Weir Services Australia Pty Ltd v Allianz Australia Insurance Limited

Judgment 1The issue for determination in these proceedings is whether Allianz Australia Insurance Limited (Allianz), the first defendant, is obliged to indemnify Weir Services Australia Pty Limited (Weir), the first plaintiff, pursuant to a Policy of Insurance in relation to workers compensation payments made to Thomas Taylor, the second defendant, (who has filed a submitting appearance) in respect of an injury suffered by him in an accident whilst employed with Weir at a Smelter in Hobart, Tasmania owned by Nyrstar Hobart Pty Limited (Nyrstar). The second plaintiff, CGU Workers Compensation (NSW) Limited (CGU), was joined because there was an issue in respect of certain payments made by it that has now been settled. 2The matter was heard on 29 January 2013 when Mr JM Harris, of counsel, appeared for Weir and CGU and Mr GB Beauchamp, of counsel, appeared for Allianz. At the conclusion of the hearing the following declaration and orders were made: 1. A declaration that the First Defendant was and is obliged to indemnify the First Plaintiff against any liability established against the First Plaintiff by the Second Defendant arising out of any claim made by the Second Defendant for compensation for personal injuries sustained by the Second Defendant in Hobart, Tasmania on 16 February 2008 and that such indemnity be made pursuant to the policy of insurance number LWH 0001489 subsisting between the First Plaintiff and the First Defendant. 2. Judgment for the Second Plaintiff against the First Defendant in the sum of $150,000. 3. The first defendant is to pay the plaintiffs' costs of the proceedings. 4. The plaintiffs are to pay the second defendant's costs incurred up to 30 August 2012. 3These are the reasons for the making of that declaration and orders. Background 4In late 2007 Weir entered into a contract with Nyrstar to provide labour to carry out general mechanical works in respect of parts of the Smelter in Hobart (the Works). The date for practical completion of the Works under the contract was 27 February 2008. 5Weir was contractually obliged to take out workers compensation insurance "in accordance with Legislative Requirements". In this regard Weir obtained a Policy of Insurance to cover its liability under the Workers Rehabilitation and Compensation Act 1988 (Tas) (the Act) from Allianz for the period 30 June 2007 to 30 June 2008 (the Policy). 6Weir engaged approximately 25 employees to complete the Works some of whom were its full-time employees deployed to Tasmania for the Works and others of whom were contractors. Mr Taylor was in the latter category. 7On 13 January 2008 Mr Taylor, an experienced mechanical fitter, accepted Weir's offer dated 7 January 2008 for the "fixed task assignment position of Project Specific - Nyrstar - Shutdown 2008 Equipment Refurbishment" (the Contract). The Contract was headed "Casual Assignment (Fitter)". It was for the "duration" of 14 days "subject to customer requirements". The duration was not guaranteed "due to the unknown emergent work activities" and was to be determined "as a result of customer requirements". It is apparent that Mr Taylor moved from North Wales in the United Kingdom to live in Perth, Western Australia. The cost of his flight from Perth to Hobart for his employment was met by Weir. However the Contract provided that the "assignment" was "project specific" and costs for journeys to Mr Taylor's home and back to the site during the project period were not to be borne by Weir. 8The Contract provided that the "Casual - Project Specific" rate for the assignment was an all up flat rate of $50.40 per hour. There was also provision for a living away from home allowance of $65.00 per day. Mr Taylor was accommodated at the Argyle Motor Lodge in North Hobart for the period of the assignment. He was driven to the Smelter for his 12 hour shift and driven back to the Motor Lodge at the conclusion of his shift. 9The Contract also included a provision in respect of termination of employment that included the following: As the position is a fixed task basis, the Project Manager shall advise of completion date. This assignment shall provide reasonable notice to allow completion at shift end. 10Mr Taylor commenced his employment on 11 February 2008 and was injured in an accident at the Smelter on 16 February 2008. He did not return to work and returned to Perth on 29 February 2008. 11A Workers Compensation Claim Form was lodged with Allianz in April 2008. Allianz advised Mr Taylor that it was investigating and assessing his claim to decide whether he was a "worker" within the State of Tasmania. Allianz agreed with Weir to pay weekly compensation to Mr Taylor on an ex gratia basis without admission of liability. However Allianz subsequently refused to indemnify Weir under the Policy. CGU subsequently paid the workers compensation payments to Mr Taylor. It is now unnecessary to deal with the detail of those payments because the parties have settled their dispute in relation to those payments and the quantum thereof. 12The plaintiffs relied upon the affidavit evidence of Gary Frazier, a manager employed by a holding company of Weir at the time of Mr Taylor's accident, sworn 4 April 2012, Martin Ofner, Weir's Finance Director, sworn 16 April 2012 and Stephen Lamond, an employee of CGU, sworn 26 April 2012. Much of this evidence became irrelevant after the parties settled their dispute in relation to the CGU payments to Mr Taylor. Allianz called no evidence. 13Mr Frazier was the only witness who was cross-examined. Mr Beauchamp cross-examined Mr Frazier as follows (tr 9-10): Q. And did he discuss with you the prospect of doing further work with your company? A. Not at all. ... Q. Is he the sort of person you would have looked to employ again? A. That's possible. ... Q. If Mr Taylor had not been injured, was the arrangement that the company would provide a ticket back to Perth for him at the end of his engagement? A. Yes, we would have. Q. And would he then go on to a list of potential employees for the company? A. Yeah, there would be - there would be a pecking list. 14In re-examination Mr Frazier defined the "pecking list" as something to which he would refer if a project of that size came up again (tr 10). He also said that Mr Taylor was "a late minute replacement" for the Works at the Smelter and that he would have been at "the tail end" of the pecking list (tr 10). During final submissions, Mr Beauchamp candidly conceded that he probably had not established that the Contract between Weir and Mr Taylor would have led to more work for Mr Taylor with Weir (tr 15). Issue for determination 15The real issue in these proceedings is whether Mr Taylor's employment was "connected" with Tasmania as provided in sub-sections 31A(1) and 31A(3) of the Act. 16Section 31A provides relevantly as follows: (1) Compensation under this Act is payable only if this State is the State of connection. (2) The fact that a worker is outside this State when injured does not prevent compensation being payable under this Act. (3) A worker's employment is connected with - (a) the State where the worker usually works in the employment; ... ... (6) In deciding whether a worker usually works in a State - (a) regard must be had to the following: (i) the worker's work history with the employer over the preceding 12 months; (ii) the worker's proposed future working arrangements; (iii) the intentions of the worker and employer; (iv) any period during which the worker worked in a State or was in a State for the purposes of employment, whether or not the worker is regarded as working or employed in that State under its workers compensation law; but (b) regard must not be had to any temporary arrangement under which the worker works in a State for a period of not longer than 6 months. 17It was far from clear on what basis Allianz claimed that Mr Taylor's employment was not connected with Tasmania. However Weir's submissions were made on the basis that Allianz contended that the Contract between Weir and Mr Taylor was a "temporary arrangement" to which regard could not be had for the purpose of deciding whether Tasmania was the State where Mr Taylor "usually works in the employment". 18Weir submitted that a short-term contract of less than 6 months that is not part of a longer or indefinite period of employment is not a "temporary arrangement" as that term is to be understood in s 31A(6)(b) of the Act. Support for this proposition is found in Roche DP's decision in Martin v RJ Hibbens Pty Ltd [2010] NSWWCCPD 83; (2010) 8 DDCR 535 at 550-551 [76] and in Tamboritha Consultants Pty Limited v Knight [2008] WADC 78; (2008) 58 SR (WA) 291 at 309 [73] in which Commissioner Herron dealt with the equivalent provision in the Workers Compensation and Injury Management Act 1981 (WA). 19In Klemke v Grenfell Commodities Pty Ltd [2011] NSWWCCPD 27 President Judge Keating, in dealing with the equivalent provision in s 9AA of the Workers Compensation Act 1987 (NSW), said: 80. It seems to me that, for the proviso in s 9AA(6) to have any work to do, any temporary arrangement contemplated by that provision must be seen as part of a longer or indefinite period of employment. Therefore, in my view, the Arbitrator was correct to conclude that the employer's submission that the short nature of the employment would permit the applicant to come under the temporary arrangements in s 9AA(6) is to misread the section, noting that the purpose of the section is to cover an employee who is normally based in one State and who on a temporary basis, not longer than six months, is required to work in another State. 20This analysis of the equivalent provision in the New South Wales legislation by President Judge Keating is compelling. I understand his Honour's description of an employee being "based" in one State to mean that the usual place or base of employment (as opposed to residence) is in that particular State. Mr Taylor's only place or base of employment with Weir was in Tasmania. This was not a "temporary arrangement" as that term is used in s 31A(6)(b) of the Act. 21The description "casual assignment" in the Contract needs to read in the context of the description "fixed task assignment position of Project Specific" for the refurbishment of the Smelter. The completion date for the Works was 27 February 2008. There was no work history between Weir and Mr Taylor. This was a contract for the provision of services on a specific project for a limited duration. It was not part of longer or any other employment with Weir. I am not satisfied that Weir and Mr Taylor entered into the contract on the basis that, or in the expectation that, it would lead to further employment for Mr Taylor. The work was performed in Tasmania. It was not contemplated that Mr Taylor would work in any other State. Tasmania was the State where Mr Taylor usually worked in the employment which was the subject of the Contract (s 31A(6) of the Act). 22I am satisfied that Tasmania is the "State of connection" as that term is used in s 31A(1) of the Act. I am satisfied that Allianz is liable to indemnify Weir pursuant to the Policy.