McILVAIN v THE COUNCIL OF THE SHIRE OF GUNNEDAH SUPREME COURT OF NEW SOUTH WALES COURT OF APPEAL MASON P, SHELLER JA and FITZGERALD AJA 15 September 1998, 2 October 1998 [1998] NSWCA 152 WORKERS COMPENSATION — trial Judge's failure to give reasons was an error of law The appellant applied in the Compensation Court for determination of the liability and the compensation payable by the respondent in relation to injuries he claimed to have received on 13 October 1994 and 31 March 1995. On 13 October 1994 he was employed by the respondent, however, on 31 March 1995 he was no longer employed by the respondent but was engaged in driving a truck, which he owned in connection with the respondent's business. The trial Judge held that the appellant was not entitled to damages for the 31 March 1995 injuries because at that time the appellant was carrying on a cartage business. However, his Honour held that the appellant was entitled to damages for the 13 October 1994 injuries and that the appellant could not receive damages for impairment of his back and loss of use of his right leg because those injuries arose from the 31 March 1995 injuries. The appellant appealed from this decision arguing that the trial Judge made an error of law by failing to give reasons for his decision that the appellant was not a deemed worker under Sch | cl2 of the Workers Compensation Act 1987 when he suffered injury on 31 March 1995. Additionally, it was argued that the trial Judge had failed to adequately consider the appellant's submissions based on Davis v Pioneer Concrete (1976) 1 NSWLR 562. Held: 1. The trial Judge failed to give reasons for his finding that the appellant was not a deemed worker and as such this amounted to an error of law. Similarly, his Honour's failure to give reasons for rejecting a relationship between the injury sustained on 13 October 1994 and his incapacity after 10 April 1995 amounted to an error of law. Humberstone v Northern Timber Mills (1949) 79 CLR 389 at 402 and Davis v Pioneer Concrete referred to. Pettit v Dunkley [1971] 1 NSWLR 376 and Soulemezis v Dudley (Holdings) Pty Ltd [1987] 10 NSWLR 247 at 280 applied. Authorities: Davis v Pioneer Concrete (1976) 1 NSWLR 562 Humberstone v Northern Timber Mills (1949) 79 CLR 389 Pettit v Dunkley [1971] 1 NSWLR 376 Soulemezis v Dudley (Holdings) Pty Ltd [1987] 10 NSWLR 247 Mason P I agree with Sheller JA. Sheller JA The appellant, Bruce James Mcllvain, applied in the Compensation Court for determination of the liability of and amount of compensation payable by the respondent, the Council of the Shire of Gunnedah, under the Workers Compensation Act 1987 (the Act) in respect of work injuries he claimed to have suffered on 13 October 1994 and 31 March 1995. On the first of these dates the appellant was employed by the respondent. By 31 March 1995 he was no longer employed by the respondent but engaged in driving a truck, which he owned, in connection with Council business. 2 UNREPORTED JUDGMENTS His Honour Judge Egan heard the proceedings and gave judgment on 28 July 1997 in which he said that he was of the view that the applicant was not entitled to an award in relation to injuries suffered by him on 31 March 1995 or the subsequent operative treatment "those having occurred while carrying on his cartage business". The applicant was, however, entitled to an award as claimed from 1 December 1994 to 9 December 1994, in respect of the injury of 13 October 1994 and his Honour made an award accordingly. His Honour observed that the applicant included in his claim a claim for permanent impairment of the back and loss of efficient use of the right leg but held that the impairments and loss of use resulted from the injury on 31 March 1995 and subsequent operative treatment in respect of which no compensation was payable. The appellant resigned from his employment with the respondent in November 1994. He bought a large truck with trailer and with work available, in particular, cartage for the Council. In his insurance application for cover for the truck he said that it would be used for carrying gravel and grain. Judge Egan made the following finding: "During the period between December 1994 and April 1995 he had been engaged in doing building work for various people. The first of those jobs was noted in his diary as 14" December 1994. He also continued to carry gravel for the council and undertake cartage of building materials and grain for a number of other persons. In short he was carrying on two businesses, one of building work and the other of carting materials. In addition to carrying on these two businesses he also conceded he did not always drive the truck and employed other drivers. On 31 March 1995 while engaged in driving the truck in connection with the council's business he jarred his back severely when the truck bumped over a bridge. He experienced severe pain in the back and left leg. Further investigations showed that he now had a frank disc protrusion and he underwent surgical procedures." The applicant's claim to compensation under the Act depended upon his being able to show that he was a "deemed worker" within the meaning of the Act. He relied upon Sch 1 cl2 which provides, so far as presently material: "(1) Where a contract: (a) to perform any work exceeding $10 in value (not being work incidental to a trade or business regularly carried on by the contractor in the contractor's own name, or under a business or firm name)........ is made with the contractor, who neither sublets the contract nor employs any worker, the contractor shall, for the purposes of this Act, be deemed to be a worker employed by the person who made the contract with the contractor." The passage that I have quoted from Judge Egan's judgment amounts, relevantly, to a finding that in March 1995 the appellant carried on a business of carting materials, including gravel for the Council, and building materials and grain for a number of other persons. The appellant did not always drive the truck and employed other drivers. The appellant appealed to this Court from Judge Egan's decision refusing to make an award in favour of the appellant in relation to the March 1995 injuries. The appellant accepted that his right of appeal, relevantly, was limited to error "in point of law"; s32(1) of the Compensation Court Act 1984 as in force at the relevant time. One of the grounds of appeal was that his Honour failed to give sufficient reasons for his decision, in particular, for his decision that the appellant was carrying on a business of carting materials and that the appellant employed URJ — McILVAIN v THE COUNCIL OF THE SHIRE OF GUNNEDAH (Sheller JA) 3 other drivers. Another ground was that his Honour failed to deal with submissions put on behalf of the appellant based upon the decision of this Court in Davis v Pioneer Concrete (1976) | NSWLR 562 which were an essential element of the appellant's case. As to the second of these grounds, the respondent accepts that submissions based upon Davis v Pioneer Concrete were put by the appellant to Judge Egan. A decision about whether a person is deemed to be employed by another within the meaning of Sch 1 cl2 where a contract is shown to have been made with that person to perform work exceeding $10 in value, requires consideration of whether the work was incidental to a trade or business regularly carried on by the contractor in the contractor's own name or under a business or firm name and whether the contractor sub-let the contract or employed any worker. In his judgment, Judge Egan nowhere referred to Sch 1 and nowhere expressly decided whether or not the appellant was a "deemed worker". The award he made in respect of the injury of 31 March 1995 could have been and probably was made on the basis that his Honour considered the appellant was not a "deemed worker" within cl2. But with respect Judge Egan does not explain why. The fact that the appellant carried on a business of carting materials or that he undertook cartage of building materials and grain for other persons or that he did not always drive the truck and employed other drivers would not severally or together inevitably lead to that conclusion. In Humberstone v Northern Timber Mills (1949) 79 CLR 389, a case concerned with a substantially similar "deemed worker" section in the Victorian Workers Compensation Act 1928, Dixon J said at 402: "\..... a consideration of the policy of the provision as well as of its text appears to me to show that the distinction it seeks to draw is between on the one hand an independent contractor whose relation with the principal is special or particular either because it is outside the course of the general business of the contractor or the general practice of his trade or because he has no such general business or is not a general practitioner of his trade, and on the other hand an independent contractor who performs work successively or perhaps concurrently for his customers or others in the course of a definite trade or business carried on systematically or who holds himself out as ready to do so........ No doubt the policy is a matter of inference but it seems reasonable to suppose that it was considered proper that a person conducting a business in the course of which he contracted to perform work should himself carry the risk of personal injuries as one of the hazards of his business, while the man who worked under contract but only for the employer or without any general trade or business or outside his trade or business should, like an ordinary employee, be insured by the Act against the risk of injury in his work." From the evidence to which counsel for the appellant took us, there is support for the view that the appellant was at the relevant time an independent contractor whose relation with the principal was special or particular for one or other of the reasons Dixon J set out. If Judge Egan thought otherwise he did not say so and gave no reasons for such a conclusion. In Davis v Pioneer Concrete, a case concerned with the deemed worker provisions in the Workers Compensation Act 1926 Mahoney JA, who with Glass JA formed the majority, said at 571: "In order to find that Davis was a deemed worker under s6(3A), it was necessary for Judge Ferrari to find that such a contract had been made with Davis. On the facts of this case, there were two general alternatives open: first, that the 4 UNREPORTED JUDGMENTS relevant contract was one made each time Davis took a load of concrete from the company for carriage (an individual contract); or, second that the relevant contract was a more general one, being a single or overall contract made or evidenced by the documents (exhibits A and B) and carried into effect by the acceptance and carriage by Davis of each load of concrete (the overall contract). The importance of determining what were the relevant contractual relations between the parties lay in this: in order that the subsection apply, the relevant contract had to be 'a contract to perform work', and, whilst the company did not contest that an individual contract was a contract to perform work, it did contest that an overall contract could be so categorised; and in addition, if the relevant contract was an individual contract, then, as it was argued, it would be more difficult for the company to establish that Davis 'employs workers' within the meaning of the subsection." The appellant argued, and there was scope for such an argument, that his contract with the respondent was an individual contract for the day when he was injured. Judge Egan nowhere said what the relevant contractual relations between the appellant and the respondent were although there was in evidence a document dated 1 February 1995, signed by the Mayor and the appellant and headed "Contract for the hire of motor lorry with driver". The failure by the trial Judge to give reasons for holding that the appellant was not a deemed worker is an error of law; Pettit v Dunkley [1971] 1 NSWLR 376. As McHugh JA said in Soulemezis v Dudley (Holdings) Pty Ltd [1987] 10 NSWLR 247 at 280 a superior court, considering the decision of an inferior tribunal, should not be left to speculate from collateral observations as to the basis of a particular finding. It is necessary that the essential ground or grounds upon which the decision rests should be articulated and reasons given for preferring one conclusion to another. In the present case that judicial function has not been performed. The appellant raised an alternative ground of appeal. If he was not a "deemed worker" of the respondent at the time of the March 1995 injury, he claimed a relationship between his incapacity after 10 April 1995 and the employment injury of 13 October 1994. This claim was based on medical evidence. Judge Egan rejected it when he said that the impairments and loss of efficient use of the right leg resulted from the injury on 31 March 1995 and subsequent operative treatment. His Honour gave no reasons for this conclusion. This again was an error of law. In my opinion the following orders should be made: 1. Appeal allowed; 2. Remit the proceedings to the Compensation Court for re-hearing according to law; 3. The respondent to pay the appellant's costs of the appeal but to have a certificate under the Suitors Fund Act 1951 if so qualified. Fitzgerald AJA The circumstances giving rise to this appeal are set out in the reasons for judgment of Sheller JA. I agree with those reasons subject to one qualification. 1. The Court did not have full argument concerning the question whether a conclusion that the appellant is a "deemed worker" within the meaning of the Workers Compensation Act 1987 was open on the facts found by the trial judge and other uncontroversial facts such as the contract between the parties. Accordingly, I express no opinion concerning whether that conclusion was open, or will be open when the matter is retried. URJ McILVAIN v THE COUNCIL OF THE SHIRE OF GUNNEDAH (Fitzgerald AJA) 5 I agree with the orders proposed by Sheller JA. 1. Appeal allowed; 2. Remit the proceedings to the Compensation Court for re-hearing 5 according to law; 3. The respondent to pay the appellant's costs of the appeal but to have a certificate under the Suitors Fund Act 1951 if so qualified. Counsel for the appellant: A J W Dodd 10 Solicitors for the appellant: Peter Long & Co Counsel for the respondent: K O'Grady Solicitors for the respondent: Sparke Helmore