Supreme Court of Tasmania|2002-07-02|Before: Underwood J

Thompson v Cooee Point Abattoirs Pty Ltd [2002] TASSC 41 (2 July 2002)

CITATION: Thompson v Cooee Point Abattoirs Pty Ltd [2002] TASSC 41

Workers Compensation - Entitlement to and liability for compensation - Persons entitled to compensation - Who is a worker - Contract of service or independent contractor - Generally - Alteration of employer/employee relationship by entry into contract.

Holliss v Vabu Pty Ltd [2001] HCA 44; (2001) 181 ALR 263, applied.

Johns Perry Hayward Pty Ltd v Greaves A72/1990, followed.

Global Plant Ltd v Secretary of State for Social Services [1972] 1 QB 139, discussed.

Workers Compensation - Proceedings to obtain compensation - Appeals and stated cases - Question of law - What constitutes - Whether determination of Tribunal necessarily outside the definition of worker in statute.

Vetter v Lake Macquarie City Council (2001) 178 ALR 1, applied.

The Board of the TGIO v Friends' Building Services Pty Ltd B37/1991_; Laird & TGIO Ltd v Shand_ B55/1996, followed.

Judgment Number: [2002] TASSC 41

GARY JOHN THOMPSON v COOEE POINT ABATTOIRS PTY LTD

1 The appellant worked as a slaughterman at the respondent's premises. He suffered an injury to his right shoulder on 17 August 2000. The appellant claimed that the injury arose out of and in the course of his employment with the respondent. A claim for compensation was not made until February 2001. Liability was not disputed in accordance with the Workers Rehabilitation and Compensation Act 1988 ("the Act"), s81A, but no weekly payments were made. By an application dated 30 April 2001, the appellant applied to the Workers Rehabilitation and Compensation Tribunal ("the Tribunal") for an order for payment of weekly payments and medical and related expenses.

2 The transcript of proceedings in the Tribunal commences with the learned Chief Commissioner stating that it is his understanding "that the only issue that the parties want me to decide in relation to this matter at this stage is the question of employment relationship". Those representing the parties said that that was so, and the Tribunal heard evidence from the appellant and a co-worker. The respondent adduced no evidence. The Tribunal determined that the appellant was not a worker and dismissed the reference. This appeal is brought from that order.

3 Why the proceedings took the course they did is not apparent to me. Why the appellant did not prove the making and service of a claim for compensation in accordance with the Act and the subsequent failure of the respondent either to invoke s81A or to make weekly payments and then rely upon the provisions of the Act, s81AB, is equally not apparent to me.

4 However, the Tribunal made a determination and an appeal from that determination has been made to this Court, and accordingly, it must be determined.

5 The Act, s63, confines the jurisdiction of this Court to appeals in point of law. The determination that the appellant was not a worker within the meaning of the Act, s3(1), is a finding of fact. See The Board of the TGIO v Friends' Building Services Pty Ltd B37/1991_; Laird & TGIO Ltd v Shand_ B55/1996_; Global Plant Ltd v Secretary of State for Social Services_ [1972] 1 QB 139.

6 In order to succeed, the appellant must demonstrate that the Tribunal's finding that the appellant was not a worker within the meaning of the Act, s3(1), was one that was not reasonably open upon the evidence. In Vetter v Lake Macquarie City Council (2001) 178 ALR 1, the High Court put the matter this way, at 8:

"Whether facts as found answer a statutory description or satisfy statutory criteria will very frequently be exclusively a question of law. To put the matter another way, indeed, as it was put by Priestley JA in his judgment, whether the facts found by the trial court can support the legal description given to them by the trial court is a question of law [(1999) [1999] NSWCA 98; 18 NSWCCR 34 at 48]. However, not all questions involving mixed questions of law and fact are, or need to be susceptible of one correct answer only. Not infrequently, informed and experienced lawyers will apply different descriptions to a factual situation. That is why the test whether legal criteria have been met has been expressed in language of the kind used by Jordan CJ in The Australian Gas Light Co v Valuer-General (1940) 40 SR (NSW) 126 at 138:

'[I]f the facts inferred ... from the evidence ... are necessarily within the description of a word or phrase in a statute or necessarily outside that description, a contrary decision is wrong in law'."

7 When filed, the notice of appeal contained seven grounds, but they all relate to questions of fact. Accordingly, none of them could succeed. However, at the hearing, the grounds of appeal were amended to add the new following ground:

"That on the whole of the evidence presented at the Tribunal, the Tribunal should not and could not have been satisfied that the appellant was an independent contractor as opposed to a worker."

8 The appellant had worked at the respondent's abattoir as a slaughterman for 20 years. During that time, the business had been operated by a number of different persons. At all times relevant to this matter, the business was operated by a Mr Tony Gee and perhaps (the evidence is not entirely clear about this), his wife, Mrs Wendy Gee.

9 For about four to five years before the accident, the appellant had been working only on Tuesdays and Thursdays. He started at 7am in the morning and finished "when the work was done". The appellant said that they started at 7am because that was the time the Government meat inspector arrived at the abattoir. Ever since the appellant had worked at the abattoir, he had provided his own tools for the job, as well as his own clothing and boots.

10 The appellant's evidence was that he worked to a pattern which had been the same for many years and apparently there was very little supervision of the way in which he carried out his work. He said that sometimes Mr Gee would tell him to slaughter animals in an order different from that customarily followed, but otherwise he was left to do his work according to his ability and skill. Normally, the appellant worked as a member of a team of three slaughtermen. All the men were paid in accordance with the number of animals they slaughtered.

11 The appellant was free to take other employment and in fact had a half day job at a sale yard every second Wednesday.

12 In March 2000 the appellant and Mr Gee entered into a written contract in the following terms:

This Contract is an agreement between Gary Thompson and Cooee Point Abattoirs.

Gary will work contract Slaughterman at the Cooee Point .abattoirs for a period of 12 months.

This contract will be reviewed a week before the Contract ceases. The Contract commences March 6 2000, - March 6th 2001.

Gary will provide his own tools of trade and his own Insurance cover. He will leave an Account of money owed on the final day of his working week.

If working with other Slaughtermen the kill total will be divided accordingly.

13 The Tribunal found that this contract came into existence because Mr Gee told the appellant and his co-workers that if they did not sign, the business could not remain financially viable due to the high cost of workers compensation premiums. The Tribunal found that at the time the appellant entered into the agreement, it was his intention, and to his knowledge, Mr Gee's intention, to alter their contractual arrangement from employer/employee to principal/independent contractor.

14 The Tribunal found that the respondent employed no duress or undue influence to force the appellant to enter into the contract: he signed it because he did not want to lose his job.

15 Following the making of the agreement, the appellant assumed the responsibility of obtaining insurance indemnity for personal injury and the respondent ceased paying workers compensation premiums. In fact, the first year's premium for the appellant's insurance was paid by the respondent. The Tribunal found that this was only done in recognition of the appellant's long and loyal service and that the gratuitous payment did not alter the obligation created by the contract.

16 After the contract had been signed, the appellant paid his own income tax, although Mrs Gee calculated the amount for him as, it would seem, she had always done.

17 After the contract had been signed, the respondent ceased to make any statutory superannuation payments to the benefit of the appellant.

18 After the contract had been signed, the piecework rate for payment was increased.

19 The evidence was that the appellant was not entitled to any overtime, long service leave, holidays or sick pay, but it is unclear whether this was the position, both before and after the contract was signed, or only after it was signed.

20 Although the contract required the appellant to give the respondent "an account of money owed" at the end of the week, it transpired that the system that had been in place for many years continued. That system was for one of the appellant's co-slaughtermen to keep a record of the kill rate and give it to Mrs Gee. From this note, Mrs Gee filled out an invoice showing the amount due. Payment was customarily divided by the three men, as the kill was customarily carried out jointly by the appellant and his two fellow slaughtermen.

"It appeared to be accepted that prior to the agreement the worker was employed as the 'worker' and accordingly these existing criteria [the nature of the work prior to the contract being entered into] would appear to be of little weight in determining whether there had been a change to a contractor relationship. The only changes in the relationship between the parties were;

* the obligation of the worker to obtain insurance indemnity for injury with the operators ceasing workers compensation coverage

* the discontinuance of the payment by the operators of superannuation on behalf of the worker

* the non-deduction of income tax prior to payment to the worker

22 However, it is settled law that whether or not a person is a worker within the meaning of the Act, s3(1), depends on all the facts, only one of which was an acceptance - inferentially by the appellant and the respondent - that prior to March 2000, the appellant came within the statutory definition of worker. It seems to me that the correct approach is to examine all the circumstances as they existed at the date of the appellant's accident to determine whether the criteria specified by the Act were satisfied.

23 The Act, s3(1), relevantly defines a worker to be:

"(a) any person who has entered into, or works under, a contract of service or training agreement with an employer, whether by way of manual labour, clerical work or otherwise, and whether the contract is express or implied, or is oral or in writing; and

24 The question of whether a person was working under a contract of service or pursuant to a contract of services has frequently attracted the attention of the High Court. See eg, Stevens v Brodribb Sawmilling Co Pty Ltd (1986) 160 CLR 16; Zuijs v Wirth Brothers Pty Ltd [1955] HCA 73; (1955) 93 CLR 561; Humberstone v Northern Timber AWL [1949] HCA 49; (1949) 79 CLR 389.

25 A recent pronouncement by the High Court on this matter is Holliss v Vabu Pty Ltd [2001] HCA 44; (2001) 181 ALR 263. The joint judgment dealt with the rationale underpinning vicarious liability and, at 274, referred to a passage in the judgment of Dixon J (as he then was) in Colonial Mutual Life Assurance Society Ltd v Producers and Citizens Co-operative Assurance Co of Australia Ltd [1931] HCA 53; (1931) 46 CLR 41 in which his Honour spoke of an independent contractor being a person doing work, not as a representative of the principal, but as a principal, even though the work was done for the principal just as work is done by an employee for the employer. There then followed this passage in the joint judgment, at 275:

"This statement merits close attention. It indicates that employees and independent contractors perform work for the benefit of their employers and principals respectively. Thus, by itself, the circumstance that the business enterprise of a party said to be an employer is benefited by the activities of the person in question cannot be a sufficient indication that this person is an employee. However, Dixon J fixed upon the absence of representation and of identification with the alleged employer as indicative of a relationship of principal and independent contractor. These notions later were expressed positively by Windeyer J in Marshall v Whittaker's Building Supply Co [1963] HCA 26; (1963) 109 CLR 210 at 217. His Honour said that the distinction between an employee and an independent contractor is "rooted fundamentally in the difference between a person who serves his employer in his, the employer's, business, and a person who carries on a trade or business of his own". In Northern Sandblasting, McHugh J said (1997) 188 CLR 313 at 366:

'The rationale for excluding liability for independent contractors is that the work which the contractor has agreed to do is not done as the representative of the employer'."

26 With respect to the so called "control test" to determine whether an employer/employee relationship existed, the joint judgment noted that the test had its origins in a predominantly agricultural society and its significance today had to take into account that in many instances, employers were large corporations and many employees exercised skills in respect of which the employer had no capacity to actually exercise any control, due to lack of knowledge and experience.

27 Finally, on this issue, the joint judgment approved a statement by Mason J (as he then was) in Brodribb (supra) at 29, that the right to control was more often of greater significance than the existence of actual control, but overall, "it is the totality of the relationship between the parties which must be considered".

28 The Tribunal referred to a passage in the judgment of Crawford J in Johns Perry Hayward Pty Ltd v Greaves A72/1990 where his Honour said at 17:

"In Global Plant Ltd v Secretary of State for Social Services (supra) at p152 Lord Widgery CJ stated that the intention of the parties that the relationship should be that of an independent contractor must not be overlooked and although the parties cannot by intention make a transaction into something which it is not, yet it is recognised that such intention is a factor for consideration. In Ferguson v John Dawson & Partners (Contractors) Ltd (supra) at p1220 Megaw LJ considered that an express declaration by the parties that the relationship of an independent contractor existed ought to be wholly disregarded if the remainder of the contractual terms, governing the realities of the relationship, showed the relationship of employer and employee. He found difficulty in accepting that the parties, by a mere expression of intention as to what the legal relationship should be, can in any way influence the conclusion as to what the relationship is. He also stated that it would be contrary to the public interest 'that the parties, by their own whim, by the use of a verbal formula, unrelated to the reality of the relationship, could influence the decision on whom the responsibility for the safety of workmen ... should rest'.

What the parties agreed or understood cannot be ignored and in a particular case it may well tip the ultimate conclusion to one side of the scales rather than the other ...".

I would respectfully adopt those observations. The English cases referred to are instructive. Ferguson concerned a claim for damages for breach of statutory duty, so the issue "in point of law" did not arise. The only evidence that the plaintiff was an independent contractor came from a sentence in the evidence of the site agent who said that when he agreed to employ the plaintiff as a labourer, he told him that there were "no cards, we were purely working as a lump labour force". The trial judge construed that as being an agreement that the plaintiff would be an independent contractor, but found that the agreement was no more than a device entered into to avoid certain statutory obligations, I infer, with respect to payment of tax, insurance, and the like. It was against this factual background that Megaw LJ made the observations cited by Crawford J.

29 The Global Plant case is quite a different matter. The facts are not dissimilar from this case. It was an appeal from a decision of the Secretary and the issue before the court was identical to the issue presently for determination. The appellant was in the business of hiring out industrial plant which included earth moving machines. S was a driver and had been working for the appellant for some time. Tax and insurance was deducted by the appellant in the usual way. S went with the machines to the sites as directed by the appellant, and there worked to the direction of those who hired the plant. The hours varied according to the wishes of the hirer. In March 1968 S told the appellant's clerk manager that he wanted to work as an independent contractor and a short written agreement was entered into. This provided that S would supply his labour to drive the appellant's digger at 14 shillings per hour, that he would be responsible for his own "tax, insurance, holiday pay etc", and that he would put in time sheets. There were other terms concerning the use of, and possible damage to, the diggers. After making the agreement, S paid his own tax, received no sick pay or holidays and was free to work or not as he chose, but basically the understanding was that the work would be done in the same manner as it had always been done.

30 The Secretary determined that S was a worker, that is, was working under a contract of service.

31 Lord Widgery CJ examined some English authorities dealing with the tests to ascertain whether there was a contract of service or a contract for services, revised the facts, and said, at 152:

"There are, as I have pointed out, other matters which are favourable to the company in the consideration of these facts. One must not overlook that the intention of the parties was that the relationship should be that of an independent contractor, and although the parties cannot by intention make a transaction into something which it is not, yet it is recognised that such intention is a factor for consideration in these cases."

"Then finally I must consider, in the words of Lord Radcliffe in Edwards v Bairstow [1955] UKHL 3; [1956] AC 14, 36 quoted in the judgment of Diplock J in Terrar's case, whether the facts found are such that no person acting judicially and properly instructed as to the relevant law could have come to the determination under appeal. It is not, as I see it; for me to balance again the arguments pro and con the decision which the Minister has reached, giving the separate factors the weight which I think they should or should not have. That balancing operation is a matter for the Minister. All that I have to ask myself is whether the conclusion which he has reached is one that no person acting judicially and properly instructed as to the relevant law could have come to in this determination. I am perfectly satisfied that although there were pointers either way, it would be quite out of the question to suggest that the Minister's decision was one open to attack on the around to which I have last referred."

33 The agreement between the appellant and the respondent was neither a device nor a sham. It was entered into with the common intention that the relationship between the parties should thereafter be one of principal and contractor. It is significant that the piece rate payment was increased by the execution of the agreement. With respect to this, the Tribunal said, "... it could be inferred that this increase was intended to compensate for the changed conditions brought about by that agreement". The appellant only worked two days per week. If he did not turn up, he did not get paid. There was some suggestion in the evidence that if he wanted to have a Tuesday or a Thursday off, he could supply another slaughterman in his place. The degree of control by the respondent over the appellant was minimal. The Tribunal said at pars15 - 16 of its determination:

"On all the evidence I am satisfied that it was the intention of the parties to create a relationship of principal and contractor, and that such intention was not displaced by any criteria identified from the actual relationship between the parties subsequent to the execution of this contract. The fact that the change of the relationship had not been fully developed and that the operator provided some continuing benefit is explained by reason of the long running nature of the relationship between the parties and their lack of sophistication in business matters rather than by a failure to recognise an actual change. The change in relationship had been effected but had not been fully developed by the parties rather than having been ignored by the parties. I am therefore not satisfied that as at the date of the injury the worker was a 'worker' within the meaning of the Act."

34 It cannot be said that the facts found, or not disputed, necessarily lead to the conclusion that the appellant was a worker within the meaning of the Act, s3(l) and consequently, the decision of the Tribunal was wrong in point of law. The appeal is dismissed.

Thompson v Cooee Point Abattoirs Pty Ltd [2002] TASSC 41

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Thompson v Cooee Point Abattoirs Pty Ltd [2002] TASSC 41 (2 July 2002)

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Cases Cited (8)