Cabra-Vale Ex-Active Servicemen's Club Ltd v Thompson - [2013] NSWWCCPD 49

WORKERS COMPENSATION COMMISSION
DETERMINATION OF APPEAL AGAINST A DECISION OF THE COMMISSION CONSTITUTED BY AN ARBITRATOR
CITATION:	Cabra-Vale Ex-Active Servicemen’s Club Ltd v Thompson [2013] NSWWCCPD 49
APPELLANT:	Cabra-Vale Ex-Active Servicemen’s Club Ltd
RESPONDENT:	James Thompson
INSURER:	Cambridge Integrated Services Australia Pty Ltd t/as Xchanging
FILE NUMBER:	A1-9647/12
ARBITRATOR:	Ms E Grotte
DATE OF ARBITRATOR’S DECISION:	30 June 2013
DATE OF APPEAL DECISION:	26 September 2013
SUBJECT MATTER OF DECISION:	Worker; pension officer for a Club; formation of a contract; whether contract of employment existed; essential features of a contract of employment; payment of an honorarium; indicia of employment
PRESIDENTIAL MEMBER:	Deputy President Bill Roche
HEARING:	On the papers
REPRESENTATION:	Appellant:	Berry Buddle Wilkins
Respondent:	Paul A Curtis & Co
ORDERS MADE ON APPEAL:	1. The Arbitrator’s determination of 30 June 2013 is revoked and the following order made in its place: “1. Award for the respondent employer. 2. No order as to costs.” 2. Each party is to pay his or its own costs of the appeal.

INTRODUCTION

A worker who has received an injury is entitled to receive compensation from the worker’s employer in accordance with the Workers Compensation Act 1987 (s 9). The term “worker” is defined in s 4 of the Workplace Injury Management and Workers Compensation Act 1998 (the 1998 Act) to mean, so far as is relevant:
“a person who has entered into or works under a contract of service or a training contract with an employer (whether by way or manual labour, clerical work or otherwise, and whether the contract is expressed or implied, and whether the contract is oral or in writing).”
The issue in the present appeal is whether the appellant’s pension officer, who was also one of the appellant’s directors, was a “worker” under the legislation when he fell at the appellant’s premises injuring his right shoulder and back on 25 April 2008.

FACTUAL BACKGROUND

The claimant is James Thompson. He was elected as a director of the Cabra-Vale Ex-Active Servicemen’s Club Ltd (the Club) in 1996 and has been re-elected each year since then. As a director, he received an honorarium of $3,000 per annum, later increased to $3,500.
In 2000, the Club’s board appointed Mr Thompson as its pension officer to act on behalf of war veterans in their dealings with the Department of Veterans’ Affairs (the Department) and to advise members about obtaining information from local authorities and the Department. That appointment was renewed each year and was current at the date of Mr Thompson’s injury.
As the pension officer, Mr Thompson would meet members at an office or room made available by the Club, or visit them at their home. He would interview the members, copy documents, assess their needs, provide advice and complete forms on their behalf. He kept files of the members’ applications, which were stored at the Club.
He received training for the position by completing two week-long courses with the Department. In addition to his honorarium for his activities as a director, he received an honorarium of $2,500 for his activities as the pension officer, which was paid at the end of the financial year concerned.
The Club’s chief executive officer, William O’Brien, gave evidence that the Club did not employ Mr Thompson. He agreed that, as the pension officer, Mr Thompson provided oral advice to members who were ex-servicemen about their eligibility to receive government benefits, but said the pension officer was “autonomous” and that Mr Thompson did not have to report to anyone at the Club.
As pension officer, Mr Thompson did not work any set or regular hours. Mr O’Brien said that Mr Thompson could go for three months, have no enquiries, and then receive three enquiries in a week. His hours depended on when members sought his advice. His only fixed hours related to attending board meetings. He was also active on several of the Club’s committees.
Mr Thompson’s honorariums were paid without the submission of an invoice and without any deduction of tax. Mr O’Brien said that the honorariums were not calculated on the basis of the hours worked by Mr Thompson or the duties he performed. The Club paid no superannuation for or on behalf of Mr Thompson.
Mr O’Brien denied that the Club had any “right of control in regards to the performance of [Mr Thompson] in his role of a pension officer” or that “any form of supervision, direction or instruction was provided to [Mr Thompson]”. Mr Thompson did not have any tools of trade. He used his own car and his travelling expenses were reimbursed by the Club.
Mr O’Brien said that the Club permitted Mr Thompson (and other directors) to use a “communal room” at the Club’s premise to perform his duties as a director and, in Mr Thompson’s case, as the pension officer. Mr Thompson did not wear a uniform while speaking to members about pension issues, but did have a Club uniform, which he wore at official functions.
Mr O’Brien said that Mr Thompson was never “held accountable as to the work he did as a pension officer” and that no one ever reviewed or appraised his work. Mr Thompson never received sick leave, annual leave, long service leave or any other form of leave.

THE CLAIM

Mr Thompson claimed lump sum compensation for permanent impairment caused by his injuries.

THE DISPUTE

The Club’s insurer disputed liability on one ground only, namely, that Mr Thompson was not a worker within the meaning of that term in s 4 of the 1998 Act and therefore had no entitlement to compensation. The basis for this assertion was that Mr Thompson was a senior director of the Club and his position was an honorary one, that is, he was not paid a wage and was therefore a non-working director. The insurer contended that there was no contract of employment between Mr Thompson and the Club and any relationship created was not with the intention of creating a master and servant relationship.

THE DECISION

After hearing brief submissions from the parties’ legal representatives, the Arbitrator delivered a reserved decision on 30 June 2013 in which she confirmed that the only issue was whether Mr Thompson was a “worker” ([14]). She said that the Club appointed Mr Thompson to the position of pension officer. That work was a service provided by the Club for the benefit of its members.
The Arbitrator said that the Club offered Mr Thompson the position and he accepted it. He was paid for the work and the requirements of a contract were satisfied. There was, the Arbitrator said, a clear intention to “make an exchange” ([23]).
Dealing with the issue of whether the Club had control over the way Mr Thompson performed his work as pension officer, the Arbitrator said that the undisputed facts were that “the work Mr Thompson performed as pension officer were performed for the Club in the provision of its service to its members” ([24]). She noted the following matters, at [24]:
(a)     Mr Thompson underwent training to perform the job, because it was a specialised activity;
(b)     the files were stored at the Club;
(c)     Mr Thompson was paid by the Club for the work he performed as pension officer, and
(d)     Mr Thompson was not subject to control as to how he performed his work, but when he performed it, it was either at the Club’s premises or at the home of the member veteran.
Based on these matters the Arbitrator concluded that the indicia of employment were in favour of Mr Thompson being a “worker” for the purposes of the legislation, because he was not just a director of the Club, but was also employed by the Club as its pension officer.
She found (at [26]–[27]) that Mr Thompson’s injuries on 25 April 2008 were received while in the course of his employment and arising out of his employment, and that his employment was a substantial contributing factor to his injuries.
The Commission issued a Certificate of Determination, dated 30 June 2013, in the following terms:
“The Commission determines:
1.    The medical dispute is remitted to the Registrar for referral to an Approved Medical Specialist (AMS) for assessment of whole person impairment in respect of the lumbar spine and right upper extremity resulting from injury on 25 April 2008.
2.    The material to go to the AMS is to include the Application to Resolve a Dispute (the Application) and attachments, the Reply and attachments, and the documents attached to the Applications to Admit Late Documents lodged on 23 October 2012 and 30 October 2012.
3.    The respondent to pay the applicant’s costs as agreed or as assessed.”
The Club has appealed the Arbitrator’s determination.

INTERLOCUTORY

As the Arbitrator’s decision was interlocutory, because it did not finally determine the parties’ rights (Licul v Corney [1976] HCA 6; 50 ALJR 439 at 443-444), but merely decided that the matter could be referred to an AMS, the appellant requires leave to appeal. In view of the issues raised in the appeal, it is necessary for the proper and effective determination of the dispute that the Commission grant leave to appeal and I do so (s 352(3A) of the 1998 Act; DP World Sydney Ltd (formerly known as Container Terminals Australia Pty Ltd) v Kelly [2011] NSWWCCPD 43 at [13]).

ON THE PAPERS

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.

ISSUES IN DISPUTE

The issues in dispute in the appeal are whether the Arbitrator erred in:
(a)     finding Mr Thompson was a “worker” for the purposes of the legislation;
(b)     determining that Mr Thompson was injured on 25 April 2008 while in the course of his employment and arising out of his employment, and
(c)     determining that employment was a substantial contributing factor to the injury.
As the appeal turns on the “worker” issue, and as that was the only issue before the Arbitrator, the second and third grounds of appeal (which I will refer to as the “in the course of and substantial contributing factor issues”) will be dealt with under “other matters”.

SUBMISSIONS

Counsel for the Club, Mr Morgan, submitted that the Arbitrator erred in:
(a)     stating (at [23]) that Mr Thompson was “remunerated for the work, which he undertakes”, because there is no evidence that the work was undertaken with a view to being remunerated. If any payment was to be made, it was subject to approval at the following year’s annual general meeting;
(b)     not having regard to the nature and character of the payment made to Mr Thompson (Riverwood Legion & Community Club Ltd v Morse [2007] NSWWCCPD 88 (Morse));
(c)     not considering whether the provision of service as the pension officer was indicative of an employment relationship with the Club itself, rather than simply a duty or obligation volunteered or offered by Mr Thompson to the members for which he received an honorarium or gratuity in thanks;
(d)     not having regard to the approach advocated by Kirby P (as his Honour then was) in Connelly v Wells [1994] 10 NSWCCR 396 at 414 (Connelly), and
(e)     finding (at [24]) that Mr Thompson was “paid by the Club for the work he performed in this capacity” when the facts established that Mr Thompson was paid an amount of money and there was “no reference point between the duties he performed and the amount of money he received”.
Mr Morgan submitted that there was no application for the role (as pension officer), simply an appointment. The honorarium to be paid to the pension officer was approved at an annual general meeting of the Club’s members. He said the mere payment of money did not itself negate the need for an analysis of all other aspects of the relationship to determine if there was a master-servant relationship that could be properly categorised as one of employment. He referred to aspects of the pension officer’s “obligation” and other matters that he said were against a finding that Mr Thompson was a worker.
Mr Morgan concluded that the indicia of employment point to a volunteer providing a service to members when needed.
Counsel for Mr Thompson, Mr Stockley, submitted that the Arbitrator “paid appropriate reference and consideration to established legal principles and to the indicia of employment to be taken into consideration in any particular case”. These were the matters to which she was directed at first instance and they were properly considered by her. She appears to have accepted the submissions made on behalf of Mr Thompson at the arbitration and, in doing so, she did not fall into error.

DISCUSSION AND FINDINGS

There are four essential features of a contract of employment (The Modern Contract of Employment, Ian Neil SC and David Chin, 2012, Lawbook Co, (Neil and Chin)). Those features are discussed in detail at pages 1–3 in Neil and Chin and may be summarised as follows:
(a)     there can be no employment without a contract (Lister v Romford Ice & Cold Storage Co Ltd [1956] UKHL 6; [1957] AC 555 at 587);
(b)     the contract must involve work done by a person in performance of a contractual obligation to a second person (Abdalla v Viewdaze (2003) 122 IR 215 at [23]). That is because the essence of a contract of service is the supply of the work and skill of the worker (Humberstone v Northern Timber Mills [1949] HCA 49; 79 CLR 389 at 404–405);
(c)     there must be a wage or other remuneration, otherwise there will be no consideration (Ready Mixed Concrete (South East) Ltd v Minister of Pensions and National Insurance [1968] 2 QB 497 at 515), and
(d)     there must be an obligation on one party to provide, and on the other party to undertake, work. The obligation required to constitute a contract of employment is that:
“the putative employer be obliged to pay the putative employee in accordance with the terms of the contract for services reasonably demanded under it, and that the putative employee be obliged to perform such services. That is as much so where the service consists of standing and waiting as where it is active” (Forstaff Pty Ltd v Chief Commissioner of State Revenue (2004) 144 IR 1 at [91]; see also Wilton v Coal & Allied Operations Pty Ltd [2007] FCA 725; 161 FCR 300 at [162]).
These principles are consistent with the decision in Morse where it was stated (at [24]) that the fundamental principles of contract law apply to the formation of a contract of employment just as they do to any other contract. In Morse, however, the authority cited (Cheshire & Fifoot’s Law of Contract, 8^th ed, N C Seddon and M P Ellinghaus, LexisNexis Butterworths, 2002) dealt with the general principles governing the formation of a contract (point (a) at [31] above). The principles summarised from Neil and Chin are more apt because they deal specifically with the formation of a contract of employment. Though Mr Morgan did not refer the Arbitrator to Neil and Chin, he did refer her to Morse and submitted that there was an absence of evidence that established a “contractual relationship” (T6.39).
Applying the above principles to the present matter, the Arbitrator erred in finding that the Club made a contract of employment with Mr Thompson. As Mr Morgan submitted, there is no evidence that Mr Thompson undertook the duties as the pension officer in return for payment. There was no work done by Mr Thompson in performance of a contractual obligation to the Club.
The very essence of a contract of service, namely, the obligation on one party to provide, and on the other party to undertake, work, is missing in the present matter. Mr Thompson had no obligation to perform the duties of the pension officer. His evidence was that he was “appointed” as the pension officer in early 2000. There is no evidence that he accepted that position in return for a promise of remuneration or that he had any obligation to perform activities of a pension officer.
The payment made to him is described in the minutes of the Club’s annual general meeting held on 23 September 2007 as follows:
“That pursuant to the Registered Clubs’ Act:
(a)     The members hereby approve Honoraria to the sum of $16,500.00 in respect of services to the Club for the Board Members for 2006–2007 who hold the following positions:
President  $3,000
Vice President  $2,000
Treasurer  $3,000
Entertainment Director         $3,000
Pension Officer  $2,500
Archivist/Bulletin Editor      $3,000”
It was conceded by Mr Morgan that a similar payment would have been authorised in 2008, the year of the injury, with respect to services provided in 2007-8.
The term “honorarium” is defined in the Shorter Oxford Dictionary, 6^th ed, to mean, “A (voluntary) fee, esp. for professional services nominally rendered without payment”. Its origin is from the Latin “honorarium”: a “gift made on being admitted to a post of honour”. The third meaning of “honorary” is “[o]f an obligation etc: depending on honour, not legally enforceable”.
Thus, consistent with the evidence, the payment of an honorarium to Mr Thompson was a voluntary payment or a gift. It was not a payment made under a contractual obligation. This is consistent with the principles discussed in Neil and Chin and highlights why there is no contract in the present matter. The Club was not obliged to pay Mr Thompson for his activities as the pension officer and Mr Thompson was not obliged to perform those duties, just as he was not obliged to perform the duties of a director (save for his obligations under the Registered Clubs Act 1976), or any of the other activities he performed on the various committees with which he was involved with the Club.
The Arbitrator was therefore wrong to state that Mr Thompson was “remunerated for the work”, in the sense understood in the law of contract, and wrong to state that there was a clear intention to “make an exchange”. There is no evidence of that. The Club paid him an honorarium, voted on at each annual general meeting, something it had no legal obligation to do. Therefore, the honorarium was not consideration from the Club in return for a promise from Mr Thompson to do work. It follows that no contract arose and Mr Thompson’s claim must fail.
If I am wrong in reaching this conclusion, and there was a contract between Mr Thompson and the Club, the question arises as to whether it was a contract of service.
In Stevens v Brodribb Sawmilling Co Pty Ltd [1986] HCA 1; 160 CLR 16, Mason J said that a “prominent factor” in determining the nature of the relationship is the degree of control which is exercised. His Honour said that the importance of control lies not so much in its actual exercise, though that is relevant, but in the right of the employer to exercise it (Zurijs v Wirth Brothers Pty Ltd [1955] HCA 73; 93 CLR 561 at 571). As his Honour added, “[c]ontrol is not now regarded as the only relevant factor. Rather it is the totality of the relationship between the parties which must be considered”.
In the same case, Wilson and Dawson JJ observed that the “modern approach” is to “have regard to a variety of criteria”, though this approach has its limitations because not all the accepted criteria provide a relevant test and none is conclusive. Their Honours acknowledged that the question is one of degree “for which there is no exclusive measure”. Dealing with the control test, their Honours said that “[i]t remains the surest guide to whether a person is contracting independently or serving as an employee”.

Considering the control test, the Arbitrator said that the work Mr Thompson performed as the pension officer was performed for the Club in the provision of its service to its members. This statement did not address the issue of control or the right to control. It is correct that the activities of the pension officer were a service the Club provided to its members. That is not the issue. The question is whether the Club exercised, or retained the right to exercise, control over Mr Thompson in his performance as the pension officer.
Mr Thompson pointed to no evidence that the Club either controlled his activities or had the right to do so. Mr O’Brien said that the office of pension officer was “autonomous” and that Mr Thompson did not report to anyone. He denied that the Club had any right of control (over Mr Thompson) in the performance of his activities as pension officer and said there was no supervision, direction or instruction given to him. This suggests that the Club did not exercise control over Mr Thompson, or reserved the right to do so, and is strongly against a finding that he was a worker.
The Arbitrator said that Mr Thompson underwent training to perform the duties of pension officer, because it was a specialised activity. It is difficult to see how that involved an exercise of control by the Club over Mr Thompson, especially in circumstances where the exact circumstances of the training are not known. The only reasonable inference from the evidence is that Mr Thompson accepted the position with the understanding that it involved some training with the Department.
That the files generated by Mr Thompson’s activities as the pension officer were stored at the Club is of no significance and does not support the Arbitrator’s conclusion. There is no evidence of what, if any, control the Club exercised over the files, or over Mr Thompson’s activities in respect of them.
The Arbitrator conceded (at [24]) that “some of the usual features of a contract of employment” were not present, such as the payment of tax, the payment of superannuation, and the supervision of work, yet concluded that “the indicia are in favour of Mr Thompson being a ‘worker’ for the purposes of the legislation”. Her conclusion did not follow from the evidence and was wrong.
Not one of the usual features of a contract of employment is present in this case. I refer, in particular, in addition to the lack of control, to the following:
(a)     the lack of any fixed or regular hours;
(b)     the lack of any right in the Club to dismiss or suspend Mr Thompson;
(c)     the lack of any regular remuneration that related to or was commensurate with the duties performed. As Mr Morgan submitted, remuneration was a token sum, paid in the financial year after the completion of the activity;
(d)     no uniform was worn while acting as the pension officer;
(e)     the lack of any obligation on Mr Thompson to do the activity;
(f)      the absence of tax deductions or superannuation contributions, and
(g)     the absence of leave entitlements.
While no one matter is determinative, these matters, taken together, and “consider[ing] the whole of the circumstances of the relationship” (Connelly at 414), point strongly to Mr Thompson not being a worker.
Before the Arbitrator, Mr Stockley submitted that by virtue of Mr Thompson’s seniority and status as a director, and his particular expertise in the area, it would be unlikely that one would find any degree of control or supervision. I do not accept that submission. Even the most skilled employee is subject to control and direction in terms of when, where and, to a lesser extent, how, he or she is to perform the required duties, and is subject to performance reviews and general supervision. No such control, or right to control or supervise, was present in this matter.
Mr Stockley submitted, at T4.49:
“So the primary features of this particular activity that we submit support a finding of worker, employment contract, are the payment of the tickets at $500 per year, the fact that the services were provided either at the club or at the veteran’s home, the fact that the appointment of Mr Thompson had been after he had undergone appropriate training by the Department of Veterans’ Affairs. This was a - an area of moderately specialised activity and it was upon that basis we submit you’d find in his favour. Excuse me.
We say that all of those matters distinguish Mr Thompson’s application from that of a person whose only relationship with the club, the Respondent, is that of as a director such as I assume the Respondent will urge upon you was the case in Mrs Morse's claim. They’re my submissions.”
I have been unable to find any reference in the evidence to the “payment of tickets at $500 per year” and the parties have not addressed that matter on appeal. I have assumed that Mr Stockley meant to refer to the payment of the honorarium of $2,500 and I have dealt with that matter above.
None of the other points made by Mr Stockley provides any support for a finding that Mr Thompson was a worker employed by the Club. The provision of advice by Mr Thompson at the Club’s premises was merely a matter of convenience and is of no significance in determining whether he was a worker. Mr Thompson also provided advice at members’ homes.
As noted above, the submission that the Club appointed Mr Thompson after he had undergone training by the Department does not advance Mr Thompson’s position.
The activities of the pension officer may well be “moderately specialised”, as Mr Stockley submitted, and the Arbitrator accepted, but that, on its own, does not indicate that Mr Thompson was a worker employed by the Club and does not diminish the need to consider the whole of the circumstances of the relationship. Having considered those circumstances, I am comfortably satisfied that, even if Mr Thompson had established that a contract existed between himself and the Club, the Arbitrator erred in finding that he was a worker under s 4 of the 1998 Act.
It follows that, none of the matters raised by Mr Stockley at the arbitration, which were not developed or advanced on appeal, provided any basis for the Arbitrator’s conclusion, which was, for the reasons explained above, erroneous.
Another matter, not argued by the parties, and therefore not the basis of my decision, confirms this conclusion. Clause 21 of the Club’s constitution expressly prohibits a Club “employee” from voting at any meeting of the Club or of the Board or from holding “office as a member of the Board”. Though this clause would not prevent the Commission from looking at the reality of the situation, as it is required to do (Hollis v Vabu Pty Ltd [2001] HCA 44; 207 CLR 21), it is another matter that is consistent with the conclusion I have independently reached that Mr Thompson was not a worker.

OTHER MATTERS

Though it is irrelevant to the outcome of the appeal, as it raises an important point of practice and procedure in the Commission, it is necessary that I comment on the “in the course of and substantial contributing factor” issues argued by Mr Morgan at the arbitration and on appeal.
Mr Morgan submitted that the Arbitrator erred in finding that Mr Thompson’s injuries were received in the course of and arising out of his employment, and that that employment was a substantial contributing factor to his injuries. While the Arbitrator dealt with those matters, she should not have done so.
The issue in dispute was expressed in clear and unequivocal terms in the s 74 notice and the Reply: the only issue was whether Mr Thompson was a worker under the legislation. No other issue was identified. In response to Mr Morgan’s submissions at the arbitration on whether the injuries were received in the course of employment, Mr Stockley rightly responded (at T7.50) that that was not one of the matters raised by the Club as being in dispute.
Mr Morgan made no application for leave to dispute “previously unnotified matters”, as he was required to do under s 289A(4) of the 1998 Act if he wished to dispute new matters. It follows that the in the course of and substantial contributing factor matters were not properly before the Commission and were not matters the Arbitrator was called upon to determine.
As the additional matters were highly relevant, and one would have expected them to have been disputed, it is quite extraordinary that they were not raised in the s 74 notice, or the Reply. The shortcomings in the s 74 notice, and the failure to seek leave to dispute the additional matters was surprising, to say the least.

CONCLUSION

The Arbitrator erred in finding that Mr Thompson was a worker employed by the Club. There is no evidence that Mr Thompson undertook the duties of a pension officer in return for payment. The payment made to him was not a payment under an obligation to pay in accordance with the terms of a contract, but was an honorarium, a payment made voluntarily “depending on honour”. Accordingly, there was no contract. In the alternative, for the reasons explained above, if there was a contract between Mr Thompson and the Club, it was not a contract of service.

DECISION

The Arbitrator’s determination of 30 June 2013 is revoked and the following order made in its place:
“1. Award for the respondent employer.
2. No order as to costs.”

COSTS

Each party is to pay his or its own costs of the appeal.

Bill Roche
Deputy President

26 September 2013

I, KATHRYN CAMP, CERTIFY THAT THIS IS A TRUE AND ACCURATE RECORD OF THE REASONS FOR DECISION OF BILL ROCHE, DEPUTY PRESIDENT OF THE WORKERS COMPENSATION COMMISSION.

ASSOCIATE