Buckeridge Nominees Pty Ltd v Foxley
[2022] WADC 118
•20 DECEMBER 2022
JURISDICTION : DISTRICT COURT OF WESTERN AUSTRALIA
IN CIVIL
LOCATION: PERTH
CITATION: BUCKERIDGE NOMINEES PTY LTD -v- FOXLEY [2022] WADC 118
CORAM: STAVRIANOU DCJ
HEARD: 12 DECEMBER 2022
DELIVERED : 20 DECEMBER 2022
FILE NO/S: APP 57 of 2022
BETWEEN: BUCKERIDGE NOMINEES PTY LTD
Appellant
AND
GRAHAM FOXLEY
Respondent
ON APPEAL FROM:
Jurisdiction : WORKERS' COMPENSATON ARBITRATION SERVICE (WA)
Coram: ARBITRATOR FLETCHER
File Number : A113134
Catchwords:
Workers' compensation - Weekly payments of compensation - Employer disputing liability to pay compensation - Employer applied under s 60 of the Workers' Compensation and Injury Management Act 1981 (WA) for order discontinuing payments - 'Genuine dispute' - Turns on own facts
Legislation:
Workers' Compensation and Injury Management Act 1981 (WA), s 5, s 18, s 58, s 61, s 71, s 247
Result:
Leave to appeal granted
Appeal allowed
Orders of arbitrator set aside
Representation:
Counsel:
| Appellant | : | Mr M L Greenland |
| Respondent | : | Mr J N Trigg |
Solicitors:
| Appellant | : | Greenland Legal Pty Ltd |
| Respondent | : | Stephen Browne Lawyers (South Perth) |
Case(s) referred to in decision(s):
Australian Broadcasting Tribunal v Bond (Bond Media Case) [1990] HCA 33; (1990) 170 CLR 321
Australian Institute of Management v Rossi [2004] WASCA 302
BHP Billiton Iron Ore Pty Ltd v Brady [2008] WASCA 250
Edgell Birds-Eye v Costello [1995] TASSC 10
Marshall v Whittaker's Building Supply Co [1963] HCA 26; (1963) 109 CLR 210
Minniti & Son Builders v Luigi De Cinque [2008] WACC C26-2008
Osland v Secretary, The Department of Justice (No 2) [2010] HCA 24; (2010) 241 CLR 320
Pacific Industrial Co v Jakovljevic [2008] WASCA 60
Rekabe v Foxline Logistics [2013] WADC 104
Schilter v South Australian Institute of Technology (1982) 31 SASR 316
State of South Australia v Wall (1980) 24 SASR 189
State of Western Australia v Bond Corporation Holdings Ltd (1991) 28 FCR 68; (1991) 5 WAR 40
Summit Homes v Lucev (1996) 16 WAR 566
Taylor v Star Broken Meats (Unreported, WASCA, Library No 920434, 26 August 1992)
XCO Pty Ltd v Federal Commissioner of Taxation [1971] HCA 37; (1971) 124 CLR 343
STAVRIANOU DCJ:
Introduction
On 13 July 2022, the respondent (Mr Foxley) was injured whilst engaged as a glazier for the appellant (Buckeridge Nominees).
Mr Foxley claimed weekly payments of workers compensation from Buckeridge Nominees. The claim was admitted and payments were made from the date of injury.
Buckeridge Nominees seeks leave to appeal against the decision of a WorkCover WA arbitrator, dismissing its application under s 60 of the Workers' Compensation and Injury Management Act 1981 (WA) (the Act).
Section 60 enables an arbitrator to make an order for discontinuance or reduction of weekly payments where the employer satisfies the arbitrator that there is a genuine dispute as to liability to pay compensation. Buckeridge Nominees contended that there was a genuine dispute as to liability to pay compensation. The s 60 application was based upon the contention that Mr Foxley was a subcontractor and not a worker as defined in the Act and not entitled to compensation.
The arbitrator determined that there was no genuine dispute and that weekly payments should continue.
In my view, for the reasons that follow, leave to appeal should be granted and the appeal allowed.
Background
Buckeridge Nominees carries on business as a supplier of glass products for doors and windows.
On or about 13 March 2007, Mr Foxley and Buckeridge Nominees signed a document entitled subcontractor agreement (the subcontract). Mr Foxley was engaged as a glazier to transport and install Buckeridge Nominees' glass products.
Throughout the course of his employment Mr Foxley utilised his own vehicle which had been modified to carry the glass.
On or about 13 July 2021, Mr Foxley sustained a laceration injury to his wrist whilst unloading a panel of glass from his vehicle at a building site.
On the day of the incident Mr Foxley made a claim for workers' compensation.
On 26 July 2021, the insurer for Buckeridge Nominees admitted liability for Mr Foxley's claim.
By application dated 20 June 2022, Buckeridge Nominees relying upon s 60 of the Act sought an order for discontinuance of Mr Foxley's weekly payments of compensation.
The application was heard and determined by an arbitrator on 8 September 2022.
The legislative framework
By s 18 of the Act if an injury to a worker occurs, the employer shall be liable to pay compensation in accordance with sch 1. Thus, the entitlement to compensation is dependent upon the applicant being a worker and having suffered injury.
Section 5 of the Act includes what is commonly referred to as the extended definition, namely that a worker includes:
(b)any person engaged by another person to work for the purpose of the other person's trade or business under a contract with him for service, the remuneration by whatever means of the person so working being in substance for his personal manual labour or services …
Buckeridge Nominees submits that because the subcontract required Mr Foxley to supply a vehicle, his remuneration was not in substance for his personal manual labour. Accordingly, Mr Foxley was not a worker within the meaning of the extended definition.
Section 58 of the Act enables an arbitrator, upon the application of a worker, to hear and determine the question of liability to make weekly payments.
Section 60 of the Act deals with the discontinuing or reducing of weekly payments of compensation and reads:
Discontinuing or reducing weekly payments, order as to
(1)Where weekly payments are made to a worker pursuant to this Division, the employer may apply at any time for an order of an arbitrator that such payments be discontinued or reduced.
(2)If the employer satisfies an arbitrator that there is a genuine dispute as to liability to pay compensation or as to the proper amount of such weekly payments, and in either case of the grounds of the dispute, the arbitrator may order that the payments be suspended for such time as the arbitrator directs or be discontinued or be reduced to such amount as the arbitrator thinks proper or the arbitrator may dismiss the application.
Section 71 of the Act enables an employer who has paid compensation or expenses to a worker and that person was not lawfully entitled to that payment or to any part of the amount of that payment, to apply for an order of an arbitrator that compensation or expenses so paid be refunded.
The hearing and the arbitrator's reasons for decision
The arbitrator had before him an application by Mr Foxley pursuant to s 58 and applications by Buckeridge Nominees pursuant to s 60 and s 71.
Counsel for Buckeridge Nominees told the arbitrator that the parties had agreed that the s 60 application was to be dealt with initially and thereafter 'the section 58 application, so then the question of whether Mr Foxley is a worker'. Counsel for Buckeridge Nominees further noted that 'the genuine dispute application would start, and then you would hear the section 58 application and then, if necessary go on to hear the section 71 application'. In doing so, counsel for Buckeridge Nominees observed that the s 58 application would deal with whether Mr Foxley was a worker. The hearing proceeded in accordance with the procedure outlined.
Rachel Hartwick, the general manager of Buckeridge Nominees, gave oral evidence. During cross‑examination, Ms Hartwig said that she had not looked at Mr Foxley's income tax returns and had not requested them. She did not know what sum he had claimed in his income tax returns for vehicle expenses. She had not done a calculation as to what Mr Foxley's costs were in proportion to his renumeration. It was her evidence that Buckeridge Nominees had changed its attitude as to liability following receipt of legal advice.
Mr Foxley did not adduce oral evidence.
The arbitrator reserved his decision for a short period and then delivered oral reasons dismissing the s 60 application.
The arbitrator concluded that Buckeridge Nominees had not discharged its onus to establish a genuine dispute ab initio. In reaching this conclusion the arbitrator identified several factors.
First, that the 'ab initio argument has to be raised on matters which had they been known at the time would have impacted on the liability of Buckeridge Nominees to commence weekly payments'.
Secondly, that an employer who omits to avail itself of an opportunity to investigate a claim before accepting liability, or who accepts liability in circumstances where new matters which it subsequently relies upon as the basis for contending that there is a s 60 genuine dispute ab initio, cannot be heard to say subsequently that it genuinely and sincerely disputes the claim. In the arbitrator's view, this would be insincere and disingenuous on the part of an employer.
Thirdly, the arbitrator referred to s 188 of the Act and expressed the view that 'Buckeridge Nominees was aware at the time it accepted liability of the matters upon which it now relies'. Buckeridge Nominees knew that Mr Foxley supplied his vehicle in order to perform duties under the subcontract.
Fourthly, the arbitrator rejected the submission that the time when the assessment is made as to the existence of a genuine dispute was at the date of hearing. The arbitrator also rejected the contention that events at the time liability was accepted can be overtaken by subsequent developments.
Having delivered his reasons for decision on the s 60 application the arbitrator indicated that the s 58 application now 'comes into play'. There then followed an exchange with counsel and ultimately Mr Foxley's s 58 application was not proceeded with. Buckeridge Nominees proceeded with an application pursuant to s 71 of the Act and adduced evidence. That evidence was directed to the primary issue between the parties, namely whether Mr Foxley was a worker as defined in the Act. The arbitrator reserved his decision on the application. Before judgment was delivered by the arbitrator, Buckeridge Nominees determined that there was no jurisdiction in relation to the s 71 application and accordingly that matter did not proceed.
The disposition of the appeal
The grounds of appeal
There are three grounds:
1The arbitrator applied the wrong test for a genuine dispute by assessing whether there was a genuine dispute at the time when liability was accepted. He should have assessed whether there was a genuine dispute at the time he was performing the assessment.
2The arbitrator relied on an irrelevant consideration, namely that the evidence regarding the putative employer's liability had not changed since liability was accepted.
The arbitrator should have determined that section 60 does not require the applicant to prove a change of circumstances since liability was accepted.
3The arbitrator failed to take into account that an applicant under section 60 might change its view of its liability based on legal advice (and in the present case had done so).
Mr Foxley's written outline of submissions substantially restates the content of the Notice of Contention:
Buckeridge Nominees' evidence could not satisfy the Arbitrator that it properly considered the issue.
Buckeridge Nominees based its assertion of genuine dispute on a misconception that the provision of a vehicle was determinative of a contactor not being a worker. That is respectfully not what the authorities say.
The cases … establish that what needs to be analysed, from an economic and accounting point of view, is how much of a worker's remuneration is in return for personal manual labour or services and how much remuneration is a return for 'something else'.
Buckeridge Nominees gave no consideration to the question of how much of his (Mr Foxley's) remuneration was a return for the provision of 'something else', namely a vehicle.
The evidence presented at the arbitration established that Buckeridge Nominees made no attempt to inform itself at all in that regard. For all Buckeridge Nominees knew the respondent's vehicle expenses could have been $1.00 a year.
Buckeridge Nominees did not present any evidence at arbitration to establish that it appreciated the nature of the issue to be determined or that it made any attempt to obtain any information to enable it to form a view in that regard.
Leave to appeal
An arbitrator's decision may be appealed with leave of the court: Section 247(1) of the Act. Leave may not be granted unless a question of law is involved 247(2)(b).
An appeal 'involves' a question of law if the court, tribunal or statutory decision‑maker whose decision is under appeal has made an error of law, or an error of mixed law and fact: BHP Billiton Iron Ore Pty Ltd v Brady [2008] WASCA 250 [3].
A decision will not 'involve' an error of law 'unless the error is material to the decision in the sense that it contributes to it so that, but for the error, the decision would have been, or might have been, different': Australian Broadcasting Tribunal v Bond (Bond Media Case) [1990] HCA 33; (1990) 170 CLR 321, 353.
An appeal 'on a question of law' is not an appeal by way of rehearing; it is judicial review, which challenges the legal correctness of what the lower court has done: Osland v Secretary, The Department of Justice (No 2) [2010] HCA 24; (2010) 241 CLR 320 [18].
Once it has been established that a ground involves a question of law, it is unnecessary to consider whether additional questions of law arise, as the whole decision of the arbitrator, and not merely the question of law identified, is open to review: XCO Pty Ltd v Federal Commissioner of Taxation [1971] HCA 37; (1971) 124 CLR 343 [10], 349.
Where leave to appeal is granted, s 247(5) of the Act provides that the appeal proceeds by way of review of the decision appealed against. If a question of law is involved and leave to appeal has been granted, the District Court must undertake a 'real review' of the application, but on the materials before the arbitrator. It is not a hearing de novo. The appellant must establish some error, either of fact, law or logic before the court may disturb the arbitrator's findings: Pacific Industrial Co v Jakovljevic [2008] WASCA 60 [20] - [21], [26].
Each ground is focused upon the interpretation of the words 'genuine dispute' contained in s 60. I am satisfied that each ground of appeal raises a question of law. At the appeal hearing, there were submissions as to whether the orders made by the arbitrator dismissing the s 60 application were interlocutory. It is unnecessary to consider that submission as I am satisfied that it is in the interests of justice and appropriate to grant leave: State of Western Australia v Bond Corporation Holdings Ltd (1991) 28 FCR 68; (1991) 5 WAR 40 [56] - [57].
Legal principles as to genuine dispute
To ground a s 60 application, an employer is required to show that it genuinely, that is, sincerely and seriously, disputes its liability or the amount of compensation to be paid. The words 'genuine dispute' should be given a plain and uncomplicated meaning. The requirement that a dispute be genuine is a safeguard against a colourable and insincere denial of liability which would frustrate the legislative policy: State of South Australia v Wall (1980) 24 SASR 189, 194.
The sincerity and seriousness of the employer's attitude is a matter to be established on the materials as a whole: Wall (198).
An objective appraisal of the merits dispute is not required, but a dispute may not be found to be genuine if it is frivolous, made without adequate inquiry, or based on a patently feeble legal argument or on unsupported factual assertions. A genuine dispute is one that is based on adequate consideration and enquiry: Wall (194).
The application of s 60 is not confined to the employer's initial liability to pay compensation but can apply to a dispute as to ongoing liability which arises from changing circumstances and where the dispute is not amenable to review under s 61: Taylor v Star Broken Meats (Unreported, WASCA, Library No 920434, 26 August 1992).
The time at which the assessment must be made as to the existence of a genuine dispute is at the time the determination is made. It is not obligatory for an employer to support its genuine dispute by calling independent evidence. An obviously fallacious view of the law would scarcely qualify as a genuine dispute but an arguable case whether of fact or law would meet the statutory criterion: Edgell Birds-Eye v Costello [1995] TASSC 10 [22], [23]; Schilter v South Australian Institute of Technology (1982) 31 SASR 316.
Section 5 of the Act -Principles as to extended definition
It is accepted that Mr Foxley's entitlement to compensation under the Act is dependent upon whether he was, at the material time, a 'worker' within the extended definition. That determination necessarily involves a consideration as to whether his remuneration by whatever means was in substance for personal manual labour or services.
In Marshall v Whittaker's Building Supply Co [1963] HCA 26; (1963) 109 CLR 210, the High Court was required to consider the interpretation of a legislative provision which was not relevantly dissimilar to s 5 of the Act. In an oft cited passage, the majority (Kitto, Taylor, Menzies & Owen JJ) said (214):
The words 'in substance' do not mean, as the Board appears to have thought 'to any substantial extent'. Their function is to enlarge the description which the words immediately following provide, so that the definition may apply not only where the remuneration is a return for manual labour bestowed by a person upon the work in which he is engaged and for nothing else, but also where, although the remuneration is a return for something else also, the something else is comparatively so insignificant that in reality, or as one might say to all intents and purposes, it is a return for manual labour so bestowed …
The majority observed (216) that the definition could cover a tradesman who provides his hand tools to do the manual work required of him by his contract or a man whose work in performing his contract is not wholly manual.
In Summit Homes v Lucev (1996) 16 WAR 566 Ipp J (576) outlined that whether a contractor's remuneration is 'in substance for personal manual labour or services' is determined by the consideration of three questions:
•First, whether the person alleged to be a worker is being remunerated for personal manual labour or services alone. If the answer to this question is no, the next two questions must be considered.
•Second, findings have to be made as to the extent to which the person concerned is being remunerated for personal manual labour or services, and the extent to which he or she is being remunerated for matters which cannot be classified as the provision of personal manual labour or services.
•Third, a judgment must be made as to whether the remuneration, overall, is 'in substance' for the personal manual labour services provided.
Ipp J (576) accepted that annual expenses of a person seeking to be classified as a worker, in some circumstances, may have some relevance to whether his or her remuneration under a particular contract was in substance for personal manual labour or services. His Honour further noted that, in determining whether a particular person is a worker in respect of a particular employer, it is only the particular relationship and circumstances obtaining between them that have to be examined.
In Australian Institute of Management v Rossi [2004] WASCA 302 [60], Le Miere J considered Ipp J's formulation in Summit and said:
The third stage in the test outlined by Ipp J is not an exercise of characterisation. It involves an analysis or dissection, from an economic and accounting point of view of what the person's remuneration was a return for. It may be difficult, if not impossible, to precisely dissect the person's remuneration into remuneration that is a return for manual labour and remuneration that is a return for something else. A broad view may be taken of the evidence. Nevertheless, the decision-maker must determine the extent to which the remuneration is a return for his personal manual labour or services and the extent to which it is a return for bringing something else to the undertaking for which he is being remunerated. It is necessary for the decision‑maker to determine whether or not the remuneration which is a return for something other than manual labour or services is comparatively so insignificant that in reality, or as one might say, to all intents and purposes, the total remuneration is a return for manual labour or services.
Consideration
The grounds of appeal significantly overlap and allege error in the arbitrator's approach to the determination as to the existence of a genuine dispute. Two primary matters are relied upon by Buckeridge Nominees in its submissions as to the existence of a genuine dispute. First, that Mr Foxley was required by the subcontract with Buckeridge Nominees to provide a specifically adapted vehicle. Secondly, that Buckeridge Nominees had received legal advice that there was a basis for a genuine dispute and that was the reason for its change in attitude as to liability.
Before the arbitrator, Mr Foxley relied upon there being a lack of evidence as to a cost analysis having been performed by Buckeridge Nominees. Accordingly, he submitted that there could be no genuine dispute. I will return to this issue when considering ground 3 and the Notice of Contention.
Ground 1
The arbitrator found that the determination as to the existence of a genuine dispute was to be made at the time of the acceptance of liability. Accordingly, in circumstances where Buckeridge Nominees knew all the facts at the time it accepted liability, it could not subsequently dispute liability genuinely on the same facts. Thus, the arbitrator found that Buckeridge Nominees could not, in good faith, change its mind as the facts had not changed.
Mr Foxley accepts that the arbitrator erred as contended and submits that the appropriate time to apply the test is at the time Buckeridge Nominees raised the issue of genuine dispute. Mr Foxley further submitted that in any event it made no difference as to the assessment because Buckeridge Nominees at no stage made proper enquiries. Ms Hartwig's evidence was that the change in attitude as to liability was made upon the basis of advice received.
I do not accept Mr Foxley's submission. The arbitrator was required to consider the position of Buckeridge Nominees at the date of the hearing and determine whether a genuine dispute existed at that date. In not doing so, the arbitrator made an error of law.
Ground 1 is allowed.
Ground 2
Ground 2 is linked to ground 1. The arbitrator considered that Buckeridge Nominees needed to demonstrate changed factual circumstances following an admission of liability.
Mr Foxley agrees that Buckeridge Nominees can 'raise genuine dispute under s.60 of the act notwithstanding that it is not in possession of facts no different to those it had when it previously accepted liability'.
I accept that in proceeding to deal with the matter based on a requirement of changed circumstances the arbitrator made an error of law.
Ground 2 is allowed.
Ground 3 and the Notice of Contention
Ground 3 and the Notice of Contention can be dealt with together.
Ms Hartwick gave evidence that the reason for the denial of liability was because of legal advice received. The arbitrator did not refer to this evidence, either directly or inferentially, in the reasons for decision.
The reason why Buckeridge Nominees changed its attitude was a relevant consideration when determining whether there was a genuine dispute. It needed to be considered and was not. In not doing so, the arbitrator made an error of law. Accordingly, ground 3 is made out.
In his reasons, the arbitrator did not specifically deal with Mr Foxley's contention that, given the absence of the performance of a cost to remuneration calculation by Buckeridge Nominees, it was not open to conclude that there was a genuine dispute.
Mr Foxley submits that, for a dispute to be genuine, Buckeridge Nominees needed to establish that it has made adequate enquiry of the facts and properly considered the matter. Buckeridge Nominees needed to inform itself to some extent as to how much of Mr Foxley's remuneration was a return for the provision of a vehicle. It is submitted that there was no evidence given by Buckeridge Nominees at the arbitration to establish that either it or its legal advisor ever informed itself of Mr Foxley's expenses. Therefore, it could not be the case that Buckeridge Nominees had formed a sincere and properly considered view.
To demonstrate that there is a genuine dispute, an employer is not required to establish that it would necessarily succeed on any substantive application. Relevantly, in this case, Buckeridge Nominees did not have to prove that Mr Foxley did not come within the definition of worker in s 5 of the Act. There was evidence that Mr Foxley, like other engaged sub‑contractors, would not have been engaged if he could not provide a vehicle with which to transport glass. The vehicle required special modification by way of an A‑frame rack to carry the glass products. It was put to Ms Hartwig in cross‑examination that she formed the view there was a genuine dispute because a vehicle was provided by Mr Foxley. It was her evidence that what Mr Foxley provided was a specialised vehicle. Mr Foxley met the cost of purchasing and equipping the vehicle as well as the usual expenses of insuring, maintaining, and running it. He was free to claim an income tax deduction for those expenses.
Buckeridge Nominees relies upon the provision by Mr Foxley of a capital item, the vehicle. It is submitted by Buckeridge Nominees that this is not a case that would readily permit a calculation of the cost to remuneration ratio. It was not a case where the income tax returns would show expenses other than depreciation, fuel, and insurance.
In each of Minniti & Son Builders v Luigi De Cinque [2008] WACC C26-2008 and Rekabe v Foxline Logistics [2013] WADC 104, there are observations that evidence as to a cost to remuneration calculation is relevant to a determination as to whether a person falls within the s 5 extended definition. As noted by Le Miere J in Rossi it may be difficult, if not impossible, to precisely dissect a person's remuneration into a return for manual labour and a return for something else, and a broad view may be taken of the evidence (see also Rekabe at [66]).
In my opinion, the absence of enquiry as to the cost to remuneration ratio is not determinative of itself of the issue as to whether there was a genuine dispute.
Ground 3 is allowed.
Further conduct
The arbitrator has erred as outlined in these reasons.
The matter will need to be remitted and re‑heard in accordance with these reasons.
Conclusion
There should be leave to appeal.
The appeal should be allowed.
The decision of the arbitrator should be quashed.
I certify that the preceding paragraph(s) comprise the reasons for decision of the District Court of Western Australia.
FE
Associate
20 DECEMBER 2022
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