Elazac Pty Ltd v Shirreff
[2011] VSCA 405
•1 December 2011
SUPREME COURT OF VICTORIA
COURT OF APPEAL
S APCI 2010 121
| ELAZAC PTY LTD | |
| Appellant | |
| v | |
| LINTON SHIRREFF | Respondent |
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JUDGES: | REDLICH and MANDIE JJA, BEACH AJA | |
WHERE HELD: | MELBOURNE | |
DATE OF HEARING: | 25 October 2011 | |
DATE OF JUDGMENT: | 1 December 2011 | |
MEDIUM NEUTRAL CITATION: | [2011] VSCA 405 | |
JUDGMENT APPEALED FROM: | [2010] VSC 381 (Robson J) | |
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ACCIDENT COMPENSATION – Negligence – Personal injuries – Employee or independent contractor – Plaintiff employed own employees – Plaintiff conducted own business – Plaintiff not subject to control as to how to perform work – Plaintiff a contractor rather than an employee – No negligence – Occupational Health and Safety Act 1985, ss 21 and 28.
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| APPEARANCES: | Counsel | Solicitors |
| For the Appellant | Mr D Curtain QC with Ms B Y Knoester | Hall & Wilcox |
| For the Respondent | Mr T Tobin SC with Ms M Pilipasidis | Slater & Gordon |
REDLICH JA
MANDIE JA
BEACH AJA:
Introduction
On 25 June 2002, Linton Sherriff ( ‘the plaintiff’) fell from a ladder in a lift well at 401 Collins Street, Melbourne (‘401’) and suffered severe injuries. On 1 April 2009, the plaintiff commenced proceedings for damages against Elazac Pty Ltd ( ‘the defendant’) for the injuries the plaintiff received as a result of the accident. Specifically, the plaintiff alleged that the defendant was his employer and the accident was caused by its negligence.
Whilst the defendant did not deny that the plaintiff fell from the ladder and suffered injury, the defendant denied that it employed the plaintiff and denied that the accident was caused by any negligence or breach of duty on its part. Further, the defendant alleged that, in any event, the plaintiff was guilty of contributory negligence.
The proceeding came on for hearing before Robson J and a jury on 26 July 2010. During the trial the mode of trial was changed to judge alone. The trial concluded on 9 August 2010. On 1 September 2010, Robson J delivered judgment for the plaintiff. His Honour held that the plaintiff was an employee of the defendant and that the defendant’s negligence was a cause of the plaintiff’s injuries. His Honour also found that there was contributory negligence on the part of the plaintiff and assessed the plaintiff’s contributory negligence at 20 per cent. In the result, judgment was entered in favour of the plaintiff in the sum of $897,620.80.[1]
[1]Which sum was inclusive of interest to the date of judgment.
The defendant appeals from the judgment of Robson J. It makes complaint concerning his Honour’s findings that the plaintiff was its employee and that it was negligent. It also asserts that his Honour erred in the amount at which he assessed the plaintiff’s contributory negligence. The defendant’s grounds of appeal are as follows:
(1)The learned trial judge erred in finding that the plaintiff was an employee of the defendant.
(2)The learned trial judge erred in finding that the defendant breached its duty of care to the plaintiff.
(3)The learned trial judge erred in finding that the duty of the defendant was breached by its failure to instruct the plaintiff that under no circumstances was he to enter the lift well on a ladder or, alternatively, to put in place a system of work that would have ensured that the plaintiff did not enter the lift shaft on a ladder with an injured arm in a cast.
(4)The learned trial judge erred in finding that the defendant failed in its duty to exercise reasonable care to provide a safe place of work because the lights in the lift shaft were not working.
(5)The learned trial judge erred in finding in favour of the plaintiff despite rejecting the evidence that he was crushed by a lift descending upon him, that being the claim made by the plaintiff in his statement of claim, in the opening of the case, and in the sworn evidence of the plaintiff and his witnesses in support of the claim.
(6)The learned trial judge erred in finding that the defendant was aware that the plaintiff’s arm was incapacitated at the time he suffered injury.
(7)The learned trial judge erred in rejecting the evidence of the plaintiff that he understood the instruction from Mr Morgan to fix the lift meant that if it were beyond his scope he would have got another contractor.
(8)The learned trial judge erred in rejecting the evidence of the plaintiff that he was the person responsible for organising that the repair of the lift be done safely.
(9)The learned trial judge erred in finding that the plaintiff’s contributory negligence was 20 per cent.
The plaintiff cross-appeals in relation to the finding of contributory negligence. The sole ground of the cross-appeal is that his Honour ‘erred in finding that there was contributory negligence on the part of the [plaintiff]’.
Thus, broadly speaking, the issues on this appeal and cross-appeal concern the correctness of the following of his Honour’s findings:
(a) that the plaintiff was an employee of the defendant;
(b) that the defendant was negligent;
(c)that there was contributory negligence on the part of the plaintiff; and
(d) as to the amount of contributory negligence.
Additionally, by a notice of contention, the plaintiff contends that even if he was not an employee of the defendant, his relationship with the defendant ‘was still of such a nature that the duty owed by the [defendant] at common law and pursuant to section 21 of the Occupational Health and Safety Act 1985 was breached by the [defendant]’. In support of his notice of contention, the plaintiff contends that the duty owed to him at common law is that set out in Stevens v Brodribb Saw Milling Pty Ltd.[2] Whatever be the position at common law (about which we will say more below), it is convenient to deal immediately with that part of the plaintiff’s notice of contention in which reliance is placed upon s 21 of the Occupational Health and Safety Act 1985.
Occupational Health and Safety Act 1985
[2](1986) 160 CLR 16.
Section 21(1) of the Occupational Health and Safety Act 1985 provides that an employer ‘shall provide and maintain so far as is practicable for employees a working environment that is safe and without risks to health’. Section 21(2) then sets out a number of circumstances which constitute contraventions of sub-s (1). Section 21(3) relevantly provides that for the purposes of sub-ss (1) and (2), ‘employee’ is defined to include an independent contractor engaged by an employer and any employees of that independent contractor.
Section 28 of the Occupational Health and Safety Act 1985 precludes the plaintiff’s right to rely upon a contravention of s 21 in civil proceedings. Sections 21 and 28 are in Part III of the Act. Section 28 relevantly provides:
Nothing in this Part [Part III] shall be construed as…conferring a right of action in any civil proceeding in respect of any contravention, whether by act or omission, of any provision of this Part.
It follows that the plaintiff’s notice of contention, in so far as it relies on s 21 of the Occupational Health and Safety Act 1985, is misconceived. We turn now to the relevant background of the plaintiff and the defendant.
Background
The evidence discloses the following background between the parties. The plaintiff completed his education at Box Hill Technical School and then obtained an apprenticeship at Georges in Collins Street, Melbourne. Whilst at Georges, he did electrical work, including maintaining and servicing lifts. After completing his apprenticeship at Georges, the plaintiff worked for approximately three years at A E Smith Air Conditioning. In about 1984, he started work as a self-employed electrician. From 1984 until the time of the accident, the plaintiff was a self-employed electrical contractor conducting a partnership with his wife in two business names: Instant Electrics and Rapid Refrigeration.
In 1996, the plaintiff did some air conditioning work for a Mr Gary Morgan on his home. The plaintiff then performed upgrading work at 411 Collins Street, a building controlled by Mr Morgan. The plaintiff then proceeded to do work for Mr Morgan at Mr Morgan’s home, a building behind 411 Collins Street in Flinders Lane and premises Mr Morgan owned in Williamstown. Mr Morgan is a businessman who operated his affairs through a number of companies, one of which was the defendant. In approximately 2000, the defendant took control of 401. Up to this time, the plaintiff was spending approximately 60% of his week working for Mr Morgan’s interests.
When the defendant took control of 401, the building required refurbishment. The defendant (through Mr Morgan) engaged the plaintiff to assist in this refurbishment as project manager. Shortly after 401 was acquired, Mr Morgan terminated the various lift maintenance contracts for his city buildings. The plaintiff gave evidence that he was called into Mr Morgan’s office and asked whether he fixed lifts. The plaintiff replied that he had worked on them, and Mr Morgan replied to the effect that that was all he wanted to know. Very shortly after this conversation, the plaintiff was contacted by one of Mr Morgan’s accountants, Mr Wallace, who wanted to know what was going on because Mr Morgan had told him to cancel all lift contracts on all buildings. Whilst the plaintiff was initially reluctant to take on responsibility in respect of the servicing of lifts, ultimately he accepted this responsibility.
So far as the plaintiff’s work at 401 was concerned, after the building was acquired, the plaintiff was given the task of supervising and refurbishing it. When 401 was acquired it had nine floors plus a mezzanine floor above the ground floor and a plant room above the ninth floor. Mr Morgan demanded that the seventh floor be refurbished first. This involved carpeting, painting, rewiring and other work. Thereafter, the plaintiff supervised the refurbishment of a floor approximately every three months. By the time of the accident, the plaintiff had refurbished floors five to nine.
The plaintiff gave evidence that by the beginning of 2002, ‘pretty much’ 100% of his working days were spent doing work for Mr Morgan. The plaintiff said that he had earlier threatened to resign because his workload was too much and he could not do the work required with the staff Mr Morgan provided for him to use. As a consequence, a new contract was entered into. The terms of this contract were contained in a file note of 23 October 2000 headed ‘Contractor Agreement With Linton Shirreff (Rapid Refrigeration/Instant Electrics)’. The agreement provided for a $20,000 advance to Instant Electrics so that they were always in funds to make payments to suppliers. The plaintiff was given authority to approve all payments to suppliers up to $5,000. Expenses over $5,000 were to be authorised by Mr Morgan or Mr Wallace. Roy Morgan Research was to pay the plaintiff’s work vehicle costs. The daily rate for the plaintiff was agreed at $450 per day for a ‘flexible eight hour day and covers overheads and project management responsibilities’.
The file note provided that other employees of Instant Electrics who worked on Roy Morgan Research/Elazac Projects were to be charged out at $30 per hour. The file note also provided for the employment of two qualified and multi-skilled electricians by Roy Morgan Research, and that the plaintiff and one Irene Koymaras were to arrange job advertisements immediately.
The plaintiff gave evidence that he was paid $450 per day irrespective of the time he worked. He also said there was no differentiation in his pay whether he was doing electrical work, non-electrical work or supervision. Whilst he could direct others to perform various tasks, his duties as project manager at 401 could not be delegated. Irrespective of which building the plaintiff was working on, invoices were rendered to the defendant (although they were addressed variously to Roy Morgan Research or Morgan Research). Invoices rendered in 2002 charged for the plaintiff’s labour and the labour of other workers employed by the plaintiff. For example, for the week containing the accident, the plaintiff rendered an invoice in the name of Rapid Refrigeration to Morgan Research charging for his own labour and the labour of three other workers (Gary, Glen and Jay).
During the first six months of 2002 (and up until the time of the accident), the plaintiff was supervising staff to carry out the refurbishment of 401 and servicing the lifts at 401, the lifts in 411 Collins Street and in Mr Morgan’s building in Flinders Lane. Workers involved in the refurbishment of 401 were employed either by the plaintiff or the defendant. The plaintiff gave evidence (which was accepted by his Honour) that if new labour was to be added, he would employ them initially for approximately three months and if they were any good they were transferred to the defendant.
As to control, the plaintiff gave evidence that he personally dealt with Mr Morgan in relation to the activities he was to carry out. Mr Morgan gave the plaintiff directions on what to do from day to day (although if Mr Morgan was away then Mr Wallace was the one who gave directions). The evidence discloses that Mr Morgan was very involved, having contact with the plaintiff at least daily, and sometimes hourly. If outside contractors were to be brought in, it was the plaintiff who made that decision. Generally speaking, and within the parameters of the agreement between the plaintiff and the defendant, it was the plaintiff who could choose whether a particular task was to be performed by the plaintiff, one of the plaintiff’s employees, one of the defendant’s employees or an outside contractor.
The plaintiff was supervised in his work by Mr Morgan. This involved Mr Morgan telling the plaintiff on a daily (if not hourly) basis what work Mr Morgan wanted done and when he wanted it done. The evidence discloses that there was a high degree of control in this regard. However, as counsel for the plaintiff conceded on this appeal, the evidence does not disclose Mr Morgan exercising any control as to how particular jobs were to be performed.
As to the plaintiff’s own employment status, the plaintiff gave evidence that whilst working for Mr Morgan he employed his own employees and made the usual deductions and payment in respect of them. As to the partnership with his wife, the plaintiff said that his wife kept the books and did the accounting. Under cross-examination, the plaintiff agreed that he had never been employed by the defendant (or indeed anyone else). The plaintiff said that he had been self-employed from 1984. He also gave evidence that he had an agreement with the Housing Commission to perform certain work for it, and that he did this work as long as his job at 401 was progressing satisfactorily.
Before dealing with the question of whether the plaintiff was an employee or independent contractor of the defendant, it is necessary to deal with the events of 25 June 2002 (the day of the accident).
The day of the accident
On the morning of the accident, the plaintiff had attended the fracture clinic at the Royal Melbourne Hospital to have a plaster cast removed from a fractured wrist. The plaintiff had fractured his left wrist six weeks earlier at 401. The cast was removed and replaced with a removable plastic splint. There was little evidence given concerning the splint. One of the plaintiff’s treating orthopaedic surgeons (Mr Patten) gave evidence-in-chief that the splint would have had a considerable effect on the left arm in that the plaintiff ‘would be unable to flex or extend his wrist, or rotate his wrist normally’. In cross-examination Mr Patten gave evidence that the capacity to grip would be at least moderately compromised by the splint. He went on to say that while the splint was designed to allow the user to grip things, ‘how hard you can grip them is difficult to speculate’. Additionally, he said that if the splint was on then this would certainly compromise the wearer’s capacity to grip a ladder. No evidence was given as to how visible or observable the splint would have been to others on the day of the accident (although one witness who assisted the plaintiff after the accident, Mr Stone, gave evidence that he observed ‘some sort of plastic brace on [the plaintiff’s] left arm’).
At approximately 4.15pm, the plaintiff and Mr Stone attended 401. As the plaintiff walked into 401, he observed one of the lifts was not working. He tried to pull the lift door open. He then stepped back to converse with someone else. At that stage, the doors opened on the other lift and Mr Morgan came out with his chief executive officer. Mr Morgan instructed the plaintiff to fix the lift immediately. In his evidence the plaintiff conveyed (and his Honour accepted) that Mr Morgan’s direction was loud, forceful and abrupt. The plaintiff gave evidence that he understood Mr Morgan wanted him to fix the lift immediately. In cross-examination, the plaintiff was asked and answered the following questions:
When you were told by Mr Morgan to get the lift working he wouldn’t have known exactly what the fault was, would he---No
He wouldn’t have directed you how to do it, but just to get it working?---His instructions was to – the instruction to me was that – he said, ‘That lift’s not working’. I said, ‘We know about it’. He said, ‘Fix it’. I said, ‘We’re working on it’. He said, ‘I said fix it now’.
Did he? Did you think that to mean you were supposed to put your life at risk?---Well to make all endeavours to get that lift working.
As quickly as possible?---As quickly as possible.
Let’s say the cable was snapped and it was unserviceable?---Yes
You couldn’t fix it could you?---Correct.
You’d say to Mr Morgan, I can’t do this, someone else has got to come and do it?---Correct.
That’s your call isn’t it?---Yes, after examination.
You understood it to mean if you can fix it, if you can’t get someone else in to fix it, correct?---Yes.
If it was within your powers, your skills to fix it, you were expected to fix it?---Yes.
You didn’t take that instruction from Mr Morgan to mean ignore safety?---No, I can’t say that.
…
Mr Morgan wanted you to fix the lift. You understood that to mean, ‘If I can fix it, I will. If I can’t fix it, I’ll get someone else to fix it, but safely’?---Yeah, if it was beyond my scope we would have got other contractors.
The plaintiff was the only witness to the accident. His Honour set out the plaintiff’s account of what occurred from the time he was instructed to fix the lift until the happening of the accident as follows:
28 Mr Shirreff went to the plant room located at the top of the building and observed from the selector that the lift was approximately near the ground floor. He applied a short circuit to the door circuit which caused the lift to move upwards. That indicated to him that there was a problem with the ground floor lock. To get access to the plant room, he and anybody else seeking access had to go through a lockable door. Mr Shirreff thought the key to the door was in it and had been so for some time.
29 He resolved to fix the problem himself. He went to his office on the ninth floor and got the door contact parts he needed and proceeded back to the ground floor. He reached inside the lift and activated it to go up while he remained on the ground floor. Once he saw the lift had cleared level 1, he inserted a key or a screwdriver in the lobby door and then opened the door. Opening the door had the effect of stopping the lift.
30 He opened the door sufficiently to put his head in to see where the trailing cables were and whether they were going to be out of the road of getting a ladder into the lift well. He then let the door close back against a screw driver. As the doors were not fully closed, the lift car was stopped from moving. He then sent either Giles Tieffel or Glenn Stone, or maybe both, to get his ladder from his car at 411 Collins Street.
31 He sat on a pile of plaster that was directly opposite the lifts and commenced to put the contact switch together. Without looking up, he saw a pair of shoes in front of him. He said it was Shane Lawler, the lift mechanic, who had been working on an electronic light beam in the lifts to stop the doors from closing on passengers when getting in or out. He told Shane to go up to the plant room and isolate the lift. Shane told him that he had to be at an appointment by 5.00pm and he told Shane that was ‘ok’ and to go up and get the lift isolated. He asked Shane to ring down to let him know when the lift was isolated.
32 The lights beside the lift door indicate at what level the lift is. The lights showed the lift was at level two. He looked up and saw the lights to two disappear. He said the lights will normally not go off unless the main switch is isolated. Shane rang down to a telephone just inside a restaurant that opened onto the lobby and informed either Mr Shirreff or Giles Tieffel that the lift was isolated.
33 When Mr Stone and Mr Tieffel came back with the ladder, Mr Shirreff opened the lobby lift door fully, exposing the lift well. He then inserted a small device under the door to hold it open. He then reached around the lift door into the lift well to activate a switch for the light in the lift well. He found the light was not working. There were switches for the lights in the lift well at the ground floor level, the top floor and in the plant room. He thought there had been problems with the lights and they could only be turned on from the plant room.
34 The illumination in the lift well in front of him was reasonably good, but very poor above that. The light came from the lobby through the opened lift lobby door. He could see the base of the well. He had a torch with him that had been obtained from his car. He inserted the ladder into the lift well and rested it against the door sill so that it protruded into the lobby by about 6 feet or so. The ladder was an extension ladder and was about 14 feet long, but could be extended to 22 feet. He was assisted by Mr Tieffel, and he thought Mr Stone, to manoeuvre the ladder to the right position.
35 He put the tools and parts in his back pocket, grabbed the torch and descended the ladder. There was a permanent fixed ladder in the lift well on the left side of the lift well (the ‘pit ladder’). He did not use it. He used his ladder because it was easier to use with the disabled hand that he had which was sore.
36 He had to introduce another ladder into the lift well as the pit ladder was not high enough to enable him to work on the door contacts. He also preferred to use another ladder to the pit ladder as it was covered in grease and very slippery. He probably descended into either pit on approximately a monthly basis to retrieve keys and mobile phones. He also entered the lift well for maintenance inspections periodically, but he had not worked in the pit area previously.
37 He descended the ladder. Whilst he did so, he was using a torch that he believed had been brought from the car by Mr Stone when he went to get the ladder. After descending to the base of the pit, he repositioned the ladder so that it was leaning above the door and over the door locks he wanted to work on. He then ascended the ladder.
38 After ascending the ladder, he put the torch in between his teeth and proceeded to undo the cover of the lift door lock and replace the contents of the door lock. At that stage his feet were probably about six feet above floor level. He unscrewed the contact off the backing plate, unscrewed the wires off the contact, screwed the new contact onto the backing plate and put the wires back on. He said that he probably did the work predominately with his right hand (his non-preferred hand) and used his left hand (which was partially enclosed in the cast) to support it. It took him three or four minutes to change the switch. Whilst he was doing this, he could hear the other lift moving. It came down at least once and discharged passengers at the ground floor.
39 After he had changed the switch, he had Mr Stone release the door holding mechanism and allow the door to come towards him. He did that about three or four times. He did that to make sure that the switch was in the right position for the contacts to engage successfully. The switch was not activated when the lift was isolated so he had to check the contact by eye. At the time he was doing the testing, he was not aware of any movement of the lift car above him.
40 After Mr Shirreff finished that task, he decided to close the door fully and climb down the lift shaft and pack the ladder up. As he started to descend, something registered in his subconscious that something was not quite right; he could not say what it was and ‘the lift came down on top of me, crushed me’. At that stage, he had descended two or three steps. The lift hit his head first and gashed his head at the point between his hairline and his forehead. He had his right hand on the ladder and it smashed that hand and the lift kept trying to stretch that arm longer and longer. The lift eventually forced that arm to let go.
The trial
A major issue at trial was whether at or about the time of the accident the plaintiff was struck by a descending lift. After giving the matter detailed consideration, his Honour rejected the plaintiff’s evidence (and his case) that he was struck by a descending lift. There is, and can be, on the evidence, no criticism of this finding. The plaintiff’s case that he was hit by a descending lift was, on the evidence, inherently unlikely. On his case, the ladder on which the plaintiff was standing would have had to have been damaged by the descending lift. The evidence at trial was that the ladder (which was produced at trial) was undamaged. Further, whilst the plaintiff gave evidence that his head was gashed by the descending lift, the medical evidence and the evidence of those who observed the plaintiff immediately after the accident was to the contrary. In rejecting the plaintiff’s account, his Honour said:
I do not find that Mr Shirreff has knowingly sought to mislead the Court. Rather, I believe that by a combination of factors he has sought to reconstruct what happened and in so doing has convinced himself that he was hit by a descending lift car. The objective and contemporaneous evidence suggests otherwise.
On the plaintiff’s pleadings, if the plaintiff did not establish that he was struck by a descending lift at the time of the accident the plaintiff’s case would fail. However, the case was conducted on an alternative basis that even if the plaintiff was not struck by a lift, the defendant’s negligence was a cause of the plaintiff’s fall from the ladder. This alternative case was pursued by the plaintiff at trial without objection.[3] In the plaintiff’s alternative case, it was alleged that the defendant was negligent in not taking steps to prevent a man (the plaintiff) with an injured arm from performing work which required him to use a ladder in the lift well. Further, in this alternative case, complaint was made as to the adequacy of the lighting in the area in which the plaintiff was required to perform his work at the time of the accident.
[3]Cf Dare v Pulham (1982) 148 CLR 658.
Ultimately, his Honour concluded that the plaintiff was injured ‘when descending the ladder when his grip with his left hand in the cast[4] slipped and he fell sustaining the injuries that he did’. During one part of the defendant’s submissions on appeal, the defendant appeared to cavil with this conclusion. Specifically, the defendant submitted that the plaintiff (who was the only witness to the accident) did not give any evidence capable of supporting this finding.
[4]Whilst there was debate during the course of the hearing of the appeal about his Honour’s use of the word ‘cast’ instead of ‘splint’, an examination of the trial transcript reveals that the words were used interchangeably to describe the splint that was given to the plaintiff on the morning of the accident.
However, ultimately the defendant conceded that there was sufficient evidence, in the form of a WorkCover claim form and other evidence of statements made by the plaintiff immediately after the accident, that was capable of supporting his Honour’s finding as to the circumstances of the accident.
Was the plaintiff an employee or contractor of the defendant?
His Honour commenced this part of his judgment with a detailed and careful analysis of the relevant authorities.[5] Whilst earlier authorities often regarded ‘control’ as the determinative factor in deciding whether someone was an employee or an independent contractor, later authorities have recognised that control (or, more particularly, the right to exercise control) is only one of a number of possibly relevant factors (albeit an important one) in determining the issue. Modern authority is to the effect that it is the totality of the relationship between the parties which must be considered. Relevant factors in determining the nature of the relationship between a person who engages another to perform work and the person so engaged include:
[5]See for example Stevens v Brodribb Sawmilling Co Pty Ltd (1986) 160 CLR 16; Humberstone v Northern Timber Mills (1949) 79 CLR 389; Hollis v Vavu Pty Ltd (2001) 207 CLR 21; Australian Mutual Providence Society v Chaplin (1978) 18 ALR 385; R v Foster; ex parte Commonwealth Life (Amalgamated) Assurances Ltd (1952) 85 CLR 138; Zuijs v Wirth Bros Pty Ltd (1955) 93 CLR 561 and Stagecraft Ltd v Minister of National Insurance (1952) SC 288.
(a)the degree of control which the former can exercise over the latter;
(b)whether what is being supplied is the work and skill of a person (contract of service) or the supply of equipment or its performance (contract for services);
(c)whether or not the person engaged can set their own hours of work;
(d)the method of payment (and, in particular, whether payment is determined by hours of service or output or production);
(e)whether or not income tax is deducted and holiday pay or long service leave or superannuation paid;
(f)whether or not the person engaged employs employees and/or conducts his business in partnership;
(g)whether or not there is a power to delegate (send someone else to perform the work); and
(h)whether or not the person engaged considered the relationship as one of independent contractor.
Further, whilst earlier authorities supported the proposition that if a person engaged had more technical or specialist skill than the person who engaged him, then the person engaged was more likely to be an independent contractor, more modern authority recognises that it is relatively commonplace to employ employees who have particular technical skills or expertise that are not possessed by those employing them. The fact that a person engaged to perform work has particular expertise no longer, of itself, provides any great support for a conclusion that that person is an independent contractor.
Having weighed the relevant matters, his Honour concluded that on the day of the accident the plaintiff was an employee of the defendant. His Honour said:[6]
In doing so I have taken into account the totality of the relationship between Mr Shirreff and Elazac, and particularly that between Mr Morgan and Mr Shirreff. There are several factors that are of particular importance. I have considered the matter on a practical basis which takes into account how the parties conducted themselves, irrespective of the formal contract between them. In other words, I have considered substance over form. On a practical level Mr Morgan demanded and expected, and Mr Shirreff tacitly accepted, complete authority by Mr Morgan over Mr Shirreff’s activities. Mr Morgan gave him instructions on a daily basis and sometimes hourly. Mr Shirreff’s duties as project manager of the projects being undertaken by Mr Morgan at his home and at 401 and 411 Collins Street were not delegable by him but had to be personally performed by him. Mr Shirreff was remunerated for the time he spent on Mr Morgan’s projects but not on the basis of his output or the tasks he performed. True it is that Mr Shirreff had flexibility in the hours he worked, but they were required to average 8 hours per day. Mr Shirreff was primarily supervising the employees of Elazac who were themselves under the control of Elazac. I accept the plea of Mr Shirreff in his amended statement of claim that Mr Morgan exercised a high degree of control over Mr Shirreff.
[6]Reasons below at [159].
Notwithstanding his Honour’s careful analysis, we have, with respect, reached a different conclusion. Whilst there was debate before us as to the course we should take should we reach a different conclusion from the trial judge, it is now settled that where a trial judge’s conclusion is drawn from inferences based on accepted facts and which can be equally validly re-determined by an appellate court, the function of the appellate court is to give due weight and respect to the trial judge’s conclusions, but the appellate court should not shrink from giving effect to its own conclusions should they differ from those below.[7]
[7]Fox v Percy (2003) 214 CLR 118 and CSR Ltd v Della Maddalena (2006) 80 ALJR 458.
It is to be remembered that in the present case, whilst Mr Morgan exercised control over the plaintiff in relation to what work was to be done at what time, Mr Morgan did not exercise control over the plaintiff as to how work was to be performed. Indeed, the plaintiff had considerable control over how work was to be performed – being able to allocate his own employees or employees of the defendant to a particular task and, in appropriate circumstances, being able to retain an outside person to perform a particular job.
The issue of control falls to be considered not merely by reference to what control was actually exercised, but also by reference to the level of control which could be exercised. Undoubtedly, Mr Morgan did exercise a great deal of control as to when the performance of particular tasks should be performed. Clearly, when Mr Morgan wanted something done immediately then it had to be done immediately. However, the evidence does not disclose any basis for concluding that Mr Morgan was capable of exercising control (or did exercise control) over how a relevant task was to be performed. Whilst it can be accepted that Mr Morgan was very interested in particular jobs being undertaken and completed immediately following the giving of an instruction to do the work, there is no evidence that Mr Morgan took any interest in how the task was to be performed. Mr Morgan was only interested in work being performed to his satisfaction when he wanted it performed, rather than the mechanics of its performance.
In our view, the most significant feature in relation to the issue of whether the plaintiff was an employee or contractor is the plaintiff’s employment of his own employees at the work sites at which he was required to perform work. Whilst it may not be absolutely inconsistent with a relationship of employer/employee that an alleged employee employs on site his or her own employees, in our view this would certainly be unusual.[8] Looking at the totality of the relationship between the plaintiff and the defendant, we have little doubt the plaintiff was a contractor and not an employee of the defendant. Not only did the plaintiff consider himself to be self-employed, everything he did in the course of his work suggested that this was so: he employed employees; his tax returns and financial documentation disclosed he was operating a business in partnership with his wife; he could determine who he employed and where they worked; he performed additional work (in working hours) for an organisation unrelated to the defendant (and sent his employees to work there from time to time); and finally, the defendant did not deduct taxation from the plaintiff’s pay and did not pay him holiday pay, sick leave, long service leave or superannuation.
[8]Cf AMP v Chaplin (1978) 18 ALR 385, 391.
In the plaintiff’s written submissions,[9] it was submitted that ‘it is conceptually possible that one man may work for another, at different times and undertaking different tasks, on the one hand under a contract for services, and on the other hand under a contract of service. Reliance was placed upon the decision of Barnes v Dawson.[10]
[9]Dated 18 April 2011.
[10][1962] NSWR 73 (and also cited in Victorian Workcover Authority v Game (2007) 16 VR 393, 398 [27] and Kovacic v Henley Arch Pty Ltd (2009) 22 VR 21, 27 [11]).
The facts in Barnes may be briefly stated as follows. The claimant, in partnership with his son, employed a third person to assist them with various kinds of rural work which they undertook and for which equipment belonging to the partnership was used. Accounts rendered by the partners for work done were based on a daily rate for each person involved and for equipment used, with adjustments for supplies and similar items received from the person for whom the work had been done. Whilst engaged on certain fencing work for the putative employer, the claimant was asked by the putative employer to assist him and some of his employees to brand and mark some calves. The claimant acceded to this request and, whilst engaged on this task, sustained injury. An account was rendered on the usual basis. The claimant later made application for workers’ compensation in respect of the injury, but this was dismissed.
In remitting the claimant’s claim for reconsideration, the Full Court of the Supreme Court of New South Wales acknowledged the possibility that a person performing work in the course of his or her business may become an employee for the purpose of performing some other specified task which was under the control, or the direction, of another. However, that is not this case. The evidence in this case discloses that the plaintiff was performing the tasks he was performing at the time of the accident as part of his overall agreement with the defendant. His Honour did not conclude (and there would have been no basis for concluding) that whilst the plaintiff was a contractor of the defendant during 2002, he became an employee for the purpose of fixing the lift on the afternoon of 25 June.
Did the plaintiff establish that the defendant was negligent?
Consistently with his finding that the plaintiff was an employee of the defendant, his Honour approached the issue of negligence on the basis that the defendant owed an employer’s duty of care to the plaintiff. After reviewing the authorities in relation to employer’s duties of care,[11] his Honour then said:
176 In my view, Elazac ought to have been aware, in view of the instruction given by Mr Morgan to Mr Shirreff, that there was a risk that Mr Shirreff may enter the lift shaft on a ladder with his incapacitated arm to fix the fault. Mr Morgan had cancelled the contracts of service for the lifts at 401 Collins Street. Mr Morgan was aware that Mr Shirreff was accustomed to obeying his instructions. The instruction was made at about 4.30pm in the afternoon when there was great demand for use of the lifts by Mr Morgan’s staff who were occupying floors five to nine. Mr Morgan instructed Mr Shirreff in a loud and demanding tone that brooked no dissent to fix the lift immediately. Mr Morgan was personally aware that Mr Shirreff had injured his arm. Mr Shirreff had shown Mr Morgan his broken arm. Elazac was aware that Mr Shirreff was on supervisory duties, that is he was not required to do any work other than supervise.
177 In accordance with the principles espoused in Wyong’s case, Elazac was thus under a duty to take reasonable steps to avoid the foreseeable risk of injury to Mr Shirreff if he sought to enter the lift well on a ladder. In my opinion, that called for Elazac as a reasonable employer to have in place a procedure that would have prevented Mr Shirreff from personally undertaking the repairs by using a ladder. Elazac, through Mr Morgan, was therefore in breach of its duty to exercise reasonable care in instructing him to fix the lift without also instructing him that he was not to enter the lift well on a ladder, but to have the repairs done some other way, such as retaining a lift servicing company or expert to fix the lift. Mr Morgan was Mr Shirreff’s employer and I have no doubt that if he instructed him not to enter the lift well on a ladder he would have complied with that instruction.
178 In my opinion, it does not matter whether or not Mr Shirreff may have acted negligently or inadvertently when on the ladder causing him to fall off the ladder. The risk of him falling from the ladder was foreseeable in the sense referred to by Mason J in Wyong’s case. The risk was not far-fetched or fanciful. The duty on Elazac to exercise reasonable care to avoid that risk was enlivened. That duty was breached by Mr Morgan’s failure to instruct Mr Shirreff that under no circumstances was he to enter the lift well on a ladder or alternatively to put in place a system of work that would have ensured that Mr Shirreff did not enter the lift shaft on a ladder with an injured left arm in a cast.
179 Further, Elazac failed in its duty to exercise reasonable care to provide a safe place of work. The lift shafts were not serviced by qualified lift maintenance people. The lights in the lift shaft were not working and it appears the accident happened whilst Mr Shirreff was on the ladder with the lights out. I find this failure also contributed to Mr Shirreff’s fall. If he lost his grip in the dark, which I found probably happened, it is likely he would have found it more difficult to save himself in the pitch black lift shaft.
[11]Kondis v State Transport Authority (1984) 154 CLR 672; Andar Transport Pty Ltd v Brambles (2004) 217 CLR 424; Bankstown Foundry Pty Ltd v Braistina (1986) 65 ALR 1; McLean v Tedman (1984) 155 CLR 306 and Czatyrko v Edith Cowan University (2005) 79 ALJR 839.
The defendant took issue with two of his Honour’s findings of fact in the above analysis. First, the defendant submitted that the evidence did not support a conclusion that on the day of the accident the plaintiff was ‘not required to do any work other than supervise’; and secondly, the defendant submitted that his Honour’s reference to the lift shaft being ‘pitch black’ was not supported by the evidence concerning the state of the lighting at the relevant time.
There is force in these criticisms. So far as the light was concerned, the plaintiff gave evidence that the light where the doors open was ‘reasonably good’; above this, it was ‘very poor’; and looking down, you could see the base of the lift well. However, in the end, it is not necessary for us to determine these issues.
As we have already said, the plaintiff’s principal case involved him being hit by a descending lift. It was the case which received most attention at trial. It was rejected by his Honour. Substantially less attention was given to the plaintiff’s alternative case which was predicated upon at least two propositions: first, Mr Morgan on behalf of the defendant knew or ought to have known that a ladder would be required to be used when fixing the lift; and secondly, Mr Morgan knew or ought to have known that the plaintiff’s left arm was in such a condition as to make it unsafe (or at least potentially unsafe) for him to use a ladder.
Relying on his notice of contention, the plaintiff contended that, even if he was not an employee, the defendant owed him a duty to provide a safe system of work in accordance with what was said in Stevens v Brodribb Sawmilling Co Pty Ltd.[12]
[12](1986) 160 CLR 16.
In Stevens v Brodribb, Mason J said:[13]
If an entrepreneur engages independent contractors to do work which might as readily be done by employees in circumstances where there is a risk to them of injury arising from the nature of the work and where there is a need to give direction when and where the work is to be done and to coordinate the various activities, he has an obligation to prescribe a safe system of work. The fact that they are not employees, or that he does not retain a right to control them in the manner in which they carry out their work, should not affect the existence of an obligation to prescribe a safe system.[14]
[13]Ibid [31].
[14]See also the judgment of Wilson and Dawson JJ, ibid [45].
It is unnecessary for us to consider further the terms of the duty found by the High Court in the circumstances that existed in the decision of Stevens v Brodribb because we have, in any event, found that even if the plaintiff was properly to be regarded as an employee (or one who was owed an identical duty), his claim must fail for the following reasons.
There was no evidence led at trial that either Mr Morgan or the defendant knew or ought to have known that a ladder would be required in the lift shaft or that the plaintiff was not fit enough to perform the necessary work. Specifically, there was no evidence led at trial from which it could be inferred that Mr Morgan or the defendant knew or ought to have known of these matters. Mr Morgan did not know what the lift problem was. For all that was known to Mr Morgan or the defendant, the lift problem may have been capable of being rectified by some adjustment or repair being performed in the plant room (and without the need to enter the lift shaft and use a ladder).
Further, whilst there was evidence that Mr Morgan knew that the plaintiff had fractured his left wrist six weeks before the accident and evidence that the plaintiff performed supervisory duties following his fracture, there was no evidence that Mr Morgan or any other representative of the defendant knew or ought to have known that the plaintiff was not fit enough to use a ladder at the time of the accident.
The defendant did not know what work would have to be performed. The method of performance of whatever work was required and who it was to be performed by were left to the discretion of the plaintiff.
It follows that in our view there was no evidence of any breach of duty on the part of the defendant.
Finally, we note for completeness that at the time of the accident there was on site a lift mechanic, Shane Lawler. Mr Lawler was employed either by the plaintiff or the defendant. Whilst there was some evidence given at trial which suggested it was more likely that Mr Lawler was employed by the plaintiff than the defendant, the invoice rendered by the plaintiff for the week which included the accident does not contain any reference to Mr Lawler. Nevertheless, the evidence discloses that Mr Lawler was a worker on site who could be (and was) directed by the plaintiff as to what work he was to perform. Whilst the plaintiff might have thought that Mr Morgan wanted the plaintiff personally to repair the lift, no evidence was given of Mr Morgan making any such statement. Mr Morgan did not give evidence at trial. Notwithstanding this fact, we see no basis for concluding that Mr Morgan (Elazac) would have had any basis for thinking that the plaintiff would personally perform the necessary work rather than the work being employed by the employed lift mechanic, Mr Lawler. However, and in any event, as we have said above, the real impediment to the plaintiff establishing a cause of action against the defendant was the lack of any evidence that the defendant knew or ought to have known that the work necessary to fix the lift would require the plaintiff to use a ladder and that the plaintiff was not fit enough to use the ladder in all the circumstances.
Conclusion
The defendant’s appeal must be allowed. The judgment below must be set aside and judgment entered in favour of the defendant. The plaintiff having failed to establish a cause of action against the defendant, the cross-appeal must also be dismissed.
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