Kallis v Workers Compensation Nominal Insurer (iCare)
[2021] NSWPIC 70
•9 April 2021
| CERTIFICATE OF DETERMINATION OF MEMBER | |
| CITATION: | Kallis v Workers Compensation Nominal Insurer (iCare) [2021] NSWPIC 70 |
| APPLICANT: | Koula Kallis |
| FIRST RESPONDENT: | D & G Produce Pty Limited |
| SECOND RESPONDENT: | Workers Compensation Nominal Insurer (iCare) |
| THIRD RESPONDENT: | D & G Produce (NSW) Pty Limited |
| FOURTH RESPONDENT: | Maria Brunetto |
| MEMBER: | Ms Catherine McDonald |
| DATE OF DECISION: | 9 April 2021 |
| CATCHWORDS: | WORKERS COMPENSATION- Death benefit; deceased injured at premises owned by a company of which he was a director when he fell whilst assisting in the installation of replacement equipment; Held- deceased was a volunteer rather than a working director under a contract of service; Riverwood Legion and Community Club v Morse discussed; deceased was not a worker employed by the company which ran the business nor a deemed worker of that company; Malivanek v Ring Group discussed; award for the respondents. |
| DETERMINATIONS MADE: | 1. Award for the first, second and third respondents. |
STATEMENT OF REASONS
BACKGROUND
Koula Kallis and Maria Brunetto are two of the four children of Dennis Bouletos. They claim the death benefit under s 25 of the Workers Compensation Act 1987 (the 1987 Act) in respect of his death on 16 June 2017. Mr Bouletos fell from a height while upgrading an augur at premises owned by D & G Produce Pty Limited (Produce) and occupied by D & G Produce (NSW) Pty Limited (DGNSW).
To avoid confusion, I refer to Mr Bouletos’ children by their given names and no disrespect is intended.
Mr Bouletos founded the business, a manufacturer of stock feed, in about 1975. At the date of Mr Bouletos’ death, he was the sole director and shareholder of Produce.
In about 2010 John Bouletos and Adam Waters set up DGNSW and took over the manufacturing business. Either Produce or Mr Bouletos continued to own the premises and much of the plant and equipment and DGNSW paid rent of $3,000 per week to Produce.
Koula and Maria contend that Mr Bouletos was a worker employed by either Produce or DGNSW at the date of his death, performing maintenance work on the machinery at the premises. John does not agree. Neither he nor their other sister Malama Habib seek any apportionment to them of any amount payable.
Produce did not hold a policy of workers compensation insurance at the date of Mr Bouletos’ death. DGNSW is insured. Each of the Nominal Insurer and DGNSW deny that Mr Bouletos was a worker.
The main issue to be determined is whether Mr Bouletos was a worker employed by Produce or DGNSW at the date of his death, though I was informed that dependency was also in issue.
PROCEDURE BEFORE THE COMMISSION
The claim was listed for conciliation conference and arbitration hearing on 2 March 2021 by telephone.
Mr Morgan of counsel appeared for Koula, Mr McEnaney of counsel appeared for the Nominal Insurer, Mr Perry of counsel appeared for DGNSW and Mr Halligan of counsel appeared for Maria.
I am satisfied that the parties to the dispute understand the nature of the application and the legal implications of any assertion made in the information supplied. I used my best endeavours in attempting to bring the parties to the dispute to a settlement acceptable to all of them. I am satisfied that the parties have had sufficient opportunity to explore settlement and that they have been unable to reach an agreed resolution of the dispute.
The parties did agree that, if the claim succeeded, the death benefit should be apportioned equally to Koula and Maria.
They also agreed that if the claim was successful, interest of $35,374.25 was payable. I was not provided with details of the calculation.
Mr Perry objected to the paragraphs of the statements of Koula[1] and Maria[2] which said, in identical terms:
“Dad was also paid earnings of $3,000-$4,000 from DGNSW. It was described as an allowance in his tax returns for many, many years.”
[1] At [12].
[2] At [18].
Mr Bouletos’ tax returns do not form part of the evidence.
After hearing short arguments, I determined that the paragraphs should stand but noted that they carried little weight.
EVIDENCE
The following documents were in evidence before the Commission and considered in making this determination:
(a) Application in Respect of Death of Worker and attached documents (the Application);
(b) Reply filed by the Nominal Insurer;
(c) Reply filed by DGNSW;
(d) Reply filed by Maria, and
(e) Applications to Admit Late Documents filed by DGNSW on 24 December 2020 and 1 February 2021
There was no oral evidence.
Koula and Maria were originally represented by the same solicitors and their statements are substantially the same, using identical words in many places.
The first statement in the Application is that of Maria and it is more detailed. Maria said that Mr Bouletos established Produce as a partnership with his wife in 1975 and incorporated it in 1995. Mrs Bouletos died in 2007. Maria said that her father made the machinery and kept the factory well-maintained.
On 13 December 2010, John incorporated DGNSW and Maria said that her father decided to change the structure of the business to hire the plant and equipment to DGNSW and to provide day to day maintenance of it. She said that Mr Bouletos was paid earnings of $3,000 to $4,000 from DGNSW which “was described as an allowance in his tax returns for many, many years.”
Maria said Mr Bouletos was told by his broker that he did not need workers compensation insurance for Produce because its earnings were less than $7,000.
Maria said that DGNSW paid produce $3,000 per week “to pay for the use and maintenance (by Dad) of the machines, plant and equipment owned by” Produce. Her father lived off the rental income from properties he owned and used the earnings to “buy more real estate and help his children financially.” Maria said:
“Knowing my Dad, he would ensure the money D&G obtained from DGNSW went back to John by paying for the continual repair and maintenance of the plant and machinery. He also gave John countless loans to use towards the business. Dad had to do it this way because Adam was not one of his children. I don't think John has ever realised this.”
Maria said that DGNSW installed robotic pack and stack machines but her father was “in charge of” adapting the existing machines to accommodate technological upgrades and that he referred to is as “the big project.”
Maria set out her understanding of the equipment and said that her father spent two weeks making a new augur which he was installing at the time of his death. She said:
“The 22-year-old plant and equipment was, as was anticipated by Dad, starting to show its age. Certain parts were becoming quite worn and fatigued. It was decided that Dad would try and repair and keep the plant working as long as possible and for any new plant or equipment provided, Dad's side of the enterprise would pay for the repairs to existing equipment and DGNSW would own and maintain the new machinery that it introduced and paid for.”
Maria described the ways her father assisted her financially. No issue has been raised as to partial dependency so there is no need to summarise that evidence. Maria said:
“After the passing of Dad, I (with Koula) appointed an accountant to advise and wind up the commercial dealings and investments of my Dad so as to enable to pay taxes owing and to distribute his estate according to his Will.
The name of this accountant is Mr Angelo Formica of Total Accounting Services. He was given all financial and past trading histories of my Dad and his businesses.”
Koula’s statement does not contain any additional material relevant to the issues is dispute. One issue on which her statement differs from Maria is that she said that “a section of robotic pack and stack machines were installed by Dad.”
Maria attached a further statement to her Reply. It is dated 1 February 2021 and deals with dependency only.
DGNSW’s dispute notice and evidence
The insurer of DGNSW issued a notice under s 78 of the Workplace Injury Management and Workers Compensation Act 1998 (the 1998 Act) on 19 May 2020. It denied that Mr Bouletos was a worker or deemed worker of DGNSW and denied that he suffered an injury arising out or in the course of his employment by DGNSW. The dispute notice did not raise the issue of dependency.
That defence was based on statements from John, Debbie McPherson and Robert McCullough and company searches.
John provided a statement to an investigator on 20 April 2020. He said that the site DGNSW occupies was owned by Mr Bouletos through Produce and that DGNSW paid rent for the premises and equipment under a lease and that the payments were transferred to a bank account on a weekly basis. John said he inherited the premises under his father’s will.
John said that he told his father that a grain augur was not working and that it was his practice to inform his father of repairs required because his father owned the equipment. John recalled that Mr Bouletos wanted to look at the equipment and that he wanted to assist his father in the repairs. Mr Bouletos visited the site on a daily basis after his retirement.
At about 11.00 am on 16 June 2017 Mr Bouletos stood on a pallet attached to the tines on a forklift and was raised to a height of three metres. He had some tools with him. John was on another forklift and both were attaching parts to the augur. Part of the augur came loose and knocked Mr Bouletos to the ground. He said that his relationship with two of his sisters has been strained since his father’s death.
Debbie McPherson has been the bookkeeper of DGNSW since 2012 and was also the bookkeeper for Produce. She said that DGNSW paid Produce weekly rent for the site and the equipment. Produce only remained in existence to collect rent and Mr Bouletos did not employ staff or receive a wage after 2010. She said that Mr Bouletos performed repairs himself or retained contractors.
Robert McCullough signed a short undated letter saying that he was the accountant for Produce, DGNSW and Mr Bouletos’ estate. He said that Produce transferred the business to DGNSW on 1 January 2011 for the value of the stock on hand. Produce leased the premises and equipment to DGNSW for $3,000 per week and Mr Bouletos was not an employee of DGNSW at the date of his death.
The company search of Produce shows that Mr Bouletos was holder of four shares at the date of his death. The company continued to exist as at May 2020 with the shares being held by members of the family and companies associated with them. All four of Mr Bouletos’ children were directors at that time.
DGNSW also relied on bank statements for Produce for the period 26 June 2017 to 3 July 2017 and 10 to 17 July 2017 which showed payment of rent by DGNSW.
John prepared a further statement dated 29 January 2021 for the purpose of these proceedings. He denied that Mr Bouletos was paid wages or allowances by DGNSW and attached a PAYG summary for the year ended 30 June 2017 which confirmed that the company employed five staff, including his son, Dennis Bouletos. He confirmed that the company paid $3,000 per week rent. He said:
“My father would come to the respondent's business at the Castlereagh premises every day ‘out of habit’ almost every day. He would stay on site on some occasions for 5 minutes or on other occasions he would stay for hours.
He was always willing to lend a hand when he attended the Castlereagh site. He liked being around the site and his building and equipment and was always giving us advice in relation to the operation of the plant and equipment. Whilst he sold the plant and equipment together with the business to my company in 2010, my father was always interested in the business. I again confirm that he was not employed by my company (respondent) and we never paid him any amount of money as an employee of our company.
…
My father would come and go as you please. I didhnot give him instructions or directions in relation to performing any task whilst he ‘pottered around’ the plant and equipment. As mentioned above he would sometimes come for five minutes to the Castlereagh property and other times he would stay for hours
I did not have any authority to order my father to perform any specific work. That is, I could not lawfully command my father to perform any work on the plant and equipment whilst he was on site
If my father performed any repair tasks on the plant and equipment he was doing so just to help us all he was performing those repair tasks in his own business (D & G Produce Pty Ltd) which involved the rental of the plant and equipment to the 3rd respondent. My father owned and operated the business of renting the plant and equipment and in performing the repair tasks it was for his business as a representative of that business rather than in and for the 3rd respondent’s business.”
John provided bank statements from DGNSW which confirmed the payment of rent to Produce and wages to staff.
Nominal Insurer’s dispute notice
The Nominal Insurer issued a s 78 notice on 23 June 2020 in respect of Produce. It denied the claim on the same three bases but, in the event Mr Bouletos was found to be a worker, added a defence under s 4A of the 1987 Act that he was not entitled to compensation as the working director of an uninsured company. It also relied on the statements by John, Ms McPherson and Mr McCullough and did not raise the issue of dependency.
Application for review
Koula and Maria sought a review of the decision made by DGNSW’s insurer relying on:
(a) a report by Mr Formica of Total Accounting Services dated 7 August 2020;
(b) appraisal report by Tim O’Mara dated 4 July 2018;
(c) letter from John dated 12 July 2018;
(d) financial statements of Produce dated 30 June 2017, and
(e) tax return of Produce for the year ended 30 June 2017.
Mr Formica prepared a letter dated 6 July 2020 in response to the contention that Mr Bouletos was not employed by either Produce or DGNSW. Mr Formica said that he had never met Mr Bouletos but had been assisting Koula and Maria with the distribution of Mr Bouletos’ estate and had assessed Mr McCullough’s accounts. In that role he had become familiar with the trading history and “wind up requirements” of Mr Bouletos’ financial position.
Mr Formica summarised the agreement between Produce and DGNSW. He said that Mr Bouletos was an employee of both companies under workers compensation legislation, and said that he made the statement based on years of knowledge gained as the Chief Accountant of TNT Workers Compensation Services, a self-insurer. He said that Mr Bouletos was a worker and working director of Produce because the Company could not function without his input. Mr Bouletos offered valuable work for valuable gain in the preservation of assets of the company. He also received a motor vehicle allowance of $275 per month or $3,300 per year.
Mr Formica also said that Mr Bouletos was a deemed worker of Produce because he worked for more than five days in the company’s trade or business by working for at least one day per month on the project of repairing the plant and equipment. Mr Bouletos was a deemed worker of both companies because the modifications and repairs were incidental to the business of DGNSW. Mr Formica said that an assumption that Mr Bouletos was only working on the day of his injury was incorrect.
In respect to the defence under s 4A of the 1987 Act, Mr Formica said that Produce was an exempt employer under s 151AA of the 1987 Act and not obliged to maintain a policy because Mr Bouletos did not receive wages equal to or above the limit in s 151AA(8).
He said that an Analysis of Plant Valuation by Mr McCullough corresponded to the plant valuation by Mr O’Mara and that:
“Item 9 is confirmation from the accountant of D & G Produce (NSW) Pty Ltd that John commissioned Dennis to install $34,000 in value of hopper and augers replacement (footnote 2). Footnote 3 confirms that the robotics installed by Dennis was paid for by D & G Produce (NSW) Pty Ltd.”
Mr Formica said that the letter from John to his siblings confirmed the validity of the accountant’s report. He said that the accounts of Produce confirmed that wages were under $7,500, that a motor vehicle allowance of $3,300 was paid and that the tax return confirms the accounts. He said that the last two documents evidenced a wage. Mr Formica also sought to suggest a conflict of interest in the insurer’s reliance on statements from John and Ms McPherson.
Mr O’Mara’s report appraised the “Trailer, Weighbridge, Silos & Palletising [sic - Pelletising] Plant” located at the premises, assessing the value on the basis of a fair market value and a forced liquidation value. The augurs were valued at $0 with a notation that they were said to be owned by a third party.
The Analysis of Plant Valuation took the market and liquidation values from Mr O’Mara’s report and averaged the total. It attributed ownership to either DB or JB, with the totals attributed to DB being $48,075 and to JB $45,325. The footnotes explain that the truck was split equally because John had bought four new tyres and renewed the registration, that 70% of the value of the pelletising plant was attributed to John because the hopper and augurs were replaced by John and that the robot was excluded because “it belongs to ‘new D & G’”.
A letter from John to his three sisters dated 12 July 2018 said that provided that Probate documents disclosed the value of plant and equipment owned by Produce at $37,370 rather than $48,000 and provided that probate documents were lodged urgently he relinquished his claim to a one-half interest in a property at Killarney Vale.
The profit and loss statement for Produce for the year ended 30 June 2017 notes that motor vehicle expenses of $3,300 were incurred. The tax return for 2017 shows the same income and expenses as in the financial statements. There is no reference to wages being paid in either document.
The Nominal Insurer provided its review decision on 24 August 2020. It said that no new information was provided and, while recognising Mr Formica’s experience working for a self-insurer, did not agree that he was a legal expert in the field. In summary, the notice said that the relationship Mr Formica described was not a contract of service and said that he appeared to conflate doing work with being a worker. It said there was no contract for services because Mr Bouletos was doing the work as the directing mind of the landlord and there was no payment for the work or obligation to perform it. It also said that reliance on s 151AA of the 1987 Act would apply so that s 4A would not undermine the contention that valuable gain amounted to wages.
SafeWork NSW documents
Documents from SafeWork NSW were produced in response to an application under the Government Information (Public Access) Act 2009.
Mr Bouletos’ injury was reported to SafeWork NSW on 16 June 2017. The documents are slightly confusing because names have been redacted and replaced by blank spaces. The work being carried out was described as maintenance of a grain augur. A series of Prohibition and Improvement Notices were issued in respect of the premises generally, including one with respect to the cause of Mr Bouletos’ injury – working at heights suspended on forklift tines on a pallet.
In a statement which appears to be made by Adam Waters dated 25 January 2018[3], the deponent said that he was a director of DGNSW. The company paid rent to lease the premises and the equipment.
[3] Application page 327.
The following questions and answers appear in the statement after a description of the work being undertaken on the day of the injury:
“Q 311 - How often did Dennis visit the site prior to the incident or how frequently?
A - Whenever he felt like it. It was - it was definitely weekly unless he was on holidays somewhere, but he'd always call in at least weekly to see how we were going or he just - I don't think he - he liked to be away from - from there too much. Although he had retired I think it was his passion and he still enjoyed - he just enjoyed coming out here.
Q312 - And what did he usually do when he visited?
A- Whatever he wanted to do.
…
Whatever he wanted - he'd just walk around and if anything looked like it needed to be done he would just carry on and do it. No instructions, he'd just - he'd just do it.
Q 314 - Roll the sleeves up and get into it?
A - Because that's what he'd done all his life and he - I don't think he - although he retired - like I said, although he retired from the business I think his mind was still here, he just - he just enjoyed doing it.
Q 315 - And what sort of person was Dennis?
A - A good bloke, a really - he was - he was probably - probably like my second father. Yeah, just a good bloke.
…
Q 317 - Did he undertake any maintenance work on any of the equipment that he owned and leased to the company?
A - Yes.Q 318 - Was there specific equipment that only he would maintain?
A - No, he just fixed whatever he wanted to fix. I think he'd create jobs
sometimes just to - just to do something even if it didn't need doing.Q 319 - Were you ever asked or did you ever call on Dennis in order for him
to repair a piece of plant or equipment?
A - No, no, he'd just see us - us doing it and as you said before, he'd roll up his sleeves and push us aside and start doing it.”
In a statement dated 22 February 2018[4] which the parties agree is made by John he said that Mr Bouletos was not employed by DGNSW or engaged as a contractor. He said that DGNSW leased the premises and the equipment from Mr Bouletos.
[4] Application page 393.
John said that Mr Bouletos carried out maintenance on the equipment and:
“He just loved coming here and mucking around. If something was broken he'd go and get into it and fix it. Maybe replace a bearing or something break he'd be there happy ready to do it. This was his life. After, [redacted] this was all he had. You couldn't get rid of him. Yeah. We did everything together in the end.”[5]
[5] Question 113.
John said that the maintenance carried out in June 2017 was scheduled but it was not expected to be carried out by his father who had come back from holidays early for a funeral. The relevant work was replacing an augur as the previous one had rusted out. He said “it was just scheduled and he happened to be here”[6]. The decision to replace the rusted augur had been made two months previously.[7] He said that DGNSW had built the augur[8] and he “guessed” that it owned the new augur. That is consistent with Mr McCullough’s note on the Analysis of Plant Valuation that the augurs had been replaced by John.
[6] Answer to question 116.
[7] Answer to question 129.
[8] Answer to question 124.
Mr Waters provided another statement dated 27 September 2018 from which his first name was not redacted on one occasion. In that statement he referred to “the installers of the robot,” the computerisation of that process and the training of the workers by the manufacturers.[9] He said that the robot was installed “eight years ago maybe”.[10]
[9] Answer to question 52.
[10] Answer to question 40.
The following passage appears in the statement:
“Q 209 Did you have any control over the activities Denis was - - -
A - No, not at all.
Q 209 - - - doing, onsite?
A - No. It was his and he, he was under the impression he had every right to do whatever he wanted to do, whenever he wanted to do it and how he wanted to do it.
Q 210 - And is that because he owns the site.
Yes.
Q 211 - And you lease the property and equipment from him?Yeah.”
A document headed Schedule of Documents was apparently produced by SafeWork NSW and it is unsigned. It read in part:
“Mr Dennis Bouletos (deceased) was not employed by D&G Produce (NSW) Pty Ltd and did not receive any payments for work carried out, therefore there are no Tax Declarations or PAYG Certificates. Mr Dennis Bouletos is the owner of all equipment and carried out work on his own equipment.
Ownership/Control/Lease Agreement
· Mr Dennis Bouletos (deceased) owns the property 981 Castlereagh Road Castlereagh (attached is a copy of the Rate Notice).
· All equipment and machinery used in the manufacture of stock feed is owned by D&G Produce Pty Ltd (Sole Director being Dennis Bouletos). D&G Produce (NSW) Pty Ltd lease the equipment from D&G Produce Pty Ltd, however there is not a signed lease agreement for this arrangement (attached are copies of bank statements showing rental payment of per week along with a copy of the Insurance Policy for D&G Produce Pty Ltd).
· Stacking Robot is owned by D&G Produce (NSW) Pty Ltd.
· The LPG Tank 4500L is owned by Elgas and maintained by them.
· There is no set agreement in regards to the responsibility for the maintenance of the machinery. On occasion D&G Produce (NSW) Pty Ltd would carry out maintenance and Dennis Bouletos as owner also carried out maintenance on the machinery.”
A certificate of insurance shows that the premises were insured in the name of Denise [sic] Bouletos ATF D & G Bouletos Unit Trust and a Rate Notice for the premises is addressed to D Bouletos.
SUBMISSIONS
The submissions of counsel were recorded and a sound recording is available so I will summarise them briefly.
Mr Morgan said that the first issue was the basis on which Mr Bouletos was on the property. Both Koula and Maria said that he was paid by DGNSW but the stronger evidence was that the sum of $3,000 was paid for the rent of the premises and the equipment.
Mr Morgan took me to the evidence of Koula, Maria and John and Ms McPherson. He noted that the schedule in the SafeWork documents said that there was no agreement between Produce and DGNSW about maintenance. He said that I would conclude that Mr Bouletos was a working director of Produce. He said I would also conclude that Mr Bouletos was a deemed worker engaged by DGNSW for a specific task, relying on Malivanek v Ring Group Pty Ltd[11] (Malivanek).
[11] [2014] NSWWCCPD 4.
Mr Morgan adopted the matters in Mr Formica’s report as submissions, including the reason why there is no insurance in the name of Produce.
Mr Perry noted that dependency was in issue and that Mr Morgan had not addressed it. Mr Morgan said that the only evidence was that Mr Bouletos was a doting father who regularly made payments to all of his children and helped them with building tasks around their homes. Both Koula and Maria said they had an expectation of ongoing support.
Mr McEnaney, on behalf of the Nominal Insurer, said that Mr Bouletos was a worker who had retired. A director is not necessarily a servant of the company but may be a working director if there is a contract of employment, which need not be in writing. There must be an intention to create legal relations and certainty as to its terms. Mr Bouletos had retired. Having split the company and received rent for the premises but out of love for his son helped out where he could.
Mr McEnaney said that I would not accept the evidence of Maria and Koula as to the arrangement. He noted that Maria did not provide a basis for the statement that Mr Bouletos was paid wages by DGNSW and her statement does not refer to the rent to which all of the other witnesses (except Koula) refer. Mr McEnaney said that I would accept the evidence of Ms McPherson as the bookkeeper of both Produce and DGNSW that Produce continued to exist only to receive rent and he referred me to the evidence set out at [55] (which was that of Mr Waters.
Mr McEnaney said there was no basis to draw the conclusion that Mr Bouletos intended to employ himself on behalf of Produce and that repairing assets did not, of itself, make him a working director. He was, in that respect, a volunteer. He referred me to Riverwood Legion & Community Club Ltd v Morse[12] (Morse) and to the reference in it to Attwood v Barley Marketing Board (NSW)[13], a claim by the widow of a member of the Barley Marketing Board who died while returning from a board meeting. Campbell J (as he then was) said:
“I could discern in the material that was placed before me nothing which led to the conclusion that the Board had lawful authority to command Mr Attwood as far as there was scope for it and I refer to Zujis v Wirth Bros Pty Ltd[1955] HCA 73; (1955) 93 CLR 561 at 571.
Even though there might have been some isolated matters, such as the remuneration and such as the facts that Mr Attwood did do work which would not come necessarily within the duties of a Board member, as provided for in the Act, they, taken together with all the facts of the case, do not lead to the conclusion that he was carrying out those activities under a contact of service. He was doing them, on the probabilities, in the capacity of a volunteer carrying out on behalf of himself as a barley grower, barley growers generally and those that had elected him the actions which he thought it desirable should be done in order to advance the interests of those people.”
[12] [2007] NSWWCCPD 88.
[13] [1982] WCR 94.
Mr McEnaney said that the evidence showed that Mr Bouletos was a good man but he was not a worker.
With respect to the argument that Produce was an exempt employer, Mr McEnaney said that it was not possible to accept that Mr Bouletos could be receiving consideration from Produce as a worker but earning less than $7,000. Section 4A of the 1987 Act precludes the recovery of compensation by a working director of an uninsured corporation. Section 3(1A) provides that a reference to a worker who is dead includes the worker’s dependants so that the death benefit is not payable to the dependants of a working director of an uninsured company.
Mr McEnaney referred to the passage from Morgan v 45 Flers Avenue Pty Ltd[14] quoted in Sarac v Itxcel Pty Limited[15]:
“So long as the law permits people to erect structures which have meaningful legal consequences then if a person elects to erect such a structure he must take the consequences of such erection for better for worse for richer or poorer in commercial sickness or commercial health.”
[14] (1986) 10 ACLR 692, 694.
[15] [2015] NSWWCCPD 32.
Mr Perry said much of Mr McEnaney’s argument that Mr Bouletos was not a worker employed by Produce could be applied to draw the conclusion that Mr Bouletos was not a worker employed by DGNSW. The only witnesses of fact whose evidence favoured that conclusion were Koula and Maria but those to the contrary were Ms McPherson, Mr McCullough and John. John’s second statement showed that DGNSW paid rent to Produce but it paid wages to five employees. Mr Bouletos was retired from the business now operated by DGNSW but remained interested in it.
There was not, as described in Morse, a contract of employment. Mr Perry said that the reference to an allowance in Mr Bouletos’ tax returns was meaningless – particularly when Koula and Maria used identical words and when there was no evidence that unsuccessful attempts had been made to obtain copies of the tax returns. As accountant for DGNSW, Mr McCullough was in a position to say that Mr Bouletos was not an employee. The bank statements of DGNSW showed payments to employees and a regular payment to produce for rent. Mr Perry said that neither Koula or Maria has established that the work that Mr Bouletos did for DGNSW was pursuant to a contract of employment.
Mr Halligan, on behalf of Maria, said that John was not impartial, admitting to a strained relationship with his sisters and that his evidence showed a degree of malice. Mr Halligan said that the evidence that Mr Bouletos went to the premises every day was an indication that he had an active interest in the leased machinery which was more than that of a lessor in a commercial relationship. The payment of $3,000 was consistent with the payment of rent but also consistent with the payment of a wage. The maintenance Mr Bouletos performed was not “one-off” but the establishment of a new system which required him to be there every day.
Mr Halligan said that Mr Waters’ statement was so heavily redacted that it did not corroborate that of John. He referred to the cases which set out the indicia of employment such as Stevens v Brodribb Sawmilling Company Pty Limited[16] (Stevens) and Hollis v Vabu Pty Limited[17] and said that it was not necessary for an employment relationship that there be actual supervision but merely the right to give direction, which can be inferred. Mr Bouletos’ knowledge of the machinery made his engagement by DGNSW sensible.
[16] (1986) 160 CLR 16
[17] [2001] HCA 44.
Mr Halligan also said that the fact that Mr Bouletos was a director of Produce was not a disentitling factor and it was meaningless to say he was not a worker because he had retired. Produce was a private company and it was not necessary that Mr Bouletos be paid wages to be an employee – drawings can be informal, such as a car allowance. Mr Halligan said that it was an appropriate decision for Produce not to take out insurance. He said there was sufficient evidence to find that Mr Bouletos was employed by either Produce, DGNSW or both.
Mr Halligan said there was evidence that Maria had been partially dependant on her father and that he assisted with the payment of her mortgage and for groceries, holidays and home improvement as well as paying her to clean.
In reply, Mr Morgan said that the financial statements of Produce showed that it made a profit of $140,000 in 2017 which showed that it was not only a vehicle for the collection of rent. Its business was the rental of premises on which the equipment was maintained by Mr Bouletos. The case was easily distinguishable from Morse. Mr Bouletos did day to day work through Produce for DGNSW.
FINDINGS AND REASONS
The determination of the claim turns on the facts and the version of the facts presented by Koula and Maria is different to that of John and Mr Waters, which is supported by Ms McPherson and the documents prepared by Mr McCullough.
Koula and Maria sought to characterise their father’s work at the premises as the “big project”. Their evidence is practically identical. If their statements provided a different but corroborative version of the facts, they may have been more persuasive. As it is, the evidence is merely the same thing, said twice and raises the question of whose evidence it really is.
The reference to a “big project” is inconsistent with the evidence of John and Mr Waters. Most importantly, it is inconsistent with the statements they gave to SafeWork reasonably contemporaneously with Mr Bouletos’ injury.
To accept Koula and Maria’s version – which also forms the basis for Mr Formica’s report – I would need to find that a new system to operate the business was being installed, all at once, over a period of one to two months before Mr Bouletos’ death. I do not accept that was the case for the reasons set out below. The evidence shows that the installation of new equipment and replacement of old was an ongoing process rather than a project and that Mr Bouletos often attended the premises, assisting in work being undertaken or finding jobs to do.
Mr Halligan submitted that there was a degree of malice in John’s evidence. I do not agree. John’s evidence is consistent with the contemporaneous documents.
It is clear from the statements that Koula and Maria are estranged from John and that has been so since the administration of Mr Bouletos’ estate. Mr Formica’s letter says that he was retained to assist Koula and Maria with distribution of the estate and the letter from John dated 12 July 2018 suggests a negotiation about the filing of an application for probate.
Mr Formica sought to offer an opinion on the issues which the Commission is required to determine. His report is a response to the s 78 notice served by the insurer of DGNSW. Regardless of past experience, his opinion on those issues is not relevant. As an accountant, his evidence can only be of assistance if it conforms with the requirements of expert evidence in the Commission. It does not. The Workers Compensation Commission Rules, in force when the proceedings were commenced, provided in rule 15.2:
“15.2 Principles of procedure
When informing itself on any matter, the Commission is to bear in mind the following principles:
(1) evidence should be logical and probative,
(2) evidence should be relevant to the facts in issue and the issues in dispute,
(3) evidence based on speculation or unsubstantiated assumptions is unacceptable,
(4) unqualified opinions are unacceptable.”
In Hancock v East Coast Timber Products Pty Limited[18] Beazley J said:
[18] [2011] NSWCA 11.
“In South Western Sydney Area Health Service v Edmonds [2007] NSWCA 16; (2007) 4 DDCR 421, McColl JA (Giles and Tobias JJA agreeing) observed, at [127]:
‘While the Commission may inform itself on any matter in such manner as it thinks appropriate and as the proper consideration of the matter before it permits (s 354(2)), r 70 of the Workers Compensation Commission Rules 2003 [the Workers Compensation Commission Rules 2006, r 15.2] provides that when informing itself on any matter, the Commission is to bear in mind the principles that evidence should be logical and probative, should be relevant to the fact in issue and the issues in dispute, that evidence 'based on speculation or unsubstantiated assumption is unacceptable' and that 'unqualified opinions are unacceptable'.’
(The Workers Compensation Commission Rules 2006, r 15.2 superseded, but replicated in identical form, the Workers Compensation Commission Rules 2003, r 70.)
Although not bound by the rules of evidence, there can be no doubt that the Commission is required to be satisfied that expert evidence provides a satisfactory basis upon which the Commission can make its findings. For that reason, an expert's report will need to conform, in a sufficiently satisfactory way, with the usual requirements for expert evidence. As the authorities make plain, even in evidence-based jurisdictions, that does not require strict compliance with each and every feature referred to by Heydon JA in Makita to be set out in each and every report . In many cases, certain aspects to which his Honour referred will not be in dispute. A report ought not be rejected for that reason alone.
In the case of a non-evidence-based jurisdiction such as here, the question of the acceptability of expert evidence will not be one of admissibility but of weight.”
Mr Formica was asked by Koula and Maria to assess Mr McCullough’s record of accounts. He must therefore have had access to those accounts and it is clear that he has seen material which does not form part of the evidence in these proceedings. As that material must have been supplied by or on behalf of Koula and Maria, its omission is curious. Maria said that “he was given all financial and past trading histories of my Dad and his businesses.” He did not explain if the facts he assumed were provided by them or gleaned from documents.
The facts on which Mr Formica relied are consistent with the statements of Koula and Maria but their statements are inconsistent with the statements John and Mr Waters provided to SafeWork NSW. The few documents on which Mr Formica relied do not support the contention for which he relied on them.
The Analysis of Plant Valuation prepared by Mr McCullough does not have the effect that Mr Formica attributed to it and set out in [45] above and it does not say anything about who installed the robotics. It does nothing more than ascribe values to items of plant and equipment. It shows that many items used by DGNSW were owned by it and roughly half the value of the plant was attributed to DGNSW.
There is no evidence as to who installed the robotic equipment though Mr Waters referred to the installers and manufacturers in his second statement to SafeWork NSW. I am satisfied that it was not installed by Mr Bouletos.
The letter from John to his siblings does nothing to prove the validity of an analysis undertaken by Mr McCullough, which must have formed part of another document. It proposed a different value for the plant and equipment owned by Produce to that in the Analysis of Plant Valuation. The letter was written for a different purpose and proposed a different valuation, apparently to resolve a dispute about Mr Bouletos’ estate.
Because Mr Morgan said that Koula relied on Mr Formica’s report as submissions, I will deal with his contentions below. Ideally, the submissions would have been made without reliance on his report.
Was Mr Bouletos a worker employed by Produce?
Mr Formica said that Mr Bouletos was a worker employed by Produce because he was the sole working director and without him the company could not function and he would be at risk of losing a valuable asset. He said there was a contract of service because Mr Bouletos offered valuable work for valuable gain.
Maria said in her statement that her father lived off the income from rental properties and used the income to buy more properties. The bank statement for Produce for the period 26 June 2017 to 3 July 2017 shows the payment from DGNSW and payments described as rent from two other sources. It also shows a deposit from Raine and Horne, well known to be a real estate agency.
The Profit and Loss statement shows, however, that the only income received by Produce – apart from interest – was $156,000 which equates to $3,000 per week paid by DGNSW for 52 weeks. It is described in the financial statements as rent and not as wages. The company also earned interest income. The profit of about $140,000, to which Mr Morgan referred, is the total income of $169,350 less expenses of $30,580.55, all of which are relevant to a business of owning premises.
Mr Bouletos was a director of Produce. That does not necessarily mean that he was a working director. As Mr McEnaney said, relying on Morse, it is necessary that there be clarity as to the terms of the contract of service if Mr Bouletos is to be characterised as a working director. There is no evidence that he was paid a salary and there is evidence that he was not.
Koula and Maria sought to characterise the payment of motor vehicle expenses as an allowance and equate it with earnings. Mr Formica equated a motor vehicle allowance with wages. There is nothing to show what that allowance was paid for.
Each of Ms McPherson and Mr McCullough who had knowledge of the books of the company said that Mr Bouletos was not paid wages by Produce. Once that is accepted, the substantial part of Koula and Maria’s argument falls away.
In Morse, Roche DP said:[19]
“… there was no evidence that Ms Morse was contractually bound to perform any work for the Club. Mutuality of obligation is an essential requirement for a contract of service. In Dare[20], Gibbs, Mason and Wilson JJ held at 409:
‘It seems to us that the arrangement lacked the element of mutuality of obligation that is essential to the formation of such a contract. A contract of service is of its nature a bilateral contract. It may be conceded that merely to say that the parties had agreed upon a trial does not necessarily rule out its formation. The answer in that respect will depend upon the detail of the arrangement. In particular, the answer will be affected, among other things, by the discovery in the arrangement of the assumption by the ‘worker’ of an obligation to perform some work, it being the purpose of the trial to determine whether the work is performed in a satisfactory manner. But in the present case we cannot discover an obligation on the appellant to perform any work at all.’”
[19] At [41].
[20] Referring to Dietrich v Dare (1980) 30 ALR 407.
There was no obligation on Mr Bouletos to perform work for Produce.
The contemporaneous evidence provides the most assistance. While the statements of John and Mr Waters to SafeWork NSW in the investigation arising from Mr Bouletos’ death were heavily redacted, it is clear whose statements they are.
Mr Waters is a director of DGNSW and he provided statements to SafeWork in February and September 2018, long before any claim for the death benefit was made. He said that DGNSW paid rent to Produce for the premises and the equipment.
Mr Waters said that Mr Bouletos went to the premises almost every day created jobs for himself to do. There is no evidence that he was required to maintain the equipment – merely that he chose to. On some occasions contractors were retained. His attendance at the premises owned by his company was voluntary.
John’s evidence is to similar effect and he said in his statement to WorkSafe that it was not originally intended that his father would undertake the repair of the augur – he had returned from a holiday to go to a funeral. Mr Bouletos became involved in that work because he chose to.
In the absence of evidence about the terms of a contract of employment between Mr Bouletos and Produce, I am satisfied that the work he did to maintain the company’s equipment was voluntary and that he was not a worker employed by Produce.
There was no need for Produce to have a policy of insurance because it did not employ any workers. In those circumstances it is not necessary to deal with the argument about the relationship between s 155AA and s 4A of the 1987 Act.
The argument raised by Mr Formica that Mr Bouletos was a deemed worker of Produce was not developed and does not need to be considered.
Was Mr Bouletos a worker employed by DGNSW?
I have set out the evidence of John and Mr Waters about the work that Mr Bouletos did at the premises owned by Produce. That evidence also leads to the conclusion that Mr Bouletos was not a worker employed by DGNSW.
There is no probative evidence that Mr Bouletos was paid wages or an allowance by DGNSW and there is evidence that he was not.
I accept that he went to the premises on a regular basis to maintain the equipment and to assist John and Mr Waters to do so. It is likely that there were other occasions – such as when he was there for “five minutes” when he merely visited. He went to the premises regularly to maintain ties with the business he had built and because he was interested in it.
DGNSW was replacing an augur at about the time of Mr Bouletos’ injury. John said that the augur was made by DGNSW and was therefore probably owned by it. That is consistent with Mr McCullough’s Analysis of Plant Valuation.
The robotics had, according to Mr Waters, been installed some years before. The evidence of John and Mr Waters is not consistent with a big project on which Mr Bouletos worked but with ongoing maintenance in which he participated when he was at the premises.
Mr Halligan referred to Stevens in which the High Court set out a number of relevant indicia of employment. It is useful to review those criteria because they illustrate that the relationship between Mr Bouletos and DGNSW was not an employment relationship. John said that he did not supervise his father’s work – they undertook repairs together.
In Stevens, Mason J with whom Brennan and Deane JJ agreed said:[21]
“...the existence of control, whilst significant, is not the sole criterion by which to gauge whether a relationship is one of employment. The approach of this court has been to regard it merely as one of a number of indicia which must be considered in the determination of that question.”
[21] At CLR 24.
Mason J said that the following were additional criteria:
· the mode of remuneration;
· the provision and maintenance of equipment;
· the obligation to work;
· the hours of work and the provision of holidays;
· the deduction of income tax, and
· delegation of work by the putative employer.
Wilson and Dawson JJ added the following additional criteria:
· the right in the employer to have a particular person do the work;
· the right to suspend or dismiss the person engaged;
· the right to the exclusive services of the person engaged, and
· the right to dictate the place of work, the hours of work and the like.
None of those criteria are relevant to the relationship between Mr Bouletos and DGNSW.
Mr Bouletos’ tax returns are not in evidence. Both Koula and Maria said, in identical words, that Mr Bouletos was paid an allowance by DGNSW for “many, many years”. As DGNSW commenced business only six years before Mr Bouletos died, the reference to “many, many years” further detracts from any probity of their evidence.
In the absence of any documents which support that contention and in the face of evidence to the contrary, I do not accept that Mr Bouletos was paid an allowance by DGNSW.
I find that Mr Bouletos was not a worker employed by DGNSW.
Was Mr Bouletos a deemed worker of DGNSW?
If Mr Bouletos was a deemed worker it was under clause 2 of Schedule 1 of the 1998 Act which provides:
“2 Other contractors (cf former Sch 1 cl 2)
(1) Where a contract—
(a) to perform any work exceeding $10 in value (not being work incidental to a trade or business regularly carried on by the contractor in the contractor’s own name, or under a business or firm name), or
(b) (Repealed)
is made with the contractor, who neither sublets the contract nor employs any worker, the contractor is, for the purposes of this Act, taken to be a worker employed by the person who made the contract with the contractor.”
Mr Morgan argued that Mr Bouletos was a deemed worker of DGNSW relying on Malivanek.
Roche DP found that Mr Malivanek was engaged for a particular task. He had a particular relationship with his deemed employer and did not employ workers on the day he was injured or at any other time. Though he had a business name, he did not carry on a trade or business, his business had no tangible assets, he was not free to engage others to do the work, his invoices were hand written and not in the form expected of a business.
Mr Morgan said that Mr Bouletos performed a specific task for DGNSW despite being a working director of Produce. To make that finding, I would need to accept the evidence that Mr Bouletos had been working on a particular project in the period of one to two months before his death, as Koula and Maria say.
I do not accept that there was an agreement between DGNSW and Mr Bouletos to perform work or complete a particular project. I am satisfied that Mr Bouletos attended the premises when he liked and assisted with any work being undertaken or created work for himself to do.
There was no payment and no contract. He was not a deemed worker employed by DGNSW.
Dependency
Having made those findings, it is unnecessary to deal with the question of dependency. I note that the issue was not raised in the dispute notices. If the issue did need to be determined, I am satisfied that the practical and financial assistance that Koula and particularly Maria received from their father would mean that they were partially dependent on him for support.
For those reasons, I make an award in favour of the first, second and third respondents.
Catherine McDonald
MEMBER
9 April 2021
0
7
0