Muscat v Connolly - [2006] NSWWCCPD 76

WORKERS COMPENSATION COMMISSION

DETERMINATION OF APPEAL AGAINST A DECISION OF THE COMMISSION CONSTITUTED BY AN ARBITRATOR

CITATION:Muscat v Connolly [2006] NSWWCCPD 76
APPELLANT:  Les Muscat
RESPONDENT:  Paul John Connolly
INSURER:Uninsured
FILE NUMBER:  WCC 17122-04
DATE OF ARBITRATOR’S DECISION:          11 March 2005
DATE OF APPEAL DECISION:  5 May 2006
SUBJECT MATTER OF DECISION: ‘worker’; Schedule 1 Clause 2 of the Workplace Injury Management and Workers Compensation Act 1998; adequacy of reasons
PRESIDENTIAL MEMBER:  Acting Deputy President Anthony J Candy
HEARING:On the papers
REPRESENTATION:  Appellant:      Bamford Marcellos O’Connor, Solicitors
Respondent:   Everingham Solomons, Solicitors

ORDERS MADE ON APPEAL: The decision of the Arbitrator dated 11 March 2005 is confirmed.

The Appellant is to pay the Respondent’s costs of the appeal.

BACKGROUND TO THE APPEAL

On 1 April 2005 Les Muscat (‘the Appellant’) sought leave to bring an ‘Appeal Against Decision of Arbitrator’ in the Workers Compensation Commission (‘the Commission’) against a decision, dated 11 March 2005.

The Respondent to the Appeal is Paul John Connolly (‘the Respondent’).

The Respondent was engaged, to use a neutral term, by the Appellant to work as a painter on 4 November 2002. The Appellant was himself a painter. After a couple of months working for the Appellant, the Respondent started to notice pain in his right shoulder with numbness going down his arm to his hand. He saw a doctor on 26 May 2003 and was off work from that date to 23 June 2003 and then from 30 June 2003 onwards.

THE DECISION UNDER REVIEW

The ‘Certificate of Determination’, dated 11 March 2005 records the Arbitrator’s orders as follows:
“1.That there be an award in favour of the First Respondent [Programmed Maintenance Services].
2.That the Second Respondent [Mr Muscat] pay to the Applicant weekly compensation at the rate of $542.30 per week from 26 May 2003 to 23 October 2003 pursuant to section 36 of the Workers Compensation Act 1987 and at the rate of $211.00 per week from 24 October 2003 to date and continuing pursuant to section 40 of the Workers Compensation Act 1987.
3.That the Second Respondent [Mr Muscat] pay the Applicant’s medical and hospital expenses pursuant to section 60 of the Workers Compensation Act 1987.
4.That the Second Respondent [Mr Muscat] pay the Applicant’s costs as agreed or assessed.
5.That the Third Respondent [WorkCover] cause the weekly payments referred to in Order 2 above, the hospital and medical expenses referred to in Order 3 above and the costs referred to in Order 4 above to be paid out of the Uninsured Liability Insurance Scheme Fund.”

It should be noted that the Certificate of Determination is expressed to record consent orders, however, the transcript of the hearing appears to indicate that this was not the case. The decision of the Arbitrator was given orally at the conclusion of the submissions on 3 March 2005.

The Appellant was the Second Respondent in the original proceedings. For completeness sake I should say that the First Respondent was a prior employer in whose favour an award was entered by the Arbitrator and the Third Respondent was the WorkCover Authority of New South Wales, since the Second Respondent was uninsured. Neither of these parties has been named in the Application to Appeal and both have indicated that they do not wish to make submissions in relation to the appeal.

ISSUES IN DISPUTE

The issues in dispute in the appeal are:
(a)whether the Application to Appeal was lodged within time;
(b)whether the Respondent was a ‘worker’ within the meaning of section 4 of the Workplace Injury Management and Workers Compensation Act 1998 (‘the 1998 Act’);
(c)whether the Respondent was a ‘deemed worker’ within the meaning of Schedule 1 clause 2 of the 1998 Act.

ON THE PAPERS REVIEW

Section 354(6) of the 1998 Act provides:
“(6)If the Commission is satisfied that sufficient information has been supplied to it in connection with proceedings, the Commission may exercise functions under this Act without holding any conference or formal hearing.”
Having regard to Practice Directions Numbers 1 and 6, the documents that are before me, and the submissions by the parties that the appeal can proceed to be determined on the basis of these documents, I am satisfied that I have sufficient information to proceed ‘on the papers’, without holding any conference or formal hearing, and that this is the appropriate course in the circumstances.

LEAVE

Before proceeding to deal with an appeal the Commission must determine whether the application meets the requirements of section 352 of the 1998 Act.

The appeal was lodged within 28 days of the Arbitrator’s decision as recorded in the Certificate of Determination in compliance with section 352(4) of the 1998 Act (see
Rule 77(2) of the Workers Compensation Commission Rules 2003).

The amount of weekly compensation awarded exceeds the sum of $5,000.00 and the whole of that amount is the subject of this appeal.
Leave to appeal is granted.

EVIDENCE AND SUBMISSIONS

A number of statements of the Respondent were put into evidence and no oral evidence was called at the hearing on 3 March 2005.

In his first statement of 28 August 2003 the Respondent relates his employment with Tamworth City Council Abattoir, which was not a party to these proceedings. He worked as a painter for Programmed Maintenance Services, the First Respondent in the claim before the Arbitrator, up to September 2002. He says he commenced employment with the Appellant as a painter. He made some enquiries to find out if anyone was looking for a painter and he was given the telephone numbers of two painters; one was the Appellant. The Respondent says he telephoned the Appellant in late September 2002 asking him whether he would have any work. He was asked to come around for an interview at the Appellant’s house. The Respondent says that he was told that he would be paid $22.00 an hour and that he would need an Australian Business Number (‘ABN’) and he was to pay his own tax but the Appellant would supply all the equipment, including paint, brushes, drop-cloths, ladders and all other materials. He was told of the commencing and finishing hours as well as the break times. The Respondent said that the Appellant had said that he would provide the work and it would not be necessary for the Respondent to do so.
The Respondent commenced work on 4 November 2002. He was told each day by the Appellant where he was to go. He was also told when he could have a break and the Appellant would tell him to fix something if it was not properly done. The Respondent says that if he wanted a day or longer period off he would have to ask the Appellant. The Respondent says that he did not hold himself out to do any work independently. He did not advertise and did not have time off while working with the Appellant to do other work. He did however, it seems, in January 2003, paint the awning of a lady’s house which was done on a weekend and which I infer was done of his own account. A couple of months after working for the Appellant the Respondent started to notice pain in his right shoulder. It is not necessary to deal with the medical evidence since there is no dispute as to this.
In the Appellant’s Reply there is his statement of 13 October 2003. There is little difference between what was said by the Respondent in his statement and what is said by the Appellant. However, the Appellant says that it was the Respondent who told him that he wanted to work on a contract basis and that he would give the Appellant a Tax Invoice. The rate was agreed at $22.00 per hour inclusive of GST. The Appellant says that the Respondent did not have much in the way of equipment so he loaned him some of his. The Respondent had only a few brushes and little more. The Appellant says that the Respondent worked on a number of sites averaging about 40 hours per week. He says he used the Respondent on a job-by-job basis and at all times he was free to go elsewhere. He said he continued to use the Respondent as he had enough work to sustain the arrangement. The Appellant says that he gave directions to the Respondent about where the work was and guidance as to what was required as stipulated by the clients but otherwise it was up to the Respondent as to how he would undertake the job.
The Appellant said that he had originally considered employing the Respondent as a worker but the Respondent had insisted on being a contractor and issuing him with Tax Invoices. The Appellant says that he did not intend to employ the Respondent as a worker and he did not consider that he was a worker directly employed by him.
The Respondent replied to the statement by the Appellant in a further statement of
6 November 2003. He disputes the Appellant’s statement that he was used on a job-by-job basis and denies that he was free to go elsewhere. The Respondent agrees that there was a period of possibly three days during which he worked unsupervised for the Appellant. The Respondent agrees that he was not paid annual leave or sick leave and was paid only for the work he actually did.
The Respondent has made a further statement dated 13 October 2004. This however does not relate in any material way to his employment by the Appellant.
The Appellant relied on certain documentary material, namely, a document showing that the Respondent had been registered with an ABN from 20 June 2000 to 4 November 2004. There are also a number of documents headed ‘Tax Invoice/Statement’ – some are numbered and dated and others, while numbered, are not dated. In some cases the dates and numbers have been obliterated in the process of photocopying. These are 25 in number and show GST being added to the charge for the supply of labour which is for most periods $880.00, which I assume would be for a 40 hour week at $22.00 per hour. Puzzlingly GST has been added on top of this so that the resulting sum is $968.00.
The Respondent in submissions which were before the Arbitrator refers to the principles established in two High Court cases, namely Stevens v Brodribb Sawmilling Co. Pty Limited (1986) 160 CLR 16 (‘Stevens’) and Hollis v Vabu Pty Limited (2001) 207 CLR 21 (‘Vabu’). A number of indicia of employment are referred to, including:
·     Control.
·     Right to delegate.
·     Performance of work.
·     Continuous exclusive service.
·     Taxation.
·     Provision of material and equipment.
·     Right of dismissal.
·     Computing remuneration.
·     Hours of work.
The Respondent relied on the control which the Appellant exercised over the manner in which he performed his work. It is also said that there was no right to delegate performance of the work. It is further said that there was continuous exclusive service. As to the remaining matters, it is common ground that no income tax was deducted from payments received by the Respondent. It also appears a matter of agreement that the equipment and materials used in the painting were provided by the Appellant. It is said that the right of the Appellant to dismiss the Respondent was indicative of a Contract of Employment relationship. It is clear that the Respondent was paid $22.00 per hour and in no way did he receive a lump sum payment for a job done or a share of profits if any arising out of a completed painting job. The hours worked are said to be consistent with a contract of service.
A further submission is made that, if the Respondent were held not to be a ‘worker’ in accordance with section 4 of the 1998 Act which was denied, then he would fall under the provisions of Schedule 1, clause 2 of that Act.
The Appellant disputed that the Respondent was a ‘worker’ within the meaning of the legislation, which I take to be a denial that he was a ‘deemed worker’ also.
At the hearing before the Arbitrator further submissions were made by the parties. The submissions made on behalf of the Respondent were substantially in accordance with the written submissions lodged. On behalf of the Appellant reference was made to the decision of the Court of Appeal in Connolly v Wells (1994) 10 NSWCCR 396, which was said to require a balancing of indicia on either side. It was argued that there were a number of facts which indicated that the Respondent was a contractor rather than a worker. One of these was that he was registered for Goods & Services Tax and reference is made to tax returns filed in the years 2001 and 2002 by the Respondent. Reliance was also placed on the Tax Invoices submitted to the Appellant by the Respondent. It was said that the amount of remuneration exceeding the award indicated that he was not a worker. It was noted that the Respondent was only paid for the actual work performed by him and reliance was also made on an unreported decision of the Court of Appeal in Ibrahim v Goldmark Jewellers Pty Limited (No. CA40653/92, 19 July 1995) (‘Ibrahim’). The Appellant argued that the experience which the Respondent had and his qualifications were factors in indicating that he was a contractor rather than a worker and there was reference made to the one job of painting carried out on a weekend at a lady’s house. It is worthy of note that no submissions were made on behalf of the Appellant in relation to Schedule 1, clause 2 of the 1998 Act.
The Arbitrator at the conclusion of the hearing on 3 March 2005 gave a short oral decision. He said that he preferred the submissions on behalf of the Respondent to those of the Appellant. In relation to the alleged registration of the Respondent for GST, the Arbitrator noted that the document relied on, in relation to registration for ABN, had a note that there was no current or historical GST registration.
In submissions lodged with the Application to Appeal the Appellant again referred to the decision of the Court of Appeal in Ibrahim and attached a copy of it. It is accepted on behalf of the Appellant that Vabu and Stevens are relevant authorities as to the approach to be adopted in determining the issue of ‘worker’. It is also said that the Arbitrator ought to have considered each indicia raised and drawn a conclusion as to the relationship between the parties. It is said that the Arbitrator failed to carry out such an assessment. Again reference was made to the Respondent being registered for an ABN and collecting GST on invoices. It is submitted on behalf of the Appellant that the Respondent was never held out to be an employee through livery or marketing and, to the contrary, it was the Respondent who held himself out to be an independent contractor through the provision of Tax Invoices, an ABN and as evidenced by his Tax Returns. It was further submitted that there was no clear evidence that the Appellant exercised significant or actual control over work done other than what would be expected from a site manager or head contractor concerned about the quality of work being performed. Further, the Appellant’s evidence is to be preferred to that of the Respondent. There is a further submission that the Arbitrator failed to give proper reasons. Once again, the submissions do not, so far as I can see, address the question of deemed employment under Schedule 1, clause 2 of the 1998 Act.
The submissions on behalf of the Respondent relate to the appeal being out of time and repeat what has earlier been said about the indicia of employment. Reference is made to the decision of Armitage J in Vezitis v Belmont Timbers (NSW) Pty Limited (1997) 14 NSWCCR 407 (‘Vezitis’). The decision was in relation to the manner in which a supposed worker is paid and whether income tax is deducted from payments made.

DISCUSSION AND FINDINGS

Appeal in time

I have already decided that the appeal was lodged within time.

Reasons

The reasons given by the Arbitrator were certainly brief. Under the circumstances in which they were given, that is, orally at the conclusion of submissions, this is perhaps understandable. Brevity of itself does not mean that the reasons are inadequate. There was very little factual issue and those matters which were in issue were not of overwhelming importance in my view. The real thrust of the Appellant’s case seems to have been that the parties had cloaked their relationship with certain attributes which suggested that the Respondent was a contractor rather than a worker. These attributes do not, in my opinion, conclude the question of ‘worker’ or ‘contractor’.
I adopt gratefully what Deputy President Fleming has said in Mayne Health Group t/as Nepean Private Hospital v Sandford [2002] NSW WCC PD 6 and M & S Shipman Pty Limited v Matters [2003] NSW WCC PD 19. As the Deputy President said in the latter case (at [84]) relying on the decision of the Court of Appeal in YG & GG v Minister for Community Services [2002] NSWCA 247):
“To succeed on the ground of ‘inadequate reasons’ it will be necessary for the Appellant to demonstrate not only that the reasons are inadequate but that the inadequacy sufficiently demonstrates that the Arbitrator has failed to exercise his or her duty to lawfully determine the application.”
In this case I do not consider that any deficiency in the reasons of the Arbitrator has resulted in any injustice to the parties and in particular the Appellant.

Worker

The indicia of employment have been stated in the submissions of the parties. In my view, the preponderance of the factual matters relating to employment which were not in issue point to the Respondent being a ‘worker’ within the definition in section 4 of the 1998 Act. The definition relevantly refers to:
“A person who has entered into or works under a contract of service ... with an employer”.
This is to be contrasted with the person who has entered into a contract for the provision of services.
The matters which lead me to conclude that the Arbitrator was correct that the Respondent was a ‘worker’ are:
·Actual control of work done.
·No delegation of work.
·Continuous exclusive service.
·Provision of materials.
·Hourly remuneration.
·Hours of work.
It is quite clear that the Respondent for the time he worked with the Appellant had no independent business which he was carrying on. If it is necessary to decide the question of whether the terms of the remuneration were imposed by the Appellant or insisted on by the Respondent, I would prefer the evidence of the Respondent. This was not a matter decided by the Arbitrator, nor do I think that it is of any crucial importance in determining the question of ‘worker’. If one looks at the reality of the relationship between the Appellant and the Respondent, the conclusion is, in my opinion, inescapable that the relationship between the parties was one of employer and employee.
The Appellant has placed some reliance on the decision of the Court of Appeal in Ibrahim. In fairness to the Appellant, I should indicate why I do not regard that decision as determinative of this appeal. I note at the outset that this was a decision on its own facts and Kirby ACJ expressed his view that this was “at the borderline”. The points of distinction between that case and the present are that it seems to me that the jeweller in Ibrahim who claimed to be a worker was remunerated at piece work rates and not an hourly rate, that is, he was paid so much for each item of jewellery produced. A further point of distinction is that the jeweller did not have to work set hours and did some work at his own workshop at home with his own tools. He also did work for others from his home. No principle binding on the Arbitrator or me emerges from the decision in Ibrahim.

Deemed Worker

The Respondent throughout has claimed to have been a ‘deemed worker’ under Schedule 1, clause 2 of the 1998 Act in the event that he was found not to be a ‘worker’ within section 4 of the 1998 Act. The Appellant has not squarely addressed this claim in submissions.

What an applicant who relies on clause 2 of Schedule 1 of the 1998 must prove is set out by Bainton A-JA in Scerri v Cahill (1997) 14 NSWCCR 389 at 399D, namely:
“1.that he was a party to the contract with the respondent to perform work;
2.that work exceeds $10 in value;
3.that the work is not work incidental to a trade or business regularly carried on by the applicant in his own name or under a business or firm name; and
4that the applicant has neither sublet the contract nor employed workers in the performance of it.”
The onus of proving all of these matters is on such an applicant.
These elements, in my opinion, are clearly established on the evidence in this case. There is no evidence of a trade or business regularly carried on in the Respondent’s name. The Appellant would no doubt say that the carrying on of a trade or business was evidence by the Tax Invoice/Statements which were in evidence. For reasons which I have given in relation to the ‘worker’ issue, I do not consider that the Respondent has such an independent trade or business.
Armitage J in Vezitis, the case which immediately follows Scerri in Volume 14 of the Compensation Court Reports summarised what Bainton A-JA had observed in Scerri regarding the Prescribed Payment System, namely that:
“... it did not necessarily, without more, connote a relationship of principal and independent contractor, and may nevertheless be consistent with the existence of a contract of service if the other features of the contract were consonant with that relationship.” (at 417A).

DECISION

The decision of the Arbitrator is confirmed.

COSTS

The Appellant is to pay the Respondent’s costs as agreed or assessed.

Anthony J Candy

Acting Deputy President
5 May 2006

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

ASSOCIATE