Millard v Golden Plains Fodder Australia Pty Ltd
[2007] SADC 47
•4 May 2007
DISTRICT COURT OF SOUTH AUSTRALIA
(Civil)
MILLARD v GOLDEN PLAINS FODDER AUSTRALIA PTY LTD
[2007] SADC 47
Judgment of His Honour Judge Boylan
4 May 2007
NEGLIGENCE - ESSENTIALS OF ACTION FOR NEGLIGENCE - WHO MAY SUE
Employee seeking common law damages - barred from action for common law damages as against employer - identity of employer - identity of parties to contract of service - tests for determining which of two putative employers is truly the employer.
Workers Compensation and Rehabilitation Act 1986 S.54(1); Workers Compensation and Rehabilitation Act 1986 S.3, referred to.
Finance Section Union of Australia v Commonwealth Bank of Australia (2001) 111 IR 241; Textile Footwear and Clothing Union of Australia v Bellechic Pty Ltd [1998] FCA 1465 (19 November 1998); Esanda Ltd v Burgess [1984] 2 NSWLR 139 at 153, applied.
Hollis v Vabu Pty Ltd (2001) 207 CLR 21, considered.
MILLARD v GOLDEN PLAINS FODDER AUSTRALIA PTY LTD
[2007] SADC 47
Shawn Millard injured his hand while working at a hay processing plant operated by Golden Plains Fodder Australia Pty Ltd. He now claims common law damages from Golden Plains but, owing to the operation of South Australia’s worker’s compensation legislation, he is not entitled to recover such damages from Golden Plains if it was his employer.[1] He argues that it was not; that an associated company, Macpri Pty Ltd, was his employer. I must decide one issue only: which of those two companies employed Mr Millard when he injured his hand on the 2nd of May 1998.
[1] Workers Compensation and Rehabilitation Act S.54(1)
That issue arises because, at different times, each of the two companies was registered as Mr Millard’s employer for the purposes of the legislation and, also at different times, each of them performed all or some of the usual functions of an employer. How that came about is best understood by looking first at the legislation.
The legislation
The Workcover Corporations Act 1994 and the Worker’s Compensation and Rehabilitation Act 1986, to which I shall refer as “the Act”, together establish a scheme of compulsory insurance. With some exceptions, which are not relevant here, all employers must register with the Workcover Corporation. Upon registration, an employer is given a unique registration number. Thereafter, employers pay premiums to Workcover which, in turn, assumes the responsibility of paying to injured workers compensation assessed by reference to the Act. The Act limits an employer’s liability to its liability under the Act. That is, it denies to a worker any right to claim common law damages from his employer.
“Employer” is defined in the Act. For the purposes of this case, an employer is “a person by whom a worker is employed under a contract of service”.[2] A contract of service is “a contract under which one person (the worker) is employed by another (the employer)”.[3] To decide who was Mr Millard’s employer, I must decide who were the parties to his contract of service. I shall return to that.
[2] Workers Compensation and Rehabilitation Act S.3
[3] orkers Compensation and Rehabilitation Act S.3
How is it that each company became registered?
Three farmers established the hay plant: John and Barry Price, who are brothers, and their then neighbour John McKay. Various members of their families worked in the business, including Barry’s wife Eyvonne and their son Stuart. The original accountant for the business was Mr Graham Sweeney, a close friend of Barry Price.
The families worked hard. The business prospered and the number of workers increased. Acting on Mr Sweeney’s advice, the Price brothers and John McKay incorporated Golden Plains Fodder Pty Ltd. They were its original directors. In July 1994, Mr Sweeney registered the company with Workcover as the employer of the workers at the hay plant and Workcover assigned it a registration number. From then, until June 1996, Golden Plains performed all of the functions of an employer. Those functions included paying the workers’ wages, deducting income tax and issuing group certificates. Its directors, or their delegates, gave instructions to the workers and the company complied with an employer’s workplace obligations. In that period there was a change of directors. John McKay died in September 1994 and his son, Duncan, replaced him as a director of Golden Plains.
In about June 1996, Mr Sweeney gave new advice and, acting on it, the directors of Golden Plains instructed him to arrange for the incorporation of Macpri. The directors were John and Barry Price and Duncan McKay. Upon Macpri’s incorporation, Golden Plains’s registration as the employer was cancelled. Macpri became the registered employer, was assigned a registration number and began paying the workers, deducting income tax from their wages and issuing group certificates. It was the registered employer when Mr Millard injured his hand and it remained so registered until June 2001 when its registration was cancelled and Golden Plains was again registered as the employer, albeit with a new registration number.
By 2001, Mr Stuart Price had become a director of Golden Plains. He first became a director in 1997, before Mr Millard was employed. Stuart Price was never a director of Macpri.
None of what I have set out so far is disputed nor is there any dispute about the important fact that, at all times, only Golden Plains carried on a business. Macpri never did. The workers at the hay plant generated income for Golden Plains and, out of that income, Macpri paid them after Golden Plains had transferred the necessary funds from its bank account to Macpri’s. But two matters are hotly disputed: the effect of the many documents that were tendered in evidence and the reason for Macpri’s incorporation. Those topics are important because each of them may help to identify the intention of Mr Millard and of the directors of the two companies at the time he began his employment. The intentions of the parties may assist in identifying the parties to the contract of employment.
The documents
I received a large number of documents. I have studied them all but shall refer to only a few of them individually. Most of the documents have not assisted me. Some of them suggest that Golden Plains Fodder employed Mr Millard, others suggest that Macpri employed him. Yet others are ambiguous. None of the documents, separately or in combination, answers the issue I must decide.
The documents to which I shall refer individually are those which Mr Millard signed when he began working at the hay plant. There was a dispute about what those documents were and when he signed them. On those issues, I accept Eyvonne Price’s evidence and I find that, on the 1st of May 1998, she provided Mr Millard with two documents. One was about occupational health and safety and the other was an authority for his wages to be paid directly into his bank account. Mr Millard signed both documents and returned them to Golden Plains’s office on the 2nd of May 1998 or caused them to be returned there within a few days thereafter.
The occupational health and safety document is on Golden Plains’s letterhead. Mr Millard has signed as “employee” in two places in the document. Eyvonne Price has also signed twice, once as “employer” and once as “the management (on behalf of the directors; John Cliff Price, Duncan Troy McKay, Barry Ralph Price and Stuart Price) for and on behalf of Golden Plains Fodder Australia Pty Ltd.”
The second document, the bank authority, is also on Golden Plains’s letterhead. Because neither document makes any mention of Macpri, Golden Plains argued that the documents show that Mr Millard knew he was contracting with Golden Plains and intended to do so. I reject that argument.
Mr Millard was only 16 when he began working at the hay plant. He had left school a few weeks earlier, only a little way into Year 10, and had been working on his family’s farm. His mother and Eyvonne Price knew each other and, through their connection, he got the job. It came as something of a surprise. He was working on the farm when Eyvonne Price rang about mid morning on the 1st of May to say that there was casual work available. He went almost immediately to the hay plant and reported to Eyvonne Price in the office. She took him to the area of the plant where he was to work. There, she introduced him to a fellow worker who showed him what to do and he began work. At the end of his first day, he received the documents to which I have referred.
I find that Mr Millard did not ever turn his mind to the precise identity of his employer. I accept his evidence that, as far as he was concerned, he was working at and for “the hay plant” as the business was known locally, although he was aware that its full name was Golden Plains Fodder. He first heard of Macpri a couple of weeks after his injury. He was recovering in hospital when he received a bank statement showing that Macpri had paid wages into his bank account. Thereafter, he became very familiar with Macpri because, as the employer registered with Workcover, all correspondence about his subsequent claim was with Macpri and, eventually, industrial proceedings were between him and Macpri.
Mr Millard’s mother also gave evidence. She was in much the same position as her son. She had no reason to think about the identity of the employer or of the hay plant’s corporate or administrative structure. Like him, Ms Millard thought her son would work at the hay plant and, also like him, did not know of Macpri until after his injury. She, too, became very familiar with Macpri because her son is dyslexic and she assisted him by reading business documents, including Workcover documents to him. Both she and her son were honest witnesses, but the nature of the case was such that they were of very little assistance on the issue of the identity of Mr Millard’s employer.
Mr Millard also called Mr Jolley, a Workcover officer, who explained Workcover’s registration system and, by reference to documents, the history of the registration of the two companies. It is as I have set out above. I make it plain that I have not used Mr Jolley’s evidence that Macpri was the registered employer in May 1998 as proof of the fact that Macpri was Mr Millard’s employer at the time. It is an item of evidence, albeit an important one, which I have considered together with all the other evidence.
Why was Macpri created?
I turn now to the other disputed matter, namely, the reason for Macpri’s incorporation. Mr Sweeney died in 1999. In his absence, the Prices should have been able to give the most helpful evidence on this topic; they now have the best and most intimate knowledge of the history and functions of the two companies. Their evidence was that Golden Plains Fodder was always the employer of the workers at the hay plant, that Macpri was ever only an administrative convenience. They told me that Mrs Eyvonne Price was originally the book-keeper for the company. As the business grew, the book-keeping became more complicated. The manual system of paying wages and keeping associated records was unwieldy. Therefore, they said, Mr Sweeney incorporated Macpri as a means of making Mrs Price’s job easier. It was no more than a “payroll company” and had never been an employer. I cannot rely on any of that evidence because, a few years ago, in another court, each of those three witnesses said the opposite.
In 2001, a number of workers at the hay plant were dismissed. At least one of them brought unfair dismissal proceedings in the Industrial Commission. Barry, Eyvonne and Stuart Price signed statements which were tendered in evidence. In those statements they asserted that Macpri was the employer of the workers. Moreover, they included in their statements particular evidence to support that general assertion. For instance, Barry Price said in his statement dated the 19th of October 2003 that Macpri was set up to supply labour to the hay plant and that he and his brother John, in their capacity as directors of Macpri, gave instruction to the workers. In evidence before me, he said that each of those statements was wrong. Eyvonne Price said in a statement made on 20 October 2003 that she understood Macpri was established to employ the staff and to supply them to Golden Plains Fodder. In evidence before me she said that she learned of the existence of Macpri when Mr Sweeney told her he was going to create a “payroll company” for accounting purposes. Mrs Price admitted that her statement in 2003 was not true and that, at the time she made the statement, she knew that it was not true. In Stuart Price’s statement to the Industrial Commission, he said that the three directors of Macpri delegated authority to deal with some issues involving employees to Golden Plains management, directors and staff. In evidence before me, he said that that statement was not correct. Mr Stuart Price is an intelligent man and was plainly embarrassed when he gave that evidence. All three of the Prices tried to explain their inconsistencies by saying that they simply signed what their lawyers in the industrial proceedings asked them to sign. I do not accept that explanation. In the proceedings in the Industrial Commission and in the proceedings before me, the Prices gave whatever evidence better, or best, suited their purposes at the time. I cannot rely on it. I find that, at the time of Macpri’s registration and up to and including the time of Mr Millard’s employment, the directors of both companies intended that Macpri be the employer of the workers at the hay plant.
The law
I must now identify the relevant law and apply it to the facts as I have found them.
Courts have developed various tests to determine the identity of an employer although most of them have been developed in efforts to determine whether a worker is an employee or an independent contractor. In that context, in Hollis v Vabu Pty Ltd (2001) 207 CLR 21 the High Court said that what must be considered is the “totality of the relationship between the parties”. I have tried to apply that in the context of this case. In doing so I have considered a number of aspects of the relationship between Mr Millard and the two companies. I have considered who had the right to control Mr Millard but have not found that a helpful inquiry because the directors of the two companies were nearly the same. I do not think that Stuart Price’s appointment as a director of Golden Plains in 1997 is significant. Control of both companies, in May 1998, remained with John and Barry Price and Duncan McKay.
I have considered, and have been troubled by one aspect of the relationship. Mr Millard worked for the benefit of Golden Plains. His efforts generated income for that company. In no sense did he work for the benefit of Macpri. In particular, he did not earn income for it in the way he would have had Macpri been a labour hire company. It was not. But that is only one aspect of the total relationship between the parties, a relationship which included Macpri. That aspect of the test does not resolve the issue for me.
In my view, the intentions of the parties provide the answer. That has been held to be the deciding factor in a number of cases. I refer especially to Finance Sector Union of Australia v Commonwealth Bank of Australia (2001) 111 IR 241, a decision of Moore J., and to Textile Footwear and Clothing Union of Australia v Bellechic Pty Ltd & Ors [1998] FCA 1465 (19 November 1998), a decision of Ryan J. Neither of those cases was about the distinction between an independent contractor and an employee. In both of them, the issue, as here, was which of two putative employers was truly the employer.
Moore J said at p. 267 paragraph 63:
“Ultimately, however, the answer emerges in my opinion, from a consideration of the intentions of the parties and, in particular, the positions adopted by the seconded employees themselves.”
Ryan J said at p.7:
“In those circumstances, in which the employees were engaged to work in a business in which a number of separate corporate entities participated otherwise than as partners, it was open to those controlling the business to select which company should be the employer provided that the selection was consistent with the financial and administrative organisation of the business and was not otherwise a sham.”
Neither of those two cases is on all fours with this case and I acknowledge that, in Bellechic, each of the putative employees was engaged in a business. But the tests which their Honours applied are apposite here. The directors of Golden Plains and of Macpri were entitled to select Macpri as the employer. That selection was not a sham in the way in which that term is understood. See Esanda Ltd v Burgess [1984] 2 NSWLR 139, especially at 153. They intended that Macpri be the party which entered into the contract of service with Mr Millard. Mr Millard neither thought about nor cared about the actual identity of the other party to his contract. In those circumstances, he contracted with Macpri. Accordingly, I conclude that Macpri was Mr Millard’s employer.
I regret my conclusion for two reasons. First, it appears to sanction a scheme which defeats one of the principal aims of the Act. But, as I have said, the scheme was not a sham and was not otherwise unlawful. Secondly, my conclusion appears to be inconsistent with the decision of the Industrial Commission. But the Industrial Commission was considering different employees in different circumstances. In particular, the employees in that case had entered into Australian Workplace Agreements with Golden Plains. I am concerned only with Mr Millard’s contract.
On the one issue which I have been asked to decide there will be judgment for the plaintiff.
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