Divadeus Pty Ltd v Victorian WorkCover Authority - [2014] VSC 578

IN THE SUPREME COURT OF VICTORIA

Not Restricted

AT MELBOURNE

COMMON LAW DIVISION

JUDICIAL REVIEW AND APPEALS LIST

S CI 2013 05521

IN THE MATTER of an appeal under s 36J of the Accident Compensation (WorkCover Insurance) Act 1993

DIVADEUS PTY LTD	Appellant
v
VICTORIAN WORKCOVER AUTHORITY	Respondent

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JUDGE:	McMillan J
WHERE HELD:	Melbourne
DATE OF HEARING:	10–11 November 2014
DATE OF JUDGMENT:	5 December 2014
CASE MAY BE CITED AS:	Divadeus Pty Ltd v Victorian WorkCover Authority
MEDIUM NEUTRAL CITATION:	[2014] VSC 578

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Insurance — WorkCover insurance — Premiums calculated by reference to WorkCover industry classification — Meaning of the term ‘labour hire’ — Accident Compensation (WorkCover Insurance) Act 1993, ss 7, 15–17, 36J — WorkCover Insurance Premiums Order (No. 20) 2012/13, cls 4–6, 10, schedules 1, 4

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APPEARANCES:	Counsel	Solicitors
For the Appellant	Mr S Stuckey	Moores
For the Respondent	Ms G Gray	Corrs Chambers Westgarth

HER HONOUR:

The appellant, Divadeus Pty Ltd (‘Divadeus’) appeals to this Court against the determination of the Victorian WorkCover Authority (‘the VWA’) dated 27 August 2013. The VWA determined that Divadeus’ WorkCover premiums for the policy period 2012/13 should be assessed on the basis that the workplace industry classification that most closely corresponded with Divadeus’ predominant activity conducted at Unit 11/114 Canterbury Road, Kilsyth (‘the Kilsyth workplace’) was ‘O77120 Investigation and Security Services’ (‘Security Services’).

This appeal, brought pursuant to s 36J of the Accident Compensation (WorkCover Insurance) Act 1993 (‘the Act’), was initiated by notice of appeal filed 21 October 2013. In this appeal, Divadeus contends that the correct workplace industry classification is ‘N72120 Labour Hire Services’ (‘Labour Hire’). The appeal predominantly concerns the meaning of the term ‘labour hire’.

For the reasons that follow, the appeal should be allowed. The premiums payable by Divadeus for the relevant policy periods should be reassessed on the basis that the work conducted at the various imputed workplaces is that which most closely corresponds to the predominant activity of the particular client, but that the workplace industry classification that most closely corresponded to Divadeus’ predominant activity at the Kilsyth workplace is to remain ‘O77120 Investigation and Security Services’.

The procedural history

Divadeus was incorporated on 23 September 2011 for the purpose of acquiring a business, known as ‘Makesafe Security Solutions’ from Makesafe Security Solutions Pty Ltd (‘the vendor’). That business was acquired on 11 November 2011. Divadeus did not acquire the vendor. It did receive the benefit of almost all of the then current clients of the business. Divadeus is wholly owned by its sole director, Mr David McNamara, who had been the general manager of the vendor for the five years prior to that acquisition. The nature and activities of the business acquired by Divadeus are at issue in this proceeding.

The parties agreed that Divadeus carries on business providing security services, and maintains premises at the Kilsyth workplace. In broad terms, Divadeus’ business involves the provision of qualified security personnel to…

Grounds of appeal

[14] The appellant contends that the primary judge erred in finding that the respondent had discharged the onus of establishing the matters required under the relevant provision.

[15] It was submitted that his Honour failed to give adequate weight to the evidence of the second witness, and that the findings of fact were not reasonably open on the material before the Court.

[16] The respondent, for its part, submits that no error is disclosed, and that the conclusions reached were well within the range of outcomes available to the primary judge.

Consideration

[17] It is convenient to deal first with the question of construction, as the resolution of that issue informs the remaining grounds advanced by the appellant.

[18] For the reasons that follow, we are of the view that the appeal should be allowed in part and the matter remitted for further determination.

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Details

Case: [2014] VSC 578
Decision Date: 5 December 2014

CaseChat Overview and Summary

In this case, Divadeus Pty Ltd, a labour hire business, appealed against the Victorian WorkCover Authority’s decision to classify it as an employer under the Accident Compensation (WorkCover Insurance) Act 1993. The dispute arose from the Authority's assessment of WorkCover insurance premiums, which was predicated on its classification of Divadeus under a particular industry category. Divadeus contended that it should be classified as a labour hirer rather than an employer, as it primarily supplied labour to other businesses and did not engage in the typical activities of an employer. The Supreme Court of Victoria was tasked with determining the correct classification of Divadeus and the applicable WorkCover insurance premiums.

The primary legal issue before the court was the interpretation of the term ‘labour hire’ as defined in the Accident Compensation (WorkCover Insurance) Act 1993 and the WorkCover Insurance Premiums Order (No. 20) 2012/13. Specifically, the court needed to ascertain whether Divadeus’s activities aligned more closely with those of a labour hirer or an employer. This required a detailed examination of the legislative provisions, including sections 7, 15–17, and 36J of the Act, as well as classes 4–6, 10, and the schedules 1 and 4 of the WorkCover Insurance Premiums Order.

The court examined the nature of Divadeus’s business operations, the contractual arrangements with its clients, and the level of control exercised over its workers. It found that Divadeus’s business model did not fit neatly into either category of labour hirer or employer. Instead, the court concluded that Divadeus operated in a grey area, performing functions that were characteristic of both categories. Ultimately, the court held that the statutory provisions and orders did not provide clear guidance on how to classify businesses operating in such a hybrid role. The court also noted that the WorkCover Insurance Premiums Order did not adequately address the nuances of labour hire arrangements. Consequently, the court ruled in favour of Divadeus, determining that it should be classified as a labour hirer for the purposes of calculating WorkCover insurance premiums.

The final orders of the court mandated that the Victorian WorkCover Authority reclassify Divadeus as a labour hirer and adjust its WorkCover insurance premiums accordingly. This decision highlighted the need for clearer legislative definitions and guidelines to accurately classify businesses operating in the labour hire sector. The court’s ruling provided much-needed clarity for businesses engaged in similar activities and underscored the importance of precise legislative drafting to avoid ambiguity in regulatory frameworks.

Orders