Dare v Dietrich

[1979] FCA 86

DARE v. DIETRICH (1979) 37 FLR 175
Workmen's Compensation - Appeal

COURT

FEDERAL COURT OF AUSTRALIA

GENERAL DIVISION
Muirhead(1), Deane(2) and Lockhart(3) JJ.

CATCHWORDS

Workmen's Compensation - Injury during contractual trial period - Whether contract of service - Whether insured person "workman" - Workmen's Compensation Ordinance 1949 (N.T.).

Appeal - New evidence - Appeal from Workmen's Compensation Tribunal to Supreme Court - Whether hearing de novo - Workmen's Compensation Ordinance 1949 (N.T.), s. 26.

HEADNOTE

The respondent by reason of disease suffered from shaking and general inability to keep still, had a problem with alcohol and was unemployed. The appellant, who had on previous occasions assisted people to obtain work, learned of the appellant's problems. Desiring to help the respondent, the appellant arranged for him to perform a trial to determine whether he was capable of painting the appellant's house. The appellant offered to pay the respondent $2 per hour for the period of trial. Shortly after the trial commenced the respondent fell from a ladder and suffered severe fractures of his right shoulder and leg. More than six months after this accident the respondent made a claim under the Workmen's Compensation Ordinance 1949 (N.T.) which was refused by the appellant. The Workmen's Compensation Tribunal held that the respondent was not a workman. On appeal to the Supreme Court, Gallop J. held that the appeal was a hearing de novo, admitted new evidence, upheld the respondent's appeal and made an order for compensation in his favour. On appeal to the Full Court of the Federal Court,

Held: Per curiam - (1) An appeal to the Supreme Court from a decision of the Workmen's Compensation Tribunal is a hearing de novo and new evidence may be adduced.

Phillips v. Commonwealth (1964), 110 CLR 347; Builders Licensing Board v. Sperway Constructions (Syd.) Pty. Ltd. (1976), 135 CLR 616; Commonwealth v. Rutledge (1964), 111 CLR 1; Connair Pty. Ltd. v. Frederiksen (1977), 16 ALR 148, and, on appeal (1978), 20 ALR 579; McMahon Constructions Pty. Ltd. v. Bonetti, unreported, Supreme Court of the Northern Territory, Forster C.J. 17th October, 1978, referred to.

(2) The contractual arrangements between the appellant and the respondent relating to the trial period did not constitute a contract of service or give rise to the relationship of master and servant and the respondent was not a workman within the Workmen's Compensation Ordinance.

Kearney v. Whitehaven Colliery Co. Ltd., (1893) 1 QB 700, referred to.

HEARING

Darwin, 1979, May 30, 31; August 21. #DATE 21:8:1979

APPEAL.

Appeal from a decision of the Supreme Court of the Northern Territory.

M.D.A. Maurice, for the appellant.

L. Wyvill, for the respondent.

Cur. adv. vult.

Solicitors for the appellant: Martin & Partners.

Solicitors for the respondent: Howard & Reeves.

GERALDINE VANDELEUR

JUDGE1

August 21.

The following judgments were delivered.

MUIRHEAD J. (Delivered separate reasons in which he agreed with the conclusions of Deane J.) (at p176)

JUDGE2

DEANE J. (Stated the facts, and continued:) (at p176)

1. Section 25 of the Northern Territory Workmen's Compensation Ordinance 1949 ("the Ordinance") provides, for present purposes, that proceedings for the recovery of compensation under the Ordinance shall not be maintainable unless the claim for compensation has been made within six months after the occurrence of the injury. The section contains a proviso to the effect that a failure to make a claim within the six months' period shall not be a bar to the maintenance of proceedings if it be found that the failure was occasioned by, inter alia, mistake or other reasonable cause. The respondent made no claim against the appellant for compensation within the specified period of six months after the occurrence of his injuries. He stated, in evidence, that his "only reason" for refraining from making such a claim was that he "knew" the appellant "wouldn't have any worker's compensation policy". After the expiry of the six months' period, the respondent made such a claim against the appellant. The claim for compensation having been refused by the appellant, the respondent commenced proceedings for compensation in the Workmen's Compensation Tribunal. The respondent's claim, as particularized, was for compensation in respect of injuries sustained in the course of work as a painter employed by the appellant. The appellant, by his answer put in issue a number of matters. Those matters, to the extent to which they remain of relevance, may be summarized as being that the claim was not made within six months after the occurrence of the respondent's injuries and that the respondent was not, in any event, a workman within the meaning of the Ordinance and therefore had no entitlement to compensation. (at p177)

2. The matter came on for hearing before the Workmen's Compensation Tribunal. The parties were represented and oral evidence of a number of witnesses, including the appellant and the respondent, was led before the tribunal. The tribunal held that the respondent was not, at the time he sustained his injuries, a workman within the meaning of the Ordinance and was therefore not entitled to compensation under the Ordinance. In the light of that finding, the tribunal found it unnecessary to make any finding in respect of the respondent's failure to make a claim within the time specified in s. 25 of the Ordinance. The respondent appealed from the tribunal's decision to the Supreme Court of the Northern Territory. (at p177)

3. At the commencement of the proceedings before the Supreme Court, a question arose as to whether the respondent, as appellant in the Supreme Court, was entitled to call further evidence. The learned judge ruled that the proceedings before him were by way of a hearing de novo and that the respondent was entitled to present his case for compensation afresh on new or additional evidence. The matter proceeded before the Supreme Court on that basis. The evidence before the tribunal was tendered and admitted into evidence and both parties supplemented their evidence before the tribunal by additional evidence. The Supreme Court upheld the respondent's appeal and made an order for compensation in the respondent's favour against the appellant. His Honour held that the respondent was, at the time he sustained his injuries, a workman within the meaning of the Ordinance and that his failure to make a claim for compensation within the time specified in s. 25 of the Ordinance did not constitute a bar to an award of compensation being made in his favour for the reasons that it was occasioned by mistake or other reasonable cause. The appellant appeals to this Court from that decision of the Supreme Court of the Northern Territory. (at p177)

4. The appellant advanced two independent grounds of attack upon the decision of the Supreme Court in the respondent's favour. First, it was said, his Honour was mistaken in ruling that the proceedings before him were by way of a hearing de novo and that the respondent was entitled to call fresh evidence. It was, it was said, only on the basis of the fresh evidence admitted on the hearing before the Supreme Court that his Honour's finding that the failure to make a claim within the period specified by s. 25 of the Ordinance was occasioned by mistake or other reasonable cause could be justified. Second, it was submitted that his Honour's finding that the respondent was, at the time he sustained his injuries, a workman for the purposes of the Ordinance was erroneous. In the event that the learned judge was not in error in admitting the further evidence, it is conceded that his finding that the failure to make the claim within the specified period of time was occasioned by mistake or other reasonable cause is not otherwise open to attack. It is not contended that, if the respondent was entitled to an award of compensation, the order for compensation made was unduly favourable.
   
   THE NATURE OF THE HEARING BEFORE THE SUPREME COURT. (at p178)
   
   

5. The appeal to the Supreme Court was, as has been mentioned, brought pursuant to the provisions of s. 26 of the Ordinance. That section provides, for present purposes, that an appeal may be on a question of law or fact or both and "may be in the nature of a re-hearing". The provision that the appeal "may be in the nature of a re-hearing", like many other provisions of the Ordinance, was based on the provisions of the Commonwealth Employees' Compensation Act 1930 which, in s. 20, used identical words in relation to an appeal from the commissioner under that Act to a County Court. (at p178)

6. In Phillips v. Commonwealth (1964) 110 CLR 347 the effect of the provisions of s. 20 of the Commonwealth Employees' Compensation Act 1930 was considered by the Full Court of the High Court of Australia. Their Honours said: "The appeal to the County Court was brought pursuant to s. 20 (1) of the Act which provides that: 'Any person affected by any determination or action of the Commissioner under this Act may appeal to a County Court against the determination or action and the Court shall have jurisdiction to hear and determine the appeal, and such appeal may be in the nature of a re-hearing'. The use of the word 'may' in the concluding words of the sub-section is somewhat curious but it is clear enough that the form of proceeding for which the sub-section provides is not an appeal in the strict sense at all. What the section does is to provide for the judicial review of administrative decisions of a particular character and upon any such review it is, we think, for the Court to pronounce anew upon the rights of the parties as disclosed by the evidence before it. That being so the application of the ordinary principles relating to the determination of disputed questions of fact by judicial tribunals requires the conclusion that if a claim for compensation be rejected by the Commissioner or his delegate the onus of proving the necessary facts to entitle the applicant to what is virtually an award of compensation will be upon the claim in later proceedings before the County Court" (1964) 110 CLR, at p 350 . Plainly, it was their Honours' view that the "appeal" referred to in the section was in the nature of a hearing de novo (see, also, Builders Licensing Board v. Sperway Constructions (Syd.) Pty. Ltd. (1976) 135 CLR 616, at p 621 ). (at p179)

7. In Commonwealth v. Rutledge Taylor J. said of s. 20 of the Act: "The so-called appeal for which s. 20 provides is, in my view, intended as a vehicle by which, in the case of claims for compensation which have been determined adversely to an applicant, such claims may be carried to a County Court for rehearing and determination. Further, in disposing of any such appeal that court may determine any issue arising in relation to the claim just as the Commissioner might have done in the first instance" (1964) 111 CLR 1, at p 8 . Menzies J. (1964) 111 CLR, at p 12 and Owen J. (1964) 111 CLR, at p 15 expressed their agreement with Taylor J. on that aspect of the case. (at p179)

8. It was submitted on behalf of the appellant that, notwithstanding the similarity in the wording of the two sections, the nature of the appeal for which s. 26 of the Ordinance makes provision is quite different from that which was established by s. 20 of the Act. Reference was made to the decision of the High Court in Builders Licensing Board v. Sperway Constructions (Syd.) Pty. Ltd. which establishes that a statement that an appeal is by way of rehearing is not, in itself, necessarily determinative of the question whether the rehearing is a hearing de novo as distinct from a rehearing on the record: that question is to be determined by the elicitation of the relevant legislative intent from the overall statutory provisions establishing or regulating the appeal. The function performed by the Workmen's Compensation Tribunal and the procedure adopted by that tribunal in the performance of that function were, it was submitted on behalf of the appellant, such as to warrant the conclusion that the relevant legislative intent was that the appeal established by s. 26 of the Ordinance was not to be a hearing de novo and that, in particular, the only fresh evidence which the Supreme Court was entitled to receive on the hearing of such an appeal was evidence bringing the material before the tribunal up to date. (at p179)

9. One difficulty which lies in the path of the appellant's argument is that the Workmen's Compensation Tribunal, whose functions and procedure form the basis of the appellant's argument as to the construction of s. 26 of the Ordinance, was only established in 1969. The amendments made to the Ordinance (and, in particular, to s. 26 thereof) in relation to the establishment of the tribunal did not include any amendments apparently intended to alter the nature of the appeal established by s. 26 of the Ordinance or to overcome the effect of the statements in Phillips' case (1964) 110 CLR 347 and Rutledge's case (1964) 111 CLR 1 which would appear to be otherwise prima facie applicable to the appeal which the section had established. Quite apart from that difficulty, I am not persuaded that consideration of the function and procedure of the Workmen's Compensation Tribunal leads to the conclusion that the appeal established by s. 26 of the Ordinance was intended to take a different form to the appeal established by the section of the Commonwealth Act upon which s. 26 of the Ordinance was plainly based. (at p180)

10. In Builders Licensing Board v. Sperway Constructions (Syd.) Pty. Ltd. (1976) 135 CLR, at p 621 Mason J. (with whose judgment Barwick C.J., and Stephen J. agreed) stated that where a right of appeal is given to a court from a decision of an administrative authority, a provision that the appeal is to be by way of rehearing generally means that the court will undertake a hearing de novo. His Honour continued: "There are, of course, sound reasons for thinking that in many cases an appeal to a court from an administrative authority will necessarily entail a hearing de novo . . . The nature of the proceedings before the administrative authority may be of such a character as to lead to the conclusion that it was not intended that the court was to be confined to the materials before the authority. There may be no provision for a hearing at first instance or for a record to be made of what takes place there. The authority may not be bound to apply the rules of evidence or the issues which arise may be non-justiciable. Again, the authority may not be required to furnish reasons for its decision. In all these cases there may be ground for saying that an appeal calls for an exercise of original jurisdiction or for a hearing de novo" (1976) 135 CLR, at p 621 . As Mason J. indicates, significant discrepancies between the judicial process of a court and the nature and form of proceedings before an administrative body will tend to confirm that a provision for an appeal by way of rehearing to a court from a decision of that body calls for an exercise by the court of original jurisdiction and involves a hearing de novo. (at p180)

11. Section 6D of the Ordinance provides that, subject to the Ordinance, the tribunal's procedure is within its own discretion, that the tribunal will act without regard to technicalities and legal forms and that the tribunal is not bound by the rules of evidence "but may inform itself on any matter in such manner as it thinks fit". These provisions make it clear that, while the tribunal is, no doubt, under an obligation to act with judicial detachment and fairness, the proceedings before the tribunal are not governed by the ordinary principles relating to the determination of disputed questions of fact by a judicial tribunal. They confirm that the appeal to the Supreme Court from a decision of the tribunal calls for an exercise of original jurisdiction by the court and was intended, where disputed questions of fact are involved, to provide for a judicial review, conducted in accordance with those ordinary principles, of the decision of the tribunal. The statement in s. 26 of the Ordinance that "the appeal may be in the nature of a re-hearing" should not be construed in a narrow technical sense as meaning no more than that the appeal is to be determined as at the date of its hearing. The statement should be construed as conveying that the rehearing may be a hearing de novo upon which it is for the Supreme Court to pronounce anew on the rights of the parties as disclosed by the evidence before it (see generally, Phillips' case (1964) 110 CLR 347 ). As the use of the word "may" indicates, this does not mean that it will be necessary or desirable in every case for the parties to present their evidence afresh to the Supreme Court so that the appeal may be a rehearing de novo in every sense. Where questions of law or inferences from undisputed facts are involved, it may well be both convenient and appropriate for the evidence before the Supreme Court to consist of the record (if there be one) of proceedings before the tribunal. (at p181)

12. It follows that the respondent was entitled to adduce new evidence on the hearing of the appeal to the Supreme Court and that the learned judge was not in error in admitting such fresh evidence or taking it into account in his decision. I note that my conclusion in that regard accords with previous statements both in this Court and in the Supreme Court of the Northern Territory. (Connair Pty. Ltd. v. Frederiksen (1977) 16 ALR 148, at p 149 and, on appeal, (1978) 20 ALR 579, at pp 581, 592, 605 ; McMahon Constructions Pty. Ltd. v. Bonetti Unreported. (Supreme Court of the Northern Territory, Forster C.J., 17th October , 1978.) ).
    
    WAS THE RESPONDENT ENTITLED TO COMPENSATION UNDER THE PROVISIONS OF THE ORDINANCE? (at p181)
    
    

13. Section 7 of the Ordinance provides that, if personal injury by accident arising out of or in the course of his employment by his employer is caused to a workman, his employer shall, subject to the Ordinance, be liable to pay compensation. Subject to certain presently irrelevant exceptions and to a contrary intention, "workman" is defined, by s. 6 of the Ordinance, as meaning, "any person who has entered into or works under a contract of service or apprenticeship 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". (at p181)

14. It is common ground between the parties that there was a contract between the appellant and the respondent. The issue between them is whether that contract was "a contract of service" between the appellant as employer and the respondent as employee. If it were such a contract, the respondent was entitled to compensation under the Ordinance. If it were not, he was not so entitled. (at p182)

15. In a case, such as the present, where it is common ground between the parties that there was a contract, the judicial determination of whether that contract was a contract of service will commonly resolve itself into the traditional choice between a contract of service and a contract for services. If, in the present case, the contractual relationship between the parties had extended beyond a period of trial to embrace the task of painting the appellant's home, the resolution of the question whether there was or was not a contract of service would have depended upon such a choice. The Workmen's Compensation Tribunal, before which all of the evidence relevant to this aspect of the matter was led, reached the conclusion, however, that any contractual relationship between the parties did not extend beyond the trial period. Examination of the evidence discloses that there was no real dispute between the parties on that point and that the tribunal's conclusion in that regard was plainly correct. The evidence also makes clear that the terms of any future contract for the performance by the respondent of the overall painting task were left for negotiation or arrangement after the completion of the trial. (at p182)

1. The respondent gave evidence:
   "Q. . . . You told us earlier what you said was, 'I think so'. Were you not on trial as to whether or not you could paint Mr. Dare's house? Was not that the real arrangement between you? A. Yes."
   "Q. If after the trial it was seen that you were capable of painting the house then you expected to work out an arrangement with Mr. Dare? A. That's right. I would have waited until he'd seen the fact that I was able; yes." To like effect was the evidence of the appellant: "I said to Mr. Dietrich that I would pay him $2 an hour initially. This is below the accepted rate for a carpenter (semble, painter) but I took into account his condition. I was a bit embarrassed about speaking to him directly about his condition, but I said, 'Well, look, I'll pay you this for a starter and see how you go and then we'll talk about it later on.' He said, 'Yes, that's O.K.' He accepted the fact that we both had to judge how he could handle the job." As to the expected length of the trial period, the appellant's evidence was:
   "Q. Well, if this - as you are alleging - was a trial, when did you expect the trial would finish? A. I would have imagined that between the two of us we would have seen what he was able to do within a couple of hours anyway."
   "Q. It could have been a day too? A. I think I would have classed myself as able to judge a workman's ability in less time than that and I think Mr. Dietrich would have known himself also in less time than that as to whether he was capable of handling the job." (at p183)
   

2. It is conceivable that, if the appellant had been satisfied as to the respondent's capability, he may have engaged him to paint his house, at times which suited the respondent, for a fixed fee for both labour and materials and upon terms which made it clear that the respondent was engaged not as an employee under a contract of service but as an independent contractor under a contract for services. It is at least equally conceivable that, if the appellant had been so satisfied, any contractual arrangements reached as regards the overall task would have established the relationship of master and servant between the parties. It is, in the circumstances, impossible to do more than speculate as to which of the two alternative types of contract would have resulted if the matter had proceeded to an ultimate contractual relationship extending beyond the trial period. The matter not having proceeded beyond the trial stage, the relevant question is whether, even at the trial stage when the respondent sustained his injuries, the respondent was employed by the appellant under a contract of service. The determination of that question does not necessarily involve a choice between alternatives of contract of service and contract for services. A third possibility exists, namely, that any contract between the appellant and the respondent in relation to the period of the trial came within neither category. (at p183)

3. The trial which the appellant and the respondent arranged was plainly in the interests of them both. From the appellant's point of view, it was to enable him to assess the respondent's capacity and to decide whether he would engage the respondent to paint his house. From the respondent's point of view, it would likewise serve to determine whether he was capable of undertaking the task and, if he were, to provide him with the opportunity of being engaged to perform it. Were it not for the appellant's undertaking to pay the respondent $2 per hour for the period of the trial, it would, in my view, be apparent that the arrangements for the trial were not intended to be, and were not, binding in contract upon either appellant or respondent. The period of the trial could not properly be seen as a period in which the respondent would be doing painting work for the benefit of the appellant. If the result of the trial had been to demonstrate the respondent's inability properly to paint, the result of the respondent's activities during the period of the trial could well have been a cause of either embarrassment or further expense to the appellant. The trial was to enable the parties to determine whether they would enter into contractual arrangements for the painting by the respondent of the appellant's house. The charitable motivation of the appellant and the fact that the content of any contractual arrangements which might eventuate was left for further negotiation lend support for the conclusion that, in the absence of the promise as to payment, the arrangements for the trial would not have been intended to be, and would not have been, binding in contract. (at p184)

4. Apart from the promise as to payment, the arrangements for the trial, in the present case, have much in common with the arrangements for the ordinary interview or test in which a potential employer discusses or observes the qualifications and talents of a potential employee or independent contractor. In such a case, if the potential employer undertakes to applicants that he will pay them for the time which their interview or test takes, he will, prima facie, be under a contractual liability to make the promised payment after his offer has been accepted by attendance for, and genuine participation in, the interview or test. It does not however follow, in such a case, that the contract imposes executory contractual obligations upon the applicant or transforms the applicant into an employee of, or independent contractor obliged to perform work for, the prospective employer regardless of the outcome of the interview or test. The question which lies at the heart of the issue presently under consideration is whether the contract arising from the acceptance of the appellant's undertaking to make the payment transformed the arrangement in the present case from a trial to determine whether the parties would enter into a contract in relation to the painting of the house into an executory contract under which the respondent was bound to perform work for the appellant as an employee or as an independent contractor. In my view, it did not. (at p184)

5. As I see the matter, the appellant's undertaking to pay the respondent $2 per hour for the period of the test was an offer to enter into a unilateral contract. That offer was accepted by the respondent when he attended at the appellant's home and embarked on the test. The resulting contract was never executory in so far as the respondent was concerned. Up until the time when he embarked upon the trial, he remained free to change his mind and to refuse to participate in it. Once he embarked upon the trial he was free, at any time, to discontinue. During the period of the trial, he was under no contractual obligation to the appellant to perform in a workmanlike manner any painting work which might be involved: one of the purposes of the trial was to determine his ability so to do painting work. The consequence of his refusing to participate in the trial or participating in it other than genuinely would have been that the appellant did not become contractually liable to make the payment which he had offered to make. Such refusal or such lack of genuine participation would, however, no more have involved breach of contract on the respondent's part than would returning home or loitering on the way have involved breach of contract on the part of the mythical walker who was offered 100 pounds to walk from London to York. (at p185)

6. A contract of service is that form of contract which embodies the social relationship of employer and employee. It cannot be identified by reference to the presence of any one or more static characteristics. The relationship is a dynamic one which needs to be accommodated to a variety of different and changing social and economic circumstances. It is, however, of the essence of a contract of service that it is a bilateral contract involving executory obligations on behalf of both employer and employee (see, for example, Kearney v. Whithaven Colliery Co. Ltd. (1893) 1 QB 700, at p 711 ). The contract which resulted from the respondent's acceptance by performance of the appellant's offer to make an unilateral contract was not such a bilateral contract. It did not extend beyond the appellant's obligation to pay the respondent for the period of the trial and did not give contractual force to the overall arrangements relating to the trial. In particular, that contract did not involve any contractually binding promise by the respondent to perform work for the appellant either in the capacity of an employee or in the capacity of an independent contractor. It did not involve the assumption by the respondent of any executory obligations whatsoever. It was not a contract of service. (at p185)

7. It follows that, in my view, the respondent was not, at the time he sustained his injuries, a workman for the purposes of the Ordinance. It follows that the appellant was not liable, under the provisions of the Ordinance, to pay him compensation in respect of those injuries. (at p185)

8. I agree with the orders proposed by Muirhead J. (at p185)

JUDGE3

LOCKHART J. (Delivered separate reasons in which he agreed that the appeal should be upheld on the ground that there was no contract for services in existence at the time of the injury.) (at p185)

ORDER

Orders accordingly.