New E-Modern Pty Limited v WorkCover Authority of New South Wales - [2006] NSWWCCPD 206

WORKERS COMPENSATION COMMISSION

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

CITATION:New E-Modern Pty Ltd v WorkCover Authority of New South Wales [2006] NSWWCCPD 206
APPELLANT:  New E-Modern Pty Ltd
RESPONDENT:  WorkCover Authority of New South Wales
INSURER:Uninsured
FILE NUMBER:  WCC4398-05
DATE OF ARBITRATOR’S DECISION:          5 September 2005
DATE OF APPEAL DECISION:  25 August 2006
SUBJECT MATTER OF DECISION: Section 145 of the Workers Compensation Act 1987: worker/independent contractor; new evidence; procedural fairness.
PRESIDENTIAL MEMBER:  Acting Deputy President Anthony Candy
HEARING:On the papers.
REPRESENTATION:  Appellant:      White Barnes, Solicitors
Respondent:   TurksLegal, Solicitors

ORDERS MADE ON APPEAL: 1. The decision of the Arbitrator dated 5 September 2005 is confirmed.

2. The appellant is to pay the costs of the respondent on the appeal.

BACKGROUND TO THE APPEAL

Mr Sang Kug Park (‘Mr Park’) came to Australia from Korea on 26 November 2001. On 28 November 2002 he began work at the premises of New E-Modern Pty Ltd (‘NEM’) at Riverstone as a welder/sheetmetal worker.
On 23 January 2004 while so engaged Mr Park was severely injured when a steel plate weighing approximately one tonne fell on the lower part of his right leg. This resulted in fractures and extensive soft tissue damage to the leg. NEM did not at the time have a workers’ compensation policy which complied with the laws of New South Wales, and accordingly, Mr Park made a claim upon the WorkCover Authority of New South Wales (‘WorkCover’). WorkCover accepted the claim and substantial payments of compensation were made in respect of the treatment of Mr Park and also in respect of his entitlement to weekly payments.
WorkCover served a notice pursuant to section 145(1) of the Workers Compensation Act 1987 (‘the 1987 Act’) on NEM on 25 February 2005 requiring reimbursement of payments made by WorkCover to Mr Park. These totalled $97,728.60.
NEM sought legal advice and made application for a determination under section 145(3) of the 1987 Act. That matter came before an Arbitrator of the Workers Compensation Commission (‘the Commission’) and oral evidence was given on 27 June and 15 August 2005.
The Arbitrator decided that NEM was liable to repay WorkCover the sum specified in the section 145 notice and made a determination accordingly. It is against this determination of the Arbitrator that NEM seeks leave to appeal by Notice of Appeal lodged on 4 October 2005.

THE DECISION UNDER REVIEW

The ‘Certificate of Determination’, dated 5 September 2005 records the Arbitrator’s orders as follows:
“1.I order that New E-Modern Pty Limited is liable pursuant to section 145(1) of the Workers Compensation Act 1987 to reimburse the WorkCover Authority Fund the sum of $97,728.60 as detailed in the statutory notice of the 21 February 2005 issued pursuant to Section 145(1) and served on the Applicant on 25 February 2005.
2.Each party pay their own costs.”
The only substantive issue agitated before the Arbitrator was whether Mr Park was a worker within the meaning of the 1987 Act or failing this whether he was a deemed worker under Schedule 1, clause 2 of the Workplace Injury Management & Workers Compensation Act 1998 (‘the 1998 Act’).

ISSUES IN DISPUTE

The issues in dispute in the appeal are:
(a)         Whether the appeal was filed in time.
(b)         Whether leave should be granted to adduce new evidence.
(c)         Whether the decision of the Arbitrator was factually correct.
(d)         Whether the Arbitrator gave adequate reasons.
(e)Whether the Arbitrator erred in law in denying an adjournment application to adduce further evidence.
(f)Whether the Arbitrator erred in treating the existence, or otherwise, of a separate company or business name as being of little significance in the case.

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 submission by WorkCover 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 amount at issue on the appeal is $97,728.60 and all of that sum is at issue.
The Application for Leave to Appeal was lodged by facsimile transmission on 4 October 2005 and, as I have earlier indicated, the date of the decision of the Arbitrator was 5 September 2005. Section 352(4) of the 1998 Act provides that an appeal must be made within twenty-eight (28) days after the making of the decision appealed against. WorkCover has submitted that the appeal was not filed within time since it ought to have been filed no later than 3 October 2005. NEM relies on the Interpretation Act 1987, and in particular the situation where the day on which an event is to be done falls on a public holiday. I note that the last day on which the appeal ought to have been filed, Monday 3 October 2005, was a public holiday. Accordingly, the appeal filed the following day is within time.
Leave to appeal is granted.

FRESH EVIDENCE

‘Fresh evidence’ on appeal is governed by section 352(6) of the 1998 Act, which provides as follows:
“(6)Evidence that is fresh evidence or evidence in addition to or in substitution for the evidence received in relation to the decision appealed against may not be given on an appeal to the Commission except with the leave of the Commission.”
Practice Direction No. 6 sets out the process for seeking leave of the Commission to give ‘new evidence’ on appeal. It provides as follows:

“New Evidence
Where a party seeks leave to give new evidence in relation to the decision appealed against, that party must serve a copy of the new evidence on the other parties to the dispute when serving the Application or Opposition.
In general, the Commission will allow new evidence to be introduced only where it can be demonstrated that the new evidence could not reasonably have been obtained by the party and tendered in proceedings before the Arbitrator and that failure to allow the new evidence would cause a substantial injustice in the circumstances of the individual case.”

Practice Direction No.6 also provides that if new evidence is sought to be relied upon, the Application or Opposition to the Appeal must contain:
“ -a schedule of the new evidence,
-a copy of the new evidence,
-a brief outline of the new evidence and the reasons why it was not given in the
proceedings before the Arbitrator, and
-submissions why the new evidence should be admitted.”
In the Application to Appeal Against Decision of the Arbitrator a further statement, undated, from Cheon Hyung Cho (also known as Bruce Cho), who I will refer to afterwards as Mr Cho, Snr was attached. He with his sons had set up and carried on the business of NEM. There is however some confusion as to who was a director at relevant times. This gentleman gave evidence at the hearing before the Arbitrator on 15 August 2005. In that evidence while under cross-examination he referred to Mr Park submitting tax invoices and said there was a “P-T-Y L-T-D”. These invoices were not in evidence and an adjournment was sought by counsel appearing for NEM so that that evidence could be put before the Arbitrator. This adjournment application was refused.
Attached to the statement referred to above are ten documents headed “Tax Invoice/Statement” which run from 885403 to 885440 dated from 7.12.02 to 2.3.03. The first nine of these documents are headed “from Yong S. Kim Co” and the ABN is 52 586 320 659. The last of the documents is headed “from S.K.P. Service” and has a different ABN.
In my opinion NEM has not satisfied me that this fresh evidence ought be admitted or that the Arbitrator erred in failing to allow an adjournment in order to procure such evidence. It appears that NEM had sought legal advice by 1 March 2005 which is the date when its solicitors wrote to WorkCover. There was ample opportunity to gather and present all relevant evidence to the Arbitrator and it seems to me that this ought to have been produced long before this. There was no good reason advanced why this was not obtained earlier. Although I do not admit the evidence, I have read it and will deal with it upon considering the merits of the appeal in fairness to NEM. I do consider however that the evidence has little, if any, probative value.

EVIDENCE

A statement of Mr Park taken on 7 April 2004 was before the Arbitrator. In that statement he said that from 28 November 2002 he worked as a sheetmetal worker for NEM at 49 Hobart Street, Riverstone. He describes the work he did and says the work was paid for on an hourly basis with his being required to invoice NEM for work undertaken by him. He understood he was to pay his own taxes and was not paid superannuation, nor was he entitled to any sick or annual leave or paid public holidays. He said he did not operate his own business and worked solely for NEM. He said that Mr Sung Young Cho (‘Mr Cho, Jnr’) would tell Mr Park what needed to be manufactured and would give the specifications to him. Mr Park had the assistance of other workers if the work was heavy but most of the time he would work on his own. He worked 10 hours a day Monday to Friday with a 30 minute lunch break.
In his evidence of 27 June 2005 before the Arbitrator, Mr Park said that in November 2002 he saw an advertisement in a Korean paper seeking employment with NEM as a welder. He answered the advertisement and spoke to Mr Cho, Snr and he then went to the factory to meet him. He said that when he met Mr Cho, Snr he did not have a business set up. About three days later he met Mr Cho, Jnr. He said that when he was working at NEM he did not have any tools of his own and these were provided by NEM. The rate of pay was $15.00 per hour and sometimes he was paid in cash and sometimes by cheque. He started work the next day. He was told what to do by both Mr Cho, Snr and Mr Cho, Jnr. For a time he was living on the premises of NEM.
On 14 February 2003 Mr Park registered a business name, SKP Service. He did this because he was told by Mr Cho, Snr that he had to register a business with NEM. An account was opened in the name of SKP Service in order to be able to deposit NEM cheques into that account. He said that Mr Cho, Snr helped him set up this account. Mr Park said that all of the invoices he was shown had been submitted at one time in October or November 2003 at the request of Mr Cho, Snr. He says that the only invoices which he completed himself were those written in Chinese.
Mr Park was cross-examined. Prior to working for NEM, Mr Park had done casual cleaning work with a Mr Kim. He was cross-examined as to whether the advertisement in the newspaper sought sub-contractors rather than welders but this was denied. It was put to him that Mr Cho, Snr asked him whether he had his own company and it was suggested that Mr Park had told him that he did. In contrast to his evidence-in-chief, Mr Park said that he would prepare invoices and give them to Mr Cho, Jnr and Snr. Mr Park said that he did not give invoices to any other company and did not work for Mr Kim cleaning during this time.
A statement of Mr Cho, Jnr dated 7 April 2004 was before the Arbitrator. He described himself as a director of NEM which had commenced on 19 May 2002. The business was involved in the manufacture of tipper truck bodies on an individual order basis to specifications provided by the client. He said that his brother, Mr Sung Il Cho, was working as an owner of the company from commencement until December 2003. Mr Park was described as working with the business as a sub-contractor as he had his own company, SKP Service, from 23 November 2002 until 23 January 2004. Mr Cho, said that any work that Mr Park undertook was paid for by payment to his business in response to invoices received outlining the work done. At no time it is said was Mr Park treated as an employee as there was no deduction for taxation or the provision of leave entitlements or superannuation. Mr Park it is said agreed to this and he was aware that he was not an employee. A further undated statement of Mr Cho, Jnr was also before the Arbitrator. On this occasion he described himself as having a “management role” with NEM and had that role going back several years. He had previously been a director of the company. He stated that NEM was a small family based business and it was always NEM’s intention to utilise sub-contractors because there were doubts as to how much work would come in. An advertisement was inserted in the Korean newspaper for welders and he says he remembers seeing that advertisement. He said it was simply referring to “Welders Wanted” and had the company phone number. His father, Mr Cho, Snr, had told him that Mr Park had answered the ad by telephoning the company and then meeting him. Mr Cho, Snr had decided to offer Mr Park a start and it is asserted by Mr Cho, Jnr that there was a discussion between himself and his father to the effect that the start would be on a sub-contractor basis and not an employee basis. Mr Park did not speak English at all but did speak Korean. Mr Cho, Jnr refers to a conversation with Mr Park in which it was agreed that he would provide NEM with invoices and the rate of pay was $14.00 an hour plus GST of 10%. Mr Park told Mr Cho, Jnr that he had a company already. Initially Mr Park was paid by cash and thereafter a mixture of cash and cheques. Mr Cho, Jnr said that because Mr Park did not read or write English, he assisted him in completing invoices after there had been agreement on the hours worked. He says there were no set hours of work. Mr Park would sometimes work on weekends and had access to the premises for this purpose. The invoices from November 2002 to March 2003 could not be found and Mr Cho, Jnr thought that Mr Park had been paid cash for these periods.
Mr Cho, Jnr said that he was concerned to have proof that Mr Park had established himself as a company and sought documentation from him in that regard. Mr Park produced details of the registration of SKP Service and as a business name. Mr Cho, Jnr at this time did not appreciate the difference between a business name and a company.
At the hearing on 15 August 2005, Mr Cho, Jnr gave evidence and was cross-examined. He said he became a company director of NEM on 9 December 2002. He said however that he was not the director of the company at the time of Mr Park’s injury, namely, 23 January 2004, and his older brother was, namely Song Il (sic). He said it was a family business and everyone was in charge of operating or managing the business and at the time he wasn’t quite sure what the word ‘director’ exactly meant. He said he told Mr Park what to do, although he was not a qualified welder. He said that Mr Park would do welding work for NEM about six days a week since he was fairly busy at that time. Mr Park would work perhaps ten hours each day. He says he did not know whether Mr Park did welding for anyone else between November 2002 and February 2004. He denied asking Mr Park to set up a bank account however it is not clear whether he also denied asking him to set up a business. Apart from Mr Park’s boots, safety helmets and goggles, NEM provided the tools and materials which he used when welding. Mr Cho, Jnr said that he had the day-to-day running of NEM, although his father would come in occasionally.
The statement of Mr Cho, Snr, dated 20 May 2005, was before the Arbitrator. He said that he was a shareholder in the company (NEM). The business had always been operated from Hobart Street, Riverstone. He had placed a small advertisement in a Korean-based magazine which referred to a welder being required and giving a phone number. Mr Park had rung him in response to that advertisement. Mr Park could converse in Korean but did not speak English. He arranged to meet him at the Riverstone train station and take him back to the workshop where Mr Park gave him a demonstration of his welding skills. Mr Cho, Snr said at the outset that he knew he did not wish to secure any employees and he specifically told Mr Park that “[I]f you come and work here you will not be an employee, I need to have you as a contractor. Do you have your own company?”. Mr Park had replied, he said, “Yes, I do have my own company”. Mr Cho, Snr said that he made it clear to Mr Park that if there was no work, he would not be paid and he was free to go elsewhere. The day-to-day management of the business was in the hands of his son, Mr Cho, Jnr, who looked after the paperwork. He said that Mr Park sometimes worked 8 a.m. to 6 p.m., sometimes on weekends. Sometimes he would stay at the Riverstone premises overnight, perhaps 2 or 3 nights a week in order to save travel from where he lived. Mr Cho, Snr says there was no intention by the company to create an employee/employer relationship and there was no restriction imposed by NEM on Mr Park working elsewhere.
Mr Cho, Snr gave evidence on 15 August 2005 and was cross-examined. He said that he would pay Mr Park’s company on an hourly rate inclusive of GST. He refers to Mr Park telling him he had a business registration. On this occasion Mr Cho, Snr referred to Mr Park submitting tax invoices which involved a “P-T-Y L-T-D” and later he submitted another invoice that said SKP Service.
In an undated statement, to which I have earlier referred in paragraph 18, Mr Cho, Snr referred to his giving evidence before the Arbitrator and to receiving invoices with the name “Yong Sam Kim Co.” (sic) with an ABN on which Mr Park had been paid for work undertaken from December 2002 through to March 2003. He did not know anything about Mr Yong S. Kim. He alleged that Mr Park had complained to him that 10% of the moneys paid to him had been retained by his brother-in-law which Mr Cho took to be a reference to Mr Kim. He then produced details for SKP Service with a new ABN and allegedly told Mr Cho that he wanted the money paid to SKP Service. A number of invoices are attached to this statement. Some of the payments, it is said, were made in cash and others were made by cheque. Mr Cho reiterated his intention on behalf of NEM to create a relationship with a contractor and never to create an employer/employee relationship.
It will be noted that there was substantial agreement as to what the facts were in the case and there was very little scope for fact finding on the part of the Arbitrator.

DISCUSSION AND FINDINGS

I have already determined that the appeal was filed in time and, although refusing leave to adduce new evidence I have considered that new evidence. The question of the error of law on the part of the Arbitrator in denying the adjournment application I think is no longer open since I have, as I have indicated, considered that the new evidence, this being the reason for the adjournment being sought. In any event, I would be reluctant to conclude that the Arbitrator erred in the circumstances of this case in denying the adjournment application. The matters which accordingly remain for decision on the appeal are:
1. Whether the decision of the Arbitrator was factually correct?
2. Whether the Arbitrator gave adequate reasons?
3.Whether the Arbitrator erred in treating the existence or otherwise of a separate company or business name as being of little significance in the case?.

It is in my opinion convenient to deal with all three of the remaining grounds together. None of them has any real merit unless my understanding of the law in relation to the existence of a contract of service is totally wrong. I share the same view as the Arbitrator on the facts of this case and the new evidence sought to be presented does not cause me to change my opinion in the slightest. True it is that Mr Cho, Snr, and Mr Cho, Jnr, did not intend to establish an employer/employee relationship with Mr Park and sought to interpose a corporate structure between NEM and Mr Park. In that regard they did not succeed, in that there was never any company by which Mr Park was employed and which sub-contracted his services to NEM. As Gleeson CJ said in Connelly v Wells (1994) 10 NSWCCR 396 at 399:
“Sometimes, when a dispute has arisen as to the legal nature of their relationship, the parties to the relationship will assert, in or out of court, their individual intentions or understandings on that question. For reasons that are explained in Australian Broadcasting Corporation v XIVth Commonwealth Games Limited (1988) 18 NSWLR 540 at 650 and which I shall not repeat, such assertions are usually unhelpful and legally irrelevant.”
It would be totally wrong, in my opinion, to describe Mr Park as being a sub-contractor. There is no evidence that he carried on an independent business of his own. Indeed, it is difficult to see how he could do so without premises and equipment. All of the welding work he did in the period November 2002 to January 2004 was done for NEM. The mode of remuneration was on an hourly rate rather than, as one would expect in the case of a contractor, a fixed price for a given job. The Arbitrator in paragraph 17 of his reasons refers to the indicia of employment which are referred to in a number of cases including Stevens v Brodribb Sawmilling Co. Pty Ltd (1986) 160 CLR 16. The Arbitrator at paragraph 20 said that the evidence given by Mr Park in-chief and in cross-examination established sufficient indicia for a conclusion to be reached that a true common law master/servant relationship was in existence at the time of the accident. He went on to say that it was not to the point that the Chos’ perception of the relationship was that he was a contractor.
As has been noted by Deputy President Fleming in M&S Shipman Pty Ltd v Larry John Matters [2003] NSWWCC PD 19 at paragraph 80, Commission arbitrators have a common law and statutory obligation to provide adequate reasons for decision. The standard by which adequacy of reasons must be determined is relative to the nature of the decision itself and of the decision-maker. The learned Deputy President goes on in paragraph 84 to say this:
“To succeed on the grounds of ‘inadequate reasons’ it would 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 statutory duty to fairly and lawfully determine the application.”
I have already said that there was little factual dispute in this matter. Rather, the matter to be decided by the Arbitrator was the legal complexion which the facts bore. Looking at the reasons given by the Arbitrator for deciding this matter, I am of opinion that they fully deal with the issues and I can see no cause to find that these reasons are inadequate.
I have taken account of the earlier invoices which are attached to the latest statement of Mr Cho, Snr. I note that two business names are specified in these invoices. There is no suggestion that Mr Park was ever employed by that business name or by the person carrying on that business. The overwhelming evidence is that Mr Park was employed by NEM and not as a sub-contractor. What, it appears to me, Mr Cho, Jnr and Snr, attempted to do was to attach the label of principal/contractor to the relationship with Mr Park, although essentially the relationship was one of master and servant. The mere fact of Mr Park submitting invoices quoting a business name and an ABN, the non-deduction of tax and the non-payment of superannuation, sick leave, etc by NEM is not sufficient in my view to cause the relationship to be other than that of master and servant.
Even if I and the Arbitrator were wrong in that regard, there is another basis on which NEM would be liable, namely, as an employer of a deemed worker pursuant to Schedule 1 clause 2 of the 1998 Act. There is no evidence that Mr Park carried on an independent business or employed anyone. The Arbitrator expressed a similar view and with that I would entirely agree.

DECISION

The decision of the Arbitrator dated 5 September 2005 is confirmed.

COSTS

The appellant is to pay the costs of the respondent on the appeal.

Anthony Candy
Acting Deputy President
25 August 2006

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

ASSOCIATE