CFMEU v Nubrick Pty Ltd
[2009] FMCA 981
•7 October 2009
FEDERAL MAGISTRATES COURT OF AUSTRALIA
| CFMEU v NUBRICK PTY LTD | [2009] FMCA 981 |
| INDUSTRIAL LAW – Alleged engagement of employees as independent contractors – whether person was reckless as to whether contracts were contracts of employment. “Reckless” defined. |
| Workplace Relation Act 1996 (Cth), ss.729, 901 Workplace Relations Regulations2006 (Cth), Chapter 2 Regulation 8.15 Criminal Code Act 1995 (Cth), s.5.4 Workplace Relations Legislation Amendment (Independent Contractors) Bill 2006 (Cth) |
| Massey v Crown Life Insurance [1978] All ER 576 Australian Mutual Provident Society v Chaplin & Anor (1978) 18 ALR 385 Hann v Commonwealth DPP [2004] SASC 86 Banditt v R (2005) 223 ALR 633 Derry v Peek (1889) LR 14 App Cas 337 English and Scottish Mercantile Investment Co Ltd v Brunton [1892] 2 QB 700 R v Caldwell [1982] AC 341 Mead v Allianz Australia [2006] NSWSC 366 |
| Applicant: | CONSTRUCTION, FORESTRY, MINING & ENERGY UNION |
| Respondent: | NUBRICK PTY LTD |
| File Number: | SYG 3233 of 2008 |
| Judgment of: | Turner FM |
| Hearing date: | 18 August 2009 |
| Date of Last Submission: | 18 August 2009 |
| Delivered at: | Melbourne |
| Delivered on: | 7 October 2009 |
REPRESENTATION
| Counsel for the Applicant: | Mr Latham |
| Solicitors for the Applicant: | CFMEU |
| Counsel for the Respondent: | Mr O'Grady |
| Solicitors for the Respondent: | Phillips Fox |
ORDERS
The application filed 8 December 2008 is dismissed.
| FEDERAL MAGISTRATES COURT OF AUSTRALIA AT MELBOURNE |
SYG 3233 of 2008
| CONSTRUCTION, FORESTRY, MINING & ENERGY UNION |
Applicant
And
| NUBRICK PTY LTD |
Respondent
REASONS FOR JUDGMENT
This case is an application for a penalty for alleged contraventions of s.901 of the Workplace Relation Act 1996 (the “Act”). Mr Latham appeared for the applicant and Mr O’Grady for the respondent.
Section 901 is in “Part 22 Sham Arrangements” of the Act. Section 901 provides:
(1)A person contravenes this subsection if:
(a)the person offers to enter into a contract with an individual; and
(b)the person makes a representation to the individual that the contract, if entered into, would be a contract for services under which the individual would perform work for the person as an independent contractor; and
(c)the contract, if entered into, would be a contract of employment under which the person would be the employer of the individual, rather than a contract for services under which the individual would perform work as an independent contractor.
(2)A person does not contravene subsection (1) if the person proves that, at the time the person made the representation concerned, the person did not know that, and was not reckless as to whether, if the contract were entered into, the contract would be a contract of employment rather than a contract for services.
(3)Subsection (1) is a civil remedy provision.”
To have contravened s.901:
a)A person must have offered to enter into a contract with an individual and
b)The person must have made a representation to the individual that the contract, if entered, would be a contract for services… as an independent contractor, and
c)The contract, if entered, would be a contract of employment… rather than a contract for services.
d)There is no contravention if the person proves on the balance of probabilities [s.729], that at the time the person made the representations the person did not know that, and was not reckless as to whether, the contract was a contract of employment rather than a contract for services [s.901(2)].
Mr Noy is the plant manager of Austral Brick Company Pty Ltd, which along with the respondent “Nubrick Pty Ltd” is a subsidiary of Brickworks Limited.
There is no dispute that Mr Noy made the offers on behalf of Nubrick to enter into contracts with Mr Little and Mr Bonnice in April 2008.
There is also no dispute that Mr Noy told both Mr Little and Mr Bonnice that they would need an ABN and that they would need to send invoices for their work.
The first contentious issue is whether the contracts were contracts of employment or for services?
The Terms of the Offers
Both workers were offered work. They were offered a flat rate of $30.00 per hour out of which they would have to pay tax; they were told that they would have to provide an ABN; they were told that they would have to invoice the company for the work done; they were told they would not get annual leave, or paid sick leave; they were told that they would not get superannuation; at least one of them was told that they could delegate their work to someone else.
They had fixed hours of employment and were told when to start and finish. They were engaged to perform continuous work for the company. They were provided with some safety gear. They did not provide their own tools and equipment but used equipment provided by the company. They had no special qualifications and did not provide any skilled labour.
It is not to the point that Mr Noy had it in his mind at the time he made the offers that the employees could delegate their work. It is also not determinative that at the time the parties thought they were entering contracts for services. The last matter however should be given significant weight as the agreement itself can become “the best material from which to gather the true legal relationship between them” per Lord Denning in Massey v Crown Life Insurance [1978] All ER 576 and approved in Australian Mutual Provident Society v Chaplin & Anor (1978) 18 ALR 385 at [50]. Exhibits R2 and R4 show that the workers signed forms headed “Induction Checklist for: Short Term Contractors”.
Based on the decision in Country Metropolitan Agency Contracting Services Pty Ltd v Slater and Workcover/CGU Workers Compensation Insurance (SA) Pty Ltd [2003] 124 IR 293 the Court finds that both Mr Little and Mr Bonnice were offered and accepted contracts of employment in April 2008.
The Court does not find that the contracts were clearly contracts of employment or that they are indicative either way. Mr Noy gave evidence that, based on his understanding, he thought that they were contracts with contractors and not employees. On the balance of probabilities the Court finds that at the time Mr Noy made the representations “he did not know that” either of the contracts were contracts of employment, being the first test for a defence under s.901(2).
The next question is “whether at the time Mr Noy made the representation, he was “reckless as to whether” the contracts “would be contracts of employment?”
The Meaning of the Word “Reckless”
Mr Latham submits that the effect of subregulation 8.15 in Chapter 2 of the Workplace Relations Regulations 2006 is that the Criminal Code of the Commonwealth [Criminal Code Act 1995 (the “Code”)] applies to civil remedy provisions in s.901. Subregulation 8.15 provides in part that the Code “applies to civil remedy provisions in this Part as if these provisions were offences.” Subregulation 8.15 is in “Part 8 Workplace Agreements.” The subregulation therefore applies the Code to civil remedy provisions in Part 8.
Submissions were not put as to how s.901 is covered by Part 8. Part 8 relates to workplace agreements and their content. Section 901 is not covered. Mr Latham concedes that the Code does not apply to a.901 (below). Further, s.729 of the Act provides that:
“A court hearing a proceeding under a civil remedy provision must apply the rules of evidence and procedure for civil matters.”
“Reckless” is defined in s5.4 of the Criminal Code and its meaning was considered in Hann v Commonwealth DPP [2004] SASC 86. It was held that in order to establish “reckless” under the Criminal Code, knowledge of a risk or harm or illegality must be established and that the risk must be substantial and that it must also be shown that the defendant was aware of the substantial risk.
Mr Latham questioned Mr Noy as to whether he was, at the time of the offers, aware of the risk that the workers could be employees and entitled to additional benefits. Mr Noy stated, and the Court accepts, that he was not aware of such risks. It was only during cross examination that he stated that he is now aware that there was a risk that the workers would or could be entitled to employer contributions to superannuation. Mr Noy’s conduct in making the offers or representations was not “reckless” as defined in the Criminal Code.
Mr O’Grady referred to the judgement in Banditt v R (2005) 223 ALR 633 where the High Court considered the concept of “recklessness” in a civil context. The following reasons by Gummow, Hayne and Heydon JJ are obiter dicta. “When “reckless” is used in applying the principles of the tort of negligence the yardstick is objective rather than subjective.” [2]. In the judgement of Lord Herschell in Derry v Peek (1889) LR 14 App Cas 337 at 374 His Honour stated “[O]ne who makes a statement under such circumstances” (recklessly) “can have no belief in the truth of what he states” Banditt at [2] and “One who wilfully shuts his eyes to what would result from further inquiry may be found to know of that result”English and Scottish Mercantile Investment Co Ltd v Brunton [1892] 2 QB 700 at 707-8 per Lord Esher MR. Banditt at [2] “It never crossed my mind” “a jury could not on those words alone properly convict him of recklessness simply because they considered that the risk ought to have crossed his mind… A person cannot in any intelligible meaning of the words, close his mind to a risk unless the first realises there is a risk; and if he realises that there is a risk, that is the end of the matter” per Lord Edmund-Davies in his dissenting speech in R v Caldwell [1982] AC 341 at 358. Banditt at [2]. The majority decision in Caldwell was overruled unanimously in R v G (2004) 1 AC which does not interfere with the above speech of Lord Edmund-Davies.
Mr O’Grady referred to the Supplementary Explanatory Memorandum of the Workplace Relations Legislation Amendment (Independent Contractors) Bill 2006. Amendment No. 2 relates to s.900(2) of the Act [which is identical to s.901(2). It includes a statement that “reckless” will take its common law meaning, as the Commonwealth Criminal Code does not apply to civil remedy provisions in the Act. This is contrary to Regulation 8.15 Chapter 2 of the Workplace Relations Regulations 2006 which provides that unless a contrary intention appears in the Act or those Regulations, Chapter 2 of the Criminal Code (other than section 13.2 and part 2.7) applies to civil remedy provisions in this Part as if those provisions were offences. However for the reasons expressed above, the Code does not apply to this matter.
In his Further Supplementary Submissions, Mr Latham contends that the Supplementary Explanatory Memorandum is incorrect when it states that “the Commonwealth Criminal Code does not apply to the civil remedy provisions in the Workplace Relations Act.” He contends that to be incorrect because the Code applies to a number of aspects of the Workplace Relations Act1996. Mr Latham then concedes (para 3) that the Code does not apply to s.901 of the Workplace Relations Act. He submits that a narrow definition was used in the civil case of Mead v Allianz Australia [2006] NSWSC 366 being
“when the insured could see the risk that harm may be caused from doing the act or omission and proceeded to act or commit the omission, not caring about or being indifferent to averting that risk.”
Even if that test was applied on the evidence of Mr Noy he was not “reckless”.
The Court does not find the actions of Mr Noy to be “(at best) careless” as contended by Mr Latham.
Applying each of the tests proposed by Mr Latham and Mr O’Grady, Mr Noy was not reckless when he made the offers to the workers. After being questioned about Mr Noys understanding of the differences between employers and contractors he agreed that he accepted “now” (emphasis added) that “there is a risk that there may be ramifications if a person is wrongfully categorised.” (Transcript 18 August 2009 Page 57 Line 35). The relevant question for the Court is “whether Mr Noy was aware at the time he engaged the persons as independent contractors, that they were employees?” There is no evidence at all that he was aware at the time that there was such a risk. Mr Noy was not “awareof the probability of the harmful consequences of his conduct but nevertheless pursued it.” R v Phillips [1971] ALR 740.
The Court is satisfied that at the time Mr Noy made representations to Mr Little and Mr Bonice, Mr Noy did not know that, and he was not reckless as to whether, their contracts would be contracts of employment rather than contracts for services. The defence in s.901(2) therefore applies. The respondent did not contravene s.901 in relation to either of the workers.
The application is dismissed.
I certify that the preceding twenty-two (22) paragraphs are a true copy of the reasons for judgment of Turner FM
Associate: Erin Firns
Date: 7 October 2009
3
3
4