Energo Form Act Pty Ltd v Beljan
[2015] ACTSC 257
•28 August 2015
SUPREME COURT OF THE AUSTRALIAN CAPITAL TERRITORY
Case Title: | Energo Form ACT Pty Ltd v Beljan |
Citation: | [2015] ACTSC 257 |
Hearing Date: | 5 May 2014 |
Date last submissions received: | 12 May 2014 |
DecisionDate: | 28 August 2015 |
Before: | Penfold J |
Decision: | 1. The appeal is allowed. 2. The Chief Magistrate’s findings that the ACT was the jurisdiction of connection for the respondent’s workers’ compensation claim and that the respondent was a “worker” for the appellant are set aside. 3. The matter is remitted to the Magistrates Court to be determined according to law. 4. Orders 1 to 3 are stayed until further order of the court. 5. The parties are to provide further submissions about the orders by a date to be fixed. |
Category: | Principal Judgment |
Catchwords: | WORKERS’ COMPENSATION – ENTITLEMENT TO AND LIABILITY FOR COMPENSATION – Persons entitled to compensation – whether respondent was a “worker” – whether jurisdiction of connection can be determined without determination of whether claimant is a “worker” and what work is done as a “worker”. WORKERS’ COMPENSATION – ENTITLEMENT TO AND LIABILITY FOR COMPENSATION – Persons entitled to compensation – determination of jurisdiction of connection – employer’s principal place of business is the place from which the employer conducts its business, not the place at which most of the employer’s work is done. APPEAL AND NEW TRIAL – Interference with Judge’s Findings of Fact – findings of fact not articulated – no findings made on challenges to respondent’s credibility – no scope for appeal court to make necessary findings of fact – matter to be remitted to Magistrates Court. |
Legislation Cited: | Civil Law (Wrongs) Act 2002 (ACT), s 100 Magistrates Court Act 1930 (ACT), s, 274; pt 4.5 Workers Compensation Act 1951 (ACT), ss 8(1), 8(1)(a), 36B, 36B(3), 116, 195, 197 |
Cases Cited: | Abdalla v Viewdaze Pty Ltd (2003) 53 ATR 30 Bratislav Beljan v Energo Form ACT Pty Ltd [2013] ACTMC 21 Stephan v Pacesetter Cleaning Services Pty Ltd [ (1995) 12 NSWCCR 19 Yaraka Holdings Pty Ltd v Giljevic (2006) 149 IR 339 |
Parties: | Energo Form ACT Pty Ltd (Appellant) Branislav Beljan (Respondent) |
Representation: | Counsel Mr R Crowe SC (Appellant) Mr J Wilson (Respondent) |
| Solicitors Minter Ellison (Appellant) Capital Lawyers (Respondent) | |
File Number: | SCA 90 of 2013 |
Decision under appeal: | Court: ACT Magistrates Court Before: Chief Magistrate Walker Date of Decision: 4 October 2013 Case Title: Branislav Beljan v Energo Form ACT Pty Ltd Citation: [2013] ACTMC 21 (4 October 2013) |
Introduction
This is an appeal brought by Energo Form ACT Pty Ltd (Energo) from a decision of the Chief Magistrate in relation to preliminary issues arising out of a claim under s 8(1)(a) of the Workers Compensation Act 1951 (ACT).
Branislav Beljan, the respondent to the appeal, made a claim under s 116 of the Workers Compensation Act for compensation for an injury said to have been suffered on 17 November 2009 when he slipped and fell while climbing scaffolding stairs at a building site at the National Gallery of Australia (NGA).
Section 195 of the Workers Compensation Act requires matters and questions (other than criminal prosecutions) that cannot be resolved by agreement to be resolved by conciliation or arbitration in accordance with, relevantly, the Workers Compensation Regulation 2002 (ACT). Under reg 44, an injured worker may apply for arbitration:
(a)of a matter in issue arising from the worker’s claim for compensation; or
(b)of the insurer’s rejection of the worker’s claim for compensation.
The application, as far as I can see, did not specify the matters to be arbitrated in a way that clearly identified one of those topics of arbitration; rather, as required by Form 3.57, Mr Beljan identified two of four options provided for describing the nature of the application. That is, Mr Beljan sought:
(a)arbitration in relation to Energo’s liability for an amount of weekly compensation payable to Mr Beljan; and
(b)arbitration in relation to Energo’s liability for an amount of medical treatment, damage and other costs.
Energo, by an Amended Answer to the Amended Application relevantly denied liability for weekly compensation or medical treatment, damage and other costs, on two grounds that first appeared in the Amended Answer, being:
the applicant was not an employee of the respondent;
in the alternative, the applicant’s employment was connected to the State of NSW pursuant to s 36B of the Workers Compensation Act 1951, and that [sic] the respondent is not liable for compensation or treatment expenses under the Act.
The arbitration
The arbitration was conducted by the Chief Magistrate.
Her Honour concluded (Bratislav Beljan v Energo Form ACT Pty Ltd [2013] ACTMC 21):
(a)(at [36] and [37]) that Mr Beljan worked for Energo under an implied contract of service and was therefore “a worker in accordance with s 8(1)(a)” of the Workers Compensation Act; and
(b)(at [48]) that the jurisdiction of connection under s 36B of the Workers Compensation Act was the ACT.
The appeal
Energo has appealed against these two findings under s 197 of the Workers Compensation Act, which applies pt 4.5 of the Magistrates Court Act 1930 (ACT) to such appeals. It has not been suggested that leave to appeal is required under s 274 of that Act.
The grounds of the appeal are:
(a)Her Honour failed to provide adequate reasons for finding (at [36] of her reasons for decision) that Mr Beljan was an employee of the appellant (hereinafter "Energo") at the time of the alleged injury.
(b)In circumstances where the appellant had submitted that the retrospective treatment of "salary" payments by BB Line Formwork Pty Ltd as having been made pursuant to a loan arrangement between that company and Energo was a sham designed to advance the prospects of a successful claim for workers compensation against Energo Her Honour erred in-
(i)... Failing to make a finding as to the credit of Mr Beljan, and,
(ii)... Failing to make a finding as to Energo's submission.
(c)Her Honour erred in not finding that in the circumstances of the case Mr Beljan had failed to discharge the onus of proof that at the time of his alleged injury he was performing duties as an employee of Energo.
(d)Her Honour erred in finding that Engergo's [sic] principal place of business was located in the ACT.
(e)Her Honour erred in failing to identify the place where the high level business functions of Energo were carried out.
(f)Her Honour erred in finding that the principal place of business under subparagraph 36B(3)(c) of the Workers Compensation Act 1951 should be determined primarily by reference to the place where the majority of the building work performed by Energo was carried out.
The orders to be sought on the appeal were originally set out as follows:
(a)... The appeal be upheld and the decisions made by Her Honour be set aside;
(b)... That this court decide that Mr Beljan failed to establish on the balance of probabilities that he was an employee of Energo at the time of his alleged injury;
(c)... That, alternatively to (b), this court decide that that the state of connection for the respondent's employment with the appellant was New South Wales;
(d)... That, in the event this court makes a decision in accordance with (b) or (c), there be an Award for Energo in the arbitration;
(e)... Alternatively to (b)-(d), the matter be remitted to the Magistrates Court for further hearing and determination.
(f).... The respondent to pay the appellant's costs of the appeal.
Counsel for Energo at the hearing submitted that, despite the framing of the notice of appeal, it would be problematic for me to determine the appeal against her Honour’s finding that Mr Beljan was an employee of Energo. This is because, although Mr Beljan’s credibility was seriously challenged in the Magistrates Court, her Honour did not make any findings about his credibility, and Mr Beljan’s credibility is fundamental to findings on a number of factual issues relevant to whether he was an employee of Energo. However, counsel says, the appeal can be disposed of if the appeal grounds relating to the jurisdiction of connection (grounds (d), (e) and (f)) are decided in favour of the Energo.
In supplementary submissions filed with leave after the hearing, counsel for Energo proposed that the appropriate orders would be to:
(a)allow the appeal;
(b)set aside the Chief Magistrate’s decisions that Mr Beljan was a worker of Energo and that the ACT was the jurisdiction of connection in relation to his employment by Energo;
(c)determine that NSW was the jurisdiction of connection in relation to any employment of Mr Beljan by Energo; and
(d)dismiss the application for arbitration.
Background
Mr Beljan has been working in the building industry for many years. In 2001 he formed a company called BB Line Formwork Pty Ltd (BB Line). Mr Beljan was the sole director and he, his wife Olivera and his son Mark each owned a one-third share of the company. That company was a NSW company and on the day of registration, a NSW address was nominated as the address of the company’s principal place of business (replacing a Perth address first specified on that day).
Later the company obtained work in the ACT, and in 2007 Mr Beljan formed another NSW company which, after a change of name, became Energo, the appellant in this case. Mr Beljan was the sole owner and director of that company. The principal place of business nominated when Energo was formed was also in NSW.
BB Line and Energo both maintained a company office at premises in Bankstown, NSW. The companies used the services of an accountant also based in Bankstown.
After completing various other contracts in the ACT, Energo obtained contracts for work at the NGA. The first contract, relating to stage 1 of the project, was begun in 2007 and completed in 2008. In 2008 Energo commenced work on stage 2 of the project. This contract was managed by a firm called Manteena Pty Ltd (Manteena).
On 17 November 2009, Mr Beljan says, he suffered the injury already mentioned while climbing stairs at the NGA site in Canberra.
On 10 May 2010, both Mr Beljan’s companies ceased work at the NGA site.
On 21 May 2010, a workers’ compensation claim form in respect of Mr Beljan’s injury was lodged with Allianz (Energo’s workers’ compensation insurer), and on 1 June 2010 an employer injury claim report was apparently lodged.
Evidence in Magistrates Court
Her Honour summarised the evidence about Mr Beljan’s work arrangements at [7] to [20], as follows:
7..... The applicant gave evidence that he was a director of the respondent and also of BB Line at the time of his injury. He claims to have worked almost exclusively for Energo on the NGA project in the capacity of supervisor between August 2008 and May 2010, with some occasional work for BB Line. He states that he was paid by Energo for his work as a supervisor and that during that time he received some proportion of his income from BB Line, depending on which entity was in funds. His further evidence was to the effect that his duties included managing and supervising, organising materials and assigning tasks, designing formwork propping and back propping as required and conducting inspections of the work. He had a site supervisor at the NGA site named Henry Berger, three foremen and staff under them.
8..... The applicant’s son and safety officer for Energo, Mr Mark Beljan, gave evidence that the applicant was head site supervisor for Energo at the NGA project.
9..... Mr Rod Mitton, project manager for Manteena Ltd, head contractor on the NGA site, stated that the applicant’s role was managerial, talking to staff and giving direction but that his main dealings were with Mr Berger, whom he understood was Energo’s foreman and supervisor. This was based on his contact with Energo’s employees and his review of documents in which Mr Berger was represented as the site foreman and supervisor for Energo. He did note that the applicant attended the NGA site once a week or fortnight. At that time he was observed to perform management and administrative functions including discussing project specifications, staffing and payments. Consistent with the applicant’s own evidence, Mr Mitton did not see the applicant perform any physical work on site.
10... In his workers compensation claim form to Allianz dated 21 May 2010, the applicant gave his occupation as “director” and his main place of work as Bankstown (New South Wales). In a second workers injury claim form to the Victorian WorkCover authority dated 1 June 2010, the applicant again gave his usual workplace address as Bankstown, New South Wales, did not complete the box requesting the worker’s usual occupation and described the main tasks performed by the worker as “supervisor”.
11... The applicant tendered tax returns for the years 2006 to 2011. In the 2006 year he reported his employer as Energo Form Pty Ltd (as opposed to Energo Form ACT Pty Ltd) and BB Line and listed his employment as “carpenter”. For the 2007 tax return, he nominated his employer as Energo Form Pty Ltd and his occupation as carpenter. In the 2008 tax return he nominated his employers as Energo Form ANU Pty Ltd and Energo Form Pty Ltd and again his occupation as carpenter. In the 2009 return, the applicant nominated his employers as Energo Form ANU Pty Ltd and BB Line and his employment as “building supervisor”. In his 2010 return, he again nominated his employers as Energo Form ANU Pty Ltd and BB Line and his employment as “building supervisor”. According to these returns at the time of injury he was not employed by the respondent Energo. I note, however, that in his statement the applicant indicates that he changed the name of Energo Form ANU Pty Ltd to Energo Form ACT Pty Ltd in August 2008. ASIC records confirm this.
12... In an application for tenancy of premises at Barton in the ACT dated 1 August 2008, the applicant nominated his employer as BB Line.
13... Energo went into liquidation after the alleged date of injury. The liquidators “Report as to Affairs” dated 20 October 2010 noted that the applicant was a priority creditor in respect to his “employee entitlements”.
14... Payment reports disclose that the applicant received income from BB Line and Energo Form ANU Pty Ltd in the months prior to the alleged injury. I have not been provided with any records indicating payments by Energo although again I note the change of name in August 2008. There is substantial dispute as to just what the applicant was paid and by which entity.
15... Another issue in dispute was the applicant’s attendance at the NGA site. His evidence was that he attended fairly consistently five days a week, that he rented premises in Barton because he was based in the ACT and that, while he returned to Sydney on weekends to see his wife and perform some administrative tasks, the majority of his work was conducted from the NGA site.
16... This position was supported by Mr Mark Beljan who gave evidence to the effect that his father was on site a minimum of five days a week for about 40 hours per week.
17... Contrary to this is Mr Mitton’s assessment of the applicant’s attendance to the effect that the applicant attended, as he understood it, far less frequently, perhaps weekly or fortnightly as required, which is supported by the site attendance records. However the applicant stated that he did not always sign in and therefore the records were unreliable. It was Mr Mitton’s evidence that site attendance records were generally accurate and compliance with them was a condition for each contractor but he conceded that the applicant may have been present at times without Mr Mitton being aware of it.
18... Mr Mitton was also aware of the Barton apartment but had been led to understand that the applicant’s son and other Energo employees regularly stayed at the apartment, with the applicant staying overnight on the occasions that he remained in Canberra.
19... I note a schedule of correspondence provided by Energo to the effect that between 15 January 2009 and 10 November 2009, correspondence between the applicant and Manteena was either faxed from a Sydney facsimile number on letterhead from Bankstown or, in the case of statutory declarations, signed and declared at Bankstown. This was relied upon by the respondent to support its contention that whatever work was carried out by the applicant was largely from Sydney. The applicant said that this was because he did not have the office facilities in Canberra and attended to such matters when he was in Sydney and in some instances sent faxes up in blank form from Manteena’s office to be returned on letterhead from Sydney. There was no evidence to support the latter.
20... Energo submitted that the applicant signed a tax return in 2009 which represented to the Taxation Commissioner that the applicant had been made redundant by Energo on 20 November 2008. The applicant denied that in oral evidence. Unfortunately this was not clarified but I do note that the payer’s ABN referred to in that tax return is not the same as the ABN listed for any of the permutations of Energo Form.
It is clear from that summary that there were relevant factual issues arising from the evidence before the Chief Magistrate about which her Honour did not make findings (for instance, the frequency with which Mr Beljan was on site at the NGA, the nature of the activities he undertook while there, and the arrangements under which he received payments from his two companies). The impact of her Honour’s failure to make particular factual findings on the finding that Mr Beljan was a “worker” of Energo is discussed below at [51] to [56].
Matters raising credibility issues
Mr Beljan’s credit was challenged in the Magistrates Court, although not as strenuously as it might have been; a number of allegations made on appeal were not put to Mr Beljan in cross-examination in the Magistrates Court. As noted, her Honour did not make any findings about Mr Beljan’s credibility, and did not resolve a number of matters that might have been able to be resolved by reference to credibility findings.
In transcript, much of Mr Beljan’s evidence suggests a basis for making an adverse credibility finding, but her Honour’s impression of Mr Beljan in court may have explained why she refrained from any such finding.
Although it is unnecessary and possibly inappropriate to canvass the credibility issues in any detail at this point, some of the credibility issues that have been raised should be mentioned before I address the specific questions that arise in this appeal.
Financial arrangements
There was no clear evidence of any payment in the nature of salary or wages being made to Mr Beljan by Energo.
In evidence before the Chief Magistrate was a document summarising nearly 100 pages of pay directions given by the two companies (Energo and BB Line) to the Commonwealth Bank for the purpose of payments to employees. They indicated that a payee identified as B O Beljan received fairly regular payments, but sometimes from one of the companies and sometimes from the other.
I am not aware of evidence that Mr Beljan had a middle name, either one beginning with “O” or at all; on the other hand his wife Olivera had the initial “O”. Thus, it is not clear that the payee referred to as “B O Beljan” was Mr Beljan; the payee might have been Mr Beljan and his wife jointly. It was submitted that if that was correct, the payments were being made to them in their capacity as company owners rather than employees.
Mr Beljan’s evidence about this was confusing. At different points in his cross-examination he gave the following explanations:
And you were known of, were you, as “Benny”?---Yes.
And you were known as “BO”, “BO Beljan”?---No, “BO”, that’s my wife normally, “BO Beljan”.
Not you?---No.
...
And BO Beljan, isn’t that - - - ?---That’s me and my wife.
Sorry?---Me and my wife.
You and your wife?---That’s it.
As to why the payments came apparently randomly from the two companies, Mr Beljan said in evidence that this was just a matter of convenience and that he had agreed with his accountant that payments would be made depending on which company happened to be in funds from time to time.
One of the Commonwealth Bank pay directions shows that for the week in which Mr Beljan was injured, there was a payment of $2,406 from BB Line to B O Beljan, and there was an equivalent pay direction made by Energo for the same week that did not include a payment to Mr Beljan or any member of his family.
Mr Beljan gave evidence that the more reliable pay records were a set of records that were prepared on 7 June 2010 by Energo’s accountant in Bankstown, and faxed to Energo’s insurer that day, in the context of Mr Beljan’s workers’ compensation claim. The relevant legislation required evidence to be provided of the claimant’s normal average weekly earnings over the 12 months preceding the injury, and the records constructed for that purpose covered a period of exactly 12 months before the date of the alleged injury.
However, those records bear little or no relationship to the contemporaneous records of pay directions, and, counsel said, do not add up to the same total for the 12-month period as those contemporaneous pay records.
Mr Beljan’s 2009 personal tax return showed that he had received an employment termination payment from Energo on 20 November 2008; this raised a question whether he could have been still employed by Energo at the time of the accident almost a year later.
Mr Beljan’s evidence about the declaration of an employment termination payment in his personal tax return seemed to suggest that he had taken a payment from Energo of an amount previously held by Energo to fund redundancy payments under Energo’s enterprise agreement; he regarded this amount as becoming available to him personally because Energo’s new enterprise agreement did not require redundancy payments to be made or provided for. It is by no means clear that, if that money was available to Mr Beljan personally in those circumstances, it would appropriately have been taxed as an employment termination payment.
Before the Chief Magistrate, it was submitted that pay records were created, after the workers’ compensation claim was made, in order to establish that Mr Beljan was an employee of Energo when he was injured, and that if Mr Beljan had in fact been an employee of either of the companies at the relevant time, he was an employee of BB Line. On behalf of Energo, the effect of the pay records created after the making of the claim was described as “all too convenient”.
On behalf of Mr Beljan it was submitted that his oral evidence of the financial and other arrangements should be accepted rather than the evidence provided by the original pay directions.
Status of workers’ compensation insurance policies
There was also an argument that, for the purposes of his compensation claim, it was in Mr Beljan’s interests to establish that he was an employee of Energo rather than BB Line.
At the time when Mr Beljan was injured, BB Line had been $20,000 in arrears with its workers’ compensation insurer (QBE). There was no evidence that those payments had been brought up to date before a liquidator of the company was appointed in November 2010.
It was also put on behalf of Energo that Mr Beljan’s entitlements under the ACT legislation would have been better than those available under the NSW legislation.
Counsel for Mr Beljan submitted that the fact that BB Line’s workers’ compensation cover was in arrears would not have precluded Mr Beljan claiming under that cover if he had been employed by BB Line at the time of the accident, because the nominal insurer would have stepped in to provide cover.
Counsel for Energo accepted that the statutory benefits under the ACT and NSW schemes are complex, comparison is not easy, and the two schemes may be generally comparable. However, he said, it is unarguable that the potential common law rights in the two jurisdictions are very different, and that more generous benefits are available in the ACT, where, among other things:
(a)there is no restriction on the award of general damages;
(b)there is no restriction on the damages available under Griffiths v Kerkemeyer (1977) 139 CLR 161); and
(c)other such damages are allowed under s 100 of the Civil Law (Wrongs) Act 2002 (ACT).]
Attendance at the NGA site
Mr Beljan gave evidence that he had moved to Canberra full-time for the NGA project, and by full-time he meant five days a week, at least eight hours a day.
However, there were in evidence in the Magistrates Court a number of claims for payment made by Energo on Manteena; most if not all those claims carried Energo’s Bankstown address, and were signed by Mr Beljan and faxed from Sydney fax numbers. Many of them were witnessed by a Justice of the Peace based in Bankstown.
In the Magistrates Court, Mr Beljan conceded that he must have signed the witnessed claims in Sydney. However, he asserted that he only did this once or twice a month, and that he would do it late on Friday or Sunday, or on Monday morning, with the implication that those times were either when he returned from Canberra at the end of the week or before he went to Canberra at the beginning of the week. When he was shown claims that he had signed before a Justice of the Peace on Thursdays in January 2009 and February 2009, he asserted that twice a month he would be in Sydney to sign these claims.
Mr Beljan agreed that there were Justices of the Peace available in Canberra. However, when it was put to him that he had lied about his attendance at the NGA site, he said that only twice a month he would travel to Sydney for half a day to sign the relevant documents, because he was the only one who could sign them.
Was Mr Beljan a “worker” for Energo?
Having summarised the evidence about Energo’s operations and Mr Beljan’s work arrangements, the Chief Magistrate turned to considering whether Mr Beljan was a worker under the Workers Compensation Act. Her Honour began by noting the Workers Compensation Act definition of “worker” in s 8(1), which relevantly provided:
“worker” means an individual who—
(a)works under a contract of service, whether the contract is express or implied, oral or written...
She then considered several relevant authorities and concluded that Mr Beljan’s role as a director of Energo did not preclude him from being an employee, and that the question was whether there was an employment relationship. Her Honour then considered “the factual situation in order to determine whether an employment contract can be implied” (at [29]).
Her Honour referred to authorities which provided principles for determining whether an employment relationship existed, in particular Abdalla v Viewdaze Pty Ltd (2003) 53 ATR 30 (Abdalla), which principles were relied on by the ACT Court of Appeal in Yaraka Holdings Pty Ltd v Giljevic (2006) 149 IR 339 at [22]. She noted that those principles relate specifically to whether a person is an employee or an independent contractor.
Her Honour then, without specifying the factual findings on which she relied, the principles or indicia she was considering, or how they might be applied in seeking to distinguish work as an employee from work as a director, provided the following analysis:
32... The applicant was largely self-directed as to the work he chose to do, having staff to whom he could delegate. As for himself, he appears to have determined what he would do, where and when. However, on behalf of his company, he managed, supervised and administered to ensure the completion of the contractual obligation to Manteena as head contractor. His efforts were directed to that end at the location at which the work was required to be performed, i.e. the NGA, or the location at which administrative support could be provided, mainly Bankstown. Whilst the usual indicia of control and direction are absent, these indicia are particularly unhelpful when considering a person exercising contiguous functions as a director and providing services to the company.
33... For this work, the applicant and his wife, who apparently helped with administration, received a regular income, although the legal entity which met those payments appears to have varied. He was not paid as an individual but as part of an arrangement including an amount directed to him and his wife with no clear distinction between them. The records do record the payment of holiday pay and the 2009 tax return discloses that the “employer” withheld tax. At the time of the accident, he was not paid directly by Energo but had been for the previous nine months. The evidence was that the applicant had been advised that one corporate entity could loan to another if funds were required and that wages were sometimes met in this way.
34... The applicant performed work for BB Line during the period that he also performed work for Energo. The division of effort is not clear. One can, of course, have more than one employer.
35... The applicant did not provide his own office, equipment or materials to perform that work. He used that of the principal place of business of Energo, 398 Chapel Road Bankstown, and the site shed established for Energo at the NGA. Certainly whilst at the NGA site, noting the dispute as to frequency, there is no evidence to contradict that his efforts there were for the benefit of Energo.
Her Honour concluded:
36... Thus, whilst the relationship between the applicant and Energo was not a typical employer/employee relationship, and is difficult to characterise, I am nonetheless satisfied on the balance of probabilities that it is properly characterised as an implied contract of service.
37.. It follows that I find that the applicant was a worker in accordance with s 8(1)(a) of the Act.
The appellant complains about her Honour’s approach to the various principles, and about her failure to provide reasons for reaching her conclusions. There are a number of issues raised by that approach.
First, there is a difficulty in the application of the Abdalla principles to determine the status of a director of a company who might for certain purposes be a worker employed by the company or might perform all his or her work in relation to the company in the capacity of director.
As her Honour recognised, it is clear from Lee v Lee’s Air Farming Ltd [1961] AC 12 at 25 that there is no reason why the sole director of a company cannot also be an employee of the company. Stephan v Pacesetter Cleaning Services Pty Ltd (1995) 12 NSWCCR 19 (at 27) stands for the proposition that in the absence of an express contract between a company director in a personal capacity and the company of which he or she is a director, any such contractual relationship has to be implied from the acts of the company and the individual director and is a question of fact to be determined in the light of legal principles.
Thus, in the absence of any written or express oral contract, the question before her Honour was whether the work Mr Beljan was doing for Energo when he suffered the claimed injury was as a director and owner, as an independent contractor, or as a “worker” for the purposes of the Workers Compensation Act. Dealing with that question required first determining what work Mr Beljan was actually doing, and then examining the circumstances in which and the arrangements under which he did that work. Establishing those facts was not straightforward given the complexities of Mr Beljan’s evidence and the difficulty of identifying any consistency in the various kinds of documentary evidence before her Honour. In particular, given that submissions were made on behalf of Mr Beljan that his oral evidence should be accepted in preference to the contemporaneous documentary records, determining the relevant facts did seem to require a finding about Mr Beljan’s credibility.
For these reasons, her Honour’s review of the evidence, without either credibility findings or findings of fact in relation to important considerations, and without reference to the Abdalla principles or any other specific legal considerations, is an unsatisfactory basis for her conclusion that Mr Beljan’s relationship with Energo, while “difficult to characterise”, was an implied contract of service. I consider that her Honour fell into error in reaching her conclusions, probably an error of law best described as a failure to give proper reasons for those conclusions (Soulemezis v Dudley (Holdings) Pty Ltd (1987) 10 NSWLR 247).
Because Mr Beljan’s credibility appears to have been such a significant issue in the determination of those questions, and because the Chief Magistrate did not make any credibility findings, resolving Mr Beljan’s status is not something that I could do by reference to the evidence that was before her Honour. In Fox v Percy (2003) 214 CLR 118, the High Court (Gleeson CJ, Gummow and Kirby JJ at [26]) reiterated the need for:
appellate respect for the advantages of trial judges, and especially where their decisions might be affected by the credibility of witnesses whom the trial judge sees but the appellate court does not.
However, where, as in this case, the “trial judge” has reached a decision but without making findings of fact on critical issues and without making the credibility findings that would underpin the necessary factual findings, there is little that can be done by an appellate court other than to send the matter back for further consideration.
Jurisdiction of connection
The appellant pointed out, however, that the appeal also challenges her Honour’s determination that the ACT was the jurisdiction of connection with Mr Beljan’s employment, and submitted that the correct determination of that question does not seem to raise the same factual issues and that if her Honour’s conclusion that Energo’s principal place of business was the ACT were set aside, then her finding that Mr Beljan was a “worker” would not need to be addressed in this appeal or re-visited in the Magistrates Court.
It is not clear to me that all the tests in s 36B of the Workers’ Compensation Act can be properly addressed if the question whether the claimant is a worker remains in dispute. As noted by her Honour, a person may be a worker and something else in relation to the same entity, or may be a worker for multiple entities. Until it is clear what work attaches to the worker’s relationship with a particular employer, it may be difficult to determine where the worker usually works or is usually based. For instance, if her Honour had found that Mr Beljan did some work as a director of Energo and some work as a “worker” for Energo, and had identified what work was done as a director and what as a worker, it might have appeared that Mr Beljan usually worked as a director in NSW but usually worked as a worker in the ACT.
However, on the approach I take to the determination of the employer’s principal place of business (at [70] to [72] below), that determination need not raise the same difficulties. Whether my conclusion about that issue advances matters is a different question, which I address at [79] below.
Her Honour’s approach
The Chief Magistrate began by setting out s 36B(3) of the Workers Compensation Act, which was as follows:
(3).. A worker’s employment is connected with—
(a)... the Territory or State where the worker usually works in the employment; or
(b)... if no Territory or State, or no single Territory or State, is identified by paragraph (a)—the Territory or State where the worker is usually based for the purposes of the employment; or
(c)... if no Territory or State, or no single Territory or State, is identified by paragraph (a) or (b)—the Territory or State where the employer’s principal place of business in Australia is located.
Her Honour correctly noted that this required a sequential consideration of the three tests until one of them provided an answer. Her Honour concluded that neither the first nor the second test provided an answer in relation to Mr Beljan, finding for s 36B(3)(a) that he “usually worked” both in the ACT and NSW, and for s 36B(3)(b) that his functions were “equally divided” between the ACT and NSW and that she could not determine a “usual base”.
These findings are not challenged. What is challenged is her Honour’s finding that the ACT was Energo’s principal place of business for the purposes of Mr Beljan’s compensation claim.
Her Honour said:
46... I am therefore required to turn to the third limb of the test (section 36B(3)(c)) which requires that if no single State or Territory can be determined as the State or Territory of connection having regard to the usual place of employment or the usual base of employment, then the determination will be made having regard to the employer's principal place of business. The respondent's registered principal place of business was Bankstown in New South Wales. However, in Tamboritha Consultants Pty Ltd v Knight (2008) 58 SR (WA) 291, it was held that the registered principal place of business is not the sole determinant of the employer's principal place of business and that regard should be had to work performed. In that case, the registered principal place of business was Victoria but the majority of the work was performed in Western Australia and that was found to be the state of connection.
47... In this instance, despite registration in New South Wales, Energo was, on the applicant’s uncontradicted evidence, established solely for the performance of work in the ACT. The contract that was being completed at the date the applicant claims to have been injured was solely within the ACT. Whilst some administration for the company was attended to New South Wales, the majority of the work of the respondent was conducted in the ACT, as was the substantive work by the applicant on its behalf.
48... I therefore conclude that the territory of connection for the purpose of this claim is the ACT.
The legal framework
The determination of Energo’s principal place of business requires consideration of several relevant decisions from other jurisdiction; whether they can be regarded as “authorities” was disputed by the respondent, but because of the way I have reached my conclusions the status of those decisions does not seem to be a real issue.
In Tamboritha Consultants Pty Ltd v Knight (2008) 58 SR (W.A.) 291, Commissioner Herron of the WA District Court expressed views about the determination of an employer’s principal place of business, as follows:
64... The expression "employer's principal place of business" is not defined. The plaintiff's counsel submits the principal place of business for the purposes of s 20(4)(c) is the same as the principal place of business according to the ASIC company extract which is in Victoria. By that I understand the submission to mean that the expression in s 20(4)(c) has the same meaning as it has for the purposes of the Corporations Act 2001 (Cth). By s 117(2)(j) of the Corporations Act to register a company a person must lodge an application stating the address of the company's proposed principal place of business. The Corporations Act does not define "principal place of business".
65... In my view the expression "principal place of business" in s 20(4)(c) is not the same as the principal place of business registered with ASIC under the Corporations Act. First, an employer may not be a corporation. Therefore to give meaning to the expression principal place of business of such an employer recourse cannot be had to the registration of a principal place of business under the Corporations Act. Secondly, if it was intended by Parliament that the expression means the principal place of business registered with ASIC it would have been a simple matter to make that clear by inserting a provision similar to s 53AA(6) of the Work Health Act (NT).
66... The Shorter Oxford English Dictionary defines "principal" as "first, chief, original, first or highest in rank, most important, foremost, greatest". Principal also commonly means "main". In my view the expression "principal place of business" in s 20(4)(c) means the chief, most important or main place of business from where the employer conducts most or the chief part of its business. If the employer is a large national employer conducting business in various States there might not be a principal place of business of the employer for the purposes of s 20(4)(c) as the main, or the most important, or the chief part of the employer's business is conducted from various places. It cannot have been intended by Parliament that in those circumstances the expression "principal place of business" for the purposes of s 20(4) simply means an entry on a registration form made by an employer and used by ASIC for administrative purposes.
However, those comments were obiter dicta, in that Commissioner Herron had already decided, for the purpose of s 20(4) of the Worker’s Compensation and Injury Management Act 1981 (WA) (equivalent to s 36B of the Workers Compensation Act), that the worker concerned was “usually based” in Western Australia.
The Chief Magistrate’s comments at [46], although strictly accurate, are somewhat misleading. As noted, Commissioner Herron did not resolve the matter by deciding that the employer’s principal place of business was in Western Australia, and nor did he decide that the worker was “usually based” in Western Australia because the majority of his work was performed in that State; rather (at [89]) he based that decision on the facts that:
each new job or contract for work commences and concludes in Western Australia, and that each contract for work is entered in Western Australia, is relevant in considering where the defendant is usually based for the purposes of that employment. Those facts combined with the fact that the defendant is paid from the plaintiff's premises in Western Australia, that Mr Ham keeps in contact with the defendant by telephone from Western Australia, with the further fact that when he is not working on a ship he performs electrical contracting work for the plaintiff at its premises in Western Australia, persuades me the defendant is "usually based" in Western Australia for the purposes of his employment with the plaintiff.
In Martin v RJ Hibbens Pty Limited [2010] NSWWCCPD 83 (4 August 2010), Commissioner Roche said:
80... I agree with Commissioner Herron that an employer’s principal place of business is not necessarily the same as its principal place of business registered with ASIC under the Corporations Act (Knight at [65]). A business may not be a corporation and therefore not be registered with ASIC. I also agree with Commissioner Herron’s conclusion (at [66]) that principal place of business means “chief, most important or main place of business from where the employer conducts most or the chief part of its business”.
81... Mr McManamey submitted that the principal place of business for the respondent employer is Kyogle. Mr Baker submitted that it depended where the employer performed work for the third parties with whom it contracted and that I would not be satisfied that it is Kyogle.
82... I am satisfied that the respondent employer’s principal place of business, in the sense of the main place at which it conducts its business, is Kyogle. First, that is Ms Martin’s evidence. Although that is obviously not conclusive, that evidence is entitled to be weighed with the other evidence in the case. Second, Kyogle is the address given on the letter of 19 February 2008. Third, Ms Martin gave unchallenged evidence that Mr Hibbens provided all equipment, which would be either delivered on site or collected by her from “his home in Kyolge”. Last, other than the suggestion that the respondent employer’s principal place of business is where it performed its work, which implies that it had no principal place of business, there is no evidence that the respondent employer had any other principal place of business. It was not suggested that the respondent employer’s principal place of business is in Queensland.
83... In the absence of any evidence from the respondent employer disputing Ms Martin’s evidence, I am comfortably satisfied that, on the balance of probabilities, the respondent employer’s principal place of business is located at Kyogle in New South Wales. It follows that, as no State or no one State has been identified by the first two tests in section 9AA(3), then Ms Martin’s employment is connected with the State in which the employer’s principal place of business is located. That place is Kyogle and Ms Martin’s employment is therefore connected with New South Wales.
Consideration – principal place of business
I see no reason to dispute Commissioner Herron’s conclusion that the principal place of business is not necessarily the same as the principal place of business for the purposes of the ASIC register.
Furthermore, I consider that the Commissioner’s reference to “the chief, most important or main place of business from where the employer conducts most or the chief part of its business” (emphasis added) is a useful summary of the appropriate test. The issue is not to identify the place at which, at any given point, the employer (let alone the employee) does most of the relevant work, but to identify the place from which the employer conducts most of its business. Consideration of the place from which the business is conducted has the advantage of avoiding any need to calculate proportions of work done in different jurisdictions over possibly disputed periods of time, as well as avoiding the associated problem, especially for employers who perform work in multiple different Australian jurisdictions, that an employer’s principal place of business would have the potential to change frequently depending on the progress and particular incidents of different jobs being taken on by the employer.
The role of s 36B(3)(c) is to allow the identification of a jurisdiction of connection after it has proved impossible to fix on a particular jurisdiction of connection because of factual complexities in the work arrangements of the employee concerned. It seems unlikely that s 36B(3)(c) was intended to be applied so as to require an inquiry not just into the work arrangements of the employee concerned but into the work arrangements of all the employer’s employees. This is especially so given the potential for such an inquiry to produce a jurisdiction of connection that has no real connection with the particular employee, the employee’s work, or the employer’s activities to the extent that they involve the employee. Section 36B(3)(c) provides a much more efficient and straightforward way of resolving the issue if it is read as focussing on the location from which the employer’s business is conducted rather than on where the broader group of employees engage in their various activities.
I note in this context that in 2014, after the hearing of this matter, the Workers Compensation Act was amended to insert, among other things, the following subsection:
(8) In deciding where the employer’s principle [sic] place of business in Australia is located regard must be had to the following:
(a) the place where the employer conducts the main part or majority of its business;
(b) the address registered on the Australian Business Register in connection with the employer’s ABN;
(c) if the employer is not registered for an ABN—the Territory or State registered by ASIC as the jurisdiction in which the employer’s business or trade is carried out;
(d) if the employer is not registered for an ABN or with ASIC—the employer’s business mailing address.
That subsection (although obviously not applicable at the time of her Honour’s consideration), is consistent with my view that s 36B(3)(c) is intended to direct attention to the employer’s conduct of its business rather than to the activities of its workers.
Applying that interpretation of s 36B, the following matters, none of which as far as I am aware was in dispute, would seem to require the conclusion that Energo’s principal place of business was NSW:
(a)Energo was registered in NSW, and its registered address was in NSW;
(b)the address of Energo’s principal place of business as shown in ASIC records was apparently the same as the actual premises in NSW from which the high-level administration of the company business was conducted, being premises in which there were a landline telephone and a fax machine, and in which Energo’s financial records were kept;
(c)the proximity of Energo’s NSW premises in Bankstown to the physical offices of Energo’s accountant (also in Bankstown) and bank (in Chester Hill, a suburb of the City of Bankstown), all in NSW;
(d)that the NSW premises were the location at which the company’s “administrator”, as well as Mr Beljan’s wife Olivera, both worked and also the location from which Mr Beljan seems to have done much of his work (see [42] above);
(e)the preparation of much of Energo’s paperwork in NSW, including the attesting of any necessary signatures before a Justice of the Peace with a Bankstown address, and the relatively ad hoc arrangements for making necessary paperwork available at the NGA site (these seemed to involve documents being faxed from the Bankstown office to Manteena’s NGA site office, where Mr Beljan would pick up the documents, sign them and “present it to whoever it’s got to go”);
(f)the absence of any ongoing connection with the ACT except from job to job, and the absence of any reason why Energo could not have taken up work in NSW (or elsewhere outside the ACT) if that had seemed to Mr Beljan to be a useful arrangement.
Energo’s activities in the ACT could have ceased at any point, as in fact they did, but this need not have had any impact on the existence of the company. As it happened, the company went into liquidation within a few months after the end of its work at the NGA, but I am not aware of any evidence suggesting that the company’s demise was a necessary consequence of the cessation of the particular job it had previously been doing in the ACT. In other words, in principle, the company could have continued to carry on business from its office in NSW whether or not it had any work in the ACT, and the company’s only real connection with the ACT (leaving aside the reference in its name) was the existence there from time to time of work for the company to do.
The facts that Energo had originally been formed to perform a particular job in the ACT, had subsequently obtained further jobs in the ACT, had changed its name to refer to the ACT rather than the source of the original contract in the ACT, and had before going into liquidation only performed contracts in the ACT were not in my view enough to establish that the company’s principal place of business (as distinct from the place where most of the company’s work happened to be done) was within the ACT.
Conclusion – jurisdiction of connection
I conclude that her Honour misinterpreted s 36B(3) in that she looked for the jurisdiction in which the majority of Energo’s work was done rather than the jurisdiction from which Energo’s business was conducted, and was in error when she concluded that the jurisdiction in which most of Energo’s work was done (the ACT), rather than the jurisdiction from which Energo’s business was conducted (NSW), was the jurisdiction in which its principal place of business was located.
However, this conclusion may itself be obiter, and does not in my view resolve the matter. This is because the employer’s principal place of business only falls to be determined, and only resolves the question of the jurisdiction of connection, if neither s 36B(3)(a) nor 36B(3)(b) provides an answer to that question. As I have already noted, it is hard to see how either of the s 36B(3)(a) and (b) tests could have been applied without proper findings about whether the claimant was a worker employed by the employer and if so, what work was performed by that worker for that employer. Those questions have not been answered in the Magistrates Court, and the fact that her Honour’s conclusions about s 36B(3)(a) and (b) have not been challenged in this appeal does not seem to be a sufficient basis on which this Court could determine the matter by applying the s 36B(3)(c) test to identify the jurisdiction of connection.
Orders
In these circumstances, I consider that the proper orders would be to:
(a)allow the appeal;
(b)set aside the Chief Magistrate’s findings that the ACT was the jurisdiction of connection for Mr Beljan’s workers’ compensation claim and that Mr Beljan was a “worker” for Energo; and
(c)remit the matter to the Magistrates Court to be determined according to law.
However, because of the nature of the submissions made by the parties about how this matter might be resolved, I shall stay those orders until further order of the court, and invite the parties to make further submissions about the appropriate orders, including any costs orders, having regard to the conclusions I have reached in this judgment.
| I certify that the preceding eighty-one [81] numbered paragraphs are a true copy of the Reasons for Judgment of her Honour Justice Penfold. Associate: Kate Harris Date: 28 August 2015 |
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