Lewis v John Holland P/L - [2003] NTSC 118

Lewis v John Holland P/L [2003] NTSC 118
PARTIES:RAY LEWIS

v
JOHN HOLLAND PTY LTD

TITLE OF COURT:  SUPREME COURT OF THE NORTHERN TERRITORY
JURISDICTION:  SUPREME COURT OF THE NORTHERN TERRITORY exercising Territory jurisdiction
FILE NO:LA13/02 (20018624)
DELIVERED:  4 December 2003
HEARING DATES:  17 November 2003
JUDGMENT OF:  THOMAS J
CATCHWORDS:

WORKERS’ COMPENSATION – sufficiency of evidence and onus of proof – whether worker was an PAYE taxpayer – whether the appellant was a “worker” within the meaning of the Work Health Act (NT) as at the date of his injury.
Work Health Act 1986 (NT) s 3, 127
Work Health Amendment Act No 27/2000 (NT), s 4 (1)
Herbert v KP Welding Constructions Pty Ltd (1995) 125 FLR 299, applied.
Purkess v Crittenden (1964) 114 CLR 164; Neat Holdings v Karajan Holdings (1992) 67 ALJR 170; Thompson v Groote Eylandt Mining Company Limited [2003] NTCA 05, considered.
REPRESENTATION:
Counsel:
Appellant:S Southwood QC
Respondent:  P Barr
Solicitors:
Appellant:Priestley Walsh
Respondent:  Hunt and Hunt
Judgment category classification:        C
Judgment ID Number:  tho200333
Number of pages:  22

IN THE SUPREME COURT
OF THE NORTHERN TERRITORY
OF AUSTRALIA
AT DARWIN
Lewis v John Holland P/L [2003] NTSC 118
No. LA13/02 (20018624)

BETWEEN:
RAY LEWIS

Appellant
AND:
JOHN HOLLAND PTY LTD

Respondent

CORAM: THOMAS J
REASONS FOR JUDGMENT
(Delivered 4 December 2003)

This is an appeal from a decision of the Work Health Court in Darwin delivered on 25 October 2002. The issue for determination was whether the appellant was a “worker” within the meaning of the Work Health Act as at the date of his injury on 3 July 2000 and in particular, whether he was a PAYE taxpayer.
The learned stipendiary magistrate found that on the evidence presented by Mr Lewis, the appellant in these proceedings, there was not sufficient material to persuade the learned stipendiary magistrate that Mr Lewis was a “worker”.
The appellant appeals from that decision on the grounds set out in the Amended Notice of Appeal filed 6 November 2003 which provides as follows:
“1.The learned Magistrate misapplied Herbert v KP Welding Constructions Pty Ltd (1995) 125 FLR 299 to the facts of the case.
2.The learned Magistrate erred in law in holding that the Appellant was not a worker.
3.The learned Magistrate erred in law and misdirected himself as to the burden of proof the worker bore in the proceeding below.
4.The hearing below miscarried.”
On behalf of the appellant, Mr Southwood QC seeks the following orders:
“31.In the circumstances the appellant is entitled to the following orders:
(a)A declaration that the Appellant is a worker within the meaning of the Work Health Act.
(b)An order that the decision of Mr Wallace SM be set aside.
(c)An order that the Respondent pay the Appellant’s cost of the appeal and of the proceeding below.
(d)An order that the matter be referred back to the Work Health Court for hearing of the Appellant’s application for worker’s compensation.”
At the commencement of the hearing of the…

Grounds of appeal

[14] The appellant contends that the primary judge erred in finding that the respondent had discharged the onus of establishing the matters required under the relevant provision.

[15] It was submitted that his Honour failed to give adequate weight to the evidence of the second witness, and that the findings of fact were not reasonably open on the material before the Court.

[16] The respondent, for its part, submits that no error is disclosed, and that the conclusions reached were well within the range of outcomes available to the primary judge.

Consideration

[17] It is convenient to deal first with the question of construction, as the resolution of that issue informs the remaining grounds advanced by the appellant.

[18] For the reasons that follow, we are of the view that the appeal should be allowed in part and the matter remitted for further determination.

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Details

Case: [2003] NTSC 118
Decision Date: 4 December 2003

CaseChat Overview and Summary

In Lewis v John Holland P/L, the appellant, Mr Ray Lewis, sought workers' compensation from the respondent, John Holland P/L, after sustaining injuries at work. The central issue was whether Mr Lewis was a "worker" within the meaning of the Work Health Act (NT) at the time of his injury. Specifically, the court needed to determine if Mr Lewis was paid under the prescribed payment system (PPS) or as a PAYE taxpayer. The court was also required to consider the onus of proof regarding the payment method.

The court found that the onus of proof initially rested with Mr Lewis to demonstrate that he was a worker under the Act. However, the court acknowledged that if there was a dispute over the nature of the relationship, it was necessary to determine the relationship as it existed at the date of the injury. The court concluded that Mr Lewis had discharged his initial onus by showing that he believed he was a PAYE taxpayer and expected to receive appropriate documentation with his payment. The court found that the objective facts were insufficient to establish, on the balance of probabilities, that there was an intention to defraud the tax office. The respondent failed to provide evidence to the contrary, and Mr Lewis was deemed an honest witness.

The court held that the respondent had not discharged the onus of proof to show that Mr Lewis was being paid on a cash basis at the time of his injury. Consequently, the court ruled in favor of Mr Lewis, determining that he was a worker under the Act and entitled to workers' compensation. The court's decision was based on the absence of sufficient evidence to support the claim that Mr Lewis had received a cash payment with the intention of defrauding the tax office.

Orders

Orders of the court

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Background

Background to the litigation

The appellant had brought proceedings in the Work Health Court against the respondent pursuant to s 127 of the Work Health Act. This provision enables a worker employed by a subcontractor to bring proceedings for the payment of workers compensation against a principal contractor if the subcontractor is uninsured.Background The appellant, Mr Ray Lewis, was born on 23 March 1959. The following background facts are not in issue and have been summarised in the written submissions prepared by Mr Southwood QC for the appellant.“6.On 26 June 2000 the Appellant entered into a contract of employment with Mr John B Zagorianas. He was employed as a painter.7.From 26 to 30 June 2000 inclusive the Appellant painted houses for Mr Zagorianas and on 30 June 2000 Mr Zagorianas paid the Appellant $525.00 for the five days he worked painting the houses.8.The Respondent had a contract with the Commonwealth Government to do building works including painting works at Shoal Bay Receiving Station (“Shoal Bay”). The Respondent subcontracted some of the paintings works it was contracted to do at Shoal Bay to Mr Zagorianas.9.As part of his contract of employment, the Appellant was required by Mr Zagorianas to do painting work at Shoal Bay and the Appellant started to work at Shoal Bay on 3 July 2000.10.On 3 July the Appellant injured his knee and back during the course of his work at Shoal Bay when the ladder he was standing on slipped down the wall it was resting against and the Appellant fell to the ground.11.The Appellant was injured 8 days after he started work with the Respondent.12.Mr Zagorianas did not have workers compensation insurance.”The evidence The appellant was the only witness who gave evidence at the hearing in the Work Health Court. Mr Lewis gave evidence (tp 14) as to his understanding of the difference between being employed for wages and the prescribed payment system (PPS). It was his evidence that he had worked PPS but that most of his long term work had been for wages. He stated he received a group certificate and holiday pay. He stated that for a period between 1991 and May 1994 he operated a registered business, RIP Painting Service. He employed people on the PPS system. Mr Lewis gave evidence (tp 17) that he applied for a Tax File Number in 1988. He stated that although he had a Tax File Number he had never lodged a tax return in Australia. He had been paying tax to the Commissioner through PPS or on wages and receiving group certificates but never lodged a tax return. He believes there is money at the tax office if he lodged his returns minus fines for not lodging a return. His evidence is that in the 1999/2000 tax year, he was unemployed and in receipt of unemployment benefits. He approached Mr Zagorianos for work as a painter. Toward the end of June 2000, Mr Zagorianos returned to him and they discussed Mr Lewis working for Mr Zagorianos. Amongst other matters discussed, Mr Zagorianos said he would like to have a trial period first. Mr Zagorianos had two houses to finish which would be a weeks work and the next Monday he was to start at John Holland P/L. Mr Lewis stated in the discussion with Mr Zagorianos that he wanted $25 an hour gross. It is Mr Lewis’ evidence that no figure was set but he understood it would not be under $20 per hour. He stated he understood this amount was to be paid to him as an employee at an hourly rate.

Evidence

Evidence Before The Court

The appellant, Mr Ray Lewis, was born on 23 March 1959. The following background facts are not in issue and have been summarised in the written submissions prepared by Mr Southwood QC for the appellant.“6.On 26 June 2000 the Appellant entered into a contract of employment with Mr John B Zagorianas. He was employed as a painter.7.From 26 to 30 June 2000 inclusive the Appellant painted houses for Mr Zagorianas and on 30 June 2000 Mr Zagorianas paid the Appellant $525.00 for the five days he worked painting the houses.8.The Respondent had a contract with the Commonwealth Government to do building works including painting works at Shoal Bay Receiving Station (“Shoal Bay”). The Respondent subcontracted some of the paintings works it was contracted to do at Shoal Bay to Mr Zagorianas.9.As part of his contract of employment, the Appellant was required by Mr Zagorianas to do painting work at Shoal Bay and the Appellant started to work at Shoal Bay on 3 July 2000.10.On 3 July the Appellant injured his knee and back during the course of his work at Shoal Bay when the ladder he was standing on slipped down the wall it was resting against and the Appellant fell to the ground.11.The Appellant was injured 8 days after he started work with the Respondent.12.Mr Zagorianas did not have workers compensation insurance.”The evidence The appellant was the only witness who gave evidence at the hearing in the Work Health Court. Mr Lewis gave evidence (tp 14) as to his understanding of the difference between being employed for wages and the prescribed payment system (PPS). It was his evidence that he had worked PPS but that most of his long term work had been for wages. He stated he received a group certificate and holiday pay. He stated that for a period between 1991 and May 1994 he operated a registered business, RIP Painting Service. He employed people on the PPS system. Mr Lewis gave evidence (tp 17) that he applied for a Tax File Number in 1988. He stated that although he had a Tax File Number he had never lodged a tax return in Australia. He had been paying tax to the Commissioner through PPS or on wages and receiving group certificates but never lodged a tax return. He believes there is money at the tax office if he lodged his returns minus fines for not lodging a return. His evidence is that in the 1999/2000 tax year, he was unemployed and in receipt of unemployment benefits. He approached Mr Zagorianos for work as a painter. Toward the end of June 2000, Mr Zagorianos returned to him and they discussed Mr Lewis working for Mr Zagorianos. Amongst other matters discussed, Mr Zagorianos said he would like to have a trial period first. Mr Zagorianos had two houses to finish which would be a weeks work and the next Monday he was to start at John Holland P/L. Mr Lewis stated in the discussion with Mr Zagorianos that he wanted $25 an hour gross. It is Mr Lewis’ evidence that no figure was set but he understood it would not be under $20 per hour. He stated he understood this amount was to be paid to him as an employee at an hourly rate.

Decision

Reasons for decision

Finally, Mr Barr drew my attention to the Court of Appeal decision in Thompson v Groote Eylandt Mining Company Limited [2003] NTCA 05, but submitted this decision did not affect the outcome in the present case and, if anything, supported the conclusion of the learned stipendiary magistrate.Conclusion of the Court I accept the appellant’s argument made by Mr Southwood QC that the learned stipendiary magistrate misdirected himself as to who bore the onus of proof in the circumstances of this case. This case has considerable similarities with the facts in Herbert v KP Welding Constructions Pty Ltd. The Court must proceed on the basis that there is an assumption that the parties would not evade the provisions of the Income Tax Assessment Act by shift or contrivance. Mr Lewis gave evidence to the effect that he believed he was a PAYE taxpayer when he commenced work on 3 July 2000 and that he assumed he would receive the appropriate paperwork in his first pay. He gave examples of other employment he had as a PAYE taxpayer. The evidence as to the payment of $525 is neutral. There is no evidence as to whether tax was deducted and if so the amount of such tax. The fact that the cash payment did not have documentation with it, is not evidence to the required standard of proof that it was a cash payment made with the intention of avoiding income tax (Neat Holdings P/L v Karajan Holdings P/L (1992) 67 ALJR 170). The preparation of any documentation was the responsibility of Mr Zagorianos. Mr Lewis did not know how the amount of $525 was calculated or what amount may have been deducted for tax. Mr Zagorianos gave no evidence. Mr Lewis’ explanation that he expected there would be documentation for PAYE tax in his first pay packet after the trial period was reasonable and the learned stipendiary magistrate found him to be an honest witness. Accordingly, the onus of proof reverted to the respondent to prove on the balance of probabilities that the worker was being paid on a cash basis at the time of his injury. The respondent has not discharged this onus of proof. In the matter of Neat Holdings P/L v Karajan Holdings P/L (supra), the trial judge had heard evidence given on behalf of the appellant that was completely contradictory to evidence given for the respondent. It was on this basis he found for the appellant on the balance of probabilities. In the matter on appeal before this Court, the learned stipendiary magistrate did not have contradictory evidence. The only evidence was that presented by the appellant. The appellant specifically denied he had received a cash payment with the intention of defrauding the tax office. The learned stipendiary magistrate found him to be an honest witness. There was no evidence to the contrary. The objective facts were not sufficient to establish, on the balance of probabilities, that there was an intention to defraud the tax office. As was stated by the Court of Appeal in Herbert v KP Welding Constructions Pty Ltd at 302, if there is a dispute between the parties as to the relationship which existed as at the date of the injury, it is necessary for that relationship to be determined by the Work Health Act.

Ratio Decidendi

Legal Principle Established

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