De Pasquale v Csr Limited & Ors No. DCCIV-98-1256

DE PASQUALE v CSR LIMITED & ORS
[2003] SADC 20
Judge Lowrie
Civil

In September 1998 the plaintiff, Daniel De Pasquale, commenced proceedings in this court against CSR Limited (“CSR”) as the first defendant and CSR Humes Pty Ltd (“Humes”) as the second defendant alleging that at all material times he was an employee of Select Staff Pty Ltd (“Select”) whose business was to provide labour to both the first and/or second defendants and in the period May to September 1995 Select provided the plaintiff’s services to the first and second defendants. During the course of this employment in September 1995 the plaintiff suffered a work injury which the plaintiff alleged arose because of the negligent work practices of the defendants.
The defendants subsequently appeared and denied the relevant allegations of negligence.
On 7 February 2000 the plaintiff commenced a further action being number 207 of 2000 against Select in effect reiterating the material allegations that he had made in the prior action, and, then alleging that Select was in breach of the duty of care that it owed to the plaintiff in and about allowing him to perform the labouring duties with Humes.
On 8 May 2001 Master Norman made an order consolidating the actions and directed that the original action was to have the carriage of the proceedings.
Following this consolidation there have been considerable contested interlocutory matters.
An issue that arose in the defendant’s pleadings was the allegation:
“.... that the plaintiff was its employee of the second defendant by implication attending either at common law or pursuant to the provisions of section 3 of the Workers Rehabilitation and Compensation Act 1986’.”
Section 54(1) of the Workers Rehabilitation and Compensation Act 1987 provides that “.... no liability attaches to an employer in respect of a compensable disability arising from employment by that employer....”. In effect CSR was claiming statutory immunity.
No doubt this pleading caused much concern to the plaintiff who at all times believed he was an employee of Select, which Select at all times, had acknowledged. Consequently, the plaintiff then commenced action number 207 of 2000 against Select.
At that time the legal debate was ongoing concerning the position of what I would refer to as “hire” and “host” firm liability for an employee. Although there are some decisions in point the legal debate was continuing. I refer to York Civil Pty Ltd v Workers Rehabilitation and Compensation Corporation [1998] SAWCT 30 and on appeal [1999] SASC 173; Mason & Cox Pty Ltd v McCann (1999) 74 SASR 438; McMahon Services Pty Ltd v Cox (2001) 78 SASR 540. One can appreciate the plaintiff’s dilemma with both the hire and host firms claiming immunity. These matters were pre-eminent in the reasoning of the learned Master when he made the order consolidating the proceedings, and, directing that the principal action carry the relevant documentation.
On 10 October 2001, the WorkCover Corporation filed an application seeking leave to intervene in the proceedings. It would appear from perusal of this rather bulky and somewhat entangled file that there was no opposition to that intervention. That application was brought pursuant to section 123 of the Workers Rehabilitation and Compensation Act 1986 where that corporation has a statutory right to intervene where there are matters of interest to the corporation. “Interest” can be both financial and administrative. As there was no opposition from the warring factions, the Master gave leave for WorkCover to intervene in the proceedings.
It appears thereafter in the numerous interlocutory applications between the factions that WorkCover was represented.
In December 2002 CSR admitted that the plaintiff was an employee of Select, and, deleted any prior assertion that the plaintiff was its employee. The consequence of that amendment to CSR’s defence was that it was unnecessary for WorkCover to be involved in the proceedings.
It is apparent that the initial plea of CSR that the plaintiff was its employee caused concern not only to the plaintiff but WorkCover. If that plea had been maintained WorkCover would be obliged to place evidence before the court as to what occurred in regard to the statutory obligations of an employer to determine who was the relevant employer.
In the appeal before me WorkCover’s counsel stressed that the basis for its intervention was CSR’s allegation that it was the employer at the relevant time. Both parties referred to the recent decision of Debelle J in City of Burnside v Attorney-General of South Australia and Others [1994] SASC 4797, 17 October 1994, unreported).
The Master delivered his reasons on 6 December 2002 and noted the dearth of authority in relation to cost orders involving interveners. The Master, in his decision, referred to Liverpool City Councill v Weir and Others (1984) 53 ALR 77; Ruddock v Vadarlis [2001] FCS 1865 and Johnston v Cameron [2002] FCAFC 301.
The learned master considered at length the judgment of Debelle J in the City of Burnside matter particularly His Honour’s reference to the process of intervention in the Admiralty and Probate jurisdictions. There are reservations in applying that type of reasoning to the factual circumstances in this case.
The learned master then went on to outline what he called “four permutations” as follows:
“1.That both CSR and Select Staff were relevantly employers. (This consequence would mean that all defendants would be protected by the Section 54 immunity. Obviously this would affect WorkCover significantly in relation to recovery actions that it might be subrogated to in the future).
2.That CSR was not an employer and Select Staff was the employer (this has been the traditional situation).
3.That CSR was the employer and Select Staff was not (WorkCover would obviously have a significant interest in this permutation).
4.That neither CSR nor Select Staff was the employer. (In this position, WorkCover would be significantly interested).”
He was then of the view that in the circumstances of this case, the intervention of WorkCover was necessary to protect its interests. He found support in the comments of Debelle J. He commented:
“Had CSR not pleaded as it did, the intervention would have been unnecessary. This has been demonstrated by its change of plea.
In the circumstances, I make an order awarding to WorkCover its costs of intervention on a party and party basis against the first and second defendants.”
The first and second defendants have appealed against the Master’s decision on the basis that it was a wrongful discretionary exercise of the Master in ordering the defendants to pay its costs of action.
The matter came on for hearing before me on 29 January 2003. Mr Beazley QC appeared for the appellants and Mr Bell for the respondent.
Mr Beazley submitted quite forcefully that in his opinion there were three errors in the Master’s reasoning and because of those errors his discretion had miscarried.
Mr Beazley confirmed that the issues arising between labour hire firms and host firms have created a rather tangled web of official pronouncements and would be critical of the conduct of WorkCover in intervening carte blanche in all actions thus giving rise to increased costs to litigants. The thrust of his submissions was that at all times WorkCover had received levies from Select and paid the employee on the basis that Select was the employer and in the proceedings Select had said, “we are the employer”. This was not disputed. When the matter was finally resolved Select was treated as the employer.
Mr Beazley was critical of the four permutations outlined by the Master particularly proposition 2 that both CSR and Select were the relevant employers. He pointed out that for the purpose of the Act there can only be one employer. At common law the situation may be different. He was also critical of the Master’s fourth proposition. He reiterated that for the purposes of these proceedings, Select had always admitted that it was the employer notwithstanding any other pleadings and, consequently, it followed that Select would have obligations to WorkCover. He was of the view because of these submissions that the exercise and discretion to make the order against the defendants had significantly miscarried.
Mr Bell replied to Mr Beazley’s submissions and pointed out immediately the very significant factor as apparent from my summary of the initial pleadings and amendments that CSR pleaded that it was the employer and continued until the very late stage to maintain that position. He referred me to the further and better defence of CSR dated 10 May 1999, and in his words, “asserted contrary to all the authorities that my friend has put to you, that CSR was really the employer”. Mr Bell conceded that it may well be this was a submission on a common law basis of employment. He said this fact was no doubt foremost in the mind of the plaintiff’s advisers when they issued the second proceedings. Mr Bell pointed out that at that point of time WorkCover would have been concerned as to who was being defined as the “employer” and thereafter following that finding recovery issues may well be an important issue and hence their intervention.
Mr Bell pointed out that at the time when WorkCover intervened there were some decisions about rights of hire and host firms, but the matter was not resolved. Consequently on this factual scenario the proper course was for WorkCover to intervene, and, importantly that leave application was not opposed by any of the parties including the present appellants. Mr Bell again reminded me of debate that ensued before the Master to determine the preliminary point as to who was the plaintiff’s employer. He pointed out that it was not until October 2002 when consideration was given by CSR and they realised in the words of Mr Bell that they “didn’t have a hope in law and they withdrew it. ..... They withdrew the pleading CSR was the employer”. Consequently that preliminary point argument did not then proceed.
Mr Bell rather succinctly said if CSR’s pleading that it was the employer had not been raised, no doubt the plaintiff would not have brought the separate proceedings against Select, or, importantly here, WorkCover would not have intervened.
Mr Bell said that the four scenarios were clearly open to the Master in his reasoning and reminded me of the comment of Debelle J in Hocking v Southern Greyhound Racing Club and Ors (1993) 61 SASR 213 that the costs of the intervener are at the discretion of the taxing officer.
I reiterate the learned comment of Debelle J in Hocking’s case. I think one has to look and examine the pleadings that the Master had before him and particularly the very pertinent early pleading which the defendants placed on foot for such a long period that it was the employer notwithstanding the clear factual background.
I believe the Master has exercised his discretion in a proper manner in ordering that the defendants pay the intervener’s costs. I confirm that decision.
I dismiss the appeal.
I make an order that the appellant pay the respondent’s costs of this matter.
I certify the same fit for counsel.

[2003] SADC 20

14 February 2003