Ormwave Pty Ltd & QH Cruises Pty Ltd t/as Captain Cook Barrier Reef v Smith

[2006] NSWWCCPD 26

WORKERS COMPENSATION COMMISSION
DETERMINATION OF APPEAL AGAINST A DECISION OF THE COMMISSION CONSTITUTED BY AN ARBITRATOR
STATUS: Decision confirmed on Appeal: Ormwave Pty Limited and Captain Cook Cruises v Smith [2007] NSWCA 210; (2007) 5 DDCR 180
CITATION:		Ormwave Pty Ltd & QH Cruises Pty Ltd t/as Captain Cook Barrier Reef v Smith and Others [2006] NSWWCCPD 26
APPELLANT:		Ormwave Pty Ltd & QH Cruises Pty Ltd t/as Captain Cook Barrier Reef
FIRST RESPONDENT:		Ronald Smith
SECOND RESPONDENT		Captain Cook Cruises (NSW) Pty Ltd t/as Captain Cook Cruises
THIRD RESPONDENT:		WorkCover Authority of NSW
INSURERS:		1.       Allianz Australia Workers Compensation (NSW) Ltd in respect of the Second Respondent (at risk for the whole of the relevant period) 2.       WorkCover Queensland in respect of the Appellants (at risk from 17 January 1992)
FILE NUMBER:		WCC14404-04
DATE OF ARBITRATOR’S DECISION:		27 June 2005
DATE OF APPEAL DECISION:		23 February 2006
SUBJECT MATTER OF DECISION:		Weight of evidence, adequacy of the reasons.
PRESIDENTIAL MEMBER:		Acting Deputy President Robin Handley
HEARING:		On the papers
REPRESENTATION:		Appellant:		Abbot Tout Lawyers
1st Respondent:		AWM Dickinson & Son, Solicitors
2nd Respondent:		Goldbergs Lawyers
3rd Respondent:		Self-represented
ORDERS MADE ON APPEAL:		The decision of the Arbitrator dated 27 June 2005 is confirmed.
The Appellants, Ormwave Pty Ltd & QH Cruises Pty Ltd t/as Captain Cook Barrier Reef, are to pay the First Respondent, Mr Smith, costs in this appeal.
No order as to costs in respect of the Second and Third Respondents.

BACKGROUND TO THE APPEAL

1. On 25 July 2005, a partnership comprising Ormwave Pty Ltd & QH Cruises Pty Ltd, t/as Captain Cook Barrier Reef (‘the Appellants’), sought leave in the Workers Compensation Commission (‘the Commission’) to bring an appeal against the decision of an arbitrator dated 27 June 2005.

1. The principal respondent to the appeal is Ronald Smith. The second respondent, Captain Cook Cruises (NSW) Pty Ltd, t/as Captain Cook Cruises, and the third respondent, the WorkCover Authority of NSW as Administrator of the Uninsured Liability and Indemnity Scheme (who were, respectively, the first and fourth respondents in the proceedings before the Arbitrator), have not made submissions in relation to the appeal but have expressed their interest in the outcome.

1. Mr Smith was born on 22 May 1956 and is aged 49. After serving for nine years in the Royal Australian Navy, he was employed for about seven years as a chef on private yachts operating outside Australia. Mr Smith returned to Sydney in 1987 and, on 7 March 1987, commenced employment variously as a chef, ship’s steward and entertainment officer with Captain Cook Cruises (NSW) Pty Ltd on vessels operating in Sydney Harbour. Very late in the evening on 11 March 1991 or very early in the morning on 12 March 1991, Mr Smith was walking home after work when he was assaulted and robbed, suffering significant injuries. He was taken to hospital later in the day on 12 March 1991, and spent two weeks in hospital and then many months off work recuperating.

1. Mr Smith returned to work for Captain Cook Cruises (NSW) Pty Ltd in December 1991, serving on cruises on the MV Lady Hawkesbury around Christmas and the New Year. From about early January 1992, the vessel then spent more than three weeks in re-fit, during which time Mr Smith oversaw the re-fitting of the galley and storage areas. Mr Smith had also been asked to help crew the Lady Hawkesbury on its sea voyage to Cairns. The vessel left Sydney on or about 26 January 1992. On arrival in Cairns, the vessel was renamed the MV Reef Escape and commenced operating Barrier Reef cruises. Mr Smith served as the Executive Chef and sometimes Cruise Director on the vessel until 27 April 1996, when he was discharged after assisting in the delivery of the vessel to Fiji, from where the vessel was to operate in the future.

1. Mr Smith suffers a variety of physical and psychological problems in respect of which he has lodged claims for workers compensation. On 15 September 2004, Mr Smith’s ‘Application to Resolve a Dispute’ was registered by the Commission in respect of his claim for (1) weekly compensation of $196 per week from 27 April 1996 to date and continuing, (2) medical, hospital or related expenses of $20,483.55, and (3) compensation for permanent impairment and pain and suffering. The injury was described as being to his “back, legs, neck, arms and psychiatric sequellae” due to the nature and conditions of his work on his employer’s boat between 1988 and 1 May 1996.

1. The issue in dispute in the appeal is whether, pursuant to section 13 of the Workers Compensation Act 1987 (‘the 1987 Act’), the Commission has jurisdiction to entertain Mr Smith’s application for compensation for alleged injuries that occurred in the course of his employment in the period 17 February 1992 to 27 February 1996, during which time Mr Smith was working in Queensland. This turns on by whom Mr Smith was employed and where Mr Smith’s contract of employment covering this period was entered into. I note there is evidence of Mr Smith entering into a new contract for the position of Hospitality Manager on the MV Reef Escape on or about 27 February 1996 (letter from Trevor Haworth to Mr Smith dated 27 February 1996: Exhibit A1).

1. Section 13 of the 1987 Act stated (this section was repealed with effect from 1 January 2006 by the Workers Compensation Legislation Amendment Act 2002, Schedule 1.1):

“(1) If-

(a) an employer has a place of employment in New South Wales, or is for the time being present in New South Wales, and there employs a worker; and
(b) any such worker while outside New South Wales receives an injury under circumstances which, had the injury been received in New South Wales, would entitle the worker to compensation in accordance with this Act,

the injury is an injury to which this Act applies, and compensation is payable accordingly.”

1. There is no dispute that on the commencement of his employment on 7 March 1987, Mr Smith’s employer was Captain Cook Cruises (NSW) Pty Ltd. However, Captain Cook Cruises (NSW) Pty Ltd claims that the Lady Hawkesbury ceased operating in Sydney Harbour in late December 1991/early January 1992 when she was sent for a re-fit in Berry’s Bay. The crew of the vessel had their employment terminated in early January 1992. When the re-fit was completed later in January 1992, Captain Cook Cruises (NSW) Pty Ltd claims to have employed a “run” crew specifically to sail the vessel from Sydney to Cairns, where shortly after arrival, on 16 February 1992, that employment was terminated. Captain Cook Cruises Pty Ltd claims that those crew who were interested and who applied and were selected to crew the vessel, re-named the MV Reef Escape, including Mr Smith, entered into new contracts with the Appellants in Cairns. Mr Smith disputes this, believing he was at all times employed by Captain Cook Cruises (NSW) Pty Ltd.

1. Amongst the evidence provided by the parties was a statement from Trevor Haworth dated 12 April 2005. Mr Haworth is the Executive Chairman of Captain Cook Cruises (NSW) Pty Ltd. He is a director and shareholder of this company, which is registered in NSW and whose registered office is at Circular Quay in Sydney. Mr Haworth is also a director of Ormwave Pty Ltd, which is registered in NSW, whose registered office is at the same location at Circular Quay, and whose current ultimate holding company is Captain Cook Cruises Australasia Pty Ltd.

1. QH Cruises Pty Ltd is a company registered in NSW, whose registered office is at Mascot in Sydney, and whose current ultimate holding company is Qantas Airways Ltd. Until 23 August 1990, the company was named Snowglobe Pty Ltd.

1. On 21 May 1990, Snowglobe Pty Ltd and Ormwave Pty Ltd entered into a partnership agreement “to carry on the business of operating a passenger cruise vessel, the ‘MV Reef Endeavour’”, with the intention of jointly leasing the vessel from its owners and entering into an agreement with Captain Cook Cruises (NSW) Pty Ltd “to provide operating, marketing and administrative services and support facilities for the vessel”. The partnership was to be known as the “Captain Cook Barrier Reef Partnership”. On the same day, the partnership entered into a Management Agreement with Captain Cook Cruises (NSW) Pty Ltd whereby that company was appointed the agent of the partnership and its manager for the purpose of operating the MV Reef Endeavour in its “absolute control and discretion”. Management included “industrial relations (including wage rates, the hiring and discharging of employees), relating to the vessel”. The first paragraph of clause 4.9 of the Agreement states:

“The Manager will engage, supervise, terminate and determine the compensation, other benefits and terms and conditions of employment of staff and employees of the Vessel as agent for the Partnership and it is acknowledged that such persons are staff and employees of the Partnership. The Manager acknowledges that all employees are to be employed pursuant to policy set down by the Partnership.”

1. It appears that a delay in the commissioning of the Reef Endeavour was the reason for transferring the Lady Hawkesbury to Cairns and renaming it the Reef Escape.

1. The Arbitrator conducted a number of teleconferences with the parties and a conciliation conference/arbitration hearing held in Brisbane on 28 February 2005 that was adjourned. On 27 May 2005, the arbitration hearing was resumed at the Commission’s premises in Sydney. The Arbitrator’s decision, dated 27 June 2005, set out below, deals only with the preliminary jurisdictional issue identified in paragraph 6 above.

THE DECISION UNDER REVIEW

1. The Certificate of Determination, dated 27 June 2005, records the Arbitrator’s orders as follows:

“(1) Pursuant to s 13 of the Workers Compensation Act 1987 the Commission has jurisdiction to entertain Mr Smith’s application for compensation for the period 17 February 1992 to 27 February 1996.

(2) Respondents are to pay the Applicant’s [costs] as agreed or assessed. I certify this to be a complex matter pursuant to the Workers Compensation (General) Regulation 1995, Schedule 6.”

1. In the ‘Statement of Reasons’ for her Decision, the Arbitrator made the following findings:

(1) From 17 February 1992 to 27 February 1996, Mr Smith was employed by the partnership, which traded under the name ‘Captain Cook Barrier Reef’, between Snowglobe Pty Ltd (a wholly owned subsidiary of QH Cruises) and Ormwave Pty Ltd.
(2) Mr Smith’s contract of employment with the partnership was formed in Sydney.
(3) Mr Haworth acted as agent for the partnership and was present in NSW at the time the contract was entered into.
(4) From about 27 February 1996 to April 1996, Mr Smith was employed under a contract formed in Cairns. 

ON THE PAPERS REVIEW

1. Section 354(6) of the Workplace Injury Management and Workers Compensation Act 1998 (‘the 1998 Act’) states:

“(6)If the Commission is satisfied that sufficient information has been supplied to it in connection with proceedings, the Commission may exercise functions under this Act without holding any conference or formal hearing.”

1. I have had regard to Practice Directions Numbers 1 and 6, the documents that are before me, and the submissions by the parties. The Appellants submit the appeal should not be determined ‘on the papers’ and merits the transparency of an open hearing. (The Appellants carry on business in Queensland where they have workers compensation insurance, and they are uninsured in NSW.) In their Notice of Opposition to the appeal, Mr Smith’s solicitors answer ‘Yes’ to a question asking whether the appeal be decided on the papers but then, in their attached submissions, agree with the Appellants that the matter should not be determined on the papers. Having considered these submissions, and having reviewed the documentary evidence, 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.

1. Neither party sought to adduce fresh evidence.

LEAVE

1. Before proceeding to deal with an appeal, the Commission must determine whether the application meets the requirements of section 352 of the 1998 Act. The appeal was lodged within 28 days of the Arbitrator’s decision in compliance with section 352(4) of the 1998 Act. With regard to section 352(2), the Appellants’ solicitors state that the subject matter of Mr Smith’s claim is for weekly compensation from 1 May 1996 to date and continuing which is in least 20% of the amount claimed. I am therefore satisfied that the section 352 threshold has been met, and I grant leave to appeal.

SUBMISSIONS

1. The Appellants submit the Arbitrator made errors of fact and law in her decision. She made errors of fact in relation to the making of the contract. Mr Smith failed to enunciate the terms of the contract for his engagement in Queensland that he contends was concluded in NSW. Contrary to the Arbitrator’s finding, Mr Smith’s evidence makes no reference to a conversation with Mr Haworth when Mr Haworth offered to engage him as Executive Chef on the MV Reef Escape. The Arbitrator wrongly inferred that it was likely that the fundamental terms of the contract were finalised in Sydney, and that the “run” crew stayed on and signed new contracts. The documentary evidence shows the new contracts were signed in Cairns (see the Australian Taxation Office (‘ATO’) Employment Declaration signed by Mr Smith in Cairns in February 1992).

1. The Appellants also submit the Arbitrator made an error of law by failing to provide adequate reasons for her decision. In particular, she failed to give reasons sufficient to understand the findings relevant to the formation of the contract of employment.

1. Mr Smith’s solicitors submit the Arbitrator correctly analysed the evidence including the features of what was a valid contract entered into in NSW. Mr Smith knew the position to which he was to be appointed and the basic duties before he left Sydney. This followed negotiations with Mr Haworth over a long period of time that took place in NSW, and there was no further negotiation after the vessel left Sydney. Moreover, Mr Haworth, who was the Appellants’ agent, was present in NSW when the oral negotiations over the contract with Mr Smith took place. Mr Smith’s solicitors submit the Arbitrator gave adequate reasons for her decision based on findings of fact.

EVIDENCE

1. In setting out the evidence below, I have not sought to detail all the evidence before the Commission, preferring to highlight the relevant oral evidence.

Mr Ronald Smith

1. Mr Smith made three written statements, dated “2-3-4 March 2004”[sic], 1 July [of no stated year], and 1 August 2004. In the statement of 1 August 2004, Mr Smith said he had a conversation with Mr Haworth in or about 1989 when Mr Haworth asked him about the galley and storerooms for a proposed new ship. Mr Haworth asked whether Mr Smith would want to work on the ship when it was ready, operating out of Cairns, to which Mr Smith said words to the effect of “Yes, of course. It would be an honour ...”.

1. In about March 1991, during the course of Mr Smith’s recuperation from the injuries received during the assault, Mr Haworth phoned and asked whether he would be fit enough to work on the MV Lady Hawkesbury on its farewell cruise at Christmas. Mr Smith responded that he thought so, but would have to check with his doctor. Mr Smith attached a letter to his treating doctor dated June 1991, following a review by Dr E Marel, Orthopaedic Surgeon on 30 May 1991, stating: “Needs improvement in knees to allow hips to take job as chef on a ship in Xmas.” Mr Smith stated Mr Haworth also asked how he felt about working out of Cairns in 1992, whether he could oversee the refit of the ship’s galley and storage at Groom Brothers’ shipyard, and whether he could be part of the delivery crew sailing the ship to Cairns. Mr Smith answered ‘Yes’ to all questions. Mr Smith said he was also part of the crew who, in January 1996, collected the new MV Reef Endeavour in Fiji, sailed it to Sydney where it was commissioned, and then sailed it to Cairns.

1. Mr Smith gave evidence at the hearing in Brisbane on 28 February 2005. He said he had his first discussion with Mr Haworth about the proposed new ship Reef Endeavour in 1989. Mr Haworth had plans for the ship on his desk and told him it was to be built in Fiji. Mr Smith thought the telephone conversation with Mr Haworth in the course of his recuperation might have occurred in June/July 1991. He also went into the Circular Quay office on a number of occasions when he saw both Mr Haworth and his secretary, and was aware by mid-1991 that the Lady Hawkesbury would be going to Cairns early in the New Year of 1992. He was told this verbally and also by letter, although the letter was part of his property not returned to him when he was discharged from the MV Reef Escape on arriving in Fiji in April 1996.

1. Mr Smith said he did not claim workers compensation after the assault and was not paid by Captain Cook Cruises Pty Ltd from the time of the assault until he went back to work on the final cruises in the period around Christmas 1991. In the meanwhile, he survived on a “very small Veteran’s Affairs Commission pension”. In late December 1991, he worked for about seven or eight days, being paid at third year apprentice wages, and then he was put back on his salary while he supervised the re-fit of the galley and storage areas on the Lady Hawkesbury before the voyage to Cairns. The vessel sailed for Cairns on or about 26 January 1992, stopping at Mackay en route and arriving in Cairns about seven or eight days later.

1. Mr Smith said he never signed a new contract in relation to working from Cairns. All his dealings continued to be with “Captain Haworth” and he assumed he was still working for Captain Cook Cruises (transcript 28 February 2005, page 48). In cross-examination, Mr Smith was asked about his tax returns showing the employer that had issued his Group Certificates as being other than Captain Cook Cruises (NSW) Pty Ltd. [Mr Smith’s tax returns show his employers as follows: Captain Cook Barrier Reef (1993 return), Ormwave P/L t/a QH Cruises P/L (1994 return), Ormwave P/L t/a QH Cruises P/L (1995 return), and Ormwave [sic] P/L as to part and Captain Cook Cruises as to part (1996 return).] Mr Smith said what was on the forms “was totally irrelevant because I was working for Captain Cook Cruises”.

Mr Trevor Haworth

1. Trevor Haworth provided a statement dated 12 April 2005. He said he is executive chairman of Captain Cook Cruises (NSW) Pty Ltd and a director of Ormwave Pty Ltd. Mr Haworth said all Captain Cook Cruises employees who worked on the MV Lady Hawkesbury had their employment terminated in early January 1992 and any employment benefits paid. The vessel went to Berry’s Bay for a re-fit and was renamed the Reef Escape. Captain Cook Cruises (NSW) Pty Ltd then employed a run crew for the transfer of the ship from Sydney to Cairns. On arrival in Cairns, the run crew were paid off. Crew who were interested in continuing to work on the ship, were requested to apply for a position on the ship and Mr Haworth then conducted interviews at a hotel in Cairns on about 16 February 1992. Those who were selected were given an employment contract with the Captain Cook Barrier Reef partnership [the Appellants]. Mr Haworth attached a sample of such an employment contract headed “Captain Cook Barrier Reef”.

1. Mr Haworth said that prior to employment of crew members, the Appellants negotiated an award for the cruise ship industry for Inner Barrier Reef Waterways with the Maritime Union of Australia. This was only finalised in January 1992. He denied that any contract was entered into with Mr Smith prior to the negotiation of his employment “which I believe took place on or about 16 February 1992”. He attached a copy of a document showing hand-written calculations of termination benefits due to run crew on 16 February 1992. This includes an entry for Mr Smith, showing wages due to that date: “from 25/1/92 paid  $155.31 pd (casual chef rate) ... till 16/2/92 then $158.00 Reef Escape Rate”.

1. Mr Haworth also gave evidence at the hearing in Sydney on 27 May 2005. He clarified his statement dated 12 April 2005 by saying that only new crew were interviewed in Cairns. With regard to the other, existing crew, members, “we knew their capabilities”. Mr Haworth said Mr Smith would have entered into a new contract on either 16 or 17 February 1992. Mr Haworth was present when the entire crew collected on the ship to sign contracts at the same time. The contracts were all sent back to the Sydney office but they have failed to find Mr Smith’s contract. Mr Haworth was, however, referred to an ATO Employment Declaration signed by Mr Smith on 17 February 1992. He said the Appellants’ joint venture did not carry on “operational business” from the Circular Quay office, although the payment of wages was handled in Sydney. Its office was in Cairns.

1. Mr Haworth said Mr Smith ceased employment with the Appellants after the delivery of the new vessel MV Reef Endeavour and at the time of the return of the MV Reef Escape to Captain Cook Cruises (NSW) Pty Ltd. Mr Haworth said he offered Mr Smith a position as Cruise Director of the Reef Escape which was to be re-registered in Fiji from where it would operate. Mr Smith was engaged by Captain Cook Cruises (NSW) Pty Ltd to be part of the run crew to take the ship from Cairns to Fiji. This was a verbal contract concluded in Cairns.

1. Mr Haworth said he was the main manager with whom the crew of the Lady Hawkesbury dealt with in Sydney. He also managed all the initial arrangements for the operation of the Reef Escape out of Cairns. They then employed a manager in Cairns who took over the day-to-day running on the ship and Mr Haworth returned to Sydney. However, Mr Haworth retained overall responsibility.

1. Mr Haworth said he probably would have told those crew of the Lady Hawkesbury in Sydney who wanted to go to Cairns “you can go up on the run job and then you’ll be employed in Cairns”.

Ms Iman El-Jouz

1. One further witness gave evidence at the hearing in Sydney, Ms Iman El-Ajouz, who has been the Payroll Manager for Captain Cook Cruises (NSW) Ltd since 2001. Ms El-Ajouz provided a statement dated 21 October 2003. She said she did not know Mr Smith personally and had never had any contact with him, but she had been asked by Mr Haworth to assist with inquiries in this matter. In oral evidence, she said she had no direct knowledge of Mr Smith’s employment. She had searched for the contracts of those crew who were employed on 17 February 1992 but had been unable to find any of them. However, in an archive box in the archive room at the office in Sydney, she had found copies of their ATO Employment Declarations and the Staff Information Form each employee completed with details of the employee, their position, bank details and next of kin. [There is such a form in evidence headed “Great Barrier Reef Australia Staff Information Form”, completed and signed by Mr Smith, which bears the handwritten date “17/2/92” on the top right-hand side.] The copy of an unsigned contract of employment with Michael Aston (which is in evidence) was supplied by him.

DISCUSSION AND FINDINGS

1. The role of the Presidential Member on appeal is to review the Arbitrator’s decision as a whole. The review is not a rehearing. In this case, the Appellants must demonstrate that the decision of the Arbitrator is affected by some legal, factual or discretionary error (Allesch v Maunz (2000) 203 CLR 172; The King Island Company Limited v Deery [2005] NSW WCC PD 1) in order to enliven the Presidential Member’s power to interfere with the Arbitrator’s decision pursuant to section 352(7) of the 1998 Act. Where the weight accorded to the evidence by the Arbitrator is challenged, Deputy President Fleming’s comment in Knight v Eyles Nominees Pty Ltd [2004] NSW WCC PD 73 at paragraph 40 should be borne in mind:

“Interference with an Arbitrator’s discretionary judgement as to the weight of evidence should only be done where it is manifestly obvious that the discretion has so miscarried that it has not been exercised fairly and lawfully.”

1. As the Arbitrator pointed out in her Statement of Reasons, one of the difficulties in this matter is that the events in question happened over 14 years ago.

The Arbitrator’s Findings and Reasons

1. The Arbitrator found the documentary evidence to be consistent with Mr Haworth’s account of Mr Smith’s employment with Captain Cook Cruises (NSW) Pty Ltd having ceased on or about 16 February 1992, and that this was disclosed to Mr Smith. However, she accepted that Mr Smith genuinely believes that he was employed by Captain Cook Cruises (NSW) Pty Ltd all along, and commented that this was not surprising since all his dealings concerning his employment had been with one person, Mr Haworth, and Mr Smith continued to work on the same vessel. The Arbitrator found the objective evidence makes it clear Mr Smith was employed by the Appellants from 17 February 1992 to 27 February 1996.

1. The Arbitrator then turned to consider where Mr Smith was employed. She found Mr Haworth’s invitation to Mr Smith mid-1991 to serve on the Reef Escape operating out of Cairns from 1992, provided Mr Smith was well, was at best a conditional offer. However, after Mr Smith had worked on the Lady Hawkesbury in the period around Christmas and the New Year, having been certified fit for work: “things had moved on ... [and] by the time Mr Smith boarded the ‘Reef Escape’ for Cairns both parties were reasonably satisfied that Mr Smith was fit for work.”

1. The Arbitrator found it was Mr Haworth’s duty under the Management Agreement to engage and terminate staff as agent for the Appellants [see clause 4.9, quoted in paragraph 11 above]. It was also clear from the evidence that the Appellants were “not prepared to take over the vessel until it was safely berthed in Cairns, and that is supportive of Mr Haworth’s assertion that the offer was only made in Cairns.” However, Mr Haworth was responsible for engaging a crew for the Reef Escape and, being well acquainted with the Sydney crew, he presumably would not have continued to employ them in Sydney and invited them to take up employment on the Reef Escape in Queensland, had he not been satisfied that they had the requisite skills. The Arbitrator found that, essentially, the selection process for these crew had already taken place prior to their embarking for Cairns:

“44 ... All that remained for him to do was make an offer to those crew members. To suggest that Mr Haworth artificially delayed engaging those Sydney crew members until they arrived in Cairns strikes me as implausible.

45 That contractual relations had been formed in Sydney is demonstrated inferentially by the evidence from Mr Haworth that all the run crew stayed on and signed the new contracts. ...

47 I think it is not correct to say that no contract could have been formed in Sydney because no terms had been settled. At least some fundamental terms were plain to all involved. First, the crew members would be members of their old ship, renamed. Second, they would operate out of Cairns. Third, they would answer directly to Mr Haworth as before. Fourth, if no further provision was made in respect of employment conditions, they would automatically be governed by the relevant State or Federal awards. Fourth [sic], Mr Smith (and presumably others on the crew) knew the position to which he had been appointed and its basic duties. ...

49. It seems to me that the most reasonable inference to draw from his conduct in boarding the ‘Reef Escape’ on Australia Day 1992 is that Mr Smith had committed himself to working in the ship and had accepted the offer made by Mr Haworth acting as agent for the First Respondent. I am satisfied on the balance of probabilities that the contract was formed in NSW.”

1. The Arbitrator found the Appellants’ agent, Mr Haworth, was present in NSW at the time the contract was formed.

Did the Arbitrator’s decision contain errors of fact?

1. The Appellants submit the Arbitrator wrongly found (at paragraph 16 of her Statement of Reasons) that in mid-1991, Mr Haworth told Mr Smith “there was a job for him on the ‘Lady Hawkesbury’ as Executive Chef when it went to Queensland ‘providing he was well’”. In answer to a question about his understanding of his role on the ship that was to go to Cairns, Mr Smith said: “Executive Chef” (transcript 28 February 2005, page 31). I have examined the transcript of Mr Smith’s oral evidence and it is clear that during the course of recuperating in 1991, Mr Smith went to the offices of Captain Cook Cruises (NSW) Pty Ltd on a number of occasions and had a number of conversations with Mr Haworth and his secretary. However, the Appellants are correct in submitting that Mr Smith’s evidence makes no reference to a specific conversation with Mr Haworth when Mr Haworth offered to engage Mr Smith as Executive Chef on the Reef Escape. At the arbitration hearing, 14 years after the events in 1991, no-one was clear about what exactly was said during these conversations and, as it turned out, Mr Smith’s understanding of his role on the Reef Escape proved to be correct. In my view, nothing turns on the Arbitrator’s error in this regard.

1. With regard to the terms of the agreement inferred by the Arbitrator, in my view, she was entitled to draw the inferences she made on the available evidence. The fact of the ATO Employment Declaration signed by Mr Smith on 17 February 1992 and Mr Haworth’s evidence that the award with the Maritime Union of Australia had not been finalised until January 1992, does not affect the Arbitrator’s findings, at paragraph 47, that some fundamental terms were plain to all involved. It was reasonable for the Arbitrator to infer from the available evidence that the members of the run crew for the voyage to Cairns who had previously served on the Lady Hawkesbury in Sydney, would probably not have embarked had there not been an understanding that they would be employed on the Reef Escape after the handover of the vessel in Cairns. Thus, it was reasonable for the Arbitrator to infer that by embarking on the vessel in Sydney, Mr Smith had committed himself to serving on the vessel operating out of Cairns, and had accepted the offer, whether express or implied, made to him in the course of communication with Mr Haworth in the preceding period. I reject the Appellants’ submissions about the Arbitrator’s findings. In my view, her principal findings can be supported on the evidence.

1. More specifically, in terms of Mr Smith’s contract of employment, there was evidence to support findings that the offer of employment on the Reef Escape operating out of Cairns was made by Mr Haworth in Sydney as the Appellants’ agent (see, for example, Mr Haworth’s evidence cited at paragraph 33, above). While the early discussions between Mr Haworth and Mr Smith could be seen as an invitation to treat by Mr Haworth, it is clear enough that once Mr Smith had proved his fitness for work, as a result of his being cleared by his doctor (notwithstanding that he does not seem to have produced a medical certificate to this effect), and his having demonstrated his fitness through working on the Lady Hawkesbury for the final cruises during the Christmas/New Year period, the invitation to treat matured into a firm offer of employment. This was either accepted by Mr Smith verbally (which could be implied from his oral evidence) or, as the Arbitrator found, based on unequivocal evidence, impliedly accepted in Sydney by his conduct in boarding the vessel as part of the run crew for the voyage to Cairns.

1. It was clear the new contract would commence with the operation of the Reef Escape out of Cairns, on arrival there. The fact that some details of the contract of employment had not been finalised, for example, as a result of the negotiations over a new award with the Maritime Union of Australia not being concluded until January 1992, does not, in my opinion, undermine the Arbitrator’s finding as to fundamental terms of the contract. In view of the negotiations with the Maritime Union, it must, in any event, have been clear that the crew of the Reef Escape would be paid in accordance with the award ultimately agreed. Nor does the later signing of a written contract in Cairns, assuming this happened (there is no direct evidence of a signed contract - only Mr Haworth’s evidence that all existing crew signed a contract in Cairns), undermine a finding that the contract had already been formed in NSW. Any later signing of a contract can be seen as evidencing the terms of a contract that had already been formed. It was also reasonable for Mr Smith to assume that since he was to be employed as Executive Chef on the Reef Escape, a position he had previously held on the same vessel under the overall control and supervision of Mr Haworth, other details of hours or shifts worked and duties to be performed would accord with his past experience.

1. In terms of section 13 of the 1987 Act, the Appellants, by their agent Mr Haworth, were present in NSW when they employed Mr Smith. Because he claims his injuries were in part due to the nature and conditions of his employment while working on the Reef Escape operating outside NSW, the 1987 Act applies in respect of those claimed injuries. Thus, I am not satisfied that the Appellants have made out this first ground of appeal.

Did the Arbitrator provide adequate reasons for her decision?

1. The Appellants also submit the Arbitrator made an error of law by failing to provide adequate reasons for her decision.

1. Generally as to the adequacy of reasons required for such a decision, I am guided by the decision of Deputy President Fleming in Mayne Health Group t/as Nepean Private Hospital v Sarah Sandford [2002] NSW WCC PD 6 (‘Mayne’), at paragraphs 45 to 48. The Deputy President said Arbitrators have a statutory obligation to provide adequate reasons for decisions (see section 294(2) of the 1998 Act, and Rule 73 of the Workers Compensation Commission Rules 2003) and failure to do so constitutes an error of law. She stated, at paragraph 46:

“The standard by which the ‘adequacy’ of reasons is determined is relative to the nature and context of the decision made and the decision-maker.”

However (paragraph 48), to succeed on the ground of inadequate reasons requires:

“that the inadequacy sufficiently demonstrates that the Arbitrator has failed to exercise his or her duty to fairly and lawfully determine the application.”

(See YG & GG v Minister for Community Services [2002] NSWCA 247.)

1. In my view, the Arbitrator’s Statement of Reasons adequately sets out her material findings of fact and the evidence upon which those findings are based; she sets out the relevant law and explains its application to the facts of Mr Smith’s case. Moreover, there is nothing to indicate that she has failed to exercise her duty to fairly and lawfully determine the application. Thus, I am not satisfied that the Appellants have made out this second ground of appeal. The Appellants having failed to establish their grounds of appeal, the decision of the Arbitrator must be confirmed.

DECISION

1. The decision of the Arbitrator dated 27 June 2005 is confirmed.

COSTS

1. The Appellants, Ormwave Pty Ltd & QH Cruises Pty Ltd, t/as Captain Cook Barrier Reef, are to pay the First Respondent, Mr Smith’s costs in this appeal.

1. No order as to costs in respect of the Second and Third Respondents.

Robin Handley

Acting Deputy President   23 February 2006

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

ASSOCIATE