Zhao v Monlea Pty Ltd t/as Nordex Interiors
[2003] NSWWCCPD 11
•16 April 2003
APPEAL AGAINST A DECISION OF THE COMMISSION CONSTITUTED BY AN ARBITRATOR
__________________________________________________________________
| CITATION: | Yu Cang Zhao v Monlea Pty Ltd trading as Nordex Interiors [2003] WCC PD11 |
| APPELLANT: | Yu Cang Zhao |
| RESPONDENT: | Monlea Pty Ltd trading as Nordex Interiors |
| INSURER: | Allianz Australia Workers Compensation (NSW) Limited |
| FILE NO: | WCC302 – 2002 |
| DATE OF DECISION: | 16 April, 2003 |
| PRESIDENTIAL MEMBER: | Deputy President Gary Byron |
| DECISION UNDER APPEAL: | The Applicant did not receive an injury arising out of or in the course of his employment as he was not a worker within the meaning of the Workplace Injury Management and Workers Compensation Act 1998. |
| DATE OF DECISION UNDER APPEAL: | 30 October, 2002 |
| HEARING: | 7 March, 2003 |
| REPRESENTATION: | Appellant: |
| Mr. B. Sullivan instructed by Keddies Litigation Lawyers | |
| Respondent: | |
| Mr. D. Dickinson instructed by Dexter Healey, Solicitors | |
| ORDERS MADE ON APPEAL: | The Appeal is not allowed. The decision appealed against is confirmed. No order is made as to costs |
THE APPEAL
On 29 November, 2002, the Applicant Yu Cang Zhao (‘the Appellant’) lodged an appeal with the Workers Compensation Commission (‘the Commission’) against a decision made by the Commission constituted by an Arbitrator, that he did not receive an injury arising out of or in the course of his employment with Monlea Pty Ltd trading as Nordex Interiors (‘the Respondent’) as he was not a worker within the meaning of the Workplace Injury Management and Workers Compensation Act 1998 (‘the Act’) and consequently, the Respondent is not liable for the Applicant’s claim for weekly compensation.
Having made this decision, the Arbitrator stated that it was unnecessary for her to determine the other issues in dispute, as having determined that the Applicant (Appellant) was not a worker within the meaning of the Act she lacked the jurisdiction to make the orders sought. The issues in dispute before the Arbitrator, as summarised by her, were:
· Is the Applicant a worker as defined? (WIMWCA s 4)
· Did the Applicant receive an injury arising out of or in the course of employment? (WCA s 9) (WCA s 10)
· Was the Applicant totally or partially incapacitated for work as a result of his or her (sic) injuries? (WCA s 33)
· Is the Applicant precluded from compensation because the Applicant failed to provide notice of injury to the employer as soon as possible after the injury? (WIMWCA s 254)
· Is the Applicant precluded from compensation because he failed to make the claim within the 6 month limitation period?
The reference ‘WCA’ is to the Workers Compensation Act 1987 (‘the 1987 Act’).
THE ISSUES IN DISPUTE IN THE APPEAL
The Appellant’s “grounds of appeal” were lodged with and were attached to the document, “Appeal Against Decision of Arbitrator”, received in the Commission on 29 November, 2002. They were repeated in further documents lodged by the Appellant in the Commission on 12 December, 2002, in response to Directions issued on 3 December, 2002. The grounds are stated as follows:
(1)The Arbitrator erred in finding that the Applicant was not a worker.
(2)The Arbitrator erred in law in the exercise of her discretion in that she failed to take into account the relevant factors to establish that the Applicant was a worker.
(3)The Arbitrator erred in failing to apply Stevens v Brodribb Sawmilling Company Pty Limited (1986) 160 CLR 16.
(4)The Arbitrator erred in the exercise of its (sic) discretion in failing to take into account the documentary evidence relevant to payment.
(5)The Arbitrator erred in finding that the Applicant did not receive an injury arising out of the course of his employment.
(6)The Arbitrator erred in failing to ensure that the Applicant received procedural fairness in the conduct of the proceedings.
In the documents lodged in the Commission by the Appellant on 12 December, 2002 the last ground was expanded by the insertion of the words “and was denied natural justice” following the words “procedural fairness”.
All “grounds” are disputed by the Respondent who submitted that the appeal ought not to be allowed.
JURISDICTION TO HEAR THE APPEAL
Section 352 of the Act provides:
352Appeal against decision of Commission constituted by Arbitrator
(1)A party to a dispute in connection with a claim for compensation may, with leave of the Commission constituted by a Presidential member, appeal to the Commission as so constituted against a decision in respect of the dispute by the Commission constituted by an Arbitrator.
(2)The Commission is not to grant leave to appeal unless the amount of compensation at issue on the appeal is both:
(a)at least $5,000 (or such other amount as may be prescribed by the regulations), and
(b)at least 20% of the amount awarded in the decision appealed against.
(3)If the Commission refuses to grant leave to appeal, the Commission must state reasons for the refusal in writing to the parties.
(4)An appeal can only be made within 28 days after the making of the decision appealed against.
(5)An appeal under this section is to be by way of review of the decision appealed against.
(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.
(7)On appeal, the decision may be confirmed or may be revoked and a new decision made in its place.
(8)In this section, decision includes an award, interim award, order, determination, ruling and direction.
Leave to appeal was granted on 14 February, 2003.
The matter was set down for hearing at the Commission on 7 March, 2003. On that date, Mr. B. O’Sullivan instructed by Keddies Litigation Lawyers appeared for the Appellant and Mr. D. Dickinson instructed by Dexter Healey Solicitors appeared for the Respondent.
THE EVIDENCE
The evidence before the Commission constituted by the Arbitrator is detailed in her ‘Statement of Reasons for Decision’ (‘reasons’) dated 30 October, 2002. A ‘Certificate of Determination’ was issued on the same date. That evidence is before me on appeal and is comprised of:
For the Applicant
·Statement of Yu Cang Zhao dated 19 September, 2002
·Sworn oral evidence of Yu Cang Zhao taken before the Arbitrator and set out in the transcript of the proceedings which were recorded
·Record of Hours – 3 May, 2000 – 30 June, 2000
·Invoices for work – 15 August, 2001 and 28 September, 2001
·Notes of Payment – 1 July, 2001 – 16 September, 2001
The Arbitrator, in referring to the documentary evidence said:
“Medical reports were in evidence however it was unnecessary to have regard to them in making the determination as the claim was determined on a jurisdictional point.
The applicant sought to rely upon documentary evidence not provided in the application and for which no statement had been made pursuant to section 290 of the WIMWCA 1998 and Rule 16 of the Interim Rules of the Commission. The documents are a private record of hours worked per day for the period 3/5/00 to 30/6/00, and invoices for periods Invoices for work (sic) 15/8/01; 28/9/01 and also personal notes of payment for the period 1/7/01 to 16/9/01. The fundamental issue to be determined is whether the applicant is a worker. Evidence of payment is therefore critical to the claim. The applicant did not provide those documents, nor make any statement of an intention to rely on such documents in the application. It is therefore necessary, in special circumstances where “employment” is disputed to allow the introduction of the evidence pursuant to Interim Rule 16, sub-rule 3 in order to avoid an injustice.”For the Respondent
·Statement of Roland Nilsson dated 12 June, 2002
·Statement of Darren Carre dated 13 June, 2002
·Individual Tax Returns for Yu Cang Zhao for the years ended 30 June, 1999, 2000 and 2001
·Business Activity Statement of Yu Cang Zhao for the period 1 July, 2001 – 30 September, 2001
·GIO Insurance Claim
In relation to the documentary evidence the Arbitrator said:
“The respondent sought to rely on further evidence after the close of the hearing. This evidence was not considered as it was not properly before the Commission, the hearing had closed pending legal submissions.
Medical Reports were in evidence however it was unnecessary to have regard to them in making the determination as the claim was determined on a jurisdictional point.”At paragraph 38 of her reasons, the Arbitrator further stated:
The respondent in turn also sought to rely upon documentary evidence not provided in the reply and for which no statement had been made declaring an intention to rely on such evidence pursuant to section 290 of the WIMWCA 1998 and Rule 27 of the Interim Rules of the Commission. The respondent sought to rely upon the applicant’s individual Tax Returns for the years ended June 30 1999/2000/2001, Business Activity Statement for the period 1/7/01 – 30/9/01 and a Personal Accident claim to GIO. As the applicant had introduced additional evidence in respect of his payment, I find that in these special circumstances, there would be an injustice if the documents were not allowed. The documents are of direct relevance to the issues in dispute.”
The Appellant lodged an ‘Application to Resolve a Dispute’ with the Commission on 20 September, 2001. He claimed that he suffered an injury that arose out of and in the course of his employment as a plasterer with the Respondent and as a result, he was totally incapacitated for work. The Appellant claimed that he was on his way to work when the injury occurred. He said that he was walking down a flight of stairs at the University of Technology when he slipped and fell, hitting his head against the wall and then landed on his back. He said that he injured his neck, head, left leg, left hand, left arm and left forearm. At the time he said that he was employed by the Respondent as a plasterer and gyprocker working on a shop fitout, on level 2 at the University premises at Broadway, Sydney. He did not notify the Respondent of the injury at that time and his work was completed on the same day as he sustained the injury, the subject of the disputed claim before the Arbitrator.
The Appellant did not return to the site and did not thereafter work for the Respondent. He made no further contact with the Respondent until February 2002 when he advised Mr. Nilsson, the Director of the Company, that he was lodging a Workers Compensation claim as a result of the injury he had sustained.
The Appellant submitted a claim to the Insurer on 18 April, 2002, and on 30 May, 2002 the Insurer informed him that liability was denied in respect of the claim for weekly benefits. An Interim Payment Direction was issued by the Commission for the period 29 April, 2002 to 29 May, 2002 and provisional payments were ordered to be made for that period. The Interim Payment Direction was issued because the Insurer had not commenced provisional payments pursuant to section 267(1) of the Act, within seven days of notification of the injury.
The oral evidence given by the Appellant before the Arbitrator is contained in the transcript of those proceedings, and is included in the documents before me in this appeal. The Arbitrator summarised that evidence in her ‘Statement of Reasons for Decision’, as follows:
“The applicant gave evidence that from September 1999 he worked for the respondent. The applicant on his own evidence did not work constantly for the respondent, only when work was available. On the applicant’s evidence he worked for friends, without pay, when the respondent did not have any work available. He claimed he did not work for anyone else for payment, however when questioned conceded he could do so.
The applicant gave evidence he supplied his own tools, including power tools. Larger tools and equipment such as scaffolding, tall ladders and the electric saw were supplied by the respondent. Materials were supplied by the respondent. The applicant provided his own car and petrol.
The applicant gave evidence he took his lunch break at a set time each day, however conceded it was because that time was convenient to him. He worked set hours each day. His work was not supervised.
There was an inconsistency between the private records kept by the applicant of hours worked and his calculated earnings and the invoices given to the respondent. The applicant gave evidence that he kept a record of hours worked and he calculated his earnings by multiplying the number of hours worked at the rate of $27.50 per hour, plus GST, to arrive at the figure presented in the invoice. The invoice however did not record this. The sum invoiced was the same, however it was recorded as being charged on a square metre basis. The applicant gave evidence that this was made up. He would calculate the square metre figure by dividing the sum owed into the hourly rate to arrive at a figure which had no relationship with the work he did. It was claimed Mr. Nilsson requested the invoices to be calculated this way. The invoices are from Yu Cang Zhao ‘Specialised in Gyprock’, ABN 73 639 585 592.
The applicant gave further evidence that he did not report the accident as he was embarrassed. Further he did not realise he had sustained any serious injuries until much later.
Evidence was given that the reason for the delay in filing the claim with the insurer was because the applicant did not realise he had sustained any serious injury at work for some time. He initially thought that he had suffered some form of stroke which accounted for the symptoms he was feeling. He also did not realise he was able to make a workers compensation claim.”The Respondent relied upon the documents before the Arbitrator including the statements of Mr. Roland Nilsson to whom I have already referred, and Mr. Darren Carre who was at the relevant times, a self-employed sub-contractor working on the site at UTS.
Mr. Nilsson’s statement indicated that the Respondent Company specialises in interior fit-outs of offices and shops and uses different contractors for various aspects of this work. He said that the Respondent used the Appellant’s services on a “fairly regular basis”. He stated that the Appellant had his own Australian Business Number and provided invoices to the Company twice each month. The Appellant was paid on the basis of an hourly rate or by quantity, as negotiated. Essentially the Appellant provided labour and the tools required to do the job and the materials were provided by the Respondent. Mr. Nilsson said that the arrangement was that the Appellant would be contacted when work was available and would be directed to a site where the builder’s foreman would give directions and instructions as to what needed to be done. Supervision on site was the responsibility of the builder’s foreman or Mr. Nilsson.
During September, 2001 the Respondent was undertaking a fit-out on level 2 of the University of Technology building at Broadway. The Appellant was contracted to install the walls and ceilings of a shop. The other plasterer on the job was Mr. Darren Carre, a sub-contractor. The hours of work on the site were 7.30 am until 3.30 pm, but there was no requirement for the Appellant to “sign on”. The plasterers had a set of drawings from which they worked and would consult with the builder’s foreman if they experienced difficulties. Mr. Nilsson claimed that he noticed that the Appellant had a noticeable limp at least two months before the date of the injury claimed to have been sustained by him. He said that he asked the Appellant what the problem was and the Appellant allegedly responded that he did not know. Mr. Nilsson claimed that there is no record of any accident on the site on 20 September, 2001 and he could not be sure that the Appellant was on the site on that day, although he knew that he was definitely there on 19 September, 2001. Mr. Nilsson said that if he was on site on 20 September, 2001 that was the last day on which he worked for the Respondent Company. Mr. Nilsson stated that he first became aware of an accident when the Appellant came to see him in February, 2002. He claimed that the Appellant told him that he had made a claim for sickness insurance, that he had been incorrectly paid and the insurance company was seeking a refund from him. Mr. Nilsson alleged that the Appellant then asked him if he would be able to make a claim on the basis of an “accident”. He then outlined the circumstances of the accident to Mr. Nilsson. Mr. Nilsson stated that in his view, the injuries described were similar to those that the Appellant had been displaying in the months before 20 September, 2001. He said that he was aware that the Appellant had his own income protection or sickness and accident insurance with an insurer, which was probably the GIO.
In his statement Mr. Carre said that he is self-employed and works as a sub-contractor. He works for the Respondent Company from time to time and has done so for about two and a half years. He has worked with the Appellant on various jobs from time to time. Mr. Carre said that he worked with the Appellant on the University of Techology site at the relevant time. He said that he noticed that the Appellant would have a sore leg at times and that he would limp around. It was difficult to communicate with the Appellant because of his inability to speak English to any great extent and consequently, he never knew what the problem was. However, Mr. Carre said that the Appellant did not indicate that he had hurt himself while working on that site.
SUBMISSIONS
Submissions in relation to this appeal were provided by both parties, in writing in the first instance and orally, at the hearing.
Written Submissions – The Appellant
The Appellant’s written submissions were provided under cover of a letter to the Commission dated 13 January, 2003 and expanded upon the grounds of the appeal under two broad headings.
The first heading was “Grounds of Appeal in Respect of the Finding that the Applicant was not a Worker”. Referring to section 4 of the Act the Appellant submitted that the Respondent had conceded that there was a contract between the Appellant and the Respondent. Whether this was a contract of service required a consideration of the degree of control that the Respondent exerted over the Appellant. It was submitted in regard to the issue of control, that the evidence adduced by the Appellant established the following:
·According to the Appellant’s own evidence he worked continuously for the Respondent for two years, and this was not contradicted.
·Again, according to the Appellant’s own evidence he would work on different jobs as directed by his “boss” Roland Nilsson.
·The Respondent would provide the Appellant with materials necessary to complete the job.
·The Respondent would provide large tools for the Appellant such as large power tools and scaffolding.
·The Appellant did not concede that he was free to work and set his own hours. In fact the Appellant’s evidence was that there was a set lunch break.
·The Appellant did not give evidence that he worked varied hours.
·The Appellant gave evidence that the mode of remuneration, an hourly rate, was decided by Mr. Nilsson.
·The Respondent dictated the mode, hours and place of work.
·The Appellant did not concede that he chose his lunch break.
·The Appellant’s evidence was that it was unrealistic and not financially possible for him to employ an employee and this would only occur if Mr. Nilsson paid him.
·The simple, uncontradicted fact was that the Appellant only worked for Mr. Nilsson during the two years he was employed.
·The Appellant gave evidence of his work condition and history. This general evidence satisfies the test of control. The Appellant’s evidence was strongly to the effect that Mr. Nilsson told him what to do on the work site. It was not put to the Appellant in cross-examination that he was free to use and devise his own methods and systems in performing the work.
·The Appellant gave specific examples of the Respondent exercising control over his work: the Respondent would direct the Appellant to change sites in the one shift and the Appellant called Mr. Nilsson “boss”.
The Appellant submitted that these factors were not fully taken into account by the Arbitrator.
Other indicia, it was submitted, that proved that the Appellant was a worker, were:
·The Appellant did not receive remuneration for any of the other work that he did during the two year period that he worked for the Respondent. The Appellant’s evidence was that he, on occasions, helped his friends.
·The evidence was that he could be dismissed by the Respondent.
The Appellant submitted that it was not relevant that the Respondent did not pay workers compensation premiums for him specifically. In Hollis v Vabu Pty Ltd [2001] HCA 44; (2000-2001) 75 ALJR 1356; 181 ALR 263, the High Court held that this factor did not indicate that an Applicant was not a worker. The Appellant primarily reported his injuries and payments for compensation to the Respondent. The Appellant said that “Many of the factors that the Respondent raises as indicia that militate against the Applicant being a worker are accomplished by the High Court’s decision in Hollis v Vabu.”
The second heading employed by the Appellant in the presentation of his written submissions, was “Grounds of Appeal in Respect of the Contention that there was Procedural Unfairness in the Conduct of the Proceedings”. In this regard the Appellant submitted that the time restraints imposed by the Arbitrator prejudiced the conduct of the Appellant’s case before her. He claimed specifically:
“The Respondent’s solicitor stated that he would cross-examine the Applicant for half an hour. This cross-examination greatly exceeded the half an hour. In fact, the cross-examination went for nearly one and a half hours. It is noted that the Arbitrator indicated to the Respondent’s solicitor that he was running out of time, however he sought to continue with his cross-examination thereby leaving little time for re-examination of the Applicant by the Applicant’s Counsel.
Further, this inefficient use of time had an adverse effect as the Applicant was not able to cross-examine the Respondent’s witness statements. The Applicant permitted the statements to be tendered without any examination. This was unfair.”
Written Submissions – The Respondent
The Respondent’s written submissions may be summarised as follows:
·The issues to be determined before the Arbitrator were inter alia, whether the Appellant was relevantly employed by the Respondent at the date of the injury on 20 September, 2001 either at common law or by way of the deeming provisions of Schedule 1 Clause 2 of the Act.
·The onus is on the Appellant to prove that he was relevantly a worker at the date of the injury.
·The Arbitrator found that the Appellant had not discharged the onus and that the available evidence was consistent with the Appellant having been engaged as a sub-contractor under a contract for services rather than a contract of service, that is he was carrying on business on his own account.
·The Arbitrator correctly applied the decisions of the High Court of Australia in Stevens v Brodribb Sawmilling Co. Pty. Ltd (1986) 160 CLR 16 and Hollis v Vabu Pty. Ltd. [2001] HCA 44; (2000-2001) 75 ALJR 1356; 181 ALR 263, to the facts as found by her.
·The Arbitrator’s findings are supported by the evidence and her decision is well reasoned. Further, there is no basis to suggest that she fell into error in the exercise of her discretion.
·The totality of the relationship between the parties must be examined:
“As the majority in Hollis v Vabu Pty. Ltd. [2001] HCA 44; (2000-2001) 75 ALJR 1356; 181 ALR 263 said, whilst control is an important consideration it is not the sole determinate (sic). The decision in Vabu turned essentially on the fact that the contractual documents evidencing the independent contractor basis were, as applied to bicycle couriers, a sham: Transtate Pty. Limited v Rauk & Anor. [2002] NSWCA 222.”
·On any view the Appellant was an independent contractor. He filed taxation returns stating his place of business; he claimed deductions from his gross takings as business expenses; he registered and obtained an ABN number; he collected and remitted GST to the Commissioner of Taxation; he filed Business Activity Statements and submitted invoices on his own letterhead to the Respondent; he was paid only on the production of invoices based on an agreed rate of $16.35 per square metre.
·The Appellant’s evidence was unsatisfactory and no evidence was led as to the formation of the oral contract or its terms.
·The Appellant’s hours of work were dictated by the requirements of the job site and the Head Contractor and not by the Respondent.
·The Appellant chose the time to take his meal break.
·The control exercised by the Respondent was no more than would be expected as between a contractor and a sub-contractor, and to the extent that his work was supervised at all, such supervision and “control” rested with the Head Contractor on site rather than the Respondent.
·The Appellant was free to undertake other plastering work and implicit in his answer in cross-examination, he did so (transcript page 23, lines 10 – 45).
·The Appellant provided his services to the Respondent as and when required and not on a continuous basis.
·The Appellant carried his own insurance that as a sole trader, took the form of a sickness and accident policy, and the Appellant made a claim under that policy some considerable time before submitting a claim for workers compensation benefits.
·The Appellant’s submissions ignore the fact that beyond making the bare assertion, there was no evidence as to control or its extent, and further, the submissions misapply the modern authorities that look at other equally important indicia.
·There was no procedural unfairness in the conduct of the proceedings that prejudiced the Appellant in relation to the Respondent. The conduct of the Appellant’s case involved lengthy examination in chief that did not get to the heart of the matter, and the Respondent’s cross-examination was not protracted.
Submissions at the Hearing
The submissions made at the hearing substantially covered and were largely in support of the written submissions outlined above. The oral submissions may be summarized as set out below.
Mr. O’Sullivan for the Appellant said that the principal error in the matter was an error in the application of the relevant law. Referring to Stevens v Brodribb Sawmilling Co Pty Ltd (supra) and Hollis v Vabu Pty Ltd (supra) Mr. O’Sullivan said that in both cases the issue was the nature of the relationship between the parties. He submitted that the Arbitrator misunderstood the indicia of employment. Although “on paper” the Appellant was conducting his own business, in reality he was no more than an employee, because of the control that was exercised over him in terms of the hours that he worked, the requirement to work regular hours and the breaks that he took. This situation pertained for two years during which time he worked for no one else. He provided some of his own tools but these were only minor tools. The major equipment was provided by the employer and he was not free to work for other people, and did not do so. It was further submitted in any event, that it is not uncommon for people to have two or three jobs and the quality of their employment with their employers is not thereby diminished.
In referring to the significance of tax deduction payments under the prescribed payments system (that preceded the GST system), Mr. O’Sullivan referred to Vezitis v. Belmont Timbers (NSW) Pty Ltd (1997) 14 NSWCCR 407 and said in that case, Armitage J. noted at page 417 that the deduction of tax payments pursuant to the prescribed payments system did not necessarily, without more, connote a relationship of principle and independent contractor, and may be consistent with a contract of service if the other features of the contract were consonant with that relationship. His Honour was relying on the judgment of Bainton AJA in Scerri v Cahill (1995) 14 NSWCCR 389 at 403-405 and comments made by Kirby P in Articulate 14 Restorations and Developments Pty Ltd v Crawford (1994) 57 IR 371; 10 NSWCCR 751 at 761. Mr. O’Sullivan drew particular attention to the comments of Kirby P at page 764 where His Honour said:
“In a sense the existence of indicia of the ultimate right of control and its exercise is more telling than the existence of indicia of independence. This is because a high measure of independence of skilled workers is now commonplace in the workforce. Thus, the existence of flexible hours, a large discretion in the performance of work, a lack of effective real control and supervision may not, in a particular case, be determinative. In today’s employment market these features of the relationship between the putative employer and worker may be neutral as to the nature of the relationship which was established between them. But where there are clear indications of the right of control, and especially where there are indications that, that right of ultimate control has actually been asserted, a court may more readily draw the inference that a contract of service (employment) has been established. Where it is, a contract for services (independent contractor) will have been excluded.”
Mr. O’Sullivan submitted that it is this right of control that is the ultimate test and in the instant case the employer determined what jobs the Appellant would work on, what hours he would work, how he would work, what breaks he would take – all of the indicia of an employment relationship. He cited Vacik Distributors Pty Ltd v Kelly (1995) 12 NSWCCR at page 34 where the Court of Appeal in dismissing the appeal in that case, said inter alia that the single most important indicium is the right to control. Mr. O’Sullivan submitted that it was not relevant that the Appellant provided his own car, paid for his own petrol, did not receive sick leave, annual leave and superannuation contributions, and that he paid GST by means of a tax return. He only provided the “minor” tools. All “major” tools and all of the work, were provided by the employer. Mr. O’Sullivan submitted that the right of control vested strongly in the hands of the employer and the relationship was one of employer/employee, and this, notwithstanding that the financial arrangements that existed between them may indicate otherwise.
It was further submitted that the Appellant worked continuously for the Respondent and that this evidence was not contradicted. He worked for no one else other than unpaid work for others of his acquaintance. He worked on different jobs and “his boss” told him where to go, when to go and what hours he was to work. He was provided with materials “and that is a very important indicia of employment for if he was a private contractor, it is a contract for services and materials as well, in the normal course of events.”
Mr. O’Sullivan submitted that the Appellant did not work varied hours and indeed, did not set his own hours of work. Furthermore, he was paid on an hourly rate. The undertaking by the principal to take out a workers compensation insurance policy in respect of a contractor cannot be used as evidence that conclusively determines the nature of the relationship between the parties. However, if it can work one way it can work the other and so the mere fact that the employer has not effected this insurance for the Appellant in this case is not “exclusive of the relationship”. He went on to say “It is said that the observance of award conditions is sometimes said to be strong evidence of an employment relationship and that’s in Odgers v Union Theatres Limited (1931) Workers Compensation Reports at 99 and Bollard and Dengate. The situation is that he was paid an hourly rate. Like any other employee, it’s a wages employee paid by the hour: a salaried employee is paid a fixed remuneration and works the hours dictated by his duties. In this particular case he was paid by the hour, I think it was $27.50 an hour and because of the financial arrangement between the parties he was required to pay GST on that and the GST was recoverable in the normal course of events from the expenses incurred by the employee in conducting his work.”
He further submitted that employment of a servant may be limited to a particular occasion or may extend over a period, but may or may not be continuous during that period: Commission of Taxation v J. Walter Thompson Australia Pty Ltd [1944] 69 CLR 227.
It was submitted that the hourly rate was determined by the Respondent and not the Appellant, and that at no time did the Appellant employ “subcontractors”. There is also no evidence that he delegated any work to another person, because it was a contract of personal service. Furthermore, no suggestion has been made that the Respondent did not have the right of dismissal, this being another of the indicia.
Mr. O’Sullivan submitted that the Arbitrator erred in law by not taking into account the relevant indicia of employment that all point to the relationship between the parties, being that of employer and employee, notwithstanding the other features it may have in regard to the economic arrangements between them.
In response Mr. Dickinson referred to Stevens v Brodribb Sawmilling Co Pty Ltd (supra) and relied on the written submissions made in this regard. He referred to the following words of Mason J at page 24:
“After setting out the control test, the existence or control whilst significant is not the sole criteria by which to gauge whether a relationship is one of employment. The approach of this court has been to regard it merely as one of a number of indicia which must be considered in the determination of that question.”
He further submitted that nothing in Hollis v Vabu Pty Ltd (supra) detracts from this fundamental statement of the law in this regard. Mr. Dickinson argued that it may be more difficult to distinguish skilled workers in a modern society from independent contractors, given the high incidence of skilled and professional workers as opposed to the more “traditional idea of the employee being the labourer who was controlled from dawn to dusk in everything he did…you needed to put in some other measures to try to distinguish between cases which really were employee situations and cases which were those of independent contractors. Hence that is the rationale behind His Honour Mason J’s comments that it is not the sole criterion because it doesn’t of itself supply an answer.”
Mr. Dickinson said that in any particular factual matrix some of the indicia will be present and some will not, and it is a matter of weighing up the evidence and arriving at a conclusion. He submitted that providing that the process of reasoning is apparent and that there is no error of law in that process, it is a matter for judgment as to whether the relationship is one of employer and employee or independent contractor. Referring to Hollis v Vabu Pty Ltd (supra), he pointed to the tightness and extent of the control that existed making the situation a sham in order to avoid obligations that an employer would normally have to employees. Mr. Dickinson submitted that in the instant case, there were difficulties for the Appellant in holding the relationship to be one of employer and employee. These may be summarized as follows:
·The provision to the Respondent on an irregular basis, of tax invoices on which an ABN number is endorsed.
·Evidence that the Appellant charged on a square metre basis and not always on the basis of an hourly rate.
·It is for the Appellant to establish that he is either an employee at common law or a deemed employee under the Act.
·There was no attempt by the Appellant to deal with the way in which the contract between himself and the Respondent was formed.
·How it came to be that he submitted tax invoices in his own business name (if that is what it is).
·There was no attempt to deal with the taxation returns that show significant amounts of deduction for the conduct of his business (including claiming rent on land and buildings, $1950).
·He submitted business activity statements and also offset his payments with the moneys he retained on behalf of the Commissioner for Taxation by way of goods and services tax.
·It was not clearly established that he was a full time employee of the Respondent.
·He was free to work for whomever he wished.
·He took his lunch break when it suited him to do so.
·The “other” sub-contractor, Mr. Carre gave evidence that he and the Appellant provided their own tools “such as hand tools, ladders and buckets on the site”.
Mr. Dickinson submitted that the Arbitrator did not err but had correctly applied the indicia and arrived at the correct conclusion.
Mr. O’Sullivan then referred to section 20 of the 1987 Act and submitted that either way, the Appellant was entitled to compensation as a worker, even if it is determined in this matter that this is a relationship of contractor and subcontractor. The principal is liable to pay compensation to the worker. Mr. Dickinson disagreed saying that this is a new issue being introduced by the Appellant. Nevertheless, there is no intervening company structure to make the section applicable, and the “worker” in the instant case is in fact, the contractor.
Mr. Dickinson did not make further submissions regarding the “deemed worker” provisions. Mr. O’Sullivan said, that in his view, it would be necessary to show that “he actually contracted with other people to provide his services to come under that particular exclusion, or under a business or firm name. He has met with a contractor who neither sublets the contract nor employs any worker. He neither sublets nor employs. The contractor is for the purpose of the Act taken to be a worker employed by the person who made the contact with the contractor. There has been a great deal of discussion in relation to that particular provision. It is generally taken and I think that there are only a couple of cases where a person who is determined to be a deemed worker, but not a worker within the meaning of the Act.”
Mr. O’Sullivan went on to refer to a case that he recalled that was before the Chief Judge of the Compensation Court (the name of which he could not recall), where a person was engaged for less than five days on a building site. He went on to say:
“He was rounded up by a telephone call through a friend saying, look you know you do odd jobs, will you come and give us a hand. There was no agreement as to remuneration but on a quantum merit worth basis had to be worth more than $10 and he was entitled in any event to the award rate. On the third day on the site a wall collapsed and fell on Mr. Lindenboom (sic) Quite clearly he couldn’t have fallen within the definition of a worker because a worker had to be for five days or more. In this particular case, the evidence is that he (the Appellant) worked on this particular site for more than five days before the injury occurred, that he’d worked for two years for the respondent previously and for no one else. On a remunerative basis I mean, he did work for mates for a couple of days here and there for no remuneration. We all do that.”
Mr. Dickinson submitted than an inference could be drawn by the submission by the Appellant of “the invoice with the letterhead”. Mr. O’Sullivan contended that this was merely the way he sent his bill.
Mr. O’Sullivan indicated at this point that as he had been briefed in this appeal only on the day before the hearing, he had not had time to take instructions on the remaining grounds of appeal. In relation to the issue of unfairness, Mr. Dickinson claimed that if this was an issue, then it “lay with our side of the record rather than my learned friend’s side of the record because the Arbitrator was not given the benefit of seeing Mr. Nilsson but nevertheless had to weigh up giving such weight as she could, to the written statements.” He said that the Respondent would have preferred to have its witnesses give evidence before the Arbitrator rather than tendering the statements. This was not allowed. In any event, Mr. Dickinson referred to an exchange at page 36 of the transcript before the Arbitrator and in particular where the Appellant indicated an objection to the prospect of the Respondent’s witness Mr. Carre, being called. In particular he referred to a comment made by the Appellant’s Solicitor, in relation to a lack of time allowed to complete the proceedings to the satisfaction of the Respondent: “I’m quite content that he is cutting it off at that point because then I know we are done for a whole day.”
In response, Mr. O’Sullivan submitted that there has been a breach of natural justice on the basis that a party has a right to be heard and to cross-examine a witness who has been brought against them. He said that in the circumstances the matter ought to be re-heard, but it may not come to that depending on the determination as to whether the Appellant is a worker. He said: “If he was not a worker and section 20 doesn’t apply, and it may not, then in that case our submission would be that because of the breach of rules of natural justice applying in this particular case, the appropriate means by which it would be disposed of is for a re-hearing before another arbitrator so that all of these matters can be aired and re-determined.”
DECISION
This appeal turns on whether the Appellant was a worker for the purposes of the Act, according primarily to the indicia, and then to other provisions, to which both parties have referred, and secondly, whether there was a breach of the principles of procedural fairness, in the proceedings before the Arbitrator. I have had regard to the evidence that was before the Arbitrator, the written submissions that were made by the parties on appeal, and the oral submissions made at the hearing. Furthermore, I have before me the transcript of the proceedings before the Arbitrator. However, the transcript is not as helpful as it might have been, because many of the responses by the Appellant and some of the propositions and discussion that occurred in the proceedings are simply recorded as “(indistinct)”.
“Worker”
Section 4 of the Act sets out the definition of “worker”.
“Worker means a person who has entered into or works under a contract of service or apprenticeship with an employer (whether by way of manual labour, clerical work or otherwise, and whether the contract is express or implied, and whether the contract is oral or in writing). However, it does not include:
(a)a member of the Police Service who is a contributor to the Police Superannuation Fund under the Police Regulation (Superannuation) Act 1906, or
(b)a person whose employment is casual (that is for 1 period only of not more than 5 working days) and who is employed otherwise than for the purposes of the employer’s trade or business, or
(c)an officer of a religious or other voluntary association who is employed upon duties for the association outside the officer’s ordinary working hours, so far as the employment on those duties is concerned, if the officer’s remuneration from the association does not exceed $700 per year, or
(d)except as provided by Schedule 1, a registered player of a sporting organization (within the meaning of the Sporting Injuries Insurance Act 1978) while:
(i)participating in an authorized activity (within the meaning of that Act) of that organization, or
(ii)engaged in training or preparing himself or herself with a view to so participating, or
(iii)engaged on any daily or periodic journey or other journey in connection with the registered player so participating or the registered player being so engaged,
if, under the contract pursuant to which the registered player does any of the things referred to above in this paragraph, the registered player is not entitled to remuneration other than for the doing of those things.”
Provision is made for deemed employment of workers in Schedule 1 of the Act. The relevant provision put by the Appellant is Clause 2, which provides:
“2 Outworkers and other contractors (cf former Sch 1 cl2)
(1)Where a contract:
(a)to perform any work exceeding $10 in value (not being work incidental to a trade or business regularly carried on by the contractor in the contractor’s own name, or under a business or firm name), or
(b)to perform any work as an outworker,
is made with the contractor, who neither sublets the contract nor employs any worker, the contractor is, for the purposes of this Act, taken to be a worker employed by the person who made the contract with the contractor.
(2)In this clause:
Outworker means a person to whom articles or materials are given out to be made up, cleaned, washed, altered, ornamented, finished or repaired, or adapted for sale:
(a)in the person’s own home, or
(b)on other premises not under the control or management of the person who gave out the articles or materials.
(3)A person excluded from the definition of worker in section 4(1) because of paragraph (d) of that definition is not to be regarded as a worker under this clause.”
Section 20 of the 1987 Act was raised by the Appellant for the first time in the appeal proceedings. Subsections (1) and (2) are the relevant provisions:
“20Principal liable to pay compensation to workers employed by contactors in certain cases (cf former s 6(3))
(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.
(2)If compensation is claimed from or proceedings are taken against the principal in respect of any such injury, then, in the application of this Act, reference to the principal shall be substituted for reference to the employer, except that the amount of compensation shall be calculated with reference to the earnings of the worker under the employer by whom the worker is immediately employed.”
Both parties cited and relied principally upon the leading cases of Stevens v Brodribb Sawmilling Co Pty Ltd (supra) and Hollis v Vabu Pty Ltd (supra). There is little dispute of substance as to the actual evidence given by the Appellant in the proceedings before the Arbitrator. The balance of the evidence was in documentary form. The central issue in this appeal is whether the relationship between the Appellant and the Respondent was one of employer and employee or one of principal and independent contractor. An important factor in determining the precise nature of the relationship is the degree of control that the person who engages another to perform the work, can exercise over the person who performs that work: Stevens v Brodribb Sawmilling Co Pty Ltd (supra) per Mason J. at p 24. However, he went on to say that the degree of control was not the sole criterion: “It has been held however, that the importance of control lies not so much in its actual exercise, although clearly that is relevant, as in the right of the employer to exercise it. (Zuijs v Wirth Brothers Pty Ltd (1955) 93 CLR 561 at p 571; Commissioner of Taxation v Barrett (1973) 129 CLR 395 at p 402; Humberstone v Northern Timber Mills (1949) 79 CLR 389.”
In the last mentioned case Dixon J. said (at p 404)):
“The question is not whether in practice the work was in fact done subject to a direction and control exercised by an actual supervision or whether an actual supervision was possible but whether ultimate authority over the man in the performance of his work resided in the employer so that he was subject to the latter’s order and directions.
But the existence of control, whilst significant, is not the sole criterion by which to gauge whether a relationship is one of employment. The approach of this Court has been to regard it merely as one of a number of indicia which must be considered in the determination of that question (Queensland Stations Pty Ltd v Federal Commission of Taxation (1945) 70 CLR 539 at p 552; Zuij’s Case; Federal Commissioner of Taxation v Barrett, at p 401 ((1973) 129 CLR); Marshall v Whittakers Building Supply Co (1963) 109 CLR 210 at p 218). Other relevant matters include, but are not limited to, the mode of remuneration, the provision and maintenance of equipment, the obligation to work, the hours of work and provision for holidays, the deduction of income tax and the delegation of work by the putative employee.”
In Stevens v Brodribb Sawmilling Co Pty Ltd (supra), Wilson and Dawson JJ. said that the classic test for determining whether the relationship of master and servant exists has been one of control, the answer depending upon whether the engagement subjects the person engaged to the command of the person engaging him, not only as to what he shall do in the course of his employment but as to how he shall do it. They went on to say:
“The modern approach however, is to have regard to a variety of criteria. This approach is not without its difficulties because not all of the accepted criteria provide a relevant test in all circumstances and none is conclusive. Moreover, the relationship itself remains largely undefined as a legal concept except in terms of the various criteria, the relevance of which may vary according to the circumstances.”
In referring to Marshall v Whittakers Building Supply Co (1963) 109 CLR 210 they said:
“Thus when Windeyer J…said that the distinction between a servant and an independent contractor ‘is rooted fundamentally in the difference between a person who serves his employer in his, the employer’s business, and a person who carries on a trade or business of his own’, he was really posing the ultimate question in a different way rather than offering a definition which could be applied for the purpose of providing an answer…We would be doing no more ourselves if we were to suggest that the question is whether the degree of independence overall is sufficient to establish that a person is working on his own behalf rather than acting as the servant of another, but putting it that way does at least indicate that the question is one of degree for which there is no exclusive measure.
In many, if not most cases it is still appropriate to apply the control test in the first instance because it remains the surest guide to whether a person is contracting independently or serving as an employee. That is not now a sufficient or even an appropriate test in its traditional form in all cases because in modern conditions a person may exercise personal skills so as to prevent control over the manner of doing his work and yet nevertheless be a servant: Montreal v Montreal Locomotive Works (1947) 1 DLR 161 at p 169. This has led to the observation that it is the right to control rather than its actual exercise which is the important thing (Zuijs v Wirth Brothers Pty Ltd (1955) 93 CLR 561 at p 571) but in some circumstances it may even be a mistake to treat as decisive a reservation of control over the manner in which work is performed for another. That was made clear in Queensland Stations Pty Ltd v Federal Commissioner of Taxation (1945) 70 CLR 539, a case involving a droving contract in which Dixon J observed, at p 552, that the reservation of a right to direct or superintend the performance of the task cannot transform into a contract of service what in essence is an independent contract.”
They went on to say:
“The other indicia of the nature of the relationship have been variously stated and have been added to from time to time. Those suggesting a contract of service rather than a contract for services include the right to have a particular person do the work, the right to suspend or dismiss the person engaged, the right to the exclusive services of the person engaged and the right to dictate the place of work, hours of work and the like. Those which indicate a contract for services include working involving a profession, trade or distinct calling on the part of the person engaged, the provision by him of his own place of work or of his own equipment, the creation by him of goodwill or saleable assets in the course of his work, the payment by him from his remuneration of business expenses of any significant proportion and the payment to him of remuneration without deduction for income tax. None of these leads to any necessary inference, however, and the actual terms and terminology of the contract will always be of considerable importance.”
Their Honours said that any list can be no more than a guide to the nature of the relationship and the ultimate question will always be whether a person is acting as the servant of another or on his own behalf. The answer to that question may be indicated in ways which are not always the same and which do not always have the same significance.
In the same case, Deane J. said at p 49:
“The distinction between ‘employee and independent contractor’ has become an increasingly amorphous one as the single test of the presence or absence of control has been submerged in a circumfluence of competing criteria and indicia.”
In relation to informal arrangements between parties Gleeson CJ in Connelly v Wells (1994) 10 NSWCCR 396, said:
“In some cases, of which the present is an example, the contract may have been entered into without writing, and in circumstances of considerable informality. This may mean that it is more difficult to reach a conclusion as to when the contract was entered into, and as to the terms of the agreement which the parties made. The conduct of the parties needs to be examined for the purpose of reaching a conclusion as to their common intention as to the terms and conditions on which they were contracting with one another. However, the basic principles remain the same.”
The difficulty of making the distinction in today’s employment market was also considered in Articulate Restoration and Developments Pty Ltd v Crawford (supra), to which Mr. O’Sullivan referred.
In Hollis v Vabu Pty Ltd (supra) the High Court agreed with Mason J. in Stevens v Brodribb Sawmilling Co 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. Mr. O’Sullivan cited Vacik Distributors Pty Ltd v Kelly (1995) 12 NSWCCR at p 34 in which the Court of Appeal said inter alia that the single most important indicium is the right to control. Mr. O’Sullivan discounted a range of other indicia in the instant case as irrelevant. Having regard to the authorities I do not accept that they can be so readily disregarded, nor that this is what the Court of Appeal was suggesting. Clearly, while the right to control is a vital indicium, the totality of the relationship between the parties must be taken into account, including the indicia within that totality, that serves to establish one way or the other, the precise nature of the relationship.
In Hollis v Vabu Pty Ltd, the High Court found that the couriers had little control over the manner of performing their work and that they were subject to close direction regarding the hours they worked and the roster they worked. They had no right to refuse or delegate work. They were required to wear Vabu uniforms and present in the image of the Company. They were required to maintain certain dress and personal standards, advertise the business, suffer deductions from pay for errors and accept the rate of pay imposed by the Company without negotiation. They were not providing skilled labour and had no goodwill to sell in terms of running a business. The Company controlled annual leave and there was little or no scope for the couriers to conduct their own business. In these circumstances the provision of their own bicycles was not seen by the Court as an indication that they were independent contractors. The Court said at 57:
“…this is not a case where there was only the right to exercise control in incidental or collateral matters. Rather, there was considerable scope for the actual exercise of control. Vabu’s whole business consisted of the delivery of documents and parcels by means of couriers. The couriers had little latitude. Their work was allocated by Vabu’s fleet controller. They were to deliver goods in the manner in which Vabu directed. In this way, Vabu’s business involved the marshalling and direction of the labour of the couriers, whose efforts comprised the very essence of the public manifestation of Vabu’s business. It was not the case that the couriers supplemented or performed part of the work undertaken by Vabu or aided from time to time; rather, as the two documents relating to work practices suggest, to its customers they ‘were’ Vabu and effectively performed all of Vabu’s operations in the outside world. It would be unrealistic to describe the couriers other than as employees.”
In Cartner v Barclay [2002] NSWCC 9 Walker J. pointed to a recent review on the law on worker that he had undertaken in Savage v Programmed Maintenance Service Pty Limited [2002] 22 NSWCCR 184, paragraphs [4] to [18], stating that while the law is well established the review was necessary because of new learning emanating from the High Court in “Hollis v Vabu Pty Ltd (2001) HCA 9 August, 2001.” His Honour said at paragraph 34:
“At para [18] of my review I drew the following conclusions as to the current state of the authorities on worker:
(1)It is an error of law in determining whether or not an employer/employee relationship exists to deduce from the semantic meaning of labels as employee or independent contractor the legal rights of the parties. To adopt such legal adjectives is to invert the proper order of the inquiry which is into the contents of those terms – see: Brooks v Burns Phillp Trustee Co Ltd (1969) 121 CLR 432 Windeyer J at 458 and Vabu at [36].
(2)Independent contractors carry out their work as principals not as the employer’s representative. The fundamental difference is between a person who serves his employer in the employers business and a person who carries on trade or business on his or her own.
(3)Modern Australian law has shifted the emphasis of the control test from the actual exercise of control to the right to exercise it. Control is no longer regarded as the only relevant factor. Rather the Court must examine the totality of the relationship between the parties.
(4)Considerations of the policy issues of rights to economic independence and freedom of contract are not determinative of the legal character of the relationship.
(5)Too much should not be made of investment in capital equipment as an indicia except in cases where the investment was most significant and greater skill was required to operate it.
(6)Control by the employer over the manner of performance is an important indicia particularly in respect to matters such as hours worked, rosters and denial of the right to refuse work or carry out work for other parties.
(7)Requirements as to the wearing of livery, presenting a good corporate image and advertising the employer are also significant indicators to be weighed.
(8)Superintendence of finances including restrictions on bargaining the rate of payment, penalties for errors, method of payment and deduction of insurance are also significant indicators.”
While the facts in Hollis v Vabu Pty Ltd revealed, on examination, a business relationship that was clearly inconsistent with the proposition that the couriers were independent contractors, the nature of the business relationship may not be so clear in different circumstances, including those surrounding the business relationship of the Appellant and the Respondent in the instant case.
The Business Arrangements
It is not in dispute that the Appellant worked as a plasterer for the Respondent, and did so on the date when it is alleged that the injury was sustained. In his oral evidence before the Arbitrator the Appellant said more precisely, that he was employed as a gyprock fixer. The Respondent Company had been engaged to undertake a fitout at the UTS premises, of which plastering/affixing of gyprock was but one, albeit a specialist aspect of the work to be done.
A number of questions were put to the Appellant in the proceedings before the Arbitrator. However, as I have said, many of his responses were not transcribed from the sound card and were shown as “(indistinct)”. To some extent therefore, I rely on the Arbitrator’s record of what was said and the submissions of the parties.
There is no dispute that the business arrangements between the parties were not reduced to writing but were arrived at orally. There is no dispute that the last day on which the Appellant worked for the Respondent was 20 September, 2001, the date on which the injury was alleged to have been sustained.
According to the evidence of the Appellant and Mr. Roland Nilsson, the representative of the Respondent Company with whom the Appellant had his dealings, the Appellant worked for the Company when work was available, but not on a continuous basis. On the other hand, the Appellant said that he had not worked for anyone else during the period that he had been associated with the Respondent and apart from doing work for friends for no charge during that time he had not been engaged in other employment. He conceded that while he did no other work for anyone else, he was free to do so.
The Appellant gave evidence that he submitted an invoice to the Respondent on a fortnightly basis, and was paid $27.50 per hour for the work done. Mr. Nilsson gave evidence that the Appellant was paid either on an hourly rate or by the amount of work done, as negotiated. Invoices were produced that indicated that in relation to this particular job, the Appellant was paid in accordance with the amount of work done. The Appellant said that he was in fact working on an hourly rate that was dictated by Mr. Nilsson, but that in accordance with Mr. Nilsson’s instructions, he worked out the total due on an hourly rate but then charged the Respondent by invoice that showed the amount due, based on a calculation of work done. No reason was advanced in evidence as to why this recalculation was undertaken. The invoices are headed “Yu Cang Zhao – Specialised in Gyprock, ABN 73 639 585 592”. The Appellant indicated that Mr. Nilsson had set the hourly rate. On balance, there is some evidence of “negotiation” between the parties, but it is not clear how far this extended.
Mr. Nilsson said that the Respondent used the services of the Appellant on a fairly regular basis and when so employed, the Appellant provided invoices to the Company twice each month. He said that the Appellant would be contacted when there was work to be done and the mode and rate of payment would be negotiated. The Appellant was directed to the relevant site where the builder’s foreman would give directions as to what needed to be done. Supervision on site was the responsibility of the builder’s foreman or himself. The Appellant said in evidence that he would go to various sites as directed by the Respondent, when there was gyprocking to be undertaken.
The Respondent did not pay workers compensation premiums for the Appellant who had made his own insurance arrangements. The Appellant attended to his own taxation arrangements.
Indicia – Control
The Appellant was engaged by the Respondent from time to time when work was available. It is evident that the Respondent directed the Appellant to the site where the gyprocking work was required to be carried out, and where he would be given directions as to what work was to be carried out. This basic direction would be required whatever the nature of the employment relationship, in order that the Appellant would know where the job site was and what needed to be done. The Appellant was one of a number of different tradespersons with different and specialist skills, engaged to complete an interior fitout. I am satisfied on the evidence that he was required to work during specified hours along with the other persons working on the site, but that there was no particularly close or specific supervision of his work. Either the builder’s foreman or Mr. Nilsson provided some degree of overall supervision of the project, on site, that is to say that someone was in charge insofar as “what” had to be done, as opposed to giving close and comprehensive supervision, directing “how” it should be done. There is no evidence to demonstrate the existence of a closer supervision than this. This is in contrast to the situation in Hollis v Vabu Pty Ltd (supra) where the couriers had little control over the manner of performing their work and were not providing skilled or specialist labour, where their annual leave was controlled and there was no scope in fact for them to conduct their own businesses. The lack of “latitude” in Hollis v Vabu Pty Ltd is not evident in and is in contrast to, the facts in the instant matter. As observed previously, this question of latitude was adverted by Wilson and Dawson JJ in Stevens v Brodribb Sawmilling Co Pty Ltd (supra) where they said in relation to the question of control, that the answer depended upon whether the engagement subjects the person so engaged to the command of the person engaging him, not only as to what he shall do in the course of his employment, but as to how he shall perform it. However, they went on to say that there exists a variety of criteria, none of which is necessarily conclusive.
There is disagreement as to whether the Appellant was required to take his lunch break at a set time each day. This was addressed twice in the Appellant’s evidence. On the first occasion he said that Mr. Nilsson set the time for his lunch break but his response on the second occasion is recorded in the transcript as “(indistinct)”. However, the Arbitrator stated:
“The Applicant gave evidence he took his lunch break at a set time each day, however conceded it was because that time was convenient to him. He worked set hours each day. His work was not supervised”.
While it may be of some significance, it is not of itself, determinative of the question of control.
It is clear from the evidence that the Appellant was free to enter into contracts with other persons should he have chosen to do so. The fact is however, that he did not do so, choosing, according to his evidence, to undertake work for friends at no cost. There is no evidence to suggest that the Respondent imposed or attempted to impose any constraints on the Appellant in relation to undertaking other work. In fact, the evidence is that the Appellant undertook gyprocking work for the Respondent as and when it became available, from time to time but not continuously.
It is not in dispute that the Appellant provided some of his own tools, being the “minor” tools required for the job and that the Respondent provided the “major” tools. There is no evidence to say whether this is the usual arrangement, whether or not the person engaged to do the work is a “worker” or an independent contractor.
At the time that the alleged injury was sustained the Appellant was engaged on the gyprocking job with Mr. Darren Carre, a self-employed sub-contractor.
Indicia – Skill
As stated, the Appellant brought specialist skills to the job for which he was employed from time to time, by the Respondent. On the evidence, he did not require nor did he receive unduly close supervision and direction as to how he should exercise those skills.
Indicia – Financial Arrangements
There is dispute as to the way in which remuneration for work was fixed as between the parties. The Appellant’s evidence was that an hourly rate was fixed by the Respondent, but that on some occasions at least, he converted the amount owing to him to a “work done” basis, on instructions from the Respondent. No reason or basis was advanced to support this. Mr. Nilsson’s evidence was that either an hourly rate or a rate based on the work to be done was negotiated before each job. As stated above, there is some evidence of “negotiation” but to what extent, is not clear.
There is no dispute that the Appellant filed his tax returns as would the proprietor of a business stating the name of his business and its address. He claimed business expenses. He had an Australian Business Number. He collected and remitted GST and filed Business Activity Statements. He submitted accounts in the name of his business on invoices that were headed up in that style. He submitted his invoices twice monthly and was paid on the basis of those invoices. He carried his own insurance and the Respondent deducted no taxation from amounts paid to the Appellant nor did the Respondent pay superannuation contributions for him.
The indicium of control itself points to the relationship of principal and independent contractor, as evidenced by the conduct of the parties in their dealings with each other: Connolly v Wells (supra). This, together with the particular indicia under the specific headings above, and other indicia referred to, provide a view of the totality of the arrangements between the parties. Based on the evidence and the weight of the evidence, the Arbitrator was entitled to conclude on the balance of probabilities, that the Appellant was an independent contractor conducting his own business as a plasterer, and was therefore, not a worker within the meaning of the Act. I agree with that finding.
Deemed Employment
This provision was considered in Scerri v Cahill (1995) 14 NSWCCR 389, where Bainton AJA said:
“On its proper construction cl 2 of Sch 1 requires an applicant who relies on it to establish each of the ingredients, both positive and negative, to identify the relevant ‘work’. What he must establish is:
(a)that he was party to a contract with the respondent to perform work;
(b)that the work exceeds $10 in value;
(c)that the work is not incidental to a trade or business regularly carried on by the applicant in his own name or under a business or firm name;
(d)that the applicant has neither sublet the contract nor employed workers in the performance of it.”
(a), (b) and (d) are satisfied. The critical question is whether test (c) is also satisfied. In Humberstone v Northern Timber Mills (1949) 79 CLR 389 at 401-2, Dixon J said that the provision was intended to draw a distinction between two classes of independent contractors. These are on the one hand those whose relation to the principal is special or particular, and on the other hand there are those who perform contract work successively for customers or others. The first class is a contractor whose contract with the principal stands outside the course of the general business of the contractor or the general practice of his trade. This class is outside the statutory exclusion and therefore, obtains the protection of the Act. The second class is a contractor who conducts as a matter of course a definite trade or business that he carries on systematically, or a contractor who holds himself out as ready to do so. This class comes within the statutory exclusion and does not have the benefit of the protection provided by the Act. To be excluded from the benefits of the Act, the applicant must have had at the date of entering into the contract with the person engaging him or her, an existing business in the course of which he carried on his trade regularly, either in his own name or under a firm or business name. His Honour went on to say at 402 that:
“…these all indicate a business or trade conceived as independently existing or exercised by a person holding himself out to the public under that name or style. No doubt the policy is a matter of inference but it seems reasonable to suppose that it was considered proper that a person conducting a business in the course of which he contracted to perform work should himself carry the risk of personal injury as one of the hazards of his business, while the man who worked under contract but only for the employer or without any general trade or business or outside his trade or business should, like an ordinary employee, be insured against the risk of injury in his work.”
That exposition of the provision has been adopted in later cases without reservation: for example in Wauthen v AUT Holdings Pty Ltd [1977] Hutley JA said that it was the “classic statement”. However, Reynolds J said in Higgins v North Coast Theatres and Drive-ins Pty Ltd [1974] 1 NSWLR 9, at p 13 that Dixon’s explanation of the policy underpinning the statute is not to be used in substitution for the words of the statute because “…whether what is done by a contractor is a business and whether it is regularly carried on by him is of course a question of fact.”
In Spackman v Morrison (2000) 21 NSWCCR 67, the putative worker had agreed to assist the respondent in slaughtering a bullock on the basis that he would be given half of the meat. The putative worker was injured in the course of slaughtering the bullock. Walter J held that there was a contract to perform work that exceeded $10 in value that was not incidental to any trade or business regularly carried on by the applicant, and the applicant neither sublet the contract nor employed any workers in the performance of it. The value of the slaughtered bullock was about $500 and his Honour said that payment could be made in kind or in cash. The putative worker was held to be a deemed worker, on the clear facts of the case.
The Appellant in the instant case clearly carried on his trade or business while working for the Respondent. He was at no time, working outside of his trade or business. Whether he was doing so as an independent contractor or as an employee under a contract of services has already been decided. While the evidence was that he did not in fact work for anyone else during the time that he was periodically engaged by the Respondent (apart from undertaking work for friends at no cost), there was no reason why he could not do so, given that he was in business as, and held himself out to be, a contract plasterer. In the circumstances and facts of this case, test (c) above is not satisfied and consequently, the Appellant is not a “deemed” worker within the meaning of Schedule 1 of the Act.
Section 20 of the 1987 Act
To be enlivened, the section requires that the “contractor” must inter alia, employ a “worker” in the performance of the work that he or she has contracted to do for the “principal”. This is not the case in this matter as the “contractor” and the “worker”, are one and the same person. The Appellant in conducting his business, is not employed by another legal entity that stands between the Respondent and himself. The section has no application.
Procedural Fairness
The Appellant’s submission that there was a denial of procedural fairness is based upon the assertion that the time restraints imposed by the Arbitrator prejudiced the conduct of the Appellant’s case, and in particular, that cross-examination by the Respondent was excessive, leaving little time for re-examination. It was further submitted that the Appellant was not able to cross-examine the Respondent’s witness statements and that they were tendered without examination. At the hearing of the appeal Mr. O’Sullivan indicated that he had only been briefed in this matter on the previous day and had received no instructions on the grounds of appeal, other than the issues on which he had made his oral submissions. He submitted later that a breach of natural justice had occurred on the basis that a party has a right to be heard and to cross-examine a witness who has been brought against them. He said that the matter could be re-heard, depending upon the outcome of the appeal.
The Respondent’s written submission in rejecting that there had been any lack of procedural fairness, stated:
“There was no procedural unfairness in the conduct of the proceedings which prejudiced the applicant in relation to the respondent. The conduct of the applicant’s case involved lengthy examination in chief which did not get to the heart of the matter and the respondent’s cross examination was not protracted.”
Mr. Dickinson submitted in the proceedings before me that if this was an issue for anyone, it was an issue for the Respondent who had to be satisfied with the Arbitrator reading the Respondent’s witness statements and not allowing oral evidence.
The principal documents in the proceedings before the Arbitrator were exchanged between the parties and were available to them prior to the proceedings. In addition to his statement, the Appellant gave evidence and was subjected to cross-examination. According to the transcript there were discussions as to time limitations and the fact that the Respondent was unable to call a witness. The Arbitrator did however, offer to receive further submissions on the evidence following the hearing. The Solicitor for the Appellant opposed the suggestion that Mr. Carre could be called by the Respondent, to give evidence “…in the interests of finishing this, to fast track this….”, and later said in relation to the time expended for the hearing, “I’m quite content because that I know we’ve done for a whole day.” According to my reading of the transcript, evidence in chief, cross-examination and re-examination of the Appellant were completed, and the issue before the Arbitrator towards the conclusion of the hearing was whether the Respondent’s witness would be allowed to give evidence. There is no evidence before me to show that the Appellant was in fact denied any right to be heard, nor that the Appellant did not have full access to the documentary evidence of the Respondent, nor that there was any lack of opportunity to respond to or make comment upon them, either in writing, or orally, or both. I note that the Arbitrator admitted into evidence, at the request of and with no objection from each party, documents relating to financial and payment issues, that had not been provided or listed prior to the hearing. She did so as the documents were critical to the central issue, and in order to prevent injustice.
In the absence of a submission of substance by the Appellant I can find nothing in any of the evidence before me to suggest that any injustice was caused to the Appellant, nor that there was a lack of procedural fairness as suggested. The Arbitrator otherwise dealt with the matter in accordance with the Act and the Interim Workers Compensation Commission Rules 2001.
On the evidence, no error of law, fact or discretion has been made by the Arbitrator. The Appeal is not allowed. The decision appealed against is confirmed.
COSTS
No application has been made in relation to costs. No order is made.
Gary Byron
Deputy President
I certify that this is a true and accurate record of the reasons for decision of Deputy President Gary Byron, Workers Compensation Commission. Registrar
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