JURISDICTION : DISTRICT COURT OF WESTERN AUSTRALIA
IN CIVIL
LOCATION: PERTH
CITATION: MOON RECRUITMENT PTY LTD -v- EXECOM SOFTWARE PTY LTD t/as EXECOM PERSONNEL [2025] WADC 18
CORAM: SWEENEY DCJ
HEARD: 8 JUNE 2023
DELIVERED : 3 APRIL 2025
FILE NO/S: APP 66 of 2022
BETWEEN: MOON RECRUITMENT PTY LTD
Appellant
AND
EXECOM SOFTWARE PTY LTD t/as EXECOM PERSONNEL
First Respondent
ADAM HORNE
Second Respondent
ON APPEAL FROM:
Jurisdiction : WORKERS' COMPENSATION ARBITRATION SERVICE
Coram: ARBITRATOR RUTHERFORD
File Number : A104376
Catchwords:
Workers' compensation - True employer case - Alleged error of law by arbitrator - Identity of employer - Misdescription of party
Legislation:
Workers' Compensation and Injury Management Act 1981 (WA), s 5, s 71
Result:
Leave to appeal refused in APP 66 of 2022 and related APP 65 of 2022
The court will hear from the parties as to the possible amendment of the appellant in both appeals prior to the making of final orders
Representation:
Counsel:
| Appellant | : | Mr G R Hancy |
| First Respondent | : | Mr T Lampropoulos |
| Second Respondent | : | Mr R D McCabe |
Solicitors:
| Appellant | : | Hall & Wilcox (Perth) |
| First Respondent | : | HWL Ebsworth Lawyers (Perth) |
| Second Respondent | : | Foyle Legal |
Case(s) referred to in decision(s):
Agrigrain Pty Ltd v Rindfleish [2024] NSWCA 295
Australian Broadcasting Tribunal v Bond [1990] HCA 33; (1990) 170 CLR 321
Australian Mutual Provident Society v Chaplin; sub nom Australian Mutual Provident Society v Allan (1978) 52 ALJR 407; (1978) 18 ALR 385
BHP Billiton Iron Ore Pty Ltd v Brady [2008] WASCA 250
BP Refinery (Westernport) Pty Ltd v Shire of Hastings (1977) 180 CLR 266
Brambles Holdings Ltd v Bathurst City Council [2001] NSWCA 61; (2001) 53 NSWLR 153
Brogden v Metropolitan Railway Company (1877) 2 App Cas 666
C & T Grinter Transport Services Pty Ltd (in liq) & Grinter Transport Pty Ltd (in liq); Ex parte Fitzgerald & Adams [2004] FCA 1148
Carey v President of the Industrial Court Queensland [2004] QCA 62
Catholic Education Office of WA v Granitto [2012] WASCA 266
Codelfa Construction Pty Ltd v State Rail Authority of New South Wales (1982) 149 CLR 337
Construction, Forestry, Maritime, Mining and Energy Union v Personnel Contracting Pty Ltd [2022] HCA 1; (2022) 275 CLR 165; (2022) 96 ALJR 89
Damevski v Giudice [2003] FCAFC 252
Empirnall Holdings Pty Ltd v Machon Paull Partners Pty Ltd (1988) 14 NSWLR 523
Erceg v Galati Nominees Pty Ltd [2016] WASCA 112
Esanda Ltd v Burgess [1984] 2 NSWLR 139; [1985] ANZ ConvR 32
Fagan v Minister for Corrective Services [2024] WASCA 167
Golden Plains Fodder Australia Pty Ltd v Millard [2007] SASC 391
Gothard, in the matter of AFG Pty Ltd (Receivers and Managers appointed) (in liq) v Davey [2010] FCA 1163
Hawke v Edwards (1947) 48 SR (NSW) 21
Hollis v Vabu Pty Ltd [2001] HCA 44; (2001) 207 CLR 21
Laidlaw v Hillier Hewitt Elsley Pty Ltd [2009] NSWCA 44
Maggbury Pty Ltd v Hafele Australia Pty Ltd [2001] HCA 70; (2001) 210 CLR 181
Marks v Coles Supermarkets [2021] WASCA 176
Marshall v Whittaker's Building Supply Company (1963) 109 CLR 210
McCluskey v Karagiozis [2002] FCA 1137; (2002) 120 IR 147
Mushroom Composters Pty Ltd v IS & DE Robertson Pty Ltd [2015] NSWCA 1
Narich Pty Ltd v Commissioner of Pay-roll Tax [1983] 2 NSWLR 597
Nokes v Doncaster Amalgamated Collieries [1940] AC 1014
Nugawela v Medical Board of Australia [2023] WASCA 92
Pacific Industrial Co v Jakovljevic [2008] WASCA 60
Pitcher v Langford (1991) 23 NSWLR 142
R v Foster; Ex parte The Commonwealth Life (Amalgamated) Assurances Ltd (1952) 85 CLR 138
Raftland Pty Ltd as Trustee of the Raftland Trust v Commissioner of Taxation [2008] HCA 21; (2008) 238 CLR 516
Resilient Investment Group Pty Ltd v Barnet and Hodgkinson as liquidators of Spitfire Corporation Ltd (in liq) [2023] NSWCA 118
RJ Baker Nominees Pty Ltd v Parsons Management Group Pty Ltd [2010] WASCA 128
Rodriguez v Telstra Corporation Ltd [2002] FCA 30
Shaw v Bindaree Beef Pty Ltd [2007] NSWCA 125
Snook v London and West Riding Investments Ltd [1967] 2 QB 786
Soulemezis v Dudley (Holdings) Pty Ltd (1987) 10 NSWLR 247
Stevens v Brodribb Sawmilling Company Pty Ltd (1986) 160 CLR 16
Sweeney v Boylan Nominees Pty Ltd [2006] HCA 19; (2006) 226 CLR 161
Taylor v Johnson [1983] HCA 5; (1983) 151 CLR 422
Toll (FGCT) Pty Ltd v Alphapharm Pty Ltd [2004] HCA 52; (2004) 219 CLR 165
SWEENEY DCJ:
Introduction
Two related appeals, both from the decision of an arbitrator of the Workers' Compensation Arbitration Service, were heard concurrently in this court. One appeal (APP 66/2022) concerned the arbitrator's finding that it was 'Moon Recruitment' (Moon Recruitment), and not the first respondent Execom Software Pty Ltd (Execom), which had been the employer of the second respondent, Mr Adam Horne, when he was injured at work. At the time of the hearing before the arbitrator, the appellant in this appeal, Moon Recruitment Pty Ltd was identified only as Moon Recruitment. The arbitrator ordered Moon Recruitment to reimburse Execom for the workers' compensation payments it had already made to Mr Horne.
In a related application by Mr Horne, the arbitrator also ordered that Ms Kerrie Moon trading as Moon Recruitment pay weekly workers' compensation payments to Mr Horne. The other appeal (APP 65/2022) concerned that order.
It was uncontroversial that Mr Horne had been injured in the workplace of Echo Marine on 2 September 2019, his first day of work. He had answered an advertisement placed by Moon Recruitment in August 2019 for a three-month position as a fabricator on a boat building project with Echo Marine in the suburb of Henderson, at competitive industry rates.
Moon Recruitment had an agreement with Echo Marine to supply workers to it on a labour-hire basis. 'Labour-hire' workers are typically employed and paid by the labour-hire business, but work at the 'host' project or business, often under the direct supervision of the host, and the labour-hire business typically charges the host business for their workers' wages, superannuation, workers' compensation insurance premiums and other expenses, and an additional fee for providing the workers. Under such an arrangement, it was the labour‑hire business, rather than the host business, which was obliged by the Workers' Compensation and Injury Management Act 1981 (WA) (the Act) to arrange workers' compensation insurance to cover any work‑related injury.
Ms Kerrie Moon of Moon Recruitment interviewed Mr Horne and thought him suitable, sent him to Echo Marine for his welding test to demonstrate his skills and told him that he had secured the job subject to a drug and alcohol screen, which she organised for him. She also provided him with a uniform.
By prior arrangement between Moon Recruitment and Execom, Mr Horne was then sent a written offer on 30 August 2019 by Execom (the Execom offer) concerning that same job, by which he would agree to provide his services to Execom's 'client' and Execom would agree to pay him, as well as to take out workers' compensation insurance which covered him. But Echo Marine was not Execom's client. It had no contractual or other relationship with Echo Marine, the business at which he was to work. Execom did arrange for Mr Horne to be covered by a workers' compensation policy with its insurer. Mr Horne commenced work at Echo Marine and was promptly injured. Weeks after he had been injured, Mr Horne signed the Execom offer. Execom made a claim on its insurer, which accepted liability to make workers' compensation payments to Mr Horne and did so.
Eventually, however, Execom brought an application against Mr Horne and Moon Recruitment (matter no A104376) pursuant to s 71 of the Act, asserting that Mr Horne had not been lawfully entitled to those payments from Execom. In the event that it was successful, Execom sought an order that Moon Recruitment, which it argued was Mr Horne's employer, reimburse it for the payments it had made. No order was sought against Mr Horne. Mr Horne brought his own application (matter no A105048) against both Execom and 'Kerrie Moon t/as Moon Recruitment', seeking an order for weekly compensation payments and expenses against whichever entity was found to be liable in matter A104376. The matters were consolidated and heard together and the arbitrator published the one decision.
It being Execom's application for reimbursement, the onus lay on it to satisfy the arbitrator, on the balance of probabilities, that it was not Mr Horne's employer within the meaning of the Act and he had not been lawfully entitled, therefore, to the payments he had received from Execom. It was accepted by all parties during that hearing, as before this court, that Mr Horne was entitled to receive workers' compensation payments, the issue being which of the two potential employers was liable for those payments. It was accepted that one of the parties was liable as Mr Horne's employer within the meaning of the Act. The arbitrator was persuaded that Execom was not Mr Horne's employer and that Moon Recruitment was, and ordered Moon Recruitment to reimburse Execom accordingly. Moon Recruitment appeals that decision by these proceedings: APP 66/2022. That is the substantive issue before this court.
For the reasons which appear below, and subject to the description of the party being clarified, in APP 66/2022 the arbitrator's decision is upheld.
In Mr Horne's related application before the arbitrator, seeking an order for weekly workers' compensation payments from whichever party was found liable in matter A104376, the arbitrator ordered 'the first respondent' in that application to make those payments, the first respondent having been named as 'Kerrie Moon t/as Moon Recruitment'. By APP 65/2022 Ms Moon appeals that decision on the basis that it was Moon Recruitment Pty Ltd which traded as Moon Recruitment, and not Ms Moon in her personal capacity and that Ms Moon did not enter into any contract of employment with Mr Horne.
As mentioned above, the tribunal heading in the application by Execom in matter A104376 described the second respondent as merely 'Moon Recruitment', not 'Moon Recruitment Pty Ltd'. The arbitrator in his reasons for both matters simply referred to 'Moon Recruitment', abbreviated to 'Moon'.
The variations 'Moon Recruitment', 'Moon Recruitment Pty Ltd' and 'Kerrie Moon trading as Moon Recruitment' were used interchangeably in the filed documents and documentary evidence before the arbitrator. Amongst the exhibits before the arbitrator, 'Moon Recruitment' was the name employed in a 2015 agreement between Moon Recruitment and Execom, but 'Moon Recruitment Pty Ltd' was the name employed in a July 2019 agreement between Moon Recruitment and Echo Marine, prior to Mr Horne's injury occurring.
Counsel for both Moon Recruitment and Ms Moon informed this court that Ms Moon had once traded under the business name 'Moon Recruitment' but, by the relevant time, Moon Recruitment was an incorporated body and Ms Moon no longer traded in her own capacity. The issue was not raised with the arbitrator.
The two orders made were not, on their face, inconsistent. Had one order referred to Moon Recruitment Pty Ltd while the other related to Ms Moon, there would have been an error on the face of two inconsistent orders but, in fact, neither order identified Moon Recruitment as a corporate body.
The arbitrator made no finding in his reasons that Ms Moon was the employer of Mr Horne in her personal capacity. If the issue of the description had been raised by Ms Moon and Moon Recruitment's lawyers before the arbitrator, an amendment could have been made at that time to the description of the party. The arbitrator had power to set his own practice and procedure: s 188(5) of the Act. He also had the power to correct an error, post decision, to a material mistake in the description of any person: s 216. This court has power on appeal to vary any decision made, or make an additional decision as should have been made in the first instance, as this court thinks fit: s 250. That power encompasses an amendment to the description of the party in the orders made.
It was made plain before this court that this argument was not advanced on the part of Ms Moon or Moon Recruitment on appeal in order that Mr Horne would not be able to receive workers' compensation payments. The court was informed that the insurance company which had funded the appeals would respond to the liability to make payments in the event the substantive appeal failed. In those circumstances and on that basis, neither Mr Horne nor Execom opposed an amendment being made by this court to the description identifying the proper party to make those workers' compensation payments in the event that the substantive appeal failed. If the appeal in APP 66/2022 succeeded and liability rested once more with Execom, then the point was academic. After those preliminary discussions and on that basis, Mr Horne, who took a neutral stance on the substantive issues, did not wish to take an active role in the hearing and his counsel was given leave to withdraw to await this decision. The matter of the amendment is revisited at the conclusion of this decision.
Nature of appeal to this court
The arbitrator provided written reasons for his decision. In such circumstances a party may, with the leave of this court, appeal the decision, but this court is not to grant leave unless 'a question of law is involved': s 247(2) of the Act. No leave had been given in advance of the hearing of the appeals.
A 'question of law is involved' where either an error of law, or an error of mixed law and fact, is involved. In a plain case, the application for leave may be dealt with before considering the grounds of appeal, but often it may be preferable to consider the question of leave after considering the merits of the grounds, and the court is not bound to accept that an error of law is 'involved' merely because it has been asserted: BHP Billiton Iron Ore Pty Ltd v Brady [2008] WASCA 250 [14] ‑ [15] (Pullin JA).
No error of law is involved in a wrong or doubtful finding or inference of fact on the evidence, but where findings of fact have been made or inferences drawn without any evidence to support them, an error of law is involved: Erceg v Galati Nominees Pty Ltd [2016] WASCA 112 [31] (Erceg v Galati) and the cases cited therein.
An appeal to this court pursuant to s 247 of the Act is by way of a review on the basis of the materials which were before the arbitrator, subject to the giving of leave to adduce fresh or other evidence. The parties did not seek to put any additional evidence before this court.
If an error of law is involved, the grant of leave to appeal remains discretionary but, if leave to appeal is granted, then the appeal is to be by way of a real review of the decision. Such a review is not a hearing de novo. The court does not start again from the beginning, as though the original decision under appeal had not been made, in order to arrive at a view afresh. An appellant must provide a proper basis, by way of establishing error, for disturbing the decision of the arbitrator: Pacific Industrial Co v Jakovljevic [2008] WASCA 60 [26] - [27] (Wheeler JA) (Pacific Industrial). That is in addition to the requirement that, in order to obtain leave to appeal, the appeal must involve a matter of law: Catholic Education Office of WA v Granitto [2012] WASCA 266 [56] - [57] (cited with approval in Marks v Coles Supermarkets [2021] WASCA 176 [116]). Simply arguing that this court should reach a different decision on the evidence and substitute that decision for that of the arbitrator is not a proper basis for a review: Pacific Industrial [26] ‑ [27] (Wheeler JA).
The appeal in Pacific Industrial concerned the interpretation of the previous version of s 247, which was in similar terms to the section pursuant to which these appeals were filed, except that an appeal lay to the since-abolished office of the Commissioner. The Commissioner had observed that a finding of fact based on the arbitrator's evaluation of the evidence was not correctable on appeal. On appeal from the Commissioner's decision, Wheeler JA, with whom the rest of the court agreed, drew the distinction between the requirement that a question of law be involved as a condition precedent to the granting of leave to appeal, and the task to be undertaken in the review of the arbitrator's decision. If an error of law is involved, then the jurisdiction to review is enlivened and the court is not restricted to correcting errors of law. Pacific Industrial was affirmed as correct and of continued application in the Court of Appeal decision of Marks v Coles Supermarkets [5], [124]. In the judgment, the court held that [124]:
It is not sufficient to satisfy the District Court judge that a decision other than that made by the arbitrator is correct and preferable. Some material error of fact or law, or some other miscarriage of justice, must be established.
The court also made observations [126] about the need for this court to bear in mind the natural limitations of an appellate court and the advantage which the original fact‑finder enjoys in having seen and heard the witnesses testify first-hand. A distinction was drawn, however, between findings of primary and secondary facts based on an assessment of that evidence, which are likely to have been affected by decisions made about credibility of the witnesses, and inferences to be drawn from those findings of fact, as to which the appellate court is in as good a position as the original fact‑finder: [126] ‑ [130]. If an error or a miscarriage of justice is established on appeal then, where this court is able to substitute its own decision, it should do so, otherwise it may be necessary to remit the matter for redetermination: Marks v Coles Supermarkets [131].
Grounds of appeal in APP 66/2022 against the finding that Execom was not liable to pay workers' compensation
There are two grounds of appeal: firstly, that the arbitrator erred in law in holding that no contract existed between Execom and Mr Horne at the time he was injured on 2 September 2019 in that, prior to that date, Execom had made a written offer to engage Mr Horne which set out his terms of engagement and pay, which offer was accepted by Mr Horne by his conduct, and later accepted in writing. The second ground asserts that the arbitrator erred in law in finding that there was any contract of employment between Moon Recruitment and Mr Horne. It asserts that no offer setting out the terms of engagement and his pay was ever made to Mr Horne by Moon Recruitment.
The grounds were expressed in language consistent with the written and oral submissions for Moon Recruitment: namely that it was not necessary for the arbitrator to find that the offer made by Execom was a contract of employment as such, because it was a contract by which Mr Horne fell within the definition of 'worker' under the Act in any event. As will be seen when the statutory provisions are set out below, there are several definitions of 'worker' within the Act, and a person who enters into a contract of employment, or engages a 'worker', is thereby an 'employer'. The contest between the parties was not about whether or not Mr Horne came within the definition of 'worker' within the Act. It was accepted that he was a 'worker' and that sufficed to render one of the parties his employer. The contest was as to which of the two entities had become his 'employer' within the meaning of the Act. It was not critical to Moon Recruitment's argument, therefore, that the precise pathway be arrived at. It argued, however, that it was Execom which had entered into the contract with Mr Horne by which he became a 'worker'.
It is convenient then in this judgment to refer to the issue as being related to which of the two was his 'employer' and to his contract of 'employment', without the constant need to qualify what is encompassed in that word by reference to the Act, and so I intend to do so.
In the notice of appeal, the question of law said to be involved was whether a contract was made between Execom and Mr Horne, and whether a contract of employment or any contract was made between Moon Recruitment and Mr Horne. Expressed in that broad fashion, it was not possible from the grounds to determine whether the 'question of law' was merely an attempt to re‑agitate the factual disputes before the arbitrator in the hope of a more favourable outcome. On that basis, Execom argued that there was no question of law involved.
In Moon Recruitment's written submissions, the question of law was said to be
… whether the facts as found were sufficient to support the conclusion that a contract was made between Horne and (Moon Recruitment) and was one of employment …
which was equally opaque. But there were layers to that question, developed in submissions.
The written and oral submissions asserted that the arbitrator had adopted a flawed approach and taken into account legally irrelevant matters, contrary to the approach dictated by the High Court in the decision of Construction, Forestry, Maritime, Mining and Energy Union v Personnel Contracting Pty Ltd [2022] HCA 1; (2022) 275 CLR 165; (2022) 96 ALJR 89 (CFMMEU v Personnel). If the arbitrator had taken into account irrelevant matters, that would amount to an error of law.
Expanding on that argument, Moon Recruitment then contended that there were insufficient legally relevant factual findings from which to find that Moon Recruitment had entered into a contract of employment with Mr Horne. If there was no evidence to support the findings made, that too would amount to an error of law. Alternatively, if the alleged error of law was demonstrated in the taking into account of irrelevant matters, then the jurisdiction to review the decision was enlivened, and the court was not restricted to correcting only errors of law, but could correct an error where there was no, or no sufficient evidentiary basis for the finding that Moon Recruitment had entered into a contract of employment with Mr Horne. It being apparent from the above that there were questions of law to be considered and decided in these reasons, then the question of leave is best determined after consideration of the merits of the appeal itself.
Complaint was also made in oral submissions as to the adequacy of the reasons given for the rulings. There was no ground of appeal alleging an inadequacy of reasons, and those submissions were advanced rather in support of the submission that the arbitrator made insufficient findings of fact to justify his conclusion.
The substance of the second appeal (APP 65/2022) was that the arbitrator erred in law in making the order against Ms Moon personally, rather than Moon Recruitment Pty Ltd. There was also complaint that the arbitrator erred in law in holding that there was a contract of employment made between Mr Horne and Ms Moon trading as Moon Recruitment. In reality, the arbitrator did not make that express finding, but that was the effect of the order made. That issue can be left to one side in the substance of these decisions and revisited at the end.
Statutory provisions
Before detailing the parties' submissions, it is relevant to briefly set out the statutory framework, because the question to be determined by the arbitrator had a context, namely the attribution of liability to make workers' compensation payments to an injured worker.
Pursuant to s 18(1) of the Act, if a 'worker' is injured, 'the employer' shall, subject to the Act, be liable to pay compensation in accordance with sch 1, which includes the payment of weekly payments for a worker who has been partially or totally incapacitated for work.
By s 160(1), every 'employer' is obliged to obtain and keep current an insurance policy from an approved insurer for the full amount of the employer's liability to pay compensation under the Act. Once requested, an approved insurance office is to provide that cover: s 160(3). The Act imposes obligations on both employers and insurers, failure to comply being an offence.
Section 5 relevantly defines 'worker':
worker does not include a person whose employment is of a casual nature and is not for the purpose of the employer's trade or business … but save as aforesaid, means any person who has entered into or works under a contract of service or apprenticeship with an employer, whether by way of manual labour, clerical work, or otherwise and whether the contract is expressed or implied, is oral or in writing.
…..
the term worker save as aforesaid, also includes -
(a)any person to whose service any industrial award or industrial agreement applies; and
(b)any person engaged by another person to work for the purpose of the other person's trade or business under a contract with him for service, the remuneration by whatever means of the person so working being in substance for his personal manual labour or services …
It was accepted by the parties that Mr Horne fell within the definition of a 'worker'. Section 5 also defines 'employer':
employer includes any body of persons, corporate or unincorporate, … and, where the services of a worker are temporarily lent or let on hire to another person by the person with whom the worker has entered into a contract of employment the latter shall, for the purposes of this Act, be deemed to continue to be the employer of the worker whilst he is working for that other person;
the term employer shall extend to any person for or by whom any worker, as defined in paragraph (a) or (b) of the definition of worker, works or is engaged;
It was accepted by the parties that one or other of Execom or Moon Recruitment was the 'employer' of Mr Horne and liable to make the workers' compensation payments. It was not suggested that both could be liable. The parties accepted it was one or the other.
The application before the arbitrator was brought by Execom pursuant to s 71(1) of the Act, which relevantly provides:
Where WorkCover WA, the employer, or the insurer has paid compensation … to a worker … and that person was not lawfully entitled to that payment … WorkCover WA, the employer, or the insurer, as the case may be, may apply for an order of an arbitrator that compensation or expenses so paid be refunded, and an arbitrator has jurisdiction to hear and determine such an application and … to make any order in relation thereto … as the arbitrator considers appropriate in the circumstances.
Section 71(2) provides:
Without limiting the orders that may be made under subsection (1), the arbitrator may, instead of making an order for a refund, order any person who the arbitrator determines was liable for the … compensation … to reimburse the person who paid the compensation …
Having found that Moon Recruitment was the employer, s 71(2) was the basis for the order that Moon Recruitment was to reimburse Execom for the workers' compensation payments it had made to Mr Horne.
An argument was but faintly floated that an application pursuant to s 71 pre-supposes that Execom was the employer, or it had no standing to make such an application. That argument was rejected by the arbitrator. It seems a hollow point, as the insurer behind Execom's payments could have made the application. There is no ground of appeal related to the arbitrator's conclusion on this point and no application was made to add such a ground. That is sufficient to deal with that point.
Factual findings made by the arbitrator which underpinned his reasons for decision
Three witnesses testified before the arbitrator, Ms Moon of Moon Recruitment, Ms Woodman of Execom and Mr Horne. An agreed book of documents was also put before him.
Early in his decision, the arbitrator summarised a number of factual matters under the heading of 'Background information and issues in dispute', the background information contained in [5] ‑ [15] amounting to factual findings. Clearly, he considered these facts to be established and/or uncontroversial. The arbitrator found:
•that Execom and Moon Recruitment are both labour‑hire organisations, with Execom also providing payroll services;
•that they had entered into an agreement whereby Execom agreed to provide payroll services for Moon Recruitment's employees for labour-hire as Moon Recruitment lacked the necessary cash flow to manage that itself, and so Execom agreed to pay the employee, described as a 'contractor', and take out workers' compensation insurance on the basis that it would then invoice Moon Recruitment for those sums plus its fee for providing the service, whereupon Moon Recruitment would then invoice its own client an amount including the wages and its own fee for providing the labour to its client, and would then pay Execom;
•Moon Recruitment entered into an agreement to provide labour‑hire services to Echo Marine for a fee. Relevant to this matter, in August 2019 Moon Recruitment advertised for fabricators to work for a three‑month contract with Echo Marine, and Mr Horne responded to the advertisement and was successful in obtaining employment;
•pursuant to its payroll agreement with Execom, on 30 August 2019 Moon Recruitment then sent Mr Horne's details to Execom, which then completed and sent the Execom offer to him, together with taxation and superannuation documents for him to sign and return and he read those documents that same day;
•Mr Horne began work at Echo Marine on 2 September 2019 and was injured on his first day of work;
•Mr Horne did not sign and return the completed documents to Execom until 10 October 2019 (there was a minor error there on which nothing turns: Mr Horne in fact signed the Execom offer on 1 October 2019 but, according to the evidence of Ms Woodman of Execom, the completed documents were not returned to Execom until 10 October 2019); and
•Mr Horne made a claim for compensation, handing his claim form to Echo Marine, which provided it to Moon Recruitment, which passed it on to Execom, and then Execom made a claim on its insurer and the insurer accepted liability and began making workers' compensation payments.
The arbitrator then embarked on a summary of the evidence given by the three witnesses and then particular documents from the book of documents - the payroll agreement between Moon Recruitment and Execom (the Moon Recruitment/Execom agreement), Moon Recruitment's labour-hire agreement with Echo Marine (the Moon Recruitment/Echo Marine agreement), the email from Moon Recruitment to Execom advising Execom of Mr Horne's hourly rate and period of employment at Echo Marine, the Execom email and attached letter sending the Execom offer to Mr Horne on 30 August 2019 and the Execom offer signed by Mr Horne on 1 October 2019, as well as some invoices. Much of the witnesses' evidence consisted of describing the agreements reached and how they were then performed, but the actual agreements were before the arbitrator and he had regard to the documents. Given that Mr Horne was injured on his first day of work, the only post-contract performance referred to in the summary related to the processing of the workers' compensation claim, which was mentioned but did not feature in his reasons.
In written and oral submissions, complaint was made of the arbitrator's failure to make factual findings, as opposed to summarising the evidence given. It is necessary for the fact‑finder to state generally and briefly the grounds which have led him to the conclusions reached concerning disputed factual questions and to list the findings on the principal contested issues, because it is only if that is done that an appellate court can discharge its functions: Soulemezis v Dudley (Holdings) Pty Ltd (1987) 10 NSWLR 247, 259. Failure to give adequate reasons amounts to an error of law: Golden Plains Fodder Australia Pty Ltd v Millard [2007] SASC 391 [19] (Golden Plains).
There was no ground of appeal asserting inadequacy of reasons, however, including factual findings to ground the reasons. It was not suggested that any failure to give reasons in this case was the error of law said to justify the granting of leave to appeal. The submission was made by way of general complaint in passing but in the context that, once the factors said to be irrelevant were excluded from consideration, there was said to be insufficient basis upon which the arbitrator could have found that Moon Recruitment was the employer.
Mention should be made of the context in which such findings and reasons are given by an arbitrator hearing a dispute pursuant to the Act. The Act sought to provide a fair and cost‑effective system for the resolution of disputes which was timely, accessible, approachable and professional, and which minimised cost to the parties and enabled disputes to be determined according to their substantial merits, with as little formality and technicality as practicable: s 177(1). An arbitrator is not bound by the rules of evidence, and is to act according to 'equity, good conscience and the substantial merits of the case': s 188(2). That more flexible procedure does not justify decisions made without an evidentiary basis, however: Rodriguez v Telstra Corporation Ltd [2002] FCA 30 [25] (Kiefel J). Nor does it give the arbitrator the power to depart from established principles of law: Fagan v Minister for Corrective Services [2024] WASCA 167.
The arbitrator's reasons for decision need only identify the facts that the arbitrator accepted in coming to his decision, and give the reasons for doing so: s 213(4) of the Act. Plainly then, the arbitrator was not obliged to mention every piece of evidence that was put before him, nor resolve every inconsistency, to the extent that there were evidentiary disputes. And in the manner in which the hearing was conducted, there was little challenge to the evidence from the witnesses, and the documents spoke for themselves.
No complaint was made before this court about the accuracy of the summary of the evidence given by the witnesses. Some brief summary was given of the contents of the documentary evidence. No complaint was made about the accuracy of that summary either, save that Moon Recruitment submitted that the arbitrator failed to reproduce certain salient passages from the documents sent to Mr Horne by Execom. The documents, which were not lengthy, were before the arbitrator, however, and there is no reason to suppose that he missed those features. He observed the inconsistency between the Execom email and letter to Mr Horne, both of which were sent to him with the Execom offer, the email referring to Mr Horne's 'start at Echo Marine for Moon Recruitment' and the letter referring to his 'working with Execom Personnel' and the 'contract with Execom'. It is apparent the arbitrator was across the details.
There was little, though some, analysis of the evidence from each witness. The summary contained no broad statement to the effect that the arbitrator considered all three witnesses to be truthful, or that he regarded each witness to be reliable. The eventual conclusions did contain, or at times necessarily implied, findings of fact. The findings were not lengthy, although they must also be taken to have included the preliminary summary mentioned above. There is reason to conclude that the arbitrator did impliedly accept that evidence which he did not expressly criticise. Given the manner in which the matter was conducted, there was no need for lengthy analysis of the evidence from the witnesses.
The examination-in-chief of each witness consisted of the witness's written statement. Ms Woodman corrected one mistake as to the date the Moon Recruitment/Execom agreement was reached.
In cross-examination as to why Execom agreed to, and did, take out workers' compensation insurance, she said Execom was so advised by its insurance broker. The arbitrator [142] accepted that evidence. As to why Execom was named as the employer in the workers' compensation claim form, Ms Woodman saw that as following from the fact that Execom was paying Mr Horne and had the insurance policy.
Ms Woodman was asked unnecessarily to confirm the Execom offer did not state that Mr Horne was employed by Moon Recruitment or that Execom's role was limited to payroll services. She explained that the Execom offer had been adapted by her from a document Execom used for its own labour-hire employees. Counsel took her through the brief contract sent to Mr Horne, highlighting certain clauses and asking whether certain clauses were consistent with Moon Recruitment being the employer of Mr Horne, which line of questioning sought opinion evidence and was really submissions dressed as questions.
Re-examination followed the same technique. None of that evidence required analysis. The arbitrator intervened when Ms Woodman was questioned as to whether the Execom offer to Mr Horne accurately reflected her arrangement with Moon Recruitment, and observed that the witness's state of mind would not matter when it came to interpreting the contract.
In his summary of Ms Woodman's evidence, the arbitrator observed that
Ms Woodman's answers to questions in cross‑examination were often non-responsive and frequently more akin to submissions. Such evidence will therefore be accorded little if any weight.
A review of the witness's evidence amply justifies the comment. She showed a strong tendency to make submissions on behalf of Execom, despite the dispute in reality being an insurance issue. It was the witness's repeatedly stated opinion that Execom was not Mr Horne's employer. That, of course, was the very question the arbitrator was to determine. He and counsel intervened on several occasions to discourage the witness from arguing the case, including reminding her that there was a lawyer representing Execom, but to no avail. The arbitrator likewise observed that the witness's agreement in cross‑examination that the Execom contract with Mr Horne was in place on 2 September 2019, the day he was injured, was a legal conclusion and to be accorded little or no weight.
There was no suggestion in the arbitrator's remarks that he considered the witness to have been dishonest or unreliable in her recollection. Nor was there any suggestion by way of cross‑examination to suggest that Ms Woodman was fabricating, or was unreliable in her evidence concerning her recollection of her dealings with Mr Horne or Ms Moon. The only issue with the witness was her desire to express her partisan opinion on the facts.
Turning to Ms Moon, the arbitrator made no negative comment about the witness which might bear upon her general credibility. The method of his summary of evidence was that, when he considered certain evidence to carry little or no weight, he commented about that.
In cross-examination by counsel for Execom, Ms Moon was taken to an email she sent to an insurance investigator in September 2020 in which she had sought to clear up any 'confusion' and described Execom as the payroll agent and Moon Recruitment as the employer of Mr Horne. She testified that she believed that because Moon Recruitment had to pay payroll tax, and attributed that understanding to Ms Woodman. Counsel for Execom in the arbitration tackled her somewhat unhelpfully and against interest on that evidence, given that a revenue ruling was before the arbitrator which appeared to say exactly that - and that was the only cross‑examination in the proceedings in which credibility was tackled. But the witness also said that she had assumed Moon Recruitment to be the employer in any event. She candidly said that, as far as she was concerned, Moon Recruitment was the employer, while Execom paid the workers' compensation premium but added, 'as far as legalities go, as far as who is the actual employer, I am still not sure'.
In his summary, the arbitrator observed that her uncertainty was essentially due to the fact of the proceedings - indicating an inference drawn by him and consistent with little or no weight to be attributed to her uncertainty, which was after all entirely understandable in the circumstances. He also placed no apparent weight on the admission. Likewise, as to her evidence that Moon Recruitment had no direct contractual relationship with Mr Horne, the arbitrator described that as 'conclusionary', and it pertained to the very issue he was to determine. The arbitrator reasoned consistently with the view he expressed several times in different ways during the hearing that personal opinions about the issue would not determine the case. Consequently, there was no need to consider the credibility of the witness in so far as the letter to the investigator was concerned and the source of her view that Moon Recruitment was the employer, as the arbitrator did not base his conclusion on such evidence. The informality of the jurisdiction clearly influenced the way in which he allowed evidence to be led, yet placed no weight on the opinion evidence.
Neither of the two counsel who cross-examined Mr Horne accused him of fabrication, or put a contrary version of events to him to suggest that his recollection was unreliable. Rather, both counsel used cross‑examination of Mr Horne to highlight certain points favourable to their respective clients. The arbitrator's summary of Mr Horne's evidence was simply that, with no further analysis. It was apparent from the arbitrator's summary of his evidence, which included references to Mr Horne's limited knowledge of Execom - that Ms Moon never really mentioned much about it, that he did not realise it was a different entity from Moon Recruitment and that he thought it to be the pay division of Moon Recruitment - that the arbitrator drew a distinction, and rightly so, between mere opinion evidence about what a contractual arrangement meant, and evidence of what knowledge a party to an agreement had at the relevant time.
Counsel for Moon Recruitment took objection to fellow counsel leading opinion evidence from Mr Horne of his understanding of who his employer was - Moon Recruitment, he thought - with mixed success, as the arbitrator took the view that the proceedings were meant to have an informality to them and therefore allowed some leeway. The arbitrator repeatedly demonstrated, however, an understanding of the difference in admissibility and weight between a witness expressing a subjective opinion, particularly on the very question to be determined by him, and giving direct evidence of events.
In those circumstances, the arbitrator did not resolve conflicts in evidence or make many findings, but then there was no conflict of any moment to resolve, and no suggestion that any of the three witnesses was giving false or unreliable evidence.
In this appeal, Moon Recruitment noted that the arbitrator had included in his summary of Ms Woodman's evidence her testimony that 'she spoke with Mr Horne and advised him that Moon had engaged Execom to pay him' and then emailed him the requisite contract and forms. The submissions point out that Mr Horne did not recall the conversation and no finding was made that the conversation occurred. It is not clear whether that was a complaint that the arbitrator had failed to resolve a conflict in the evidence, or merely a submission that such evidence was to be disregarded by this court.
The evidence was based on Ms Woodman's evidence‑in‑chief via her statement, which was based on what she usually did and what usually occurred, rather than actual recollection. She said that, at Moon Recruitment's request, Execom would call the worker and 'explain that Execom has been engaged by Moon Recruitment to pay the applicant during their placement' and send them the paperwork required.
The witness was not challenged on that evidence. Mr Horne did not deny the conversation. He did not recall it. The arbitrator did not expressly reject the evidence of Ms Woodman to that effect. He did find that Execom had 'never met' Mr Horne - there was no suggestion that Ms Woodman had met Mr Horne at the relevant time, or ever - and that Execom 'had no dealings' with Mr Horne other than paying him, a finding made in circumstances in which it was uncontroversial that Execom had sent him the documentation already described. It appears the arbitrator did not place weight on the evidence in that there was no reference in his reasons, which are set out below, to this possible conversation.
The arbitrator was not obliged to resolve every aspect of the evidence, and clearly did not find it necessary to resolve that issue. Had he accepted that such a conversation occurred, then that evidence was consistent with his overall conclusion that Execom was just providing a payroll service and was not Mr Horne's employer. Had he not accepted the evidence, that was consistent with his conclusion that Execom had no prior contact with Mr Horne before sending him its offer, still consistent with the overall conclusion reached. It was not a conflict in the evidence but, if it was, it was a conflict of no moment.
It is sufficiently clear that the arbitrator accepted the evidence of all three witnesses as being honest and reliable in so far as they testified about their memory of events, including their understanding at the time, whether relevant or not, but he considered Ms Woodman to be unhelpfully desirous of arguing the case, and he was not assisted in any event by any witness's opinion about the legal effect of their dealings, including when that opinion evidence arguably amounted to an admission. A portion of the evidence was simply the witness's recollection of what the documentary evidence would establish and how the agreements were performed. While it was dutifully summarised, the arbitrator also had the agreements, or at least the relevant schedule to the agreement in the case of the Moon Recruitment/Echo Marine agreement and summarised their effect. If he had something negative to say about a witness's evidence, he said it in the summary of evidence. There was little negative to say, and the evidence was not contentious.
Indeed, counsel for Moon Recruitment submits that the whole focus of the decision was supposed to be on the objective interpretation to be placed on the Execom offer. The case was not determined on credibility issues. In delivering reasons, the arbitrator dispensed with reference to unhelpful opinion evidence, and there was no hint in his reasons that his conclusion was based on the acceptance of one witness's personal opinion over that of another.
After summarising the evidence of the witnesses, the arbitrator summarised the parties' submissions and then delivered his reasons for concluding that Moon Recruitment had entered into a contract of employment with Mr Horne, while Execom had not, as at the date of his injury.
While it would have been preferable if the arbitrator had expressly spelt out his acceptance of the evidence of each witness, the summary of the evidence, coupled with the findings he did make, were adequate to explain the logic behind his reasoning. Plainly he made the findings referred to in those reasons which are reproduced under the next heading, together with the summary of the background information. The arbitrator set out his reasoning as to why he concluded that Mr Horne had entered into an employment contract with Moon Recruitment and not Execom at [124] ‑ [144] which are reproduced in full below. Those reasons were sufficiently clear to enable this court to follow his process of reasoning and to carry out its task as an appellate court.
The arbitrator's reasons for decision
After summarising the evidence and submissions by counsel, the arbitrator distinguished the decision in CFMMEU v Personnel on which Moon Recruitment relied. That decision was one of the key issues to be considered in this appeal, because it led to the arbitrator taking a broad view on what facts were relevant. The arbitrator then gave reasons for his finding that there was no contract of employment between Execom and Mr Horne at the time he was injured, and that it was Moon Recruitment which was his employer.
Those reasons were as follows, with the underlined portions being those findings which, in Moon Recruitment's submission, were irrelevant (to avoid confusion, a small portion of underlining which was in the original decision has been replaced with italics):
124Firstly, I consider the evidence establishes that Mr Horne had entered into a contract of employment with Moon i.e. he was employed by Moon pursuant to a contract of service, in essence to provide his labour to Moon's client.
125That contract is established by the following facts and circumstances.
126Moon is a labour hire organisation. It entered into an agreement with Echo to provide labour services provided by Moon's employees. Echo required fabricators. Moon advertised in SEEK for fabricators for Echo. Mr Horne responded to that advertisement. Ms Moon spoke to Mr Horne, received and considered his C.V., checked his credentials and referred his details to Echo. She arranged an interview with Echo, arranged a drug and alcohol test and then orally informed Mr Horne that he had been accepted for a three‑month contract to work with Echo. Although Mr Horne does not recall any specific discussions with Ms Moon about pay, nonetheless it is clear that in those circumstances he was going to be paid for his services to Echo.
127I also refer to the definition of employer in s 5 of the Act is:
s 5
employer includes any body of persons … and, where the services of a worker are temporarily lent or let on hire to another person by the person with whom the worker has entered into a contract of employment the latter shall, for the purposes of the Act, be deemed to continue to be the employer of the worker whilst working for that other person.
128Therefore, while Mr Horne is to be let on hire to Echo, Moon is deemed to continue to be the employer.
129The above facts and circumstances in my opinion lead to a conclusion that the relationship between Mr Horne and Moon has all the hallmarks of a contract of employment, whereby Mr Horne had entered into a contract of employment to work for Moon, in that he was employed by Moon to work for Moon's client for a fee rendered by Moon, where the fee contained a profit margin over and above the wages paid to Mr Horne.
130Otherwise, on what other basis was Mr Horne working at Echo?
Finding of no contract with Execom
131Moon submits he was then employed by Execom, but I do not accept that to be the case. Execom had no control over Mr Horne, had never met him, had no prior involvement with him (Execom was also a labour hire organisation), and had no contractual relationship with Echo. Therefore, other than the Execom/Horne agreement, pragmatically and applying common sense, Execom cannot be Mr Horne's employer.
132So, what about the Execom/Horne agreement and the CFMMEU decision?
133There are some similarities with that decision and the current dispute, but there are also differences.
134In no particular order, firstly the decision did not involve the application of the Workers Compensation and Injury Management Act 1981. Secondly, the agreement in the CFMMEU case had been executed by the parties.
135In the current dispute, the purported Execom/Horne agreement was not executed by Mr Horne until sometime after his injury. Moon submits the offer of employment was accepted by Mr Horne's conduct, by turning up to work at Echo on 2 September 2019. However, as earlier found, there was already a contract of employment in existence, with Moon, and I consider that consistent with the Moon/Echo agreement, Mr Horne turned up at Echo as fulfilling his obligations under the Moon employment contract.
136In essence and seen in that light, and in light of the overall circumstances of the case, the Execom/Horne agreement in essence artificially inflates a payroll agreement into something which it is not. Basically and from a pragmatic point of view, the Execom/Horne agreement is nonsensical.
137Execom had no other dealings with Mr Horne other than being provided his details by Moon and then paying him on behalf of Moon. Moon was the party primarily responsible for his wages. That is recognised by the payroll agreement, where Execom and Moon essentially agreed that the payroll responsibility is contracted out, or sub‑contracted, to Execom. Notwithstanding, the entity with the primary responsibility for paying Mr Horne was Moon.
138Further, Execom had no contract with Echo and it was in the context of the Moon/Echo agreement that Mr Horne obtained his employment. To then introduce Execom as the employer is completely artificial, even in circumstances where the Execom/Horne agreement had been drafted by Execom.
139That conclusion is in part supported by the fact that fees charged by Moon and Execom. Execom charged a nominal fee in keeping with providing a payroll service. Moon charged Echo with a fee consistent with its labour hire agreement with Echo.
140Further, although Execom agreed to have workers' compensation insurance cover for the workers within the payroll agreement, Execom charged Moon for a portion of the premium on each invoice. In effect, therefore, Moon was paying the premium.
141In addition, the Echo agreement included a term that Moon had to have workers' compensation cover. That it did so through Execom appears more a matter of convenience that anything else.
142I pause here to observe that it is unclear (a) why Execom's insurer advised Execom that it should take out workers' compensation insurance and (b) why Execom produced an agreement which had the hallmarks of an employment agreement. That the email and letter from Execom to Mr Horne on 30 August 2019 contained inconsistent information about the perceived status of Execom and Moon perhaps identifies a lack of understanding on the part of Execom of their processes and their potential legal effect.
143Nonetheless, I consider the Execom/Horne agreement does not establish that there was a contract of employment between Execom and Mr Horne in existence on the date of injury. The Execom agreement was not signed by Mr Horne prior to his injury. The fact of Mr Horne attending at work with Echo does not lead to a conclusion that he was thereby accepting employment with Execom. He already had a contract of employment, with Moon. Further, although he had read the Execom agreement, he had not heard of Execom and merely assumed Execom was something akin to a subsidiary of Moon. He had otherwise no contact or prior dealings with Execom.
144On that understanding, pursuant to the definition of 'employer' in s 5 of the Act, Moon is deemed to continue to be Mr Horne's employer while Mr Horne was lent on hire to Echo. Mr Horne was injured while working with Echo. Moon is therefore the responsible party for Mr Horne's compensation under the Act.
Moon Recruitment's argument
It was Moon Recruitment's position that the arbitrator adopted an incorrect approach at law and consequently took into account irrelevant facts or factors in reaching his finding that Mr Horne was employed by Moon Recruitment and not Execom. The legal basis underpinning that submission will be discussed shortly, but the impact of the submission is revealed in the underlined passages in the arbitrator's conclusions reproduced above.
Moon Recruitment's position was that its contractual arrangement with Echo Marine, including its obligation under that contract to pay its workers their wages and to take out workers' compensation insurance, and the fee it charged Echo Marine - and how that compared to the fee Execom earned in its agreement with Moon Recruitment - was wholly irrelevant to the issue to be determined by the arbitrator.
Likewise irrelevant, Moon Recruitment submitted, was its contractual arrangement with Execom, including the fact that Moon Recruitment was to reimburse Execom for the wages it paid Mr Horne and the workers' compensation insurance it took out and the basis of the fee to be paid to Execom by Moon Recruitment. Likewise, speculation about why Execom's insurer would have advised Execom that it should take out workers' compensation insurance was said to be irrelevant, as was Execom's lack of any prior contact with Mr Horne, the fact that Ms Woodman of Execom never met him and that, in the Execom offer, Execom was not to exercise any control or supervision over Mr Horne's work.
Likewise irrelevant, Moon Recruitment argued, was the lack of any contractual arrangement between Execom and Echo Marine. The failure to underline that aspect in [131] of the reasons above was clearly an error, given the objection to the whole of [138] which referred to the same.
In written submissions, in addition to the passages underlined in the reasons reproduced above, Moon Recruitment also identified further facts or factors which it submitted were irrelevant. It submitted that Ms Moon's efforts to make sure that Mr Horne was a suitable fit for Echo Marine's requirements, including sending his details to Echo Marine, organising a drug and alcohol screen for him and, once it was agreed with Echo Marine that Mr Horne was suitable, sending an email to Execom asking it to send its contract to Mr Horne to engage him to work with Echo Marine was all irrelevant, as was Mr Horne's understanding that Moon Recruitment was hiring him and that Execom was part of Moon Recruitment.
Moon Recruitment's starting point underpinning those objections was the uncontroversial submission that Australia follows the objective approach to contract interpretation. In Toll (FGCT) Pty Ltd v Alphapharm Pty Ltd [2004] HCA 52; (2004) 219 CLR 165 [40] (Toll v Alphapharm) the High Court said:
… References to the common intention of the parties to a contract are to be understood as referring to what a reasonable person would understand by the language in which the parties have expressed their agreement. 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 purposes and object of the transaction.
(footnotes omitted)
The reasonable person contemplated by the test is a person with all the background knowledge which would reasonably have been available to the parties at the time of agreement, which may include matters of law: Maggbury Pty Ltd v Hafele Australia Pty Ltd [2001] HCA 70; (2001) 210 CLR 181 [11].
Moon Recruitment argued that, in order to determine whether a contract of employment was formed between Mr Horne and Execom, the arbitrator was to examine the words and conduct of Mr Horne and Execom between themselves, and the words and conduct of another party extraneous to that transaction had no bearing on the question of contract formation where that third party was not a participant in the communications between the two. Consequently, while it did not contend that all of Ms Moon's dealings with Mr Horne were irrelevant, it took objection to the relevance of her conduct to which it argued Mr Horne was not privy, such as her dealings with Echo Marine about Mr Horne, but not in his presence.
It was Moon Recruitment's submission that, given that the onus lay on Execom to prove that it did not enter into a contract of employment with Mr Horne, the arbitrator's focus should have been on an objective consideration of the contract entered into between Execom and Mr Horne - based on the assertion that the Execom offer had been accepted by conduct - to determine what a reasonable bystander would have understood by it. It contends that, contrary to that approach, the arbitrator embarked on a broad enquiry as to the dealings between not just Mr Horne and Execom in considering whether they had entered into an employment contract, and between Mr Horne and Moon Recruitment, but also the dealings between Moon Recruitment and both Echo Marine and Execom. Moon Recruitment submitted that the arbitrator's approach and reasoning was contrary to the approach dictated by the High Court in the decision of CFMMEU v Personnel.
Moon Recruitment further argued that, by his finding that Execom had no control over Mr Horne's work performance and that staff at Execom had never met him, had no prior involvement with him and had no contractual arrangement with Echo Marine, the arbitrator was wrongly applying the 'multifactorial' approach that, since CFMMEU vPersonnel was decided, has been overtaken by a focus, in a case where the parties have committed their arrangement to a written contract, on the rights and obligations of the parties as determined by the terms of the contract. Moon Recruitment contended that this was such a case.
Moon Recruitment contended that it had not reached a completed bargain of employment with Mr Horne, in that there had been no written offer of employment sent to him by Moon Recruitment and there were matters that remained to be agreed - most importantly the rate at which he was to be paid - which prevented their dealings from amounting to a concluded contract, whereas Execom and Mr Horne did reach a concluded bargain, by way of Mr Horne accepting the Execom offer by his conduct in presenting to the workplace of Echo Marine as arranged on 2 September 2019.
Finally, Moon Recruitment also argued that the deeming provision in s 5 of the Act was irrelevant and submitted that the arbitrator erred in reasoning that Moon Recruitment was deemed by that provision to continue to be the employer of Mr Horne.
It was Moon Recruitment's case that, had the arbitrator confined his considerations to what was relevant, he could not have concluded that Moon Recruitment and Mr Horne had entered into a contract of employment, and that Execom and Mr Horne had not, essentially asserting that there was no factual, or no sufficient factual basis, to justify the conclusions reached.
Submissions on behalf of Execom
Counsel for Execom, in reliance on Moon Recruitment's identification in its written submissions of the question of law said to be involved, understood Moon Recruitment to be asserting that the arbitrator had made a finding against the weight of the evidence, and submitted that such would amount to an error of fact rather than an error of law, relying upon Australian Broadcasting Tribunal v Bond [1990] HCA 33; (1990) 170 CLR 321. Execom therefore contended that leave to appeal should not be given because no question of law was involved. It was Execom's contention that a determination as to which entity was the employer of Mr Horne was a factual enquiry and that, having regard to the evidence in the case, there was evidence to support the arbitrator's conclusion and there was no error of fact or law.
Moon Recruitment's written submissions, however, did identify alleged errors of law, namely the failure to follow the approach in CFMMEU v Personnel and the taking into account of irrelevant matters, coupled with the submission that, when the analysis was restricted to relevant matters, the arbitrator could not have reached the conclusions that he did, an assertion that there was no or insufficient factual basis for the conclusions. If an error of law is established, this court is not restricted to correcting errors of law.
Execom submitted that CFMMEU v Personnel could be distinguished on the basis that the issue in that case was the true nature of the contract entered into and whether the worker was an employee or an independent contractor, whereas the issue in this case was identifying which of two parties was the employer. Execom endorsed the approach taken by the arbitrator in considering the overall context in which Mr Horne was hired and came to work at Echo Marine, including the arrangements between Moon Recruitment and Echo Marine, the arrangement between Moon Recruitment and Execom and the dealings between Ms Moon and Mr Horne. Execom supported the conclusion reached by the arbitrator.
Although it argued that CFMMEU v Personnel was distinguishable, Execom did seek to place some reliance upon the joint judgment of Gageler and Gleeson JJ in that decision, arguing that it was not irrelevant to examine the arrangement between the labour‑hire company and the host company, leading to an overall conclusion in that case that the labour‑hire company remained the employer. Execom also placed reliance upon s 5 of the Act, which deems a labour‑hire organisation which lets its employee on hire to another to continue to be the employer.
Finally, Execom argued that Moon Recruitment could be seen to be Mr Horne's employer on the basis of its right to exercise control over his manner of work, contrasted with Execom's lack of right to control his manner of work, pointing to the Moon Recruitment/Execom agreement which provided that Execom 'exercises no control or direction over the contractor', the Moon Recruitment/Echo Marine agreement which established that Moon Recruitment was providing its staff to Echo Marine, and the evidence as to Mr Horne's dealings with Ms Moon and lack of in‑person contact with Execom.
The question of whether the arbitrator took into account irrelevant matters is a key issue to be determined. I turn now to the decision in CFMMEU v Personnel upon which Moon Recruitment relied, and which the arbitrator distinguished.
CFMMEU v Personnel
Prior to the High Court decision of CFMMEU v Personnel, cases in which the issue to be determined was whether a relationship was properly to be characterised as one of employment, or of principal and independent contractor, tended to be approached on the basis of an assessment of 'the totality of the relationship'. The terms of the written contract were considered but, also, the manner of its performance, and the courts weighed multiple factors in the relationship, such as the right in the putative employer to direct and exercise control over the manner in which the work was to be performed, and any right in the worker to delegate his work to another. This multifactorial approach was sourced in the decisions of Stevens v Brodribb Sawmilling Company Pty Ltd (1986) 160 CLR 16, 29 (Stevens v Brodribb) and Hollis v VabuPty Ltd [2001] HCA 44 [24]; (2001) 207 CLR 21, 33 (Hollis v Vabu), and many which followed. And then on 9 February 2022, a couple of months before the hearing in this matter before the arbitrator, the High Court delivered the decisions in CFMMEU v Personnel and ZG Operations Australia Pty Ltd v Jamsek [2022] HCA 2 (ZG Operations).
In CFMMEU v Personnel, the union took action against Personnel Contracting, trading as 'Construct', for failing to pay a worker, Mr McCourt, his full award entitlements as an employee. The question in the case was whether McCourt was indeed Construct's employee, or a self-employed contractor.
Construct was a labour-hire company, recruiting and engaging workers to supply their labour to its clients. Construct interviewed McCourt who, despite his limited experience, was willing to perform any construction work available and had his own work-appropriate clothing. Construct offered him work with its client, Hanssen, at Hanssen's worksite. The relationship between Construct and Hanssen was governed by a labour‑hire agreement (LHA). McCourt signed an administrative services agreement (ASA) with Construct, in which he was described as a 'self-employed contractor'. McCourt did not sign any contract with Hanssen. Hanssen staff gave McCourt a safety induction talk onsite and he was to be supervised by one of its leading hands. Construct staff visited the Hanssen worksite from time to time, and sometimes discussed health and safety issues with McCourt, but never directed him in the manner of his work with Hanssen.
The trial judge adopted the multifactorial approach, considering both the ASA between Construct and McCourt, but also the manner in which the parties conducted their relationship thereafter in performing the contract, with factors falling on both sides of the argument. The trial judge regarded the description of McCourt in his ASA as a 'contractor' as decisive, and dismissed the union's suit. That judgment was upheld on appeal, but ultimately overturned by the High Court.
Kiefel CJ, and Keane and Edelman JJ described the broad effect of the LHA between Construct and Hanssen to the effect that Construct was to liaise between its client, Hanssen, and the self‑employed contractor, to refer the worker to Hanssen on a daily-hire basis for which Hanssen paid Construct at an hourly rate, and to be responsible for the suitability of the workers for their work at Hanssen. The plurality also remarked on the consistency between the LHA and the ASA, in that the contractors were said to be under Hanssen's direction and supervision. Beyond that, the plurality observed that it was 'unnecessary, and indeed inappropriate, to refer to the terms of the LHA in any greater detail because McCourt was not a party to the LHA. His contract with Construct was not affected by the terms of the LHA': [12]. But they had referred to its basic effect and, immediately after the observation just quoted, further remarked upon the consistency between the LHA and the ASA in a particular respect. The approach is clearly one of degree and purpose for which some understanding of context is legitimate to aid interpretation.
Their Honours also observed that the 'operative terms of the ASA and the factual matrix in which it was made' [15] between Construct and McCourt made it clear that Construct was not merely seeking out employment opportunities for McCourt and introducing him to Hanssen, but was empowered to fix his remuneration and had assumed the obligation to pay him and that, for his part, McCourt had obligations to cooperate and report various matters to both Construct and Hanssen. As to the relevance of post-contractual performance, their Honours remarked [18]:
Before both the primary judge and the Full Court, the facts surrounding the work practices of Construct and Hanssen, and the specific arrangements vis-à-vis Mr McCourt, were canvassed at length. Given there was no challenge to the validity of the ASA nor any suggestion that the contract had been varied by conduct, a review of how the parties went about discharging their obligations to each other after execution of the ASA was unwarranted. It is unnecessary and inappropriate to replicate that fact-finding exercise in this Court.
Their Honours considered the multifactorial approach to be open to criticism on the basis that it is impressionist, and therefore may produce inconsistency and uncertainty [33], but also countered that the foundation cases of Stevens v Brodribb and Hollis v Vabu had not suggested that a consideration of the 'totality of the relationship' was to be conducted by 'running down items on a checklist in order to determine a balance of ticks and crosses' and observed that it 'has never been suggested that the factors identified to be relevant are of equal weight in the characterisation of the relationship': [34]. Their Honours were still attracted to the proposition that the totality of the relationship should also (not necessarily alternatively) be viewed through the prism of discerning the difference between an employee being a person who serves his employer's business, and a contractor who serves his own: [35] ‑ [39].
Their Honours concluded:
41An employment relationship will not always be defined exclusively by a contract between the parties. Historically, the employment relationship was recognised and regulated by the law before the law of contract came to govern the relationship. An employment relationship, though principally based in contract, may be affected by statutory provisions and by awards made under statutes. It may also be that aspects of the way in which a relationship plays out 'on the ground' are relevant for specific statutory purposes …
42A contract of employment may be partly oral and partly in writing, or there may be cases where subsequent agreement or conduct effects a variation to the terms of the original contract or gives rise to an estoppel or waiver. In such cases, it may be that the imposition by a putative employer of its work practices upon the putative employee manifests the employer's contractual right of control over the work situation; or a putative employee's acceptance of the exercise of power may show that the putative employer has been ceded the right to impose such practices.
43While there may be cases where the rights and duties of the parties are not found exclusively within a written contract, this was not such a case. In cases such as the present, where the terns of the parties' relationship are comprehensively committed to a written contract, the validity of which is not challenged as a sham nor the terms of which otherwise varied, waived or the subject of an estoppel, there is no reason why the legal rights and obligations so established should not be decisive of the character of the relationship.
(footnotes omitted)
Their Honours cited with approval a decision of the Privy Council in Narich Pty Ltd v Commissioner of Pay-roll Tax [1983] 2 NSWLR 597, 600 ‑ 601 (Narich) (approving its earlier decision in Australian Mutual Provident Society v Chaplin; sub nom Australian Mutual Provident Society v Allan (1978) 52 ALJR 407, 409 ‑ 410; (1978) 18 ALR 385, 389 ‑ 390 (Chaplin)) in which, subject to the exception where, by subsequent conduct, the parties had been shown to have varied the terms of the written contract, Lord Brandon of Oakbrook said that:
Where there is a written contract between the parties whose relationship is in issue, a court is confined, in determining the nature of that relationship, to a consideration of the terms, express or implied, of that contract in the light of the circumstances surrounding the making of it, and is not entitled to consider also the manner in which the parties subsequently acted in pursuance of such contract.
Their Honours continued to the effect that, in cases where the relationship sought to be characterised was one of either employment, or principal and independent contractor, any understanding that the multifactorial approach had superseded the principles set down in Narich and Chaplin was misconceived [47], and that no decision of the High Court had ever adopted an approach where the terms of the written contract are to be regarded as mere 'factors' to be considered alongside other circumstances. Those cases where the court had examined factors involving the post-contract work practices of the parties involved circumstances where the contract was partly written, but also partly oral or, where the written terms of a contract had been varied, where the contract was a sham, or where estoppel was engaged, and are not to be seen as a departure from Narich and Chaplin, but consistent with those same principles. As to the decision in Stevens v Brodribb, their Honours commented that the decision did not suggest that, where one party worked for another subject to a comprehensive written contract, the court should broaden the enquiry beyond the contractual rights and obligations of the parties and perform a multifactorial balancing exercise, exhaustively reviewing the history of all of the dealings between the parties, even though no party disputes the validity of the contract: [55] ‑ [56]. Similarly, the decision in Hollis v Vabu which concerned a partly written, partly oral contract did not, their Honours observed, impugn the task of determining the contractual obligations by which the parties were bound: [57].
Finally, subject to the qualification that the parties cannot, by attaching a label to their relationship, alter the nature of the contractual rights and obligations they have agreed upon, their Honours observed that the parties are free to agree upon those contractual rights and obligations and that courts should 'promote certainty', particularly where the parties have taken steps themselves to avoid uncertainty, by entering into a comprehensive written contract:
59Where the parties have comprehensively committed the terms of their relationship to a written contract the validity of which is not in dispute, the characterisation of the relationship as one of employment or otherwise proceeds by reference to the rights and obligations of the parties under that contract. Where no party seeks to challenge the efficacy of the contract as the charter of the parties' rights and duties, on the basis that it is either a sham or otherwise ineffective under the general law or statute, there is no occasion to seek to determine the character of the parties' relationship by a wide-ranging review of the entire history of the parties' dealings. Such a review is neither necessary nor appropriate because the task of the court is to enforce the parties' rights and obligations, not to form a view as to what a fair adjustment of the parties' rights might require.
60In this respect, the principles governing the interpretation of a contract of employment are no different from those that govern the interpretation of contracts generally. The view to the contrary, which has been taken in the United Kingdom, cannot stand with the statements of the law in Chaplin and Narich.
(footnotes omitted)
The plurality allowed the appeal, finding that McCourt was an employee of Construct. Gordon J reached the same outcome and took an essentially similar approach [162] to Kiefel CJ, and Keane and Edelman JJ:
The resolution of the central question requires consideration of the totality of the relationship between Construct and Mr McCourt, which must be determined by reference to the legal rights and obligations that constitute that relationship. Where the parties have entered a wholly written employment contract, as in this case, the totality of the relationship which must be considered is the totality of the legal rights and obligations provided for in the contract, construed according to the established principles of contractual interpretation. In such a case, the central question neither permits nor requires consideration of subsequent conduct and is not assisted by seeing the question as involving a binary choice between employment and own business. The totality of the relationship between Construct and Mr McCourt was that of employer and employee.
Her Honour continued:
174The task is to construe and characterise the contract made between the parties at the time it was entered into. The nature of the contracting parties, such as where a contracting party is a separate entity or a partnership, rather than an individual, may suggest that the relationship between the parties is not that of employer and employee. The way that the contractual terms address the mode of remuneration, the provision and maintenance of equipment, the obligation to work, the hours of work, the provision for holidays, the delegation of work, and where the right to exercise discretion and control resides may together show that the relationship is not one of employer and employee.
175Recourse may be had to events, circumstances and things external to the contract which are objective, which are known to the parties at the time of contracting and which assist in identifying the purpose or object of the contract. The nature of the specific job that the purported employee applied for as well as the nature and extent of the equipment to be supplied by that purported employee for that particular job may well be relevant to the question of characterisation of the contract. Indeed, it is often relevant, but not determinative, to observe that the purported employee must supply some uniform, tools or equipment. But again that observation must be made in context. The context is the nature and extent of what is required to be provided under the contract. In many forms of employment, employees provide their own uniform and bring their own tools to work.
(footnotes omitted)
Moon Recruitment was to 'make available' to Execom 'the contractor' - ultimately Mr Horne - on the following basis (paraphrased):
•Moon Recruitment had 'engaged the services' of the contractor upon its and its customer's own examination and interview of him;
•the contractor was 'an Independent Contractor and is not a Direct Employee, servant or agent' of Execom;
•Execom was to exercise 'no control or direction' over him;
•the contractor would observe and comply with the policies, customs and practices established at Moon Recruitment's customer's project, and the contractor would obey all lawful directions of the customer and perform any work for the customer with reasonable care, skill and diligence;
•Execom would not be liable for any loss or damage suffered by Moon Recruitment or its employees, customers or clients as a result of the contract services;
•Moon Recruitment was to arrange public liability and professional indemnity insurance to cover the liability of the contractor while engaged by Execom;
•Moon Recruitment acknowledged its responsibility to pay State payroll tax on behalf of the contractor on the basis that it was 'closest to the ultimate client and as per State Revenue Office Legislation';
•Execom was to arrange and maintain workers' compensation insurance, and cost that to Moon Recruitment; and
•Moon Recruitment would pay Execom for 'payroll services' for the contractor at the rate set out in the schedule and would pay 'all reasonable client approved out of pocket expenses incurred in the performance of the services' as well as interest on any outstanding amounts.
The Moon Recruitment/Execom agreement included a schedule which was to be subsequently completed in relation to each individual worker to whom it related, providing him his applicable rates of pay and the nature of the services he was to provide and where. Such a schedule was ultimately completed by Moon Recruitment in relation to Mr Horne, and sent to Execom on 30 August 2019 to be included in 'the Moon Recruitment and Execom Personnel Standard Contract' in respect of Mr Horne. The details in that schedule, including the address for the provision of his services and the rates he was to be paid and other details were then clearly inserted as the schedule which formed part of the Execom offer.
On an objective reading of that agreement, it was the parties' intention that Moon Recruitment (with input from its own customer/client) would select and interview the worker, that Moon Recruitment would engage his services, that Execom would pay the worker for his work at the project run by Moon Recruitment's customer at a rate to be provided to it, and would also arrange and pay for workers' compensation insurance cover for him, and then invoice Moon Recruitment for those sums, goods and services tax and its own fee. The income to be made by Execom was the payment it received from Moon Recruitment for providing the payroll service, while every other sum it received from Moon Recruitment was by way of reimbursement. Moon Recruitment gained the benefit of Execom taking prompt care of the required financial arrangements to pay the worker and cover the workers' compensation insurance premiums immediately, and could thereby postpone the cost of engaging the worker until a later time (once it had been paid by its own customer) for the price of Execom's fee.
Objectively, the parties also agreed that the 'contractor' would not be an employee, agent or servant of Execom. There is ample case law to the effect that parties cannot change the nature of a relationship by merely attaching a label to it which is inconsistent with that relationship: see, for example, CFMMEU v Personnel [58] (Kiefel CJ, Keane & Edelman JJ). Neither party argued before this court or the arbitrator that Mr Horne was in fact an independent contractor.
The parties did more than label the worker a 'contractor', however: they agreed that Execom would exercise no control or direction over him. Moon Recruitment agreed that the worker would obey the directions of its customer, Echo Marine, in the performance of his work. In contrast to the position in CFMMEU v Personnel [4] (Kiefel CJ, Keane & Edelman JJ), Execom did not by this contract have a contractual right to exercise control and direction over the worker, not even indirectly. Execom had no contractual arrangement with Echo Marine.
Further, the parties objectively intended that Execom would not be vicariously liable for any loss or damage caused by the worker in his work at the project run by Echo Marine. The distinction between an employee and independent contractor is important because an employer is regarded as vicariously liable for the actions of his employee, while (usually) not vicariously liable for the actions of an independent contractor engaged by him: Sweeney v Boylan Nominees Pty Ltd [2006] HCA 19; (2006) 226 CLR 161 [12]. The drawing of that distinction in this agreement further confirms the parties' objective intention that Execom was not to be the employer of the worker. That was not just a label by which they sought to characterise the worker as a contractor. Moon Recruitment acknowledged that it had engaged his services and was to arrange public liability and professional indemnity insurance to cover any loss caused by him, as well as paying State payroll tax.
Further, apart from such contact as was involved in performing its payroll obligations towards the worker, Execom was plainly not required by its contract with Moon Recruitment to have any other contact with the worker at all. It had no role in recruiting or selecting him, or arranging pre‑employment screening or providing him with equipment or training. The agreement also gave no power to Execom to terminate his services, which was consistent with its lack of any role in supervising his performance. Execom only had the right to terminate its agreement with Moon Recruitment. And, if it did so then, because of the Moon Recruitment/Echo Marine agreement, Moon Recruitment would have been obliged to pay the worker while ever he remained working at Echo Marine on a labour-hire basis. Execom's potential termination of its contract with Moon Recruitment did not terminate Moon Recruitment's agreement with its own customer to provide the worker and pay him and insure him.
And so the position was that Execom was to have minimal contact with the worker, who was recruited and supervised by others, at a worksite to which Execom had no connection, to work for a customer with which Execom had no contractual relationship and the parties intended that Execom would not bear the liability for the worker's actions which would ordinarily attend an employment relationship, and would be fully reimbursed for paying his wages and arranging insurance for him.
This was not a labour-hire arrangement. Moon Recruitment was not letting the worker on hire to Execom for him to work at its premises or project and charging Execom a fee for that service. Execom was charging Moon Recruitment for its services. In terms of the benefits flowing both ways, it is difficult to see on what genuine commercial basis Execom should be reimbursed by Moon Recruitment for paying its own employee's wages and, in addition, earn its only profit in the arrangement by being paid for the service of paying its own employee. As an agreement in which Execom earned a fee for providing payroll services to Moon Recruitment in respect of Moon Recruitment's own employee, however, it mostly made commercial sense.
The jarring note in the Moon Recruitment/Execom agreement was that Execom was also to arrange and maintain workers' compensation insurance for the worker. Pursuant to s 18 of the Act, it was the 'employer' who was liable to pay compensation to an injured worker, with a corresponding obligation to obtain and keep current a policy of insurance: s 160. There was nothing in the Act suggesting that the obligation to insure was delegable and the Act prohibited any attempt to contract out of its provisions: s 301.
The terminology in cl 1 of the Moon Recruitment/Execom agreement is instructive, however. Moon Recruitment agreed, for the period specified in the schedule, to 'make available' to Execom the named worker for the services there set out. One employer cannot assign an employee to another without that employee's consent and the language employed elsewhere in the contract plainly sought to avoid any consequence that Execom might thereby become his employer. The obligation in Moon Recruitment to arrange public liability and professional indemnity insurance over the worker, such insurance to cover liability of the worker 'whilst engaged solely by Execom' was, I infer, related to the extent of the insurance cover and the fact that this was a casual worker (who might also work elsewhere) rather than an attempt to define the relationship, which was not to be one of employment. And yet, Execom was to arrange the workers' compensation policy.
The expression 'make available' is inconsistent with Execom becoming the employer (including via the extended definition of worker) of the worker. If Execom was to employ or engage the worker, there was no need for Moon Recruitment to make the worker 'available' to it. And there was no need for the worker to be made available to Execom for it to provide a payroll service to Moon Recruitment. Again, given the ambiguity in the agreement, it was permissible to have regard to the evidence concerning the purpose behind that. It was also permissible because, absent the evidence explaining how this came about, there was reason to suspect this aspect of the arrangement was a sham.
Ms Woodman testified however that, as Execom was unsure about its liability in these circumstances, it consulted its insurer, which advised it to take out a workers' compensation insurance policy for the workers under this arrangement. The arbitrator accepted that evidence.
Ms Moon testified that the agreement was for Execom to provide a payroll service, and Moon Recruitment needed Execom to cover the workers' compensation insurance. Echo Marine required Moon Recruitment to have workers' compensation insurance for the workers it provided. Moon Recruitment passed the cost of that workers' compensation premium to its client, Echo Marine, in its rate. Ms Moon understood that 'someone' had to take out workers' compensation insurance policy for the worker - an inaccurate statement of the law which required the employer within the meaning of the Act to insure the worker. She said that Moon Recruitment would not have entered into the Moon Recruitment/Execom agreement if it had not provided that Execom was to take out the policy. That subjective evidence of Moon Recruitment's requirements was admissible given the obvious inconsistency in the Moon Recruitment/Execom agreement between the objective intent that Execom was not to be the employer or be vicariously liable for any injury or damage caused by the worker, coupled with its agreement to take out workers' compensation insurance.
The arbitrator [141] observed that the requirement in the agreement that Execom take out workers' compensation insurance for the worker 'appears more a matter of convenience than anything else' and considered it to be unclear why Execom's own insurer had advised it to take out such a policy. By 'convenience', I understand him to have meant financial convenience. There was clear evidence upon which to base that observation.
Tempting though it may have been to simply attribute the status of employer to Execom which agreed to take out a workers' compensation policy, on the basis that its agreement to that obligation rendered it the employer, such reasoning would be circular, particularly where there exists a possibility of contracting out.
Moon Recruitment complains that the arbitrator considered the possible reasoning behind the insurer's advice. It was not improper for him to do so. The arbitrator was justified in at least considering the advice to decide what weight might be attributed to it as, on its face, it might be seen to imply some sort of admission. Having wondered about it, the arbitrator clearly did not place stock in it, and correctly so.
Given the obligation of an employer to obtain and keep current a policy of insurance, and corresponding obligations pursuant to s 160 of the Act on approved insurance companies, with offence creating provisions and penalties for failure to comply, it is not surprising that Execom's insurer or agent advised it to obtain such a policy, for whatever reason, including erring on the side of caution.
The advice from the insurance company (or agent) did not amount to an admission on the part of Execom that it was the employer. It did not even amount to evidence that, in giving such advice, the insurance company regarded Execom as the employer. What should be said, however, is that it is apparent that both parties were cognisant of the obligation to insure and took steps, even if they were misconceived, to put that insurance in place. The advice from the insurer was also evidence tending against a suggestion that the Moon Recruitment/Execom agreement and its fulfilment in the Execom offer was an attempt to deceive a third party, being the insurer, or an attempt to contract out of the obligation to insure, given that Moon Recruitment was to reimburse Execom and thereby incur the expense of the insurance in any event, but at a time more convenient to it.
Moon Recruitment also submitted that the arbitrator erred in taking into account in his reasoning the deeming provision contained within s 5 of the Act and the Moon Recruitment/Echo Marine agreement. I reject both propositions.
The term 'employer' was defined in s 5 in multiple ways, including
where the services of a worker are temporarily lent or let on hire to another person by the person with whom the worker has entered into a contract of employment the latter shall, for the purposes of this Act, be deemed to continue to be the employer of the worker whilst he is working for that other person.
The evident purpose of that deeming provision was to give clarity and certainty of insurance cover for workers in labour‑hire arrangements, where certain features typical of employment such as supervision and control might tend, at least practically, to reside in the host project owner while other features of employment including the selection and hiring and payment of wages would reside in the labour‑hire provider.
Moon Recruitment was a labour‑hire provider which, according to its agreement with Echo Marine, would charge Echo Marine for 'work performed by Moon Recruitment Pty Ltd staff' to Echo Marine. The arrangement reached as between Moon Recruitment and Echo Marine was consistent with s 5 of the Act. The obligation to insure lay with Moon Recruitment, which charged Echo Marine a rate which included the price of that insurance.
Section 5, by itself, does beg the question of whether the worker had entered into a contract of employment with Moon Recruitment. While, at first blush, the arbitrator appeared to reason [128] that the deeming provision in s 5 alone rendered Moon Recruitment the employer of Mr Horne, his reasons read as a whole do not support that conclusion.
The arbitrator found that Mr Horne had entered into a contract of employment with Moon Recruitment by reason of a combination of facts, which were summarised [126] and which, in short form, revolved around Moon Recruitment agreeing to provide labour for Echo Marine, advertising the job, and then the totality of Ms Moon's dealings with Mr Horne, culminating in informing him that he had the job, and ending with the implication of a term that Mr Horne would be paid for his services. The arbitrator then referred to the deeming provision, and explained its effect accurately, namely that, as Mr Horne had, as the arbitrator found, entered into a contract of employment with Moon Recruitment, he remained employed by Moon Recruitment when it let him on hire to Echo Marine.
In a choice between Moon Recruitment and Echo Marine, Moon Recruitment was objectively to be regarded as the employer, and responsible for workers' compensation insurance, which is how those parties contracted with each other.
Thus, while the deeming provision could be said to beg the question of whether Moon Recruitment had entered into a contract of employment with Mr Horne, regardless of whether it held itself out to Echo Marine as having done so, it would circumvent the obvious intention of that deeming provision if Moon Recruitment, which let him on hire, purportedly as its own employee, to Echo Marine, was not his employer because it had made him 'available' to another entity, and that other entity, Execom, could justifiably say that it had not let him on hire to Echo Marine either, given that it had no contract with Echo Marine.
Further, it cannot realistically be said that Execom had temporarily lent or let Mr Horne on hire to Moon Recruitment which, according to the Moon Recruitment/Execom agreement, had made Mr Horne 'available' to Execom. And any suggestion that Moon Recruitment initially employed Mr Horne and then temporarily lent or let Mr Horne on hire to Execom is of no assistance to Moon Recruitment.
The decision to be made by the arbitrator occurred within the context of a protective statutory scheme by which the legislation sought to ensure that an injured worker would be compensated and insurance would be taken out.
Seen as one of a number of factors taken into account, I do not consider the arbitrator erred at law in giving consideration to the deeming provision in s 5. It is readily apparent that Moon Recruitment did temporarily lend or let Mr Horne on hire to Echo Marine. The purpose of the deeming provision was to promote certainty of obligation to insure and make compensation payments. An interpretation of the facts which was consistent with that purpose was preferable to one which promoted uncertainty, based on an arrangement which, but for the underlying purpose of the Moon Recruitment/Execom agreement which included an acceptance of an obligation to insure, might have been regarded as a simple attempt to contract out.
The deeming provision was also not irrelevant to the consideration of what the parties objectively intended, given that both Moon Recruitment and Execom should be taken to have been familiar with the statutory obligation of the employer to insure, including the effect of the deeming provision in relation to labour‑hire arrangements, and plainly were in fact aware of those obligations. Moon Recruitment was obliged both by law and by its agreement with Echo Marine to have workers' compensation insurance, but could not financially field the expense prior to receiving payment from Echo Marine, which was plainly too late. Execom was not obliged to insure a worker unless it was its employer within the definitions in the Act, which the parties objectively (and indeed, subjectively) did not intend.
Moon Recruitment plainly intended to keep its contractual arrangement and the fee structure it had in place with Echo Marine intact. Moon Recruitment complained that the arbitrator had regard to that fee arrangement, by which Moon Recruitment stood rather more to gain in the fee it continued to charge Echo Marine than Execom stood to gain by its fee to Moon Recruitment. The arbitrator considered that as another reason to accept that the purpose of the Execom offer had been to provide payroll services to Moon Recruitment for a fee commensurate with that service in relation to Moon Recruitment's chosen employee. In line with my previous reasoning as to the justifiably broader enquiry as to the surrounding facts underpinning the Execom offer, I consider the arbitrator did not err in taking that fact into account.
There was a fiction about the Moon Recruitment/Execom agreement and the resulting Execom offer, because the parties did not intend that Execom was to become the worker's employer. I use the word 'fiction' rather than 'sham', because the insurer, or an agent, was part of the discussion and both Moon Recruitment and Execom intended that the agreement be performed and that Execom provide payroll services and take out workers' compensation insurance. And so the nebulous expression 'make available' was resorted to. The arbitrator also did not use the description 'sham'. But the arbitrator was justified in finding [138] that 'to introduce Execom as the employer is completely artificial'.
Against the relevant background context and those arrangements which were put in place before Mr Horne was on the scene, the Execom offer was made to him. Of course, the arbitrator found that the Execom offer had not been accepted by conduct by the time Mr Horne was injured anyway, and I have found that there was an evidentiary basis on which to make that finding. But leaving that to one side for now, I turn to the terms of the offer itself.
The agreement, if accepted, was to be between Execom and Mr Horne 'or nominee acceptable to the client'. Neither Moon Recruitment nor Echo Marine were a party to the agreement. Clause 1 provided that Mr Horne undertook to 'supply such services for clients of Execom' as were set out in the schedule, the services being that of 'Fabricator Welder'. The 'client' was not defined in the agreement. The address for the provision of the services, however, was the address of Echo Marine, which was named for the one and only time in the schedule, although not as 'the client'. And of course Echo Marine was not in fact a client of Execom.
Moon Recruitment was expressly named in the agreement, but not as 'the client'. Moon Recruitment could have legitimately been described as a client for the purpose of payroll services, but they were the services Execom was providing, whereas the 'client' was the entity to which Mr Horne was to provide his services, at Echo Marine. And there was reference to motor vehicles being driven while on the client's premises in regard to insurance, which was again suggestive of Echo Marine being the client.
Execom agreed to pay Mr Horne at the rate set out in the schedule. He was to keep a timesheet showing full details of all work carried out by him for the client, such timesheet to be signed by an authorised signatory of the client and the timesheet was to be produced to Execom each time he requested payment for services.
Clause 3 specified that he was at all times an independent contractor, and not an agent or employee of Execom or of Execom's client for any purpose whatsoever. If the client was Echo Marine, than that was consistent with the Moon Recruitment/Echo Marine agreement, by which the worker was Moon Recruitment's employee. It also specified that he had no entitlement to sickness pay, holiday pay, long service leave or any entitlement other than the agreed contract payment (which would be consistent with the offer being for three months on a casual basis).
Mr Horne was to observe and comply with the policies, customs and practices established by the 'Client/Project', obey directions of the 'Client/Project' and perform work 'for the Client with reasonable care, skill and diligence'. Those expressions suggested that the client was one and the same as the place of work, which was Echo Marine.
The offer gave Execom the right to terminate the contract on one day's notice and the right to terminate the agreement immediately without prior notice if its client became insolvent or a receiver or administrator was appointed. That requirement would more naturally apply to Moon Recruitment in that, if Moon Recruitment went into administration or receivership, Execom could lose its means of reimbursement.
Clause (j) provided:
Moon Recruitment shall arrange and maintain Public Liability and Professional Indemnity insurance. Such insurance shall cover liability of contractors whilst engaged solely by Execom Personnel. The Contractor will immediately notify Moon Recruitment or Execom Personnel of an event that is likely to give rise to a claim under the Public Liability and Professional Indemnity insurance.
The fact that Moon Recruitment was not a party to this offer yet was named, with an obligation imposed upon it by Execom, tended to suggest that it was not the entity that was repeatedly referred to as 'the client'. There was certainly nothing to correct Mr Horne's misapprehension that Execom and Moon Recruitment were the same or connected entities, or that Execom was just the pay division of Moon Recruitment.
Execom was to arrange and maintain workers' compensation insurance and Mr Horne was to immediately notify Execom of an event likely to give rise to a claim.
On balance, the offer objectively implied to a reasonable person not in possession of the background facts that the client was Echo Marine, by various phrases, including the initial reference to 'supply such services for clients of Execom Personnel as are set out in the schedule', with Echo Marine named in the 'address for provision of services'. It is notable that the client was not unambiguously identified, however, in the way that the contractor, Mr Horne was named, as if the author was self-conscious about simply stating that Echo Marine was Execom's client. And the merest enquiry to clarify the ambiguity would bring to the attention of the reasonable person possessed of the relevant facts the knowledge that Echo Marine was not a client of Execom's and it had no contractual right to employ or engage any worker to work at Echo Marine.
The accompanying email sent to Mr Horne, attaching the offer, was headed up 'Contract for Moon Recruitment for Echo Marine Group', and continued 'Congratulations on your start at Echo Marine Group for Moon Recruitment', while the letter, also attached, congratulated him on his 'contract with Execom Personnel'. Again, there was nothing there to correct Mr Horne's misapprehension that Execom and Moon Recruitment were the same or connected entities, or that Execom was just the pay division of Moon Recruitment. The email and letter were inconsistent and ambiguous as to who the employer of Mr Horne really was. Behind the scenes, Execom had a contractual arrangement with only one of those parties. And Mr Horne was only sent the Execom offer after Moon Recruitment had informed him that he had secured the job, and then provided his details to Execom.
The offer expressly stated that Mr Horne was not to be an employee. It expressly divested Execom of any obligation to supervise, direct or control his work, or to provide any training for him, and the obligation to take out public liability and professional indemnity for the contractor's liability was placed on Moon Recruitment. It divested Execom of any need to have any contact with him at all, beyond paying him and potentially receiving notification from him if there was to be some insurance claim.
On its face, the offer contained certain features consistent with being an offer of employment (including within the extended definition within the Act) and not merely an offer to fulfill a payroll arrangement it had reached with Moon Recruitment: in imposing an obligation on the 'contractor' to follow the directions and comply with the requirements of the client and to perform work with reasonable care, skill and diligence, in concerning itself with the insurance of the motor vehicle to be driven at the client's premises, and in bearing the obligation to take out workers' compensation insurance for the contractor.
The obligation on the 'contractor' to follow the directions and comply with the requirements of the client and to perform his work with reasonable care, skill and diligence, however, can equally be seen as an intention on Execom's part to divest itself of control and supervision, consistent with the express terms divesting Execom of supervision and control over the contractor and the express term stating that he was not an employee. Of course, if he was to be an employee by this offer, calling him a contractor would not alter the reality of the relationship, particularly under the definitions of worker in the Act, but the express terms just mentioned are not evidence of an intention that Execom was to be his employer.
The obligation to take out workers' compensation insurance for the contractor is, objectively, evidence of intention to employ or engage him. It was inconsistent with the obvious intent to render the worker an independent contractor.
However, given that this was a case in which the issue was to determine which of two potential employers was the true employer, justifying a broader enquiry, and that the offer was ambiguous and internally inconsistent, the relevant factual matrix in which this offer came to be made to Mr Horne included three key facts: that Execom had no contractual arrangement with Echo Marine and therefore could not unilaterally employ a worker (or engage a contractor) to work at its premises; that despite the intent to divest itself from control or supervision over the worker, it had no ability to control him in any event, not even indirectly, because it had no contractual arrangement with Echo Marine; and, finally, that Execom had entered into an agreement with Moon Recruitment to provide payroll services in relation to Moon Recruitment's workers and to take out workers' compensation insurance, for which it would be reimbursed.
Seen against that background, there was ample evidentiary basis for the arbitrator to conclude that this offer on the part of Execom to Mr Horne was Execom's flawed attempt to comply with its contractual arrangement with Moon Recruitment. It did contain features which were superfluous to a mere payroll agreement, as Moon Recruitment submitted, but the underlying factual context in which this offer was made to Mr Horne which, given the nature of the issues in dispute before the arbitrator were relevant, justify the arbitrator's conclusion [136] that the Execom offer 'in essence artificially inflates a payroll agreement into something which it is not'. He was justified in finding [138] that
Execom had no contract with Echo and it was in the context of the Moon/Echo agreement that Mr Horne obtained his employment. To then introduce Execom as the employer is completely artificial …
And otherwise, the obligations contained within the Execom offer were consistent with the provision of payroll services. In keeping with that intention, according to the email and letter which accompanied the offer, Mr Horne was not required to sign the offer and fill in the necessary financial forms until a week after he had commenced work, in time for his first pay cycle, but obviously not in time for his whole first week at work.
It was not the objective (nor even the subjective) intention of those parties that Execom was to become employer to those workers. Execom had no ability to unilaterally employ a worker (or even engage a contractor) at Echo Marine. It is no answer to that proposition to suggest that Execom may have been in breach of the Moon Recruitment/Execom agreement by employing Mr Horne, but still chose to employ him. There was also no suggestion in this case that Moon Recruitment had engaged with Echo Marine as an agent for Execom as an undisclosed principal, and the Moon Recruitment/Execom agreement makes it plain that it did not. This was also not a case in which there was but one potential employer, where an estoppel was asserted against a party which had held itself out as an employer, by a worker who changed his position accordingly. Nor was it a question of whether the worker was an employee, or a contractor.
The objective interpretation to be placed on the Execom offer, consistent with the commercial purpose for which Execom became involved at all, was that it was the means by which Moon Recruitment was to ensure that its employee, Mr Horne, was paid in a timely manner and that workers' compensation insurance was put in place, even though the latter intention fell foul of the Act, in that it was the employer which was obliged to insure the worker.
One final matter to be mentioned: the payroll tax revenue ruling, published by the Department of Finance: Office of State Revenue (undated) which was in the papers before the arbitrator and was alluded to in the Moon Recruitment/Execom agreement does not assist Moon Recruitment. The document was before the arbitrator because of evidence that it was the reason why the Moon Recruitment/Execom agreement obliged Moon Recruitment to pay payroll tax over the worker.
Counsel for Moon Recruitment pointed to it as an indicator that it was not unheard of for labour‑hire businesses to 'on‑hire' workers to another labour-hire business. The fact that the department thought it appropriate to make the ruling, whenever that occurred, suggests that that is so, or at least was at the relevant time.
The revenue ruling explained 'the payroll tax implications of an employment agency arrangement involving multiple employment agents (chain of on-hire)' and contained a diagram showing an example where an employment agent (Agent 1) on‑hires a worker to another employment agent (Agent 2) who then on-hires the worker to its client and, in those circumstances, the Commissioner of Taxation would regard Agent 2, being 'the employment agent closest to the client', as the agent liable to pay payroll tax.
The diagram bore no similarity to the arrangement reached in this case, however. Moon Recruitment recruited the worker, who worked at the premises of its client, Echo Marine. On the basis of the revenue ruling, Moon Recruitment was certainly liable to pay the payroll tax, consistent with the understanding of the parties at the time. If any on‑hiring occurred, it occurred to an agent which had no relationship with the client. Execom did not on‑hire Mr Horne to Moon Recruitment, in order that Moon Recruitment could in turn provide his services to its client Echo Marine. The Moon Recruitment/Execom agreement provided that Moon Recruitment was to make Mr Horne 'available' to Execom, while it was Moon Recruitment which let the worker on‑hire to Echo Marine. The payroll tax ruling then rendered Moon Recruitment liable.
There were ways in which Moon Recruitment could have fulfilled the function of a recruiter and introduced Mr Horne to Echo Marine and, by agreement with Echo Marine and Mr Horne, nominated another entity such as Execom to be the employer, while perhaps continuing to serve some purpose as agent to that employer in terms of dealing with the worker, for a fee. There are obvious commercial reasons why that may not have been attractive though, if it was considered. Alternatively, Moon Recruitment could have reached an agreement with Execom whereby Execom provided payroll functions and merely temporarily financed the workers' compensation premiums, with Moon Recruitment as the named employer. But the Execom offer to Mr Horne did not achieve either of those options.
Conclusion
In APP 66/2022, the arbitrator did not err in law in taking irrelevant matters into account. Further, there was an evidentiary basis for his findings on both issues, namely whether the Execom offer had been accepted by conduct on 2 September 2019 and whether it was Execom which was the employer, or Moon Recruitment. Although the appeal raised questions of law to be considered, no error of law was involved and so I do not grant leave to appeal. In any event, I consider the conclusion the arbitrator reached to have been correct.
As to APP 65/2022, it appears that all parties and the arbitrator were not alive to any issue with the description of 'Moon Recruitment' in A104376 and 'Kerrie Moon t/as Moon Recruitment' in A105048. It was just not the focus of the dispute and was overlooked, it seems, by everybody. The parties, particularly Ms Moon, would have known better than the arbitrator whether the descriptions were correct or not. A court or tribunal cannot be said to have made an error of law if the matter was not raised for determination at the hearing: Nugawela v Medical Board of Australia [2023] WASCA 92 [64].Nor was there an error on the face of the orders made. The orders made were consistent with each other. In those circumstances, no error of law has been made out and no question of law involved so as to justify giving leave to appeal in APP 65/2022.
This court has power to amend the orders made to make any correction in the description of the liable party which ought to be made, upon being satisfied that there was a misdescription. This court has power 'upon hearing an appeal' to make 'any further or other decision, as to costs or otherwise' as the court thinks fit. I do not see that power as dependant upon a successful appeal - clearly the making of a costs order would not be dependent upon a successful appeal. Otherwise it would be necessary to remit the matter to the arbitrator to correct the description. Providing nothing has changed in the interim, I do not consider that to be necessary on the basis discussed with the parties at the outset of the hearing, and I will hear from the parties as to the appropriate orders to be made.
Some proof of incorporation of Moon Recruitment at the relevant time will be required prior to the making of final orders. I did not find formal evidence of incorporation in the papers before the arbitrator. If it is there, the court can be taken to such evidence. Alternatively, prior to the making of any final orders, leave can be given to add it to the materials before this court: s 247(6) of the Act.
Should the additional evidence not reveal an error in the description, then the orders made by the arbitrator will stand. Should the additional evidence confirm what counsel for Moon Recruitment and Ms Moon understands to be the case, namely that Moon Recruitment was, as at 2 September 2019, incorporated, then an amendment can be made.
Postscript
On 3 April 2025 I published this decision, and the decision in the related matter of Kerrie Moon t/as Moon Recruitment v Execom Software Pty Ltd t/as Execom Personnel [2025] WADC 20. Counsel for the applicant/appellant in both appeals then furnished the court (with leave as discussed in [371] above) with documentation from the Australian Securities & Investments Commission proving that Moon Recruitment Pty Ltd was registered as a company from 11 August 2015, which registration was current as at the date of Mr Horne's injury.
No opposition being raised by the other parties in each appeal, orders were made amending the name of the first respondent in A105048 before the arbitrator from 'Kerrie Moon t/as Moon Recruitment' to 'Moon Recruitment Pty Ltd' with corresponding amendments to the orders made by the arbitrator on 2 November 2022 and, likewise, amending the name of the first respondent in A104376 before the arbitrator from 'Moon Recruitment' to 'Moon Recruitment Pty Ltd' with corresponding amendments to the orders made by the arbitrator on 2 November 2022. The applications for leave to appeal in each matter before this court were then dismissed.
I certify that the preceding paragraph(s) comprise the reasons for decision of the District Court of Western Australia.
DD
Associate to Judge Sweeney
2 APRIL 2025
- AGLC
- Moon Recruitment Pty Ltd v Execom Software Pty Ltd t/as Execom Personnel [2025] WADC 18
- Case
- [2025] WADC 18
- Decision Date
CaseChat Overview and Summary
The court examined the arbitrator's approach and the procedural flexibility afforded under the relevant statute, which allows for decisions to be made on equity, good conscience, and the substantial merits of the case. However, this flexibility does not permit decisions made without an evidentiary basis or a departure from established principles of law. The court found that the arbitrator had indeed considered the evidence, including identifying inconsistencies in the documents presented by Execom. While there was no extensive analysis of each witness's testimony, the arbitrator's summary of the evidence was accurate and unchallenged.
In its reasoning, the court noted that the arbitrator was not required to mention every piece of evidence or resolve every inconsistency, especially since there were few challenges to the evidence presented. The court concluded that the arbitrator's findings and reasons were sufficient, given the context and the manner in which the hearing was conducted. The court upheld the arbitrator's decision, finding no basis for a complaint about the accuracy of the evidence summary or the identification of the true employer.
The final orders of the court were to dismiss the appeal, affirming the arbitrator's decision regarding the identity of the true employer and finding no error of law in the arbitrator's description of the parties.
Orders
Orders of the court
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Background
Background to the litigation
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Evidence
Evidence Before The Court
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Decision
Reasons for decision
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Ratio Decidendi
Legal Principle Established
Mention should be made of the context in which such findings and reasons are given by an arbitrator hearing a dispute pursuant to the Act. The Act sought to provide a fair and cost‑effective system for the resolution of disputes which was timely, accessible, approachable and professional, and which minimised cost to the parties and enabled disputes to be determined according to their substantial merits, with as little formality and technicality as practicable: s 177(1). An arbitrator is not bound by the rules of evidence, and is to act according to 'equity, good conscience and the substantial merits of the case': s 188(2). That more flexible procedure does not justify decisions made without an evidentiary basis, however: Rodriguez v Telstra Corporation Ltd [2002] FCA 30 [25] (Kiefel J). Nor does it give the arbitrator the power to depart from established principles of law: Fagan v Minister for Corrective Services [2024] WASCA 167. The arbitrator's reasons for decision need only identify the facts that the arbitrator accepted in coming to his decision, and give the reasons for doing so: s 213(4) of the Act. Plainly then, the arbitrator was not obliged to mention every piece of evidence that was put before him, nor resolve every inconsistency, to the extent that there were evidentiary disputes. And in the manner in which the hearing was conducted, there was little challenge to the evidence from the witnesses, and the documents spoke for themselves. No complaint was made before this court about the accuracy of the summary of the evidence given by the witnesses. Some brief summary was given of the contents of the documentary evidence. No complaint was made about the accuracy of that summary either, save that Moon Recruitment submitted that the arbitrator failed to reproduce certain salient passages from the documents sent to Mr Horne by Execom. The documents, which were not lengthy, were before the arbitrator, however, and there is no reason to suppose that he missed those features. He observed the inconsistency between the Execom email and letter to Mr Horne, both of which were sent to him with the Execom offer, the email referring to Mr Horne's 'start at Echo Marine for Moon Recruitment' and the letter referring to his 'working with Execom Personnel' and the 'contract with Execom'. It is apparent the arbitrator was across the details. There was little, though some, analysis of the evidence from each witness. The summary contained no broad statement to the effect that the arbitrator considered all three witnesses to be truthful, or that he regarded each witness to be reliable. The eventual conclusions did contain, or at times necessarily implied, findings of fact. The findings were not lengthy, although they must also be taken to have included the preliminary summary mentioned above. There is reason to conclude that the arbitrator did impliedly accept that evidence which he did not expressly criticise. Given the manner in which the matter was conducted, there was no need for lengthy analysis of the evidence from the witnesses.