Lane v Livingston

[2005] NSWWCCPD 115

WORKERS COMPENSATION COMMISSION

APPEAL AGAINST A DECISION OF THE COMMISSION CONSTITUTED BY AN ARBITRATOR

CITATION:Lane v Livingston [2005] NSW WCC PD 115

APPELLANT:  David Lane, t/as David Lane Builders

RESPONDENT:  Paul Livingston

INSURER:G.I.O. Workers Compensation (NSW) Ltd

FILE NUMBER:  WCC6593-04

DATE OF ARBITRATOR’S DECISION:          25 August 2004

DATE OF APPEAL DECISION:  28 September 2005

SUBJECT MATTER OF DECISION:                Employee or independent contractor; definition of “worker” section 4 Workplace Injury Management and Workers Compensation Act 1998, sections 9A and 16 Workers Compensation Act 1987.

PRESIDENTIAL MEMBER:  Acting Deputy President Lansdowne

HEARING:On the papers

REPRESENTATION:  Appellant: Abbott Tout, Solicitors

Respondent: Adams Leyland, Solicitors

ORDERS MADE ON APPEAL:  (1) The decision of the Arbitrator is confirmed.

(2) The Appellant to pay the Respondent’s costs of the appeal.

BACKGROUND TO THE APPEAL

1. The appellant is Mr David Lane (‘the Appellant’).  He seeks leave to appeal the decision of an arbitrator (‘the Arbitrator’) made 25 August 2004.  The Arbitrator made an award of weekly compensation for total incapacity for various closed periods and medical expenses in favour of the original applicant, Mr Paul Livingston, who is the respondent to this appeal (‘the Respondent’).  The Appellant’s appeal is filed by his insurer, G.I.O. Workers Compensation (NSW) Ltd on his behalf (‘the Insurer’). 

1. It was the Respondent’s case before the Arbitrator that he was employed by the Appellant as a builder on the construction of a laboratory in March 2002, and that in the course of that employment he fell from a scaffold to the ground. His case was that the fall caused a total incapacity for work for a short period immediately after the fall and, further, caused an acceleration in degeneration of his right hip that lead to a period of total incapacity for work before and after an operation to effect a hip replacement. The operation took place in September 2003 and the Respondent claimed total incapacity for work due to the hip problem from 11 July 2003 to 6 April 2004. The Appellant’s case before the Arbitrator was principally that the Respondent was not his employee, but was an independent contractor. In the event that the Arbitrator found that the Respondent was an employee of the Appellant, the Appellant also made submissions about causation, section 16 of the Workers Compensation Act 1987 (‘the 1987 Act’) and the amount of compensation due. The Appellant did not file any medical evidence, although the Insurer had required the Respondent to be medically examined.

1. The Arbitrator found that the Respondent was employed by the Appellant at the time of the fall.  In relation to the submissions of the Appellant that the degeneration of the Respondent’s hip may have been caused by work he carried out for others more proximate in time to his incapacity the Arbitrator held that this was not supported by any medical evidence, and was inconsistent with the medical evidence relied on by the Respondent.  The Arbitrator determined the amount to be awarded on the basis of the amount the Appellant himself notified to the Insurer as being the Respondent’s average weekly earnings for the past 12 months.

THE DECISION UNDER REVIEW

1. The Certificate of Determination, dated 25 August 2004 records the Arbitrator’s orders as follows:

   “1.  That the Respondent pay the Applicant weekly compensation at the rate of $790.00 from 22 March 2002 to 3 April 2002 under 36 [sic] of the Workers Compensation Act 1987.

   2. That the Respondent pay the Applicant weekly compensation at the rate of $790.00 from 11 July 2003 to 26 December 2003 under s36 of the Workers Compensation Act 1987.

   3.   That the Respondent pay the Applicant weekly compensation at the rate of $376.90 from 27 December 2003 to 31 March 2004 under 37 [sic] of the Workers Compensation Act 1987.

   4.   That the Respondent pay the Applicant weekly compensation at the rate of $383.80 from 1 April 2004 to 6 April 2004 under 37 [sic] of the Workers Compensation Act 1987.

   5. That the Respondent pay the Applicant’s section 60 of the Workers Compensation Act 1987 expenses on production of accounts or receipts.

   6.   That the Respondent pay the Applicant’s costs as agreed or assessed.”

ISSUES IN DISPUTE

1. The Appellant raises a number of grounds of appeal dealing with the following issues: employer/employee; the medical evidence; alleged failure to apply section 9A of the 1987 Act; and alleged failure to apply section 16 of the 1987 Act. In relation to the first ground, the Appellant says that the Arbitrator failed to give proper weight to facts that suggested the relationship was one of head/sub-contractor rather that employer/employee. In relation to the second ground, the Appellant submits that the Arbitrator failed to consider all relevant medical evidence. The Respondent opposes the appeal in detail on all grounds and makes an overall submission that the Appellant has failed to demonstrate any error in the Arbitrator’s decision so as to justify review under section 352(2) of the Workplace Injury Management and Workers Compensation Act 1998 (‘the 1998 Act’). The Respondent submits that the Appellant is seeking merely to re-agitate the issues before the Arbitrator.

ON THE PAPERS REVIEW

1. Section 354(6) of the 1998 Act provides:

“(6)If the Commission is satisfied that sufficient information has been supplied to it in connection with proceedings, the Commission may exercise functions under this Act without holding any conference or formal hearing.”

1. The Appellant submits that oral submissions at a hearing are required.  The Respondent makes no specific comment, but does not oppose the appeal proceeding on the papers.  There is no justification given by the Appellant as to why oral submissions, in addition to the Appellant’s lengthy written submissions, are required.  The Appellant does not seek to call any fresh evidence at the appeal.  In all the circumstances I do not see the need for any oral hearing.  I am satisfied that I have sufficient information to proceed ‘on the papers’, and that this is the appropriate course in the circumstances. 

LEAVE

1. Before proceeding to deal with an appeal the Commission must determine whether the application meets the requirements of section 352 of the 1998 Act which requires that a minimum amount of compensation be at issue on the appeal (section 352(2)) and that the appeal be filed within 28 days after the Arbitrator’s decision (section 352(4)).  There is no dispute that both requirements are met in this case.  The Respondent submits, however, that “there are insufficient prospects of success on the Appeal to justify leave being granted”.  I consider that the appropriate course is to grant leave to appeal, which I do, and then consider the merits of the appeal.

EVIDENCE AND SUBMISSIONS

1. I have before me the material relied on before the Arbitrator together with the following:

• The Appellant’s appeal and submissions

• The Respondent’s submissions in reply

• Transcript of the arbitration, held 18 August 2004.

DISCUSSION AND FINDINGS

Ground 1: Employer/employee: alleged failure to give proper weight to relevant facts

1. Paragraphs (a)-(g) of this ground are introductory.  In these paragraphs the Appellant recites various matters taken into account by the Arbitrator in determining whether or not the Respondent was employed by the Appellant or was a sub-contractor.  In paragraph (h) the Appellant asserts that the Arbitrator was correct in examining indicia of employment as drawn from Hollis v Vabu Pty Limited (2001) HCA 44 (‘Hollis’) but failed to deal with a submission put by the Appellant that “there needed to be, for a finding of employment to be in existence, a more basic contract of service as defined under s.4 of the 1998 Act”.  In my view it is apparent from the whole of the Statement of Reasons that this was precisely the issue the Arbitrator determined, although he did not refer to that particular section.  I accept the submission of the Respondent on this point, that the Arbitrator was correct in applying Hollis to determine if the Respondent had entered into a “contract of service” as required by section 4 of the 1998 Act.

1. In paragraph (i) of this ground the Appellant refers to Harris v Cudgegong Soaring Pty Limited (‘Cudgegong’) (1995) WCR 678 as support for the proposition that the onus was on the original applicant to prove that there was a contract of employment. This is self evident. The Appellant does not indicate in detail in what way Cudgegong is said to be of particular relevance to the facts of this case, and, from my examination of it, no particular relevance is apparent.  In both Cudgegong and the appeal from that decision, Cudgegong Soaring v Harris (1996) 13 NSWCCR 92 (CA), the principal issue as to whether or not the injured person was a “worker” turned on whether or not the parties had intended to create legal relations by their arrangement. That issue does not arise in this case. I accept the submission of the Respondent that neither Cudgegong nor the appeal from that decision assist in this case.

1. In paragraph (j) the Appellant asserts that the original applicant, here the Respondent, could not rely on the deeming provisions in Schedule 1.2 of the 1998 Act.  It is not necessary to determine whether or not that is the case because the Arbitrator did not rely on the deeming provisions in reaching his conclusion “that the Applicant was an employee of the Respondent at the time he fell” (Reasons paragraph 31).  Indeed this is conceded by the Appellant in the next paragraph, paragraph (k) of this ground, where he apparently asserts error by the Arbitrator in that “At no point did the Arbitrator discuss the deeming provisions even though these were raised by both parties”.  It is true that both parties referred to the deeming provisions in their submissions before the Arbitrator, but neither party placed any great reliance on those provisions.  Further, the deeming provisions extend the ambit of the scheme beyond the common law definition of “contract of service” as utilised in the definition of “worker” in section 4 of the 1998 Act.  It is not necessary to rely on them when it can be determined by reference to those principles that an applicant is a “worker”.  This is what the Arbitrator did in this case.  For these reasons it was not an error for the Arbitrator to omit comment on whether or not those provisions applied.

1. In paragraphs (l) –(p), being the remaining paragraphs of this ground, the Appellant puts his argument that the Arbitrator should have concluded on the evidence before him and his findings that the Respondent was an independent contractor, not an employee.  The nub of these submissions is that the right to control is not the sole criterion by which to gauge whether a relationship is one of employment, and the other factors in this case, including hours of work, obligation to work, non-deduction of income tax, payment on invoice, and description as an independent contractor in the Respondent’s tax return favoured the view that the Respondent was an independent contractor.   These paragraphs essentially repeat the submissions and authorities put by the Appellant, then the respondent, before the Arbitrator.

1. All these matters of fact were considered by the Arbitrator.  The Arbitrator records in paragraph 29 of his Reasons that the Respondent, there the applicant, argued that the issue of control was the central one, whereas the respondent, now Appellant, urged him to consider the other indicia of the relationship.  The Arbitrator did not confine his examination to the issue of control, but rather examined the whole of the relationship as the authorities (Stevens v Bodribb Sawmilling Company Pty Ltd (1985-1986) 160 CLR 16, Mason J. at page 24) indicate he was required to do. There is authority for the proposition, however, that the right to control remains a significant factor where it is present. In Articulate Restorations and Developments Pty Limited v Lawford (1994) 10 NSWCCR 751 (‘Articulate Restorations’), at page 764 Kirby P. stated as follows:

“In a sense the existence of indicia of the ultimate right of control and its exercise is more telling than the existence of indicia of independence….where there are clear indications of the right of control, and especially where there are indications that that right of ultimate control has actually been asserted, a court may more readily draw the inference that a contract of service (employment) has been established.  Where it is, a contract for services (independent contractor) will have been excluded.”

1. Interestingly the Appellant refers to this case in his submissions, although without expansion as to why, and it is the only authority referred to by the Appellant on this ground in the appeal that he did not rely on before the Arbitrator.  The decision does not assist the Appellant. Not only does Kirby P. in the majority decision reiterate the significance of control, where it is present, the decision also expresses the caution that should be felt in overturning the decision of a primary fact finder (there a judge of the Compensation Court of New South Wales) as to classification of a work arrangement as employment or independent contracting.  I will return to this later.

1. To return to the Arbitrator’s Reasons, the Arbitrator set out in paragraph 30 of his Reasons his conclusions from his findings of fact, having regard to the authorities put to him.  He notes that the Respondent when he fell was working alongside the Appellant’s apprentice, as part of the Appellant’s “team”, and that, significantly, the Respondent’s evidence that the Appellant set the hours, set out how the work was to be performed and  “had the final say” was uncontradicted.  Thus there was present in this case, as in Articulate Restorations, uncontradicted evidence of the right of control.  Further, I accept the submission of the Respondent on this appeal that the Respondent’s evidence on this point was also consistent with evidence in the Appellant’s own case, being the report of Protocol Investigations dated 4 May 2004, at page 8 point 3 “The Insured (i.e the Appellant) had the right to control how the work was performed and did exercise this right”.  This evidence adds further weight to the Arbitrator’s ultimate conclusion.  As against these factors, the Arbitrator noted that the “economic features of this case are indicative of the Applicant being an independent contractor” (sub-paragraph (e)).  Thus it is clear that the Arbitrator examined the totality of the relationship, including but not limited to the right to control, in reaching his conclusion that the Respondent was an employee of the Appellant. 

1. I have carefully examined the submissions and authorities put by the Appellant in relation to this ground but I do not consider that the Appellant has established any error by the Arbitrator in reaching this conclusion.  It is arguable that the opposite conclusion may also have been open on the facts, but that does not mean that the Arbitrator has erred.  I consider that the Arbitrator applied the correct principles, examined all the evidence and reached conclusions that were open to him on that evidence.  At its highest the Appellant’s case on this ground is that the Arbitrator placed too much emphasis on some factors, such as the absence of supply of materials by the Respondent, and too little on other factors, such as the provision of tax invoices by the Respondent to the Appellant and the nature of the Respondent’s tax return, in reaching his conclusions.  I am mindful of the cautious approach advocated in Articulate Restorations to overturning the decision of a primary fact finder on this issue in a specialised jurisdiction, even where, as in that case and in this, appeal is available on errors of fact as well as law.  In that case Kirby P. in the majority decision restated his comments in an earlier case, Connelly v Wells (1994) 10 NSWCCR 410 as follows:

“Bearing in mind the absence of rigid criteria and the necessity to consider the whole of the circumstances of the relationship, it is necessary for this Court to have a proper sense of modesty when it comes to the task of classification (as to whether the relationship was or was not one of employment).  Especially is this so when the Court is asked to reverse the conclusion of a judge in a specialised court with the responsibility of decision.” (Articulate Restorations at page 758)

1. I do not consider the force of those comments has been weakened by the subsequent High Court decision in Hollis.  Indeed that case demonstrates dramatically the possibility of different conclusions on the same or similar facts.  In Hollis itself the majority of the High Court, in concluding that a bicycle courier was employed by the respondent Vabu Pty Ltd, reached a different conclusion to that of the New South Wales Court of Appeal in a previous case, Vabu Pty Ltd v Federal Commissioner of Taxation (1996) 33 ATR 537. In that case the Court held that bicycle and other couriers working for the same respondent were independent contractors, not employees of Vabu Pty Ltd.

1. Further, I accept the submissions of the Respondent that some of the statements in paragraph (p) of the Appellant’s submissions are not supported by the evidence.  There was no evidence that the Respondent could “elect where and when he worked and for what wages”, and indeed the Arbitrator concluded that the Appellant set the amount he was prepared to pay (paragraph 24 of the Reasons).  Nor did the evidence show that the Respondent worked, at least proximate in time to the fall, on a “sporadic basis” for the Appellant as asserted in paragraph (p).  Indeed, the Appellant’s own report as to the hours worked before and after the fall, being Annexure F to the report of Protocol Investigations dated 4 May 2004, contradicts this statement.  The Appellant has not been as careful in basing his submissions on the evidence as one would expect.   

1. For these reasons I do not consider this ground of appeal established.

Ground 2: Alleged failure to consider all relevant medical evidence

1. In this ground the Appellant asserts that it was open to the Arbitrator “to find the deterioration to the Applicant’s condition from causes other than the incident of 22 March 2002” (paragraph 2 (g) of the Appellant’s submissions).  The Appellant’s complaint is that the Arbitrator found that the fall on 22 March 2002 caused the deterioration in the Respondent’s pre-existing osteoarthritis in his right hip, which caused the Respondent to be unfit for work and the need for the hip replacement operation, rather than work the Respondent carried out after he ceased working for the Appellant in August 2002.  The submission that this later work may have caused the deterioration was put to the Arbitrator by the then respondent at the arbitration.  The Arbitrator referred to the submission and the evidence in support of it in his Reasons (paragraphs 33-35) but rejected it because there was no medical evidence to support it.  The only medical report expressing an opinion as to the cause of the deterioration in the hip was that filed by the Respondent, and that report, being the report of Dr Love dated 4 May 2004 expressed the opinion:

“The osteoarthritis of Mr Livingstone’s [sic] right hip would have been present prior to the fall in March 2002, however it appeared to deteriorate rapidly in the months after the fall as evidenced by progressive x-rays taken, first in July 2002 and subsequently January 2003.  It would appear that his employment was a substantial contributing factor to this degeneration in his hip.  The other factors would be primarily his very heavy build.”

1. The Appellant asserts that the force of this evidence is weakened by the fact that the Respondent had not given a “full and thorough history” to Dr Love   (paragraph 2(c) of the Appellant’s submissions).  This submission is speculative and without an evidentiary basis.  The Respondent was not cross examined about what work history he gave his doctors and, in particular whether he told them he had engaged in form work after August 2002 and there is no indication that Dr Love was required for cross examination.  The report from Dr Love acknowledges that the first x-ray of the hip was not taken until July 2002 and then again in January 2003, and the Arbitrator notes the arguments put to him that this lapse of time casts doubt on a causal relationship between the fall and deterioration in the hip.  The Arbitrator was entitled to take the view, however, that in the absence of medical evidence associating the deterioration with any other cause that he should accept the report of Dr Love.  I do not consider any error is demonstrated in the way the Arbitrator dealt with the medical evidence.  This ground of appeal is not established.

Ground 3: Alleged failure to apply s9A of the 1987 Act

1. Section 9A(1) of the 1987 Act provides that “No compensation is payable under this Act in respect of an injury unless the employment concerned was a substantial contributing factor to the injury”.  Sub-section 2 sets out various matters that can be taken into account in determining if the employment was a “substantial contributing factor” to the injury.  The Appellant submits that “the Arbitrator failed to properly address the issues raised by s9A of the 1987 Act” (paragraph 2(h) and 3(a)-(c ) of the Appellant’s submissions).  In particular, the Appellant says the Arbitrator failed to take into consideration other issues that may be the cause of the Respondent’s condition and did not “look at, in isolation, the fall of 22 March 2002, and investigate whether that day of employment was such as to be causative of the (Respondent’s) injury” (paragraph 3(b)).

1. These submissions are essentially the same as the submissions put in relation to the medical evidence as both relate to the causal link between the fall and the deterioration in the right hip.  I do not consider any error is established.  It is simply incorrect to say the Arbitrator did not take other possible causal factors into account- he records the then respondent’s submissions on this point and the evidence in support of it (see paragraphs 32-34 of the Reasons).  He notes the lapse in time before the first complaint by the Respondent about his hip and the lapse in time before further complaint and acknowledges the “logic” of the then respondent’s argument.  The submission failed before the Arbitrator because there was no medical evidence to support it, and the only medical evidence on causation expressed the view that there was a causal link between the fall and the degeneration.  In these circumstances it would have been very difficult, and possibly an error, for the Arbitrator to reject that evidence and take the view that section 9A was not satisfied.  I consider the Arbitrator was correct to take the view that “in the absence of any medical evidence from the (Appellant) to support its [sic] argument I cannot substitute the (Appellant’s) conjecture and inferences for the clear conclusion expressed by Dr Love” (paragraph 35 of the Reasons).  This ground of appeal is not established.

Ground 4: Alleged failure to consider the disease provisions

1. Section 16(1)(b) of the 1987 Act provides “If an injury consists in the aggravation, acceleration, exacerbation or deterioration of a disease…compensation is payable by the employer who last employed the worker in employment that was a substantial contributing factor to the aggravation, acceleration, exacerbation or deterioration”. I call that employer the ‘last relevant employer’ in the discussion below. Sub-section (2) provides for contribution to the compensation payable by any other employers who employed the worker in such employment in the 12 months before the relevant date. The Appellant argues that the Arbitrator should have applied the section, as the injury in question in this case was the deterioration in a pre-existing disease, being osteoarthritis of the right hip, but failed to do so. The Appellant submits that by this failure to apply the section the Appellant has been “disallowed…the capacity to seek contribution from subsequent employers” (paragraph 4(e) of the Appellant’s submissions).

1. The quoted portion of this submission appears to misunderstand the intention of section 16. That section enables the worker to make a claim only on his or her last relevant employer, and for that employer to then seek contribution from earlier, not subsequent, employers.  The quoted portion is also inconsistent with the argument put at the arbitration.  At the arbitration the then respondent asserted that the section applied with the consequence that the then applicant, now Respondent, had failed to prove his case because the then respondent, now Appellant, was not the last relevant employer (page 41 line 55 of the transcript).  If this is what this submission on appeal means, then it is not clearly expressed.  I will, however, also consider it on this basis in fairness to the Appellant.

1. Even considered on this basis I consider the submission fails, for the same reasons that the other submissions in relation to the medical evidence and causation fail. Accepting for the moment that the deterioration in the hip could be considered the deterioration of a disease, there was simply no medical evidence to support the proposition that later work undertaken by the Respondent was “employment that was a substantial contributing factor to (the deterioration of the disease)” and so the submission that the Appellant was not the last relevant employer has no evidentiary foundation. If the Appellant or the Insurer were of the view that the Respondent had failed to disclose to his doctors that he had undertaken other work that may have contributed to his condition then he and it were at liberty to require him to be examined by their own doctor who could take a complete history. Indeed the Insurer did require the Respondent to be examined, but did not tender that evidence. I accept the submission of the Respondent in relation to this ground that “the (Appellant) sought to place all its eggs in one basket and argue that the (Respondent) was not a worker. It neglected or was unable to obtain evidence to support its arguments based upon s16 1987 Act and also failed to join other employers whom it subsequently alleged were liable” (Respondent’s submissions paragraph 4(e)). I do not consider this ground of appeal established.

DECISION

1. The Appellant has failed to establish any error by the Arbitrator. Accordingly I confirm the decision of the Arbitrator.

COSTS

1. The Respondent seeks that the appeal be dismissed with costs.  I consider this to be the correct approach. Accordingly, I order the Appellant to pay the Respondent’s costs of the appeal.

Robyn Lansdowne

Acting Deputy President  

28 September 2005

I CERTIFY THAT THIS IS A TRUE AND ACCURATE RECORD OF THE REASONS FOR DECISION OF ROBYN LANSDOWNE, ACTING DEPUTY PRESIDENT OF THE WORKERS COMPENSATION COMMISSION.

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