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[2003] TASSC 26
Supreme Court of Tasmania
2003-05-06
Blow J
Original judgment source is linked above.
CITATION: Cox Logging v Rigby [2003] TASSC 26
Workers Compensation - Entitlement to and liability for compensation - Who is a "worker" - Contract of service or independent contractor - Generally - Particular cases - Other cases - Tree faller.
Vetter v Lake Macquarie City Council (2001) 202 CLR 439, applied.
Judgment ID Number: [2003] TASSC 26
G D & E A COX trading as COX LOGGING v ANTHONY VERE RIGBY
1 The respondent suffered a serious spinal injury on 7 March 2002 in the course of his work as a tree faller. He made a claim for compensation under the Workers Rehabilitation and Compensation Act 1988 ("the Act"). He contended that the appellants were his employers. They disputed liability to pay compensation under the Act. The Workers Rehabilitation and Compensation Tribunal ("the Tribunal") considered that a genuine dispute existed concerning the liability of the appellants to pay compensation. The respondent referred the matter to the Tribunal for determination. The critical issue was whether the respondent was a "worker" within the meaning of the Act, or an independent contractor. On 21 November 2002, a commissioner of the Tribunal made a determination that the respondent was working for the appellants under a contract of service and, as such, was a worker within the meaning of the Act, s3(1). The appellants have appealed from that determination under s63(1). That subsection permits a party to appeal if aggrieved by any determination of the Tribunal in point of law. The appellants contend that it was not open to the learned commissioner to make a finding of fact that the respondent was a person employed under a contract of service, as distinct from an independent contractor.
2 At the hearing before the learned commissioner, the facts were substantially undisputed. As is usual in cases like this, there were a number of factors that weighed in favour of the injured man being regarded as an independent contractor, a number that weighed in favour of him being regarded as an employee, and a number that were neutral or equivocal.
3 The findings of fact and undisputed evidence tending to indicate that the respondent was an independent contractor included the following:
(a) The learned commissioner found that the appellants paid the respondent remuneration without the deduction of income tax.
(b) The learned commissioner found that the appellants, having initially agreed to pay the respondent $30 per hour for his work, in fact paid him an additional $3 per hour by way of GST. The evidence was that the respondent was paid at the same hourly rate, regardless of the number of hours worked in a day, ie, that there was no arrangement for the payment of remuneration at an overtime rate.
(c) The learned commissioner found that the appellants did not make any superannuation payments for the benefit of the respondent. The impact of this factor is weakened, in my view, by evidence, which the learned commissioner accepted, to the effect that the respondent filled in a form at the request of the appellants when he first started working for them in which he was asked to provide "superannuation details" and wrote "AMP 914740935". On the other hand, there was uncontradicted and unchallenged evidence that the respondent did not ever ask the appellants to make superannuation payments, nor ask why they were not doing so, nor discuss superannuation with them at all.
(d) The learned commissioner found that the respondent operated a partnership in conjunction with his wife; that the partnership's only income was his earnings from his work as a timber faller; that the partnership enabled his earnings to be split between him and his wife for tax purposes; and that the partnership claimed income tax deductions for the expenses incurred by him in working as a tree faller. There was uncontradicted and unchallenged evidence that the respondent previously felled trees for a Mr Padgett, and that the remuneration for that work was also paid to the partnership.
(e) The learned commissioner found that the respondent paid work expenses from his income as a tree faller, including the cost of a chainsaw which he purchased for $1,310.78.
(f) The learned commissioner found that the respondent used his own vehicle to travel to and from a logging coupe each work day without recompense. However he also found that transport was available to the respondent each day with the appellants' son in a work vehicle. He properly concluded that this factor therefore carried less weight than it otherwise would have.
(g) The learned commissioner found that the respondent provided his own tree felling equipment. It comprised chainsaws, axes and wedges. However the learned commissioner also found that one of the appellants had offered the use of their timber felling equipment, and quite properly concluded that the impact of this factor was to some extent moderated.
(h) The learned commissioner made findings to the effect that, at the request of the appellants, the respondent kept a record of the hours he worked, and provided them with a signed invoice bearing his ABN number once per fortnight.
(i) The respondent gave undisputed evidence to the effect that, when initially engaged by the appellants, his work for them took only three days per week; and that the male appellant was not "really enthused" by a suggestion that the respondent could work for another man at other times; but that there was no agreement, promise or insistence that he would not take on other timber felling work whilst working for the appellants. However, the amount of work made available by the appellants soon increased, and the learned commissioner made a finding that the hours of work required of the respondent "provided him with little opportunity to pursue other work outside of the work being undertaken for Cox Logging".
4 Mr Jackson submitted on behalf of the appellants that another factor indicating the respondent to be an independent contractor was that he received no sick leave, holiday pay, or other leave. I disagree. Those facts are equally consistent with him having been a casual employee.
5 In cases like this the question whether the putative employee had the right to delegate work to someone else is often very significant. However, the learned commissioner stated in his reasons that that subject was effectively ignored at the hearing, and that the evidence was insufficient to permit a finding either that the respondent could or could not delegate his duties to another.
6 The principal matters relied upon by the learned commissioner as indicators of an employer/employee relationship were described by him as "the documentation created in the early stages of the parties' relationship, the respondents' [ie the appellants'] right to control and the exercise of that right". Less significantly, he expressed the view that willingness on the part of the appellants for the respondent to take firewood, free of cost, from their logging coupe was more consistent with a contract of service than a contract for services. For my part, I simply do not understand the significance of the firewood but, in light of the learned commissioner's finding, I can only think that logging contractors must be more generous towards employees than they are towards independent contractors when it comes to the provision of firewood. I do not regard the firewood factor as one that should make any significant difference to the outcome of this appeal.
7 There was evidence, which the learned commissioner accepted, that the appellants gave the respondent certain "induction papers" soon after he started working for them. Those papers included a letter formally offering the respondent "employment", and stating that he would be "employed" primarily as a faller. However, as Mr Jackson pointed out, cross-examination of the male appellant revealed that he had little or no understanding of the distinction between an employee and an independent contractor. The letter of offer stated that the respondent would be required to undertake a "safety system induction"; that from time to time he could be required to perform duties other than those of a faller; and that breaches of the appellants' safety management system would not be tolerated and could result in instant dismissal. It was certainly open to the learned commissioner to find that the appellants had a contractual right to require the respondent to perform duties other than his primary duties as a faller, and that that was an indication of an employment relationship. I think a contractual right to require the performance of non-primary duties is more likely to exist in relation to an employee than an independent contractor. There was also evidence, accepted by the learned commissioner, that the respondent had driven a skidder for the appellants on occasions.
8 Another of the induction documents included a list of duties and responsibilities. I agree with the learned commissioner that many of the listed items were equally consistent with the respondent being an employee or an independent contractor. However, the learned commissioner regarded some of them as evidence of an employment relationship, including duties to identify and report site hazards, to undertake training and assessment as required, to maintain adequate physical condition for the task, and to undertake any task which may be agreed on between the parties. I am inclined to regard the last two items as somewhat insignificant, but I accept that reporting site hazards and undertaking training are duties more likely to be required of employees than of independent contractors.
9 In relation to the appellants' right to exercise control over the respondent, the learned commissioner was satisfied that the appellants exercised their right to seek and obtain the respondent's participation in their induction programme. He took the view that some of the topics included in it suggested the existence of an employment relationship, particularly items described as "company activities", "smoking rules", "workers compensation and rehabilitation programme", "OHS consultative mechanism", "disputes procedure to be followed" and "outline of training to be provided". The learned commissioner noted that the respondent had signed against each of 15 items, including the ones I have just quoted. He inferred that the respondent had received and understood information relating to each such item. Such an inference was no doubt open to him.
10 The learned commissioner found that the respondent was not free to fix his own working hours, but was required to work the same days and essentially the same hours as the male appellant and his son. He also found that the male appellant at times directed the respondent to fell timber in particular areas, and to work at a pace set by him. The learned commissioner also relied on the fact that the respondent had driven the skidder, and the fact that he had attended two on-site safety meetings, as evidence indicating an employment relationship.
11 Mr Grey submitted on behalf of the respondent that his client had no goodwill that he could sell, and that this was an indication that he was an employee. I disagree. Timber fallers may be engaged by logging contractors either as employees or as independent contractors. The nature of the relationship depends on all the circumstances, particularly the contractual arrangements between the parties. When a timber faller is engaged as an independent contractor, I think the nature of the business will ordinarily be such that there is little or no scope for the independent contractor to sell goodwill. Thus the lack of any saleable goodwill is a neutral factor, and not a factor tending to indicate the existence of an employment relationship.
12 The learned commissioner made a finding to the effect that, at the time when the respondent was engaged by the appellants, it was agreed that they would meet the cost of workers compensation insurance cover for him. He also made a finding that the female appellant sought and obtained confirmation from the appellants' insurance broker that the respondent was covered by their workers compensation insurance. However, he did not rely upon those findings, or even refer to them, in reaching a conclusion favourable to the respondent. In my view those findings weighed in favour of the respondent.
13 The learned commissioner's determination that the respondent was a worker within the meaning of the Act, s3(1), was a finding of fact. However, s63 confines the jurisdiction of this Court to appeals "in point of law". In order to succeed, the appellants must demonstrate that the finding that the respondent was a worker within the meaning of s3(1) was a finding that was not reasonably open upon the evidence. In Vetter v Lake Macquarie City Council (2001) 202 CLR 439 at 450, Gleeson CJ, Gummow and Callinan J said:
"Whether facts as found answer a statutory description or satisfy statutory criteria will very frequently be exclusively a question of law. To put the matter another way, indeed, as it was put by Priestley JA in his judgment, whether the facts found by the trial court can support the legal description given to them by the trial court is a question of law. Vetter [1999] NSWCA 98; (1999) 18 NSWCCR 34 at 48 [44]- [45]. However, not all questions involving mixed questions of law and fact are, or need to be susceptible of one correct answer only. Not infrequently, informed and experienced lawyers will apply different descriptions to a factual situation. That is why the test whether legal criteria have been met has been expressed in language of the kind used by Jordan CJ in The Australian Gas Light Co v Valuer-General (1940) 40 SR (NSW) 126 at 138:
'[I]f the facts inferred ... from the evidence ... are necessarily within the description of a word or phrase in a statute or necessarily outside that description, a contrary decision is wrong in law.'"
14 In order to determine whether the learned commissioner's conclusion was reasonably open to him, it is necessary to have regard to the authorities as to the significance of the degree of control exercised and exercisable over a putative employee. In Stevens v Brodribb Sawmilling Co Pty Ltd (1986) 160 CLR 16 at 24, Mason JJ (with whose reasons Brennan and Deane JJ agreed) said the following:
"... 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 or indicia which must be considered in the determination of that question. ... 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."
"Furthermore, control is not now regarded as the only relevant factor. Rather it is the totality of the relationship between the parties which must be considered."
16 That sentence was cited with approval in Hollis v Vabu Pty Ltd [2001] HCA 44; (2001) 207 CLR 21 at 41 by Gleeson CJ, Gaudron, Gummow, Kirby and Hayne JJ.
17 An examination of the totality of the relationship between the present parties, on the basis of the facts as found by the learned commissioner, reveals only the following factors that lend support to the proposition that the respondent was an employee:
(a) The appellants could and did exercise control over the respondent to the extent of directing him to fell timber in particular areas, determining the pace of his work, determining what days and approximately what hours he was to work, and requiring him to drive a skidder on occasions.
(b) It was a term of the contract that the appellants would provide the respondent with workers compensation insurance cover, and they obtained confirmation from their insurance broker that the respondent was covered by their workers compensation policy.
(c) By the express terms of the contract between the parties, the respondent was required to identify and report site hazards, to undertake training and assessment as required, to maintain adequate physical condition, and to undertake any task agreed on by the parties.
(d) Under an express term of the contract, the respondent was initially required to undertake a "safety system induction", and other components of an induction programme.
(e) The appellants had the right to terminate the contract instantly if the respondent breached their safety management system.
(f) The appellants let the respondent have free firewood.
(g) Documentation created by the appellants when they first engaged the respondent referred to "employment", and to the respondent being "employed".
(h) The respondent attended two on-site safety meetings.
18 In my view, all but the first two of these factors must be regarded as quite insignificant. I think it follows that the question whether the learned commissioner's conclusion was reasonably open to him depends on the strength of the first two factors, ie, those relating to control and insurance.
19 The evidence did not suggest that the appellants had the right to tell the respondent which trees to fell, nor how to go about felling any tree or trees, nor that they ever attempted to do so. The learned commissioner made a finding that the respondent was "an experienced and skilled tree feller able to carry out his ordinary duties with minimal supervision". The respondent's undisputed evidence was that it was his responsibility to fell enough trees to keep ahead of Mr Cox and his son in the overall operation. That is to say, there was a need for the respondent to co-ordinate his activities with those responsible for moving the felled timber, loading it onto trucks, and carting it away. The need for such co-ordination was the same, irrespective of whether the feller was an employee or an independent contractor. The degree of control exercised and exercisable by the appellants was something that was dictated by the nature of their forestry operations. Whether the respondent was an employee or an independent contractor, the only sensible contractual arrangement would have been one whereby the appellants could direct him to fell timber in particular areas, determine the pace of his work, and determine what days and approximately what hours he was to work. It is true that he drove a skidder for them when required to do so - on 10 or 12 occasions according to his evidence - but that fact must be seen in the light of the express term of the parties' contract (item 1.13 in a list of duties and responsibilities) whereby the respondent was to undertake "Any other task which may be agreed on between the parties from time to time". I do not think there was any suggestion that he drove the skidder otherwise than by agreement. All of these matters very significantly weaken the impact of the fact that the applicants could and did exercise control over the respondent in the ways that I have referred to.
20 If the respondent was an independent contractor, the appellants' contractual promise that they would meet the cost of workers compensation insurance cover for him would have to be interpreted as meaning that they would arrange cover equivalent to that provided under the Act for an employee. Although it was agreed that the appellants would meet the cost of such cover for the respondent, it does not necessarily follow that a finding that the respondent was an employee was reasonably open. In my view there are two matters that weaken the significance of the fact that workers compensation insurance cover was promised. The first is that the male appellant had little or no understanding of the distinction between an employee and an independent contractor, as his cross-examination revealed. The second is that, as found by the learned commissioner, the female appellant sought and obtained confirmation from the appellants' insurance broker that the respondent was covered by their workers compensation insurance. The fact that she needed to ask suggests that the appellants contemplated the possibility that they might need to take out some policy other than their statutory workers compensation policy in order to provide the respondent with the promised cover.
21 In my view, the control factor and the workers compensation insurance factor are so weak, and the other factors indicating an employer/employee relationship so trivial, that it was not reasonably open for the learned commissioner to find that such a relationship existed, given that the appellants were not deducting income tax from the respondent's remuneration or making superannuation payments for him, but were making payments for his work to a partnership constituted by him and his wife, paying only upon receiving invoices bearing the partnership's ABN number, and paying GST in addition to the orally agreed hourly rate.
22 I have therefore decided to allow the appeal, set aside the determination of Tribunal, and dismiss the claim for compensation.
# Cox Logging
Rigby \[2003\] TASSC 26
(2001) 202 CLR 439
(1999) 18 NSWCCR 34
(1986) 160 CLR 16
(2001) 207 CLR 21