Chief Executive of Department of Agriculture v Foster

[2006] HCATrans 585

[2006] HCATrans 585

IN THE HIGH COURT OF AUSTRALIA

Office of the Registry
  Perth  No P16 of 2006

B e t w e e n -

CHIEF EXECUTIVE OF THE DEPARTMENT OF AGRICULTURE

Applicant

and

BRENDAN FOSTER

Respondent

Application for special leave to appeal

GLEESON CJ
HAYNE J
CRENNAN J

TRANSCRIPT OF PROCEEDINGS

AT PERTH ON THURSDAY, 26 OCTOBER 2006, AT 10.29 AM

Copyright in the High Court of Australia

MR D.R. CLYNE:   May it please the Court, I appear for the applicant.  (instructed by Downings Legal)

MR D.M. BRUNS:   May it please your Honours, I appear for the respondent.  (instructed by Separovic & Associates)

GLEESON CJ:   Yes, Mr Clyne.  We have been down this track quite recently.

MR CLYNE: Yes, I think only a couple of days ago in a matter that I am familiar with. This, however, raises another issue really. This is one that deals with section 175(1) and the use of the phrase “by or under” in terms of the contractor being – and in the issue of a deemed employment situation.

GLEESON CJ:   We have the text of 175(1) in front of us.  Could you just by reference to that text explain to us how you fit the facts of the case into it?

MR CLYNE:   Certainly.  In this case we say that the contractor is the University of Western Australia which was in a joint venture with the Department of Agriculture and some other parties which was known as the CLIMA joint venture, the Co‑operative Research Centre for Legumes in Mediterranean Agriculture.  Also in that was another university and the CSIRO.  So we have that joint venture.  UWA, although was both a member of the joint venture was also the direct employer of Mr Foster.

Mr Foster was injured in the course of doing work for the joint venture, we say, and at the premises – and this was the relevant distinguishing part for the Department as opposed to the other joint venturers – at our premises, so all of the various heads of 175 applied.  If I go to that section:

(1)Where a person … contracts with another person –

the contracting parties here were both the applicant and the University of Western Australia.

GLEESON CJ:   Who is the first person?  I would just like you to read the section, reading the characters, as it were, in this case into it.

MR CLYNE:   Yes:

Where a person –

that, we say, is the applicant –

contracts with another person –

that, we say, is the University of Western Australia, the contractor –

for the execution of any work by or under the [University of Western Australia] and, in the execution of the work, a worker –

Mr Foster –

is employed by the [University], both the [Department] –

the applicant –

and the [University] are, for the purposes of this Act, deemed to be employers of the worker so employed and are jointly and severally liable to pay any compensation which the [University] if he were the sole employer would be liable to pay under this Act.

GLEESON CJ:   Just going back to the third and fourth lines of subsection (1).  Your theory is that as a result of this joint venture arrangement you have a situation where the Department of Agriculture has contracted with the University of Western Australia for “the execution of any work” by the University of Western Australia.

MR CLYNE:   That is correct.  The contract was for this development of, or investigation into, developing better Mediterranean‑style legumes.  That involved, of course, the carting of seeds and the like within a warehouse at our premises.  In the course of carting seeds Mr Foster hurt his back.  That is the factual scenario.

GLEESON CJ:   The decision against you went on the basis, as I understand it, that this joint venture arrangement did not involve the Department of Agriculture contracting with the University of Western Australia for the execution of work by the University of Western Australia.

MR CLYNE:   Yes.  What the court held, in effect, was that it was not a contract for the execution of work; it was a contract for the supply of workers.  That is one of the distinctions that we say is wrong, based on other authorities, and the other of course is that the court introduced this notion for the very first time of a need for control or supervision of the worker by the contractor.  That really is the fundamental error we say has been made in this case but there are those two live issues.

The second is really the significant one in this case because there has never been a case where there has been a need for control or supervision for section 175(1) to apply and if it is left like that it will have very adverse effects on the ongoing impact of section 175 because although we have had common law changes from November last year 175 in its beneficial form, for the benefit of workers receiving workers’ compensation entitlements or an ability to receive them, both from their direct employer and their deemed employer, will be adversely affected if this control and supervision test is left in place.

GLEESON CJ:   But in this case we have yet another example of a body anxious to assert that it is a deemed employer because it wants, by virtue of that decision in Hewitt v Benale to take advantage of what I will call the damage control provisions.

MR CLYNE:   Absolutely, but, as I say, if it is left in place as it is, the long‑term impact will remain that it will adversely affect the beneficial interpretation as well.

HAYNE J:   Why?  Why will it have an adverse effect?

MR CLYNE:   Because for a worker to obtain any benefit they will have to show the circumstances were that there was control or supervision by their own employer.  So a person who is simply lent out to do a job will not fall under the umbrella of 175.  If we look at the examples on some of these other cases, such as Jones v Wesfarmers where an auto‑electrician was sent by his boss out to fix something, unless there was a supervisor there with him there was no control or supervision while he was doing the job on site.  So there would need to be an additional employee sent with him and then the issue is, who supervises the supervisor so the supervisor gets the benefit of 175?  That is why the beneficial effect is significantly reduced by this particular control test that has been imposed by the court on this occasion.

GLEESON CJ:   Did it impose a control test or did it just say on the true construction of the joint venture agreement it does not satisfy the requirements of the section?  It was a decision, was it not, particular to this contract?

MR CLYNE:   With respect, no.  At page 27 of the book, paragraph 18, her Honour Justice Wheeler says:

If I were wrong in the conclusion that the Agreement is not a contract “for the execution of any work”, I would nevertheless be of the view that there is no deemed employment relationship in this case, for the reason that the contract is not for the execution of that work “by or under” UWA.

HAYNE J:   Now, assume we were to give leave, do we get to that point if her Honour is right about the particular construction of the particular agreement?  Have we not to go through that gateway first before you get to this point about “by or under”?

MR CLYNE:   Yes, you do.  I will come back to that in a moment, if I may, but just dealing with the second point, her Honour then says:

It seems to me that the words “by or under” require some degree of control or supervision greater than that implicit in merely providing an employee for a task. If that were not the case, it is difficult to see what the words “by or under” the contractor would add to the further requirement contained in s 175(1) that, in the execution of the work, the worker be employed by the contractor.

We say that her Honour has rolled up that phrase “by or under” and has failed to look at the disjunctive, that simply it is enough that it be “by”, that the work can be done simply by the contactor where the contractor sends a worker to do a task, as was the case in Jones v Wesfarmers.  So there is a control test that has been applied here. 

This case, on that point, is different from the other cases that have hitherto been dealt with under section 175 and whilst her Honour has in some ways distinguished Marsden v Unimin it is relevant to note that that decision was heard at the same time as another one, Price v Resolute, which is also in the book, which was a straight labour hire situation.  The court has not sought to distinguish Prive v Resolute.  It cannot be distinguished on any basis.  The two cannot sit together.

GLEESON CJ:   How does section 175 apply to a case where, for example, the Western Australian Bar Association gives a cocktail party and it arranges for a firm that provides waiters to provide two waiters for the purposes of the cocktail party?  Do the waiters become deemed employees of the Western Australian Bar Association?

MR CLYNE:   Yes, under 175, providing the other aspects apply, that it was on the Bar Association’s premises and – well, no, sorry, it may if it was part of the business of the Western Australia Bar Association.

HAYNE J:   Well, that goes without saying.

MR CLYNE:   That is the other control test that has to apply.  That is the provision that makes it necessary.

GLEESON CJ:   Quite.  So it does not apply to you if you have a dinner party at home and hire a cook and a waiter?

MR CLYNE:   No.  It has to be part of the business for it to apply.  So that is the problem.  It is a clear problem in this particular issue.  Can I then address the other issue which, as Justice Hayne has said, is probably the gateway issue.  Her Honour deals with that in paragraph 11 at page 25.  That is where it starts.  What her Honour says there, halfway through that paragraph, is that:

there is a distinction to be drawn between a contract for the execution of work, which one would generally understand to be the execution of some particular task, even if broadly defined, and one for the temporary provision of workers for the purpose of assisting the principal to complete whatever tasks the principal has set itself.  So far as the Act is concerned, the distinction appears to me to emerge when one compares the extended definition of “employer” in s 5 with the terms of s 175.

She then looks at the definition of “employer”.  She says:

The focus of that definition is on the provision of the services of a worker.  The focus of s 175 is on the contract for the execution of work.  It is, of course, possible to contemplate agreements which are agreements both for the provision of workers and for the execution of work; for example, where there is a contract for particular identified work and there is further an identification of the manner in which particular workers are to be made available to perform that task.  However, the two concepts are distinct and very often an agreement will be able to be characterised as simply one or the other.

Her Honour then goes on to say that in this case this was simply a case for the provision of a worker.  We say that does not matter.  There is no requirement to distinguish 175, the definition of an “employer” or “deemed employers” there, and section 5, the definition of an “employer”.  That really was dealt with by Justice Heenan when he provided the background to the reason why 175 applies in Hewitt v Benale.  He there said – and your Honours have the papers of that case at the back of the book provided.  His Honour starts the review of that in paragraph 106, if your Honour have it.  I am sorry, it is difficult to read it sideways.  His Honour there says:

It has, for a very long time, been a feature of the labour market, particularly the industrial labour market, for workers to be let on hire by their main employer to another employer for special or limited purposes sometimes, but not always, for short periods.

He then goes on to look at vicarious liability, et cetera, in the common law.  Then in 109 his Honour says:

It is against this background that the worker’s compensation legislation was originally framed at a time when the distinction between employee and independent contractor was both sharp and fundamental.  The liability which the Act imposes is the liability of an “employer” to a “worker” – s 18.  However, both those terms have had their traditional meanings enlarged by the special definitions given to them by s 5 of the Act.  So, the statutory definition of employer within the legislation is –

and he there deals with section 5.  At 110 he says:

This definition continues the approach of the common law to the employment of workers who are lent or let on hire by their ordinary employers to another.  As in the common law, the original primary employer continues as the employer liable under the Act.

However, s 175 has the effect of making the person who takes the worker on loan or hire an employer and so liable under the Act for compensation concurrently with the principal employer.  This result is achieved by deeming the person who takes the employee on loan or hire to be an employer “for the purposes of the Act”.  This “deemed employment” is additional to, and not in substitution for or exclusive of, the contractual employment by the original employer –

We say there is nothing in section 175 which in any way says or requires a determination that there is a distinction between a contract for the supply of an employee and a contract for work, which is the distinction that her Honour has made.  That, we say, is the second area where her Honour – I say her Honour because her Honour Justice Wheeler wrote the judgment – has, we say, varied the purpose and intent of this particular section.  I dealt with that in my submissions at paragraphs 3.11 and 3.12 and 3.13.

We say that the proper interpretation is that of Justice Heenan in Hewitt v Benale and it accords with the beneficial purpose of the legislation. There is no need for there to be a distinction between the provision of an employee and a contract for the provision of work as her Honour has made. So we do, we say, pass that gateway because of the error made by the court in that regard. It should also be noted that of course 175 has an identical section, as I understand it, in New South Wales, the section 20 of the Workers Compensation Act 1987 there has exactly the same phrase “for the execution by or under the contractor”. It is section 20. It was formerly section 6(3). So the way in which her Honour has now put this control test

over section 175 is not a matter that would simply be relevant to this State but may be of more broad application.

GLEESON CJ:   Yes.  Apparently there are people everywhere claiming to be deemed employers now so that they can get the benefit of the limitation of employer’s liability.

MR CLYNE:   The Act has been amended without changing 175 but to take away the common law restrictions so as to benefit deemed employers.  That was achieved in section 93B(5) of the 2004 Act with effect from last November.

GLEESON CJ:   Yes, we heard about that earlier in the week. 

MR CLYNE:   That is all I have, thank you.

GLEESON CJ:   Yes, thank you, Mr Clyne.  Yes, Mr Bruns.

MR BRUNS:   Your Honours, the criterion for special leave seems to be that this is a question of general public importance.  I would submit that it is not.  There is no scope really for subcontractors’ employees to be anything other than amply protected under the Act and even in view of this new case, if you like, because it is on unique facts which are unlikely to recur, it does not relate to the classic section 175 scenario, and in the authorities, particularly Moir v Schrader, there are many references to the classic idea of someone in an enterprise subcontracting out some work which is part of that enterprise.

Building sites are often seen as the natural habitat for section 175.  That kind of scenario is simply not affected by the statutory interpretation, the contractual construction exercise that was undertaken by her Honour Justice Wheeler in this case.  There is no problem about people evading their responsibility to pay compensation by contracting out a particular task to subcontractors rather than by direct employees.  That is the mischief the legislature was concerned with.  This is a case of a joint venture.

HAYNE J:   It is a joint venture in which, as is so commonly done, the agreements proceed as if the venture has separate legal personality when it does not and to accommodate joint venture arrangements of the kind recorded at page 6 concerning seconded personnel to 175(1) is not without its difficulty.

MR BRUNS:   No, your Honour, that is right.  There is a great deal of difficulty.  I would suggest that section 175 has three aspects.  The principal has to contract with the contractor for the execution of work.  Now, on a building site it might be the builder and the bricklaying contractor for bricklaying.  That is work.  Here, it is suggested that the joint venture agreement constitutes a contract with the University of Western Australia to execute work.  What work?  That is the first question.  Is it the provision, the seconding of an employee, or is it carting bags of seeds around?

One has to follow that thought through because I would submit that the section has in mind an identity of the concept as one travels through it.  On to the next concept, the work has to be “by or under” the University, in this case, or, in the building case I used, the bricklaying contractor.  No problem in the building context.  Of course the bricklaying will be done “by or under” the bricklaying contractor.  Here, what work are we talking about?  Are we talking about the seconding of the employee?  Yes, that would be done “by or under” the University.  Or are we talking about carting around bags of seeds?  Well, no, there is no suggestion in the papers that that is being done “by or under” the University.  That is being done on premises away from the University.  There is no indication that the University even knows what is happening.  The University does not have any obligation to perform work of that kind.  All it has to do is send an employee along who can sit on his hands, if necessary, and the University will have discharged all of its obligations.

The third idea is that the employee has to be employed by the contractor, the University in this case, in execution of the work.  Well, again, is this the work of seconding, because it would be hard to say that he was employed in the execution of that work.  That work would be done by administrators back at the office, surely.  In the building context, of course there is no difficulty.  The bricklayer will be employed by the contractor in execution of the bricklaying.

So when one undertakes that kind of exercise I would submit it becomes clear that her Honour was right, this template just does not fit this situation.  It was designed for an entirely different situation and it is understandable that the present applicant would want to squeeze it into section 175, but it does not fit.  It is my submission that it is not inconsistent with any of the other cases that have been cited to the Court.  It is different.  It is decided on its own facts.  We were referred to Hewitt v Benale.  There there was a concession.  This issue was conceded that there was a deemed employment.  There was no analysis of that.

The passage your Honours have just been referred to by Justice Heenan was obiter, as her Honour Justice Wheeler correctly noted, I think, at paragraph 17 of her decision.  It had nothing to do with the reason for that case.  Your Honours have also been invited by my learned friend in his submissions at 4.2 to consider inconsistencies with other cases.  Marsden v Unimin, Price v Resolute Resources, Jones v Wesfarmers, Minister for Education v Klein.  Again, in my submission, there is no inconsistency.

Marsden v Unimin was specifically dealt with by her Honour.  It was said that that was a contract for mixed work and services, it was not just the provision of an employee, it was also a provision of certain services such as providing safety equipment, supervising the employee on site.  It is quite different.  My learned friend suggested Price v Resolute Resources is the same.  Well, with respect, no, your Honours.  The description in Price of the work which can be found in the applicant’s book of authorities at tab 3 and it is page 19 of the decision and it is in paragraph 48 in the middle of the quotation.  The characterisation of that contract was that Mr Price was “sent to perform maintenance duties”.  He was not just sent as a spare pair of hands; he was sent to perform maintenance duties.  He was sent to do work.  That is different from what we have here where he is not sent to do anything, he is simply using the definition of “second”, transferred temporarily to another position.  It is a work of the stroke of a pen.  It is not work in any normal sense, and that is what her Honour found.  It is not work.

In Jones v Wesfarmers, which is the next case referred to in paragraph 4.2, subsection (1) was not in issue.  Once again, the deemed employment in that sense that the contract complied, that was conceded.  That was a case on subsection (3), which we do not have to consider today, and subsection (7), which we do not have to consider today.

In Minister for Education v Klein, the last one, as your Honours the Chief Justice and Justice Hayne will be aware, that is very much on subsection (3).  It has nothing to do with subsection (1).  So, in my submission, there is no need for this Court to be involved in clarifying the law.  The law is quite clear.  Moreover, this case is so special that there will never need to be further development of the analysis of this particular contract and how it fits into the section.

GLEESON CJ:   Suppose that Westpac has a regular business lunch every Friday for senior executives and some customers of the bank and they get a caterer to cater for that lunch and the caterer provides a cook and a waiter and somebody to serve the drinks and so forth, how, if at all, does section 175 operate there?  Does Westpac become the deemed employer of the cook and the waiter?

MR BRUNS:   Of course the subsection (3) issue arises, which we can leave to one side, whether it is part of the process of Westpac.

GLEESON CJ:   I have assumed it is part of their trade or business.

MR BRUNS:   They have contracted with the caterer for the execution of work.  The work would be “by or under” the catering contractor and the waiter, or whoever, would presumably be employed by the catering contractor in the execution of that same work.  There would be identity of the work.

GLEESON CJ:   So they would become deemed employees of Westpac?

MR BRUNS:   As I say, assuming the other requirements are met, but, yes, just looking at subsection (1).

GLEESON CJ:   Then but for this later legislation, if they slipped over on some carelessly maintained floor in Westpac’s premises and suffered an injury, their entitlements to damages would be limited?

MR BRUNS:   Yes, your Honour.

GLEESON CJ:   Is your client part of this closed class that we have heard about?

MR BRUNS:   I expect he is.  If the accident had happened after 14 November 2005, there would not be an issue.

GLEESON CJ:   If the accident happened after 14 November 2005, we would not have your opponent’s client here claiming to be a deemed employer.

MR BRUNS:   That is right, your Honour.  That, of course, is another part of our argument of the limited relevance of this case because there are very few members of this closed class left, we would say.  Unless your Honours have any further question, those are my submissions.

GLEESON CJ:   Thank you, Mr Bruns.  Yes, Mr Clyne.

MR CLYNE:   Thank you, your Honour.  Can I deal just with two issues.  The first is this question of whether there is any legal personality in the joint venture.  We do not say there is or was.  We say that this section applies to the various joint venture partners, each and every one of them, and in this case all of the various provisions of 175 apply to us because it was our premises, otherwise it would apply to the others.

So we say that 175 would, had the premises been jointly owned by us and CSIRO, for example, place an onus on both in terms of 175 to pay compensation in the event that the employer could not and also, of course, give the benefit of the restrictive provisions by virtue of the restriction on common law damages. 

The only other issue that I would raise is my friend referred to Price v Resolute as being distinguishable from the present case saying there is no real issue as between the rationale in each of those cases.  Price v Resolute is entirely different and this is why it leaves such an unsatisfactory circumstance at the moment because it is impossible to advise on this issue of whether control and supervision is required. 

Price v Resolute, as appears at page 18, was a case where a maintenance fitter was employed by Drake Overload and sent to the mine site to work at the direction and control of the mine owners, Resolute Resources, to do whatever they told him.  He was a qualified maintenance fitter. They wanted a qualified maintenance fitter.  He went there.  It clearly appears at 18, “Drake hired us to work for Resolute” at their direction and control.

So those two cases cannot sit together.  There is either a need for control and supervision or there is not.  In either event we say the word “by”, work done by the contractor, includes the cases of labour hire because the work done “by” – the phrase used in Price v Resolute is that the work was done by Drake and by Resolute and they can be coterminous, but it is impossible to advise on this issue of control or supervision whilst these various cases remain as they are.

GLEESON CJ:   Thank you.  We will adjourn for a short time to consider the course we will take.

AT 11.03 AM SHORT ADJOURNMENT

UPON RESUMING AT 11.06 AM:

GLEESON CJ: The decision of the Court of Appeal in this case turned on the application of section 175(1) of the Workers’ Compensation and Rehabilitation Act 1981 (WA) to the particular facts and circumstances of a certain joint venture arrangement. The case would not provide a suitable vehicle for the examination of obiter dicta in paragraph 18 of the leading judgment in the Court of Appeal.

The case does not raise an issue suitable to a grant of special leave to appeal and we are not persuaded that the interests of justice require such a grant.  The application is dismissed with costs.

AT 11.08 AM THE MATTER WAS CONCLUDED