Workcover Authority of New South Wales v Wightman and 2 Ors

[2001] NSWCA 362

CITATION:	Workcover Authority of New South Wales v Wightman & 2 Ors [2001] NSWCA 362
FILE NUMBER(S):	CA 40878/00
HEARING DATE(S):	4 September 2001
JUDGMENT DATE:	11 October 2001
PARTIES :	Workcover Authority of New South Wales - Appellant Jeffrey Phillip Wightman - 1st Respondent B M Culley & Associates Pty Ltd - 2nd Respondent S J Turnbull Constructions Pty Ltd - 3rd Respondent
JUDGMENT OF:	Priestley JA at 1; Stein JA at 2; Davies AJA at 30

LOWER COURT JURISDICTION :	Compensation Court
LOWER COURT FILE NUMBER(S) :	CC 10363/96
LOWER COURT JUDICIAL OFFICER :	Judge Walker QC

COUNSEL:	P M Hall QC/A J Candy/J A Kernick - Appellant J D Hislop QC/M S Choat - 1st Respondent L C King SC/M R Gracie - 2nd Respondent
SOLICITORS:	Workcover Authority of New South Wales - Appellant Sommerville & Co - 1st Respondent Vanderwords - 2nd Respondent Giles Payne & Co - 3rd Respondent
CATCHWORDS:	TORTS - negligence - liability - Workers Compensation Act 1987 - deemed worker - employer uninsured - whether a party was a 'principal' - whether compensation can be ordered against appellant where judge noted a non-party was the principal - whether a positive finding made - CONTRACT - sub contractor - whether a contractual relationship existed - ND
LEGISLATION CITED:	Workers Compensation Act 1987 Workplace Injury Management Act 1998 Compensation Court Rules 1990
CASES CITED:	n/a
DECISION:	1) Appeal dismissed. 2) Appellant to pay costs of the first respondent on appeal. 3) Cross-appeal dismissed with no order as to costs. 4) The appellant and second respondent to lodge written submissions with respect to costs within 7 days.

IN THE SUPREME COURT
OF NEW SOUTH WALES
COURT OF APPEAL

CA 40878/00
CC 10363/96

PRIESTLEY JA

STEIN JA

DAVIES AJA

Thursday, 11 October 2001

WORKCOVER AUTHORITY OF NEW SOUTH WALES v Jeffrey Phillip WIGHTMAN & ORS

An award was made in the Compensation Court in favour of the first respondent against the third respondent, the principal contractor under s20 of the Workers Compensation Act 1987, for compensation for injuries arising out of a workplace accident. As the third respondent was uninsured, the appellant was ordered to pay the compensation awarded. The first respondent was the deemed worker of the third respondent, who was then engaged by the second respondent. A company called Ausdef Project Management Pty Ltd was described in the documents as ‘the Proprietor’. Ausdef had paid for the services of the third respondent, via the second respondent. Ausdef was not a party to the workers compensation proceedings. The third respondent had applied for Ausdef to be joined, however the trial judge declined to do so as it would involve an adjournment of the proceedings. The trial judge made a finding that the second respondent was not the principal contractor, and went on to note that in his view Ausdef was a principal contractor. The appellant appealed, submitting that the trial judge having formed a view that Ausdef was a principal, erred in ordering the appellant to pay the first respondent’s compensation.

Held:

Per Stein JA (Priestley JA and Davies AJA agreeing):

1) The trial judge clearly found that the 2nd respondent was not a principal contractor under s20 of the Workers Compensation Act 1987.

2) The statement by the trial judge that Ausdef was a principal contractor was unnecessary, and his Honour was doing no more than proffering a view or opinion. When considered in conjunction with the language of the finding against the second respondent, it is clear that there was no positive finding made against Ausdef under s20. Ausdef was not a party and whether it was a s20 principal was not an issue squarely before the court.

Orders:

1) Appeal dismissed.

2) Appellant to pay the costs of the first respondent in the appeal.

3) Cross-appeal dismissed with no order as to costs.

4) Appellant and second respondent to lodge written submissions on costs as between them within 7 days.

IN THE SUPREME COURT
OF NEW SOUTH WALES
COURT OF APPEAL

CA 40878/00
CC 10363/96

PRIESTLEY JA

STEIN JA

DAVIES AJA

Thursday, 11 October 2001

WORKCOVER AUTHORITY OF NEW SOUTH WALES v Jeffrey Phillip WIGHTMAN & ORS


Judgment

I agree with Stein JA.

In the Compensation Court Judge Walker QC made an award in favour of the first respondent, Jeffrey Phillip Wightman, against the third respondent, S J Turnbull Constructions Pty Ltd (Turnbull). Because Turnbull was uninsured, Workcover was ordered to pay the compensation awarded. His Honour also found an award in favour of the second respondent, B M Culley & Associates Pty Ltd (Culley).

3 The case was a complicated one with many issues. Apparently, there had been a history of litigation in the Compensation Court between the parties.

4 Mr Wightman’s claim arose out of an injury he suffered on 30 September 1995 when he was working as a carpenter on a building site at Dee Why. He was employed by Turnbull, which was, as indicated above, uninsured. Turnbull had quoted for the carpentry work on the site to a Mr Jeff Smith of Culley. Turnbull was paid by Ausdef Project Management Pty Ltd (Ausdef) via Culley, which was described in the contract documents before the Court as ‘The Construction Manager’. Ausdef was therein described as ‘the Proprietor’.

5 His Honour found that Mr Wightman was a deemed worker under the Workers’ Compensation Act 1987 (the Act), a finding which is not challenged. Having found that Turnbull was uninsured, his Honour went on to find that Culley was not a principal within s20 of the Act. I will return to the specific findings concerning principals in a moment. Before doing so, it is helpful to indicate the issues arising on the appeal.

6 Workcover’s Notice of Appeal specifies one ground. In essence it says that, having formed a view that Ausdef was a principal within s20 of the Act, his Honour erred in ordering the appellant to pay compensation to the first respondent out of the fund constituted by s34 of the Workplace Injury Management Act 1998.

7 There was an earlier ground of appeal directed against Culley, but this was abandoned.

8 The deemed worker, Mr Wightman, has filed a defensive cross-appeal to be relied upon in the event that the Court accepts the case urged by the appellant.

9 Before turning to his Honour’s judgment, it is pertinent to examine how the case was conducted below.

10 The Answer filed by Culley did not raise any issue relating to s20 of the Act. The Answer by Workcover pleaded that the applicant was employed directly by Turnbull and ‘[Culley] is a principal of [Turnbull] in terms of Section 20 and the Applicant is not eligible to make a claim under the Uninsured Liability and Indemnity Scheme by operation of Section 140(4)’.

11 The hearing commenced on 18 October 1999. The transcript notes that an application was made to adjourn the proceedings but was refused. We have been informed from the bar table that Turnbull applied to join Ausdef to the proceedings but his Honour declined to do since it would involve an adjournment. Given the issues seen to arise on the pleadings, it is unsurprising that the application was refused. The hearing continued through the 19th October and was adjourned part-heard to 25 May 2000. On that day counsel for Workcover called Mr Turnbull, the principal of S J Turnbull Constructions Pty Ltd. It is plain that in doing so he was seeking to support the defence filed that Culley was the principal of Turnbull. Counsel for Culley cross-examined Mr Turnbull. Turnbull agreed that while his accounts were presented to Culley for payment, he knew that payments would be made by Ausdef.

12 At the conclusion of the evidence it appears that counsel agreed with his Honour that they would file written submissions. In the course of discussion about this his Honour asked counsel what they saw as the issues arising for consideration. Counsel for Culley raised the issue that his client was not a s20 principal. Counsel for Turnbull also raised certain matters. His Honour then asked counsel for Workcover for his assistance. His sole contribution was to raise the question of whether it had been conceded that Turnbull was uninsured and informed his Honour that his instructions were that it was uninsured. No mention was made to the effect that Workcover submitted that Ausdef was a principal, and it must be kept in mind that it had not so pleaded.

13 The parties lodged written submissions. Workcover’s submission relevantly stated that the required elements of s20 had been made out against Culley. Alternatively, it was argued that the required elements had been made out against Ausdef, although noting that it was not a party to the proceedings. The submission then developed reasons, by reference to the evidence, upon which it relied to support its primary case against Culley. No further mention was made of the alternative proposition and no evidence was relied on as supporting it. As noted earlier, Workcover had not raised any such defence, as regards Ausdef, in its Answer.

14 Culley’s submission was that it was not a s20 principal, pointing to evidence which supported such a conclusion. Counsel stressed that there was no contractual relationship between Culley and Turnbull.

15 The applicant worker’s written submission curiously adopted Workcover’s submission on s20. It is plain that counsel then engaged had not completely thought through the implications of such a broad adoption.

16 In his judgment, Walker CCJ noted that Culley denied that it was a s20 principal while Workcover submitted the opposing view. Indeed, this had been clearly raised by the parties as the s20 issue for the Court to determine.

17 His Honour specified the conditions necessary to establish liability under s20 of the Act and referred to relevant authority, later returning to what he identified as being the resolution of the s20 issue. In a later reference to the evidence he concluded:

To my mind the contract speaks for itself. The work undertaken by the first respondent [Culley] was that of construction manager not general carpentry. The distinction here from the situation in Easton case is that there was an unbroken chain of contractors doing the same work. In this case the first respondent’s role is that of the agent for Ausdef Project Management Pty Ltd and the third respondent’s [Turnbull] contract makes it abundantly clear that the first respondent is not doing the work of a builder.

18 His Honour continued:

Accordingly I determine that the first respondent [Culley] is not a principal contractor within the meaning of s20.

19 This is a very clear finding that, on the evidence, Culley was not a s20 principal. It was a finding against the primary case advanced by Workcover.

20 His Honour did not need to add anything more. This, in conjunction with other findings, was sufficient for an award to be made against Turnbull and an order that Workcover meet it out of the Fund since Turnbull was uninsured.

21 However, his Honour went further and stated:

Ausdef Project Management Pty Ltd is in my view a principal contractor but is not a party to the current proceedings.

22 This was not a necessary finding, if indeed it is one at all. On its face it is not a finding that Ausdef was a s20 principal, and his Honour did not examine the other elements of the provision as far as concerns Ausdef. His Honour did not proceed to conclude that s140(4) of the Act was engaged. When considered in conjunction with the emphatic language of the finding with respect to Culley and the lack of reference to Ausdef in his Honour’s summary of findings, it is clear that there was no positive finding made against Ausdef.

23 Section 140(4) provides that a claim shall not be made against the Scheme if the claimant is entitled under s20 to claim compensation against a principal within s20. Senior counsel for Workcover on the appeal informed the Court that Ausdef is insured.

24 It beggars belief why Workcover did not inform the trial judge of this situation and seek to add Ausdef as a party to the proceedings, as it was entitled to do under s144(2)(b) of the Act.

25 Bearing in mind the failure of Workcover to plead any s20 issue regarding Ausdef and its failure to inform the judge that it submitted in the alternative that Ausdef was a principal, except in the most elliptical way, it was unnecessary for his Honour to determine whether or not Ausdef was a principal. This is especially so when it is remembered that Ausdef was not a party to the proceedings and the issue was never properly explored. Rather, the s20 issue which was explored at the trial was the position of Culley.

26 In my view, his Honour was doing no more than proffering a view, no doubt garnered from the documents before the Court, that Ausdef was a principal. It was an unnecessary statement. It was not responding to any issue squarely before the Court. His Honour could have said, I find that Culley is not a s20 principal, and left it at that. That would have determined the issue raised. Alternatively, he could have said that it may be that Ausdef is a principal, but it is not a party and I do not need to make a finding.

27 If his Honour had done this, there could, I believe be no criticism.

28 When judged in its proper context (the pleadings and the way the case was run) what his Honour said was no more than surplusage and was unnecessary. In any event, his Honour did not specifically find that Ausdef was a s20 principal. That is, that the worker had an entitlement to claim against Ausdef under s20. Mr Hall QC argues that such a finding is implicit. I do not accept that this is so.

29 It follows, in my opinion, that the appeal should be dismissed. The appellant should pay the costs of the first respondent of the appeal. The cross-appeal is dismissed with no order as to costs. Since there is a costs dispute between the appellant and the second respondent caused by the amendment of the Notice of Appeal, those parties should lodge written submissions within 7 days and the Court will determine on the papers what orders should be made.

I have had an opportunity to read the reasons for judgment of Stein JA. I agree with them and the orders proposed but would add a few words of my own.

31 At the relevant time, s 140 of the Workers Compensation Act, 1987 ("the Act") provided, inter alia:-

" 140 Persons eligible to make claims
(1) A claim may be made under the Scheme by any person who considers he or she has a claim for compensation under this Act against an employer in respect of an injury to a worker, if the employer

(a) had not obtained, or was not maintaining in force, a policy of insurance for the full amount of the employer's liability under this Act in respect of the injured worker at the relevant time, or

…
(4) A claim shall not be made under the Scheme if the person claiming the compensation is entitled under section 20 to claim compensation against a principal within the meaning of section 20."

32 Section 20(1) of the Act provided:-

" 20 Principal liable to pay compensation to workers employed by contractors in certain cases
(1) If any person (in this section referred to as the principal ) in the course of or for the purposes of the person's trade or business, contracts with any other person (in this section referred to as the contractor ) for the execution by or under the contractor of the whole or any part of any work undertaken by the principal, the principal is, if the contractor does not have a policy of insurance or is not a self-insurer at the time a worker employed in the execution of the work receives an injury, liable to pay any compensation under this Act which the principal would have been liable to pay if that worker had been immediately employed by the principal."

33 When the matter came on for hearing in the Compensation Court of New South Wales before his Honour Judge Walker, the parties were Jeffrey Phillip Wightman, the applicant ("Wightman"), S J Turnbull Constructions Pty Limited ("Turnbull"), to whom Wightman was contracted, B M Culley & Associates Pty Limited ("Culley"), the construction manager of the building project, and Workcover Authority of New South Wales ("Workcover"). Turnbull was not insured under the Act.

34 Wightman claimed compensation from Turnbull alleging that Turnbull was his employer, either in the ordinary sense or under s 20(1) of the Act. As Turnbull was uninsured, Wightman also claimed against Workcover under s 140(1) of the Act. Wightman also claimed compensation from Culley, relying upon s 20(1). Culley was insured under the Act.

35 In its answer, Workcover alleged that Culley was a relevant principal under s 20(1) of the Act and that Wightman was, by virtue of s 140(4), not eligible to claim under the Uninsured Liability and Indemnity Scheme. The answer also, alternatively, claimed that Wightman was employed directly by Culley.

36 When the matter came on for hearing before the trial Judge, Turnbull sought an adjournment to permit the joinder of Ausdef Project Management Pty Limited ("Ausdef"), which company, Turnbull alleged, might be the principal contractor in terms of s 20(1), rather than Culley. The trial Judge refused the adjournment. It may be assumed that the other parties either objected to the adjournment or did not join in the application. Of course, any liability on the part of Ausdef had not been raised neither in the claim nor in any of the answers filed in the Court.

37 The matter thus proceeded on the footing that the matter in dispute was a matter which concerned the parties before the Court and that the issues to be determined were set out in the application for determination and the answers filed in the Court.

38 After viewing a contract which was expressed to be entered into by Ausdef as proprietor and Turnbull as contractor and which specifically made the point that Culley was the construction manager, not the builder of the project, and after hearing evidence that Turnbull was paid by Ausdef, not Culley, the trial Judge understandably held that Culley was not a principal contractor of Wightman for the purposes of s 20(1).

39 The trial Judge stated:-

"390. Ausdef Project Management Pty Ltd is in my view a principal contractor but is not a party to the current proceedings."

40 Accordingly, his Honour made an award in favour of Wightman against Turnbull and ordered that, as Turnbull was not insured, Workcover cause payment of the compensation and costs to be made out of the Uninsured Liability Fund constituted for the purposes of the Uninsured Liability and Indemnity Scheme.

41 In this appeal, Mr P M Hall QC, with whom Mr A J Candy of counsel and Mr J A Kernick of counsel appeared for the appellant, relied upon an affidavit deposing that Ausdef was insured under the Act at the relevant time. He submitted that Parliament intended by s 140(4) that the Scheme would not be liable in the situation where the worker was entitled to recover from a person who was a principal contractor under s 20(1) of the Act.

42 However, as Stein JA has pointed out, as Ausdef was not a party in the proceedings below, it was not established that Wightman was entitled to claim compensation against Ausdef. Entitlement to claim against Ausdef would not exist unless there was a liability on the part of Ausdef to pay compensation. A finding to that effect could not be made unless Ausdef was a party to proceedings in which that fact was established.

43 Mr Hall submitted that there was an obligation on the part of Wightman to prove that he was not entitled to claim compensation from Ausdef. In my opinion, that was not so. The matter proceeded by way of a claim under s 140(1) on the allegation that Wightman was entitled to claim compensation from Turnbull and that Turnbull was uninsured. An alternative claim was made by Wightman that he was entitled to claim compensation from Culley. He succeeded on the first claim but not the alternative claim. Workcover was joined in the proceedings and was entitled to raise, by its answer, any issue which it considered to be relevant. It chose to contend, in its answer, that Wightman was entitled to claim compensation from Culley and that Culley was insured. That answer failed.

44 Although the Compensation Court of New South Wales is not a court governed by pleadings and a trial Judge must endeavour to do justice to the parties in accordance with the Act, it is not irrelevant that Pt 11 r 3 of the Compensation Court Rules, 1990 provides, inter alia:-

" 3 Answer
(1) A respondent to proceedings may, not later than 28 days after service on him of the originating process in the proceedings, file, and serve on all other parties to the proceedings, an answer setting out:


(a) any grounds on which he intends to deny wholly or partially the applicant's claim,

…

(2) Without limiting the generality of subrule (1), where a respondent intends:


(a) to deny wholly or partially that he is liable to pay to the applicant the compensation claimed or that the applicant is entitled to the relief sought, he shall set out in his answer a statement of the grounds on which and the extent to which he denies that he is so liable or that the applicant is so entitled, or

(b) to rely upon the fact that:


(i) any notice of injury or of incapacity or death was not given as required by the Workers Compensation Acts and the respondent is prejudiced in his defence by the want of that notice, or

(ii) that the claim for compensation was not made within the time limited by the Workers Compensation Acts,

he shall set out in his answer a detailed statement of that fact.

(3) A respondent shall not, at any hearing of the proceedings, except by consent of the applicant or by leave, given on terms, of the Court, raise any matter of defence not raised in the answer filed by him under this rule."

45 In the proceedings before the trial Judge, Workcover did not seek leave to rely upon the point that Wightman was entitled to claim compensation from Ausdef as a principal contractor and that Ausdef was insured. No such leave was given. Indeed, if an application for leave had been sought, it would have been refused having regard to Workcover's objection to or failure to support Turnbull's application at the commencement of the trial for an adjournment to permit the joinder of Ausdef. Once the adjournment had been refused, all parties necessarily proceeded on the footing that the issues before the Court did not include an issue in respect of which the joinder of Ausdef was essential.

46 The trial Judge was correct in dealing with the matter having regard to the claim and the answers which were before him.

47 I agree with the orders proposed by Stein JA.