STAGING CONNECTIONS P/L v. WORKCOVER AUTHORITY OF NEW SOUTH WALES [2004] NSWCA 357

LOWER COURT Supreme Court - Common Law Division JURISDICTION : LOWER COURT SC 30056/2003 FILE NUMBER(S) : LOWER COURT Adams J JUDICIAL OFFICER :

IN THE SUPREME COURT OF NEW SOUTH WALES COURT OF APPEAL 40384/2004

Spigelman CJ Beazley JA Bryson JA

1 October 2004 STAGING CONNECTIONS P/L v. WORKCOVER AUTHORITY OF NEW SOUTH WALES Judgment 1 SPIGELMAN CJ: I agree with Bryson JA. 2 BEAZLEY JA: I agree with Bryson JA. 3 BRYSON JA: The appellant as plaintiff (Staging Connections Pty Ltd) issued Summons 30056 of 2003 in the Administrative Law List (Common Law Division) of the Supreme Court on 16 June 2003 and claimed against the respondent as defendant (WorkCover Authority of New South Wales) orders to these effects: 1. A declaration that the determination by the defendant under s 170 of the Workers Compensation Act 1987 notified to the plaintiff by letter dated 28 March 2003 is invalid. 2. An order requiring the defendant to determine according to law the plaintiff's application under s 170 of the Workers Compensation Act 1987 for review of the determination by Allianz Australia Ltd of the insurance premium payable for the year 1 July 2001 to 30 June 2002. 3. An order requiring that the Defendant pay the Plaintiff's costs. 4 The Summons was heard and dismissed by Adams J on 9 February 2004, and the present appeal is brought against Adams J's order. 5 The Workers Compensation Act 1987 (NSW) makes insurance against liabilities under that Act compulsory for employers (s.155), and requires that insurance premiums be calculated in accordance with Insurance Premiums Orders made by the Governor with the advice of the Executive Council and notified in the Government Gazette (ss.168-169). Section 170 prescribes the action which an employer may take when a licensed insurer charges an insurance premium which is not in accordance with an Insurance Premiums Order. Section 170 is as follows:

170 Action by employer where premium not in accordance with insurance premiums order (cf former s 18AA) (1) An employer from whom an insurer has demanded a premium for the issue or renewal of a policy of insurance may dispute an aspect of the insurer's determination of that premium on the basis that it is not in accordance with the relevant insurance premiums order. The employer may apply to the Authority for a review by the Authority of that aspect ( "the disputed aspect" ) of the insurer's determination. (2) Any such application must be made within 1 month after the date of the demand for the premium concerned, or within such further period as the Authority may, in special circumstances, approve in relation to the application. (3) When any such application is made, the Authority: (a) shall notify the insurer of the making of the application, (b) shall consider the application and may have regard to such oral or written evidence or representations as it thinks fit, (c) must dismiss the application if the Authority decides that: (i) the policy is not a policy to which a relevant insurance premiums order applies, or (ii) the disputed aspect was determined by the insurer in accordance with the relevant insurance premiums order, or must in any other case determine the disputed aspect in accordance with the relevant insurance premiums order, and (d) shall, in such manner as it thinks fit, inform the employer and the insurer of its dismissal of the application or its determination, as the case may require. (3A) The Authority's determination of the disputed aspect is to be made as a review of the insurer's determination and accordingly is to be made as if it were the determination required to be made by the insurer at the time of the determination of the premium concerned. (3B) When the Authority makes a determination on a review under this section, the insurer must redetermine the relevant premium in accordance with the Authority's determination. (4) Where: (a) the insurer redetermines a premium following the Authority's determination, and (b) the employer has already paid to the insurer the premium to which the application relates, the employer may recover from the insurer, in a court of competent jurisdiction as a debt due to the employer, so much of the premium paid as exceeds the premium as redetermined, together with interest on the amount of premium recoverable calculated at the rate of 1.2% per month compounded monthly (or, where some other rate of interest is prescribed by the regulations, that other rate). (5) Where: (a) the Authority makes a determination, (b) the insurer does not within 1 month after the date of the determination of the Authority: (i) in the case of the issue of a policy of insurance - issue to the employer a policy of insurance having effect for such period (not exceeding 1 year) and from such date as the Authority determines, or (ii) in the case of the renewal of a policy of insurance - effect the renewal of the policy for such period (not exceeding 1 year) as the Authority determines from the date of expiry referred to in subsection (2) (b), at such premium as would result from a redetermination by the insurer of the premium in accordance with the Authority's determination, and (c) the employer does not otherwise agree or request, the insurer shall be deemed to have issued to the employer a policy of insurance at that premium and having effect for the period and from the date referred to in paragraph (b) (i) or (ii). (6) The insurer shall forthwith supply to the employer a document setting out the provisions of a policy of insurance deemed by subsection (5) to be issued to the employer. Maximum penalty: 20 penalty units. (7) In this section, a reference to an employer includes a reference to a person who proposes to become an employer. 6 No legislation specifically provides for appeal against or review of a determination by WorkCover under s.170, and the determination is accordingly open to review under the general powers of the Court and not otherwise. 7 The Insurance Premiums Order 2001-2002 under the Workers Compensation Act 1987 was gazetted on 22 June 2001 and commenced at 4 pm on 30 June 2001. The Order is a very elaborate document. Clause 2 subcll. (1), (2), (3) and (4) of schedule I Interpretation of the Order are as follows: 2 Classification of employer's business (1) For the purposes of this Order, the classification applicable to an employer is the class in Column 2 of Table A (NSW WorkCover Industry Classification System) to which the employer's business corresponds. (2) An employer's basic tariff premium is determined having regard to the classification applicable to the employer's business. An employer's business means the employer's business or industrial activity. (3) An employer may carry on a single business or more than one business at the same time. (4) If an employer carries on a single business, the classification applicable to the business is that which most accurately describes the entire business of the employer. The entire business includes not only the operations and activities directly involved in the conduct of the business, but also all operations and activities incidental to the conduct of the business.

Subclauses 5 to 7 deal with an employer who carries on more than one business, and are not now relevant. 8 Schedule 3 Basic Tariff Premium provides for calculation of the basic rate of premium for an employer by a formula elements in which are the total wages payable to workers by the employer and a percentage rate which corresponds with a class appearing in column 2 in Table A opposite the percentage rate. Subclause 2(2) of Schedule 3 provides: (2) If the employer does not supply sufficient information to enable the business to be classified, the business is to be classified in the class with the highest percentage rate that appears to be applicable to the business. The business may be reclassified to a class having a lower percentage rate when sufficient information is supplied. 9 The amounts of premiums may be affected by other provisions in Schedules 1 to 10 of the Order which do not require detailed attention now. 10 Table A NSW WorkCover Industry Classification System sets out the classification system at great length on 378 pages. Table A provides for Industry Classification into Division A - Agriculture, Forestry and Fishing - to Division Q - Personal and Other Services, and within the Divisions there are 97 Subdivisions from Subdivision 01 Agriculture to Subdivision 97 Private Households Employing Staff. Division L - Property and Business Services - contains most of the classifications now relevant. Division L is introduced by the words: This Division includes all employers engaged in renting and leasing assets as well as employers engaged in providing a wide variety of business service. 11 The classifications to which most attention was directed in argument are in subdivisions 77 and 78. Subdivision 77 is in these terms: 774310 Plant and Machinery Hiring and Leasing Without Operator 4.73%

This class includes employers engaged in leasing, renting or hiring industrial machinery, plant or equipment (except transport equipment) without operators, from stock physically held for that purpose.

Employers mainly engaged in leasing machinery, plant or equipment purely on a financial service basis (ie without physically handling the goods are included in Subdivision 73 Finance).

Primary Activities: Agricultural machinery leasing Amusement machines, coin operated, hiring Construction machinery leasing Leasing of plant or equipment (from own stocks; without operators; except transport equipment)

774320 Plant and Machinery Hiring and Leasing With 6.74% Operator

This class includes employers engaged in leasing, renting or hiring industrial machinery, plant or equipment (except transport equipment) with operators.

Employers mainly engaged in leasing machinery, plant or equipment purely on a financial service basis (ie without physically handling the goods are included in Subdivision 73 Finance).

Primary Activities: Construction machinery leasing, with operator Leasing of plant or equipment

This class includes employers engaged in leasing, renting or hiring office equipment from stock physically held for that purpose.

Employers mainly engaged in leasing machinery, plant or equipment purely on a financial service basis (ie without physically handling the goods are included in Subdivision 73 Finance).

Primary Activities: Computer leasing Computer peripheral leasing Office machinery or equipment hiring 12 Subdivision 78 is in these terms: 786900 Business Services nec 0.67%

This class includes employers engaged in providing business services not elsewhere classified, such as auctioning or valuing services (except in the case of real estate, wool or livestock), translation services, call centres and telephone answering services. Also included in this class are employers engaged in debt collecting, or in mercantile or consumer credit reporting.

Employers mainly engaged in (a) auctioning or valuing wool or livestock are included in Group 451 Farm Produce Wholesaling; and (b) auctioning or valuing real estate are included in Class 772000 Real Estate Agents.

Primary Activities: Auction rooms operation Auctioning service (except real estate, wool or livestock) Business service nec Call centres Collection agency service (accounts; except real estate) Consumer credit reporting service Credit bureau or agency service Debt collecting service Fashion design service Interior decorating service nec Interpreting service Mercantile credit reporting service Microfiche production service Telephone answering service Translation service Valuation service (except for real estate, wool or livestock) 13 Division P - Cultural and Recreational Services subdivision - 92 - Libraries, Museums and the Arts - also contains a classification now relevant: 925920 Services to the Arts nec 2.20%

This class includes employers engaged in providing services to the arts not elsewhere classified.

Primary Activities: Costume design service Services to the arts nec Set designing service Theatre lighting service 14 The abbreviation "nec" means "Not Elsewhere Classified"; see Note 9 to Table A. 15 The classifications in Table A follow generally, it may be not exactly, the Australian and New Zealand Standard Industrial Classification 1993 published by the Australian Bureau of Statistics and the Department of Statistics of New Zealand, referred to as the ANZIC Code. Before 30 June 2001 a different but also elaborate classification performed a similar function. Staging Connections' Workers Compensation insurer Allianz Australia Limited allocated it to classification 925920 Services to the Arts nec; under the earlier classification system Staging Connections had been classified into subdivision 694 Broadcasting & Television and the reclassification produced a large increase in premium. Staging Connections asked Allianz to review the classification and received a response which in substance was a refusal to alter Allianz' position. By letter of 6 December 2001 Staging Connections asked WorkCover to review the tariff classification; this letter plainly meant that WorkCover was asked to make a determination under s.170 of the Workers Compensation Act 1987. In the letter Staging Connections claimed that its classification should be 786900 Business Services nec, gave a description of its business activities and reasons why it was contended that the description under subdivision 925920 Services to the Arts nec did not reflect the true nature of its business activities, and said: "We believe we could equally fall into any of the following categories." 786900 Business Services nec 785100 Marketing and Business Management Services 774330 Office Equipment Hiring and Leasing 785500 Business Management Services 844020 Other Education and Training nec 911100 Film & Video Production

16 After extended correspondence, communications and consideration, WorkCover made the determination by its letter of 28 March 2003, which was challenged in the proceedings. Staging Connections' challenge to that determination did not turn on formal and procedural requirements made by s.170. 17 The details of the correspondence between Staging Connections and WorkCover can be summarised below:

WorkCover wrote to Staging Connections on 18 June 2002 and after giving a history of the application and a short statement of what Staging Connections contended said: After carefully considering all the available information provided in this matter WorkCover is satisfied that the predominant business activity of Staging Connections (Australia) Pty Ltd is that of hiring and leasing of equipment with operators. … The provision of workers to erect, dismantle and operate the items hired by the company is in many instances integral to the operation of the business and cannot be excluded in determining the appropriate tariff classification. Therefore the alternative rate of 774310 - Plant and Machinery Hiring and Leasing without Operator is not appropriate. 18 WorkCover invited submission of further information and indicated that unless there was some further submission the determination would be made as indicated adopting Classification 774320 Plant and Machinery Hiring and Leasing with Operator. 19 Staging Connections replied challenging this decision and putting some further submissions by a fax message in June 2002, and WorkCover replied by a lengthy letter on 21 June 2002. Among other things this letter said: Table A of the Insurance Premiums Order specifies that an employer's basic tariff premium rate is determined having regard to the employer's entire business or industrial activity. Table A further prescribes that the entire business activity includes not only the operations and activities directly involved [in] the conduct of the business, but also all operations and activities incidental to the conduct of the business. Table A does not advise that the basic tariff premium is based upon claims experience. 20 WorkCover went on to make a review of the reasons why it had not adopted a number of other classifications. It is not necessary to set them all out but an example is the following: WorkCover Industry Classification Business Service nec - WIC786900 was not considered appropriate as this is a classification for business which were not elsewhere classified. As the business activity of Staging Connections (Australia) Pty Ltd was able to be classified elsewhere through the activities of hiring and leasing with operators, it is considered that this classification was applicable. 21 WorkCover went on to deal with six other classifications which had been considered but not adopted. Again WorkCover invited further submissions before making a determination. 22 There followed a series of communications, and on 12 September 2002, two officers of WorkCover carried out a site inspection of the head office premises of Staging Connections, took photographs and discussed business activities with the Finance Director and another representative of Staging Connections. In further correspondence the Finance Director again contended for classification 786900 Business Services nec. 23 WorkCover by a letter of 4 December 2002 referred to the meeting and the site inspection, set out observations made at the site inspection and said: After carefully considering all the available information provided in this matter WorkCover is satisfied that the predominant business activity of Staging Connections (Australia) Pty Ltd is that of hiring and leasing of equipment without operators.

This indicates movement from Classification 774320 - Plant and Machinery Hiring and Leasing with Operator to 774310 Plant and Machinery Hiring Leasing without Operator. 24 WorkCover went on to mention several other classifications which had been considered but were regarded as not appropriate for the business activities of Staging Connections; these included 786900 Business Services nec. WorkCover said: Further to this, the claims history of Staging Connections has been examined and it is noted that there is a significant number of claims as a result of manual handling incidents. This is consistent with the description of the activities carries out by Staging Connections of bumping in/bumping out, setting up, returning, cleaning and delivery of equipment involved in the hiring and leasing of equipment. 25 WorkCover again invited further submissions. Staging Connections made detailed submissions by a letter of 27 February 2003 contending, with much supporting detail: Outline of the Staging Connection's Business Staging Connections is a company which specialises in the provision of event management services. It provides "one stop" event staging service, from the most complex of events to a simple board room presentation. 26 Staging Connections contended that the most accurate classification was 925920 - Services to the Arts nec and disputed a number of other possible classifications, with reasons. 27 The final step in WorkCover's consideration and reasoning was its letter to Staging Connections of 28 March 2003. In view of its overall importance I set out the whole letter: We refer to your application under Section 170 of the Workers Compensation Act, 1987 for a review of the WorkCover Industry Classification used to calculate the basic tariff premium in the insurer's determination of the premium. We also refer to WorkCover's most recent correspondence dated 4 December 2002 where you were advised of the proposed determination of the classification to be used in the calculation of the basic tariff premium and the reasons this was applicable. You were invited to provide further information in support of your application within fourteen days and further correspondence was received dated 27 February 2003. In this correspondence the business activity of Staging Connections was further described. This description is consistent with information previously provided by Staging Connections to WorkCover and as viewed by Mr Rod McInnes and Mr John Murray of WorkCover in a site inspection of the Head Office of Staging Connections. WorkCover has carefully considered these further submissions together with all previously submitted material. WorkCover Industry Classification Services to the Arts nec - WIC925920 has been suggested as an appropriate classification for the business activity of Staging Connections. As the business of Staging Connections predominantly is that of a service to the business community, rather than specifically to the arts, it is not considered that this classification is appropriate. The classification Services to the Arts nec - WIC925920 is not appropriate for business that predominantly supply services to any other industry than that of the arts. It is noted that further classifications have been suggested as appropriate to the business activity of Staging Connections. WorkCover's consideration of these classifications and the reasons that they are not appropriate is outlined in WorkCover's previous correspondence dated 21 June 2002. The further information provided does not after these conclusions. Further information has also been provided stating that the Australian Bureau of Statistics considers that ANZSIC Code 7869 - Business Services nec is appropriate for the activities of Staging Connections. While the ANZSIC system was used as the base model for the formulation of the WorkCover Industry Classification system, these are separate and distinct classification systems. WorkCover has carefully examined the nature of work carried out by Staging Connections and acknowledges that while some of the activities of the company may be characterised as falling under this classification, the predominant activity of Staging Connections is hiring equipment to business for the purpose of staging events. WorkCover has formed this view on the basis that: · The most significant source of turnover is equipment hire (45%) · The majority of staff are associated with equipment hire (hire, storage, transport, operations, etc.) · A substantial majority of the claims arising from handling / use of equipment. Accordingly, the Authority has determined that WorkCover industry Classification Plant and Machinery Hiring and Leasing Without Operators - WIC774310 (4.73%) is to be used to calculate the basic tariff premium in the determination of the premium for the period of insurance 30 June 2001 to 30 June 2002. Allianz Australia Workers Compensation (NSW) Limited has been advised of WorkCover's decision. This concludes WorkCover's review and our file has now been closed. 28 The process of consideration and determination is not contained only in this letter. The letter itself refers back to WorkCover's letter of 21 June 2002. The process of reasoning on which the rejection of a number of classifications was based, set out in WorkCover's letter of 21 June 2002, was expressly adopted in the letter of 28 March 2003, and continued to affect the determination then made. The whole correspondence needs to be examined in order to understand the material which was before WorkCover for consideration and the process of determination. It is also necessary to have regard to statements in the correspondence and elsewhere in the evidence about what took place at the site inspection. Exhibit GRK1 is a bundle of photographs of equipment and scenes in Staging Connections' head office produced on subpoena by WorkCover and, it should be inferred, taken on the site inspection. 29 In my understanding the principles on which the Court should act are these. WorkCover was required to make its determination in accordance with law. Its determination may be set aside if it is shown that WorkCover made an error of law in the course of considering and making the determination. However the error of law must have been material to the decision, and not an error on some incidental matter which did not materially affect the outcome. It is an error of law to base a decision on some fact or consideration which is not relevant to the process of determination the power to make which is conferred on WorkCover by s.170 of the Workers Compensation Act 1987. As with other errors of law, an error of this kind must be material to the outcome. If there was an error of law the Court may make an order setting aside the determination which WorkCover made. The Court's power to do this is discretionary, and for sufficient reason the Court may allow a determination to stand even though there was a material error of law. The Court does not have power to make a determination itself, or to decide what is the correct classification in accordance with the Insurance Premium Order, including Schedule 1 cl.2(4) and Table A. If WorkCover's determination is set aside, the Court should order WorkCover to proceed to make its determination on the correct basis. These principles were not in contention at the hearing of the appeal, and the arguments submitted related to their application. 30 In applying these principles materiality may come under consideration at two different stages. An error of law which does not affect the outcome, the decision under challenge, is not material and is not a basis on which the Court could set the decision aside. At the discretionary stage materiality can be weighed and assessed for its relative importance, which may not justify intervention. A similar process of assessment can take place where there is some procedural shortcoming: compare Minister for Local Government v. South Sydney City Council (2002) 55 NSWLR 381 at [48] (Spigelman CJ). 31 At a number of points in the correspondence Staging Connections pointed to the percentage rates of premium which were chargeable if different classifications were adopted, and to what were said to be anomalies about very large differences in the rates and total amounts of premium which followed from a decision in favour of one classification or another. Staging Connections also referred to its claims experience, contending to the effect that its claims experience did not justify a high rate of premium. In its letter of 21 June 2002 WorkCover said, plainly correctly, "Table A does not advise that the basic tier of premium is based upon claims experience." Thereafter Staging Connections continued to refer in one form or another to its claims experience, for example by saying in its message of 27 June 2002 "We have a good OHS record and the occupations of its staff would not ordinarily be considered inherently dangerous. We have satisfied the highest requirements for the NSW Premium Discount Scheme by satisfying the most recent State OHS regulations." 32 In an unregulated insurance industry, claims experience and risk would have prominent claim for consideration when assessing premiums, but as WorkCover indicated in its letter of 21 June 2002, claims experience was not relevant to the allocation of a business to one of the classifications in Table A. However it will be seen that the third part of the basis of decision set out in WorkCover's determination of 28 March 2003 is "A substantial majority of the claims arising from handling/use of equipment." At the hearing before Adams J and again on appeal Staging Connections took the position that WorkCover was in error in having regard to its claims experience in making the determination. 33 In the judgment under appeal Adams J (Red 18) said: I have concluded that WorkCover did indeed regard the claims history as a relevant factor when it derived its characterisation of the predominant activity of the plaintiff and placed it within class 774310 and I consider that this constitutes an error of law. The question arises, nevertheless, whether the relief sought ought to be granted. I take the rule to be that relief in a case such as this should be granted unless the defendant can show that the error was in substance immaterial. In this regard Ms Allars [counsel for WorkCover] has pointed to a letter from WorkCover to the plaintiff on 4 December 2002 referring to the plaintiff's business and, in particular, to a site inspection carried out at the plaintiff's invitation and concluding - "After carefully considering all the available information provided in this matter WorkCover is satisfied that the predominant business activity of Staging Connections (Australia) Pty Ltd is that of hiring and leasing of equipment without operators." 34 However his Honour went on to reach the conclusion that although this and an earlier reference in correspondence show that WorkCover was aware of and referred to Staging Connections' claims experience, the reference to claims experience was: … merely incidental and could not reasonably or logically be considered to give support to the classification which had been made. However, I am satisfied that the classification did not depend upon the claims history and that the determination would have been the same had the claims history been left out of account and that is so although it appears from the letter of 28 March 2003 that it was a factor in determining the classification.

35 I respectfully take a different view to Adams J as I am of the opinion that the terms of the letter of 28 March 2003 are such that it is not possible to see the reference to claims experience as merely incidental, or as something which could not reasonably or logically be considered to give support to the classification which was made. WorkCover's letter stated the basis for the view, which is obviously central to the decision, that the predominant activity of Staging Connections is hiring equipment to business for the purpose of staging events, and that basis was set out in three points one of which refers to claims experience. The reference to claims experience is basal, not merely incidental to the decision which was reached. 36 However I must go on also to say that I do not agree with Adams J's view that the reference to and treatment of the consideration relating to claims experience in WorkCover's determination constitute an error of law. It would be an error of law to identify the appropriate classification in Table A by considering whether the claims experience of Staging Connections justifies the imposition of the premium rate referred to in the classification. WorkCover was aware that it should not use claims experience in this way, and I regard it as clear that WorkCover did not do so, although some submissions put forward by Staging Connections had, in effect, invited WorkCover to do so. In its determination WorkCover stated the basis for WorkCover's view about what the predominant activity of Staging Connections was, and one of the three points of that basis was the part of the business activities from which a substantial majority of claims arose. This and the other two points, the most significant source of turnover and the activities of the majority of staff, are, in my opinion, relevant to identification of the predominant activity; a reasonable person in WorkCover's position could so regard them. 37 Staging Connections also presented arguments to the effect that in reaching its determination WorkCover had not applied subcl.2(4) of Schedule 1 of the Insurance Premium Order according to its true meaning, and had applied tests which should not have been applied according to the true meaning and effect of subcl.2(4). The first form of this argument was to the effect that WorkCover had applied a "predominant activity" test in determining to apply Classification 774310 Plant and Machinery Hiring and Leasing without Operators, and that to adopt this test was not to identify the classification applicable to the business as "that which most accurately describes the entire business of the employer," taken with the definition of inclusion of "the entire business" in the second sentence of subcl.2(4). The contention was to the effect that identifying the predominant activity is a different process to searching for and identifying the classification which most accurately describes the entire business, including operations and activities directly involved in the conduct of the business and also those incidental to the conduct of the business. Obviously enough, identifying the predominant activity of a business is a different process to identifying the most accurate description of the entire business, including both the activities directly involved and the incidental activities. 38 This contention was made before Adams J, who disposed of it in the following terms: (Red 16) In this case the reasoning of WorkCover, as disclosed in the correspondence, is that it determined that the entire business is most accurately described in class 323774 because of the extent to which its activities predominantly fall within that description. It does not seem to me that the plaintiff has made good the complaint that WorkCover equated the predominant activity with "entire business" but, in determining whether the business fell within the specified classification, it considered that, because its predominant activity did so in terms, that is connected one way or another with the leasing of equipment, that classification best described its entire business. I repeat that many businesses will not fit precisely into any classification. The mere reference by Workcover to the predominant activities of an employer did not mean that all the activities of the employer were not considered. It simply means that the predominance of those activities, as it were, clinched the matter. 39 In my respectful view Adams J disposed of this question correctly. I do not see the terms of the correspondence, and in particular of the letter of 28 March 2003, as indicating that WorkCover did not advert to or was not fully aware of the terms of subcl.2(4). When searching for the most accurate description of the entire business, including the activities directly involved and the incidental activities, the identification of the predominant activity is in my view a relevant matter; indeed it would be very hard to address the application of subcl.2(4) without identifying the predominant activity among the operations and activities directly involved in the conduct of the business, as well as identifying any incidental activities so involved. It would be an error to treat identification of the predominant activity as excluding or substituting for the whole exercise, but identifying the predominant activity could never be anything less than a very important part of the exercise. I do not think that it has been shown, from the terms of the determination or from the other material in evidence, that WorkCover substituted the predominant activity test for the application of the test in subcl.2(4). 40 In saying this I have regard to observations of Brennan CJ, Toohey, McHugh and Gummow JJ on the proper role of judicial review in Minister for Immigration and Ethnic Affairs v. Wu Shan Liang (1996) 185 CLR 259 at 271-272, which show that it is well settled that the reasons for an administrative decision should be given a beneficial construction, that a Court should not be concerned with looseness in language or unhappy phrasing and "The reasons for the decision under review are not to be construed minutely and finely with an eye keenly attuned to the perception of error." I do not see the prominent attention given by WorkCover to the predominant activity, a relevant and important consideration, as an indication that WorkCover did not give attention to other relevant considerations or to the test in subcl.2(4). 41 In approaching the meaning of subcl.2(4) it should be understood that the subclause proceeds on the basis that there is no classification which accurately describes the entire business of Staging Connections. If there had been such a classification (as there often would be), the process of assessment in subcl.2(4) would not have been necessary. When subcl.2(4) is taken with the terms of the classifications themselves, which are quite broad, many businesses can be readily and unmistakably classified. Staging Connections certainly leases out equipment without operators; if it did nothing else its business could readily be allocated to Classification 774310 Plant and Machinery Hiring Leasing Without Operator. The terms of the classifications themselves reflect the insusceptibility of many businesses to precise classification. Even when some classification seems from its own words to be completely clear or very close, it cannot be taken in isolation from the other classifications: there may be one or several others which, once identified, disturb the clarity which seems to emerge from isolated consideration. 42 After opening with the word "Plant and Machinery Hiring and Leasing without Operator" the terms of Classification 774310 in effect acknowledge the indefinite nature of the exercise by going on to state certain employers included in the class and certain employers excluded from the class, references to other parts of Table A, and illustrations of activity under the heading of "Primary Activities". (The word "Primary" appears to be present for the historical reason that it also appears in the ANZSIC Standard Industrial Classification 1993 from which Table A is derived. The word "Primary" has significance for the purpose of the ANZSIC classification but appears to have no real meaning in Table A where the heading "Primary Activities" indicates some included business activities.) The generally indefinite edge of the expressions used reflects the nature of the whole exercise, as it is beyond what language can do to define classifications of businesses with complete rigour so as to have a classification for all possible businesses and to have no overlaps. Table A could not work and achieve its purposes without subcl.2(4) and its process of assessment. 43 In an argument which was not presented before Adams J, Staging Connections contended to this effect. The criticism was offered of WorkCover's determination that it made a quantitative approach to Staging Connections' business activities, and did not make a qualitative approach which would have enabled recognition of the provision of services as the central or qualitative character of the business activities, and would have enabled recognition of the hire of equipment as no more than ancillary and incidental to the effectual provision of the services. I see this argument as another form of the contention that it was wrong to identify the predominant activity. In my understanding subcl.2(4) does not require adoption of either qualitative approach or quantitative approach, and does not make either a qualitative or a quantitative approach determinative. In recognising the classification which most accurately describes the entire business of Staging Connections it is open to WorkCover and it would be reasonable for WorkCover to appraise both the quality of the services provided by the business and the quantity of the various activities in which the business engages; neither is exclusive or predominant, and there is a range of outcomes which it would be reasonable for a decision maker to reach while allocating weight and importance to quality, quantity and other aspects; the exercise is not completely susceptible of logical resolution, and it is difficult to suppose that some allocation by a decision maker of weight to quality or quantity could be identified as an error of law. 44 Staging Connections contended that WorkCover was wrong to have taken a sequential approach to the various classifications brought forward for consideration. In illustration of this counsel pointed to the terms of the letter of 21 June 2002 and its elimination of a number of classifications under consideration, for reasons there stated; counsel contended that WorkCover was wrong to take the sequential approach of eliminating a number of classifications from consideration and then directing attention, as was done in the letter of 28 March 2003, to the respects in which the classifications remaining under consideration seemed appropriate. Counsel said of this method "It fails to take a holistic approach to the identification of the classification which most accurately describes the entire business." Counsel also said "The sequential approach in Table A fails to give due significance to the NEC classifications unless a precise fit can be made between primary activities there listed and the predominant activity of an employer." 45 In my opinion this submission is correct. The terms of subcl.2(4) mean that it is incorrect to address classifications sequentially, rejecting some and then bringing relatively intense examination to bear on how accurately the remaining classification or classifications describes the entire business. This sequential method does not appropriately recognise the underlying difficulty which subcl.2(4) exists to resolve: the difficulty that there is and can be no classification which completely and accurately describes the entire business of an employer, and there are a number of classifications , all of which are imperfect descriptions, which have to come under consideration when identifying which of these most accurately describes the entire business. Even if there is one classification which seems to fit the business under consideration entirely accurately, the impression of entire accuracy may well be unreliable because of the nature of the process of description, and because each description is set in the context of many other descriptions also describing a subject matter which cannot be defined in an entirely precise way. 46 Business classifications which do not give rise to doubt, the overwhelming majority, can be left on one side. For those where there is doubt subcl.2(4) is to be applied so as to make a choice among them, and it is necessary to identify the classifications which call for consideration, all of which describe the business more or less accurately but not with complete accuracy, and then to identify the one which describes the business most accurately. Once the classifications which call for consideration are identified, sequential elimination will prevent the exercise from being conducted properly; what is required is global assessment of all those which call for consideration. 47 To carry out the exercise in subcl.2(4) it is necessary to have an understanding of what is the entire business of the employer, with the inclusions required by subcl.2(4), it is necessary to identify all the classifications which call for consideration, and it is necessary to make a global assessment about which classification most accurately describes that entire business. In both parts of this exercise there is plainly a wide range for judgment, admitting of little possibility of judicial review; but the exercise has not been performed and in my opinion it should have been. 48 For these reasons I am of opinion that the appeal should be allowed, and the application under s.170 of the Workers Compensation Act 1987 should be returned to WorkCover for determination in accordance with these reasons. The orders should be:

(1) Appeal allowed with costs. (2) Orders of Adam J of 9 February 2004 set aside. (3) Declaration 1 as claimed in the Summons dated 16 June 2003. (4) Order 2 as claimed in the Summons. (5) Order that the Respondent Defendant pay the costs of the Appellant Plaintiff of the proceedings in the Common Law Division.

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