Caruso v Ewart - [2012] WADC 181

JURISDICTION : DISTRICT COURT OF WESTERN AUSTRALIA
IN CIVIL

LOCATION: PERTH

CITATION: CARUSO -v- EWART [2012] WADC 181

CORAM: WISBEY DCJ

HEARD: 14 NOVEMBER 2012

DELIVERED : 21 DECEMBER 2012

FILE NO/S: APP 27 of 2012

BETWEEN: SALVATORE CARUSO
Appellant
AND
GODFREY EDWARD EWART
Respondent

ON APPEAL FROM:
Jurisdiction              :  WORKCOVER
Coram  :MR G RUTHERFORD
Citation  :A51

Catchwords:

Workers' compensation - Appeal from decision of Arbitrator - Whether respondent 'worker' or independent contractor

Legislation:

Workers' Compensation and Injury Management Act 1981 s 5, s 247

Result:

Leave to appeal granted and decision of Arbitrator quashed

Representation:

Counsel:

Appellant:     Mr R Lonnie
Respondent:     Mr K S Pratt
Amicus Curiae              :     Mr D Anderson appeared for the Chief Executive Officer of the Department of the Attorney General

Solicitors:

Appellant:     McAuliffe Legal
Respondent:     CLP Legal
Amicus Curiae              :     State Solicitor for Western Australia

Case(s) referred to in judgment(s):

Farmer v Trustees of Cotton [1915] AC 922
Re Monger; Ex parte Dutch (2001) 25 WAR 96
Stevens v Brodribb Sawmilling Co Pty Ltd (1986) 160 CLR 16

WISBEY DCJ: Pursuant to s 247 of the Workers' Compensation and Injury Management Act 1981 the appellant seeks leave to appeal the decision of the WorkCover Arbitrator delivered 28 March 2012 in which he found that the respondent was a worker in the employ of the appellant; was injured in the course of that employment; and is totally incapacitated.
Although the notice of appeal particularises numerous grounds of alleged error, the essential issue upon which this appeal turns is the finding that the respondent was a 'worker'.
Section 247 relevantly provides that a party may with the leave of the District Court appeal to the District Court against an Arbitrator's written decision. The court is not to grant leave unless, in the case of an appeal in which an amount of compensation is at issue:
(i)a question of law is involved and the amount at issue in the appeal is at least $5,000; and at least 20% of the amount awarded in the decision appealed against; or
(ii)a question of law is involved which it is in the public interest to clarify.
In Re Monger; Ex parte Dutch (2001) 25 WAR 96 Malcolm CJ stated [11]:
Where the ultimate fact in issue (the factum probandum) involves a term used in a statute, the question whether the facts found adduced by the evidence and found (facta probanda) establish the ultimate fact is, at least generally, if not always, a question of law: see Hayes v Federal Commissioner of Taxation (1956) 96 CLR 47 at 51 per Fullagar J.
Fullagar J in fact quoted Lord Parker of Waddington in Farmer v Trustees of Cotton [1915] AC 922 where his Lordship said:
The views from time to time expressed in this House have been far from unanimous, but in my humble judgment where all of the material facts are fully found, and the only question is whether the facts are such as to bring the case within the provisions properly construed of some statutory enactment, the question is one of law only.
The question whether the factual material placed before the Arbitrator demanded a finding that the respondent was a worker, is a question of law, and consequently amenable to review by this court.
The Arbitrator's finding that the respondent was totally incapacitated for work is clearly a factual finding and can not be categorised as constituting a question of law. Similarly his finding that the appellant had not been prejudiced by the late notification of the claim.
The definition section of the Act (s 5) relevantly provides that the term 'worker':
(i)does not include a person whose employment is of a casual nature and is not for the purpose of the employer's trade or business;
(ii)means any person who has entered into or works under a contract of service or apprenticeship with an employer;
(iii)includes 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.
The following facts were established in the arbitration:
1.The respondent had been carrying out painting work for the appellant at the Admiral Stirling Inn, Margaret River, a premises owned by the appellant, from 6 May 2009 until 5 February 2010.
2.The respondent's remuneration was $30 per hour gross without tax deduction.
3.The respondent was injured on 18 February 2010 when he fell from a ladder whilst fitting downpipes and storm water guttering to a property at Lot 1, 6 Townview Terrace, Margaret River.
4.The property at Lot 1, 6 Townview Terrace was owned by the respondent's brother Angus Bruce Ewart.
5.The respondent fractured his right calcaneum and sustained a tear of his right shoulder rotator cuff.
6.The respondent had been requested by the appellant to do the work, and would have been paid for it by the appellant.
It is the appellant's position that the respondent was not a 'worker' but was carrying out the work at an agreed hour rate as an independent contractor. The appellant claims he had informed the respondent that he was responsible to personally address his taxation obligations (that is the appellant would be making gross payments without deduction) and the appellant would not be providing workers' compensation cover.
The respondent denies such matters were discussed; although it is the fact that he acknowledged his obligation to make, and assumed responsibility for direct payment of tax. He did not expect any superannuation contributions, sick leave entitlements or holiday pay.
In the course of evidence the respondent stated that the agreement he had with the appellant was 'that I worked on an hourly rate and supplied my labour and hand tools'. When it was put to him that he told the hospital admitting doctor he was a contractor, he stated that he had been medicated and was not clear what he said. His attention was drawn to his amended tax return for the year ended 30 June 2010 in which no income was returned as salary or wages, but $28,831 was returned as the nett business income after a deduction of $6,719 by way of business expenses ($3,750 of the business expenses related to motor vehicle; $103 to home office; $840 to replacement of tools; $872 to telephone expenses; and $910 to purchases). That was a clear representation that the respondent regarded, and held himself out, as an independent contractor.
The respondent absented himself for a period of 17 days during the course of the work he was doing for the appellant, to carry out renovations on the kitchen at his daughter's house.
The respondent rendered invoices from time‑to‑time, and in the first two numbered 20 and 21 dated 6 and 13 May 2009 respectively, identified the services performed as 'supply labour and hand tools, painting Town View property (barn)'. The services were identified as being performed by G Ewart trading as Northampton Engineering (ABN 82073 272 836). Subsequent invoices referred to 'painting and/or supplying labour and hand tools' in respect of several premises being Townview property (barn); Townview property (Inn); Admiral Stirling Inn; Redgate. A number of invoices do not identify where the work was performed. The respondent agreed that he had previously been in business as a sole trader under the style 'Northampton Engineering'.
It was put to the respondent during his evidence that he could work any hours he liked on any day of the week, and his response was 'if I had something else to do I would let Sam know and I would go and do it'.
The respondent agreed that he predominantly worked on the Admiral Stirling Inn. He was not prepared to accept that the work came to an end on 5 February 2010. He claimed that he worked up until the accident on 18 February under instruction from the appellant on a number of properties including, it would appear, the manager's residence which was rented out, and his brother's house, where he was working at the time of the accident. Although he initially stated that he fell off the ladder at the appellant's property, he agreed in cross‑examination that he was in fact fixing downpipes on the rear veranda of his brother's property.
The appellant's evidence was that work on the Admiral Stirling Inn was completed by 5 February when the council issue a final certificate, and thereafter the work that the respondent was performing was to his brother's residence.
When discussing the terms of the engagement the appellant stated that the respondent was willing to work for $30 per hour which was cheaper than a registered painter, but that it was basically labouring work. He stated that the respondent could select his own hours of work so long as he performed the work properly. He seemed to agree that he gave the instructions for the work to be carried out on the brother's property, and that if and when he received an invoice, would have paid it.
The respondent's brother, Angus Bruce Ewart, gave evidence before the Arbitrator confirming the contents of his statement dated 15 November 2011 (AB 490). In that statement he recorded that the respondent arrived in Margaret River around May 2009 when 'he told me that he was broke and was looking for work. He said he was a self‑employed builder and could do a variety of tasks'. Mr Ewart confirmed that he was the registered proprietor of Lot 1, 6 Townview Terrace, Margaret River, being the property where the respondent was working when the accident happened.
In evidence he identified building licence 209365 which had been issued to him as the owner/builder of Lot 1, 6 Townview Terrace, Margaret River. He stated that the licence was obtained in respect of proposed additions to the house. Mr Ewart stated that the appellant took care of the buildings, and that he looked after the other side of the business. The appellant also took care of Mr Ewart's building.
In his WorkCover outline of submissions, the respondent stated that he was working under a contract of service with the appellant; and in the alternative he was a worker within the extended definition in that he had been engaged by the appellant to work for the purpose of the appellant's trade or business, and that the remuneration was in substance for his personal manual labour.
The appellant's position as already stated was that the respondent was not a 'worker' and was not working for the appellant at the time he sustained the injury by accident.
In his reasons for decision the Arbitrator correctly identified the primary issue to be determined in these terms:
The applicant will need to prove he either:
(i)entered into a contract of service with the respondent; or
(ii)is engaged by the respondent to work for the purposes of the respondent's trade or business under a contract with him for service, the remuneration by whatever means being in substance for the applicant's personal manual labour or services;
(iii)but does not include a person whose employment is of a casual nature and is not for the purpose of the employer's trade or business.
The Arbitrator found that the applicant's (respondent's) employment was not at any relevant time of a casual nature.
He noted that the appellant was the proprietor of the Admiral Stirling Inn which he was renovating as an owner/builder. He observed that the appellant's evidence was that he told the respondent he was not an employee but an independent contractor who he was engaging to provide painting and other services at an hourly rate of $30; that the respondent was responsible for attending to his tax obligation; and that the appellant was not providing workers' compensation cover. The respondent denied that there were any such discussions, stating that the appellant employed him as a handyman on an agreed hourly rate of $30, and that he was to invoice the appellant for the work performed.
Whatever the arrangement, it was common ground that the respondent performed mainly painting services for the appellant, providing relevant invoices during the period 6 May 2009 to 12 February 2010, and that there were no deductions for tax.
The Arbitrator stated that it was common ground that the appellant provided the paint and other hardware material; the respondent supplying his labour and tools of trade. The respondent valued these tools at approximately $3,000.
The Arbitrator rejected the respondent's proposition that the representation in his taxation return that he was self‑employed occurred as a result of a misunderstanding between himself and his accountant. Having regard to the fact that the respondent necessarily signed the taxation return, there really was no alternative open.
The Arbitrator found that the majority of the work performed by the respondent was painting. He noted that the appellant denied supervising the respondent, claiming that he simply checked from time‑to‑time to see whether painting had been completed; whilst the respondent claimed that the appellant turned up daily, instructing him in the morning, and reviewing the work done in the afternoon. The Arbitrator considered both parties were exaggerating, and found that the level of supervision was 'somewhere in the middle'. Essentially he concluded that the appellant attended at the Inn on a regular basis to review progress; regularly instructed the respondent on the rooms to be painted; and inspected the quality of the work. That is not particularly surprising, and would be expected of anyone who engaged the services of a painter; particularly an owner/builder.
The Arbitrator also noted that the medical records at the Margaret River Hospital Emergency Department contained the notation '54‑year‑old handy man - working for himself on a ladder installing some plumbing'. He concluded that was an indicator that the respondent regarded himself as self‑employed.
Apart from the fact that the appellant did not make any deductions for tax there was no provision for payment and deduction of statutory superannuation payments, or any expectation of holiday or sick leave entitlement.
At [47] of his reasons the arbitrator addressed the relevant criteria to be taken into account in determining whether there was a contract of service, and apart from his failure to mention the non‑provision of statutory superannuation, and the respondent's work flexibility, appears to have taken into account all relevant matters.
It is of significance, as found by the arbitrator, that on the day of the accident the respondent was working on his brother's property at Lot 1, 6 Townview Terrace. The Arbitrator found as a fact that the work associated with the Admiral Stirling Inn concluded on or about 5 February 2010.
The Arbitrator found that at the time of the accident the respondent, on the instructions of the appellant, was attempting to secure downpipes to his brother's property.
Angus Bruce Ewart gave evidence (which the Arbitrator accepted) that he did not give any instruction to the respondent to do maintenance work on his property as he left such tasks to the appellant.
During the course of the Arbitration the respondent's representative stated 'its not in dispute that he didn't receive a wage and that he didn't issue? (receive) a group certificate. He was responsible for his own taxation'. Notwithstanding, the respondent was adamant that he had never stated to his accountant or anyone else that he was a contractor. Incidentally he claimed as a PAYE employee in the tax years 2008 and 2009, but not in the relevant year.
It is to be observed that the respondent claimed to often work on Saturdays and Sundays, although the hourly rate remained constant.
Apart from painting, the respondent also did tiling.
Although the respondent claimed to have issued one, an invoice was not produced in respect of the work carried out on the day of the accident, as the respondent said he was unable to locate it.
The appellant agreed that he would have directed the respondent as to the work that was required to be done, and would have provided the necessary material. He confirmed that had he received an invoice for the downpipe work, he would have paid it.
It is on those facts that it is necessary to determine the respondent's vocational situation.

Indicia suggesting contract of service:

(i)The remuneration was essentially referrable to the respondent's 'personal manual labour services' although painting requires a certain skill level;
(ii)the appellant directed the respondent as to the various tasks that he was to undertake;
(iii)the appellant provided the paint and other necessary hardware;
(iv)although not specifically addressed in the arbitration, it is a reasonable inference that the respondent was only going to work for the appellant during the period of the performance of the work.

Indicia suggesting self‑employment:

(i)the representation by the respondent in the relevant tax return and at the Margaret River Hospital was that he was self‑employed;
(ii)the respondent was remunerated on a gross hourly fee basis, and the appellant did not make deductions for income tax;
(iii)the appellant did not make statutory superannuation deductions;
(iv)there was no provision in the agreement between the parties for the respondent to receive holiday pay, sick leave entitlement or penalty loading;
(v)the appellant exercised no greater control than would be expected in circumstances where a person engaged the service of a painter;
(vi)The respondent provided hand tools, although not of substantial value;
(vii)The respondent appears to have had flexibility concerning how and when he worked (e.g. time taken off to work on his sister's kitchen).

The relevant law

In Stevens v Brodribb Sawmilling Co Pty Ltd (1986) 160 CLR 16 Wilson and Dawson JJ stated (36):
In many, if not most, cases it is still appropriate to apply the control test in the first instance because it remains the surest guide to whether a person is contracting independently or serving as an employee. That is not now a sufficient or even an appropriate test in its traditional form in all cases because in modern conditions a person may exercise personal skills so as to prevent control over the manner of doing his work and yet nevertheless be a servant: Montreal v Montreal Locomotive Works (75). This has led to the observation that it is the right to control rather than its actual exercise which is the important thing (Zuijs v Wirth Bros Pty Ltd (76)) but in some circumstances it may even be a mistake to treat as decisive a reservation of control over the manner in which work is performed for another. That was made clear in Queensland Stations Pty Ltd v Federal Commissioner of Taxation (77), a case involving a droving contract in which Dixon J observed that the reservation of a right to direct or superintend the performance of the task cannot transform into a contract of service what in essence is an independent contract.
The other indicia of the nature of the relationship have been variously stated and have been added to from time to time. Those suggesting a contract of service rather than a contract for services include the right to have a particular person do the work, the right to suspend or dismiss the person engaged, the right to the exclusive services of the person engaged and the right to dictate the place of work, hours of work and the like. Those which indicate a contract for services include work involving a profession, trade or distinct calling on the part of the person engaged, the provision by him of his own place of work or of his own equipment, the creation by him of goodwill or saleable assets in the course of his work, the payment by him from his remuneration of business expenses of any significant proportion and the payment to him of remuneration without deduction for income tax. None of these leads to any necessary inference, however, and the actual terms and terminology of the contract will always be of considerable importance.
Having said that, we should point out that any attempt to list the relevant matters, however incompletely, may mislead because they can be no more than a guide to the existence of the relationship of master and servant. The ultimate question will always be whether a person is acting as the servant of another or on his own behalf and the answer to that question may be indicated in ways which are not always the same and which do not always have the same significance.

In my view the Arbitrator erred in finding that at the relevant time there was a contract of service between the appellant and the respondent.
It is clear that the respondent regarded himself as a self‑employed contractor. That much is evident from the representation he made to the Deputy Commissioner of Taxation in his 2010 return, which was clearly completed and submitted subsequent to the work accident, and prior to him being advised by others that he may have an entitlement to workers' compensation.
The view held by him as to his vocational situation is supported by other evidence. It appears that he was engaged for a specific task, namely the painting of the Admiral Stirling Inn. In the performance of that work he was obviously subject to the direction of the appellant, but it did not go so far as to constitute the control that would be expected to be exercised by an employer over his employee. It was no more than would be expected to be exercised by a person who engaged a painting contractor. As the respondent put it 'Caruso controlled the work I was to perform and would check that it was to standard'. There was no specific direction given as to the hours the respondent was required to work. He was during the course of the work able to engage in other pursuits, as evidenced by the time taken off to carry out kitchen renovations for his daughter. He was paid a gross hourly amount and did not have entitlement to compulsory employee superannuation, penalty rates, sickness leave or holidays. It would appear that either party was at liberty to terminate the arrangement at any time. The respondent took approximately three weeks off to work on his daughter's kitchen; did not work between 28 May 2009 and 5 June 2009 when he went to Perth to visit family; and did not work between 18 June 2009 and 1 July 2009 when work was delayed because of non‑delivery of gyprock. The respondent provided his own tools of trade (although not of great value) and it is to be observed he spent $840 on replacement of tools during the relevant period.
The ultimate question whether the respondent was acting as the servant of the appellant required a negative answer.
The above finding does not dispose of the appeal as it is still necessary to determine whether the respondent comes within the extended definition of 'worker'. The appellant's trade or business was that of provision of short‑term accommodation, or as it is colloquially referred, 'bed and breakfast'. The work carried out by the respondent on the Admiral Stirling Inn was for the purpose of facilitating accommodation for lodgers. It was a necessary requirement of the appellant in his trade or business.
In the result between 6 May 2009 and 5 February 2010 the respondent was engaged by the appellant to carry out work for the purpose of the appellant's trade or business, his remuneration being in substance for his personal manual labour or services. The position however is that the Arbitrator found on the material before him (and he was clearly entitled so to do) that work on the Admiral Stirling Inn concluded on 5 February 2010. The evidence indicates that thereafter the respondent was offered random jobs, including the work on which he was engaged at the time of the accident. That work was reparation work on his brother's house, and was not adjunct to the appellant's trade or business.
At the time of the accident the respondent was not a worker within the extended definition in s 5(3) of the Act. His employment was at that time, of a casual nature.
I would give leave to appeal; quash the decision delivered 28 March 2012; and dismiss the respondent's application for compensation filed 20 May 2011.