T/E Development Group No 3 Pty Ltd v Sheremeta
[2006] NSWWCCPD 42
•10 March 2006
WORKERS COMPENSATION COMMISSION
APPEAL AGAINST A DECISION OF THE COMMISSION CONSTITUTED BY AN ARBITRATOR
CITATION:T/E Development Group No 3 Pty Ltd v Sheremeta and anor [2006] NSWWCCPD 42
APPELLANT: T/E Development Group No 3 Pty Ltd
FIRST RESPONDENT: Mykola Sheremeta
SECOND RESPONDENT: WorkCover Authority of NSW (as Administrator of the Uninsured Liability Insurance Scheme)
FILE NUMBER: WCC 16749-04
DATE OF ARBITRATOR’S DECISION: 30 June 2005
DATE OF APPEAL DECISION: 10 March 2006
SUBJECT MATTER OF DECISION: Whether the applicant was a ‘worker’ as defined in section 4 of the Workplace Injury Management and Workers Compensation Act 1998.
PRESIDENTIAL MEMBER: Acting Deputy President Robin Handley
HEARING:On the papers
REPRESENTATION: Appellant: Bolzan & Dimitri, Lawyers
FirstRespondent: Doherty Partners, Barristers & Solicitors
SecondRespondent: no appearance
ORDERS MADE ON APPEAL: The decision of the Arbitrator is confirmed.
The Appellant, T/E Development Group No 3 Pty Ltd, is to pay Mr Sheremeta’s costs in this appeal.
BACKGROUND TO THE APPEAL
On 27 July 2005, T/E Development Group No 3 Pty Ltd (‘T/EDG’) sought leave in the Workers Compensation Commission (‘the Commission’) to bring an appeal against the decision of an arbitrator dated 30 June 2005. The First Respondent to the appeal is Mykola Sheremeta. The Second Respondent is the WorkCover Authority of NSW as Administrator of the Uninsured Liability Insurance Scheme. The WorkCover Authority has not made any submission in relation to the appeal.
Mr Sheremeta was born in the Ukraine on 20 July 1950 and is aged 55. He migrated to Australia in 1998. Mr Sheremeta worked as a carpenter, although he is qualified as a civil engineer in the Ukraine. On 10 June 2003, he was working on the roof of a house being built in Newtown when a plank slipped and he fell about three and a half metres to the ground, injuring his back, right knee and lower leg. He notified T/EDG on that day and, on 29 September 2003, lodged a claim for compensation. He subsequently lodged a claim for compensation for permanent impairment and pain and suffering.
On 18 October 2004, the Commission registered Mr Sheremeta’s ‘Application to Resolve a Dispute’ in respect of his claim for permanent impairment and pain and suffering. The injury was described as “Displaced fracture right tibial plateau, bruising to the back of head, bruising to low back and concussion”. T/EDG’s solicitors’ Reply was received on 8 November 2004. On 24 January 2005 and 2 March 2005, the Arbitrator conducted teleconferences with the parties and, on 15 April 2005, conciliation having proved unsuccessful, she conducted an arbitration hearing. On 30 June 2005, she made the decision set out below.
THE DECISION UNDER REVIEW
The Certificate of Determination, dated 30 June 2006, records the Arbitrator’s orders as follows:
“Finding:
1. At the date of the injury, being 10 June 2003, the Applicant was a ‘worker’ within the meaning of section 4 of the 1998 Act.
Order:
1. I refer the question of Whole Person Impairment for assessment by an AMS [Approved Medical Specialist].”
In the Statement of Reasons for her decision, the Arbitrator noted that there was no dispute between the parties as to the fact of the injury, although the extent of the injury for the purposes of permanent impairment is disputed. The principal issue in dispute was whether Mr Sheremeta was a ‘worker’ or ‘deemed worker’ for the purposes of sections 4 and 5 and Schedule 1 of the Workplace Injury Management and Workers Compensation Act 1998 (‘the 1998 Act’). The Arbitrator set out the applicable law and examined the relationship between Mr Sheremeta and T/EDG by reference to a number of factors.
The Arbitrator concluded that having weighed all the factors and incidents of the relationship, she was satisfied that Mr Sheremeta was a ‘worker’ within the meaning of section 4 of the 1998 Act. It was therefore unnecessary to determine whether he was a ‘deemed worker’ pursuant to Schedule 1(2) of the 1998 Act. The Arbitrator noted it was not disputed that if she determined Mr Sheremeta to be a worker, then it would follow that he suffered an injury that arose out of or in the course of his employment and that such employment was a substantial contributing factor to the injury. She therefore so found and, by agreement, referred Mr Sheremeta to an Approved Medical Specialist for assessment of whole person impairment.
ISSUE IN DISPUTE
The principal issue in dispute in the appeal is whether the Arbitrator erred in finding Mr Sheremeta to be a ‘worker’. T/EDG submits the Arbitrator made errors of law and fact in her decision. The parties’ submissions are discussed below.
ON THE PAPERS REVIEW
Section 354(6) of the 1998 Act states:
“(6)If the Commission is satisfied that sufficient information has been supplied to it in connection with proceedings, the Commission may exercise functions under this Act without holding any conference or formal hearing.”
I have had regard to Practice Directions Numbers 1 and 6, the documents that are before me, and the submissions by the parties. T/EDG submits the appeal involves an important legal issue and written submissions can be expanded upon in oral argument. Mr Sheremeta’s solicitors submit the matter should be determined on the papers, there being no new issues raised and no additional evidence being required. Having considered these submissions, noting that there is adequate guidance from the courts as to the approach to be applied in determining whether a person is a ‘worker’ and, as discussed below, with my refusal of leave to admit the further evidence tendered by T/EDG, I am satisfied that I have sufficient information to proceed ‘on the papers’, without holding any conference or formal hearing, and that this is the appropriate course in the circumstances.
LEAVE
Before proceeding to deal with an appeal, the Commission must determine whether the application meets the requirements of section 352 of the 1998 Act. The appeal was lodged within 28 days of the Arbitrator’s decision in compliance with section 352(4) of the 1998 Act. With regard to section 352(2), I note Mr Sheremeta claims compensation for a 13% whole person impairment, amounting to $17,000, together with compensation of $15,000 for pain and suffering.
I am satisfied that although the Arbitrator’s decision did not involve an ‘award’, the decision does “have a real capacity to put the amount of compensation, determined by reference to the decision or the claim (Sheridan v Coles Supermarkets Australia Pty Ltd [2003] NSW WCC PD 3), in issue in the appeal (as in the case of the filing of a ‘Reply’ (ADCO Constructions Pty Ltd v Ferguson [2003] NSW WCC PD 21))” (Fletchers International Exports Pty Ltd v Regan [2004] NSW WCC PD 7 at page 5). I am therefore satisfied that the section 352 threshold has been met, and I grant leave to appeal.
FRESH EVIDENCE
Fresh evidence on appeal is governed by section 352(6) of the 1998 Act, which provides as follows:
“(6) Evidence that is fresh evidence or evidence in addition to or in substitution for the evidence received in relation to the decision appealed against may not be given on an appeal to the Commission except with the leave of the Commission.”
Practice Direction No 6 sets out the process for seeking leave of the Commission to give ‘new evidence’ on appeal. It provides as follows:
“New Evidence
Where a party seeks leave to give new evidence in relation to the decision appealed against, that party must serve a copy of the new evidence on the other parties to the dispute when serving the Application or Opposition.
In general, the Commission will allow new evidence to be introduced only where it can be demonstrated that the new evidence could not reasonably have been obtained by the party and tendered in proceedings before the Arbitrator and that failure to allow the new evidence would cause a substantial injustice in the circumstances of the individual case.”
Practice Direction No 6 also provides that if new evidence is sought to be relied upon, the Application or Opposition to the Appeal must contain:
“ -a schedule of the new evidence,
-a copy of the new evidence,
-a brief outline of the new evidence and the reasons why it was not given in the
proceedings before the Arbitrator, and
-submissions why the new evidence should be admitted.”
T/EDG seeks leave to admit various business and tax records on the basis that these are relevant to a consideration of whether Mr Sheremata was a ‘worker’ or an independent contractor. These records concern Mr Sheremeta’s registration for and payment of Goods and Services Tax ('GST'), his purchase of a Nissan utility vehicle (‘ute’), his Australian Business Name ('ABN') registration and his business card. T/EDG has not explained why this evidence was not filed with the Commission at the proper time. I note the Arbitrator declined to admit these records, excepting those relating to Mr Sheremeta’s “ute”, as late documents when they were tendered at the arbitration hearing. Having reviewed the documents now sought to be admitted, and in the light of the Arbitrator’s Statement of Reasons in which she refers to Mr Sheremeta’s tax and business arrangements, including his registration for and payment of GST, his vehicle, his ABN registration and his handyman business “Mykola & Sons”, I am not satisfied that refusal of leave to admit the documents would cause a substantial injustice to T/EDG. I therefore refuse leave to admit the documents.
SUBMISSIONS
T/EDG submits that the Arbitrator erred by failing to take into account relevant material and evidence before her indicating that Mr Sheremeta was not a ‘worker’, by refusing to properly exercise her discretion to admit relevant evidence relating to his business and tax records, by applying a subjective rather than an objective test in determining whether Mr Sheremeta was a ‘worker’, by incorrectly applying the criteria set out in Stevens v Brodribb Saw Milling Company Pty Ltd (1986) 160 CLR 16 (‘Stevens’), and by failing to find Mr Sheremeta was not a ‘worker’. T/EDG adopts the Arbitrator’s summary of its submissions at the arbitration hearing set out at paragraph 15 of her Statement of Reasons.
Mr Sheremeta’s solicitors note that the business and tax records sought to be admitted in relation to the appeal were material that would have been available to Mr Pinkewich, a director of T/EDG, who was also Mr Sheremeta’s accountant. Mr Sheremeta’s solicitors submit the material adds nothing to the evidence going to the issue of whether Mr Sheremeta was carrying on a business that was before the Arbitrator at the hearing. They submit the Arbitrator worked through all of the evidence and there is nothing to indicate that she did not approach the matter in accordance with well–established authorities and in accordance with the law.
DISCUSSION AND FINDINGS
The role of the Presidential Member on appeal is to review the Arbitrator’s decision as a whole. The review is not a rehearing. In this case, T/EDG must demonstrate that the decision of the Arbitrator is affected by some legal, factual or discretionary error (Allesch v Maunz (2000) 203 CLR 172; The King Island Company Limited v Deery [2005] NSW WCC PD 1) in order to enliven the Presidential Member’s power to interfere with the Arbitrator’s decision pursuant to section 352(7) of the 1998 Act. Where the weight accorded to the evidence by the Arbitrator is challenged, Deputy President Fleming’s comment in Knight v Eyles Nominees Pty Ltd [2004] NSW WCC PD 73 at paragraph 40 should be borne in mind:
“Interference with an Arbitrator’s discretionary judgement as to the weight of evidence should only be done where it is manifestly obvious that the discretion has so miscarried that it has not been exercised fairly and lawfully.”
As stated above, the principal issue in dispute is whether Mr Sheremeta was a ‘worker’ as defined in section 4 of the 1998 Act. The section 4 definition states:
“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) …”
The definition goes on to exclude certain categories of persons, none of which are relevant here.
In order to determine whether a person is a ‘worker’ within the section 4 definition, the indicia identified by Mason J in the High Court decision in Stevens at 24 must be considered, with a view to balancing those indicia which suggest the existence of an employment contract with those that do not. Mason J, with whom Brennan and Deane JJ agreed, identified ‘control’ as an important criterion and the following as a non-exclusive list of additional indicia:
• 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
• delegation of work by the putative employee.With regard to ‘control’, Deputy President Byron reviewed the relevant law in Zhao v Monlea Pty Ltd t/as Nordex Interiors [2003] NSW WCC PD 11 (‘Zhao’). He noted, at paragraph 44, that:
“in Hollis v Vabu Pty Ltd (2001) 207 CLR 21, the High Court agreed with Mason J in Stevens v Brodribb Sawmilling Pty Ltd (supra) that the test was not the exercise of control per se, but the right to exercise control, and further, that control is not the only relevant factor. Rather it is the totality of the relationship between the parties that must be considered.”
This was emphasised by Walker J in Cartner v Barclay [2002] 9 NSWCC 9 in his summary of the applicable principles, and, recently, by Deputy President Fleming in her decision in Qantas Airways Ltd vCampisi [2005] NSW WCC PD 13.
The Arbitrator reviewed the relevant authorities in her Statement of Reasons and then proceeded to make findings under a number of headings. Under her first heading, “The Business Arrangements”, the Arbitrator considered the relationship between Mr Sheremeta and Mr Pinkewich, who is also of Ukrainian background, going back some nine years, how Mr Pinkewich undertook Mr Sheremeta’s accounting work after he migrated to Australia, and how they entered into an oral agreement in July 2002 for Mr Sheremeta to undertake general carpentry and occasional welding work for T/EDG. When Mr Sheremeta applied for a carpenter’s licence in about February 2003, Mr Pinkewich wrote him references and stated T/EDG and another company had employed/engaged Mr Sheremeta as a carpenter-joiner since February 2002.
The Arbitrator found Mr Sheremeta had worked consistently on a daily basis for Mr Pinkewich and the companies he controlled from July 2002, and that he was paid on the basis of invoices detailing the hours worked. Mr Sheremeta claimed Mr Pinkewich told him the invoices had to show his ABN and detail the GST payable. These invoices were submitted to T/EDG or one of the other companies, and Mr Sheremeta was usually paid by cheque or by electronic transfer to his personal account. The Arbitrator found Mr Sheremeta was generally paid about $1,200 per week, although he was only paid for the hours worked and did not receive holiday pay or sick leave. The Arbitrator found that as at 10 June 2003, the business arrangements between the parties “are more strongly indicative of an employment relationship and of a contract of service than they are of a relationship of principal and independent contractor”.
Under her second heading, “Tax Documentation and mode of remuneration”, the Arbitrator noted that T/EDG relied heavily on the fact that Mr Sheremeta lodged tax returns in the name of his ABN registered business “Mykola & Sons”, claiming business deductions, and lodged Business Activity Statements (‘BAS’) for GST purposes. The Arbitrator found this “holding out” was only to the Australian Taxation Office and not to the world at large. As indicated in Campisi, a person could simultaneously be considered as a contractor for taxation purposes but a ‘worker’ for the purposes of State workers compensation legislation. The Arbitrator noted that Mr Pinkewich, a Director of T/EDG and a member of the Ukrainian community who understood the Australian system, was also Mr Sheremeta’s accountant and that Mr Sheremeta relied upon his advice. Thus, it would be unsafe to place too much weight on the taxation and business documentation. The Arbitrator therefore did not accept T/EDG’s submission that this factor evidenced that Mr Sheremeta was an independent contractor.
Under her third heading, “The ‘control test’”, the Arbitrator found Mr Sheremeta was allocated specific jobs/tasks to do each day by the licensed builder on site, and he did not know from day to day what specific tasks he would be undertaking or on which sites he would be working. The Arbitrator therefore found Mr Sheremeta “was subject to the actual and continuing direction and control of the First Respondent or its agents”.
The Arbitrator’s fourth heading was “The right to have a certain person perform the work/non-delegation of the performance of work”. She found Mr Sheremeta had contracted with T/EDG “to provide his services personally and that he had no power to delegate the performance of his work to any other person”. Moreover, there was no evidence of such delegation. The Arbitrator found this to be “another factor that suggests clearly that the Applicant was in an employment relationship with the First Respondent”.
The fifth heading was “Continuous, exclusive service and control of allocation of work”. The Arbitrator found Mr Sheremeta was working exclusively for T/EDG at the relevant time and had done so for many months. He was essentially working full-time with occasional weekend work as well. Even though his business “Mykola & Sons” was still registered, and he completed BAS forms and collected GST, the Arbitrator said “I do not accept that they reflected the reality of the relationship between the Applicant and the First Respondent”. Mr Sheremeta “was not a person who could be said to be carrying on a business on his own. His business was effectively ‘integrated’ or ‘assimilated’ into the larger organisation”.
With regard to “Workers Compensation insurance”, the sixth heading, the Arbitrator noted that although T/EDG claimed that it had told Mr Sheremeta to organise his own insurance, he denied this. The Arbitrator was not satisfied of the facts relied on by T/EDG and found this factor provided no assistance in her determination.
The seventh heading was “The provision of materials, tools, equipment and a uniform”. The Arbitrator found Mr Sheremeta provided some of his own hand tools and also bought tools on behalf of T/EDG for which he was reimbursed. The Arbitrator noted “current industry practice and the widespread use of professional tradespersons who are employees using their own tools”. On balance, the Arbitrator found the facts to be indicative of an employment relationship.
Under her final heading, “Other factors”, the Arbitrator noted that after the accident, T/EDG continued to pay Mr Sheremeta wages and also medical expenses until 8 August 2003. The Arbitrator did not accept Mr Pinkewich’s explanation that these payments “were motivated not by legal obligation but by an ‘act of goodwill’ aimed at preserving their business relationship”. She found they suggested “an employment relationship and some sense of obligation to the Applicant following the injury, albeit a position from which the First Respondent later resiled”.
The Arbitrator said that having weighed all the factors and indicia of the relationship, she was satisfied on balance that, at the relevant date, Mr Sheremeta was a ‘worker’ within the meaning of section 4 of the 1998 Act.
Turning to the High Court decision in Stevens, the criterion of ‘control’ and the other additional indicia identified by Mason J referred to above, it is clear to me that the Arbitrator properly turned her mind both to ‘control’ and to all the other additional indicia identified. Even though the Arbitrator may not have admitted late documents tendered by T/EDG comprising business and tax records relating to Mr Sheremeta, she undoubtedly considered Mr Sheremeta’s business and tax arrangements, of which those documents appear to be evidence, noting the arrangements appear to have been made for him on the advice of Mr Pinkewich, who was also Mr Sheremeta’s accountant and on whom he relied.
In my view, there is nothing to indicate the Arbitrator made any error of law or fact in her decision and I am satisfied that she properly exercised her discretion in weighing up the relevant factors in making her decision. Indeed, her Statement of Reasons appears to be a careful and thorough analysis of the relevant law and facts. The decision of the Arbitrator must therefore be confirmed. Mr Sheremeta should now be referred to an Approved Medical Specialist for assessment, in accordance with the Arbitrator’s determination.
DECISION
The decision of the Arbitrator is confirmed.
COSTS
The Appellant, T/E Development Group No 3 Pty Ltd, is to pay Mr Sheremeta’s costs in this appeal.
Robin Handley
Acting Deputy President
10 March 2006
I CERTIFY THAT THIS IS A TRUE AND ACCURATE RECORD OF THE REASONS FOR DECISION OF ROBIN HANDLEY, ACTING DEPUTY PRESIDENT OF THE WORKERS COMPENSATION COMMISSION.
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