| JURISDICTION : DISTRICT COURT OF WESTERN AUSTRALIA LOCATION : PERTH CITATION : SMITH -v- NATIONAL SCAFFOLDING PTY LTD & ORS [2005] WADC 47 CORAM : COMMISSIONER STAVRIANOU HEARD : 18 FEBRUARY 2005 DELIVERED : 15 MARCH 2005 FILE NO/S : CIV 2437 of 2001 BETWEEN : AARON JAMES SMITH Plaintiff
AND
NATIONAL SCAFFOLDING PTY LTD (ACN 085 110 827)
First Defendant
AARON MURRAY BRAY
Second Defendant
HORTLE HOMES PTY LTD (ACN 077 377 130)
Third Defendant
AARON MURRAY BRAY
Third Party
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ON APPEAL FROM:
For File No : CIV 2437 of 2001 Jurisdiction : DISTRICT COURT OF WESTERN AUSTRALIA Coram : DEPUTY REGISTRAR HEWITT File No : CIV 2437 of 2001 Catchwords: Appeal from decision of Deputy Registrar - Whether there should be a stay of proceedings - Principles for determining stay application - Section 175 of the Workers' Compensation and Rehabilitation Act 1981
Legislation: Workers' Compensation and Rehabilitation Act 1981
Result: Appeal allowed Representation:
Counsel:
Plaintiff : Mr B L Nugawela
First Defendant : Mr A Lustig
Second Defendant : No appearance
Third Defendant : Mr M L Williams
Third Party : No appearance
Solicitors:
Plaintiff : Friedman Lurie Singh & D'Angelo
First Defendant : Jackson McDonald
Second Defendant : Not applicable
Third Defendant : Phillips Fox
Third Party : Not applicable
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Case(s) referred to in judgment(s):
Berg v Hamersley Iron Pty Ltd [2005] WADC 3
Birch Investments Pty Ltd v Lim, unreported; BC880157; 12 July 1988
Christmas Island Resort Pty Ltd v Geraldton Building Co Pty Ltd (No 5) (1997) 18 WAR 334
Dey v Victorian Railways Commissioners (1949) 78 CLR 62
D'Orta-Ekenaike v Victoria Legal Aid [2005] HCA 12
Hunt v Knabe (No 2) (1992) 8 WAR 96
Hunt v Multiplex Constructions Pty Ltd [2000]WADC 175
Murcia & Associates (a firm) v Grey & Ors (2001) 25 WAR 209
Royal v Alcoa of Australia Ltd [2004] WASCA 269
Thomas v Arimco Mining Pty Ltd (2000) 24 SR (WA) 142
Wentworth v Attorney-General (NSW) (1984) 154 CLR 518
Western Metals Zinc NL v Wesfarmers Transport Ltd & Anor [2003] WASCA 152
Williams v Spautz (1992) 174 CLR 509
Case(s) also cited:
De San Miguel v Ryanex Pty Ltd [2003] WADC 263
Harvey v Aerodrome Management Services Pty Ltd [2004] WADC 115
Hastie v Iluka Midwest Ltd (2003) 32 SR (WA) 190
Jones v SNF (Australia) Pty Ltd (2002) 29 SR (WA) 164
Jones v Wesfarmers Ltd [2003] WASCA 225
Price v Resolute Resources [2002] WADC 235
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1 COMMISSIONER STAVRIANOU: This is an appeal against a judgment of a Deputy Registrar delivered 28 October 2004 by which the learned Deputy ordered that the plaintiff's action against the third defendant be stayed. An appeal from the decision of a registrar is a hearing de novo (Hunt v Knabe (No 2) (1992) 8 WAR 96).
2 By Writ of Summons filed in the Court on 19 September 2001 the plaintiff seeks to recover damages arising out of an injury he alleges he sustained on 4 April 2000. 3 The third defendant contends that it is a deemed employer of the plaintiff under s 175 of the Workers' Compensation and Rehabilitation Act 1981 ("the Act") and by virtue of the constraints upon the award of damages imposed by Division 2 of Part IV of the Act the plaintiff will be unable to obtain an award of damages against it. Accordingly it is submitted that the action is an abuse of process and should be stayed.
The pleadings and the application for stay 4 The Amended Statement of Claim dated 27 August 2003 relevantly pleads: "1. The Plaintiff was born on 27 February 1980 and was at all material times employed by Varrone Plastering Pty Ltd as a Plasterer ('the employment'). 2. The First Defendant is and was at all material times a Company duly incorporated under the Corporations Law and having its registered office with an address for service at 193 Main Street, Osborne Park, in the State of Western Australia and which carried on the business of the hire and erection of temporary scaffolding and structures. 3. At all material times the First Defendant arranged for the erection, maintenance and dismantling of the scaffold with metal rafters ('scaffold') at the premises on behalf of the Third Defendant. 4. At all material times the Second Defendant is and was a licensed scaffolder working under the supervision and direction of the First Defendant.
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5. The First Defendant engaged the services of the Second Defendant in erecting and dismantling the scaffold pleaded in paragraph 6 below. 6. At all material times the First Defendant and/or the Third Defendant occupied and controlled the premises comprising of a scaffold which was an "A" frame type with metal rafters ("scaffold") at the site at 12 Melvista Avenue, Nedlands, in the State of Western Australia and was thus an 'occupier of premises' within the meaning of Section 2 of the Occupiers' Liability Act 1985 ('The Occupiers' Liability Act'). 7. The Third Defendant is and was at all material times a Company duly incorporated under the Corporations Law and having its registered office with an address for service at Quartz Business Advisers (WA), Level 2, 11 Ventnor Avenue, West Perth, in the State of Western Australia, and which carried on the business of a builder and building a residence on the site. 8. At all material times the Third Defendant occupied and controlled the site at Melvista Avenue, Nedlands, in the State of Western Australia and was thus an 'occupier of premises' within the meaning of Section 2 of the Occupiers' Liability Act 1985 ("the Act"). 9.1 On 4 April 2000 the Plaintiff was in the course of his employment assigned by his employer Varrone Plastering Pty Ltd to work in a two storey home at the site at 12 Melvista Avenue, Nedlands ('house') where the scaffold was supplied already built by the First Defendant and installed and dismantled by the Second Defendant for the First Defendant and/or the Third Defendant or on its behalf. 9.2 The plaintiff who had been plastering and mixing mud for the external wall and upon finishing same, went to the tap to turn off the water. The tap was situated in the laundry of the house and the Plaintiff had to walk through and underneath the scaffold to get to the laundry. 9.3 As the Plaintiff was walking towards the scaffold to the laundry, suddenly and without warning whatsoever he
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Particulars of negligence of the Second Defendant
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12.4 failed to provide a safe system of work; 12.5 failed to provide a safe system of work; 12.6 exposed the Plaintiff to unnecessary risk of injuries; 12.7 failed to require the Plaintiff to wear a hard hat and/or failed to provide the Plaintiff with a hard hat." 5 The third defendant's Defence dated 3 November 2003 pleads:
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4.5 Varrone Plastering Pty Ltd employed the plaintiff in the execution of the work under the contract. 5 The third defendant denies each allegation in paragraph 12 of the statement of claim. 6. As to paragraph 13 of the statement of claim, the third defendant: 7. As to paragraph 15 of the statement of claim, the third defendant does not plead to that paragraph on the basis that it comprises of a prayer for relief. 8. By virtue of the facts admitted and pleaded above, the third defendant is a principal for the purposes of section 175 of the Workers' Compensation & Rehabilitation Act ('the Act') and is deemed by that section to be the plaintiff's employer for the purposes of the Act. 9. The plaintiff has been paid weekly payments of workers' compensation further to the Act in respect of the injuries he allegedly sustained in the accident. 10. The plaintiff has not at any material time: 11. By virtue of the facts pleaded in paragraphs 8, 9 and 10 above, the plaintiff is not entitled to be awarded damages
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against the third defendant further to section 93E(3) of the Act … " 6 The third defendant's application for a stay of proceedings was made by chamber summons dated 24 August 2004. The order sought was expressed to be a stay until the plaintiff had complied with the Act. The order made by the learned Deputy did not include the condition. 7 The application for a stay was supported by two affidavits. 8 The first affidavit was sworn by Philip Hortle on 24 August 2004. Mr Hortle deposes that he is the sole director of the third defendant and was a director of the third defendant in 1999 and 2000 when it carried on residential building work. Annexed to his affidavit is a copy of a building contract in relation to construction of a home at No 12 Melvista Avenue, Nedlands. He deposes that he entered into an agreement with a Mr Andre Varrone of Varrone Plastering Pty Ltd regarding plastering work required pursuant to the building contract. He deposes that he had observed plasterers on 4 April 2000 completing the final part of a plastering job at the site, cleaning their tools and packing up their plastering equipment. Paragraph 17 of the affidavit is as follows: "Based on my observations at the site and what I was told by Andre Varrone I believe: 17.1 the plaintiff was working at the site during the course of his employment; 17.2 the plaintiff was injured at the site during the course of his employment while performing work further to the plastering contract; and 17.3 the plastering work performed by Varrone Plastering was directly a part of the third defendant's business of home renovations." 9 The second affidavit was sworn by a solicitor acting on behalf of the third defendant. The affidavit annexes copies of medical reports of Dr Joel Silbert dated 26 October 2001 and Mr Paul Graziotti dated 8 November 2001. 10 No affidavit was filed by the plaintiff in opposition to the application.
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The power to order a stay
11 A preliminary submission was made by counsel for the appellant that the District Court did not have jurisdiction to order a stay of proceedings. It is appropriate to deal with that submission at the outset. 12 Section 50(1) of the District Court Act 1969 provides that the District Court has "the same jurisdiction to hear and determine and may exercise all the powers and authority that the Supreme Court has and may exercise from time to time in relation to … " a number of matters of which this is one. 13 Section 52 of the Act provides that: "In all respects, except as expressly provided by or under this Act, the practice and procedure of the Court as a court of civil jurisdiction including the trial of certain cases with or without a jury, shall be the same as the practice and procedure of the Supreme Court in like matters." 14 Section 53 of the Act provides that:
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the Court, the decision of the District Court Judge therein shall be conclusive." 15 Section 55 of the Act provides that: "The Court or a District Court Judge has, as regards any action or matter within its or his jurisdiction for the time being, power – (a) to grant, and shall grant, in the action or matter such relief, redress or remedy, or combination of remedies, either absolute or conditional; and (b) to make any order that could be made in regard to any action or matter, and shall in each such action or matter give such and the like effect to every ground of defence or counterclaim equitable or legal, in a full and ample manner as might and ought to be done in the like case by the Supreme Court or a Judge thereof." 16 Section 57 of the Act provides that: "(1) The several rules of law and equity enacted and declared by the Supreme Court Act 1935, shall, unless express provision is otherwise made in this Act, be in force and take effect in the Court, as far as the matters to which those rules relate are respectively cognizable by the Court. (2) Without affecting the generality of subsection (1), but subject to the express provisions of any other Act, in every action or matter commenced in the Court, law and equity shall be administered according to the provisions of section 25 of the Supreme Court Act 1935 as though that section were enacted in this Act and in terms made applicable to the Court." 17 In Murcia & Associates (a firm) v Grey & Ors (2001) 25 WAR 209 Steytler J when dealing with the power of the District Court to grant injunctive relief in relation to a solicitor said at p 214: "However the supervisory or disciplinary jurisdiction referred to in those cases is that which is part of the inherent jurisdiction of the Supreme Court and it is to that court that solicitors are
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appointed as officers upon their admission to practice. The District Court does not have a like jurisdiction, although it does have incidental powers which are necessary for the exercise of such jurisdiction as is conferred upon it (see the definition of 'jurisdiction' in s 6 of the District Court of Western Australia Act 1969 and Grassby v The Queen (1989) 168 CLR 1 at 16), and those powers are sufficient, at least, to enable it to correct irregularities in, and frauds upon, its own procedure and rules and to prevent abuses of its process: see Mason v Ryan, above, at 340 and Duncan v Lowenthal [1969] VR 180 at 182. It is unnecessary, for present purposes, to explore the full limits of those powers." 18 There are a series of decisions of this Court where a stay of proceedings has been granted to a defendant pending a plaintiff satisfying the requirements of s 93E(3) of the Act. The matter was recently considered by Dean DCJ in Berg v Hamersley Iron Pty Ltd [2005] WADC 3. In that case Her Honour (at par 19) referred to and relied upon Wentworth v Attorney-General (NSW) (1984) 154 CLR 518 and Christmas Island Resort Pty Ltd v Geraldton Building Co Pty Ltd (No 5) (1997) 18 WAR 334 in support of her determination that the Court has an inherent power to order a stay to prevent its processes from being abused. I respectfully agree with all that Her Honour has said in relation to the power to order a stay. 19 The rationale for the Court's intervention in granting a stay is to ensure that the Court can operate effectively. In Chrismas Island Resort Pty Ltd v Geraldton BuildingCo Pty Ltd (supra) at p 345, Franklyn, Owen and Parker JJ said the Court will act where "to abstain from intervening could prevent the Court from acting effectively". 20 The application for the stay in this case is made in the context of an existing action which is within the jurisdiction of the Court. The submission as to jurisdiction cannot succeed. The Court does have the power to prevent an abuse of process by ordering a stay of proceedings. 21 In the context of stays in relation to claims made against employers for damages arising out of the employment relationship, the Full Court of the Supreme Court of Western Australia in Western Metals Zinc NL v Wesfarmers Transport Ltd & Anor [2003] WASCA 152 in a judgment of the Court stated at par 3:
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"… Of course, it would plainly be vexatious to institute proceedings where there was no possibility that it could ever be established that a relevant degree of disability existed, and in an appropriate case such a proceeding might be struck out. Further, it would generally be oppressive to require a defendant to incur expense in defending proceedings where it was not clear whether or not damages could be awarded, and one would usually expect the Court to order a stay of proceedings until the provision of s 93E(3) had been complied with ..."
Deemed employment 22 In this case to obtain a stay the third defendant will need to establish that it is the plaintiff's deemed employer pursuant to s 175 of the Act. 23 Section 175 of the Act provides that: "(1) Where a person (in this section referred to as the principal) contracts with another person (in this section referred to as the contractor) for the execution of any work by or under the contractor and, in the execution of the work, a worker is employed by the contractor, both the principal and the contractor are, for the purposes of this Act, deemed to be employers of the worker so employed and are jointly and severally liable to pay any compensation which the contractor if he were the sole employer would be liable to pay under this Act. (2) The principal is entitled to indemnity from the contractor for the principal's liability under this section. (3) The principal is not liable under this section unless the work on which the worker is employed at the time of the occurrence of the disability is directly a part or process in the trade or business of the principal. (4) Where the principal and the contractor are jointly and severally liable under this section, a judgment obtained against one is not a bar to proceedings against the other except to the extent that the judgment has been satisfied. (5) Where compensation is claimed from or proceedings are taken against the principal, in the application of this Act a reference to the employer shall be read as a reference to
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the principal except where, for the purpose of calculating the amount of compensation, a reference is made to the earnings of a worker, the reference shall be read as a reference to the earnings of the worker under the contractor. (6) For the purposes of this section, where sub-contracts are made – (7) Where the disability does not occur in respect of premises on which the principal has undertaken to execute the work or which are otherwise under his control or management, subsections (1) to (6) inclusive do not apply." 24 Section 175 of the Act has been the subject of recent analysis by the Full Court of the Supreme Court of Western Australia in Royal v Alcoa of Australia Ltd[2004] WASCA 269 (23 November 2004). The appeal involved an application for leave to amend a defence to plead s 175 of the Act. 25 Each member of the Court made observations as to the proper construction of s 175 of the Act. In a detailed analysis of s 175 McLure J (at par [13]) noted that there must be a connection between the injury and the execution of the contractual works. She observed that in the phrase "in the execution of the work a worker is employed by the contractor" execution means the carrying out or performance of the work; work means work pursuant to the contract between the principal and contractor; and worker is employed means the contractor employs (uses) his worker in carrying out the work under the contract. Her Honour noted that there
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was no express requirement in subsection (1) of s 175 for a connection between the execution of the work by the worker and the injury (or disease) the subject of the claim. However, the requirement emerged when subsection (1) was read in the context of subsections (3) and (7) of s 175. Her Honour further observed that the phrase "unless the work on which the worker is employed at the time of the occurrence of the disability" in subsection (3) is a reference to the contractual work on which the worker is employed, which must coincide with the occurrence of the injury. On the facts of the case before the Court it was unnecessary in Her Honour's view to decide whether s 175 applied to an injury which occurred in the course of a break in the work which was referable and incidental to the actual performance of the contract works. However, she noted that it was arguable that injury suffered during breaks directly referable to the execution of the works may be sufficient. 26 Similarly Le Miere J (at par 41), observed that it was essential that a defendant should plead in its s 175 defence material facts sufficient to establish the relevant connection between the injury sustained and the execution of the contractual works. In his view it was necessary for there to be some temporal or causal connection between the injury to the worker and the execution of the contractual work for the principal to be deemed an employer of the worker. He agreed with McLure J that on the facts pleaded the worker's presence on the premises on instructions from his employer for the purpose of the contractual works is not, of itself, sufficient to establish the necessary connection between the injury and the execution of the contractual works.
Restrictions on awards of damages 27 If the third defendant's assertion that it is a deemed employer pursuant to s 175 of the Act is made good then the provisions of Div 2 Pt IV of the Act are applicable. In particular s 93C of the Act provides that a court is not to award damages to a person contrary to the provisions in the Division. It does not preclude the bringing of an action by an employee in circumstances where the Act does not permit the award of damages (Western Metals Zinc NL (supra); Thomas v Arimco Mining Pty Ltd (2000) 24 SR (WA) 142 at 144-145; Hunt v Multiplex Constructions Pty Ltd [2000]WADC 175, at par 18-19). 28 Section 93E of the Act restricts the right to obtain an award of damages and provides that: "(3) Damages can only be awarded if –
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For the purposes of subsection (2)(b) the worker has a significant disability if it is agreed or determined that the degree of disability is not less than 16% and that agreement or determination is recorded in accordance with the regulations." 29 The evidence is that the plaintiff has not obtained a determination or agreement as required by s 93E(3) of the Act. The defendant accordingly submits that without the plaintiff obtaining such a determination or agreement, the Court cannot award damages even if a breach of duty is established. That submission necessarily requires a finding that the third defendant was at the material time the deemed employer of the plaintiff.
Disposition of appeal 30 The third defendant's submission is that the affidavit of Mr Hortle when read with the allegations contained in the statement of claim establishes a s 175 deemed employment relationship. 31 In Dey v Victorian Railways Commissioners (1949) 78 CLR 62 at 109 Williams J said: "This jurisdiction (to strike out or stay an action) is not confined to cases where the abuse is manifest from the pleadings, the application may be supported by affidavits, and the jurisdiction may be exercised where the facts proved raise a complete legal bar to the action so that the action is vexatious in that it must fail." 32 Counsel for the plaintiff submits that the issue under s 175 requires a factual determination to be made by the Court and that it inappropriate to do so on an interlocutory basis. 33 The plaintiff has pleaded in par 9.2 of the statement of claim that he had been plastering and mixing mud for the external wall and upon
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finishing same went to the tap to turn off the water. The plaintiff thus puts in issue the temporal connection between the execution of the contractual works and the injury suffered. (See Royal [supra] at [16], [41]). The defendant relies upon the hearsay evidence of Mr Hortle that "the plaintiff was injured at the site during the course of his employment while performing work further to the plastering contact ..." Order 37, r 6(2) of the Rules of the Supreme Court permits hearsay evidence to be admitted upon an interlocutory application. The statement made by Mr Hortle is based upon his observations and what he was told by a Mr Andre Varrone. 34 In Birch Investments Pty Ltd v Lim, unreported; BC880157; 12 July 1988 Master White (as he then was) in dealing with an application for summary judgment expressed the view that notwithstanding Rule of Court which permitted the admission of hearsay evidence, where primary evidence is available, it should be placed before the Court. In this case Mr Varrone presumably would have been able to give primary evidence on oath as to what he saw. In the circumstances I am not prepared to rely upon the hearsay contained in the affidavit of Mr Hortle to determine the s 175 issue. 35 Counsel for the plaintiff further made submissions as to the proper interpretation of s 175(7) of the Act. In particular plaintiff's counsel submitted that the third defendant had not admitted the allegation in the statement of claim (par 6) as to control of the scaffolding. If it was the case that the third defendant did not have control of the scaffolding then the submission is that s 175 does not apply. The determination of the submission as to s 175(7) involves consideration of question of law and fact. The plaintiff's submissions are not so obviously untenable that they cannot possibly succeed. A full investigation of all the circumstances is required. A serious question is raised which the plaintiff should have the opportunity to have determined at trial. (Dey (supra) per Dixon J at 92). 36 In D'Orta-Ekenaike v Victoria Legal Aid [2005] HCA 12 Kirby J made the following observations in relation to the summary determination of proceedings: "227. However, the function of a court, asked to give peremptory relief that stops proceedings in their tracks, is not a mechanical one [303]. To prevent a party with an apparently serious claim from having a trial of that claim on its merits must not become an occasion to inflict
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injustice or prematurely to close the court's doors in that party's face. 228. Summary relief terminating an action, or ordering that it be permanently stayed, is only available where there is 'no risk of injustice to the plaintiffs'. Such orders are provided 'only in plain and obvious cases'. Otherwise, as Sir Thomas Bingham MR said in E (A Minor) v Dorset County Council [304], 'where the legal viability of a cause of action is unclear (perhaps because the law is in a state of transition), or in any way sensitive to the facts, an order to strike out should not be made'. In Woolcock Street Investments Pty Ltd v CDG Pty Ltd [305], I explained why the approach to such cases is one of restraint: 'Only in a clear case will answers be given, and orders made, that have the effect of denying a party its ordinary civil right to a trial. This is especially so where, as in many actions for negligence, the factual details may help to throw light on the existence of a legal cause of action – specifically a duty of care owed by the defendant to the plaintiff.' 229. Unfortunately, it has been a feature of many of the cases concerned with the existence, and scope, of the duty of care owed by lawyers to their clients (and of the immunity from suit claimed by such lawyers) that courts, determining the matter, have had to do so in proceedings such as the present. The issue has been disjoined from the evidence. Questions of law have been isolated [306]. Or the matter has been determined on pleadings without the benefit of a full consideration of the facts and findings based on a thorough appreciation of the evidence. 230. Where parties seek peremptory relief, as VLA and the barrister did in these proceedings, they cannot complain if an appellate court tests the provision of such relief against the plaintiff's case, viewed at its highest. Doing so is only fair. If a party is to be denied a trial on the merits, which is ordinarily any person's right, this should only happen
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where the facts and law combine to make the case a clear one, demanding that result and none other. …" 37 The third defendant's application is not for a summary determination of the proceedings. However before a stay can be granted in this particular case I do need to be satisfied as to the s 175 issue. I cannot be satisfied on the evidence that no issue arises under s 175. 38 A further issue arises as to the evidence adduced as to the degree of the plaintiff's disability. The third defendant relies upon the medical reports annexed to the affidavit of its solicitor to establish that the plaintiff will have a degree of disability of less than 30 per cent. The 30 per cent threshold is relevant because the evidence is that the plaintiff is out of time to elect to obtain damages even if his degree of disability is between 16 per cent and 29 per cent (s 93E(3)(b) of the Act). 39 In the report of 26 October 2001 Dr Joel Silbert assesses a permanent disability in relation to a depressed facture of the frontal sinus and ongoing headaches. He notes that further assessment is required in order to establish the nature and extent of any visual disability. No evidence has been adduced in relation to the visual disability (if any). 40 The most recent medical evidence briefed is contained in a report from Dr Paul Graziotti dated 8 November 2001. In that report Dr Graziotti does make an assessment of the plaintiff's degree of permanent disability. However, importantly the assessment is now over three years old and there is no current evidence as to the plaintiff's degree of disability. 41 There is a clear dispute in this case as to the applicability of s 175 of the Act. It is not in my view appropriate to determine that issue on affidavit evidence. 42 The onus of satisfying the Court that there is an abuse of process lies upon the party alleging it; the onus is a heavy one and the power to grant a permanent stay is one to be exercised only in the most exceptional case. (Williams v Spautz (1992) 174 CLR 509). In this case the stay granted was unconditional. I am not satisfied that the action constitutes an abuse of process. The issues raised by the plaintiff as to s 175 in response to the third defendant's submissions are arguable and the case for a stay is not so clear that the discretion should be exercised in favour of the third defendant.
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Conclusion
43 The appeal should be allowed.
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