DSG Pty Ltd v Victorian WorkCover Authority [2008] VSCA 42

Court of Appeal (Vic)|2008-04-03|Before: ASHLEY and DODDS-STREETON JJA and PAGONE AJA

Accident compensation - Worker hired out to appellant by company which employed worker under contract of service - Injury sustained whilst employee working for appellant - Accident compensation claim made on employer - Compensation paid - Payments reimbursed by respondent - Proceeding brought by respondent under s 138 Accident Compensation Act 1985 to recover indemnity from appellant - Whether contract between appellant and employer a 'relevant contract' pursuant to s 9(1) - Whether appellant a 'deemed employer' and employee a 'deemed worker' pursuant to s 9(2) - Whether, if so, appellant could be a 'third party' for the purposes of s 138 - Whether precluded employer from having that status - Held, appellant not a deemed employer, did not operate so that the employer was denied that status, and appellant a 'third party' for the purposes of

**1 I have had the advantage of reading in draft the reasons for judgment of Pagone AJA. I agree with his Honour that the appeal should be dismissed. I agree with his Honour that the appeal may be resolved by focussing only upon s 138 of the Accident Compensation Act 1985 ('the Act'), and with his Honour's analysis of that section. I also agree with his Honour that, assuming there to have been, prima facie, a 'relevant contract' between the appellant, DSG Pty Ltd ('DSG') and Catalyst Recruiting Systems Pty Ltd ('Catalyst') under s 9(1)(a) and (b) of the Act, such contract lost that status by operation of s 9(1)(e)(v). I further agree with his Honour's conclusion as to the relevant interrelationship between s 9(2) and (3) of the Act. There are, however, matters which I wish to add concerning s 9. Broadly, it is my opinion that for one reason or another it is at least very unlikely that the section will have substantive application where, a 'relevant contract' existing, work is performed pursuant to a contract of service.

2 The circumstances of the matter are set out in the reasons for judgment of Pagone AJA at [83]-[84] and [94]. It is convenient to recapitulate a few of them. Ben Holt was employed by Catalyst under a contract of service. Catalyst had a business of hiring out its employees to businesses which needed additional labour. Mr Holt was hired out to DSG as a storeman. On his first day at work at DSG's Dingley premises, he sustained injury. He did so in circumstances which would have enabled him to bring a successful claim for damages against DSG.

3 Mr Holt made a claim for compensation on Catalyst. Liability was admitted, and compensation was paid. His claim, and the payment of compensation by Catalyst and the Victorian WorkCover Authority ('the Authority'), was in each instance well-founded. At the time when he was injured, he was a person who had entered into or worked under a contract of service[1] with Catalyst, his employer. Catalyst, it should be noted, had a policy of compensation insurance, and paid premium to secure its protection under the Act.

4 The Authority brought proceedings against DSG seeking indemnity in reliance upon s 138 of the Act.

5 The Act provides for - in essence delimits - the right of injured workers[2] to bring common law claims for damages; see Divisions 8A, 9, 9A and 10 of Part IV of the Act. Within Division 10 is s 138, headed 'Indemnity by third party'. Sub-s 1 says this -**

Where an injury or a death for which compensation has been paid, or is or may be payable, by the Authority, a self-insurer or an employer was caused under circumstances creating a legal liability in a third party to pay damages or that would, but for section 134A, create such a liability in respect of the injury or death, the Authority, self-insurer or employer is entitled to be indemnified by the third party in accordance with this section.

**6 The amount which a third party is required to pay as an indemnity is, by sub-s (3) the lesser of the amount of compensation paid or payable under the Act in respect of the injury or death and the amount calculated in accordance with a specified formula. It is to be noted that, by sub-s (4), judgment against or settlement by a third party in an action brought by a worker or a worker's dependants in respect of the particular injury or death does not eliminate or diminish the right of indemnity given by the section except to the extent provided for in the section - as to which see the formula in sub-s 3(b).

7 For the Authority to recover from DSG, the latter must have been a 'third party' for the purposes of s 138(1). DSG argued that it was not a third party because it was the employer, or at least an employer, of Mr Holt. It was not suggested that DSG had paid premium under the Act in respect of remuneration paid to Mr Holt - or, as I apprehend it, in respect of remuneration paid to other persons whom Catalyst provided to it. It had, rather, been charged by Catalyst, in respect of workers provided by that company, amounts which included an allowance for premium paid by Catalyst to meet its obligations to its employees under the Act.

8 The gist of DSG's argument was that, by operation of s 9 of the Act, it was at relevant times a deemed employer of Mr Holt, and he was a deemed worker - see s 9(2)(a)(i) and (ii) and (2)(b). Those provisions, the argument ran, became pertinent because the contract between Catalyst and DSG pursuant to which Mr Holt's services were provided was a 'relevant contract' under s 9(1)(a) and (b), and no exclusion applied to deprive it of that status. The definition of 'employer' in s 5 of the Act included any person deemed to be an employer by the Act. The definition of 'worker' included a person deemed to be a worker. In those circumstances, Mr Holt could have successfully maintained a claim for compensation against DSG. It was immaterial that he had not done so. As an employer, DSG could hardly be a third party for the purposes of s 138. Moreover, the effect of s 9(3)(b) was that Catalyst should be deemed not to be an employer.

9 The logical end point of the argument pursued by DSG would seem to be that it and it alone had been liable to pay compensation; and that Catalyst, which employed Mr Holt under a contract of service, had not been so liable. The corollary would seem to be that DSG, not Catalyst, should have paid premium in respect of monies paid to Mr Holt for work which he undertook at DSG - whether upon the total amount paid by DSG to Catalyst for the provision of his services, or upon the amount which he received net from Catalyst, was not the subject of argument. But in fact DSG did not contend that Catalyst had made payments of compensation which it was not liable to make; and its counsel accepted on the hearing of the appeal that it had no prospective future liability to pay compensation to Mr Holt.**

10 I have said that the starting point for DSG's argument was that the contract between it and Catalyst was a 'relevant contract' within s 9(1)(a) and (b), and that no exclusion applied to deprive it of that status. In order to explain the decision of the learned trial judge it is desirable to set out s 9(1)(a)-(e) in full:

(1) For the purposes of this section, a reference to a relevant contract in relation to a financial year is a reference to a contract under which a person during that financial year, in the course of a business carried on by that person -

(a) supplies to another person services for or in relation to the performance of work;

(b) has supplied to that person the services of persons for or in relation to the performance of work; or

(c) gives out goods to natural persons for work to be performed by those persons in respect of those goods and for re-supply of the goods to the first-mentioned person or, where that person is a member of a group within the meaning of section 66 of the Accident Compensation (WorkCover Insurance) Act 1993, to another member of that group -

but does not include a reference to a contract of service or a contract under which a person during a financial year -

(d) has supplied to that person services for or in relation to the performance of work that are ancillary to the supply of goods under the contract by the person by whom the services are supplied or to the use of goods which are the property of that second-mentioned person;

(e) has supplied to that person services for or in relation to the performance of work where -

(i) those services are of a kind not ordinarily required by that person and are rendered by a person who ordinarily renders services of that kind to the public generally;

(ii) those services are of a kind ordinarily required by that person for less than 180 days in a financial year;

(iii) those services are provided for a period that does not exceed 90 days or for periods that, in the aggregate, do not exceed 90 days in that financial year and are not services -

(A) provided by a person by whom similar services are provided to the first-mentioned person; or

(B) for or in relation to the performance of work where any of the persons who perform the work also perform similar work for the first-mentioned person -

For periods that, in the aggregate, exceed 90 days in that financial year;

(v) those services are supplied under a contract to which subparagraphs (i) to (iv) do not apply and the Authority is satisfied that those services are rendered by a person who ordinarily renders services of that kind to the public generally in that financial year;

**11 The learned trial judge decided that the Authority's claim against DSG should succeed. The case was not one, said her Honour, in which it was necessary to deem DSG to be Mr Holt's employer, for he was not an independent contractor and had already been paid compensation by Catalyst (which had been reimbursed by the Authority). Further, the pertinent contract, for the purposes of s 9(1), was the contract of service between Catalyst and Mr Holt. That contract, her Honour concluded, was outside s 9(1)(a) and (b) because of the words 'but does not include a reference to a contract of service' ('the broad exclusion') which immediately follow s 9(1)(a)(b) and (c).

12 The judge also held that s 9(1)(a) and (b) had no application by operation of sub-s (1)(e)(v) .

13 Because, as her Honour concluded, there was no relevant contract for the purposes of s 9(1), DSG was not a deemed employer and Mr Holt was not a deemed worker. The consequences provided for by s 9(3) did not arise. There was only one employer at the relevant time, and that was Catalyst. There was then no difficulty in concluding that DSG was a third party for the purposes of s 138.**

14 As I said earlier, I respectfully agree with Pagone AJA that the appeal may be resolved by focussing only upon s 138. I agree with his Honour's analysis of that section at [87]-[89]. I agree also with his Honour that it would be wrong to read 'employer' in s 138(1) as referring to a deemed employer in circumstances where a contract of service employer existed and had paid compensation, and where negligence or breach of statutory duty of the putative deemed employer was causative of the worker's injury. True it is that s 9(2) deems a person to be an employer 'for the purposes of this Act'. But, subject to a matter which I must later address, that simply drives the reader to the definition of 'employer', which includes, by paragraph (c) 'any person deemed to be an employer by this Act'. The definition applies 'unless inconsistent with the context of subject matter'. Even if DSG was a deemed employer by operation of s 9 - which, see later, I conclude it was not - I consider that there would be a relevant inconsistency, so that 'employer' in s 138(1) should not be read as referring to the deemed employer.

**15 In considering the appellant's arguments founded on s 9 of the Act, these question arise:

(1) Was the contract between Catalyst and DSG prima facie a 'relevant contract' for the purposes of s 9(1)(a) and (b)?

(2) If yes to question 1, was the contract deprived of that status by one or more of the exceptions within s 9(1)?

(3) If the contract between Catalyst and DSG was prima facie a 'relevant contract', and was not deprived of that status by any exception, how did s 9(2) and (3) operate in the circumstances of the case?**

I shall deal with these questions separately, save that within question 1 I will consider the possible significance of the broad exclusion.

Question 1: Was the contract between Catalyst and DSG prima face a 'relevant contract' for the purposes of section 9(1)(a) and (b)?

**16 Both parties to the appeal approached the matter on the footing that the contract which fell for examination in the context of s 9(1)(a) and (b) was the contract between Catalyst and DSG. Both parties arrived at the position, focussing on the contract from the perspective of Catalyst, that the contract was a 'relevant contract' by operation of s 9(1)(a); and that, focussing on the contract from the perspective of DSG, it was a 'relevant contract' by operation of s 9(1)(b). According to the submissions for DSG it was the only pertinent contract, and the learned judge below had erred in treating the contract between Catalyst and Mr Holt as being 'the relevant contract.'

17 Pagone AJA observes that there were two contracts which potentially might qualify as 'relevant contracts' within the meaning of s 9(1): the contract between Catalyst and DSG; and the contract between Catalyst and Mr Holt. He concludes that the latter, being a contract of service, fell outside the subsection. He then concludes that the former was prima facie a 'relevant contract' as described in s 9(1)(a) and (b). Taking that as his starting point, he concludes that paragraph (e)(v) operated to deprive the contract of that status. He also concludes that an argument founded on the interrelationship between s 9(2) and (3) should be rejected.

18 I respectfully agree, as I have earlier said, with his Honour's analysis of the operation of paragraph (e)(v) in the circumstances of the case, and with what he says about the interrelationship between s 9(2) and (3). In that event it is strictly unnecessary to determine several issues: first, whether the very existence of the contract between Catalyst and Mr Holt bore upon the question whether the contract between Catalyst and DSG should be characterised, prima facie, as a 'relevant contract'. Second, whether the existence of the contract between Catalyst and Mr Holt bore upon the application of s 9(2) when regard is had to the direction that the subsection applies 'for the purposes of the Act'.

19 Conscious that those questions were not fully explored in argument, I nonetheless consider that tentative answers can be given to them. For the reasons which follow, I am of opinion, notwithstanding the existence of the contract between Catalyst and Mr Holt, that the contract between Catalyst and DSG was a 'relevant contract' within s 9(1)(a) and (b); but that, even if none of the s 9(1) exclusions applied, the latter contract did not attract the consequences set out in s 9(2).**

20 A very important object of the Accident Compensation Act 1985 ('the Act') is 'to provide adequate and just compensation to injured workers'.[3] Another declared object is to 'establish and maintain a fully-funded scheme'.[4]

21 The entitlement to compensation is conferred, most often, by s 82(1) of the Act. It reads, relevantly,

If there is caused to a worker an injury arising out of or in the course of any employment, the worker shall be entitled to compensation in accordance with this Act.

**22 Division 3 of Part IV of the Act deals with claims management and procedures. Consistently with provisions dealing with quantification of compensation and provisions dealing with payment of compensation, the critical parties for the purposes of claims management and procedures are on the one hand a worker (or the worker's dependants) and on the other hand the employer.[5]

23 It is perfectly true that the Authority or a self-insurer has many functions under the Act in respect of the acceptance of claims, payment of compensation, cessation of payment of compensation and the like; but the rights and obligations of the Authority and any self-insurer derive from the claimed occurrence of compensable injury to a worker in an employment, and a claim made against the employer.**

Predecessor legislation. Compensability of injury

**24 Now I turn to the predecessor legislation. It helps set the context for consideration of the meaning of s 9(1).

25 The Workers Compensation Act 1958 defined worker to mean 'any person (including a domestic servant) who has entered into or works under a contract of service or apprenticeship or otherwise with an employer ...'. The words 'or otherwise', which appear in the definition of 'worker' in the Act, have received judicial attention at times.[6] But it was not suggested that they were of present relevance.

26 The 1958 Act also provided that in specified circumstances a person who was not employed under a contract of service or apprenticeship should nonetheless have an entitlement to compensation in the event of injury. There was a common formula in each of s 3(3), (4), (5) and (6). It provided that a person in a defined class 'shall for the purposes of this Act be deemed to be working under a contract of service' with another person, which other person 'shall for the said purposes be deemed to be the employer'. Again, s 4(1) provided that the Act 'shall apply to workers employed by or under the Crown or any Government Department', and that 'every member of the police force or member of the [police reserve] shall be deemed to be employed by the Crown under a contract of service . . .'. The latter provision put paid to a difficulty arising from the particular problem of police officers being sworn.

27 In the period between 1958 and the commencement of the Accident Compensation Act in 1985, further provision was made to bring within the protection of the Workers Compensation Act persons who would not or might not otherwise have had its protection. So, for example, by s 3(6A) share farmers were deemed to be workers in prescribed circumstances. By s 3(7C) a school pupil employed pursuant to an arrangement within the meaning of Part IVA of the Education Act 1958 was deemed for the purposes of the Act to be 'a worker employed by the employer'. See also s 3(7DA). Again, by s 3A a person who was the secretary of a co-operative society 'shall be deemed to be a worker and the society shall be deemed to be his employer'; and if a person was secretary of more than one society, such person 'shall be deemed to be a worker and those societies shall be deemed to be his employer.' Then also, there was enlargement of s 4. 'For the purposes of the Act', persons (including a responsible Minister of the Crown) 'shall be deemed to be ... worker[s] employed by or under the Crown'.

28 The language of the extending provisions introduced into the Workers' Compensation Act after 1958 was not always the same. It did not make use of the common formula used in the earlier provisions. That said, in each instance the provision was intended to bring within the umbrella of protection given by the Act a person who, being injured, would not or might not otherwise be within that umbrella.

29 There was the other side of the coin. In each instance where protection was extended by the Workers Compensation Act, there arose a correlative obligation on the putative employer to hold a policy of workers compensation insurance.

30 All the extending provisions to which I have referred were imported into the Act, even if the language was not always the same.**

The provenance and purpose(s) of section 9

**31 I turn to s 9. Its provenance is not in doubt. It is a provision transposed from the Payroll Tax (Amendment) Act 1983, which inserted s 3C into the Payroll Tax Act. Murphy J, a judge who had a deep understanding of workers compensation law and practice, explained in Mayne Nickless Ltd v Mackintosh,[7] that its purpose in the Payroll Tax Act was to counter the avoidance by employers of the payment of payroll tax by the engagement of new staff as contractors rather than as employees.

32 Referring to the explanatory memorandum pertaining to the Payroll Tax (Amendment) Bill, his Honour observed that -**

The emphasis throughout the explanatory memorandum is laid on casting a wide net in order to catch all those whether workers or employers, who might seek by a stratagem to avoid the payment of payroll tax, otherwise applicable to employer/employee relationship. The emphasis is placed upon the stratagem, whether initiated by the "worker" or by the "employer" and thus there are included exemptions designed to exempt, what I may broadly call, certain normal business transactions.

33 His Honour noted that, when commenting upon s 9 in the Assembly, the Treasurer who moved its adoption had said:

The provisions in the Bill are based upon the payroll tax provisions and they will be interpreted in the same manner ... the Government is determined to stamp out avoidance and evasion, and this is one of the provisions necessary to achieve that object.[8]

Since its primary object is the identification of persons liable to a levy, and a further identification of remuneration for this purpose ... it not only deems persons to be workers, but more importantly has in mind to deem identified persons to be employers and certain payments "to be remuneration".

**35 In the event, s 9 was in origin an attempt to ensure the payment of levy[9] by principals who contracted with independent contractors in circumstances which the government of the day characterised as attempted avoidance or evasion of the obligation cast on employers to pay the same. Almost as a sidewind, the section extended the protection of the Act to certain independent contractors.[10]

36 Although, it seems, the subjective intent of the parliament was that the customary order of importance of, on the one hand, extending the umbrella of compensability, and, on the other hand, ensuring that a putative employer paid premium, were to be reversed in the case of s 9, each of those key objects of the Act was capable of being advanced by the section. Pertinent authorities show why that is so.**

Types of case in which section 9 has been applied

**37 Until the present proceeding, there had been resort to s 9 in two types of case. The first is epitomised by Mackintosh. The injured man sought to rely upon the section where it had been held at first instance, and was not challenged on appeal, that he had not been employed under a contract of service by Mayne Nickless, nor had been a person protected by s 8 of the Act (the equivalent of s 3(6) of the Workers Compensation Act). In those circumstances, he sought to establish that he was a deemed worker, and that Mayne Nickless was a deemed employer, under s 9.

38 The second class of case is epitomised by Accident Compensation Commission v Odco Pty Ltd.[11] There, in a proceeding brought by the Commission, the question was whether Odco was liable to pay levy in respect of persons who, by contracts with builders, it arranged to work on building sites. The arrangements were not dissimilar to those between Mr Holt, Catalyst and DSG, except that the persons equivalent to Mr Holt who contracted with Odco (they were not always individuals) declared themselves to be independent contractors. The question, to be clear, was whether Odco was liable to pay levy in respect of amounts paid to its contractors; not whether builders were liable to pay levy in respect of amounts paid by them to Odco in respect of work performed by the contractors.

39 The present case is quite different to the two classes of case which I have just identified. Mr Holt did not seek recourse to s 9 in a claim for compensation. He had no reason to do so. He had an employer, who paid him compensation. Further, his employer had relevant insurance cover and had paid premium. No question arises, by contrast with Odco, of the liability of an entity which engages persons to perform services for others to pay premium. Neither again, so far as this Court is aware, is any proceeding on foot by which the Authority is seeking premium from DSG in respect of 'remuneration' deemed to have been paid by it to Mr Holt. Indeed, it appears that in cases of this kind the Authority does not, as a matter of practice, seek premium from parties such as DSG in respect of moneys paid to parties such a Catalyst in respect of services performed by persons such as Mr Holt.**

Section 9 and contracts of service

**40 Thus far I have said nothing about what I have called the broad exclusion. It was not mentioned in either of Mackintosh or Odco. Neither was it mentioned in Drake Personnel Ltd and Ors v Commissioner of State Revenue,[12] a payroll tax case. But Drake may not be unimportant, at least by analogy. Of this, more later.

41 The analysis of s 9(1)(a)(b) in Mackintosh and Odco, and of s 3C(1) of the Payroll Tax Act in Drake, suggests that, prima facie, a contract such as that made between Catalyst and DSG is a relevant contract under both paragraphs (a) and (b); and that (subject to an important qualification) a contract between an individual such as Mr Holt, or between an entity such as a partnership, or the corporate trustee of a trust, and a company such as DSG is a relevant contract under paragraph (a) at least, and probably paragraph (b).

42 The question arises whether any of those contracts could be a contract of service. For what I have called the broad exclusion follows paragraphs (a) to (c). If the exclusion could not apply in the case of some contracts otherwise falling within those paragraphs, then some other work must be found for it.

43 Counsel were unable, in the course of argument, to provide the Court with any example of a contract falling within paragraphs (a)-(c) which might be a contract of service. But the Court gave counsel little time to consider the question. In fact, I think, there may be relevant contracts which are of that character.

44 Plainly enough, a contract such as that made between Catalyst and DSG could not itself attract the description.

45 Then consider the case of a partnership or individual entering into a contract with a company such as DSG. Such a contract, if nominally within paragraph (a), could not be a contract of service (even in the case of an individual) because paragraph (a) is prefaced by the words 'in the course of a business carried on by that person'.

46 Next consider, see paragraph (b), services supplied to a person under a contract entered into in the course of a business carried on by that person. According to Odco, such services might be supplied by an individual.[13] In that event, it is possible that the services might be supplied pursuant to a contract of service. This would give the broad exclusion some work to do - though it would seem likely to be quite limited.

47 I turn to paragraph (c). The definition of 'worker' in s 5 of the Act includes, in effect, an outworker who has entered into or works under a contract of service. Compare the definition of 'worker' in the Workers Compensation Act 1958; and see also the definition of 'outworker' in that Act.

48 The present definition of 'worker' reflects statutory intervention to overcome the decision of the High Court, by majority, in Babaniaris v Lutony Fashions Pty Ltd.[14] An outworker may be, but will not necessarily be, a worker employed under a contract of service. If he or she is not so employed, s 9(1)(c) might operate to extend the protection of the Act to such person.

49 In the event, a contract of the kind described in s 9(1)(c) might, as between the business proprietor and the outworker, be a contract of service. In such a case, the broad exclusion would operate, and the contract would not be a relevant contract.

50 It can be seen, then, that in two situations at least there is room for operation of the broad exclusion. Common to each of those situations is the circumstance that the person actually performing the services has an employer in the unextended sense - upon whom any claim for compensation should be made, and who must hold insurance and pay premium.

51 It is, I think, tempting to conclude that the broad exclusion should apply whenever it is disclosed that the person actually performing the services the subject of a contract said to be a relevant contract is doing so pursuant to a contract of service. For in such a case the person performing the work will have the protection of the Act, and premium is unarguably payable by the employer. Key purposes of the Act being served, why erect a deemed employer, a deemed worker, and deemed remuneration by operation of s 9? That is, I am sure, what the learned judge was getting at below when she said -**

[Section 9] would appear not to apply in this case. This is because it is not a case where Mr Holt is an independent contractor and it is necessary to deem [DSG] to be his employer in order to ensure he receives weekly compensation payments.

**52 The difficulty I have, however, is that the broad exclusion does have some area of possible application to contracts which would otherwise fall within paragraphs (b)-(c). It is not a question of the exclusion having no possible operation for the purposes of paragraphs (a)-(c) - which would invite the question whether the exclusion was a clumsy attempt to ensure that, where a contact of service lay behind a contract which would otherwise be a 'relevant contract', the existence of the contract of service would prevent the other contract being characterised as a 'relevant contract'.

53 Further excluded from the scope of 'relevant contract' are not only contracts of service but also certain contracts under which a person has supplied to it services of the kinds described in s 9(1)(d), (e), (f) and (g). Paragraph (f) may apply to exclude a contract from being a relevant contract where neither paragraph (d) nor any part of paragraph (e) have that effect. Paragraph (f) will have that exclusionary effect, inter alia, where the work performed pursuant to a contract for the supply of services is performed by persons 'employed by or who provide services for' a contractor in its business. There, unless the Authority determines that the contract under which the services are supplied was entered into with an intention either directly or indirectly of avoiding or evading the payment of premium by any person, the exclusion applies.

54 I think that paragraph (f) reinforces a general impression that s 9 is not concerned to deal with situations in which the relevant contract is for the supply of services which are performed pursuant to a contract of service.[15] Nonetheless, because it addresses particular circumstances, it at least implies that the broad exclusion should not be given a meaning which, in effect, removes from the purview of s 9 all contracts where the work to be performed pursuant to a relevant contract is to be performed by a person (or persons) employed under a contract of service. That is so although the circumstances contemplated by paragraph (f), which, like paragraphs (d) and (e) focus on contracts by which services are supplied to a person - the s 9(1)(b) situation - do not exhaust the circumstances under which, by a contract which would otherwise be a relevant contract, services may be performed by persons employed under contracts of service; and although paragraphs (d) and (e) and (f) are expressed disjunctively to the broad exclusion.

55 I should refer to Drake.[16] It was, as I have said, a payroll tax case. The essential question was whether such tax was payable by Drake in respect of 'temporaries', the services of whom were hired out by it to entities which required such services. As in Odco, the focus was upon the relationship between the temporaries and Drake, not on the contracts struck between Drake and the service users. The case had been fought at first instance on the basis that the contracts between the temporaries and Drake were 'relevant contracts' under the equivalent of s 9 (1)(a) and (b); and that the live question was as to the application of the exceptions which are s 9 (1)(c)(iii) and (v) in the Act. But on the appeal, the respondent Commissioner argued that the contracts between the temporaries and Drake were conventional contracts of employment. The argument succeeded. In the upshot, it was said that s 3C was not pertinent, and so the exemptions in s 3C(1) had no application.

56 Ormiston JA expressed the matter in terms of it not being necessary for the Commissioner to place reliance on s 3C.[17] However, he agreed with Phillips JA that the Commissioner would also have been entitled to succeed on s 3C.

57 Phillips JA concluded, strictly obiter dicta, that the contracts between Drake and service users were contracts within s 3C(1)(a) and (b). As to the relationship between Drake and its temporaries, his Honour focussed upon sub-s (1)(b) and the exceptions - the latter of which, he said 'appear to apply more readily to a relevant contract by virtue of sub-s (1)(b) than to a contract which was a relevant contract under sub-s (1)(a)'.[18] Then his Honour considered the operation of exception (e)(v). Having held that the exception did not assist Drake, his Honour said that he was not persuaded that Drake should have succeeded at first instance in reliance upon s 3C. But that was of secondary importance because the temporaries were employees of Drake according to ordinary common law concepts, 'so that s 3C was not called into play at all'.[19]

58 It is unnecessary to say why it was that his Honour concluded that the temporaries were workers employed by Drake. The consequence of that conclusion was that payments made by Drake to the temporaries were wages, as amounts paid to 'an employee as such' and so attracted payroll tax. There was no 'need to have recourse to s 3C'.

59 Two points should be made: First, his Honour did not consider the application of the broad exclusion when concluding, as he seems to have done, that the temporaries had relevant contracts under s 3C(1). Second, his Honour's conclusion that s 3C 'was not called into play' is consistent with my conclusion that s 9 has nothing to say in circumstances of this case.

60 In all, I consider that the broad exclusion cannot be understood to remove from the purview of s 9(1) a contract which would otherwise be a 'relevant contract' only because the work to be performed thereunder is to be performed by a worker employed under a contract of service. But the broad exclusion and the paragraph (f) exclusion, understood together with the objects of the Act and the provenance of s 9, strongly suggest, where the work which to be performed pursuant to a 'relevant contract' is to be performed by a worker employed under a contract of service, that there is no call for s 9(2) to erect a deemed employer, a deemed worker and deemed remuneration. The question which then arises is whether there is a process of orthodox statutory construction by which - if neither the broad exclusion nor the paragraph (f) exclusion applies - s 9(2) will not have those deeming impacts. In my tentative opinion there is such a process. I shall deal with it when addressing the third question which I specified at [15].**

Question 2: If yes to question 1, was the contract deprived of that status by one or more of the exceptions within section 9(1)?

**61 Assuming that the contract between Catalyst and DSG fitted the description in s 9(1)(a) and (b), a question arises whether such contract was excluded from being a 'relevant contract' by s 9(1)(e)(v). An employee of the Authority certified that for the purposes of that provision the Authority was 'satisfied that the services supplied by Catalyst ... to DSG ... at all times since August 1996, and including the period 1 July 2000 to 30 June 2001, were supplied by Catalyst ... who ordinarily rendered services of that kind to the public generally.'

62 According to the argument for DSG, the certificate was not in point. That was because it treated Catalyst as the party which must ordinarily render services of the particular kind to the public generally, and not Mr Holt.

63 Section 9(1)(e)(v) relevantly provides that a reference to a 'relevant contract' does not include a reference to a contract -**

. . . Under which a person during a financial year -

(e) has supplied to that person services for or in relation to the performance of work where -

**64 Counsel for DSG distinguished between the language of supply of services and the language of services being rendered. The argument ran that the contract was for the supply of services to DSG but that the services were rendered - in the sense of being actually undertaken - by Mr Holt. Regard must be had, it was submitted, to the changing language between services supplied and services rendered.

65 Unfortunately, the language of paragraphs (e) and (f) of s 9(1) is far from consistent. It does not encourage a conclusion that a change in language necessarily connotes a change in concept. So, for instance, the language of paragraph (e)(v) is essentially the language of paragraph (e)(i). On the other hand, paragraph (e)(iii) refers to services 'provided' and in paragraph (e)(iii)(b) there is a reference to 'the persons who perform the work'. Then, in paragraph (f), there is reference to the work, in respect of the services supplied, being 'performed' by one or more persons as variously described in sub-paragraphs (i)-(iii).

66 I think it is clear that references to the performance of work are a reference to work being actually undertaken by one or more individuals. But I do not think it is at all clear that the same idea is conveyed by the verbs 'rendered' and 'renders'. I think that the preferable view is that a contract whereby services are supplied to A by B involves them being rendered by B to A; and, as a corollary, that they may in fact be performed by C.

67 So, if it mattered, I agree with the submission for the Authority that services under the contract between Catalyst and DSG were rendered by Catalyst notwithstanding that, in part, the services which were to be rendered were to be performed by Mr Holt. The point, I should add, was left open by Phillips JA in his wide-ranging analysis of s 3C of the Payroll Tax Act in Drake.[20] His Honour's later consideration of who rendered the services in the context of contracts between the temporaries and Drake is not in point.

68 Then the question arises whether the services supplied by Catalyst to DSG were rendered 'by a person who ordinarily renders services of that kind to the public generally ... '. I think that the certificate upon which the Authority relied made out the burden of persuasion resting upon it in that connection. In any event, I think that the services rendered by Catalyst were, as a matter of evidence, ordinarily rendered by Catalyst to the public generally in the financial year. Its business was to provide the services of its employees, on an all of cost basis, to a variety of enterprises, such employees to perform such duties as the particular service user required.

69 As I observed earlier, the effect of paragraphs (d)-(g) of s 9(1) is that a reference to a relevant contract 'does not include a reference to ... a contract under which a person ... has supplied to that person services ... for or in relation to the performance of work.' That is the language of s 9(1)(b), although the same contract might fall within the descriptions in paragraphs (a) and (b). On the assumptions which I have previously stated, the contract between Catalyst and DSG was such a contract. It could not sensibly be the case that a contract which met both descriptions, and was excluded by reference to the language of one of them, was not excluded for the purposes of both.

70 So, if it mattered, I would hold that the exclusion set out in s 9(1)(e)(v) applied in the circumstances of this case.**

Question 3: If the contract between Catalyst and DSG was prima facie a 'relevant contract', and was not deprived of that status by any exception, how did section 9(2) and (3 operate) in the circumstances of the case?

**71 The significance of a contract being a 'relevant contract' is that, by s 9(2), certain circumstances - 'employer', 'worker' and remuneration' - are deemed to exist 'for the purposes of the Act'. Deeming such circumstances to exist, regardless that in the particular case no identifiable purpose of the Act will be served by doing so, can be prevented from distorting the operation of the Act by resort to the opening words of s 5(1) - 'In this Act, unless inconsistent with the context or subject-matter...'. Pagone AJA adopts that approach, inter alia, in concluding that DSG was a third party for the purposes of s 138. But I think that there is an antecedent question: should subs (2) be read to clothe a relevant contract with those deemed circumstances if in the particular case no identifiable purpose of the Act will be served by doing so? Tentatively, I would answer that question 'no'. In that way, in my opinion, s 9(2) would properly be denied operative effect in at least most circumstances in which, there being a relevant contract, the work to be performed thereunder was to be performed by a worker employed under a contract of service. Specifically, it would be denied operative effect in the circumstances of this proceeding.

72 The 'purposes of the Act' are partly stated - albeit by reference to the 'objects' of the legislation. Otherwise the purposes of the Act must be implied from its content. Creating an entitlement to compensation in specified circumstances and establishing a fully-funded scheme are declared purposes. Another purpose, it should be accepted, is to enable the recoupment of compensation paid or payable by an employer (or the Authority or a self insurer) from a negligent third party. It does not seem to me to be consistent with any purpose of the Act that such a party might, by recourse to s 9, seek to characterise itself as a (deemed) employer so as to avoid an obligation to give indemnity under s 138. That is particularly so because the payment of compensation implies the existence of a contract of employment and the payment (or liability to pay) premium. That is, it implies, assuming the existence of a relevant contract, that the work performed thereunder was performed by a worker employed under a contract of service.

73 Such an approach may not mean that s 9(2) would or would not operate upon a particular relevant contract in the same way in all circumstances. No purpose of the Act would be advanced by deeming DSG to be an employer in the context of this proceeding; rather, the contrary. But perhaps s 9(2) would operate in a contrary fashion if - wholly improbably - the Authority was to seek to recover premium from DSG in respect of moneys paid to Catalyst for Mr Holt's services. In Odco, the High Court met an argument for Odco that focussed upon a risk that both it and builders with which it contracted could be liable to pay premium by operation of s 9. At one point, the Court said that if there was such a liability - the premise was not unequivocally accepted - it would not be in respect of the same remuneration.[21] But at another point the Court said that it was 'immaterial' that a company which (as trustee of a family trust) contracted with Odco to provide the services of its key man, paid levy based on his 'wages ' in respect of periods that he was working on sites arranged by Odco; and that if payments relating to the man's work were made under several contracts which were relevant contracts, each employer was liable to levy in respect of the payments made by it.[22] Whether, if the issue was to arise squarely, the High Court would thus resolve it, need not be speculated upon. The only purpose of this reference to Odco is to illustrate the possibility that 'the purposes of the Act' might yield a different application of s 9(2) in different circumstances relating to the same 'relevant contract'.

74 In argument, counsel for DSG referred to Hewitt v Benale Pty Ltd[23] and to Klein v Minister for Education[24] in advancing a proposition, as I understood it, that the phrase 'the purposes of the Act' should be given a liberal application. The effect of Hewitt was described in the joint judgment of Gummow, Hayne and Heydon JJ in Klein.[25] It is unnecessary to set out what their Honours said; or to identify particular passages in Hewitt itself. It may be accepted[26] that, in seeking to identify 'the purposes of the Act', a purposes (or objects) section of the Act should not be treated as being the sole repository of statutory purpose, and that - absent some clear indication to the contrary - the phrase should be given an ambulatory and liberal application. But that only invites the question whether, applying those principles in concrete factual circumstances, and in the context of a particular statute, the phrase authorises an application of a section of the statute in those circumstances. In the present case I consider, for reasons which I have given, that the better view is that s 9(2) did not apply to the 'relevant contract'; and that rarely at most will the subsection apply in circumstances where, there being a relevant contract, the work performed thereunder is performed by a worker employed under a contract of service.

75 Let it be supposed, however, that the circumstances of this matter were such as to engage s 9(2)(a)(i) and (ii). Sub-section (2)(a)(i) picks up s 9(1)(a). Sub-section 9(2)(a)(ii) picks up s 9(1)(b). In consequence, staying with s 9(2), each of Catalyst and DSG was deemed to be an employer in respect of the financial year. Further, by s 9(2)(b)(i), Mr Holt was deemed to be a worker - whether of Catalyst, or DSG, or both.[27]

76 The circumstances which I have just described would engage s 9(3). By operation s 9(3)(b), Catalyst as the person who supplied the services 'shall not be deemed to be an employer'.

77 Counsel for DSG submitted that sub-s (3)(b) should be read as if it provided that Catalyst as the supplier of services 'shall be deemed not to be an employer'. The corollary was said to be that Catalyst, although it in fact employed Mr Holt under a contract of service, was removed from being an employer.

78 I do not agree. I think it is clear that s 9(3) only addresses a deemed situation arising by operation of ss 9(1) and (2) in combination. So to conclude is quite**

consistent with what the High Court said in Odco. Faced with the argument, if two-party only relationships were held to be caught by s 9(1)(a) and (b), that, nonsensically, an individual contractor might be deemed an employer by operation of s 9(1)(a) and 9(2)(a)(i) in combination, but the party in receipt of services might also be deemed an employer by operation of s 9(1)(b) and 9(2)(a)(ii) in combination, the Court said -

Section 9(3) provides another answer to TSA's argument. That subsection is specifically directed to a contract which is a relevant contract pursuant to both pars (a) and (b) of s 9(1). Sub-section (3) provides that in such a situation the person to whom, under the contract, the services of persons are supplied shall be deemed to be an employer and the person who supplies the services shall not be deemed to be an employer.[28]

**79 In the event, after the application of sub-s (3) there would a subsisting contract of service between Catalyst and Mr Holt - Catalyst being the employer and Mr Holt the worker; and also a situation in which DSG was deemed to be an employer and Mr Holt was deemed to be a worker. The consequences of that situation, in the context of this proceeding, would be influenced by the matters pertinent to the operation of s 138(1) to which Pagone AJA has referred.

80 The interrelationship of s 9(2) and (3) which I have just described yields the result, if it could even have been in doubt, that Catalyst rightly paid compensation to Mr Holt, and that the s 138 claim was rightly brought by the Authority against DSG. Assuming that s 9(2) had application in the circumstances of this case, such interrelationship helps explain why, for the purposes of s 138, DSG was rightly characterised as a third party, and not as an employer.**

81 I agree with the disposition proposed by Pagone AJA, for the reasons he gives. I also agree with the analysis set out in Ashley JA's judgment.

**82 The principal issue in this appeal is whether the Victorian WorkCover Authority ('the VWA') is entitled to be indemnified by DSG Pty Ltd under s 138 of the Accident Compensation Act 1985 ('the Act') in respect of an injury suffered by Mr Ben Holt and for which the VWA has paid compensation.

83 Mr Holt was injured on 10 October 2000 whilst working at the premises of the appellant, a 'host employer', on a job obtained for him by Catalyst Recruiting Systems Pty Ltd ('Catalyst'), a labour hire firm, for whom he worked as an employee under a contract of service. The injury occurred on Mr Holt's first day on the host employer's site when loading boxes in a container. His task had been to load cardboard boxes into containers that were some 50 feet long and 10 feet wide. The system of work was supposed to include the placement of a piece of plywood sheet on top of two or three layers of cardboard boxes to form a base upon which Mr Holt could stand to load and stack the boxes in the container. On this occasion, however, the supervisor changed the system of work and directed Mr Holt to complete the stacking without the plywood sheet. Mr Holt believed this to have been done as a shortcut and to save time. Unfortunately, the cardboard boxes gave way as he was standing on them, causing him to fall and to suffer an injury to his left knee.

84 Mr Holt received weekly compensation payments from Catalyst as it was required to pay under its WorkCover insurance policy. Under that policy it was required to make payments to workers where it, as the employer, was notified by the VWA that a worker was entitled to weekly payments. The policy provided that payments made by the employer would then be reimbursed by VWA. Catalyst has had its weekly payments reimbursed by VWA which then claimed to be indemnified by the appellant, the host employer, under s 138 of the Act.

85 Section 138 of the Act entitles an employer, the VWA or a self-employer, to be indemnified by a third party where an injury, for which compensation has been paid, 'was caused under circumstances creating a legal liability to a third party to pay damages or that would' create such a liability in respect of the injury. The section provides:**

(1) Where an injury or a death for which compensation has been paid, or is or may be payable, by the Authority, a self-insurer or an employer was caused under circumstances creating a legal liability in a third party to pay damages or that would, but for section 134A, create such a liability in respect of the injury or death, the Authority, self-insurer or employer is entitled to be indemnified by the third party in accordance with this section.

(2) In determining for the purposes of subsection (1) whether an injury or death was caused under circumstances creating a legal liability in a third party to pay damages in respect of the injury or death, Divisions 8A and 9 of Part IV must not be taken into account.

(3) The amount which a third party is required to pay as indemnity under subsection (1) is the lesser of-

(a) the amount of compensation paid or payable under this Act in respect of the injury or death; and

(b) the amount calculated in accordance with the formula -

is the extent, expressed as a percentage, whereby the third party's act, default or negligence caused or contributed to the injury or death;

is the amount of damages (disregarding the extent, if any, whereby any other person's act, default or negligence caused or contributed to the injury or death) for pecuniary loss and non pecuniary loss which the third party is or would have been liable to pay in respect of the injury or death were it not for the provisions of this Act and the Transport Accident Act 1986;
is the amount recovered or recoverable by the Authority, the self-insurer or the employer under section 137 from the Transport Accident Commission (otherwise than under a settlement);

is the amount paid by the third party in respect of the injury or death to the worker or the dependants of the worker under any settlement of, or judgment in, an action by the worker or dependants of the worker against the third party.

(4) Judgment against or settlement by a third party in an action by a worker, or dependants of a worker, in respect of an injury or death referred to in subsection (1) does not eliminate or diminish the right of indemnity given by this section, except to the extent provided in this section.

(5) If the Transport Accident Commission is liable to make payment to the Authority under section 137(5A) or to a self-insurer under section 137(5B) in respect of a death or injury and the Authority or self-insurer is entitled under this section to be indemnified by a third party in respect of the liability, the entitlement of the Authority or self-insurer is subrogated to the Transport Accident Commission by virtue of this subsection.

**The purpose of the section is to ensure that the burden of payment for the injury is borne by those with the legal liability for it.

86 The appellant in this case contends that it is not a 'third party' within the meaning of s 138(1) and, therefore, that it cannot be obliged to indemnify VWA. That contention is based upon a construction of s 9 of the Act which, it is said, has the effect of deeming a host employer, in this case the appellant, to be an employer for the purposes of the Act, including for the purposes of s 138 of the Act. A consequence of that construction is said to be that a host employer cannot simultaneously be both an employer and a third party for the purposes of s 138. It is also contended that s 9 deems Catalyst not to be an employer for the purposes of the Act, including for the purpose of s 138.**

**87 It is sufficient to dispose of this appeal by rejecting the contention that the host employer is not a 'third party' within the meaning of s 138 even assuming that it was an employer by operation of s 9. The subject matter of s 138 is the right of indemnity by a person who has paid or who is obliged to pay compensation in respect of an injury under the Act. Compensation in this case has been paid in the first instance by Catalyst which was then reimbursed by VWA. The appellant is a 'third party' in relation to those payments and the claim under which they were made. The Act does not define 'third party' and the natural and ordinary meaning of those words in the context of s 138 is any person having a liability but who was not a party to the compensation which was claimed and paid or for whom that payment is or may be payable. The Act establishes a comprehensive scheme for the making of claims and the payment of compensation to injured workers under those claims. The claim here was made by Mr Holt to Catalyst and paid by Catalyst to Mr Holt. Amounts were then reimbursed by the VWA to Catalyst. The appellant is a third party to the claim and payments between Catalyst and Mr Holt and, if it were relevant, the reimbursement between VWA and Catalyst.

88 The construction of 'third party' contended for by the appellant is inconsistent with the evident purpose of s 138 and is productive of avoidable distortions to the operation of the Act. The section is designed to match the burden of payment with the legal liability in respect of a compensable injury. The appellant's argument, however, if accepted, would lead to a mismatch between obligation and burden. No policy reason was suggested for that result and, indeed, it is fundamentally contrary to the scheme and objectives of the Act. The legislation is designed to have employers pay premiums commensurate with the risks they expose to their employees as judged by such matters as the activities inherent in the work and an employer's history of claims, accidents and payments. The appellant's argument would see s 138 effect an inexplicable departure from that design and a distortion of premiums for those entities able to rely upon the appellant's construction of the operation of s 138.

89 A construction of s 9 that would result in the appellant being an employer for its purposes does not necessarily result in it not being a third party for the purposes of s 138. Section 9 does not, on its face, provide a definition of employer for the purposes of s 138. At best the impact of s 9 upon s 138 occurs through the definition of 'employer' in s 5 which includes any person deemed to be an employer by the Act. Section 5, however, provides such a definition only to the extent that it is not 'inconsistent with the context or subject matter'. The definition of employer advanced by the appellant's construction of s 9 is inconsistent with the context and subject matter of s 138. Section 9 is concerned with treating as employees certain persons working under specified contracts; it is not concerned with identifying who may be liable to pay compensation where a liability may fall upon more than one person. There is no sound policy argument evident in s 138, or in the Act, or in any of the submissions for the appellant, to exclude from the requirement of contribution any person merely because the person may fall within the definition of employer for some purposes of the Act. The critical question is not whether the appellant may be an employer but, rather, whether it is a third party in the context of the specific operation of s 138 on the particular facts.[29] Whatever the appellant's primary liability may, or may not, have been, the fact is that in respect of any claim made and any compensation paid or payable by another person, namely by Catalyst, or by VWA, the appellant is a third party. Alternatively, if a strict and literal reading of s 138 must be given, it would ultimately work against the appellant's contention because, even assuming that it was an employer, it could not satisfy a strict literal reading of the condition contemplated by the section. Section 138 identifies the kind of employer who is entitled to seek indemnity and does so by reference to the case where the compensation by the employer 'has been paid, or is or may be payable'. It is only an employer of that description to which the appellant's argument can apply. However, the appellant, if it be an employer, concedes that it has not paid compensation and that it is not obliged now, nor will in the future be obliged, to pay any compensation (although it concedes that may have been in the past). A strict reading of the words in s 138 would, therefore, not see the appellant qualify as the kind of employer contemplated by a literal reading of the words describing the class of employer since it cannot establish that it has paid or is now obliged to pay or may in the future be obliged to pay compensation in respect of the injury to Mr Holt.**

**90 In any event, the argument based upon s 9 is also to be rejected. The section identifies that class of persons (who may loosely be called independent contractors) who are to be treated as employees for the purposes of the Act. The mechanism by which this is achieved is the deeming of the parties to the relevant contracts described in s 9(1) as employers and employees effected through s 9(2) and 9(3) of. In this case there are two potential contracts which would qualify as 'relevant contracts' within the meaning of s 9(1): That between the appellant and Catalyst (through which the labour of Mr Holt was provided to the appellant); and that between Catalyst and Mr Holt. The second contract falls outside s 9(1) because it is a contract of service and thereby expressly excluded by s 9(1). It is the contract between Catalyst and the appellant to which attention must be turned and which was relied upon by the appellant.

91 The contract between Catalyst and the appellant may qualify as a relevant contract under s 9(1)(a) or (b). Section 9(1) provides:**

(a) supplies to another person services for or in relation to the performance of work;

(b) has supplied to that person the services of persons for or in relation to the performance of work; or

but does not include a reference to a contract of service or a contract under which a person during a financial year-

(e) has supplied to that person services for or in relation to the performance of work where-

(i) those services are of a kind not ordinarily required by that person and are rendered by a person who ordinarily renders services of that kind to the public generally;

(ii) those services are of a kind ordinarily required by that person for less than 180 days in a financial year;

(iii) those services are provided for a period that does not exceed 90 days or for periods that, in the aggregate, do not exceed 90 days in that financial year and are not services-

(A) provided by a person by whom similar services are provided to the first-mentioned person; or

(B) for or in relation to the performance of work where any of the persons who perform the work also perform similar work for the first-mentioned person-

for periods that, in the aggregate, exceed 90 days in that financial year;

(f) has supplied to that person by a person (in this paragraph called the contractor) services for or in relation to the performance of work under a contract to which paragraphs (d) and (e) do not apply where the work to which the services related is performed-

(i) by two or more persons employed by, or who provide services for, the contractor in the course of a business carried on by the contractor;

(ii) where the contractor is a partnership of two or more natural persons, by one or more of the members of the partnership and one or more persons employed by, or who provide services for, the contractor in the course of a business carried on by the contractor; or

(iii) where the contractor is a natural person, by the contractor and one or more persons employed by, or who provide services for, the contractor in the course of a business carried on by the contractor-

unless the Authority determines that the contract or arrangement under which the services are so supplied was entered into with an intention either directly or indirectly of avoiding or evading the payment of a premium by any person; or

(g) has supplied to that person services for or in relation to the door to door sale of goods or of services ancillary to the sale of those goods on behalf of that person unless the Authority determines that the contract or arrangement under which the services are so supplied was entered into with an intention, either directly or indirectly, of avoiding or evading the payment of a premium by any person.

**The contract between Catalyst and the appellant qualifies as a relevant contract under s 9(1)(a) because Catalyst has supplied to the appellant 'services for or in relation to the performance of work'. The contract also qualifies as a relevant contract under s 9(1)(b) because Catalyst has supplied to the appellant the services of persons (namely, Mr Holt) for or in relation to the performance of work.

92 In considering the operation of s 9 upon that contract, and contracts of that kind, it is important to bear in mind the primary focus of the section. The purpose of s 9 is to bring within the operation of the Act certain workers who would not otherwise be regarded as employees, and correspondingly, to require the payment of premiums by certain persons who would not otherwise be employers. Where there is otherwise an employee and employer relationship, the other provisions of the Act would apply both to the provision of benefits to a worker and for the obligation to pay a premium by an employer. Where, however, there was no relationship of employee and employer either under a contract of service or by virtue of a deemed relationship under the extended provisions found in sections like s 6, 7 and 8, it is necessary for parties to contracts chosen for inclusion in the Act to be deemed, respectively, as employee and employer if the Act is to apply. The primary focus of the section, in other words, is not those situations where there is a contract of service (as is emphasised by the express exclusion to that effect in s 9(1)) or where there is already a deemed relationship under some other provision in the Act: in those cases the Act already applies and its coverage already extends to the worker, and the obligations already fall upon the employer (deemed or otherwise).

93 Section 9(1) contemplates a contract such as that entered into between Catalyst and the appellant. Such a contract is one under which a person (Catalyst), in the course of a business carried on by that person (Catalyst) has supplied to another person (the appellant) services for or in relation to the performance of work: s 9(1)(a). Alternatively, the section applies because there was a contract under which a person (the appellant) in the course of a business carried on by that person (the appellant) has supplied to that person (the appellant) the services of persons (Catalyst and Mr Holt) for or in relation to the performance of work (by Mr Holt): s 9(1)(b). From these provisions there are a number of exclusions, of which the only one relevant in this proceeding is that found in s 9(1)(e)(v) which excludes services supplied to a person (the appellant) 'for or in relation to' the performance of work where the VWA is satisfied that those services are rendered by a person (Catalyst) who ordinarily renders services of that kind to the public generally.

94 In this case there is no doubt that there was a contract between Catalyst and the appellant. Under that contract Catalyst provided services to the appellant within the meaning of the word 'services' as contemplated by s 9. There is no reason to give a narrow meaning to the word 'services' and, indeed, it is clear from the extended meanings given to that word in s 9(6)(b) and (d) that it was intended to have a wide meaning. The evidence made clear that Catalyst did not simply act as a mere conduit between the appellant and Mr Holt. Mr Holt had worked for Catalyst for about 18 months. Catalyst paid his wages and it was to Catalyst that he had to report if he could not attend the job, was unwell, or had any problems on the site. Catalyst trained people to perform work, kept records of hours that were worked, made payments, looked after superannuation arrangements, arranged for work to be done, attended the appellant's premises checking the suitability of the site, et cetera. One of the services rendered by Catalyst to the appellant was the provision of the labour of Mr Holt but that was only one, albeit perhaps the most important, of the services contracted for by the appellant to be provided by Catalyst and which was paid for by the appellant to Catalyst. It was the provision of those services which ultimately led the trial judge to conclude a partial responsibility on behalf of Catalyst (as to 10%) for its proportion of the responsibility of the injury. All these are services contemplated by the exclusion in s 9(1)(e)(v).[30] The VWA tendered[31] a certificate stating its satisfaction that at all times the services by Catalyst were supplied by it being a person ordinarily rendering services of that kind to the public generally and, accordingly, the contract between Catalyst and the appellant is excluded from the operation of s 9(1).

95 If wrong about the application of the exclusion in s 9(1)(e)(v), it would next be necessary to consider the appellant's contention that the proper construction of s 9 is to deem Catalyst not to be an employer for the purposes of the Act. In that regard it is important to turn to the provisions of s 9 which have the effect of deeming a person to be an employer. Sub-sections 9(2) and (3) provide:**

(i) who during a financial year under a relevant contract supplies services to another person;

(ii) to whom during a financial year, under a relevant contract, the services of persons are supplied for or in relation to the performance of work; or

(iii) who, during a financial year, under a relevant contract, gives out goods to other persons-

shall be deemed to be an employer in respect of that financial year;

(i) performs work for or in relation to which services are supplied to another person under a relevant contract; or

(ii) being a natural person, under a relevant contract, re-supplies goods to an employer-

shall be deemed to be a worker in respect of that financial year;

(c) amounts paid or payable by an employer during a financial year for or in relation to the performance of work relating to a relevant contract or the re-supply of goods by a worker under a relevant contract shall be deemed to be remuneration paid or payable during that financial year; and

(d) where an amount referred to in paragraph (c) is included in a larger amount paid or payable by an employer under a relevant contract during a financial year, that part of the larger amount which is not attributable to the performance of work relating to the relevant contract or the re-supply of goods by a worker under the relevant contract may be prescribed; and

(e) an amount paid or payable for or in relation to the performance of work under a relevant contract is deemed to include any payment made by a person who is deemed to be an employer under a relevant contract in relation to a person who is deemed to be a worker under the relevant contract that would be a superannuation benefit if made in relation to a person in the capacity of an employee.

(3) Where a contract is a relevant contract pursuant to both subsections (1)(a) and (1)(b)-

(a) the person to whom, under the contract, the services of persons are supplied for or in relation to the performance of work shall be deemed to be an employer; and

(b) notwithstanding subsection (2)(a)(i) the person who under the contract supplies the services shall not be deemed to be an employer.

The appellant contends that the effect of s 9(3)(b) is to deem Catalyst not to be an employer. Amongst the obstacles the appellant has in making that submission is the necessity to have the words 'shall not be deemed to be an employer' be read as if they said 'shall be deemed not to be an employer': that construction is contrary to the words actually found in the provision and there is no reason shown for adopting it. The effect of the provisions, rather, is to negate an unnecessary deeming in circumstances where the provisions would otherwise have brought about more than one person being deemed to be the employer. There is no reason for s 9(3)(b) to extend any further than the undoing of a deeming otherwise brought about by s 9(2).

**96 Assuming that the contract between Catalyst and the appellant is a relevant contract for the purposes of s 9(1), the effect of s 9(2) is to deem both the appellant and Catalyst to be an employer of Mr Holt. Section 9(3), however, does not deem, and has no need to deem, an actual employer under a contract of service not to be an employer; what it does, more narrowly, is to undo the unnecessary deeming otherwise brought about by s 9(2). In that way the worker continues to have one employer (albeit a deemed employer) for the purposes of the Act, and of the two employers which had initially been deemed by s 9(2), the Act ensures that only one is the employer (albeit a deemed employer) who becomes fixed with any obligations imposed by the Act in respect of premiums. There is no reason in principle or policy to construe s 9(3) to have any impact upon any employer and employee under a contract of service; if anything, the provision is another indicator that s 9 was not intended to have application where such a relationship existed. Section 9 has nothing to say where there is a contract of service even though nominally s 9(1)(b) might be satisfied.[32] Accordingly, I would dismiss the appeal with costs.

97 I should add that since preparing these reasons I have had the opportunity to read the views expressed by Ashley JA and agree with his Honour's analysis and conclusion that s 9 of the Accident Compensation Act 1985 is not directed at situations in which there is a contract of service.

[1] See para (a) of the definition of 'worker' in s 5 of the Act. The correlative provision with respect to the definition of 'employer' in s 5 only emerges in a glancing way. Paragraph (e) refers to the services of a worker being temporarily lent or let on hire to another person 'by the person with whom the worker has entered into a contract of service ...'.

[3] Section 3(d) of the Act.

[5] See for example ss 101(2), 102(1), 103(1)(c), 108(1) and (2) and 109(3).

[6] Ritchie v The Swan Hill District Hospital [1931] VicLawRp 8; [1931] VLR 57, Bailey v Victorian Soccer Federation [1976] VicRp 2; [1976] VR 13, 28 (Gillard J).

[10] See the heading to s 9.

[13] [1990] HCA 43; (1990) 64 ALJR 606, 610 right hand column to 612, left hand column.

[15] At least so long as the contractual arrangement involves no intention of avoiding or evading payment of premium.

[21] [1990] HCA 43; (1990) 64 ALJR 606, 612, right hand column.

[26] Out of caution, I restrict these observations to accident compensation and like legislation.

[27] Phillips JA seemed to suggest in Drake that he would be a worker in relationship to DSG. See [2000] VSCA 122; (2000) 2 VR 635, 651 [41]. But his Honour did not have to 'choose' between deemed employers, for he had excluded s 3C(1)(a) from application.

[28] [1990] HCA 43; (1990) 64 ALJR 606, 612, left hand column.

[29] Collector of Customs v Agfa-Gevaert Ltd [1996] HCA 36; (1996) 186 CLR 389; MLC Limited v Deputy Commissioner of Taxation [2002] FCA 1491; (2002) 126 FCR 37, 47 (Hill J).

[30] See also Drake Personnel Ltd v Commissioner of State Revenue [2000] VSCA 122; (2000) 2 VR 635, 653 (Phillips JA).

At a glance

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Before

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Judgment (205 paragraphs)

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Legislation Cited (10)

Cases Cited (7)