MARSHALL and ANOR T/AS THE PARTNERSHIP B AND J MARSHALL v ANDREWS and ANOR SUPREME COURT OF NEW SOUTH WALES COURT OF APPEAL KIRBY ACJ, HANDLEY JA and ROLFE AJA 19 July 1995, 23 August 1995 10 [1995] NSWCA 274 WORKERS' COMPENSATION — principal and contractor — agricultural work — worker injured — who is "the principal" for Workers Compensation Act 1987, s20 — who is the "contractor" — held: (by maj): The principal may include a person higher in the chain of contracting. WORDS AND PHRASES — "other agricultural work" — "employed in the execution of the work" — "under". WORKERS' COMPENSATION — uninsured employer — WorkCover Authority pays compensation — whether Compensation Court can order refund by principal 20 — held: It can. WORKERS' COMPENSATION — principal and contractors — liability of ie principal — worker employed in loading wheat onto truck for movement to a silo — worker's direct employer uninsured — that employer works under a contractor engaged by farm owners — worker originally paid compensation by WorkCover Authority — brings proceedings in Compensation Court for recovery of compensation against Authority or farm owners as "the principal" under s20(1) of the Workers Compensation Act 1987 — Truss CCJ upholds claim against farm owners as "the principal' and enters award against them — on appeal to the Court of Appeal — held: (Kirby ACJ and Handley JA; Rolfe AJA dissenting): (1) No error 30 was shown in the finding that the farm owners were "the principal', and that the liability under s20(1) of the Act attached to them; (2) The exclusion for agricultural work under s20(3) did not apply, as it was limited to cases of workers employed by the contractor and the injured worker WORDS AND PHRASES — "in the execution of the work" — "under" — "other 35 agricultural work". was not so employed; (3) (by the Court): The order in the award requiring the repayment of compensation by the principal to the Authority for monies paid as compensation for ie uninsured employer was not erroneous and would not be disturbed. Frauenfelder v Reid and Ors (1963) 109 CLR 42; Moir v Schrader and Anor (1936) 56 CLR 310 applied. Workmen's Compensation Act 1916, s8. Workers' Compensation Act 1926, s6(3)(a). Workers Compensation Act 1987, s20, s145. Workmen's Compensation Act 1906 (GB), s4. 45 ORDERS Appeal dismissed with costs. Kirby ACJ The facts are set out in the reasons of Rolfe AJA. COMMON GROUND IN THE APPEAL With most of Rolfe AJA's conclusions I am in agreement. Thus, I agree: (1) That the only reasonable inference to be drawn from the evidence is that 50 Mr and Mrs Marshall (the appellants) were desirous of cropping the land and, to facilitate this, they engaged the services of Mr Smith and provided seed and 2 UNREPORTED JUDGMENTS equipment to assist in the operation. In these circumstances, it is proper to conclude that Mr and Mrs Marshall were "the principal" within the meaning of s20(1) of the Workers Compensation Act 1987 (the Act) with respect to Mr Smith; (2) That, therefore, the primary judge in the Compensation Court (Truss CCJ) was correct in concluding that Mr and Mrs Marshall could, other things being equal, be described as a "principal"; (3) That her Honour was also correct in holding that s20(3) of the Act did not apply because the worker (Mr Hickey) was not employed by the contractor (Mr Smith) on that work. Truss CCJ was correct in finding that there was no evidence that the worker had been employed by Mr Smith. The only evidence was that he had been employed by Mr Andrews under Mr Smith and, in turn, under the Marshalls. This conclusion obviates the need to determine whether the contract of the contractor (Mr Smith) related to "other agricultural work". My own inclination would be to hold that it did, given the general characterisation of the work of transporting harvested grain from the field to grain sheds and silos, and the extremely wide words of connection "relates to". But this is irrelevant because s20(3) does not attach, there being no evidence that the worker was employed by the contractor, Mr Smith; (4) So far as the order for reimbursement made against the appellants in favour of WorkCover Authority of New South Wales, I agree for the reasons which Rolfe AJA has given that there is no substance in this belated objection to the order which her Honour made. $20(2) of the Act provides that references to "the principal" should be substituted for references to "the employer" where s20(1) is attracted. The power to order reimbursement to the Authority is provided by s145 of the Act. It permits the Authority to serve a notice on "an employer" claiming reimbursement. To confine the operation of the Act to a direct employer, and to exclude its application to a principal, in a case to which s20 applies, would be to reveal a clearly unintended omission "in the application of this Act". S20(2) provides a special dictionary for the meaning of the word "employer" in the Act where s20(1) applies to the relationship of the parties. Applying that dictionary, and accepting that notice was served, and that the Compensation Court may otherwise deal with a failure to comply with it, I see no error in the order which Truss CCJ made requiring Mr and Mrs Marshall to reimburse the Authority. Once it was established that they were liable as "the principal', their liability applied from the date of the injury. It was sensible, just and lawful, therefore, that they should be required by order to reimburse the Authority for the monies paid to the worker whilst the liability of Mr and Mrs Marshall was being determined. It was proper that the Authority should pay the worker immediately, for there was no doubt that his direct employer (Mr Andrews) was uninsured, was not a self-insurer, and was otherwise unable to pay compensation to the worker. Amongst all the other doubts and uncertainties in this case, there was no doubt that Mr Hickey was a "worker", that he was injured in the course of his employment, and that he was entitled to benefits under the Act. Neither Mr Andrews nor Mr Smith were insured for the purposes of the Act. If the only liability to pay compensation to the worker under the Act fell upon them (and not the Marshalls), the Authority was obliged to pay the compensation. Neither Mr Smith nor Mr Andrews appeared in this Court. Indeed, Mr Smith was not a party either in this Court or in the Compensation Court. The real battle before us was fought between Mr and Mrs Marshall and the Authority, each seeking to shift the burden to the other. WAARSHALL and ANOR T/AS THE PARTNERSHIP B AND J MARSHALL v ANDREWS an@ ANOR (Kirby ACJ) PROVIDING FOR UNINSURED EMPLOYERS OF RURAL WORKERS I now reach the important point of divergence from the opinion of Rolfe AJA. The statutory provisions which are before us are directly derived from s4 of the Workmen's Compensation Act 1906 (GB). They come to their present form in s20 of the Act by way of s8 of the Workmen's Compensation Act 1916, and s6(3)(a) of the Workers' Compensation Act 1926. It is curious that the problem now before the Court has not arisen earlier. Neither party could point the Court to any decision of the High Court of Australia, or of this Court, or its predecessor, to resolve the issue in contention. That issue can be stated simply. In the application of s20, and the ascertainment of who is "the principal", must the claimant worker be a direct employee of the contractor, or may the worker be employed by another person who is in turn employed by the contractor? In the facts of this case there were (as explained in the reasons of Rolfe AJA) four levels in the hierarchy. The Marshalls were at the top. Under them was Mr Smith, a contractor in relation to them. Under him was Mr Andrews. Mr Hickey was the direct worker of Mr Andrews. Could he claim that the Marshalls were the principal for the purpose of the proceedings? Or was he confined to claiming that Mr Smith alone was the principal? The answer to this controversy is not entirely clear. But in my view, the language of s20(1) is wide enough to attach its provisions to Mr and Mrs Marshall in a case such as this. The section states: "20(1) If any person (in this Section referred to as "the principal") in the course of or for the purposes of the person's trade or business, contracts with any other person (in this Section referred to as "the contractor") for the execution by OR UNDER the contractor of the whole or any part of the work undertaken by the principal, the principal is, if the contractor does not have a policy of insurance or is not a self-insurer at the time a worker EMPLOYED IN THE EXECUTION OF THE WORK receives an injury, liable to pay any compensation under this Act which the principal would have been liable to pay if the worker had been immediately employed by the principal". (emphasis added) Taking the language of the subsection, there are two indications that it may apply in the circumstances envisaged here in the relationship between Mr and Mrs Marshall (at the top of the hierarchy) and Mr Hickey (at the bottom). Those indications are: (1) The use of the preposition "under". This envisages that the actual execution of the work, ie by persons other than the contractor, will be carried out by others in a subordinate relationship to the contractor. The Act does not state that such persons must be employed by the contractor. It would have been simple for the Act to have so provided. There is no express provision to that effect. In this regard, the words used may be contrasted with the words used in s20(3) [any worker employed by the contractor on that work]. Where direct employment by the contractor was envisaged by Parliament, it was expressly provided for, and indeed, in words expressly contained in the Act but two subsections later; and (2) This is confirmed by the use of the phrase "a worker employed in the execution of the work". Again, the statute refrains from confining ie worker entitled to recovery to one "employed by the contractor'. Instead, it is enough that the worker is employed "in the execution of the work". The phrase therefore attaches, so long as the express pre-condition is established. What gives the worker rights is not employment by the contractor as such, but employment in the execution of the work. In this way, Parliament has envisaged that in some cases there will be a looser and more indirect relationship between the contractor and the worker. 4 UNREPORTED JUDGMENTS To these express provisions can be added implications as to the meaning of s20(1) of the Act and as to its intended operation. The section was designed, long ago in England, to cover the problem, common in rural employment, of informal arrangements and lack of insurance. To guard against these eventualities, and ultimately to provide a fund for the workers of uninsured employers, Parliament enacted that liability should fall upon the principal. This was in order, by ascending the hierarchical tree of employment, to attempt to fix, at least in those having the likely organisation and wherewithal, knowledge and access to advice, an effective duty to insure or otherwise provide for the entirety of the execution of the work, performed directly and indirectly in their interests. This is not a new provision designed for the peculiarities of Australian rural conditions. I repeat that it is derived from s4 of the United Kingdom Act 1906. Fixing liability on Mr and Mrs Marshall in this case is not something which does offence either to the apparent general scheme of the Act, or to commonsense. Unsurprisingly, the Marshalls were in fact insured. The work being done by Mr Hickey was being performed, indirectly, as part of the execution of the work in which Mr and Mrs Marshall had the clearest possible interest. If they wished to do so, they could have ascertained precisely not only the employment relationships which existed down the line of their farming enterprise, but also the insurance arrangement made. Therefore, if we are looking to who was "the principal" to achieve the purposes of the Act, Mr and Mrs Marshall at the top of the possibilities certainly qualified. One argument against multiple application of the Act for different suggested principals in the hierarchy is the use in s20(1) of the definite article "the". The subsection appears to envisage that there is one, ie "the" principal. But this is by no means certain. A possible reading of s20(1) is that the specification of the particular person as "the principal' does not exclude the like conclusion in relation to others. In support of the arguments for Mr and Mrs Marshall it was also pointed out that the heading to s20(1) is "Principal liable to pay compensation to workers employed by contractors in certain cases". However, whilst regard may be had to the heading, its terms cannot override the actual provisions of the subsection which follow. Rolfe AJA finds that Mr Smith was also a person who could qualify for the description of "the principal". But whether this is so or not, is beside the point in the challenge to the award of Truss CCJ. The fact that some other person might qualify for the description does not, in the view which I take of the subsection, establish the inapplicability of the Act to Mr and Mrs Marshall who also qualify as such. If the worker (aided and abetted by the Authority) can establish that the Act attaches to Mr and Mrs Marshall as "the principal" the award will be upheld. To succeed, Mr and Mrs Marshall have, in effect, to show that Truss CCJ erred in entering her award. They do not succeed simply by showing that potentially, the Act might have been applied, additionally, to designate Mr Smith as "the principal". The construction adopted by her Honour is not anomalous. Parliament has turned its attention to the exclusion of certain contractors by the terms of s20(3). Cf Holland v Boland [1953] WCR 25. But for the reasons which I have explained, that exclusion does not apply here. Orders WAARSHALL and ANOR T/AS THE PARTNERSHIP B AND J MARSHALL v ANDREWS an& ANOR (Handley JA) The result is that whilst I agree with most of the conclusions which Rolfe AJA has reached on the crucial question as to the liability of Mr and Mrs Marshall as "the principal", I respectfully disagree. In my view no error has been shown in the application by Truss CCJ of the Act to the facts found. I would therefore dismiss the appeal with costs. Handley JA In this appeal I have had the benefit of reading in draft form the reasons for judgment of Kirby ACJ and Rolfe AJA. The findings of Truss CCJ established that in this case the Marshalls were "the principal" and Mr Smith was "the contractor" for the purposes of s20 of the Workers Compensation Act 1987. Since "the contractor" was not insured the section would have applied to any injured worker employed by "the contractor". However Mr Hickey, the injured worker, was employed by Mr Andrews, the subcontractor of "the contractor". Rolfe AJA demonstrates that the section also applied at the next stage in the contractual chain with Mr Smith as "the principal" and Mr Andrews as "the contractor". Since Mr Andrews, "the contractor" was not insured, Mr Hickey the injured worker employed by him had rights under the section against Mr Smith "the principal". The question in this appeal is whether the section also applies across the whole contractual chain to enable the injured worker employed by the last contractor to sue the ultimate principal. Rolfe AJA favours the narrower construction which would limit the operation of the section to principal, contractor and employee of contractor at any stage in the contractual chain. Dixon CJ said in Frauenfelder v Reid (1963) 109 CLR 42 at 46, 47 with reference to the predecessor of s20 in the 1926 Act which was based on s4 of the UK Act of 1906 that it was "of long standing. But difficulties of construction not altogether settled by decision apparently remain... The form of the section suggests that something went wrong in the drafting..." The present case involves another difficulty of construction which it seems must now be decided at an appellate level for the first time. There are several indications in the section that its operation is not confined to workers employed by "the contractor". The contract which causes the section to operate must be one for the execution of work "by or under the contractor'. The reference to the execution of the work "under the contractor" would have been unnecessary if the section had been intended to benefit only workers employed by "the contractor". The section applies for the benefit of "a worker employed in the execution of the work". Workers employed by the contractor are clearly covered but the language naturally extends to workers employed by employers further down the contractual chain. If Parliament had intended to limit the section to workers employed by "the contractor" that intention could easily have been expressed. Subs(2) provides that the compensation payable by "the principal to an injured worker shall be based on the worker's earnings under the employer by whom the worker is immediately employed." Once again, it would have been so easy to say "under the contractor by whom the worker is employed" if that had been intended. Subs(3), as Rolfe AJA demonstrates, is limited to direct employees of "the contractor" and it supports the narrower construction. However it is an exclusion provision and while it is a guide to the construction of the principal provisions, it cannot control that construction. 6 UNREPORTED JUDGMENTS Subs(4) gives "the principal" a right of indemnity not just against "the contractor" but against "any person" liable to the worker independently of the section. One wonders why wider language was used if the only person who could ever be liable under the indemnity was "the contractor". At first sight subs(5) appeared to support the narrower construction but on reflection I have concluded otherwise. It is not in terms limited to workers employed by "the contractor". Again, it would have been so easy to say "the employer" if that had been the intention. S20 confers additional rights on injured workers against "the principal" but does not take away their normal rights against an uninsured employer. It seems to me that subs(5) may be needed where "the contractor" is not the employer but at another level is also "the principal" to ensure that the worker may sue both "the principal" at one level, and "the contractor" at another as well as his employer. So understood the provision supports the wider construction. There are therefore a number of indications in the language of the section which support the wider construction. Another factor which supports the wider construction is that if Mr Smith "the contractor" had been insured the Marshalls as "the principal" would not have been liable. The injured worker, Mr Hickey, was not employed by Mr Smith who, as "the principal" in the next stage of the chain, was liable because Mr Andrews, "the contractor" in that stage, was not insured. If the section was not capable of operating at the next stage of the contractual chain Mr Smith's failure, as "the contractor', to take out insurance would not have prejudiced this worker's rights. He could not have sued Mr Smith as "the contractor" because he was employed by the subcontractor Mr Andrews and it was not suggested that the Act otherwise enabled the worker, Mr Hickey, to sue "the contractor". However, since Mr Smith as "the principal" in the next stage of the chain was liable under the section, his failure to take out insurance prejudiced the worker. The imposition of liability on the Marshalls as "the principal" above "the contractor" in the chain because "the contractor" was not insured thus served a useful purpose. It did so not only for workers employed by "the contractor" but also for other workers employed further down the chain who had rights against the contractor under the section. The wider construction is supported by language in the text which naturally extends to workers further down the contractual chain, and it gives the section a sensible and workable operation consistent with its evident purpose. I would therefore adopt the wider construction which was previously adopted by Burke and Manser CCJJ whose decisions were followed by the trial Judge. The wider construction is not supported by UK authority but is not novel. It has the support of this note in Halsbury 2nd ed vol 34 "Workers Compensation" at 904 published in 1940: "From the wording of the section it seems that the employer of the workman need not necessarily be the person therein referred to as the contractor; a workman employed by the last of a chain of sub-contractors could, it is submitted, claim under this section against the original principal." In my opinion the appeal should be dismissed with costs. Rolfe AJA INTRODUCTION This is an appeal from a decision of Her Honour Judge Truss. The applicant before her Honour was Mr Arthur Hickey. The first respondent was Mr Ian Henry Andrews, who is also known as Ike Andrews, and the second respondent was WorkCover Authority of New South Wales, ("WorkCover"). Bruce Lisle WAARSHALL and ANOR T/AS THE PARTNERSHIP B AND J MARSHALL v ANDREWS and@ ANOR (Rolfe AJA) Marshall and his wife, Janet Mary Marshall, trading as The Partnership B and J Marshall were added as third parties pursuant to s144(2)(b) of the Workers Compensation Act 1987, ("the Act"), alleging they were "a principal for the purposes of s20 of" the Act. Before this Court Mr and Mrs Marshall are the appellants, Mr Andrews is the first respondent and WorkCover is the second respondent. Mr Andrews appeared in person at the hearing before her Honour and did not appear and was not represented on the hearing of the appeal. For ease of understanding I shall refer to the parties by their names. Mr Hickey brought an application on 21 August 1992 seeking workers compensation from Mr Andrews in respect of an injury he sustained on 29 October 1990 at "Enmore" Station near Walgett whilst operating an auger to load barley on to a truck for movement from a paddock, in which it had been harvested, to a grain shed on the property for treatment prior to its being transported to silos. So much was not in issue. The property was owned by Pine Creek Pty Ltd, a company apparently controlled by Mr and Mrs Marshall, and was farmed by them. A Mr Robert John Smith owned it previously and, after selling it, he had performed fanning work on it on a contract basis for Mr and Mrs Marshall since 1975. Mr and Mrs Marshall entered into a contract with Mr Smith in relation to the 1990 crop. Her Honour refers to the contractual arrangements commencing at AB74, which she said included Mr Andrews ploughing and planting the seed provided by Mr and Mrs Marshall for which he was paid on a per acre basis. Mr Andrews also contracted to supervise and haul the harvest for a fixed amount per tonne. As part of the contract, I assume between Mr and Mrs Marshall and Mr Smith, it was necessary for Mr Smith to make arrangements with other parties for the harvesting and carting of the grain from the property, and her Honour found that in accordance with the usual practice he advised Mr and Mrs Marshall with whom he had made those arrangements. Her Honour found Mr Smith knew Mr Andrews was a haulage carter, and that he contracted with Mr Andrews to haul the crop off the property at $1 per tonne. Mr Andrews told Mr Smith that he, Mr Andrews, would be "using" Mr Hickey as a fill-in driver. Her Honour found there was an arrangement between Mr Smith and Mr and Mrs Marshall to pool the equipment to be used in carting the grain, and that Mr Smith owned the auger upon which the applicant injured himself whilst transferring grain from a saucer bin in the paddock into the truck. The grain was then to be transported to the grain sheds on the property for grading "because of black oats before being carted to the silos", which I assume to mean the communal ones in the township: AB69. Her Honour found that shortly prior to 29 October 1990 Mr Andrews arranged for Mr Hickey to cart the barley and there was no discussion, at that stage, of the basis on which he was to be paid. She found that Mr Andrews said "he was fairly sure that he told" Mr Hickey "that he would be paid ten per cent of the gross earnings of the truck with the proviso that if the truck were down for any period for the duration of the contract he would pay the applicant a retainer so as not to see him short". Subsequently, AB75, her Honour found that Mr Smith instructed Mr Andrews to send his account to Mr and Mrs Marshall, that they paid it direct and received a receipt from Mr Andrews. 8 UNREPORTED JUDGMENTS Her Honour found: "It is clear on the evidence, and not disputed by the respondents, that the applicant was a worker within the meaning of the Act and as such is entitled to compensation in respect of the injury which he received on 29 October 1990. The primary issue for determination is by whom the compensation is payable having regard to s20": AB75-76. HER HONOUR'S REASONS Her Honour set out s20 and said it was clear on the evidence and acknowledged by counsel that there were a number of contracts in existence. She identified these, AB77, thus: "(a) Between (Mr Hickey) and (Mr Andrews) to drive the truck. (b) Between (Mr Andrews) and (Mr Smith) to cart the grain to the silo. (c) Between (Mr Smith) and (Mr and Mrs Marshall) to supervise and haul the harvest." Her Honour held the evidence did not establish a contract between Mr and Mrs Marshall and Mr Andrews "despite the fact that" Mr Andrews "received payment direct from" Mr and Mrs Marshall "for the cartage". She referred to the consideration of s20 by Burke CCJ in Easton v Wiseman and Ors (30 March 1990 - unreported), and Manser CCJ in Newstyle Furniture Pty Ltd v Kim and Ors (11 May 1993 - unreported). At AB80 her Honour set forth a consideration of "a number of steps", which a determination under s20(1) involved. Firstly, she said it was necessary that there be a "principal" as specified in the section. She then held that: "The only person(s) capable of being a principal in these proceedings is" Mr and Mrs Marshall. She noted a concession on their behalf that there was a contract between them and Mr Smith, and a submission on their behalf that the "true" principal was Mr Smith, who was not a party to the proceedings. She also noted a submission that Mr and Mrs Marshall could not be considered a "principal" within the meaning of the section because there was no evidence that they had any input into the crop other than providing the land, seed and some of the equipment. She rejected these submissions and found that Mr and Mrs Marshall fell within the words "the principal": "... who, in the course of or for the purpose of a trade or business, namely farming me property known as Enfield (sic) Station contracted with another person (namely Smith) for the growing and management of the 1990 crop including the harvesting and carting to the silo." Her Honour found that Mr Smith was "the contractor" and that Mr Hickey: "was clearly engaged in the execution of work the subject of this contract, namely the final stage of the crop, carting the grain to the silo via the grain sheds. It is clear on the authorities to which I have referred that for the subsection to operate it is not necessary for the applicant to be an employee of the contractor. In this case he was clearly an employee of the first respondent." Her Honour continued, AB81: "Tn my view it is clear on the authorities that there is nothing in the s20(1) WHICH LIMITS THE LIABILITY OF THE PRINCIPAL TO THE SITUATION WHERE THE CONTRACTOR IS THE DIRECT EMPLOYER OF THE INJURED PERSON. The words of the subsection are wide enough to make a principal liable where the injured worker has been employed as a sub-contractor to a contractor to the principal (as is the situation here) or under an even longer chain of contractual links." (My emphasis.) Her Honour then turned her attention to subs(3), which she quoted, and, after referring to the decision of the High WAARSHALL and ANOR T/AS THE PARTNERSHIP B AND J MARSHALL v ANDREWS an@ ANOR (Rolfe AJA) Court in Frauenfelder v Reid and Ors (1962-1963) 109 CLR 42, which dealt with the former s6(3)(a), her Honour said that in her opinion the contract referred to in s20(3): "".. must be the contract between the principal and contractor as referred to in subs(1). In this case, that is the contract between the third party and Smith. In my view subs(3) would only apply, prima facie, if the applicant had been employed by Smith which on the evidence he was not." Her Honour continued that if she be wrong about that it was necessary to consider the meaning of "agricultural work" in the subsection. She referred to a passage from the judgment of Windeyer J in Frauenfelder and continued: "Tt was submitted that 'harvesting' included taking the crop to the silo and that this therefore could be considered 'other agricultural work' within the meaning of the section. At the time of his injury, the applicant was engaged in the work of carting the crop from the paddock to the shed to the silo. In my view this did not constitute 'agricultural work' within the meaning of the section. It was not part of the operation of tilling the soil but was part of the post harvest operation." The passage upon which she relied stated that agricultural work comprehended: "\.. any work that is agricultural in the sense that ploughing, threshing, chaff cutting are - that is to say any of the ordinary operations of tilling the soil, sowing, harvesting and the treatment on the farm of crops." As I would understand it the barley, once it had been stripped by the harvester from the stalks, was placed in temporary containers, referred to as saucer bins, in the paddocks and, thereafter, removed by auger into a truck and taken to grain sheds on the property for the purposes to which her Honour had referred, prior to being taken to the town silos. As the word "harvesting" encompasses the getting in of the crop, and as the crop was the barley, it seems to me, at least prima facie, that this was harvesting work and, certainly that it fell within the ordinary operations "involved therein". The consequence of the various findings her Honour made were that she found Mr and Mrs Marshall to be the principal within the meaning of s20(1) and Mr Smith to be the contractor. She found the contract between Mr and Mrs Marshall and Mr Smith was for their trade or business and that Mr Hickey was injured in the execution "under the contractor of work undertaken by the principal" and that, as was not in issue, Mr Smith did not have a policy of insurance and was not a self-insurer. She found that Mr Hickey was entitled to an award and made certain orders against Mr Andrews and, having declared he was not insured, she ordered WorkCover to cause payment of the compensation and costs awarded against Mr Andrews from the fund constituted under s18, and she also ordered that Mr and Mrs Marshall reimburse WorkCover such amount or amounts as may be paid out of that fund in respect of the compensation and costs awarded against Mr Andrews. THE GROUNDS OF APPEAL Mr and Mrs Marshall appeal against this decision on the bases that her Honour erred in finding that they were the relevant "principal" for the purposes of s20(1); that she erred in finding that Mr Hickey sustained injury whilst engaged in any work undertaken by Mr and Mrs Marshall; that she erred in concluding that in order for s20(3) of the Act to apply it was necessary to show that Mr Hickey had been employed by the person who supplied the machinery, namely Mr Smith; and that she erred in finding that the work did not constitute "agricultural work" within the meaning of s20(3). 10 UNREPORTED JUDGMENTS THE FIRST GROUND OF APPEAL The first ground of appeal requires a consideration of the position held by Mr and Mrs Marshall in terms of s20(1). It provides: "Tf any person (in this section referred to as 'the principal') in the course of or for the purposes of the person's trade or business, contracts with any other person (in this section referred to as 'the contractor') for the execution by or under the contractor of the whole or any part of any work undertaken by the principal, the principal is, if the contractor does not have a policy of insurance or is not a self-insurer at the time a worker employed in the execution of the work receives an injury, liable to pay any compensation under this Act which the principal would have been liable to pay if that worker had been immediately employed by the principal." For a person to be "the principal", the person must be one in the course of or for the purposes of whose trade or business he/she contracts with any other person for the execution by or under that person of the whole or any part of any work undertaken by the principal. It was submitted on behalf of Mr and Mrs Marshall that they did not fall within the statutory definition and, in the circumstances of this case, it was submitted that Mr Smith was the principal and not, as her Honour found, the contractor. Thus it was submitted her Honour was in error in concluding that "the only person(s) capable of being a principal in these proceedings" were Mr and Mrs Marshall, and that she erred in rejecting ie submission that Mr Smith was the principal. It was submitted the evidence did not support the conclusion that the trade or business of Mr and Mrs Marshall was that of farming nor that they undertook the work of farming on "Enmore". This was said to be so notwithstanding that they shared in the profit, if any, from the crop and provided some seed and equipment for the operation. It was pointed out that the property was owned by Pine Creek Pty Ltd and, it was submitted, farmed by Mr Smith. The evidence, as I have said, established that Pine Creek Pty Ltd owned the property and, under some arrangement which does not seem to have been investigated further, Mr and Mrs Marshall had the right to occupation of it so as to enable them to contract with Mr Smith for the growing of crops on it. Mr Smith described the work he carried out. He said he came to an agreement with Mr and Mrs Marshall to farm the property on a contract basis, his task being to plough the ground and plant the seed, which was supplied by Mr and Mrs Marshall, and supervise the crop, all of which was done on the basis of an agreement with Mr and Mrs Marshall for payment based on an amount per tonne of the crop and an amount per acre. Mr Smith said he employed various sub-contractors, but he had the overall management of the operation. This included spraying the crop on various occasions, although he did not recall whether this crop was sprayed: AB, at 58 and 59. At AB60 Mr Smith said: "Q. So in effect Mr Marshall provided the land and he provided the seed and otherwise you arranged the entirety of the crop. A. No there was a little bit more to it than that, Mr Marshall owned some saucer bins and one auger, I owned one auger and some saucer bins. An arrangement between us was that we pool all our resources to facilitate the harvest wherever it may have been." Mr Marshall said that in October 1990 a barley crop was being grown on the property, and he agreed he and Mr Smith "were in a contract farming arrangement for the growing of that crop". He continued: WAARSHALL and ANOR T/AS THE PARTNERSHIP B AND J MARSHALL v ANDREWS and ANOR (Rolfe AJA) "Q. When did the arrangements for the growing of that particular crop occur with Mr Smith. Can you recall? A. Probably the year before I think when we had an ongoing arrangement, it started back in 1975 and we'd just go on with it occasionally things changed a little bit but basically John's been doing MY FARMING in that time. Q. In relation to the harvest and the haulage of me crop in 1990 who made the arrangements for the harvest and the haulage? A. John Smith": AB63. (My emphasis.) At AB65 Mr Marshall said the property was owned by Pine Creek Pty Ltd and, at AB66: "Q. In October 1990, the period which we are talking about to-day, when the haulage of this harvested crop came off Enmore, there was a partnership, I take it, of you and your wife and the partnership was B and J Marshall. Is that correct? A. Yes. Q. At that time B and J Marshall was not simply an account, a bank account, it was more than that, was it not? A. It was more, yes. Q. Indeed, may I take it in 1990, for example, the financial year ending 30 June 1991, that what profits B and J Marshall made as a result of conducting the business at Enmore you declared to the Tax Commissioner? A. Yes." It was submitted on behalf of Mr and Mrs Marshall that they were no more than investors deriving income by allowing Mr Smith to crop the land. Accordingly, it followed, it was not part of their trade or business to be engaged in the growing of crops, but rather that of Mr Smith, and that, accordingly, Mr Smith was not performing any part of any work "undertaken" by them. In my view the evidence does not support this submission. I am of the opinion that the only reasonable inference to be drawn from the evidence is that Mr and Mrs Marshall were desirous of cropping the land and, to facilitate that, engaged the services of Mr Smith, on the terms to which the evidence makes reference, and provided seed and equipment to assist in the operation. Their income from this enterprise was derived by reference to the crop harvested and the use of the land, which they must have occupied under some arrangement with Pine Creek Pty Ltd. In these circumstances I consider the proper conclusion is that Mr and Mrs Marshall were "the principal" within the meaning of s20(1) and I shall refer, in a moment, to the authority I consider supports that. However, that finding has to be placed in the context of and made relevant to the claim, which was being made by Mr Hickey. By that I mean that whilst Mr and Mrs Marshall may, by reference to the statutory requirements of "the principal", be treated as such, such a finding may not, in the context of a claim made by Mr Hickey, be of ultimate relevance. The predecessor to s20(1) was s6(3)(a). That was considered by the High Court in Moir v Schrader and Anor (1936) 56 CLR 310. At 319 Starke J observed that the construction of s6(3)(a) had caused considerable difference of opinion, and continued: "But it is now, I think, settled that the section refers to cases in which a person contracts for the execution by a contractor of any work part and parcel of his own trade or business, or in the usual course of his trade or business. 'It is not sufficient to say that it was for the purposes of the business; it must also be part of the work undertaken by the principal' (see Skate v Jones and Co; Hockley v West London Timber and Joinery Co)." 12 UNREPORTED JUDGMENTS His Honour said the Workers Compensation Commission had found the respondents had undertaken a fire wood business. He was of the view they had not commenced that business, but, assuming they had, there was no evidence to warrant that the work the contractor was undertaking "was part and parcel" of that business or in its usual course. In those circumstances his Honour was of the view that the respondents were not liable. At 320 Dixon J considered the meaning of the expression "work undertaken by the principal". His Honour said: "As I understand the interpretation which the expression has received, the liability of the principal is limited to workmen employed in the execution of work forming part of the operations which constitute the exercise of the principal's trade or business." His Honour adopted the statement that the particular work in question must be the principal's "own trade or business". He then considered a number of contracts in which it had been held that the section applied, which indicated, essentially, that it was a question of fact in each case. At 323 his Honour said: "Unfortunately the principle which that interpretation of the words 'any work undertaken' ascribes to the legislation is not susceptible of exact definition and of completely certain application. It is based upon the view that from the course of the principal's trade or business and the manner in which he conducts it, he will be found to have assumed responsibility for the performance of a class of work, the fulfilment of given functions or the pursuit of a system of activities. What he has thus adopted as his proper operations, he may accomplish by means of direct employees, or by means of contracts which remove him from the relation of employer with the workmen who do the work. Whichever be his method, he is to be responsible for the workers' compensation payable to those injured in the course of the work for the performance of which he has assumed responsibility, the work which he has 'undertaken'. But when, although the work performed by the injured workman is necessary to enable the principal to carry out the operations the execution of which he has adopted as his trade or business, yet that work does not form a component part of the operations and only contributes or conduces to their performance or is preliminary or ancillary or incidental to them, then the workman must look to his direct employer for compensation." The final sentence I have quoted is not strictly relevant to this case. It provides, in effect, an exemption from circumstances in which, by virtue of the operations being carried on, the principal could be liable, subject to the satisfaction of other statutory criteria, to the injured employee. His Honour had regard to the facts of the case and concluded the circumstances did not admit of the inference that the principals "in the course of or for the purpose of a business contracted for the execution by or under the contractors of part of work undertaken by" them. He said "they were not engaged in a continuous process of obtaining timber and selling it, nor were they about to establish such a process. They wished to rid themselves of particular timber. They abstained from doing for themselves more than selling it as firewood when it was cut": at 325. In these circumstances his Honour considered the appeal should be dismissed. I consider the facts of that case are distinguishable from those of the present where, on the evidence, it is clear that part of the business of Mr and Mrs Marshall was the growing of crops with a view to sale, which work they contracted to Mr Smith. WAARSHALL and ANOR T/AS THE PARTNERSHIP B AND J MARSHALL v ANDREWS ana ANOR (Rolfe AJA) However, in my opinion, for the purposes of another aspect of this case, it is important to have regard to the statement by his Honour, at 324, that in the circumstances there predicated the worker must look to his direct employer for compensation. His Honour there is saying, as I understand it, that if the employee is performing work for which the principal has assumed responsibility he may look to the principal in the circumstances stated by the section. If the employee is not so working he must look to his direct employer for compensation. That case, of course, only involved the principal, the contractor and the employee. Evatt J, at 329, said the question as to whether the work was being carried out in the course of, or for the purpose of, the trading or business of the respondents was "really a question of fact". His Honour considered the nature of the work being undertaken and, after giving certain examples, he said, at 330: "These examples also serve to illustrate the principle that s6(3)(a) of the New South Wales Act must apply to all cases where a worker is injured in performing work for a contractor, provided that the contract between the principal and contractor requires the performance of the work which is an essential part of the very business or trade in which the principal is at the time engaged." Thereafter he said: "The general object of the provision is that the worker who is injured is entitled to say: 'The work I was doing was not only for the benefit of the principal, but was done under an arrangement by which my direct employer was really conducting a portion of the principal's own business. In such a case I should not be put in the position of attempting to enforce my statutory right against an impecunious employer, and I look to the principal in the transaction'." His Honour found, on the facts of that case, that there was evidence to support the award in favour of the worker made by the Workers Compensation Commission. At 335 McTiernan J said: "There is no evidence that they entered upon the execution of such work by their own workmen or had intended to do so. But is that a ground of immunity from the obligation imposed by the subsection on the 'principal'? In the case where there is a contractor who is bound by contract to execute work, and a sub-contractor to whom he sub-lets the work, that work may nevertheless be undertaken by the contractor within me meaning of the subsection. It is not necessary that the person to be made liable as the principal should perform as well as undertake the work. And, as has been observed, a person may be liable as a 'principal' under the subsection who is not under a contractual obligation to perform the work which he agreed with the injured workmen's immediate employer to have carried out. This is a development of the principle that a contractor strictly so called cannot shield himself against liability to pay compensation by sub-letting his contract to others who are employers of the workmen engaged. Where there is a contract between the person sought to be made liable as principal and the worker's immediate employer for the execution of the work., it is difficult to understand why the former should not be liable as principal under the subsection because it was not his practice to perform such work by workmen directly employed by him." The question answered by this decision, in my opinion, is that the person against whom the worker must have recourse, in the first instance, is the person by whom he is employed, which person, in turn, has sub-contracted to carry out statutorily specified work for the "principal". That, of course, was all the High 14 UNREPORTED JUDGMENTS Court was called on to determine. The case does not, in my opinion, stand as authority for the wider proposition that in the absence of a contractual link between the principal and the employer of the worker, the worker may proceed against an entity, which falls within the statutory proscription for "the principal". The matter was nextly considered by the High Court in Frauenfelder v Reid and Ors (1962-1963) 109 CLR 42. The Messrs Reid owned a property on which they wished to have a subdivisional fence erected. They sub-let the work to a contractor and an employee of the contractor, whilst working on the fence, was injured. He claimed workers' compensation from the Messrs Reid and the contractor and he was awarded compensation against the former under s6(3)(a). The High Court held that the contractor was engaged in work, which it was open to the Workers Compensation Commission to find was part and parcel of the Messrs Reid's business undertaking. In commencing his consideration of the difficulties posed by s6(3)(a) Dixon CJ said, at 46: "But difficulties of construction not altogether settled by judicial decision apparently remain. It relates to the liability of a person employing a contractor to pay workers' compensation TO THE CONTRACTOR'S EMPLOYEES if they are injured in the course of the work. The liability depends upon certain conditions which are not well defined." (My emphasis.) His Honour referred to the necessity for the contract to be made by the principal in the course of or for the purpose of his trade or business, as to which he was satisfied on the facts of that case. He then referred to the requirement that the principal must contract with another person for the purpose stated in the Act and to the difficulty posed by the words "work undertaken by the principal". He discussed the various authorities, including Moir v Schrader, and said: "This means that he is regarded as having undertaken to execute or have executed the particular class of work because it is essential to the trade or business he has assumed to conduct. The form of the section suggests that something went wrong in the drafting in the manner in which it is expressed, but the Courts have adopted an interpretation which appears to cover cases where the necessary conduct of the business involves the performance of the particular work. If that be so the owner of the business is regarded as having 'undertaken' it for the purposes of the section." His Honour held the Messrs Reid should be treated as having "undertaken" the fencing and he concluded that: "\.. the view should be adopted that it is capable of embracing work done on a station which forms a recognised or necessary incident of conducting a station, although it is not work which does directly relate to or affect outsiders or the relations of the station owners with outsiders." At 50 Windeyer J said: "Without attempting an exhaustive definition it must, I think, be accepted that the expression 'work undertaken by the principal' is not limited to work that the principal has contracted to do for someone else, but covers also any work the doing of which is part and parcel of the business undertaking of the principal. Whether or not some particular work falls within the enactment then becomes ultimately a question of fact." In my opinion the evidence in this case establishes that the cropping of "Enmore" was for the purposes of Mr and Mrs Marshall's trade or business, that in pursuance thereof they entered into the contract with Mr Smith and, accordingly, the work to be done under that contract was for the execution by him WAARSHALL and ANOR T/AS THE PARTNERSHIP B AND J MARSHALL v ANDREWS anh@ ANOR (Rolfe AJA) of either the whole or any part of the work undertaken by them. In these circumstances I am of the opinion that her Honour was correct in concluding that Mr and Mrs Marshall could be described as "the principal". The relevance of that to Mr Hickey's claim still has to be considered. THE SECOND GROUND OF APPEAL The terms of this ground of appeal are: "That her Honour erred in finding that the applicant sustained injury whilst engaged in any work undertaken by the principal." That does not expose the principal submissions made in this Court, namely that if it was correct to say that Mr and Mrs Marshall were "the principal", and that Mr Smith was the contractor, Mr Hickey was not employed by the contractor so no liability attached to Mr and Mrs Marshall, notwithstanding her Honour's finding that they were "the principal". The appellant's submitted there is no express requirement for the worker to be employed by the contractor in s20(1), although it was submitted such a requirement was implicit. Reference was made, inter alia, to the passage from Frauenfelder at 46 to which I have referred. It was submitted that if this was not the proper construction some strange results flowed from other parts of s20. Before looking to those it is appropriate to undertake a construction of subs(1). In my opinion, upon a proper construction of that subsection, the requirement is that the injured worker must have a right to recover compensation, in the first instance, from the person by whom that worker is employed. My reasoning is that the principal becomes liable to pay compensation as, in effect, the direct or immediate employer of the worker, if the contractor either does not have a policy of insurance or is not a self-insurer at the time the worker is employed "in the execution of the work" and receives an injury. These words, in my opinion, make it clear that the injury must be sustained by the worker in circumstances where the contractor is liable to pay compensation, which the contractor is not able to do, or may not be able to do, by virtue of not having a policy of insurance or not being a self-insurer. In this way a second necessary statutory nexus between the principal, the contractor and the injured worker is established and the injured worker, if otherwise left to pursue an uninsured contractor, is entitled to recover from the principal, whose work he was employed in executing, albeit employed by an intervening contractor. The nature of the work the worker was undertaking constitutes the first necessary statutory nexus. In my opinion both must be established before the principal can be made liable. However, in my opinion, for the chain to be created it is necessary to establish the employment of the worker by the "contractor". In the present case her Honour has found Mr Smith was the contractor. She has also found there was a contract between Mr Smith and Mr Andrews, but that there was no contract between Mr and Mrs Marshall and Mr Andrews. In these circumstances it seems to me that the proper approach is to regard Mr Smith, who was not a party, as "the principal" and Mr Andrews as "the contractor". I do not see any difficulty with this analysis because, contrary to the view to which her Honour came, I do not think it correct to say that Mr and Mrs Marshall were the only persons who could be "the principal". The evidence established, in my opinion, that part of Mr Smith's trade or business was farming "Enmore" and I see no reason, on the facts as found, why he should not have been held to be "the principal" and Mr Andrews held to be "the contractor". That, in my opinion, is the proper characterisation of the roles occupied by the various parties. 16 UNREPORTED JUDGMENTS The necessity for the worker to be employed by the contractor is assisted, in my view, by the requirement of subs(2), which requires a consideration of the earnings of the worker "under the employer by whom the worker is immediately employed". Subs(3) also leads to the same conclusion. In the circumstances stated therein only the contractor is liable to pay compensation to any worker employed by him. It was submitted on behalf of the appellants that this section pointed up an anomaly if the view to which her Honour came was correct, in the sense that the liability provided for in subs(1) would overcome the precise words of subs(3). I do not, with respect, think this submission is correct. Subs(3) operates notwithstanding subs(1), so that in the particular circumstances therein predicated no liability can be passed back to "the principal" and the injured worker, if the injury arises in those circumstances, only has a right of redress against his employer. On the other hand I think the sub-section is of assistance in showing that, in the first instance, the liability is that of the contractor rather than that of any other person and, in the situation envisaged by subs(3), it remains with the contractor. Subs(4) gives the principal a right to indemnity for any compensation he is liable to pay, that right being against "any person who would have been liable to pay compensation to the worker independently of this section". Once again it seems to me that that points up the requirement that there is a liability in the contractor to pay compensation, which liability, at least prima facie, must stem from a contract of employment between the contractor and the worker. Subs(5) leads to the same conclusion, if it be accepted that the only right of the worker to recover compensation from the contractor is by virtue of the establishment of the relationship of employer and employee. Subs(6) imposes liability on the contractor in the circumstances therein set forth. Subs(7), somewhat similarly to subs(3), excludes liability on the part of the principal in those circumstances. In so far as regard may be had to the title of the section it supports the view to which I have come. The view to which I have come is not inconsistent with that expressed by Burke CCJ in Easton v Wiseman. where his Honour said: "The liability is not defined in terms of a relationship between the worker and the contractor but in terms of a nexus between the worker and the actual performance of the work": at 4. I say that, however, only if what his Honour was deciding was that the first statutory requirement was thereby met. In my view there are two requirements, which run concurrently. The first involves the determination of the relationship between the worker and work being undertaken by the principal. The second requires the determination of the relationship of employer and employee in circumstances where liability can be passed on to the principal. The statute demands that consideration be given to each of these requirements, and not merely one. Burke CCJ, I think, has focussed on the first, but, that having been established, it is necessary to consider the second. Manser CCJ in New Style Furniture was considering the nature of the work being undertaken, ie the first point to which I have just referred. In my view her Honour was in error in finding that for the subsection to operate it is not necessary for the applicant to be an employee of the contractor, and to find there was nothing in s20(1), which limits the liability of the principal to the situation where the contractor is the direct employer of the injured person. In so WAARSHALL and ANOR T/AS THE PARTNERSHIP B AND J MARSHALL v ANDREWS and ANOR (Rolfe AJA) far as her Honour said: "The words of the subsection are wide enough to make the principal liable where the injured worker has been employed by a sub-contractor to a contractor to the principal (as is the situation here) or under an even longer chain of contractual links" she is, in my respectful submission, in error. The submissions on behalf of the respondent to the appeal are that there is no requirement, whether express or implied, for the worker to be employed by the contractor, it being sufficient that the worker be employed "in the execution of the work". For the reasons I have given I do not agree with this. Those words dictate a requirement, which must be fulfilled before subs(1) operates, but not the only requirement for the reasons I have sought to give. It was further submitted that such a construction of subs(1) did not lead to any anomaly with other subsections. It may be correct to say there is no anomaly, but it is not correct, in my opinion, to say that a consideration of the other subsections does not disclose the necessity, seen throughout s20, for a direct relationship of employer and employee when one is considering the position as between contractor and employee. Since preparing these reasons I have had the advantage of reading, in draft form, the judgment of Kirby ACJ. I would not give the same emphasis to the word "under", which his Honour does. I consider it to be in aid or amplification of the word "by" and, therefore, to under score the requirement that the work of the principal is to be performed "by", in every sense of that word, the contractor. This tends to focus on the importance, in the statutory scheme, of the contractor qua the worker. As I have sought to explain, the phrase "a worker employed in the execution of the work" is the necessary "work nexus", which must be established before the worker can recover under s20. Once that is brought about the link back to "the principal" must be made out. That is done through employment with the "contractor", who or which is either not insured or not a self-insurer. The section focuses upon "the" principal, ie the person who or which can, by dint of the statutory requirements, be made liable. His Honour relies upon the implications to be derived from the origin of the section. The clear intention of the section was to ensure, if the statutory requirements were met, that an injured worker performing the work of "the principal" would be entitled to claim against "the principal" if the person against whom the injured worker had the first right to claim, namely "the contractor", is neither insured nor a self-insurer. The section, in its second limb, only imposes liability on the principal if the contractor is not insured or is not a self-insurer. The words could not, in my respectful opinion, be more clear. In my judgment the finding that Mr Smith was a person, who could qualify as a principal, alters, in a significant way, how the employment nexus can be established. If Mr Smith can be described as the principal, as I consider he can, the chain from him to Mr Andrews to Mr Hickey, as required by the section, is made out. Mr Hickey moves to the position of "contractor". Equally, or importantly for Mr and Mrs Marshall, the chain to them is broken at Mr Smith. T agree Mr and Mrs Marshall must show error in the award and perhaps it is correct to say that they do not do that by showing that potentially, the Act might have applied to designate Mr Smith a principal. I do not suggest that would have been sufficient. What must be established is "the principal" not "a principal" qua Mr Hickey and that, in my judgment, on the application of the section to the facts of this case, was Mr Smith and not Mr and Mrs Marshall. 18 UNREPORTED JUDGMENTS THE THIRD AND FOURTH GROUNDS OF APPEAL The third ground is that her Honour was in error in concluding that s20(3) only applied if it was shown Mr Hickey had been employed by the person who supplied the machinery. Her Honour approached this task by saying, firstly, that the contract referred to in subs(3) must be the contract between the principal and the contractor referred to in subs(1) which, in my view, is correct. Her Honour continued: "In my view subs(3) would only apply, prima facie, if the applicant had been employed by Smith which on the evidence he was not." I think, with respect, that is also correct. It tends to reinforce the view to which I have come that there must be a relationship of employer and employee as between the contractor and the injured worker. The fact there was no such relationship between the person her Honour found to be the contractor and Mr Hickey reinforces, in my respectful submission, the view that her Honour's interpretation of s20(1) is wrong. On her Honour's findings I do not consider that subs(3) operated because Mr Hickey was not, relevantly, employed by Mr Smith. The fourth ground of appeal proceeds on the basis that her Honour was in error in finding that the work did not constitute "agricultural work". In my opinion this is correct. I have referred to my prima facie view earlier. I consider it should be adopted. In my opinion Frauenfelder is not authority for the proposition that a necessary step in the harvesting of the grain, that is the transportation of it from the field to grain sheds and/or silos, is not part of "other agricultural work". Therefore, if contrary to the view to which I have come, Mr Smith was the contractor for the purpose of the section he was the person liable to pay compensation to Mr Hickey. This result illustrates further the difficulties brought about by her Honour's finding that Mr Smith was the contractor. ADDITIONAL GROUND OF APPEAL The appellants, by an Amended Notice of Appeal, have sought to raise the following further ground: "Her Honour erred in making an order that the appellants reimburse the second respondent in that the Court does not have jurisdictional power to make such an order against a principal." It was submitted on behalf of the respondent that there was no utility in determining this ground of appeal because WorkCover had indemnified Mr Andrews and was not proposing to seek indemnity from Mr and Mrs Marshall. When this was announced counsel for the appellant suggested there was no utility in the appeal's proceeding. However, following a suggestion that it may affect the way in which the premium for the appellants was calculated based upon claims' experience, the appeal proceeded. In the view to which I have come it becomes unnecessary to determine this ground of appeal because I do not consider Mr and Mrs Marshall are liable. However, in deference to the submissions made, and having regard to the fact that the matter was said to involve a question of jurisdiction, I think it necessary to refer to it. It was submitted on behalf of the appellants that the only power to order reimbursement to WorkCover is contained in s145, which states: "The Authority may serve on a person, who in the opinion of the Authority, was: (a) In respect of an injured worker to or in respect of whom a payment has been made under the Scheme, an employer at the relevant time; or WAARSHALL and ANOR T/AS THE PARTNERSHIP B AND J MARSHALL v ANDREWS ana ANOR (Rolfe AJA) (b) an insurer under this Act of such an employer, a notice requesting that person, within a period specified in the notice, to reimburse the WorkCover Authority fund an amount (not being an amount exceeding the amount of the payment made) specified in the notice." The submission was that the provision only applies to an employer or an insurer of an employer and not to a principal. The difficulty I have with this submission is that subs(2) of s20 requires a substitution of reference to the principal for reference to the employer "in the application of this Act", in the event of compensation being claimed from or proceedings being taken against the principal in respect of any such injury. That, in my opinion, means that one must substitute in s145(1) for the word "employer", the word "principal". Accordingly, if her Honour's conclusions were otherwise correct, so also was her conclusion on this point. CONCLUSIONS In the result I am of the opinion that the appellants fell within the proscription of "the principal", but that the finding was irrelevant to these proceedings in the sense that Mr Hickey was entitled to recover against Mr Andrews, who was a contractor from Mr Smith who, in turn, was the principal relevantly for the determination of the entitlement of Mr Hickey to recover. This arises because of the view I take that Mr Hickey had to look to his direct employer, pursuant to s20(1), who, in turn, had to look to the person with whom he had contracted for the carrying out of the work and that, in those circumstances, the principal was Mr Smith. In order to make Mr and Mrs Marshall liable it was necessary, in my opinion, to establish a contractual relationship between them and Mr Andrews but, critically, her Honour found there was no such relationship, and she did not suggest, I think correctly, that Mr Smith entered into the contract with Mr Andrews as the agent for Mr and Mrs Marshall. So much is inherent in her finding that there was no contract between Mr Andrews and Mr and Mrs Marshall. If that not be correct I consider that Mr Hickey was engaged in "other agricultural work" and that this was done in the context of machinery driven by mechanical power, such that the contractor "(and no other person)" was liable to pay compensation to Mr Hickey. This tends to point up that Mr Andrews was the contractor but, on her Honour's finding that Mr Smith was the contractor, he would have been, if joined, the person liable to pay compensation. However, in the view I take, he would not have been liable, that liability falling upon Mr Andrews as the contractor and being confined to him by the terms of the Act. That finding, of course, depends upon an acceptance of the proposition that the provision of the truck by Mr Andrews and its use in carrying the grain from the paddock, constitutes the provision and use of machinery driven by mechanical power for the purposes of that work. It was not submitted to the contrary, nor, in my opinion, could it have been. ORDERS PROPOSED In the result I propose that the appeal be allowed and that the second respondent pay the appellant's costs. The second respondent should have a certificate pursuant to the Suitors Fund Act if otherwise entitled. Appeal dismissed with costs. COUNSEL: Appellant: JD Hislop QC/GJ Parker 20 UNREPORTED JUDGMENTS Respondent: P Webb QC/DA Baker SOLICITORS: Appellant: PV McCulloch and Buggy Respondent: Dexter Healey and Co