Coxon v Kat - [2009] SASC 28

SUPREME COURT OF SOUTH AUSTRALIA
(Full Court: Civil)
COXON v KAT
[2009] SASC 28
Judgment of The Full Court
(The Honourable Justice Duggan, The Honourable Justice Bleby and The Honourable Justice White)
13 February 2009
EMPLOYMENT LAW - THE RELATIONSHIP OF EMPLOYER AND EMPLOYEE
Appeal from decision of District Court Judge on preliminary point – appellant is former employee of respondent under a contract of training – contract of training transferred to company incorporated by respondent – appellant injured while at work at premises owned by respondent – appellant commenced negligence action against respondent, relying on occupiers’ liability – respondent claimed he was still the employer of appellant and thus entitled to immunity from action under Workers Rehabilitation and Compensation Act 1986 (SA) s 54 – District Court Judge held respondent was not employer of appellant at time of injury but was nonetheless entitled to rely on s 54 as rights, obligations and liabilities transferred under Vocational Education, Employment and Training Act 1994 (SA) s 33 included immunity of respondent from suit.
Held: section 33 had the effect that rights were transferred from respondent to company, not vice versa – respondent lost immunity from liability when contract of training transferred to company.
Whether respondent remained the employer of the appellant notwithstanding transfer of contract of training – whether possible to have separate contracts of training and employment.
Held: only one contract existed between appellant and respondent – respondent did not remain employer of the appellant.
Appeal allowed – declaration made that appellant’s action against respondent not barred by s 54.
Workers Rehabilitation and Compensation Act 1986 (SA) ss 3 & 54; Vocational Education, Employment and Training Act 1994 (SA) ss 30, 32, 33 & 37, sch 2 cl 4; Civil Liability Act 1936 (SA) Part 4; Constitution s 51 (xxxv), referred to.
Junior Constables Case (1943) 17 SAIR 334; Rowe v Capital Territory Health Commission (1982) 39 ALR 39, applied.
Nokes v Doncaster Amalgamated Collieries Ltd [1940] AC 1014; Adamson v New South Wales Rugby League Ltd (1991) 31 FCR 242; Wiltshire Police Authority v Wynn [1981] 1 QB 95; Jumbunna Coal Mine NL v Victorian Coal Miners’ Association (1908) 6 CLR 309; R v Coldham; Ex parte Australian Social Welfare Union (1983) 153 CLR 297, considered.

COXON v KAT
[2009] SASC 28
Full Court: Duggan, Bleby and White JJ

DUGGAN J: I would allow the appeal.
I agree with the orders proposed by Bleby J and the reasons which he has prepared.
BLEBY J.
Introduction
Ms Coxon, the appellant, is suing her former employer, Mr Kat, the respondent, for damages. Section 54(1) of the Workers Rehabilitation and Compensation Act 1986 (SA) (“the WRC Act”) effectively prevents an employee from suing his or her employer at common law for damages for personal injury arising out of or in the course of the employee’s employment. It provides:
(1) Subject to subsection (2), no liability attaches to an employer in respect of a compensable disability arising from employment by that employer except—
(a) a liability under this Act.
Sub-section (2) is not relevant for present purposes.
Section 3 of the WRC Act relevantly defines “employer” as meaning:
(a) a person by whom a worker is employed under a contract of service, or for whom work is done by a worker under a contract of service …;
…
The section also relevantly defines “contract of service” as meaning:
(a)     a contract under which one person (the worker) is employed by another (the employer);
(b)     a contract, arrangement or understanding under which one person (the worker) works for another in prescribed work or work of a prescribed class;
(c)     a contract of apprenticeship;[1]
(d)     a contract, arrangement or understanding under which a person (the worker)—
(i) receives on-the-job training in a trade or vocation from another (the employer); and
(ii)is during the period of that training remunerated by the employer;
Background
Ms Coxon was a trainee hairdresser. She had entered into a contract of training under the Vocational Education, Employment and Training Act 1994 (SA) (“the VEE&T Act”). As from 12 March 2001 the contract was effectively transferred under the Act to her new employer, Mr Kat. At that time Mr Kat conducted a hairdressing business under the registered business name of “MK Cutters”. For some time, Mr Kat was therefore Ms Coxon’s employer for the purposes of the WRC Act.
In the proceedings below, the District Court Judge found, and on appeal there was no dispute, that at least as from 1 July 2002, and probably from 1 July 2001, a company which Mr Kat had incorporated, known as “Go Kat Pty Ltd” (“Go Kat”), owned and operated the hairdressing business. However, the Accreditation and Registration Council (“the ARC”) constituted under the VEE&T Act was not notified of the transfer of Ms Coxon’s contract of training to the new company. That was required both by cl 1(d) of the prescribed form of contract which the parties had entered into, and by s 33(2) of the VEE&T Act.
Section 33 of the VEE&T Act provides:
(1)A change in the ownership of a business does not result in the termination of a contract of training entered into by the former owner, but, where a change of ownership occurs, the rights, obligations and liabilities of the former owner under the contract are transferred to the new owner.
(2)Where a contract of training is transferred or assigned from one employer to another (whether by subsection (1) or otherwise), the employer to whom the contract is transferred or assigned must, within seven days of the transfer or assignment, notify ARC, in writing, of the transfer of assignment.
Penalty: Division 7 fine.
The District Court Judge held, correctly in my view, that the failure to notify the ARC, even though it may have constituted an offence on the part of Go Kat, did not affect the operation of sub-s (1). Go Kat therefore became Ms Coxon’s employer for the purposes of the WRC Act.
On 6 September 2002 Ms Coxon was seriously injured in the course of her employment. She alleges that the injury was caused by the defective premises in which she worked. She commenced proceedings in the District Court against Mr Kat as occupier of the premises, claiming damages for personal injury for an alleged breach of his duty of care to her, and in accordance with the requirements of what is now Part 4 of the Civil Liability Act 1936 (SA).
The District Court proceedings
Mr Kat claims that at the material time, he was still the employer of Ms Coxon, and that her action is therefore barred by s 54 of the WRC Act.
In deciding that issue as a preliminary point, the District Court Judge held that, notwithstanding the effective transfer of the rights, obligations and liabilities of Mr Kat under s 33 of the VEE&T Act, Ms Coxon could not maintain the action. That was because he held that the rights, obligations and liabilities transferred under s 33 included the right of Mr Kat to immunity from suit. The Judge said:[2]
Accordingly, the new owner’s “rights, obligations and liabilities” to Dyani Coxon, include those incurred by the former owner up to the point of transfer, derived from the Workers Rehabilitation and Compensation Act (above). That bundle of rights necessarily incorporate the right to invoke s54(1) of the Worker’s Rehabilitation and Compensation Act (above), as a statutory bar to an occupiers’ liability claim arising from “a compensable disability” incurred by the former owner, even though the principal incidence of liability to make workers compensation payments lies with the Work Cover Corporation of South Australia under s46(1). That is to say Go Kat Pty Ltd stands in the shoes of the defendant so far as rights, obligations and liabilities to the plaintiff for workers compensation are concerned.
Having confirmed that Mr Kat was not, as of 6 September 2002, the employer of Ms Coxon, he said:[3]
All the same, the defendant is entitled to set up the plea in bar, conferred by s54(1) Workers Rehabilitation and Compensation Act of proceedings by the plaintiff for occupiers liability, because the “rights” transferred to him incorporated that right.
It can be seen that the Judge considered that Mr Kat was entitled to plead s 54(1) as a defence to Ms Coxon’s action because the rights which had been transferred to him under s 33 of the VEE&T Act included the immunity from liability bestowed by that subsection. This conclusion involves a misunderstanding by the Judge. Section 33 of the VEE&T Act did not have the effect that rights were transferred to Mr Kat. Instead they were transferred from him to Go Kat. Mr Kat lost the immunity from liability which s 54(1) bestowed on him when, from at least 1 July 2002, he transferred Ms Coxon’s contract of training to Go Kat.
If the action in negligence had been brought against Go Kat as Ms Coxon’s then employer, no question of the transfer of Mr Kat’s rights, obligations and liabilities would arise because Go Kat, as Ms Coxon’s employer at the relevant time, would enjoy its own immunity from action under s 54 of the WRC Act.
Was Mr Kat Ms Coxon’s employer?
Mr Kat nevertheless seeks to avoid liability to Ms Coxon by arguing that, in law, he was, at the material time, still the employer of Ms Coxon. He argues that, while the effect of s 33 of the VEE&T Act was to transfer the rights, obligations and liabilities of himself under the contract of traineeship to Go Kat, the contract of employment remained with him. He was still the employer and was therefore entitled to the immunity from action under s 54 of the WRC Act.
I assume for present purposes that Ms Coxon never consented to being employed by Go Kat. Mr Kat points to authorities such as Nokes v Doncaster Amalgamated Collieries Ltd[4] and Adamson v New South Wales Rugby League Ltd[5] which undoubtedly stand for the proposition that at common law a contract of employment cannot be transferred or assigned to a new employer without the consent, expressed or implied, of the employee. However, that common law position may be modified by a statutory provision such as s 33 of the VEE&T Act. Mr Kat’s submissions recognised this. In order to succeed, he is forced to argue that the contract of employment is quite separate from the contract of traineeship under the VEE&T Act, and that one person may be the employer of a trainee while another assumes the obligations under the contract of traineeship and the VEE&T Act.
I reject that argument. At common law, there is a distinction between a contract of service and a contract of apprenticeship depending on whether the primary purpose of the contract is the performance of work for the master or the teaching of a trade.[6] A contract is either one or the other. It was never suggested that there could be two contracts in parallel – a contract of employment and a separate contract of apprenticeship. It follows that a contract of apprenticeship could always provide, as a secondary purpose, for the performance of work or service for the employer such that the apprentice was also an employee.
This is borne out by the remarks of Morgan P in the Junior Constables Case.[7]In that case, the question arose as to whether junior constables in the police force were “employed” in the public service of the State. In the course of his judgment, Morgan P said:[8]
The evidence shows that the activities in which a Junior Constable engages fall, as I think might be expected, into three classes:
1.     Those which do not involve the rendering of any service. A large part of the training which I have set out would fall into this class, for instance, the Junior Constable who takes part in a debate or memorises portions of the Justices Act does not render any actual service in so doing, he is simply equipping himself for future service.
2.     Work which does involve a rendering of service but in the doing of which the Junior Constable might be expected to learn how to perform the work efficiently.
3.     Work which involves a rendering of service but which does not instruct the Junior Constable. (This would include the carrying out of jobs so simple that their performance would not teach the Junior Constable anything (for instance, carting wood to police stations) and the continuance in a job which the trainee has already mastered).
On behalf of the respondent, it was urged that the Junior Constable only does jobs which are intended to teach him. I do not think that this contention was entirely borne out by the evidence, but even if it were, it seems to me to be beside the point. A person may enter into a contract of service, the purpose of which is to teach him an occupation, and in fact that person may learn all the time that he carries out his service, and yet be an employee. An apprentice may be such a person, and an improver may be such a person, yet both of them are clearly employees.
In the working out by the High Court of the extent of the conciliation and arbitration power contained in s 51(xxxv) of the Constitution, concerned as it is with the relations between employers and employees,[9] it has never been suggested that apprentices were outside the scope of that power. As Keely J observed in Rowe v Capital Territory Health Commission:[10]
As long ago as Whybrow’s case (1910) 11 CLR 1, the High Court dealt with prohibition proceedings relating to claims (see at 32) brought before the Arbitration Court as to the rate of wages of apprentices – and did not suggest that apprentices are not “employees” within the Act. In John Heine & Son Ltd v Pickard (1921) 29 CLR 592 the High Court upheld the conviction of an employer for failing to pay to an employee, who was apprenticed to it by articles of apprenticeship, an amount prescribed by an award in respect of apprentices. In Fletcher v A H McDonald & Co Pty Ltd (1927) 39 CLR 174, the High Court dealt with an award which prescribed the minimum rate of wages to be paid to apprentices. In Culbert v Clyde Engineering Co Ltd (1936) 54 CLR 544 the High Court held (at 553) that an employer committed a breach of a federal award “in that it did … apprentice a certain boy and did not apprentice him in accordance with the provisions of the award” (at 551). In my view those four decisions of the High Court give support to the principle in the Junior Constables case, supra, that the fact that an apprentice (or other person) is performing duties under a contract, the primary purpose of which is to teach that person an occupation, does not prevent that person from being an employee.
An apprentice may therefore be an employee. It does not follow that the apprentice has a separate contract of employment. Contracts of apprenticeship or contracts of training, as they are now known under the VEE&T Act, are carefully regulated under that Act. Significantly, s 30 of the Act relevantly provides:
(1)An employer must not undertake to train a person in a trade except under a contract of training.
Penalty: Division 7 fine.
…
(4)A contract of training––
(a)    must be in the form required by ARC by notice in the Gazette for the trade or other declared vocation to which the contract relates; and
(b)    must contain the conditions required by ARC by notice in the Gazette for that trade or other declared vocation.
(5)An employer must, within two weeks after employing a person under a contract of training, provide ARC with a copy of the contract of training and with the particulars required by ARC by notice in the Gazette.
Penalty:     Division 7 fine.
(6)Two or more employers may, with the approval of ARC, enter into a contract of training with the same trainee.
Section 32 provides that, subject to the provisions of Act, a contract of training may not be terminated or suspended without the approval of the ARC. Significantly, s 37(1) provides:
A contract of training must provide for the employment of the trainee who is to be trained under the contract.
As the District Court Judge noted, Part 4 of the Act, in which those sections appear, is replete with the language of a contract of employment or service.
The contract of traineeship entered into in this case in the form prescribed in the Gazette provides:
1.The employer agrees with the apprentice/trainee and (where applicable) the parent or legal guardian and with each of them separately:
a)    to employ and to teach and instruct the apprentice/trainee (or cause the apprentice/trainee to be taught and instructed) to achieve the qualification by the best means in the employer’s power throughout the agreed term;
b)    to provide facilities and appropriate supervision for the practical training of the apprentice/trainee;
…
3.The employer and apprentice/trainee and (where applicable) the parent/legal guardian agree:
a)    that the conditions of employment for the apprentice/trainee, including wages and other entitlements will be prescribed from time to time by the appropriate Industrial Award or Agreement of the State and/or Australian Industrial Relations Commission;…
There was only one contract between Ms Coxon and Mr Kat. It provided, as required by the VEE&T Act, that the employer both employ and teach and instruct the trainee. Upon the change of ownership of the business, the contract of training was not terminated, as would be the effect at common law of a contract of employment.[11] Section 33 of the VEE&T Act expressly provided that the rights, obligations and liabilities of Mr Kat were transferred to Go Kat when Go Kat commenced operating the business. That included the obligation under s 37 and under the provisions of the contract to employ Ms Coxon. Mr Kat did not remain as Ms Coxon’s employer.
Conclusion
It follows that Mr Kat is not immune from suit under s 54 of the WRC Act. The appeal must be allowed. The judgment of the District Court dismissing Ms Coxon’s action must be set aside. In lieu thereof there must be a declaration that the plaintiff’s action against the defendant is not barred by s 54(1) of the Workers Rehabilitation and Compensation Act 1986 (SA).
WHITE J: I agree with the orders proposed by Bleby J. I also agree with his reasons.

[1] This must now be read as a reference to a contract of traineeship: Vocational Education, Employment and Training Act 1994 (SA), Schedule 2, clause 2(4).

[2] Coxon v Kat [2008] SADC 65, [34].

[3] Ibid [39].

[4] [1940] AC 1014, 1020 Viscount Simon LC, 1026 Lord Atkin.

[5] (1991) 31 FCR 242, 267-268 Wilcox J.

[6] See Wiltshire Police Authority v Wynn [1981] 1 QB 95, 109 Lord Denning MR.

[7] (1943) 17 SAIR 334.

[8] Ibid 346.

[9] Jumbunna Coal Mine NL v Victorian Coal Miners’ Association (1908) 6 CLR 309, 332-333 Griffith CJ, 367 O’Connor J; R v Coldham; Ex parte Australian Social Welfare Union (1983) 153 CLR 297, 312 Gibbs CJ, Mason, Murphy, Wilson, Brennan, Deane and Dawson JJ.

[10] (1982) 39 ALR 39, 57.

[11] See for example Ford v Lismore City Council (1989) 28 IR 68.