Workers Compensation Tribunal (SA)|1999-11-05|Before: Bagshaw Australia P

Mmi Workers Compensation (SA) Ltd (formerly Fai Workers Compensation (SA) P/L) as compensation authority for Horwood Bagshaw Australia P/L v Jean Lewis [1999] SAWCT 112 (5 November 1999)

MMI WORKERS COMPENSATION (SA) LTD. (formerly FAI WORKERS COMPENSATION (SA) PTY. LTD.) as compensating authority for HORWOOD BAGSHAW AUSTRALIA PTY. LTD.

Her Honour Deputy President Judge F.K. Cawthorne

Appeal - Deceased worker found at first instance to have been working under a contract of service - Appeal on basis Deputy President erred in law in misinterpreting and/or failing to give proper weight to evidence of the parties' intentions to establish a contract for the provision of services - Respondent contends no question of law involved - Respondent's contention upheld.

Australian Broadcasting Tribunal v. Bond and Others [1990] HCA 33; (1990) 170 C.L.R. 321.

Warrior v. WorkCover Corporation Supreme Court of South Australia Judgment No. S.6893.

Williams v. Australian Frontier Holidays [1998] NTSC 84; (1998) 147 F.L.R. 157.

Alice Springs Town Council v. Mpweteyerre Aboriginal Corporation (1997) 139 F.L.R. 236.

Lenzoot Haulage Pty. Ltd. v. Sinclair (1986) 42 S.A.S.R. 506.

Rohrlach v. Christianos (1980) 26 S.A.S.R. 161.

This appeal comes from a judicial determination by a single Member. The matter had before then been the subject of an arbitration and the evidence before the Arbitration Officer was put before the single Member without further oral evidence.

The essential issue to be decided is whether or not the deceased worker was at the time of his death working under a contract of service. The learned Deputy President found that he was. The appellant appeals this decision. An appeal to this Tribunal can be an appeal on a question of law only - Section 86(1) Workers Rehabilitation and Compensation Act 1986.

Mr. Kernot, for the respondent, contends that there is no question of law raised by the appeal, and so this issue must be determined at the outset. To do this it is necessary to examine the grounds of appeal and the reasons given by the learned Deputy President for his decision.

`1. The learned deputy president erred in law in interpreting the purchase order (between Horwood Bagshaw Australia Ltd. and Kenneth Lewis the deceased) as not intending "to create a relationship in any way different from that that had existed before, namely a contract of services" (sic) decision, p.7.

2. The learned deputy president failed to properly appreciate that both the deceased and Horwood Bagshaw Australia Ltd. intended to create a contract for the provision of services rather than a contract of service.

3. The learned deputy president erred in law in failing to give proper weight to the evidence on the purchase order that the deceased held himself out to operate under the name of "K.R. Lewis Consulting" which was contrary to any intention that he was to be engaged as a worker.

4. The learned deputy president erred in law in failing to give proper weight to the stated intention of Horwood Bagshaw Australia Ltd. that no person and in particular the deceased, was to be engaged as an employee.

5. The learned deputy president erred in law in failing to give proper weight to the use of a purchase order by Horwood Bagshaw Australia Ltd. to hire independent contractors as opposed to engaging employees.'

As Mr. Kernot rightly observed, there is a common theme running through each of the grounds of appeal and that in essence is the assertion that the learned Deputy President erred in law in misinterpreting and/or failing to give proper weight to the evidence of the parties' intentions to establish a contract for the provision of services rather than a contract of service.

As to the parties' intentions, the learned Deputy President made the following findings (p.7 decision):-

`Here Mr. Allen had an intention to resume the relationship with Mr. Lewis as it had been before. [In the past, between 1993 and 30 June 1996, the respondent had been employed by Horwood Bagshaw Australia Ltd.]. However, to get past the edict from HBAL that no-one was to be employed, he engaged in the device of raising the purchase order. But the purchase order was not intended to create a relationship in any way different from that that had existed before, namely a contract of services. In my view this device was a sham in the sense understood at law.'

The finding that `the purchase order was not intended to create a relationship in any way different from that that had existed before, namely a contract of services' is somewhat ambiguous and we need to refer to the evidence to resolve the ambiguity. Whilst the purchase order clearly did not cover the terms of the deceased's engagement, its use does provide corroborative evidence for the testimony of Messrs. Sweeney and Allen to the effect that at least the employer intended to establish a different legal relationship than had previously been the case, such that the deceased was not to be an employee on the PAYE system with the various leave and superannuation entitlements of an employee. There is no evidence to suggest that the deceased did not agree to this different form of relationship. Mr. Allen said that he made it quite clear to the deceased that he was not to be employed. He suggested to the deceased that he should seek some advice from a tax accountant.

Our analysis of the evidence does not reveal anything that would support a finding that the purchase order was not intended to create a legal relationship in any way different from that that had existed before. A wrong finding of fact does not give rise to an error of law, but if there is no evidence to support a crucial finding of fact, that is an error of law: Australian Broadcasting Tribunal v. Bond and Others [1990] HCA 33; (1990) 170 C.L.R. 321; Warrior v. WorkCover Corporation Supreme Court of South Australia Judgment No. S.6893 per Lander J; Williams v. Australian Frontier Holidays [1998] NTSC 84; (1998) 147 F.L.R. 157. Thus, if the learned Deputy President is to be read as saying that the parties did not intend to create a legal relationship in any way different from that that had existed before, it can be argued that he erred in law. However, an appeal can only succeed on an error of law if the error is one upon which the decision depends and is such as to vitiate the decision appealed from: Williams v. Australian Frontier Holidays (supra at 160); Alice Springs Town Council v. Mpweteyerre Aboriginal Corporation (1997) 139 F.L.R. 236 at 247-248, and, for the reasons we give later, we do not think that any possible error in respect of the learned Deputy President's findings as to the parties' intentions was one upon which his decision depended.

We do not, however, think that this is what the learned Deputy President meant to convey, for in the same paragraph he acknowledged the `edict from HBHL that no-one was to be employed', and he then went on to describe the use of the purchase order as a `sham'. If in the learned Deputy President's view the purchase order was not intended to create a legal relationship in any way different from that that had existed before, there was no need or logic in calling it a sham.

We think that what the learned Deputy President meant to convey was that the parties intended their day to day working relationship to be the same as it had been in the past. Such a finding was open on the evidence and is unassailable. Implicit in the learned Deputy President's findings, not least his description of the use of the purchase order as a sham, is an acknowledgment that the parties had labelled and perhaps understood their relationship to be one wherein the deceased was not to be employed.

The parties' agreement as to their rights and obligations clearly extended to matters beyond the use of the purchase order and the employer's wish not to `employ' the deceased. The purchase order itself is not indicative of any form of relationship. In the circumstances, the parties' conversations, conduct and course of dealings need to be examined to ascertain all the terms of the agreement constituting their relationship.

It is well established that in these circumstances a relationship is not determined by the label the parties choose to put on it nor even by their understanding of it. As King C.J. said in Lenzoot Haulage Pty. Ltd. v. Sinclair (1986) 42 S.A.S.R. 506 at 511:-

`... Whether the relationship of the parties is that of employer and employee, so as to attach to the applicant for compensation the status of "worker", is to be determined by reference to indicia found in the terms of the agreement constituting the relationship. The terms of that agreement may be written, oral, or implied from the conduct or course of dealing of the parties and may be found partly in one source and partly in another.'

In Lenzoot Haulage the parties had signed a written agreement, not suggested by anyone to be a sham, that purported to define their true legal relationship. Sinclair, the driver was defined as `the contractor'. Another clause specifically declared the status of Sinclair to be that of an independent contractor and not that of an employee. With reference to this clause King C.J. said at p.514:-

`Clause 10 of the written agreement purports to declare the status of the respondent as that of an independent contractor and not as that of an employee. The status of the respondent must be determined, however, upon an analysis of the rights and obligations of the parties as ascertained from the agreement between them considered as a whole. It is not determined by the label which the parties choose to place upon it. If the status is ambiguous, the parties understanding of it as declared in their written agreement may have an influence on the final decision, but if the status can be ascertained by means of an analysis of the agreed rights and obligations, the label, if inconsistent with the status thus applied, must be disregarded.'

It is evident that the learned Deputy President applied the appropriate law to the facts found. After citing the aforementioned passage from King C.J. in Lenzoot Haulage, he conducted the requisite analysis of the rights and obligations of the parties and in relation thereto made a number of findings, set out at pp.4 and 8 of his decision, leading to the conclusion that there was no discernible difference in the circumstances of the deceased's engagement after 1 October 1996 as compared with his employment between 1993 and 30 June 1996. These were findings and inferences of fact, open on the evidence and as such binding on this Tribunal. The learned Deputy President thereupon concluded that `This was a man who was engaged in the service of Horwood Bagshaw. It would be ludicrous to describe him in the given circumstances as in business on his own account'.

In Rohrlach v. Christianos (1980) 26 S.A.S.R. 161 the issue was whether the deceased worker was employed by the respondent or by one of the incorporated companies which the respondent controlled. Discussing the competency of the appeal, King C.J. stated at p.162:-

`The distinction between a matter of law and a matter of fact is not always easy to make. "The proper legal effect of a proved fact is essentially a question of law, but the question whether a fact has been proved when evidence for and against has been properly admitted is necessarily a pure question of fact": _Wali Mohammad v. Mohammad Baksh_1, quoted by Rich A.C.J. in Federal Commission of Taxation v. Broken Hill South Ltd. The question is one of fact, whether it relates to primary facts or to inferences of secondary facts drawn from the primary facts: Vickers v. Jarrett Industries Pty. Ltd.3 , per Zelling J. at p.546. Some questions are matters of mixed law and fact. Their resolution requires a correct appreciation of the legal concept involved and a correct understanding of the facts to which those concepts must be applied. It seems to me that the question whether the relationship of worker and employer exists at a particular time for the purpose of s. 9(1) of the Workers Compensation Act falls into that category. Its resolution requires a correct appreciation of the legal concepts of worker and employer as used in the Act, a correct appreciation of the principles of the law of contract relating to the formation, termination and novation of contracts as those principles apply to the relationship of worker and employer, and a correct understanding of the facts to which those principles must be applied to resolve the question in the particular case.'

We think these remarks are apposite here. There is nothing in the Deputy President's reasons to suggest that he misunderstood or misapplied the relevant law. It is apparent from the learned Deputy President's reasons that he did not regard the parties' own description of their relationship as overriding what he found, upon his analysis of their rights and obligations as ascertained from all the terms of their agreement, to be an unambiguous case of engagement of service. It is not to the point that other reasonable minds might have come to a different conclusion. There is no question of law involved.

Rehabilitation and Compensation Act 1986

Mmi Workers Compensation (SA) Ltd (formerly Fai Workers Compensation (SA) P/L) as compensation authority for Horwood Bagshaw Australia P/L v Jean Lewis [1999] SAWCT 112

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Judgment (35 paragraphs)

Mmi Workers Compensation (SA) Ltd (formerly Fai Workers Compensation (SA) P/L) as compensation authority for Horwood Bagshaw Australia P/L v Jean Lewis [1999] SAWCT 112 (5 November 1999)

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