Broadsword Builders P/L v Q-Comp
[2010] QMC 18
•12 November 2010
MAGISTRATES COURTS OF QUEENSLAND
CITATION:
Broadsword Builders P/L v Q-COMP [2010] QMC 18
PARTIES:
BROADSWORD BUILDERS PTY LTD
(appellant)
v
Q-COMP
(respondent)
FILE NO/S:
MAG34603/10(3)
DIVISION:
Industrial Magistrates Court
PROCEEDING:
Appeal against decision of Q-COMP
ORIGINATING COURT:
Industrial Magistrates Court at Brisbane
DELIVERED ON:
12 November 2010
DELIVERED AT:
Brisbane
HEARING DATE:
26 July 2010
MAGISTRATE:
Lee G
ORDER:
Q-COMP’s decision dated 8 January 2010 is confirmed. This means the appeal is unsuccessful.
CATCHWORDS:
INDUSTRIAL LAW – WORKERS COMPENSATION – APPEAL AGAINST ADMINISTRATIVE DECISION – Q-COMP – Calculation of premiums – meaning of “worker” – independent contractors – whether satisfy the three elements of “results test” in s 2(a) Part 1 Schedule 2 of the Workers Compensation and Rehabilitation Act 2003 to fall outside definition of deemed worker
Workers Compensation and Rehabilitation Act 2003 (Qld), s 11, s 48, s 50, Schedule 2 Part 1 (s 2)
Workers Compensation and Rehabilitation Regulation 2003 (Qld), r 113
Brett Holt Plumbing Pty Ltd v Q-COMP [2005] QIC 13; 178 QGIG 255 cited
Cachia v Haines (1994) 179 CLR 403; [1994] HCA 14 cited
Con-Stan Industries of Australia Pty Ltd v Norwich Winterthur Insurance (Australia) Ltd (1986) 160 CLR 226 considered
Reliable Couriers Pty Ltd v Q-COMP [2005] 180 QGIG 255 applied
SPE Pty Ltd v Q-COMP and Fuller (C/2010/19) 10 August 2010 applied
Sterling Estates Development Corp Pty Ltd v Malouf [2003] NSWCA 278 considered
COUNSEL:
S Crawford (director) for appellant
P O’Neill for respondent
SOLICITORS:
Appellant appeared on own behalf
Respondent appeared on own behalf
Broadsword Building Pty Ltd (Broadsword), a company in the business of housing construction, appeals pursuant to section 550 of the Workers Compensation and Rehabilitation Act 2003 (“the Act”)[1] from a decision of Q-COMP dated 8 January 2010[2] which confirmed WorkCover’s earlier decision[3] to conclude that three certain entities were workers with the consequence that amounts paid to them as wages are to be taken into account in determining Broadsword’s premium.
[1] In Division 1 (Appeals to Industrial Magistrate or Industrial Commission) of Part 3 (Appeals);
[2] Exhibit 3;
[3] Exhibit 1 – WorkCover’s reasons for decision dated 11 November 2009;
The matter came to light when WorkCover conducted an audit of Broadsword’s policy in October to November 2009 for the 2007/08 years. As a policy holder, Broadsword was obliged to file an annual return for all workers employed (section 50). It was discovered that Broadsword’s return for the 2007/08 year did not include payments made to the three entities concerned.
In confirming WorkCover’s decision, Q-COMP found that entities Owen Conohan, Dave’s Excavator (David van Rooyen) and Ben’s Bobcat (Ben Gilmore) were workers within the meaning of section 11(2) of the Act
This appeal is not an appeal in the strict sense. It is a hearing de novo to be conducted as a full trial where both parties call evidence in support of their cases and witnesses are subject to cross examination: see for example Labaj v. WorkCover Queensland [2003] QIC 155; 174 QGIG 370 (17 September 2003) per Hall P[4]. It is trite to observe that Broadsword as the appellant bears the onus of proof on the balance of probabilities: for examples in this jurisdiction see Labaj v. Q-COMP [2005] QIC 37; 179 QGIG 365 (20 June 2005) and Briffa v. Q-COMP [2005] QIC 55; 180 QGIG 70 (19 August 2005) per Hall P.
[4] While that case dealt with the WorkCover Queensland Act 1996 (now repealed), the comments equally apply to the current Act;
Ms S. Crawford, a director for Broadsword, appeared for Broadsword. Mr P. O’Neill of counsel appeared for Q-COMP. The trial proceeded on 26 July 2010. At the conclusion of the evidence I heard final addresses. During his address I was informed by Mr O’Neill that there was a matter pending in the Queensland Industrial Court in which he appeared on the same issue and that the decision would be handed down by Hall P. in the near future. It was arranged for Mr O’Neill to provide to the court and Ms Crawford a copy of that decision when available together with any further written submissions in respect of that decision only. Ms Crawford was then to provide written submissions in response, again, in respect of that decision only. On 13 August 2010 the court received Mr O’Neill’s further written submissions together with the decision of Hall P. in SPE Pty Ltd v. Q-COMP and Fuller (C/2010/19) delivered on 10 August 2010 (SPE). On 16 August 2010 the court received further written submissions from Ms Crawford in response to Mr O’Neill’s further submissions on a wide range of issues not limited to the applicability of SPE.
Relevant Statutory Provisions
For each worker employed by an employer, the employer must insure and remain insured against injury sustained by the worker (section 48) and the employer must maintain a policy of insurance by filing an annual return for all workers employed by the employer and pay the appropriate premium (section 50).
Central to this case is whether Owen Conohan, Dave’s Excavator (David van Rooyen) and Ben’s Bobcat (Ben Gilmore) (the contractors) fall within the definition of “worker”. The starting point is section 11 of the Act[5] provides:
[5] In Part 4 (Basic concepts) of Chapter 1 (Preliminary);
11 Who is a worker
(1) A worker is a person who works under a contract of service.
(2) Also, schedule 2, part 1 sets out who is a worker in particular
circumstances.
(3) However, schedule 2, part 2 sets out who is not a worker in
particular circumstances.
(4) Only an individual can be a worker for this Act.The critical question argued in this appeal is the meaning of “worker” specified in subsection 11(2), that is, the provisions in Part 1 of Schedule 2:
Schedule 2 Who is a worker in particular
circumstances
Part 1 Persons who are workers
1 ……
2 A person who works for another person under a contract
(regardless of whether the contract is a contract of service) is a
worker unless—(a) the person performing the work—
(i) is paid to achieve a specified result or outcome; and
(ii) has to supply the plant and equipment or tools of
trade needed to perform the work; and
(iii) is, or would be, liable for the cost of rectifying any
defect in the work performed; or
(b) ……
The Issues
It seems clear to me that each of the three contractors are persons who worked under a contract for Broadsword and that by virtue of section 2 Part 1 of Schedule 2, they are deemed workers unless all three criteria in (i), (ii) and (iii) therein are satisfied. I note Ms Crawford submits that all criteria in (i), (ii) and (iii) in section 2(a) Part 1 of Schedule 2 need not be satisfied relying on a statement by Hall P. at paragraph 3 of the judgement in SPE that “It is also common ground that, if either of s 2(a)(i) or (iii) is not satisfied, Mr Fuller is excluded form [sic] the definition of a “worker”[6]. It respectfully seems to me that this is not the case upon a plain reading of that provision and such a view appears inconsistent with the approach taken by Hall P. in Reliable Couriers Pty Ltd v. Q-COMP [2005] 180 QGIG 255 (9 March 2005). Contrary to section 2 in Part 2 of Schedule 2[7] where each paragraph is joined by the words “or”, each of paragraphs (i), (ii), and (iii) in section 2(a) Part 1 of Schedule 2 are joined by the words “and”.
[6] Paragraph 6 supplementary submissions on behalf of Broadsword dated 16 August 2010;
[7] Part 2 (Persons who are not workers) Schedule 2 (Who is a worker in particular circumstances);
It is not disputed that, at all material times, each of those contractors supplied their own plant, equipment and tools of trade to do the work they contracted with Broadsword to perform. Subparagraph (ii) in section 2(a) Part 1 of Schedule 2 is thus satisfied[8]. For Broadsword to succeed in this appeal, it must show that subparagraphs (i) & (iii) are also satisfied so as to exclude Owen Conohan, Dave’s Excavator (David van Rooyen) and Ben’s Bobcat (Ben Gilmore) from being workers as defined.
[8] Paragraph 6 of original submissions for Q-COMP;
At the de novo hearing of this appeal it was clear that subparagraphs (i) & (iii) remained in issue even though Ms Crawford said subparagraph (iii) was not an issue because that was stated to be the case at paragraph 6.12 of WorkCover’s decision dated 11 November 2009 (exhibit 1) and Q-COMP’s decision dated 8 January 2010 at page 9 (exhibit 3)[9]. In both of those decisions, only subparagraph (i) remained in issue. In a de novo hearing such as this where evidence adduced in this court may differ from that available to previous decision makers, in my view it is open for a party to re-litigate an issue conceded by previous decision makers[10].
[9] Paragraphs 2 to 5 of supplementary submissions on behalf of Broadsword dated 16 August 2010;
[10] Paragraphs 6 & 7 submissions for Q-COMP;
Broadsword called the following witnesses in support of its appeal:
· Mr John Banfield (building director of Broadsword Sept 2000 to Sept 2009);
· Mr Ben Gilmore (trading under name of Ben’s Bobcat);
· Ms Lynette Spicer (office administrator for Broadsword).
Q-COMP did not call any witnesses.
Nine exhibits were tendered.
Discussion
Broadsword engages in the business of house construction and development. It builds about 90 houses per year on average. Briefly, through the engagement of earthworks contractors it levels blocks of land according to a site plan so that buildings can be erected. Contractors provide and operate their own plant and equipment for this purpose and are paid at an hourly rate upon invoice. Other activities include cutting driveways, turf preparation and site clean ups at multifarious locations. There are no written contracts. The contractors are engaged verbally over the phone by Mr Banfield. Oral evidence was that no fixed quotes were given. Mr Gilmore explained in evidence, quotes could not be given because it is not known if there is rock under the surface instead of soil. Mr Gilmore said that if he had to give a quote, he would have to provide an inflated quote to allow for any unforeseen circumstance e.g. hard underground rock. I note that that oral evidence conflicts with answers provided in a Workcover questionnaire completed by Ms Lynette Spicer for Broadsword
(exhibit 5). When engaged, the industry hourly rate was understood. They meet on site, handed a site map, and then asked to level the site for construction. No actual result or outcome is specified as such other than to level the block using the site map and by reference to survey pegs.
It seems to me that, overall, this case is similar to SPE although there are some obvious points of similarity and difference identified in submissions for both parties[11]. In SPE the contractor had worked for the employer for many years, was verbally engaged to slash blocks of land for an hourly rate. No quote was given in that case. Reasons for this are not dissimilar from those given by Mr Gilmore in this case in that the extent of the work is not known until the work is performed.
[11] Paragraphs 8 to 9 & 34 to 40 Broadsword’s supplementary submissions dated 16 August 2010; paragraphs 3 & 4 supplementary submissions for Q-COMP dated 13 August 2010;
The three contractors in this case have been undertaking work for a number of years for Broadsword – some more than others. They all conduct their own businesses, provided their own plant and equipment and they charged an hourly rate for the supply of equipment and labour. Mr Banfield gave general evidence as to Broadsword’s operations and the system of engaging the three contractors to undertake various works although he could not recall individual discussions with the three contractors concerned. He is an experienced carpenter of about 50 years and had been in his own building business prior to being employed as Broadsword’s building manager and then building director, a position which he held for about 10 years until he finished in September 2009.
In each case the contractors were verbally engaged by phone. The main purpose of the call was to see if they were available. There was no written contract. No quote or agreement was given prior to commencement of the work nor was a total price agreed upon beforehand. No doubt there were intentions to create legal relations as submitted by Broadsword, but that is not the point. It is the terms of the engagement that are important. Further, there is no discussion beforehand as to who is responsible for rectifying defects. Mr Banfield acknowledged this. He also said that he cannot recall an instance where defects were required to be rectified by the three contractors here. He thought there was an expectation that the contractors would fix up defects although there was no specific mention of this when they were engaged prior to doing the work. Mr Banfield purported to give evidence of an industry practice that these contractors would fix up defects although he could not recall an instance where they needed to. Mr Gilmore said if he dug a trench too deep he would be responsible for the cost of extra concrete to fill it. Each contractor would invoice Broadsword after the work had been completed claiming for the hours actually worked.
Ms Lynette Spicer is, and has been for the last 10 years or so, the administrative and personal assistant for Broadsword. She gave evidence about what she does when she receives an account from the contractors to the effect that she does not pay them until Mr Banfield has approved it after checking to see if the contractors have done the required work. That is, generally, her evidence was more directed to office procedures and payment of invoices rather that engagement of contractors and the terms of that engagement. Ms Spicer thought that Broadsword provided materials for these contractors from time to time. Mr Gilmore gave evidence that Broadsword would supply necessary items like sand for driveways, for example.
Mr Conohan tendered his invoices to Broadsword roughly monthly itemising details of the work performed[12]. He charged for the hours worked only. Mr Van Rooyen tendered invoices each day as the work is done charging on an hourly basis only[13]. It appears that he charged on a daily basis regardless of whether the job had been completed on a particular day and that his invoices indicate ongoing work on the same blocks on following days. Mr Gilmore invoiced irregularly as the work was performed charging an hourly rate for the number of hours worked[14]. On the face of the invoices and Broadsword’s General Ledger for the 2007/08 financial year
(exhibit 6)[15], in all cases it appears that no fixed price was agreed upon for the works.
[12] Exhibit 9 – invoices;
[13] Exhibit 8 – invoices;
[14] Exhibit 7 – invoices;
[15] Provided to WorkCover under cover letter dated 14 October 2009;
Submissions
Citing a passage in the judgement of Hall P. in SPE[16], Broadsword submits that charging an hourly rate is not fatal preventing a finding that the task to be performed by a contractor was “specified”. I respectfully agree with that. However, each case is to be determined on its own facts and Hall P. made it clear later in paragraph [8] of the judgement that, in that case, “The point is, that on the whole of the negotiations and the evidence, one cannot characterise the result or outcome as “specified”. Neither, on the evidence, is any link established between right to payment and completion of the “specified task”. The respondent submits that, on the evidence adduced for Broadsword who bears the onus of proof, the present case is stronger than that in SPE[17]. For reasons developed, my ultimate view is I accept Q-COMP’s submissions.
[16] Paragraph [8] of the judgment;
[17] Paragraph 10 supplementary submissions for Q-COMP dated 13 August 2010;
Broadsword submits that there is nothing in the assertion that the contractors were engaged verbally. When engaged, there was an in intention to create legal relations and the parties were considered bound[18]. While that is so, the point is that it is the terms of that engagement that are critical here. It is this aspect of the case where Broadsword has failed to discharge its onus of proof.
[18] Paragraphs 14 to 16 supplementary submissions for Broadsword dated 16 August 2010;
The next submission for Broadsword is that a term regarding rectification of defects should be implied into the contracts with the contractors[19]. Possible defects identified are where the task was not fully completed or “other damage as a result of the work” is caused. The High Court case of Con-Stan Industries of Australia Pty Ltd v. Norwich Winterthur Insurance (Australia) Ltd (1986) 160 CLR 226 (Con-Stan) was cited which outlined four elements to be satisfied in order for a court to imply a term into a contract. The relevant element here is that there must be evidence of custom or usage that is reasonable and uniform so that everyone in the industry can reasonably take it that it is a part of their contract.
[19] Paragraphs 17 to 24 & 48 supplementary submissions for Broadsword dated 16 August 2010;
In Con Stan, an insurance case, an insurance broker acted as agent for Con-Stan who engaged the brokers to find suitable insurance. A suitable policy with an insurance company was found. Con-Stan then paid premiums to the broker who went into liquidation before passing it on the insurance company. Con-Stan argued that it had discharged its liability to pay premiums when it paid the broker. Due to custom and usage in the insurance industry, it was argued that there was an implied term of their contract with the broker that brokers were responsible for payment of premiums and that payment by the insured to a broker discharged the insured’s obligation to pay premiums to the insurance company. That argument failed. There is a heavy onus on a party seeking to have a term implied into a contract and this is difficult to discharge. The term sought to be implied must be unequivocally established usually by evidence of industry experts.
In making this submission, Broadsword relies on the evidence of Mr Banfield and Mr Gilmore given their “vast experience”. I do not agree. First, it has not been established that Mr Gilmore is an expert in the industry. Further, in any event, his evidence was deficient on this point. Secondly, while it may be said that Mr Banfield has generally worked in the building industry for many years, this does not make him an expert on the question under consideration. In any event, his evidence falls short in unequivocally establishing as industry practice that rectification of defects is the responsibility of the earth contractors. To the contrary, his evidence was equivocal. I find that Broadsword has not discharged its onus of showing that such a term should be implied.
Alternatively, Broadsword submitted that common law implies that work is to be performed in a proper and workmanlike manner and that if it is not performed in that manner then the work is defective requiring rectification: Sterling Estates Development Corp Pty Ltd v. Malouf [2003] NSWCA 278[20]. In my view it does not follow that it is a term of the contract that a contractor is liable to remedy any defects in those circumstances. The effect of “proper and workmanlike manner’ is that the other party may have a right of action against the contractor for a breach of that term.
[20] Paragraphs 25 to 30 supplementary submissions for Broadsword dated 16 August 2010;
I agree with Q-COMP’s submissions as to rectification of defects[21]. After noting hypothetical answers that Mr Fuller might be asked to cut the grass lower, Hall P. in SPE at paragraph [9] of his judgment nevertheless concluded that “I am content to conclude that on the evidence SPE Pty Ltd did not make out a case in satisfaction of s2(a)(iii) of Part 2 of Schedule 2 of the Act”. I come to a similar view on the evidence of Broadsword in this case. I note that Mr Gilmore gave evidence that if he dug a trench too deep, he would have to pay for the cost of extra concrete to fill it. He did not give that evidence in a confident way. Further, that was a hypothetical situation in any event. There was no acceptable evidence that Mr Gilmore actually remedied a defect.
[21] Paragraphs 18 to 24 supplementary submissions for Q-COMP dated 13 August 2010
In considering “is paid to achieve a specified result or outcome”[22], Broadsword submitted that the contractors were not paid until they completed their task to specification. Mr Banfield had to sign off on each invoice. Each job was specified because the contractors had to follow the survey plans and engineering plans when completing their tasks for example by levelling a site. It was submitted that the tasks here were certain and that at all times from the start, the contractors knew the full extent of their task although not the precise time taken to complete those tasks[23]. In short, I do not accept that submission. Further, I note that other tasks were undertaken such as driveways. The evidence is clear that at one level the contractors generally knew what they had to do, for example, to level a block of land by reference to a site map etc. However, the extent of work required to perform that task was unknown. Mr Gilmore said that he might encounter rock which would add significantly to the extent of work required.
[22] Section 2(a)(i) in Part 1 of Schedule 2 of the Act;
[23] Paragraphs 34 to 40 supplementary submissions for Broadsword dated 16 August 2010;
I accept Q-COMP’s submissions that this case is similar to SPE[24]. Mr Fuller in SPE was a contractor who slashed blocks of land. At paragraph [7] in the judgement of Hall P. in SPE, it was noted that the extent of the task to be performed by Mr Fuller was “entirely uncertain”, that it was only during the course of the work did the extent of the task emerge, and the full extent of the task became known when the task was completed. At paragraph [7] Hall P. among other things said:
Only upon completion would the full extent of the task be known. Like Pooh Bear, Mr Fuller would know his task when he completed his task. If “specified” is given that primary meaning attributed to the word by the Macquarie Dictionary, Fifth Edition, viz., “to mention or name specifically or definitely; state in detail” the task to be performed by Mr Fuller was not “specified”.
[24] Paragraphs 11 to 17 supplementary submissions for Q-COMP dated 13 August 2010
I agree with Q-COMP’s submissions that those comments equally apply to this case.
The legislative history for the “results test” is helpfully set out in Q-COMP’s original submissions[25]. Part 1 of Schedule 2 of the Act took effect from 1 July 2003. The Explanatory Notes recognised that one of the effects of the “results test” is to widen the net to include self-employed independent contractors within the definition of “worker”: see also similar sentiments by Hall P. in Brett Holt Plumbing Pty Ltd v. Q-COMP [2005] QIC 13; 178 QGIG 255 (9 March 2005).
[25] Paragraphs 21 to 25 original submissions for Q-COMP tendered during addresses at trial;
In its supplementary submissions dated 16 August 2010[26] Broadsword again agitated the question that if it is concluded that the three contractors are “workers” under section 2 Part 1 of Schedule 2 of the Act, premiums should only be paid in relation to their labour and not in relation to machinery hire. As explained during the hearing of this matter, that is not the decision under review.
[26] At paragraph 52;
Findings
On balance I find that Broadsword has not discharged its onus of establishing that
Q-COMP’s decision was wrongly made. It has not established on balance that the three contractors were paid to achieve a specified result or outcome or that they were liable for the cost of rectifying any defect in work performed.
In view of my findings, as the three contractors do not satisfy all three limbs of section 2(a)(i), (ii) & (iii) in Part 1 of Schedule 2 of the Act, then, by virtue of that section they are taken to be workers for the purposes of the Act.
Broadsword’s appeal is therefore unsuccessful.
Conclusion
Pursuant to the section 558(1)(a) of the Act I confirm the decision of Q-COMP dated 8 January 2010.
I note Broadsword seeks indemnity costs in its supplementary submissions on two grounds presumably on the basis that it succeeds in the appeal[27]. The first ground is that counsel for Q-COMP was aware of the SPE decision prior to the commencement of this appeal. The submission was that Broadsword should have been informed of it so that it could either properly prepare for the hearing or desist with the hearing and pursue other avenues. The second ground is that the only issue before previous decision makers was section 2(a)(i) only and section 2(a)(iii) became an issue in this appeal.
[27] Paragraphs 53 to 56 supplementary submissions for Broadsword dated 16 August 2010;
In my view, both points lack substance. As to the first point, the result in SPE was unknown until after the hearing of this appeal. Therefore, Q-COMP was in no better position as to what the outcome of that case would be. As to the second ground, this is a hearing de novo and Broadsword beared the onus of proof. Broadsword agitated this appeal and it is incumbent on it to prepare its case and seek appropriate advice.
In this jurisdiction the question of costs is governed by Part 8 (Costs) of the Workers Compensation and Rehabilitation Regulations 2003 (Reprint 4 with effect from 1 July 2010) (the regulations). Section 113(1) generally provides that the costs of a proceeding before an Industrial Magistrate are in the discretion of the magistrate. Section 113(2)(a)(i) then provides that if costs are awarded, costs for counsel or solicitors fees are as per schedule 3[28] scale E of the Uniform Civil Procedure Rules 1999 (UCPR)[29]. If the matter is thought to be complex and the magistrate considers the remuneration for such counsel or solicitor is inadequate, then an amount up to 1.5 times that scale can be awarded: section 113(a)(ii). I do not think that applies in this case.
[28] “Scale of costs – Magistrates Courts”;
[29] See select “Acts, SL as in force”; then select “S”; found under Supreme Court of Queensland Act 1991;
The first point to note is that the regulations apply to counsel or solicitor fees and not to anyone else including self represented litigants. Costs are confined to money paid or liabilities incurred for professional legal services. It is only in that sense that the regulations speak of costs. This is consistent with the approach taken by the majority of the High Court in Cachia v. Hanes (1994) 179 CLR 403; [1994] HCA 14.
In any event, Broadsword was not successful in its appeal. On that basis also, in the absence of some extraordinary circumstance, it would not ordinarily be entitled to a costs award even if legally represented. However, Q-COMP succeeded in resisting the appeal and it incurred legal costs. I will grant the parties liberty to apply on
5 business days notice in the event the parties cannot resolve the question of costs.
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