Klein v Minister for Education
[2006] HCATrans 576
[2006] HCATrans 576
IN THE HIGH COURT OF AUSTRALIA
Office of the Registry
Perth No P31 of 2006
B e t w e e n -
ALAN DAVID JOHN KLEIN
Appellant
and
MINISTER FOR EDUCATION
Respondent
GLEESON CJ
GUMMOW J
KIRBY J
HAYNE J
HEYDON J
TRANSCRIPT OF PROCEEDINGS
AT PERTH ON WEDNESDAY, 25 OCTOBER 2006, AT 10.21 AM
Copyright in the High Court of Australia
MR C.P. SHANAHAN, SC: May it please the Court, I appear with my friend, MR N.J. MULLANY, for the appellant. (instructed by Butcher Paull & Calder)
MR B.W. WALKER, QC: May it please the Court, I appear with my friend, MS D.J. OSBORN, for the respondent. (instructed by Blake Dawson Waldron)
GLEESON CJ: Yes, Mr Shanahan.
MR SHANAHAN: Your Honours, this is an appeal which turns on the construction of section 175(3) of the Workers’ Compensation and Injury Management Act. A copy of that provision appears in the book of materials prepared by the appellant behind tab 8. Your Honours will see at tab 8 that there are three vertical tabs of different colours, and the blue tab is section 175. Section 175 of the Act deals with the legal significance of the relationship between a principal, the principal’s contractor and a worker employed by that contractor on work for which the principal has contracted. I would like to take the Court to section 175(1), (3) and (7). Subsection (1) appears on the page with the blue tab:
Where a person (in this section referred to as the principal) –
which in this case would be the Minister –
contracts with another person (in this section referred to as the contractor) –
which in this case would be Falcon, a security firm –
for the execution of any work by or under the contractor and, in the execution of the work, a worker is employed by the contractor, both the principal and the contractor are, for the purposes of this Act ‑
the workers’ compensation legislation –
deemed to be employers of the worker so employed and are jointly and severally liable –
in respect of matters covered by the Act.
GLEESON CJ: Just pausing there, is it the case that if it were not for subsection (3) that would apply to, for example, an individual who employed a painter to paint his house?
MR SHANAHAN: Yes.
GLEESON CJ: What I am getting at is this. There is no concept of trade or business in subsection (1) read alone, is there?
MR SHANAHAN: No.
GLEESON CJ: So that if I employed a painter to paint my house and the painter employed some workers, subsection (1) would make me a deemed employer of the workers?
MR SHANAHAN: I think that subsection (1) would, absent the application of subsection (3), yes.
GLEESON CJ: Exactly. So while we are here arguing about a marginal situation it may be important not to overlook the more obvious and elementary operation of this provision, and is it the case that one of the elementary functions intended to be performed by subsection (3) was to avoid the consequence I just gave in relation to a man who engages someone to paint his house?
MR SHANAHAN: Yes, your Honour.
KIRBY J: What was the original purpose of this? Was not the original purpose to cover the situation that the head contractors, I will call it, engages a contractor who is not insured and the head contractor, in the ordinary experience of mankind, is in a better position to look after the uninsured employees of the contractor and therefore the law deemed the head contractor to be liable, including in domestic situations and so on?
MR SHANAHAN: Your Honour, I think that the issue of domestic situations, the one I just dealt with in respect of the other question that has been put, in terms of your Honour’s question ultimately what the legislature originally intended was to cover the situation where principals and head contractors, where there was a subcontracting relationship, a waterfall, if you like, of contracting relationships, that a worker could have access to deeper pockets which was more likely to be the head contractor or the principal.
GLEESON CJ: Now, in the example that I gave subsection (3) produces the consequence that I am not a deemed employer of the worker employed by my painter.
MR SHANAHAN: Yes.
GLEESON CJ: What if I am a man who runs a used car sales yard and I employ someone to paint the office?
MR SHANAHAN: Your Honour, that goes to the heart of the argument before your Honours today in the sense that the appellant would contend that that is an ancillary matter to the trade or business conducted by the used car sales person, or the used car salesman. The painting of the office does not go to the selling of cars, it is not central to the business, and I will develop that argument during the course of my submissions.
KIRBY J: I gather that rather apparently an elegant phrase “directly a part or process in” came originally from the English legislation and had some punctuation in it. Is that correct?
MR SHANAHAN: No, your Honours.
KIRBY J: Because it is an inapt expression to say that “directly a part . . . in the trade or business”. It would have to be “a part . . . in the trade or business”, and that is not a very elegant or clear expression, “at the time of the occurrence of the disability is directly a part . . . in the trade or business of the principal”.
MR SHANAHAN: Can I take your Honours to paragraph 97 at page 19 of the written outline which has been filed by the appellant which deals with the origin of the provision.
GLEESON CJ: There is a typographical error in that paragraph, in the first line.
MR SHANAHAN: Yes, I apologise, your Honours. That should be 1897. Your Honour Justice Kirby, the origins of the Western Australian provision are from New Zealand, not England, and the original language was section 15 of the equivalent legislation in New Zealand in 1900, and that is what sets the Western Australian provision apart from the provision which occurs in other Australian mainland States like New South Wales.
GLEESON CJ: What was the UK provision?
MR SHANAHAN: The UK provision appears in the book of materials which has been filed on behalf of the appellant at tab 15. If I can take your Honours to tab 15 perhaps, and once your Honours reach tab 15 the relevant page number is 56, and the page number 56 is in the inside margin of the page. Your Honours can see there that is the original English provision.
KIRBY J: Is this section 4?
MR SHANAHAN: This is section 4 of the 1897 English Act, your Honour.
GLEESON CJ: And there is the punctuation halfway down the page:
This section shall not apply to any contract with any person for the execution by or under such contractor of any work which is merely ancillary or incidental to, or is no part of, or process in, the trade or business carried on by such undertakers respectively.
MR SHANAHAN: Yes, your Honour.
KIRBY J: See, there is the preposition “of” that makes sense of it and that has slipped out in this modern expression of it.
MR SHANAHAN: Yes. Leaving a finger at that page because I am going to deal with that, if I could take your Honours to tab 13 which has the New Zealand Act, the 1900 Act ‑ ‑ ‑
KIRBY J: I will leave a tab rather than my finger. I like to keep control of my fingers.
MR SHANAHAN: I am sorry, your Honour. At section 15(3) on page 231:
The principal shall not be liable under this section except in cases where the work to be executed under the contract, and in which the worker is employed –
. . .
(b)Is directly a part or a process in the trade or business of the principal –
Now, that is the exact language that is in the Western Australian ‑ ‑ ‑
GLEESON CJ: The origin of that language is evidently the UK language ‑ ‑ ‑
MR SHANAHAN: That is accepted, your Honour, except ‑ ‑ ‑
GLEESON CJ: ‑ ‑ ‑ where the punctuation made the syntax easier to follow.
MR SHANAHAN: Yes. What the appellant would say about the differences would be that the formulation in England was negative. It was a negative expression, what was not caught, whereas the formulation in the New Zealand legislation is what is caught, and that makes a difference in emphasis and it is a difference in emphasis which his Honour Chief Justice Malcolm picked up in Jones v Wesfarmers, which I will take your Honours to in due course, where he says that the formulation in the Western Australian Act is a narrower formulation than the one in provisions derived from the English Act because it deals with the formulation in a positive way. That is the difference. Directly part or process in the New Zealand legislation rather than merely ancillary or incidental, the negative proposition in the English legislation. I would like to develop that, your Honours, in due course.
KIRBY J: It is not very well drawn legislation.
MR SHANAHAN: No.
KIRBY J: Its purpose is not entirely clear. Once you start mangling the words and taking words and punctuation out it is not entirely clear what it is getting at. The one thing that is clear is Justice Wheeler said “directly” it did not have much to do or could not have much to do, and that just cannot be right because it is in the statute, it is a qualifying adverb and it is obviously intended to have something to do. What exactly is not clear, but it cannot be wished away.
MR SHANAHAN: Well, I hope to show your Honours what the appellant says “directly” does do at section 175(3).
KIRBY J: This appeal really turns on that adverb, does it not?
MR SHANAHAN: Yes, not section 6, 175(3), and I would like to explain why the appellant contends that. The operation of section 175(1) is conditioned by two subsections, (3) and (7), and it is worth looking at (7) as well as (3). I think we have dealt with 175(3) which talks about:
unless the work on which the worker is employed at the time of the occurrence of the disability is directly a part or process in the trade or business of the principal.
Subsection (7) deals with another element. If I could just take your Honours to that, which is behind the blue tab on page 177:
Where the disability does not occur in respect of premises on which the principal has undertaken to execute the work or which are otherwise under his control or management, subsections (1) to (6) inclusive do not apply.
So, again, subsection (7) operates to condition the operation of subsection (1). Now, the significance of that in this case is really in terms of the construction that your Honours might arrive at in terms of subsection (3). The appellant always conceded that subsection (7) was satisfied in this instance because the appellant’s action against the Minister was in occupier’s liability and it was always conceded that the Minister in respect of the premises had the relevant control or management which is referred to at section 175(7).
KIRBY J: Just give me a factual assistance here. The actual injury to your client occurred when the security guard ran, chasing a person found disturbing the security of the school, and he was injured in some premises where there was long grass with a deposit of concrete that caused him to break his patella.
MR SHANAHAN: Yes.
KIRBY J: One would infer from that that the premises where he was injured were not part of the school premises, but you say it has been conceded that ‑ ‑ ‑
MR SHANAHAN: School grounds, your Honour.
KIRBY J: ‑ ‑ ‑ they were in the school and somebody had deposited concrete in the school grounds?
MR SHANAHAN: Yes.
KIRBY J: In long grass?
MR SHANAHAN: That is so.
KIRBY J: I see.
GLEESON CJ: Mr Shanahan, before you leave subsection (7), what does that word “undertaken” mean?
MR SHANAHAN: Well, your Honour, I was just about to point to that because ultimately when your Honours come to construe subsection (3) your Honours will have to consider what was the intention of the legislature and the employment in subsection (7) of a word like “undertaken” is certainly resonant of the language that is employed in the New South Welsh legislation and based on the English model in the sense that that talks about the principal’s undertaking in terms of a description of its commercial activity, so that the idea of “undertaken” appears at (7) as do the ideas of “control” and “management”.
In other words, when we look to the type of relationship that the legislature was trying to identify in section 175, it seems that the legislature considered the premises or the location from which a principal conducted a trade or business to be important, the nature of the work that was executed on the premises to be important and, relevantly, control or management of those premises by a principal. Now, those matters do not go to the heart of this case but they are relevant in terms of how one understands the operation of section 175.
HAYNE J: But was (7) doing more than taking journey accidents out of the operation of the provision?
MR SHANAHAN: The appellant would contend that it does do more than that, your Honour, in the sense that it seeks to identify the location from which a principal conducts a trade or business because what the legislature, the appellant would contend, is searching for in this instance is to identify when, despite the absence of a legal employment relationship between the principal and the contractor’s worker, there is such a relationship in fact or there are incidents of that relationship which encourage the legislature to impose liability for workers’ compensation.
Your Honours, that is the basic outline of 175. In terms of answering the question at subsection (3), your Honours have noted that the provision requires consideration of what “is directly a part or process in the trade or business of the principal”. Where the principal is a public authority that draws attention to section 6, which is another deeming provision in the Act. Can I take your Honours to the red vertical tab behind tab 8. Your Honours will see section 6:
The exercise and performance of the powers and duties of a local government or other public, or statutory authority shall, for the purposes of this Act, be treated as the trade or business of such local government or other authority.
KIRBY J: Do you accept Justice Wheeler’s explanation of that?
MR SHANAHAN: No, your Honour.
KIRBY J: What is the purpose of that other than to say we recognise that public authorities may not generically be treated as being engaged in a trade or business but we are going to deem everything they do within their statutory powers as being their trade and business for the purpose of this Act?
MR SHANAHAN: Yes.
KIRBY J: Now, is that not how it is supposed to work?
MR SHANAHAN: Yes, and your Honour uses three very important words “everything they do”, “everything they do” is deemed to be their trade or business. Not one of the things they do, not one exercise of power, not one performance of a duty, everything they do. Because when one comes to consider what a trade or business is, one does so by reference to the activity of the principal as a whole.
KIRBY J: This is why you underline the preposition “in” work?
MR SHANAHAN: Yes, and also “The”. The words that the appellant would emphasise in section 6 would be “The”, the plural of “powers” and the plural of “duties” and “the trade or business”, “the trade or business of . . . [the] authority”. If one thinks about it, that makes sense because if one was dealing with a private corporation, just setting aside the public authority for a moment, one would consider the commercial activity of the private principal as a totality when considering what its trade or business was. One does not consider a part of it.
KIRBY J: You have conceded, I think, that protecting public schools is within the performance of the powers and duties of the public authority?
MR SHANAHAN: Yes, always conceded, your Honour.
KIRBY J: So that prima facie that is therefore to be “treated” as part of the trade or business of the public authority?
MR SHANAHAN: Part of, but not the trade or business, because the trade or business requires reference to all of the exercises and all of the performances of powers or duties.
KIRBY J: But is not the whole point of section 6 to say they do all sorts of things under their powers and duties and that is going to be deemed to be and be treated as the trade or business of the public authority, all of it, including protecting public schools from being burnt down by vandals.
MR SHANAHAN: Yes, to be treated as the trade or business of the Minister, that is so, but that does not answer the question whether a particular work – now I am dealing with the work of the appellant. This is not referrable to the exercise of the power by the Minister. Whether or not work engaged in or on which the appellant was employed is work which is directly a part or process of that trade or business requires further examination and consideration. Perhaps if I can just deal with her Honour’s reasons in the court below at this stage. If I can take your Honours to page 203 and following in the appeal book, that is where her Honour ‑ ‑ ‑
KIRBY J: Just before you do that, could you just help me with one last question?
MR SHANAHAN: Yes, your Honour.
KIRBY J: Given the importance of preserving the buildings and facilities of public education without which you cannot have public education, if you burn the school down then you are sitting under a tree and you do not have the chalk, you do not have the books, you do not have all the other things that are necessary, so just give me a clue as to why it would not be directly part of the process of the trade or business deemed to be all the discharge of the duties and functions of the public education to stop people burning schools down.
MR SHANAHAN: Well, your Honour, that is a large question to which there are three points that I would make. One is that public education does not require classrooms necessarily in the sense that there are things like ‑ ‑ ‑
KIRBY J: That is a bit unrealistic.
MR SHANAHAN: Well, your Honour, just by way of example, distance education.
KIRBY J: Next you will be saying they are doing us a favour burning down the schools and that is ridiculous.
MR SHANAHAN: No, your Honour, I would not say that, but I simply make the point that education in a pure form does not necessarily require a classroom. That is significant for this reason, because the appellant says that allows one to identify what the basic elements are in the process of delivering education and that involves a teacher, a student, materials, a form of communication and it may well involve classrooms and it may well involve the maintenance of those classrooms, but the appellant’s argument is that the maintenance of those classrooms is one step removed from the actual process of delivering education. That makes it ancillary or incidental and not central to the process which the Minister is engaged in.
KIRBY J: I am just remembering my little local public school classrooms. You just did not have a school, you did not have public education. It was one of the absolutely central and essential ingredients and protecting it – and I would just like to understand why that is not directly part of the process of the deemed trade or business of the Minister.
MR SHANAHAN: Well, your Honour, the appellant would say something can be essential and it can be necessary without being directly part or process of a trade or business.
KIRBY J: So is your case dependent therefore on a theory that a classroom is not essential and that therefore it is not directly part of the deemed trade or business of the Minister?
MR SHANAHAN: No, your Honour, it is not.
KIRBY J: You will never convince me of that.
MR SHANAHAN: No, and the appellant does not try. The appellant accepts that classrooms may be necessary, may even be essential, to the process of public education, but that the maintenance of them is not directly part or process of the delivery of public education; that that is one step removed. The logic of that becomes clear if one considers perhaps a school which has been affected by a storm and has been wiped out, if you like, so that students cannot go into it, so that the Minister then hires a building contractor to come along and fix it. In the course of the building contractor fixing the school a worker is injured. Is it to be said that that worker – can it be said to have been injured on work which is directly part or process in the trade or business of the Minister for Education? With respect, the appellant would say no.
KIRBY J: Yes, but if that contractor were not insured, you would be standing before us saying yes. So you have your rights against the Minister because of the Act. That was the scheme going back to the UK Act to bypass the potentially uninsured contractor and go straight to the principal.
MR SHANAHAN: The response to that must be that the legislature only intended to allow a worker access to a principal where there was truly a relationship, an immediate or central or functional relationship, between the work on which the worker was engaged at the time of the injury and what the principal did to make money.
KIRBY J: Anyway, I will keep quiet for a while and see whether you can develop this, but I have difficulties with the notion that it is not directly part of the trade or deemed trade or business of the Minister to provide his statutory functions in education by dealing with the problem of security which I think judicial notice would tell us is a real problem in schools, public and private.
MR SHANAHAN: In Textron Pacific Ltd, your Honour, Justice Pincus in the Federal Court considered whether or not a Bell helicopter was used directly in petroleum exploration.
GUMMOW J: That was a revenue case.
MR SHANAHAN: Yes, that is so, your Honour. His Honour basically said this, that the Bell helicopter was used to ferry people and supplies out to petroleum exploration platforms and whilst it was essential, necessary to the operation of the petroleum exploration process, it was not used directly in it because the Bell helicopter itself was not engaged in prospecting for petroleum. In other words, it was necessary, indeed, essential – I think it carried newspapers and other important materials for the people on the platform – but ultimately it was not used directly in the process of petroleum exploration.
Now, that is the construction of “directly in” which the appellant contends for in this case and that is why it is said that something may be essential, it may be necessary, but it is not necessarily directly part or process in a trade or business.
KIRBY J: Well, the word has to be given some meaning. That is the strength of your case. You say it is there, it is deliberate, it has been there for a while in this legislation and it has to be given a meaning and Justice Wheeler’s interpretation gives it no meaning and says it is basically redundant.
MR SHANAHAN: That is so.
KIRBY J: And that cannot be right and that is the strength of your case.
MR SHANAHAN: Yes.
KIRBY J: But then essentially there is a factual question as to whether it is directly part of the process. I just find it difficult to say that preserving the schoolroom and the books and all the other things that are essential to education is not directly – whatever is not directly in this day and age is directly part of the trade or deemed trade or business.
MR SHANAHAN: Well, your Honour, I think the appellant would simply say that in respect of those matters those services may be essential, they may be necessary, but because they are one step removed from the process of delivering education, they are not directly in the trade or business of the Minister, and I would like to develop that. Perhaps, though, I could start by dealing with the decision in the court below which I think is where I was heading previously, your Honour. Can I take you to page 203 of the appeal book. Your Honour has referred to a passage in the judgment of her Honour Justice Wheeler which appears at paragraph 16 which is on page 207 at line 25. This is where her Honour says that:
It may well be that, once the operation of s 6 is correctly understood, there is little work for the word “directly” to do in s 175(3), so far as public authorities are concerned. That is, it would normally be the case that work was either part of the trade or business of a public authority within the meaning of s 6, or it was not.
I think that the parties now accept that that was an error and my friend, in his written outline at paragraphs 13 to 14 at page 3, makes, I think, that concession.
KIRBY J: Mr Walker’s written outline does not really give us a clue as to what an instance which he contends would be an “indirect”. He accepts that there is error but he does not really instance what would be a “non‑direct” and I think that is what he will have to do in order to, accepting the error, show how the section is supposed to work in a case other than this type of case.
MR SHANAHAN: That was a matter that concerned their Honours in the court below.
KIRBY J: So your central and essential argument is, in order to give “directly” work to do, which it is conceded must be done, you then have to divide up the trade or business into the essential and non‑essential ‑ ‑ ‑
MR SHANAHAN: Direct or indirect, yes, your Honour.
KIRBY J: ‑ ‑ ‑ and if you do that to education, the direct is teaching and imparting knowledge and indirect is pieces of concrete in the grounds and looking after them and things of that kind?
MR SHANAHAN: Gardening, catering, security, all of the host of different activities that might support the operation of a school.
KIRBY J: Children will starve unless they have catering.
MR SHANAHAN: Well, we will not let them starve, your Honour, but we would say that that is a similar activity which is at least one step removed from the process of education. The other point I should make about your Honour’s question was your Honour used the word “essential” again and what the appellant would say is that we have to have regard here very carefully to the language used in the Act and the distinction that the appellant would make would be “direct” and “indirect” and that “direct” is not synonymous with “essential” or “necessary”, and I will develop that.
GUMMOW J: What do you say about Mr Walker’s paragraph 15? That is where you seem to be at issue and there is only so much that can be said about it it seems to me.
MR SHANAHAN: Well, the appellant would accept that in executing the work that the appellant was executing at the relevant time he was contributing to the maintaining of government schools. It is just that the maintaining of government schools by the provision of security is not something that is directly part of the ‑ ‑ ‑
GUMMOW J: Paragraph (b) you see.
MR SHANAHAN: Well, with respect to my friend, the appellant would say that there was no exercise by the Minister in respect of that work. The exercise of power by the Minister is the contract. The Minister has no control over the way in which the work was done by the appellant. The appellant cannot be said to be an agent of the Minister in the execution of a power. It is removed by ‑ ‑ ‑
HAYNE J: The key joinder of issue is found in paragraph 38, page 7 of your submission, is it not, where you there identify what you say is the relevant trade or business?
MR SHANAHAN: Yes.
HAYNE J: Which is to identify the trade or business of the Minister in a way which does not take to account what might be called the Minister’s administration of the Act or exercise of executive power more generally. It identifies the Minister’s function, if I may use that as an intendedly neutral term, as being simply providing public education.
MR SHANAHAN: Even if one extended that description of the Minister’s trade or business to include administration, that still would not be ‑ ‑ ‑
HAYNE J: No, administering the Act and exercise of executive power more generally.
MR SHANAHAN: Yes, even if one extends it to that, it does not include the work that ‑ ‑ ‑
KIRBY J: But does that not run into the problem of section 6, the whole purpose of which is to say we are going to put everything in, administering the Act, the exercise of executive power, catering and cleaning and also security, in all of which you can have accident charged circumstances and section 6 says we are not going to have any fuss about what is the – it is going to be everything.
MR SHANAHAN: Yes.
KIRBY J: I know you say you then have to come back to the word “directly” and that cuts it back ‑ ‑ ‑
MR SHANAHAN: I understood that is what my friend is saying as well, your Honour.
KIRBY J: ‑ ‑ ‑ but I would like to know how you can cut it back in the face of section 6 which is, of course, Justice Wheeler’s point, that if it includes everything, then it is hard to see what is left for “directly” to do. Then you say there has to be something for it to do and therefore you then have to go back and read section 6 in light of the word “directly” and narrow it down.
MR SHANAHAN: Perhaps if I could explain the appellant’s position in relation to her Honour’s reasons, that might help.
GLEESON CJ: Yes, you were coming to her Honour’s reasons.
MR SHANAHAN: Yes, your Honour. Essentially what the appellant contends is that there are two errors that one can discern, with respect, from her Honour’s reasons. One is the point that has been made already and that is that in seeking to determine what is the trade or business of the Minister one has to have reference to all of the exercises of power and all of the performances of duty, so that one does not look narrowly at the exercise of a particular power in a particular circumstance. So in this case, for example, one does not look just at the act of contracting with Falcon; one has to look at the sum.
The second matter is that in seeking to answer the question at section 6, one does not make reference to the availability of power, one makes reference to the exercise of it. Her Honour, when she deals with the question of power, appears to move away from the exercise of power to simply whether or not a power exists. The place where the appellant says that occurs is at paragraph 17 of her Honour’s reasons. If I could take the Court to that on page 207 of the appeal book, at 17, which is at the bottom of the page, her Honour says this:
In the present case, the powers of the appellant specifically include the power to, inter alia, maintain government schools as deemed necessary for the purposes of the Act. That power necessarily involves, it seems to me, a complex set of actions, and would encompass the power to cause schools to be constructed, to be cleaned, to be repaired, and to be secured as necessary. Those powers are therefore powers which, for the purposes of the Act, are to be treated as the trade or business of the appellant –
Well, with respect, the appellant would say it is not the powers that are to be treated as the trade or business, it is the exercise of the powers, and it may be that a statutory authority has a whole lot of powers that the authority chooses not to exercise. Where there has been no exercise of the power, it cannot be said that the existence or availability of the powers themselves condition the answer to the question that is posed at section 6.
KIRBY J: But that does not help you because the exercise of the powers includes the exercise of securing the building.
MR SHANAHAN: Yes. No, the appellant has always accepted that the contracting by the Minister with Falcon was lawful and that ‑ ‑ ‑
KIRBY J: So this is an immaterial error, if there is an error. This is not material. The material error is saying that “directly” does not have any work to do.
MR SHANAHAN: Yes, your Honour, but it is part and process of understanding how section 6 works and her Honour ultimately disposed of this appeal by simply applying section 6 and the appellant says it is the way in which her Honour dealt with section 6 is an error in that regard. As my learned junior is suggesting to me, if one reads the whole of paragraph 17, which I think I was part way through, it does become material. I think I was up to the point:
Those powers are therefore powers which, for the purposes of the Act, are to be treated as the trade or business of the appellant; that is, the power to build, repair, clean and maintain schools is to be treated as the trade or business of the appellant. The work in which the respondent was engaged was directly a part, therefore, of that trade or business. It is not necessary for the Court to engage in the task of determining for itself the question of what are to be regarded as part of the core or essential features of a system of provision of public education at the present time.
In other words, your Honour, her Honour moved from the nature of the power to the conclusion regarding the answer to section 6.
It is enough for the Court to know that the Minister is empowered to carry out the functions set out in the Act and that he has determined that it is appropriate to do so by engaging security services.
Well, of course, if the Minister engaged security services as an employer, then those services would be part of the Minister’s trade or business, if the Minister hired security guards as employees, but the Minister has not. What the Minister has done in this case is simply to contract with Falcon for the provision of those services and that that is a degree of separation.
KIRBY J: Could I ask you, assume Falcon had been uninsured and your client had been injured and was only making a workers’ compensation claim, you would want to have a claim over against the Minister?
MR SHANAHAN: Well, my client would, yes, your Honour.
KIRBY J: And the Act from its British origins is in this respect beneficial and intended to expand the notional employers who will respond to a claim for workers’ compensation?
MR SHANAHAN: That is so.
KIRBY J: And you would not give the sections a different construction in the context of a claim for compensation that you would in a claim which is relevant to a claim for damages?
MR SHANAHAN: That is so.
KIRBY J: You would be giving it the same construction?
MR SHANAHAN: Yes.
KIRBY J: Now, given that originally it is beneficial, why would one therefore not construe section 175(3) plus section 6 in an ample way that expands its application to the whole gamut of the things that the Minister does, including security?
MR SHANAHAN: Well, your Honour, with respect, they are deeming provisions which seek to identify when there is a factual relationship between the Minister and the worker which should be recognised as, in effect, a de facto employment relationship. If one seeks to expand the relationship beyond that, then the appellant would contend that one has gone beyond what the legislature intended, because that would be to impose liability for workers’ compensation in a situation in which the principal’s relationship with the worker is not referrable to an employment relationship. It is not of a similar type.
KIRBY J: But that would mean that the worker, though the employee of a contractor who has been secured, would have no entitlement to recover compensation in the postulated circumstances that the contractor is not itself insured.
MR SHANAHAN: That must be so.
KIRBY J: That would be an odd result and a reason for not giving a narrow reading to section 6 in its relation to 175(3).
MR SHANAHAN: Well, your Honour, the appellant would contend that is not an odd result in this sense, that the relationship that I have just described is the relationship which is intended to be recognised by the legislature in section 175 and that is the type of relationship which has been recognised both in the original English provisions, which, on one view, are cast in even broader terms than this provision, and in the New Zealand Act from which this provision was drawn.
GLEESON CJ: The original English provisions were modified substantially in their practical operation by the definition of “undertaker”.
MR SHANAHAN: Yes.
GLEESON CJ: They only applied to a limited defined class of activity.
MR SHANAHAN: Yes.
GLEESON CJ: You complain that her Honour made too much of section 6.
MR SHANAHAN: Yes.
GLEESON CJ: That could be tested by stripping away from this problem for the moment section 6.
MR SHANAHAN: Yes.
GLEESON CJ: How do you say section 175 would have applied in the present case if it had been a private school?
MR SHANAHAN: One would look at what the business was. So the private school would no doubt have similar types of equipment to a public school. So we are imagining a situation in which the purpose of the school is to deliver education, so it would be a similar exercise because we would look at the nature of the undertaking or the business of the private school and we would look it at as a whole and ‑ ‑ ‑
GLEESON CJ: Your argument would be exactly the same if this were a private school?
MR SHANAHAN: I think so, your Honour, yes. In fact it is a good example in many ways because if we were to look at section 6 in a way other than the way for which the appellant contends, section 175(3) would have a different impact in respect of private as against public schools and, with respect, that cannot be right.
KIRBY J: No, but wait a moment. A private school is a trade or business, therefore, you do not need a notional provision, but in the case of a public school the provision has been included which has the fiction, and is a very ample fiction, and it says, whatever is the case of a trade or business private school, in the case of a Minister, a public authority, all of the exercise of the powers the Minister is going to be deemed to be part of the trade or business and that may well take the public school situation beyond that which would apply in the case of the actual, real trade or business of a private school.
MR SHANAHAN: The appellant would contend, as I have already put, that the words “directly a part or process” bring one back to the same result and that is their purpose. The purpose is to apply the Act in the same manner whether a school is public or private.
KIRBY J: So you say, when you read 6 and 175(3) together, meaning has to be given to “directly” and “directly” has to therefore focus on what is directly the activity of the public authority in this case?
MR SHANAHAN: Yes, “directly” ‑ ‑ ‑
KIRBY J: You do that in education, it is imparting information and knowledge, it is not protecting the infrastructure. I still have problems with that. No infrastructure, no imparting of knowledge, children are sent home. It is the reality. They would be sent home. If the school has burnt down, no education until they have some new infrastructure or they would be sent to another school.
MR SHANAHAN: Yes, they would be sent to another school. Your Honour, with respect, the employment of contractors to repair the school whilst the students are elsewhere is really demonstrative of the argument that is put by the appellant. There is no education going on at the school where the contractor is employed repairing it. This is ancillary or incidental to the process of delivering education.
KIRBY J: Could I ask you now – and I am sorry to have to ask you this; I should understand it – why do you want to cut back the scope? Is this because if it falls within the deemed employment you lose rights to damages?
MR SHANAHAN: Yes, your Honour.
GUMMOW J: Because of Part IV to which we have not yet been taken ‑ ‑ ‑
MR SHANAHAN: That is so, your Honour.
GUMMOW J: ‑ ‑ ‑ which is where you should be starting.
MR SHANAHAN: I am sorry, your Honour. That was where I was going to go next with the yellow tab behind tab 8.
GUMMOW J: Well, it is where you should have started. Now, what was the action brought, what were the causes of action, how does Part IV impact on it and how then do these later sections impact on Part IV?
MR SHANAHAN: The action was brought under the Occupiers’ Liability Act, your Honour, by the appellant against the Minister. That succeeded and Part IV Division 2 impacted on that because ‑ ‑ ‑
GUMMOW J: We have only been given bits and pieces of this Act too, I see, as usual.
MR SHANAHAN: I am sorry, your Honour, but we are only seeking to take your Honours to the relevant pieces.
GUMMOW J: What you think is relevant may not be what I think is relevant and I have to write a judgment. We say this over and over again.
MR SHANAHAN: The appellant is more than happy to provide your Honours with a complete copy of the Act. Can I start at the statement of claim on page 1 of the appeal book?
GUMMOW J: Well, a complete reproduction of Part IV would be a good idea.
MR SHANAHAN: Thank you, your Honour. We can provide that, your Honour. Can I start at page 1 of the appeal book, please? Your Honours will see that the claim by the appellant ‑ ‑ ‑
KIRBY J: This just ignored the employment‑type relationship or the fictional – it was just a pure occupiers’ liability claim, was it?
MR SHANAHAN: The issue of section 175 emerged as an affirmative defence pleaded by the defendant, and I will come to that in a moment, your Honour.
GUMMOW J: That is the point. It cuts down. It was originally enacted with the opposite operation. The question is, how does one accommodate this Janus‑like operation?
MR SHANAHAN: Yes, that is so, your Honour. The causes of action are set out at paragraphs 3.2.1, 3.2.2 and 3.2.3. The plaintiff pleads:
3.2.1a duty at common law to ensure that the premises were safe . . .
3.2.2a duty pursuant to Section 5 of the Occupier’s Liability Act to protect the Plaintiff from any dangers related to the premises;
3.2.3a duty pursuant to the Occupational Safety and Health Act to provide and maintain a workplace in which persons such as the Plaintiff were not exposed to hazards.
Ultimately his Honour the learned trial judge found in favour of the appellant in relation to a breach of the duty at 3.2.2 and found it unnecessary to deal with the other causes of action.
KIRBY J: So you did not sue for an employer’s liability on the basis of a deemed statutory employment relationship?
MR SHANAHAN: No, this was an action by the appellant in occupier’s liability because of the danger posed by the concrete lump ‑ ‑ ‑
KIRBY J: Yes, just one citizen against the Minister for the purpose of an occupier’s claim?
MR SHANAHAN: Yes, that is so.
KIRBY J: All right, and then the sting in the tail.
MR SHANAHAN: Yes. If I could take your Honours to page 6 of the appeal book, this is where the affirmative defence is pleaded, paragraph 6. Here we have the defendant Minister, or the respondent in this case, pleading at paragraph 6 that:
it contracted with Falcon Investigations and Security Pty Ltd –
the body I called Falcon, the security contractor –
for the execution of security work at the premises.
Can I make the point at this stage the appellant would say that is the respondent’s description of the work in this case? The work in which the appellant was engaged or employed on, to use the language of section 175(3), was security work. There is a contract, which I will take your Honours to in due course. At paragraph 7:
In the execution of the said security work, the plaintiff was employed to work at the premises by Falcon.
At paragraph 8:
Further, at all material times, the defendant was carrying on –
and this is important, the appellant would say –
the business of the provision of educational services including all tasks necessary involved therein, including but not limited to, the security of the premises.
What the appellant says about that is that is the way in which the respondent’s trade or business has always been characterised: educational services or the provision of public education. In the court below the references to the Minister’s trade or business were redolent with references to the provision of public education. That was the way in which this matter has always been dealt with. At paragraph 9:
The defendant says that the security work on which the plaintiff was employed on 1 November 1999 is directly a part or process in the business referred to in paragraph 8 –
That is the basis upon which it is said that the deemed relationship at 175(1) precludes the appellant succeeding, whatever the result of his cause of action in occupier’s liability.
KIRBY J: There must be another section of Part IV which says that you cannot bring actions against employers in certain circumstances.
MR SHANAHAN: Section 93B(2), your Honour, which is the yellow tab that I was seeking to take your Honours to in the book of materials behind tab 8, towards the middle of the page, “Application of this Division”, and then at subsection (2) at the bottom of the page.
HEYDON J: A broken leg causing $100,000 worth of damage is not a 30 per cent or more disability.
MR SHANAHAN: No, and your Honour has effectively summarised section 93D, that is so, a serious disability being 30 per cent or more.
KIRBY J: Is that common ground that this would have been an injury that would take you outside the entitlement to recover damages in addition to workers’ compensation?
MR SHANAHAN: Yes. I think also ‑ ‑ ‑
GUMMOW J: Was there any reply?
MR SHANAHAN: No. I think also, your Honour, at the time of trial the time expired for an application under the relevant provisions of Part IV Division 2 had expired and there were procedural issues which precluded the appellant from pursuing that course. Also, he did not accept that the Minister was his deemed employer under section 175. Your Honours, I think, in respect of the way in which her Honour dealt with section 6 – and I think that is where I was – her Honour looked at the manner in which the learned trial judge had dealt with that issue at line 30 on page 204 of the appeal book.
GUMMOW J: Do you not have to look at the education legislation?
MR SHANAHAN: Yes, your Honour. I am happy to take your Honours through that. It is behind tab 10 of the book of materials. There was an agreement between the parties at trial that this was the Act which covered any exercise of powers or performance of duties that might be caught by section 6. That appears in his Honour the learned trial judge’s reasons I think at about paragraph 21 on page 192 of the appeal book at the bottom of the page.
KIRBY J: That is the Education Act as stated in the form of tab 10?
MR SHANAHAN: That is so. Again, I apologise, your Honour, it is not a complete copy of the Act. It is an attempt to provide your Honours with the relevant provisions and, again, a complete copy can be made available.
KIRBY J: Is there anything in there specific to security?
MR SHANAHAN: No, in this sense, that the power that has been contended has been exercised is at section 9. I am happy to take your Honours directly to that, which appears at page 17 of the excerpts that your Honours have behind tab 10. This is the power to establish and maintain schools:
The Minister may, subject to this Act, continue and maintain and carry on any Government schools in existence at the commencement of this Act, and may establish and maintain and carry on such other Government schools, and such other means of instruction –
and the appellant would take some support for its argument in this case from the comparison between government schools and means of instruction. The appellant would contend that that is what this Act is about. It is about the provision of means of instruction.
KIRBY J: Yes, but it is also about establishing and maintaining and carrying on schools.
MR SHANAHAN: Yes, that is so.
KIRBY J: And maintaining them includes protecting them.
MR SHANAHAN: Your Honour Justice Kirby, the appellant concedes that the maintenance of classrooms, these other types of activities that support the process of delivering education, may be necessary but the argument is that they remain ancillary or incidental to the process of delivering ‑ ‑ ‑
GUMMOW J: What is there in the Education Act that talks about occupying and controlling land on which there is buildings?
MR SHANAHAN: Yes, your Honour. There are powers to make ‑ ‑ ‑
GUMMOW J: This school that is being talked about is an activity. When it says “establish and maintain” schools, it is talking about an activity. It is not talking about bricks and mortar necessarily or terra firma. Is there any separate power in the Minister to acquire land to build these buildings?
MR SHANAHAN: Yes, your Honour. There is power at section 5 which establishes the Minister as a body corporate on page 6 of the excerpts and that deals with the Minister’s power to sue, to acquire, hold, lease and alienate real and personal property. Section 6 provides for the property to vest in the Minister.
GUMMOW J: The Minister is a corporation sole really.
MR SHANAHAN: Yes, that is so.
HAYNE J: And holding land on trust for the purposes of the Act: see 6(3).
MR SHANAHAN: Yes, and the Minister may grant licences for the use of land: 6A. His Honour the learned trial judge tried to identify where the objects of the Act could be found, without success, and there is no provision which provides for the objects of the Act, except perhaps that that can be discerned from the language of the Act and particularly its long title, which appears on the very first page behind tab 10.
HAYNE J: I think you might also have to look at the compulsory education provisions in the Act which we have not been given that thou shalt attend school.
MR SHANAHAN: Yes, your Honour. As I say, a full copy of the Act can certainly be provided, but just dealing with the long title at this stage:
AN ACT to consolidate and amend the law relating to public education and for incidental and other purposes.
KIRBY J: Where is that? Which section?
MR SHANAHAN: That is the long title of the Act, your Honour. I was trying to take your Honours to that behind tab 10, the first page. Your Honour Justice Gummow asked a question regarding how the Minister managed or dealt with land. There was a power to make regulations under sections 28 and 28A and they appear in the excerpts with which the Court has been provided.
GUMMOW J: Yes, whereabouts in section 28?
MR SHANAHAN: They appear in the excerpts.
GUMMOW J: I know, but which paragraph in section 28(1)? It goes for some pages.
MR SHANAHAN: Yes, it does, your Honour. Paragraph (d), I believe, your Honour, page 55. That deals with prescribing regulations in respect of when school lands may be used but more particularly ‑ ‑ ‑
GLEESON CJ: Are you talking about section 28 or 28A?
MR SHANAHAN: Section 28A. This is the provision that deals with regulations for the control and management of school lands.
GLEESON CJ: Yes, and I should have thought that what we are talking about here is management, not maintenance. I would understand the word “maintain” to mean “conduct”, not “clean”.
MR SHANAHAN: Yes. What the appellant would also say about that point, your Honour, is this, that it is wrong to characterise the work by the appellant as maintenance. The work that was done by the appellant was security work. Security work may be a type of maintenance, or maintaining schools more particularly, but to describe it as maintenance in this case would be unfortunate ‑ ‑ ‑
GLEESON CJ: It is not “maintenance” within the meaning of that word in section 28(1)(b) which talks about “establishment, maintenance and classification”.
MR SHANAHAN: That is so.
GLEESON CJ: I should have thought that maintenance in that context means operate.
MR SHANAHAN: Yes, that is so. Can I take your Honours perhaps to some of the regulations that were made just to try and point up what may be relevant in this case. In terms of the Education Act Regulations 1960 they appear behind tab 11 and the relevant parts of those provisions to the extent that they deal with the maintaining of schools, the appellant would contend are at Division 6 which deals with school premises. They appear at page 16 of the excerpt and No 45 is the first regulation.
HAYNE J: That is to do with maintenance, not with maintaining.
MR SHANAHAN: Yes, that is what the appellant would say, but they are the regulations in these Education Act Regulations which relate to the process of maintaining schools, but the appellant would accept what your Honour Justice Hayne says in that regard. The other regulations that were in force at the time were the School Premises Regulations. They appear behind tab 12. The significance of these regulations is that they provide for the offence of trespassing on school grounds at regulation 3 which is the second ‑ ‑ ‑
KIRBY J: Are these made under the relevant Act? I noticed they were originally made under the Public Education Endowment Act 1909.
MR SHANAHAN: They were certainly in force at the relevant time, your Honour.
KIRBY J: I am sorry, I interrupted you. You were going to take us to a particular regulation.
MR SHANAHAN: I was only going to take you to regulation 3 which provides for the offence of, effectively, the equivalent of trespassing. Part II is titled “Trespass on School Premises” and at regulation 3.1:
A person who, without authority, enters or remains on any part of school premises commits an offence –
and that is what regulation 3 deals with. Regulation 4 gives a principal the power to prohibit persons entering onto school premises. The principal has a power to close school premises at regulation 5 and at Part III on page 3594 the regulations provide for conduct that is prohibited on school premises but, again, this appears to be more in the nature of managing the premises because the nature of the conduct that is identified is threatening, abusing or insulting of a teacher, defacing school premises, lighting fires or bringing explosives onto school premises, bringing animals onto school premises, having intoxicating liquor on school premises, driving vehicles and other parking and traffic matters.
The enforcement that is provided for at regulation 14 gives a principal or a police officer certain powers in terms of excluding people. To the extent that these provisions are important the appellant would simply make the observation that the power that is conferred by regulation 14 envisages that these powers would be exercised either by a principal or a police officer.
KIRBY J: Well, if these are important to your argument, you would have to send in a note showing how they are regulations for the purposes of the current Education Act as distinct from the Acts nominated at the opening of the regulations.
MR SHANAHAN: Thank you, your Honour. Can I just say this though, that in dealing with regulation 14, that a principal will not be at the school in the middle of the night when the appellant was chasing and seeking to apprehend a trespasser, so that a principal would not be in a position to exercise power under these regulations in respect of the work that is the subject matter of these proceedings. That is why, the appellant says, the power at regulation 14 is also vested in police officers, because that is the person who would exercise this power at the material time in relation to the facts in this case and it may well be the reason why the Minister chose to contract with Falcon to provide additional security services, because at the material time there would have been no teachers or principals on the school grounds.
GUMMOW J: There is no difficulty with the Regulations, is there? Look at the first page, 3592, tab 12, in the middle, Education Act made under sections 28 and 28A.
MR SHANAHAN: Thank you. That is correct, your Honour. They are the provisions that the appellant has reproduced behind tab 11.
KIRBY J: Yes, but it is like ships passing in the night. This is dealing with very specific matters and, as I understand it, the matter that is relied on by the respondent, which you do not contest, is that the Act in its generality provides powers to the Minister which would extend to powers to protect the premises by engaging Falcon.
MR SHANAHAN: Yes. The appellant, I think, has already made that point in respect of section 9 of the Education Act.
HAYNE J: Can I take you back to the workers’ compensation provisions that you have taken us through. What is it that brings a deemed employer, that is, a person deemed by section 175 to be an employer who is to be “jointly and severally liable to pay compensation” under the Act, within the purview of Part VI Division 2 and its reference to employers?
MR SHANAHAN: The decision in Hewitt v Benale in the sense that it was an issue in this State as to whether or not section 175 actually applied in relation to ‑ ‑ ‑
GUMMOW J: To Part IV.
MR SHANAHAN: Yes, and that was resolved by Hewitt v Benale.
GUMMOW J: Resolved where?
MR SHANAHAN: It was resolved in the Court of Appeal in this State, your Honour, that section 175 applied to all of the provisions of the Act and that included Part IV Division 2.
GUMMOW J: Was that challenged?
MR SHANAHAN: No, not as I understand it. Your Honour, there is a reference to that by the learned trial judge in his reasons. I can take your Honour to that paragraph if you wish.
HAYNE J: Because it is that which gives rise to the tension between a beneficial provision being employed in the cutting down of common law rights.
MR SHANAHAN: Yes. Can I just say that whilst we are talking about Hewitt v Benale I believe in the judgment of his Honour Justice Hasluck in that case he makes reference to section 175(3) and says one of the reasons why section 175 should apply to that Division is because of the existence of 175(3) which will limit its application to circumstances in which there is a type of relationship between the worker and the principal which is referrable to an employment relationship of the type that the appellant contends for in this case.
KIRBY J: I thought I saw a little lifeline floating towards you and it was suggesting that there may be at least theoretically an argument that you do not read 175(3) with the cutting‑down provisions in the same way as you would read the beneficial provisions for the purpose of providing workers’ compensation cover. That would cast doubt on this authority of the Court of Appeal of Western Australia decision, but you have not challenged that so far. Is that a matter that you are challenging in this appeal or not?
MR SHANAHAN: No, your Honour, it is not.
KIRBY J: We better have a reference to that case.
HEYDON J: It is page 194, paragraph 29.
MR SHANAHAN: Thank you, your Honour. It is at page 194 of the appeal book in paragraph 29 of his Honour the learned trial judge’s reasons.
GLEESON CJ: It is in (2002) 27 WAR 91.
MR SHANAHAN: That is so, your Honour. I can give the Court a reference to the passage in his Honour Justice Hasluck’s reasons to which I have referred in due course.
GUMMOW J: What do I do if I decide I do not agree with it, it does not make sense, decide this case on some false basis?
MR SHANAHAN: Your Honour, the appellant is in the position where it cannot be said that that is the basis upon which this case has been conducted, but this Court is clearly in a position where it can make its own determination as to how these matters operate.
GUMMOW J: No, we can only respond to your submissions.
KIRBY J: We determine matters and the matters are framed by the issues which the parties advance, even if they advance them belatedly and make them part of the matter.
MR SHANAHAN: If your Honours just bear with me for a moment. Your Honours, it seems churlish for the appellant to limit what this Court can and cannot do on appeal and I just make the point that that is not the basis on which the appeal has been brought, but if that is a matter that needs to be taken into account then the appellant would not resist it.
GLEESON CJ: There is no impetus coming from anybody for you to resist.
KIRBY J: It is not resisting; it is a question of whether you are insisting.
GUMMOW J: The impetus is about to come from me.
MR SHANAHAN: I am happy to assist your Honours then in relation to that matter.
GUMMOW J: The impetus that you might be getting from me is revocation of special leave.
MR SHANAHAN: Thank you, your Honour.
GUMMOW J: You had better think about all of this.
MR SHANAHAN: If I might, your Honours, I might deal with that matter in due course.
KIRBY J: Due course is going to expire pretty soon.
MR SHANAHAN: Thank you, your Honour. Her Honour Justice Wheeler in the court below at page 205 of the appeal book took issue with his Honour the learned trial judge’s use of the word “incidental” in respect of the power exercised. This is at paragraph 9 of her reasons. With respect to her Honour, the appellant contends that that is precisely what this particular power was: incidental to the provision of public education.
KIRBY J: Could you help me, Mr Walker has not been very clear of what is directly and what is a not directly, but you have not been all that clear. Would cleaning be directly?
MR SHANAHAN: No, your Honour, that would be ancillary.
KIRBY J: But all the rubbish is piling up and the children cannot get into the classroom. There is filth, it is disgusting and they will get sick.
MR SHANAHAN: Yes, and it is necessary, essential, but not directly part or process of the trade or business.
KIRBY J: You have a somewhat Dickensian view of schools.
MR SHANAHAN: Your Honour, it is conceded that that may be necessary or essential, and perhaps that takes us out of the 19th century. Your Honour, the appellant is trying to set out at paragraph 54 at page 10 of the appellant’s submissions what is said to underlie the word “directly” in section 175(3) and there are three ways in which it is said that “directly” operates. One is that the activity is centrally referrable to the purpose of the public authority, in other words, in this case, the delivery of education. If something is centrally referable to that in the sense, for example, of a teacher providing lessons to students, then that must be directly a part or process of the Minister’s business, because that is directly involved in the delivery of education. That is the point of distinction, the point of principle, which the appellant would contend for excludes the type of necessary, perhaps essential, activities that your Honour Justice Kirby is drawing attention to.
KIRBY J: I just say to you gain that if Falcon had been uninsured and your client was claiming compensation, you would be standing there putting forward an argument and I just do not see how the Court could have rejected that argument that this is essential, this is necessary, this is direct, this is part and parcel of education. We have to be neutral in the way we apply the statute. We cannot sort of pick and choose.
MR SHANAHAN: Your Honour, the word “directly” in the New Shorter Oxford English Dictionary in a definition which is included in the papers behind tab 17 talks about what “directly” means and it suggests that “directly” means in the absence of an intermediary. With respect, what the appellant contends is that where the relationship between the worker employed on work and the principal is such that the status of the contractor is purely legal, in other words, the existence of the intermediary is essentially illusory, that is when section 175 operates. That is why it is said that in this case that does not work because when we talk about centrally referrable to the activities of the Minister it simply does not include the provision of security services. The Minister does not provide security services.
The next description that the appellant puts forward is functionally referrable. What is meant by that is this. If the Minister chose by exercising power to employ security officers under section 7 of the Education Act then the Minister would have a ministerial security workforce. Once the Minister has done that the Minister has by the exercise of a power chosen to expand the nature of the work which the Minister engages in in the course of its trade or business.
So that if, for example, having hired employees to provide security services the Minister chooses to get a contractor in to provide relief staff for the ministerial workforce, then it is said by the appellant that that would be caught by “directly a part or process” because the Minister has its own business in security services. The role of the contractor is to supplement those activities and on that basis it can be said that a worker working for the contractor as a relief security guard would be caught by “directly a part or process”. The heart of that is that there is a real employment relationship between the Minister and the Minister’s workers and that the position of the contractor’s worker is essentially referrable to that.
The third point that is made at paragraph 54 is immediately referrable. What that expression tries to capture is where a public authority employs a contractor for work which is not centrally referrable, where it does not have its own workforce in that area but retains control of the manner in which the work is executed in such a way that one could suggest that the nature of the relationship between the contractor’s worker and the principal is really or equivalent to an employment relationship, and then that would be caught by 175(3).
GLEESON CJ: Mr Shanahan, is it the case that this word “directly” first appeared in the New Zealand version, if I can use that expression, of this kind of legislation?
MR SHANAHAN: Yes.
GLEESON CJ: So if you go to the UK Act of 1897 which is behind tab 15 you find in section 4 the origin of this legislative deeming?
MR SHANAHAN: Yes.
GLEESON CJ: But if you look at the definition of “undertakers” in section 7 you will find that it only applies to people in certain limited kinds of business, but it does apply in the case of a building. So if you had a person under the original English scheme, if you had a person who as the owner of a building engaged a contractor to repair the building, how would section 4 operate?
MR SHANAHAN: It would be a question, your Honour, as to whether or not the work – the appellant would draw attention to the last paragraph in section 4 and the inquiry would be whether or not the work in which the worker was engaged was merely ancillary or incidental and that would require some engagement of the facts to determine the nature of the work.
GLEESON CJ: But if the building had nothing to do with any trade or business of the owner, if it was a private dwelling house, would subsection (4) ‑ ‑ ‑
MR SHANAHAN: Could one say then that that was part of the undertaking?
GLEESON CJ: I am trying to get at the meaning of this word “undertaking”.
MR SHANAHAN: Yes, I am just considering it, your Honour. I think that we might be back to where we began in the sense that the appellant would understand the intention of section 4 of this Act to be to engage the liability of parties described as undertakers who engaged in a commercial activity and who should be made liable for workers’ compensation payments because of their relationship with the worker, not a relationship between a private individual who has contracted for work of a private nature. The thrust of this provision is to preclude employers contracting out of workers’ compensation obligations by the artificial process of employing intermediaries in the nature of contractors.
GLEESON CJ: Then we go to what I will call the New Zealand version of this idea and we see that in section 15 behind tab 13 and that is where the word “directly” first comes in and in that context they separate out these two notions of “lands, buildings”, et cetera, and “part of or a process in the trade or business” and in both cases they introduce this notion of directness.
MR SHANAHAN: Yes.
GLEESON CJ: In that original context of the New Zealand legislation, once again, how would section 15 operate in the case of a private landowner who engaged a painter?
MR SHANAHAN: I think here, your Honour, that the expressions at (3)(a) and (b) are put in the alternative with an “or” and that because the private individual did not have a trade or business referrable to the employment of the contractor the worker’s work would not be caught. In other words, the private individual would not be liable in workers’ compensation payments.
GLEESON CJ: Now, in a case of a trade or business which is dealt with by paragraph (b) what would be an example of work that is “directly a part of or a process in the trade or business of the principal” and what would be an example of work that was not “directly a part of or a process in the trade or business”?
MR SHANAHAN: Where the principal was a private school, what would be directly a part or process of the business would be anything to do with the delivery of education itself. In other words, the process of delivering education in a classroom or if it was distance education the process of delivering it by tapes or by engaging in school of the air activities or that type of thing. In other words, it is central to the process which is at the heart of the trade or business of the principal.
An example of what would not be caught by that language would be anything which is ancillary to that process, in other words, anything that is not directly referrable to that process but supports it. It may be necessary, it may be essential, but it is ancillary in that sense. That would include catering, cleaning, any manner of repair, all of the types of activities that are necessary to support such an activity.
GLEESON CJ: Is there anything in the legislative history of the New Zealand legislation that throws any light on what they were getting at when they introduced this word “directly”?
MR SHANAHAN: No, your Honour, we have looked. Can I say that there is a collection of cases at I think it is footnote 47 on page 19 of the appellant’s written outline and there is a collection of New Zealand cases. Can I say to your Honours that I do not think those cases will assist. There is only one of those cases which deals with a public authority and that was decided in relation to the equivalent of paragraph (a) of section 3, not paragraph (b).
GLEESON CJ: I was trying to get away from the problem about public authorities because this question of the meaning of the word “directly” applies regardless of whether you are dealing with a public authority, I should have thought.
MR SHANAHAN: Yes, that is the appellant’s contention.
GLEESON CJ: I am not saying it applies in the same way. In other words, I am not seeking to beg the question with which we are concerned, but if you look at the origin of this concept of direct relationship or directly being a part of, it has nothing specially or particularly to do with Crown activities.
MR SHANAHAN: No, that is so.
KIRBY J: In your written submissions you did refer to a recent decision of this Court. It was in the motor vehicle third party case, I think, about “directly”. Is that correct or not?
MR SHANAHAN: Just a causation. I think that may just have been a case which dealt with “directly” in the sense of causation. It may not assist your Honours.
KIRBY J: It was not a statutory expression?
MR SHANAHAN: No.
KIRBY J: I do not think that helps then. We do not want to get into all that causation case lore.
MR SHANAHAN: Without wanting to distract your Honours, can I say this in relation to section 6, that section 6 was introduced after the Dunn Report in 1978 through to 1979 which was a judicial review of workers’ compensation legislation in this State. Prior to that report section 6 was a compendious provision which had six subsections and dealt with the application of the Act to the Crown in detail.
After the Dunn Report there was a Bill produced and at that stage – can I call it the first 1981 Bill – the provision at section 6 remained compendious. The Bill was withdrawn. There was a tripartite discussion and then a second 1981 Bill was introduced. When that second Bill was introduced it came with clause 6 which is the current section 6 that your Honours have before you. Looking at the Dunn Report, looking at the various parliamentary debates regarding section 6, there is nothing to assist this Court as to where section 6 came from. However, if one looks at the equivalent Victorian legislation at the same time at section 4(4), one finds similar language used in the Victorian Act in the provision which refers to the application of that Act to the Crown.
GLEESON CJ: But in relation to section 175 and this word “directly” we do not know what made the New Zealanders think that in 1900 they were improving on the 1897 UK model.
MR SHANAHAN: That is so, your Honour, we do not, but what we can say about it is that they thought that a different formulation was necessary or useful and that that formulation in the appellant’s contention is more direct, it is more positive. It requires a closer relationship than did the provisions derived from the English legislation.
GLEESON CJ: And this is the point taken up by the Court of Appeal here in Wesfarmers?
MR SHANAHAN: Yes.
GLEESON CJ: You were going to take us to Wesfarmers.
MR SHANAHAN: I would like to do that, your Honour. Before I do that, your Honour, I am asked to inform the Court that we have looked at Canada, we have looked at a series of different jurisdictions in respect of whether or not there are equivalent provisions and I can tell the Court that Canada, South Africa, Hong Kong, Singapore and Papua New Guinea do not have a similar provision and if your Honours are interested in the equivalent types of provisions in the Canadian Provinces there is a list ‑ ‑ ‑
GUMMOW J: Similar to what? This case is all about the constraints on common law damages.
MR SHANAHAN: That is so and I do not seek to move your Honours from that. I simply say that to the extent that one might look for an iteration of this particular provision it does not exist.
GUMMOW J: Section 93B and so forth went in in 1993, did they not?
MR SHANAHAN: At about that time, yes, your Honour.
GUMMOW J: Yes, 48 of 1993. Section 175 has always been there, has it not?
MR SHANAHAN: No, your Honour, it has not. It was originally section 14 in the 1902 Western Australian Act.
GUMMOW J: No, in the 1981 Act it has always been there.
MR SHANAHAN: It has always been in the 1981 Act, yes, your Honour.
GUMMOW J: Right, okay. We are trying to read this Act as a whole, you see.
MR SHANAHAN: Yes, your Honour.
GUMMOW J: Now, the 1981 Act, section 175(1) talks about “the purposes of this Act”, “deemed” something. Section 175(3) talks about liability “under this section”. Then in 1993 Division 2 comes along and cuts down common law rights.
MR SHANAHAN: Yes.
GUMMOW J: What is there to suggest that the words “for the purposes of this Act” in 175 got this enhanced meaning by the later amendment by the addition of Part IV? You say, it seems to me, or you do not challenge the proposition that 175 meant something different after Act 48 of 1993 because the purpose of the Act changed. They now included cutting down rights, not enhancing them.
MR SHANAHAN: Yes, that is so.
GUMMOW J: That strikes me, prima facie, as odd.
MR SHANAHAN: Yes. The appellant has always contended that the relevance of 175 is solely in relation to insurance because that is Part X. Part X of the Act is where it appears. It appears completely separate from the introduction of the provisions to which your Honour has taken the appellant.
KIRBY J: There is a lot of authority in this Court that when you get an Act which is cutting down rights that previously exist you approach it with a degree of strictness on the assumption that if Parliament intended that it would make it very clear and that is a principle which seems to stand against the Court of Appeal’s decision that the employer is to be given that meaning in the extended statute of cutting down rights when originally that was to enhance rights. I think you have to consider whether or not you do not seek to enlarge your grounds of appeal in this case to suggest that that was a wrong decision of the Court of Appeal and that construing it with the strictness that the principle seems to require that you would give it a much narrower meaning and that Justice Hasluck’s decision may not have been correct.
MR SHANAHAN: Yes. Your Honours, I am not in a position to address you about that matter now but I am more than happy to provide a note regarding that matter or ‑ ‑ ‑
KIRBY J: It is not a matter of a note. You have to amend the record to enlarge the matter or you have to seek to do so at this late stage.
MR SHANAHAN: Your Honours, to the extent that we may need to apply to amend our notice of appeal to include that, I would make that application.
GUMMOW J: You have to have a text. You have a junior. That is what they are meant to be doing.
MR SHANAHAN: Thank you, your Honour. Your Honour, we will provide the Court with ‑ ‑ ‑
GUMMOW J: Now.
MR SHANAHAN: I think, your Honours, I was taking the Court to Jones v Wesfarmers.
GLEESON CJ: Yes.
MR SHANAHAN: It is at tab 4. Your Honours, Jones v Wesfarmers related to a situation where there was a private corporation, Wesfarmers, and Wesfarmers had a transport business and as part of the transport business they delivered flocculent using tankers. Wesfarmers had its own employees which provided maintenance to maintain that fleet of tankers. Wesfarmers contracted with Seeley that was a contractor for the purposes of providing specialist services in respect of auto‑electrics in terms of its maintenance operations. In the course of Seeley providing those services they employed Jones in relation that work. Mr Jones was ultimately injured when dealing with a starter motor in the process of seeking to maintain one of Wesfarmers’ tankers which was used for the purposes of delivering flocculent.
The reason for taking your Honours to this case is that his Honour Chief Justice Malcolm, as he then was, considered the approach by this Court in Moir v Schrader and Frauenfelder v Reid. The first references to those cases appears at page 16 of the report and his Honour Chief Justice Malcolm then goes on to look at his Honour Justice Dixon’s judgment in Moir v Schrader – Justice Dixon, as he then was – at page 320 and he deals with the differences between section 6(3)(a) of the Workers’ Compensation and Rehabilitation Act 1926 (NSW) which was derived from the English legislation and the differences between that and the Western Australian provision, but ultimately his Honour at paragraph [46] on page 18 cites with approval the oft‑cited passage from Moir v Schrader by his Honour Justice Dixon. That is the passage at the bottom of page 18 which begins:
It is based upon the view that from the course of the principal’s trade or business and the manner in which he conducts it, he will be found to have assumed responsibility for the performance of a class of work ‑ ‑ ‑
HEYDON J: I think we have read this in the written submissions.
MR SHANAHAN: The appellant would emphasise it. I do not take that any further. But perhaps the other passage in these reasons that is important is where his Honour cites a passage from the judgment of the learned trial judge in that matter. That passage appears at page 9 at paragraph [23]. Your Honours will see that his Honour the Chief Justice in talking about the reasons given by the learned trial judge refers to:
“S175(3) requires that the work on which the worker was employed at the time of the occurrence of the disability was ‘directly a part or process in the trade or business of the principal’. Counsel for the parties referred extensively to . . . Moir v Schrader (1936) 56 CLR 310 and Frauenfelder v Reid & Ors (1963) 109 CLR 42. However there is a significant difference between the legislation considered in those cases and s175(3) of the Workers’ Compensation and Rehabilitation Act –
the Western Australian provision –
In both the English legislation and the New South Wales legislation considered by the High Court, the work agreed to be carried out by the contractor was required to be ‘in the course of or for the purposes of [the principal’s] trade or business’. In my view, the words ‘directly a part or process in the trade or business of the principal’ import a closer connection between the work on which the worker was employed at the time of the occurrence [of the disability] and the principal’s trade or business than that considered in the English cases and the High Court cases to which I was referred.
His Honour the learned trial judge in that case then refers to Textron Pacific which is the case that the appellant urges on the Court in terms of the meaning of the words “directly in”, particularly the examples given by his Honour Justice Pincus on the last page of that report. If I can take your Honours briefly to that, that is behind tab 5 and on the very last page at line 10:
His Honour used the word “directly” as indicating a close connection between the expenditure and the mining operations.
This is the case where his Honour was considering whether or not a Bell helicopter was used directly in petroleum exploration.
KIRBY J: Yes, but, as Justice Gummow pointed out, this is a revenue case. This is the Customs Tariff Act. It may not be reasoning that one could just pick up and apply to this Act.
MR SHANAHAN: Your Honour, can I take you to page ‑ ‑ ‑
KIRBY J: It has a Janus‑like effect, as his Honour has said.
MR SHANAHAN: Yes, and I appreciate that. The highest that the appellant can put its reliance on his Honour Justice Pincus’s judgment is the passage that appears on page 309 at line 30 where his Honour says the case hinges on the two words “directly in”. So, clearly, whatever the context that his Honour was asked to consider the meaning of these words, he considered that the whole case in Textron Pacific turned on the meaning of those two words “directly in”.
So despite its context the appellant would say it provides some assistance in terms of looking for examples, if you like, as to why “directly in” means something that is referrable to a particular purpose or process, and the examples that are given by his Honour, the appellant would say, assist at page 310 where he talks about whether or not a vehicle is used directly in a manufacturing process where the vehicle is used to deliver employees to the factory. His Honour concludes that the vehicle is not used “directly in” because whilst it may be necessary and essential to take employees to the factory the use of the vehicle is not part of the manufacturing process. That is a distinction which describes the same type of degree of closeness which the appellant contends for in this case.
KIRBY J: I could understand that reading in a revenue statute where a benefit is being sought and you would not necessarily take the same view in reducing a compensation statute where there is an added protection for workers in the case of uninsured contractors, though you might take a similar approach to employers whose relationship is such as to cut back entitlements to damages, but it a matter of construing the word in the context of each particular statutory objective.
MR SHANAHAN: Yes. Your Honour, there is a dearth of authority about what the words mean in the Western Australian provision. That was the closest decision that actually dealt with the meaning of those words and to that extent the appellant relies upon it.
GLEESON CJ: You have given us the media neutral citation of that decision. Is it in the Western Australian Reports?
MR SHANAHAN: The case of Jones v Wesfarmers is not reported in the Western Australian Reports, your Honour.
GLEESON CJ: What about the decision referred to in paragraph [22] of Jones v Wesfarmers?
MR SHANAHAN: Hewitt v Benale is reported, your Honour. That is the reference that was in the learned trial judge’s reasons.
HAYNE J: 27 WAR 91.
MR SHANAHAN: Yes. Can I take your Honours briefly to the contract in this case. This is the contract between the Minister and Falcon. The significance of that contract relates to the nature of the relationship between the Minister and Falcon and assists the Court to identify what was the work that the Minister contracted for, what the exercise of the power by the Minister was and how that is referrable to what the worker was doing when he was disabled. The contract appears behind tab ‑ ‑ ‑
KIRBY J: It is actually in the appeal book.
MR SHANAHAN: I am sorry, it is in the appeal book at page 157 and following. Your Honours, this contract was made up of two documents. One was the agreement between pages 158 and 161 and there was a document entitled “THE SPECIFICATION” which commences at 162 and runs through to page 176. The specification is part of the agreement and one can discern that from the reference to “Specification” at or about line 47 on page 158 where the agreement says:
Specification: means the Specification attached to and forming part of this Agreement.
The nature of the work that was contracted for can be found in the specification. That appears at clause 9 on page 167 of the appeal book and it defines the extent of security services and that is said to include:
(a)Staffing and operation of the Control Centre as detailed in Clause 10.1 and 10.2.
(b)Provision of Metropolitan Patrol Services as detailed in Clause 10.3.
(c)Provision of Field Operatives for alarm responses as detailed in Clause 10.4.
(d)Provision of Static Guards as required for watching and security duties as detailed in Clause 10.5.
(e)Provision of Static Guards for the Central Office building as detailed in Clauses 10.6 and 10.8.
(f)Provision of Static Guards for the Reception Centre as detailed in Clauses 10.7 and 10.8.
(g)All ancillary or incidental duties required for the full and effective performance of the matters detailed in paragraphs (a), (b), (c), (d) and (e) of this clause.
What the Court needs to understand in relation to these services was that there was a control centre which was located on the same premises as the Minister’s office at 151 Royal Street, East Perth. That emerges from the definitions on page 158 of the appeal book where the control centre is sited at the same site as the central office. The Minister provided the premises upon which the control centre operated but the staffing of the control centre, the supervision of those staff and the manner of the services was all a matter for Falcon.
I could take your Honours to the evidence. The evidence of the chief or head of security for the Minister, a Mr Marrapodi gave evidence that the security services for the Minister had always been contracted out. The evidence of the two workers, the appellant, and Mr Woods, was that they had always taken all of their instructions from the employees of Falcon and that reflects the structure and nature of this agreement. The particular role that might be of assistance to the Court is the role of supervisor which is defined at the bottom of page 158:
Supervisor: means the employee described in clause 14 hereof.
Clause 14 of the specification, which appears at page 173 of the appeal book, titled “SUPERVISION”, indicates at clause 14.1 that Falcon is obliged to provide a supervisor, that the supervisor has to be available for “emergency purposes and shall regularly liaise with the Co‑ordinator of Security”. The co‑ordinator of security was the Minister’s nominee. That that is so emerges out of the definition of “Co‑ordinator of Security” which appears at page 158 of the appeal book in the agreement.
GUMMOW J: Is there a definition of “static duties”? There is a definition of “Static Guard” I see on page 158. It says “a general guard involved in static duties”. What does that mean?
MR SHANAHAN: As I understood it, your Honour, I am not sure. The answer to your Honour’s first question is no, I do not think there is a definition of “static duties” and, as I would understand it, it is simply a guard who is positioned in a particular place. I am sure, one would hope, that they are not static.
KIRBY J: The fact that it is a sort of controlled from the Minister’s office tends to integrate it very much in the Minister’s activities, does it not?
MR SHANAHAN: Your Honour, the appellant would say no. They would say no because the manner in which the control centre is operated is under the control of Falcon. It is not under the Minister’s control, which are the provisions that I am now taking the Court to. The first point is that there is a supervisor. The supervisor operates the control centre and supervises the staff. The supervisor is the employee of Falcon, not the Minister. The relationship between Falcon and the Minister in relation to the control room is dealt with by clause 14. Clause 14 makes provision, as I have just taken the Court to, at 14.2 that the supervisor liaise with the co‑ordinator of security. At 14.3 there is a description of the supervisor’s duties and they include:
(a)Discussion of any security matters with the Co‑ordinator of Security;
(b)Attendance to the training of new or replacement Contract Personnel in accordance with the procedures in the Security Manual –
and the evidence at trial was that the Security Manual had never been provided to the appellant –
(c)Maintains regular checks of Metropolitan Patrol Services for the purpose of supervision and/or training –
(d)Supervises Control Centre operations for the purpose of supervision and/or training;
(e)Ensuring that all Contract Personnel are available to undertake their prescribed duties;
(f) Ensuring that equipment is used only in the correct manner;
(g) Ensuring that the Department’s vehicles are in good order –
because the Minister provided vehicles –
and repair and shall notify immediately the Co‑ordinator of Security of any defects;
(h)Undertaking such other duties as may be required by the Co‑ordinator of Security from time to time;
(i)Supervises Central Office security operations for the purpose of supervision and/or training;
(j) Inspects departmental supplied vehicles daily –
et cetera. Then at 14.4:
In addition to the above requirements the Contractor shall be conversant with all Security Services and Contract Personnel and be available for consultation with the Co‑ordinator of Security.
So the proposition was that the Minister’s head of security said that the services had always been contracted out. This contract seeks to set out how they are to be provided. The Metropolitan Patrol Services, which perhaps are the most readily referrable to the work upon which the appellant was engaged at the material time, are dealt with at clause 10.3 on page 168.
Your Honours, my learned junior tells me he has drafted an amendment to the appellant’s notice of appeal in this matter. I would like the opportunity to discuss the form of that with him perhaps before we provide it to the Court.
KIRBY J: But if it is to be included in the matter, we would have to have Mr Walker’s submission in relation to it – and he is going to be on his feet in a few minutes – we would need that before the end of his submission.
MR SHANAHAN: Yes.
GLEESON CJ: I have only had an opportunity to have a very quick look at this decision in Hewitt v Benale Pty Ltd but it was the subject on which there were conflicting decisions of the District Court before the matter went to the Full Court and it is also a subject on which there are decisions of the New South Wales Court of Appeal in relation to a similar problem in relation to New South Wales legislation. It looks as though it is a Commonwealth‑wide phenomenon, that is, of the legislation changing its character in some respects from a simply beneficial workers’ compensation legislation to what might be called a damages management legislation.
MR SHANAHAN: Yes, your Honour.
GLEESON CJ: It is an issue that has implications that go far beyond the implications of this present appeal.
HAYNE J: One of the central steps taken by Justice Hasluck in his reasoning is that at paragraph 74 of the reasons where he refers to:
S175(1) of the Act provides that both the principal and contractor are “for the purposes of this Act” deemed to be employers of the worker. The purposes of the Act are set out in s3 of the Act.
It is true that there is no express reference in the purposes listed in that provision to any limitation of liability in respect of common law claims. However, the purposes of the Act include, pursuant to s3(a), the making of provision for the compensation of workers who suffer a disability. To my mind, this must be taken to mean the provision of compensation in the manner provided for by the Act.
Now, non constat that that applies to the limitation provision and yet that is the conclusion to which his Honour then comes.
MR SHANAHAN: Yes.
GLEESON CJ: If we were to allow you to amend your notice of appeal to raise this further issue, one consequence may well be the adjournment of this appeal for further argument in Canberra, because dealing on the run with an issue which has this wide importance would ‑ ‑ ‑
MR SHANAHAN: The appellant would not oppose that course, your Honour.
GLEESON CJ: Nobody has heard what Mr Walker has to say about this so far.
MR SHANAHAN: No, of course.
GLEESON CJ: We usually take – I will not go down that path.
MR SHANAHAN: Thank you, your Honour. Your Honour, I think they would be the appellant’s submissions in relation to this matter.
GLEESON CJ: Well, let us just look at this, are you applying for leave to amend your notice of appeal?
MR SHANAHAN: Yes, your Honour.
GLEESON CJ: We had better first hear what Mr Walker has to say about that application before we go any further.
MR WALKER: Your Honours, the Hewitt v Benale point does have wider ramifications, unquestionably. Indeed, I had better hand up a transcript that will inform your Honours and, I hope, remind two of your Honours that there is a particular reason for me to be putting that submission.
GLEESON CJ: Thank you.
MR WALKER: That was a pair of cases from the District Court. One of the judges had held that there required to be compliance with provisions similar to those that applied to my friend’s client in this case. There had not been, therefore, the case could not ‑ ‑ ‑
GUMMOW J: Yes, you light upon our colleagues’ statement at 635 about the language being intractable.
MR WALKER: Yes.
GLEESON CJ: Was this the Judge O’Sullivan decision?
MR WALKER: Yes, it was a double‑header, Hewitt v Benale (2002) 27 WAR 91. As your Honours will see from the report, it was heard together with WMC Resources Ltd v Koljibabic, who was my client in a special leave application. Judge O’Sullivan was held to be wrong, Judge Hammond was held to be right. That is why we went forward to the High Court. We went forward with the point – I will try to put this delicately – that has been brought to light by questions particularly from Justices Gummow and Hayne today and we fell flat. So it is not proper, particularly appearing for a Minister, for me to dispute the ramifications beyond this case of that point. It has such ramifications and that is regardless of who appeared on that last special leave point.
It is, however, a commonplace for cases to be framed and argued and determined according to the law as it is plainly set out in relevant authorities and for parties to decide whether or not to challenge, as they are entitled to do at any time in dynamic jurisprudence, the received authority. It was clearly decided, and no possible criticism could ever be expressed of this decision by the other side in this case, not to challenge Hewitt v Benale.
KIRBY J: On page 11 at 425, I expressed disquiet about the unfairness of the outcome.
GLEESON CJ: That is expressed in the joint reasons for judgment on pages 15 and 16.
MR WALKER: Yes, indeed. It is certainly ‑ ‑ ‑
KIRBY J: You were arguing for the point that has now been raised on that occasion. You might ultimately be vindicated.
MR WALKER: Your Honour, it is just the day’s brief. As I say, the personality is irrelevant. There was an argument. It was plainly put in the Full Court in Hewitt v Benale.
KIRBY J: But the point is, now that we have it before us, we have this case before us, and you are a public authority, you are a Minister, you are a special litigant, and the issue was granted special leave because it was said there were a number of cases that were affected by the outcome and there is a certain artificiality once the matter is fully embarked on by a Full Court in cutting out part of it if that part of it is relevant to giving meaning to the statute.
MR WALKER: Well, no, your Honour. We do resist that approach to the matter. There is nothing artificial about parties framing their dispute according to their understanding and their running of the risks in relation to the state of the law. The state of the law could not have been clearer after Hewitt v Benale in this State as to the effect of section 175 with what was described as the intractable wording “for the purposes of this Act” upon the state of affairs where, to use the metaphor I used in the previous argument, there was a palimpsest effect whereby there were layers which were not always coherent.
GUMMOW J: It depends what you mean by “intractable” and it depends what you mean by “the purposes of this Act”.
MR WALKER: Quite so. We accept that that is an argument and I do not want, appearing for a Minister, to give to your Honours any impression that we resist the public importance of the point. It is a manifestly important point and ‑ ‑ ‑
GUMMOW J: It is a point of general statutory construction these days.
MR WALKER: Your Honour anticipates me – and, I was about to say, it goes beyond simply the manifestly important scheme for workers’ compensation and damages management to which reference has already been made. It transcends the particular area in which legislation is operating. It is a very important aspect of statutory interpretation to grapple with the sometimes complex interaction of deeming provisions with what I will call comprehensive or portmanteau phrases such as “for the purposes of this Act” when the Act is then altered from time to time in such a way as necessarily to alter the character of its so‑called purposes – and I do not mean objects, I mean purposes.
HEYDON J: Are you opposing the amendment or favouring it?
MR WALKER: I am, but only on the ground that it does not attack the general public importance of the matter; simply that the way the parties have framed the issues in this case ‑ ‑ ‑
HEYDON J: But is it a Suttor v Gundowda matter?
MR WALKER: No.
HEYDON J: This is a pure point of law. It does not affect the way the evidence was brought.
MR WALKER: There is no shred of Suttor v Gundowda. This is a pure matter of law. But the one point of resistance is this is how they chose to frame their case.
GLEESON CJ: Because of the decision of this Court in October 2003, no doubt.
MR WALKER: Yes, that is why I say no possible criticism can be expressed at that decision. In answer to Justice Heydon, no Suttor v Gundowda and, of course, I have already conceded the nature of the point, it is an important point. Your Honours, I would say this, however, that it is such an important matter for the understanding of the statute that it is a point that we would, with great respect, prefer not to deal with, as it were, once and for all in the next 45 minutes.
GLEESON CJ: No. We would have to reconstitute the Court to seven, Mr Walker.
MR WALKER: Your Honours, yes. We would also make this point, that if this point is good, it is the only point my friend needs.
GUMMOW J: Yes, that is why it is important.
MR WALKER: It was a threshold point. It was conceded up until now, as I say, for reasons which are perfectly good and we do not wish to criticise them. I stress my only resistance to an amendment is this really is for the next case where somebody takes the hint.
GLEESON CJ: Is there anything you want to add, Mr Shanahan?
MR WALKER: Your Honour, before I go, I should make this point. It would require a better demonstration than simply generalisation from the Bar table for your Honours to understand how many cases in Western Australia –this is not the statutory interpretation point, this is the workers’ compensation and damages management point – are really affected by this, particularly in relation to the public authorities aspect if that survives as an important point. That is because in the way of things since this case there has been a radical amendment. Your Honours will perhaps have seen already in the state of the legislation as it now exists which is found behind tab 9, if your Honours were to go to ‑ ‑ ‑
GUMMOW J: There seems to have been some big changes in 2004.
MR WALKER: Yes, and these are critical changes. If I could take your Honours – the page numbers at the bottom of that reprint extract – to page 111. There is the new subsection (5) of section 93B. Your Honours will recall it is 93B that administered the sting to the appellant in this case. One sees that for a category of case which does not include this present appellant there is now a closed class in the appellant’s plight, “a reference in the other subsections of this section”, and those are the ones that apply the restrictive requirements for 30 per cent or 15 per cent, depending upon the case, that they are not applying for a section 175 deemed employer.
GUMMOW J: Does that mean that your opponent would be okay or the opposite?
MR WALKER: It means that we have not merely potential but actual demonstration that the beneficial or restrictive effect, as the case may be, of provisions which the general words of 175 are under Hewitt v Benale said to bring in in their train. It has occurred in this case because it would be clearly enough to remove any of those restrictions from a case such as my friend’s client were that case to be commenced after the 2004 amendments came into effect – opposite effect.
GLEESON CJ: But does that mean that the 2004 amendments were made by Parliament in the light of the decision of this Court in October 2003?
MR WALKER: Yes. In our submission, if there is a closed class, there has been a legislative response, then, whatever misgivings one may have about the point, its candidacy for special leave is to be doubted.
GLEESON CJ: What do you say particularly about that last point, Mr Shanahan? Mr Walker has put to us that not only was there the decision of this Court on 23 October 2003 but there has been subsequent legislation of the Western Australian Parliament on the faith of that decision?
MR SHANAHAN: Your Honour, there has been legislation, it was effective from 14 November 2005, and it certainly does not affect my client, but, as my learned friend has pointed out, it certainly has been amended, but that does not remove the importance of the general principle that has been put to ‑ ‑ ‑
GLEESON CJ: One of my questions would be this: what would be the effect on the 2004 legislation of a decision from this Court now that Hewitt v Benale was wrong?
MR SHANAHAN: Your Honour, I would have to consider that question, but one of the effects of the provisions was to remove section 175 as applying for the purposes of Part IV Division 2.
GLEESON CJ: But if you were here fresh today or, more accurately, if you were here tomorrow afternoon in a special leave list arguing for special leave out of time to appeal against Hewitt v Benale, for example, one of the first matters that you would be confronted with would be the question of the operation of this 2004 legislation.
MR SHANAHAN: Yes. The operation of that legislation is to legislate so that section 175 does not apply for the purposes of Part IV Division 2.
GLEESON CJ: We actually have not travelled over here for the purpose of throwing into complete confusion the legislative scheme that has been enacted by the Western Australian Parliament.
MR SHANAHAN: Your Honour, I was asked earlier for a complete Part IV Division 2, and I do not know if that would assist the Court but it is certainly available now. The point that the appellant would make in response to what my friend put at the last point is that the general principle in relation to the effect of these type of amendments in terms of a beneficial provision remains a point of general importance, irrespective of the fact of the amendments.
GUMMOW J: Do we know how numerous the closed class would be?
MR SHANAHAN: Your Honours, we have sought to ascertain that, it is just very difficult. We know that it continues to be an active class but as my friend puts it I would not seek to characterise the extent of that class from the Bar table.
GUMMOW J: At what date would it have closed, the date of ‑ ‑ ‑
MR SHANAHAN: 14 November 2005, your Honour. All I could give your Honours is anecdote.
GLEESON CJ: After you have finished what you were going to say, we are going to adjourn for a short time. So is there anything else you want to ‑ ‑ ‑
MR SHANAHAN: No, your Honour, I have finished.
GLEESON CJ: All right. We will adjourn for a short time to consider the course we will take.
AT 12.21 PM SHORT ADJOURNMENT
UPON RESUMING AT 12.36 PM:
GLEESON CJ: A majority of the Court is of the view that the application for leave to amend the notice of appeal should be refused. All members of the Court would wish to hear argument from both sides in addition to any argument that is yet to be put in relation to the merits of the present appeal on the question whether special leave to appeal should be revoked.
You particularly, Mr Shanahan, might want to have something to say about that. One ground upon which special leave to appeal might be revoked might be that the question of construction that you wish to agitate could only properly be considered by reconsidering Hewitt v Benale and our refusal to give you leave to amend precludes that possibility.
MR SHANAHAN: Well, your Honours, as was put at the special leave application stage of this process, section 175 continues to operate in relation to workers’ compensation and its continued operation says nothing about Part IV Division 2 since the amendment, so that it continues to operate. It continues to govern the relationship between workers of contractors and principals in terms of the principals’ liability to workers’ compensation payments, and that remains a significant issue because until one understands how section 175(3) operates, in a State like Western Australia where a lot of the current construction work is being done by government through contractors, the existence of those provisions remains important. It is simply not limited – the significance of the construction section ‑ ‑ ‑
GUMMOW J: Your case is that is the problem I think.
MR SHANAHAN: Yes, it is just not limited to the gateway provisions, and that was not the basis on which leave was granted, with respect.
KIRBY J: As this matter has arisen in the course of argument, it might be helpful to you and would be helpful to me if, after argument has been concluded on the matters that we were assembled to hear argument on, a
note could be sent into the Court explaining the point that you have just made as you see it and Mr Walker can respond to that.
MR SHANAHAN: Yes, thank you.
GLEESON CJ: Mr Walker, you too are invited to say what you want to say about the revocation of special leave to appeal as well as anything else you want to say.
MR WALKER: May it please your Honour. Your Honours, may I return to that later? Your Honours, the way the case was argued and decided below, put to the forefront of the interaction between sections 6 and 175, the word “maintain” which is found in the Education Act 1928 in relation to schools, in our submission, that ought to be seen as something in the nature of a red herring, that is, the appearance of that word “maintain” in the statute ought not to be regarded as the way in which the section 6/section 175 exercise should have been performed, but it makes no difference because if one ignores the fact that the word “maintain” appears in the statute, the word “maintain” used outside the statute and in a different sense from the way it is found in the statute clearly does fall within the powers granted to the Minister.
In other words, it was a miscue to see the word in section 9 of the Education Act “maintain” as referring to what one does with paintbrushes and hammers and saws, and we would respectfully adopt the reading that sees “maintain” as not much different from the other phrase that appears in the same expression, namely, “carry on”. It refers to an activity or governmental exercise as opposed to physical work performed upon physical structures or land, but we stress that the very broad grant of power in the Education Act clearly includes “maintaining” in the different sense of looking after property which itself includes or has as a component part providing security for, protecting against depredations by criminals, so that there was never any dispute and still is not any dispute that what was done on the land by the plaintiff was done – and I choose at this moment my words carefully and in a transitional way – pursuant to an exercise of power by the Minister.
The words in the statute that make that crystal clear are the phrase “necessary or expedient” in section 5 and the similar phrase “necessary or convenient” in section 9. Before leaving the Education Act it is as well, in our submission, to note the obvious proposition is referred to in the Education Act 1928 in relation to this corporation sole in section 5 that he or she – it more accurately – will be acting through the necessary human agency of other persons: see section 7, which is found on page 7 of the extracted print behind tab 10 of appellant’s bundle.
Now, true it is that in section 7 one talks about appointing teachers and employees other than officers of the Department – in subsection (2), just as in subsection (1), there is a reference to departmental officers – but we know by a combination of section 5 and section 9 that entering into contracts such as were entered into with Falcon in this case is within the powers of the Minister.
The point that therefore separates the parties in relation to the application of section 175 in light of section 6 is whether or not it is possible to discern error in the conclusion that the word “directly” was satisfied by the facts of this case – so it is a factual conclusion – by reference to the kind of criteria that my learned friend has offered. Of those criteria, the first, as we heard it this morning, was that there was the interposition of what was called an intermediary by a process that we will call contracting out, in other words, a contract for services as opposed to contracts of service.
The reason why that ought to be rejected as an available criterion to distinguish that which satisfies directly from that which does not is that section 175 has as its only concern the regulation of matters where there has been the interposition of a so‑called intermediary or a contracting out. That is what subsection (1) directs all attention to in section 175 and it could not possibly be that the very condition to which section 175 addresses itself is a condition which means by reason of subsection (3) that it will not apply at all. So one can reject interposition of intermediaries as being the introduction of something which is not direct.
Now, I accept of course that but for that essential piece of context or interpretation the word “directly” or its opposite, “indirectly”, would as a matter of ordinary English and legal English used, for example, in insurance policies would very often treat as indirect that which is done by the employee of a person with whom I contract, rather than that which is done by me or by my employee, but it cannot be the available criterion in this statute because of the very purpose and condition of operation of section 175.
That leaves, with respect, only the negative criterion which is offered by my learned friend’s resort to epithets such as “ancillary” or “incidental” in contrast against those such as “core” or “peripheral”. Now, we have put in our written submission that the difficulty with that approach is of course that there is nothing in the statutory text to support it and that is where ‑ ‑ ‑
KIRBY J: Yes, but there is, as you concede, the word “directly”, and you accept that Justice Wheeler’s reasoning fell into error by saying you just have to say that that does not have anything to do. It must have something to do. The New Zealanders added it and it is there. So you have to postulate a meaning consistent with your success in this case that still gives a real activity for the word “directly” to do.
MR WALKER: Indeed, yes, and we have put on a contention which means that there is common ground for a lot of the remaining issue in this case, namely, that there needed to be work assigned to “directly”, that is, the provisions of subsection (3) include the word “directly” and, unless the Court is driven to it, that word must have something to do.
KIRBY J: Could you give me a clue as to what would be a case of a non‑directly?
MR WALKER: I am not quite sure whether this will be a clue or not, your Honours. We tried in paragraph 24 of our written submissions on page 6 in the last line and a half of that paragraph to offer a paraphrase of what would not be direct. Now, we accept that such mode of argument can be subject to the stricture that one is moving away from the words of the statute, but trying not to do that we have offered as a contrast to “directly” those things which are, and I quote, a preliminary step, or it is a removed contribution.
GLEESON CJ: Did not Justice Wheeler give an example? I thought that she gave an example of a barrister who engaged somebody to do some repair activity in relation to her car.
MR WALKER: Yes.
KIRBY J: I thought the example, with respect ‑ ‑ ‑
MR WALKER: That was the example offered by counsel and taken up in the reasons.
KIRBY J: She said if the barrister goes in a car to the prison to see a client, some defect in the car does not make it part of the trade or business of the barrister directly.
MR WALKER: The person who repairs the car – for some reason that included the possibility of it being a barrister, but assume someone else – I think in the tentative conclusion expressed by her Honour would not be working directly in the barrister’s trade or business, notwithstanding the use of a motor car was part and parcel of how that was done, travelling to courts, travelling to prisons, being part of what the barrister does. Now, we are content to accept that as an example.
KIRBY J: Well, would you give it in the education context? Just give me an example of what you say would be a non‑direct in the education context. Your strength is you say the Education Act gives this huge gamut of activities and the Compensation Act says that you take them all into account.
MR WALKER: Yes. I am going to come to section 6 in a moment. We are very much at odds with our learned friends on that. But assuming at the moment success on the section 6 point, somewhat diffidently may I offer this example, trying to stick to the facts of this case. Falcon was the contracted corporation whose own employees were doing work, that work being within the power of the Minister under the statute. That expression “within the power of the Minister under the statute” must mean work which it was within his or her powers to have done, because one ignores entirely the silly spectacle of the Minister doing these things himself or herself. The Minister’s powers are to have things done by officers, by employees, by teachers, and by dint of contracting for the provision of services.
If as a preliminary to the employees of Falcon carrying out their work – Justice Gummow asked some questions about the nature of the work, I will come to that in a moment – there had been an executive of Falcon, that is, an employee but in a senior managerial position, who for their own insurance purposes had gone out to reconnoitre the site, including at night, to understand the nature of the work conditions the employees were going to do and did so perhaps periodically for the purposes of renewing insurance cover and the like, then it would be difficult, we submit, to see that person’s disability when they stumbled across this pile of concrete rubble in long grass in a school playground as having been directly a part – and clearly there has been a word dropped in the legislative limitation; it should be “of” – a part or process in the trade or business of the Minister for Education.
Now, why is that not direct and the unfortunate plaintiff’s mishap is from work which is direct? Simply because looking after school premises, including by patrols that answer alarms, as the plaintiff was doing, is within the powers bestowed by “necessary or expedient” or “necessary or convenient” which may be exercised by the Minister, whereas that which is truly ancillary, that is, is at several removes from the provision of that work, scouting the site to see what needs to be disclosed to one’s own insurer about the dangers of the site for one’s employees who are going to be doing the work which does contribute to the securing of school premises, that remove which can be framed perhaps in two or three different steps rather than immediately providing security for the school would fail the test of “directly”.
There is, however, we accept, a grave danger of substituting a paraphrase for the word that the statute requires to be answered, namely, “directly”, and it may be that there are going to be impressionistic elements to whether or not a particular activity answers that description, depending upon particular facts. Nothing has been pointed to in this case, however, which suggests that responding to an intruder’s reported presence on the school yards is not directly within the ambit of a power which the Minister may exercise, namely, to protect, that is, to have protected, the land and buildings in which schools are conducted.
So the best we can offer in answer to Justice Kirby’s stricture, the justness of which we accept, with respect, about vagueness is that if it is preliminary, if it is at one or more remove from an activity which is clearly within a power that may be exercised by the Minister, notwithstanding it is clearly lawful because it is related to that matter, then, in our submission, it is likely not to be direct. But with a statutory provision that requires a word like “directly” to be satisfied and which is therefore dependent upon the assessment of different factual cases from time to time, substitution of a paraphrase in more or less abstract terms is not something that we would submit the Court should do, as it were, rather than simply ‑ ‑ ‑
KIRBY J: It does tend to give a little strength to Justice Wheeler’s comment that there is not much left. Once you take the broad view of section 6 and the broad view of the Minister’s powers, then if it has any connection at all with the exercise of those powers it will be directly part or process in the trade or business concerned.
MR WALKER: It is certainly very easy to understand why her Honour made the comment, yes, your Honour, but ‑ ‑ ‑
GUMMOW J: We are really construing the word “employer” in 93B, are we not?
MR WALKER: Yes.
GUMMOW J: You do not seem to mention that much.
MR WALKER: Well, your Honour, that is not at stake, however, bearing in mind that the parties proceeded on the basis that 175 would operate so as to ‑ ‑ ‑
GUMMOW J: Yes. What I am suggesting to you is that the one word may have two denotations, depending upon whether it is in Part X or Part II, whatever it is.
MR WALKER: Yes, your Honour, but that again is not a matter which is presently before this Court.
GUMMOW J: It does not seem to be urged by your opponent.
MR WALKER: No, and it is for those reasons that we do not venture upon any of those issues in relation to what I will call the interpretation of the statute as a whole operating: 6, 175 and 93B and the provisions that are triggered by 93B’s application. Section 93B and the associated provisions were treated as a given in the argument and we are not intent on challenging that, for obvious reasons.
GUMMOW J: No, the question I put to you assumes it applies to 93B. The question is, does it have a fixed meaning?
MR WALKER: In 93B?
GUMMOW J: Throughout the Act.
MR WALKER: And the answer is that for our case the issue joined, including on appeal in this Court, is simply whether 175 applied on the facts of this case, it being conceded in our favour that if it did 93B would have the effect of providing the defence we had pleaded. Now, that does not answer the substance of your Honour’s point. The substance of the point remains outside this appeal and clearly in a statute that is built up bit by bit at different times and by different parliaments and often, no doubt, by different governments introducing amendments, the possibility that the one word will in fact have different meanings, some more expansive, some more restricted ‑ ‑ ‑
GUMMOW J: At different times when the Act is in different conditions.
MR WALKER: That is right, yes. There is no doubt that there is that possibility but it not live on the issues on appeal in this case.
GLEESON CJ: On your argument, would the outcome be the same if this were a private school?
MR WALKER: We can only go this far: it may or may not have been. If the private school were of the familiar kind that had physical premises requiring protection and it was not, as it were, in cyberspace, one would expect so, yes, but it would depend very much upon looking at the way in which the private school had organised itself and what it charged for and how it, in particular, organised the delivery of the services which it was in the trade or business of supplying.
This is a factual matter, so this is all hypothesising. Almost certainly they would be offering in return for the fees charged access to premises in a particular state of being, namely, able to be used and either in tiptop condition or acceptable condition, and that would obviously include not only ensuring that they are clean and well‑lit, et cetera, but also that they were not burned down. It is in that sense that we would ‑ ‑ ‑
GLEESON CJ: Well, do you have a sign saying “These premises are patrolled by guard dogs”? Is that a convenient time, Mr Walker?
MR WALKER: Yes, your Honour.
GLEESON CJ: We will adjourn until 2.00 pm.
AT 12.59 PM LUNCHEON ADJOURNMENT
UPON RESUMING AT 1.59 PM:
GLEESON CJ: Yes, Mr Walker.
MR WALKER: Your Honours, to conclude what I wanted to put about how the word “directly” may be applied, your Honours have seen how we put the matter in our paragraphs 14 and 15 of our written submissions with respect to the need to identify the trade or business and then to ask the question about whether the work of the plaintiff in this case was directly a part or process in it.
Justice Gummow, in relation to the contract to which my learned friend had taken your Honours, asked a question about the nature of one of the curious expressions in it. In the appeal book at page 158 the expression “Static Guard” is defined at about line 45 to mean:
a general guard involved in static duties.
At about line 29 on the same page “Field Operatives” are defined to mean:
a general guard involved in mobile, static and alarm response duties.
If one goes to page 167 in the specification to that contract, one finds under clause 9, about line 17, the extent of security services include item (d):
Provision of Static Guards as required for watching and security duties as detailed in Clause 10.5.
Then on page 169, clause 10.5 describes in subclause 1:
Static Guards are required to attend at the scene of a call –
et cetera. One sees what static guards do in relation to the premises in question and that may be contrasted with field operatives’ procedures in accordance with the security manual, to which my learned friend took you. Clause 10.4.6 describes what one might imagine was being done by the plaintiff in this case.
The question therefore comes down, as we put in our written submissions in paragraph 25, it will involve an impressionistic factual conclusion. If the Court were not satisfied that that conduct pursuant to that kind of contractual provision itself constituted the exercise of the respondent’s power to look after the infrastructure involved in providing State education, then, as we put it, the requisite nexus which the word “directly” requires would not be made out on the facts of the case. We do not want to offer further paraphrases beyond what we have already suggested in paragraph 24. It requires, we respectfully submit, proper weight to be given to the facts that the Minister obviously must act through the human agency of others.
It requires full weight to be given to the role of section 6, to which I now turn. It is clear that the word “directly” will be affected to some extent as to its content or how it might be found to draw the dividing line between cases in and cases out by reason of section 6 when it comes to a public authority. The approach taken to section 6, however, by our learned friends in address today seemed to suggest, by the emphasis on the definite article as it twice appears, and the plural for “powers and duties” seems to suggest that it was only the complete suite of all powers and all duties as a complete suite, the exercise or performance of which is to be treated as the trade or business.
For the very reasons that Justice Wheeler has pointed out, rendering section 6 an understandable provision, that ought to be rejected as a reading of section 6. There may be from time to time a number particularly of powers of a statutory or public authority which for political or other operational reasons are simply not resorted to. The State retreats from a field in which it retains statutory power but it does not exercise those powers. It would be most peculiar if the notion of the whole suite, to use our expression to describe our learned friend’s argument, could therefore so radically affect the relation of injured workers to statutory authorities, depending upon whether or not the statutory authority was using the full plenitude of their available powers.
So one would reject that but in any event one would notice that under section 175(3) the possibility of singling out some or even only one of the available powers is clearly involved in the notion of the work being “directly a part or process in the trade or business of the principal.” So if it is a part and if trade or business involves the exercise of the powers – see section 6 – clearly enough the work can be that which comprises the exercise of one or part of one of the powers, which may be of course very numerous.
It is for those reasons that one simply reads section 6 as Justice Wheeler read it, with respect, as placing with some verbal violence, no doubt, all and any exercise of powers or performance of duties which appertain to the authority in question in the place occupied by “trade or business” in section 175(3). If that has an effect for some purposes of expanding the exposure of the State to a liability to grant compensation, so be it. If it has the effect from time to time, depending upon the patchwork quilt of the statute, of making common law claims more difficult or other statutory claims akin to common law claims such as occupiers’ liability more difficult, then again so be it. That will not affect the inexorable need to read section 6 as applying to each and any exercise of a power which is within the authority of in this case the Minister of Education.
That is why it all comes down simply to the question which, with respect, my friend correctly phrased as being whether or not the plaintiff’s work in this case was directly a part or process in the exercise of a power by the Minister of Education. I do not want to repeat what we have already put in writing and in our address so far. In our submission, no error can be shown in the factual decision that in this case the answer to that question was “Yes”.
KIRBY J: The only real weakness in your argument is that you have only been able to come up with a very peculiar and remote illustration of what “non‑directly” or “indirectly” would be. That really is to slip back without admitting it into Justice Wheeler’s statement that it just does not really have any work to do, which you concede is erroneous. I would feel more comfortable, and I do see the force of your argument, if you could give some more instances which would fall outside “directly” which were a bit more realistic than the one you have given so far, which is of some executive hovering around. Even if he were hovering around before taking on the risks and assessing the risks, on one view that too would be directly involved in a part of the employer’s activity of education because of the integral necessity to protect the educational infrastructure.
MR WALKER: Yes, your Honour, but that may only serve to emphasise that there is a necessarily evaluative or impressionistic element to such a judgment “Is this direct or not?” Once section 6 operates, then – accepting that looking after the security of schools by means involving security guards turning up, once it is accepted that is within the statutory power of the Minister, and that is accepted, the only question is whether there is something in, the way our learned friends put it this morning, that the security guard turning up involved, I think I quote correctly, no exercise of power by the Minister. The exercise of power by the Minister was by the Minister’s officers being detailed to enter into and presumably police the performance of the contract with Falcon.
The difficulty with that argument is the same as the one we identified at the outset. Section 175 is about contracting, so that it can scarcely be an answer which will always give a negative to subsection (3). It can scarcely be an answer to how section 175 operates with section 6 to say whenever a Minister does not do it by dint of direct employment then it must be falling foul of the requirement “directly” in subsection (3). That turns section 175 into a dead letter for the whole of the area that it is intended to occupy because otherwise, but for that context, there is, with great respect, real weight in the way our friends put it.
There is an indirectness in the contractual arrangement by which this man arrived at the school playground, but because the statutory context requires that not to be regarded as not direct, one is left simply with the difficulty that Justice Kirby has identified, and that translates in a case such as this as the inability to show that there was error.
GLEESON CJ: I wonder whether part of the explanation for what appeared to Justice Wheeler to be the case might be that when you consider the way this section applies in relation to an individual, subsection (3) is intended to draw a distinction between the trade or business of the individual and, for example, domestic or private matters. Somebody then says, “How are we going to apply this to a government department? What’s the trade or business of a government department?” Answer, “Everything the government department has power to do”. When you are dealing with a government department and perhaps also when you are dealing with a corporation, you do not have a domestic or private concern to hive off.
MR WALKER: No, quite. Yes to all of those observations. However, they do not provide much guidance as to the line to be drawn by the adverb “directly”. There comes a limit which I have well and truly reached as to how one can venture further explanation about that word. It is, as it were, a jury question. It may be answered by judicial reasoning that is relatively compact. We have joined our friends in criticising part of, maybe the main part of, the reasoning of Justice Wheeler in this regard but, in our submission, it still is necessary to show that there should have been a different result by saying that this is somehow not within a smaller class of workers’ activities which could be described as directly a part in the exercise of one of the many powers of the Minister, which is to read section 6 into the closing words of section 175(3).
Your Honours will have noted in the historical antecedents which are somewhat ambivalent in the support they give to the rival arguments there was a concern with work being done on property as well as work being done as part of or as a process in trade or business. The property link no longer appears in subsection (3). On the other hand, we have a premises link in subsection (7). So it is not particularly straightforward either from the historical antecedents or from all the components of section 175 itself to understand what “directly” is intended to be contrasting with, which is why we have somewhat gingerly offered the suggestion we have in our written submissions.
GLEESON CJ: Back in 1900 in New Zealand a lot of employers, perhaps most employers, would have been individuals.
MR WALKER: Yes, quite, and many of them would have been conducting trade or business from premises either the same as or immediately adjacent to where they lived, for example, so the physical distinction between private and public zones may not always have been so clear. Your Honours, for those reasons the appeal, if your Honours entertain the merits of it, should be dismissed but for reasons which depart from Justice Wheeler’s virtual removal of “directly” from the test that has to be satisfied.
KIRBY J: You have not left much of it in there.
MR WALKER: Your Honour, I cannot protest at that characterisation.
KIRBY J: Anyway, we have been down that ground.
MR WALKER: Your Honours asked to address the question of special leave. The notice of contention does matter to us, which is not capable of being dealt with.
KIRBY J: I am not hearing you.
MR WALKER: The notice of contention does matter to us. That is, it is something that we would wish attended to and it cannot be attended to unless there is an appeal. Otherwise, we do not have anything to say about whether there should be a revocation of special leave.
KIRBY J: As we were told, there are some cases waiting in the wings. I would have thought you would want the matter decided, otherwise you might find yourself on the receiving end of a new and enlarged application at a later stage.
MR WALKER: Your Honour, we certainly do not join in suggesting that there is, as it were, a pent‑up list of cases that a decision in this case will determine. My learned friend correctly says that section 175 remains regardless of the 2005 amendments to which I drew attention but it remains for purposes such as workers’ compensation which are not going to be affected one way or the other by the result in this case. For those reasons, that in itself would not – the fact that section 175 remains is not a reason for special leave to be granted and it is not the reason special leave was granted, as we understand it, in its application, for example, to exposing other people to liability to provide workers’ compensation. But the notice of contention is the one thing we are interested in that would require leave.
KIRBY J: Is there a principle of construction that when Parliament amends a statute it is taken to insert the amendments in the statute in a way that is intended that the statute will operate as a whole and speak as amended from the date of the amendment?
MR WALKER: Yes, your Honour. That is a theory which is sometimes stretched to breaking point. But yes, unless one starts with that basis, then you would not be paying regard to what the legislature has done by an amendment.
KIRBY J: That presumably was the consideration behind the view of the panel which heard the application in Koljibabic v WMC Resources.
MR WALKER: Yes, indeed, your Honour. If it please the Court.
KIRBY J: Just one last question, I am sorry, Mr Walker. You will remember that there were two applications for special leave and one of them only attracted the grant of special leave. The other was stood over to be returned I thought before this Court on this day. Is it common ground that if the case is disposed of within P4 that there is no need to deal with P3?
MR WALKER: I do not think it is common ground. It is certainly our position. We would want to say that P3 is a matter of no moment or substance in any event, that is on the merits of it, but I will not go into that argument now.
GUMMOW J: That is the reopening debate.
MR WALKER: Yes, it is.
HEYDON J: If the appeal is dismissed, P3 does not arise, or is it the other way round?
MR WALKER: I think it is the other way round, your Honour. If this appeal is entertained and dismissed, I do not know whether our friends would wish to contend that notwithstanding this Court’s dismissal of the appeal, it is still open for them to complain that the Court of Appeal should have set aside its order dismissing the appeal.
KIRBY J: The theory behind the dismissal of the appeal if your argument succeeded would be that, although for different reasons, in the substantive matter the Court of Appeal was correct and, therefore, reopening the judgment of the Full Court would not be appropriate or necessary. Therefore, the application from that refusal would not have to be dealt with.
MR WALKER: That is our position on the merits, that that is one of the reasons why that application is of no moment or of no substance, but I am sure that is not common ground.
GLEESON CJ: Thank you, Mr Walker. Yes, Mr Shanahan.
MR SHANAHAN: Thank you, your Honours. Can I just deal with the question of the second special leave application perhaps first and say that it would be redundant in the appellant’s position to continue to pursue P3 if the appeal were dismissed. Then the only question would be one as to costs and why we had two special leave applications in the first instance. It is a matter that was dealt with on the special leave application. It only goes to costs. There would be no point in the appellant pursuing another hearing when it has had a full hearing and has had a full hearing in this Court.
There are eight points I want to make in reply and there are two matters of housekeeping. The first point that I would make by way of reply is that my friend has been invited to come up with an example of when the exercise of a power by the Minister is merely indirectly part or process of the Minister’s trade or business. With great respect to him, he has not been able to, not a reasonable one. That is not a weakness in his argument; that is a flaw which we say disposes of the argument. Ultimately, if one applies principle to the meaning of the words in 175(3) by way of applying his Honour Justice Pincus’s approach in Textron, one can apply principle here, not make an impressionistic judgment based on the facts of each case regarding whether or not work is properly to be understood as directly part or process of the trade or business of a public authority such as the Minister.
The second point that I would make in reply would be this, that it is not the existence of the contractor which makes something indirect at section 175(3). What makes it direct is when the existence of the contractor is illusory because the real relationship is between the principal and the worker. That is the substance of the appellant’s argument. It is not the existence of the contractor; it is when the contractor’s existence is relatively immaterial for the real economic relationship, the employment relationship, between the principal and the worker. So the mere fact that there is a contractor is neither here nor there. It is simply an incident of the application of section 175.
KIRBY J: But the point put against that is that the whole context of 175 is that there is this interposition and that therefore that argument for the meaning of “directly” cannot work in the context of 175, given its purpose.
MR SHANAHAN: What the appellant says about that is that the concept of “directly” can work because where the actual work in which the worker is engaged at a particular time is directly referable to the trade or business of the principal, then the existence of the contractor is really illusory because the real relationship is between the worker and the principal. Where that relationship is not illusory and the contractor provides an effective intermediary, then what is done under the contractor is necessarily indirect, and that is what the appellant said happened here. The role of Falcon was real; it was not illusory. The real employment relationship, if you like, the real factual employment relationship, was between Falcon and Mr Klein, not between Mr Klein and the Minister for Education.
My friend went to Justice Wheeler’s example in the court below in relation to a barrister’s car breaking down. With respect, that is an example which is consistent with his Honour Justice Pincus’s approach in Textron because effectively the repair of the car was ancillary to the trade or business of the barrister. It must be.
KIRBY J: But if the barrister’s job is to go out and interview prisoners, then without the car the barrister cannot do it.
MR SHANAHAN: Yes. The car becomes essential and necessary but the repair of the car is not directly part or process in the barrister’s trade or business because it is not part of the provision of advice or advocacy services which characterise what the barrister’s business is.
KIRBY J: Unless the barrister gets there, he cannot give the advice.
MR SHANAHAN: That is so, but merely because an activity is necessary or essential, in the appellant’s respectful submission, that does not make it directly part or process in the trade or business of the barrister. With respect, that is the point that his Honour Justice Pincus makes in Textron. Merely because the Minister had the power to respond to the alarm is irrelevant in this case, in the appellant’s submission, because it is the
exercise of powers that is caught by section 6, not their availability. Otherwise, the word “exercise” means nothing in section 6. It is the exercise of a power that is caught by section 6.
There was no exercise by the Minister of a power when the appellant chased the trespasser on the particular evening other than to enter into the contract with Falcon. That is the only exercise of a power by the Minister. Mr Klein was not the agent of the Minister other than in the sense that Mr Klein was employed by a contractor on work contracted for by the Minister. The Minister had the power to employ employees directly for the purposes of security and chose not to. I would simply emphasise that point, that it is the exercise of the power that is caught by section 6, not its availability. If one confuses those two things, then one ends up with the conclusion such as the one drawn by her Honour Justice Wheeler in the court below.
In terms of housekeeping, there were two matters. The first one was the note that your Honour Justice Kirby asked for. The appellant would be able to provide that if seven days was convenient, within the next seven days, and a copy of the Education Act will be provided to the Court, a complete copy. They are the submissions of the appellant.
KIRBY J: Do you agree with what Mr Walker said about the other application for special leave?
MR SHANAHAN: It must fall away, your Honour. The only point of considering would be a question of costs, and I am not going to trouble the Court with that now. It becomes redundant because ultimately the appellant is only concerned with the substantive argument.
GLEESON CJ: Thank you, Mr Shanahan. We will reserve our decision in this matter and we will adjourn for a brief time to reconstitute.
AT 2.26 PM THE MATTER WAS ADJOURNED
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