Issue 2: February 2014

Workers Compensation Nominal Insurer v O'Donohue [2014] NSWWCCPD 1

Whether employment connected with New South Wales; s 9AA of the 1987 Act; current weekly wage rate; calculation of weekly compensation for partial incapacity prior to the amendments introduced by the Workers Compensation Legislation Amendment Act 2012; s 42 of the 1987 Act

Roche DP

16 January 2014

Facts:

The worker is a professional actor/performer who lives in Sydney. On 20 July 2010, he ruptured his Achilles tendon while performing the role of Ben Tennyson in Ben 10 Live – The Power of the Omnitrix in Bahrain under a contract with MEI Live Ltd (MEI), a company registered in Hong Kong.

The main issue in this appeal was whether the worker was entitled to compensation for his injury under the 1987 Act on the ground that his employment with MEI was “connected with” NSW under s 9AA of that Act.

The worker claimed compensation from MEI and, as that company was not insured in NSW, from the Workers Compensation Nominal Insurer (the Nominal Insurer). He argued that he satisfied all three tests in s 9AA(3). His main arguments were that:

• he usually worked in NSW and the arrangement with MEI involved the likelihood of future performances in Australia (including Sydney);
• he was based in Sydney;
• he auditioned for the role at the Sydney home office of MEI’s executive producer;
• he rehearsed for the role in Sydney, as required by the contract;
• his contract required MEI to provide him with airfares from Sydney to Bahrain to Sydney, and
• as MEI’s executive producer was based in Sydney, her home office was MEI’s principal place of business in Australia.

MEI took no part in the proceedings, but the Nominal Insurer disputed liability on the ground that, as the contract was for a performance outside NSW, and as the contract was made in Hong Kong, the worker’s employment was not “connected with” NSW under s 9AA. It also disputed incapacity, the current weekly wage rate and the quantum of the worker’s entitlement to weekly compensation.

The Arbitrator found that the worker’s employment with MEI satisfied all three of the tests in s 9AA(3) and he made an award in the worker’s favour.

The issues in dispute on appeal were whether the Arbitrator erred in:

• his application of s 9AA
• finding the worker to be totally incapacitated for the period 20 July 2010 to 11 October 2010;
• his determination of the current weekly wage rate;
• failing to assess the worker’s entitlement under s 40 of the 1987 Act during the period of partial incapacity, and
• failing to nominate the party against whom his findings were made and failing to make any order the Nominal Insurer could be required to act upon.

Held: The Arbitrator’s determination was in part revoked. The quantification of the worker’s entitlement to weekly compensation was remitted to another Arbitrator for re-determination.  

Application of s 9AA

1. Section 9AA provides that compensation is only payable under the 1987 Act in “respect of employment that is connected with this State”. The fact that a worker is outside this State when the injury happens does not prevent compensation being payable under the 1987 Act “in respect of employment that is connected with this State” (s 9AA(2)) [47]. To determine whether the employment is connected with NSW, sub-s (3) of s 9AA provides a series of cascading tests [48].

2. The Deputy President considered the following principles regarding the general operation of s 9AA, found in Martin v R J Hibbens Pty Ltd [2010] NSWWCCPD 83 (Martin):

3. The principle that it would be relevant to look to where the worker is contracted to do the work, will not always be a determinative consideration. The test is where the work is done. However, care must be exercised when, because of the injury, the work under the contract has not been completed. In that situation, it may still be necessary to look at where the worker was contracted to work. (see Avon Products Pty Ltd v Falls [2010] ACTCA 21; Klemke v Grenfell Commodities Pty Ltd [2011] NSWWCCPD 27) [56].

The “usually works” test – s 9AA(3)(a)

4. The Arbitrator erred in finding that the worker “usually worked” in NSW. The place where a worker usually works is where he or she habitually or customarily works, or where he or she works in a regular manner (Martin). It does not mean the place where the worker works for the majority of the time [57].

5. In deciding whether a worker usually works in a State, regard must be had to the worker’s work history “with the employer” and the intention of the worker and the employer (s 9AA(6)). Regard must not be had to any temporary arrangement under which the worker works in a State for a period of not less than six months [58].

6. While it was correct that earlier contracts with MEI provided for the worker to be flown from Sydney to the relevant venue and back to Sydney, that did not establish that, in respect of those contacts, the worker usually worked in NSW [60].

7. Considering the 2010 contract under which the worker was working when injured, the worker rehearsed two days in Sydney and for one day in Bahrain. But for his injury, he would have performed on four days in Bahrain. Thus, part of the work “in that employment” was in Sydney and part was in Bahrain. Though the contract provided that more of his working time was to be spent in Bahrain, that was not determinative of where he usually worked. The reality was that, under the 2010 contract, he worked partly in Sydney and partly in Bahrain [61].

8. Section 9AA does not turn on where the contract was made. It has a clear and specific regime that applies according to its terms. It makes no mention of where the contract is made. Therefore, that the contract was made in Hong Kong, because the acceptance was received in Hong Kong (Olivaylle Pty Ltd v Flottweg AG (No 4) [2009] FCA 522; (2009) 255 ALR 632), was of no consequence [63].

9. The “usually works” test did not provide an answer to the question. It followed that it was necessary to move to the next test, the “usually based” test, which the Arbitrator wrongly considered first rather than second [64].

The “usually based” test – s 9AA(3)(b)

10. Though the Arbitrator was wrong to conclude that the contract was not made in Hong Kong, that error did not affect the outcome because the location in which the contract was made is not determinative of the state of connection in s 9AA [66].

11. The worker routinely attended Surry Hills during the term of the employment to receive directions, report and attend rehearsals which were an integral part of the work he was contracted to perform [70]-[71].

12. The evidence was silent as to the location from which the worker’s wages were paid. The contract provided for a daily fee of USD $40, paid weekly. As the daily fee was paid in the relevant local currency, it was assumed that it would have been paid in Bahrain. It was unclear if the worker received this amount. MEI paid the balance of the fee into the worker’s bank account. While there was no direct evidence on this, as the worker lived in, and was based in, Sydney, it was reasonable to conclude that his bank account was in Sydney. The fact that the money may have come from Hong Kong was of limited relevance: the worker was not based in Hong Kong. It followed that, as most of the fee was (most likely) paid to the worker in NSW, that provided a further ground in support of the finding that the worker was “usually based” in NSW [72].

13. Though the contract only gave a post office box number at Bondi as the worker’s address, it acknowledged that the worker was based in Sydney. The travel route noted in the contract, namely “Sydney – Bahrain – Sydney”, also confirmed that the worker was based in Sydney. MEI agreed to pay the economy airfare for that route, and no other. That provided strong objective evidence that confirmed the worker’s assertion that he was based in Sydney [73].

14. The “usually based” test does not involve the application of any specific, pre-set, criteria. Each case will depend on its own facts. The Arbitrator’s conclusion that the worker was usually based in NSW was correct [75].

The “principle place of business” test – s 9AA(3)(c)

15. As the “usually based” test provided the State with which the worker’s employment with MEI was connected, it was not necessary to consider the “principal place of business test”. However, the following observations were made [76].

16. An employer’s principal place of business is not necessarily the same as its principal place of business registered with the Australian Securities and Investment Commission under the Corporations Act 2001. Also, principal place of business means “chief, most important or main place of business from where the employer conducts most or the chief part of its business” (Consultants Pty Ltd v Knight [2008] WADC 78; Martin) [78].

17. It does not matter that the employer’s main business, or registered office, is located overseas. Section 9AA(3)(c) directs attention to the employer’s principal place of business in Australia. That does not exclude the possibility that its main business activities may be based overseas [79].

18. MEI conducted an integral part of its business (of producing live shows) in NSW. There being no evidence that MEI conducted any part of its business in any other State or Territory in Australia, the compelling conclusion was that MEI’s chief, or most important, place of business in Australia was in Sydney. More precisely, it was at the home office of its Executive producer at Rozelle. That followed notwithstanding that the rehearsals were held at different premises [84].

19. While it was true that MEI has no premises in Sydney or NSW with its name displayed, and it does not own or lease premises in NSW, that is not the test. What is required to establish a State of connection in s 9AA(3)(c) is a place in a State in which the employer’s principal place of business in Australia is located. That requires a consideration of the nature of the business concerned and the nature of the activities conducted in NSW to further that business [85].

20. It followed that, in the alternative to succeeding under the “usually based” test, but without deciding it, the worker may well also have been entitled to succeed because the State in which MEI’s principal place of business in Australia was located was NSW [86].

Total incapacity

21. It was submitted that the Arbitrator erred in stating that, on the issue of total incapacity, there was “no evidence to the contrary”. This submission ignored the fact that it was accepted that relying on a specialist doctor’s evidence, the worker was totally incapacitated from 20 July 2010 to 11 October 2010. The worker conceded on appeal that in the event there were actual earnings in part of that period, the Arbitrator erred in finding total incapacity. While the employer, at the arbitration, did not address on any of the evidence it relied upon in the appeal on this point, and it is not normally open to argue that an Arbitrator erred by accepting a concession by one of the parties, given the concessions made by the worker on appeal, this matter was remitted to a different Arbitrator for re-determination [88]-[90].

Current weekly wage rate

22. A worker’s current weekly wage rate is normally calculated by reference to one of the three methods in s 42(1) [94]. A worker’s average weekly earnings are calculated in such manner as is best calculated to give the rate per week at which the worker was being remunerated except that if, because of the shortness of time during which the worker was in the employment of the employer, or the terms of the employment, it is impractical at the date of injury to compute the rate of remuneration, regard may be had to the average weekly amount which, during the 12 months previous to the injury, was being earned by a person in the same grade or in the same classification (s 43(1)(a)) [95].

23. As the Arbitrator did not refer to s 42(d), or s 43, his figure for the current weekly wage rate could not stand. However, in the absence of any useful submissions by the parties on appeal on this issue, the appropriate course was to remit this matter for re-determination [96].

Entitlement under s 40

24. The Arbitrator’s figures in support of his findings under s 40 were wrong and, as the current weekly wage rate required re-determination, it was appropriate that the s 40 award also be re-determined [101].

Formal orders

25. The Arbitrator failed to identify which of the two respondents was liable to satisfy the award and failed to make a finding of non-insurance. As the award of weekly compensation required re-determination, these matters were also remitted for re-determination [107].

Gregory J Britt and Leanne Britt v Coady [2014] NSWWCCPD 5

Whether injury received in an assault during an interval in actual work was received in the course of employment; factual findings; issues not argued at arbitration; application of the principles in Hatzimanolis v ANI Corporation Ltd [1992] HCA 21; 173 CLR 473 and Comcare v PVYW [2013] HCA 41; non-compliance with Practice Direction No 6

Roche DP

30 January 2014

Facts:

In partnership with his wife, Leanne Britt, Gregory Britt (the employer) conducted a building and concreting business. In December 2010 Mr Britt was engaged in concreting work at the Cootamundra Abattoir. Mr Britt employed the worker as a labourer. In addition to his laboring duties, the worker also drove Mr Britt to and from work and, as required, to other places, as Mr Britt had lost his driver’s licence because of a drink driving offence.

On Saturday, 11 December 2010, the worker drove his car to Mr Britt’s home at Gundagai. The worker left his car there and drove Mr Britt to the Cootamundra Abattoir. Other workers employed by Mr Britt on this job were his brother, Andrew, and his cousin Scott Pollack, who drove to the abattoir in a separate vehicle.

Mr Britt said that after work finished for the day, Mr Pollack drove Mr Britt’s vehicle to the Family Hotel in Cootamundra for a beer. Mr Britt said he did not want the worker driving his vehicle because he could allegedly smell alcohol on him. The worker disputed that accusation and submitted that he got a lift with Andrew to the hotel because Mr Britt was allegedly abusing someone on the phone. The worker said that they went to the hotel to get paid as per the usual practice.

Mr Pollack and Andrew left the hotel without saying goodbye. Mr Britt and the worker stayed for a few more beers. The worker said to Mr Britt that he would not have any more drinks so that he could drive Mr Britt home. The worker states that Mr Britt said:

“You may as well have another one we will stay the night, we have been invited to the Christmas drinks with a [m]aintenance [c]rew from the [a]battoirs and besides we can do a couple of hours tomorrow setting up for Monday.”

It was not disputed that they both attended Christmas drinks with the maintenance crew at the Wallendbeen Hotel about 20 km from Cootamundra, travelling there by mini bus.

Late that evening the men returned to the Family Hotel in the mini bus. As they were getting off the bus Mr Britt assaulted the worker.

The worker completed a claim form in which he alleged that he suffered from depression and anxiety caused by the assault by Mr Britt on 11 December 2010. He claimed weekly compensation from 12 December 2010 to date and continuing together with medical expenses. The insurer disputed liability on the grounds that the worker had not suffered an injury out of or in the course of his employment under s 4 of the 1987Act and, if he did suffer such an injury, his employment was not a substantial contributing factor to that injury under s 9A. It also disputed that the worker suffered any incapacity as a result of the assault or had any entitlement to any statutory compensation.

The Arbitrator found in favour of the worker and invited further submissions with respect to the worker’s entitlement to weekly compensation. The Arbitrator found that despite the worker’s stated preference for Mr Pollack to drive Mr Britt home, in the absence of evidence of any arrangement that he do so, the practice that the worker would drive Mr Britt home each day continued to apply. In keeping with that practice, Mr Pollack left the hotel without further communication with them. It followed that the worker’s responsibility to drive Mr Britt home was not transferred to Mr Pollack.

Having regard to the principles in Hatzimanolis v ANI Corporation Ltd [1992] HCA 21; 173 CLR 473 (Hatzimanolis), the Arbitrator said that the worker’s responsibilities as Mr Britt’s driver meant that “the employer, expressly or impliedly ... induced or encouraged the employee to spend the interval or interlude at a particular place or in a particular way” until Mr Britt arrived at his residence. He added that, having regard to the general nature, terms and circumstances of the worker’s employment, what the worker did after “the actual work” was completed was subject to what Mr Britt chose to do between “knocking off” and being left, with his vehicle, at his home.

The Arbitrator did not consider the alternative ground that the injuries arose out of employment.

The employer appealed. As the grounds of appeal were not clearly articulated the Deputy President dealt with the appeal under the seven general topics or headings in the appellant’s submissions on appeal, which are detailed below.

Held: Leave granted to appeal an interlocutory decision. The Arbitrator’s determination was confirmed and the matter was remitted to the Arbitrator for determination of all outstanding matters in respect of the entitlement to weekly compensation.  

Topic 1 – The finding that the worker remained in the course of his duties at least until he reached the Family Hotel

1. The Arbitrator’s finding that, in the circumstances, the worker’s responsibility to drive Mr Britt home had not been transferred to Mr Pollack and that subsequent discussions between the worker and Mr Britt confirmed the worker’s continuing responsibility to do that was open on the evidence [60].

2. The Arbitrator correctly approached the scope of the worker’s employment, as required by Hatzimanolis, by reference to “the general nature, terms and circumstances” of the worker’s employment, which established that the worker’s whereabouts, and what he did after his “actual work” was completed, was subject to what Mr Britt chose to do between “knocking off” and being left at his home [61].

3. Contrary to the appellant’s submission, which was inconsistent with the heading for this topic, the Arbitrator did not accept that the worker ceased his duties as driver when the worker proceeded from the abattoir separately from Mr Britt. In the circumstances, where the Arbitrator found there was no evidence regarding any arrangement that Mr Pollack drive Mr Britt home, it was open for the Arbitrator to find that the practice that the worker would drive Mr Britt home each day continued [62].

4. It followed that there was no conflict between the facts found and the Arbitrator’s conclusion that the worker remained in the course of his employment after he left the abattoir [63].

5. In the absence of any evidence from Mr Britt (or anyone else) disputing the worker’s assertion that it was the usual practice to go to the hotel to be paid, it was open to find that, for that reason alone, the worker remained in the course of his employment when he went to the Family hotel [65].

Topic 2 – The finding that the time spent at the Family Hotel was an interval between two periods of work

6. The fact that the worker and Mr Britt arrived at the Family Hotel separately did not establish, on its own, that the worker’s driving duties had concluded and the Arbitrator did not err in not making that finding [72].

7. Though the Arbitrator made no express finding as to whether Mr Britt told the worker not to drive his car, in light of the later conversations at the Family Hotel, that was of no consequence. He approached the issue by reference the whole of the evidence, which included the conversations between the worker and Mr Britt at the hotel, their previous dealings, and by reference to the principals in Hatzimanolis, which required consideration of the general nature, terms and circumstances of the employment [73].

8. It was never put to the Arbitrator that the conversation between Mr Britt and the worker, regarding the consumption of further alcohol and the worker’s requirement to drive Mr Britt home (see above), was disputed and it was therefore not open to argue on appeal that the Arbitrator erred in failing to deal with a point not argued (Brambles Industries Ltd v Bell [2010] NSWCA 162; 8 DDCR 111) [78].

9. To the extent there was any inconsistency with the worker’s statement to the police and his second statement, it was noted that the worker gave his statement to the police for a very different purpose to the purpose for which he gave his later statement. Just as medical reports must be assessed in their proper context and a judge must have regard to the purpose for which they were obtained (Patrech v State of NSW [2009] NSWCA 118), statements from lay witnesses should also be assessed in their proper context [80].

10. In circumstances where counsel for the appellant at the arbitration proceedings made no reference to the police statement and, save for submitting that the worker’s working day came to an end at the abattoir, made no submissions along the lines argued by the appellant on appeal, the Arbitrator was not required to deal with any alleged inconsistency in that statement. Even if the Arbitrator erred in failing to deal with the police statement that error made no difference to the outcome because the police statement did not alter the substance of the unchallenged conversation in the worker’s second statement [93].

11. Having regard to the issues argued at the arbitration, the Arbitrator adequately exposed his reasoning on the critical issues in dispute and articulated the essential ground on which he based his decision (Soulemezis v Dudley (Holdings) Pty Ltd (1987) 10 NSWLR 247) [94].

Topic 3 – The question of whether the worker’s consumption of alcohol took him outside the course of his duties

12. Once it was accepted that the worker and Mr Britt were drinking together while on an interval between periods of actual work, and that Mr Britt had induced or encouraged the worker to spend his time at a particular place and in a particular way, and that the Arbitrator’s findings on these points were open to him, as the Deputy President had found, it was untenable to argue that the mere fact of drinking took the worker outside the course of his employment [100].

Topic 4 – The decision to stay in Cootamundra overnight

13. On this point, counsel for the appellant at the arbitration proceedings made no submission that the decision to go to the Christmas drinks and stay overnight at Cootamundra was a mutual one, and that, therefore, the worker could not succeed [106].

14. It goes without saying that there does not have to be coercion, or even a direction, for there to be an inducement or encouragement. The Arbitrator acknowledged the submission that the working day had ended, but accepted the worker’s evidence, which was not disputed by Mr Britt, that Mr Britt said, relatively early in the afternoon, and prior to the Christmas drinks invitation, that the worker may as well have another (drink) and that they would stay the night in Cootamundra and do some work on Sunday. That finding was open and disclosed no error [107].

15. The statement by Mr Britt to the worker, as accepted by the Arbitrator, that “we have been invited to the Christmas drinks”, was a clear inducement or encouragement to the worker to attend those drinks. That was especially so when it was preceded by the words “we will stay the night” and followed by the statement “we can do a couple of hours tomorrow setting up for Monday” [109].

16. Having regard to the principles in Hatzimanolis, and the worker’s responsibilities as Mr Britt’s driver, the Arbitrator was satisfied that “the employer, expressly or impliedly... induced or encouraged the employee to spend the interval or interlude at a particular place or in a particular way” until Mr Britt arrived at his residence. Having regard to the further conversation at the Family Hotel, about the invitation to Christmas drinks, and about Mr Britt and the worker staying overnight and working on Sunday, which the Arbitrator accepted took place, the Arbitrator’s conclusion was open to him and disclosed no error [113].

Topic 5 – The finding that the worker had no choice but to stay in Cootamundra

17. The question of whether the worker could independently proceed home was incidental to the Arbitrator’s main finding and therefore of limited relevance to the conclusion. He found that Mr Britt had told the worker that they would go to the Christmas drinks, stay in Cootamundra and work the next day setting up for Monday [121].

18. Thus, as the Arbitrator found, the worker was in Cootamundra at the direct inducement and encouragement of his employer for reasons directly related to his employment. That was the critical finding, not whether alternative transport was available. It was open to the Arbitrator to find, as he did, that the worker did not go home because of Mr Britt’s statement to him that they would stay the night, as they had on previous occasions, and would work on Sunday [122]

19. It followed that it was open to the Arbitrator to apply the principles in Hatzimanolis. He did so by determining that the period after work finished, and up to the time of the assault, was an interval between periods of actual work and that the worker had been induced or encouraged to spend his time in that interval at a particular place and in a particular way [127].

Topic 6 – The finding [that the] injury occurred during an interval or interlude

20. iven that Mr Britt’s evidence failed to deal with the critical parts of the worker’s case, the appellant’s submission on appeal that the weight of the evidence did not support the Arbitrator’s finding was without merit and was rejected [129].

21. Given the Arbitrator’s factual findings, which were open to him, the submission that the worker was “there of his own accord to attend a social function” was untenable and was rejected [130].

Topic 7 – The application of Hatzimanolis and PVYW

22. The Arbitrator found that the interval was to continue until work resumed on Sunday and the circumstances in which the worker found himself “at the time of the assault were therefore incidental to his employment”. It was clear, that the circumstances in which the worker found himself at the time of the assault were incidental to his employment as he was at that place, and engaged in that activity, having been expressly encouraged or induced by the employer to go to the Christmas drinks at Wallendbeen Hotel and to stay the night at Cootamundra. That encouragement or inducement was for a work purpose, namely, to do work the next day (Hatzimanolis)  [138].

23. As the majority in Comcare v PVYW[2013] HCA 41(PVYW) noted, if the injury was suffered while not engaged in actual work, and clearly it was not in the present case, the next enquiry is what the employee was doing when injured [143].

24. The injury was “brought about” by Mr Britt’s unprovoked assault when the worker was either sitting on the bus at the Family Hotel, or standing outside the bus, immediately after it had brought the men back from the Wallendbeen Hotel. It followed that, consistent with PVYW, the injury occurred “at and by reference to the place” where it occurred. That was so because being on the bus, or standing outside the bus, and therefore being in close proximity to Mr Britt when he was well affected by alcohol, occurred because the worker had been induced or encouraged by his employer to go to Wallendbeen Hotel and to stay at Cootamundra so work could continue on Sunday. In other words, the injury was referrable to the place where the Mr Britt, the employer, had induced or encouraged the worker to stay [145].

25. The activity in which the worker was engaged, at the time of the injury, was either sitting on the bus or standing outside the bus after it had returned from the drinks at Wallendbeen Hotel. While that was not an activity in the sense of playing football, it was part of the activity of drinking and socialising, which included him undertaking the bus trip from the Family Hotel in Cootamundra and back again. That was an activity that Mr Britt had induced or encouraged the worker to do. It followed that the connection between that activity and the employer’s inducement or encouragement to engage in it was clearly established (Hatzimanolis) [151].

26. It followed that the worker was injured at a place (the Family Hotel at Cootamundra) where his employer had induced or encouraged him to be and while participating in an activity his employer had induced or encouraged him to do (attending the Wallendbeen Hotel and the Family Hotel and drinking) and that the Arbitrator’s conclusion is consistent with PVYW [154].

Malivanek v Ring Group Pty Ltd [2014] NSWWCCPD 4

Worker; deemed worker; cl 2 of Sch 1 to the 1998 Act; whether applicant regularly carried on a trade or business; additional evidence on appeal; s 352(6) of the 1998 Act; non-compliance with Practice Direction No 6; general approach to whether an applicant is a worker; the “ultimate question” in worker cases; principles in Stevens v Brodribb Sawmilling Co Pty Ltd [1986] HCA 1; 160 CLR 16 and Hollis v Vabu Pty Ltd [2001] HCA 44; 207 CLR 21 discussed

Roche DP

29 January 2014

Facts:

The appellant worker, Christopher Malivanek, is a carpenter. In March 2007, Alan Ring, the managing director of the respondent, Ring Group Pty Ltd, engaged Mr Malivanek to assist another person (Grant Tully) install a skylight at a house in Willoughby. While performing that work on 22 March 2007, the first day of a one-day job, Mr Malivanek fell from the roof and suffered serious injuries.

The two men had previously worked together when Mr Ring was a director of another company called CRC. The exact arrangement with that company was the subject of conflicting evidence. Mr Ring’s version was that he offered Mr Malivanek full-time work but he (Mr Malivanek) would have to set up a business name and carry his own insurance. Mr Ring said that the same arrangements applied with the respondent for the work on 22 March 2007. Mr Malivanek agreed that he set up a business name (Mallows), but said that he worked exclusively for CRC, that he regarded himself as an employee of CRC, that he had no other customers, and that Mr Ring said he would be covered by CRC’s insurance.

The Arbitrator held that Mr Malivanek was neither a worker nor a deemed worker and made an award for the respondent employer.

The issue in dispute on appeal was whether at the time of the accident, Mr Malivanek was a worker or a deemed worker under the terms of the 1998 Act.

Held: The Arbitrator’s determination was in part revoked. The matter was remitted to the Registrar for referral to an AMS for assessment of WPI resulting from injury to lumbar spine, upper left extremity and both lower extremities. The claim for weekly compensation and s 60 expenses was remitted to another Arbitrator for determination.  

Fresh Evidence

1. Mr Malivanek sought to tender on appeal two statements dealing with whether, at the time of the accident, he was working for people other than the respondent [103].

2. Fresh evidence or additional evidence on appeal is governed by s 352(6). The Commission is not to grant leave to rely on fresh evidence or additional evidence on appeal unless it is satisfied that:

3. As the evidence sought to be tendered was available at the arbitration, the first test could not be satisfied. Dealing with the second test, the question was whether the absence of the evidence “would cause” a substantial injustice in the case (Chep Australia Ltd v Strickland [2013] NSWCA 351). As the evidence sought to be tendered made no difference to the outcome, the application to admit it was refused [108]-[111].

4. It will only be in the most exceptional case that evidence of the kind sought to be tendered on appeal in this case, that is, evidence that was available at the arbitration to deal with an issue that was fully argued at the arbitration, will be allowed into evidence on appeal as additional evidence. Parties are reminded, yet again, that arbitrations are not a preliminary hearing where they can await the outcome and then seek to tender on appeal evidence that was readily available at the arbitration [112].

Worker

Control

5. The Arbitrator considered the issue of control and noted, in favour of Mr Malivanek, Mr Ring’s evidence that he provided an induction, “which would suggest some degree of control”. She added that the concept of direction must not be confused with that of control [123].

6. The fact that Mr Ring directed Mr Malivanek where and when the work was to be done was a factor the Arbitrator considered, but it was certainly not determinative [125].

7. Apart from the direction by Mr Ring that the men were not to go on the roof there was no other persuasive evidence that Mr Ring exercised control over how the men were to do their work. Indeed, Mr Malivanek firmly denied any such control. Consistent with this denial, the evidence suggested that Mr Malivanek was engaged on the job because of his particular expertise [127].

8. It followed that the submission that the Arbitrator failed to give sufficient weight to the direction and control exercised by Mr Ring was without substance [128].

Tools

9. While the provision of tools by the claimant is often an indication that the relationship is not one of employment, it is not necessarily determinative (Ready Mixed Concrete (South East) Ltd v Minister of Pensions and National Insurance [1968] 2 QB 497) [129].

10. Though the Arbitrator made no express finding about who provided which tools for the job, given the state of the evidence, that was not surprising. The evidence was merely that Mr Ring “ensured” that the men had the tools they required for the job. That was ambiguous [136].

11. Whether Mr Malivanek carried his own ladder was not determinative. The evidence established that Mr Tully provided some tools and equipment and that Mr Malivanek provided his own hand tools and harness. In these circumstances, the Arbitrator’s failure to make any express finding about the equipment Mr Malivanek provided, and its significance, did not advance Mr Malivanek’s position on appeal. If the Arbitrator erred in not referring to this part of Mr Malivanek’s evidence, it made no difference to the outcome [137].

Employment of workers

12. It was submitted that the Arbitrator failed to deal with the dispute over whether Mr Malivanek employed workers (or a worker). The issue turned on whether he had ever employed his son, Lewis, to work on a property that Mr Malivanek was working on for the respondent in October 2006 [138].

13. The Arbitrator did not determine the dispute on this issue. Rather, she found that Mr Malivanek was entitled to employ workers, at least when he worked for CRC (a building company run by Mr Ring and another person), where the same arrangements applied. That was not consistent with the evidence [142].

14. Having regard to the structure of an invoice of 2 November 2006 (which included an amount for Lewis’s labour as an additional item after Mr Malivanek had listed the days and hours he (Mr Malivanek) had worked) and the fact that Mr Ring clearly considered that he had the right to determine whom Mr Malivanek brought onto the site, it was not accepted that Mr Malivanek employed Lewis [148].

Indicia

15. The Arbitrator referred to the relevant indicia that supported the conclusion that Mr Malivanek was an independent contractor. Those matters were:

• Mr Malivanek had an Australian Business Number (ABN);
• Mr Malivanek operated under a business name;
• Mr Malivanek issued invoices for the work he performed for the respondent;
• Mr Malivanek charged GST on his invoices;
• there was no evidence that the respondent was entitled to Mr Malivanek’s exclusive services;
• though none of the invoices issued to the respondent included any payment for materials, some issued to CRC included such payments;
• the respondent made no deduction for income tax from the payments made to Mr Malivanek, and
• there was no evidence that Mr Malivanek was entitled to sick leave or annual leave [153].

16. Those matters pointed to Mr Malivanek not being a worker employed under a contract of service and, though no one matter was determinative, they were matters the Arbitrator was entitled to consider [154].

17. The Arbitrator then dealt with the provision of tools, the fact that Mr Malivanek did not work every day for the respondent and then the matters in favour of Mr Malivanek being a worker employed by the respondent. The Arbitrator concluded, that “having considered and weighed the indicia” she was satisfied that Mr Malivanek was not a worker employed by the respondent [155]-[162].

18. It followed that, contrary to the challenge on appeal, the Arbitrator did say what indicia she considered. Though she did not say what weight she gave to each of the indicia involved, it will rarely, if ever, be possible for that to be done with any sort of mathematical precision [163].

19. However, as the control test is not determinative, that is not the end of the analysis. The other indicia that must be considered include the provision of tools and equipment, the method of remuneration, the arrangements about hours of work and the provision of holidays, the obligation to work, the arrangements about taxation, and the capacity to delegate work (Stevens v Brodribb Sawmilling Co Pty Ltd [1986] HCA 1; 160 CLR 16 at 24 (Stevens v Brodribb)) [165].

20. The method of remuneration is a less than ideal indicator that must be treated with care. A contract that gives a quote for a specific outcome is often associated with an independent contractor relationship, but that will not always be so. Remuneration at an hourly rate, as opposed to remuneration for a specific outcome, may be consistent with an employer/employee relationship or an independent contractor relationship (see On Call Interpreters and Translators Agency Pty Ltd v Commissioner of Taxation (No 3) [2011] FCA 366 (On Call Interpreters)) [167].

21. Though the invoice for the work on 22 March 2007 did not have any dollar amount on it and merely referred to “Install skylight”, and said that Mr Ring paid $500, the agreement was that Mr Malivanek was to work for an hourly rate, as he had in 2006. For his work in 2006, Mr Malivanek charged an agreed hourly rate ($45). This tended to suggest that he was selling his labour (as an employee) and not contracting for a specific outcome (as an independent contractor) [168].

22. While there was no fixed arrangement for the hours of work on 22 March 2007, Mr Malivanek met at 7.30 am and was to work until the job was completed. Mr Malivanek said that he previously worked for the respondent from 7 am to 3.30 pm and that Mr Malivanek was very strict about starting and finishing times [169]. This regularity of hours suggested an employer/employee relationship. Mr Ring’s evidence that Mr Malivanek worked his own hours was inconsistent with the invoices submitted by Mr Malivanek [170].

23. There were no arrangements for holidays or sick pay and this pointed to an independent contractor relationship [171].

24. The evidence did not properly address the obligation to work. Mr Ring’s evidence that, if Mr Malivanek had not been available, he would have selected another contractor suggested that there was no obligation to work and this pointed strongly to an independent contractor relationship [172].

25. Mr Ring did not deduct tax from the payments he made to Mr Malivanek. This fact, and the fact that Mr Malivanek charged GST, pointed strongly to an independent contractor relationship [173].

26. The power to delegate is an important factor in deciding whether a worker is a servant or independent contractor (Stevens v Brodribb citing Australian Mutual Provident Society v Chaplin (1978) 52 ALJR 407). The evidence did not directly deal with that issue. Given Mr Tully’s request for assistance, because of his lack of experience in installing skylights, and given Mr Malivanek’s experience, it seemed logical that Mr Ring contacted Mr Malivanek with the intention of engaging him to do the work. It was therefore a reasonable inference to conclude that, had someone else turned up in Mr Malivanek’s place, then that would not have been acceptable to Mr Ring. This strongly pointed to an employer/employee relationship [174].

Conclusion on worker

27. Notwithstanding the shortcomings in the Arbitrator’s decision, a detailed review of the relevant indicia revealed that only the power of delegation, the method of remuneration and the hours of work pointed to Mr Malivanek being a worker within the meaning of the legislation. However, they did not point decisively in that direction. Considering these matters and weighing them against the other indicia it was apparent that the Arbitrator was faced with a choice between conclusions that were finely balanced and where there was no clearly right or wrong view [179].

28. In these circumstances, given the way the arbitration and appeal were argued, it was open to the Arbitrator to conclude as she did on this issue and her conclusion disclosed no error that affected the outcome [180].

The ultimate question in worker cases

29. Consistent with Australian Air Express Pty Ltd v Langford [2005] NSWCA 96, Buchanan J observed in ACE Insurance Ltd v Trifunovski [2013] FCAFC 3 that in Hollis v Vabu Pty Ltd [2001] HCA 44; 207 CLR 21 (Hollis) “a real emphasis was authoritatively placed on the notion of working in the business of another, rather than in the business of the individual”. This statement attempts to overcome the broad, and often unhelpful and imprecise, “multi-factorial” approach developed in Stevens v Brodribb [182]. While the majority in Hollis applied a multi-factorial approach, they provided a “focal point around which relevant indicia can be examined” (On Call Interpreters) [183]. That focal point is the ‘ultimate question’ posed by the totality approach.

30. No argument along these lines was presented in the present matter, either before the Arbitrator or on appeal, and it was unnecessary to express a view on whether, if it had been, it would have led to a different outcome. It was noted that, in cases of this kind in the future, careful attention to the questions posed in On Call Interpreters, which are based on the majority decision in Hollis, would be prudent. A consideration and balancing of the indicia is critical, but the focal point around which one examines the indicia is whether the applicant is working in the business of another, or in the business of the applicant [184].

Deemed Worker

31. In Scerri v Cahill (1995) 14 NSWCCR 389 it was held that, to rely on cl 2 of Sch 1, an applicant must establish that:

• he (or she) was a party to a contract with the respondent to perform work;
• the work exceeded $10 in value;
• the work is not work incidental to a trade or business regularly carried on by the applicant in his (or her) own name or under a business or firm name, and
• the applicant has neither sublet the contract nor employed workers in the performance of it [186].

32. The only issue in dispute was whether the work being performed on 22 March 2007 was work incidental to a trade or business regularly carried on by Mr Malivanek in his own name or a business or firm name [196].

33. The Arbitrator appeared to have concluded, without explanation or analysis, that Mr Malivanek regularly carried on a business in the name of Mallows [197]. The Arbitrator dealt with several matters of limited, if any, relevance to whether Mr Malivanek regularly carried on a business at the relevant time. They related to whether Mr Ring had come out of retirement to do only a few jobs, and whether he had promised Mr Malivanek regular work. Whether it was unlikely that the respondent would have been in a position to offer Mr Malivanek regular work, as the Arbitrator found, was largely irrelevant to whether Mr Malivanek was regularly conducting a trade or business [198].

34. The Arbitrator considered a number of matters relevant to the worker issue but did not explain their relevance to the deemed worker issue. On the question of whether Mr Malivanek worked for anyone else, the Arbitrator noted Mr Malivanek’s evidence that he did not and referred to the evidence in the claim form that was to the contrary. The Arbitrator said that if Mr Malivanek accurately completed the claim form, and there was no reason to assume that he had not, he was not working solely for the respondent in March 2007. She added (presumably on the basis of the claim form) that Mr Malivanek regarded himself as carrying on a trade or business, though his evidence was that the arrangement he had with the respondent was the same as that with CRC, where he considered himself an employee [206].

35. Without saying which evidence she accepted and which she rejected, and without referring to the 2007 business tax return, the Arbitrator merely said that the discrepancy between the claim form and Mr Malivanek’s evidence was not explained. Without referring to the 2007 tax return, to which Mr Malivanek’s counsel expressly referred, the Arbitrator failed to determine an important point on the deemed worker issue. That was a critical error that affected the outcome [207]

36. Considering the evidence as a whole, the Deputy President was comfortably satisfied that the work Mr Malivanek performed when he was injured on 22 March 2007 was not work incidental to a trade or business regularly carried on by him in his name or a business or firm name (Humberstone v Northern Timber Mills [1949] HCA 49; 79 CLR 389 (Humberstone); Turner v Stewardson [1962] NSWR 137; Higgins v Jackson [1976] HCA 37; 135 CLR 174; Cam v Cousins Interstate Transport Pty Ltd [1964] NSWR 1288; Wathen v AUT Holdings Pty Ltd [1977] 51 WCR 1) [222].

37. The only evidence that Mr Malivanek was working elsewhere at the time of the accident was in the claim form and in Mr Ring’s evidence that, when he contacted Mr Malivanek in March 2007, Mr Malivanek said he would try and fit the work around his other work commitments. However, even without referring to the additional evidence sought to be tendered on appeal, the 2007 business tax return established that the claim form was incorrect and that Mr Malivanek’s statement was accurate [229].

38. Mr Malivanek’s relationship with the respondent was clearly “special or particular” (Humberstone) and he did not perform work successively or concurrently for his customers in the course of a trade or business. He had no customers and no independent business outside of the work he did for the respondent. That was sufficient to enable Mr Malivanek to succeed on the deemed worker issue [235].

39. The work Mr Malivanek performed on 22 March 2007, when he suffered his injuries, was not work incidental to a trade or business regularly carried on by him in his own name or a firm name and, as the other conditions in Sch 1 were satisfied, he was a deemed worker at that time and was entitled to receive benefits under the legislation [244].

Parramatta City Council v Harrison [2014] NSWWCCPD 2

Section 4(b)(ii) of the 1987 Act; aggravation of disease; s 9A of the 1987 Act; employment substantial contributing factor to injury; evidence of incapacity; duty to give reasons for decision

O’Grady DP

21 January 2014

Facts:

The worker alleged that the duties he performed in the course of his employment between 2007 and 2011 aggravated a degenerative condition in his cervical spine, giving rise to incapacity.

In 2007, the worker was a truck driver, driving garbage trucks, street sweepers and rubbish trucks for the appellant employer. He experienced neck pain when operating and driving a street sweeper. The worker subsequently had some short and longer absences from work due to neck symptoms.

The worker later resumed driving the street sweeper machine, which had been equipped with a camera, the purpose of which was to eliminate some of the neck movements during the worker’s operation of the machine. The worker did not find the camera of great utility. The worker’s duties were subsequently changed and he became an offsider team member picking up rubbish and cleaning drains.

On 27 May 2010, the worker injured his neck whilst travelling in a truck which had struck a gutter at speed. He remained off work for approximately three weeks, during which time he was paid compensation benefits. The worker was later assigned to work operating a Glutton machine, a powerful vacuum cleaner designed to clean the streets.

On 2 November 2011, the worker stumbled and fell whilst operating the Glutton machine. The machine ran over his right heel. A compensation claim was made by the worker and accepted by the employer.

The worker continued to operate the Glutton machine but experienced pain in his right elbow, right arm and neck. The employer could not provide the worker with restricted duties and he remained off work for approximately four months, during which period he received sick leave, annual leave and long service leave payments. He also received payment from the employer for a number of weeks which was paid from a “special account”. A workers compensation claim in respect of this absence from work was declined.

A Commission Arbitrator found in favour of the worker, finding that he suffered injuries to his cervical spine by way of aggravation of a disease to his cervical spine, in the course of his employment. The worker’s employment was found to be a substantial contributing factor to such injury. The Arbitrator entered an award finding the worker partially incapacitated for work from 28 November 2011 to 8 May 2012, deemed to be total because the employer failed to provide suitable employment.

The main issues in dispute on appeal were whether the Arbitrator erred in finding that the:

• worker received an injury;
• worker’s employment was a substantial contributing factor to injury;
• worker was incapacitated as a result of injury, and
• worker was incapacitated as a result of such injury beyond 2 February 2012 or, alternatively, beyond 15 February 2012.

Held: The Arbitrator’s determination was in part revoked. A finding was made that the worker was, as a result of the injury, partially incapacitated for work between 28 November 2011 and 2 February 2012 and an award was entered in favour of the worker for weekly compensation pursuant to s 38 during that period.  

Submissions, Discussion and Findings

1. Whilst the Arbitrator made no express reference to s 4(b)(ii) of the 1987 Act relevant to his finding of injury, it was clear that the injury found concerned such an aggravation [36].

2. The appellant suggested that any symptoms experienced by reason of work conditions prior to work on the Glutton machine had no relevance to the incapacity as found by the Arbitrator. Whilst the appellant was incorrect to submit that no allegation of injury to the arm or elbow was made it was correct in submitting that the worker had recovered from any “aggravation” that may have occurred causing incapacity prior to commencement of work on the Glutton machine. The relevance of the arm and elbow symptoms, having regard to the medical evidence, appeared to be such that symptoms were in some unexplained manner associated with the aggravation of the degenerative condition of the neck caused by work on that machine [39].

3. The Arbitrator’s reasons did not make clear whether a finding was made that the incapacity as found following November 2011 was, in part, causally related to work performed before the worker commenced work on the Glutton machine. That deficiency in the reasons demonstrated that the Arbitrator had failed, as he was obliged, to state adequate reasons for his determination of the dispute (Beale v Government Insurance Office of NSW (1997) 48 NSWLR 430) [40].

4. The worker’s only allegation of injury was that his degenerative cervical spine had been aggravated by work he performed. Such aggravation had occurred on a number of occasions and on each such occasion, including the November 2011 aggravation, had subsequently settled. This undisputed fact led the employer to characterise the nature of the injury alleged as one of “symptomatic aggravation” [43].

5. The thrust of the employer’s argument was that the preponderance of evidence established no more than that the worker suffered a constitutional condition, that certain activities should be avoided, and that any symptoms experienced by him demonstrated no more than the existence of that condition and that there had been no relevant aggravation [48].

6. Notwithstanding the shortcomings found in the evidence of two specialist doctors, it was clear that each of those expert witnesses had taken into account the onset of symptoms following performance of work involving the Glutton machine. Both of the experts were of the opinion that those symptoms prevented the worker from performing all the duties required of him [57].

7. The Arbitrator’s conclusion as to the occurrence of injury should not be disturbed. The evidence of those specialist doctors permitted his conclusion and the question as to the weight to be ascribed to that evidence was one for the Commission [58].

Section 9A

8. The evidence of the two specialist doctors clearly implicated the performance of work on the Glutton machine as being causative of the appearance of the symptoms described. Acceptance of such evidence inevitably led to a conclusion that the injury was causally related to the employment. Those duties were the only factor giving rise to the disabling symptoms, thus it followed that employment was a substantial contributing factor to the injury being aggravation of the underlying degenerative cervical condition [60].

Incapacity

9. The symptoms which prevented the worker from performing his duties on the Glutton machine involved pain in his elbow and shoulder/arm and perhaps a worsening of neck pain. The employer argued that the evidence suggested that those symptoms had resolved earlier than, as it seemed was found by the Arbitrator, the date of his return to work on 9 May 2012 [62].

10. Careful consideration of the evidence revealed that the worker’s pain in the elbow and shoulder had recovered as at the date of examination by a specialist doctor recorded in his report dated 2 February 2012 and therefore any incapacitating consequences of the work on the Glutton machine had come to an end [64].

11. The Deputy President rejected the submission that the “tenor” of the employer’s correspondence dated 28 November 2011 and the “absence of any evidence with respect to efforts made to return [the worker] to employment” demonstrated that “it was clear that the incapacity extended through to the end of the period claim [sic] by the final certificate issued by [the worker’s general practitioner]”. The latest certificate, dated 19 June 2012, issued by the worker’s general practitioner stated that the worker was fit for pre-injury duties from 20 June 2012. The Deputy President found that earlier certification by the general practitioner that the worker was fit for suitable duties reflected, not the persistence of relevant symptoms, but rather a need to restrict the duties of the worker with a view to avoidance of aggravation of his condition [65].

12. It followed that, in so far as it appeared that the Arbitrator found incapacity up to 8 May 2012, such conclusion was reached in error. The relevant incapacity resulted from the work operating the Glutton machine and the worker remained so incapacitated between 28 November 2011 and 2 February 2012 [66].

Suggested error “in taking into account matters of little or no relevance”

13. The employer’s suggestion that the Arbitrator had been “influenced by an adverse and unfounded perception that the conduct of the employer and the insurer towards [the worker] was unfair”, which was founded upon the Arbitrator’s view of the employer’s letter dated 28 November 2011 suspending the worker and the insurer’s response to the claim, was rejected. The Arbitrator’s observations, whilst to some extent being critical of the conduct of both the employer and its insurer could not be perceived as being matters which had been taken into account by him when determining the merits of the application [67]-[68].

Conclusion

14. The Arbitrator’s finding as to injury was not revoked, but his finding as to incapacity required amendment [69]. His failure to make orders as to the worker’s entitlement to weekly compensation constituted error and also required amendment [70].

Nepean Rubber Moulding Pty Ltd v Veljanoski [2014] NSWWCCPD 3

Absence of transcript of arbitral proceedings; duty to provide sufficient reasons; constructive failure to provide reasons for decision; need for remitter

O’Grady DP

22 January 2014

Facts:

The respondent worker was employed as a machine operator for 36 years. He last worked in that occupation on 25 March 2011, at which time he was employed by the appellant employer. There was confusion as to the identity of his employers prior to that date.

In 1994 the worker had been paid lump sum compensation in respect of binaural hearing loss. The date of injury appeared to be 28 July 1993. It was unclear who the employer was at the relevant time.

In 2006 there was a “merger” between a company the worker had worked for at Wetherill Park and the appellant, after which the worker was transferred to work at the appellant’s premises located at St Marys.

In 2012 the worker claimed a further lump sum in respect of an additional WPI together with lump sum compensation pursuant to s 67 and the cost of hearing aids. That claim was rejected by the appellant on the basis that it was “not a noisy employer”.

The matter came before the Commission by way of Application. The date of injury was stated in that Application to be “26 March 2012 [sic]”. The Arbitrator ordered that the matter be remitted to the Registrar for referral to an AMS. The employer sought leave to appeal the Arbitrator’s interlocutory order. That leave was granted.

Held: The Arbitrator’s determination was revoked and remitted to a different Arbitrator for determination afresh.  

Absence of Transcript

1. Proceedings before the Commission are, as a matter of course, recorded and, in the case of an appeal, a transcript of proceedings is produced and made available to the parties. In the present matter, by reason of technical failure, there was no transcript of the arbitral proceedings nor of the reasons delivered by the Arbitrator which were given extempore at that time [12].

2. It was apparent from the submissions put by the worker that it was conceded by him that the working conditions at his place of employment during the five years up to 2011, during which period he worked at St Marys, were not relevantly noisy. It was submitted that the Arbitrator accepted that the employment at Wetherill Park in 2006 was employment between the worker and the appellant to the nature of which the injury was due [19].

3. The Commission, on this appeal, was unable to ascertain the precise manner in which the worker presented his claim before the Arbitrator. There remained considerable confusion concerning the worker’s employment history. Further, it was reasonably clear that the date of injury alleged, and as found by the Arbitrator had been nominated in error. All of those difficulties had been compounded by reason of the absence of a transcript [20].

4. The absence of the transcript of the Arbitrator’s reasons constitutes a constructive failure to provide reasons (Thompson v Expamet Pty Ltd t/as T & G Sheetmetal Services [2005] NSWCCPD 14). A statement of such reasons is required by the provisions of s 294 of the 1998 Act. As a matter of general principle failure to provide sufficient reasons constitutes error of law: Beale v Government Insurance Office NSW (1997) 48 NSWLR 430 [21].

5. The constructive failure to provide reasons constituted relevant error. In the circumstances the findings and orders of the Arbitrator were revoked and the matter required remittal to a different Arbitrator for determination afresh [22].