Intelligent Structures Pty Ltd v Workers Compensation Nominal Insurer (iCare)

CERTIFICATE OF DETERMINATION OF MEMBER
CITATION:	Intelligent Structures Pty Ltd v Workers Compensation Nominal Insurer (iCare) [2021] NSWPIC 333
APPLICANT:	Intelligent Structures Pty Ltd
FIRST RESPONDENT:	Workers Compensation Nominal Insurer (iCare)
SECOND RESPONDENT:	Intelligent Build Pty Ltd
THIRD RESPONDENT:	Farshid Golafshan
FOURTH RESPONDENT	Dallad Pty Ltd
MEMBER:	Cameron Burge
DATE OF DECISION:	6 September 2021
CATCHWORDS:	WORKERS COMPENSATION - Section 145 of the Workers Compensation Act 1987 repayment; whether applicant liable to repay first respondent; whether third respondent was a worker or independent contractor, and whether retained by the applicant or by second respondent, which held a relevant policy of insurance; whether applicant suffered injury as alleged, and whether that injury gave rise to incapacity and the payment of reasonably necessary medical expenses; whether fourth respondent had liability as head contractor of the site where alleged injury took place; Held - the third respondent was a worker employed by the applicant; Stevens v Brodribb Sawmilling Co Pty Ltd followed; in the event the applicant was not a worker, he was in any event a deemed worker; the third respondent suffered an injury in the course of his employment with the applicant on 7 December 2019 which gave rise to payments of weekly compensation and medical expenses; the first respondent made compensation payments to the third respondent in the sum of $40,141,10; the applicant is to reimburse the first respondent for the payments made; there is no liability in the fourth respondent as head contractor.
DETERMINATIONS MADE:	1. The third respondent was a worker employed by the applicant on and about 7 December 2019. 2. The third respondent suffered an injury in the course of his employment with the applicant on 7 December 2019, to which his employment was a substantial contributing factor. 3. As a result of the injury referred to in (2) above, the third respondent suffered periods of incapacity for employment and incurred reasonably necessary medical expenses. 4. The first respondent made compensation payments to the third respondent in the sum of $40,141.10. 5. On 16 October 2020, the first respondent served on the applicant a notice pursuant to section 145 of the Workers Compensation Act 1987 seeking reimbursement of the sum referred to in (4) above. 6. The applicant is to reimburse the first respondent for compensation paid in the sum of $40,141.10. Otherwise, award for the first respondent on the applicant’s claim. 7. Awards for the second and third respondents. 8. The fourth respondent has no liability as principal/ head contractor pursuant to section 20 of the Workers Compensation Act 1987. 9. Award for the fourth respondent.

STATEMENT OF REASONS

BACKGROUND

Intelligent Structures Pty Ltd (the applicant) brings these proceedings to challenge its liability to repay the Workers Compensation Nominal Insurer (the first respondent) monies paid by way of compensation to Farshid Golafshan (the third respondent) as a result of an injury allegedly suffered on 7 December 2019.
The applicant also joined to the proceedings Intelligent Build Pty Ltd (the second respondent) as the entity which it says engaged the third respondent to undertake the duties he was carrying out at the time of the alleged injury. The second respondent is a related company of the applicant, and the director of both the applicant and the second respondent is Mr Peter Kord (Kord). At the date of the alleged injury, the second respondent held workers compensation insurance.
Dallad Pty Ltd (the fourth respondent) was also joined to the proceedings as alleged head contractor of the worksite where the third respondent was injured and is said by the applicant to be liable for the compensation paid pursuant to section 20 of the Workers Compensation Act 1987 (the 1987 Act).
The first respondent’s notice seeks repayment by the applicant of weekly benefits and medical expenses paid to the third respondent amounting to $40,141.10.
As is often the case in matters of this nature, the dispute is wide ranging. The applicant has placed worker/ deemed worker in dispute, together with the question of whether the third respondent suffered an injury, and if so whether that injury caused incapacity and gave rise to the need for payment of medical expenses. It follows that these issues also give rise to questions as to which entity, if any, is responsible for responding to the first respondent's section 145 notice.

ISSUES IN DISPUTE

The parties agree the following issues remain in dispute:

(a) whether the third respondent was a worker/ deemed worker of the applicant;
(b) if the third respondent was a worker or deemed worker employed by the applicant, whether he suffered an injury pursuant sections 4 and 9A of the 1987 Act which give rise to an entitlement for weekly benefits and/or payment of reasonable medical expenses;

(c) if the third respondent was not employed by the applicant or a deemed worker of it, whether there is another entity which employed the applicant and may therefore be liable to respond to the first respondent’s section 145 notice, and if so, which entity, and

(d) whether the fourth respondent is liable to pay compensation pursuant section 20 of the 1987 Act.

PROCEDURE BEFORE THE COMMISSION

The parties attended a hearing on 3 May 2021. At the hearing, I determined the matter would proceed by way of written submissions pursuant to a detailed timetable set out in directions, and thereafter dealt with "on the papers." The parties have now lodged their written submissions.
Additionally, on 8 June 2021, the applicant sought to lodge an Application to Admit Late Documents (AALD) with the Commission, which was objected to by the other parties. On 22 June 2021, I determined the AALD would not be accepted for filing or taken into consideration in making this decision, given it was lodged after the submissions of other parties had been filed, referred to witnesses whose evidence the other parties could not test in circumstances where no indication was given at the conciliation/arbitration hearing of any party relying on further evidence.

EVIDENCE

Documentary evidence

The following documents were in evidence before the Commission and considered in making this determination:

(a) Amended Miscellaneous Application (the Application) and attached documents;
(b) Reply of the first respondent and attached documents;

(c)    Reply of the second respondent (filed under AALD, dated 27 April 2021) and attached documents;
(d)    Reply of the third respondent (filed under AALD, dated 26 April 2021) and attached documents;
(e)    Reply of the fourth respondent (filed under AALD, dated 23 April 2021) and attached documents;

(f) AALD of the first respondent, dated 22 April 2021;

(g) AALD of the first respondent, dated 17 May 2021, and

(h) AALD of the third respondent, dated 28 April 2021.

Additionally, the party's written submissions were also taken into consideration.

Oral evidence

There was no oral evidence called in this matter.

FINDINGS AND REASONS

Worker/deemed worker

The Workers Compensation legislation provides that a "worker" is entitled to benefits. The entitlement is contained in section 9 of the 1987 Act which provides:
"A worker who has received an injury...shall receive compensation from the worker's employer..."

The first step then is to establish whether the injured person was a "worker". Worker is defined in section 4 of the Workplace Injury Management and Workers Compensation Act 1998 (the 1998 Act) as follows:
"Worker means a person who has entered into or works under a contract of service or a training contract with an employer (whether by way of manual labour, clerical work or otherwise, and whether the contract is expressed or implied, and whether the contract is oral or in writing)..."

The essential feature of the definition in section 4 is the "contract of service" between the employer and worker. This relationship must be distinguished from that of a "contract for services", which is generally referred to as the rendering of services by an independent contractor. Put simply, the difference is between a person who serves his employer in the employer's business and a person who carries on a trade or business of their own. The onus is on the worker to prove the employment contract.
Establishing a contract of service involves principles of contract law such as offer and acceptance, consideration and mutual obligation. A contract of service requires a mutuality of obligation in the formation of the contract with the intention to create legal obligations. If there is clear evidence that a person offered his services for reward, and the proposed employer accepted the offer on the basis that payment for those services would be made, there will be an intention to enter into labour relations, and a contract of employment will exist.
There are four essential features of a contract of employment, which may be summarised as follows:
(a)    there can be no employment without a contract (Lister v Romford Ice and Cold Storage Ltd) [1956] UKHL6;
(b)    the contract must involve work done by a person in performance of a contractual obligation to a second person (Abdalla v Viewdaze) [2003] 122 IR 215. That is because the essence of a contract of services the supply of the work and the skill of the worker;
(c)    there must be a wage or other remuneration, otherwise there will be no consideration (Ready Mixed Concrete (Southeast) Ltd v Minister of Pensions and National Insurance) [1968] 2 QB 497, and
(d)    there must be an obligation on one party to provide, and on the other party to undertake work.
It is often unclear whether a relationship is one of employment. There are, however, a number of indicia by which to gauge whether an employment relationship exist. The facts in each case must be carefully considered in order to balance the indicia both for and against the contract of employment.
The principal criterion remains the employer's right of control of the person engaged, but it is not the sole determined. In more recent times, the Courts will favour looking at a variety of criteria. As IPP JA said in Boylan Nominees Pty Ltd Trading as Quirks Refrigeration v Sweeney [2005] NSWCA 8;
“The control test remains important and it is appropriate, in the first instance, to have regard to what (albeit that is by no means conclusive) because, as Wilson and Dawson JJ said in Stevens v Brodribb Sawmilling Co Pty Ltd (1986) 160 CLR 16 (at 36) (Stevens);
'It remains the source guide to whether a person is contracting independently or serving as an employee'."

The High Court in Stevens set out a number of indicia which are relevant, but non-exhaustive categories in identifying who is a worker. They are:
(a) The mode of remuneration;
(b) The provision and maintenance of equipment;
(c) The obligation to work;
(d) The timetable of work and provision for holidays;
(e) The deduction of income tax;
(f) The right to delegate work;
(g) The right to dismiss the person;
(h) The right to dictate the hours of work, place of work and the like, and
(i) The right to the exclusive services of the person engaged
Applying the criteria set out in Stevens is not always straightforward. In Hollis v Vabu Pty Ltd (2001) 207 CLR 21, a man was injured when a bicycle courier struck him, and he sued Vabu Pty Ltd for damages. The trial judge found that the bicycle couriers were independent contractors, however, the High Court ultimately found the couriers were employers and held the trial judge had placed too much weight on the fact that bicycle couriers own their own bicycles. The High Court examined the totality of the relationship and noted the couriers have little control over the manner of performing their work, and looking at the relationship as a whole, it was properly characterised as one of employment.
In my opinion, for the following reasons the evidence in this matter establishes the third respondent was a worker employed by the applicant.
By way of background, Kord was the director of both the applicant and the second respondent. He states he was in the process of transferring employees from the applicant to the second respondent, as the applicant was in the process of being wound up. There is no issue the third respondent was retained to act as a site foreman at various locations around the Sydney region, from in or about September 2019. As has been noted, the nature of that relationship is in issue.
There are a number of inconsistencies in Kord’s evidence which warrant scrutiny. He provided a response to the first respondent’s notice for reimbursement [1R’s Reply 4]. The response was a series of questions and answers, and in it Kord answered the third respondent was a contractor, not an employee. Relevantly, Kord provided answers to the questions in English and signed a statutory declaration on 14 January 2020 as to the accuracy of his answers. He did so without an interpreter. The applicant later asserted Kord had difficulty understanding and communicating in English, a contention refuted by the respondents.
Kord asserted in his answers that the third respondent did not work continuously for the applicant and that he was paid in accordance with invoices rendered by him to the applicant. Those invoices are in evidence. They relevantly disclose at the date of injury that the third respondent was invoicing the applicant for work done six days per week [1R’s Reply 23 and following]. Kord’s answers to the first respondent’s notice indicate the third respondent’s hours were 7am to 3pm. That evidence is corroborated by the third respondent’s statement and the invoices rendered by him to the applicant.
According to Kord's second statement, the applicant was only being used to process bills and make payments as its business was being transferred to the second respondent, which had been established with a friend of his. Moreover, Kord alleges he contacted the first respondent and received advice to cancel the applicant's Workers Compensation insurance.
There is no evidence to support Kord's version of events in relation to receiving that advice, though there is no issue the policy was cancelled in March 2019 [Amended Application 29]. Presumably though, Kord would expect the Commission to accept that evidence, which in turn is also suggestive that he in fact has a competent enough understanding of English to communicate with an officer of the first respondent and to take on board their advice concerning his insurance obligations. Such a contention cannot stand with Kord’s assertion he has a very limited understanding of English. There is no record of such a conversation having taken place, and if it had taken place with the assistance of an interpreter, presumably that interpreter would have been available to give evidence on behalf of the applicant. No such evidence is proffered, and in my view the applicant cannot have matters both ways. Moreover, the documents requesting the cancellation of the policy were completed by Kord in English, and the accompanying email was also written by him in English.
I also note the applicant’s solicitors wrote to the first respondent on 18 September 2020 disputing liability. No mention is made in that letter about Kord’s alleged difficulty understanding English. The letter also acknowledges there was a contractual relationship between the applicant and third respondent, as it seeks to classify the third respondent as a contractor, not as someone retained by the second respondent rather than the applicant itself.
For reasons which will follow, I do not accept Mr Kord as a witness of truth in circumstances where he has given conflicting versions of events in his statements and sought to portray the third respondent as an unreliable witness who was a contractor, as opposed to a worker in the employ of the applicant.
Addressing the Stevens indicia, I note the following.
The third respondent provides clear evidence that he worked only for the applicant at the time he suffered injuries [14]-[18] of his [R1’s Reply at 13]. He was exclusively engaged by the applicant to undertake work for it at the site as a foreman. The evidence discloses the applicant was paid via Kord for work carried out for the applicant per day or per week, in that he was paid in accordance with his invoices, which reflect hours consistent with full time work. The applicant asserts the third respondent was retained by the second respondent; however, the second respondent’s bank records disclose no payments to him. The applicant itself has not produced its bank records which could presumably demonstrate payments were not made by it to the third respondent.
I accept the third respondent was directed by Kord as to when he was to work, where and which duties to undertake. Kord alleges the third respondent was carrying out separate work as a contractor for other companies, however, the third respondents bank records attached to his AALD demonstrate he was being paid only by the applicant during the period at issue, in accordance with the invoices rendered by him to it. Aside from Kord’s assertions, there is no evidence to support the suggestion the third respondent was working for anyone else that the relevant time. That is supported by the contemporaneous invoices and the bank records of the third respondent. As such, I accept the applicant had the exclusive services of the third respondent.
I note the applicant has sought to rely on the evidence of Ashok Racha (Racha), the owner of the site at Pendle Hill where the third respondent alleges he was injured. To the extent Racha gives evidence as to the relationship between the applicant and the third respondent, I reject his evidence. He is not a party to that relationship, and his evidence amounts to a statement that he is aware the applicant, who he describes as a “sub-contractor” has a workers compensation claim. No weight can be given to that evidence. The same criticism is drawn with regards to the evidence of Amir Javir, civil engineer, who simply says third respondent was “to my knowledge” sub-contracted under the same conditions as any other sub-contractor.
The evidence discloses the applicant received invoices from the third respondent from time to time and the third respondent was paid GST. Whilst this is an indicator which does not suggest an employment relationship, it is but one of several relevant indicia which, on balance clearly disclose a contract of service between the third respondent and the applicant.
The third respondent was paid weekly or fortnightly in accordance with his invoices rendered to the applicant, which in turn reflect full time employment hours. The fact those payments were made by Kord in turn suggests his evidence that the third respondent was not exclusively working for the applicant at the relevant time should not be accepted.
There is no issue the third respondent was given a company vehicle by the applicant to travel between sites and carry various materials. That much is clear from copies of the text messages attached to Kord’s statement which make reference to the applicant having access to a company vehicle. He also did not have to supply any tools of his trade. That is suggestive of an employment relationship, not one of principal and contractor.
There is no suggestion the third respondent could delegate his work to anyone else, or that he did so. Moreover, text messages from Kord to the third respondent demonstrate he was told by Kord when and where to work.
On balance, I am of the view the evidence discloses an employment relationship between he applicant and the third respondent, and as a result the third respondent is a worker for the purposes of the Workers Compensation legislation.
In any event, even if the applicant was not a worker, he is a deemed worker pursuant to Schedule 1, clause 2 of the 1998 Act. That is because I have found there was a contract between the applicant and the third respondent as evidenced by the issuing of invoices by the third respondent to the applicant, the work performed in relation to that contract exceeded $10 in value, as also evidenced by the invoices; there was no evidence the work was carried out incidental to a trade or business regularly carried on by the third respondent in his own name, and the third respondent did not employ any other worker or sublet the contract to anyone else.

The applicant contends the agreement was between the second respondent and the third respondent, rather than between the applicant and third respondent. I reject that submission. The applicant itself served copies of weekly invoices issued by the third respondent to it for work performed as a site foreman at various sites. The invoices are made out to the applicant, however, the ABN listed on them is that of the second respondent.
In response to the first respondent's notice, Kord provided a statement admitting the third respondent undertook work with the applicant. He later provided a statement resiling from that position on the basis that his understanding of English was limited and the statement was taken without an interpreter.
I reject that submission, noting the applicant’s subsequent statement was also taken without an interpreter and, to the extent I am required to, I reject the suggestion contained within the applicant's written submissions that the first respondent via its investigator as agent attempted to coerce or manipulate the evidence of Kord.
There is ample evidence contained within the pleadings of the various parties which demonstrates Kord communicating efficiently and effectively in English. Moreover, the New South Wales residential building contract for works at the relevant site in Pendle Hill (see page 34 of amended application) identifies the applicant as construction manager for that site. Kord in his statement also conceded the third respondent undertook work at that site, and there is no evidence the second respondent was engaged to carry out work there.
The bank records for the second respondent, found from page 66 of the Amended Application, do not indicate any payment to the third respondent. The applicant has not produced any financial records itself which might identify payments to the third respondent or the absence of same. The first respondent submitted, and I accept, that it is appropriate to draw a Jones v Dunkel (1959) 101 CLR 298 inference that the bank records would not have assisted the applicant in its case.
The third respondent's bank records which have been placed into evidence also indicate that payments were made by the applicant, and that he was only paid by the applicant during the relevant period.
For these reasons, I am of the opinion that the third respondent was a worker employed by the applicant at the alleged date of injury, namely 7 December 2019 and also of the view the applicant fits the criteria for a deemed worker pursuant to the Workers Compensation legislation.

Whether the third respondent suffered an injury giving rise to incapacity and the reasonable payment of medical expenses

In his first statement, Kord admitted the third respondent suffered a right ankle fracture on 7 December 2019 whilst on the worksite at Pendle Hill controlled by the applicant. The third respondent also provided a statement which is consistent with the version of events of injury provided to various treating and medico-legal practitioners.
The only evidence which casts doubt on the third respondent's version of events surrounding the alleged injury is the second statement of Kord, in which he indicates the applicant was not injured or at the relevant worksite on a date in question. Kord himself does not suggest he was present at the work site on that day. To the extent there is an inconsistency between Kord's statement and that of the third respondent, I prefer the evidence of the third respondent.
As Kord’s version of events is so different from his initial statement and the applicant's response to the initial repayment notice it cannot, in my view, merely be explained way by his not having the benefit of an interpreter when he provided the initial statement. Moreover, for the reasons which I have already set out in this decision, I do not accept that Kord's command of English is as poor as is suggested by him. This is particularly the case given his further statement was taken without the assistance of any interpreter and there is documentary evidence of Kord communicating in English without any difficulty.
There is also some independent and business record evidence which provides, in my view, confirmation that the third respondent was present at the relevant worksite when he was injured. This consists of a receipt from Bunnings dated 7 December 2019 contained within the text messages between Racha and the third respondent which also reference the third respondent’s injury. That evidence, which I accept as contemporaneous corroboration of the third respondent’s version, contradicts Racha’s statement that he was not in attendance at the work site on the date of injury and did not meet with the third respondent that day.
I also note that on 8 December 2019 Kord and another colleague, Koanta, came to the third respondent's house to collect the company vehicle, and at that time the injury was formally reported.
The director of the fourth respondent, Mr Jones (Jones) made it abundantly clear the assertion that Kord labours under a significant difficulty with respect to speaking, reading, or writing English is incorrect. In my view, that evidence is consistent with the other documentary evidence in the case, including the two statements Kord and the various documentation to which he has been involved in creating.
The seriousness of the third respondent's injury cannot really be questioned. There is no medical evidence put forward by the applicant to contradict the medical evidence of the first respondent and that of the third respondent which sets out in detail the nature and extent of the injury.
The third respondent consulted with Dr Lim, General Practitioner, on 9 December 2019, at which time the injury was noted and recorded as having taken place on 7 December 2019. That is consistent with the third respondent's version of events.
The third respondent was then referred to Dr Suthersan, Orthopaedic Surgeon, who provided a report in which he recorded the third respondent as suffering a severe inversion injury on a worksite. There is no suggestion, as asserted by the applicant in its submissions and evidence, that the third respondent was in fact injured whilst assisting a friend move house. That allegation is a serious one and can in no way be supported by the evidence in this matter to a degree remotely sufficient to satisfy a factual inquiry into it. The contemporaneous medical evidence supports the injury having taken place as asserted by the third respondent, and there is no competing medical evidence adduced by the applicant.
As such, I find the factual and medical evidence each support a finding of injury simpliciter, sufficient to satisfy sections 4 and 9A of the 1987 Act. There can be no question that the third respondent's employment (having found he was a worker employed by the applicant) was a substantial contributing factor to the injury suffered.
In relation to capacity, the medical evidence clearly demonstrates by way of certificates of capacity found at [1-4] of the first respondents AALD dated 22 April 2021, that the third respondent suffered incapacity for work during the relevant period for which the first respondent seeks reimbursement by the applicant. Dr Suthersan, treating orthopaedic surgeon, completed a questionnaire dated 16 September 2020 in which he also stated that the proposed ankle surgery was reasonably necessary due to the ongoing non-union of fracture and associated tendinitis (see [41] of the first respondent’s Reply).
No competing medical evidence has been filed by the applicant to suggest either that the third respondent was anything other than incapacitated for employment during the relevant period or that the surgery was not reasonably necessary. There is accordingly no meaningful dispute as to either the incapacity caused by the fracture of the left ankle or the reasonably necessary medical treatment rendered for it.

Liability of the fourth respondent

In my view, there is no liability pursuant to section 20 of the 1987 Act.
The only contractual evidence is the building contract pursuant to which the work at the relevant site was performed by the fourth respondent. The only parties to that contract were Ashok Kuma Racha and Vina Rani Racha as owners and the fourth respondent as the builder.
The applicant was noted in the contract as "construction manager", however, it is clear from the wording of the contract that the applicant's contract was with the owners and not with the fourth respondent. There is no evidence of any contract between the applicant and the fourth respondent. That much is also supported by the statement of Jones, Director and Principal of the fourth respondent. Likewise, there are no records of any invoices issued by the applicant to the fourth respondent or payment by the fourth respondent to the applicant.
Absent any evidence which could possibly establish the existence of any contract between the applicant and the fourth respondent, it is my view the fourth respondent could have no liability pursuant section 20(1) of the 1987 Act in respect to the injury alleged by the third respondent.

SUMMARY

For the above reasons, the Commission will make the orders set forth on page 1 of the Certificate of Determination and finds that the applicant is liable to repay the sum claimed in the first respondent's notice.

[2021] NSWPIC 333

6 September 2021