Lee v Metalcorp Recyclers Pty Ltd - [2006] WADC 117

JURISDICTION : DISTRICT COURT OF WESTERN AUSTRALIA
IN CHAMBERS

LOCATION: PERTH

CITATION: LEE -v- METALCORP RECYCLERS PTY LTD [2006] WADC 117

CORAM: PRINCIPAL REGISTRAR GETHING

HEARD: 26 JULY 2006

DELIVERED : 11 AUGUST 2006

FILE NO/S: CIV 1186 of 2005

BETWEEN: KRISTIN LEE
Plaintiff
AND
METALCORP RECYCLERS PTY LTD
Defendant

Catchwords:

Stay of proceedings - Workers' Compensation - Whether defendant deemed employer

Legislation:

Compensation and Injury Management Act 1891 (WA)

Rules of the Supreme Court

Result:

Application dismissed

Representation:

Counsel:

Plaintiff: Mr C Prast
Defendant: Mr M P Cornes

Solicitors:

Plaintiff: Slater & Gordon
Defendant: Minter Ellison

Case(s) referred to in judgment(s):

Berg v Hamersley Iron Pty Limited [2005] WADC 3
Burton v Shire of Bairnsdale (1908) 7 CLR 76
Christmas Island Resort Pty Ltd v Geraldton Building Co Pty Ltd (No 5) (1997) 18 WAR 334
Dey v Victorian Railways Commissioners (1949) 78 CLR 62
Fancourt v Mercantile Credits Ltd (1983) 154 CLR 87
Foster v Chief Executive Officer of the Department of Agriculture [2006] WASCA 95
Frauenfelder v Reid (1963) 109 CLR 42
General Steel Industries Inc v Commissioner for Railways (NSW) (1964) 112 CLR 125
Hospitals Contribution Fund of Australia v Hunt (1983) 44 ALR 365
Mikkelsen v United Group Limited [2005] WADC 24

Case(s) also cited:

Hewitt v Benale Pty Ltd [2002] WASCA 163

PRINCIPAL REGISTRAR GETHING: In the present application the defendant seeks an order that the plaintiff's claim be stayed pending the plaintiff obtaining a determination of his degree of disability pursuant to Workers' Compensation and Injury Management Act 1981 (WA) ("WCIMA") s 93D. The plaintiff resists the application on the basis that the relevant threshold in WCIMA s 93D does not apply in the circumstances of this case, the defendant not being the plaintiff's employer or deemed employer pursuant to WCIMA s 175.
The plaintiff commenced this action in May 2005 by writ endorsed with a statement of claim. From the statement of claim, it appears that the plaintiff's case is that on 31 May 2001, whilst the plaintiff was in the course of this employment with Cisco's Transport as a truck driver, a forklift driven by an employee of the defendant struck the plaintiff in the area of the right leg causing injury. The plaintiff goes on to plead that the collision was caused by the negligence of the employee for whose negligence the defendant is vicariously liable, and that as a result of this collision, the plaintiff has sustained various injuries for which he claims damages.
For reasons that are not apparent on the face of the file, no memorandum of appearance was filed until 19 April 2006. The present application was filed shortly afterwards on 25 May 2006.

Factual background

The defendant filed four affidavits in support of its application. The first is an affidavit of David Anthony Edward Hopkins, sworn 23 May 2006 Mr Hopkins is the State Manager of the defendant. The second is sworn by John Frederick William Bailiff, the Administration Manager of Pep Transport, a company whose role I will outline shortly. The final two affidavits were sworn by Prudence Elizabeth Griffin, a solicitor employed by the defendant's solicitors.
The plaintiff did not file any affidavit in relation to the application. In submissions, counsel for the plaintiff advised that the key issue for the determination by the Court is the application of WCIMA s 175. The determination of this issue purely involves the nature of the contractual relationships between the defendant and Pep Transport (an intervening contractor) and Pep Transcript and Cisco's Transport. In this context, the evidence of the plaintiff would not have added to the relevant factual matrix.
The defendant is a scrap metal recycling company. It's Kewdale premises, at which the plaintiff's accident occurred, includes a scrap metal yard. In 2001, the defendant routinely used transport contractors in the course of its business to move scrap metal. The usual practice of the defendant to engage a transport contractor was to telephone around various companies until one could be found which was able to provide the truck required for the particular job. In 2001 the defendant did not have a semi‑trailer so it needed to engage a contractor to provide one, with a driver. On the occasion in question, the defendant engaged Pep Transport.
Pep Transport provides a range of services including taxi‑trucks, couriers, parcel express, warehousing and distribution. Pep Transport does not have semi‑trailers in its fleet. If a client requires a semi‑trailer, Pep Transport out-sources that requirement to one of a number of other companies it routinely uses. The procedure is that Pep Transport invoices its client, at its rates, for the job performed and any contractor Pep Transport uses invoices Pep Transport for the work it performs. If a request from a client involves a semi‑trailer, Pep Transport's taxi‑truck radio operator will call around the various contracting companies it uses to find one with the appropriate equipment. There are no standard terms and conditions between Pep Transport and its contractors – the engagement is verbal.
From invoices annexed to Mr Hopkins' and Mr Bailiff's affidavit, it appears that on 31 May 2001, Pep Transport received a request from the defendant to provide a "semi‑taxi" truck. In response to that request Pep Transport contracted Cisco's Transport to provide the semi‑trailer and driver, being the plaintiff. Cisco's Transport invoiced Pep Transport for the provision of a semi‑trailer and driver.
In her affidavit sworn 18 July 2006, Ms Griffin deposes that at no stage has the plaintiff sought to make any application with respect to determination of his disability against the defendant. In argument before me it was common ground that the plaintiff has not made any application with respect to determination of his degree of disability under the WCIMA, and in particular, has not made any such application against his employer, Cisco's Transport.
Ms Griffin swore a further affidavit, dated 25 July 2006, annexing a document entitled "claim form for injury on the journey" which appears to have been filled in by the plaintiff. The annexed claim form sets out details as to how the relevant accident occurred.
Ms Griffin's affidavit of 18 July 2006 also contains a report relating to the plaintiff from Mr John M Hill, an orthopaedic surgeon, dated 21 July 2004. The defendant submits that, from Mr Hill's report, I should find that the plaintiff has little, if any, prospect of obtaining a degree of disability determination in excess of 30 per cent. The defendant further submits that, pursuant to WCIMA s 93E(5), given the lapse of time since the plaintiff sustained his injury, the only way the plaintiff can proceed is to obtain agreement of the party against whom it sues or a determination that his degree of disability is not less than 30 per cent.
As I understand the plaintiff's submissions, the plaintiff has no present intention of making an application for determination of his degree of disability, though there is no evidence to that effect. Thus, this is not a case in which the plaintiff is asserting that he is diligently pursuing an application for determination of his degree of disability.

Principles governing stay applications

In Mikkelsen v United Group Limited [2005] WADC 24, I considered the relevant principles governing the grant of a stay of proceedings in circumstances such as the present. It is convenient to quote that analysis for present purposes [at par 7‑13]:
"7.The principles governing the grant of a stay for a damages claim in the District Court pending a plaintiff clearing the hurdle set out in s 93E of the Act have been traversed in a number of cases in the Court, most recently, Berg v Hamersley Iron Pty Limited [2005] WADC 3. Unless there are sound reasons not to, I should follow decisions of Judges of this Court: Berg (supra), at par 23.
8.The Court has an inherent power to order a stay to prevent its processes from being abused: Wentworth v Attorney‑General (NSW) (1984) 154 CLR 518; Christmas Island Resort Pty Ltd v Geraldton Building Co Pty Ltd (No 5)(1997) 18 WAR 334; Berg (supra), at par 19. The rationale for the Court's intervention is [to] ensure that the Court can operate effectively – or put it in the negative, the Court will act where 'to abstain from intervening could prevent the Court from acting effectively' (Geraldton Building (supra) at 345).
9.In order to determine whether there has been an abuse of process, the Court must balance the private interests of the parties against the broader public interest considerations involved in the administration of justice: Geraldton Building (supra), at p 345; Belcher v Austal Ships Pty Ltd [2002] WADC 259, at par 29. Thus, three sets of interests must be balanced:
(a)The interests of the party seeking the stay (in cases concerning s 93E, usually the defendant/employer), in particular whether that party would suffer any prejudice if the stay is not granted;
(b)The interests of the party opposing the stay (in cases concerning s 93E, usually the plaintiff/employee), in particular whether that party would suffer any prejudice if the stay is granted; and
(c)The public interest in the administration of justice, in particular ensuring that scarce public resources, both in terms of time and facilities, are applied in the best and most efficient means possible (Geraldton Building (supra) at 345).
10.Overriding these perspectives is the caveat that the power to order a stay must be used with caution (Geraldton Building (supra) at 345).
11.Dealing first with the interests of the party seeking the stay, in Western Metals Zinc NL v Wesfarmers Transport Ltd & Anor [2003] WASCA 152 the Full Court of the Supreme Court stated that (at par 31):
'Of course, it would plainly be vexatious to institute proceedings where there was no possibility that it could ever be established that a relevant degree of disability existed, and in an appropriate case such a proceeding might be struck out. Further, it would generally be oppressive to require a defendant to incur expense in defending proceedings where it was not clear whether or not damages could be awarded, and one would usually expect the Court to order a stay of proceedings until the provisions of s 93E(3) had been complied with'.
12.Deane DCJ in Berg (supra) commented that in 'appropriate cases the purpose of interlocutory proceedings such as an application for stay of proceedings might be seen as a method of avoiding litigation which has little or not point and which will involve considerable expense' (par 19), citing Hastie v Iluka Midwest Limited [2003] WADC 95 and Robe River Mining Co Pty Ltd & Anor v Morseu [2004] WADC 142.
13.Thus in cases like the present one, the Court will inquire as to whether or not the litigation has any point. This will usually involve a consideration of whether the plaintiff has any prospect of clearing the hurdles set out in s 93E of the Act. If the plaintiff has no prospect of clearing the hurdles, then there is considerable prejudice to the defendant in allowing the litigation to continue."

Application to the present case

Dealing first with the public interest, this action is at an early stage in its history. As I have noted, the memorandum of appearance has recently been filed. No defence has been filed and served. This is not a case where there is a risk of a trial being vacated due to the thresholds in WCIMA s 93E not being met. The public interest in the efficient administration of justice has minimal weight in the circumstances of the present case.
In terms of the risk of prejudice to the defendant and to the plaintiff, the present application seems to turn on whether or not WCIMA s 175 applies in the facts of this case. The defendant says that it does, and consistent with the authorities, having found that it does, the Court should stay the plaintiff's action until such time as a degree of disability determination has been obtained. The plaintiff contests the application of s 175 and, submits that it should be permitted to argue whether or not s 175 applies in the context of a trial in the action.
The defendant's position is that, in effect, this case is on all fours with decisions such as that in Berg v Hamersley Iron Pty Limited [2005] WADC 3. In that case, the plaintiff was employed by a sub‑contractor of the defendant's contractor. The defendant alleged that it was the deemed employer of the plaintiff for the purposes of WCIMA s 175(6). The plaintiff challenged this assertion. Deane DCJ concluded [at par 17]:
"It would seem that if this were a case where there was a complete lack of evidence before the Court to support [the defendant's] application, it would be appropriate to proceed to trial, but that in my view is not the case. This is an action that has been commenced by the plaintiff, and if it is asserted that there is no contract of employment between him and for example, Roche Mining Pty Ltd, then notwithstanding the argument to the contrary put by counsel for the plaintiff, one would in my view expect the plaintiff to place some material before the Court to demonstrate that is the case, rather than simply putting any of the other parties to proof. Further, the Court was advised that the contract of employment in its entirety has been discovered. At this point there is nothing before the Court to suggest the assertions or statements in the affidavits [filed by the defendant] are inaccurate or unreliable."
Her Honour was of the view that a stay was appropriate.
In so far as is relevant for present purposes, WCIMA s 175 is in the following terms:
"(1)Where a person (in this section referred to as the principal) contracts with another person (in this section referred to as the contractor) 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, deemed to be employers of the worker so employed and are jointly and severally liable to pay any compensation which the contractor if he were the sole employer would be liable to pay under this Act.
(2)…
(3)The principal is not liable under this section unless the work on which the worker is employed at the time of the occurrence of the injury is directly a part or process in the trade or business of the principal.
(4)…
(5)Where compensation is claimed from or proceedings are taken against the principal, in the application of this Act a reference to the employer shall be read as a reference to the principal except where, for the purpose of calculating the amount of compensation, a reference is made to the earnings of a worker, the reference shall be read as a reference to the earnings of the worker under the contractor."
(6)   For the purposes of this section, where sub-contracts are
made —
(a)'principal' includes the original principal for whom   the work is being done and each contractor who constitutes himself a principal with respect to a sub-contractor by contracting with him for the execution by him of the whole or any part of the work;
(b)'contractor' includes the original contractor and each sub-contractor; and
(c)a principal’s right to indemnity is a right against each contractor standing between the principal and the worker.
(7)   Where the injury 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."
The defendant's position is that a principal, the defendant, contracted with another person, Pep Transport, for the execution of work by or under that contractor. The defendant notes that by WCIMA s 175(6)(b), the word "contractor" includes the original contractor and each sub‑contractor. The work alleged to have been done was removal of scrap metal from the defendant's premises to be taken to another location, the identity of which is not disclosed in the evidence before me. This is said to constitute a contract for the execution of work within the meaning of s 175 because it involves one party being contracted to execute a particular task, namely the transport of scrap metal. Further, the contract to transport the scrap metal is one in which there was some degree of control or supervision by Cisco's Transport (or Pep Transport), in particular once the loaded truck had left the defendant's premises. The defendant goes on to submit that the injury occurred "in respect of premises on which the principal has undertaken to execute the work" and therefore the exclusion in s 175(7) does not apply. The defendant further submits that the requirements of s 175(3) are satisfied as the defendant operated a scrap metal business, the relevant work was the removal of scrap metal and that that sub‑section applies to work "the doing of which is part and parcel of the business undertaking of a principal" (citing Frauenfelder v Reid (1963) 109 CLR 42).
The plaintiff contends that s 175 does not apply to the facts of the present case. The plaintiff submits that the contracts in question were the provision of a semi‑trailer with a driver, and not a contract for the "execution of any work" as required by s 175(1). The plaintiff goes on to submit that the plaintiff was not employed in any relevant sense by any of the contractors and that in fact the plaintiff only had one employer, Cisco's Transport. As Cisco's Transport was being renumerated for the provision of a semi‑trailer and driver, it could never be said that Cisco's Transport was an employee or that Pep Transport was an employer as defined in the Act. The plaintiff relies on s 175(6)(a) to assert that Pep Transport became the relevant principal with respect to the contract entered into with Cisco's Transport. This then triggers the application of s 175(7) as the injury did not occur in respect of premises on which Pep Transport had undertaken to execute work or which were otherwise under its control or management.
The resolution of this conflict in the application of s 175 is at the heart of the determination of this application. This leads to the questions as to the basis on which the Court in hearing a stay application should determine a contested point of law and/or fact. The effect of granting a stay in this case is, in practical terms, to bring the plaintiff's claim to an end. As I have noted, the plaintiff does not propose to make an application for a degree of disability determination. Rather, the plaintiff's claim is that WCIMA s 175 does not apply on the facts of the case and therefore, he is entitled to pursue a claim for common law damages against the defendant as the occupier of the premises on which the relevant accident occurred. In this sense, the defendant's application for a stay is somewhat analogous to an application by a defendant for summary judgment pursuant to Rules of the Supreme Court, O 16. Another way the defendant could have brought the plaintiff's case to an end would have been to have pleaded a defence under WCIMA s 175, and then to have sought summary judgment on that defence pursuant to O 16. Order 16, r 1 provides that the Court may grant summary judgment on the application of a defendant if it is satisfied that the action is frivolous or vexatious, that the defendant has a good defence on the merits or that the action should otherwise be disposed of summarily.
The power given by O 16 to enter judgment for the defendant makes express provision for what is, in any event, the Court's inherent jurisdiction to protect its process from abuse by summarily disposing of an action as being frivolous or vexatious where the action is so obviously untenable that it can not possibly succeed: Burton v Shire of Bairnsdale (1908) 7 CLR 76 at 92. The conceptual basis for a stay application of the kind sought by the defendant in this case is the Court's inherent power to prevent its processes from being abused: Christmas Island Resort Pty Ltd v Geraldton Building Co Pty Ltd (No 5) (1997) 18 WAR 334 at 343-345. This is the same conceptual basis as the power to order summary judgment against a plaintiff, whether in the Court's inherent jurisdiction or under the Rules of Court: General Steel Industries Inc v Commissioner for Railways (NSW) (1964) 112 CLR 125 at 129-130. It thus seems appropriate to adopt a similar approach to that used had the Court been asked by the defendant to grant judgment against the plaintiff to prevent an abuse of process, to the present question of whether a stay should be granted to prevent an abuse of process. I have consciously used the term "similar" not "identical" as the overall discretionary framework is the present application is some what wider than application based primarily on the plaintiff's pleading.

It is well established that the power to order summary judgment should be exercised with great care and should never be exercised unless it is clear that there is no real question to be tried: Fancourt v Mercantile Credits Ltd (1983) 154 CLR 87 at 99. Or put slightly differently, a case must be very clear to justify the summary intervention of the Court to prevent a party submitting his case for determination in the appointed manner by the Court. Once it appears that there is a real question to be determined, whether of fact or law, and that the rights of parties depend upon it, it is not competent for the Court to dismiss the action as frivolous or vexatious and an abuse of process: Dey v Victorian Railways Commissioners (1949) 78 CLR 62 at 91.
Further, great care must be exercised to ensure that under the guise of achieving expeditious finality, a plaintiff is not improperly deprived of his opportunity for the trial of his care in the appointed manner by the Court: General Steel Industries Inc v Commissioner for Railways (supra). Moreover, and importantly for present purposes, the authorities establish that the Court at first instance should be particularly astute not to risk stifling the development of the law by summarily terminating actions in respect of which there is a reasonable possibility that it will be found, in the development of the law, still embryonic, that a cause of action does lie: Hospitals Contribution Fund of Australia v Hunt (1983) 44 ALR 365 at 373. After making this oft cited proposition, Master Allen goes on to comment that there was a real risk of injustice to the plaintiff in that case had it been summarily terminated (at 374).
The reference to the decision in Hospitals Contribution Fund of Australia (supra) is significant in the present context as the recent decision of the Court of Appeal in Foster v Chief Executive Officer of the Department of Agriculture [2006] WASCA 95 gives the clear impression that the law relating to the interpretation of WCIMA s 175 is not yet settled. Given its importance to the present application, at the conclusion of the hearing I invited the parties to file submissions on the application of the decision. Both parties subsequently filed supplementary submissions.
The leading judgment in that case was given by her Honour Justice Wheeler, with whom Steytler P and Pullin JA agreed. Wheeler JA drew attention to the point that before s 175 operates the relevant contract between the principal and the contractor must be "for the execution of any work". If the relevant contract was for the "supply of workers" then that may not be sufficient unless there is a dual contract for the execution of work. Specifically, her Honour stated [at par 11]:
"It seems to me that there is a distinction to be drawn between a contract for the execution of work, which one would generally understand to be the execution of some particular task, even if broadly defined, and one for the temporary provision of workers for the purpose of assisting the principal to complete whatever tasks the principal has set itself."
Further, her Honour also highlighted the point that the contract must be for the execution of work "by or under" the contractor. At par [18], her Honour makes the point in the following way:
"It seems to me that the words 'by or under' require some degree of control or supervision greater than that implicit in merely providing an employee for the task. If that were not the case, it is difficult to see what the words 'by or under' the contractor would add to the further requirement contained in s 175(1) that, in the execution of the work, the worker be employed by the contractor."
On the facts, her Honour found that the relevant contract was not "for the execution of any works". Rather, it was for the supply of workers. Wheeler JA went on to find that if she was wrong in that conclusion, her Honour would nevertheless be of the view that there was no deemed employment relationship in the case as the contract was not for the execution of the particular work "by or under" the relevant contractor.
It seems to me, that it is at least arguable in the present case that the contract was for the provision of a semi‑trailer and driver, not for the execution of any work. I accept that there is an argument to the contrary, namely that the contract was for the execution of work in the form of removal of scrap metal. Also, it seems to be arguable that if there was a contract for the removal of scrap metal, then it was not "by or under" the contractor, either Pep Transport or Cisco Transport. In neither case does it appear that either Pep Transport or Cisco Transport provided any control or supervision "greater than implicit in merely providing an employee for a task" albeit an employee coupled with a semi‑trailer. The supervision was provided by the defendant.
In those circumstances, like those in Hospital Contribution Fund of Australia (supra), it seems to me that there is a real risk of injustice to the plaintiff if a stay is granted effectively terminating his case in a summary manner. Put slightly, differently, I am not persuaded that there is no real question to be tried on the application of WCIMA s 175.
This case can be contrasted to the decision in Berg (supra).From the passage quoted above, it seems clear that Deane DCJ formed the view that there was no real question to be tried on the application of WCIMA s 175. The plaintiff appears to have done no more than to put the defendant to proof.
The risk of injustice to the defendant if no stay is granted is that it will have to defend a claim which may not succeed at trial. Having concluded that there is an arguable question to be tried in the plaintiff's claim, the defendant is then in the same position as any defendant in the Court.
The defendant submitted that the plaintiff has not conducted his case in a timely manner. From the Court file, this point has some merit. The accident occurred in May 2001. The action was not commenced until May 2005, and has barely progressed since then. However, the action is governed under the District Court Rules 2005 which imposes a timetable for entry to trial once the defence is filed with the prospect of adverse consequences if the entry for trial milestone is breached.
Exercising the power to order a stay with caution, as I must, the defendant's application must fail.
I will hear counsel as to the appropriate costs orders and orders to program this action towards entry for trial.