MMM Mechanical Services Pty Ltd v King

[2005] NSWWCCPD 69

WORKERS COMPENSATION COMMISSION

APPEAL AGAINST A DECISION OF THE COMMISSION CONSTITUTED BY AN ARBITRATOR

CITATION:MMM Mechanical Services Pty Ltd v King [2005] NSWWCCPD 69

APPELLANT:  MMM Mechanical Services Pty Ltd

RESPONDENT:  Cecil King

INSURER:Employers Mutual Indemnity (Workers Compensation) Ltd

FILE NUMBER:  WCC6223-04

DATE OF ARBITRATOR’S DECISION:          7 December 2004

DATE OF APPEAL DECISION:  15 July 2005

SUBJECT MATTER OF DECISION: Whether the Respondent was a ‘deemed worker’ pursuant to Schedule 1, clause 2 of the Workplace Injury Management and Workers Compensation Act 1998

PRESIDENTIAL MEMBER:  Acting Deputy President Robin Handley

HEARING:On the papers

REPRESENTATION:  Appellant: Nevill & Edwards, Solicitors

Respondent: Edwards Michael Lawyers

ORDERS MADE ON APPEAL:  The decision of the Arbitrator is confirmed.

The Appellant, MMM Mechanical Services Pty Ltd, is to pay the Respondent, Mr King’s costs of this appeal as agreed or assessed.

BACKGROUND TO THE APPEAL

1. On 23 December 2004, MMM Mechanical Services Pty Ltd (‘MMM’) sought leave to bring an ‘Appeal Against Decision of Arbitrator’ in the Workers Compensation Commission (‘the Commission’) in respect of a decision dated 7 December 2004.

1. The Respondent to the Appeal is Cecil King.

1. Mr King was born on 1 February 1939 and is aged 66. In April 2000, Mr King and his wife, Lisa King, purchased a truck that was registered in Mrs King’s name. At about that time, Mrs King also registered a business name “Triple K Transport”. Mr King commenced working as a general carrier using the name Triple K Transport on handwritten invoices. He was the sole driver of the truck.

1. On 1 May 2001, Mr King was at MMM’s premises at Silverwater, pursuant to a contract with MMM, where one of MMM’s employees was using a forklift to load Mr King’s truck. In the process of doing so, the forklift ran over Mr King’s left foot, causing injury to the foot requiring surgery. As a result, Mr King claims to have ongoing problems with the foot including pain and restrictions on walking.

1. Mr King notified MMM of the injury on 1 May 2001 and, on 8 January 2004, lodged a claim for medical expenses and compensation for non-economic loss. On 19 April 2004, Mr King’s ‘Application to Resolve a Dispute’ was registered by the Commission. MMM filed its ‘Reply’ on 10 May 2004, denying liability. On 16 June 2004, the Arbitrator conducted a teleconference with the parties and, on 31 August 2004, the dispute not having been resolved through conciliation, the Arbitrator conducted an arbitration hearing. On 7 December 2004, the Arbitrator made a determination as set out below.

THE DECISION UNDER REVIEW

1. The Certificate of Determination, dated 7 December 2004, records the Arbitrator’s orders as follows:

“1. Cecil King is a deemed worker pursuant to Schedule 1 cl 2 of the Workplace Injury Management and Workers Compensation Act 1998.
2. The medical issues in dispute between the parties are referred to an Approved Medical Specialist, for assessment.”

1. The Arbitrator provided a ‘Statement of Reasons for Decision’ which is discussed further below.

ISSUES IN DISPUTE

1. The issue in dispute in the appeal is whether Mr King is deemed to be a ‘worker’ pursuant to Schedule 1, clause 2 of the Workplace Injury Management and Workers Compensation Act 1998 (‘the 1998 Act’). MMM submits the Arbitrator erred in making findings of fact leading to his determination that were not supported by the evidence. Mr King’s counsel denies this.

ON THE PAPERS REVIEW

1. Section 354(6) of the 1998 Act states:

“(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.”

1. Having regard to Practice Directions Numbers 1 and 6, the documents that are before me, and the submission by MMM 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. I note that Mr King’s solicitors are silent on whether the matter can be dealt with in this way. I also note that although the sound recording of the arbitration hearing is defective and of no assistance, the Arbitrator has provided a detailed ‘Statement of Reasons for Decision’.

1. Neither party sought to adduce fresh evidence.

LEAVE

1. Before proceeding to deal with an appeal, the Commission must determine whether the application meets the requirements of section 352 of the 1998 Act. The appeal was lodged within 28 days of the Arbitrator’s decision in compliance with section 352(4).

1. With regard to section 352(2)(a), I am satisfied that the amount of compensation at issue is at least $5,000. With regard to section 352(2)(b), as Deputy President Byron held in Mawson vFletchers International Exports Pty Limited [2002] NSW WCC PD 5, at paragraph 22, and for the reasons he stated, the subparagraph (b) “qualification or condition does not and cannot meaningfully apply to a decision” where an award of compensation has not been made. In any event, MMM states that it appeals against the Arbitrator’s decision in its entirety. Thus, the threshold prescribed by section 352(2) has been met and I therefore grant MMM leave to appeal.

SUBMISSIONS

1. MMM submits that the Arbitrator erred by inferring that an exclusive working arrangement existed between MMM and Mr King from a conversation between Mr King and MMM’s supervisor. Indicators of there being no exclusive work commitment are that in November 2000, when MMM did not have any work for Mr King, he obtained work with Tricke Air Installations at MMM’s suggestion. Moreover, between January and May 2001, Mr King sold scrap metal that he was asked by MMM to dump, to Metalcorp Recyclers Pty Ltd for a small profit. The Arbitrator ignored the fact that Mr King was free to enter into contracts with others should he choose to do so. It is not in dispute that he provided his own truck and kept his own hours. At the time the alleged injury was sustained by Mr King, he was carrying on his own trade or business while working for MMM. Mr King was in business and held himself out to be in business. Consequently, he was not a ‘deemed worker’ pursuant to Schedule 1, clause 2(1) of the 1998 Act.

1. Mr King’s counsel submits there is no inconsistency in the Arbitrator’s reasoning. The Arbitrator’s finding that after the conversation with MMM’s supervisor, Mr King made himself exclusively available to MMM and did not hold himself out or seek work from anyone else, was a finding that was clearly available on the evidence. The Arbitrator was not, however, satisfied of the existence of a continuing contract between MMM and Mr King. Rather, the Arbitrator reasoned that viewed objectively over a course of time, the relationship between MMM and Mr King was such that Mr King was working for MMM on an exclusive basis and was no longer carrying on a general business. There was ample evidence on which the Arbitrator could base this finding and no evidence from MMM to the contrary.

1. With regard to Mr King earning some money by selling scrap metal, Mr King’s counsel submits that this was of little relevance. It was tacitly consented to by MMM and, though a factor to be considered as part of the surrounding circumstances, it was not determinative of the relationship or whether Mr King was conducting a business. The Arbitrator’s findings in this regard are available on the evidence and his reasoning is logical and does not demonstrate error.

EVIDENCE

1. The evidence relevant to this appeal is that concerning Mr King’s work and his relationship with MMM, a company which manufactures and installs air conditioning systems. In his statement dated 11 January 2004, Mr King said he had been working with MMM as a truck driver for the last few years:

“In respect of my employment with MMM Mechanical Services, I run a business with my wife and we own the truck I was using at the time. I do however have a verbal contract to MMM Mechanical Services and was not performing work for anyone else at that time. I was not advertising at the time and did not have business cards, and did not seek work elsewhere. If MMM Mechanical Services were not providing me with work at the time then I would not have any work to perform.”

1. Mr King also gave evidence at the arbitration hearing on 31 August 2004. Unfortunately, because of a defective sound recording, no transcript of that hearing is available. However, the Arbitrator set out the relevant evidence in some detail in his ‘Statement of Reasons for Decision’. The Arbitrator records:

“14. The Applicant commenced work as a general carrier performing work for a number of different clients and invoiced them using the name ‘Triple K Transport’ on handwritten invoices. From the commencement of that work until the injury of 1 May 2001 the Applicant was the only person to drive the truck in the performance of the carrying work. Prior to the injury of 1 May 2001 the Applicant had no business cards in his name or in the name of ‘Triple K Transport’ nor any logo or uniform indicating his name or the business name ‘Triple K Transport’ …

17. In April 2000, soon after purchase of the truck, the Applicant had a meeting with a supervisor of the Respondent, Mr Chapman, who explained what would be required of the Applicant when performing work for the Respondent. Thereafter at various times the Applicant was contacted by the Respondent to see if he was available to perform work for the Respondent …

19. The Applicant was not paid by the Respondent according to distance travelled, by weight or by fixed quote [unlike in respect of the work he did for others] …

20. If available to do work for the Respondent, the Applicant was required at designated times to attend with his truck at the Respondent’s place of business, or at the address of the Respondent’s customers, to receive loads for delivery on behalf of the Respondent. The Applicant’s truck was loaded by and with the assistance of employees of the Respondent.

21. After the first six or eight weeks the Applicant contended that things changed in the business relationship between the Applicant and the respondent. The Applicant gave evidence that, after first starting to work for the respondent, for about the first six to eight weeks, that ‘Peter Chapman would ring me up and ask if I was available, if I was I would say – ‘yes – I was (sic) available’ – however sometimes I was not available, he used to book me in’.

22. The Applicant gave evidence of a conversation said to have taken place in about [sic] beginning of June 2000 to the following effect: ‘Peter Chapman asked me: ‘Are you available?’ (I was available, mostly I was available) – I said ‘From now on don’t ask me just tell me when and where you want me. He said ‘OK’.’….

23. The Applicant stated that ‘From then on Triple M would call on a daily basis or whilst on the job. He would say I want you here at 6, or 6.30 – mostly he called me to be on site at 6.30am – to take air conditioning ducts from Triple M to sites. Air conditioning components would be lifted onto my truck by the fork driver and when I arrived at site Triple M boys would unload the truck.’ He stated ‘They would also ask me to pick up stuff from different manufacturers who made ducts – B & M Botany, L & M Strathfield/Burwood, Tricke Installations.’

24. The Applicant stated that from about June 2000 through to May 2001 the nature of the work was always the same. When performing work for the Respondent the Applicant was paid an hourly rate of $37. According to the Respondent’s statement (paragraph 10) this hourly rate (plus GST) was still, in place as at February 2004.

25. After the introduction of GST, every week or so the Applicant would submit to the Respondent a time sheet indicating the start and finish times for work performed by the Applicant including a notation of the sites attended and the total hours spent. The Respondent would type up an invoice in the name of ‘Lisa King’ and add GST.

26. The timesheet was a standardised printed form bearing at the top the words ‘Timesheet for Cec King’ – the timesheet had no other company or business name references.”

1. Mr King testified that from June 2000, he only ever performed work for MMM except for a couple of weeks in about November 2000 when MMM had no work for him. Instead, MMM asked him to work for Tricke Air Installations. There was also one occasion when ‘Norton Leichardt’ paid him to deliver two air conditioning units that MMM was “pulling out” of the Olympics site. Mr King said that, otherwise, if he was not working for MMM, he did not go looking for work - he sat at home or did some gardening. At first, MMM paid Mr King by cheque payable to him but, later, at Mr King’s direction, the money was paid directly into his wife’s bank account.

1. Mr King also explained that if MMM was installing new air conditioning equipment, he would take scrap removed from the site to Metalcorp Recyclers Pty Ltd who paid him the cash value of the scrap. MMM were aware of this.

1. The Arbitrator found that with the minor exceptions of Mr King working for Tricke Air Installations and Norton Leichardt, from the time of his conversation with Mr Chapman in June 2000, he “made himself available to the Respondent on an exclusive basis”, performing carrying work only for MMM, and did not hold himself out or seek work from anyone else. The Arbitrator found that at the time of the injury, Mr King “was performing carrying work only for the Respondent and … was not employed by anyone other than himself”.

DISCUSSION AND FINDINGS

1. The role of the Presidential Member on appeal is to review the Arbitrator’s decision as a whole. The review is not a rehearing. In this case, MMM must demonstrate that the decision of the Arbitrator is affected by some legal, factual or discretionary error (Allesch v Maunz (2000) 203 CLR 172; The King Island Company Limited v Deery [2005] NSW WCC PD 1) in order to enliven the Presidential Member’s power to interfere with the Arbitrator’s decision pursuant to section 352(7) of the 1998 Act.

1. As stated above, the issue in dispute in the appeal is whether Mr King is deemed to be a ‘worker’ pursuant to Schedule 1, clause 2 of the 1998 Act. In submissions to the Arbitrator, Mr King’s counsel conceded that Mr King was not a worker at common law and, it appears, therefore, not within the definition of a ‘worker’ as defined in section 4 of the 1998 Act. However, Schedule 1, clause 2 states relevantly:

“ 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) to perform any work as an outworker,
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.”

1. The former, but essentially similar, version of this clause - Schedule 1, clause 2 of the Workers Compensation Act 1987, was considered by Bainton AJA in Scerri v Cahill (1995) 14 NSW CCR 389 (‘Scerri’):

“On its proper construction cl 2 of Sch 1 requires an applicant who relies on it to establish each of the ingredients, both positive and negative, to identify the relevant ‘work’. What he must establish is:

(a) that he was a party to the contract with the respondent to perform work;
(b) that the work exceeds $10 in value;
(c) that the work is not incidental to a trade or business regularly carried on by the applicant in his own name or under a business or firm name;
(d) that the applicant has neither sublet the contract nor employed workers in the performance of it.”

1. In Mr King’s case, MMM does not appear to dispute the Arbitrator’s finding that paragraphs (a), (b) and (d) are satisfied. The critical question, therefore, is whether paragraph (c) is also satisfied. Deputy President Byron reviewed the relevant law in Zhao v Monlea Pty Ltd t/as Nordex Interiors [2003] NSW WCC PD 11 (‘Zhao’). At paragraph 63, the Deputy President referred to Dixon J’s discussion of this in Humberstone v Northern Timber Mills (1949) 79 CLR 389 at 401-2:

“Dixon J said that the provision was intended to draw a distinction between two classes of independent contractors. These are on the one hand those whose relation to the principal is special or particular, and on the other hand there are those who perform contract work successively for customers or others. The first class is a contractor whose contract with the principal stands outside the course of the general business of the contractor or the general practice of his trade. This class is outside the statutory exclusion and, therefore, obtains the protection of the Act. The second class is a contractor who conducts as a matter of course a definite trade or business that he carries on systematically, or a contractor who holds himself out as ready to do so. This class comes within the statutory exclusion and does not have the benefit of the protection provided by the Act. To be excluded from the benefits of the Act, the applicant must have had at the date of entering into the contract with the person engaging him or her, an existing business in the course of which he carried on his trade regularly, either in his own name or under a firm or business name. His Honour went on to say at 402 that;

‘… these all indicate a business or trade conceived as independently existing or exercised by a person holding himself out to the public under that name or style. No doubt the policy is a matter of inference but it seems reasonable to suppose that it was considered proper that a person conducting a business in the course of which he contracted to perform work should carry the risk of personal injury as one of the hazards of his business, while the man who worked under contract but only for the employer or without any trade or business or outside his trade or business should, like an ordinary employee, be insured against the risk of injury in his work.’”

1. With regard to MMM’s submission that the Arbitrator read too much into ‘the conversation’ between Mr King and MMM’s supervisor, Mr Chapman, in June 2000, in my view there is nothing inconsistent in the Arbitrator’s discussion. The focus of paragraph (c) of the Scerri test is on the work performed by the contractor. The relevant enquiry, therefore, is as to the contractor’s work and business. In Mr King’s case, it is evidence of his understanding of the arrangement with MMM, of the work he undertook and his intentions in relation to his business that must be the focus, rather than MMM’s intentions in relation to the arrangement. In my view, there is nothing to indicate that the Arbitrator erred in his treatment of the evidence of the conversation, which he considered along with other evidence of Mr King’s work and business dealings.

1. With regard to Mr King’s earnings from selling scrap metal to Metalcorp Recyclers Pty Ltd, it is clear that the small amount of money Mr King earned from doing so, he treated as ‘lunch money’. He removed the scrap from the sites at which MMM was working, pursuant to his contractual arrangement with MMM. His earnings from selling the scrap were incidental to his work for MMM and insignificant in terms of the amount of money involved ($146.42 for the period 1 January 2001 to 1 May 2001) – essentially a small bonus of which MMM was aware.

1. With regard to Mr King’s work for Tricke Air Installations, according to Mr King this was for about two weeks in November 2000, at MMM’s suggestion, when they had no work for him. The Arbitrator found that Mr King undertook this work in accordance with what he considered was a direction from MMM at a time when it was “going through a quiet time”. The Arbitrator noted that Mr King’s work for Tricke Air Installations and for Metalcorp Recyclers Pty Ltd were exceptions in the extended period from June 2000 during which he otherwise worked only for MMM and did not advertise or hold himself out as available to do carrying work. In my view, there was ample evidence to support such a finding and that Mr King’s relationship with MMM was a “special or particular” one in which Mr King essentially regarded himself as ‘on call’ to undertake carrying work exclusively for MMM. Thus, I am not satisfied the Arbitrator erred in finding that “at the date of the injury the Applicant did not carry on a business regularly under his own name or under a firm or business name”.

1. In summary, I am not satisfied that the Arbitrator made any legal, factual or discretionary error and there is, therefore, no basis for my interfering with his decision. His conclusion that paragraph (c) of the Scerri test was satisfied and that Mr King was a ‘deemed worker’ within the meaning of Schedule 1, clause 2 of the Act should not be disturbed.

DECISION

1. The decision of the Arbitrator is confirmed.

COSTS

1. The Appellant, MMM Mechanical Services Pty Ltd, is to pay the Respondent, Mr King’s costs of this appeal as agreed or assessed.

OTHER

1. I refer the matter back to the Registrar for referral to an Approved Medical Specialist.

Robin Handley

Acting Deputy President  

15 July 2005

I CERTIFY THAT THIS IS A TRUE AND ACCURATE RECORD OF THE REASONS FOR DECISION OF ROBIN HANDLEY, ACTING DEPUTY PRESIDENT OF THE WORKERS COMPENSATION COMMISSION.

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