Cook v Miley
[2007] TASSC 70
•3 September 2007
[2007] TASSC 70
CITATION: Cook v Miley [2007] TASSC 70
PARTIES: COOK, James Allen
v
MILEY, Alan John,
(HAZELL, Wesley
(HAZELL, Geoffrey Revington and
(HAZELL, Robert Georgetrading as HAZELL BROS (REGISTRATION NO 01284B)
HAZELL, Robert George
TITLE OF COURT: SUPREME COURT OF TASMANIA
JURISDICTION: ORIGINAL
FILE NO/S: 128/2004
DELIVERED ON: 3 September 2007
DELIVERED AT: Launceston
HEARING DATE: 20 June 2007
JUDGMENT OF: Crawford J
CATCHWORDS:
Workers' Compensation – Liability to pay compensation – Liability of principal for employee of contractor – Other matters – Principal contracted to train apprentice of contractor – Contract silent as to performance of work undertaken by principal – Whether express terms of contract determinative.
Workers Rehabilitation and Compensation Act 1988 (Tas), s29.
Aust Dig Workers Compensation [229]
Workers' Compensation – Alternative rights against employer and/or third parties and consequences thereof – Actions for damages against employer – Statutory constraint on actions for damages – Generally – Whether constraint on action against employer extends to action against employee for whom employer vicariously liable.
Workers Rehabilitation and Compensation Act 1988 (Tas), ss132, 138AA and 138AB.
Aust Dig Workers Compensation [237]
REPRESENTATION:
Counsel:
Plaintiff: K E Read
First and Second Defendants: B R McTaggart
Solicitors:
Plaintiff: Murdoch Clarke
First and Second Defendants: Ogilvie Jennings
Judgment Number: [2007] TASSC 70
Number of paragraphs: 32
Serial No 70/2007
File No 128/2004
JAMES ALLEN COOK v ALAN JOHN MILEY; WESLEY HAZELL, GEOFFREY REVINGTON HAZELL and ROBERT GEORGE HAZELL trading as HAZELL BROS (REGISTRATION NO 01284B); and ROBERT GEORGE HAZELL
REASONS FOR JUDGMENT CRAWFORD J
3 September 2007
In this action commenced on 16 March 2004, the plaintiff sued the defendants for damages for personal injuries suffered when working as an apprentice boilermaker/welder on 11 March 2003. By order of the Master on 18 December 2006 a number of questions have been tried before any others.
The plaintiff was employed by Work & Training Ltd, which was a labour hire business that specialised, not only in employment services, but also training. Its Group Employment Division placed new apprentices and trainees into the workforce in areas offering training and employment opportunities. In the case of an apprentice, he or she remained employed by and apprenticed to Work & Training Ltd, but another business paid Work & Training Ltd for the services of the apprentice and undertook to train the apprentice. Later, I will examine in some detail the terms of the relevant contract between Work & Training Ltd and the second defendant, Hazell Bros.
On 11 March 2003, the plaintiff was working at 8b Lampton Avenue, Derwent Park, which was a workplace operated by Hazell Bros and a "workplace" for the purposes of the Workplace Health and Safety Act 1995. Hazell Bros was responsible for the management and control of the premises. The plaintiff was assisting Mr Miley, the first defendant, to move a steel beam from one part of the premises to another. Mr Miley was an employee of Hazell Bros and was acting in the course of that employment. The work the two men were doing was part of the work undertaken by Hazell Bros. The beam was about 18 metres long, weighed approximately 2.2 tonnes and was being moved with a crane being operated by Mr Miley. While Mr Miley was doing so, the beam swung and struck the plaintiff, as a consequence of which he suffered a serious injury to his spine.
The plaintiff claimed from Work & Training Ltd compensation under the Workers Rehabilitation and Compensation Act 1988 ("the Act"). Work & Training Ltd accepted the claim and made payments of compensation to the plaintiff. It is an agreed fact that the degree of impairment of the plaintiff as a result of his injury is, for the purposes of the Act, less than 30 percent of the whole person, and that the plaintiff has not lodged with the Workers Rehabilitation and Compensation Tribunal an election to claim damages pursuant to the Act, s138AB(1).
By this action, the plaintiff sued Mr Miley for damages, claiming that Mr Miley caused his injury by negligence (inter alia) in the way in which he operated the crane. The plaintiff sued Hazell Bros for damages, claiming that it was vicariously liable for the action of its employee, Mr Miley, and that, in addition, it was negligent and committed breaches of statutory duty. The plaintiff sued the third defendant, Robert George Hazell, for damages for breach of statutory duty, for example by breaching the Workplace Health and Safety Act, s11(1), by failing to ensure that so far as was reasonably practicable, a safe working environment and a safe system of work were provided. Mr Hazell was the responsible officer for the premises under s10 of that Act. The plaintiff did not sue his employer, Work & Training Ltd, for damages.
The questions being tried
The Master ordered that the following questions be tried before any other:
(a) Has Hazell Bros contracted with Work & Training Ltd?
(b)If "yes" to (a), did Hazell Bros contract in the course of, or for the purposes of, their trade or business?
(c)If "yes" to (a) and (b), did Hazell Bros contract with Work & Training Ltd for the execution by or under Work & Training Ltd of the whole or any part of any work undertaken by Hazell Bros?
(d)If "yes" to (a), (b) and (c), was the plaintiff employed in the execution of the work at the time he suffered the injury?
(e)By reason of the Act, ss29, 132, 138AA and 138AB, is the plaintiff precluded from obtaining an award of damages from the first and second defendants?
For the purpose of answering those questions the parties agreed on the facts. It is the plaintiff's case that the questions posed should be answered:
(a) Yes.
(b) Yes.
(c) No.
(d) Not applicable.
(e) No.
The third defendant is not involved in the issues. It is the case for the first and second defendants that the questions should be answered:
(a) Yes.
(b) Yes.
(c) Yes.
(d) Yes.
(e) Yes.
The legislative provisions
The parties agree that the Court is concerned with the provisions of the Act as at the date of the accident, 11 March 2003, and that it should ignore amendments made to the Act in 2004. The relevant provisions of the Act were the following:
"PART I – Preliminary
...
3 Interpretation
(1) In this Act, unless the contrary intention appears –
...
"employer" means the person with whom a worker has entered into a contract of service or training agreement and may include –
(a)the Crown; and
(b)the employer of any person or class of persons taken to be a worker for the purposes of this Act; and
(c)the legal personal representative of a deceased employer;
...
"training agreement" has the same meaning as it has in the Vocational Education and Training Act 1994;
...
"worker" means –
(a)any person who has entered into, or works under, a contract of service or training agreement with an employer, whether by way of manual labour, clerical work or otherwise, and whether the contract is express or implied, or is oral or in writing; and
(b)any person or class of persons taken to be a worker for the purposes of this Act –
and when used in relation to a person who has been injured and is dead, includes the legal personal representatives or dependants of that person or other person to whom or for whose benefit compensation is payable;
...
PART III – ENTITLEMENT TO COMPENSATION
...
29 Liability of principal in case of workers employed by contractors
(1) Where a person (in this section referred to as "the principal") in the course of, or for the purposes of, his trade or business contracts with any other person (in this section referred to as "the contractor") for the execution by or under the contractor of the whole or any part of any work undertaken by the principal, the principal is liable to pay to a worker employed in the execution of the work any compensation under this Act that he would have been liable to pay if that worker had been immediately employed by him.
(2) Where compensation is claimed from, or proceedings are taken against, the principal, then, in the application of this Act, a reference to the principal shall be substituted for a reference to the employer, and the amount of compensation shall be calculated with reference to the earnings of the worker under the employer by whom he is immediately employed.
(3) In the construction of the provisions of this section, the expression "the principal" includes a contractor who enters into a sub-contract with any other person for the whole or any part of the work undertaken by him, and the expression "the contractor" includes a person who takes such a sub-contract.
(4) Where the principal is liable to pay compensation under this section, he is entitled to be indemnified by any person, other than the Nominal Insurer, who would have been liable to pay compensation to the worker independently of this section, and the right to that indemnity is available against every contractor standing between the principal and the worker.
(5) Nothing in this section shall be construed as preventing a worker recovering compensation under this Act from the contractor instead of the principal.
(6) This section does not apply in any case where the injury occurs elsewhere than on, in, or about the place on which the principal has undertaken to execute the work or that is otherwise under his control or management.
...
PART X – CONCURRENT RIGHTS TO COMPENSATION AND DAMAGES
Division 1 – Rights to compensation and damages
132 Interpretation of Part X
In this Part, unless the contrary intention appears –
"compensation", used in relation to an injury, means any compensation or any such expenses as are referred to in section 75 payable in respect of that injury under this Act;
"damages" means damages recoverable (whether by virtue of an enactment or otherwise) in respect of any civil liability in the employer, however arising;
"employer", used in relation to an injury suffered by a worker, includes any person who, in respect of that injury, is liable, under section 29, to pay compensation or to indemnify any other person for any compensation paid by that other person.
...
Division 2 - Restrictions on awards of damages
138AA Application of Division
(1)This Division applies to the awarding of damages against an employer independently of this Act in respect of an injury suffered by a worker if –
(a)the injury was caused by the negligence or other tort of, or a breach of contract by, the worker's employer; and
(b)compensation has been paid or is payable in respect of the injury under this Act or would have been paid or be payable but for section 25(2).
(2)This Division applies even if the damages resulting from the negligence or other tort of the worker's employer are sought to be recovered in an action for breach of contract or other action.
(3)A reference in this section to the worker's employer includes a reference to a person for whose acts the employer is vicariously liable.
138AB Election to claim damages
(1)Before commencing proceedings in court for an award of damages, a worker who intends to seek damages against his or her employer must lodge with the Tribunal an election to claim damages.
(2)A worker is not to make an election unless the degree of his or her permanent impairment is agreed by the worker and the employer, or determined by the Tribunal, to be a percentage of the whole person of not less than 30%.
(3)An assessment of the degree of the worker's impairment is to be carried out in accordance with section 72 or 73.
(4)An election is to be in a form approved by the Tribunal.
(5)An election is to be lodged within 2 years after the date on which weekly payments first became payable under this Act.
(6)The Tribunal may extend the period within which an election is to be made if –
(a)there is a dispute as to the level of the worker's impairment; or
(b)the injury is not stable and stationary.
(7)If there is a dispute as to the degree of impairment, the worker may apply to the Tribunal for a determination of the degree of impairment.
...
(9)If the Tribunal determines the degree of impairment to be not less than 30% of the whole person, the worker is to lodge his or her election within 21 days after the determination.
(10)The Tribunal may refer the question of the degree of impairment to a medical panel in accordance with Part V.
..."
Sections 132, 138AA and 138AB were considered in Skilled Engineering Ltd v Glaxo Wellcome Australia Pty Ltd [2005] TASSC 39, a case arising out of circumstances where a labour hire company, Skilled, supplied to a principal, Glaxo, a worker who remained employed by Skilled, and the worker was injured. Under s29 both the employer and the principal were liable to pay compensation under the Act to the worker. At [24] Blow J held that because s132 extended the meaning of the word "employer" to include a principal to whom s29 applied, the protection of s138AB extended to the s29 principal as well as to the actual employer of the worker. That proposition was not challenged on appeal in Skilled Engineering Ltd v Glaxo Wellcome Australia Pty Ltd (2005) 15 Tas R 88, but it obviously had the approval of the Full Court and it was not challenged on the hearing of the present appeal.
Was Hazell Bros a principal under s29?
The plaintiff contends that Hazell Bros comes within the meaning of "principal" in s29(1), because in the course of and for the purposes of its business it contracted with Work & Training Ltd for the execution by or under Work & Training Ltd of part of the work undertaken by Hazell Bros. It also contends that the plaintiff was a worker employed in the execution of that work when he was injured. On the other hand, it is contended by Hazell Bros that it does not come within the meaning of "principal" in s29(1), because the contract it entered into with Work & Training Ltd required Hazell Bros to provide a work place for the training of the plaintiff and not for Work & Training Ltd to perform the whole or any part of the work undertaken by Hazell Bros.
The contract is in writing. It refers to the plaintiff as "the New Apprentice". It provides in cl 1.1 that "the New Apprentice will commence on [24 February 2003] and will continue for the period set out [9 months] unless terminated under clause 7 of this agreement" and that "the placement is based on the number of hours per week stated [38 per week]". By cl 2, "the New Apprentice is contracted to [Work & Training Ltd]. The New Apprentice will remain an employee of [Work & Training Ltd] at all times and nothing contained in this agreement will be considered so as to constitute a transfer of employment or an assignment of the contract of training to [Hazell Bros]." By cl 3.2, Hazell Bros is to be charged $19.90 per hour for every hour the plaintiff works under the direct control of Hazell Bros and for "non-gazetted holidays, ie, bank holidays", but not when absent on sick leave, annual leave and gazetted public holidays. The plaintiff is to be employed by Work & Training Ltd under the terms and conditions of the Metal and Engineering Industry Award.
Concerning the obligations of Work & Training Ltd, cls 4.1 and 4.2 require it to pay the plaintiff all money due to him under the Award in accordance with time sheets, which, under cl 3.5, are to be completed and signed by the plaintiff and countersigned by Hazell Bros. By cl 4.2, Work & Training Ltd is to be responsible for the payment of all ancillary costs, such as group tax, superannuation, workers compensation insurance, leave loading, sick leave and annual leave.
Concerning the responsibilities of Hazell Bros, cls 5.1 and 5.2 require it to take out and keep a certain level of public risk insurance indemnifying Work & Training Ltd for claims in respect of bodily injury or damage to property arising solely out of the conduct of the business of Hazell Bros, to observe certain health and safety requirements and to provide a safe and supervised work environment. By cl 5.3, Hazell Bros acknowledges that Work & Training Ltd has certain duties and obligations under the Vocational Education and Training Regulations 1995 and agrees "(a) to ensure that the New Apprentice receives work place instruction according to the requirements of the scheme of training and to provide the appropriate facilities for quality work place instruction", and "(b) when and where necessary to release the New Apprentice for training as required by the Tasmanian State Training Authority (TASTA), and give every encouragement to the New Apprentice to attain the required standard of training."
In essence, the express terms of the contract require Hazell Bros to provide a workplace for the training of the plaintiff, to ensure that he receives workplace instruction in accordance with the appropriate scheme for his training, and to pay Work & Training Ltd $19.90 for every hour the plaintiff works under the direct control of Hazell Bros. There is no express term that the plaintiff will perform work for Hazell Bros or that Work & Training Ltd will ensure that he does so, and it is particularly because the contract makes no provision for either of those matters that Hazell Bros argues that it is not a "principal" under s29(1). It maintains that it did not contract with Work & Training Ltd for the execution by or under Work & Training Ltd of any part of any work undertaken by Hazell Bros. Nevertheless, Hazell Bros admits, by way of an agreed fact, that it entered into the agreement with Work & Training Ltd for the purpose of obtaining labour on a labour hire basis to perform part of the work undertaken by Hazell Bros. Counsel for Hazell Bros conceded that if the contract had been the usual contract for the hire of labour to Hazell Bros, s29 would apply. Its argument is based on the fact that the written contract between the parties provided only for the training of the plaintiff and not for the execution by him, as an employee of Work & Training Ltd, of work undertaken by Hazell Bros.
The origins of s29(1) lie in the Workmen's Compensation Act 1906 (UK), s4, and the later and similar Workmen's Compensation Act 1925 (UK), s6(1). The provision was adopted in a number of Australian jurisdictions. It has been considered in a great number of cases, but they mainly concerned the question whether the work being performed by the worker was part of "work undertaken by the principal", as that expression was used in the legislation. Like counsel, I have been unable to find a reported case that considered issues raised by the legislation from the aspect of the terms of the contract between the principal and the contractor.
A question that arises is whether the words "contracts ... for the execution ... of ... work" refer only to the terms of the contract or whether instead they refer to the purpose of the principal for entering into the contract and the state of affairs that results from the making of the contract. I think that the latter is the case and that the adoption of such an interpretation applies the purpose of the legislation. It has long been said that the primary object of the section is to prevent an employer from escaping liability for compensation by contracting with someone else to provide labour or to execute work, and to give a worker who is employed by a contractor, a double security for his compensation, which, but for the section, he might lose through the poverty of his direct employer. Willis's Workmen's Compensation (29th ed 1934) at 167. In Reardon v Scolyer [1984] Tas R 69 at 75, Cox J referred to the statement to that effect in the 31st ed of Willis at 191, and added:
"Another object it was said by Lord Brampton in Cooper & Crane v Wright [1902] AC 302 at p308, 'was to impose the obligation of providing such statutory compensation upon those to whom good sense would naturally point as the fittest persons to bear it, and to define for the convenience of injured workmen seeking compensation the persons from whom they are entitled to claim it'."
That passage was cited with approval by Blow J in Skilled Engineering Ltd v Glaxo Wellcome Australia Pty Ltd [2005] TASSC 39 at [12]. That those are the objects of the legislation is also supported by Moir v Schrader (1936) 56 CLR 310, per Dixon J at 323 – 324:
"It is based upon the view that from the course of the principal's trade or business and the manner in which he conducts it, he will be found to have assumed responsibility for the performance of a class of work, the fulfilment of given functions or the pursuit of a system of activities. What he has thus adopted as his proper operations, he may accomplish by means of direct employees, or by means of contracts which remove him from the relation of employer with the workmen who do the work. Whichever be his method, he is to be responsible for the workers' compensation payable to those injured in the course of the work for the performance of which he has assumed responsibility, the work which he has 'undertaken'. But when, although the work performed by the injured workman is necessary to enable the principal to carry out the operations the execution of which he has adopted as his trade or business, yet that work does not form a component part of the operations and only contributes or conduces to their performance or is preliminary or ancillary or incidental to them, then the workman must look to his direct employer for compensation."
A principal might enter into a contract with a contractor for the supply of labour to the principal without any mention in the contract of the nature of the work to be performed. The purpose of the section would be defeated if the principal could avoid its provisions simply by a choice of words in the contract.
It is plain that it was contemplated by the parties to the contract that the plaintiff would perform work for Hazell Bros. The contract provided for Hazell Bros to pay Work & Training Ltd "for every hour that the New Apprentice works under the direct control of" Hazell Bros. Hazell Bros and Work & Training Ltd intended to enter into a contract that was legally binding on each of them. It is ridiculous to contemplate that Hazell Bros paid Work & Training Ltd to train the plaintiff and was to receive nothing in return. It is obvious that under the contract the plaintiff was to perform work for Hazell Bros.
For these reasons, the answer to question (c) is "yes".
The action against Mr Miley
I consider next the application of s138AB(1) to the plaintiff's action in negligence against Mr Miley. The subsection only requires the lodging of an election before seeking damages from the plaintiff's "employer". Mr Miley was not the employer of the plaintiff, unless the Act deemed him to be. On its face, s138AB(1) does not apply to a claim for damages against an employee of an employer.
Assuming for the purposes of the legislation that Hazell Bros was the "employer" of the plaintiff because of s132, the question is whether Mr Miley was also his employer for the purposes of the legislation. Section 138AA requires interpretation. Subsection (3), which expressly applies to s138AA but not to the other sections in the Division, provides that a "reference in this section to the worker's employer includes a reference to a person for whose acts the employer is vicariously liable". Subsection (1) refers to "an employer" and, in par(a), to "the worker's employer". Subsection (2) refers only to "the worker's employer". The plaintiff argues that in those two subsections the references to "employer" and "worker's employer" are two different concepts, so that the Division only applies to the awarding of damages against an employer for the negligence or other tort of, or a breach of contract by, the employer or a person for whose acts the employer is vicariously liable. On the other hand, the defendants argue that the references in those two subsections to "employer" and to "worker's employer" are to the same concept, so that the Division applies not only to the awarding of damages against an employer but also to the awarding of damages against persons for whose acts the employer is vicariously liable.
The extended meaning of "employer" provided by s132 applies to the sections in the Division, including s138AA. Therefore, the effect of s138AA(1)(a) is that the Division applies to the awarding of damages independently of the Act in respect of an injury suffered by a worker, against an employer and any person who, in respect of that injury, is liable, under s29, to pay compensation or to indemnify any other person for any compensation paid by that other person, if (a) the injury was caused by the negligence or other tort of, or a breach of contract by, the "worker's employer". The provisions of par(b) are irrelevant.
The meaning of par(a) is extended by subs(3) to a situation where the injury was caused by the negligence or other tort of, or a breach of contract by, the employer (or principal) or a person for whose acts the employer (or principal) is vicariously liable. Without subs(3), the Division would apply only to the awarding of damages against an employer, or a principal liable by virtue of s29, for the negligence or other tort of, or a breach of contract by, the employer or principal, as the case may be.
It is the defendants' case that the extended meaning of "worker's employer" that is provided by s138AA(3) applies to the meaning of "employer" in the opening line of s138AA(1), so that the Division applies to the awarding of damages against those for whom an employer, or principal, is vicariously liable. It follows, so the defendants say, that s138AB(1) requires the making of an election prior to seeking damages against an employer, a principal, or a person for whom an employer or principal is vicariously liable.
The interpretation sought by the defendants is not a literal one. It requires a strained use of the language. If Parliament had intended such a result, it could have said so clearly, for example, by simply providing that unless the context indicated otherwise, a reference in the Division to an employer included a reference to a person for whom the employer was vicariously liable. By limiting the extended meaning to the use of the expression "worker's employer" in s138AA, and not to the expression "employer" in all of the sections in the Division, an intention contrary to that argued by the defendants was made clear.
It was submitted for the defendants that the interpretation for which they argued is one "that promotes the purpose or object of the Act" (Acts Interpretation Act 1931, s8A(1)), and that sections 138AA and 138AB were inserted into the Act for the purpose of restricting the rights of workers injured in work-related accidents with a view to making insurance premiums more affordable. Even accepting that was the purpose of the legislation, nevertheless it is not of assistance in the task of interpretation, because it does not explain how far Parliament intended to go in achieving that object. Historical instances of statutory limitations on actions for damages against employers, but not against those for whom employers are vicariously liable, may easily be found. For example, see the Workers' Compensation Act 1927, s9(7), in the form in which it was in at the time of the 1959 reprint of the Statutes, and the present Act, s135(1), as originally enacted.
An election under s138AB(1) is required before an action for damages is commenced by a worker against an "employer", whether the actual employer of the worker or a principal liable because of s29, if the injury the subject of the action was caused by the negligence or other tort of, or a breach of contract by, that "employer" or a person for whose act that "employer" is vicariously liable. No such election is required before an action for damages is commenced against the person for whose actions the actual employer or principal is vicariously liable. The deeming provision of s138AA(3) extends only to the meaning of the expression "the worker's employer" in s138AA and adds nothing to the meaning of "employer" where it appears alone, either in s138AA or s138AB.
Conclusions
The answer to question (d) is "yes", because the plaintiff was employed in the execution of work undertaken by Hazell Bros when he was injured. For the reasons I have given, the answer to question (e) is that, because no election to claim damages against any of the defendants was lodged pursuant to s138AB(1) and because the degree of impairment of the plaintiff is less than 30 percent of the whole person, the plaintiff is precluded from obtaining an award of damages from Hazell Bros. However, the plaintiff is not precluded from obtaining an award of damages from Mr Miley.
I note that counsel for the plaintiff conceded that the plaintiff could not rely on an argument against Hazell Bros that depended on part of his claim against Hazell Bros being based on a breach of a statutory duty. See Stryke Corporation Pty Ltd v Miskovic [2007] NSWCA per Spigelman CJ at [3] and [4] and Santow JA at [61].
In summary, the answers to the five questions are:
(a) Yes.
(b) Yes.
(c) Yes.
(d) Yes.
(e)No as to the first defendant, Alan John Miley, but yes as to the second defendant, Wesley Hazell, Geoffrey Revington Hazell and Robert George Hazell trading as Hazell Bros.
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