Foster v Chief Executive Officer of the Department of Agriculture - [2006] WASCA 95

JURISDICTION : SUPREME COURT OF WESTERN AUSTRALIA

TITLE OF COURT : THE COURT OF APPEAL (WA)

CITATION: FOSTER -v- CHIEF EXECUTIVE OFFICER OF THE DEPARTMENT OF AGRICULTURE [2006] WASCA 95

CORAM: STEYTLER P
WHEELER JA
PULLIN JA

HEARD: 20 MARCH 2006

DELIVERED : 31 MAY 2006

FILE NO/S: FUL 178 of 2004

BETWEEN: BRENDON FOSTER
Appellant
AND
CHIEF EXECUTIVE OFFICER OF THE DEPARTMENT OF AGRICULTURE
Respondent

ON APPEAL FROM:
Jurisdiction              :  DISTRICT COURT OF WESTERN AUSTRALIA
Coram  :O'SULLIVAN DCJ
Citation  :FOSTER -v- CHIEF EXECUTIVE OFFICER OF THE DEPARTMENT OF AGRICULTURE [2004] WADC 216
File No  :CIV 868 of 2003

Catchwords:

Workers' compensation - Joint venture agreement - Whether joint venturer a deemed employer of a seconded employee of another joint venturer - Marsden v Unimin not followed

Legislation:

Workers' Compensation and Injury Management Act 1981 (WA), s 175(1)

Result:

Appeal allowed

Category: A

Representation:

Counsel:

Appellant: Mr D M Bruns
Respondent: Mr D R Clyne

Solicitors:

Appellant: Separovic & Associates
Respondent: Downings Legal

Case(s) referred to in judgment(s):

Foster v Chief Executive Officer of the Department of Agriculture [2004] WADC 216
Hewitt v Benale Pty Ltd; WMC Resources Ltd v Koljibabic [2002] WASCA 163; (2002) 27 WAR 91
Marsden v Unimin Australia Ltd [2004] WASCA 143
Pilcher v H B Brady & Co Pty Ltd [2005] WASCA 159

Case(s) also cited:

Jones v Wesfarmers Ltd [2003] WASCA 225
Frauenfelder v Reid (1963) 109 CLR 42

STEYTLER P: I agree with Wheeler JA.
WHEELER JA: This is an appeal from the trial of a preliminary issue in the District Court as to whether the respondent was a "deemed employer" of the appellant pursuant to s 175(1) of the Workers' Compensation and Injury Management Act 1981 (WA) (formerly the Workers' Compensation and Rehabilitation Act 1981 - ("the Act")). The agreed facts upon which the issue was to be decided were:
"(a)As of 30 June 2000 the plaintiff was employed (in the usual sense) by the University of Western Australia [UWA];
(b)On 30 June 2000 the plaintiff was injured in the course of his work ('the accident');
(c)Following the accident a workers [sic] compensation claim was made against the University of Western Australia and accepted by the University of Western Australia;
(d)The relationship between the defendant, the University of Western Australia, and CLIMA is regulated by an Agreement made 1 June 1992 which will be tendered in evidence;
(e)The accident occurred when the plaintiff was deployed to the CLIMA project and was helping two other workers, one employed by the defendant, the other employed by the University of Western Australia, to manoeuvre bags of seeds. He was at the time on the defendant's premises;
(f)The work in which the plaintiff was engaged was part of a research programme being conducted by CLIMA."
In 2003, the appellant commenced an action in the District Court against the respondent for negligence and breach of statutory duty. In its defence, the respondent pleaded that it was a deemed employer of the appellant and that Pt IV Div 2 of the Act applied. It seems to be common ground that the appellant has not made a form 22 application to the Conciliation and Review Directorate. Because of the time which has elapsed since he first received weekly payments, he is unable now to make such an application in respect of a determination that he has suffered a degree of disability of at least 16 per cent. It would still be

open to him to seek a determination in relation to a degree of disability of at least 30 per cent. However, unless such a determination is made, he will, if the respondent's claim to be a deemed employer is correct, be unable to take further proceedings against the respondent.

The Agreement referred to in par (d) of the agreed facts came about when, on about 1 July 1992, the respondent entered into the agreement with UWA, the Commonwealth Scientific and Industrial Research Organisation ("CSIRO") and Murdoch University for carrying out what the Agreement describes as a "joint venture" in the field of legume research. The Agreement provided for the establishment and operation of a centre which was to be called the Cooperative Research Centre for Legumes in Mediterranean Agriculture ("CLIMA"). Under the Agreement, each of the parties undertook to make various contributions, including contribution of funds, personnel, premises, and plant, and to distribute the benefits accruing as a result of the activities of CLIMA to each of the parties in proportion to the contributions deemed to have been made by each. It was contemplated that the "product" would be intellectual property derived as a result of the research activities to be undertaken. Relevant provisions of the Agreement were as follows.
"'Contribution', in relation to a Party, means all of the monies, Assets, Seconded Personnel, Facilities and services to be contributed by the Party to the Centre, as set out in the Budget Plan, but does not include any Intellectual Property, and 'Contributions' means the aggregate of the Contribution of each of the Parties;
...
'Director' means the director of the Centre appointed pursuant to clause 10 [Director];
...
'Policy Board' means the board of management of the Centre established pursuant to clause 9 [Policy Board];
...
'Seconded Personnel' means the personnel of a Party to be seconded by it to the Centre as part of that Party's Contribution pursuant to clause 20 [Seconded Personnel];

...
3.ESTABLISHMENT OF JOINT VENTURE
3.1The Parties hereby form and agree to constitute themselves in an unincorporated joint venture to be known by the Centre Title for the purpose of carrying out the Activities.
3.2The Parties agree that:
(a)the rights, duties, obligations and liabilities of the Parties shall in every case, be several and not joint or joint and several;
(b)the relationship between the Parties is one of joint venturers and is limited to carrying out the Activities so that, except for clause 15 [Centre Agent], nothing contained in this Agreement constitutes any of them as agent, partner or trustee of any other of them, or creates any agency, partnership or trust for any purpose whatsoever;
...

5.1Each Party covenants and agrees with each other Party:
...
(d)to provide its Contribution to the Centre in accordance with the terms of this Agreement;
...

8.MANAGEMENT STRUCTURE
8.1The Management Structure of the Centre shall consist of the Policy Board, the Executive Committee, the Director and the Deputy Director.
8.2Lines of communication and control within the Management Structure shall be as depicted in the chart contained in Schedule 1 [broadly, the Centre Director reports to an Executive Committee, which, in turn, reports to the Policy Board].
9.POLICY BOARD
9.1The Policy Board shall have one representative from each of the Parties, a Chairman independent of the Parties, the Director, and eight other persons representing either end users, Rural Industry Research and Development Corporations, and institutions with which the Centre wishes to collaborate.
...
9.9The functions of the Policy Board are to provide the policy framework for the operation of the Centre. The Board shall be responsible for:
...
(f)approval of changes to Contributions and Seconded Personnel.
...

10.DIRECTOR
10.1The Policy Board shall appoint a person to act as Director of the Centre.
10.2The functions of the Director shall be:
(a)day‑to‑day management of the Activities of the Centre in association with the Centre Agent and, subject to overall control of the Policy Board;
(b)liaison with Parties to ensure adequate and timely availability of all Centre Resources necessary for the Activities;

...
13.3In approving the draft Annual Budget, the Policy Board shall determine, for the Financial Year in question -
...
(c)each Party's Annual Contribution [including cash and non‑cash components]; and
(d)the Annual Payment and the non‑cash Centre Resources to be made available to each Party in the Financial Year in question for the purpose of carrying out the Activities.

14.CONTRIBUTIONS
14.1Each Party covenants and agrees with the other Parties to pay to the Centre Agent the cash component of its Annual Contribution and to apply to the Activities the in‑kind component of its Annual Contribution in accordance with the Budget and in the manner determined by the Policy Board.
...
20.SECONDED PERSONNEL
20.1Each Party covenants and agrees with the other Parties to second to the Centre its Seconded Personnel for such time and for such purposes as determined by the Policy Board.
20.2Seconded Personnel of each Party shall remain subject to the terms and conditions of employment of that Party and shall be replaced if recommended by the Policy Board in compliance with the Commonwealth Agreement.
...
20.4Should the Centre require the services of persons not presently employed by any of the Parties, such persons shall be retained pursuant to arrangements determined by the Policy Board."

In summary, CLIMA is, as created by this Agreement, an entity which does not itself have a legal personality. Rather, it is the collective name given to the activities which the various parties agree to carry out for the purposes identified in the Agreement. The Director prepares a draft annual budget, which the Policy Board approves and it is the Policy Board, in considering and approving the budget, which determines the annual contribution to be made by each party. Each party agrees to make available the contributions determined by the Board in the manner determined by the Board, which contributions include the Seconded Personnel. Although the Policy Board determines the purposes for which the Seconded Personnel are made available, the day‑to‑day management of their activities would seem to lie with the Director pursuant to cl 10.2.
Section 175(1) of the Act provides as follows:
"175. Principal contractor and sub‑contractor deemed employers
(1)Where a person (in this section referred to as the principal) contracts with another person (in this section referred to as the contractor) for the execution of any work by or under the contractor and, in the execution of the work, a worker is employed by the contractor, both the principal and the contractor are, for the purposes of this Act, deemed to be employers of the worker so employed and are jointly and severally liable to pay any compensation which the contractor if he were the sole employer would be liable to pay under this Act."
The way the respondent would say that provision operates in the present case is that, by the Agreement: " ... the Chief Executive Officer of the Department of Agriculture (principal) contracts with UWA (contractor) for the execution of any work by or under UWA and, in the execution of the work, the appellant is employed by UWA .... " The appellant contends that the Agreement is not a contract by the respondent with UWA "for the execution of any work" and, that even if it is such a contract, it is not a contract for the execution of that work "by or under" UWA.
It is obvious that the Agreement contemplates that work will be performed, and that it will be performed by persons, many of whom are employees of one or the other of the contracting parties. The question is whether that is sufficient to render the Agreement a contract "for" the execution of work "by or under" that contracting party.
As to these questions, his Honour considered that there was no reason to take a restricted view of the meaning of the words "a contract for the execution of work" (Foster v Chief Executive Officer of the Department of Agriculture [2004] WADC 216, at [31]). He considered that, particularly having regard to cl 14.1, the provision of the appellant by UWA to carry out work for the joint venturers was, in effect, the performance by UWA of a contractual obligation "for the execution of work" (at [34]). I agree with the former proposition, but not with the latter.
It is not, in my view, strictly correct to describe the appellant as carrying out work "for the joint venturers". The work which he carried out was work contemplated by and for the purpose of the joint venture, but that does not make it work which was "for" each of the joint venturers. Rather, it seems to me that the work was either "for" UWA as the appellant's employer, or perhaps "for" the Director of CLIMA, as the person having day‑to‑day control of the joint venture. That distinction does not seem to me to be of great importance, however. What is of more importance is his Honour's conclusion that the provision of the appellant was the performance of a contractual obligation "for the execution of work".
While, as I have noted, the Agreement obviously contemplates that work will be done, it would not, in my view, be correct to characterise it as an agreement "for the execution of work" by each of the joint venturers. It is, pursuant to cls 14 and 20, an agreement for the supply of personnel by any of the parties who might be called upon to make such a contribution. That is, it is not a contract for the execution of work, but a contract for the supply of workers. It seems to me that there is a distinction to be drawn between a contract for the execution of work, which one would generally understand to be the execution of some particular task, even if broadly defined, and one for the temporary provision of workers for the purpose of assisting the principal to complete whatever tasks the principal has set itself. So far as the Act is concerned, the distinction appears to me to emerge when one compares the extended definition of "employer" in s 5 with the terms of s 175. The definition of "employer" is relevantly as follows:
"'employer' ... and, where the services of a worker are temporarily lent or let on hire to another person by the person with whom the worker has entered into a contract of employment the latter shall ... be deemed to continue to be the employer of the worker ... "
The focus of that definition is on the provision of the services of a worker. The focus of s 175 is on the contract for the execution of work. It is, of course, possible to contemplate agreements which are agreements both for the provision of workers and for the execution of work; for example, where there is a contract for particular identified work and there is further an identification of the manner in which particular workers are to be made available to perform that task. However, the two concepts are distinct and very often an agreement will be able to be characterised as simply one or the other.
The distinction discussed above may appear inconsistent with the decision of this Court in Marsden v Unimin Australia Ltd [2004] WASCA 143. In that case, Miller and McKechnie JJ (Wallwork AJ dissenting) characterised two labour hire contracts as contracts for the execution of work, pursuant to s 175 of the Act. There are, however, two observations I would make about that decision.
The first is that it appears to me that the decision may well rest upon an obvious misidentification of the party to be considered the contractor. In that case, Integrated Workforce was the labour hire company and Unimin the company which had engaged Integrated to provide workers to it. That is, Integrated was plainly the "contractor" and the question in the case was whether the contract was "for the execution of any work" "by or under" Integrated. However, in [33] of the reasons of the majority, their Honours characterised the issue in the appeal as being "whether, in the words of s 175, Unimin contracted with Integrated Workforce for the execution of any work by or under Unimin" (emphasis supplied). By contrast, in my view, Wallwork AJ in that case correctly characterised the question as being whether the execution of the work was by or under Integrated (at [86]).
If, as appears may have been the case, the slip in [33] of the reasons of the majority flowed through to the remainder of the decision, then I would take the view that that decision was so plainly incorrect that it should not be followed (see Pilcher v H B Brady & Co Pty Ltd [2005] WASCA 159 at [24] ‑ [26]). Submissions were invited from the parties, after the hearing of the appeal, as to whether Marsden was distinguishable and, if not, whether it should be followed. The respondent asserts that Marsden should be applied in the present case because he agreed on the statement of agreed facts as a result of a particular understanding of the law. However, those facts were agreed in circumstances where it was clear that the applicable law was in dispute; the purpose of the preliminary issue was to determine whether s 175 applied. The circumstance that certain facts were agreed does not require that Marsden be applied.
In any event, if it be accepted that Marsden is correct, it may be that it is explained on the basis that the contract in that case was one of the "dual" types of contract which I have described, in which there was both a contract for identified work and for the provision of workers to perform that work. There is some support for that conclusion in [39] of the reasons of the majority. Their Honours refer, in that paragraph, to some evidence which may be understood as suggesting that Integrated was asked to supply a person "to fulfil some [presumably particularised] duties that were vacant at the time". It may have been that their Honours considered that that was sufficient to characterise the contract as one for the execution of that work and that the work was "by or under" Integrated because of the procedures, described in [31] of the majority's reasons, which required supervision of the worker by Integrated; see also [40], [77] and [81], which refer to obligations of the contractor.
I would note that in Hewitt v Benale Pty Ltd; WMC Resources Ltd v Koljibabic [2002] WASCA 163; (2002) 27 WAR 91, at [111], EM Heenan J observed that s 175 "has the effect of making the person who takes the worker on loan or hire an employer .... " However, that observation appears to me to have been obiter, it being apparently conceded in that case that the deemed employment relationship pursuant to s 175 existed (see [112]), and the question for the Court being only whether, given that concession, the provisions of Pt IV of Div 2 applied.
If I were wrong in the conclusion that the Agreement is not a contract "for the execution of any work", I would nevertheless be of the view that there is no deemed employment relationship in this case, for the reason that the contract is not for the execution of that work "by or under" UWA. It seems to me that the words "by or under" require some degree of control or supervision greater than that implicit in merely providing an employee for a task. If that were not the case, it is difficult to see what the words "by or under" the contractor would add to the further requirement contained in s 175(1) that, in the execution of the work, the worker be employed by the contractor.
While it is clear from the terms of cl 20.2 that the appellant was to remain subject to the terms and conditions of his employment by UWA, cl 20.1 makes it plain that his secondment was for the duration and for the purposes determined by the Policy Board, with the Director, pursuant to cl 10, having day‑to‑day control of whatever activities he was required to carry out. The work therefore was work either "by or under" the Board, or the Director, or perhaps "by or under" whichever party the Board or the Director identified as the appropriate entity to carry out the task for which the appellant was seconded. It is not necessary for present purposes to choose between these possibilities.

For these reasons, I would allow the appeal, set aside the order of the District Court answering the question described as "Preliminary Issue 1" in the affirmative, and substitute an answer in the negative.

PULLIN JA: I have read the draft reasons prepared by Wheeler JA. I agree with those reasons and have nothing to add.