KP Welding Construction Pty Ltd v Kevin Francis Herbert [NTR]

• Jurisdiction: Northern Territory
• Court: Supreme Court
• Judge: Kearney J
• Judgment Date: 04 January 1995
• Docket Number: No. 195 of 1994
• Date: 04 January 1995

[1995] 102 NTR 20

IN THE SUPREME COURT OF THE NORTHERN TERRITORY OF AUSTRALIA

Kearney J

No. 195 of 1994

KP Welding Construction Pty Ltd

and

Kevin Francis Herbert

Counsel for appellant: Mr McDonald

Counsel for respondent: Mr Southwood

Work Health Act — meaning of “worker”

ORDER

Appeal allowed.

JUDGE1

1 Kearney J A preliminary issue in the respondent's application for compensation to the Work Health Court (herein ‘the Court’) was argued before the Court. The question was whether the respondent, herein ‘H’, was a ‘worker’ within the meaning of that term in the Work Health Act (herein ‘the Act’). On 16 August 1994 the Court held that he was. This is an appeal under s116(1) of the Act from that decision, on the basis that it involved errors of law.

2 How the issue arose: The preliminary issue arose from H's Statement of Claim and the appellant's Answer. Respectively, these documents state, as far as material:

‘STATEMENT OF CLAIM —

2. At all material times the Worker (H) was employed by the Employer (the appellant) as a Tradesman's Assistant.

3. The Worker sustained an injury on 16 October 1993 which arose out of or during the course of his employment with the Employer. —-

6. As a result of the injury sustained by the Worker during the course of his employment he has been totally incapacitated for employment from the 16 October 1993 until the present and continuing.

7. The Worker claimed payment of compensation pursuant to the provisions of the Work Health Act from the Employer in respect of the injury from 16 October 1993.

8. On 29 October 1993 the Employer disputed liability for the Worker's claim.

9. And the Worker claims:-

(a) Payment of compensation for total incapacity as from 16 October 1993 until the present and continuing;

(b) Payment of past, present and continuing medical pharmaceutical and like expenses;

(c) Payment of compensation for permanent impairment;

(d) Costs of this Application.’

‘Answer —

2. The Employer does not admit the allegations contained in paragraphs 2 and 6 of the Statement of Claim.

3. The Employer admits that the Worker sustained an injury on or about 16th October 1993 as alleged in paragraph 3 of the Statement of Claim but does not otherwise admit the allegations contained in that paragraph.

4. THE EMPLOYER SAYS THAT THE PERSON DESCRIBED AS THE WORKER IN THESE PROCEEDINGS IS NOT A ‘WORKER’ WITHIN THE MEANING OF THE WORK HEALTH ACT.’ (emphasis mine)

3 On 10 January 1994 the appellant successfully applied to the Court for the following order: —

‘That the question of whether or not the worker in these proceedings is a ‘worker’ within the meaning of the Work Health Act be heard and determined as a preliminary issue.’

4 The relevant provisions of the Act: It is convenient at this point to set out the provisions of the Act relevant to the issue. It will be recalled the alleged injury occurred on 16 October 1993. Until the 1991 amendments to the Act, which came into force on 1 January 1992, ‘worker’ had been defined in s3(1) as follows:

‘‘worker’ means a natural person who under a contract or agreement of any kind — performs work or a service of any kind for another person, OTHER THAN SUCH A PERSON WHO IS—

—-

(h) AN INDEPENDENT CONTRACTOR;

—-.’ (emphasis mine)

5 Until 1 January 1992, when the concept of ‘independent contractor’ in the Act was swept away, that term was defined by s3(1) as follows:

‘‘independent contractor’ means a natural person who has a current certificate of exemption issued to him under section 58 by the Authority:’

6 Until 1 January 1992 when s58 of the Act was repealed, it provided: —

‘(1) A natural person who is in business on his own account may, in an approved form, apply to the Authority for an exemption under this section in respect of activities carried out for the purposes of that business.

(2) The Authority may, in its discretion, and on being satisfied that an applicant under subsection (1) — (a) understands the effect under this Act of being granted the exemption applied for; (b) has not been subjected to undue pressure by any person to make the application; and (c) has considered other forms of insurance cover available to him, grant the exemption and issue to him a certificate of exemption in the prescribed form, or refuse to grant the exemption.

—-

(5) Neither a person to whom an exemption has been granted under this section nor a dependant of such a person shall be entitled —

(a) to compensation under this Act;

—-

in respect of the death of or injury to the exempted person occurring or sustained in or as a result of an activity to which the exemption relates.’

7 It can be seen from these provisions that pre-1992 only certain independent contractors, in the common law sense of that expression, were outside the definition of ‘worker’ for the purposes of the Act; this was a radical change to the law on workers' compensation prior to the Act being passed in 1986. Until that time persons who were independent contractors at common law were outside the definition of a ‘worker’ except in those specific cases when the Workers' Compensation Act deemed them to fall within it. Consequently, in determining who was a ‘worker’, workers' compensation law before 1986 was bedevilled by the need to distinguish between a contract of service (the index of a ‘worker’) and a contract for services; see, for example, the discussion in Zuijs v Wirth Bros Pty. Ltd (1955) 93 CLR 561 at 569–573, Huett v Clark (1956) Tas SR 39 at 42–27, Bailey v Victorian Soccer Federation (1976) VR 13 at 27–29 and 33–35 per Gillard J, Dietrich v Dare (1980) 30 ALR 407 at 411, Christofis v Tomazos Bros. Pty. Ltd. (1985–86) 38 NTR 8 at 14–19, Stevens v Brodribb Sawmilling Coy. Ltd (1986) 60 ALJR 194 at 196–198, and in countless other cases. As his Worship said in his closely-reasoned decision, the purpose and effect of the pre-1992 provisions in the Act —

‘—- was to remove the need for the Court (in deciding if an applicant was a worker) to determine whether a contract was for the performance of service or for the provision of services (as an independent contractor) which had been the subject of much judicial determination. (His Worship cited various authorities by way of illustration, and continued:) —- In order to remove the need for evidence on the indicia of employment (such as control, provision of tools, rights of dismissal etc.) the legislature opted for a system whereby only persons with a current exemption certificate issued in accordance with section 58 of the Act were independent contractors (and thus were not workers for the purposes of the Act).’

8 It appears that by 1991 this approach to defining a ‘worker’ for the purposes of the Act had been found to be unsatisfactory, for practical reasons; see the responsible Minister's speech on the 1991 amendments, at pp22–23. As a result of the 1991 amendments, s3(1) of the Act now defines ‘worker’, as far as material, as follows:-

‘‘Worker’ means a natural person —

(a) who, under a contract or agreement of any kind — performs work or a service of any kind for another person AND WHO IS A P.A.Y.E. TAXPAYER;

—-

but does not include a person

—-.’ (emphasis mine)

9 It can be seen that the approach of defining ‘worker’ in terms of an exclusionary concept of ‘independent contractor’ has disappeared, and is replaced by a new approach which restricts a worker to a ‘P.A.Y.E. taxpayer’. That term is now defined in s3(1) as follows:-

‘P.A.Y.E. taxpayer’, in relation to a worker, means that his employer MAKES DEDUCTIONS from money paid to the worker for work performed or service provided to the employer IN ACCORDANCE WITH Division 2 of Part VI of the Income Tax Assessment Act 1936 of the Commonwealth, AND INCLUDES a worker in respect of whom such deductions are NOT MADE by his employer BUT ONLY BECAUSE —

(a) OF THE SHORTNESS OF TIME during which the worker has been in the employment of his employer; or

(b) having regard to the amount of money paid to the worker, his employer IS NOT REQUIRED TO MAKE such deductions under that Division.’ (emphasis mine)

10 I note in passing that in these fundamental definitions of ‘worker’ and its corollary term ‘P.A.Y.E taxpayer’, the Legislative Assembly appears to have struck out on its own, in the sense that there is no similar approach to the definition of ‘worker’ in legislation corresponding to the Act in any other State or Territory. Hence this preliminary issue. It will also be noted that as a vital element in defining ‘worker’ the definition of ‘P.A.Y.E. taxpayer’ contains some apparent circularity.

11 Section 53 of the Act provides for the crucial right to compensation of a ‘worker’ as defined under the Act; as far as material, it states:-

‘Subject to this Part, where a worker suffers an injury —- and that injury results in or materially contributes to his —

—-

(b) impairment; or

(c) incapacity,

there is payable by his employer to the worker or the worker's dependants, in accordance with this Part, such compensation as is prescribed.’

12 The reasoning and decision of the Court: The Court heard evidence and argument on the preliminary issue on 18 February 1994 and 23 June. In his reasons for decision the Magistrate summarized the relevant evidence, and expressed certain views thereon, as follows:-

‘The applicant (H) gave evidence on his own behalf. On the 13th day of October 1993 H said he was telephoned by Petros Koursaris (hereinafter referred to as ‘K’) and asked if he was available to work as a Trades Assistant starting work the next day at Berrimah. H said that he accepted the position and on the 14th October 1993 he attended at the employer's factory at Berrimah and started work at about 7.30am.

H said that he also worked for the Employer (the appellant) on the 15th day of October 1993 and on that day he spoke to K and K told him that he would pay H fourteen dollars an hour and that H...