramwell LJ expressed the control test in these words: a servant is a person subject to the command of his master as to the manner in which he shall do his work. Professor K.W. Wedderburn (as he then was) at p.53 of his book The Worker and the Law (Second Edition 1971) put the socio-economic rationale for the origins of the control test in this passage: The development of the law was here again greatly influenced by propositions established in the cases dealing with agricultural or manual labourers and domestic servants. [7] In a seminal Note in Vol.14 of the Modern Law Review (1951), the late Professor Otto Khan-Freund also explained the philosophy underpinning the control test and the distinction between a servant and an independent contractor. Discussing the decision in Cassidy v. Ministry of Health [1951] 1 All ER 574, Professor Kahn-Freund wrote (p.505): This distinction was based upon the social conditions of an earlier age: it assumed that the employer of labour was able to direct and instruct the labourer as to the technical methods he should use in performing his work.The control test was well suited to govern relationships like those between a farmer and an agricultural labourer (prior to agricultural mechanisation), a craftsman and a journeyman, a householder and a domestic servant; and even a factory owner and an unskilled hand. [8] In a telling sentence he exposed the weaknesses implicit in the control test at p.506. To say of the captain of a ship, the pilot of an aeroplane, the driver of a railway engine, of a motor vehicle, or of a crane that the employer controls the performance of his work is unrealistic and almost grotesque. In contemporary times, controlling the manner of doing work is only one indicium to which the courts will look in determining the status of a worker. It is fair to say that the control test is no longer decisive but it is still of importance. (b) The Organisation or Integration Test [9] Because of the limitations of the control test as revealed by changes in social and economic conditions and in industry, the courts searched for a different test. Cases in which hospital authorities were held vicariously liable for the negligence of their professional staff accelerated the search for a new test. The test which emerged was a response to the difficulties in making Bramwell LJs test applicable to skilled, professional workers. In Stevenson Jordan and Harrison Ltd v. MacDonald and Evans [1952] 1 T.L.R. 101, Denning LJ (as he then was) mentioned that, in Cassidy, Somervell LJ had pointed out that the control test was not universally correct. There are many contracts of service where the employer cannot control the manner in which the work is to be done. Denning LJ said (p.111): It is almost impossible to give a precise definition of the distinction. It is often easy to recognise a contract of service when you see it, but difficult to say wherein the difference lies. A ships master, a chauffeur, and a reporter on the staff of a newspaper are all employed under a contract of service; but a ships pilot, a taxi-man, and a

newspaper contributor are employed under a contract for services. One feature which seems to run through the instances is that, under a contract of service, a man is employed as part of the business, and his work is done as an integral part of the business; whereas, under a contract for services, his work, although done for the business, is not integrated into it but is only accessory to it. (Emphasis supplied). [10] In his desire to extend employee status to certain professionals, Lord Denning propounded a new test. It came to be known as the organisation or integration test. And in Bank Voor Handel en Scheepvaart v. Slatford *1953+ 1 Q.B. 248 at 295 Lord Denning referred to an employee as being part and parcel of the organisation. But the organisation/integration test did not escape criticism. In Ready Mixed Concrete (South East) Ltd. v. Minister of Pensions and National Insurance [1968] 1 All ER 433 MacKenna J was unsure of the meaning and import of the organisation/integration test. He asked at p.445: 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? [11] If the organisation/integration test is applied to determine the nature of the employment relationship, a court has to find those indicia which point to the workers being part and parcel of the organisation or those which point to integrated work. The organisation/integration test has not gained much ground in the common law. Having said that, the organisation/integration test, like the control test, may still be of relevance in some cases but the judges have developed other tests which either look to the economic or business reality of the relationship or examine the multiple terms of the contract between the parties. (c) The Economic Reality Test [12] Deakin and Morris in their text Labour Law (Third Edition 2001) explain the essence of the economic or business reality test at p.160. The test of business or economic reality essentially asks whether the worker is in business on his or her own account, as an entrepreneur, or works for another who takes the ultimate risk of loss or chance of profit. Lord Wright laid the foundation for the possible use of the economic reality test as a criterion for determining the status of a worker in Montreal v. Montreal Locomotive Works Ltd. [1947] 1 DLR 161. He said (p.169): 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. [13] Lord Wright recognised that in the more complex conditions of modern industry, more complicated tests have often to be applied. He suggested a fourfold test involving (i) control; (ii) ownership of the tools; (iii) chance of profit; (iv) risk of loss. The question can only be settled by examining the whole of the various elements which constitute the relationship between the parties. Lord Wrights test had the flavour of a decision in the previous year in U.S. v. Silk (1946) 331 U.S. 704. There, the question raised was whether workers for Silk were employees for the purpose of social security legislation. The test used by the U.S. Supreme Court was whether the men were employees as a matter of economic reality. The Supreme Court said that important factors to be considered included the degree of control, opportunities of profit and loss, investment in facilities, permanency of relation and skill required in the alleged independent operation. [14] In Market Investigations Ltd. v. Minister of Social Security [1969] 2 Q.B. 173, a female part-time researcher was engaged by the company to do interviews for market research purposes. She was provided with the

companys Interviewers Guide which gave detailed instructions about the conduct of interviews. These instructions included the assignment, the persons to be interviewed and the questions to be asked. She might be asked to attend briefing meetings of the company or receive instructions from the companys supervisor. Provided that she completed the work within an allotted time frame, she was free to work when she chose and could work for others. Cooke J held that the interviewer was not an independent contractor but was an employee under a series of contracts of service. His Lordship found that the extent of control exercised by the company was so extensive as to be consistent with employment under a contract of service, notwithstanding her freedom to work for others. Looking at the contract as a whole the interviewer was not in business on her own account. The Court pointed out that control, though a matter for consideration, was not decisive. [15] Echoing Lord Wright in the Montreal case, Cooke J held that the fundamental test in determining whether a person was performing services under a contract of service or for services was whether the worker was performing them as a person in business on his own account and thus under a contract for services. But he declined to draw up an exhaustive list of the relevant considerations or assign a weight to them. At p.185 Cooke J recommended that a multiplicity of factors be considered to resolve the issue in any given case. *F+actors which may be of importance are such matters as whether the man performing the services provides his own equipment, whether he hires his own helpers, what degree of financial risks he takes, what degree of responsibility for investment and management he has, and whether and how far he has an opportunity of profiting from sound management in the performance of his task. [16] In Ready Mixed Concrete (supra), MacKenna J said (p.443): *I+f the question is whether *a person+ is carrying on 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. Deakin and Morris suggest that the approach of Cooke J may be applied to skilled and professional workers who organise their own working schedules and do not come under close personal supervision. (p.161). (d) The Multifactor Test [17] In Ready Mixed Concrete (supra) MacKenna J applied a multifactor test following Dixon J in two Australian cases, Queensland Stations Pty. Ltd. v. Federal Commissioner of Taxation (1945) 70 C.L.R. 539 and Humberstone v. Northern Timber Mills (1949) 79 C.L.R. 389. Lord Wright had said in the Montreal case at p.169 that in many cases the question can only be settled by examining the whole of the various elements which constitute the relationship between the parties. [18] In Ready Mixed Concrete the court was asked to determine, for national insurance purposes, the status of a lorry driver who delivered concrete for the company. The facts were these. In 1959 the company introduced a system of delivery by owner drivers. It was the companys policy that the making and selling of concrete should be carried on separately from the process of delivering it. In 1965 L contracted with the company to deliver concrete and took a lorry on hire-purchase from an associated hire-purchase company. The lorry was painted in the concrete companys colours and adapted to carry its mixer. Ls contract with the concrete company required him to procure a special carriers licence, make the lorry available at all times to the company and use it only for the transport of the companys concrete. He could employ drivers but the company was entitled to require him personally to drive the lorry for the maximum time permitted by law, save for holidays. He was to wear the companys uniform and carry out all reasonable orders from the companys agents as if he were an employee of the company. He had to maintain the lorry and pay all running costs. The lorry and mixer were insured by the company. L was paid a fixed rate per cubic yard. The contract was terminable by notice of either party. There was a declaration in the contract that L was an independent contractor.

[19] It was held that L was an independent contractor. The importance of this case lay in the criteria established by MacKenna J to determine a contract of service. At pp.439 to 440 he said: A contract of service exists if the following three conditions are fulfilled: (i) The servant agrees that in consideration of a wage or other remuneration he 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 others 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. [20] MacKenna J saw condition (iii) as the important one. He went on to explain what he meant by provisions inconsistent with the nature of a contract of service. I must set them out. 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 anothers 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 others control over his performance; it is a contract of carriage. (iii) A contract obliges a labourer to work for a builder, providing some simple tools, and to accept the builders 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 others 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 W.L.R. 441). I can put the point which I am making in other words. An obligation to do work subject to the other partys 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 judges 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. [21] In my view, the second condition postulated by MacKenna J comes very close to a restatement of the control test and the third condition is rather open-ended in so far as it does not explain what terms of the engagement are or are not inconsistent with a contract of employment. Nevertheless, although it is a decision at first instance, Ready Mixed Concrete is considered a leading authority on the issue in this case. [22] In Queensland Stations (supra) the question was whether a drover (cattle dealer) was employed as a servant or independent contractor for purposes of tax legislation. The drovers contract provided, inter alia, that he should drive 317 cattle to a destination; he should obey and carry out all lawful instructions; devote his full time and energy in driving the cattle; he should provide at his own expense all men, plant, horses and rations required for the operation; that he be paid per head of cattle delivered. Dixon J held that the drover was an independent contractor. He pointed out at p.552 that the status of the drover depended 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.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. [23] Dixon J said that: 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.

Mutuality of Obligations [24] It has been said that there must be mutual obligations before a contract of service can exist. That is to say, a continuing obligation on the employer to provide work and pay and a continuing obligation on the employee to do the work provided. Counsel referred me to OKelly v. Trusthouse Forte plc *1983+ ICR 728 for the proposition that mutuality of obligations is yet another test to determine the nature of the contractual relationship. This is a decision of the Court of Appeal of England and Wales. The defendant owned and operated the Grosvenor House Hotel in Park Lane, London. It rented rooms for banquets. Catering for banquets was run by a banqueting department. It was seasonal business. So, there were only 34 permanent staff in the department. Most of the staff were casual employees paid a rate for work actually performed. There were about 104 of such casuals. But they were known as regulars because, when needed by the department, they were hired, rostered and given an assured preference of work. The regulars were paid the same rate as other casuals; they could work longer hours than the permanent employees and some of them had no other regular employment. When notified in 1983 that they would no longer be needed, they alleged unfair dismissal. The industrial tribunal held that they were independent contractors in business on their own account. The tribunal said that their relationship with the defendant had many of the features of a contract of service but the element of mutuality of obligations was missing. [25] In the Court of Appeal Ackner LJ quoted the decision of the tribunal to explain this concept. The applicants entered into their relationship with the company in the expectation that they would be provided with any work which was currently available. It was a purely commercial transaction for the supply and purchase of services for specific events, because there was no obligation for the company to provide further work and no obligation for the applicants to offer their further services. By making themselves available on a regular basis the applicants had the prospect of enhanced profit for themselves. If they could obtain more regular and profitable work elsewhere they were free to take it. The applicants were in no different position than [sic] any independent contractor who offers his services for a particular purpose or event (e.g. a jobbing gardener or a day labourer) and it was by their choice that they made their services available to a single customerWe are, of course, aware that lack of mutuality of obligation is not, in itself, a decisive factor and that outworkers can, in appropriate circumstances, be employees working under a contract of employment... (Emphasis supplied). [26] An important aspect of the industrial tribunals decision in OKelly is that the tribunal listed many of the factors which it considered to be both consistent and inconsistent with a contract of service. I wish to emphasise, however, that these are only indicia and are not binding. Care must be exercised in this area because each case will turn on its own facts and the terms of the particular contract being construed. [27] In the nineteenth century, courts sometimes required an obligation on the part of the master to provide work as well as wages, complementing an obligation on the part of the servant to perform the work: R. v. Welch

(1853) 2 E.&B.357, Whittle v. Frankland (1862) 2 B.&S.49. But later cases have shown that the normal rule is that a contract of employment does not oblige the master to provide the servant with work in addition to wages: Collier v. Sunday Referee Publishing Co. Ltd. *1940+ 2 K.B. 647 per Stephenson LJ in Nethermere (St. Neots) Ltd. v. Gardiner [1984] I.C.R. 612 at 623. In Nethermere, Stephenson LJ expressly approved the following dictum of MacKenna J in Ready Mixed Concrete (supra.): 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. [28] The Court of Appeal in Nethermere held that for a contract of service to be formed, an irreducible mutual obligation between the parties was necessary: an obligation under which an employee was paid a wage for the work done and was obliged to provide his own work and skill in the performance of a service for the employer. The mere fact that a home worker could arrange his own hours of work, holidays and the amount of work he did, would not, as a matter of law, negative such a contract. Regional Cases [29] The issue in the present case has previously been examined in the Supreme Court of Barbados. In Rudder v. Dallaway (1984) 38 WIR 56, Sir William Douglas CJ, sitting in the Divisional Court with Lindsay Worrell J, dismissed an appeal by Antonio Rudder, drummer and leader of the Blue Rhythm Combo, in which Kurt Dallaway, the trumpeter in the band, was found by the Magistrate to have been employed under a contract of service. The true basis for the Divisional Courts decision was that no evidence was led before the Magistrate in regard to many factors which would have helped to indicate whether this was a contract of service or a contract for services. The parties spoke only of remuneration. - p.58. In considering the proper approach to the question raised in this matter, Douglas CJ was of opinion that a wide range of factors needs to be taken into account in determining whether a person is engaged under a contract of service or a contract for services and the integration test alone is not sufficient to determine the issue. [30] More recently in Barbados, Kentish J had to deal with the very issue before me in Henderson Franklyn v. American Life Insurance Company (ALICO) No.611 of 2003, decision of 29 May 2006. ALICO had appointed Franklyn as one of its agents in Barbados under a career agent agreement dated 4 March 1974 to solicit, procure and transmit to ALICO applications for insurance and annuities offered by ALICO. The contract expressly described Franklyn as an independent contractor. Apparently, up to 1987, Franklyn performed well but, thereafter, his performance gradually deteriorated. By 1999 he was not meeting the minimum targets of applications and he was warned about his performance. Ultimately, ALICO demanded that he secure two applications for life insurance and one for personal accident every week, otherwise ALICO threatened to provide him with a special contract to operate outside of the company. As it turned out, Franklyn was given notice that with effect from 15 May 2002, he would become an external agent of ALICO. But before that change came about, Franklyns contract was terminated retroactively. [31] One of the issues for determination by Kentish J was whether Franklyn was employed under a contract of service or a contract for services. Notwithstanding that the contract between the parties expressly stated that Franklyn was an independent contractor and that nothing in the contract..shall be deemed to constitute the relationship of employer and employee, Kentish J held that Franklyn was employed under a contract of service. At para.[12] the trial judge explained the correct approach to a determination of the issue: It is now clear from the authorities that no one test may be sufficient to determine the issue and that a number of factors may have to be considered. [32] The test used by Kentish J was whether Franklyn was performing the services under the contract as a person in business on his own account. She found that he was not. Accordingly, she concluded, after reviewing

the absence of certain factors pointing to a contract for services, that he was an employee of ALICO. The provisions of the contract and the manner in which it was operationalized were consistent with its being a contract of service see para.[24] of the decision. [33] During the time when judgment was reserved in this matter, the Judicial Committee of the Privy Council on 2 May 2007 delivered its advice in a case from the Bahamas involving, inter alia, a determination of the status of an insurance agent working for an insurance company see John Hanna v. Imperial Life Assurance Company of Canada (Privy Council Appeal No.61 of 2005). I am bound to say that I have found this case very helpful. The material facts were these. [34] On 7 November 1988, Hanna entered into an agency agreement with the company as its agent to solicit applications for insurance policies. He was to collect and immediately remit to the company the first premium on such applications and deliver promptly, policies issued pursuant to the applications. He was to be remunerated on commission; he was not entitled to commission after termination except in accordance with clause 6 of the agreement. He was free to select the persons from whom he solicited applications and to determine the place of solicitation. He was governed by the rules and regulations of the company; he was required to participate in the companys pension plan and became entitled to retirement benefits in accordance with the provisions of the plan. The company provided Hanna with equipment and premises and paid a portion of his national insurance contributions. Hannas engagement was terminable by death or by either party with or without cause, by notice in writing. The agreement was described as an agency agreement. [35] On a preliminary issue to determine whether Hanna was an employee of the company or not, Thompson J ruled that he was an employee. She was reversed in the Court of Appeal. However, the Privy Council restored her ruling. Delivering the advice of the Board, Lord Hope of Craighead held that there was ample material before the trial judge to entitle her to hold that Hanna was not an agent carrying on business on his own account. Thus, as an employee, Hanna was entitled to reasonable notice of termination of his employment. The case was remitted to the Court of Appeal for its determination of what was reasonable notice. [36] At para.19 of his opinion, Lord Hope, having identified the main features of Hannas contract which I mentioned at para.[34] said: It is plain that while he held the position of manager-marketing supervising a staff of six employees, he was himself an employee of the company. He was not required to enter into a fresh agreement with the company during this period. This is a strong pointer to the conclusion, when taken with the other evidence, that he was an employee throughout and that he remained an employee when the contract was terminated. [37] Did it make a difference that the parties agreement was described as one of agency? Lord Hope observed at para.20: It is true, as the judge recognised, that the word agent was used throughout the written agreement. But the provisions in clause 8(ii) and (vii) show that the appellant was not free to set his own standards of performance. He was required to observe the rules and regulations laid down by the company..The description of his contract in the letter of 1 October 2005, while not determinative, is at least consistent with the impression created by the facts as a whole that the appellant was working throughout the period of his service not on his own account but as the respondents employee. (My emphasis).

B. The Approach to the Issue [38] A proper approach to the issue in this case requires a thorough consideration of all aspects of the relationship between the parties including an examination and construction of the terms expressly set out in the written contracts as well as the manner in which the contracts were performed. The written contracts are the

principal, though not the only, sources of information as to the nature of the contractual relationship between the parties. There are other factors or features of the relationship that require examination. No single factor or feature is likely to be decisive in itself. Each may vary in weight or direction pointing either towards a contract of service or a contract for services. Having given such balance to the respective factors as seems warranted on the evidence, I then have to determine the ultimate question, namely, whether the worker is carrying on business on his/her own account or not. As Lord Wright advised in Montreal v. Montreal Locomotive Works Ltd. (supra) at p.169: In many cases the question can only be settled by examining the whole of the various elements which constitute the relationship between the parties. [39] As I conceive it, the question whether these defendants are engaged under a contract of service or not, is a mixed question of fact and law because my determination does not depend solely upon a construction of the written contracts but requires also an investigation and evaluation of the factual circumstances in which the work was performed see Lord Hope in Hanna (supra at para.17 thereof) and Lord Griffiths in Lee Ting Sang v. Chung Chi-Keung [1990] 2 A.C. 374. [40] In approaching a resolution of the issue, I have been greatly assisted by the affidavits of the defendants and those of Ms. Sandra Osborne, Executive Vice-President, General Counsel and Secretary of Sagicor. Ms. Osborne filed three affidavits: the first, on 20 June 2006 (the June affidavit); the second, on 29 December 2006 (the December affidavit); and the third, on 7 March 2007 (the 2007 affidavit). As is to be expected on an Originating Summons, the facts in this case are substantially agreed and I am not called upon to resolve large areas of disputed fact in the affidavit evidence. C. Factors Common to all the Contracts [41] Before examining the relevant terms in the written contracts and, with a view to the avoidance of prolixity and repetition, it is convenient next to identify at (i) to (viii) below, certain aspects of the contractual relationships between the parties which are common to all the contracts and to illustrate, from legal authorities, how the courts have dealt with these factors. I remind myself, however, that each case turned on its own facts and it would be undesirable to propound or seek to distil general propositions wider than was strictly necessary for the determination of the particular case. In this part of the decision, I shall refer to Sagicor as the company and the defendants as such. (i) N.I.S. contributions and P.A.Y.E. deductions [42] It was admitted in the evidence that Sagicor treated the four defendants as though they were employees for the purposes of national insurance and income tax. Thus, the company deducted statutory contributions payable to the National Insurance Scheme (NIS) and P.A.Y.E. payable to the Department of Inland Revenue. The company also issued each defendant TD4 slips annually to enable the defendants to file their income tax returns. [43] The fact that an employer pays a workers NIS contributions and deducts P.A.Y.E does not, ipso facto, constitute the relationship of employer and employee. This type of circumstance is an indication, but no more, of a contract of service see Hanna (supra). Chitty on Contracts (28th Edition, Vol.2, 1999) para.39-023 states: The deduction by the employer of income tax and employed earners social security contributionsare indications that the parties themselves view their relationship as one of employment. But neither this nor the failure to make these payments or deductions is conclusive as to the nature of the relationship in the eyes of the law. [44] In OKelly v. Trusthouse Forte plc (supra), the company deducted social security contributions and P.A.Y.E. from the salaries of its casual banqueting staff. Notwithstanding this feature of the contracts, the Court of Appeal held that the casual staff were independent contractors. See also, Clark v. Oxfordshire [1998] IRLR 125. (ii) Payment on Commission Basis

[45] None of the defendants is paid a salary. Remuneration is based on commissions earned. Entitlement to commission is expressly set out in the written contract, or scheduled to it. This feature of the contractual relationships between the parties induced Mr. Cheltenham, Q.C., for the company, to argue most ably in favour of a finding that the defendants are independent contractors. I think, however, that contextualisation is important. [46] Professor Stacey Ball in his work Canadian Employment Law (2002) at para.3:20.9, issues a pertinent reminder that courts must look beneath the surface of the mere fact of payment by commission. He says: Cases involving commission sales representatives often engender considerable confusion about the nature of the legal relationship between the individual engaged to do the work and the entity or person engaging him or her. Confusion arises at least partly because sales representatives are often paid on the basis of what they sell and therefore appear superficially to be in business for themselves. It is a time-honoured defence of alleged employers to argue that a sales representative is not an employee, but an independent contractor. The courts have responded to this confusion by finding in most cases that these individuals are indeed either employees or in the intermediate class. [47] In two Canadian cases, commission sales agents were held to be in truth employees engaged under a contract of service see, MacDonald v. Richarson Greenshields of Canada Ltd. (1985) 12 C.C.E.L. 23 and Roberts v. Libman & Co. (1991) 38 C.C.E.L. 240. Hannas case (supra) also shows that an insurance salesperson, paid by commission, may yet be an employee. Mr. Cheltenham placed much reliance upon Kovats v. Poirier (1976) 69 D.L.R. (3d) 466 in which a commission sales representative was held to be an independent contractor. He worked in his own time without direction or supervision from his principal; was not assigned a sales territory; had no sales quota to reach; could work for other persons and had limited contact with his principal. [48] I think that this case is distinguishable from the case before me in one very important particular. Here, all of the defendants deposed that they were under the supervision of a manager. This element of supervision implies some form of control on the part of the company. It is also important to point out that, although Kovats v. Poirier was a 1976 decision, there was no reference in the judgment of Hughes CJ to Ready Mixed Concrete (1968) or Market Investigations (1969) two leading English authorities on the correct tests to be applied. [49] Payment to a worker on a commission basis does not lead inexorably to the conclusion that the worker is an independent contractor. I think that even though a worker may have liberal freedom of action in his working arrangements, he may yet be an employee in law if he is financially dependent on one principal employer. - See Market Investigations Ltd v. Minister of Social Security (supra) where the court held that the part-time market researcher was an employee notwithstanding that she had a discretion as to when to do the work. [50] In Jaremko v. A.E. Le Page Real Estate Services Ltd., 39 D.L.R. (4th) 252, McKinlay J in the Ontario High Court of Justice held that a commission salesman of commercial and industrial estate was not an independent contractor but an employee. As such, he was entitled to damages for wrongful dismissal. (iii) Hours of Work [51] None of the defendants had fixed hours of work. They were free to work when they liked or where they liked. However, provision was made by Sagicor for them to meet customers at Sagicors offices. The defendants primary obligation was to sell Sagicors life insurance policies and products to members of the public. Potential policy holders are to be found anywhere at home, in offices, after work or even as a result of a chance meeting. An insurance salesperson must seek out and find his/her customer. This invariably entails fixing an appointment to suit the convenience of the customer. In such circumstances, it may well be inconvenient or impractical to bind persons like the defendants to a rigid time schedule. In my judgment, flexibility of working hours does not, by itself, point in the direction of a contract for services having regard to the nature of the parties business in this case. See also Hannas case (supra).

[52] Jaremko is also some authority for holding that a worker may, in law, be an employee even where he had substantial freedom in determining his hours of work but used offices provided by the employer and was subject to companys policy. Flexibility in working hours does not mean that the worker is not an employee Hobbs v. Royal Arsenal Co-operative Society Ltd. (1930) 23 B.W.C.C. 254. (iv) Holiday with Pay [53] Sagicor did not pay the defendants holiday pay. Broadly, they were free to take holidays according to their own convenience although in practice the timing of holidays was discussed with a manager. I accept, on the evidence, that managerial approval for holiday was not a requirement by either party. I also accept the evidence that Sagicor keeps no records of vacation taken by the defendants. It is also clear that payment of holiday pay is not determinative of status. Payment of holiday pay is an incident of the relationship between the parties but not necessarily conclusive of the true nature of that relationship Young & Woods Ltd. v. West [1980] IRLR 201. [54] Sagicor never paid holiday pay for the defendants because, according to Ms. Osbornes affidavit, it did not regard the [defendants+ as employees within the meaning of the Holidays with Pay Act, Cap.348. Mr. Cheltenham argued that freedom to take vacation leave as a matter of personal choice suggests a contract for services. As I see it, since these defendants were required to discuss the timing of vacation with a manager, the implication is that consultation was required to facilitate good administration within the company. It enabled the employer to know the whereabouts of a particular worker at a particular time. (v) Tools of Trade [55] Sagicor provided the Defendants with office space, secretarial assistance, stationery supplies and subsidised promotional materials used by them. They were also required to attend seminars or training courses organised by the company. Some of them were supplied with receipt books of the company and could not use their own receipt books. [56] If these workers were carrying on their business on their own account, I hardly think that they would require provision of office space and secretarial assistance from Sagicor. Professionals, as they undoubtedly are, would find and pay for their own office space and secretarial assistance. If that were the case, it would be a strong factor pointing in favour of a finding that they were independent contractors. [57] I appreciate that in the Australian Mutual Provident Society v. Chaplin 18 ALR 385, the agents were supplied with books, maps and literature for use in soliciting clients but the court held there that they were independent contractors. However, in my opinion, that case did not turn upon that factor. It should be remembered that the worker was not only an insurance agent but he was a bookmakers assistant and he also carried on a market gardening business. [58] What swung the case in favour of a contract for services was the right to enter into a partnership and the agents right to appoint sub-agents. As Lord Fraser said at p.391, In the opinion of their Lordships this power of unlimited delegation is almost conclusive against the contract being a contract of service. A further important indication against the contract being one of service was the right of the agent to incorporate himself and have his own employees. [59] Counsel for Sagicor submitted that in Australian Provident Society, it was held that a requirement to undergo training was not inconsistent with a contract for services. In principle, I can see nothing unusual in stipulating that an insurance representative, whether an employee or independent contractor, should undergo training or continuing education to make him conversant with the employers practices, standards or products. Insurance business is highly specialised, technical and competitive. A well-informed independent contractor is likely to be a better professional than an uninformed one. I do not think, however, that a requirement of training is inconsistent with the status of either an employee or an independent contractor. It all depends upon the nature of the work or service. At best, the requirement that the defendants undergo continuing education and training relevant to their work is neutral. (vi) Enlistment in Pension Plans and Health Plans

[60] All of the defendants are enlisted in Sagicors pension plan and are members of its Group Life and Health Plans. The pension plan is a defined contribution plan under which benefits are based on the amount contributed and the members bear the investment risk of profit or loss. Administrative staff of Sagicor are enrolled in a defined benefit plan which guarantees them a specific, determined benefit on retirement. Joining the pension plan and the Group Life and Group Health plans are requirements of neutral effect in so far as these plans offer significant benefits to a worker, whether an employee or an independent contractor. But in Hannas case (supra), Lord Hope found that the agents access to retirement benefits that were available under the companys pension plan was an aspect of the ample material before Thompson J to entitle her to hold that *Hanna+ was an employee of the company. para.19 of Hanna. On balance, I am of opinion that, in the overall factual matrix of this case, the pension plan feature leans in favour of a contract of service. (vii) Exclusivity of Employment and Confidentiality [61] Despite differences in language in the relevant clauses of the contract, each defendant covenanted not to do any business for or on behalf of any other Life Assurance Company and to observe confidentiality. I find that a confidentiality clause in the contracts (where applicable) is of neutral effect. It is true that a duty of confidentiality is a usual term in a contract of employment. It is part of an employees duty of loyalty to an employer. But, equally, and depending upon the nature of the business, it would not be inappropriate to make an independent contractor covenant to keep a companys trade secrets. Insurance business is the type of business where, because of its highly specialised, technical and competitive nature, it would be reasonable to expect a company to bind those engaged in selling its products to observe confidentiality about its trade secrets or methods of sale. Thus, in my view, a confidentiality clause is not inconsistent with either a contract of service or a contract for services. (viii) Supply of Work [62] In the words of Ms. Osborne, Sagicor did not provide work for the defendants and was not obligated to find work for them. This is unsurprising since the defendants were paid on commission and had to find or make their own opportunities for earning remuneration by selling the companys insurance products. In light of the authorities discussed at paras.*45+ to *50+, this aspect of the defendants contracts seems to me to be of neutral effect. D. Construing the Written Contracts [63] I turn now to an examination and analysis of the material clauses in the 4 written contracts. 1. Canvassers Contract Mr. Carter Clause 1, reproducing the recital, provides that Mr. Carter is employed to solicit applications for Life Assurance.. Clause 2 stipulates that he is to be remunerated on a commission basis for his services of every kind and for all his expenses connected therewith. The special terms applicable to payment of commission are set out in 10 provisos to clause 2. Thus, payment of commission does not become due until Sagicor has issued a policy in respect of which commission is payable or the premiums in respect of the policy have actually been received in full by Sagicor or charged as a loan under the policy. Cl.2(a). [64] As a general rule, Mr. Carter would not be entitled to commission on a renewal premium if he is not in the employ of Sagicor when the premium is paid Cl.2(c). Likewise, Cl.2(c)(i) says in part On the resignation of the Canvasser after five years *sic+ employment by the Society.. and Cl.2(c)(ii) includes these words: in the event of the death of the Canvasser while in the employment of the Society.. But, if the Directors decide otherwise, commission may be paid on renewal premiums. If Sagicor cancels a policy or returns premiums paid, Mr. Carter loses the right to a commission Cl.2(d). Commission is payable yearly Cl.2(e), but the directors may agree to allow Mr. Carter to make drawings in advance of commissions payable subject to subsequent adjustment Cl.2(g). Retirement must be in accordance with Sagicors scheme For Retirement Provision for Members of the Staff and Mr. Carter is entitled to a Pension in accordance with the scheme Cl.2(h). At their discretion, the directors may revise rates of commission from time to time Cl.2(j). [65] An analysis of clause 2 suggests that Mr. Carter was engaged under a contract of service. As pointed out in

the preceding paragraph, this clause refers to employment in 3 sub-clauses. Although payment by commission may point towards a contract for services, it is by no means unusual to find employees remunerated on that basis as Professor Ball shows. para.[46] supra. Indeed, legislation acknowledges that a person may be paid on commission but still be an employee. In the Australian Provident Society case (supra), the legislation defined a worker as a person employed under a contract of service and includes a person so employed who is remunerated wholly or partly by commission. See also Hobbs v. Royal Arsenal Cooperative Society Ltd. (supra at para.[52]). The objective and purpose of payment on commission are to promote productivity on the part of the worker. Payment is results-oriented. The pension clause - 2(b) - is also relevant. Significantly, the contract refers to retirement provisions for Members of Staff (my emphasis). I would not expect an independent contractor to be characterised as a member of staff. Nor would I expect an independent contractor to be included in a companys pension scheme. Such a person will usually make his own arrangements for retirement as a matter of good financial and retirement planning. [66] Clause 3 contains 13 covenants (positive and negative) on the part of Mr. Carter. Under Cl.3(a) the Canvasser must deliver to Sagicor or its agent every application for Life Assurance as soon as it is completed and signed. Mr. Roger Forde Q.C., for Mr. Carter, submitted that this clause is restrictive of Mr. Carters freedom of action. He cannot issue a receipt; his function is limited to soliciting business and referring an application to Sagicor. A person in business on his own account would be expected to have more latitude in carrying out his functions. Cl.3(c) bears reproduction in extenso: To submit to and comply with all instructions, rules, regulations, and directions as shall from time to time be laid down by the Society and communicated to him and to submit to the authority, instruction, control and supervision of any person appointed by the Society. (Emphasis supplied). [67] Mr. Carter said that at all times he worked under the control or supervision of a Supervisor and/or Unit Manager appointed by *Sagicor+ para.3 of his affidavit of 20 November 2006. Mr. Cheltenham argued that Cl.3(c) is not incompatible with a contract for services. He relied on the Australian Provident Society case (supra). Clause 5 of the agreement in that case placed an obligation on the insurance agent to conduct the agency in accordance with practices as laid down by the Society from time to time. In the Privy Council, Lord Fraser was of opinion that this clause was capable of being read as giving the Society complete control over the work of the respondent. If Cl.5 stood alone it would be a strong indication of a relationship of master and servant. p.390. [68] However, the Privy Council held that the employee was engaged under a contract for services. The ratio decidendi of that case was that the relationship of the parties was ambiguous and, in such a state, the parties could remove any ambiguity by expressly stating the nature of their relationship as they in fact did. In that case the relationship was expressed in the agreement to be one of Principal and Agent and not that of Master and Servant. [69] It is easy to understand the reasoning of the Privy Council in its advice because, as I shall show later in the discussion on Mr. Ishmaels contract, the courts will give effect to the parties express characterisation of their relationship where, on the facts, there is an ambiguity. In the instant case, Mr. Carters status was not expressly stated in the contract, in contradistinction to Mr. Ishmaels contract. In my opinion, Cl.3(c) in this case weighs heavily in favour of a contract of service. Mr. Carter must submit to all instructions, rules, regulations and directions and comply with them. Looked at another way, Sagicor is empowered to control the manner in which the canvasser does his work through instructions and directions. [70] Turning to the negative covenants on the part of a Canvasser, he cannot receive any money or give any receipt in Sagicors name except as specifically authorised by the company Cl.3(e). He cannot share commission with any applicant Cl.3(f); he cannot assign any part of his commission except with the written consent of Sagicors directors Cl.3(g). He cannot canvas or do any business for any other Life Assurance company Cl.3(b). He cannot have applicants examined by any Medical Practitioner not appointed by Sagicor Cl.3(i). The Canvasser

is enjoined to be confidential and not to divulge the contents of any application, communication or document to any person not directly concerned therewith Cl.3(j). [71] These prohibitions at (e), (f), (g) and (h) seem to me to bind a Canvasser hand and foot to Sagicor and, though they may be found in a contract for services, when taken with Cl.3(c), the purport and effect, cumulatively, of these clauses point in favour of a finding that the relationship between the parties was one of employer and employee. [72] Clause 3(h) enjoins a Canvasser Not to canvass or do any business for or on behalf of any other life assurance company. Counsel for Sagicor argued that this prohibition related merely to a competing insurance company and did not prevent a Canvasser from working for another company in a different area of business. He thought that this clause imposed some form of control but did not go far enough to tilt towards a contract of service. In Franklyn v. American Life Insurance Company, the trial judge was of the view that this type of clause suggested a contract of service. Termination of the Contract [73] I turn now to the provisions for termination of the contract. Clause 4 and its sub-clauses (a) to (g) deal with termination of the relationship and the consequences of termination. For example, if the agreement is terminated because of dishonesty, fraud or breach of the express terms therein, a Canvasser is not entitled to commission accruing after the date of termination Cl.4(a). If there is a dispute as to the earning of commission, the dispute is referred to and determined by the Directors or their nominee Cl.4(b). Books, correspondence and documents relating to the business transacted by a Canvasser are the property of Sagicor and are subject to inspection at all times by the Secretary, auditors or other agents of Sagicor. [74] Clause 4(f) states: Either party to this Agreement shall have the right at any time to terminate this Agreement by giving to the other, one months notice in writing. There is no express power of suspension or dismissal per se. This leads Sagicor to contend in its written submissions that the power to dismiss or suspend is an important indicator of a contract of service. An independent contractor cannot be dismissed. The absence of a right.to dismiss or suspend a canvasser is suggestive of a contract for services. [75] I do not agree. Without more, such a right may be neutral. I do not accept the proposition advanced on behalf of Sagicor that because the contract did not contain an express clause for suspension or dismissal, that omission should lead to a finding that Mr. Carter was an independent contractor. First, on ordinary principles of the law of contract, a breach by one party which goes to the root of the contract will entitle the other party to terminate the contract. Take the obvious case. Suppose that an insurance agent was indeed an independent contractor. He misappropriated the companys funds. Plainly, the company would be justified in terminating the relationship. On that footing, there is no difference between a contract of service and a contract for services. The effect of the breach is the same, although in the case of a contract of service, the consequence is expressed as a right to dismiss. In the words of Cooke J in Market Investigations (supra) at p.187: it is a peculiarity of words which makes no difference to the substance. [76] Secondly, Ms. Osborne said that if they (canvassers) did not meet set sales targets, they risked their contracts being determined. Thus, there was another circumstance which might cause the contract to be determined. An attorney-at-law in private practice is an independent contractor but this court is aware of cases where attorneys-at-law are dismissed by clients. This clause, in my view, is neutral and points equally in favour of either type of contract. [77] Carmichael v. National Power PLC *1999+ 1 WLR 2042 was also cited from Mr. Cheltenhams bundle of cases. I do not find that case particularly helpful in the context of this case because, there, the workers were engaged as tour guides on a casual as required basis. [78] Cl.4(g) provides for arbitration by two arbitrators or an umpire (in the event of disagreement) where there is a dispute in respect of construction of the Agreement or matters arising thereunder. This clause is not usual in a contract of service and points in the other direction.

Incorporation [79] Then it was said on behalf of Sagicor that canvassers were allowed to incorporate themselves into companies. The contract, however, did not contain any express term to that effect. Ms. Osbornes evidence is that some did incorporate. However, there was no evidence before me that Mr. Carter incorporated a company; and there was no evidence of the number of canvassers who incorporated, under what circumstances and what were the arrangements negotiated between Sagicor and the canvassers after incorporation. [80] Although it is not commonplace that an employee will set himself up in business using a corporate vehicle, again, as a matter of principle, I can see no objection in law to such a stratagem. It is a logical consequence of the decisions in Salomon v. Salomon *1897+ A.C.22 and Lee v. Lees Air Farming Ltd *1961+ A.C.12. As an incident of tax planning, it may be in the best interests of an individual to use a corporate vehicle. Many professional persons avail themselves of the benefit of a corporate vehicle to reduce the incidence of taxation on their businesses or services. Even if Mr. Cheltenham, relying on dicta in the Australian Provident Society case, is right that the freedom to incorporate suggests a contract for services, I am not persuaded that this freedom is enough to tilt the balance of the contractual arrangement between Mr. Carter and Sagicor towards a finding of a contract for services. [81] Mr. Roger Forde drew my attention to National Insurance Board v. Walke (1994) 45 WIR 35 decided by the then Chief Justice, Sir Denys Williams, in his capacity as National Insurance Commissioner. There, Sir Denys found nothing legally objectionable in an arrangement which allowed the individual worker under a contract of service with Barbados Light and Power Co. Ltd. to transfer the rights and obligations under the contract to his private company after it was incorporated. The character of the contract did not change. [82] It is my understanding of the operation of a Canvassers contract that a Canvasser could not delegate his/her contractual obligations to another person. The contract required personal service. In Staffordshire Sentinel Newspapers v. Potter [2004] IRLR 752, Mr. Potter signed a contract in February 1999 as an independent contractor. In November 2000 he signed another agreement in which there was a clause permitting him to engage suitable substitutes if he could not perform his services personally. The Employment Appeal Tribunal held that he was in truth an independent contractor. The need for personal service was said to be one of the irreducible minima of a contract of service. [83] In determining whether a contract includes the need for personal service, the critical question is the particular contractual term. If the contract expressly spells out the position, that is the end of the matter. On the other hand, where there is no clear express term in writing, it will be necessary to look at the overall factual matrix in order to discern that term. The English Court of Appeal held in 1999 that an express right to provide substitutes is wholly inconsistent with a contract of service Express & Echo Publications Ltd. v. Tanton [1999] IRLR 367. I construe the contractual arrangements for Canvassers as requiring personal service. Conclusion Mr. Carter [84] The conclusion which I draw from a detailed examination of the written agreement and the other aspects of the parties relationship as they operated in practice, is that Mr. Carters contract was a contract of service and not a contract for services. Canvassers are regular and necessary units of production in the complex organisation that is a large insurance company such as Sagicor. They are integral parts of the company. I hold that they are not performing services as persons in business on their own account or working as mere accessories to the companys business. They are central to its success or failure. 2. Senior Financial Services Representatives Agreement Margaret Audain [85] Mrs. Audain was first appointed a Canvasser on 1 September 1981. Her contract was identical to that of Mr. Carter. By letter of 15 January 2001 Sagicor offered her the position of Senior Financial Services Representative for

Barbados. She was asked in the letter to partner with the Management Team in development and execution of the sales strategy with particular emphasis on assisting in the development of less experienced sales agents through mentoring, guidance, problem-solving and experiential learning. There was no basic salary attached to the position and her existing Sales Agreement was retained. There were certain performance targets to be met. [86] She remained as a Class A member of the companys Pension Plan and there were no alterations to her Group Life and Health benefits. In addition, Sagicor agreed to provide voice mail, e-mail and internet access, an office and up to 60% of the cost of a computer once every three years. Clause 5 of the agreement referred to its termination in these terms: Except in cases where your employment is terminated for cause or by death, disability or any other incapacity, this agreement may be terminated by either party giving the other one months notice in writing. Clause 4 of the Canvassers agreement was saved and when the two documents are read together, termination in clause 5 of the letter is to be construed as being referable to termination for breach in clause 4. Nothing turns upon this. [87] Since I have examined the canvassers agreement in detail at paras.*63+ to *84+ above, it would be otiose to re-pass that ground again. The letter of 15 January 2001 changes nothing in my previous findings. I would only add that, in Hanna, Lord Hope saw no inconsistency in Hannas being an employee notwithstanding the fact that he held the position of Manager-Marketing supervising a staff of six employees.. see para.[36] supra. Conclusion Mrs. Audain [88] The reasons which I have expressed for holding that Mr. Carters contract was one of service apply with equal force to Mrs. Audain. Accordingly, I hold that she is employed under a contract of service. 3. Sales Representative Agreement Mr. Ishmael [89] Mr. Ishmael was appointed on 17 March 1992 by Sagicor as a sales representative to solicit applications exclusively for such policies as [Sagicor] may issue and to collect and forthwith pay over to [Sagicor] the first premium on such policies and to perform such other duties as may from time to time be required by *Sagicor+. Then, unlike the other contracts in this case, the clause goes on to provide importantly: It is understood that there is no employer/employee relationship between *Sagicor+ and the Representative and nothing contained herein shall be construed to create such relationship. (Emphasis supplied). [90] A few words about the passage italicised. The courts have held that the fact that the parties make a consensual declaration of the nature of their relationship and attach a label to their relationship is not necessarily conclusive of the legal status of that relationship. However, it may be appropriate in cases of ambiguity to resort to a label clause to determine the true nature of the relationship. [91] In Massey v. Crown Life Insurance Co. [1978] IRLR 31 Lord Denning MR said: The law, as I see it, is this: If the true relationship of the parties is that of master and servant under a contract of service, the parties cannot alter the truth of that relationship by putting a different label upon itOn the other hand, if their relationship is ambiguous and is capable of being one or the other, then the parties can remove that ambiguity, by the very agreement itself which they make with one another. The agreement itself then becomes the best material from which to gather the true legal relationship between them. This is clearly seen by referring back to the case of The Commissioners of Inland Revenue v. His Grace the Duke of Westminster (1936) AC 1. [92] The Master of the Rolls found support for his view in a passage from the judgment of MacKenna J in Ready Mixed Concrete at p.513. Lord Denning concluded: *T+he way in which they draw up their agreement and express it may be a very important factor in defining what the true relation was between them. If they declare that he is self-employed, that may be decisive.

A label is therefore not conclusive but may be a factor pointing in favour of the relationship so characterised if the court finds an ambiguity upon a construction of the agreement between the parties. In the final analysis, however, the court must still look at the overall contractual relationship between the parties to determine its true nature. Hannas case (supra). [93] I shall now deal with some of the other material clauses in Mr. Ishmaels contract which require analysis. Under Cl.4, Mr. Ishmael agreed to be remunerated on commission together with certain bonuses and allowances scheduled to the Agreement. Under Cl.5(a) it was provided that he should undergo such training as Sagicor required and keep such records as Sagicor might require to enable him to become more proficient in the performance of his duties. In her June affidavit, Ms. Osbourne explained that Cl.5 reflects the level of direction given by the Plaintiff to the Defendant. Then the affidavit continues in para.5: Such training includes instruction in areas such as product knowledge, computer training, selling techniques, needs analyses and customer relations. The Defendant is obligated to conform to the selling and servicing methods approved by the Plaintiff and to meet an annual production sales target as set by the Plaintiff and, from time to time, to submit reports regarding sales activity and to attend meetings. [94] On his part, Mr. Ishmael agreed to conform to the selling and servicing methods approved by Sagicor and to maintain a standard of knowledge and competence in the sale of Sagicors products Cl.5(b). [95] As regards Cl.5(b), a duty to conform to the selling methods of the company carries implications that the company can control the manner in which Mr. Ishmael sells its products. But a similar implication cannot properly be deduced from a duty to maintain satisfactory standards of knowledge and competence in the performance of the contract. Surely it is within the competence of the directorate of the company to prescribe that those who solicit business on its behalf, maintain the standards set by the company and be knowledgeable and competent salespersons. A requirement for maintenance of standards applies equally, in my judgment, to an employed salesperson or an independent salesperson. I consider that part of the obligation in sub-clause (b) leans in favour of a contract of service whereas the other part is neutral. It is not inconsistent with either kind of contract. [96] The same comment applies to sub-clause (c). Here, Sagicor agreed to communicate annual targets to the Sales Representative who agreed to produce a level of new business sufficient to meet the requirements of the Sales Agreement. [97] Cl.6 provided that the Representative shall be governed strictly by the terms of this Agreement together with the rules, regulations and instructions.of *Sagicor+ from time to time. This clause seems to me to reserve to the employer a measure of control as to the Sales Representatives work and the manner in which it is to be done. It points towards a contract of service. [98] Clause 8 provides for Collections and Remittances. The material parts of this clause state: All monies, policies, premium receipts, premium notices and other securities received or collected by the Representative for and on behalf of [Sagicor] are to be held by the Representative as a fiduciary trustee..and under no circumstances is the Representative to make any personal or other use of them but shall immediately pay them over to *Sagicor+. [99] At the end of each month or, on demand, the Representative must return to Sagicor all undelivered policies and overdue and uncollected premium notices and receipts and render true accounts on demand or in accordance with the companys rules and regulations. It is a trite proposition of the law that where one person (A) receives money or property belonging to another (B), the recipient (A) holds the money or property as a constructive trustee for B. So, it matters not whether the Sales Representative is an employee or independent contractor. Either type of worker in such circumstances would be fixed with the equitable duties of a trustee. The effect of the first aspect of clause 8 (para.[98]) is neutral in the context of the issue before me. The requirements to make returns and deliver up undelivered polices and render accounts are, in my view, the normal consequences of being

a trustee. So, too, is the obligation to render accounts. Again, I hold that these obligations are neutral in their effect and do not indicate strongly one way or the other the true nature of the relationship. [100] Cl.10 is in the nature of a penalty clause. It stipulates that if the company issues a policy as a result of an application received through the Representative and the premium is not paid within 60 days, the Representative must pay a fee to the company. The fee is returnable if the insurance policy is subsequently paid for. The clause ends: The Representative also agrees to sustain any loss that may occur in consequence of advances made by him for premiums. [101] Cl.12 provides for unethical practices in these terms: The Representative shall at all times strictly observe all the statutory requirements and *Sagicors+ rules and regulations and instructions concerning rebating, twisting and estimating of policy results and in every other respect. [102] This clause is neutral. It applies equally to an employee or an independent contractor. Plainly, every worker must observe the applicable statutory requirements of the job and, if the company deems it in its best interests to lay down rules about rebating and so on, such requirements are within the prerogative of management to ensure that the company trades according to the highest ethical standards. The insurance business is a competitive one. A companys good reputation is absolutely critical to its success and profitability. It is therefore incumbent upon all who work for an insurance company to observe the highest standards and practices. A reputation once lost is not easily regained. [103] Under Cl.13 the company provided a rate book, canvassing and promotional materials to assist the Sales Representative in the performance of his functions. These materials remained the property of the company. A key part of this clause, to my mind, is this: No advertisement shall be published or broadcast and no printed matter concerning *Sagicor+ or any other Life Assurance Company or Society shall be issued or circulated by the Representative unless the Representative is specifically authorised to do so by *Sagicor+. I am not persuaded by Mr. Cheltenhams contention that this restriction on advertising is neutral. [104] In the case of a person carrying on business on his/her own account, there would, generally, be full freedom to advertise in such a way as would best promote that persons business interests. On the other hand, an employee, properly so called, would hardly advertise his/her employers business. Advertisement would be the province of the employer and should be seen as a necessary and normal business expense. Particularly, in a highly competitive business such as insurance, advertisement, as I see it, is a corporate prerogative and responsibility. The fact that Cl.13 permitted advertisement only where the Representative was specifically authorised to do so by Sagicor, is so restrictive of freedom to advertise that it seems to me to point in the direction of a contract of service. [105] The Agreement was terminable by either party giving one months notice to the other Cl.15. In addition, under Cl.16, automatic termination was provided for in 6 instances set out in Cl.16. Broadly, these were: death; retirement; termination of the Sales Representative licence; permanent disability; relocation outside of Barbados; and breach of any of the contractual terms. Termination for loss of licence or breach of contractual terms carried no entitlement to remuneration whereas termination by reason of death, disability or retirement entitled the Sales Representative to payment of commissions due. Sub-clauses (c) and (d) of Cl.16 contain details of entitlements where termination is not for fraud or gross misconduct. Different benefits are payable dependent upon length of service. I do not think that these need any elaboration since they are not germane to the issue before me. [106] There is a limited provision for arbitration in Cl.23. Disputes between the Representative and the company

are referable to the Directors or a person appointed by them. In either case the decision is binding. The way in which the arbitration clause is worded suggests that it is linked to the matter of payment by commissions because it speaks of a dispute relative to the earning of any remuneration. It may well be the case (and I do not decide the point) that the jurisdiction of the courts is not ousted in other types of dispute. No assignment of the rights under the contract is permissible without the written authorisation of the company. [107] Mr. Ishmaels evidence in his affidavit of 21 December 2006, is that he worked under the control or supervision of a Unit Manager appointed by Sagicor. He does not expand this rather bald, generalised statement. He says that Sagicor provided him with support staff but he had no say in the choice of staff nor could he discipline or dismiss any member of staff. The contract was one of personal service. He had no authority to delegate any functions to a third party. He was invited to staff meetings, seminars and the like and was always subject to Sagicors rules, regulations and methods of sale. The company issued him with a receipt book to record payments made by customers. He could use no other receipt book except that issued by the company. [108] Looking at this contract in its entirety and the way in which it was performed, it seems to me that the balance is in favour of a contract of service. However, the overarching question remains as to whether that inference is displaced by the fact that the parties attached the label of independent contractor to their relationship. I have explained above that this is not a conclusive criterion. I hasten to add that I do not believe that its inclusion in the contract was a sham. In fact, there is nothing before me which suggests other than that it was a relationship freely and voluntarily entered into. But I find no ambiguities in the contractual relationship between the parties to this contract. If there were an ambiguity, I would have to resolve it by application of the label. Conclusion Mr. Ishmael [109] In the circumstances, it is my finding that Mr. Ishmael was employed under a contract of service, clause 1 of the contract notwithstanding. The critical elements in a contract of service are the supply of the work personally and the skill of the worker. I find, on the evidence before me, that Mr. Ishmael performed the work personally using his skills in accordance with the instructions of Sagicor as to the manner in which he should sell Sagicors products. He was assisted in the performance of his contract by Sagicor through its provision of office space, secretarial assistance and stationery. He undertook no investment or management responsibilities; he was on a lower rung of the companys organisational chart. He took no financial risks. 4. Representatives Agreement Mr. Patrick Hill [110] Mr. Hills contract is relatively short and has been the easiest to construe. On 21 October 1986, he signed a contract with LOB as a representative of that company. In para.6 of his affidavit of 19 July 2006, Mr. Hill deposed to his transfer from LOB to Sagicor. He said that about August 2003, representatives of LOB were informed by the Chief Executive Officer of Sagicor, Mr Dodridge Miller, that it was obligatory for them to sign a document to effect the transfer of their registration in order to sell insurance for Sagicor. If they did not sign, it meant that they had constructively dismissed themselves. In the result, Sagicors Human Resource Department sent them a form which they signed and Sagicor paid the fees transferring registration from LOB to Sagicor. [111] By Cl.2 of the contract it was provided as follows: 2. Service The Representative shall solicit, exclusively for the Company, applications for life assurance and annuities (hereinafter referred to as Assurance) and will collect and forthwith pay over to the Company such premiums as he shall from time to time be directed by the Company to collect. The Representative shall have no authority to bind the Company in any way and in particular shall have no authority to waive or alter the terms or conditions of any application or policy or other document issued by or contract made by the Company.

[112] Cl.4 provided for payment on a commission basis as specified in the schedule and the right to commission accrued in respect of premiums paid in cash to the company under policies personally effected by the Representative and issued by the company. Where the company cancelled a policy and returned any part of the premium, the Representative agreed to repay to the company any commission that he may have received thereon. Cl.5(g). Cl.5(k) gives the Representative a right to be paid commissions if he qualified for any pension plan established by the company and, if he retired upon pension, in accordance with the terms of such plan. [113] Cl.6 dealt with commissions payable after termination of the agreement, for example, by death, incapacitation by injury or disease, so long as the agreement subsisted for at least one year. Nothing much turns on this clause except to note that all rights to commission cease and are liable to forfeiture if the Representative becomes connected with any other life insurance company in any way or does business for such other life insurance company directly or indirectly in a territory in which the company is authorised to do business Cl.6(b). The territory means Barbados. Where commissions are payable after the termination of the agreement, the company is entitled to deduct a service fee of one-fifth of such commissions Cl.6(d). [114] Cl.7 dealt with the requirements for and the rate of bonus. The agreement was terminable at any time, with or without cause, by either partys giving the other written notice of termination Cl.8(a). Next, Cl.8(d). This states: The Representative will be governed by the terms of this agreement and by the rules, regulations and instructions of the company now in effect or as from time to time issued by the company which shall be deemed to form part of this agreement to the same extent as though contained herein either originally or by way of amendment; provided that this agreement may not be amended except in writing or by amendment to the rules, regulations or instructions of the company. [115] In her December affidavit, Ms. Osborne deposes that the Representative could not work for a competitor of Sagicor but could undertake other work outside the companys business. As regards the critical issue of instructions, Ms. Osborne explained that such instructions were limited to methods of sale, details of products, sales quotas and the observance of ethical standards. She said that Representatives were not provided with work; they created or sought out their own opportunities. If they did not meet sales targets, they risked termination of their contracts. [116] Mr. Hill said, in his affidavit of 1 March 2007, that before being allowed to work on his own, he had to attend classroom instructions for 3 months, at the end of which he was required to take an examination. When he passed the examination, he obtained a licence paid for by the company but reimbursable. Thereafter, he was assigned to an Agency Manager who took *him+ on the road and made a determination of his suitability to work on his own. Sagicor provided him with a car loan; it arranged computer training for him and assisted with the purchase of a laptop computer which became his own, as I understand, after it was depreciated off the books. [117] Upon a construction of Mr. Hills contract, I find that he was employed to solicit business for Sagicor and collect premiums as he was directed by Sagicor. He was governed by the rules, regulations and instructions of Sagicor. Since he was paid on commission, his earnings were entirely the result of his own resourcefulness and diligence. But, as the cases show, that fact, by itself, is not conclusive of his status. Of especial significance, however, is the evidence that the instructions given to Mr. Hill involved instructions about methods of sale. In my view, Sagicor reserved to itself the right to tell Mr. Hill how he should go about the business of selling its insurance policies. This fact and the fact that he collects premiums as directed by Sagicor suggest strongly that Sagicor exercised a high degree of control over Mr. Hill. Conclusion Mr. Hill [118] Having considered all of the clauses of this contract and the way in which it was performed, I find that Mr. Hill was engaged under a contract of service. He did not provide all of the tools of trade; he took no financial risks; he had no responsibility for investment and management. It cannot be truly said on the totality of evidence

that he was carrying on business independently of Sagicor and on his own account. E. General Conclusions and Disposal [119] In coming to my decision, I have taken into account the affidavit evidence, the material written terms in the various contracts, the factors that are common to all the contracts as well as those which are specific to the particular type of contract. I have avoided an evaluation of the contracts based upon a mechanistic or arithmetic calculation of the factors pointing towards a contract of service vis--vis a contract for services. [120] Rather, I have allowed myself time to stand back from the mass of information provided by Counsel in order to understand the business realities and to make an informed, considered and qualitative appreciation of the entire arrangements as disclosed on the evidence. I think that the answer to the question raised in the Originating Summonses required an evaluation of the overall effect of the detail, which is not necessarily the same as the sum total of the individual details. [121] The picture which emerged is that the defendants are professional persons engaged by Sagicor to sell its insurance products. None of the defendants was free to set his/her own standards of performance. They all had to observe the rules, regulations and instructions of Sagicor, if I may adapt and apply the language of Lord Hope in Hanna. They require specialist training constantly to update their knowledge base and make them proficient in the insurance business. All of this redounds to the benefit of Sagicor whose profitability in my view, is directly linked to the skill, resoucefulness and expertise of the workers in this case. Those are the business realities. The fact that these workers have no fixed hours of work, are skilled, highly trained, competent and do not require detailed and close supervision does not preclude a finding in favour of a contract of service. A contract of service may exist even though control does not extend to prescribing how work must be done; Morren v. Swinton and Pendlebury Borough Council [1965] 1 WLR 576. The opportunity to deploy individual skill and personality is frequently present in contracts of service. In this regard, the workers in this case are very much like the doctors in the hospital cases where the integration/organisation test was developed. [122] I find that the defendants, in consideration of payment by commission, provided their own work and skill in performance of service for Sagicor. In performance of that service, there was a sufficient degree of control and supervision reserved to Sagicor in respect of the manner in which its products should be sold to make Sagicor employer. The other material provisions of the contracts are not inconsistent with contracts of service. Indeed, many of the factors common to all of the contracts point in the direction of a contract of service. The defendants are employed as part of Sagicors business; their work is an integral part of its business and not merely accessory to it. They are not in business on their own account as entrepreneurs. Disposal [123] In the result, in answer to the question asked in the Originating Summonses, I hold that each of the defendants and the other workers whom they represent in the various categories mentioned in the first paragraph of this judgment are and/or were engaged by the Plaintiff under contracts of service. The Plaintiff must pay the defendants their costs certified fit for two attorneys-at-law