Kakos v Victorian WorkCover Authority
[2022] VMC 19
•17 June 2022
IN THE MAGISTRATES’ COURT OF VICTORIA
AT MELBOURNE
WORKCOVER DIVISIONCase No. M10352174
ALLEN KAKOS Plaintiff v VICTORIAN WORKCOVER AUTHORITY Defendant ---
MAGISTRATE: M A HOARE WHERE HELD: Melbourne DATE OF HEARING: 19 – 20 May 2022 DATE OF DECISION: 17 June 2022 CASE MAY BE CITED AS: Kakos v Victorian WorkCover Authority MEDIUM NEUTRAL CITATION: [2022] VMC 19 ---
WORKERS COMPENSATION – Whether a ‘worker’ – Family trust structure - Preliminary ruling sought - Accident Compensation Act 1985, ss 5(1), 5A
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APPEARANCES:
COUNSEL
SOLICITORS
For the Plaintiff
Ms M Fudim
Zaparas Lawyers
For the Defendant Mr C Miles Lander & Rogers Lawyers HER HONOUR:
Introduction and Overview
1 Over several years, Mr Kakos, the plaintiff, and his brother developed a successful and, at least until about 2010, lucrative business collecting shopping trolleys at large retail centres in metropolitan Melbourne.
2 The parties required a preliminary ruling on whether or not Mr Kakos was a ‘worker’ over the period from 2005 to 20 March 2011 for the purposes of the Accident Compensation Act 1985 (the Act).[1]
[1] That was the Act incorporating amendments as at 1 July 2011.
3 Mr Kakos gave oral evidence solely on the ‘worker’ issue.
Agreed Facts and Matters Not in Dispute
4 On 21 March 2011, Mr Kakos had signed an employment agreement document with Kakos Trolley Services Pty Ltd (KTS) (now de-registered) which was co-signed by his brother (the March 2011 agreement). The agreement was that he would commence casual employment with KTS as a trolley pusher.
5 On 25 September 2012, Mr Kakos lodged a claim for injuries to his back and left hip over the course of his employment with KTS (the first claim). Liability for the first claim was accepted and, from 1 October 2012, Mr Kakos began receiving weekly payments of compensation and medical and like expenses.
6 On 27 September 2013, Mr Kakos lodged a further claim for a neck injury over the course of his employment with KTS (the second claim). Liability, which was initially rejected, was accepted after a Medical Panel Opinion.
7 By notice dated 27 November 2019, the WorkCover Agent then handling the first and second claims made a decision to terminate Mr Kakos’ weekly payments of compensation (the 27 November 2019 notice).
8 The 27 November 2019 notice was on the grounds that Mr Kakos had been in receipt of payments for a total of at least 130 weeks and had current work capacity or has no current work capacity but it was not likely to continue indefinitely.
9 By notice dated 4 April 2022, the WorkCover Agent then handling the first and second claims made a decision that Mr Kakos was no longer entitled to weekly payments from 7 March 2020 (and also terminated medical and like expenses from 7 May 2022) (the 4 April 2022 decision). [2]
[2] This was following a transfer or change of WorkCover Agent handling the first and second claims.
10 The 4 April 2022 decision was on different and various grounds to the 27 November 2019 notice including: Mr Kakos was not a worker under the Act; he had not sustained injury arising out of or in the course of employment with KTS; and employment was not a significant contributing factor.
11 The Authority did not dispute that from the time of the March 2011 agreement or around from 21 March 2011 Mr Kakos was working for KTS under a contract of service. [3]
[3] The Victorian WorkCover Authority was the defendant in this proceeding given the de-registration of KTS.
12 The parties were in dispute regarding Mr Kakos ’s employment status prior to 21 March 2011 as the Authority denied that, prior to that time, Mr Kakos was a ‘worker’ within the meaning of the Act.
Mr Kakos’ evidence
13 Mr Kakos, a married man with five children, emigrated to Australia from Iraq in 1992. At no time had Mr Kakos’ spouse, Nada, performed work for KTS.
14 In around 2003 or 2004, Mr Kakos and his brother established KTS, a business operated via a partnership arrangement although there was no formal documentation of that.
15 On 22 August 2005, KTS was registered as an Australian proprietary company. The two directors of KTS were Mr Kakos and his brother.
16 KTS was the Trustee of a family trust known as The Allos & Kakos Family Trust (the Family Trust). The Family Trust was set up for the distribution to family members of the profits of the KTS business.
17 KTS had a contractual arrangement with an entity referred to by Mr Kakos as ‘ATN’ to provide shopping trolley collection services at shopping centres. This was to be provided at two shopping centres: Southland (for which Mr Kakos was responsible) and the QV Melbourne centre (QV) for which his brother had responsibility.
18 KTS employed, and paid wages to, initially 15 then up to 23 staff to perform trolley collection tasks.
19 Between 2005 and 2010, Mr Kakos’ day to day role at Southland involved the training and instruction of staff in the work of trolley-pushing and also working alongside them. That was especially when employees did not show up for work.
20 Mr Kakos worked ten to twelve hour days. He usually spent roughly half the time on teaching or training workers and half of the time checking the safety rules, checking the quality of the work and overseeing workers.
21 KTS was paid annually or half yearly by the ‘head office’ of ATN. It was his brother who handled all the business side and Mr Kakos was just managing the workers. The brother dealt with their accountant and took care of lodging tax returns for the business and personal tax returns for himself and also Mr Kakos.
22 As for how Mr Kakos was paid for his work, he and his brother were paid on a weekly basis and received payslips every week.
23 As for any formal agreement between himself and KTS between 2005 and 2010 as to wages, superannuation or any other form payments or aspects of his role, Mr Kakos said, in cross-examination, that all documentation was with his brother and had been given to his lawyers.
24 In cross-examination, Mr Kakos was taken in detail through his personal returns for various tax years from 2005 to 2010 which he said were truthful. The returns reflected income declared as follows:
a. For 2005, $31,464 being distribution from a partnership and a net distribution of $28,484 deductions.
b. For 2006, $71,465, being a partnership distribution of $7,365 and a trust distribution of $64,100. Also declared was a trust distribution paid to his spouse of $64,100.
c. For 2007, $61,659, being a trust distribution. Also declared was a trust distribution paid to his spouse of $64,100.
d. For 2008, $57,139, being a trust distribution. Also declared was a trust distribution to his spouse of $57,139.
e. For 2009, $38,379, being a trust distribution. Also declared was a trust distribution paid to his spouse of $38,590.
f. For 2010, $25,823, being a trust distribution of $25,823. Also declared was a trust distribution paid to his spouse of $26,287.
25 In cross-examination, Mr Kakos agreed that in his personal returns, the income source was entirely distributions from the Family Trust and not wages. The distributions were for his share of the work.
26 As for why his spouse had received virtually the same trust distribution amount as he did although doing no work in the business, he said she was looking after the children and doing a bigger job than him.
27 In cross-examination, Mr Kakos was taken through the trust tax returns of KTS as the Trustee of the Family Trust as well as balance-sheets for the Family Trust which he said were accurate. These reflected declared business income as follows:
a. In 2008, $644,358 with net income of $246,560 after deductions. In the balance-sheet, sales were declared of $644,358 and expenditure on ‘salary & wages’ of $202,975. As for distributions from KTS, Mr Kakos received the sum of $57,139 as did his spouse, his brother and his brother’s spouse. Additionally, lesser sums were distributed to the children.
b. In 2009, $576,494 with net income of $181,550 after deductions. In the balance-sheet, sales were declared of $576,494 with expenditure on ‘salary & wages’ of $210,267. As for declared distributions from KTS, Mr Kakos received $38,639 as did his spouse, his brother and his brother’s spouse with lesser sums to the children.
c. In 2010, the declared business income was $531,066 with balance-sheet sales of $518,898 and expenditure on ‘salary & wages’ of $230,692. As for declared distributions from KTS, Mr Kakos received $25,823 as did his spouse and his brother with the children receiving lesser amounts.
28 In cross-examination, Mr Kakos conceded that none of the ‘salary & wages’ figures in the balance sheets included wages paid to him. These were wages paid to the employees of the business. All he knew was that he was getting a wage every week.
29 In cross-examination, Mr Kakos also agreed that his annual distribution from the Family Trust matched exactly the declared income in his annual personal tax returns.
30 In late 2010, KTS lost the contract to provide the trolley collection service at Southland.
31 On 29 November 2010, Mr Kakos ceased to be a director of KTS. From around the same time, he worked at QV as a trolley pusher on a casual basis until around March 2011. He received payslips over this period.
32 In cross-examination, he agreed that he was receiving Centrelink benefits from 29 November 2010 in addition to working up to the permitted hours of 15 to 20 hours a week.
33 Then, from around the time of the March 2011 agreement, Mr Kakos began trolley pushing duties at Broadmeadows Central shopping centre (Broadmeadows). He worked four days a week doing four hours per day.
34 In cross-examination, Mr Kakos agreed that in the 2011 tax year, he transitioned to being an employee of KTS.
35 As for why he entered into a formal employment agreement at this time, in cross-examination, Mr Kakos said it was a requirement of Broadmeadows centre management. This requirement applied to any workers on the premises in the event of accident or injury.
36 In cross-examination, Mr Kakos said that was also the reason he completed staff induction training according to a form dated 21 March 2021.
37 In cross-examination, Mr Kakos was then taken to his 2011 personal tax return in which his stated occupation was ‘Labourer-Other’ for which he was paid wages of $17,695. He received Centrelink benefits of $3,580. Other income was a distribution from the Family Trust of $8,115 for the period 1 July 2010 to 20 March 2011. Also declared was a trust distribution paid to his spouse of $15,295.
38 On 28 November 2011, Mr Kakos stopped work for KTS because of left leg and back pain and has not worked at all since then.
39 In cross-examination, Mr Kakos agreed with the accuracy of a letter dated 20 May 2019 from his brother to the solicitors for the Authority. The letter stated that Mr Kakos had commenced working at KTS as casual trolley pusher and driver on 21 March 2011 and finished up on 16 October 2011 due to his injury.
40 In re-examination, Mr Kakos stated that his brother had been responsible for setting up the business structure of KTS and of the Family Trust. His brother was responsible for distribution of the funds at the end of each tax year. Mr Kakos himself was a manager and worker.
Consideration
41 Mr Kakos had the burden of proof that he was a ‘worker’ as defined by the Act.
42Section 5 of the Act defines a worker as an individual—
(a)who—
(i) performs work for an employer; or
(ii)agrees with an employer to perform work — at the employer's direction, instruction or request, whether under a contract of employment (whether express, implied, oral or in writing) or otherwise; or
(b) who is deemed to be a worker under this Act.
43A corresponding definition in s 5 of employer includes—
(a) a person—
(i) for whom a worker works; or
(ii) with whom a worker agrees to perform work— at the person's direction, instruction or request, whether under a contract of employment (whether express, implied oral or in writing) or otherwise; and
(b) a person who is deemed to be an employer under this Act; …
44Counsel for the Authority contended that it followed plainly from the arrangements chosen by Mr Kakos (with his brother) that prior to, and up until the March 2011 agreement, he was not a worker for statutory purposes.
45The focus of the evidence and submissions was on the nature of Mr Kakos’ arrangements with, and relationship to, KTS including as a director and shareholder prior to the date on which there was unequivocal evidence of his employee status on 21 March 2011.
46 Counsel submitted that, prior to the March 2011 agreement, Mr Kakos, with his brother, had deliberately chosen the particular type of arrangements for their own reasons and ought to bear the consequences of that election. That was how the Court of Appeal had put it in Eastern Van Services Pty Ltd v Victorian WorkCover Authority.[4]
[4] [2020] VSCA 154 (‘Eastern Van’), [162] – [163]. Although governed by the Workplace, Rehabilitation and Compensation Act 2013 (the WIRC Act), the definitions of ‘worker’ and ‘employer’ are identical to those in s 5 of the Act.
47 An individual’s taxation treatment of income is certainly well-established in the case law as one of the indicia in differentiating between two types of arrangements or relationships: that of a contract of service or contract for services. I refer to leading authorities such as Stevens v Brodribb Sawmilling Co Pty Ltd[5] and Elazac Pty Ltd v Shirreff.[6]
[5] (1986) 160 CLR 16.
[6] [2011] VSCA 405.
48Neither party contended that the provisions providing for deemed employment were relevant to Mr Kakos.
49In this case, for completeness, I note that there was no evidence adduced as to the nature of contractual arrangements as between KTS and the head-contractor, ATN.
50Counsel for Mr Kakos submitted that he was a person who, in addition to being a shareholder, also performed work in the service of KTS.
51 In a decision of this Court of Alobaidi v Z’N M TPT Pty Ltd,[7] Magistrate Ginnane (as he then was) had this to say about such arrangements:
Historically the idea that a person might perform dual roles and hold dual functions was controversial but it has become progressively less so to the point where now the matter is well settled. A company director can have the dual status of an "officer" for the purposes of corporation’s legislation and at the same time serve as an “employee” of that very same company. This is so even if the corporation is a one person company and its sole director is its employee or indeed is its only employee. This is because of the separate entity doctrine and the capacity of the corporation to enter into contracts even if they be with its sole director or shareholder. …[8]
[7] [2013] VMC 34 (‘Alobaidi’).
[8] Ibid, [40].
52 Counsel for the Authority acknowledged it was possible for an individual to be both a director of a company and employee. However, it will always depend on how the arrangement is set up.
53 In this case, it was submitted for the Authority, there was simply no evidence of a contract of service between KTS and Mr Kakos prior to 21 March 2011. It was significant that, although Mr Kakos asserted in cross-examination there was documentation of such an arrangement between him and KTS, none was produced.
54 Counsel for the Authority contended that although Mr Kakos was on his evidence performing a ‘hands on’ role in the period between 2005 and 2010, that was not of itself a basis for a finding that he was an employee as well as a director and shareholder. That was because of the arrangements chosen and intended by the brothers.
55 Certainly, there was no written agreement at all between Mr Kakos and KTS. That contrasted to the facts in Eastern Van which included the existence of formal written contracts as between Mr Barca and EVS (as well as between EVS and RACV). A specific clause in the contract between Mr Barca and EVS stated that he was an independent contractor.
56 Counsel for the Authority argued that whilst it was well-established not all employment agreements must be in writing, there nevertheless needed to be some evidence of intention of the parties. Had there been such an intent on the part of KTS, it would be reasonable to expect there would be company memoranda or minutes produced.
57 Moreover, it was submitted for the Authority, it would be reasonable to draw an inference regarding the nature of the arrangement prior to 21 March 2011 from the letter of Mr Kakos’ brother to the lawyers dated 20 May 2019. That letter had stated that Mr Kakos ‘commence [sic] working at Kakos Trolley service on 21st March 2011 as a casual worker. His position was trolley pusher and a driver’.
58 It was acknowledged by Mr Kakos’ Counsel that, whilst it may be argued the remuneration arrangements ‘tended against’ a finding that Mr Kakos was a worker for statutory purposes, he was nevertheless a worker as well as a shareholder.
59 Counsel for Mr Kakos submitted that it was well-established at common law and specifically contemplated by s 5 that a contract of employment could be ‘express, implied, oral or in writing’.
60 Moreover, the weight of evidence supported a finding that Mr Kakos was employed by KTS under a contract of service throughout the period from around 2005 to 20 March 2011.[9]
[9] As noted previously, there was no dispute Mr Kakos was a ‘worker’ within the meaning of the Act from 21 March 2011.
61 Counsel contended that there was no necessity for there to be a formal agreement between Mr Kakos and KTS as to the making of trust distributions as part of ‘earnings’. It would suffice that there was ‘an arrangement’ to that effect which, as a matter of law, did not need to be in writing and could be oral or implied.
62 The thrust of Counsel’s submission for Mr Kakos was that the Court should adopt and apply the approach taken by the Court of Appeal in Azzopardi Haulage Pty Ltd v Azzopardi.[10]
[10] [2008] VSCA 241 (‘Azzopardi’).
63 Counsel for Mr Kakos submitted that although Azzopardi was a widow’s dependency claim, the analysis of Ashley JA (with whom Redlich and Dodd-Streeton JJA agreed) was directly relevant to consideration of this case. That was because of the similar factual scenarios.
64 It is worthwhile setting out in brief the facts of Azzopardi as both Counsel made reference to it. As both Counsel noted, the primary issue on appeal was not concerned with whether Mr Azzopardi was a worker for statutory purposes (which had been conceded) but as to whether the widow was dependent upon the deceased’s ‘earnings’ to the required extent.[11]
[11] Ibid, [1].
65 Mr Azzopardi was initially in partnership with his wife in his transport business. Later, the business was incorporated as a proprietary limited company, as trustee for a family trust. Mr Azzopardi and his wife were both directors. Mr Azzopardi drove trucks and his wife did the administration work. Mr Azzopardi and his wife were paid wages from the company’s account. They would also, at the end of the financial year, receive distributions of the profits of the company. The trust distributions were recorded as taxable earnings in the individual tax returns and they paid income tax on it.
66Ultimately, the Court of Appeal agreed with the trial judge that the distribution of profits earned by the company as trustee for the family trust were capable of being ‘earnings’ when made to the deceased worker.
67 Mr Kakos’ Counsel urged the adoption of the reasoning in Azzopardi to find that Mr Kakos was a worker. Mr Kakos was rewarded by KTS for his personal exertion in the business by payment of a share of the profits.
68 However, Counsel for the Authority submitted that Azzopardi was of limited assistance to the Court in the present case.
69 That was because Mr Kakos’ circumstances were distinguishable from Azzopardi and also from cases such as Paterson v Stanmorr Pty Ltd.[12] According to Counsel for the Authority, those were ‘low wages’ cases based on the income tax returns whereas this case involved ‘no wages’ according to income declared before the March 2011 agreement.
[12] [1999] VSC 65.
70Moreover, in Azzopardi, there, unlike here, both the deceased worker and his widow had performed work in the business (unlike Mr Kakos’ wife). It was highly significant that that the trust distributions to Mr Kakos and his wife were virtually identical irrespective of the fact that Mr Kakos worked in the business and his wife did not. That was indicative that the trust distributions were not earnings for personal exertion.
71 Counsel for the Authority pointed me to Mr Kakos’ income as declared in his personal returns as between 2006 and 2010. His income was precisely the same as his trust (and initially partnership) distributions. His income fluctuated with the fortunes of the business. Initially, it was high and then dropped due to KTS’ loss of the Southland contract.
72 It was significant, Counsel submitted, that there was also no superannuation paid and no income tax deducted in respect of Mr Kakos. This was in stark contrast to KTS’s conduct with respect to those who Counsel termed ‘genuine employees’.
73 Having considered submissions, I now turn to my findings.
74I conclude from the evidence that at least from the date of incorporation, Mr Kakos was performing work for KTS. I make that conclusion from the following findings of fact:
a.Mr Kakos’ evidence (which was unchallenged on this issue) was that from around 2005 (and earlier for the partnership) and to late 2010, he was performing work relating to trolley collection over ten to twelve hour days predominantly at Southland. His duties involved managing staff from day to day and working alongside them.
b.That was also apparent from the first claim form in which Mr Kakos described himself as a driver (as well as being a director of KTS until 2010). On the forms for both claims, he described his ‘normal duties’ as being the manual work of collecting and pushing trolleys.
c.Mr Kakos’ performance of the work was required by, and for the benefit of, KTS. It was KTS that had the contractual obligation to the head contractor, ATN, to perform the trolley collection work and for which KTS was remunerated. Counsel for the Authority did not submit otherwise.
d.The benefit derived by KTS for the trolley collection service provided is apparent from trust tax returns of KTS (as the Trustee for the Family Trust). The returns declared business income (‘sales’ according to the balance sheets for the Family Trust) of sums in excess of $500,000 from 2008 to 2010.
75To my mind, to conclude otherwise would be to ignore the fundamental point that, as a matter of law, a corporation such as KTS is, an entity separate from other persons, such as Mr Kakos and in his brother who are its shareholders or associated with it.[13]
[13] See for example Macleod v R [2003] HCA 24, [75].
76I agree with Counsel for the Authority that, as for whether a director has entered into a contract of service, each case will turn on its own facts. That was observed by Judge G D Lewis in a decision of Spark v Victorian WorkCover Authority.[14]
[14] [2002] VCC 4.
77That case involved a scenario in which the plaintiff and his wife had a building business with a family trust arrangement. His Honour had to determine as a matter of fact whether or not a corporate entity had assumed the role of trustee of the family trust. It was common ground that if the plaintiff was working as a trustee of the family trust at the date that he was injured, he would in effect be employing himself (as the trust itself is not a legal entity), and hence he would not be a worker within the meaning of the Act. On the on the other hand, it is clear from his Honour’s reasoning that had the Court been satisfied, on the evidence, that the corporate entity was the trustee of the family trust as at the date of injury, and as trustee was the plaintiff’s employer, then the plaintiff would have succeeded.
78Here, there was no question on the evidence, as I have observed, that it was KTS, as a corporate entity, that required performance of the trolley collecting work and also was the Trustee of the Family Trust.
79I conclude that the weight of evidence supports a finding, therefore, that Mr Kakos was performing dual roles and held dual functions in the sense referred previously to in Alobaidi.
80I further conclude that the weight of evidence supports a finding that he was performing the work under a contract of service rather than a contract for services. I draw that conclusion from the following findings of fact:
a.The evidence, as I have already observed, was that between 2005 and 2010, Mr Kakos worked on a consistently full-time for KTS performing more or less the same duties week after week. There was no evidence that he performed work other than exclusively for KTS over this period.
b.His evidence was that he ‘managed the workers’ and worked alongside them pushing trolleys and driving trucks as he also
c.Mr Kakos, according to his unchallenged evidence, was that he played a minimal role in any other aspect of KTS in terms of practical input as a director, having no input into the structure of KTS nor the financial or taxation arrangements. All those matters were controlled by his brother although, of course, that does not mean Mr Kakos avoids the consequences of those arrangements and declarations in terms of treatment of his earnings.
81As for the content of the letter of Mr Kakos’ brother of 19 May 2019, I attribute minimal weight to that in so far of it being evidence as to the nature of, nor intent of the brothers (as directors of KTS), as to the arrangement prior to the March 2011 agreement. The very brief letter was apparently a response to a letter to the brother from the lawyers (which was not tendered into evidence) and simply states the date after which he began as a casual employee of KTS.
82I must assess the weight of that letter in the context of the whole of the evidence. It seems to me the assertion in that letter is consistent with the evidence of Mr Kakos beginning a new arrangement at a different site (Broadmeadows) which differed from the work he performed and the long hours of employment in a manager type role at Southland. It is true that the role at Broadmeadows was similar to the work briefly performed at QV between late 2010 and March 2011. I do accept as a reasonable explanation for the March 2011 agreement and induction documents being that they were to comply with the requirements of centre management at Broadmeadows.
83For these reasons, the letter of 19 May 2021 combined with the employment documents of March 2011 are of insufficient weight, in my view, to persuade me that prior to the March 2011 agreement Mr Kakos was not a worker for the purpose of the Act.
84It is true that under cross-examination Mr Kakos referred to having received weekly payslips for his work both whilst at Southland and then in the period at QV. Yet the earliest dated payslip produced by him was for the week ending 3 July 2011. It is also true that he told the Court there were documents regarding the nature of the agreement between himself and KTS, yet none were produced.
85Nevertheless, under rigorous cross-examination, particularly on the income documents, Mr Kakos made significant concessions against interest. He agreed none of ‘salary and wages’ figures in the annual trust balance sheets included any wages paid to him. He also conceded that none his declared income in his annual personal returns for 2005 to 2010 represented wages and was entirely distributions from the Family trust.
86I formed a generally favourable impression of Mr Kakos as a cooperative and also credible, if unsophisticated, witness. For example, he explained the reason for his wife receiving the same trust distribution figure as himself was that she did ‘a bigger job’ than he, being responsible for raising their five children.
87 Under pressure of cross-examination, Mr Kakos agreed with the proposition that in the 2011 tax year, he ‘transitioned to being an employee’ of KTS.
88 Weighing the whole of the evidence and my observations about Mr Kakos as being generally credible and rather unsophisticated, I do not infer from that concession that, before then, he considered himself not an employee. Rather, I infer that he was making reference to transitioning to being in a quite different situation of no longer being a director, no longer working long hours and signing documents required by the Broadmeadows centre management.
89Finally, the existence of a contract of service is not precluded by the fact that the remuneration is directed into the account of another person or entity such as a family company. That is clear from Azzopardi.[15] In other words, the sharing of profits does not of itself negate the existence of a contract of service.
[15] Ibid, [62].
90In her reply, Counsel for Mr Kakos submitted that an alternative approach was open to the Court in considering his situation. She contended that his ‘earnings’ really went to the question of assessing pre-injury average weekly earnings (PIAWE) which may well be assessed as nil. It nevertheless remained open, on the evidence, for the Court to find that Mr Kakos was a ‘worker’ for the purposes of establishing an entitlement to compensation under the Act pre-dating the March 2011 agreement. That may ultimately be an entitlement only to compensation for medical and like expenses for the period prior the March 2011 agreement.
91Counsel for the Authority objected to that submission as there could be no question the case was opened and proceeded solely on the basis of the parties seeking a determination on the question of whether Mr Kakos was a ‘worker’. However, I did not understand Mr Kakos’ Counsel to be submitting other than that the worker question needed to be determined on the whole of the evidence.
92Certainly, I have not been asked to deal with matters other than that question nor do I propose to do so. I therefore make only brief additional observations on the issue of ‘earnings’.
93The starting point for calculating PIAWE under Division 2 of Part 1 of the Act must be the worker’s ordinary earnings for the ordinary hours worked.
94Both Counsel conceded that Azzopardi is authority for the proposition that trust distribution amounts can be seen as earnings in appropriate cases. Yet, it could not be said that Mr Kakos’ half share of profits distributed to him (and his wife and children) reflected his own work by way of personal exertion.
95In this regard, I refer to a decision of Magistrate Wright of Pobke v Ninth Rischell Pty Ltd.[16] Counsel for the employer in Pobke had submitted (and Magistrate Wright agreed) that it may not be appropriate to look at drawings, and presumably profits, to ascertain PIAWE. That was in accordance with decisions of Cage Developments Pty Ltd v Schubert[17] and Martino v Blakistons Ltd.[18]
[16] [2015] VMC 23 (‘Pobke’).
[17] (1983) 151 CLR 584.
[18] [1998] VCC 8.
96Finally, in submissions, Mr Kakos’ Counsel did make passing reference to the Authority now contending he was not a worker for statutory purposes when he had been in receipt of compensation as a worker for some eleven years prior to the 4 April 2022 notice.
97 However, Counsel for Mr Kakos also did concede, correctly of course, that the 27 November 2019 acceptance was not conclusive of the matter. In my view, Counsel properly made this concession given the decision of Sednaouni v Amac Corrosion Protection Pty Ltd.[19]
[19] [2017] VSCA 66.
Conclusion
98For these reasons, I conclude that Mr Kakos was a ‘worker’ within the meaning of the Act from 22 August 2005 (the date of incorporation of KTS) until 20 March 2011.
99I will hear from Counsel as to the further disposition of the proceeding.
MAGISTRATE HOARE
17 JUNE 2022
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