GLENMASON PTY LTD v KRAMER and ORS SUPREME COURT OF NEW SOUTH WALES COURT OF APPEAL MAHONEY P, PRIESTLEY and MEAGHER JJA 28 May 1996, 28 May 1996 [1996] NSWCA 218 Was worker an employee of the appellant company — Did Judge adopted a correct principle in reviewing the Commissioner's findings — Was worker totally incapacitated for work WORKERS COMPENSATION — Appeal against review by Judge of Commissioner's findings — Whether Judge applied correct test — Whether respondent was employee of company — Incapacity for work: Held, appeal dismissed. Appeal dismissed with costs. Mahoney P This is an appeal against a judgment of her Honour Judge Truss given on 29 September 1995. The applicant, Elizabeth Wilhelmina Kramer sustained an injury on 14 August 1986. She claimed worker's compensation in relation to that injury. The matter came before a Commissioner and was found in her favour. It then came on for appeal or review before Truss J and on 29 September 1995 her Honour held that the application for review should be dismissed. The result was that the conclusion of the Commissioner that the applicant had been injured and was totally incapacitated, remained in force. In this Court the issues that have been raised are, in form, three: first, whether it was correct to hold, as was held below, that the applicant Mrs Kramer was the employee of the applicant company. (I shall refer to it as the Glenmason company). Second, whether the learned judge had adopted a correct principle in reviewing the Commissioner's findings. And, third, whether in the end the conclusion should be that she was totally incapacitated for work. The other company respondent, the Kramer company, has not been represented, before the judge or before this Court. It was, I think, a necessary party. The Court has been pressed to proceed in its absence. As in the event it will suffer no detriment, the Court has proceeded with the appeal in its absence from the proceeding. If it should later be agreed that what has been done does not bind it, that is a matter that can then be dealt with. Mr Hoeben SC, who has argued the matter for the appellant, the Glenmason company, has argued the matter in great detail and it is no reflection upon his argument or, if I may say so, his industry, that I deal with the matter rather briefly. The facts disclose that Mr and Mrs Kramer were directors and shareholders in the Kramer company. They worked in a business which involved, at the relevant time, the making of furniture or cabinet work. Having regard to the evidence, I am of the opinion that they were - at least she was - an employee of the Kramer company up to 1 August 1986. At that time an agreement was to come into effect for the sale of the business of the Kramer company to the Glenmason company. The terms of the agreement are set forth in the appeal papers and I shall not go to the detail of them. The position was that 2 UNREPORTED JUDGMENTS the business was to be taken over by the Glenmason company which was essentially controlled by a Mr Barnes, the person who gave evidence in the present proceedings. I shall not extend this judgment by referring to all the terms of the agreement, but the term of the agreement strictly relevant for present purposes is that contained in condition 34, being CL21 of that condition: "21. The vendor and Teunis Kramer and Elizabeth Kramer agree with the purchaser that both Teunis Kramer and Elizabeth Kramer shall attend at the business on and from the date of completion (except for a period of 1 week which shall be taken not earlier than 4 weeks from the date of completion and provided that the hours which they are not in attendance at the business for such week shall be made up hour for hour by arrangement during the other period of 19 weeks 1 day) for the period from the date of completion up to and including the date which is 20 weeks 1 day thereafter (to the intent that provided completion takes place on 1 August 1986 they shall attend at the business up to and including Friday 19 December) and shall give tuition to the purchaser and its officers and employees in relation to the conduct of the business and introduce to the purchaser and its officers, the customers and clients of the business and the suppliers of goods, services and stock-in-trade used in the business and generally to use their best endeavours to retain for the purchaser the benefit of the goodwill of the business and also to work in whatsoever manner in the business as is requested by the purchaser." What happened was that pursuant to or consequent upon the arrangements which were there referred to, Mr and Mrs Kramer - I shall describe the matter without pre-empting the issue - went to attend upon the place of business on an afternoon, 1 August 1986. The agreement had provided, according to CL21, that they should attend at the business for a period of 20 weeks and 1 day from the date of completion. The date of completion may be taken to be, for this purpose, 1 August 1986. The terms of the clause provided that they would, as therein stated, "... give tuition to the purchaser and its officers and employees in relation to the conduct of the business and introduce to the purchaser and its officers, the customers and clients of the business and the suppliers of goods, services and stock-in-trade...". More significantly, the concluding words of CL21 were, "... and also to work in whatsoever manner in the business as is requested by the purchaser". Subsequently, in the course of her evidence, Mrs Kramer gave evidence as to what occurred in relation to work that was done in the premises. The inference that I draw from what had been said is that not merely did they come to give tuition and the like but they actually were engaged in working as employees of the Glenmason company under the direction of Mr Barnes. I shall not lengthen this judgment by setting out all of the references in the transcript which lead me to this conclusion. The circumstances of the accident as she described them in chief (for example at 30 of the appeal papers) and what she said subsequently in the course of cross-examination, indicate to me that (as the Commissioner and Mr Barnes saw the position) what was involved was not merely that tuition was given by her (as it were, by an outsider previously unknown to the business) but was work being done at the behest of Mr Barnes under his direction and under his control as to what was to be done and how it was to be done. The reasons why Mr Barnes had stipulated for this and the way in which it had come to be included in the contract were discussed in the course of her cross-examination and the details are set forth in her evidence. URJ GLENMASON PTY LTD v KRAMER and ORS (Mahoney P) 3 As I have said, the conclusion that I have come to is that as a result of, or consequent upon, what was provided in the clause, there was established a relationship of employer and employee between Mr and Mrs Kramer and the Glenmason company. Mr Hoeben SC properly has referred the Court to cases in which, in a context not dissimilar in principle from the present, the position has been held to be that an employee of a company being a vendor company, or a company in the analogous position, has been linked to a purchaser company or a company in an analogous position. Arguments have then arisen as to what is the relationship between the employee of the first company and the second company for the purposes of the general law of workers compensation. Reference has been made to a number of cases; Mr Hoeben has taken us to the main cases dealing with such a situation. But, in the end, I do not think that those cases are of assistance in the present case. My finding is that what occurred was not a lending of an employee but the actual employment of the employee, in this case the applicant Mrs Kramer. In the course of the evidence, there is reference to her being "employed" by the Glenmason company. I accept the submission of Mr Hoeben SC that statements of that kind are not conclusive, perhaps they are not relevant in determining what was the relationship between her and the Glenmason company. But they may, perhaps, provide some basis for inference as to what the parties at the time understood to be their relationship and to be the arrangement that had been made pursuant to the terms of the agreement as from 1 August 1986. In relation to the position of Mr and Mrs Kramer, vis-a-vis the Kramer company, the position may arguably be somewhat different. She and he, as directors of the company, effectively controlled what it did and it may be they were in the position, by an assertion or by an admission or by a statement against interest, to provide some evidence why, as she said, the relationship between them and the Kramer company as from | August 1986 was "null and void" so far as employment was concerned. It is not necessary to come to a final conclusion in relation to that aspect of the matter. Reference has been made by Mr Hoeben SC - I do not attempt to cover all of the matters or all of the submissions that have been made - to matters such as the payment of wages, the way in which they have been paid, the form of the cheques and so on. All of these matters are relevant as evidence bearing upon the inference to be drawn as to what in fact was done by the parties in setting up the relationship that existed as from 1 August 1986. In the end, I do not think that any of them is determinative. But taking them altogether the inference that I draw is that to which I have referred. I am, therefore, of the opinion that in relation to this issue the appellant should not succeed. Reference was then made to the question whether the learned judge of the Compensation Court had, in considering the conclusions of the Commissioner, applied the correct test, that is, had approached the matter upon the correct basis. Reference is made in her Honour's judgment to this question. I do not think that, in the circumstances of the present case, this Court need examine that matter in detail. I think the end result is that whether the judge applied the right test or not, the nature of the problem as it has been presented to this Court is one in which this Court can and should form its own conclusion upon the evidence. There is, as Mr Hoeben SC has put from the outset, no Abalos issue before the Court and the Court approaches the matter by reference simply to the effect of the evidence as it appears in the appeal papers. In the circumstances I do not think 4 UNREPORTED JUDGMENTS that it is necessary for this Court to pursue the details of the test by which a judge of the Compensation Court reviews a Commissioner's decision and how in precise terms it is to be formulated. In saying this, I am not to be taken as differing from the statements of principle set forth in the judge's judgment. It is simply not necessary for me to consider the terms of them. I go then to the third matter, the question whether the Court should conclude that the Commissioner and the judge were wrong in forming their conclusion that the incapacity from which undoubtedly the worker, Mrs Kramer, suffered was and is total. Incapacity is, of course, incapacity "for work". That is the phrase contained in the relevant provision of the Workers Compensation Act 1987. The work for which she is to be considered is work in the area in which she would reasonably be expected to find work: Arnotts Snack Products Pty Ltd v Yacob (1985) 155 CLR 171. Evidence was given as to the acts which physically she can and cannot do. There was considerable cross-examination in relation to the matter and Mr Hoeben quite properly referred the Court to some of the statements that she made as to what she could and could not do. She could do some but not all of her housework. She could do the physical acts involved although she could not do, for example, vacuuming or the like: in that she is helped by members of her family. Reference was made to doing housework at about two hours at a stretch. She made reference to her need to sit down from time to time. She was asked to consider whether she could do casual work as a shop assistant: the effect of the evidence was, in my opinion, that while she could have done some of the physical acts involved for some period of time, she would not have been able to undertake the duties of a shop assistant over the period of time that a shop assistant would be expected to work. It may be that she could have done the physical acts involved in a period of two hours "at a stretch" provided that she was able to sit or otherwise accommodate herself to her difficulties. But I do not think that indicates, in the relevant sense, a capacity for work in the area of work in which she would reasonably be expected to work. I have not detailed in terms the medical evidence as to her condition. Reference has been made to the condition of her back, the serious pain from which she continuously suffered, the operation that was necessary in order to remove one of the discs of her spine. The medical witnesses provided evidence as to her condition. Reference was made in the judgment of the Commissioner to the report of Dr Jones in January 1993 where he reported that she had: "... a persistent left foot drop as a result of her injury in August 1986. Associated with this, she has had chronic pain in the left lower back and leg and is unable to pursue any persistent activity." The doctor subsequently reiterated views of this kind in his general report of 15 June 1993. It is not necessary for me to detail all of the relevant evidence. The conclusion I have formed is that she is totally incapacitated for any work of the kind which she would reasonably be expected to do within the authorities. For those reasons I am of opinion that the appeal on this third issue fails. The result is, in my opinion therefore, that the appeal should be dismissed. I would propose it be dismissed with costs. Priestley JA I agree with the President. Meagher JA So do L. URJ GLENMASON PTY LTD v KRAMER and ORS (Meagher JA) 5 Mahoney P: The order of the Court is, therefore, the order that I have proposed. Appeal dismissed with costs. Counsel for the appellant: CRR Hoeben SC Solicitors for the appellant: Pieterse and Pieterse 10 Counsel for the respondent (1): JA Gracie Solicitors for the respondent (1): Astley, Thompson and Valtas Counsel for the respondent (2): AJ Candy 15 Solicitors for the respondent (2): N Vrabac