Lukic v Toll Holdings Pty Ltd (Ruling)
[2022] VCC 22
•25 January 2022
| IN THE COUNTY COURT OF VICTORIA AT MELBOURNE COMMON LAW DIVISION | Revised Not Restricted Suitable for Publication |
| SERIOUS INJURY LIST |
Case No. CI-17-03762
| ZORAN LUKIC | Plaintiff |
| v | |
| TOLL HOLDINGS PTY LTD | Defendant |
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JUDGE: | HIS HONOUR JUDGE LAURITSEN | |
WHERE HELD: | Melbourne | |
DATE OF HEARING: | 23 September 2021 | |
DATE OF RULING: | 25 January 2022 | |
CASE MAY BE CITED AS: | Lukic v Toll Holdings Pty Ltd (Ruling) | |
MEDIUM NEUTRAL CITATION: | [2022] VCC 22 | |
RULING
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Subject:PRACTICE AND PROCEDURE
Catchwords: Serious injury application – whether plaintiff a “worker” for the purposes of the Accident Compensation Act 1985
Legislation Cited: Accident Compensation Act 1985
Cases Cited:Vabu v Federal Commissioner of Taxation (1996) 33 ATR 537; Mutch v ISG Management Pty Ltd [2020] FCA 362; Hollis v Vabu [2001] HCA 44; Ansett Australia Pty v Taylor [2006] VSCA 171; Sednaoui v Amac Corrosion Protection Pty Ltd [2017] VSCA 66; Cairns v Trowelcoat Pty Ltd [2014] VSC 129; Pell v R [2020] HCA 12; Marshall v Whittaker’s Building Supply Co (1963) 109 CLR 210
Ruling: For the purposes of the serious injury application, at all relevant times the plaintiff was employed by the defendant and was a “worker” under the Act.
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APPEARANCES: | Counsel | Solicitors |
| For the Plaintiff | Ms N Vogel | - |
| For the Defendant | Mr A Saunders | Minter Ellison |
HIS HONOUR:
Introduction
1During 2017, Zoran Lukic applied for leave to commence proceedings to recover damages under the Accident Compensation Act 1985 (“the Act”). Four years later, as a preliminary issue, the parties seek a ruling as to whether Mr Lukic is a “worker” for the purposes of the Act. As Meagher JA said in Vabu v Federal Commissioner of Taxation:[1]
“While it is almost never an easy task to decide whether a given person is an employee or an independent contractor, there is no doubt what the legal tests are.”
[1] (1996) 33 ATR 537 at 538
2Toll Holdings Pty Ltd (“Toll”) was at the relevant times, and still is, a self-insurer under the Act.
3Mr Lukic gave evidence. His two affidavits were admitted into evidence as was the affidavit of Michael Midgley. The latter affidavit contained exhibits.[2]
[2] Affidavits sworn 22 February 2017 and 27 May 2021, and for Mr Midgley sworn 8 July 2021
Circumstances
4Mr Lukic is now 38. He was born in Croatia and came to Australia at the age of 13. During 2000, he completed Year 10 at Epping High School. He always struggled with English, which is the reason he did not attempt Year 11. His earlier education in Croatia had been interrupted by civil war. Although he speaks English well, his reading and writing skills in that language are “not very good”.[3]
[3] Affidavit sworn 22 February 2017 at [5]
5After leaving school, Mr Lukic undertook several short-term jobs. At 21, he completed a heavy vehicle driver’s course and became licensed. In due course, he bought a truck and became an owner/driver. He possessed his own Australian Business Number (ABN).
6In 2009, Mr Lukic started working for Toll Fast as a “support truck”, as he put it, for two or three days a week. It was with Toll NQX that he became a full-time operator. With Toll Fast, it does not appear he was required to sign any significant document.
7Toll NQX is the business name of Toll North Pty Ltd, which is a subsidiary of Toll. To work for Toll NQX, he was required to incorporate a company and provide his services through the company:[4]
“I was told that my employment was conditional upon me operating under this company structure”.
[4] Affidavit sworn on 27 May 2021 at [10]
8With the help of Toll NQX, a company, Kazor Logistics Pty Ltd (“Kazor”), was incorporated. He is its sole director and, presumably, sole shareholder.
9Toll alleges that in about June 2010, Kazor entered an agreement with Toll NQX. Although the agreement is said by Toll to be in writing, neither the original nor a true copy of the original was produced.
10Mick Midgley is a divisional manager, employed by an entity called Toll Global Express. His affidavit is largely a means to exhibit documents and, in places, is argumentative, However, it does contain useful information including this piece of evidence from his own knowledge:[5]
“As at 2010, Toll NQX had a standard subcontract agreement. While a copy of the executed agreement between Kazor and Toll NQX has not been found, it was Toll NQX’s practice to use a standard subcontract agreement.”
[5] At [8]
11Mr Midgley annexed a copy of the standard subcontractor agreement to his affidavit.[6] During cross-examination, Mr Lukic could not recall seeing this document:[7]
“You’re asking me something to remember, a piece of paper from 11 years ago. I think that’s unrealistic.”
[6] Sworn 8 July 2021
[7] Transcript at p 4
12Mr Lukic signed “a lot of papers” when he started working for Toll NQX and did sign the following on behalf of Kazor:
(a) on 4 June 2010, a “Direct payment authority form”, advising Toll NQX how Kazor wished to be paid;[8]
(b) on 9 June 2010, a “Subcontractor fuel card/tag request”;[9]
(c) on 10 June 2010, a “Sub-contractor maintenance form”;[10] and
(d) on 13 March 2015, a “Subcontractor Pallet Agreement”.[11]
[8] Part of exhibit MM 3 to the affidavit of Mick Midgley
[9] Part of exhibit MM 2 to the affidavit of Mick Midgley
[10] Part of exhibit MM 3 to the affidavit of Mick Midgley
[11] Part of exhibit MM 2 to the affidavit of Mick Midgley
Subcontractor agreement
13What Mr Midgley calls a standard subcontractor agreement is an eight-page document entitled “Subcontract services conditions – waiver”. On the eighth page, there is provision for the signing by the subcontractor and on behalf of Toll Holdings Ltd or one of its “related bodies corporate”. At the top of the first page is a logo – NQX; underneath “Freight Systems”. The document contains 16 clauses, including a definition clause.
14Clause 2 describes the services a subcontractor must provide to Toll. Over the course of 12 sub-clauses, it specifies in considerable detail how the subcontractor will perform those services.
15Clause 3 requires the subcontractor to take out five different types of insurance. Sub-clause 3.4 requires the subcontractor to insure any employee under any relevant workers’ compensation legislation.
16Mr Lukic never employed anyone in his business, he worked alone. During his oral evidence, he said:[12]
“You were required to have WorkCover insurance, correct? – I was required with Toll Fast to have WorkCover insurance but after that I was not required to have WorkCover insurance. From 2010 to 2016 I went with no insurance, by being told that I’m insured under Toll self insurance unit …”
[12] Transcript at p 12
17I daresay the questioner had sub-clause 3.4 in mind when asking the question.
18Clause 4 sets out in four sub-clauses what the subcontractor must not do. Clause 5 sets out warranties made by the subcontractor in 10 sub-clauses. The remaining clauses emphasise the degree of control Toll seeks to exercise over its subcontractors and the contractual relationship. The latter is re-iterated in sub-clause 13.1:
“For this subcontract, You are an independent contractor and not an employee or agent of Toll.”
19The document does not require the incorporation of the subcontractor. It does anticipate the possibility for the word “You” is used throughout the document to refer to the subcontractor and is defined “includes your officers, employees, agents, subcontractors and permitted transferees”.
20The document permits delegation of duties by the subcontractor. It also permits either party to assign rights and liabilities under the contract. The subcontractor could work for others. Mr Lukic brought his truck into the arrangement which he maintained.
21Interestingly, Kazor was paid on invoices prepared by Toll NQX, not by Kazor itself. This practice was intended to promote uniformity and regulatory compliance. At no stage did Toll NQX pay Mr Lukic directly, Kazor did.
22Since Toll NQX paid Kazor, it did not deduct tax from the payments. Nor did it pay sick leave, although there is no evidence Mr Lukic was sick in the period leading up to his injury. Payments were calculated from the tasks performed and not by a fixed wage or hourly rate.
23Mr Lukic worked on a full-time basis with Toll NQX. He provided his truck which he drove. He did not employ anyone. He wore a Toll or Toll NQX uniform. He worked exclusively for Toll NQX and it told him what he had to do. Each working day, he attended a Toll yard where he collected goods. He would then deliver and collect goods in the Moorabbin area.
Accident
24On 21 October 2010, Mr Lukic fell at Toll’s Altona depot, injuring several parts of his body but mainly, his left elbow. He described the circumstances of the fall in his affidavit.[13] For the purposes of this application, there is no need to repeat them. Nor is it necessary to set out the treatment he received.
[13] Affidavit sworn 27 May 2021 at [11] to [13]
25Mr Lukic was incapacitated for work. He did not return to work until June 2011. Despite the treatment, he found it increasingly difficult to drive. He stopped driving his truck in January 2016. Toll placed him on light duties. He ceased work in May 2016 when he underwent surgery to his elbow. This surgery proved unsuccessful. He has not returned to work after the surgery.
Claims for compensation
26Following the fall, Mr Lukic lodged a worker’s injury form. To complete the form, he was helped by an employee of Toll or Toll NQX, Alison Sullivan. He claimed compensation against Kazor.[14] His form and the employer’s response were sent to an authorised agent, Allianz Australia Workers Compensation (Vic) Ltd (‘Allianz’). His claim was rejected by Allianz, asserting he was a “deemed” worker of Toll NQX. Not unnaturally, Mr Lukic then made a claim for compensation upon Toll NQX. The employer injury claim report was prepared by Alison Sullivan.[15] Under the heading of “Additional Information”, Ms Sullivan wrote:
“Zoran is a sub contractor with his own w/comp insurance
Allianz have been (sic.) advised him to withdraw his claim with them & lodge with Toll NQX as he is a deemed worker under the Act.”
[14] Exhibit MM6 to the affidavit of Mr Midgley
[15] Part of Exhibit MM7 to the affidavit of Mr Midgley
27On 12 November 2010, Toll accepted his claim for weekly payments and medical and like expenses.[16] Subsequently, compensation payments were made. During 2016, he injured his left elbow and left knee and was incapacitated. He again claimed compensation against Toll. The injury to his elbow was accepted but, not initially, his knee. Toll accepted liability for the knee after a conciliation conference.
[16] Exhibit MM 8 to the affidavit of Mr Midgley.
28Despite Allianz’s earlier rejection and Toll’s subsequent acceptance of liability, on 15 September 2016, Mr Lukic’s then solicitors wrote to Allianz claiming impairment benefits under s98C of the Act.[17] The letter enclosed a handwritten claim dated 1 August 2016.
[17] Exhibit MM 9 of the affidavit of Mr Midgley.
29By a letter dated 7 October 2016, Allianz said, in part:
“Allianz Australia Ltd is not the managing agent for Toll Holdings Pty Ltd. Toll Holdings are self-insured and we note that the claim number, 88100000146, is related to a self-insured claim with Toll Holdings Pty Ltd.”
30As far as I can tell, exactly the same handwritten claim was sent to Toll. By letter dated 17 January 2017, Toll accepted liability for injuries to his left elbow and knee and “secondary psychological condition”. It rejected injuries to the left forearm and “scarring/skin”. The letter then set out the total impairment benefit payable of $24,909.00. I daresay Mr Lukic accepted the asserted entitlement and impairment benefits were paid.
31Between 2016 and 2019, Mr Lukic remained incapacitated for work. By a letter dated 31 October 2019, Toll terminated Mr Lukic’s entitlement to weekly payments of compensation and medical and like expenses from 30 January 2020.[18] It did so on two grounds:
(a) he was not a “worker” under the Act; and
(b) weekly payments have been paid or were payable for 130 weeks and he had a capacity for suitable employment, or, if he was totally incapacitated, this incapacity was unlikely to continue indefinitely.
[18] Exhibit MM 13 to the affidavit of Mr Midgley.
Legal considerations
32As part of his application for leave, Mr Lukic must prove he was employed by Toll, that is, he was a “worker” under the Act. The parties agree the relevant legislative provisions appear in Reprint 16 of the Act. Of the various provisions dealing with the concept of a “worker”, the definition of “worker” in s5 and s8, s9 and s10 are relevant here.
33The defendant contends in respect of each section that none applies here because, at common law, he is not. In s8, the person to whom Toll contracted was not Mr Lukic but Kazor and, with ss 9 and 10, the “relevant contract” was with Kazor.
34I will not cite these provisions as they are lengthy.
35Apart from the statutory provisions, in examining whether an employer/employee relationship exists, in the law of such relationships, Mr Saunders submitted the incorporation of the provider of services usually excludes the relationship citing the observation of Meagher JA in Vabu v Federal Commissioner of Taxation:[19]
“It is not, I think, fanciful to say that each courier conducts his own operation, permitting himself for his own economic advantage to be supervised by the company. If this were not so, why would the documents anticipate that the courier may use a business name or corporate name if he so wishes. A company does not usually have employee corporations.”
[19] (1996) 33 ATR 537 at 539
36Mr Saunders did refer to a paragraph from the judgment of Bromberg J in Mutch v ISG Management Pty Ltd: [20]
“It will not necessarily be the case that the interposition of a corporation between a worker proving personal services and an entity receiving those services will deny the existence of a contract of employment between the worker and the recipient of the work….A relevant consideration is the function served by the corporation in the relationship created by the contract which, as the authorities just referred to show, requires an examination of a range of relevant circumstances beyond the terms of the contract in question.”
[20] [2020] FCA 362 at [67]
37Although Vabu v FCT was not the subject of a determination in the High Court, the status of one of Vabu’s employees was. In Hollis v Vabu,[21]in the majority judgment, these factors were relevant to the determination of that appeal:
(a) “these couriers were not providing skilled labour or labour which required special qualifications. A bicycle courier is unable to make an independent career as a free-lancer or to generate any ‘goodwill’ as a bicycle courier. The notion that the couriers were running their own enterprises is intuitively unsound…”;[22]
(b) the couriers had little control over the manner of performing their work;[23]
(c) the couriers were presented to the public and to those using the courier service as emanations of Vabu;[24]
(d) the matter of deterrence. This is a consideration which in that case Vabu knew of the dangers presented by its bicycle couriers and its failure to adopt effective means for the personal identification of those couriers by the public – “holding the employer vicariously liable for the wrongs of its employee may encourage the employer to take such steps, and hence, reduce the risk of future harm”;[25]
(e) Vabu superintended the couriers’ finances. Moreover, there was no scope for the couriers to bargain for the rate of their remuneration;[26]
(f) the particular situation in that case with tools and equipment favoured, in anything, a finding the bicycle couriers were employees;[27]
(g) there was considerable scope for the actual exercise of control:[28]
“Vabu’s whole business consisted of the delivery of documents and parcels by means of couriers. Vabu retained control of the allocation and direction of the various deliveries. The couriers had little latitude. Their work was allocated by Vabu’s fleet controller. They were to deliver goods in the manner in which Vabu directed. In this way, Vabu’s business involved the marshalling and direction of the labour of the couriers, whose efforts comprised the very essence of the public manifestation of Vabu’s business.”
[21] [2001] HCA 44.
[22] At [48].
[23] At [49].
[24] At [50].
[25] At [53].
[26] At [54].
[27] At [56]
[28] At [57]
Admissions
38Mr Lukic relies upon the admissions made by Toll to support his contention that he is a “worker” under the Act. He submitted that the admissions cannot be withdrawn. The defendant submitted admissions can be withdrawn and explained. Moreover, the defendant submitted its mistaken acceptance cannot operate to accrue jurisdiction. It referred to s326 and s330 of the Act.
39The starting point for this submission is the judgment of Ashley JA in Ansett Australia Pty v Taylor.[29] That appeal raised the question whether the acceptance by the Victorian WorkCover Authority (VWA) of a claim under s98C for an injury allegedly suffered after 20 October 1999 established conclusively that the worker suffered a compensable injury after that date.
[29][2006] VSCA 171
40The leading judgment was Ashley JA. Although his Honour denied the conclusive effect of the acceptance of liability by the VWA, it was an admission which should ordinarily be regarded as very significant, having regard to the serious consequences to the VWA flowing from the acceptance of the claim. His Honour said:[30]
“But in cases where liability in relation to such a claim is accepted, I consider that the acceptance should stand only as an admission by the Authority or self-insurer speaking for the employer, that such an injury had been sustained. Having regard, however, to the very serious consequences for the Authority or self-insurer flowing from acceptance of the claim – not only in respect of compensation payable under s 98C or s 98E, but also, potentially, with respect to s 134AB(3) and (15) – I consider that such an admission should ordinarily be regarded as very significant, albeit not conclusive, because a defendant, in a particular case, might be able satisfactorily explain its conduct.”
[30] [2006] VSCA 71 at [40]
41In Sednaoui v Amac Corrosion Protection Pty Ltd,[31] the Court referred to a line of authority in rejecting a submission that those words of Ashley JA could be distilled into two propositions of law, saying they were observations, not statements of legal principle. However, the Court added:
“The observation in Ansett v Taylor that an admission of the type here under discussion ‘should ordinarily be regarded as very significant’ is, with respect, undoubtedly true.”
[31] [2017] VSCA 66 at [66] and [67]
42In Cairns v Trowelcoat Pty Ltd,[32] Rush J held an admission could be used as evidence in a trial as opposed to a serious injury application.
[32][2014] VSC 129
Discussion
Am I satisfied Mr Lukic signed the standard agreement?
43This is an important question. I have approached it by ignoring who has the burden of proof and treating it as simply a fact-finding exercise where the standard of proof is civil and where I must be actually persuaded of the fact’s existence before it can be found.
44Toll relies on the evidence of practice. This can be an important piece of evidence as the Court said in Pell v R:[33]
“Evidence of a person’s habit or practice of acting in a particular way to establish that the person acted in that way on a specific occasion may have considerable probative value.”
[33] [2020] HCA 12 at [93]
45Mr Lukic does not remember executing the agreement. I accept his lack of memory. It is said to have occurred in 2010, which is a long time ago. Mr Lukic suffers from recognised psychological disorders. They can be expected to interfere with his memory. His lack of memory is a neutral factor.
46Importantly, neither Toll nor Mr Lukic produced the executed agreement or even a copy of it. At least, on the part of Toll, this is remarkable. Toll NQX was large enough to have a human resources person. From a human resources perspective, this would be a very important document. The fact that Toll does not have it, or a copy requires some attempt at an explanation. Although it has retained some documents from June 2010, signed on different days, none is offered. The fact Mr Lukic does not have his part, or a true copy is of little significance for he produced little by way of documents generally. A lot has happened to him in the intervening years. It is something he may have misplaced. I do not consider the existence of the June 2010 documents and the 2015 documents assists in the absence of an explanation of the “missing” agreement.
47In relation to the issue of admission, Toll says it no longer employs Ms Sullivan and cannot locate her. Mr Midgley does not say what attempts were made to locate her. In a settled society like Australia finding people is generally not a difficult task. They may not be at their last known residence, but simple enquiries usually locate them. I would conclude Toll did not try enough to locate her.
48Earlier, except for one document, I described documents signed by Mr Lukic in June 2010 and on behalf of Kazor. Individually, they are of little moment. Collectively, they hint at the existence of a principal agreement. How is it that Toll possesses copies of these documents but not the alleged agreement?
49It is a fundamental document purporting to set out in considerable detail the contractual relationship between it and a sub-contractor. One supposes Toll NQX is a sizeable company. It has a human resources section. It engages sub-contractors. If there was such an agreement, one would expect a copy to be in the records of Toll NQX. Without regard to the question of the onus of proof, if I am asked to find there was such an agreement between these parties, the evidence would fall short of actually persuading me, and I would not be satisfied there was any such agreement notwithstanding the existence of other documents suggesting that it does. To me, the unexplained absence of the contract or a copy overwhelms the evidence of practice and leaves me unable to find an agreement was ever executed.
50Turning to other considerations.
51Toll submitted Mr Lukic was not its employee because of the interposition of Kazor between it and Mr Lukic. Factually, it submits, Kazor employed Mr Lukic and, contractually, it provided his services to Toll. I accept the observation of Meagher JA in Vabu v FCT, and the acknowledgement of Bromberg J in Mutch’s case, that there can be exceptions.
52Apart from possessing a driver licence enabling him to drive trucks, Mr Lukic was not providing skilled labour or labour which required special qualifications. Needing a particular licence and the ability to drive a truck is removed from the circumstance of riding a bicycle even in the central business district. But it is not far removed from that situation.
53As in Vabu’s case, Toll NQX exercised considerable control of the performance of Mr Lukic’s work. He retained little control over the manner he performed his work. He worked exclusively for Toll NQX. Each working day, he attended Toll’s yard and was given goods to deliver in the Moorabbin area. He also collected goods within that area and, presumably, returned them to Toll’s yard.
54The business of Toll NQX, or at least an important part of it, consisted of the delivery and collection of goods. It controlled the allocation of the work and the direction of where the deliveries occurred. However, the situation was not as extreme as that in Vabu’s case where the couriers effectively performed all of Vabu’s operations in the outside world. The evidence in this application does not permit that extreme finding.
55Mr Lukic wore a Toll uniform. The evidence does not reveal whether his truck bore Toll insignia. Insofar as he wore a Toll uniform, he was presented to the public and to those using transport services as an emanation of Toll. A business of Toll NQX was the transportation of goods. That was what Mr Lukic did exclusively for Toll NQX along the roads of the Moorabbin area.
56I do not consider the issue of deterrence arises in this case. There is no evidence of any particular harm of which Toll NQX was aware.
57Mr Lukic provided and maintained his truck. Unlike Vabu’s case, where bicycles were involved, these facts point to the existence of an independent contractor and principal relationship.
58Toll NQX plainly supervised the finances of Mr Lukic indirectly through Kazor. It prepared Kazor’s invoices and paid on them. There was no apparent negotiation over the fees. Looking at Kazor’s taxation returns, essentially it acted as a conduit to Mr Lukic, paying the properly available monies to him.
59Turning to the admissions.
60Mr Lukic submits Toll’s repeated acceptance of his claims for compensation constitutes an admission that he was its employee, and that admission cannot be withdrawn. There is no impediment for Toll to seek to negative the effect of its admission. The admission is not a form of estoppel, it is a piece of evidence.
61The admission made by Toll was emphatically and repeatedly made. It was directly made twice in the face of the denial of liability by an authorised agent when claims were made on Kazor. It was made indirectly through the making of weekly payments of compensation and the payment of medical and like expenses over a nine-year period. In my experience, this is the starkest example of an admission.
62There was an additional piece of evidence. Mr Lukic said in evidence he was told by Toll not to insure after 2011. Mr Saunders submitted this evidence is of recent invention because Mr Lukic did not raise it in his affidavits. I saw and heard Mr Lukic give his evidence. As far as I am concerned, he was a truthful witness. I do not consider this piece of evidence to be untruthful. Although this advice occurred after the accident and does not directly affect the claim, it is a piece of evidence consistent with the view of Toll that Mr Lukic was its employee.
63As I said earlier, there is no evidence of any real attempt to locate Ms Sullivan. In this application, to say she cannot be located says nothing in the absence of an explanation of the attempts to do so. The fact remains there is no evidence explaining the asserted mistake made by Toll in treating Mr Lukic as its employee over such a long period.
64In Mutch’s case, Bromberg J said, determining whether a person is providing services as an employee requires a multi-factorial assessment of the totality of the relationship, and noted the observation of Windeyer J in Marshall v Whittaker’s Building Supply Co,[34] that the distinction between an employee and an independent contractor is rooted fundamentally in the difference between a person who serves his employer in his, the employer’s, business and a person who carries on a trade or business of his own.[35]
[34] (1963) 109 CLR 210 at 217
[35] At [69]
65There was little in what Mr Lukic did for Toll NQX which points to his being an independent contractor. There was no suggestion he turned down jobs for Toll NQX or that he stopped driving during a working day when he wanted to. He served Toll NQX in its business. An additional factor is the evidence of the admission. For many years, Toll viewed Mr Lukic as its employee and repeatedly acted on that view.
66Weighing each of those factors, at common law, I consider Mr Lukic was an employee of Toll NQX despite the existence of Kazor.
Deeming provisions
67In relation to s8, s9 and s10, Toll again submits the contract or relevant contract is between it and Kazor, and not it and Mr Lukic. To her credit, it was Mr Lukic’s counsel who pointed out that s8 and s9 deal with “natural persons” and not corporations. I accept Toll’s submissions in relation to those provisions.
Conclusion
68For the purposes of the serious injury application, I find at all relevant times Mr Lukic was employed by Toll and he was a “worker” under the Act.
69I will hear the parties on the form of the order and any other issue arising under this application.
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