Lewis v John Holland Pty Ltd
[2005] HCATrans 224
[2005] HCATrans 224
IN THE HIGH COURT OF AUSTRALIA
Office of the Registry
Darwin No D5 of 2004
B e t w e e n -
RAY LEWIS
Applicant
and
JOHN HOLLAND PTY LTD
Respondent
Application for special leave to appeal
HAYNE J
CALLINAN J
TRANSCRIPT OF PROCEEDINGS
FROM DARWIN BY VIDEO LINK TO CANBERRA
ON FRIDAY, 22 APRIL 2005 AT 10.18 AM
Copyright in the High Court of Australia
MR J.C.A. TIPPETT, QC: If it please the Court, I appear on behalf of the applicant with my learned friend, MR W.J. PRIESTLEY. (instructed by Priestleys)
MR A.R. HARRIS, QC: If the Court pleases, I appear with my learned friend, MR S.J. HANUS. (instructed by Hunt & Hunt)
HAYNE J: Yes, Mr Tippett.
MR TIPPETT: May it please the Court, this is an application in which a case came before a magistrate who concluded that the worker was an honest witness and an honest man and it appears, in this particular instance, if it please the Court, that honesty was praised but left a shiver, for the reason that ultimately the court found that the worker was not entitled to workers’ compensation benefits because he did not fall within the provisions of the definition of “worker” as found in the Work Health Act (NT), section 3. Being “A natural person” he was required to show that he was a PAYE taxpayer or as in circumstances in relation to this matter where deductions had not been made due to “shortness of time” then he had to bring himself within that provision on the basis that, of course, he had performed a service to an employer.
HAYNE J: There is a difficulty you have to confront, is there not, presented by the fact that the definition of “worker” has changed? Indeed, this applicant was on the cusp of that change and the transitional provisions were engaged to apply to him the former definition, is that right?
MR TIPPETT: That is right.
HAYNE J: Why should we take on this case to deal with superseded legislation?
MR TIPPETT: Simply because a miscarriage of justice has arisen as a result of the application of the superseded legislation.
HAYNE J: If, then, the miscarriage ground is engaged, what is the chief error that you would seek to point to in the conclusion that was reached?
MR TIPPETT: The error is that there was a finding made that the worker was in receipt of a cash payment, or under the table payment, rather than in receipt of ordinary wages. As a result of that finding, which was arrived at by inference, the worker was deprived of his entitlement to compensation.
HAYNE J: Given the history of events where the applicant, I think, had, what, never filed a tax return and given the circumstances in which the payment was made, again, why should we, not having had the benefit of seeing witnesses and the like, want to or be able to conclude that the finding of fact was wrong?
MR TIPPETT: The finding of fact was wrong because one critical fact was overlooked, certainly, by the Court of Appeal, in our submission, and that is that the magistrate accepted the worker as an honest man. If that proposition is true, and we say that in this case there is no contradictory material, there is no rejection of the worker’s evidence in any part, then the court was obliged to consider in circumstances where there were alternatives, explained behaviour, one, that brought his payment within the provisions of the Work Health Act.
The other, that held it outside those provisions and therefore denied compensation, the court was obliged to assume in circumstances where the worker has said to the court he believed that the arrangement he was entering into was a PAYE arrangement, that he believed that arrangement was properly placed because of the nature of his contract with the employer for contract of service and that as mostly a PAYE employee in the past the arrangements in relation to this particular employment did not give rise to any concern in his mind that the arrangements may not fall within the appropriate provisions of PAYE taxpayer.
Consequently, if his evidence is accepted, and it was in this case, then, in my submission, the court was in error in drawing inferences from other parts of the evidence that contradicted the worker’s accepted honest belief that the arrangement was a PAYE arrangement. So where the Court of Appeal sought to mirror the magistrate’s assessment of indicia that took the payment outside a regular arrangement for PAYE tax, it was wrong in doing so. It should have assessed those circumstances from the point of view of the acceptance of the worker as an honest man.
None of the indicia, when looked at alone or in combination, that the Court of Appeal considered in its decision at application book 59 and following goes to relieve the court of approaching the matter in the manner that I have put, namely, that the worker was an honest man and had an honest belief, which was accepted by the court, that it was a PAYE tax arrangement.
At application book 59 Justice Riley, and Justices Angel and Mildren agreed – he set out a number of points which he said supported the conclusion that the worker ought not to be compensated because he did not fall within the definition of “worker” ‑ ‑ ‑
CALLINAN J: He was in receipt of benefits from Centrelink while he was working there.
MR TIPPETT: Yes, he was.
CALLINAN J: Well, if he had been working and at the same time receiving benefits from Centrelink, he would have been committing an offence, would he not?
MR TIPPETT: No, not necessarily, your Honour. In fact, there was no evidence ‑ ‑ ‑
CALLINAN J: Does that depend upon how much he was paid? Is not a Centrelink payment an unemployment benefit?
MR TIPPETT: Yes, I understand it is, but there was no evidence before the court to suggest that by accepting the money he did at that time that he was under any obligation at that immediate time or within any particular period to advise Centrelink. Certainly, he said in evidence that in the past he had worked and advised Centrelink of the fact that he had worked.
CALLINAN J: The other factor that the court could have taken into account against your client was the one at page 6. Mr Zagorianos said to him immediately after the accident at about line 45:
“Have you got your own insurance?”
MR TIPPETT: That is something that the magistrate did not rely upon.
CALLINAN J: I know the magistrate did not, but it was uncontradicted and it is very much against your client.
MR TIPPETT: It was uncontradicted, your Honour.
CALLINAN J: And your client was an honest man, so why would you not accept it?
MR TIPPETT: Because Mr Zagorianos was an uninsured employer, your Honour.
CALLINAN J: Exactly.
MR TIPPETT: That is the sort of approach one would expect from an uninsured employer when he finds that his employee has been injured, so, really, it does not take the assessment of the situation anywhere, in my submission. In my submission, once it is concluded that the worker is engaged in a contract of service, once it is accepted that he is an honest man holding an honest belief, then, really, it is incumbent, in my submission, upon the employer to show that the payment – the proof of the payment was one that was either unlawful or under the table or outside the provisions of the definition of “worker”, because it is one of those incidences of life that where people are employed, the employer takes the tax out as a PAYE taxpayer and ‑ ‑ ‑
HAYNE J: I think that resort to ordinary incidences of life, particularly in the building trade, may not be to your immediate advantage, Mr Tippett.
MR TIPPETT: That may be so, your Honour, but your Honour might be falling into error in the way that the Court of Appeal did and that is having in the back of your mind practices that were not lawful in relation to people who were dishonest, as distinct from this particular applicant. That is the difference. He comes along to court and says, “Look, I haven’t put in a tax return, but so what?” He has paid his tax. And the salient point in relation to that is that he says he has been visited by the Australian Taxation Office and he has been spoken to some years ago and the Tax Office has not come near him since.
One can conclude from that, if one were to infer from the ordinary incidences of how the Australian Taxation Office operates, that if the worker owed any tax he would find himself on the other end of some sort of proceeding. Indeed, the deathly silence that appears to have arisen after that interview from the Australian Taxation Office does in some way support the conclusion that they owed him more money than he owed them.
So what I am trying to say, your Honours, is this, that when you look at those indicia that I have taken you to in the Court of Appeal and you look at each either independently or collectively, there is, taking the position from the point of view of the conclusion that the person giving evidence in relation to these matters is an honest person and has an honest belief, as was the case in this case, then each is innocently explained. And because of the approach taken – we say it should have been taken in this case – taken in Herbert v KP Welding, where there is the opportunity of choosing one of two forks, where one leads to illegality, in circumstances where there is an innocent explanation available, you take the position that is lawful as distinct from that which is unlawful. For example, your Honours, if I can take you to, firstly, the indicia set out by Justice Riley at page 59:
the respondent’s history of having worked on an unlawful cash ‑ ‑ ‑
HAYNE J: We have read these aspects, indeed, the whole of the judgment, Mr Tippett. What is it you would want to draw from them?
MR TIPPETT: Draw from them this, that all of them have an innocent explanation, if you conclude that the worker is an honest man, as the magistrate did. If the explanation is innocent, then it is not open in those circumstances to draw inferences against the worker, ignoring the innocent explanation. That could only be done if you concluded that you could not rely upon the honesty of the worker. It is submitted that where the Court of Appeal distinguished the case of Herbert v KP Welding (1995) 125 FLR 299 it was wrong to do so, because the approach referred to by Justice Angel at page 303 of that decision where he said:
A court of law ought not to contemplate that parties to an employment contract would come to an agreement that, notwithstanding the relationship established by that contract, they would or might pretend that the contract was other than it was for taxation purposes.
And that is precisely what in fact the Court of Appeal did. It came to a conclusion that the agreement was an unlawful one or did not fall within the provisions of the Act, when in fact there was really no evidence that that was so or available evidence that that was so, assuming that the worker was an honest man, which, of course, the magistrate found. Consequently, it is submitted that if one uses that principle, the conclusion to be arrived at is that the arrangement was a regular PAYE arrangement and that the worker was entitled to compensation, accordingly.
There was another aspect to the honest belief and that was, of course, payment. There was some criticism by the Court of Appeal that there had not been really a precise arrangement arrived at. Again, however, though exhibits were in place in the Work Health Court, particularly exhibit 2, which is an application for compensation which showed that the employer was paying him $21 an hour. That was consistent with the worker’s evidence as to the discussions he had had with the employer. It was a 38‑hour week, and he received $525.
He said that he had been very happy to return to work and that payment was satisfactory to him at that time. He envisaged the relationship to continue and he envisaged that he would receive documentation down the track, as he had in the past. There was nothing unusual about that. He was accepted on that basis as an honest belief. But if the workers’ compensation application is referred to – the sum of $798 is the figure that he ought to have received – he received $525 and there is an amount that has been withheld – one can infer has been withheld, assuming, again, as the magistrate did, the worker was honest.
What has happened, in my submission, in this case is that the Court of Appeal has overlooked the fact that the really central finding in this whole case is the honesty of the worker. He has been absolutely frank about his dealings with the taxation department and with other institutions
and he says that his arrangements with the employer were, he believed, appropriate PAYE tax arrangements.
If that is to be accepted, then what follows from that are innocent explanations for matters raised by the Court of Appeal and in support of that his position is the approach that should have been taken by that court in Herbert v KP Welding. The conclusion to be arrived at, if those errors had not been made, is that the worker would have received compensation and there would have been no miscarriage.
We say, finally, that in fact a presumption does arise in relation to this case, a presumption of fact, because as soon as the evidence is accepted from the worker that he was engaged in a contract of service, then such a contract is commonly known to require an employer to remove tax from it and it becomes incumbent then upon the employer to bring evidence forward to show that in fact the payment is not a payment within the provisions of the definition of “worker” under the Work Health Act. May it please the Court, those are my submissions.
HAYNE J: Thank you, Mr Tippett. We need not trouble you, Mr Harris.
The applicant’s claim to compensation turned on his meeting a statutory definition of “worker” which has since been radically altered. We are not persuaded that the Court of Appeal erred in its application of that definition to the facts and circumstances of this case. An appeal to this Court would enjoy no prospect of success sufficient to warrant a grant of special leave. It follows that special leave to appeal is refused and refused with costs.
AT 10.39 AM THE MATTER WAS CONCLUDED
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