A M Reberger & R G Reberger v Reberger
[2012] NSWWCCPD 16
•23 March 2012
| WORKERS COMPENSATION COMMISSION | |||||
| DETERMINATION OF APPEAL AGAINST A DECISION OF THE COMMISSION CONSTITUTED BY AN ARBITRATOR | |||||
| CITATION: | A M Reberger & R G Reberger as Trustees of the Reberger Family Trust v Reberger [2012] NSWWCCPD 16 | ||||
| APPELLANT: | A M Reberger & R G Reberger as Trustees of the Reberger Family Trust | ||||
| RESPONDENT: | Rodney Reberger | ||||
| INSURER: | Allianz | ||||
| FILE NUMBER: | A1-4872/11 | ||||
| ARBITRATOR: | Mr J Phillips SC | ||||
| DATE OF ARBITRATOR’S DECISION: | 2 December 2011 | ||||
| DATE OF APPEAL DECISION: | 23 March 2012 | ||||
| SUBJECT MATTER OF DECISION: | Contract of service; trustee as employee of trustees; s 72 Conveyancing Act 1919; purported retirement of trustee; s 8 Trustee Act 1925; no evidence to support factual finding; error of law. | ||||
| PRESIDENTIAL MEMBER: | Deputy President Kevin O'Grady | ||||
| HEARING: | On the papers | ||||
| REPRESENTATION: | Appellant: | Goldbergs Lawyers | |||
| Respondent: | Walsh & Blair Lawyers Pty Ltd | ||||
ORDERS MADE ON APPEAL: | 1. The Arbitrator’s determination made in the Certificate of Determination dated 2 December 2011 is confirmed. 2. The appellant to pay the respondent’s costs of the appeal. |
BACKGROUND
Rodney Gerard Reberger, a bricklayer by trade, entered into a bricklaying partnership with his father, Alan Michael Reberger, in 1988 which traded as Reberger’s Bricklaying. In that year a trust, known as the Reberger Family Trust was created, the settlor being Mary Eileen Plunkett. Alan Michael Reberger and Mr Reberger (the appellants) were appointed trustees.
It seems that the trust was created, as stated in evidence by Mr Reberger, “to protect the business and its assets, and serve as a financial vehicle for the business”. The business referred to was the bricklaying partnership conducted by Mr Reberger and his father.
Mr Reberger alleged that “the trust was set up to employ my father and I and our profit was paid into the trust and distributed to us as income by the trust”. It seems that arrangement remained in place thereafter. Mr Reberger’s father ceased working in 1993 and at that time purported to resign as trustee. Mr Reberger continued as a trustee of the Reberger Family Trust, which in turn continued to conduct the business and serve as a financial vehicle for Reberger’s Bricklaying.
Mr Reberger alleged that as a result of the “nature and conditions” of his employment as a bricklayer up to March 2002 he received a back injury and was incapacitated for a period of years. A claim for compensation benefits was made against the “Reberger Family Trust” as employer. The trustees had put in place a policy of insurance in respect of liability under the Workers Compensation legislation. That policy was issued by Allianz Australia Workers Compensation (NSW) Limited as scheme agent. The employers named in that policy were Alan Michael Reberger and Mr Reberger as trustees of Reberger Family Trust.
Mr Reberger’s claim was declined by the insurer. Proceedings were commenced in the Commission in 2005 seeking orders concerning his entitlement to payment of benefits. Those proceedings were discontinued. The present proceedings were commenced in June 2011. The Application sought orders against the appellants, as subsequently amended, with respect to weekly compensation between April 2002 and December 2007, medical and associated expenses and lump sums pursuant to ss 66 and 67 of the Workers Compensation Act 1987 (the 1987 Act).
The matter was listed for conciliation and arbitration before Arbitrator Jeffrey Phillips SC on 27 September 2011. The Arbitrator reserved his decision and a Certificate of Determination, accompanied by a Statement of Reasons (Reasons) issued on 2 December 2011 in the following terms:
“The Commission determines:
1. The respondent will pay the applicant pursuant to section 36 of the Workers Compensation Act 1987 for the period 1 April 2002 to 30 September 2002 $447 per week.
2. The respondent will pay the applicant pursuant to section 40 of the Workers Compensation Act 1987 the sum of $300 per week for the period 1 October 2002 to 31 December 2007.
3. The respondent will pay the applicant pursuant to section 60 of the Workers Compensation Act 1987 all verified medical expenses.
4. The respondent will pay the applicant's costs as agreed or assessed plus 30 per cent uplift to both parties on the grounds of complexity.
5. I refer to the Registrar to have an Approved Medical Specialist assess the applicant’s lumbar spine as a result of the deemed date of injury of 14 March 2002.
A statement is attached to this determination setting out the Commission’s reasons for the determination.”
An appeal against the Arbitrator’s decision was registered by the appellants on 4 January 2012.
ISSUES IN DISPUTE
The issues in dispute raised on this appeal, as set out in the grounds of appeal, are whether the Arbitrator erred in the following respects:
(a) finding that the respondent could enter a contract of employment with himself;
(b) finding that the respondent was a worker;
(c) finding that the respondent was employed as a manager;
(d) finding that the respondent’s work as a manager included bricklaying work, and
(e) failing to determine the correct identity of the appellant.
ON THE PAPERS REVIEW
Section 354(6) of the 1998 Act provides:
“(6) If the Commission is satisfied that sufficient information has been supplied to it in connection with proceedings, the Commission may exercise functions under this Act without holding any conference or formal hearing.”
Having regard to Practice Directions Nos 1 and 6, the documents that are before me, and the submissions by the parties that the appeal can proceed to be determined on the basis of these documents, I am satisfied that I have sufficient information to proceed ‘on the papers’, without holding any conference or formal hearing, and that this is the appropriate course in the circumstances. This course was adopted following a teleconference conducted on 13 March 2012.
THRESHOLD MATTERS
There is no dispute that the threshold requirements as to quantum as found in s 352(3) of the Workplace Injury Management and Workers Compensation Act 1998 (the 1998 Act) have been met. However the appeal was registered on 4 January 2012 which, after allowance for holiday closure of the registry, was one day out of time for commencement as provided by s 352(4).
The appellant has made application pursuant to Pt 16 r 16.2 (12) of the Workers Compensation Rules 2011 (the Rules) for an extension of time in which the appeal may be made. That sub-rule provides:
“(12) The Commission constituted by a Presidential member may, if a party satisfies the Presidential member, in exceptional circumstances, that to lose the right to seek leave to appeal would work demonstrable and substantial injustice, by order extend the time for making an appeal.”
It may be seen that Pt 16 r 16.2(12) has not been amended to reflect the 2011 amendments to s 352 of the 1998 Act which, inter alia, repealed that provision concerning leave to appeal. The question arises, nonetheless, as to whether the appellant satisfies the Commission that exceptional circumstances have been made out and that to lose the right to bring the appeal would work demonstrable and substantial injustice.
In support of its application for an extension of time the appellant, at [2.1.3] of submissions, provides a chronology of events relevant to receipt of a copy of the Certificate of Determination by its solicitors and those steps taken concerning commencement of the appeal. It is to be noted that the Certificate of Determination was received on 5 December 2011 and that Counsel’s opinion concerning the appeal was received on 12 December 2011. A copy of a transcript of the proceedings (T) was obtained on 22 December 2011. Instructions to proceed with the appeal were forwarded to the solicitors on 23 December 2011 by email which communication was “received and read” on 3 January 2012. Counsel was on that day instructed to draft a Notice of Appeal and submissions in support.
It may be seen that the short delay caused to the filing of the appeal occurred immediately after the festive season. The delay is but one day as noted earlier and the appellant has otherwise acted promptly. The respondent does not oppose the extension of time as sought by the appellant.
The appellant has raised substantial issues for determination on this appeal. I am satisfied that there exist exceptional circumstances and that demonstrable and substantial injustice would follow refusal to grant an extension as sought. I order that time for the making of the appeal be extended to 4 January 2012.
ADDITIONAL EVIDENCE
Mr Reberger seeks leave pursuant to s 352(6) of the 1998 Act to adduce additional evidence on this appeal. That subsection provides:
“Evidence that is fresh evidence or evidence in addition to or in substitution for the evidence received in relation to the decision appealed against may not be given on an appeal to the Commission except with the leave of the Commission. The Commission is not to grant leave unless satisfied that the evidence concerned was not available to the party, and could not reasonably have been obtained by the party, before the proceedings concerned or that failure to grant leave would cause substantial injustice in the case.”
The additional evidence is a statement made by Mr Reberger dated 10 February 2012. Submissions in support of the application seeking leave, found at Part A [2.5] of submissions in opposition to the appeal are as follows:
“1. The statement was not given in proceedings due to an oversight not to develop further the factual matrix of the nature of the Respondent’s employment given the overriding issue of trusteeship.
2. The statement addresses the factual matters raised in paragraphs 1, 2, 3 and 4 of the Grounds of Appeal.
3. The Respondent would suffer substantial injustice if leave were not granted to rely on his further statement.”
The additional evidence details the work carried out by the bricklaying business between 1988 and 2002. The statement also contains detail of the duties performed by Mr Reberger during that period in the course of conduct of the business. A general description is given of financial arrangements concerning payment of Mr Reberger for work performed by him in the business.
The appellants, in submissions forwarded to the Commission under cover of correspondence dated 7 March 2012, oppose admission of Mr Reberger’s additional evidence. It is put that “if the evidence is germane to the appeal it should have been adduced before the Arbitrator. If it is relevant, its introduction at this stage is clearly prejudicial to the appellant. If not relevant it should not be admitted in any event”.
It is clear that the evidence in question was available to Mr Reberger and could, with reasonable diligence, have been obtained by him for presentation at the arbitration hearing. In such circumstances, having regard to the terms of s 352(6), leave should be refused unless it is established that such refusal would cause substantial injustice.
The appellants submit that admission of the statement would cause prejudice. That assertion is not elaborated; however, it is clear that the matters addressed in the statement raise evidentiary matters for the first time. It is reasonable to infer that the appellants would have wished to investigate and perhaps contest those matters had they been raised before the Arbitrator.
I am not satisfied that the interests of justice would be served by permitting admission of the statement. It was acknowledged that the preparation of the statement has been prompted by the formulation by the appellants of the grounds of appeal. To permit a party to tailor its case at such a late stage of these proceedings to counter argument presented on appeal would, in my view, cause irreparable prejudice to the appellant. Further, I am not satisfied that refusal to grant leave to adduce the evidence would cause Mr Reberger substantial injustice. I refuse leave to tender the statement as additional evidence on this appeal.
PRELIMINARY MATTERS
The two copies of the relevant trust deed which were tendered in evidence before the Arbitrator each had a page (page 30) which was, in part, illegible and pages 27 and 29 of the document were not present. A Direction was made to the parties concerning this circumstance on 6 February 2012 following which legible copies of each page, including the missing pages, were made available to the Commission. Those documents are treated as part of the evidence tendered by each party.
A teleconference was arranged for the purpose of addressing matters for consideration which were identified following the conclusion of written submissions. A Direction was issued appointing 13 March 2012 as the date for conduct of that teleconference and inviting the parties to put submissions with respect to:
“1.the relevance or otherwise of s 72 [of the] Conveyancing Act 1919 (NSW);
2.cl 7 of the trust deed where it states concerning trustees’ powers ‘AND generally to deal with the Trustees or any of them in their personal capacity in all respects as if there were two separate persons to the dealings’, and
3.the consequences, if any, of the purported resignation of Alan Michael Reberger (s 8(2) [of the] Trustees Act 1925 (NSW)).”
The parties were each represented at the teleconference by their legal representatives and oral submissions were advanced in relation to the matters raised in the Direction and generally. Those matters are addressed below.
THE ARBITRAL PROCEEDINGS
The proceedings before the Arbitrator were recorded and, as earlier noted, a transcript has been produced. That transcript has been made available to the parties. The evidence which was before the Arbitrator is recorded (at T1). It is also recorded that written submissions had been provided by each party.
The Arbitrator noted the documentary evidence before him at [6] of Reasons. No oral evidence was taken at the hearing.
The evidence
Mr Reberger’s evidence
There are two statements made by Mr Reberger in evidence, the first dated 22 September 2005 and the second dated 4 January 2011. The following is a summary of matters stated in the earlier statement:
(a) at age 15 he left school and commenced work as an apprentice bricklayer with his father’s business which then traded as LG and AN Reberger and H Moore. He remained so employed until 1988;
(b) in 1988 he went into partnership with his father trading as Reberger’s bricklaying;
(c) in 1988 a trust deed was “drawn up to protect the business and its assets, and serve as a financial vehicle for the business”. The trust “provided for my father, his wife, myself and my wife, our children and grandchildren”. The trust “was set up to employ my father and I and our profit was paid into the trust, and distributed to us as income by the trust. This is how my affairs had been structured ever since the trust was set up”;
(d) in 1993 Mr Reberger’s father “resigned from the trust” and retired from work. Mr Reberger requested his then solicitors to arrange for the appointment of his wife as trustee. He assumed at that time that the “trust deed” was altered as he had instructed. Since that time the respondent’s wife, Kerry Elizabeth Reberger, “considered herself to be a trustee” as did Mr Reberger. Mrs Reberger has dealt with trust affairs and funds since that time;
(e) Mr Reberger had become aware that his father’s deed of resignation had never been registered. It is stated “this means that my father has been an ongoing trustee”;
(f) Mr Reberger had experienced constant back pain for a “long time” before experiencing severe back pain whilst driving to Orange NSW with his daughter in 1999;
(g) he described treatment and investigations of his back pain. The pain caused absences from work as a bricklayer. In 2002, after he returned to work, his back “was getting worse again”. He was treated by Dr Ryan, orthopaedic surgeon, in Sydney who advised him to give up work immediately, and
(h) Mr Reberger sought advice concerning an accident and sickness insurance policy. He was advised to make a workers compensation claim. It was stated:
“I have always paid workers compensation insurance premiums for myself as a worker.
The business has been running since 1946 and workers compensation premiums have been paid by this business since that time, through the same policy, although the insurer has changed over that time. At one time there were up to 70 people employed by the business”.
The latter statement included the following matters:
(a) Mr Reberger was absent from work between approximately July 2001 and December 2001. A table of earnings between 31 January 2002 and 27 March 2002 appears at [1] of the statement;
(b) a copy of extracts of “the Wages Book for the Reberger Family Trust” for the weeks ending 31 January 2002 through to 28 March 2002 which were annexed to the statement;
(c) Mr Reberger did not resume employment until January 2008. Detail of payments made in 2003 and 2004 by Australian Casualty Life appear at [4] of the statement;
(d) Mr Reberger received no income during the years ending 30 June 2005, 30 June 2006 and 30 June 2007;
(e) Mr Reberger stated that, by reason of the symptoms he described (which are not directly relevant to the issues raised on appeal and need not be summarised), he could not have returned to “working as a builder”;
(f) Mr Reberger retrained as a project manager and commenced work for Telum Commercial Pty Ltd (Telum) in January 2008, and
(g) the Reberger Family Trust has “not operated since [Mr Reberger] commenced working at Telum”.
A copy of the deed of trust dated 28 October 1988 referred to by Mr Reberger in his evidence was before the Arbitrator. The relevant provisions of that deed are referred to in the course of discussion below.
A copy of an unregistered deed dated 22 January 1993 recording the intention of Alan Michael Reberger to retire as trustee of the Reberger Family Trust, the consent of Mr Reberger to that retirement and his acknowledgement that Mr Reberger “shall be the sole trustee from hereon of the Reberger Family Trust” is in evidence.
There is a copy of correspondence from Allianz addressed to Mr Reberger’s solicitors dated 5 May 2004 acknowledging receipt of a letter of claim for lump sum compensation. It is there recorded, “[w]e refer to policy number MWR003957, Reberger Family Trust. Where the trustee is an individual (not a company) the policy cannot cover that trustee”.
A copy of correspondence dated 9 December 2010 from Allianz to Mr Reberger’s solicitors is in evidence. That document appears to be a notice of dispute of claim given pursuant to s 74 of the 1998 Act. It is asserted in that letter that the trust is not a legal entity; that there had been a breach of the Trustee Act 1925 (s 8 in particular); Mr Reberger is suing himself and that no person may be on both sides of litigation; that Mr Reberger is not a worker (s 4 of the 1998 Act); that injury was not received in the course of any relevant employment. The provisions of s 9A of the 1987 Act were, in the alternative, relied upon.
Copies of Mr Reberger’s taxation returns for the period 1 July 2001 to 30 June 2008 are in evidence. His occupation is given as “building construction supervisor”. Income received from “Reberger Family Trust” is recorded.
Mr Reberger tendered a number of medical reports addressing the alleged injury, the diagnosis and the history of treatment. There is some evidence in those reports as to causation of his condition. A CT scan performed on 23 February 1999 demonstrated a “substantial left sided L5/S1 disc prolapse which caused compression of the S1 and perhaps even the L5 root” (report of Dr Paul Miniter, orthopaedic surgeon, dated 16 March 1999).
The appellants’ evidence
The appellant has tendered many of those documents relied upon by Mr Reberger as above summarised. Written submissions, which are addressed below, were attached to the Reply. No other evidence (other than correspondence dated 2 May 2011, being a letter from Allianz to Mr Reberger’s solicitors confirming their earlier dispute of claim following their review of additional evidence supplied by Mr Reberger) was relied upon in defence of the claim.
Submissions before the Arbitrator
The appellants’ submissions
The written submissions relied upon by the appellants directed attention to the nature of the trust generally. The evidence concerning the intention of the trustee Alan Michael Reberger to resign, was relied upon in support of the argument that “at all relevant times after 22 January 1993 [Mr Reberger] has been the sole trustee of the Reberger Family Trust”.
That argument was developed with the further contention that Mr Reberger “is suing” himself. It was put that “no person may be on both sides of litigation”. Such proceedings, it was put, cannot be maintained and must fail. Reliance was placed upon the decision in Hayes v Hayes [1994] NSWCC 7; 10 NSWCCR 111.
It was argued that the respondent’s allegation was that he had employed himself. Whatever relationship was in place, it could not, it was argued, be regarded as a contract of service.
There was no contract of service in existence in which the employer “directs or controls the employee”. Mr Reberger was the sole trustee. There is no suggestion of direction or control of his activities “by any other persons” to be found in the evidence. There is no suggestion of a power of appointment or a power of dismissal. Reliance was placed upon the decision of the High Court in Stevens v Brodribb Sawmilling Company Pty Ltd [1986] HCA 1; 160 CLR 16 (Stevens).
It was argued that Mr Reberger’s own evidence “indicates that he viewed himself as a principal of whatever business activity was occurring”.
Reference was made in argument to provisions in the trust deed. It was accepted that the deed granted power to the trustees to carry on a business “as provided in cl 6(1) [sic, cl 6(i)] of the deed”, but it was asserted that no power was given “for a trustee to employ himself as a bricklayer or labourer.” It was further put that “there is simply no evidence of a contract for [sic, of] service and there was no power for the trustee to employ himself in the position he was working in when injured”.
The appellant challenged the argument advanced by Mr Reberger in his written submissions (which was subsequently abandoned) concerning the suggested substitution of his wife as trustee in place of Alan Michael Reberger. It was again argued that since 1993 Mr Reberger has been “the sole trustee of the trust”.
The appellant noted that the respondent had placed reliance upon the decision in Warner v K J Warner as trustee of R and K Warner Family Trust [2000] NSWCC 41; 20 NSWCCR 307 (Warner). That decision was, it was argued, distinguishable from the present matter upon the facts.
It was put that there was “no compelling evidence available to indicate that as of the date of Mr Reberger’s injury the business was operating as anything other than an arrangement whereby Mr Reberger was seeking to deal with his income in a tax effective manner”.
Oral submissions put to the Arbitrator by counsel at the hearing commenced with the observation that there “was really little or no evidence ... produced by [Mr Reberger] as to what the working arrangements were said to be” (at T6). Reference was made to the decision of Stevens and that of Hollis v Vabu Pty Ltd t/as Crisis Couriers [2001] HCA 44; 207 CLR 21 (Hollis) as well as decisions of the Commission, which cases demonstrate the adoption of the “control test” as one means of determining the existence or otherwise of a contract of service. The relevance of other indicia of the relationship was also addressed in those cases.
Counsel made clear that the appellants were not asserting that the trust arrangement was a sham, and it was conceded that the terms of the trust “entitle the trustees to operate a business and it entitles the trustee to employ other persons” (at T10–T11). It was also made clear that the appellants resist the suggestion that the trustees were empowered to employ Mr Reberger. It was argued that it must be established that there was an intention “to create legal relations, offer and acceptance and the passing of consideration” (at T12). Counsel proceeded to elaborate those earlier written submissions.
It was argued that the decision of Warner was of no assistance to Mr Reberger given that the issue raised in the present matter (that is, Mr Reberger purporting to employ himself) was not addressed in that matter. It was further argued that the Court in Warner had erred.
The power of the trustees to employ a manager was addressed by counsel and it was put that the evidence did not establish the identity of the manager of the business.
A final submission was put that, notwithstanding Mr Reberger’s belief that he was employed, “that is not the test ... because he [sic, it] was a legal impossibility, it doesn’t matter what he believes” (at T26).
Mr Reberger’s submissions
The written submissions relied upon by Mr Reberger argued that the purported resignation of Alan Michael Reberger was of no effect and that he remained as trustee. Reliance was placed upon the decision in Commonwealth Bank of Australia v Nick Frisina Pty Ltd [1999] NSWSC 907 as well as the provisions of the Trustee Act 1925 (ss 6(6) and 8(2) in particular).
The argument was advanced that the trustees were empowered by the deed of trust (cl 6(i), wrongly identified as cl 7(1)) to employ a manager and that the evidence supports a conclusion that Mr Reberger was so employed. Reliance was placed upon the decision of the former Compensation Court in Warner.
It was put that Mr Reberger had “entered into a valid contract of employment with the trust [sic]” and was thus “an employee ... for the purposes of workers compensation”.
The Arbitrator’s decision
The Arbitrator stated that the issue in dispute was “whether at the relevant time of injury, which is the deemed date of 14 March 2002, the applicant, as a trustee, whether sole or co-trustee of [the respondent] [sic, trust], could employ himself”. It was further stated that the question was raised as to “whether the applicant could sue the trustee of the respondent [sic], being one and the same person as himself” (at [15] of Reasons).
Following a review of a number of authorities (between [16] and [19] of Reasons) the Arbitrator made the observation that:
“[i]f those older cases were still the law, then the claim brought by the applicant in these proceedings would be doomed either by way of being unable to sue himself or before that being unable to employ himself”.
The Arbitrator proceeded to consider the decision of Kennedy J in Gulland v Federal Commissioner of Taxation (1983) 72 FLR 362 (Gulland) and the subsequent decisions, made on appeal from his Honour’s decision, of the Full Federal Court and of the High Court. The Arbitrator concluded that:
“the current trend of authority does suggest one can contract with oneself if one is acting in different capacities. In these circumstances, the applicant qua as [sic] trustee was able to employ himself qua employee if the trust deed so permitted it” (at [24] of Reasons).
The Arbitrator determined that the “trust deed permitted the employment of a trustee as a manager” (at [24] of Reasons). Following a summary of the respondent’s evidence the Arbitrator concluded:
“In my opinion, his intimate involvement in the trust as described by that statement provides an overwhelming inference that [Mr Reberger] was a manager and as a trustee he could perform work as a manager even though that work included the work of bricklaying. This is particularly so in a small company that the manager would engage him or herself in the actual work of the business. Consequently, there will be a finding that at all relevant times [Mr Reberger] was a worker as defined by the 1987 Act” (at [25] of Reasons).
The appellant’s argument that the respondent was, following the intended resignation of Alan Michael Reberger, the sole trustee of the trust was considered. The Arbitrator concluded that “whether or not Alan Michael Reberger effectively resigned as trustee is not to the point” (at [27] of Reasons).
The Arbitrator proceeded to consider the medical evidence and the question of the respondent’s entitlement to compensation. The award, as appears at [6] above was entered in favour of Mr Reberger.
SUBMISSIONS, DISCUSSION AND FINDINGS
This appeal is governed by the provisions of s 352 of the 1998 Act. The nature and scope of such an appeal is as provided by s 352(5):
“(5) An appeal under this section is limited to a determination of whether the decision appealed against was or was not affected by any error of fact, law or discretion, and to the correction of any such error. The appeal is not a review or new hearing.”
The powers of the Commission upon conduct of such an appeal are defined by the provisions of s 352(7):
“(7) On appeal, the decision may be confirmed or may be revoked and a new decision made in its place.
Alternatively, the matter may be remitted back to the Arbitrator concerned, or to another Arbitrator, for determination in accordance with any decision or directions of the Commission.”
Ground one
The first challenge to the Arbitrator’s determination suggests error in finding that Mr Reberger could enter a contract with himself. The relevant finding is found at [24] of Reasons where the Arbitrator stated:
“[Mr Reberger] qua as [sic] trustee was able to employ himself qua employee if the trust deed so permitted it”.
The Arbitrator’s conclusion was reached after a review of relevant authority and he placed reliance upon the decision at first instance of Kennedy J in Gulland. It is the appellant’s complaint that the Arbitrator, in so doing, permitted that decision of Kennedy J “to displace the legal orthodoxy” earlier identified by him which I have noted at [56] above.
The decisions of Gulland at first instance, before the Full Federal Court (Gulland v Federal Commissioner of Taxation [1984] FCA 216; 55 ALR 65) and the decision of Dawson J in the High Court (Federal Commissioner of Taxation v Gulland [1985] HCA 83; 160 CLR 55) are addressed by the appellant in submissions. Those proceedings, it is put, concerned the construction and application of s 260 of the Income Tax Assessment Act 1936 (Cth) and the question as to whether certain contracts or agreements were void as against the Commissioner, as provided by that section.
Reference is made in submissions to the decision of the Full Federal Court where it was noted that Kennedy J, at first instance, had held to be valid those agreements challenged by the Commissioner, rejecting the contention that they were “shams”. However, as emphasised in submissions, the Full Federal Court noted that Kennedy J had “expressed reservations” about the status of Dr Gulland as an employee. The facts of Gulland concerned, in part, the suggested existence of a contract of employment between trustees of a unit trust, one of whom was Dr Gulland, and Dr Gulland in his personal capacity. The point was made in submissions that Dawson J, in the High Court, had noted that the capacity of a person to engage themself in a contract of service was not the issue in the case. I note that Dawson J (at [15]) observed that “no attack” had been made upon Kennedy J’s findings concerning the effectiveness of the arrangement including the employment of Dr Gulland by the trustees who were himself (Dr Gulland) and another (a Dr Burke).
The appellant argued that Gulland may be distinguished from the present matter on the facts and that a “different legal question” to the issue in the present matter had been addressed.
Whilst there are significant factual differences between the present case and Gulland, I am of the opinion that Kennedy J’s reasoning concerning the status of Dr Gulland as an employee has considerable relevance to the resolution of the questions raised on this appeal. His Honour considered whether Dr Gulland could enter a binding contract with himself and Dr Burke as trustees. That question is similar to the inquiry concerning Mr Reberger’s ability at law to enter into a contract with himself and Alan Michael Reberger as trustees.
It is clear, having regard to Kennedy J’s reasoning, and those decisions cited by the Arbitrator in the present matter, that the position at common law is that it is not possible to make a contract with oneself. It is also clear that the common law rule has been partly abrogated in New South Wales by s 72 of the Conveyancing Act 1919, which is discussed below. (Also see discussion in N C Seddon and M P Ellinghaus, Cheshire and Fifoot’s Law of Contract (LexisNexis Butterworths, 8th Australian ed, 2002) at [3.11]).
Kennedy J made reference to the decision of Watchorn v Comptroller of Stamps [1969] VR 128 (Watchorn) and expressed the view that any attempt by trustees to employ one of their number to perform duties as trustee would, if upheld, have been “quite inconsistent with the nature of the relationship between trustees in the performance of their duties”.
His Honour proceeded to consider the operation of s 52(1) of the Property Law Act 1969 (WA) to the facts. That section is in similar terms to s 72 of the Conveyancing Act 1919 (NSW) which was the subject of submissions at the teleconference referred to at [25] above. That sections provides:
“Covenants etc by a person with himself or herself and another, or others
72 Covenants etc by a person with himself or herself and another, or others
(1)A covenant, whether express, or implied under this or any other Act, or an agreement made by a person with himself or herself and another or others shall be construed and be capable of being enforced in like manner as if the covenant or agreement had been made with the other or others.
(2)This section applies to covenants or agreements made or implied before or after the commencement of this Act.”
Kennedy J concluded (at 379) that s 52 of the Western Australian legislation did not apply to validate the contract for the reason that the terms of the contract were, as in Watchorn, inconsistent with the nature of the relationship between the trustees, being joint trustees, in the performance of their duties. I note that his Honour had emphasised (at 369) that the contract in question included a clause in the following terms:
“During the period of his employment hereunder [Dr Gulland] shall:
...
(c) fulfil and obey all lawful directions and orders of the employer from time to time”.
Kennedy J proceeded to consider whether the contract of employment was effective “apart from s 52(1)” of the Western Australian legislation. His Honour acknowledged the position at common law that it is not possible to make a contract with oneself as noted at [69] above. However he then observed (at 379-380):
“The current trend of authority, however, does appear to suggest that it makes a difference to the validity of the contract if the contracting party concerned is acting in different capacities. Thus, the rule is stated in Halsbury’s Laws of England (4th ed., vol. 9, par. 204), as follows:
‘There must be at least two parties to a contract, a promisor and a promisee ... However, where a person has different capacities, he may have power to contract in his representative capacity with himself as an individual.’
A footnote provides, as examples of the latter situation, a trustee, executor, administrator or agent. No authority is cited for this view, which is somewhat tentatively put forward, and which is new to the 4th edition of Halsbury. It is the same view as that put forward in Corbin on Contracts (par. 55, footnote 2). It is to be observed that it is contrary to the view expressed in the Restatement of the Law of Contracts (par. 15), and in 17 Corpus Juris Secundum, Contracts (par. 26), and see also Williston on Contracts (2nd ed., par. 18). It was, however, adopted by Kilner Brown J. in Rowley Holmes and Co. v. Barber [1977] 1 W.L.R. 371 when delivering the judgment of the Employment Appeal Tribunal in which it was held that a personal representative could contract with himself in his individual capacity so as to become an employee.”
His Honour, after citing other authority, including the opinion of the Privy Council in Lee v Lee’s Air Farming Ltd [1961] AC 12, ultimately concluded “that the contract was a valid contract, notwithstanding the dual position of the appellant” (at 381).
I have reached the conclusion that Watchorn may be distinguished from the present matter. The trustee in Watchorn was “designated manager” and was referred to as “employed by the trustees”. As stated by Little J in that matter:
“he is not in any relevant sense an employee. Nor are the trustees or any of them properly described as his employers. He is performing his duties as a trustee and as a trustee he is not subject to any right in the co-trustees, to control the manner of their performance”.
In the present matter the contract which is challenged was one to perform work as a tradesman in a business, the conduct of which had been assumed by the trustees. The work in question, bricklaying, had no connection to discharge of duties as trustee as was the case in Watchorn.
It is also of relevance that an arrangement such as the present contract was one in respect of which the trustees were expressly granted power to enter into by the terms of the trust. Clause 7 of the trust deed provided, inter alia:
“… generally to deal with the trustees or any of them in their personal capacity in all respects as if there were two separate persons to the dealings…”
The deed also empowered the trustees to “carry on or join in carrying on any business either alone or in partnership” (cl 6(i), at page 20 of the deed). The trustees, if empowered to operate a business, must be “capable of employing people and therefore must be capable of an employer/employee relationship” (per Ashford J in Warner at [21]).
I note in passing that I reject the appellants’ argument that the decision in Warner was wrongly decided. Whilst her Honour’s finding may be subject to some criticism, being that no distinction had been drawn between “trustees” and “the trust”, her Honour’s conclusions were, in my opinion, correct.
I am also of the view that the provisions of s 72 of the Conveyancing Act, which has general application, and is not restricted to real property transactions (Stewart v Hawkins [1960] SR (NSW) 104), operates so as to validate the contract and enables Mr Reberger to enforce the agreement against Alan Michael Reberger.
The Arbitrator in the present case accepted Kennedy J’s view that “the current trend of authority does suggest one can contract with oneself if one is acting in different capacities”. That acceptance was, in my opinion, correct. I am also of the view, as explained above, that such contracts may include an employment contract. The appellant’s first ground of appeal should be rejected.
Grounds two, three and four
It is convenient to deal with these grounds together. Ground two challenges the Arbitrator’s finding that Mr Reberger was a worker. Ground three challenges the finding that Mr Reberger was employed as a manager and ground four challenges the finding that Mr Reberger’s work as manager included bricklaying.
The Arbitrator, at [24] of Reasons, found that “the trust deed permitted the employment of a trustee as a manager”. It is clear that the Arbitrator had taken into account those powers of the trustees as granted and defined in cl 6(i) of the deed which provided:
“Carry on Business
(i) To acquire carry on or join in carrying on any business either alone or in partnership with any other person or persons at the discretion of the Trustees during such period as they shall think proper with power for that purpose to employ therein such part or parts of the capital of the Trust Fund as they think fit and employ at such salary as they think fit as manager of the said business any person or persons (whether Trustees or a Trustee of or otherwise interested in the Trust Fund or not) or to leave the entire management of such business to any partner therein and to renew partnerships and generally to act in all matters relating to such business or businesses as if they were beneficially entitled thereto and without responsibility for loss.”
A further finding was made that “the overwhelming inference to be found from the evidence is that [Mr Reberger] was employed by the trust as a manager”. The evidence, to be found in the first statement of Mr Reberger, which was relied upon by the Arbitrator in reaching this factual conclusion, is set forth at [24] of Reasons. At [25] of Reasons the Arbitrator further found:
“… [Mr Reberger’s] intimate involvement in the trust as described by that statement provides an overwhelming inference that he was a manager and as a trustee he could perform work as a manager even though that work included the work of bricklaying”.
The Arbitrator later observed that “[m]anagers can be employees”.
It may be seen that these grounds challenge factual findings which were each made by the Arbitrator upon his acceptance of Mr Reberger’s evidence and his having regard to the provisions of cl 6(i) of the deed.
The state of the evidence concerning the making of a contract of service is close to non-existent. A bare assertion is made by Mr Reberger that “the trust was set up to employ my father and I” and that “this is how my affairs have been structured ever since the trust was setup”. The only other evidence which supports the existence of such a contract is the content of the “Wages Book” which is attached to Mr Reberger’s second statement. It is not disputed that those records relate to payments made to Mr Reberger in 2002. The document is headed “Wages Book”; employee’s name is recorded as Rodney Reberger; applicable award/agreement is noted as being “bricklayer/state”, and classification/designation of employee as being “bricklayer”. There is provision on that document for “employment commencement date” which was not noted and remains blank.
It was stated at the teleconference conducted on 13 March 2012 by Mr Reberger’s solicitor that it was her client’s case that the contract came into being in 1988. That, to an extent, is supported by the matters stated by Mr Reberger which I have noted at [29] above.
The inference that an arrangement came into existence at about the time the trust was established is open on the evidence. There is no evidence to refute that inference. The appellant’s fundamental argument concerned the absence of evidence of an intention to create legal relations. My earlier findings concerning Mr Reberger’s ability to enter into an agreement in his personal capacity with himself and his father as trustees, together with his evidence concerning the purpose of establishment of the trust and management of his affairs since that time, leads me to conclude that there was an intention to create legal relations. The question remains as to whether there was an employment contract.
The appellant argues that in all the circumstances it cannot be said that Mr Reberger’s activities were relevantly subject to direction or control as that concept is discussed in Stevens and Hollis. The evidence, it is put, does not support the existence of a contract of service.
The persons allegedly engaging Mr Reberger are the trustees. The work in question is bricklaying. Such a tradesman is to a large extent not subject to close direction or control by an employer in the performance of such work. On the present facts the business conducted by the trustees is one that previously operated as a partnership comprising Mr Reberger and his father. Whilst Mr Reberger’s performance at work would be largely autonomous, such would, I find, remain subject to direction and control by the person against whom the contract is enforceable as earlier determined on this appeal, namely Alan Michael Reberger. Such remains the case notwithstanding the purported resignation of Alan Michael Reberger.
The appellant’s original submission on this point asserted that, upon Alan Michael Reberger’s “resignation”, there could not be “control” exercised by Mr Reberger over his own activities. It is my opinion that the ‘resignation’ of Alan Michael Reberger was of no effect having regard to the fact that the deed of resignation had not been registered as required by ss8(1) and 8(2) of the Trustee Act 1925 which provides:
“8 Retirement
(1) A trustee may by registered deed retire from the trust without any new trustee being appointed in the trustee’s place.
(2) A trustee may not so retire, unless the trustee’s co-trustees and such other person, if any, as is empowered to appoint trustees, consent by the same or other registered deed to the retirement, and there will be left after the retirement at least two continuing trustees, or the NSW Trustee, or a trustee company, to perform the trust.”
At the teleconference counsel accepted that, having regard to the operation of s 8(2) of the Trustee Act 1925, Alan Michael Reberger remained as trustee beyond 1993 and that the appellant’s argument, whilst not abandoned, may not be as forceful as originally advanced in written submissions.
A finding was made by the Arbitrator that Mr Reberger “was a worker as defined by the 1987 Act” (at Reasons [25]). I am not persuaded that the Arbitrator has erred in so finding. The appellant’s second ground of appeal must be rejected.
It now becomes necessary to consider the appellant’s challenge to the Arbitrator’s finding that Mr Reberger was employed as “manager”. Whilst the state of the meagre evidence is such that a finding of a contract of service as bricklayer was open, it is my view that there was no evidence before the Arbitrator concerning Mr Reberger’s employment as a manager. As was stated in the joint judgement in Kostas v HIA Insurance Services Pty Ltd t/as Home Owners Warranty [2010] HCA 32; 241 CLR 390 (per Hayne, Heydon, Crennan and Kiefel JJ): “[w]hether there was no evidence to support a factual finding is a question of law, not a question of fact” and later, “[a] tribunal that decides a question of fact when there is ‘no evidence’ in support of the finding makes an error of law” (at [91]). I accept the appellant’s submission that the Arbitrator has erred in concluding that Mr Reberger was engaged as manager of the business. It follows that I accept the appellant’s further argument, raised in ground four, that there was no evidence that the duties of a manager included bricklaying. The appellant has established error on the part of the Arbitrator with respect to those findings raised in grounds three and four.
Ground five
The appellant suggests error by reason of the Arbitrator’s failure to “decide whether the appellant was composed of one trustee or two”. It is correctly argued that that question was relevant to the “matters raised in the substantive grounds one, two, three and four.” I have addressed that question and, having regard to the provisions of s 8(2) of the Trustee Act 1925 and the terms of the deed, have concluded that Alan Michael Reberger remained as trustee, together with Mr Reberger as co-trustee, at all relevant times. The Arbitrator has erred in failing to address that question which was of much significance to the resolution of factual issues raised in argument.
The question arises as to whether the errors identified have or have not affected the decision appealed against. The finding, that Mr Reberger was a worker, has been upheld on appeal. That finding is sufficient as a foundation for the determination and orders made in Mr Reberger’s favour. Those orders are not otherwise challenged. In the circumstances, for the reasons I have attempted to summarise above, the appeal should be dismissed.
DECISION
For the reasons given in this decision the Arbitrator’s determination of 2 December 2011 is confirmed.
COSTS
The appellant is to pay Mr Reberger’s costs of the appeal.
Kevin O'Grady
Deputy President
23 March 2012
I, CATHRINE LOREN, CERTIFY THAT THIS IS A TRUE AND ACCURATE RECORD OF THE REASONS FOR DECISION OF KEVIN O'GRADY, DEPUTY PRESIDENT OF THE WORKERS COMPENSATION COMMISSION.
ASSOCIATE
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