Sean Francis v I T Gardiner - [2011] NSWWCCPD 67

WORKERS COMPENSATION COMMISSION
DETERMINATION OF APPEAL AGAINST A DECISION OF THE COMMISSION CONSTITUTED BY AN ARBITRATOR
CITATION:		Sean Francis v I T Gardiner [2011] NSWWCCPD 67
APPELLANT:		Sean Francis
RESPONDENT:		I T Gardiner
INSURER:		QBE Insurance (Australia) Ltd
FILE NUMBER:		A1-003604/11
ARBITRATOR:	Mr Brett Batchelor
DATE OF ARBITRATOR’S DECISION:		1 September 2011
DATE OF APPEAL DECISION:		29 November 2011
SUBJECT MATTER OF DECISION:		Section 4 of the Workers Compensation Act 1997; worker; control test; consideration of Stevens v Brodribb Sawmilling Co Pty Ltd [1986] HCA 1; 160 CLR 16; indicia of relationship; Sch 1 cl 3 of the Workplace Injury Management and Workers Compensation Act 1998; deemed worker
PRESIDENTIAL MEMBER:		Deputy President Kevin O'Grady
HEARING:		On the papers
REPRESENTATION:		Appellant:	Carroll & O’Dea
Respondent:	Curwoods
ORDERS MADE ON APPEAL:		1. The Arbitrator’s determination made in the Certificate of Determination dated 1 September 2011 is confirmed. 2. No order as to costs

BACKGROUND TO THE APPEAL

Sean Francis was injured on 15 September 2009 when kicked by a cow whilst working at a rural property conducted by Ian Gardiner (the respondent). Mr Francis alleged that, at the time of injury, he was a worker in the employ of the respondent. In the alternative it was alleged that, at that time, he was deemed to be a worker employed by Mr Gardiner, pursuant to the provisions of cl 3 of Sch 1 to the Workplace Injury Management and Workers Compensation Act 1998 (the 1998 Act).
The respondent and his wife, Isabel Gardiner, have for many years conducted business upon the property known as “Billapalap” at Adelong, NSW, which carried a commercial breeding herd.
The relevant facts are not in dispute. Between the years 2000 and 2005 Mr Francis worked concurrently as a farm labourer for various landowners in the Adelong district. During that period most work was performed for two named landholders and some work was performed for at least six other landholders including the respondent.
In April 2005 Mr Francis created a ‘sole trader’ farm labouring business, titled “Sean Francis Farm Services Contracting” and registered for an Australian Business Number.
Between April 2005 and October 2008 he performed work almost exclusively for four named landholders, including the respondent, for whom he usually worked each Wednesday.
For approximately one year prior to his injury, Mr Francis usually worked four days per week. He was engaged by the respondent for two of those days and by the respondent’s neighbour for two days. The respondent’s neighbouring property was conducted by the P M Reynolds Family Trust (Reynolds). On occasions he would also work for other landholders.
Following his injury, a claim for compensation benefits made by Mr Francis against the respondent was denied. A notice of that denial was forwarded by the respondent’s insurer to Mr Francis pursuant to s 74 of the 1998 Act. The reasons for denial of the claim included an assertion that Mr Francis was not a worker within the meaning of s 4 of the 1998 Act. The insurer also asserted that Mr Francis was not a “deemed worker”.
Proceedings in the Commission were commenced on behalf of Mr Francis by the filing of an Application to Resolve a Dispute in May 2011. That Application came before Arbitrator Brett Batchelor for conciliation and arbitration on 12 August 2011. The matter proceeded to hearing following which the Arbitrator reserved his decision.
A Certificate of Determination, accompanied by a Statement of Reasons (Reasons) for his decision, was issued by the Arbitrator on 1 September 2011. Those Reasons identified the issues for determination as:
“Whether or not [Mr Francis] was a “worker” or “deemed worker” within the meanings of those termed (sic, terms) as defined in section 4 and Schedule 1 clauses 2 and 3 of the 1998 Act” at [23] of Reasons.
I note Mr Francis makes it clear on this Appeal that no submission had been put before the Arbitrator “in support of a finding” pursuant to cl 2 of Sch 1 to the 1998 Act. That fact is acknowledged by the Arbitrator in his Reasons. Clause 2 of the Schedule is, it seems, addressed by the Arbitrator given the manner in which the matter was argued by the respondent.
The Arbitrator’s orders are recorded in the Certificate of Determination as follows:
“The Commission determines:

1. Award for the Respondent.

2. No order as to costs.”

ISSUES IN DISPUTE

The issues in dispute on appeal are whether the Arbitrator erred in:
(a) finding that Mr Francis was not a worker in the employ of the respondent, and
(b) finding that Mr Francis was not deemed to be a worker pursuant to Schedule 1 of the 1998 Act.

DETERMINATION OF APPEAL ON THE PAPERS

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 Nos 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.

THRESHOLD MATTERS

There is no dispute between the parties that the threshold requirements as to quantum and time as found in the provisions of s 352(3) and s 352(4) of the 1998 Act have been met.

THE ARBITRAL PROCEEDINGS

The proceedings before the Arbitrator were recorded. A transcript (T) has been produced and made available to the parties. No oral evidence was given at the hearing.
The application before the Arbitrator was amended by consent. That amendment limited the claim for weekly benefits to one in respect of incapacity between 16 September 2009 and 31 January 2011.

The evidence

The documentary evidence before the Arbitrator was noted at [26] of Reasons. That evidence included all documents attached to the Application and to the Reply, as well as a late document, being a helpful summary or schedule of a large number of invoices issued by Mr Francis which were in evidence. That schedule was prepared in response to a direction earlier made by the Arbitrator.

Mr Francis’s evidence

There is a statement made by Mr Francis dated 25 February 2011 (statement) in evidence. Mr Francis stated that at the time of his injury in September 2009 he was earning “between $700 and $730 per week”. He stated that he had obtained an economics degree from the University of Sydney and that between 1980 and 1991 had worked in family restaurants and hotels. Between 1991 and 1992 he worked as a farm labourer at Moss Vale and Young. In 1992 he worked for a party hire firm and thereafter, for two years, he worked at Jetmaster Fireplaces. Between 1995 and 2000 he worked as a farm labourer at Nyngan. Between 2000 and 2009 he worked as a farm labourer at Adelong.
The work performed by Mr Francis in the Adelong district was described by him as that of “a casual farm labourer for landowners [sic]”. Between 2000 and 2005 he carried out work for various landholders, eight of whom are named, including the respondent (at [13] of the statement). Mr Francis states that during that period he had also worked for “various others”.
Mr Francis stated that in April 2005 he “created a Sole Trading farm labouring contracting business”. The business was named “Sean Francis Farm Services Contracting” and an Australian Business Number (93 481 593 977) was obtained. Mr Francis provided landowners with invoices in respect of the hours of work he undertook. As at September 2009, he was “paid a set rate of $27 per hour”. Mr Francis paid his own income tax. He did not render invoices for anything other than his physical labour. He did not use business cards nor did he advertise his services in the local newspaper. He did not place an advertisement in the Yellow Pages.
The duties performed by Mr Francis were described by him at [22] and [23] of the statement:
“22. My duties were the same regardless of who I worked for. They included stock-handling which included general inspection of stock; mustering stock from paddock to paddock and paddocks to yards; drafting stock in yards; drenching; crutching and all requirements for animal husbandry. I was required to process stock for sale off-farm. This involved tagging; docking tail hair; weighing and checking teeth. I also undertook general farm labouring which included fencing repair and installation; weed control; animal feeding; crop preparation and sowing; on-farm hay carting; building maintenance; irrigation and pipe maintenance and tree planting.
23. I provided my own dogs and horses but I would use the landowners’s trucks and other equipment.”
Mr Francis further stated that he did not employ any other workers nor did he subcontract work. Payments were made out to him personally or to “Sean Francis Farm Services Contracting”. He did not receive any annual leave, sick leave or superannuation from any of the landholders. He provided no “quotes” in respect of the work he was to perform but worked as directed. Upon completion of the work he “would invoice the landowner, usually at the end of each month”.
Mr Francis stated that between April 2005 and October 2008 he “worked almost exclusively” for four named landholders, including the respondent and Reynolds. Such work was done “as their needs required”. The work pattern was described in the statement. Work for the respondent at that time was usually performed one day per week, on Wednesdays.
A conversation had taken place between Mr Francis and Mrs Isabel Gardiner, the respondent’s wife, in October 2008. Mrs Gardiner advised that Mr Joseph Jones, the Manager, was overwhelmed with work and stated that “it would be good if you could make available two days per week instead of the one day you are currently doing”. Mr Francis informed Mrs Gardiner that he was prepared to “do that, starting immediately”. His work was increased to two days and was usually performed on Wednesdays and Thursdays.
Between October 2008 and September 2009 Mr Francis usually worked four days per week, being two days for Reynolds and two days for the respondent. It is stated that during that period Mr Francis “also performed work for a number of other landowners in the district as required”. He states that the respondent and Reynolds “had priority for my work and if they needed me to work on a day that I had arranged to work elsewhere, I would rearrange my other work to suit [the respondent’s] convenience”.
The statement described the respondent and Reynolds as being “direct neighbours”. The landowners had a “harmonious relationship”. The days allotted for Mr Francis’s work could be rearranged depending upon the needs of the landholders who would “sort it out between them”. The respondent’s manager, Mr Joseph Jones, discussed with Reynolds the need for Mr Francis’s work; an agreement would be “struck” and Mr Francis informed as to what work was to be performed. On occasions Mr Francis was requested by Reynolds or Mr Jones to “vary my usual days work to suit a special requirement” or work an extra day for either of the landowners.
Mr Francis generally received orders and instructions from Mr Jones. It is also stated that “on occasions [the respondent], (or mostly through his wife Isabel Gardiner), would also personally give me instructions”.
Mr Francis was unable to vary working for the respondent on Wednesdays and Thursdays “without speaking to Joe Jones prior to the day to ensure that he was happy for me not to work.” On a number of occasions, Mr Jones would refuse his request to attend his “preferred tasks”. If Mr Jones approved his request he was expected to make up for any lost time on days he could not work for the respondent.
It is stated that Mr Francis was given specific instructions to perform a variety of tasks and that “on occasions I would be directed to stop performing the task I had been set in order to undertake another job which either Joseph Jones or Ian Gardiner wanted done. For example, if I was doing stock work, and the Gardiners wanted me to go and start fixing the fences, then I would act under their direction”.
Mr Francis proceeded to describe in the statement the injury which occurred on 15 September 2009 at a time when Mr Francis was calf marking. As Mr Francis and Mr Jones were drafting cows, a cow leapt over Mr Francis from behind and kicked him in the back causing him to fall forward. He received a significant left leg injury and has not been able to work on farms since that date.
The medical treatment received following that injury and the resultant disability is described in the statement. As there is no issue between the parties concerning incapacity, it is unnecessary to record those matters.
Mr Francis tendered in evidence a copy of a factual investigation report provided by M P O L Group (NSW) Pty Ltd dated 15 March 2011 which had been prepared at the request of the insurer. Attached to that report was a statement made by Mrs Isabel Gardiner, the wife of the respondent, dated 12 May 2010. Mrs Gardiner stated that she and her husband operate the property known as Billapalap upon which is run a commercial breeding herd. Mr Francis commenced work on that property “approximately four years ago” and “began as a contractor, he operated Sean Francis Farm Services Contracting”. At that time Mr Francis was asked if he had his own insurances and ABN and “he advised that he did”. Mrs Gardiner named nine other properties upon which Mr Francis carried out farm work.
Mr Francis informed Mrs Gardiner that he was “fully trained” and that he had been working on properties all his life. Mrs Gardiner knew Mr Francis to be competent and that he was well known in the area. Mr Francis was shown around the property by the manager, Joseph Jones (Joe). Mr Francis normally worked two days per week and he worked “under the instruction of Joe”. Mr Francis’s hours and days could vary from week to week. He normally worked Wednesdays and one other day. Mr Francis provided invoices on a monthly basis and was paid at the rate of $27 per hour. Mrs Gardiner further stated “I was not required to pay any superannuation, payroll tax, or workers compensation”.
Mrs Gardiner became aware of Mr Francis’s injury a number of days after its occurrence. That report was made by Joe, the manager. Mr Francis did not make contact with Mrs Gardiner after the injury. Mrs Gardiner had no knowledge of a claim in relation to the injury until March 2010 at which time she received a letter from Mr Francis’s solicitors. It is asserted that Mr Francis “has never been an employee of I and I Gardiner”. Mrs Gardiner stated that Mr Francis would “generally liaise with Joe regarding the days and hours he would work as well as the duties required”.
Included in the documents tendered on behalf of Mr Francis was a copy of “U L I S Claim Form” signed by him, dated 1 March 2010. That claim form, addressed to WorkCover NSW, provided particulars of the subject injury and included detail of a claim in respect of weekly compensation payments from that date. The form included particulars of an income protection insurance policy issued by Elders to Mr Francis which made provision for the payment of $71.96 per day which, as noted in the form, Mr Francis had received. Detail was provided in that form concerning concurrent “employment” with Reynolds.
The claim form nominated Ian Gardiner as Mr Francis’s employer. That form also included particulars of a trade or business conducted by Mr Francis being “Sean Francis Farm Services Contracting”. Those particulars state that Mr Francis did not employ “anyone in carrying out” the trade or business.
Mr Francis tendered a large number of copies of invoices which had been prepared by him, and addressed to various landholders, including the respondent. Those invoices related to work performed on particular properties and included details of hours worked. A schedule of those invoices has been prepared by Mr Francis and had been tendered as a late document. The invoices date between 19 April 2006 and 21 August 2009. Details of those invoices, where relevant, are addressed below.

The respondent’s evidence

The respondent relied upon those documents tendered on behalf of Mr Francis as particularised at Part 6.2.1 of his reply. No other evidence was tendered in reply to the application.

Submissions before the Arbitrator

The respondent argued that, having regard to the facts which were not in dispute, a conclusion should be reached that Mr Francis, at relevant times, was an independent contractor to the respondent and not a worker within the meaning of the legislation.
Counsel made reference to the decision of the High Court in Stevens v Brodribb Sawmilling Co Pty Ltd [1986] HCA 1; 160 CLR 16 (Stevens) in support of an argument that the “control test” remains relevant to a determination as to whether an individual has entered into a contract of employment. That test is to be considered along with the various indicia of the relationship. It was argued that proper consideration of those indicia would lead to a conclusion that the parties had no intention to establish an employee/employer relationship.
Counsel proceeded to address the question as to whether, on the facts, Mr Francis had made out a case that he was a deemed worker within the meaning of cl 2 of Sch 1 to the 1998 Act. I note that Mr Francis placed no reliance upon that clause in the proceedings and it is not necessary in those circumstances to summarise the argument advanced. No argument was advanced concerning the relevance or otherwise of cl 3 of Sch 1.
Counsel appearing on behalf of Mr Francis addressed the question as to whether the facts support a conclusion that he was a deemed worker having regard to the provisions of cl 3 of Sch 1 to the 1998 Act. Attention was drawn to the class of work which appears in that clause being work involving “erecting, constructing or demolishing or assisting in the erection, construction or demolition of fences, yards or enclosures for horses, cattle, sheep or other animals”.
Counsel accepted that the contract in question “extended well beyond” the class of work concerning fencing which appears in the clause. It was argued, however, that the contract made provision for fencing work to be performed and that such “would be enough” to permit a conclusion that the contract came within the clause and that Mr Francis was thus deemed to be a worker.
The question as to whether the evidence established that Mr Francis was a worker within the meaning of the legislation was then addressed and reference was made to the decision of Roche DP in Gerob Investments Ballina Pty Ltd t/as Beach Life Homes v Compton [2007] NSWWCCPD 180 (Compton) which, it was said, contained a convenient summary of relevant authority. Reliance was placed upon the decision in Stevens in support of the contention that, on the facts, a conclusion would be reached that Mr Francis was at the relevant time a worker within the meaning of s 4 of the 1998 Act.

The Arbitrator’s Decision

Following a careful summary of the facts and those submissions put on behalf of each party the Arbitrator proceeded to consider the question as to whether Mr Francis had established that he was a worker. The Arbitrator cited a number of authorities and acknowledged that a determination as to whether a relationship of employer/employee existed required consideration of the “control test” as well as other indicia of the relationship.

The Arbitrator determined that “the degree of control exercised by the respondent over [Mr Francis] from day to day was not of the type one would expect to exist between an employee and an employer”. The Arbitrator then proceeded to consider a number of indicia of the relationship including:
(a)     the right to delegate performance of the work;
(b)     continuous exclusive service;
(c)     taxation, annual/sick leave and insurance;
(d)     supply of materials and equipment;
(e)     right of dismissal, and
(f)      the manner of computing remuneration/hours of work.
Following an analysis of the evidence in relation to the indicia identified, the Arbitrator concluded that Mr Francis “was not engaged by the respondent under a contract of service, and was therefore not an employee of the respondent”.
The Arbitrator proceeded to consider the question as to whether, on the evidence, Mr Francis had established that he was a “deemed” worker. The Arbitrator firstly considered the question as to whether Mr Francis should have the benefit of the provisions found in cl 2 of Sch 1 to the 1998 Act. No doubt this was considered by him having regard to the submissions put by the respondent’s counsel. As noted above, Mr Francis placed no reliance upon that clause at the hearing, and on this appeal Mr Francis has again confirmed that no submission is made that the terms of cl 2 of that Schedule afford a basis for recovery under the Act. I note in passing that the Arbitrator found that, on the facts, Mr Francis was not entitled to the benefit of that clause.
The Arbitrator proceeded to address the question as to whether the provisions of cl 3 of Sch 1 to the 1998 Act had application in the circumstances of the case. In the Arbitrator’s view, that clause:
“contemplates a contract, agreement or arrangement between the principal and the contractor under which the contractor agrees … to carry out the work of erecting, constructing or demolishing or assisting in the erection, construction or demolition of fences”.
The Arbitrator found that the work to be performed by Mr Francis was “general rural work as outlined in [22] of his statement of 25 February 2011”. The Arbitrator found that that contract “included fencing repair and installation” but also found that there was “no contract between [Mr Francis] and the respondent specifically for the erecting, constructing or demolishing or assisting in the erection, construction or demolition of fences”. He further found that “any work to do with fencing carried out by the applicant was… incidental to his other duties as a rural contractor engaged in a farm labouring contracting business”. The Arbitrator noted that Mr Francis was not carrying out such work at the time of his injury. In the circumstances the Arbitrator determined that Mr Francis had failed to establish that he was to be “taken to be a worker employed by the respondent”.

SUBMISSIONS, DISCUSSION AND FINDINGS

This appeal is governed by the provisions of s 352 of the 1998 Act. The nature and scope of such an appeal is as provided by s 352(5):
“An appeal under this section is limited to a determination of whether the decision appealed against was or was not affected by any error of fact, law or discretion, and to the correction of any such error. The appeal is not a review or new hearing.”
The powers of the Commission upon conduct of such an appeal are defined by the provisions of s 352(7):
“On appeal, the decision may be confirmed or may be revoked and a new decision made in its place.

Alternatively, the matter may be remitted back to the Arbitrator concerned, or to another Arbitrator, for determination in accordance with any decision or directions of the Commission.”

Mr Francis in preliminary submissions accepts that “the primary facts were largely uncontentious”. Reference is made to authority relevant to the issue of “worker” including those decisions of Stevens and Compton as well as the decision of the High Court in Humberstone v Northern Timber Mills [1949] HCA 49; 79 CLR 389. Those authorities are carefully analysed between [3] and [10] of submissions and it is argued, adopting the observation by Mason J in Stevens, that control is not to be regarded as the only relevant factor “rather it is the totality of the relationship between the parties which must be considered”.
Emphasis in submissions is placed upon the High Court’s apparently cautious approach in Stevens, in its reluctance to make an exhaustive list of criteria, given the risk that one might be misled. In the words of Wilson and Deane JJ (at 37):
“The ultimate question will always be whether a person is acting as the servant of another or on his own behalf and the answer to that question may be indicated in ways which are not always the same and which do not always have the same significance.”
Those submissions make it clear that Mr Francis places no reliance upon the provisions of cl 2 of Sch 1 to the 1998 Act. The argument advanced before the Arbitrator was that at the relevant times Mr Francis was carrying out rural work, which included a class of work concerning fencing, which is described in cl 3(1)(e) of Sch 1.
It is argued on appeal that the Arbitrator erred in his determination that Mr Francis was not a worker at the time of injury. In the alternative, the argument is advanced that the Arbitrator had erred in concluding that he was not, on the evidence, a deemed worker by reason of the application of cl 3 of Sch 1 to the 1998 Act.

Worker

It is accepted by Mr Francis that the Arbitrator had correctly identified the relevant legal principles when he considered the question as to whether, on the facts, he should be found to be a worker within the meaning of the legislation. The criticism made of the Arbitrator’s decision relates to the manner of application of the relevant principles.
A definition of the term “worker” appears in s 4 of the 1998 Act which provides, relevantly:
“Worker means a person who has entered into or works under a contract of service or a training contract with an employer (whether by way of manual labour, clerical work or otherwise, and whether the contract is expressed or implied, and whether the contract is oral or in writing).”
It is put by both parties that whilst the “control test” remains relevant to a determination as to the existence or otherwise of a contract of service, that question, given modern conditions, also requires consideration of other indicia of the nature of the relationship between the parties. That approach is clearly correct.
The Arbitrator’s consideration of the “control test” is the subject of criticism by Mr Francis upon the basis that his reasoning demonstrates that he considered “the degree of control actually exercised on a day to day basis rather than the respondent’s right to exert control”. It is asserted in argument that there is little or no doubt that Mr Francis was subject to the orders and directions of the respondent while performing the work. It is accepted that the respondent could exert no control over how Mr Francis rode his horse or directed a dog. Notwithstanding that fact, it is put that there is “absolutely no doubt that the respondent reserved to itself [sic] the right to tell him whereabouts on the property to work and what particular jobs to perform”.
The proper approach to a consideration of the “control test” is conveniently stated by Mason J in Stevens at 24, emphasis added:
“A prominent factor in determining the nature of the relationship between a person who engages another to perform work and the person so engaged is the degree of control which the former can exercise over the latter. It has been held, however, that the importance of control lies not so much in its actual exercise, although clearly that is relevant, as in the right of the employer to exercise it: Zuijs v Wirth Bros Pty Ltd (1955) 93 CLR 561 at 571; Federal Commissioner of Taxation v Barrett(1973) 129 CLR 395 at 402; Humberstone v Northern Timber Mills(1949) 79 CLR 389 at 404. In the last-mentioned case Dixon J said:
‘The question is not whether in practice the work was in fact done subject to a direction and control exercised by an actual supervision or whether an
actual supervision was possible but whether ultimate authority over the man in the performance of his work resided in the employer so that he was subject to the latter's order and directions.’
But the existence of control, whilst significant, is not the sole criterion by which to gauge whether a relationship is one of employment. The approach of this Court has been to regard it merely as one of a number of indicia which must be considered in the determination of that question: Queensland Stations Pty Ltd v Federal Commissioner of Taxation (1945) 70 CLR 539 at 552; Zuijs' Case; Federal Commissioner of Taxation v Barrett, (1973) 129 CLR at 401; Marshall v Whittaker's Building Supply Co.(1963) 109 CLR 210 at 218. Other relevant matters include, but are not limited to, the mode of remuneration, the provision and maintenance of equipment, the obligation to work, the hours of work and provision for holidays, the deduction of income tax and the delegation of work by the putative employee.”
It is clear from that which was stated by Mason J, that the actual exercise of control, as demonstrated on the evidence, remains a relevant consideration.
Whilst the Arbitrator has not considered the question as to whether the respondent reserved the right to control the performance of Mr Francis’s tasks, such reservation if it exists may, as stated by Wilson and Dawson JJ in Stevens, mistakenly be treated as decisive. Such does not “transform into a contract of service what in essence is an independent contract” (at 37 where their Honours placed reliance upon the decision of Dixon J in Queensland Stations Pty Ltd v Federal Commissioner of Taxation [1945] HCA 13; 70 CLR 539 (at 552)).
The Arbitrator has concluded, as a matter of fact, that “the degree of control exercised by the respondent over [Mr Francis] from day to day was not of the type one would expect to exist between an employee and employer” (at [17] of Reasons). That conclusion was reached having regard to the evidence. There was no evidence before the Arbitrator of any right asserted by the respondent to control Mr Francis’s work other than that noted by him at [44] of Reasons. In those circumstances I consider that the Arbitrator’s conclusion was one open to him on the evidence and that no relevant error has been demonstrated. The suggestion made that a worker employed by the respondent would “have been directed in precisely the same manner as Mr Francis was” (at [17] of submissions) is not established on the evidence and, in my view, even if proven would not be determinative of the difficult question as to the nature of the contractual relationship between the respondent and Mr Francis. The Arbitrator’s conclusion is one which might be seen as similar to the conclusion reached by Wilson and Dawson JJ in Stevens where it was observed, following a consideration of the evidence and relevant principle (at 37-38):
“…it is consistent with the reservation of a right to direct or superintend the performance of the task which does not impair the essential independence of the person performing that task, of which Dixon J spoke in Queensland Stations Pty Ltd v Federal Commissioner of Taxation. Even the most independent of independent contractors is subject to some direction in the performance of his work and some circumstances will justify the termination of the engagement. This leads to a consideration of the other factors which are relevant to determine the nature of the relationship.”

The right to delegate performance of the work

Mr Francis (at [18] of submissions) accepts the availability of an inference, as was drawn by the Arbitrator, that the “parties had not really put their minds to” the right to delegate performance of the work. It is also accepted that the Arbitrator correctly records that there was no evidence to suggest that Mr Francis was forbidden to delegate work. Having regard to the state of the evidence and that available inference, the Arbitrator concluded that the “right to delegate” factor was “neutral”. That conclusion was open to the Arbitrator and no relevant error is demonstrated. The suggestion that a competing inference is available, namely that the parties had not turned their mind to the question of delegation “because Mr Francis was expected to perform the work” (at [18] of submissions) does not persuade me that the Arbitrator has erred in his evaluation of the evidence as it stood.

Continuous exclusive service

The manner in which the Arbitrator dealt with the factor of “continuous exclusive service” is criticised by Mr Francis upon the basis that his evidence (at [32] and [38] of his statement) had been disregarded.
The Arbitrator concluded that the facts concerning this factor favoured the respondent. It was accepted that Mr Francis worked continuously and exclusively in the service of the respondent “in the sense that he did work for the respondent for one or two days per week” following a request by Mrs Gardiner. The evidence concerning that request was considered by the Arbitrator to be “illustrative of the fact that the degree of control exerted by the respondent over Mr Francis and his working hours and times was slight”.
That conclusion was, in my view, open to the Arbitrator on the evidence, including the matters alleged by Mr Francis to have been “disregarded”. It must be remembered that the evidence had been carefully summarised by the Arbitrator, including the particular matters referred to in submissions. The evidence concerning variations to the usual working arrangement instituted by the respondent and his neighbour, and the need to have consent to any request by Mr Francis to vary the arrangement, makes it clear that the agreement as to continuity and exclusivity of service was able to be varied. It is clear that Mr Francis at all times reserved the right to work for others and the evidence establishes that he did do so. Where that work displaced the respondent, Mr Francis by agreement was required to “make up” such time. I consider that such flexibility supports the Arbitrator’s views.
A matter not dealt with by the Arbitrator, nor in submissions, is that the evidence of the invoices suggests that no work at all was performed, for any landholder, by Mr Francis between 2 June 2009 and 13 August 2009. That hiatus is not explained in the evidence. The invoices, tendered by Mr Francis, establish an absence of continuity of work. That evidence suggests that the Arbitrator’s evaluation of circumstances generally was correct. The submission that the Arbitrator’s “overall assessment of the ultimate legal question was incorrect” must be rejected.

Taxation, annual/sick leave and insurance

Mr Francis’s submission that the existence of the income protection policy “says little about the legal status of the appellant” has some force. However, the existence of the policy was apparently treated by the parties as being a matter relevant to the ultimate creation of legal relations. Considered with the taxation and annual/sick leave indicia it is a matter which reinforces the Arbitrator’s conclusion that that evidence suggests a relationship of principal/contractor.

Supply of materials and equipment

Mr Francis’s submission concerning the indicia being “supply of materials and equipment” fails to acknowledge that the Arbitrator had noted that he “used the respondent’s other equipment such as trucks and tools”. It was also noted that he “supplied his own horses and dogs”. The Arbitrator concluded that a consideration of this indicator in the context that Mr Francis was an experienced, competent and well known rural worker in the area suggested that he was an independent contractor as distinct from an employee of the respondent. That approach to the evidence was, in my view, correct, and the argument that an “incorrect legal test” had been applied must be rejected.

Right of dismissal

The Arbitrator has treated the “right of dismissal” as a “neutral indicia” given the absence of relevant evidence. That does not appear to be challenged by Mr Francis.

The manner of computing remuneration/hours of work

Mr Francis argues that the evidence concerning remuneration is equivocal rather than determinative. That assertion fails to acknowledge that the Arbitrator has considered remuneration together with the absence of taxation deductions and the creation of the sole trader business when reaching a conclusion that a relationship of principal/contractor is indicated. No relevant error is disclosed.

General submission

A general submission is put by Mr Francis that certain evidentiary matters had received “little or no consideration” by the arbitrator. That submission, and the suggestion of error, should be rejected. As earlier noted the Arbitrator carefully summarised the evidence and submissions and, in my view, has adequately addressed all matters relevant to a determination of the nature of the contractual relationship between the parties.

Deemed Employment

Mr Francis’s alternative argument, that he should be taken to be a worker, was founded upon the provisions of cl 3 of Sch 1 to the 1998 Act which provides relevantly:
“3 Rural work
(cf former Sch 1 cl 3)
(1) This clause applies to the following work:
(a)The work of supplying timber, if the timber is obtained, or is to be obtained, from trees felled, or to be felled, by a contractor (whether the trees are the property of the principal or the contractor or any other person).
(b)The work of felling or ringbarking trees, or cutting scrub, or hauling or loading timber.
(c)The work of clearing land of stumps or logs.
(d)The work of cutting sugar cane.
(e)The work of erecting, constructing or demolishing or assisting in the erection, construction or demolition of:
(i)fences, or

(ii)yards or enclosures for horses, cattle, sheep or other animals,

on farms, orchards, vineyards or agricultural or pastoral holdings.

(f)All classes of work normally carried out or performed by derrick operators in or in connection with the transport of sugar cane to a mill.
(g)Any other class of work prescribed by the regulations.

(2) If:
(a)any person (in this clause referred to as the principal) in the course of, or for the purposes of, the person’s trade or business enters into a contract, agreement or arrangement with any other person (in this clause referred to as the contractor) under which the contractor agrees to carry out work to which this clause applies, and
(b)the contractor:

(i)does not either sublet any part of the work to be carried out, or employ a worker, or
(ii)(although either subletting part of the work or employing a worker) actually performs some part of the work himself or herself,

the contractor and any worker so employed by the contractor are, for the purposes of this Act, taken to be workers employed by the principal, and a worker so employed by the contractor is, for the purposes of this Act, other than this clause, taken not to be a worker employed by the contractor.”

I have attempted to summarise the argument advanced before the Arbitrator at [43] - [44] above.
The Arbitrator’s findings concerning this argument are to be found at [65] and [66] of Reasons:
“That clause contemplates a contract, agreement or arrangement between the principal and the contractor under which the contractor agrees (for example) to carry out the work of erecting, constructing or demolishing or assisting in the erection, construction or demolition of fences. The work of the applicant for the respondent in this case was general rural work as outlined in [22] of his statement of 25 February 2011. It “included fencing repair and installation.” There was no contract between the applicant and the respondent specifically for the erecting, constructing, or demolishing or assisting in the erection, construction, or demolition of fences, but any work to do with fencing carried out by the applicant was, in my view, incidental to his other duties as a rural contractor engaged in a farm labouring contracting business. He certainly was not carrying out such work at the time of his accident.
Because the applicant did not enter into a contract, agreement or arrangement with the respondent under which he agreed to carry out the work of erecting, constructing or demolishing or assisting in the erection, construction or demolition of fences, I find that the applicant cannot bring himself within the provisions of that clause, and cannot be taken to be a worker employed by the respondent.”

Mr Francis argues that the Arbitrator has erred in two respects being:
(a) failure to apply the clause in its terms, and
(b) finding that the contract, to fall within the clause, “had to be exclusively for the work described in cl 3(1)(e)”.
To successfully rely upon the provisions of cl 3 Mr Francis was required to prove a number of matters, some of which are not controversial; namely that the work was rural work and that the respondent, as principal, entered the contract in the course of or for the purposes of, his trade or business. What is in dispute was whether the contract came within the clause. The Arbitrator has plainly found that the contract did not fall within the clause. In challenging that conclusion Mr Francis has cited no authority in support of the argument that, since the contract related in part to “fencing repair and installation”, it did fall within the clause.
The circumstance that a contract does not have as its main object that class of work which is defined in the clause was considered by the High Court in McNamee v Partridge [1959] HCA 43; 101 CLR 384 (McNamee). That matter concerned a question as to the proper construction and application of the provisions of s 6(5)(a) of the Workers Compensation Act 1926 (the former Act). That section, whilst it had often been the subject of amendment, had provisions similar to those found in cl 3. The facts of the case concern the rights of an employee of a contractor who had agreed with a principal to carry out fencing work and to fell trees and supply timber. At the relevant time the section included a class of work being the supply of timber obtained from trees felled by the contractor (s 6(5)(a)(i)). It is important to note that “fencing” contracts were not, at that time, a prescribed class of work within the section (fencing contracts were included, I note, by proclamation in the NSW Gazette soon after publication of the High Court’s decision in McNamee).
The question for the High Court was whether, in addition to deeming employment by the principal, the section operated to deem that the employee’s contract of employment with the contractor did not, for the purposes of the former Act, exist.
Whist there had been a concession made prior to the hearing before the High Court that the contract fell within the terms of s 6(5)(a), that question had been agitated in submissions before the Court. The appellant had asked the Court, notwithstanding the concession, to determine whether the contract did come within the section.
The question was addressed by Kitto J (with whom Dixon CJ agreed). Their Honours, with McTiernan J, comprised the majority in upholding the appeal. McTeirnan J appears simply to have accepted that the employee was within the protection of the section. The minority Menzies J and Windeyer J, whilst agreeing as to the outcome of the appeal, each addressed the question concerning application of s 6(5)(a) and reached opposing views.
The employee was injured whilst felling trees to provide posts and strainers for the fencing. The prescribed class of work was the supply of timber to be felled by the contractor. It was observed by Kitto J (at 391):
“In the Supreme Court it was regarded as a contract by which the respondent agreed to fell trees. Assuming that I have stated correctly the facts which should have been set forth in the case, I see nothing wrong with this view of the contract. True, the felling of trees was not its main object. It was a fencing contract; but if by a fencing contract the contractor agrees to fell such trees as are necessary for the purpose of providing posts and strainers, he agrees to fell trees. Again, the respondent agreed under the contract to supply timber to be obtained from trees, the property of the principals, to be felled by him. Doubts seem to have been suggested in some cases which have come before the commission in the past as to whether such things as fencing posts and strainers are “timber”, especially in view of a definition of timber, found near the end of s 6(5), as including sleepers, piles, poles, girders, logs, or pit timber, with no mention of fencing posts or strainers. I agree, however, with the view which the commission has taken in such cases as Charnock v O’Brien (1929) 3 WCR 116 and Robinson v W.P. Snelson (1955) 29 WCR 147 that such things are ‘timber’ within the meaning of the subsection; for in this country it is a word normally used in a sense wide enough to include any wood suitable for purposes of construction, and the definition in s 6(5) seems intended only to ensure the inclusion of certain kinds of wooden articles about which doubts might otherwise be suggested. It may be conceded that the respondent’s contract with Ralston and Carter was not a contract to supply timber, if by that is meant a contract predominantly concerned with the supply of timber. But what has to be found in order to satisfy the relevant words of the Act is no more than a contract under which the contractor agrees to supply timber; and if it be agreed that fencing posts and strainers are timber there can hardly be any dispute that the respondent did agree under his contract with Ralston and Carter to supply timber.”
A similar conclusion on this issue was reached by Menzies J who stated at 396:
“Partridge, in the course of his business, entered into a contract under which he agreed inter alia to fell trees to supply timber from the trees felled by him. It was an essential part of his contract that he should do these things. It is true that he contracted to do more, but I see no justification for treating his contract as one to fence rather than as one to fence, cut trees and supply timber. It seems to me that part of the work Partridge contracted to do fell squarely within the sub-section, and that it would be to impose an unwarranted limitation upon its language to treat the sub-section as inapplicable because the contract covered other work as well. It is to be observed that s 6(5)(a) does not speak of contracts to do the enumerated things but contracts ‘under which the contractor agrees’ to do the enumerated things. I find no sound reason for saying that Partridge did not agree to fell trees and supply timber.”
It is clear from the judgment of Windeyer J that, whilst he was prepared to assume that s 6(5)(a) applied, he was “not satisfied that a contract such as the present one does come within the sub-section” (at 398). His Honour proceeded to state that he wished the question to remain open and indicated his reasons for “doubting the correctness of the assumption” which he had made (between 398 - 400). His Honour’s view is summarised by him at 399:
“I would have read it as referring only to contracts for recognised forms of work done in the country or on the outskirts of cities, performance of which by the contractor is the consideration for payment by the principal, and not as referring to undertakings incidental to the performance of the work for which payment is to be made. I am disposed to view the sub-section as referring to contracts which can be characterised by the various descriptions and not as referring to work of those descriptions incidental to the performance of a principal undertaking. That is to say the work described must, I feel, be either the subject matter of an entire contract or a separate undertaking of a divisible contract. On that view a contract to build a fence, cutting the posts, is not, I would think, ordinarily a contract under which the contractor agrees to supply timber or to fell trees within the meaning of the Act.”
Having regard to that which was held by Kitto J (the Chief Justice agreeing) and Menzies J, Mr Francis may seek some comfort. However, there remains the question as to whether the evidence establishes that the contract concerned performance of that work prescribed by cl 3(1)(e) of Sch 1 which, for convenience, I shall refer to as fencing.
The only evidence before the Arbitrator concerning fencing was that noted at [22] and [30] above. Such work is described by Mr Francis as “fencing repair and installation” and “fixing the fences”.
There is no description otherwise of any specific task relating to fencing that may have been agreed to or performed by Mr Francis. In the circumstances it is necessary to determine whether the evidence establishes that the work performed by him relating to fence work is a class of work falling within the description found in cl 3(1)(e) of Sch 1. A similar question was raised in the matter of Mattinson v Multiplo Incubators Pty Ltd [1977] 1 NSWLR 368 where it was stated by Glass JA (with whom Reynolds JA agreed) at 372, omitting footnotes:
“...the question whether a proved state of affairs should be included in, or excluded from, a statutory category is generally a question of fact. No question of law is raised unless the situation disclosed by the evidence is necessarily inside or outside the statutory description. It is only in those circumstances that a contrary decision involves an error of law. It can then be said that “the true and only reasonable conclusion” contradicts the determination: Edwards v Bairstow [1956] AC 14 at 33-35.”
Mr Francis describes “fencing repair” and “fixing the fences”. Adopting a literal approach to the construction of the clause it is clear that neither “repair” nor “fixing” of fences is included in the description of the subject class of work. Nor do such activities, I conclude, fall within the meaning of the terms “erection” or “construction” which appear in the clause.
A more difficult question is raised when the activity described as “installation” is considered. The question is whether the terms “erection” or “construction” include the work described as “installation”. I have reached the view that it is not so included. Firstly, none of the words are synonymous. Secondly, in the absence of evidence concerning “installation” it is to be taken to mean “to place in position for use” as it is defined in the Macquarie dictionary. Such meaning is not included in “erection” or “construction” as those terms are understood in their ordinary sense. It follows that the fence work as described in the evidence does not fall within the terms of the clause.
Having regard to that which was held by the majority in McNamee, the appellant’s criticism of the Arbitrator’s reasoning concerning “deemed worker” is, in part, well founded. In treating the clause as having no application in circumstances where the work to do with fencing was “incidental” to Mr Francis’s other duties as a rural contractor is contrary to authority and constitutes error.
However, given my view as to the application of cl 3(1) of Sch 1 to the facts, any error made by the Arbitrator as discussed, has not affected the decision and in all the circumstances the appeal must fail.

DECISION

The Arbitrator’s determination made in the Certificate of Determination dated 1 September 2011 is confirmed.

COSTS

No order is made as to costs of this appeal.

Kevin O'Grady

Deputy President
29 November 2011

I, CATHRINE LOREN, CERTIFY THAT THIS IS A TRUE AND ACCURATE RECORD OF THE REASONS FOR DECISION OF KEVIN O'GRADY, DEPUTY PRESIDENT OF THE WORKERS COMPENSATION COMMISSION.

ASSOCIATE