Manildra Flour Mills Pty Ltd v Almer
[2017] NSWWCCPD 21
•15 May 2017
| WORKERS COMPENSATION COMMISSION | ||
| DETERMINATION OF APPEAL AGAINST A DECISION OF THE COMMISSION CONSTITUTED BY AN ARBITRATOR | ||
| CITATION: | Manildra Flour Mills Pty Ltd v Almer [2017] NSWWCCPD 21 | |
| APPELLANT: | Manildra Flour Mills Pty Ltd | |
| RESPONDENT: | Peter Almer | |
| INSURER: | EML Workers Insurance | |
| FILE NUMBER: | A1-4787/16 | |
| ARBITRATOR: | Mr G Egan | |
| DATE OF ARBITRATOR’S DECISION: | 22 December 2016 | |
| DATE OF APPEAL DECISION: | 15 May 2017 | |
| SUBJECT MATTER OF DECISION: | Schedule 1 cl 2 of the Workplace Injury Management and Workers Compensation Act 1998 (the 1998 Act), nature of a ‘contract for services’ | |
| PRESIDENTIAL MEMBER: | Deputy President Michael Snell | |
| HEARING: | On the papers | |
| REPRESENTATION: | Appellant: | Lee Legal Group |
| Respondent: | Slater & Gordon | |
| ORDERS MADE ON APPEAL: | 1. The Certificate of Determination dated 22 December 2016 is revoked. 2. The matter is remitted for redetermination by another Arbitrator, on the issue of whether the respondent was a ‘deemed worker’ pursuant to Sch 1 cl 2 of the 1998 Act. | |
INTRODUCTION
Peter Almer (the respondent) worked as a truck driver, carrying and delivering loads of baking flour for Manildra Flour Mills Pty Ltd (the appellant), from its Toronto warehouse to stores such as bakeries. The nature of the contractual arrangements, and the identity of the contracting parties, are issues in the case. The respondent was injured in incidents on
3 October 2014 and 12 February 2015, and additionally due to “altered gait and movement” following the injury on 3 October 2014. He has not worked since 12 February 2015. The claim is for weekly payments of compensation and medical expenses.This appeal is brought against a decision of an Arbitrator that the respondent was a ‘deemed worker’ pursuant to Sch 1 cl 2 of the Workplace Injury Management and Workers Compensation Act 1998 (the 1998 Act). It succeeds on this issue, for reasons which follow.
BACKGROUND
The appellant denied liability for the respondent’s injury in a s 74 notice dated
19 March 2015. It said that the respondent was “a contractor hired under the entity PTE Enterprises”, and denied that he was a deemed worker. The proceedings were listed for conciliation conference/arbitration hearing on 14 December 2016 at Tamworth. Mr Judd appeared for the respondent, and Mr P Perry for the appellant.The respondent relied on an Amended Application to Resolve a Dispute filed on
2 November 2016. An allegation that the respondent was a ‘worker’ within the meaning of s 4 of the 1998 Act was not pressed (T5.6-8). Evidence relied on by the parties is set out in the Arbitrator’s Statement of Reasons (the reasons) at [10]. The respondent was cross-examined (and briefly re-examined) by leave. Counsel for both parties addressed, and the Arbitrator reserved his decision. A Certificate of Determination was issued on 22 December 2016.
THE ARBITRATOR’S DECISION
The Arbitrator referred to the test described in Scerri v Cahill (1995) 14 NSWCCR 389 (Scerri) (reasons at [5]). He noted it was common ground that there was a contract between the appellant and “another party for the provision of transport and associated services”. There was an issue whether the other contracting party was the respondent, or a company, P.T.E. Enterprises Pty Ltd (the company), of which the respondent was the sole shareholder and director. If the respondent failed to establish that he (rather than the company) contracted with the appellant, his claim failed as he would not satisfy the first limb of the test in Scerri (see [27] below). The Arbitrator said that there was an issue regarding whether the respondent carried on a trade or business. He said that an issue had developed in cross-examination regarding a person other than the respondent carrying out work covered by invoices issued by the company, for which fees were paid into the respondent’s account. The Arbitrator noted that “although capacity was put in issue, no submissions were made in that regard” (reasons at [7]).
The Arbitrator referred to the various entities. The company registered an ABN on 11 July 2008 (33 132 173 203). The company was the trustee of P.T.E. Enterprises Family Trust (the trust), which was a discretionary trading trust. The respondent was a beneficiary of the trust. When the company was acting as trustee for the trust, “it had a different ABN (41 355 017 852)” (reasons at [12], [18] and [19]).
The respondent previously was involved in a business in Queensland, in which he owned trucks and employed contractors. The respondent (either in his own right or through the vehicle of the company) contracted with the appellant “from approximately 2010 under these business arrangements”. The respondent said that he worked with the appellant until mid-2014, when he moved to Sydney/Newcastle. The respondent said that he then “worked exclusively for the [appellant] on a full-time basis” from 29 July 2014 until 12 February 2015. The respondent sold all of his trucks when he moved to New South Wales, and rented a truck from Thrifty Hire to carry out his work for the appellant.
The respondent, in his oral evidence, said that in Queensland he supplied the appellant with “all the documentation he thought was required for the purpose of carrying out his business in Queensland”. The appellant “prepared the invoices”, “issued the invoices and made the payments without any action from the [respondent]”. The respondent said that, on moving to New South Wales, “nothing additional was done… the same invoicing and payment practice continued” (reasons at [13], [14], [16] and [17]). The respondent said, in his statement dated 1 December 2016, that payment for the invoices was made into an account “held in the name of myself and PTE Enterprises Pty Ltd”. It was common ground that this was a joint account between the respondent and the company, the company was “trustee of the family trust” (reasons at [27]).
The Arbitrator referred to delivery notes and driver daily run sheets which were in evidence. He referred to the invoices. He said that Natalie Loveday (the appellant’s warehouse manager at Toronto) “prepared the relevant invoices addressed to herself”. The “biller is 41 355 017 852 – that is, the trustee” The invoices were marked “PTE Enterprises, Vendor 13668”. Ms Loveday stated that she thought “PTE Enterprises was a legal entity because it had an ABN” (reasons at [20]-[23]).
The Arbitrator referred to invoices dated 15 and 22 August 2014, which referred to the provision of a driver, Darren Kemp, to drive “a Manildra vehicle” and “deliver stock” while “Noel Laing was on annual leave”. The respondent, in his oral evidence, said that “Darren Kemp was a mate of his and [the appellant] had asked him whether anybody wanted work”; “he arranged for Daren Kemp to undertake the work”. He had “no idea that his work would be billed to PTE Enterprises” (reasons at [24]). The Arbitrator concluded that the arrangement for Mr Kemp’s work could not be construed as part of any contract between the appellant, and either the respondent or the company. He said that it was unlikely that the appellant, without special arrangement, would have acceded to “ad hoc replacement” by others, to perform work normally done by the respondent (reasons at [34]-[35]).
Four invoices in December 2014 included a sum for “provision of an off side [sic]” estimated at $30.00 per hour. These invoices were paid. There were entries for truck rental expenses when the truck was being hired over the weekend. The respondent said that he requested this modification to the invoicing, but these invoices “were never paid” (reasons at [25]-[26]).
Payment of invoices was made by the appellant into a joint account, in the names of the respondent and the “trustee company”. The respondent was subject to direction, as evidenced by the delivery notes and run sheets. The respondent said that he did duties other than deliveries, driving forklifts, filling in for warehouse staff, and teaching the appellant’s staff how to load and balance pallets (reasons at [36]-[40]). He wore the appellant’s “livery”, he did not advertise and he was unable to work for any other person. The respondent said that he told the appellant that he did not have workers compensation insurance, and they were “not concerned”. The respondent said that the amount of his pay was set by the appellant (reasons at [41]-[46]).
Who Contracted?
The Arbitrator said that the name on the bank account into which payments were made was in the name of an unregistered entity, but a name that more closely resembled that of the trustee and the trust, rather than that of the respondent. The respondent was the “100 per cent beneficiary” each year. His income was derived not as a director or shareholder of the company, but “as a beneficiary of the trust”. Identifying the parties to the contract does not depend on “the intention of one or other party”, but on an “objective analysis of all the surrounding facts and circumstances at the time of entering the contract”: Codelfa Construction Pty Ltd v State Rail Authority of NSW [1982] HCA 24; 149 CLR 337; 41 ALR 367; 56 ALJR 459 (Codelfa Constructions) (reasons at [47]-[49]).
The Arbitrator referred to the decision in Gerob Investments Ballina Pty Ltd t/as Beach Life Homes v Compton [2007] NSWWCCPD 180 (Compton), in which the worker directed that payments for his work be made into a partnership account that he held with his wife. The Arbitrator said that a party “may gain advantage from directing payment other than directly to himself” (reasons at [51]-[52]). That payments were made into a bank account held jointly between the respondent and the trustee was not determinative. It was not dissimilar to the arrangement in Compton, where payments were made into a partnership account. Similarly the preparation of accounts and tax documents was not determinative (reasons at [54]).
The Arbitrator at [50] said:
“One factor that bears on my considerations is whether or not it is likely the respondent would have contracted with any person (either the applicant or the trustee) if it was not the applicant personally giving the undertaking that the work would be performed, and actually performing it. In my view, this goes to the heart of the arrangement concerning the contracting for the service provided by the applicant.”
The Arbitrator concluded that it was “highly unlikely” that the appellant would have contracted with the trustee, as the appellant would have no control over the person who provided the services. As in Compton, the respondent effectively worked as a “sole practitioner”. The appellant’s dealings were always with the respondent. The payments were made into a joint account, leaving the possibilities that the appellant contracted with the respondent, or the company. The circumstances indicate that it was with the respondent. The Arbitrator concluded that the appellant contracted with the respondent (reasons at [53], [57]-[59]).
Incidental to a Trade or Business?
The Arbitrator concluded that the relevant work was not incidental to a trade or business carried on by the respondent. He referred to the fact that the respondent worked for the appellant only, he did not advertise or canvass for work, he did not employ workers, he did not sublet any part of the contract, he provided his own truck (which he rented), other equipment was provided by the appellant. The circumstances changed “significantly” when the respondent moved from Queensland to New South Wales. The situation was similar to that in Compton. This finding is not challenged.
The Arbitrator then dealt with issues of injury and incapacity, assessed the respondent’s weekly entitlement, and made a general order for the payment of s 60 expenses. These findings are not challenged.
ON THE PAPERS
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.”
Having regard to Practice Directions Nos 1 and 6; the documents that are before me, and the submissions by the parties that the appeal can proceed to be determined on the basis of these documents, I am satisfied that I have sufficient information to proceed ‘on the papers’ without holding any conference or formal hearing and that this is the appropriate course in the circumstances.
THRESHOLD MATTERS
There is no dispute between the parties that the threshold requirements as to quantum and time as found in the provisions of ss 352(3) and 352(4) of the 1998 Act have been met.
THE NATURE OF THE APPEAL
This appeal is governed by the provisions of s 352 of the 1998 Act. The nature and scope of such an appeal is as provided by s 352(5):
“An appeal under this section is limited to a determination of whether the decision appealed against was or was not affected by any error of fact, law or discretion, and to the correction of any such error. The appeal is not a review or new hearing.”
The powers of the Commission upon conduct of such an appeal are defined by the provisions of s 352(7):
“On appeal, the decision may be confirmed or may be revoked and a new decision made in its place.
Alternatively, the matter may be remitted back to the Arbitrator concerned, or to another Arbitrator, for determination in accordance with any decision or directions of the Commission.”
THE GROUNDS OF APPEAL
The pleaded grounds of appeal are:
(a) The Arbitrator erred in determining that the appellant contracted with the respondent, rather than with the company (Ground No 1).
(b) The Arbitrator erred in concluding that the fact that the appellant always dealt with the respondent “was contraindicative of the existence of a contract between [the appellant] and the [c]ompany” (Ground No 2).
(c) The Arbitrator erred in concluding that the fact that the respondent performed the work “was contraindicative of the existence of a contract between [the appellant] and the [c]ompany” (Ground No 3).
(d) The Arbitrator erred in concluding that if the appellant contracted with the company, the appellant “could not have control over the person who provided the services” (Ground No 4).
(e) The Arbitrator erred in instructing himself as to the nature of a contract for services (Ground No 5).
(f) The Arbitrator erred in concluding that the company had no ‘status’ (Ground No 6).
(g) The Arbitrator erred in failing to address the evidence of Ms Loveday (Ground No 7).
THE STATUTORY PROVISION
Clause 2 of Sch 1 of the 1998 Act relevantly provides:
“Where a contract:
(a) to perform any work exceeding $10 in value (not being work incidental to a trade or business regularly carried on by the contractor in the contractor’s own name, or under a business or firm name), or
(b) [Repealed]
is made with the contractor, who neither sublets the contract nor employs any worker, the contractor is, for the purposes of this Act, taken to be a worker employed by the person who made the contract with the contractor.”
In Scerri at 399 Bainton AJA (Kirby ACJ and Rolfe AJA agreeing) said:
“On its proper construction, clause 2 of Schedule 1 requires an applicant who relies on it to establish each of the ingredients, both positive and negative, which identify the relevant ‘work’.
What he must establish is:
1. that he was party to a contract with the respondent to perform work;
2. that work exceeds $10 in value;
3. that the work is not work incidental to a trade or business regularly carried on by the applicant in his own name or under a business or firm name; and
4. that the applicant has neither sublet the contract nor employed workers in the performance of it.”
Amendment to the statutory provision, since Scerri, means a deemed worker now needs to establish that he did not employ “any worker”, rather than that he did not employ “workers”.
THE APPELLANT’S SUBMISSIONS
The appellant submits it is clear that it entered into a contract, the issue is the identity of the other party. The appellant refers to a number of matters which it says are “clear”:
(a) The tax invoices were in a name that more closely resembled that of the trustee, than of the respondent (reasons at [47]). The trustee was the company.
(b) The respondent provided the appellant with the name of the company, which had been trading since its inception in 2008.
(c) The respondent provided the appellant with the details of the bank account into which moneys were paid, and with the company’s ABN, 41 355 017 852. (It should be noted at this point that this is the ABN of the company acting as trustee for the trust, the company otherwise has a different ABN, 33 132 173 203: reasons at [18]-[19].)
(d) The respondent “was provided with copies of all documents. There is no suggestion that he objected to the form and content of the invoices.”
The appellant submits that the only available conclusion was that the company was invoicing the appellant for the delivery work. The evidence “was entirely to the effect that Manildra had contracted with the company”.
The appellant submits that the decision of Roche DP in Sarac v Itxcel Pty Ltd [2015] NSWWCCPD 32 (Sarac) is “apposite and the case analogous”. It submits that the decision in Compton (to which the Arbitrator referred) can be distinguished. In that case the deemed worker contracted as a member of a partnership; in the current matter the respondent was “the principal of his company”, and acquiesced in the issuing of invoices by “the business operated by the company”.
The Arbitrator’s reasons at [57] said that the appellant’s dealings were always with the respondent, and this inclined him to a finding that the respondent was the contracting party. This is “entirely specious”, a company will always operate through its servants and agents. Reference is made to Sarac.
The Arbitrator at [50] of the reasons said:
“One factor that bears on my considerations is whether or not it is likely the respondent would have contracted with any person (either the applicant or the trustee) if it was not the applicant personally giving the undertaking that the work would be performed, and actually performing it. In my view, this goes to the heart of the arrangement concerning the contracting for the service provided by the applicant.”
The appellant submits:
“The Arbitrator erred in concluding as he did by necessary inference at [50] that it was unlikely that [the appellant] would have contracted with any person if it were not the [respondent] personally giving the undertaking that the work would be performed, and actually performing it.”
The appellant submits that “[t]here are two errors here”. The first is that the invoice 006 indicates that the appellant was “quite prepared for Darren Kemp and Noel Laing to perform the delivery”. The second error is submitted to be that the appellant could have contracted with the company, with a term that the deliveries be carried out by the respondent “and no other”. It uses the illustration of a management company contracting to provide the services of an entertainer to perform at a concert. There would be no impediment to the company contracting with the appellant, to provide the services of the respondent.
The appellant submits that “[a]ll of the evidence coming into existence for the duration of the contract (invoices, payments, truck rentals) were consistent with the parties to the contract being Manildra and PTE Enterprises”. It submits that to the extent that the respondent dealt with the appellant, “he did so as the agent of PTE Enterprises”.
The appellant quotes from [57] of the reasons, where the Arbitrator said:
“The nature of a contract for services (that is, employment) requires the personal undertaking of the worker to perform the services. Here, the contract for service, at least so far in the identification of the parties, is little different. Objectively, I conclude that it is highly unlikely the respondent would have contracted with the trustee for the provision of services to be provided by anyone other than the applicant and indeed I conclude that the respondent would not have contracted with the trustee in any event because it would have no control over the person who provided the services. As in Compton, effectively the applicant worked as a sole practitioner, but he dealt with the income in a certain manner on someone else’s advice. The respondent’s dealings were always with the applicant: see again, in the context of a partnership and the tax arrangements, Compton at [59].”
The appellant submits that this is “simply incorrect”. In labour hire contracts “the host employer has control over the person performing the work”. That the respondent worked wearing the insignia of the appellant “does not negate the existence of a contract between Manildra and the company”. The appellant additionally submits that the above passage misstates the nature of a ‘contract for services’. It is not necessary that a worker personally undertake to perform the services. Reference is made to Collins v Hertfordshire County Council [1947] KB 598; 1 All ER 633 (Collins) at 615, where Hilbery J said:
“…the distinction between the contract for services and the contract of service can be summarized in this way: In the one case the master can order or require what is to be done, while in the other case he can not only order or require what is to be done but how it shall be done.”
The appellant submits that the Arbitrator was correct to identify the current matter as one involving a contract for services, but it is not part of such a contract “that a worker provide a personal undertaking to provide the service”. The appellant asks rhetorically whether , if the company sued the appellant for moneys payable pursuant to one of the invoices, the appellant could resist such a claim on the basis it had not contracted with the company. “The answer clearly is ‘no’.”
The appellant refers to a passage of the reasons at [58], in which the Arbitrator referred to the “non-status of PTE Enterprises Pty Ltd”. The appellant observes that this may be a typographical error, as the Arbitrator “had accepted that the company existed as a legal entity at the relevant times”. The fact that, in the invoices, the name of the company is expressed as “PTE Enterprises”, rather than more fully as “PTE Enterprises Pty Ltd as trustee of PTE Enterprises Family Trust”, is of no significance. The Arbitrator pointed out that the name, as described in the invoices, more closely resembles that of the trustee and the trust than it does of the [respondent]” (reasons at [47]).
The appellant submits that Ms Loveday’s evidence is not referred to at all in the determination”. She was the warehouse manager, set up the arrangements for the work after a conversation with the respondent, and processed the invoices. It was an error not to refer to her statement. The appellant refers to the Arbitrator’s discussion at [50] of the reasons, where he said that the appellant would have been unlikely to contract for performance of the relevant work, unless it required the respondent to perform the work. This is described as “speculation” as to the appellant’s intentions, when there was direct evidence in Ms Loveday’s statement at [19]:
“As far as I was aware, PTE Enterprises was a legal entity as it had an ABN. We did business with PTE Enterprises, not Peter Almer the individual.”
The appellant submits that “there was clear evidence as to the understanding and intention of one of the parties to the contract”. It submits that the Arbitrator erred in not mentioning that evidence, and in reaching a conclusion “diametrically opposed” to it.
THE RESPONDENT’S SUBMISSIONS
The respondent submits that he supplied details of the company to the appellant, in Queensland in 2008. He submits that his evidence was that he ceased operating his business when he came to New South Wales. He states that he then entered into an agreement with the appellant. He refers to his statement dated 5 September 2016 at [22]-[23], and his statement dated 1 December 2016 at [5]. Those paragraphs are quoted below at [68]-[69]. The respondent, not the company, entered into the agreement.
The respondent submits that the Arbitrator was required to perform an objective assessment, and after careful consideration of the evidence, concluded that the agreement was with the respondent personally. The appellant did not demonstrate error. The decision in Sarac could be distinguished, as in the current matter the contract was with the individual, not the company. The respondent submits that the Arbitrator, in his reasons at [53], found “upon moving to New South Wales in July, 2014 that the respondent was no longer operating the business”.
The respondent submits that whether a company is obliged to act through its servants and agents is immaterial, the Arbitrator’s finding about the contracting parties was made after “an objective assessment of all the evidence”.
The respondent submits that the appellant’s submission based on Darren Kemp and Noel Laing is not open. The respondent was cross-examined about those references in the invoices, and he provided an explanation which is “unchallenged” (T21.24-26.1).
The respondent submits that the Arbitrator did not err in his consideration of the significance of the requirement that the respondent perform the work. The respondent submits that the Arbitrator’s finding about the identity of the contracting parties was available on the evidence overall. The Arbitrator accepted the respondent’s submission that he ceased operating his business when he moved to New South Wales (reasons at [53]).
The respondent submits that there was no error at [57] of the reasons. The Arbitrator was not making a “universal statement about contracts for service”, he was “making an objective assessment of the evidence before him”. He determined that the appellant would not have contracted with the company, as it would have no control over the person who provided the services”. The respondent submits that the appellant’s hypothetical question about recovery of a debt based on one of the invoices does not assist.
The respondent refers to the appellant’s argument referring to the “non-status of the PTE Enterprises Pty Ltd” at [58] of the reasons. The respondent says that it is “no[t] possible to know what the Arbitrator meant” when he used this phrase. It may well be that the appellant is correct, and the Arbitrator was seeking to refer to “PTE Enterprises”, the name on the invoices. The respondent accepts that PTE Enterprises Pty Ltd existed as a legal entity at the relevant time. It says that payment of invoices went to a joint account operated by the company and the respondent, and the respondent received 100 per cent of the funds. A contract for services was entered into between the appellant and the respondent.
The respondent submits that the appellant’s submission that Ms Loveday was the appellant’s “agent in creating the contract” is wrong. It refers to Ms Loveday’ statement at [14]. I should note there is a difficulty with this submission. Paragraph [14] of the statement was objected to by the respondent’s counsel, not pressed by the appellant, and deleted from the statement, at the arbitration hearing (T2.8-20). The respondent also refers to the respondent not having been cross-examined on Ms Loveday’s statement, as a basis for giving it no weight. He submits that consideration of Ms Loveday’s evidence would not have changed the result.
CONSIDERATION
Some Authorities
The Arbitrator in his reasons, and both parties in their submissions, referred to the decision in Compton. That decision involved a carpenter, who was injured whilst constructing a house. He traded through a partnership with his wife, with whom he shared the business income equally, and he worked only for the alleged employer. Mr Compton alleged that he was a ‘worker’, or alternatively that he was a deemed worker. Roche DP referred to a number of authorities on ‘worker’, conducted an extensive review of the evidence, and confirmed a decision by an arbitrator, that Mr Compton was a ‘worker’ within the meaning of s 4 of the 1998 Act.
The Deputy President then considered whether, if he was wrong in his conclusion on the ‘worker’ issue, Mr Compton was a deemed worker pursuant to Sch 1 cl 2 of the 1998 Act. On that issue, the alleged employer submitted that Mr Compton should fail, as the relevant work was incidental to a trade or business regularly carried on by Mr Compton (the third limb of the test in Scerri). The Deputy President at [74] described this as “the only issue” in that case, relevant to the application of Sch 1 cl 2. The Deputy President decided that issue in Mr Compton’s favour, if he was wrong in the view he had formed on the issue of ‘worker’. The identification of contracting parties (and satisfaction of the first limb of the test in Scerri), which is the primary issue in the current claim, was not at issue in Compton.
The Deputy President at [52] said that Mr Compton did not conduct a business, and the fact that “he directed that his earnings be paid to a partnership was not determinative of the issue of worker”. This was in the context of a finding that Mr Compton was a ‘worker’ within the meaning of s 4 of the 1998 Act, which is not alleged in the current matter. Compton does demonstrate that use by an alleged deemed worker, of a partnership as a trading vehicle, is not inconsistent with satisfying the requirements of the third limb of Sch 1 cl 2, as set out in Scerri.
The appellant placed reliance on the decision in Sarac. It was common ground in that case that Mr Sarac was “a working director” employed by his own company, K & B Ceilings Pty Ltd (K & B). He had formed that company so as to work for employers who insisted that workers have “an ABN”. Itxcel Pty Ltd (Itxcel) was one such company. Mr Sarac worked exclusively for Itxcel for about five years. He was a “one man operation”.
Invoices were submitted to Itxcel in the name of K & B, and Itxcel made payments to the company account of K & B. After about two years, invoices were submitted in the name “K & B Ceilings” (allegedly a business name) rather than “K & B” (the company). Payments of invoices continued to be made to “K & B” (the company), and the company continued to pay money to Mr Sarac. Mr Sarac submitted that, at least from that time, he was a deemed worker in the employ of Itxcel.
Mr Sarac’s personal taxation returns demonstrated that he was paid by K & B (the company). Roche DP accepted that it was possible for a person to be both “the governing director in sole control of the company and servant of that company” (at [50]). K & B employed Mr Sarac, it was “a legal person apart from the legal personality of the individual controller” (R v Goodall (1975) SASR 94 at 100, applied in Hamilton v Whitehead [1988] HCA 65; 166 CLR 121; 82 ALR 626; 63 ALJR 80at [13]). Mr Sarac had formed a company, he became an employee of it, and the company paid him for that work. This was inconsistent with him being a deemed worker engaged by Itxcel. The contract to perform the relevant work was between K & B and Itxcel, Mr Sarac was not a party to that contract (at [52] and [54]-[55]). The Deputy President at [53] quoted the following passage from Young J in Morgan v 45 Flers Avenue Pty Ltd (1986) 10 ACLR 692:
“So long as the law permits people to erect structures which have meaningful legal consequences then if a person elects to erect such a structure he must take the consequences of such erection for better for worse for richer or poorer in commercial sickness or commercial health.”
The respondent, in written submissions before the Arbitrator, referred to Lindeboom v Goodwin (2000) 21 NSWCCR 297. That case involved an issue regarding Sch 1 cl 2 of the 1998 Act, and whether a contract had been formed. Campbell CJ said that “the existence of the intention to create legal relations must be determined objectively”, applying Cudgegong Soaring Pty Ltd v Harris (1996) 13 NSWCCR 92 per Sheller JA at 101. Campbell CJ referred to the following passage from Jones v Padavatton [1969] 2 All ER 616; 1 WLR 328 per Salmon LJ at 332, describing it as “a useful statement as to how the objective assessment is to be made:
“Did the parties intend the arrangement to be legally binding? This question has to be solved by applying what is sometimes (although perhaps unfortunately) called an objective test. The court has to consider what the parties said and wrote in the light of all the surrounding circumstances, and then decide whether the true inference is that the ordinary man and woman, speaking or writing thus in such circumstances, would have intended to create a legally binding agreement.” (at [29]):
In Codelfa Constructions, Mason J, after reviewing a number of the authorities, at [22] and [26] said:
“22. The true rule is that evidence of surrounding circumstances is admissible to assist in the interpretation of the contract if the language is ambiguous or susceptible of more than one meaning. But it is not admissible to contradict the language of the contract when it has a plain meaning. Generally speaking facts existing when the contract was made will not be receivable as part of the surrounding circumstances as an aid to construction, unless they were known to both parties, although, as we have seen, if the facts are notorious knowledge of them will be presumed.”
“26. The importance of this evolution of the law as it affects the construction of contracts is that it centres upon the presumed, rather than the actual, intention of the parties…”
In Lend Lease (Millers Point) Pty Limited v Barangaroo Delivery Authority [2013] NSWSC 1848 (Lend Lease) Lindsay J at [228] said:
“A contract is to be construed by reference to the intention of the contracting parties, objectively ascertained. The meaning of the terms of a contractual document is to be determined by what a reasonable person would have understood them to mean; that, normally, requires consideration not only of the text but also of the surrounding circumstances known to the parties, and the purpose and object of the transaction: Toll (FGCT) Pty Limited v Alphapharm Pty Limited (2004) 219 CLR 165 at 179 [40], citing Pacific Carriers Limited v BNP Paribas [2004] HCA 35; (2004) 218 CLR 451 at 461-462 [22]. According to the ‘objective’ theory of contract law, the legal rights and obligations of contracting parties turn upon what their words and conduct would be reasonably understood to convey, not upon actual beliefs or intentions: Equuscorp Pty Limited v Glengallan Investments Pty Limited [2004] HCA 55; (2004) 218 CLR 471 at 483 [34].”
Lend Lease was applied by the President Keating DCJ in Bennett Constructions (NSW) Pty Ltd v Bond [2014] NSWWCCPD 32; 15 DDCR 376.
The Evidence Going to Formation of the Contract
It is common ground that the appellant contracted with either the respondent or the company. Both parties rely on evidence that involves statements of the subjective intention or interpretation of the author. The appellant refers to the statement of Ms Loveday dated 18 October 2016. The appellant, as one of its grounds of appeal, states that the Arbitrator erred in failing to address the evidence of Ms Loveday. It submits that her statement provided “clear evidence as to the understanding and intention of one of the parties”. It submits that Ms Loveday was the appellant’s “agent in creating the contract”.
Ms Loveday, in her statement at [12], said that she was aware that the respondent had worked for the appellant in Brisbane previously, but was “not sure of the details”. He started as a “driver from the Toronto warehouse on 28 July 2014”. Ms Loveday described the respondent’s duties in some detail, at [13], and [15]-[18]. At [19]-[22], [25] and [33], she said:
“19. We paid Peter for his work through his business, PTE Enterprises. As far as I was aware, PTE Enterprises was a legal entity as it had an ABN. We did business with PTE Enterprises, not Peter Almer the individual.
20. When I first met Peter I had a conversation with him about invoicing. I vaguely recall him saying something along the lines of that Manildra in Queensland did the invoices for him, as he did not have [a] computer. We set up the same system for Peter in the Toronto warehouse, which was done as a favour to Peter as he said he didn’t have computer access. Kathryn Prendergast, the CHEP controller, sent me a master copy of an invoice to use for Peter’s billing on 30 July 2014. Kathryn still works for Manildra.
21. All up, I prepared 39 invoices for Peter during his time here. I prepared the invoices based on the run sheets filled out by Peter daily.
22. I would prepare an invoice for Peter every week with a copy of the actual delivery runs attached. He was given a copy of this invoice. I would also send a copy of the invoice to Manildra’s head office in Sydney, who are responsible for all the payments to contractors. He would have been paid by direct deposit, which is done through the head office. I am not sure which bank account the funds were paid into.”
“25. Peter provided his ABN and business name for payments on the invoices. No tax was taken out of the payments made to Peter, and he charged for GST.”
“33. Because Peter came to us from Brisbane, a lot of the information, such as banking details and personal information, was submitted to that office and never made its way to us. His arrangements with Manildra were pre-existing from when he worked for the company in Queensland.”
It should be observed that Ms Loveday did not describe herself as having been the appellant’s agent in creating the contract. Other than referring to a conversation about invoicing, she did not refer to conversations relevant to formation of the contract. She did not say that she was present when any such conversations took place. The respondent, in his statement dated 1 December 2016, at [5] said:
“In or around 29 July 2014 I entered into an agreement with Manildra Flour Mills Pty Ltd through Bill Allport. This was in New South Wales.”
The appellant relied on a statement of William Allport, its “National Manager, Transport and Logistics” as at 28 July 2014. He referred to the respondent’s work with the appellant in Rocklea, Queensland, and said that the respondent “left the employ of Manildra prior to his move down to Newcastle”. He stated at [11]:
“... Peter’s subsequent work for Manildra in Newcastle was not a continuation of employment. We were advertising for drivers in the Newcastle area and he applied for a position there. There was no transfer of any arrangements from Rocklea to Newcastle, and his work was based on two separate contracts in these two areas.”
Mr Allport went on to state that the respondent was a “contractor”, that there was “no written contract”, and that the “contract with Peter was a verbal contract by which he was paid a certain fee per tonne of delivered goods”. He stated at [13]:
“I cannot recall whether the arrangement with Manildra was with Peter Almer as an individual, or with his business, PTE Enterprises. Whatever was written on his invoice would reflect the arrangement with Manildra. If it said PTE Enterprises on Peter’s invoices, then we paid him through his business, PTE Enterprises. I am not sure of Manildra typing up invoices on behalf of Peter.”
The respondent, in his statement dated 5 September 2016, also described his “contract of employment” as “verbal” (at [15]).
Neither party has sought to put on evidence dealing with what was done or said, leading to formation of the verbal contract. Ms Loveday’s statement at [19], on which the appellant specifically submits, is described as “clear evidence as to the understanding and intention of one of the parties”. The respondent said that he reached the agreement “through Bill Allport”. Mr Allport’s statement was generally consistent with this, although he did not specifically refer to any conversation at which agreement was reached. Ms Loveday’s statement does not say that she was present at, much less a party to, any conversation which involved formation of the contract. She does not state that she had authority to enter into such contracts on the appellant’s behalf.
In any event, Ms Loveday’s statement that “[w]e did business with PTE Enterprises, not Peter Almer the individual”, is a statement of her “actual beliefs”, and reliance on it is inconsistent with the “general test of objectivity”: Equuscorp Pty Ltd v Glengallan Investments [2004] HCA 55; 218 CLR 471; 211 ALR 101; 79 ALJR 206 at [34]. The Arbitrator did refer to Ms Loveday’s statement at [19] (the reasons at [23]), although he did not deal with it specifically, in his analysis of who the parties to the contract were. The Arbitrator, in his reasons at [49], referred to Codelfa Constructions, and recognised that “[t]he intention of one or other party does not determine the objective construction exercise”. The Arbitrator, correctly, did not rely on Ms Loveday’s belief as to the identity of the party with whom the appellant contracted.
The respondent’s submissions on this appeal refer, on a number of occasions, to his statements dated 5 September 2016 at [22]-[23], and 1 December 2016 at [5]. In the earlier statement the respondent said:
“22. In mid-2014 I moved to the Sydney/Newcastle region and worked exclusively for Manildra Flour Mills Pty Ltd on a full-time basis. I worked from 29 July 2014 until I received an injury to my ankle on 12 February 2015.
23. On moving to New South Wales I sold all of my trucks.” (emphasis added)
In the later statement at [5] the respondent said, inter alia:
“In or around 29 July 2014 I entered into an agreement with Manildra Flour Mills Pty Ltd through Bill Allport…” (emphasis added)
The respondent’s submissions on appeal, at [15], refer to these passages of his statements:
“The Arbitrator accepted at [53] the unchallenged evidence of the Respondent that when he came to New South Wales the Respondent ceased operating his business and entered into an agreement with the Appellant…”
Referring to the same passages, the respondent at [17] of his submissions submits that there is “clear unchallenged evidence that when the Respondent came to New South Wales, he as an individual and not the company, entered into agreement with the Appellant”.
The reference to the evidence as “unchallenged” is based on the fact that these specific passages of the respondent’s statements were not the subject of cross-examination (respondent’s submissions at [15]). The appellant refers to the description of the proposition, that the company ceased operating when the respondent moved to Newcastle, as “ludicrous” (its submissions in reply at [9]-[12]). The appellant submits that the respondent’s position on this issue is challenged by the invoices (in the name PTE Enterprises), the fact that the company was the lessee of the truck the respondent used (T28.1-10), and that the income earned by the trust from “transport operations” in the year 2014/2015 was $106,861.
In the context of the Commission, a party’s evidence may be rejected in the absence of cross-examination on it, subject to principles of procedural fairness: New South Wales Police Force v Winter [2011] NSWCA 330; 10 DDCR 69 at [77]-[84], JB Metropolitan Distributors Pty Ltd v Kitanoski[2016] NSWWCCPD 17 at [122]. I accept the appellant’s submission that the respondent’s submission was not “unchallenged”. The appellant correctly describes its challenge to this proposition as “the centre of this case”.
The respondent’s statements do not explicitly say that he ceased to conduct a business from when he moved to New South Wales, or that the company ceased trading from that time. The respondent’s earlier statement at [32] acknowledged that the company was registered from 11 July 2008 to 6 December 2015. The respondent’s statement that he “entered into an agreement” with the appellant when he came to New South Wales suffers from the same vice as that part of Ms Loveday’s statement which deals with the identities of the contracting parties. It is a statement of his actual beliefs or intentions.
Ground No 1
For reasons given above, the respondent’s reliance on Compton does not much assist his position. The reasoning in Compton dealt predominantly with whether Mr Compton was a ‘worker’ within the meaning of s 4 of the 1998 Act, which is not an allegation made in the current matter. The decision in Compton additionally dealt with the third of the limbs of the test described in Scerri, which was not an issue in the current matter. The first limb of the test in Scerri, which was the main issue in the current proceedings, was not at issue in Compton. The decision in Sarac is relevant. It demonstrates that, if the relevant contract was between the appellant and the company (rather than the respondent individually), the first limb of the test in Scerri is not satisfied, and the allegation of ‘deemed worker’ cannot succeed (Sarac at [54]-[55]). For reasons given above, there are difficulties with the scope of the evidence of the respondent, and with that of Ms Loveday in the appellant’s case.
Ground No 1 is broadly stated, and goes to an ultimate finding of fact dealing with the fundamental issue in the case, whether the appellant contracted with the respondent. For reasons which follow, the appellant has succeeded in establishing error in connection with specific grounds, which demonstrate error in the reasoning which led to the Arbitrator’s finding that the appellant contracted with the respondent.
Ground No 2
The appellant’s submissions on this ground are summarised at [31] above, and those of the respondent at [44]. The appellant submits that “a company will always be obliged to operate through its servants and agents”. The appellant submits this did not preclude a finding that the appellant contracted with the company. The respondent’s submissions do not engage with this ground. He refers to the passages of his statements quoted at [68]-[69] above. He submits that the Arbitrator determined that the appellant entered into a “contract of service” with the respondent (this was not the case the respondent sought to make). He submits that relevant error was not identified.
The proposition that a company acts through its servants and agents is uncontroversial. There is no suggestion to the contrary. The company, from July 2014, had no other officers, shareholders or employees. As the Arbitrator observed at [57], the respondent effectively “worked as a sole practitioner”. Regardless of whether he was acting in his own right, or as an agent of the company, dealings with the appellant, connected with the contract, would be carried out by the respondent. There was no one else.
The Arbitrator’s observations on this point are similar to remarks in Compton at [59], to which the Arbitrator refers. That passage of Compton dealt with whether Mr Compton was a ‘worker’, and the significance (if any) of the fact that he was in partnership with his wife. In the current matter, the respondent dealt with the appellant, in circumstances where he could have been doing so either in his own right, or as the agent of a company of which he was the sole shareholder and office holder. The fact that the appellant always dealt with the respondent is consistent with either possibility, that the contract was with the respondent, or with the company. I accept the appellant’s submission, that the fact that the appellant always dealt with the respondent was not more supportive of one possibility than the other.
The Arbitrator’s finding at [58] of the reasons, that the appellant’s contract was with the respondent, was expressed to be based on “the other circumstances”. The Arbitrator’s reference at [57], to the appellant always dealing with the respondent, was one of the “other circumstances”. It follows that the Arbitrator’s reliance on this aspect of the evidence affected the result, and is appealable error.
Grounds Nos 3, 4 and 5
These grounds deal with similar subject matter, the extent to which the appellant required that the respondent be personally responsible for performance of the duties under the contract, and whether this was inconsistent with the contract being one between the appellant and the company, as opposed to the respondent. The appellant’s submissions dealing with these grounds are at [32]-[38] above, those of the respondent are at [45]-[47] above.
At [24] of its submissions on this appeal, the appellant says that it was “quite prepared for Darren Kemp and Noel Laing to perform the delivery”. This, it submits, is based on an invoice dated 22 August 2014, which refers to the provision of Darren Kemp as a “relief driver” while “Noel Laing was on annual leave”. The respondent was cross-examined about this (T21.24-23.27). The respondent’s evidence was that the appellant asked him if he knew a driver to fill in for Noel Laing, a driver employed by the appellant. The respondent suggested Darren Kemp. The respondent said that he was “just a liaison between Manildra and Darren”. There were difficulties with how the appellant paid Mr Kemp for filling in, which do not appear to have been caused by the respondent. I do not see the fact that the respondent assisted in recommending a substitute driver, when an employed driver was on leave, is relevant one way or the other, to the issue about who the appellant contracted with.
The Arbitrator’s reasons at [57] described a ‘contract for services’ as an ‘employment’ contract, which required the personal undertaking of the worker to perform the services. The significance and application of the ‘control’ test has changed somewhat since Collins was decided in 1947 (see for example Zuijs v Wirth Brothers Pty Ltd [1955] HCA 73; 93 CLR 561; ALR 123; 29 ALJR 698, Stevens v Brodribb Sawmilling Company Pty Ltd [1986] HCA 1; 160 CLR 16; 63 ALR 513; 60 ALJR 194 (Stevens), Hollis v Vabu Pty Ltd [2001] HCA 44; 207 CLR 21; 75 ALJR 1356; 106 IR 80; 181 ALR 263, On Call Interpreters and Translators Agency Pty Ltd v Commissioner of Taxation (No 3) [2011] FCA 366; 214 FCR 82; 279 ALR 341). Be that as it may, the passage from Collins, relied on by the appellant and quoted at [37] above, is in general terms correct.
In Scott v JR Corney and SM Morrisey t/as Digquip [2016] NSWWCCPD 11 Roche DP at [10] distinguished the terms ‘contract of service’ and ‘contract for services’ in the following fashion:
“…the Arbitrator concluded that Mr Corney engaged Mr Scott pursuant to a contract for services and not a contract of service. That is, that the relationship was one of independent contractor and principal and not one of employee and employer.”
In the current matter, the respondent did not argue that he was a ‘worker’ within the meaning of s 4 of the 1998 Act; he did not submit that the relationship was one of employer and employee. Thus, whoever the appellant contracted with, the contract was one for services. It was not alleged to be a contract of service, involving an employment relationship.
The Arbitrator, at [57], said “[t]he nature of a contract for services (that is, employment) requires the personal undertaking of the worker to perform the services”. A contract for services does not involve such a requirement. In Stevens Mason J at [9] described “the delegation of work by the putative employee” as one of the indicia, in considering whether an employment relationship existed, as opposed to one of “principal and independent contractor”. In the same case, Wilson and Dawson JJ at [11] described “the right to have a particular person do the work” as one of the indicia of a contract of service (as opposed to a contract for services). In a contract for services the independent contractor can delegate the work. In the current matter, this would be so, regardless of whether the appellant contracted with the respondent or the company. This would potentially be subject to any contractual provision to the contrary, regardless of whether the contracting party was the respondent or the company.
The Arbitrator went on, at [57], to reason as follows:
“Objectively, I conclude that it is highly unlikely the respondent would have contracted with the trustee for the provision of services to be provided by anyone other than the applicant and indeed I conclude that the respondent would not have contracted with the trustee in any event because it would have no control over the person who provided the services.”
The essential issue was who the appellant contracted with, the company (which was trustee of the trust) or the respondent. The above finding of fact is consistent with reasoning that, if the appellant contracted with the respondent (as opposed to the company), the respondent would personally perform the services the subject of the contract. This is consistent with the earlier discussion in the reasons at [57], to the effect that a contract for services with the respondent involved him undertaking to perform such services. This misconstrued the nature of a contract for services.
The Arbitrator, at [58], expressed his finding that the contract was between the appellant and the respondent, as being “because of all the other circumstances”. The Arbitrator’s finding at [57], dealing with the obligations of the respondent under a contract for services, represented one of the “other circumstances”. It follows from the above that the error in describing the nature of a contract for services affected the result, and constitutes appealable error.
The respondent, on this ground, submits that in any event, there was “unchallenged evidence” that “when he moved to New South Wales he (not the company) entered into an agreement with the Appellant for the provision of services”. This submission relies on the respondent’s statement evidence referred to at [69]-[70] above. For reasons given above, in particular at [74], that evidence does not assist the respondent in establishing who the appellant contracted with. It is evidence of the respondent’s actual beliefs or intention. His actual intention “does not determine the objective construction exercise”.
Ground No 6
Ground No 6 deals with the Arbitrator’s reference at [58] of the reasons, to “the non-status of the PTE Enterprises Pty Ltd”. The appellant postulates that this may be a “typographical error”, as the Arbitrator in other places “accepted the company existed as a legal entity at the relevant times”. The respondent, in its submissions on appeal, “concedes that at the relevant time PTE Enterprises Pty Ltd existed as [a] legal entity”, and says that it is “no[t] possible to know what the Arbitrator meant when he referred to the non-status of PTE Enterprises Pty Limited”.
The appellant’s observation that this may simply be a typographical error is probably correct. The Arbitrator’s analysis at [58] did not proceed on the basis that the company was not a legal entity. He went on to say that the possibility that the contracting party “was either the applicant, or the company” was left open. This misstatement of the company’s status did not affect the result.
Ground No 7
For reasons given above, the Arbitrator did not err in failing to address the evidence of Ms Loveday going to her belief of the identity of the party with which the appellant contracted.
DISPOSITION OF THE APPEAL
It flows from the above that there was appealable error, and that the determination dated 22 December 2016 should be revoked. I am of the view that the matter should be remitted to a different Arbitrator, to determine the issue of whether the respondent was a ‘deemed worker’ pursuant to Sch 1 cl 2 of the 1998 Act. I note that, should the respondent succeed on the rehearing, issues of injury, and the respondent’s entitlement to weekly compensation and medical expenses, have been determined, and those aspects of the determination were not the subject of challenge.
The contract at issue was oral. Construction of it, to determine the identity of the parties, involves consideration of the words and conduct used, to determine what these would be reasonably understood to convey, rather than the actual beliefs and intentions of those involved. The parties may consider whether this should be further addressed by evidence, before a further arbitration hearing.
DECISION
The Certificate of Determination dated 22 December 2016 is revoked.
The matter is remitted for redetermination by another Arbitrator, on the issue of whether the respondent was a ‘deemed worker’ pursuant to Sch 1 cl 2 of the 1998 Act.
Michael Snell
Deputy President
15 May 2017
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