McLean v Shoalhaven City Council
[2015] NSWWCCPD 52
•2 September 2015
| WORKERS COMPENSATION COMMISSION | |||
| DETERMINATION OF APPEAL AGAINST A DECISION OF THE COMMISSION CONSTITUTED BY AN ARBITRATOR | |||
| CITATION: | McLean v Shoalhaven City Council [2015] NSWWCCPD 52 | ||
| APPELLANT: | Kenneth McLean | ||
| RESPONDENT: | Shoalhaven City Council | ||
| INSURER: | Self-insured | ||
| FILE NUMBER: | A1-6931/14 | ||
| ARBITRATOR: | Mr W Dalley | ||
| DATE OF ARBITRATOR’S DECISION: | 29 May 2015 | ||
| DATE OF APPEAL DECISION: | 2 September 2015 | ||
| SUBJECT MATTER OF DECISION: | Deemed worker; cl 2 of Sch 1 to the Workplace Injury Management and Workers Compensation Act 1998; alleged failure to give reasons; whether worker conducted a trade or business; whether work incidental to a trade or business; relevance of indicia of employment in a claim under cl 2 of Sch 1 | ||
| PRESIDENTIAL MEMBER: | Deputy President Bill Roche | ||
| HEARING: | On the papers | ||
| REPRESENTATION: | Appellant: | Slater and Gordon Lawyers | |
| Respondent: | Bartier Perry | ||
| ORDERS MADE ON APPEAL: | 1. The Arbitrator’s determination of 29 May 2015 is confirmed. | ||
BACKGROUND
The appellant, Kenneth McLean, supplied a tip truck and driver to the respondent, Shoalhaven City Council (the Council), from the mid-1980s until his injury in 2013. On 2 August 2013, Mr McLean sustained injuries when his truck slid off Grahams Road at Barrengarry and down an embankment.
Mr McLean has claimed weekly compensation from 2 August 2013 to 2 August 2014, compensation for medical expenses, and compensation for permanent impairment said to have resulted from his injuries. The Council disputed liability on the ground that Mr McLean was neither a worker nor a deemed worker under the legislation.
Mr McLean’s case was and is that he was a deemed worker under cl 2 of Sch 1 to the Workplace Injury Management and Workers Compensation Act 1998 (the 1998 Act) and that he worked “on an almost exclusive basis” (emphasis added) for the Council under a Services Agreement (the Agreement). He did not allege that he was a “worker” employed by the Council under a contract of service. (The qualification that Mr McLean worked “almost” exclusively for the Council is significant and will be discussed later in these reasons.)
Clause 2(1) of Sch 1 of the 1998 Act provides:
“(1) 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
…
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 v Cahill (1995) 14 NSWCCR 389 (Scerri), Bainton AJA (Kirby ACJ and Rolfe AJA agreeing) held (at 399D) that, to rely on cl 2 of Sch 1, an applicant must establish that:
(1) he (or she) was a party to a contract with the respondent to perform work;
(2) the work exceeded $10 in value;
(3) the work is not work incidental to a trade or business regularly carried on by the applicant in his (or her) own name or under a business or firm name, and
(4) the applicant has neither sublet the contract nor employed workers in the performance of it.
Though Scerri dealt with cl 2 of Sch 1 of the Workers Compensation Act 1987 (the 1987 Act), that provision was in substantially the same terms as cl 2 of Sch 1 to the 1998 Act. It has not been submitted that the principles in Scerri do not apply in the present case.
After noting that there was no dispute that Mr McLean was a contractor, or that the contract exceeded $10 in value, the Arbitrator said (at [60]) that the issue was whether the work being performed by Mr McLean at the time of his injury was incidental to a trade or business regularly carried on by him in his own name or a business or firm name.
The Arbitrator concluded that the contract between Mr McLean and the Council was not a contract to perform work, as required to come within the terms of cl 2 of Sch 1, but was a contract to “provide a particular truck with a driver” ([82]), noting that the payments made by the Council were for the “supply of the vehicle and driver”.
The Arbitrator was further satisfied that the work carried out under the contract with the Council “was incidental to a business regularly carried on by Mr McLean for the hire of his truck and the provision of a suitable driver” ([89]). Consequently, Mr McLean could not come within the terms of cl 2 of Sch 1 and the Arbitrator made an award for the respondent.
Mr McLean has appealed. For the reasons explained below, the appeal is unsuccessful.
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.
ISSUES IN DISPUTE
The issues in dispute in the appeal are whether the Arbitrator erred in:
(1) failing to give adequate reasons and explanation for concluding that Mr McLean’s injury occurred in circumstances that were incidental to his business;
(2) determining that driving the truck was not personal labour under the terms of the Agreement;
(3) determining that Mr McLean was injured in circumstances that were incidental to Mr McLean’s business;
(4) failing to appropriately deal with the relevant indicia of employment (indicia of employment), and
(5) allowing into evidence, as late documents, the statements of Adam Pratt, David Paisley-Topp, Peter Tyrell, and Scott Aldridge (admission of lay evidence).
In addition, as part of the third ground of appeal, it was asserted that “the decision was outside the limits of sound discretionary judgment”. It is convenient to deal with these grounds under three headings: was the work incidental to Mr McLean’s business, indicia of employment and admission of lay evidence.
GROUNDS 1, 2 AND 3: WAS THE WORK INCIDENTAL TO MR MCLEAN’S BUSINESS
Submissions
Counsel appeared for Mr McLean at the arbitration. Though submissions in support of the appeal have the name of Mr Legzdin, solicitor, and Mr Niven at the end, the Appeal Against Decision of Arbitrator states that Mr Legzdin has prepared the written submissions. Since the publication of this decision, the Commission has been informed that Mr Niven prepared the submissions in support of the appeal and Mr Legzdin has prepared the submissions in reply.
Mr Niven contended that the Arbitrator erred in determining that Mr McLean was carrying on a business, and performing work for the Council as a contractor, without paying any regard to the longevity and permanency of the arrangement between the parties, in circumstances where cl 2 of Sch 1 is clearly intended to protect workers such as Mr McLean.
Mr Niven argued that the Arbitrator’s finding that the contract between Mr McLean and the Council was a contract to provide a particular truck with a driver, was “artificial” and did not recognise that the provision of a driver and the availability of work were the reason for the Council engaging Mr McLean and that arrangement (subject to agreed exceptions) was exclusive.
Mr Niven said that the Arbitrator gave no reasons as to why the arrangement between the Council and Mr McLean “did not qualify as [a] business covered” by the proviso in cl 2 of Sch 1, apart from the inference that the contract was not a contract for the provision of labour by Mr McLean but rather the provision of a “tipper truck and a driver”.
Mr Niven submitted that the Arbitrator did not provide reasons for Mr McLean’s labour not being the subject of the arrangement with the Council. He said that the various “contract agreements” provided by the Council to Mr McLean did not reflect the actual engagement and performance of duties carried out by Mr McLean on behalf of the Council. Nor, in making his determination, did the Arbitrator have regard to the regularity of duties performed, the manner of engagement and the regular method of payment for Mr McLean’s services.
To this extent, the Arbitrator ignored his reasons in O’Mullane v Bashas Floors & Blinds Pty Ltd [2014] NSWWCC 157 (O’Mullane) and the reasons in Malivanek v Ring Group Pty Ltd [2014] NSWWCCPD 4 (Malivanek), where extensive consideration was given to “circumstances where control, exclusivity and the general indicia of what constitutes the requirements” of cl 2 of Sch 1.
Referring to Scerri, Mr Niven submitted that Mr McLean established that the work he did (for the Council) “was not incidental to a ‘business’ but was in fact ‘the business’ contrary to the finding by the Arbitrator”.
Mr Niven referred to Mr McLean’s statement, which detailed “alternative employment on a weekend performing minoe [sic] property maintenance work” for his accountants, Tait Miller and McIntyre, voluntary work for Nowra Golf Club (where Mr McLean was a member), and ad hoc arrangements to perform “beam testing” for Coffey International Pty Ltd (Coffey), which was conducted outside normal Council work hours at the recommendation of the Council.
In submissions in reply, Mr Legzdin submitted it was important to bear in mind that it was Mr McLean who had the personal relationship with the Council and it was Mr McLean “who entered the contract of service with the Respondent Council”. He said that it was not disputed that the “contract of service” did not allow Mr McLean to sublet the contract or employ others, which was a further indication that, by inference, the contract required Mr McLean to perform work personally.
Mr Legzdin said that “[t]he services performed by [Mr McLean] were not merely incidental to the trade or business”. He said that the relationship between the parties over 20 years was relevant. During the course of the working relationship, it was Mr McLean who would provide the services personally and it could be inferred that it was expected by the employees of the Council that he would perform the work personally. This was supported by evidence from Scott Aldridge that “[i]f [Mr McLean] was no good, I wouldn’t have employed him as a contractor”. It was only on rare occasions, when Mr McLean was on leave, that he would find a substitute driver.
Mr Legzdin contended that, relying on Malivanek at [165], the control test is a relevant consideration. He referred to matters that demonstrated the Council exercised control over Mr McLean.
Any additional work Mr McLean did was “always done outside of [the Council’s] normal operating hours” or where “no work was available”. It was relevant that, except in limited circumstances, Mr McLean did not employ workers. Though Mr McLean had an ABN, the business did not, in the years prior to the accident, “regularly carry out trade or business for other parties”. Mr McLean was not free to engage whomever he wished to drive the truck, as a business would normally do.
Mr Legzdin said that the invoices issued by Mr McLean did not amount to advertising of services.
Dealing with the “suggested discrepancy between the business income records as disclosed in [Mr McLean’s] tax returns and those contained in the printout of payments made by [the Council]”, Mr Legzdin submitted that the Arbitrator dealt with this at [33], where he said:
“This figure corresponds closely with the accounts shown to have been rendered by the Invoice books produced by Mr McLean that were in evidence (after making allowance for payments received in the period for accounts rendered in the previous financial year and for invoices unpaid at the end of the period).”
Discussion and findings
The submissions by Mr Niven and Mr Legzdin cannot be accepted.
The relevance of Mr McLean’s “longevity and permanency” with the Council was not explained with any meaningful submission. To succeed under cl 2 of Sch 1, a claimant must establish the matters listed in Scerri (see [5] above). Mr Niven has not addressed the terms of that decision or the terms of the legislation. Clause 2 of Sch 1 applies only to claimants who come within its terms.
Neither the longevity nor the permanency of Mr McLean’s arrangement with the Council brought him within the operation of the clause. Applying Scerri, the Arbitrator correctly concluded that cl 2 of Sch 1 did not apply to Mr McLean. He did so for two reasons: first, the contract between Mr McLean and the Council was not a contract to perform work, but was a contract to provide a truck with a driver and, second, the work carried out under the contract was incidental to a business regularly carried on by Mr McLean for the hire of his truck and the provision of a suitable driver.
The submission that the Arbitrator’s finding, that the contract was for the provision of a truck and a driver, was “artificial” was unhelpful and made without reference to the Arbitrator’s decision or the evidence. A finding that the contract is one to perform work is the first requirement in determining if cl 2 of Sch 1 applies. The Arbitrator made his finding on this issue based on the Agreement, Mr McLean’s evidence as to how the contract was performed, the evidence of Council workers, and the invoices Mr McLean submitted to the Council.
The Agreement provided, under “Background”, that the Council required the provision of “the Services and the Contractor has offered to supply the Services to Council”. The term “Services” was defined in the Agreement to mean “the provision of plant hire services to Council by the Contractor as described in the Specification”.
Attached to the contract is a schedule, which identifies Mr McLean’s Isuzu truck and specifies an hourly rate of $92.70. The Agreement permitted Mr McLean to employ “qualified, skilled and efficient staff to perform [his] obligations under this Agreement”. Mr McLean normally drove the truck, but he paid a replacement driver when he took holidays.
Invoices submitted by Mr McLean provided for a total amount that, consistent with the Agreement, included the location of the work, the number of hours involved and a total charge. They did not include an amount for a driver and a separate amount for the truck. Thus, it was open to the Arbitrator to find that the Agreement was for the provision of a truck with a driver.
The submission that the arrangement (subject to agreed exceptions) was exclusively with the Council was incorrect. Mr McLean did not hire his truck exclusively to the Council. His evidence was that he worked for the Council “on an almost exclusive basis” (emphasis added). He also worked for other entities. Whether that work was with the knowledge of the Council or was an “agreed exception” is irrelevant. The question was whether he conducted a trade or business.
Mr McLean issued invoices that described himself as a “Sole Trader” and included his Australian Business Number. The invoices included in the heading “Earth Moving ♦ Topsoil ♦ Truck Hire”. He issued those invoices to the Council, Coffey, Network Geotechnical, Focus, Nowra Golf Club and Tait Miller McIntyre. The invoices established that Mr McLean held himself out as conducting a business. (I note that it is not essential that there be a “holding out” before it can be held that a claimant is conducting a trade or business. What is required is that the contractor regularly carries on business in his own or a firm name: Higgins v Jackson [1976] HCA 37; 135 CLR 174 at 176 per Barwick CJ (Stephen, Mason and Murphy JJ concurring)).
I accept that the work with Tait Miller McIntyre was minor property maintenance work, which was of a different nature to the services provided to the Council, and that Mr McLean’s activities for Nowra Golf Club were voluntary. However, that does not assist Mr McLean. That is because, as part of his business, excluding both Tait Miller McIntyre and the Nowra Golf Club, Mr McLean regularly contracted with other entities and billed those entities on the same business invoices, and in the same manner, that he billed the Council. Thus, his business was not exclusively with the Council.
As the Arbitrator found, Mr McLean clearly conducted a business of hiring a truck and driver. That is confirmed by his tax returns, which revealed that for the year ending 30 June 2013 Mr McLean’s contract receipts were more than $102,000, while his receipts from the Council were less than two thirds of that sum. In other words, a significant proportion of the business income came from sources other than the Council. The only reasonable conclusion is that that income came from hiring his truck to entities other than the Council. This evidence provided a sound basis for the Arbitrator’s conclusion that Mr McLean regularly conducted a business.
Nothing in the Arbitrator’s statement at [33], quoted at [28] above, undermines that conclusion. Mr Legzdin’s submission that the Arbitrator dealt with this point has taken the passage quoted at [28] above out of context in a way that was unhelpful. The quote relied on appears in that part of the Arbitrator’s decision where he set out Mr McLean’s records. In his analysis of those records, the Arbitrator said (at [73]) that approximately two thirds of Mr McLean’s income came from the hire of his truck to the Council. He noted (at [83]) that Mr McLean also hired the vehicle to Coffey and Network Geotechnics. At [84], he noted that the invoices rendered by Mr McLean were not for his labour but for the employment of his vehicle. These findings were open on the evidence and all support the Arbitrator’s conclusion that Mr McLean was conducting a business.
The Arbitrator was satisfied that the work carried out pursuant to the contract (with the Council) was incidental to a business regularly carried on by Mr McLean for the hire of his truck and the provision of a suitable driver. Mr McLean’s tax records, the invoices, and Mr McLean’s own evidence, which was that he did not work exclusively for the Council, support that finding.
The submission that the Arbitrator gave no reasons for his conclusions is incorrect. After setting out a detailed summary of the evidence and the parties’ submissions, the Arbitrator said, at [86]–[89]:
“86.I am satisfied on the evidence of the contract, the evidence of [Mr McLean] as to how the contract was performed, the evidence of the council workers together with the invoices that the business carried on by Mr McLean was that of the hire of his vehicle and driver. It was not a contract for Mr McLean to perform work personally for the respondent other than to see that the contract was carried out.
87.Accordingly the evidence demonstrates that Mr McLean was injured when carrying out work that was incidental to the vehicle hire contract in performing the role of driver. In doing so he was performing work that was incidental to his business which was the hire of the truck.
88.[Mr McLean] did not contract to perform work as a driver with [the Council]. [Mr McLean] contracted to supply the vehicle with a driver. From time to time when Mr McLean was on holidays another driver had been substituted in earlier years.
89.I am satisfied that the work to be carried out pursuant to the contract was incidental to a business regularly carried on by Mr McLean for the hire of his truck and the provision of a suitable driver.”
These reasons adequately explained the basis for the Arbitrator’s conclusions (Soulemezis v Dudley (Holdings) Pty Ltd (1987) 10 NSWLR 247). The allegation that the Arbitrator failed to give reasons was without substance.
The submission that, with regard to Mr McLean’s activities with the Council, the Arbitrator did not have regard to the regularity of duties, the manner of engagement or the regular method of payment was incorrect. The Arbitrator expressly noted (at [19]) Mr McLean’s evidence that he worked for the Council on “an almost exclusive basis”, the method by which the Council would contact him ([21]) and the regular submission by Mr McLean of invoices ([22]). He also referred (at [52], [55] and [57]) to other lay evidence about the nature and extent of Mr McLean’s activities with the Council.
Apart from the general contention that the Arbitrator ignored his reasons in O’Mullane and the reasons in Malivanek, Mr Niven made no relevant submission about these authorities and I do not intend to deal with them in detail. Each turned on its own facts and each is clearly distinguishable from the present case.
The relevance of the submission that Mr McLean did his other work “outside normal Council work hours” is unclear. On Mr McLean’s own evidence, he did not work exclusively for the Council during the relevant period of the Agreement. Therefore, whether he worked for other entities “outside normal Council work hours”, or when no work was available with the Council, is irrelevant. The evidence established that, during the period of the Agreement with the Council, Mr McLean regularly conducted a business of hiring his truck with a driver.
Even if it is accepted that, contrary to the Arbitrator’s finding, the contract with the Council was for the performance of work by Mr McLean personally, that makes no difference to the outcome. That is because the Arbitrator found that Mr McLean was conducting a business and, further, that the work he performed for the Council was incidental to that business.
The reference to the control test and the reliance on [165] in Malivanek was misplaced. Paragraph [165] in Malivanek dealt with whether the claimant in that case was a worker. In the present case, it was conceded that Mr McLean was not a worker and Mr McLean relied only on cl 2 of Sch 1. The issue of control is not relevant to that question.
The submission that, “except in limited circumstances”, Mr McLean did not employ workers does not advance Mr McLean’s position. The question is whether, during the period of the Agreement, Mr McLean employed a worker or workers. His evidence was that he paid a driver to fill in for him when he took holidays. Whether that occurred during the period of the Agreement is unclear but, in the circumstances of this case, is not determinative. That is because even if Mr McLean employed a worker outside the period of the Agreement, the Arbitrator was satisfied that the relevant work was incidental to Mr McLean’s trade or business.
The submission that the work Mr McLean did for the Council was not incidental to a business but was, in fact, the business does not assist Mr McLean. The phrase “work incidental to a trade or business” in cl 2 of Sch 1 means “work which is an incident of” a trade or business regularly carried on by the contractor (Brown v Contemporary Carpet Services Pty Ltd (1997) 14 NSWCCR 360).
The Arbitrator (correctly) found that Mr McLean carried on a business of hiring his truck with a suitably qualified driver. Usually, but not always, that driver was Mr McLean. The work Mr McLean was doing when he was injured, namely driving the truck, was clearly an incident of that business. It follows that he does not come within cl 2 of Sch 1.
The assertion that the decision was outside the limits of discretionary judgment was not developed with any relevant submissions and, in any event, was plainly misconceived. The Arbitrator’s decision did not involve a discretionary judgment. It involved whether, on the evidence, Mr McLean came within the terms of cl 2 of Sch 1. The Arbitrator’s approach and conclusion involved no error.
GROUND 4: INDICIA OF EMPLOYMENT
Submissions
Mr Niven submitted that there was no challenge to Mr McLean’s credit, nor his fundamental assertions of exclusivity of employment, length of engagement with the Council over 30 years, or that, at the date of injury, he was performing normal duties required by the Council.
Mr Niven contended that the Arbitrator gave no reasons for his assertion that Mr McLean’s work for the Council was “incidental” to his business, which assertion was contrary to the Arbitrator’s earlier finding that Mr McLean only performed work for others when he was not required by the Council.
Mr Niven said that the Arbitrator’s finding that the business was hiring out Mr McLean’s truck was not available “on the evidence that the truck was separate to the labour provided by [Mr McLean] and that this took [Mr McLean] outside the proviso in Clause 2 of Schedule 1”. He said that Mr McLean was a preferred provider, because of his expertise as a driver and in conducting road maintenance duties including “beam testing” as required by the Council. Throughout his 30 years’ service to the Council, apart from rare instances, Mr McLean was the driver of the truck and was at the Council’s “complete control”.
Discussion and findings
This ground of appeal is fundamentally misconceived and is rejected.
The “indicia of employment” are relevant to determining whether a claimant is a worker or an independent contractor. As Mr McLean conceded that he was an independent contractor, and not a “worker”, it was not necessary or appropriate for the Arbitrator to consider the indicia of employment. It follows that, given that concession, it is irrelevant that Mr McLean may have been under the Council’s “complete control”.
Mr Niven’s first submission under this ground does not address the ground of appeal and is irrelevant. In any event, as explained above, the assertion of “exclusivity of employment” with the Council was incorrect. Mr McLean did not hire his truck and driver exclusively to the Council. The fact that he did most of his work for the Council was, in circumstances where he was conducting a business, not sufficient to bring him within the terms of cl 2 of Sch 1.
I have previously dealt with the assertion that the Arbitrator gave no reasons for his finding that Mr McLean’s work for the Council was incidental to his business and will not repeat what I said (see [42]–[43] above). The additional submission, that Mr McLean only performed work for others when the Council did not require him, which the Arbitrator accepted, does not advance Mr McLean’s position. The essential facts remain that, as the Arbitrator found, Mr McLean regularly conducted a business and that the work being performed under the Agreement with the Council was incidental to that business.
The challenge to the Arbitrator’s finding that the business was the hiring of Mr McLean’s truck is unsustainable and is rejected. As previously explained (see [32]–[35] above), the Arbitrator’s finding was consistent with the evidence and involved no error. It is irrelevant that Mr McLean may have been a “preferred provider” with the Council. The question was whether he came within the terms of cl 2 of Sch 1. For the reasons stated, he did not.
GROUND 5: ADMISSION OF LAY EVIDENCE
Submissions
Mr Niven submitted that a number of statements, served on short notice, were admitted over objection “dealing with the issue of employment”. He contended that the statements were “prejudicial to [Mr McLean’s] case as self-serving and without the opportunity to cross-examine such witnesses left evidence which clearly required testing to remain unchallenged.”
Discussion and findings
This ground, which has ignored the way the arbitration was conducted, is untenable and is rejected.
The statements referred to were filed and served within the timetable set by the Arbitrator on the first arbitration date on 23 March 2015. Mr Niven initially said that he “generally object[ed] to the statements” (T5.24) and that Mr McLean should have a right of reply by giving evidence and/or the authors of the statements should be available for cross-examination (T7.8).
However, when the Arbitrator invited the parties to look at the issues raised by the statements, Mr Niven merely objected to some of the paragraphs in some of the statements. Most of those objections were upheld (T34.27). With respect to the one objection that was not upheld, paragraph 17 of a statement from a Mr Tyrell, the Arbitrator said that he would give leave to Mr Niven to call oral evidence dealing with that paragraph. At the conclusion of submissions, the Arbitrator indicated that paragraph 17 of Mr Tyrell’s statement did not assist him (T73.16) and Mr Niven did not press his objection (T73.19).
It follows that, without properly identifying the evidence that was said to have been wrongly admitted, and how that has affected the outcome, this ground of appeal is completely specious.
CONCLUSION
This appeal was completely without merit. The submissions in support and reply demonstrated a fundamental misunderstanding of the evidence and of the legal issues involved in cases under cl 2 of Sch 1.
DECISION
The Arbitrator’s determination of 29 May 2015 is confirmed.
Bill Roche
Deputy President
2 September 2015
I, STEVEN HAMPSON, CERTIFY THAT THIS IS A TRUE AND ACCURATE RECORD OF THE REASONS FOR DECISION OF BILL ROCHE, DEPUTY PRESIDENT OF THE WORKERS COMPENSATION COMMISSION.
ASSOCIATE
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