Dickinson v Chapman

[2022] NSWCA 2

Court of Appeal

Supreme Court

New South Wales

• Summary available

Medium Neutral Citation:

Dickinson v Chapman [2022] NSWCA 2

Hearing dates:

13 August 2021

Date of orders:

3 February 2022

Decision date:

03 February 2022

Before:

Basten JA at [1];
Macfarlan JA at [46];
McCallum JA at [47]

Decision:

(1)   Allow the appeal and set aside the judgment of the District Court, order 1 made on 18 December 2020 and order 1 made on 23 February 2021.

(2)   In lieu thereof,

(a)   dismiss the statement of claim dated 31 August 2017;

(b)   order that the plaintiff pay the defendants’ costs of the proceedings in the District Court.

(3)   Order that the respondent pay the appellants’ costs in this Court.

Catchwords:

CONTRACTS – formation – intention to create legal relations – agreement evidenced by course of conduct – regular rate of payment – record of hours worked – whether payment for work performed gave rise to contractual rights or obligations on a quantum meruit

TORTS – negligence – workplace injury – whether injured party a worker or deemed worker – whether work done under contract of employment – non-compliance with procedural requirements if claim for work injury damages – application of Workplace Injury Management and Workers Compensation Act 1998 (NSW), Sch 1, cl 2

Legislation Cited:

Civil Procedure Act 2005 (NSW), s 91

Workers Compensation Act 1987 (NSW), s 66; Pt 5, Div 2

Workplace Injury Management and Workers Compensation Act 1998 (NSW), ss 4, 5, 250; Sch 1, cl 2

Cases Cited:

Australian Woollen Mills Pty Ltd v The Commonwealth (1954) 92 CLR 424; [1954] HCA 20

Chapman v Dickinson [2018] NSWDC 359

Chapman v Dickinson [2020] NSWDC 269

Ermogenous v Greek Orthodox Community of SA Inc (2002) 209 CLR 95; [2002] HCA 8

Category:

Principal judgment

Parties:

Justin Dickinson (First Appellant)
Annette Patrick (Second Appellant)
Christopher Chapman (Respondent)

Representation:

Counsel:
Mr J Catsanos SC / Mr A Parker (Appellants)
Mr P Braham SC / Mr R Goodridge (Respondent)

Solicitors:
McInnes Wilson Lawyers (Appellants)
Firths the Compensation Lawyers (Respondent)

File Number(s):

2020/365141

 Decision under appeal 

Court or tribunal:

District Court

Jurisdiction:

Civil

Citation:

[2020] NSWDC 847

Date of Decision:

18 December 2020

Before:

P Taylor SC DCJ

File Number(s):

2017/265257

HEADNOTE

[This headnote is not to be read as part of the judgment]

The respondent (the plaintiff in the court below), Mr Christopher Chapman, completed odd jobs at two industrial yards from which the second appellant (the second defendant in the court below), Ms Annette Patrick, operated a heavy freight haulage business known as White Heavy Haulage.

On 1 September 2014, Mr Chapman’s left forearm was trapped in the closing jaws of a front-end loader and suffered a significant crush injury. The front-end loader was being operated by the first appellant (the first defendant in the court below), Mr Justin Dickinson, who was an employee of the business.

On 31 August 2017, Mr Chapman commenced proceedings in the District Court seeking damages in negligence, joining Mr Dickinson and Ms Patrick as defendants. The defence asserted that Mr Chapman was precluded from seeking common law damages because he was a deemed worker pursuant to Sch 1 of the Workplace Injury Management and Workers Compensation Act 1998 (NSW) (“Workplace Injury Act”). The defendants filed a notice of motion seeking to have the District Court resolve this issue as a separate question. On 27 November 2017 the defendants’ application was dismissed.

Mr Chapman then brought proceedings in the Workers Compensation Commission. Mr Chapman and Ms Patrick, represented by her workers compensation insurer, agreed that Mr Chapman was not a worker under the Workplace Injury Act. The arbitrator found that Mr Chapman was not a worker. Ms Patrick’s public liability insurer, who was joined to the proceedings, appealed this finding. A Deputy President determined that the Commission had no jurisdiction to determine the issue because there was no dispute before it.

On 20 May 2020, Mr Chapman filed a notice of motion in the District Court seeking to strike out the defence that alleged that he was a worker or deemed worker. He asserted that the defendants were estopped from making those submissions by their “admissions” in the Workers Compensation Commission. On 29 May 2020, the motion was dismissed.

The claim was heard in November 2020. Mr Chapman’s diary showed that, at least since 3 March 2014, Ms Patrick was paying him for his work in the yards. Mr Chapman told Ms Patrick the hours he worked and she paid him $30 per hour. However, the trial judge held that there was no obligation on the plaintiff to do anything and he was not employed under a contract. He was therefore not precluded from claiming damages for the negligence of Mr Dickinson (for which Ms Patrick was vicariously liable) which caused his injury. The judge held that the defendants owed the plaintiff a duty of care and were negligent in failing to implement a safe system of work. On 18 December 2020, the trial judge awarded the plaintiff damages of $121,844.61.

On appeal, the defendants challenged the finding that the Workplace Injury Act did not apply. The primary issues before the Court were whether:

1. there was a common intention between the plaintiff and the second defendant to be legally bound by contract; and

2. the plaintiff was a worker or deemed worker within the meaning of the Workplace Injury Act.

Held by Basten JA (Macfarlan and McCallum JJA agreeing) upholding the appeal:

Issue 1 – common intention to be legally bound by contract

1. A common intention to be legally bound by contract was to be determined objectively. From March 2014 the course of conduct between the plaintiff and the second defendant satisfied that test. The plaintiff regularly communicated his hours of work to the second defendant, who consistently paid him $30 per hour for services rendered. The facts that (i) the second defendant had unilaterally set the rate of pay and (ii) the plaintiff was not obliged to work particular hours, did not preclude the existence of an intention to be contractually bound: [35]-[36].

Australian Woollen Mills Pty Ltd v The Commonwealth (1954) 92 CLR 424; [1954] HCA 20; Ermogenous v Greek Orthodox Community of SA Inc (2002) 209 CLR 95; [2002] HCA 8 applied.

Issue 2 – worker or deemed worker

1. The plaintiff fell within the definitions of a worker and deemed worker under the Workplace Injury Act. The plaintiff was a worker because he was a person who worked under a contract of service, and was a deemed worker because he had performed work exceeding $10 in value pursuant to a contract: [36].

Workplace Injury Management and Workers Compensation Act 1998 (NSW) ss 4, 5; Sch 1, cl 2 applied.

1. The plaintiff’s entitlement to recover damages was subject to the Workplace Injury Act and Workers Compensation Act, which he had not complied with. He was thereby precluded from bringing a claim for damages in the District Court: [37].

Judgment

1. BASTEN JA: On 1 September 2014 Mr Christopher Chapman (the plaintiff) suffered a significant crush injury to his left forearm when the arm was trapped in the closing jaws of a front-end loader. The injury occurred at industrial premises in Kingswood from which Ms Annette Patrick operated a heavy freight haulage business known as White Heavy Haulage. The front-end loader was being operated by Ms Patrick’s son, Mr Justin Dickinson, an employee of the business.

2. In August 2017, the plaintiff commenced proceedings in the District Court seeking damages in negligence, joining as defendants Mr Justin Dickinson and Ms Patrick. Ms Patrick was said to be vicariously liable for the acts and omissions of Mr Dickinson as her employee.

3. A major issue in the proceedings was whether the plaintiff was an employee of Ms Patrick. The plaintiff did not assert that he was; the position of the defendants was ambivalent. It was common ground that if the plaintiff had been at the time of the injury an employee, he was not able to bring proceedings in negligence for work injury damages, not having taken the necessary procedural steps.

4. The resolution of this issue gave rise to a complex procedural history. The defence to the plaintiff’s statement of claim asserted that the plaintiff was a deemed worker pursuant to Sch 1 (and s 5) of the Workplace Injury Management and Workers Compensation Act 1998 (NSW) (“Workplace Injury Act”). This allegation was denied by the plaintiff in his reply of 2 May 2018.

5. No doubt confident that Ms Patrick’s workers compensation insurer would also deny that he was a worker or deemed worker, and perhaps hoping to engage the exclusive jurisdiction of the commission under s 105 of the Workplace Injury Act, the plaintiff proposed to commence proceedings in the Workers Compensation Commission, seeking a ruling as to that jurisdictional issue. In response to that proposed course, on 19 October 2018 the defendants filed a notice of motion in the District Court seeking to have the issue dealt with in the Court as a separate question. That application was dismissed by Gibson DCJ, judgment being delivered on 27 November 2018. ^[1]

   1. Chapman v Dickinson [2018] NSWDC 359.

6. Proceedings were then brought before the Workers Compensation Commission, where both the plaintiff and Ms Patrick, represented by her worker’s compensation insurer, took the view that he was not a worker. However, Ms Patrick’s public liability insurer was joined to those proceedings and objected to the Commission determining the merits of the matter. Nevertheless, the arbitrator did consider the issue and determined that the plaintiff was not a worker. The public liability insurer appealed, and a Deputy President determined that the Commission had no jurisdiction to determine the issue because there was no dispute before it.

7. Undeterred by the setting aside of the arbitrator’s ruling, the plaintiff, by a second notice of motion in the District Court dated 20 May 2020, sought to strike out the paragraphs of the defence which asserted that he was a worker or deemed worker. The plaintiff asserted that the defendants were bound by an estoppel arising from the decision of the arbitrator in the Workers Compensation Commission, or that they were bound by “admissions” made in the Commission or, otherwise, to permit the defence to proceed would amount to an abuse of process. By judgment delivered on 29 May 2020, Judge P Taylor SC dismissed the plaintiff’s motion. ^[2]

   2. Chapman v Dickinson [2020] NSWDC 269 (“Chapman (No 1)”).

8. In late November 2020, the plaintiff’s claim proceeded to a hearing in the District Court before Judge Taylor. On 18 December 2020 judgment was given for the plaintiff against the defendants in the sum of $121,844.61. ^[3]

   3. Chapman v Dickinson (No 2) [2020] NSWDC 847 (“Chapman (No 2)”) at [132].

9. The notice of appeal filed on 15 March 2021 contained two parts. First, it challenged the finding that the plaintiff was not a worker or deemed worker. Secondly, it challenged the findings of liability and quantum, based on the assumption that the claim was subject to the terms of Civil Liability Act 2002 (NSW), and did not involve a liability governed by Pt 5, Div 2 of the Workers Compensation Act 1987 (NSW) and the Workplace Injury Act.

Liability – worker or deemed worker

(a)   the issue

10. The restrictive provisions with which the plaintiff had not complied dealt with “work injury damages”, which were defined in the Workplace Injury Act to mean “damages recoverable from a worker’s employer in respect of … an injury to the worker caused by the negligence or other tort of the employer”. ^[4] (The reference to a worker’s employer includes a reference to a person for whose acts the employer is vicariously liable,^[5] which would thus cover the negligence of Mr Dickinson.) The concept of employment, and thus identification of the “worker’s employer”, flows from the definition of “worker” to mean “a person who has entered into or works under a contract of service … with an employer (whether by way of manual labour, clerical work or otherwise, and whether the contract is expressed or implied, and whether the contract is oral or in writing).”^[6] There are exclusions which are not presently relevant; the definition is extended, however, by s 5 which provides that Sch 1 has effect. Schedule 1, cl 2 relevantly provides:

2   Other contractors

(1)   Where a contract—

(a)   to perform any work exceeding $10 in value (not being work incidental to a trade or business regularly carried on by the contractor in the contractor’s own name, or under a business or firm name), …

…

is made with the contractor, … the contractor is, for the purposes of this Act, taken to be a worker employed by the person who made the contract with the contractor.

4. Workplace Injury Act, s 250(1) work injury damages.

5. Workplace Injury Act, s 250(2)(b).

6. Workplace Injury Act, s 4(1) worker.

11. The term “contract” is thus central to the identification of the relevant relationship, namely that between the plaintiff and Ms Patrick. Relying upon general law principles, the parties treated the relevant issue as whether they had exhibited an intention to create a contractual relationship. On one view, that formulation does not establish a criterion, the application of which may assist in determining whether there is a contract, because, as noted in Ermogenous v Greek Orthodox Community of SA Inc,^[7] “the search for the ‘intention to create contractual relations’ requires an objective assessment of the state of affairs between the parties (as distinct from the identification of any uncommunicated subjective reservation or intention that either may harbour)….” Rather, the criterion reflects the principle that “the essence of contract, regarded as a class of obligations, … is a voluntary assumption of a legally enforceable duty.” ^[8] The intention may be “imputed”, which means that the law accepts the conduct of one party as sufficient to involve the voluntary assumption of an obligation which it will enforce. Thus, a statement which induces the other party to act in a way in which he or she would not otherwise have acted may give rise to an obligation which the law will enforce. A course of conduct may give rise to an obligation as much as may an express statement of intention to act in a particular way.

    7. (2002) 209 CLR 95; [2002] HCA 8 at [25] (Gaudron, McHugh, Hayne and Callinan JJ).

    8. Australian Woollen Mills Pty Ltd v The Commonwealth (1954) 92 CLR 424 at 457 (Dixon CJ, Williams, Webb, Fullagar and Kitto JJ).

12. The defendants’ case was based upon the fact that, although the plaintiff attended the yards from which Ms Patrick conducted her business, at irregular times but over a lengthy period and was paid by Ms Patrick, there was no expectation of payment for hours worked at the yard for the benefit of Ms Patrick’s business. Alternatively, any right to payment was an obligation based on quantum meruit, imposed without any contractual entitlement. The plaintiff recorded in his diary payments received and, in several cases, the number of hours worked which, where the hours were recorded, reflected payments of $30 per hour.

(b)   the judge’s reasoning

13. The assessment of the circumstances (which will be explained more fully below) was by no means an easy matter for the judge. Neither party was seeking to assert a breach of contract and thus neither sought to identify any particular contractual obligation.

14. Dealing with the evidence of events for the six months prior to the plaintiff’s injury, the judge made the following findings in Chapman (No 2):

“[53]   I find that Mr Chapman volunteered to clean or assist to clean the yard at Sydenham, not expecting payment, motivated by the circumstance that he had some goods stored there and that he had contributed to the accumulation of the material through his auction purchases with and for Kevin.

[54]   I find that Ms Patrick was not inclined to have Mr Chapman giving her assistance without him being paid. She insisted that Mr Chapman be paid for the assistance he gave, and Mr Chapman accepted those payments, although initially and at other times he did so reluctantly. I am not persuaded that those payments were solely based on the hours Mr Chapman recounted to Ms Patrick, not only because she paid other matters such as fines, but she determined the value of the work Mr Chapman did. In my view, the payments reflected her view, after enquiry, of the value to her of Mr Chapman’s assistance, moderated by such matters as his history of friendship with Kevin and her sympathy for him.

[55]   I find that Mr Chapman was never obligated legally to provide any assistance to Ms Patrick. Mr Chapman went to one or other yard or not at all invariably according to his own inclination, and if he chose not to turn up, no one was troubled. Ms Patrick on many occasions did not want him to turn up, and sometimes strongly expressed her disapproval of him coming or being on site.

[56]   Mr Chapman came to expect that he would be paid something for his labours, that amount would be based upon a rate determined by Ms Patrick to be the going hourly rate together with Ms Patrick’s view of the appropriate number of hours, taking into account what Mr Chapman reported, her own enquiries, and other matters like her sympathy for him and his past friendship with Kevin. Mr Chapman never regarded Ms Patrick as bound in law to pay him, and Ms Patrick, although she felt in accordance with her own principles and morality that she would and did always pay him, understood Mr Chapman’s view on the matter. Apart from what she saw of Mr Chapman at the Sydenham yard, she was personally unaware of the hours of assistance he had provided, the work he had done, and when he would or might return in the future. Even at Sydenham, Mr Chapman might turn up on weekends when she was not present. Ms Patrick understood Mr Chapman would do his own thing. Only on rare occasions did she direct his activities, and even then Mr Chapman was not likely to follow her direction unless it accorded with his view of what he should do.

[57]   It follows that there was no formal offer of employment by Ms Patrick, or offer to work by Mr Chapman, nor any acceptance. Ms Patrick said she paid what she regarded as ‘the going rate’, which she said was $20 to $30 per hour. There was no evidence that Mr Chapman sought that rate, or any rate. The amounts he received appeared generally to be at or near $30 per hour in 2014, but the methodology of calculation of the hours was uncertain. Mr Chapman’s duties and obligations were not agreed and were essentially at large. He was doing what he wished according to his own timetable. He generally accepted what he was paid, although on occasion he attempted to refuse payment or return some funds. But the amount he was paid was an amount Ms Patrick determined.”

15. Nevertheless, the judge was not satisfied that the conduct manifested an intention on either part to be legally bound to the essential elements of a contract: at [69]. He continued:

“[70]   If an intention in some way to be legally bound to pay (absent ‘the essential elements of a contract’) is manifested in some way by Ms Patrick, that of itself is insufficient to establish a contract, for Ms Patrick would be legally bound on a quantum meruit for accepting the benefit of work done by the other. This is a legal obligation ‘that differs in character from the contractual obligation’. ^[9] The ‘true foundation of the legal right to recover on a quantum meruit does not depend on the existence of an implied contract’. ^[10]

[71]   Had Ms Patrick refused to pay Mr Chapman on any particular day, on the basis that his work was considered unproductive, unhelpful, contrary to what she requested that he stay off the site, could Mr Chapman sue for payment? It is ‘of the essence of contract, regarded as a class of obligations, that there is a voluntary assumption of a legally enforceable duty’. ^[11] While a voluntary assumption of a legally enforceable duty may be necessary for a contract, of course not all such assumptions of duty give rise to a contract. A motor vehicle driver assumes certain duties when they drive on a public road, but there is no contract involved. The duty assumed by Ms Patrick was that ‘nothing is for nothing and she would pay Mr Chapman whatever she thought was the value of his work, determined by her assessment of his hours, and her view of the ‘going rate’. She acquiesced in Mr Chapman doing work for her benefit. If that gave rise to any obligation, it was at most to pay the fair value of the work done. A refusal to pay a reasonable amount may found a quantum meruit claim, but no legally enforceable duty to pay an agreed sum under a contract was established.

[72]   In my view, any entitlement at law Mr Chapman may have possessed had he received no payment for his activities seems not to rest on an implied contract, ^[12] but rather in the unjust enrichment Ms Patrick may have received resulting from her deriving a benefit in which she has acquiesced and which she accepts without payment. Even this entitlement seems not to have been established at the commencement of Mr Chapman’s activities. But as he continued to receive payment on some basis related to his hours, he expected to be paid and I accept that he attended at the sites with that expectation. And Ms Patrick continued to accept his presence, somewhat intermittently and reluctantly. Yet this does not give rise to a contract as there is an absence of features that objectively manifest a common intention to create legal relations.

…

[74]   The same circumstances deny certainty to the essential terms of the arrangement sufficient to establish a contract. That Mr Chapman was prepared to work cleaning up the yard, apparently for nothing, but accepted whatever Ms Patrick gave him in her discretion, does not reflect a concluded certain bargain.

[75]   I am not persuaded that the Court should find a contract of service or for services where the alleged worker has no obligation to perform any duty at any time, and the existence, rate or basis of payments remains undefined and payable out of the largesse or at the discretion of the alleged employer.”

9. Pavey & Matthews Pty Ltd v Paul (1987) 162 CLR 221, 228.

10. Pavey & Matthews Pty Ltd at 227.

11. Ermogenous at [24], Australian Woollen Mills at 457, (Dixon CJ, Williams, Webb, Fullagar and Kitto JJ).

12. See Pavey & Matthews Pty Ltd at [11], [12].

(c)   plaintiff’s contentions on appeal

16. Before assessing the correctness of the judge’s findings, it is convenient to consider two matters raised by the plaintiff by way of notice of contention in this Court. First, challenging the findings of the trial judge in the second interlocutory judgment of 29 May 2020 (Chapman (No 1)), the notice of contention alleged error in failing to find that at least Ms Patrick (though not Mr Dickinson) was estopped by “her conduct in the Workers Compensation Commission, or by the outcome in that Commission”. Secondly, the notice submitted that the judge erred in failing to find that both defendants’ assertions that the plaintiff was a worker or a deemed worker were “an abuse of the process of the District Court.”

17. The trial judge was correct to dismiss arguments presented to him based on estoppel and abuse of process. The contentions may be dealt with shortly.

18. First, contrary to the plaintiff’s assertions, there was no finding of fact by the Commission that he was not a worker or deemed worker under the Workers Compensation Act. The arbitrator made such a finding, but it was set aside by a Deputy President on appeal and therefore has no legal effect. The basis of the appeal decision was that the Commission lacked jurisdiction to consider that issue. As the trial judge pointed out, the plaintiff was bound by the appeal decision and therefore could not rely upon a purported finding of fact which the arbitrator had no jurisdiction to make. ^[13]

    13. Chapman (No 1) at [26].

19. Secondly, while it is important to avoid relitigating matters which have been raised or which should properly have been raised on an earlier occasion, it does not necessarily follow that consideration in a later proceeding constitutes an abuse of the process of that court. In the present case, it was the proceedings in the Commission which potentially constituted an abuse of process. The plaintiff commenced proceedings in the Commission in order to present an argument that he was not a worker and that the Commission therefore had no jurisdiction grant him any relief. If the Commission were the only available tribunal in which his status as a worker could be determined, it would be necessary to consider whether declaratory relief to that effect might be available. As the premise was not established, it is not necessary to address that proposition. However, on the basis that the proceedings in the Commission brought by the plaintiff were misconceived, the conduct of Ms Patrick in defending the proceedings can have no legal significance.

20. The circumstance revealed by the contentions is one of potential difficulty which should not be resolved in circumstances where the issue does not properly arise. A workplace injury may give rise to a claim for statutory compensation under the Workers Compensation Act, a claim for damages against the employer and a claim for damages against a third party. The differing claims which may be brought against an employer may engage separate insurance policies issued by separate insurers. The circumstances in which the conduct of a case by one insurer can bind an insurer having a different interest and properly being a party only to different proceedings may be rare. They do not arise in the present case.

(d)   whether plaintiff a worker or deemed worker

21. The legal exercise required to determine whether the parties intended to create contractual relations was identified in Ermogenous in the following terms:

“[24]   … To be a legally enforceable duty there must, of course, be identifiable parties to the arrangement, the terms of the arrangement must be certain, and, unless recorded as a deed, there must generally be real consideration for the agreement.

[25]   … Although the word ‘intention’ is used in this context, it is used in the same sense as it is used in other contractual contexts. It describes what it is that would objectively be conveyed by what was said or done, having regard to the circumstances in which those statements and actions happened. ^[14] It is not a search for the uncommunicated subjective motives or intentions of the parties.”

14. Codelfa Construction Pty Ltd v State Rail Authority (NSW) (1982) 149 CLR 337 at 348-353(Mason J); Royal Botanic Gardens and Domain Trust v South Sydney City Council (2002) 76 ALJR 436; [2002] HCA 5.

22. The basic elements of the arrangement in the present case were not in doubt. As Ms Patrick said in her evidence: ^[15]

“Q. And it's the case that you felt that it was appropriate to give Mr Chapman some money from time-to-time?

A. When he worked. He was a worker. I paid him.

Q. But it was more than that. You paid him depending on what the value you put on the work, wasn't it?

A. No, he'd give me the hours, and if I thought that he didn't do the hours, or didn't do the job good, I'd ask Justin [Dickinson] downstairs or Colin [Barnes -another employee and yard foreman].”

15. Tcpt, 25/11/20, p 488(45).

23. There is no doubt that there was consideration for the arrangement. It is true that there was no agreement on the part of the plaintiff that he should work particular hours or on particular days. In terms of the analysis based on offer and acceptance, the position, as described in Australian Woollen Mills, “is simply that the consideration on the part of the offeree is completely executed by the doing of the very thing which constitutes acceptance of the offer.” ^[16]

    16. Australian Woollen Mills at 456.

24. There was no dispute that payments were made by Ms Patrick. Although the trial judge thought there was some uncertainty as to the amount of the payments, the evidence provided sufficient certainty. Ms Patrick gave evidence as to the arrangement in the following terms: ^[17]

    17. Tcpt, p 475(10)-(25).

“Q. I'm talking about the period of April to September 2014?

A. Yes, he would write the hours down, and on whatever – a piece of paper, bit of cardboard, whatever, and I'd pay him.

Q. Hours for what?

A. For working in the yard.

Q. Do you recall now how much you paid him?

A. The going rate – 20 – $30 an hour was the going rate if—

Q. You paid him the going rate?

A. Yes.

Q. How often would you pay him?

A. When he done the work.”

The plaintiff gave evidence to similar effect. ^[18]

18. Tcpt, pp 299(1)-(19), 308(10)-309(13), 313(44)-314(11), 315(24)-316(45).

25. The plaintiff kept a diary for 2014, with a page per day. Some 25 pages of the diary for the period 3 March 2014 – 1 September 2014 (the date of the accident) were tendered as part of the defendants’ case. (They were apparently selected as those showing payments by Ms Patrick.) The judge noted that, over the six-month period, the diary recorded that the plaintiff received $14,560. The notations for some days did not include the number of hours worked, but each entry recorded the period of days covered by the payment. Where the hours worked were recorded, they demonstrated a rate of payment as $30 per hour. There were one or two minor errors, but the entries were precise and clearly written. For example, although no payment was recorded for the page of the diary for 25 June 2014, the following entries appeared:

“3.39PM   Kev’s

Chat with Dick about cleaning Kingswood & Wabco water tank etc.

Never got started.

Left 5.35pm.”

The reference to “Kev’s” was to the yards at Sydenham and Kingswood operated by White Heavy Haulage. The plaintiff had, many years earlier, established a close relationship with Ms Patrick’s partner, Mr Kevin Dickinson, who died in December 2013. The plaintiff and Mr Kevin Dickinson had visited auctions together and bought scrap machinery which was stored at the yards. As the plaintiff explained, he identified the yards generically as “Kev’s” in his diary. The plaintiff also noted that “Dick” was Kevin’s son, Justin Dickinson. ^[19]

19. Tcpt, p 318(30).

26. The plaintiff’s attention to detail in relation to the amounts of the payments was demonstrated by two entries in the diary. First, on 25 May the plaintiff recorded that Ms Patrick paid him “$1020 (34 hrs)”. That reflected a payment at $30 per hour. The entry for 31 May recorded the payment in the following terms:

“Paid me 26-5-14/31-5-14 31 hrs $930

Gave me $1100 (for rent) owe $170”.

The payment is calculated at $30 per hour; the amount paid is then noted, with an indication that an extra amount was given to him to cover his rent, the balance of $170 being a debt owed by him to Ms Patrick.

27. The page for 29 June 2014 recorded that the plaintiff paid rent of $1,050. Further, although there is no record of the repayment of $170 overpaid on 31 May, there is a record of $300 being repaid by the plaintiff to Ms Patrick on 6 July. The explanation for that appears from the previous day, namely 5 July, which contained the following entry:

“Annette paid me $1290 – 43 hrs (which was wrong. Should have been 33 hrs.)”

28. The clear inference from this material was that both Ms Patrick and the plaintiff were operating on the basis of an arrangement that the plaintiff was paid $30 per hour for work done at the yards from which White Heavy Haulage operated. The plaintiff kept precise times to calculate the hours he worked at the yards and provided a record of those times to Ms Patrick who paid him accordingly. There was evidence of the kind of work that he did, including welding, removing scrap metal, sweeping and cleaning and removing material damaged in a fire at the Kingswood yard in June or July 2014. The payments for that period, assuming that all relevant entries were included in the evidence, demonstrated an average amount of $560 per week and, at $30 per hour, some 19 hours per week. As at 1 September 2014 (the date of the accident) these figures demonstrated payments being made for work done on a regular basis. The appropriate inference is that this was a contractual arrangement. The parties clearly treated it as payment at a going rate for unskilled manual labour provided by the plaintiff.

29. The plaintiff tendered as part of his case in the District Court a statement of Ms Patrick prepared for the purposes of the proceedings in the Workers Compensation Commission. In the statement she described the relationship which had developed in about 2011 between the plaintiff and her husband. The statement included the following paragraphs, to which objection was taken, but which were admitted as explaining Ms Patrick’s view as a lay person of her relationship with the plaintiff:

“21.   Because I felt sorry for him, I would pay him for his assistance around the yard. This was done with cash, without any recordkeeping, and on a purely discretionary rather than systematic basis. I would literally take the cash straight out of my purse. I would estimate that, in total, I paid him approximately $1000.00 over a period of three months. I do not believe I ever paid him more than $100 at a time.

22.   To clarify, the claimant was never asked to perform any services or work for the insured. He was neither an employee nor a contractor. There was never a working relationship of any kind.

23.   It was readily apparent that the claimant had a mental condition of some sort. He was seemingly unable to understand that we did not want him working in the yard and would often do things that indicated he was almost entirely lacking in common sense. He became a liability and a concern around the yard because he appeared to have little awareness of his own safety and the things he was doing. We tried to get rid of him many times but he simply kept coming into the yard of his own accord, at random times.”

30. It is clear from the material set out above that aspects of this statement were incorrect. The amounts of the payments made to the plaintiff were grossly understated. Further, her evidence on oath in the District Court as to her relationship with the plaintiff after the death of her husband did not reflect the tenor of the description in the earlier statement. Rather, in the course of cross-examination she described the payment of money to the plaintiff in the following terms: ^[20]

    20. Tcpt, pp 488(35)-489(8).

“Q. And you got the understanding that he had no money or access to very little money?

A. Yes.

Q. And you felt sorry for him?

A. Sometimes.

Q. And it's the case that you felt that it was appropriate to give Mr Chapman some money from time-to-time?

A. When he worked. He was a worker. I paid him.

Q. But it was more than that. You paid him depending on what the value you put on the work, wasn't it?

A. No, he'd give me the hours, and if I thought that he didn't do the hours, or didn't do the job good, I'd ask Justin downstairs or Colin.

Q. Wasn't it the case that Mr Chapman would tell you the hours?

A. He'd write the hours down.

Q. Sorry, I just - there's a couple of parts of this. [He?] would tell you the hours, you'd respond with how much you thought was productive or real time and go backwards and forwards and then just decide on how much Mr Chapman was entitled to?

A. That's not true.”

31. Her denial of the last proposition was repeated shortly thereafter. ^[21] In the course of her evidence-in-chief Ms Patrick had confirmed the plaintiff’s evidence that she had a saying, “Nothing is for nothing.” ^[22]

    21. Tcpt, p 489(45).

    22. Tcpt, p 476(33).

32. In cross-examination she was asked, with respect to par 22 of her earlier statement: ^[23]

“Q. Within this clarifying paragraph you went on to say, ‘He was neither an employee nor a contractor’; your words?

A. That's right. So what do you call a guy that's been paid cash – a worker or a deemed worker. He wasn't employed, he wasn't on the books. He was paid cash, so again I'm not a lawyer to know which – what that means.

Q. And your next words within this clarifying paragraph, ‘There was never a working relationship of any kind.’ You know what all those words mean, don't you?

…

Q. You didn't have any trouble using those words in 2017, that there was never a working relationship of any kind, did you?

A. Well, it all depends what you call a working relationship. He was a worker and I paid him cash.”

23. Tcpt, pp 493(48)-494(20).

33. Neither Ms Patrick’s motivation, nor her characterisation of the relationship, was significant in determining whether the objective legal test of an intention to create a legal relationship was satisfied.

34. The trial judge dealt with this material in the passage set out at [14] above. However, the evidence did not support the proposition that, as at 1 September 2014, the plaintiff was working on a voluntary basis, expecting no payment. He kept careful hourly records of the time he spent working at the yards and understood the amount which was to be paid for his time. Further, the evidence did not support the proposition that Ms Patrick made her own assessment of the value to her of the plaintiff’s work. Indeed there is some inconsistency between the view that she made such an assessment and the finding that she was “personally unaware of the hours of assistance he had provided, the work he had done and when he would or might return in the future.”^[24] Rather, as has been noted, at least in the period preceding 1 September 2014, the plaintiff was paid on an hourly basis, the number of hours being supplied by him to Ms Patrick, whether orally (as he stated at one point) or in writing (as Ms Patrick stated). His diary suggested that he was meticulous in calculating the time spent at the yards and recording it. The evidence did not support the proposition that Ms Patrick made some independent calculation of the value of his service to her business.

    24. Chapman (No 2) at [56].

35. It is true, as the judge noted at [57], that the evidence did not support a finding that there was any “formal offer of employment”: that was no doubt relevant, but it was of no great significance in the circumstances. Similarly, the findings that Ms Patrick determined the rate of payment, and that the plaintiff did not seek it, are matters of little significance. So far as the evidence revealed a rate, it was $30 per hour. There was no uncertainty as to “the methodology of calculation of the hours”. The occasions on which the plaintiff returned funds to Ms Patrick were consistent with an agreed basis of calculation, namely his specification of the hours worked and Ms Patrick’s identification of the going rate as $30 per hour.

36. There was a degree of consistency in the evidence of the plaintiff, Ms Patrick and the documentary material available from the plaintiff’s diary entries. Ms Patrick ran the business, as she had done prior to her husband’s death. Prior to his death, Kevin Dickinson had, with the assistance and collaboration of the plaintiff, acquired machinery which was stored at Ms Patrick’s yards and some of which was repaired and sold or used in the business. There was no finding that the plaintiff continued to attend auctions and purchase machinery after Mr Dickinson’s death. The work for which he was paid was entirely work undertaken at Ms Patrick’s yards. The plaintiff was an odd-jobs man. He did not have fixed hours, but was paid for the work he did. He did not run a business of his own. He kept a record of his hours and was paid at an agreed rate, albeit fixed by Ms Patrick, for the hours he spent working at the yard. While he was not “on the books” of the business as an employee, and was paid cash, there was a standing arrangement that he would be paid for the hours he worked. It was a commercial arrangement: as Ms Patrick acknowledged, she ran a business not a charity. Neither her conduct nor her evidence supported the proposition that she found his assistance to be of no value.

37. In these circumstances, the proper conclusion is that the plaintiff was either a person who worked under a contract of service (as defined in s 4 of the Workplace Injury Act) or a person who performed work exceeding $10 in value pursuant to a contract (within the deemed employment provisions in Sch 1, cl 2 of the Workplace Injury Act). His entitlement to recover damages was therefore subject to the requirements of the workers compensation legislation. In circumstances where it was agreed that there had been no compliance with that legislation, the proceedings in the District Court ought properly to have been dismissed.

Conclusion and orders

38. The appeal should be upheld and the judgment in the District Court set aside.

38. That conclusion raises a question as to the proper form of the relief to be granted by this Court. Some 10 days after the completion of the hearing of the appeal, the defendants (the appellants in this Court) sought leave to file an amended notice of appeal seeking to vary the orders sought depending on the basis upon which they were successful in their challenge as to liability. The orders proposed were that, in place of the orders made in the District Court, which were to be set aside,

“a.   in the event that the appellants succeed on grounds 1 to 6 of the Notice of Appeal, there be an order that the proceedings below be dismissed on account of the procedural irregularities pleaded in paragraphs 3(f)-(k) and 21-24 of the Amended Defence, or

b.   in the event that the appellant [sic] succeeds on Grounds 7 and 8 of the Notice of Appeal, there be judgment in favour of the appellants.”

40. Grounds 1 to 6 in the notice of appeal relied upon a finding that the plaintiff was a worker or deemed worker under the workers compensation legislation; grounds 7 and 8 turned on a challenge to a finding of liability under the general law. On the reasoning set out above, the appellants succeed on the former basis, namely that the plaintiff was a worker or deemed worker. The submissions in support of the varied form of order was that in such a case “there having been no determination on the merits of the respondent’s claim in negligence, the appropriate order would be a dismissal of the proceedings below as contemplated by s 91 of the Civil Procedure Act 2005.”

41. The respondent (the plaintiff in the court below) did not object to the proposed amendment, but noted that the appellants had not addressed the consequences of the amendment. The respondent referred to the possible engagement of s 91(2) of the Civil Procedure Act 2005 (NSW).

42. Where a plaintiff brings a claim in negligence and fails to establish liability on the part of the defendant, it would usually be sufficient to order that the proceedings be dismissed. The effect of a dismissal will then turn on the operation of s 91 of the Civil Procedure Act which provides:

91   Effect of dismissal of proceedings

(1)   Dismissal of—

(a)   any proceedings, either generally or in relation to any cause of action, or

(b)   the whole or any part of a claim for relief in any proceedings,

does not, subject to the terms on which any order for dismissal was made, prevent the plaintiff from bringing fresh proceedings or claiming the same relief in fresh proceedings.

(2)   Despite subsection (1), if, following a determination on the merits in any proceedings, the court dismisses the proceedings, or any claim for relief in the proceedings, the plaintiff is not entitled to claim any relief in respect of the same cause of action in any subsequent proceedings commenced in that or any other court.

43. The amended form of the relief implies a concern on the part of the appellants as to what steps the plaintiff may seek to take in the future were the appeal to be upheld. There would appear to be two courses potentially available. One might be to renew his application to the Workers Compensation Commission, with at least a possibility of obtaining lump sum compensation under s 66 of the Workers Compensation Act, that being the purported subject of his initial claim in 2017. The alternative might be a claim for work injury damages, on the basis that he is able to (and wishes to) comply with the requirements of the Workplace Injury Act. Indeed, a claim for work injury damages cannot be made unless a claim for lump sum compensation is or has been made.

44. If the alternative forms of relief turn on the potential operation of s 91 of the Civil Procedure Act, the constraint on a plaintiff making a fresh claim depends upon the determination of “the merits” in the proceedings. To the extent that the negligence of the appellants was in issue, that was determined against them by the trial judge, although that part of the proceedings falls away on the basis that the cause of action was not otherwise available to the plaintiff. If the merits concern the identification of the plaintiff as a worker or deemed worker, that finding, as determined by this Court, would entitle the plaintiff to bring proceedings in the Workers Compensation Commission (subject to any other statutory constraints which may be engaged). As it is a matter of speculation as to why the alternative forms of relief were sought, the better course is to take the usual step of simply ordering that the proceedings in the District Court be dismissed. The appellants are entitled to costs both in this Court and in the District Court.

45. Accordingly, the Court should make the following orders:

1. Allow the appeal and set aside the judgment of the District Court, order 1 made on 18 December 2020 and order 1 made on 23 February 2021.

2. In lieu thereof,

1. dismiss the statement of claim dated 31 August 2017;

2. order that the plaintiff pay the defendants’ costs of the proceedings in the District Court.

3. Order that the respondent pay the appellants’ costs in this Court.

46. MACFARLAN JA: I agree with Basten JA.

47. McCALLUM JA: I agree with Basten JA.

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Endnotes

Decision last updated: 03 February 2022