Secretary, Department of Family and Community Services v Bee - [2014] NSWWCCPD 66

WORKERS COMPENSATION COMMISSION
DETERMINATION OF APPEAL AGAINST A DECISION OF THE COMMISSION CONSTITUTED BY AN ARBITRATOR
CITATION:	Secretary, Department of Family and Community Services v Bee [2014] NSWWCCPD 66
APPELLANT:	Secretary, Department of Family and Community Services
RESPONDENT:	Carolyne Maree Bee
INSURER:	QBE Insurance (Australia) Ltd
FILE NUMBER:	A1-1525/13
ARBITRATOR:	Mr R Foggo
DATE OF ARBITRATOR’S DECISION:	16 June 2014
DATE OF APPEAL HEARING:	1 October 2014
DATE OF APPEAL DECISION:	13 October 2014
SUBJECT MATTER OF DECISION:	Deemed worker; Sch 1 cl 2 of the Workplace Injury Management and Workers Compensation Act 1998; whether contract existed between foster carer and the Department of Family and Community Services; intention to enter legal relations; consideration
PRESIDENTIAL MEMBER:	Deputy President Bill Roche
HEARING:	Oral
REPRESENTATION:	Appellant:	Ms L Goodman with Mr A Parker, instructed by Bartier Perry
Respondent:	Mr J Dodd, instructed by Rural Law
ORDERS MADE ON APPEAL:	1. The name of the appellant is amended to be Secretary, Department of Family and Community Services. 2. The Arbitrator’s determination of 16 June 2014 is revoked and the following orders are made in its place: “1. There is an award for the respondent employer. 2. No order as to costs.” 3. Each party is to pay her or its own costs of the appeal.

INTRODUCTION

This appeal concerns whether a registered foster carer is a deemed worker under the terms of the Workplace Injury Management and Workers Compensation Act 1998 (the 1998 Act). The resolution of that issue turns on whether, applying the basic principles of contract law, the parties intended to create legal (contractual) relations and, if so, whether their arrangement was supported by real consideration.

BACKGROUND

The respondent to the appeal, Carolyn Bee, is a registered foster carer, having been so appointed by the appellant, the Department of Family and Community Services (the Department), under the Employment and Workplace Relations Legislation Amendment (Welfare to Work and Other Measures) Act 2005.
Between 22 and 28 August 2010, Ms Bee undertook the care of two children, as an emergency, when another foster carer had become sick. Ms Bee alleged that she contracted H1N1 swine flu from the children and, as a result, was unfit for work from 25 August 2010 to 7 May 2012.
The issue before the Arbitrator was whether Ms Bee cared for the children under a contract made with the Department and, if so, whether the contract was one of service or services. If the contract was one of service, Ms Bee was a worker as defined in s 4 of the 1998 Act. If the contract was one of services, Ms Bee contended that she was a deemed worker under Sch 1 cl 2 of the 1998 Act.
If Ms Bee was a worker or a deemed worker, a further issue arose as to whether her employment was a substantial contributing factor to her injury.
The Arbitrator found that when, at the request of the Department, Ms Bee agreed to undertake the care of the two children on 22 August 2010, she entered into a contract with the Department and she was a “deemed employee pursuant to the provisions of Schedule 1” ([32]). He also found that Ms Bee contracted H1N1 swine flu from the children and that her employment was a substantial contributing factor to her injury.
The Commission issued a Certificate of Determination on 16 June 2014 in the following terms:
“The Commission determines:
1. The respondent is to pay the applicant weekly payments of compensation from
25 August 2010 to 28 February 2011 [at] the rate of $650 per week and from 1 March 2011 to 7 May 2012 at the rate of $418 per week.
2.The respondent is to pay the applicant’s section 60 expenses upon production of accounts and/or receipts and/or Medicare Notice of Charge.
3.The respondent is to pay the applicant’s costs as agreed or assessed and I specify an uplift of 30 per cent from [sic] complexity, which uplift is to be available to both parties.”
The Department has appealed. It has challenged the Arbitrator’s finding that a contract existed between Ms Bee and the Department, but has not challenged the finding that Ms Bee contracted swine flu from the children.

THE ARBITRATOR’S REASONS

The Arbitrator noted the submissions by counsel for the Department, Ms Goodman, that:
(a)     Ms Bee received a care allowance ($33 per day per child), not a wage, which was to cover the children’s expenses;
(b)     the documents headed Advice of Deposit appeared to characterise the payment (to Ms Bee for caring for the children) as an allowance;
(c)     Ms Bee earned an average of $650 per week in her employment with Gunnedah Automotive;
(d)     Simone Czech, the director of the Department’s Out-of-Home Care Reform explained that:
“Foster carers are not paid for the service they provide, rather there is a care allowance intended to cover the cost of the care for the child including food, clothing, educational and other needs. This is classified as ‘an allowance to meet the needs of a child in the care of the Minister’. It is not income and is not classified as income by the Australian Taxation Office.”
(e)     accordingly, Ms Bee was not being paid for a service. She was paid an allowance, which was based on the age and special needs (of the child).
The Arbitrator said that these submissions were “clearly correct” ([11]).
Turning to Sch 1 cl 2, the Arbitrator summarised Ms Goodman’s additional submissions as follows:
(a)     even if a contract existed between Ms Bee and the Department, there still had to be an intention to create legal relations (Scerri v Cahill (1995) 14 NSWCCR 389 (Scerri)) (Ms Goodman conceded at the oral hearing of the appeal that this submission was erroneous – if there was no intention to create legal relations, there was no contract);
(b)     the Department had authorised Ms Bee to undertake foster care and provided her with a licence, but no contract was created. Otherwise there would be a contract in writing, as is the case with all employment by any instrumentality of the NSW State Government;
(c) Ms Bee had not performed work as required by sub-cl (1) of cl 2 of Sch 1, as there was no contract, only an arrangement between the parties, and
(d)     Ms Bee had failed to establish that the work exceeded $10 in value, as there was no contract and no evidence that Ms Bee was paid.
Under “Discussion”, the Arbitrator referred to an additional submission by Ms Goodman, namely, that in the Pre-Employment and Other Screening Consent/Request Form (the Screening Form) completed by Ms Bee on 22 October 2007, Ms Bee crossed the box “Authorised Carer” not the box “Employment/Promotion DOCS /DACHC”. This indicated, so it was argued, that the purpose for which the screening was required was that of “Authorised Carer” and not “Employment/Promotion”.
Dealing with the Screening Form, the Arbitrator said that little could be inferred from the description by one party of the nature of the relationship between them (Floorplay Pty Ltd v Commissioner of Taxation [2013] AATA 637 at [12]).
The Arbitrator then noted the submissions by Mr Dodd to the effect that:
(a) section 16(1) of the Children and Young Persons (Care and Protection) Act 1998 (the Care Act) describes the “Principal role” of the Director-General to be “to provide services and promote the development, adoption and evaluation of policies and procedures that accord with the objects and principles of this Act”;
(b) “out-of-home care” is defined in s 135 of the Care Act to mean:
“residential care and control of a child or young person that is provided:
(a) by a person other than a parent of the child or young person, and
(b) at a place other than the usual home of the child or young person,
whether or not for a fee, gain or reward.”
(c)     under s 136, statutory out-of-home care can only be provided by an authorised carer;
(d)     pursuant to s 139, Ms Bee only did work for the Department, and the designated agency under s 139 was the Department;
(e)     section 140(c) allows the designated agency the power to control the exercise of care responsibility by giving directions to the authorised carers;
(f)      section 161 allows the Director-General to provide financial assistance for children and young persons in out-of-home care, and
(g)     Ms Bee’s statement that “[o]n 22 August 2010, two girls came into [her] care, under emergency care provisions, from another foster carer who was apparently sick”, established that Ms Bee, a duly authorised carer, agreed to take two girls into her care on 22 August 2010 as an emergency because another foster carer had become sick.
Immediately after the passage noted in sub-paragraph (g) above, the Arbitrator said (at [25]) that he agreed with Mr Dodd’s submission that “this constituted [a] contract between [Ms Bee] and the [Department]”. He added, starting at [26]:
“26.The statutory provisions to which counsel for [Ms Bee] had referred and which I have set out in the preceding paragraphs, provide the framework for an agreement between [Ms Bee] and [the Department], which was perfected once [Ms Bee] agreed to the [Department’s] request that [Ms Bee] care for the two children.
27. The fact that no written contract was concluded is unsurprising.
28.The particular instance of [Ms Bee’s] agreement to undertake the care of the two children on 22 August 2010 is a case in point. This was an emergency. The requirement for written agreements between the [Department] and authorised carers would be unduly onerous, as some placements could be with little or no notice (as in the present case), for very short times, could be varied by addition of more children, by the temporary placement of the children with a parent or grandparent, and a myriad of other situations which could not possibly be covered in any standard agreement. Even if a written agreement endeavoured to cover these eventualities, it would require running [sic] amendments or new agreements each time an unforeseen event altered the scope of the initial agreement.
29.Accordingly I have no hesitation in finding that [Ms Bee], when she agreed to undertake the care of the two children on 22 August 2010 at the request of the [Department], entered into a contract with the [Department].
30.The fact that the allowance for the care of children is not characterised by the [Department] or the Australian Tax Office as a wage is immaterial for the purposes of Schedule 1 Clause 2(1). All that is required is that the employment exceeds $10 in value. Spackman v Morrison 21 NSW CCR 67 established that the payment of money is not required for the purpose of deemed employment, merely that the value of the service provided exceeds $10 a day. There can be no doubt, as counsel to [Ms Bee] submitted, the minding of two children for an indefinite time exceed $10 in value – indeed one can infer from the allowance provided by the [Department] that its value was somewhere in the region of $33 per child per day.”
The Arbitrator concluded that he was “comfortably persuaded that [Ms Bee] was a deemed employee pursuant to the provisions of Schedule 1”. He then assessed the medical evidence to determine if Ms Bee’s employment had been a substantial contributing factor to her condition.

ISSUES IN DISPUTE

The issues in dispute in the appeal are whether the Arbitrator erred in:
(a)     failing to give proper reasons in resolving the “intention to create legal relations” issue (reasons);
(b)     implicitly finding the parties had an intention to create legal relations, so as to enter into a contract (intention to create legal relations);
(c)     implicitly finding there was consideration, so as to have an enforceable contract (consideration), and
(d) finding that there was a contract “to perform any work exceeding $10 in value” and that Ms Bee was a “deemed employee pursuant to the provisions of Schedule 1”. (The submission made in support of this ground was that it was the value to the contractor that was relevant. At the oral hearing of the appeal, Ms Goodman conceded that, if a contract existed, it exceeded $10 in value. Thus, this ground was not pressed but is the subject of brief comment at [101] below.)

REASONS

Submissions

Counsel for the Department, Ms Goodman, who appeared with Mr Parker, submitted that the Arbitrator failed to provide reasons addressing the intention to create legal relations issue.
Mr Dodd submitted that the Arbitrator set out his reasons for concluding that there was a contract at [21] to [29] and those reasons were sufficient to enable his decision to be made, consistent with the requirements of Soulemezis v Dudley (Holdings) Pty Ltd (1987) 10 NSWLR 247 at 270 requiring the statement of reasons to be sufficient to enable a party to exercise his or her right of appeal.
Mr Dodd contended that the Arbitrator set out:
(a)     the framework of the parties undertaking obligations if there is an agreement to provide “out-of-home” care under the Care Act;
(b)     the sequence of Ms Bee qualifying to provide “out-of-home” services to young people, and
(c)     Ms Bee agreeing with the Department to undertake such services within the ambit of the Care Act.
Mr Dodd pointed out that there was no real dispute about the facts giving rise to the relationship and no need for the Arbitrator to decide what evidence he accepted. He said, relying on the decision of Basten JA in Resource Pacific Pty Ltd v Wilkinson [2013] NSWCA 33 (Wilkinson), that different principles apply (with respect to the requirement to give reasons) depending on whether the appeal is a rehearing or an appeal limited to a question of law (as in this case).

Discussion and findings

As explained by Kirby J in Roncevich v Repatriation Commission [2005] HCA 40; 22 CLR 115 at [64], courts should avoid an “overly pernickety examination of the reasons”. However, his Honour added, making a point of particular significance to the present matter, that “[t]he focus of attention is on the substance of the decision and whether it has addressed the ‘real issue’ presented by the contest between the parties”.
In a similar vein, Gleeson JA (Emmett JA and Simpson J agreeing) observed in Keith v Gal [2013] NSWCA 339 at [117] that “it is essential to expose the reasoning on a point critical to the contest between the parties”. In other words, it is necessary for a decision maker, such as an Arbitrator, to “engage with, or grapple or wrestle with cases presented by each party” (Mitchell v Cullingral Pty Ltd [2012] NSWCA 389 at [116]).
The critical issue in the present case was whether the parties made a contract. Central to that issue was, among other things, whether the parties had an intention to enter into legal relations. This issue was the subject of extensive submissions by Ms Goodman, who made express reference to the principles discussed in several leading authorities. Other than acknowledging that Ms Goodman made submissions on that point, the Arbitrator did not explain why the parties had an intention to enter into legal relations.
Though Ms Goodman’s point was, initially at least, expressed incorrectly, because she started by saying that “even if there is a contract was there any intention to create legal relations?” (T41.24), the authorities quoted by Ms Goodman make it clear that she was arguing that, for there to be a contract, the first ingredient is that there must be an intention to create legal relations.
This follows from the following passage quoted by Ms Goodman from LexisNexis Butterworths, Mills Workers Compensation New South Wales, (at Service 136) [37,753], where, after noting the requirements for a contract under Sch 1 listed by Bainton AJA in Scerri, the following is stated:
“For there to be a ‘contract’, the first ingredient listed by Bainton JA [sic], [was that] there must be an intention to create legal relations and mutuality or contractual consensus. The presence of both of these matters is to be determined objectively: Lindeboom v Goodwin (2000) 21 NSWCCR 297 at 302 and Cudgegong Soaring Pty Ltd v Harris (1996) 13 NSWCCR 92 at 101…
In Lindeboom v Goodwin (2000) 21 NSWCCR 297 at 303, Campbell CJ cited a useful statement as to how the objective assessment is to be made, which is found in Jones v Padavatton [1968] EWCA Civ 4; (1969) 1 WLR 328 per Salmon LJ at 332:
‘Did the parties intend the arrangement to be legally binding? This question has to be solved by applying what is sometimes (although perhaps unfortunately) called an objective test. The court has to consider what the parties said and wrote in the light of all the surrounding circumstances, and then decide whether the true inference is that the ordinary man and women, speaking or writing thus in such circumstances, would have intended to create a legally binding agreement.’”
The Arbitrator made no attempt to “engage with” these points and did not say how he approached the intention to create legal relations issue. It is unclear if he considered it at all. He merely said that he agreed with the submission from Mr Dodd that Ms Bee’s statement (quoted at [14(g)] above) established a contract between her and the Department. That approach is not permissible and involved an error in failing to determine a matter in dispute that was critical to the outcome. This ground alone is enough for the appeal to succeed.
Wilkinson does not assist Ms Bee. In that case, Basten JA observed that the ground of failing to give “‘any or any proper reasons’ is frequently used without sufficient regard to the precise nature of the complaint” ([42]). His Honour added that if there is a failure to make a finding that is a necessary step in support of the court’s orders, that failure may constitute a failure to exercise jurisdiction. Whichever approach is taken, the Arbitrator erred in failing to determine the issue argued by Ms Goodman.
The submission that the present appeal is limited to a question of law was incorrect. Appeals under s 352 are not limited in that way. They are limited to the identification and correction of errors of fact, law or discretion. Regardless of the nature of the appeal, the Arbitrator erred in failing to determine a critical issue.

INTENTION TO ENTER LEGAL RELATIONS

Submissions

Ms Goodman submitted that the relationship between the parties was one created and operated through statute. She said that the situation was indistinguishable from Mannah v Trustees of the Roman Catholic Church for the Archdiocese of Sydney (2005) 2 DDCR 332 (Mannah), where Neilson DCJ found that Sch 1 did not apply to a foster carer because the parties lacked the intention to create legal relations.
Ms Goodman contended that the Care Act and the Children and Young Persons (Care and Protection) Regulation 2012 (the Care Regulation) governed the relationship, as it did in Mannah, and the parties acted in accordance with their statutory obligations, not under any contractual rights. She referred to various provisions in the legislation that were inconsistent with “a regular contract for services”. For example, the Department has the power to vary the conditions of Ms Bee’s authorisation (cl 34) or to cancel it altogether (cl 42).
Ms Goodman pointed out that there was no obligation on the Department to provide children to Ms Bee and no obligation on her to take children. This is in contrast to a contract of services, which has mutually enforceable contractual obligations. She also highlighted the fact that the payment of the care allowance is intended to cover the children’s day-to-day expenses. It is not a wage or income and is not taxable. Thus, it is not a payment for services rendered. It is a payment for the care of the children, regulated by statute not through any bargain reached between the parties.
The payment of the care allowance is intended to cover the children’s day-to-day expenses, such as food, shelter, clothing and footwear (including school uniforms), household provisions, haircuts, general medical costs, pharmaceutical costs, general education costs (including excursions), suitable car restraints, leisure and outing costs, gifts and pocket money, daily travel, general hygiene and incidentals, hobbies and holidays.

Mr Dodd submitted that Mannah is factually distinguishable from the present case. Among other things, the documents in evidence in that case specifically disavowed any contractual relationship or coverage for workers compensation benefits. Moreover, Mrs Mannah said that she fostered children because of her love of children. Both Mr and Mrs Mannah were parties and payments were made to them jointly, which militated against Mrs Mannah having entered into a contract for her own benefit.
Mr Dodd argued the present case must be determined on its own facts, which the Arbitrator did, and “such conclusions are not open to appeal”, there being no suggestion that he misread the evidence. Mr Dodd said that the contract came into existence when Ms Bee was asked by the Department to look after two children on 22 August 2010. It was then that there was an offer by the Department for Ms Bee to “carry out part of the services that the Director-General is to provide and fund under” the Care Act. It was Ms Bee’s acceptance of that offer that gave rise to the “many obligations o[n] her and [the Department] pursuant to that Act”. It was only upon the offer of the children to Ms Bee and her acceptance of that offer that there arose the contractual relations between the parties. Those relations were then governed by the terms of the legislation.
Mr Dodd contended that it was the intention of the parties, when the Department asked Ms Bee to provide out-of-home care for the children, that she would undertake that obligation in accordance with (the Department’s) Code of Conduct for Authorised Carers (the Code of Conduct) and the supervision by the Department, and that the Department would pay Ms Bee $33 per day per child.
He said the test of whether the parties intended to enter legal relations depended on whether the arrangement could be the subject of enforcement by a court of law. In this case, if, after having cared for the children at the request of the Department, the Department refused to pay the $33 allowance, Ms Bee would be entitled to sue the Department in a common law court for the recovery of that amount. That is evidence of an intention to enter legal relations. He contended that it is not the entirety of the relationship that needs to be enforceable (Kirby J in Ermogenous v Greek Orthodox Community of SA Inc [2002] HCA 8; 209 CLR 95 (Ermogenous) at [74]).
Mr Dodd emphasised the need to look at the whole of the circumstances and that a care arrangement can be the subject of a contract (FM v CareSouth [2011] NSWSC 1366 (FM) and Australian Woollen Mills Pty Ltd v Commonwealth [1954] HCA 20; 92 CLR 424 (Australian Woollen Mills)).
Like most other contracts, either party could bring the fostering of the children by Ms Bee to an end, but that had to be done in accordance with the obligations of the parties prescribed by the legislation (including Ms Bee complying with the Code of Conduct).
Dealing with the Arbitrator’s decision, Mr Dodd said that the Arbitrator had all the facts necessary to come to a conclusion that there was a contract to provide services between the parties and did not err in law in coming to that conclusion.

Discussion and findings

Authorities

As Mannah does not bind me, it is not necessary for me to determine if the present case is distinguishable from it. As Mr Dodd submitted, Ms Bee’s claim must be determined on its own facts.
The authorities are clear that the question of an intention to create legal (contractual) relations requires an objective assessment of the state of affairs between the parties (Ermogenous at [25]). “Intention” describes what it is that would objectively be conveyed by what was said or done, having regard to the circumstances in which those statements and actions happened (Ermogenous at [25]). (Though Ermogenous refers to the “intention to create contractual relations”, this expression is clearly interchangeable with the phrase “intention to create legal relations”.)
This approach is consistent with the following statement by Windeyer J in South Australia v The Commonwealth [1962] HCA 10; 108 CLR 130 at 154, referred to at [24] (with apparent approval) in Ermogenous:
“An agreement deliberately entered into and by which both parties intend themselves to be bound may yet not be an agreement that the courts will enforce. The circumstances may show that they did not intend, or cannot be regarded as having intended, to subject their agreement to the adjudication of the courts. The status of the parties, their relationship to one another, the topics with which the agreement deals, the extent to which it is expressed to be finally definitive of their concurrence, the way in which it came into existence, these, or any one or more of them taken in the circumstances, may put the matter outside the realm of contract law.”
In light of these authorities, it is appropriate to consider the background to Ms Bee becoming a foster carer in February 2009, which is relevant to the status of the parties and their relationship to one another and the other matters mentioned by Windeyer J.

Background to Ms Bee becoming a foster carer

The process commenced with an inquiry by Ms Bee, about becoming a foster carer, in or about October 2007. In response to that inquiry, Ms Bee was provided information to assist her to understand the children and young people who need foster care and the process of becoming a foster carer.
In a letter dated 12 October 2007, Ms Bee was informed that, prior to approval as a carer, every applicant is required to be involved in an assessment process that includes approximately four interviews, training and background checks, including criminal records. If, after reading certain information enclosed with the letter, Ms Bee wished to take the next step toward being a foster carer, she was asked to complete and return the following documents: “Registration of interest”, “Criminal Records Check” consent form and a “Self Assessment Form”.
On 22 October 2007, Ms Bee completed the Screening Form (see [12] above) in which, when asked to certify the purpose for which the screening was required, she ticked the box marked “Authorised Carer” and left all other boxes blank. The other boxes included, among other things, boxes marked “Employment/Promotion DoCS/DADHC”.
On 27 November 2007, Ms Bee was requested to complete an authority to release information to the Department and a medical questionnaire. The letter enclosing those documents stated that the physical and medical condition of potential foster carers is seriously considered when assessing applicants. That was to ensure that applicants are physically and emotionally able to care for children and that the applicant’s health and well-being will not be adversely affected by the additional demands of being a foster carer.
In late 2008, a representative of the Department completed an Assessment Record relating to Ms Bee’s application to be a foster carer. This document set out certain background information about Ms Bee, including that she worked in the office of a local earthmoving contractor. (It was agreed that, for all relevant periods up to August 2010, Ms Bee was working full-time in reception and administration at Gunnedah Automotive.)
Under “Competency A – Personal Readiness to Become an Authorised Foster Carer”, the following appears at page four of the Assessment Record:
“A 1.1 Evidence that motivation to become a foster carer included a focus on the needs of children and young people in out of home care has been identified by the applicant
Carolyn [sic] stated her motivation to foster was spurred by a friend who is currently fostering and seeing children who are not as well off as her. She has plenty of room in her home for other children and time to help them. Even though she has not got every thing to spoil children like computer games, she can provide well for them. Carolyn has spoken to her sons and they are happy with the idea of fostering.
Carolyne said she has a good life and wants to give something back to a child who has not had a loving home. Carolyne also said she can give a child a chance of a brand new start and help other foster carers.” (emphasis included in original)
Included in the Assessment Record is document headed “What motivates foster carers?” This document provides:
“1. I’ve had a good life, I want to give something back.
2. I can’t have a child of my own at this time.
3. Every child has a right to a home and to be loved. I can do that.
4. Some parents are doing it tough out there. I want to help them and their children.
5. I love kids, my life seems empty without them.
6. My child/ren would love a playmate.
7. It seems a great way to work from home, I really need a little extra income.
8. I want to give a child the chance of a brand new start.
9. I had a difficult childhood. I know what some kids go through and I want to help them.
10. I want to have fun with a kid, planning and going to lots of places and excursions with them.
11. Other Want to help other Foster Careers [sic]”
This document has ticks against points one, three and eight. While the document is typed, the note, “Want to help other Foster Careers [sic]”, at point 11, is hand written, presumably by Ms Bee.
On 12 February 2009, the Department advised Ms Bee in writing that she had been authorised as a foster carer for the Department pursuant to the Care Act. The authorisation was for an initial period of 12 months and was subject to review during that period. The letter enclosed a copy of the Code of Conduct, which Ms Bee was asked to read, sign, and return. The signed document is not in evidence but, by consent, the parties handed up at the oral hearing of the appeal a copy of the Department’s standard Code of Conduct for Authorised Foster, Relative and Kinship Carers, which I marked MFI 1. They agreed that this document was in the same or substantially the same terms as the document signed by Ms Bee.
The Code of Conduct sets out standards of behaviour that apply to carers and provides an “overarching framework for the care and protection of, and provision of services to, children and young persons in NSW, including the provision of out-of-home care services”. It sets out no obligations on the Department that, on any objective view, could be considered contractual. At its highest, it states that authorised carers can expect, among other things, to be provided with “support, resources and assistance to ensure the child or young person’s health, wellbeing and educational needs are met”.
On 14 August 2009, the Department wrote the following to Ms Bee:
“As you are well aware you are currently receiving a care allowance to care for the children/young people in your care. If you are not receiving an allowance, in the event that children/young people are placed into your care, you will receive an allowance from the Department to care for them. [emphasis added]
The allowance is intended to cover day to day expenses such as food, shelter, clothing and footwear (including school uniforms), household provisions, haircuts, general medical costs, pharmaceutical costs, general education costs (including excursions), suitable car restraints, leisure and outing costs, gifts and pocket money, daily travel, general hygiene and incidentals, hobbies and holidays.
You may seek reimbursement from DoCS for expenses not expected to be covered by the allowance, where this is part of an approved case plan and has been pre-approved by a Manager. Please be aware that caseworkers cannot approve any reimbursement, they must be approved by a local Manager.” (emphasis in the last paragraph included in original)
The letter enclosed expenditure logs to enable the recording of payments made by Ms Bee for such costs.

The present case

Ms Bee gave evidence about the children for whom she cared, once she became an approved carer, and that the Department paid her $33 per day per child. She said that, on 22 August 2010, two girls came into her care, under emergency care provisions, from another foster carer who was sick. She noticed that they were sick and, as a result, they had three days off school, which required Ms Bee to care for them the entire time. Within a few days, Ms Bee became ill and was ultimately diagnosed with swine flu.
In or about September 2010, the Department issued Ms Bee with two invoices stating that two separate amounts of $231.50 had been credited to her bank account on 3 September 2010. The payments were the allowance for the two children Ms Bee had cared for between 22 and 28 August 2010.
Also in evidence is a statement from Simone Czech, the director of out-of-home care reform with the Department. She said:
“7.     Community Services is one of a number of bodies which operate foster care programs and authorise foster carers. Other bodies are non-government organisations (NGOs). Foster carers are generally in demand and both Community Services and the NGOs run recruitment campaigns through the media. Interested persons then make enquiries either directly to Community Services or to the NGOs.
8.      In the case of enquiries direct to Community Services[,] we initiate the process by sending out information and dispatching one or more caseworkers to the home of the applicant where a carer assessment is conducted. This assessment includes property suitability inspection, obtaining a life history report for the applicant, discussing their motivation and making a general assessment of their suitability based on such information.
9.      The next stage of the process is a training session conducted over a few days/evenings titled “Shared Stories/Shared Lives”. This covers issues associated with foster care including working with birth parents and general requirements and responsibilities. NGOs conduct their own training but also use this Shared Stories/Shared Lives.
10.    Prior to authorisation of an applicant they are put through a thorough assessment process with competencies they are required to meet based on skills and experience as well as insight into child development and the effect of abuse and neglect. There are also issues as to whether they have their own children and probity and criminal record checks for the applicant and adult members of the household.
11.    There is then a code of conduct which the applicant signs and returns. The caseworker then makes an assessment as to authorisation which is reviewed by the case manager.
12.    Applicant[s] can then be authorised to provide different types of care. This may be based on aged [sic] ranges, restricted to emergency short term fostering and such guidelines. A carer development plan is then put in place as to how CS [Community Services] will support the carer. Peak bodies in the industry provide ongoing training opportunities but Community Services places no compulsion on our carers to attend such training.
13.    Once authorised the applicant is matched with appropriate children who are taken into their care as per their level of authorisation. Each child is allocated a Community Services caseworker who also provides support to the foster carer. We also have a Child & Family Regional unit which provides support to the carer.
14.    There is [an] annual review of authorisation based on follow up interview with the foster carer as to how they are coping and all relevant issues. They are re-authorised on that basis and their authorisation modified if appropriate. Monitoring and supervision is outside the annual review [and] is by way of home visits and checks as deemed appropriate and necessary. There are also voluntary carer support groups but these are voluntary and are based on support not supervision.
15.    Historically[,] there had not necessarily been exclusivity of authorisation of foster carers such that they may have provided care through Community Services as well as other NGO agencies. This has been discouraged and is now highly unlikely to occur.
16.    All child placements are by way of mutual agreement with the foster carers and there is no compulsion by Community Services directing foster carers in relation to child placements.
17.    Foster carers are not paid for the service they provide, rather there is a care allowance intended to cover the cost of the care for the child including food, clothing, educational and other needs. This is classified as ‘an allowance to meet the needs of a child in the care of the Minister’. It is not income and is not classified as income by the Australian Taxation Office.
18.    The allowance is based on aged [sic] and special needs. Currently the fortnightly allowance is $446.00 for a child aged 0-4 years; $502.00 for 5-13 years; $674.00 for 14-15 years and $450.00 for 16–17 years. There is also an additional allowance for children with care plus one or care plus two special needs.
19.    There is no expectation that foster carers are otherwise not employed. While employment is a consideration in authorisation as to their ability to provide appropriate care, in current practice carers are often couples with a mortgage and all the expectations and responsibilities of any modern family. They are commonly employed provided that employment is not such as to impact upon their ability to provide appropriate care.
20. In researching this matter of Ms Bee’s claim to be an employee I have been advised of the following by Derek Smith, Assistant Director – Legal Services – Department of Family and Community Services NSW (Community Services) via email correspondence dated 30 January 2014. Authorised carers are only deemed to be employees for the purpose of our reporting obligations under section 25C of the Ombudsman Act under section 25A definitions of that Act. Mr Smith has further advised that the Workers Compensation Act does not make this deeming provision.” (emphasis added)

Approach

As the Arbitrator erred in his approach, and as there are no credit issues involved, or any need to call additional evidence, both parties consented to me re-determining the matter. I intend to approach the issue of whether the parties intended to create legal (contractual) relations by reference to the statement by Windeyer J quoted at [43] above, though I note that I am not limited or restricted by that statement and that I have carefully considered all of Mr Dodd’s submissions and all of the evidence.

Status of the parties

Ms Bee was motivated by a desire to help children not as well off as her. She was under no legal obligation to accept children, though if she did, she was required to comply with the terms of the Code of Conduct. Thus, the only reasonable conclusion, viewing the matter objectively, is that Ms Bee’s status was that of a private person volunteering to “give something back”. These matters point strongly against an intention to enter legal (contractual) relations.

The relationship between Ms Bee and the Department

The relationship between Ms Bee and the Department, as far as the care and welfare of foster children in her care was concerned, was that of a volunteer and a government department. It is true that the it was closely controlled by the Care Act and the Care Regulation. However, that was not done pursuant to any contractual arrangement or obligation. It was done because of the Director-General’s statutory obligation to provide services and promote the development, adoption and evaluation of policies and procedures that accord with the objects and principles of the Care Act (see s 16 of the Care Act).
The relationship between Ms Bee and the Department may be contrasted to the relationship between the agency and the carer in FM, the case on which Mr Dodd relies. In that case, the relationship was governed by two written agreements. Dealing with the first, the Foster Carer Agreement, Bryson AJ observed that, like the Code of Conduct in the present case, the agreement contained no promise by the care agency. In particular, its provision about an allowance contained no mechanism by which the amount of the allowance could be determined; that was left to the agency (as it was left to the Department in the present case). Significantly, his Honour added that “[t]he absence of any means of determining how much the financial allowance was to be illustrates that it was not intended to give rise to contractually binding obligations” ([29]). The same comment applies in the present matter: there was no means of determining how much the financial allowance was to be.

With respect to the second agreement considered in FM, the Fixed Term Foster Care Agreement, his Honour noted that that agreement “spelt out obligations on both sides and spoke at much greater length than the earlier document” ([35]). It provided that the placement could be terminated on two weeks’ notice and set out allowances in a schedule that totalled $2,395 per week. This is in stark contrast to the present situation where there is no such agreement, express, implied, oral or written.
Once the care agency terminated the Fixed Term Foster Care Agreement, which Bryson AJ held to be a valid termination, the Department continued to make “carer allowances and other allowances to the” carer, but did so “according to its own resources, at its own scale and on its own decisions, not those of the [agency]” ([40]). His Honour added that, there being no breach of contract by the care agency, the Court “cannot take control of [the Department’s] decisions about allowances”.
His Honour’s statement in the preceding paragraph, which is equally applicable in the present case, is consistent with a lack of intention to enter legal (contractual) relations in a matter such as the present.

Topics with which the agreement deals

There is no written agreement and, consequently, no topics are dealt with in such an agreement. The agreement on which Mr Dodd relies is the arrangement that arose when the Department (apparently) asked Ms Bee to take the two children into foster care on 22 August 2010 and Ms Bee agreed to do so.
Given the nature of the arrangement, the observations by Bryson AJ at [20] in FM are instructive, though not determinative:
“All DFCS’s [the Department’s] communications in evidence are expressed in terms appropriate for carrying out public administration, and not for entering into contractual relationships. It would be very unusual for a public officer to give a contractual commitment in less than clearly expressed terms relating to management of the care of a child for whom the Minister or the Crown had responsibility, or a contractual commitment about the amount, payment or continuance of an allowance. Observations of McTiernan J in The Administration of Papua and New Guinea v Leahy [1961] HCA 6; (1961) 105 CLR 6 at 11 are applicable to the present facts:
‘... The work done by the Administration was analogous to a social service which generally does not have as its basis a legal relationship of a contractual nature and from which no right of action would arise in favour of the citizen who is receiving the services if the Government acts inefficiently in performing them.’”
The matters covered in the Code of Conduct, with its emphasis on the “overarching framework for the care and protection of” children and young persons, and its failure to refer to any specific obligation on the Department to make any payment to the carer, in return for being a carer, other than the provision of “support, resources and assistance to ensure the child or young person’s health, wellbeing and educational needs are met”, suggests that the service provided by the foster carer, absent some specific agreement, such as there was in the Fixed Term Foster Care Agreement in FM, is more in the nature of a social service that is outside the realm of contract law. Similarly, the Code of Conduct refers to no obligation on the foster carer to accept children into care. This strongly points to an absence of an intention to enter legal (contractual) relations in the presence matter.

The extent to which the agreement is expressed to be finally definitive of the parties’ concurrence

There is no agreement (oral or written) that is expressed to be finally definitive of the parties’ concurrence and this points to an absence of an intention to create legal or contractual relations. This point is of limited weight and is certainly not determinative. It is mentioned merely because it is part of the overall circumstances.

The way in which the agreement came into existence

The arrangement came into existence in the manner set out above. Ms Bee volunteered to become a foster carer. After going through the Department’s assessment process, Ms Bee was approved as a foster carer. That relationship was then governed by the terms of the Care Act, the Care Regulation and the Code of Conduct (I should add that neither party suggested that the Code of Conduct constituted a contract). Nothing in that arrangement suggests an intention to create legal (contractual) relations.

The arrangement/relationship between Ms Bee and the Department generally

The relationship was not one of a service provider offering a service, namely, foster care for children, in return for a fee for that service. It was a community service provided out of a desire to provide a loving home to children who would not otherwise have one. Moreover, the nature of the allowance paid to Ms Bee was, for the reasons discussed in detail below when looking at the consideration issue, not one that can be characterised as consideration for a promise. It was an “allowance to care for the children” in Ms Bee’s care (see [55] above), not a payment in return for being a carer.
That the arrangement was closely controlled by statute does not, of itself, prevent the existence of the intention to create a legally binding contract. However, in the absence of an agreement, the fact that the arrangement was so closely controlled by statute points strongly to the parties not seeking to create any independent, negotiated, contractual arrangement. This is consistent with the evidence that the daily allowance was set by the Department, not by negotiation or tender, as would often be the case with a contract. Again, this point is not conclusive, because not all contract prices are set by negotiation, but it is another matter that points to the parties not intending to create legal (contractual) relations.
That the allowance was not characterised as a wage (and was not taxable income) also points to parties not intending the arrangement to create legally enforceable relations. That is because, as noted above, the payment was not a payment in return for services rendered, but to cover expenses incurred or likely to be incurred in caring for a child or young person.
The Arbitrator dealt with payment of the allowance at [30], where he said that the fact that the allowance was not characterised by the Department or the Australian Tax Office as a wage was “immaterial” because “[a]ll that is required is that the employment exceeds $10 in value”. That statement was incorrect. Clause 2 of Sch 1 does not deal with “employment” contracts. It deals with “a contract” “to perform any work exceeding $10 in value”.

Whether the arrangement could be the subject of enforcement by a court of law

Mr Dodd’s submission on this point, namely, that Ms Bee would be entitled to recover the allowance by suing the Department in contract, in a common law court, involves an assumption that there is a contract. That is the very thing in issue. In the absence of an intention to enter legal (contractual) relations, had the Department not paid the care allowance, Ms Bee would not have been able to sue, on a contract, to recover the unpaid allowance, though she may well have other rights to recover the allowance.
The weakness in Mr Dodd’s submission can be illustrated by considering the matter from the Department’s perspective. Would the Department have been entitled to sue Ms Bee if, having agreed to accept children for six weeks, she changed her mind after one week and the Department incurred additional expense (in addition to the usual allowances) in having to engage a private care agency to place the children? Having regard to the social service nature of the arrangement, the answer is clearly “no”.
If I am wrong on this issue and Ms Bee is entitled to sue the Department, on a contract, for the recovery of the allowance, that contract would not be a contract “to perform any work”, as required by Sch 1 cl 2, but merely an agreement that, if children are accepted by a foster carer, an allowance “to care for them” will be paid (see Department’s letter of 14 August 2009 at [55] above). Thus, this point would still not advance Ms Bee’s position.

Conclusion

Having regard to the status of the parties, their relationship to one another, the topics with which the Code of Conduct dealt, the way in which the relationship came into existence, and looking at what the parties said and wrote in the light of all the surrounding circumstances, it is impossible to accept, viewing the matter objectively, that they intended the arrangement to create legally enforceable contractual relations. The Arbitrator’s implicit finding to the contrary was wrong.
As I have found that, viewed objectively, the parties had no intention to create legal (contractual) relations, it is not strictly necessary to consider the remaining grounds of appeal. That is because, if there is no intention to create legal relations, there is no contract and Sch 1 cl 2 cannot be satisfied. Thus, Ms Bee fails at the first of the four steps listed by Bainton AJA at 399D in Scerri (see [26] above).
However, if I am wrong on this issue, it is appropriate to consider the further grounds of appeal.

CONSIDERATION

Submissions

Ms Goodman submitted that it was implicit in the Arbitrator’s findings that Ms Bee agreed to accept the children on 22 August 2010 on the basis that she would receive a payment of $33 per day per child. Ms Goodman argued that the Arbitrator erred in concluding that those payments were consideration and/or that Ms Bee entered the agreement on the basis of the payment. She contended that Ms Bee’s motive was crucial in this regard.
Mr Dodd’s main point was that a contract arose when the Department asked Ms Bee to care for the children and she agreed to do so. In return for her caring for the children the Department agreed to pay her something, namely, an allowance of $33 per child per day. That allowance was valuable consideration for the agreement.
That payment was not based on a reimbursement to Ms Bee of expenses incurred in maintaining the children and there was no suggestion that the amount was “calculated to meet the costs of keeping the children”. Moreover, there was no requirement that Ms Bee spend the money on the children at all: she could spend it on herself, gamble or give it away. She could make a profit out of keeping the children.
Mr Dodd submitted that there was no basis in law for the consideration involved to be analysed regarding whether it is “adequate” in value (Barba v Gas and Fuel Corp of Victoria [1976] HCA 60) and that even nominal consideration is sufficient to make a promise binding as a contract (J W Carter, Contract Law in Australia, 6^th ed, LexisNexis Butterworths, para 6-27 (Carter)).
He contended that the lack of relationship between the payments and any expenses in maintaining the children “robs the payment of any characterization of an allowance to cover expenses, except in the mind of the [Department]”. The intention expressed in Ms Czech’s statement and in the letter of 14 August 2009 does not bind Ms Bee, noting that it was never put to Ms Bee that she only intended the payments to cover day-to-day expenses.
In any event, Mr Dodd submitted that the motivation of a contractor does not rob the contract of any validity and there was no need for payment to be at market rates for there to be consideration for a contract.
Mr Dodd argued that the situation is analogous to Carlill v Carbolic Smoke Ball Co [1893] 1 QB 256 (Carlill): an offer was made that if you do x you will be paid y. In the present case, there was an offer to pay money (the allowance) in return for looking after the two children. Ms Bee accepted that offer when she took the children into her home on 22 August 2010.

Discussion and findings

I do not accept Mr Dodd’s submissions.
The Department does not complain that the allowance is not consideration because it was not “adequate”. Its argument is that the payment cannot be characterised as consideration for an agreement because Ms Bee did not agree to care for the children in return for the payment of money. On the evidence, that submission is clearly correct and the claim cannot succeed.
As explained in the unanimous decision of the High Court in Australian Woollen Mills “[i]t is of the essence of a contract, regarded as a class of obligations, that there is a voluntary assumption of a legally enforceable duty”. To be legally enforceable, there must be, among other things, real consideration “for the agreement” (Ermogenous at [24]).
To prove a contract, it must be established that the “statement or announcement which is relied on as a promise was really offered as consideration for doing the act, and that the act was really done in consideration of a potential promise inherent in the statement or announcement” (Australian Woollen Mills at 456). In other words, there must be a quid pro quo (“one thing in exchange for another; something in exchange” Butterworths Concise Australian Legal Dictionary, 3th ed).
The above propositions are the very essence of a contract. The principles are well summarised in Carter, at 6–07 (footnotes omitted):
“When the existence or validity of a propounded consideration is in question, what was in fact the agreement of the parties must first be determined. It is only necessary to determine its effectiveness as consideration if what the plaintiff propounds as consideration did indeed form part of the parties’ bargain. Conversely, a promise is not rendered binding by the fact that there was at hand some ‘price’ which would have served as a good consideration, if in fact this was not the agreed price as indicated by the parties’ agreement. …
Consideration may be and often is itself a promise (or a bundle of promises), but it is always for the other party’s undertaking (or undertakings) and it is not strictly accurate to speak of consideration for a contract.” (emphasis included in original)
Though it is not necessary that the proposed consideration should be the only inducement for a promise, it is necessary that, for a valid contract to exist, it was an inducement (Carter 6–15).
In the present case, Ms Bee did not assume any “legally enforceable duty” (Australian Woollen Mills) to be a foster carer in consideration for the promise of payment by the Department. The evidence comfortably establishes that she undertook the care of children because of her desire to “give something back to a child who has not had a loving home”. She did not do it in return for a promise of payment. In other words, as was the case in Australian Woollen Mills (explained at 461), no relation of quid pro quo between a promise and an act can be inferred.
Thus, the payment of $33 per day per child cannot be characterised as consideration that supports a contract. It is not to the point that Ms Bee was not obliged to use the whole of the allowance to meet the needs of the children in her care. Ms Czech’s evidence clearly establishes, and I find to be the fact, that the Department did not pay foster carers for the services they provided. The payment was not an inducement for a promise and it did not “form part of the parties’ bargain” (Carter at 6-07).
Reinforcing this conclusion, but independent of it, the evidence of the nature of the $33 payment puts it beyond doubt that it was not consideration in return for being a foster carer. The payment was an allowance to cover day-to-day expenses “to care for the” children (see [55] above). No other conclusion is open. It was “not in any sense the consideration for a bargain” (per Handley JA (Mahony and Powell JJA agreeing) in Teen Ranch Pty Ltd v Brown (1995) 11 NSWCCR 197 at 202B) under which Ms Bee agreed to provide her services as a foster carer.
Carlill provides no support for Ms Bee’s position. That was a case of a unilateral contract: a promise in return for an act. That is the very thing missing in the present case. There was no promise by the Department to pay Ms Bee in return for Ms Bee being a foster carer. Nor was there a promise by Ms Bee to accept children in return for payment. To say, as Mr Dodd contended, that the Department only paid Ms Bee because she fostered the children and, therefore, the payment is valid consideration for the agreement, is to misrepresent the nature of the payment. It was not a payment in return for Ms Bee agreeing to be a foster carer. It was an allowance for the needs and welfare of the children.
It follows that, even if there were an intention to enter into legal (contractual) relations, that intention was not supported by consideration for the agreement and there is no contract. As there is no contract, Ms Bee cannot be a deemed worker under Sch 1 cl 2 because there is no “contract” to “perform any work”.

OTHER MATTERS

To be consistent with Kelly v Secretary, Department of Family and Community Services [2014] NSWCA 102 and Pt 1 of Sch 1 of the Government Sector Employment Act 2013 (NSW), the name of the respondent has been amended to be Secretary, Department of Family and Community Services.
Though the Department did not press the fourth ground of appeal, I make the following observation about its original contention. The submission that, assuming a contract existed, Ms Bee had to establish that the net value to her of the contract was more than $10 was incorrect. She only had to establish the existence of a contract to perform work exceeding $10 in value. That is, that the work the subject of the contract had a value in excess of $10. As she failed to establish the existence of a contract, it is not necessary to consider this point further.

CONCLUSION

It follows that the Arbitrator’s decision cannot stand. The only conclusion open is that Ms Bee has failed to establish that she was a deemed worker under Sch 1 cl 2 of the 1998 Act because there was no intention to enter into legal relations (or create contractual relations). Even if, contrary to my finding, the parties did have such an intention, the arrangement was not supported by any consideration. Thus, there is no contract to perform any work, let alone a contract to perform any work exceeding $10 in value, which is the requirement in Sch 1 cl 2.
Mr Dodd made no submission on the alternative basis on which the case was conducted before that Arbitrator, that is, that Ms Bee was a worker under s 4 of the 1998 Act. However, if there is no contract, that argument must also fail.

DECISION

The Arbitrator’s determination of 16 June 2014 is revoked and the following orders are made in its place:
“1. There is an award for the respondent employer.
2. No order as to costs.”

COSTS

Each party is to pay her or its own costs of the appeal.

Bill Roche
Deputy President

13 October 2014

I, JACQUELINE HAGGER, CERTIFY THAT THIS IS A TRUE AND ACCURATE RECORD OF THE REASONS FOR DECISION OF BILL ROCHE, DEPUTY PRESIDENT OF THE WORKERS COMPENSATION COMMISSION.

ASSOCIATE